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

                                  FORM 10-QSB/A

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

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

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

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

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

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

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

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

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

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

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

     Class                                    Outstanding as of November 5, 1999
---------------                               ----------------------------------
Common Stock                                                952,296
Par Value $3.15 per share



<PAGE>



                 CITRUS FINANCIAL SERVICES, INC. AND SUBSIDIARY

                                      INDEX


                                                                           PAGE
PART I:  FINANCIAL INFORMATION                                            NUMBER

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

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

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

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

                 Notes to Consolidated Financial Statements (Unaudited)     5

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

PART II:         OTHER INFORMATION                                         19

Signatures                                                                 20


<PAGE>



                 CITRUS FINANCIAL SERVICES, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                                             September 30, 1999
                                                                                                (Unaudited)       December 31, 1998
                                                                                                -----------       -----------------
                                                                                             (In Thousands, Except Per Share Data)
<S>                                                                                           <C>                       <C>
ASSETS
Cash and due from banks ..............................................................        $   2,449                 $   3,940
Federal funds sold ...................................................................            5,200                     9,200
                                                                                              ---------                 ---------
     Total cash and cash equivalents .................................................            7,649                    13,140
Interest-bearing deposits in other banks .............................................               39                         9
Securities available-for-sale at fair value ..........................................            5,700                     4,675
Securities held-to-maturity (market value of
    $1,043 for 1999 and $1,273 for 1998) .............................................            1,109                     1,307
Loans held for investment less allowance for credit losses ...........................           62,455                    52,548
Loans held for sale ..................................................................            3,412                     8,291
Facilities ...........................................................................            2,872                     2,884
Other real estate owned ..............................................................             --                         390
Deferred income taxes ................................................................              140                       233
Accrued interest receivable ..........................................................              435                       343
Other assets .........................................................................              974                       231
                                                                                              ---------                 ---------

         TOTAL .......................................................................        $  84,785                 $  84,051
                                                                                              =========                 =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
     Noninterest-bearing .............................................................        $  10,692                 $  13,393
     NOW accounts ....................................................................            3,704                     4,121
     Money market accounts ...........................................................            4,711                     3,026
     Savings accounts ................................................................            9,182                     8,423
     Time, $100,000 and over .........................................................           10,517                    10,377
     Other time deposits .............................................................           38,794                    37,363
                                                                                              ---------                 ---------

         Total deposits ..............................................................           77,600                    76,703
                                                                                              ---------                 ---------

Other borrowings .....................................................................              249                       217
Accrued interest payable on deposits .................................................              282                       297
Accounts payable and accrued liabilities .............................................                4                       387
                                                                                              ---------                 ---------

         Total liabilities ...........................................................           78,135                    77,604
                                                                                              ---------                 ---------

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

Stockholders' equity:
     Preferred stock .................................................................               --                        --
     Common stock ....................................................................            3,007                     3,007
     Additional paid-in capital ......................................................            3,149                     3,149
     Retained earnings ...............................................................              540                       324
     Accumulated other comprehensive income:
         Net unrealized holding losses on securities .................................              (46)                      (33)
                                                                                              ---------                 ---------

         Total stockholders' equity ..................................................            6,650                     6,447
                                                                                              ---------                 ---------

         TOTAL .......................................................................        $  84,785                 $  84,051
                                                                                              =========                 =========

Book value per common share ..........................................................        $    6.98                 $    6.77
                                                                                              =========                 =========

Common shares outstanding ............................................................          952,296                   952,296
                                                                                              =========                 =========
</TABLE>






                See accompanying notes to consolidated financial
                                   statements.


                                        1

<PAGE>



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

<TABLE>
<CAPTION>

                                                                              For the Three Months Ended  For the Nine Months Ended
                                                                                     September 30,                September 30,
                                                                                     -------------                -------------
                                                                                  1999           1998          1999           1998
                                                                                  ----           ----          ----           ----
                                                                                   (Dollars in Thousands, Except Per Share Data)

<S>                                                                             <C>            <C>           <C>            <C>
Interest and fees on loans held for investment ..........................       $ 1,348        $ 1,191       $ 3,866        $ 3,617
Interest and fees on loans held for sale ................................           136            289           460            635
Investment and dividend income on investment securities
   and interest-bearing deposits in other banks .........................            94            107           255            339
Federal funds sold ......................................................            48            121           199            174
                                                                                -------        -------       -------        -------
         Total interest income ..........................................         1,626          1,708         4,780          4,765
                                                                                -------        -------       -------        -------

Interest on deposits ....................................................           710            820         2,071          2,106
Other ...................................................................            28             22            48             52
                                                                                -------        -------       -------        -------
         Total interest expense .........................................           738            842         2,119          2,158
                                                                                -------        -------       -------        -------

         Net interest income before provision
              for credit losses .........................................           888            866         2,661          2,607

Provision for credit losses .............................................           144             28           164            (21)
                                                                                -------        -------       -------        -------

         Net interest income after provision
              for credit losses .........................................           744            838         2,497          2,628
                                                                                -------        -------       -------        -------

Fees and service charges ................................................           104            111           324            304
Other income ............................................................             8              5            25             21
                                                                                -------        -------       -------        -------
         Total other income .............................................           112            116           349            325
                                                                                -------        -------       -------        -------

Other expenses:
     Salaries and employee benefits .....................................           479            369         1,312          1,080
     Expenses of bank premises and fixed assets .........................           162            136           465            391
     Other operating expenses ...........................................           261            257           722            738
                                                                                -------        -------       -------        -------
         Total other expenses ...........................................           902            762         2,499          2,209
                                                                                -------        -------       -------        -------

Income (loss) before provision for income taxes .........................           (46)           192           347            744

Provision for income taxes ..............................................           (17)            73           131            280
                                                                                -------        -------       -------        -------

Net income (loss) .......................................................           (29)           119           216            464

Other comprehensive income, net of income taxes:
     Unrealized holding gains (losses) arising during period ............             6             41           (11)            59
     Less: reclassification adjustments for gains included in
       net income for the period ........................................            --             --            (2)            (3)
                                                                                -------        -------       -------        -------
         Total other comprehensive income,
              net of income taxes .......................................             6             41           (13)            56
                                                                                -------        -------       -------        -------

Comprehensive income (loss) .............................................       $   (23)       $   160       $   203        $   520
                                                                                -------        =======       =======        =======

Earnings Per Share Information
     Primary ............................................................       $ (0.03)       $  0.13       $  0.23        $  0.49
                                                                                =======        =======       =======        =======
     Diluted ............................................................       $ (0.02)       $  0.10       $  0.18        $  0.40
                                                                                =======        =======       =======        =======
</TABLE>

                See accompanying notes to consolidated financial
                                   statements.


