10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10 – Q

(Mark One)
x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
	SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended March 31, 2014
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
	SECURITIES EXCHANGE ACT OF 1934
	For the transition period from  ____________ to  _____________

Commission File No: 0 - 14535

CITIZENS BANCSHARES CORPORATION

(Exact name of registrant as specified in its charter)

Georgia	58 – 1631302
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
75 Piedmont Avenue, N.E., Atlanta, Georgia	30303
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (404) 659-5959

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 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 past 90 days.      x Yes     o No.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.      x Yes     o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o      Accelerated filer o      Non-accelerated filer o      Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)     o      Yes      x No

SEC 1296 (08-03)  Potential persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding for each of the issuer’s classes of common stock as of the latest practicable date: 2,056,790 shares of Common Stock, $1.00 par value and 90,000 shares of Non-Voting Common Stock, $1.00 par value were outstanding on May 13, 2014.

PART 1.     FINANCIAL INFORMATION

ITEM 1.     Financial Statements

CITIZENS BANCSHARES CORPORATION AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

March 31, 2014 AND DECEMBER 31, 2013

(In thousands, except share data)

ASSETS	2014			2013
	(Unaudited)
Cash and due from banks	$	5,322		$	6,340
Interest-bearing deposits with banks		43,889			22,827
Certificates of deposit		350			350
Investment securities available for sale, at fair value		138,389			141,045
Investment securities held to maturity, at cost		240			240
Other investments		748			874
Loans receivable, net		178,127			182,119
Premises and equipment, net		6,485			6,589
Cash surrender value of life insurance		10,008			9,948
Other Real Estate Owned		6,751			7,404
Other assets		9,878			9,997
Total assets	$	400,187		$	387,733
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES:
Noninterest-bearing deposits	$	77,817		$	71,142
Interest-bearing deposits		270,373			265,820
Total deposits		348,190			336,962
Accrued expenses and other liabilities		4,233			4,190
Advances from Federal Home Loan Bank		268			273
Total liabilities		352,691			341,425
STOCKHOLDERS’ EQUITY:
Preferred stock - No par value; 10,000,000 shares authorized;
Series B, 7,462 shares issued and outstanding		7,462			7,462
Series C, 4,379 shares issued and outstanding		4,379			4,379
Common stock - $1 par value; 20,000,000 shares authorized;
2,292,728 shares issued and outstanding at March 31, 2014
and December 31, 2013, respectively		2,293			2,293
Nonvoting common stock - $1 par value; 5,000,000 shares
authorized; 90,000 issued and outstanding		90			90
Nonvested restricted common stock		(4	)		(16	)
Additional paid-in capital		7,933			7,933
Retained earnings		27,488			27,131
Treasury stock at cost, 235,938 shares at March 31, 2014 and December 31, 2013, respectively		(1,882	)		(1,882	)
Accumulated other comprehensive loss, net of income taxes		(263	)		(1,082	)
Total stockholders’ equity		47,496			46,308
	$	400,187		$	387,733

See notes to condensed consolidated financial statements.

Page 1 of 43

CITIZENS BANCSHARES CORPORATION AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited - In thousands, except per share data)

	Three Months  Ended March 31,
	2014		2013
Interest income:
Loans, including fees	$	2,477	$	2,538
Investment securities:
Taxable		584		375
Tax-exempt		295		340
Interest-bearing deposits		20		20
Total interest income		3,376		3,273
Interest expense:
Deposits		212		235
Total interest expense		212		235
Net interest income		3,164		3,038
Provision for loan losses		—		225
Net interest income after provision for loan losses		3,164		2,813
Noninterest income:
Service charges on deposits		703		768
Gain on sales of securities		—		141
Other operating income		276		328
Total noninterest income		979		1,237
Noninterest expense:
Salaries and employee benefits		1,536		1,615
Net occupancy and equipment		543		510
Amortization of core deposit intangible		118		118
FDIC insurance		77		130
Other real estate owned, net		231		248
Other operating expenses		1,139		1,192
Total noninterest expense		3,644		3,813
Income before income taxes		499		237
Income tax expense (benefit)		83		(35	)
Net income	$	416	$	272
Preferred dividends		59		59
Net income available to common shareholders	$	357	$	213
Net income per common share - basic	$	0.17	$	0.10
Net income per common share - diluted	$	0.16	$	0.10
Weighted average common outstanding shares - basic		2,161		2,146
Weighted average common outstanding shares - diluted		2,171		2,152

See notes to condensed consolidated financial statements.

Page 2 of 43

CITIZENS BANCSHARES CORPORATION AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited - In thousands)

	Three Months Ended
	March 31,
	2014		2013
Net Income	$	416	$	272
Other Comprehensive Income (Loss)
Unrealized holding gain (loss) on investment securities available for sale, net of tax of $421 for 2014 and $44 for 2013	$	819	$	(87	)
Reclassification adjustment for holding gains included in net income, net of tax of $ — and $48 for 2014 and 2013, respectively	$	—	$	(93	)
Other Comprehensive Income		819		(180	)
Total Comprehensive Income (Loss)	$	1,235	$	92

See notes to condensed consolidated financial statements.

Page 3 of 43

CITIZENS BANCSHARES CORPORATION AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2014 AND 2013

(Unaudited - In thousands)

																												Accumulated
									Nonvoting				Nonvested			Additional												Other
	Preferred Stock				Common Stock				Common Stock				Restricted			Paid-in			Retained			Treasury Stock						Comprehensive
	Shares		Amount		Shares		Amount		Shares		Amount		Stock			Capital			Earnings			Shares			Amount			Income (Loss)			Total
Balance—December 31, 2012		12	$	11,841		2,250	$	2,250		90	$	90	$	(57	)	$	7,942		$	26,190			(221	)	$	(1,820	)	$	2,718		$	49,154
Net income		—		—		—		—		—		—		—			—			272			—			—			—			272
Other Comprehensive Loss		—		—		—		—		—		—		—			—			—			—			—			(180	)		(180	)
Issuance of common stock		—		—		43		43		—		—		—			137			—			—			—			—			180
Nonvested restricted stock		—		—		—		—		—		—		5			(147	)		—			—			—			—			(142	)
Purchase of treasury stock		—		—		—		—		—		—		—			—			—			(15	)		(62	)		—			(62	)
Dividends declared - preferred		—		—		—		—		—		—		—			—			(59	)		—			—			—			(59	)
Balance—March 31, 2013		12	$	11,841		2,293	$	2,293		90	$	90	$	(52	)	$	7,932		$	26,403			(236	)	$	(1,882	)	$	2,538		$	49,163
Balance—December 31, 2013		12	$	11,841		2,293	$	2,293		90	$	90	$	(16	)	$	7,933		$	27,131			(236	)	$	(1,882	)	$	(1,082	)	$	46,308
Net income		—		—		—		—		—		—		—			—			416			—			—			—			416
Other Comprehensive Income		—		—		—		—		—		—		—			—			—			—			—			819			819
Issuance of common stock		—		—		—		—		—		—		—			—			—			—			—			—			—
Nonvested restricted stock		—		—		—		—		—		—		12			—			—			—			—			—			12
Purchase of treasury stock		—		—		—		—		—		—		—			—			—			—			—			—			—
Dividends declared - preferred		—		—		—		—		—		—		—			—			(59	)		—			—			—			(59	)
Balance—March 31, 2014		12	$	11,841		2,293	$	2,293		90	$	90	$	(4	)	$	7,933		$	27,488			(236	)	$	(1,882	)	$	(263	)	$	47,496

See notes to condensed consolidated financial statements.

Page 4 of 43

CITIZENS BANCSHARES CORPORATION AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2014 AND 2013

(In thousands)

	2014			2013
	(Unaudited)
OPERATING ACTIVITIES:
Net income	$	416		$	272
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		—			225
Depreciation		137			150
Amortization and accretion, net		216			388
Provision for deferred income tax benefit		77			(4	)
Gains on sale of assets and investments, net		—			(141	)
Restricted stock based compensation plan		12			(142	)
Decrease in carrying value of other real estate owned		206			116
Net loss on sale of other real estate owned		(60	)		2
Change in other assets		(557	)		71
Change in accrued expenses and other liabilities		43			(168	)
Net cash provided by operating activities		490			769
INVESTING ACTIVITIES:
Proceeds from calls and maturities of investment securities held to maturity		—			430
Proceeds from sales, maturities, and paydowns of investment securities available for sale		4,109			9,124
Purchases of investment securities available for sale		(200	)		(10,224	)
Net change in loans receivable		4,008			5,904
Proceeds from the sale of other real estate owned		917			159
Purchases of premises and equipment, net		(32	)		(73	)
Net cash provided by (used in) investing activities		8,802			5,320
FINANCING ACTIVITIES:
Net change in deposits		11,228			(1,198	)
Net change in advances from Federal Home Loan Bank		(5	)		(5	)
Proceeds from issuance of common stock		—			180
Purchase of treasury stock		—			(62	)
Dividends paid - preferred		(59	)		(59	)
Net cash provided by (used in) financing activities		11,164			(1,144	)
Net change in cash and cash equivalents		20,044			4,945
Cash and  cash equivalents, beginning of period		29,167			40,187
Cash and  cash equivalents at end of period	$	49,211		$	45,132
Supplemental disclosures of cash paid during the period for:
Interest	$	264		$	254
Income taxes	$	—		$	26
Supplemental disclosures of noncash transactions:
Real estate acquired through foreclosure	$	410			1,254
Change in unrealized gain (loss) on investment securities available for sale, net of taxes	$	819		$	(180	)

See notes to condensed consolidated financial statements.

Page 5 of 43

CITIZENS BANCSHARES CORPORATION AND SUBSIDIARY

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Citizens Bancshares Corporation (the “Company”) is a holding company that provides a full range of commercial and personal banking services to individual and corporate customers in metropolitan Atlanta and Columbus, Georgia, and in Birmingham and Eutaw, Alabama, through its wholly owned subsidiary, Citizens Trust Bank (the “Bank”). The Bank operates under a state charter and serves its customers through seven full-service financial centers in metropolitan Atlanta, Georgia, one full-service financial center in Columbus, Georgia, one full-service financial center in Birmingham, Alabama, and one full-service financial center in Eutaw, Alabama.

The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. 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-K filed with the Securities and Exchange Commission for the year ended December 31, 2013. The results of operations for the interim periods reported herein are not necessarily representative of the results expected for the full 2014 fiscal year.

The consolidated financial statements of the Company for the three month period ended March 31, 2014 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 has been included.  All adjustments are of a normal recurring nature.  All significant intercompany accounts and transactions have been eliminated in consolidation.

Accounting Policies

The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), which often require the judgment of management in the selection and application of certain accounting principles and methods. Reference is made to the accounting policies of the Company described in the notes to the consolidated financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013. The Company has followed those policies in preparing this report. Management believes that the quality and reasonableness of its most critical policies enable the fair presentation of its financial position and of its results of operations.

Troubled Asset Relief Program

On August 13, 2010, as part of the U.S. Department of the Treasury (the “Treasury”) Troubled Asset Relief Program (“TARP”) Community Development Capital Initiative, the Company entered into a Letter Agreement, and an Exchange Agreement–Standard Terms (“Exchange Agreement”), with the Treasury, pursuant to which the Company agreed to exchange 7,462 shares of the Company’s Fixed Rate Cumulative Perpetual Preferred Stock, Series A (“Series A Preferred Shares”), issued on March 6, 2009, pursuant to the Company’s participation in the TARP Capital Purchase Program, for 7,462 shares of the Company’s Fixed Rate Cumulative Perpetual Preferred Stock, Series B (“Series B Preferred Shares”) issued pursuant to the TARP Community Development Capital Initiative, both of which have a liquidation preference of $1,000 (the “Exchange Transaction”). No new monetary consideration was exchanged in connection with the Exchange Transaction. The Exchange Transaction closed on August 13, 2010 (the “Closing Date”).

Page 6 of 43

On September 17, 2010, the Company issued 4,379 shares of its Series C Preferred Shares to the Treasury as part of its TARP Community Development Capital Initiative for a total of 11,841 shares of Series B and C Preferred Shares issued to Treasury. The issuance of the Series B and Series C Preferred Shares was a private placement exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended.

The Series B and Series C Preferred Shares qualify as Tier 1 capital and will pay cumulative dividends at a rate of 2% per annum for the first eight years after the Closing Date and 9% per annum thereafter. The Company may, subject to consultation with the Federal Reserve Bank of Atlanta, redeem the Series B and Series C Preferred Shares at any time for its aggregate liquidation amount plus any accrued and unpaid dividends.

Recently Issued Accounting Standards

In April 2013, the FASB issued guidance addressing application of the liquidation basis of accounting. The guidance is intended to clarify when an entity should apply the liquidation basis of accounting. In addition, the guidance provides principles for the recognition and measurement of assets and liabilities and requirements for financial statements prepared using the liquidation basis of accounting. The amendments went into effect for entities that determine liquidation is imminent during annual reporting periods beginning after December 15, 2013, and interim reporting periods therein and those requirements should be applied prospectively from the day that liquidation becomes imminent. Early adoption is permitted. The amendments did not have a material effect on the Company’s financial statements.

In January 2014, the FASB amended the Receivables—Troubled Debt Restructurings by Creditors subtopic of the Codification to address the reclassification of consumer mortgage loans collateralized by residential real estate upon foreclosure. The amendments clarify the criteria for concluding that an in substance repossession or foreclosure has occurred, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan. The amendments also outline interim and annual disclosure requirements. The amendments will be effective for the Company for interim and annual reporting periods beginning after December 15, 2014. Companies are allowed to use either a modified retrospective transition method or a prospective transition method when adopting this update. Early adoption is permitted. The Company does not expect these amendments to have a material effect on its financial statements.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

2. INVESTMENTS

Investment securities available for sale are summarized as follows (in thousands):

At March 31, 2014	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
State, county, and municipal securities	$	33,536	$	1,349	$	—	$	34,885
Mortgage-backed securities		95,431		405		2,327		93,509
Corporate securities		9,821		183		9		9,995
Totals	$	138,788	$	1,937	$	2,336	$	138,389

Page 7 of 43

At December 31, 2013	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
State, county, and municipal securities	$	33,735	$	1,097	$	30	$	34,802
Mortgage-backed securities		99,143		347		3,223		96,267
Corporate securities		9,806		180		10		9,976
Totals	$	142,684	$	1,624	$	3,263	$	141,045

Investment securities held to maturity are summarized as follows (in thousands):

At March 31, 2014	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
State, county, and municipal securities	$	240	$	—	$	—	$	240

At December 31, 2013	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
State, county, and municipal securities	$	240	$	—	$	—	$	240

The amortized costs and fair values of investment securities at March 31, 2014, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with and without call or prepayment penalties (in thousands).

	Available for Sale				Held to Maturity
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Due in one year or less	$	—	$	—	$	—	$	—
Due after one year through five years		13,297		13,647		240		240
Due after five years through ten years		29,620		30,429		—		—
Due after ten years		95,871		94,313		—		—
	$	138,788	$	138,389	$	240	$	240

Securities with carrying values of $103,762,000 and $102,728,000 as of March 31, 2014 and December 31, 2013, respectively, were pledged to secure public deposits, FHLB advances and a $18,903,000 line of credit at the Federal Reserve Bank discount window and for other purposes as required by law.

Page 8 of 43

For the three months ended March 31, 2013, proceeds from the sale of securities was $1,082,000. There were no sale of securities during the three months ended March 31, 2014. Gross realized gains on the sale of securities for the three months ended March 31, 2013 was $141,000. There were no gross realized losses on sales of securities for the three month period ended March 31, 2014 and 2013, respectively.

The Company’s investment portfolio consists principally of obligations of the United States, its agencies, or its corporations, general obligation and revenue municipals and corporate securities. In the opinion of management, there is no concentration of credit risk in its investment portfolio. The company places its deposits and correspondent accounts with and sells its federal funds to high quality institutions. Management believes credit risk associated with correspondent accounts is not significant.

The following tables show investments’ gross unrealized losses and fair value, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position, at March 31, 2014 and December 31, 2013. Except as explicitly identified below, all unrealized losses on investment securities are considered by management to be temporarily impaired given the credit ratings on these investment securities and the short duration of the unrealized loss (in thousands).

At March 31, 2014

Securities Available for Sale

	Securities in a loss position  for less than twelve months					Securities in a loss position  for twelve months or more					Total
	Fair value		Unrealized losses			Fair value		Unrealized losses			Fair value		Unrealized losses
Mortgage-backed securities	$	65,808	$	(2,098	)	$	5,047	$	(229	)	$	70,855	$	(2,327	)
Corporate		1,991		(9	)		—		—			1,991		(9	)
Total	$	67,799	$	(2,107	)	$	5,047	$	(229	)	$	72,846	$	(2,336	)

Securities Held to Maturity

There were no securities classified as held to maturity in an unrealized loss position at March 31, 2014.

At December 31, 2013

Securities Available for Sale

	Securities in a loss position  for less than twelve months					Securities in a loss position  for twelve months or more					Total
	Fair value		Unrealized losses			Fair value		Unrealized losses			Fair value		Unrealized losses
Municipal securities	$	2,775	$	(30	)	$	—	$	—		$	2,775	$	(30	)
Mortgage-backed securities		68,420		(2,907	)		5,136		(316	)		73,556		(3,223	)
Corporate		1,990		(10	)		—		—			1,990		(10	)
Total	$	73,185	$	(2,947	)	$	5,136	$	(316	)	$	78,321	$	(3,263	)

Securities Held to Maturity

There were no securities classified as held to maturity in an unrealized loss position at December 31, 2013.

Page 9 of 43

The Company’s available for sale portfolio had three investment securities at March 31, 2014 that were in an unrealized loss position for longer than twelve months. At December 31, 2013, the Company had two investment securities that were in an unrealized loss position for longer than twelve months. The Company reviews these securities for other-than-temporary impairment on a quarterly basis by monitoring their credit support and coverage, constant payment of the contractual principal and interest, loan to value and delinquencies ratios.

We use prices from third party pricing services and, to a lesser extent, indicative (non-binding) quotes from third party brokers, to measure fair value of our investment securities. Fair values of the investment securities portfolio could decline in the future if the underlying performance of the collateral for collateralized mortgage obligations or other securities deteriorates and the levels do not provide sufficient protection for contractual principal and interest. As a result, there is risk that an other-than-temporary impairment may occur in the future particularly in light of the current economic environment.

As of the date of its evaluation, the Company did not intend to sell and has the ability to hold these securities and it is more likely than not that the Company will not be required to sell those securities before recovery of its amortized cost or the security matures. The Company believes, based on industry analyst reports and credit ratings, that it will continue to receive scheduled interest payments as well as the entire principal balance, and the deterioration in value is attributable to changes in market interest rates and is not in the credit quality of the issuer and therefore, these losses are not considered other-than-temporary.

3. LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES

Loans outstanding, by classification, are summarized as follows (in thousands):

	March 31,		December 31,
	2014		2013
Commercial, financial, and agricultural	$	19,416	$	20,292
Commercial Real Estate		117,461		120,180
Single-Family Residential		34,085		34,864
Construction and Development		4,039		3,626
Consumer		6,195		6,314
		181,196		185,276
Allowance for loan losses		3,069		3,157
	$	178,127	$	182,119

Page 10 of 43

Activity in the allowance for loan losses for the three months ended March 31, 2014 and 2013 and the year ended December 31, 2013 is summarized as follows (in thousands):

	March 31, 2014			December 31, 2013			March 31, 2013
Balance at beginning of period	$	3,157		$	3,509		$	3,509
Provision for loan losses		—			425			225
Loans charged-off		(200	)		(1,485	)		(388	)
Recoveries on loans previously charged-off		112			708			69
Balance at end of period	$	3,069		$	3,157		$	3,415

Activity in the allowance for loan losses by portfolio segment is summarized as follows (in thousands):

	For the Three Month Period Ended March 31, 2014
	Commercial		Commercial Real Estate			Single-family Residential			Construction & Development		Consumer			Total
Beginning balance	$	384	$	1,721		$	731		$	126	$	195		$	3,157
Provision for loan losses		—		—			—			—		—			—
Loans charged-off		—		(105	)		(52	)		—		(43	)		(200	)
Recoveries on loans charged-off		10		3			86			—		13			112
Ending Balance	$	394	$	1,619		$	765		$	126	$	165		$	3,069

	For the Three Month Period Ended March 31, 2013
	Commercial			Commercial Real Estate			Single-family Residential			Construction & Development			Consumer			Total
Beginning balance	$	433		$	1,853		$	803		$	177		$	243		$	3,509
Provision for loan losses		(31	)		14			136			39			67			225
Loans charged-off		(5	)		(65	)		(216	)		(30	)		(72	)		(388	)
Recoveries on loans charged-off		11			26			11			—			21			69
Ending Balance	$	408		$	1,828		$	734		$	186		$	259		$	3,415

	For the Year Ended December 31, 2013
	Commercial			Commercial Real Estate			Single-family Residential			Construction & Development			Consumer			Total
Beginning balance	$	433		$	1,853		$	803		$	177		$	243		$	3,509
Provision for loan losses		(68	)		127			361			(56	)		61			425
Loans charged-off		(22	)		(710	)		(554	)		(30	)		(169	)		(1,485	)
Recoveries on loans charged-off		41			451			121			35			60			708
Ending Balance	$	384		$	1,721		$	731		$	126		$	195		$	3,157

Portions of the allowance for loan losses may be allocated for specific loans or portfolio segments. However, the entire allowance for loan losses is available for any loan that, in the judgment of management, should be charged-off.

Page 11 of 43

In determining our allowance for loan losses, we regularly review loans for specific reserves based on the appropriate impairment assessment methodology. Consumer residential loans are evaluated as a homogeneous population and therefore loans are not evaluated individually for impairment. General reserves are determined using historical loss trends measured over a rolling four quarter average for consumer loans, and a three year average loss factor for commercial loans which is applied to risk rated loans grouped by Federal Financial Examination Council (“FFIEC”) call code. For commercial loans, the general reserves are calculated by applying the appropriate historical loss factor to the loan pool. Impaired loans greater than a minimum threshold established by management are excluded from this analysis.   The sum of all such amounts determines our total allowance for loan losses. 

