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 March 31, 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 March 31, 2000
$5 Par Value
CITIZENS BANCSHARES, INC. AND SUBSIDIARY
CONTENTS
PART I. FINANCIAL INFORMATION
Condensed Consolidated Balance Sheet - March 31, 2000
Condensed Consolidated Statements of Income and Comprehensive
Income - Three months ended March 31, 2000 and 1999
Condensed Consolidated Statements of Cash Flows - Three months
ended March 31, 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 6. Exhibits and Reports on Form 8-K
PART I. FINANCIAL INFORMATION
CITIZENS BANCSHARES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
MARCH 31, 2000
(In thousands of dollars)
ASSETS
Cash and due from banks $3,166
Federal funds sold 9,755
Cash & cash equivalents 12,921
Interest-bearing deposits with banks 4,656
Securities available for sale, at fair values 29,488
Securities held to maturity 9,577
Loans receivable, net of allowance for loan
losses of $1,059 60,530
Premises and equipment 2,975
Other assets 2,145
Total assets $122,292
LIABILITIES
Demand deposits $13,101
Savings, NOW and money-market deposits 22,978
Time deposits $100,000 and more 24,896
Other time deposits 49,184
Total deposits 110,159
Accrued expenses and other liabilities 896
Total liabilities 111,055
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 10,340
Accumulated other comprehensive income (497)
Total shareholders' equity 11,237
Total liabilities and shareholders' equity $122,292
CITIZENS BANCSHARES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 2000 & 1999
(In thousands of dollars, except per share data)
2000 1999
Interest income
Loans receivable $1,356 $1,226
Taxable securities 447 384
Tax-exempt securities 101 90
Federal funds sold 150 115
Deposits with banks 73 69
Total interest income 2,127 1,884
Interest expense
Savings, NOW & money-market deposits 107 84
Time deposit $100,000 and more 406 347
Other time deposits 656 631
Total interest expense 1,169 1,062
Net interest income 958 822
Provision for loan losses 30 20
Net interest income after provision
for loan losses 928 802
Non-interest income 196 178
Non-interest expense
Salaries and employee benefits 343 329
Other expense 302 285
Total non-interest expense 645 614
Income before income taxes 479 366
Income tax expense 107 102
Net income $372 $264
Other comprehensive income, net of (153) (36)
Comprehensive income $219 $228
Net income per share of common stock $3.24 $2.30
CITIZENS BANCSHARES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(In thousands of dollars)
2000 1999
Cash flows from operating activities
Net income $372 $264
Adjustments to reconcile net income
to net cash provided by operating
activities 264 253
Net cash provided by operating
activities 636 517
Cash flows from investing activities
Maturities and calls of securities 70 1,705
Purchases of securities (4,816) (4,502)
Net decrease/(increase) in interest-
bearing deposits with banks 594 (10)
Net (increase)/decrease in loans (1,030) 489
Purchases of premises and equipment (13) (175)
Net cash (used) by investing
activities (5,195) (2,493)
Cash flows from financing activities
Net increase in deposits 8,832 6,677
Net cash provided by financing
activities 8,832 6,677
Net increase in cash and cash
equivalents 4,273 4,701
Cash and cash equivalents at
beginning of year 8,648 8,482
Cash and cash equivalents at
end of period 12,921 13,183
Income taxes paid - -
Interest paid 1,210 1,087
Foreclosed real estate acquired in
satisfaction of loans 288 -
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 $9,085,000 or 8.03%,
from $113,207,000 at December 31, 1999 to $122,292,000 at
March 31, 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 93.23% of
total assets at March 31, 2000.
Loans showed an increase of $1,688,000 or 2.87% at March 31,
2000. There was an increase in securities of $3,596,000 or
10.14% at March 31, 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 $1,059,000 at March 31,
2000, which represents 1.72% of total loans outstanding on
that date. Provisions to the allowance for loan losses, which
were charged to net income as of March 31, 2000, 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, 2000, past due loans to
total loans were 1.56%.
