Market Overview

Citizens Holding Company Reports Earnings

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Citizens Holding Company (NASDAQ:CIZN) announced today results of
operations for the three and twelve months ended December 31, 2017.

As a result of the Tax Cuts and Jobs Act of 2017 signed into law by
President Trump on December 22, 2017, the Company has, as required,
reevaluated its deferred tax assets and deferred tax liabilities to
account for the future impact of lower corporate tax rates on these
deferred amounts. Although it is expected to positively impact the
Company's future after-tax earnings, the reduction in the federal
corporate tax rate negatively impacted the Company's fourth quarter 2017
results.

The revaluation of the deferred tax asset and liabilities resulted in a
one-time non-cash charge to the income statement of approximately $2.6
million, which reduced the Company's fourth quarter 2017 results by
approximately $0.52 per share-diluted. However, as a result of the
revised federal corporate income tax rates effective for 2018, and
changes or limits for certain tax deductions, the Company expects its
effective combined federal and state income tax rate for 2018 will range
between 14% and 15%. Of the $2.6 million non-cash charge, $1.6 million
is related to the market valuation of available for sale securities. The
FASB has issued an exposure draft, that if adopted, would require the
reclassification from other comprehensive income to retained earnings in
an amount equal to the non-cash charge related to available for sale
securities, thereby minimizing the impact on regulatory capital.

After the deferred tax adjustment, the Company incurred a net loss for
the three months ended December 31, 2017 of $1.125 million, or $0.23 per
share-basic and diluted, down from a net income of $1.679 million, or
$0.34 per share-basic and diluted for the same quarter in 2016. Had the
accounting rules not required this revaluation of deferred taxes, net
income for the quarter would have been $1.434 million or $0.29 per
share-basic and diluted for the three months ended December 31, 2017.

Net interest income for the fourth quarter of 2017, after the provision
for loan losses, was $7.080 million, approximately 5.0% higher than the
same period in 2016. The provision for loan losses for the three months
ended December 31, 2017 was negative $288 thousand compared to a
negative $162 thousand for the same period in 2016. The increase in the
negative provision reflects management's estimate of inherent losses in
the loan portfolio including the impact of current local and national
economic conditions and partially offset by an increase in total loans
outstanding. The net interest margin was 2.98% for both the fourth
quarter of 2017 and 2016.

Non-interest income increased in the fourth quarter of 2017 by $214
thousand, or 11.4%, while non-interest expenses increased $698 thousand,
or 10.5%, compared to the same period in 2016. The increase in
non-interest income was mainly the result of an increase in service
charges on checking accounts and other service charges and fees.
Non-interest expense increased due to an increase in salary and benefit
expense of $262 thousand, occupancy expense of $159 thousand and a $277
thousand increase in other operating expenses. The increase in other
non-interest expense was due mainly to loan collection and repossession
expense for the fourth quarter.

Net income for the twelve months ended December 31, 2017 decreased 45.0%
to $3.703 million, or $0.76 per share-basic and diluted, from $6.737
million, or $1.38 per share-basic and diluted, for the twelve months
ended December 31, 2016. Had the accounting rules not required this
revaluation of deferred taxes, net income for the twelve months ended
December 31, 2017 would have been $6.288 million or $1.29 per
share-basic and diluted.

Net interest income for the twelve months ended December 31, 2017, after
the provision for loan losses, increased 2.1% to $27.728 million from
$27.149 million for the same period in 2016. Net interest margin for the
twelve months ended December 31, 2017, decreased to 3.01% in 2017 from
3.07% in the same period in 2016. The provision for loan losses for the
twelve months ended December 31, 2017 was a negative $543 thousand
compared to a negative $65 thousand in 2016. The increase in the
negative provision reflects management's assessment of inherent losses
in the loan portfolio including the impact caused by current local and
national economic conditions partially offset by an increase in loans
outstanding.

Non-interest income increased by $595 thousand, or 7.7%, and
non-interest expense increased by $1.749 million, or 6.6%, for the
twelve months ended December 31, 2017 when compared to the same period
in 2016. The increase in non-interest income was the result of increases
in service charges on deposit accounts and other service charges and
fees. Non-interest expense increased primarily due to an increase in
salary and benefits costs related to additional loan personnel.

Total assets as of December 31, 2017 decreased to $993.096 million, down
$32.118 million, or 3.1%, when compared to December 31, 2016. Deposits
decreased by $39.470 million, or 5.2%, and loans, net of unearned
income, increased by $11.359 million, or 2.9%, when compared to December
31, 2016. The increase in loans, net of unearned income, was due to new
loan demand in excess of loan payments. Non-performing assets decreased
by $1.159 million to $12.369 million at December 31, 2017 as compared to
$13.528 million at December 31, 2016, due in large part to decreases in
other real estate owned and in non-accrual loans partially offset by a
slight increase in loans 90 days or more past due and still accruing
interest.

During the twelve months of 2017, the Company paid dividends totaling
$0.96 per share.

Citizens Holding Company (the "Company") is a one-bank holding company
and the parent company of The Citizens Bank of Philadelphia (the
"Bank"), both headquartered in Philadelphia, Mississippi. The Bank
currently has twenty-four banking locations in fourteen counties in East
Central and South Mississippi. In the fourth quarter of 2016, the Bank
added a Loan Production Office in Oxford, Mississippi to offer loan
services to north Mississippi. In addition to full service commercial
banking, the Bank offers mortgage loans, title insurance services
through its subsidiary, Title Services, LLC, and a full range of
Internet banking services including online banking, bill pay and cash
management services for businesses. Internet services are available at
the Bank's website, www.thecitizensbankphila.com.
Citizens Holding Company stock is listed on the NASDAQ Global Market and
is traded under the symbol CIZN. The Company's transfer agent is
American Stock Transfer & Trust Company. Information about Citizens
Holding Company may be obtained by accessing its corporate website at www.citizensholdingcompany.com.

