570-662-0422 15 S. Main Street
570-662-8512 (fax) Mansfield, PA 16933
Citizens Financial Reports Second Quarter Earnings
MANSFIELD, PENNSYLVANIA - Citizens Financial Services, Incorporated (OTC BB: CZFS) President Richard E. Wilber has released its financial performance through June 30, 2003. Earnings for quarter ending June 30, 2003, were $1,382,000 as compared to $1,415,000 for the same quarter last year, representing a 2.3% decrease.
Total assets for First Citizens were $446.5 million, an increase of 3.6% over June 30, 2002. Total deposits are $391.9 million while total loans are $303 million - an increase of 3.8% and 6.2%, respectively.
Earnings for the first half of 2003 were $2.7 million, a 1% decline from the comparable period in 2002. The primary reason that earnings have been limited is due to the very unusual interest rate environment that the banking industry is faced with.
Earnings per share in the current quarter were 49 cents versus 50 cents in the comparable quarter 2002. Total stockholders' equity is $39.5 million as compared to $35.9 million one year ago - a 9.9% improvement. The common stock market price remains strong at approximately $27.63 - a 57% increase over the $17.60 one year ago. The recently declared cash dividend of 18 1/2 cents represents a 2.7% yield on the per share market price.
President Richard E. Wilber stated, "We are very proud of the results we received during the first half of 2003 considering that national interest rates are lower than we've seen in decades. The Federal Reserve continues to hope that lowering rates will stimulate more economic growth. This has caused the yield on our loan portfolio to decline significantly as the refinancing binge continues. Furthermore, our investment portfolio yield has likewise declined due to the unusual amount of bonds "called" and the accelerated prepayments on mortgage-backed securities. Offsetting the decline in asset yield is a reduction in the cost of interest-bearing deposits, but this decline has been somewhat more modest and has tightened our net interest margin. We are committed to meeting the challenges created by a very different interest rate environment. I believe our on-going management of assets and liabilities over a variety of interest rate environments is serving us well."
| CITIZENS FINANCIAL SERVICES, INC. | ||
| CONSOLIDATED BALANCE SHEET | ||
| (UNAUDITED) | ||
June 30 | December 31 | |
| (in thousands, except per share data) | 2003 | 2002 |
| ASSETS: | ||
| Cash and due from banks: | ||
| Noninterest-bearing | $ 13,255 | $ 11,173 |
| Interest-bearing | 9,955 | 421 |
| Total cash and cash equivalents | 23,210 | 11,594 |
| Available-for-sale securities | 96,289 | 100,725 |
| Loans (net of allowance for loan losses of $3,769 and $3,621) | 299,188 | 294,836 |
| Premises and equipment | 10,966 | 11,134 |
| Accrued interest receivable | 1,720 | 1,976 |
| Goodwill | 6,905 | 6,905 |
| Core deposit intangible | 1,195 | 1,413 |
| Other assets | 6,976 | 4,075 |
| TOTAL ASSETS | $ 446,449 | $ 432,658 |
| LIABILITIES: | ||
| Deposits: | ||
| Noninterest-bearing | $ 44,475 | $ 40,143 |
| Interest-bearing | 347,403 | 332,908 |
| Total deposits | 391,878 | 373,051 |
| Borrowed funds | 11,857 | 17,027 |
| Accrued interest payable | 1,626 | 2,077 |
| Other liabilities | 1,642 | 2,097 |
| TOTAL LIABILITIES | 407,003 | 394,252 |
| STOCKHOLDERS' EQUITY: | ||
| Common Stock | ||
| $1.00 par value; authorized 10,000,000 shares; | ||
| issued 2,882,070 shares in 2003 and 2002, respectively | 2,882 | 2,882 |
| Additional paid-in capital | 9,474 | 9,473 |
| Retained earnings | 26,161 | 24,447 |
| TOTAL | 38,517 | 36,802 |
| Accumulated other comprehensive income | 1,878 | 2,553 |
| Less: Treasury Stock, at cost | ||
