EX-99.1 2 releaseandfinancials.htm PRESS RELEASE AND FINANCIALS FOR THIRD QUARTER 2005 press release and financials for third quarter 2005
Exhibit 99.1

 
 Contact:      Kathleen Campbell, Marketin Director      First Citizens National Bank
   570-662-0422  15 South Main Street
   570-662-8512 (fax)  Mansfield, PA 16933
 
 
Citizens Financial Services, Inc. Reports Third Quarter Earnings

MANSFIELD, PENNSYLVANIA— October 26, 2005 - Citizens Financial Services, Incorporated (OTC BB: CZFS), parent company of First Citizens National Bank, has released its unaudited financial performance for the third quarter of 2005. Net income for the three months and nine months ended September 30, 2005 was $1,318,000 and $3,898,000, respectively. This compares to the three months and nine months ended September 30, 2004 of $1,423,000 and $4,383,000, respectively. Earnings per share were $1.36 through September 2005 compared with $1.53 in 2004, a decrease of 11.1%.

Return on equity (ROE) was 12.53% while return on assets (ROA) was 1.03% for the first nine months of 2005. Likewise, ROE and ROA was 15.04% and 1.22% for the first nine months of 2004, respectively.

CEO and President Randall E. Black stated, “Throughout 2005, we have continued to see our interest rate margin compressed due to the flattened yield curve and have implemented strategies during this period to minimize the impact to our cost of funds. Despite the less than favorable interest rate environment, we have been successful in growing our loan portfolio and increasing deposits. Lastly in July, we declared a 1% stock dividend which was distributed to shareholders along with our normal dividend, which is a continuation of past practice since 1991.”

Net interest income was $13.2 million for the nine month period ending September 30, 2005 compared to $12.9 million for the nine month period ending September 30, 2004, representing a $254,000 or 2.0% increase over the same period a year ago. Net interest margin for the nine months ended September 30 2005 of 4.02% declined from 4.15% in the same period of 2004, which is a reflection of cost of funds increasing 26 basis points over the same time frame resulting in net margin compression.

The company has grown loans organically by $22.0 million since last September, an increase of 6.2%. Total deposits have increased $21.7 million, an increase of 5.3%. We continue to focus on serving our existing customer relationships, while fostering new ones within our current and new Wellsville, NY markets.
 
Non-interest income was down $454,000 which has been impacted due to the lack of investment security gains in 2005. Through September 2004, $491,000 of investment gains had been recorded compared to none thus far in 2005.

Since last September, stockholders’ equity, excluding accumulated other comprehensive income, has increased $2,013,000 or 5.0%. This equates to a book value per share of $14.87, which is an increase of 4.8% over last year’s book value per share of $14.19.

The cash dividend to be paid on October 28, 2005 to record holders of October 14, 2005 will be $.21 per share. This compares to $.20 per share for the comparable period in 2004, an increase of 5.0%. The annualized dividend yield through September is 4.00%.

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.
 
 

CITIZENS FINANCIAL SERVICES, INC.
              
CONSOLIDATED BALANCE SHEET
             
(UNAUDITED)
              
 
              
 
    
September 30 
    
December 31
 
 
September 30
  
(in thousands)
    
2005
    
2004
 
 
2004
  
ASSETS:
                    
Cash and due from banks:
                    
Noninterest-bearing
  
$
7,868
  
$
9,162
  
$
8,145
  
Interest-bearing
    
540
   
177
   
123
 
Total cash and cash equivalents
    
8,408
   
9,339
   
8,268
 
                     
Available-for-sale securities
    
90,512
   
95,747
   
100,996
 
 
                    
Loans (net of allowance for loan losses: 2005, $3,666;
                    
December 31, 2004, $3,919; and September 30, 2004, $4,109)
    
371,852
   
355,774
   
349,381
 
 
                    
Premises and equipment
    
12,316
   
11,833
   
11,863
 
Accrued interest receivable
    
2,037
   
1,736
   
1,875
 
Goodwill
    
8,605
   
8,605
   
8,605
 
Core deposit intangible
    
828
   
1,262
   
1,406
 
Bank owned life insurance
    
7,669
   
7,449
   
7,374
 
Other assets
    
7,356
   
7,602
   
7,721
 
               
TOTAL ASSETS
  
$
509,583
  
$
499,347
  
$
497,489
  
               
LIABILITIES:
                    
Deposits:
                    
Noninterest-bearing
  
$
52,246
  
$
46,866
  
$
42,420
  
Interest-bearing
    
378,436
   
372,208
   
366,592
 
Total deposits
    
430,682
   
419,074
   
409,012
 
Borrowed funds
    
32,814
   
34,975
   
43,753
 
Accrued interest payable
    
1,627
   
1,870
   
1,685
 
Commitment to purchase investment securities
    
300
   
-
   
-
 
Other liabilities
    
2,718
   
2,639
   
2,607
 
TOTAL LIABILITIES
    
468,141
   
458,558
   
457,057
 
 
                
                     
STOCKHOLDERS' EQUITY:
                    
Common Stock
                    
$1.00 par value; authorized 10,000,000 shares;
                    
issued 2,965,257 shares in 2005 and 2,937,519
                    
shares in 2004
    
2,965
   
2,938
   
2,938
 
Additional paid-in capital
    
11,359
   
10,804
   
10,804
 
Retained earnings
    
30,472
   
28,894
   
28,578
 
TOTAL
    
44,796
   
42,636
   
42,320
 
Accumulated other comprehensive (loss) income
    
(880
)
  
164
   
123
 
Less: Treasury Stock, at cost 118,715 shares for 2005 and 97,262
                    
shares in 2004
    
(2,474
)
  
(2,011
)
  
(2,011
)
                     
TOTAL STOCKHOLDERS' EQUITY
    
41,442
   
40,789
   
40,432
 
TOTAL LIABILITIES AND
                    
STOCKHOLDERS' EQUITY
  
$
509,583
  
$
499,347
  
$
497,489
  
 
 

CITIZENS FINANCIAL SERVICES, INC.
                  
