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, 1995 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, 1995
CITIZENS BANCSHARES, INC. AND
CITIZENS BANK, VILLE PLATTE, LOUISIANA
INDEX
PART I. FINANCIAL INFORMATION PAGE
Condensed Consolidated Balance Sheets -
June 30, 1995 and December 31, 1994 ..................3
Condensed Consolidated Statements of Income -
Six and Three months ended June 30, 1995 and
June 30, 1994 ........................................4
Condensed Consolidated Statements of Cash Flows -
Six months ended June 30, 1995 and
June 30, 1994 ........................................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 ............................10
Item 6. Exhibits and Reports on Form 8-K .............10
PART I. CITIZENS BANCSHARES, INC. AND
CITIZENS BANK, VILLE PLATTE, LOUISIANA
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 1995 (UNAUDITED) AND DECEMBER 31, 1994 (AUDITED)
(in thousands of dollars)
JUNE 30, 1995 DECEMBER 31,1994
ASSETS
Cash and due from banks $ 2,066 $ 1,799
Federal funds Sold 3,450 2,325
CASH AND CASH EQUIVALENTS 5,516 4,124
Interest-bearing deposits in other banks 3,654 3,961
Investment securities
Held to maturity (estimated fair values 11,638 13,024
of $11,739 and $12,893)
Available-for-Sale, at fair value 23,800 17,070
TOTAL SECURITIES 35,438 30,094
Loans, 36,665 35,274
Unearned income ( 579) ( 550)
Allowance for possible loan losses ( 791) ( 774)
NET LOANS 35,295 33,950
Premises and equipment, net 841 602
Other real estate 6 -
Deferred tax asset 9 348
Accrued interest receivable 856 830
Other assets 670 255
TOTAL ASSETS $82,285 $74,164
LIABILITIES
Deposits
Demand $ 8,101 $ 7,206
Savings and NOW Accounts 12,481 11,588
Certificate of deposit and other
time deposits $100,000 or more 17,956 17,259
Other time deposits 36,175 31,646
TOTAL DEPOSITS 74,713 67,699
Accrued interest 412 324
Other liabilities 129 93
TOTAL LIABILITIES 75,254 68,116
SHAREHOLDERS' EQUITY
Common Stock $5 par value, 300,000
shares authorized, 115,000 shares
issued and outstanding 575 575
Capital surplus 825 825
Retained earnings 5,649 5,186
Unrealized (loss) on Available-for-Sale
Securities, net of applicable deferred
income taxes (18) (538)
TOTAL SHAREHOLDERS' EQUITY 7,031 6,048
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $82,285 $74,164
CITIZENS BANCSHARES, INC. AND
CITIZENS BANK, VILLE PLATTE, LOUISIANA
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
SIX AND THREE MONTHS ENDED JUNE 30, 1995 AND 1994
(in thousands of dollars, except per share data)
SIX MONTHS THREE MONTHS
ENDED ENDED
6/30/95 6/30/94 6/30/95 6/30/94
Interest income
Interest and fees on loans $ 1,671 $ 1,538 $ 850 $ 782
Interest on investment securities
U.S. Treasury Securities 203 239 101 131
Obligations of other U.S. Government 645 447 347 219
agencies and corporations
Obligations of states and political 96 85 50 42
subdivisions
Interest on federal funds sold 116 61 55 31
Interest on deposits in other banks 117 104 59 52
TOTAL INTEREST INCOME 2,848 2,474 1,462 1,257
Interest expense
Interest on deposits
Savings and NOW accounts 181 179 59 90
Certificates and other time deposits
$100,000 and more 467 353 250 185
Other time deposits 865 655 493 322
Other interest expense 0 0 0 0
TOTAL INTEREST EXPENSE 1,513 1,187 802 597
Net interest income 1,335 1,287 660 660
Provision for Possible Loan Losses 30 30 15 15
Net interest income after provision
for possible loan losses 1,305 1,257 645 645
Service Charge on deposit accounts 173 158 87 79
Other income 128 68 88 39
Salaries & Employee Benefits 422 374 208 194
Other expense 505 414 246 202
Income before income taxes 679 695 366 367
Income tax expense 216 202 87 98
Net Income $ 463 $ 493 $ 279 $ 269
Net income per share of common stock $ 4.02 $ 4.29 $ 2.43 $ 2.34
The accompanying notes are an integral part of these financial statements.
