Citizens Financial Services, Inc. Reports First Quarter 2014 Earnings

MANSFIELD, Pa., April 28, 2014 /PRNewswire/ -- Citizens Financial Services, Inc. (OTC BB: CZFS), parent company of First Citizens Community Bank, has released its unaudited financial performance for the three months ended March 31, 2014.

For the three months ended March 31, 2014, net income totaled $3,176,000 which compares to net income of $3,287,000 for the first quarter of 2013. This represents a decrease of $111,000, or 3.4%. Earnings per share of $1.05 for the first quarter compares to $1.08 last year.  Annualized return on equity for the comparable periods was 13.38% and 15.22%, while return on assets was 1.41% and 1.50%, respectively.

CEO and President Randall E. Black stated, "Financial results continue to remain strong and continue to place us near the top of our peers, even though performance is slightly below 2013's first quarter results.  Margin compression and increasing regulatory burdens continue to be the primary factors in our first quarter results. However, our results reflect our commitment to remain a strong, well-capitalized, local community bank committed to serving our communities and customers, as well as providing exceptional shareholder return and value.  We continue to focus on our strategic plan, which includes investments in technology, new products and services, and wealth management resources.  During the first quarter, we introduced our mobile banking app which is an example of our commitment to serving our customers and meeting their needs for better and more convenient banking products and services."

Net interest income, before the provision for loan losses, increased from $7,313,000 for the three months ended March 31, 2013, to $7,512,000 for 2014.  Although interest income decreased $218,000, interest expense decreased $417,000 from last year's first quarter resulting in an overall increase in net interest income of $199,000 over the comparable periods.  "The margin decreased from 3.90% last year to 3.87% this year due to the continued difficult economic environment that has been persistent in impacting us and others in our industry.  The prolonged interest rate environment has resulted in a continued decrease in the tax-effected yield on interest earning assets, from 4.72% last year to 4.47% this year.  Interest earning assets, mostly loans, increased by $28 million compared to last year, which helped significantly in offsetting the decline in yields.  The cost of interest bearing liabilities declined from .99% last year to .72% in 2014," added Mr. Black.

At March 31, 2014, total assets were $902.6 million, up from total assets of $883 million as of March 31, 2013 and down slightly from total assets of $914.9 million at December 31, 2013.  The investment portfolio has decreased $6.3 million from year-end 2013.  Net loans of $526 million as of the end of March have decreased $7.5 million, or 1.4%, compared to the end of last year.  However, net loans have increased $29.2 million from the end of March 2013.  Asset quality remains strong.  As of March 31, 2014, non-performing assets totaled $10.5 million and represented 1.98% of loans.  This compares to 1.88% as of December 31, 2013.  Annualized net charge-offs as a percent of average loans remains very low at .03%.

Stockholders' equity totaled $95.6 million at March 31, 2014, which compares to $92.1 million at December 31, 2013. Net income of $3.2 million was offset by cash dividends of $1.2 million.  Additionally, the unrealized gain on available for sale investment securities increased $1.4 million from the end of 2013 as a result of changes in interest rates impacting the fair value of investment securities.  A cash dividend of $.385 per share was paid on March 28, 2014 to shareholders of record on March 21, 2014.  This quarterly cash dividend is an increase of 35% over the dividend declared a year ago. 

Citizens Financial Services, Inc. has over 1,500 shareholders, the majority of whom reside in Potter, Tioga, and Bradford Counties, Pennsylvania and Allegany County, New York, where their 18 offices are located.

Note: This press release may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Actual results and trends could differ materially from those set forth in such statements due to various factors. These factors include operating, legal and regulatory risks; changing economic and competitive conditions and other risks and uncertainties.

 

 

CITIZENS FINANCIAL SERVICES, INC.




CONSOLIDATED BALANCE SHEET




(UNAUDITED)









March 31

December 31

March 31

(in thousands except share data)

2014

2013

2013

ASSETS:




Cash and due from banks:




  Noninterest-bearing

$           10,642

$           8,899

$            6,162

  Interest-bearing

767

1,184

30,952

Total cash and cash equivalents

11,409

10,083

37,114





Interest bearing time deposits with other banks

2,480

2,480

-





Available-for-sale securities

310,983

317,301

300,176





Loans held for sale

242

278

-





Loans (net of allowance for loan losses: $7,233 at March 31, 2014;




    $7,098 at December 31, 2013 and $6,928 at March 31, 2013)

525,990

533,514

496,795





Premises and equipment

10,994

11,105

11,446

Accrued interest receivable

3,771

3,728

3,840

Goodwill

10,256

10,256

10,256

Bank owned life insurance

14,800

14,679

14,301

Other assets

11,701

11,510

9,022





TOTAL ASSETS

$         902,626

$       914,934

$        882,950





LIABILITIES:




Deposits:




