-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, sU9TXeHbIpS0CXZI0bi7L/Gvr8/aPLy/NVK5CWUS3vDPyuGfVdHvqofstMsu9I0l GpAWlCFENWGpSmqcc0+wrw== 0000950165-95-000020.txt : 19950516 0000950165-95-000020.hdr.sgml : 19950516 ACCESSION NUMBER: 0000950165-95-000020 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950515 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CITIZENS FINANCIAL SERVICES INC CENTRAL INDEX KEY: 0000739421 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 232265045 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-13222 FILM NUMBER: 95538612 BUSINESS ADDRESS: STREET 1: 15 S MAIN ST CITY: MANSFIELD STATE: PA ZIP: 16933 BUSINESS PHONE: 7176622121 MAIL ADDRESS: STREET 1: 15 S MAIN ST CITY: MANSFIELD STATE: PA ZIP: 16933 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1995 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________________ to ____________________ Commission file number 0-13222 CITIZENS FINANCIAL SERVICES, INC. (Exact name of registrant as specified in its charter) PENNSYLVANIA 23-2265045 (State of other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 15 South Main Street, Mansfield, Pennsylvania 16933 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (717) 662-2121 Indicate by checkmark whether the registrant (1) has filed all reports to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes__X___ No_____ The number of shares outstanding of the Registrant's Common Stock, as of April 26, 1995, 1,334,543 shares of Common Stock, par value $1.00. Citizens Financial Services, Inc. Form 10-Q INDEX Page Part I FINANCIAL INFORMATION (UNAUDITED) Item 1-Financial Statements Consolidated Balance Sheet as of March 31, 1995 and December 31, 1994 1 Consolidated Statement of Income for the Three months Ended March 31, 1995 and 1994 2 Consolidated Statement of Cash Flows for the Three months Ended March 31, 1995 and 1994 3 Notes to Consolidated Financial Statements 4 Item 2-Management's Discussion and Analysis of Financial Condition and Results of Operations 4-10 Part II OTHER INFORMATION AND SIGNATURES Item 1-Legal Proceedings 11 Item 2-Changes in Securities 11 Item 3-Defaults upon Senior Securities 11 Item 4-Submission of Matters to a Vote of Security Holders 11 Item 5-Other Information 11 Item 6-Exhibits and Reports on Form 8-K 11 Signatures 12 CITIZENS FINANCIAL SERVICES, INC. CONSOLIDATED BALANCE SHEET (UNAUDITED) March 31, December 31, 1995 1994 ASSETS: Cash and due from banks: Noninterest-bearing $ 5,269,512 $ 5,479,295 Interest-bearing 46,342 32,005 Total cash and cash equivalents 5,315,854 5,511,300 Available-for-sale securities 15,003,258 14,639,874 Held-to-maturity securities (estimated market value 1995, $48,027,000; December 31, 1994, $47,897,000) 48,679,966 49,617,504 Loans (net of allowance for possible loan losses 1995, $1,772,374; December 31, 1994, $1,721,343) 155,158,320 154,847,712 Foreclosed assets held for sale 253,131 167,969 Premises and equipment 4,065,135 4,123,658 Accrued interest receivable and other assets 3,831,827 3,628,671 TOTAL ASSETS $232,307,491 $232,536,688 LIABILITIES: Deposits: Noninterest-bearing $ 13,760,342 $ 14,494,727 Interest-bearing 186,977,489 179,983,170 Total deposits 200,737,831 194,477,897 Borrowed funds 9,171,792 16,030,406 Accrued interest payable 1,295,171 1,691,646 Dividends payable 0 547,163 Other liabilities 1,342,451 886,444 TOTAL LIABILITIES 212,547,245 213,633,556 STOCKHOLDERS' EQUITY: Common Stock $1.00 par value; authorized 2,000,000 shares; issued and outstanding 1,334,543 in 1995 and December 31, 1994 1,334,543 1,334,543 Additional paid-in capital 6,224,579 6,224,579 Retained earnings 12,316,648 11,708,435 TOTAL 19,875,770 19,267,557 Unrealized holding losses on available-for-sale securities (115,524) (364,425) TOTAL STOCKHOLDERS' EQUITY 19,760,246 18,903,132 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $232,307,491 $232,538,688 The accompanying notes are an integral part of these financial statements. 1 CITIZENS FINANCIAL SERVICES, INC. CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) Three Months Ended March 31, 1995 1994 INTEREST INCOME: Interest and fees on loans $3,552,760 $2,981,554 Interest on interest-bearing deposits with banks 495 8,113 Interest and dividends on investments: Taxable 1,005,650 978,869 Nontaxable 52,425 96,088 Dividends 17,165 16,533 Total interest and dividends on investments 1,075,240 1,091,490 TOTAL INTEREST INCOME 4,628,495 4,081,157 INTEREST EXPENSE: Interest on deposits 2,109,416 1,778,689 Interest on borrowed funds 203,737 50,200 TOTAL INTEREST EXPENSE 2,313,153 1,828,889 NET INTEREST INCOME 2,315,342 2,252,268 Provision for possible loan losses 50,000 75,000 NET INTEREST INCOME AFTER PROVISION