Filed by Citizens Financial Services, Inc.
(Commission File No. 001-41410)
pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
under the Securities Exchange Act of 1934
Subject Company: HV Bancorp, Inc.
(Commission File No. 001-37981)
The following presentation was made available on the Citizens Financial Services, Inc. website on October 19, 2022.
INVESTOR PRESENTATION: STRATEGIC ACQUISITION OF HV BANCORP, INC.
2 Legal Disclosures Forward-Looking Statements This presentation contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements about CZFS and HVBC and their industry involve substantial risks and uncertainties. Statements other than statements of current or historical fact, including statements regarding CZFS’ or HVBC’s future financial condition, results of operations, business plans, liquidity, cash flows, projected costs, and the impact of any laws or regulations applicable to CZFS or HVBC, are forward-looking statements. Words such as “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “intends,” “plans,” “projects,” “may,” “will,” “should” and other similar expressions are intended to identify these forward-looking statements. Such statements are subject to factors that could cause actual results to differ materially from anticipated results. Among the risks and uncertainties that could cause actual results to differ from those described in the forward-looking statements include, but are not limited to the following: (1) the businesses of CZFS and HVBC may not be combined successfully, or such combination may take longer to accomplish than expected; (2) the cost savings from the merger may not be fully realized or may take longer to realize than expected; (3) operating costs, customer loss and business disruption following the merger, including adverse effects on relationships with employees, may be greater than expected; (4) governmental approvals of the merger may not be obtained, or adverse regulatory conditions may be imposed in connection with governmental approvals of the merger; (5) the shareholders of HVBC may fail to approve the merger; (6) the possibility that the merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events; (7) diversion of management’s attention from ongoing business operations and opportunities; (8) the possibility that the parties may be unable to achieve expected synergies and operating efficiencies in the merger within the expected timeframes or at all and to successfully integrate HVBC’s operations and those of CZFS; (9) such integration may be more difficult, time consuming or costly than expected; (10) revenues following the proposed transaction may be lower than expected; (11) CZFS’s and HVBC’s success in executing their respective business plans and strategies and managing the risks involved in the foregoing; (12) the dilution caused by CZFS’s issuance of additional shares of its capital stock in connection with the proposed transaction; (13) changes in general economic conditions, including changes in market interest rates and changes in monetary and fiscal policies of the federal government; (14) legislative and regulatory changes; and (15) uncertainty as to the extent of the duration, scope, and impacts of the COVID-19 pandemic on CZFS, HVBC and the proposed transaction. Further information about these and other relevant risks and uncertainties may be found in CZFS’ and HVBC’s respective Annual Reports on Form 10-K for the fiscal year ended December 31, 2021 and in subsequent filings with the Securities and Exchange Commission (“SEC”). Forward-looking statements speak only as of the date they are made. CZFS and HVBC do not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. You are cautioned not to place undue reliance on these forward-looking statements.
3 Legal Disclosures Additional Information and Where to Find it In connection with the proposed transaction, CZFS expects to file with the SEC a registration statement on Form S-4 that will include a proxy statement of HVBC that also constitutes a prospectus of CZFS (the “proxy statement/prospectus”), which proxy statement/prospectus will be mailed or otherwise disseminated to HVBC’s shareholders when it becomes available. CZFS and HVBC also plan to file other relevant documents with the SEC regarding the proposed transaction. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT ON FORM S-4, THE PROXY STATEMENT/PROSPECTUS TO BE INCLUDED WITHIN THE REGISTRATION STATEMENT ON FORM S-4, AND ANY OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC WHEN THEY BECOME AVAILABLE, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT CZFS, HVBC AND THE PROPOSED TRANSACTION. You may obtain a free copy of the registration statement, including the proxy statement/prospectus (when it becomes available) and other relevant documents filed by CZFS and HVBC with the SEC, without charge, at the SEC’s website at www.sec.gov. Copies of the documents filed by CZFS with the SEC will be available free of charge on CZFS’ website at www.firstcitizensbank.com or by directing a request to Citizens Financial Services, Inc., 15 S. Main Street, Mansfield, PA 16933, attention: Corporate Secretary (570) 622-2121. Copies of the documents filed by HVBC with the SEC will be available free of charge on HVBC’s website at www.myhvb.com or by directing a request to HV Bancorp, Inc., 2005 South Easton Road, Suite 304, Doylestown, PA 18901, attention: Corporate Secretary (267) 280-4000. No Offer This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended, and otherwise in accordance with applicable law. Participants in Solicitation CZFS and HVBC and their respective directors and executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. You can find information about CZFS’ executive officers and directors in CZFS’ definitive proxy statement filed with the SEC on March 10, 2022. You can find information about HVBC’s executive officers and directors in HVBC’s definitive proxy statement filed with the SEC on April 14, 2022. Additional information regarding the interests of such potential participants will be included in the proxy statement/prospectus and other relevant documents filed with the SEC when they become available. You may obtain free copies of these documents from CZFS or HVBC using the sources indicated above.
