SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
--------------------------------------------------------------------------------
Form 10-QSB
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF
THE EXCHANGE ACT
For the transition period from ____________ to ___________________.
Commission File Number: 0-24625
CFS Bancshares, Inc.
----------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
Delaware 63-1207881
------------------------------ ---------------------
(State or other jurisdiction of IRS Employer
incorporation or organization) Identification Number
1700 3rd Avenue North
Birmingham, Alabama 35203
---------------------- --------
(Address of principal Zip Code
executive office)
Registrant's telephone number, including area code: (205) 328 - 2041
Indicate by check mark whether the registrant (1) has filed all the reports
required to be filed by section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or 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.
Yes x No
-- --
Number of shares outstanding of common stock
as of June 30, 2000
$0.01 par value common stock 130,000 shares
---------------------------- --------------------------
Class Outstanding
<PAGE>
CFS BANCSHARES, INC. AND SUBSIDIARY
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION: PAGE NO.
Consolidated Balance Sheets at June 30, 2000
and September 30, 1999 (unaudited) -3-
Consolidated Statements of Operations for the Three Months and
Nine Months Ended June 30, 2000 and 1999 (unaudited) -4-
Consolidated Statements of Cash Flows for the Nine Months Ended
June 30, 2000 and 1999 (unaudited) -6-
Consolidated Statements of Comprehensive Income for the Three Months
and Nine Months ended June 30, 2000 and 1999 (unaudited) -8-
Notes to Consolidated Financial Statements -9-
Management's Discussion and Analysis of Financial
Condition and Results of Operations -10-
PART II - OTHER INFORMATION -14-
SIGNATURES -15-
<PAGE>
<TABLE>
<CAPTION>
CFS BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, September 30,
2000 1999
ASSETS
------
<S> <C> <C>
Cash and amounts due from depository
institutions $ 3,009,496 $ 4,811,709
Federal funds sold and overnight deposits 361,394 2,877,742
------------ ------------
Total cash and cash equivalents 3,370,890 7,689,451
Interest bearing deposits 163,142 161,524
Investment securities held to maturity
(fair value of $4,042,988 and $4,919,789,
respectively) 4,075,685 4,929,808
Investment securities available for sale,
at fair value (cost of $40,576,543 and
$34,389,879, respectively) 39,620,019 33,604,258
Federal Home Loan Bank stock 597,500 592,500
Loans receivable (net of allowances of
$321,383 and $310,157, respectively) 45,806,052 43,521,160
Premises and equipment, net 3,715,156 3,871,433
Real estate acquired by foreclosure 49,530 47,270
Accrued interest receivable on investment securities 144,321 122,584
Accrued interest receivable on mortgage-backed securities 191,114 169,254
Accrued interest receivable on loans 369,678 317,617
Other assets 753,408 1,077,514
------------ ------------
Total assets $ 98,856,495 $ 96,104,373
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Interest-bearing deposits $ 77,077,495 75,180,323
Advance payments by borrowers for
taxes and insurance 174,992 257,724
Other liabilities 904,873 981,602
Employee Stock Ownership Plan debt 64,000 72,000
FHLB advances and other borrowing 12,660,000 11,850,000
------------ ------------
Total Liabilities 90,881,360 88,341,649
Stockholders' Equity:
Common stock 130,000 130,000
Additional paid-in-capital 1,184,757 1,180,060
Retained earnings 7,323,790 7,020,548
Accumulated other comprehensive loss (612,176) (502,798)
Unearned common stock held by ESOP (51,236) (65,086)
------------ ------------
Total Stockholders' Equity 7,975,135 7,762,724
------------ ------------
Total liabilities and stockholders' equity $ 98,856,495 $ 96,104,373
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
CFS BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
2000 1999 2000
<S> <C> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans $ 967,548 $ 966,574 $2,879,649 $3,015,714
Interest and dividend income
on investment securities 149,652 94,631 392,795 193,111
Interest income on
mortgage-backed securities 577,725 459,541 1,527,007 1,415,473
Other interest income 18,944 23,212 116,647 71,191
---------- ---------- ---------- ----------
Total interest income 1,713,869 1,543,958 4,916,098 4,695,489
Interest on deposits 710,390 671,398 2,039,137 2,032,724
Interest on FHLB advances 180,867 130,034 501,128 395,189
---------- ---------- ---------- ----------
Total interest expense 891,257 801,432 2,540,265 2,427,913
Net interest income 822,612 742,526 2,375,833 2,267,576
