<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------
FORM 10-KSB/A
------------
Amendment No. 1 to
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 1996
------------
Commission File No. 0-14535
CITIZENS BANCSHARES CORPORATION
A Georgia Corporation
(IRS Employer Identification No. 58-1631302)
175 John Wesley Dobbs Avenue, N.E.
Atlanta, Georgia 30303
(404) 659-5959
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Annual Report on Form 10-KSB for
the fiscal year ended December 31, 1996:
(List all such items, financial statements, exhibits or other portions amended)
Item 7. Financial Statements.
Item 13. Exhibits and Reports on Form 8-K.
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Citizens Bancshares Corporation:
We have audited the accompanying consolidated balance sheet of Citizens
Bancshares Corporation and subsidiary (the "Company") as of December 31, 1995
and the related consolidated statements of operations, shareholders' equity, and
cash flows for the years ended December 31, 1995 and 1994. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Citizens Bancshares
Corporation and subsidiary at December 31, 1995 and the results of their
operations and their cash flows for the years ended December 31, 1995 and 1994
in conformity with generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Atlanta, Georgia
February 9, 1996
<PAGE>
CITIZENS BANCSHARES CORPORATION AND SUBSIDIARY
Consolidated Financial Statements
Index to Consolidated Financial Statements
Page
Citizens Bancshares Corporation and subsidiary:
Independent Auditors Report.......................................F-2
Consolidated Balance Sheets - December 31, 1996 and 1995..........F-3
Consolidated Statements of Operations for the Years ended
December 31, 1996, 1995, and 1994...................F-4
Consolidated Statements of Shareholders' Equity for
the Years ended December 31, 1996, 1995, 1994.......F-5
Consolidated Statements of Cash Flows for the Years
ended December 31, 1996, 1995, and 1994.............F-6
Notes to Consolidated Financial Statements........................F-8
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders
Citizens Bancshares Corporation
We have audited the accompanying consolidated balance sheet of
Citizens Bancshares Corporation and subsidiary as of December 31,
1996 , and the related statements of earnings, changes in
stockholders equity and cash flows for the year then ended. These
financial statements are the responsibility of the Company s
management. Our responsibility is to express an opinion on these
financial statements based on our audit. The consolidated financial
statements as of December 31, 1995 and for the two years in the
period then ended were audited by other auditors whose report dated
February 9, 1996 expressed an unqualified opinion on those financial
statements.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
<PAGE>
In our opinion, the 1996 consolidated financial statements referred
to above present fairly, in all material respects, the financial
position of Citizens Bancshares Corporation and subsidiary as of
December 31, 1996, and the results of their operations and their
cash flows for the year then ended, in conformity with generally
accepted accounting principles.
PORTER KEADLE MOORE, LLP
Atlanta, Georgia
January 31, 1997
F-2
<PAGE>
<TABLE>
<CAPTION>
CITIZENS BANCSHARES CORPORATION AND SUBSIDIARY
Consolidated Balance Sheets
December 31, 1996 and 1995
Assets
1996 1995
<S> <C> <C> <C>
Cash and due from banks, including reserve
requirements of $2,165,000 and $2,488,000 $ 8,968,430 10,015,154
Federal funds sold 10,200,000 4,000,000
Cash and cash equivalents 19,168,430 14,015,154
Investment securities available for sale 13,269,047 9,064,320
Investment securities held to maturity 26,072,230 32,108,125
Loans, net 80,966,676 68,518,305
Premises and equipment, net 2,891,437 2,238,381
Other assets 2,510,788 2,444,514
$ 144,878,608 128,388,799
Liabilities and Stockholders Equity
Deposits:
Noninterest-bearing deposits $ 46,328,256 39,694,310
Interest-bearing deposits 86,560,487 76,685,242
Total deposits 132,888,743 116,379,552
Treasury, tax and loan account 116,415 172,801
Long-term debt 765,000 900,000
Accrued expenses and other liabilities 1,145,963 1,365,805
Total liabilities 134,916,121 118,818,158
Commitments
Stockholders equity:
Common stock - $1 par value; 5,000,000
shares authorized; 1,329,684 shares
issued and outstanding 1,329,684 1,329,684
Additional paid-in capital 1,470,210 1,470,210
Retained earnings 7,193,210 6,683,000
Unrealized (loss) gain on investment
securities available for sale, net of tax (30,617) 87,747
Total stockholders equity 9,962,487 9,570,641
$ 144,878,608 128,388,799
See accompanying notes to consolidated financial statements.
