Exhibit 99.1
| Contact: | Kathlenn Campbell, Marketing Director | First Citizens National Bank |
| | 570-662-0422 | 15 South Main Street |
| | 570-662-8512 (fax) | Mansfield, PA 16933 |
Citizens Financial Services, Inc. Reports Third Quarter 2010 Earnings
MANSFIELD, PENNSYLVANIA— November 1, 2010 – Citizens Financial Services, Incorporated (OTC BB: CZFS), parent company of First Citizens National Bank, has released its unaudited financial performance for the third quarter ended September 30, 2010.
Net income for the nine months ended September 30, 2010 totaled $8,570,000 which compares to $7,206,000 for the same period last year. This represents an increase of $1,364,000, or 18.9%. Earnings per share of $2.96 increased 19.4% from $2.48 per share last year. Annualized return on equity for the comparable periods was 18.31% and 17.46%, while return on assets was 1.51% and 1.39%, respectively.
Net income for the three months ended September 30, 2010 totaled $2,897,000 which compares to $2,388,000 for the third quarter of 2009, representing an increase of $509,000, or 21.3%. Earnings per share of $1.00 increased 22.0% from $.82 per share for the same period last year. Annualized return on equity for the comparable periods was 17.98% and 16.84%, while return on assets was 1.49% and 1.35%, respectively.
As of September 30, 2010, total assets were $789.4 million, which was an increase of $59.9 million from December 31, 2009, and an increase of $82.2 million since September, 2009. The investment portfolio totaled $230.5 million, an increase of $31.9 million since year-end. Net loans of $469.2 million have increased $17.7 million, or 3.9%, since December 31, 2009 and have increased $25.4 million since last September. Total deposits at the end of September totaled $655.2 million, which is an increase of $49.6 million since year end, and have increased $75.4 million since last September, or 13.0%. The growth in deposits can be attributed to the impact of the Marcellus Shale gas play, our outstanding customer service and the overall financial strength of First Citizens.
CEO and President Randall E. Black stated, “Our continued financial performance is the result of disciplined balance sheet management, emphasis on credit quality and a focus on efficiency. Net interest income, before the provision for loan loss, increased from $18,819,000 last year through September to $20,569,000 this year, an increase of $1,750,000, or 9.3%. On a tax equivalent basis, our net interest margin has remained relatively stable at 4.23% this year compared with 4.24% last year. Although asset yields have declined, particularly yields on investment securities, we have been able to decrease our deposit costs by attracting more low cost deposits along with continuing to roll down the yield curve as a result of the continued low interest rate environment. Additionally, our non-interest expenses have decreased $143,000 from a year ago. The soft eco nomy has had an impact on our credit quality. As of September 30, 2010 non-performing assets as a percent of loans was 3.01%, which is an increase from 1.55% at the end of December 2009. However, 72.1% of these non-performing assets are paid current. Most of the increase in non-performing assets is attributable to one large commercial loan, which we believe is well collateralized. Even with this increase, we continue to compare favorably to other community banks in our industry. As a result of the increase, the provision for loan losses totaled $840,000 for the nine months ended September 30, 2010 compared with $700,000 last year through nine months.”
Stockholders’ equity totaled $69.6 million at September 30, 2010, representing an increase of $8.1 million, or 13.2%, from December 31, 2009. Book value per share at September 30, 2010 was $22.70 compared with $20.71 last December, an increase of 9.6%. Mr. Black also stated, “Regulators and the entire banking industry are focused on capital levels and capital planning. I am pleased to note that First Citizens remains well capitalized based upon regulatory guidelines. In fact, our financial strength and strong financial performance thus far in 2010 has enabled us to continue to build our capital levels while still providing an attractive dividend to our shareholders.” On October 6, 2010, a cash dividend of $.26 per share was declared and will be paid on November 5, 2010 to shareholders of record as of October 15, 2010. The quarterly cash dividend is an increase of 4% over the dividend declared one year ago.
