What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2018-03-15 compared with 2017-03-15 · 97 added, 93 removed, 227 unchanged (46% of the section changed)

8 unchanged sentences

In 1917, the Bank surrendered its national charter and obtained a state charter, at which time the name of the Bank was changed to The Citizens Bank of Philadelphia, Mississippi.

December 31, 2016, the Bank was the largest bank headquartered in Neshoba County, Mississippi, with total assets of $1.025 billion and total deposits of $760.152 million.

For more information regarding the assets, revenue and profits

of the Company, refer to the Consolidated Financial Statements of the Company contained in Item 8, Financial Statements and Supplementary Data. The Companys only reportable segment is the assets and cash flow of the Bank, resulting

in revenues of $37,747,661, operating profit of $6,949,153 and total assets of $1,024,898,099 for the Company as of December 31, 2016.

December 31, 2017, the Bank was the largest bank headquartered in Neshoba County, Mississippi, with total assets of $992.744 million and total deposits of $723.055 million.

For more information regarding the assets, revenue and

profits of the Company, refer to the Consolidated Financial Statements of the Company contained in Item 8, Financial Statements and Supplementary Data. The Companys only reportable segment is the assets and cash flow of the Bank,

resulting in revenues of $38,696,252, operating profit of $4,123,243 and total assets of $992,743,682 for the Company as of December 31, 2017.

The principal executive offices of both the Company and the Bank are located at 521 Main Street, Philadelphia, Mississippi

8 unchanged sentences

Loan demand has improved but increased competition that results in lower loan yields along with an increased investment portfolio have

caused this percentage to remain relatively flat over the last three years.

caused this percentage to decline over the last three years.

Such lending activities include commercial, real estate, installment (direct and indirect) and credit card loans.

The Companys primary lending area is East Central and

South Mississippi, specifically Neshoba, Newton, Leake, Lamar, Forrest, Scott, Attala, Lauderdale, Oktibbeha, Rankin, Harrison, Jackson, Winston and Kemper counties and contiguous counties.

In 2008, the Company entered the southern Mississippi

market with the opening of a branch office in Hattiesburg, Mississippi, which is located in Lamar County.

In 2009, the Company opened a Loan Production Office in Biloxi, Mississippi to serve the Mississippi Gulf Coast and in April 2014 converted

this office to a full service branch and at the same time opened another branch in Biloxi.

The Companys primary lending area is East Central and South

Mississippi, specifically Neshoba, Newton, Leake, Lamar, Forrest, Scott, Attala, Lauderdale, Oktibbeha, Rankin, Harrison, Jackson, Winston and Kemper counties and contiguous counties.

In 2008, the Company entered the southern Mississippi market with

the opening of a branch office in Hattiesburg, Mississippi, which is located in Lamar County.

In 2009, the Company opened a Loan Production Office (LPO) in Biloxi, Mississippi to serve the Mississippi Gulf Coast and in April 2014

converted this office to a full service branch and at the same time opened another branch in Biloxi.

In 2011, the Company opened a branch in

Flowood, Mississippi.

In December 2016, the Company opened a loan production office (LPO) in Oxford to offer commercial loans to the people in North Mississippi.

On a very limited

basis, the Company extends out-of-area credit only to borrowers who are considered to be low risk, as defined within the Banks lending policy.

The Company is not

dependent upon any single customer or small group of customers, and it has no foreign operations.

The Companys

market area is mainly rural, with Hattiesburg, population 50,233, Biloxi, population 50,644, and Meridian, population 38,314, being the largest markets.

In December 2016, the Company opened a LPO in Oxford, Mississippi to offer commercial loans to the people in North Mississippi.

On a very limited basis, the Company extends out-of-area credit only to borrowers who are considered to be low risk, as defined within the Banks lending policy.

The Company is not dependent upon any single customer

or small group of customers, and it has no foreign operations.

The Companys market area is mainly rural, with

Hattiesburg, population 50,233, Biloxi, population 50,644, and Meridian, population 38,314, being the largest markets.

