Citizens Financial Services, Inc. Reports Second Quarter 2015 Earnings

Jul 27, 2015, 11:14 ET from Citizens Financial Services, Inc.

MANSFIELD, Pa., July 27, 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 six months ended June 30, 2015.

For the three months ended June 30, 2015 net income totaled $3,189,000 which compares to net income of $3,365,000 for the second quarter of 2014, which is a decrease of $176,000, or 5.2%. Earnings per share of $1.06 for the second quarter compares to $1.11 for the second quarter last year.  Annualized return on equity for the comparable periods was 12.45% and 13.88%, while return on assets was 1.36% and 1.49%, respectively.

For the six months ended June 30, 2015, net income totaled $6,309,000 which compares to net income of $6,541,000 for the comparable 2014 period. This represents a decrease of $232,000, or 3.5%. Earnings per share of $2.09 for the first six months of 2015 compares to $2.15 last year.  Annualized return on equity for the comparable periods was 12.41% and 13.63%, while return on assets was 1.36% and 1.45%, respectively. 

Net interest income before the provision for loan loss has decreased from $15,162,000 for the six months ended June 30, 2014, to $15,148,000 for 2015.  For the six months ended June 30, 2015, interest income decreased $131,000, which has been offset by a decrease in interest expense of $117,000.  The margin has decreased from 3.89% last year to 3.81% for 2015.  CEO and President Randall E. Black stated, "Despite the ongoing yield curve challenges that we and other banks are forced to deal with, our financial results remain strong and compare favorably to peers.  The challenging yield curve has resulted in continued pressure on the tax-effected yield on interest earning assets, which has decreased from 4.48% for the six months ended June 30, 2014 to 4.36% this year.  The cost of interest bearing liabilities has also declined, from .71% last year to .67% in 2015.  We have been able to mitigate the declining margin with positive growth in interest earning assets, particularly average loans, which have increased by $25.9 million compared to June 30, 2014".  The provision for loan losses decreased $90,000 for the comparable periods.

At June 30, 2015, total assets were $942.5 million, up from total assets of $914.2 million as of June 30, 2014 and up $17.5 million from total assets of $925.0 million at December 31, 2014.  Compared to December 31, 2014, available for sale investments have decreased $1.3 million, mostly due to unattractive yields in the market.  However, net loans have increased $17.4 million, or 3.2%, compared to the end of last year.  Contributing to this growth is the continued success in growing loans and deposits in the new branch in the Mill Hall / Lock Haven market.  Asset quality remains strong, and continues to improve, with non-performing assets to total loans at 1.61% as of June 30, 2015 compared to 1.67% at year end and 1.70% last June.  Annualized net charge-offs as a percent of average loans is very low at .03%.

Stockholders' equity totaled $103.2 million at June 30, 2015, which compares to $100.5 million at December 31, 2014 and $98.2 million at June 30, 2014.  For 2015, net income of $6.3 million was offset by cash dividends of $2.4 million and treasury share purchases of $1.0 million.  Additionally, the unrealized gain on available for sale investment securities decreased $.5 million from the end of 2014 as a result of changes in interest rates impacting the fair value of investment securities.  A cash dividend of $.405 per share was paid on June 26, 2015 to shareholders of record on June 19, 2015.  This quarterly cash dividend is an increase of 5.2% over the dividend declared a year ago, adjusted for stock dividends.  "Capital levels are very strong and our continued 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.  Our strong capital position has also enabled us to seek growth opportunities, including our recently announced signing of a definitive merger agreement to acquire The First National Bank of Fredericksburg.  We are excited about the tremendous opportunity to grow our franchise and expand into the Lebanon Valley Region of Pennsylvania, 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.

 

CITIZENS FINANCIAL SERVICES, INC.




CONSOLIDATED BALANCE SHEET




(UNAUDITED)









June 30

December 31

June 30

(in thousands except share data)

2015

2014

2014

ASSETS:




Cash and due from banks:




Noninterest-bearing

$      9,910

$      10,091

$   14,742

Interest-bearing

1,002

1,332

998

Total cash and cash equivalents

10,912

11,423

15,740





Interest bearing time deposits with other banks

5,960

5,960

2,480





Available-for-sale securities

304,792

306,146

312,322





Loans held for sale

1,152

497

545





Loans (net of allowance for loan losses: $6,959 at June 30, 2015;




$6,815 at December 31, 2014 and $6,751 at June 30, 2014)

564,692

547,290

533,126





Premises and equipment

12,582

12,357

11,501

Accrued interest receivable

3,584

3,644

3,557

Goodwill

10,256

10,256

10,256

Bank owned life insurance

20,615

20,309

14,921

Other assets

7,934

7,166

9,721





TOTAL ASSETS

$  942,479

$    925,048

$ 914,169





LIABILITIES:




Deposits:




  Noninterest-bearing

$  100,469

$      95,526

$   94,434

  Interest-bearing

691,418

678,407

671,022

Total deposits

791,887

773,933

765,456

Borrowed funds

39,194

41,799

43,075

Accrued interest payable

674

756

735

Other liabilities

7,499

8,032

6,664

TOTAL LIABILITIES

839,254

824,520

815,930

STOCKHOLDERS' EQUITY:




