Citizens Bancshares Corp. (CZBS)

[norweger1979]

6/30/2016 10q

http://seekingalpha.com/filing/3194045?source=email_rt_filing_headline&uprof=16

Net Income / common share $0.31 for the June 2016 qtr. vs. $0.13 for the June 2015 qtr.


...reduced OREO
At June 30, 2016, OREO decreased by $1,614,000 to $2,849,000 compared to $4,463,000 reported at the year-end of 2015. This decrease is primarily related to the sale of OREO properties totaling $1,871,000 and $98,000 in write-downs, partially offset by $355,000 in additions to the OREO balance during the first half of 2016.

During the first half of 2016, nonperforming assets decreased by $1,486,000, or 19.9%, to $5,993,000 when compared to December 31, 2015. The year-to-date decrease is primarily attributed to a $1,614,000 decline in other real estate owned (OREO); offset by an increase in nonperforming loans of $128,000. The Company charged-off $407,000 in nonperforming loans during the first half of 2016 which is a increase of $43,000 compared to $364,000 charged-off for the same period last year. Charged-offs, net of recoveries, for the same period decreased by $137,000. At June 30, 2016, nonperforming assets represent 1.45% of total assets compared to 1.92% at December 31, 2015. There was one (1) loan greater than 90 days past due and still accruing interest at June 30, 2016 and none at December 31, 2015.

...little recovery help
For the three months ended June 30, 2016, the Company was able to recapture previous provision for loan losses of $175,000 due to the receipt of two large recoveries during the quarter. For the three months ended June 30, 2015, the Company charged against operating earnings a provision for loan losses of $50,000.

Noninterest income totaled $1,203,000 for the three months period ended June 30, 2016, an increase of $144,000, or 13.60% compared with the same period last year. This increase is primarily due to a $186,000 legal judgment that the Company collected and a $78,000 recovery; offset by gains on the sale of investment securities of $121,000 reported for the second quarter of 2015. There were no gains on sale of investment securities for the same period in 2016. The service charges on deposits income decreased by $6,000 and other operating income increased by $271,000 compared to the same period last year.

...deposit growth
Deposits are the Company’s primary source of funding loan growth. Total deposits at June 30, 2016 increased by 6.8% or $22,383,000 to $351,245,000 compared to December 31, 2015. The bank has a stable core deposit base with a high percentage of non-interest bearing deposits. Noninterest-bearing deposits increased by $3,376,000, or approximately 3.8% to $91,919,000 and interest-bearing deposits increased by $19,007,000, or 7.9%, to $259,326,000 for the six months period ending June 30, 2016. On an average basis, noninterest-bearing deposits increased by $3,487,000 to $91,457,000 during the first half of 2016 compared to $87,970,000 for the year ended December 31, 2015. Average interest-bearing deposits decreased by $732,000 to $250,762,000 at June 30, 2016 compared to $251,494,000 for the year ended December 31, 2015. At June 30, 2016, the Company’s cost of funds was approximately 0.18% compared to 0.20% for the same period last year.

...good NIM
For the six months ended June 30, 2016, the Company maintained an annualized net interest margin on a fully tax equivalent basis of 3.29% compared to 3.36% reported at June 30, 2015

....good expense controls
Non-interest expense in the second quarter of 2016 decreased by $245,000 to $3,335,000 compared to $3,580,000 for the same quarter last year primarily due to a decrease of $118,000 in the amortization of core deposit intangible which was fully amortized in the first quarter of 2016. Salaries and employee benefits expense decreased by $4,000. Net occupancy and equipment expense decreased by $18,000 compared to the same period of last year. OREO related expenses decreased by $95,000 compared to the same period last year primarily due to a gain on sale of OREO. FDIC insurance expenses decreased by $14,000 compared to the same period in the prior year. Other operating expenses increased by $4,000 compared to the same period in the prior year.

....growing stockholders' equity
Stockholders’ equity increased by $2,487,000 during the six months period ended June 30, 2016 due to multiple factors. Accumulated other comprehensive income, net of income taxes, increased by $1,644,000. This increase is attributed to the volatility in interest rates and swings in credit spreads, and their impact on the fair value of the Company’s available for sale securities portfolio. Retained earnings increased by $815,000 primarily due to a net income of $1,107,000; offset by $118,000 of preferred dividends paid to the U.S. Treasury and $174,000 in cash dividends paid to common stockholders. Additional paid-in-capital decreased by $22,000 due to issuance of common stock associated with restricted stock.