EXHIBIT 22.1

                          Citizens' 1999 Annual Report

                                       16

<PAGE>

                        "Community is our middle name"





                        Citizens Community Bancorp, Inc.
                               1999 Annual Report

<PAGE>


                              Financial Highlights

                Citizens Community Bancorp, Inc. and Subsidiaries

                   At December 31, or For the Year Then Ended
                (Dollars in thousands, except per share figures)


                                                        1999              1998

At Year End:


     Assets............................................  $122,193        82,226
     Loans, net........................................    79,988        44,933
     Securities........................................    19,022         8,500
     Deposits..........................................   102,498        63,990
     Stockholders' equity..............................    17,984        17,225
     Book value per share..............................      5.16          4.99
     Shares outstanding (1)............................ 3,486,767     3,455,039
     Equity as a percentage of assets..................     14.72%        20.95%
     Nonperforming assets to total assets ratio........       NIL           NIL

For The Year:


     Interest income.....................................   6,792         4,129
     Net earnings.......................................      615           206
     Basic earnings per share (1).......................      .18           .08
     Diluted earnings per share (1).....................      .17           .08
     Return on average assets...........................      .61%           32%
     Return on average equity...........................     3.50%         1.71%
     Average equity to average assets...................    17.51%        18.91%
     Noninterest expenses to average assets.............     3.22%         3.04%

     (1) All share  amounts  reflect the 8% stock  dividend to  stockholders  of
record on December 31, 1998.


[graphic omitted]


<PAGE>

                     About Citizens Community Bancorp, Inc.

     Citizens  Community  Bancorp,  Inc.  ("Citizens")  is  a  one-bank  holding
company,  established on May 24, 1995. Citizens' three wholly-owned subsidiaries
are Citizens Community Bank of Florida ("CCB"), Citizens Financial Corp. ("CFC")
and  CCB  Mortgage  Corporation  ("CCB  Mortgage").  CCB  is a  state  chartered
commercial bank which provides  traditional  community  banking services through
its three  full-service  office  facilities  strategically  located  in  Collier
County,  Florida,  which is one of the fastest growing  community in the Nation.
CCB's deposit accounts are insured by the Federal Deposit Insurance Corporation.
CCB offers a broad range of retail and commercial banking services,  including a
variety of deposit  accounts and loan products for consumers and businesses.  As
part of its "customer first" pledge,  CCB offers a courier service to commercial
account  customers.  CFC and CCB  Mortgage are  mortgage  origination  companies
operating in Southwest  Florida.  CFC specializes in commercial  mortgage loans,
while CCB  Mortgage  offers a variety of fixed and  adjustable-rate  residential
mortgage products.

     At December  31,  1999,  Citizens  had $122  million in total  consolidated
assets and $18 million in stockholders' equity.

                        Common Stock Prices and Dividends

     Although there has been no established  public trading market for Citizens'
common  stock,  the brokerage  firm of A.G.  Edwards & Sons,  Inc.,  facilitates
trades of  Citizens'  common  stock in the over the  counter  market  with other
brokerage firms. On October 14, 1999,  Citizens filed an application with Nasdaq
for approval for listing its common stock on the Nasdaq Smallcap  Market.  It is
expected that the qualification  process will be finalized during the first half
of 2000. The stock was originally  offered and sold in a public offering in 1996
for $4.18 per share.  A secondary  offering  was  completed in 1998 at $6.94 per
share.  Citizens  paid a cash  dividend  of $.05 per share for the first time to
shareholders  of record of January 31, 2000 and was paid on February  14,  2000.
Future  dividends,  if any, will be  determined  by the Board of Directors.  Per
share amounts above and  throughout  this report reflect the 2-for-1 stock split
effective  December  15,  1997  and the 8% stock  dividend  to  shareholders  on
December 31, 1998.

     As of January 31, 2000, Citizens had approximately 785 holders of record of
common stock.

                Special Note Regarding Forward Looking Statements

     This Annual  Report  contains  certain  forward  looking  statements  which
represent management's  expectations or beliefs,  including, but not limited to,
statements   concerning  the  banking  industry  and  the  issuer's  operations,
performance,  financial  condition and growth. For this purpose,  any statements
contained  in this  Report that are not  statements  of  historical  fact may be
deemed to be forward looking statements.  Without limiting the generality of the
foregoing,  words such as "may,"  "will,"  "expect,"  "believes."  "anticipate,"
"intend," "could," "should," "can," "estimate," or "continue" or the negative of
other  variations  thereof or  comparable  terminology  are intended to identify
forward-looking statements. These statements by their nature involve substantial
risks and uncertainties,  certain of which are beyond management's  control, and
actual  results  may  differ  materially  depending  on a variety  of  important
factors, including competition,  general economic conditions,  potential changes
in interest rates, and changes in the value of real estate securing loans, among
other things.


                                Table of Contents

   Financial Highlights.......................................Inside Front Cover
   Message to Shareholders.................................................2-4
   Directors of Citizens.....................................................5
   Directors of CCB..........................................................6
   Selected Financial Data...................................................7
   Management's Discussion and Analysis of
     Financial Condition and Results of Operations........................8-20
   Consolidated Financial Statements.....................................21-38
   Independent Auditors' Report.............................................39
   Officers - Citizens and Subsidiaries.....................................40
   Corporate Information.....................................Inside Back Cover


<PAGE>



                             Message To Shareholders

     As we close out the  millennium we are excited  about our excellent  growth
and earnings for 1999. The foundations  established during our first three years
have begun to build momentum,  which is reflected in the dramatic improvement in
earnings and growth  during 1999.  Our focus  continues to be a  customer-driven
community bank, with great emphasis on service, and building profitable loan and
deposit relationships.  We are pleased that your Board of Directors declared its
first cash dividend of $.05 per share that was paid to  shareholders in February
2000.

                                    Earnings

     Net  earnings for 1999 were  $615,259,  triple our earnings of $205,854 for
1998.  The  improved  earnings  for 1999 was  primarily  attributable  to a $2.7
million,  or 64%  increase in interest  income which was  partially  offset by a
$740,000,  or 37%  increase  in  interest  expense  and a $1.0  million,  or 66%
increase in net non-interest  expenses. On a basic per share basis, our earnings
were $.18 in 1999  compared  to $.08 in 1998.  The per share  calculations  were
adjusted for the 8% stock  dividend  paid as of December 31, 1998.  In addition,
the 1998 per share  calculations  were  impacted by the exercise of the warrants
and the additional shares issued from the successful stock offering in mid 1998.

                                     Growth

     In the highly competitive market for financial  services,  there are always
new opportunities  for the growth of the Citizens  Community  Bancorp,  Inc. and
subsidiaries  (the "Company").  Recently enacted banking  legislation also gives
banks authority to provide  additional  services to customers.  With the capital
the Company  raised in 1998,  we are well  positioned  for growth from  internal
sources and through strategic alliances with other financial institutions. There
are numerous financial and non-financial  considerations  which will be reviewed
to evaluate future services and possible target acquisitions. The considerations
will include size,  historical  performance,  projected operating  efficiencies,
office  locations,  management  and  resources  required to integrate the target
institution.  We believe that the exciting expansion of the South Florida market
area will provide  significant  opportunities to deploy our capital strength for
both internal growth and  acquisitions  which will enhance the size and value of
our Company.

     Total  assets  for  the  Company  at the end of 1999  were  $122.2  million
compared  to  $82.2   million  at  December   31,  1998,   representing   a  49%
year-over-year growth. Total deposits reached $102.5 million at the end of 1999,
up 60% from  $64.0  million  at the end of 1998.  Total  loans  grew 78% in 1998
reaching  $80.0  million at December  31,  1999,  compared  to $44.9  million at
December 31, 1998.

     Our  strong  loan  growth  during  1999  was a  significant  factor  in the
Company's improvement in core earnings.  Under the supervision of Executive Vice
President and Senior Lender,  James F. Schaffer,  we have been successful in our
continuing  efforts to build a strong loan origination  staff in the competitive
market for high  quality  personnel.  While we have focused on the growth of the
loan  portfolio,  we have  remained  vigilant for  borrowers  with strong credit
qualifications.  Our ongoing  focus on quality is  evidenced by the fact that we
had virtually no charge-offs or significant delinquencies or foreclosures in the
portfolio during 1999.

<PAGE>

                            Citizens Financial Corp.

     Also  instrumental  for the loan  growth  during  1999,  was the  impact of
Citizens  Financial Corp.  ("CFC"), a commercial  mortgage  brokerage  business,
which  is  operated  as a  separate  subsidiary  of  Citizens.  Robert  David is
President and Chief Executive  Officer of CFC. Bob joined the Company at the end
of 1998 and has  worked  virtually  his  entire  career in banking in the Naples
area.  Through Bob's  contacts,  he  contributed  both fee income to the Company
through  the loans sold to third  parties and also had a  significant  impact on
building  the loan  portfolio of the bank.  We expect that CFC will  continue to
play an  instrumental  role in the future growth of the Company through the loan
referrals and brokerage fee income.

                               CCB Mortgage Corp.

     CCB  Mortgage  Corp.  ("CCB  Mortgage")  is a wholly  owned  subsidiary  of
Citizens,  and  is  a  residential  mortgage  loan  origination  company,  which
commenced  operations  in November  1999.  Tony  Iannotta is President and Chief
Executive Officer of CCB Mortgage.  Prior to joining CCB Mortgage,  Tony was the
owner of Island Mortgage,  Inc. which he established in 1988. Tony and his staff
from Island Mortgage, Inc., who have also joined CCB Mortgage, have an excellent
reputation for quality  service to their  customers.  CCB Mortgage offers a wide
variety or residential  mortgage  products  including  fixed and adjustable rate
mortgage loans and construction and lot loan financing.  The successful mortgage
loan origination  volume during the first few months of operations  exceeded our
expectations.  The staff of CCB Mortgage and Citizens Community Bank are working
closely to develop cross-sale efforts of the mortgage loan and deposit products.
The  integration  of the mortgage  team has gone very well and we expect it will
enhance the Company's  future growth and  profitability.  In the year 2000,  CCB
Mortgage intends to add additional residential origination staff to be housed in
each of the bank's  branch  locations.  In addition,  the CCB  Mortgage  website
www.ccbmtgcorp.com  offers potential  mortgage  customers useful  information to
assist them with their mortgage selection.

                                 Marco Expansion

     In September 1999, the Company completed the 3,000 square foot expansion of
the Marco Island facility. The expanded branch facility includes offices for CCB
Mortgage Corp.,  Citizens' Executive Offices,  and additional branch offices for
our  Chairman's  Club  customers.  A  "Community  Room" has also been  added for
meetings,  or training programs of Company staff and local  organizations.  From
November 15, 1999 through March 30, 2000,  the Community Room has been dedicated
to a  display  of the  original  "Key  Marco  Cat",  which  is on loan  from the
Smithsonian  Institution,  together with various other artifacts,  paintings and
photographs from  archeological  excavations of a Calusa Indian village on Marco
Island. This is the first time the original "Key Marco Cat" has been returned to
Marco Island.  The exhibit is shown in  conjunction  with and for the benefit of
the Marco Island Historical Society. We are excited about our ability to support
the local community through the use of our Community Room facility.

                              East Trail Expansion

     In December 1999, the Company  completed the renovation of the second floor
of our 12,000 square foot, 2-story Tamiami Trail East office. Our administration
and operations staff are now housed in one centralized  facility to better serve
our  rapidly  growing  customer  base.  Enhanced  computer  network,  e-mail and
Internet access have also  contributed to improve staff  efficiency and internal
communications.

                                Year 2000 Update

     After significant planning,  review and updates to our computer systems, we
were very pleased that the  much-publicized  Y2K event has passed with virtually
no effect on our  operating  systems.  We committed  significant  resources  and
efforts during 1999 for the Y2K event,  and feel these efforts have enhanced our
data processing systems,  which will pay dividends through improved  information
systems in the upcoming years.

<PAGE>

                             New Branch Development

     In the year 2000 we plan to open our fourth branch on Airport Road near the
rapidly developing Vanderbilt Beach Road intersection. This exciting corridor in
north Naples has numerous  residential  and golf  communities  and is the future
site of the Ritz Carlton Hotel and Golf Complex.  Kim  Williams-Poorman has been
designated  the  Branch  Manager  for  the  new  branch  office.  Kim is a third
generation  resident of Collier County and has spent virtually her entire career
in business  development and management with increased  responsibility  in local
financial institutions.

     With the  introduction  of our Chairman's  Club,  our new checking  account
products,  and our internet banking services,  we feel we are well positioned to
provide our present and future  customers  with the banking  services  they will
need  in the  rapidly  evolving  financial  services  market.  Our  strong  loan
origination team in the bank, together with CCB Mortgage Corp. and CFC, provides
us the resources and loan products to meet the borrowing needs for a broad array
of customers.  Please check our bank website at www.ccbank.com  for our internet
banking service and other information about Citizens Community Bank. For updated
stock quotes and more information  about our holding company  activities,  visit
our Citizens Community Bancorp website at www.ccbancorpfl.com.

     We appreciate  your  continued  support and referrals as  shareholders  and
customers of our exciting financial services franchise.



