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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
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 - 1,789,715 as of
August 10, 1999.
Transitional Small Business Disclosure Format (Check one): Yes No X
The date of this Report is August 16, 1999.
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1
<PAGE>
Part I - Financial Information; Item 1 - Financial Statements
Citizens Financial Corporation and Subsidiaries
Condensed Consolidated Statements of Income
(Unaudited)
Six Months Ended June 30 1999 1998
- ------------------------------------------------------------------------------
Revenues:
Premiums and other considerations $ 10,623,599 $ 9,312,068
Premiums ceded (459,238) (452,586)
- ------------------------------------------------------------------------------
Net premiums earned 10,164,361 8,859,482
Net investment income 3,114,506 2,280,744
Net realized investment gains, net of expenses 3,954,078 2,069,029
Other income 95,090 8,254
- ------------------------------------------------------------------------------
Total Revenues 17,328,035 13,217,509
Policy Benefits and Expenses:
Policyholder benefits 7,964,573 6,416,566
Policyholder benefits ceded (632,594) (574,795)
- ------------------------------------------------------------------------------
Net benefits 7,331,979 5,841,771
Increase in net benefit reserves 566,305 326,061
Interest credited on policyholder deposits 451,561 443,030
Commissions 2,101,436 1,906,588
General expenses 2,789,182 2,368,900
Interest expense 251,674 192,067
Policy acquisition costs deferred (640,883) (544,871)
Amortization of deferred policy acquisition
costs and value of insurance acquired 682,821 524,077
- ------------------------------------------------------------------------------
Total Policy Benefits and Expenses 13,534,075 11,057,623
- ------------------------------------------------------------------------------
Income before Federal Income Tax 3,793,960 2,159,886
Federal Income Tax Expense 1,095,000 478,000
- ------------------------------------------------------------------------------
Net Income 2,698,960 1,681,886
Dividends on Redeemable Convertible Preferred
Stock --- 202,950
- ------------------------------------------------------------------------------
Net Income Applicable to Common Stock $ 2,698,960 $ 1,478,936
- ------------------------------------------------------------------------------
Net Income Per Common Share:
Basic $1.50 $1.37
Diluted $1.50 $0.93
- ------------------------------------------------------------------------------
See Notes to Condensed Consolidated Financial Statements.
2
<PAGE>
Part I; Item 1 (continued)
Citizens Financial Corporation and Subsidiaries
Condensed Consolidated Statements of Income
(Unaudited)
Three Months Ended June 30 1999 1998
- ------------------------------------------------------------------------------
Revenues:
Premiums and other considerations $ 5,493,912 $ 4,733,218
Premiums ceded (275,787) (228,404)
- ------------------------------------------------------------------------------
Net premiums earned 5,218,125 4,504,814
Net investment income 1,604,611 1,357,739
Net realized investment gains, net of expenses 2,412,242 1,041,514
Other income 83,182 7,576
- ------------------------------------------------------------------------------
Total Revenues 9,318,160 6,911,643
Policy Benefits and Expenses:
Policyholder benefits 3,917,139 3,684,180
Policyholder benefits ceded (420,054) (468,570)
- ------------------------------------------------------------------------------
Net benefits 3,497,085 3,215,610
Increase in net benefit reserves 692,030 61,215
Interest credited on policyholder deposits 204,210 229,063
Commissions 1,106,811 938,770
General expenses 1,554,602 1,262,174
Interest expense 124,575 113,998
Policy acquisition costs deferred (332,815) (264,217)
Amortization of deferred policy acquisition
costs and value of insurance acquired 265,258 295,223
- ------------------------------------------------------------------------------
Total Policy Benefits and Expenses 7,111,756 5,851,836
- ------------------------------------------------------------------------------
Income before Federal Income Tax 2,206,404 1,059,807
Federal Income Tax Expense 670,000 238,000
- ------------------------------------------------------------------------------
Net Income 1,536,404 821,807
Dividends on Redeemable Convertible Preferred
Stock --- 101,200
- ------------------------------------------------------------------------------
Net Income Applicable to Common Stock $ 1,536,404 $ 720,607
- ------------------------------------------------------------------------------
Net Income Per Common Share:
Basic $0.85 $0.66
Diluted $0.85 $0.46
- ------------------------------------------------------------------------------
See Notes to Condensed Consolidated Financial Statements.
