Citizens Holding Company

Press Release

Printer Friendly Version View printer-friendly version << Back
January 26, 2021 at 4:15 PM EST

Citizens Holding Company Reports Earnings

PHILADELPHIA, Miss.--(BUSINESS WIRE)--Jan. 26, 2021-- Citizens Holding Company (the “Company”) (NASDAQ:CIZN) announced today results of operations for the three and twelve months ended December 31, 2020.

(in thousands, except share and per share data)

Net income for the three months ended December 31, 2020 was $2,226, or $0.40 per share-basic and diluted, an increase of $255, or 12.94% from net income of $1,971, or $0.35 per share-basic and diluted for the same quarter in 2019.

Net income for the twelve months ended December 31, 2020 was $6,931, or $1.24 per share-basic and diluted, an increase of $1,029, or 17.43% from net income of $5,902, or $1.17 per share-basic and diluted for the same period in 2019. The majority of the increase for the three- and twelve-month periods relate to an increase in net interest income partially offset by additional provision for loan losses and non-interest expense.

The Company continues to be proactive in dealing with the effects of the pandemic to its employees, customers and communities. While the ultimate impact of the crisis cannot be accurately predicted at this point, the Company is well-capitalized and has the financial stability to continue to serve its customers and communities during this unprecedented time.

Fourth Quarter Highlights

  • Total revenues, or interest and noninterest income, for the three months ended December 31, 2020 totaled $13,118, a decrease of $98 or (0.74%), compared to the three months ended September 30, 2020, and an increase of $113, or 0.87%, compared to the three months ended December 31, 2019.
  • Beginning in the second quarter of 2020, the Bank participated as a lender in the Small Business Administration’s (“SBA”) and U.S. Department of Treasury’s Paycheck Protection Program (“PPP”) as established by the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). The PPP loans are generally 100% guaranteed by the SBA. At December 31, 2020, the balance of PPP loans was $29,523 and the Company had recognized $1,172 in PPP fee income for the twelve months ended December 31, 2020.
  • Total loans decreased $3,378, or (0.52%), to $652,256 at December 31, 2020, compared to $655,634 at September 30, 2020, and increased $75,189, or 13.03%, compared to $577,067 at December 31, 2019. Excluding PPP loans with a total balance of $29,523 at December 31, 2020, total loans increased $45,666, or 7.91%, compared to December 31, 2019.
  • Total deposits increased $196,193, or 21.82%, to $1,095,189 at December 31, 2020, compared to $898,996 at December 31, 2019. Total noninterest-bearing deposits increased $85,627, or 44.97%, to $276,033 at December 31, 2020, compared to $190,406 at December 31, 2019.
  • The Bank recorded $302 in provision for loan losses for the three months ended December 31, 2020, compared to $247 and $101 for the quarters ended September 30, 2020 and December 31, 2019, respectively. The increases in the provision for loan losses in each quarter of 2020 compared to the same quarters in 2019 are primarily a result of the stable loan growth during the year along with qualitative adjustments for uncertainty of market conditions brought about by the COVID-19 pandemic.
  • Overall cost of funds decreased 4 basis points (“bps”) to 63 bps for the three months ended December 31, 2020 compared to 67 bps for the three months ended September 30, 2020 and decreased 61 bps compared to 124 bps for the three months ended December 31, 2019.
  • Net interest margin decreased 17 bps to 2.64% for the three months ended December 31, 2020 compared to 2.81% for the three months ended September 30, 2020.
  • The Company and Bank remain well capitalized with all capital ratios above the regulatory requirements. The Tier 1 capital ratio for the Company and Bank was 12.50% and 12.20%, respectively, at December 31, 2020, compared to 13.01% and 12.71%, respectively, at September 30, 2020.

Net Interest Income

Net interest income for the three months ended December 31, 2020 was $8,493, approximately 16.26% higher than the same period in 2019. The net interest margin (“NIM”) was 2.64% for the three months ended December 31, 2020 compared to 2.81% for the three months ended September 30, 2020 and 2.79% for the same period in 2019.

Net interest income for the twelve months ended December 31, 2020 increased 29.23% to $33,134 from $25,639 for the same period in 2019. NIM for the twelve months ended December 31, 2020, decreased to 2.72% from 2.77% in the same period in 2019.

Continued low interest rates decreased the yield on the loans held for investment as well as the securities portfolio but were partially offset by lower costs on interest-bearing deposits along with the increased volume of loans, excluding PPP loans which earn 1% interest, thus further compressing our margin.

Credit Quality

The provision for loan losses for the three months ended December 31, 2020 was $302 compared to a provision for loan losses of $101 for the same period in 2019. The increase in the provision reflects management’s estimate of inherent losses in the loan portfolio including, but not limited to, the government shutdown of the local and national economy in March of 2020 due to the COVID-19 pandemic, the continued uncertainty surrounding the pandemic for the Company and our customers, increased risks related to certain industry sectors such as restaurants, hotels and retail businesses and an overall increase in the loan portfolio when compared to the same quarter in 2019.

