Citizens Financial Services, Inc. Reports Second Quarter 2014 Earnings

MANSFIELD, Penn., July 28, 2014 /PRNewswire/ -- Citizens Financial Services, Inc. (OTC BB: CZFS), parent company of First Citizens Community Bank, has released its unaudited financial performance for the three and six months ended June 30, 2014.

For the three months ended June 30, 2014, net income totaled $3,365,000 which compares to net income of $3,280,000 for the second quarter of 2013. This represents an increase of $85,000, or 2.6%. Earnings per share of $1.11 for the second quarter compares to $1.07 last year.  Annualized return on equity for the comparable periods was 13.88% and 14.77%, while return on assets was 1.49% for both comparable periods.      

For the six months ended June 30, 2014, net income totaled $6,541,000 which compares to $6,567,000 for the same period last year. Earnings per share of $2.15 increased .5% from $2.14 per share last year.  Annualized return on equity for the comparable periods was 13.63% and 14.99%, while return on assets was 1.45% and 1.50%, respectively.

CEO and President Randall E. Black stated, "As expected the continued lack of loan demand, margin compression, and ongoing and increasing regulatory burdens continue to challenge us; however, our financial performance remains strong and continues to compare favorably to peer.  We continue to remain focused on implementing our strategic plan and expanding our footprint.  During the second quarter, the construction of our new branch location in Mill Hall, Pennsylvania has begun.  We strongly believe that our community banking focus and our ongoing commitment to customer service, as most recently evidenced with the success with growing our loan production office in Mill Hall, will result in the successful expansion of our branch network". 

Net interest income, before the provision for loan losses, increased from $14,664,000 for the six months ended June 30, 2013, to $15,162,000 for 2014.  While interest income decreased $277,000, interest expense decreased $775,000 from last year's first six months resulting in an overall increase in net interest income of $498,000, or 3.4%, over the comparable periods.  For the three months ended June 30, 2014 net interest income was $7,500,000 compared to $7,276,000 a year ago, an increase of $299,000, or 4.1%.  The tax equivalent net interest margin for the first six months has increased slightly from 3.87% last year to 3.89% this year on a tax equivalent basis.  For the comparable three month periods ending June 30, our margin has increased from 3.85% to 3.92%.  "Despite the fact that the yield on interest earning assets continues to decline as the persistent low interest rate environment continues, we have been successful at managing and maintaining our margin.  The overall yield on interest bearing assets has declined from 4.67% last year to 4.48% this year on a tax equivalent basis.  This decrease has been mitigated by also decreasing the overall cost of interest bearing liabilities, both through a decrease in interest bearing deposits and by managing the rate and term of borrowed funds" added Mr. Black.

At June 30, 2014, total assets were $914.2 million, up from total assets of $879.1 million as of June 30, 2013 and essentially unchanged from total assets of $914.9 million at December 31, 2013.  The investment portfolio has decreased $5.0 million from year-end 2013.  Net loans of $533.1 million as of the end of June have decreased $388,000, or .07%, compared to the end of last year.  However, net loans have increased $24.4 million from the end of June 2013.  Asset quality remains strong.  As of June 30, 2014, non-performing assets totaled $9.2 million and represented 1.70% of loans.  This compares to 1.88% as of December 31, 2013.  During the second quarter, $640,000 in loan charge-offs were recorded, most of which were previously specifically reserved for in the allowance for possible loan losses.  The annualized net charge-offs to average loans remains low at .25%.

Stockholders' equity totaled $98.2 million at June 30, 2014, which compares to $92.1 million at December 31, 2013.  Net income of $6.5 million was offset by cash dividends of $2.3 million.  Additionally, net treasury stock purchases totaled $.4 million.  As a result of changes in interest rates impacting the fair value of investment securities, the unrealized gain on available for sale investment securities increased $2.3 million from the end of 2013.  A cash dividend of $.385 per share was paid on June 27, 2014 to shareholders of record on June 20, 2014 and represents an increase of 35% over the dividend declared a year ago.  Additionally, a 1% stock dividend was also distributed on June 27, 2014.  Both Citizens Financial Services, Inc. and First Citizens Community Bank remain well-capitalized under regulatory capital guidelines.

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.