Citizens Financial Services, Incorporated, parent company of First Citizens Community Bank, has released its unaudited financial performance for the quarter ended June 30, 2012.

For the three months ended June 30, 2012, net income totaled $3,753,000 which compares to $3,147,000 for the same period last year. This represents an increase of $606,000, or 19.26 percent. Earnings per share of $1.30 increased 20.46 percent from $1.08 per share last year.

For the six months ended June 30, 2012, net income totaled $7,202,000 which compares to $5,977,000 for the same period last year. This represents an increase of $1,225,000, or 20.50 percent. Earnings per share of $2.49 increased 21.57 percent from $2.05 per share last year. Annualized return on equity for the comparable periods was 18.58 percent and 17.22 percent, while return on assets was 1.63 percent and 1.44 percent, respectively.

Net interest income, before the provision for loan losses, increased from $14,012,000 for the six months ended June 30, 2011 to $15,223,000 this year, an increase of $1,211,000, or 8.6 percent. On a tax equivalent basis, our net interest margin on interest earning assets has increased from 3.96 percent last year to 4.04 percent this year.

Yields on interest earning assets decreased 23 basis points, but was offset by a decrease of 35 basis points on interest bearing liabilities. In particular, yields on investment securities decreased 38 basis points. CEO and President Randall E. Black stated, "The unprecedented low interest rate environment has continued to make investing difficult. Primarily, we have invested in short-term investments in order to manage for long-term profitability by having available liquidity when market conditions and investment opportunities improve. We have been able to off-set declining investment yields by decreasing our deposit costs."

As of June, 30, 2012, total assets were $881.4 million, which was an increase of $2.8 million from Dec. 31, 2011. The investment portfolio totaled $323.1 million, which is an increase of $4.3 million from the Dec. 31, 2011 balance of $318.8 million. Net loans have increased $9.5 million to a total of $490.5 million at June 30, 2012 from the end of December. Since June 30, 2011, net loans have increased $19.7 million, or 4.2 percent. Through June $14.2 million of residential mortgages have been originated which have been sold on the secondary market compared with $5.1 million last year.

The provision for loan losses for the first six months of 2012 totaled $210,000 which compares to $375,000 recorded last year. Credit quality continues to improve and compares favorably to peer. As of June 30, 2012, non-performing assets as a percent of loans was 1.89 percent, which compares to 2.11 percent as of Dec. 31, 2011 and 2.25 percent as of June 30, 2011. Through June, annualized net charge-offs as a percent of average loans remains very low at .02 percent.

Stockholders' equity totaled $86.5 million at June 30, 2012, which is an increase of $5.1 million, or 6.2 percent, from Dec. 31, 2011 and an increase of $11.2 million from June 30, 2011. First Citizens continues to remain well capitalized based upon regulatory guidelines. On July 10, 2012 a cash dividend of $.30 per share along with a 1 percent stock dividend were declared to shareholders of record as of July 20, 2012. The cash dividend will be paid on July 27, 2012 and represents an increase of 13.2 percent over the July 2011 cash dividend of $.265 per share."Our financial performance remains strong as we focus on remaining a strong, well-capitalized, local community bank committed to serving our communities and customers, as well as providing outstanding shareholder return and value", commented 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 18 offices are located.

Submitted by Citizens Financial Services, Incorporated