-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TZ9MxvvU3xog77QgTds5K4qt77/0FZkf7EsU1fdyG3gH8Lvk6d2qpgz8AhjwhH9M pzRGTxdvzrm/G1ObpmT8fg== 0000813640-98-000008.txt : 19981123 0000813640-98-000008.hdr.sgml : 19981123 ACCESSION NUMBER: 0000813640-98-000008 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981116 DATE AS OF CHANGE: 19981120 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CITIZENS BANCSHARES CORP /GA/ CENTRAL INDEX KEY: 0000813640 STANDARD INDUSTRIAL CLASSIFICATION: 6022 IRS NUMBER: 581631302 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-14535 FILM NUMBER: 98753360 BUSINESS ADDRESS: STREET 1: 175 JOHN WESLEY DOBBS AVE NE STREET 2: P O BOX 4485 CITY: ATLANTA STATE: GA ZIP: 30303 BUSINESS PHONE: 4046595959 MAIL ADDRESS: STREET 1: 175 JOHN WESLEY DOBBS AVENUE, NE CITY: ATLANTA STATE: GA ZIP: 30303 10QSB 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10 - QSB ( X ) QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) TO THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1998 ( ) TRANSITION REPORT UNDER SECTION 13 OR 15 (d) TO THE EXCHANGE ACT For the transition period from ____________ to _____________ Commission File No: 0 - 14535 CITIZENS BANCSHARES CORPORATION (Name of small business issuer in its charter) Georgia 58 - 1631302 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 175 John Wesley Dobbs Avenue, N.E., Atlanta, Georgia 30303 (Address of principal executive office) (Zip Code) Registrant's telephone number, including area code: (404) 659 - 5959 Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15 (d) of the Exchange Act during the past 12 months ( or for such shorter period that the registrant was required to file such reports ), and (2) has been subject to such filing requirements for the 90 days. Yes X No . State the number of shares outstanding if each of the issuer's classes of common equity as of the latest practicable date: 2,164,065 shares of Common Stock, $1.00 par value, outstanding on November 1, 1998. Part I. Financial Information: Citizens Bancshares Corporation and Subsidiaries Consolidated Balance Sheets September 30, 1998 and December 31, 1997 (unaudited-amounts in thousands, except per share amounts) ASSETS 1998 1997 Cash and due from banks $ 10,123 10,637 Interest bearing deposits 13,153 857 Federal funds sold 37 3,456 Investment securities: Held to maturity 16,441 13,164 Available for sale 23,177 21,740 Other Investments 1,271 2,000 Total investments 40,889 36,904 Loans, net of unearned income 119,195 121,414 Less allowance for loan losses 1,746 1,752 Loans, net 117,449 119,662 Loans held for sale 364 623 Premises and equipment, net 6,094 5,844 Cash value of life insurance 3,985 3,640 Other assets 3,816 4,122 Total assets $ 195,910 185,745 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Deposits: Noninterest-bearing $ 45,330 43,633 Interest-bearing 128,655 120,311 Total deposits 173,985 163,944 Treasury, tax and loan account 48 195 Short-term debt 1,478 1,851 Long-term debt - 585 Other liabilities 1,977 2,349 Total liabilities 177,488 168,924 Shareholders' equity: Common stock-$1 par value. Authorized 5,000,000 shares; issued and outstanding 2,164,065 shares 2,164 2,164 Additional Paid-In Capital 6,174 6,174 Accumulated other comprehensive income 845 643 Retained earnings 9,239 7,840 Total shareholders' equity 18,422 16,821 Total liabilities and shareholders' equity $ 195,910 185,745 Citizens Bancshares Corporation and Subsidiaries Consolidated Statements of Earnings and Comprehensive Income (unaudited-amounts in thousands, except per share amounts) Three Months Nine Months Ended September 30, Ended September 30, 1998 1997 1998 1997 INTEREST INCOME: Loans, including fees $ 2,888 2,921 8,585 8,329 Investment securities: Taxable 469 613 1,431 2,148 Tax-exempt 110 37 234 168 Interest bearing deposits 119 13 420 22 Federal funds sold 17 21 99 137 Total interest income 3,603 3,605 10,769 10,804 INTEREST EXPENSE: Deposits 1,260 1,185 3,737 3,703 Other borrowed funds 23 60 52 127 Long-term debt - 15 17 45 Total interest expense 1,283 1,260 3,806 3,875 Net interest income 2,320 2,345 6,963 6,929 Provision for loan losses 75 75 125 165 Net interest income after provision for loan losses 2,245 2,270 6,838 6,764 NONINTEREST INCOME: Service charges on deposit accounts 1,046 1,143 3,030 3,197 Commission and fees 758 400 2,128 936 Other operating income 205 134 705 597 Total noninterest income 2,009 1,677 5,863 4,730 NONINTEREST EXPENSE: Salaries and employee benefits 1,773 1,997 5,392 5,913 Net occupancy and equipment 666 634 1,962 1,785 Other operating expenses 1,196 1,059 3,433 3,230 Total other expense 3,635 3,690 10,787 10,928 Earnings before income taxes 619 257 1,914 566 Income tax expense 169 78 515 162 Net earnings $ 450 179 1,399 404 Net earnings 450 179 1,399 404 Other comprehensive income, net of tax Unrealized holding gains arising during the period 201 69 214 157 Less: reclassification adjustment for gains included in net earnings - (13) (12) (13) Comprehensive income 651 235 1,601 548 Net earnings per common share $ 0.21 0.08 0.65 0.19 Average outstanding shares 2,164 2,164 2,164 2,164
