<PAGE>
<PAGE>
SCHEDULE 14A INFORMATION
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Subsection 240.14a-11(c)
or Subsection 240.14a-12
[ ] Confidential, For use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
CFS BANCSHARES, INC.
- ----------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- ----------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act
Rules 14a-6(i)(1) and 0-11.
1. Title of each class of securities to which
transaction applies:
________________________________________________________________
2. Aggregate number of securities to which transaction
applies:
________________________________________________________________
3. Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11 (set
forth the amount on which the filing fee is calculated and state
how it was determined):
________________________________________________________________
4. Proposed maximum aggregate value of transaction:
________________________________________________________________
5. Total fee paid:
________________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
1. Amount Previously Paid:
____________________________________________
2. Form, Schedule or Registration Statement No.:
____________________________________________
3. Filing Party:
____________________________________________
4. Date Filed:
____________________________________________<PAGE>
<PAGE>
[LETTERHEAD OF CFS BANCSHARES, INC.]
December 29, 1998
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of
Stockholders of CFS Bancshares, Inc. for the year ended
September 30, 1998, to be held adjacent to the Savings Bank's
office in the second floor auditorium at 300 18th Street North,
Birmingham, Alabama, on Wednesday, January 27, 1999, at 2:00
p.m., local time.
The attached Notice of Annual Meeting and Proxy Statement
describe the formal business to be transacted at the meeting.
At the Meeting, stockholders will consider and vote on the
election of one director.
During the Meeting, we will also report on the operations
of the Company. Directors and Officers of the Company as well
as a representative of KPMG Peat Marwick LLP will be present to
respond to any questions that stockholders may have.
Your vote is important, regardless of the number of shares
you own. On behalf of the Board of Directors, we urge you to
sign, date and return the enclosed proxy card as soon as
possible, even if you currently plan to attend the Annual
Meeting. This will not prevent you from voting in person, but
will assure that your vote is counted if you are unable to
attend the meeting.
Sincerely,
/s/ Bunny Stokes, Jr.
Bunny Stokes, Jr.
Chairman of the Board and
Chief Executive Officer
<PAGE>
<PAGE>
CFS BANCSHARES, INC.
1700 3RD AVENUE NORTH
BIRMINGHAM, ALABAMA 35203
(205) 328-2041
________________________________________________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 27, 1999
________________________________________________________________
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stock-
holders (the "Meeting") of CFS Bancshares, Inc. (the "Company"),
will be held adjacent to Citizens Federal Savings Bank's office
in the second floor auditorium at 300 18th Street North,
Birmingham, Alabama, on Wednesday, January 27, 1999, at 2:00
p.m., local time.
A Proxy Card and a Proxy Statement for the Meeting are
enclosed.
The Meeting is for the purpose of considering and acting
upon:
1. The election of one director of the Company;
2. Such other matters as may properly come before
the Meeting or any adjournments thereof.
NOTE: The Board of Directors is not aware of any other
business to come before the Meeting.
Any action may be taken on any one of the foregoing pro-
posals at the Meeting on the date specified above, or on any
date or dates to which, by original or later adjournment, the
Meeting may be adjourned. Pursuant to the Company's Bylaws, the
Board of Directors has fixed the close of business on December
11, 1998, as the record date for determination of the stock-
holders entitled to vote at the Meeting and any adjournments
thereof.
You are requested to fill in and sign the enclosed form of
Proxy which is solicited by the Board of Directors and to mail
it promptly in the enclosed envelope. The proxy will not be
used if you attend and vote at the Meeting in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ W. Kent McGriff
W. KENT MCGRIFF
SECRETARY
Birmingham, Alabama
December 29, 1998
________________________________________________________________
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY
THE EXPENSE OF FURTHER REQUESTS FOR PROXIES IN ORDER TO INSURE A
QUORUM. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES.
________________________________________________________________
<PAGE>
<PAGE>
________________________________________________________________
PROXY STATEMENT
OF
CFS BANCSHARES, INC.