Agriculture and some light industry comprise a significant portion of the economy of this area.

The largest employer in the Companys service area is the Mississippi Band of Choctaw Indians.

Its schools, manufacturing plants and main source of income, The Pearl River Resort (the Resort), generate a significant number of jobs

The Resort and its related services employ approximately 2,400 people within the Companys market.

For more information regarding revenue from external customers for the last three fiscal years, attributed by geographic region,

please refer to Item 7, Managements Discussion and Analysis of Financial Condition and Results of Operations, which is included in the Companys Annual Report and attached as an exhibit hereto.

The largest employer in the

Companys service area is the Mississippi Band of Choctaw Indians.

Its schools, manufacturing plants and main source of income, The Pearl River Resort (the Resort), generate a significant number of jobs in the area.

The Resort and

its related services employ approximately 2,400 people within the Companys market.

For more information regarding revenue from external customers for the last three fiscal years, attributed by geographic region, please refer to Item 7,

Managements Discussion and Analysis of Financial Condition and Results of Operations, which is included in the Companys Annual Report and attached as an exhibit hereto.

The Company has historically made, and intends to continue to make, most types of real estate loans, including, but not

21 unchanged sentences

He has served as President of the Bank since January 2002 and served as Chief Operating Officer of the Bank from January 2002 until December 31, 2002.

He has also been a member of the Board

of Directors of both the Company and the Bank since 2001.

McKee served as Executive Vice-President of the Bank from 2001 to 2002, Senior Vice-President of the Bank from 2000 to 2001, Vice-President of the Bank from 1992 to 2000, Assistant

Vice-President of the Bank from 1989 to 1992, and Assistant Cashier of the Bank from 1984 to 1989.

has been employed by the Bank since 1986.

He has also been a member of the

Board of Directors of both the Company and the Bank since 2001.

McKee served as Executive Vice-President of the Bank from 2001 to 2002, Senior Vice-President of the Bank from 2000 to 2001, Vice-President of the Bank from 1992 to 2000,

Assistant Vice-President of the Bank from 1989 to 1992, and Assistant Cashier of the Bank from 1984 to 1989.

Smith, 66, has been employed by the Bank since 1986.

He has served as Senior Vice-President and Chief Financial Officer of the Bank since January 2001.

Prior to January 2001, Mr.

Smith held the title of Vice-President and Controller of the Bank from 1987

until 2001 and Assistant Vice-President of the Bank from 1986 to 1987.

Smith held the title of Vice-President and Controller of the Bank

from 1987 until 2001 and Assistant Vice-President of the Bank from 1986 to 1987.

In addition to his position with the Bank, Mr.

Smith has served as Treasurer of the Company since February 1996 and Treasurer and Chief Financial Officer since January 2001.

Smith has served as Treasurer of the Company since February 1996 and Treasurer and Chief Financial Officer since

January 2001.

The Company has no employees other than three Bank officers who provide services to the Company.

17 unchanged sentences

in any unsafe or unsound practice or that violates certain laws, regulations, or conditions imposed in writing by the FRB.

Dodd-Frank Wall Street

Reform and Consumer Protection Act of 2010.

The Dodd-Frank Wall Street Reform and Consumer Protection Act, as amended,

(Dodd-Frank Act) affects financial institutions in numerous ways, including the creation of a new Financial Stability Oversight Council responsible for monitoring and managing systemic risk, granting additional authority to the FRB to

regulate certain types of nonbank financial companies,

granting new authority to the FDIC as liquidator and receiver, abolishing the Office of Thrift Supervision, changing the manner in which insurance deposit assessments are made, requiring the

regulators to modify capital standards, establishing a new Bureau of Consumer Financial Protection to regulate compliance with consumer laws and regulations, cap interchange fees which banks charge merchants for debit card transactions, and imposing

new requirements on mortgage lenders.

