A Cheap Bank With a Fortress Balance Sheet
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There are lots of good banks, and there are lots of cheap banks, but there are not many banks that are both good and cheap. Citizens Bancshares is one that is both.
Citizens Bancshares Corporation (CZBS) is the holding company for Citizens Trust Bank (CTB). It is a community bank with 5 branches in Atlanta, 1 in Birmingham, Alabama and 1 in Eutaw, Alabama.
Heman Perry and other African-American businessmen founded CTB in 1921 to serve Atlanta’s Black community. It became the first Black-owned bank to join the FDIC (1930s) and Federal Reserve System (1948). CZBS went public in 1999 and acquired Mutual Federal Savings Bank in 2000, Citizens Federal Savings Bank in 2003, and Peoples Bank in 2009.
The bank has maintained a purpose-driven mission as a Minority Depository Institution (MDI) and Community Development Financial Institution (CDFI), focusing on underrepresented communities and underserved individuals and small businesses.
In 2023 CTB earned 1.66% on its assets with a 50% efficiency ratio and a 43% total capital ratio. Its ROE was 7%, depressed by its excess capital. It trades for six times earnings and 0.6x book value, after adjusting for some of its unusual assets. Management has deployed capital conservatively and repurchased shares every year since 2019, including a 10% buyback in 2023. Management owns just over 30% of shares, keeping interests aligned.
CTB’s exceptional performance and low valuation can be traced back to 2020, when the bank found itself in the right place at the right time.