3
<PAGE>
Part I; Item 1 (continued)
Citizens Financial Corporation and Subsidiaries
Condensed Consolidated Statements of Financial Condition
June 30 December 31
1999 1998
- ------------------------------------------------------------------------------
ASSETS (Unaudited)
Investments:
Securities available for sale, at fair value:
Fixed maturities (amortized cost of $72,060,467
and $75,235,199 in 1999 and 1998, respectively) $ 72,784,687 $ 77,582,742
Equity securities (cost of $22,051,976 and
$14,733,876 in 1999 and 1998, respectively) 26,553,208 17,208,338
Investment real estate 3,495,789 3,618,698
Mortgage loans on real estate 161,621 164,757
Policy loans 4,033,464 4,034,152
Short-term investments 594,805 594,805
- ------------------------------------------------------------------------------
Total Investments 107,623,574 103,203,492
Cash and cash equivalents 5,949,030 8,301,999
Accrued investment income 1,345,266 1,263,898
Reinsurance recoverable:
Paid benefits and losses 69,156 85,299
Unpaid benefits, losses and IBNR 3,385,849 3,379,063
Premiums receivable 335,605 407,571
Property and equipment 1,923,984 1,846,768
Deferred policy acquisition costs 4,347,812 4,120,215
Value of insurance acquired 5,696,663 6,135,132
Goodwill 491,737 513,325
Other assets 471,236 242,361
- ------------------------------------------------------------------------------
Total Assets $ 131,639,912 $ 129,499,123
- ------------------------------------------------------------------------------
See Notes to Condensed Consolidated Financial Statements.
4
<PAGE>
Part I; Item 1
Citizens Financial Corporation and Subsidiaries
Condensed Consolidated Statements of Financial Condition
June 30, December 31,
1999 1998
- ------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDER'S EQUITY (Unaudited)
Liabilities:
Policy liabilities:
Future policy benefits $ 78,122,771 $ 77,665,183
Policyholder deposits 15,973,533 16,323,652
Policy and contract claims 1,367,440 1,259,459
Unearned premiums 211,842 208,524
Other 254,416 187,779
- ------------------------------------------------------------------------------
Total Policy Liabilities 95,930,002 95,644,597
Notes payable 6,255,000 6,510,000
Accrued expenses and other liabilities 2,550,956 3,627,214
Federal income tax payable 937,363 667,013
Deferred federal income tax 1,402,043 1,305,018
- ------------------------------------------------------------------------------
Total Liabilities 107,075,364 107,753,842
Commitments and Contingencies
Shareholders' Equity:
Common stock, 6,000,000 shares authorized;
1,793,715 and 1,802,615 shares issued and
outstanding in 1999 and 1998, respectively 1,793,715 1,802,615
Additional paid-in capital 8,007,425 8,091,825
Accumulated other comprehensive income 3,293,223 3,079,616
Retained earnings 11,470,185 8,771,225
- ------------------------------------------------------------------------------
Total Shareholders' Equity 24,564,548 21,745,281
- ------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $ 131,639,912 $ 129,499,123
- ------------------------------------------------------------------------------
See Notes to Condensed Consolidated Financial Statements.
