UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Quarterly Period Ended September 30, 2000
Commission File Number 000-26145
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CITRUS FINANCIAL SERVICES, INC.
(Exact Name of registrant as specified in its charter)
Florida 65-0136504
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1717 Indian River Boulevard
Suite 100
Vero Beach, Florida 32960
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(Address of Principal Executive Offices) (Zip Code)
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(561) 778-4100
(Registrant's telephone number including area code)
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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 _____.
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Indicate the number of shares outstanding of each of the issuer's classes of
Common stock as of the latest practicable date:
Class Outstanding as of November 10, 2000
--------------- -----------------------------------
Common Stock 1,423,402
Par Value $3.15 per share (rounded)
<PAGE>
CITRUS FINANCIAL SERVICES, INC.
INDEX
PAGE
NUMBER
REPORT OF INDEPENDENT ACCOUNTANTS 3
PART I: FINANCIAL INFORMATION
Item 1: Financial Statements:
Consolidated Condensed Balance Sheets as of September 30, 2000
(Unaudited) and December 31, 1999 4
Consolidated Statements of Operations and Comprehensive Income
for the Three and Nine Months Ended September 30, 2000 and
1999 (Unaudited) 5
Consolidated Condensed Statements of Cash Flows for the Three
and Nine Months Ended September 30, 2000 and 1999 (Unaudited) 6
Consolidated Statement of Changes in Stockholders' Equity
(Unaudited) 7
Notes to Consolidated Financial Statements (Unaudited) 8
Item 2: Management's Discussion and Analysis of Financial Condition
and Results of Operations 12
PART II: OTHER INFORMATION 22
Signatures 23
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Audit Committee
Citrus Financial Services, Inc. and Subsidiary
Vero Beach, Florida
We have reviewed the accompanying consolidated condensed balance sheet of Citrus
Financial Services, Inc., and its wholly-owned subsidiary ("Citrus"), Citrus
Bank, N.A. ( "Citrus Bank"), as of September 30, 2000, and the related
consolidated statements of operations and comprehensive income and consolidated
condensed statements of cash flows for the three and nine months ended September
30, 2000 and 1999, and the related consolidated statement of changes in
stockholders' equity for the nine months ended September 30, 2000. These
consolidated financial statements are the responsibility of Citrus' management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the consolidated financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based upon our review, we are not aware of any material modifications that
should be made to the consolidated financial statements referred to above for
them to be in conformity with generally accepted accounting principles.
We previously audited, in accordance with generally accepted auditing standards,
the consolidated balance sheet as of December 31, 1999, and the related
consolidated statements of operations and comprehensive income, cash flows, and
changes in stockholders' equity for the year then ended (not presented herein);
and in our report dated January 21, 2000, we expressed an unqualified opinion on
those consolidated financial statements. In our opinion, the information set
forth in the accompanying consolidated condensed balance sheet as of December
31, 1999, is fairly stated, in all material respects, in relation to the
consolidated balance sheet from which it has been derived.
STEVENS, SPARKS & COMPANY, P.A.
Jacksonville, Florida
November 10, 2000
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<PAGE>
CITRUS FINANCIAL SERVICES, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, 2000
(Unaudited) December 31, 1999
--------------- -----------------
(In Thousands, Except Per Share Data)
<S> <C> <C>
ASSETS
Cash and due from banks $ 2,471 $ 4,040
Federal funds sold 5,230 3,550
----------- -----------
Total cash and cash equivalents 7,701 7,590
Interest-bearing deposits in other banks 17 32
Securities available-for-sale at fair value 9,571 5,636
Securities held-to-maturity (market value of
$635 for 2000 and $953 for 1999) 689 1,039
Loans held for investment less allowance for credit losses 70,920 67,349
Loans held for sale 859 1,963
Facilities 2,606 2,802
Other real estate owned 88 --
Other assets 1,751 1,648
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TOTAL $ 94,202 $ 88,059
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing $ 12,132 $ 12,092
NOW accounts 4,046 4,639
Money market accounts 3,756 4,287
Savings accounts 8,880 9,105
Time, $100,000 and over 10,688 9,747
Other time deposits 44,629 39,221
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Total deposits 84,131 79,091
Other borrowings 129 237
Accounts payable and accrued liabilities 594 364
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Total liabilities 84,854 79,692
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Commitments and contingencies -- --
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Stockholders' equity:
Preferred stock -- --
Common stock 4,491 4,125
Additional paid-in capital 4,638 4,271
Retained earnings 276 47
Accumulated other comprehensive income
Net unrealized holding losses on securities (57) (76)
----------- -----------
Total stockholders' equity 9,348 8,367
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TOTAL $ 94,202 $ 88,059
=========== ===========
Book value per common share $ 6.57 $ 6.40
=========== ===========
Common shares outstanding 1,423,402 1,307,167
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
CITRUS FINANCIAL SERVICES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)
<TABLE>
<CAPTION>
For the Three Months Ended September 30,For the Nine Months Ended September 30,
-------------------------------------------------------------------------------
2000 1999 2000 1999
---- ---- ---- ----
(Dollars in Thousands, Except Per Share Data)
<S> <C> <C> <C> <C>
Interest and fees on loans held for investment $ 1,650 $ 1,348 $ 4,848 $ 3,866
Interest and fees on loans held for sale 18 136 62 460
Investment income on investment securities
and interest-bearing deposits in other banks 153 94 366 255
Federal funds sold 75 48 196 199
------- ------- ------- -------
Total interest income 1,896 1,626 5,472 4,780
------- ------- ------- -------
Interest on deposits 957 710 2,617 2,071
Other 2 28 7 48
------- ------- ------- -------
Total interest expense 959 738 2,624 2,119
------- ------- ------- -------
Net interest income before provision
for credit losses 937 888 2,848 2,661
