We have audited the accompanying consolidated financial statements of Citizens Bancshares, Inc. and its subsidiary, which
comprise the consolidated balance sheets as of December 31, 2016 and 2015, and the related consolidated statements of comprehensive income, shareholders’ equity, and cash flows for the years then ended, and the related notes to the
financial statements.
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles
generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement,
whether due to fraud or error.
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing
standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures
selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our audit opinion.
In
our opinion, the 2016 consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Citizens Bancshares, Inc. and its subsidiary as of December 31, 2016, and the results of
their operations and their cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.
The consolidated
financial statements as of December 31, 2015 were audited by Roy Chenevert, CPA, whose firm was acquired by Hannis T. Bourgeois, LLP as of September 1, 2016, and whose report dated February 29, 2016 expressed an unmodified opinion on
those statements.
/s/ Hannis T. Bourgeois, LLP
The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2016 AND 2015
(1) Summary of Significant Accounting Policies
The accounting and reporting policies of Citizens Bancshares, Inc. (the “Company”) and its subsidiary are based on generally accepted accounting
principles and conform to predominant banking industry practices. Citizens Bank, Ville Platte, Louisiana (the “Bank”) is wholly owned by the Company.
|
(a)
|
Principles of consolidation
- The consolidated financial statements of the Company include the accounts of the Company and its subsidiary. All material intercompany transactions and accounts have been eliminated.
|
|
(b)
|
Nature of operations
- The Bank provides a variety of financial services to individual and business customers through its three offices in Evangeline Parish, Louisiana, which is primarily an agricultural area.
The Bank’s primary deposit products are checking and savings accounts and certificates of deposit. Its primary lending products are commercial, agricultural, real estate and consumer loans.
|
|
(c)
|
Use of 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.
Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for losses on loans and the valuation of real estate acquired in connection with foreclosures or in satisfaction of loans. In
connection with the determination of the allowances for losses on loans and foreclosed real estate, management obtains independent appraisals for significant properties. While management uses available information to recognize losses on loans and
foreclosed real estate, future additions to the allowances may be necessary based on changes in local economic conditions, which depends heavily on the agricultural industry. In addition, regulatory agencies, as an integral part of their examination
process, periodically review the Bank’s allowances for losses on loans and foreclosed real estate. Such agencies may require the Bank to recognize additions to the allowances based on their judgments about information available to them at the
time of their examination. Because of these factors, it is reasonably possible that the allowances for losses on loans and foreclosed real estate may change materially in the near term.
|
|
(d)
|
Cash equivalents
- For the purpose of presentation in the consolidated statements of cash flows, the Company considers due from bank accounts, federal funds sold and the Federal Reserve Bank excess balance
account to be cash equivalents.
|
|
(e)
|
Securities held to maturity
- Bonds and notes for which the Bank has the positive intent and ability to hold to maturity are reported at cost, adjusted for premiums and discounts that are recognized in interest
income using the interest method over the period to maturity. Declines in the fair value of individual securities below cost that are other than temporary result in write-downs of the individual securities to their fair value. The related
write-downs are included in earnings as realized losses.
|
|
(f)
|
Securities available for sale
- Securities available for sale consist of bonds and notes not classified as held to maturity. Unrealized holding gains and losses, net of tax, on these securities are reported as
accumulated other comprehensive income in shareholders’ equity. Gains and losses on the sale of securities available for sale are determined using the specific-identification method. Premiums and discounts are recognized in interest income
using the interest method over the period to maturity. Declines in the fair value of individual securities below cost that are other than temporary result in write-downs of the individual securities to their fair value. The related write-downs are
included in earnings as realized losses.
|
|
(g)
|
Loans receivable and allowance for loan losses
- Loans receivable that management has the intent and
ability to hold for the foreseeable future or until maturity or pay-off are reported at their outstanding principal adjusted for any charge-offs, the allowance for loan losses, and unearned income. Unearned income on discounted loans is recognized
as income over the term of the loans using a method that approximates the interest method. Interest on other loans is calculated by using the simple interest method on daily balances of the principal amount outstanding. The accrual of interest on
impaired loans is discontinued when, in management’s opinion, the borrower may be unable to meet payments as they become due. Interest income
|
9
CITIZENS BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2016 AND 2015
generally is not recognized on these loans unless the likelihood of further loss is remote. Interest payments received on such loans are applied as a reduction of the loan principal balance. The
allowance for loan losses is increased by charges to income and decreased by charge-offs (net of recoveries). Management’s periodic evaluation of the adequacy of the allowance is based on the Bank’s past loan loss experience, known and
inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, and current economic conditions.
|
(h)
|
Premises and equipment
- Land is carried at cost. Bank premises, furniture and equipment are carried at cost, less accumulated depreciation and amortization computed principally by the straight-line method.
|
|
(i)
|
Foreclosed real estate
- Real estate properties acquired through, or in lieu of, loan foreclosure are to be sold and 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 carrying amount or fair value less cost to sell. Revenue and expenses from operations and changes in the valuation allowance are
included in operations.
|
|
(j)
|
Income taxes
- Deferred tax assets and liabilities are reflected at currently enacted income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized or
settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes.
|
|
(k)
|
Net income per share
- Net income per share of common stock has been computed on the basis of the weighted-average number of shares of common stock outstanding.
|
|
(l)
|
Shareholders’ equity
- On January 1, 2015, the Louisiana Business Corporation Act (the Act) became effective. Under the provisions of the Act, the concept of “Treasury Shares” is eliminated.