With interest earned on investment securities being one of the
primary sources of income, investment securities increased by
$3,596,000 or 10.14% at March 31, 2000. The following chart
shows what our portfolio is made up of as of March 31, 2000:
U.S. Government Agencies 47.69%
Mortgage-Backed Securities 30.83%
Municipal Securities 21.48%
At of March 31, 2000, securities classified as "held to
maturity" had an amortized cost/recorded value of $9,577,000
and a fair value of $9,420,000; securities classified as
"available for sale" had a fair value of $29,488,000 and an
amortized cost of $30,241,000.
With deposits being the Bank's primary source of funds, both
time and demand, total deposits increased $8,832,000 or 8.72%
from $101,327,000 at December 31, 1999 to $110,159,000 at
March 31, 2000. Money-market accounts increased by $3,219,000
or 79.80%.
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 March
31, 2000, the Bank's liquidity ratio was 41.16%.
RESULTS OF OPERATIONS
For the first quarter of 2000, the Company reported net income
of $372,000 or $3.24 per average share. Net return on assets
was 1.24% and net return on equity was 13.37%.
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 March 31, 2000, the Bank's net
interest margin was 3.28%, a slight increase from March 31,
1999, which at that time the net interest margin was 3.12%.
Net interest income increased $136,000, or 16.55% in 2000 to
$958,000 compared to $822,000 at March 31, 1999. The reason
for such increase was $243,000 or 12.90% increase in interest
income which was offset by a $107,000 or 10.08% increase in
interest expense.
Non-interest income, which consists primarily of service
charges and fees on financial services increased $18,000 or
10.12% in comparing March 31, 2000 to March 31, 1999. Service
charges on deposit accounts increased by $11,000 or 8.34%.
Non-interest expense includes salaries and employee benefits,
occupancy and equipment expense, and other expense. Non-
interest expense amounted to $645,000 at March 31, 2000, a
$31,000 or 5.05% increase from March 31, 1999. Salaries and
employee benefits being the main expense showed an increase of
$14,000 or 4.26%.
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 March 31, 2000, the Bank's
ratios were as follows:
Risk Based Capital 18.65%
Tier 1 Capital 17.39%
Leverage Ratio 9.19%
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 6. Exhibits and Reports on Form 8-K
(a) Exhibits - (3)(ii) By-laws of Citizens Bancshares,
Inc., amended in March, 2000
(27) Financial Data Schedule
(b) The Company has not filed any reports on Form 8-K during the
quarter ended March 31, 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
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Page 16 of 16
CITIZENS BANCSHARES, INC.
AMENDED AND RESTATED BYLAWS
Section 1. OFFICES
1.1 The principal office shall be located at 841 West Main
Street, Ville Platte, Louisiana.
1.2 The corporation may also have offices at such other
places as the Board of Directors may from time to time determine
or the business of the corporation may require.
Section 2. SHAREHOLDERS' MEETINGS
2.1 All meetings of the shareholders shall be held at the
principal office of the corporation or at such other place,
within or without the State of Louisiana, as may be designated by
the Board of Directors.
2.2 (a) The annual meeting of the shareholders shall be
held on the second Thursday of April in each year, or if said day
be a legal holiday, then on the next succeeding day not a legal
holiday, at 2:30 p.m., or on such other date or at such other
time as the Board of Directors shall designate for the purpose of
electing directors and for the transaction of such other business
as may properly be brought before the meeting. There will be no
cumulative voting with respect to the election of directors.
Directors shall be elected by plurality vote.
(b) At any annual meeting of shareholders, only such
new business shall be conducted, and only such proposals shall be
acted upon, as shall have been properly brought before the
meeting (i) by, or at the direction of, the Board of Directors or
(ii) by any shareholders entitled to vote at such meeting. Only
such new business and only such proposals as have been raised in
accordance with the procedures set forth in this Section 2.2 (b)
shall be eligible for action or consideration at an annual
meeting.
In order for a proposal to be properly brought before
an annual meeting by a shareholder, the shareholder must have
given timely notice thereof in writing to the Secretary of the
corporation as set forth in this Section 2.2 (b). To be timely, a
shareholder's notice must be delivered to, or mailed and received
at, the principal executive office of the corporation not less
than thirty (30) calendar days prior to the date of the
originally scheduled meeting, regardless of any postponements,
deferrals or adjournments of that meeting to a later date.