FOR POSSIBLE LOAN LOSSES 2,265,342 2,177,268 OTHER OPERATING INCOME: Service charge income 163,339 154,346 Trust income 76,542 63,163 Other income 47,220 58,797 Realized securities gains, net 4,700 43,527 TOTAL OTHER OPERATING INCOME 291,801 319,833 OTHER OPERATING EXPENSES: Salaries and employee benefits 807,990 760,738 Occupancy expenses 108,250 115,754 Furniture and equipment expenses 139,747 142,540 FDIC insurance expense 110,849 108,260 Other expenses 542,094 477,537 TOTAL OTHER OPERATING EXPENSES 1,708,930 1,604,829 Income before provision for income taxes 848,213 892,272 Provision for income taxes 240,000 270,000 NET INCOME $ 608,213 $ 622,272 Earnings per share $ 0.46 $ 0.47 Weighted average number of shares outstanding 1,334,543 1,334,543 The accompanying notes are an integral part of these financial statements. 2 CITIZENS FINANCIAL SERVICES, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) Three months Ended March 31, 1995 1994 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 608,213 $ 622,272 Adjustments to reconcile net income to net cash provided by operating activities: Provision for possible loan losses 50,000 75,000 Provision for depreciation 107,388 107,860 Amortization and accretion of investment securities 55,609 28,213 Deferred income taxes (8,229) (40,198) Realized gains on securities (4,700) (43,527) Realized gains on loans sold (2,155) (7,261) Gain on sales or disposals of premises and equipment 0 (2,139) (Gain) loss on sale of foreclosed assets held for sale 0 (16,737) (Increase) decrease in accrued interest receivable and other assets (323,149) 203,434 Increase (decrease) in accrued interest payable and other liabilities 59,531 (79,763) Net cash provided by operating activities 542,508 847,154 CASH FLOWS FROM INVESTING ACTIVITIES: Available-for-sale securities: Proceeds from sales of securities 0 2,044,258 Purchase of securities 0 (3,002,812) Held-to-maturity securities: Proceeds from maturity and principal repayments of securities 941,068 1,385,209 Purchase of securities (40,700) (1,589,994) Net increase in loans (443,615) (754,697) Capital expenditures (48,865) (67,598) Proceeds from sales of premises and equipment 0 2,214 Proceeds from sale of foreclosed assets held for sale 0 16,737 Net cash provided (used) by investing activities 407,888 (1,966,683) CASH FLOWS FROM FINANCING ACTIVITIES: Net increase (decrease) in deposits 6,259,934 (910,545) Proceeds from long-term borrowings 440,358 186,524 Repayments of long-term borrowings (75,369) 0 (Decrease) increase in short-term borrowed funds (7,223,602) 1,385,704 Dividends paid (547,163) (515,536) Net cash provided (used) by financing activities (1,145,842) 146,147 Net decrease in cash and cash equivalents (195,446) (973,382) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 5,511,300 5,612,269 CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 5,315,854 $ 4,638,887 The accompanying notes are an integral part of these financial statements. 3 CITIZENS FINANCIAL SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 1 - Basis of Presentation The consolidated financial statements include the accounts of Citizens Financial Services, Inc. and its wholly-owned subsidiary, First Citizens National Bank (the "Bank"), (collectively, the "Company"). All material intercompany balances and transactions have been eliminated in consolidation. The accompanying interim financial statements have been prepared by the Company without audit and, in the opinion of management, reflect all adjustments (which include only normal recurring adjustments) necessary to present fairly the Company's financial position as of March 31, 1995, and the results of operations for the interim periods presented. For further information refer to the consolidated financial statements and footnotes thereto incorporated by reference in the Company's Annual Report on Form 10-K for the year ended December 31, 1994. The results of operations for the three months ended March 31, 1995 and 1994 are not necessarily indicative of the results to be expected for the full year. Note 2 - Earnings per Share Earnings per share calculations give retroactive effect to stock dividends declared by the Company. The number of shares used in the earnings per share and dividends per share calculation was 1,334,543 for 1995 and 1994. Note 3 - Standby Letters of Credit Outstanding standby letters of credit amounted to $607,000 and $1,117,000 at March 31, 1995 and December 31, 1994, respectively. Note 4 - Repurchase Agreements As of March 31, 1995, the Company had no repurchase agreements that exceeded 10% of stockholders' equity. Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following is management's discussion and analysis of certain significant factors which have affected the Company's financial position and operating results during the periods indicated in the accompanying consolidated financial statements. Financial Condition For the three month period ended March 31, 1995, the assets of the Company have decreased by $.2 million versus an increase of $.3 million in 1994. Net loan growth was $.3 million for the current period, slightly less than the $.7 million increase in 1994. Total investments decreased $.6 million compared to an increase of $.9 million in 1994. 4 Total investments decreased a modest $.6 million during the period compared to an increase of $.6 million in 1994. During 1994 U. S. Treasury securities, held in the available-for-sale category, totaling $2 million with maturities within one year were sold and reinvested in similar securities with maturities of 4 to 6 years. Also during 1994 an additional $2.5 million U. S. Treasury securities were purchased in the 4 to 6 year maturities and classified as held-for-sale. Cash and cash equivalents decreased $.2 million in 1995 compared to a decrease of $1 million in 1994. The Company's loan growth during 1994 and 1995 stems from its commitment to the local communities and servicing their needs. The primary concentration of loans continues to be in residential real estate-consisting of loans to purchase and improve real estate, debt consolidation and home equity lines of credit. Loan demand has slowed during the last 6 months because of the approximately 300 basis point increase in interest rates during 1994 with only a slight decline during the first quarter of 1995. During the remainder of 1995, management expects that loan demand will continue to be slow as interest rates remain high nationwide and in the local market area. The loan portfolio consists of the following (in thousands): March 31, December 31, March 31, 1995 1994 1994 Real estate loans - residential $ 97,522 $ 98,630 $ 92,841 Real estate loans - commercial 22,729 21,915 17,758 Real estate loans - agricultural 7,020 7,125 6,483 Loans to individuals for household, family and other purchases 12,430 11,886 11,724 Commercial and other loans 10,220 10,285 9,401 State and political subdivision loans 7,500 7,303 5,528 157,421 157,144 143,735 Less: unearned income on loans 490 575 1,065 Loans net of unearned income $156,931 $156,569 $142,670 Deposits increased by $6.3 million or 3.2% during the first quarter of 1995 versus a decrease of $.9 million in 1994. The creation of some promotional certificates of deposit with attractive rates resulted in the deposit growth for 1995. As discussed in the Management's Discussion and Analysis section of the 1994 annual report, during 1994 the rate paid on certificates of deposit increased more rapidly that the rates paid on NOW and savings accounts. This trend, which continued into 1995, increased the growth of certificates of deposit and offset the decrease in NOW and savings accounts. Borrowed funds decreased by a repayment of $6.9 million during 1995 (made possible by the deposit growth discussed above) compared to an increase of $1.6 million in 1994. This decrease was the result of a repayment of the short term borrowing from the Federal Home Loan Bank. The Company's daily cash requirements are now being met by using the financial instruments available through the Federal Home Loan Bank rather than using federal funds market. A modest increase in loan demand as well as a significant increase in deposits for this period resulted in the decrease in short term borrowing. 5 Capital The Company has computed its risk-based capital ratios as follows (dollars in thousands): March 31, December 31, 1995 1994 Tier I - Total stockholders' equity $ 19,760 $ 18,903 Less: Unrealized holding (losses) gains on available-for-sale securities (116) (364) ------------------------ Tier I, net 19,876 19,267 Tier II - Allowance for loan losses(1) 1,622 1,625 ------------------------ Total qualifying capital $ 21,498 $ 20,892 ======================== Risk-adjusted on-balance sheet assets $123,018 $123,077 Risk-adjusted off-balance sheet exposure (2) 6,768 6,956 ------------------------ Total risk-adjusted assets $129,786 $130,033 ======================== March 31, December 31, 1995 1994 Ratios: Tier I risk-based capital ratio 15.3% 14.8% Federal minimum required 4.0 4.0 Total risk-based capital ratio 16.6% 16.1% Federal minimum required 8.0 8.0 Leverage ratio (3) 8.6% 8.6% Federal minimum required 4.0 4.0 (1) Allowance for loan losses is limited to 1.25% of total risk-adjusted assets. (2) Off-balance sheet exposure is caused primarily by standby letters of credit and loan commitments with a remaining maturity exceeding one year. These