Citizens reports decreased net income for quarter, year

PHILADELPHIA — Citizens Holding Company has released the results of operations for the quarter and year ended Dec. 31, 2012.

Net income for the quarter was $1.740 million or $0.36 per share-basic and diluted, down from $1.786 million, or $0.37 per share-basic and diluted for the same quarter in 2011. Net interest income for the fourth quarter of 2012, after the provision for loan losses for the quarter, was $6.648 million, approximately 1.5% lower than the same period in 2011, due to a decrease in net interest income offset partially by a decrease in the provision for loan losses. The provision for loan losses for the quarter was $218,000, compared to $408,000 for the same period in 2011. The decrease in the provision reflects management’s assessment of estimated losses in the loan portfolio including the impact of current local and national economic conditions. The net interest margin decreased to 3.74 percent in the fourth quarter from 3.98 percent in the same period in 2011 primarily because of the decrease in yields on earning assets, which was partially offset by the decline in rates paid on interest bearing deposits.

Non-interest income increased in the fourth quarter by $421,000, or 22.2 percent, while non-interest expenses decreased $153,000, or 2.2 percent, compared to the same period in 2011. The increase in non-interest income was due primarily to an increase in gains on sales of investment securities. Non-interest expenses decreased primarily due to a $39,000 decrease in other operating expense, a $206,000 decrease in salaries and benefits partially offset by $91,000 increase in occupancy expense.

Net income for the year decreased 7.1 percent to $6.784 million, or $1.40 per share-basic and $1.39 per share-diluted, from $7.218 million, or $1.49 per share-basic and diluted, for the year ended Dec. 31, 2011. Net interest income for the year ended Dec. 31, 2012, after the provision for loan losses, decreased 0.7 percent to $27.133 million from $27.337 million for the same period in 2011. Net interest margin for the year decreased to 3.93 percent in 2012 from 4.20 percent in the same period in 2011. The provision for loan losses for the year was $1.546 million, compared to the provision of $2.995 million in 2011. The decrease in the provision reflects management’s assessment of estimated losses in the loan portfolio including the impact caused by current local and national economic conditions.

Non-interest income decreased by $40 thousand, or 0.5%, and non-interest expense decreased by $144 thousand, or 0.5%, for the year ended December 31, 2012 when compared to the same period in 2011. The decrease in non-interest income was primarily due to a decrease in the gain of sales of investment securities partially offset by increases in service charges on checking accounts and other service fees. Non-interest expense decreased primarily due to a decrease in other operating expenses of $3 thousand and in salaries and benefits of $320 thousand, partially offset by an increase in occupancy expenses of $179 thousand.

Total assets as of Dec. 31, 2012 increased to $880.840 million, up $26.895 million, or 3.1 percent, when compared to Dec. 31, 2011. Deposits increased by $70.211 million, or 12.3 percent, and loans, net of unearned income decreased by $20.371 million, or 5.2 percent, when compared to Dec. 31, 2011. The decrease in loans, net of unearned, was due to declining loan demand and repayments of existing loans. Investment securities increased $50.282 million, or 13.6 percent, to $420.908 million when compared to Dec. 31, 2011. Non-performing assets increased by $2.965 million to $19.402 million at Dec. 31, 2012 as compared to Dec. 31, 2011, because of increases in non-accrual loans and loans 90 days or more past due and still accruing interest partially offset by a decrease in other real estate owned.

During 2012, the company paid dividends totaling $0.88 per share.

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