<PAGE>
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 quarter ended: June 30, 1997 Commission file number: 33-42286
HENDERSON CITIZENS BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
TEXAS 6712 75-2371232
------------------------ ----------------------- ------------------------
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification No.)
incorporation or Classification Code
organization) Number)
201 WEST MAIN STREET, P.O. BOX 1009
HENDERSON, TEXAS 75653
(903) 657-8521
(Address, including ZIP code, and telephone number, including
area code, of registrant's principal executive offices)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
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.
X Yes No
--- ---
At June 30, 1997, 2,116,080 shares of Common Stock, $5.00 par value, were
outstanding.
1
<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
HENDERSON CITIZENS BANCSHARES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(unaudited)
June 30, 1997 and December 31, 1996
(dollars in thousands)
<TABLE>
<CAPTION>
Assets 1997 1996
------ -------- --------
<S> <C> <C>
Cash and due from banks $ 8,028 12,413
Interest-bearing deposits with
other financial institutions 6,000 3,892
Federal funds sold 600 1,150
Securities:
Held-to-maturity, approximate market
value of $75,748 in 1997 and
$82,465 in 1996 75,802 82,415
Available-for-sale 144,467 145,740
-------- --------
220,269 228,155
Loans, net 102,146 100,825
Premises and equipment, net 4,801 3,751
Accrued interest receivable 3,403 3,449
Other assets 3,933 3,195
-------- --------
$349,180 356,830
======== ========
Liabilities and Stockholders' Equity
------------------------------------
Deposits:
Demand - non interest-bearing 32,501 31,785
Interest-bearing transaction accounts 71,370 74,984
Money market and savings 44,091 45,484
Certificates of deposit and other
time deposits 165,061 168,420
-------- --------
Total deposits 313,023 320,673
-------- --------
Accrued interest payable 1,586 1,144
Notes payable 844 1,511
Other liabilities 1,140 1,514
-------- --------
316,593 324,842
Stockholders' equity:
Preferred stock, $5 par value;
2,000,000 shares authorized
none issued or outstanding -- --
Common stock, $5 par value;
10,000,000 shares authorized,
2,160,000 issued 10,800 10,800
Surplus 5,400 5,400
Retained earnings 17,717 16,825
Net unrealized losses on securities
available for sale, net of income taxes (824) (703)
-------- --------
33,093 32,322
Less treasury stock, 43,920 shares in
1997 and 29,700 shares in 1996, at
cost (506) (334)
-------- --------
Total stockholders' equity 32,587 31,988
Commitments and contingencies
-------- --------
$349,180 356,830
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
HENDERSON CITIZENS BANCSHARES, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(unaudited)
(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three months Six months
ended June 30 ended June 30
----------------------- -----------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Interest income:
Loans $ 2,129 1,756 4,224 3,400
Securities
Taxable - available-for-sale 2,336 2,775 4,530 5,585
Taxable - held-to-maturity 592 1,326
Tax-exempt 462 389 899 780
Federal funds sold 33 17 86 71
Interest-bearing deposits with other
financial institutions 53 49 158 167
---------- ---------- ---------- ----------
Total interest income 5,605 4,986 11,223 10,003
---------- ---------- ---------- ----------
Interest expense:
Deposits:
Transaction accounts 473 476 990 1,007
Money market and savings 317 316 639 646
Certificates of deposit and
other time deposits 2,112 1,899 4,192 3,845
Other 13 -- 26 --
---------- ---------- ---------- ----------
Total interest expense 2,915 2,691 5,847 5,498
---------- ---------- ---------- ----------
Net interest income 2,690 2,295 5,376 4,505
Provision for loan losses 83 70 170 120
---------- ---------- ---------- ----------
Net interest income after
provision for loan losses 2,607 2,225 5,206 4,385
---------- ---------- ---------- ----------
Other income:
Gains (losses) on securities
transactions, net (26) 123 (64) 763
Income from fiduciary activities 150 154 288 318
Service charges, commissions,
and fees 449 331 892 649
Other 83 92 158 191
---------- ---------- ---------- ----------
Total other income 656 700 1,274 1,921
---------- ---------- ---------- ----------
Other expenses:
Salaries and employee benefits 1,404 1,182 2,666 2,245
Occupancy and equipment 253 212 486 418
Regulatory assessments 34 46 60 86
Other 632 504 1,235 994
---------- ---------- ---------- ----------
Total other expenses 2,323 1,944 4,447 3,743
---------- ---------- ---------- ----------
Income before income taxes 940 981 2,033 2,563
Income tax expense 204 230 462 658