Provision for loan losses -- -- (100,000) --
---------- ---------- ---------- ----------
Net interest income after
provision for loan losses 822,612 742,526 2,475,833 2,267,576
OTHER INCOME:
Service charges on deposits 96,047 111,923 320,065 294,609
Net gain on sale of assets 17,191 5,616 15,404 10,140
Gain (loss) on sale of securities -- -- (6,125) 27,486
Other 8,421 7,101 23,018 24,859
---------- ---------- ---------- ----------
Total Other Income 121,659 124,640 352,362 357,094
EXPENSES:
Salaries and employee benefits 345,153 329,673 1,000,726 1,011,545
Net occupancy expense 32,866 27,390 91,027 86,185
Federal insurance premium 12,042 24,859 45,715 74,028
Data processing expenses 52,466 53,483 156,058 184,851
Professional services 40,044 20,344 188,240 138,951
Depreciation and amortization 66,278 76,311 215,142 223,557
Advertising expense 23,808 55,395 58,970 138,972
Office supplies 7,913 21,434 44,362 56,510
Insurance expense 19,804 14,963 49,172 44,680
Other 120,971 84,062 344,623 252,056
---------- ---------- ---------- ----------
Total other expense 721,345 707,914 2,194,035 2,211,335
---------- ---------- ---------- ----------
Income before income taxes 222,926 159,252 634,160 413,335
Income tax expense 79,304 54,304 233,163 148,801
---------- ---------- ---------- ----------
Net Income $ 143,622 $ 104,948 $ 400,997 $ 264,534
========== ========== ========== ==========
Basic earnings per common share $ 1.13 $ 0.85 $ 3.17 $ 2.13
========== ========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
CFS BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
2000 1999 2000
<S> <C> <C> <C> <C>
Basic average shares outstanding 126,645 124,055 126,545 123,955
========== ========== ========== ==========
Diluted earnings per common share $ 1.07 $ 0.82 $ 2.99 $ 2.01
========== ========== ========== ==========
Diluted average shares outstanding 134,445 127,607 134,163 131,455
========== ========== ========== ==========
Dividends declared and paid
per common share $ -- $ -- $ 0.75 $ 0.75
========== ========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
CFS BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
June 30,
2000 1999
<S> <C> <C>
Cash flows from operating activities:
Net income $ 400,997 $ 264,534
Adjustments to reconcile net income to
net cash provided by operating activities
Loan loss provision 50,000 --
Depreciation and amortization 215,142 223,557
Compensation expense recognized on ESOP allocation 11,000 1,062
Net amortization of premium on investment securities 38,861 103,968
Loss on sale of investment securities held to maturity 2,042 --
Loss (gain) on sale or call of investment securities
available for sale 4,083 (27,486)
Loss recognized on foreclosed loans 5,155 --
Gain on sale of real estate acquired by foreclosure (14,333) (9,070)
Decrease in deferred gain on sale of REO (1,907) (1,876)
Decrease (increase) in accrued interest receivable (95,658) 31,904
Decrease (increase) in other assets 324,106 (4,418)
Increase in accrued interest on deposits 19,890 48,711
Decrease in other liabilities (64,005) (220,012)
------------ ------------
Net cash provided by operating activities 895,373 410,874
Cash flows from investing activities:
Purchase of interest-bearing deposits (1,618) (1,139)
Purchase of investment securities held to maturity -- (1,456,542)
Purchase of investment securities available for sale (10,493,881) (14,725,949)
Proceeds from sale of investment securities held to maturity 81,232 --
Maturity or call of investment securities available for sale -- 1,000,000
Proceeds from sale of investment securities available for sale 1,309,941 1,550,760
Proceeds from principal collected on
investment securities held to maturity 760,170 1,391,669
Proceeds from principal collected on
investment securities available for sale 2,965,011 9,279,940
Net change in loans (2,327,304) 1,609,547
Redemptions (purchase) of FHLB stock (5,000) 145,300
Purchase of premises and equipment (58,865) (127,431)
Proceeds from sale of real estate acquired by foreclosure 49,330 121,100
------------ ------------
Net cash used in investing activities (7,720,984) (1,212,745)
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
CFS BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
June 30,
2000 1999
<S> <C> <C>
Cash flows from financing activities:
Net increase in interest bearing deposits 1,877,282 1,014,660
Decrease in advance payments by
borrowers for taxes and insurance (82,732) (85,507)
Net proceeds from FHLB advances 100,000 --
Net proceeds from other borrowing 710,000 --
Cash dividends (97,500) (97,500)
------------ ------------
Net cash provided by financing activities 2,507,050 831,653
