Citizens Financial : 2021 Financial Report

NEW MARTINSVILLE

BUCKHANNON

PURCHASE OF COMMUNITY BANK OFFICES IN BUCKHANNON

AND NEW MARTINSVILLE WAS FINALIZED DECEMBER 10, 2021

2021ANNUALREPORT

THE BEST BANK FOR

BUSINESSES CUSTOMERS COMMUNITIES

2021 ANNUAL REPORT

SHAREHOLDER LETTER	2
SELECTED FINANCIAL DATA	4
CONSOLIDATED BALANCE SHEETS	5
CONSOLIDATED STATEMENTS OF INCOME	6
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME	7
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY	8
CONSOLIDATED STATEMENTS OF CASH FLOWS	9
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS	10
INDEPENDENT AUDITOR'S REPORT	40
DIRECTORS	42
OFFICERS	43
RETIREMENT ANNOUNCEMENT	44
MEETING NOTICE	44

FELLOW SHAREHOLDERS:

Year 2021 was an exciting time for Citizens, and we want to take this opportunity to highlight many of our accomplishments during an extraordinary year. It is also an opportunity to boast on a collective team of resilient bankers that have pulled together through a global pandemic to meet the ongoing challenges of our clients and communities in order to make us a stronger financial institution. Citizens excelled at providing a second round of Paycheck Protection Program loans to small business clients, expanding our commercial and automobile lending programs, and acquiring two branches from another financial institution to broaden market penetration. In the last four years, Citizens has doubled its asset size to nearly $500 million; and we have done it responsibly with appropriate regard to earnings, efficiency and asset quality.

2021 FINANCIAL PERFORMANCE. Citizens reported remarkable earnings in 2021, with net income at $5.8 million-thehighest in our history and exceeding 2020 net income by nearly $1.5 million. At 16.79% for 2021, Citizens Bank produced the highest return on average equity (ROE) of any bank headquartered in the state of West Virginia! In addition, we produced the 2nd highest return on average assets (ROA) at 1.63% and were ranked 3rd in net interest margin (NIM) at 4.2% within West Virginia headquartered banks. We are incredibly proud of these results and the team of dedicated bankers that achieved them.

Growth was a key component of our success this past year. Citizens acquired two branches from Community Bank in Buckhannon and New Martinsville, West Virginia on December 10, 2021 (discussed later). In this transaction, Citizens purchased $102.8 million in deposits and $6.1 million in loans. Overall, Citizens assets grew by nearly 54% or $173 million to $495 million at year-end. Deposits increased by $147 million or 54% to $420 million and gross loans grew by $37 million or 15% to $292 million. While the branch acquisition accounted for the majority of the deposit growth, loan

2

growth was largely the result of our increased focus on automobile and recreational vehicle lending, as well as commercial real estate loans. Additionally, Citizens also had an exceptional year in secondary market fixed-rate mortgage production, generating nearly $1 million in revenue.

Shareholder value continues to increase as we reported earnings per common share of $3.26 in 2021 compared to $2.42 in 2020. We continue to use retained earnings to grow capital and increase your dividend. As we closed out the year, Citizens Financial declared our 2021 fourth quarter dividend in January of 2022 of $.20 per common share bringing total dividends to $.71 per common share-our highest level in history. We are thrilled with our financial results and performance; likewise, we are pleased to provide a strong return on your investment in Citizens.

BRANCH ACQUISITIONS. As previously mentioned, Citizens acquired two branches from Community Bank in Buckhannon and New Martinsville, West Virginia. These additional offices are a nice complement to our existing branch network and provide significant opportunities for Citizens to deepen our relationships in an existing market, as well as expand our franchise north into a new one.

In Buckhannon, our existing office was consolidated into the newly acquired location at the corner of Main

and Locust Streets-arguably the busiest intersection in the city. Our expanded market share in Upshur County now ranks us in the top three financial institutions in this market with regard to deposits and creates new lending opportunities. A major renovation of this branch is planned in the coming months to provide better operational space and a rebranding of the property. We are excited about the transformation and expansion in Buckhannon as Citizens is happily referred to as "the local community bank" in this market.

In New Martinsville, aside from changing exterior and interior signage, the office space is well suited to serve our new customers in Wetzel County. Both transitions went very smoothly and we now are able to offer world-class technology and the best in banking and wealth management products and services to nearly forty-five hundred new customers!

COMMUNITY INVOLVEMENT. While many things in our world have been turned upside down since the onset of the COVID-19 pandemic, Citizens continues to keep our community involvement at the forefront. Citizens and our employees played a key role in 2021 through volunteerism, board membership, or financial support. Citizens continues to contribute to many organizations throughout our region including multiple nonprofit agencies, fire departments, schools, colleges, hospitals, foundations, among many others.

Citizens partnered with Davis & Elkins College and WDTV Channel 5 to offer a Citizens Bank of West Virginia Emerging Leaders Scholarship with high school seniors across the state vying for a four-year scholarship that includes tuition, room and board with an approximate value of $160,000. The inaugural scholarship winner was selected from over 100 applicants and will attend D&E in the fall of 2022.

CITIZENS RECEIVES NATIONAL RECOGNITION. Our 2021 financial performance earned Citizens Bank the 10th position in the nation on CB Resource's CB Top Ten™ report in our peer group. This means that out of 638

banks with assets between $250 and $499 million, Citizens Bank is ranked 10th in the United States! The CB Top Ten™ report includes the top 10 percent of banks in our peer group and takes a scoreboard approach to analyzing community bank performance by ranking Asset Growth, ROA, ROE, NIM, Efficiency Ratio, Non-Performing Assets to Assets, Non-Interest Bearing Deposits, and Non-Interest Income. We are extremely proud of this achievement and honored to be classified as one of the top performing banks in the country.

For the second straight year, Citizens was named to American Banker magazine's Top 200 Publicly Traded Community Banks and Thrifts in the nation. In its May 2021 issue, American Banker ranked Citizens 64th on its prestigious nationwide list, up from 150th in 2020. Citizens is ranked the highest in West Virginia and the only bank headquartered in our region of the state to make the list. Citizens was also fortunate to receive

• five-starrating for financial strength and security in all of 2021 from Bauer Financial, Inc., the nation's leading independent bank rating and research firm.
  This rating indicates that the bank excels in areas of capital adequacy, profitability, asset quality, and much more. We are thrilled to receive this coveted rating for another year!

We believe all these accolades are a reflection of the hard work and dedication of our board, management and staff.

RETIREMENT CONGRATULATIONS. In April 2021, Citizens bid farewell to Janet Chapman, Senior Vice President & CFO. We are thankful for her leadership and financial acumen over the last 14 years in our accounting department. She and her husband, Dave, spent the remainder of 2021 traveling and enjoying the grandchildren. At the close of her 22-yearbanking career, we are grateful for her service and wish her the very best in retirement.

WHAT LIES AHEAD. Record earnings, record asset growth, and record dividends made 2021 a stellar

3