1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- ------- SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
- ------- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
--------- --------
Commission File Number 1-13824
CITISAVE FINANCIAL CORPORATION
(Exact name of issuer as specified in its charter)
Louisiana 72-1289214
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
665 Florida Street, Baton Rouge, Louisiana 70801
(Address of principal executive offices)
Issuer's telephone number, including area code: (504)383-4102
Indicate by check mark whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the past 12 months (or for such shorter period that the registrant was required
to file such reports) and (2) has been subject to such filing requirements for
the past 90 days. Yes X No
---- ----
Shares of common stock, par value $.01 per share, outstanding as of March 31,
1997: 962,207. Transitional Small Business Disclosure Format: Yes No X
---- ----
2
CITISAVE FINANCIAL CORPORATION
FORM 10-QSB
QUARTER ENDED MARCH 31, 1997
PART I - FINANCIAL INFORMATION
Interim Financial Information required by Rule 10-01 of Regulation S-X and Item
303 of Regulation S-B is included in this Form 10-QSB as referenced below:
Item 1 - Financial Statements Page
Consolidated Statements of Financial Condition at
March 31, 1997 and December 31, 1996 3
Consolidated Statements of Income For the Three Months
Ended March 31, 1997 and 1996 4
Consolidated Statements of Stockholders' Equity for
the Three Months Ended March 31, 1997 and 1996 5
Consolidated Statements of Cash Flows For the Three Months Ended
March 31, 1997 and 1996 6 - 7
Notes to Consolidated Financial Statements 8 - 11
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 12 - 17
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings 18
Item 2 - Changes in Securities 18
Item 3 - Defaults Upon Senior Securities 18
Item 4 - Submission of Matters to a Vote of Security Holders 18
Item 5 - Other Information 18
Item 6 - Exhibits and Reports on Form 8-K 18
Signatures 19
3
CITISAVE FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
AS OF MARCH 31, 1997 AND DECEMBER 31, 1996
(UNAUDITED) (UNAUDITED)
MARCH 31, DECEMBER 31,
1997 1996
-----------------------------------
ASSETS: (In Thousands)
Cash and Cash Equivalents $ 1,388 $ 1,755
Interest-Earning Deposits in Other Institutions 209 664
----------------------------------
Total Cash and Cash Equivalents 1,597 2,419
Federal Funds Sold 3,550 2,650
Securities:
Investment Securities held to maturity 19,168 19,254
(Market Value $18,933 and $19,229)
Mortgage-Backed Securities held to maturity 2,222 2,275
(Market Value $2,229 and $2,293)
Federal Home Loan Bank Stock 408 380
----------------------------------
Total Securities 21,798 21,909
Insurance Accounts Receivable 3 42
Loans Held for Sale 415 363
Real Estate Owned 76 64
Loans Receivable 44,982 45,254
Less: Allowance for Loan Losses (70) (61)
----------------------------------
Total Loans Receivable 44,912 45,193
Accrued Interest Receivable 456 500
Premises and Equipment 1,946 1,966
Other Assets 189 180
----------------------------------
Total Assets $ 74,942 $75,286
==================================
LIABILITIES & STOCKHOLDERS' EQUITY:
Deposits $ 61,294 $61,457
Accounts Payable 40 187
Advances from Borrowers for Taxes & Insurance 111 77
Federal Income Taxes:
Current 86 42
Deferred 151 151
Accrued Expenses & Other Liabilities 765 1,040
----------------------------------
Total Liabilities 62,447 62,954
Minority Interest in Subsidiary 38 40
STOCKHOLDERS' EQUITY:
Common Stock, $.01 Par Value; Authorized
10,000,000 Shares, 964,707 Shares Issued 10 10
Paid-in Capital in Excess of Par 7,403 7,376
Retained Earnings 6,115 6,020
Less: Unearned ESOP Shares (561) (582)
Less: Unearned Compensation-MRP (475) (497)
Less: Treasury Shares ( 2,500 shares at cost) (35) (35)
----------------------------------
Total Stockholders' Equity 12,457 12,292
----------------------------------
Total Liabilities & Stockholders Equity $74,942 $75,286
==================================
The accompanying notes are an integral part of these financial statements.