---------- ---------- ---------- ----------
Net income $ 736 751 1,571 1,905
========== ========== ========== ==========
Net income per common share $ .35 .35 .74 .88
========== ========== ========== ==========
Average number of shares
outstanding 2,121,640 2,160,000 2,125,946 2,160,000
========== ========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
HENDERSON CITIZENS BANCSHARES, INC. AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
(unaudited)
Six months ended June 30, 1997 and 1996
(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Net Unrealized
Losses on
Securities Total
Preferred Common Retained Available Treasury Stockholder's
Stock Stock Surplus Earnings for Sale Stock Equity
--------- ------ ------- -------- -------------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances at December 31, 1995 $ -- 10,800 5,400 14,859 147 -- 31,206
Net income -- -- -- 1,905 -- -- 1,905
Net change in unrealized losses
on securities available for sale -- -- -- -- (1,401) -- (1,401)
Cash dividends ($.32 per share) -- -- -- (691) -- -- (691)
--------- ------ ------- -------- -------------- -------- -------------
Balances at June 30, 1996 $ -- 10,800 5,400 16,073 (1,254) -- 31,019
========= ====== ======= ======== ============== ======== =============
Balances at December 31, 1996 $ -- 10,800 5,400 16,825 (703) (334) 31,988
Net income -- -- -- 1,571 -- -- 1,571
Net change in unrealized losses
on securities available for sale -- -- -- -- (121) -- (121)
Cash dividends ($.32 per share) -- -- -- (679) -- -- (679)
Purchase of 14,220 shares
of treasury stock -- -- -- -- -- (172) (172)
--------- ------ ------- -------- -------------- -------- -------------
Balances at June 30, 1997 $ -- 10,800 5,400 17,717 (824) (506) 32,587
========= ====== ======= ======== ============== ======== =============
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
HENDERSON CITIZENS BANCSHARES, INC. AND SUBSIDIARIES
Consolidated Statement of Cash Flows
(unaudited)
Six months ended June 30, 1997 and 1996
(dollars in thousands)
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Operating activities:
Net income $ 1,571 1,905
Adjustments to reconcile net income
to net cash provided by operating
activities:
Net amortization of securities 190 334
Net (gains) losses on
securities transactions 64 (763)
Provision for loan losses 170 120
Depreciation and amortization 296 225
Decrease in accrued interest
receivable 46 681
Increase in other assets (775) (8)
Increase (decrease) in accrued
interest payable 442 (62)
Decrease in other liabilities (374) (179)
------- -------
Net cash provided by operating
activities 1,630 2,253
------- -------
Investing activities:
Proceeds from maturities and paydowns
of held-to-maturity securities 11,568 4,469
Purchases of held-to-maturity
securities (5,130) (4,787)
Proceeds from sales of
available-for-sale securities 14,958 40,662
Proceeds from maturities and
paydowns of available-for-sale
securities 5,757 16,848
Purchases of available-for-sale
securities (19,705) (44,521)
Net (increase) in loans (1,490) (6,560)
Purchases of bank premises and
equipment (1,247) (239)
------- -------
Net cash provided by (used
in) investing activities 4,711 5,872
------- -------
Financing activities:
Net decrease in deposits (7,650) (6,725)
Payment on notes payable (667) --
Cash dividends paid (679) (691)
Purchase of treasury stock (172) --
------- -------
Net cash used in financing
activities (9,168) (7,416)
------- -------
Increase (decrease) in cash
and cash equivalents (2,827) 709
Cash and cash equivalents at beginning
of period 17,455 11,558
------- -------
Cash and cash equivalents at end of period $14,628 12,267
======= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
ACTIVITIES
Income taxes paid, net of refunds $ 590 555
======= =======
Interest paid $ 5,405 5,560
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
HENDERSON CITIZENS BANCSHARES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1997
(1) BASIS OF PRESENTATION
---------------------
The accompanying consolidated financial statements are unaudited, but
include all adjustments, consisting of normal recurring accruals, which
management considers necessary for a fair presentation of the financial
position, results of operations, and cash flows.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to Securities and
Exchange Commission rules and regulations. The consolidated financial
statements and footnotes included herein should be read in conjunction
with the Company's annual consolidated financial statements as of
December 31, 1996 and 1995, and for each of the years in the three year
period ended December 31, 1996 included in the Company's Form 10-K.
