Citizens Financial Services, Inc. Reports Record 2009 Earnings

Jan 28, 2010, 08:05 ET from Citizens Financial Services, Inc.

MANSFIELD, Pa., Jan. 27 /PRNewswire-FirstCall/ -- Citizens Financial Services, Incorporated (OTC Bulletin Board: CZFS), parent company of First Citizens National Bank, has released its unaudited financial performance for 2009.  

Net income for the twelve months ended December 31, 2009 totaled $9,864,000 which compares to $6,905,000 for 2008.  This represents an increase of $2,959,000, or 42.9%.  The comparison to 2008's results is impacted by the $4.1 million other than temporary impairment charge recorded in the third quarter of 2008 related to investments in Freddie Mac preferred stock and a Lehman Brothers corporate bond.  Earnings per share of $3.43 increased 42.9% from $2.40 per share for the same period last year.  Return on equity for the comparable periods was 17.65% and 13.51%, while return on assets was 1.42% and 1.13%, respectively.

Net income for the three months ended December 31, 2009 totaled $2,658,000 which compares to $3,490,000 for the fourth quarter of 2008, a decrease of $832,000.  Fourth quarter 2008 results included a tax benefit related to the third quarter write-down of the investments in Freddie Mac preferred stock.  The Federal Government's October 3, 2008 bailout bill permitted the write-down of the Freddie Mac preferred stock to be treated as an ordinary loss, allowing a tax benefit of approximately $1,000,000.  However, accounting rules did not allow the recognition of the tax benefit until the fourth quarter.  Earnings per share for the three months ended December 31, 2009 and 2008 were $.93 and $1.21 per share, respectively.  Return on equity for the comparable periods was 18.19% and 27.15%, while return on assets was 1.48% and 2.15%, for the respective time periods.

CEO and President Randall E. Black stated, "Our record 2009 performance was achieved not without its challenges.  Non-interest expenses increased $1.9 million, of which approximately $1.0 million is attributable to an increase in FDIC insurance premiums.  This includes a special assessment of approximately $330,000.  The increase in premiums was necessary in order to replenish the FDIC insurance fund, which has declined due to the significant increase in bank failures throughout the country.  On an after tax basis, this increase has reduced earnings per share in 2009 by $.23.  Excluding the increase in FDIC insurance premiums, overall expenses would have increased $837,000 or 5.3%."

As of December 31, 2009, total assets were $729.5 million, which was an increase of $60.9 million from December 31, 2008.  The investment portfolio increased $24.4 million since December 31, 2008 to a total of $198.6 million.  Net loans have increased $23.1 million, or 5.4%, since last year.  Total deposits of $605.6 million have increased $58.9 million from December 31, 2008.  The economic downturn, high unemployment rates and the struggles of the agricultural community have had an impact on the credit quality as non-performing assets as a percent of loans was 1.55% at December 31, 2009 which compared to 0.73% at the end of 2008.    As a result, the provision for loan losses for the twelve months ended December 31, 2009 was $925,000 compared to $330,000 for the same period last year, an increase of $595,000.  Credit quality continues to compare favorably to our peer group.

Excluding accumulated other comprehensive income, stockholders' equity totaled $59.5 million at December 31, 2009, representing an increase of $6.7 million, or 12.8%, from December 31, 2008.  Book value per share at December 31, 2009 was $20.71 compared with $18.52 last December, an increase of 11.8%.  As a result of our outstanding performance in 2009, the Board of Directors declared a one-time special cash dividend of $.05 per share on November 5, 2009 which was paid on December 10, 2009 to shareholders of record on November 16, 2009. This one-time special cash dividend resulted in an overall increase of 4.04% in dividends declared in 2009 compared with 2008.