obligations have been converted to on-balance sheet credit equivalent amounts and adjusted for risk. (3) Tier I capital divided by average total assets. Results of Operations Net income for the three month period ending March 31, 1995 was $608,000 a decrease of $14,000 over the 1994 related period. Earnings per share was $.46 during the first three months of 1995 compared to $.47 during the 1994 period. Net interest income, the most significant component of earnings, is the amount by which interest generated from earning assets exceeds interest expense on liabilities. Net interest income for the 1995 period, after provision for possible loan losses, was $2,265,000 an increase of $88,000 or 6 4% compared to an increase of $185,000 or 9.3% during the same time period in 1994. Interest earning assets, not based on a tax-equivalent basis, was 8.43% and 8.08% (8.57% and 8.23% tax adjusted) in the first three months of 1995 and 1994, respectively, which resulted in a decrease of 35 basis points. The cost of funds was 4.77% and 4.08% in the three months of 1995 and 1994, respectively, as deposit costs increased 69 basis points. During the first quarter of 1995, savings and NOW accounts were effected by the upward pressure in interest rates as well as certificates of deposit. This trend reflects the general increase in interest rates that occurred during 1994 and the first quarter of 1995 resulted in a decrease in the net interest spread of 35 basis points (tax adjusted). As describe above, the Company has experienced a narrowing of it's margin during the first quarter of 1995 as has a number of the banks competing in the same market area. Upward pressure in the cost of funds is expected in the near future. The Company continues to review various pricing strategies to enhance deposit growth without margin compression. Provision for possible loan losses decreased $25,000 to $50,000 in 1995, compared to a provision of $75,000 in the same three month period of 1994. This decrease was appropriate given management's quarterly review of the allowance for loan and lease losses which is based on the following information; migration analysis of delinquent and non-accrual loans, estimated future losses on loans, recent review of large problem credits, local economic conditions, historical loss experience, OCC qualitative adjustments and peer comparisons. Other operating income decreased by $28,000, primarily due to a decrease in other income of $12,000. There was $5,000 realized securities gains during 1995 as compared to realized gains of $44,000 in 1994 resulting in a net decrease of $39,000. Other operating expense was $1,709,000 in the first three months of 1995 which reflected an increase of $104,000 or 6.5% over the 1994 period. Salaries and benefits increased 6.2% or $47,000 for the current three month period reflecting normal merit increases when compared to the same period in 1994. Occupancy expense decreased by $8,000 or 6.5% and furniture and equipment expenses remained nearly the same as 1994. Federal Deposit Insurance Corporation(FDIC) insurance expense increased by $3,000 or 2.3%. Other expenses increased $65,000 or 13.5% in the three months of 1995 over the 1994 related period representing an increase in postage, recruitment and marketing costs. The FDIC (Federal Deposit Insurance Corporation) is currently evaluating a significant premium reduction that may begin as early as September 1995. The provision for income taxes was $240,000 during the first three months of 1995 compared to $270,000 during the 1994 related period. Income before taxes decreased $30,000 in the 1995 period as compared to the same time period in 1994. Liquidity Liquidity is a measure of the Company's ability to efficiently meet normal cash flow requirements of both borrowers and depositors. In order to maintain proper liquidity, the Company uses funds management policies along 7 with its investment policies to assure it can meet its financial obligations to depositors, credit customers and shareholders. Liquidity is needed to meet depositors' withdrawal demands, extend credit to meet borrowers' needs, provide funds for normal operating expenses and cash dividends, as well as fund other capital expenditures. Management projected that capital expenditures for 1995 would increase approximately $495,000 for optical check imaging and needed renovations to branches and capital expenditures to keep pace with current technology requirements. During the first three months of 1995 $49,000 was expended as compared to capital acquisitions of $68,000 during the same period in 1994. Management is currently renting three properties as a temporary solution to the space limitations it has