UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________________________________
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR
15 (D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Quarterly Period Ended June 30, 1996
Commission File Number 33-29696-A
__________________________________________________
CITRUS FINANCIAL SERVICES, INC.
(Exact Name of registrant as specified in its charter)
Florida 65-0136594
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1717 Indian River Boulevard
Suite 100
Vero Beach, Florida 32960
(Address of Principal Executive Offices) (Zip Code)
__________________________________________________
(561) 778-4100
(Registrant's telephone number including area code)
__________________________________________________
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 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 of outstanding of each of the issuer's classes
of Common Stock:
Class Outstanding as of August 8, 1996
Common Stock 711,647
Par Value $4.17 per share
<PAGE>
CITRUS FINANCIAL SERVICES, INC.
INDEX
PAGE
PART I: FINANCIAL INFORMATION NUMBER
Item 1: Financial Statements:
Consolidated Balance Sheets as of June 30, 1996
(unaudited) and December 31, 1995 1
Consolidated Statements of Operations for the six months
ended June 30, 1996 and 1995 and for the three months
ended June 30, 1996 and 1995 (unaudited) 2
Consolidated Statements of Cash Flows for the six months
ended June 30, 1996 and June 30, 1995 (unaudited) 3
Notes to Consolidated Financial Statements (unaudited) 4-7
Item 2: Management's Discussion and Analysis of Financial Condition
and Results of Operations 8-12
PART II: OTHER INFORMATION 13
Signatures 14
<PAGE>
<TABLE>
CITRUS FINANCIAL SERVICES, INC. and SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<CAPTION>
June 30, 1996 December 31,
(dollars in thousands) (Unaudited) 1995*
<S> <C> <C>
ASSETS
Cash and Due From Banks $ 1,422 $ 1,644
Federal Funds Sold 0 3,358
Interest Bearing Deposits in Other Banks 117 124
Investment Securities 4,546 4,747
(Market Value June 30, 1996 was $4,335)
(Market Value December 31, 1995 was $4,636)
Securities Available for Sale 5,368 5,571
Loans, Net of Deferred Fee Income 44,489 43,401
Less: Allowance for Loan Losses 417 373
Net Loans 44,072 43,028
Premises & Equipment, Net 2,348 2,176
Other Assets, Net 846 850
Total Assets $ 58,719 $ 61,498
LIABILITIES
Deposits:
Noninterest Bearing Demand Deposits $ 6,361 $ 6,699
Interest Bearing Accounts:
NOW 2,665 3,117
Money Market Deposit Accounts 4,497 4,522
Savings 2,113 2,205
Certificates of Deposits 36,516 37,260
Total Deposits 52,152 53,803
Federal Funds Purchased and FHLB Advances 765 2,076
Other Liabilities 311 248
Total Liabilities 53,228 56,127
STOCKHOLDERS' EQUITY
Preferred Stock 0 0
Common Stock 2,966 2,966
Additional Paid-In Capital 3,108 3,108
Accumulated Deficit ( 395) ( 573)
Unrealized loss on securities available for sale ( 188) ( 130)
Total Shareholders' Equity 5,491 5,371
Total Liabilities and Stockholders' Equity $ 58,719 $ 61,498
* Condensed from December 31, 1995, audited
balance sheet
</TABLE>
<PAGE>
<TABLE>
CITRUS FINANCIAL SERVICES, INC. and SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Six months ended June 30, Three months ended June 30,
1996 1995 1996 1995
(dollars in thousands except per share amounts)
<S> <C> <C> <C> <C>
Interest Income:
Loans Including Fees $ 2,140 $ 1,892 $ 1,082 $ 996
Investment Securities and Interest
Bearing Deposits in Other Banks 289 421 143 209
Federal Funds Sold 25 9 8 5
Total Interest Income 2,454 2,322 1,233 1,210
Interest Expense:
Interest on Deposits 1,101 1,015 542 532
Other Interest 24 122 11 62
Total Interest Expense 1,125 1,137 553 594
Net Interest Income 1,329 1,185 680 616
Provision for Loan Losses 122 31 91 18
Net Interest Income After Provision for
for Loan Losses 1,207 1,154 589 598
Noninterest Income 172 151 87 65
Noninterest Expense 1,112 1,046 566 526
INCOME BEFORE INCOME TAXES 267 259 110 137
INCOME TAXES (CREDIT) 89 (5) 30 0
NET INCOME $ 178 $ 264 $ 80 $ 137
NET INCOME PER COMMON SHARE:
Primary $ 0.25 $ 0.37 $ 0.11 $ 0.19
