UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
            ---------------------------------------------------------

                                   FORM 10-QSB

                      QUARTERLY REPORT UNDER SECTION 13 OR
                        15 (d) OF THE SECURITIES EXCHANGE
                                   ACT OF 1934

                  For the Quarterly Period Ended June 30, 1999
                        Commission File Number 000-26145

           -----------------------------------------------------------

                         CITRUS FINANCIAL SERVICES, INC.
                         -------------------------------
             (Exact Name of registrant as specified in its charter)

Florida                                                               65-0136504
-------                                                               ----------
(State or other jurisdiction of                                 (I.R.S. Employer
incorporation or organization)                               Identification No.)

1717 Indian River Boulevard
Suite 100
Vero Beach, Florida                                                        32960
-------------------                                                        -----
(Address of Principal Executive Offices)                              (Zip Code)

           ----------------------------------------------------------

                                 (561) 778-4100
                                 --------------
               (Registrant's telephone number including area code)

          ------------------------------------------------------------

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes X No _____.

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
Common stock as of the latest practicable date:

   Class                                         Outstanding as of July 30, 1999
   -----                                         -------------------------------
Common Stock                                                 952,296
Par Value $3.15 per share



<PAGE>


                         CITRUS FINANCIAL SERVICES, INC.

                                      INDEX


                                                                         PAGE
PART I:  FINANCIAL INFORMATION                                          NUMBER

         Item 1: Financial Statements:
                 Consolidated Balance Sheets as of June 30, 1999
                 (Unaudited) and December 31, 1998                        1

                 Consolidated Statements of Operations and
                 Comprehensive Income for the Three Months and the
                 Six Months Ended June 30, 1999 and 1998 (Unaudited)      2

                 Consolidated Condensed Statements of Cash Flows for
                 the Three Months and the Six Months Ended June 30, 1999
                 and 1998 (Unaudited)                                     3

                 Consolidated Statement of Changes in Stockholders'
                 Equity (Unaudited)                                       4

                 Notes to Consolidated Financial Statements (Unaudited)   5

         Item 2: Management's Discussion and Analysis of Financial
                 Condition and Results of Operations                      9

PART II:         OTHER INFORMATION                                        18

Signatures                                                                19



<PAGE>



                 CITRUS FINANCIAL SERVICES, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                                   June 30, 1999
                                                                                                    (Unaudited)    December 31, 1998
                                                                                                    -----------    -----------------
                                                                                               (In Thousands, Except Per Share Data)
<S>                                                                                                    <C>                <C>
ASSETS
Cash and due from banks ..............................................................             $   3,165              $   3,940
Federal funds sold ...................................................................                 4,400                  9,200
                                                                                                   ---------              ---------
    Total cash and cash equivalents ..................................................                 7,565                 13,140
Interest-bearing deposits in other banks .............................................                     1                      9
Securities available-for-sale at fair value ..........................................                 5,754                  4,675
Securities held-to-maturity (market value of
    $1,099 for 1999 and $1,273 for 1998) .............................................                 1,163                  1,307
Loans held for investment less allowance for credit losses ...........................                58,294                 52,548
Loans held for sale ..................................................................                 3,686                  8,291
Facilities ...........................................................................                 2,894                  2,884
Other real estate owned ..............................................................                  --                      390
Deferred income taxes ................................................................                   369                    233
Accrued interest receivable ..........................................................                   449                    343
Other assets .........................................................................                 1,017                    231
                                                                                                   ---------              ---------

         TOTAL .......................................................................             $  81,192              $  84,051
                                                                                                   =========              =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
    Noninterest-bearing ..............................................................             $  11,517              $  13,393
    NOW accounts .....................................................................                 3,825                  4,121
    Money market accounts ............................................................                 2,843                  3,026
    Savings accounts .................................................................                 9,674                  8,423
    Time, $100,000 and over ..........................................................                 8,607                 10,377
    Other time deposits ..............................................................                31,781                 37,363
                                                                                                      ------                 ------

        Total deposits ...............................................................                68,247                 76,703
                                                                                                      ------                 ------

Other borrowings .....................................................................                 6,042                    217
Accrued interest payable on deposits .................................................                   177                    297
Accounts payable and accrued liabilities .............................................                    53                    387
                                                                                                          --                    ---

        Total liabilities ............................................................                74,519                 77,604
                                                                                                      ------                 ------

Commitments and contingencies ........................................................                  --                     --

Stockholders' equity:
    Preferred stock ..................................................................                  --                     --
    Common stock .....................................................................                 3,007                  3,007
    Additional paid-in capital .......................................................                 3,149                  3,149
    Retained earnings ................................................................                   569                    324
    Accumulated other comprehensive income:
        Net unrealized holding losses on securities ..................................                   (52)                   (33)
                                                                                                         ---                    ---

        Total stockholders' equity ...................................................                 6,673                  6,447
                                                                                                       -----                  -----

        TOTAL ........................................................................             $  81,192              $  84,051
                                                                                                   =========              =========

Book value per common share ..........................................................             $    7.01              $    6.77
                                                                                                   =========              =========

Common shares outstanding ............................................................               952,296                952,296
                                                                                                     =======                =======

</TABLE>




          See accompanying notes to consolidated financial statements.