                                        2

<PAGE>



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



<TABLE>
<CAPTION>
                                                                             For the Three Months Ended   For the Nine Months Ended
                                                                                   September 30,                 September 30,
                                                                                1999          1998            1999           1998
                                                                                ----          ----            ----           ----
                                                                                  (Dollars in Thousands, Except Per Share Data)

<S>                                                                          <C>            <C>            <C>            <C>
Net income (loss) ......................................................     $     (29)     $     119      $     216      $     464
Adjustments to  reconcile  net  income  (loss)  to net cash
  provided  (used) by
      operating activities:
         Provision for credit losses ...................................           144             28            164            (21)
         Depreciation and amortization .................................            86             86            254            169
         Net premium amortization and
              discount accretion .......................................             4             20             14             20
         (Increase) decrease in other assets ...........................           300         16,156           (225)        16,064
         Increase (decrease) in other liabilities ......................            56            179           (318)           425
         Origination of loans held for sale ............................       (22,585)       (45,485)       (84,974)      (124,291)
         Proceeds on sale of loans held for sale .......................        22,859         50,281         89,853        116,501
                                                                             ---------      ---------      ---------      ---------

              Net cash provided by
                  operating activities .................................           835         21,384          4,984          9,331
                                                                             ---------      ---------      ---------      ---------

Cash flows from investing activities: Net (increase) decrease in:
         Investment securities .........................................           148            700           (828)         1,878
         Interest-bearing deposits in other banks ......................           (38)            (2)           (30)            54
         Loans .........................................................        (4,357)       (18,347)       (10,224)       (17,881)
     Purchases of bank premises and equipment, net .....................           (64)          (311)          (242)          (478)
                                                                             ---------      ---------      ---------      ---------

              Net cash used by
                  investing activities .................................        (4,311)       (17,960)       (11,324)       (16,427)
                                                                             ---------      ---------      ---------      ---------

Cash flows from financing activities:
     Net increase in deposits ..........................................         9,353          2,485            897         10,523
     Proceeds from other borrowings,
         net of repayments .............................................        (5,793)        (3,530)           (48)           (91)
                                                                             ---------      ---------      ---------      ---------

              Net cash provided (used) by
                  financing activities .................................         3,560         (1,045)           849         10,432
                                                                             ---------      ---------      ---------      ---------

Increase (decrease) in cash and cash equivalents .......................            84          2,379         (5,491)         3,336

Cash and cash equivalents at beginning of period .......................         7,565          7,199         13,140          6,242
                                                                             ---------      ---------      ---------      ---------

Cash and cash equivalents at end of period .............................     $   7,649      $   9,578      $   7,649      $   9,578
                                                                             =========      =========      =========      =========
</TABLE>











                See accompanying notes to consolidated financial
                                   statements.


                                        3

<PAGE>



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



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

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

Comprehensive income:
   Net income .......................................     --           --           --            216           --            --
   Net change in unrealized holding
     gains (losses) on securities
     less reclassification for realized
     gains ..........................................     --           --           --            --           (13)          203
                                                       -------      -------      -------      -------      -------       -------

Balance, September 30, 1999 .........................  952,296      $ 3,007      $ 3,149      $   540      $   (46)      $ 6,650
                                                       =======      =======      =======      =======      =======       =======
</TABLE>



































                See accompanying notes to consolidated financial
                                   statements.

                                        4

<PAGE>



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


NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES

The consolidated  financial  statements include the accounts of Citrus Financial
Services,  Inc.  ("Citrus") and its wholly owned  subsidiary  Citrus Bank,  N.A.
("Citrus Bank").  The consolidated  financial  statements for the three and nine
months  ended  September  30,  1999 and 1998,  have not been  audited and do not
include  information  or  footnotes  necessary  for a complete  presentation  of
financial  condition,  results of operations  and cash flows in conformity  with
generally accepted accounting principles. However, in the opinion of management,
the  accompanying  consolidated  financial  statements  contain all adjustments,
which are of a normal recurring nature,  necessary for a fair presentation.  The
results of operations for the interim periods are not necessarily  indicative of
the results which may be expected for an entire year.  The  accounting  policies
followed  by Citrus  are set forth in Note 1 to Citrus'  consolidated  financial
statements  contained  in  the  1998  Annual  Report  to  Stockholders  and  are
incorporated herein by reference.

Use of Estimates
----------------

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

Material  estimates that are  particularly  susceptible  to  significant  change
relate to the  determination of the allowance for credit losses on loans and the
valuation  of  real  estate  acquired  in  connection  with  foreclosures  or in
satisfaction  of loans  ("Other  Real Estate  Owned").  In  connection  with the
determination  of the allowances  for credit losses and foreclosed  real estate,
management obtains independent appraisals for significant properties.

While  management  uses available  information to recognize  losses on loans and
foreclosed  real estate,  future  additions to the  allowances  may be necessary
based on changes in local economic conditions. In addition, regulatory agencies,
as an integral part of their  examination  process,  periodically  review Citrus
Bank's  allowances for credit losses and foreclosed  real estate.  Such agencies
may require Citrus Bank to recognize  additions to the allowances based on their
judgments about information  available to them at the time of their examination.
Management  does not  anticipate  that the  allowances  for  credit  losses  and
foreclosed real estate will change materially in the near term.

Fair Value of Financial Instruments
-----------------------------------

Financial  instruments of Citrus consist of cash, due from banks,  federal funds
sold,  investment  securities,  loans receivable,  accrued interest  receivable,
deposits, federal funds purchased,  other borrowings,  accrued interest payable,
and  off-balance  sheet  commitments  such as  commitments  to extend credit and
standby letters of credit. On an interim basis, management considers the cost of
providing estimated fair values by each class of financial  instrument to exceed
the benefits derived. In management's  opinion, the carrying amount of financial
instruments approximates fair value.





                                        5

<PAGE>



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


NOTE 2 - COMPUTATION OF PER SHARE EARNINGS

Basic  earnings  per share  amounts are computed by dividing net earnings by the
weighted average number of common shares outstanding during the period.  Diluted
earnings per share are computed by dividing net earnings by the weighted average
number of shares  and all  dilutive  potential  shares  outstanding  during  the
period.  The following  information  was used in the computation of earnings per
share on both a basic and  diluted  basis for the  three and nine  months  ended
September 30, 1999 and 1998 (in thousands except per share data):
<TABLE>
<CAPTION>

                                                                                 For the Three Months           For the Nine Months
                                                                                  Ended September 30,           Ended September 30,
                                                                                  1999           1998           1999          1998
                                                                               ----------      --------       --------      --------

<S>                                                                            <C>             <C>            <C>            <C>
Basic EPS computation:
    Numerator - Net income ............................................        $   (29)        $   119        $   216        $   464
    Denominator - Weighted average shares outstanding .................            952             952            952            952
                                                                               -------         -------        -------        -------

    Basic EPS .........................................................        $ (0.03)        $  0.13        $  0.23        $  0.49
                                                                               =======         =======        =======        =======

Diluted EPS computation:
    Numerator - Net income ............................................        $   (29)        $   119        $   216        $   464
                                                                               -------         -------        -------        -------
    Denominator - Weighted average shares outstanding .................            952             952            952            952
    Stock options and warrants ........................................            221             220            221            220
                                                                               -------         -------        -------        -------

                                                                                 1,173           1,172          1,173          1,172
                                                                               -------         -------        -------        -------

    Diluted EPS .......................................................        $ (0.02)        $  0.10        $  0.18        $  0.40
                                                                               =======         =======        =======        =======
</TABLE>


NOTE 3 - LOANS HELD FOR INVESTMENT

Loans held for investment consisted of (dollars in thousands):
<TABLE>
<CAPTION>
                                                                                               September 30,          December 31,
                                                                                                   1999                   1998

<S>                                                                                              <C>                    <C>
Real estate ....................................................................                 $ 44,456               $ 35,914
Commercial and agriculture .....................................................                   14,086                 12,868
Installment and other loans ....................................................                    4,388                  4,347
                                                                                                 --------               --------
      Total loans held for investment, gross ...................................                   62,930                 53,129
Unearned income and deferred fees ..............................................                       (3)                  (120)
Allowance for credit losses ....................................................                     (472)                  (461)
                                                                                                 --------               --------
      Net loans held for investment ............................................                 $ 62,455               $ 52,548
                                                                                                 ========               ========
</TABLE>














                                        6

<PAGE>



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


NOTE 4 - LOANS HELD FOR SALE

Loans held for sale include  residential real estate loans held for sale to FNMA
and  outstanding  loans  originated by third-party  brokers,  assigned to Citrus
Bank,  and held by Citrus Bank  pending  transfer  to  investors  with  take-out
commitments.  At September 30, 1999,  and December 31, 1998,  such loans totaled
$3,412,000 and $8,291,000,  respectively. These loans are carried at cost, which
is lower than market.

