Citizens Financial Services, Inc. Reports Third Quarter 2013 Earnings

MANSFIELD, Pa., Oct. 25, 2013 /PRNewswire/ -- Citizens Financial Services, Inc. (OTC BB: CZFS), parent company of First Citizens Community Bank, has released its unaudited financial performance for the nine months ended September 30, 2013.

For the three months ended September 30, 2013, net income totaled $3,512,000 which compares to net income of $3,464,000 for the third quarter of 2012. This represents an increase of $48,000, or 1.4%. Earnings per share of $1.16 for the third quarter compares to $1.13 last year.  Annualized return on equity for the comparable periods was 15.42% and 16.78%, while return on assets was 1.58% for both periods. 

For the nine months ended September 30, 2013, net income totaled $10,079,000 which compares to $10,666,000 for the same period last year. This represents a decrease of $587,000, or 5.5%. Earnings per share of $3.33 decreased 4.3% from $3.48 per share last year.  Annualized return on equity for the comparable periods was 15.13% and 17.74%, while return on assets was 1.52% and 1.62%, respectively.  CEO and President Randall E. Black stated, "Our financial performance continues to remain strong and better than peer.  As expected, results for 2013 have been impacted by the prolonged 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 $22,838,000 for the nine months ended September 30, 2012 to $22,409,000 in 2013.  The decrease of $429,000, or 1.9%, is reflective of the previously stated declining margins.  On a tax equivalent basis, the net interest margin has decreased from 3.99% last year to 3.89% this year.  The tax equivalent yields on interest earning assets decreased from 4.94% for the first nine months of 2012 to 4.67% this year.  "As expected, the sluggish economy and the current interest rate environment have continued to impact our margins.  Despite 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 1.12% last year to .93% this year," added Mr. Black.

At September 30, 2013, total assets were $899.4 million, which was an increase of $17.0 million from total assets of $882.4 million at December 31, 2012.  From year-end 2012, the investment portfolio and time deposits with other banks have increased a total of $10.7 million to a combined $320.9 million at September 30, 2013.  Net loans of $515.3 million as of the end of September have increased $19.6 million, or 4%, compared to December 31, 2012 and have increased $22.8 million from September 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 September 30, 2013, non-performing assets totaled $9.8 million and represented 1.87% of loans.  This compares to 1.83% as of December 31, 2012.  Through September 2013, the provision for loan loss was $315,000 which is the same as the amount recorded last year.  The annualized net charge-offs as a percent of average loans remains very low at .01%.

Stockholders' equity totaled $90.4 million at September 30, 2013, which compares to $89.5 million at December 31, 2012. The increase is attributable to net income of $10.1 million offset by cash dividends paid of $2.5 million and purchases of treasury stock of $1.2 million. Additionally, the unrealized gains on available for sale investment securities have decreased $5.7 million due to the increase in long-term interest rates that has occurred in 2013. On September 27, 2013, a cash dividend of $.285 per share was paid on September 28, 2013 to shareholders of record on September 20, 2013. The cash dividend compares to the June 28, 2013 cash dividend of $.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)






September 30

December 31

September 30

(in thousands except share data)

2013

2012

2012

ASSETS:




Cash and due from banks:




  Noninterest-bearing

$           10,956

$         12,307

$          10,086

  Interest-bearing

2,800

14,026

624

Total cash and cash equivalents

13,756

26,333

10,710





Interest bearing time deposits with other banks

2,480

-

-





Available-for-sale securities

318,452

310,252

322,039





Loans held for sale

260

1,458

-





Loans (net of allowance for loan losses: $7,070 at September 30, 2013;




    $6,784 at December 31, 2012 and $6,734 at September 30, 2012)

515,262

495,679

492,492





Premises and equipment

11,259

11,521

11,419

Accrued interest receivable

3,815

3,816

3,961

Goodwill

10,256

10,256

10,256

Bank owned life insurance

14,554

14,177

14,047

Other assets

9,302

8,935

11,293





TOTAL ASSETS

$         899,396

$       882,427

$        876,217





LIABILITIES:




Deposits:




  Noninterest-bearing

$           89,716

$         89,494

$          84,767

  Interest-bearing

668,940

647,602

644,440

Total deposits

758,656

737,096

729,207

Borrowed funds

43,163

46,126

47,956

Accrued interest payable

971

1,143

1,213

Other liabilities

6,226

8,587

7,865

TOTAL LIABILITIES

809,016

792,952

786,241

STOCKHOLDERS' EQUITY:




Preferred Stock $1.00 par value; authorized




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




    none issued in 2013 or 2012

-

-

-

Common stock




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




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




  December 31, 2012 and  September 30, 2012

3,306

3,161

3,161

Additional paid-in capital

23,545

16,468

16,474

Retained earnings

72,190

71,813

70,255

Accumulated other comprehensive income

(816)

4,631

5,990

Treasury stock, at cost:  289,040 shares at September 30, 2013; 262,921 shares at




  December 31, 2012 and 247,134 shares at September 30, 2012

(7,845)

(6,598)

(5,904)

TOTAL STOCKHOLDERS' EQUITY

90,380

89,475

89,976

TOTAL LIABILITIES AND




   STOCKHOLDERS' EQUITY

$         899,396

$       882,427

$        876,217





 

CITIZENS FINANCIAL SERVICES, INC.





