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 Record Earnings for 2007
MANSFIELD, PENNSYLVANIA— January 24, 2008 – Citizens Financial Services, Incorporated (OTC BB: CZFS), parent company of First Citizens National Bank, has released its unaudited financial performance for the fourth quarter of 2007.
Net income for 2007 totaled $6,736,000 compared with $5,800,000 last year, representing an increase of $936,000, or 16.1%. Net income for the three months ended December 31, 2007 was $1,842,000 which compares to $1,490,000 for the fourth quarter last year. This is an increase of $352,000, or 23.6%. Earnings per share for the year ended December 31, 2007 and 2006 were $2.37 and $2.02 per share, respectively, representing a 17.3% increase. Return on equity for the comparable periods were 14.38% and 13.21%, respectively.
Net interest income before the provision for loan losses totaled $19,102,000, an increase of $1,204,000 compared with last year. CEO and President Randall E. Black stated,“During the fourth quarter, the Federal Reserve continued to decrease the federal funds rate in an attempt to balance the risks of economic growth against worries about inflation. The Federal Reserve’s action resulted in a 25 basis point decrease in October and another 25 basis point decrease in December in the federal funds rate. These decreases have had a positive impact on improving our net interest margin by reducing short term deposit and borrowing costs compared to the reduction of interest rates on our interest sensitive loan portfolio,” stated Mr. Black.
Compared to the year ended December 31, 2006, non-interest expenses increased a modest $287,000, or 1.9%. “2007 has been an outstanding year for our organization. Our record financial performance reiterates our commitment to create shareholder value. Contributing greatly to our success and record financial performance was our ongoing ability in becoming a more efficient organization while simultaneously maintaining outstanding service to our customers,”stated Mr. Black.
Since December of last year, total assets have increased $18.9 million, or 3.3%. At the end of December total assets were $591.0 million, which compares to $572.2 million as of December 31, 2006. Since last December, net loans have increased $8.3 million, an increase of 2.0%. Total deposits have increased $9.5 million while borrowed funds have increased $4.6 million.
Stockholders’ equity, excluding accumulated other comprehensive income, has increased $3.6 million, or 7.9% since last December. Book value per share at December 31, 2007 was $17.30 compared with $16.04 last year, an increase of 7.8%. In January, a cash dividend of $.23 per share was declared and will be paid to shareholders on January 25, 2008 to record holders as of January 14, 2008, which represents an increase of 4.5% over the January 2007 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) | | |
| | | |
| | December 31, | December 31, |
| (in thousands except share data) | 2007 | 2006 |
| ASSETS: | | |
| Cash and due from banks: | | |
| Noninterest-bearing | $ 10,374 | $ 10,007 |
| Interest-bearing | 15 | 8 |
| Total cash and cash equivalents | 10,389 | 10,015 |
| Available-for-sale securities | 120,802 | 109,743 |
| Loans (net of allowance for loan losses: | | |