Additionally in January 2010, a cash dividend of $.25 per share was declared and will be paid on January 29, 2010 to shareholders of record, as of January 15, 2010, an increase of 4.2% over the January 2009 dividend.  First Citizens remains well capitalized with capital levels exceeding regulatory levels.  "Our financial strength and continued profitability give us the affordability to continue to provide a very attractive dividend yield to our shareholders and demonstrates our commitment to provide total shareholder return," stated 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 17 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)                                                              
                                                                             
                                                      December 31  December 31
    (in thousands, except share and per share data)       2009         2008 
    -----------------------------------------------       ----         ---- 
    ASSETS:                                                                  
    Cash and due from banks:                                                 
      Noninterest-bearing                                $9,505       $9,692 
      Interest-bearing                                   21,944       10,164 
    ------------------                                   ------       ------ 
    Total cash and cash equivalents                      31,449       19,856 
                                                                             
    Available-for-sale securities                       198,582      174,139 
                                                                             
    Loans (net of allowance for loan losses:                                 
     $4,888 at December 31, 2009 and                                         
     $4,378 at December 31, 2008)                       451,496      428,436 
                                                                             
    Premises and equipment                               12,227       12,762 
    Accrued interest receivable                           3,141        2,912 
    Goodwill                                             10,256       10,256 
    Bank owned life insurance                            12,667       12,176 
    Other assets                                          9,659        8,075 
    ------------                                          -----        ----- 
                                                                             
    TOTAL ASSETS                                       $729,477     $668,612 
    ============                                       ========     ======== 
                                                                             
    LIABILITIES:                                                             
    Deposits:                                                                
      Noninterest-bearing                               $60,061      $55,545 
      Interest-bearing                                  545,498      491,135 
    ------------------                                  -------      ------- 
    Total deposits                                      605,559      546,680 
    Borrowed funds                                       54,115       61,204 
    Accrued interest payable                              2,037        2,233 
    Other liabilities                                     6,239        5,725 
    -----------------                                     -----        ----- 
    TOTAL LIABILITIES                                   667,950      615,842 
    -----------------                                   -------      ------- 
    STOCKHOLDERS' EQUITY:                                                    
    Common stock                                                             
      $1.00 par value; authorized 10,000,000                                 
       shares; issued 3,076,253 shares at                 3,076        3,048 
       December 31, 2009 and 3,048,289                                       
       shares at December 31, 2008                                           
    Additional paid-in capital                           13,457       12,981 
    Retained earnings                                    47,353       41,034 
    Accumulated other comprehensive income                2,041           26 
    Treasury stock, at cost:  204,437 shares at                              
     December 31, 2009 and 200,918 shares at                                 
     December 31, 2008                                   (4,400)      (4,319)
    -------------------                                  ------       ------ 
    TOTAL STOCKHOLDERS' EQUITY                           61,527       52,770 
    --------------------------                           ------       ------ 
    TOTAL LIABILITIES AND                                                    
     STOCKHOLDERS' EQUITY                              $729,477     $668,612 
    =====================                              ========     ======== 
    
    
    