Rather, shares purchased by the Company constitute authorized but unissued shares. Under the Accounting Standards Codification (ASC 505-30-05-3, Treasury Stock), accounting for treasury stock shall conform to applicable laws. Accordingly, the
Company’s Consolidated Balance Sheet as of December 31, 2015 reflects this change. The cost of shares purchased by the Company has been allocated to common stock, additional paid-in capital and retained earnings balances.
|
|
(m)
|
Reclassifications
- Certain reclassifications have been made to the prior year’s financial statements, which have no effect on net income as previously reported, to conform to current year reporting.
|
|
(n)
|
Date of Management’s Review of Subsequent Events
- Management has evaluated subsequent events through February 17, 2017, the date which the financial statements were available to be issued.
|
(2) Restrictions
The Bank is required
to maintain reserve balances by the Federal Reserve Bank. The amounts of these reserves as of December 31, 2016 and 2015 were $1,323,000 and $1,628,000, respectively.
In addition, prior approval of the Commissioner of the Louisiana Office of Financial Institutions is required for the Bank to pay dividends if the total of
all dividends declared and paid during any one year would exceed the total of net profits of that year combined with the net profits from the immediately preceding year.
10
CITIZENS BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2016 AND 2015
(3) Investment Securities
The amortized costs and approximate fair values of investments in debt securities at December 31 follow (in thousands of dollars):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
|
|
|
|
|
|
Gross
|
|
|
Gross
|
|
|
|
|
|
|
|
Amortized
|
|
|
Unrealized
|
|
|
Unrealized
|
|
|
Fair
|
|
|
|
|
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Value
|
|
|
Securities available for sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U. S. Treasury securities
|
|
$
|
9,010
|
|
|
$
|
1
|
|
|
$
|
30
|
|
|
$
|
8,981
|
|
|
U. S. Government agencies and corporations
|
|
|
34,088
|
|
|
|
33
|
|
|
|
203
|
|
|
|
33,918
|
|
|
Mortgage-backed securities
|
|
|
23,979
|
|
|
|
310
|
|
|
|
71
|
|
|
|
24,218
|
|
|
State and political subdivisions
|
|
|
9,115
|
|
|
|
61
|
|
|
|
96
|
|
|
|
9,080
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
76,192
|
|
|
$
|
405
|
|
|
$
|
400
|
|
|
$
|
76,197
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities pledged to secure public deposits and for other purposes
|
|
$
|
31,568
|
|
|
|
|
|
|
|
|
|
|
$
|
31,460
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015
|
|
|
|
|
|
|
|
Gross
|
|
|
Gross
|
|
|
|
|
|
|
|
Amortized
|
|
|
Unrealized
|
|
|
Unrealized
|
|
|
Fair
|
|
|
|
|
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Value
|
|
|
Securities available for sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U. S. Treasury securities
|
|
$
|
8,006
|
|
|
$
|
—
|
|
|
$
|
40
|
|
|
$
|
7,966
|
|
|
U. S. Government agencies and corporations
|
|
|
43,509
|
|
|
|
114
|
|
|
|
245
|
|
|
|
43,378
|
|
|
Mortgage-backed securities
|
|
|
24,576
|
|
|
|
360
|
|
|
|
72
|
|
|
|
24,864
|
|
|
State and political subdivisions
|
|
|
7,591
|
|
|
|
140
|
|
|
|
35
|
|
|
|
7,696
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
83,682
|
|
|
$
|
614
|
|
|
$
|
392
|
|
|
$
|
83,904
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities held to maturity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
States and political subdivisions
|
|
$
|
20
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities pledged to secure public deposits and for other purposes
|
|
$
|
31,720
|
|
|
|
|
|
|
|
|
|
|
$
|
31,618
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The scheduled maturities of securities available for sale and held to maturity at December 31, 2016 were as follows (in
thousands of dollars):
|
|
|
|
|
|
|
|
|
|
|
|
|
Available for sale
|
|
|
|
|
Amortized
|
|
|
Fair
|
|
|
|
|
Cost
|
|
|
Value
|
|
|
Contractual maturities
|
|
|
|
|
|
|
|
|
|
One year or less
|
|
$
|
11,504
|
|
|
$
|
11,545
|
|
|
After one year through five years
|
|
|
53,187
|
|
|
|
53,203
|
|
|
After five years through ten years
|
|
|
10,158
|
|
|
|
10,100
|
|
|
After ten years
|
|
|
1,343
|
|
|
|
1,349
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
76,192
|
|
|
$
|
76,197
|
|
|
|
|
|
|
|
|
|
|
|
Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations
with or without call or prepayment penalties. No securities were sold in 2016 and 2015.
11
CITIZENS BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2016 AND 2015
Information pertaining to securities with gross unrealized losses at December 31, 2016 and 2015,
aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows (in thousands of dollars):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less Than 12 Months
|
|
|
12 Months or Greater
|
|
|
Total
|
|
|
|
|
|
|
|
Gross
|
|
|
|
|
|
Gross
|
|
|
|
|
|
Gross
|
|
|
|
|
Fair
|
|
|
Unrealized
|
|
|
Fair
|
|
|
Unrealized
|
|
|
Fair
|
|
|
Unrealized
|
|
|
|
|
Value
|
|
|
Losses
|
|
|
Value
|
|
|
Losses
|
|
|
Value
|
|
|
Losses
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U. S. Treasury securities
|
|
$
|
5,982
|
|
|
$
|
30
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,982
|
|
|
$
|
30
|
|
|
U. S. Government agencies and corporations
|
|
|
28,885
|
|
|
|
195
|
|
|
|
991
|
|
|
|
8
|
|
|
|
29,876
|
|
|
|
203
|
|
|
Municipal securities
|
|
|
4,186
|
|
|
|
73
|
|
|
|
396
|
|
|
|
23
|
|
|
|
4,582
|
|
|
|
96
|
|
|
Mortgage-backed securities
|
|
|
6,877
|
|
|
|
44
|
|
|
|
2,105
|
|
|
|
27
|
|
|
|
8,982
|
|
|
|
71
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
45,930
|
|
|
$
|
342
|
|
|
$
|
3,492
|
|
|
$
|
58
|
|
|
$
|
49,422
|
|
|
$
|
400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U. S. Treasury securities
|
|
$
|
7,966
|
|
|
$
|
40
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,966
|
|
|
$
|
40
|
|
|
U. S. Government agencies and corporations
|
|
|
27,384
|
|
|
|
157
|
|
|
|
5,907
|
|
|
|
88
|
|
|
|
33,291
|
|
|
|
245
|
|
|
Municipal securities
|
|
|
1,384
|
|
|
|
25
|
|
|
|
659
|
|
|
|
10
|
|
|
|
2,043
|
|
|
|
35
|
|
|
Mortgage-backed securities
|
|
|
7,448
|
|
|
|
47
|
|
|
|
1,166
|
|
|
|
25
|
|
|
|
8,614
|
|
|
|
72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
44,182
|
|
|
$
|
269
|
|
|
$
|
7,732
|
|
|
$
|
123
|
|
|
$
|
51,914
|
|
|
$
|
392
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when
economic or market concerns warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and
(3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.