CITIZENS BANCSHARES, INC AND
CITIZENS BANK, VILLE PLATTE, LOUISIANA
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
JUNE 30, 1995 AND JUNE 30, 1994
JUNE JUNE
31, 1995 31, 1994
Cash flows from operating activities:
Net Income $ 464 $ 493
Adjustments to reconcile net income to
net cash provided by operating activities -
Provision for possible loan losses 30 30
Depreciation 21 22
Net (accretion) of investment securities (22) (34)
(Gain) on ivestment securities (1) --
(Gain) on sale of other real estate -- --
(Increase) in interest receivable (26) ( 1)
(Increase) in other assets (49) (13)
Increase (decrease) in interest payable 88 (24)
Increase (decrease) in other liabilities 36 (138)
Net cash provided by operating activities 541 335
Cash flows from investing activities:
Proceeds from maturities and calls of
investment securities 5,225 6,495
Purchase of investment securities (9,891) (8,007)
Decrease in interest-bearing
deposits in other banks 307 499
Purchase of Bank Branch (367) --
Proceeds from sales of other real estate -- --
(Increase) in loans (1,181) (1,212)
Purchase of premises and equipment (256) (28)
Net cash (used) by investing activities (6,163) (2,253)
Cash flows from financing activities:
Increase in deposits 7,014 2,018
Net cash provided by financing activities 7,014 2,018
Net increase in cash and cash equivalents 1,392 100
Cash and cash equivalents, beginning of year 4,124 4,443
Cash and cash equivalents, end of period $ 5,516 $ 4,543
Cash paid for income taxes $ 188 $ 193
Cash paid for interest expense $ 1,425 $ 1,211
Other real estate acquired in satisfaction
of loans $ 6 $ --
Total Increase (decrease) in Fair Value of
Securities Available for Sale $ 788 $ (524)
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,
1994 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
ended December 31, 1995.
(2) As of January 1, 1994, the Company adopted the Financial
Accounting Standards Board Statement Number 115 (FASB 115),
"Accounting for Certain Investments in Debt and Equity
Securities". Under FASB 115, the Company has classified its
investment securities into two categories, held-to-maturity and
available-for-sale. Securities considered as held-to-maturity
generally include all municipal and US Treasury and Government
Agencies maturing within two years, which the Company has both
the positive intent and ability to hold until maturity.
Available-for-sale securities are those not considered held-to-
maturity. Held-to-maturity securities are carried at amortized
cost and are $11,638,000 at June 30, 1995 and $13,024,000 at
December 31, 1994. Available-for-sale securities are carried at
their fair value at June 30, 1995 of $23,800,000, which includes
a net unrealized loss of $27,470 from their amortized cost of
$23,827,000. The net unrealized loss net of a deferred tax
benefit of $9,340 is carried as a reduction of stockholders'
equity of $18,130.
CITIZENS BANCSHARES, INC. AND
CITIZENS BANK, VILLE PLATTE, LOUISIANA
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
JUNE 30, 1995
GENERAL STATEMENT
Citizens Bank, Ville Platte, Louisiana (The Bank) is a commercial
banking institution formed in 1975 under the banking laws of the State
of Louisiana. The Bank conducts business at a main office located in
the City of Ville Platte, Louisiana and at branch offices located 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, and access to
two retail credit card plans, "VISA and MASTER CARD". Drive-in
facilities are located at all banking locations.
The Bank is the 100% owned and consolidated subsidiary of Citizens
Bancshares, Inc. of Ville Platte, Louisiana (the Company). The Company
owns no other company.
