-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KC+RH0zb431fFzuiiunBUaDDOrDj3s9fF27snO0vyzhUPbAOpXNwaP3FL8YoDNw+ Bj86pFqVIgpBSlasHkB7Mg== 0000813640-97-000013.txt : 19971118 0000813640-97-000013.hdr.sgml : 19971118 ACCESSION NUMBER: 0000813640-97-000013 CONFORMED SUBMISSION TYPE: 10QSB/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971117 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/A SEC ACT: SEC FILE NUMBER: 000-14535 FILM NUMBER: 97722469 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/A 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 September 30, 1997 CITIZENS BANCSHARES CORPORATION (Name of small business issuer in its charter) Georgia 58 - 1631302 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 175 John Wesley Dobbs Avenue, N.E., Atlanta, Georgia 30303 (Address of principal executive office) (Zip code) Registrant's telephone number, including area code: (404) 659-5959 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 classes of common equity as of the l practicable date: 1,329,684 shares of Common Stock, $1.00 par value, outstanding on, November 1,1997.
Part I. Financial Information: Citizens Bancshares Corporation and Subsidiary Consolidated Balance Sheets September 30, 1997 and December 31, 1996 (unaudited-amounts in thousands, except per share amounts) ASSETS 1997 1996 Cash and due from banks $ 8549 $ 8968 Federal funds sold 1000 10200 Investment securities: Held to maturity 18934 26072 Available for sale 8863 13269 Total investments 27797 39341 Loans, net of unearned income 82805 82408 Less allowance for loan losses 1272 1441 Loans, net 81533 80967 Premises and equipment, net 3162 2891 Real estate acquired through foreclosure 798 218 Other assets 4741 2293 Total assets $ 127580 $ 144878 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Deposits: Noninterest-bearing $ 32570 $ 46328 Interest-bearing 83031 86560 Total deposits 115601 132888 Treasury, tax and loan account 161 116 Federal funds purchased - - Long-term debt and obligations under capital 630 765 Other liabilities 1110 1147 Total liabilities 117502 134916 Shareholders' equity: Common stock-$1 par value. Authorized 5,000,000 shares; issued and outstanding 1,329,684 shares 1330 1330 Additional paid-in capital 1470 1470 Unrealized (loss)gain on available for sale s -2 -31 Retained earnings 7280 7193 Total shareholders' equity 10078 9962 Total liabilities and sha $ 127580 $ 144878
Citizens Bancshares Corporation and Subsidiary Consolidated Statements of Earnings (unaudited-amounts in thousands, except per share amounts) Three Months Nine Months Ended September 30, Ended September 30, 1997 1996 1997 1996 INTEREST INCOME: Loans, including fees $ 1932 $ 1850 $ 5535 $ 5096 Investment securities Taxable 440 740 1681 2147 Tax-exempt 26 19 72 60 Federal funds sold 21 100 127 350 Total interest income 2419 2709 7415 7653 INTEREST EXPENSE: Deposits 693 767 2298 2170 Treasury, tax, and loan account 1 2 4 5 Long-term debt 15 17 45 46 Other 14 20 14 20 Total interest expense 723 806 2361 2241 Net interest income 1696 1903 5054 5412 Provision for loan losses 30 - 30 - Net interest income after provision for possible loan losses 1666 1903 5024 5412 NONINTEREST INCOME: Service charges on deposit accounts 870 936 2491 2805 Other operating income 113 9 363 225 Total noninterest income 983 945 2854 3030 NONINTEREST EXPENSE: Salaries and employee benefits 1382 1424 4217 4018 Net occupancy and equipment 450 434 1278 1291 Other operating expenses 735 819 2252 2281 Total noninterest expense 2567 2677 7747 7590 Earnings before income taxes 82 171 131 852 Income tax expense 31 22 44 164 Net earnings $ 51 $ 149 $ 87 $ 688 Net earnings per common share $ 0.04 $ 0.11 $ 0.07 $ 0.52 Average outstanding shares 1330 1330 1330 1330