5
<PAGE>
Part I; Item 1 (continued)
Citizens Financial Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended June 30 1999 1998
- ------------------------------------------------------------------------------
Cash Flows from Operations:
Net income $ 2,698,960 $ 1,681,886
Adjustments to reconcile net income to cash
from operations:
Increase in benefit reserves 538,789 295,947
Increase (decrease) in claim liabilities 107,981 (279,439)
(Increase) decrease in reinsurance recoverable 9,357 (4,596)
Interest credited on policyholder deposits 451,561 443,030
Provision for amortization and depreciation,
net of deferrals 197,938 109,349
Amortization of premium and accretion of
discount on securities purchased, net 83,155 36,508
Net realized investment gains (3,954,078) (2,069,029)
(Increase) decrease in accrued investment income (81,368) 36,657
Change in other assets and liabilities (102,987) (162,529)
Increase (decrease) in deferred federal
income tax liability (13,014) 94,425
Increase in federal income taxes payable 270,350 178,575
- ------------------------------------------------------------------------------
Net Cash provided by Operations 206,644 360,784
Cash Flows from Investment Activities:
Cost of securities acquired (31,785,122) (22,575,973)
Investments sold or matured 32,018,397 21,249,385
Investment management fees and margin interest (233,349) (359,396)
Additions to property and equipment, net (88,719) (97,206)
Purchase of United Liberty Life Insurance
Company, net of cash acquired --- (3,848,387)
Other investing activities, net 7,401 56,623
- ------------------------------------------------------------------------------
Net Cash used in Investment Activities (81,392) (5,574,954)
Cash Flows from Financing Activities:
Policyholder deposits 368,808 322,361
Policyholder withdrawals (1,170,488) (947,220)
Brokerage account advances, net (1,328,241) 1,702,393
Proceeds from note payable - bank --- 3,400,000
Payments on notes payable - bank (255,000) (200,000)
Repurchase of common stock (93,300) ---
Dividends on redeemable convertible preferred
stock --- (203,500)
- ------------------------------------------------------------------------------
Net Cash provided by (used in) Financing
Activities (2,478,221) 4,074,034
- ------------------------------------------------------------------------------
Net Decrease in Cash and Cash Equivalents (2,352,969) (1,140,136)
Cash and Cash Equivalents at Beginning of Period 8,301,999 6,180,576
- ------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Period $ 5,949,030 $ 5,040,440
- ------------------------------------------------------------------------------
See Notes to Condensed Consolidated Financial Statements.
6
<PAGE>
Part I; Item 1 (continued)
Citizens Financial Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with the instructions to Form 10-QSB in
conformity with generally accepted accounting principles. The accompanying
unaudited condensed financial statements reflect all adjustments which are,
in the opinion of management, necessary to a fair presentation of the
results for the interim periods. All such adjustments are of a normal
recurring nature. For further information, refer to the December 31, 1998
consolidated financial statements and footnotes included in the Company's
annual report on Form 10-KSB.
Note 2 - COMPREHENSIVE INCOME
The components of comprehensive income, net of related tax, for the three
months and six months ended June 30, 1999 and 1998 are as follows:
-------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------------------------
COMPREHENSIVE INCOME: 1999 1998 1999 1998
- -----------------------------------------------------------------------------
Net Income $1,536,404 $821,807 $2,698,960 $1,681,886
Net unrealized gains (losses)
on securities (543,028) 764,175 213,607 1,882,915
- -----------------------------------------------------------------------------
Comprehensive Income $ 993,376 $1,585,982 $2,912,567 $3,564,801
- -----------------------------------------------------------------------------
Note 3 - SEGMENT INFORMATION
The Company's operations are managed along five principal insurance product
lines: Home Service Life, Broker Life, Preneed Life, Dental, and Other
Health. Products in all five lines are sold through independent agency
operations. Home Service Life consists primarily of traditional life
insurance coverage sold in amounts of $10,000 and under to middle and lower
income individuals. This distribution channel is characterized by a
significant amount of agent contact with customers throughout the year.
