EX-99.1 2 secondquarter08pressrelease.htm PRESS RELEASE SECOND QUARTER 2008 secondquarter08pressrelease.htm


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 2008 Earnings

MANSFIELD, PENNSYLVANIA— July 21, 2008 – 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 2008.

Net income for the three months ended June 30, 2008 totaled $2,446,000 which compares to $1,760,000 for the second quarter last year, representing an increase of $686,000, or 38.9%.    Earnings per share for the three months ended June 30, 2008 and 2007 were $.87 and $.62 per share, respectively, representing a 40.3% increase.  Return on equity for the comparable periods was 19.24% and 15.24%, while return on assets was 1.64% and 1.23%, for the respective time periods.

On a year to date basis net income through June 30, 2008 was $4,467,000 compared with $3,140,000 last year, representing an increase of $1,327,000 or 42.2%.  Earnings per share of $1.58 increased 43.6% from $1.10 per share for the same period last year.  Return on equity for the comparable periods were 17.80% and 13.68%, while return on assets was 1.50% and 1.10%, respectively.

CEO and President Randall E. Black stated, “The significant improvement in our net interest margin and our continued ability to manage operational efficiencies has resulted in outstanding financial performance for the first six months of 2008.  The Federal Reserve’s decision to decrease the federal funds rate by 225 basis points mostly during the first quarter has resulted in an improvement of our net interest margin by reducing our short-term deposit and borrowing costs relative to the impact of the reduction of interest rates on our interest sensitive loan portfolio.  Our net interest margin, tax effected, on interest earning assets has improved from 3.72% for the first six months of 2007 to 4.38% for this year.”

Total assets at June 30, 2008 totaled $602.0 million, an increase of $20.7 million from June 30, 2007.  The increase in assets principally occurred in the investment portfolio which increased from $118.6 million to $124.7 million, as well as, net loans, which grew $13.2 million to $424.1 million at June 30, 2008.  Total deposits have increased 3.7% from $467.9 million at June 30, 2007 to $485.1 million as of June 30, 2008.

Citizens Financial Services, Inc. remains well capitalized, with an equity-to-assets ratio of 8.4%, versus 7.6% as of June 30, 2007.  This improvement was largely the result of a $6.2 million, or 14.1% increase in stockholders equity since June 30 of last year.  Book value per share at June 30, 2008 was $18.38 compared with $16.67 last June.  In July, a cash dividend of $.235 per share was declared and will be paid on July 25, 2008 to shareholders of record, as of July 11, 2008.  Also in July, a 1% stock dividend was declared and will be distributed July 25, 2008 as well.

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 16 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)
      
       
 
June 30
December 31
June 30
(in thousands except share data)
2008
2007
2007
ASSETS:
      
Cash and due from banks:
      
  Noninterest-bearing
 $           12,931
 $         10,374
 $          10,873
  Interest-bearing
                         1
                    15
                     12
Total cash and cash equivalents
               12,932
            10,389
             10,885
       
Available-for-sale securities
            124,674
          120,802
           118,614
       
Loans (net of allowance for loan losses: 2008, $4,287
      
  December 31, 2007, $4,197; and June 30, 2007, $4,107)
            424,144
          419,182
           410,967
       
Premises and equipment
               12,289
            12,538
             12,660
Accrued interest receivable
                 2,563
              2,522
               2,383
Goodwill
                 8,605
              8,605
               8,605
Bank owned life insurance
                 8,549
              8,378
               8,209
Other assets
                 8,258
              8,613
               8,958
       
TOTAL ASSETS
 $         602,014
 $       591,029
 $        581,281
       
LIABILITIES:
      
Deposits:
      
  Noninterest-bearing
 $           56,968
 $         50,944
 $          50,753
  Interest-bearing
            428,161
          405,084
           417,189
Total deposits
            485,129
          456,028
           467,942
Borrowed funds
               60,067
            80,348
             62,382
Accrued interest payable
                 1,951
              2,199
               2,086
Other liabilities
                 4,296
              3,926
               4,531
TOTAL LIABILITIES
            551,443
          542,501
           536,941
STOCKHOLDERS' EQUITY:
      
Common stock
      
  $1.00 par value; authorized 10,000,000 shares; issued 3,020,538 shares in
      
  2008 and December 31, 2007; 2,992,896 shares at June 30, 2007
                 3,020
              3,020
               2,993
Additional paid-in capital
               12,519
            12,511
             11,935
Retained earnings
               40,743
            37,590
             35,892
Accumulated other comprehensive loss
               (1,319)
                (348)
              (2,551)
Unearned restricted stock, at cost: 7,205 shares for 2008; 3,149 shares at
      
  December 31, 2007; and 3,074 shares for June 30, 2007
                  (162)
                  (72)
                   (72)
Treasury stock, at cost:  196,927 shares for 2008; 194,883 shares at December 31, 2007;
      
  and 180,140 shares at June 30, 2007
               (4,230)
             (4,173)
              (3,857)
TOTAL STOCKHOLDERS' EQUITY
               50,571
            48,528
             44,340
TOTAL LIABILITIES AND
      
   STOCKHOLDERS' EQUITY
 $         602,014
 $       591,029
 $        581,281
       
       
The accompanying notes are an integral part of these unaudited consolidated financial statements.
  