Citizens Bancshares Corporation and Subsidiary Consolidated Statements of Cash Flows Nine months ended September 30, 1997 and 1996 (unaudited-amounts in thousands, except per share amounts) 1997 1996 Cash flows from operating activities: Net earnings $ 87 688 Adjustments to reconcile net earnings to net cash provided by operating activities: Provision for possible loan losses 30 - Depreciation and amortization 592 491 Amortization, net -10 29 Amortization of deferred loan fees 30 96 Gain on sale of securities -13 - Loss on sale of premises and equipment 2 Increase in other assets -2329 -244 Decrease in accrued expenses and other liabilities -36 -521 Net cash (used) provided by operating activities -1649 541 Cash flows from investing activities: Proceeds from maturities of investment securities held to ma 7145 9154 Proceeds from maturities of investment securities available 10969 1204 Purchases of investment securities held to maturity - -6500 Purchases of investment securities available for sale -6517 -6574 Net decrease in loans -1422 -8456 Purchases of premises and equipment -863 -1039 Proceeds from sale of real estate acquired through foreclosu 95 123 Proceeds from sale of premises and equipment - 9 Net cash provided (used) by investing activities 9407 -12079 Cash flows from financing activities: Net (decrease) increase in demand deposits -13758 1195 Net (decrease) increase in time deposits -3529 7408 Principal payment on long-term debt -135 -90 Net increase in treasury, tax and loan account 45 172 Dividend paid to shareholders - -66 Net cash (used) provided by financing activities -17377 8619 Net decrease in cash and cash equivalents -9619 -2919 Cash and cash equivalents at beginning of period 19168 14015 Cash and cash equivalents at end of period $ 9549 11096 Supplemental disclosures of cash paid during the period for: Interest $ 2361 2173 Income taxes $ - 301 Supplemental disclosures of noncash transactions: Real estate acquired through foreclosure $ 836 193
CITIZENS BANCSHARES CORPORATION AND SUBSIDIARY Notes to the Consolidated Financial Statements September 30, 1997 and 1996 (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 interim statements 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 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. The consolidated financial statements of Citizens Bancshares Corporation and Subsidiary (the "Company") as of September 30, 1997 and for the three and nine month periods ended September 30, 1997 and 1996 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 three month period have been included. All adjustments are of a normal recurring nature. 2. ACCOUNTING AND REGULATORY MATTERS During 1997, the Financial Accounting Standards Board has issued Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income. " SFAS 130 establishes standards for reporting and display of comprehensive income and its components in a full set of financial statements. Comprehensive income includes all changes in equity during the period except those resulting from investments by owners or distributions to owners. The statement does not address issues of recognition or measurement of comprehensive income and its components. The provisions of this statement shall be effective for the fiscal years beginning after December 15, 1997 and early application is permitted. Additionally during 1997, the Financial Accounting Standards Board has issued Statement of Financial Accounting Standards No. 128, "Earnings Per Share " (SFAS 128). SFAS supersedes APB Opinion 15. SFAS 128 simplifies current standards by eliminating the presentation of primary EPS and requiring the presentation of basic EPS, which includes no potential common shares and thus no dilution. The Statement also requires entities with complex capital structures to present basic and diluted EPS on the face of the income statement and also eliminates the modified treasury stock method of computing potential common shares. The Statement is effective for financial statements issued for periods ending after December 15, 1997, including interim periods. Early application is not permitted. On adoption, restatement of all prior-period EPS data presented is required. Based upon the current capital structure of the Company, this Statement should have no effect on the present EPS calculation. SERVICING RIGHTS The Financial Accounting Standards Board (FASB) has issued SFAS No. 