Broker Life product sales consist primarily of simplified issue and
graded-benefit policies in amounts of $10,000 and under. Other products in
this segment which are not aggressively marketed include: group life,
universal life, annuities and participating life coverages. Preneed Life
products are sold to individuals in connection with prearrangement of their
funeral and include single premium and multi-pay policies with coverages
generally in amounts of $10,000 and less. These policies are generally
sold to older individuals at increased premium rates. Dental products are
term coverages generally sold to small and intermediate size employer
groups. Other Health products include various accident and health
coverages sold to individuals and employer groups. Segment information as
of June 30, 1999 and 1998, and for the periods then ended is as follows:
7
<PAGE>
Part I; Item 1 (continued)
-------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------------------------
REVENUE: 1999 1998 1999 1998
- -----------------------------------------------------------------------------
Home Service Life $ 2,290,329 $2,154,139 $4,427,256 $4,261,451
Broker Life 1,533,610 1,399,850 3,087,760 2,523,982
Preneed Life 1,022,484 406,528 1,808,055 406,528
Dental 1,721,092 1,567,147 3,397,389 3,259,147
Other Health 338,403 342,465 653,497 697,372
- -----------------------------------------------------------------------------
Segment Totals 6,905,918 5,870,129 13,373,957 11,148,480
Net realized investment gains,
net of expenses 2,412,242 1,041,514 3,954,078 2,069,029
- -----------------------------------------------------------------------------
Total Revenue $ 9,318,160 $6,911,643 $17,328,035 $13,217,509
- -----------------------------------------------------------------------------
Below are the net investment income amounts which are included in the
revenue totals above.
-------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------------------------
INVESTMENT INCOME: 1999 1998 1999 1998
- -----------------------------------------------------------------------------
Home Service Life $543,509 $506,513 $1,050,478 $974,969
Broker Life 680,843 605,609 1,324,446 1,031,331
Preneed Life 349,005 214,300 679,012 214,300
Dental 8,417 8,010 16,303 15,793
Other Health 22,837 23,307 44,267 44,351
- -----------------------------------------------------------------------------
Segment Totals $1,604,611 $1,357,739 $3,114,506 $2,280,744
- -----------------------------------------------------------------------------
The Company evaluates performance based on several factors, of which the
primary financial measure is segment profit. Segment profit represents
pretax earnings, except net realized investment gains and interest expense
are excluded. The majority of the Company's realized investment gains are
generated from investment in equity securities. The equities portfolio has
averaged (on a cost basis) approximately $19,500,000 and $14,000,000 during
the six months ended June 30, 1999 and 1998, respectively. If these funds
had been invested in fixed-maturities yielding 6.5%, realized investment
gains would have declined and the six month segment profit totals below
would have increased by an additional $372,000 and $286,000 in 1999 and
1998, respectively.
-------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------------------------
SEGMENT PROFIT (LOSS): 1999 1998 1999 1998
- -----------------------------------------------------------------------------
Home Service Life $(10,841) $74,264 $25,870 $118,792
Broker Life 23,180 40,575 195,739 93,755
Preneed Life (122,174) (47,399) (301,366) (47,399)
Dental 76,573 80,163 255,265 137,341
Other Health (48,001) (15,312) (83,952) (19,565)
- -------------------------------------------------------------------------------
Segment Totals (81,263) 132,291 91,556 282,924
Net realized investment gains,
net of expenses 2,412,242 1,041,514 3,954,078 2,069,029
Interest expense 124,575 113,998 251,674 192,067
- -------------------------------------------------------------------------------
Income before Federal Income
Tax $2,206,404 $1,059,807 $3,793,960 $2,159,886
- -------------------------------------------------------------------------------
8
<PAGE>
Part I; Item 1 (continued)
Depreciation and amortization amounts below consist of amortization of the
value of insurance acquired, deferred policy acquisition costs and
goodwill, along with depreciation expense.
-------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------------------------
DEPRECIATION AND AMORTIZATION: 1999 1998 1999 1998
- -----------------------------------------------------------------------------
Home Service Life $ 89,873 $ 156,992 $ 303,176 $ 331,085
Broker Life 147,074 133,697 286,283 231,200
Preneed Life 87,995 50,095 208,066 50,095
Dental 10,218 10,188 23,808 23,990
Other Health 8,097 9,322 17,488 17,850
- -----------------------------------------------------------------------------
Segment Totals $ 343,257 $ 360,294 $ 838,821 $ 654,220
- -----------------------------------------------------------------------------
Segment asset totals are determined based on policy liabilities outstanding
in each segment.
