<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number: 000-25221
CITIZENS HOLDING COMPANY
State of Incorporation or other jurisdiction of I. R. S. Employer
incorporation or organization Identification Number
Mississippi 64-0666512
Citizens Holding Company
521 Main Street
Philadelphia, MS 39350
(601) 656-4692
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 of 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. | | Yes |X| No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of August 7, 2000.
Title Outstanding
Common Stock, $.20 par value 3,308,750
<PAGE>
CITIZENS HOLDING COMPANY
SECOND QUARTER 2000 INTERIM FINANCIAL STATEMENTS
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets
June 30, 2000 and December 31, 1999
Consolidated Statements of Income
Three and six months ended June 30, 2000 and 1999
Consolidated Statements of Comprehensive Income
Three and six months ended June 30, 2000 and 1999
Consolidated Statements of Cash Flows
Six months ended June 30, 2000 and 1999
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
<PAGE>
PART 1.CONSOLIDATED FINANCIAL STATEMENTS
CITIZENS HOLDING COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CONDITION
<TABLE>
<CAPTION>
June 30, December 31,
ASSETS 2000 1999
----------------------------
<S> <C> <C>
Cash and due from banks $ 16,174,044 $ 13,312,028
Interest bearing balances at Federal Home
Loan Bank 1,515,354 182,042
Federal funds sold 0 0
----------------------------
Cash and cash equivalents 17,689,398 13,494,070
Federal Home Loan Bank stock 1,610,200 1,284,000
Investment securities available for sale, at
fair value 99,544,151 101,167,360
Loans, net of allowance for loan losses of
$3,250,000 in 2000 and $3,100,000 in 1999 241,959,898 231,248,551
Premises and equipment, net 4,461,642 4,410,976
Other real estate owned, net 159,109 291,508
Accrued interest receivable 4,339,639 3,683,849
Cash value of life insurance 2,998,274 2,828,265
Goodwill (net) 690,211 649,854
Other Assets 3,687,528 3,731,269
----------------------------
TOTAL $377,140,050 $362,789,702
----------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits:
Noninterest-bearing demand $ 37,209,290 $ 37,090,779
Interest-bearing NOW and money market
accounts 73,158,667 74,616,711
Savings deposits 20,073,618 20,031,653
Certificates of deposit 159,257,489 152,722,496
----------------------------
Total deposits 289,699,064 284,461,639
Accrued interest payable 1,424,751 1,242,916
Federal Home Loan Bank advances 28,000,000 23,100,000
Federal funds Purchased 12,600,000 10,600,000
ABE loan liability 2,627,409 2,727,004
Treasury tax and loan note option 700,000 700,000
Directors deferred compensation payable 861,888 812,130
Income taxes payable 21,073 0
Other liabilities 297,422 339,403
----------------------------
Total liabilities 336,231,607 323,983,092
----------------------------
Minority interest in consolidated subsidiaries 1,326,930 1,260,649
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
STOCKHOLDERS' EQUITY
Common stock; $.20 par value, 15,000,000 shares
authorized, and 3,308,750 shares outstanding at
June 30, 2000, and at December 31, 1999 670,750 670,750
Less: Treasury stock, at cost, 45,000 shares at
June 30, 2000 and at December 31, 1999 (239,400) (239,400)
Additional paid-in capital 3,353,127 3,353,127
Retained earnings 37,391,043 35,303,504
Other Accumulated Comprehensive Income, net
of income taxes of $(821,155) in 2000 and
$(821,577) in 1999 (1,594,007) (1,542,020)
----------------------------
Total stockholders' equity 39,581,513 37,545,961
----------------------------
TOTAL $377,140,050 $362,789,702
----------------------------
</TABLE>
See notes to consolidated financial statements
CITIZENS HOLDING COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
For the three months For the six months
Ended June 30, Ended June 30,
2000 1999 2000 1999
---------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME:
Loans, including fees $5,439,328 $4,771,770 $10,712,786 $ 9,509,086
Federal funds sold 565 72,813 1,079 135,282
Investment securities 1,551,560 1,390,053 3,063,574 2,692,275
Other interest 19,020 9,579 24,399 21,360
---------------------------------------------------
Total interest income 7,010,473 6,244,215 13,801,838 12,358,003
INTEREST EXPENSE:
Deposits 2,908,393 2,496,394 5,568,138 4,987,462
Other borrowed funds 528,917 151,509 999,807 299,379
---------------------------------------------------
Total interest expense 3,437,310 2,647,903 6,567,945 5,286,841