experienced at the main office. Efforts are continuing to evaluate various long term alternatives. Liquidity is achieved primarily by having temporary or short-term investments in the Federal Home Loan Bank of Pittsburgh, PA , federal funds sold and investments which mature in a relatively short time period (such as under one year). The Company also maintains a credit line with the Federal Home Loan Bank as an additional source of liquidity. The objective of interest rate sensitivity management is to maintain an appropriate balance between the stable growth of income and the risks associated with maximizing income through interest sensitivity imbalances.An asset or liability is considered to be interest-sensitive if the rate it yields or bears is subject to change within a predetermined time period. If interest-sensitive assets exceeds interest-sensitive liabilities during a prescribed time period, a positive gap results. Conversely, when interest-sensitive liabilities exceeds interest-sensitive assets during a time period, a negative gap results. A positive gap tends to indicate that earnings will be impacted favorably if interest rates rise during the period and negatively when interest rates fall during the time period. A negative gap tends to indicate that earnings will be effected inversely to interest rate changes. In other words, as interest rates fall, a negative gap should tend to produce a positive effect on earnings and when interest rates rise, a negative gap should tend to affect earnings negatively. The primary components of interest-sensitive assets include adjustable rate loans and investments, loan repayments, investment maturities and money market investments. The primary components of interest-sensitive liabilities include maturing certificates of deposit, money market deposits, savings deposits, N.O.W. accounts and short-term borrowing. The Company's six-month asset/liability position at March 31, 1995, was asset sensitive, with a dollar gap of $8.7 million or 1.10, while at December 31, 1994 the Company's liability sensitivity was at $(9.6) million or .91. Management was able to move to within its policy range (positive 1.25 to negative .75) by the selection of assets to be purchased and the pricing of liabilities acquired. Gap analysis does not necessarily indicate the precise impact of specific interest rate movements on the Company's net interest income because the repricing of certain assets and liabilities is discretionary and is subject to competitive and other pressures. In addition, assets and 8 liabilities within the same period may, in fact, reprice at different times and at different rate levels. Another method used the by Company to measure the impact of interest rate changes on net interest income is to simulate the potential effects of changing interest rates through computer modeling. The Company is then able to evaluate strategies which would include an acceleration of a deposit rate reduction or rate increase and the related repricing strategies for loans. Credit Quality Risk The following table identifies amounts of loan losses and nonperforming loans. Past due loans are those which were contractually past due 90 days or more as to interest or principal payments. March 31, December 31, ----------------------------------------------- 1995 1994 1993 1992 1991 (dollars in thousands) Loans in nonaccrual status $ 1,300 $ 1,557 $ 1,566 $ 689 $ 154 Accrual loans - 90 days or more past due 124 267 418 439 977 Total non-performing loans $ 1,424 $ 1,824 $ 1,984 $ 1,128 $ 1,131 Other real estate owned $ 253 $ 168 $ 231 $ 330 $ 188 Loans outstanding at end of period $156,931 $156,569 $141,907 $129,527 $121,743 Nonperforming loans as percent of total loans .91% 1.16% 1.40% .87% .87% Provision for possible loan losses $ 1,772 $ 1,721 $ 1,516 $ 1,201 $ 906 Net charge-offs $ (1) $ 50 $ 0 $ 119 $ 88 Provision for possible loan losses as percent of loans outstanding 1.13% 1.10% 1.07% .93% .82% Total non-performing assets as a percent of loans, net of unearned income, and foreclosed assets held for sale 1.07% 1.27% 1.56% 1.12% 1.08%
Transactions in the allowance for possible loan losses were as follows (in thousands): At March 31, Years Ended December 31, 1995 1994 1993 1992 Balance, beginning of year $ 1,721 $1,516 $1,201 $ 996 Provision charged to income 50 255 315 324 Recoveries on loans previously charged against the allowance 1 18 71 32 1,772 1,789 1,587 1,352 Loans charged against the allowance 0 (68) (71) (151) Balance, end of year $ 1,772 $1,721 $1,516 $1,201