-3-
4
CITISAVE FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND MARCH 31, 1996
(UNAUDITED)
QUARTER ENDED
MAR 31, MAR 31,
1997 1996
-----------------------------------
In Thousands, Except Per Share Data)
Interest Income:
Loans $ 949 $ 920
Investment Securities 297 309
Mortgage-Backed Securities 37 41
Other Interest-earning Assets 43 127
---------------
Total Interest Income 1,326 1,397
---------------
Interest Expense:
Deposits 606 642
Other Interest-bearing Liabilities 0 0
---------------
Total Interest Expense 606 642
---------------
Net Interest Income 720 755
Provision for Loan Losses 8 7
---------------
Net Interest Income After Provision
for Loan Losses 712 748
---------------
Noninterest Income:
Insurance Agency Commissions 189 201
Rent Income 2 2
Loan Fees and Service Charges 74 80
Gain on Sales of Loans 29 25
Other 7 6
---------------
Total Noninterest Income 301 314
---------------
Noninterest Expense:
Compensation and Benefits 440 406
Occupancy and Equipment Expense 93 86
Federal Insurance Premium 2 38
Other 179 164
Goodwill Amortization 0 4
---------------
Total Noninterest Expense 714 698
---------------
Income Before Provision for Taxes &
Minority Interest 299 364
Income Tax Expense 95 115
---------------
Net Income Before Minority Interest 204 249
Minority Interest in Subsidiary 13 14
---------------
Net Income $ 191 $ 235
===============
Per Share:
Net Income-Note 4 $ .19 $ .26
Dividends-Note 4
.10 .075
The accompanying notes are an integral part of these financial statements.
-4-
5
CITISAVE FINANCIAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED) (UNAUDITED)
MAR 31, MAR 31,
1997 1996
----------------------------------
(In Thousands)
COMMON STOCK:
Balance-Beginning of Period $ 10 $ 10
Shares Activity 0 0
------------------------------
10 10
Balance-End of Period ==============================
PAID-IN CAPITAL IN EXCESS OF PAR:
Balance-Beginning of Period $ 7,376 $ 9,144
27 10
ESOP Shares Released for Allocation-Note 2 ------------------------------
7,403 9,154
Balance-End of Period ==============================
RETAINED EARNINGS:
Balance-Beginning of Period $ 6,020 $ 5,879
Net Income 191 235
Cash Dividends-Note 4 (96) (67)
------------------------------
Balance-End of Period 6,115 6,047
==============================
UNEARNED ESOP SHARES:
Balance-Beginning of Period $ (582) $ (733)
Shares Released for Allocation-Note 2 21 19
------------------------------
Balance-End of Period (561) (714)
==============================
UNEARNED COMPENSATION-MRP SHARES:
Balance-Beginning of Period (497) 0
Shares Earned by Participants of MRP-Note 3 22 0
------------------------------
Balance-End of Period (475) 0
==============================
TREASURY STOCK:
Balance-Beginning of Period (2,500 shares at cost) (35) 0
Shares Activity 0 0
------------------------------
Balance - End of Period (35) 0
==============================
Total Stockholders' Equity $12,457 $14,497
==============================
The accompanying notes are an integral part of these financial statements.
