UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2025 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from_____________________ to ___________________ Commission file number 0-13222 CITIZENS FINANCIAL SERVICES, INC. (Exact name of registrant as specified in its charter) ( ...

Financial Performance - Net income for the first nine months of 2025 was $26,089,000, an increase of $6,254,000 or 31.5% compared to the same period in 2024[2] - Net income for Q3 2025 was $10,005,000, an increase of 32.7% from $7,536,000 in Q3 2024[15] - For the three months ended September 30, 2025, Citizens Financial Services, Inc. reported net income of $10,005,000, an increase of 18.2% compared to $8,463,000 for the previous quarter[16] - Net income for the three months ended September 30, 2025, was $10,005 thousand, compared to $7,536 thousand for the same period in 2024, reflecting a year-over-year increase of 32.6%[24] Earnings and Dividends - Basic earnings per share for the first nine months of 2025 was $5.44, compared to $4.14 for the same period in 2024[4] - Earnings per share (diluted) rose to $2.09 in Q3 2025, up from $1.57 in Q3 2024, reflecting a 33.1% increase[15] - The company's diluted earnings per share rose to $2.09, compared to $1.76 in the previous quarter, marking a 18.8% increase[16] - A cash dividend of $0.50 per share was declared, representing a 3.1% increase over the previous year's dividend[9] - Cash dividends paid per share increased to $0.500 in Q3 2025 from $0.485 in Q3 2024[15] Asset Quality - Non-performing assets decreased by $5,618,000 or 19.6% since December 31, 2024, totaling $22,994,000 as of September 30, 2025[4] - Non-performing assets decreased to $22,994,000 from $24,045,000 year-over-year, indicating improved asset quality[13] - Non-performing loans decreased to $20,560 thousand from $24,942 thousand in June 2025, a reduction of 17.5%[23] Interest Income and Expenses - Net interest income before the provision for credit losses for the nine months ended September 30, 2025 was $71,790,000, a 12.9% increase from $63,582,000 in 2024[2] - Net interest income for the same period was $25,140,000, up 6.3% from $23,648,000 in the prior quarter[16] - Total interest income for the three months ended September 30, 2025, was $40,254 thousand, compared to $38,689 thousand in 2024, an increase of 4.05%[25] - Net interest income (fully taxable equivalent) for the three months ended September 30, 2025, was $25,425 thousand, up from $21,570 thousand in 2024, reflecting a growth of 18%[25] Credit Losses - The provision for credit losses for the nine months ended September 30, 2025 was $1,875,000, a decrease of $712,000 from $2,587,000 in 2024[4] - The company reported a provision for credit losses of $500,000 in Q3 2025, compared to a release of $200,000 in Q3 2024[15] - The provision for credit losses was $500,000, a decrease from $750,000 in the previous quarter, indicating improved credit quality[16] Assets and Liabilities - Total assets as of September 30, 2025 were $3.06 billion, compared to $3.03 billion at December 31, 2024[8] - Total assets as of September 30, 2025, reached $3,056,421,000, compared to $3,025,724,000 at the end of 2024[14] - Total assets increased to $3,019,016,000, reflecting a growth from $3,003,434,000 in the previous quarter[17] - Total loans increased to $2,335,388 thousand as of September 30, 2025, up from $2,241,755 thousand in June 2025, representing a growth of 4.19%[22] - The allowance for credit losses on loans was $22,454,000 as of September 30, 2025, an increase of $755,000 from December 31, 2024[8] - The allowance for credit losses on loans increased to $22,454 thousand as of September 30, 2025, from $22,109 thousand in June 2025, indicating a rise of 1.55%[23] Return on Equity and Assets - Return on average equity for the nine months ended September 30, 2025 was 11.15%, up from 9.23% in the same period of 2024[2] - Return on average assets (annualized) improved to 1.33% in Q3 2025 from 1.01% in Q3 2024[13] - Annualized return on average assets (GAAP) improved to 1.33% for the three months ended September 30, 2025, compared to 1.01% in the same period of 2024[24] Trust Assets - Trust assets under management grew to $194,325,000, up from $181,052,000 year-over-year[13]