Net increase (decrease) in cash and cash equivalents (4,318,561) 29,782
Cash and cash equivalents at beginning of period 7,689,451 5,317,285
------------ ------------
Cash and cash equivalents at end of period $ 3,370,890 $ 5,347,067
============ ============
Supplemental information on cash payments
Interest paid $ 2,520,375 2,476,624
Income taxes paid $ 337,500 $ --
Supplemental information on noncash transactions:
Loans transferred to real estate acquired by foreclosure $ 42,412 $ 123,394
</TABLE>
See accompanying notes to consolidated financial statements.
7
<PAGE>
CFS BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Nine months ended
June 30, June 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Net income $ 143,622 $ 104,948 $ 400,997 $ 264,534
Other comprehensive income, before tax:
Unrealized holding loss arising during the period (22,403) (567,894) (179,069) (770,700)
Less reclassification adjustment for gains (losses) on
securities available for sale -- -- (4,083) 27,486
--------- --------- --------- ---------
Total other comprehensive loss before tax (22,403) (567,894) (174,986) (798,186)
Income tax expense (benefit) related to other comprehensive income:
Unrealized holding loss on available
for sale securities (8,352) (193,648) (66,996) (277,543)
Less reclassification adjustment for gains (losses) on
securities available for sale -- -- (1,388) 10,170
--------- --------- --------- ---------
Total income tax benefit related to
other comprehensive income (8,352) (374,246) (65,608) (267,283)
--------- --------- --------- ---------
Total other comprehensive loss net of tax (14,051) (269,298) (109,378) (530,903)
--------- --------- --------- ---------
Total comprehensive income (loss) $ 129,571 $ (42,337) $ 291,619 $(266,369)
========= ========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
8
<PAGE>
CFS BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited consolidated financial
statements contain all adjustments (none of which are other than normal
recurring accruals) necessary for a fair statement of financial position of the
Company and the results of operations for the three month and nine month periods
ended June 30, 1999 and 2000. The results contained in these statements are not
necessarily indicative of the results that may be expected for the entire year.
For further information, refer to the consolidated financial statements and
notes included in the Company's annual report on Form 10-KSB for the year ended
September 30, 1999.
2. RECLASSIFICATIONS
Certain items in the 1999 consolidated financial statements have been
reclassified to conform to current year classifications.
3. NET INCOME PER SHARE
Presented below is a summary of the components used to calculate diluted
earnings per share for the three months and nine months ended June 30, 2000 and
1999.
<TABLE>
<CAPTION>
Three months ended Nine months ended
June 30, June 30,
2000 1999 2000 1999
----------------------------------------------------------
<S> <C> <C> <C> <C>
Weighted average common shares outstanding 126,645 124,055 126,545 123,955
Net effect of the assumed exercise of stock
options based on the treasury stock method
using average market price for the quarter 7,800 7,200 7,618 7,500
----------------------------------------------------------
Total weighted average common shares and
potential common stock outstanding 134,445 127,607 134,163 131,455
==========================================================
</TABLE>
4. RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the FASB issued Financial Accounting Standard No. 133, Accounting
for Derivative Instruments and Hedging Activities, ("FAS133"). The standard
establishes comprehensive accounting and reporting standards for derivative
instruments and hedging activities. FAS133 requires that all derivative
instruments be recorded in the statement of financial position at fair value;
the accounting for gains or losses due to changes in fair value of the
derivative instruments depends on whether the derivative instruments qualify as
hedging instruments. If a derivative instrument does not qualify as a hedge, the
gain or loss is reported in earnings when it occurs. However, if the derivative
qualifies as a hedging instrument, the accounting varies based on the type of
risk being hedged, and includes either recognizing earnings for changes in fair
value each reporting period, or accumulating changes in other comprehensive
income and recognizing earnings during the period that the hedged forecasted
item impacts earnings. FAS133, as amended, becomes effective for financial
statements for the first quarter of fiscal years beginning after June 15, 2000.
