EXHIBIT 99.1
Contact: Kathleen Campbell, Marketing Director First Citizens Community Bank
570-662-0422 15 S. Main Street
570-662-8512 (fax) Mansfield, PA 16933
Citizens Financial Services, Inc. Reports A 19% Increase in Second Quarter 2012 Earnings
MANSFIELD, PENNSYLVANIA— July 25, 2012 – Citizens Financial Services, Incorporated (OTC BB: CZFS), parent company of First Citizens Community Bank, has released its unaudited financial performance for the quarter ended June 30, 2012.
For the three months ended June 30, 2012, net income totaled $3,753,000 which compares to $3,147,000 for the same period last year. This represents an increase of $606,000, or 19.26%. Earnings per share of $1.30 increased 20.46% from $1.08 per share last year.
For the six months ended June 30, 2012, net income totaled $7,202,000 which compares to $5,977,000 for the same period last year. This represents an increase of $1,225,000, or 20.50%. Earnings per share of $2.49 increased 21.57% from $2.05 per share last year. Annualized return on equity for the comparable periods was 18.58% and 17.22%, while return on assets was 1.63% and 1.44%, respectively.
Net interest income, before the provision for loan losses, increased from $14,012,000 for the six months ended June 30, 2011 to $15,223,000 this year, an increase of $1,211,000, or 8.6%. On a tax equivalent basis, our net interest margin on interest earning assets has increased from 3.96% last year to 4.04% this year. Yields on interest earning assets decreased 23 basis points, but was offset by a decrease of 35 basis points on interest bearing liabilities. In particular, yields on investment securities decreased 38 basis points. CEO and President Randall E. Black stated, “The unprecedented low interest rate environment has continued to make investing difficult. Primarily, we have invested in short-term investments in order to manage for long-term profitability by having available liquidity when market conditions and investment opportunities improve. We have been able to off-set declining investment yields by decreasing our deposit costs”.
As of June, 30, 2012, total assets were $881.4 million, which was an increase of $2.8 million from December 31, 2011. The investment portfolio totaled $323.1 million, which is an increase of $4.3 million from the December 31, 2011 balance of $318.8 million. Net loans have increased $9.5 million to a total of $490.5 million at June 30, 2012 from the end of December. Since June 30, 2011, net loans have increased $19.7 million, or 4.2%. Through June $14.2 million of residential mortgages have been originated which have been sold on the secondary market compared with $5.1 million last year.
The provision for loan losses for the first six months of 2012 totaled $210,000 which compares to $375,000 recorded last year. Credit quality continues to improve and compares favorably to peer. As of June 30, 2012, non-performing assets as a percent of loans was 1.89%, which compares to 2.11% as of December 31, 2011 and 2.25% as of June 30, 2011. Through June, annualized net charge-offs as a percent of average loans remains very low at .02%.
Stockholders’ equity totaled $86.5 million at June 30, 2012, which is an increase of $5.1 million, or 6.2%, from December 31, 2011 and an increase of $11.2 million from June 30, 2011. First Citizens continues to remain well capitalized based upon regulatory guidelines. On July 10, 2012 a cash dividend of $.30 per share along with a 1% stock dividend were declared to shareholders of record as of July 20, 2012. The cash dividend will be paid on July 27, 2012 and represents an increase of 13.2% over the July 2011 cash dividend of $.265 per share.