Richard Storm, Jr.                           Gregory E. Smith
Chairman of the Board and                    President and
Chief Executive Officer                      Chief Financial Officer
<PAGE>



                           Citizens Community Bancorp
                               Board of Directors


<PAGE>

<TABLE>


                             SELECTED FINANCIAL DATA

                   At December 31, or for the Year then Ended
                (Dollars in thousands, except per share figures)



                                                                          1999        1998         1997        1996
                                                                          ----        ----         ----        ----
At Year End:

<S>                                                                  <C>            <C>          <C>          <C>
Cash and cash equivalents..........................................  $  16,928      24,663       12,211       8,042
Securities available for sale......................................      6,022       -            -
Securities held to maturity........................................     13,000       8,500        2,499       2,240
Loans, net.........................................................     79,988      44,933       26,420      12,116
All other assets...................................................      6,255       4,130        3,292       2,630
                                                                     ----------     ------      -------      ------

         Total assets..............................................  $ 122,193      82,226       44,422      25,028
                                                                       =======      ======       ======      ======

Deposit accounts...................................................    102,498      63,990       36,938      17,885
All other liabilities..............................................      1,711       1,011          713       1,179
Stockholders' equity...............................................     17,984      17,225        6,771       5,964
                                                                       -------      ------       ------      ------

         Total liabilities and stockholders' equity................  $ 122,193      82,226       44,422      25,028
                                                                       =======      ======       ======      ======

For the Year:

Total interest income..............................................      6,792       4,129        2,523         740
Total interest expense.............................................      2,750       2,009        1,208         283
                                                                      --------      ------       ------     -------

         Net interest income.......................................      4,042       2,120        1,315         457

Provision for loan losses..........................................        437         162          153         145
                                                                      --------     -------      -------      ------

         Net interest income after provision for loan losses.......      3,605       1,958        1,162         312
                                                                      --------      ------       ------      ------

Noninterest income.................................................        592         341          273          70
Noninterest expenses...............................................      3,234       1,935        1,260         915
                                                                       -------      ------       ------       -----

Earnings (loss) before income tax credit...........................        963         364          175        (533)
Income taxes (benefit).............................................        348         158           65        (191)
                                                                      --------      ------      -------      ------

Net earnings (loss)................................................  $     615         206          110        (342)
                                                                       =======      ======       ======      ======

Basic earnings (loss) per share (1)................................ $      .18         .08          .06        (.22)
                                                                      ========     =======       ======     =======

Diluted earnings (loss) per share (1)..............................        .17         .08          .06        (.22)
                                                                      ========     =======       ======     =======

Ratios and Other Data:

Return on average assets...........................................         .61%        .32%        .30%      (2.71)
Return on average equity...........................................        3.50%       1.71%       1.72%     (10.35)
Average equity to average assets...................................       17.51%      18.91%      17.47%       26.16%
Interest-rate spread during the period.............................        3.62%       3.00%       3.50%        2.33%
Net yield on average interest-earning assets.......................        7.43%       7.36%       8.04%        6.61%
Noninterest expenses to average assets.............................        3.22%       3.04%       3.45%        7.24%
Ratio of average interest-earning assets to average
         interest-bearing liabilities..............................      1.27        1.22        1.18          1.69
Nonperforming loans and foreclosed real estate as a percentage
         of total assets at end of year............................       NIL         NIL         NIL           NIL
Allowance for credit losses as a percentage
         of total loans at end of year.............................        1.11%       1.01%       1.12%        1.18%
Total number of banking offices....................................         3           3           2             1
Total shares outstanding at end of year (1)........................ 3,486,767   3,455,039   1,697,354     1,528,438
Book value per share at end of year................................   $ 5.16         4.99        3.99          3.91

------------------------
<FN>
(1)      Share amounts  reflect the two-for-one  stock split effective  December 15, 1997, and the 8% stock dividend to
         stockholders of record on December 31, 1998.
</FN>
</TABLE>

                                        7

<PAGE>


                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


                                     General

Citizens  Community  Bancorp,  Inc.  ("Citizens")  owns 100% of the  outstanding
common stock of Citizens  Community  Bank ("CCB") and Citizens  Financial  Corp.
("CFC") and CCB Mortgage Corporation ("CCB Mortgage") (collectively the entities
are referred to as the "Company". Citizens was organized simultaneously with CCB
and its primary  business is the  ownership  and  operation  of CCB, CFC and CCB
Mortgage. CCB is a Florida state-chartered  commercial bank and its deposits are
insured by the Federal Deposit Insurance Corporation. CCB opened for business on
March 8, 1996, and provides  community banking  services,  through three banking
offices,  to businesses and  individuals  in Collier  County,  Florida.  CFC was
formed and  commenced  business as a  commercial  mortgage  broker in 1997.  CCB
Mortgage was formed and  commenced  business in 1999 as a  residential  mortgage
broker,  offering a variety of fixed and adjustable rate residential  permanent,
construction and lot loans.

                         Liquidity and Capital Resources

A  state-chartered  commercial  bank is  required  under  Florida  Law and  FDIC
regulations  to  maintain  a  liquidity  reserve  of at least  15% of its  total
transaction  accounts and 8% of its total  non-transaction  accounts  subject to
certain restrictions.  The reserve may consist of cash-on-hand,  demand deposits
due from  correspondent  banks, and other investments and short-term  marketable
securities.

The Company's primary source of cash during the year ended December 31, 1999 was
from net deposit inflows of $38.5 million.  Cash was used primarily to originate
loans and purchase securities. At December 31, 1999, the Company had outstanding
commitments to originate loans totaling $11.0 million,  commitments to borrowers
for available lines of credit  totaling $4.5 million and time deposits  maturing
in the next year of $27.3  million.  At December  31,  1999,  CCB  exceeded  its
regulatory liquidity requirements.

                           Regulation and Legislation

As a state-chartered  commercial bank, CCB is subject to extensive regulation by
the Florida  Department of Banking and Finance  ("Florida  DBF") and the Federal
Deposit Insurance Corporation  ("FDIC").  CCB files reports with the Florida DBF
and the FDIC concerning its activities and financial  condition,  in addition to
obtaining  regulatory approvals prior to entering into certain transactions such
as  mergers  with or  acquisitions  of other  financial  institutions.  Periodic
examinations  are  performed  by the Florida  DBF and the FDIC to monitor  CCB's
compliance with the various regulatory  requirements.  Citizens and CCB are also
subject to regulation and examination by the Federal Reserve Board of Governors.

                              Year 2000 Compliance

The Company's  operating and financial  systems have been found to be compliant;
the "Y2K Problem" did not adversely  affect the  Company's  operations  nor does
management expect that it will.

                                   Credit Risk

The Company's  primary business is providing deposit related services and making
real estate secured  residential and commercial  loans as well as other business
and consumer loans. The lending  activities  entail  potential loan losses,  the
magnitude of which depend on a variety of economic factors  affecting  borrowers
which are beyond our control.  We have  instituted  underwriting  guidelines and
credit review  procedures to protect the Company from  avoidable  credit losses,
some losses will  inevitably  occur.  At December 31, 1999 and 1998, the Company
had no  nonperforming  assets or loans which were  delinquent 90 days or more or
were nonperforming.



                                       8
<PAGE>



The following table presents information regarding total allowance for losses as
well as the  allocation  of such  amounts  to the  various  categories  of loans
(dollars in thousands):

<TABLE>

                                                               At December 31,
                               --------------------------------------------------------------------------------------
                                       1999                     1998                 1997                     1996
                               --------------------------------------------------------------------------------------
                                                 Loans                Loans               Loans                 Loans
                                                  To                   To                    To                    To
                                                 Total                Total               Total                 Total
                                       Amount    Loans      Amount    Loans     Amount    Loans       Amount    Loans

<S>                                    <C>         <C>      <C>         <C>      <C>         <C>       <C>         <C>
     Commercial real estate loans..... $ 527       52%      $ 315       48%      $ 94        35%       $ 62        31%
     Residential real estate loans....    99       31          51       32         42        27          22        36
     Commercial loans.................   221        7          68       11        117        29          55        31
     Consumer loans...................    38       10          19        9         45         9           6         2
                                       -----     ----         ---     ----        ---      ----         ---       ---

     Total allowance for loan
         losses....................... $ 885      100%      $ 453      100%     $ 298       100%      $ 145       100%
                                         ===      ===         ===      ===        ===       ===         ===       ===

     Allowance for credit losses as
         a percentage of the total
         loans outstanding............  1.11%                1.02%               1.12%                 1.18%
                                        ====                 ====                ====                  ====
</TABLE>


                           Loan Portfolio Composition

Commercial  real estate loans and land loans comprise the largest group of loans
in the portfolio,  amounting to approximately $42.3 million, or 52% of the total
loan portfolio as of December 31, 1999.  Commercial real estate loans consist of
approximately  $26.1  million of loans  secured by  nonresidential  property and
approximately $16.2 million of loans secured by undeveloped land.

Residential  real estate loans comprise the second largest group of loans in our
loan portfolio, amounting to $24.9 million or 31% of the total loan portfolio as
of December 31, 1999, of which approximately 96% are first mortgage loans. As of
December 31, 1999,  consumer loans and savings  account loans,  amounted to $7.7
million or 10% of the total loan portfolio.

The following table sets forth the loan portfolio composition:

<TABLE>

                                                                       At December 31,
                               --------------------------------------------------------------------------------------
                                            1999                  1998                1997                 1996
                               --------------------------------------------------------------------------------------
                                                  % of                 % of                % of                  % of
                                       Amount    Total      Amount    Total     Amount    Total       Amount    Total
                                      -------    -----     ------     -----    -------    -----      -------    -----
                                                                       (In thousands)

<S>                                  <C>            <C>   <C>           <C>   <C>            <C>    <C>            <C>
Commercial real estate.............. $ 42,287       52%   $ 21,820      48%   $  9,423       35%    $  3,758       31%
Residential real estate.............   24,921       31      14,571      32       7,261       27        4,384       36
Commercial..........................    5,706        7       4,994      11       7,710       29        3,815       31
Consumer ...........................    7,703       10       3,827       9       2,261        9          305        2
                                      -------     ----     -------     ----     ------      ---        -----      ---

         Loans, gross...............   80,617      100%     45,212     100%     26,655      100%      12,262      100%
                                                   ===                 ===                  ===                   ===

Add (subtract):
     Deferred costs, net............      256                  174                  63                    (1)
     Allowance for loans losses.....     (885)                (453)               (298)                 (145)
                                      -------             --------              ------                ------

         Loans, net................. $ 79,988             $ 44,933            $ 26,420              $ 12,116
                                      =======             ========              ======                ======
</TABLE>


                                       9
<PAGE>



                                   Securities

The  securities  portfolio is  comprised  primarily  of U.S.  Government  agency
securities.  According to Financial Accounting Standards No. 115, the securities
portfolio must be categorized as either "held to maturity", "available for sale"
or "trading".  Securities held to maturity  represent those securities which the
Company  has  the  positive  intent  and  ability  to hold  to  maturity.  These
securities are carried at amortized  cost and were comprised of U.S.  Government
agency securities at December 31, 1999.  Securities available for sale represent
those  investments  which may be sold for various reasons  including  changes in
interest rates and liquidity  considerations.  These  securities are reported at
fair  market  value with  unrealized  gains and losses  being  reported as a net
amount in other comprehensive  income, net of income taxes and were comprised of
U.S.  government  agency  securities,   mortgage-backed  securities  and  equity
securities  at December 31, 1999.  Trading  securities  are held  primarily  for
resale and are  recorded  at their fair  values.  Unrealized  gains or losses on
trading  securities are included  immediately in earnings.  At December 31, 1999
and 1998, the Company had no securities categorized for trading purposes.

The following  table sets forth the carrying  value of the Company's  securities
portfolio:

<TABLE>

                                                                                                   At December 31,
                                                                                                 1999        1998
                                                                                                 ----        ----
                                                                                                  (In thousands)
     Securities available for sale:
<S>                                                                                            <C>
         U.S. Government agency securities................................................     $  4,878         -
         Mortgage-backed securities.......................................................          954         -
         Equity securities................................................................          190         -
                                                                                                -------      ----

               Total available for sale...................................................     $  6,022         -
                                                                                                 ======      ====

     Securities held to maturity-
         U.S. Government agency securities................................................     $ 13,000     8,500
                                                                                                 ======     =====
</TABLE>

The following table sets forth, by maturity  distribution,  certain  information
pertaining to the securities portfolio (dollars in thousands):

<TABLE>

                                            After One Year    After Five Years
                        One Year or Less      to Five Year       to Ten Years     After Ten Years         Total
                       ------------------- ----------------  -----------------  -----------------  -------------------
                        Carrying   Average Carrying Average   Carrying Average  Carrying  Average   Carrying   Average
                         Value     Yield    Value    Yield     Value    Yield    Value     Yield     Value      Yield
                       ---------  -------- -------- -------  --------- -------  --------  -------   --------   -------
At December 31, 1999:
   U.S. Government
     agency
<S>                         <C>      <C>   <C>        <C>      <C>       <C>     <C>        <C>     <C>          <C>
     securities........     $ 750    6.01% $ 13,992   5.86%    $ 1,058   6.65%   $ 2,078    7.63%   $ 17,878     6.12%
                              ===    ====    ======   ====       =====   ====      =====    ====                 ====

   Mortgage-backed securities....................................................................        954
   Equity securities.............................................................................        190
                                                                                                      ------

     Total.......................................................................................   $ 19,022
                                                                                                      ======

At December 31, 1998:
   U.S. Government
     agency
     securities........     $   -       -% $  8,500   5.17%    $    -        - % $     -       -%   $  8,500     5.17%
                              ===   =====    ======   ====       =====    ====     =====    ====      ======     ====

</TABLE>



                                       10
<PAGE>


                         Regulatory Capital Requirements

All Banks are required to meet certain minimum regulatory capital  requirements.
These capital  requirements  are intended to promote safety and soundness in the
banking  industry and the  requirement  provide limits to the amount of assets a
bank may have in light of its capital structure.

Quantitative  measures  established  by  regulation to ensure  capital  adequacy
require  CCB to  maintain  minimum  amounts  and ratios  (set forth in the table
below)  of  total  and  Tier  I  capital  (as  defined  in the  regulations)  to
risk-weighted assets (as defined), and of Tier I capital (as defined) to average
assets (as defined).

