Citizens Holding Company Reports Earnings

Citizens Holding Company (NASDAQ:CIZN) announced today results of operations as of and for the three and six months ended June 30, 2010.

Net income for the three months ended June 30, 2010 decreased to $1.696 million, or $0.35 per share-basic and diluted, from $1.840 million, or $0.38 per share-basic and $0.37 per share-diluted for the same quarter in 2009. Net interest income for the second quarter of 2010, after the provision for loan losses for the quarter, was $6.516 million, approximately 0.8% lower than the same period in 2009, in part due to the decrease in yield on interest earning assets partially offset by a decrease in the provision for loan losses. The provision for loan losses for the three months ended June 30, 2010 was $695 thousand compared to $824 thousand for the same period in 2009. The net interest margin decreased to 3.97% in the second quarter of 2010 from 4.16% in the same period in 2009 primarily because the decrease in yields on earning assets was greater than the decline in rates paid on interest bearing deposits. Non-interest income decreased in the second quarter of 2010 by approximately $113 thousand, or 6.0%, while non-interest expenses increased $71 thousand, or 1.2%, compared to the same period in 2009. Non-interest expense increased mainly due to a $226 thousand increase in salaries and benefits partially offset by reductions in other operating expenses.

Net income for the six months ended June 30, 2010 decreased 0.7% to $3.672 million, or $0.76 per share-basic and $0.75 per share-diluted, from $3.699 million, $0.76 per share-basic and $0.75 per share-diluted, for the six months ended June 30, 2009. Net interest income for the six months ended June 30, 2010, after the provision for loan losses, increased 3.5% to $13.456 million from $13.002 million for the same period in 2009. Net interest margin decreased to 4.08% in 2010 from 4.14% in 2009. The provision for loan losses for the six months ended June 30, 2010 was $1.320 million compared to the provision of $1.140 million in 2009. The increase in the provision reflects management’s assessment of inherent losses in the loan portfolio including the impact caused by current local and national economic conditions. Non-interest income decreased by $52 thousand, or 1.5%, and non-interest expense increased by $470 thousand, or 4.0%, for the six months ended June 30, 2010 when compared to June 30, 2009. The reduction in non-interest income was due to a reduction in the income from bank owned life insurance. Non-interest expense increased mainly due to an increase in salaries and benefits.

As of June 30, 2010, total assets decreased by $14.280 million, or 1.7%, and deposits decreased by $20.209 million, or 3.5%, when compared to December 31, 2009. Loans, net of unearned income, during this period decreased by $12.728 million, or 2.8%, due to a lack of demand for new loans and payments on existing loans. Non-performing assets increased by $2.877 million to $17.191 million at June 30, 2010 compared to December 31, 2009 because of an increase in non-accrual loans and loans 90 days or more past due offset by a small decrease in other real estate.

During the first two quarters of 2010, the Company paid dividends totaling $0.42 per share. This represents an increase of 5.0% over the dividends paid in the first two quarters of 2009.

Citizens Holding Company (the "Company”) is a one-bank holding company and the parent company of The Citizens Bank of Philadelphia (the "Bank”), both headquartered in Philadelphia, Mississippi. The Bank currently has twenty-three banking locations in ten counties in East Central Mississippi and has a Loan Production Office in Biloxi, Mississippi. In addition to full service commercial banking, the Bank offers mortgage loans, title insurance services through its subsidiary, Title Services, LLC, and a full range of Internet banking services including online banking, bill pay and cash management services for businesses. Internet services are available at the Bank’s web site, www.thecitizensbankphila.com. Citizens Holding Company stock is listed on the NASDAQ Global Market and is traded under the symbol CIZN. The Company’s transfer agent is American Stock Transfer & Trust Company. Information about Citizens Holding Company may be obtained by accessing its corporate website at www.citizensholdingcompany.com.

This press release includes "forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical facts included in this release regarding the Company’s financial position, results of operations, business strategies, plans, objectives and expectations for future operations, are forward looking statements. The Company can give no assurances that the assumptions upon which such forward-looking statements are based will prove to have been correct. Forward-looking statements speak only as of the date they are made. The Company does not undertake a duty to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made. Such forward-looking statements are subject to certain risks, uncertainties and assumptions. The risks and uncertainties that may affect the operation, performance, development and results of the Company’s and the Bank’s business include, but are not limited to, the following: (a) the risk of adverse changes in business conditions in the banking industry generally and in the specific markets in which the Company operates; (b) changes in the legislative and regulatory environment that negatively impact the Company and Bank through increased operating expenses; (c) increased competition from other financial institutions; (d) the impact of technological advances; (e) expectations about the movement of interest rates, including actions that may be taken by the Federal Reserve Board in response to changing economic conditions; (f) changes in asset quality and loan demand; (g) expectations about overall economic strength and the performance of the economics in the Company’s market area; and (h) other risks detailed from time to time in the Company’s filings with the Securities and Exchange Commission. Should one or more of these risks materialize, or should any such underlying assumptions prove to be significantly different, actual results may vary significantly from those anticipated, estimated, projected or expected.