UNITED STATES
SECURITIES AND EXCHANGE COMMSSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
Commission file number 0-12425
Citizens Bancshares, Inc.
(Exact name of small business issuer
as specified in its charter)
Louisiana 72-0759135
(State of other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
841 West Main Street, Ville Platte, LA 70586
(Address of principal executive offices)
Issuer's telephone number, including area code: 337-363-5643
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
Class of Number of Shares
Common Equity Outstanding As of
Common stock, 114,855 June 30, 2000
$5 Par Value
CITIZENS BANCSHARES, INC. AND SUBSIDIARY
CONTENTS
PART I. FINANCIAL INFORMATION
Condensed Consolidated Balance Sheet - June 30, 2000
Condensed Consolidated Statements of Income and Comprehensive
Income - Six months ended June 30, 2000 and 1999
Condensed Consolidated Statements of Cash Flows - Six months
ended June 30, 2000 and 1999
Note to Condensed Consolidated Financial Statements
Management's Discussion and Analysis of Financial Condition and
Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holdings
Item 6. Exhibits and Reports on Form 8-K
PART I. FINANCIAL INFORMATION
CITIZENS BANCSHARES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
June 30, 2000
(In thousands of dollars)
ASSETS
Cash and due from banks $2,673
Federal funds sold 9,750
Cash & cash equivalents 12,423
Interest-bearing deposits with banks 2,971
Securities available for sale, at fair values 29,291
Securities held to maturity 8,842
Loans receivable, net of allowance for loan
losses of $1,083 64,587
Premises and equipment 2,950
Other assets 2,211
Total assets $123,275
LIABILITIES
Demand deposits $10,919
Savings, NOW and money-market deposits 21,219
Time deposits $100,000 and more 28,921
Other time deposits 49,663
Total deposits 110,722
Accrued expenses and other liabilities 926
Total liabilities 111,648
SHAREHOLDERS' EQUITY
Common Stock $5 par value, 300,000 shares
authorized, 115,000 shares issued and
outstanding 575
Additional paid-in capital 825
Treasury stock at cost, 145 shares (6)
Retained earnings 10,707
Accumulated other comprehensive income (474)
Total shareholders' equity 11,627
Total liabilities and shareholders' equity $123,275
CITIZENS BANCSHARES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME (UNAUDITED)
SIX AND THREE MONTHS ENDED JUNE 30, 2000 & 1999
(In thousands of dollars, except per share data)
Year-to-Date Quarter-to-Date
2000 1999 2000 1999
Interest income
Loans receivable $2,802 $2,519 $1,445 $1,293
Taxable securities 934 786 487 401
Tax-exempt securities 194 180 93 90
Federal funds sold 271 226 121 111
Deposits with banks 133 139 60 70
Total interest income 4,334 3,850 2,206 1,965
Interest expense
Savings, NOW & money-
market deposits 219 163 112 79
Time deposit $100,000 and
more 819 728 413 381
Other time deposits 1,334 1,280 678 648
Total interest expense 2,372 2,171 1,203 1,108
Net interest income 1,962 1,679 1,003 857
Provision for loan losses 68 47 38 27
Net interest income after
provision for loan losses 1,894 1,632 965 830
Non-interest income 377 345 181 167
Non-interest expense
Salaries and employee
benefits 696 643 353 315
Other expense 582 558 280 273
Total non-interest expense 1,278 1,201 633 588
Income before income taxes 993 776 513 409
Income tax expense 250 216 144 114
Net income $743 $560 $369 $295
Other comprehensive income, (130) (228) 23 (195)
net of tax
Comprehensive income $613 $332 $392 $100
Net income per share of $6.47 $4.88 $3.21 $2.57
common stock
CITIZENS BANCSHARES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(In thousands of dollars)
2000 1999
Cash flows from operating activities
Net income $743 $560
Adjustments to reconcile net income
to net cash provided by operating
activities 306 406
Net cash provided by operating
activities 1,049 966
Cash flows from investing activities
Maturities and calls of securities 175 2,348
Purchases of securities (5,451) (7,953)
Net decrease/(increase) in interest-
bearing deposits with banks 2,279 (306)
Net (increase)/decrease in loans (3,627) (1,520)
Purchases of premises and equipment (43) (284)
Net cash (used) by investing
activities (6,667) (7,715)
Cash flows from financing activities
Net increase in deposits 9,393 8,873
Net cash provided by financing
activities 9,393 8,873
Net increase in cash and cash
equivalents 3,775 2,124
Cash and cash equivalents at
beginning of year 8,648 8,482
Cash and cash equivalents at
end of period $12,423 $10,606
Income taxes paid $259 $161
Interest paid $2,290 $2,138
Foreclosed real estate acquired in
satisfaction of loans $378 $ -
CITIZENS BANCSHARES, INC. AND SUBSIDIARY
NOTE TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The interim financial statements are prepared pursuant to the
requirements for reporting on Form 10-QSB. 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, 2000.