| 2007, $4,197; 2006, $3,876) | 419,182 | 410,897 |
| Premises and equipment | 12,538 | 12,892 |
| Accrued interest receivable | 2,522 | 2,458 |
| Goodwill | 8,605 | 8,605 |
| Bank owned life insurance | 8,378 | 8,047 |
| Other assets | 8,613 | 9,511 |
| | | |
| TOTAL ASSETS | $ 591,029 | $ 572,168 |
| | | |
| LIABILITIES: | | |
| Deposits: | | |
| Noninterest-bearing | $ 50,944 | $ 48,509 |
| Interest-bearing | 405,084 | 398,006 |
| Total deposits | 456,028 | 446,515 |
| Borrowed funds | 80,348 | 75,775 |
| Accrued interest payable | 2,199 | 2,287 |
| Other liabilities | 3,926 | 4,091 |
| TOTAL LIABILITIES | 542,501 | 528,668 |
| STOCKHOLDERS' EQUITY: | | |
| Common Stock $1.00 par value; authorized, 10,000,000 shares; issued | | |
| 3,020,538 and 2,992,896 shares for 2007 and 2006, respectively | 3,020 | 2,993 |
| Additional paid-in capital | 12,511 | 11,933 |
| Retained earnings | 37,590 | 34,007 |
| Accumulated other comprehensive loss | (348) | (1,737) |
| Unearned restricted stock: 3,149 and 0 shares for 2007 and 2006, respectively | (72) | - |
| Treasury Stock, at cost, 194,883 and 172,954 shares for 2007 and 2006, respectively | (4,173) | (3,696) |
| TOTAL STOCKHOLDERS' EQUITY | 48,528 | 43,500 |
| TOTAL LIABILITIES AND | | |
| STOCKHOLDERS' EQUITY | $ 591,029 | $ 572,168 |
| 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) | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
| INTEREST INCOME: | | | | | | | | | | | | |
| Interest and fees on loans | | $ | 7,787 | | | $ | 7,461 | | | $ | 30,398 | | | $ | 28,101 | |
| Interest-bearing deposits with banks | | | 1 | | | | - | | | | 5 | | | | - | |
| Investment securities: | | | | | | | | | | | | | | | | |
| Taxable | | | 1,115 | | | | 978 | | | | 4,316 | | | | 3,526 | |
| Nontaxable | | | 267 | | | | 224 | | | | 958 | | | | 903 | |
| Dividends | | | 90 | | | | 98 | | | | 347 | | | | 321 | |
| TOTAL INTEREST INCOME | | | 9,260 | | | | 8,761 | | | | 36,024 | | | | 32,851 | |
| INTEREST EXPENSE: | | | | | | | | | | | | | | | | |
| Deposits | | | 3,258 | | | | 3,295 | | | | 13,363 | | | | 11,685 | |
| Borrowed funds | | | 899 | | | | 880 | | | | 3,559 | | | | 3,268 | |
| TOTAL INTEREST EXPENSE | | | 4,157 | | | | 4,175 | | | | 16,922 | | | | 14,953 | |
| NET INTEREST INCOME | | | 5,103 | | | | 4,586 | | | | 19,102 | | | | 17,898 | |
| Provision for loan losses | | | 140 | | | | 105 | | | | 365 | | | | 330 | |
| NET INTEREST INCOME AFTER | | | | | | | | | | | | | | | | |
| PROVISION FOR LOAN LOSSES | | | 4,963 | | | | 4,481 | | | | 18,737 | | | | 17,568 | |
| NON-INTEREST INCOME: | | | | | | | | | | | | | | | | |
| Service charges | | | 841 | | | | 799 | | | | 3,210 | | | | 3,140 | |
| Trust | | | 132 | | | | 115 | | | | 520 | | | | 487 | |
| Brokerage and insurance | | | 45 | | | | 29 | | | | 132 | | | | 260 | |
| Investment securities (losses) gains, net | | | (53 | ) | | | - | | | | (29 | ) | | | 4 | |
| Gains on sales of foreclosed properties | | | - | | | | 33 | | | | 396 | | | | 80 | |
| Earnings on bank owned life insurance | | | 86 | | | | 80 | | | | 331 | | | | 304 | |
| Other | | | 138 | | | | 124 | | | | 525 | | | | 441 | |
| TOTAL NON-INTEREST INCOME | | | 1,189 | | | | 1,180 | | | | 5,085 | | | | 4,716 | |
| NON-INTEREST EXPENSES: | | | | | | | | | | | | | | | | |