                                                         1

<PAGE>



                 CITRUS FINANCIAL SERVICES, INC. AND SUBSIDIARY
   CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)
<TABLE>
<CAPTION>


                                                            For the Three Months Ended June 30,    For the Six Months Ended June 30,
                                                            -----------------------------------    ---------------------------------

                                                                    1999           1998                   1999           1998
                                                                    ----           ----                   ----           ----
                                                                          (Dollars in Thousands, Except Per Share Data)
<S>                                                               <C>            <C>                    <C>            <C>

Interest and fees on loans held for investment .................  $ 1,307        $ 1,214                $ 2,518        $ 2,426
Interest and fees on loans held for sale .......................      147            239                    324            346
Investment and dividend income on investment securities
   and interest-bearing deposits in other banks ................       83            107                    161            232
Federal funds sold .............................................       49             14                    151             53
                                                                       --             --                    ---             --
         Total interest income .................................    1,586          1,574                  3,154          3,057
                                                                    -----          -----                  -----          -----

Interest on deposits ...........................................      645            661                  1,361          1,286
Other ..........................................................       17             24                     20             30
                                                                       --             --                     --             --
         Total interest expense ................................      662            685                  1,381          1,316
                                                                      ---            ---                  -----          -----

         Net interest income before provision
              for credit losses ................................      924            889                  1,773          1,741

Provision for credit losses ....................................       (2)            47                     20            (49)
                                                                       --             --                     --            ---

         Net interest income after provision
              for credit losses ................................      926            842                  1,753          1,790
                                                                      ---            ---                  -----          -----

Fees and service charges .......................................      113             94                    220            187
Other income ...................................................       10             15                     17             22
                                                                       --             --                     --             --
         Total other income ....................................      123            109                    237            209
                                                                      ---            ---                    ---            ---

Other expenses:
     Salaries and employee benefits ............................      445            370                    833            711
     Expenses of bank premises and fixed assets ................      162            127                    303            255
     Other operating expenses ..................................      245            245                    461            481
                                                                      ---            ---                    ---            ---
         Total other expenses ..................................      852            742                  1,597          1,447
                                                                      ---            ---                  -----          -----

Income before provision for income taxes .......................      197            209                    393            552

Provision for income taxes .....................................       74             78                    148            207
                                                                       --             --                    ---            ---

Net income .....................................................      123            131                    245            345

Other comprehensive income, net of income taxes:
     Unrealized holding gains (losses) arising during period ...      (19)            12                    (17)            34
     Less: reclassification adjustments for gains included in
       net income for the period ...............................       (2)            (3)                    (2)            (3)
                                                                       --             --                     --             --
         Total other comprehensive income,
              net of income taxes ..............................      (21)             9                    (19)            31
                                                                      ---              -                    ---             --

Comprehensive income ...........................................  $   102        $   140                $   226        $   376
                                                                  =======        =======                =======        =======


Earnings Per Share Information
     Primary ...................................................  $  0.13        $  0.14                $  0.26        $  0.36
                                                                  =======        =======                =======        =======
     Fully diluted .............................................  $  0.10           0.11                $  0.21        $  0.30
                                                                  =======           ====                =======        =======
</TABLE>


          See accompanying notes to consolidated financial statements.

                                        2

<PAGE>



                 CITRUS FINANCIAL SERVICES, INC. AND SUBSIDIARY
           CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

<TABLE>
<CAPTION>


                                                             For the Three Months Ended June 30,   For the Six Months Ended June 30,
                                                             -----------------------------------   ---------------------------------
                                                                 1999            1998                     1999            1998
                                                                 ----            ----                     ----            ----
                                                                                      (Dollars in Thousands)
<S>                                                           <C>             <C>                     <C>             <C>

Net income ...............................................    $    123        $    131                $    245        $    345
Adjustments to reconcile net income to net cash
      provided (used) by operating activities:
         Provision for credit losses ....................           (2)             22                      20             (49)
         Depreciation and amortization ..................           89              21                     168              83
         Net premium amortization and
              discount accretion ........................            5            --                        10            --
         (Increase) decrease in other assets ............         (154)             27                    (525)            (92)
         Increase (decrease) in other liabilities .......         (403)            107                    (374)            246
         Origination of loans held for sale .............      (31,831)        (53,112)                (62,389)        (78,806)
         Proceeds on sale of loans held for sale ........       33,579          45,626                  66,994          66,220
                                                                ------          ------                  ------          ------

              Net cash provided (used) by
                  operating activities ..................        1,406          (7,178)                  4,149         (12,053)
                                                                 -----          ------                   -----         -------