Fully diluted $ 0.43 $ 0.50 $ 0.35 $ 0.38
AVERAGE SHARES OUTSTANDING 711,767 711,767 711,767 711,767
</TABLE>
<PAGE>
<TABLE>
CITRUS FINANCIAL SERVICES, INC. and SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30,
(dollars in thousands) 1996 1995
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income $ 178 $ 264
Adjustment To Reconcile Net Income to
Net Cash Provided (Used) by Operating Activities:
Depreciation and Amortization 84 111
Increase in Prepaid Expenses and Other Assets 4 (66)
Provision for Loan Losses 122 31
Origination of Loans Held for Sale (24,852) (10,919)
Proceeds on Sale of Loans Held for Sale 24,981 7,608
Increase (Decrease) in Other Liabilities 63 57
Net Cash (Used) by Operating Activities 580 (2,914)
Cash Flows from Investing Activities:
Loan Originations, Net of Principal Payments (1,295) (3,025)
Purchase of Investment Securities and Interest
Bearing Deposits -- (19)
Proceeds on Maturing Securities 201 145
Purchase of Securities Available for Sale -- (71)
Proceeds on Sale of Securities Available for Sale 145 339
Capitalization of Premises and Equipment (256) 37
Proceeds from Maturing Interest Bearing Deposits 7 0
Net Cash Used by Investing Activities (1,198) (2,594)
Cash Flows from Financing Activities:
Increase (Decrease) in Certificates of Deposit - Net (744) 2,884
Increase (Decrease) in Other Deposits - Net (907) (298)
FHLB Advances -- 17
Repayment of FHLB Advances (1,311) 0
Net Cash Provided (Used) by Financing Activities (2,962) 2,603
Net (Decrease) in Cash and Cash Equivalents (3,580) (2,905)
Cash and cash equivalents at Beginning of Period 5,002 3,481
Cash and cash equivalents at End of Period $ 1,422 $ 576
Supplemental disclosure of cash flow information
Amount paid during the period for:
Interest Expense $ 1,123 $ 1,099
</TABLE>
<PAGE>
CITRUS FINANCIAL SERVICES, INC. and SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1996
Note (1) Accounting Policies
The consolidated financial statements include the accounts of Citrus Financial
Services, Inc. and its wholly owned subsidiary Citrus Bank, National
Association, (Company). The information contained in the financial statements
is unaudited. In the opinion of management, all adjustments have been made
(consisting only of normal recurring accruals) necessary to present a fair
statement of the results for interim periods. The results for interim periods
are not necessarily indicative of trends or results to be expected for a full
year. It is suggested that these financial statements and notes be read in
conjunction with the Company's financial statements for the year ended
December 31, 1995 included in the Company's annual report on Form 10-KSB filed
with the Securities and Exchange Commission.
Note (2) Loans
Loans receivable are stated at unpaid principal balances, less unearned
discounts, and net of deferred loan origination fees and costs. Interest
receivable is accrued only if deemed collectible. Generally, Company policy
is not to accrue interest on loans delinquent over ninety days. Such interest
ultimately collected is credited to income in the period received.
Loans, as categorized by the underlying collateral, consist of:
<TABLE>
June 30, 1996 December 31, 1995
(dollars in thousands)
<S> <C> <C> <C> <C>
Real Estate $ 32,200 72.4% $ 29,815 68.7%
Commercial, Financial, and Agriculture 8,547 19.2% 9,104 21.0%
Consumer and other 3,742 8.4% 4,482 10.3%
Total loans, gross $ 44,489 100.0% $ 43,401 100.0%
</TABLE>
Note (3) Allowance for Loan Losses
The Company's Board of Directors monitors the loan portfolio monthly in order
to enable it to evaluate the adequacy of the allowance for loan losses. In
addition to reviews by regulatory agencies and the Company's certified public
accountants, the services of outside lending professionals have been engaged
to assist in the valuation of credit quality and loan administration. These
professionals compliment the system implemented by the Company which identifies
potential problem credits as early as possible, categorizes the credits as to
risk and puts a reporting process in place to monitor the progress of the
credits.