| Salaries and employee benefits | | | 2,130 | | | | 1,948 | | | | 8,386 | | | | 8,026 | |
| Occupancy | | | 274 | | | | 278 | | | | 1,151 | | | | 1,123 | |
| Furniture and equipment | | | 134 | | | | 151 | | | | 539 | | | | 593 | |
| Professional fees | | | 176 | | | | 180 | | | | 645 | | | | 551 | |
| Amortization of intangibles | | | 36 | | | | 36 | | | | 144 | | | | 252 | |
| Other | | | 1,042 | | | | 1,108 | | | | 4,449 | | | | 4,482 | |
| TOTAL NON-INTEREST EXPENSES | | | 3,792 | | | | 3,701 | | | | 15,314 | | | | 15,027 | |
| Income before provision for income taxes | | | 2,360 | | | | 1,960 | | | | 8,508 | | | | 7,257 | |
| Provision for income taxes | | | 518 | | | | 470 | | | | 1,772 | | | | 1,457 | |
| NET INCOME | | $ | 1,842 | | | $ | 1,490 | | | $ | 6,736 | | | $ | 5,800 | |
| | | | | | | | | | | | | | | | | |
| Earnings Per Share | | $ | 0.65 | | | $ | 0.52 | | | $ | 2.37 | | | $ | 2.02 | |
| Cash Dividends Paid Per Share | | $ | 0.23 | | | $ | 0.22 | | | $ | 0.90 | | | $ | 0.86 | |
| | | | | | | | | | | | | | | | | |
| Weighted average number of shares outstanding | | | 2,832,834 | | | | 2,853,706 | | | | 2,840,973 | | | | 2,871,766 | |
| Financial Highlights | | | | | | |
| | | | | | | |
| (Unaudited - In thousands, except per share and ratio data) | | | | | | |
| | | 2007 | | | 2006 | |
| Twelve Months Ended December 31 | | | | | | |
| Net Income | | $ | 6,736 | | | $ | 5,800 | |
| Comprehensive Income | | | 8,125 | | | | 6,689 | |
| Per common share data: | | | | | | | | |
| Earnings per share | | $ | 2.37 | | | $ | 2.02 | |
| Cash dividends paid per share | | $ | 0.90 | | | $ | 0.86 | |
| Performance Ratios: | | | | | | | | |
| Return on average assets (annualized) | | | 1.16 | % | | | 1.05 | % |
| Return on average equity (annualized) | | | 14.38 | % | | | 13.21 | % |
| | | | | | | | | |
| | | | | | | | | |
| Three Months Ended December 31 | | | | | | | | |
| Net Income | | $ | 1,842 | | | $ | 1,490 | |
| Per common share data: | | | | | | | | |
| Earnings per share | | $ | 0.65 | | | $ | 0.52 | |
| Cash dividends paid per share | | $ | 0.23 | | | $ | 0.22 | |
| Performance Ratios: | | | | | | | | |
| Return on average assets (annualized) | | | 1.26 | % | | | 1.05 | % |
| Return on average equity (annualized) | | | 15.26 | % | | | 13.30 | % |
| | | | | | | | | |
| | | | | | | | | |
| At December 31 | | | | | | | | |
| Assets | | $ | 591,029 | | | $ | 572,168 | |
| Investment securities: | | | | | | | | |
| Available for sale | | | 120,802 | | | | 109,743 | |
| Loans (net of unearned income) | | | 423,379 | | | | 414,773 | |
| Allowance for loan losses | | | 4,197 | | | | 3,876 | |
| Deposits | | | 456,028 | | | | 446,515 | |
| Stockholders' Equity | | | 48,528 | | | | 43,500 | |
| Non-performing assets | | | 2,393 | | | | 4,116 | |
| Average Leverage Ratio | | | 8.20 | % | | | 7.82 | % |
| Per common share data: | | | | | | | | |
| Book value | | $ | 17.30 | | | $ | 16.04 | |
| Market value (average of bid/ask price) | | | 20.23 | | | | 22.75 | |
| Market price to book value ratio | | | 116.96 | % | | | 141.82 | % |
| Common Stock Information: | | | |
| | | | Cash Dividends |
| Quarter Ended: | Bid | Ask | Paid |
| | | | |
| December 31, 2007 | $20.00 | $20.45 | $0.230 |
| 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 |