Management is evaluating the impact of FAS133 on the financial condition of the
Company.
9
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS
----------------------------------
REVIEW OF RESULTS OF OPERATIONS
OVERVIEW
--------
Net income for the nine months ended June 30, 2000 was $400,997 an increase of
$136,463 or 51.59% when compared to the nine months ended June 30, 1999. The
increase in net earnings resulted primarily from the recovery in February 2000
of $150,000 from a $220,000 loan that was charged off during the fiscal year
ended September 30, 1998 and from a $112,352 increase in net interest income.
The positive impact of the loan loss recovery was partially offset by the
addition of $50,000 to the Bank's loan loss provision during the nine month
period ended June 30, 2000. There were no loan loss provisions added during the
nine month period ended June 30, 1999. Net income for the three months ended
June 30, 2000 was $143,622 an increase of $38,674 or 36.85% as compared to net
income during the three months ended June 30, 1999 of $104,948.
NET INTEREST INCOME
-------------------
Net interest income is the difference between the interest and fees earned on
loans, securities and other interest earning assets (interest income) and the
interest paid on deposits and FHLB advances (interest expense). The Bank's
deposits and FHLB advances are primarily short term in nature and reprice faster
than the Bank's interest earning assets, consisting mainly of loans and mortgage
backed securities, which generally have longer maturities. The mix of the Bank's
interest earning assets and deposits and FHLB advances along with the trend of
market interest rates have a substantial impact on the change in net interest
margin. The cost of the Bank's interest bearing liabilities increased two basis
points from 3.91% for the nine month period ended June 30, 1999 to 3.93% during
the nine month period ended June 30, 2000 while the yield on interest earning
assets increased five basis points from 7.54% for the nine month period ended
June 30, 1999 to 7.59% for the comparable period in the current fiscal year.
The Bank's net interest income increased by $108,257 or 4.77% from $2,427,913
for the nine month period ended June 30, 1999 to $2,540,265 for the nine month
period in the current fiscal year. Net interest income for the three months
ended June 30, 2000 increased by $80,086 or 10.78% from $742,526 for the three
months ended June 30, 1999 to $822,612 for the three months ended June 30, 2000.
Net interest income increased for the three month and nine months periods ended
June 30, 2000 as compared to the same periods in the prior fiscal year as the
result of in an increase in the amount of interest earning assets and from a
slight increase in the Bank's net interest margin.
OTHER INCOME
------------
Other income decreased slightly from $357,094 for the nine month period ended
June 30, 1999 to $352,362 for the comparable period in the current fiscal year.
Decreases in gains on sale of securities of $33,611 were offset by an increase
in service charges on deposits of $25,456 when comparing the nine months ended
June 30, 2000 to the comparable period in the prior fiscal year. During the
three months ended June 30, 2000 other income declined by $2,981 as a result of
a decrease in service charges on deposits for the period when compared to the
three month period ended June 30, 2000.
10
<PAGE>
OTHER EXPENSE
-------------
During the nine month period ended June 30, 2000 the Bank's other expense
decreased by .78% or $17,300 from $2,211,335 for the nine month period ended
June 30, 1999 to $2,194,035 for the comparable period in the current year.
Salaries and employee benefits, federal insurance premiums, data processing
expense and advertising expense decreased by $10,819, $28,313, $28,793 and
$80,002 respectively when comparing the nine months ended June 30, 1999 to the
nine month period ended June 30, 2000. The decrease in salaries and employee
benefits resulted from a decline in the expense associated with the Bank's
Employee Stock Ownership Plan due to the completion of the allocation of shares
related to a $412,750 ten year loan made in 1989.
