EX-99.2 4 invvestorpresentation.htm INVESTOR PRESENTATION DATED SEPTEMBER 18, 2019
1172120 1963086 8614264 217217217 242205203 To Acquire September 18, 2019 Transaction Announcement

Legal Disclosures Forward-Looking StatementsThis investor presentation contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act, relating to present or future trends or factors affecting the banking industry and, specifically, the financial operations, markets and products of Citizens Financial Service, Inc. (“Citizens”) and MidCoast Community Bancorp, Inc. (“MidCoast”). Forward-looking statements are typically identified by words such as "believe", "plan", "expect", "anticipate", "intend", "outlook", "estimate", "forecast", "will", "should", "project", "goal", and other similar words and expressions. These forward-looking statements involve certain risks and uncertainties. In addition to factors previously disclosed in Citizens’ reports filed with the Securities and Exchange Commission (the “SEC”) and those identified elsewhere in this press release, the following factors among others, could cause actual results to differ materially from forward-looking statements or historical performance: ability to obtain regulatory approvals and meet other closing conditions to the merger, including approval by MidCoast’s shareholders eligible to vote on the proposed merger, on the expected terms and schedule; delay in closing the merger; difficulties and delays in integrating the respective businesses of Citizens and MidCoast or fully realizing cost savings and other benefits; business disruption following the merger; changes in asset quality and credit risk; the inability to sustain revenue and earnings growth; changes in interest rates and capital markets; inflation; customer acceptance of Citizens’ products and services; customer borrowing, repayment, investment and deposit practices; customer disintermediation; the introduction, withdrawal, success and timing of business initiatives; competitive conditions; the inability to realize cost savings or revenues or to implement integration plans and other consequences associated with mergers, acquisitions and divestitures; economic conditions; and the impact, extent and timing of technological changes, capital management activities, and other actions of the Federal Reserve Board and legislative and regulatory actions and reforms. Citizens and MidCoast undertake no obligation to revise these forward-looking statements or to reflect events or circumstances after the date of this press release. Additional Information About the Proposed Merger and Where to Find ItCitizens will file a registration statement with the SEC under the Securities Act of 1933, as amended, which will include a proxy statement/prospectus and other relevant documents in connection with the proposed merger. MIDCOAST STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS CAREFULLY WHEN IT BECOMES AVAILABLE, INCLUDING ANY AMENDMENTS OR SUPPLEMENTS TO IT, BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER.The proxy statement/prospectus (when it becomes available) and any other documents Citizens has filed and will file with the SEC may be obtained free of charge at the SEC's website (www.sec.gov). In addition, copies of the documents Citizens has filed or will file with the SEC may be obtained free of charge by contacting Randall E. Black, Citizens Financial Services, Inc., 15 South Main Street, Mansfield, PA 16933. No Offer or Solicitation This investor presentation does not constitute an offer to sell or a solicitation of an offer to buy any securities. The shares of common stock of Citizens are not savings or deposit accounts and are not insured by the Federal Deposit Insurance Corporation or any other government agency.

Likeminded Institutions Coming Together Community-Focused Institution Attentive to Customers Disciplined Lending Practices Entrepreneur Sales Culture Preferred Community Bank in its Markets Serving the Local Business Community Employer of Choice

Note: Data as of 6/30/2019Source: S&P Global Market Intelligence Headquarters: Mansfield, PA Executive Management: Randy Black (CEO)Mick Jones (CFO) Offices: 28 Branches Employees: 257 Full Time Employees Assets: $1.45 billion Loans/Deposits (%): 92.9% LTM ROAA (%): 1.28% LTM ROAE (%): 12.73% LTM Efficiency Ratio (%): 55.72% LTM NIM (%): 3.68% NPAs/Assets (%): 1.64% Reserves/Loans (%): 1.21% Company Overviews Headquarters: Wilmington, DE Executive Management: Eric G. Hoerner (CEO)Bill Lattanzio (CBO) Offices: 3 branches Employees: 40 Full Time Employees Assets: $268.5 million Loans/Deposits (%): 108.6% YTD ROAA (%): 0.22% YTD ROAE (%): 2.26% YTD Efficiency Ratio (%): 81.01% YTD NIM (%): 2.98% NPAs/Assets (%): 0.17% Reserves/Loans (%): 0.91%

(1) Based upon a $61.00 price for CZFS common stock(2) Core deposits defined as total deposits less time deposits > $100kSource: S&P Global Market Intelligence Transaction Citizens Financial Services, Inc. (“CZFS”) will acquire 100% of MidCoast Community Bancorp, Inc.’s (“MDCT”) outstanding common stock Consideration Mix 75% stock / 25% cashSubject to shareholder election Per Share Consideration(1) $6.50 total cash or stock consideration per share of MDCT common stock(1)$6.50 in cash consideration per share of MDCT common stock; or0.1065 shares of CZFS common stock per share (the “Exchange Ratio”) Aggregate Consideration $31.0 million at announcement(1) Price Protection Fixed exchange ratio20% double trigger downside price protection Announcement Metrics Price to tangible equity of 122%Price/2020 Earnings (+ Estimated Cost Savings) of 11.1xPremium to core deposits(2) of 3.7% Personnel Five commercial relationship managers with over 150 years of combined experience have signed employment agreements with CZFS Approvals & Close MDCT shareholder approvalWill seek customary approvals from PA, DE and the Federal ReserveExpected closing in the 1st quarter of 2020 Transaction Terms

