Financial Performance - Net income for the first nine months of 2024 was $19,835,000, an increase of 93.1% compared to $10,271,000 in the same period last year[149]. - Basic earnings per share for the first nine months of 2024 were $4.18, representing a 75.6% increase from $2.38 in the prior year[149]. - Annualized return on assets for the nine months of 2024 was 0.88%, compared to 0.53% for the same period last year[149]. - Annualized return on equity for the nine months of 2024 was 8.45%, up from 6.56% in the prior year[149]. - Non-interest income for the nine months ended September 30, 2024, totaled $12,062,000, an increase of $3,946,000 compared to the same period in 2023[182]. - Gains on loans sold increased by 144.5% to $1,648,000 for the nine months ended September 30, 2024, compared to $674,000 in the same period last year[182]. - The provision for income taxes for the nine months ended September 30, 2024, was $4,304,000, compared to $2,020,000 for the same period in 2023, reflecting an increase in income before tax[190]. - The effective tax rate for the first nine months of 2024 was 17.8%, compared to 16.4% for the same period in 2023[190]. Interest Income and Expenses - Net interest income for the first nine months of 2024 was $63,582,000, an increase of $5,177,000 or 8.9% compared to the same period in 2023[152]. - Net interest income after the provision for credit losses was $60,995,000 in the first nine months of 2024, compared to $53,077,000 in the same period last year[152]. - Total interest income rose to $38,689 thousand for the three months ended September 30, 2024, up from $36,689 thousand in 2023, representing an increase of approximately 5.5%[157]. - Total interest expense increased to $17,365 thousand for the three months ended September 30, 2024, compared to $14,285 thousand in 2023, reflecting a rise of about 21.5%[157]. - Total interest expense increased by $20,741,000 for the nine months ended September 30, 2024, due to higher volume and rates on interest-bearing liabilities[170]. - The average rate paid on interest-bearing liabilities increased from 1.83% to 3.02%, driven by Federal Reserve interest rate increases[170]. - Tax equivalent net interest margin decreased from 3.23% for the first nine months of 2023 to 3.09% for the comparable period in 2024[159]. Asset and Loan Growth - Total assets increased to $2,996,076 thousand, up from $2,589,610 thousand, representing a growth of approximately 15.7%[154]. - Total loans, net of discount, reached $2,285,323 thousand, up from $1,908,621 thousand, marking an increase of approximately 19.7%[154]. - Total loans reached $2.33 billion as of September 30, 2024, an increase from $2.25 billion at December 31, 2023, with a notable rise in consumer loans by 133.3%[201]. - Loans held for sale increased by $4.1 million to $13.5 million as of September 30, 2024, due to higher residential home sales activity in the third quarter[200]. - The average balance of commercial loans increased by $201.4 million, resulting in a positive impact of $9,361,000 on total interest income due to volume[167]. Credit Quality and Losses - The provision for credit losses for the first nine months of 2024 was $2,587,000, down from $5,328,000 in the same period of 2023[152]. - The allowance for credit losses on loans is $21,695,000, which is 0.93% of total loans, reflecting a slight increase from $21,153,000 or 0.94% as of December 31, 2023[211]. - Non-performing loans increased to $21,559,000 as of September 30, 2024, from $12,703,000 on December 31, 2023, representing a 69.7% increase[225]. - Non-accruing loans rose to $20,858,000 as of September 30, 2024, compared to $12,187,000 at the end of 2023, indicating a significant increase in loan quality issues[225]. - The total non-performing assets reached $24,045,000 as of September 30, 2024, up from $13,177,000 at the end of 2023, reflecting a substantial rise in distressed assets[225]. Capital and Equity - Stockholders' equity increased to $312,900 thousand from $263,016 thousand, reflecting a growth of approximately 19.0%[154]. - As of September 30, 2024, total stockholders' equity increased by $18.99 million, or 6.8%, reaching $298.7 million compared to $279.7 million at December 31, 2023[242]. - The leverage ratio under the community bank leverage ratio (CBLR) framework was 8.96% as of September 30, 2024, below the 9.0% requirement to be considered "well-capitalized"[245]. - Total Capital to Risk Weighted Assets for the Company was $278,944, representing a ratio of 11.55% as of September 30, 2024[247]. - Tier 1 Capital to Risk Weighted Assets for the Company was $237,796, with a ratio of 9.85% as of September 30, 2024[247]. Deposits and Funding - Total deposits rose by $128.7 million to $2.45 billion since year-end 2023, while borrowed funds decreased by $90.3 million to $231.7 million[45]. - Interest-bearing deposits totaled $1,916,401 thousand, up from $1,592,210 thousand, indicating a growth of approximately 20.4%[154]. - The average balance of interest-bearing deposits increased by $346.1 million, resulting in an increase in interest expense of $6,200,000[172]. - Borrowed funds decreased to $231.7 million as of September 30, 2024, from $322.0 million at December 31, 2023, due to a decrease in loans and a seasonal increase in deposits[239]. Risk Management and Strategy - Management continues to implement heightened risk management procedures for its commercial real estate portfolio due to regulatory guidance on concentration risks[205]. - The company utilizes a disciplined loan review process, including external independent reviews of at least 50% of the commercial loan portfolio annually[220]. - The company has not originated loans to companies performing actual drilling and exploration activities, focusing instead on service industry customers[209]. - The company recognizes fee income for servicing certain sold loans, contributing to non-interest income[210]. - The company anticipates recognizing an aggregate of $8.2 million of tax credits over the next 12 years from investments in low-income housing projects[192].
Citizens Financial Services(CZFS) - 2024 Q3 - Quarterly Report