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 March 31, 1996 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 March 31, 1996
CITIZENS BANCSHARES, INC. AND
CITIZENS BANK, VILLE PLATTE, LOUISIANA
INDEX
PART I. FINANCIAL INFORMATION PAGE
Condensed Consolidated Balance Sheets -
March 31, 1996 and December 31, 1995...................3
Condensed Consolidated Statements of Income -
Three months ended March 31, 1996 and
March 31, 1995.........................................4
Condensed Consolidated Statements of Cash Flows -
Three months ended March 31, 1996 and
March 31, 1995.........................................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 6. Exhibits and Reports on Form 8-K ..............9
PART I. CITIZENS BANCSHARES, INC. AND
CITIZENS BANK, VILLE PLATTE, LOUISIANA
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 1996 (UNAUDITED) AND DECEMBER 31, 1995 (AUDITED)
(in thousands of dollars)
MARCH 31, 1996 DECEMBER 31,1995
ASSETS
Cash and due from banks $ 2,102 $ 2,498
Federal funds Sold 5,950 3,575
CASH AND CASH EQUIVALENTS 8,052 6,073
Interest-bearing deposits in other banks 3,867 3,765
Investment securities
Held to maturity (estimated fair values 9,105 9,695
of $ 9,222 and $ 9,849)
Available-for-Sale, at fair value 25,531 25,224
TOTAL SECURITIES 34,636 34,919
Loans, 38,376 37,444
Unearned income ( 496) ( 527)
Allowance for possible loan losses ( 825) ( 832)
NET LOANS 37,055 36,085
Premises and equipment, net 850 850
Other real estate 13 28
Deferred tax asset 12 -
Accrued interest receivable 806 868
Other assets 555 582
TOTAL ASSETS $85,846 $83,170
LIABILITIES
Deposits
Demand $ 8,546 $ 7,773
Savings and NOW Accounts 12,800 12,693
Certificate of deposit and other
time deposits $100,000 or more 18,668 17,829
Other time deposits 37,530 36,717
TOTAL DEPOSITS 77,544 75,012
Accrued interest 464 480
Deferred tax liability - 20
Other liabilities 165 106
TOTAL LIABILITIES 78,173 75,618
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 6,295 6,029
Unrealized (loss) on Available-for-Sale
Securities, net of applicable deferred
income taxes (22) 123
TOTAL SHAREHOLDERS' EQUITY 7,673 7,552
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $85,846 $83,170
CITIZENS BANCSHARES, INC. AND
CITIZENS BANK, VILLE PLATTE, LOUISIANA
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(in thousands of dollars, except per share data)
THREE MONTHS
ENDED
03/31/96 03/31/95
Interest income
Interest and fees on loans $ 897 $ 821
Interest on investment securities
U.S. Treasury Securities 71 102
Obligations of other U.S. Government
agencies and corporations 365 298
Obligations of states and political
subdivisions 63 46
Interest on federal funds sold 69 61
Interest on deposits in other banks 55 58
TOTAL INTEREST INCOME 1,520 1,386
Interest expense
Interest on deposits
Savings and NOW accounts 89 121
Certificates and other time deposits
$100,000 and more 268 218
Other time deposits 512 372
TOTAL INTEREST EXPENSE 869 711
Net interest income 651 675
Provision for Possible Loan Losses 15 15
Net interest income after provision
for possible loan losses 636 660
Service Charge on deposit accounts 100 50
Other income 46 75
Salaries & Employee Benefits 221 214
FDIC Assessment -- 38
Other expense 194 220
Income before income taxes 367 313
Income tax expense 102 129
Net Income $ 265 $ 184
Net income per share of common stock $ 2.60 $ 1.60
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)
MARCH 31, 1996 AND MARCH 31, 1995
MARCH MARCH
31, 1996 31, 1995
Cash flows from operating activities:
Net Income $ 265 $ 184
Adjustments to reconcile net income to
net cash provided by operating activities -
Provision for possible loan losses 15 15
Depreciation 13 11
Net (accretion) of investment securities (11) (7)
(Gain) on investment securities -- (1)
(Gain) on sale of other real estate (10) --
Decrease in interest receivable 61 45
(Increase) in other assets (18) (13)
Increase (decrease) in interest payable 16 (18)
Increase in other liabilities 60 114
Net cash provided by operating activities 391 330
Cash flows from investing activities:
Proceeds from maturities and calls of
investment securities 9,696 2,825
Purchase of investment securities (9,795) (6,409)
Decrease in interest-bearing
deposits in other banks 102 297
Purchase of Bank Branch (348) (380)
Proceeds from sales of other real estate 25 130
(Increase) in loans (612) (340)
Purchase of premises and equipment (13) (168)
Net cash (used) by investing activities (945) (4,045)
Cash flows from financing activities:
Increase in deposits 2,533 6,497
Net cash provided by financing activities 2,533 6,497
Net increase in cash and cash equivalents 1,979 2,782
Cash and cash equivalents, beginning of year 6,073 4,124
Cash and cash equivalents, end of period $ 8,052 $ 6,906
Cash paid for income taxes $ --- $ ---
Cash paid for interest expense $ 885 $ 729
Other real estate acquired in satisfaction
of loans $ 13 $ --
Total Increase (decrease) in Fair Value of
Securities Available for Sale $ (221) $ 398
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,
1995 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, 1996.