---------------------------------------------------
NET INTEREST INCOME 3,573,163 3,596,312 7,233,893 7,071,162
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
PROVISION FOR LOAN LOSSES 197,131 236,983 281,993 382,617
---------------------------------------------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 3,376,032 3,359,329 6,951,900 6,688,545
---------------------------------------------------
OTHER INCOME:
Service charges on deposit
accounts 609,788 588,196 1,188,705 1,150,825
Other service charges and fees 135,466 93,479 224,684 184,645
Other income 109,865 114,434 203,546 201,090
---------------------------------------------------
Total other income 855,119 796,109 1,616,935 1,536,560
OTHER EXPENSES:
Salaries and employee benefits 1,227,064 1,018,088 2,472,802 2,188,097
Occupancy expense 358,044 325,117 720,041 633,186
Other operating expense 498,331 456,937 1,069,311 935,494
Earnings applicable to minority
interest 47,345 51,987 94,975 101,266
---------------------------------------------------
Total other expenses 2,130,784 1,852,129 4,357,129 3,858,043
---------------------------------------------------
INCOME BEFORE PROVISION
FOR INCOME TAXES 2,100,367 2,303,309 4,211,706 4,367,062
---------------------------------------------------
PROVISION FOR INCOME TAXES 723,264 747,057 1,462,417 1,487,450
---------------------------------------------------
NET INCOME $1,377,103 $1,556,252 $ 2,749,289 $ 2,879,612
---------------------------------------------------
NET INCOME PER SHARE
-Basic $0.42 $0.47 $0.83 $0.87
---------------------------------------------------
-Diluted $0.41 $0.47 $0.83 $0.87
---------------------------------------------------
</TABLE>
See notes to consolidated financial statements
<PAGE>
CITIZENS HOLDING COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
For the three months For the six months
ended June 30, ended June 30,
2000 1999 2000 1999
-----------------------------------------------------
<S> <C> <C> <C> <C>
Net Income $1,377,103 $1,556,252 $2,749,289 $ 2,879,612
Other Comprehensive Income, net
of tax Unrealized holding gains
(losses) (166,525) (997,012) (51,987) (1,393,632)
Less reclassification
adjustment for losses included
in net income 35,240 3,419 20,007 3,419
-----------------------------------------------------
Total other comprehensive
income (131,285) (993,593) (31,980) (1,390,213)
-----------------------------------------------------
Comprehensive income $1,245,818 $ 562,659 $2,717,309 $ 1,489,399
-----------------------------------------------------
</TABLE>
<PAGE>
CITIZENS HOLDING COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the six months
ended June 30,
2000 1999
----------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Cash Provided by Operating Activities $ 2,913,428 $ 3,091,368
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of securities avail for sale 8,847,786 13,570,711
Proceeds from sale of investment securities 9,348,856 1,499,393
Purchases of investment securities (17,104,609) (22,043,367)
----------------------------
Purchases of bank premises, furniture, fixtures and
equipment (324,866) (180,611)
Decrease in interest bearing deposits with other banks (1,333,312) 338,652
Net (increase) decrease in federal funds sold 0 4,900,000
Net increase in loans (10,861,347) (13,040,467)
Net Cash Used by Investing Activities (11,427,492) (14,955,689)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposits 5,237,425 8,230,656
Net increase (decrease) in ABE loans (99,595) 348,474
Increase in FHLB advances 4,900,000 0
Increase in federal funds purchased 2,000,000 0
Payment of dividends (661,750) (496,313)
Net Cash Provided by Financing Activities 11,376,080 8,082,817
Net Increase (Decrease) in Cash and Due from Banks 2,862,016 (3,781,504)
Cash and Due From Banks, beginning of year 13,312,028 15,234,594
Cash and Due from Banks, end of period 16,174,044 11,453,090
</TABLE>
<PAGE>
CITIZENS HOLDING COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended June 30, 2000
1. The interim consolidated financial statements are unaudited and reflect all
adjustments and reclassifications which, in the opinion of management, are
necessary for a fair presentation of the results of operations and
financial condition of the interim period. All adjustments and
reclassifications are of a normal and recurring nature. Results for the
periods ending June 30, 2000 are not necessarily indicative of the results
which may be expected for any other interim periods or for the year as a
whole.