-------------------------
June 30, December 31,
ASSETS: 1999 1998
- ------------------------------------------------------------
Home Service Life $44,783,105 $43,299,037
Broker Life 55,908,975 55,139,933
Preneed Life 28,416,465 28,513,188
Dental 692,274 674,728
Other Health 1,839,093 1,872,237
- ------------------------------------------------------------
Segment Totals $131,639,91 $129,499,123
- ------------------------------------------------------------
Note 4 - NET REALIZED CAPITAL GAINS, NET OF EXPENSE
The Company nets certain direct, incremental investment management fees and
margin loan interest cost against net realized investment gains and losses
presented in the Condensed Consolidated Statements of Income. Such costs
are based directly on or, are primarily associated with, realized capital
gains. Costs netted against realized investment gains total $296,700 and
$527,286 for the six months ended June 30, 1999 and 1998, respectively.
Note 5 - INCOME TAXES
Current taxes are provided based on estimates of the projected effective
annual tax rate. Deferred taxes reflect the net effects of temporary
differences between the carrying amount of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes.
9
<PAGE>
Part I; Item 2 - Management's Discussion and Analysis or Plan of Operations
FINANCIAL POSITION
Fixed maturities decreased $3,175,000 based on amortized cost, during the
first six months of 1999. Equity securities increased $7,318,000 on a cost
basis and increased $9,345,000 on market value basis, during the same
period. Gross unrealized appreciation for available-for-sale fixed
maturities and equity securities increased approximately $403,000 during
the six months ended June 30, 1999.
OPERATIONS
Net premiums and other considerations increased approximately 15% during
the first six months of 1999 compared to the first six months of 1998.
This increase is primarily attributable to the acquisition of United
Liberty Life Insurance Company (United Liberty) during May 1998, along with
approximately 3% growth in the Company's other product lines. Preneed Life
premium associated with the United Liberty acquisition generated growth of
approximately 12% compared to the prior year. Premium growth for the
Company's primary, previously existing products - Broker Life, Dental, and
Home Service Life, totaled 5%, 4%, and 2%, respectively. The 37% increase
in investment income compared to the first three months of the prior year
is also primarily attributable to the United Liberty acquisition.
Total pretax earnings increased approximately 76% to $3,794,000 for the six
months ended June 30, 1999, primarily due to an approximate $1,885,000
increase in realized investment gains, net of expenses. Pretax Segment
Profit (excluding realized investment gains and interest expense) for the
first six months of 1999 was approximately $92,000 compared to $283,000 for
the first six months of 1998. This decrease is primarily due to costs
associated with expanding the Company's recently acquired Preneed Life
segment, somewhat higher Home Service Life mortality, and lower investment
income associated with increased positions in the favorable equity
markets. In addition, Dental profit margins continue to improve due to a
number of profitability initiatives, including selective non-renewal of
groups with excessive claim ratios.
The Company's increased earnings has also resulted in a higher effective
income tax rate due to a phasing-out of available small-life insurance
company deductions and full utilization of previously available non-life
insurance net operating loss carryforwards.
CASH FLOW AND LIQUIDITY
Cash flow from operations totaled $207,000 for the six months ended June
30, 1999 compared to $361,000 for the same period in the prior year. This
change is principally attributable to increased claims and spending
associated with business acquired in the prior year.
The $81,000 of cash used in investing activities reflects essentially
equivalent purchases and sales of securities during the six months ended
June 30, 1999, while the $5,575,000 of cash used in investing activities
for the six months ended June 30, 1998 was primarily attributable to the
acquisition of United Liberty Life Insurance Company and growth in equity
security positions.
The $2,478,000 of cash used in financing activities during the first six
months of 1999 is primarily attributable to a decrease in the Company's
investment margin account advances, which total $179,000 at June 30, 1999,
and somewhat higher annuity withdrawals.