</TABLE>
F-3
<PAGE>
CITIZENS BANCSHARES CORPORATION AND SUBSIDIARY
Consolidated Statements of Earnings
For the Years Ended December 31, 1996, 1995 and 1994
[CAPTION]
<TABLE>
1996 1995 1994
<S> <C> <C> <C>
Interest income:
Loans, including fees $ 7,048,133 6,415,508 5,232,136
Investment securities:
Taxable 2,805,944 2,751,717 2,617,378
Tax-exempt 77,052 112,646 227,710
Federal funds sold 427,763 527,748 322,895
Total interest income 10,358,892 9,807,619 8,400,119
Interest expense:
Deposits 2,990,421 2,888,047 2,342,621
Treasury, tax and loan account 6,696 14,315 26,195
Long-term debt 87,675 79,124 96,135
Total interest expense 3,084,792 2,981,486 2,464,951
Net interest income 7,274,100 6,826,133 5,935,168
Provision for loan losses 65,000 416,670 735,004
Net interest income after provision for
loan losses 7,209,100 6,409,463 5,200,164
Noninterest income:
Service charges on deposit accounts 3,745,993 3,771,170 4,060,090
Gain on sale of assets 19,042 96,360 114,529
Other operating income 294,886 268,537 458,565
Total noninterest income 4,059,921 4,136,067 4,633,184
Noninterest expense:
Salaries and employee benefits 5,286,500 4,783,799 4,463,468
Net occupancy and equipment 1,826,313 1,762,799 1,686,830
Other operating expenses 3,134,012 2,671,437 2,956,204
Total noninterest expense 10,246,825 9,218,035 9,106,502
Earnings before income taxes 1,022,196 1,327,495 726,846
Income tax expense 379,018 74,551 25,765
Net earnings $ 643,178 1,252,944 701,081
Net earnings per share $ 0.48 0.94 0.53
Weighted average outstanding shares 1,329,684 1,329,684 1,329,684
See accompanying notes to consolidated financial statements.
</TABLE>
F-4
<PAGE>
<TABLE>
<CAPTION>
CITIZENS BANCSHARES CORPORATION AND SUBSIDIARY
Consolidated Statements of Stockholders Equity
For the Years Ended December 31, 1996, 1995 and 1994
Unrealized
gain (loss) on
Additional investment
Common stock paid-in Retained securities
Shares Amount capital earnings available for sale Total
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1993 1,303,655 $ 1,303,655 1,366,094 4,992,088 - 7,661,837
Cumulative effect of change
in accounting principle,
net of tax - - - - 40,920 40,920
Net earnings - - - 701,081 - 701,081
Common stock dividend declared - 2% 26,029 26,029 104,116 (130,145) - -
Change in unrealized gain (loss)
on investment securities
available for sale, net of tax - - - - (118,383) (118,383)
Balance, December 31, 1994 1,329,684 1,329,684 1,470,210 5,563,024 (77,463) 8,285,455
Net earnings - - - 1,252,944 - 1,252,944
Dividends paid - $0.10 per share - - - (132,968) - (132,968)
Change in unrealized gain (loss)
on investment securities
available for sale, net of tax - - - - 165,210 165,210
Balance, December 31, 1995 1,329,684 1,329,684 1,470,210 6,683,000 87,747 9,570,641
Net earnings - - - 643,178 - 643,178
Dividends paid - $0.10 per share - - - (132,968) - (132,968)
Change in unrealized gain (loss)
on investment securities
available for sale, net of tax - - - - (118,364) (118,364)
Balance, December 31, 1996 1,329,684 $ 1,329,684 1,470,210 7,193,210 (30,617) 9,962,487
See accompanying notes to consolidated financial statements.
</TABLE>
F-5
<PAGE>
<TABLE>
<CAPTION>
CITIZENS BANCSHARES CORPORATION AND SUBSIDIARY
Consolidated Statements of Cash Flows
For the Years Ended December 31, 1996, 1995 and 1994
1996 1995 1994
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 643,178 1,252,944 701,081
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Provision for loan losses 65,000 416,670 735,004
Depreciation 685,436 643,611 460,100
Amortization and accretion (76,997) (244,233) (61,906)
Provision for deferred income taxes 179,070 (213,730) (211,499)
Gain on sale of assets (19,042) (96,360) (114,529)
Change in other assets (327,022) (148,486) 17,236
Change in accrued expenses and other
liabilities (219,842) 309,156 201,813
Net cash provided by operating activities 929,781 1,919,572 1,727,300
Cash flow from investing activities:
Proceeds from maturities of investment
securities held to maturity 12,557,117 12,828,965 24,409,192
Proceeds from maturities of investment
securities available for sale 2,204,200 3,550,000 4,000,000
Purchases of investment securities
held to maturity (6,500,200) (8,260,943)(19,422,825)
Purchases of investment securities
available for sale (6,574,413) (5,218,435) (2,483,147)
Purchases of loans - - (11,097,636)
Net change in loans (12,603,287) (667,590) (9,074,817)
Purchases of premises and equipment (1,347,892) (456,973) (1,074,324)
Proceeds from sale of premises and equipment 9,400 100,000 -
Proceeds from sale of real estate acquired
through foreclosure 293,733 689,683 1,593,340
Net cash (used) provided by
investing activities (11,961,342) 2,564,707 (13,150,217)
Cash flows from financing activities:
Net change in deposits 16,452,805 (6,017,990) 13,543,777
Principal payments on long-term debt (135,000) (393,223) (367,055)
Proceeds from long-term debt - - 900,000
Dividends paid (132,968) (132,968) -
Net cash provided by financing activities 16,184,837 (6,544,181) 14,076,722
Net change in cash and cash equivalents 5,153,276 (2,059,902) 2,653,805
Cash and cash equivalents at beginning
of year 14,015,154 16,075,056 13,421,251
Cash and cash equivalents at end of year $ 19,168,430 14,015,154 16,075,056
</TABLE>
F-6
<PAGE>
<TABLE>
<CAPTION>
CITIZENS BANCSHARES CORPORATION AND SUBSIDIARY
Consolidated Statements of Cash Flows, continued
For the Years Ended December 31, 1996, 1995 and 1994
1996 1995 1994
<S> <C> <C> <C> <C>
Supplemental disclosures of cash paid during
the year for:
Interest $ 2,922,016 2,912,000 2,343,000
Income taxes $ 493,000 159,000 141,000
Supplemental disclosure of noncash
investing transactions:
Real estate acquired through foreclosure $ 186,962 36,000 686,000
Investment securities held to maturity
transferred to available for sale $ - - 8,746,430
Change in unrealized (loss) gain
on investment securities available
for sale, net of tax $ (118,364) 165,210 118,383
</TABLE>
See accompanying notes to consolidated financial statements
F-7
<PAGE>
CITIZENS BANCSHARES CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
(1) Summary of Significant Accounting Policies
The following is a description of the more significant
accounting policies.
