UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 1996
Commission File Number: 000-18507
Citi-Bancshares, Inc.
(Exact name of registrant as specified in its charter)
Florida 59-2298309
(State or Other Jurisdiction of (Internal Revenue Service Employer
Incorporation or Organization) Identification number)
1211 N. Boulevard W., Leesburg, Florida 34748
(Address of principal executive offices) (Zip Code)
904-787-5111
(Registrant's telephone number, including area code)
Indicate By Check Mark Whether The Registrant:
(1) Has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months ( or for
such shorter period that the registrant was required to file such
reports), and
(2) Has been subject to such filing requirements for the past 90 days.
YES X NO ___
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
4,472,414
<PAGE>
Part I - Financial Information
Item 1. Financial Statements.
See attached.
Item 2. Management's Discussion and Analysis of Financial
Conditions and Results of Operations
See attached.
Part II - Other Information
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
Not Applicable.
Item 3. Defaults upon Senior Securities
Not Applicable.
Item 4. Submissions of Matters to a Vote of Security Holders
Not Applicable.
Item 5. Other Information
See attached.
Item 6. Exhibits and Reports on Form 8-K
A Form 8-K-A dated April 19, 1996 was filed by Citi-Bancshares,
Inc. during the second quarter of 1996.
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.
CITI-BANCSHARES, INC.
(REGISTRANT)
DATED: August 2, 1996 By /s/ K. W. Mullis
K. W. Mullis
PRESIDENT
DATED: August 2, 1996 By /s/ T. Michael Killingsworth
T. Michael Killingsworth
SECRETARY
<PAGE>
CONDENSED CONSOLIDATED BALANCE SHEET
CITI-BANCSHARES, INC. AND SUBSIDIARY - LEESBURG, FLORIDA
(IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS
(Unaudited) (Audited) (Unaudited)
Month End as Year End as Month End as
of 6/30/96 of 12/31/95 of 6/30/95
<S> <C> <C> <C>
Cash and Demand Deposits Due From Banks $14,164 $17,833 $14,694
Investment Securities ( Market Value 6/30/96 -
$209,319; 12/31/95 - $228,916; 6/30/95 -
$219,817) 209,319 228,916 218,352
Fed Funds Sold 4,970 7,392 12,835
Loan Receivables 275,504 253,510 238,814
Less: Unearned Income (649) (826) (962)
Allowance for Loan Losses (3,842) (3,800) (3,534)
------------ ----------- ------------
Loan Receivables, Net 271,013 248,884 234,318
Real Estate Owned 468 663 613
Premises and Equipment, Net 9,971 9,285 7,795
Accrued Interest Receivable 4,690 4,515 4,107
Other Assets 3,147 1,986 2,188
------------ ----------- ------------
Total Assets 517,742 519,474 494,902
============ =========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits:
Noninterest-Bearing 47,209 47,929 44,249
Interest-Bearing 408,899 403,669 394,123
------------ ----------- ------------
Total Deposits 456,108 451,598 438,372
------------ ----------- ------------
Federal Funds Purchased and Securities Sold
Under Agreement to Repurchase 8,459 8,498 6,439
Accrued Interest Payable 3,841 4,180 3,407
Other Liabilities 881 4,314 765
------------ ----------- ------------
Total Liabilities 469,289 468,590 448,983
------------ ----------- ------------
Stockholders' Equity
Common Stock - Par Value $.01 Per Share;
Authorized 10,000,000 Shares; Issued
4,609,402 Shares 46 46 46
Capital Surplus 15,271 15,052 15,052
Retained Earnings 35,709 32,759 30,611
Less: Treasury Stock at Cost (136,988
Shares) (792) (792) (792)
Unrealized (Losses) on Certain Securities (1,781) 3,819 1,002
Total Stockholders' Equity 48,453 50,884 45,919
------------ ----------- ------------
Total Liabilities and Stockholders' Equity $517,742 $519,474 $494,902
============ =========== ============
</TABLE>
See accompanying notes.