However, if less than forty (40) calendar days' notice or prior
public disclosure of the date of the scheduled meeting is given
or made by the corporation, the shareholder's notice must be
received not later than the close of business on the tenth
calendar day following the earlier of the day on which
notice of the meeting was mailed or the day on which public
disclosure was made. A shareholder's notice shall set forth as to
each matter the shareholder proposes to bring before the meeting
(a) a description of the proposal desired to be brought before
the meeting and the reasons for conducting such business at the
meeting, (b) the name and address, as they appear on the
corporation's books, of the shareholders proposing such business,
(c) the number of shares of the corporation beneficially owned by
the shareholder on the date of the shareholder's notice and (d)
any financial or other interest of the shareholder in the
proposal.
2.3 Written notice of the annual meeting shall be
given to each shareholder entitled to vote at least ten (10), but
not more than sixty (60), days prior to the meeting. Notice of
the annual meeting need not state the purpose thereof, unless
action is to be taken at the meeting as to which notice is
required by law.
2.4 At every meeting of shareholders, a list of
shareholders entitled to vote, arranged alphabetically and
certified by the Secretary or by the agent of the corporation
having charge of transfers of shares, showing the number and
class of shares held by each such shareholder on the record date
for the meeting, shall be produced on the request of any
shareholder.
2.5 Special meetings of the shareholders, for any
purpose or purposes, may be called by the president or the Board
of Directors. Special meetings shall be called by the Chairman of
the Board, the President, or Secretary or upon the written
request of any two (2) directors or of any shareholder or
shareholders holding in the aggregate not less than one-fifth of
the total voting power. Such a meeting shall be held at the
registered office of the corporation at such time as the
Secretary may fix, not less than fifteen (15) nor more than sixty
(60) days after the receipt of said request, and if the Secretary
shall neglect or refuse to fix such time or to give notice of the
meeting, the shareholder or shareholders making the request may
do so.
2.6 Except as otherwise provided by law, the presence, in
person or by proxy, of the holders of a majority of the total
voting power shall constitute a quorum at all meetings of the
shareholders.
2.7 When a quorum is present at any meeting, the vote of
the holders of a majority of the stock having voting power
present in person or represented by proxy shall decide any
question brought before such meeting, unless the question is one
upon which, by express provision of law or the Articles of
Incorporation, a different vote is required, in which case, such
express provision shall govern and control the decision of such
question.
2.8 At any meeting of the shareholders, every
shareholder having the right to vote shall be entitled to vote in
person or by proxy. Proxies must be duly authorized in writing,
signed by the shareholders granting them, and filed with the
Secretary at or before the meeting. Proxies shall be valid for
one meeting and any adjournments of such meeting. No proxy shall
be valid more than eleven (11) months after execution thereof.
The revocation of a proxy, if revocable, shall not be effective
until written notice thereof has been given to the Secretary at
or before the meeting. The holder of a proxy need not be a
shareholder of the corporation. Each shareholder shall have one
vote for each share of stock having voting power registered in
his name on the books of the corporation at the time of the
meeting or on the record date for the determination of
shareholders entitled to vote at such meeting.
2.9 Adjournments of any annual or special meeting of
shareholders may be taken without new notice being given unless a
new record date is fixed for the adjourned meeting, but any
meeting at which directors are to be elected shall be adjourned
only from day to day until such directors shall have been
elected.
2.10 The shareholders present or represented at a duly
organized meeting shall constitute a quorum and may continue to
do business until adjournment, notwithstanding the withdrawal of
enough shareholders to leave less than a quorum as fixed in
Section 2.6 of these bylaws, or the refusal of any shareholders
present to vote.
2.11 If a meeting cannot be organized because a quorum
has not attended, those present may adjourn the meeting to such
time and place as they may determine, subject, however, to the
provisions of Section 2.9 hereof. In the case of any meeting
called for the election of directors, those who attend the second
of such adjourned meetings, although less than a quorum as fixed
in Section 2.6 hereof, shall nevertheless constitute a quorum for
the purpose of electing directors.
Section 3. DIRECTORS
3.1 The business and affairs of the corporation shall be
managed and administered by a Board of Directors of not less than
five (5) and note more than thirty (30) natural persons, the
exact number to be set by the shareholders from time to time.