4 Total Assets $570,647 Total Loans $391,338 Total Deposits $481,510 Loans / Deposits 81.27% % of Core Deposits(2) 96.81% TCE / TA 7.22% Bank Leverage Ratio 9.36% Bank CET 1 Ratio 12.20% Bank Tier 1 Ratio 12.20% Bank TRBC Ratio 12.90% Net Interest Margin 3.34% ROAA 0.46% ROAE 6.23% Efficiency Ratio 77.80% Net Income $640 NPAs/Assets 0.49% LLR/Gross Loans 0.73% NCOs/Average Loans 0.10% All rankings shown exclude banks with total assets greater than $10.0 billion Core deposits defined as total deposits less time deposits > $100k Note: Dollars in thousands Note: Financial data as of June 30, 2022 Source: S&P Capital IQ Pro Overview of HV Bancorp, Inc. Well Positioned Market Footprint(1) Market Rank HVBC is the holding Company of Huntingdon Valley Bank, which was founded in 1871 as a mutual institution and converted to a stock institution in 2017 HVBC is led by Travis Thompson, the Chairman and CEO, who has overseen HVBC’s transformation since he joined in 2013 HVBC has the 19th largest deposit market share in the Philadelphia MSA(1) HVBC has seen a total asset Compound Annual Growth Rate (“CAGR”) of 24.0% since 2017 Burlington County, NJ #8 Philadelphia County, PA #13 Montgomery County, PA #7 Bucks County, PA #13 Capital Summary Balance Sheet Profitability (06/30/2022) Asset Quality
5 First Citizens & Huntingdon Valley Combination of Like-Minded Institutions Headquarters: Mansfield, PA Doylestown, PA Executive Management: Randall E. Black Travis J. Thompson Assets: $2.2B $570.6M Loans: $1.6B $391.3M Deposits: $1.9B $481.5M Loans / Deposits (%): 84.9% 81.3% LTM ROAA (%): 1.31% 0.49% LTM ROAE (%): 12.92% 6.55% LTM Efficiency Ratio (%): 54.4% 84.6% LTM NIM (%): 3.40% 3.00% NPAs/Assets (%): 0.67% 0.49% Reserves/Loans (%): 1.10% 0.73% Note: Financial data shown as of June 30, 2022
6 Compelling Strategic Rationale Proactive Transaction Pro forma Company approaching $3B in assets – immediate loan growth of ~$400M(1) Addition of experienced and talented pool of community banking leaders Presents strong market entrance into Southeastern Pennsylvania markets and is geographically complementary to prior acquisitions in Delaware markets HVBC is in the middle of a commercial bank transformation – doubling total assets since 2017 and recomposing its balance sheet Attractive pro forma loan and deposit mix expected to enhance future banking relationships and better position the pro forma Company in the current interest rate environment Strategically Compelling Accretion/dilution and earn-back metrics are within market acceptable guardrails Continues to establish CZFS as the consolidator of choice in its markets Acquisition with ~95% pay-to-trade ratio utilizes strong CZFS currency(2) Pro forma market capitalization positions for Russell 3000 anticipated participation in 2023 Low Risk Transaction Retention of key players to the franchise – existing HVBC leadership will join the CZFS executive team and board of directors (1 Hold Co. / 2 Bank) HVBC will represent approximately 22.5% of the pro forma balance sheet Historical track record of strong asset quality as a result credit culture within HVBC Conservative merger-related assumptions Detailed credit review by internal CZFS team and independent external team Creating Scale and Enhancing Shareholder Value Financial data shown as of June 30, 2022 Based upon CZFS common stock closing price of $70.26 per share as of October 18, 2022
7 First Citizens & Huntingdon Valley Community-Focused Institution Attentive to Customers Disciplined Lending Practices Entrepreneur Sales Culture Preferred Community Bank in its Markets Serving the Local Business Community Employer of Choice Combination of Like-Minded Institutions Community-oriented banks providing exceptional levels of service and driving high levels of performance for shareholders
