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Previous: OPPENHEIMER INTERNATIONAL BOND FUND, 497, 1996-07-29 |
Next: SITEL CORP, DEFM14A, 1996-07-29 |
<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB/A
/X/ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
OR
/ / TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
---------- ---------------
Commission File No.: 0-13824
CITISAVE FINANCIAL CORPORATION
--------------------------------------------------------------
(Name of Small Business Issuer in Its Charter)
LOUISIANA 72-1289214
------------------------------ -----------------------
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
665 FLORIDA STREET
BATON ROUGE, LOUISIANA 70801
---------------------- -------------------
(Address of Principal Executive Offices) (Zip Code)
Issuer's telephone number, including area code: (504) 383-4102
Securities registered under Section 12(b) of the Exchange Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
- -------------------------------------- ------------------------
COMMON STOCK (PAR VALUE $.01 PER SHARE) AMERICAN STOCK EXCHANGE
Securities registered under Section 12(g) of the Exchange Act: NOT APPLICABLE
Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the Issuer was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
----- -----
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of Issuer's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB.
/ /
Issuer's revenues for the fiscal year ended December 31, 1995: $6.4 million.
As of March 15, 1996, the aggregate market value of the 857,038 shares of
Common Stock of the Issuer held by non-affiliates, which excludes 107,669
shares held by all directors and officers of the Issuer as a group, was
approximately $12.1 million. This figure is based on the closing sale price of
$14.125 per share of the Issuer's Common Stock on March 15, 1996.
Number of shares of Common Stock outstanding as of March 15, 1996: 964,707
Transitional Small Business Disclosure Format (check one): Yes No X
----- -----
DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of the Annual Report to Stockholders for the year ended
December 31, 1995 are incorporated into Part II, Items 5 through 8 of this Form
10-KSB.
(2) Portions of the definitive proxy statement for the 1996 Annual
Meeting of Stockholders filed on March 14, 1996 are incorporated into Part III,
Items 9 through 13 of this Form 10-KSB.
<PAGE> 2
The purpose of this amendment to the Form 10-KSB for CitiSave
Financial Corporation (the "Company") is to include a revised audit opinion.
The consolidated financial statements previously incorporated by reference from
the Company's 1995 Annual Report to Stockholders, which annual report was filed
as Exhibit 13.0 to the Company's initial Form 10-KSB for the year ended
December 31, 1995, are included with the revised audit opinion in Exhibit 13.0
hereto. The pages included in Exhibit 13.0 hereto replace in their entirety
pages 4 through 31, inclusive, of the 1995 Annual Report to Stockholders, which
were also identified as pages E-21 through E-48, inclusive, in Exhibit 13.0 of
the initial Form 10-KSB.
ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K.
(a) DOCUMENTS FILED AS PART OF THIS REPORT
(1) The following financial statements are incorporated by
reference from Item 7 hereof (see Exhibit 13):
Report of Independent Auditors
Consolidated Balance Sheets as of December 31
1995 and 1994
Consolidated Statements of Income for the Years Ended
December 31, 1995, 1994 and 1993
Consolidated Statements of Changes in Stockholders' Equity for
the Years Ended December 31, 1995, 1994 and 1993
Consolidated Statements of Cash Flows for the Years
Ended December 31, 1995, 1994 and 1993
Notes to Consolidated Financial Statements
(2) All schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission ("SEC") are
omitted because of the absence of conditions under which they are required or
because the required information is included in the consolidated financial
statements and related notes thereto.
1
<PAGE> 3
(3) The following exhibits are filed as part of this amended Form
10-KSB, and this list includes the Exhibit Index.
Exhibit Index
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
2.1 Plan of Conversion *
3.1 Articles of Incorporation of CitiSave Financial Corporation *
3.2 Bylaws of CitiSave Financial Corporation *
4.1 Stock Certificate of CitiSave Financial Corporation **
10.1 Employee Stock Ownership Plan *
10.2 Employment Agreement among CitiSave
Financial Corporation, Citizens Savings Association, F.A. and
Lee F. Nettles dated July 14, 1995 **
13.0 1995 Annual Report to Stockholders*** E-21
21.0 Subsidiaries of the Registrant - Reference is made to "Item 2.
"Business" for the required information
</TABLE>
- -------------------------------
(*) Incorporated herein by reference from the Company's Registration
Statement on Form S-1 (Registration No. 33-90546) filed by the Company
with the SEC on March 22, 1995, as subsequently amended.
(**) Previously filed in the initial Form 10-KSB for the year ended
December 31, 1995.
(***) The revised audit opinion and the consolidated financial statements
are being filed in their entirety and replace pages E-21 through E-48,
inclusive, in Exhibit 13.0 of the initial Form 10-KSB. The remaining
pages of Exhibit 13.0 were unaffected.
2
<PAGE> 4
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
CITISAVE FINANCIAL CORPORATION
By: /s/ Lee F. Nettles
-------------------------------------
Lee F. Nettles
Chairman of the Board, President and
Chief Executive Officer
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.
/s/ Lee F. Nettles July 23, 1996
--------------------------------------------
Lee F. Nettles
Chairman of the Board, President and Chief
Executive Officer
/s/ Dr. Ernest D. Bateman, Jr. July 23, 1996
----------------------------------------
Dr. Ernest D. Bateman, Jr.
Director
/s/ S. Pendery Gibbens, Jr. July 23, 1996
------------------------------------------
S. Pendery Gibbens, Jr.
Director
<PAGE> 5
/s/ Dr. Clarence B. Hackett July 23, 1996
----------------------------------------
Dr. Clarence B. Hackett
Director
/s/ Howard L. Harvill July 23, 1996
------------------------------------------
Howard L. Harvill
Director
/s/ Wayne P. Hirschey July 23, 1996
-----------------------------------------
Wayne P. Hirschey
Director
/s/ Ferd B. Kramer, Jr. July 23, 1996
------------------------------------------
Ferd B. Kramer, Jr.
Director
/s/ Frank D. McArthur, II July 23, 1996
-----------------------------------------
Frank D. McArthur, II
Director
/s/ Charlotte H. Smith July 23, 1996
------------------------------------------
Charlotte H. Smith
Director
/s/ J. Larry Bellard July 23, 1996
-------------------------------------------
J. Larry Bellard
Senior Vice President and Controller
(also chief financial officer)
<PAGE> 1
HANNIS T. BOURGEOIS & CO., L.L.P.
Certified Public Accountants
2322 Tremont Drive, Suite 200
Baton Rouge, Louisiana 70809-1487
(504) 928-4770
Independent Auditor's Report
To the Board of Directors
CitiSave Financial Corporation
and Subsidiary
Baton Rouge, Louisiana
We have audited the Consolidated Statements of Financial Condition of
CitiSave Financial Corporation and Subsidiary as of December 31, 1995 and 1994,
and the related Consolidated Statements of Income, Stockholders' Equity and
Cash Flows for the years ended December 31, 1995, 1994 and 1993. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of CitiSave Financial
Corporation and Subsidiary as of December 31, 1995 and 1994, and the results of
their operations and their cash flows for the years ended December 31, 1995,
1994 and 1993, in conformity with generally accepted accounting principles.