Business
Citizens Bancshares Corporation and subsidiary (the Company )
is a one-bank holding company that provides a full range of
c o mmercial banking services to individual and corporate
customers in metropolitan Atlanta through its wholly owned
subsidiary, Citizens Trust Bank (the Bank ). The Bank operates
under a state charter and serves its customers in metropolitan
Atlanta through eight full-service branches. The Bank has a
w h olly owned subsidiary, Atlanta Mortgage Brokerage and
Servicing Co., Inc., whose accounts are also included. All
significant intercompany accounts and transactions have been
eliminated in consolidation.
Basis of Presentation
The consolidated financial statements have been prepared in
conformity with generally accepted accounting principles and
with general practices within the banking industry. In
preparing the consolidated financial statements, management is
required to make estimates and assumptions that affect the
reported amounts in the consolidated financial statements.
Actual results could differ significantly from those estimates.
A material estimate common to the banking industry that is
particularly susceptible to significant change in the near term
is the allowance for loan losses.
Cash and Cash Equivalents
Cash and cash equivalents include cash and due from banks and
federal funds sold. Generally, federal funds are sold for
periods less than 90 days.
Investment Securities
The Company classifies investments in one of three categories:
held to maturity securites 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 separate
c o mponent of stockholders equity. The Company had no
investment securities classified as trading securities during
1996 and 1995.
Premiums and discounts on held-to-maturity securities are
amortized and accreted using a method which approximates a
level yield. Principal repayments received on mortgage-backed
securities are included in proceeds from maturities of
investment securities in the consolidated statements of cash
flows.
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 resulting in the establishment of a new cost basis for
the security.
<PAGE>
Loans and Allowance for Loan Losses
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.
Management considers a loan to be impaired when, based on
current information and events, it is probable that all amounts
due according to the contractual terms of the loan will not be
collected. Impaired loans are measured based on the present
value of expected future cash flows, discounted at the loan s
effective interest rate, or at the loan s observable market
price, or the fair value of the collateral if the loan is
collateral dependent.
Loans are generally placed on nonaccrual status when the full
and timely collection of principal or interest becomes
uncertain or the loan becomes contractually in default for 90
days or more as to either principal or interest unless the loan
is well collateralized and in the process of collection. When a
loan is placed on nonaccrual status, current period accrued and
uncollected interest is charged to interest income on loans
unless management feels the accrued interest is recoverable
through the liquidation of collateral. Interest income, if any,
on impaired loans is generally recognized on the cash basis.
The allowance for loan losses is based on management s
evaluation of the loan portfolio under current economic
conditions, historical loan loss experience, adequacy of
collateral, and such other factors which, in management s
judgment, deserve recognition in estimating loan losses. Loans
are charged against the allowance when, in the opinion of
management, such loans are deemed to be uncollectible and
subsequent recoveries are added to the allowance.
Management believes the allowance for loan losses is adequate.
While management uses available information to recognize losses
on loans, future additions to the allowance may be necessary
based on changes in economic conditions, particularly in the
metropolitan Atlanta area. 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.
Premises and Equipment
Premises and equipment are stated at cost less accumulated
depreciation which is computed using the straight-line method
over the estimated useful lives of the related assets. When
assets are retired or otherwise disposed, the cost and related
accumulated depreciation are removed from the accounts, and any
resulting gain or loss is reflected in earnings for the period.
The cost of maintenance and repairs which do not improve or
extend the useful life of the respective asset is charged to
earnings as incurred, whereas significant renewals and
improvements are capitalized. The range of estimated useful
lives for premises and equipment are generally as follows:
Buildings and improvements 5 - 20 years
Furniture and equipment 3 - 7 years
<PAGE>
Real Estate Acquired Through Foreclosure
Real estate acquired through foreclosure 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 loan loss. Any subsequent declines
in value are charged to operations.
Intangible Assets
Intangible assets includes deposit assumption premiums from the
purchase of certain assets and liabilities of a financial
institution during 1994. The deposit assumption premiums are
being amortized over five years, the estimated average life of
the deposit base acquired, using the straight-line method.