Core Insights - Citizens Financial Services, Inc. reported a significant increase in net income for the first nine months of 2025, totaling $26.1 million, which is a 31.5% increase compared to the same period in 2024 [5][9] - The company experienced growth in net interest income, driven by an increase in investment income and a decrease in interest expense, leading to a net interest margin increase from 3.09% to 3.44% [5][9] - The effective tax rate for the first nine months of 2025 was 18.9%, up from 17.8% in the same period of 2024 [5] Financial Performance - For the nine months ended September 30, 2025, net income was $26,089,000, an increase of $6,254,000 from $19,835,000 in 2024, with basic earnings per share rising from $4.14 to $5.44 [5][9] - The annualized return on average equity improved to 11.15% for the nine months ended September 30, 2025, compared to 9.23% in 2024 [5][9] - Non-performing assets decreased by $5,618,000, or 19.6%, since December 31, 2024, totaling $22,994,000 as of September 30, 2025 [5][9] Income and Expenses - Total non-interest income for the nine months ended September 30, 2025, was $10,946,000, down from $12,062,000 in 2024, primarily due to the absence of gains from the sale of the Braavo division [5][9] - Total non-interest expenses decreased slightly to $48,709,000 from $48,918,000 in the previous year, despite an increase in salary and benefit costs [5][9] - The provision for credit losses for the nine months ended September 30, 2025, was $1,875,000, a decrease from $2,587,000 in 2024 [5][9] Balance Sheet Highlights - As of September 30, 2025, total assets were $3.06 billion, a slight increase from $3.03 billion at December 31, 2024 [9][10] - Deposits increased by $29.2 million to $2.41 billion, while net loans totaled $2.31 billion, reflecting a modest increase [9][10] - Stockholders' equity rose to $327.7 million from $299.7 million at the end of 2024, driven by net income and a decrease in accumulated other comprehensive loss [9][10] Dividend Information - The Board of Directors declared a cash dividend of $0.50 per share, representing a 3.1% increase over the previous year's dividend of $0.485 per share [6]

Group 1 - Crude Value Insights provides an investment service and community focused on the oil and natural gas sector [1] - The service emphasizes cash flow and identifies companies that generate it, highlighting their value and growth prospects [1] - Subscribers have access to a model account with over 50 stocks, detailed cash flow analyses of exploration and production firms, and live discussions about the sector [1] Group 2 - A two-week free trial is available for new subscribers, promoting engagement with the oil and gas market [2]

Group 1 - Citizens Financial Services, Inc. (NASDAQ: CZFS) is a regional bank in Pennsylvania operating as First Citizens Community Bank, with a focus on uplisting [1] - The investment group European Small Cap Ideas specializes in high-quality small-cap investment opportunities in Europe, emphasizing capital gains and dividend income [1] - The group offers two model portfolios: the European Small Cap Ideas portfolio and the European REIT Portfolio, along with weekly updates and educational content [1]

Group 1 - Citizens Financial Services, Inc. (NASDAQ: CZFS) is a regional bank in Pennsylvania operating as First Citizens Community Bank, with a focus on uplisting opportunities [1] - The investment group European Small Cap Ideas specializes in high-quality small-cap investment opportunities in Europe, emphasizing capital gains and dividend income [1] - The group offers two model portfolios: the European Small Cap Ideas portfolio and the European REIT Portfolio, along with weekly updates and educational content [1]

Core Viewpoint - Citizens Financial Services (CZFS) has been upgraded to a Zacks Rank 1 (Strong Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][4]. Earnings Estimates and Revisions - The Zacks Consensus Estimate for Citizens Financial Services is projected at $6.90 per share for the fiscal year ending December 2025, showing no year-over-year change [9]. - Over the past three months, analysts have raised their earnings estimates for Citizens Financial Services by 5.5% [9]. Zacks Rating System - The Zacks rating system is based solely on a company's changing earnings picture, which is tracked through the Zacks Consensus Estimate [2]. - The system classifies stocks into five groups, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [8]. - Only the top 5% of Zacks-covered stocks receive a "Strong Buy" rating, indicating superior earnings estimate revisions [10][11]. Market Implications - The upgrade to Zacks Rank 1 suggests that Citizens Financial Services is positioned for potential price increases due to improved earnings outlook [4][11]. - Rising earnings estimates are correlated with stock price movements, as institutional investors adjust their valuations based on these estimates [5][6].