Respectfully submitted,
HANNIS T. BOURGEOIS & CO., L.L.P.
Baton Rouge, Louisiana
January 26, 1996
4
E-21
<PAGE> 2
CITISAVE FINANCIAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
AS OF DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
ASSETS
------
1995 1994
-------- --------
(In Thousands)
<S> <C> <C>
Cash and Cash Equivalents $ 1,022 $ 999
Interest-Bearing Deposits in
Other Institutions 2,914 46
------ ------
Total Cash and Cash Equivalents 3,936 1,045
Federal Funds Sold 5,000 625
Securities: - Note 3
Investment Securities Held to Maturity 22,521 27,784
Mortgage-Backed Securities Held to Maturity 2,565 2,873
Federal Home Loan Bank Stock 358 336
------ ------
25,444 30,993
Insurance Accounts Receivable 56 132
Loans Held for Sale - Note 4 - 71
Loans Receivable - Note 4 41,792 34,485
Less: Allowance for Loan Losses (82) (139)
------ ------
41,710 34,346
Accrued Interest Receivable - Note 6 531 453
Foreclosed Real Estate, Net - Note 7 39 -
Premises and Equipment - Note 8 1,369 1,335
Other Assets 116 91
Costs in Excess of Net Assets of
Business Acquired 17 34
------ ------
Total Assets $78,218 $69,125
====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Deposits - Note 10 $62,514 $62,560
Accounts Payable 243 289
Advances from Borrowers for Taxes
and Insurance 94 95
Federal Income Taxes - Note 12:
Current 16 51
Deferred 160 127
Accrued Expenses and Other Liabilities 854 800
------ ------
Total Liabilities 63,881 63,922
Minority Interest in Subsidiary 37 25
Stockholders' Equity: - Note 2, 13, 14 and 15
Common Stock, $.01 Par Value; Authorized
10,000,000 Shares, 964,707 Issued Shares 10 -
Paid-in Capital in Excess of Par 9,144 -
Retained Earnings 5,879 5,178
------ ------
15,033 5,178
Less: Unearned ESOP Shares (733) -
------ ------
14,300 5,178
------ ------
Total Liabilities and Stockholders' Equity $78,218 $69,125
====== ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
E-22
<PAGE> 3
CITISAVE FINANCIAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
------ ------ ------
(In Thousands)
<S> <C> <C> <C>
Interest Income:
Loans $3,391 $2,989 $3,531
Investment Securities 1,409 1,253 828
Mortgage-Backed Securities 172 169 208
Other Interest-Earning Assets 258 75 189
----- ----- -----
Total Interest Income 5,230 4,486 4,756
----- ----- -----
Interest Expense:
Deposits - Note 10 2,512 2,104 2,138
Other Interest-Bearing Liabilities 4 - -
----- ----- -----
Total Interest Expense 2,516 2,104 2,138
----- ----- -----
Net Interest Income Before Provision
for (Recovery of) Loan Losses 2,714 2,382 2,618
Provision for (Recovery of) Loan Losses -
Note 4 1 10 (43)
----- ----- -----
Net Interest Income after Provision for
(Recovery of) Loan Losses 2,713 2,372 2,661
----- ----- -----
Noninterest Income:
Insurance Agency Commissions 690 666 741
Loan Fees and Service Charges 349 223 202
Gain on Sales of Loans 65 51 246
Other 35 32 31
----- ----- -----
Total Noninterest Income 1,139 972 1,220
----- ----- -----
Noninterest Expense:
Compensation and Benefits - Note 11 and 14 1,567 1,411 1,476
Occupancy and Equipment Expenses 369 316 333
Federal Insurance Premium 146 152 113
Net Real Estate Owned Expense (Income) (8) (36) (80)
Other - Note 16 488 630 607
----- ----- -----
Total Noninterest Expense 2,562 2,473 2,449
----- ----- -----
Income Before Provision for Income Taxes and
Minority Interest 1,290 871 1,432
Income Taxes - Note 12 418 334 503
----- ----- -----
Net Income Before Minority Interest 872 537 929
Minority Interest in Subsidiary (37) (37) (42)
----- ----- -----
Net Income $ 835 $ 500 $ 887
===== ===== =====
Per Share:
Net Income - Note 15 $ - $ - $ -
Dividends - Note 15 $ .15 $ - $ -
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
E-23
<PAGE> 4
CITISAVE FINANCIAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
------ ------ ------
(In Thousands)
<S> <C> <C> <C>
Common Stock:
Balance - Beginning of Year $ - $ - $ -
Issuance of Common Stock - Note 2 10 - -
----- ----- -----
Balance - End of Year $ 10 $ - $ -
===== ===== =====
Paid-In Capital in Excess of Par:
Balance - Beginning of Year $ - $ - $ -
Issuance of Common Stock - Note 2 9,128 - -
Allocation of ESOP Shares 16 - -
----- ----- -----
Balance - End of Year $9,144 $ - $ -
===== ===== =====
Retained Earnings:
Balance - Beginning of Year $5,178 $4,678 $3,791
Net Income 835 500 887
Cash Dividends (134) - -
----- ----- -----
Balance - End of Year $5,879 $5,178 $4,678
===== ===== =====
Unearned ESOP Shares:
Balance - Beginning of Year $ - $ - $ -
Establishment of ESOP - Note 14 (772) - -
Shares Released for Allocation - Note 15 39 - -
----- ----- -----
Balance - End of Year $ (733) $ - $ -
===== ===== =====
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
E-24
<PAGE> 5
CITISAVE FINANCIAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
-------- ---------- ---------
(In Thousands)
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net Income $ 835 $ 500 $ 887
Adjustments to Reconcile Net Income
to Net Cash Provided by (Used in)
Operating Activities:
Provision for (Recovery of) Loan and
Foreclosed Real Estate Losses 20 10 (48)
Gain on Sale of Foreclosed Real Estate (26) (30) (56)
Provision for Depreciation and
Amortization 111 213 220
Other 55 - -
Provision for Deferred Income Taxes 33 - 67
Loss on Sale of Property and Equipment - 4 -
Increase (Decrease) in Minority
Interest, Net 12 1 (3)
Stock Dividends on Federal Home Loan
Bank Stock (22) (17) (13)
Loans Originated for Sale (5,467) (4,293) (19,764)
Sale of Loans 5,538 5,232 20,188
Amortization (Accretion) of Securities
Premiums (Discounts) (184) (272) (267)
Changes in Assets and Liabilities:
(Increase) Decrease in Insurance
Accounts Receivable 76 36 5
(Increase) Decrease in Accrued
Interest Receivable (78) (180) (45)
(Increase) Decrease in Other Assets (25) (11) 177
Increase (Decrease) in Accounts
Payable (46) 26 26
Increase (Decrease) in Income Taxes
Payable (35) 51 (184)
Increase (Decrease) in Accrued
Expenses and Other Liabilities 54 86 (267)
------- ------- -------
Net Cash Provided by Operating
Activities 851 1,356 923
------- ------- -------
Cash Flows From Investing Activities:
Purchase of Premises and Equipment (128) (96) (82)
Proceeds from Sale of Premises and
Equipment - 19 -
Maturities of Investment Securities 17,750 22,800 30,600
</TABLE>
(CONTINUED)
8
E-25
<PAGE> 6
<TABLE>
1995 1994 1993
---------- ----------- -----------
(In Thousands)
<S> <C> <C> <C>
Purchase of Investment Securities (12,303) (24,609) (38,523)
Payments on Mortgage-Backed Securities 308 444 892
Purchase of Mortgage-Backed Securities - - (971)
Net (Increase) Decrease in Federal
Funds Sold (4,375) (625) 2,073
Redemption of Federal Home Loan
Bank Stock - 62 102
Net (Increase) Decrease in Loans (7,392) 759 2,870
Proceeds from Sale of Real Estate Owned 21 62 162
Additions to Real Estate Owned (26) - -
------- ------- -------
Net Cash Used in Investing
Activities (6,145) (1,184) (2,877)
------- ------- -------
Cash Flows From Financing Activities:
Net Proceeds from the Issuance of Common
Stock 8,366 - -
Dividends Paid on Common Stock (134) - -
Net Increase (Decrease) in Demand
Accounts, Ready Cash Accounts, and
Passbook Savings Accounts (760) (289) 33
Net Increase (Decrease) in
Certificates of Deposit 714 (3,226) (1,346)
