TO OUR SHAREHOLDERS. Citizens Bancshares Company Shareholders

Transcription

1 2018 ANNUAL REPORT

2 TO OUR SHAREHOLDERS Citizens Bancshares Company Shareholders Thank you for your continued investment in Citizens Bancshares Company during I am pleased to report that several years of improved performance by Citizens Bank & Trust, our primary operating entity, provided a solid foundation from which your company was able to build significantly during This enabled Citizens to enter 2019 well positioned among the banking companies headquartered in our Northwest Missouri and Kansas City marketplace. At Citizens Bancshares Company, our year over year performance improved during 2018 with audited net income of $5.8 million compared with $1.4 million in During 2018, Citizens Bank & Trust also continued its trend of improvement to earnings and asset quality, and made progress in several other key performance measures. The 2018 highlight for Citizens Bancshares occurred in the first quarter when we were able to repay our senior secured debt of $7.5 million. The senior debt had been incurred when we redeemed our preferred stock in 2017, and was repaid with the issuance of 200,000 shares of non-voting common stock and corporate cash. This transaction, which significantly enhanced our capitalization and reduced our interest expense, should enable us to more quickly build shareholder value going forward. Your investment in Citizens Bancshares Company and support is important to us. Every banking day, our dedicated employees strive to earn your continued support and grow the value of your company. As always, we welcome your comments and the opportunity to earn your referrals of family and friends who need banking products and services. Sincerely, Roger M. Arwood Chief Executive Officer

3 BOARD OF DIRECTORS Don Walsworth, Sr., Chairman Roger Arwood William E. Young Ed Douglas James Gegg Gene Millard Dr. David M. Neal, DMD William L. Orscheln Tony Scavuzzo Pat Thorne Don Walsworth, Jr. 3

4 2018 EXECUTIVE OFFICERS ROGER ARWOOD WILLIAM E. YOUNG JON APPLEBY BILL DIPPEL Chief Executive Officer President Chief Financial Officer Chief Credit Officer MARK EAGLETON LARRY TAFT BOB WRIGHT Director of Retail Banking & Operations Director of Enterprise Risk Management JIM CONLEY Director of Commercial Real Estate Commercial Banking & Wealth Management 4

5 MARKET AREA SERVED 19 Banking Centers. 14 Markets. Boonville Brookfield Burlington Junct. Chillicothe Kansas City Kearney King City Leawood Macon Maryville Ravenwood Smithville St. Joseph Trenton Grundy Linn Livingston Macon Nodaway Platte Johnson (KS) 11 Counties. Buchanan Clay Cooper Gentry 5

6 SHOWCASE FINANCIAL LITERACY 201 Financial Literacy Events held in 2018 impacting more than 20 communities and thousands of individuals. 5,000 fifty-eight E M P L O Y E E V O L U N T E E R S 63 HOURS organizations have participated of total training were provided through various platforms. 661 Students used our EverFi Program The EverFi program is our in-school program that touched three schools, with 592 students and provided 3,559 hours of learning in the 2017/2018 school year. Citizens Bank & Trust takes pride in the ability to give back to our surrounding communities through our Financial Literacy program. This program is aimed towards advancing financial literacy within our markets through a variety of online learning tools, as well as in-person events that allow an interactive approach to financial education. We understand that every individual has a unique financial situa- tion, therefor our dedicated volunteers cater to a variety of financial needs. Since its start in 2015, we have seen the positive impact that this program has had on our communities. We are proud of our progress thus far and are looking forward to advancing this program in years to come. 6

7 Citizens Bancshares Company Consolidated Balance Sheets December 31, 2018 and 2017 (Dollars in Thousands, Except Share Data) Assets Cash and due from banks $ 20,987 $ 27,865 Securities available for sale 148, ,508 Loans, net 601, ,093 Cash surrender value of life insurance 20,742 20,259 Premises and equipment, net 19,159 19,668 Accrued interest receivable 3,457 3,332 Other real estate owned 7,010 11,622 Federal Home Loan Bank stock 3,020 4,104 Deferred income taxes, net 9,614 10,270 Other assets 1,669 1,249 $ 835,687 $ 883,970 Liabilities and Stockholders' Equity Liabilities Deposits Non-interest-bearing $ 122,426 $ 110,718 NOW, money market, and savings 345, ,936 Certificates of deposit 197, ,611 Total deposits 665, ,265 Securities sold under agreement to repurchase 19,748 26,866 Federal Home Loan Bank advances 49,080 75,000 Other borrowings 12,500 19,780 Accrued interest payable Other liabilities 3,182 4,067 Total liabilities 750, ,463 Commitments and contingencies (Note 15) Stockholders' equity Common stock, $0.01 par value; 5,000,000 shares authorized; 2,561,600 shares issued; 2,346,915 shares outstanding 2018; 2,146,915 shares outstanding Additional paid-in capital 8,302 5,400 Retained earnings 83,542 77,704 Treasury stock, at cost (2018, 214,685 shares; 2017, 414,685 shares) (4,900) (9,464) Accumulated other comprehensive income (loss) (1,475) (159) Total stockholders' equity 85,495 73,507 $ 835,687 $ 883,970 See Notes to Consolidated Financial Statements. 7

8 Citizens Bancshares Company Consolidated Statements of Income Years Ended December 31, 2018 and 2017 (Dollars in Thousands) Interest income Loans, including fees $ 27,182 $ 25,658 Securities 5,156 4,822 Federal funds sold and other ,568 30,819 Interest expense Deposits 4,256 2,746 Federal Home Loan Bank advances 1, Securities sold under agreement to repurchase and federal funds purchased Other borrowings 985 1,086 6,869 5,024 Net interest income 25,699 25,795 Provision for loan losses Net interest income after provision for loan losses 25,592 25,675 Noninterest income Service charges and fees 3,437 3,329 Wealth Management fees 2,164 1,746 Net loss on sale of securities (513) - Net gain on sale of branch office - 1,274 Net loss on sale of premises and equipment (13) (325) Net gain on sale of other real estate Increase in cash surrender value of life insurance Other 2,651 2,800 8,352 9,558 Noninterest expense Salaries and employee benefits 13,970 14,341 Occupancy 5,753 5,768 FDIC assessments Expenses on other real estate owned Professional fees Telephone, postage, and delivery Advertising and marketing Office supplies Other 4,439 5,594 26,643 29,179 Income before income taxes 7,301 6,054 Income tax expense 1,463 4,656 Net income $ 5,838 $ 1,398 See Notes to Consolidated Financial Statements. 8