CITIZENS FINANCIAL SERVICES INC 
By In the news release, Citizens Financial Services, Inc. Reports Record 2009 Earnings, issued
Citizens Financial Services, Inc. Reports Record 2009 Earnings
MANSFIELD, Pa., Jan. 27 /PRNewswire-FirstCall/ -- Citizens Financial Services, Incorporated (OTC Bulletin Board: CZFS), parent company of First Citizens National Bank, has released its unaudited financial performance for 2009.
Net income for the twelve months ended December 31, 2009 totaled $9,864,000 which compares to $6,905,000 for 2008. This represents an increase of $2,959,000, or 42.9%. The comparison to 2008's results is impacted by the $4.1 million other than temporary impairment charge recorded in the third quarter of 2008 related to investments in Freddie Mac preferred stock and a Lehman Brothers corporate bond. Earnings per share of $3.43 increased 42.9% from $2.40 per share for the same period last year. Return on equity for the comparable periods was 17.65% and 13.51%, while return on assets was 1.42% and 1.13%, respectively.
Net income for the three months ended December 31, 2009 totaled $2,658,000 which compares to $3,490,000 for the fourth quarter of 2008, a decrease of $832,000. Fourth quarter 2008 results included a tax benefit related to the third quarter write-down of the investments in Freddie Mac preferred stock. The Federal Government's October 3, 2008 bailout bill permitted the write-down of the Freddie Mac preferred stock to be treated as an ordinary loss, allowing a tax benefit of approximately $1,000,000. However, accounting rules did not allow the recognition of the tax benefit until the fourth quarter. Earnings per share for the three months ended December 31, 2009 and 2008 were $.93 and $1.21 per share, respectively. Return on equity for the comparable periods was 18.19% and 27.15%, while return on assets was 1.48% and 2.15%, for the respective time periods.
CEO and President Randall E. Black stated, "Our record 2009 performance was achieved not without its challenges. Non-interest expenses increased $1.9 million, of which approximately $1.0 million is attributable to an increase in FDIC insurance premiums. This includes a special assessment of approximately $330,000. The increase in premiums was necessary in order to replenish the FDIC insurance fund, which has declined due to the significant increase in bank failures throughout the country. On an after tax basis, this increase has reduced earnings per share in 2009 by $.23. Excluding the increase in FDIC insurance premiums, overall expenses would have increased $837,000 or 5.3%."
As of December 31, 2009, total assets were $729.5 million, which was an increase of $60.9 million from December 31, 2008. The investment portfolio increased $24.4 million since December 31, 2008 to a total of $198.6 million. Net loans have increased $23.1 million, or 5.4%, since last year. Total deposits of $605.6 million have increased $58.9 million from December 31, 2008. The economic downturn, high unemployment rates and the struggles of the agricultural community have had an impact on the credit quality as non-performing assets as a percent of loans was 1.55% at December 31, 2009 which compared to 0.73% at the end of 2008. As a result, the provision for loan losses for the twelve months ended December 31, 2009 was $925,000 compared to $330,000 for the same period last year, an increase of $595,000. Credit quality continues to compare favorably to our peer group.
Excluding accumulated other comprehensive income, stockholders' equity totaled $59.5 million at December 31, 2009, representing an increase of $6.7 million, or 12.8%, from December 31, 2008. Book value per share at December 31, 2009 was $20.71 compared with $18.52 last December, an increase of 11.8%. As a result of our outstanding performance in 2009, the Board of Directors declared a one-time special cash dividend of $.05 per share on November 5, 2009 which was paid on December 10, 2009 to shareholders of record on November 16, 2009. This one-time special cash dividend resulted in an overall increase of 4.04% in dividends declared in 2009 compared with 2008.
Additionally in January 2010, a cash dividend of $.25 per share was declared and will be paid on January 29, 2010 to shareholders of record, as of January 15, 2010, an increase of 4.2% over the January 2009 dividend. First Citizens remains well capitalized with capital levels exceeding regulatory levels. "Our financial strength and continued profitability give us the affordability to continue to provide a very attractive dividend yield to our shareholders and demonstrates our commitment to provide total shareholder return," stated Mr. Black.
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 17 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 and per share data) 2009 2008
----------------------------------------------- ---- ----
ASSETS:
Cash and due from banks:
Noninterest-bearing $9,505 $9,692
Interest-bearing 21,944 10,164
------------------ ------ ------
Total cash and cash equivalents 31,449 19,856
Available-for-sale securities 198,582 174,139
Loans (net of allowance for loan losses:
$4,888 at December 31, 2009 and
$4,378 at December 31, 2008) 451,496 428,436
Premises and equipment 12,227 12,762
Accrued interest receivable 3,141 2,912
Goodwill 10,256 10,256
Bank owned life insurance 12,667 12,176
Other assets 9,659 8,075
------------ ----- -----
TOTAL ASSETS $729,477 $668,612
============ ======== ========
LIABILITIES:
Deposits:
Noninterest-bearing $60,061 $55,545
Interest-bearing 545,498 491,135
------------------ ------- -------
Total deposits 605,559 546,680
Borrowed funds 54,115 61,204
Accrued interest payable 2,037 2,233
Other liabilities 6,239 5,725
----------------- ----- -----
TOTAL LIABILITIES 667,950 615,842
----------------- ------- -------
STOCKHOLDERS' EQUITY:
Common stock
$1.00 par value; authorized 10,000,000
shares; issued 3,076,253 shares at 3,076 3,048
December 31, 2009 and 3,048,289
shares at December 31, 2008
Additional paid-in capital 13,457 12,981
Retained earnings 47,353 41,034
Accumulated other comprehensive income 2,041 26
Treasury stock, at cost: 204,437 shares at
December 31, 2009 and 200,918 shares at
December 31, 2008 (4,400) (4,319)
------------------- ------ ------
TOTAL STOCKHOLDERS' EQUITY 61,527 52,770
-------------------------- ------ ------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $729,477 $668,612
===================== ======== ========
CITIZENS FINANCIAL SERVICES, INC.