At December 31, 2016, the 75 securities with unrealized losses have depreciated 0.75% from the Company’s amortized cost basis. These securities are
guaranteed by either the U. S. Government or other governments. These unrealized losses relate principally to current interest rates for similar types of securities. In analyzing an issuer’s financial condition, management considers whether the
securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuer’s financial condition. As management has the ability to hold debt securities
until maturity, or for the foreseeable future if classified as available for sale, no declines are deemed to be other-than-temporary.
12
CITIZENS BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2016 AND 2015
(4) Loans Receivable
The components of loans in the statements of financial condition at December 31 were as follows (in thousands of dollars):
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
Real estate
|
|
|
|
|
|
|
|
|
|
Construction and development
|
|
$
|
5,531
|
|
|
$
|
5,326
|
|
|
1-4 family residential
|
|
|
64,915
|
|
|
|
66,701
|
|
|
Multifamily
|
|
|
4,505
|
|
|
|
4,777
|
|
|
Farmland
|
|
|
4,974
|
|
|
|
4,500
|
|
|
Nonfarm, nonresidential
|
|
|
22,838
|
|
|
|
20,082
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate
|
|
|
102,763
|
|
|
|
101,386
|
|
|
Agricultural
|
|
|
2,464
|
|
|
|
3,328
|
|
|
Commercial and industrial
|
|
|
12,814
|
|
|
|
12,021
|
|
|
Consumer
|
|
|
10,673
|
|
|
|
11,449
|
|
|
Other
|
|
|
50
|
|
|
|
139
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
128,764
|
|
|
|
128,323
|
|
|
Allowance for loan losses
|
|
|
(1,915
|
)
|
|
|
(1,923
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
126,849
|
|
|
$
|
126,400
|
|
|
|
|
|
|
|
|
|
|
|
Credit Quality Indicators
Loans are categorized into risk categories based on relevant information about the ability of borrowers to service their debt, such as: current financial
information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The following definitions are utilized for risk ratings, which are consistent with the definitions used in
supervisory guidance:
Special Mention
- Loans classified as special mention have potential weaknesses that deserve
management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Bank’s credit position at some future date.
Substandard
- Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or
of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the
deficiencies are not corrected.
Loans not meeting the criteria above are considered to be
Pass
rated loans.
Loan Analysis by Credit Quality Indicators (in thousands of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
|
|
Pass or
Not Rated
|
|
|
Special
Mention
|
|
|
Substandard
|
|
|
Total
|
|
|
Construction and development
|
|
$
|
5,531
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,531
|
|
|
1-4 family residential
|
|
|
64,362
|
|
|
|
478
|
|
|
|
75
|
|
|
|
64,915
|
|
|
Multifamily
|
|
|
4,505
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,505
|
|
|
Farmland
|
|
|
4,974
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,974
|
|
|
Nonfarm, nonresidential
|
|
|
21,614
|
|
|
|
—
|
|
|
|
1,224
|
|
|
|
22,838
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate
|
|
|
100,986
|
|
|
|
478
|
|
|
|
1,299
|
|
|
|
102,763
|
|
|
Agricultural
|
|
|
2,464
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,464
|
|
|
Commercial and industrial
|
|
|
12,756
|
|
|
|
58
|
|
|
|
—
|
|
|
|
12,814
|
|
|
Consumer
|
|
|
10,649
|
|
|
|
—
|
|
|
|
24
|
|
|
|
10,673
|
|
|
Other
|
|
|
50
|
|
|
|
—
|
|
|
|
—
|
|
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
126,905
|
|
|
$
|
536
|
|
|
$
|
1,323
|
|
|
$
|
128,764
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13
CITIZENS BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2016 AND 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015
|
|
|
|
Pass or Not
Rated
|
|
|
Special
Mention
|
|
|
Substandard
|
|
|
Total
|
|
|
Construction and development
|
|
$
|
5,275
|
|
|
$
|
—
|
|
|
$
|
51
|
|
|
$
|
5,326
|
|
|