-5-
6
CITISAVE FINANCIAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED) (UNAUDITED)
MAR 31, MAR 31,
1997 1996
-----------------------------------------------
(In Thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 191 $ 235
Adjustments to Reconcile Net Income
to Net Cash Provided by (Used in)
Operating Activities:
Provision for Loan Losses (8) (9)
Provision for Depreciation and Amortization 31 28
Other 70 29
Increase (Decrease) in Minority Interest, Net (2) (1)
Stock Dividends on Federal Home Loan Bank Stock (5) (5)
Loans Originated for Sale (2,477) (2,600)
Sale of Loans 2,425 2,058
Amortization (Accretion) of Securities
Premiums (Discounts) (14) (9)
Changes in Assets and Liabilities:
(Increase) Decrease in Insurance Receivables 39 21
(Increase) Decrease in Accrued Interest Receivable 44 66
(Increase) Decrease in Other Assets (10) (33)
Increase (Decrease) in Accounts Payable 5 (18)
Increase (Decrease) in In Taxes Payable 44 87
Increase (Decrease) in Accrued
Expenses and Other Liabilities (431) 248
-----------------------------------
Net Cash Provided by (Used in) Operating Activities (98) 97
-----------------------------------
Cash Flows from Investing Activities:
Purchase of Premises and Equipment (11) (94)
Maturities of Investment Securities 100 8,495
Purchase of Investment Securities 0 (7,000)
Maturities of Mortgage-Backed Securities 53 119
Net (Increase) Decrease in Federal Funds Sold (900) 1,025
Net (Increase) Decrease in Loans 259 (1,317)
Net Proceeds from Sales of Foreclosed Real Estate 0 58
-----------------------------------
Net Cash Provided by (Used in) Investing Activities (499) 1,286
-----------------------------------
-6-
7
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends (96) (67)
Net Increase (Decrease) in Certificates of Deposit (1,067) (91)
Net Increase in Other Deposit Accounts 904 1,042
Net Increase in Advances from Borrowers
for Taxes and Insurance 34 35
--------------------------
Net Cash Provided by (Used in) Investing Activities (225) 919
--------------------------
Increase (Decrease) in Cash and Cash Equivalents (822) 2,302
Cash and Cash Equivalents-Beginning of Period 2,419 3,936
--------------------------
Cash and Cash Equivalents-End of Period $ 1,597 $6,238
==========================
Supplemental Disclosures of Cash Flow Information
Cash Payments for:
Interest Paid to Depositors $ 600 $ 642
==========================
Income Taxes 81 87
==========================
Supplemental Schedules of Noncash Investing
and Financing Activities:
Transfers from Loans to Real Estate
Acquired through Foreclosure 12 0
==========================
The accompanying notes are an integral part of these financial statements.
-7-
8
CITISAVE FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 1997
NOTE 1 - BASIS OF PRESENTATION
The accompanying consolidated financial statements for the three-month
period ended March 31, 1997 include the accounts of CitiSave Financial
Corporation and its wholly owned subsidiary, Citizens Savings Association, F.A.
(Association). The Association has been consolidated with its wholly owned
subsidiary, 665 Florida Street Corp. 665 Florida Street Corp. has been
consolidated with Roberts and Eastland (a Louisiana partnership), of which it
owns an 80% interest. Currently, the business and management of CitiSave
Financial Corporation is primarily the business and management of the
Association. All significant intercompany transactions and balances have been
eliminated in the consolidation. The minority interest's share of the net
income of Roberts and Eastland has been properly reflected in these financial
statements.
The accompanying unaudited financial statements were prepared in
accordance with instructions for Form 10-QSB and, therefore, do not include
information or footnotes necessary for a complete presentation of financial
position, results of operations and cash flows in conformity with generally
accepted accounting principles. However, all adjustments (consisting only of
normal recurring accruals) which, in the opinion of management, are necessary
for a fair presentation of the financial statements have been included.
NOTE 2 - EMPLOYEE STOCK OWNERSHIP PLAN
The Company sponsors a leveraged employee stock ownership plan (ESOP)
that covers all employees who have at least one year of service with the
Company. The ESOP is accounted for in accordance with AICPA SOP 93-6,
"Employers' Accounting for Employee Stock Ownership Plans". The ESOP shares
initially were pledged as collateral for its debt. The debt is being repaid
based on a ten-year amortization and the shares are being released for
allocation to active employees annually over the ten-year period. The shares
pledged as collateral are deducted from stockholders' equity as unearned ESOP
shares in the accompanying balance sheets.