To be categorized as well  capitalized,  an  institution  must maintain  minimum
total  risk-based,  Tier I risk-based,  and Tier I leverage  percentages  as set
forth in the  following  tables.  There are no  conditions  or events since that
notification  that  management  believes  have  changed  CCB's  category.  As of
December  31,  1999,  CCB meet all capital  adequacy  requirements  as set forth
below:

<TABLE>

                                                                                                    To Be Well
                                                                                                   Capitalized
                                                                              Minimum              for Purposes
                                                                           For Capital             of Prompt and
                                              Actual                    Adequacy Purposes:       Corrective Action:
                                     ------------------------      ----------------------      --------------------
                                       Amount            %          Amount          %           Amount            %
                                       ------         ------        ------       -------        ------         ----
                                                                  (Dollars in thousands)
     <S>                             <C>              <C>
     As of December 31, 1999:
         Total Capital (to Risk-
         Weighted Assets)..........  $ 9,232          12.17%       $ 5,927         8.00%        $ 7,409       10.00%
         Tier I Capital (to Risk-
         Weighted Assets)..........    8,427          11.11          2,964         4.00           4,445        6.00
         Tier I Capital
         (to Average Assets).......    8,427           8.25          4,085         4.00           5,106        5.00

     As of December 31, 1998:
         Total Capital (to Risk-
         Weighted Assets)  .........   6,808          15.34          3,551         8.00           4,439       10.00
         Tier I Capital (to Risk-
         Weighted Assets)  .........   6,375          14.36          1,776         4.00           2,663        6.00
         Tier I Capital
         (to Average Assets)........   6,375          10.36          2,461         4.00           3,077        5.00

</TABLE>

                                   Market Risk

Market risk is the risk of loss from adverse changes in market prices and rates.
The Company"s market risk arises primarily from  interest-rate  risk inherent in
its lending and  deposit-taking  activities.  To that end,  management  actively
monitors and manages its interest-rate risk exposure.  The measurement of market
risk associated  with financial  instruments is meaningful only when all related
and offsetting on- and  off-balance-sheet  transactions are aggregated,  and the
resulting  net  positions are  identified.  Disclosures  about the fair value of
financial instruments,  which reflect changes in market prices and rates, can be
found in Note 6 of Notes to Consolidated Financial Statements.

The primary objective in managing interest-rate risk is to maximize earnings and
minimize the potential  adverse impact of changes in interest rates on CCB"s net
interest  income and capital,  while  adjusting  the  company"s  asset-liability
structure to obtain the maximum  yield-cost  spread on that  structure.  We rely
primarily  on our  asset-liability  structure  to  manage  interest  rate  risk.
However,  a sudden and  substantial  increase  in interest  rates may  adversely
impact  our  earnings,  to the  extent  that  the  interest-earning  assets  and
interest-bearing  liabilities  do not  change  at the  same  speed,  to the same
extent, or on the same basis. The Company does not engage in securities  trading
activities.



                                       11
<PAGE>



                           Asset - Liability Structure

As part of its  asset and  liability  management,  the  Company  has  emphasized
establishing and implementing internal  asset-liability  decision processes,  as
well as communications  and control  procedures to aid in managing the Company's
asset and liability mix and to improve earnings. We believe that these processes
and procedures  provide the Company with better capital planning,  asset mix and
volume controls,  loan-pricing guidelines,  and deposit interest-rate guidelines
which should result in tighter controls and less exposure to interest-rate risk.

The matching of assets and  liabilities  may be analyzed by examining the extent
to which such assets and  liabilities  are  "interest-  rate  sensitive"  and by
monitoring  an  institution's  interest  rate  sensitivity  "gap."  An  asset or
liability is said to be interest-rate sensitive within a specific time period if
it will mature or reprice within that time period. The interest-rate sensitivity
gap  is  defined  as  the  difference   between   interest-earning   assets  and
interest-bearing  liabilities  maturing or repricing within a given time period.
The gap ratio is computed by dividing  rate  sensitive  assets by interest  rate
sensitive liabilities. A gap ratio of 1.0% represents perfect matching. A gap is
considered  positive when the amount of  interest-rate  sensitive assets exceeds
interest-rate  sensitive  liabilities.  A gap is  considered  negative  when the
amount of interest-rate  sensitive liabilities exceeds  interest-rate  sensitive
assets. During a period of rising interest rates, a negative gap would generally
be expected to adversely  affect net interest income since more liabilities than
assets are subject to maturity or  repricing,  conversely,  a positive gap would
generally result in an increase in net interest income with rising rates. During
a period of falling  interest  rates, a negative gap would result in an increase
in net interest income, while a positive gap would adversely affect net interest
income.

In order to minimize the potential for adverse effects of material and prolonged
increases in interest  rates on the results of  operations,  asset and liability
management  policies are monitored to better match the  maturities and repricing
terms of both  interest-earning  assets and interest-bearing  liabilities.  Such
policies  have  consisted  primarily  of: (i)  emphasizing  the  origination  of
adjustable-rate  loans;  (ii)  maintaining a stable core deposit base; and (iii)
maintaining  a  significant  portion  of  liquid  assets  (cash  and  short-term
securities).

The following table reflects the contractual  principal  repayments by period of
the Company's loan portfolio at December 31, 1999 (in thousands):

<TABLE>

                                               Commercial
                                                  Real                       Residential
         Years Ending                            Estate       Commercial      Mortgage        Consumer
         December 31,                            Loans          Loans           Loans          Loans           Total
                                               ----------     ----------     -----------      --------       --------

<S>        <C>                                 <C>              <C>            <C>            <C>              <C>
           2000.............................   $  7,259         3,909          2,407          1,775            15,350
           2001.............................      8,691           484            944            707            10,826
           2002.............................      5,626           525          1,555            596             8,302
           2003-2004........................      3,328           500          1,345            496             5,669
           2005-2006........................      3,544            68            644            396             4,652
           2007 and beyond..................     13,839           220         18,026          3,733            35,818
                                                 ------        ------         ------          -----            ------

           Total............................   $ 42,287         5,706         24,921          7,703            80,617
                                                 ======         =====         ======          =====            ======
</TABLE>


Of the $65.3  million  of loans due after  2000,  30% of such  loans  have fixed
interest rates and 70% have adjustable interest rates.

Scheduled  contractual  principal  repayments of loans do not reflect the actual
life of such assets.  The average life of loans is substantially less than their
average contractual terms due to prepayments.  In addition,  due-on-sale clauses
on loans  generally  give the Company the right to declare a  conventional  loan
immediately due and payable in the event, among other things,  that the borrower
sells the real property subject to the mortgage and the loan is not repaid.  The
average life of mortgage loans tends to increase, however, when current mortgage
loan rates are  substantially  higher than rates on existing mortgage loans and,
conversely,  decrease when rates on existing mortgages are substantially  higher
than current mortgage loan rates.



                                       12
<PAGE>



The   following   table  sets  forth   certain   information   relating  to  our
interest-earning  assets and  interest-bearing  liabilities at December 31, 1999
that are estimated to mature or are scheduled to reprice within the period shown
(dollars in thousands):

<TABLE>
                                                                 More
                                                                 Than         More
                                                                 Three       Than Six     More
                                                                 Months       Months    Than One
                                                    Three        to Six       to One    Year to      More Than
                                                     Months      Months       Year     Five Years   Five Years  Total
Mortgage, commercial and consumer loans (1):
<S>                                                <C>             <C>        <C>        <C>            <C>     <C>
    Variable rate...........................       $ 24,381        143        2,542      27,010         560     54,636
    Fixed rate..............................          1,751      1,313        2,818      17,992       2,107     25,981
                                                    -------     ------       ------      ------      ------    -------

         Total loans........................         26,132      1,456        5,360      45,002       2,667     80,617

Interest bearing deposits...................          2,000      -            -           -           -          2,000
Federal funds sold and securities
    purchased under agreements
    to resell...............................          8,893      -            -           -           -          8,893
Federal Home Loan Bank stock................            215      -            -           -           -            215
Securities held to maturity (2).............          -          -            -          13,000       -         13,000
Securities available for sale...............          4,090      -              750         992         190      6,022
                                                     ------     ------       ------      ------      ------    -------

         Total rate-sensitive assets........         41,330      1,456        6,110      58,994       2,857    110,747
                                                     ------     ------       ------      ------      ------    -------

Deposit accounts (3):
    NOW deposits  ..........................         27,173      -            -           -           -         27,173
    Money-market deposits...................         21,722      -            -           -           -         21,722
    Savings deposits........................          7,119      -            -           -           -          7,119
    Time deposit  ..........................         15,768      3,878        7,553       7,076       -         34,275
                                                    -------     ------       ------      ------      ------    -------

         Total rate-sensitive
             liabilities....................       $ 71,782      3,878        7,553       7,076       -         90,289
                                                     ======     ======       ======      ======      ======    =======

GAP repricing differences...................       $(30,452)    (2,422)      (1,443)     51,918       2,857    20,458
                                                     ======     ======       ======      ======      ======   =======

Cumulative GAP    ..........................       $(30,452)   (32,874)     (34,317)     17,601      20,458
                                                     ======     ======       ======      ======      ======

Cumulative GAP/total assets.................            (25)%      (27)%        (28)%        14%         17%
                                                     ======     ======       ======      ======      ======
<FN>
(1) In  preparing  the table  above,  adjustable-rate  loans are included in the
    period in which the interest  rates are next scheduled to adjust rather than
    in the period in which the loans  mature.  Fixed-rate  loans are  scheduled,
    including repayment, according to their maturities.
(2) Securities are scheduled through the maturity dates.
(3) Money-market,  NOW, and savings  deposits  are regarded as ready  accessible
    withdrawable  accounts.  Time  deposits are  scheduled  through the maturity
    dates.
</FN>
</TABLE>

                                       13
<PAGE>



Origination,  Sale and Repayment of Loans. The Company generally originate loans
on real estate  located in our primary  geographical  lending  area in Southwest
Florida.  Residential  mortgage loan originations are generated from depositors,
other  existing  customers,  advertising  and  referrals  from mortgage and real
estate  brokers  and  developers.   The  Company"s  residential  mortgage  loans
generally  are  originated  to  ensure   compliance   with   documentation   and
underwriting  standards which permit their sale to the Federal National Mortgage
Association ("Fannie Mae") and other investors in the secondary market.

Since  November,   1999,  substantially  all  residential  mortgage  loans  were
originated by the Company  through CCB Mortgage.  For certain  adjustable  rate,
construction  and lot loans, the loans were closed by CCB for its permanent loan
portfolio. All other loans originated by CCB Mortgage Corp. were sold to, closed
and funded by other third party  banks or mortgage  companies.  Both CCB and CCB
Mortgage  intend to continue to cross sell loan and deposit  products  that meet
the bank's desired asset liability mix and generate  additional revenues for the
Company.

Similar to CCB  Mortgage,  CFC  originates  loans,  some of which are closed and
funded by CCB and some of which are closed and funded by third  parties.  During
the year ending December 31, 1999, there were no loans closed in the name of CCB
Mortgage or CFC, all loans originated by both subsidiaries were closed by CCB or
third parties.  The Company intends to continue to utilize both subsidiaries for
the origination referrals.

The following table sets forth total loans originated, repaid and sold:

<TABLE>

                                                                                    Year Ended December 31,
                                                                     --------------------------------------------------
                                                                         1999          1998          1997          1996
                                                                         ----          ----          ----          ----
                                                                                    (In thousands)
      Originations:
<S>                                                                   <C>              <C>            <C>        <C>
         Commercial loans..........................................   $  3,379         2,964          756        3,855
         Commercial real estate loans..............................     22,884        11,798        9,426        3,797
         Residential mortgage loans................................     18,442        10,785       13,897        4,384
         Consumer loans............................................      5,600         2,800        2,888          305
                                                                        ------        ------       ------       ------

             Total loans originated................................     50,305        28,347       26,967       12,341

      Principal reductions.........................................     14,900         9,209        7,887           79
      Loans sold...................................................         -            565        4,687           -
                                                                        ------        ------       ------       ------

      Increase in total loans......................................   $ 35,405        18,573       14,393       12,262
                                                                        ======        ======       ======       ======
</TABLE>


                       Deposits and Other Sources of Funds

General. In addition to deposits, the sources of funds available for lending and
other business  purposes include loan  repayments,  loan sales, and Federal Home
Loan Bank ("FHLB")  advances.  Loan repayments are a relatively stable source of
funds,  while  deposit  inflows and outflows  are  influenced  significantly  by
general  interest  rates and market  conditions.  FHLB advances may be used on a
short-term or long-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.

Deposits.  Deposits are attracted principally from our primary geographic market
areas in  Collier  County,  Florida.  CCB  offers a broad  selection  of deposit
instruments  including  demand  deposit  accounts,  NOW accounts,  money- market
accounts,  regular savings  accounts,  term certificate  accounts and retirement
savings plans (such as IRA  accounts).  Certificate  of deposit rates are set to
encourage longer  maturities as cost and market  conditions will allow.  Deposit
account  terms vary,  with the  primary  differences  being the minimum  balance
required,  the time  period the funds must  remain on deposit  and the  interest
rate.  Deposit  interest rates are set weekly based on a review of deposit flows
for the previous week, a survey of rates among  competitors  and other financial
institutions  in  Southwest  Florida.   Commercial  banking   relationships  are
emphasized  in an effort to increase  demand  deposits as a percentage  of total
deposits.  A courier  service is  provided to better  serve the banks'  business
customers.

                                       14
<PAGE>


The following  table shows the  distribution  of, and certain other  information
relating to deposit accounts by type (dollars in thousands):

<TABLE>

                                                                                     At December 31,
                                                                         1999                             1998
                                                            ----------------------------------------------------------
                                                                                 % of                         % of
                                                                   Amount       Deposits           Amount    Deposits

<S>                                                              <C>              <C>            <C>             <C>
         Noninterest-bearing demand deposits..................   $  12,210        11.91%         $  6,365        9.95%
         NOW deposits.........................................      27,173        26.51            25,073       39.18
         Money-market deposits................................      21,722        21.19             4,011        6.27
         Savings deposits.....................................       7,119         6.95             8,235       12.87
                                                                  --------       ------           -------      ------

                  Subtotal....................................      68,224        66.56            43,684       68.27
                                                                   -------       ------            ------      ------

         Time deposits:
                  2.00% - 3.99%...............................         262          .26               265         .41
                  4.00% - 4.99%...............................      10,371        10.12             3,093        4.83
                  5.00% - 5.99%...............................      18,765        18.31            11,952       18.68
                  6.00% - 6.99%...............................       4,876         4.75             4,996        7.81
                                                                  --------      -------           -------     -------

         Total time deposits (1)..............................      34,274        33.44            20,306       31.73
                                                                   -------       ------            ------      ------

         Total deposit........................................   $ 102,498       100.00%         $ 63,990      100.00%
                                                                   =======       ======            ======      ======

<FN>
(1)      Includes  individual  retirement accounts ("IRAs") totaling $1,896,095 and $1,514,387 at December 31, 1999 and
         1998, all of which are in the form of time deposits.
</FN>
</TABLE>

Jumbo time deposits ($100,000 and over) mature as follows (in thousands):

<TABLE>

                                                                                                       At December 31,
                                                                                                      1999        1998

<S>                                                                                               <C>              <C>
         Due three months or less...........................................................      $  4,929         825
         Due over three months to six months................................................         1,840         409
         Due over six months to one year....................................................         3,328       2,399
         Due over one year..................................................................         2,521       1,809
                                                                                                    ------       -----

                                                                                                  $ 12,618       5,442
                                                                                                    ======       =====
</TABLE>



                                       15
<PAGE>


                              Results of Operations

The Company's  operating  results depend  primarily on its net interest  income,
which is the difference between interest income on  interest-earning  assets and
interest  expense  on  interest-bearing  liabilities,  consisting  primarily  of
deposits.  Net interest  income is determined by the  difference  between yields
earned on interest-earning assets and rates paid on interest-bearing liabilities
("interest-rate spread") and the relative amounts of interest-earning assets and
interest-bearing  liabilities. The Company's interest-rate spread is affected by
regulatory,  economic,  and competitive  factors that influence  interest rates,
loan demand, and deposit flows. In addition,  the net earnings are also affected
by  provisions  for future loan  losses,  the level of  nonperforming  loans and
foreclosed  real estate,  as well as the level of our  noninterest  income,  and
noninterest  expenses,  such as salaries and employee  benefits,  occupancy  and
equipment costs and income taxes.