(2) SECURITIES
----------
The amortized cost (carrying value) and approximate market values of
securities held-to-maturity at June 30, 1997, are summarized as follows
(in thousands of dollars):
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- -------
<S> <C> <C> <C> <C>
U.S. Treasury $ 7,050 49 (65) 7,034
U.S. Government agencies 10,179 40 (45) 10,174
State and municipal 33,552 285 (108) 33,729
Mortgage-backed securities
and collateralized
mortgage obligations 24,021 15 (227) 23,809
Other securities 1,000 2 -- 1,002
--------- ---------- ---------- -------
$ 75,802 391 (445) 75,748
========= ========== ========== =======
</TABLE>
The amortized cost and approximate market values (carrying value) of
securities available-for-sale at June 30, 1997, are summarized as
follows (in thousands of dollars):
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- -------
<S> <C> <C> <C> <C>
U.S. Treasury $ 51,957 184 (109) 52,032
U.S. Government agencies 22,237 28 (92) 22,173
Other securities 368 -- -- 368
Mortgage-backed securities
and collateralized
mortgage obligations 71,154 446 (1,705) 69,895
--------- ---------- ---------- -------
$ 145,716 658 (1,906) 144,468
========= ========== ========== =======
</TABLE>
6
<PAGE>
HENDERSON CITIZENS BANCSHARES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1997
(3) LOANS AND ALLOWANCE FOR LOAN LOSSES
-----------------------------------
The composition of the Company's loan portfolio is as follows (in thousands
of dollars):
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
--------- -----------
<S> <C> <C>
Commercial and industrial $ 25,225 23,863
Real estate mortgage 48,545 46,211
Installment and other 30,569 33,111
--------- ----------
Total 104,339 103,185
Less:
Allowance for loan losses (1,196) (1,146)
Unearned discount (998) (1,214)
--------- ----------
Loans, net $ 102,145 100,825
========= ==========
</TABLE>
Changes in the allowance for loan losses for the six months ended June 30,
1997 and 1996 are summarized as follows (in thousands of dollars):
<TABLE>
<CAPTION>
1997 1996
--------- ----------
<S> <C> <C>
Balance, January 1 $ 1,146 1,019
Provision charged to
operating expense 170 120
Loans charged off (176) (57)
Recoveries on loans 56 39
--------- ----------
Balance, June 30 $ 1,196 1,121
========= ==========
</TABLE>
7
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION
AND RESULTS OF OPERATIONS OF HENDERSON CITIZENS BANCSHARES, INC.
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
The following discussion and analysis of the financial condition and results of
operations of the Company and its primary bank subsidiaries, Citizens National
Bank and First State Bank, should be read in conjunction with the financial
statements and the notes thereto, and other financial and statistical
information appearing elsewhere in this report.
RESULTS OF OPERATIONS
- ---------------------
Net income for the first six months of 1997 was $1,571,000 compared to
$1,905,000 for the same period in 1996 primarily caused by changes in gains and
losses on securities transactions. The decline in net income was offset by the
acquisition of Waskom Bancshares, Inc., and its majority owned subsidiary, First
State Bank, Waskom in late 1996 and the establishment of a trust office in
Corsicana in March, 1997 (see "Acquisitions" below). During the first six
months of 1997, net interest income increased due to increased loan demand and
improved spreads and margins. The Company made a provision of $170,000 to the
allowance for loan losses during the first six months of 1997. A provision of
$120,000 was made for loan losses during the same period in 1996. The Company
experienced losses on securities transactions totaling approximately $64,000 in
the first six months of 1997 compared to gains of $763,000 in the first six
months of 1996. Other income, excluding gains on securities transactions, for
the first six months of 1997 was $1,338,000 compared to $1,158,000 for the same
period in 1996 due to increased volumes. Total other expenses for the first six
months of 1997 were $4,447,000 compared to $3,743,000 for the same period in
1996. Income tax expense for the first six months of 1997 and 1996 was $462,000
and $658,000, respectively.