As shares are released from collateral, the Company reports
compensation expense equal to the current market price of the shares. Dividends
on allocated ESOP shares are recorded as a reduction of retained earnings.
Compensation expense of the ESOP was $39,180 for the three months ended March
31, 1997 based on the release of 2,102 shares. As of March 31, 1997, there were
18,990 allocated shares, 2,102 shares had been committed to be released and
56,085 shares were uncommitted and held in suspense by the ESOP.
-8-
9
NOTE 3 - MANAGEMENT RECOGNITION PLAN AND STOCK OPTION PLANS
A special stockholders' meeting was held on July 23, 1996 for the
purpose of approving the following stock benefit plans: (1) 1996 Key Employee
Stock Compensation Program; (2) 1996 Directors' Stock Option Plan; and (3) 1996
Management Recognition Plan for Officers. At that meeting, all of the above
plans were adopted and approved by the stockholders.
Stock Option Plans-Under the 1996 Directors' Stock Option Plan, the
Company may grant options to its non-employee directors for up to 28,941 shares
of common stock. The exercise price of each option equals the market price of
the Company's stock on the date of grant and an option's maximum term is 10
years. 26,040 or ninety percent of the options were granted on the date the
Plan was approved by the stockholders of the Company, at an exercise price of
$13.875 per share. The remaining 2,901 shares are scheduled to be granted after
one year on July 23, 1997. The options became exercisable after six months from
the grant date. Under the 1996 Key Employee Stock Compensation Program, the
Company may grant both incentive and compensatory options to its officers and
key employees up to 67,529 shares of common stock. The exercise price of each
option equals the market price of the Company's stock on the date of the grant,
$13.875; and an option's maximum term is 10 years for incentive options and 10
years and one month for compensatory options. Options are granted and vest at
the discretion of the Program Administrators. At March 31, 1997, shares
available for grant under the 1996 Directors' Stock Option Plan and the 1996
Key Employee Stock Compensation Program amounted to 2,901 and 6,962,
respectively.
Management Recognition Plan-Under the 1996 Management Recognition Plan
instituted by the Company, it may grant awards to its officers and key
employees for up to 38,588 shares of common stock. The awards are allocated at
the discretion of the Compensation Committee of the Board. Shares vest at the
rate of 20% on each annual anniversary date. At March 31, 1997, 32,847 shares
were granted and 5,741 shares remain available for grant.
NOTE 4 - DIVIDENDS AND EARNINGS PER SHARE
During the three-month period ended March 31, 1997, the Company paid
dividends of $0.10 per share to shareholders of record on March 17, 1997. The
dividends were paid to shareholders on March 31, 1997.
The Company had a net income of $191,000 or $.19 per share for the
three-month period ending March 31, 1997 based on weighted average shares
outstanding for the quarter of 990,650 shares. The weighted average shares
outstanding calculation was based on the issuance of 964,707 shares less the
unreleased ESOP shares held in the collateral account in each period plus the
86,607 directors and employee stock options approved at the July 23, 1996
special stockholders meeting, less Treasury Stock of 2,500 shares purchased on
August 1, 1996.
-9-
10
NOTE 5 - ALLOWANCE FOR LOAN LOSSES
The following is a summary of the activity in the allowance for loan
losses.
(UNAUDITED)
THREE MONTHS ENDED
MAR 31, 1997 MAR 31,1996
------------ -----------
(In Thousands)
Balance at Beginning of Period $61 $82
Provision for Loan Losses 8 7
Recovery of Loan Losses 1 17
Charged-Off Loans 0 (13)
--- ---
Balance at End of Period $70 $93
=== ===
The Association had non-performing loans contractually past due 90
days or more totaling approximately $76,000 and $167,000 at March 31, 1997 and
1996, respectively. Impairment of loans having recorded investments of $76,000
at March 31, 1997 has been recognized in conformity with SFAS No. 114 as
amended by SFAS No. 118. The total allowance for loan losses related to these
loans at March 31, 1997 was $10,058. The allowance for loan loss of $70,000 as
of March 31, 1997 was .16% of the total loan portfolio and was 92.1% of the
non-performing loan balance.