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.
Reclassifications
Certain 1995 and 1994 amounts have been reclassified to conform
to the 1996 presentation.
Recent Accounting Pronouncements
During 1996, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard No. 125 Accounting
for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities. This new standard, which
becomes effective for the Company on January 1, 1997, will
require the Company to make certain disclosures regarding its
servicing assets and liabilities, and may also affect the
classification of certain servicing assets and liabilities.
Management does not expect this new standard to have a material
impact on the consolidated financial statements.
<PAGE>
(2) Acquisition
On April 22, 1994, the Bank assumed the insured deposits of the
main office branch of the former Southern Federal Savings
Association from the Resolution Trust Corporation ( RTC ). The
deposit base assumed totaled $13 million for which a premium of
$275,000 was paid. The RTC paid approximately $3.6 million in
cash to fund the difference between the cash on hand and
liabilities assumed, and the premium paid. Also, the Bank
received an option to purchase performing residential mortgage
loans as part of the transaction. The Bank exercised this
option and purchased approximately $11 million in one-to-four
family residential mortgages. At December 31, 1996 and 1995,
t h e unamortized premium was approximately $126,000 and
$181,000, respectively.
In conjunction with the acquisition, the Company issued a
promissory note to the RTC totaling $900,000 to provide interim
capital assistance to the Bank. In addition, the Bank entered
into a lease and option agreement with the RTC. The Bank leases
the branch facility rent-free for five years with an option to
purchase.
(3) Investment Securities
Investment securities held to maturity are summarized as
follows:
<PAGE>
[CAPTION]
<TABLE>
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
At December 31, 1996: Cost Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Treasury and
U.S. Government agencies $ 15,677,378 14,457 158,044 15,533,791
Mortgage-backed securities 9,525,145 166,717 101,364 9,590,498
State, county, and municipal
securities 869,707 43,035 - 912,742
Totals $ 26,072,230 224,209 259,408 26,037,031
At December 31, 1995:
U.S. Treasury and
U.S. Government agencies $ 19,187,698 133,054 191,863 19,128,889
Mortgage-backed securities 11,795,245 297,244 84,498 12,007,991
State, county, and municipal
securities 1,125,182 75,826 - 1,201,008
Totals $ 32,108,125 506,124 276,361 32,337,888
</TABLE>
Investment securities available for sale are summarized as
follows:
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
At December 31, 1996: Cost Gains Losses Value
<S> <C> <C> <C> <C>
U.S Treasury and
U.S Government agencies $ 12,684,485 37,407 83,796 12,638,096
Other equity securities 630,951 - - 630,951
Totals $ 13,315,436 37,407 83,796 13,269,047
At December 31, 1995:
U.S. Treasury and
U.S. Government agencies $ 8,685,916 134,493 1,540 8,818,869
Other equity securities 245,451 - - 245,451
Totals 8,931,367 134,493 1,540 9,064,320
</TABLE>
The amortized costs and fair values of investment securities at
December 31, 1996, by contractual maturity, are shown below.
Expected maturities may differ from contractual maturities
b e cause issuers may have the right to call or prepay
obligations with and without call or prepayment penalties.
<PAGE>
<TABLE>
<CAPTION>
Held to Maturity Available for Sale
Estimated Estimated
Amortized Fair Amortized Fair
Cost Value Cost Value
<S> <C> <C> <C> <C>
Due in one year or less $1,180,212 1,181,097 4,496,497 4,518,708
Due after one year through
five years 15,366,873 15,265,436 4,989,719 4,976,790
Due after five years
through ten years - - 3,198,269 3,142,598
Mortgage-backed securities 9,525,145 9,590,498 - -
Other equity securities - - 630,951 630,951
$26,072,230 26,037,031 13,315,436 13,269,047
</TABLE>
There were no sales of securities in 1996, 1995 or 1994.
Investment securities with carrying values of approximately
$34,373,000 and $26,493,000 at December 31, 1996 and 1995 ,
respectively, were pledged to secure public funds on deposit and for
other purposes as required by law.
Upon adoption of SFAS No. 115 in 1994, the Company transferred
$8,746,430 of investment securities previously accounted for as held
to maturity to the available for sale category. The effect of this
change in accounting principle was a n addition to stockholders equity
of $40,920 which represents $62,000 of unrealized gains, net of
deferred taxes of $21,080.
<PAGE>
<TABLE>
<CAPTION>
(4) Loans
Loans outstanding, by classification, are summarized as
follows:
December 31,
1996 1995
<S> <C> <C>
Commercial, financial, and agricultural $ 13,727,346 11,002,816
Installment and single payment individual 13,850,289 7,782,645
Real estate - commercial 31,114,851 29,772,443
Real estate - residential 22,064,124 19,208,954
Real estate - construction 1,830,000 2,543,379
82,586,610 70,310,237
Less: Unearned income 178,803 225,792
Allowance for loan losses 1,441,131 1,566,140
$ 80,966,676 68,518,305
</TABLE>
A substantial portion of the Company s loan portfolio is
collateralized by real estate in metropolitan Atlanta.