<PAGE>
CITRUS FINANCIAL SERVICES, INC. and SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1996
The Company maintains the allowance for loan losses at a level sufficient to
absorb all estimated losses inherent in the loan portfolio. The allowance for
loan losses is made up of two primary components, amounts allocated to loans
based on collateral type and amounts allocated for loans reviewed on an
individual basis in accordance with a credit risk grading system.
Activity in the allowance for loan losses from January 1, 1996 through
June 30, 1996 is as follows: (in thousands)
<TABLE>
1996 1995
<S> <C> <C>
Balance, January 1, $ 373 $ 299
Recoveries 0 1
Chargeoffs (78) (3)
Provision charged to expense 122 31
Balance, June 30, $ 417 $ 328
</TABLE>
Note (4) Investment Securities
Investment securities are carried at cost, adjusted for amortization of
premiums or accretion of discounts. The amortized cost and estimated fair
value of investments in securities are as follows:
<TABLE>
June 30, 1996 December 31, 1995
Amortized Estimated Amortized Estimated
Cost Fair Value Cost Fair Value
(in thousands)
Debt Securities:
<S> <C> <C> <C> <C>
U.S. Government Agencies $ 1,463 $ 1,358 $ 1,459 $ 1,391
Mortgaged-backed Securities 2,831 2,732 3,035 2,995
Other 252 245 253 250
Total Securities $ 4,546 $ 4,335 $ 4,747 $ 4,636
</TABLE>
<PAGE>
CITRUS FINANCIAL SERVICES, INC. and SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1996
The amortized cost and estimated fair value of debt securities by contractual
maturity, are shown below. Debt securities with maturities greater than ten
years include fixed rate mortgage backed obligations which have significantly
shorter expected maturities as a result of prepayments.
<TABLE>
June 30, 1996 December 31, 1995
Amortized Estimated Amortized Estimated
Cost Fair Value Cost Fair Value
(in thousands)
<S> <C> <C> <C> <C>
Due in One Year or Less $ 75 $ 76 $ 107 $ 107
From One to Five Years 3,085 2,951 3,207 3,136
From Five to Ten Years 962 909 988 954
Due After Ten Years 424 399 445 439
$ 4,546 $ 4,335 $ 4,747 $ 4,636
</TABLE>
Note (5) Securities Available for Sale
The amortized cost and estimated fair value of securities available for sale
as of June 30, 1996 and December 31, 1995 are as follows:
<TABLE>
June 30, 1996 December 31, 1995
Amortized Estimated Amortized Estimated
Cost Fair Value Cost Fair Value
(in thousands)
<S> <C> <C> <C> <C>
U.S. Government Agencies $ 500 $ 487 $ 500 $ 495
U.S. Government Agency
Mortgage Backed Securities 4,760 4,508 4,879 4,727
Other 373 373 349 349
Total Securities $ 5,633 $ 5,368 $ 5,728 $ 5,571
</TABLE>
<PAGE>
CITRUS FINANCIAL SERVICES, INC. and SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1996
The amortized cost and estimated fair value of debt securities by contractual
maturity, are shown below. Debt securities with maturities greater than ten
years include $2,864,000 in market value adjustable rate issues and the
balance in primarily fixed rate mortgage backed obligations that have
significantly shorter expected maturities as a result of prepayments.
<TABLE>
June 30, 1996 December 31, 1995
Amortized Estimated Amortized Estimated
Cost Fair Value Cost Fair Value
(in thousands)
<S> <C> <C> <C> <C>
Due in One to Five Years $ 500 $ 487 $ 500 $ 495
From Five to Ten Years -- -- -- --
Due After Ten Years 4,760 4,508 4,879 4,727
Other 373 373 349 349
Total Securities $ 5,633 $ 5,368 $ 5,728 $ 5,571
</TABLE>
From January 1, 1996 through June 30, 1996 securities were sold, called, or
prepaid that aggregated $325,000. There were no securities purchased.
Securities Available for Sale had an unrealized market value loss of $301,000
as of June 30, 1996.
Note (6) Financial Instruments With Off-Balance Sheet Risk
The Company is a party to financial instruments with off-balance sheet risk in
the normal course of business to meet the financing needs of its customers.
These financial instruments included commitments to extend credit. Those
instruments involve, to varying degrees, elements of credit and interest rate
risk in excess of the amounts recognized in the balance sheet. The contract
or notional amounts of those instruments reflect the extent of involvement the
Company has in particular classes of financial instruments.