2. Summary of Significant Accounting Policies. See note 1 of the Notes to
Consolidated Financial Statements of the Citizens Holding Company that were
included in the Form 10-K Annual Report filed March 29, 2000.
Investment Securities -- The Corporation classifies all of its securities
as available-for-sale and carries them at fair value with unrealized gains
or losses reported as a separate component of capital, net of any
applicable income taxes. Realized gains or losses on the sale of securities
available-for-sale, if any, are determined on an identification basis. The
Corporation does not have any securities classified as Held for Trading.
3. In the ordinary course of business, the Corporation enters into commitments
to extend credit to its customers. The unused portion of these commitments
is not reflected in the accompanying financial statements. As of June 30,
2000, the Corporation had entered into commitments with certain customers
that had an unused balance of $13,850,000 compared to $16,241,000 unused at
December 31, 1999. There were $367,850 of letters of credit outstanding at
June 30, 2000, compared to $313,105 at December 31, 1999.
4. Net income per share -- Basic, has been computed based on the weighted
average number of shares outstanding during each period. Net income per
share - Diluted, has been computed based on the weighted average number of
shares outstanding during each period plus the dilutive effect of
outstanding granted options. Basic weighted average shares have been
adjusted to reflect the five-for-one stock split on the common stock
effective January 1, 1999. Earnings per share were computed as follows:
<PAGE>
<TABLE>
<CAPTION>
For the three months For the six months
Ended June 30, Ended June 30,
2000 1999 2000 1999
---------------------------------------------------
<S> <C> <C> <C> <C>
Basic weighted average
shares outstanding 3,308,750 3,308,750 3,308,750 3,308,750
Dilutive effect of
granted options 12,742 0 22,364 0
---------------------------------------------------
Diluted weighted average
shares outstanding 3,321,492 3,308,750 3,331,114 3,308,750
Net income $1,377,103 $1,556,252 $2,749,289 $2,879,612
Net income per
share-basic $ 0.42 $ 0.47 $ 0.83 $ 0.87
Net income per
share-diluted $ 0.41 $ 0.47 $ 0.83 $ 0.87
</TABLE>
<PAGE>
CITIZENS HOLDING COMPANY AND SUBSIDIARY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Management's discussion and analysis is written to provide greater insight into
the results of operations and the financial condition of Citizens Holding
Company, (the "Corporation").
Statements concerning future performance, developments or events, concerning
expectations for growth and market forecasts, and any other guidance on future
periods, constitute forward-looking statements which are subject to a number of
risks and uncertainties which might cause actual results to differ materially
from stated expectations. These factors include, but are not limited to, the
approval of regulatory agencies and shareholders, the effect of interest rates
changes, the expansion of the Corporation, competition in the financial services
market for both deposits and loans, and general economic conditions.
LIQUIDITY
The Corporation has an asset and liability management program that assists
management in maintaining net interest margins during times of both rising and
falling interest rates and in maintaining sufficient liquidity. Liquidity of
the Corporation at June 30, 2000 was 35.74% and at June 30, 1999 was 35.90%.
Liquidity is the ratio of short-term investments to potentially volatile
liabilities. Management believes it maintains adequate liquidity for the
Corporation's current needs.
When the Corporation has more funds than it needs for its reserve requirements
or short-term liquidity needs, the Corporation increases its security
investments or sells federal funds. It is management's policy to maintain an
adequate portion of its portfolio of assets and liabilities on a short-term
basis to insure rate flexibility and to meet loan funding and liquidity needs.
The Corporation has secured and unsecured federal funds lines with correspondent
banks in the amount of $38,500,000. In addition, the Corporation has the
ability to draw on its line of credit with the Federal Home Loan Bank in excess
of $47,448,000 at June 30, 2000.
CAPITAL RESOURCES
The Corporation's equity capital was $39,581,513 at June 30, 2000. The main
source of capital for the Corporation has been the retention of net income.
On January 1, 1999, the Corporation issued a five-for-one (5:1) split to the
shareholders of the Corporation. This split increased the number of shares
outstanding to 3,308,750
<PAGE>
from 661,750. The number of shares authorized increased from 750,000 to
3,750,000 after the split. Additionally, the shareholders approved an increase
in authorized shares to 15,000,000 at the annual meeting held April 13, 1999.
Cash dividends in the amount of $661,750 or $.20 per share were paid year to
date June 30, 2000. This is the first year that the Company paid a quarterly
dividend rather than paying a semi-annual dividend as had been paid in the prior
years.
