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Acquisition of HV Bancorp, Inc. (Tables) | 6 Months Ended
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Jun. 30, 2023
Acquisition of HV Bancorp, Inc. [Abstract] |
Net Assets Acquired and Consideration Transferred | The following table summarizes the purchase of HVB as of June 16, 2023:
(In Thousands, Except Per Share Data) |  |  |  |  |  |
Purchase Price Consideration in Common Stock |  |  |  |  |  |
Citizens Financial Services, Inc. shares issued |  |  | 693,858 |  |  |  |
Value assigned to Citizens Financial Services, Inc. common share |  | $ | 86.67 |  |  |  |
Purchase price assigned to HVBC common shares exchanged for Citizens Financial Services, Inc. |  |  |  |  |  | $ | 60,137 |
Purchase Price Consideration - Cash for Common Stock |  |  |  |  |  |  |  |
Purchase price assigned to HVBC’s common shares exchanged for cash |  |  |  |  |  |  | 13,112 |
Purchase Price Related to Cash Payout of Stock Options |  |  |  |  |  |  | 3,416 |
Total Purchase Price |  |  |  |  |  |  | 76,665 |
Net Assets Acquired: |  |  |  |  |  |  |  |
HVBC shareholders’ equity |  | $ | 40,630 |  |  |  |  |
Adjustments to reflect assets acquired at fair value: |  |  |  |  |  |  |  |
Investments |  |  | 31 |  |  |  |  |
Loans |  |  |  |  |  |  |  |
Interest rate |  |  | (24,097 | ) |  |  |  |
General credit |  |  | (1,834 | ) |  |  |  |
Credit - PCD Loans |  |  | (2,042 | ) |  |  |  |
Core deposit intangible |  |  | 2,770 |  |  |  |  |
Owned premises |  |  | 67 |  |  |  |  |
Other assets |  |  | (193 | ) |  |  |  |
Deferred tax assets |  |  | 3,737 |  |  |  |  |
Adjustments to reflect liabilities acquired at fair value: |  |  |  |  |  |  |  |
Time deposits |  |  | 586 |  |  |  |  |
Borrowings |  |  | 3,017 |  |  |  |  |
Other liabilities |  |  | 611 |  |  |  |  |
|  |  |  |  |  |  | 23,283 |
Goodwill resulting from merger |  |  |  |  |  | $ | 53,382 |
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, Except Per Share Data) |  |  |  |  |  |
Total purchase price |  |  |  |  |  | 76,665 |
Fair value of assets acquired |  |  |  |  |  |  |
Cash and due from banks |  |  | 18,017 |  |  |  |  |
Investment securities |  |  | 79,248 |  |  |  |  |
Loans held for sale |  |  | 10,750 |  |  |  |  |
Loans |  |  | 475,338 |  |  |  |  |
Premises and equipment |  |  | 2,310 |  |  |  |  |
Intangible assets |  |  | 2,972 |  |  |  |  |
Bank owned life insurance |  |  | 10,387 |  |  |  |  |
Interest receivable |  |  | 2,226 |  |  |  |  |
Deferred taxes |  |  | 8,392 |  |  |  |  |
Other assets |  |  | 18,213 |  |  |  |  |
Total assets acquired |  |  | 627,853 |  |  |  |  |
Fair value of liabilities assumed |  |  |  |  |  |  |  |
Deposits |  |  | 533,364 |  |  |  |  |
Borrowings |  |  | 58,647 |  |  |  |  |
Accrued interest payable |  |  | 885 |  |  |  |  |
Other liabilities |  |  | 11,674 |  |  |  |  |
Total liabilities assumed |  |  | 604,570 |  |  |  |  |
Total fair value of identifiable net assets |  |  |  |  |  |  | 23,283 |
Goodwill resulting from merger |  |  |  |  |  |  | 53,382 |
Fair Value of Acquired PCD Loans | The following table provides details related to the fair value of acquired PCD loans (in thousands):
|  | Unpaid principal balance |  |  | PCD Allowance for Credit Loss at Acquisition |  |  | (Discount) Premium on Acquired Loans |  |  | Fair Value of PCD Loans at Acquisition |
Real estate loans: |  |  |  |  |  |  |  |  |  |  |  |
Mortgages |  | $ | 2,398 |  |  | $ | (108 | ) |  | $ | - |  |  | $ | 2,290 |
Home Equity |  |  | 34 |  |  |  | - |  |  |  | (4 | ) |  |  | 30 |
Commercial |  |  | 4,774 |  |  |  | (39 | ) |  |  | (507 | ) |  |  | 4,228 |
Construction |  |  | 4,278 |  |  |  | (37 | ) |  |  | (293 | ) |  |  | 3,948 |
Consumer |  |  | 1,343 |  |  |  | (677 | ) |  |  | (271 | ) |  |  | 395 |
Other commercial loans |  |  | 5,214 |  |  |  | (828 | ) |  |  | (48 | ) |  |  | 4,338 |
|  | $ | 18,041 |  |  | $ | (1,689 | ) |  | $ | (1,123 | ) |  | $ | 15,229 |
Fair Value of Acquired Non-PCD Loans | The following table provides details related to the fair value and Day 1 provision related to the acquired non-PCD loans (in thousands):
|  | Unpaid principal balance |  |  | (Discount)Premium on Acquired Loans |  |  | Fair Value of Non-PCD Loans at Acquisition |  |  | Day 1 Provision for Credit Losses- Non-PCD Loans |
Real estate loans: |  |  |  |  |  |  |  |  |  |  |  |
Mortgages |  | $ | 155,799 |  |  | $ | (17,506 | ) |  | $ | 138,293 |  |  | $ | 1,015 |
Home Equity |  |  | 2,165 |  |  |  | (55 | ) |  |  | 2,110 |  |  |  | 15 |
Commercial |  |  | 203,638 |  |  |  | (9,226 | ) |  |  | 194,412 |  |  |  | 1,968 |
Construction |  |  | 76,703 |  |  |  | (1,420 | ) |  |  | 75,283 |  |  |  | 747 |
Consumer |  |  | 2,794 |  |  |  | (222 | ) |  |  | 2,572 |  |  |  | 159 |
Other commercial loans |  |  | 47,753 |  |  |  | (314 | ) |  |  | 47,439 |  |  |  | 687 |
|  | $ | 488,852 |  |  | $ | (28,743 | ) |  | $ | 460,109 |  |  | $ | 4,591 |
Pro Forma Information |
|  | Actual from Acquisition Date Through June 30, 2023 |  |  | Unaudited Pro Forma for |
|  |  |  | Three Months Ended |  |  | Six Months Ended |
|  |  |  | June 30, |  |  | June 30, |
(In Thousand s, Except Per Share Data) |  |  |  | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
Net interest income |  | $ | 917 |  |  | $ | 18,901 |  |  | $ | 23,572 |  |  | $ | 38,004 |  |  | $ | 44,960 |
Non-interest income |  |  | 34 |  |  |  | 2,280 |  |  |  | 4,488 |  |  |  | 4,454 |  |  |  | 10,241 |
Net (loss) income |  |  | 590 |  |  |  | (3,461 | ) |  |  | 8,587 |  |  |  | 4,124 |  |  |  | 13,557 |
Pro forma (loss) earnings per share: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic |  |  |  |  |  | $ | (0.72 | ) |  | $ | 1.84 |  |  |  | 0.87 |  |  | $ | 2.91 |
Diluted |  |  |  |  |  | $ | (0.72 | ) |  | $ | 1.84 |  |  | $ | 0.87 |  |  | $ | 2.91 |

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