Accordingly, the ultimate collectibility of a substantial
portion of the Company s loan portfolio is susceptible to
changes in market conditions in the metropolitan Atlanta area.
<TABLE>
<CAPTION>
Activity in the allowance for loan losses are summarized as
follows:
Years Ended December 31,
1996 1995 1994
<S> <C> <C> <C>
Balance at beginning of year $ 1,566,140 1,047,072 941,671
Provision 65,000 416,670 735,004
Loans charged off (423,676) (335,711)(1,200,700)
Recoveries on loans previously
charged off 233,667 438,109 571,097
Balance at end of year $ 1,441,131 1,566,140 1,047,072
</TABLE>
<TABLE>
<CAPTION>
Nonaccrual loans amounted to $1,286,000 and $1,261,000 at December
31, 1996 and 1995, respectively, and the interest income on the
nonaccrual loans which would have been reported for the years ended
December 31, 1996, 1995 and 1994 is summarized as follows:
Years Ended December 31,
1996 1995 1994
<S> <C> <C> <C>
Interest at contracted rate $ 83,000 91,000 182,000
Interest recorded as income (10,000) - (16,000)
Reduction of interest income $ 73,000 91,000 166,000
</TABLE>
<PAGE>
At December 31, 1996 and 1995, the recorded investment in loans that
are considered to be impaired was approximately $1,959,000 and
$2,051,000, respectively. The related allowance for loan losses for
each of these loans was approximately $302,000 and $308,000,
respectively. The average investment in impaired loans during 1996
was approximately $2,000,000.
The Company has direct and indirect loans outstanding to certain
executive officers, directors, and principal holders of equity
securities (including their associates). Management believes such
loans are made substantially on the same terms as those prevailing
at the time for comparable transactions with unaffiliated customers.
The following table summarizes the activity in these loans during
1996:
Balance at December 31, 1995 $ 803,000
New loans 1,723,000
Repayments (589,000)
Balance at December 31, 1996 $1,937,000
(5) Premises and Equipment
Premises and equipment are summarized as follows:
December 31,
1996 1995
Land $ 389,610 388,653
Buildings and improvements 1,578,301 1,440,499
Furniture and equipment 3,607,580 3,405,529
5,575,491 5,234,681
Less accumulated depreciation 2,684,054 2,996,300
$ 2,891,437 2,238,381
Depreciation expense totaled $685,436, $643,611 and $460,100
for the years ended December 31, 1996, 1995 and 1994,
respectively.
<TABLE>
<CAPTION>
(6) Deposits
The following is a summary of interest-bearing deposits:
1996 1995
<S> <C> <C>
NOW and money market accounts $ 24,258,804 29,866,212
Savings accounts 14,440,873 15,076,236
Time deposits of $100,000 or more 28,808,299 13,632,486
Other time deposits 19,052,511 18,110,308
$ 86,560,487 76,685,242
</TABLE>
<PAGE>
At December 31, 1996, maturities of time deposits are
approximately as follows:
Years ended December 31,
1997 $ 43,916,000
1998 1,754,000
1999 495,000
2000 1,478,000
2001 and thereafter 218,000
$ 47,861,000
Additionally, at December 31, 1996, demand deposits totaling
approximately $164,500 have been reclassified as loan balances,
and the Bank has deposits from related parties totaling
approximately $471,000.
(7) Long-Term Debt
Long-term debt at December 31, 1996 consists of a term loan
payable to a bank. The loan accrues interest at prime less
0.25% and interest is payable quarterly. Principal is payable
in quarterly installments of $45,000 beginning June 30, 1996
and through March 31, 2001. The loan is collateralized by a
pledge of the common stock of the Bank.
The loan agreement contains certain covenants, the most
restrictive of which relate to limitations on dividend
payments, additional debt, and capital expenditures, and to
minimum capital levels of the Company and the Bank, as well as
certain financial ratios. At December 31, 1996, the Company was
in violation of certain of these covenants and has obtained a
waiver from the bank through 1997 for these violations.
Long-term debt at December 31, 1995 consisted of a $900,000
note payable to the Resolution Trust Corporation. The note bore
a variable interest rate and matured April 22, 1996. The note
was collateralized by all of the common stock of the Bank.