1
<PAGE>
CONDENSED CONSOLIDATED STATEMENT OF INCOME
CITI-BANCSHARES, INC., AND SUBSIDIARY - LEESBURG, FLORIDA
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
---------------------- ------------------------------
1996 1995 1996 1995
---------- ----------- ------------ ---------
<S> <C> <C> <C> <C> <C>
Interest Income
Loans, Including Fees $11,469 $10,360 $5,698 $5,354
---------- ----------- ------------ ---------
Investment Securities:
Taxable 5,551 5,801 2,729 3,048
Exempt From Federal Income Taxes 1,749 1,427 900 704
---------- ----------- ------------ ---------
Total Investment Securities 7,300 7,228 3,629 3,752
Federal Funds Sold 223 351 94 166
---------- ----------- ------------ ---------
Total Interest Income 18,992 17,939 9,421 9,272
---------- ----------- ------------ ---------
Interest Expense
Deposits 8,788 8,257 4,350 4,378
Securities Sold Under Repurchase Agreements 193 165 106 101
---------- ----------- ------------ ---------
Total Interest Expense 8,981 8,422 4,456 4,479
---------- ----------- ------------ ---------
Net Interest Income 10,011 9,517 4,965 4,793
Provision For Loan Losses 50 125 50 95
---------- ----------- ------------ ---------
Net Interest Income After Provision For Loan 9,961 9,392 4,915 4,698
---------- ----------- ------------ ---------
Losses
Noninterest Income
Investment Securities (Losses) Gains (11) 3 (22) 18
Service Charges on Deposits Accounts 1,062 759 634 375
Trust Income 464 417 235 202
Other Income 264 189 111 97
---------- ----------- ------------ ---------
Total Noninterest Income 1,779 1,368 958 692
---------- ----------- ------------ ---------
Noninterst Expense
Salaries and Employee Benefits 3,283 3,227 1,647 1,620
Occupancy Expense 620 673 305 347
Equipment Expense 585 513 302 254
Other Expenses 1,812 1,887 929 893
---------- ----------- ------------ ---------
Total Noninterest Expense 6,300 6,300 3,183 3,114
---------- ----------- ------------ ---------
Income Before Income Taxes 5,440 4,460 2,690 2,276
Provision For Income Taxes 1,468 1,174 714 609
---------- ----------- ------------ ---------
Net Income $3,972 $3,286 $1,976 $1,667
========== =========== ============ =========
Earnings Per Common Share and Common
Shares Equivalent
$0.89 $0.73 $0.44 $0.37
========== =========== ============ =========
Average Number of Shares 4,491 4,482 4,484 4,482
========== =========== ============ =========
</TABLE>
See accompanying notes.
2
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
CITI-BANCSHARES, INC., AND SUBSIDIARY - LEESBURG, FLORIDA
(IN THOUSANDS)
<TABLE>
<CAPTION>
Unrealized
Gains (Losses)
Common Capital Retained Treasury on Certain
Stock Surplus Earnings Stock Securities Total
<S> <C> <C> <C> <C> <C> <C>
Balances, December 31, 1994
(Audited) $42 $11,208 $27,338 ($792) ($3,820) $33,976
Common Stock Issued For
Pooled Bank Acquired April 16,
1996 4 3,844 (12) 0 (80) $3,756
-------------- --------------- -------------- -------------- ------------------
Balances, December 31, 1994
After Stock Issued For
Pooled Bank 46 15,052 27,326 (792) (3,900) 37,732
Net Income 0 0 7,214 0 0 7,214
Cash Dividend Declared
($.44 Per Share) 0 0 (1,781) 0 0 (1,781)
Unrealized Gains on
Certain Securities 0 0 0 0 7,719 7,719
-------------- --------------- -------------- -------------- ------------------ --------
Balances, December 31, 1995 46 15,052 32,759 (792) 3,819 50,884
Net Income 0 0 3,972 0 0 3,972
Cash Dividend Declared
($.12 Per Share Per Quarter) 0 0 (1,022) 0 0 (1,022)
Pre-Merger Options Exercised
For Stock of Acquired Company 0 181 0 0 0 181
Stock Options Grants 0 38 0 0 0 38
Unrealized (Loss) on Certain
Securities 0 0 0 0 (5,600) (5,600)
-------------- --------------- -------------- -------------- ------------------ --------
Balances, June 30, 1996 $46 $15,271 $35,709 ($792) ($1,781) $48,453
============== =============== ============== ============== ================== =========
</TABLE>
3
See accompanying notes.