Citrus Bank does not originate any significant amounts of loans specifically for
resale.  Loans  originated by Citrus Bank and sold principally to FNMA generally
represent  less  than 3% of all  loans  originated.  The only  servicing  income
received by Citrus Bank comes from the  servicing of loans sold  principally  to
FNMA, which is not considered to be material.


NOTE 5 - ALLOWANCE FOR CREDIT LOSSES

Citrus'  Board of Directors  monitors the loan  portfolio  quarterly in order to
enable  it to  evaluate  the  adequacy  of  the  allowance  for  credit  losses.
Management  has  implemented  a risk system that  identifies  potential  problem
credits as early as  possible,  categorizes  the credits as to risk,  and puts a
reporting process in place to monitor the progress of the credits.

Citrus maintains the allowance for credit losses at a level sufficient to absorb
all estimated  losses inherent in the loan portfolio.  Activity in the allowance
for credit losses follows (dollars in thousands):
<TABLE>
<CAPTION>

                                                                                                Nine Months         Twelve Months
                                                                                            Ended September 30,   Ended December 31,
                                                                                                    1999                 1998
                                                                                                  --------            ---------

<S>                                                                                                 <C>                  <C>
Balance, beginning of period .......................................................                $461                 $431
                                                                                                    ----                 ----
Recoveries
         Real estate loans .........................................................                  --                   43
         Installment loans .........................................................                  --                    8
         Credit card and related plans .............................................                  --                   --
         Commercial and all other loans ............................................                  33                    1
                                                                                                    ----                 ----
                                                                                                      33                   52
                                                                                                    ----                 ----
Charge-offs
         Real estate loans .........................................................                  --                   --
         Installment loans .........................................................                  12                   35
         Credit card and related plans .............................................                   7                   10
         Commercial and all other loans ............................................                 167                   --
                                                                                                    ----                 ----
                                                                                                     186                   45
                                                                                                    ----                 ----

Provision charged to operations ....................................................                 164                   23
                                                                                                    ----                 ----

Balance, end of period .............................................................                $472                 $461
                                                                                                    ====                 ====
</TABLE>


During  the  first  quarter  of 1998,  Citrus  settled  litigation  involving  a
significant  problem credit.  As a result of this settlement,  Citrus recorded a
credit  provision of $96,000 for the quarter  ended March 31,  1998.  During the
remainder of 1998,  Citrus recorded a provision for credit losses of $119,000 to
recognize the potential credit losses associated with one borrower.  Three loans
totaling  $85,000 to this  borrower  were charged off in 1999.  At September 30,
1999, Citrus had one loan relationship classified as a loss totaling $79,000.






                                        7

<PAGE>



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


NOTE 6 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

Citrus is a party to financial  instruments with  off-balance  sheet risk in the
normal course of business to meet the financing  needs of its  customers.  These
financial  instruments include  commitments to extend credit.  Those commitments
involve,  to varying  degrees,  elements of credit,  and  interest  rate risk in
excess of the amounts recognized in the balance sheet.

Commitments  to extend  credit are  agreements  to lend to a customer as long as
there is no violation of any condition established in the contract.  Commitments
generally  have fixed  expiration  dates or other  termination  clauses  and may
require  payment of a fee. Since many of the  commitments are expected to expire
without  being  drawn  upon,  the total  commitment  amounts do not  necessarily
represent future cash requirements.

Financial  instruments at September 30, 1999, consisted of commitments to extend
credit approximating $8.8 million and letters of credit of $126,000.


NOTE 7 - SUBSEQUENT EVENTS

Public Stock Offering
---------------------

Citrus'  Registration  Statement  on Form SB-2  ("Registration  Statement")  was
declared  effective by the Securities and Exchange  Commission ("SEC") on May 3,
1999.  Citrus  commenced its public offering of between  1,000,000 and 1,200,000
shares of its common stock. The proceeds are expected to be used to complete the
opening of two  proposed  banks if the maximum  shares are sold or one  proposed
bank and  additional  branches if less than the  maximum  shares are sold (see a
more complete  discussion in the  Registration  Statement).  As of September 30,
1999,  approximately  $3.0 million had been  deposited in an escrow account held
with  Independent  Bankers'  Bank of Florida  subject to an Escrow  Agreement as
described in the Registration  Statement.  None of the escrow deposits have been
recorded  by Citrus  and the costs of raising  these  funds  incurred  by Citrus
through September 30, 1999, have been recorded as other assets.

On October 28, 1999, the SEC declared effective an amendment to the Registration
Statement  that  provides for a reduction in the minimum  public  offering  from
1,000,000 to 560,000 shares of Citrus' common stock.  Also, the offering  period
has been extended to April 30, 2000.  Because of these changes,  Citrus refunded
all subscription proceeds and began a reoffering of shares on November 6, 1999.

Restatement of Financial Statements
-----------------------------------

Subsequent to September 30, 1999, Bank management  amended its quarterly  filing
with its primary regulator for the quarter ended September 30, 1999, and reduced
interest  income by  $30,000,  increased  the  provision  for  credit  losses by
$105,000, and reduced income tax expense by $51,000.

















                                        8

<PAGE>



                 CITRUS FINANCIAL SERVICES, INC. AND SUBSIDIARY


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

                                    Overview

Citrus Financial Services,  Inc. ("Citrus") is a bank holding company registered
under the Bank Holding  Company Act of 1956.  Citrus owns 100% of the issued and
outstanding  common stock of Citrus Bank,  N.A.,  Vero Beach,  Florida  ("Citrus
Bank").  Citrus was  incorporated  on May 19,  1989,  to enhance  Citrus  Bank's
ability to serve its future customers'  requirements for financial services. The
holding company  provides  flexibility for expansion of Citrus' banking business
through acquisition of other financial  institutions and provision of additional
banking-related  services which the traditional  commercial bank may not provide
under present laws.

Citrus'  Registration  Statement  on Form SB-2  ("Registration  Statement")  was
declared  effective by the Securities and Exchange  Commission ("SEC") on May 3,
1999.  Citrus  commenced its public offering of between  1,000,000 and 1,200,000
shares of its common stock. The proceeds are expected to be used to complete the
opening of two  proposed  banks if the maximum  shares are sold or one  proposed
bank and  additional  branches if less than the  maximum  shares are sold (see a
more complete  discussion in the Registration  Statement).  On October 28, 1999,
the SEC  declared  effective an amendment  to the  Registration  Statement  that
provides  for a reduction  in the minimum  public  offering  from  1,000,000  to
560,000  shares of Citrus'  common  stock.  Also,  the offering  period has been
extended  to April 30,  2000.  Because of these  changes,  Citrus  refunded  all
subscription proceeds and began a reoffering of shares on November 6, 1999.