Quantitative measures established by regulation to ensure capital adequacy
require the Corporation to maintain minimum amounts and ratios of Total and Tier
1 capital (primarily common stock and retained earnings, less goodwill) to risk
weighted assets, and of Tier 1 capital to average assets. Management believes
that as of June 30, 2000, the Corporation meets all capital adequacy
requirements to which it is subject.
<TABLE>
<CAPTION>
To Be Well
Capitalized Under
For Capital prompt Corrective
Actual Adequacy Purposes Actions Provisions
Amount Ratio Amount Ratio Amount Ratio
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
As of June 30, 2000
Total Capital $44,768,550 18.93% $18,920,389 (greater than) 8.00% $23,650,487 (greater than) 10.00%
(to Risk-Weighted Assets)
Tier 1 Capital $41,812,239 17.68% $ 9,460,195 (greater than) 4.00% $14,190,292 (greater than) 6.00%
(to Risk-Weighted Assets)
Tier 1 Capital $41,812,239 11.27% $14,844,692 (greater than) 4.00% $18,555,864 (greater than) 5.00%
(to Average Assets)
</TABLE>
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated, certain items in the
consolidated statements of income of the Corporation and the related changes
between those periods:
<TABLE>
<CAPTION>
For the three months For the six months
ended June 30, ended June 30,
2000 1999 2000 1999
-----------------------------------------------------
<S> <C> <C> <C> <C>
Interest Income $6,811,209 $6,244,215 $13,602,574 $12,358,003
Interest Expense 3,437,310 2,647,903 6,567,945 5,286,841
Net Interest Income 3,373,899 3,596,312 7,034,629 7,071,162
Provision for Loan Losses 197,131 236,983 281,993 382,617
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Net Interest Income after
Provision for Loan Losses 3,176,768 3,359,329 6,752,636 6,688,545
Other Income 1,054,383 796,109 1,816,199 1,536,560
Other Expense 2,130,784 1,852,129 4,357,129 3,858,043
Income before Provision For
Income Taxes 2,100,367 2,303,309 4,211,706 4,367,062
Provision for Income Taxes 723,264 747,057 1,462,417 1,487,450
Net Income $1,377,103 $1,556,252 $ 2,749,289 $ 2,879,612
-----------------------------------------------------
Net Income Per share - $ 0.42 $ 0.47 $ 0.83 $ 0.87
Basic -----------------------------------------------------
Net Income Per Share - $ 0.41 $ 0.47 $ 0.83 $ 0.87
Diluted -----------------------------------------------------
</TABLE>
Net Income Per Share - Basic is calculated using weighted average number of
shares outstanding for the period. Net Income Per Share - Diluted is calculated
using the weighted average number of shares outstanding for the period, plus the
net dilutive effect of granted stock options determined using the treasury stock
method.
Annualized return on average equity was 13.78% and 13.97% for the three and six
months ended June 30, 2000, and 17.24% and 15.99% for the three and six months
ended June 30, 1999.
The book value per share increased to $11.96 at June 30, 2000 compared to $11.35
at December 31, 1999. This increase is due to earnings exceeding dividends paid
during this period. Average assets for the six months ended June 30, 2000, were
$371,117,289 compared to $347,613,000 at December 31, 1999; average equity
increased to $39,333,947 for the six months ended June 30, 2000, from
$37,603,000 at December 31, 1999.
NET INTEREST INCOME/NET INTEREST MARGIN
One component of the Corporation's earnings is net interest income, which is the
difference between the interest and fees earned on loans and investments and the
interest paid for deposits and borrowed funds. The net interest margin is net
interest income expressed as a percentage of average earning assets.
The annualized net interest margin was 4.25% for the six months ended June 30,
2000, compared to an annualized net interest margin of 4.51% for the six months
ended June 30, 1999. Earnings assets averaged $343,618,147 for the six months
ended June 30, 2000. This represented an increase of $32,503,101 or 10.45%,
over average earning assets of $311,115,046 for the six months ended June 30,
1999. This increase was from normal growth of the Corporation and not from any
special program or promotion.
<PAGE>
The net interest income figures above include income from the Corporation's
securities. The following table shows the interest and fees and corresponding
yields for loans only.