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
CITI-BANCSHARES, INC., AND SUBSIDIARY - LEESBURG, FLORIDA
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------------
1996 1995
<S> <C> <C>
------------ ------------
Cash Flows From Operating Activities
Net Income $3,972 $3,286
Adjustments to Reconcile net Income to Net Cash
Provided By Operating Activities:
Provision For Loan Losses 50 125
Depreciation 157 0
Loss on Fixed Asset Disposals 433 380
Net Accretion)/ Amortization of Discount on Investments 102 (248)
(Gain) loss on Sale of Land (194) 0
(Gain) Loss on Sale of Investments and Real Estate Owned 9 (3)
Net Amortization of Deferred Loan Fees (307) 0
Decrease (Increase) in Accrued Interest Receivable (175) 39
Decrease (Increase) in Accrued Interest Payable (339) 976
Other (56) (102)
------------ ------------
Net Cash Provided By Operating Activities 3,652 4,453
------------ ------------
Cash Flows From Investing Activities
Proceeds From Sales of Investment Securities 42,091 22,553
Proceeds From Maturities of Investment Securities 10,581 20,116
Purchases of Investment Securities (42,042) (41,500)
Net (Increase) in Loan Receivables (21,955) (16,233)
Proceeds From Sale of Real Estate Owned 278 102
Proceeds From Sale of Land 296 0
Purchases of Premises and Equipment (1,378) (347)
------------ ------------
Net Cash ( Used In) Investing Activities (12,129) (15,309)
------------ ------------
Cash Flows From Financing Activities
Pre-Merger Stock Activity of Acquired Company 181 810
Net (Decrease) Increase in Demand Deposits, NOW Accounts, and
Savings Accounts (1,341) 1,784
Net Increase in Certificates of Deposit 5,851 20,489
Net (Decrease) in Federal Funds Purchased and Securities
Sold Under Agreements to Repurchase (39) (434)
Dividends Paid (2,266) (1,417)
------------ ------------
Net Cash Provided By Financing Activities 2,386 21,232
------------ ------------
Net (Decrease) in Cash and Cash Equivalents (6,091) 10,376
Cash and Cash Equivalents, Beginning of Period 25,225 17,153
------------ ------------
Cash and Cash Equivalents, End of Period $ 19,134 $27,529
============ ============
</TABLE>
See accompanying notes.
4
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
CITI-BANCSHARES, INC., AND SUBSIDIARY - LEESBURG, FLORIDA
(UNAUDITED)
(IN THOUSANDS)
(Concluded)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------------
1996 1995
------------ ------------
<S> <C> <C>
Supplemental Disclosures of Cash Flow Information
Cash and Cash Equivalents
Cash and Demand Deposits Due From Banks $14,164 $14,694
Federal Funds Sold 4,970 12,835
------------ ------------
Total Cash and Cash Equivalents $19,134 $27,529
==========================
Interest Paid $9,320 $7,445
============ ============
Income Taxes Paid $1,220 $857
============ ============
Disposal of Premises and Equipment
Cost Basis $921 0
(Accumulated Depreciation) (764) 0
------------ ------------
Total $157 0
============ ============
Gain on Land Sale
Proceeds Received (296) 0
Cost Basis 102 0
------------ ------------
Gain (194) 0
============ ============
</TABLE>
See accompanying notes.
5
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CITI-BANCSHARES, INC., AND SUBSIDIARY - LEESBURG, FLORIDA
Note 1 - Significant Accounting Policies
The accounting and reporting policies of Citi-Bancshares, Inc. (the Company)
and it subsidiary conform to generally accepted accounting principles and to
predominant practices within the banking industry.
In the opinion of the Company's management, all adjustments necessary to
present fairly the financial position as of June 30, 1996 and the results of
operations and cash flows for the period then ended have been included and are
of a normal and recurring nature.
