Citizens Financial Services, Inc. Reports Fourth Quarter 2013 Earnings

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.

SOURCE Citizens Financial Services, Inc.