The following table sets forth, for the periods indicated, information regarding
(i)  the  total   dollar   amount  of   interest   and   dividend   income  from
interest-earning  assets and the resultant  average yield; (ii) the total dollar
amount of interest  expense on  interest-bearing  liabilities  and the resultant
average costs; (iii) net  interest/dividend  income;  (iv) interest rate spread;
(v) net interest margin; and (vi) the ratio of average  interest-earning  assets
to average interest-bearing  liabilities.  Average balances are based on average
daily balances (dollars in thousands).

<TABLE>

                                          1999                                  1998                                    1997
                     ----------------------------------------------------------------------------------------------------------
                                             Interest    Average              Interest    Average            Interest   Average
                                   Average      and      Yield/   Average       and       Yield/    Average     and      Yield/
                                   Balance   Dividends   Rate     Balance    Dividends    Rate      Balance  Dividends   Rate
                                   -------   ---------   -------  -------    ---------    --------  -------  ---------   ------
Interest-earning assets:
<S>                               <C>          <C>       <C>     <C>           <C>         <C>     <C>         <C>       <C>
     Loans....................... $  63,483    5,275     8.31%   $ 35,329      2,944       8.33%   $  20,537   1,914     9.32%
     Securities..................    15,521      902       5.81     7,670        476       6.21        2,346     141     6.01
     Other interest-earning
         assets (1)..............    12,356      615       4.98    13,131        709       5.40        8,516     468     5.50
                                    -------   ------               ------      -----                 -------   -----

         Total interest-earning
           assets................    91,360    6,792       7.43    56,130      4,129       7.36       31,399   2,523     8.04
                                    -------                                    -----                           -----

Noninterest-earning assets.......     9,107                         7,420                              5,157
                                    -------                       -------                             ------

         Total assets............ $ 100,467                      $ 63,550                           $ 36,556
                                    =======                        ======                             ======

Interest-bearing liabilities:
     Savings, money-market and
         NOW deposits............    44,641    1,303       2.92    26,748        912       3.41       14,768     534     3.62
     Time deposits...............    27,556    1,447       5.25    19,302      1,097       5.68       11,704     664     5.67
     Other.......................      -        -           -        -          -           -            125      10     8.00
                                    -------   ------              -------      -----                  ------   -----

         Total interest-bearing
           liabilities...........    72,197    2,750       3.81    46,050      2,009       4.36       26,597   1,208     4.54
                                               -----                           -----                           -----

Noninterest-bearing liabilities..    10,674                         5,484                              3,571
Stockholders' equity.............    17,596                        12,016                              6,388
                                    -------                        ------                             ------

         Total liabilities and
           stockholders' equity.. $ 100,467                      $ 63,550                           $ 36,556
                                    =======                        ======                             ======

Net interest/dividend income.....            $ 4,042                         $ 2,120                         $ 1,315
                                               =====                           =====                           =====

Interest-rate spread (2).........                          3.62%                           3.00%                         3.50%
                                                           ====                            ====                          ====

Net interest margin (3)..........                          4.42%                           3.78%                         4.20%
                                                           ====                            ====                          ====

Ratio of average interest-earning
     assets to average interest-
     bearing liabilities.........      1.27                          1.22                               1.18
                                       ====                          ====                               ====


<FN>
(1)  Includes interest-bearing deposits and federal funds sold.
(2)  Interest-rate spread represents the difference between the average yield on
     interest-earning   assets  and  the   average   cost  of   interest-bearing
     liabilities.
(3)  Net   interest   margin  is  net   interest   income   divided  by  average
     interest-earning assets.
</FN>
</TABLE>

                                       16
<PAGE>



Rate/Volume Analysis

The following table sets forth certain information regarding changes in interest
income and  interest  expense for the periods  indicated.  For each  category of
interest-earning  assets  and  interest-bearing   liabilities,   information  is
provided  on  changes  attributable  to (1)  changes  in  rate  (change  in rate
multiplied by prior volume),  (2) changes in volume (change in volume multiplied
by prior  rate) and (3) changes in  rate-volume  (change in rate  multiplied  by
change in volume).

<TABLE>

Year Ended December 31, 1999 vs. 1998:
                                                                                      Increase (Decrease) Due to
                                                                                                      Rate/
                                                                                  Rate    Volume     Volume     Total
                                                                                -------   -------    ------   -------
                                                                                               (In thousands)
Interest-earning assets:
<S>                                                                             <C>         <C>          <C>    <C>
    Loans....................................................................   $   (7)     2,345        (7)    2,331
    Securities...............................................................      (31)       488       (31)      426
    Other interest-earning assets............................................      (55)       (42)        3       (94)
                                                                                   ---     ------      ----    ------

      Total..................................................................      (93)     2,791       (35)    2,663
                                                                                   ---      -----       ---     -----

Interest-bearing liabilities:
    Deposits:
      Savings, demand, money-market and NOW deposits.........................     (131)       610       (88)      391
      Time deposits..........................................................      (83)       469       (36)      350
                                                                                   ---     ------       ---    ------

      Total..................................................................     (214)     1,079      (124)      741
                                                                                   ---      -----       ---     -----

Net change in net interest income............................................    $ 121      1,712        89     1,922
                                                                                   ===      =====      ====     =====

Year Ended December 31, 1998 vs. 1997:

Interest-earning assets:
    Loans....................................................................    $(203)     1,379      (146)    1,030
    Securities...............................................................        5        320        10       335
    Other interest-earning assets............................................       (9)       254        (4)      241
                                                                                  ----     ------      ----     -----

      Total..................................................................     (207)     1,953      (140)    1,606
                                                                                   ---      -----       ---     -----

Interest-bearing liabilities:
    Deposits:
      Demand, money-market and NOW deposits..................................      (34)       368       (24)      310
      Savings................................................................        3         56         9        68
      Time deposits..........................................................        1        430         2       433
      Other..................................................................        -        (10)        -       (10)
                                                                                 -----      -----     -----    ------

      Total..................................................................      (30)       844       (13)      801
                                                                                   ---      -----       ---     -----

Net change in net interest income............................................    $(177)     1,109      (127)      805
                                                                                   ===      =====       ===     =====
</TABLE>
Comparison of Years Ended December 31, 1999 and 1998

                                       17


<PAGE>


    General.  Net earnings for the year ended December 31, 1999 were $615,259 or
      $.18 per  basic  and $.17  per  diluted  share  compared  to net  earnings
      $205,854 or $.08 per basic and diluted  share for the year ended  December
      31, 1998. This  improvement in net operating  results was primarily due to
      an increase  in net  interest  income and  noninterest  income,  partially
      offset by an increase in  noninterest  expenses and the provision for loan
      losses, all as a result of growth of the Company.

    Interest Income and Expense.  Interest income increased by $2.7 million from
      $4.1 million for the year ended  December 31, 1998 to $6.8 million for the
      year ended December 31, 1999.  Interest  income on loans increased to $5.3
      million from $2.9  million due an increase in the average  loan  portfolio
      balance  for the year  ended  December  31,  1999,  partially  offset by a
      decrease in the weighted-average yield earned to 8.31% for 1999 from 8.33%
      for 1998.  Interest  on  securities  increased  to $.9  million  due to an
      increase in the average securities balance in 1999,  partially offset by a
      decrease in the average  yield earned from 6.21% in 1998 to 5.81% in 1999.
      Interest  on  other  interest-earning  assets  decreased  to  $.6  million
      primarily  due to a decrease in the average  balance and a decrease in the
      weighted-average yield earned on those assets.

      Interest  expense  increased  to $2.7 million in 1999 from $2.0 million in
      1998.  Interest  expense  increased  due to the  $26.1  million  growth in
      average interest-bearing  deposits in 1999, partially offset by a decrease
      in the weighted-average rate paid.

    Provision  for Loan  Losses.  The  provision  for loan losses was charged to
      earnings to bring the total  allowance  to a level deemed  appropriate  by
      management and is based upon historical experience, the volume and type of
      lending conducted by the Company.  In addition,  industry  standards,  the
      amounts of nonperforming loans, general economic conditions,  particularly
      as  they  relate  to  market  areas,  and  other  factors  related  to the
      collectibility  of the  Company's  loan  portfolio  were  considered.  The
      provision for loan losses  increased  from $161,711 in 1998 to $437,000 in
      1999. The  year-over-year  increase was due to the $35 million increase in
      loan portfolio during the year. Management believes that the allowance for
      loan losses of $885,617 is adequate at December 31, 1999.

    Noninterest  Income.  Noninterest  income increased from $341,397 in 1998 to
      $592,202 in 1999  primarily  due to increased  service  charges on deposit
      accounts in 1999 compared to 1998.

    Noninterest Expense. Total noninterest expense increased to $3.2 million for
      the year  ended  December  31,  1999  compared  to $1.9  million  in 1998,
      primarily  due to  increases  in employee  compensation  and  benefits and
      occupancy and equipment  expense  resulting,  in part, from the opening of
      the Moorings office in September  1998. All other operating  expenses also
      increased primarily due to the overall growth of the Company.

    Income Taxes.  The income tax  provision was $347,876 (an effective  rate of
      36.1%) for 1998 compared to a $157,893 (an effective rate of 43.4%) for
      1998.



                                       18
<PAGE>



Comparison of Years Ended December 31, 1998 and 1997


    General.  Net earnings for the year ended December 31, 1998 were $205,854 or
      $.08 per basic and diluted share compared to net earnings $109,506 or $.06
      per basic and diluted  share for the year ended  December 31,  1997.  This
      improvement  in net operating  results was primarily due to an increase in
      net  interest  income  and  noninterest  income,  partially  offset  by an
      increase  in  noninterest  expenses,  all as a  result  of  growth  of the
      Company.

    Interest Income and Expense.  Interest income increased by $1.6 million from
      $2.5 million for the year ended  December 31, 1997 to $4.1 million for the
      year ended December 31, 1998.  Interest  income on loans increased to $2.9
      million from $1.9 million due to an increase in the average loan portfolio
      balance  for the year  ended  December  31,  1998,  partially  offset by a
      decrease  in the  weighted-average  yield to 8.33% for 1998 from 9.32% for
      1997.  Interest on securities  increased to $.5 million due to an increase
      in the average  securities  balance in 1998, as well as an increase in the
      average  yield  from  6.01% in 1997 to 6.21%  in 1998.  Interest  on other
      interest-earning  assets  increased  to $.7  million  primarily  due to an
      increase in average other interest-earning  assets,  partially offset by a
      decrease in the weighted-average yield earned on those assets.

      Interest  expense  increased  to $2.0 million in 1998 from $1.2 million in
      1997.  Interest expense increased due to the growth in average deposits in
      1998, partially offset by a decrease in the weighted-average  rate paid on
      deposits.

    Provision for Loan Losses.  As mentioned  earlier,  the  provision  for loan
      losses was  charged to earnings  to bring the total  allowance  to a level
      deemed appropriate by management. The provision for loan losses charged to
      expenses was  $161,711 and $153,000 for the years ended  December 31, 1998
      and 1997,  respectively.  Management  believes that the allowance for loan
      losses of $453,211 was adequate at December 31, 1998.

    Noninterest  Income.  Noninterest  income  increased  from  $273,102 in 1997
      to $341,397 in 1998  primarily due to increased service charges on deposit
      accounts.

    Noninterest Expense. Total noninterest expense increased to $1.9 million for
      the year  ended  December  31,  1998  compared  to $1.3  million  in 1997,
      primarily  due to  increases  in employee  compensation  and  benefits and
      occupancy and equipment  expense  resulting from the opening of additional
      offices in 1997 and 1998.  All other  operating  expenses  also  increased
      primarily due to the overall growth of the Company.

    Income Taxes.  The income tax  provision  was $157,893 (an effective rate of
      43.4%) for 1998 compared to a $66,000 (an effective rate of 37.6%) for
      1997.



                                       19
<PAGE>



                     Impact of Inflation and Changing Prices

The financial statements and related data presented herein have been prepared in
accordance with generally  accepted  accounting  principles,  which requires the
measurement 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 the  Company  are  monetary  in nature.  As a
result,  interest  rates  have  a  more  significant  impact  on  the  Company's
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.

                         Future Accounting Requirements

Financial Accounting  Standards 133 - Accounting for Derivative  Investments and
Hedging Activities requires companies to record derivatives on the balance sheet
as assets or liabilities, measured at fair value. Gains or losses resulting from
changes in the values of those  derivatives  would be accounted for depending on
the use of the  derivatives and whether they qualify for hedge  accounting.  The
key criterion  for hedge  accounting  is that the hedging  relationship  must be
highly  effective in achieving  offsetting  changes in fair value or cash flows.
The  Company  will be  required to adopt this  Statement  January 1, 2001.  This
Statement is not expected to have a material impact on the Company.