Certain amounts for 1996 and 1995 were reclassified to conform with statement
presentation for June 30, 1996. These reclassifications have no effect on
stockholders' equity or net income as previously reported.
Note 2 - Income Taxes
Federal and state income taxes are provided on income reported for financial
statement purposes and include both current and deferred income tax expense.
Current income tax expense in recorded to reflect income taxes based upon the
tax returns filed with the appropriate taxing agencies. Deferred income taxes
are recorded to reflect the tax consequences on future years of differences
between the tax bases of assets and liabilities and their financial reporting
amounts at year end. The change in deferred taxes attributable to the carrying
value of investments categorized as "available-for-sale" is recognized as a
change in stockholders' equity. The change in deferred income taxes
attributable to all other timing differences is recognized as deferred income
tax expense or benefit. The tax benefit related to operating loss and tax
credit carryforwards, if any, are recognized if management believes, based on
available evidence, that it is more likely than not that they will be realized.
Investment tax credits, if any, are accounted for using the flow-through method.
The Company files consolidated federal and state income tax returns with its
subsidiary, Citizens National Bank of Leesburg. Federal and state income taxes
are allocated between the Company and its subsidiary in proportion to the
respective contributions in consolidated taxable income.
6
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CITI-BANHARES, INC., AND SUBSIDIARY - LEESBURG, FLORIDA
Note 3 - Loans and Allowance For Loan Losses
Major categories of loans included in the loan portfolio are:
<TABLE>
<CAPTION>
(In Thousands)
(Unaudited) (Audited) (Unaudited)
6/30/96 12/31/95 6/30/95
<S> <C> <C> <C>
Commercial, Financial and Agricultural $ 31,487 $ 24,478 $ 21,836
Real Estate 214.733 200,185 190,209
Installment Loans 29,284 28,847 26,769
----------- --------- ---------
Loans Receivable $ 275,504 $ 253,510 $238,814
======= ======= ========
</TABLE>
Changes in the allowance for loan losses are summarized as follows:
<TABLE>
<CAPTION>
(In Thousands)
(Unaudited) (Audited) (Unaudited)
6/30/96 12/31/95 6/30/95
<S> <C> <C> <C>
Balance, Beginning of Period $ 3,800 $ 3,404 $ 3,404
Additions:
Provision Charged to Expense 50 255 125
Recoveries on Loans Previously
Charged Off 56 308 59
-------- -------- ----------
Total Additions 106 563 184
(Loans Charged Off) (64) (167) (54)
---------- ---------- ----------
Balance, End of Period $ 3,842 $ 3,800 $ 3,534
======= ======= ======
</TABLE>
Note 4 - Unrealized Gain on Securities Available-For-Sale
Effective December 31, 1993, the Company adopted the investment categorization
and carrying value rules as required by Financial Accounting Standards Board
Statement of Financial Accounting Standards No. 115 (FASB 115), Accounting for
Certain Investments in Debt and Equity Securities.