The decrease in federal insurance premiums resulted from an upgrade in the FDIC
classification of the Bank. The decrease in data processing expense resulted
from declines in Year 2000 related expenses. The decline in advertising resulted
from decreases in the amount of media purchases compared to the nine month
period ended June 30, 1999 during which the Bank was conducting an extensive
advertising campaign.
The decreases described above were partially offset by increases in professional
services and other expense of $49,289 and $92,567, respectively. The increase in
professional services resulted from an unsuccessful bid by the Bank for another
institution offered by the FDIC. The increase in other expense included higher
expenses for property tax and state franchise tax, as well as an increase in
charitable contributions and travel expense.
During the three month period ended June 30, 2000 other expense increased by
$13,431 or 1.90%. Increases in professional services and other expense of
$36,909 and $19,700 when comparing the three month period ended June 30 in the
current fiscal to the same period in the prior fiscal year. The increases
described above were partially offset by decreases in advertising expense and
federal insurance premiums of $31,587 and $12,817, respectively. See the
discussion of other expense for the nine month period ended June 30, 2000 and
1999 for explanations concerning the changes.
REVIEW OF FINANCIAL CONDITION
-----------------------------
Significant factors affecting the Bank's financial condition from September 30,
1999 to June 30, 2000 are detailed below:
ASSETS
------
Total assets increased $2,752,122 or 2.86% from $96,104,373 at September 30,
1999 to $98,856,495 at June 30, 2000. Significant changes in assets balances
include an increase in investment securities available for sale and loans which
increased by $6,015,761 or 17.90% and $2,284,892 or 5.25%, respectively from
$33,604,258 and $43,521,160, respectively at September 30, 1999 to $39,620,019
and $45,806,052, respectively at June 30, 2000. The increase was funded from
decreases in cash and cash equivalents which were maintained at a higher than
normal level at September 30, 1999 in anticipation of possible Year 2000
liquidity demands and from an increase in deposits. Other assets declined from
$1,077,514 at September 30, 1999 to $753,408 at June 30, 2000 as the result of
approximately $470,000 of short term receivables at September 30, 1999 being
collected during the current fiscal year.
11
<PAGE>
LIABILITIES
-----------
Total liabilities increased $2,539,711 or 2.87% between September 30, 1999 and
June 30, 2000. The increase resulted from an increase in the Bank's interest
bearing deposits of $1,897,172 from $75,180,323 at September 30, 1999 to
$77,077,495 at June 30, 2000.
LOAN QUALITY
------------
A key to long term earnings growth for Citizens Federal Savings Bank is
maintenance of a high quality loan portfolio. The Bank's directive in this
regard is carried out through its policies and procedures for review of loans.
The goals and results of these policies and procedures are to provide a sound
basis for new credit extensions and an early recognition of problem assets to
allow the most flexibility in their timely disposition.
At June 30, 2000 the Bank had $650,436 in assets classified as substandard,
including assets acquired by foreclosure or repossession of $49,530, no assets
classified as doubtful and $54,572 in assets classified as loss. A specific loan
loss reserve has been established for all loans classified as a loss. At
September 30, 1999 the Bank had $848,537 in assets classified as substandard
including real estate acquired by foreclosure of $47,270, no assets classified
as doubtful and $54,589 in assets classified as loss.
The allowance for loan losses was $321,383 at June 30, 2000. Management believes
that the current allowance for loan losses is adequate to cover any potential
future loan losses which exist in the loan portfolio, although there can be no
assurance that further increases in the loan loss allowance will not be made as
circumstances warrant.
LIQUIDITY AND INTEREST SENSITIVITY
----------------------------------
The Bank is required under applicable federal regulations to maintain specified
levels of cash and "liquid" investments in qualifying types of United States
Treasury and federal agency securities and other investments. Such investments
serve as a source of funds upon which the Bank may rely to meet deposit
withdrawals and other short term needs. The Bank monitors its cash flow position
to assure adequate liquidity levels and to take advantage of market
opportunities. The Bank maintains liquidity levels, which significantly exceed
the minimum regulatory requirements. Management believes that the Bank's
liquidity is adequate to fund all outstanding commitments and other cash needs.
