Exhibit 99.1
Contact: Kathleen Campbell, Marketing Director First Citizens National Bank
570-662-0422 15 S. Main Street
570-662-8512 (fax) Mansfield, PA 16933
Citizens Financial Services, Inc. Reports Third Quarter 2007 Earnings
MANSFIELD, PENNSYLVANIA— October 18, 2007 – Citizens Financial Services, Incorporated (OTC BB: CZFS), parent company of First Citizens National Bank, has released its unaudited financial performance for the third quarter of 2007.
Net income for the three months ended September 30, 2007 was $1,754,000 which compares to $1,548,000 for the third quarter last year. This is an increase of $206,000, or 13.3%. On a year to date basis net income through September 30 was $4,894,000 compared with $4,310,000 last year, representing an increase of $584,000, or 13.5%. Earnings per share for the nine months ended September 30, 2007 and 2006 were $1.72 and $1.50 per share, respectively, representing a 14.7% increase. Return on equity for the comparable periods were 14.08% and 13.18%, respectively.
CEO and President Randall E. Black stated, “During the third quarter, we have begun to see some slight improvement in our net interest margin. The Federal Reserve’s decision at its September meeting to cut the federal funds rate 50 basis points has resulted in a slight positive impact on the short-term end of the yield curve. This 50 basis point reduction, as expected, has had a greater impact on improving our margin by reducing the cost of our short term borrowing and deposit costs, compared to the reduction in interest rates on our prime based loan portfolio.”
Net interest income before the provision for loan losses totaled $13,998,000, an increase of $686,000 compared to the first nine months a year ago, while non-interest expenses have increased only $195,000 for the same period. “We continue to examine ways to become a more efficient organization without sacrificing what we do best, serving the customer,” stated Mr. Black.
Since September of last year, total assets have increased $23.5 million, or 4.2%. At the end of September total assets were $584.1 million, which compares to $560.7 million as of last September and $572.2 million as of December 31, 2006. Since last September, net loans have increased $7.6 million, an increase of 1.9%. Total deposits have increased $16.6 million while borrowed funds have increased $2.3 million.
Stockholders’ equity, excluding accumulated other comprehensive income, has increased $3.3 million, or 7.4% since last September. Book value per share at September 30, 2007 was $16.89 compared with $15.76 last year, an increase of 7.2%. In October, a cash dividend of $.23 per share was declared and will be paid to shareholders on October 26, 2007 to record holders as of October 12, 2007, which represents an increase of 4.5% over the October 2006 dividend.
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 16 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) | | | |
| | | | |
| | September 30 | December 31 | September 30 |
(in thousands except share data) | 2007 | 2006 | 2006 |
ASSETS: | | | |
| Cash and due from banks: | | | |
| Noninterest-bearing | $ 10,468 | $ 10,007 | $ 9,616 |
| Interest-bearing | 13 | 8 | 26 |
| Total cash and cash equivalents | 10,481 | 10,015 | 9,642 |
| Available-for-sale securities | 117,787 | 109,743 | 103,301 |
| Loans (net of allowance for loan losses: | | | |
| 2007, $4,112; December 31, 2006, $3,876; and September 30, 2006, $3,841) | 415,328 | 410,897 | 407,769 |
| Premises and equipment | 12,627 | 12,892 | 12,574 |
| Accrued interest receivable | 2,784 | 2,458 | 2,407 |
| Goodwill | 8,605 | 8,605 | 8,605 |
| Bank owned life insurance | 8,293 | 8,047 | 7,967 |
| Other assets | 8,217 | 9,511 | 8,389 |
| | | | |
TOTAL ASSETS | $ 584,122 | $ 572,168 | $ 560,654 |
| | | | |
LIABILITIES: | | | |
| Deposits: | | | |
| Noninterest-bearing | $ 53,867 | $ 48,509 | $ 49,741 |
| Interest-bearing | 410,869 | 398,006 | 398,418 |
| Total deposits | 464,736 | 446,515 | 448,159 |
| Borrowed funds | 66,593 | 75,775 | 64,295 |
| Accrued interest payable | 2,029 | 2,287 | 1,994 |
| Other liabilities | 4,296 | 4,091 | 2,628 |
TOTAL LIABILITIES | 537,654 | 528,668 | 517,076 |
STOCKHOLDERS' EQUITY: | | | |
| Common Stock $1.00 par value; authorized, 10,000,000 shares; issued | | | |
| 3,020,537 shares in 2007 and 2,992,896 at December 31, 2006 | | | |
| and September 30, 2006 | 3,021 | 2,993 | 2,993 |
| Additional paid-in capital | 12,511 | 11,933 | 11,933 |
| Retained earnings | 36,399 | 34,007 | 33,140 |
| Accumulated other comprehensive loss | (1,426) | (1,737) | (1,018) |