ACQUISITION
- -----------
On August 31, 1996, the Company acquired substantially all of the outstanding
shares of Waskom Bancshares, Inc. and its majority owned subsidiary, First State
Bank, Waskom, Texas. Pursuant to the purchase agreement, the Company paid
$3,463,000, $1,511,000 of which was paid as a note payable due upon demand
having an interest rate of 6.10%. The remaining balance on the note payable as
of June 30, 1997 is $844,000. This transaction resulted in approximately
$1,337,000 in goodwill, which is being amortized over fifteen years on a
straight line basis. The transaction was accounted for using the purchase method
of accounting. This acquisition resulted in an increase in total assets of
$24,075,000 and total deposits of $21,714,000.
On March 24, 1997, the Company expanded its trust operations by establishing a
trust department in Corsicana, Texas. Three new employees were hired as a
result of this transaction.
NET INTEREST INCOME
- -------------------
For the six months ended June 30, 1997, net interest income was $5,376,000
compared to $4,505,000 for the first six months of 1996. Approximately $468,000
of the increase in net interest income is due to the Waskom acquisition. The
remainder of the increase is the result of an increase in loan volumes and
improved net interest margins and spreads.
Net interest income for the three month period ended June 30, 1997 was
$2,690,000 compared to $2,295,000 in 1996. Approximately $240,000 of the
increase in 1997 is a result of the Waskom acquisition. The remainder of the
increase is the result of improved loan demand and improved net interest margins
and spreads.
PROVISION FOR LOAN LOSSES
- -------------------------
During the first six months of 1997, the Company increased its allowance for
loan losses through a provision of $170,000. The Company increased its allowance
for loan losses during the same period of 1996 by $120,000. The Company
experienced net charge offs of $120,000 in the first six months of 1997 compared
to net charge offs of $18,000 in the same period in 1996.
8
<PAGE>
For the three month period ended June 30, 1997, the Company increased its
allowance through a provision of $83,000. The Company increased its allowance
for loan losses during the same period in 1996 by $70,000.
See additional information related to the Company's loan operations in the
Allowance for Loan Loss section below.
OTHER INCOME AND EXPENSES
- -------------------------
Non-interest income, excluding securities losses was $1,338,000 for the first
six months of 1997 as compared to $1,158,000 in the first six months of 1996.
This increase is due to increases in service charges and volumes. Approximately
$106,000 is related to the Waskom acquisition. The Company experienced losses
on securities transactions for the first six months of 1997 of $64,000 which
compares to gains on securities transactions for the first six months of 1996 of
$763,000. The gain in 1996 was the result of the sale of certain taxable
securities consistent with the Company's portfolio management policy. Other
expenses for the six month period ended June 30, 1997 were $4,447,000 compared
to $3,743,000 during the same period in 1996. The increase is due primarily to
general salary and benefit increases. Approximately $423,000 of the increase in
other expenses is related to the Waskom acquisition, and approximately $58,000
is related to the establishment of the trust office in Corsicana.
For the three months ended June 30, 1997, non-interest income, excluding
securities losses was $682,000 compared to $577,000 for the same period in 1996
due primarily from increases in service charges. The Company experienced losses
on securities transactions in the three months ended June 30, 1997 of
approximately $26,000 compared to gains on securities transactions of $123,000
for the three months ended June 30, 1996.
INCOME TAXES
- ------------
Income tax expense for the first six months of 1997 was $462,000, compared to
$658,000 in the same period in 1996. The effective tax rate for the first six
months of 1997 and 1996, respectively, was 22.7% and 25.7%. In 1996, the higher
effective rate was due to the large gain on securities transactions and its
effect on tax-exempt income as a percent of income. The effective tax rate
decreased in 1997 due to the effect of increased tax exempt income from
municipal securities.