Citizens Bancshares Corporation and Subsidiaries Consolidated Statements of Cash Flows Nine months ended September 30, 1998 and 1997 (unaudited-amounts in thousands, except per share amounts) 1998 1997 Cash flows from operating activities Net earnings $ 1,399 404 Adjustments to reconcile net earnings to net cash provided by operating activities Provision for loan losses 125 165 Depreciation and amortization 867 859 Provision for deferred taxes (3) 4 Amortization (accretion), net 2 (10) Accretion (amortization) of deferred loan fees 52 30 Gain on investments (12) (13) Loss on sale of assets 228 - Increase in other assets (1,103) (3,786) Increase in accrued expenses and other liabilities (372) 189 Net cash (used) provided by operating activities 1,183 (2,158) Cash flows from investing activities: Proceeds from maturities of investment securities held to maturity 7,488 8,501 Proceeds from maturities of investment securities available for sale 11,185 11,411 Purchases of investment securities held to maturity (789) - Purchases of investment securities available for sale (22,296) (6,616) Net decrease ( increase) in other investments 729 (1,130) Net decrease (increase) in loans 2,218 (5,522) Purchases of premises and equipment (1,122) (1,111) Proceeds from sale of real estate acquired through foreclosure 831 95 Net cash (used) provided by investing activities (1,756) 5,628 Cash flows from financing activities: Net increase (decrease) in demand deposits 1,697 (14,449) Net increase in time and savings deposits 8,344 (1,840) Net (decrease) increase in short-term debt (373) 1,100 Principal payment on long-term debt (585) (135) Proceeds from sale of stock - 261 Dividends paid - (28) Net (decrease) increase in treasury, tax and loan account (147) 45 Net cash provided (used) by financing activities 8,936 (15,046) Net increase (decrease) in cash and cash equivalents 8,363 (11,576) Cash and cash equivalents at beginning of period 14,950 23,327 Cash and cash equivalents at end of period $ 23,313 11,751 Supplemental disclosures of cash paid during the period for: Interest $ 4,010 3,867 Income taxes $ 695 112 Supplemental disclosures of noncash transactions: Real estate acquired through foreclosure $ 118 836 CITIZENS BANCSHARES CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements September 30, 1998 and 1997 (unaudited) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited statements have been prepared pursuant to the rules and regulations for reporting on Form 10 - QSB. Accordingly, certain disclosures required by generally accepted accounting principles are not included herein. These interim statements should be read in conjunction with the financial statements and notes thereto included in the company's latest Annual Report on Form 10 - KSB. On January 30, 1998, Citizens Bancshares Corporation ( the "Company" ) and First Southern Bancshares, Inc. (" First Southern"), a bank holding company that wholly owned one bank and a non-bank subsidiary, merged. The Company exchanged 1.508 shares of its common stock to acquire each share of First Southern common stock. The transaction was a tax-free exchange. The merger was accounted for as a pooling of interest with the Company being the surviving entity. The financial statements of the Company for the three and nine month periods ended September 30, 1998 have been restated to include First Southern. First Southern also owned FSB Mortgage Services, Inc. ("FSB Mortgage") which originates residential mortgages through a variety of products. The mortgage subsidiary is now wholly owned by the Company and has changed its name to Citizens Trust Bank Mortgage Services, Inc. ("CTB Mortgage") to reflect this affiliation. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Citizens Trust Bank ( the "Bank" ) and CTB Mortgage. The Bank has a wholly owned subsidiary, Atlanta Mortgage Brokerage and Servicing Co., whose accounts are also included. All significant intercompany accounts and transactions have been eliminated in consolidation. The consolidated financial statements of Citizens Bancshares Corporation and Subsidiaries ( the "Company" ) as of September 30, 1998 and for the three and nine month periods ended September 30,1998 and 1997 are unaudited. In the opinion of management, all adjustments necessary for a fair presentation of the financial position and results of operations and cash flows for the three month period have been included. All adjustments are of a normal recurring nature. 