There are many provisions in the Dodd-Frank Act mandating regulators to adopt new regulations and conduct studies upon which future regulation may be based.

regulations issued by the CFPB affect the origination, administration, and servicing of mortgage loans, and it is anticipated that these rules and enforcement by the Banks regulators will continue to evolve through regulatory amendments,

informal interpretations, and enhanced enforcement in the future.

Congress and the President have announced proposed reforms and changes to the Dodd-Frank Act, and it is uncertain how the Dodd-Frank Act provisions may be modified or the ultimate

impact any such modifications may have to our business operations.

The Dodd-Frank Wall Street Reform and Consumer Protection Act, as amended, (Dodd- Frank

Act) made extensive changes in the regulation of financial institutions.

There are many provisions in the Dodd-Frank Act mandating regulators to adopt new regulations and conduct studies upon which future regulation may be based, a number of

which still have not been implemented.

anticipated that these rules and enforcement by the Banks regulators will continue to evolve through regulatory amendments, informal interpretations, and enhanced enforcement in the future.

Congress and the President have announced proposed reforms and changes to the Dodd-Frank Act, and it is uncertain how the Dodd- Frank Act provisions may be modified or the ultimate impact any such modifications may have to our business operations.

Capital Standards.

24 unchanged sentences

$500 million in total assets, and all savings and loan holding companies.

Beginning January 1, 2015 the Bank began to comply with the Basel III rules,

although the rules will not be fully phased-in until January 1, 2019.

Among other things, the final Basel III rules will impact regulatory capital ratios of banking organizations in the following manner, when

fully phased in:

Beginning January 1, 2015, the Bank began

to comply with the Basel III rules, although the rules will not be fully phased-in until January 1, 2019.

Among other things, the final Basel III rules will impact regulatory capital ratios of banking

organizations in the following manner, when fully phased in:

Create a new requirement to maintain a ratio of common equity Tier 1 capital to total risk-weighted assets of

4 unchanged sentences

Maintain the minimum total risk-based capital ratio at 8%.

In addition, the Basel III rules, when fully phased-in, will subject a banking organization to certain limitations on capital

distributions and discretionary bonus payments to executive officers if the organization did not maintain a capital conservation buffer of common equity Tier 1 capital in an amount greater than 2.5% of its total risk-weighted assets.

The effect of

the capital conservation buffer, when fully phased-in, will be to increase the minimum common equity Tier 1 capital ratio to 7%, the minimum Tier 1 risk-based capital ratio to 8.5% and the minimum total risk-based capital ratio to 10.5% for banking

organizations seeking to avoid the limitations on capital distributions and discretionary bonus payments to executive officers.

In addition, the Basel III rules, when fully phased-in, will subject a banking

organization to certain limitations on capital distributions and discretionary bonus payments to executive officers if the organization did not maintain a capital conservation buffer of common equity Tier 1 capital in an amount greater than 2.5% of

its total risk-weighted assets.

The effect of the capital conservation buffer, when fully phased-in, will be to increase the minimum common equity Tier 1 capital ratio to 7%, the minimum Tier 1 risk-based capital ratio to 8.5% and the minimum total

risk-based capital ratio to 10.5% for banking organizations seeking to avoid the limitations on capital distributions and discretionary bonus payments to executive officers.

The Basel III rules also changed the capital categories for insured depository institutions for purposes of prompt corrective

21 unchanged sentences

Among other things, FDICIA limits the interest rates paid on deposits by undercapitalized institutions, the use of

brokered deposits and the aggregate extension of credit by a depository institution to an executive officer, director, principal shareholder or related interest, and reduces deposit insurance

coverage for deposits offered by undercapitalized institutions and for deposits by certain employee benefits accounts.

Restrictions on

Dividends and Other Distributions.

The Companys ability to pay dividends depends in large part on the ability of

the Bank to pay dividends to the Company.

The power of the board of directors of an insured depository institution to declare a cash dividend or other distribution with respect to capital is subject to federal statutory and regulatory restrictions,

which limit the amount available for such distribution depending upon the earnings, financial condition and cash needs of the institution, as well as general business conditions.

brokered deposits and the aggregate extension of credit by a depository institution to an executive officer, director, principal shareholder or related interest, and reduces deposit insurance coverage for deposits offered by undercapitalized

institutions and for deposits by certain employee benefits accounts.