(2) On January 1, 1996, the Company adopted Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of."
Statement No. 121 requires that long-lived assets and certain
identifiable intangibles to be held and used by the Company be
reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be
recoverable. Measurement of an impairment loss on these assets
is based on fair value. In addition, long-lived assets and
certain identifiable intangibles to be disposed of are required
to be reported at the lower of carrying amount or fair value less
costs to sell. The adoption of this statement had no effect on
the results of operations for the quarter ended March 31, 1996.
CITIZENS BANCSHARES, INC. AND
CITIZENS BANK, VILLE PLATTE, LOUISIANA
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MARCH 31, 1996
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 brach 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; and access to
two retail credit card plans, VISA and MASTERCARD. Drive-in facilities
are located at all banking locations.
FINANCIAL CONDITION
The Bank's total assets increased during the first three months of 1996
from $83,170,000 to $85,846,000, a $2,676,000 or 3.22% increase. Most
of this increase is attributed primarily to a $1,979,000 increase in
cash and cash equivalents and a $960,000 increase in loans.
Earning assets, which include loans, investment securities, federal
funds sold, and deposits in other banks were 95.14% of total assets.
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 $825,000 as of March 31, 1996, which represents a 2.18%
of total loans outstanding on that date. Provisions to the allowance
for loan losses, which were charged to net income of 1996, totaled
$15,000. 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.
Another primary source of income is interest on investment securities.
The Bank's investment objectives and activities are guided by a written
Investment Policy. The Investment Policy directs that, to the extent
not needed to meet loan demand, funds be invest to earn maximum returns
with minimum risks, and established liquidity guidelines be observed.
At March 31, 1996, securities classified as "held-to-maturity" had an
amortized cost/recorded value of $9,105,000 and a fair value of
$9,222,000; securities classified as "available-for-sale" had a fair
recorded value of $25,531,000 and an amortized cost of $25,565,000.
The Bank's primary source of funds is customer deposits. Total deposits
increased by $2,532,000 in the first three months of 1996. At March 31,
1996, the Bank's Total Loans to Total Deposits ratio was 48.85%.
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 for
without an adverse impact on earnings. The liquidity ratio for the Bank
at year end was 57.51%.
RESULTS OF OPERATIONS
The Bank reported a net income of $265,000 or $2.60 per average share
outstanding for the first three months of 1996. Net return on assets
was 1.26% and net return on equity was 12.54%.
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. The Bank's net
interest income for March 31, 1996 decreased $24,000 or 3.56%.
Noninterest income, which consists primarily of service charges and fees
on financial services, was $146,000 as of March 31, 1996, as compared to
$125,000 as of March 31, 1995.
Noninterest expense as of March 31, 1996 was $415,000, a $57,000
decrease from March 31, 1995. This decrease is primarily attributed to
the rate adjustment made by FDIC on assessment charges. In March of
1995 the Bank had expensed $38,000 for assessment charges and as of
March 31, 1996 total amount expensed was $500.00.
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, 1996, the Bank's
ratios were as follows:
Capital to Assets 9.25%
Risk Based Capital 19.86%
Tier 1 Capital 18.61%
Leverage Ratio 8.79%
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 March 31, 1996.
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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