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 17 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) | 2010 | 2009 | 2009 |
| ASSETS: | | | |
| Cash and due from banks: | | | |
| Noninterest-bearing | $ 11,392 | $ 9,505 | $ 10,844 |
| Interest-bearing | 28,674 | 21,944 | 9,318 |
| Total cash and cash equivalents | 40,066 | 31,449 | 20,162 |
| | | | |
| Available-for-sale securities | 230,493 | 198,582 | 197,544 |
| | | | |
| Loans (net of allowance for loan losses: September 30, 2010, $5,588; | | | |
| December 31, 2009, $4,888; September 30, 2009, $4,683) | 469,204 | 451,496 | 443,808 |
| | | | |
| Premises and equipment | 12,944 | 12,227 | 11,896 |
| Accrued interest receivable | 3,636 | 3,141 | 3,544 |
| Goodwill | 10,256 | 10,256 | 10,256 |
| Bank owned life insurance | 13,043 | 12,667 | 12,539 |
| Other assets | 9,713 | 9,659 | 7,465 |
| | | | |
| TOTAL ASSETS | $ 789,355 | $ 729,477 | $ 707,214 |
| | | | |
| LIABILITIES: | | | |
| Deposits: | | | |
| Noninterest-bearing | $ 68,794 | $ 60,061 | $ 56,070 |
| Interest-bearing | 586,446 | 545,498 | 523,777 |
| Total deposits | 655,240 | 605,559 | 579,847 |
| Borrowed funds | 56,454 | 54,115 | 57,790 |
| Accrued interest payable | 1,814 | 2,037 | 2,075 |
| Other liabilities | 6,225 | 6,239 | 6,395 |
| TOTAL LIABILITIES | 719,733 | 667,950 | 646,107 |
| STOCKHOLDERS' EQUITY: | | | |
| Preferred Stock $1.00 par value; authorized | | | |
| 3,000,000 shares 2010 and none in 2009; none issued in 2010 or 2009 | - | - | - |
| Common stock | | | |
| $1.00 par value; authorized 15,000,000 shares at September 30, 2010; 10,000,000 at | | | |
| December 31, 2009 and September 30, 2009; issued 3,104,434 shares at September 30, | | |
| 2010; 3,076,253 shares at December 31, 2009 and September 30, 2009 | 3,104 | 3,076 | 3,076 |
| Additional paid-in capital | 14,219 | 13,457 | 13,455 |
| Retained earnings | 52,968 | 47,353 | 45,557 |
| Accumulated other comprehensive income | 3,984 | 2,041 | 3,365 |
| Treasury stock, at cost: 212,737 shares at September 30, 2010; 204,437 shares at | | | |
| December 31, 2009 and 202,287 shares at September 30, 2009 | (4,653) | (4,400) | (4,346) |
| TOTAL STOCKHOLDERS' EQUITY | 69,622 | 61,527 | 61,107 |
| TOTAL LIABILITIES AND | | | |
| STOCKHOLDERS' EQUITY | $ 789,355 | $ 729,477 | $ 707,214 |
| 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) | 2010 | 2009 | 2010 | 2009 |
| INTEREST INCOME: | | | | |
| Interest and fees on loans | $ 7,782 | $ 7,581 | $ 23,268 | $ 22,616 |
| Interest-bearing deposits with banks | 24 | 15 | 55 | 27 |
| Investment securities: | | | | |
| Taxable | 1,178 | 1,466 | 3,777 | 4,647 |
| Nontaxable | 772 | 598 | 2,140 | 1,583 |
| Dividends | 14 | 7 | 27 | 20 |
| TOTAL INTEREST INCOME | 9,770 | 9,667 | 29,267 | 28,893 |
| INTEREST EXPENSE: | | | | |
| Deposits | 2,313 | 2,777 | 7,374 | 8,555 |
| Borrowed funds | 444 | 500 | 1,324 | 1,519 |