9 General The Reigle Community Development and Regulatory Improvement Act which was signed into law on September 23, 1994 included a reduction in the regulatory burden of the banking industry. Management believes that the effect of the provisions of this legislation on liquidity, capital resources, and the results of operations of the company will be immaterial. Aside from those matters described above, management does not believe that there are any trends or uncertainties which would have a material impact on future operating results, liquidity or capital resources nor is it aware of any current recommendations by the regulatory authorities which if they were to be implemented would have such an effect, although the general cost of compliance with numerous and multiple federal and state laws and regulations does have and in the future may have a negative impact on the company's results of operations. In May, 1993, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 114, "Accounting by Creditors for Impairment of a Loan," which was adopted by the Company January 1, 1995. SFAS 114 applies to loans other than groups of smaller-balance homogenous loans (generally consumer loans) that are collectively evaluated for impairment. The standard requires that impairment of such loans be measured generally based on the present value of expected future principal and interest cash flows, discounted at the loan's effective interest rate, and that a valuation allowance related to those impaired loans be established. Under SFAS 114, a loan is considered impaired when, based on current information and events, it is probable that a creditor will be unable to collect all amounts due. Presently, credit losses on all loans are accounted for through the allowance for credit losses, which is maintained at a level adequate to absorb losses inherent in the portfolio. In October, 1994, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 118, "Accounting by Creditors for Impairment of a Loan - Income Recognition and Disclosures" an amendment of SFAS No. 114. This statement amends SFAS 114 to allow a creditor to use existing methods for recognizing interest income on impaired loans and the disclosure requirements regarding the recorded investment in certain impaired loans and how a creditor recognizes interest income related to those impaired loans. The Company has no loans meeting the definition of impairment as of March 31, 1995. The effect of adopting the new standards did not have a significant impact on earnings, capital, etc. 10 PART II - OTHER INFORMATION AND SIGNATURES Item 1 - Legal Proceedings Management is not aware of any litigation that would have a material adverse effect on the consolidated financial position of the Company. Any pending proceedings are ordinary, routine litigation incidental to the business of the Company and its subsidiary. In addition, no material proceedings are pending or are known to be threatened or contemplated against the Company and its subsidiary by government authorities. Item 2 - Changes in Securities - Nothing to report. Item 3 - Defaults Upon Senior Securities - Nothing to report. Item 4 - Submission of Matters to a Vote of Security Holders: Results of the voting at the Annual Meeting of Shareholders April 18, 1995: 1. Election of Class 2 Directors whose term will expire in 1998: For Withhold Authority Robert E. Dalton 1,071,995 22,085 John E. Novak 1,063,824 30,256 Rudolph J. van der Heil 1,067,969 26,111 Robert J. Landy 1,071,308 22,772 2. Proposal to amend Article 4 of the Corporation's amended Articles of Incorporation to increase the number of authorized shares, from 2,000,000 shares to 5,000,000 shares. 1,051,184 FOR 14,350 AGAINST 28,543 ABSTAIN Current Class 1 Directors whose term expires in 1996: Carol J. Bond R. Lowell Coolidge Richard E. Wilber John M. Thomas, M.D. Larry J. Croft Current Class 3 Directors whose term expires in 1997: Bruce L. Adams William D. Van Etten Item 5 - Other Information - Nothing to report. Item 6 - Exhibits and reports on Form 8-K. (a) Exhibits - None. (b) Reports - None. 11 Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the undersigned Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Citizens Financial Services, Inc. (Registrant) May 10, 1995 /s/ Richard E. Wilber ------------------------------------- By: Richard E. Wilber President and Chief Financial Officer (Principal Executive Officer) May 10, 1995 /s/ Thomas C. Lyman ------------------------------------- By: Thomas C. Lyman Treasurer (Principal Financial & Accounting Officer) 12 EX-27 2
9 1,000 3-MOS DEC-31-1995 MAR-31-1995 5,270 46 0 0 15,003 48,680 48,027 155,158 1,772 232,308 200,738 3,300 2,638 1,874 1,335 0 0 18,426 232,308 3,553 1,075 1 4,629 2,109 2,313 2,315 50 5 1,709 848 608 0 0 608 .46 .46 0 1,300 124 0 0 1,721 0 1 1,772 1,772 0 0
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