U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 or 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarter ended June 30, 1997 Commission file number 0-12425
Citizens Bancshares, Inc.
(Exact name of small business issuer as specified in its charter)
Louisiana 72-0759135
(State or other jurisdiction of (I.R.S. Employer Identification)
incorporation or organization)
841 West Main Street, Ville Platte, La. 70586
(Address of principal executive offices)
Issuer's telephone number, including area code 318-363-5643
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months, and
(2) had been subject to such filing requirements for the past 90 days.
Yes (x) No ( )
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
Number of
Class of Common Stock Shares Outstanding As of
Common Stock $5 Par Value 115,000 June 30, 1997
CITIZENS BANCSHARES, INC. AND
CITIZENS BANK, VILLE PLATTE, LOUISIANA
INDEX
PART I. FINANCIAL INFORMATION PAGE
Condensed Consolidated Balance Sheets -
June 30, 1997 and December 31, 1996...................3
Condensed Consolidated Statements of Income -
Six and three months ended June 30, 1997
and June 30, 1996.....................................4
Condensed Consolidated Statements of Cash Flows -
Six months ended June 30, 1997 and
June 30, 1996.........................................5
Notes to Consolidated Financial Statements.............6
Management's Discussion and Analysis of
Financial Condition and Results of
Operations ..........................................7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings ............................9
Item 4. Submission of Matters to a Vote of
Security Holders..............................9
Item 6. Exhibits and Reports on Form 8-K .............9
PART I. CITIZENS BANCSHARES, INC. AND
CITIZENS BANK, VILLE PLATTE, LOUISIANA
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 1997 AND DECEMBER 31, 1996 (UNAUDITED)
(in thousands of dollars)
JUNE 30,1997 DECEMBER 31,1996
ASSETS
Cash and due from banks $ 2,431 $ 2,352
Federal funds sold 4,800 3,725
CASH AND CASH EQUIVALENTS 7,231 6,077
Interest-bearing deposits with banks 3,865 3,766
Securities available for sale,
at fair values 27,523 25,999
Securities held to maturity, fair values
of $8,756 & $10,997 8,712 10,909
TOTAL SECURITIES 36,235 36,908
Loans, 47,467 43,181
Unearned income (511) (490)
Allowance for possible loan losses (891) ( 859)
NET LOANS 46,065 41,832
Premises and equipment, net 1,629 1,017
Foreclosed real estate 17 --
Deferred tax asset 7 44
Accrued interest receivable 924 890
Other assets 549 516
TOTAL ASSETS $96,522 $91,050
LIABILITIES
Demand deposits $10,470 $ 9,235
Savings, NOW and money-market deposits 13,130 12,146
Time deposits $100,000 or more 21,643 20,772
Other time deposits 41,562 39,780
TOTAL DEPOSITS 86,805 81,933
Accrued interest payable 543 540
Accrued expenses and other liabilities 116 117
TOTAL LIABILITIES 87,464 82,590
SHAREHOLDERS' EQUITY
Common Stock $5 par value, 300,000
shares authorized, 115,000 shares
issued and outstanding 575 575
Additional paid-in capital 825 825
Retained earnings 7,673 7,013
Unrealized (loss) gain on Available-for-Sale
Securities, net of applicable deferred
income taxes (15) 47
TOTAL SHAREHOLDERS' EQUITY 9,058 8,460
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $96,522 $91,050
CITIZENS BANCSHARES, INC. AND
CITIZENS BANK, VILLE PLATTE, LOUISIANA
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
SIX AND THREE MONTHS ENDED JUNE 30, 1997 AND 1996
(in thousands of dollars, except per share data)
SIX MONTHS THREE MONTHS
ENDED ENDED
6/30/97 6/30/96 6/30/97 6/30/96
Interest income
Loans receivable $ 2,085 $ 1,837 $ 1,080 $ 941
U.S. Treasury Securities 162 148 81 77
U.S. Government agencies 837 736 426 371
States and political subdivisions 128 130 65 67
Federal funds sold 150 134 64 65
Deposits with banks 114 111 58 55
Total interest income 3,476 3,096 1,774 1,576
Interest expense
Deposits
Savings, NOW and money-market accts 287 178 198 89
Time deposits $100,000 and more 580 542 282 274
Other time deposits 1,046 1,032 490 520
Total interest expense 1,913 1,752 970 883
Net interest income 1,563 1,344 804 693
Provision for loan losses 47 30 25 15
Net interest income after provision
for loan losses 1,516 1,314 779 678
Noninterest income
Service charge on deposit accounts 206 193 106 94
Other income 71 85 40 39
Total noninterest income 277 278 146 133
Noninterest expense
Salaries & employee benefits 468 445 232 225
Occupancy & equipment expense 113 106 57 60
Other expense 312 288 158 141
Total noninterest expense 893 839 447 426
Income before income taxes 900 753 478 385
Income tax expense 240 227 135 125
Net Income $ 660 $ 526 $ 343 $ 260
Net income per share of
common stock $ 5.74 $ 4.57 $ 2.99 $ 2.26
CITIZENS BANCSHARES, INC AND
CITIZENS BANK, VILLE PLATTE, LOUISIANA
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
JUNE 30, 1997 AND JUNE 30, 1996
JUNE JUNE
30, 1997 30, 1996
Cash flows from operating activities:
Net Income $ 660 $ 526
Adjustments to reconcile net income to
net cash provided by operating activities -
Provision for possible loan losses 47 30
Depreciation & Amortization 42 27
Net (accretion) of investment securities (38) (18)
(Gain) on sale of other real estate -- (10)
(Increase) decrease in interest receivable (34) 4
(Increase) in other assets (44) (17)
Increase (decrease) in interest payable 3 (32)
(Decrease) increase in other liabilities (1) 30
Net cash provided by operating activities 635 540