Group 1: Motorcar Parts of America, Inc. (MPAA) - The company specializes in heavy-duty truck, industrial, marine, and agricultural application replacement parts [1] - It has a Zacks Rank of 1 and a 5.7% increase in the Zacks Consensus Estimate for current year earnings over the last 60 days [1] - The price-to-earnings ratio (P/E) is 6.71, significantly lower than the industry average of 14.70, and it possesses a Value Score of A [2] Group 2: OppFi Inc. (OPFI) - OppFi operates as a tech-enabled digital finance platform [2] - It also holds a Zacks Rank of 1 with a 15.5% increase in the Zacks Consensus Estimate for current year earnings over the last 60 days [2] - The P/E ratio is 7.58, compared to the industry average of 17.90, and it has a Value Score of A [2] Group 3: Citizens Financial Services, Inc. (CZFS) - The company is a bank holding company for First Citizens Community Bank [3] - It carries a Zacks Rank of 1 and has seen a 5.5% increase in the Zacks Consensus Estimate for current year earnings over the last 60 days [3] - The P/E ratio stands at 7.75, lower than the industry average of 10.10, and it possesses a Value Score of B [3]

Part I FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for Citizens Financial Services, Inc. as of June 30, 2025, including balance sheet, income, comprehensive income, equity, and cash flow statements, with detailed notes [Consolidated Balance Sheet](index=3&type=section&id=Consolidated%20Balance%20Sheet) Total assets decreased to $2.97 billion from $3.03 billion at year-end 2024, driven by reduced net loans, while stockholders' equity increased to $313.7 million Consolidated Balance Sheet Summary (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$2,967,274** | **$3,025,724** | | Cash and cash equivalents | $49,484 | $42,202 | | Available-for-sale securities | $431,649 | $425,912 | | Loans (net of allowance) | $2,219,646 | $2,291,543 | | **Total Liabilities** | **$2,653,621** | **$2,725,990** | | Total deposits | $2,292,662 | $2,382,028 | | Borrowed funds | $313,219 | $297,721 | | **Total Stockholders' Equity** | **$313,653** | **$299,734** | [Consolidated Statement of Income](index=4&type=section&id=Consolidated%20Statement%20of%20Income) Net income for the six months ended June 30, 2025, increased to $16.1 million from $12.3 million, with diluted EPS rising to $3.35 Statement of Income Highlights (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $23,648 | $21,300 | $46,650 | $42,258 | | Provision for credit losses | $750 | $2,002 | $1,375 | $2,787 | | **Net Income** | **$8,463** | **$5,275** | **$16,084** | **$12,299** | | **Net Income - Diluted (per share)** | **$1.76** | **$1.10** | **$3.35** | **$2.56** | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Detailed disclosures cover accounting policies, investment and loan portfolios, allowance for credit losses, goodwill, fair value, and segment reporting - The loan portfolio is diversified, with commercial real estate representing the largest segment at **$1.15 billion** as of June 30, 2025[34](index=34&type=chunk) Allowance for Credit Losses Activity - Six Months Ended June 30, 2025 (in thousands) | Description | Amount | | :--- | :--- | | Balance at December 31, 2024 | $22,375 | | Net loans charged-off | ($727) | | Provision for credit losses | $1,375 | | **Balance at June 30, 2025** | **$23,023** | - As of June 30, 2025, total non-performing loans were **$24.9 million**, a decrease from **$26.0 million** at year-end 2024[44](index=44&type=chunk) - The company operates as a single reportable segment: Community Banking All operations are domestic[95](index=95&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance and condition, highlighting a 30.8% increase in net income for the first six months of 2025, driven by higher net interest income and lower credit loss provision [Results of Operations](index=38&type=section&id=Results%20of%20Operations) Net income for the first six months of 2025 increased to $16.1 million ($3.35 per share) from $12.3 million ($2.56 per share) in the prior year, primarily due to higher net interest income and lower credit loss provision Key Performance Metrics - Six Months Ended June 30 | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net Income (in thousands) | $16,084 | $12,299 | | Basic EPS | $3.35 | $2.56 | | Annualized Return on Assets | 1.07% | 0.83% | | Annualized Return on Equity | 10.44% | 8.67% | - Net interest income for the first six months of 2025 increased by **10.4%** to **$46.7 million**, compared to the same period in 2024[121](index=121&type=chunk) - The provision for credit losses decreased to **$1.375 million** for the first half of 2025, down