1700 3RD AVENUE NORTH
BIRMINGHAM, ALABAMA 35203
(205) 328-2041
________________________________________________________________
ANNUAL MEETING OF STOCKHOLDERS
JANUARY 27, 1999
________________________________________________________________
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of CFS
Bancshares, Inc. (the "Company") to be used at the Annual
Meeting of Stockholders of the Company (hereinafter called the
"Meeting") which will be held adjacent to the Citizens Federal
Savings Bank's (the "Savings Bank") office in the second floor
auditorium at 300 18th Street North, Birmingham, Alabama, on
Wednesday, January 27, 1999, at 2:00 p.m., local time. The
accompanying notice of meeting and this Proxy Statement are
being first mailed to stockholders on or about December 29,
1998. The reorganization of the Savings Bank into the holding
company form of ownership, and the Company becoming the sole
stockholder of the Savings Bank occurred on June 30, 1998.
________________________________________________________________
REVOCATION OF PROXIES
________________________________________________________________
Stockholders who execute proxies retain the right to
revoke them at any time. Unless so revoked, the shares
represented by such proxies will be voted at the Meeting and all
adjournments thereof. Proxies may be revoked by written notice
to the Secretary of the Company, mailed or delivered to the
above address, or the filing of a later proxy prior to a vote
being taken on a particular proposal at the Meeting. A proxy
will not be voted if a stockholder attends the Meeting and votes
in person. Proxies solicited by the Board of Directors of the
Company will be voted in accordance with the directions given
therein. Where no instructions are indicated, proxies will be
----------------------------------------------------
voted for the nominee for director set forth below. The proxy
- --------------------------------------------------
confers discretionary authority on the persons named therein to
vote with respect to the election of any person as a director
where the nominee is unable to serve or for good cause will not
serve, and matters incident to the conduct of the Meeting.
Proxies marked as abstentions will not be counted as votes cast.
In addition, shares held in street name which have been
designated by brokers on proxy cards as not voted will not be
counted as votes cast. Proxies marked as abstentions or as
broker no votes, however, will be treated as shares present for
purposes of determining whether a quorum is present.
________________________________________________________________
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
________________________________________________________________
Stockholders of record as of the close of business on
December 11, 1998, are entitled to one vote for each share then
held. As of December 11, 1998, the Company had 130,000 shares
of Common Stock issued and outstanding.
The following table sets forth, as of December 11, 1998,
the shares of Common Stock beneficially owned by all holders of
more than 5% of the Company's stock and by all officers and
directors of the Company as a group. Persons and groups owning
in excess of 5% of the Company's Common Stock are required to
file certain reports regarding such ownership pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"). Based upon such reports, management knows of no persons,
other than those set forth below, who owned more than 5% of the
Company's outstanding shares of Common Stock at December 11,
1998.<PAGE>
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND PERCENT OF
NATURE OF SHARES OF
NAME AND ADDRESS BENEFICIAL COMMON STOCK
OF BENEFICIAL OWNER OWNERSHIP(1) OUTSTANDING
- -------------------- ------------ -----------
<S> <C> <C>
Citizens Federal Savings Bank Employee 30,765 23.67%
Stock Ownership Plan ("ESOP")
1700 3rd Avenue North
Birmingham, Alabama 35203
State Farm Insurance Co. 12,999 9.99
1 State Farm Plaza
Bloomington, Illinois 61701
James W. Coleman 11,600 8.92
Route 1 Box 287
Sawyerville, AL 36776
Bunny Stokes, Jr. 24,019 (2) 17.40
1700 3rd Avenue North
Birmingham, Alabama 35203
Thomas G. Gardner Living Trust 6,500 (3) 5.00
470 1st Street North
Birmingham, Alabama 35204
Ross E. Gardner 4,000 (3) 3.08
470 1st Street North
Birmingham, Alabama 35204
Paul G. Gardner 4,000 (3) 3.08
216 Fair Oak Drive
Fairfield, Alabama 35064
Eric A. Gardner 3,596 (3) 3.08
5605 Avenue C
Fairfield, Alabama 35064
All Officers and Directors 50,427 (4) 36.28%
as a Group (6 Persons)
<FN>
____________________
(1) All shares are owned directly by the named individuals or
by their spouses and minor children, over which shares the
named individuals effectively exercise sole or shared
voting and investment power.