The allocation of the allowance for loan losses by portfolio segment was as follows (in thousands):

	At March 31, 2014
	Commercial		Commercial Real Estate		Single-family Residential		Construction & Development		Consumer		Total
Specific Reserves:
Impaired loans	$	—	$	42	$	11	$	—	$	—	$	53
Total specific reserves		—		42		11		—		—		53
General reserves		394		1,577		754		126		165		3,016
Total	$	394	$	1,619	$	765	$	126	$	165	$	3,069
Loans individually evaluated for impairment	$	—	$	10,928	$	490	$	—	$	—	$	11,418
Loans collectively evaluated for impairment		19,416		106,533		33,595		4,039		6,195		169,778
Total	$	19,416	$	117,461	$	34,085	$	4,039	$	6,195	$	181,196

	At December 31, 2013
	Commercial		Commercial Real Estate		Single-family Residential		Construction & Development		Consumer		Total
Specific Reserves:
Impaired loans	$	—	$	3	$	—	$	—	$	—	$	3
Total specific reserves		—		3		—		—		—		3
General reserves		384		1,718		731		126		195		3,154
Total	$	384	$	1,721	$	731	$	126	$	195	$	3,157
Loans individually evaluated for impairment	$	—	$	10,705	$	360	$	—	$	—	$	11,065
Loans collectively evaluated for impairment		20,292		109,475		34,504		3,626		6,314		174,211
Total	$	20,292	$	120,180	$	34,864	$	3,626	$	6,314	$	185,276

Page 12 of 43

The following table presents impaired loans by class of loan (in thousands):

	At March 31, 2014
							Impaired Loans - With
	Impaired Loans - With Allowance						no Allowance
	Unpaid Principal		Recorded Investment		Allowance for Loan Losses Allocated		Unpaid Principal		Recorded Investment
Residential:
First mortgages	$	—	$	—	$	—	$	231	$	231
HELOC’s and equity		130		130		11		129		129
Commercial
Secured		—		—		—		—		—
Unsecured		—		—		—		—		—
Commercial Real Estate:
Owner occupied		—		—		—		10,753		8,442
Non-owner occupied		—		—		—		2,673		2,057
Multi-family		485		429		42		—		—
Construction and Development:
Construction		—		—		—		—		—
Improved Land		—		—		—		—		—
Unimproved Land		—		—		—		—		—
Consumer and Other		—		—		—		—		—
Total	$	615	$	559	$	53	$	13,786	$	10,859

The following table presents the average recorded investment and interest income recognized on impaired loans by class of loan (in thousands):

	Three Months				Three Months
	March 31, 2014				March 31, 2013
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Residential:
First mortgages	$	231	$	—	$	231	$	—
HELOC’s and equity		260		9		204		9
Commercial
Secured		—		—		—		—
Unsecured		—		—		—		—
Commercial Real Estate:
Owner occupied		8,523		252		7,898		199
Non-owner occupied		2,104		21		5,404		47
Multi-family		—		13		367		29
Construction and Development:				.				.
Construction		—		—		122		8
Improved Land		—		—		—		—
Unimproved Land		—		—		—		—
Consumer and Other		—		—		—		—
Total	$	11,118	$	295	$	14,226	$	292

Page 13 of 43

	At December 31, 2013
							Impaired Loans - With
	Impaired Loans - With Allowance						no Allowance
	Unpaid Principal		Recorded Investment		Allowance for Loan Losses Allocated		Unpaid Principal		Recorded Investment		Average Recorded Investment		Interest Income Recognized
Residential:
First mortgages	$	—	$	—	$	—	$	231	$	231	$	231	$	—
HELOC’s and equity		—		—		—		129		129		128		2
Commercial
Secured		—		—		—		—		—		—		—
Unsecured		—		—		—		—		—		—		—
Commercial Real Estate:
Owner occupied		—		—		—		10,300		7,968		8,049		534
Non-owner occupied		—		—		—		2,924		2,407		2,516		108
Multi-family		386		330		3		—		—		359		28
Construction and Development														.
Construction		—		—		—		—		—		—		—
Improved Land		—		—		—		—		—		—		—
Unimproved Land		—		—		—		—		—		—		—
Consumer and Other		—		—				—		—		—		—
Total	$	386	$	330	$	3	$	13,584	$	10,735	$	11,283	$	672

The following table is an aging analysis of our loan portfolio (in thousands):

	At March 31, 2014
	30- 59 Days Past Due		60- 89 Days Past Due		Over 90 Days Past Due		Total Past Due		Current		Total Loans Receivable		Recorded Investment > 90 Days and  Accruing		Nonaccrual
Residential:
First mortgages	$	1,737	$	682	$	1,442	$	3,861	$	21,873	$	25,734	$	35	$	2,895
HELOC’s and equity		434		72		476		982		7,369		8,351		—		578
Commercial:
Secured		29		—		2		31		14,206		14,237		—		2
Unsecured		—		—		—		—		5,179		5,179		—		—
Commercial Real Estate
Owner occupied		750		—		254		1,004		60,260		61,264		—		1,211
Non-owner occupied		—		—		128		128		41,422		41,550		—		1,402
Multi-family		—		332		—		332		14,315		14,647		—		332
Construction and  Development:
Construction		43		—		—		43		3,788		3,831		—		—
Improved Land		—		—		—		—		208		208		—		—
Unimproved Land		—		—		—		—		—		—		—		—
Consumer and Other		11		8		42		61		6,134		6,195		—		42
Total	$	3,004	$	1,094	$	2,344	$	6,442	$	174,754	$	181,196	$	35	$	6,462

Page 14 of 43

	At December 31, 2013
	30- 59 Days Past Due		60- 89 Days Past Due		Over 90 Days Past Due		Total Past Due		Current		Total Loans Receivable		Recorded Investment > 90 Days and  Accruing		Nonaccrual
Residential:
First mortgages	$	1,778	$	360	$	1,840	$	3,978	$	22,348	$	26,326	$	—	$	3,334
HELOC’s and equity		444		19		466		929		7,609		8,538		—		821
Commercial:
Secured		125		—		2		127		14,906		15,033		—		2
Unsecured		—		—		—		—		5,259		5,259		—		—
Commercial Real Estate:
Owner occupied		715		753		81		1,549		60,090		61,639		—		1,038
Non-owner occupied		38		199		286		523		43,287		43,810		—		1,550
Multi-family		747		—		—		747		13,984		14,731		—		330
Construction and  Development
Construction		477		—		—		477		2,542		3,019		—		—
Improved Land		—		—		—		—		242		242		—		—
Unimproved Land		—		—		—		—		365		365		—		—
Consumer and Other		6		30		45		81		6,233		6,314		—		45
Total	$	4,330	$	1,361	$	2,720	$	8,411	$	176,865	$	185,276	$	—	$	7,120

Each of our portfolio segments and the classes within those segments are subject to risks that could have an adverse impact on the credit quality of our loan and lease portfolio. Management has identified the most significant risks as described below which are generally similar among our segments and classes. While the list is not exhaustive, it provides a description of the risks that management has determined are the most significant.

Commercial, financial and agricultural loans—We centrally underwrite each of our commercial loans based primarily upon the customer’s ability to generate the required cash flow to service the debt in accordance with the contractual terms and conditions of the loan agreement. We endeavor to gain a complete understanding of our borrower’s businesses including the experience and background of the principals. To the extent that the loan is secured by collateral, which is a predominant feature of the majority of our commercial loans, we gain an understanding of the likely value of the collateral and what level of strength the collateral brings to the loan transaction. To the extent that the principals or other parties provide personal guarantees, we analyze the relative financial strength and liquidity of each guarantor. Common risks to each class of commercial loans include risks that are not specific to individual transactions such as general economic conditions within our markets, as well as risks that are specific to each transaction including demand for products and services, personal events such as disability or change in marital status, and reductions in the value of our collateral. Due to the concentration of loans in the metro Atlanta and Birmingham areas, we are susceptible to changes in market and economic conditions of these areas.

Consumer—The installment loan portfolio includes loans secured by personal property such as automobiles, marketable securities, other titled recreational vehicles and motorcycles, as well as unsecured consumer debt. The value of underlying collateral within this class is especially volatile due to potential rapid depreciation in values since date of loan origination in excess of principal repayment.

Commercial Real Estate—Real estate commercial loans consist of loans secured by multifamily housing, commercial non-owner and owner occupied and other commercial real estate loans. The primary risk associated with multifamily loans is the ability of the income-producing property that collateralizes the loan to produce adequate cash flow to service the debt. High unemployment or generally weak economic conditions may result in our customer having to provide rental rate concessions to achieve adequate occupancy rates. Commercial owner-occupied and other commercial real estate loans are primarily dependent on the ability of our customers to achieve business results consistent with those projected at loan origination resulting in cash flow sufficient to service the debt. To the extent that a customer’s business results are significantly unfavorable versus the original projections, the ability for our loan to be serviced on a basis consistent with the contractual terms may be at risk. These loans are primarily secured by real property and can include other collateral such as personal guarantees, personal property, or business assets such as inventory or accounts receivable, it is possible that the liquidation of the collateral will not fully satisfy the obligation. Also, due to the concentration of loans in the metro Atlanta and Birmingham areas, we are susceptible to changes in market and economic conditions of these areas.

Page 15 of 43

Single-family Residential—Real estate residential loans are to individuals and are secured by 1-4 family residential property. Significant and rapid declines in real estate values can result in residential mortgage loan borrowers having debt levels in excess of the current market value of the collateral. Such a decline in values has led to unprecedented levels of foreclosures and losses during 2008-2012 within the banking industry.

Construction and Development—Real estate construction loans are highly dependent on the supply and demand for residential and commercial real estate in the markets we serve as well as the demand for newly constructed commercial space and residential homes and lots that our customers are developing. Continuing deterioration in demand could result in significant decreases in the underlying collateral values and make repayment of the outstanding loans more difficult for our customers. Real estate construction loans can experience delays in completion and cost overruns that exceed the borrower’s financial ability to complete the project. Such cost overruns can routinely result in foreclosure of partially completed and unmarketable collateral.

Risk categories—The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. Loans classified as substandard or special mention are reviewed quarterly by the Company for further deterioration or improvement to determine if appropriately classified and impairment, if any. All other loan relationships greater than $750,000 are reviewed at least annually to determine the appropriate loan grading. In addition, during the renewal process of any loan, as well as if a loan becomes past due, the Company will evaluate the loan grade.

Loans excluded from the scope of the annual review process above are generally classified as pass credits until: (a) they become past due; (b) management becomes aware of deterioration in the credit worthiness of the borrower; or (c) the customer contacts the Company for a modification. In these circumstances, the loan is specifically evaluated for potential classification as to special mention, substandard or even charged off. The Company uses the following definitions for risk ratings:

Special Mention Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Substandard Loans classified as substandard are inadequately protected by the current net worth and payment capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Page 16 of 43

Doubtful Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

The following table presents our loan portfolio by risk rating (in thousands):

	At March 31, 2014
	Total		Pass Credits		Special Mention		Substandard		Doubtful
Residential:
First mortgages	$	25,734	$	23,363	$	176	$	2,195	$	—
HELOC’s and equity		8,351		7,224		310		704		113
Commercial:
Secured		14,237		14,215		—		22		—
Unsecured		5,179		5,179		—		—		—
Commercial Real Estate:
Owner occupied		61,264		48,187		8,312		4,765		—
Non-owner occupied		41,550		38,528		807		2,215		—
Multi-family		14,647		13,524		647		445		31
Construction and Development:
Construction		3,831		3,470		—		361		—
Improved Land		208		165		—		43		—
Unimproved Land		—		—		—		—		—
Consumer and Other		6,195		6,105		—		76		14
Total	$	181,196	$	159,960	$	10,252	$	10,826	$	158

	At December 31, 2013
	Total		Pass Credits		Special Mention		Substandard		Doubtful
Residential:
First mortgages	$	26,326	$	24,126	$	—	$	2,200	$	—
HELOC’s and equity		8,538		7,686		22		728		102
Commercial:
Secured		15,033		15,009		—		24		—
Unsecured		5,259		5,259		—		—		—
Commercial Real Estate:
Owner occupied		61,639		50,921		5,929		4,789		—
Non-owner occupied		43,810		40,482		819		2,509		—
Multi-family		14,731		13,704		647		380		—
Construction and Development:
Construction		3,019		3,019		—		—		—
Improved Land		242		197		—		45		—
Unimproved Land		365		—		—		365		—
Consumer and Other		6,314		6,224		—		90		—
Total	$	185,276	$	166,627	$	7,417	$	11,130	$	102

Page 17 of 43

During the three months ended March 31, 2014 the bank modified no loans that were considered to be troubled debt restructurings. During the three months ended March 31, 2013, the Bank modified two loans that were considered to be troubled debt restructurings. We extended the terms and decreased the interest rate on both loans (dollar in thousands).

	March 31, 2013
	Number of Loans		Pre-Modification Recorded Investment		Post-Modification Recorded Investment
Troubled Debt Restructurings
Commercial Real Estate:
Owner occupied		1	$	198	$	198
Non-owner occupied		1		62		62
Total		2	$	260	$	260

There were no loans restructured during the last twelve months that have experienced payment default subsequent to restructuring during the three months ended March 31, 2014 and 2013, respectively.

The Company considers a default as failure to comply with the restructured loan agreement. This would include the restructured loan being past due greater than 90 days, failure to comply with financial covenants, or failure to maintain current insurance coverage or real estate taxes after the loan restructure date.

4. FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company measures or monitors certain of its assets and liabilities on a fair value basis. Fair value is used on a recurring basis for assets and liabilities that are elected to be accounted for under ASC guidance as well as certain assets and liabilities in which fair value is the primary basis of accounting. Depending on the nature of the asset or liability, the Company uses various valuation techniques and assumptions when estimating fair value, which are in accordance with the guidance for determining the fair value of a financial asset when the market for that asset is not active.

In accordance with ASC guidance, the Company applied the following fair value hierarchy:

Level 1—Quoted prices in active markets for identical assets or liabilities. Level 1 assets and liabilities include debt and equity securities and derivative contracts that are traded in an active exchange market, as well as U.S. Treasury and other highly liquid investments that are actively traded in over-the-counter markets.

Page 18 of 43

Level 2—Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets and liabilities include debt securities with quoted prices that are traded less frequently than exchange-traded instruments and derivative contracts whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data. This category generally includes U.S. Government and agency mortgage-backed debt securities, certain derivative contracts and impaired loans.

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. For example, this category generally includes certain private equity investments, retained residual interests in securitizations, residential mortgage servicing rights, and highly structured or long-term derivative contracts.

Investment Securities Available for Sale—Investment securities available for sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted prices, if available. If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security’s credit rating, prepayment assumptions and other factors such as credit loss assumptions. Level 1 securities include those traded on an active exchange such as the New York Stock Exchange, Treasury securities that are traded by dealers or brokers in active over-the counter markets and money market funds. Level 2 securities include mortgage backed securities issued by government sponsored entities, municipal bonds and corporate debt securities. Securities classified as Level 3 include asset-backed securities in less liquid markets.

Other Real Estate Owned— Assets acquired through or instead of loan foreclosure are initially recorded at fair value less estimated costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. The fair value of other real estate owned is generally based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are typically significant and result in a Level 3 classification of the inputs for determining fair value. In addition, the Company may further adjust an appraised amount given its knowledge of a specific property or market.

Loans—The Company does not record loans at fair value on a recurring basis, however, from time to time, a loan is considered impaired and an allowance for loan loss is established. Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan are considered impaired. Once a loan is identified as individually impaired, management measures impairment. The fair value of impaired loans is estimated using one of several methods, including the collateral value, market value of similar debt, and discounted cash flows. Those impaired loans not requiring a specific allowance represent loans for which the fair value of expected repayments or collateral exceed the recorded investment in such loans. At March 31, 2014 and December 31, 2013, substantially all of the impaired loans were evaluated based upon the fair value of the collateral. Impaired loans where an allowance is established based on the fair value of collateral require classification in the fair value hierarchy. The fair value of collateral dependent impaired loans is generally based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are typically significant and result in a Level 3 classification of the inputs for determining fair value. In addition, the Company may further adjust an appraised amount given its knowledge of a specific property or market. Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

Page 19 of 43

The following tables present financial assets measured at fair value on a recurring and nonrecurring basis and the change in fair value for those specific financial instruments in which fair value has been elected. (there were no financial liabilities measured at fair value for the periods being reported) (in thousands):

	Fair Value Measurements at March 31, 2014
			Quoted Prices
			In Active		Significant
			Markets for		Other		Significant
	Assets		Identical		Observable		Unobservable
	Measured at		Assets		Inputs		Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
Recurring Basis:
Assets
Securities available for sale:
State, county, and municipal securities	$	34,885	$	—	$	34,885	$	—
Mortgage-backed securities		93,509		—		93,509		—
Corporate securities		9,995		—		9,995		—
		138,389		—		138,389		—
Nonrecurring Basis:
Assets
Collateral Dependent Impaired loans:
Commercial Real Estate	$	10,886	$	—	$	—	$	10,886
Single-family Residential		479		—		—		479
Other real estate owned		6,752		—		—		6,752
		18,117		—		—		18,117

	Fair Value Measurements at December 31, 2013
			Quoted Prices
			In Active		Significant
			Markets for		Other		Significant
	Assets		Identical		Observable		Unobservable
	Measured at		Assets		Inputs		Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
Recurring Basis:
Assets
Securities available for sale:
State, county, and municipal securities	$	34,802	$	—	$	34,802	$	—
Mortgage-backed securities		96,267		—		96,267		—
Corporate securities		9,976		—		9,976		—
		141,045		—		141,045		—
Nonrecurring Basis:
Assets
Collateral Dependent Impaired loans:
Commercial Real Estate	$	10,702	$	—	$	—	$	10,702
Single-family Residential		360		—		—		360
Other real estate owned		7,404		—		—		7,404
		18,466		—		—		18,466

Page 20 of 43

For Level 3 assets and liabilities measured at fair value on a recurring or non-recurring basis as of March 31, 2014, the significant unobservable inputs used in the fair value measurements were as follows (dollars in thousands):

	Fair Value at	Valuation	Unobservable
	March 31, 2014	Technique	Inputs	Range
Collateral Dependent Impaired Loans:
Commercial Real Estate	$                      10,886	Appraised Value	Negative adjustment for selling costs and changes in market conditions since appraisal	5% - 20%
Single-family Residential	$                            479	Appraised Value	Negative adjustment for selling costs and changes in market conditions since appraisal	5% - 20%
OREO	$                        6,752	Appraised Value	Negative adjustment for selling costs and changes in market conditions since appraisal	5% - 20%

As of December 31, 2013, the significant unobservable inputs used in the fair value measurements were as follows (dollars in thousands):

	Fair Value at	Valuation	Unobservable
	December 31, 2013	Technique	Inputs	Range
Collateral Dependent Impaired Loans:
Commercial Real Estate	$                      10,702	Appraised Value	Negative adjustment for selling costs and changes in market conditions since appraisal	5% - 20%
Single-family Residential	$                            360	Appraised Value	Negative adjustment for selling costs and changes in market conditions since appraisal	5% - 20%
OREO	$                        7,404	Appraised Value	Negative adjustment for selling costs and changes in market conditions since appraisal	5% - 20%

Following are disclosures of fair value information about financial instruments, whether or not recognized on the balance sheet, for which it is practicable to estimate that value. The assumptions used in the estimation of the fair values are based on estimates using discounted cash flows and other valuation techniques. The use of discounted cash flows can be significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. The following disclosures should not be considered an estimate of the liquidation value of the Company, but rather a good-faith estimate of the increase or decrease in the value of financial instruments held by the Company since purchase, origination, or issuance.

Cash, Due from Banks, Federal Funds Sold, Interest-Bearing Deposits with Banks and Certificates of Deposits—Fair value equals the carrying value of such assets due to their nature and is classified as Level 1.

Investment Securities—Fair value of investment securities is based on quoted market prices and is classified as Level 2.

Other Investments—The carrying amount of other investments approximates its fair value and is classified as Level 1.

Loans—The fair value of fixed rate loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings resulting in a Level 3 classification. For variable rate loans, the carrying amount is a reasonable estimate of fair value. The methods utilized to estimate the fair values of loans do not necessarily represent an exit price. The carrying amount of related accrued interest receivable, due to its short-term nature, approximates its fair value, is not significant and is not disclosed.

Cash Surrender Value of Life Insurance—Cash values of life insurance policies are carried at the value for which such policies may be redeemed for cash and are classified as Level 1.

Deposits—The fair value of demand deposits, savings accounts, and certain money market deposits is the amount payable on demand at the reporting date. The fair value of fixed rate certificates of deposit is estimated by discounting the future cash flows using the rates currently offered for deposits of similar remaining maturities and is classified as Level 2.

Page 21 of 43

Fed Funds Purchased—Fair value equals the carrying value due to the nature of this liability and is classified as Level 1.

Advances from Federal Home Loan Bank—The fair values of advances from the Federal Home Loan Bank are estimated by discounting the future cash flows using the rates currently available to the Bank for debt with similar remaining maturities and terms and are classified as Level 2.

Commitments to Extend Credit and Commercial Letters of Credit—Because commitments to extend credit and commercial letters of credit are made using variable rates, or are recently executed, the contract value is a reasonable estimate of fair value.

Limitations—Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on many judgments. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. Fair value estimates are based on existing on and off-balance-sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments; for example, premises and equipment. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.

The following presents the carrying amount, fair value, and placement in the fair value hierarchy of the Company’s financial instruments as of March 31, 2014 (in thousands):

	March 31, 2014
	Carrying		Fair Value Measurements
	Amount		Total		Level 1		Level 2		Level 3
Financial assets:
Cash and due from banks	$	5,322	$	5,322	$	5,322	$	—	$	—
Interest-bearing deposits with banks		43,889		43,889		43,889		—		—
Certificates of deposit		350		350		350		—		—
Investment securities		138,629		138,629		—		138,629		—
Other investments		748		748		748		—		—
Loans—net		178,127		178,797		—		—		178,797
Cash surrender value of life insurance		10,008		10,008		10,008		—		—
Financial liabilities:
Deposits		348,190		348,996		208,534		140,462		—
Advances from Federal Home Loan Bank		268		268		—		268		—
	Notional		Estimated
	Amount		Fair Value
Off-balance-sheet financial instruments:
Commitments to extend credit	$	24,499		—
Commercial letters of credit	$	2,027		—

Page 22 of 43

The carrying values and estimated fair values of the Company’s financial instruments at December 31, 2013 are as follows:

	December 31, 2013
	Carrying		Fair Value Measurements
	Amount		Total		Level 1		Level 2		Level 3
Financial assets:
Cash and due from banks	$	6,340	$	6,340	$	6,340	$	—	$	—
Interest-bearing deposits with banks		22,827		22,827		22,827		—		—
Certificates of deposit		350		350		350		—		—
Investment securities		141,285		141,285		—		141,285		—
Other investments		874		874		874		—		—
Loans—net		182,119		183,150		—		—		183,150
Cash surrender value of life insurance		9,948		9,948		9,948		—		—
Financial liabilities:
Deposits		336,962		337,768		195,884		141,884		—
Advances from Federal Home Loan Bank		273		273		—		273		—
	Notional		Estimated
	Amount		Fair Value
Off-balance-sheet financial instruments:
Commitments to extend credit	$	26,313		—
Commercial letters of credit	$	2,125		—

5. OTHER REAL ESTATE OWNED

Other real estate owned is reported at the lower of cost or fair value less estimated disposal costs, determined on the basis of current appraisals, comparable sales, and other estimates of value obtained principally from independent sources. Any excess of the loan balance at the time of foreclosure over the fair value of the real estate held as collateral is treated as a charge-off against the allowance for loan losses. Any subsequent declines in value are charged to earnings. Transactions in other real estate owned are summarized below (in thousands):

	March 31,			December 31,
	2014			2013
Balance—beginning of period	$	7,404		$	8,195
Additions		410			3,901
Sales		(857	)		(4,076	)
Write downs		(206	)		(616	)
Balance—end of period	$	6,751		$	7,404

Page 23 of 43

6. INTANGIBLE ASSETS

Finite lived intangible assets of the Company represent deposit assumption premiums recorded upon the purchase of certain assets and liabilities from other financial institutions. Deposit assumption premiums are amortized over seven years, the estimated average lives of the deposit bases acquired, using the straight-line method and are included within other assets on the Condensed Consolidated Balance Sheets.

The Company applies a fair value-based impairment test to the carrying value of goodwill on an annual basis and on an interim basis if certain events or circumstances indicate that an impairment loss may have been incurred.

The following table presents information about the Company’s intangible assets (in thousands):

	March 31, 2014				December 31, 2013
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Unamortized intangible asset:
Goodwill	$	362	$	—	$	362	$	—
Amortized intangible assets:
Core deposit intangibles	$	3,303	$	2,360	$	3,303	$	2,242

The following table presents information about aggregate amortization expense (in thousands):

	Three months ended March 31,
	2014		2013
Aggregate amortization expense of core deposit intangibles:	$	118	$	118
Estimated aggregate amortization expense of core deposit intangibles for the years ending December 31:
2014	$	472
2015	$	472
2016	$	118
2017 and thereafter	$	—

Page 24 of 43

7. NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE

Basic and diluted net income per share available to common and potential common stockholders has been calculated based on the weighted average number of shares outstanding. Options that are potentially dilutive for the three months ended March 31, 2014 and 2013 due to the exercise price of all options being greater than the average market price of the Company’s stock during the period. As of March 31, 2014 and 2013 there were 49,277 potentially diluted options outstanding. The following schedule reconciles the numerator and denominator of the basic and diluted net income per share available to common and potential common stockholders for the three months ended March 31, 2014 and 2013 (in thousands, except per share data):

	Net Income		Shares		Per Share
	(Numerator)		(Denominator)		Amount
Three Months ended March 31, 2014
Basic earnings per share available to common stockholders	$	357		2,161	$	0.17
Nonvested restricted stock grant		—		10		(0.01	)
Effect of dilutive securities: options to purchase common shares		—		—		—
Diluted earnings per share	$	357		2,171	$	0.16
Three Months ended March 31, 2013
Basic earnings per share available to common stockholders	$	213		2,146	$	0.10
Nonvested restricted stock grant		—		6		—
Effect of dilutive securities: options to purchase common shares		—		—		—
Diluted earnings per share	$	213		2,152	$	0.10

8. SUBSEQUENT EVENTS

The Company evaluated subsequent events through the date its financial statements were issued.

9. RECLASSIFICATIONS

Certain amounts in the 2013 consolidated financial statements were reclassified to conform to the 2014 presentation. These reclassifications had no effect on shareholders’ equity or the results of operations as previously presented.

Page 25 of 43

ITEM 2.     MANAGEMENT’S DISCUSSION AND ANALYSIS

INTRODUCTION

Citizens Bancshares Corporation (the “Company”) is a holding company that provides a full range of commercial and personal banking services to individuals and corporate customers in its primary market areas, metropolitan Atlanta and Columbus, Georgia, and Birmingham and Eutaw, Alabama through its wholly owned subsidiary, Citizens Trust Bank (the “Bank”). The Bank is a member of the Federal Reserve System and operates under a state charter. The Company serves its customers through 10 full-service financial centers in Georgia and Alabama.

Forward Looking Statements

In addition to historical information, this report on Form 10-Q may contain forward-looking statements. For this purpose, any statements contained herein, including documents incorporated by reference, that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements are subject to numerous assumptions, risks and uncertainties. Without limiting the foregoing, the words “believe,” “anticipates,” “plan,” expects,” and similar expressions are intended to identify forward-looking statements.

