Citizens Financial Services, Inc. Reports Record 2012 Earnings

Jan 22, 2013, 16:37 ET from Citizens Financial Services, Incorporated

MANSFIELD, Pa., Jan. 22, 2013 /PRNewswire/ -- Citizens Financial Services, Incorporated (OTC BB: CZFS), parent company of First Citizens Community Bank, has released its unaudited financial performance for the twelve months and three months ended December 31, 2012.

For the year ended December 31, 2012, net income totaled $14,215,000 which compares to net income of $12,832,000 for 2011. This represents an increase of $1,383,000, or 11%. Earnings per share of $4.88 increased 11.9% from $4.36 per share last year.  Annualized return on equity for the comparable periods was 17.48% and 17.86%, while return on assets was 1.62% and 1.52%, respectively.

For the three months ended December 31, 2012, net income totaled $3,549,000 which compares to $3,477,000 for the same period last year. This represents an increase of $72,000, or 2.1%. Earnings per share of $1.22 increased 3.4% from $1.18 per share for the fourth quarter last year.

Net interest income, before the provision for loan losses, increased from $28,610,000 for the twelve months ended December 31, 2011 to $30,426,000 in 2012, an increase of $1,816,000 or 6.3%. On a tax equivalent basis, the net interest margin on interest earning assets increased from 3.94% last year to 3.99% this year.  CEO and President Randall E. Black stated, "Even with the slight improvement in our margin, the current interest rate environment remains difficult.  Yields on interest earning assets decreased from 5.16% for 2011 to 4.91% this year.  The yield on investment securities decreased 34 basis points primarily due to our strategy to invest in shorter term investments. Our margin stability compared to last year was directly related to our ability to decrease our cost of funds, which decreased from 1.41% last year to 1.09% this year.  We do expect that 2013 will bring challenges as the prolonged low interest rate environment persists."

At December 31, 2012, total assets were $882.4 million, which was an increase of $3.8 million from total assets of $878.6 million at December 31, 2011.  The investment portfolio totaled $310.3 million, which was a decrease of $8.5 million from the December 31, 2011 balance of $318.8 million.  Net loans increased $14.7 million to a total of $495.7 million at December 31, 2012 from the end of last year.  The 3.1% increase in net loans was primarily due to growth in commercial and municipal loan portfolios.  The low interest rate environment continues to have a dramatic impact on fixed, residential mortgage rates.  "We have chosen to service and sell most of the residential loans that we have originated on the secondary market rather than significantly increasing our interest rate risk.  During 2012 we originated and sold $37 million of residential mortgages compared to $10 million during 2011," stated Mr. Black.

As of December 31, 2012, non-performing assets totaled $9.2 million and represented 1.83% as a percent of loans. This compares to 2.11% as of December 31, 2011.  Credit quality has continued to improve and has resulted in a decrease in the provision for loan losses for 2012.  For 2012, the provision totaled $420,000 compared to $675,000 recorded last year.  Annualized net charge-offs as a percent of average loans remains very low at .02%.

Stockholders' equity totaled $89.5 million at December 31, 2012, which was an increase of $8 million or 9.8% from December 31, 2011.  On October 26, 2012 a cash dividend of $.305 per share was paid representing the regular fourth quarter dividend to shareholders.  Additionally, on December 31, 2012 a cash dividend of $.38 per share was paid and represented an accelerated dividend for the regularly scheduled dividend payment due for January 2013.  "With the significant issues in Washington regarding the very complex fiscal cliff tax issues that were not resolved until the final hours of 2012, the Board of Directors made the decision to accelerate the first quarter 2013 dividend to benefit our shareholders that could have been significantly impacted by the potential tax increase in 2013 on dividends that was on the table by the lawmakers.  Our strong capital position and continued outstanding financial performance put us in a position to accelerate the January 2013 dividend.  The cash dividend of $.38 per share represented an increase of $.085 per share, or 29%, over the quarterly dividend of $.295 per share paid in January 2012.  This increase in the cash dividend results in a very attractive dividend yield, and is consistent with the Board of Directors' desire to provide total shareholder return to our shareholder base," commented 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.

 

CITIZENS FINANCIAL SERVICES, INC.



CONSOLIDATED BALANCE SHEET



(UNAUDITED)







December 31

December 31

(in thousands except share data)

2012

2011

ASSETS:



Cash and due from banks:



  Noninterest-bearing

$           12,307

$           9,960

  Interest-bearing

14,026

20,472

Total cash and cash equivalents

26,333

30,432




Available-for-sale securities

310,252

318,823




Loans held for sale

1,458

-




Loans (net of allowance for loan losses: $6,784 at December 31, 2012 and 



  $6,487 at December 31, 2011)

495,679

481,022




Premises and equipment

11,521

11,702

Accrued interest receivable

3,816

3,621

Goodwill

10,256

10,256

Bank owned life insurance

14,177

13,669

Other assets

8,935

9,042




TOTAL ASSETS

$         882,427

$       878,567




LIABILITIES:



Deposits:



  Noninterest-bearing

$           89,494

$         85,605

  Interest-bearing

647,602

648,388

Total deposits

737,096

733,993

Borrowed funds

46,126

53,882

Accrued interest payable

1,143

1,512

Other liabilities

8,587

7,712

TOTAL LIABILITIES

792,952

797,099

STOCKHOLDERS' EQUITY:



Preferred Stock $1.00 par value; authorized



  3,000,000 shares at December 31, 2012 and December 31, 2011; 



    none issued in 2012 or 2011

-

-

Common stock



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



  December 31, 2011;  issued 3,161,324 shares at December 31, 2012 and 3,132,866 at 



   December 31, 2011

3,161

3,133

Additional paid-in capital

16,468

15,313

Retained earnings

71,813

63,337

Accumulated other comprehensive income

4,631

4,949

Treasury stock, at cost:  262,921 shares at December 31, 2012 and 230,203 shares at  



  December 31, 2011

(6,598)

(5,264)

TOTAL STOCKHOLDERS' EQUITY

89,475

81,468

TOTAL LIABILITIES AND



   STOCKHOLDERS' EQUITY

$         882,427

$       878,567




 

CITIZENS FINANCIAL SERVICES, INC.





CONSOLIDATED STATEMENT OF INCOME





(UNAUDITED)






Three Months Ended

Twelve Months Ended


December 31

December 31

(in thousands, except per share data)

2012

2011

2012

2011

INTEREST INCOME:





Interest and fees on loans

$       7,418

$      7,503

$     29,770

$    29,916

Interest-bearing deposits with banks

10

17

21

81

Investment securities:





    Taxable

1,002

1,132

4,521

4,575

    Nontaxable

909

978

3,702

3,666

    Dividends

22

16

71

55

TOTAL INTEREST INCOME

9,361

9,646

38,085

38,293

INTEREST EXPENSE:





Deposits

1,406

1,841

6,113

7,944

Borrowed funds

367

414

1,546

1,739

TOTAL INTEREST EXPENSE

1,773

2,255

7,659

9,683

NET INTEREST INCOME

7,588

7,391

30,426

28,610

Provision for loan losses

105

150

420

675

NET INTEREST INCOME AFTER





    PROVISION FOR LOAN LOSSES

7,483

7,241

30,006

27,935

NON-INTEREST INCOME:





Service charges

1,129

1,122

4,475

4,380

Trust

172

199

644

665

Brokerage and insurance

87

55

392

352

Gains on loans sold

472

97

759

208

Investment securities gains (losses), net

43

(17)

604

334

Earnings on bank owned life insurance

129

127

507

498

Other

114

156

456

479

TOTAL NON-INTEREST INCOME

2,146

1,739

7,837

6,916

NON-INTEREST EXPENSES:





Salaries and employee benefits

2,892

2,436

11,018

9,996

Occupancy 

337

317

1,265

1,331

Furniture and equipment

96

111

411

449

Professional fees

190

218

891

744

FDIC insurance

115

45

468

592

Pennsylvania shares tax

161

101

602

541

Other

1,154

1,261

4,642

4,756

TOTAL NON-INTEREST EXPENSES

4,945

4,489

19,297

18,409

Income before provision for income taxes

4,684

4,491

18,546

16,442

Provision for income taxes

1,135

1,014

4,331

3,610

NET INCOME

$       3,549

$      3,477

$     14,215

$    12,832






PER COMMON SHARE DATA:





Net Income - Basic

$          1.22

$        1.18

$          4.88

$        4.36

Net Income - Diluted

$          1.22

$        1.18

$          4.88

$        4.36

Cash Dividends Paid 

$       0.685

$      0.370

$       1.580

$      1.160






Number of shares used in computation - basic

2,900,798

2,936,594

2,911,885

2,943,028

Number of shares used in computation - diluted

2,901,242

2,936,594

2,913,527

2,943,028






 

Financial Highlights











Three Months Ended

Nine Months Ended


December 31,

December 31,


2012

2011

2012

2011

Performance Ratios and Share Data:





    Return on average assets (annualized)

1.62%

1.61%

1.62%

1.52%

    Return on average equity (annualized)

16.74%

18.45%

17.48%

17.86%

    Net interest margin (tax equivalent)

3.96%

3.96%

3.99%

3.94%

    Cash dividends paid per share 

$                        0.685

$                       0.370

$                     1.580

$            1.160

    Earnings per share - basic

$                          1.22

$                         1.18

$                       4.88

$              4.36

    Earnings per share - diluted

$                          1.22

$                         1.18

$                       4.88

$              4.36

Number of shares used in computation - basic

2,900,798

2,936,594

2,911,885

2,943,028

Number of shares used in computation - diluted

2,901,242

2,936,594

2,913,527

2,943,028


























Balance Sheet Highlights (dollars in thousands):

December 31, 2012

December 31, 2011








Assets

$                   882,427

$                   878,567



Investment securities:





    Available for sale

310,352

318,823



Loans (net of unearned income)

502,463

487,509



Allowance for loan losses

6,784

6,487



Deposits

737,096

733,993



Stockholders' Equity

89,475

81,468



Non-performing assets

9,189

10,300



Non-performing assets to total loans

1.83%

2.11%



Annualized net charge-offs to total loans

0.02%

0.02%



Average Leverage Ratio

9.70%

8.83%



Common shares outstanding

2,898,402

2,902,663



Book value per share

$                       29.27

$                       26.36








 

SOURCE Citizens Financial Services, Incorporated