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, 1998 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, 1998
CITIZENS BANCSHARES, INC. AND
CITIZENS BANK, VILLE PLATTE, LOUISIANA
INDEX
PART I. FINANCIAL INFORMATION PAGE
Condensed Consolidated Balance Sheets -
March 31, 1998 and December 31, 1997.......................3
Condensed Consolidated Statements of Income -
Three months ended March 31, 1998
and March 31, 1997.........................................4
Condensed Consolidated Statements of Cash Flows -
Three months ended March 31, 1998
and March 31, 1997.........................................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, 1998 AND DECEMBER 31, 1997 (UNAUDITED)
(in thousands of dollars)
03/31/98 12/31/97
ASSETS
Cash and due from banks $ 2,133 $ 1,848
Federal funds sold 8,550 6,900
CASH AND CASH EQUIVALENTS 10,683 8,748
Interest-bearing deposits with banks 5,153 4,758
Securities available for sale,
at fair values 26,606 25,316
Securities held to maturity, fair values
of $8,794 & $8,399 8,723 8,329
TOTAL SECURITIES 35,329 33,645
Loans receivable, net of allowance for
loan losses of $957 in 1998 and
$937 in 1997 45,969 46,051
Accrued interest receivable 810 960
Premises and equipment, net 2,931 3,064
Foreclosed real estate 47 14
Deferred tax asset -- 68
Other assets 918 649
TOTAL ASSETS $101,841 $97,957
LIABILITIES
Demand deposits $10,772 $ 9,308
Savings, NOW and money-market deposits 14,203 13,261
Time deposits $100,000 or more 22,851 22,397
Other time deposits 43,177 42,467
TOTAL DEPOSITS 91,003 87,433
Accrued interest payable 532 568
Accrued expenses and other liabilities 608 482
TOTAL LIABILITIES 92,143 88,483
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 8,287 8,027
Unrealized gain on Available-for-Sale
Securities, net of applicable deferred
income taxes 11 47
TOTAL SHAREHOLDERS' EQUITY 9,698 9,474
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $101,841 $97,957
CITIZENS BANCSHARES, INC. AND
CITIZENS BANK, VILLE PLATTE, LOUISIANA
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(in thousands of dollars, except per share data)
THREE MONTHS
ENDED
03/31/98 03/31/97
Interest income
Loans receivable $ 1,094 $ 1,005
U.S. Treasury Securities 41 80
U.S. Government agencies 393 411
States and political subdivisions 71 64
Federal funds sold 131 86
Deposits with banks 73 56
Total interest income 1,803 1,702
Interest expense
Deposits
Savings, NOW and money-market accts 104 89
Time deposits $100,000 and more 313 298
Other time deposits 605 556
Total interest expense 1,022 943
Net interest income 781 759
Provision for loan losses 30 23
Net interest income after provision
for loan losses 751 736
Noninterest income
Service charge on deposit accounts 110 100
Insurance Commission 20 17
Other income 19 15
Total noninterest income 149 132
Noninterest expense
Salaries & employee benefits 267 236
Occupancy & equipment expense 109 56
Other expense 143 155
Total noninterest expense 519 447
Income before income taxes 381 421
Income tax expense 120 105
Net Income $ 261 $ 316
Net income per share of
common stock $ 2.27 $2.75
CITIZENS BANCSHARES, INC AND
CITIZENS BANK, VILLE PLATTE, LOUISIANA
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED
MARCH 31, 1998 AND MARCH 31, 1997
MARCH MARCH
31, 1998 31, 1997
Cash flows from operating activities:
Net Income $ 260 $ 316
Adjustments to reconcile net income to
net cash provided by operating activities -
Provision for possible loan losses 30 23
Depreciation & Amortization 44 21
Net (accretion) of investment securities -- (25)
(Gain) on sale of other real estate -- --
(Increase) in interest receivable 150 3
(Increase) in other assets (269) (49)
(Decrease) in interest payable (36) (49)
Increase in other liabilities 126 115
Net cash provided by operating activities 305 355
Cash flows from investing activities:
Proceeds from maturities and calls of
investment securities 7,155 4,046
Purchase of investment securities (9,475) (5,294)
(Increase) in interest-bearing
deposits with other banks (395) (198)
Proceeds from sales of foreclosed real estate -- --
Decrease (increase) in loans 656 (363)
Purchase of premises and equipment 119 (183)
Net cash (used) by investing activities (1,940) (1,992)
Cash flows from financing activities:
Increase in deposits 3,570 3,656
Net cash provided by financing activities 3,570 3,656
Net increase in cash and cash equivalents 1,935 2,019
Cash and cash equivalents, beginning of year 8,748 6,077
Cash and cash equivalents, end of period $10,683 $ 8,096
Cash paid for income taxes $ --- $ ---
Cash paid for interest expense $ 1,058 $ 991
Foreclosed real estate acquired in
satisfaction of loans $ 47 $ --
Total Increase (decrease) in Fair Value of
Securities Available for Sale $ (55) $ (135)
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,
1997 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, 1998.