(2) Includes 8,000 shares which Mr. Stokes has a right to
acquire pursuant to stock options, and 3,711 shares owned
by the Savings Bank's ESOP which have been allocated to
the account of Mr. Stokes.
(3) Ross Gardner, Paul Gardner and Eric Gardner are brothers.
Paul Gardner and Eric Gardner are listed as co-trustees of
the Thomas G. Gardner Living Trust.
(4) Includes 10,324 shares owned by the ESOP which, as of
December 11, 1998, had not been allocated and are
currently voted by Citizens Federal Savings Bank Directors
Lett, Greene, Woolfolk and Bennett, as members of the
Savings Bank's ESOP Committee. Also includes 6,437 shares
held in retirement accounts for the benefit of the named
individuals, and 9,000 shares which the named individuals
have a right to acquire within 60 days pursuant to stock
options.
</FN>
</TABLE>
2<PAGE>
<PAGE>
________________________________________________________________
PROPOSAL I -- ELECTION OF DIRECTORS
________________________________________________________________
The Company's Board of Directors is presently composed of
four members elected for terms of three years, approximately
one-third of whom are to be elected annually in accordance with
the Bylaws of the Company. Pursuant to the Certificate of
Incorporation of the Company, stockholders are not entitled to
cumulate their votes for the election of directors.
The Board of Directors has nominated Bunny Stokes, Jr., to
serve as director for a three year term. It is intended that
the persons named in the proxies solicited by the Board will
vote for the election of the named nominee. If the nominee is
unable to serve, the shares represented by all valid proxies
will be voted for the election of such substitute as the Board
of Directors may recommend. At this time the Board knows of no
reason why the nominee might be unavailable to serve.
The following table sets forth for the nominee and each
director continuing in office, his or her name, age (as of
September 30, 1998), principal occupation(s) during the past
five years, the year he or she first became a director of the
Savings Bank (predecessor to the Company) and the number of
shares and percentage of the Company's Common Stock beneficially
owned at December 11, 1998. All persons were appointed as
directors in January 1998 in connection with the incorporation
of the Company. Each director of the Company is also a member
of the Board of Directors of the Savings Bank.
<TABLE>
<CAPTION>
Shares of
Common Stock
Beneficially
First Elected Current Owned at Percent
Age at Director of Term December 11, of
Name 9/30/98 Principal Occupation(1) Savings Bank to Expire 1998 (2) Class
- ---- ------- ----------------------- ------------ --------- ------------ -------
<S> <C> <C> <C> <C> <C> <C>
BOARD NOMINEES FOR TERMS TO EXPIRE IN 2002
Bunny Stokes, Jr. 55 Chairman of the Board of the 1989 1999 24,019 17.40%
Savings Bank since March 1996;
President of the Savings Bank
since February since 1990.
DIRECTORS CONTINUING IN OFFICE
Odessa Woolfolk 65 Private consultant and lecturer; 1990 2000 100 .08
previously Assistant to President
of the University of Alabama at
Birmingham (UAB) for community
relations from January 1991 to
October 1993, and Director of
the UAB Center for Urban Affairs
from 1983 to 1991.
James W. Coleman 59 Executive Director, West Alabama 1994 2001 11,600 8.92
Health Services, Inc., Eutaw,
Alabama.
Rev. John T. Porter 67 Pastor, Sixth Avenue Baptist 1986 2001 100 .08
Church.
<FN>
____________________
(1) Nominees and directors have held these vocations or positions for at least five years unless
otherwise noted. Businesses are located in Birmingham, Alabama unless otherwise noted.