Financial instruments at June 30, 1996 consisted of commitments to extend
credit approximating $6,155,000, and standby letters of credit of $322,000.
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. Since many of the commitments are expected
to expire without being drawn upon, the total commitment amounts do not
necessarily represent future cash requirements.
<PAGE>
CITRUS FINANCIAL SERVICES, INC. and SUBSIDIARY
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
Citrus Financial Services, Inc., a one bank holding company, has consolidated
assets of $58,719,000 at the end of the second quarter of 1996 after reaching
$61,498,000 at the end of 1995. The reduction in consolidated assets reflect
primarily the elimination of federal funds sold which crested at $3,358,000
at 1995's year end. The expansion of the Bank's operations has increased
operating costs, but these costs have continued, as in 1995, to be more than
offset by increases in net interest income that reflected a $144,000 increase
compared to the same period through the end of June, 1995. The Company's
rapid loan growth throughout 1994 and 1995 is most responsible for the
increase in net income. Management and the directorate remain confident that
this expansionary loan positioning will continue to increase future
profitability.
STATEMENT OF CONDITION ANALYSIS
The Company's one bank subsidiary, Citrus Bank, National Association, reflected
lower total assets from the end of 1995. This downturn reflects the softening
of loan growth, the normal seasonality of deposits, and the reduction of
borrowings. Nonetheless, total deposits for the Company exceed the same period
last year by $1,283,000. The Company's deposits totaled $50,869,000 on
June 30, 1995, compared to $52,152,000 on June 30, 1996. Management expects
continued deposit growth throughout 1996 and anticipates deposit growth to
average some $550,000 per month for the year. The Company's prospects for
deposit growth are heightened with the opening of its newest full service bank
branch in Barefoot Bay, Florida. This branch is expected to open the first
week in September, 1996. In addition, bank deposits will continue to grow
beginning in October as the winter residents return.
The deposit mix reflects disintermediation during the period as savings, NOW
and certificates of deposits as a percentage of total average deposits, have
decreased while noninterest bearing, and money market deposits as a percentage
of total deposits increased. These changes reflect increased activity in
business deposits. Increased confidence in the Company by the local community
coupled with the large increase in lending activities can, in part, account for
these increases in aggregate deposits. Management expects to continue its
aggressive marketing of these less costly deposit relationships.
<PAGE>
CITRUS FINANCIAL SERVICES, INC. and SUBSIDIARY
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following schedule illustrates this deposit mix change using monthly
average consolidated deposit aggregates:
<TABLE>
Average Monthly Deposit Mix Comparison
Deposit Types 6/96 Change 12/95
<S> <C> <C> <C>
Demand Deposits 12.9% .4% 12.5%
NOW Accounts 5.2% -0.6% 5.8%
Money Market Accounts 8.9% .5% 8.4%
Savings Deposits 4.0% -0.1% 4.1%
Certificates of Deposit 69.0% -0.2% 69.2%
</TABLE>
Total loans aggregate $44,489,000 at the end of June, 1996, an increase of
$1,088,000 from December 31, 1995. The first half's growth was 2.5% or 5%
annualized. Management continues to target the loan portfolio for growth
during 1996 but the local economy has softened and business leaders feel more
hesitant about future economic prospects.
Aggregate real estate loans at the end of June represented 72% of gross loans
as compared to 69% at the end of 1995. Commercial non-real estate loans
decreased from 21.0% of gross loans to 19.2% on June 30, 1996. These movements
are reflective of the current economic environment that is closely linked to
real estate activities. Loans secured by real estate had the only dollar
increase, up $2,399,000 from December 31, 1995. Permanent loan portfolio
residential real estate loans total $17,251,000 at June 30, 1996 with
commercial real estate loans totalling $12,517,000. Consumer loans have
decreased from 10.3% to 8.4%. With the downturn in consumer loans, management
has targeted growth toward commercial and commercial real estate loans during
the balance of 1996 and expects this category to increase proportionally.
Management will also continue to direct attention toward the bank's residential
loan program. Construction and land development loans now represent 10.7%
compared to 8.5% at the end of 1995.
This change in the loan portfolio's mix together with management's anticipated
loss potential with regard to identified problematic loans is reflected in the
change in the reserve for loan losses. The reserve was increased by $45,000,
net of chargeoffs, through June 30, 1996. Gross loans increased during the
period and necessitated a commensurate increase in the reserve that reflects
exposure by type of loan as well as any identified problematic credits. The
reserve was .94% of gross loans at June 30, 1996.