Income tax expense for the three months ended June 30, 1997 and June 30, 1996
were $204,000 and $230,000, respectively.
FINANCIAL CONDITION
- -------------------
The Company's total assets at June 30, 1997 of $349,180,000 decreased from the
total assets at December 31, 1996 of $356,830,000. Total deposits were
$313,023,000 at June 30, 1997, compared to the December 31, 1996 total of
$320,673,000.
Equity capital of the Company, excluding unrealized gains or losses on
securities available for sale, as a percentage of total assets was 9.6% at June
30, 1997 compared to 9.2% at December 31, 1996. The risk-based Tier I and Tier
II capital ratios and the leverage ratio of Citizens National Bank amounted to
24.3%, 25.2% , and 9.2%, respectively at June 30, 1997 compared to 23.5%,
24.4%, and 9.0%, respectively, at December 31, 1996. At June 30, 1997, First
State Bank had Tier I and Tier II capital ratios and a leverage ratio of 27.1%,
27.5%, AND 9.1%, RESPECTIVELY, COMPARED TO 25.3%, 25.5%, AND 8.9%, RESPECTIVELY
AT DECEMBER 31, 1996.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
At June 30 1997, cash and cash equivalents for the Company of $14,628,000
decreased from the December 31, 1996 amount of $17,455,000. The Company's
stockholders' equity of $32,587,000 remains at a level considered to be adequate
by management. Profits in excess of dividends paid to shareholders is reflected
in the increase in undivided profits from 1996.
9
<PAGE>
ALLOWANCE FOR LOAN LOSSES
- -------------------------
The allowance for loan losses at June 30, 1997 and December 31,1996 was 1.15%
and 1.11% of outstanding loans, respectively. By its nature, the process
through which management determines the appropriate level of the allowance
requires considerable judgment. The determination of the necessary allowance,
and correspondingly the provision for loan losses, involves assumptions about
projections of national and local economic conditions, the composition of the
loan portfolio, and prior loss experience, in addition to other considerations
As a result, no assurance can be given that future losses will not vary from the
current estimates. However, management believes that the allowance at June 30,
1997 is adequate to cover losses inherent in its loan portfolio. A migration
analysis and an internal classification system for loans also helps identify
potential problems, if any, that are not identified otherwise. From these
analyses, management determines which loans are potential candidates for
nonaccrual status, including impaired loan status, or charge-off. Management
continually reviews loans and classifies them consistent with the Comptroller's
guidelines to help ensure that an adequate allowance is maintained.
The allocation of the allowance for loan losses is based upon the inherent risks
in the various components of the loan portfolio. Amounts allocated to each
component are determined based on management's evaluations of concentrations of
credit risks, current and anticipated economic conditions, historical analyses,
and classification and estimated loss exposure assigned to specific credits.
These reserve allocations are subject to change as various economic conditions
dictate. The following table is an analysis of the Allowance for Loan Losses.
ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
For the Six Months Ended
June 30,
1997 1996
------ ------
<S> <C> <C>
Balance at beginning of period $1,146 1,019
Charge-offs:
Commercial, financial, and agricultural 57 10
Real estate-mortgage 1 --
Installment loans to individuals 118 47
------ ------
176 57
Recoveries:
Commercial, financial, and agricultural 32 20
Installment loans to individuals 24 19
------ ------
56 39
------ ------
Net charge-offs 120 18
------ ------
Additions charged to operations 170 120
------ ------
Balance at end of period $1,196 1,121
====== ======
Ratio of net charge-offs during the period
to average loans outstanding during the
period .10% .01%
====== ======
</TABLE>
NON ACCRUAL, PAST DUE AND RESTRUCTURED LOANS
- --------------------------------------------
The Company's policy is to discontinue the accrual of interest income on loans
whenever it is determined that reasonable doubt exists with respect to timely
collectibility of interest and principal. Loans are placed on nonaccrual status
if either material deterioration occurs in the financial position of the
borrower, payment in full of interest or principal is not anticipated, payment
in full of interest or principal is past due 90 days or more unless well
secured, payment in full of interest or principal on a loan is past due 180 days
or more, regardless of collateral, or the loan in whole or in part is classified
as doubtful. A loan may remain on accrual status if it is in the process of
collection and is either guaranteed or well-secured. When a loan is placed on
nonaccrual status, interest is no longer accrued or included in interest income
and previously accrued income is reversed.
