CZFS · Citizens Financial Services, Inc.

Citizens Financial Services, Inc. delivered strong Q1 2026 results with net income of $10.4 million, a 36.2% increase from $7.6 million in Q1 2025, primarily fueled by net interest income growth of 13.5% to $26.1 million. This was driven by higher loan interest income, recovery of $683,000 in previously charged-off interest offsetting new non-accruals, and reduced interest expense on deposits and borrowings. The tax-equivalent net interest margin expanded 42 basis points to 3.72%, with earning asset yields up 14 bps to 5.71% and liability costs down 34 bps to 2.46%. Non-interest income rose modestly due to $224,000 higher BOLI earnings from $22 million in new policies, while expenses increased 1.4% on higher taxes from improved pre-tax income. CEO Randall E. Black highlighted the results in the April 29 press release (Exhibit 99.1). Balance sheet showed total assets at $3.03 billion, with deposits up $64.2 million to $2.44 billion (including $52.8 million brokered to offset seasonal municipal outflows), enabling borrowed funds reduction by $110.7 million to $198.7 million. Net loans declined seasonally $68.6 million to $2.28 billion amid student loan payoffs, though commercial real estate demand remained strong in key markets. Credit quality deteriorated with non-performing assets surging $10.9 million to $40.1 million (1.74% of loans) from four CRE relationships >90 days past due; strategy involves improving metrics, collateral sales, or refinancing. Allowance for credit losses rose slightly to $22.9 million (1.00% of loans), with $144,000 provision. ROE improved to 12.03% and ROA to 1.34%. Board raised quarterly dividend 2.0% to $0.50 per share, signaling confidence.