The Board of Directors may exercise all such powers of the
corporation and do all such lawful acts and things which are not
by law, the Articles of Incorporation, or these bylaws directed
or required to be done by the shareholders. The directors shall
be elected by written ballot at the annual meeting of the
shareholders, or at a special meeting held for that purpose, and
shall hold office for one year or until their successors are
chosen and have qualified. The shareholders by vote of a majority
of the total voting power at any special meeting called for the
purpose, may remove from office any one or more of the directors,
notwithstanding that his or their terms of office may not have
expired, and may forthwith at such meeting proceed to elect a
successor for the unexpired term. No director need be a
shareholder.
3.2 In the event that a directorship becomes vacant by
reason of death, resignation, retirement, disqualification,
removal from office, increase in the number of directors, failure
of the shareholders to elect the full number of authorized
directors, or any other cause, a majority of the remaining
directors, even if less than a quorum, may fill the vacancy at a
regular meeting or at a special meeting called for that purpose,
subject to the right of the shareholders to fill such position in
their discretion. Such successor or successors shall hold office
for the unexpired term in respect to which such vacancy occurred
or until the next election of directors.
3.3 The Board of Directors may submit nominations in
writing to the President of the corporation not less than thirty
(30) days prior to any annual meeting of the shareholders called
for the election of directors. Such nominations shall be
considered as nominations made by or on behalf of the then
existing management of the corporation.
3.4 Nominations for election to the Board of Directors at
an annual or special meeting of shareholders may also be
submitted to the Secretary of the corporation by any shareholders
of the corporation entitled to vote for the election of
directors. To be timely, a shareholder's notice must be
delivered to or mailed and received at, the principal executive
office of the corporation not less than thirty (30) calendar days
nor more than sixty (60) calendar days prior to the date of the
originally scheduled meeting, regardless of any postponements,
deferrals or adjournments of that meeting to a later date.
However, if less than forty (40) calendar days' notice or prior
public disclosure of the date of the scheduled meeting is given
or made by the corporation, the shareholder's notice must be
received not later than the close of business on the tenth
calendar day following the earlier of the day on which notice of
the meeting was mailed or the day on which such public disclosure
was made. A shareholder's notice shall set forth (a) as to each
person whom the shareholder proposes to nominate for election as
a director (i) the name, age, business address and residence
address of such person, (ii) the principal occupation or
employment of such person, (iii) the number of shares of the
corporation which are beneficially owned by such person and (b)
as to the shareholder giving the notice (i) the name and record
address of such shareholder and (ii) the number of shares of the
corporation which are beneficially owned by such shareholder. Any
nomination or nominations not made in accordance herewith shall
be disregarded by the Chairman of the meeting and the Secretary
shall disregard all votes for any such nominee.
3.5 The Board of Directors may elect or appoint a Chairman,
who shall be a member of the Board of Directors. The Chairman, if
there be one, shall preside over all meetings of the Board of
Directors and shall have the supervision of such matters, not
inconsistent with these bylaws, as may, from time to time, be
designated by the Board of Directors.
Section 4. COMPENSATION OF DIRECTORS
Directors, as such, shall receive such compensation for
their services as directors as may be fixed by resolution of the
Board of Directors, and may receive their actual expenses of
attendance, if any, for each regular or special meeting of the
Board of Directors; provided that nothing herein shall be
construed to preclude any director from serving the corporation
in any other capacity and receiving compensation for such
services.
Section 5. MEETINGS OF THE BOARD
5.1 Regular meetings of the Board of Directors may be held
at such time, date, and place within or without the State of
Louisiana as shall from time to time be determined by the Board
of Directors, provided that notice of such determination shall be
given to all directors not less than 5 days prior to such regular
meetings. A continuing resolution adopted by the Board of
Directors that specifies the time, date, and place of regular
meetings shall constitute valid notice to directors of such
regular meetings without a separate notice being necessary.
5.2 The first meeting of each newly elected Board of
Directors shall be held immediately following the annual
shareholder's meeting and at the same place as the annual
meeting, and no notice of such first meeting to the newly elected
directors shall be necessary in order legally to constitute the
meeting.
5.3 Special meetings of the Board of Directors may be
called by the President on one (1) days' notice given to each
director, either personally or by telephone, mail, or telegram.
