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ACQUISITION OF HV BANCORP, INC (Tables) | 12 Months Ended
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Dec. 31, 2023
Business Acquisition [Line Items] |
Net Assets Acquired and Consideration Transferred | The following table summarizes the purchase of HVBC 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: |  |  |  |  |  |  |  |
HV Bancorp, Inc shareholders’ equity |  | $ | 40,630 |  |  |  |  |
Adjustments to reflect assets acquired at fair value: |  |  |  |  |  |  |  |
Investments |  |  | 31 |  |  |  |  |
Loans |  |  |  |  |  |  |  |
Interest rate |  |  | (24,097 | ) |  |  |  |
General credit |  |  | (1,834 | ) |  |  |  |
Specific credit - PCD accrual |  |  | (277 | ) |  |  |  |
Specific credit - PCD non-accrual |  |  | (1,765 | ) |  |  |  |
Core deposit intangible |  |  | 2,770 |  |  |  |  |
Owned premises |  |  | 67 |  |  |  |  |
Other assets |  |  | (193 | ) |  |  |  |
Deferred tax assets |  |  | 3,051 |  |  |  |  |
Adjustments to reflect liabilities acquired at fair value: |  |  |  |  |  |  |  |
Time deposits |  |  | 586 |  |  |  |  |
Borrowings |  |  | 3,017 |  |  |  |  |
Other liabilities |  |  | 297 |  |  |  |  |
|  |  |  |  |  |  | 22,283 |
Goodwill resulting from merger |  |  |  |  |  | $ | 54,382 |
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) |  |  |  |  |  |
Total purchase price |  |  |  |  |  | 76,665 |
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 |  |  | 7,706 |  |  |  |  |
Other assets |  |  | 18,213 |  |  |  |  |
Total assets acquired |  |  | 627,167 |  |  |  |  |
Fair value of liabilities assumed |  |  |  |  |  |  |  |
Deposits |  |  | 533,364 |  |  |  |  |
Borrowings |  |  | 58,647 |  |  |  |  |
Accrued interest payable |  |  | 885 |  |  |  |  |
Other liabilities |  |  | 11,988 |  |  |  |  |
Total liabilities assumed |  |  | 604,884 |  |  |  |  |
Total fair value of identifiable net assets |  |  |  |  |  |  | 22,283 |
Goodwill resulting from merger |  |  |  |  |  |  | 54,382 |
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 |
Estimated Future Amortization Expense | The following table provides the current year and estimated future amortization expense for the next five years of amortized intangible assets (in thousands). We based our projections of amortization expense shown below on existing asset balances at December 31, 2023. Future amortization expense may vary from these projections:
|  | MSRs |  |  | Core deposit intangibles |  |  | Total |
Year ended December 31, 2023 |  | $ | 301 |  |  | $ | 373 |  |  | $ | 674 |
Estimate for year ended December 31, |  |  |  |  |  |  |  |  |  |  |  |
2024 |  |  | 280 |  |  |  | 564 |  |  |  | 844 |
2025 |  |  | 228 |  |  |  | 478 |  |  |  | 706 |
2026 |  |  | 177 |  |  |  | 395 |  |  |  | 572 |
2027 |  |  | 120 |  |  |  | 339 |  |  |  | 459 |
2028 |  |  | 71 |  |  |  | 284 |  |  |  | 355 |
2029 and thereafter |  |  | 79 |  |  |  | 635 |  |  |  | 714 |
Total |  |  | 955 |  |  |  | 2,695 |  |  |  | 3,650 |
Pro Forma Information | The following table presents financial information regarding the former HVBC operations included in our Consolidated Statement of Income from the date of acquisition through December 31, 2023 under the column “Actual from Acquisition Date through December 31, 2023”. In addition, the following table presents unaudited pro forma information as if the acquisition of HVBC had occurred on January 1, 2022 under the “Pro Forma” columns. The table below has been prepared for comparative purposes only and is not necessarily indicative of the actual results that would have been attained had the acquisition occurred as of the beginning of the periods presented, nor is it indicative of future results. Furthermore, the unaudited proforma information does not reflect management’s estimate of any revenue-enhancing opportunities nor anticipated cost savings as a result of the integration and consolidation of the acquisition. Merger and acquisition integration costs and amortization of fair value adjustments are included in the numbers below.
|  | Actual from Acquisition |  |  | Unaudited Pro Forma |
|  | Date Through |  |  | Twelve Months Ended December 31, |
(In Thousands, Except Per Share Data) |  | December 31, 2023 |  |  | 2023 |  |  | 2022 |
Net interest income |  | $ | 14,697 |  |  | $ | 89,217 |  |  | $ | 96,185 |
Non-interest income |  |  | 1,543 |  |  |  | 13,856 |  |  |  | 17,863 |
Net income |  |  | 6,487 |  |  |  | 15,034 |  |  |  | 31,625 |
Pro forma earnings per share: |  |  |  |  |  |  |  |  |  |  |  |
Basic |  |  |  |  |  | $ | 3.03 |  |  | $ | 6.72 |
Diluted |  |  |  |  |  | $ | 3.03 |  |  | $ | 6.72 |
HV Bancorp, Inc. [Member] |
Business Acquisition [Line Items] |
Estimated Future Amortization Expense | As of December 31, 2023, the current year and estimated future amortization expense for the core deposit intangibles and MSRs acquired as part of the acquisition was (in thousands):
|  | MSRs |  |  | Core deposit intangibles |  |  | Total |
Amortization for the period 6/16/23-12/31/23 |  | $ | 33 |  |  | $ | 252 |  |  | $ | 285 |
Estimate for year ended December 31, |  |  |  |  |  |  |  |  |  |  |  |
2024 |  |  | 52 |  |  |  | 478 |  |  |  | 530 |
2025 |  |  | 51 |  |  |  | 428 |  |  |  | 479 |
2026 |  |  | 44 |  |  |  | 378 |  |  |  | 422 |
2027 |  |  | 21 |  |  |  | 327 |  |  |  | 348 |
2028 |  |  | 1 |  |  |  | 277 |  |  |  | 278 |
2029 and thereafter |  |  | - |  |  |  | 630 |  |  |  | 630 |
Total |  | $ | 169 |  |  | $ | 2,518 |  |  |  | 2,687 |

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