Forward-looking statements are based on current management expectations and, by their nature, are subject to risk and uncertainties because of the possibility of changes in underlying factors and assumptions. Actual conditions, events or results could differ materially from those contained in or implied by such forward-looking statements for a variety of reasons, including: sharp and/or rapid changes in interest rates; significant changes in the economic scenario from the current anticipated scenario which could materially change anticipated credit quality trends and the ability to generate loans and gather deposits; significant delay in or inability to execute strategic initiatives designed to grow revenues and/or control expenses; unanticipated issues during the integration of acquisitions; and significant changes in accounting, tax or regulatory practices or requirements. The Company undertakes no obligation to, nor does it intend to, update forward-looking statements to reflect circumstances or events that occur after the date hereof or to reflect the occurrence of unanticipated events.

The following discussion is of the Company’s financial condition as of March 31, 2014 and December 31, 2013, and the changes in the financial condition and results of operations for the three month periods ended March 31, 2014 and 2013.

Critical Accounting Policies

In response to the Securities and Exchange Commission’s (“SEC”) Release No. 33-8040, Cautionary Advice Regarding Disclosure About Critical Accounting Policies, the Company has identified the following as the most critical accounting policies upon which its financial status depends. The critical policies were determined by considering accounting policies that involve the most complex or subjective decisions or assessments. The Company’s most critical accounting policies relate to:

Investment Securities - The Company classifies investments in one of three categories based on management’s intent upon purchase: held to maturity securities which are reported at amortized cost, trading securities which are reported at fair value with unrealized holding gains and losses included in earnings, and available for sale securities which are recorded at fair value with unrealized holding gains and losses included as a component of accumulated other comprehensive income. The Company had no investment securities classified as trading securities during 2014 or 2013.

Page 26 of 43

Premiums and discounts on available for sale and held to maturity securities are amortized or accreted using a method which approximates a level yield.

Gains and losses on sales of investment securities are recognized upon disposition, based on the adjusted cost of the specific security. A decline in market value of any security below cost that is deemed other than temporary is charged to earnings or OCI resulting in the establishment of a new cost basis for the security.

Loans - Loans are reported at principal amounts outstanding less unearned income and the allowance for loan losses. Interest income on loans is recognized on a level-yield basis. Loan fees and certain direct origination costs are deferred and amortized over the estimated terms of the loans using the level-yield method. Discounts on loans purchased are accreted using the level-yield method over the estimated remaining life of the loan purchased.

Allowance for Loan Losses - The Company provides for estimated losses on loans receivable when any significant and permanent decline in value occurs. These estimates for losses are based, not only on individual assets and their related cash flow forecasts, sales values, and independent appraisals, but also on the volatility of certain real estate markets, and the concern for disposing of real estate in distressed markets. For loans that are pooled for purposes of determining the necessary provisions, estimates are based on loan types, history of charge-offs, and other delinquency analyses. Therefore, the value used to determine the provision for losses is subject to the reasonableness of these estimates. The adequacy of the allowance for loan losses is reviewed on a monthly basis by management and the Board of Directors. On a semi-annual basis an independent comprehensive review of the methodology and allocation of the allowance for loan losses is performed. This assessment is made in the context of historical losses as well as existing economic conditions, and individual concentrations of credit. Loans are charged against the allowance when, in the opinion of management, such loans are deemed uncollectible and subsequent recoveries are added to the allowance.

Other Real Estate Owned - Other real estate owned is reported at the lower of cost or fair value less estimated disposal costs, determined on the basis of current appraisals, comparable sales, and other estimates of value obtained principally from independent sources. Any excess of the loan balance at the time of foreclosure over the fair value of the real estate held as collateral is treated as a charge-off against the allowance for loan losses. Any subsequent declines in value are charged to earnings.

Income Taxes - Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the assets and liabilities are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income tax expense in the period that includes the enactment date.

In the event the future tax consequences of differences between the financial reporting bases and the tax bases of the Company’s assets and liabilities result in deferred tax assets, an evaluation of the probability of being able to realize the future benefits indicated by such assets is required. A valuation allowance is provided for the portion of a deferred tax asset when it is more likely than not that some portion or all of the deferred tax asset will not be realized. In assessing the realizability of the deferred tax assets, management considers the scheduled reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies.

Page 27 of 43

The Company believes that its income tax filing positions taken or expected to be taken in its tax returns will more likely than not be sustained upon audit by the taxing authorities and does not anticipate any adjustments that will result in a material adverse impact on the Company’s financial condition, results of operations, or cash flow. Therefore, no reserves for uncertain income tax positions have been recorded.

A description of other accounting policies are summarized in Note 1, Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements of the Company’s Annual Report on Form 10-K for the year ended December 31, 2013. The Company has followed those policies in preparing this report.

FINANCIAL CONDITION

At March 31, 2014, the Company had total assets of $400,187,000 compared to $387,733,000 at December 31, 2013. The increase is primarily related to a $21,062,000 increase in interest bearing deposits with banks, partially offset by a $1,018,000 decrease in cash and due from banks, a $2,656,000 decrease in available for sale investment securities and a $3,992,000 decrease in net loans outstanding. Interest-bearing deposits with banks primarily represent funds maintained on deposit at the Federal Reserve Bank (FRB) and the Federal Home Loan Bank (FHLB). These funds fluctuate daily and are used to manage the Company’s liquidity position in light of the current economic environment. At March 31, 2014, total assets consisted primarily of $138,389,000 in investment securities and $178,127,000 in net loans representing 35% and 45% of total assets, respectively. Investment securities and net loans represented 37% and 47% of total assets at December 31, 2013.

Loans typically provide higher interest yields than other types of interest-earning assets and, therefore, continue to be the largest component of the Company’s assets. Net loans receivable decreased by $3,992,000 for the period as mentioned above. This decrease was primarily due to normal principal paydowns, maturities and pay-offs which exceeded the volume of new loans added to the portfolio. As with our industry, we continue to experience a challenging lending environment and competitive pricing pressures. The Company continues to pursue opportunities to enhance its lending and continues to invest in the resources and lending associates to strengthen our efforts.

At March 31, 2014, OREO decreased by $653,000 to $6,751,000 compared to $7,404,000 reported at the year-end of 2013. This decrease primarily related to the sale of OREO properties.

Cash value of life insurance, a comprehensive compensation program for directors and certain senior managers of the Company, increased $60,000 to $10,008,000 at March 31, 2014. The increase primarily represents the earnings on the premiums paid over the life of the insurance contract.

The Company’s liabilities at March 31, 2014 totaled $352,691,000 and consisted primarily of $348,190,000 in deposits, representing an increase of $11,228,000 compared to total deposits of $336,962,000 at December 31, 2013. FHLB advances totaled $268,000 compared to $273,000 at December 31, 2013.

The Company’s asset/liability management program, which monitors the Company’s interest rate sensitivity as well as volume and mix changes in earning assets and interest bearing liabilities, may impact the growth of the Company’s balance sheet as it seeks to maximize net interest income.

INVESTMENT SECURITIES

The composition of the Company’s investment securities portfolio reflects the Company’s investment strategy of maximizing portfolio yields commensurate with risk and liquidity considerations. The primary objective of the Company’s investment strategy is to maintain an appropriate level of liquidity and provide a tool to assist in controlling the Company’s interest rate sensitivity position, while at the same time producing adequate levels of interest income.

Page 28 of 43

At March 31, 2014 and December 31, 2013, the investment securities portfolio represented approximately 35% and 37%, respectively, of the Company’s total assets.

Other investments consist of Federal Home Loan Bank and Federal Reserve Bank stock which are restricted and have no readily determined market value. The Company is required to maintain an investment in the FHLB and the FRB as part of its membership conditions. The level of investments at the FHLB is primarily determined by the amount of outstanding advances. The FRB investment level is 6 percent of the par value of the bank’s common stock outstanding and paid-in-capital. These investments are carried at cost.

LOANS

Loans outstanding, by classification, are summarized as follows (in thousands):

	March 31,		December 31,
	2014		2013
Commercial, financial, and agricultural	$	19,416	$	20,292
Commercial Real Estate		117,461		120,180
Single-Family Residential		34,085		34,864
Construction and Development		4,039		3,626
Consumer		6,195		6,314
		181,196		185,276
Allowance for loan losses		3,069		3,157
	$	178,127	$	182,119

The Company does not have any concentrations of loans exceeding 10% of total loans of which management is aware and which are not otherwise disclosed as a category of loans in the table above or in other sections of this Quarterly Report on Form 10-Q. A substantial portion of the Company’s loan portfolio is secured by real estate in metropolitan Atlanta and Birmingham.

The largest component of loans in the Company’s loan portfolio is real estate loans.  At March 31, 2014 and December 31, 2013, real estate loans, which represent commercial and industrial real estate and other loans secured by single-family properties, totaled $151.5 million and $155.0 million, respectively, and represented 83.6% and 83.7% of loans, respectively, net of unearned income for the period.

As stated above, a substantial portion of the Company’s loan portfolio is collateralized by real estate in metropolitan Atlanta and Birmingham markets. Accordingly, the ultimate collectability of a substantial portion of the Company’s loan portfolio is susceptible to changes in market conditions in the metropolitan Atlanta and Birmingham areas.

· The Company’s loans to area churches, which are generally secured by real estate, were approximately $40.9 million at March 31, 2014 and December 31, 2013, respectively.

· The Company’s loans to area convenience stores were approximately $9.0 million and $9.2 million at March 31, 2014 and December 31, 2013, respectively. Loans to convenience stores are generally secured by real estate.

· The Company’s loans to area hotels, which are generally secured by real estate, were approximately $24.7 million and $25.7 million at March 31, 2014 and December 31, 2013, respectively.

Page 29 of 43

NONPERFORMING ASSETS

Nonperforming assets include nonperforming loans, real estate acquired through foreclosure, and repossessed assets. Nonperforming loans generally include loans and leases whose contractual terms have been restructured in a manner that grants a concession to a borrower experiencing financial difficulties or are past due with respect to principal or interest more than 90 days and have been placed on nonaccrual status.

Accrued interest income is reversed when a loan is placed on nonaccrual status. Interest collections on nonaccruing loans and leases for which the ultimate collectability of principal is uncertain are applied as principal reductions; otherwise, such collections are credited to income when received. Nonperforming loans may be restored to accrual status when all principal and interest is current and the full repayment of the remaining contractual principal and interest is expected, or when the loan becomes well-secured and is in the process of collection.

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.

For the period, nonperforming assets decreased by $1,276,000, or 8.78%, to $13,248,000 compared to $14,524,000 at December 31, 2013. The decrease is attributed to a $623,000 decrease in nonperforming loans and a reduction of $653,000 in real estate acquired through foreclosures. The Company charged-off $200,000 in nonperforming loans during the first three months of 2014 which is a decrease of $188,000 compared to the $388,000 charged-off for the same period last year. At March 31, 2014, nonperforming assets represent 3.31% of total assets compared to 3.75% at December 31, 2013. There were no loans greater than 90 days past due and still accruing interest at December 31, 2013.

The Company continues to work aggressively to resolve and reduce its nonperforming assets including restructuring loans, requesting additional collateral, demanding payment from guarantors, sale of the loans if possible, or foreclosure and sale of the collateral.

Page 30 of 43

The table below presents a summary of the Company’s nonperforming assets at March 31, 2014 and December 31, 2013.

	March 31,			December 31,
	2014			2013
	(in thousands, except financial ratios)
Nonperforming assets:
Nonperforming loans:
Restructured nonperforming loans (TDRs)	$	3,652		$	4,482
Other nonaccrual loans		2,810			2,638
Past-due loans of 90 days or more and still accruing		35			—
Nonperforming loans		6,497			7,120
Real estate acquired through foreclosure		6,751			7,404
Total nonperforming assets	$	13,248		$	14,524
Ratios:
Nonperforming loans to loans, net of unearned income		3.59	%		3.84	%
Nonperforming assets to loans, net of unearned income, and real estate acquired through foreclosure		7.05	%		7.54	%
Nonperforming assets to total assets		3.31	%		3.75	%
Allowance for loan losses to nonperforming loans		47.24	%		44.34	%
Allowance for loan losses to nonperforming assets		23.17	%		21.74	%

TROUBLED DEBT RESTRUCTURINGS

Loans to be restructured are identified based on an assessment of the borrower’s credit status, which involves, but is not limited to, a review of financial statements, payment delinquency, non-accrual status, and risk rating. Determining the borrower’s credit status is a continual process that is performed by the Company’s staff with periodic participation from an independent external loan review group.

Troubled debt restructurings (“TDR”) generally occur when a borrower is experiencing, or is expected to experience, financial difficulties in the near-term and it is probable that the Company will not be able to collect all amounts due according to the contractual terms of the loan agreement. The Company seeks to assist these borrowers by working with them to prevent further difficulties, and ultimately to improve the likelihood of recovery on the loan while ensuring compliance with the Federal Financial Institutions Examination Council (FFIEC) guidelines. To facilitate this process, a formal concessionary modification that would not otherwise be considered may be granted resulting in classification of the loan as a TDR. All concessionary modifications are considered troubled debt restructurings.

The modification may include a change in the interest rate or the payment amount or a combination of both. Substantially all modifications completed under a formal restructuring agreement are considered TDRs. Modifications can involve loans remaining on nonaccrual, moving to nonaccrual, or continuing on accruing status, depending on the individual facts and circumstances of the borrower. These restructurings rarely result in the forgiveness of principal or interest.

Page 31 of 43

With respect to commercial TDRs, an analysis of the credit evaluation, in conjunction with an evaluation of the borrower’s performance prior to the restructuring, are considered when evaluating the borrower’s ability to meet the restructured terms of the loan agreement. Nonperforming commercial TDRs may be returned to accrual status based on a current, well-documented credit evaluation of the borrower’s financial condition and prospects for repayment under the modified terms. This evaluation must include consideration of the borrower’s sustained historical repayment performance for a reasonable period (generally a minimum of six months) prior to the date on which the loan is returned to accrual status.

In connection with consumer loan TDRs, a nonperforming loan will be returned to accruing status when current as to principal and interest and upon a sustained historical repayment performance (generally a minimum of six months).

The following table summarizes the Company’s TDRs and loans modifications (in thousands):

	March 31, 2014		December 31, 2013
Troubled Debt Restructured Loans:
Restructured loans still accruing	$	6,666	$	6,177
Restructured loans nonaccruing		3,652		4,482
Total restructured and modified loans	$	10,318	$	10,659

Troubled debt restructured loans that have performed in accordance with the restructured terms of the agreement for one year and for which an interest rate concession was not granted are removed from the TDR classification.

ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses is primarily available to absorb losses inherent in the loan portfolio. Credit exposures deemed uncollectible are charged against the allowance for loan losses.

The Company provides for estimated losses on loans receivable when any significant and permanent decline in value occurs. These estimates for losses are based on individual assets and their cash flow forecasts, sales values, independent appraisals, the volatility of certain real estate markets, and concern for disposing of real estate in distressed markets. For loans that are pooled for purposes of determining the necessary provisions, estimates are based on loan types, history of charge-offs, and other delinquency analyses. Therefore, the value used to determine the provision for losses is subject to the reasonableness of these estimates. The adequacy of the allowance for loan losses is reviewed on a monthly basis by management and the Board of Directors. On a semi-annual basis an independent review of the adequacy of allowance for loan losses is performed. This assessment is made in the context of historical losses as well as existing economic conditions, and individual concentrations of credit.

Portions of the allowance for loan losses may be allocated for specific loans or portfolio segments. However, the entire allowance for loan losses is available for any loan that, in the judgment of management, should be charged-off. Based on the Company’s evaluation, and the continued overall improvement of the credit quality in the loan portfolio, a provision for loan losses was deemed not necessary for the first quarter of 2014. For the same three month period last year, a provision for loan losses of $225,000 was charged against operating earnings. Approximately $53,000 of the allowance for loan losses was allocated to loans management considered impaired at March 31, 2014 compared to $3,000 at December 31, 2013.

Page 32 of 43

At March 31, 2014, management believes the allowance for loan losses is adequate. Management uses available information to recognize losses on loans; however, future additions to the allowance may be necessary based on changes in economic conditions, particularly in the metropolitan Atlanta, Georgia and Birmingham, Alabama areas. In addition, regulatory agencies, as an integral part of their examination process, periodically review the Company’s allowance for loan losses. Such agencies may require the Company to recognize additions to the allowance based on their judgments about information available to them at the time of their examination.

The following table summarizes loans, changes in the allowance for loan 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 three months ended March 31, 2014 and 2013 (amount in thousands, except financial ratios):

	2014			2013
Loans, net of unearned income	$	181,196		$	183,516
Average loans, net of unearned income and the allowance for loan losses	$	179,338		$	180,740
Allowance for loan losses at the beginning of period	$	3,157		$	3,509
Loans charged-off:
Commercial, financial, and agricultural		—			5
Real estate - loans		157			311
Installment loans to individuals		43			72
Total loans charged-off		200			388
Recoveries of loans previously charged off:
Commercial, financial, and agricultural		10			11
Real estate - loans		89			37
Installment loans to individuals		13			21
Total loans recovered		112			69
Net loans charged-off		88			319
Additions to allowance for loan losses charged to operating expense		—			225
Allowance for loan losses at period end	$	3,069		$	3,415
Ratio of net loans charged-off to average loans, net of unearned income and the allowance for loan losses		0.05	%		0.18	%
Ratio of allowance for loan losses to loans, net of unearned income		1.69	%		1.86	%

Page 33 of 43

The following table presents the allocation of the allowance for loan losses. The allocation is based on an evaluation of defined loan problems, historical ratios of loan losses, and other factors that may affect future loan losses in the categories of loans shown (amount in thousands):

	March 31, 2014					December 31, 2013
			Percent of					Percent of
	Amount		Total Loans			Amount		Total Loans
Commercial, financial, and agricultural	$	394		11	%	$	384		11	%
Commercial Real Estate		1,619		65	%		1,721		65	%
Single-family Residential		765		19	%		731		19	%
Construction and Development		126		2	%		126		2	%
Consumer		165		3	%		195		3	%
Total allowance for loan losses	$	3,069		100	%	$	3,157		100	%

DEPOSITS

Deposits are the Company’s primary source of funding loan growth. Total deposits at March 31, 2014 increased by 3.3% or $11,228,000 to $348,190,000 compared to December 31, 2013. The bank has a stable core deposit base with a high percentage of non-interest bearing deposits. Noninterest-bearing deposits increased by $6,675,000, or 9.4% to $77,817,000 and interest-bearing deposits increased by $4,553,000, or 1.7%, to $270,373,000 for the three month period ending March 31, 2014. On an average basis, noninterest-bearing deposits increased to $80,260,000 for the first three months of the year compared to $73,897,000 for the year ended December 31, 2013. Average interest-bearing deposits decreased by $3,392,000 to $267,442,000 at March 31, 2014 compared to $270,834,000 for the year ended December 31, 2013. At March 31, 2014, the Company’s cost of funds was approximately 0.24% compared to 0.27% for the same period last year.

The Company participates in Certificate of Deposit Account Registry Services (“CDARS”), a program that allows its customers the ability to benefit from the FDIC insurance coverage on their time deposits over the $250,000 limit. At March 31, 2014 and December 31, 2013, the Company had $22,881,000 and $22,375,000, respectively, in CDARS deposits. Participation in this program has enhanced the Company’s ability to retain customers with time deposits higher than the FDIC $250,000 insurance coverage limit.

The following is a summary of interest-bearing deposits (in thousands):

	March 31,		December 31,
	2014		2013
NOW and money market accounts	$	97,104	$	92,794
Savings accounts		33,613		31,948
Time deposits of $100,000 or more		107,339		107,490
Other time deposits		32,317		33,589
	$	270,373	$	265,821

Page 34 of 43

OTHER BORROWED FUNDS

The Company continues to emphasize funding earning asset growth through core deposits; however, the Company has relied on other borrowings as a supplemental funding source. Other borrowings consist of Federal funds purchased, short-term borrowings, and FHLB advances.

These advances are collateralized by FHLB stock, a blanket lien on 1-4 family and multifamily mortgage loans, certain commercial real estate loans and investment securities. As of March 31, 2014 and December 31, 2013, total loans pledged as collateral was $30,488,000 and $33,186,000, respectively.

Maturity	Callable	Type		March 31, 2014					December 31, 2013
				(in thousands)
August 2026			(1)		—		$	268		—		$	273
Total Principal Outstanding							$	268				$	273
Weighted Average Rate at Period End					—	%				—	%

(1) Represents an Affordable Housing Program (AHP) award used to subsidize loans for homeownership or rental initiatives. The AHP is a principal reducing credit, scheduled to mature on August 17, 2026 with an interest rate of zero.

At March 31, 2014 the Company had a $77.5 million line of credit facility at the FHLB of which $20.3 million was committed consisting of advances of $0.3 million and a letter of credit to secure public deposits in the amount of $20.0 million. The Company also had $18.9 million of borrowing capacity at the Federal Reserve Bank discount window.

RESULTS OF OPERATIONS

Net Interest Income:

Net interest income is the principal component of a financial institution's income stream and represents the difference, or spread, between interest and fee income generated from earning assets and the interest expense paid on deposits and borrowed funds. Fluctuations in interest rates as well as volume and mix changes in earning assets and interest bearing liabilities can materially impact net interest income.

Page 35 of 43

For the three-month period ended March 31, 2014, net interest income increased by $126,000 or 4.15% to $3,164,000 compared to $3,038,000 reported for the same period last year. Total interest income increased $103,000, or 3.15%, to $3,376,000 compared to $3,273,000 for the same three month period in 2013. Interest income on loans declined by a nominal $61,000 due to a 10 bps decline in yields earned on loans caused by the challenging lending environment and lower lending rates. Interest income on investment securities increased by $164,000 primarily due to the taxable investment portfolio having a higher average investment balance compared to the first quarter of 2013. Also, due to the decreased prepayments in the Company’s mortgage-backed sector of its securities portfolio, investment yields on taxable investments increased by 59 bps to 2.14 percent compared to the three month period ended March 31, 2013. Total interest expense for the period decreased by $23,000 or 9.8% compared to the same three month period in 2013 as the Company continues to lower its funding cost and improve its deposit mix. At March 31, 2014, the Company’s cost of funds was approximately 0.24% compared to 0.27% for the same period last year. At March 31, 2014, the Company maintained an annualized net interest margin on a fully tax equivalent basis of 3.69% compared to 3.68% reported at March 31, 2013.

The Company has an asset/liability management program which monitors the Company's interest rate sensitivity and ensures the Company is competitive in the loan and deposit market. The Company continues to monitor its asset/liability mix and will make changes as appropriate to ensure it is properly positioned to react to changing interest rates and inflationary trends.

Provision for loan losses

In the first quarter of 2014, due to the continued improvement in the credit quality of the Company’s loan portfolio, a provision for loan losses was deemed not necessary. For the first quarter of 2013, the Company charged against operating earnings a provision for loan losses of $225,000.

The allowance for loan losses was $3,069,000, $3,157,000, and $3,415,000 at March 31, 2014, December 31, 2013, and March 31, 2013, respectively. The allowance for loan losses was 47.24%, 44.34%, and 28.71% of nonperforming loans at March 31, 2014, December 31, 2013, and March 31, 2013, respectively. The provision for loan losses and the resulting allowance for loan losses are based on changes in the size and character of the Company’s loan portfolio, changes in nonperforming and past due loans, the existing risk of individual loans, concentrations of loans to specific borrowers or industries, and economic conditions. At March 31, 2014 the Company considered its allowance for loan losses to be adequate.

Noninterest income:

Noninterest income consists of revenues generated from a broad range of financial services and activities, including fee-based services and commissions earned through insurance sales. In addition, gains and losses realized from the sale of investment portfolio securities and sales of assets are included in noninterest income.

Noninterest income totaled $979,000 for the three month period ended March 31, 2014, a decrease of $258,000,or 20.9% compared with the same period last year. This decline in primarily due to gains on the sale of investments of $141,000 reported for the first quarter of 2013. There were no gains on sale of investments for the same period in 2014. Service charges and other operating income also declined for the period by $65,000 and $52,000, respectively.

Page 36 of 43

Noninterest expense:

Noninterest expense includes compensation and benefits, occupancy expenses, advertising and marketing, professional fees, office supplies, data processing, telephone expenses, miscellaneous items, and other losses.

Non-interest expense in the first quarter of 2014 decreased by $169,000 to $3,644,000 compared to $3,813,000 for the same quarter last year. Non-interest expense continues to be closely managed as salaries and employee benefits expense, FDIC insurance expense, OREO, and other operating expenses decreased $79,000, $53,000, $17,000, and $53,000, respectively. Net occupancy and equipment expense increased by $33,000 primarily due to higher real estate taxes, equipment maintenances and insurance costs.

