CZBS 2015 10k filed 3/30/2016
In 2015, the Company reported net income available to common shareholders of $1,582,000 compared to $1,572,000 in 2014, and a 42 percent increase over net income available to common shareholders of $1,112,000 reported in 2013. The year over year increase in 2015 net income available to common shareholders is attributed primarily to the successful implementation of the Company’s asset disposition plan that started in 2012 which has reduced the amount of nonperforming assets on the Company’s books and its negative impact on earnings. The provision for loan losses was $100,000 compared to $75,000 in 2014 and declined by 77 percent or $325,000 compared to 2013 due to continued improvement in credit quality. Also, other real estate owned related expenses decreased 57 percent or $507,000 during 2015 compared to 2014.
The Company is a participant in the U.S. Department of the Treasury TARP CPP program and paid preferred dividends of $237,000 in 2015, 2014, and 2013. Basic and diluted earnings per common share were $0.72 and $0.71 for the year ended December 31, 2015, respectively. Basic and diluted earnings per common share were $0.73 and $0.72 for 2014, respectively. For fiscal year 2013, basic and diluted earnings per common share were $0.52 and $0.51, respectively.
The Company has maintained its strong capital position during the financial crisis that has affected the banking system and financial markets. The ratio of average stockholders’ equity to average assets is one measure used to determine capital strength. The Company’s average stockholders’ equity to average assets ratio for 2015, 2014, and 2013 was 12.67%, 11.89% and 12.00%, respectively. The Company’s net income available to common shareholders to average stockholders’ equity (return on equity), was 3.17%, 3.27% and 2.33% in 2015, 2014 and 2013, respectively.
Financial Condition
At December 31, 2015, the Company had total assets of $388,620,000 which represents a decrease of $7,019,000 from last year. Total assets primarily consisted of $123,258,000 in investment securities and $184,836,000 in net loans representing 32 percent and 48 percent, respectively, of total assets at December 31, 2015. For the same period last year, investment securities and net loans represented 32 percent and 48 percent, respectively, of total assets.
Interest-bearing deposits with banks decreased by $15,833,000 to $29,819,000 at December 31, 2015 compared to last year. The decrease in interest-bearing deposits is primarily due to a $16,500,000 increase in federal funds sold. Interest-bearing deposits with banks primarily represent funds maintained on deposit at the Federal Reserve Bank (FRB) and the Federal Home Loan Bank (FHLB). These funds fluctuate daily and are used to manage the Company’s liquidity position. Investment securities available for sale decreased $3,353,000 to $123,258,000 during the year. The Company monitors its short-term liquidity position daily and closely manages its overnight cash positions in light of the current economic environment.
Loans typically provide higher interest yields than other types of interest-earning assets and, therefore, continue to be the largest component of the Company’s assets. Average loans, net for the years ended December 31, 2015 and 2014 were $187,636,000 and $181,856,000, respectively. Loans, net outstanding at December 31, 2015 and 2014 were $184,837,000 and $188,739,000, respectively. The decrease was primarily driven by a decrease of commercial real estate loans of $12,344,000, single-family residential of $844,000 and construction & development of $705,000; offset by an increase in commercial, financial and agriculture of $9,440,000, and consumer loans of $376,000 during the year, coupled with a decline in the allowance for loan losses of $175,000. As with our industry, we are experiencing the impact of a challenging lending environment and competitive pricing pressures. However, we continue to cultivate new lending opportunities and invest in the resources needed to augment our lending operations to pursue quality and profitable loan growth.
Cash value of life insurance, a comprehensive compensation program for directors and certain senior managers of the Company, increased by $8,000 to $10,090,000 at December 31, 2015. The increase is attributed to the earnings on the premiums paid over the life of the insurance contract.
At December 31, 2015, other real estate owned decreased by $205,000 to $4,463,000 compared to the year-end of 2014. The decrease is due to sales of $964,000 and write-downs of $217,000 which exceeded the $976,000 in additions of foreclosed properties during 2015.
The Company’s liabilities at December 31, 2015 totaled $338,244,000 and consisted primarily of $328,862,000 in deposits. Average deposits for the years ended December 31, 2015 and 2014 were $339,464,000 and $351,489,000, respectively. Total deposits outstanding at December 31, 2015 and 2014 were $328,862,000 and $340,889,000, respectively. FHLB advances at December 31, 2015 totaled $5,235,000 compared to $254,000 at December 31, 2014.
At December 31, 2015, stockholders’ equity was $50,376,000, representing an increase of $810,000 over year-end 2014 primarily due to a net income of $1,819,000 earned in 2015 offset by $741,000 in accumulated other comprehensive income (loss) as a result of the increases in interest rates and their impact on the market value of the Company’s investments and other stockholders’ component of $409,000 primarily due to the payment of preferred and common stock dividends. As a result, book value per common share increased to $17.87 at December 31, 2015 compared to $17.49 at December 31, 2014.
The Company’s asset/liability management program, which monitors the Company’s interest rate sensitivity as well as volume and mix changes in earning assets and interest bearing liabilities, may impact the growth of the Company’s balance sheet as it seeks to maximize net interest income.