Restrictions on Dividends and Other Distributions.

The Companys ability to pay dividends depends in large part on the ability of the Bank to pay dividends to the Company.

distribution depending upon the earnings, financial condition and cash needs of the institution, as well as general business conditions.

The approval of the Mississippi Department of Banking and Consumer Finance is also required prior to the Bank paying

25 unchanged sentences

The BHC Act provides that the FRB shall not approve any acquisition, merger or consolidation that would result in

a monopoly or that would be in furtherance of any combination or conspiracy to monopolize or

attempt to monopolize the business of banking.

The FRB also will not approve any other transactions in which the effect might be to substantially lessen competition or in any manner be a

restraint on trade, unless the anti-competitive effects of the proposed transaction are clearly outweighed by the public interest in the probable effect of the transaction in meeting the convenience and needs of the community to be served.

The BHC Act also prohibits a bank holding company, with certain exceptions, from engaging in or from acquiring direct or

indirect control of more than 5% of the voting shares of any company engaged in non-banking activities.

The principal exception to this rule is for engaging in or acquiring shares of a company whose activities

are found by the FRB to be so closely related to banking or managing banks as to be a proper incident thereto.

In making such determinations, the FRB is required to consider whether the performance of such activities by a bank holding company or its

subsidiaries can reasonably be expected to produce benefits to the public such as greater convenience, increased competition or gains in efficiency of resources that outweigh the risks of possible adverse effects such as decreased or unfair

competition, conflicts of interest or unsound banking practices.

The BHC Act prohibits the acquisition by a bank holding

company of more than 5% of the outstanding voting shares of a bank located outside the state in which the operations of its banking subsidiaries are principally conducted, unless such an acquisition is specifically authorized by statute of the state

in which the bank to be acquired is located.

The Company and the Bank are subject to certain restrictions imposed by the

Federal Reserve Act and the Federal Deposit Insurance Act on any extensions of credit to the Company or the Bank, on investments in the stock or other securities of the Company or the Bank, and on taking such stock or other securities as collateral

for loans of any borrower.

The BHC Act was amended in 2000 by the Gramm-Leach-Bliley Financial Services Modernization Act

of 1999 to permit financial holding companies to engage in a broader range of nonbanking financial activities, such as underwriting and selling insurance, providing financial or investment advice, and dealing and making markets in

securities and merchant banking.

In order to qualify as a financial holding company, the Company must declare to the FRB its intention to become a financial holding company and certify that the Bank meets the capitalization management requirements

and that it has at least a satisfactory rating under the Community Reinvestment Act of 1997, as amended (the CRA).

a monopoly or that would be in furtherance of any combination or conspiracy to monopolize or attempt to monopolize the business of banking.

The FRB also will not approve any other transactions in which the effect might be to substantially lessen

competition or in any manner be a restraint on trade, unless the anti-competitive effects of the proposed transaction are clearly outweighed by the public interest in the probable effect of the transaction in meeting the convenience and needs of the

community to be served.

The BHC Act also prohibits a bank holding company, with certain exceptions, from

engaging in or from acquiring direct or indirect control of more than 5% of the voting shares of any company engaged in non-banking activities.

The principal exception to this rule is for engaging in or

acquiring shares of a company whose activities are found by the FRB to be so closely related to banking or managing banks as to be a proper incident thereto.

In making such determinations, the FRB is required to consider whether the performance of

such activities by a bank holding company or its subsidiaries can reasonably be expected to produce benefits to the public such as greater convenience, increased competition or gains in efficiency of resources that outweigh the risks of possible

adverse effects such as decreased or unfair competition, conflicts of interest or unsound banking practices.

prohibits the acquisition by a bank holding company of more than 5% of the outstanding voting shares of a bank located outside the state in which the operations of its banking subsidiaries are principally conducted, unless such an acquisition is

specifically authorized by statute of the state in which the bank to be acquired is located.

