CITIZENS FINANCIAL SERVICES, INC. REPORTS UNAUDITED SECOND QUARTER 2026 FINANCIAL RESULTS

Citizens Financial Services, Inc (Nasdaq: CZFS ), parent company of First Citizens Community Bank (the "Bank"), released today its unaudited consolidated financial results for the three and six months ended June 30, 2026.

Net income for the first six months of 2026 was $20.6 million, which was $4.5 million, or 27.9% more than 2025's net income through June 30, 2025 due to the increase in net interest income after the provision for credit losses of $5.5 million. The effective tax rate for the first six months of 2026 was 17.9% compared to 19.1% in the comparable period in 2025.

Net income was $10.2 million for the three months ended June 30, 2026, which was $1.7 million more than the net income for 2025's comparable period due to an increase in net interest income after the provision for credit losses of $2.3 million. The effective tax rate for the three months ended June 30, 2026 was 17.5% compared to 19.1% in the comparable period in 2025.

Net interest income before the provision for credit losses was $51.8 million for the six months ended June 30, 2026, an increase of $5.2 million, or 11.1%, over the same period a year ago and was primarily due to an increase in investment income and a decrease in interest expense.

The provision for credit losses for the three and six months ended June 30, 2026 was $500,000 and $1,000,000, respectively, compared to $750,000 and $1,375,000 for the three and six months ended June 30, 2025, respectively. The provision for 2026 was driven by the updated loss driver analysis for 2026, the economic impact of the Iran conflict, and an increase in specific reserves for non-performing loans.

Return on average equity for the three and six months (annualized) ended June 30, 2026 was 11.64% and 11.84% compared to 10.88% and 10.44% for the three and six months (annualized) ended June 30, 2025. Return on average tangible equity for the three and six months (annualized) ended June 30, 2026 was 15.54% and 15.84% compared to 15.19% and 14.65% for the three and six months (annualized) ended June 30, 2025 (non-GAAP).

Return on average assets for the three and six months (annualized) ended June 30, 2026 was 1.32% and 1.33% compared to 1.13% and 1.07% for the three and six months (annualized) ended June 30, 2025.

Loans grew $151.8 million, or 6.8% since June 30, 2025. Loan growth since December 31, 2025, excluding the student loan portfolio, was $92.1 million, or 8.2% on an annualized basis.

Non-performing assets increased $14,176,000 since December 31, 2025 and totaled $43,365,000 as of June 30, 2026, which is $15,989,000 higher than the balance as of June 30, 2025. The increase from December 31, 2025 is primarily due to six commercial real estate loan relationships and one construction real estate loan relationship, totaling approximately $12.2 million, being placed on non-accrual status during the first half of 2026 due to becoming more than 90 days.

The Bank's continued strategy for certain acquired loans is to either improve the credit metrics of the non-performing loans or sell the underlying collateral or have the customers refinance the loans with another institution.

As a percent of loans, non-performing assets totaled 1.81%, 1.24% and 1.22% as of June 30, 2026, December 31, 2025 and June 30, 2025, respectively. While non-performing assets have increased significantly as of June 30, 2026 when compared to December 31, 2025 and June 30, 2025, specific reserves for these assets have remained stable at $2,432,000, $1,912,758 and $1,476,000 at June 30, 2026, December 31, 2025 and June 30, 2025, respectively.

For the six months ended June 30, 2026, net income totaled $20,563,000 which compares to net income of $16,084,000 for the first six months of 2025, an increase of $4,479,000. Basic earnings per share of $4.29 for the first six months of 2026 compared to $3.35 for the first six months last year.