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, 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 March 31, 1997
CITIZENS BANCSHARES, INC. AND
CITIZENS BANK, VILLE PLATTE, LOUISIANA
INDEX
PART I. FINANCIAL INFORMATION PAGE
Condensed Consolidated Balance Sheets -
March 31, 1997 and December 31, 1996...................3
Condensed Consolidated Statements of Income -
Three months ended March 31, 1997 and
March 31, 1996.........................................4
Condensed Consolidated Statements of Cash Flows -
Three months ended March 31, 1997 and
March 31, 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 ............................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
MARCH 31, 1997 AND DECEMBER 31, 1996 (UNAUDITED)
(in thousands of dollars)
MARCH 31,1997 DECEMBER 31,1996
ASSETS
Cash and due from banks $ 2,396 $ 2,352
Federal funds sold 5,700 3,725
CASH AND CASH EQUIVALENTS 8,096 6,077
Interest-bearing deposits with banks 3,964 3,766
Securities available for sale,
at fair values 28,474 25,999
Securities held to maturity, fair values
of $9,823 & $10,997 9,759 10,909
TOTAL SECURITIES 38,233 36,908
Loans, 43,415 43,181
Unearned income (485) (490)
Allowance for possible loan losses (879) ( 859)
NET LOANS 42,051 41,832
Premises and equipment, net 1,186 1,017
Deferred tax asset 22 44
Accrued interest receivable 887 890
Other assets 559 516
TOTAL ASSETS $94,998 $91,050
LIABILITIES
Demand deposits $10,364 $ 9,235
Savings, NOW and money-market deposits 12,972 12,146
Time deposits $100,000 or more 20,993 20,772
Other time deposits 41,260 39,780
TOTAL DEPOSITS 85,589 81,933
Accrued interest payable 491 540
Accrued expenses and other liabilities 232 117
TOTAL LIABILITIES 86,312 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 7,329 7,013
Unrealized (loss) on Available-for-Sale
Securities, net of applicable deferred
income taxes (43) 47
TOTAL SHAREHOLDERS' EQUITY 8,686 8,460
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $94,998 $91,050
CITIZENS BANCSHARES, INC. AND
CITIZENS BANK, VILLE PLATTE, LOUISIANA
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(in thousands of dollars, except per share data)
THREE MONTHS
ENDED
03/31/97 03/31/96
Interest income
Loans receivable $ 1,005 $ 897
U.S. Treasury Securities 80 71
U.S. Government agencies 411 365
States and political subdivisions 64 63
Federal funds sold 86 69
Deposits with banks 56 55
Total interest income 1,702 1,520
Interest expense
Deposits
Savings, NOW and money-market deposits 89 89
Time deposits $100,000 and more 298 268
Other time deposits 556 512
Total interest expense 943 869
Net interest income 759 651
Provision for loan losses 23 15
Net interest income after provision 736 636
for loan losses
Noninterest income
Service charge on deposit accounts 100 100
Other income 32 46
Total noninterest income 132 146
Noninterest expense
Salaries & employee benefits 236 221
Occupancy & equipment expense 56 46
Other expense 155 148
Total noninterest expense 447 415
Income before income taxes 421 367
Income tax expense 105 102
Net Income 316 265
Net income per share of common stock $ 2.75 $ 2.60
CITIZENS BANCSHARES, INC AND
CITIZENS BANK, VILLE PLATTE, LOUISIANA
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
MARCH 31, 1997 AND MARCH 31, 1996
MARCH MARCH
31, 1997 31, 1996
Cash flows from operating activities:
Net Income $ 316 $ 266
Adjustments to reconcile net income to
net cash provided by operating activities -
Provision for possible loan losses 23 15
Depreciation & Amortization 21 17
Net (accretion) of investment securities (25) (11)
(Gain) on sale of other real estate -- (10)
Decrease in interest receivable 3 62
(Increase) in other assets (49) (21)
(Decrease) in interest payable (49) (11)
Increase in other liabilities 115 126
Net cash provided by operating activities 355 433
Cash flows from investing activities:
Proceeds from maturities and calls of
investment securities 4,046 9,696
Purchase of investment securities (5,294) (9,795)
(Increase) decrease in interest-bearing
deposits in other banks (198) (102)
Proceeds from sales of foreclosed real estate -- 25
(Increase) in loans (363) (797)
Purchase of premises and equipment (183) (13)
Net cash (used) by investing activities (1,992) (986)
Cash flows from financing activities:
Increase in deposits 3,656 2,532
Net cash provided by financing activities 3,656 2,532
Net increase in cash and cash equivalents 2,019 1,979
Cash and cash equivalents, beginning of year 6,077 6,073
Cash and cash equivalents, end of period $ 8,096 $ 8,052
Cash paid for income taxes $ -- $ --
Cash paid for interest expense $ 991 $ 885
Other real estate acquired in satisfaction
of loans $ -- $ 13
Total Increase (decrease) in Fair Value of
Securities Available for Sale $ (135) $ (221)
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
MARCH 31, 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 during the first quarter of 1997 from
$91,050,000 to $94,998,000, a $3,948,000 or 4.34% increase. Much of this
increase is attributed to a $2,019,000 increase in cash and cash
equivalents and $1,325,000 increase in securities.
Earning assets, which include loans, investment securities, federal
funds sold, and deposits in other banks were 95.22% of total assets as
of March 31, 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 $879,000 as of March 31, 1997, which represents a 2.05%
of total loans outstanding on that date. Provisions to the allowance
for loan losses, which were charged to net income of 1997, totaled
$23,000. 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 invested to earn maximum
returns with minimum risks, and established liquidity guidelines be
observed. At March 31, 1997, securities classified as "held-to-
maturity" had an amortized cost/recorded value of $9,759,000 and a fair
value of $9,823,000; securities classified as "available-for-sale" had
a fair recorded value of $28,474,000 and an amortized cost of
$28,470,000.
The Bank's primary source of funds is deposits, both time and demand.
At the end of the first quarter of 1997, total deposits, increased
$3,656,000 or 4.46%. Noninterest-bearing deposits increased by
$1,129,000 and interest-bearing deposits increased by $2,527,000. At
March 31, 1997, the Bank's Loan to Deposit ration was 50.16%.
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 March 31, 1997 the Bank's
liquidity ratio was 55.39%.
RESULTS OF OPERATIONS
The Bank reported a net income of $316,000 or $2.75 per average share
outstanding for the first quarter of 1997. Net return on assets was
1.34% and net return on equity was 13.21%.
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
March 31, 1997 to March 31, 1996, the Bank's net interest income
increased by $108,000 or 16.59%. Much of this increase is attributed to
loans receivable.
Noninterest income, which consists primarily of service charges and fees
on financial services, shows a slight decrease when comparing March 31,
1997 to March 31, 1996.
Noninterest expense as of March 31, 1997 was $447,000, a $32,000
increase from March 31, 1996. Much of this increase is attributed to
salary adjustments and additional staff needed due to the growth of
Citizens Bank.
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 9.26%
Risk Based Capital 20.27%
Tier 1 Capital 19.02%
Leverage Ratio 8.99%
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 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 March 31, 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
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