2014

Citizens Financial Services, Inc. Reports Second Quarter 2013 Earnings

MANSFIELD, Pa., July 23, 2013 /PRNewswire/ -- Citizens Financial Services, Inc. (OTC BB: CZFS), parent company of First Citizens Community Bank, has released its unaudited financial performance for the six months ended June 30, 2013.

For the three months ended June 30, 2013, net income totaled $3,280,000 which compares to net income of $3,753,000 for the second quarter of 2012. This represents a decrease of $473,000, or 12.6%. Earnings per share of $1.08 for the second quarter compares to $1.23 last year.  Annualized return on equity for the comparable periods was 14.77% and 18.72%, while return on assets was 1.49% and 1.69%, respectively. 

For the six months ended June 30, 2013, net income totaled $6,567,000 which compares to $7,202,000 for the same period last year. This represents a decrease of $635,000, or 8.8%. Earnings per share of $2.17 decreased 7.7% from $2.35 per share last year.  Annualized return on equity for the comparable periods was 14.99% and 18.25%, while return on assets was 1.50% and 1.63%, respectively.  CEO and President Randall E. Black stated, "Our financial performance continues to remain strong and better than peer.  As expected, results for 2013 are negatively impacted by the current low interest rate environment, which has resulted in margin compression as cash flows are being invested at lower yields."

Net interest income, before the provision for loan losses, decreased from $15,223,000 for the six months ended June 30, 2012 to $14,664,000 in 2013.  The decrease of $559,000, or 3.7%, is reflective of declining margins.  On a tax equivalent basis, the net interest margin has decreased from 4.04% last year to 3.87% this year.  The tax equivalent yields on interest earning assets decreased from 5.02% for the first six months of 2012 to 4.67% this year.  "As expected, the sluggish economy and persistent interest rate environment has continued to impact our margins.  Despite the moderate growth in interest earning assets from a year ago, particularly loans, the additional assets are added at lower rates than those assets that are maturing or re-pricing.  This has been offset somewhat by reducing our cost of funds, which has decreased from 1.14% last year to .95% this year", added Mr. Black.

At June 30, 2013, total assets were $879.1 million, which was a decrease of $3.3 million from total assets of $882.4 million at December 31, 2012.  From year-end 2012, the investment portfolio has decreased $2.3 million to $307.9 million at June 30, 2013.  Net loans of $508.7 million as of the end of June have increased $13.1 million, or 2.6%, compared to December 31, 2012 and have increased $18.3 million from June 30, 2012.  Part of this growth has been the success in Luzerne and Lackawanna counties since opening a loan production office in the latter part of 2012.  Asset quality remains strong.  As of June 30, 2013, non-performing assets totaled $9.1 million and represented 1.77% of loans.  This compares to 1.83% as of December 31, 2012.  Through June 2013, the provision for loan loss was $225,000 compared to $210,000 recorded last year.  The annualized net charge-offs as a percent of average loans remains very low at .01%.

Stockholders' equity totaled $88.9 million at June 30, 2013, which compares to $89.5 million at December 31, 2012. The decrease is attributable to a decrease in the unrealized gain on available for sale investment securities.  The recent increase in long-term interest rates has resulted in a decrease in the fair value of investment securities.  On June 28, 2013 a 5% stock dividend was paid to shareholders of record on June 21, 2013.  Additionally, a cash dividend of $.285 per share was also paid on June 28th, which equates to $.271 per share after giving retroactive consideration to the 5% stock dividend.  The cash and stock dividend reflects the Board of Directors' desire to provide total shareholder return to the shareholder base.

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)









June 30

December 31

June 30

(in thousands except share data)

2013

2012

2012

ASSETS:




Cash and due from banks:




  Noninterest-bearing

$              7,928

$         12,307

$          12,525

  Interest-bearing

3,642

14,026

5,243

Total cash and cash equivalents

11,570

26,333

17,768





Available-for-sale securities

307,935

310,252

323,131





Loans held for sale

796

1,458

-





Loans (net of allowance for loan losses: $6,989 at June 30, 2013;




    $6,784 at December 31, 2012 and $6,650 at June 30, 2012)

508,747

495,679

490,482





Premises and equipment

11,396

11,521

11,515

Accrued interest receivable

3,821

3,816

3,800

Goodwill

10,256

10,256

10,256

Bank owned life insurance

14,427

14,177

13,919

Other assets

10,128

8,935

10,479





TOTAL ASSETS

$         879,076

$       882,427

$        881,350





LIABILITIES:




Deposits:




  Noninterest-bearing

$           86,852

$         89,494

$          86,218

  Interest-bearing

661,162

647,602

652,549

Total deposits

748,014

737,096

738,767

Borrowed funds

33,993

46,126

47,066

Accrued interest payable

964

1,143

1,222

Other liabilities

7,223

8,587

7,754

TOTAL LIABILITIES

790,194

792,952

794,809

STOCKHOLDERS' EQUITY:




Preferred Stock $1.00 par value; authorized




  3,000,000 shares at June 30, 2013, December 31, 2012 and June 30, 2012; 




    none issued in 2013 or 2012

-

-

-

Common stock




  $1.00 par value; authorized 15,000,000 shares at June 30, 2013, December 31, 2012 and