(2) Unless otherwise noted, includes certain shares owned by corporations or foundations in which
the director is an officer or major stockholder, or by spouses, or as a custodian or trustee
for minor children, over which shares the named individual effectively exercises sole or
shared voting and investment power. Also includes shares held in retirement accounts or
funds for the benefit of the listed individuals. Does not include 10,324 shares owned by the
Savings Bank's ESOP, over which shares the ESOP Committee, consisting of Citizens Federal
Savings Bank Directors Lett, Greene, Woolfolk and Bennett, exercises partial voting and
investment power. Also includes shares which persons named in the table have a right to
acquire within 60 days pursuant to stock options.
</FN>
</TABLE>
3<PAGE>
<PAGE>
________________________________________________________________
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
________________________________________________________________
Because the reorganization of the Savings Bank into the
holding company form of ownership was only completed on June
30, 1998 and only two meetings of the Company's Board of
Directors have been held, the following information relates to
Citizens Federal Savings Bank.
The Board of Directors conducts its business through
meetings of the Board and through its committees. During the
fiscal year ended September 30, 1998, the Board of Directors
held 12 meetings. No director of the Company attended fewer
than 75% of the meetings of the Board of Directors and of the
committees on which such Board member served during this period.
The Board of Directors also serves as a Nominating
Committee for selecting the management nominees for election as
directors. While the Board of Directors will consider nominees
recommended by stockholders, as submitted in any form, it has
not actively solicited recommendations from the Company's
stockholders for nominees nor has it established any procedures
for this purpose. The Board of Directors held one meeting in
its capacity as the Nominating Committee to nominate the
individuals named herein for election as directors at the
Meeting. Nominations for election as directors shall be made in
accordance with the Company's Bylaws. Copies of the Company's
Bylaws may be requested by a stockholder of record, by writing
to the Secretary of the Company at the Company's executive
office.
Directors Porter, Bennett, Coleman and Woolfolk serve as a
compensation committee, the function of which is to evaluate the
qualifications and performance of the Company's and Savings
Bank's principal officers and employees to determine the
compensation and benefits to be paid such individuals. The
Committee met one time during the 1998 fiscal year.
Directors Coleman, Porter, Lett and Woolfolk serve as an
audit committee. The primary function of this committee is to
review audit performance and evaluate policies and procedures
relating to internal auditing functions and controls. These
functions are performed through discussions with the Company's
internal auditors and management as needed, and through
discussions and meetings with the Company's independent auditors
and management to review the audit report and related matters.
No meetings were held by the Company's audit committee during
the fiscal year ended September 30, 1998.
________________________________________________________________
EXECUTIVE COMPENSATION
________________________________________________________________
Compensation Summary
The following table sets forth the cash and noncash
compensation for the last three fiscal years awarded to or
earned by the Chief Executive Officer of Citizens Federal
Savings Bank, the principal subsidiary of the Company. Mr.
Stokes was the only executive officer of the Company whose
compensation earned during the year ended September 30, 1998,
1997 and 1996 which exceeded $100,000 for services rendered in
all capacities to the Company and the Savings Bank. <PAGE>
<TABLE>
<CAPTION>
Long-term
Compensation
Name and Principal Other Annual Awards of All other
Position Year Salary Bonus Compensation Options Compensation
- ------------------ ---- ------ ----- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Bunny Stokes, Jr. 1998 $117,191 $11,000 -- -- $ 16,492 (1)
Chief Executive 1997 110,000 -- -- -- 16,847 (2)
Officer 1996 108,525 11,000 -- -- 13,390 (3)
<FN>
____________________
(1) Includes $12,025 representing the allocation of benefits under the Savings Bank's ESOP and
$4,467 representing the matching contributions by the Company to the account of Mr. Stokes
under the Savings Bank's 401(k) Plan.
(2) Includes $13,228 representing the allocation of benefits under the Savings Bank's ESOP and
$3,619 representing the matching contributions by the Savings Bank to the account of Mr.