INTEREST RATE SENSITIVITY MANAGEMENT

Interest rate sensitivity management involves managing the potential impact of interest rate movements on net interest income within acceptable levels of risk. The Company seeks to accomplish this by structuring the balance sheet so that repricing opportunities exist for both assets and liabilities in equivalent amounts and time intervals. Imbalances in these repricing opportunities at any point in time constitute a financial institution’s interest rate risk. The Company’s ability to reprice assets and liabilities in the same dollar amounts and at the same time minimizes interest rate risk.

One method of measuring the impact of interest rate sensitivity is the cumulative gap analysis. The difference between interest rate sensitive assets and interest rate sensitive liabilities at various time intervals is referred to as the gap. The Company is liability sensitive on a short-term basis as reflected in the following table. Generally, a net liability sensitive position indicates that there would be a negative impact on net interest income in an increasing rate environment. However, interest rate sensitivity gap does not necessarily indicate the impact of general interest rate movements on the net interest margin, since all interest rates and yields do not adjust at the same velocity and the repricing of various categories of assets and liabilities is subject to competitive pressures and the needs of the Company’s customers. In addition, various assets and liabilities indicated as repricing within the same period may in fact reprice at different times within such period and at different rates. The following table shows the contractual maturities of all interest rate sensitive assets and liabilities at March 31, 2014. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Taking a conservative approach, the Company has included demand deposits such as NOW, money market, and savings accounts in the three month category. However, the actual repricing of these accounts may extend beyond twelve months. The interest rate sensitivity gap is only a general indicator of potential effects of interest rate changes on net interest income.

Page 37 of 43

The following table sets forth the distribution of the repricing of the Company’s interest rate sensitive assets and interest rate sensitive liabilities as of March 31, 2014.

	Cumulative amounts as of March 31, 2014
	Maturing and repricing within
	3			3 to 12			1 to 5			Over
	Months			Months			Years			5 Years			Total
				(amounts in thousands, except ratios)
Interest-sensitive assets:
Interest-bearing deposits with other banks	$	43,889		$	—		$	—		$	—		$	43,889
Certificates of deposit		250			100			—			—			350
Investments		—			—			13,887			124,742			138,629
Loans		39,771			14,131			96,652			30,642			181,196
Total interest-sensitive assets	$	83,910		$	14,231		$	110,539		$	155,384		$	364,064
Interest-sensitive liabilities:
Deposits  (a)	$	161,511		$	64,572		$	44,290		$	—		$	270,373
Other borrowings		—			—			—			268			268
Total interest-sensitive liabilities	$	161,511		$	64,572		$	44,290		$	268		$	270,641
Interest-sensitivity gap	$	(77,601	)	$	(50,341	)	$	66,249		$	155,116		$	93,423
Cumulative interest-sensitivity gap		(77,601	)		(127,942	)		(61,693	)		93,423			93,423
Cumulative interest-sensitivity gap to total interest-sensitive assets		(21.32	)%		(35.14	)%		(16.95	)%		25.66	%		25.66	%

(a) Savings, NOW, and money market deposits totaling $130,717 are included in the maturing in 3 months classification.

LIQUIDITY

Liquidity is the ability of the Company to convert assets into cash or cash equivalents without significant loss and to raise additional funds by increasing liabilities. Liquidity management involves maintaining the Company’s ability to meet the day-to-day cash flow requirements of its customers, whether they are depositors wishing to withdraw funds or borrowers requiring funds to meet their credit needs. Without proper liquidity management, the Company would not be able to perform the primary function of a financial intermediary and would, therefore, not be able to meet the needs of the communities it serves. Additionally, the Company requires cash for various operating needs including: dividends to shareholders; business combinations; capital injections to its subsidiary; the servicing of debt; and the payment of general corporate expenses. The Company has access to various capital markets and on March 6, 2009, the Company issued 7,462 shares of a Fixed Rate Cumulative Perpetual Preferred Stock, Series A, to the U.S. Department of the Treasury (“Treasury”) under the TARP Program for an investment of $7,462,000. On August 13, 2010, the Company exchanged the outstanding 7,462 shares of Series A Preferred Stock for 7,462 shares of Series B Preferred Stock. No monetary consideration was given in connection with this exchange. The Company also issued 4,379 shares of Series C Preferred Stock for $4,379,000 to the Treasury on September 17, 2010. However, the primary source of liquidity for the Company is dividends from its bank subsidiary. Statutory and regulatory limitations apply to the Bank’s payment of dividends to the Company as well as the Company’s payment of dividends to its stockholders. The Georgia Department of Banking and Finance regulates the Bank’s dividend payments and must approve dividend payments that exceed 50 percent of the Bank’s prior year net income. The payment of dividends may also be affected or limited by other factors, such as the requirement by federal agencies to maintain adequate capital above regulatory guidelines and that bank holding companies and insured banks pay dividends out of current earnings.

Page 38 of 43

Asset and liability management functions not only serve to assure adequate liquidity in order to meet the needs of the Company’s customers, but also to maintain an appropriate balance between interest-sensitive assets and interest-sensitive liabilities so that the Company can earn a return that meets the investment requirements of its shareholders. Daily monitoring of the sources and uses of funds is necessary to maintain an acceptable cash position that meets both requirements.

The asset portion of the balance sheet provides liquidity primarily through loan principal repayments, maturities of investment securities and, to a lesser extent, sales or paydowns of investment securities available for sale and held to maturity. Other short-term investments such as federal funds sold and maturing interest bearing deposits with other banks are additional sources of liquidity funding.

The liability portion of the balance sheet provides liquidity through various customers’ interest bearing and noninterest bearing deposit accounts. Federal funds purchased and other short-term borrowings from the Federal Reserve Bank Discount Window and the Federal Home Loan Bank are additional sources of liquidity and, basically, represent the Company’s incremental borrowing capacity. At March 31, 2014 the Company had a $77.5 million line of credit facility at the FHLB of which $20.3 million was committed consisting of advances of $0.3 million and a letter of credit to secure public deposits in the amount of $20.0 million. The Company also had $18.9 million of borrowing capacity at the Federal Reserve Bank discount window. These sources of liquidity are short-term in nature and are used as necessary to fund asset growth and meet short-term liquidity needs. The Company does not anticipate any liquidity requirements in the near future that it will not be able to meet.

CAPITAL RESOURCES

Stockholders’ equity increased $1,188,000 for the three month period ended March 31, 2014 primarily due to an increase in other comprehensive income, net of income taxes, of $819,000. This increase is attributed to the volatility in interest rates and swings in credit spreads, and their impact on the fair value of the Company’s available for sale securities portfolio. Retained earnings also increased by $357,000 due to net income of $416,000, partially offset by a $59,000 preferred dividend paid to the U.S. Treasury.

Quantitative 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. The Company’s total and Tier 1 capital to risk weighted assets and Tier 1 to average assets were 20%, 18% and 11% at March 31, 2014 and 19%, 18% and 11% at December 31, 2013. The Bank’s total and Tier 1 capital to risk weighted assets and Tier 1 to average assets were 19%, 17% and 11% at March 31, 2014 and December 31, 2013, respectively. At March 31, 2014, the Company and the Bank met all capital adequacy requirements to which it is subject and is considered to be ’‘well capitalized” under regulatory standards.

ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

This information is not required since the Company qualifies as a smaller reporting company.

ITEM 4.     CONTROLS AND PROCEDURES

As of the end of the period covered by this report, we conducted, under the supervision of and with the participation of our management, including the Company’s Chief Executive Officer and Chief Financial Officer, an evaluation of the effectiveness of our disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e). Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of March 31, 2014 in accumulating and communicating information to management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures of that information under the SEC’s rules and forms and that the Company’s disclosure controls and procedures are designed to ensure that the information required to be disclosed in reports filed or submitted by the Company under the Securities Exchange Act is recorded, processed, summarized and reported within the specified time periods. During the quarter ended March 31, 2014, there have been no changes in the Company’s internal controls over financial reporting or, to the Company’s knowledge, in other factors that could significantly change those internal controls subsequent to the date the Company carried out its evaluation that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. However, the design of any system of controls and procedures is based in part upon certain assumptions about the likelihood of future events. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

Page 39 of 43

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company and the Bank are involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, based in part on the advice of counsel, the ultimate disposition of these matters will not have a material adverse impact on the Company’s consolidated financial position.

ITEM 1A. RISK FACTORS

We believe there have been no material changes from the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2013. You should carefully consider the factors discussed in our Annual Report on Form 10-K, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

ITEM 2. UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable

ITEM 5. OTHER INFORMATION

None

Page 40 of 43

ITEM 6. EXHIBITS

Exhibit 31

Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 32

Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Exhibit 101

Interactive data files providing financial information from the Registrant’s Report on Form 10-Q as of and for the three months ended March 31, 2014 in XBRL. Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability.

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:   May 15, 2014	By:  /s/ Cynthia N. Day
	Cynthia N. Day
	President and Chief Executive Officer
Date:   May 15, 2014	By:  /s/ Samuel J. Cox
	Samuel J. Cox
	Executive Vice President and
	Chief Financial Officer

Page 41 of 43

EX-31

Exhibit 31   Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

We, Cynthia N. Day, and Samuel J. Cox certify that:

1. We have reviewed this quarterly report of Citizens Bancshares Corporation on Form 10-Q for the quarterly period ended March 31, 2014;

2. Based on our knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on our knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. We are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. We have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:   May 15, 2014	By:  /s/ Cynthia N. Day
	Cynthia N. Day
	President and Chief Executive Officer
Date:   May 15, 2014	By:  /s/ Samuel J. Cox
	Samuel J. Cox
	Executive Vice President and
	Chief Financial Officer

Page 42 of 43

EX-32

Exhibit 32   CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The certifications set forth below are hereby submitted to the Securities and Exchange Commission pursuant to, and solely for the purpose of complying with, Section 1350 of Chapter 63 of Title 18 of the United States Code in connection with the filing on the date hereof with the Securities and Exchange Commission of the Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2014.

Each of the undersigned hereby certifies in their capacity as an officer of Citizens Bancshares Corporation and subsidiary (the “Company”) that, to their knowledge on the date of this certification, the Quarterly Report of the Company on Form 10-Q for the period ended March 31, 2014 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such report fairly presents, in all material respects, the financial condition of the Company at the end of such period and the results of operations of the Company for such period.

Date:   May 15, 2014	By: /s/ Cynthia N. Day
	Cynthia N. Day
	President and Chief Executive Officer
Date:   May 15, 2014	By: /s/ Samuel J. Cox
	Samuel J. Cox
	Executive Vice President and
	Chief Financial Officer

Page 43 of 43

XML

LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES (Details Narrative)	3 Months Ended
	Mar. 31, 2014
Loans and Leases Receivable Disclosure [Abstract]
Minimum period of restructured loan past due	90 days

XML

NET INCOME (LOSS) PER COMMON AND COMMON EQUIVALENT SHARE (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Earnings Per Share [Abstract]
Potentially dilutive options outstanding	49,277	49,277
Net Income (Numerator)
Basic earnings (loss) available to common stockholders	$ 357	$ 213
Nonvested restricted stock grant
Effect of dilutive securities: options to purchase common shares
Diluted earnings (loss)	$ 357	$ 213
Shares (Denominator)
Basic (in shares)	2,161	2,146
Nonvested restricted stock grant (in shares)	10	6
Effect of dilutive securities: options to purchase common shares (in shares)
Diluted (in shares)	2,171	2,152
Per Share Amount
Basic earnings (loss) per share available to common stockholders (in dollars per share)	$ 0.17	$ 0.10
Nonvested resticted stock grant (in dollars per share)	$ (0.01)
Effect of dilutive securities: options to purchase common shares (in dollars per shares)
Diluted earnings (loss) per share (in dollars per share)	$ 0.16	$ 0.10

XML

LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES (Details 2) (USD $) In Thousands, unless otherwise specified	3 Months Ended		12 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Activity in allowance for loan losses by portfolio segment
Beginning balance	$ 3,157	$ 3,509	$ 3,509
Provision for loan losses		225	425
Loans charged-off	(200)	(388)	(1,485)
Recoveries on loans charged-off	112	69	708
Ending balance	3,069	3,415	3,157
Commercial Financial and Agricultural Portfolio Segment [Member]
Activity in allowance for loan losses by portfolio segment
Beginning balance	384	433	433
Provision for loan losses		(31)	(68)
Loans charged-off		(5)	(22)
Recoveries on loans charged-off	10	11	41
Ending balance	394	408	384
Commercial Real Estate Portfolio Segment [Member]
Activity in allowance for loan losses by portfolio segment
Beginning balance	1,721	1,853	1,853
Provision for loan losses		14	127
Loans charged-off	(105)	(65)	(710)
Recoveries on loans charged-off	3	26	451
Ending balance	1,619	1,828	1,721
Single Family Residential Mortgage [Member]
Activity in allowance for loan losses by portfolio segment
Beginning balance	731	803	803
Provision for loan losses		136	361
Loans charged-off	(52)	(216)	(554)
Recoveries on loans charged-off	86	11	121
Ending balance	765	734	731
Construction and Development Portfolio Segment [Member]
Activity in allowance for loan losses by portfolio segment
Beginning balance	126	177	177
Provision for loan losses		39	(56)
Loans charged-off		(30)	(30)
Recoveries on loans charged-off			35
Ending balance	126	186	126
Consumer Portfolio Segment [Member]
Activity in allowance for loan losses by portfolio segment
Beginning balance	195	243	243
Provision for loan losses		67	61
Loans charged-off	(43)	(72)	(169)
Recoveries on loans charged-off	13	21	60
Ending balance	$ 165	$ 259	$ 195

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) (USD $) In Thousands, except Share data, unless otherwise specified	0 Months Ended					3 Months Ended
	Aug. 13, 2010 Series A Preferred Stock [Member]	Aug. 13, 2010 Series B Preferred Stock [Member]	Mar. 31, 2014 Series B Preferred Stock [Member]	Dec. 31, 2013 Series B Preferred Stock [Member]	Dec. 31, 2012 Series B Preferred Stock [Member]	Mar. 31, 2014 Series B and Series C Preferred Stock [Member]	Sep. 17, 2010 Series B and Series C Preferred Stock [Member]	Mar. 31, 2014 Series C Preferred Stock [Member]	Dec. 31, 2013 Series C Preferred Stock [Member]	Dec. 31, 2012 Series C Preferred Stock [Member]
Class of Stock [Line Items]
Number of preferred shares exchanged	7,462
Number of preferred shares issued			7,462	7,462	7,462		11,841	4,379	4,379	4,379
Monetary consideration exchanged in connection with the Exchange Transaction	$ 1	$ 1
Cumulative dividend payment for first eight years after closing date (as a percent)						2.00%
Period for which preferred stock dividend rate is 2%						8 years
Cumulative dividend payment after the first eight years of closing date (as a percent)						9.00%

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 3) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Financial assets:
Cash and due from banks	$ 5,322	$ 6,340
Interest-bearing deposits with banks	43,889	22,827
Certificates of deposit	350	350
Other investments	748	874
Loans-net	178,127	182,119
Cash surrender value of life insurance	10,008	9,948
Financial liabilities:
Deposits	348,190	336,962
Advances from Federal Home Loan Bank	268	273
Commitments to Extend Credit [Member]
Off-balance-sheet financial instruments:
Notional amount	24,499	26,313
Estimated fair value
Letter of Credit [Member]
Off-balance-sheet financial instruments:
Notional amount	2,027	2,125
Estimated fair value
Fair Value, Inputs, Level 1 [Member]
Financial assets:
Cash and due from banks	5,322	6,340
Interest-bearing deposits with banks	43,889	22,827
Certificates of deposit	350	350
Investment securities
Other investments	748	874
Loans-net
Cash surrender value of life insurance	10,008	9,948
Financial liabilities:
Deposits	208,534	195,884
Advances from Federal Home Loan Bank
Fair Value, Inputs, Level 2 [Member]
Financial assets:
Cash and due from banks
Interest-bearing deposits with banks
Certificates of deposit
Investment securities	138,629	141,285
Other investments
Loans-net
Cash surrender value of life insurance
Financial liabilities:
Deposits	140,462	141,884
Advances from Federal Home Loan Bank	268	273
Fair Value, Inputs, Level 3 [Member]
Financial assets:
Cash and due from banks
Interest-bearing deposits with banks
Certificates of deposit
Investment securities
Other investments
Loans-net	178,797	183,150
Cash surrender value of life insurance
Financial liabilities:
Deposits
Advances from Federal Home Loan Bank
Carrying (Reported) Amount, Fair Value Disclosure [Member]
Financial assets:
Cash and due from banks	5,322	6,340
Interest-bearing deposits with banks	43,889	22,827
Certificates of deposit	350	350
Investment securities	138,629	141,285
Other investments	748	874
Loans-net	178,127	182,119
Cash surrender value of life insurance	10,008	9,948
Financial liabilities:
Deposits	348,190	336,962
Advances from Federal Home Loan Bank	268	273
Estimate of Fair Value, Fair Value Disclosure [Member]
Financial assets:
Cash and due from banks	5,322	6,340
Interest-bearing deposits with banks	43,889	22,827
Certificates of deposit	350	350
Investment securities	138,629	141,285
Other investments	748	874
Loans-net	178,797	183,150
Cash surrender value of life insurance	10,008	9,948
Financial liabilities:
Deposits	348,996	337,768
Advances from Federal Home Loan Bank	$ 268	$ 273

XML

LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES (Details 6) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Total	$ 181,196	$ 185,276
Single Family Residential Mortgage [Member]
Total	34,085	34,864
Single Family Residential Mortgage [Member] | First Mortgage [Member]
Total	25,734	26,326
Single Family Residential Mortgage [Member] | Home Equity Line of Credit [Member]
Total	8,351	8,538
Commercial Financial and Agricultural Portfolio Segment [Member]
Total	19,416	20,292
Commercial Financial and Agricultural Portfolio Segment [Member] | Secured Financing Receivable [Member]
Total	14,237	15,033
Commercial Financial and Agricultural Portfolio Segment [Member] | Unsecured Financing Receivable [Member]
Total	5,179	5,259
Commercial Real Estate Portfolio Segment [Member]
Total	117,461	120,180
Commercial Real Estate Portfolio Segment [Member] | Owner Occupied Financing Receivable [Member]
Total	61,264	61,639
Commercial Real Estate Portfolio Segment [Member] | Non Owner Occupied Financing Receivable [Member]
Total	41,550	43,810
Commercial Real Estate Portfolio Segment [Member] | Multi Family Financing Receivable [Member]
Total	14,647	14,731
Construction and Development Portfolio Segment [Member]
Total	4,039	3,626
Construction and Development Portfolio Segment [Member] | Construction Financing Receivable [Member]
Total	3,831	3,019
Construction and Development Portfolio Segment [Member] | Improved Land Financing Receivable [Member]
Total	208	242
Construction and Development Portfolio Segment [Member] | Unimproved Land Financing Receivable [Member]
Total		365
Consumer Portfolio Segment [Member]
Total	6,195	6,314
Pass [Member]
Total	159,960	166,627
Pass [Member] | Single Family Residential Mortgage [Member] | First Mortgage [Member]
Total	23,363	24,126
Pass [Member] | Single Family Residential Mortgage [Member] | Home Equity Line of Credit [Member]
Total	7,224	7,686
Pass [Member] | Commercial Financial and Agricultural Portfolio Segment [Member] | Secured Financing Receivable [Member]
Total	14,215	15,009
Pass [Member] | Commercial Financial and Agricultural Portfolio Segment [Member] | Unsecured Financing Receivable [Member]
Total	5,179	5,259
Pass [Member] | Commercial Real Estate Portfolio Segment [Member] | Owner Occupied Financing Receivable [Member]
Total	48,187	50,921
Pass [Member] | Commercial Real Estate Portfolio Segment [Member] | Non Owner Occupied Financing Receivable [Member]
Total	38,528	40,482
Pass [Member] | Commercial Real Estate Portfolio Segment [Member] | Multi Family Financing Receivable [Member]
Total	13,524	13,704
Pass [Member] | Construction and Development Portfolio Segment [Member] | Construction Financing Receivable [Member]
Total	3,470	3,019
Pass [Member] | Construction and Development Portfolio Segment [Member] | Improved Land Financing Receivable [Member]
Total	165	197
Pass [Member] | Construction and Development Portfolio Segment [Member] | Unimproved Land Financing Receivable [Member]
Total
Pass [Member] | Consumer Portfolio Segment [Member]
Total	6,105	6,224
Special Mention [Member]
Total	10,252	7,417
Special Mention [Member] | Single Family Residential Mortgage [Member] | First Mortgage [Member]
Total	176
Special Mention [Member] | Single Family Residential Mortgage [Member] | Home Equity Line of Credit [Member]
Total	310	22
Special Mention [Member] | Commercial Financial and Agricultural Portfolio Segment [Member] | Secured Financing Receivable [Member]
Total
Special Mention [Member] | Commercial Financial and Agricultural Portfolio Segment [Member] | Unsecured Financing Receivable [Member]
Total
Special Mention [Member] | Commercial Real Estate Portfolio Segment [Member] | Owner Occupied Financing Receivable [Member]
Total	8,312	5,929
Special Mention [Member] | Commercial Real Estate Portfolio Segment [Member] | Non Owner Occupied Financing Receivable [Member]
Total	807	819
Special Mention [Member] | Commercial Real Estate Portfolio Segment [Member] | Multi Family Financing Receivable [Member]
Total	647	647
Special Mention [Member] | Construction and Development Portfolio Segment [Member] | Construction Financing Receivable [Member]
Total
Special Mention [Member] | Construction and Development Portfolio Segment [Member] | Improved Land Financing Receivable [Member]
Total
Special Mention [Member] | Construction and Development Portfolio Segment [Member] | Unimproved Land Financing Receivable [Member]
Total
Special Mention [Member] | Consumer Portfolio Segment [Member]
Total
Substandard [Member]
Total	10,826	11,130
Substandard [Member] | Single Family Residential Mortgage [Member] | First Mortgage [Member]
Total	2,195	2,200
Substandard [Member] | Single Family Residential Mortgage [Member] | Home Equity Line of Credit [Member]
Total	704	728
Substandard [Member] | Commercial Financial and Agricultural Portfolio Segment [Member] | Secured Financing Receivable [Member]
Total	22	24
Substandard [Member] | Commercial Financial and Agricultural Portfolio Segment [Member] | Unsecured Financing Receivable [Member]
Total
Substandard [Member] | Commercial Real Estate Portfolio Segment [Member] | Owner Occupied Financing Receivable [Member]
Total	4,765	4,789
Substandard [Member] | Commercial Real Estate Portfolio Segment [Member] | Non Owner Occupied Financing Receivable [Member]
Total	2,215	2,509
Substandard [Member] | Commercial Real Estate Portfolio Segment [Member] | Multi Family Financing Receivable [Member]
Total	445	380
Substandard [Member] | Construction and Development Portfolio Segment [Member] | Construction Financing Receivable [Member]
Total	361
Substandard [Member] | Construction and Development Portfolio Segment [Member] | Improved Land Financing Receivable [Member]
Total	43	45
Substandard [Member] | Construction and Development Portfolio Segment [Member] | Unimproved Land Financing Receivable [Member]
Total		365
Substandard [Member] | Consumer Portfolio Segment [Member]
Total	76	90
Doubtful [Member]
Total	158	102
Doubtful [Member] | Single Family Residential Mortgage [Member] | First Mortgage [Member]
Total
Doubtful [Member] | Single Family Residential Mortgage [Member] | Home Equity Line of Credit [Member]
Total	113	102
Doubtful [Member] | Commercial Financial and Agricultural Portfolio Segment [Member] | Secured Financing Receivable [Member]
Total
Doubtful [Member] | Commercial Financial and Agricultural Portfolio Segment [Member] | Unsecured Financing Receivable [Member]
Total
Doubtful [Member] | Commercial Real Estate Portfolio Segment [Member] | Owner Occupied Financing Receivable [Member]
Total
Doubtful [Member] | Commercial Real Estate Portfolio Segment [Member] | Non Owner Occupied Financing Receivable [Member]
Total
Doubtful [Member] | Commercial Real Estate Portfolio Segment [Member] | Multi Family Financing Receivable [Member]
Total	31
Doubtful [Member] | Construction and Development Portfolio Segment [Member] | Construction Financing Receivable [Member]
Total
Doubtful [Member] | Construction and Development Portfolio Segment [Member] | Improved Land Financing Receivable [Member]
Total
Doubtful [Member] | Construction and Development Portfolio Segment [Member] | Unimproved Land Financing Receivable [Member]
Total
Doubtful [Member] | Consumer Portfolio Segment [Member]
Total	$ 14

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Citizens Bancshares Corporation (the “Company”) is a holding company that provides a full range of commercial and personal banking services to individual and corporate customers in metropolitan Atlanta and Columbus, Georgia, and in Birmingham and Eutaw, Alabama, through its wholly owned subsidiary, Citizens Trust Bank (the “Bank”). The Bank operates under a state charter and serves its customers through seven full-service financial centers in metropolitan Atlanta, Georgia, one full-service financial center in Columbus, Georgia, one full-service financial center in Birmingham, Alabama, and one full-service financial center in Eutaw, Alabama.