Increase (Decrease) in Advances from
Borrowers for Taxes and Insurance (1) (50) -
------- ------- -------
Net Cash Provided by (Used in)
Financing Activities 8,185 (3,565) (1,313)
------- ------- -------
Increase (Decrease) in Cash and
Cash Equivalents 2,891 (3,393) (3,267)
Cash and Cash Equivalents - Beginning
of Year 1,045 4,438 7,705
------- ------- -------
Cash and Cash Equivalents - End of Year $ 3,936 $ 1,045 $ 4,438
======= ======= =======
Supplemental Disclosures of Cash Flow
Information:
Cash Payments for:
Interest Paid to Depositors $ 2,516 $ 2,102 $ 2,138
======= ======= =======
Income Taxes $ 368 $ 252 $ 645
======= ======= =======
Supplemental Schedules of Noncash
Investing and Financing Activities:
Transfers from Loans to Real
Estate Acquired Through
Foreclosure $ 142 $ - $ 11
======= ======= =======
Real Estate Owned Sold as Loans $ 115 $ 48 $ 128
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
E-26
<PAGE> 7
CITISAVE FINANCIAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
Note 1 - Summary of Significant Accounting Policies -
The accounting principles followed by CitiSave Financial Corporation and
its wholly-owned subsidiary, Citizens Savings Association, F.A., are those
which are generally practiced within the savings and loan industry. The
methods of applying those principles conform with generally accepted
accounting principles and have been applied on a consistent basis. The
principles which significantly affect the determination of financial
position, results of operations, changes in stockholders' equity and cash
flows are summarized below.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts
of CitiSave Financial Corporation ("the Company") and its wholly owned
subsidiary, Citizens Savings Association, F.A. ("the Association"),
(formally Citizens Savings & Loan Association). Citizens Savings
Association, F.A. has been consolidated with 665 Florida Street Corp.
(formally CitiSave Financial Corp.) (the "Subsidiary"). 665 Florida Street
Corp. has been consolidated with Roberts & Eastland (A Louisiana
Partnership), of which it owns an 80% interest. See Note 22 regarding
disclosure of certain segment information. Roberts & Eastland is an
insurance agency whose operation consists primarily of commissions and
related expenses from the sale of insurance policies for various insurance
companies. All significant intercompany transactions and balances are
eliminated in consolidation. The minority interest's share of the net
income of Roberts & Eastland has been properly reflected in these financial
statements.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand, certificates of
deposit, and funds due from banks. For purposes of the Statements of Cash
Flows, the Company and its subsidiary consider all highly liquid debt
instruments with original maturities when purchased of three months or less
to be cash equivalents. In addition, the Association reports its loans and
certificates of deposit on a net basis.
10
E-27
<PAGE> 8
Investment and Mortgage-Backed Securities
Securities are being accounted for in accordance with Statement of
Financial Accounting Standards (SFAS) No. 115, "Accounting for Investments
in Debt and Equity Securities," which requires the classification of
securities as held to maturity, trading, or available for sale.
Securities classified as held to maturity are those debt securities the
Company has both the intent and ability to hold to maturity regardless of
changes in market conditions, liquidity needs or changes in general economic
conditions. These securities are carried at cost adjusted for amortization
of premium and accretion of discount, computed by various methods
approximating the interest method over their contractual lives.
Securities classified as available for sale are those debt securities
that the Company intends to hold for an indefinite period of time but not
necessarily to maturity. Securities classified as trading are those
securities held for resale in anticipation of short-term market movements.
The Company had no securities classified as available for sale or trading at
December 31, 1995 or 1994.
Loans Held For Sale
Mortgage loans originated and intended for sale in the secondary market
are carried at the lower of cost or estimated market value on an aggregate
basis. Net unrealized losses are recognized in a valuation allowance by
charges to income.
Loans Receivable
Loans receivable are stated at unpaid principal balances, less the
allowance for loan losses, and net deferred loan origination fees. Interest
on mortgage and consumer loans is accrued based on the principal
outstanding.
The Association discontinues the accrual of interest income when a loan
becomes 90 days past due as to principal or interest. At that time, a
reserve is recorded equal to the amount of delinquent interest. If the
delinquent interest is subsequently collected, it is credited to income in
the period collected. Interest on impaired loans is discontinued when, in
management's opinion, the borrower may be unable to meet payments as they
become due.
Allowance for Losses
The allowance for loan losses is maintained at a level which, in
management's judgment, is adequate to absorb credit losses inherent in the
loan portfolio. The amount of the allowance is based on management's
evaluation of the collectibility of the loan portfolio, including the nature
of the portfolio, credit concentrations, trends in historical loss
experience, specific impaired loans, and economic conditions. Allowances
for impaired loans are generally determined
11
E-28
<PAGE> 9
based on collateral values or the present value of estimated cash flows.
The allowance is increased by a provision for loan losses, which is charged
to expense, and reduced by charge-offs, net of recoveries.
Loan Origination Fees, Commitment Fees and Related Costs
Loan fees and certain direct loan origination costs are accumulated and,
if significant, are recognized as an adjustment to interest income using the
level yield method over the contractual life of the loans, adjusted for
estimated prepayments based on the Association's historical prepayment
experience. No fees are deferred on loans that are sold. Commitment fees
and costs relating to commitments, the likelihood of exercise of which is
remote, are recognized over the commitment period on a straight-line basis
if material. If the commitment is subsequently exercised during the
commitment period, the remaining unamortized commitment fee at the time of
exercise is recognized over the life of the loan as an adjustment of yield.
Foreclosed Real Estate
Real estate properties acquired through, or in lieu of, loan foreclosure
are initially recorded at fair value at the date of foreclosure establishing
a new cost basis. After foreclosure, valuations are periodically performed
by management and the real estate is carried at the lower of cost or fair
value minus estimated costs to sell. Revenue and expenses from operations
and additions to the valuation allowance are included in Net Real Estate
Owned Expense.
Income Taxes
Deferred income taxes are provided on differences between income
reported for financial reporting and income tax purposes as explained more
fully in Note 12.