NOTE 6-AGREEMENT AND PLAN OF MERGER
On March 26, 1997, the Company and the Association entered into an
Agreement and Plan of Merger ("Agreement") by and among Deposit Guaranty
Corporation ("DGC"), CSF Acquisition Corporation, a Louisiana corporation and
wholly owned subsidiary of DGC ("CSF Acquisition"), the Company and the
Association, which provides for DGC's acquisition of all the issued and
outstanding Common Stock, par value $.01 per share, of the Company. Under the
terms of the Agreement, CSF Acquisition shall be merged with and into the
Company and the Company shall be the surviving corporation. As a result of the
merger, the Company will become a wholly owned subsidiary of DGC.
Pursuant to the Agreement, upon the effective date of the Merger
("Effective Date"), each share of the Company Common Stock, other than those as
to which the Company stockholders properly perfect their dissenters' rights
under Louisiana law (if applicable), will be converted into the right to
receive from DGC $20.50 in cash (the "Merger Price"). In addition, pursuant to
the Agreement, at or immediately prior to the Effective Date, each outstanding
option to purchase the Company Common Stock issued by the Company ("CitiSave
Option") shall be canceled, and each holder of any such CitiSave Option,
whether or not then vested or exercisable, shall be entitled to receive from
the Company at the Effective Date for each CitiSave Option an amount determined
by multiplying (i) the excess of the Merger Price over the applicable exercise
price per share of the stock option by (ii) the number of shares of the Company
Common Stock subject to such CitiSave Option, subject to the execution by any
such holder of such instruments of cancellation as DGC may reasonably deem
appropriate. At or
-10-
11
immediately prior to the Effective Date, each outstanding award ("MRP Award")
to acquire the Company Common Stock pursuant to the Company's 1996 Management
Recognition Plan for Officers shall be canceled to the extent not previously
vested, and each holder of any such unvested MRP Award shall be entitled to
receive at or immediately prior to the Effective Date for each MRP Award an
amount determined by multiplying (i) the Merger Price by (ii) the number of
shares of unvested Company Common Stock subject to such MRP Award, subject to
the execution by any such holder of such instruments of cancellation as DGC may
reasonably deem appropriate.
Consummation of the Merger is subject to the prior receipt of all necessary
regulatory or governmental approvals and consents, the necessary approval of
stockholders of the Company and certain closing conditions.
-11-
12
CITISAVE FINANCIAL CORPORATION AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion compares the consolidated financial condition
of CitiSave Financial Corporation and Subsidiary at March 31, 1997 to December
31, 1996 and the results of operations for the three months ended March 31,
1997 with the same period in 1996. Currently, the business and management of
CitiSave Financial Corporation is primarily the business and management of the
Association. This discussion should be read in conjunction with the interim
consolidated financial statements and footnotes included herein.
CHANGES IN FINANCIAL CONDITION
Total assets decreased $344,000 or .5% from $75.3 million at December
31, 1996 to $74.9 million at March 31, 1997. The decrease in assets primarily
reflected decreases in total cash and cash equivalents and loans receivable
offset by an increase infederal funds sold at March 31, 1997.
Interest-earning deposits in other institutions decreased from
$664,000 at December 31, 1996 to $209,000 at March 31, 1997. Federal funds sold
increased 33.3% from $2.7 million at December 31, 1996 to $3.6 million at March
31, 1997.
The securities portfolio decreased from $21.9 million at
December 31, 1996 to $21.8 million at March 31, 1997, due to maturities of
securities.
The net loan portfolio decreased $281,000 or .6% from $45.2 million at
December 31, 1996 to $44.9 million at March 31, 1997 and loans held for sale
increased from $363,000 at December 31, 1996 to $415,000 at March 31, 1997.
These changes in mix were primarily due to an increase in loan rates in the
Association's market area and normal seasonal patterns.