2. ACCOUNTING AND REGULATORY MATTERS IMPAIRED LOANS Management considers a loan to be impaired when, based on current information and events, it is probable that all amounts due according to the contractual terms of the loan will not be collected. Impaired loans are measured based on the present value of expected future cash flows, discounted at the loan?s effective interest rate, or at the loan's observable market price, or the fair value of the collateral if the loan is collateral dependent. Loans are generally placed on nonaccrual status when the full and timely collection of principal or interest becomes uncertain or the loan becomes contractually in default for 90 days or more as to either principal or interest unless the loan is well collateralized and in the process of collection. When a loan is placed on nonaccrual status, current period accrued and uncollected interest is charged to interest income on loans unless management feels the accrued interest is recoverable through the liquidation of collateral. Interest income, if any, on nonaccrual loans is generally recognized on the cash basis. At September 30, 1998, the recorded investment in loans that are considered to be impaired was approximately $814,000, a decrease of $416,000 from December 31, 1997. At September 30, 1998 and December 3, 1998 the related allowance for loan losses for each of these loans was approximately $116,000 and $244,000, respectively. For the three and nine month periods ended September 30, 1998, the Company recognized approximately $6,000 and $13,000 in interest income on these impaired loans on an accrual basis, respectively. NONPERFORMING ASSETS Nonperforming assets include nonperforming loans, real estate acquired through foreclosure and repossessed assets. Nonperforming loans consist of loans which are past due with respect to principal or interest more than 90 days or have been placed on nonaccrual status. With the exception of the loans included within nonperforming assets in the table below, management is not aware of any loans classified for regulatory purposes as loss, doubtful, substandard, or special mention that have not been disclosed which(1) represent or result from trends or uncertainties which management reasonably expects will materially impact future operating results, liquidity, or capital resources, or (2) represent any information on material credits of which management is aware that causes management to have serious doubts as to the abilities of such borrowers to comply with the loan repayment terms. Nonperforming loans increased approximately $1,040,000 to $2,152,000 at September 30, 1998, from $1,112,000 at December 31, 1997. Nonperforming assets represented 1.92% of loans, net of unearned income and real estate acquired through foreclosure at September 30, 1998 as compared to 1.79% at December 31, 1997. 3. IMPACT OF NEW ACCOUNTING STANDARDS The Company adopted Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS 130") as of January 1, 1998. Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available-for - - -sale securities are reported as a separate component of the equity section of the balance sheet, such items, along with net income, are components of comprehensive income. The adoption of SFAS 130 had no effect on the Company's net income or shareholders' equity. In June 1997, Statement of Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and Related Information" ("SFAS 131") was issued. SFAS 131 establishes annual and interim reporting standards for an enterprise's business segments and related disclosures about its products, services, geographic areas and major customers. Adoption of this statement will not impact the Company's consolidated financial position, results of operations or cash flows. The Company will adopt this Statement in its annual financial statements for the year ending December 31, 1998. In February 1998, Statement of Financial Accounting Standards No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits" ("SFAS 132") was issued. SFAS 132 standardizes the disclosure requirements for pensions and other postretirement benefits to the extent practicable, requires additional information on changes in the benefit obligations and fair values of plan assets that will facilitate financial analysis, and eliminates certain disclosures that are no longer useful. SFAS 132 is effective for fiscal years beginning after December 15, 1997. The Statement is not expected to have an effect on the Company's financial statements. In June 1998, Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133") was issued. SFAS 133 establishes standards for derivative instruments and hedging activities and requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. This statement is effective for all fiscal quarters of fiscal years beginning after June 15, 1999. The Statement is not expected to have an effect on the Company's financial statements. 4. RESTATEMENT During the third quarter of 1998, the Company's management discovered that certain of its equity securities had not been recorded in compliance with SFAS 115. The effect on the December 31, 1997 financial statements related to the correction was to increase investment securities available for sale and stockholders' equity by $944,396 and $611,751, respectively, with the offset affecting deferred taxes. Comprehensive income for the three and nine month periods ended September 30, 1997 was $235,000 and $548,000, respectively. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS INTRODUCTION Citizens Bancshares Corporation ( the "Company" ), a one-bank holding company, provides a full range of commercial banking services to individual and corporate customers in metropolitan Atlanta through its wholly owned subsidiary, Citizens Trust Bank ( the "Bank" ). The Bank operates under a state charter and serves its customers through ten full service branches. The following discussion is of the Company's financial condition as of September 30, 1998 and the changes in the financial condition and results of operations for the three and nine month periods ended September 30, 1998 and 1997. RESULTS OF OPERATIONS Net Interest Income: Net interest income represents the excess of income received on interest- earning assets and interest paid on interest-bearing liabilities. Net interest income for the nine month period ended September 30, 1998 increased approximately $34,000 compared to the same period in 1997. The combination of higher volume and lower rates on interest earning assets and interest bearing liabilities caused the Company's net interest margin to remain relatively stable at 5.58% for the period ended September 30, 1998 compared to 1997. Noninterest income: Noninterest income increased approximately $332,000 or 20% for the three month period ended September 30, 1998 and approximately $1,133,000 or 24% for the nine month period ended September 30, 1998 as compared to the same period in 1997. The increase in noninterest income is due primarily to an increase in commissions and fees on mortgage loans of approximately $1,192,000, as a result of an increase in the volume of loan closings. Noninterest expense: Noninterest expense decreased approximately $141,000 for the nine month period ended September 30, 1998 as compared to the same period in 1997. The decrease is attributable to a combination of a decrease in salaries and employee benefits of $521,000, an increase in occupancy expense and other operating expense of $177,000 and $203,000, respectively. The decrease in salaries and employee benefit costs is attributed to a reduction in staff due to the merger. The Mortgage Company relocated which accounts for the increase in occupancy expense. Other operating expense increased because the Company outsourced its data processing services during the second quarter. Net earnings: The Company had net earnings of approximately $450,000 or $0.21 per share and $1,399,000 or $0.65 per share for the three and nine month periods ended September 30, 1998 as compared to $179,000 and $404,000 or $0.08 and $0.19 per share in 1997. The $995,000 increase in net earnings as compared to 1997 is attributable to an increase in noninterest income of approximately $1,133,000 and a decrease in noninterest expense of approximately $141,000. LIQUIDITY Liquidity is a bank's ability to meet deposit withdrawals, while also providing for the credit needs of customers. In the normal course of business, the Company's cash flow is generated from interest and fees on loans and other interest-earning assets. The Company continues to meet liquidity needs primarily through the sale of federal funds and managing the maturities of investment securities. At September 30,1998, approximately 9% of the investment portfolio matures within the next year, 41% after one year but before five years. In addition, interest bearing deposits and federal funds sold averaged approximately $9.5 and $2.6 million, respectively, during the nine month period ended September 30, 1998. The Company is a member of the Federal Home Loan Bank of Atlanta, the Federal Reserve System and maintains relationships with several correspondent banks and, thus, could obtain funds on short notice. Company management closely monitors and maintains appropriate levels of interest-earning assets and interest-bearing liabilities, so that maturities of assets are such that adequate funds are provided to meet customer withdrawals and loan demand. CAPITAL RESOURCES Quantitive measures established by regulation to ensure capital adequacy require the Company to maintain minimum amounts and ratios of total and Tier 1 capital to risk weighted assets, and Tier 1 capital to average assets. As of September 30, 1998, the Company?s total and Tier 1 capital to risk weighted assets and Tier 1 to average assets were 14%, 13% and 9% respectively. Management believes, as of September 30, 1998, that the Company meets all capital adequacy requirements to which it is subject. Year 2000 Processing Risk The Board and management consider the Year 2000 ("Y2K") computer processing risk to be a very serious risk for the banking and financial services industry in particular and for all businesses which depend on computer hardware and software to perform the