| Unearned restricted stock: 2,785 shares for 2007 and 0 shares for 2006 | (65) | - | - |
| Treasury Stock, at cost, 185,433 shares for 2007, 172,954 shares at December 31, 2006 | | | |
| and 162,674 shares at September 30, 2006 | (3,972) | (3,696) | (3,470) |
TOTAL STOCKHOLDERS' EQUITY | 46,468 | 43,500 | 43,578 |
TOTAL LIABILITIES AND | | | |
STOCKHOLDERS' EQUITY | $ 584,122 | $ 572,168 | $ 560,654 |
CITIZENS FINANCIAL SERVICES, INC. | | | | |
CONSOLIDATED STATEMENT OF INCOME | | | | |
(UNAUDITED) | | | | |
| | Three Months Ended | Nine Months Ended |
| | September 30, | September 30, |
(in thousands, except per share data) | 2007 | 2006 | 2007 | 2006 |
INTEREST INCOME: | | | | |
| Interest and fees on loans | $ 7,715 | $ 7,226 | $ 22,611 | $ 20,639 |
| Interest-bearing deposits with banks | 4 | - | 4 | - |
| Investment securities: | | | | |
| Taxable | 1,130 | 851 | 3,201 | 2,549 |
| Nontaxable | 242 | 232 | 691 | 679 |
| Dividends | 88 | 74 | 257 | 223 |
TOTAL INTEREST INCOME | 9,179 | 8,383 | 26,764 | 24,090 |
INTEREST EXPENSE: | | | | |
| Deposits | 3,366 | 3,067 | 10,106 | 8,390 |
| Borrowed funds | 928 | 849 | 2,660 | 2,388 |
TOTAL INTEREST EXPENSE | 4,294 | 3,916 | 12,766 | 10,778 |
NET INTEREST INCOME | 4,885 | 4,467 | 13,998 | 13,312 |
| Provision for loan losses | 60 | 105 | 225 | 225 |
NET INTEREST INCOME AFTER | | | | |
PROVISION FOR LOAN LOSSES | 4,825 | 4,362 | 13,773 | 13,087 |
NON-INTEREST INCOME: | | | | |
| Service charges | 809 | 827 | 2,369 | 2,342 |
| Trust | 123 | 135 | 387 | 372 |
| Brokerage and insurance | 37 | 77 | 86 | 230 |
| Investment securities gains, net | 24 | 5 | 24 | 4 |
| Gains on loans sold | 18 | 11 | 82 | 24 |
| Gains on sales of foreclosed properties | - | - | 396 | 47 |
| Earnings on bank owned life insurance | 84 | 78 | 246 | 224 |
| Other | 83 | 80 | 306 | 293 |
TOTAL NON-INTEREST INCOME | 1,178 | 1,213 | 3,896 | 3,536 |
NON-INTEREST EXPENSES: | | | | |
| Salaries and employee benefits | 2,130 | 2,055 | 6,256 | 6,078 |
| Occupancy | 268 | 261 | 877 | 845 |
| Furniture and equipment | 137 | 146 | 405 | 442 |
| Professional fees | 149 | 125 | 469 | 371 |
| Amortization | 36 | 36 | 108 | 216 |
| Other | 1,068 | 1,075 | 3,406 | 3,374 |
TOTAL NON-INTEREST EXPENSES | 3,788 | 3,698 | 11,521 | 11,326 |
| Income before provision for income taxes | 2,215 | 1,877 | 6,148 | 5,297 |
| Provision for income taxes | 461 | 329 | 1,254 | 987 |
NET INCOME | $ 1,754 | $ 1,548 | $ 4,894 | $ 4,310 |
| | | | | |
Earnings Per Share | $ 0.62 | $ 0.54 | $ 1.72 | $ 1.50 |
Cash Dividends Paid Per Share | $ 0.225 | $ 0.215 | $ 0.670 | $ 0.640 |
| | | | | |
| Weighted average number of shares outstanding | 2,835,546 | 2,863,404 | 2,842,115 | 2,877,852 |
Financial Highlights (Unaudited - In Thousands, Except Per Share and Ratio Data) | 2007 | 2006 |
| | | |
Nine Months Ended September 30 | | |
| Net Income | $ 4,894 | $ 4,310 |
| Comprehensive Income | 5,205 | 4,833 |
| Per common share data: | | |
| Earnings per share | $ 1.72 | $ 1.50 |
| Cash dividends paid per share | $ 0.670 | $ 0.640 |
| Performance Ratios: | | |
| Return on average assets (annualized) | 1.13% | 1.06% |
| Return on average equity (annualized) | 14.08% | 13.18% |
| | | |
| | | |
Three Months Ended September 30 | | |
| Net Income | $ 1,754 | $ 1,548 |
| Per common share data: | | |
| Earnings per share | $ 0.62 | $ 0.54 |
| Cash dividends paid per share | $ 0.225 | $ 0.215 |
| Performance Ratios: | | |
| Return on average assets (annualized) | 1.20% | 1.12% |
| Return on average equity (annualized) | 14.85% | 14.03% |
| | | |
| | | |
At September 30 | | |
| Assets | $ 584,122 | $ 560,654 |
| Investment securities: | | |
| Available for sale | 117,787 | 103,301 |
| Loans (net of unearned income) | 419,440 | 411,610 |
| Allowance for loan losses | 4,112 | 3,841 |
| Deposits | 464,736 | 448,159 |
| Stockholders' Equity | 46,468 | 43,578 |
| Non-performing assets | 2,527 | 3,141 |
| Average Leverage Ratio | 8.10% | 7.91% |
| Per common share data: | | |
| Book value | $ 16.89 | $ 15.76 |
| Market value (average of bid/ask price) | 21.75 | $22.50 |
| Market price to book value ratio | 128.75% | 142.79% |
| | | | |
| | | | Cash Dividends |
Common Stock Information: | Bid | Ask | Paid |
| | | | |
Quarter Ended: | | | |
| | | | |
| September 30, 2007 | $21.50 | $22.00 | $0.225 |
| June 30, 2007 | $21.20 | $22.50 | $0.225 |
| March 31, 2007 | $22.55 | $23.00 | $0.220 |
| December 31, 2006 | $22.00 | $23.50 | $0.220 |
| | | | |
| September 30, 2006 | $22.00 | $23.00 | $0.215 |
| June 30, 2006 | $21.60 | $23.00 | $0.215 |
| March 31, 2006 | $21.35 | $23.25 | $0.210 |
| December 31, 2005 | $20.80 | $21.00 | $0.210 |
