EX-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 THIRD quarter 2013 Earnings
MANSFIELD, PENNSYLVANIA— October 25, 2013 – Citizens Financial Services, Inc. (OTC BB: CZFS), parent company of First Citizens Community Bank, has released its unaudited financial performance for the nine months ended September 30, 2013.
For the three months ended September 30, 2013, net income totaled $3,512,000 which compares to net income of $3,464,000 for the third quarter of 2012. This represents an increase of $48,000, or 1.4%. Earnings per share of $1.16 for the third quarter compares to $1.13 last year. Annualized return on equity for the comparable periods was 15.42% and 16.78%, while return on assets was 1.58% for both periods.
For the nine months ended September 30, 2013, net income totaled $10,079,000 which compares to $10,666,000 for the same period last year. This represents a decrease of $587,000, or 5.5%. Earnings per share of $3.33 decreased 4.3% from $3.48 per share last year. Annualized return on equity for the comparable periods was 15.13% and 17.74%, while return on assets was 1.52% and 1.62%, respectively. CEO and President Randall E. Black stated, “Our financial performance continues to remain strong and better than peer. As expected, results for 2013 have been impacted by the prolonged low interest rate environment, which has resulted in margin compression as cash flows are being invested at lower yields.”
Net interest income, before the provision for loan losses, decreased from $22,838,000 for the nine months ended September 30, 2012 to $22,409,000 in 2013. The decrease of $429,000, or 1.9%, is reflective of the previously stated declining margins. On a tax equivalent basis, the net interest margin has decreased from 3.99% last year to 3.89% this year. The tax equivalent yields on interest earning assets decreased from 4.94% for the first nine months of 2012 to 4.67% this year. “As expected, the sluggish economy and the current interest rate environment have continued to impact our margins. Despite growth in interest earning assets from a year ago, particularly loans, the additional assets are added at lower rates than those assets that are maturing or re-pricing. This has been offset somewhat by reducing our cost of funds, which has decreased from 1.12% last year to .93% this year”, added Mr. Black.
At September 30, 2013, total assets were $899.4 million, which was an increase of $17.0 million from total assets of $882.4 million at December 31, 2012. From year-end 2012, the investment portfolio and time deposits with other banks have increased a total of $10.7 million to a combined $320.9 million at September 30, 2013. Net loans of $515.3 million as of the end of September have increased $19.6 million, or 4%, compared to December 31, 2012 and have increased $22.8 million from September 30, 2012. Part of this growth has been the success in Luzerne and Lackawanna counties since opening a loan production office in the latter part of 2012. Asset quality remains strong. As of September 30, 2013, non-performing assets totaled $9.8 million and represented 1.87% of loans. This compares to 1.83% as of December 31, 2012. Through September 2013, the provision for loan loss was $315,000 which is the same as the amount recorded last year. The annualized net charge-offs as a percent of average loans remains very low at .01%.
Stockholders’ equity totaled $90.4 million at September 30, 2013, which compares to $89.5 million at December 31, 2012. The increase is attributable to net income of $10.1 million offset by cash dividends paid of $2.5 million and purchases of treasury stock of $1.2 million. Additionally, the unrealized gains on available for sale investment securities have decreased $5.7 million due to the increase in long-term interest rates that has occurred in 2013. On September 27, 2013, a cash dividend of $.285 per share was paid on September 28, 2013 to shareholders of record on September 20, 2013. The cash dividend compares to the June 28, 2013 cash dividend of $.271 per share after giving retroactive consideration to the 5% stock dividend. The cash and stock dividend reflects the Board of Directors’ desire to provide total shareholder return to the shareholder base.
