Citizens Bank posts a steep decline |

Citizens Bank posts a steep decline

Citizens Bankcorp of Nevada City posted a 41 percent drop in net profits for the three months ending December 31 – to $508,000 from $858,000 – but management was upbeat on a number of fronts.

For the full year, Citizens posted a 15 percent decline in net income compared with 2006 – to $2.59 million from $3 million.

“As anticipated, earnings this year were down due primarily to the squeeze in the Bank’s net interest margin caused by increased funding costs and our continued branch expansion,” said chief executive Judy Hess in a statement issued late last week. “In addition, and to a lesser extent, earnings during 2007 were impacted by interest foregone on non-accrual loans.”

She added, “While the Bank does not have any loans in its portfolio that would be considered sub-prime, a few of the Bank’s borrowers who have obtained construction financing from the Bank for the purpose of constructing single family residences are experiencing a reduction in sales volume and pricing due to the current real estate environment.

Total assets for Citizens, as a result of on-going growth initiatives, grew to $328 million at December 31, up $48 million, or 17 percent, from $280 million as of December 31, 2006.

Total loans were $305 million, up $46 million, or 18 percent, compared to $259 million the previous year.

Total deposits grew $31 million, or 13 percent, to $274 million at December 31 compared to $243 million a year earlier.

“The bank’s credit quality has historically reflected our strong credit discipline, and as a result, the Bank’s loan losses to date have been low,” Hess said. “In addition to our continued monitoring of these loans, management has established reserves that it believes will cover any potential losses in the portfolio.”

Hess continued, “We believe the short-term impact of expenses related to our two newest branches in Truckee and Auburn, are supportive of the long-term strategic goals of the company.”

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