Citrus Bank  commenced  business  operations  on April 13, 1990,  in a permanent
facility  located at the corner of Indian River Boulevard and 17th Street,  Vero
Beach,  Florida.  The facility is a three-story  office  condominium,  the first
floor of which is owned by Citrus Bank.  Citrus Bank operates a branch office at
1020 U.S. 1, Sebastian, Florida, which commenced operations in February 1993 and
another branch office located at 1020 Buttonwood Street,  Barefoot Bay, Florida,
which  commenced  operations  in  September  1996.  Citrus  Bank  opened  a loan
production office in Dade County, Florida, during the first quarter of 1999, and
opened a loan production office in Sebring,  Florida,  during the second quarter
of 1999. It is Citrus' intent that these loan production  offices will be closed
when and if Citrus opens its proposed new banks.  Loans originated in these loan
production  offices would then be transferred to the new banks.  Citrus Bank has
incurred loan  production  office  operating  costs through  September 30, 1999,
totaling approximately $270,000.

                           Forward-looking Statements

When used in this Form 10-QSB,  the words or phrases "will likely  result," "are
expected  to," "will  continue,"  "is  anticipated,"  "estimate,"  "project," or
similar expressions are intended to identify "forward-looking statements" within
the  meaning of the  Private  Securities  Litigation  Reform  Act of 1995.  Such
statements are subject to certain risks and  uncertainties  including changes in
economic  conditions in Citrus'  market area,  changes in policies by regulatory
agencies,  fluctuations  in interest  rates,  demand for loans in Citrus' market
area and competition,  that could cause actual results to differ materially from
historical earnings and those presently anticipated or projected.  Citrus wishes
to caution  readers  not to place  undue  reliance  on any such  forward-looking
statements,  which  speak  only as to the date  made.  Citrus  wishes  to advise
readers that the factors listed above,  as well as others,  could affect Citrus'
financial  performance and could cause Citrus' actual results for future periods
to differ  materially from any opinions or statements  expressed with respect to
future  periods  in any  current  statements.  Citrus  does not  undertake,  and
specifically  disclaims any  obligation,  to publicly  release the result of any
revisions which may be made to any forward-looking  statements to reflect events
or circumstances  after the date of such statements or to reflect the occurrence
of anticipated or unanticipated events.










                                        9

<PAGE>



                                    Year 2000

Citrus is aware of the issue  associated with the  programming  code in existing
computer systems as the millennium (Year 2000) approaches.  The issue is whether
computer  systems will properly  recognize date sensitive  information  when the
year  changes to 2000.  Primary  systems  that do not  properly  recognize  this
information  could generate  erroneous data or cause a system to fail. Citrus is
utilizing  both  internal and external  resources to identify,  correct and test
their  systems  for the  Year  2000  compliance.  Management  believes  that all
necessary modifications and testing have been completed. To date,  confirmations
have been received from all of the Bank's primary  processing vendors that their
software  is now Year 2000  compliant.  To date there  have been no  significant
limitations on recourse under the representations  obtained from primary vendors
that have indicated Year 2000 compliance. In addition to representations made by
the primary  vendors,  Citrus has  completed  testing  for all mission  critical
hardware and software.  At September 30, 1999,  Citrus had estimated  total Year
2000 costs of $10,000 in excess of normal  recurring  capital  expenditures  for
routine software and hardware upgrades.  All of this amount remains to be spent.
It is  recognized  that  any Year  2000  compliance  failures  could  result  in
additional expense to Citrus.

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

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

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

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

                         Future Accounting Requirements

In September 1998, the Financial  Accounting Standards Board issued Statement of
Financial Accounting  Standards No. 133, "Accounting for Derivative  Instruments
and Hedging  Activities"  ("SFAS  133"),  which  addresses  the  accounting  for
derivative  instruments  and  provides  for  matching the timing of gain or loss
recognition  on the  hedging  instrument.  Guidance  on  identifying  derivative
instruments is also provided as well as additional disclosures. SFAS 133 becomes
effective for all fiscal  quarters of all fiscal years  beginning after June 15,
1999. Earlier application is permitted with certain exceptions.  Management does
not  anticipate  that  adoption  of SFAS 133 will have a material  impact on the
financial condition or results of operations of Citrus.


                                       10

<PAGE>



                               Impact of Inflation

The  consolidated  financial  statements and related data presented  herein have
been  prepared in  accordance  with  generally  accepted  accounting  principles
("GAAP"),  which require the  measurements  of financial  position and operating
results  in terms of  historical  dollars,  without  considering  changes in the
relative  purchasing  power of money  over time due to  inflation.  Unlike  most
industrial companies,  substantially all of the assets and liabilities of Citrus
are  monetary in nature.  As a result,  interest  rates have a more  significant
impact on Citrus'  performance  than the effects of general levels of inflation.
Interest  rates do not  necessarily  move in the same  direction  or in the same
magnitude as the prices of goods and services, since such prices are affected by
inflation  to  a  larger  extent  than  interest  rates.  As  discussed  herein,
management seeks to manage the relationships  between interest  sensitive assets
and  liabilities  in order to protect  against wide interest rate  fluctuations,
including those resulting from inflation.

                              Results of Operations

Overview

Citrus' net income decreased $148,000 and $248,000 for the three and nine months
ended  September 30, 1999,  respectively,  over the comparable  periods in 1998.
This  decline for the nine months of 1999  versus 1998  reflects  the effects of
increases in the  provision for credit losses  ($185,000),  increased  operating
costs  associated with the start-up of loan  production  offices in Dade County,
Florida,  and Sebring,  Florida, as well as a declining net interest margin. The
increase  in average  earning  assets of 6.4% for the first nine  months of 1999
versus  the  same  period  in  1998  was  partially   offset  by  a  decline  of
approximately  60 basis  points in the average  yield on earning  assets.  These
factors  produced a net increase in total interest income of less than 1% in the
first nine months of 1999 as compared to the first nine months of 1998.  For the
nine months ended September 30, 1999, as compared with the comparable  period in
1998,  increases in total  interest  income of $15,000 and decreases in interest
expense of  $39,000  resulted  in an  increase  in net  interest  income  before
provision for credit losses of $54,000,  or 2.1%, over 1998.  Noninterest income
increased  7.4%,  to  $349,000  in the first nine  months of 1999 as compared to
$325,000 in the first nine months of 1998. This improvement  resulted  primarily
from deposit account charges  corresponding with the growth in average deposits.
Noninterest  expense in the first nine  months of 1999 as  compared to the first
nine months of 1998 rose at a pace of 13.1% to $2,499,000 from  $2,209,000.  The
return on average assets for the nine months ended September 30, 1999,  declined
to 0.35%  annualized as compared with the return of average  assets of 0.72% for
1998.