Stokes under the Savings Bank's 401(k) Plan.
(3) Includes $8,253 representing the allocation of benefits under the Savings Bank's ESOP and
$5,137 representing matching contributions by the Savings Bank to the account of Mr. Stokes
under the Savings Bank's 401(k) Plan.
</FN>
</TABLE>
4<PAGE>
<PAGE>
OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table sets forth information concerning the
value of options held by the Chief Executive Officer during the
last fiscal year, as well as the value of such options at the
end of the fiscal year. No options were granted during fiscal
1998.
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised In-the-Money
Options at Options at
Shares Fiscal Year-End Fiscal Year-End
Acquired Value Exercisable/ Exercisable/
On Exercise Realized Unexercisable Unexercisable (1)
----------- -------- ------------- -----------------
<S> <C> <C> <C> <C>
Bunny Stokes, Jr.
Chief Executive Officer -- $ -- 8,000 $36,000
<FN>
_____________
(1)1 Difference between fair market value of underlying securities at fiscal
year-end and the exercise or base price (a difference of $4.50 per share).
</FN>
</TABLE>
EMPLOYMENT AGREEMENT. On June 5, 1989, the Savings Bank
entered into an employment agreement with Bunny Stokes, Jr.,
Executive Vice President of the Savings Bank. The agreement was
subsequently amended in 1990 to reflect the appointment of Mr.
Stokes as President of the Savings Bank, and was amended again
in 1993 to change the agreement from a five-year term to a
three-year term. The agreement also provides for an annual
extension of the term of employment for an additional one-year
period beyond the then effective expiration date subject to
Board of Directors approval of the extension, unless Mr. Stokes
gives written notice that the agreement will not be extended
further. The agreement provides that Mr. Stokes will be
entitled to participate in discretionary bonuses, customary
fringe benefits, vacation and sick leave and disability payments
as provided for other management personnel. The agreement is
terminated upon the death of the employee, by his voluntary
termination, or by the Savings Bank for "just cause" as defined
in the agreement. If Mr. Stokes's employment is terminated
without just cause, he would be entitled to a continuation of
his salary for the remaining term of the agreement. Mr. Stokes'
salary under the agreement at September 30, 1998 was $123,210.
The employment agreement further provides that in the
event of the involuntary termination of employment in connection
with, or within six months after, any change in control of the
Savings Bank, or voluntary termination of employment in
conjunction with, or within six months after, any change in
control of the Savings Bank which in either case has not been
approved in advance by a two-thirds' vote of the full Board of
Directors, Mr. Stokes will be paid within 30 days of such
termination in one lump sum payment or, at his election, in
periodic payments over the remaining term of the agreement, a
sum equal to 2.99 times the average annual compensation he
received during the five year period immediately prior to the
date of change of control. "Control" generally refers to the
acquisition by any person or entity of the ownership or power to
vote more than 25% of the Savings Bank's stock or the control of
the election of a majority of the Savings Bank's directors. The
agreement also provides for a similar lump sum payment to be
made in the event of his voluntary termination of employment
following the occurrence of certain specified events following
any change in control, whether approved by the Board of
Directors or otherwise, including an assignment of duties and
responsibilities other than those normally associated with his
position, a diminishment of his authority or responsibility,
failure to maintain benefit plans providing at least a
comparable level of benefits presently afforded, requiring him
to move his personal residence or perform his principal execu-
tive functions more than 35 miles from the Savings Bank's
current main office. Such payment would, at this time, for
example, be equal to $385,677 based upon Mr. Stokes'
compensation during the past five years.
5<PAGE>
<PAGE>
________________________________________________________________
DIRECTORS' COMPENSATION
________________________________________________________________
During the fiscal year ended September 30, 1998, each
director was paid directors' fees of $4,300 for the year.
Additional fees of $200 per meeting were paid for attendance at
committee meetings. The Company's executive officers who also
serve as directors received no directors fees during fiscal
1998, and as a policy do not receive directors fees.