------- ------- ------- -------
Provision for credit losses 4 144 129 164
------- ------- ------- -------
Net interest income 933 744 2,719 2,497
------- ------- ------- -------
Fees and service charges 88 104 289 324
Other income 28 8 41 25
------- ------- ------- -------
Total other income 116 112 330 349
------- ------- ------- -------
Other expenses:
Salaries and employee benefits 440 479 1,370 1,312
Expenses of bank premises and fixed assets 171 162 533 465
Other operating expenses 256 261 780 722
------- ------- ------- -------
Total other expenses 867 902 2,683 2,499
------- ------- ------- -------
Income before provision for income taxes 182 (46) 366 347
Provision for income taxes 69 (17) 137 131
------- ------- ------- -------
Net income 113 (29) 229 216
Other comprehensive income, net of income taxes:
Unrealized holding gains (losses) arising during period 49 6 39 (11)
Less: reclassification adjustments for gains included in
net income for the period (20) -- (20) (2)
------- ------- ------- -------
Total other comprehensive income,
net of income taxes 29 6 19 (13)
------- ------- ------- -------
Comprehensive income $ 142 $ (23) $ 248 $ 203
======= ======= ======= =======
Earnings Per Share Information
Primary $ 0.09 $ (0.03) $ 0.17 $ 0.23
======= ======= ======= =======
Fully diluted $ 0.08 $ (0.02) $ 0.16 $ 0.18
======= ======= ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
CITRUS FINANCIAL SERVICES, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
--------------------------- ---------------------------
2000 1999 2000 1999
---- ---- ---- ----
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Net income $ 113 $ (29) $ 229 $ 216
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Provision for credit losses 4 144 129 164
Depreciation and amortization 87 86 267 254
Gain on sale of securities (20) -- (20) (2)
Net premium amortization and discount accretion (6) (4) (16) (14)
(Increase) decrease in other assets (142) 300 486 (225)
Increase (decrease) in other liabilities 161 56 230 (318)
Origination of loans held for sale (6,692) (22,585) (18,382) (84,974)
Proceeds on sale of loans held for sale 6,432 22,859 19,486 89,853
-------- -------- -------- --------
Net cash provided (used)
by operating activities (63) 827 2,409 4,954
-------- -------- -------- --------
Cash flows from investing activities:
Net (increase) decrease in:
Investment securities (964) 156 (3,530) (798)
Interest-bearing deposits in other banks 343 (38) 15 (30)
Loans 1,600 (4,357) (3,644) (10,224)
Purchases of bank premises and equipment, net (8) (64) (71) (242)
-------- -------- -------- --------
Net cash provided (used)
by investing activities 971 (4,303) (7,230) (11,294)
-------- -------- -------- --------
Cash flows from financing activities:
Net increase in deposits 2,378 9,353 5,040 897
Repayments of FHLB advances, net (13) (5,793) (108) (48)
-------- -------- -------- --------
Net cash provided by
financing activities 2,365 3,560 4,932 849
-------- -------- -------- --------
Increase (decrease) in cash and cash equivalents 3,273 84 111 (5,491)
Cash and cash equivalents at beginning of period 4,428 7,565 7,590 13,140
-------- -------- -------- --------
Cash and cash equivalents at end of period $ 7,701 $ 7,649 $ 7,701 $ 7,649
======== ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
- 6 -
<PAGE>
CITRUS FINANCIAL SERVICES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
<TABLE>
<CAPTION>
Net
Common Stock Unrealized
------------------------------- Holding
Par Additional Gains Total
Value Paid-in Retained (Losses)on Stockholders'
Shares (Rounded) Amount Capital Earnings Securities Equity
--------- --------- -------- ----------- ---------- ----------- ---------
(Dollars in Thousands, Except Par Value Per Share)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1999 1,307,167 $3.15 $ 4,125 $ 4,271 $ 47 $ (76) $ 8,367
Stock options/warrants exercised 116,235 -- 366 367 -- -- 733
Comprehensive income:
Net income -- -- -- -- 229 --
Net change in net unrealized
holding gains on securities
less reclassification for
realized gains -- -- -- -- -- 19
Total comprehensive income -- -- -- -- -- -- 248
--------- --------- ---------
Balance, September 30, 2000 1,423,402 $3.15 $ 4,491 $ 4,638 $ 276 $ (57) $ 9,348
========= ===== ======== ========= ========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
- 7 -
<PAGE>
CITRUS FINANCIAL SERVICES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 2000
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements include the accounts of Citrus Financial
Services, Inc., and its wholly owned subsidiary, Citrus Bank, N.A. The
consolidated financial statements for the three and nine months ended September
30, 2000 and 1999, have not been audited and do not include information or
footnotes necessary for a complete presentation of financial condition, results
of operations and cash flows in conformity with generally accepted accounting
principles. However, in the opinion of management, the accompanying consolidated
financial statements contain all adjustments, which are of a normal recurring
nature, necessary for a fair presentation. The results of operations for the
interim periods are not necessarily indicative of the results which may be
expected for an entire year. The accounting policies followed by Citrus are set
forth in Note 1 to Citrus' consolidated financial statements contained in the
1999 Annual Report to Stockholders and are incorporated herein by reference.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Material estimates that are particularly susceptible to significant change
relate to the determination of the allowance for credit losses on loans and the
valuation of real estate acquired in connection with foreclosures or in
satisfaction of loans ("Other Real Estate Owned"). In connection with the
determination of the allowances for credit losses on loans and foreclosed real
estate, management obtains independent appraisals for significant properties.
While management uses available information to recognize losses on loans and
foreclosed real estate, future additions to the allowances may be necessary
based on changes in local economic conditions. In addition, regulatory agencies,
as an integral part of their examination process, periodically review Citrus
Bank's allowances for losses on loans and foreclosed real estate. Such agencies
may require Citrus Bank to recognize additions to the allowances based on their
judgments about information available to them at the time of their examination.
Management does not anticipate that the allowances for credit losses on loans
and foreclosed real estate will change materially in the near term.