7
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CITI-BANCSHARES, INC., AND SUBSIDIARY - LEESBURG, FLORIDA
Under this statement, the unrealized gain or loss on investment securities
available-for-sale, net of the applicable deferred income taxes, is shown as a
separate component of stockholders' equity in the balance sheet. The following
is a summary of the effects of the statement of stockholders' equity as of June
30, 1996, December 31, 1995, and June 30, 1995:
<TABLE>
<CAPTION>
( In Thousands)
--------------------------------------
(Unaudited) (Audited) (Unaudited)
6/30/96 12/31/95 6/30/95
------------ ----------- ------------
<S> <C> <C> <C>
Gross Unrealized (Losses) Gains on Invest-
ments Securities Available-For-Sale $ (2,816) $ 6,040 $ 1,573
Deferred Income Tax Asset (Liability) on
Unrealized Gain 1,035 (2,221) (571)
------------ --------- ---------
Net (Decrease) Increase in Stockholders'
Equity $ (1,781) $ 3,819 $ 1,002
======== ======== ======
</TABLE>
Note 5 - Premises and Equipment
A summary of premises and equipment is as follows:
<TABLE>
<CAPTION>
(in Thousands)
-----------------------------------------------
(Unaudited) (Audited) (Unaudited)
6/30/96 12/31/95 6/30/95
-------------- ----------- ----------
<S> <C> <C> <C>
Land $ 1,453 $ 1,518 $ 1,518
Buildings 9,384 7,969 7,399
Furniture, Fixtures and Equipment 6,187 6,274 5,931
Construction in Process 0 963 0
---------- --------- -----------
17,024 16,724 14,848
(Accumulated Depreciation) (7,053) (7,439) (7,053)
---------- --------- ---------
Total Premises and Equipment $ 9,791 $ 9,285 $ 7,795
====== ======== ======
</TABLE>
8
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CITI-BANCSHARES, INC., AND SUBSIDIARY - LEESBURG, FLORIDA
Note 6 - Deposits
<TABLE>
<CAPTION>
( In Thousands)
---------------------------------------------------
(Unaudited) (Audited) (Unaudited)
6/30/96 12/31/95 6/30/95
-------------- ----------- -------------
<S> <C> <C> <C>
Demand $ 55,438 $ 59,679 $ 57,602
Savings 95,863 92,243 95,093
Time 257,598 251,747 241,434
---------- ---------- -------------
Total Interest-Bearing Accounts $ 408,899 $ 403,669 $ 394,129
======== ======= =======
</TABLE>
Note 7 - Stock Option Plan
In 1994, the Company adopted a stock option plan for granting nonqualified
stock options to specified officers. The nonqualified stock options are
granted to the officers provided the Bank meets certain target performance and
asset quality criteria. The stock options, after a two-year vesting
requirement, are exercisable at a price equal to the book value per share, net
of FASB No. 115. The Board normally makes its decision on whether or not to
grant the options for a given year in February of the following year, allowing
time to review complete financial data and achievement of certain performance
criteria. If approved, the options are granted effective the first business
day following the end of the year. The option price is the year-end book value,
net of FASB NO. 115, for the year just completed. Should a grantee retire, the
options granted to him or her are exercisable within one year of retirement.
In 1995. options for 11,250 shares were granted effective January 2, 1995,
based on the Company's performance for the year ended December 31, 1994.
The company follows APB Opinion No. 25, Accounting for Stock Issued to
Employees in recognizing stock options. In December 1995, the board approved
a stock option of 6,250 shares for the Chief Financial Officer to be effective
starting January 2, 1996. This was done as per discussions with the Chief
Financial Officer prior to his employment in March 1995. These options may be
earned by the Chief Financial Officer if future performance criteria is met.
In February 1996, the Board approved 11,250 options, effective 1996. Total
shares outstanding at June 30, 1996 was 28,750.
These securities were included in the calculation of primary earnings per share
as a common stock equivalent.
9
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CITI-BANCSHARES, INC., AND SUBSIDIARY - LEESBURG, FLORIDA
Note 8 - Acquisitions
On April 19, 1996, the Company acquired Citizens First Bancshares, Inc. (CFB),
a bank holding company in Ocala, Florida. The merger was accounted for as a
pooling of interests. As a result, the financial information presented is as
if the combining companies has been consolidated for all periods presented.
On the date of the merger, CFB has assets of $40,866,000, net loans of
$25,668,000, deposits of $35,863,000 and net income of $144,375.
Per the Merger Agreement, each share of issued and outstanding CFB common stock
was converted into 1.317911 shares of the Company's common stock with cash being
paid for fractional share interest. 424,711 shares of the Company's stock were
issued for 322,480 shares of CFB common stock.
10
<PAGE>
MANAGEMENT DISCUSSION
OUTSTANDING BALANCES
MERGER
On April 19, 1996, Citizens First Bancshares, Inc. was merged into Citi-
Bancshares, Inc. The merger was accounted for as a pooling of interest and
accordingly the financial information shown here is shown as if the two
institutions had been together during the prior periods.