CONSOLIDATED STATEMENT OF INCOME





(UNAUDITED)






Three Months Ended

Nine Months Ended


September 30,

September 30,

(in thousands, except per share data)

2013

2012

2013

2012

INTEREST INCOME:





Interest and fees on loans

$       7,521

$      7,448

$     21,799

$    22,352

Interest-bearing deposits with banks

8

5

27

11

Investment securities:





    Taxable

905

1,085

2,804

3,519

    Nontaxable

850

919

2,563

2,793

    Dividends

23

17

61

49

TOTAL INTEREST INCOME

9,307

9,474

27,254

28,724

INTEREST EXPENSE:





Deposits

1,279

1,486

3,894

4,707

Borrowed funds

283

373

951

1,179

TOTAL INTEREST EXPENSE

1,562

1,859

4,845

5,886

NET INTEREST INCOME

7,745

7,615

22,409

22,838

Provision for loan losses

90

105

315

315

NET INTEREST INCOME AFTER





    PROVISION FOR LOAN LOSSES

7,655

7,510

22,094

22,523

NON-INTEREST INCOME:





Service charges

1,100

1,139

3,203

3,346

Trust

169

148

539

472

Brokerage and insurance

120

80

333

305

Gains on loans sold

75

102

236

287

Investment securities gains, net

91

240

385

561

Earnings on bank owned life insurance

127

128

377

378

Other

124

109

328

342

TOTAL NON-INTEREST INCOME

1,806

1,946

5,401

5,691

NON-INTEREST EXPENSES:





Salaries and employee benefits

2,856

2,705

8,456

8,126

Occupancy 

302

304

956

928

Furniture and equipment

157

113

372

315

Professional fees

187

209

604

701

FDIC insurance

112

115

337

353

Pennsylvania shares tax

183

115

548

441

Other

1,123

1,398

3,301

3,488

TOTAL NON-INTEREST EXPENSES

4,920

4,959

14,574

14,352

Income before provision for income taxes

4,541

4,497

12,921

13,862

Provision for income taxes

1,029

1,033

2,842

3,196

NET INCOME

$       3,512

$      3,464

$     10,079

$    10,666






PER COMMON SHARE DATA:





Net Income - Basic

$          1.16

$        1.13

$          3.33

$        3.49

Net Income - Diluted

$          1.16

$        1.13

$          3.33

$        3.48

Cash Dividends Paid 

$        0.285

$      0.290

$        0.837

$      0.853






Number of shares used in computation - basic

3,024,507

3,052,628

3,029,801

3,059,808

Number of shares used in computation - diluted

3,025,990

3,054,694

3,031,089

3,061,570






 

Financial Highlights











Three Months Ended

Nine Months Ended


September 30

September 30


2013

2012

2013

2012

Performance Ratios and Share Data:





    Return on average assets (annualized)

1.58%

1.58%

1.52%

1.62%

    Return on average equity (annualized)

15.42%

16.78%

15.13%

17.74%

    Net interest margin (tax equivalent)

3.93%

3.99%

3.89%

3.99%

    Cash dividends paid per share 

$                        0.285

$                       0.290

$                     0.837

$            0.853

    Earnings per share - basic

$                          1.16

$                         1.13

$                       3.33

$              3.49

    Earnings per share - diluted

$                          1.16

$                         1.13

$                       3.33

$              3.48

Number of shares used in computation - basic

3,024,507

3,052,628

3,029,801

3,059,808

Number of shares used in computation - diluted

3,025,990

3,054,694

3,031,089

3,061,570


























Balance Sheet Highlights (dollars in thousands):

September 30, 2013

December 31, 2012

September 30, 2012







Assets

$                   899,396

$                   882,427

$                 876,217


Investment securities:





    Available for sale

318,452

310,252

322,039


Loans (net of unearned income)

522,332

502,463

499,226


Allowance for loan losses

7,070

6,784

6,734


Deposits

758,656

737,096

729,207


Stockholders' Equity

90,380

89,475

89,976


Non-performing assets

9,786

9,189

9,157


Non-performing assets to total loans

1.87%

1.83%

1.83%


Annualized net charge-offs to total loans

0.01%

0.02%

0.02%


Average Leverage Ratio

10.29%

9.70%

9.62%


Common shares outstanding

3,016,477

2,898,403

2,914,490


Book value per share

$                       30.20

$                       27.89

$                     27.46







 

SOURCE Citizens Financial Services, Inc.



RELATED LINKS
http://www.firstcitizensbank.com

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