Fair Value of Financial Instruments
Financial instruments of Citrus consist of cash, due from banks, federal funds
sold, investment securities, loans receivable, accrued interest receivable,
deposits, federal funds purchased, other borrowings, accrued interest payable,
and off-balance sheet commitments such as commitments to extend credit and
standby letters of credit. On an interim basis, management considers the cost of
providing estimated fair values by each class of financial instrument to exceed
the benefits derived. In management's opinion, the carrying amount of financial
instruments approximates fair value.
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<PAGE>
CITRUS FINANCIAL SERVICES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 2000
NOTE 2 - COMPUTATION OF PER SHARE EARNINGS
Basic earnings per share amounts are computed by dividing net earnings by the
weighted average number of common shares outstanding during the period. Diluted
earnings per share are computed by dividing net earnings by the weighted average
number of shares and all dilutive potential shares outstanding during the
period. The following information was used in the computation of earnings per
share on both a basic and diluted basis for the three and nine months ended
September 30, 2000 and 1999 (in thousands except per share data):
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2000 1999 2000 1999
-------- --------- -------- --------
<S> <C> <C> <C> <C>
Basic EPS computation:
Numerator - Net income $ 113 $ (29) $ 229 $ 216
Denominator - Weighted average shares outstanding 1,423 952 1,388 952
------- ------- ------- -------
Basic EPS $ 0.09 $ (0.03) $ 0.17 $ 0.23
======= ======= ======= =======
Diluted EPS computation:
Numerator - Net income $ 113 $ (29) $ 229 $ 216
------- ------- ------- -------
Denominator - Weighted average shares outstanding 1,423 952 1,388 952
Stock options and warrants 25 221 24 221
------- ------- ------- -------
1,448 1,173 1,412 1,173
------- ------- ------- -------
Diluted EPS $ 0.08 $ (0.02) $ 0.16 $ 0.18
======= ======= ======= =======
</TABLE>
NOTE 3 - LOANS HELD FOR INVESTMENT
Loans held for investment consisted of (dollars in thousands):
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
-------- --------
<S> <C> <C>
Real estate $ 53,372 $ 49,486
Commercial and agriculture 13,890 13,881
Installment and other loans 4,248 4,385
-------- --------
Total loans, gross 71,510 67,752
Unearned income and deferred fees (6) (2)
Allowance for credit losses (584) (401)
-------- --------
Net loans $ 70,920 $ 67,349
======== ========
</TABLE>
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<PAGE>
CITRUS FINANCIAL SERVICES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 2000
NOTE 4 - LOANS HELD FOR SALE
Loans held for sale include residential real estate loans held for sale to FNMA
and outstanding loans originated by third- party brokers, assigned to Citrus
Bank, and held by Citrus Bank pending transfer to investors with take-out
commitments. At September 30, 2000, and December 31, 1999, such loans totaled
$859,000 and $1,963,000, respectively. These loans are carried at cost, which is
lower than market.
Citrus Bank does not originate any significant amounts of loans specifically for
resale. Loans originated by Citrus Bank and sold principally to FNMA generally
represent less than 3% of all loans originated. The only servicing income
received by Citrus Bank comes from the servicing of loans sold principally to
FNMA, which is not considered to be material.
NOTE 5 - ALLOWANCE FOR CREDIT LOSSES
Citrus' Board of Directors monitors the loan portfolio quarterly in order to
enable it to evaluate the adequacy of the allowance for credit losses.
Management has implemented a risk system that 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.
Citrus maintains the allowance for credit losses at a level sufficient to absorb
all estimated losses inherent in the loan portfolio. Activity in the allowance
for credit losses follows (dollars in thousands):
<TABLE>
<CAPTION>
Nine Months Twelve Months
Ended September 30, Ended December 31,
2000 1999
-------- ---------
<S> <C> <C>
Balance, beginning of period $401 $461
---- ----
Recoveries
Real estate loans -- --
Installment loans 83 --
Credit card and related plans 2 1
Commercial and all other loans -- 32
---- ----
85 33
---- ----
Charge-offs
Real estate loans -- --
Installment loans 8 153
Credit card and related plans 8 28
Commercial and all other loans 15 587
---- ----
31 768
---- ----
Provision charged to operations 129 675
---- ----
Balance, end of period $584 $401
==== ====
</TABLE>
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<PAGE>
CITRUS FINANCIAL SERVICES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 2000
NOTE 6 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
Citrus 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 include 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 Citrus has in
particular classes of financial instruments.
Financial instruments at September 30, 2000, consisted of commitments to extend
credit approximating $7.6 million and letters of credit of $601,000.
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.
NOTE 7 - STOCKHOLDERS' EQUITY
Authorized Capital Stock:
Citrus has authorized 11,000,000 shares of authorized capital stock, consisting
of 10,000,000 shares of common stock, par value $3.15 (as adjusted for stock
splits) per share, and 1,000,000 shares of preferred stock, par value of $5.00
per share. As of September 30, 2000, 1,423,402 shares of common stock were
issued and outstanding and 53,824 shares were subject to issuance pursuant to
vested options and warrants. No shares of preferred stock were issued.
Stock Warrants:
In connection with Citrus' 1990 offering, organizers were granted warrants to
purchase 469,772 shares of common stock at $6.31 per share, (as adjusted for
stock splits). The warrants were exercisable for a ten-year period commencing
April 13, 1990. During the first and second quarters of 2000, warrants for
36,997 and 60,439 shares, respectively, were exercised. Warrants totaling 17,465
expired unexercised during the quarter ended June 30, 2000, which represented
less than 4% of the original warrants.
Executive Officer Stock Options:
Citrus has also entered into stock option agreements with its executive officers
providing for the granting of 112,613 non-statutory stock options. Such options
are exercisable between $6.31 (as adjusted for stock splits) and $10.75 per
share. Options totaling 18,789 and 10 were exercised in the second and third
quarters of 2000, respectively. Pursuant to a termination of employment, 24,990
options, of which 9,990 were vested, expired during the third quarter of 2000,
leaving 68,824 options outstanding at September 30, 2000 (of which 53,824
options were vested).