                           Selected Quarterly Results

Selected quarterly results of operations for the four quarters ended December 31
are as follows (in thousands, except share amounts:

<TABLE>

                                          1999                                                 1998
                               ---------------------------------------------------------------------------------------
                                 Fourth    Third      Second      First        Fourth     Third      Second     First
                                Quarter    Quarter    Quarter    Quarter      Quarter    Quarter    Quarter    Quarter
                               ---------------------------------------------------------------------------------------

<S>                            <C>          <C>        <C>        <C>            <C>      <C>        <C>         <C>
Interest income............    $ 1,946      1,815      1,630      1,401          982      1,142      1,075       931
Interest expense...........        805        756        642        547          484        528        534       464
Net interest income........      1,141      1,059        988        854          498        614        541       467
Provision for loan
   losses..................         80        103        133        121           54         37         15        56
Noninterest income.........        187        139        133        133           35        117        100        89
Noninterest expense........        977        760        755        742          424        529        521       461
Earnings before
   income taxes............        271        335        233        124           54        165        105        39
Net earnings...............        169        209        151         87            9        103         70        24
Basic earnings per
   common share (1)........        .05        .06        .04        .03          -          .03        .04       .01
Diluted earnings per
   common share (1)........        .05        .06        .04        .03          -          .03        .03       .01
Cash dividends declared
   per common share........        -          -          -          -            -         -          -        -



<FN>
(1)   All per share information presented reflects the 1998 stock dividend.
</FN>
</TABLE>


                                       20
<PAGE>



                CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES

                           Consolidated Balance Sheets
<TABLE>


                                                                                                At December 31,
                                                                                            1999              1998
                                                                                            ----              ----
    Assets

<S>                                                                                   <C>                   <C>
Cash and due from banks.............................................................. $   6,035,589         5,481,992
Interest-bearing deposits............................................................     2,000,000            -
Federal funds sold and securities purchased under agreements to resell...............     8,892,655        19,181,095
                                                                                        -----------        ----------

              Cash and cash equivalents..............................................    16,928,244        24,663,087

Securities available for sale........................................................     6,022,103            -
Securities held to maturity..........................................................    13,000,000         8,499,968
Loans, net of allowance for loan losses of $885,617 and $453,211.....................    79,987,726        44,932,943
Premises and equipment, net..........................................................     5,039,789         3,549,924
Federal Home Loan Bank stock, at cost................................................       214,800           127,100
Deferred tax asset...................................................................        32,775            -
Accrued interest receivable and other assets.........................................       967,253           453,104
                                                                                        -----------        ----------

              Total assets........................................................... $ 122,192,690        82,226,126
                                                                                        ===========        ==========

    Liabilities and Stockholders' Equity

Liabilities:
    Noninterest-bearing demand deposits..............................................    12,208,961         6,365,180
    Savings and NOW deposits.........................................................    34,292,059        33,307,881
    Money-market deposits............................................................    21,722,006         4,010,998
    Time deposits....................................................................    34,274,902        20,306,399
                                                                                        -----------        ----------

              Total deposits.........................................................   102,497,928        63,990,458

    Official checks..................................................................     1,060,366           697,458
    Deferred income taxes............................................................        -                 19,850
    Accrued interest payable and other liabilities...................................       650,769           293,832
                                                                                        -----------        ----------

              Total liabilities......................................................   104,209,063        65,001,598
                                                                                        -----------        ----------

Commitments and contingency (Note 6 and 14)

Stockholders' Equity:
    Preferred stock, $.01 value; 2,000,000 shares authorized,
         none issued or outstanding..................................................        -               -
    Common stock, $.01 par value; 8,000,000 shares authorized, 3,486,767
         and 3,455,039 shares issued and outstanding.................................        34,868            34,550
    Additional paid-in capital.......................................................    19,310,313        19,158,862
    Accumulated deficit..............................................................    (1,353,625)       (1,968,884)
    Accumulated other comprehensive income (loss)....................................        (7,929)          -
                                                                                        -----------        -----------

              Total stockholders' equity.............................................    17,983,627        17,224,528
                                                                                        -----------        ----------

              Total liabilities and stockholders' equity............................. $ 122,192,690        82,226,126
                                                                                        ===========        ==========

See Accompanying Notes to Consolidated Financial Statements.

</TABLE>

                                       21
<PAGE>




               CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES

                       Consolidated Statements of Earnings
<TABLE>


                                                                                      Year Ended December 31,
                                                                       --------------------------------------
                                                                             1999             1998             1997
                                                                             ----             ----             ----
Interest income:
<S>                                                                      <C>               <C>              <C>
   Loans ..............................................................  $ 5,274,975       2,943,598        1,913,828
   Securities..........................................................      901,457         476,060          140,545
   Other interest-earning assets.......................................      615,424         709,403          468,404
                                                                           ---------       ---------        ---------

         Total interest income.........................................    6,791,856       4,129,061        2,522,777
                                                                           ---------       ---------        ---------

Interest expense:
   Deposits............................................................    2,749,603       2,009,177        1,197,823
   Other ..............................................................        -               -                9,573
                                                                           ---------       ---------        ---------

         Total interest expense........................................    2,749,603       2,009,177        1,207,396
                                                                           ---------       ---------        ---------

Net interest income....................................................    4,042,253       2,119,884        1,315,381

         Provision for loan losses.....................................      437,000         161,711          153,000
                                                                           ---------       ---------        ---------

Net interest income after provision for loan losses....................    3,605,253       1,958,173        1,162,381
                                                                           ---------       ---------        ---------

Noninterest income:
   Service charges and fees............................................      498,094         280,970          176,974
   Gain on sale of loans...............................................        -               -               68,476
   Other ..............................................................       94,108          60,427           27,652
                                                                           ---------       ---------        ---------

         Total noninterest income......................................      592,202         341,397          273,102
                                                                           ---------       ---------        ---------

Noninterest expenses:
   Compensation and  benefits..........................................    1,624,999         899,761          641,693
   Occupancy and equipment.............................................      440,281         330,474          167,755
   Advertising.........................................................      134,026         104,710           31,917
   Office supplies.....................................................      122,965         107,577           30,120
   Data processing.....................................................      170,575          78,024           62,195
   Professional fees...................................................      182,770          67,672           13,538
   Other ..............................................................      558,704         347,605          312,802
                                                                           ---------       ---------        ---------

         Total noninterest expenses....................................    3,234,320       1,935,823        1,260,020
                                                                           ---------       ---------        ---------

Earnings before income taxes...........................................      963,135         363,747          175,463

         Income taxes..................................................      347,876         157,893           65,957
                                                                           ---------       ---------        ---------

Net earnings ..........................................................  $   615,259         205,854          109,506
                                                                           =========       =========        =========

Earnings per share:

         Basic.........................................................$         .18            .08              .06
                                                                           =========       ========         ========

         Diluted.......................................................$         .17            .08              .06
                                                                           ==========      =========        =========


See Accompanying Notes to Consolidated Financial Statements.
</TABLE>

                                       22
<PAGE>
<TABLE>

                CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES

           Consolidated Statements of Changes in Stockholders' Equity

                  Years Ended December 31, 1999, 1998 and 1997

                                                     Common Stock                                     Accumulated
                                                 Number                   Additional                  Other            Total
                                                  of                       Paid-In      Accumulated   Comprehensive   Stockholders'
                                                 Shares        Amount      Capital        Deficit     Income (Loss)    Equity
                                                -------      --------     ----------    -----------   -------------  --------------

<S>                 <C> <C>                      <C>         <C>           <C>           <C>                         <C>
Balance at December 31, 1996...............      707,610     $  7,076      6,322,086     (364,979)        -          5,964,183

Issuance of shares of common stock at
     $9.00.................................       77,452          774        689,545         -            -            690,319

Two-for-one stock split on December
     15, 1997..............................      785,062        7,851         (7,851)        -            -              -

Issuance of common stock at $4.50..........        1,500           15          6,735         -            -              6,750

Net earnings and comprehensive income......          -           -           -            109,506         -            109,506
                                              ----------   ---------     ----------    ---------     -------        ---------

Balance at December 31, 1997..............     1,571,624       15,716      7,010,515     (255,473)        -          6,770,758
                                                                                                                    ----------

     Net earnings and comprehensive
        income............................        -            -              -           205,854         -            205,854

Sale of shares of common
     stock at $7.50 per share ............     1,000,000       10,000      7,413,256       -              -          7,423,256

Issuance of shares of common
     stock to holders of  warrants........       625,513        6,255      2,808,553       -              -          2,814,808

Stock options exercised...................         2,000           20          9,832       -              -              9,852

Stock dividend............................       255,902        2,559      1,916,706   (1,919,265)        -             -
                                              ----------      -------     ----------    ---------     -------       -----------

Balance at December 31, 1998..............     3,455,039       34,550     19,158,862   (1,968,884)        -         17,224,528
                                                                                                                    ----------

Comprehensive income:
     Net earnings.........................        -            -              -           615,259         -            615,259

     Net change in unrealized loss on
        securities available for sale.....        -            -              -           -            (7,929)          (7,929)
                                                                                                                    ----------

     Comprehensive income.................        -            -              -           -               -            607,330
                                                                                                                    ----------

Stock options exercised...................        31,728          318        151,451      -               -            151,769
                                              ----------     --------     ----------    ---------     -------       ----------

Balance at December 31, 1999..............     3,486,767     $ 34,868     19,310,313   (1,353,625)     (7,929)      17,983,627
                                              ==========     ========     ==========    =========     =======       ==========



See Accompanying Notes to Consolidated Financial Statements.
</TABLE>

                                       23
<PAGE>
<TABLE>



                CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows


                                                                                                     Year Ended December 31,
                                                                              1999             1998           1997
                                                                              ----             ----           ----
Cash flows from operating activities:
<S>                                                                     <C>                   <C>             <C>
    Net earnings ...................................................... $     615,259         205,854         109,506
    Adjustments to reconcile net earnings to net cash provided
      by operating activities:
        Depreciation...................................................       216,949         191,670          82,818
        Provision for loan losses......................................       437,000         161,711         153,000
        (Credit) provision for deferred income taxes...................       (47,844)        157,893          65,957
        Amortization of loan fees, premiums and discounts..............       (76,665)       (103,785)       (148,005)
        Increase in accrued interest receivable and other assets.......      (514,149)       (144,952)       (175,746)
        Loans originated for sale......................................        -             (565,000)     (4,687,283)
        Proceeds from sale of loans originated for sale................        -              565,000       4,755,759
        Gain on sale of loans..........................................        -               -              (68,476)
        Increase in accrued interest payable and other liabilities.....       356,637          54,946         165,352
                                                                           ----------      ----------      ----------

               Net cash provided by operating activities...............       987,187         523,337         252,882
                                                                           ----------      ----------      ----------

Cash flows from investing activities:
    Purchase of securities available for sale..........................    (6,207,508)         -              -
    Purchases of securities held to maturity...........................    (8,000,000)    (13,499,095)     (1,750,000)
    Purchase of Federal Home Loan Bank stock...........................       (87,700)       (127,100)        -
    Maturities of securities available for sale........................       160,090         -               -
    Maturities of securities held to maturity..........................     3,499,045       7,500,000       1,500,000
    Net increase in loans..............................................   (35,401,290)    (18,572,979)    (14,317,557)
    Purchase of premises and equipment, net............................    (1,706,814)       (895,597)       (635,675)
                                                                           ----------      ----------      ----------

               Net cash used in investing activities...................   (47,744,177)    (25,594,771)    (15,203,232)
                                                                           ----------      ----------      ----------

Cash flows from financing activities:
    Net increase deposits..............................................    38,507,470      27,052,091      19,053,263
    Net increase (decrease) in official checks.........................       362,908         223,937        (106,182)
    Sales of common stock..............................................       151,769      10,247,916         697,069
    Repayment of mortgage payable......................................         -              -             (525,000)
                                                                           ----------      ----------      ----------

               Net cash provided by financing activities...............    39,022,147      37,523,944      19,119,150
                                                                           ----------      ----------      ----------

Net (decrease) increase in cash and cash equivalents...................    (7,734,843)     12,452,510       4,168,800

Cash and cash equivalents at beginning of year.........................    24,663,087      12,210,577       8,041,777
                                                                           ----------      ----------      ----------

Cash and cash equivalents at end of year...............................  $ 16,928,244      24,663,087      12,210,577
                                                                           ==========      ==========      ==========

Supplemental disclosure of cash flow information:
    Cash paid during the year for:
        Interest.......................................................  $  2,536,826       1,952,818       1,093,507
                                                                           ==========      ==========      ==========

        Income taxes................................................... $     345,000           -              -
                                                                           ==========      ==========      ==========

    Noncash transaction-
        Issuance of mortgage payable for acquisition of property.......$          -              -            525,000
                                                                           ==========      ==========      ==========

        Change in unrealized loss on securities available for
           sale........................................................$       (7,929)         -               -
                                                                           ==========      ==========      ==========


See Accompanying Notes to Consolidated Financial Statements.
</TABLE>

                                       24
<PAGE>



                CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                   December 31, 1999 and 1998 and for each the
                         Years In the Three-Year Period
                             Ended December 31, 1999


(1)  Summary of Significant Accounting Policies
     Organization.  Citizens Community Bancorp, Inc.  ("Citizens") is a one-bank
        holding  company  and  owns  100% of the  outstanding  common  stock  of
        Citizens  Community Bank of Florida  ("CCB")  Citizens  Financial  Corp.
        ("CFC")  and  CCB  Mortgage  Company  ("CCB  Mortgage").   Citizens  was
        organized  simultaneously  with CCB.  Citizens'  primary business is the
        ownership and  operation of CCB, CFC and CCB Mortgage.  CCB is a Florida
        state-chartered  commercial  bank and its  deposits  are  insured by the
        Federal Deposit Insurance  Corporation.  CCB provides  community banking
        services to businesses and individuals  predominantly in Collier County,
        Florida.  CFC and CCB  Mortgage  are a  mortgage  origination  companies
        operating in Southwest Florida.  CFC specializes in commercial  mortgage
        organizations  while CCB Mortgage is a residential real estate brokerage
        company. Collectively the entities are referred to as the "Company." The
        Company  operates  predominantly  in one  reportable  industry  segment:
        banking.