<TABLE>
<CAPTION>
For the three months For the six months
ended June 30, ended June 30,
2000 1999 2000 1999
-----------------------------------------------------------
<S> <C> <C> <C> <C>
Interest and Fees $ 5,439,328 $ 4,771,770 $ 10,712,786 $ 9,509,086
Average Loans 240,136,169 211,287,134 237,835,220 211,923,173
Annualized Yield 9.06% 9.03% 9.01% 8.97%
</TABLE>
CREDIT LOSS EXPERIENCE
As a natural corollary to the Corporation's lending activities, some loan losses
are to be expected. The risk of loss varies with the type of loan being made
and the creditworthiness of the borrower over the term of the loan. The degree
of perceived risk is taken into account in establishing the structure of, and
interest rates and security for, specific loans and for various types of loans.
The Corporation attempts to minimize its credit risk exposure by use of thorough
loan application and approval procedures.
The Corporation maintains a program of systematic review of its existing loans.
Loans are graded for their overall quality. Those loans which the Corporation's
management determines require further monitoring and supervision are segregated
and reviewed on a periodic basis. Significant problem loans are reviewed on a
monthly basis by the Corporation's Board of Directors.
The Corporation charges off that portion of any loan which management considers
to represent a loss. A loan is generally considered by management to represent
a loss in whole or in part when an exposure beyond the collateral value is
apparent, servicing of the unsecured portion has been discontinued or collection
is not anticipated based on the borrower's financial condition and general
economic conditions in the borrower's industry. The principal amount of any loan
which is declared a loss is charged against the Corporation's allowance for loan
losses.
The Corporation's allowance for loan losses is designed to provide for loan
losses which can be reasonably anticipated. The allowance for loan losses is
established through charges to operating expenses in the form of provisions for
loan losses. Actual loan losses or recoveries are charges or credited to the
allowance for loan losses. The amount of the allowance is determined by
management of the Corporation. Among the factors considered in determining the
allowance for loan losses are the current financial condition of the
Corporation's borrowers and the value of security, if any, for their loans.
Estimates of future economic conditions and their impact on various industries
and individual borrowers are also taken into consideration, as are the
Corporation's historical loan loss experience and reports of banking regulatory
authorities. Because these estimates, factors and evaluations are primarily
judgmental, no assurance can be given as to whether or not
<PAGE>
the Corporation will sustain loan losses or that subsequent evaluation of the
loan portfolio may not require substantial changes in such allowance.
The following table summarizes the Corporation's allowance for loan loss for the
dates indicated:
<TABLE>
<CAPTION>
Amount of Percent of
June 30, December 31, Increase Increase
2000 1999 (Decrease) (Decrease)
----------------------------------------------------------
<S> <C> <C> <C> <C>
BALANCES:
Gross Loans $247,978,961 $237,007,080 $10,971,881 4.63%
Allowance for Loan Losses 3,250,000 3,100,000 150,000 4.84%
Non-accrual Loans 507,322 389,876 117,446 30.12%
Ratios:
Allowance for loan losses
to gross loans 1.31% 1.31%
Net loans charged off to
allowance for loan losses 4.06% 20.95%
</TABLE>
The provision for loan losses for the three months ended June 30, 2000 was
$197,131, a decrease of $39,852 over the $236,983 for the same period in 1999.
The provision for the six months ended June 30, 2000 was $281,993; a decrease of
$100,624 or 26.3%, over the $382,617 for the six months ended June 30, 1999.
Gross loans outstanding increased 4.63% for the six months in 2000. For the
three months ended June 30, 2000, net loan losses charged to the allowance for
loan losses totaled $122,131, a decrease of $64,852 over the same period in
1999. For the six months ended June 30, 2000, net loan losses totaled $131,993
compared to $282,617 for the six months ended June 30, 1999.
Management of the Corporation reviews with the Board of Directors the adequacy
of the allowance for possible loan losses on a quarterly basis. The loan loss
provision is adjusted when specific items reflect a need for such an adjustment.
Management believes that there were no material loan losses during the last
fiscal year that have not been charged off. Management also believes that the
Corporation has adequately reserved for all credits in its portfolio that may
result in a loss to the Corporation.
OTHER OPERATING INCOME
Other operating income includes service charges on deposit accounts, wire
transfer fees, safe deposit box rentals and other revenue not derived from
interest on earning assets. Other operating income for the three and six months
ended June 30, 2000, increased $59,010 or 7.41% and $80,375 or 5.23% over the
respective periods ended June 30, 1999. Especially in periods of declining net
interest margins, the Corporation has sought
<PAGE>
to increase the income derived from these sources and will continue to seek
opportunities to do so.