LOANS
Gross loans at June 30, 1996 were up $21,994,000 over December 31, 1995, an
annualized increase of 17.35%. This is up from the $13,849,000 growth we
enjoyed in the first six months of last year. Our loan growth in the first six
months of this year was primarily in residential and commercial real estate
mortgages. Real Estate loans grew approximately $14,548,000 or 14.53% in the
first six months of 1996. The Company also experienced growth in the
commercial loan portfolio of $7,009,000 or 57.27% on an annualized basis from
the end of the previous year ended December 31, 1995. The ratio of gross loans
to total deposits for June 30, 1996 was 60.40% compared to 54.64% at year-end
1995.
<TABLE>
<CAPTION>
(in thousands)
$ %
6/30/96 12/31/95 GROWTH GROWTH
<S> <C> <C> <C> <C>
Commercial, Financial
and Agricultural $ 31,487 $ 24,478 $ 7,009 57.27%
Real Estate 214,733 200,185 14,548 14.53%
Installment Loans 29,284 28,847 437 3.03%
Loans Receivable $275,504 $253,510 $21,994 17.35%
</TABLE>
11
<PAGE>
DEPOSITS
Total deposits at June 30, 1996 were up $4,510,000 over December 31, 1995, an
annualized increase of 2.00%. In comparison, deposits grew $13,323,000 in the
same period last year. Non-interest bearing deposits decreased $720,000 from
December 31, 1995 to June 30, 1996 and interest-bearing deposits increased
$5,230,000 during the same period. From December 31, 1995 to June 30, 1996 we
saw the following change in interest-bearing deposits:
<TABLE>
<CAPTION>
(in thousands)
$ %
6/30/96 12/31/95 GROWTH GROWTH
<S> <C> <C> <C> <C>
Demand $ 55,438 $ 59,679 $( 4,241) ( 7.11%)
Savings 95,863 92,243 3,620 3.92%
Time 257,598 251,747 5,851 2.32%
Total Interest-Bearing $408,899 $403,669 $ 5,230 1.30%
Non-Interest Bearing $ 47,209 $ 47,929 $ ( 720) ( 1.50%)
Total Deposits $456,108 $451,598 $4,510 1.00%
Annualized Total Deposit Growth: 2.00%
</TABLE>
12
<PAGE>
NET INTEREST INCOME
INTEREST INCOME
The interest income on earning assets was $9,421,000 in the second quarter of
1996, an increase of $149,000 when compared to the second quarter of 1995. The
increase in income was due entirely from the increase in outstanding loan
balances. The rates paid on loans actually decreased in the second quarter of
1996 and had the same result on interest income.
INTEREST EXPENSE
Interest expense was $4,456,000 in the second quarter of 1996, an decrease of
$ 23,000 when compare to the same period in 1995. Most of the decrease in
interest expense is due to the decrease in rates paid by the bank in the second
quarter of 1996. The net interest margin remained fairly stable in the second
quarter of 1996. The dollar volume of interest bearing deposits increased
$14,776,000 from the ending of second quarter 1996 as compared to the ending
balance of second quarter 1995.
NET INTEREST INCOME
Second quarter net interest income in 1996 was $4,965,000, an increase of
$172,000 over the second quarter 1995 level of $4,793,000.
13
<PAGE>
LOAN QUALITY
PROVISION/ALLOWANCE FOR LOAN LOSSES
The provision for loan losses was $50,000 in the second quarter of 1996. This
is a decrease of $45,000 when compared to the 1995 second quarter loan
provision of $95,000. The decrease in the provision is a direct benefit of the
continued improvement of our asset quality of the bank.
Year-to-date net charge-off in the first six months of 1996 are $18,000
compared to net recoveries of $6,000 for the first six months of 1995.
The allowance for loan losses as a percentage of gross loans is as follows:
<TABLE>
<CAPTION>
06/30/96 12/31/95
<S> <C> <C>
ALL/Gross Loans 1.39% 1.50%
Actual $ in Loan Loss Reserve $3,842,000 $3,800,000
</TABLE>
The bank decided to reduce the Reserve for Loss on Loans as a percentage of
Total Loans in the first six months of 1996 due to the urging by the bank's
regulators. The regulators commented that the percentage was a little high due
to the impressive quality of the bank's loan portfolio.