<TABLE>
<CAPTION>
(8) Income Taxes
The components of income tax expense consist of:
1996 1995 1994
<S> <C> <C> <C>
Federal:
Current tax expense $ 199,948 288,281 237,264
Deferred tax expense (benefit) 179,070 (213,730) (211,499)
$ 379,018 74,551 25,765
</TABLE>
<PAGE>
[CAPTION]
<TABLE>
Income tax expense for the years ended December 31, 1996, 1995
and 1994 differed from the amounts computed by applying the
U.S. Federal income tax rate of 34% to earnings before income
taxes as follows:
1996 1995 1994
<S> <C> <C> <C>
Income tax expense at statutory rate 347,547 451,348 247,128
Tax-exempt interest income, net of
disallowed interest expense (24,196) (40,662) (73,939)
Utilization of alternative minimum
tax credits - (129,908) -
Change in the valuation allowance
for deferred tax assets (76,000) (211,000) (155,222)
Other, net 131,667 4,773 7,798
Income tax expense $ 379,018 74,551 25,765
</TABLE>
(8) Income Taxes, continued
The tax effects of temporary differences that give rise to
significant portions of deferred tax assets and deferred tax
liabilities are presented below:
1996 1995
Deferred tax assets:
Loans, principally due to difference in
allowance for loan losses and
deferred loan fees $ 262,106 303,000
Alternative minimum tax credit 45,722 196,000
Postretirement benefit accrual 61,971 46,000
Net unrealized loss on securities
available for sale 15,772 -
Premium paid in acquisition 33,978 21,000
Other 11,144 120,000
Total gross deferred tax assets 430,693 686,000
Less valuation allowance - 76,000
Net deferred tax assets 430,693 610,000
Deferred tax liabilities:
Premises and equipment, principally
due to difference in depreciation 32,905 51,000
Net unrealized gain on securities
available for sale - 45,000
Other 2,136 -
Total gross deferred liabilities 35,041 96,000
Net deferred tax assets $ 395,652 514,000
In assessing the realizability of deferred tax assets,
management considers whether it is more likely than not that
some portion or all of the deferred tax assets will not be
realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income and tax
planning strategies in making this assessment.
<PAGE>
The Company s alternative minimum tax credits can be carried
forward for an indefinite period. The Company also has, at
December 31, 1996, net operating loss carryforwards of
approximately $17,165,000 for state income tax purposes, which
expire in years 1999 through 2011, and state income tax credits
of approximately $249,000 which expire in years 1997 through
2001.
(9) Employee Benefits
Pension Plan
The Company had a noncontributory, defined benefit pension plan
which covered substantially all full-time employees. The
benefits payable under the plan were based on years of service
and the employee s compensation during the last five years of
employment. During 1994, the Company approved the curtailment
of the pension plan and the establishment of a defined
contribution 401(k) plan. In 1995, the Company terminated the
pension plan and distributed the net plan assets to the plan
participants. In connection with the termination, the Company
recorded an expense of $36,469, which represents the final
required contribution, net of previously accrued amounts.
Pension expense was $36,469 and $116,644 for 1995 and 1994,
respectively.
Defined Contribution Plan
The Company sponsors a defined contribution 401(k) plan
c o vering substantially all full-time employees. Employee
contributions are voluntary. The Company matches employee
contributions at 25% up to a maximum of 6% of compensation.
During the years ended December 31, 1996, 1995 and 1994, the
Company recognized $37,690, $31,735 and $14,611, respectively,
in expense related to this plan.
Other Postretirement Benefit Plans
In addition to the Company's defined contribution plan, the
Company sponsors postretirement medical and life insurance
benefits to full-time employees who meet certain minimum age
and service requirements. The plan contains cost sharing
features with retirees.
The following table presents the plan s funded status
reconciled with amounts recognized in the consolidated balance
sheets at December 31, 1996 and 1995:
1996 1995
Accumulated postretirement benefit
obligation $ (302,601) (320,492)
Unrecognized transition obligation 272,772 288,817
Unrecognized prior service cost (125,267) (132,226)
Unrecognized actuarial (gain)loss (31,198) 27,106
Accrued postretirement benefit cost
included in other liabilities $ (186,294) (136,795)
Net periodic postretirement benefit cost includes the
following components:
Years Ended December 31,
1996 1995 1994
Service cost $ 26,805 12,322 23,994
Interest cost 21,976 18,221 24,093
Net amortization 9,328 7,472 12,414
Net periodic postretirement
benefit cost $ 58,109 38,015 60,501
<PAGE>
For measurement purposes, an 8% annual rate of increase in the
per capita cost of covered benefits (i.e., health care cost
trend rate) was assumed for 1997; the rate was assumed to
decrease gradually to 5% over 28 years and remain level
thereafter. The effect of a one percentage point increase in
the assumed health care cost trend rate is not significant. The
w e ighted average discount rate used in determining the
accumulated postretirement benefit obligation was 7.5% at
January 1, 1997 and 7% at January 1, 1996.
(10) Commitments and Contingencies
The Company is a party to financial instruments with
off-balance sheet risk in the normal course of business to meet
t h e financing needs of its customers. These financial
instruments include commitments to extend credit and standby
letters of credit. Those instruments involve, to varying
degrees, elements of credit and interest rate risk in excess of
the amount recognized in the consolidated balance sheets. The
contract amounts of those instruments reflect the extent of
involvement the Company has in particular classes of financial
instruments.
The Company s exposure to credit loss in the event of
nonperformance by the other party of the financial instrument
for commitments to extend credit and standby letters of credit
is represented by the contractual amount of those instruments.
The Company uses the same credit policies in making commitments
and conditional obligations related to off-balance sheet
financial instruments as it does for the financial instruments
recorded in the consolidated balance sheet. At December 31,
1996, the Company had approximately $12,503,000 and $1,126,000
of commitments to originate loans and standby letters of
credit, respectively.
