Dear Valued Shareholders,

As we present the Company’s 2023 Annual Report, we are excited to share a story of performance, innovation, and unwavering commitment to our purpose. We operate in a dynamic and often unpredictable world, yet we remain steadfast in our mission: to serve as the financial cornerstone of our community by empowering our customers, their families, and their businesses to prosper.

As we reflect on empowering and investing in our communities and what that means to us, this year’s theme – “Purpose. Performance. Possibilities.” – aligns with these core values that inspire and guide our journey. Purpose defines who we are and the difference we strive to make. Performance signifies our commitment to delivering value for our customers, team, and shareholders. Possibilities represent the limitless potential that lies ahead as we dream of and imagine a brighter future for everyone.

We strive to continue progressing in every aspect of our Company so that we keep improving the lives of those around us. In 2023, we faced a challenging economic environment with rising interest rates, geopolitical uncertainties, and ongoing industry transformation. Despite the complex environment, our Company demonstrated remarkable resilience and adaptability and had the greatest year in the history of our Company. We were extremely proud to have our efforts recognized by the S&P Global ranking of Citizens Trust Bank as #28 in the 100 Best Performing U.S. Community Banks under $3 Billion in assets.

It is a perception that you cannot be a mission-driven bank and have best-in-class industry performance. Yet, we keep pushing the limits and defying the odds while remaining steadfast in our commitment to our mission: empowering families, businesses, and communities to achieve their dreams and have financial success.

We achieved several notable milestones while simultaneously laying the groundwork for future success.

Performance…2023 Financial Highlights:

• Another historic year of pre-tax earnings of $16 million, or a 29% increase, compared to $12 million in 2022
• Record earnings per share of $6.27, or a 35% increase over last year.
• Record common stock dividend of $1.00 per share, or $1.8 million, in 2024 compared to a previous record dividend of $0.75 per share in 2023.
• A Return on Assets (“ROA”) of 1.66% — generated by the company’s historic performance combined with an extraordinary efficiency ratio of 50.5%
• Solid total loan growth of 11% driven by another exceptional year of funded loan production with a deliberate focus on customer retention. Over 95% of loans originated were to minority or low-to-moderate income borrowers.
• Strong asset quality as measured by low non-performing assets to total assets of 0.24%
• Positioned for continued growth with a total capital ratio of 43%

Possibilities…Investing in Our Future: Creating Greater Access

As we continue our strategy to increase wallet share with existing customers and expand into new markets similar in make-up to our current customer composition, we are building infrastructure to accommodate the anticipated growth.

During 2023, we saw great promise in our pursuit of enhancing our digital solutions. Customers are responding positively with an increase in our business and consumer online banking, by 16% and 7%, respectively, and a 13% increase in Zelle customer utilization. We launched:

1. contactless debit cards with the ability to connect to Apple and Google digital wallets. This creates a better customer experience and allows for faster transactions and a safer and more secure checkout, and
2. More sophisticated strategies to improve engagements with our online and digital communities. One example is through a third-party online vendor relationship that provides an auto-decisioning platform allowing us to deliver fast, convenient loan solutions to consumers and businesses. 

Further, in our commitment to facilitating the dream of homeownership, we simplified the mortgage loan application process with a new digital loan portal allowing customers in all 50 states to apply for a mortgage loan entirely online.

For other loan products, in 2023, we began our pursuit of engaging a fintech partnership to optimize, automate, and accelerate the loan decisioning process to enhance the customer experience while integrating fraud prevention and risk mitigating attributes. We have selected a partner and are anticipating a 3rd quarter 2024 launch.

We remain committed to transforming how we do business and fostering a culture of innovation. As we look forward to 2024, we are already continuing our progress by:

• Implementing a new digital banking platform with a modern user interface that anticipates customer’s needs, streamlines workflow, and works seamlessly on any device.
• Launching instant issue debit cards that allow our customers to receive their cards immediately. This will enhance the customer’s experience, increase activation rate, reduce fraud, and provide a competitive advantage.
• Preparing the launch of a new digital marketing campaign in collaboration with our digital marketing partners to create a brand-differentiating strategy to bolster brand awareness, promote customer acquisition, increase wallet share, and deepen relationships with existing clients.

We are excited about the strides we are making in our delivery channels and building infrastructure for expansion. We are positioning our Company for scale and future success by developing tools and deploying resources to enhance client engagement and bring greater efficiencies into our business model. But most importantly, we are investing in high-performance teammates. Teammates who can execute our vision, build relationships, and create an exceptional personalized customer experience.

Purpose…Investing in our Community: Our Mission

Though we are extremely proud of our financial performance, we are equally proud of our partnership and impact in the communities we serve. We remain true to our mantra: We are not just in the Community, We are a part of the Community. Our legacy is founded on the principles of economic equality and well-being, and we are dedicated to fulfilling our mission of empowering communities, families, and future generations to achieve financial success and overall well-being.

We demonstrated our commitment by:

• Extending over $82 million in community loans to consumers and small businesses, contributing to job growth and economic revitalization and promoting strong community ecosystems.
• Committed $100,000 to our Citizens Trust Bank-funded Down Payment Assistance Grant Program for first-time home buyers supporting homeownership and addressing the widening wealth gap.
• Dedicated over 400 community service and volunteer hours – supporting over 2,800 community citizens through financial and homeownership education and addressing food, and housing insecurities.

Furthermore, through our involvement in the community, we continue to provide financial literacy and money management skills to small businesses and community youth and give a vision of hope for future generations through internships and corporate exposure.

Our collaboration with the community and respected community partners allowed us to provide much-needed support and continue to enrich our understanding of the challenges faced by our communities. We are inspired by the progress made and continue to be dedicated to our efforts to create positive change.

A Message of Confidence

In a dynamic and competitive landscape, we are confident that our Company is well positioned for continued success. We remain dedicated to our core values of purpose, performance, and possibilities, and are committed to delivering long-term value for our shareholders, customers, teammates, and the communities we serve.

We are confident that by staying true to our purpose, delivering exceptional performance, and embracing endless possibilities, we will continue to grow and thrive.

We thank our teammates and board of directors for their unwavering commitment to the success of our Company and we thank you, our fellow shareholders, for your continued support. Together, we will continue to build a better future, as we build on the momentum and grow with purpose and passion.

Sincerely

Cynthia N. Day
President and CEO
Citizens Trust Bank

Ray M. Robinson
Chairman of the Board
Citizens Bancshares Corporation