UNITED STATES
SECURITIES AND EXCHANGE COMMSSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
Commission file number 0-12425
Citizens Bancshares, Inc.
(Exact name of small business issuer
as specified in its charter)
Louisiana 72-0759135
(State of other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
841 West Main Street, Ville Platte, LA 70586
(Address of principal executive offices)
Issuer's telephone number, including area code: 337-363-5643
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
Class of Number of Shares
Common Equity Outstanding As of
Common stock, 114,855 March 31, 2000
$5 Par Value
CITIZENS BANCSHARES, INC. AND SUBSIDIARY
CONTENTS
PART I. FINANCIAL INFORMATION
Condensed Consolidated Balance Sheet - March 31, 2000
Condensed Consolidated Statements of Income and Comprehensive
Income - Three months ended March 31, 2000 and 1999
Condensed Consolidated Statements of Cash Flows - Three months
ended March 31, 2000 and 1999
Note to Condensed Consolidated Financial Statements
Management's Discussion and Analysis of Financial Condition and
Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 6. Exhibits and Reports on Form 8-K
PART I. FINANCIAL INFORMATION
CITIZENS BANCSHARES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
MARCH 31, 2000
(In thousands of dollars)
ASSETS
Cash and due from banks $3,166
Federal funds sold 9,755
Cash & cash equivalents 12,921
Interest-bearing deposits with banks 4,656
Securities available for sale, at fair values 29,488
Securities held to maturity 9,577
Loans receivable, net of allowance for loan
losses of $1,059 60,530
Premises and equipment 2,975
Other assets 2,145
Total assets $122,292
LIABILITIES
Demand deposits $13,101
Savings, NOW and money-market deposits 22,978
Time deposits $100,000 and more 24,896
Other time deposits 49,184
Total deposits 110,159
Accrued expenses and other liabilities 896
Total liabilities 111,055
SHAREHOLDERS' EQUITY
Common Stock $5 par value, 300,000 shares
authorized, 115,000 shares issued and
outstanding 575
Additional paid-in capital 825
Treasury stock at cost, 145 shares (6)
Retained earnings 10,340
Accumulated other comprehensive income (497)
Total shareholders' equity 11,237
Total liabilities and shareholders' equity $122,292
CITIZENS BANCSHARES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 2000 & 1999
(In thousands of dollars, except per share data)
2000 1999
Interest income
Loans receivable $1,356 $1,226
Taxable securities 447 384
Tax-exempt securities 101 90
Federal funds sold 150 115
Deposits with banks 73 69
Total interest income 2,127 1,884
Interest expense
Savings, NOW & money-market deposits 107 84
Time deposit $100,000 and more 406 347
Other time deposits 656 631
Total interest expense 1,169 1,062
Net interest income 958 822
Provision for loan losses 30 20
Net interest income after provision
for loan losses 928 802
Non-interest income 196 178
Non-interest expense
Salaries and employee benefits 343 329
Other expense 302 285
Total non-interest expense 645 614
Income before income taxes 479 366
Income tax expense 107 102
Net income $372 $264
Other comprehensive income, net of (153) (36)
Comprehensive income $219 $228
Net income per share of common stock $3.24 $2.30
CITIZENS BANCSHARES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(In thousands of dollars)
2000 1999
Cash flows from operating activities
Net income $372 $264
Adjustments to reconcile net income
to net cash provided by operating
activities 264 253
Net cash provided by operating
activities 636 517
Cash flows from investing activities
Maturities and calls of securities 70 1,705
Purchases of securities (4,816) (4,502)
Net decrease/(increase) in interest-
bearing deposits with banks 594 (10)
Net (increase)/decrease in loans (1,030) 489
Purchases of premises and equipment (13) (175)
Net cash (used) by investing
activities (5,195) (2,493)
Cash flows from financing activities
Net increase in deposits 8,832 6,677
Net cash provided by financing
activities 8,832 6,677
Net increase in cash and cash
equivalents 4,273 4,701
Cash and cash equivalents at
beginning of year 8,648 8,482
Cash and cash equivalents at
end of period 12,921 13,183
Income taxes paid - -
Interest paid 1,210 1,087
Foreclosed real estate acquired in
satisfaction of loans 288 -
CITIZENS BANCSHARES, INC. AND SUBSIDIARY
NOTE TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The interim financial statements are prepared pursuant to the
requirements for reporting on Form 10-QSB. The interim financial
statements and notes thereto should be read in conjunction with
the financial statements and notes included in the Company's
latest annual report on Form 10-KSB. In the opinion of
management, the interim financial statements reflect all
adjustments of a normal recurring nature necessary for a fair
statement of the results for interim periods. The current period
results of operations are not necessarily indicative of results
which ultimately will be reported for the full year ending
December 31, 2000.
CITIZENS BANCSHARES, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL STATEMENT
For a comprehensive review of financial condition and results
of operations of Citizens Bancshares, Inc. (the Company), this
discussion and analysis should be reviewed along with the
information and financial statements presented elsewhere in
this report. The Company is a one-bank holding company whose
sole subsidiary is Citizens Bank, Ville Platte, Louisiana (the
Bank).
Citizens Bank, Ville Platte, Louisiana is a commercial banking
institution formed in 1975 under the banking laws of the State
of Louisiana. The bank operates a main office located in the
City of Ville Platte, Louisiana and also operates branch
facilities in the Town of Mamou, Louisiana and the Village of
Pine Prairie, Louisiana. The Bank offers a full range of
traditional commercial banking services, including demand,
savings, and time deposits, consumer, commercial, agriculture,
and real estate loans, safe-deposit boxes, two credit card
plans, VISA and MASTERCARD. Drive-in facilities are located
at all banking locations with ATM service at the main office.