NOTE 8 - LOAN PRODUCTION OFFICE
In July 2000, the Citrus Board of Directors voted to close down the Miami loan
production office as of July 31, 2000. As a result of this closing and other
management changes, Citrus terminated, through settlement agreements, two
employment agreements reviously entered into in 1998 and 1999. One of the
settlement agreements calls for salary continuation of $10,417 per month and
other benefits for insurance and auto usage, all of which terminate upon the
earlier of August 16, 2001, or upon employment of the individual by another
employer. The other employee has been reassigned to management duties at Citrus
Bank and will receive a lump-sum payment in the amount of $60,000 on or before
November 1, 2000. All payments are to be expensed as compensation when paid.
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
Citrus Financial Services, Inc., is a registered bank holding company under the
federal Bank Holding Company Act of 1956, as amended, and owns 100% of the
issued and outstanding common stock of Citrus Bank, N.A., Vero Beach, Florida.
Citrus was incorporated under the laws of the State of Florida on May 19, 1989,
to enhance Citrus Bank's ability to serve its future customers' requirements for
financial services. The holding company provides flexibility for expansion of
Citrus' banking business through acquisition of other financial institutions and
provision of additional banking-related services which the traditional
commercial bank may not provide under present laws.
Citrus Bank commenced business operations on April 13, 1990, in a permanent
facility located at the corner of Indian River Boulevard and 17th Street, Vero
Beach, Florida. The facility is a three-story office condominium, the first
floor of which is owned by Citrus Bank. Citrus Bank operates a branch office at
1020 U.S. 1, Sebastian, Florida, which commenced operations in February 1993 and
another branch office located at 1020 Buttonwood Street, Barefoot Bay, Florida,
which commenced operations in September 1996. During 1999, Citrus opened loan
production offices in Miami and Sebring, Florida. In July 2000, Citrus closed
the loan production office in Miami, Florida.
Forward-looking Statements
When used in this Form 10-QSB, the words or phrases "will likely result," "are
expected to," "will continue," "is anticipated," "estimate," "project," or
similar expressions are intended to identify "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. Such
statements are subject to certain risks and uncertainties including changes in
economic conditions in Citrus' market area, changes in policies by regulatory
agencies, fluctuations in interest rates, demand for loans in Citrus' market
area and competition, that could cause actual results to differ materially from
historical earnings and those presently anticipated or projected. Citrus wishes
to caution readers not to place undue reliance on any such forward-looking
statements, which speak only as to the date made. Citrus wishes to advise
readers that the factors listed above could affect Citrus' financial performance
and could cause Citrus' actual results for future periods to differ materially
from any opinions or statements expressed with respect to future periods in any
current statements. Citrus does not undertake, and specifically disclaims any
obligation, to publicly release the result of any revisions which may be made to
any forward-looking statements to reflect events or circumstances after the date
of such statements or to reflect the occurrence of anticipated or unanticipated
events.
Contingencies and Uncertainties - Year 2000 Compliance Matters
During the periods leading up to January 1, 2000, Citrus addressed the potential
problems associated with the possibility that the computers that control or
operate Citrus' information technology system and infrastructure may not have
been programmed to read four-digit date codes and, upon arrival of the year
2000, may have recognized the two-digit code "00" as the year 1900, causing
systems to fail to function or generate erroneous data.
Citrus expended approximately $55,000 since the inception of its Year 2000
compliance program. Citrus experienced no significant problems related to its
information technology systems upon arrival of the Year 2000, nor was there any
reported interruption in service to its customers of any kind. No significant
Year 2000 expenses have been incurred since December 31, 1999.
Citrus could incur losses if Year 2000 issues adversely affect its depositors or
borrowers. Such problems could include delayed loan payments due to Year 2000
problems affecting any significant borrowers or impairing the payroll systems of
large employers in Citrus' primary market areas. Because Citrus' loan portfolio
is highly diversified with regard to individual borrowers and types of
businesses, Citrus does not expect, and to date has not realized, any
significant or prolonged difficulties that will affect net earnings or cash
flow.
- 12 -
<PAGE>
Future Accounting Requirements
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"), which addresses the accounting for
derivative instruments and provides for matching the timing of gain or loss
recognition on the hedging instrument. Guidance on identifying derivative
instruments is also provided as well as additional disclosures. SFAS 133 has
been deferred to become effective for all fiscal quarters of all fiscal years
beginning after June 15, 2000. Earlier application is permitted with certain
exceptions. Management does not anticipate that adoption of SFAS 133 will have a
material impact on the financial condition or results of operations of Citrus.
Impact of Inflation
The consolidated financial statements and related data presented herein have
been prepared in accordance with generally accepted accounting principles
("GAAP"), which require the measurements of financial position and operating
results in terms of historical dollars, without considering changes in the
relative purchasing power of money over time due to inflation. Unlike most
industrial companies, substantially all of the assets and liabilities of Citrus
are monetary in nature. As a result, interest rates have a more significant
impact on Citrus' performance than the effects of general levels of inflation.
Interest rates do not necessarily move in the same direction or in the same
magnitude as the prices of goods and services, since such prices are affected by
inflation to a larger extent than interest rates. As discussed herein,
management seeks to manage the relationships between interest sensitive assets
and liabilities in order to protect against wide interest rate fluctuations,
including those resulting from inflation.
Results of Operations
Net Income
Citrus' net income improved $142,000 and $13,000, respectively, for the three
and nine months ended September 30, 2000, over the comparable periods in 1999.
Significant factors affecting the profitability of Citrus for the three and nine
months ended September 30, 2000, versus 1999 were:
o growth in earning assets;
o declining margins as the cost of deposits have risen more sharply than the
yield on earning assets;
o decreased provision for credit losses of $140,000 and $35,000, respectively;
o increased operating costs associated with the loan production offices in
Miami (for the first six months of 2000) and Sebring (for 2000), Florida; and
o declines experienced in the origination of loans under Citrus Bank's table
funding program.