1-4 family residential
|
|
|
66,216
|
|
|
|
143
|
|
|
|
342
|
|
|
|
66,701
|
|
|
Multifamily
|
|
|
4,777
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,777
|
|
|
Farmland
|
|
|
4,500
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,500
|
|
|
Nonfarm, nonresidential
|
|
|
19,629
|
|
|
|
—
|
|
|
|
453
|
|
|
|
20,082
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate
|
|
|
100,397
|
|
|
|
143
|
|
|
|
846
|
|
|
|
101,386
|
|
|
Agricultural
|
|
|
3,328
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,328
|
|
|
Commercial and industrial
|
|
|
11,966
|
|
|
|
—
|
|
|
|
55
|
|
|
|
12,021
|
|
|
Consumer
|
|
|
11,393
|
|
|
|
—
|
|
|
|
56
|
|
|
|
11,449
|
|
|
Other
|
|
|
139
|
|
|
|
—
|
|
|
|
—
|
|
|
|
139
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
127,223
|
|
|
$
|
143
|
|
|
$
|
957
|
|
|
$
|
128,323
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following is a summary loan aging analysis as of December 31 (in thousands of dollars):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
|
|
|
Past Due 90 Days or More
|
|
|
|
|
|
|
|
|
|
|
|
|
Past Due
30 - 89 Days
|
|
|
And
Accruing
|
|
|
And Not
Accruing
|
|
|
Total
Past Due
|
|
|
Current
|
|
|
Total
Loans
|
|
|
Construction and development
|
|
$
|
18
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
18
|
|
|
$
|
5,513
|
|
|
$
|
5,531
|
|
|
1-4 family residential
|
|
|
2,169
|
|
|
|
81
|
|
|
|
75
|
|
|
|
2,325
|
|
|
|
62,590
|
|
|
|
64,915
|
|
|
Multifamily
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,505
|
|
|
|
4,505
|
|
|
Farmland
|
|
|
528
|
|
|
|
—
|
|
|
|
—
|
|
|
|
528
|
|
|
|
4,446
|
|
|
|
4,974
|
|
|
Nonfarm, nonresidential
|
|
|
136
|
|
|
|
—
|
|
|
|
—
|
|
|
|
136
|
|
|
|
22,702
|
|
|
|
22,838
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate
|
|
|
2,851
|
|
|
|
81
|
|
|
|
75
|
|
|
|
3,007
|
|
|
|
99,756
|
|
|
|
102,763
|
|
|
Agricultural
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,464
|
|
|
|
2,464
|
|
|
Commercial and industrial
|
|
|
69
|
|
|
|
24
|
|
|
|
—
|
|
|
|
93
|
|
|
|
12,721
|
|
|
|
12,814
|
|
|
Consumer
|
|
|
168
|
|
|
|
14
|
|
|
|
24
|
|
|
|
206
|
|
|
|
10,467
|
|
|
|
10,673
|
|
|
Other
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
50
|
|
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3,088
|
|
|
$
|
119
|
|
|
$
|
99
|
|
|
$
|
3,306
|
|
|
$
|
125,458
|
|
|
$
|
128,764
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015
|
|
|
|
|
Past Due 90 Days or More
|
|
|
|
|
|
|
|
|
|
|
|
|
Past Due
30 - 89 Days
|
|
|
And
Accruing
|
|
|
And Not
Accruing
|
|
|
Total
Past Due
|
|
|
Current
|
|
|
Total
Loans
|
|
|
Construction and development
|
|
$
|
21
|
|
|
$
|
—
|
|
|
$
|
51
|
|
|
$
|
72
|
|
|
$
|
5,254
|
|
|
$
|
5,326
|
|
|
1-4 family residential
|
|
|
1,263
|
|
|
|
92
|
|
|
|
303
|
|
|
|
1,658
|
|
|
|
65,043
|
|
|
|
66,701
|
|
|
Multifamily
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,777
|
|
|
|
4,777
|
|
|
Farmland
|
|
|
173
|
|
|
|
—
|
|
|
|
—
|
|
|
|
173
|
|
|
|
4,327
|
|
|
|
4,500
|
|
|
Nonfarm, nonresidential
|
|
|
73
|
|
|
|
—
|
|
|
|
—
|
|
|
|
73
|
|
|
|
20,009
|
|
|
|
20,082
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate
|
|
|
1,530
|
|
|
|
92
|
|
|
|
354
|
|
|
|
1,976
|
|
|
|
99,410
|
|
|
|
101,386
|
|
|
Agricultural
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,328
|
|
|
|
3,328
|
|
|
Commercial and industrial
|
|
|
409
|
|
|
|
—
|
|
|
|
55
|
|
|
|
464
|
|
|
|
11,557
|
|
|
|
12,021
|
|
|
Consumer
|
|
|
190
|
|
|
|
15
|
|
|
|
56
|
|
|
|
261
|
|
|
|
11,188
|
|
|
|
11,449
|
|
|
Other
|
|
|
6
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6
|
|
|
|
133
|
|
|
|
139
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,135
|
|
|
$
|
107
|
|
|
$
|
465
|
|
|
$
|
2,707
|
|
|
$
|
125,616
|
|
|
$
|
128,323
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following tables outline the changes in the allowance for loan losses by collateral type, the allowances for loans
individually and collectively evaluated for impairment, and the amount of loans individually and collectively evaluated for impairment at December 31.
