DEF 14A: Citizens Financial Services, Inc. Announces Annual Meeting of Shareholders

Citizens Financial Services, Inc. will hold its Annual Meeting of Shareholders on April 16, 2024, to elect directors, ratify the appointment of the independent accounting firm, and conduct advisory votes on executive compensation.

Summary

• Citizens Financial Services, Inc. will hold its Annual Meeting of Shareholders on April 16, 2024, at First Citizens Community Bank in Wellsboro, Pennsylvania.
• Shareholders of record as of February 26, 2024, are entitled to vote.
• The meeting's purposes include electing three Class 1 directors for three-year terms, ratifying the appointment of S.R. Snodgrass, P.C. as the independent registered public accounting firm for the fiscal year ending December 31, 2024, and conducting non-binding advisory votes on executive compensation and the frequency of such votes.
• The Board of Directors recommends voting for the election of the director nominees, for the ratification of S.R. Snodgrass, P.C., for the approval of the compensation of the named executive officers, and for a one-year frequency of the shareholder vote on executive compensation.
• The proxy statement and related materials were first made available on March 7, 2024.
• As of the record date, February 26, 2024, there were 4,706,994 shares of common stock outstanding.

Sentiment

Score: 6

Explanation: The document is largely factual and procedural, with some positive elements related to community involvement and recognition, but also acknowledges a decrease in net income and earnings per share. The sentiment is neutral to slightly positive.

Positives

• The Board of Directors is committed to strong corporate governance, as evidenced by the various committees and policies in place.
• The company supports environmental awareness and sustainability through various initiatives.
• The company actively supports the communities it serves through volunteerism, corporate sponsorships, and financial literacy programs.
• The company was recognized by American Banker as one of the top-performing community banks nationwide for the 16th consecutive year, ranking third in Pennsylvania and 54th nationally.
• The company expanded its market presence with the opening of its 39th office in the Williamsport region.
• The company successfully concluded the acquisition of Huntingdon Valley Bank, integrating five additional full-service community offices.
• The company was inducted into the American Bankers Association Nasdaq Community Bank Index (ABAQ).

Negatives

• Net income for 2023 was $17.8 million, which was $11.2 million less than 2022's net income of $29.1 million, primarily due to one-time costs associated with the acquisition of Huntingdon Valley Bancorp, Inc. (HVB).
• Higher market interest rates resulted in additional pressure on the company's deposit pricing during 2023 which also impacted the company's margin.
• Basic earnings per share of $4.06 for 2023 compared to basic earnings per share of $7.25 for 2022.
• Return on equity for the years ended December 31, 2023 and 2022 was 6.52% and 12.98%, respectively, while return on assets was 0.66% and 1.29%, respectively.

Risks

• The company faces risks including credit risk, interest rate risk, liquidity risk, operational risk, strategic risk, and reputation risk.
• The company's future performance is subject to various economic and market conditions.

Future Outlook

The company does not provide specific forward-looking financial guidance in this document.

Management Comments

• The Board of Directors concluded that Mr. Black continues to exhibit strong business and leadership skills and is moving the Company in a direction that continues to enhance long-term shareholder value.
• Mr. Black conducted a performance review of our other named executive officers and determined that the officers continue to contribute greatly to the success of the Company and its affiliates.

Industry Context

The announcement reflects standard corporate governance practices for publicly traded companies, including holding annual shareholder meetings and providing disclosures related to executive compensation and related party transactions. The company operates in the community banking sector, which is characterized by relationship-based lending and deposit gathering.

Comparison to Industry Standards

• The peer group for executive compensation includes community banks and thrifts in Pennsylvania and New York with total assets between $1.4 billion and $3.7 billion.
• The company's compensation practices are benchmarked against these peers to ensure competitiveness.
• The company's performance is compared to regional peers in terms of return on equity, efficiency ratio, net interest income growth, non-performing assets to total assets, and net charge-offs to average total loans.

Management Changes

Corporate Governance

Related Party Transactions

• The Bank makes loans to persons affiliated with the Company and the Bank in the normal course of its business.
• During 2023, all Bank loans to related persons were made in the ordinary course of business, made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with other persons not related to the Bank and did not involve more than the normal risk of collectability or present other unfavorable features.
• The Company's policies require that any loan to a director that would cause his/her aggregate loan relationship to exceed $300,000 be approved in advance by a majority of the disinterested members of the Board of Directors.
• Any loan to an executive officer in the aggregate greater than $100,000 must be approved in advance by a majority vote of the Board of Directors.

Stakeholder Impact

• Shareholders are asked to vote on key proposals related to the company's governance and executive compensation.
• Employees are impacted by the company's compensation and benefits programs.
• The company's community involvement initiatives benefit local communities.
• Customers are served through the company's banking operations and community support.

Next Steps

• Shareholders should review the proxy materials and vote on the proposals.
• The company will hold the Annual Meeting on April 16, 2024.
• The Compensation/Human Resource Committee expects the plan calculations to be made and awards determined (if any) by June 2024.

Key Dates

Keywords

Annual Meeting, Shareholders, Proxy Statement, Board of Directors, Executive Compensation, Corporate Governance, Director Election, S.R. Snodgrass, Audit Firm, Citizens Financial Services, Banking