| 55,162 shares | (949) | (949) |
| TOTAL STOCKHOLDERS' EQUITY | 39,446 | 38,406 |
| TOTAL LIABILITIES AND | ||
| STOCKHOLDERS' EQUITY | $ 446,449 | $ 432,658 |
| The accompanying notes are an integral part of these unaudited financial statements. | ||
| Financial Highlights (In thousands, except per share and ratio data.) | ||
| (Unaudited) | ||
2003 | 2002 | |
| Six Months Ended June 30 | ||
| Net income | $ 2,746 | $ 2,775 |
| Comprehensive income | 2,072 | 3,431 |
| Per common share data: | ||
| Earnings per share | 0.97 | 0.98 |
| Cash dividends declared | 0.365 | 0.335 |
| Performance ratios: | ||
| Return on average assets | 1.27% | 1.32% |
| Return on average equity | 15.04% | 16.77% |
| Three Months Ended June 30 | ||
| Net income | $ 1,382 | $ 1,415 |
| Per common share data: | ||
| Earnings per share | 0.49 | 0.5 |
| Cash dividends declared | 0.185 | 0.17 |
| Performance ratios: | ||
| Return on average assets | 1.26% | 1.32% |
| Return on average equity | 14.96% | 16.88% |
| At June 30 | ||
| Assets | $446,449 | $ 430,830 |
| Investment securities: | ||
| Available-for-sale | 96,289 | 105,839 |
| Loans (net of unearned income) | 302,957 | 285,176 |
| Allowance for loan losses | 3,769 | 3,409 |
| Deposits | 391,878 | 377,468 |
| Stockholders' Equity | 39,446 | 35,882 |
| Non-performing assets | 2,724 | 2,639 |
| Average leverage ratio | 6.84% | 6.08% |
| Per common share data: | ||
| Book value | $ 13.95 | $ 12.82 |
| Market value (average of bid/ask price) | 27.75 | 17.60 |
| Market price to book value ratio | 198.93% | 137.29% |
| CITIZENS FINANCIAL SERVICES, INC. | ||||
| CONSOLIDATED STATEMENT OF INCOME | ||||
| (UNAUDITED) | ||||
| (in thousands, except per share data) | 2003 | 2002 | 2003 | 2002 |
| INTEREST INCOME: | ||||
| Interest and fees on loans | $ 5,315 | $ 5,314 | $ 10,719 | $ 10,610 |
| Interest-bearing deposits with banks | 17 | 25 | 21 | 31 |
| Investment securities: | ||||
| Taxable | 871 | 1,226 | 1,765 | 2,506 |
| Nontaxable | 121 | 167 | 258 | 352 |
| Dividends | 77 | 93 | 159 | 193 |
| TOTAL INTEREST INCOME | 6,401 | 6,825 | 12,922 | 13,692 |
| INTEREST EXPENSE: | ||||
| Deposits | 2,190 | 2,537 | 4,429 | 5,164 |
| Borrowed funds | 74 | 95 | 149 | 191 |
| TOTAL INTEREST EXPENSE | 2,264 | 2,632 | 4,578 | 5,355 |
| NET INTEREST INCOME | 4,137 | 4,193 | 8,344 | 8,337 |
| Provision for loan losses | 120 | 90 | 255 | 210 |
| NET INTEREST INCOME AFTER | ||||
| PROVISION FOR LOAN LOSSES | 4,017 | 4,103 | 8,089 | 8,127 |
| NON-INTEREST INCOME: | ||||
| Service charges | 772 | 776 | 1,482 | 1,512 |
| Trust | 171 | 148 | 295 | 282 |
| Other | 328 | 230 | 587 | 561 |
| Realized securities gains, net | 140 | 186 | 400 | 216 |
| TOTAL NON-INTEREST INCOME | 1,411 | 1,340 | 2,764 | 2,571 |
| NON-INTEREST EXPENSES: | ||||
| Salaries and employee benefits | 1,942 | 1,808 | 3,836 | 3,521 |
| Occupancy | 240 | 254 | 518 | 505 |
| Furniture and equipment | 176 | 242 | 354 | 472 |
| Professional fees | 142 | 134 | 304 | 290 |
| Amortization | 109 | 114 | 217 | 240 |
| Other | 1,021 | 1,038 | 2,032 | 2,029 |
| TOTAL NON-INTEREST EXPENSES | 3,630 | 3,590 | 7,261 | 7,057 |
| Income before provision for income taxes | 1,798 | 1,853 | 3,592 | 3,641 |
| Provision for income taxes | 416 | 438 | 846 | 866 |
| NET INCOME | $ 1,382 | $ 1,415 | $ 2,746 | $ 2,775 |
| OPERATING CASH EARNINGS** | $ 1,453 | $ 1,491 | $ 2,890 | $ 2,934 |
| Earnings Per Share | $ 0.49 | $ 0.50 | $ 0.97 | $ 0.98 |
| Operating Cash Earnings Per Share** | $ 0.51 | $ 0.53 | $ 1.02 | $ 1.04 |
| Cash Dividend Declared | $ 0.185 | $ 0.170 | $ 0.365 | $ 0.335 |
| **Operating cash earnings are net income before amortization of intangible assets, net of tax. | ||||
2,826,908 | 2,826,908 | 2,826,908 | 2,826,908 | |