critical functions of their businesses. Y2K computer processing risk is defined as the risk associated with computer hardware or software that fails to process data or to operate in the manner for which it was designed as a result of century date changes. This risk encompasses hardware and software owned, leased, licensed or otherwise used by the Company and the Bank or by vendors upon which the Company and the Bank depend for mission-critical functions or by customers with which the Company and the Bank have a material relationship. In the third quarter of 1997, the Board established a Y2K Policy and Y2K Compliance Committee. The Committee is headed by senior management, meets monthly and regularly reports to the Audit and Compliance Committee of the Board and to the full Board. The Company and Bank do not use proprietary computer hardware or software. Therefore, they depend upon outsourced data processing services and third party software. Management has identified all mission critical hardware and software applications and is following the general guidelines promulgated by the FDIC to assure that all mission critical applications will be renovated, with testing in progress, by December 31, 1998, or contingency plans will be in the process of implementation. At this time, the servicing vendors appear to have completed their assessments and have described to the Bank their time lines for renovation and testing. Management has no reason to believe at this time, that all mission critical applications for the Bank and Company will not be adequately addressed by our vendor's plans. Management is currently reviewing all of the Bank's significant commercial loan relationships to determine how much Y2K risk may exist in the Bank's customer base. To the extent that such risk is identified, management is requesting such customers to develop their own compliance strategy and will require those customers to keep us informed of their progress. Management's current plans are to help customers understand the risk involved to share the Company's strategies and to encourage those customers to satisfy their compliance requirements on timelines that are consistent with those of the Company and the Bank. The Bank's credit review processes have been modified to address this risk. The Bank's contingency plans for customers who fail to adequately address this risk may include but will not be limited to, requiring such customers to pay off their loans. The Company and the Bank are in the process of initiating communications with all suppliers and vendors to determine the potential impact of such third party's failure to remediate their own Y2K issues. These third parties include other financial institutions, office supply vendors and telephone, electric and other utility companies. The Company and the Bank are encouraging its counterparts, vendors and customers to conduct their own Y2K assessments and to take appropriate steps to become Y2K compliant. There can be no assurances that all hardware and software that the Company and the Bank will use or that their customers, other vendors and utility companies will use will be Y2K compliant. The Company's and the Bank's customers, other vendors and utility companies may be negatively affected by the Y2K issue and any difficulties incurred by them in solving the Y2K issues could negatively affect their ability to perform their agreements with the Company and the Bank. As part of their normal business practice, the Company and the Bank maintain contingency plans to follow in the event of emergency situations, some of which could arise from Y2K-related problems. The Company and the Bank are in the process of formulating a detailed Y2K contingency plan which will assess several possible scenarios to which the Company may be required to react. The foregoing are forward-looking statements reflecting management's current assessments and estimates with respect to the Company's Y2K compliance efforts and the impact of Y2K issues on the Company's business and operations. Various factors could cause actual plans and results to differ materially from those contemplated by such assessments, estimates and forward-looking statements, many of which are beyond control of the Company. Some of these factors include, but are not limited to, representations by the Company's and Bank's vendors and customers, technological advances, economic considerations and customers perceptions. The Y2K compliance program is an ongoing process involving continual evaluation and may be subject to change in response to new developments. The costs of implementing Y2K solutions on mission critical systems have not been fully determined as of the date of this report. The Bank's local area computer network was already budgeted for upgrade in 1998 to workstations and file-servers that will be Y2K ready. The budget for these upgrades is approximately $500,000. Selected Statistical Information NONPERFORMING ASSETS The table below presents a summary of the Company's nonperforming assets at September 30, 1998 and December 31, 1997. 