Special meetings shall be called by the President or Secretary in
like manner and on like notice on the written request of two (2)
directors, and if the President and Secretary fail or refuse, or
are unable to call a meeting when requested by any two (2)
directors, then the two (2) directors may call the meeting on one
(1) days' written notice given to each director.
5.4 Special emergency meetings of the Board of Directors
may be called by the President or any two (2) directors on two
(2) hours' notice given to each director, either personally or by
telephone, mail, telegram, or facsimile copy. Such meeting may
be called only in the event circumstances arise which are
considered to be so serious as to require consideration by the
directors sitting as a Board of Directors, on less than the one
days' notice required for the calling of a special meeting.
5.5 A majority of the Board of Directors shall be necessary
to constitute a quorum for the transaction of business, and
except as otherwise provided by law, the Articles of
Incorporation, or these bylaws, the acts of a majority of the
directors present at a meeting at which a quorum is present shall
be the acts of the Board of Directors.
5.6 If a quorum is present when the meeting is convened,
the directors present may continue to do business, taking action
by vote of a majority of a quorum as fixed in Section 5.5 hereof,
until adjournment, notwithstanding the withdrawal of enough
directors to leave less than a quorum or the refusal of any
director present to vote.
5.7 The Board of Directors may designate one or more
committees, each committee to consist of two or more of the
directors of the corporation (and one or more directors may be
named as alternate members to replace any absent or disqualified
regular members), which, to the extent provided by resolution of
the Board of Directors or these bylaws, shall have and may
exercise the powers of the Board of Directors in the management
of the business and affairs of the corporation. Such committee
or committees shall have such name or names as may be stated in
these bylaws or as may be determined, from time to time, by the
Board of Directors. Any vacancy occurring in any such committee
shall be filled by the Board of Directors, but the President may
designate another director to serve on the committee pending
action by the Board of Directors. The Board of Directors, in its
discretion, may designate persons who are not directors to be non-
voting members of any committee created by the Board of
Directors. Each such committee shall hold office during the term
of the Board of Directors constituting it, unless otherwise
ordered by the Board of Directors. Such committees shall keep
regular minutes of their proceedings and file regular reports of
their activities with the Board of Directors.
5.8 Any action which may be taken at a meeting of the Board
of Directors or any committee thereof, may be taken by a consent
in writing signed by all of the directors or by all members of
the committee, as the case may be, and filed with the records of
proceedings of the Board of Directors or committee.
5.9 The members of the Board of Directors, or any committee
designated by the Board of Directors, may participate in and hold
a meeting of the Board of Directors, or such committee, by means
of conference telephone or similar communications equipment,
provided that all persons participating in the meeting can hear
and communicate with each other. Participation in a meeting
pursuant to this Section 5.9 shall constitute presence in person
at such meeting, except where a person participates in the
meeting for the express purpose of objecting to the transaction
of any business on the ground that the meeting is not lawfully
called or convened.
Section 6. NOTICES
6.1 Any written notice required or permitted by law, the
Articles of Incorporation or these bylaws to be given to any
shareholder or director shall be deemed to have been given to
such shareholder or director when such notice is served upon such
shareholder or director or two business days after such notice is
placed in the United States mail, postage prepaid, addresses to
such shareholder or director at his last known address, or when
received as evidenced by a written or electronic receipt, or when
a telephonic or oral notice is communicated directly to such
shareholder or director, whichever is earlier.
6.2 Whenever any notice is required to be given by law or
the Articles of Incorporation, or these bylaws, a waiver thereof
in writing signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be
deemed equivalent thereto.
Section 7. OFFICERS
7.1 The officers of the Bank shall be chosen by the Board
of Directors and shall be a President, a Secretary, and a
Treasurer. The Directors may elect a Chief Executive Officer,
and Executive Vice President, a Chief Operating Officer, a Chief
Financial Officer, one or more Vice Presidents and one or more
Assistant Secretaries. Any two officers may be held by one
person, provided that no person holding more than one office may
sign, in more than one capacity, any certificate or other
instrument required by law to be signed by two officers.
7.2 The Board of Directors may appoint such other officers
and agents as it shall deem necessary, who shall serve for such
terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the Board of Directors.
7.3 The salaries of all the officers of the corporation
shall be fixed by the Board of Directors.
