0000813640-95-000012.txt : 19950809 0000813640-95-000012.hdr.sgml : 19950809 ACCESSION NUMBER: 0000813640-95-000012 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950808 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CITIZENS BANCSHARES CORP /GA/ CENTRAL INDEX KEY: 0000813640 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 581631302 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-14535 FILM NUMBER: 95559621 BUSINESS ADDRESS: STREET 1: 175 JOHN WESLEY DOBBS AVE NE STREET 2: P O BOX 4485 CITY: ATLANTA STATE: GA ZIP: 30303 BUSINESS PHONE: 4046595959 MAIL ADDRESS: STREET 1: 175 JOHN WESLEY DOBBS AVENUE, NE CITY: ATLANTA STATE: GA ZIP: 30303 10QSB 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB X QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) TO THE SECURITIES EXCHANGE ACT OF 1934 TRANSITION REPORT UNDER SECTION 13 OR 15 (d) TO THE EXCHANGE ACT For the quarterly period end June 30, 1995 CITIZENS BANCSHARES CORPORATION (Name of small business issuer in its charter) Georgia (State or other jurisdiction of incorporation or organization) 175 John Wesley Dobbs Avenue, N.E., Atlanta, Georgia (Address of principal executive office) Registrant's telephone number, including area code: 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 registrant was required to file such reports), and (2) has been subject to such filing requirements for the 90 days. Yes _X__ No ___. State the number of shares outstanding if each of the issuer's practicable date: 1,329,684 shares of Common Stock, $1.00 par value, outstanding on August 1, 1995. Part I. Financial Information: Citizens Bancshares Corporation and Subsidiary Consolidated Balance Sheets June 30, 1995 and December 31, 1994 (unaudited-amounts in thousands, except per share amounts)
ASSETS 1995 1994 Cash and due from banks $ 9,686 11,675 Federal funds sold 9,000 4,400 Investment securities: Held to maturity 33,946 36,535 Available for sale 9,832 7,132 Total investments 43,778 43,667 Loans, net of unearned income 70,112 69,261 Less allowance for possible loan losses 1,467 1,047 Loans, net 68,645 68,214 Premises and equipment, net 2,247 2,425 Real estate acquired through foreclosure 274 823 Other assets 1,893 2,002 Total assets $ 135,523 133,206 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Deposits: Noninterest-bearing $ 40,989 39,268 Interest-bearing 82,829 82,877 Total deposits 123,818 122,145 Treasury, tax and loan account 436 425 Long-term debt and obligations under capital leas 1,101 1,293 Other liabilities 1,308 1,057 Total liabilities 126,663 124,920 Shareholders' equity: Common stock-$1 par value. Authorized 5,000,000 shares; issued and outstanding 1,329,684 shares 1,330 1,330 Additional Paid-In Capital 1,470 1,470 Unrealized gain(loss) - securities 71 (77) Retained earnings 5,989 5,563 Total shareholders' equity 8,860 8,286 Total liabilities and shareholders' e $ 135,523 133,206
Citizens Bancshares Corporation and Subsidiary Consolidated Statements of Earnings (unaudited-amounts in thousands, except per share amounts)
Three Months Six Months Ended June 30 Ended June 30, 1995 1994 1995 1994 INTEREST INCOME: Loans, including fees 1,625 1,225 3,166 2,339 Investment securities Taxable 693 717 1,364 1,349 Tax-exempt 26 57 65 119 Federal funds sold 148 34 275 74 Total interest income 2,492 2,033 4,870 3,881 INTEREST EXPENSE: Deposits 751 557 1,458 1,078 Treasury tax, and loan account 2 1 10 2 Long-term debt and obligations under capital lease 22 24 46 46 Total interest expense 775 582 1,514 1,126 Net interest income 1,717 1,451 3,356 2,755 Provision for possible loan losses 125 182 250 373 Net interest income after provision for possible loan losses 1,592 1,269 3,106 2,382 NONINTEREST INCOME: Service charges on deposit accounts 947 1,098 1,831 2,079 Gain on sale of real estate (32) 26 5 137 Other operating income 96 79 162 197 Total noninterest income 1,011 1,203 1,998 2,413 NONINTEREST EXPENSE: Salaries and employee benefits 1,209 1,146 2,376 2,204 Net occupancy and equipment 397 446 81 846 Other operating expenses 762 661 1,408 1,311 Total other expense 2,368 2,253 4,602 4,361 Earnings before income taxes 235 219 502 434 Income tax expense 43 45 76 87 Net earnings 192 174 426 347 Net earnings per common share $ 0.14 0.13 0.32 0.26 Average outstanding shares 1,330 1,330 1,330 1,330
Citizens Bancshares Corporation and Subsidiary Consolidated Statements of Cash Flows Six months ended June 30, 1995 and 1994 (unaudited-amounts in thousands, except per share amounts)