The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. 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-K filed with the Securities and Exchange Commission for the year ended December 31, 2013. The results of operations for the interim periods reported herein are not necessarily representative of the results expected for the full 2014 fiscal year.

The consolidated financial statements of the Company for the three month period ended March 31, 2014 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 has been included.  All adjustments are of a normal recurring nature.  All significant intercompany accounts and transactions have been eliminated in consolidation.

Accounting Policies

The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), which often require the judgment of management in the selection and application of certain accounting principles and methods. Reference is made to the accounting policies of the Company described in the notes to the consolidated financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013. The Company has followed those policies in preparing this report. Management believes that the quality and reasonableness of its most critical policies enable the fair presentation of its financial position and of its results of operations.

Troubled Asset Relief Program

On August 13, 2010, as part of the U.S. Department of the Treasury (the “Treasury”) Troubled Asset Relief Program (“TARP”) Community Development Capital Initiative, the Company entered into a Letter Agreement, and an Exchange Agreement–Standard Terms (“Exchange Agreement”), with the Treasury, pursuant to which the Company agreed to exchange 7,462 shares of the Company’s Fixed Rate Cumulative Perpetual Preferred Stock, Series A (“Series A Preferred Shares”), issued on March 6, 2009, pursuant to the Company’s participation in the TARP Capital Purchase Program, for 7,462 shares of the Company’s Fixed Rate Cumulative Perpetual Preferred Stock, Series B (“Series B Preferred Shares”) issued pursuant to the TARP Community Development Capital Initiative, both of which have a liquidation preference of $1,000 (the “Exchange Transaction”). No new monetary consideration was exchanged in connection with the Exchange Transaction. The Exchange Transaction closed on August 13, 2010 (the “Closing Date”).

On September 17, 2010, the Company issued 4,379 shares of its Series C Preferred Shares to the Treasury as part of its TARP Community Development Capital Initiative for a total of 11,841 shares of Series B and C Preferred Shares issued to Treasury. The issuance of the Series B and Series C Preferred Shares was a private placement exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended.

The Series B and Series C Preferred Shares qualify as Tier 1 capital and will pay cumulative dividends at a rate of 2% per annum for the first eight years after the Closing Date and 9% per annum thereafter. The Company may, subject to consultation with the Federal Reserve Bank of Atlanta, redeem the Series B and Series C Preferred Shares at any time for its aggregate liquidation amount plus any accrued and unpaid dividends.

Recently Issued Accounting Standards

In April 2013, the FASB issued guidance addressing application of the liquidation basis of accounting. The guidance is intended to clarify when an entity should apply the liquidation basis of accounting. In addition, the guidance provides principles for the recognition and measurement of assets and liabilities and requirements for financial statements prepared using the liquidation basis of accounting. The amendments went into effect for entities that determine liquidation is imminent during annual reporting periods beginning after December 15, 2013, and interim reporting periods therein and those requirements should be applied prospectively from the day that liquidation becomes imminent. Early adoption is permitted. The amendments did not have a material effect on the Company’s financial statements.

In January 2014, the FASB amended the Receivables—Troubled Debt Restructurings by Creditors subtopic of the Codification to address the reclassification of consumer mortgage loans collateralized by residential real estate upon foreclosure. The amendments clarify the criteria for concluding that an in substance repossession or foreclosure has occurred, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan. The amendments also outline interim and annual disclosure requirements. The amendments will be effective for the Company for interim and annual reporting periods beginning after December 15, 2014. Companies are allowed to use either a modified retrospective transition method or a prospective transition method when adopting this update. Early adoption is permitted. The Company does not expect these amendments to have a material effect on its financial statements.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

XML

OTHER REAL ESTATE OWNED (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		12 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Transactions in other real estate owned
Balance-beginning of period	$ 7,404	$ 8,195	$ 8,195
Additions	410	1,254	3,901
Sales	(857)		(4,076)
Write downs	(206)	(116)	(616)
Balance-end of period	$ 6,751		$ 7,404

XML

INVESTMENTS (Details 4) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014 item	Dec. 31, 2013
Securities Available for Sale, Fair value
Securities in a loss position for less than twelve months	$ 67,799	$ 73,185
Securities in a loss position for twelve months or more	5,047	5,136
Total	72,846	78,321
Securities Available for Sale, Unrealized losses
Securities in a loss position for less than twelve months	(2,107)	(2,947)
Securities in a loss position for twelve months or more	(229)	(316)
Total	(2,336)	(3,263)
Number of securities classified as held to maturity in an unrealized loss position	0
Available for sale securities portfolio disclosure
Number of investment securities in an unrealized loss position for more than 12 months	1
State, county and municipal securities [Member]
Securities Available for Sale, Fair value
Securities in a loss position for less than twelve months		2,775
Securities in a loss position for twelve months or more
Total		2,775
Securities Available for Sale, Unrealized losses
Securities in a loss position for less than twelve months		(30)
Securities in a loss position for twelve months or more
Total		(30)
Mortgage Backed Securities [Member]
Securities Available for Sale, Fair value
Securities in a loss position for less than twelve months	65,808	68,420
Securities in a loss position for twelve months or more	5,047	5,136
Total	70,855	73,556
Securities Available for Sale, Unrealized losses
Securities in a loss position for less than twelve months	(2,098)	(2,907)
Securities in a loss position for twelve months or more	(229)	(316)
Total	(2,327)	(3,223)
Corporate Securities [Member]
Securities Available for Sale, Fair value
Securities in a loss position for less than twelve months	1,991	1,990
Securities in a loss position for twelve months or more
Total	1,991	1,990
Securities Available for Sale, Unrealized losses
Securities in a loss position for less than twelve months	(9)	(10)
Securities in a loss position for twelve months or more
Total	$ (9)	$ (10)

XML

INVESTMENTS (Details 3) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Available for Sale, Amortized Cost
Due in one year or less
Due after one year through five years	13,297
Due after five years through ten years	29,620
Due after ten years	95,871
Total	138,788
Available for Sale, Fair Value
Due in one year or less
Due after one year through five years	13,647
Due after five years through ten years	30,429
Due after ten years	94,313
Total	138,389	141,045
Held to Maturity, Amortized Cost
Due in one year or less
Due after one year through five years	240
Due after five years through ten years
Due after ten years
Total	240	240
Held to Maturity, Fair Value
Due in one year or less
Due after one year through five years	240
Due after five years through ten years
Due after ten years
Total	$ 240

XML

INTANGIBLE ASSETS (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Goodwill and Intangible Assets Disclosure [Abstract]
Period over which the deposit assumption premiums are amortized	7 years
Gross Carrying Amount, Goodwill	$ 362		$ 362
Amortized intangible asset:
Gross Carrying Amount, Core deposit intangibles	3,303		3,303
Accumulated Amortization, Core deposit intangibles	2,360		2,242
Aggregate amortization expense of core deposit intangibles	$ 118	$ 118

XML

INVESTMENTS (Details Narrative) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Securities pledged as collateral
Securities pledged to secure public funds on deposit and for other purposes as required by law, FHLB advances	$ 103,762		$ 102,728
Line of credit at Federal Reserve Bank discount window	18,903
Gross realized gains (losses) on securities
Proceeds from sale of securities		1,082
Gross realized gains on sale of securities		141
Gross realized losses on sale of securities

XML

LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, gross	$ 181,196	$ 185,276
Allowance for loan losses	3,069	3,157
Loans, net	178,127	182,119
Commercial Financial and Agricultural Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, gross	19,416	20,292
Commercial Real Estate Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, gross	117,461	120,180
Single Family Residential Mortgage [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, gross	34,085	34,864
Construction and Development Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, gross	4,039	3,626
Consumer Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, gross	$ 6,195	$ 6,314

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended		12 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
OPERATING ACTIVITIES:
Net income	$ 416	$ 272
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		225
Depreciation	137	150
Amortization and accretion, net	216	388
Provision for deferred income tax benefit	77	(4)
Gains on sale of assets and investments, net		(141)
Restricted stock based compensation plan	12	(142)
Decrease in carrying value of other real estate owned	206	116	616
Net loss on sale of other real estate owned	(60)	2
Change in other assets	(557)	71
Change in accrued expenses and other liabilities	43	(168)
Net cash provided by operating activities	490	769
INVESTING ACTIVITIES:
Proceeds from calls and maturities of investment securities held to maturity		430
Proceeds from sales, maturities, and paydowns of investment securities available for sale	4,109	9,124
Purchases of investment securities available for sale	(200)	(10,224)
Net change in loans receivable	4,008	5,904
Proceeds from the sale of other real estate owned	917	159
Purchases of premises and equipment, net	(32)	(73)
Net cash provided by (used in) investing activities	8,802	5,320
FINANCING ACTIVITIES:
Net change in deposits	11,228	(1,198)
Net change in advances from Federal Home Loan Bank	(5)	(5)
Proceeds from issuance of common stock		180
Purchase of treasury stock		(62)
Dividends paid - preferred	(59)	(59)
Net cash provided by (used in) financing activities	11,164	(1,144)
Net change in cash and cash equivalents	20,044	4,945
Cash and cash equivalents, beginning of period	29,167	40,187	40,187
Cash and cash equivalents at end of period	49,211	45,132	29,167
Supplemental disclosures of cash paid during the period for:
Interest	264	254
Income taxes		26
Supplemental disclosures of noncash transactions:
Real estate acquired through foreclosure	410	1,254	3,901
Change in unrealized gain (loss) on investment securities available for sale, net of taxes	$ 819	$ (180)

XML

LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended		12 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Activity in allowance for loan losses
Beginning balance	$ 3,157	$ 3,509	$ 3,509
Provision for loan losses		225	425
Loans charged-off	(200)	(388)	(1,485)
Recoveries on loans previously charged-off	112	69	708
Ending balance	$ 3,069	$ 3,415	$ 3,157

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) (USD $)	Mar. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale:	$ 138,389,000	$ 141,045,000
Other real estate owned	6,751,000	7,404,000	8,195,000
State, county and municipal securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale:	34,885,000	34,802,000
Mortgage Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale:	93,509,000	96,267,000
Corporate Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale:	9,995,000	9,976,000
Fair Value, Inputs, Level 3 [Member] | Commercial Real Estate Portfolio Segment [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral Dependent Impaired loans	10,886	10,702
Fair Value, Inputs, Level 3 [Member] | Single Family Residential Mortgage [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral Dependent Impaired loans	479	360
Fair Value, Inputs, Level 3 [Member] | Other real estate owned [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other real estate owned	6,752	7,404
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale:	138,389,000	141,045,000
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | State, county and municipal securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale:	34,885,000	34,802,000
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Mortgage Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale:	93,509,000	96,267,000
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Corporate Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale:	9,995,000	9,976,000
Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale:	138,389,000	141,045,000
Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member] | State, county and municipal securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale:	34,885,000	34,802,000
Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member] | Mortgage Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale:	93,509,000	96,267,000
Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member] | Corporate Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale:	9,995,000	9,976,000
Fair Value, Measurements, Nonrecurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans and Other real estate owned	18,117,000	18,466,000
Fair Value, Measurements, Nonrecurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member] | Commercial Real Estate Portfolio Segment [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral Dependent Impaired loans	10,886,000	10,702,000
Fair Value, Measurements, Nonrecurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member] | Single Family Residential Mortgage [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral Dependent Impaired loans	479,000	360,000
Fair Value, Measurements, Nonrecurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member] | Other real estate owned [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other real estate owned	6,752,000	7,404,000
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans and Other real estate owned	18,117,000	18,466,000
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member] | Commercial Real Estate Portfolio Segment [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral Dependent Impaired loans	10,886,000	10,702,000
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member] | Single Family Residential Mortgage [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral Dependent Impaired loans	479,000	360,000
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member] | Other real estate owned [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other real estate owned	$ 6,752,000	$ 7,404,000

XML

CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $)	Mar. 31, 2014	Dec. 31, 2013
ASSETS
Cash and due from banks	$ 5,322,000	$ 6,340,000
Interest-bearing deposits with banks	43,889,000	22,827,000
Certificates of deposit	350,000	350,000
Investment securities available for sale, at fair value	138,389,000	141,045,000
Investment securities held to maturity, at cost	240,000	240,000
Other investments	748,000	874,000
Loans receivable, net	178,127,000	182,119,000
Premises and equipment, net	6,485,000	6,589,000
Cash surrender value of life insurance	10,008,000	9,948,000
Other Real Estate Owned	6,751,000	7,404,000
Other assets	9,878,000	9,997,000
Total assets	400,187,000	387,733,000
LIABILITIES:
Noninterest-bearing deposits	77,817,000	71,142,000
Interest-bearing deposits	270,373,000	265,820,000
Total deposits	348,190,000	336,962,000
Accrued expenses and other liabilities	4,233,000	4,190,000
Advances from Federal Home Loan Bank	268,000	273,000
Total liabilities	352,691,000	341,425,000
STOCKHOLDERS' EQUITY:
Additional paid-in capital	7,933,000	7,933,000
Retained earnings	27,488,000	27,131,000
Treasury stock at cost, 235,938 shares at March 31, 2014 and December 31, 2013, respectively	(1,882,000)	(1,882,000)
Accumulated other comprehensive loss, net of income taxes	(263,000)	(1,082,000)
Total stockholders' equity	47,496,000	46,308,000
Total liabilities and stockholders' equity	400,187,000	387,733,000
Series B Preferred Stock [Member]
STOCKHOLDERS' EQUITY:
Preferred stock	7,462,000	7,462,000
Series C Preferred Stock [Member]
STOCKHOLDERS' EQUITY:
Preferred stock	4,379,000	4,379,000
Common Stock [Member]
STOCKHOLDERS' EQUITY:
Common stock	2,293,000	2,293,000
Nonvoting Common Stock [Member]
STOCKHOLDERS' EQUITY:
Common stock	90,000	90,000
Restricted Stock [Member]
STOCKHOLDERS' EQUITY:
Common stock	$ (4,000)	$ (16,000)

XML

INTANGIBLE ASSETS (Details 1) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014
Estimated aggregate amortization expense of core deposit intangibles
2014	$ 472
2015	472
2016	118
2017 and thereafter

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Consolidated Statements Of Comprehensive Income Parenthetical
Unrealized holding gain (loss) on investment securities available for sale, tax	$ 421	$ 44
Reclassification adjustment for holding gains included in net income, tax		$ 48

XML

LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES (Details 4) (USD $) In Thousands, unless otherwise specified	3 Months Ended		12 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Financing Receivable, Impaired [Line Items]
Impaired Loans - With Allowance, Unpaid Principal	$ 615		$ 386
Impaired Loans - With Allowance, Recorded Investment	559		330
Impaired Loans - With Allowance, Allowance for Loan Losses Allocated	53		3
Impaired Loans - With no Allowance, Unpaid Principal	13,786		13,584
Impaired Loans - With no Allowance, Recorded Investment	10,859		10,735
Average Recorded Investment	11,118	14,226	11,283
Interest Income Recognized	295	292	672
Single Family Residential Mortgage [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans - With Allowance, Allowance for Loan Losses Allocated	11
Single Family Residential Mortgage [Member] | First Mortgage [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans - With Allowance, Unpaid Principal
Impaired Loans - With Allowance, Recorded Investment
Impaired Loans - With Allowance, Allowance for Loan Losses Allocated
Impaired Loans - With no Allowance, Unpaid Principal	231		231
Impaired Loans - With no Allowance, Recorded Investment	231		231
Average Recorded Investment	231	231	231
Interest Income Recognized
Single Family Residential Mortgage [Member] | Home Equity Line of Credit [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans - With Allowance, Unpaid Principal	130
Impaired Loans - With Allowance, Recorded Investment	130
Impaired Loans - With Allowance, Allowance for Loan Losses Allocated	11
Impaired Loans - With no Allowance, Unpaid Principal	129		129
Impaired Loans - With no Allowance, Recorded Investment	129		129
Average Recorded Investment	260	204	128
Interest Income Recognized	9	9	2
Commercial Financial and Agricultural Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans - With Allowance, Allowance for Loan Losses Allocated
Commercial Financial and Agricultural Portfolio Segment [Member] | Secured Financing Receivable [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans - With Allowance, Unpaid Principal
Impaired Loans - With Allowance, Recorded Investment
Impaired Loans - With Allowance, Allowance for Loan Losses Allocated
Impaired Loans - With no Allowance, Unpaid Principal
Impaired Loans - With no Allowance, Recorded Investment
Average Recorded Investment
Interest Income Recognized
Commercial Financial and Agricultural Portfolio Segment [Member] | Unsecured Financing Receivable [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans - With Allowance, Unpaid Principal
Impaired Loans - With Allowance, Recorded Investment
Impaired Loans - With Allowance, Allowance for Loan Losses Allocated
Impaired Loans - With no Allowance, Unpaid Principal
Impaired Loans - With no Allowance, Recorded Investment
Average Recorded Investment
Interest Income Recognized
Commercial Real Estate Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans - With Allowance, Allowance for Loan Losses Allocated	42		3
Commercial Real Estate Portfolio Segment [Member] | Owner Occupied Financing Receivable [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans - With Allowance, Unpaid Principal
Impaired Loans - With Allowance, Recorded Investment
Impaired Loans - With Allowance, Allowance for Loan Losses Allocated
Impaired Loans - With no Allowance, Unpaid Principal	10,753		10,300
Impaired Loans - With no Allowance, Recorded Investment	8,442		7,968
Average Recorded Investment	8,523	7,898	8,049
Interest Income Recognized	252	199	534
Commercial Real Estate Portfolio Segment [Member] | Non Owner Occupied Financing Receivable [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans - With Allowance, Unpaid Principal
Impaired Loans - With Allowance, Recorded Investment
Impaired Loans - With Allowance, Allowance for Loan Losses Allocated
Impaired Loans - With no Allowance, Unpaid Principal	2,673		2,924
Impaired Loans - With no Allowance, Recorded Investment	2,057		2,407
Average Recorded Investment	2,104	5,404	2,516
Interest Income Recognized	21	47	108
Commercial Real Estate Portfolio Segment [Member] | Multi Family Financing Receivable [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans - With Allowance, Unpaid Principal	485		386
Impaired Loans - With Allowance, Recorded Investment	429		330
Impaired Loans - With Allowance, Allowance for Loan Losses Allocated	42		3
Impaired Loans - With no Allowance, Unpaid Principal
Impaired Loans - With no Allowance, Recorded Investment
Average Recorded Investment		367	359
Interest Income Recognized	13	29	28
Construction and Development Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans - With Allowance, Allowance for Loan Losses Allocated
Construction and Development Portfolio Segment [Member] | Construction Financing Receivable [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans - With Allowance, Unpaid Principal
Impaired Loans - With Allowance, Recorded Investment
Impaired Loans - With Allowance, Allowance for Loan Losses Allocated
Impaired Loans - With no Allowance, Unpaid Principal
Impaired Loans - With no Allowance, Recorded Investment
Average Recorded Investment		122
Interest Income Recognized		8
Construction and Development Portfolio Segment [Member] | Improved Land Financing Receivable [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans - With Allowance, Unpaid Principal
Impaired Loans - With Allowance, Recorded Investment
Impaired Loans - With Allowance, Allowance for Loan Losses Allocated
Impaired Loans - With no Allowance, Unpaid Principal
Impaired Loans - With no Allowance, Recorded Investment
Average Recorded Investment
Interest Income Recognized
Construction and Development Portfolio Segment [Member] | Unimproved Land Financing Receivable [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans - With Allowance, Unpaid Principal
Impaired Loans - With Allowance, Recorded Investment
Impaired Loans - With Allowance, Allowance for Loan Losses Allocated
Impaired Loans - With no Allowance, Unpaid Principal
Impaired Loans - With no Allowance, Recorded Investment
Average Recorded Investment
Interest Income Recognized
Consumer Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans - With Allowance, Unpaid Principal
Impaired Loans - With Allowance, Recorded Investment
Impaired Loans - With Allowance, Allowance for Loan Losses Allocated
Impaired Loans - With no Allowance, Unpaid Principal
Impaired Loans - With no Allowance, Recorded Investment
Average Recorded Investment
Interest Income Recognized

XML

OTHER REAL ESTATE OWNED (Tables)

3 Months Ended

Mar. 31, 2014

Real Estate [Abstract]

Summary of transactions in other real estate owned

Transactions in other real estate owned are summarized below (in thousands):

	March 31,			December 31,
	2014			2013
Balance—beginning of period	$	7,404		$	8,195
Additions		410			3,901
Sales		(857	)		(4,076	)
Write downs		(206	)		(616	)
Balance—end of period	$	6,751		$	7,404

XML

LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES (Details 5) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Financing Receivable, Impaired [Line Items]
30-59 Days Past Due	$ 3,004	$ 4,330
60-89 Days Past Due	1,094	1,361
Over 90 Days Past Due	2,344	2,720
Total Past Due	6,442	8,411
Current	174,754	176,865
Total	181,196	185,276
Recorded Investment > 90 Days and Accruing	35
Nonaccrual	6,462	7,120
Minimum amount required for loan to be reviewed at least annually to determine appropriate loan grading	750
Single Family Residential Mortgage [Member]
Financing Receivable, Impaired [Line Items]
Total	34,085	34,864
Commercial Financial and Agricultural Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Total	19,416	20,292
Commercial Real Estate Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Total	117,461	120,180
Construction and Development Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
Total	4,039	3,626
Consumer Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
30-59 Days Past Due	11	6
60-89 Days Past Due	8	30
Over 90 Days Past Due	42	45
Total Past Due	61	81
Current	6,134	6,233
Total	6,195	6,314
Recorded Investment > 90 Days and Accruing
Nonaccrual	42	45
First Mortgage [Member] | Single Family Residential Mortgage [Member]
Financing Receivable, Impaired [Line Items]
30-59 Days Past Due	1,737	1,778
60-89 Days Past Due	682	360
Over 90 Days Past Due	1,442	1,840
Total Past Due	3,861	3,978
Current	21,873	22,348
Total	25,734	26,326
Recorded Investment > 90 Days and Accruing	35
Nonaccrual	2,895	3,334
Home Equity Line of Credit [Member] | Single Family Residential Mortgage [Member]
Financing Receivable, Impaired [Line Items]
30-59 Days Past Due	434	444
60-89 Days Past Due	72	19
Over 90 Days Past Due	476	466
Total Past Due	982	929
Current	7,369	7,609
Total	8,351	8,538
Recorded Investment > 90 Days and Accruing
Nonaccrual	578	821
Secured Financing Receivable [Member] | Commercial Financial and Agricultural Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
30-59 Days Past Due	29	125
60-89 Days Past Due
Over 90 Days Past Due	2	2
Total Past Due	31	127
Current	14,206	14,906
Total	14,237	15,033
Recorded Investment > 90 Days and Accruing
Nonaccrual	2	2
Unsecured Financing Receivable [Member] | Commercial Financial and Agricultural Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
30-59 Days Past Due
60-89 Days Past Due
Over 90 Days Past Due
Total Past Due
Current	5,179	5,259
Total	5,179	5,259
Recorded Investment > 90 Days and Accruing
Nonaccrual
Owner Occupied Financing Receivable [Member] | Commercial Real Estate Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
30-59 Days Past Due	750	715
60-89 Days Past Due		753
Over 90 Days Past Due	254	81
Total Past Due	1,004	1,549
Current	60,260	60,090
Total	61,264	61,639
Recorded Investment > 90 Days and Accruing
Nonaccrual	1,211	1,038
Non Owner Occupied Financing Receivable [Member] | Commercial Real Estate Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
30-59 Days Past Due		38
60-89 Days Past Due		199
Over 90 Days Past Due	128	286
Total Past Due	128	523
Current	41,422	43,287
Total	41,550	43,810
Recorded Investment > 90 Days and Accruing
Nonaccrual	1,402	1,550
Multi Family Financing Receivable [Member] | Commercial Real Estate Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
30-59 Days Past Due		747
60-89 Days Past Due	332
Over 90 Days Past Due
Total Past Due	332	747
Current	14,315	13,984
Total	14,647	14,731
Recorded Investment > 90 Days and Accruing
Nonaccrual	332	330
Construction Financing Receivable [Member] | Construction and Development Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
30-59 Days Past Due	43	477
60-89 Days Past Due
Over 90 Days Past Due
Total Past Due	43	477
Current	3,788	2,542
Total	3,831	3,019
Recorded Investment > 90 Days and Accruing
Nonaccrual
Improved Land Financing Receivable [Member] | Construction and Development Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
30-59 Days Past Due
60-89 Days Past Due
Over 90 Days Past Due
Total Past Due
Current	208	242
Total	208	242
Recorded Investment > 90 Days and Accruing
Nonaccrual
Unimproved Land Financing Receivable [Member] | Construction and Development Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
30-59 Days Past Due
60-89 Days Past Due
Over 90 Days Past Due
Total Past Due
Current		365
Total		365
Recorded Investment > 90 Days and Accruing
Nonaccrual