The increase in average earning assets of $9.4 million, or 12.6%, for the first
nine months of 2000 versus the same period in 1999 along with an increase of
approximately 20 basis points in the average yield on earning assets produced a
net increase in total interest income of $692,000, or 14.5%, in the first nine
months of 2000 as compared to the first nine months of 1999. For the three and
nine months ended September 30, 2000, as compared with the comparable period in
1999, increases in total interest income of $270,000 and $692,000, respectively,
were partially offset by increases in interest expense of $221,000 and $505,000,
respectively. Noninterest expense in the first nine months of 2000 as compared
to the first nine months of 1999 rose at a pace of 7.4% to $2,683,000 from
$2,499,000. The loan production offices started in 1999 contributed to
substantially all of this increase. The return on average assets for the nine
months ended September 30, 2000, was 0.34% annualized as compared with the
return of average assets of 0.35% for the same period in 1999.
Net Interest Income
The largest component of net income for Citrus is net interest income, which is
the difference between the income earned on assets and interest paid on deposits
and borrowings used to support such assets. Net interest income is determined by
the rates earned on Citrus' interest-earning assets and the rates paid on its
interest-bearing liabilities, the relative amounts of interest-earning assets
and interest-bearing liabilities, and the degree of mismatch and the maturity
and repricing characteristics of its interest-earning assets and
interest-bearing liabilities.
- 13 -
<PAGE>
Net interest income (before provision for credit losses) was $2,848,000 for the
nine months ended September 30, 2000, as compared to $2,661,000 for the nine
months ended September 30, 1999. The substantial average growth of Citrus' total
loan portfolio between these periods of almost $8.9 million, or 14.1%, was more
than offset by an increase in the average cost of interest-bearing liabilities
of 60 basis points, which contributed to the decline in the net interest margin
and interest-rate spread. Net interest margin (which is net interest income
divided by average interest-earning assets) declined to 4.5% for the nine months
ended September 30, 2000, as compared to 4.8% for the nine months ended
September 30, 1999. Net interest-rate spread, the difference between the yield
on earning assets and the rate paid on interest-bearing liabilities, was 3.6%
for the nine months ended September 30, 2000, as compared to 4.0% for the nine
months ended September 30, 1999.
The decline in the key measurements of net interest income results from the
shift in the mix of deposit liabilities with higher costing certificates of
deposit comprising a greater percentage of total deposits. At September 30,
2000, certificates of deposit totaled $55.3 million, or 65.8%, of total
deposits, as compared with $49.0 million, or 61.9%, at December 31, 1999. For
the nine months ended September 30, 2000 and 1999, the ratios were 64.4% and
60.8%, respectively. In addition, rates paid on certificates of deposit have
increased by approximately 60 basis points in the nine months ended September
30, 2000, as compared with the same period in 1999.
Average Balances, Income and Expenses, and Rates. The following table depicts,
for the periods indicated, certain information related to Citrus' average
balance sheet and its average yields on assets and average costs of liabilities.
Such yields are derived by dividing income or expense by the average balance of
the corresponding assets or liabilities. Average balances have been derived from
daily averages.
[Page intentionally left blank.]
- 14 -
<PAGE>
Average Balances, Income and Expenses, and Rates (dollars in thousands)
<TABLE>
<CAPTION>
For the Nine Months Ended September 30,
2000 1999
----------------------------------- --------------------------------
Interest Average Interest Average
Average and Yield/ Average and Yield/
Balance Dividends Rate Balance Dividends Rate
------- --------- ---- ------- --------- ----
<S> <C> <C> <C> <C> <C> <C>
Earning assets:
Interest-earning deposits $ 69 $ 4 6.3% $ 24 $ 1 4.9%
Taxable securities 7,953 362 6.1% 6,294 255 5.4%
Federal funds sold 4,353 196 6.0% 5,518 198 4.8%
Loans held for sale 911 62 9.1% 5,555 460 11.0%
Loans held for investment, net 70,829 4,848 9.1% 57,299 3,866 9.0%
------ ----- ------ -----
Total earning assets 84,115 5,472 8.7% 74,690 4,780 8.5%
----- -----
Non-earning assets 6,834 6,815
----- -----
Total assets $90,949 $81,505
======= =======
Interest-bearing liabilities:
NOW and money market deposits $ 7,967 138 2.3% $ 7,311 112 2.0%
Savings 8,458 205 3.2% 9,522 232 3.2%
Time deposits 52,446 2,274 5.8% 44,524 1,727 5.2%
Other borrowings 162 7 5.8% 1,189 48 5.4%
------ ----- ------ -----
Total interest-bearing liabilities 69,033 2,624 5.1% 62,546 2,119 4.5%
----- -----
Noninterest-bearing liabilities 12,952 12,355
Stockholders' equity 8,964 6,604
------ ------
Total liabilities and
stockholders' equity $90,949 $81,505
======= =======
Net interest income before provision
for credit losses $ 2,848 $ 2,661
======= =======
Interest-rate spread 3.6% 4.0%
==== ====
Net interest margin 4.5% 4.8%
==== ====
Ratio of average earning assets to
average interest-bearing liabilities 121.8% 119.4%
====== ======
</TABLE>
- 15 -
<PAGE>
Provision and Allowance for Credit Losses
Citrus has developed policies and procedures for evaluating the overall quality
of its credit portfolio and the timely identification of potential problem
loans. Management's judgment as to the adequacy of the allowance is based upon a
number of assumptions about future events which it believes to be reasonable,
but which may or may not be valid. Thus, there can be no assurance that
charge-offs in future periods will not exceed the allowance for credit losses or
that additional increases in the credit loss allowance will not be required.
Asset Classification. Commercial banks are required to review and, when
appropriate, classify their assets on a regular basis. The OCC has the authority
to identify problem assets and, if appropriate, require them to be classified.
