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 September 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 September 30,1997
CITIZENS BANCSHARES, INC. AND
CITIZENS BANK, VILLE PLATTE, LOUISIANA
INDEX
PART I. FINANCIAL INFORMATION PAGE
Condensed Consolidated Balance Sheets -
September 30, 1997 and December 31, 1996...................3
Condensed Consolidated Statements of Income -
Nine and three months ended September 30, 1997
and September 30, 1996.....................................4
Condensed Consolidated Statements of Cash Flows -
Nine months ended September 30, 1997 and
September 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 6. Exhibits and Reports on Form 8-K .................9
PART I. CITIZENS BANCSHARES, INC. AND
CITIZENS BANK, VILLE PLATTE, LOUISIANA
CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1997 AND DECEMBER 31, 1996 (UNAUDITED)
(in thousands of dollars)
SEPT 30,1997 DECEMBER 31,1996
ASSETS
Cash and due from banks $ 2,213 $ 2,352
Federal funds sold 7,125 3,725
CASH AND CASH EQUIVALENTS 9,338 6,077
Interest-bearing deposits with banks 3,964 3,766
Securities available for sale,
at fair values 25,395 25,999
Securities held to maturity, fair values
of $8,433 & $10,997 8,360 10,909
TOTAL SECURITIES 33,755 36,908
Loans 48,913 43,181
Unearned income (506) (490)
Allowance for possible loan losses (921) (859)
NET LOANS 47,486 41,832
Premises and equipment, net 2,347 1,017
Foreclosed real estate 17 --
Deferred tax asset -- 44
Accrued interest receivable 932 890
Other assets 561 516
TOTAL ASSETS $98,400 $91,050
LIABILITIES
Demand deposits $10,053 $ 9,235
Savings, NOW and money-market deposits 13,140 12,146
Time deposits $100,000 or more 23,007 20,772
Other time deposits 42,090 39,780
TOTAL DEPOSITS 88,290 81,933
Accrued interest payable 522 540
Accrued expenses and other liabilities 184 117
TOTAL LIABILITIES 88,996 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 7,946 7,013
Unrealized gain on Available-for-Sale
Securities, net of applicable deferred
income taxes 58 47
TOTAL SHAREHOLDERS' EQUITY 9,404 8,460
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $98,400 $91,050
CITIZENS BANCSHARES, INC. AND
CITIZENS BANK, VILLE PLATTE, LOUISIANA
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
NINE AND THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(in thousands of dollars, except per share data)
NINE MONTHS THREE MONTHS
ENDED ENDED
9/30/97 9/30/96 9/30/97 9/30/96
Interest income
Loans receivable $ 3,250 $ 2,859 $ 1,164 $ 1,022
U.S. Treasury Securities 225 223 63 75
U.S. Government agencies 1,241 1,105 405 369
States and political subdivisions 198 197 69 68
Federal funds sold 215 179 65 45
Deposits with banks 171 163 57 51
Total interest income 5,300 4,726 1,823 1,630
Interest expense
Deposits
Savings, NOW and money-market accts 284 265 101 88
Time deposits $100,000 and more 893 802 312 259
Other time deposits 1,749 1,583 599 551
Total interest expense 2,926 2,650 1,012 898
Net interest income 2,374 2,076 811 732
Provision for loan losses 88 53 40 23
Net interest income after provision
for loan losses 2,286 2,023 771 709
Noninterest income
Service charge on deposit accounts 314 294 108 99
Other income 107 133 36 48
Total noninterest income 421 427 144 147
Noninterest expense
Salaries & employee benefits 741 698 273 253
Occupancy & equipment expense 173 165 60 58
Other expense 474 442 162 153
Total noninterest expense 1,388 1,305 495 464
Income before income taxes 1,319 1,145 420 392
Income tax expense 387 338 147 111
Net Income $ 932 $ 807 $ 273 $ 281
Net income per share of
common stock $ 8.11 $ 7.02 $ 2.37 $2.44
CITIZENS BANCSHARES, INC AND
CITIZENS BANK, VILLE PLATTE, LOUISIANA
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED
SEPTEMBER 30, 1997 AND SEPTEMBER 30, 1996
SEPT SEPT
30, 1997 30, 1996
Cash flows from operating activities:
Net Income $ 932 $ 811
Adjustments to reconcile net income to
net cash provided by operating activities -
Provision for possible loan losses 88 53
Depreciation & Amortization 62 40
Net (accretion) of investment securities (46) (27)
(Gain) on sale of other real estate -- (18)
(Increase) in interest receivable (42) (16)
(Increase) in other assets (64) (400)
(Decrease) in interst payable (18) (1)
Increase in other liabilities 67 64
Net cash provided by operating activities 979 506
Cash flows from investing activities:
Proceeds from maturities and calls of
investment securities 10,497 14,155
Purchase of investment securities (8,292) (13,722)
(Increase) in interest-bearing
deposits with other banks (198) (197)
Proceeds from sales of foreclosed real estate -- 158
(Increase) in loans (4,710) (3,982)
Purchase of premises and equipment (1,373) (155)
Net cash (used) by investing activities (4,075) (3,743)
Cash flows from financing activities:
Increase in deposits 6,357 3,497
Net cash provided by financing activities 6,357 3,497
Net increase in cash and cash equivalents 3,261 260
Cash and cash equivalents, beginning of year 6,077 6,073
Cash and cash equivalents, end of period $ 9,338 $ 6,333
Cash paid for income taxes $ 411 $ 305
Cash paid for interest expense $ 2,944 $ 2,649
Foreclosed real estate acquired in
satisfaction of loans $ -- $ 151
Total Increase (decrease) in Fair Value of
Securities Available for Sale $ 17 $ (336)
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
SEPTEMBER 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 with ATM service at the main office.
FINANCIAL CONDITION
The Bank's total assets increased in the first nine months of 1997 from
$91,050,000 to $98,400,000, a $7,350,000 or 8.07% increase. The increase
is attributable to an increase in deposits of $6,357,000, 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 94.89% of total assets as
of September 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 $921,000 as of September 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 $88,000. 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. At September 30, 1997 past due loans to total
loans were 1.50%.
With deposits being the bank's primary source of funds, both time and
demand, in the first nine months of 1997, total deposits increased
$6,357,000 or 7.76%. Much of this increase is in time deposits which
increased by $4,545,000 or 7.50%. At September 30, 1997, the Bank's
loan to deposit ratio was 54.83%.
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 September 30, 1997 the
Bank's liquidity ratio was 49.17%.
RESULTS OF OPERATIONS
The Bank reported a net income of $932,000 or $8.11 per average share
outstanding for the first nine months of 1997. Net return on assets was
1.30% and net return on equity was 12.17%.
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. At September 30,
1997, the Bank's net interest income increased by $298,000 or 14.35%.
Much of this increase is attributed to loans receivable which increased
by 13.68%.
Noninterest income, which consists primarily of service charges and fees
on financial services had little change at September 30, 1997.
Noninterest expense as of September 30, 1997 increased by $83,000 from
September 30, 1997. Salaries increased by $43,000 or 6.16% due to
salary adjustments and overtime paid to employees for extra hours worked
due to the data processing conversation which will take place in October
of 1997. Other expenses increased by $32,000 which is mainly due to the
expenses incurred for data processing training and supplies.
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 September 30,1997, the Bank's
ratios were as follows:
Capital to Assets 9.86%
Risk Based Capital 19.32%
Tier 1 Capital 18.07%
Leverage Ratio 9.51%
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 September 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
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