 Net income for the three months ended  September  30, 1999,  declined  $148,000
from the same period in 1998  primarily  due to increases in the  provision  for
credit losses  ($116,000)  and a 18.4%  increase in other  expenses.  During the
three months ended September 30, 1999,  expenses for the Dade County and Sebring
loan production offices totaled $189,000 and $96,000, respectively, for the nine
months ended September 30, 1999. The $140,000 increase in other expenses for the
third  quarter of 1999 as compared  with the same  period of 1998 was  partially
offset by lower costs on deposits.

Average Balances,  Income and Expenses,  and Rates. The following table depicts,
for the  periods  indicated,  certain  information  related to  Citrus'  average
balance sheet and its average yields on assets and average costs of liabilities.
Such yields are derived by dividing  income or expense by the average balance of
the corresponding assets or liabilities. Average balances have been derived from
daily averages.





                    (This section left blank intentionally.)













                                       11

<PAGE>



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

                                                                            For the Nine Months Ended September 30,
                                                                            1999                                1998
                                                            ---------------------------------     ----------------------------------
                                                                          Interest    Average                 Interest     Average
                                                            Average          and       Yield/     Average        and        Yield/
                                                            Balance       Dividends     Rate      Balance     Dividends      Rate
<S>                                                         <C>           <C>           <C>      <C>          <C>             <C>
Earning assets:
     Interest-earning deposits .......................      $    24       $     1        4.9%    $    48      $     2          5.6%
     Taxable securities ..............................        6,294           255        5.4%      8,380          337          5.4%
     Federal funds sold ..............................        5,518           198        4.8%      4,250          174          5.5%
     Loans held for sale .............................        5,555           460       11.0%      8,491          635         10.0%
     Loans held for investment, net ..................       57,299         3,866        9.0%     49,043        3,617          9.8%
                                                             ------         -----                 ------        -----

         Total earning assets ........................       74,690         4,780        8.5%     70,212        4,765          9.1%
                                                                            -----                               -----

Non-earning assets ...................................        6,815                                6,269
                                                              -----                                -----

         Total assets ................................      $81,505                              $76,481
                                                            =======                              =======

Interest-bearing liabilities:
     NOW and money market deposits ...................      $ 7,311           112        2.0%    $ 7,316          116          2.1%
     Savings .........................................        9,522           232        3.3%      7,176          173          3.2%
     Time deposits ...................................       44,524         1,727        5.2%     43,897        1,817          5.5%
     Other borrowings ................................        1,189            48        5.4%      1,280           52          5.4%
                                                              -----            --                  -----           --

         Total interest-bearing liabilities ..........       62,546         2,119        4.5%     59,669        2,158          4.8%
                                                                            -----                               -----

Noninterest-bearing liabilities ......................       12,355                               11,423
Stockholders' equity .................................        6,604                                5,389
                                                              -----                                -----

         Total liabilities and
              stockholders' equity ...................      $81,505                              $76,481
                                                            =======                              =======

Net interest income before provision
  for credit losses ..................................                    $ 2,661                             $ 2,607
                                                                          =======                             =======

Interest-rate spread .................................                                   4.0%                                  4.2%
                                                                                         ===                                   ===

Net interest margin ..................................                                   4.8%                                  5.0%
                                                                                         ===                                   ===

Ratio of average earning assets to
  average interest-bearing liabilities ...............        119.4%                              117.7%
                                                              =====                               =====
</TABLE>



                                       12

<PAGE>


             Comparison of Results of Operations for the Nine Months
                        Ended September 30, 1999 and 1998

Net Interest Income

The largest component of net income for Citrus is net interest income,  which is
the difference between the income earned on assets and interest paid on deposits
and borrowings used to support such assets. Net interest income is determined by
the rates  earned on Citrus'  interest-earning  assets and the rates paid on its
interest-bearing  liabilities,  the relative amounts of interest-earning  assets
and  interest-bearing  liabilities,  and the degree of mismatch and the maturity
and   repricing    characteristics   of   its   interest-earning    assets   and
interest-bearing liabilities.

Net interest income was $2,497,000 for the nine months ended September 30, 1999,
as compared to  $2,628,000  for the nine months ended  September  30, 1998.  The
increases  in earning  assets of $4.5  million  reflected  the growth of Citrus'
average loan portfolio of $5.3 million,  or 9.2%,  between these periods,  which
contributed to  improvements  in Citrus' total  interest  income.  However,  net
interest income decreased $131,000 for the nine months ended September 30, 1999,
versus the comparable  period in 1998, due to declining yields on earning assets
and the increase in the provision for credit losses.  Net interest  spread,  the
difference   between  the  yield  on  earning   assets  and  the  rate  paid  on
interest-bearing  liabilities,  was 4.0% for the nine months ended September 30,
1999,  as compared to 4.2% for the nine months ended  September  30,  1998.  Net
interest margin, net interest income divided by average interest-earning assets,
declined to 4.8% for the nine months ended  September  30, 1999,  as compared to
5.0% for the nine months ended  September  30, 1998.  These  unfavorable  trends
result  from lower  yields on loans  held for  investment,  which have  declined
approximately  80 basis points,  while interest rates on deposits and borrowings
have only dropped  approximately  30 basis  points in 1999 versus 1998.  Also, a
swing in the provision  for credit  losses of $185,000 left net interest  income
down $94,000 for the nine months ended  September 30, 1999, as compared with the
same period of 1998.

Provision and Allowance for Credit Losses

Citrus has developed  policies and procedures for evaluating the overall quality
of its credit  portfolio  and the timely  identification  of  potential  problem
loans. Management's judgment as to the adequacy of the allowance is based upon a
number of  assumptions  about future events which it believes to be  reasonable,
but  which  may or may  not be  valid.  Thus,  there  can be no  assurance  that
charge-offs in future periods will not exceed the allowance for credit losses or
that additional increases in the credit loss allowance will not be required.

Asset  Classification.  Commercial  banks  are  required  to  review  and,  when
appropriate, classify their assets on a regular basis. The OCC has the authority
to identify  problem assets and, if appropriate,  require them to be classified.
There are three  classifications for problem assets:  substandard,  doubtful and
loss.   Substandard   assets  have  one  or  more  defined  weaknesses  and  are
characterized  by the distinct  possibility  that the insured  institution  will
sustain some loss if the  deficiencies  are not corrected.  Doubtful assets have
the weaknesses of substandard assets with the additional characteristic that the
weaknesses  make  collection  or  liquidation  in full on the basis of currently
existing  facts,  condition,  and  values  questionable,  and  there  is a  high
possibility of loss. An asset classified as loss is considered uncollectible and
of such little  value that  continuance  as an asset of the  institution  is not
warranted.  If an asset or portion  thereof is classified  as loss,  the insured
institution establishes a specific reserve for the full amount of the portion of
the asset  classified as loss. All or a portion of general loan loss  allowances
established to cover possible losses related to assets classified as substandard
or doubtful may be included in determining an institution's  regulatory capital,
while specific valuation  allowances for loan losses generally do not qualify as
regulatory   capital.   Assets  that  do  not  warrant   classification  in  the
aforementioned  categories,  but possess  weaknesses,  are classified as special
mention and are monitored by Citrus.

