EX-99 2 pressreleasesecondquarter.htm EARNINGS RELEASE WITH SUPPORTING FINANCIALS SECOND QUARTER Earnings Release with Supporting Financials Second Quarter

Exhibit 99.1

Contact:
 
Kathleen Campbell, Marketing Director              First Citizens National Bank
570-662-0422                         15 S. Main Street
570-662-8512 (fax)                  Mansfield, PA 16933

Citizens Financial Services, Inc. Reports Second Quarter Earnings

MANSFIELD, PENNSYLVANIA— July 26, 2005 - Citizens Financial Services, Incorporated (OTC BB: CZFS), parent company of First Citizens National Bank, has released its unaudited financial performance for the second quarter of 2005. Net income for the three months and six months ended June 30, 2005 was $1,313,000 and $2,580,000, respectively. This compares to the three months and six months ended June 30, 2004 of $1,468,000 and $2,961,000, respectively. Earnings per share were $.91 through June 2005 compared with $1.04 in 2004, a decrease of 12.5%.

Return on equity (ROE) was 12.52% while return on assets (ROA) was 1.02% for the first six months of 2005. Likewise, ROE and ROA was 15.41% and 1.26% for the first six months of 2004, respectively.

Since June of last year, total loans have increased $20.6 million, which represents a 5.87% increase. Total deposits have increased $7.5 million, an increase of 1.81%. CEO and President Randall E. Black stated, “Despite the ongoing effects of the flattening yield curve and the issues it presents to our interest margins, we have been able to increase our loan portfolio and continue to report solid core earnings from operations. Year-to-date net interest income increased $294,000 or 3.5% over the same period a year ago. The lack of security gains has had a significant impact to our overall net income, particularly compared to realized gains of $491,000 recorded for the first six months of 2004.”

During this same period, asset quality has continued to improve such that through June, there has been no provision for loan losses. The ratio of classified assets to regulatory capital has improved from 27.90% as of June 30, 2004 to 20.82% as of June 30, 2005.

Stockholders’ equity, excluding accumulated other comprehensive income, has increased $2,148,000 or 5.45% since last June. In June, 21,453 shares of treasury stock were purchased at a total cost of $462,312. The book value per share of $14.76 represents an increase of 5.3% over last year.

The cash dividend to be paid on July 29, 2005 to record holders of July 15, 2005 will be $.205 per share. This compares to $.195 per share for the comparable period in 2004, an increase of 5.1%. “The increase in dividends of 5.1% over last year reflects the continued profitability of the Company and the Board of Directors’ desire to provide shareholders with overall total return,” stated Mr. Black. The annualized dividend yield through June is 3.86%. Additionally, a 1% stock dividend will be distributed to shareholders, which is a continuation of past practice since 1991.

Citizens Financial Services, Inc., has over 1,500 shareholders, the majority of whom reside in Potter, Tioga, and Bradford Counties where their 15 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.
 
1

CITIZENS FINANCIAL SERVICES, INC.
              
CONSOLIDATED BALANCE SHEET
             
(UNAUDITED)
              
 
              
 
    
June 30 
    
December 31
 
 
June 30
  
(in thousands)
    
2005
 
 
2004
 
 
2004
  
ASSETS:
                    
Cash and due from banks:
                    
Noninterest-bearing
  
$
8,607
  
$
9,162
  
$
8,782
  
Interest-bearing
    
101
   
177
   
3,650
 
Total cash and cash equivalents
    
8,708
   
9,339
   
12,432
 
                     
Available-for-sale securities
    
91,947
   
95,747
   
98,507
 
 
                    
Loans (net of allowance for loan losses: 2005, $3,692;
                    
December 31, 2004, $3,919; and June 30, 2004, $4,129)
    
367,684
   
355,774
   
346,668
 
 
                    
Premises and equipment
    
12,493
   
11,833
   
10,395
 
Accrued interest receivable
    
1,895
   
1,736
   
1,689
 
Goodwill
    
8,605
   
8,605
   
8,605
 
Core deposit intangible
    
973
   
1,262
   
1,551
 
Bank owned life insurance
    
7,598
   
7,449
   
7,299
 
Other assets
    
7,244
   
7,602
   
7,650
 
     
   