Cash flows from investing activities: Net (increase) decrease in:
         Investment securities ..........................       (1,181)            614                    (976)          1,178
         Interest-bearing deposits in other banks .......           22            --                         8              56
         Loans ..........................................       (3,111)            361                  (5,867)            466
     Purchases of bank premises and equipment, net ......          (67)            (84)                   (178)           (167)
                                                                   ---             ---                    ----            ----

              Net cash provided (used) by
                  investing activities ..................       (4,337)            891                  (7,013)          1,533
                                                                ------             ---                  ------           -----

Cash flows from financing activities:
     Net increase (decrease) in deposits ................       (3,756)          4,637                  (8,456)          8,038
     Proceeds from other borrowings,
         net of repayments ..............................        5,758           3,469                   5,745           3,439
                                                                 -----           -----                   -----           -----

              Net cash provided (used) by
                  financing activities ..................        2,002           8,106                  (2,711)         11,477
                                                                 -----           -----                  ------          ------

Increase (decrease) in cash and cash equivalents ........         (929)          1,819                  (5,575)            957

Cash and cash equivalents at beginning of period ........        8,494           5,380                  13,140           6,242
                                                                 -----           -----                  ------           -----

Cash and cash equivalents at end of period ..............     $  7,565        $  7,199                $  7,565        $  7,199
                                                              ========        ========                ========        ========

</TABLE>









          See accompanying notes to consolidated financial statements.


                                        3

<PAGE>



                 CITRUS FINANCIAL SERVICES, INC. AND SUBSIDIARY
     CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)


<TABLE>
<CAPTION>

                                                                                                          Net
                                                                                                       Unrealized
                                                                                                        Holding
                                                                             Additional                  Gains           Total
                                                             Common Stock     Paid-in      Retained   (Losses) on     Stockholders'
                                                           Shares    Amount   Capital      Earnings    Securities        Equity
                                                           ------    ------   -------      --------    ----------        ------
                                                                                   (Dollars in Thousands)
<S>                                                        <C>       <C>      <C>          <C>          <C>            <C>

Balance, December 31, 1998 .........................       952,296   $3,007   $3,149       $ 324        $(33)          $ 6,447

Comprehensive income:
   Net income ......................................          --       --       --           245         --              --
   Net change in unrealized holding
     gains (losses) on securities
     less reclassification for realized
     gains .........................................          --       --       --          --           (19)             226
                                                                                                         ---              ---

Balance, June 30, 1999 .............................       952,296   $3,007   $3,149       $ 569        $(52)         $ 6,673
                                                           =======   ======   ======       =====        ====          =======

</TABLE>






















          See accompanying notes to consolidated financial statements.

                                        4

<PAGE>



                 CITRUS FINANCIAL SERVICES, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                                  JUNE 30, 1999


NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES

The consolidated  financial  statements include the accounts of Citrus Financial
Services,  Inc.  ("Citrus") and its wholly owned  subsidiary  Citrus Bank,  N.A.
("Citrus  Bank").  The consolidated  financial  statements for the three and six
months  ended June 30, 1999 and 1998,  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  1998  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.



                                        5

<PAGE>



                 CITRUS FINANCIAL SERVICES, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                                  JUNE 30, 1999


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 six months ended June
30, 1999 and 1998 (in thousands except per share data):

<TABLE>
<CAPTION>
                                                                                  For the Three Months        For the Six Months
                                                                                     Ended June 30,              Ended June 30,
                                                                                   1999         1998           1999         1998
                                                                                   ----         ----           ----         ----
<S>                                                                              <C>            <C>            <C>          <C>

Basic EPS computation:
    Numerator - Net income .............................................         $  123         $  131         $  245       $  345
    Denominator - Weighted average shares outstanding ..................            952            952            952          952
                                                                                    ---            ---            ---          ---

    Basic EPS ..........................................................         $ 0.13         $ 0.14         $ 0.26       $ 0.36
                                                                                 ======         ======         ======       ======

Diluted EPS computation:
    Numerator - Net income .............................................         $  123         $  131         $  245       $  345
                                                                                 ------         ------         ------       ------
    Denominator - Weighted average shares outstanding ..................            952            952            952          952
    Stock options and warrants .........................................            227            196            227          196
                                                                                    ---            ---            ---          ---

                                                                                  1,179          1,148          1,179        1,148
                                                                                  -----          -----          -----        -----

    Diluted EPS ........................................................         $ 0.10         $ 0.11         $ 0.21       $ 0.30
                                                                                 ======         ======         ======       ======
</TABLE>


NOTE 3 - LOANS HELD FOR INVESTMENT
<TABLE>
<CAPTION>

Loans consisted of (dollars in thousands):
                                                                                               June 30,           December 31,
                                                                                                 1999                 1998
                                                                                                 ----                 ----
<S>                                                                                            <C>                  <C>

Real estate ................................................................                   $ 41,282             $ 35,914
Commercial and agriculture .................................................                     12,985               12,868
Installment and other loans ................................................                      4,415                4,347
                                                                                                  -----                -----
      Total loans, gross ...................................................                     58,682               53,129
Unearned income and deferred fees ..........................................                         (8)                (120)
Allowance for credit losses ................................................                       (380)                (461)
                                                                                                   ----                 ----
      Net loans ............................................................                   $ 58,294             $ 52,548
                                                                                               ========             ========