7.4 The officers of the corporation shall hold office for a
term of one year or until their respective successors shall have
been elected and qualified in their stead, provided, however,
that any officer may be removed by the Board of Directors at any
time, with or without cause. If the office of any officer
becomes vacant for any reason, the vacancy may be filled by the
Board of Directors.
Section 8. THE PRESIDENT
The President shall be the chief executive officer of
the corporation unless another person has been elected as Chief
Executive Officer; he shall preside at all meetings of the
shareholders and shall have general and active management of the
business of the corporation, and shall see that all orders and
resolutions of the Board of Directors are carried into effect.
If a Chairman of the Board of Directors has not been elected, the
President, if a director, shall preside at all meetings of the
Board of Directors. The President shall also execute bonds,
mortgages, or other contracts, except where required or permitted
by law to be otherwise signed or executed and except where the
signing and execution thereof shall be expressly delegated by the
Board of Directors to some other officer or agent of the
corporation.
Section 9. THE CHIEF EXECUTIVE OFFICER
The Chief Executive Officer, if any, shall be
responsible for the general operations of the corporation and its
subsidiaries. The Chief Operating Officer shall report to the
Chief Executive Officer and the Chief Executive Officer shall
report to the President. The duties of the Chief Executive
Officer shall be prescribed by the Board of Directors.
Section 10. THE VICE PRESIDENTS
The Executive Vice President and the Vice Presidents
(if any), in the order of their seniority, shall, in the absence
or disability of the President, perform the duties and exercise
the powers of the President, and shall perform such other duties
as the President or the Board of Directors shall prescribe.
Section 11. THE CHIEF OPERATING OFFICER
The Chief Operating Officer, if any, shall oversee the
day-to-day operations of the corporation. The Treasurer and the
Chief Financial Officer, if any, shall report to the Chief
Operation Officer. The Chief Operating Officer shall perform
such other duties as the Board of Directors may prescribe. The
Chief Operating Officer shall also execute bonds, mortgages, or
other contracts, except where required or permitted by law to be
otherwise signed or executed and except where the signing and
execution thereof shall be expressly delegated by the Board of
Directors to some other officer or agent of the corporation.
Section 12. THE TREASURER AND THE CHIEF FINANCIAL OFFICER
As determined by the Board of Directors, the Treasurer
or the Chief Financial Officer, if any, shall have the custody of
the corporate funds and securities and shall keep full and
accurate accounts of receipts and disbursements in books
belonging to the corporation and shall deposit all moneys and
other valuable effects in the name and to the credit of the
corporation in such depositories as may be designated by the
Board of Directors. He shall prepare and maintain the various
financial records of the Bank. Such officer shall keep a proper
accounting of all receipts and disbursements and shall disburse
the funds of the corporation only for proper corporate purposes
or as may be ordered by the Board of Directors and render to the
President and the Board of Directors at the regular meetings of
the Board of Directors, or whenever they may require it, an
account of all transactions as such officer and of the financial
condition of the corporation.
Section 13. THE SECRETARY
The Secretary shall attend all sessions of the Board of
Directors and all meetings of the shareholders and record all
votes and the minutes of all proceedings in a book to be kept for
that purpose. He shall give, or cause to be given, notice of all
meetings of the shareholders and special meetings of the Board of
Directors, and shall perform such other duties as may be
prescribed by the Board of Directors or President, under whose
supervision he shall be. He shall keep in safe custody the seal
of the corporation, if any, and affix the same to any instrument
requiring it.
Section 14. ASSISTANT SECRETARIES
Assistant Secretaries, if any, in order of their
seniority, shall, in the absence or disability of the Secretary,
perform the duties or exercise the powers of the Secretary and
shall perform such other duties as the Board of Directors shall
prescribe.
Section 15. ADDITIONAL OFFICERS
In case of the absence of any officer of the
corporation, or for any other reason that the Board of Directors
may deem sufficient, if not otherwise provided in these bylaws,
the Board of Directors may transfer the powers or duties of that
officer to any other officer or to any director or employee of
the corporation; provided that a majority of the full Board of
Directors concurs in such action.
