ACQUISITION OF FNB (Tables)

12 Months Ended

Dec. 31, 2015

The following table summarizes the purchase of FNB as of December 11, 2015:

(In Thousands, Except Per Share Data)
Purchase Price Consideration in Common Stock
Citizens Financial Services, Inc. shares issued	336,515
Value assigned to Citizens Financial Services, Inc. common share	$ 47.50
Purchase price assigned to FNB common shares exchanged for Citizens Financial Services, Inc.		$ 15,984
Purchase Price Consideration - Cash for Common Stock
Purchase price assigned to The First National Bank of Fredericksburg common shares exchanged for cash		5,619
Total Purchase Price		21,603
Net Assets Acquired:
The First National Bank of Fredericksburg shareholders’ equity	$ 12,298
Adjustments to reflect assets acquired at fair value:
Loans
Interest rate	31
General credit	(1,362)
Specific credit - non-amortizing	(2,495)
Specific credit - amortizing	(665)
Core deposit intangible	1,641
Covenant not to compete	125
Premises and equipment	1,203
Leased premises contracts	(359)
Other assets	(358)
Deferred tax assets	785
Adjustments to reflect liabilities acquired at fair value:
Time deposits	(74)
		10,770
Goodwill resulting from merger		$ 10,833

Schedule of asset acquired and liability assumed

The following condensed statement reflects the amounts recognized as of the acquisition date for each major class of asset acquired and liability assumed:

(In Thousands)
Total purchase price		$ 21,603
Assets (liabilities) acquired:
Cash and cash equivalents	$ 83,514
Interest bearing time deposits with other banks	1,236
Securities available for sale	23,831
Loans	115,211
Premises and equipment, net	4,743
Accrued interest receivable	282
Bank-owned life insurance	4,598
Intangibles	1,981
Deferred tax asset	2,979
Other assets	2,332
Time deposits	(42,675)
Deposits other than time deposits	(182,555)
Accrued interest payable	(14)
Other liabilities	(4,693)
		10,770
Goodwill resulting from the FNB merger		$ 10,833

Schedule of future amortization expense for core deposit intangible and MSR

The following table provides the current year and estimated future amortization expense for amortized intangible assets. We based our projections of amortization expense shown below on existing asset balances at December 31, 2015. Future amortization expense may vary from these projections (in thousands):

	MSRs	Core deposit intangibles	Covenant not to compete	Total
Year ended December 31, 2015 (actual)	$ 129	$ 25	$ 2	$ 156
Estimate for year ended December 31,
2016	173	296	31	500
2017	142	266	31	439
2018	113	236	31	380
2019	88	206	30	324
2020	66	177	—	243

Summary of integration costs and amortization of fair value adjustments

Merger and acquisition integration costs and amortization of fair value adjustments are included in the numbers below.

		Pro Formas
	Actual from Acquisition Date Through December 31, 2015	Twelve Months Ended December 31,
(In Thousands, Except Per Share Data)	Actual from Acquisition Date Through December 31, 2015	2015	2014
Net interest income	$ 401	$ 37,736	$ 37,634
Non-interest income	21	8,576	8,184
Net income	(22)	8,640	14,019
Pro forma earnings per share:
Basic		$ 2.57	$ 4.15
Diluted		$ 2.57	$ 4.15