</TABLE>













                                        6

<PAGE>



                 CITRUS FINANCIAL SERVICES, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                                  JUNE 30, 1999


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 June 30,  1999,  and  December  31,  1998,  such loans  totaled
$3,686,000 and $8,291,000,  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>
                                                                                   Six Months         Twelve Months
                                                                                  Ended June 30,     Ended December 31,
                                                                                       1999                1998
                                                                                       ----                ----
<S>                                                                                     <C>                <C>

Balance, beginning of period .......................................................    $461               $431
Recoveries
         Real estate loans .........................................................     --                  43
         Installment loans .........................................................     --                   8
         Credit card and related plans .............................................     --                 --
         Commercial and all other loans ............................................     --                   1
                                                                                                              -
                                                                                         --                  52
                                                                                                             --
Charge-offs
         Real estate loans .........................................................     --                 --
         Installment loans .........................................................       6                 35
         Credit card and related plans .............................................       5                 10
         Commercial and all other loans ............................................      90                --
                                                                                          --
                                                                                         101                 45
                                                                                         ---                 --

Provision charged to operations ....................................................      20                 23
                                                                                          --                 --

Balance, end of period .............................................................    $380               $461
                                                                                        ====               ====

</TABLE>

During  the  first  quarter  of 1998,  Citrus  settled  litigation  involving  a
significant  problem credit.  As a result of this settlement,  Citrus recorded a
credit  provision of $96,000 for the quarter  ended March 31,  1998.  During the
remainder of 1998,  Citrus recorded a provision for credit losses of $119,000 to
recognize the potential credit losses associated with one borrower.  Three loans
totaling  $85,000 to this  borrower  were charged off in 1999. At June 30, 1999,
Citrus had $30,00 in loans classified as loss. This loss was fully reserved.


                                        7

<PAGE>



                 CITRUS FINANCIAL SERVICES, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                                  JUNE 30, 1999


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 commitments
involve,  to varying  degrees,  elements of credit,  and  interest  rate risk in
excess of the amounts recognized in the balance sheet.

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.

Financial  instruments  at June 30,  1999,  consisted of  commitments  to extend
credit approximating $8.5 million and letters of credit of $126,000.


NOTE 7 - PUBLIC STOCK OFFERING

Citrus'  Registration  Statement  on Form SB-2  ("Registration  Statement")  was
declared  effective by the  Securities  and Exchange  Commission on May 3, 1999.
Citrus has  commenced  its public  offering of between  1,000,000  and 1,200,000
shares of its common stock. The proceeds are expected to be used to complete the
opening of two new banks as further discussed in the Registration  Statement. As
of June 30, 1999,  approximately  $1.1  million had been  deposited in an escrow
account  held with  Independent  Bankers'  Bank of Florida  subject to an Escrow
Agreement  as  described  in the  Registration  Statement.  None  of the  escrow
deposits  have been  recorded  by Citrus  and the costs of raising  these  funds
incurred by Citrus through June 30, 1999, have been recorded as other assets. As
of July 30, 1999,  approximately  $1.8 million had been  deposited in the escrow
account.

                                        8

<PAGE>



                 CITRUS FINANCIAL SERVICES, INC. AND SUBSIDIARY



ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

                                    Overview

Citrus Financial Services,  Inc. ("Citrus") is a bank holding company registered
under the Bank Holding  Company Act of 1956.  Citrus owns 100% of the issued and
outstanding  common stock of Citrus Bank,  N.A.,  Vero Beach,  Florida  ("Citrus
Bank").  Citrus was  incorporated  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.

                           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,  as well as others,  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.

                                    Year 2000

Citrus is aware of the issue  associated with the  programming  code in existing
computer systems as the millennium (Year 2000) approaches.  The issue is whether
computer  systems will properly  recognize date sensitive  information  when the
year  changes to 2000.  Primary  systems  that do not  properly  recognize  this
information  could generate  erroneous data or cause a system to fail. Citrus is
utilizing  both  internal and external  resources to identify,  correct and test
their  systems  for the  Year  2000  compliance.  Management  believes  that all
necessary modifications and testing have been completed. To date,  confirmations
have been received from all of the Bank's primary  processing vendors that their
software  is now Year 2000  compliant.  To date there  have been no  significant
limitations on recourse under the representations  obtained from primary vendors
that have indicated Year 2000 compliance. In addition to representations made by
the primary  vendors,  Citrus has  completed  testing  for all mission  critical
hardware and software.  At June 30, 1999,  Citrus had estimated  total Year 2000
costs of $55,000 in excess of normal recurring capital  expenditures for routine
software and hardware upgrades. Of this amount, approximately $22,000 remains to
be spent. It is recognized  that any Year 2000 compliance  failures could result
in additional expense to Citrus.