14
CITIZENS BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2016 AND 2015
Allowance for Loan Losses and Recorded Investment in Loans Receivable (in thousands of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for Loan Losses
|
|
|
|
Beginning
Balance
|
|
|
Provision for
Loan Losses
|
|
|
Charge-offs
|
|
|
Recoveries
|
|
|
Ending
Balance
|
|
|
Year Ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
$
|
953
|
|
|
$
|
—
|
|
|
$
|
9
|
|
|
$
|
1
|
|
|
$
|
945
|
|
|
Consumer
|
|
|
970
|
|
|
|
—
|
|
|
|
31
|
|
|
|
31
|
|
|
|
970
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,923
|
|
|
$
|
—
|
|
|
$
|
40
|
|
|
$
|
32
|
|
|
$
|
1,915
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
$
|
952
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
953
|
|
|
Consumer
|
|
|
973
|
|
|
|
—
|
|
|
|
18
|
|
|
|
15
|
|
|
|
970
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,925
|
|
|
$
|
—
|
|
|
$
|
18
|
|
|
$
|
16
|
|
|
$
|
1,923
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
|
|
|
Allowance for Loan Losses
|
|
|
Loans Receivable
|
|
|
|
|
Balance
for Loans
Individually
Evaluated for
Impairment
|
|
|
Balance
for Loans
Collectively
Evaluated for
Impairment
|
|
|
Total
Ending
Balance
|
|
|
Balance
of Loans
Individually
Evaluated for
Impairment
|
|
|
Balance
of Loans
Collectively
Evaluated for
Impairment
|
|
|
Commercial
|
|
$
|
—
|
|
|
$
|
945
|
|
|
$
|
63,756
|
|
|
$
|
1,224
|
|
|
$
|
62,532
|
|
|
Consumer
|
|
|
—
|
|
|
|
970
|
|
|
|
65,008
|
|
|
|
99
|
|
|
|
64,909
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
—
|
|
|
$
|
1,915
|
|
|
$
|
128,764
|
|
|
$
|
1,323
|
|
|
$
|
127,441
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015
|
|
|
|
|
Allowance for Loan Losses
|
|
|
Loans Receivable
|
|
|
|
|
Balance
for Loans
Individually
Evaluated for
Impairment
|
|
|
Balance
for Loans
Collectively
Evaluated for
Impairment
|
|
|
Total
Ending
Balance
|
|
|
Balance
of Loans
Individually
Evaluated for
Impairment
|
|
|
Balance
of Loans
Collectively
Evaluated for
Impairment
|
|
|
Commercial
|
|
$
|
3
|
|
|
$
|
950
|
|
|
$
|
60,971
|
|
|
$
|
508
|
|
|
$
|
60,463
|
|
|
Consumer
|
|
|
10
|
|
|
|
960
|
|
|
|
67,352
|
|
|
|
449
|
|
|
|
66,903
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
13
|
|
|
$
|
1,910
|
|
|
$
|
128,323
|
|
|
$
|
957
|
|
|
$
|
127,366
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired Loans
The
following table summarizes information relative to impaired loans at December 31, 2016 and 2015 (in thousands of dollars):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unpaid
Principal
Balance
|
|
|
|
|
|
Average
Recorded
Investment
|
|
|
Interest
Income
Recognized
|
|
|
December 31, 2016
|
|
Recorded
Investment
|
|
|
|
Related
Allowance
|
|
|
|
|
With no allowance recorded
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction and development
|
|
$
|
75
|
|
|
$
|
75
|
|
|
$
|
—
|
|
|
$
|
82
|
|
|
$
|
4
|
|
|
1-4 family residential
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Multifamily
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Farmland
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Nonfarm, nonresidential
|
|
|
1,224
|
|
|
|
1,224
|
|
|
|
—
|
|
|
|
1,235
|
|
|
|
72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate
|
|
|
1,299
|
|
|
|
1,299
|
|
|
|
—
|
|
|
|
1,317
|
|
|
|
76
|
|
|
Agricultural
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Commercial and industrial
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Consumer
|
|
|
24
|
|
|
|
24
|
|
|
|
—
|
|
|
|
27
|
|
|
|
1
|
|
|
Other
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,323
|
|
|
$
|
1,323
|
|
|
$
|
—
|
|
|
$
|
1,344
|
|
|
$
|
77
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15
CITIZENS BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2016 AND 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unpaid
|
|
|
|
|
|
Average
|
|
|
Interest
|
|
|
|
|
Recorded
|
|
|
Principal
|
|
|
Related
|
|
|
Recorded
|
|
|
Income
|
|
|
December 31, 2016
|
|
Investment
|
|
|
Balance
|
|
|
Allowance
|
|
|
Investment
|
|
|
Recognized
|
|
|
With an allowance recorded
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction and development
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
1-4 family residential
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Multifamily
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Farmland
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Nonfarm, nonresidential
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Agricultural
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Commercial and industrial
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Consumer
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Other
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction and development
|
|
$
|
75
|
|
|
$
|
75
|
|
|
$
|
—
|
|
|
$
|
82
|
|
|
$
|
4
|
|
|
1-4 family residential
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Multifamily
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Farmland
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Nonfarm, nonresidential
|
|
|
1,224
|
|
|
|
1,224
|
|
|
|
—
|
|
|
|
1,235
|
|
|
|
72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate
|
|
|
1,299
|
|
|
|
1,299
|
|
|
|
—
|
|
|
|
1,317
|
|
|
|
76
|
|
|
Agricultural
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Commercial and industrial
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Consumer
|
|
|
24
|
|
|
|
24
|
|
|
|
—
|
|
|
|
27
|
|
|
|
1
|
|
|
Other
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,323
|
|
|
$
|
1,323
|
|
|
$
|
—
|
|
|
$
|
1,344
|
|
|
$
|
77
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unpaid
|
|
|
|
|
|
Average
|
|
|
Interest
|
|
|
|
|
Recorded
|
|
|
Principal
|
|
|
Related
|
|
|
Recorded
|
|
|
Income
|
|
|
December 31, 2015
|
|
Investment
|
|
|
Balance
|
|
|
Allowance
|
|
|
Investment
|
|
|
Recognized
|
|
|
With no allowance recorded
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction and development
|
|
$
|
51
|
|
|
$
|
51
|
|
|
$
|
—
|
|
|
$
|
51
|
|
|
$