FINANCIAL CONDITION
Total assets of the Company increased by $9,085,000 or 8.03%,
from $113,207,000 at December 31, 1999 to $122,292,000 at
March 31, 2000. The increase is attributed to an increase in
loans and deposits.
Earning assets, which include loans, investment securities,
federal funds sold, and deposits in other banks were 93.23% of
total assets at March 31, 2000.
Loans showed an increase of $1,688,000 or 2.87% at March 31,
2000. There was an increase in securities of $3,596,000 or
10.14% at March 31, 2000.
The Bank maintains an allowance for loan losses against which
impaired or uncollectible loans are charged. The balance in
the allowance for loan losses was $1,059,000 at March 31,
2000, which represents 1.72% of total loans outstanding on
that date. Provisions to the allowance for loan losses, which
were charged to net income as of March 31, 2000, totaled
$30,000. Management evaluates the adequacy of the allowance
for loan losses on a monthly basis by monitoring the balance
in total loans as well as the past due, nonaccrual,
classified, and other problem loans. On the basis of this
evaluation, the allowance for loan losses is considered
adequate to meet possible future charges for losses in the
existing loan portfolio. At March 31, 2000, past due loans to
total loans were 1.56%.
With interest earned on investment securities being one of the
primary sources of income, investment securities increased by
$3,596,000 or 10.14% at March 31, 2000. The following chart
shows what our portfolio is made up of as of March 31, 2000:
U.S. Government Agencies 47.69%
Mortgage-Backed Securities 30.83%
Municipal Securities 21.48%
At of March 31, 2000, securities classified as "held to
maturity" had an amortized cost/recorded value of $9,577,000
and a fair value of $9,420,000; securities classified as
"available for sale" had a fair value of $29,488,000 and an
amortized cost of $30,241,000.
With deposits being the Bank's primary source of funds, both
time and demand, total deposits increased $8,832,000 or 8.72%
from $101,327,000 at December 31, 1999 to $110,159,000 at
March 31, 2000. Money-market accounts increased by $3,219,000
or 79.80%.
The primary functions of asset/liability management are to
assure adequate liquidity and maintain an appropriate spread
between interest-earning assets and interest-bearing
liabilities. Liquidity management involves the ability to
meet cash flow requirements of customers who may be either
depositors wanting to withdraw funds or borrowers needing
assurance that sufficient funds will be available to meet
their credit needs. Major elements of the Bank's overall
liquidity management capabilities and financial resources are
(1) core deposits, (2) closely managed maturity structure of
loans and deposits, (3) sale and maturity of assets (primarily
investment securities), and, if necessary, (4) extensions of
credit, including federal funds purchased and securities sold
under repurchase agreements. With the Bank's asset/liability
management program, most loan and deposit changes can be
anticipated without an adverse impact on earnings. At March
31, 2000, the Bank's liquidity ratio was 41.16%.
RESULTS OF OPERATIONS
For the first quarter of 2000, the Company reported net income
of $372,000 or $3.24 per average share. Net return on assets
was 1.24% and net return on equity was 13.37%.
Net interest income is the Company's principal source of
revenue and is measured by the difference between interest
income earned on loans and investments and interest expense
incurred on deposits. At March 31, 2000, the Bank's net
interest margin was 3.28%, a slight increase from March 31,
1999, which at that time the net interest margin was 3.12%.
Net interest income increased $136,000, or 16.55% in 2000 to
$958,000 compared to $822,000 at March 31, 1999. The reason
for such increase was $243,000 or 12.90% increase in interest
income which was offset by a $107,000 or 10.08% increase in
interest expense.
Non-interest income, which consists primarily of service
charges and fees on financial services increased $18,000 or
10.12% in comparing March 31, 2000 to March 31, 1999. Service
charges on deposit accounts increased by $11,000 or 8.34%.
Non-interest expense includes salaries and employee benefits,
occupancy and equipment expense, and other expense. Non-
interest expense amounted to $645,000 at March 31, 2000, a
$31,000 or 5.05% increase from March 31, 1999. Salaries and
employee benefits being the main expense showed an increase of
$14,000 or 4.26%.
CAPITAL ADEQUACY
Primary capital (shareholders' equity plus a portion of the
allowance for loan losses) as a percent of adjusted total
assets is one of the standard measures of capital adequacy
used by bank regulators. This and other measurement ratios
serve as the underlying basis for evaluating the Bank's
capital adequacy and for determining the Bank's insurance fund
deposit assessment charges. At March 31, 2000, the Bank's
ratios were as follows:
Risk Based Capital 18.65%
Tier 1 Capital 17.39%
Leverage Ratio 9.19%
To be categorized as well capitalized, the Bank must maintain
a total risk-based capital ratio of 10% or higher, Tier 1 risk-
based capital ratio of 6% or higher, and leverage capital
ratio of 5% or higher.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Legal proceedings involving the Bank are limited to proceedings
arising from normal business activities, none of which are
considered material.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - (3)(ii) By-laws of Citizens Bancshares,
Inc., amended in March, 2000
(27) Financial Data Schedule
(b) The Company has not filed any reports on Form 8-K during the
quarter ended March 31, 2000.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
CITIZENS BANCSHARES, INC.
CARL W. FONTENOT
PRESIDENT & CEO
WAYNE VIDRINE
EXECUTIVE VICE PRESIDENT-TREASURER