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, 1997
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, 1997
Common Stock 865,961
Par Value $3.47 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, 1997
(unaudited) and December 31, 1996 1
Consolidated Statements of Operations for the six months
ended June 30, 1997 and 1996 and for the three months
ended June 30, 1997 and 1996 (unaudited) 2
Consolidated Statements of Cash Flows for the six months
ended June 30, 1997 and June 30, 1996 (unaudited) 3
Notes to Consolidated Financial Statements (unaudited) 4-7
Item 2: Management's Discussion and Analysis of Financial Condition
and Results of Operations 8-11
PART II: OTHER INFORMATION 12
Signatures 13
<PAGE>
<TABLE>
CITRUS FINANCIAL SERVICES, INC. and SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<CAPTION>
June 30, 1997 December 31,
(dollars in thousands) (Unaudited) 1996*
<S> <C> <C>
ASSETS
Cash and Due From Banks $ 1,539 $ 2,514
Federal Funds Sold 0 0
Interest Bearing Deposits in Other Banks 7 106
Investment Securities 3,831 4,203
(Market Value June 30, 1997 was $3,714)
(Market Value December 31, 1996 was $4,013)
Securities Available for Sale 5,912 5,296
Loans, Net of Deferred Fee Income 51,136 51,024
Less: Allowance for Loan Losses 391 354
Net Loans 50,745 50,670
Premises & Equipment, Net 2,471 2,550
Other Assets, Net 1,108 1,077
Total Assets $ 65,613 $ 66,416
LIABILITIES
Deposits:
Noninterest Bearing Demand Deposits $ 7,924 $ 8,136
Interest Bearing Accounts:
NOW 3,080 3,386
Money Market Deposit Accounts 4,065 3,889
Savings 4,468 2,987
Certificates of Deposits 38,746 40,248
Total Deposits 58,283 58,646
Federal Funds Purchased and FHLB Advances 1,494 2,055
Other Liabilities 286 288
Total Liabilities 60,063 60,989
STOCKHOLDERS' EQUITY
Common Stock 3,007 2,966
Additional Paid-In Capital 3,149 3,108
Treasury stock (120 shares, at cost) (1) (1)
Accumulated Deficit ( 487) ( 488)
Unrealized loss on securities available for sale ( 118) ( 158)
Total Shareholders' Equity 5,550 5,427
Total Liabilities and Stockholders' Equity $ 65,613 $ 66,416
* Condensed from December 31, 1996, audited
balance sheet
</TABLE>
<PAGE>
<TABLE>
CITRUS FINANCIAL SERVICES, INC. and SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Six months Three months
ended June 30, ended June 30,
(dollars in thousands except 1997 1996 1997 1996
per share amounts)
<S> <C> <C> <C> <C>
Interest Income:
Loans Including Fees $ 2,360 $ 2,140 $ 1,186 $ 1,082
Investment Securities and Interest
Bearing Deposits in Other Banks 275 289 139 143
Federal Funds Sold 74 25 40 8
Total Interest Income 2,709 2,454 1,365 1,233
Interest Expense:
Interest on Deposits 1,205 1,101 602 542
Other Interest 26 24 9 11
Total Interest Expense 1,231 1,125 611 553
Net Interest Income 1,478 1,329 754 680
Provision for Loan Losses 212 122 14 91
Net Interest Income After Provision for
for Loan Losses 1,266 1,207 740 589
Noninterest Income 182 172 71 87
Noninterest Expense 1,447 1,112 759 566
INCOME BEFORE INCOME TAXES 1 267 52 110
INCOME TAXES (CREDIT) - 89 5 30
NET INCOME $ 1 $ 178 $ 47 $ 80
NET INCOME PER COMMON SHARE:
Primary $ nil $ 0.21 $ 0.05 $ 0.09
Fully diluted $ 0.22 $ 0.35 $ 0.25 $ 0.28
AVERAGE SHARES OUTSTANDING 865,961 865,961 865,961 865,961
</TABLE>
<PAGE>
<TABLE>
CITRUS FINANCIAL SERVICES, INC. and SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Six Months Ended June 30,
(dollars in thousands) 1997 1996
(unaudited)
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income $ 1 $ 178
Adjustment To Reconcile Net Income to
Net Cash Provided (Used) by Operating Activities:
Depreciation and Amortization 110 84
Increase (Decrease) in Prepaid Expenses and Other Assets (31) 4
Provision for Loan Losses 212 122
Origination of Loans Held for Sale (20,612) (24,852)
Proceeds on Sale of Loans Held for Sale 23,057 24,981
Increase (Decrease) in Other Liabilities (2) 63
Net Cash (Used) by Operating Activities 2,735 580
Cash Flows from Investing Activities:
Loan Originations, Net of Principal Payments (2,732) (1,295)
Purchase of Investment Securities and Interest
Bearing Deposits -- --
Proceeds on Maturing Securities 372 201