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
Three Months Ended Twelve Months Ended
December 31, December 31,
------------ ------------
(in thousands, except share
and per share data) 2009 2008 2009 2008
-------------------- ---- ---- ---- ----
INTEREST INCOME:
Interest and fees on loans $7,689 $7,608 $30,305 $30,710
Interest-bearing
deposits with banks 16 23 43 57
Investment securities:
Taxable 1,397 1,437 6,044 4,828
Nontaxable 612 427 2,195 1,475
Dividends 8 4 28 168
------------- ---- ---- ---- ----
TOTAL INTEREST INCOME 9,722 9,499 38,615 37,238
--------------------- ----- ----- ------ ------
INTEREST EXPENSE:
Deposits 2,667 2,984 11,222 11,492
Borrowed funds 490 536 2,009 2,566
-------------- ---- ---- ----- -----
TOTAL INTEREST EXPENSE 3,157 3,520 13,231 14,058
---------------------- ----- ----- ------ ------
NET INTEREST INCOME 6,565 5,979 25,384 23,180
Provision for loan losses 225 105 925 330
------------------------- ---- ---- ---- ----
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 6,340 5,874 24,459 22,850
-------------------------- ----- ----- ------ ------
NON-INTEREST INCOME:
Service charges 948 898 3,612 3,489
Trust 124 110 521 561
Brokerage and insurance 56 64 284 240
Gains on loans sold 138 38 430 84
Investment securities gains
(losses), net 21 - 139 (4,089)
Earnings on bank owned life
insurance 128 101 492 362
Other 91 142 369 509
----- ---- ---- ---- ----
TOTAL NON-INTEREST INCOME 1,506 1,353 5,847 1,156
------------------------- ----- ----- ----- -----
NON-INTEREST EXPENSES:
Salaries and employee benefits 2,454 2,215 9,472 8,725
Occupancy 290 296 1,179 1,162
Furniture and equipment 101 111 437 479
Professional fees 201 140 660 625
FDIC insurance 170 52 1,200 156
Other 1,230 1,178 4,811 4,730
----- ----- ----- ----- -----
TOTAL NON-INTEREST EXPENSES 4,446 3,992 17,759 15,877
--------------------------- ----- ----- ------ ------
Income before provision for
income taxes 3,400 3,235 12,547 8,129
Provision (benefit)
for income taxes 742 (255) 2,683 1,224
------------------- --- ---- ----- -----
NET INCOME $2,658 $3,490 $9,864 $6,905
========== ====== ====== ====== ======
Earnings Per Share $0.93 $1.21 $3.43 $2.40
================== ===== ===== ===== =====
Cash Dividends Paid Per Share $0.300 $0.290 $1.030 $0.990
============================= ====== ====== ====== ======
Weighted average number of
shares outstanding 2,873,393 2,876,087 2,873,488 2,878,907
Financial Highlights
--------------------
Three Months Ended Twelve Months Ended
December 31 December 31
2009 2008 2009 2008
Performance Ratios and
Share Data:
Return on average assets
(annualized) 1.48% 2.15% 1.42% 1.13%
Return on average equity
(annualized) 18.19% 27.15% 17.65% 13.51%
Net interest margin (tax
equivalent) 4.21% 4.22% 4.23% 4.36%
Cash dividends paid
per share $0.30 $0.29 $1.03 $0.99
Earnings per share $0.93 $1.21 $3.43 $2.40
Weighted average shares
outstanding 2,873,393 2,876,087 2,873,488 2,878,907
Balance Sheet Highlights
(dollars in thousands): December 31, 2009 December 31, 2008
----------------- -----------------
Assets $729,477 $668,612
Investment securities:
Available for sale 198,582 174,139
Loans (net of unearned income) 456,384 432,814
Allowance for loan losses 4,888 4,378
Deposits 605,559 546,680
Stockholders' Equity 61,527 52,770
Non-performing assets 7,173 3,176
Non-performing assets to
total loans 1.55% 0.73%
Average Leverage Ratio 8.15% 7.91%
Common shares outstanding 2,871,816 2,847,371
Book value per share $20.71 $18.52
SOURCE Citizens Financial Services, Inc.