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) | | | |
| | | | |
| | September 30 | December 31 | September 30 |
| (in thousands except share data) | 2013 | 2012 | 2012 |
| ASSETS: | | | |
| Cash and due from banks: | | | |
| Noninterest-bearing | $ 10,956 | $ 12,307 | $ 10,086 |
| Interest-bearing | 2,800 | 14,026 | 624 |
| Total cash and cash equivalents | 13,756 | 26,333 | 10,710 |
| | | | |
| Interest bearing time deposits with other banks | 2,480 | - | - |
| | | | |
| Available-for-sale securities | 318,452 | 310,252 | 322,039 |
| | | | |
| Loans held for sale | 260 | 1,458 | - |
| | | | |
| Loans (net of allowance for loan losses: $7,070 at September 30, 2013; | | |
| $6,784 at December 31, 2012 and $6,734 at September 30, 2012) | 515,262 | 495,679 | 492,492 |
| | | | |
| Premises and equipment | 11,259 | 11,521 | 11,419 |
| Accrued interest receivable | 3,815 | 3,816 | 3,961 |
| Goodwill | 10,256 | 10,256 | 10,256 |
| Bank owned life insurance | 14,554 | 14,177 | 14,047 |
| Other assets | 9,302 | 8,935 | 11,293 |
| | | | |
| TOTAL ASSETS | $ 899,396 | $ 882,427 | $ 876,217 |
| | | | |
| LIABILITIES: | | | |
| Deposits: | | | |
| Noninterest-bearing | $ 89,716 | $ 89,494 | $ 84,767 |
| Interest-bearing | 668,940 | 647,602 | 644,440 |
| Total deposits | 758,656 | 737,096 | 729,207 |
| Borrowed funds | 43,163 | 46,126 | 47,956 |
| Accrued interest payable | 971 | 1,143 | 1,213 |
| Other liabilities | 6,226 | 8,587 | 7,865 |
| TOTAL LIABILITIES | 809,016 | 792,952 | 786,241 |
| STOCKHOLDERS' EQUITY: | | | |
| Preferred Stock $1.00 par value; authorized | | | |
| 3,000,000 shares at September 30, 2013, December 31, 2012 and September 30, 2012; |
| none issued in 2013 or 2012 | - | - | - |
| Common stock | | | |
| $1.00 par value; authorized 15,000,000 shares at September 30, 2013, December 31, 2012 |
| and September 30, 2012; issued 3,305,517 shares at September 30, 2013; 3,161,324 at |
| December 31, 2012 and September 30, 2012 | 3,306 | 3,161 | 3,161 |
| Additional paid-in capital | 23,545 | 16,468 | 16,474 |
| Retained earnings | 72,190 | 71,813 | 70,255 |
| Accumulated other comprehensive income | (816) | 4,631 | 5,990 |
| Treasury stock, at cost: 289,040 shares at September 30, 2013; 262,921 shares at | |
| December 31, 2012 and 247,134 shares at September 30, 2012 | (7,845) | (6,598) | (5,904) |
| TOTAL STOCKHOLDERS' EQUITY | 90,380 | 89,475 | 89,976 |
| TOTAL LIABILITIES AND | | | |
| STOCKHOLDERS' EQUITY | $ 899,396 | $ 882,427 | $ 876,217 |
| 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) | 2013 | 2012 | 2013 | 2012 |
| INTEREST INCOME: | | | | |
| Interest and fees on loans | $ 7,521 | $ 7,448 | $ 21,799 | $ 22,352 |
| Interest-bearing deposits with banks | 8 | 5 | 27 | 11 |
| Investment securities: | | | | |
| Taxable | 905 | 1,085 | 2,804 | 3,519 |
| Nontaxable | 850 | 919 | 2,563 | 2,793 |
| Dividends | 23 | 17 | 61 | 49 |
| TOTAL INTEREST INCOME | 9,307 | 9,474 | 27,254 | 28,724 |
| INTEREST EXPENSE: | | | | |
| Deposits | 1,279 | 1,486 | 3,894 | 4,707 |
| Borrowed funds | 283 | 373 | 951 | 1,179 |
| TOTAL INTEREST EXPENSE | 1,562 | 1,859 | 4,845 | 5,886 |
| NET INTEREST INCOME | 7,745 | 7,615 | 22,409 | 22,838 |
| Provision for loan losses | 90 | 105 | 315 | 315 |