  June 30, 2012;   issued 3,305,517 shares at June 30, 2013; 3,161,324 at 




  December 31, 2012 and 3,132,866 shares at June 30, 2012

3,306

3,161

3,133

Additional paid-in capital

23,545

16,468

15,364

Retained earnings

69,538

71,813

68,813

Accumulated other comprehensive income

(713)

4,631

4,990

Treasury stock, at cost:  267,006 shares at June 30, 2013; 262,921 shares at




  December 31, 2012 and 243,784 shares at June 30, 2012

(6,794)

(6,598)

(5,759)

TOTAL STOCKHOLDERS' EQUITY

88,882

89,475

86,541

TOTAL LIABILITIES AND




   STOCKHOLDERS' EQUITY

$         879,076

$       882,427

$        881,350





CITIZENS FINANCIAL SERVICES, INC.





CONSOLIDATED STATEMENT OF INCOME





(UNAUDITED)






Three Months Ended

Six Months Ended


June 30,

June 30,

(in thousands, except per share data)

2013

2012

2013

2012

INTEREST INCOME:





Interest and fees on loans

$       7,141

$      7,439

$     14,278

$    14,904

Interest-bearing deposits with banks

9

1

19

6

Investment securities:





    Taxable

936

1,237

1,899

2,434

    Nontaxable

844

920

1,713

1,874

    Dividends

18

16

38

32

TOTAL INTEREST INCOME

8,948

9,613

17,947

19,250

INTEREST EXPENSE:





Deposits

1,287

1,555

2,615

3,221

Borrowed funds

310

393

668

806

TOTAL INTEREST EXPENSE

1,597

1,948

3,283

4,027

NET INTEREST INCOME

7,351

7,665

14,664

15,223

Provision for loan losses

75

105

225

210

NET INTEREST INCOME AFTER





    PROVISION FOR LOAN LOSSES

7,276

7,560

14,439

15,013

NON-INTEREST INCOME:





Service charges

1,079

1,129

2,103

2,207

Trust

169

151

370

324

Brokerage and insurance

121

75

213

225

Gains on loans sold

50

131

161

185

Investment securities gains, net

98

213

294

321

Earnings on bank owned life insurance

126

126

250

250

Other

100

104

204

233

TOTAL NON-INTEREST INCOME

1,743

1,929

3,595

3,745

NON-INTEREST EXPENSES:





Salaries and employee benefits

2,795

2,668

5,600

5,421

Occupancy 

312

314

654

624

Furniture and equipment

113

96

215

202

Professional fees

188

224

417

492

FDIC insurance

113

115

225

238

Pennsylvania shares tax

182

160

365

326

Other

1,129

988

2,178

2,090

TOTAL NON-INTEREST EXPENSES

4,832

4,565

9,654

9,393

Income before provision for income taxes

4,187

4,924

8,380

9,365

Provision for income taxes

907

1,171

1,813

2,163

NET INCOME

$        3,280

$      3,753

$        6,567

$      7,202






PER COMMON SHARE DATA:





Net Income - Basic

$          1.08

$        1.23

$          2.17

$        2.35

Net Income - Diluted

$          1.08

$        1.23

$          2.16

$        2.35

Cash Dividends Paid 

$        0.271

$      0.283

$        0.543

$      0.562






Number of shares used in computation - basic

3,031,279

3,058,663

3,032,491

3,063,500

Number of shares used in computation - diluted

3,032,857

3,060,072

3,033,272

3,064,124






Financial Highlights











Three Months Ended

Six Months Ended


June 30

June 30


2013

2012

2013

2012

Performance Ratios and Share Data:





    Return on average assets (annualized)

1.49%

1.69%

1.50%

1.63%

    Return on average equity (annualized)

14.77%

18.72%

14.99%

18.25%

    Net interest margin (tax equivalent)

3.85%

4.03%

3.87%

4.04%

    Cash dividends paid per share 

$                        0.271

$                       0.283

$                     0.543

$            0.562

    Earnings per share - basic

$                          1.08

$                         1.23

$                       2.17

$              2.35

    Earnings per share - diluted

$                          1.08

$                         1.23

$                       2.16

$              2.35

Number of shares used in computation - basic

3,031,279

3,058,663

3,032,491

3,063,500

Number of shares used in computation - diluted

3,032,857

3,060,072

3,033,272

3,064,124


























Balance Sheet Highlights

 (dollars in thousands):

June 30, 2013

December 31, 2012

June 30, 2012







Assets

$                   879,076

$                   882,427

$                 881,350


Investment securities:





    Available for sale

307,935

310,252

323,131


Loans (net of unearned income)

515,736

502,463

497,132


Allowance for loan losses

6,989

6,784

6,650


Deposits

748,014

737,096

738,767


Stockholders' Equity

88,882

89,475

86,541


Non-performing assets

9,129

9,189

9,403


Non-performing assets to total loans

1.77%

1.83%

1.89%


Annualized net charge-offs to total loans

0.01%

0.02%

0.02%


Average Leverage Ratio

10.18%

9.70%

9.20%


Common shares outstanding

3,038,511

2,898,402

2,881,266


Book value per share

$                       29.49

$                       27.89

$                     26.64







 

SOURCE Citizens Financial Services, Inc.



RELATED LINKS
http://www.firstcitizensbank.com

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