XML

NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE (Tables)

3 Months Ended

Mar. 31, 2014

Earnings Per Share [Abstract]

Schedule of reconciliation of the numerators and denominator of the basic and diluted net income per common and potential common share

The following schedule reconciles the numerator and denominator of the basic and diluted net income per share available to common and potential common stockholders for the three months ended March 31, 2014 and 2013 (in thousands, except per share data):

	Net Income		Shares		Per Share
	(Numerator)		(Denominator)		Amount
Three Months ended March 31, 2014
Basic earnings per share available to common stockholders	$	357		2,161	$	0.17
Nonvested restricted stock grant		—		10		(0.01	)
Effect of dilutive securities: options to purchase common shares		—		—		—
Diluted earnings per share	$	357		2,171	$	0.16
Three Months ended March 31, 2013
Basic earnings per share available to common stockholders	$	213		2,146	$	0.10
Nonvested restricted stock grant		—		6		—
Effect of dilutive securities: options to purchase common shares		—		—		—
Diluted earnings per share	$	213		2,152	$	0.10

XML

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) (USD $) In Thousands, except Share data	Preferred Stock [Member]	Common Stock [Member]	Nonvoting Common Stock [Member]	Restricted Stock [Member]	Additional Paid-In Capital [Member]	Retained Earnings [Member]	Treasury Stock [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Total
Balance at Dec. 31, 2012	$ 11,841	$ 2,250	$ 90	$ (57)	$ 7,942	$ 26,190	$ (1,820)	$ 2,718	$ 49,154
Balance (in shares) at Dec. 31, 2012	12	2,250	90				(221)
Net income						272			272
Other Comprehensive Income (Loss)								(180)	(180)
Issuance of common stock		43			137				180
Issuance of common stock (in shares)		43
Nonvested restricted stock				5	(147)				(142)
Purchase of treasury stock							(62)		(62)
Purchase of treasury stock (in shares)							(15)
Dividends paid on preferred stock						(59)			(59)
Balance at Mar. 31, 2013	11,841	2,293	90	(52)	7,932	26,403	(1,882)	2,538	49,163
Balance (in shares) at Mar. 31, 2013	12	2,293	90				(236)
Balance at Dec. 31, 2013	11,841	2,293	90	(16)	7,933	27,131	(1,882)	(1,082)	46,308
Balance (in shares) at Dec. 31, 2013	12	2,293	90				(236)
Net income						416			416
Other Comprehensive Income (Loss)								819	819
Issuance of common stock
Nonvested restricted stock				12					12
Purchase of treasury stock
Dividends paid on preferred stock						(59)			(59)
Balance at Mar. 31, 2014	$ 11,841	$ 2,293	$ 90	$ (4)	$ 7,933	$ 27,488	$ (1,882)	$ (263)	$ 47,496
Balance (in shares) at Mar. 31, 2014	12	2,293	90				(236)

XML

CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) (USD $)	Mar. 31, 2014	Dec. 31, 2013
Treasury stock, shares	235,938	235,938
Series B Preferred Stock [Member]
Preferred stock, par value (in dollars per share)	$ 0	$ 0
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	7,462	7,462
Preferred stock, shares outstanding	7,462	7,462
Series C Preferred Stock [Member]
Preferred stock, par value (in dollars per share)	$ 0	$ 0
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	4,379	4,379
Preferred stock, shares outstanding	4,379	4,379
Common Stock [Member]
Common stock, par value (in dollars per share)	$ 1	$ 1
Common stock, shares authorized	20,000,000	20,000,000
Common stock, shares issued	2,292,728	2,292,728
Common stock, shares outstanding	2,292,728	2,292,728
Nonvoting Common Stock [Member]
Common stock, par value (in dollars per share)	$ 1	$ 1
Common stock, shares authorized	5,000,000	5,000,000
Common stock, shares issued	90,000	90,000

XML

RECLASSIFICATIONS

3 Months Ended

Mar. 31, 2014

Accounting Changes and Error Corrections [Abstract]

RECLASSIFICATIONS

9. RECLASSIFICATIONS

Certain amounts in the 2013 consolidated financial statements were reclassified to conform to the 2014 presentation. These reclassifications had no effect on shareholders’ equity or the results of operations as previously presented.

XML

Document and Entity Information	3 Months Ended
	Mar. 31, 2014	May 13, 2014 Common Stock [Member]	May 13, 2014 Nonvoting Common Stock [Member]
Entity Registrant Name	CITIZENS BANCSHARES CORP /GA/
Entity Central Index Key	0000813640
Document Type	10-Q
Document Period End Date	Mar. 31, 2014
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		2,056,790	90,000
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q1

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Mar. 31, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

Citizens Bancshares Corporation (the “Company”) is a holding company that provides a full range of commercial and personal banking services to individual and corporate customers in metropolitan Atlanta and Columbus, Georgia, and in Birmingham and Eutaw, Alabama, through its wholly owned subsidiary, Citizens Trust Bank (the “Bank”). The Bank operates under a state charter and serves its customers through seven full-service financial centers in metropolitan Atlanta, Georgia, one full-service financial center in Columbus, Georgia, one full-service financial center in Birmingham, Alabama, and one full-service financial center in Eutaw, Alabama.

The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. 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-K filed with the Securities and Exchange Commission for the year ended December 31, 2013. The results of operations for the interim periods reported herein are not necessarily representative of the results expected for the full 2014 fiscal year.

The consolidated financial statements of the Company for the three month period ended March 31, 2014 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 has been included.  All adjustments are of a normal recurring nature.  All significant intercompany accounts and transactions have been eliminated in consolidation.

Troubled Asset Relief Program

Troubled Asset Relief Program

On August 13, 2010, as part of the U.S. Department of the Treasury (the “Treasury”) Troubled Asset Relief Program (“TARP”) Community Development Capital Initiative, the Company entered into a Letter Agreement, and an Exchange Agreement–Standard Terms (“Exchange Agreement”), with the Treasury, pursuant to which the Company agreed to exchange 7,462 shares of the Company’s Fixed Rate Cumulative Perpetual Preferred Stock, Series A (“Series A Preferred Shares”), issued on March 6, 2009, pursuant to the Company’s participation in the TARP Capital Purchase Program, for 7,462 shares of the Company’s Fixed Rate Cumulative Perpetual Preferred Stock, Series B (“Series B Preferred Shares”) issued pursuant to the TARP Community Development Capital Initiative, both of which have a liquidation preference of $1,000 (the “Exchange Transaction”). No new monetary consideration was exchanged in connection with the Exchange Transaction. The Exchange Transaction closed on August 13, 2010 (the “Closing Date”).

On September 17, 2010, the Company issued 4,379 shares of its Series C Preferred Shares to the Treasury as part of its TARP Community Development Capital Initiative for a total of 11,841 shares of Series B and C Preferred Shares issued to Treasury. The issuance of the Series B and Series C Preferred Shares was a private placement exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended.

The Series B and Series C Preferred Shares qualify as Tier 1 capital and will pay cumulative dividends at a rate of 2% per annum for the first eight years after the Closing Date and 9% per annum thereafter. The Company may, subject to consultation with the Federal Reserve Bank of Atlanta, redeem the Series B and Series C Preferred Shares at any time for its aggregate liquidation amount plus any accrued and unpaid dividends.

Recently Issued Accounting Standards

Recently Issued Accounting Standards

In April 2013, the FASB issued guidance addressing application of the liquidation basis of accounting. The guidance is intended to clarify when an entity should apply the liquidation basis of accounting. In addition, the guidance provides principles for the recognition and measurement of assets and liabilities and requirements for financial statements prepared using the liquidation basis of accounting. The amendments went into effect for entities that determine liquidation is imminent during annual reporting periods beginning after December 15, 2013, and interim reporting periods therein and those requirements should be applied prospectively from the day that liquidation becomes imminent. Early adoption is permitted. The amendments did not have a material effect on the Company’s financial statements.

In January 2014, the FASB amended the Receivables—Troubled Debt Restructurings by Creditors subtopic of the Codification to address the reclassification of consumer mortgage loans collateralized by residential real estate upon foreclosure. The amendments clarify the criteria for concluding that an in substance repossession or foreclosure has occurred, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan. The amendments also outline interim and annual disclosure requirements. The amendments will be effective for the Company for interim and annual reporting periods beginning after December 15, 2014. Companies are allowed to use either a modified retrospective transition method or a prospective transition method when adopting this update. Early adoption is permitted. The Company does not expect these amendments to have a material effect on its financial statements.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

XML

CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Interest income:
Loans, including fees	$ 2,477	$ 2,538
Investment securities:
Taxable	584	375
Tax-exempt	295	340
Interest-bearing deposits	20	20
Total interest income	3,376	3,273
Interest expense:
Deposits	212	235
Total interest expense	212	235
Net interest income	3,164	3,038
Provision for loan losses		225
Net interest income after provision for loan losses	3,164	2,813
Noninterest income:
Service charges on deposits	703	768
Gain on sales of securities		141
Other operating income	276	328
Total noninterest income	979	1,237
Noninterest expense:
Salaries and employee benefits	1,536	1,615
Net occupancy and equipment	543	510
Amortization of core deposit intangible	118	118
FDIC insurance	77	130
Other real estate owned, net	231	248
Other operating expenses	1,139	1,192
Total noninterest expense	3,644	3,813
Income before income taxes	499	237
Income tax expense (benefit)	83	(35)
Net income	416	272
Preferred dividends	59	59
Net income available to common stockholders	$ 357	$ 213
Net income (loss) per common share - basic (in dollars per share)	$ 0.17	$ 0.10
Net income (loss) per common share - diluted (in dollars per share)	$ 0.16	$ 0.10
Weighted average common outstanding shares - basic (in shares)	2,161	2,146
Weighted average common outstanding shares - diluted (in shares)	2,171	2,152

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS

3 Months Ended

Mar. 31, 2014

Fair Value Disclosures [Abstract]

FAIR VALUE OF FINANCIAL INSTRUMENTS

4. FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company measures or monitors certain of its assets and liabilities on a fair value basis. Fair value is used on a recurring basis for assets and liabilities that are elected to be accounted for under ASC guidance as well as certain assets and liabilities in which fair value is the primary basis of accounting. Depending on the nature of the asset or liability, the Company uses various valuation techniques and assumptions when estimating fair value, which are in accordance with the guidance for determining the fair value of a financial asset when the market for that asset is not active.

In accordance with ASC guidance, the Company applied the following fair value hierarchy:

Level 1—Quoted prices in active markets for identical assets or liabilities. Level 1 assets and liabilities include debt and equity securities and derivative contracts that are traded in an active exchange market, as well as U.S. Treasury and other highly liquid investments that are actively traded in over-the-counter markets.

Level 2—Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets and liabilities include debt securities with quoted prices that are traded less frequently than exchange-traded instruments and derivative contracts whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data. This category generally includes U.S. Government and agency mortgage-backed debt securities, certain derivative contracts and impaired loans.

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. For example, this category generally includes certain private equity investments, retained residual interests in securitizations, residential mortgage servicing rights, and highly structured or long-term derivative contracts.

Investment Securities Available for Sale—Investment securities available for sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted prices, if available. If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security’s credit rating, prepayment assumptions and other factors such as credit loss assumptions. Level 1 securities include those traded on an active exchange such as the New York Stock Exchange, Treasury securities that are traded by dealers or brokers in active over-the counter markets and money market funds. Level 2 securities include mortgage backed securities issued by government sponsored entities, municipal bonds and corporate debt securities. Securities classified as Level 3 include asset-backed securities in less liquid markets.

Other Real Estate Owned— Assets acquired through or instead of loan foreclosure are initially recorded at fair value less estimated costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. The fair value of other real estate owned is generally based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are typically significant and result in a Level 3 classification of the inputs for determining fair value. In addition, the Company may further adjust an appraised amount given its knowledge of a specific property or market.

Loans—The Company does not record loans at fair value on a recurring basis, however, from time to time, a loan is considered impaired and an allowance for loan loss is established. Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan are considered impaired. Once a loan is identified as individually impaired, management measures impairment. The fair value of impaired loans is estimated using one of several methods, including the collateral value, market value of similar debt, and discounted cash flows. Those impaired loans not requiring a specific allowance represent loans for which the fair value of expected repayments or collateral exceed the recorded investment in such loans. At March 31, 2014 and December 31, 2013, substantially all of the impaired loans were evaluated based upon the fair value of the collateral. Impaired loans where an allowance is established based on the fair value of collateral require classification in the fair value hierarchy. The fair value of collateral dependent impaired loans is generally based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are typically significant and result in a Level 3 classification of the inputs for determining fair value. In addition, the Company may further adjust an appraised amount given its knowledge of a specific property or market. Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

The following tables present financial assets measured at fair value on a recurring and nonrecurring basis and the change in fair value for those specific financial instruments in which fair value has been elected. (there were no financial liabilities measured at fair value for the periods being reported) (in thousands):

	Fair Value Measurements at March 31, 2014
			Quoted Prices
			In Active		Significant
			Markets for		Other		Significant
	Assets		Identical		Observable		Unobservable
	Measured at		Assets		Inputs		Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
Recurring Basis:
Assets
Securities available for sale:
State, county, and municipal securities	$	34,885	$	—	$	34,885	$	—
Mortgage-backed securities		93,509		—		93,509		—
Corporate securities		9,995		—		9,995		—
		138,389		—		138,389		—
Nonrecurring Basis:
Assets
Collateral Dependent Impaired loans:
Commercial Real Estate	$	10,886	$	—	$	—	$	10,886
Single-family Residential		479		—		—		479
Other real estate owned		6,752		—		—		6,752
		18,117		—		—		18,117

	Fair Value Measurements at December 31, 2013
			Quoted Prices
			In Active		Significant
			Markets for		Other		Significant
	Assets		Identical		Observable		Unobservable
	Measured at		Assets		Inputs		Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
Recurring Basis:
Assets
Securities available for sale:
State, county, and municipal securities	$	34,802	$	—	$	34,802	$	—
Mortgage-backed securities		96,267		—		96,267		—
Corporate securities		9,976		—		9,976		—
		141,045		—		141,045		—
Nonrecurring Basis:
Assets
Collateral Dependent Impaired loans:
Commercial Real Estate	$	10,702	$	—	$	—	$	10,702
Single-family Residential		360		—		—		360
Other real estate owned		7,404		—		—		7,404
		18,466		—		—		18,466

For Level 3 assets and liabilities measured at fair value on a recurring or non-recurring basis as of March 31, 2014, the significant unobservable inputs used in the fair value measurements were as follows (dollars in thousands):

	Fair Value at	Valuation	Unobservable
	March 31, 2014	Technique	Inputs	Range
Collateral Dependent Impaired Loans:
Commercial Real Estate	$                      10,886	Appraised Value	Negative adjustment for selling costs and changes in market conditions since appraisal	5% - 20%
Single-family Residential	$                            479	Appraised Value	Negative adjustment for selling costs and changes in market conditions since appraisal	5% - 20%
OREO	$                        6,752	Appraised Value	Negative adjustment for selling costs and changes in market conditions since appraisal	5% - 20%

As of December 31, 2013, the significant unobservable inputs used in the fair value measurements were as follows (dollars in thousands):

	Fair Value at	Valuation	Unobservable
	December 31, 2013	Technique	Inputs	Range
Collateral Dependent Impaired Loans:
Commercial Real Estate	$                      10,702	Appraised Value	Negative adjustment for selling costs and changes in market conditions since appraisal	5% - 20%
Single-family Residential	$                            360	Appraised Value	Negative adjustment for selling costs and changes in market conditions since appraisal	5% - 20%
OREO	$                        7,404	Appraised Value	Negative adjustment for selling costs and changes in market conditions since appraisal	5% - 20%

Following are disclosures of fair value information about financial instruments, whether or not recognized on the balance sheet, for which it is practicable to estimate that value. The assumptions used in the estimation of the fair values are based on estimates using discounted cash flows and other valuation techniques. The use of discounted cash flows can be significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. The following disclosures should not be considered an estimate of the liquidation value of the Company, but rather a good-faith estimate of the increase or decrease in the value of financial instruments held by the Company since purchase, origination, or issuance.

Cash, Due from Banks, Federal Funds Sold, Interest-Bearing Deposits with Banks and Certificates of Deposits—Fair value equals the carrying value of such assets due to their nature and is classified as Level 1.

Investment Securities—Fair value of investment securities is based on quoted market prices and is classified as Level 2.

Other Investments—The carrying amount of other investments approximates its fair value and is classified as Level 1.

Loans—The fair value of fixed rate loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings resulting in a Level 3 classification. For variable rate loans, the carrying amount is a reasonable estimate of fair value. The methods utilized to estimate the fair values of loans do not necessarily represent an exit price. The carrying amount of related accrued interest receivable, due to its short-term nature, approximates its fair value, is not significant and is not disclosed.

Cash Surrender Value of Life Insurance—Cash values of life insurance policies are carried at the value for which such policies may be redeemed for cash and are classified as Level 1.

Deposits—The fair value of demand deposits, savings accounts, and certain money market deposits is the amount payable on demand at the reporting date. The fair value of fixed rate certificates of deposit is estimated by discounting the future cash flows using the rates currently offered for deposits of similar remaining maturities and is classified as Level 2.

Fed Funds Purchased—Fair value equals the carrying value due to the nature of this liability and is classified as Level 1.

Advances from Federal Home Loan Bank—The fair values of advances from the Federal Home Loan Bank are estimated by discounting the future cash flows using the rates currently available to the Bank for debt with similar remaining maturities and terms and are classified as Level 2.

Commitments to Extend Credit and Commercial Letters of Credit—Because commitments to extend credit and commercial letters of credit are made using variable rates, or are recently executed, the contract value is a reasonable estimate of fair value.

Limitations—Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on many judgments. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. Fair value estimates are based on existing on and off-balance-sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments; for example, premises and equipment. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.

The following presents the carrying amount, fair value, and placement in the fair value hierarchy of the Company’s financial instruments as of March 31, 2014 (in thousands):

	March 31, 2014
	Carrying		Fair Value Measurements
	Amount		Total		Level 1		Level 2		Level 3
Financial assets:
Cash and due from banks	$	5,322	$	5,322	$	5,322	$	—	$	—
Interest-bearing deposits with banks		43,889		43,889		43,889		—		—
Certificates of deposit		350		350		350		—		—
Investment securities		138,629		138,629		—		138,629		—
Other investments		748		748		748		—		—
Loans—net		178,127		178,797		—		—		178,797
Cash surrender value of life insurance		10,008		10,008		10,008		—		—
Financial liabilities:
Deposits		348,190		348,996		208,534		140,462		—
Advances from Federal Home Loan Bank		268		268		—		268		—
	Notional		Estimated
	Amount		Fair Value
Off-balance-sheet financial instruments:
Commitments to extend credit	$	24,499		—
Commercial letters of credit	$	2,027		—

The carrying values and estimated fair values of the Company’s financial instruments at December 31, 2013 are as follows:

	December 31, 2013
	Carrying		Fair Value Measurements
	Amount		Total		Level 1		Level 2		Level 3
Financial assets:
Cash and due from banks	$	6,340	$	6,340	$	6,340	$	—	$	—
Interest-bearing deposits with banks		22,827		22,827		22,827		—		—
Certificates of deposit		350		350		350		—		—
Investment securities		141,285		141,285		—		141,285		—
Other investments		874		874		874		—		—
Loans—net		182,119		183,150		—		—		183,150
Cash surrender value of life insurance		9,948		9,948		9,948		—		—
Financial liabilities:
Deposits		336,962		337,768		195,884		141,884		—
Advances from Federal Home Loan Bank		273		273		—		273		—
	Notional		Estimated
	Amount		Fair Value
Off-balance-sheet financial instruments:
Commitments to extend credit	$	26,313		—
Commercial letters of credit	$	2,125		—

XML

LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES

3 Months Ended

Mar. 31, 2014

Loans and Leases Receivable Disclosure [Abstract]

LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES

3. LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES

Loans outstanding, by classification, are summarized as follows (in thousands):

	March 31,		December 31,
	2014		2013
Commercial, financial, and agricultural	$	19,416	$	20,292
Commercial Real Estate		117,461		120,180
Single-Family Residential		34,085		34,864
Construction and Development		4,039		3,626
Consumer		6,195		6,314
		181,196		185,276
Allowance for loan losses		3,069		3,157
	$	178,127	$	182,119

Activity in the allowance for loan losses for the three months ended March 31, 2014 and 2013 and the year ended December 31, 2013 is summarized as follows (in thousands):

	March 31, 2014			December 31, 2013			March 31, 2013
Balance at beginning of period	$	3,157		$	3,509		$	3,509
Provision for loan losses		—			425			225
Loans charged-off		(200	)		(1,485	)		(388	)
Recoveries on loans previously charged-off		112			708			69
Balance at end of period	$	3,069		$	3,157		$	3,415

Activity in the allowance for loan losses by portfolio segment is summarized as follows (in thousands):

	For the Three Month Period Ended March 31, 2014
	Commercial		Commercial Real Estate			Single-family Residential			Construction & Development		Consumer			Total
Beginning balance	$	384	$	1,721		$	731		$	126	$	195		$	3,157
Provision for loan losses		—		—			—			—		—			—
Loans charged-off		—		(105	)		(52	)		—		(43	)		(200	)
Recoveries on loans charged-off		10		3			86			—		13			112
Ending Balance	$	394	$	1,619		$	765		$	126	$	165		$	3,069

	For the Three Month Period Ended March 31, 2013
	Commercial			Commercial Real Estate			Single-family Residential			Construction & Development			Consumer			Total
Beginning balance	$	433		$	1,853		$	803		$	177		$	243		$	3,509
Provision for loan losses		(31	)		14			136			39			67			225
Loans charged-off		(5	)		(65	)		(216	)		(30	)		(72	)		(388	)
Recoveries on loans charged-off		11			26			11			—			21			69
Ending Balance	$	408		$	1,828		$	734		$	186		$	259		$	3,415

	For the Year Ended December 31, 2013
	Commercial			Commercial Real Estate			Single-family Residential			Construction & Development			Consumer			Total
Beginning balance	$	433		$	1,853		$	803		$	177		$	243		$	3,509
Provision for loan losses		(68	)		127			361			(56	)		61			425
Loans charged-off		(22	)		(710	)		(554	)		(30	)		(169	)		(1,485	)
Recoveries on loans charged-off		41			451			121			35			60			708
Ending Balance	$	384		$	1,721		$	731		$	126		$	195		$	3,157

Portions of the allowance for loan losses may be allocated for specific loans or portfolio segments. However, the entire allowance for loan losses is available for any loan that, in the judgment of management, should be charged-off.

In determining our allowance for loan losses, we regularly review loans for specific reserves based on the appropriate impairment assessment methodology. Consumer residential loans are evaluated as a homogeneous population and therefore loans are not evaluated individually for impairment. General reserves are determined using historical loss trends measured over a rolling four quarter average for consumer loans, and a three year average loss factor for commercial loans which is applied to risk rated loans grouped by Federal Financial Examination Council (“FFIEC”) call code. For commercial loans, the general reserves are calculated by applying the appropriate historical loss factor to the loan pool. Impaired loans greater than a minimum threshold established by management are excluded from this analysis.   The sum of all such amounts determines our total allowance for loan losses. 

