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Public offering made to improve shareholder liquidity

Philadelphia’s Citizens olding Company hits AMEX ticker

PHILADELPHIA – Changes in the banking industry have been numerous and well-documented. Financial institutions growing via mergers and acquisitions, with start-ups coming in to fill the void left by once “small” banks, have dominated headlines.

However, Citizens Holding Company, parent of The Citizens Bank of Philadelphia, has made the news in a different venture. On Oct. 19 at 8:15 Central Standard Time, Citizens began trading publicly on the American Stock Exchange (AMEX). Its new trading symbol is “CIZ.”

“Everybody has been so excited about us going public,” said Jackie Hester, vice president of Citizens. “Our customers have been asking, ‘When will trading begin?’ It’s created a lot of excitement in the community.

“Citizens has a very strong capital position. The decision to go public was mainly made to offer liquidity to our stockholders.”

Citizens Bank was established in 1908 with $50,000 in capital and 48 stockholders. The financial institution has a long history of progressive vision and bucking trends. In 1972, it opened the first branch location in the history of Neshoba County. About the same time, it purchased its own computer system and started doing data processing in-house when other institutions were outsourcing the work. And in 1980, Citizens Holding Company was formed which, according to Hester, was one of the first of its kind in Mississippi. Today Citizens Bank makes up 96.6% of the holding company’s assets.

Citizens currently boasts about $350 million in assets and operates 12 locations in six east-central Mississippi counties in Philadelphia, Union, Carthage, Madden, Sebastopol, De Kalb, Kosciusko, Scooba, Meridian, as well as a branch on the Choctaw Reservation. Citizens also has a loan production office in Meridian. It employs 170 people.

Growth, particularly over the last several years, has been healthy. Citizens’ return on assets (ROA) was 1.75% at mid-year of 1999, placing it in the top 10% of its peer institutions in the U.S. Its return on equity was 16.5%, with a solid efficiency ratio of 43%.

The process of going public began about a year ago. The biggest hurdle was the first step – gaining SEC approval.

“First we filed a regulatory statement with the SEC,” said Robert Smith, vice president and controller. “We filed Form 10, which ended up being about an inch-and-a-half thick when complete. We had to lay open the history of the bank and give other pertinent information, such as audit reports, asset analysis, management discussions and other information. We submitted it, and the regulators went through it. They came back with other questions, then we re-submitted it again. We continued to do that until we had met their requirements.”

After obtaining SEC approval, then the AMEX’s approval had to be gained. Smith said this step was less tedious and time-consuming than the SEC work.

“A lot of the information was redundant, already having been gathered for the SEC,” he said. “The other difference is that the American Stock Exchange wants to do business with companies, they want your listing. So, it was not as demanding. It was easier, but it wasn’t easy.”

Surprisingly, both Hester and Smith called the process of going public enjoyable and a great learning experience.

“My advice to other financial institutions which are thinking of going public is to make good plans, be prepared for a lot of work, don’t get flustered, and hire a good law firm,” Smith said.

Contact MBJ staff writer Wally Northway at northway@msbusiness.com.

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