Commitments to extend credit are agreements to lend to a
customer as long as there is no violation of any condition
established in the contract. Commitments generally have fixed
expiration dates or other termination clauses and may require
payment of a fee. Since many of the commitments are expected to
expire without being drawn upon, the total commitment amounts
d o not necessarily represent future cash requirements.
Collateral held varies but may include accounts receivable,
inventory, property, plant and equipment, and residential and
c o m mercial real estate. Standby letters of credit are
commitments issued by the Company to guarantee the performance
of a customer to a third party.
The Bank has an employment agreement, expiring in June 1998,
with its president and chief executive officer whereby such
officer can earn bonuses each year equivalent to 30% of his
base salary if certain predetermined performance goals are met.
During 1996, a bonus of $24,000 was accrued and paid pursuant
to this agreement. No bonuses were accrued or paid under the
provisions of the agreement for the years ended December 31,
1995 and 1994.
<PAGE>
As of December 31, 1996, future minimum lease payments under
all noncancelable lease agreements inclusive of sales tax and
maintenance costs for the next five years are as follows:
Years ended December 31,
1997 $ 305,043
1998 297,375
1999 279,188
2000 267,408
2001 10,084
$ 1,159,098
Rent expense in 1996, 1995 and 1994 approximated $252,000,
$254,000 and $254,000, respectively.
The Bank has entered into long-term license agreements for the
operation of branch offices in supermarkets which expire in
2013. Future minimum license fee payments under these
agreements at December 31, 1996 for the next five years are as
follows:
Years ended December 31,
1997 $ 89,775
1998 97,125
1999 101,800
2000 101,800
2001 101,800
Thereafter 1,150,392
$ 1,642,692
License fee expense associated with these agreements for 1996,
1995 and 1994 amounted to $89,000, $125,000 and $231,000,
respectively.
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.
(11) Stockholders Equity
On December 21, 1994, the Board of Directors approved a 2%
stock dividend payable on January 3, 1995. All weighted average
s h a r e and per share information in the accompanying
consolidated financial statements and notes have been restated
to reflect the effect of the additional shares outstanding
resulting from this stock dividend.
<PAGE>
(12) Fair Value of Financial Instruments
Following are disclosures of fair value information about
financial instruments, whether or not recognized on the face of
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
c a n be significantly affected by the assumptions used,
including the discount rate and estimates of future cash flows.
The following disclosures should not be considered a surrogate
of the liquidation value of the Company, but rather a
good-faith estimate of the increase or decrease in value of
financial instruments held by the Company since purchase,
origination, or issuance.
Cash and Cash Equivalents
For cash, due from banks and federal funds sold, the
carrying amount is a reasonable estimate of fair value.
Investment Securities
Fair value of investment securities are based on quoted
market prices.
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. For variable rate loans, the carrying amount
is a reasonable estimate of fair value.
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
maturity certificates of deposit is estimated by discounting
the future cash flows using the rates currently offered for
deposits of similar remaining maturities.
Long-term Debt
Since the term loan bears a reasonable variable interest
rate, the carrying value approximates fair value.
Commitments to Extend Credit and Standby Letters of Credit
Because commitments to extend credit and standby letters of
credit are made using variable rates, 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.
<PAGE>
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.
I n a ddition, 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 carrying value and estimated fair value of the Company s
financial instruments at December 31, 1996 and 1995 are as
follows:
F-32
<PAGE>
[CAPTION]
<TABLE>
1996
--------------------------------------------
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Financial assets:
Cash and due from banks $ 8,968 8,968 10,015 10,015
Federal funds sold $ 10,200 10,200 4,000 4,000
Investment securities $ 39,341 39,306 41,172 41,402
Loans, net $ 80,967 78,958 68,518 68,891
Financial liabilities:
Deposits $132,889 132,995 116,370 116,339
Long-term debt $ 765 765 900 900
Off-balance-sheet financial
instruments:
Commitments to extend credit $ 12,503 12,503 2,750 2,750
Stand-by letters of credit $ 1,126 1,126 555 555
</TABLE>
CITIZENS BANCSHARES CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements, continued
(13) Condensed Financial Information Of Citizens Bancshares
Corporation (Parent Only)
Condensed Balance Sheets
[CAPTION]
<TABLE>
<S> <C> <C> <C>
December 31,
_________________________________
Assets: 1996 1995
Cash $ 12,298 16,738
Investment in the Bank, at equity 10,658,711 10,438,364
Other assets 56,478 28,061
$ 10,727,487 10,483,163
Liabilities and Stockholders Equity:
Liabilities:
Long-term debt $765,000 900,000
Accrued interest payable - 12,522
912,522
Stockholders equity:
Common stock 1,329,684 1,329,684
Additional paid-in capital 1,470,210 1,470,210
Retained earnings 7,193,210 6,683,000