Deferred taxes are provided on a liability method in accordance with
SFAS No. 109 whereby deferred tax assets are recognized for deductible
temporary differences and operating loss and tax credit carryforwards and
deferred tax liabilities are recognized for taxable temporary differences.
Temporary differences are the differences between the reported amounts of
assets and liabilities and their tax bases. Deferred tax assets are reduced
by a valuation allowance when, in the opinion of management, it is more
likely than not that some portion or all of the deferred tax assets will not
be realized. Deferred tax assets and liabilities are adjusted for the
effects of changes in tax laws and rates on the date of enactment.
Premises and Equipment
Land is carried at cost. Buildings and equipment are stated at cost
less accumulated depreciation. Buildings, furniture, fixtures and equipment
are depreciated for book purposes using the straight-line method. The
estimated useful lives used to compute depreciation are: buildings twenty
to forty years; and furniture, fixtures and equipment, three to ten years.
Maintenance and repairs are expensed as incurred. For assets placed in
service since 1980, the Accelerated and Modified Accelerated Cost Recovery
System is used for tax reporting purposes.
12
E-29
<PAGE> 10
Cost In Excess of Fair Value of Net Assets Acquired
The cost of investment in subsidiary in excess of the fair value of net
assets at dates of purchase is amortized over a period of ten years.
Pension Benefits
The Association has a noncontributory defined benefit retirement plan
which covers substantially all employees who qualify as to age and length of
service. The benefits are based on each employee's years of service and an
employee's average monthly compensation. An employee becomes fully vested
upon completion of 5 years of qualifying service. The Association's funding
policy is to make the minimum annual contribution that is required by
actuarial calculations subject to Internal Revenue Service limitations.
Current Accounting Developments
In December, 1991, the Financial Accounting Standards Board issued
Statement No. 107, "Disclosures about Fair Value of Financial Instruments."
This statement requires disclosure of the fair value of financial
instruments, both assets and liabilities, whether or not such instruments
are recognized in the balance sheet. As it relates to the Association,
financial instruments include primarily cash equivalents, securities, loans,
and deposits. SFAS No. 107 was adopted by the Association for the fiscal
year ended December 31, 1995. Reference should be made to Note 18 regarding
adoption of this statement.
The Financial Accounting Standards Board issued Statement No. 114,
"Accounting by Creditors for Impairment of a Loan", which became effective
for years beginning after December 15, 1994. The Statement generally
requires impaired loans to be measured on the present value of expected
future cash flows discounted at the loan's effective interest rate, or as an
expedient, at the loan's observable market price or the fair value of the
collateral if the loan is collateral dependent. A loan is impaired when it
is probable the creditor will be unable to collect all contractual principal
and interest payments due in accordance with the terms of the loan
agreement. The Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 118, Accounting for Creditors for
Impairment of a Loan Income Recognition and Disclosures, which allows a
creditor to use existing methods for recognizing interest income on impaired
loans. Reference should be made to Note 18 regarding the application of
these statements.
In August 1995, the FDIC established a new assessment rate schedule for
financial institutions which are members of the Bank Insurance Fund ("BIF")
of the FDIC with a premium range of .04% to .31% of deposits while retaining
the existing assessment rate of .23% to .31% of deposits applicable to
SAIF-insured institutions. In announcing this premium reduction for
BIF-insured institutions retroactive to May 1995, the FDIC noted that the
premium differential may have adverse competitive consequences for SAIF
members, including lesser earnings as compared to BIF-insured institutions.
In November 1995, the FDIC further reduced the premium range for BIF insured
institutions to as low as zero basis points, subject to a $2,000 minimum.
13
E-30
<PAGE> 11
Reclassifications
Certain reclassifications have been made to the prior year's finan-
cial statements in order to conform to current reporting practices. The
reclassifications have no effect on total assets or net earnings as
previously reported.
Note 2 - Reorganization and Change of Corporate Form -
In July 1995, Citizens Savings and Loan Association (Citizens) completed
its reorganization into a federally chartered stock savings and loan
association whereby Citizens (i) converted its charter to a federal stock
savings and loan association known as Citizens Savings Association, F.A.,
and (ii) concurrently issued all of its outstanding capital stock to the
newly formed holding company, CitiSave Financial Corporation (the Company).
As part of the Reorganization, which was accounted for under the pooling of
interests method of accounting, the Company issued 964,707 shares of common
stock, 77,177 shares of which were acquired by its Employee Stock Ownership
Plan, and the Association issued 1,000 shares of $.01 par value common stock
to the Company. The 1994 and 1993 financial statements contained herein are
those of the Association as the predecessor entity.
Note 3 - Securities -
The amortized cost and fair values of securities being held to maturity
as of December 31, 1995 and 1994 are summarized as follows:
<TABLE>
<CAPTION>
1995
--------------------------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
----------- ----------- ----------- ---------
(In Thousands)
<S> <C> <C> <C> <C>
Investment Securities:
U.S. Treasury Securities $ 5,484 $ 55 $ - $ 5,539
Securities of Other
U.S. Government Agencies 17,037 - (51) 16,986
------- ------- ------- -------
22,521 55 (51) 22,525
------- ------- ------- -------
Mortgage-Backed Securities:
FHLMC 188 13 - 201
FNMA 497 - (6) 491
GNMA 1,880 3 - 1,883
------- ------- ------- -------
2,565 16 (6) 2,575
------- ------- ------- -------
$ 25,086 $ 71 $ (57) $ 25,100
======= ======= ======= =======
</TABLE>
(CONTINUED)
14
E-31
<PAGE> 12
<TABLE>
<CAPTION>
1994
------------------------------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
----------- ----------- ----------- ---------
(In Thousands)
<S> <C> <C> <C> <C>
Investment Securities:
U.S. Treasury Securities $ 13,357 $ - $ (103) $ 13,254
Securities of Other U.S.
Government Agencies 14,427 - (641) 13,786
------- ------- ------- -------
27,784 - (744) 27,040
------- ------- ------- -------
Mortgage-Backed Securities:
FHLMC 238 7 - 245
FNMA 562 - (36) 526
GNMA 2,073 - (127) 1,946
------- ------- ------- ------
2,873 7 (163) 2,717
------- ------- ------- -------
$ 30,657 $ 7 $ (907) $ 29,757
======= ======= ======= =======
</TABLE>
Included in the category of Securities of Other U.S. Government Agencies
at December 31, 1995 and 1994 are structured notes with a par value of $5.5
million and $8 million, respectively. At December 31, 1995 and 1994, the
securities have an amortized cost of $5.5 million and $8.0 million and a
fair value of $5.4 million and $7.5 million, respectively. Structured notes
consist of step-up notes, adjustable rate notes that are not subject to
interest rate caps which adjust monthly based on the 11th District Cost of
Funds index minus 17.5 to 35 basis points, and adjustable rate notes that
are subject to interest rate caps which adjust based on the 90 day U.S.
Treasury bill plus a specified margin. The step-up notes have interest
rates that are scheduled to increase by predetermined amounts on
pre-determined dates, and are callable at par on each date the interest rate
is scheduled to increase. Management understands the risks associated with
these types of instruments. Management has all securities mentioned above
classified as Held To Maturity.
