Notes From Citizens Bancshares' Annual Meeting

Last week I flew to Atlanta for Citizen Bancshares’ annual meeting. A bank depends on management more than most businesses, so it was helpful to meet the CEO and board of directors. They struck me a kind, thoughtful people intent on maximizing long term value. They also served some incredibly tasty southern food, which is a good tactic to increase board meeting attendance. There were only three other investors there, so I thought I’d share my notes for the rest.

As a reminder, Citizens Bancshares (CZBS) is the bank holding company for Citizens Trust Bank (CTB). The elevator pitch for the stock is that for a $90 million market cap you get $90 million of cash at the holding company (CZBS) in addition to $86 million of equity in the bank (CTB). The holdCo cash is invested in treasury bills earning 4.5% and financed with ECIP non-cumulative preferreds that cost 2.0%. Its a nice spread. In November the Treasury explained how banks can repurchase, sell, or transfer their ECIP preferreds for 0.5% to ~26% of face value. If CZBS can repurchase its preferreds or buy another ECIP bank, it will create a ton of value. For a more detailed look at CZBS, read my last post on the stock.