Future anticipations are for continued loan growth for the remainder of 1996.
The continued development of the commercial loan market is expected to be the
most productive if the local economy strengthens.
<PAGE>
CITRUS FINANCIAL SERVICES, INC. and SUBSIDIARY
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The bank's loan operation has limited its full service mortgage loan activities
that originate and sells mortgages in the secondary market as well as retaining
mortgages for the bank's own loan portfolio. This activity generated only
$21,784 in real estate loan brokerage fees through the first half of 1996.
With the very recent decrease in interest rates, the need for these services
should increase. Management has, therefore, decided to devote more resources
in this direction and bolster this operation.
During 1996 the market value of securities available for sale has continued to
decrease from $5,571,000 at December 31, 1995 to $5,368,000. As of
June 30, 1996, the investment portfolio had decreased to $9,914,000.
U.S. Government and Agency securities represent 98% of total securities. As
of June 30, 1996, aggregate securities and interest-bearing deposits yielded
5.45% compared to 5.41% on December 31, 1995. During 1996, no investment
securities were purchased or sold as bank management continued to invest growth
into loans.
Additional reductions in the investment portfolio were also invested in loan
growth. Unrealized losses on Securities Available for Sale totaled $301,000
as of June 30, 1996. Securities Available for Sale are recorded at market, in
the aggregate, with any unrealized market value gains or losses taken through
the Company's equity capital. The FASB (Financial Accounting Standard Board)
has adopted formal accounting rules for investment security accounting. These
rules were adopted by the Company on December 31, 1993.
Management will continue to position the investment portfolio to best serve all
the needs of the Company. Consideration will be given to current economic
conditions and forecasts. The Company's adopted investment strategy coincides
with the Company's overall strategies and market anticipations. At the end of
June, 1996, 39% of the aggregate investment portfolio had adjustable interest
rates that would change with the market within a one year time frame.
The Company exhibits sufficient liquidity at the current time with $1,422,000
in Cash and Due from Banks, $1,750,000 in unsecured federal funds purchased
lines of credit with correspondent banks, $117,000 in Interest Bearing Deposits
in Other Banks, and $5,368,000 in the market value of securities available for
sale. In addition, the Bank has established $10,000,000 in lines of credit
with the Federal Home Loan Bank (FHLB) to provide additional funding should
the need arise. This relationship provides the bank an opportunity to fund
oan growth with a borrowing that can match interest rate volatility. Such
balanced funding limits the bank's exposure to interest rate risk. One FHLB
borrowing is secured by the Bank's residential mortgage loan portfolio.
Another FHLB line of credit has also been established to fund residential
mortgage loans that will be sold into the secondary market and transferred to
the permanent holder. These loans are normally held less than one month and
are appropriately matched against this funding line of credit. This line is
secured by investment securities. Management anticipates that these funding
sources are adequate to meet anticipated needs.
<PAGE>
CITRUS FINANCIAL SERVICES, INC. and SUBSIDIARY
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Through the first half of 1996 deposits fell $1,651,000. Management
anticipates deposit growth to still aggregate $6 - $7 million for 1996. In
September, 1996 the new Barefoot Bay Branch will open. This branch is
anticipated to generate a large volume of deposits. When coupled with the
return of winter residents, growth anticipations are well within reach. The
anticipated vitality of this new market is expected to have a favorable impact
on the financial capacity of the Company with regard to future growth and
profitability. There are no other trends, demands, commitments, events, or
uncertainties that will result in or are reasonably likely to result in the
Company's liquidity increasing or decreasing in any material way.
The Company's large initial capitalization and enhanced profitability reflect
in above average capital ratios. As of June 30, 1996, capital represents
9.35% of assets and overnight cash and cash equivalents aggregate 2.4% of
assets.
Beginning in 1992, the Company's capitalization is measured by guidelines
adopted by federal regulatory bodies. This capital adequacy measurement is
known as risk based capital and applies risk weighted capital needs according
to predetermined risk factors per category of asset. Assets or commitments
with less potential risk require less supportive capital while those items
considered to have greater risk potential require greater capital support.
Beginning December 31, 1992 the capital to risk weighted assets requirement
is 8%. At June 30, 1996 the Company had a risk based capital to asset ratio
of 14.33%. Management expects to maintain capital above the required level
through earnings retention and management of the Company's mix of risk weighted
assets.
