CITIZENS FINANCIAL SERVICES INC 
By MANSFIELD, Pa., Jan. 24, 2014 /PRNewswire/ -- Citizens Financial Services, Inc. (OTC BB: CZFS), parent company of First Citizens Community Bank, has released its unaudited financial performance for the year ended December 31, 2013.
For the twelve months ended December 31, 2013, net income totaled $13,375,000 which compares to $14,215,000 last year. This represents a decrease of $840,000, or 5.9%. Earnings per share of $4.42 decreased 4.9% from $4.65 per share last year. Annualized return on equity for the comparable periods was 14.89% and 17.48%, while return on assets was 1.51% and 1.62%, respectively. CEO and President Randall E. Black stated, "While not at last year's record level, results for 2013 represent very strong financial performance, are the second highest level of earnings in the history of our organization, and will continue to place us near the top of our peers. Margin compression and increasing regulatory burdens are the primary factors in lower earnings. Despite this, the results support our ongoing efforts to remain a strong, well-capitalized, local community bank committed to serving our communities and customers, as well as providing exceptional shareholder return and value. In the forthcoming year, we will continue to focus on investments in technology and human resources, and new products that will provide greater benefits and service for our customers."
For the three months ended December 31, 2013, net income totaled $3,296,000 which compares to net income of $3,549,000 for the fourth quarter of 2012. This represents a decrease of $253,000, or 7.1%. Earnings per share of $1.09 for the fourth quarter compares to $1.17 last year. Annualized return on equity for the comparable periods was 14.21% and 16.74%, while return on assets was 1.47% and 1.62%, respectively.
Net interest income, before the provision for loan losses, decreased from $30,426,000 for the twelve months ended December 31, 2012 to $29,919,000 for 2013. The decrease of $507,000, or 1.7%, is reflective of declining margins. "As the prolonged low interest rate cycle persists, our cash flows continue to be re-invested at lower yields. We anticipate our strong loan demand towards the end of 2013 will help offset additional margin compression as we utilize future cash flows from our investment portfolio to fund our lending needs. On a tax equivalent basis, our net interest margin has declined 12 basis points from 3.99% last year to 3.87% this year. The tax equivalent yields on interest earning assets decreased from 4.91% for 2012 to 4.62% this year. This has been offset somewhat by reducing our cost of funds, including non-interest bearing deposits, from .97% last year to .80% this year," added Mr. Black.
At December 31, 2013, total assets were $914.9 million, which was an increase of $32.5 million from total assets of $882.4 million at December 31, 2012. The investment portfolio and time deposits with other banks increased $9.5 million from year-end 2012. Net loans of $533.5 million as of the end of December have increased $37.8 million, or 7.6%, compared to December 31, 2012. Much of the success in loan growth is attributed to expansion into Luzerne and Lackawanna counties via loan production offices. Even with our growth, asset quality remains strong. As of December 31, 2013, non-performing assets totaled $10.2 million and represented 1.88% of loans. This compares to 1.83% as of December 31, 2012. For 2013, the provision for loan loss was $405,000 which is slightly less than the $420,000 provision recorded last year. The annualized net charge-offs as a percent of average loans remains very low at .02%.
Stockholders' equity totaled $92.1 million at December 31, 2013, which compares to $89.5 million at December 31, 2012. Excluding accumulated other comprehensive income; stockholders' equity increased $8.4 million since the end of 2012. Net income of $13.4 million was offset by net treasury stock activity of $1.3 million and cash dividends of $3.7 million. Additionally, the unrealized gain on available for sale investment securities has decreased $6.9 million from last year due to the increase in long-term interest rates which has resulted in a decrease in the fair value of investment securities. A cash dividend of $.385 per share was paid on December 27, 2013 to shareholders of record on December 19, 2013. The dividends for the year will total $1.22 per share adjusted for the stock dividend paid earlier this year, which continues to represent an attractive dividend yield. In addition to the cash and stock dividend issued in 2013, the Board of Directors of Citizens Financial Services accelerated the 2013 first quarter dividend of $.38 per share into the fourth quarter of 2012 due to the significant issues in Washington regarding the very complex fiscal cliff tax issues at that time.
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)
December 31 December 31
(in thousands except share data) 2013 2012
------------------------------- ---- ----
ASSETS:
Cash and due from banks:
Noninterest-bearing $8,899 $12,307
Interest-bearing 1,184 14,026
---------------- ----- ------
Total cash and cash equivalents 10,083 26,333
Interest bearing time deposits with
other banks 2,480 -
Available-for-sale securities 317,301 310,252
Loans held for sale 278 1,458
Loans (net of allowance for loan
losses: $7,098 at December 31,
2013 and $6,784 at December 31,
2012)
533,514 495,679
Premises and equipment 11,105 11,521
Accrued interest receivable 3,728 3,816
Goodwill 10,256 10,256
Bank owned life insurance 14,679 14,177
Other assets 11,510 8,935
------------ ------ -----
TOTAL ASSETS $914,934 $882,427
============ ======== ========
LIABILITIES:
Deposits:
Noninterest-bearing $85,585 $89,494
Interest-bearing 662,731 647,602
---------------- ------- -------
Total deposits 748,316 737,096
Borrowed funds 66,932 46,126
Accrued interest payable 895 1,143
Other liabilities 6,735 8,587
----------------- ----- -----
TOTAL LIABILITIES 822,878 792,952
----------------- ------- -------
STOCKHOLDERS' EQUITY:
Preferred Stock $1.00 par value;
authorized
3,000,000 shares at December 31,
2013 and December 31, 2012;
none issued in 2013 or 2012 - -
Common stock
$1.00 par value; authorized 15,000,000 shares at December 31, 2013 and December 30, 2012; issued 3,305,517 shares at December 31, 2013 and 3,161,324 at December 31, 2012
3,306 3,161
Additional paid-in capital 23,562 16,468
Retained earnings 74,325 71,813
Accumulated other comprehensive
income (loss) (1,225) 4,631
Treasury stock, at cost: 290,468
shares at December 31, 2013 and
262,921 shares at December 31,
2012
(7,912) (6,598)
------ ------
TOTAL STOCKHOLDERS' EQUITY 92,056 89,475
-------------------------- ------ ------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $914,934 $882,427
==================== ======== ========
CITIZENS
FINANCIAL
SERVICES, INC.