(1) Based upon a $61.00 price for CZFS common stock(2) Core deposits defined as total deposits less time deposits > $100kSource: S&P Global Market Intelligence StrategicRationale Creation of a multi-regional, dynamic franchise with strong financial performance in attractive marketsLargest OTC listed bank in the PA, NJ, DE & MD combined marketOne of the Top 25 banks by asset size in the PA & DE combined market Continuation of acquisitive growth – acquired First National Bank of Fredericksburg in December 2015; acquired 1 S&T branch in December 2017Strategic geographic expansion into affluent regions with favorable demographics, while also increasing southeastern PA presence FinanciallyAttractive Immediately accretive to earnings at closeImmediately accretive to tangible book value at closeImmediate payback period> 15% internal rate of return exceeds internal thresholdsReasonable cost savings (32%) projected to be achievable via operating synergies Pricing in line with other recent transactions for banks similar in size, performance and geography Well-PositionedFranchise Opportunity to expand relationships with MidCoast customersStronger balance sheet and capital base to support increased borrowing needsBroader array of products and services offeredContinuity of key MidCoast management and personnel will ease integration and keep expertise of local markets within the company Larger pro forma company can lead to further benefits of scale, additional growth opportunities and improved efficiency Ideally positioned to become consolidator of choice in PA and adjacent markets Transaction Rationale

Source: S&P Global Market Intelligence Strengthening an Attractive Footprint MDCT LocationsCZFS Locations

Market Overview – Metro Wilmington Most populous city in DelawarePopulation of approximately 71,000 peopleLocated within major Northeast CorridorPart of the Philadelphia-Camden-Wilmington, PA-NJ-DE-MD MSA Fortune 500 Presence Higher Education Overview of Wilmington Key Economic Drivers Higher concentration in Finance and Science sectors than rest of MSATop location for Fortune 500 companies to incorporateEducation attainment in population higher than the national averageLargest deposit market in Delaware State of Delaware1 (13,200 employees)Christiana Care Health Services (10,000 employees)DuPont (8,100 employees)Bank of America (7,600 employees)AstraZeneca Inc., Wal-Mart Stores, Inc., University of Delaware Top Employers Demographics (1): Excludes educational jobsSource: S&P Global Market Intelligence, Data USA, City of Wilmington, World Population

Note: Bank level regulatory data shown; data as of June 30, 2019Source: S&P Global Market Intelligence; Company-provided documents Attractive Pro Forma Business Mix CZFS MDCT Pro Forma Loans Deposits

(1) Estimated impacts provided solely for illustrative purposes(2) Tangible book value payback period calculated using the crossover method; inclusive of all one-time related transaction expensesSource: S&P Global Market Intelligence; Company-provided documents Estimated EPS Accretion >3% TBV Payback Period(2) Immediate Internal Rate of Return >15% Pro Forma TCE/TA (At Close) > 8.0% Pro Forma Leverage (At Close) > 8.5% Pro Forma Tier 1 RBC (At Close) > 10.0% Pro Forma TRBC (At Close) > 12.0% Pro Forma Loans/Deposits 95% Pro Forma CRE Concentration (At Close) 161% Top Tier Consolidated Impact Bank Level Impact Key Transaction Impacts(1)

Prudently Structured Transaction Experience successfully executing and integrating strategic initiatives including acquisitionsCurrent CZFS management has experience successfully leading M&A transactions in recent history (acquired First National Bank of Fredericksburg in December 2015; acquired 1 S&T branch in December 2017)Increases likelihood of a smooth integration process for employees and customersExtensive credit review & prudent fair value adjustmentsReviewed loans in all product linesUtilized 3rd party loan reviewComprehensive operational due diligence performed Detailed review of business plans, budgets, credit processes, among other aspects of the businessIn-depth evaluation of personnel at both companies to build the most efficient team for the combined entityPro forma capital ratios are expected to meet regulatory guidelines for “well-capitalized”Robust revenue enhancements and synergies are identified but not included in the model

* Include pro forma impact of acquisition of MidCoastSource: S&P Global Market Intelligence Building Upon a Proven Track Record Total Asset Growth Since 2000 ($000)

* 2Q2019 data annualized for EPS and dividendSource: S&P Global Market Intelligence Building Shareholder Value TBV/Share & EPS Growth Dividend History Annual Dividend/Share Stock Dividend 1.0% 1.0% 5.0% 1.0% 1.0% 5.0% 1.0%

YTD Stock Performance 3-Year Stock Performance Leadership’s Track Record of Shareholder Value Creation Note: Market data as of market close on September 16, 2019Note: Total return assumes dividend reinvestment Source: S&P Global Market Intelligence Stock Price Under Current Management Current Management Took Leadership Roles 1H’2004 Total Return Under Current Leadership: 438% 5-Year Stock Performance YTD Total Return: 8% 3 Year Total Return: 37% 5 Year Total Return: 40%