________________________________________________________________
TRANSACTIONS WITH MANAGEMENT
________________________________________________________________
The Savings Bank has followed the policy of offering loans
to its officers, directors and employees for the financing of
their personal residences. Applicable law requires that loans
to directors, officers and 10% or greater stockholders and their
affiliates must be approved by a disinterested majority of the
board of directors if all such loans exceed the greater of 5% of
capital and surplus, or $25,000. Such loans must also be made
on terms substantially the same as offered in comparable
transactions. The Savings Bank's loan policy complies with
these requirements. During the year ended September 30, 1998,
except as described below, the Savings Bank had no residential
real estate loans or other loans outstanding to any officer or
director with unpaid balances totaling in excess of $60,000.
The Savings Bank also grants loans secured by savings
accounts to its directors, officers and employees on the same
terms as are made to unaffiliated borrowers of the Savings Bank.
Pursuant to OTS regulations the interest rate charged on the
loan is required to be at least one percentage point above the
rate paid on the underlying deposit that serves as collateral
for the loan. On July 3, 1987, a commercial real estate loan
for $282,377 at 12.00% interest, the market interest rate, was
made to Selma University, for whom Rev. Lett serves as a
Trustee. The maximum amount outstanding during fiscal 1998 was
$144,911 and the amount outstanding on September 30, 1998 was
$144,911. Rev. Lett had no other indebtedness to the Savings
Bank at or during the year ended September 30, 1998.
________________________________________________________________
RELATIONSHIP WITH INDEPENDENT AUDITORS
________________________________________________________________
KPMG Peat Marwick LLP, independent certified public
accountants, was the Company's independent public accountants
for the 1998 fiscal year. The Company has heretofore reached
agreement with KPMG Peat Marwick LLP to be its auditors for the
1999 fiscal year. A representative of KPMG Peat Marwick LLP
will be present at the Meeting, will have the opportunity to
make a statement if he or she so desires, and will respond to
any questions that stockholders may have.
________________________________________________________________
BENEFICIAL OWNERSHIP REPORTS
________________________________________________________________
Pursuant to regulations promulgated under the Exchange
Act, the Company's directors and officers, and persons who own
more than ten percent of the Common Stock, are required file
reports to report their ownership and changes in ownership in
the Common Stock and to furnish the Company with copies of all
such ownership reports that are filed. Based solely on its
review of the copies of such reports received during the past
fiscal year or with respect to the last fiscal year, the Company
believes that all of its directors, officers and stockholders
owning in excess of ten percent of the Common Stock have
complied with the reporting requirements.
6<PAGE>
<PAGE>
________________________________________________________________
OTHER MATTERS
________________________________________________________________
The Board of Directors is not aware of any business to
come before the Meeting other than those matters described above
in this Proxy Statement. However, if any other matters should
properly come before the Meeting, it is intended that proxies in
the accompanying form will be voted in respect thereof in
accordance with the judgment of the person or persons voting the
proxies.
________________________________________________________________
MISCELLANEOUS
________________________________________________________________
The cost of solicitation of proxies will be borne by the
Company. In addition to solicitations by mail, directors,
officers, and regular employees of the Company may solicit
proxies personally or by telegraph or telephone without
additional compensation.
The Company's Annual Report to Stockholders, including
financial statements, has been mailed to all stockholders of
record as of the close of business on December 11, 1998. Any
stockholder who has not received a copy of such Annual Report
may obtain a copy by writing to the Company. Such Annual Report
is not to be treated as a part of the proxy solicitation
material nor as having been incorporated herein by reference.
________________________________________________________________
STOCKHOLDER PROPOSALS
________________________________________________________________
In order to be eligible for inclusion in the Company's
proxy materials for next year's Annual Meeting of Stockholders,
any stockholder proposal to take action at such meeting must be
received at the Company's main office at 1700 3rd Avenue North,
Birmingham, Alabama 35203, no later than August 30, 1999. Any
such proposals shall be subject to the requirements of the proxy
rules adopted under the Exchange Act.
