Attached files
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| 8-K - SECOND QUARTER 2014 8-K - CITIZENS FINANCIAL SERVICES INC | secondquarter2014.htm |
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 Second quarter 2014 Earnings
MANSFIELD, PENNSYLVANIA— July 28, 2014 – 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%.
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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 $.385 per share was paid on June 27, 2014 to shareholders of record on June 20, 2014 and represents an increase of 35% over the dividend declared a year ago. Additionally, a 1% stock dividend was also distributed on June 27, 2014. Both Citizens Financial Services, Inc. and First Citizens Community Bank remain well-capitalized under regulatory capital guidelines.
Citizens Financial Services, Inc. has over 1,500 shareholders, the majority of whom reside in Potter, Tioga, and Bradford Counties, Pennsylvania and Allegany County, New York, where their 18 offices are located.
Note: This press release may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Actual results and trends could differ materially from those set forth in such statements due to various factors. These factors include operating, legal and regulatory risks; changing economic and competitive conditions and other risks and uncertainties.
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CITIZENS FINANCIAL SERVICES, INC.
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CONSOLIDATED BALANCE SHEET
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(UNAUDITED)
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June 30
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December 31
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June 30
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(in thousands except share data)
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2014
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2013
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2013
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ASSETS:
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Cash and due from banks:
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Noninterest-bearing
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$ 14,742
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$ 8,899
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$ 7,928
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Interest-bearing
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998
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1,184
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3,642
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Total cash and cash equivalents
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15,740
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10,083
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11,570
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Interest bearing time deposits with other banks
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2,480
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2,480
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-
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Available-for-sale securities
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312,322
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317,301
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307,935
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Loans held for sale
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545
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278
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796
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Loans (net of allowance for loan losses: $6,751 at June 30, 2014;
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$7,098 at December 31, 2013 and $6,989 at June 30, 2013)
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533,126
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533,514
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508,747
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Premises and equipment
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11,501
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11,105
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11,396
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Accrued interest receivable
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3,557
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3,728
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3,821
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Goodwill
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10,256
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10,256
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10,256
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Bank owned life insurance
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14,921
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14,679
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14,427
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Other assets
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9,721
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11,510
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10,128
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TOTAL ASSETS
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$ 914,169
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$ 914,934
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$ 879,076
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LIABILITIES:
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Deposits:
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Noninterest-bearing
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$ 94,434
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$ 85,585
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$ 86,852
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Interest-bearing
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671,022
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662,731
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661,162
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Total deposits
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765,456
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748,316
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748,014
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Borrowed funds
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43,075
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66,932
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33,993
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Accrued interest payable
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735
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895
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964
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Other liabilities
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6,664
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6,735
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7,223
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TOTAL LIABILITIES
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815,930
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822,878
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790,194
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STOCKHOLDERS' EQUITY:
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Preferred Stock $1.00 par value; authorized
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3,000,000 shares at June 30, 2014, December 31, 2013 and June 30, 2013;
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none issued in 2014 or 2013
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-
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-
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-
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Common stock
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$1.00 par value; authorized 15,000,000 shares at June 30, 2014, December 31, 2013 and
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June 30, 2013; issued 3,335,235 shares at June 30, 2014; 3,305,517 shares at
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December 31, 2013 and June 30, 2013
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3,335
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3,306
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3,306
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Additional paid-in capital
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25,142
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23,562
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23,545
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Retained earnings
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76,925
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74,325
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69,538
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Accumulated other comprehensive income (loss)
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1,100
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(1,225)
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(713)
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Treasury stock, at cost: 296,758 shares at June 30, 2014; 290,468 shares at
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December 31, 2013 and 267,006 shares at June 30, 2013
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(8,263)
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(7,912)
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(6,794)
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TOTAL STOCKHOLDERS' EQUITY
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98,239
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92,056
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88,882
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TOTAL LIABILITIES AND
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STOCKHOLDERS' EQUITY
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$ 914,169
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$ 914,934
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$ 879,076
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The accompanying notes are an integral part of these unaudited consolidated financial statements.
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3
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CITIZENS FINANCIAL SERVICES, INC.