Total deposits decreased $163,000 or .3% to $61.3 million at
March 31, 1997 from $61.5 million at December 31, 1996.
Total stockholders' equity increased by $165,000 or 1.3% to $12.5
million at March 31, 1997 compared to $12.3 million at December 31, 1996. The
increase was the result of net income of $191,000, release of ESOP shares of
$48,000 and $22,000 MRP stock earned, partially offset by the cash dividends of
$96,000 on common stock paid to stockholders at March 31, 1997.
-12-
13
REGULATORY CAPITAL
As of March 31, 1997, the Association meets the criteria for a "well
capitalized" institution following the Office of Thrift Institution's three
capital requirements. The Association's management believes that under the
current regulations, the Association will continue to meet its minimum capital
requirements in the foreseeable future.
The table below shows the three different capital requirements and the
Association's amount of capital in each category.
REGULATORY TANGIBLE CORE RISK-BASED
CAPITAL REQUIREMENTS: CAPITAL CAPITAL CAPITAL
------- ------- ----------
(DOLLARS IN THOUSANDS)
GAAP Capital $10,803 $10,803 $10,803
Additional Capital Items:
General Valuation Allowances --- --- 70
------- ------- -------
Regulatory Capital Computed 10,803 10,803 10,873
Minimum Capital Requirement 1,109 2,218 2,724
------- ------- -------
Regulatory Capital Excess $ 9,694 $ 8,585 $ 8,149
======= ======= =======
Regulatory Capital as a Percentage 14.61% 14.61% 31.93%
Minimum Capital Required as a Percentage 1.50% 3.00% 8.00%
------- ------- -------
Regulatory Capital as a
Percentage in Excess
of Requirements 13.11% 11.61% 23.93%
======= ======= =======
LIQUIDITY
The Association is required under applicable federal regulations to
maintain specified levels of "liquid" investments in qualifying types of U.S.
Government, federal agency and other investments having maturities of five
years or less. Current OTS regulations require that a savings institution
maintain liquid assets of not less than 5% of its average daily balance of net
withdrawable deposit accounts and borrowings payable in one year or less, of
which short-term liquid assets must consist of not less than 1%. At March 31,
1997, the Association's regulatory liquidity was 38.5% or $20.3 million in
excess of the minimum OTS requirement of 5%.
-13-
14
RESULTS OF OPERATIONS
The Company reported net income of $191,000 or $.19 per share for the
three months ended March 31, 1997, compared to net income of $235,000 or $.26
per share during the three month period ended March 31, 1996. The decrease in
first quarter earnings for 1997 compared to 1996 was the result of a 4.6%
decrease in net interest income. This decrease was due primarily to a decrease
in average net interest earning assets of $2.4 million from 1996 to 1997.
Contributing to this decrease was the payment of a special cash distribution
totaling $1.9 million or $2 per share to shareholders on June 28, 1996.
NET INTEREST INCOME
The primary source of earnings for the Company is net interest income,
which is the difference between income generated from interest-earning assets
and interest expense from interest-bearing liabilities. The major factors that
affect net interest income are changes in the volume and type of
interest-earning assets and interest-bearing liabilities, along with changes in
market rates.
Net interest income for the three months ending March 31, 1997
decreased $35,000 or 4.6% to $720,000 as compared to $755,000 for the three
months ended March 31, 1996. This decline was due to a decrease of $71,000 in
interest income offset by a $36,000 decrease in interest expense. The decrease
in interest income was the result of a $4.8 million or 6.4% decrease in the
average balance of interest-earning assets offset by an increase in the average
yield of those assets from 7.42% to 7.52%. The decrease in interest expense was
due to a decrease of $2.4 million or 4.1% in the average balance of
interest-bearing liabilities and a decrease in the average cost of those
liabilities from 4.27% to 4.20%.