Stockholder proposals, other than those submitted pursuant
to the Exchange Act, must be submitted in writing to the
Secretary of the Company at the address given in the preceding
paragraph not less than thirty days nor more than sixty days
prior to the date of any such meeting; provided, however, that
if less than forty days' notice of the meeting is given to
stockholders, such written notice shall be delivered or mailed,
as prescribed, to the Secretary of the Company not later than
the close of business on the tenth day following the day on
which notice of the meeting was mailed to stockholders.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ W. Kent McGriff
W. KENT McGRIFF
SECRETARY
Birmingham, Alabama
December 29, 1998
________________________________________________________________
FORM 10-KSB
________________________________________________________________
A COPY OF THE FORM 10-KSB AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION WILL BE FURNISHED WITHOUT CHARGE TO
STOCKHOLDERS AS OF THE RECORD DATE UPON WRITTEN REQUEST TO THE
SECRETARY, CFS BANCSHARES, INC., 1700 3rd AVENUE NORTH,
BIRMINGHAM, ALABAMA 35203.
________________________________________________________________
7<PAGE>
<PAGE>
REVOCABLE PROXY
CFS BANCSHARES, INC.
________________________________________________________________
ANNUAL MEETING OF STOCKHOLDERS
JANUARY 27, 1999
________________________________________________________________
The undersigned hereby appoints those persons who
constitute the Board of Directors of CFS Bancshares, Inc. as
listed in the Proxy Statement dated December 29, 1998, with full
powers of substitution, to act as attorneys and proxies for the
undersigned, to vote all shares of Common Stock of CFS
Bancshares, Inc. ("the Company"), which the undersigned is en-
titled to vote at the Annual Meeting of Stockholders, to be held
adjacent to the Company's office in the second floor auditorium
at 300 18th Street North, Birmingham, Alabama on Wednesday,
January 27, 1999, at 2:00 p.m., local time, and at any and all
adjournments thereof, as follows:
FOR AGAINST
--- -------
1. The election as directors of the
nominees listed below for the
terms noted. [ ] [ ]
FOR THREE YEAR TERM:
Bunny Stokes, Jr.
INSTRUCTION: To withhold your vote
for the nominee, write his name on the line below.
___________________________
The Board of Directors recommends a vote "FOR" the
listed proposition.
________________________________________________________________
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED FOR THE PROPOSITION STATED.
IF ANY OTHER BUSINESS IS PRESENTED AT SUCH MEETING, THIS PROXY
WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN THEIR BEST
JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF
NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING. THIS PROXY
ALSO CONFERS DISCRETIONARY AUTHORITY ON THE BOARD OF DIRECTORS
TO VOTE WITH RESPECT TO THE ELECTION OF ANY PERSON AS DIRECTOR
WHERE THE NOMINEE IS UNABLE TO SERVE OR FOR GOOD CAUSE WILL NOT
SERVE, AND MATTERS INCIDENT TO THE CONDUCT OF THE 1999 ANNUAL
MEETING.
________________________________________________________________
<PAGE>
<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the
Annual Meeting or at any adjournment thereof and after notifica-
tion to the Secretary of the Company at the Meeting of the
stockholder's decision to terminate this proxy, then the power
of said attorneys and proxies shall be deemed terminated and of
no further force and effect.
The undersigned acknowledges receipt from the Company
prior to the execution of this proxy of notice of the Meeting, a
Proxy Statement dated December 29, 1998 and the 1998 Annual
Report to Stockholders.
Dated: ______________________
___________________________ __________________________
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
___________________________ __________________________
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on the envelope in
which this card was mailed. When signing as attorney, executor,
administrator, trustee or guardian, please give your full title.
If shares are held jointly, each holder should sign.
________________________________________________________________
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE
ENCLOSED POSTAGE-PREPAID ENVELOPE.
________________________________________________________________