There are three classifications for problem assets: substandard, doubtful and
loss. Substandard assets have one or more defined weaknesses and are
characterized by the distinct possibility that the insured institution will
sustain some loss if the deficiencies are not corrected. Doubtful assets have
the weaknesses of substandard assets with the additional characteristic that the
weaknesses make collection or liquidation in full on the basis of currently
existing facts, condition, and values questionable, and there is a high
possibility of loss. An asset classified as loss is considered uncollectible and
of such little value that continuance as an asset of the institution is not
warranted. If an asset or portion thereof is classified as loss, the insured
institution establishes a specific reserve for the full amount of the portion of
the asset classified as loss. All or a portion of general loan loss allowances
established to cover possible losses related to assets classified as substandard
or doubtful may be included in determining an institution's regulatory capital,
while specific valuation allowances for loan losses generally do not qualify as
regulatory capital. Assets that do not warrant classification in the
aforementioned categories, but possess weaknesses, are classified as special
mention and are monitored by Citrus.
At September 30, 2000, Citrus had 17 loans classified as substandard, doubtful,
or loss totaling $1.5 million. At December 31, 1999, Citrus had loans totaling
$656,000 in the same categories. Substantially all of the increase is
attributable to three borrowers and their affiliated companies. Management
believes that one of the underlying loan relationships is well-secured. The
other two loan relationships are believed to be backed by financially sound
guarantors. At both September 30, 2000, and December 31, 1999, Citrus had no
material loss assets to be charged-off. Loans classified by management as
impaired totaled $720,000 and $368,000 at September 30, 2000, and December 31,
1999, respectively.
Nonperforming loans include loans that have been placed on nonaccrual status by
Citrus and loans past due for ninety days or more. Some of these nonperforming
loans are well-collateralized, posing no significant risk of loss, and have not
been classified as impaired, doubtful, or loss. A summary of nonperforming loans
and assets follows:
[Page intentionally left blank.]
- 16 -
<PAGE>
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
-------- --------
(dollars in thousands)
<S> <C> <C>
Nonaccrual loans held for investment:
Real estate loans $ 60 $ 88
Installment loans 16 201
Credit cards and related plans -- --
Commercial and all other loan 1,040 167
------ ------
Total nonaccrual loans held for investment 1,116 456
------ ------
Accruing loans held for investment over 90 days delinquent:
Real estate loans -- --
Installment loans -- --
Credit cards and related plans -- 2
Commercial and all other loans 247 --
------ ------
Total accrual loans held for investment over 90 days delinquent 247 2
------ ------
Troubled debt restructurings not included above -- --
------ ------
Total nonperforming loans held for investment 1,363 458
------ ------
Other real estate owned:
Real estate acquired by foreclosure or deed in lieu
of foreclosure 88 --
------ ------
Total nonperforming loans held for investment and
other real estate owned $1,451 $ 458
====== ======
Total nonperforming loans held for investment
as a percentage of total loans held for investment 1.91% 0.68%
====== ======
Total nonperforming loans held for investment
as a percentage of total assets 1.45% 0.52%
====== ======
Total nonperforming loans held for investment
and other real estate owned as a percentage of total assets 1.54% 0.52%
====== ======
Troubled debt restructurings and modified loans held for investment:
Current $1,671 $1,585
Past due over 30 days and less than 90 days -- 60
Past due over 90 days and included above -- 88
------ ------
$1,671 $1,733
====== ======
</TABLE>
Nonperforming loans at September 30, 2000, decreased from the quarter ended June
30, 2000, total of $1,414,000, but increased from the December 31, 1999, total
of $458,000. Other real estate owned at September 30, 2000, totaled $88,000, as
compared with no other real estate owned at December 31, 1999. Troubled debt
restructuring at September 30, 2000, declined $62,000 from the level at December
31, 1999.
Allowance for Credit Losses. The allowance for credit losses is established
through a provision for loan losses charged against income. Loans are charged
against the provision when management believes that the collectibility of the
principal is unlikely. The provision is an estimated amount that management
believes will be adequate to absorb losses inherent in the loan portfolio based
on evaluations of its collectibility. The evaluations take into consideration
such factors as changes in the nature and volume of the portfolio, overall
portfolio quality, specific problem loans and commitments, and current
anticipated economic conditions that may affect the borrower's ability to pay.
While management uses the best information available to recognize losses on
loans, future additions to the provision may be necessary based on changes in
economic conditions.
- 17 -
<PAGE>
Activity in the allowance for credit losses follows (dollars in thousands):
<TABLE>
<CAPTION>
Nine Months Twelve Months
Ended Ended
September 30, December 31,
2000 1999
-------- --------
<S> <C> <C>
Allowance at beginning of period $ 401 $ 461
----- -----
Recoveries:
Real estate loans -- --
Installment loans 83 --
Credit cards and related plans 2 1
Commercial and all other loans -- 32
----- -----
Total recoveries 85 33
----- -----
Charge-offs:
Real estate loans -- --
Installment loans 8 153
Credit cards and related plans 8 28
Commercial and all other loans 15 587
----- -----
Total charge-offs 31 768
----- -----
Provision for credit losses charged to operations 129 675
----- -----
Allowance at end of period $ 584 $ 401
===== =====
Ratio of net charge-offs during the period to average
loans outstanding during the period (including loans
held for sale) (0.11)% 1.15%
===== =====
</TABLE>
At September 30, 2000, the allowance for credit losses amounted to $584,000, or
0.82% of outstanding loans held for investment. At December 31, 1999, the
allowance for credit losses amounted to $401,000, or 0.59% of outstanding loans
held for investment. Citrus' provision for credit losses was $129,000 for the
nine months ended September 30, 2000. For the same nine months period in 1999,
the provision for credit losses was $164,000. The provision was made based on
management's assessment of general credit loss risk and asset quality. In
late-1999, Citrus recognized charge- offs totaling $81,000, that were mandated
by the OCC, but were recorded in full during the third quarter of 2000.