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities" which requires the Company to make certain disclosures regarding is servicing assets and liabilities, and may also affect the classification of certain servicing assets and liabilities. SFAS 125 is effective for transfers and servicing of financial assets and extinguishments of liabilities occurring after December 31, 1996. On January 1, 1997, the Company adopted the provisions of SFAS No. 125 which had no material impact on the consolidated financial statements. IMPAIRED LOANS Management considers a loan to be impaired when, based on current information and events, it is probable that all amounts due according to the contractual terms of the loan will not be collected. Impaired loans are measured based on the present value of expected future cash flows, discounted at the loan's effective interest rate, or at the loan's observable market price, or the fair value of the collateral if the loan is collateral dependent. Loans are generally placed on nonaccrual status when the full and timely collection of principal or interest becomes uncertain or the loan becomes contractually in default for 90 days or more as to either principal or interest unless the loan is well collateralized and in the process of collection. When a loan is placed on nonaccrual status, current period accrued and uncollected interest is charged to interest income on loans unless management feels the accrued interest is recoverable through the liquidation of collateral. Interest income, if any, on nonaccrual loans is generally recognized on the cash basis. At September 30, 1997 and December 31, 1997, the recorded investment in loans that are considered to be impaired was approximately $1,258,000 and $1,959,000, respectively, a decrease of $701,000 when compared to December 31, 1996. The related allowance for loan losses for each of these loans was approximately $159,000 and $293,000, respectively. For the three month and the nine month periods ended September 30, 1997, the Company recognized approximately $4,000 and $23,000 interest income on these impaired loans on an accrual basis, respectively. NONPERFORMING ASSETS Nonperforming assets include nonperforming loans, real estate acquired through foreclosure and repossessed assets. Nonperforming loans consist of loans which are past due with respect to principal or interest more than 90 days or have been placed on nonaccrual status and restructured loans. Accrual of interest on loans is discontinued when reasonable doubt exists as to the full, timely collection of interest or principal or they become contractually in default for 90 days or more as to either interest or principal unless the loan is well secured and in process of collection. When a loan is placed on nonaccrual status, previously accrued and uncollected interest is charged against interest income on loans unless management feels the accrued interest is recoverable through the liquidation of the collateral. With the exception of the loans included within nonperforming assets in the table below, management is not aware of any loans classified for regulatory purposes as loss, doubtful, substandard, or special mention that have not been disclosed which (1) represent or result from trends or uncertainties which management reasonably expects will materially impact future operating results, liquidity, or capital resources, or (2) represent any information on material credits which management is aware that causes management to have serious doubts as to the abilities of such borrower to comply with the loan repayment terms. Nonperforming loans decreased approximately $262,000 to $1,103,000 at September 30, 1997, from $1,365,000 at December 31, 1996. Real estate acquired through foreclosure increased approximately $735,000 from $63,000 at December 31, 1996 to $798,000 at September 30, 1997. Nonperforming assets represented 2.32% of loans, net of unearned income and real estate acquired through foreclosure at September 30, 1997 as compared to 1.73% at December 31, 1996. CITIZENS BANCSHARES CORPORATION AND SUBSIDIARY Selected Statistical Information, continued
The increase in nonperforming assets relative to loans, net of unearned income and real estate acquired through foreclosure, was primarily caused by the foreclosure of a commercial property with a recorded book value of $765,000. Management has actively marketed the property and expects to close on the sale of the building during the fourth quarter of 1997. The table below presents a summary of the Company's nonperforming assets at September 30, 1997 and December 31, 1996. 1997 1996 (Amounts in thousands, except financial ratios) Nonperforming assets: Nonperforming loans: $ 1,062 1,286 Past-due loans 41 79 Nonperforming loans 1,103 1,365 Repossessed property 32 Real estate acquired through foreclosure 798 63 Total nonperforming assets $ 1,933 1,428 Ratios: Nonperforming loans to loans, net of unearned income 1.33% 1.66% Nonperforming assets to loans(net of unearned income) and real estate acquired through foreclosure 2.32% 1.73% Nonperforming assets to total assets 1.49% .99% Allowance for loan losses to nonperforming loans 115% 106% Allowance for loan losses to nonperforming assets 66% 101%