CITIZENS BANCSHARES, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
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
Total assets of the Company increased by $10,068,000 or 8.89%,
from $113,207,000 at December 31, 1999 to $123,275,000 at June
30, 2000. The increase is attributed to an increase in loans
and deposits.
Earning assets, which include loans, investment securities,
federal funds sold, and deposits in other banks were 93.65% of
total assets at June 30, 2000.
Loans showed an increase of $5,745,000 or 9.76% at June 30,
2000. There was an increase in securities of $2,664,000 or
7.51% at June 30, 2000.
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 $1,083,000 at June 30, 2000,
which represents 1.68% of total loans outstanding on that
date. Provisions to the allowance for loan losses, which were
charged to net income as of June 30, 2000, totaled $68,000.
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 June 30, 2000, past due loans to total loans
were 1.10%.
With interest earned on investment securities being one of the
primary sources of income, investment securities increased by
$2,664,000 or 7.51% at June 30, 2000. The following chart
shows what our portfolio is made up of as of June 30, 2000:
U.S. Government Agencies 50.85%
Mortgage-Backed Securities 28.99%
Municipal Securities 20.16%
As of June 30, 2000, securities classified as "held to
maturity" had an amortized cost/recorded value of $8,842,000
and a fair value of $8,697,000; securities classified as
"available for sale" had a fair value of $29,291,000 and an
amortized cost of $30,010,000.
With deposits being the Bank's primary source of funds, both
time and demand, total deposits increased $9,395,000 or 9.27%
from $101,327,000 at December 31, 1999 to $110,722,000 at June
30, 2000. Money-market accounts increased by $2,399,000 or
59.46%.
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. At June
30, 2000, the Bank's liquidity ratio was 37.23%.
RESULTS OF OPERATIONS
For the second quarter of 2000, the Company reported net
income of $743,000 or $6.46 per average share. Net return on
assets was 1.21% and net return on equity was 12.78%.
Net interest income is the Company'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 June 30, 2000, the Bank's net
interest margin was 3.34%, a slight increase from June 30,
1999, which at that time the net interest margin was 3.11%.
Net interest income increased $275,000, or 15.85% in 2000 to
$2,010,000 compared to $1,735,000 at June 30, 1999. The
reason for such increase was $476,000 or 12.19% increase in
interest income which was offset by a $201,000 or 9.26%
increase in interest expense.
Non-interest income, which consists primarily of service
charges and fees on financial services increased $32,000 or
9.28% in comparing June 30, 2000 to June 30, 1999. Service
charges on deposit accounts increased by $26,000 or 10.00%.
Non-interest expense includes salaries and employee benefits,
occupancy and equipment expense, and other expense. Non-
interest expense amounted to $1,278,000 at June 30, 2000, a
$77,000 or 6.41% increase from June 30, 1999. Salaries and
employee benefits being the main expense showed an increase of
$53,000 or 8.24%.
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. At June 30, 2000, the Bank's
ratios were as follows:
Risk Based Capital 18.36%
Tier 1 Capital 17.10%
Leverage Ratio 9.88%
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.
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 4. Submission of Matters to a Vote of Security Holders
Pursuant to a notice of meeting mailed March 13,
2000 accompanied by a proxy statement, the annual meeting of
shareholders was held April 13, 2000. Proxies for the annual
meeting were solicited pursuant to Regulation 14A. There was
no solicitation in opposition to management's nominees for the
Board of Directors as listed in the Proxy Statement. All of
the following nominees were duly nominated and elected:
Carl W. Fontenot K. Wayne Vidrine
Eugene Fontenot E.J. Deville
Jules Hebert Fredrick Phillips
Joseph West Roderick Young
C. Brent Coreil Bryan L. Fontenot
Anita F. Melancon Brod Veillon
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 June 30, 2000.
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 PRESIDENT-TREASURER