14
<PAGE>
RISK ELEMENTS
All loan delinquencies over 30 days past due and all loans on non-accrual as a
percentage of total loans are reflected below:
<TABLE>
<CAPTION>
6/30/96 12/31/95 6/30/95
<S> <C> <C> <C>
Total Loan Delinquencies 0.27% 0.31% 0.42%
Total Non-Accrual Loans 0.41% 0.35% 0.33%
Total Delinquencies and
Non-Accruals 0.68% 0.66% 0.75%
</TABLE>
Other Real Estate Owned (O.R.E.O.) consists primarily of foreclosed real estate
and has decreased in the past year as the Company disposed of O.R.E.O. in an
improving economy:
<TABLE>
<CAPTION>
6/30/96 12/31/95 6/30/95
<S> <C> <C> <C>
O.R.E.O. / Total Real
Estate Loans 0.22% 0.46% 0.35%
Actual $ In O.R.E.O. $468,000 $663,000 $613,000
</TABLE>
All O.R.E.O. has been written down to the current appraised value at the time
the bank took ownership.
15
<PAGE>
NON-INTEREST INCOME
Non-interest income for the second quarter of 1996, net of securities gains/
losses was $980,000, an increase of $306,000 or 45.40% over the second quarter
of 1995 figure of $674,000. The increase in non-interest income was due mostly
to the increase in service charges on deposit accounts.
Losses on the sale of securities in the second quarter of 1996 were $22,000 as
compared to $18,000 gain on sales of securities in the second quarter of 1995.
The Company will continue to manage its securities portfolio in this moderately
progressive yield curve rate environment to sell any lower yielding securities
and purchase higher yielding investments as the opportunity arises.
Trust income for the second quarter of 1996 was up $33,000 over the same period
a year ago.
NON-INTEREST EXPENSE
The Company's non-interest expense was $3,183,000 in the second quarter of
1996, up $69,000 or 2.22% from the corresponding period in 1995. Included in
the non-interest expense classification for the second quarter of 1996 is the
cost of the merger with Citizens First Bank of Ocala. The merger accounted for
approximately $128,000 in non-interest expense in the second quarter of 1996
related to the legal and accounting work required by the merger.
Management continues to emphasize expense control in all areas as evidenced by
the Bank Holding Company Performance Report for March 31, 1996, which compares
our holding company to 248 holding companies in our peer group.
<TABLE>
<CAPTION>
3/31/96 3/31/95
OUR PEER
COMPANY GROUP
<S> <C> <C>
Overhead Expense as Percentage
of Average Assets 2.30% 3.26%
</TABLE>
16
<PAGE>
NET INCOME
Second quarter net income for 1996 was up $309,000 from the second quarter of
1995.
Earnings per share for the second quarter of 1996 were $0.44 compare to $0.37
per share from total income in the second quarter of 1995.
The annualized return on average assets for the second quarter as of June 30,
1996 is 1.51% compared to 1.36% for the same period in 1995. The annualized
year to date return on average assets is 1.53% in 1996 as compared to 1.37% for
the same period in 1995.
The annualized return on average equity, excluding the impact of FASB 115, for
the second quarter of 1996 is 16.07% as compared to the second quarter of 1995
return on average equity of 15.25%. The annualized year to date return on
average equity for 1996, including the effects of FASB 115, is 16.49% as
compared to the comparable period in 1995 of 15.44%.
CAPITAL
Total stockholders' equity, excluding the effect of FASB 115, was $50,234,000
on June 30, 1996, an increase of $3,169,000 over the December 31,1995 level of
$47,065,000. This 6.73% increase in capital was provided entirely through
retained earnings. Citi-Bancshares, Inc. has changed it's dividend payment
policy from an annually payable dividend to a quarterly payable dividend
beginning in January of 1996.
When including the effect of FASB 115 by adding in the net unrealized gain on
securities classified "available-for-sale" the June 30, 1996 total
stockholders' equity is $48,453,000 compared to year-end 1995 stockholders'
equity of $50,884,000. On December 31,1995 the Company had $3,819,000 in net
unrealized gain on securities classified as "available-for-sale" compared to
$(1,781,000) in unrealized losses on June 30, 1996. As a percentage of total
assets, stockholders' equity including adjustments for FASB 115, increase from
9.80% on December 31, 1995 to 9.36% on June 30, 1996. Excluding the impact of
FASB 115, stockholders' equity as a percentage of total assets was 9.06% on
December 31, 1995 compared to 9.70% on June 30, 1996.