Cash flows from investing activities:
Proceeds from maturities and calls of
investment securities 6,796 11,860
Purchase of investment securities (6,307) (13,072)
(Increase) decrease in interest-bearing
deposits in other banks (99) 299
Proceeds from sales of foreclosed real estate -- 31
(Increase) in loans (4,102) (3,093)
Purchase of premises and equipment (641) (441)
Net cash (used) by investing activities (4,353) (4,416)
Cash flows from financing activities:
Increase in deposits 4,872 2,731
Net cash provided by financing activities 4,872 2,731
Net increase (decrease) in cash and
cash equivalents 1,154 (1,145)
Cash and cash equivalents, beginning of year 6,077 6,073
Cash and cash equivalents, end of period $ 7,231 $ 4,928
Cash paid for income taxes $ 276 $ 187
Cash paid for interest expense $ 1,910 $ 1,720
Other real estate acquired in satisfaction
of loans $ 17 $ 141
Total Increase (decrease) in Fair Value of
Securities Available for Sale $ (93) $ (401)
CITIZENS BANCSHARES, INC. AND
CITIZENS BANK, VILLE PLATTE, LOUISIANA
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
(1) The interim financial statements are prepared pursuant to the
requirements for reporting on Form 10-QSB. The December 31,
1996 balance sheet data was derived from audited financial
statements but does not include all disclosures required by
generally accepted accounting principles. 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, 1997.
CITIZENS BANCSHARES, INC. AND
CITIZENS BANK, VILLE PLATTE, LOUISIANA
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
JUNE 30, 1997
GENERAL STATEMENT
For a comprehensive review of financial condition and results of
operations of Citizens Bancshares, Inc. (the Company), this discussion
and anaylsis 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.
FINANCIAL CONDITION
The Bank's total assets increased in the first six months of 1997 from
$91,050,000 to $96,522,000, a $5,472,000 or 6.00% increase. The increase
is attributable to an increase in deposits of $4,872,000, which have
been used to fund the increases in cash, cash equivalents and loans.
Earning assets, which include loans, investment securities, federal
funds sold, and deposits in other banks were 94.24% of total assets as
of June 30, 1997.
The Bank maintains an allowance for loan losses against which imparied
or uncollectible loans are charged. The balance in the allowance for
loan losses was $891,000 as of June 30, 1997, which represents a 1.90%
of total loans outstanding on that date. Provisions to the allowance
for loan losses, which were charged to net income of 1997, totaled
$47,000. 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 charge- for losses in the
existing loan portfolio.
The Bank's primary source of funds is deposits, both time and demand.
For the first six months of 1997, total deposits, increased $4,872,000
or 5.95%. At June 30, 1997, the Bank's loan to deposit ratio was
54.09%.
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 avaliable 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 pruchased 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. As of June 30, 1997 the Bank's
liquidity ratio was 51.33%.
RESULTS OF OPERATIONS
The Bank reported a net income of $660,000 or $5.74 per average share
outstanding for the first six months of 1997. Net return on assets was
1.39% and net return on equity was 13.30%.
Net interest income is the Bank'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. In comparing
June 30, 1997 to June 30, 1996, the Bank's net interest income
increased by $219,000 or 16.29%. Much of this increase is attributed to
loans receivable which increased by 13.50%.
Noninterest income, which consists primarily of service charges and fees
on financial services, stayed basically the same when comparing June 30,
1997 to June 30, 1996.
Noninterest expense as of June 30, 1997 increased by $54,000 or 6.44%
from June 30, 1996. Salaries increased by $23,000 or 5.17% due to
adjustments and additional staff needed to meet the growth of Citizens
Bank. Other expenses increased by $24,000 or 8.33% which is mainly due
to expenses incurred for our Bankcard program.
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. As of March 31, 1997, the Bank's
ratios were as follows:
Capital to Assets 9.59%
Risk Based Capital 19.49%
Tier 1 Capital 18.24%
Leverage Ratio 9.30%
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.
CITIZENS BANCSHARES, INC. AND
CITIZENS BANK, VILLE PLATTE, LOUISIANA
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 4. Submission of Matters to a Vote of Security Holders
Pursuant to a notice of meeting mailed March 10, 1997
accompanied by a proxy statement, the annual meeting of
shareholders was held on April 10, 1997. Proxies for the
annual meeting were solicited pursuant to Regulation 14A.
There was no solicitation in opposition to management's
nominees for the Board of Directors as listed in the
Proxy Statement. All of the following nominees were duly
nominated and elected:
Carl W. Fontenot Otis Fontenot
Joseph Jake Fontenot J.B. Veillon
Curley Courville Fredrick Phillips
Eugene S. Fontenot Roderick Young
Jules Hebert
No other matters were submitted to the shareholders for
their consideration or vote at the annual meeting.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits -
(27) Financial Data Schedule
(b) The Company has not filed any reports on Form 8-K
during the quarter ended June 30, 1997.
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 PRES.-TREASURER