Noninterest Income and Expense
Noninterest Income. Citrus' primary source of noninterest income is service
charges on deposit accounts. In addition, Citrus originates mortgage loans,
which are closed in the name of a third party, for which Citrus receives a fee.
Other sources of noninterest income include bankcard fees, commissions on check
sales, safe deposit box rent, wire transfer, and official check fees.
Total noninterest income decreased by $19,000, or 5.4%, during the nine months
ended September 30, 2000, as compared to the same period in 1999. Fees and
service charges were $289,000 for the nine months ended September 30, 2000, as
compared to $324,000 for the comparable periods in 1999, a decrease of 10.8%. A
decline in NSF and overdraft fees of approximately $44,000 contributed to this
decline. Included in other income for 2000 was $20,000 in gains from sales of
securities.
- 18 -
<PAGE>
Noninterest Expense. Total noninterest expense increased by $184,000, or 7.4%,
during the nine months ended September 30, 2000, as compared to the same period
in 1999. This increase was consistent with Citrus' loan growth and reflected
normal salary and benefit increases, including the new loan production offices
in Miami (for six months of 2000) and Sebring, Florida. As a result of these
factors, Citrus experienced higher operating costs as follows:
o salary and benefit expenses increased $58,000, or 4.4%;
o occupancy-related expenses increased $68,000, or 14.6%; and,
o other operating expenses increased $58,000, or 8.0%.
Income Tax Expense
The income tax provision was $137,000 for the nine months ended September 30,
2000, or an effective rate of 37.4%. This compares with an effective rate of
37.8% for the same period in 1999.
Comparison of Results of Operations for the Three Months
Ended September 30, 2000 and 1999
Net Interest Income
Net interest income (before provision for credit losses) was $937,000 for the
three months ended September 30, 2000, as compared to $888,000 for the three
months ended September 30, 1999. The increases in average earning assets of
$11.0 million, or 14.5%, were attributable to the growth of Citrus' loan
portfolio of $10.2 million, or 16.5%, between these periods; however the
declining net interest-rate spread and net interest margin contributed to only
moderate increases of 5.5% in net interest income in 2000 versus 1999. Net
interest spread, the difference between the yield on earning assets and the rate
paid on interest-bearing liabilities, was 3.5% for the three months ended
September 30, 2000, as compared to 4.0% for the three months ended September 30,
1999. Net interest margin, net interest income divided by average
interest-earning assets, declined to 4.4% in the third quarter of 2000 from the
4.8% reported for the three months ended September 30, 1999. Net interest-rate
spread and net interest margins were impacted by higher costs of deposits and
the reversal of interest income on nonaccrual loans of approximately $30,000.
Noninterest Income and Expense
Noninterest Income. Total noninterest income increased $4,000 during the three
months ended September 30, 2000, as compared to the same period in 1999, with
gains on sales of securities totaling $20,000 offset by decreases in NSF and
overdraft fees. Fees and service charges were $88,000 for the three months ended
September 30, 2000, as compared to $104,000 for the comparable period in 1999, a
decrease of 15.4%.
Noninterest Expense. Total noninterest expense declined $35,000 during the three
months ended September 30, 2000, as compared to the same period in 1999.
Reductions in personnel costs of $39,000, or 8.1%, were attributable to
management changes and the closing of the Miami, Florida, loan production office
during the third quarter of 2000.
Income Tax Expense
The income tax provision was $69,000 for the three months ended September 30,
2000, or an effective rate of 37.9%. This compares with an effective rate of
37.0% for the same period in 1999.
- 19 -
<PAGE>
Financial Condition
Citrus' total assets at September 30, 2000, were $94.2 million, an increase of
$6.1 million, or 7.0%, from $88.1 million at December 31, 1999. Increases in
total securities of $3.6 million, total loans of $2.5 million, and federal funds
sold of $1.7 million were offset by declines in cash and due from banks of $1.6
million since December 31, 1999. Deposits increased approximately $5.0 million,
with higher costing certificates of deposit contributing $6.3 million in total
increases and offsets in other deposits of $1.3 million.
Total stockholders' equity as of September 30, 2000, was $9.3 million, an
increase of $1.0 million, or approximately 11.7%, compared with stockholders'
equity of $8.4 million as of December 31, 1999. This increase was attributable
to net income for the nine months of 2000 of $229,000 and $733,000 in additional
capital from the exercise of the options and warrants, and an increase of
$19,000 in the market value (net of deferred income taxes) of investment
securities available-for-sale.
The following table shows selected ratios for the periods ended or at the dates
indicated (annualized for the nine months ended September 30, 2000):
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, December 31,
2000 1999
------------------- --------------
<S> <C> <C>
Return on average assets 0.34% -0.33%
Return on average equity 3.41% -4.09%
Interest-rate spread during the period 3.60% 4.10%
Net interest margin 4.50% 4.70%
Allowance for credit losses to period end loans held for investment 0.82% 0.59%
Net charge-offs to average loans held for investment -0.11% 1.26%
Nonperforming assets to period end loans held for investment
and foreclosed property 2.03% 0.68%
Nonperforming assets to period end total assets 1.54% 0.52%
</TABLE>
Liquidity and Capital Resources
Liquidity Management. Liquidity management involves monitoring Citrus' sources
and uses of funds in order to meet its day-to-day cash flow requirements while
maximizing profits. Liquidity represents the ability of a company to convert
assets into cash or cash equivalents without significant loss and to raise
additional funds by increasing liabilities. Liquidity management is made more
complicated because different balance sheet components are subject to varying
degrees of management control. For example, the timing of maturities of the
investment portfolio is very predictable and subject to a high degree of control
at the time investment decisions are made. However, net deposit inflows and
outflows are far less predictable and are not subject to the same degree of
control. Asset liquidity is provided by cash and assets which are readily
marketable, which can be pledged, or which will mature in the near future.