“Our financial performance remains strong as we focus on remaining a strong, well-capitalized, local community bank committed to serving our communities and customers, as well as providing outstanding shareholder return and value”, commented 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) | 2012 | 2011 | 2011 |
| ASSETS: | | | |
| Cash and due from banks: | | | |
| Noninterest-bearing | $ 12,525 | $ 9,960 | $ 11,318 |
| Interest-bearing | 5,243 | 20,472 | 33,114 |
| Total cash and cash equivalents | 17,768 | 30,432 | 44,432 |
| | | | |
| Available-for-sale securities | 323,131 | 318,823 | 288,610 |
| | | | |
| Loans (net of allowance for loan losses: $6,650 at June 30, 2012; | | | |
| $6,487 at December 31, 2011 and $6,163 at June 30, 2011) | 490,482 | 481,022 | 470,749 |
| | | | |
| Premises and equipment | 11,515 | 11,702 | 11,956 |
| Accrued interest receivable | 3,800 | 3,621 | 3,717 |
| Goodwill | 10,256 | 10,256 | 10,256 |
| Bank owned life insurance | 13,919 | 13,669 | 13,416 |
| Other assets | 10,479 | 9,042 | 9,846 |
| | | | |
| TOTAL ASSETS | $ 881,350 | $ 878,567 | $ 852,982 |
| | | | |
| LIABILITIES: | | | |
| Deposits: | | | |
| Noninterest-bearing | $ 86,218 | $ 85,605 | $ 80,545 |
| Interest-bearing | 652,549 | 648,388 | 632,582 |
| Total deposits | 738,767 | 733,993 | 713,127 |
| Borrowed funds | 47,066 | 53,882 | 55,408 |
| Accrued interest payable | 1,222 | 1,512 | 1,556 |
| Other liabilities | 7,754 | 7,712 | 7,592 |
| TOTAL LIABILITIES | 794,809 | 797,099 | 777,683 |
| STOCKHOLDERS' EQUITY: | | | |
| Preferred Stock $1.00 par value; authorized | | | |
| 3,000,000 shares at June 30, 2012, December 31, 2011 and June 30, 2011; | | | |
| none issued in 2012 or 2011 | - | - | - |
| Common stock | | | |
| $1.00 par value; authorized 15,000,000 shares at June 30, 2012, December 31, 2011 and | | |
| June 30, 2011; issued 3,132,866 shares at June 30, 2012 and December 31, 2011; | | |
| 3,104,434 shares at June 30, 2011 | 3,133 | 3,133 | 3,104 |
| Additional paid-in capital | 15,364 | 15,313 | 14,295 |
| Retained earnings | 68,813 | 63,337 | 59,393 |
| Accumulated other comprehensive income | 4,990 | 4,949 | 3,244 |
| Treasury stock, at cost: 243,784 shares at June 30, 2012; 230,203 shares at | | | |
| December 31, 2011 and 214,942 shares at June 30, 2011 | (5,759) | (5,264) | (4,737) |
| TOTAL STOCKHOLDERS' EQUITY | 86,541 | 81,468 | 75,299 |
| TOTAL LIABILITIES AND | | | |
| STOCKHOLDERS' EQUITY | $ 881,350 | $ 878,567 | $ 852,982 |
| 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) | 2012 | 2011 | 2012 | 2011 |
| INTEREST INCOME: | | | | |
| Interest and fees on loans | $ 7,439 | $ 7,463 | $ 14,904 | $ 14,858 |
| Interest-bearing deposits with banks | 1 | 20 | 6 | 42 |
| Investment securities: | | | | |
| Taxable | 1,237 | 1,176 | 2,434 | 2,348 |
| Nontaxable | 920 | 892 | 1,874 | 1,757 |
| Dividends | 16 | 14 | 32 | 29 |
| TOTAL INTEREST INCOME | 9,613 | 9,565 | 19,250 | 19,034 |
| INTEREST EXPENSE: | | | | |
| Deposits | 1,555 | 2,046 | 3,221 | 4,134 |
| Borrowed funds | 393 | 443 | 806 | 888 |
| TOTAL INTEREST EXPENSE | 1,948 | 2,489 | 4,027 | 5,022 |
| NET INTEREST INCOME | 7,665 | 7,076 | 15,223 | 14,012 |
| Provision for loan losses | 105 | 150 | 210 | 375 |