1995 1994 Cash flows from operating activities: Net earnings $ 426 347 Adjustments to reconcile net earnings(loss) to net cash provided by operating activities: Provision for possible loan losses 250 373 Depreciation and amortization 291 222 Amortization and (accretion), net (57) (48) Amortization of deferred loan fees (66) (22) (Gain) on sale of real estate (5) (137) Decrease(increase) in other assets 19 (1,046) Increase in accrued expenses and other liabi 251 512 Net cash provided by operating activities 1,109 201 Cash flows from investing activities: Proceeds from maturities of investment securitie 5,401 15,714 Proceeds from maturities of investment securitie 1,550 3,000 Purchases of investment securities held to matur (2,761) (20,382) Purchases of investment securities available for (4,019) (500) Net increase in loans (630) (6,692) Purchases of premises and equipment (99) (205) Proceeds from sale of real acquired through fore 569 848 Net cash used in investing activities 11 (8,217) Cash flows from financing activities: Net increase in demand deposits and savings acco 5,707 4,745 Net (decrease) increase in time deposits (4,035) 1,595 Principal payment on long-term debt and obligations under capital lease (193) (180) Net increase in treasury, tax and loan account 12 944 Proceeds from long-term debt - 900 Net cash provided by financing activities 1,491 8,004 Net increase(decrease) in cash and cash eq 2,611 (12) Cash and cash equivalents at beginning of period 16,075 13,421 Cash and cash equivalents at end of period 18,686 13,409 Supplemental disclosures of cash paid during the year for: Interest $ 1,432 1,021 Income taxes $ 159 65 Supplemental disclosures of noncash transactions: Real estate acquired through foreclosure $ 15 441
CITIZENS BANCSHARES CORPORATION AND SUBSIDIARY Notes to the Consolidated Financial Statements June 30, 1995 and 1994 (unaudited) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited statements have been prepared pursuant to the rules and regulations for reporting on Form 10 - QSB. Accordingly, certain disclosures required by generally accepted accounting principles are not included herein. These interimstatements should be read in conjunction with the financial statements and notes thereto included in the company's latest Annual Report on Form 10 - KSB. The consolidated financial statements of Citizens Bancshares Corporation and Subsidiary( the "Company" ) as of June 30, 1995 and for the six months ended June 30,1995 and 1994 are unaudited. In the opinion of management, all adjustments necessary for a fair presentation of the financial position and results of operations and cash flows for the six months period have been included. All adjustments are of a normal recurring nature. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Citizens Trust Bank ( the "Bank" ). The Bank has a wholly owned subsidiary, Atlanta Mortgage Brokerage and Servicing Co., whose accounts are also included. All significant intercompany accounts and transactions have been eliminated in consolidation. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS INTRODUCTION Citizens Bancshares Corporation ( the "Company" ), a one-bank holding company, provides a full range of commercial banking services to individual and corporate customers in metropolitan Atlanta through its wholly owned subsidiary, Citizens Trust Bank ( the "Bank" ). The Bank operates under a state charter and serves its customers through eight full service branches. The following discussion is of the Company's financial condition as of June 30, 1995 and the changes in financial condition and results of operations for the six month periods ended June 30, 1995 and 1994. RESULTS OF OPERATIONS Net Interest Income: Net interest income represents the excess of income received on interest-earning assets and interest paid on interest-bearing liabilities. Net interest income for the second quarter 1995 increased $266,000 or 18% for the three month period and increased $601,000 or 22% for the six month period ended June 30, 1995, over the three and six month periods of 1994. The combination of higher levels of market interest rates and a $1.6 million increase in the excess of average earning assets over average interest-bearing liabilities increased the Company's net interest margin to 5.51% compared to 5.07% in 1994. Provision for possible loan losses: The provision for possible loan losses is a charge to earnings that management considers necessary to maintain an adequate allowance for possible loan losses. The provision for loan losses decreased $123,000 in 1995 as compared to the provision in 1994. Higher levels of recoveries from loans previously charged off as compared to prior years contributed to the decrease in the provision for possible loan losses. The provision is determined based on growth of the loan portfolio, the amount of net loan losses incurred, and management's estimation of potential future loan losses based on an evaluation of loan portfolio risks, adequacy of underlying collateral, and economic conditions. As of June 30, 1995, the allowance for possible loan losses was approximately 2.09% of loans, net of unearned income which is comparable to prior year. Management feels that this level of allowance is adequate. Noninterest income: Noninterest income decreased approximately $192,000 or 16% for the three month period ended June 30, 1995 and $415,000 or 17% for the six month period as