|
—
|
|
|
1-4 family residential
|
|
|
342
|
|
|
|
342
|
|
|
|
—
|
|
|
|
348
|
|
|
|
11
|
|
|
Multifamily
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Farmland
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Nonfarm, nonresidential
|
|
|
453
|
|
|
|
453
|
|
|
|
—
|
|
|
|
458
|
|
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate
|
|
|
846
|
|
|
|
846
|
|
|
|
—
|
|
|
|
857
|
|
|
|
30
|
|
|
Agricultural
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Commercial and industrial
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Consumer
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Other
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
846
|
|
|
$
|
846
|
|
|
$
|
—
|
|
|
$
|
857
|
|
|
$
|
30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With an allowance recorded
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction and development
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
1-4 family residential
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Multifamily
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Farmland
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Nonfarm, nonresidential
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Agricultural
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Commercial and industrial
|
|
|
55
|
|
|
|
55
|
|
|
|
3
|
|
|
|
55
|
|
|
|
2
|
|
|
Consumer
|
|
|
56
|
|
|
|
56
|
|
|
|
10
|
|
|
|
58
|
|
|
|
1
|
|
|
Other
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
111
|
|
|
$
|
111
|
|
|
$
|
13
|
|
|
$
|
113
|
|
|
$
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16
CITIZENS BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2016 AND 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unpaid
|
|
|
|
|
|
Average
|
|
|
Interest
|
|
|
|
|
Recorded
|
|
|
Principal
|
|
|
Related
|
|
|
Recorded
|
|
|
Income
|
|
|
December 31, 2015
|
|
Investment
|
|
|
Balance
|
|
|
Allowance
|
|
|
Investment
|
|
|
Recognized
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction and development
|
|
$
|
51
|
|
|
$
|
51
|
|
|
$
|
—
|
|
|
$
|
51
|
|
|
$
|
—
|
|
|
1-4 family residential
|
|
|
342
|
|
|
|
342
|
|
|
|
—
|
|
|
|
348
|
|
|
|
11
|
|
|
Multifamily
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Farmland
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Nonfarm, nonresidential
|
|
|
453
|
|
|
|
453
|
|
|
|
—
|
|
|
|
458
|
|
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate
|
|
|
846
|
|
|
|
846
|
|
|
|
—
|
|
|
|
857
|
|
|
|
30
|
|
|
Agricultural
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Commercial and industrial
|
|
|
55
|
|
|
|
55
|
|
|
|
3
|
|
|
|
55
|
|
|
|
2
|
|
|
Consumer
|
|
|
56
|
|
|
|
56
|
|
|
|
10
|
|
|
|
58
|
|
|
|
1
|
|
|
Other
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
957
|
|
|
$
|
957
|
|
|
$
|
13
|
|
|
$
|
970
|
|
|
$
|
33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No commitments to loan additional funds to borrowers of impaired loans were outstanding at December 31, 2016.
Troubled Debt Restructurings
The following tables
summarize information relative to loan modifications determined to be troubled debt restructurings as of December 31, 2016 (in thousands of dollars). All troubled debt restructurings are included in impaired loans.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-
|
|
|
Post-
|
|
|
|
|
|
|
|
Modification
|
|
|
Modification
|
|
|
|
|
|
|
|
Outstanding
|
|
|
Outstanding
|
|
|
|
|
Number of
|
|
|
Recorded
|
|
|
Recorded
|
|
|
Troubled debt restructurings
|
|
Contracts
|
|
|
Investment
|
|
|
Investment
|
|
|
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonfarm, nonresidential
|
|
|
1
|
|
|
$
|
1,224
|
|
|
$
|
1,224
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1
|
|
|
$
|
1,224
|
|
|
$
|
1,224
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5) Premises and Equipment
Components of premises and equipment included in the consolidated balance sheets at December 31 were as follows (in thousands of dollars):
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
Land
|
|
$
|
356
|
|
|
$
|
356
|
|
|
Buildings
|
|
|
3,698
|
|
|
|
3,664
|
|
|
Furniture and equipment
|
|
|
433
|
|
|
|
433
|
|
|
Automobiles
|
|
|
55
|
|
|
|
55
|
|
|
Capital improvement construction
|
|
|
—
|
|
|
|
58
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost
|
|
|
4,542
|
|
|
|
4,566
|
|
|
Accumulated depreciation
|
|
|
(2,538
|
)
|
|
|
(2,384
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,004
|
|
|
$
|
2,182
|
|
|
|
|
|
|
|
|
|
|
|
17
CITIZENS BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2016 AND 2015
(6) Deposits
At December 31, 2016, the scheduled maturities of time deposits are as follows (in thousands of dollars):
|
|
|
|
|
|
|
Year maturing
|
|
|
|
|
2017
|
|
$
|
73,966
|
|
|
2018
|
|
|
16,010
|
|
|
2019
|
|
|
1,333
|
|
|
2020
|
|
|
707
|
|
|
2021 and thereafter
|
|
|
6,486
|
|
|
|
|
|
|
|
|
|
|
$
|
98,502
|
|
|
|
|
|
|
|
(7) Fair Value Measurements
Fair Value Disclosures
- The Company groups its financial assets and liabilities measured at fair value in three levels. Fair value is an exit price,
representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Applicable accounting guidance establishes a fair value hierarchy that prioritizes the inputs used
to develop assumptions and measure fair value. The hierarchy requires companies to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
Level 1 - Includes the most reliable sources and includes quoted prices in active markets for identical assets or liabilities.
Level 2 - Includes observable inputs other than quoted prices that are observable for the asset or liability (for example, interest rates and
yield curves at commonly quoted intervals, volatilities, prepayment speeds, loss severities, credit risks, and default rates) as well as inputs that are derived principally from or corroborated by observable market data by correlation or other means
(market-corroborated inputs).
Level 3 - Includes unobservable inputs and should be used only when observable inputs are unavailable.