8 Transaction Citizens Financial Services, Inc. (“CZFS”) , parent of Frist Citizens Community Bank (“FCCB”), will acquire 100% of HV Bancorp, Inc.’s (“HVBC”) outstanding common stock Consideration Mix 80% stock / 20% cash Subject to shareholder election Per Share Consideration(1) $30.50 per share in cash per share of HVBC common stock; or 0.4000 shares of CZFS common stock per HVBC share $28.58 blended price per share based on CZFS stock price as of October 18, 2022(1) Aggregate Consideration $67.4 million at announcement(1) including cashed out options Price Protection Fixed exchange ratio 20% double trigger downside price protection Announcement Metrics Price to tangible equity of 163.4% on a fully diluted basis Price to tangible equity (excluding AOCI) of 153.1% on a fully diluted basis Price/LTM Earnings of 21.2x Premium to core deposits(2) of 4.0% Personnel Key executives from HVBC to join executive team at CZFS and First Citizens Community Bank, including HVBC CEO Travis Thompson and HVBC President Bob Marino Approvals & Close HVBC shareholder approval Will seek customary approvals from PA and the Federal Reserve Expected closing in the 1st half of 2023 Based upon CZFS common stock closing price of $70.26 per share as of October 18, 2022 Core deposits defined as total deposits less time deposits > $100k Note: Financial data shown as of June 30, 2022, unless otherwise noted Transaction Overview
9 Pro Forma Institution – A Premier Community Bank Based upon market data as of October 18, 2022 Combined annual earnings = HVBC LTM earnings + CZFS LTM earnings + after-tax estimated cost saves Note: Financial data shown as of June 30, 2022 Note: Dollars in thousands $2.8B Assets $2.0B Loans $2.4B Deposits $236M Tier 1 Capital $329M Market Cap.(1) 44 Locations 4 States 18 Counties 436 Team Members $35.6M Combined Annual Earnings(2)
10 Combined Group of Talented Bankers Randall Black CZFS CEO since 2004 Started his banking career at CZFS in 1993 Penn State Board of Trustees Director of the Federal Reserve Bank of Philadelphia Pennsylvania Bankers Association Board - 2nd Vice Chair 30 Mickey Jones CZFS Chief Operating Officer / Former CZFS CFO Current CZFS Board Member Certified public accountant 20 Travis Thompson HVBC CEO since 2013 / Chairman since 2016 Former practicing attorney in the community banking division of a prominent regional law firm 25 Robert J. Marino HVBC President and Vice Chairman Former Delaware Valley Region Market for Valley Green Bank President of Southeast Region for National Penn Founder of Spring Garden Lending 35 David Richards Jr. CZFS Executive Vice President and Central Market President Current CZFS board member Former CEO of Nittany Bank / Former EVP at S&T 40 Banker Community Bank Experience Years
11 Note: Bank level regulatory data shown Source: Company-Filed Documents HV Bancorp, Inc. – A Transformational Story Deposit Mix Loan Composition Huntingdon Valley Bank was formed in 1871 as a mutual bank - 150+ year legacy HVBC executed a successful stock conversion in 2017 and has been executing a transformation strategy to create a strong commercial bank since the conversion Loans and deposits now represent a more commercially focused bank 1Q2017 2Q2022 1-4 Family Res. 81.2% HELOC 4.7% Owner - Occ CRE 6.0% Other CRE 3.9% Multifamily 0.2% C&D C&I 2.6% 1.4% C&D 13.6% 1-4 Family Res. 47.1% HELOC 0.6% Owner - Occ CRE 6.6% Other CRE 10.8% Multifamily 4.6% C&I 15.6% Consr & Other 1.0% Non Int. Bearing 12.0% NOW Accts 40.2% MMDA & Sav 30.0% Time < $100k 9.2% Time > $100k 8.6% Non Int. Bearing 24.7% NOW Accts 39.0% MMDA & Sav 28.3% Time < $100k 4.9% Time > $100k 3.2%