CONSOLIDATED STATEMENT OF INCOME
                  
(UNAUDITED)
                  
 
                  
   
Three Months Ended
 
Nine Months Ended
  
(in thousands, except per share data)
  
September 30
  
September 30
  
   
2005
  
2004
  
2005
  
2004
  
INTEREST INCOME:
                  
Interest and fees on loans
  
$
6,362
  
$
5,851
  
$
18,386
  
$
16,647
  
Interest-bearing deposits with banks
    
3
   
1
   
2
   
9
 
Investment securities:
                          
Taxable
    
698
   
846
   
2,240
   
2,590
 
Nontaxable
    
153
   
76
   
394
   
223
 
Dividends
    
50
   
81
   
156
   
210
 
                   
TOTAL INTEREST INCOME
    
7,266
   
6,855
   
21,178
   
19,679
 
                   
INTEREST EXPENSE:
                          
Deposits
    
2,416
   
2,126
   
6,840
   
6,081
 
Borrowed funds
    
383
   
253
   
1,140
   
684
 
                   
TOTAL INTEREST EXPENSE
    
2,799
   
2,379
   
7,980
   
6,765
 
                   
NET INTEREST INCOME
    
4,467
   
4,476
   
13,198
   
12,914
 
Provision for loan losses
    
30
   
-
   
30
   
-
 
                   
NET INTEREST INCOME AFTER
                          
PROVISION FOR LOAN LOSSES
    
4,437
   
4,476
   
13,168
   
12,914
 
                   
NON-INTEREST INCOME:
                          
Service charges
    
784
   
783
   
2,203
   
2,265
 
Trust
    
161
   
86
   
368
   
332
 
Brokerage
    
45
   
40
   
138
   
152
 
Insurance
    
61
   
61
   
205
   
150
 
Gains on loans sold
   
24
   
17
   
45
   
37
 
Investment securities gains, net
    
-
   
-
   
-
   
491
 
Earnings on bank owned life insurance
    
71
   
75
   
220
   
233
 
Other
    
85
   
91
   
289
   
262
 
                       
TOTAL NON-INTEREST INCOME
    
1,231
   
1,153
   
3,468
   
3,922
 
                     
NON-INTEREST EXPENSES:
                          
Salaries and employee benefits
    
1,993
   
1,905
   
5,888
   
5,677
 
Occupancy
   
262
   
259
   
846
   
812
 
Furniture and equipment
    
156
   
181
   
491
   
517
 
Professional fees
    
132
   
131
   
408
   
443
 
Amortization of intangibles
    
145
   
145
   
434
   
362
 
Other
    
1,133
   
1,159
   
3,439
   
3,314
 
                   
TOTAL NON-INTEREST EXPENSES
    
3,821
   
3,780
   
11,506
   
11,125
 
                   
Income before provision for income taxes
    
1,847
   
1,849
   
5,130
   
5,711
 
Provision for income taxes
    
529
   
426
   
1,232
   
1,328
 
                   
NET INCOME
  
$
1,318
  
$
1,423
  
$
3,898
  
$
4,383
  
 
                          
 
                          
                   
Earnings Per Share
  
$
0.46
  
$
0.50
  
$
1.36
  
$
1.53
  
Cash Dividends Per Share
  
$
0.205
  
$
0.195
  
$
0.610
  
$
0.580
  
                   
                           
Weighted average number of shares outstanding
    
2,846,542
   
2,867,995
   
2,859,980
   
2,868,177
 
 
 
 

Financial Highlights
          
   
2005
  
2004
  
Nine Months Ended September 30
          
Net Income
  
$
3,898
  
$
4,383
  
Comprehensive Income
    
2,855
   
3,550
 
Per common share data:
              
Earnings per share
  
$
1.36
  
$
1.53
  
Cash dividends per share
  
$
0.610
  
$
0.580
  
Performance Ratios:
              
Return on average assets (annualized)
    
1.03
%
  
1.22
%
Return on average equity (annualized)
    
12.53
%
  
15.04
%
               
               
Three Months Ended September 30
              
Net Income
  
$
1,318
  
$
1,423
  
Per common share data:
              
Earnings per share
  
$
0.46
  
$
0.50
  
Cash dividends per share
  
$
0.205
  
$
0.195
  
Performance Ratios:
              
Return on average assets (annualized)
    
1.03
%
  
1.15
%
Return on average equity (annualized)
    
12.55
%
  
14.31
%
               
               
At September 30
              
Assets
  
$
509,583
  
$
497,489
  
Investment securities:
              
Available for sale
    
90,512
   
100,996
 
Loans (net of unearned income)
    
375,518
   
353,490
 
Allowance for loan losses
    
3,666
   
4,109
 
Deposits
    
430,682
   
409,012
 
Stockholders' Equity
    
41,442
   
40,432
 
Non-performing assets
    
2,857
   
2,588
 
Average Leverage Ratio
    
8.03
%
  
7.74
%
Per common share data:
              
Book value
  
$
14.87
  
$
14.19
  
Market value (average of bid/ask price)
  
$
20.30
  
$
21.83
  
Market price to book value ratio
    
136.5
%
  
153.8
%
 

           
Cash Dividends
  
Common Stock Information:
  
Bid
 
Ask
 
Per Share
  
               
Quarter Ended:
              
               
September 30, 2005
  
$
20.10
  
$
20.50
  
$
0.205
  
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