  Noninterest-bearing

$           95,230

$         85,585

$          85,330

  Interest-bearing

658,413

662,731

651,591

Total deposits

753,643

748,316

736,921

Borrowed funds

45,728

66,932

45,556

Accrued interest payable

774

895

1,039

Other liabilities

6,897

6,735

8,664

TOTAL LIABILITIES

807,042

822,878

792,180

STOCKHOLDERS' EQUITY:




Preferred Stock $1.00 par value; authorized




  3,000,000 shares at March 31, 2014, December 31, 2013 and March 31, 2013; 




    none issued in 2014 or 2013

-

-

-

Common stock




  $1.00 par value; authorized 15,000,000 shares at March 31, 2014, December 31, 2013 and




  March 31, 2013;   issued 3,305,517 shares at March 31, 2014 and December 31, 2013;




  3,161,324 shares at March 31, 2013

3,306

3,306

3,161

Additional paid-in capital

23,623

23,562

16,534

Retained earnings

76,340

74,325

74,276

Accumulated other comprehensive income (loss)

154

(1,225)

3,627

Treasury stock, at cost:  288,822 shares at March 31, 2014; 290,468 shares at




  December 31, 2013 and 267,729 shares at March 31, 2013

(7,839)

(7,912)

(6,828)

TOTAL STOCKHOLDERS' EQUITY

95,584

92,056

90,770

TOTAL LIABILITIES AND




   STOCKHOLDERS' EQUITY

$         902,626

$       914,934

$        882,950





The accompanying notes are an integral part of these unaudited consolidated financial statements.






 

CITIZENS FINANCIAL SERVICES, INC.



CONSOLIDATED STATEMENT OF INCOME



(UNAUDITED)




Three Months Ended


March 31,

(in thousands, except per share data)

2014

2013

INTEREST INCOME:



Interest and fees on loans

$               6,988

$                 7,137

Interest-bearing deposits with banks

13

10

Investment securities:



    Taxable

888

963

    Nontaxable

842

869

    Dividends

50

20

TOTAL INTEREST INCOME

8,781

8,999

INTEREST EXPENSE:



Deposits

1,105

1,328

Borrowed funds

164

358

TOTAL INTEREST EXPENSE

1,269

1,686

NET INTEREST INCOME

7,512

7,313

Provision for loan losses

180

150

NET INTEREST INCOME AFTER



    PROVISION FOR LOAN LOSSES

7,332

7,163

NON-INTEREST INCOME:



Service charges

995

1,024

Trust

191

201

Brokerage and insurance

120

92

Gains on loans sold

40

111

Investment securities gains, net

171

196

Earnings on bank owned life insurance

121

124

Other

105

104

TOTAL NON-INTEREST INCOME

1,743

1,852

NON-INTEREST EXPENSES:



Salaries and employee benefits

2,917

2,805

Occupancy 

350

342

Furniture and equipment

100

102

Professional fees

234

229

FDIC insurance

113

112

Pennsylvania shares tax

193

183

Other

1,140

1,049

TOTAL NON-INTEREST EXPENSES

5,047

4,822

Income before provision for income taxes

4,028

4,193

Provision for income taxes

852

906

NET INCOME

$               3,176

$                 3,287




PER COMMON SHARE DATA:



Net Income - Basic

$                  1.05

$                   1.08

Net Income - Diluted

$                  1.05

$                   1.08

Cash Dividends Paid 

$               0.385

$                 0.272




Number of shares used in computation - basic

3,012,204

3,033,716

Number of shares used in computation - diluted

3,012,398

3,034,165




 

 

Financial Highlights









Three Months Ended



March 31



2014

2013


Performance Ratios and Share Data:




    Return on average assets (annualized)

1.41%

1.50%


    Return on average equity (annualized)

13.38%

15.22%


    Net interest margin (tax equivalent)

3.87%

3.90%


    Cash dividends paid per share 

$                      0.385

$                       0.272


    Earnings per share - basic

$                          1.05

$                         1.08


    Earnings per share - diluted

$                          1.05

$                         1.08


Number of shares used in computation - basic

3,012,204

3,033,716


Number of shares used in computation - diluted

3,012,398

3,034,165














Balance Sheet Highlights (dollars in thousands):

March 31, 2014

December 31, 2013

March 31, 2013





Assets

$                   902,626

$                   914,934

$                 882,950

Investment securities:




    Available for sale

310,983

317,301

300,176

Loans (net of unearned income)

533,223

540,612

503,723

Allowance for loan losses

7,233

7,098

6,928

Deposits

753,643

748,316

736,921

Stockholders' Equity

95,584

92,056

90,770

Non-performing assets

10,538

10,154

8,911

Non-performing assets to total loans

1.98%

1.88%

1.77%

Annualized net charge-offs to total loans

0.03%

0.02%

0.01%

Average Leverage Ratio

10.64%

10.42%

9.96%

Common shares outstanding

3,016,695

3,015,049

2,893,595

Book value per share

$                        31.63

$                       30.94

$                     28.69





 

SOURCE Citizens Financial Services, Inc.



RELATED LINKS
http://www.firstcitizensbank.com

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