Citrus has established time lines for testing all ancillary  systems,  including
telephone systems and security devices. We cannot give assurances, however, that
all  hardware  and software  that Citrus uses will be Year 2000  compliant,  and
Citrus  cannot  predict with any certainty the costs it will incur to respond to
any unidentified Year 2000 issues.  Factors which may affect the amount of these
costs  include  Citrus'  inability to control  third party  modification  plans,
Citrus'  ability to identify  and  correct  all  relevant  computer  codes,  the
availability and cost of engaging personnel trained in solving Year 2000 issues,
and other similar uncertainties.

                                        9

<PAGE>





Further, the business of many of Citrus' customers may be negatively affected by
the  Year  2000  issue,  and any  financial  difficulties  incurred  by  Citrus'
customers in solving Year 2000 issues could  negatively  affect those customers'
ability to repay any loans which Citrus may have  extended.  Therefore,  even if
Citrus does not incur significant  direct costs in connection with responding to
the Year 2000  issue,  we cannot  give  assurances  that the failure or delay of
Citrus'  customers or other third parties in  addressing  the Year 2000 issue or
the costs  involved in the process  will not have a material  adverse  effect on
Citrus' business, financial condition, or results of operations.  However, we do
not believe that such situations will be the case.

During 1998,  we notified our  customers for the purpose of making them aware of
the Year  2000  issues.  In 1999,  our  significant  commercial  customers  were
surveyed to assess their status in preparing for the Year 2000 using  checklists
to assist in identifying other current and potential  borrowers with a high Year
2000 risk exposure.  No current nor potential  borrowers have been determined to
have a high Year 2000 risk exposure. Should Citrus identify a Year 2000 exposure
associated  with one of its  borrowers,  the lending  officer will work with the
borrower on a one-on-one basis to minimize the exposure. Frequent reminders will
be made to all customers of Year 2000 matters in monthly deposit  statements and
other correspondence.

Our Year 2000  plans  provide  for use of  outside  consultants  to ensure  that
adequate  contingency plans have been adopted.  Citrus has completed its initial
contingency  plan and management  currently  believes the most likely worst case
scenario centers around the loss of power at its main office,  branches, and ATM
machines.  Citrus is currently  investigating the most reliable  alternate power
supply to operate its main  office.  If  necessary,  the ATM machines and branch
operations  would be suspended  and the main office  would  conduct all business
operations  until  the  power  is  restored.  Plans  also  exist to  handle  the
contingency  of a  disruption  in  data  communications,  which  include  use of
couriers  to  provide  tapes of data  normally  transmitted  by data  lines  and
printing of reports at the main office for delivery to the tellers and branches.

                         Future Accounting Requirements

In September 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 becomes
effective for all fiscal  quarters of all fiscal years  beginning after June 15,
1999. 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.











                                       10

<PAGE>






                              Results of Operations

Overview

Citrus' net income  decreased  $8,000 and  $100,000 for the three and six months
ended June 30, 1999,  respectively,  over the comparable  periods in 1998.  This
decline for the six months of 1999 versus 1998 reflects the effects of increases
in credit provision for credit losses, increased operating costs associated with
the start-up of loan production offices in Miami and Sebring,  Florida,  as well
as declining net interest.  The increase in average  earning assets of 11.6% for
the first six months of 1999 versus the same period in 1998 was partially offset
by a decline of  approximately  70 basis points in the average  yield on earning
assets.  These factors  produced a net increase in total interest income of 3.2%
in the first six  months of 1999 as  compared  to the first six  months of 1998.
Total interest income was  approximately  $1.6 million for both the three months
ended  June 30,  1999 and 1998.  For the six  months  ended  June 30,  1999,  as
compared with the comparable period in 1998,  increases in total interest income
of $97,000 were  partially  offset by increases in interest  expense of $65,000.
Noninterest  income increased 13.4%, to $237,000 in the first six months of 1999
as  compared  to  $209,000  in the first six  months of 1998.  This  improvement
resulted  primarily from deposit  account  charges  resulting from the growth in
average  deposits.  Noninterest  expense  in the  first  six  months  of 1999 as
compared  to the first six months of 1998 rose at a pace of 10.4% to  $1,597,000
from $1,447,000.  The return on average assets for the six months ended June 30,
1999, declined to 0.61% annualized as compared with the return of average assets
of 0.72% for 1998. Net income for the three months ended June 30, 1999, declined
$8,000 from the same period in 1998  primarily due to a 14.8%  increase in other
expenses.  During the three months  ended June 30, 1999,  expenses for the Miami
and Sebring loan production  offices  totaled  $119,000 and $162,000 for the six
months ended June 30,  1999.  The  $110,000  increase in other  expenses for the
second  quarter of 1999 as compared  with the same period of 1998 was  partially
offset by lower costs on deposits  and a reduction in the  provision  for credit
losses.  An overall  improvement  in the quality of Citrus Bank's loan portfolio
contributed to the lower allowance for credit losses.

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.