Changes in interest rates will necessarily lead to changes in net interest
margin. The Bank's goal is to minimize volatility in the net interest margin by
taking an active role in managing the level, mix and maturity of assets and
liabilities. The Bank's primary emphasis in reducing its interest rate risk is
to focus on reducing the weighted average maturity of the loan portfolio and by
purchasing adjustable rate securities.
INFORMATION ABOUT FORWARD-LOOKING STATEMENTS
--------------------------------------------
Any statement contained in this report which is not a historical fact,
or which might otherwise be considered an opinion or projection concerning the
Bank or its business, whether expressed or implied, is meant as and should be
considered a forward-looking statement as that term is defined in the Private
Securities Litigation Reform Act of 1995. Forward-looking statements are based
on assumptions and opinions concerning a variety of known and unknown
12
<PAGE>
risks, including but not necessarily limited to changes in market conditions,
natural disasters and other catastrophic events, increased competition, changes
in availability and cost of reinsurance, changes in governmental regulations,
and general economic conditions, as well as other risks more completely
described in the Bank's filings with the Securities and Exchange Commission,
including this Annual Report on Form 10-KSB. If any of these assumptions or
opinions prove incorrect, any forward-looking statement made on the basis of
such assumptions or opinions may also prove materially incorrect in one or more
respects.
CAPITAL ADEQUACY AND RESOURCES
------------------------------
Management is committed to maintaining capital at a level sufficient to protect
stockholders and depositors, provide for reasonable growth, and fully comply
with all regulatory requirements. Management's strategy to maintain this goal is
to retain sufficient earnings while providing a reasonable return to
stockholders in the form of dividends and return on equity.
The Office of Thrift Supervision has issued guidelines identifying minimum
regulatory "tangible" capital equal to 1.50% of adjusted total assets, a minimum
3.00% core capital ratio and a minimum risk based capital of 8.00% of risk
weighted assets. The Bank has provided the majority of its capital requirements
through the retention of earnings.
At June 30, 2000 the Bank satisfied all regulatory requirements. The Bank's
compliance with the current standards is as follows:
<TABLE>
<CAPTION>
For capital Well
Actual adequacy purposes capitalized
------- ----------------- ----------
Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Total capital
(to risk weighted assets) $8,624,455 17.55% $3,932,240 8.00% $4,915,300 10.00%
Tier I capital
(to risk weighted assets) $8,476,026 17.24% $1,966,120 4.00% $2,949,180 6.00%
Tier I capital
(to average assets) $8,476,026 8.70% $3,895,610 4.00% $4,869,513 5.00%
</TABLE>
Reconciliation of capital:
Risk Weighted Tier I Capital
Capital
Total bank equity (GAAP) $ 7,863,850 $ 7,863,850
Unrealized loss on securities - AFS 612,176 612,176
Allowance for loan losses 266,811 --
Equity investments (118,282) --
Total $ 8,624,455 $ 8,476,026
13
<PAGE>
CFS BANCSHARES, INC. AND SUBSIDIARY
PART II OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS
The Bank is defending various lawsuits and claims. In the opinion of management
the ultimate disposition of these matters will not have a significant effect on
the financial position of the Bank.
ITEM 2: CHANGE IN SECURITIES
Not Applicable
ITEM 3: DEFAULT UPON SENIOR SECURITIES
Not Applicable
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5: OTHER INFORMATION:
None
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
None
14
<PAGE>
CFS BANCSHARES INC. AND SUBSIDIARY
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CFS BANCSHARES, INC.
(Registrant)
Date: August 14, 2000 By: /s/ Bunny Stokes, Jr.
-------------------------- ---------------------------------
Bunny Stokes, Jr.
Chairman/CEO
(principal executive officer)
Date: August 14, 2000 By: /s/ W. Kent McGriff
-------------------------- ---------------------------------
W. Kent McGriff
Executive Vice President
(principal financial and accounting
officer)