12 Non Int. Bearing 21.5% NOW Accts 11.0% MMDA & Sav 53.4% $100k 6.4% Time < Time > $100k 7.7% Non Int. Bearing 24.7% NOW Accts 39.0% MMDA & Sav 28.3% Time < $100k 4.9% Time > $100k 3.2% Non Int. Bearing 20.7% NOW Accts 3.9% MMDA & Sav 59.8% $100k 6.7% Time < Time > $100k 8.9% C&D 6.3% 1-4 Family Res. 25.8% HELOC 1.5% Owner - Occ CRE 10.6% Other CRE 21.0% C&I 6.3% Consr & Other 5.8% Ag. 17.6% C&D 4.5% 1-4 Family Res. 20.3% HELOC 1.7% Owner - Occ CRE 11.6% Other CRE 23.6% Consr & Other 7.0% C&I 3.9% Multifamily 5.3% Ag. 22.2% C&D 13.6% 1-4 Family Res. 47.1% HELOC 0.6% Owner - Occ CRE 6.6% Multifamily 5.1% Other CRE 10.8% C&I 15.6% Consr & Other 1.0% Note: Bank level regulatory data shown Source: Company-Filed Documents $1.6B Total Complementary Loan & Deposit Mix Loan Composition Deposit Mix $0.4B Total $2.0B Total MRQ Yield: 4.49% Multifamily 4.6% MRQ Yield: 4.67% MRQ Yield: 4.53% Pro Forma $1.9B Total $0.5B Total $2.4B Total Cost of Total Deposits: 0.29% Cost of Total Deposits: 0.28% Cost of Total Deposits: 0.28%
13 Note: Southeastern Pennsylvania is defined as the following counties: Bucks, Chester, Delaware Montgomery & Philadelphia Note: Deposit market share data as of June 30, 2022 Source: S&P Capital IQ Pro; Company-provided information Extends Presence in Highly Attractive Southeastern PA Highly-Ranked Pro Forma Deposit Market Share Attractive Pro Forma Branch Franchise Footprint HVBC Branch Locations HVBC Residential Mortgage Locations HVBC Corporate Office & Mortgage Center HVBC Business Banking Division CZFS Locations Pro Forma Entity 9 513,373 0.3 25 12 HV Bancorp Inc. (PA) 8 485,598 0.3 26 13 Quaint Oak Bancorp Inc. (PA) 2 485,294 0.3 27 14 Citizens & Northern Corp. (PA) 4 474,800 0.3 28 15 Hatboro Federal Savings (PA) 4 452,076 0.3 29 16 William Penn Bancorp. (PA) 9 443,825 0.3 30 17 The Victory Bancorp (PA) 1 415,224 0.2 31 18 Tompkins Financial Corporation (NY) 7 400,962 0.2 32 19 First Resource Bancorp (PA) 3 381,637 0.2 33 20 Ambler Savings Bank (PA) 7 361,512 0.2 34 21 United Savings Bank (PA) 6 352,654 0.2 60 44 Citizens Financial Services (PA) 1 27,775 0.0 Total 1009 $171,529,245 100.0 Southeastern PA Region June 30, 2022 Under 2022 Rank $10B Rank Institution Branches Deposits ($000) Market Share (%) 15 4 Republic First Bancorp, Inc. (PA) 15 $1,946,940 1.1 16 5 Meridian Corp. (PA) 7 1,570,777 0.9 17 -- JPMorgan Chase & Co. (NY) 33 1,239,093 0.7 18 6 FNB Bancorp Inc. (PA) 15 1,239,060 0.7 19 7 QNB Corp. (PA) 10 1,212,606 0.7 20 8 S&T Bancorp, Inc. (PA) 14 891,139 0.5 21 9 Harleysville Financial Corp. (PA) 7 779,084 0.5 22 10 Malvern Bancorp, Inc. (PA) 8 663,214 0.4 23 -- Customers Bancorp, Inc. (PA) 6 578,379 0.3 24 11 Phoenixville Federal Bk & Tr (PA) 7 529,844 0.3 Acquisition of FNB Fredericksburg in Dec 2015 Acquisition of MidCoast In April 2020
14 Note: Southeastern Pennsylvania is defined as the following counties: Bucks, Chester, Delaware, Montgomery & Philadelphia Note: Household Income abbreviated to “HHI” Source: S&P Capital IQ Pro; Forbes; Fortune; Census.gov Demographically Accretive Acquisition Weighted ‘27 Pop. Growth Weighted ‘27 HHI Growth 2.3% 2.6% 10.2% 10.4% CZFS Pro Forma CZFS Pro Forma Median Southeastern PA Counties vs. Median Pennsylvania Demographics Population: 4,195,425 Southeastern PA Observations CZFS MSA Projected Growth Trends Southeastern Pennsylvania region encompasses some of the most desirable counties in the Commonwealth of Pennsylvania With higher education options such as Pennsylvania University, Swarthmore College, and Villanova University, the region attracts a young and educated work force Southeastern Pennsylvania is a diverse economic hub with established industries including Healthcare, Manufacturing, Biomedical Technology, Finance and Supply Chain In addition to metro Philadelphia, Southeastern Pennsylvania is home to other attractive markets such as West Chester, Media, Downingtown, King of Prussia and Conshohocken Southeastern Pennsylvania Age Breakdown 25-34 15% 35-44 13% 45-54 12% 55-64 13% Over 65 17% Under 25 30% Southeastern PA Counties Remaining PA Counties Median Population 639,897 76,476 Median HHI $100,615 $61,705 Median Unemployment 3.9% 5.0%