Purchase of Securities Available for Sale (616) --
Proceeds on Sale of Securities Available for Sale 40 145
Capitalization of Premises and Equipment (31) (256)
Proceeds from Maturing Interest Bearing Deposits 99 7
Net Cash Used by Investing Activities (2,868) (1,198)
Cash Flows from Financing Activities:
Increase (Decrease) in Certificates of Deposit - Net (1,502) (744)
Increase (Decrease) in Other Deposits - Net 1,139 (907)
Repayment of FHLB Advances (561) --
Issuance of Common Stock 82 (1,311)
Net Cash Provided (Used) by Financing Activities (842) (2,962)
Net (Decrease) in Cash and Cash Equivalents (975) (3,580)
Cash and cash equivalents at Beginning of Period 2,514 5,002
Cash and cash equivalents at End of Period $ 1,539 $ 1,422
Supplemental disclosure of cash flow information
Amount paid during the period for:
Interest Expense $ 1,264 $ 1,123
</TABLE>
<PAGE>
CITRUS FINANCIAL SERVICES, INC. and SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note (1) Accounting Policies
The consolidated financial statements include the accounts of Citrus Financial
Services, Inc. (Company) and its wholly owned subsidiary Citrus Bank, National
Association, (Bank). 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, 1996 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>
<CAPTION>
June 30, 199 December 31, 1996
(dollars in thousands)
<S> <C> <C> <C> <C>
Real Estate $ 37,197 72.6% $ 37,980 74.4%
Commercial, Financial, and Agriculture 10,064 19.7% 9,133 17.9%
Consumer and other 3,958 7.7% 3,945 7.7%
Total loans, gross $ 51,219 100.0% $ 51,058 100.0%
</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
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 through June 30 is as
follows: (in thousands)
<TABLE>
<CAPTION>
<S> <C> <C>
1997 1996
Balance, January 1, $ 354 $ 373
Recoveries 0 0
Chargeoffs (175) (78)
Provision charged to expense 212 122
Balance, June 30, $ 391 $ 417
</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>
<CAPTION>
June 30, 1997 December 31, 1996
Amortized Estimated Amortized Estimated
Cost Fair Value Cost Fair Value
(in thousands)
Debt Securities:
<S> <C> <C> <C> <C>
U.S. Government Agencies $ 1,470 $ 1,388 $ 1,499 $ 1,322
Mortgaged-backed Securities 2,110 2,077 2,452 2,442
Other 251 249 252 249
Total Securities $ 3,831 $ 3,714 $ 4,203 $ 4,013
</TABLE>
<PAGE>
CITRUS FINANCIAL SERVICES, INC. and SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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>
<CAPTION>
June 30, 1997 December 31, 1996
Amortized Estimated Amortized Estimated
Cost Fair Value Cost Fair Value
(in thousands)
<S> <C> <C> <C> <C>
Due in One Year or Less $ 291 $ 291 $ --- $ ---
From One to Five Years 2,734 2,688 2,661 2,627
From Five to Ten Years 474 415 900 759
Due After Ten Years 332 320 390 378
Other --- --- 252 249
$ 3,831 $ 3,714 $ 4,203 $ 4,013
</TABLE>
Note (5) Securities Available for Sale
The amortized cost and estimated fair value of securities available for sale
as of June 30, 1997 and December 31, 1996 are as follows:
<TABLE>
<CAPTION>
June 30, 1997 December 31, 1996
Amortized Estimated Amortized Estimated
Cost Fair Value Cost Fair Value
(in thousands)
<S> <C> <C> <C> <C>
U.S. Treasury Securities $ 601 $ 604 $ --- $ ---
U.S. Government Agencies 500 496 500 495
Mortgage Backed Securities 4,568 4,385 4,643 4,427
Other 427 427 374 374
Total Securities $ 6,096 $ 5,912 $ 5,517 $ 5,296
</TABLE>
<PAGE>
CITRUS FINANCIAL SERVICES, INC. and SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 $2,055,000 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>
<CAPTION>
June 30, 1997 December 31, 1996
Amortized Estimated Amortized Estimated
Cost Fair Value Cost Fair Value
(in thousands)
<S> <C> <C> <C> <C>
Due in One to Five Years $ 1,101 $ 1,100 $ 500 $ 495
Due After Ten Years 4,568 4,385 4,643 4,427
Other 427 427 374 374
Total Securities $ 6,096 $ 5,912 $ 5,517 $ 5,296
</TABLE>
From January 1, 1997 through June 30, 1997 securities were sold, called, or
prepaid that aggregated $395,000. There were $601,000 in U.S. Treasury
Securities purchased. Securities Available for Sale had an unrealized market
value loss of $184,000 as of June 30, 1997.