The purpose of this narrative is to provide additional information that
one may use to gain a more complete perspective on the operation of
Citizens Bank as a commercial banking enterprise. Comments included
herein should be read and taken into consideration along with other
specific financial information given within this report. It is also
noted that these comments may represent information that would not be
otherwise available from the financial statements alone.
FINANCIAL CONDITION
The Bank's total assets increased during the first six months of 1995
from $74,165,000 to $82,285,000, a $8,120,000 or 10.95% increase. Most
of this increase took place in the first quarter of 1995 due to the ac
quisition of the Pine Prairie Branch which was purchased on January 12,
1995 from American Security Bank of Ville Platte, Louisiana. With about
80% of the deposits remaining with Citizens Bank, the acquisition has
provided growth opportunities and new customer relationships for the
Bank. In comparing the first quarter of 1995 to the second quarter of
1995, the bank's total assets increased by $1,082,000 or about 1%; this
increase resutled broad internal growth.
Earning assets, which include loans, investment securities, federal
funds sold, and deposits in other banks were $78,628,000, a 10.58%
increase from 1994 year end earning assets of $71,103,000. Increases in
earning assets positions generally mirror increases in total assets both
in terms of the amounts and causes of change.
Nonaccrual loans, which are loans on which the interest recognition has
been suspended until received because of doubts as to the borrowers'
ability to repay principal and interest, were $179,008 at June 30, 1995.
Loans which are 90 days or over past due and still accruing interest
totaled $289,749 at June 30, 1995. Past Due loans to total loans for
June 30, 1995 was 2.31% and loan to deposit ratio was 48.30%.
The Allowance for Possible Loan Losses at June 30, 1995 was $790,558.
Management maintains an allowance for possible loan losses at a level
considered to be adequate to provide for possible loan losses. At June
30, 1995, the loan loss reserve to total loans was 2.19%. A total of
$30,000 has been added to the allowance by charges against income during
the first six months of 1995. Total charge-offs as of June 30, 1995
were $33,716 and recoveries of charge-offs totaled $20,172.
As the Bank's primary source of funds, deposits, both time and demand,
increased $7,014,000 or 10.36% during the first six months of 1995. Non-
interest-bearing deposits increased $895,000, and interest-bearing
deposits increased $6,119,000. With the downward turn in interest
rates, management finds that most depositors are staying short and feels
pressured with the competitor rates being offered by local brokerage
firms.
The primary functions of asset/liability management are to assure
adequate liquidity and maintaince of appropriate balance between
interest-earning assets and interest-bearing liabilities. Liquidity
management involves the ability to meet cash flow requirements of
customers. With the Bank's asset/liability management program, most
loan and deposit changes can be anticipated and provided for without an
adverse impact on earnings. The Bank's liquidity ratio at June 30, 1995
was 56.59%.
RESULTS OF OPERATIONS
The Bank's net income for the six months ended June 30, 1995 was
$463,000 or $4.02 per share as compared to $493,000 or $4.29 per share
for the same period in 1994. At June 30, 1995, net return on assets was
1.14% and the net return on equity was 11.85%.
Noninterest income, which consists of service charges and fees on
financial services, was $301,000 for the first six months of 1995, a
$75,000 increase from the first six months of 1994. Most of this
increase is attributed to the gain on sale of assets in which $55,000
was credited to income for the adjustment of land acquired in exchange
to fair value in accordance with the Official of Financial Institution.
Noninterest expense for the first six months of 1995 increased by
$139,000 as compared to the first six months of 1994. Salaries and
employee benefits, the largest component of non-interest expense,
increased by $48,000 as a result of additional staff to meet the branch
acquisition and internal growth of Citizens Bank. With a 15 year
amortization for the premium paid for the acquisition of the Pine
Prairie Branch, $12,667 has been expense as of June 30, 1995.
At June 30, 1995, the bank's ratios were as follows:
Capital to Asset 9.43%
Risk Based 19.45%
Tier 1 17.50%
Leverage Ratio 8.08%
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 6. Exhibits and Reports on Form 8-K
(a) Part II Exhibits: none
(b) The Company has not filed any reports on Form 8-K
during the quarter ended June 30, 1995.
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
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