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. Vendor modifications to the Group insurance system have been
<PAGE> 10
Part I; Item 2 (continued)
installed and are being tested by the Company. Most of the peripheral,
internally developed programs associated with these systems have also been
modified, and those remaining are scheduled to be completed by September
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. The Company has verified these systems are year 2000
compliant.
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 Company'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 two
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 September 30, 1999,
there is no guarantee that these results will be achieved. Specifically,
from year 2000 problems, the Company could experience 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 an event
could result in a material disruption to the Company's 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.
FORWORD -LOOKING INFORMATION. The Company makes forward-looking
statementsfrom 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.
11
<PAGE>
Part II - Other Information
Item 4. Submission of Matters to a Vote of Security Holders.
The 1999 annual meeting of shareholders of the company was
held on May 20, 1999. At the meeting:
a). Eight incumbent directors were re-elected to serve until the 2000
annual meeting of shareholders.
The names of the incumbent directors and shares of the Company's
Class A Stock voted were as follows:
Candidate For Withheld
------------------------- ------------ ------------
John H. Harralson, Jr. 1,429,273 14,771
Lane A. Hersman 1,420,573 23,471
Frank T. Kiley 1,429,273 14,771
Charles A. Mays 1,404,073 39,971
Earle V. Powell 1,429,273 14,771
Thomas G. Ward 1,429,273 14,771
Darrell R. Wells 1,429,273 14,771
Margaret A. Wells 1,429,098 14,946
b). The Citizens Financial Corporation 1999 Stock Option Plan, as
described in the Proxy Statement for the meeting, was adopted
with 1,439,213 votes for adoption; 1,345 votes against; and
3,486 votes withheld.
Item 6. Exhibits and Reports on Form 8-K.
a). Exhibit 11. Statement re: computation of per share earnings.
Exhibit 27. Financial Data Schedule.
b). none
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, thereunto 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: August 11, 1999
12
<PAGE>
EXHIBIT INDEX
- ----------------------------------------------------------------
Exhibit No. Description
- ----------------------------------------------------------------
11 Statement re: computation of per share earnings
27 Financial Data Schedule (electronic filing only)
13
<PAGE>
EXHIBIT 11
Citizens Financial Corporation and Subsidiaries
Computation of Per Share Earnings
(Unaudited)
Six Months Ended June 30 1999 1998
- ------------------------------------------------------------------------------
Numerator:
Diluted: Net income $2,698,960 $1,681,886
Less: Preferred stock dividends --- (202,950)
- ------------------------------------------------------------------------------
Basic: Net income applicable to common stock $2,698,960 $1,478,936
- ------------------------------------------------------------------------------
Denominator:
Basic: Weighted average common shares 1,799,116 1,076,670
Plus: Assumed conversion of preferred
stock ---- (202,950)
- ------------------------------------------------------------------------------
Diluted: Weighted average shares assuming
preferred conversion 1,799,116 1,816,029
- ------------------------------------------------------------------------------
Basic Earnings Per Share $1.50 $1.37
Diluted Earnings Per Share $1.50 $0.93
Three Months Ended June 30 1999 1998
- ------------------------------------------------------------------------------
Numerator:
Diluted: Net income $1,536,404 $821,807
Less: Preferred stock dividends --- (101,200)
- ------------------------------------------------------------------------------
Basic: Net income applicable to common stock $1,536,404 $720,607
- ------------------------------------------------------------------------------
Denominator:
Basic: Weighted average common shares 1,797,804 1,077,714
Plus: Assumed conversion of preferred
stock --- 738,725
- ------------------------------------------------------------------------------
Diluted: Weighted average shares assuming
preferred conversion 1,797,804 1,816,439
- ------------------------------------------------------------------------------
Basic Earnings Per Share $0.85 $0.66
Diluted Earnings Per Share $0.85 $0.46
14
<PAGE>
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<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
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0
0
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10,164
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