Recurring Basis
- Fair values of investment securities available for sale were primarily measured using information from a third-party pricing service.
This pricing service provides information by utilizing evaluated pricing models supported with market data information. Standard inputs include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, benchmark securities, bids,
offers, and reference data from market research publications.
Fair values that are measured on a recurring basis at December 31 are as follows (in
thousands of dollars):
|
|
|
|
|
|
|
|
|
|
|
Securities available for sale
|
|
2016
|
|
|
2015
|
|
|
Fair value
|
|
$
|
76,197
|
|
|
$
|
83,904
|
|
|
Fair value measurement based on significant other observable inputs (Level 2)
|
|
$
|
76,197
|
|
|
$
|
83,904
|
|
Nonrecurring Basis
- The fair value of impaired loans is measured at the fair value of the collateral for
collateral-dependent loans. Impaired loans are Level 2 assets measured using appraisals from external parties of the collateral less any prior liens. Foreclosed real estate is initially recorded at fair value less estimated costs to sell. The fair
value of foreclosed real estate is based on property appraisals and an analysis of similar properties available. As such, foreclosed real estate properties are Level 2 assets.
18
CITIZENS BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2016 AND 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
Impaired Loans
|
|
|
|
|
|
|
|
|
|
Fair value
|
|
$
|
1,323
|
|
|
$
|
957
|
|
|
Fair value measurement based on significant other observable inputs (Level 2)
|
|
$
|
1,323
|
|
|
$
|
957
|
|
|
Foreclosed Real Estate
|
|
|
|
|
|
|
|
|
|
Fair value
|
|
$
|
89
|
|
|
$
|
—
|
|
|
Fair value measurement based on significant other observable inputs (Level 2)
|
|
$
|
89
|
|
|
$
|
—
|
|
(8) Income Taxes
The
consolidated provision for income taxes consisted of the following for the years ended December 31 (in thousands of dollars):
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
Current expense
|
|
$
|
1,047
|
|
|
$
|
1,045
|
|
|
Deferred expense (benefit)
|
|
|
(29
|
)
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
$
|
1,018
|
|
|
$
|
1,047
|
|
|
|
|
|
|
|
|
|
|
|
The effective tax rates differed from the statutory federal income tax rates as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
Statutory federal income tax rate
|
|
|
34.0
|
%
|
|
|
34.0
|
%
|
|
Nontaxable income
|
|
|
(2.1
|
%)
|
|
|
(2.3
|
%)
|
|
Nondeductible expenses
|
|
|
0.2
|
%
|
|
|
0.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate
|
|
|
32.1
|
%
|
|
|
31.9
|
%
|
|
|
|
|
|
|
|
|
|
|
Deferred tax assets and (liabilities) at December 31 consist of the following (in thousands of dollars):
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
Net (appreciation) of securities available for sale
|
|
$
|
(2
|
)
|
|
$
|
(75
|
)
|
|
Allowance for loan losses
|
|
|
467
|
|
|
|
469
|
|
|
Accumulated depreciation
|
|
|
(118
|
)
|
|
|
(135
|
)
|
|
Deferred compensation payable
|
|
|
321
|
|
|
|
307
|
|
|
Tax basis of land over book
|
|
|
25
|
|
|
|
25
|
|
|
Other
|
|
|
(20
|
)
|
|
|
(20
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax asset
|
|
$
|
673
|
|
|
$
|
571
|
|
|
|
|
|
|
|
|
|
|
|
No valuation allowance was recorded to reduce the deferred tax assets at December 31, 2016 and 2015.
The Company and its subsidiary bank file a consolidated federal income tax return in the U.S. federal jurisdiction. In addition, a Louisiana income tax return
is filed individually by the Company in accordance with state statutes. With few exceptions, the Company is no longer subject to federal and state income tax examinations by tax authorities for years before 2013.
19
CITIZENS BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2016 AND 2015
(9) Related Parties
The Bank has entered into transactions with its directors, executive officers, significant shareholders, and their affiliates. The aggregate amount of loans to
such related parties at December 31, 2016 and 2015 was $876,000 and $1,316,000, respectively. During 2016, new loans to such related parties amounted to $150,000 and repayments amounted to $590,000. Deposits held by the Bank at
December 31, 2016 and 2015 for related parties were $7,754,000 and $7,783,000, respectively. Fees paid for goods and services provided by related parties amounted to $41,000 in 2016 and $18,000 in 2015.
(10) Commitments and Contingencies
The Bank 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 include commitments to extend credit and standby letters of credit, which involve credit
risk in excess of the amounts recognized in the statement of financial condition. The Bank’s exposure to credit loss in the event of nonperformance by the other party to these financial instruments is represented by the contractual amounts of
the instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments, including collateral or other security to support the financial instruments.
At December 31, 2016 and 2015, commitments to extend credit totaled $18,752,000 and $19,096,000, respectively. These commitments are agreements to lend
to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments may expire
without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.
At December 31, 2016 and 2015,
commitments under standby letters of credit totaled $487,000 and $511,000, respectively. Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. The credit risk involved
in issuing letters of credit is essentially the same as that involved in extending loans to customers.
At December 31, 2016 and 2015, the Bank had
an unused line of credit of $13,000,000 and $12,800,000, respectively, with an unrelated bank. This line is unsecured and has a variable interest rate based on the lending bank’s daily federal funds rate. In addition, at December 31, 2016
and 2015 the Bank had an unused line of credit with another unrelated bank of $7,000,000. Security for this line of credit may be required by the lending bank prior to funding, and interest is based on the lending bank’s daily federal funds
rate.
In addition, the Bank may make advances from the Federal Reserve Bank of Atlanta’s discount window. At December 31, 2016 and 2015, no
advances were outstanding. A pledge of collateral, such as investment securities and loans, is necessary before the Bank may borrow from the discount window.