   
 
TOTAL ASSETS
  
$
507,147
  
$
499,347
  
$
494,796
  
     
   
   
 
LIABILITIES:
                    
Deposits:
                    
Noninterest-bearing
  
$
46,764
  
$
46,866
  
$
47,157
  
Interest-bearing
    
375,668
   
372,208
   
367,754
 
Total deposits
    
422,432
   
419,074
   
414,911
 
Borrowed funds
    
39,199
   
34,975
   
37,313
 
Accrued interest payable
    
1,599
   
1,870
   
1,543
 
Other liabilities
    
2,716
   
2,639
   
2,521
 
TOTAL LIABILITIES
    
465,946
   
458,558
   
456,288
 
 
    
   
       
                     
STOCKHOLDERS' EQUITY:
                    
Common Stock
                    
$1.00 par value; authorized 10,000,000 shares;
                    
issued 2,937,519 shares in 2005 and at December 31, 2004
                    
and 2,909,849 shares at June 30, 2004
    
2,938
   
2,938
   
2,910
 
Additional paid-in capital
    
10,804
   
10,804
   
10,213
 
Retained earnings
    
30,324
   
28,894
   
28,332
 
TOTAL
    
44,066
   
42,636
   
41,455
 
Accumulated other comprehensive (loss) income
    
(391
)
  
164
   
(936
)
Less: Treasury Stock, at cost 118,715 shares for 2005 and 97,262 at
                   
December 31, 2004 and June 30, 2004
    
(2,474
)
  
(2,011
)
  
(2,011
)
                     
TOTAL STOCKHOLDERS' EQUITY
    
41,201
   
40,789
   
38,508
 
TOTAL LIABILITIES AND
                    
STOCKHOLDERS' EQUITY
  
$
507,147
  
$
499,347
  
$
494,796
  
2

CITIZENS FINANCIAL SERVICES, INC.
                  
CONSOLIDATED STATEMENT OF INCOME
                  
(UNAUDITED)
                  
   
Three Months Ended
      
Six Months Ended
      
(in thousands, except per share data)
  
June 30
      
June 30
      
   
2005
  
2004
  
2005
  
2004
  
INTEREST INCOME:
                  
Interest and fees on loans
  
$
6,105
  
$
5,447
  
$
12,024
  
$
10,795
  
Interest-bearing deposits with banks
    
-
   
3
   
-
   
8
 
Investment securities:
                          
Taxable
    
749
   
852
   
1,541
   
1,744
 
Nontaxable
    
124
   
62
   
242
   
147
 
Dividends
    
55
   
67
   
106
   
129
 
     
   
   
   
 
TOTAL INTEREST INCOME
    
7,033
   
6,431
   
13,913
   
12,823
 
     
   
   
   
 
INTEREST EXPENSE:
                          
Deposits
    
2,256
   
1,992
   
4,425
   
3,956
 
Borrowed funds
    
379
   
217
   
757
   
430
 
     
   
   
   
 
TOTAL INTEREST EXPENSE
    
2,635
   
2,209
   
5,182
   
4,386
 
     
   
   
   
 
NET INTEREST INCOME
    
4,398
   
4,222
   
8,731
   
8,437
 
Provision for loan losses
    
-
   
-
   
-
   
-
 
     
   
   
   
 
NET INTEREST INCOME AFTER
                          
PROVISION FOR LOAN LOSSES
    
4,398
   
4,222
   
8,731
   
8,437
 
     
   
   
   
 
NON-INTEREST INCOME:
                          
Service charges
    
746
   
751
   
1,419
   
1,482
 
Trust
    
86
   
119
   
208
   
246
 
Brokerage
    
55
   
58
   
93
   
112
 
Insurance
    
61
   
60
   
144
   
88
 
Gains on loans sold
   
12
   
12
   
22
   
21
 
Investment securities gains, net
    
-
   
204
   
-
   
491
 
Earnings on bank owned life insurance
    
75
   
79
   
149
   
158
 
Other
    
100
   
93
   
202
   
172
 
                 
   
