U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB /A
AMENDMENT NO. 1
NO. 1 TO QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 0-20148
CITIZENS FINANCIAL CORPORATION
(Exact name of small business issuer as specified in its charter)
Kentucky 61-1187135
(State of Incorporation) (I.R.S. Employer Identification No.)
12910 Shelbyville Road, Louisville, Kentucky, 40243
(Address of principal executive offices)
(502) 244-2420
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Sections 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to filing requirements for the past 90 days. Yes X No--
APPLICABLE ONLY TO CORPORATE ISSURERS
State the number of shares outstanding of each issuer's classes of common
equity, as of the latest practicable date: Class A Stock - 1,802,615 as of
November 12, 1998.
Transitional Small Business Disclosure Format (Check one): Yes -- No X
Part I; Item 2
Citizens Financial Corporation and Subsidiaries
Revised Managemen's Discussion and Analysis or Plan of Operations
(Unaudited)
The undersigned registrant hereby amends its Quarterly Report on Form 10QSB
for the period ended September 30, 1998 to include additional disclosure
regarding status of the year 2000 issue.
Year 2000 Issue:
Some of the Company's older computer programs were written using two digits
rather than four to define the applicable year. As a result, those computer
programs could fail to properly distinguish between dates in the 1900's and
2000's. This could cause system failures or miscalculations, creating disruption
of operations, including, among other things, a temporary inability to process
insurance transactions, conduct banking activities, or engage in other normal
business activities. Also, some systems and equipment that are not typically
thought of as "computer-related" ("non-IT") contain imbedded hardware or
software that may not perform properly after 1999.
The Company has completed an internal assessment of the year 2000 issue and
implemented a program to install updated releases or modify its software so that
its computer systems will function properly with respect to dates in the year
2000 and thereafter. The Company's two primary insurance administrative systems
(Individual and Group) are vendor supplied programs which have been or, are
being modified as part of the ongoing vendor maintenance process. Modification
of the Individual insurance system is complete. The Group insurance system
modifications are currently being tested by the vendor and are expected to be
installed and tested by the Company by June 30, 1999. Most of the peripheral,
internally developed programs associated with these systems have also been
modified, and those remaining are scheduled to be completed by June 30, 1999.
The Company's investment accounting and general ledger systems are also vendor
supplied programs which have been properly updated. The Company's primary non-IT
systems involve building equipment control modules at its home office. No
significant issues are expected with these systems and verification is expected
to be complete by March 31, 1999.
The most significant third-parties potentially impacting the Company are
banks, investment brokers, and suppliers of utility and telecommunication
services. Their critical functions include safekeeping and managing investment
portfolios, processing the Compan's operating bank accounts, and supplying
utilities. Assurances of year 2000 compliance have been received from the
Company's primary banking service provider and many other key providers. Efforts
are ongoing to obtain additional assurances.
The total year 2000 project cost is estimated at approximately $100,000
which is primarily internal salary cost for testing and modifying peripheral
programs associated with the Individual and Group insurance systems.
Approximately half of this total has been incurred and expensed with the
remaining half to be incurred and expensed over the next four quarters. The
direct cost of modifying the Individual and Group system vendor programs is
included in annual maintenance fees which total approximately $25,000.
The Company has investments in publicly and privately placed securities and
loans. The Company may be exposed to credit risk to the extent that related
borrowers are materially adversely impacted by the year 2000 issue. Portfolio
diversification reduces the overall risk.
Although the Company expects its critical systems to be compliant by June
30, 1999, there is no guarantee that these results will be achieved.
Specifically, from year 2000 problems, the Company could experience
Part I; Item 2 continued
an interruption in its ability to collect and process premiums, process
claim payments, safeguard and manage its invested assets and operating cash
accounts, accurately maintain policyholder information, accurately maintain
accounting records, issue new policies and/or perform adequate customer service.
While the Company believes the occurrence of such a situation is unlikely, a
possible worst case scenario might include one or more of the Company's
significant insurance systems being non-compliant. Such event could result in a
material disruption to the Companys operations. Should the worst case scenario
occur, it could, depending on its duration, have a material impact on the
Company's results of operations and liquidity and ultimately on its financial
position.
With respect to contingency plans for the Group insurance system, if
unforeseen delays are encountered during the next few months, the Company will
develop supplemental manual processing procedures to assist with group claims
adjudication. This is not expected to be a significant issue, as most group
insurance processing is not dependent on date sensitive data. Regarding
third-party systems, the Company is continuing to assess their compliance and
will continue to reassess the need for formal contingency plans, based on
progress of year 2000 efforts by the Company and third parties.
Forward - Looking Information:
The Company makes forward-looking statements from time to time and desires
to take advantage of the "safe harbor" which is afforded such statements under
the Private Securities Litigation Reform Act of 1995 when they are accompanied
by meaningful cautionary statements identifying important factors that could
cause actual results to differ materially from those in the forward-looking
statements.
The statements contained in this "Management's Discussion and Analysis or
Plan of Operations," and statements contained in future filings with the
Securities and Exchange Commission and publicly disseminated press releases,
and statements which may be made from time to time in the future by management
of the Company in presentations to shareholders, prospective investors, and
others interested in the business and financial affairs of the Company, which
are not historical facts, are forward-looking statements that involve risks and
uncertainties that could cause actual results to differ materially from those
set forth in the forward-looking statements. Any projections of financial
performance or statements concerning expectations as to future developments
should not be construed in any manner as a guarantee such results or
developments will, in fact, occur. There can be no assurance that any
forward-looking statement will be realized or actual results will not be
significantly different from those set forth in such forward-looking statement.
In addition to the risks and uncertainties of ordinary business operations, the
forward-looking statements of the Company referred to above are also subject to
risks and uncertainties.
CITIZENS FINANCIAL CORPORATION
SIGNATURES
In accordance with the requirements of the Securities and Exchange Act of
1934, the registrant caused this report to be signed on its behalf by the
undersigned,therunto duly authorized.
CITIZENS FINANCIAL CORPORATION
BY: /s/ Darrell R. Wells
-------------------------------------------
Darrell R. Wells
President and Chief Executive Officer
BY: /s/ Brent L. Nemec
-------------------------------------------
Brent L. Nemec
Treasurer and Principal Accounting Officer
Date: January 15, 1999