compared to the same periods in 1994. The decrease in noninterest income is due to a decline in service charges on deposits of 248,000 or 12% and to a decline in other operating income of $35,000 or 18%. In 1994, the Company recognized a gain on sale of other real estate owned property of $111,000. Total proceeds from the sale were $726,000 with a book value of $615,000. Management continues to explore ways to maximize noninterest income through fee income. Noninterest expense: Noninterest expense increased approximately $115,000 or 5% during the three month period and $241,000 or 6% during the six month period ended June 30, 1995, as compared to a decrease of $65,000 or 2.8% and $149,000 or 3.3% during the same periods of 1994. The increase is attributable to salaries and employee benefits of $172,000, and other operating expenses of $97,000. The increase in salaries and employee benefit costs is due to normal salary adjustments coupled with high turnover costs. Advertising and other operating losses contributed to the increase in other operating expenses. The decrease in noninterest expense in 1994 from 1993 was due to a reduction in other operating expenses, namely, professional services and operating losses. Net earnings: The Company had net earnings of approximately $426,000 or $0.32 per share during the second quarter ended 1995 as compared to $347,000 or $0.26 per share in 1994. The $79,000 or 23% increase in net earnings as compared to 1994 reflects improved net interest income of $601,000 which offsets the decrease in noninterest income and the increase noninterest expense. LIQUIDITY Liquidity is a bank's ability to meet all deposit withdrawals immediately, while also,providing for the credit needs of customers. In the normal course of business,the Company's cash flow is generated from interest and fees on loans and other interest-earning assets, repayments of loans, and maturities of investment securities. The Company continues to meet liquidity needs primarily through the sale of federal funds and managing the maturities of investment securities. At June 30,1995, approximately 11.4% of the investment portfolio matures within the next year and approximately 83.6% after one year but before five years. In addition, federal funds sold averaged approximately $9 million during the six month period ended June 30, 1995. The Company is a member of the Federal Reserve System and maintains relation- ships with several correspondent banks and, thus, could obtain funds on short notice. Company management closely monitors and maintains appropriate levels of interest-earning assets and interest-bearing liabilities, so that maturities of assets are such that adequate funds are provided to meet customer withdrawals and loan demand. CAPITAL RESOURCES The Company has maintained an adequate level of primary capital as measured by its shareholders' equity and the allowance for possible loan losses to adjusted total assets of approximately 8.04% at June 30, 1995 and 7.66% at December 31, 1994. The Board of Directors of the Bank entered into a Board Resolution (the "Resolution") dated March 15, 1995 with the Georgia Department of Banking and Finance and the Federal Reserve Bank of Atlanta ("Regulatory Authorities") to take certain corrective actions, which if not taken could result in further regulatory sanctions. The Board Resolution replaces the Memorandum of Understanding for which the Bank previously operated under. The Resolution include provisions on asset quality, capital adequacy and management succession; requires the Bank to improve its information system controls; specifies that the Bank shall maintain at least a 7.53% primary capital to adjusted total assets ratio during the term of the Agreement; and limits the payment of dividends without the prior written consent of the Regulatory Authorities. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Company is not aware of any material pending legal proceedings to which the Company or its subsidiary is a party or to which any of their property is subject. ITEM 2. CHANGES IN SECURITIES The Company is restricted as to dividend payments to its shareholders by certain covenants in its long-term debt agreement and the Bank is restricted as to dividend payments to the Company by regulatory requirements and agreements. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS None ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K None SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CITIZENS BANCSHARES CORPORATION Date: August 8, 1995 By: /s/ William L. Gibbs William L. Gibbs President and Chief Executive Officer Date: August 8, 1995 By: /s/ Ann I. Scott Ann I. Scott Senior Vice President and Controller EX-27 2
9 6-MOS JAN-01-1995 JUN-30-1995 9,686 82,829 9,000 0 9,832 33,946 0 70,112 1,467 135,523 123,818 436 1,308 1,101 1,330 0 0 7,530 135,523 3,166 1,429 275 4,870 1,458 1,514 3,356 250 0 4,602 502 0 0 0 426 .32 .32 5.51 1,333 0 0 0 1,047 96 266 1,467 0 0 0