Magazine article Black Enterprise

Citizens Expands through Tough Times: Aging Bank Explores Acquisitions in Attempt to Rebound from Falling Revenue. (B.E. 100s)

Magazine article Black Enterprise

Citizens Expands through Tough Times: Aging Bank Explores Acquisitions in Attempt to Rebound from Falling Revenue. (B.E. 100s)

Article excerpt

America's fourth-largest black-owned bank, Atlanta-based Citizens Trust Bank (No. 4 on the BE BANKS list with $267 million in assets), plans to expand despite its parent company, Citizens Bancshares Corp. (OTC Bulletin Board: CZBS.OB), reporting a second-quarter earnings fall of 54%.

The 80-year-old bank recently closed one of its 12 branches and sold the building, and it is looking to acquire or build new branches. "Most of our 80 years have been mainly in the metro-Atlanta area, and we have determined other areas in the Southeast that could benefit from an alternative bank," says Citizens Trust President and CEO James E. Young.

Citizens Trust opened a branch in Columbus, Georgia, with the full backing of the bank's board in October 2000. "Though this decision was made before the shift in the economy, we are still aggressively looking for other sites in Georgia and beyond," says Young. Thus far, Young says, there are two possible sites in Georgia, as well as one in Alabama. These planned expansions, says Young, may come through partnerships with other minority-owned banks.

For 2001, Citizens Bancshares reported second-quarter earnings of $475,000, or 21 cents a share, excluding charges. For the same quarter last year, the company earned $1 million, or 46 cents a share, including gains. The loan-loss provision for 2001 was raised to $940,000, partly through the sale of a bank branch and the sale of securities. The branch sale, which was previously planned Because of an undisclosed acquisition-related overlap, freed about $250,000, and the sale of equity added another $503,000 before taxes.

According to Joe Gladue, an equity analyst for the Baltimore-based investment bank The Chapman Co. (No. 12 on the BE INVESTMENT BANKS list with $4.3 billion in total issues), the current economic climate might benefit the bank and its expansion plans. "Although there will probably be less lending, in times of economic turmoil people take their money out of the stock market and put it somewhere safer, such as banks, which will mean an increase in deposits," he notes. …

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