     Basis of Presentation. The accompanying  consolidated  financial statements
        include  the  accounts  of  Citizens,  CCB,  CFC and CCB  Mortgage.  All
        significant  intercompany accounts and transactions have been eliminated
        in consolidation.  The accounting and reporting practices of the Company
        conform  to  generally  accepted  accounting  principles  and to general
        practices within the banking industry.

     Use of Estimates.   In  preparing   consolidated  financial  statements  in
        conformity with generally accepted accounting principles,  management is
        required to make  estimates  and  assumptions  that affect the  reported
        amounts of assets and  liabilities  as of the date of the balance  sheet
        and  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 in the
        near term relate to the  determination of the allowance for loan losses,
        and deferred tax assets.

     Cash and Cash Equivalents. For purposes of the  consolidated  statements of
        cash flows, cash and cash equivalents include cash and balances due from
        banks,  interest-bearing  deposits,  federal  funds sold and  securities
        purchased under agreements to resell,  all of which mature within ninety
        days.

     Securities.  Securities may be classified  as trading,  held to maturity or
        available for sale.  Trading securities are held principally for resale
        and  recorded  at their  fair  values.  Unrealized  gains and losses on
        trading  securities are included  immediately in earnings.  The Company
        does   not   maintain   any   securities   in  a   trading   portfolio.
        Held-to-maturity  securities  are  those  which  the  Company  has  the
        positive  intent and  ability to hold to maturity  and are  reported at
        amortized cost. Available-for-sale securities consist of securities not
        classified as trading  securities nor as  held-to-maturity  securities.
        Unrealized holding gains and losses, net of tax, on  available-for-sale
        securities  are  reported  as a net  amount  in a  other  comprehensive
        income. Gains and losses on the sale of  available-for-sale  securities
        are determined using the  specific-identification  method. Premiums and
        discounts  on  securities  available  for sale and held to maturity are
        recognized in interest income using the interest method over the period
        to maturity.

     Loans Held for Sale. Mortgage loans originated and intended for sale in the
        secondary  market are carried at the lower of cost or estimated  market
        value in the  aggregate.  At December 31, 1999 and 1998,  there were no
        loans held for sale.

     Loans  Receivable.  Loans  receivable  that  management  has the intent and
        ability  to hold  for the  foreseeable  future  or until  maturity  or
        pay-off are reported at their outstanding  principal  adjusted for any
        charge-offs,  the allowance for loan losses,  and any deferred fees or
        costs on  originated  loans and  unamortized  premiums or discounts on
        purchased loans.

                                                                 (continued)


                                       25
<PAGE>

                CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


(1)  Summary of Significant  Accounting  Policies,  Continued

     Loans Receivable,  ontinued.  Loan  origination  fees  and  certain  direct
        origination  costs are  capitalized and recognized as an adjustment of
        the yield of the related loan.

        The accrual of interest on loans is discontinued at the time the loan is
        ninety days delinquent  unless the credit is well-secured and in process
        of  collection.  In  all  cases,  loans  are  placed  on  nonaccrual  or
        charged-off at an earlier date if collection of principal or interest is
        considered doubtful.

        All  interest  accrued  but not  collected  for loans that are placed on
        nonaccrual or  charged-off  is reversed  against  interest  income.  The
        interest  on  these  loans  is  accounted  for  on  the   cash-basis  or
        cost-recovery method, until qualifying for return to accrual.  Loans are
        returned to accrual  status when all the principal and interest  amounts
        contractually due are brought current and future payments are reasonably
        assured.

     Allowance for Loan Losses. The allowance for loan losses is  established as
        losses are  estimated  to have  occurred  through a  provision  for loan
        losses  charged  to  earnings.  Loan  losses  are  charged  against  the
        allowance  when  management  believes  the  uncollectibility  of a  loan
        balance is confirmed. Subsequent recoveries, if any, are credited to the
        allowance.

        The  allowance  for loan  losses  is  evaluated  on a  regular  basis by
        management  and  is  based  upon  management's  periodic  review  of the
        collectibility  of the  loans  in light of  historical  experience,  the
        nature and volume of the loan  portfolio,  adverse  situations  that may
        affect  the  borrower's  ability  to  repay,   estimated  value  of  any
        underlying   collateral  and  prevailing   economic   conditions.   This
        evaluation is inherently  subjective as it requires  estimates  that are
        susceptible  to  significant   revision  as  more  information   becomes
        available.

        A loan is considered  impaired when,  based on current  information  and
        events,  it is probable  that the Company  will be unable to collect the
        scheduled  payments of principal or interest  when due  according to the
        contractual  terms  of  the  loan  agreement.   Factors   considered  by
        management in determining impairment include payment status,  collateral
        value,  and  the  probability  of  collecting  scheduled  principal  and
        interest payments when due. Loans that experience  insignificant payment
        delays and payment shortfalls  generally are not classified as impaired.
        Management  determines  the  significance  of payment delays and payment
        shortfalls on a case-by-case basis, taking into consideration all of the
        circumstances  surrounding  the loan  and the  borrower,  including  the
        length of the delay,  the reasons for the delay,  the  borrower's  prior
        payment  record,  and the amount of the  shortfall  in  relation  to the
        principal  and interest  owed.  Impairment is measured on a loan by loan
        basis for  commercial  loans by either  the  present  value of  expected
        future cash flows discounted at the loan's effective  interest rate, the
        loan's  obtainable  market price, or the fair value of the collateral if
        the loan is collateral dependent.

        Large  groups of  smaller  balance  homogeneous  loans are  collectively
        evaluated for impairment.  Accordingly,  the Company does not separately
        identify  individual  consumer  and  residential  loans  for  impairment
        disclosures.


                                                                   (continued)

                                       26
<PAGE>


                CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

(1)  Summary of Significant Accounting Policies, Continued
     Premises  and  Equipment.  Premises  and equipment are stated at cost less
        accumulated depreciation.  Depreciation expense is computed on the
        straight-line  basis  over the  estimated  useful  life of each type of
        asset.

    Stock Compensation Plans. Statement of Financial Accounting Standards (SFAS)
        No.  123,  Accounting  for  Stock-Based  Compensation,   encourages  all
        entities to adopt a fair value based method of  accounting  for employee
        stock compensation plans,  whereby  compensation cost is measured at the
        grant  date based on the value of the award and is  recognized  over the
        service period,  which is usually the vesting period.  However,  it also
        allows an entity to  continue  to  measure  compensation  cost for those
        plans using the intrinsic value based method of accounting prescribed by
        Accounting  Principles Board Opinion No. 25, Accounting for Stock Issued
        to Employees,  whereby  compensation  cost is the excess, if any, of the
        quoted market price of the stock at the grant date (or other measurement
        date) over the amount an employee  must pay to acquire the stock.  Stock
        options  issued under the Company's  stock option plan have no intrinsic
        value at the grant date, and under Opinion No. 25 no  compensation  cost
        is  recognized  for them.  The Company has elected to continue  with the
        accounting  methodology in Opinion No. 25 and, as a result, has provided
        proforma  disclosures  of net  earnings and earnings per share and other
        disclosures,  as if the fair value based method of  accounting  had been
        applied.

    Transfer of Financial  Assets.  Transfers of financial  assets are accounted
        for as sales, when control over the assets has been surrendered. Control
        over transferred  assets is deemed to be surrendered when (1) the assets
        have been  isolated  from the Company,  (2) the  transferee  obtains the
        right (free of  conditions  that  constrain it from taking  advantage of
        that right) to pledge or exchange the  transferred  assets,  and (3) the
        Company does not maintain  effective control over the transferred assets
        through an agreement to repurchase them before their maturity.

    Income Taxes.  Deferred  income tax assets and  liabilities  are recorded to
        reflect the tax  consequences  on future years of temporary  differences
        between revenues and expenses reported for financial statement and those
        reported for income tax  purposes.  Deferred tax assets and  liabilities
        are  measured  using the enacted tax rates  expected to apply to taxable
        income in the years in which those temporary differences are expected to
        be realized or settled. Valuation allowances are provided against assets
        which are not likely to be realized.

    Off-Balance-Sheet  Instruments.  In the  ordinary  course of  business,  the
        Company  has  entered  into   off-balance-sheet   financial  instruments
        consisting of commitments to extend credit.  Such financial  instruments
        are recorded in the financial statements when they are funded.

    Advertising.  The Company expenses all media advertising as incurred.


                                                                   (continued)

                                       27
<PAGE>


                CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

(1)  Summary of Significant Accounting Policies, Continued
     Fair Values of Financial  Instruments.   The  fair  value  of  a  financial
        instrument is the current amount that would be exchanged between willing
        parties,  other  than  in a  forced  liquidation.  Fair  value  is  best
        determined based upon quoted market prices.  However, in many instances,
        there are no quoted market prices for the  Company's  various  financial
        instruments. In cases where quoted market prices are not available, fair
        values are based on estimates  using  present  value or other  valuation
        techniques.   Those  techniques  are   significantly   affected  by  the
        assumptions  used,  including  the discount rate and estimates of future
        cash flows. Accordingly, the fair value estimates may not be realized in
        an immediate  settlement of the  instrument.  SFAS 107 excludes  certain
        financial   instruments  and  all  nonfinancial   instruments  from  its
        disclosure requirements.  Accordingly,  the aggregate fair value amounts
        presented may not necessarily represent the underlying fair value of the
        Company.  The following methods and assumptions were used by the Company
        in estimating fair values of financial instruments:

        Cash and  Cash  Equivalents.  The  carrying  amounts  of cash and cash
        equivalents approximates their fair value.

        Securities.  Fair values for  securities  held to maturity and available
        for sale are based on quoted market prices,  where available.  If quoted
        market prices are not available,  fair values are based on quoted market
        prices of  comparable  instruments.  The carrying  value of Federal Home
        Loan Bank stock approximates fair value due to the redemption provisions
        of Federal Home Loan Bank stock.

        Loans.  For  variable-rate  loans that  reprice  frequently  and have no
        significant  change in credit  risk,  fair  values are based on carrying
        values.  Fair values for certain fixed-rate  mortgage (e.g.  one-to-four
        family  residential),  commercial  real estate and commercial  loans are
        estimated  using  discounted  cash flow  analyses,  using interest rates
        currently  being  offered for loans with  similar  terms to borrowers of
        similar credit quality.

        Deposit  Liabilities.   The  fair  values  disclosed  for  demand,  NOW,
        money-market  and  savings  deposits  are, by  definition,  equal to the
        amount  payable on demand at the reporting date (that is, their carrying
        amounts). Fair values for fixed-rate time deposits are estimated using a
        discounted cash flow  calculation  that applies interest rates currently
        being  offered on these  accounts to a schedule of  aggregated  expected
        monthly maturities on time deposits.

        Accrued Interest.  The carrying amounts of accrued interest approximate
        their fair values.

        Off-Balance-Sheet Instruments. Fair values for off-balance-sheet lending
        commitments  are based on fees  currently  charged to enter into similar
        agreements,  taking into account the remaining  terms of the  agreements
        and the counterparties' credit standing.

    Earnings Per Share. Basic earnings per share is computed on the basis of the
        weighted-average  number of common shares outstanding.  Diluted earnings
        per share is  computed  based on the  weighted-average  number of shares
        outstanding plus the effect of outstanding stock options, computed using
        the treasury stock method.

    Future  Accounting  Requirements.   Financial  Accounting  Standards  133  -
        Accounting for Derivative  Investments and Hedging  Activities  requires
        companies  to  record  derivatives  on the  balance  sheet as  assets or
        liabilities,  measured at fair  value.  Gains or losses  resulting  from
        changes  in the  values  of those  derivatives  would be  accounted  for
        depending  on the use of the  derivatives  and whether  they qualify for
        hedge  accounting.  The key criterion  for hedge  accounting is that the
        hedging  relationship  must be highly effective in achieving  offsetting
        changes in fair value or cash  flows.  The  Company  will be required to
        adopt this  Statement  effective  January 1, 2001.  Management  does not
        anticipate  that  this  Statement  will  have a  material  impact on the
        Company.

    Reclassifications.  Certain  amounts  in  the  1998  consolidated financial
        statements have been reclassified to conform with the 1999 presentation.

                                                                (continued)

                                       28
<PAGE>



                CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


(2)  Securities
    Securities have been  classified  as available for sale or held to maturity,
        in  accordance  with  management's   intent.   The  carrying  amount  of
        securities and their approximate fair values are as follows:

<TABLE>


                                                                   Amortized     Unrealized     Unrealized    Fair
                                                                     Cost          Gains          Losses      Value
                                                                  -----------     ---------    ----------   ----------
              Securities Available for Sale:
                  December 31, 1999:
<S>                                                              <C>                 <C>           <C>       <C>
                    U.S. Government agencies...................  $  4,880,563        4,515         7,500     4,877,578
                    Mortgage-backed securities.................       964,245        -             9,720       954,525
                    Equity securities..........................       190,000        -            -            190,000
                                                                   ----------       ------       -------    ----------

                    Total......................................  $  6,034,808        4,515        17,220     6,022,103
                                                                   ==========       ======       =======    ==========

              Securities Held to Maturity:
                  December 31, 1999-
                    U.S. Government agencies...................  $ 13,000,000         -          438,400    12,561,600
                                                                   ==========       ======       =======    ==========

                  December 31, 1998-
                    U.S. Government agencies...................  $  8,499,968        2,565        -          8,502,533
                                                                   ==========       ======       =======    ==========
</TABLE>
<TABLE>

    The scheduled maturities of securities are as follows:

                                                                Available for Sale               Held to Maturity
                                                               --------------------------    --------------------------
                                                                 Amortized      Fair          Amortized       Fair
                                                                 Cost            Value         Cost           Value
         December 31, 1999:
<S>                                                            <C>               <C>
              Due in one or less............................   $   750,000       750,078         -              -
              Due after one through five years...............    1,000,000       992,500     13,000,000     12,561,600
              Due after five years through ten years.........    1,053,063     1,057,500         -              -
              Due after ten years............................    2,077,500     2,077,500         -              -
              Mortgage-backed securities.....................      964,245       954,525         -              -
              Equity securities..............................      190,000       190,000         -              -
                                                                ----------    -----------    ------------   ------------

                                                               $ 6,034,808     6,022,103     13,000,000     12,561,600
                                                                 =========     =========     ==========     ==========
</TABLE>

    There were no sales of securities in 1999, 1998 or 1997.