The Company’s non-performing assets decreased $2,416, or (17.17%), to $11,655 at December 31, 2020 compared to September 30, 2020 and decreased $4,147, or (26.24%), from $15,802 at December 31, 2019.

Year-to-date net charge-offs totaled $505 or 0.08% of average loans at December 31, 2020 compared to 0.07% and 0.03% at September 30, 2020 and December 31, 2019, respectively.

The Company continues to maintain strong credit quality, but this may be impacted in the future by factors related to the pandemic that are still uncertain. The overarching theme continues to be uncertainty, but management believes the Company has taken the steps necessary to be prepared for the continued uncertainty.

Noninterest Income

Non-interest income increased for the three months ended December 31, 2020, by $335, or 12.70% compared to the three months ended September 30, 2020 and decreased by $150 or (4.80%) compared to the same period in 2019.

Non-interest income increased by $712, or 7.30%, for the twelve months ended December 31, 2020 when compared to the same period in 2019.

The increase in non-interest income was primarily due to the following factors:

  • Increase in mortgage loan origination income due to a decrease in long-term mortgage rates;
  • Increase in gains from the sale of investment securities to lower the Company’s prepayment risk within the Company’s mortgage backed securities portfolio;
  • Partially offset by a decrease in overdraft income due to the savings trend related to the COVID-19 pandemic.

Noninterest Expense

Non-interest expense decreased for the three months ended December 31, 2020 by $291, or (3.36%) compared to the three months ended September 30, 2020 and increased by $634 or 8.20% compared to the same period in 2019.

Non-interest expense increased by $5,868, or 21.29%, for the twelve months ended December 31, 2020 when compared to the same period in 2019.

The increase in non-interest expense is mainly attributable to an increase in non-recurring COVID-19 safety measures such as: PPE, laptops, and branch safety measures. In addition, the COVID-19 expenses were also coupled with an increase in regulatory related expenses and core service contracts after the merger conversion in the second quarter of 2020.

Dividends

The Company paid aggregate cash dividends in the amount of $5,363, or $0.96 per share, during the twelve-month period ended December 31, 2020 compared to $4,874, or $0.96 per share, for the same period in 2019.

Citizens Holding Company (the “Company”) is a one-bank holding company and the parent company of The Citizens Bank of Philadelphia (the “Bank”), both headquartered in Philadelphia, Mississippi. The Bank currently has twenty-four banking locations in fourteen counties in East Central and South Mississippi and a Loan Production Office in Oxford, Mississippi to offer loan services to north Mississippi. In addition to full service commercial banking, the Bank offers mortgage loans, title insurance services through its subsidiary, Title Services, LLC, and a full range of Internet banking services including online banking, bill pay and cash management services for businesses. Internet banking services are available at the Bank’s website, www.thecitizensbankphila.com. Citizens Holding Company stock is listed on the NASDAQ Global Market and is traded under the symbol CIZN. The Company’s transfer agent is American Stock Transfer & Trust Company. Information about Citizens Holding Company may be obtained by accessing its corporate website at www.citizensholdingcompany.com.

This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical facts included in this release regarding the Company’s financial position, results of operations, business strategies, plans, objectives and expectations for future operations, are forward looking statements. The Company can give no assurances that the assumptions upon which such forward-looking statements are based will prove to have been correct. Forward-looking statements speak only as of the date they are made. The Company does not undertake a duty to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made. Such forward-looking statements are subject to certain risks, uncertainties and assumptions. The risks and uncertainties that may affect the operation, performance, development and results of the Company’s and the Bank’s business include, but are not limited to, the following: (a) the risk of adverse changes in business conditions in the banking industry generally and in the specific markets in which the Company operates; (b) the impact of COVID-19 on our business, including the impact of the actions taken by governmental authorities to try and contain the virus or address the impact of the virus on the United States economy (including, without limitation, the CARES Act), and the resulting effect of all of such items on our operations, liquidity and capital position, and on the financial condition of our borrowers and other customers; our ability to mitigate our risk exposures; (c) changes in the legislative and regulatory environment that negatively impact the Company and Bank through increased operating expenses; (d) increased competition from other financial institutions; (e) the impact of technological advances; (f) expectations about the movement of interest rates, including actions that may be taken by the Federal Reserve Board in response to changing economic conditions; (g) changes in asset quality and loan demand; (h) expectations about overall economic strength and the performance of the economics in the Company’s market area; and (i) other risks detailed from time to time in the Company’s filings with the Securities and Exchange Commission. Should one or more of these risks materialize or should any such underlying assumptions prove to be significantly different, actual results may vary significantly from those anticipated, estimated, projected or expected.