Interest income on nonaccrual loans which would have been reported for the three and nine months ended September 30, 1997 totaled approximately $61,000 and $115,000, as compared to $19,000 and $50,000 for the respective periods ending September 30, 1996. The Company recorded approximately $0 and $43,000 interest income on these loans for the three and nine months period ended September 30, 1997. ALLOWANCE FOR LOAN LOSSES The following table summarizes loans, changes in the allowance for loan losses arising from loans charged off, recoveries on loans previously charged off by loan category, and additions to the allowance which have been charged to operating expense as of and for the period ended September 30, 1997 and December 31, 1996. 1997 1996 Loans, net of unearned income $ 82,805 82,408 Average loans, net of unearned income and the allowance for loan losses $ 80,803 73,576 Allowance for loans losses at the beginning of year $ 1,441 1,566 Loans charged off: Commercial, financial, and agricultural 3 111 Real estate- mortgage 148 285 Installment loans to individuals 285 76 Total loans charged off 436 424 Recoveries of loans previously charged off: Commercial, financial, and agricultural 64 38 Real estate mortgage 81 104 Installment loans to individuals 92 92 Total loans recovered 237 234 Net loans charged off 199 190 Addition to allowance for loan losses charged to operating expense 30 65 Allowance for loan losses at period end $ 1,272 1,441 Ratio ofnet loans charged off to average loans, net of unearned income .25% .26% Allowance for loan loses to loan, net of unearned income 1.54% 1.75%
Credit reviews of the loan portfolio designed to identify potential charges to the allowance for loan losses, as well as to determine the adequacy of the allowance for loan losses, are made on a continuous basis throughout the year. These reviews are conducted by management, lending officers, and independent third parties. These reviews are also reviewed by the Board of Directors, who consider such factors as the financial strength of borrowers, the value of applicable collateral, past loan loss experience, anticipated loan losses, growth in the loan portfolio, and other factors including prevailing and anticipated economic conditions. Management believes the allowance for loan losses is adequate at September 30, 1997. A substantial portion of the Company's loan portfolio is secured by real estate in the metropolitan Atlanta market. Accordingly, the ultimate collectibility of a substantial portion of the Company's loan portfolio is susceptible to changes in the market conditions in the metropolitan Atlanta area. 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 September 30, 1997 and the changes in financial condition and results of operations for the three and the nine month periods ended September 30, 1997 and 1996. 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 three month and nine month periods ended September 30, 1997 decreased approximately $207,000 and $358,000 or 11% and 7%, respectively. The decrease in net interest income is due to the combination of higher relative reliance on interest bearing deposits to fund assets and the decrease in the investments portfolio. This combination decreased the Company's net interest margin to 5.63% for the period ended September 30, 1997 compared to 5.84% in 1996. Noninterest income Noninterest income increased approximately $38,000 or 4% for the three month period ended September 30, 1997 and while decreasing approximately $176,000 or 6% for the nine month period ended September 30, 1997 as compared to the same period in 1996. The increase in the three month period is due to individually insignificant items. The decrease in noninterest income is primarily due to a decrease in service charges on deposits of $314,000 or 11% for the nine month period ended September 30, 1997. This change is consistent with the change in the volume of deposit accounts outstanding. Noninterest expense Noninterest expense decreased approximately $110,000 or 4% for the three month period while increasing $157,000 or 2% for the nine month periods ended September 30, 1997, as compared