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, 1997 consisted of commitments to extend
credit approximating $8,184,000, and standby letters of credit of $375,000.
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, had consolidated
assets of $65,613,000 at the end of the second quarter of 1997 after reaching
$66,416,000 at the end of 1996. The reduction in consolidated assets reflects
primarily the seasonal downturn of deposit balances consistently experienced
in this retirement intensive community. The Company's increased noninterest
expenses resulted in a break-even performance for the first six months of 1997.
These expenses were the result of continued litigation on one of the Bank's
problem credits. During July a significant recovery of these legal expenses
was negotiated with the Bank's insurance carrier as well as a commitment to
share in future legal expenses. Net interest income reflected an 11% increase
moving up $149,000 compared to the end of June, 1996. The Company's loan
growth throughout 1995 and 1996 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 seasonality of the local community is responsible for the downturn in
deposits since the year ended 1996. Nonetheless, total deposits for the
Company exceed the same period last year by $6,131,000. The Company's deposits
totaled $52,152,000 on June 30, 1996, compared to $58,283,000 on June 30, 1997.
Management expects continued deposit growth throughout 1997 and anticipates
deposit growth to average some $550,000 per month for the year. The Company's
prospects for deposit growth have been heightened with the September, 1996
opening of its newest full service bank branch in Barefoot Bay, Florida. 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 noninterest
bearing and lower yielding deposits increased significantly as a portion of
the deposit portfolio. The largest mix increase was in savings accounts that
now represents 7.5% of deposits compared to only 5.1% at the end of 1996.
Noninterest bearing deposits continued to grow and now represent 14.3% of
aggregate deposits compared to 13% at the end of 1996. Management was able to
reduce it reliance on more costly certificates of deposit, reducing this
portion of the deposit portfolio to 65.1% from 69.8% at the end of 1996. These
dramatic changes were reflective of a continued effort by management to reduce
interest cost by shifting deposit solicitation efforts toward less costly
deposits. To date this effort has been successful and management will continue
its effort to maintain and enhance this repositioning of the deposit portfolio.
Management expects to continue its aggressive marketing of these less costly
deposit relationships.
The following schedule illustrates this deposit mix change using monthly average
consolidated deposit aggregates:
<TABLE>
<CAPTION>
Average Monthly Deposit Mix Comparison
Deposit Types 6/97 Change 12/96
<S> <C> <C> <C>
Demand Deposits 14.3% 1.3% 13.0%
NOW Accounts 5.9% .7% 5.2%
Money Market Accounts 7.2% .3% 6.9%
Savings Deposits 7.5% 2.4% 5.1%
Certificates of Deposit 65.1% -4.7% 69.8%
</TABLE>
<PAGE>
CITRUS FINANCIAL SERVICES, INC. and SUBSIDIARY
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Total loans aggregate $51,136,000 at the end of June, 1997, relatively flat
from December 31, 1996 although up $6,647,000 from the same period in 1996 for
an annualized growth of 14.9%. Management continues to target the loan
portfolio for growth during 1997. With the rather robust state of the current
economy local business leaders feel more confident about future economic
prospects and are more likely to expand their operations.
Aggregate real estate loans at the end of June represented 73% of gross loans
as compared to 74% at the end of 1996. Commercial loans increased from 17.9%
of gross loans to 19.7% on June 30, 1997. These movements are reflective of
the currently robust economic environment that has encouraged business leaders
to expand. These commercial loans had the only significant dollar increase,
up $931,000 from December 31, 1996. Real estate loans still make up the
largest portion of the loan portfolio at $37,197,000 at June 30, 1997.
Consumer loans have increased marginally but still make up only 7.7% of
aggregate loans. Management has continued to target growth toward commercial
and commercial real estate loans and expects this category to increase
proportionally. Management will also continue to direct attention toward the
bank's residential loan program.
During the first half of 1997 management recognized a possible problematic
credit now in litigation by increasing the loan loss reserve. Provisions for
the period were increased to $212,000 for the period to facilitate loan
chargeoffs of $175,000 and accommodate loan mix changes. Management is
hopeful that these loan write downs can be recovered during the litigation
process. The reserve was .76% of gross loans at June 30, 1997.
Future anticipations are for continued loan growth for the remainder of 1997.
The continued development of the commercial loan market is expected to be the
most productive as the local economy continues to strengthen.
The bank's loan operation has limited its full service mortgage loan activities
that originates and sells mortgages in the secondary market as well as
retaining mortgages for the bank's own loan portfolio. This activity generated
only $20,279 in real estate loan brokerage fees through the first half of 1997.