1998 1997 (Amounts in thousands, except financial ratios) Nonperforming assets: Nonperforming loans: Nonaccrual loans $ 775 1,005 Past-due loans 1,377 107 Nonperforming loans 2,152 1,112 Real estate acquired through foreclosure 137 1,075 Total nonperforming assets $ 2,289 2,187 Ratios: Nonperforming loans to loans, net of unearned income 1.81% .92 Nonperforming assets to loans(net of unearned income) and real estate acquired through foreclosure 1.92% 1.79 Nonperforming assets to total assets 1 .17% 1.18 Allowance for loan losses to Nonperforming loans 81.13% 157.55 Allowance for loan losses to nonperforming assets 76.28% 80.11 Interest income on nonaccrual loans which would have been reported for the three and nine month periods ended September 30, 1998 totaled approximately $18,000 and $61,000. The Company recorded approximately $22,000 in income on these loans for the nine month period ended September 30, 1998. ALLOWANCE FOR LOAN LOSSES The following table summarize loans, changes in the allowance for loans losses arising from loans charged off, recoveries on loans previously charged off by loan category, and additions to the allowance which have been charged to operating expense as of and for the periods ended September 30, 1998 and December 31, 1997. 1998 1997 Loans, net of unearned income $ 119,195 121,414 Average loans, net of unearned income and the allowance for loan losses $ 118,565 115,657 Allowance for loans losses at the beginning of year $ 1,752 1,806 Loans charged off: Commercial, financial, and agricultural 110 68 Real estate- mortgage 35 169 Installment loans to individuals 188 436 Total loans charged off 333 673 Recoveries of loans previously charged off: Commercial, financial, and agricultural 13 84 Real estate- mortgage 68 85 Installment loans to individuals 121 149 Total loans recovered 202 318 Net loans charged off 131 355 Additions to allowance for loan losses charged to operating expense 125 301 Allowance for loan losses at period end $ 1,746 1,752 Ratio of net loans charged off to average loans, net of unearned income and the allowance for loan losses .11% .31 Allowance for loan losses to loans, net of unearned income 1.46% 1.44 Credit reviews of the loan portfolio designed to identify potential charges to the allowance for loan losses, as well as to determine the adequacy of the allowance for loan losses, are made on a continuous basis throughout the year. These reviews are conducted by management, lending officers, and independent third parties. These reviews are also reviewed by the Board of Directors, who consider such factors as the financial strength of borrowers, the value of applicable collateral, past loan loss experience, anticipated loan losses, growth in the loan portfolio, and other factors including prevailing and anticipated economic conditions. Management believes the allowance for loan losses is adequate at September 30, 1998. A substantial portion of the Company's loan portfolio is secured by real estate in the metropolitan Atlanta market. Accordingly, the ultimate collectibility of a substantial portion of the Company's loan portfolio is susceptible to changes in market conditions in the metropolitan Atlanta area PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Company is not aware of any material pending legal proceedings to which the Company or its subsidiary is a party or to which any of their property is subject. ITEM 2. CHANGES IN SECURITIES None ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS None ITEM 5. OTHER INFORMATION Pursuant to Rule 14a-4(c)(1) promulgated under the Securities Exchange Act of 1934, as amended, shareholders desiring to present a proposal for consideration at the Company's 1999 Annual Meeting of Shareholders must notify the Company in writing at its principal office at 175 John Wesley Dobbs Avenue, NE., Atlanta, Georgia 30303 of the contents of such proposal no later than March 12, 1999 . Failure to timely submit such a proposal will enable the proxies appointed by management to exercise their discretionary voting authority when the proposal is raised at the Annual Meeting of Shareholders without any discussion of the matter in the proxy statement. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K None SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CITIZENS BANCSHARES CORPORATION Date: November 16, 1998 By: /s/ James E. Young James E. Young President and Chief Executive Officer Date: November 16, 1998 By: /s/ Willard C. Lewis Willard C. Lewis Senior Executive Vice President and Chief Operating Officer EX-27 2
9 9-MOS DEC-31-1998 SEP-30-1998 10,127 13,153 37 0 22,085 16,441 0 119,195 1,746 195,910 173,985 1,478 1,977 0 0 0 2,164 6,174 195,910 8585 1665 519 10,769 3,737 3,806 6,963 125 0 69 1,914 1,914 0 0 1,399 .65 .65 5.58 775 1,377 39 0 1,752 333 202 0 0 0 0
-----END PRIVACY-ENHANCED MESSAGE-----