10
<PAGE>
As of June 30, 1997 and 1996, the Company had $92,000 in nonaccrual loans. The
total of accruing loans which are contractually past due 90 days or more as to
principal or interest at June 30, 1997 is $18,000 compared to $67,000 as of June
30, 1996. Other real estate totaled $175,000 at June 30, 1997. At June 30,
1996, the Company did not have any other real estate.
The following is a summary of the Company's problem loans as of June 30, 1997
and 1996.
<TABLE>
<CAPTION>
At June 30,
1997 1996
---- ----
(dollars in thousands)
<S> <C> <C>
Nonaccrual loans $ 92 92
Restructured loans -- --
Other impaired loans -- --
Other real estate 175 --
---- ----
Total nonperforming loans 267 92
==== ====
Loans past due 90+ days and still 18 67
accruing
==== ====
Other potential problem loans -- --
==== ====
Income that would have been recorded in
accordance with original terms 5 2
Less income actually recorded -- --
---- ----
Loss of income $ 5 2
==== ====
</TABLE>
CONCENTRATION OF CREDIT RISK
- ----------------------------
The Company grants real estate, commercial, and industrial loans to customers
primarily in Henderson, Texas, and surrounding areas of east Texas. Although the
Company has a diversified loan portfolio, a substantial portion (approximately
46.5% at June 30, 1997) of its loans are secured by real estate and its ability
to fully collect its loans is dependent upon the real estate market in this
region. The Company typically requires collateral sufficient in value to cover
the principal amount of the loan. Such collateral is evidenced by mortgages on
property held and readily accessible to the Company. See additional information
related to the composition of the Company's loan portfolio included in note 3 to
the consolidated financial statements.
CORPORATE OBJECTIVES
- --------------------
It is the philosophy of the Company to continue to remain independent in
ownership, to foster its image as the community leader in banking, to increase
its market share through selected acquisitions and aggressive marketing, to
maintain a sound earning-asset portfolio, and to assess liquidity needs while
maximizing its profitability and return to its shareholders.
11
<PAGE>
Part II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities.
None
Item 3. Defaults Upon Senior Securities.
None
Item 4. Submission of Matters to a Vote of Security Holders.
None
Item 5. Other Information.
None
Item 6. Exhibits and Reports on Form 8-K.
None
12
<PAGE>
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.
HENDERSON CITIZENS BANCSHARES, INC.
Date: 8-11-97 By: /s/ MILTON S. McGEE, JR.
---------------------- -------------------------------------------
Milton S. McGee, Jr., CPA
President
Date: 8-11-97 By: /s/ REBECCA G. TANNER
---------------------- -------------------------------------------
Rebecca G. Tanner, CPA
Chief Accounting Officer
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 8028
<INT-BEARING-DEPOSITS> 6000
<FED-FUNDS-SOLD> 600
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 144467
<INVESTMENTS-CARRYING> 75802
<INVESTMENTS-MARKET> 75748
<LOANS> 104339
<ALLOWANCE> 1196
<TOTAL-ASSETS> 349180
<DEPOSITS> 313023
<SHORT-TERM> 0
<LIABILITIES-OTHER> 3570
<LONG-TERM> 0
0
0
<COMMON> 10800
<OTHER-SE> 21787
<TOTAL-LIABILITIES-AND-EQUITY> 349180
<INTEREST-LOAN> 4224
<INTEREST-INVEST> 6999
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 11223
<INTEREST-DEPOSIT> 5821
<INTEREST-EXPENSE> 5847
<INTEREST-INCOME-NET> 5376
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<EPS-PRIMARY> .74
<EPS-DILUTED> .74
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</TABLE>