Preferred Stock $1.00 par value; authorized




3,000,000 shares; none issued in 2015 or 2014




Common stock




$1.00 par value; authorized 15,000,000 shares at June 30, 2015, December 31, 2014 and June 30, 2014; issued 3,335,236 shares at June 30, 2015, December 31, 2014 and June 30, 2014







3,335

3,335

3,335

Additional paid-in capital

25,124

25,150

25,142

Retained earnings

83,371

79,512

76,925

Accumulated other comprehensive income (loss)

171

767

1,100

Treasury stock, at cost:  306,560 shares at June 30, 2015; 296,280 shares at December 31, 2014 and 296,758 shares at June 30, 2014




(8,776)

(8,236)

(8,263)

TOTAL STOCKHOLDERS' EQUITY

103,225

100,528

98,239

TOTAL LIABILITIES AND




STOCKHOLDERS' EQUITY

$  942,479

$    925,048

$ 914,169

 

 

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)

2015

2014

2015

2014

INTEREST INCOME:





Interest and fees on loans

$       7,129

$      7,118

$     14,168

$    14,106

Interest-bearing deposits with banks

39

13

70

26

Investment securities:





    Taxable

765

849

1,519

1,737

    Nontaxable

801

840

1,649

1,682

    Dividends

34

69

133

119

TOTAL INTEREST INCOME

8,768

8,889

17,539

17,670

INTEREST EXPENSE:





Deposits

1,035

1,094

2,044

2,199

Borrowed funds

172

145

347

309

TOTAL INTEREST EXPENSE

1,207

1,239

2,391

2,508

NET INTEREST INCOME

7,561

7,650

15,148

15,162

Provision for loan losses

120

150

240

330

NET INTEREST INCOME AFTER





    PROVISION FOR LOAN LOSSES

7,441

7,500

14,908

14,832

NON-INTEREST INCOME:





Service charges

1,028

1,102

2,004

2,141

Trust

180

186

374

377

Brokerage and insurance

255

137

382

257

Gains on loans sold

60

30

98

70

Investment securities gains, net

175

75

301

246

Earnings on bank owned life insurance

154

121

306

242

Other

103

104

218

209

TOTAL NON-INTEREST INCOME

1,955

1,755

3,683

3,542

NON-INTEREST EXPENSES:





Salaries and employee benefits

2,993

2,893

6,049

5,810

Occupancy 

348

304

717

654

Furniture and equipment

87

94

215

194

Professional fees

180

208

412

442

FDIC insurance

116

116

232

229

Pennsylvania shares tax

200

191

401

384

Other

1,504

1,194

2,737

2,378

TOTAL NON-INTEREST EXPENSES

5,428

5,000

10,763

10,091

Income before provision for income taxes

3,968

4,255

7,828

8,283

Provision for income taxes

779

890

1,519

1,742

NET INCOME

$       3,189

$      3,365

$       6,309

$      6,541






PER COMMON SHARE DATA:





Net Income - Basic

$          1.06

$        1.11

$          2.09

$        2.15

Net Income - Diluted

$          1.06

$        1.11

$          2.09

$        2.15

Cash Dividends Paid 

$        0.405

$      0.385

$        0.810

$      0.770






Number of shares used in computation - basic

3,019,661

3,039,734

3,022,945

3,040,822

Number of shares used in computation - diluted

3,020,725

3,040,661

3,023,479

3,041,227

 

 

Financial Highlights











Three Months Ended

Six Months Ended


June 30

June 30


2015

2014

2015

2014

Performance Ratios and Share Data:





    Return on average assets (annualized)

1.36%

1.49%

1.36%

1.45%

    Return on average equity (annualized)

12.45%

13.88%

12.41%

13.63%

    Net interest margin (tax equivalent)

3.77%

3.92%

3.81%

3.89%

    Cash dividends paid per share 

$          0.405

$                    0.385

$          0.810

$      0.770

    Earnings per share - basic

$            1.06

$                      1.11

$            2.09

$        2.15

    Earnings per share - diluted

$            1.06

$                      1.11

$            2.09

$        2.15

Number of shares used in computation - basic

3,019,661

3,039,734

3,022,945

3,040,822

Number of shares used in computation - diluted

3,020,725

3,040,661

3,023,479

3,041,227


























Balance Sheet Highlights (dollars in thousands):

June 30, 2015

December 31, 2014

June 30, 2014







Assets

$      942,479

$                925,048

$      914,169


Investment securities:





    Available for sale

304,792

306,146

312,322


Loans (net of unearned income)

571,651

554,105

539,877


Allowance for loan losses

6,959

6,815

6,751


Deposits

791,887

773,933

765,456


Stockholders' Equity

103,225

100,528

98,239


Non-performing assets

9,208

9,227

9,203


Non-performing assets to total loans

1.61%

1.67%

1.70%


Annualized net charge-offs to total loans

0.03%

0.16%

0.25%


Average Leverage Ratio

11.08%

10.99%

10.85%


Common shares outstanding

3,028,676

3,038,956

3,038,477


Book value per share

$          34.03

$                    32.83

$          31.97


 

SOURCE Citizens Financial Services, Inc.



RELATED LINKS

http://www.firstcitizensbank.com