The amortized cost and fair values of securities being held to maturity
as of December 31, 1995 by contractual maturity are shown below. Maturities
may differ from contractual maturities in mortgage-backed securities because
the mortgages underlying the securities may be called or repaid without any
penalties. Therefore, these securities are not included in the maturity
categories in the following maturity summary.
<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE
---------- ----------
(In Thousands)
<S> <C> <C>
Within One Year $ 16,525 $ 16,557
One to Five Years 5,996 5,968
--------- ---------
$ 22,521 $ 22,525
Mortgage-backed Securities 2,565 2,575
--------- ---------
Total $ 25,086 $ 25,100
========= =========
</TABLE>
15
E-32
<PAGE> 13
Securities being held to maturity with a carrying amount of $500,000 and
$700,000 at December 31, 1995 and 1994, respectively, were pledged as
collateral on public deposits and for other purposes as required or
permitted by law.
There were no sales of securities during 1995, 1994 or 1993.
The Association has invested in FHLB stock which is reflected at cost
which approximates market.
Note 4 - Loans Receivable -
Loans receivable at December 31, 1995 and 1994 consisted of the
following:
<TABLE>
<CAPTION>
1995 1994
---------- ----------
(In Thousands)
<S> <C> <C>
First Mortgage Loans (Principally
Conventional):
Principal Balances:
Secured by One-To-Four-Family
Residences $ 33,812 $ 28,114
Secured by Other Properties 4,623 4,283
Construction Loans 2,601 1,749
------- -------
41,036 34,146
Less:
Unearned Discounts (363) (477)
Undisbursed Portion of
Construction Loans (1,915) (1,145)
Deferred Loan Fees (142) (84)
------- -------
Total First Mortgage Loans 38,616 32,440
Consumer and Other Loans:
Principal Balances:
Automobile 597 386
Home Equity and Second Mortgage 756 614
Commercial 770 350
Loans on Deposits 553 403
Other 500 292
------- -------
Total Consumer and Other Loans 3,176 2,045
------- -------
Total All Loans 41,792 34,485
Less: Allowance for Loan Losses (82) (139)
------- -------
41,710 34,346
Loans Held for Sale - 71
------- -------
Net Loans $ 41,710 $ 34,417
======= =======
</TABLE>
16
E-33
<PAGE> 14
Following is a summary of the activity in the allowance for loan losses:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
(In Thousands)
<S> <C> <C> <C>
Balance at Beginning of Year $ 139 $ 129 $ 180
Provision for (Recovery of)
Loan Losses 1 10 (43)
Charged-Off Loans (58) - (8)
Recoveries of Loans - - -
------- ------- -------
Balance at End of Year $ 82 $ 139 $ 129
======= ======= =======
</TABLE>
The Association had non-performing loans contractually past due 90 days
or more totalling approximately $118,000 and $109,000 at December 31, 1995
and 1994, respectively. The Association recognized $12,000 and $18,000 in
interest income relating to these loans during the years ended December 31,
1995 and 1994, respectively. Had the loans been performing, approximately
$5,000 and $9,000 of additional interest income would have been recognized
for the years ended December 31, 1995 and 1994, respectively.
Impairment of loans having recorded investments of $118,000 at
December 31, 1995 has been recognized in conformity with FASB Statement No.
114 as amended by FASB Statement No. 118. The total allowance for loan
losses related to these loans was $46,000.
The Association is permitted to make extensions of credit to its
officers and directors in the ordinary course of business. The loans are
made on substantially the same terms as those prevailing at the time for
comparable loans with other parties. The total of such indebtedness
outstanding at December 31, 1995 and 1994 for officers, directors and their
associates was $510,000 and $781,000, respectively. An analysis of the
aggregate of these loans for 1995 is as follows:
<TABLE>
<CAPTION>
(In Thousands)
<S> <C>
Balance - Beginning of Year $ 781
New Loans 14
Repayments (285)
----
Balance - End of Year $ 510
====
</TABLE>
Note 5 - Loan Servicing -
Mortgage loans serviced for others are not included in the accompanying
Consolidated Statements of Financial Condition. The unpaid principal
balances of these loans serviced for FHLMC at December 31, 1995, 1994 and
1993 amounted to $1.8 million, $2.2 million and $2.5 million, respectively.
Custodial escrow balances maintained in connection with the foregoing
loan servicing were approximately $6,000, $7,000 and $8,000 at December 31,
1995, 1994 and 1993, respectively.
17
E-34
<PAGE> 15
Note 6 - Accrued Interest Receivable -
Accrued interest receivable at December 31 is summarized as follows:
<TABLE>
<CAPTION>
1995 1994
---------- ----------
(In Thousands)
<S> <C> <C>
Securities $ 363 $ 338
Loans Receivable 168 115
------- -------
$ 531 $ 453
======= =======
</TABLE>
Note 7 - Foreclosed Real Estate -
Activity in the allowance for losses on foreclosed real estate is as
follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
(In Thousands)
<S> <C> <C> <C>
Balance at Beginning of Year $ - $ - $ 16
Provision (Credit) Charged to Income 19 - (5)
Charge-offs, Net of Recoveries - - (11)
------- ------- ------
Balance at End of Year $ 19 $ - $ -
======= ======= ======
</TABLE>
Note 8 - Premises and Equipment -
Premises and equipment at December 31 are summarized as follows:
<TABLE>
<CAPTION>
1995 1994
--------- ---------
(In Thousands)
<S> <C> <C>
Cost:
Land $ 492 $ 492
Buildings 1,163 1,163
Autos 77 77
Furniture, Fixtures and Equipment 889 779
------- -------
2,621 2,511
Less: Accumulated Depreciation (1,252) (1,176)
------- -------
$ 1,369 $ 1,335
======= =======
</TABLE>
The provision for depreciation charged to operating expenses was
$83,000, $92,000 and $99,000, respectively, for the years ended December 31,
1995, 1994 and 1993.
Note 9 - Short-Term Borrowings -
The Association has an outstanding line of credit for the purchase of
Federal Funds with First National Banker's Bank in the amount of $2.5
million. No funds were drawn on this line during the year ended December
31, 1995.
18
E-35
<PAGE> 16
The Association has, in conjunction with the ownership of FHLB Stock, an
unused line of credit in the amount of $7,164,000 with the Federal Home Loan
Bank of Dallas. Although this line of credit is available, management has
no intentions of drawing from it.