RESULTS OF OPERATIONS
The consolidated statement of operations for the six months ended
June 30, 1996, reflects net income of $178,000. For the same period in 1995
net income was $264,000. The Company became taxable in 1996 accounting for
this fall in net income. Income before taxes actually increased from $259,000
to $267,000 at the end of the six months ended June 30, 1996. Net interest
income for the six months ending June 30, 1996 also compared favorably to the
same period in 1995 showing a 12% or $144,000 improvement and growing to
$1,329,000. At this level, net interest income was adequate to cover heightened
noninterest expenses of $1,112,000. The Company's net interest income
improvement reflects management's aggressive attention to loan and deposit
pricing which has controlled the yield on the Company's earning assets and
lowered the yield on funding liabilities in this recent period of falling
interest rates.
The bank's net interest income to average earning assets (net interest margin)
increased from 4.12% for 1995 to 4.35% for year to date June 30, 1996. The
net interest margin was improved by decreasing costs of funding liabilities
from the repricing of existing deposits and a shift toward noninterest bearing
deposits. The bank's continued investment in loans as reflected in its higher
loan to deposit ratio which was increased from 80% on December 31, 1995 to
84.8% at the end of June 30, 1996. This increase has bolstered the Bank's
yield on earning assets as investment securities have been replaced by loans
at higher interest yields. Management continues to actively solicit loans and
price loan products competitively to attract prudent loans with the goal of
maintaining the current loan to deposit ratio while increasing the banks total
assets.
<PAGE>
CITRUS FINANCIAL SERVICES, INC. and SUBSIDIARY
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
<TABLE>
Net Interest Non Interest
Income Expense
<S> <C> <C>
Six months ended 6/30/96 $ 1,329,000 $ 1,112,000
Six months ended 6/30/95 1,185,000 1,046,000
</TABLE>
Noninterest expenses included in the six months ended June 30, 1996 included
normal operating overhead with the largest portion of the cost being salaries
and benefits which aggregated $530,000 for the period ended June 30, 1996 and
$506,000 for the period ended June 30, 1995. The increase in salaries and
benefits reflects the additional staff and concurrent expertise needed to
service the Company's growth. Bank premises and equipment expenses together
with other operating expenses make up the balance at $582,000 for the 1996
period and $540,000 for the 1995 period.
Using the current balance sheet, the current maturity schedule, and the
forecasted balance sheet, management projects the worst-case scenario to be
falling rates. Should the prime rate decrease to 7.25% during the next twelve
months, net interest income could be reduced about $82,000. Conversely, if
prime rates increased to 10.5% during the next twelve months, net interest
income could be enhanced by approximately $41,000.
The Bank continues to engage an outside firm to provide management with monthly
asset/liability position reports. These reports measure the Bank's
vulnerability to interest rates should rates change in an adverse direction.
In addition, the future impact of these rate changes are measured over a twelve
month period using management's expectations as to future growth and mix.
Meetings are held with the Bank's Asset/Liability Investment Committee to work
with these reports and management's expectations to continue to control and
monitor balance sheet mix and interest rate exposures.
<PAGE>
CITRUS FINANCIAL SERVICES, INC.
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.
An annual meeting of shareholders was held on April 22, 1996.
At that meeting a majority of the shareholders of record gave
their proxy to the re-election of two directors, to approve a
Stock Option Agreement for the President and Chief Executive
Officer and to ratify the continuing appointment of the
Company's CPA firm.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
a) None
b) Reports on Form 8-K.
None
Item 7. Exhibit 27 - Article 9 Financial Data Schedule for 10-QSB
<PAGE>
CITRUS FINANCIAL SERVICES, INC..
SIGNATURE
Pursuant to the requirements 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.
Citrus Financial Services, Inc.
Date: August 11, 1996 _________________________
Josh C. Cox, Jr.
President and CEO
Date: August 11, 1996 _________________________
Henry O. Speight
Chief Financial Officer
<PAGE>
CITRUS FINANCIAL SERVICES, INC.
SIGNATURE
Pursuant to the requirements 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.
Citrus Financial Services, Inc.
Date: August 11, 1996 /s/ Josh C. Cox, Jr.
Josh C. Cox, Jr.
President and CEO
Date: August 11, 1996 /s/ Henry O. Speight
Henry O. Speight
Chief Financial Officer