Section 16. CERTIFICATES OF STOCK
16.1 The certificates for each class of stock of the
corporation shall be numbered and shall be entered in the books
of the corporation as they are issued. Every certificate of
stock shall be signed by the President or a Vice-President and
the Treasurer or the Secretary. Each stock certificate shall
include the holder's name, the number of shares owned by such
holder, and shall be sealed with the corporation's seal, if there
is a seal. If any stock certificate is signed by a transfer
agent or by a registrar, other than the corporation itself or an
employee of the corporation, the signature of any such officer
may be a facsimile.
16.2 Any two officers of the corporation may direct a new
certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the corporation
where the holder of record of the certificate:
(a) Makes proof in affidavit form that it has been
lost, destroyed or wrongfully taken;
(b) Requests the issue of a new certificate before the
corporation has notice that the certificate has been acquired by
purchase for value in good faith and without notice of any
adverse claims;
(c) Gives a bond in such form, and with such surety or
sureties as the corporation may direct, to indemnify the
corporation against any claim that might be made on account of a
loss, destruction or theft of the certificate; and
(c) Satisfies any other reasonable requirements imposed by the
corporation.
16.3 When a certificate has been lost, apparently destroyed,
or wrongfully taken and the holder of record fails to notify the
corporation within a reasonable time after he has notice of it,
if the corporation registers a transfer of the shares represented
by such certificate before receiving such notification, the
holder of record is precluded from making any claim against the
corporation for the transfer of for the new certificate.
16.4 Upon surrender to the corporation of a certificate for
shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person
entitled thereto, cancel the old certificate and record the
transaction upon its books.
Section 17. RECORD DATE
For the purpose of determining shareholders entitled to
notice of and to vote at a meeting, to receive a dividend, to
receive or exercise subscription or other rights, to participate
in a reclassification of stock, or in order to make a
determination of shareholders for any other proper purpose, the
Board of Directors may fix in advance a record date for the
determination of shareholders for such purpose, such date to be
not more than sixty (60) days prior to the date on which the
action is to be taken. If fixed for the purpose of determining
shareholders entitled to notice of and to vote at a meeting, the
record date shall be not less than ten days (10) prior to the
date on which the action requiring the determination of
shareholders is to be taken. Except as the Board of Directors
may provide otherwise, if no record date is fixed for the purpose
of determining shareholders (a) entitled to notice of and to vote
at a meeting, the close of business on the day before the notice
of the meeting is mailed, or if notice is waived, the close of
business on the day before the meeting, shall be the record date
for such purpose, or (b) for any other purpose, the close of
business on the day on which the Board of Directors adopts the
resolution relating thereto shall be the record date for such
purpose.
Section 18. REGISTERED SHAREHOLDERS
Except as otherwise provided by law, the corporation
and its directors, officers and agents, may recognize and treat a
person registered on its records as the owner of shares, as the
owner in fact thereof for all purposes, and as the person
exclusively entitled to have and to exercise all rights and
privileges incident to the ownership of such shares. Rights
under this Section shall not be affected by any actual or
constructive notice which the corporation or any of its
directors, officers or agents, may have to the contrary.
Section 19. DIVIDENDS
19.1 Except as otherwise provided by law or the Articles of
Incorporation, dividends upon the stock of the corporation may be
declared by the Board of Directors at any regular or special
meeting. Dividends may be paid in cash, in property, or in
shares of stock.
19.2 Before the payment of any dividend, there may be set
aside out of any funds of the corporation available for dividends
such sum or sums as the Board of Directors from time to time, in
their absolute discretion, think proper as a reserve fund to meet
contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the corporation, or for such other
purpose or purposes as the Board of Directors shall think
conducive to the interests of the corporation, and the Board of
Directors may modify or abolish any such reserve in the manner in
which it was created.
Section 20. SPECIAL CORPORATE ACTS
20.1 All checks, drafts, notes, bonds, bills of exchange and
orders for the payment of money of the corporation, all deeds,
mortgages and other written contracts and agreements to which the
corporation may be a party; and all assignments or endorsements
or stock certificates, registered bonds or other securities owned
by the corporation, shall, unless otherwise directed by the Board
of Directors, or unless otherwise required by law, be signed by
the President or by any two (2) of the following officers who are
different persons: President, Chief Operating Officer, Vice
Presidents, Secretary, or Chief Financial Officer. The Board of
Directors may, however, authorize any one of such officers to
sign and any such instruments for and on behalf of the
corporation, without the necessity of countersignatures; may
designate officers or employees of the corporation, other than
those named above, who may, in the name of the corporation, sign
such instruments; and may authorize the use of facsimile
signatures of any such persons.