At  September  30,  1999,  Citrus  had 12  loans  totaling  $934,000  that  were
classified  by  regulatory  standards  as  substandard,  doubtful,  or loss.  At
December 31, 1998, Citrus had 12 loans totaling $448,000 in the same categories.
At September  30, 1999,  Citrus had $79,000 in loss assets to be charged off and
none on December 31, 1998.  Loans  classified by  management  as impaired  under
generally  accepted  accounting  principles  (and are included in the regulatory
classifications  of doubtful or loss) totaled  $185,000 and $85,000 at September
30,  1999,  and  December  31,  1998,  respectively.  Management  increased  the
provision  for  credit  losses to reflect  increases  in  classified  loans from
December 31, 1998, to September 30, 1999.






                                       13

<PAGE>



Nonperforming  loans include loans that have been placed on nonaccrual status by
Citrus and loans past due for ninety days or more.  Some of these  nonperforming
loans are well-collateralized,  posing no significant risk of loss, and have not
been classified as substandard, doubtful, or loss.
<TABLE>
<CAPTION>
                                                                                                  Nine Months      Twelve Months
                                                                                                    Ended             Ended
                                                                                                 September 30,     December 31,
                                                                                                     1999              1998
<S>                                                                                                 <C>                <C>
Nonaccrual loans held for investment:
     Real estate loans .......................................................................      $   88             $   --
     Installment loans .......................................................................          67                  2
     Credit cards and related plans ..........................................................          --                 --
     Commercial and all other loan ...........................................................         580                139
                                                                                                    ------             ------
Total nonaccrual loans held for investment ...................................................         735                141
                                                                                                    ------             ------

Accruing loans held for investment over 90 days delinquent:
     Real estate loans .......................................................................          --                228
     Installment loans .......................................................................          14                 23
     Credit cards and related plans ..........................................................           8                 --
     Commercial and all other loans ..........................................................          19                108
                                                                                                    ------             ------
Total accrual loans held for investment over 90 days delinquent ..............................          41                359
                                                                                                    ------             ------

Troubled debt restructurings not included above ..............................................          --                 --
                                                                                                    ------             ------

Total nonperforming loans held for investment ................................................         776                500
                                                                                                    ------             ------

Other real estate owned:
     Real estate acquired by foreclosure or deed in lieu
         of foreclosure ......................................................................          --                390
                                                                                                    ------             ------
     Total nonperforming loans held for investment and
          other real estate owned ............................................................      $  776             $  890
                                                                                                    ======             ======

     Total nonperforming loans held for investment
         as a percentage of total loans ......................................................         1.2%               0.9%
                                                                                                    ======             ======
     Total nonperforming loans held for investment
         as a percentage of total assets .....................................................         0.9%               0.6%
                                                                                                    ======             ======
     Total nonperforming loans held for investment
         and other real estate owned as a percentage of total assets .........................         0.9%               1.1%
                                                                                                    ======             ======

Troubled debt restructurings and modified loans held for investment:
     Current .................................................................................      $1,434             $  685
     Past due over 30 days and less than 90 days .............................................          --                 --
     Past due over 90 days and included above ................................................          --                 --
                                                                                                    ------             ------

                                                                                                    $1,434             $  685
                                                                                                    ======             ======
</TABLE>

Nonperforming  loans at September 30, 1999 declined from the quarter ended March
31, 1999 total of $859,000,  but continue to exceed  December 31, 1998,  levels.
However,  total  nonperforming  loans and other real estate owned  declined from
$890,000 at December 31, 1998, to $776,000 at September 30, 1999.

Allowance for Credit  Losses.  The  allowance  for credit losses is  established
through a provision for loan losses charged  against  income.  Loans are charged
against the provision when management  believes that the  collectibility  of the
principal is unlikely.  The  provision  is an estimated  amount that  management
believes will be adequate to absorb losses  inherent in the loan portfolio based
on evaluations of its  collectibility.  The evaluations take into  consideration
such  factors as changes  in the  nature  and volume of the  portfolio,  overall
portfolio  quality,   specific  problem  loans  and  commitments,   and  current
anticipated  economic  conditions that may affect the borrower's ability to pay.
While  management  uses the best  information  available to recognize  losses on
loans,  future  additions to the provision may be necessary  based on changes in
economic conditions.





                                       14

<PAGE>



Activity in the allowance for credit losses follows (dollars in thousands):
<TABLE>
<CAPTION>

                                                                                               Nine Months         Twelve Months
                                                                                                  Ended               Ended
                                                                                              September 30,        December 31,
                                                                                                   1999                1998
                                                                                                 --------            --------

<S>                                                                                               <C>                   <C>
Allowance at beginning of period .......................................................          $461                  $431
                                                                                                  ----                  ----

Charge-offs:
    Real estate loans ..................................................................            --                    --
    Installment loans ..................................................................            12                    35
    Credit cards and related plans .....................................................             7                    10
    Commercial and all other loans .....................................................           167                    --
                                                                                                  ----                  ----
Total charge-offs ......................................................................           186                    45
                                                                                                  ----                  ----

Recoveries:
    Real estate loans ..................................................................            --                    43
    Installment loans ..................................................................            --                     8
    Credit cards and related plans .....................................................            --                    --
    Commercial and all other loans .....................................................            33                     1
                                                                                                  ----                  ----
Total recoveries .......................................................................            33                    52
                                                                                                  ----                  ----

Provision for credit losses charged to operations ......................................           164                    23
                                                                                                  ----                  ----

Allowance at end of period .............................................................          $472                  $461
                                                                                                  ====                  ====

Ratio of net charge-offs during the period to average
   loans outstanding during the period .................................................           0.4%                  0.0%
                                                                                                   ===                   ===
</TABLE>

At September 30, 1999, the allowance for credit losses amounted to $472,000,  or
0.75% of  outstanding  loans held for  investment.  At December  31,  1998,  the
allowance for credit losses amounted to $461,000,  or 0.87% of outstanding loans
held for  investment.  Citrus'  provision for credit losses was $164,000 for the
nine months ended  September 30, 1999.  For the same nine months period in 1998,
the provision for credit  losses was  $(21,000).  The provision in 1999 was made
based on management's  assessment of general credit loss risk and asset quality.
The decline in the allowance  for credit  losses as a percentage of  outstanding
loans reflects the overall  improvement in the quality of the loan portfolio (as
measured  by the decline in  nonperforming  loans  since  March 31,  1999),  the
recognition  of losses on impaired  credit  relationships  during the first nine
months of 1999, and favorable historical trends in overall charge-offs.

During  the  first  quarter  of 1998,  Citrus  settled  litigation  involving  a
significant  problem credit.  As a result of this settlement,  Citrus recorded a
credit  provision  of $21,000  for the nine months  ended  September  30,  1998.
Citrus'  allowance for credit losses remains at levels lower than its peer group
due in part to the mix of the loan portfolio with  approximately  71% of Citrus'
loans secured by real estate as of September 30, 1999. No separate allowance for
credit losses has been established for loans held for sale since these loans are
purchased for amounts up to 98% of the note amount.  Substantially  all of these
loans have take-out  commitments in place at the time  purchased by Citrus,  and
these loans meet Citrus' underwriting guidelines.

Noninterest Income and Expense

Noninterest  Income.  Citrus'  primary source of  noninterest  income is service
charges on deposit  accounts.  In addition,  Citrus  originates  mortgage loans,
which are closed in the name of a third party,  for which Citrus receives a fee.
Other sources of noninterest  income  include  credit card fees,  commissions on
check sales, safe deposit box rent, wire transfer, and official check fees.