                    (This section left blank intentionally)











                                       11

<PAGE>






Average Balances, Income and Expenses, and Rates (dollars in thousands)
<TABLE>
<CAPTION>

                                                                                 For the Six Months Ended June 30,
                                                                            1999                                  1998
                                                                            ----                                  ----
                                                                          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 ........................      $    28       $     1        4.9%     $    46      $    1        4.3%
     Taxable securities ...............................        5,987           160        5.3%       8,578         231        5.4%
     Federal funds sold ...............................        6,390           151        4.7%       1,965          53        5.4%
     Loans held for sale ..............................        6,515           324        9.9%       6,943         346       10.0%
     Loans held for investment, net ...................       55,143         2,518        9.1%      48,838       2,426        9.9%
                                                              ------         -----        ---       ------       -----        ---

         Total earning assets .........................       74,063         3,154        8.5%      66,370       3,057        9.2%
                                                                             -----                               -----

Non-earning assets ....................................        6,841                                 6,820
                                                               -----                                 -----

         Total assets .................................      $80,904                               $73,190
                                                             =======                               =======

Interest-bearing liabilities:
     NOW and money market deposits ....................      $ 6,799            62        1.8%     $ 7,403          72        1.9%
     Savings ..........................................        9,580           152        3.2%       6,990         116        3.3%
     Time deposits ....................................       44,158         1,147        5.2%      40,312       1,098        5.4%
     Other borrowings .................................          944            20        4.2%       1,055          30        5.7%
                                                                 ---            --        ---        -----          --        ---

         Total interest-bearing liabilities ...........       61,481         1,381        4.5%      55,760       1,316        4.7%
                                                                             -----                               -----
+
Noninterest-bearing liabilities .......................       12,856                                11,646
Stockholders' equity ..................................        6,567                                 5,784
                                                               -----                                 -----

         Total liabilities and
              stockholders' equity ....................      $80,904                               $73,190
                                                             =======                               =======

Net interest income before provision
  for credit losses ...................................                    $ 1,773                             $ 1,741
                                                                           =======                             =======

Interest-rate spread ..................................                                   4.0%                                4.5%
                                                                                          ===                                 ===

Net interest margin ...................................                                   4.8%                                5.2%
                                                                                          ===                                 ===

Ratio of average earning assets to
  average interest-bearing liabilities ................       120.5%                                 119.0%
                                                              =====                                  =====

</TABLE>


                                       12

<PAGE>




Comparison of Results of  Operations  for the Six Months Ended June 30, 1999 and
1998

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.

Net interest  income was  $1,773,000  for the six months ended June 30, 1999, as
compared to $1,741,000  for the six months ended June 30, 1998. The increases in
earning assets of $7.7 million reflected the growth of Citrus' loan portfolio of
$5.9 million, or 10.5%, between these periods, which resulted in improvements in
Citrus' total interest income.  However, net interest income increased only 1.8%
for the six months ended June 30, 1999,  versus the  comparable  period in 1998,
due to declining yields on earning assets.  Net interest spread,  the difference
between  the  yield on  earning  assets  and the rate  paid on  interest-bearing
liabilities,  was 4.0% for the six months  ended June 30,  1999,  as compared to
4.5% for the six months ended June 30, 1998. Net interest  margin,  net interest
income divided by average  interest-earning assets, declined to 4.8% for the six
months  ended June 30,  1999,  as compared to 5.2% for the six months ended June
30, 1998.  These decreases  reflect the fact that during the first six months of
1999 yields on loans held for investment  have declined  approximately  80 basis
points,  while  interest  rates on deposits  and  borrowoings  have only dropped
approximately 20 basis points in 1999 versus 1998.

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 June 30, 1999,  Citrus had 14 loans  classified  by  regulatory  standards as
substandard,  doubtful,  or loss totaling $471,000. At December 31, 1998, Citrus
had 12 loans  totaling  $448,000 in the same  categories.  At June 30, 1999, and
December 31, 1998, Citrus had loss assets to be charged-off totaling $30,000 and
$-0-, respectively.  The loss assets were fully reserved at June 30, 1999. Loans
classified  by  management  as  impaired  under  generally  accepted  accounting
principles  (and are included in the regulatory  classifications  of doubtful or
loss)  totaled  $108,000  and $85,000 at June 30,  1999,  and December 31, 1998,
respectively.







                                       13

<PAGE>


<TABLE>
<CAPTION>

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 substandard, doubtful, or loss.

A summary of nonperforming loans by type follows (dollars in thousands):
                                                                                     June 30,            December 31,
                                                                                       1999                  1998
                                                                                       ----                  ----
<S>                                                                                     <C>                 <C>

Real estate ....................................................................        $129                $228
Installment loans ..............................................................          79                  25
Credit cards and related plans .................................................           4                 --
Commercial and all other loans .................................................         391                 247
                                                                                         ---                 ---

                                                                                        $603                $500
                                                                                        ====                ====
</TABLE>

Nonperforming  loans at June 30, 1999,  declined from the quarter-end  March 31,
1999,  total of  $859,000,  but  continue to exceed  December  31, 1998  levels.
However,  the overall credit quality improved in the second quarter of 1999 with
the reduction in total nonperforming loans and other real estate owned.