Average interest rate spread is the average yield of interest-earning
assets minus the average cost of interest-bearing liabilities. The
Association's average interest rate spread for the three months ended March 31,
1997 was 3.32% compared to 3.15% for the same period in 1996. Net interest
margin represents net interest income as a percent of average interest-earning
assets. Net interest margin was 4.09% for the three months ended March 31, 1997
as compared to 4.01% for the three months ended March 31, 1996.
The table of Average Balance Sheets and Interest Rate Analysis for the
three months period ended March 31, 1997 and 1996 on page 15 and the
corresponding table of Rate/Volume Analysis on page 16 detail the effects the
changes in average balances and the changes in interest rates had on net
interest income during the respective periods.
-14-
15
CITISAVE FINANCIAL CORPORATION
AVERAGE BALANCE SHEETS AND INTEREST RATE ANALYSIS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
THREE MONTHS ENDED MAR 31, 1997
-------------------------------
AVERAGE
AVERAGE YIELD/
BALANCE INTEREST RATE
--------------------------------
(Dollars In Thousands)
INTEREST-EARNING ASSETS:
Loans $ 45,340 $ 949 8.37 %
Investment Securities 19,621 297 6.08
Mortgage-Backed Securities 2,248 37 6.58
Other Interest-Earning Assets 3,344 43 5.14
------ ----- ----
Total Interest-Earning Assets 70,553 1,326 7.52
Noninterest-Earning Assets 3,940
------
Total Assets $ 74,493
======
Interest-Bearing Liabilities:
Passbook, NOW and Money Market Accounts $ 18,198 94 2.07
Certificates of Deposit 39,529 512 5.18
------ ----- ----
Total Interest-Bearing Liabilities 57,727 606 4.20
Noninterest-Bearing Liabilities 4,361
------
Total Liabilities 62,088
Stockholders' Equity 12,405
------
Total Liabilities and Stockholders' Equity $ 74,493
======
Net Interest-Earning Assets $ 12,826
======
Net Interest Income; Average Interest Rate Spread $ 720 3.32 %
======== ====
Net Interest Margin 4.09 %
====
Average Interest-Earning Assets to
Average Interest-Bearing Liabilities 122.22 %
======
(UNAUDITED)
THREE MONTHS ENDED MAR 31, 1996
---------------------------------
AVERAGE
AVERAGE YIELD/
BALANCE INTEREST RATE
----------------------------------
(Dollars In Thousands)
INTEREST-EARNING ASSETS:
Loans $ 42,487 $ 920 8.66 %
Investment Securities 19,934 309 6.20
Mortgage-Backed Securities 2,517 41 6.52
Other Interest-Earning Assets 10,439 127 4.90
------ ----- ----
Total Interest-Earning Assets 75,377 1,397 7.42
Noninterest-Earning Assets 3,184
------
Total Assets $ 78,561
======
Interest-Bearing Liabilities:
Passbook, NOW and Money Market Accounts $ 18,156 96 2.12
Certificates of Deposit 42,013 546 5.20
------ ----- ----
Total Interest-Bearing Liabilities 60,169 642 4.27
Noninterest-Bearing Liabilities 3,985
------
Total Liabilities 64,154
Stockholders' Equity 14,407
------
Total Liabilities and Stockholders' Equity $ 78,561
======
Net Interest-Earning Assets $ 15,208
=========
Net Interest Income; Average Interest Rate Spread $ 755 3.15 %
====== ====
Net Interest Margin 4.01 %
====
Average Interest-Earning Assets to
Average Interest-Bearing Liabilities 125.28 %
======
-15-
16
CITISAVE FINANCIAL CORPORATION
RATE/VOLUME ANALYSIS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 VS. MARCH 31, 1996
(UNAUDITED)
---------------------------------------------------
INCREASE (DECREASE) TOTAL
DUE TO INCREASE
--------------------------------
RATE VOLUME (DECREASE)
---------------------------------------------------
(In Thousands)
INTEREST-EARNING ASSETS:
Loans $ (31) $ 60 $ 29
Investment Securities (6) (6) (12)
Mortgage-Backed Securities 0 (4) (4)
Other Interest-Earning Assets 6 (90) (84)
----------------------------------------------------
(31) (40) (71)
----------------------------------------------------
INTEREST-BEARING LIABILITIES:
Passbook, NOW & Money
Market Accounts (2) 0 (2)
Certificates of Deposit (2) (32) (34)
----------------------------------------------------
Total Interest-Bearing Liabilities (4) (32) (36)