CITIZENS BANCSHARES, INC. AND
CITIZENS BANK, VILLE PLATTE, LOUISIANA
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MARCH 30, 1998
GENERAL STATEMENT
For a comprehensive review of financial condition and results of
operations of Citizens Bancshares, Inc. (the Company), this discussion
and analysis 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 quarter of 1998 from
$97,957,000 to $101,841,000, a $3,884,000 or 3.97% increase. Much of the
increase is attributable to an increase in deposits of $3,570,000, 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 93.43% of total assets as
of March 31, 1998.
The Bank maintains an allowance for loan losses against which impaired
or uncollectible loans are charged. The balance in the allowance for
loan losses was $957,000 as of March 31, 1998, which represents a 2.04%
of total loans outstanding on that date. Provisions to the allowance
for loan losses, which were charged to net income in the first quarter
of 1998, totaled $30,000. 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. At March 31, 1998 past due loans
to total loans were 1.41%.
Another primary source of income is interest earned on investment
securities. The Bank's investment objectives and activities are guided
by a written Investment Policy. As of March 31, 1998, securities
classified as "held-to-maturity" had an amortized cost/recorded value of
$8,723,000 and a fair value of $8,794,000; securities classified as
"available-for-sale" had a fair recorded value of $26,606,000 and an
amortized cost of $26,590,000.
With deposits being the bank's primary source of funds, both time and
demand, in the first quarter of 1998, total deposits increased
$3,570,000 or 4.08%. Noninterest-bearing deposits increased by
$1,464,000 and interest-bearing deposits increased by $2,106,000. As of
March 31, 1998, the Bank's Loan to Deposit Ratio was 51.56%.
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 available 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 purchased 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, 1998 the Bank's
liquidity ratio was 52.00%.
RESULTS OF OPERATIONS
The Bank reported a net income of $261,000 or $2.27 per average share
outstanding for the first quarter of 1998. Net return on assets was
1.03% and net return on equity was 9.88%.
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 March 31,
1998, the Bank's net interest income increased slightly by $22,000.
Noninterest income, which consists primarily of service charges and fees
on financial services had a slight increase of $17,000 in the first
quarter of 1998.
Noninterest expense as of March 31, 1998 increased by $72,000 from
March 31, 1997. Most of this increase is attributed to occupancy and
equipment expense due to the completion of the addition to the main
office building and the data processing conversation. Depreciation
Banking House and Ad Valorem Taxes increased by approximately $15,000.
Depreciation Furniture and Fixture and Furniture and Fixture Maintenance
increased by $28,000.
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 31,1998, the Bank's ratios
were as follows:
Capital to Assets 9.59%
Risk Based Capital 20.00%
Tier 1 Capital 18.75%
Leverage Ratio 9.34%
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, 1998.
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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