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CONSOLIDATED STATEMENT OF INCOME
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(UNAUDITED)
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Three Months Ended
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Six Months Ended
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June 30,
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June 30,
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(in thousands, except per share data)
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2014
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2013
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2014
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2013
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INTEREST INCOME:
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Interest and fees on loans
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$ 7,118
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$ 7,141
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$ 14,106
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$ 14,278
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Interest-bearing deposits with banks
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13
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9
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26
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19
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Investment securities:
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Taxable
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849
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936
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1,737
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1,899
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Nontaxable
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840
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844
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1,682
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1,713
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Dividends
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69
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18
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119
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38
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TOTAL INTEREST INCOME
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8,889
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8,948
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17,670
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17,947
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INTEREST EXPENSE:
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Deposits
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1,094
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1,287
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2,199
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2,615
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Borrowed funds
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145
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310
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309
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668
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TOTAL INTEREST EXPENSE
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1,239
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1,597
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2,508
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3,283
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NET INTEREST INCOME
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7,650
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7,351
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15,162
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14,664
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Provision for loan losses
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150
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75
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330
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225
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NET INTEREST INCOME AFTER
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PROVISION FOR LOAN LOSSES
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7,500
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7,276
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14,832
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14,439
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NON-INTEREST INCOME:
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Service charges
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1,102
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1,114
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2,141
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2,168
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Trust
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186
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169
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377
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370
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Brokerage and insurance
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137
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121
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257
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213
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Gains on loans sold
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30
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50
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70
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161
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Investment securities gains, net
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75
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98
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246
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294
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Earnings on bank owned life insurance
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121
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126
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242
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250
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Other
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104
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100
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209
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204
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TOTAL NON-INTEREST INCOME
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1,755
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1,778
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3,542
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3,660
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NON-INTEREST EXPENSES:
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Salaries and employee benefits
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2,893
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2,795
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5,810
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5,600
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Occupancy
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304
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312
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654
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654
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Furniture and equipment
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94
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113
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194
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215
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Professional fees
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208
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188
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442
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417
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FDIC insurance
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116
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113
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229
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225
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Pennsylvania shares tax
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191
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182
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384
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365
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Other
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1,194
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1,164
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2,378
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2,243
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TOTAL NON-INTEREST EXPENSES
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5,000
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4,867
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10,091
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9,719
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Income before provision for income taxes
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4,255
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4,187
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8,283
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8,380
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Provision for income taxes
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890
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907
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1,742
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1,813
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NET INCOME
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$ 3,365
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$ 3,280
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$ 6,541
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$ 6,567
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PER COMMON SHARE DATA:
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Net Income - Basic
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$ 1.11
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$ 1.07
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$ 2.15
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$ 2.14
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Net Income - Diluted
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$ 1.11
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$ 1.07
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$ 2.15
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$ 2.14
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Cash Dividends Paid
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$ 0.385
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$ 0.278
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$ 0.770
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$ 0.547
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Number of shares used in computation - basic
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3,039,734
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3,060,998
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3,040,822
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3,062,210
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Number of shares used in computation - diluted
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3,040,661
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3,062,576
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3,041,227
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3,062,991
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4
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Financial Highlights
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Three Months Ended
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Six Months Ended
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June 30
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June 30
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2014
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2013
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2014
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2013
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Performance Ratios and Share Data:
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Return on average assets (annualized)
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1.49%
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1.49%
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1.45%
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1.50%
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Return on average equity (annualized)
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13.88%
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14.77%
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13.63%
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14.99%
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Net interest margin (tax equivalent)
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3.92%
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3.85%
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3.89%
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3.87%
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Cash dividends paid per share
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$ 0.385
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$ 0.278
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$ 0.770
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$ 0.547
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Earnings per share - basic
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$ 1.11
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$ 1.07
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$ 2.15
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$ 2.14
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Earnings per share - diluted
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$ 1.11
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$ 1.07
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$ 2.15
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$ 2.14
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Number of shares used in computation - basic
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3,039,734
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3,060,998
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3,040,822
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3,062,210
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Number of shares used in computation - diluted
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3,040,661
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3,062,576
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3,041,227
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3,062,991
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Balance Sheet Highlights (dollars in thousands):
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June 30, 2014
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December 31, 2013
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June 30, 2013
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Assets
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$ 914,169
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$ 914,934
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$ 879,076
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Investment securities:
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Available for sale
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312,322
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317,301
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307,935
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Loans (net of unearned income)
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539,877
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540,612
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515,736
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Allowance for loan losses
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6,751
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7,098
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6,989
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Deposits
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765,456
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748,316
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748,014
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Stockholders' Equity
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98,239
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92,056
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88,882
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Non-performing assets
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9,203
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10,154
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9,129
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Non-performing assets to total loans
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1.70%
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1.88%
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1.77%
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Annualized net charge-offs to total loans
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0.25%
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0.02%
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0.01%
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Average Leverage Ratio
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10.85%
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10.42%
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10.18%
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Common shares outstanding
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3,038,477
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3,015,049
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3,038,511
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Book value per share
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$ 31.97
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$ 30.64
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$ 29.20
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5