Note 10 - Deposits -
Deposits at December 31 are summarized as follows:
<TABLE>
<CAPTION>
1995 1994
-------------------------------------- -------------------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE
RATE AMOUNT % RATE AMOUNT %
-------- --------- ----- -------- --------- -----
(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
Demand and NOW
Accounts* 2.22% $ 7,724 12.4% 2.50% $ 7,448 11.9%
Ready Cash
Accounts 2.10% 6,293 10.1% 2.20% 6,584 10.5%
Passbook Savings 1.96% 6,523 10.4% 2.12% 7,268 11.6%
------- ----- ------ -----
20,540 32.9% 21,300 34.0%
------- ----- ------ -----
Certificates of Deposit:
2.00-3.00% 2.35% 141 .2% 2.35% 530 .9%
3.01-4.00% 3.95% 1,517 2.4 3.67% 25,353 40.5
4.01-5.00% 4.53% 18,577 29.7 4.69% 5,958 9.5
5.01-6.00% 5.52% 13,246 21.2 5.54% 7,784 12.4
6.01-7.00% 6.61% 6,632 10.6 6.56% 883 1.4
7.01-8.00% 7.38% 1,449 2.3 7.61% 342 .5
Less than or equal to 8.01% 8.62% 412 .7 8.63% 410 .8
------- ----- ------ -----
41,974 67.1% 41,260 66.0%
------- ----- ------ -----
$ 62,514 100% $ 62,560 100.0%
======= ===== ====== =====
</TABLE>
*Includes noninterest-bearing deposits of $4.4 million at December 31, 1995
and $2.4 million at December 31, 1994.
The aggregate amount of demand accounts, savings accounts and cer-tificates
of deposit with a minimum balance of $100,000 was approximately $8.9 million at
December 31, 1995 and $7.1 million at December 31, 1994. Deposit accounts are
insured by the SAIF to a maximum of $100,000 for each insured member.
19
E-36
<PAGE> 17
A summary of savings certificates by maturity at December 31, 1995 and 1994
is as follows:
<TABLE>
<CAPTION>
1995 1994
---------- ----------
(In Thousands)
<S> <C> <C>
1995 $ - $ 27,830
1996 27,628 7,253
1997 8,623 2,333
1998 1,822 1,509
1999 1,550 1,420
2000 1,288 -
Thereafter 1,063 915
------- -------
$ 41,974 $ 41,260
======= =======
</TABLE>
Interest expense on deposits is summarized as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
(In Thousands)
<S> <C> <C> <C>
Demand Accounts $ 120 $ 123 $ 121
Ready Cash Accounts 144 166 162
Passbook Savings 146 155 166
Certificates of Deposits 2,102 1,660 1,689
------- ------- -------
$ 2,512 $ 2,104 $ 2,138
======= ======= =======
</TABLE>
Note 11 - Pension Plan -
The following table sets forth the plan's funded status and amounts
recognized in the Association's financial statements at December 31:
<TABLE>
<CAPTION>
1995 1994
-------- --------
(In Thousands)
<S> <C> <C>
Actuarial Present Value of Benefit
Obligations:
Accumulated Benefit Obligation:
Vested $ 729 $ 643
Nonvested 107 97
------- -------
836 740
Effect of Projected Future Obligation 238 225
------- -------
Projected Benefit Obligation for
Service Rendered To Date 1,074 965
Plan Assets at Fair Value 967 824
------- -------
Projected Benefit Obligation in
Excess of Plan Assets (107) (141)
Unrecognized Net Loss 148 137
Unrecognized Net Transition Amount 31 35
------- -------
Prepaid Pension Benefit $ 72 $ 31
======= =======
</TABLE>
20
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<PAGE> 18
Plan assets are primarily invested in U.S. Treasury Securities, U.S.
Government Agencies and Mortgage-Backed Securities.
The components of net pension expense for the years ended December 31,
are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
(In Thousands)
<S> <C> <C> <C>
Service Cost-Benefits Earned During
the Period $ 40 $ 41 $ 43
Interest Cost on Projected Benefit
Obligation 70 63 55
Actual Return on Plan Assets (83) (18) (40)
Net Amortization and Deferral 23 (41) (13)
------- ------- -------
Net Pension Expense $ 50 $ 45 $ 45
======= ======= =======
</TABLE>
Assumptions used to develop the net periodic pension cost were:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Discount Rate 7.50% 7.25% 7.25%
Expected Long-Term Rate
of Return on Assets 8.00% 8.00% 8.00%
Rate of Increase In
Compensation Levels 4.00% 4.00% 4.00%
</TABLE>
Note 12 - Income Taxes -
The Company files a separate federal income tax return from the
Association and Subsidiary. The Association and Subsidiary file a consolidated
federal income tax return on a calendar-year basis. In addition, state income
tax returns are filed individually by the Company in accordance with state
statutes. If certain conditions are met in determining taxable income, the
Association is allowed a special bad debt deduction based on a percentage of
taxable income (presently 8 percent) or on specified experience formulas. The
Association used the percentage of taxable income method in 1995, 1994, and
1993.
The components of consolidated income tax expense are:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
(In Thousands)
<S> <C> <C> <C>
Provision for Current Taxes $ 385 $ 334 $ 436
Provision for Deferred Taxes 33 - 67
------- ------- -------
$ 418 $ 334 $ 503
======= ======= =======
</TABLE>
21
E-38
<PAGE> 19
Total income tax expense differed from the amounts computed by applying
the U.S. federal income tax rate of 34 percent in 1995, 1994 and 1993 to
income before income taxes as a result of the following:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
(In Thousands)
<S> <C> <C> <C>
Expected Income Tax Expense at
Federal Tax Rate $ 424 $ 296 $ 487
Amortization of Goodwill 6 40 40
Bad Debt - (30) (50)
Other - Net (12) 28 26
------- ------- -------
Total Income Tax Expense $ 418 $ 334 $ 503
======= ======= =======
Effective Tax Rate 33.4% 40.0% 36.2%
======= ======= =======
</TABLE>
The deferred tax provision consists of the following timing differences:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
(In Thousands)
<S> <C> <C> <C>
Difference in Tax Bad Debt Deduction $ 28 $ - $ 70
Depreciation for Tax Purposes in
Excess of Book 2 4 4
Dividends/Redemptions on FHLB Stock 7 - (3)
Retirement Expense (4) (4) (4)
------- ------- -------
$ 33 $ - $ 67
======= ======= =======
</TABLE>
A deferred income tax liability of $160,000 and $127,000 is included in
the liabilities section of the Statement of Condition at December 31, 1995
and 1994.
The net deferred tax liability consist of the following components at
December 31, 1995, 1994 and 1993:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
(In Thousands)
<S> <C> <C> <C>
Depreciation $ 105 $ 103 $ 99
FHLB Stock 39 32 32
Retirement Expense (12) (8) (4)
Provision for Loan Losses 28 - -
------- ------- -------
$ 160 $ 127 $ 127
======= ======= =======
</TABLE>
Retained earnings at December 31, 1995 and 1994 include approximately
$1 million at each date for which no deferred federal income tax liability
has been recognized. These amounts represent an allocation of income to bad
debt deductions for tax purposes only.
22
E-39
<PAGE> 20
Note 13 - Regulatory Capital Requirements -
Under the Financial Institutions Reform, Recovery, and Enforcement Act
of 1989 (FIRREA), the Association is required by law to maintain (i) core
capital equal to 3% of adjusted total assets, (ii) tangible capital equal to
1.5% of adjusted total assets, and (iii) total capital equal to 8.0% of
risk-weighted assets.