                                                                    (continued)


                                       29
<PAGE>


                CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


(3)  Loans
     The components of loans are as follows:

<TABLE>
                                                                                               At December 31,
                                                                                             1999           1998
                                                                                             ----           ----

<S>                                                                                        <C>             <C>
              Commercial real estate..................................................     $ 42,286,675    21,820,359
              Residential real estate.................................................       24,920,678    14,570,558
              Commercial..............................................................        5,706,516     4,993,954
              Consumer................................................................        7,703,412     3,827,444
                                                                                             ----------    ----------

                                                                                             80,617,281    45,212,315
              Add (Subtract):
                Deferred costs, net...................................................          256,062       173,839
                Allowance for loan losses.............................................         (885,617)     (453,211)
                                                                                             ----------    ----------

              Loans, net..............................................................     $ 79,987,726    44,932,943
                                                                                             ==========    ==========
</TABLE>

    An analysis of the change in the allowance for loan losses follows:

<TABLE>
                                                                                       Year Ended December 31,
                                                                                  1999            1998          1997
                                                                                  ----            ----          ----

<S>                                                                            <C>              <C>           <C>
              Balance at beginning of year...................................  $ 453,211        298,000       145,000
              Loans charged-off..............................................     (4,594)        (6,500)       -
              Provision for loan losses......................................    437,000        161,711       153,000
                                                                                 -------        -------       -------

              Balance at end of year.........................................  $ 885,617        453,211       298,000
                                                                                 =======        =======       =======
</TABLE>

    The Company had no impaired loans in 1999, 1998 or 1997.

(4)  Premises and Equipment
    A summary of premises and equipment follows:

<TABLE>
                                                                                           At December 31,
                                                                                            1999             1998
                                                                                            ----             ----

<S>                                                                      <C>                <C>
              Land..................................................................    $ 1,768,020           931,056
              Bank premises.........................................................      2,340,036         2,092,525
              Furniture, fixtures and equipment.....................................      1,430,067           807,727
                                                                                          ---------        ----------

                  Total, at cost....................................................      5,538,123         3,831,308

              Less accumulated depreciation.........................................        498,334           281,384
                                                                                          ---------        ----------

                  Premises and equipment, net.......................................    $ 5,039,789         3,549,924
                                                                                          =========        ==========
</TABLE>

                                                                    (continued)


                                       30
<PAGE>


                CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

(5)  Deposits
     The aggregate amount  of time  deposits  with a  minimum  denomination  of
         $100,000, was approximately  $12,618,000 and $5,442,000 at December 31,
         1999 and 1998, respectively.

    At December  31,  1999 the  scheduled  maturities  of time  deposits  are as
follows:

              Year Ending
              December 31,                                               Amount

                  2000..........................................   $ 27,317,186
                  2001..........................................      5,809,714
                  2002..........................................        621,195
                  2003..........................................        221,629
                  2004 and thereafter...........................        305,178
                                                                    -----------

                                                                   $ 34,274,902

(6) Financial Instruments
    The  Company 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 are commitments to extend credit
         and  may  involve,   to  varying   degrees,   elements  of  credit  and
         interest-rate  risk in excess of the amount  recognized  in the balance
         sheet. The contract amounts of these instruments  reflect the extent of
         involvement the Company has in these financial instruments.

    The  Company's exposure to credit loss in the event of nonperformance by the
         other  party to the  financial  instrument  for  commitments  to extend
         credit is represented by the contractual  amount of those  instruments.
         The Company uses the same credit  policies in making  commitments as it
         does for on-balance-sheet instruments.

    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 some of the commitments
         are expected to expire without being drawn upon,  the total  commitment
         amounts do not  necessarily  represent  future cash  requirements.  The
         Company  evaluates each customer's  credit worthiness on a case-by-case
         basis.  The amount of  collateral  obtained if deemed  necessary by the
         Company  upon  extension  of  credit  is based on  management's  credit
         evaluation of the counterparty.

    The estimated fair values of the financial  instruments  were as follows (in
thousands):

<TABLE>

                                                                   At December 31, 1999         At December 31, 1998
                                                                ------------------------     ---------------------------
                                                                 Carrying        Fair          Carrying          Fair
                                                                  Amount         Value          Amount           Value
                                                                ---------       --------     ----------         --------
         Financial assets:
<S>                                                             <C>               <C>            <C>            <C>
              Cash and cash equivalents.....................    $  16,928         16,928         24,663         24,663
              Securities available for sale.................        6,022          6,022         -              -
              Securities held to maturity...................       13,000         12,562          8,500          8,503
              Loans receivable..............................       79,988         79,880         44,933         45,353
              Accrued interest receivable...................          739            739            351            351

         Financial liabilities:
              Deposit liabilities...........................      102,498        102,595         63,990         64,252

</TABLE>
                                                                    (continued)



                                       31
<PAGE>



                CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


(6) Financial Instruments, Continued
    A    summary of the amounts of the Company's  financial  instruments,  which
         approximates  market value with off-balance  sheet risk at December 31,
         1999 follows (in thousands):

              Unfunded loan commitments.............................    $ 10,988
                                                                          ======

              Available lines of credit.............................   $   4,501
                                                                         =======

(7)  Credit Risk
    The  Company  grants  the  majority  of its  loans to  borrowers  throughout
         Collier County,  Florida.  Although the Company has a diversified  loan
         portfolio,  a significant  portion of its  borrowers'  ability to honor
         their  contracts  is  dependent  upon the  economy in  Collier  County,
         Florida.

(8)  Income Taxes
    The income tax provision consisted of the following:
<TABLE>

                                                                                         Year Ended December 31,
                                                                                    1999           1998        1997
                                                                                    ----           ----        ----
              Current:
<S>                                                                              <C>
                  Federal....................................................... $ 340,930          -            -
                  State.........................................................    54,790          -            -
                                                                                   -------        -------       ------

                     Total current provision....................................   395,720          -            -
                                                                                   -------        -------       ------

              Deferred:
                  Federal.......................................................   (43,651)       134,815       56,317
                  State.........................................................    (4,193)        23,078        9,640
                                                                                   -------        -------       ------

                     Total deferred (credit) provision..........................   (47,844)       157,893       65,957
                                                                                   -------        -------       ------

                     Total...................................................... $ 347,876        157,893       65,957
                                                                                   =======        =======       ======
</TABLE>

    The  reasons for the  differences  between the statutory  federal income tax
         rate and the effective tax rate are summarized as follows:
<TABLE>

                                                           1999                    1998                    1997
                                               ---------------------------------------------------------------------
                                                                    % of                 % of                 % of
                                                                  Pretax                Pretax                Pretax
                                                        Amount   Earnings      Amount  Earnings       Amount  Loss
                                                     ---------   --------   ---------  --------     -------- -------
         Income tax expense (benefit) at statutory
<S>                                                  <C>            <C>     <C>           <C>       <C>         <C>
              Federal income tax rate............    $ 327,464      34.0%   $ 123,674     34.0%     $ 59,657    34.0%
         Increase (decreases) resulting from:
              State taxes, net of federal tax
                  benefit........................       33,394       3.5       15,231      4.2         6,362     3.6
              Other..............................      (12,982)     (1.4)      18,988      5.2           (62)      -
                                                       -------      ----      -------     ----        ------    ----

                                                     $ 347,876      36.1%   $ 157,893     43.4%     $ 65,957    37.6%
                                                       =======      ====      =======     ====        ======    ====
</TABLE>

                                                                   (continued)



                                       32
<PAGE>



                CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

(8)  Income Taxes, Continued
    The  tax  effects of  temporary  differences  that give rise to  significant
         portions of the deferred tax assets and  deferred tax  liabilities  are
         presented below.

<TABLE>

                                                                                               At December 31,
                                                                                             1999            1998
                                                                                             ----            ----
              Deferred tax assets:
<S>                                                                                       <C>                <C>
                  Allowance for loan losses...........................................    $ 223,310          58,867
                  Contributions.......................................................       -                2,111
                  Organization and start-up costs.....................................       13,318          23,536
                  Unrealized loss on securities available for sale....................        4,781           -
                                                                                            -------         -------

                    Total deferred tax asset..........................................      241,409          84,514
                                                                                            -------         -------

              Deferred tax liabilities:
                  Depreciation........................................................      115,802          46,117
                  Accrual to cash adjustment..........................................       92,832          58,247
                                                                                            -------         -------

                    Total deferred tax liabilities....................................      208,634         104,364
                                                                                            -------         -------

                    Net deferred income tax asset (liability).........................   $   32,775         (19,850)
                                                                                            =======         =======
</TABLE>

(9)  Stock Options
    The  Company has established  two Stock Option plans,  one for directors and
         one for officers  and  employees.  A total of 459,000  shares of common
         stock has been  reserved for the plans.  At December  31, 1999,  11,560
         shares remain available for grant. The directors  options have terms of
         ten years and vest over three years.  The officers and employee options
         have terms of ten years and vest over five years.

<TABLE>
                                                                                Range
                                                                                of Per       Weighted-
                                                                                Share        Average
                                                                      Number    Option      Per Share    Aggregate
                                                                       of       Exercise     Exercise     Option
                                                                      Shares     Price        Price        Price
                                                                    ---------  ---------    ----------   -----------

<S>                                   <C> <C>                         <C>      <C>             <C>          <C>
              Outstanding at December 31, 1996....................    55,080   $ 4.17          4.17         229,684
              Options granted.....................................   135,000     4.17-5.56     4.80         648,090
              Options terminated..................................   (13,600)    4.17          4.17         (56,700)
              Options exercised...................................    (8,640)    4.17          4.17         (36,000)
                                                                     -------                             ----------

              Outstanding at December 31, 1997....................   167,840     4.17-5.56     4.68         785,074
              Options granted.....................................   268,812     6.48-9.25     7.56       2,033,513
              Options terminated..................................   (67,651)    4.67-9.26     5.46        (369,576)
              Options exercised...................................    (2,160)    4.67-5.21     4.59          (9,920)
                                                                     -------                             ----------

              Outstanding at December 31, 1998....................   366,841     4.17-9.26     6.65       2,439,091
              Options granted.....................................   156,500     9.00-9.50     9.36       1,464,840
              Options terminated..................................   (44,173)    4.63-9.26     6.03        (266,573)
              Options exercised...................................   (31,728)    4.17-6.95     4.78        (151,769)
                                                                     -------                             ----------

              Outstanding at December 31, 1999...................    447,440   $ 4.17-9.50     7.82       3,485,589
                                                                     =======     =========     ====      ==========
</TABLE>

    The  weighted-average  remaining  contractual life of the outstanding  stock
         options  at both  December  31,  1999 and 1998  was 92  months  and 100
         months.
                                                                   (continued)



                                       33
<PAGE>


                CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

(9)  Stock Options, Continued
    These options are exercisable as follows:

<TABLE>
                                                                                        Weighted-      Remaining
                                                                                        Average       Contractual
                                                                                        Exercise        Life in
               Year Ending                                                              Price           Months
               -----------                                                              --------       ----------
<S>                  <C>                                             <C>                 <C>               <C>
                     2000.........................................   200,151             $ 7.30            90
                     2001.........................................   117,788               7.73            79
                     2002.........................................    74,572               8.43            70
                     2003.........................................    39,917               8.58            62
                     2004.........................................    15,012               9.40            55
                                                                     -------

                                                                     447,440               7.79            92
                                                                     =======               ====            ==
</TABLE>

    FASB Statement 123 requires proforma information  regarding net earnings and
       earnings per share.  This proforma  information has been determined as if
       the Company had accounted  for its employee  stock options under the fair
       value method of that statement and is as follows:
<TABLE>

                                                                                       Year Ended December 31,
                                                                                  1999          1998         1997
                                                                                  ----          ----         ----


               Net earnings:
<S>                                                                            <C>              <C>         <C>
                     As reported.............................................  $ 615,259        205,854     109,506
                                                                                 =======        =======     =======

                     Proforma................................................  $ 175,256        106,098      97,605
                                                                                 =======        =======     =======

               Basic earnings  per share:
                     As reported.............................................  $     .18            .08         .06
                                                                                 ========       =======     =======

                     Proforma ...............................................$       .05            .04         .06
                                                                                 ========       =======     =======

               Diluted earnings per share:
                     As reported.............................................$       .17            .08         .06
                                                                                 ========       =======     =======

                     Proforma................................................$       .05            .04         .06
                                                                                 ========       =======     =======

                     Fair value per share granted............................$       4.49          2.65        .75
                                                                                 ========       =======     =======
</TABLE>

    The fair value of each option grant is  estimated on the date of grant using
       the minimum value method with the following assumptions:
<TABLE>

                                                                                            Year Ended December 31,
                                                                                    1999         1998          1997
                                                                                    ----         ----          ----

<S>                                                                                    <C>          <C>           <C>
               Risk-free interest rate...........................................       6%           5%            6%
               Dividend yield....................................................      - %           - %           - %
               Volatility .......................................................   14.03%           - %           - %
               Expected life in years............................................      10           10            10
</TABLE>
                                                                 (continued)

                                       34
<PAGE>



                CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


(10)  Earnings Per Share ("EPS")
    The following is a reconciliation  of the numerators and denominators of the
basic and diluted earnings per share computations.

<TABLE>

                                                         For the Year Ended December 31,
                                           1999                       1998                           1997
                         ----------------------------------------------------------------------------------------------------------
                                         Weighted-    Per                Weighted-   Per                     Weighted-    Per
                                         Average     Share               Average    Share                    Average     Share
                               Earnings  Shares     Amount    Earnings   Shares     Amount       Earnings    Shares      Amount
     Basic EPS:
         Net earnings
          available to
          common
<S>                          <C>        <C>           <C>     <C>        <C>         <C>           <C>        <C>
          stockholders...... $ 615,259  3,470,664  $ .18    $ 205,854    2,597,330   $ .08       $ 109,506    1,697,354  $ .06
                                                     ===                              ====                                 ===
     Effect of dilutive
       securities:
         Incremental shares
          from assumed
          exercise of
          options ..........               98,118                           44,602                                   -
                                        ---------                        ---------                            ---------
     Diluted EPS:
         Net earnings
          available to
          common
          stockholders
          and assumed
          conversions....... $ 615,259  3,568,782  $ .17    $ 205,854    2,641,932   $ .08       $ 109,506    1,697,354 $ .06
                               =======  =========    ===      =======    =========     ===         =======    =========   ===
</TABLE>


(11)  Stockholders' Equity
     The Board of Directors approved the split of the Company"s common shares on
         a two-for-one basis effective  December 15, 1997 and to pay an 8% stock
         dividend to  stockholders  of record on December  31,  1998.  All share
         amounts reflect this split and stock dividend.

