Acquisition and Market Expansion - Citizens Financial Services, Inc. completed the acquisition of HV Bancorp, Inc. on June 16, 2023, enhancing its market presence[11] - The Company acquired HV Bancorp, Inc. and its subsidiary, Huntingdon Valley Bank, on June 16, 2023, expanding its market presence[11] - The Bank operates 38 full-service offices and has expanded into new markets, including a limited production office in Georgetown, Delaware, opened in 2024[14] - The Bank operates 38 full-service offices and has opened a limited production office in Georgetown, Delaware, enhancing its geographic reach[14] Employee Diversity and Development - As of December 31, 2024, the Company had a total of 410 employees, with approximately 70% being women, indicating a strong commitment to diversity[18] - As of December 31, 2024, the Company had 410 employees, with approximately 70% being women, indicating a diverse workforce[18] - The Company emphasizes employee development, with 19% of staff having been with the organization for over 15 years, showcasing strong employee retention[19] - The Company emphasizes employee development and retention, with 19% of staff having been with the Company for over fifteen years[19] Regulatory Compliance and Capital Standards - The Company maintains a common equity Tier 1 capital ratio of at least 4.5%, in compliance with federal regulations[28] - Federal regulations require the Company to meet minimum capital standards effective January 1, 2015, aligning with Basel Committee recommendations[27] - The capital standards require a minimum common equity Tier 1 capital ratio of 4.5%, Tier 1 capital ratio of 6.0%, and total capital ratio of 8.0% to risk-weighted assets[28] - The Bank's leverage ratio was 8.99%, which is below the "well-capitalized" threshold under the community bank leverage ratio framework[33] - An institution is deemed "well capitalized" if it has a total risk-based capital ratio of 10.0% or greater, a Tier 1 risk-based capital ratio of 8.0% or greater, and a leverage ratio of 5.0% or greater[34] - The Bank must file a capital restoration plan with the FRB within 45 days if deemed "undercapitalized" or worse[35] - The Company is subject to extensive regulation by the Pennsylvania Department of Banking and the Federal Reserve System, ensuring compliance and operational integrity[21] - The Company is subject to extensive regulation by the Federal Reserve System and the Pennsylvania Department of Banking, impacting its operational framework[21] Community Engagement and Credit Needs - The Bank's most recent Community Reinvestment Act rating was "Satisfactory," reflecting its commitment to meeting community credit needs[26] - The Bank's market areas include diverse economies, such as manufacturing and retail trade, which are crucial for its growth strategy[15] Competitive Landscape - The Bank's competitive landscape includes local community banks and larger regional banks, necessitating strategic pricing and service differentiation[17] - The Company is engaged in a competitive banking environment, facing pressures from local community banks and larger regional banks[17] Dividend Policies and Financial Regulations - The Bank could have declared approximately $29.9 million in dividends during 2024 without prior regulatory approval, plus net profits earned to the date of declaration[40] - The Dodd-Frank Act mandates that no institution may pay a dividend if it is in default of its assessments[44] - The FRB's policies require that dividends should be paid only out of current earnings and if the prospective rate of earnings retention appears consistent with the organization's capital needs[58] - The Dodd-Frank Act increased the minimum target Deposit Insurance Fund (DIF) ratio from 1.15% to 1.35% of estimated insured deposits[45] - Under the Dodd-Frank Act, deposit insurance per account owner is set at $250,000 for all types of accounts[44] - The Bank is required to maintain average daily reserves equal to 3% on aggregate transaction accounts of up to $644.0 million, plus 10% on the remainder[48] - The Federal Deposit Insurance Act holds depository institutions liable for losses related to defaults, which could apply if the company had a separate depository institution[59] Economic Influences - The Company’s operations are influenced by the Federal Reserve's monetary policies, which affect interest rates and overall economic growth[62] - The FRB's monetary policies significantly influence the banking industry's earnings and growth, affecting interest rates on loans and deposits[62] - The company cannot predict changes in interest rates, deposit levels, or loan demand due to the dynamic economic conditions and regulatory actions[63]
Citizens Financial Services(CZFS) - 2024 Q4 - Annual Report