17
<PAGE>
Risk Based Capital Ratios
Risk based capital ratios, excluding the effect of FASB 115, are shown below:
<TABLE>
<CAPTION>
REGULATORY
ACTUAL MINIMUM
6/30/96 12/31/95
<S> <C> <C>
Tier I Risk Based Capital
(Tier I : Stockholders' Equity
/ Risk Based Assets at Quarter
End) 18.42% 4.0%
Total Risk Based Capital
(Total : Stockholders' Equity
plus Loan Loss Reserve /
Risk Based Assets at Quarter
End) 19.67 8.0%
Leverage Capital ( excluding
FASB 115)
(Stockholders' Equity /
Average Total Assets for
the Quarter) 9.36% 3.0%
</TABLE>
18
<PAGE>
SUMMARY
The Company continues to enjoy good earnings and growth through the second
quarter of 1996. While interest margins have remained moderate in the last six
months, good investments portfolio management, expense control and loan growth
have all contributed to this profitability. "Other Real Estate Owned" and
non-performing assets have remained at very satisfactory levels.
The Company has no securities in its investments portfolio that equal 10% or
more of our capital as of June 30, 1996. The unrealized losses in the
investment portfolio on securities classified "available-for-sale" on June 30,
1996 were $(1,781,000). These numbers are shown without any consideration of
income tax effects. While FASB 115 requires the "available-for-sale"
securities be shown at the market value we would receive if they were sold, the
majority of these securities will be held to maturity and no gain or loss will
be incurred. Management opted at year-end 1995 to put 100% of its portfolio
the available-for-sale classification simply to provide the flexibility needed
to maintain liquidity and reposition its portfolio as necessary. Management
does not know of any loans not already classified or on non-accrual that would
materially impact future operating results, liquidity or capital resources.
Nor does Management know of any trends, events, current regulatory proposals or
uncertainties that will have, or that are reasonably likely to have material
effect on the Company's liquidity, capital, resources or operations.
19
<PAGE>
Item 5. Other Information
As previously mentioned, Citizens First Bancshares, Inc., Ocala, Florida was
merged into Citi-Bancshares, Inc. on April 19, 1996. The merger was accounted
for as a pooling of interest and accordingly the figures reported herein
reflect the merger as if the two institutions had been together during the
previous periods.
20
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 6-Mos
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-01-1996
<PERIOD-END> Jun-30-1996
<CASH> 14,164
<INT-BEARING-DEPOSITS> 408,899
<FED-FUNDS-SOLD> 4,970
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 212,136
<INVESTMENTS-MARKET> 209,319
<LOANS> 274,855
<ALLOWANCE> 3,842
<TOTAL-ASSETS> 517,742
<DEPOSITS> 456,108
<SHORT-TERM> 0
<LIABILITIES-OTHER> 881
<LONG-TERM> 0
0
0
<COMMON> 46
<OTHER-SE> 48,407
<TOTAL-LIABILITIES-AND-EQUITY> 517,742
<INTEREST-LOAN> 11,469
<INTEREST-INVEST> 7,300
<INTEREST-OTHER> 223
<INTEREST-TOTAL> 18,992
<INTEREST-DEPOSIT> 8,788
<INTEREST-EXPENSE> 8,981
<INTEREST-INCOME-NET> 10,011
<LOAN-LOSSES> 0
<SECURITIES-GAINS> (11)
<EXPENSE-OTHER> 1,812
<INCOME-PRETAX> 5,440
<INCOME-PRE-EXTRAORDINARY> 5,440
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,972
<EPS-PRIMARY> .89
<EPS-DILUTED> .89
<YIELD-ACTUAL> 3.86
<LOANS-NON> 1,119
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,395
<CHARGE-OFFS> 70
<RECOVERIES> 62
<ALLOWANCE-CLOSE> 3,842
<ALLOWANCE-DOMESTIC> 3,842
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