 
TOTAL NON-INTEREST INCOME
    
1,135
   
1,376
   
2,237
   
2,770
 
           
   
   
 
NON-INTEREST EXPENSES:
                          
Salaries and employee benefits
    
1,974
   
1,847
   
3,895
   
3,772
 
Occupancy
   
282
   
267
   
585
   
553
 
Furniture and equipment
    
160
   
165
   
335
   
335
 
Professional fees
    
131
   
158
   
275
   
312
 
Amortization of intangibles
    
144
   
109
   
289
   
217
 
Other
    
1,171
   
1,129
   
2,306
   
2,155
 
     
   
   
   
 
TOTAL NON-INTEREST EXPENSES
    
3,862
   
3,675
   
7,685
   
7,344
 
     
   
   
   
 
Income before provision for income taxes
    
1,671
   
1,923
   
3,283
   
3,863
 
Provision for income taxes
    
358
   
455
   
703
   
902
 
     
   
   
   
 
NET INCOME
  
$
1,313
  
$
1,468
  
$
2,580
  
$
2,961
  
 
                          
     
   
   
   
 
Earnings Per Share
  
$
0.46
  
$
0.52
  
$
0.91
  
$
1.04
  
Cash Dividends Declared
  
$
0.205
  
$
0.195
  
$
0.405
  
$
0.385
  
3

FINANCIAL HIGHLIGHTS
          
(UNAUDITED)
          
           
(in thousands, except per share data and ratio data)
         
   
2005
 
2004
  
Six Months Ended June 30
          
Net Income
  
$
2,580
  
$
2,961
  
Comprehensive Income
    
2,025
   
1,069
 
Per common share data:
              
Earnings per share
  
$
0.91
  
$
1.04
  
Cash Dividends declared
  
$
0.405
  
$
0.385
  
Performance Ratios:
              
Return on average assets (annualized)
    
1.02
%
  
1.26
%
Return on average equity (annualized)
    
12.52
%
  
15.41
%
               
               
Three Months Ended June 30
              
Net Income
  
$
1,313
  
$
1,468
  
Per common share data:
              
Earnings per share
  
$
0.46
  
$
0.52
  
Cash Dividends declared
  
$
0.205
  
$
0.195
  
Performance Ratios:
              
Return on average assets (annualized)
    
1.04
%
  
1.23
%
Return on average equity (annualized)
    
12.63
%
  
15.12
%
               
               
At June 30
              
Assets
  
$
507,147
  
$
494,796
  
Investment securities:
              
Available for sale
    
91,947
   
98,507
 
Loans (net of unearned income)
    
371,376
   
350,797
 
Allowance for loan losses
    
3,692
   
4,129
 
Deposits
    
422,432
   
414,911
 
Stockholders' Equity
    
41,201
   
38,508
 
Non-performing assets
    
2,806
   
3,299
 
Average Leverage Ratio
    
7.94
%
  
7.81
%
Per common share data:
              
Book value
  
$
14.76
  
$
14.02
  
Market value (average of bid/ask price)
  
$
21.35
  
$
22.48
  
Market price to book value ratio
    
144.69
%
  
160.31
%
 

   
 
  
 
  
Cash Dividends
  
Common Stock Information:
  
Bid
  
Ask
  
Paid
  
               
Quarter Ended:
              
               
June 30, 2005
  
$
21.00
  
$
21.70
  
$
0.205
  
March 31, 2005
  
$
23.50
  
$
24.25
  
$
0.200
  
December 31, 2004
  
$
23.65
  
$
24.00
  
$
0.200
  
September 30, 2004
  
$
21.50
  
$
22.15
  
$
0.195
  
                     
June 30, 2004
  
$
22.20
  
$
22.75
  
$
0.195
  
March 31, 2004
  
$
25.00
  
$
25.25
  
$
0.190
  
December 31, 2003
  
$
23.85
  
$
24.15
  
$
0.190
  
September 30, 2003
  
$
24.75
  
$
25.50
  
$
0.185
  
4