(12) Profit Sharing Plan
     During 1998,  the Company began  sponsoring a Section 401(k) profit sharing
         plan. The profit sharing plan is available to all employees electing to
         participate   after   meeting   certain   age  and  length  of  service
         requirements.  Expense  related to the Company"s  contributions  to the
         profit   sharing  plan  included  in  the   accompanying   consolidated
         statements  of  earnings  was  approximately  $5,000 and $3,000 for the
         years ended December 31, 1999 and 1998, respectively.

                                                                  (continued)


                                       35
<PAGE>

                CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


(13) Regulatory Matters
     Federal  and  state  banking  regulations  place  certain  restrictions  on
         dividends  paid and loans or advances  made by CCB to  Citizens.  As of
         December 31, 1999, CCB had not paid any dividends to Citizens.

     CCB is subject to various regulatory capital  requirements  administered by
         the federal and state banking agencies. Failure to meet minimum capital
         requirements  can initiate  certain  mandatory and possibly  additional
         discretionary  actions by regulators that, if undertaken,  could have a
         direct  material  effect on the  financial  statements  of the Company.
         Under capital  adequacy  guidelines  and the  regulatory  framework for
         prompt  corrective  action,  CCB must meet specific capital  guidelines
         that involve quantitative  measures of their assets,  liabilities,  and
         certain   off-balance-sheet   items  as  calculated   under  regulatory
         accounting  practices.  The capital amounts and classification are also
         subject to qualitative  judgements by the regulators about  components,
         risk weightings, and other factors.

     Quantitative measures  established by regulation to ensure capital adequacy
         require CCB to maintain  minimum amounts and percentages  (set forth in
         the  following  table) of total and Tier 1 capital  (as  defined in the
         regulations) to risk-weighted assets (as defined) and of Tier 1 capital
         (as defined) to average assets (as defined). Management believes, as of
         December  31,  1999  and  1998,  that  CCB  met  all  capital  adequacy
         requirements to which it is subject.

     To  be  categorized  as well  capitalized,  an  institution  must  maintain
         minimum  total  risk-based,  Tier I  risk-based,  and  Tier I  leverage
         percentages  as  set  forth  in  the  following  tables.  There  are no
         conditions or events since that notification  that management  believes
         have  changed  CCB's   category.   CCB's  actual  capital  amounts  and
         percentages  as of December  31, 1999 are also  presented  in the table
         (dollars in thousands).

<TABLE>

                                                                                                    To Be Well
                                                                                                 Capitalized Under
                                                                         Minimum                   the Provisions
                                                                        For Capital                of Prompt and
                                                Actual               Adequacy Purposes:         Corrective Action
                                          ------------------         ------------------         ------------------
                                          Amount         %           Amount          %            Amount        %
                                          ------      ------         ------       ------          ------     -----
     As of December 31, 1999:
         <S>                            <C>           <C>          <C>             <C>          <C>          <C>
         Total Capital (to Risk-
         Weighted Assets)..........     $ 9,232       12.17%       $ 5,927         8.00%        $ 7,409      10.00%
         Tier I Capital (to Risk-
         Weighted Assets)..........       8,427       11.11          2,964         4.00           4,445       6.00
         Tier I Capital
         (to Average Assets).......       8,427        8.25          4,085         4.00           5,106       5.00

     As of December 31, 1998:
         Total Capital (to Risk-
         Weighted Assets)..........       6,808       15.34          3,551         8.00           4,439      10.00
         Tier I Capital (to Risk-
         Weighted Assets)..........       6,375       14.36          1,776         4.00           2,663       6.00
         Tier I Capital
         (to Average Assets).......       6,375       10.36          2,461         4.00           3,077       5.00


</TABLE>

(14) Year 2000 Issues
    The Company's  operating  and  financial  systems  have  been  found  to  be
        compliant;  the "Y2K Problem" has not  adversely  affected the Company's
        operations nor does management expect that it will.

                                                                    (continued)



                                       36
<PAGE>

                CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


(15) Parent  Company  Only  Financial   Information   Citizens'   unconsolidated
     financial information is as follows:
<TABLE>

                            Condensed Balance Sheets
                                 (In thousands)
                                                                                                     At December 31,
                                                                                                    1999         1998
                                                                                                 -------       ------
                  Assets

<S>                                                                                              <C>               <C>
              Cash and interest-bearing deposits...............................................  $  1,112          131
              Securities purchased under agreements to resell..................................     1,300        8,705
              Securities available for sale....................................................       190          -
              Loans receivable.................................................................     5,751        2,036
              Investment in subsidiaries.......................................................     8,663        6,456
              Premises and equipment, net......................................................       883          -
              Other assets.....................................................................        85           12
                                                                                                   ------        -----

                  Total assets................................................................. $  17,984       17,340
                                                                                                   ======       ======

                  Liabilities and Stockholders' Equity

              Liabilities......................................................................     -              115
              Stockholders' equity.............................................................    17,984       17,225
                                                                                                   ------       ------

                  Total liabilities and stockholders' equity...................................  $ 17,984       17,340
                                                                                                   ======       ======
</TABLE>

<TABLE>
                                           Condensed Statements of Operations
                                                     (In thousands)

                                                                                             Year Ended December 31,
                                                                                          1999        1998       1997
                                                                                          ----        ----       ----

<S>                                                                                       <C>          <C>         <C>
              Revenues..............................................................      $ 753        416         162
              Expenses..............................................................       (254)      (106)       (138)
                                                                                            ---        ---         ---

                  Income before income of subsidiaries
                    and income taxes................................................        499        310          24

              Income of subsidiaries................................................        294         11          94
                                                                                            ---        ---         ---

                  Earnings before income taxes......................................        793        321         118

              Income taxes..........................................................        178        115           8
                                                                                            ---        ---         ---

                  Net earnings......................................................      $ 615        206         110
                                                                                            ===        ===         ===
</TABLE>

                                                                  (continued)


                                       37
<PAGE>


                CITIZENS COMMUNITY BANCORP, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


(15)  Parent Company Only Financial Information, Continued
<TABLE>


                       Condensed Statements of Cash Flows
                                 (In thousands)

                                                                                               Year Ended December 31,
                                                                                          1999        1998        1997
                                                                                          ----        ----        ----
         Cash flows from operating activities:
<S>                                                                                     <C>            <C>         <C>
              Net earnings...........................................................   $   615        206         110
              Adjustments to reconcile net earnings to net cash provided
                by operating activities:
                  Equity in undistributed earnings of subsidiaries...................      (294)       (11)        (94)
                  (Increase) decrease in other assets................................       (73)       (12)         23
                  (Decrease) increase in other liabilities...........................      (115)       111          (5)
                  Depreciation.......................................................         -         15          17
                                                                                          ------     ------      ------

                  Net cash provided by operating activities..........................        133       309          51
                                                                                          ------     -----       ------

         Cash flows from investing activities:
              Securities purchased under agreements to resell........................     7,405     (8,705)       -
              Purchase of available for sale securities..............................      (190)      -           -
              Purchase of property and equipment, net of transfer to subsidiary......      (883)      (467)        (48)
              Net increase in loans receivable.......................................    (3,715)      (775)       (600)
                                                                                          -----     ------       ------

                  Net cash provided by (used in) investing activities................     2,617     (9,947)       (648)
                                                                                          -----     ------       ------

         Cash flows from financing activities:
              Repayment of mortgage note payable.....................................      -          -           (525)
              Net proceeds from issuance of common stock.............................       152     10,248         697
              Investment in subsidiary...............................................    (1,921)      (750)       (617)
                                                                                          -----     ------       ------

                  Net cash (used in) provided by financing activities................    (1,769)     9,498        (445)
                                                                                          -----     ------       ------

         Net increase (decrease) in cash.............................................       981       (140)     (1,042)

         Cash and cash equivalents at beginning of the year..........................       131        271       1,313
                                                                                          -----     ------       -----

         Cash and cash equivalents at end of year....................................   $ 1,112        131         271
                                                                                          =====     ======       ======
</TABLE>

                                       38
<PAGE>



                          Independent Auditors' Report



Board of Directors
Citizens Community Bancorp, Inc.
Marco Island, Florida:

         We  have  audited  the  accompanying  consolidated  balance  sheets  of
Citizens  Community  Bancorp,  Inc. and Subsidiaries (the "Company") at December
31, 1999 and 1998, and the related consolidated statements of earnings,  changes
in stockholders'  equity, and cash flows for each of the years in the three-year
period  ended   December  31,  1999.   These   financial   statements   are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

         We conducted our audits in accordance with generally  accepted auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

         In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects,  the financial position of the Company
at December 31, 1999 and 1998,  and the results of its  operations  and its cash
flows for each of the years in the three-year period ended December 31, 1999, in
conformity with generally accepted accounting principles.





HACKER, JOHNSON, COHEN & GRIEB PA
Tampa, Florida
January 14, 2000


                                       39
<PAGE>

                      Citizens Community Bancorp Officers

                               Richard Storm, Jr.
                             Chairman of the Board
                            Chief Executive Officer

Gregory E. Smith                                          John G. Wolf
   President                                            Asst. Treasurer
Chief Financial Officer
   Treasurer

James S. Hagedorn                                       Bruce G. Fedor
Vice Chairman                                           Vice President
 Secretary
General Counsel

Robert J. David                                         Diane M. Beyer
Senior Vice President                                   Asst. Secretary

                        Citizens Community Bank Officers

        Richard Storm, Jr.                      Clifford H. Ford
        Chairman of the Board                   Vice President
        Chief Executive Officer                 Commercial Lending Officer

        Gregory E. Smith                        Guy W. Harris
        President                               Vice President
        Chief Operating                         Officer Cashier

        Jeffrey L. Merwin                       Diana M. Newell
        Executive Vice President                Vice President
        Senior Administrative Officer           Branch Manager

        James F. Schaffer                       Nancy A. Obrochta
        Executive Vice President                Vice President
        Senior Lender                           Loan Operations Manager

        Robert J. David                         Patricia V. Paris
        Senior Vice President                   Vice President
        Marketing                               Branch Manager

        David E. Klein                          Melissa R. Prickett
        Senior Vice President                   Vice President
        Loan Officer                            Human Resources Director

        Bruce G. Fedor                          Kim Williams- Poorman
        Vice President                          Asst. Vice President
        General Counsel                         Branch Manager


                       Citizens Financial Corp. Officers

        Robert J. David         Bruce G. Fedor          Gregory E. Smith
        President               Secretary               Treasurer
        Chief Executive Officer


                          CCB Mortgage Corp. Officers

        Tony J. Iannotta        Bruce G. Fedor          Gregory E. Smith
        President               Secretary               Treasurer
        Chief Executive Officer


<PAGE>

                              Corporate Information

Corporate
Offices         650 East Elkcam Circle
                Marco Island, Florida 34145
                (941) 393-2333

Annual Meeting  The Annual Meeting of the  Stockholders  will be held at the
                Deck, located in the Shops of Marco,  1839 San Marco Road, Marco
                Island, Florida 34145 at 11:00 a.m., April 18, 2000.

Common Stock    National Quotation Bureau, Inc., Pink Sheets; Stock Symbol
                "CCBI"

Available
Information    Citizens Community Bancorp,  Inc. is subject to the informational
               requirements of the Securities  Exchange Act of 1934, as amended,
               and,  in  accordance  therewith,  files  electronically  with the
               Securities  and Exchange  Commission  ("Commission")  through the
               Commission's  Electronic  Data  Gathering  Analysis and Retrieval
               ("EDGAR") system, reports, proxy statements and other information
               which may also be  inspected  and copied at the public  reference
               facilities  maintained  by the  Commission  at 450 Fifth  Street,
               N.W.,  Washington,  D.C. 20549 and 3475 Lenox Road,  N.E.,  Suite
               1000, Atlanta, GA 30326 1232. Copies of such material may also be
               reviewed on the Commission's Web Site, http://www.sec.gov.

               Copies of Forms 10-KSB and 10-QSB,  as filed with the  Securities
               and Exchange  Commission,  may also be obtained by  stockholders,
               without  charge,  upon written  request to Mr. Gregory E. Smith -
               President  and  Chief  Financial   Officer,   Citizens  Community
               Bancorp,  Inc.,  650 East Elkcam  Circle,  Marco Island,  Florida
               34145, telephone number (941) 389-1800 Extension 280.

Transfer Agent
and Registrar  Registrar and Transfer Company
               10 Commerce Drive
               Cranford, NJ 07016
               (800) 368-5948

Corporate
Counsel        Igler & Dougherty, P.A.
               1501 Park Avenue East
               Tallahassee, Florida 32301
               (850) 878-2411

Independent
Auditors       Hacker, Johnson, Cohen & Grieb PA
               Certified Public Accountants
               500 North Westshore Boulevard
               Suite 1000
               Tampa, Florida 33609
               (813) 286-2424



<PAGE>

Corporate Offices                               Marco Island Branch

650 E. Elkcam Circle                            650 S. Elkcam Circle
Marco Island, Florida 34145                     Marco Island, Florida  34145
941.393.2333                                    941.389.1800


East Trail Branch                               Moorings Branch
5101 East Tamiami Trail                         2375 North Tamiami Trail
Naples, Florida 34113                           Naples, Florida  34103
941.775.0748                                    941.430.1775


Citizens Financial Corp.                        CCB Mortgage Corporation
5101 Tamiami Trail North                        650 E. Elkam Circle
Naples, Florida 34113                           Marco Island, Florida  34145
941.659.0422                                    941.394.4433 or 800.310.8234



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                               www.ccbancorpfl.com

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