The Company and the Bank are

subject to certain restrictions imposed by the Federal Reserve Act and the Federal Deposit Insurance Act on any extensions of credit to the Company or the Bank, on investments in the stock or other securities of the Company or the Bank, and on

taking such stock or other securities as collateral for loans of any borrower.

The BHC Act was amended in 2000 by the

Gramm-Leach-Bliley Financial Services Modernization Act of 1999 to permit financial holding companies to engage in a broader range of nonbanking financial activities, such as underwriting and selling insurance, providing financial or

investment advice, and dealing and making markets in securities and merchant banking.

In order to qualify as a financial holding company, the Company must declare to the FRB its intention to become a financial holding company and certify that the

Bank meets the capitalization management requirements and that it has at least a satisfactory rating under the Community Reinvestment Act of 1997, as amended (the CRA).

To date, we have not elected to become a financial holding company.

7 unchanged sentences

outstanding to substantial noncompliance. Different evaluation methods are used depending on the asset size of the bank.

The FDIC examined the Bank on July 12, 2016 for its performance under the

The Bank was rated Satisfactory during this examination.

The FDIC examined the Bank on July 12, 2016 for its performance under the CRA.

The Bank was rated

Satisfactory during this examination.

No discriminatory practices or illegal discouragement of applications were found.

Consumer Protection.

The Bank is subject to a number of federal and state consumer protection laws.

These laws provide substantive consumer rights

and subject the Bank to substantial regulatory oversight.

Violations of applicable consumer protection laws can result in significant potential liability from litigation brought by customers, including actual damages, restitution and attorneys

Federal bank regulators, state attorneys general and state and local consumer protection agencies may also seek to enforce consumer protection requirements and obtain these and other remedies, including regulatory sanctions, customer

rescission rights, action by the state and local attorneys general in each jurisdiction in which our bank subsidiary operates and civil money penalties.

Failure to comply with consumer protection requirements may also result in the Banks

failure to obtain any required bank regulatory approval for merger or acquisition transactions the Bank may wish to pursue or its prohibition from engaging in such transactions even if approval is not required.

Anti-Money Laundering Efforts.

56 unchanged sentences

Furthermore, as a local institution, the Company believes it can provide such services faster than a larger institution not based in the Companys market area.

Changes in federal and state law have resulted in, and are expected to continue to result in, increased competition.

reductions in legal barriers to the acquisition of banks by out-of-state bank holding companies resulting from implementation of the Dodd-Frank Act and other recent

changes in banking laws and regulations are expected to continue to further stimulate competition in the markets in which the Company operates, although it is not possible to predict the extent or timing of such increased competition.

Currently, there are approximately thirty different financial institutions in the

Companys market competing for the same customer base.

Changes in federal and state law have resulted in, and are expected to continue

to result in, increased competition.

The reductions in legal barriers to the acquisition of banks by out-of-state bank holding companies resulting from implementation of

the Dodd-Frank Act and other recent changes in banking laws and regulations are expected to continue to further stimulate competition in the markets in which the Company operates, although it is not possible to predict the extent or timing of such

increased competition.

Currently, there are approximately thirty different financial institutions in the Companys

market competing for the same customer base.

According to the FDICs Summary of Deposits that is collected as of June 30 each year, the Companys market share in its market area was approximately 5.67% at June 30, 2017.

The Company competes in its market for loan and deposit products, along with many of the other services required by todays banking customer, on the basis of availability, quality and pricing.

The Company believes it is able to compete

favorably in its markets, in terms of both the rates the Company offers and the level of service that the Company provides to its customers.

Company competes in its market for loan and deposit products, along with many of the other services required by todays banking customer, on the basis of availability, quality and pricing.

The Company believes it is able to compete favorably in

its markets, in terms of both the rates the Company offers and the level of service that the Company provides to its customers.

AVAILABILITY OF INFORMATION

7 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business