The allocation of the allowance for loan losses by portfolio segment was as follows (in thousands):

	At March 31, 2014
	Commercial		Commercial Real Estate		Single-family Residential		Construction & Development		Consumer		Total
Specific Reserves:
Impaired loans	$	—	$	42	$	11	$	—	$	—	$	53
Total specific reserves		—		42		11		—		—		53
General reserves		394		1,577		754		126		165		3,016
Total	$	394	$	1,619	$	765	$	126	$	165	$	3,069
Loans individually evaluated for impairment	$	—	$	10,928	$	490	$	—	$	—	$	11,418
Loans collectively evaluated for impairment		19,416		106,533		33,595		4,039		6,195		169,778
Total	$	19,416	$	117,461	$	34,085	$	4,039	$	6,195	$	181,196

	At December 31, 2013
	Commercial		Commercial Real Estate		Single-family Residential		Construction & Development		Consumer		Total
Specific Reserves:
Impaired loans	$	—	$	3	$	—	$	—	$	—	$	3
Total specific reserves		—		3		—		—		—		3
General reserves		384		1,718		731		126		195		3,154
Total	$	384	$	1,721	$	731	$	126	$	195	$	3,157
Loans individually evaluated for impairment	$	—	$	10,705	$	360	$	—	$	—	$	11,065
Loans collectively evaluated for impairment		20,292		109,475		34,504		3,626		6,314		174,211
Total	$	20,292	$	120,180	$	34,864	$	3,626	$	6,314	$	185,276

The following table presents impaired loans by class of loan (in thousands):

	At March 31, 2014
							Impaired Loans - With
	Impaired Loans - With Allowance						no Allowance
	Unpaid Principal		Recorded Investment		Allowance for Loan Losses Allocated		Unpaid Principal		Recorded Investment
Residential:
First mortgages	$	—	$	—	$	—	$	231	$	231
HELOC’s and equity		130		130		11		129		129
Commercial
Secured		—		—		—		—		—
Unsecured		—		—		—		—		—
Commercial Real Estate:
Owner occupied		—		—		—		10,753		8,442
Non-owner occupied		—		—		—		2,673		2,057
Multi-family		485		429		42		—		—
Construction and Development:
Construction		—		—		—		—		—
Improved Land		—		—		—		—		—
Unimproved Land		—		—		—		—		—
Consumer and Other		—		—		—		—		—
Total	$	615	$	559	$	53	$	13,786	$	10,859

The following table presents the average recorded investment and interest income recognized on impaired loans by class of loan (in thousands):

	Three Months				Three Months
	March 31, 2014				March 31, 2013
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Residential:
First mortgages	$	231	$	—	$	231	$	—
HELOC’s and equity		260		9		204		9
Commercial
Secured		—		—		—		—
Unsecured		—		—		—		—
Commercial Real Estate:
Owner occupied		8,523		252		7,898		199
Non-owner occupied		2,104		21		5,404		47
Multi-family		—		13		367		29
Construction and Development:				.				.
Construction		—		—		122		8
Improved Land		—		—		—		—
Unimproved Land		—		—		—		—
Consumer and Other		—		—		—		—
Total	$	11,118	$	295	$	14,226	$	292

	At December 31, 2013
							Impaired Loans - With
	Impaired Loans - With Allowance						no Allowance
	Unpaid Principal		Recorded Investment		Allowance for Loan Losses Allocated		Unpaid Principal		Recorded Investment		Average Recorded Investment		Interest Income Recognized
Residential:
First mortgages	$	—	$	—	$	—	$	231	$	231	$	231	$	—
HELOC’s and equity		—		—		—		129		129		128		2
Commercial
Secured		—		—		—		—		—		—		—
Unsecured		—		—		—		—		—		—		—
Commercial Real Estate:
Owner occupied		—		—		—		10,300		7,968		8,049		534
Non-owner occupied		—		—		—		2,924		2,407		2,516		108
Multi-family		386		330		3		—		—		359		28
Construction and Development														.
Construction		—		—		—		—		—		—		—
Improved Land		—		—		—		—		—		—		—
Unimproved Land		—		—		—		—		—		—		—
Consumer and Other		—		—				—		—		—		—
Total	$	386	$	330	$	3	$	13,584	$	10,735	$	11,283	$	672

The following table is an aging analysis of our loan portfolio (in thousands):

	At March 31, 2014
	30- 59 Days Past Due		60- 89 Days Past Due		Over 90 Days Past Due		Total Past Due		Current		Total Loans Receivable		Recorded Investment > 90 Days and  Accruing		Nonaccrual
Residential:
First mortgages	$	1,737	$	682	$	1,442	$	3,861	$	21,873	$	25,734	$	35	$	2,895
HELOC’s and equity		434		72		476		982		7,369		8,351		—		578
Commercial:
Secured		29		—		2		31		14,206		14,237		—		2
Unsecured		—		—		—		—		5,179		5,179		—		—
Commercial Real Estate
Owner occupied		750		—		254		1,004		60,260		61,264		—		1,211
Non-owner occupied		—		—		128		128		41,422		41,550		—		1,402
Multi-family		—		332		—		332		14,315		14,647		—		332
Construction and  Development:
Construction		43		—		—		43		3,788		3,831		—		—
Improved Land		—		—		—		—		208		208		—		—
Unimproved Land		—		—		—		—		—		—		—		—
Consumer and Other		11		8		42		61		6,134		6,195		—		42
Total	$	3,004	$	1,094	$	2,344	$	6,442	$	174,754	$	181,196	$	35	$	6,462

	At December 31, 2013
	30- 59 Days Past Due		60- 89 Days Past Due		Over 90 Days Past Due		Total Past Due		Current		Total Loans Receivable		Recorded Investment > 90 Days and  Accruing		Nonaccrual
Residential:
First mortgages	$	1,778	$	360	$	1,840	$	3,978	$	22,348	$	26,326	$	—	$	3,334
HELOC’s and equity		444		19		466		929		7,609		8,538		—		821
Commercial:
Secured		125		—		2		127		14,906		15,033		—		2
Unsecured		—		—		—		—		5,259		5,259		—		—
Commercial Real Estate:
Owner occupied		715		753		81		1,549		60,090		61,639		—		1,038
Non-owner occupied		38		199		286		523		43,287		43,810		—		1,550
Multi-family		747		—		—		747		13,984		14,731		—		330
Construction and  Development
Construction		477		—		—		477		2,542		3,019		—		—
Improved Land		—		—		—		—		242		242		—		—
Unimproved Land		—		—		—		—		365		365		—		—
Consumer and Other		6		30		45		81		6,233		6,314		—		45
Total	$	4,330	$	1,361	$	2,720	$	8,411	$	176,865	$	185,276	$	—	$	7,120

Each of our portfolio segments and the classes within those segments are subject to risks that could have an adverse impact on the credit quality of our loan and lease portfolio. Management has identified the most significant risks as described below which are generally similar among our segments and classes. While the list is not exhaustive, it provides a description of the risks that management has determined are the most significant.

Commercial, financial and agricultural loans—We centrally underwrite each of our commercial loans based primarily upon the customer’s ability to generate the required cash flow to service the debt in accordance with the contractual terms and conditions of the loan agreement. We endeavor to gain a complete understanding of our borrower’s businesses including the experience and background of the principals. To the extent that the loan is secured by collateral, which is a predominant feature of the majority of our commercial loans, we gain an understanding of the likely value of the collateral and what level of strength the collateral brings to the loan transaction. To the extent that the principals or other parties provide personal guarantees, we analyze the relative financial strength and liquidity of each guarantor. Common risks to each class of commercial loans include risks that are not specific to individual transactions such as general economic conditions within our markets, as well as risks that are specific to each transaction including demand for products and services, personal events such as disability or change in marital status, and reductions in the value of our collateral. Due to the concentration of loans in the metro Atlanta and Birmingham areas, we are susceptible to changes in market and economic conditions of these areas.

Consumer—The installment loan portfolio includes loans secured by personal property such as automobiles, marketable securities, other titled recreational vehicles and motorcycles, as well as unsecured consumer debt. The value of underlying collateral within this class is especially volatile due to potential rapid depreciation in values since date of loan origination in excess of principal repayment.

Commercial Real Estate—Real estate commercial loans consist of loans secured by multifamily housing, commercial non-owner and owner occupied and other commercial real estate loans. The primary risk associated with multifamily loans is the ability of the income-producing property that collateralizes the loan to produce adequate cash flow to service the debt. High unemployment or generally weak economic conditions may result in our customer having to provide rental rate concessions to achieve adequate occupancy rates. Commercial owner-occupied and other commercial real estate loans are primarily dependent on the ability of our customers to achieve business results consistent with those projected at loan origination resulting in cash flow sufficient to service the debt. To the extent that a customer’s business results are significantly unfavorable versus the original projections, the ability for our loan to be serviced on a basis consistent with the contractual terms may be at risk. These loans are primarily secured by real property and can include other collateral such as personal guarantees, personal property, or business assets such as inventory or accounts receivable, it is possible that the liquidation of the collateral will not fully satisfy the obligation. Also, due to the concentration of loans in the metro Atlanta and Birmingham areas, we are susceptible to changes in market and economic conditions of these areas.

Single-family Residential— Real estate residential loans are to individuals and are secured by 1-4 family residential property. Significant and rapid declines in real estate values can result in residential mortgage loan borrowers having debt levels in excess of the current market value of the collateral. Such a decline in values has led to unprecedented levels of foreclosures and losses during 2008-2012 within the banking industry.

Construction and Development—Real estate construction loans are highly dependent on the supply and demand for residential and commercial real estate in the markets we serve as well as the demand for newly constructed commercial space and residential homes and lots that our customers are developing. Continuing deterioration in demand could result in significant decreases in the underlying collateral values and make repayment of the outstanding loans more difficult for our customers. Real estate construction loans can experience delays in completion and cost overruns that exceed the borrower’s financial ability to complete the project. Such cost overruns can routinely result in foreclosure of partially completed and unmarketable collateral.

Risk categories—The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. Loans classified as substandard or special mention are reviewed quarterly by the Company for further deterioration or improvement to determine if appropriately classified and impairment, if any. All other loan relationships greater than $750,000 are reviewed at least annually to determine the appropriate loan grading. In addition, during the renewal process of any loan, as well as if a loan becomes past due, the Company will evaluate the loan grade.

Loans excluded from the scope of the annual review process above are generally classified as pass credits until: (a) they become past due; (b) management becomes aware of deterioration in the credit worthiness of the borrower; or (c) the customer contacts the Company for a modification. In these circumstances, the loan is specifically evaluated for potential classification as to special mention, substandard or even charged off. The Company uses the following definitions for risk ratings:

Special Mention Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Substandard Loans classified as substandard are inadequately protected by the current net worth and payment capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

The following table presents our loan portfolio by risk rating (in thousands):

	At March 31, 2014
	Total		Pass Credits		Special Mention		Substandard		Doubtful
Residential:
First mortgages	$	25,734	$	23,363	$	176	$	2,195	$	—
HELOC’s and equity		8,351		7,224		310		704		113
Commercial:
Secured		14,237		14,215		—		22		—
Unsecured		5,179		5,179		—		—		—
Commercial Real Estate:
Owner occupied		61,264		48,187		8,312		4,765		—
Non-owner occupied		41,550		38,528		807		2,215		—
Multi-family		14,647		13,524		647		445		31
Construction and Development:
Construction		3,831		3,470		—		361		—
Improved Land		208		165		—		43		—
Unimproved Land		—		—		—		—		—
Consumer and Other		6,195		6,105		—		76		14
Total	$	181,196	$	159,960	$	10,252	$	10,826	$	158

	At December 31, 2013
	Total		Pass Credits		Special Mention		Substandard		Doubtful
Residential:
First mortgages	$	26,326	$	24,126	$	—	$	2,200	$	—
HELOC’s and equity		8,538		7,686		22		728		102
Commercial:
Secured		15,033		15,009		—		24		—
Unsecured		5,259		5,259		—		—		—
Commercial Real Estate:
Owner occupied		61,639		50,921		5,929		4,789		—
Non-owner occupied		43,810		40,482		819		2,509		—
Multi-family		14,731		13,704		647		380		—
Construction and Development:
Construction		3,019		3,019		—		—		—
Improved Land		242		197		—		45		—
Unimproved Land		365		—		—		365		—
Consumer and Other		6,314		6,224		—		90		—
Total	$	185,276	$	166,627	$	7,417	$	11,130	$	102

During the three months ended March 31, 2014 the bank modified no loans that were considered to be troubled debt restructurings. During the three months ended March 31, 2013, the Bank modified two loans that were considered to be troubled debt restructurings. We extended the terms and decreased the interest rate on both loans (dollar in thousands).

	March 31, 2013
	Number of Loans		Pre-Modification Recorded Investment		Post-Modification Recorded Investment
Troubled Debt Restructurings
Commercial Real Estate:
Owner occupied		1	$	198	$	198
Non-owner occupied		1		62		62
Total		2	$	260	$	260

There were no loans restructured during the last twelve months that have experienced payment default subsequent to restructuring during the three months ended March 31, 2014 and 2013, respectively.

The Company considers a default as failure to comply with the restructured loan agreement. This would include the restructured loan being past due greater than 90 days, failure to comply with financial covenants, or failure to maintain current insurance coverage or real estate taxes after the loan restructure date.

XML

INTANGIBLE ASSETS (Tables)

3 Months Ended

Mar. 31, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of intangible assets

The following table presents information about the Company’s intangible assets (in thousands):

	March 31, 2014				December 31, 2013
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Unamortized intangible asset:
Goodwill	$	362	$	—	$	362	$	—
Amortized intangible assets:
Core deposit intangibles	$	3,303	$	2,360	$	3,303	$	2,242

Schedule of aggregate amortization expense

The following table presents information about aggregate amortization expense (in thousands):

	Three months ended March 31,
	2014		2013
Aggregate amortization expense of core deposit intangibles:	$	118	$	118
Estimated aggregate amortization expense of core deposit intangibles for the years ending December 31:
2014	$	472
2015	$	472
2016	$	118
2017 and thereafter	$	—

XML

INVESTMENTS (Tables)

3 Months Ended

Mar. 31, 2014

Investments, Debt and Equity Securities [Abstract]

Schedule of investment securities available for sale

Investment securities available for sale are summarized as follows (in thousands):

At March 31, 2014	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
State, county, and municipal securities	$	33,536	$	1,349	$	—	$	34,885
Mortgage-backed securities		95,431		405		2,327		93,509
Corporate securities		9,821		183		9		9,995
Totals	$	138,788	$	1,937	$	2,336	$	138,389

At December 31, 2013	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
State, county, and municipal securities	$	33,735	$	1,097	$	30	$	34,802
Mortgage-backed securities		99,143		347		3,223		96,267
Corporate securities		9,806		180		10		9,976
Totals	$	142,684	$	1,624	$	3,263	$	141,045

Schedule of investment securities held to maturity

Investment securities held to maturity are summarized as follows (in thousands):

At March 31, 2014	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
State, county, and municipal securities	$	240	$	—	$	—	$	240

At December 31, 2013	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
State, county, and municipal securities	$	240	$	—	$	—	$	240

Schedule of amortized costs and fair values of investment securities, by contractual maturity

The amortized costs and fair values of investment securities at March 31, 2014, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with and without call or prepayment penalties (in thousands).

	Available for Sale				Held to Maturity
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Due in one year or less	$	—	$	—	$	—	$	—
Due after one year through five years		13,297		13,647		240		240
Due after five years through ten years		29,620		30,429		—		—
Due after ten years		95,871		94,313		—		—
	$	138,788	$	138,389	$	240	$	240

Schedule of investments' gross unrealized losses and fair value, aggregated by investment category and length of time that the individual securities have been in a continuous unrealzied loss position

The following tables show investments’ gross unrealized losses and fair value, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position, at March 31, 2014 and December 31, 2013. Except as explicitly identified below, all unrealized losses on investment securities are considered by management to be temporarily impaired given the credit ratings on these investment securities and the short duration of the unrealized loss (in thousands).

At March 31, 2014

Securities Available for Sale

	Securities in a loss position  for less than twelve months					Securities in a loss position  for twelve months or more					Total
	Fair value		Unrealized losses			Fair value		Unrealized losses			Fair value		Unrealized losses
Mortgage-backed securities	$	65,808	$	(2,098	)	$	5,047	$	(229	)	$	70,855	$	(2,327	)
Corporate		1,991		(9	)		—		—			1,991		(9	)
Total	$	67,799	$	(2,107	)	$	5,047	$	(229	)	$	72,846	$	(2,336	)

Securities Held to Maturity

There were no securities classified as held to maturity in an unrealized loss position at March 31, 2014.

At December 31, 2013

Securities Available for Sale

	Securities in a loss position  for less than twelve months					Securities in a loss position  for twelve months or more					Total
	Fair value		Unrealized losses			Fair value		Unrealized losses			Fair value		Unrealized losses
Municipal securities	$	2,775	$	(30	)	$	—	$	—		$	2,775	$	(30	)
Mortgage-backed securities		68,420		(2,907	)		5,136		(316	)		73,556		(3,223	)
Corporate		1,990		(10	)		—		—			1,990		(10	)
Total	$	73,185	$	(2,947	)	$	5,136	$	(316	)	$	78,321	$	(3,263	)

Securities Held to Maturity

There were no securities classified as held to maturity in an unrealized loss position at December 31, 2013.

XML

NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE

3 Months Ended

Mar. 31, 2014

Earnings Per Share [Abstract]

NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE

7. NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE

Basic and diluted net income per share available to common and potential common stockholders has been calculated based on the weighted average number of shares outstanding. Options that are potentially dilutive for the three months ended March 31, 2014 and 2013 due to the exercise price of all options being greater than the average market price of the Company’s stock during the period. As of March 31, 2014 and 2013 there were 49,277 potentially diluted options outstanding. The following schedule reconciles the numerator and denominator of the basic and diluted net income per share available to common and potential common stockholders for the three months ended March 31, 2014 and 2013 (in thousands, except per share data):

	Net Income		Shares		Per Share
	(Numerator)		(Denominator)		Amount
Three Months ended March 31, 2014
Basic earnings per share available to common stockholders	$	357		2,161	$	0.17
Nonvested restricted stock grant		—		10		(0.01	)
Effect of dilutive securities: options to purchase common shares		—		—		—
Diluted earnings per share	$	357		2,171	$	0.16
Three Months ended March 31, 2013
Basic earnings per share available to common stockholders	$	213		2,146	$	0.10
Nonvested restricted stock grant		—		6		—
Effect of dilutive securities: options to purchase common shares		—		—		—
Diluted earnings per share	$	213		2,152	$	0.10

XML

OTHER REAL ESTATE OWNED

3 Months Ended

Mar. 31, 2014

Real Estate [Abstract]

OTHER REAL ESTATE OWNED

5. OTHER REAL ESTATE OWNED

Other real estate owned is reported at the lower of cost or fair value less estimated disposal costs, determined on the basis of current appraisals, comparable sales, and other estimates of value obtained principally from independent sources. Any excess of the loan balance at the time of foreclosure over the fair value of the real estate held as collateral is treated as a charge-off against the allowance for loan losses. Any subsequent declines in value are charged to earnings. Transactions in other real estate owned are summarized below (in thousands):

	March 31,			December 31,
	2014			2013
Balance—beginning of period	$	7,404		$	8,195
Additions		410			3,901
Sales		(857	)		(4,076	)
Write downs		(206	)		(616	)
Balance—end of period	$	6,751		$	7,404

XML

INTANGIBLE ASSETS

3 Months Ended

Mar. 31, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

INTANGIBLE ASSETS

6. INTANGIBLE ASSETS

Finite lived intangible assets of the Company represent deposit assumption premiums recorded upon the purchase of certain assets and liabilities from other financial institutions. Deposit assumption premiums are amortized over seven years, the estimated average lives of the deposit bases acquired, using the straight-line method and are included within other assets on the Condensed Consolidated Balance Sheets.

The Company applies a fair value-based impairment test to the carrying value of goodwill on an annual basis and on an interim basis if certain events or circumstances indicate that an impairment loss may have been incurred.

The following table presents information about the Company’s intangible assets (in thousands):

	March 31, 2014				December 31, 2013
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Unamortized intangible asset:
Goodwill	$	362	$	—	$	362	$	—
Amortized intangible assets:
Core deposit intangibles	$	3,303	$	2,360	$	3,303	$	2,242

The following table presents information about aggregate amortization expense (in thousands):

	Three months ended March 31,
	2014		2013
Aggregate amortization expense of core deposit intangibles:	$	118	$	118
Estimated aggregate amortization expense of core deposit intangibles for the years ending December 31:
2014	$	472
2015	$	472
2016	$	118
2017 and thereafter	$	—

XML

SUBSEQUENT EVENTS

3 Months Ended

Mar. 31, 2014

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

8. SUBSEQUENT EVENTS

The Company evaluated subsequent events through the date its financial statements were issued.

XML

LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES (Details 3) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2013	Dec. 31, 2012
Allocation of allowance for loan losses by portfolio segment
Specific Reserves, Impaired loans	$ 53	$ 3
Total specific reserves	53	3
General reserves	3,016	3,154
Total	3,069	3,157	3,415	3,509
Loans individually evaluated for impairment	11,418	11,065
Loans collectively evaluated for impairment	169,778	174,211
Total	181,196	185,276
Commercial Financial and Agricultural Portfolio Segment [Member]
Allocation of allowance for loan losses by portfolio segment
Specific Reserves, Impaired loans
Total specific reserves
General reserves	394	384
Total	394	384	408	433
Loans individually evaluated for impairment
Loans collectively evaluated for impairment	19,416	20,292
Total	19,416	20,292
Commercial Real Estate Portfolio Segment [Member]
Allocation of allowance for loan losses by portfolio segment
Specific Reserves, Impaired loans	42	3
Total specific reserves	42	3
General reserves	1,577	1,718
Total	1,619	1,721	1,828	1,853
Loans individually evaluated for impairment	10,928	10,705
Loans collectively evaluated for impairment	106,533	109,475
Total	117,461	120,180
Single Family Residential Mortgage [Member]
Allocation of allowance for loan losses by portfolio segment
Specific Reserves, Impaired loans	11
Total specific reserves	11
General reserves	754	731
Total	765	731	734	803
Loans individually evaluated for impairment	490	360
Loans collectively evaluated for impairment	33,595	34,504
Total	34,085	34,864
Construction and Development Portfolio Segment [Member]
Allocation of allowance for loan losses by portfolio segment
Specific Reserves, Impaired loans
Total specific reserves
General reserves	126	126
Total	126	126	186	177
Loans individually evaluated for impairment
Loans collectively evaluated for impairment	4,039	3,626
Total	4,039	3,626
Consumer Portfolio Segment [Member]
Allocation of allowance for loan losses by portfolio segment
Specific Reserves, Impaired loans
Total specific reserves
General reserves	165	195
Total	165	195	259	243
Loans individually evaluated for impairment
Loans collectively evaluated for impairment	6,195	6,314
Total	$ 6,195	$ 6,314

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

3 Months Ended

Mar. 31, 2014

Fair Value Disclosures [Abstract]

Schedule of financial assets measured at fair value on a recurring and nonrecurring basis and the change in fair value for those specific financial instruments in which fair value has been elected

The following tables present financial assets measured at fair value on a recurring and nonrecurring basis and the change in fair value for those specific financial instruments in which fair value has been elected. (there were no financial liabilities measured at fair value for the periods being reported) (in thousands):

	Fair Value Measurements at March 31, 2014
			Quoted Prices
			In Active		Significant
			Markets for		Other		Significant
	Assets		Identical		Observable		Unobservable
	Measured at		Assets		Inputs		Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
Recurring Basis:
Assets
Securities available for sale:
State, county, and municipal securities	$	34,885	$	—	$	34,885	$	—
Mortgage-backed securities		93,509		—		93,509		—
Corporate securities		9,995		—		9,995		—
		138,389		—		138,389		—
Nonrecurring Basis:
Assets
Collateral Dependent Impaired loans:
Commercial Real Estate	$	10,886	$	—	$	—	$	10,886
Single-family Residential		479		—		—		479
Other real estate owned		6,752		—		—		6,752
		18,117		—		—		18,117

	Fair Value Measurements at December 31, 2013
			Quoted Prices
			In Active		Significant
			Markets for		Other		Significant
	Assets		Identical		Observable		Unobservable
	Measured at		Assets		Inputs		Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
Recurring Basis:
Assets
Securities available for sale:
State, county, and municipal securities	$	34,802	$	—	$	34,802	$	—
Mortgage-backed securities		96,267		—		96,267		—
Corporate securities		9,976		—		9,976		—
		141,045		—		141,045		—
Nonrecurring Basis:
Assets
Collateral Dependent Impaired loans:
Commercial Real Estate	$	10,702	$	—	$	—	$	10,702
Single-family Residential		360		—		—		360
Other real estate owned		7,404		—		—		7,404
		18,466		—		—		18,466

Significant unobservable inputs used for assets and liabilities measured at fair value on a recurring or non-recurring basis

For Level 3 assets and liabilities measured at fair value on a recurring or non-recurring basis as of March 31, 2014, the significant unobservable inputs used in the fair value measurements were as follows (dollars in thousands):

	Fair Value at	Valuation	Unobservable
	March 31, 2014	Technique	Inputs	Range
Collateral Dependent Impaired Loans:
Commercial Real Estate	$                      10,886	Appraised Value	Negative adjustment for selling costs and changes in market conditions since appraisal	5% - 20%
Single-family Residential	$                            479	Appraised Value	Negative adjustment for selling costs and changes in market conditions since appraisal	5% - 20%
OREO	$                        6,752	Appraised Value	Negative adjustment for selling costs and changes in market conditions since appraisal	5% - 20%

As of December 31, 2013, the significant unobservable inputs used in the fair value measurements were as follows (dollars in thousands):