15 Note: Financial and transaction value shown as of announcement of transaction Source: S&P Capital IQ Pro Successful Track Record of Prudent Acquisitions CZFS Acquisitions since January 1, 2015 Transaction: FNB of Fredericksburg MidCoast Community Bancorp, Inc. HV Bancorp, Inc. Total Recent Whole Bank Acquisitions Geography: Fredericksburg, PA Wilmington, DE Doylestown, PA -- Date Closed: 12/11/2015 4/17/2020 Est. 1H2023 -- Locations: 7 3 12 22 Purchase Price: Cash & Stock: $23.0 million Cash & Stock: $29.5 million Cash & Stock: $67.9 million -- Target Assets ($000): $232,409 $268,546 $570,647 $1,071,602 Target Loans ($000): $146,425 $230,934 $391,338 $768,697 Target Deposits ($000): $214,114 $212,963 $481,510 $908,587
16 -20% 0% 20% 40% 60% 80% -40% Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21 Jan-22 CZFS Note: Market data as of October 18, 2022 Source: S&P Capital IQ Pro Acquisitions Driving CZFS Shareholder Return CZFS Stock Performance since January 1, 2015 Total Return: 46% Acquisition of FNB of Fredericksburg Completion Date: 12/11/2015 Total Return: 65% Acquisition of MidCoast Community Bancorp, Inc. Completion Date: 04/17/2020 Total Return: 39%
17 (1) Core deposits defined as total deposits less time deposits > $100k Source: S&P Capital IQ Pro Key Financial Assumptions Targeted Cost Savings: Identified $6.6 million in cost savings, 30% cost savings rate based upon HVBC’s LTM noninterest expense as of June 30, 2022 75% expected to be phased-in in first 12 months post-close; 100% phased-in thereafter Loan Credit Mark: $6.9 million total loan credit mark (1.37% of total loans est. at close) $3.3 million PCD $3.6 million Non-PCD $3.6 million allowance recorded immediately at close as part of the CECL double-count Fair Value Marks: $6.5 million (1.29%) positive mark to HVBC loan portfolio 100% straight-line over 5 years accretion $822 thousand write up to time deposits $2.7 million write up to borrowings Existing AOCI of $2.8 million on HVBC 6/30 balance sheet Transaction Expenses: $8.4 million in pre-tax transaction expenses Other: Core deposit intangible estimated represent 1.50% of HVBC’s core deposits(1) estimated at close
18 > 20% Internal Rate of Return ~5.8% TBVPS Dilution ~2.7 years TBV Payback Period(1) > 10% 2024 EPS Accretion > 8% 2023 EPS Accretion Transaction Impact Pro Forma Financial Impact Pro Forma Financial Impact (Excl. HVBC AOCI) Capital Ratio Impact(2) > 20% Internal Rate of Return ~4.5% TBVPS Dilution ~2.5 years TBV Payback Period(1) > 9% 2024 EPS Accretion > 6% 2023 EPS Accretion 8.4% Pro Forma Leverage Ratio 12.5% Pro Forma TRBC 11.7% Pro Forma Tier 1 RBC 6.7% Pro Forma TCE / TA Ratio Tangible book value payback period calculated using the crossover method; inclusive of all one-time related transaction expenses As of projected close on March 31, 2023, regulatory ratios are bank-level Source: S&P Capital IQ Pro; Company-provided documents
19 Building the “Better Experience Bank”
20 Transaction Summary Strategic and offensive transaction to create the premier community banking franchise in its markets Extraordinary depth of community banking expertise, experience and leadership at the executive level Pushes the combined institution clearly into a stronger market cap class for future institutional sponsorship Continued execution of acquisition strategy to create long term franchise value and establishes CZFS as a premier consolidator in the Mid-Atlantic Region Financially attractive transaction with strong earnings accretion numbers and reasonable tangible book value dilution metrics Addition of HVBC accelerates CZFS’ plans to improve infrastructure and build resources for long term franchise growth