This press release includes "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934. All statements other than
statements of historical facts included in this release regarding the
Company's financial position, results of operations, business
strategies, plans, objectives and expectations for future operations,
are forward looking statements. The Company can give no assurances that
the assumptions upon which such forward-looking statements are based
will prove to have been correct. Forward-looking statements speak only
as of the date they are made. The Company does not undertake a duty to
update forward-looking statements to reflect circumstances or events
that occur after the date the forward-looking statements are made. Such
forward-looking statements are subject to certain risks, uncertainties
and assumptions. The risks and uncertainties that may affect the
operation, performance, development and results of the Company's and the
Bank's business include, but are not limited to, the following: (a) the
risk of adverse changes in business conditions in the banking industry
generally and in the specific markets in which the Company operates; (b)
changes in the legislative and regulatory environment that negatively
impact the Company and Bank through increased operating expenses; (c)
increased competition from other financial institutions; (d) the impact
of technological advances; (e) expectations about the movement of
interest rates, including actions that may be taken by the Federal
Reserve Board in response to changing economic conditions; (f) changes
in asset quality and loan demand; (g) expectations about overall
economic strength and the performance of the economics in the Company's
market area; and (h) other risks detailed from time to time in the
Company's filings with the Securities and Exchange Commission. Should
one or more of these risks materialize, or should any such underlying
assumptions prove to be significantly different, actual results may vary
significantly from those anticipated, estimated, projected or expected.

     

Citizens Holding Company

Financial Highlights

(amounts in thousands, except share and per share data)

 
For the Three Months Ending For the Twelve Months Ending
December 31,   September 30,   December 31, December 31,   December 31,
2017     2017     2016     2017     2016  
 
INTEREST INCOME
Loans, including fees $4,717 $4,585 $4,668 $18,734 $19,012
Investment securities 2,854 2,893 2,685 11,498 10,972
Other Interest 102     66     50     296     198  
7,673 7,544 7,403 30,528 30,182
 
INTEREST EXPENSE
Deposits 487 472 477 1,922 1,844
Other borrowed funds 394     353     343     1,421     1,254  
881 825 820 3,343 3,098
 
NET INTEREST INCOME 6,792 6,719 6,583 27,185 27,084
 
PROVISION FOR LOAN LOSSES (288 )   (74 )   (162 )   (543 )   (65 )
 

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES

7,080 6,793 6,745 27,728 27,149
 
NON-INTEREST INCOME
Service charges on deposit accounts 1,062 1,116 994 4,239 3,789
Other service charges and fees 645 703 589 2,638 2,441
Other non-interest income 383     308     293     1,397     1,449  
2,090 2,127 1,876 8,274 7,679
 
NON-INTEREST EXPENSE
Salaries and employee benefits 3,618 3,745 3,356 14,772 13,697
Occupancy expense 1,400 1,336 1,241 5,385 5,108
Other non-interest expense 2,303     1,806     2,026     8,071     7,674  
7,321 6,887 6,623 28,228 26,479
 
NET INCOME BEFORE TAXES 1,849 2,033 1,998 7,774 8,349
 
INCOME TAXES 2,974     425     319     4,071     1,612  
 
NET INCOME (LOSS) (1,125 )   1,608     1,679     3,703     6,737  
 
Earnings (loss) per share - basic ($0.23 )   $0.33     $0.34     $0.76     $1.38  
 
Earnings (loss) per share - diluted ($0.23 )   $0.33     $0.34     $0.76     $1.38  
 
Dividends Paid $0.24     $0.24     $0.24     $0.96     $0.96  
 
Average shares outstanding-basic 4,882,705 4,882,705 4,869,079 4,878,691 4,865,968
 
Average shares outstanding-diluted 4,892,233 4,891,148 4,881,088 4,895,848 4,875,638
   
For the Period Ended,
December 31,   September 30,   December 31,
2017     2017     2016  
Period End Balance Sheet Data:
Total assets $993,096 $1,026,124 $1,025,214
Total earning assets 910,282 939,295 935,957
Loans, net of unearned income 405,410 393,079 394,051
Allowance for loan losses 3,019 3,404 3,093
Total deposits 720,685 754,768 760,155
Short term borrowings 11,500 - -
Long-term borrowings 20,000 20,000 20,000
Shareholders' equity 88,451 91,942 85,059
Book value per share $18.14 $18.86 $17.42
 
Period End Average Balance Sheet Data:
Total assets $1,013,177 $1,009,781 $996,266
Total earning assets 929,261 926,107 928,861
Loans, net of unearned income 395,216 393,796 409,367
Total deposits 762,983 767,634 766,264
Long-term borrowings 21,644 20,000 20,000
Shareholders' equity 90,230 89,693 91,766
 
Period End Non-performing Assets:
Non-accrual loans 7,582 7,833 8,879
Loans 90+ days past due and accruing 807 298 206
Other real estate owned 3,980 4,174 4,443
 
As of
December 31, September 30, December 31,
2017     2017     2016  
 

Year to Date Net charge-offs as a percentage of average net loans

0.09 % 0.06 % 0.61 %
 
Year to Date Performance Ratios:
Return on average assets(1) 0.62 % 0.64 % 0.68 %
Return on average equity(1) 7.01 % 7.18 % 7.34 %
 
Year to Date Net Interest
Margin (tax equivalent)(1) 3.01 % 3.03 % 3.07 %
 
(1) Annualized

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