The following is a reconciliation of GAAP capital to regulatory capital
for the Association at December 31, 1995:
<TABLE>
<CAPTION>
TANGIBLE CORE RISK-BASED
CAPITAL CAPITAL CAPITAL
----------- ----------- ----------
(In Thousands)
<S> <C> <C> <C>
GAAP Capital $ 9,805 $ 9,805 $ 9,805
Nonallowable Capital:
Costs in Excess of Net
Assets of Business Acquired 17 17 17
Additional Capital Items:
General Valuation Allowances - - 54
--------- --------- ---------
Regulatory Capital - Computed $ 9,788 $ 9,788 $ 9,842
Minimum Capital Requirement 1,142 2,285 2,636
--------- --------- ---------
Regulatory Capital - Excess $ 8,646 $ 7,503 $ 7,206
========= ========= =========
Regulatory Capital as a
Percentage 12.85% 12.85% 29.87%
Minimum Capital Required as
a Percentage 1.50 3.00 8.00
----- ----- -----
Regulatory Capital as a
Percentage in Excess of
Requirements 11.35% 9.85% 21.87%
===== ===== =====
</TABLE>
Based on these capital ratios, the Association meets the criteria for a
"well capitalized" institution at December 31, 1995. The Association's
management believes that under the current regulations, the Association will
continue to meet its minimum capital requirements in the foreseeable future.
However, events beyond the control of the Association, such as increased
interest rates or a downturn in the economy in the Association's area, could
adversely affect future earnings and consequently, the ability of the
Association to continue to exceed its future minimum capital requirements.
Note 14 - Employee Stock Ownership Plan -
The Company sponsors a leveraged employee stock ownership plan (ESOP)
that covers all employees who have completed one year of service and have
attained age 21. The Company makes quarterly contributions to the ESOP
equal to the ESOP's debt service less dividends received by the ESOP. All
dividends received by the ESOP are used to pay debt service. As the debt is
repaid, shares are released from collateral and allocated to active
employees, based on the proportion of debt service paid in the year.
23
E-40
<PAGE> 21
The note payable referred to in the preceding paragraph requires
quarterly principal payments plus interest at 8.5%. Future principal
payments are due as follows:
During the year ending December 31:
<TABLE>
<CAPTION>
(In Thousands)
<S> <C>
1996 $ 54
1997 58
1998 64
1999 69
2000 75
Due thereafter 424
-----
$ 744
=====
</TABLE>
As shares are released from collateral, the Company reports compensation
expense equal to the current market price of the shares and the shares
become outstanding for earnings-per-share computations. Dividends on
allocated ESOP shares are recorded as a reduction of retained earnings;
dividends on unallocated ESOP shares are recorded as a reduction of debt and
accrued interest. ESOP compensation expense was $54,000 for the year ended
December 31, 1995.
Shares of the Company held by the ESOP at December 31, 1995 are as
follows:
<TABLE>
<CAPTION>
(In Thousands)
<S> <C>
Allocated shares -
Shares released for allocation 4
Unreleased shares 73
-----
77
=====
Fair value of unreleased shares $1,070
=====
</TABLE>
Note 15 - Dividends and Earnings Per Share -
During 1995, the Company declared dividends of $.075 per share to be
paid to shareholders of record on September 15, 1995 and December 15, 1995.
The dividends were paid to shareholders on September 30, 1995 and December
31, 1995, respectively.
The Company had earnings per share of $.53 for the period from July
14, 1995 (date of conversion) through December 31, 1995. The calculation of
average shares outstanding was based on the issuance of 964,707 shares on
July 14, 1995 less unallocated ESOP shares of 77,177 through September 29,
1995 and the allocation of 1,938 shares on September 30, 1995 and December
31, 1995 for a weighted average shares outstanding for the period of
888,595. The Company's stock issuance took place on July 14, 1995 and
earnings per share numbers for periods prior to the quarter ended September
30, 1995 were not considered meaningful.
24
E-41
<PAGE> 22
Note 16 - Other Noninterest Expense -
Other noninterest expense amounts are summarized as follows for the
years ended December 31:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
(In Thousands)
<S> <C> <C> <C>
Advertising $ 45 $ 77 $ 34
Data Processing 127 110 113
Goodwill Amortization 17 124 124
Professional Fees 76 73 72
Printing, Postage, Stationery
and Supplies 117 118 125
Other 106 128 139
------- ------- -------
$ 488 $ 630 $ 607
======= ======= =======
</TABLE>
Note 17 - Off-Balance Sheet Instruments -
The Association is a party to financial instruments with off-balance
sheet risk in the normal course of business to meet the financing needs of
its customers. These financial instruments consist of commitments to extend
credit. Those instruments involve, to varying degrees, elements of credit
risk in excess of the amount recognized in the Statement of Financial
Condition.
The Association's exposure to credit loss in the event of non-
performance by the other party to the financial instrument for commitments
to extend credit is represented by the contractual amount of those
instruments. The Association uses the same credit policies in making
commitments and conditional obligations as they do for on-balance sheet
instruments.
In the normal course of business, the Association has made commitments
to extend credit of $4.4 million at December 31, 1995. This amount includes
unfunded loan commitments aggregating $3.2 million and undisbursed lines of
credit of $1.2 million.
The Association has entered into agreements with third parties to sell
loans that it originates. The Association may be required to repurchase a
loan if it is in violation of certain representations and warranties during
a specified period of time as stated in the agreement. The total amount of
loans originated and sold to these parties subject to repurchase amounted to
$3.1 million and $576,000 at December 31, 1995 and 1994, respectively.
Note 18 - Fair Value of Financial Instruments -
The following methods and assumptions were used to estimate the fair
value of each class of financial instruments for which it is practicable to
estimate that value:
Cash and Short-Term Investments - For those short-term instruments, the
carrying amount is a reasonable estimate of fair value.
25
E-42
<PAGE> 23
Securities - Fair value of securities held to maturity is based on
quoted market prices or dealer quotes, if available. If a quoted market
price is not available, fair value is estimated using quoted market prices
for similar securities.
Loans - The fair value for loans is estimated using discounted cash flow
analyses, with interest rates currently being offered for similar loans to
borrowers with similar credit rates. Loans with similar classifications are
aggregated for purposes of the calculations. The allowance for loan loss,
which was used to measure the credit risk, is subtracted from loans.
Deposits - The fair value of demand deposits, savings accounts, and
certain money market deposits is the amount payable on demand at the
reporting date. The fair value of fixed-maturity certificates of deposit is
estimated using discounted cash flow analyses, with interest rates currently
offered for deposits of similar remaining maturities.
Commitments to Extend Credit and Standby Letters of Credit - The fair value
of commitments to extend credit and standby letters of credit were not
significant.
The estimated approximate fair values of the Association's financial
instruments as of December 31, 1995 are as follows (in thousands):
<TABLE>
<CAPTION>
CARRYING FAIR
AMOUNT VALUE
-------- --------
<S> <C> <C>
Financial Assets:
Cash, Short-Term Investments and
Federal Funds Sold $ 8,936 $ 8,936
Securities Held to Maturity 25,444 25,458
Loans - Net 41,710 41,803
------- -------
$ 76,090 $ 76,197
======= =======
Financial Liabilities:
Deposits $ 62,514 $ 62,142
======= =======
</TABLE>
Note 19 - Related Party Transactions -
The Association has an outstanding note receivable from 665 Florida
Street Corp. The balance on the note is $735,000 and $741,000 at December
31, 1995 and 1994, respectively. The interest rate charged is currently
prime plus 1% on the outstanding principal balance at the end of the month.