Total  noninterest  income  increased  by $24,000  during the nine months  ended
September 30, 1999, as compared to the same period in 1998, reflecting increased
activity  fees  related to  increases  in deposit  and loan  balances.  Fees and
service  charges were $324,000 for the nine months ended  September 30, 1999, as
compared to $304,000 for the comparable period in 1998, an increase of 6.6%.




                                       15

<PAGE>



Noninterest Expense.  Total noninterest expense increased by $290,000 during the
nine months ended September 30, 1999, as compared to the same period in 1998, as
a result of Citrus'  continued  growth.  For the first nine months in 1999, this
increase  includes an increase in salary and benefits  expense of  $232,000,  as
Citrus employed  additional  employees for its new loan  production  offices and
provided  normal  salary  and  benefit  increases.   Occupancy-related  expenses
increased  $74,000 in the first nine  months of 1999 as  compared  with the same
period  in 1998,  principally  due to the  start-up  of  Citrus'  in-house  data
processing center and the new loan production offices.  Continued  reductions in
professional  fees were  realized  in the first  nine  months of 1999 along with
reductions in outside data processing costs, contributed to a $16,000 decline in
other operating expenses for the period.

Income Tax Expense

The income tax  provision  was $131,000 for the nine months ended  September 30,
1999, or an effective  rate of 37.8%.  This  compares with an effective  rate of
37.6% for the same period in 1998.


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

Net Interest Income

Net interest  income was $744,000 for the three months ended September 30, 1999,
as compared  with  $838,000  for the three months  ended  September  30, 1998, a
decrease of $94,000,  or 11.2%.  This  decrease is  reflective  of the  $116,000
increase in the  provision  for credit  losses.  While  average  earning  assets
increased  only $1.3  million,  or 1.7%,  during  this same  period,  the mix in
earning  assets  improved with average total loans  representing  85% of average
earning  assets for the three months ended  September 30, 1999, as compared with
80% for the same  period in 1998.  These  factors  helped  mitigate  the overall
decline in yields,  which resulted in a yield on average  earning assets of 8.6%
for the three months ended  September 30, 1999,  versus 9.2% for the same period
in 1998.  Also, a reduction in the cost of  interest-bearing  liabilities  of 70
basis  points in this  period  was due in part to a shift  from  higher  costing
certificates  of deposit to savings and other lower cost deposits.  As a result,
Citrus'  interest  rate spread  improved  approximately  10 basis points and net
interest margin was flat at 4.7%.

Noninterest Income and Expense

Noninterest  Income.  Total noninterest income decreased $4,000 during the three
months ended  September 30, 1999, as compared to the same period in 1998.  While
fees and service  charges  declined  $7,000 for the three months ended September
30, 1999, as compared with the comparable  period in 1998,  management  believes
this decline to be temporary and no anticipated negative trend is expected.

Noninterest Expense.  Total noninterest expense increased by $140,000 during the
three months ended  September  30, 1999, as compared to the same period in 1998,
as a result of Citrus'  continued  growth.  For the third quarter of 1999,  this
increase  includes an increase in salary and benefits  expense of  $110,000,  as
Citrus employed  additional  employees for its new loan  production  offices and
provided  normal  salary  and  benefit  increases.   Occupancy-related  expenses
increased  $26,000 in the third quarter of 1999 as compared with the same period
in 1998,  principally  due to the start-up of Citrus'  in-house data  processing
center and the new loan production offices. Continued reductions in professional
fees were realized  during 1999 which,  when combined with reductions in outside
data processing  costs,  kept other  operating  expense growth to a rate of less
than 1.6% for the third quarter of 1999 over the same period in 1998.

Income Tax Expense

The  income  tax  provision  was a $17,000  credit  for the three  months  ended
September  30,  1999,  or an  effective  rate of 37.0%.  This  compares  with an
effective rate of 38.0% for the same period in 1998.

                               Financial Condition

Citrus' total assets at September 30, 1999, were $84.8 million,  increasing from
$84.1 million at December 31, 1998. The increase of  approximately  $0.7 million
reflects  increases in loans held for  investment of $9.9 million and securities
of $0.8  million,  offset by declines in loans held for sale of $4.9 million and
cash and cash equivalents of $5.5 million.

Total  stockholders'  equity as of September  30,  1999,  was $6.7  million,  an
increase of $203,000,  or approximately 3.1%, compared with stockholders' equity
of $6.4 million as of December 31, 1998. This increase was attributable to net


                                       16

<PAGE>



income for the nine months of 1999 of $216,000  offset by a $13,000  decrease in
the  market  value  (net of  deferred  income  taxes) of  investment  securities
available-for-sale.

The following  table shows selected ratios for the periods ended or at the dates
indicated (annualized for the nine months ended September 30, 1999):
<TABLE>
<CAPTION>
                                                                                                   Nine Months Ended     Year Ended
                                                                                                     September 30,      December 31,
                                                                                                         1999              1998
                                                                                                   -----------------    ------------
<S>                                                                                                      <C>               <C>
Return on average assets ......................................................................          0.35%             0.72%
Return on average equity ......................................................................          4.36%             9.13%
Interest-rate spread during the period ........................................................          4.00%             4.20%
Net interest margin ...........................................................................          4.80%             4.92%
Allowance for credit losses to period end loans held for investment ...........................          0.75%             0.87%
Net charge-offs to average loans held for investment ..........................................          0.36%            (0.01)%
Nonperforming assets to period end loans held for investment
    and foreclosed property ...................................................................          1.23%             1.67%
Nonperforming assets to period end total assets ...............................................          0.91%             1.06%
</TABLE>


                         Liquidity and Capital Resources

Liquidity  Management.  Liquidity management involves monitoring Citrus' sources
and uses of funds in order to meet its day-to-day cash flow  requirements  while
maximizing  profits.  Liquidity  represents  the ability of a company to convert
assets  into  cash or cash  equivalents  without  significant  loss and to raise
additional funds by increasing  liabilities.  Liquidity  management is made more
complicated  because  different  balance sheet components are subject to varying
degrees of  management  control.  For example,  the timing of  maturities of the
investment portfolio is very predictable and subject to a high degree of control
at the time  investment  decisions are made.  However,  net deposit  inflows and
outflows  are far less  predictable  and are not  subject to the same  degree of
control.  Asset  liquidity  is  provided  by cash and assets  which are  readily
marketable,  which can be  pledged,  or which  will  mature in the near  future.
Liability  liquidity is provided by access to core funding sources,  principally
the ability to generate  customer  deposits in Citrus' market area. In addition,
liability  liquidity is provided  through the ability to borrow against approved
lines of credit (federal funds purchased) from correspondent banks and to obtain
funds from the Federal Home Loan Bank on a secured basis through securities sold
under agreements to repurchase.

Short-Term Investments.  Short-term investments,  which consist of federal funds
sold and securities  purchased under  agreements to resell and  interest-bearing
deposits,  averaged $5.5 million in the first nine months of 1999 as compared to
$4.3 million in the same period of 1998. At September 30, 1999, and December 31,
1998,   short-term   investments   totaled  $5.2   million  and  $9.2   million,
respectively.  These  funds are a primary  source of Citrus'  liquidity  and are
generally invested in an earning capacity on an overnight basis.