       

 
 
 


CITIZENS FINANCIAL SERVICES, INC.
        
CONSOLIDATED STATEMENT OF INCOME
        
(UNAUDITED)
        
 
Three Months Ended
Six Months Ended
 
June 30,
June 30,
(in thousands, except per share data)
2008
2007
2008
2007
INTEREST INCOME:
        
Interest and fees on loans
 $        7,645
 $      7,539
 $      15,309
 $    14,896
Investment securities:
        
    Taxable
           1,132
         1,057
           2,255
         2,071
    Nontaxable
               353
             225
               689
             449
    Dividends
                 56
               78
               141
             169
TOTAL INTEREST INCOME
           9,186
         8,899
         18,394
       17,585
INTEREST EXPENSE:
        
Deposits
           2,728
         3,430
           5,671
         6,740
Borrowed funds
               628
             806
           1,485
         1,732
TOTAL INTEREST EXPENSE
           3,356
         4,236
           7,156
         8,472
NET INTEREST INCOME
           5,830
         4,663
         11,238
         9,113
Provision for loan losses
                    -
               45
               120
             165
NET INTEREST INCOME AFTER
        
    PROVISION FOR LOAN LOSSES
           5,830
         4,618
         11,118
         8,948
NON-INTEREST INCOME:
        
Service charges
               871
             812
           1,647
         1,560
Trust
               136
             127
               303
             264
Brokerage and insurance
                 74
               31
               118
               49
Gain on sales of foreclosed properties
                    -
             373
                    -
             396
Earnings on bank owned life insurance
                 86
               82
               171
             162
Other
               151
             166
               288
             287
TOTAL NON-INTEREST INCOME
           1,318
         1,591
           2,527
         2,718
NON-INTEREST EXPENSES:
        
Salaries and employee benefits
           2,158
         2,033
           4,314
         4,126
Occupancy
               281
             308
               595
             609
Furniture and equipment
               128
             140
               261
             268
Professional fees
               148
             155
               329
             320
Other
           1,223
         1,320
           2,354
         2,410
TOTAL NON-INTEREST EXPENSES
           3,938
         3,956
           7,853
         7,733
Income before provision for income taxes
           3,210
         2,253
           5,792
         3,933
Provision for income taxes
               764
             493
           1,325
             793
NET INCOME
 $        2,446
 $      1,760
 $        4,467
 $      3,140
         
Earnings Per Share
 $          0.87
 $        0.62
 $          1.58
 $        1.10
Cash Dividends Paid Per Share
 $        0.235
 $      0.225
 $        0.465
 $      0.445
         
Weighted average number of shares outstanding
   2,825,116
  2,843,514
   2,825,323
  2,845,454
         
The accompanying notes are an integral part of these unaudited consolidated financial statements.
    
         

 
 
 

 
Financial Highlights
        
(Unaudited - dollars in thousands except per share and ratio data)
      
         
         
 
Three Months Ended
Six Months Ended
 
June 30
June 30
 
2008
2007
2008
2007
Performance Ratios and Share Data:
        
    Return on average assets (annualized)
1.64%
1.23%
1.50%
1.10%
    Return on average equity (annualized)
19.24%
15.24%
17.80%
13.68%
    Net interest margin (tax equivalent)
4.52%
3.81%
4.38%
3.72%
    Cash dividends paid per share
 $                     0.235
 $                      0.225
 $                      0.465
 $                      0.445
    Earnings per share
 $                       0.87
 $                        0.62
 $                        1.58
 $                        1.10
    Weighted average shares outstanding
                  2,825,116
                  2,843,514
                  2,825,323
                  2,845,454
         
 

 
Balance Sheet Highlights:
June 30, 2008
December 31, 2007
June 30, 2007
       
Assets
 $                 602,014
 $                  591,029
 $                  581,281
Investment securities:
      
    Available for sale
124,674
120,802
118,614
Loans (net of unearned income)
428,431
423,379
415,074
Allowance for loan losses
4,287
                         4,197
                         4,107
Deposits
485,129
456,028
467,942
Stockholders' Equity
50,571
48,528
44,340
Non-performing assets
3,360
                         2,393
                         2,754
Non-performing assets to total loans
0.78%
0.57%
0.66%
Average Leverage Ratio
8.50%
8.20%
8.05%
Common shares outstanding
2,823,611
2,825,655
2,812,756
Book value per share
 $                     18.38
 $                      17.30
 $                      16.67