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.

At June 30, 1999, the allowance for credit losses amounted to $380,000, or 0.65%
of outstanding  loans held for  investment.  At December 31, 1998, the allowance
for credit losses amounted to $461,000,  or 0.87% of outstanding  loans held for
investment.  Citrus'  provision for credit losses was $20,000 for the six months
ended June 30, 1999.  For the same six months period in 1998,  the provision for
credit  losses  was  $(49,000).   The  provision  in  1999  was  made  based  on
management's  assessment  of general  credit  loss risk and asset  quality.  The
decline in the allowance for credit losses as a percentage of outstanding  loans
reflects  the  overall  improvement  in the quality of the loan  portfolio,  the
recognition of losses on one impaired credit relationship  totaling $85,000, and
favorable historical trends in overall charge-offs.

During  the  first  quarter  of 1998,  Citrus  settled  litigation  involving  a
significant  problem credit.  As a result of this settlement,  Citrus recorded a
credit  provision  of $49,000 for the six months  ended June 30,  1998.  Citrus'
allowance  for credit  losses  remains at levels  lower than its peer group with
approximately  70% of Citrus'  loans secured by real estate as of June 30, 1999.
No separate  allowance for credit losses has been established for loans held for
sale since these loans are  purchased  for amounts up to 98% of the note amount.
Substantially all of these loans have take-out  commitments in place at the time
purchased by Citrus, and these loans meet Citrus' underwriting guidelines.

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  credit card fees,  commissions on
check sales, safe deposit box rent, wire transfer, and official check fees.

Total  noninterest  income increased by $28,000 during the six months ended June
30, 1999, as compared to the same period in 1998,  reflecting increased activity
fees related to increases in deposit and loan balances. Fees and service charges
were  $220,000 for the six months  ended June 30, 1999,  as compared to $187,000
for the comparable period in 1998, an increase of 17.6%.




                                       14

<PAGE>




Noninterest Expense.  Total noninterest expense increased by $150,000 during the
six months  ended June 30,  1999,  as compared to the same period in 1998,  as a
result of  Citrus'  continued  growth.  For the first six  months in 1999,  this
increase  includes an increase in salary and benefits  expense of  $122,000,  as
Citrus employed  additional  employees for its new loan  production  offices and
provided  normal  salary  and  benefit  increases.   Occupancy-related  expenses
increased  $48,000  in the first six  months of 1999 as  compared  with the same
period  in 1998,  principally  due to the  start-up  of  Citrus'  in-house  data
processing  center.  Continued  reductions in professional fees were realized in
the first six months of 1999 along with  reductions  in outside data  processing
costs, which partially offset total increases in noninterest expenses.

Income Tax Expense

The income tax provision was $148,000 for the six months ended June 30, 1999, or
an effective  rate of 37.6%.  This compares with an effective  rate of 37.5% for
the same period in 1998.

Comparison of Results of Operations for the Three Months Ended June 30, 1999 and
1998


Net Interest Income

Net interest  income was  $924,000 for the three months ended June 30, 1999,  as
compared to $889,000 for the three months ended June 30, 1998.  The increases in
earning  assets of $5.2 million,  or 7.7%,  reflected the growth of Citrus' loan
portfolio of $4.3 million, or 7.5%, between these periods; however the declining
net  interest  spread  and net  interest  margin  contributed  to only  moderate
increases in net interest income in 1999 versus 1998. Net interest  spread,  the
difference   between  the  yield  on  earning   assets  and  the  rate  paid  on
interest-bearing liabilities, was 4.4% for the three months ended June 30, 1999,
as compared  to 4.6% for the three  months  ended June 30,  1998.  Net  interest
margin, net interest income divided by average interest-earning assets, improved
to 5.1% in the second  quarter of 1999,  but  continues to lag the 5.3% reported
for the three months ended June 30, 1998.

Noninterest Income and Expense

Noninterest  Income.  Total  noninterest  income increased by $14,000 during the
three  months  ended June 30,  1999,  as  compared  to the same  period in 1998,
reflecting  increased  activity  fees  related to  increases in deposit and loan
balances. Fees and service charges were $113,000 for the three months ended June
30, 1999, as compared to $94,000 for the comparable  period in 1998, an increase
of 20.2%.

Noninterest Expense.  Total noninterest expense increased by $110,000 during the
three months ended June 30, 1999,  as compared to the same period in 1998,  as a
result of  Citrus'  continued  growth.  For the  second  quarter  of 1999,  this
increase  includes  an increase in salary and  benefits  expense of $75,000,  as
Citrus employed  additional  employees for its new loan  production  offices and
provided  normal  salary  and  benefit  increases.   Occupancy-related  expenses
increased  $35,000 in the first three  months of 1999 as compared  with the same
period  in 1998,  principally  due to the  start-up  of  Citrus'  in-house  data
processing  center.  Continued  reductions  in  professional  fees were realized
during 1999 which,  when  combined with  reductions  in outside data  processing
costs,  resulted in no net increase in other  operating  expenses for the second
quarter of 1999 as compared with the same period in 1998.