 

For the Three Months Ended

For the Twelve Months Ended

December 31,

September 30,

December 31,

December 31,

December 31,

2020

2020

2019

2020

2019

INTEREST INCOME

Loans, including fees

$

8,024

$

7,805

$

7,433

$

30,941

$

24,652

Investment securities

 

2,111

 

2,766

 

2,073

 

9,338

 

9,801

Other interest

 

11

 

8

 

377

 

282

 

908

 

10,146

 

10,579

 

9,883

 

40,561

 

35,361

 

INTEREST EXPENSE

Deposits

 

1,469

 

1,506

 

2,151

 

6,556

 

7,719

Other borrowed funds

 

184

 

167

 

427

 

871

 

2,003

 

1,653

 

1,673

 

2,578

 

7,427

 

9,722

 

NET INTEREST INCOME

 

8,493

 

8,906

 

7,305

 

33,134

 

25,639

 

PROVISION FOR LOAN LOSSES

 

302

 

247

 

101

 

1,485

 

573

 

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES

 

8,191

 

8,659

 

7,204

 

31,649

 

25,066

 

NON-INTEREST INCOME

Service charges on deposit accounts

 

864

 

771

 

1,144

 

3,352

 

4,413

Other service charges and fees

 

931

 

1,031

 

812

 

3,606

 

3,129

Other non-interest income

 

1,177

 

835

 

1,166

 

3,502

 

2,206

 

2,972

 

2,637

 

3,122

 

10,460

 

9,748

 

NON-INTEREST EXPENSE

Salaries and employee benefits

 

4,345

 

4,389

 

4,358

 

17,476

 

14,883

Occupancy expense

 

1,804

 

1,861

 

1,125

 

7,360

 

5,245

Other non-interest expense

 

2,213

 

2,403

 

2,245

 

8,590

 

7,430

 

8,362

 

8,653

 

7,728

 

33,426

 

27,558

 

NET INCOME BEFORE TAXES

 

2,801

 

2,643

 

2,598

 

8,683

 

7,256

 

INCOME TAX EXPENSE

 

575

 

560

 

627

 

1,752

 

1,354

 

NET INCOME

$

2,226

$

2,083

$

1,971

$

6,931

$

5,902

 

Earnings per share - basic

$

0.40

$

0.37

$

0.35

$

1.24

$

1.17

 

Earnings per share - diluted

$

0.40

$

0.37

$

0.35

$

1.24

$

1.17

 

Dividends paid

$

0.24

$

0.24

$

0.24

$

0.96

$

0.96

 

Average shares outstanding - basic

 

5,578,820

 

5,578,281

 

5,558,891

 

5,574,330

 

5,063,736

 

Average shares outstanding - diluted

 

5,580,726

 

5,580,728

 

5,561,351

 

5,576,894

 

5,066,103

 
 

For the Period Ended,

December 31,

September 30,

December 31,

2020

2020

2019

Period End Balance Sheet Data:

Total assets

$

1,450,692

 

$

1,374,217

 

$

1,195,434

 

Total earning assets

 

1,357,974

 

 

1,284,602

 

 

1,105,163

 

Loans, net of unearned income

 

652,256

 

 

655,634

 

 

577,067

 

Allowance for loan losses

 

4,735

 

 

4,494

 

 

3,755

 

Total deposits

 

1,095,189

 

 

1,049,157

 

 

898,996

 

Securities sold under agreement to repurchase

 

196,272

 

 

176,978

 

 

170,410

 

Short-term borrowings

 

25,000

 

 

15,000

 

 

-

 

Shareholders' equity

 

119,548

 

 

117,498

 

 

112,800

 

Book value per share

 

21.43

 

 

21.03

 

 

20.22

 

 

Period End Average Balance Sheet Data:

Total assets

 

1,336,513

 

 

1,308,298

 

 

1,164,570

 

Total earning assets

 

1,243,566

 

 

1,215,916

 

 

1,068,683

 

Loans, net of unearned income

 

622,805

 

 

613,674

 

 

561,483

 

Total deposits

 

1,013,258

 

 

995,403

 

 

929,598

 

Securities sold under agreement to repurchase

 

181,699

 

 

175,267

 

 

124,344

 

Short-term borrowings

 

10,318

 

 

6,168

 

 

2,096

 

Shareholders' equity

 

117,775

 

 

117,539

 

 

96,295

 

 

Period End Non-performing Assets:

Non-accrual loans

 

8,568

 

 

10,412

 

 

11,993

 

Loans 90+ days past due and accruing

 

14

 

 

246

 

 

257

 

Other real estate owned

 

3,073

 

 

3,413

 

 

3,552

 

 

As of

December 31,

September 30,

December 31,

2020

2020

2019

 

 

Year to Date Net charge-offs as a percentage of average net loans

 

0.08

%

 

0.07

%

 

0.03

%

 

Year to Date Performance Ratios:

Return on average assets(1)

 

0.52

%

 

0.41

%

 

0.51

%

Return on average equity(1)

 

5.89

%

 

4.52

%

 

6.13

%

 

Year to Date Net Interest

Margin (tax equivalent)(1)

 

2.72

%

 

2.74

%

 

2.77

%

 

(1) Annualized

 

Citizens Holding Company, Philadelphia
Phillip R. Branch, 601/656-4692
Phillip.branch@thecitizensbank.bank

Source: Citizens Holding Company