OTHER OPERATING EXPENSE
Other expenses include salaries and employee benefits, occupancy and equipment,
and other operating expenses. The continued growth of the Corporation has put
pressure on Management to control overhead expenses. The growth of the
Corporation, annual raises, and the addition of the mortgage department has
resulted in an increase in salaries and benefits of $208,976 and $284,705 for
the three and six months ended June 30, 2000 over the respective periods in
1999. Other operating expenses for the three and six months ended June 30, 2000
were $2,130,784 and $4,357,129 compared to the $1,852,129 and $3,858,043 for the
three and six months ended June 30, 1999 for an increase of $278,655 and
$499,086 respectively. The Corporation's efficiency ratios for the three and
six months ended June 30, 2000 were 46.22% and 47.29%, respectively.
BALANCE SHEET ANALYSIS
<TABLE>
<CAPTION>
Amount of Percent of
June 30, December 31, Increase Increase
2000 1999 (Decrease) (Decrease)
--------------------------------------------------------
<S> <C> <C> <C> <C>
Cash and Cash Equivalents $ 17,689,398 $ 13,494,070 $ 4,195,328 31.09%
Investment Securities 101,154,351 102,451,360 (1,297,009) -1.27%
Loans, net 241,959,898 231,248,551 10,711,347 4.63%
Total Assets 377,140,050 362,789,702 14,350,348 3.96%
Total Deposits 289,699,064 284,461,639 5,237,425 1.84%
Total Stockholders' Equity 39,581,513 37,545,961 2,035,552 5.42%
</TABLE>
CASH AND CASH EQUIVALENTS
Cash and cash equivalents are made up of cash, balances at correspondent banks
and federal funds sold. The increase at June 30, 2000 was due to a temporary
increase in correspondent bank accounts. The Corporation did not have any
federal funds sold at this date due to continued strong loan demand.
<PAGE>
INVESTMENT SECURITIES
The investment securities are made up of U. S. Treasury Notes, U. S. Agency
debentures, mortgage-backed securities, obligations of states, counties and
municipal governments and Federal Home Loan Bank Stock.
Investments decreased $1,297,009 or 1.27% as a result of the need for liquidity
to fund the strong loan demand.
LOANS
Loan demand continued to be strong in the service area of the Corporation as
evidenced by the 4.63% increase in gross loans. Residential housing loans
continue to be in demand along with commercial and industrial loans. No special
loan programs were initiated during this period to add to this growth.
DEPOSITS
The following shows the balance and percentage change in the various deposits:
<TABLE>
<CAPTION>
Amount of Percent of
June 30, December 31, Increase Increase
2000 1999 (Decrease) (Decrease)
--------------------------------------------------------
<S> <C> <C> <C> <C>
Noninteresting-bearing Deposits $ 37,209,290 $ 37,090,779 $ 118,511 0.32%
Interest-bearing Deposits 73,158,667 74,616,711 (1,458,044) -1.95%
Savings 20,073,618 20,031,653 41,965 0.21%
Certificates of Deposit 159,257,489 152,722,496 6,534,993 4.28%
--------------------------------------------------------
Total Deposits $289,699,064 $284,461,639 $ 5,237,425 1.84%
--------------------------------------------------------
</TABLE>
The increase in deposits reflected in the above table is solely the result of
normal deposit growth for our service area. The Corporation does not have any
brokered deposits. There were no special deposit programs or incentives in
place during this period.
YEAR 2000
The Corporation has not encountered any problems with the Y2K date change.
Although we are pleased with our transition through this period, we are on guard
for any problems that might yet surface. We will continue to look for potential
Y2K problems until we are satisfied that no such problems exist.
<PAGE>
CITIZENS HOLDING COMPANY
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
There have been no material change in the Corporation's market risk since the
end of the last fiscal year end of December 31, 1999.
PART II. - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
1. The following exhibit is included herein:
(27) Financial Data Schedule
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
CITIZENS HOLDING COMPANY
BY: /s/ Steve Webb BY: /s/ Robert T. Smith
------------------------- --------------------------
Steve Webb Robert T. Smith
Chairman, President and Treasurer (Chief Financial
Chief Executive Officer and Accounting Officer)
DATE: August 10, 2000 DATE: August 10, 2000
<PAGE>
EXHIBIT INDEX
Exhibit Number Description
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27 Financial Data Schedule