| NET INTEREST INCOME AFTER | | | | |
| PROVISION FOR LOAN LOSSES | 7,560 | 6,926 | 15,013 | 13,637 |
| NON-INTEREST INCOME: | | | | |
| Service charges | 1,129 | 1,128 | 2,207 | 2,073 |
| Trust | 151 | 146 | 324 | 303 |
| Brokerage and insurance | 75 | 123 | 225 | 218 |
| Gains on loans sold | 131 | 34 | 185 | 75 |
| Investment securities gains, net | 213 | 114 | 321 | 234 |
| Earnings on bank owned life insurance | 126 | 124 | 250 | 245 |
| Other | 208 | 129 | 364 | 269 |
| TOTAL NON-INTEREST INCOME | 2,033 | 1,798 | 3,876 | 3,417 |
| NON-INTEREST EXPENSES: | | | | |
| Salaries and employee benefits | 2,668 | 2,518 | 5,421 | 5,033 |
| Occupancy | 314 | 329 | 624 | 719 |
| Furniture and equipment | �� 96 | 106 | 202 | 223 |
| Professional fees | 224 | 172 | 492 | 329 |
| FDIC insurance | 115 | 250 | 238 | 500 |
| Pennsylvania shares tax | 160 | 146 | 326 | 293 |
| Other | 1,092 | 1,189 | 2,221 | 2,393 |
| TOTAL NON-INTEREST EXPENSES | 4,669 | 4,710 | 9,524 | 9,490 |
| Income before provision for income taxes | 4,924 | 4,014 | 9,365 | 7,564 |
| Provision for income taxes | 1,171 | 867 | 2,163 | 1,587 |
| NET INCOME | $ 3,753 | $ 3,147 | $ 7,202 | $ 5,977 |
| | | | | |
| PER COMMON SHARE DATA: | | | | |
| Net Income - Basic | $ 1.30 | $ 1.08 | $ 2.49 | $ 2.05 |
| Net Income - Diluted | $ 1.30 | $ 1.08 | $ 2.49 | $ 2.05 |
| Cash Dividends Paid | $ 0.300 | $ 0.265 | $ 0.595 | $ 0.525 |
| | | | | |
| Number of shares used in computation - basic | 2,886,012 | 2,915,708 | 2,890,849 | 2,916,526 |
| Number of shares used in computation - diluted | 2,887,421 | 2,915,708 | 2,891,473 | 2,916,526 |
| | | | | |
| Financial Highlights | | | | |
| | | | | |
| | Three Months Ended | Six Months Ended |
| | June 30 | June 30 |
| | 2012 | 2011 | 2012 | 2011 |
| Performance Ratios and Share Data: | | | | |
| Return on average assets (annualized) | 1.69% | 1.50% | 1.63% | 1.44% |
| Return on average equity (annualized) | 18.72% | 17.85% | 18.58% | 17.22% |
| Net interest margin (tax equivalent) | 4.03% | 3.93% | 4.04% | 3.96% |
| Cash dividends paid per share | $ 0.300 | $ 0.265 | $ 0.595 | $ 0.525 |
| Earnings per share - basic | $ 1.30 | $ 1.08 | $ 2.49 | $ 2.05 |
| Earnings per share - diluted | $ 1.30 | $ 1.08 | $ 2.49 | $ 2.05 |
| Number of shares used in computation - basic | 2,886,012 | 2,915,708 | 2,890,849 | 2,916,526 |
| Number of shares used in computation - diluted | 2,887,421 | 2,915,708 | 2,891,473 | 2,916,526 |
| Balance Sheet Highlights (dollars in thousands): | June 30, 2012 | December 31, 2011 | June 30, 2011 |
| | | | |
| Assets | $ 881,350 | $ 878,567 | $852,982 |
| Investment securities: | | | |
| Available for sale | 323,131 | 318,823 | 288,610 |
| Loans (net of unearned income) | 497,132 | 487,509 | 476,912 |
| Allowance for loan losses | 6,650 | 6,487 | 6,163 |
| Deposits | 738,767 | 733,933 | 713,127 |
| Stockholders' Equity | 86,541 | 81,468 | 75,299 |
| Non-performing assets | 9,403 | 10,300 | 10,725 |
| Non-performing assets to total loans | 1.89% | 2.11% | 2.25% |
| Annualized net charge-offs to total loans | 0.02% | 0.02% | 0.05% |
| Average Leverage Ratio | 9.20% | 8.83% | 8.53% |
| Common shares outstanding | 2,881,266 | 2,902,663 | 2,889,492 |
| Book value per share | $ 28.23 | $ 26.36 | $24.94 |