from **$2.787 million** in the first half of 2024, primarily due to improved performance of certain commercial loans acquired from HVBC[144](index=144&type=chunk) [Financial Condition](index=47&type=section&id=Financial%20Condition) Total assets decreased by $58.5 million to $2.97 billion at June 30, 2025, mainly due to a $71.5 million decrease in total loans, while stockholders' equity grew by $13.9 million to $313.7 million - Total loans decreased by **$71.5 million (3.1%)** since year-end 2024, largely due to the seasonal nature of the student loan portfolio[165](index=165&type=chunk)[166](index=166&type=chunk) - The allowance for credit losses to total loans increased to **0.99%** at June 30, 2025, from **0.94%** at December 31, 2024[173](index=173&type=chunk) - Deposits decreased by **$89.4 million**, driven by outflows from state and political organizations and a **$33.1 million** reduction in brokered deposits[189](index=189&type=chunk) - The Bank's leverage ratio under the Community Bank Leverage Ratio (CBLR) framework was **9.22%** as of June 30, 2025, meeting the **9.0%** requirement to be considered 'well-capitalized'[196](index=196&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=59&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk, with a simulation model indicating a 100 basis point rate increase would decrease one-year net interest income by 2.89%, while a decrease would increase it by 2.43% Interest Rate Shock Analysis on Net Interest Income (as of June 30, 2025) | Change in Rates (bps) | % Change In Prospective Net Interest Income | | :--- | :--- | | +400 | (11.52)% | | +300 | (8.97)% | | +200 | (6.10)% | | +100 | (2.89)% | | **Base** | **-** | | -100 | 2.43% | | -200 | 4.06% | | -300 | 5.60% | | -400 | 10.26% | [Item 4. Controls and Procedures](index=60&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting during the quarter - The principal executive officer and principal financial officer concluded that the Company's disclosure controls and procedures were effective as of the end of the reporting period[210](index=210&type=chunk) - No material changes were made to the Company's internal control over financial reporting during the quarter ended June 30, 2025[211](index=211&type=chunk) Part II OTHER INFORMATION [Item 1. Legal Proceedings](index=61&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no pending or threatened litigation that would have a material adverse effect on its consolidated financial position - Management is not aware of any pending or threatened litigation that would materially and adversely affect the company's financial position[212](index=212&type=chunk) [Item 1A. Risk Factors](index=61&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - The risk factors of the Company have not changed materially from those reported in the 2024 Annual Report on Form 10-K[213](index=213&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=61&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) During the second quarter of 2025, the company repurchased 821 shares at an average price of $60.25 per share, with 144,418 shares remaining available under the current authorization Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | - | $0.00 | | May 2025 | - | $0.00 | | June 2025 | 821 | $60.25 | | **Total** | **821** | **$58.15** | [Other Items (3, 4, 5, 6)](index=61&type=section&id=Other%20Items%20(3%2C%204%2C%205%2C%206)) This section confirms no defaults upon senior securities, no mine safety disclosures, and no Rule 10b5-1 trading plan adoptions or terminations by directors or executive officers during the quarter, along with a list of exhibits - Items 3 (Defaults Upon Senior Securities) and 4 (Mine Safety Disclosure) are not applicable[216](index=216&type=chunk)[218](index=218&type=chunk) - No directors or executive officers adopted or terminated any Rule 10b5-1 trading arrangements during the quarter[219](index=219&type=chunk)

Group 1: Stock Recommendations - Quad Graphics (QUAD) has seen a 7.9% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days and offers print and multichannel solutions [1] - Citizens Financial Services (CZFS) has experienced a 5.5% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days and has a dividend yield of 3.7%, above the industry average of 2.7% [2] - Farmers & Merchants Bancorp (FMAO) has reported a 6.6% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days and has a dividend yield of 3.6%, also above the industry average of 2.7% [3] Group 2: Industry Insights - The average dividend yield for the industry is notably low at 0.0% for print and related solutions, while the banking sector shows an average of 2.7% [2][3]