    CITIZENS FINANCIAL SERVICES, INC.                                         
    CONSOLIDATED STATEMENT OF INCOME                                          
    (UNAUDITED)                                                               
                                      Three Months Ended   Twelve Months Ended
                                         December 31,         December 31,    
                                         ------------         ------------    
    (in thousands, except share  
     and per share data)                2009      2008       2009      2008 
    --------------------                ----      ----       ----      ---- 
    INTEREST INCOME:                                                          
    Interest and fees on loans        $7,689     $7,608    $30,305    $30,710 
    Interest-bearing                                                         
     deposits with banks                  16         23         43         57 
    Investment securities:     
        Taxable                        1,397      1,437      6,044      4,828 
        Nontaxable                       612        427      2,195      1,475 
        Dividends                          8          4         28        168 
    -------------                       ----       ----       ----       ---- 
    TOTAL INTEREST INCOME              9,722      9,499     38,615     37,238 
    ---------------------              -----      -----     ------     ------ 
    INTEREST EXPENSE:               
    Deposits                           2,667      2,984     11,222     11,492 
    Borrowed funds                       490        536      2,009      2,566 
    --------------                      ----       ----      -----      ----- 
    TOTAL INTEREST EXPENSE             3,157      3,520     13,231     14,058 
    ----------------------             -----      -----     ------     ------ 
    NET INTEREST INCOME                6,565      5,979     25,384     23,180 
    Provision for loan losses            225        105        925        330 
    -------------------------           ----       ----       ----       ---- 
    NET INTEREST INCOME AFTER   
     PROVISION FOR LOAN LOSSES         6,340      5,874     24,459     22,850 
    --------------------------         -----      -----     ------     ------ 
    NON-INTEREST INCOME:   
    Service charges                      948        898      3,612      3,489 
    Trust                                124        110        521        561 
    Brokerage and insurance               56         64        284        240 
    Gains on loans sold                  138         38        430         84 
    Investment securities gains  
     (losses), net                        21          -        139     (4,089)
    Earnings on bank owned life  
     insurance                           128        101        492        362
    Other                                 91        142        369        509
    -----                               ----       ----       ----       ----
    TOTAL NON-INTEREST INCOME          1,506      1,353      5,847      1,156
    -------------------------          -----      -----      -----      -----
    NON-INTEREST EXPENSES:    
    Salaries and employee benefits     2,454      2,215      9,472      8,725
    Occupancy                            290        296      1,179      1,162
    Furniture and equipment              101        111        437        479
    Professional fees                    201        140        660        625
    FDIC insurance                       170         52      1,200        156
    Other                              1,230      1,178      4,811      4,730
    -----                              -----      -----      -----      -----
    TOTAL NON-INTEREST EXPENSES        4,446      3,992     17,759     15,877
    ---------------------------        -----      -----     ------     ------
    Income before provision for 
     income taxes                      3,400      3,235     12,547      8,129
    Provision (benefit)                                                      
     for income taxes                    742       (255)     2,683      1,224
    -------------------                  ---       ----      -----      -----
    NET INCOME                        $2,658     $3,490     $9,864     $6,905
    ==========                        ======     ======     ======     ======
                                                                             
    Earnings Per Share                 $0.93      $1.21      $3.43      $2.40
    ==================                 =====      =====      =====      =====
    Cash Dividends Paid Per Share     $0.300     $0.290     $1.030     $0.990
    =============================     ======     ======     ======     ======
                                                                             
    Weighted average number of    
     shares outstanding            2,873,393  2,876,087  2,873,488  2,878,907
    
    
    
    Financial Highlights                                                    
    --------------------                                                    
                                                                            
                                    Three Months Ended    Twelve Months Ended
                                        December 31            December 31   
                                      2009       2008        2009       2008 
    Performance Ratios and                                                  
     Share Data:                                                            
        Return on average assets                                            
         (annualized)                 1.48%      2.15%       1.42%      1.13%
        Return on average equity                                            
         (annualized)                18.19%     27.15%      17.65%     13.51%
        Net interest margin (tax                                            
         equivalent)                  4.21%      4.22%       4.23%      4.36%
        Cash dividends paid                                                 
         per share                   $0.30      $0.29       $1.03      $0.99 
        Earnings per share           $0.93      $1.21       $3.43      $2.40 
        Weighted average shares                                             
         outstanding             2,873,393  2,876,087   2,873,488  2,878,907 
    
                                                                           
                                                                           
    Balance Sheet Highlights 
     (dollars in thousands):          December 31, 2009  December 31, 2008 
                                      -----------------  ----------------- 
                                                                           
    Assets                                     $729,477           $668,612 
    Investment securities:                                                 
        Available for sale                      198,582            174,139 
    Loans (net of unearned income)              456,384            432,814 
    Allowance for loan losses                     4,888              4,378 
    Deposits                                    605,559            546,680 
    Stockholders' Equity                         61,527             52,770 
    Non-performing assets                         7,173              3,176 
    Non-performing assets to                                               
     total loans                                   1.55%              0.73%
    Average Leverage Ratio                         8.15%              7.91%
    Common shares outstanding                 2,871,816          2,847,371 
    Book value per share                         $20.71             $18.52 

SOURCE Citizens Financial Services, Inc.



RELATED LINKS

http://www.firstcitizensbank.com