Citizens Financial Services, Inc. Reports Third Quarter 2015 Earnings

MANSFIELD, Pa., Oct. 29, 2015 /PRNewswire/ -- Citizens Financial Services, Inc. (OTC BB: CZFS), parent company of First Citizens Community Bank, has released its unaudited financial performance for the three and nine months ended September 30, 2015.

For the nine months ended September 30, 2015, net income totaled $9,166,000 which compares to net income of $9,909,000 for the comparable 2014 period.  This represents a decrease of $743,000, or 7.5%. Earnings per share of $3.04 for the first nine months of 2015 compares to $3.26 for the first nine months of 2014.  Annualized return on equity for the nine months ended September 30, 2015 and 2014 was 11.93% and 13.64%, while return on assets was 1.31% and 1.46%, respectively.  Included in 2015 results are $405,000 of costs associated with The First National Bank of Fredericksburg (FNB) merger and $686,000 of foreclosed property expenses.

For the three months ended September 30, 2015 net income totaled $2,857,000 which compares to net income of $3,368,000 for the third quarter of 2014, which is a decrease of $511,000. Earnings per share of $.95 for the third quarter of 2015 compares to $1.11 for the third quarter last year.  Annualized return on equity for the three months ended September 30, 2015 and 2014 was 11.00% and 13.59%, while return on assets was 1.21% and 1.48%, respectively.  Third quarter results are impacted by $282,000 of FNB merger related costs and $328,000 of foreclosed property expenses.

CEO and President Randall E. Black stated, "Our financial performance for the quarter was solid, although it reflects the ongoing yield curve challenges that we and other financial institutions are forced to deal with.  Our performance was also impacted by FNB merger related costs, which were expected, and other expenses related to foreclosed properties.  We also have incurred additional costs in 2015 related to our expansion into the Lock Haven market in the first quarter, which aligns with our strategic plan.  Despite this, our financial results remain strong and continue to compare favorably to peers."

Net interest income before the provision for loan loss has increased from $22,736,000 for the nine months ended September 30, 2014 to $22,793,000 for 2015.  For the nine months ended September 30, 2015, interest income decreased $76,000, which has been offset by a decrease in interest expense of $133,000.  With the existing yield curve and the ongoing interest rate environment, the margin has decreased from 3.85% last year to 3.78% for 2015.  This has resulted in continued pressure on the tax-effected yield on interest earning assets, which has decreased from 4.43% last year to 4.32% this year.  The cost of interest bearing liabilities has also declined, from .71% last year to .66% in 2015.  Offsetting the declining margin, the Company has been successful in increasing interest earning assets, particularly loans.  For 2015, average loans have increased by $29.6 million compared to the first nine months of 2014.  The provision for loan losses decreased $120,000 for the nine month comparable periods.

At September 30, 2015, total assets were $954.0 million, up from total assets of $913.0 million as of September 30, 2014 and up $29.0 million from total assets of $925.0 million at December 31, 2014.  Compared to December 31, 2014, available for sale investments have decreased $5.5 million, mostly due to unattractive yields in the market.  However, net loans have increased $28.7 million, or 5.2%, compared to the end of last year.  Included within this loan growth is $11.2 million that has come from the continued success in growing loans in the Mill Hall / Lock Haven market. Asset quality remains strong, and improving, with non-performing assets to total loans at 1.44% as of September 30, 2015 compared to 1.67% at December 31, 2014 and September 30, 2014.  Annualized net charge-offs as a percent of average loans remains very low at .03%.

Stockholders' equity totaled $103.9 million at September 30, 2015, which compares to $100.5 million at December 31, 2014 and $99.2 million at September 30, 2014.  For 2015, net income of $9.2 million was offset by cash dividends of $4.0 million and net treasury share purchases and re-issues of $2.0 million.  A regular cash dividend of $.41 per share was paid on September 25, 2015 to shareholders of record on September 18, 2015.  This regular quarterly cash dividend is an increase of 2.5% over the regular dividend declared a year ago.  Additionally, due to the continued outstanding financial performance, the Board of Directors declared a one-time special cash dividend of $.10 per share which was also paid on September 25, 2015 to shareholders of record on September 18, 2015. 

"Our strong financial performance has permitted us to continue paying an attractive cash dividend and reflects the Board of Directors' desire to provide total shareholder return to our shareholder base. Additionally, our Management Team plus numerous teams of dedicated employees have been extremely busy during the third quarter working on the acquisition of FNB and our expansion into the Lebanon Valley Region of Pennsylvania.  Teams from both First Citizens and FNB have worked diligently on the merger and we anticipate a successful closing and conversion in the fourth quarter of 2015.  As work progresses on the merger, we remain optimistic about the tremendous growth opportunities this new market provides," added Mr. Black. 

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.

SOURCE Citizens Financial Services, Inc.