With the very recent decrease in interest rates, the need for these services
should increase.
During 1997 the market value of securities available for sale has increased
from $5,296,000 at December 31, 1996 to $5,912,000 primarily from the purchase
of $601,000 in two year U.S. Treasury Securities. As of June 30, 1997, the
aggregate investment portfolio had increased to $9,743,000. U.S. Government
and Agency securities represent 97% of total securities. As of June 30, 1997,
aggregate securities yielded 5.52% compared to 5.6% on December 31, 1996.
Unrealized losses on Securities Available for Sale totaled $184,000 as of June
30, 1997. 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, 1997 22% of the aggregate investment portfolio had adjustable interest
rates that would change with the market within a one year time frame.
<PAGE>
CITRUS FINANCIAL SERVICES, INC. and SUBSIDIARY
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Company exhibits sufficient liquidity at the current time with $1,539,000
in Cash and Due from Banks, $1,250,000 in unsecured federal funds purchased
lines of credit with correspondent banks, and $5,912,000 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 loan 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.
Through the first half of 1997 deposits fell $363,000. Management anticipates
deposit growth to still aggregate $6 - $7 million for 1997. In September, 1996
the new Barefoot Bay Branch opened. This branch has generated almost $8 million
in new deposits since its opening. 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. During the second quarter of 1997 warrant
agreements were exercised that generated $82,000 in additional capital. As of
June 30, 1997, capital represents 8.45% of assets and overnight cash and cash
equivalents aggregate 2.3% of assets. At June 30, 1997 the Company had a
risk based capital to asset ratio of 12.18%. 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, 1997,
reflects net income of $1,000. For the same period in 1996 net income was
$178,000. Net interest income for the six months ending June 30, 1997 compared
favorably to the same period in 1996 showing a 11% or $149,000 improvement and
growing to $1,478,000. At this level, net interest income was inadequate to
cover heightened noninterest expenses of $1,447,000 and was reflective of the
Company's break-even earnings performance. 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 4.23% for December, 1996 to 4.85% for June 30, 1997. 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
and less costly interest bearing deposits. At the same time, 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>
<CAPTION>
Net Interest Non Interest
Income Expense
<S> <C> <C>
Six months ended 6/30/97 $ 1,478,000 $ 1,447,000
Six months ended 6/30/96 1,329,000 1,112,000
</TABLE>
Noninterest expenses included in the six months ended June 30, 1997 included
normal operating overhead with the largest portion of the cost being salaries
and benefits which aggregated $629,000 for the period ended June 30, 1997 and
$530,000 for the period ended June 30, 1996. 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 $818,000 for the 1997
period and $582,000 for the 1996 period. These heightened expenses represent,
in large part, legal fees on one of the bank's problem credits now in
litigation. During July the Company's insurance carrier indicated they would
share in these legal expenses by paying $50,000 against expenses through
May 31, 1997 and one-half of these expenses going forward.
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 6.50% during the next twelve
months, net interest income could be reduced about $105,000.
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 28, 1997. At that meeting a majority of the
shareholders of record gave their proxy to the re-election
of two Class III directors, to ratify the appointment of
the Company's independent auditors for the fiscal year
ending December 31, 1996, and to approve the adjournment
of the Annual Meeting to solicit additional proxies in the
event that there were not sufficient votes to approve any
one or more of the proposals.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
a) None
b) Reports on Form 8-K.
None
<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 13, 1997 /s/ Josh C. Cox, Jr.
Josh C. Cox, Jr.
President and CEO
Date: August 13, 1997 /s/ Henry O. Speight
Henry O. Speight
Chief Financial Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 1,539
<INT-BEARING-DEPOSITS> 7
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 5,912
<INVESTMENTS-CARRYING> 3,831
<INVESTMENTS-MARKET> 3,714
<LOANS> 51,136
<ALLOWANCE> 391
<TOTAL-ASSETS> 65,613
<DEPOSITS> 58,283
<SHORT-TERM> 1,000
<LIABILITIES-OTHER> 286
<LONG-TERM> 494
0
0
<COMMON> 3,007
<OTHER-SE> 2,543
<TOTAL-LIABILITIES-AND-EQUITY> 65,613
<INTEREST-LOAN> 2,360
<INTEREST-INVEST> 275
<INTEREST-OTHER> 74
<INTEREST-TOTAL> 2,709
<INTEREST-DEPOSIT> 1,205
<INTEREST-EXPENSE> 1,231
<INTEREST-INCOME-NET> 1,478
<LOAN-LOSSES> 212
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,447
<INCOME-PRETAX> 1
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</TABLE>