Management   regularly  reviews  the  liquidity   position  of  Citrus  and  has
implemented   internal  policies  which  establish  guidelines  for  sources  of
asset-based  liquidity  and limit the total  amount of  purchased  funds used to
support the balance sheet and funding from non-core sources.

Deposits and Other  Sources of Funds.  In addition to  deposits,  the sources of
funds available for lending and other business purposes include loan repayments,
loan sales, and securities sold under agreements to repurchase.  Loan repayments
are a relatively stable source of funds,  while deposit inflows and outflows are
influenced  significantly by general interest rates and money market conditions.
Borrowings  may be used on a short-term  basis to compensate  for  reductions in
other sources,  such as deposits at less than projected levels and are also used
to fund the origination of mortgage loans designated to be sold in the secondary
markets.

Core Deposits. Core deposits,  which exclude certificates of deposit of $100,000
or more,  provide a relatively  stable funding source for Citrus' loan portfolio
and other earning assets.  Citrus' core deposits were $67.1 million at September
30, 1999, and $66.3 million at December 31, 1998. Management  anticipates that a
stable base of deposits will be Citrus'  primary  source of funding to meet both
its short-term and long-term liquidity needs in the future.

Customers with large  certificates of deposit tend to be extremely  sensitive to
interest rate levels, making these deposits less reliable sources of funding for
liquidity planning purposes than core deposits. Some financial institutions fund
their balance  sheets in part through  large  certificates  of deposit  obtained
through  brokers.  These  brokered  deposits  are  generally  expensive  and are
unreliable as long-term  funding  sources.  Accordingly,  Citrus does not accept
brokered deposits.


                                       17

<PAGE>






Citrus uses its  resources  principally  to fund  existing and  continuing  loan
commitments and to purchase investment securities. At September 30, 1999, Citrus
had  commitments to originate loans totaling $8.8 million,  and had issued,  but
unused,  letters  of  credit  of  $126,000  for the same  period.  In  addition,
scheduled  maturities of certificates of deposit during the 12 months  following
September 30, 1999,  total $41.6  million.  Management  believes that Citrus has
adequate  resources to fund all its commitments,  that  substantially all of its
existing  commitments  will be funded within 12 months and, if so desired,  that
Citrus  can  adjust the rates and terms on  certificates  of  deposit  and other
deposit accounts to retain deposits in a changing interest rate environment.

Borrowings.  Citrus Bank has a line of credit master  agreement with the FHLB of
Atlanta that enables Citrus Bank to borrow up to $10,000,000. These advances are
collateralized  by  Citrus  Bank's  FHLB  stock  and  a  blanket  floating  lien
consisting of  wholly-owned  residential  (1-4 units) first mortgage  loans.  At
September 30, 1999, all advances  during 1999 had been repaid.  At September 30,
1999,  Citrus had borrowed  $70,000 from Central Illinois Bank under a revolving
line of credit agreement in the amount of $500,000.  This line of credit matures
May 20, 2000, with interest  floating at New York prime. In addition to the line
of credit  arrangements,  Citrus  Bank had fixed FHLB  advances  outstanding  as
follows (dollars in thousands):

                                          At September 30,       At December 31,
Maturity Date      Interest Rate               1999                  1998
-------------      -------------               ----                  ----

    2003               5.76%                  $ 179                 $ 217
                                              =====                 =====

Capital.  The Federal  Reserve Board and bank regulatory  agencies  require bank
holding  companies and financial  institutions  to maintain  capital at adequate
levels based on a percentage of assets and off-balance sheet exposures, adjusted
for  risk  weights  ranging  from 0% to 100%  (the  Federal  Reserve  grants  an
exemption from these requirements for bank holding companies with less than $150
million in  consolidated  assets,  and  therefore  Citrus'  capital is currently
measured only at Citrus Bank level). Under the risk-based  standard,  capital is
classified  into two  tiers.  Tier 1 capital  consists  of common  stockholders'
equity,  excluding the unrealized gain (loss) on available-for-sale  securities,
minus  certain  intangible  assets.  Tier 2  capital  consists  of  the  general
allowance for credit losses  subject to certain  limitations.  An  institution's
qualifying capital base for purposes of its risk-based capital ratio consists of
the sum of its Tier 1 and Tier 2 capital.  The regulatory  minimum  requirements
are 4% for Tier 1 and 8% for total risk-based capital.

Bank  holding  companies  and banks are also  required to maintain  capital at a
minimum level based on total assets,  which is known as the leverage ratio.  The
minimum  requirement for the leverage ratio is 3%, but all but the highest rated
institutions  are required to maintain  ratios 100 to 200 basis points above the
minimum. Citrus and Citrus Bank exceeded their minimum regulatory capital ratios
as of September 30, 1999, as reflected in the following table.

The  following  table sets  forth  Citrus  Bank's  regulatory  capital  position
(dollars in thousands):
<TABLE>
<CAPTION>

                                                                      Actual                   Minimum(1)        Well-Capitalized(2)
                                                              Amount            %       Amount            %      Amount         %
                                                              ------            -       ------            -      ------         -

<S>                                                           <C>             <C>       <C>             <C>      <C>          <C>
Total Capital (to Risk-Weighted Assets) ...............       $6,716          10.10%    $5,320          8.00%    $6,651       10.00%
Tier I Capital (to Risk-Weighted Assets) ..............       $6,244           9.39%    $2,660          4.00%    $3,990        6.00%
Tier I Capital (to Average Assets) ....................       $6,244           7.65%    $3,263          4.00%    $4,079        5.00%
</TABLE>


(1)  The  minimum  required  for  adequately  capitalized  purposes.  (2)  To be
"well-capitalized" under the FDIC's Prompt Corrective Action regulations.

Citrus  Bank's total  capital to risk  weighted  assets ratio has declined  from
10.71% at December 31, 1998,  to 10.10% at September  30, 1999.  Management  has
developed  plans to increase  Citrus  Bank's  capital  during 2000.  These plans
include the  anticipated  capital  infusion  from the  exercise of warrants  and
options  expiring  in April  2000,  which may result in up to 488,561  shares of
Citrus'  common  stock  issued for a total of up to $3.1  million in  additional
capital.  Some or all of the proceeds to Citrus could be  contributed  to Citrus
Bank.


                                       18

<PAGE>



                 CITRUS FINANCIAL SERVICES, INC. AND SUBSIDIARY



PART II:     OTHER INFORMATION

             Item 1.      Legal Proceedings.
                          None.

             Item 2.      Changes In Securities.
                          None.

             Item 3.      Defaults upon Senior Securities.
                          None.

             Item 4.      Submission of Matters to a Vote of Security Holders.
                          None.

             Item 5.      Other Information.
                          None.

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



                                       19

<PAGE>



                 CITRUS FINANCIAL SERVICES, INC. AND SUBSIDIARY
                                   SIGNATURES



Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registered  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.



                                          Citrus Financial Services, Inc.
                                          -------------------------------




Date:         December 30, 1999           /s/ Josh C. Cox, Jr.
              -----------------           --------------------
                                          Josh C. Cox, Jr.
                                          President and Chief Executive Officer



Date:         December 30, 1999           /s/ Henry O. Speight
              -----------------           --------------------
                                          Henry O. Speight
                                          Executive Vice President and
                                          Chief Financial Officer



                                       20

<PAGE>