	Fair Value at	Valuation	Unobservable
	December 31, 2013	Technique	Inputs	Range
Collateral Dependent Impaired Loans:
Commercial Real Estate	$                      10,702	Appraised Value	Negative adjustment for selling costs and changes in market conditions since appraisal	5% - 20%
Single-family Residential	$                            360	Appraised Value	Negative adjustment for selling costs and changes in market conditions since appraisal	5% - 20%
OREO	$                        7,404	Appraised Value	Negative adjustment for selling costs and changes in market conditions since appraisal	5% - 20%

Schedule of carrying values and estimated fair values of the Company's financial instruments

The following presents the carrying amount, fair value, and placement in the fair value hierarchy of the Company’s financial instruments as of March 31, 2014 (in thousands):

	March 31, 2014
	Carrying		Fair Value Measurements
	Amount		Total		Level 1		Level 2		Level 3
Financial assets:
Cash and due from banks	$	5,322	$	5,322	$	5,322	$	—	$	—
Interest-bearing deposits with banks		43,889		43,889		43,889		—		—
Certificates of deposit		350		350		350		—		—
Investment securities		138,629		138,629		—		138,629		—
Other investments		748		748		748		—		—
Loans—net		178,127		178,797		—		—		178,797
Cash surrender value of life insurance		10,008		10,008		10,008		—		—
Financial liabilities:
Deposits		348,190		348,996		208,534		140,462		—
Advances from Federal Home Loan Bank		268		268		—		268		—
	Notional		Estimated
	Amount		Fair Value
Off-balance-sheet financial instruments:
Commitments to extend credit	$	24,499		—
Commercial letters of credit	$	2,027		—

The carrying values and estimated fair values of the Company’s financial instruments at December 31, 2013 are as follows:

	December 31, 2013
	Carrying		Fair Value Measurements
	Amount		Total		Level 1		Level 2		Level 3
Financial assets:
Cash and due from banks	$	6,340	$	6,340	$	6,340	$	—	$	—
Interest-bearing deposits with banks		22,827		22,827		22,827		—		—
Certificates of deposit		350		350		350		—		—
Investment securities		141,285		141,285		—		141,285		—
Other investments		874		874		874		—		—
Loans—net		182,119		183,150		—		—		183,150
Cash surrender value of life insurance		9,948		9,948		9,948		—		—
Financial liabilities:
Deposits		336,962		337,768		195,884		141,884		—
Advances from Federal Home Loan Bank		273		273		—		273		—
	Notional		Estimated
	Amount		Fair Value
Off-balance-sheet financial instruments:
Commitments to extend credit	$	26,313		—
Commercial letters of credit	$	2,125		—

XML

INVESTMENTS (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Amortized Cost	$ 138,788	$ 142,684
Gross Unrealized Gains	1,937	1,624
Gross Unrealized Losses	2,336	3,263
Total	138,389	141,045
State, county and municipal securities [Member]
Amortized Cost	33,536	33,735
Gross Unrealized Gains	1,349	1,097
Gross Unrealized Losses		30
Total	34,885	34,802
Mortgage Backed Securities [Member]
Amortized Cost	95,431	99,143
Gross Unrealized Gains	405	347
Gross Unrealized Losses	2,327	3,223
Total	93,509	96,267
Corporate Securities [Member]
Amortized Cost	9,821	9,806
Gross Unrealized Gains	183	180
Gross Unrealized Losses	9	10
Total	$ 9,995	$ 9,976

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 2) (USD $)						3 Months Ended	12 Months Ended	3 Months Ended	12 Months Ended			3 Months Ended	12 Months Ended	3 Months Ended	12 Months Ended			3 Months Ended	12 Months Ended	3 Months Ended	12 Months Ended
	Mar. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Mar. 31, 2014 Fair Value, Inputs, Level 3 [Member] Commercial Real Estate Portfolio Segment [Member]	Dec. 31, 2013 Fair Value, Inputs, Level 3 [Member] Commercial Real Estate Portfolio Segment [Member]	Mar. 31, 2014 Fair Value, Inputs, Level 3 [Member] Commercial Real Estate Portfolio Segment [Member] Minimum [Member]	Dec. 31, 2013 Fair Value, Inputs, Level 3 [Member] Commercial Real Estate Portfolio Segment [Member] Minimum [Member]	Mar. 31, 2014 Fair Value, Inputs, Level 3 [Member] Commercial Real Estate Portfolio Segment [Member] Maximum [Member]	Dec. 31, 2013 Fair Value, Inputs, Level 3 [Member] Commercial Real Estate Portfolio Segment [Member] Maximum [Member]	Mar. 31, 2014 Fair Value, Inputs, Level 3 [Member] Single Family Residential Mortgage [Member]	Dec. 31, 2013 Fair Value, Inputs, Level 3 [Member] Single Family Residential Mortgage [Member]	Mar. 31, 2014 Fair Value, Inputs, Level 3 [Member] Single Family Residential Mortgage [Member] Minimum [Member]	Dec. 31, 2013 Fair Value, Inputs, Level 3 [Member] Single Family Residential Mortgage [Member] Minimum [Member]	Mar. 31, 2014 Fair Value, Inputs, Level 3 [Member] Single Family Residential Mortgage [Member] Maximum [Member]	Dec. 31, 2013 Fair Value, Inputs, Level 3 [Member] Single Family Residential Mortgage [Member] Maximum [Member]	Mar. 31, 2014 Fair Value, Inputs, Level 3 [Member] Other real estate owned [Member]	Dec. 31, 2013 Fair Value, Inputs, Level 3 [Member] Other real estate owned [Member]	Mar. 31, 2014 Fair Value, Inputs, Level 3 [Member] Other real estate owned [Member] Minimum [Member]	Dec. 31, 2013 Fair Value, Inputs, Level 3 [Member] Other real estate owned [Member] Minimum [Member]	Mar. 31, 2014 Fair Value, Inputs, Level 3 [Member] Other real estate owned [Member] Maximum [Member]	Dec. 31, 2013 Fair Value, Inputs, Level 3 [Member] Other real estate owned [Member] Maximum [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Negative adjustment for selling costs and changes in market conditions since appraisal (as a percent)						5.00%	5.00%	20.00%	20.00%			5.00%	5.00%	20.00%	20.00%			5.00%	20.00%	20.00%	5.00%
Collateral Dependent Impaired loans				$ 10,886	$ 10,702					$ 479	$ 360
Other real estate owned	$ 6,751,000	$ 7,404,000	$ 8,195,000													$ 6,752	$ 7,404

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Consolidated Statements Of Comprehensive Income
Net Income	$ 416	$ 272
Other Comprehensive Income (Loss)
Unrealized holding gain (loss) on investment securities available for sale, net of tax of $421 for 2014 and $44 for 2013	819	(87)
Reclassification adjustment for holding gains included in net income, net of tax of $ — and $48 for 2014 and 2013, respectively		(93)
Other Comprehensive Income (Loss)	819	(180)
Total Comprehensive Income	$ 1,235	$ 92

XML

INVESTMENTS

3 Months Ended

Mar. 31, 2014

Investments, Debt and Equity Securities [Abstract]

INVESTMENTS

2. INVESTMENTS

Investment securities available for sale are summarized as follows (in thousands):

At March 31, 2014	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
State, county, and municipal securities	$	33,536	$	1,349	$	—	$	34,885
Mortgage-backed securities		95,431		405		2,327		93,509
Corporate securities		9,821		183		9		9,995
Totals	$	138,788	$	1,937	$	2,336	$	138,389

At December 31, 2013	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
State, county, and municipal securities	$	33,735	$	1,097	$	30	$	34,802
Mortgage-backed securities		99,143		347		3,223		96,267
Corporate securities		9,806		180		10		9,976
Totals	$	142,684	$	1,624	$	3,263	$	141,045

Investment securities held to maturity are summarized as follows (in thousands):

At March 31, 2014	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
State, county, and municipal securities	$	240	$	—	$	—	$	240

At December 31, 2013	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
State, county, and municipal securities	$	240	$	—	$	—	$	240

The amortized costs and fair values of investment securities at March 31, 2014, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with and without call or prepayment penalties (in thousands).

	Available for Sale				Held to Maturity
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Due in one year or less	$	—	$	—	$	—	$	—
Due after one year through five years		13,297		13,647		240		240
Due after five years through ten years		29,620		30,429		—		—
Due after ten years		95,871		94,313		—		—
	$	138,788	$	138,389	$	240	$	240

Securities with carrying values of $103,762,000 and $102,728,000 as of March 31, 2014 and December 31, 2013, respectively, were pledged to secure public deposits, FHLB advances and a $18,903,000 line of credit at the Federal Reserve Bank discount window and for other purposes as required by law.

For the three months ended March 31, 2013, proceeds from the sale of securities was $1,082,000. There were no sale of securities during the three months ended March 31, 2014. Gross realized gains on the sale of securities for the three months ended March 31, 2013 was $141,000. There were no gross realized losses on sales of securities for the three month period ended March 31, 2014 and 2013, respectively.

The Company’s investment portfolio consists principally of obligations of the United States, its agencies, or its corporations, general obligation and revenue municipals and corporate securities. In the opinion of management, there is no concentration of credit risk in its investment portfolio. The company places its deposits and correspondent accounts with and sells its federal funds to high quality institutions. Management believes credit risk associated with correspondent accounts is not significant.

The following tables show investments’ gross unrealized losses and fair value, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position, at March 31, 2014 and December 31, 2013. Except as explicitly identified below, all unrealized losses on investment securities are considered by management to be temporarily impaired given the credit ratings on these investment securities and the short duration of the unrealized loss (in thousands).

At March 31, 2014

Securities Available for Sale

	Securities in a loss position  for less than twelve months					Securities in a loss position  for twelve months or more					Total
	Fair value		Unrealized losses			Fair value		Unrealized losses			Fair value		Unrealized losses
Mortgage-backed securities	$	65,808	$	(2,098	)	$	5,047	$	(229	)	$	70,855	$	(2,327	)
Corporate		1,991		(9	)		—		—			1,991		(9	)
Total	$	67,799	$	(2,107	)	$	5,047	$	(229	)	$	72,846	$	(2,336	)

Securities Held to Maturity

There were no securities classified as held to maturity in an unrealized loss position at March 31, 2014.

At December 31, 2013

Securities Available for Sale

	Securities in a loss position  for less than twelve months					Securities in a loss position  for twelve months or more					Total
	Fair value		Unrealized losses			Fair value		Unrealized losses			Fair value		Unrealized losses
Municipal securities	$	2,775	$	(30	)	$	—	$	—		$	2,775	$	(30	)
Mortgage-backed securities		68,420		(2,907	)		5,136		(316	)		73,556		(3,223	)
Corporate		1,990		(10	)		—		—			1,990		(10	)
Total	$	73,185	$	(2,947	)	$	5,136	$	(316	)	$	78,321	$	(3,263	)

Securities Held to Maturity

There were no securities classified as held to maturity in an unrealized loss position at December 31, 2013.

The Company’s available for sale portfolio had three investment securities at March 31, 2014 that were in an unrealized loss position for longer than twelve months. At December 31, 2013, the Company had two investment securities that were in an unrealized loss position for longer than twelve months. The Company reviews these securities for other-than-temporary impairment on a quarterly basis by monitoring their credit support and coverage, constant payment of the contractual principal and interest, loan to value and delinquencies ratios.

We use prices from third party pricing services and, to a lesser extent, indicative (non-binding) quotes from third party brokers, to measure fair value of our investment securities. Fair values of the investment securities portfolio could decline in the future if the underlying performance of the collateral for collateralized mortgage obligations or other securities deteriorates and the levels do not provide sufficient protection for contractual principal and interest. As a result, there is risk that an other-than-temporary impairment may occur in the future particularly in light of the current economic environment.

As of the date of its evaluation, the Company did not intend to sell and has the ability to hold these securities and it is more likely than not that the Company will not be required to sell those securities before recovery of its amortized cost or the security matures. The Company believes, based on industry analyst reports and credit ratings, that it will continue to receive scheduled interest payments as well as the entire principal balance, and the deterioration in value is attributable to changes in market interest rates and is not in the credit quality of the issuer and therefore, these losses are not considered other-than-temporary.

XML

INVESTMENTS (Details 2) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Amortized Cost	$ 240	$ 240
Fair Value	240
State, county and municipal securities [Member]
Amortized Cost	240	240
Gross Unrealized Gains
Gross Unrealized Losses
Fair Value	$ 240	$ 240

XML

LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES (Details 7) (Troubled Debt Restructuring [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013 item
Financing Receivable, Modifications [Line Items]
Number of Loans	2
Pre-Modification Recorded Investment	$ 260
Post-Modification Recorded Investment	260
Owner Occupied Financing Receivable [Member] | Commercial Real Estate Portfolio Segment [Member]
Financing Receivable, Modifications [Line Items]
Number of Loans	1
Pre-Modification Recorded Investment	198
Post-Modification Recorded Investment	198
Non Owner Occupied Financing Receivable [Member] | Commercial Real Estate Portfolio Segment [Member]
Financing Receivable, Modifications [Line Items]
Number of Loans	1
Pre-Modification Recorded Investment	62
Post-Modification Recorded Investment	$ 62

XML

LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES (Tables)

3 Months Ended

Mar. 31, 2014

Loans and Leases Receivable Disclosure [Abstract]

Summary of loans outstanding, by classification

Loans outstanding, by classification, are summarized as follows (in thousands):

	March 31,		December 31,
	2014		2013
Commercial, financial, and agricultural	$	19,416	$	20,292
Commercial Real Estate		117,461		120,180
Single-Family Residential		34,085		34,864
Construction and Development		4,039		3,626
Consumer		6,195		6,314
		181,196		185,276
Allowance for loan losses		3,069		3,157
	$	178,127	$	182,119

Summary of activity in allowance for loan losses

Activity in the allowance for loan losses for the three months ended March 31, 2014 and 2013 and the year ended December 31, 2013 is summarized as follows (in thousands):

	March 31, 2014			December 31, 2013			March 31, 2013
Balance at beginning of period	$	3,157		$	3,509		$	3,509
Provision for loan losses		—			425			225
Loans charged-off		(200	)		(1,485	)		(388	)
Recoveries on loans previously charged-off		112			708			69
Balance at end of period	$	3,069		$	3,157		$	3,415

Summary of activity in the allowance for loan losses by portfolio segment

Activity in the allowance for loan losses by portfolio segment is summarized as follows (in thousands):

	For the Three Month Period Ended March 31, 2014
	Commercial		Commercial Real Estate			Single-family Residential			Construction & Development		Consumer			Total
Beginning balance	$	384	$	1,721		$	731		$	126	$	195		$	3,157
Provision for loan losses		—		—			—			—		—			—
Loans charged-off		—		(105	)		(52	)		—		(43	)		(200	)
Recoveries on loans charged-off		10		3			86			—		13			112
Ending Balance	$	394	$	1,619		$	765		$	126	$	165		$	3,069

	For the Three Month Period Ended March 31, 2013
	Commercial			Commercial Real Estate			Single-family Residential			Construction & Development			Consumer			Total
Beginning balance	$	433		$	1,853		$	803		$	177		$	243		$	3,509
Provision for loan losses		(31	)		14			136			39			67			225
Loans charged-off		(5	)		(65	)		(216	)		(30	)		(72	)		(388	)
Recoveries on loans charged-off		11			26			11			—			21			69
Ending Balance	$	408		$	1,828		$	734		$	186		$	259		$	3,415

	For the Year Ended December 31, 2013
	Commercial			Commercial Real Estate			Single-family Residential			Construction & Development			Consumer			Total
Beginning balance	$	433		$	1,853		$	803		$	177		$	243		$	3,509
Provision for loan losses		(68	)		127			361			(56	)		61			425
Loans charged-off		(22	)		(710	)		(554	)		(30	)		(169	)		(1,485	)
Recoveries on loans charged-off		41			451			121			35			60			708
Ending Balance	$	384		$	1,721		$	731		$	126		$	195		$	3,157

Schedule of allocation of allowance for loan losses by portfolio segment

The allocation of the allowance for loan losses by portfolio segment was as follows (in thousands):

	At March 31, 2014
	Commercial		Commercial Real Estate		Single-family Residential		Construction & Development		Consumer		Total
Specific Reserves:
Impaired loans	$	—	$	42	$	11	$	—	$	—	$	53
Total specific reserves		—		42		11		—		—		53
General reserves		394		1,577		754		126		165		3,016
Total	$	394	$	1,619	$	765	$	126	$	165	$	3,069
Loans individually evaluated for impairment	$	—	$	10,928	$	490	$	—	$	—	$	11,418
Loans collectively evaluated for impairment		19,416		106,533		33,595		4,039		6,195		169,778
Total	$	19,416	$	117,461	$	34,085	$	4,039	$	6,195	$	181,196

	At December 31, 2013
	Commercial		Commercial Real Estate		Single-family Residential		Construction & Development		Consumer		Total
Specific Reserves:
Impaired loans	$	—	$	3	$	—	$	—	$	—	$	3
Total specific reserves		—		3		—		—		—		3
General reserves		384		1,718		731		126		195		3,154
Total	$	384	$	1,721	$	731	$	126	$	195	$	3,157
Loans individually evaluated for impairment	$	—	$	10,705	$	360	$	—	$	—	$	11,065
Loans collectively evaluated for impairment		20,292		109,475		34,504		3,626		6,314		174,211
Total	$	20,292	$	120,180	$	34,864	$	3,626	$	6,314	$	185,276

Schedule of impaired loans by class of loan

The following table presents impaired loans by class of loan (in thousands):

	At March 31, 2014
							Impaired Loans - With
	Impaired Loans - With Allowance						no Allowance
	Unpaid Principal		Recorded Investment		Allowance for Loan Losses Allocated		Unpaid Principal		Recorded Investment
Residential:
First mortgages	$	—	$	—	$	—	$	231	$	231
HELOC’s and equity		130		130		11		129		129
Commercial
Secured		—		—		—		—		—
Unsecured		—		—		—		—		—
Commercial Real Estate:
Owner occupied		—		—		—		10,753		8,442
Non-owner occupied		—		—		—		2,673		2,057
Multi-family		485		429		42		—		—
Construction and Development:
Construction		—		—		—		—		—
Improved Land		—		—		—		—		—
Unimproved Land		—		—		—		—		—
Consumer and Other		—		—		—		—		—
Total	$	615	$	559	$	53	$	13,786	$	10,859

The following table presents the average recorded investment and interest income recognized on impaired loans by class of loan (in thousands):

	Three Months				Three Months
	March 31, 2014				March 31, 2013
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Residential:
First mortgages	$	231	$	—	$	231	$	—
HELOC’s and equity		260		9		204		9
Commercial
Secured		—		—		—		—
Unsecured		—		—		—		—
Commercial Real Estate:
Owner occupied		8,523		252		7,898		199
Non-owner occupied		2,104		21		5,404		47
Multi-family		—		13		367		29
Construction and Development:				.				.
Construction		—		—		122		8
Improved Land		—		—		—		—
Unimproved Land		—		—		—		—
Consumer and Other		—		—		—		—
Total	$	11,118	$	295	$	14,226	$	292

	At December 31, 2013
							Impaired Loans - With
	Impaired Loans - With Allowance						no Allowance
	Unpaid Principal		Recorded Investment		Allowance for Loan Losses Allocated		Unpaid Principal		Recorded Investment		Average Recorded Investment		Interest Income Recognized
Residential:
First mortgages	$	—	$	—	$	—	$	231	$	231	$	231	$	—
HELOC’s and equity		—		—		—		129		129		128		2
Commercial
Secured		—		—		—		—		—		—		—
Unsecured		—		—		—		—		—		—		—
Commercial Real Estate:
Owner occupied		—		—		—		10,300		7,968		8,049		534
Non-owner occupied		—		—		—		2,924		2,407		2,516		108
Multi-family		386		330		3		—		—		359		28
Construction and Development														.
Construction		—		—		—		—		—		—		—
Improved Land		—		—		—		—		—		—		—
Unimproved Land		—		—		—		—		—		—		—
Consumer and Other		—		—				—		—		—		—
Total	$	386	$	330	$	3	$	13,584	$	10,735	$	11,283	$	672

Schedule of aging analysis of loan portfolio

The following table is an aging analysis of our loan portfolio (in thousands):

	At March 31, 2014
	30- 59 Days Past Due		60- 89 Days Past Due		Over 90 Days Past Due		Total Past Due		Current		Total Loans Receivable		Recorded Investment > 90 Days and  Accruing		Nonaccrual
Residential:
First mortgages	$	1,737	$	682	$	1,442	$	3,861	$	21,873	$	25,734	$	35	$	2,895
HELOC’s and equity		434		72		476		982		7,369		8,351		—		578
Commercial:
Secured		29		—		2		31		14,206		14,237		—		2
Unsecured		—		—		—		—		5,179		5,179		—		—
Commercial Real Estate
Owner occupied		750		—		254		1,004		60,260		61,264		—		1,211
Non-owner occupied		—		—		128		128		41,422		41,550		—		1,402
Multi-family		—		332		—		332		14,315		14,647		—		332
Construction and  Development:
Construction		43		—		—		43		3,788		3,831		—		—
Improved Land		—		—		—		—		208		208		—		—
Unimproved Land		—		—		—		—		—		—		—		—
Consumer and Other		11		8		42		61		6,134		6,195		—		42
Total	$	3,004	$	1,094	$	2,344	$	6,442	$	174,754	$	181,196	$	35	$	6,462

	At December 31, 2013
	30- 59 Days Past Due		60- 89 Days Past Due		Over 90 Days Past Due		Total Past Due		Current		Total Loans Receivable		Recorded Investment > 90 Days and  Accruing		Nonaccrual
Residential:
First mortgages	$	1,778	$	360	$	1,840	$	3,978	$	22,348	$	26,326	$	—	$	3,334
HELOC’s and equity		444		19		466		929		7,609		8,538		—		821
Commercial:
Secured		125		—		2		127		14,906		15,033		—		2
Unsecured		—		—		—		—		5,259		5,259		—		—
Commercial Real Estate:
Owner occupied		715		753		81		1,549		60,090		61,639		—		1,038
Non-owner occupied		38		199		286		523		43,287		43,810		—		1,550
Multi-family		747		—		—		747		13,984		14,731		—		330
Construction and  Development
Construction		477		—		—		477		2,542		3,019		—		—
Improved Land		—		—		—		—		242		242		—		—
Unimproved Land		—		—		—		—		365		365		—		—
Consumer and Other		6		30		45		81		6,233		6,314		—		45
Total	$	4,330	$	1,361	$	2,720	$	8,411	$	176,865	$	185,276	$	—	$	7,120

Schedule of loan portfolio by risk rating

The following table presents our loan portfolio by risk rating (in thousands):

	At March 31, 2014
	Total		Pass Credits		Special Mention		Substandard		Doubtful
Residential:
First mortgages	$	25,734	$	23,363	$	176	$	2,195	$	—
HELOC’s and equity		8,351		7,224		310		704		113
Commercial:
Secured		14,237		14,215		—		22		—
Unsecured		5,179		5,179		—		—		—
Commercial Real Estate:
Owner occupied		61,264		48,187		8,312		4,765		—
Non-owner occupied		41,550		38,528		807		2,215		—
Multi-family		14,647		13,524		647		445		31
Construction and Development:
Construction		3,831		3,470		—		361		—
Improved Land		208		165		—		43		—
Unimproved Land		—		—		—		—		—
Consumer and Other		6,195		6,105		—		76		14
Total	$	181,196	$	159,960	$	10,252	$	10,826	$	158

	At December 31, 2013
	Total		Pass Credits		Special Mention		Substandard		Doubtful
Residential:
First mortgages	$	26,326	$	24,126	$	—	$	2,200	$	—
HELOC’s and equity		8,538		7,686		22		728		102
Commercial:
Secured		15,033		15,009		—		24		—
Unsecured		5,259		5,259		—		—		—
Commercial Real Estate:
Owner occupied		61,639		50,921		5,929		4,789		—
Non-owner occupied		43,810		40,482		819		2,509		—
Multi-family		14,731		13,704		647		380		—
Construction and Development:
Construction		3,019		3,019		—		—		—
Improved Land		242		197		—		45		—
Unimproved Land		365		—		—		365		—
Consumer and Other		6,314		6,224		—		90		—
Total	$	185,276	$	166,627	$	7,417	$	11,130	$	102

Schedule of troubled debt restructurings

During the three months ended March 31, 2014 the bank modified no loans that were considered to be troubled debt restructurings. During the three months ended March 31, 2013, the Bank modified two loans that were considered to be troubled debt restructurings. We extended the terms and decreased the interest rate on both loans (dollar in thousands).

	March 31, 2013
	Number of Loans		Pre-Modification Recorded Investment		Post-Modification Recorded Investment
Troubled Debt Restructurings
Commercial Real Estate:
Owner occupied		1	$	198	$	198
Non-owner occupied		1		62		62
Total		2	$	260	$	260