Liability liquidity is provided by access to core funding sources, principally
the ability to generate customer deposits in Citrus' market area.
In addition, liability liquidity is provided through the ability to borrow
against approved lines of credit (federal funds purchased) from correspondent
banks and to borrow on a secured basis through securities sold under agreements
to repurchase.
Short-Term Investments. Short-term investments, which consist of federal funds
sold and securities purchased under agreements to resell and interest-bearing
deposits, averaged $4.4 million in the first nine months of 2000 as compared to
$5.5 million in the same period of 1999. At September 30, 2000, and December 31,
1999, short-term investments totaled $5.2 million and $3.6 million,
respectively. These funds are a primary source of Citrus' liquidity and are
generally invested in an earning capacity on an overnight basis.
Management regularly reviews the liquidity position of Citrus and has
implemented internal policies which establish guidelines for sources of
asset-based liquidity and limit the total amount of purchased funds used to
support the balance sheet and funding from non-core sources.
- 20 -
<PAGE>
Deposits and Other Sources of Funds. In addition to deposits, the sources of
funds available for lending and other business purposes include loan repayments,
loan sales, and securities sold under agreements to repurchase. Loan repayments
are a relatively stable source of funds, while deposit inflows and outflows are
influenced significantly by general interest rates and money market conditions.
Borrowings may be used on a short-term basis to compensate for reductions in
other sources, such as deposits at less than projected levels and are also used
to fund the origination of mortgage loans designated to be sold in the secondary
markets.
Core Deposits. Core deposits, which exclude certificates of deposit of $100,000
or more, provide a relatively stable funding source for Citrus' loan portfolio
and other earning assets. Citrus' core deposits were $73.4 million at September
30, 2000, and $69.3 million at December 31, 1999. Management anticipates that a
stable base of deposits will be Citrus' primary source of funding to meet both
its short-term and long-term liquidity needs in the future.
Customers with large certificates of deposit tend to be extremely sensitive to
interest rate levels, making these deposits less reliable sources of funding for
liquidity planning purposes than core deposits. Some financial institutions fund
their balance sheets in part through large certificates of deposit obtained
through brokers. These brokered deposits are generally expensive and are
unreliable as long-term funding sources. Accordingly, Citrus does not generally
accept brokered deposits.
Borrowings. Citrus Bank has a line of credit master agreement with the FHLB of
Atlanta that enables Citrus Bank to borrow up to $10,000,000. These advances are
collateralized by Citrus Bank's FHLB stock and a blanket floating lien
consisting of wholly-owned residential (1-4 units) first mortgage loans. At
September 30, 2000, there were no advances outstanding under this line. In
addition to the line of credit arrangement, Citrus Bank had fixed FHLB advances
outstanding as follows (dollars in thousands):
<TABLE>
<CAPTION>
At September 30, At December 31,
Maturity Date Interest Rate 2000 1999
------------- ------------- ---- ----
<S> <C> <C> <C>
2003 5.76% $ 129 $ 167
===== =====
</TABLE>
During the first nine months of 2000, Citrus repaid other borrowings of $70,000
from Central Illinois Bank under its revolving line of credit agreement in the
amount of $500,000.
Capital. The Federal Reserve Board and bank regulatory agencies require bank
holding companies and financial institutions to maintain capital at adequate
levels based on a percentage of assets and off-balance sheet exposures, adjusted
for risk weights ranging from 0% to 100% (the Federal Reserve grants an
exemption from these requirements for bank holding companies with less than $150
million in consolidated assets, and therefore Citrus' capital is currently
measured only at Citrus Bank level). Under the risk-based standard, capital is
classified into two tiers. Tier 1 capital consists of common stockholders'
equity, excluding the unrealized gain (loss) on available-for-sale securities,
minus certain intangible assets. Tier 2 capital consists of the general
allowance for credit losses subject to certain limitations. An institution's
qualifying capital base for purposes of its risk-based capital ratio consists of
the sum of its Tier 1 and Tier 2 capital. The regulatory minimum requirements
are 4% for Tier 1 and 8% for total risk-based capital.
Bank holding companies and banks are also required to maintain capital at a
minimum level based on total assets, which is known as the leverage ratio. The
minimum requirement for the leverage ratio is 3%, but all but the highest rated
institutions are required to maintain ratios 100 to 200 basis points above the
minimum. Citrus and Citrus Bank exceeded their minimum regulatory capital ratios
as of September 30, 2000, as reflected in the following table.
The following table sets forth Citrus Bank's regulatory capital position
(dollars in thousands):
<TABLE>
<CAPTION>
Actual Minimum(1) Well-Capitalized(2)
Amount % Amount % Amount %
------ --------- ------ ------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Total Capital (to Risk-Weighted Assets) $ 8,883 11.76% $ 6,042 8.00% $ 7,552 10.00%
Tier I Capital (to Risk-Weighted Assets) $ 8,299 10.99% $ 3,021 4.00% $ 4,531 6.00%
Tier I Capital (to Average Assets) $ 8,299 9.01% $ 3,685 4.00% $ 4,606 5.00%
<FN>
(1) The minimum required for adequately capitalized purposes.
(2) To be "well-capitalized" under the FDIC's Prompt Corrective Action regulations.
</FN>
</TABLE>
- 21 -
<PAGE>
CITRUS FINANCIAL SERVICES, INC. AND SUBSIDIARY
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.
a) Exhibits.
--------
Exhibit 27 - Financial Data Schedule.
b) Reports on Form 8-K.
-------------------
None
- 22 -
<PAGE>
CITRUS FINANCIAL SERVICES, INC. AND SUBSIDIARY
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registered has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Citrus Financial Services, Inc.
Date: November 10, 2000 /s/ Randy J. Riley
----------------- ------------------
Randy J. Riley
Interim President/Chief Executive Officer
Date: November 10, 2000 /s/ Marion H. Tupek
----------------- -------------------
Marion H. Tupek
Principal Accounting Officer/Vice President
- 23 -
<PAGE>