The Association leases office space to Roberts & Eastland. The lease is
for a twelve month period and is renewed annually. Rent income for the
years ended December 31, 1995, 1994 and 1993 amounted to $47,000 for each
year.
The Association's ESOP borrowed $772,000 from the Company in order to
acquire shares of the Company's stock (See Note 14). The dividends received
from the Company on these shares are used to repay the debt. The balance of
this note payable at December 31, 1995 is $744,000. Dividends to the ESOP
totaled $11,000 for the year.
26
E-43
<PAGE> 24
Note 20 - Contingencies -
In the normal course of business, the Association is involved in various
legal proceedings. In the opinion of management, and counsel, any liability
resulting from such proceedings would not have a material adverse effect on
the Association's financial statements.
Note 21 - Concentrations of Credit -
The Association's business activities are primarily with customers in
the Association's market area, which is East Baton Rouge Parish. The
majority of such customers are depositors of the Association. The
concentrations of credit by type of loan are shown in Note 3. The
Association generally originates single-family residential loans within its
primary lending area.
Note 22 - Segment Information -
The Company owns 100% of the Association, a federally chartered stock
savings and loan. The Company's operations relate primarily to its
investment in the Association. The Association and its subsidiary own an
80% interest in an insurance agency. The subsidiary's operations relate
totally to its investment in the insurance agency. Noninterest income of
the subsidiary is the insurance agency commissions.
Certain financial information concerning the Company, the Association
and its subsidiary operations are as follows:
<TABLE>
<CAPTION>
COMPANY ASSOCIATION SUBSIDIARY ELIMINATIONS TOTALS
------- ----------- ---------- ------------ -------
(In Thousands)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
1995:
Total Interest Income $ 88 $ 5,164 $ 8 $ (30) $ 5,230
Total Interest Expense - 2,546 72 (102) 2,516
Provision for (Recovery
of) Loan Losses - 1 - - 1
Noninterest Income 776 608 690 (934) 1,139
Noninterest Expense 12 2,081 516 (47) 2,562
Income Taxes 17 368 33 - 418
Minority Interest in
Subsidiary - - (37) - (37)
------ ------ ------ ------- -------
Net Income $ 835 $ 776 $ 40 $ (815) $ 835
====== ====== ====== ======= =======
Depreciation and
Amortization - 101 10 - 111
====== ====== ====== ======= =======
Property and Equipment
Acquisitions - 90 6 - 96
====== ====== ====== ======= =======
DECEMBER 31, 1995:
Total Assets $ 9,112 $ 76,063 $ 551 $ (7,508) $ 78,218
====== ====== ====== ======= =======
</TABLE>
(CONTINUED)
27
E-44
<PAGE> 25
<TABLE>
<CAPTION>
ASSOCIATION SUBSIDIARY ELIMINATIONS TOTALS
----------- ---------- ------------ -------
(In Thousands)
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
1994:
Total Interest Income $ 4,541 $ 6 $ (61) $ 4,486
Total Interest Expense 2,104 61 (61) 2,104
Provision for (Recovery
of) Loan Losses 10 - - 10 10
Noninterest Income 293 666 13 972
Noninterest Expense 1,925 595 (47) 2,473
Income Taxes 295 39 - 334
Minority Interest in
Subsidiary - (37) - (37)
------- ------ ------- -------
Net Income $ 500 $ (60) $ 60 $ 500
======= ====== ======= =======
Depreciation and
Amortization 81 132 - 213
======= ====== ======= =======
Property and Equipment
Acquisitions 96 - - 96
======= ====== ======= =======
DECEMBER 31, 1994:
Total Assets $ 68,975 $ 397 $ (247) $ 69,125
======= ====== ======= =======
YEAR ENDED DECEMBER 31, 1993:
Total Interest Income $ 4,809 $ 3 $ (56) $ 4,756
Total Interest Expense 2,138 56 (56) 2,138
Provision for (Recovery
of) Loan Losses (43) - - (43)
Noninterest Income 481 741 (2) 1,220
Noninterest Expense 1,805 691 (47) 2,449
Income Taxes 503 - - 503
Minority Interest in
Subsidiary - (42) - (42)
------- ------ ------- -------
Net Income $ 887 $ (45) $ 45 $ 887
======= ====== ======= =======
Depreciation and
Amortization 99 121 - 220
======= ====== ======= =======
Property and Equipment
Acquisitions 82 - - 82
======= ====== ======= =======
DECEMBER 31, 1993:
Total Assets $ 71,799 $ 514 $ (283) $ 72,030
======= ====== ======= =======
</TABLE>
28
E-45
<PAGE> 26
Note 23 - Financial Information - Parent Company Only -
The financial statement for CitiSave Financial Corporation (Parent
Company) is presented below:
BALANCE SHEET
December 31, 1995
<TABLE>
<CAPTION>
(In Thousands)
<S> <C>
Assets:
Cash $ 1,686
Investment Securities 1,994
Investment in Subsidiary 10,538
Due from Subsidiary 35
Other Assets 52
-------
Total Assets $ 14,305
=======
Liabilities:
Income Tax Payable $ 16
-------
Total Liabilities 16
Stockholders' Equity:
Common Stock 10
Additional Paid in Capital 9,144
Retained Earnings 5,879
Less: Note Receivable ESOP (744)
-------
Total Stockholders' Equity 14,289
-------
Total Liabilities and Stockholders'
Equity $ 14,305
=======
</TABLE>
29
E-46
<PAGE> 27
STATEMENT OF INCOME
for the year ended December 31, 1995
<TABLE>
<CAPTION>
(In Thousands)
<S> <C>
Income:
Interest on Investment Securities $ 58
Interest on ESOP Note 30
------
Total Income 88
Expenses:
Operating Expenses 12
------
Income before Equity in Undistributed
Net Income of Subsidiary 76
Equity in Undistributed Net Income
of Subsidiary 775
------
Net Income before Income Taxes 851
Applicable Income Tax Expense 16
------
Net Income $ 835
======
</TABLE>
30
E-47
<PAGE> 28
STATEMENT OF CASH FLOWS
for the year ended December 31, 1995
<TABLE>
<CAPTION>
(In Thousands)
<S> <C>
Cash Flows From Operating Activities:
Net Income $ 835
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Equity in Undistributed Net Income
of Subsidiary (775)
(Increase) Decrease in Receivable
From Subsidiary (35)
(Increase) Decrease in Other Assets (52)
Increase (Decrease) in Income Tax Payable 16
-------
Net Cash Provided by Operating
Activities (11)
Cash Flows From Investing Activities:
Purchase of Investment Securities (1,994)
Investment in Subsidiary (4,570)
-------
Net Cash Used in Investing Activities (6,564)
Cash Flows From Financing Activities:
Net Cash Proceeds from Sale of Stock 9,139
Note Payable Issued on ESOP (772)
Payment Received on Note 28
Dividends Paid (134)
-------
Net Cash Provided by Financing
Activities 8,261
-------
Net Increase (Decrease) in Cash 1,686
Cash - Beginning of Year -
-------
Cash - End of Year $ 1,686
=======
</TABLE>
31
E-48
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