Income Tax Expense

The income tax  provision  was $74,000 for the three months ended June 30, 1999,
or an effective rate of 37.6%. This compares with an effective rate of 37.3% for
the same period in 1998.


                               Financial Condition

Citrus' total assets at June 30, 1999, were $81.2 million, decreasing from $84.1
million at December 31, 1998. The decrease of approximately $2.9 million was due
principally  to the decline in federal funds sold of $4.8 million and loans held
for sale of $4.6  million,  partially  offset by an  increase  in loans held for
investment of $5.7 million.  Deposits declined  approximately $8.5 million, with
$7.4  million of the decline  attributable  to higher  costing  certificates  of
deposit.
                                       15

<PAGE>



Total stockholders' equity as of June 30, 1999, was $6.7 million, an increase of
$226,000  or  approximately  3.5%  compared  with  stockholders'  equity of $6.4
million as of December 31, 1998.  This increase was  attributable  to net income
for the six  months of 1999 of  $245,000  offset by a  $19,000  decrease  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 six months ended June 30, 1999):
<TABLE>
<CAPTION>

                                                                                         Six Months Ended     Year Ended
                                                                                             June 30,         December 31,
                                                                                               1999              1998
                                                                                               ----              ----
<S>                                                                                            <C>               <C>

Return on average assets ......................................................                0.61%             0.72%
Return on average equity ......................................................                7.46%             9.13%
Interest-rate spread during the period ........................................                4.03%             4.20%
Net interest margin ...........................................................                4.79%             4.92%
Allowance for credit losses to period end loans held for investment ...........                0.65%             0.87%
Net charge-offs to average loans held for investment ..........................                0.37%            (0.01)%
Nonperforming assets to period end loans held for investment
    and foreclosed property ...................................................                1.03%             1.67%
Nonperforming assets to period end total assets ...............................                0.74%             1.06%
</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 the
Federal  Home Loan Bank 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  $6.4 million in the first six months of 1999 as compared to
$2.0  million in the same period of 1998.  At June 30,  1999,  and  December 31,
1998,   short-term   investments   totaled  $4.4   million  and  $9.2   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.

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 $59.6 million at June 30,

                                       16

<PAGE>



1999, and $66.3 million at December 31, 1998. Most of the $6.7 million  decrease
in core deposits  since  December 31, 1998,  was  attributable  to maturities of
higher-priced  short-term certificates of deposit that were obtained during 1998
to fund Citrus'  investment in loans  held-for-sale.  Loans  held-for-sale  have
declined  $4.6 million  during the period from  December  31, 1998,  to June 30,
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 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 June
30,  1999,  advances  totaling  $5.8  million,  which  mature  within 30 days at
interest rates ranging from 5.09% to 5.16%, were outstanding under this line. At
June 30, 1999,  Citrus had borrowed  $50,000 from Central  Illinois Bank under a
revolving  line of credit  agreement  in the  amount of  $500,000.  This line of
credit  matures  May 20,  2000 with  interest  floating  at New York  prime.  In
addition to the line of credit arrangements, Citrus Bank had fixed FHLB advances
outstanding as follows (dollars in thousands): <TABLE> <CAPTION>

                                                 At June 30,    At December 31,
   Maturity Date          Interest Rate             1999             1998
   -------------          -------------             ----             ----
<S>                           <C>                  <C>              <C>

     2003                     5.76%                $ 192            $ 217
</TABLE>

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 June 30, 1999, 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) ...............       $6,656        10.58%    $5,031        8.00%    $6,289       10.00%
Tier I Capital (to Risk-Weighted Assets) ..............       $6,276         9.98%    $2,515        4.00%    $3,773        6.00%
Tier I Capital (to Average Assets) ....................       $6,276         7.88%    $3,188        4.00%    $3,985        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>



                                       17

<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.
                               An  annual  meeting  of shareholders  was held on
                               April 26, 1999. At that meeting a majority of the
                               shareholders  of record voted for the re-election
                               of  two Class  III   Directors,   to  ratify  the
                               appointment of the Board of Directors'appointment
                               of  the  Company's  independent auditors for  the
                               fiscal  year  ended  December  31, 1999,  and  to
                               approve the  adjournment of the Annual Meeting to
                               solicit  additional  proxies  in  the  event that
                               there  were  not sufficient votes to  approve any
                               one or more of the proposals.

                  Item 5.      Other Information.
                               None.

                  Item 6.      Exhibits and Reports on Form 8-K.
                               None.



                                       18

<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:         August 11, 1999              /s/ Josh C. Cox, Jr.
              ---------------              --------------------
                                           Josh C. Cox, Jr.
                                           President and Chief Executive Officer



Date:         August 11, 1999              /s/ Henry O. Speight
              ---------------              --------------------
                                           Henry O. Speight
                                           Executive Vice President and
                                           Chief Financial Officer



                                       19

<PAGE>