| TOTAL INTEREST EXPENSE | 2,757 | 3,277 | 8,698 | 10,074 |
| NET INTEREST INCOME | 7,013 | 6,390 | 20,569 | 18,819 |
| Provision for loan losses | 300 | 400 | 840 | 700 |
| NET INTEREST INCOME AFTER | | | | |
| PROVISION FOR LOAN LOSSES | 6,713 | 5,990 | 19,729 | 18,119 |
| NON-INTEREST INCOME: | | | | |
| Service charges | 919 | 958 | 2,709 | 2,664 |
| Trust | 130 | 121 | 411 | 397 |
| Brokerage and insurance | 91 | 75 | 314 | 228 |
| Gains on loans sold | 44 | 83 | 92 | 292 |
| Investment securities gains, net | - | - | 99 | 118 |
| Earnings on bank owned life insurance | 127 | 128 | 376 | 364 |
| Other | 134 | 87 | 358 | 278 |
| TOTAL NON-INTEREST INCOME | 1,445 | 1,452 | 4,359 | 4,341 |
| NON-INTEREST EXPENSES: | | | | |
| Salaries and employee benefits | 2,436 | 2,393 | 7,293 | 7,018 |
| Occupancy | 295 | 272 | 898 | 889 |
| Furniture and equipment | 114 | 102 | 331 | 336 |
| Professional fees | 176 | 164 | 509 | 459 |
| Federal deposit insurance | 245 | 277 | 699 | 1,030 |
| Other | 1,220 | 1,242 | 3,440 | 3,581 |
| TOTAL NON-INTEREST EXPENSES | 4,486 | 4,450 | 13,170 | 13,313 |
| Income before provision for income taxes | 3,672 | 2,992 | 10,918 | 9,147 |
| Provision for income taxes | 775 | 604 | 2,348 | 1,941 |
| NET INCOME | $ 2,897 | $ 2,388 | $ 8,570 | $ 7,206 |
| | | | | |
| Earnings Per Share | $ 1.00 | $ 0.82 | $ 2.96 | $ 2.48 |
| Cash Dividends Paid Per Share | $ 0.255 | $ 0.245 | $ 0.760 | $ 0.730 |
| | | | | |
| Weighted average number of shares outstanding | 2,891,875 | 2,902,147 | 2,896,314 | 2,901,701 |
| Financial Highlights | | | | |
| | | | | |
| | Three Months Ended | Nine Months Ended |
| | September 30 | September 30 |
| | 2010 | 2009 | 2010 | 2009 |
| Performance Ratios and Share Data: | | | | |
| Return on average assets (annualized) | 1.49% | 1.35% | 1.51% | 1.39% |
| Return on average equity (annualized) | 17.98% | 16.84% | 18.31% | 17.46% |
| Net interest margin (tax equivalent) | 4.17% | 4.16% | 4.23% | 4.24% |
| Cash dividends paid per share | $0.255 | $0.245 | $0.760 | $0.730 |
| Earnings per share | $1.00 | $0.82 | $2.96 | $2.48 |
| Weighted average shares outstanding | 2,891,875 | 2,902,147 | 2,896,314 | 2,901,701 |
| Balance Sheet Highlights (dollars in thousands): | September 30, 2010 | December 31, 2009 | September 30, 2009 |
| | | | |
| Assets | $ 789,355 | $ 729,477 | $ 707,214 |
| Investment securities - Available For Sale | 230,493 | 198,582 | 197,544 |
| Loans (net of unearned income) | 474,792 | 456,384 | 448,491 |
| Allowance for loan losses | 5,588 | 4,888 | 4,683 |
| Deposits | 655,240 | 605,559 | 579,847 |
| Stockholders' Equity | 69,622 | 61,527 | 61,107 |
| Non-performing assets | 14,270 | 7,057 | 6,517 |
| Non-performing assets to total loans | 3.01% | 1.55% | 1.45% |
| Average Leverage Ratio | 8.37% | 8.15% | 8.04% |
| Common shares outstanding | 2,891,697 | 2,871,816 | 2,873,966 |
| Book value per share | $ 22.70 | $ 20.71 | $ 20.09 |
