Citizens Financial Services, Incorporated (OTC BB: CZFS), parent company of First Citizens National Bank, has released its unaudited financial performance for the quarter ended March 31, 2012.

Net income for the three months ended March 31, 2012 totaled $3,449,000 which compares to $2,830,000 for the same period last year. This represents an increase of $619,000, or 21.9%. Earnings per share of $1.19 increased 22.7% from $.97 per share last year. Annualized return on equity for the comparable periods was 17.76% and 16.57%, while return on assets was 1.57% and 1.38%, respectively.

Net interest income, before the provision for loan loss, increased from $6,936,000 for the three months ended March 31, 2011 to $7,558,000 this year, an increase of $622,000, or 9%. On a tax equivalent basis, net interest margin on interest earning assets has increased from 3.98% last year to 4.02% this year. Yields on interest earning assets decreased 27 basis points, but was offset by a decrease of 31 basis points on interest bearing liabilities. In particular, yields on investment securities decreased 46 basis points as excess funds were invested mostly in short-term investments. CEO and President Randall E. Black stated, "This strategy allows for long-term profitability by having available liquidity when market conditions and investment opportunities improve. With low interest rates persisting, declining investment yields have been off-set by decreasing deposit costs".

As of March 31, 2012, total assets were $909.4 million, which was an increase of $30.8 million or 3.5% from Dec. 31, 2011. The investment portfolio totaled $362.1 million, which was an increase of $43.3 million from the Dec. 31, 2011 balance of $318.8 million. Net loans have increased $3.7 million to a total of $484.7 million at March 31, 2012 from Dec. 31, 2011. Since March 31, 2011, net loans have increased $24 million, or 5.2%. Deposits have increased $8.8 million since Dec. 31, 2011.

The provision for loan losses for the first quarter of 2012 totaled $105,000 which compares to $225,000 recorded last year. Credit quality continues to compare favorably to peer. Non-performing assets as a percent of loans was 2.12% as of March 31, 2012, which compares to 2.31% as of the end of last March. Annualized net charge-offs as a percent of average loans remains very low at .04%. The overall level of non-performing assets is related to a couple larger commercial loans on non-accrual status of which 58.1% remain current with their payments.

Stockholders' equity totaled $83.8 million at March 31, 2012, which is an increase of $2.3 million, or 2.8%, from Dec. 31, 2011 and an increase of $12.7 million from March 31, 2011. First Citizens continues to remain well capitalized based upon regulatory guidelines. On April 11, 2012, a cash dividend of $.30 per share was declared and will be paid on April 27, 2012 to shareholders of record as of April 20, 2012. The cash dividend of $.30 per share represents an increase of 13.2% over the April 2011 cash dividend of $.265 per share. "Our financial performance remains strong as we strive to remain 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.

Submitted by Citizens Financial Services