CONSOLIDATED
STATEMENT OF
INCOME
(UNAUDITED)
Three Months Twelve Months
Ended Ended
December 31 December 31
----------- -----------
(in thousands,
except per
share data) 2013 2012 2013 2012
-------------- ---- ---- ---- ----
INTEREST
INCOME:
Interest and
fees on loans $7,183 $7,418 $28,982 $29,770
Interest-
bearing
deposits with
banks 13 10 40 21
Investment
securities:
Taxable 917 1,002 3,721 4,521
Nontaxable 842 909 3,405 3,702
Dividends 25 22 86 71
--------- --- --- --- ---
TOTAL INTEREST
INCOME 8,980 9,361 36,234 38,085
-------------- ----- ----- ------ ------
INTEREST
EXPENSE:
Deposits 1,213 1,406 5,107 6,113
Borrowed funds 257 367 1,208 1,546
-------------- --- --- ----- -----
TOTAL INTEREST
EXPENSE 1,470 1,773 6,315 7,659
-------------- ----- ----- ----- -----
NET INTEREST
INCOME 7,510 7,588 29,919 30,426
Provision for
loan losses 90 105 405 420
------------- --- --- --- ---
NET INTEREST
INCOME AFTER
PROVISION FOR
LOAN LOSSES 7,420 7,483 29,514 30,006
------------- ----- ----- ------ ------
NON-INTEREST
INCOME:
Service charges 1,096 1,129 4,299 4,475
Trust 155 172 694 644
Brokerage and
insurance 111 87 444 392
Gains on loans
sold 207 472 443 759
Investment
securities
gains, net 56 43 441 604
Earnings on
bank owned
life insurance 125 129 502 507
Other 118 114 446 456
TOTAL NON-
INTEREST
INCOME 1,868 2,146 7,269 7,837
---------- ----- ----- ----- -----
NON-INTEREST
EXPENSES:
Salaries and
employee
benefits 2,936 2,892 11,392 11,018
Occupancy 315 337 1,271 1,265
Furniture and
equipment 120 96 492 411
Professional
fees 177 190 781 891
FDIC insurance 113 115 450 468
Pennsylvania
shares tax 92 161 640 602
Other 1,329 1,154 4,630 4,642
----- ----- ----- ----- -----
TOTAL NON-
INTEREST
EXPENSES 5,082 4,945 19,656 19,297
---------- ----- ----- ------ ------
Income before
provision for
income taxes 4,206 4,684 17,127 18,546
Provision for
income taxes 910 1,135 3,752 4,331
------------- --- ----- ----- -----
NET INCOME $3,296 $3,549 $13,375 $14,215
========== ====== ====== ======= =======
PER COMMON
SHARE DATA:
Net Income -
Basic $1.09 $1.17 $4.42 $4.65
============ ===== ===== ===== =====
Net Income -
Diluted $1.09 $1.17 $4.42 $4.65
============ ===== ===== ===== =====
Cash Dividends
Paid $0.385 $0.654 $1.222 $1.505
============== ====== ====== ====== ======
Number of
shares used in
computation -
basic 3,012,003 3,044,991 3,025,315 3,056,078
Number of
shares used in
computation -
diluted 3,012,228 3,045,435 3,026,485 3,057,720
Financial Highlights
--------------------
Three Months Ended Twelve Months Ended
December 31, December 31,
2013 2012 2013 2012
Performance Ratios and Share Data:
Return on average assets (annualized) 1.47% 1.62% 1.51% 1.62%
Return on average equity (annualized) 14.21% 16.74% 14.89% 17.48%
Net interest margin (tax equivalent) 3.78% 3.96% 3.87% 3.99%
Cash dividends paid per share $0.385 $0.654 $1.222 $1.505
Earnings per share - basic $1.09 $1.17 $4.42 $4.65
Earnings per share - diluted $1.09 $1.17 $4.42 $4.65
Number of shares used in computation - basic 3,012,003 3,044,991 3,025,315 3,056,078
Number of shares used in computation - diluted 3,012,228 3,045,435 3,026,485 3,057,720
Balance Sheet Highlights (dollars in thousands): December 31, 2013 December 31, 2012
----------------- -----------------
Assets $914,934 $882,427
Investment securities:
Available for sale 317,301 310,352
Loans (net of unearned income) 540,612 502,463
Allowance for loan losses 7,098 6,784
Deposits 748,316 737,096
Stockholders' Equity 92,056 89,475
Non-performing assets 10,154 9,189
Non-performing assets to total loans 1.88% 1.83%
Annualized net charge-offs to total loans 0.02% 0.02%
Average Leverage Ratio 10.52% 9.70%
Common shares outstanding 3,015,049 2,898,403
Book value per share $30.94 $27.89
SOURCE Citizens Financial Services, Inc.