----------------------------------------------------
Increase (Decrease) in Net Interest Income (27) (8) (35)
====================================================
PROVISION FOR LOAN LOSSES
The provision for loan losses increased $1,000 for the three months
ended March 31, 1997 compared to the same period in 1996. The Association
recorded a provision for loan losses in the amount of $8,000 for the three
months ended March 31, 1997, compared to $7,000 for the three months ended
March 31, 1996. The allowance for loan losses is maintained at a level which,
in management's judgment, is adequate to absorb credit losses inherent in the
loan portfolio. The amount of the allowance is based on management's quarterly
evaluation of the collectibility of the loan portfolio, including the nature of
the portfolio, credit concentrations, trends in historical loss experience,
specific impaired loans, and economic conditions. Allowances for impaired loans
are generally determined based on collateral values or the present value of
estimated cash flows. The allowance is increased by a provision for loan
losses, which is charged to expense, and reduced by charge-offs, net of
recoveries. The allowance for loan loss was $70,000 at March 31, 1997 or .16%
of the total loan portfolio. The allowance for loan loss as a percentage of
non-performing loans at March 31, 1997 was 92.1%.
-16-
17
NON INTEREST INCOME
Non interest income decreased by $13,000 or 4.1% to $301,000 for the
three months ended March 31, 1997 compared to $314,000 for the same three month
period in 1996.
NON INTEREST EXPENSE
Non interest expense increased $16,000 to $714,000 for the three
months ended March 31, 1997 compared to $698,000 for the same period in 1996.
The 2.3% increase in 1997 is due to an increase of $34,000 in compensation and
benefits expense, an increase of $15,000 in other non interest expenses such as
professional fees, data processing, La. Shares Tax, printing and postage, and
an increase of $7,000 in building occupancy expense, which increases were
partially offset by a decrease of $36,000 in the federal insurance premiums for
FDIC SAIF coverage. The Association opened its sixth full service branch on
October 1, 1996 which contributed to the increase in these expense categories.
INCOME TAX EXPENSE
Income tax expense for the quarter ended March 31, 1997 decreased by
$20,000 to $95,000 as compared to $115,000 for the same quarter in 1996. This
decrease reflects the decrease in income before income taxes during the first
quarter of 1997.
-17-
18
CITISAVE FINANCIAL CORPORATION
FORM 10-QSB
QUARTER ENDED MARCH 31, 1997
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings:
There are no matters required to be reported under this item.
Item 2 - Changes in Securities:
There are no matters required to be reported under this item.
Item 3 - Defaults Upon Senior Securities:
There are no matters required to be reported under this item.
Item 4 - Submission of Matters to a Vote of Security Holders:
There are no matters required to be reported under this item.
Item 5 - Other Information:
There are no matters required to be reported under this item.
Item 6 - Exhibits and Reports on Form 8-K:
a) Exhibits:
The following exhibit is filed herewith:
Exhibit No. Description
----------- -----------
27.1 Financial Data Schedule
b) Reports:
A Form 8-K current report was filed by the Registrant on
April 7, 1997 under Item 5. Other Events to report the
execution of an Agreement and Plan of Merger with
Deposit Guaranty Corp on March 26, 1997. No financial
statements were required to be filed with the Form 8-K.
-18-
19
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CITISAVE FINANCIAL CORPORATION
Registrant
Date: May 7, 1997 /s/ LEE F. NETTLES
----------------- ----------------------
Lee F. Nettles
Chairman of the Board,
President and Chief Executive Officer
Date: May 7, 1997 /s/ J. LARRY BELLARD
----------------- ----------------------
J. Larry Bellard
Sr. Vice-President and Controller
-19-