20.2 Any shares of stock issued by any other corporation and
owned by or controlled by the corporation may be voted at any
shareholders' meeting of the other corporation by the President
of the corporation, if he is present, or in his absence, by any
Vice President of the corporation who may be present.
Section 21. FISCAL YEAR
The Board of Directors may adopt for and on behalf of
the corporation a fiscal year or a calendar year.
Section 22. CORPORATE SEAL
The Board of Directors may adopt a corporate seal,
which seal shall have inscribed thereon the name of the
corporation. Said seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.
Failure to affix the seal shall not, however, affect the validity
of any instrument.
Section 23. GENDER
All pronouns and variations thereof used in these
Bylaws shall be deemed to refer to the masculine, feminine or
neuter gender, singular or plural, as the identify of the person,
persons, entity or entities referred to require.
Section 24. INDEMNIFICATION
The corporation shall indemnify its directors and
officers, and may indemnify its employees, to the fullest extent
permitted by law. The corporation may, upon affirmative vote of
a majority of its Board of Directors, purchase insurance to
indemnify its directors, officers, and other employees to the
extent that such indemnification is allowed by applicable law and
the Articles of Incorporation. Such insurance may, but need not,
be for the benefit of all directors, officers, or employees.
Section 25. CONFIRMATION AND RATIFICATION OF CONTACTS
25.1 (a) No contract or other transaction between the
corporation and one or more of its directors or officers, or
between the corporation and any other business, non-profit or
foreign corporation, partnership, or other organization in which
one or more of the corporation's directors or officers are
directors or officers or have a financial interest, shall be void
or voidable solely because of such relationship, or solely
because the common or interested director or officer was present
at or participated in the meeting of the Board of Directors or
committee thereof which authorized the contract or other
transaction, or solely because his or their votes were counted
for such purpose, if: (a) the material facts as to his
relationship or interest and as to the contract or other
transaction were known or disclosed to the Board of Directors or
committee thereof, and such Board of Directors or committee in
good faith authorized the contract or other transaction by a vote
sufficient for such purpose without counting the vote of the
interested director or directors, or (b) the material facts as to
his interest and as to the contract or other transaction were
known or disclosed to the shareholders entitled to vote thereon,
and the contract or other transaction was approved in good faith
by vote of the shareholders, or (c) the contract or other
transaction was fair as to the corporation as of the time it was
authorized, approved or ratified by the Board of Directors, a
committee thereof, or the shareholders.
(b) Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the Board of
Directors or of a committee thereof which authorized the contract
or other transaction.
25.2 Any contract, transaction, or act of the corporation or
of the Board of Directors or any committee thereof which shall be
ratified by a majority of the shareholders of the corporation,
voting either in person or by proxy at any annual meeting, or at
any special meeting called for such purpose, shall be as valid
and binding as though ratified by every shareholder of the
corporation; provided, however, that any failure of the
shareholders to approve or ratify such contract, transaction, or
act, when and if submitted, shall not be deemed in any way to
invalidate the same or to deprive the corporation, its officers
or directors of their right to proceed with such contract,
transaction or action.
Section 26. AMENDMENTS TO BYLAWS
26.1 These bylaws may be amended or repealed by a majority
vote of the Board of Directors at any regular or special meeting
of the Board of Directors, or by the majority vote of those
shareholders present and entitled to vote, in person or by proxy,
at any annual or special meeting of the shareholders, provided
that notice of any proposed amendment to or repeal of these
bylaws be contained in the notice of such annual or special
meeting of the shareholders.
26.2 If any provision or provisions of these bylaws are
determined by a court or administrative agency of competent
jurisdiction to be invalid and contrary to any existing or future
law or regulation, such invalidity shall not impair the operation
of or affect the remaining provisions hereof.
The foregoing bylaws were duly adopted by the Board of
Directors of Citizens Bancshares, Inc. on March 14, 2000.
_____________________________
Secretary