| NET INTEREST INCOME AFTER | | | | |
| PROVISION FOR LOAN LOSSES | 7,655 | 7,510 | 22,094 | 22,523 |
| NON-INTEREST INCOME: | | | | |
| Service charges | 1,100 | 1,139 | 3,203 | 3,346 |
| Trust | 169 | 148 | 539 | 472 |
| Brokerage and insurance | 120 | 80 | 333 | 305 |
| Gains on loans sold | 75 | 102 | 236 | 287 |
| Investment securities gains, net | 91 | 240 | 385 | 561 |
| Earnings on bank owned life insurance | 127 | 128 | 377 | 378 |
| Other | 124 | 109 | 328 | 342 |
| TOTAL NON-INTEREST INCOME | 1,806 | 1,946 | 5,401 | 5,691 |
| NON-INTEREST EXPENSES: | | | | |
| Salaries and employee benefits | 2,856 | 2,705 | 8,456 | 8,126 |
| Occupancy | 302 | 304 | 956 | 928 |
| Furniture and equipment | 157 | 113 | 372 | 315 |
| Professional fees | 187 | 209 | 604 | 701 |
| FDIC insurance | 112 | 115 | 337 | 353 |
| Pennsylvania shares tax | 183 | 115 | 548 | 441 |
| Other | 1,123 | 1,398 | 3,301 | 3,488 |
| TOTAL NON-INTEREST EXPENSES | 4,920 | 4,959 | 14,574 | 14,352 |
| Income before provision for income taxes | 4,541 | 4,497 | 12,921 | 13,862 |
| Provision for income taxes | 1,029 | 1,033 | 2,842 | 3,196 |
| NET INCOME | $ 3,512 | $ 3,464 | $ 10,079 | $ 10,666 |
| | | | | |
| PER COMMON SHARE DATA: | | | | |
| Net Income - Basic | $ 1.16 | $ 1.13 | $ 3.33 | $ 3.49 |
| Net Income - Diluted | $ 1.16 | $ 1.13 | $ 3.33 | $ 3.48 |
| Cash Dividends Paid | $ 0.285 | $ 0.290 | $ 0.837 | $ 0.853 |
| | | | | |
| Number of shares used in computation - basic | 3,024,507 | 3,052,628 | 3,029,801 | 3,059,808 |
| Number of shares used in computation - diluted | 3,025,990 | 3,054,694 | 3,031,089 | 3,061,570 |
| Financial Highlights | | | | |
| | | | | |
| | Three Months Ended | Nine Months Ended |
| | September 30 | September 30 |
| | 2013 | 2012 | 2013 | 2012 |
| Performance Ratios and Share Data: | | | | |
| Return on average assets (annualized) | 1.58% | 1.58% | 1.52% | 1.62% |
| Return on average equity (annualized) | 15.42% | 16.78% | 15.13% | 17.74% |
| Net interest margin (tax equivalent) | 3.93% | 3.99% | 3.89% | 3.99% |
| Cash dividends paid per share | $ 0.285 | $ 0.290 | $ 0.837 | $ 0.853 |
| Earnings per share - basic | $ 1.16 | $ 1.13 | $ 3.33 | $ 3.49 |
| Earnings per share - diluted | $ 1.16 | $ 1.13 | $ 3.33 | $ 3.48 |
| Number of shares used in computation - basic | 3,024,507 | 3,052,628 | 3,029,801 | 3,059,808 |
| Number of shares used in computation - diluted | 3,025,990 | 3,054,694 | 3,031,089 | 3,061,570 |
| Balance Sheet Highlights (dollars in thousands): | September 30, 2013 | December 31, 2012 | September 30, 2012 |
| | | | |
| Assets | $ 899,396 | $ 882,427 | $ 876,217 |
| Investment securities: | | | |
| Available for sale | 318,452 | 310,252 | 322,039 |
| Loans (net of unearned income) | 522,332 | 502,463 | 499,226 |
| Allowance for loan losses | 7,070 | 6,784 | 6,734 |
| Deposits | 758,656 | 737,096 | 729,207 |
| Stockholders' Equity | 90,380 | 89,475 | 89,976 |
| Non-performing assets | 9,786 | 9,189 | 9,157 |
| Non-performing assets to total loans | 1.87% | 1.83% | 1.83% |
| Annualized net charge-offs to total loans | 0.01% | 0.02% | 0.02% |
| Average Leverage Ratio | 10.29% | 9.70% | 9.62% |
| Common shares outstanding | 3,016,477 | 2,898,403 | 2,914,490 |
| Book value per share | $ 30.20 | $ 27.89 | $ 27.46 |