to the same period in 1996. The decrease during the third quarter is a result of a reduction in staff during the period. However for the nine month period, the increase is attributable to a combination of an increase in salaries and employee benefits of $199,000, offset by a decrease in occupancy expense of $13,000 and an increase in other operating expenses of $29,000. The increase in salaries and employee benefit costs is due to new hires, normal salary adjustments and increased employee benefits. Net earnings The Company had a net earnings of approximately $51,000 or $0.04 per share for the three month period ended September 30, 1997 and net earnings of $87,000 or $0.07 per share for the nine month period ended September 30, 1997 as compared to $149,000 and $688,000 or $0.11 and $0.52 per share in 1996. The $601,000 or 87% decrease in net earnings for the nine months ended September 30, 1997 as compared to the same period in 1996 is attributable to the combination of declining net interest income and noninterest income of $358,000 and $176,000 respectively, and an increase in noninterest expense of approximately $157,000. PART II. OTHER INFORMATION LIQUIDITY Liquidity is a bank's ability to meet deposit withdrawals, 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 September 30,1997, approximately 11% of the investment portfolio matures within the next year, 74% after one year but before five years. In addition, federal funds sold averaged approximately $2.9 million during the nine month period ended September 30, 1997. The Company is a member of the Federal Home Loan Bank of Atlanta, 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 Quantitative measures established by regulation to ensure capital adequacy require the Company to maintain minimum amounts and ratios of total Tier 1 capital to risk weighted assets and Tier 1 capital to average assets. As of September 30, 1997 the Company's actual capital amounts (in thousands) and ratios are as follows: For Capital Actual Adequacy Purposes Amount Ratio Amount Ratio Total Capital (to Risk Weighted Assets): Consolidated $ 11,267 12% $ 7,254 >8% Bank $ 11,842 13% 7,251 >8% Tier 1 capital (to Risk Weight Assets): Consolidated $ 10,080 11% $ 3,627 >4% Bank $ 10,655 12% $ 3,625 >4% Tier 1 Capital (to Average Assets): Consolidated $ 10,080 7% $ 5,528 >4% Bank $ 10,655 8% $ 5,527 >4% 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 None ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS None ITEM 5. OTHER INFORMATION Effective July 1, 1997, Mr. William L. Gibbs resigned as the President and Chief Executive Officer of the Bank. Dr. Johnnie L. Clark, Vice Chairman of the Company's Board of Directors, was named as his temporary replacement. Effective July 27, 1997, the Company signed a letter of intent to merge with First Southern Bancshares, Inc.. The merger is contingent upon regulatory and shareholder approval. On October 23, 1997, an S-4 was filed with the SEC in connection with the merger. 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: November 13, 1997 By: /s/ Johnnie L. Clark Johnnie L. Clark President and Chief Executive Officer Date: November 13, 1997 By: /s/ Ann I. Scott Ann I. Scott Senior Vice President and Controller EX-1 2 [ARTICLE] 9 [CIK] [NAME] [PERIOD-TYPE] 9-MOS [FISCAL-YEAR-END] DEC-31-1997 [PERIOD-END] sep-30-1997 [CASH] 8549 [INT-BEARING-DEPOSITS] 83031 [FED-FUNDS-SOLD] 1000 [TRADING-ASSETS] 0 [INVESTMENTS-HELD-FOR-SALE] 18934 [INVESTMENTS-CARRYING] 0 [INVESTMENTS-MARKET] 8863 [LOANS] 82805 [ALLOWANCE] 1272 [TOTAL-ASSETS] 127580 [DEPOSITS] 115601 [SHORT-TERM] 0 [LIABILITIES-OTHER] 1271 [LONG-TERM] 630 [PREFERRED-MANDATORY] 0 [PREFERRED] 0 [COMMON] 1330 [OTHER-SE] 8748 [TOTAL-LIABILITIES-AND-EQUITY] 127580 [INTEREST-LOAN] 5535 [INTEREST-INVEST] 1753 [INTEREST-OTHER] 127 [INTEREST-TOTAL] 7415 [INTEREST-DEPOSIT] 2298 [INTEREST-EXPENSE] 2361 [INTEREST-INCOME-NET] 5054 [LOAN-LOSSES] 0 [SECURITIES-GAINS] 13 [EXPENSE-OTHER] 7747 [INCOME-PRETAX] 131 [INCOME-PRE-EXTRAORDINARY] 131 [EXTRAORDINARY] 0 [CHANGES] 0 [NET-INCOME] 87 [EPS-PRIMARY] .07 [EPS-DILUTED] .07 [YIELD-ACTUAL] 4.54 [LOANS-NON] 1062 [LOANS-PAST] 41 [LOANS-TROUBLED] 200 [LOANS-PROBLEM] 0 [ALLOWANCE-OPEN] 1441 [CHARGE-OFFS] 436 [RECOVERIES] 237 [ALLOWANCE-CLOSE] 1272 [ALLOWANCE-DOMESTIC] 1272 [ALLOWANCE-FOREIGN] 0 [ALLOWANCE-UNALLOCATED] 0
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