(11) Employee Benefit Plans
Effective January 1,
1997, the Bank offers a Savings Incentive Match Plan for Employees (SIMPLE) with no minimum age or years of service eligibility requirements. All employees who are reasonably expected to receive at least $5,000 during the current calendar year are
eligible to participate. In general, participants could elect to defer up to $12,500 of their compensation as elective contributions in 2016 and in 2015. The Bank is required to match employee contributions up to 3% of each employee’s total
compensation. The Bank contributed $68,000 in each of the years 2016 and 2015.
The Bank has nonqualified deferred compensation plans for several of its
key executives. Under the related “Executive Officers’ Death or Retirement Benefits Contract,” the Bank is required to pay each executive fixed amounts for 10 years upon attainment of age 65 and retirement. Should the executive die
before age 65 and while in the employ of the Bank, the Bank is also required to pay each executive’s beneficiary fixed amounts for 10 years. Any amounts payable are to be paid from the general assets of the Bank, and the executives’ rights
under the contracts are those of an unsecured creditor. At December 31, 2016 and 2015, amounts payable under the plans totaled $945,000 and $904,000, respectively. Deferred compensation expense for each of the years 2016 and 2015 were $41,000.
20
CITIZENS BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2016 AND 2015
In addition, the Bank has entered into agreements with two of these key executives that provide for benefits
should either become disabled before age 65. In the event an executive is certified disabled, the Bank will pay the employee cash in the amount of the cash surrender value of life insurance policies covering the respective employee’s life. In
lieu of receiving cash, the employee may elect to receive ownership of the policies. At December 31, 2016 and 2015, the cash surrender values of the aforementioned policies totaled $783,000 and $754,000, respectively.
(12) Regulatory Matters
The Bank is subject to various
regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly discretionary, actions by regulators that, if undertaken, could have a direct
material effect on the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the
Bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about
components, risk weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain
minimum amounts and ratios including total capital, tier 1 capital, and common equity tier 1 capital to risk-weighted assets (as defined in the regulations), and leverage capital, which is tier 1 capital to adjusted average total assets (as
defined). Management believes, as of December 31, 2016, that the Bank meets all capital adequacy requirements to which it is subject.
As of
December 31, 2016, the most recent notification from the Federal Deposit Insurance Corporation categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank
must maintain a total risk-based capital ratio of 10% or higher, tier 1 risk-based capital ratio of 8% or higher, common equity tier 1 risk-based capital ratio of 6.5% or higher, and tier 1 leverage capital ratio of 5% or higher. No conditions or
events have occurred since that notification that management believes have changed the Bank’s category. The Bank’s actual and required capital amounts and ratios are as follows (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual
|
|
|
For Capital
Adequacy Purposes
|
|
|
To Be Well Capitalized
under the Prompt
Corrective Action
Provisions
|
|
|
|
|
Amount
|
|
|
Ratio
|
|
|
Amount
|
|
|
Ratio
|
|
|
Amount
|
|
|
Ratio
|
|
|
At December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Capital (to Risk Weighted Assets)
|
|
$
|
36,986
|
|
|
|
33.6
|
%
|
|
>
$
|
8,797
|
|
|
|
>
8.0
|
%
|
|
|
>
$10,997
|
|
|
|
>
10.0
|
%
|
|
Tier 1 Capital (to Risk Weighted Assets)
|
|
$
|
35,605
|
|
|
|
32.4
|
%
|
|
>
$
|
6,598
|
|
|
|
>
6.0
|
%
|
|
|
>
$8,797
|
|
|
|
>
8.0
|
%
|
|
Common Tier 1 Capital (to Risk Weighted Assets)
|
|
$
|
35,605
|
|
|
|
32.4
|
%
|
|
>
$
|
4,949
|
|
|
|
>
4.5
|
%
|
|
|
>
$7,148
|
|
|
|
>
6.5
|
%
|
|
Tier 1 Capital (to Adjusted Total Assets)
|
|
$
|
35,605
|
|
|
|
14.5
|
%
|
|
>
$
|
9,848
|
|
|
|
>
4.0
|
%
|
|
|
>
$12,310
|
|
|
|
>
5.0
|
%
|
|
At December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Capital (to Risk Weighted Assets)
|
|
$
|
34,993
|
|
|
|
31.8
|
%
|
|
>
$
|
8,796
|
|
|
|
>
8.0
|
%
|
|
|
>
$10,995
|
|
|
|
>
10.0
|
%
|
|
Tier 1 Capital (to Risk Weighted Assets)
|
|
$
|
33,612
|
|
|
|
30.6
|
%
|
|
>
$
|
6,597
|
|
|
|
>
6.0
|
%
|
|
|
>
$8,796
|
|
|
|
>
8.0
|
%
|
|
Common Tier 1 Capital (to Risk Weighted Assets)
|
|
$
|
33,612
|
|
|
|
30.6
|
%
|
|
>
$
|
4,948
|
|
|
|
>
4.5
|
%
|
|
|
>
$7,147
|
|
|
|
>
6.5
|
%
|
|
Tier 1 Capital (to Adjusted Total Assets)
|
|
$
|
33,612
|
|
|
|
13.5
|
%
|
|
>
$
|
9,988
|
|
|
|
>
4.0
|
%
|
|
|
>
$12,485
|
|
|
|
>
5.0
|
%
|
21
CITIZENS BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2016 AND 2015
(13) Parent Company Statements
The financial statements of Citizens Bancshares, Inc. (parent company only) at December 31 and for the years then ended follow (in thousands of dollars):
The balance sheets and income of Citizens Bank (bank only) at December 31 and for the years then ended follow (in thousands of dollars):