Unrealized (loss) gain on investment securities
available for sale, net of tax (30,617) 87,747 _____________
Total stockholders equity 9,962,487 9,570,641 ___________
$ 10,727,487 10,483,163 __________
</TABLE>
F-33
<PAGE>
CITIZENS BANCSHARES CORPORATION AND SUBSIDIARY
to Consolidated Financial Statements, continued
(13) Condensed Financial Information Of Citizens Bancshares
Corporation (Parent Only), continued
Condensed Statements of Earnings
[CAPTION]
<TABLE>
For the Years Ended December 31,
1996 1995 1994
<S> <C> <C> <C>
Dividend from the Bank $381,484 450,000 300,000
Expenses:
Interest 63,017 60,464 51,620
Other 53,675 45,633 39,754
Total expenses 116,692 106,097 91,374
Earnings before income tax benefit and equity in
undistributed earnings of the Bank 264,792 343,903 208,626
Income tax benefit 39,675 23,786 18,275
Earnings before equity in undistributed
earnings of the Bank 304,467 367,689 226,901
Equity in undistributed earnings of the Bank 338,711 885,255 474,180 _______
Net earnings $643,178 1,252,944 701,081
</TABLE>
F-34
<PAGE>
CITIZENS BANCSHARES CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements, continued
(13) Condensed Financial Information Of Citizens Bancshares
Corporation (Parent Only), continued
[CAPTION]
<TABLE>
Condensed Statements of Cash Flows
Years Ended December 31, ______
1996 1995 1994 ____ ____ ____
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net earnings $643,178 1,252,944
701,081
Adjustments to reconcile net earnings
to net cash provided by operating activities:
Equity in undistributed earnings of the Bank (338,711)
(885,255) (474,180)
Change in other assets (28,417) (23,786) (4,275)
Change in other liabilities (12,522) 1,271 11,251
Net cash provided by operating activities 263,528 _______
345,174 233,877 _______ _______
Cash flows from investing activities - capital
contribution to Bank - - (900,000) _________
Cash flows from financing activities:
Proceeds from long-term debt - - 900,000
Payment on long-term debt (135,000) (225,000) (225,000)
Dividends paid (132,968) (132,968) -
Net cash (used) provided by financing activities (267,968)
(357,968) 675,000 _________ _______
Net change in cash (4,440) (12,794) 8,877
Cash at beginning of year 16,738 29,532 20,655
Cash at end of year $ 12,298 16,738 29,532
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 75,539 59,193
40,369 ________
Income taxes $493,000159,000 141,000
Noncash investing activities:
Change in Bank s unrealized (loss) gain on
investment securities available for sale,
net of tax $ (118,364) 165,210 (118,383)
</TABLE>
F-36
<PAGE>
CITIZENS BANCSHARES CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements, continued
(14) Regulatory Matters
Capital Adequacy Capital Adequacy T h e Company is subject to
various regulatory capital requirements administered by state and
federal banking agencies. Failure to meet minimum capital
requirements can i n i t iate certain mandatory -- and possibly
additional discretionary -- actions by regulators that, if
undertaken, could have a direct material effect on the Company s
financial s t a t ements. Under capital adequacy guidelines and
the regulatory framework for prompt corrective action, the
Company must meet specific capital guidelines that involve
quantitative measures of the Company s assets, liabilities, and
certain o f f - balance-sheet items as calculated under
regulatory accounting practices. The Company s capital amounts
and classification are also subject to qualitative judgments by
the r e gulators about components, risk weightings, and other
factors.
Quantitative measures established by regulation to ensure capital
adequacy require the Company to maintain minimum amounts and
ratios (set forth in the table below) of total and Tier 1capital
(as defined in the regulations) to risk-weighted assets (as
defined), and of Tier 1 capital (as defined) to average assets
(as defined). Management believes, as of December 31, 1996, that
the Company meets all capital adequacy requirements to which it
is subject.
As of December 31, 1996 the most recent notification from the
various regulators categorized the Company as well capitalized
under the regulatory framework for prompt corrective action. To
be categorized as well capitalized the Company must maintain
minimum total risk-based, Tier 1 risk-based and Tier 1 leverage
ratios as set forth in the table. There are no conditions or
events since that notification that management believes have
changed the institution s category.
The Company s actual capital amounts and ratios are also
presented in the table
To Be
Well
[CAPTION]
<TABLE>
<S> <C> <C> <C> <C>
Capitalized Under
For Capital Prompt
Corrective Actual Adequacy PurposesAction
Provisions Amount Ratio
AmountRatio Amount Ratio
(dollars in thousands) ______________________
As of December 31, 1996
Total Capital (to Risk Weighted Assets):
Consolidated $11,002 12% 7,228> 8% N/A N/A ____
Bank $11,699 13% 7,227> 8% 9,033 > 10% _ __ _
</TABLE>
F-37
<PAGE>
The Company's actual capital amounts and ratios are also
presented in the table
[CAPTION]
<TABLE>
To Be Well
Capitalized Under
Actual Adequancy Purposes Action Provisions
Amount Ratio Amount Ratio Amount Ratio
(dollars in thousands)
<S> <C> <C> <C> <C>
As of December 31, 1996
Total Capital (to Risk
Weighted Assets):
Consolidated $11,002 12% 7,228> 8% N/A N/A ____
Bank $11,699 13% 7,227> 8% 9,033 > 10% _ __ _
F-37
Tier 1 Capital (to Risk Weighted Assets):
Consolidated $ 9,867 11% 3,614> 4% N/A N/A
Bank $10,564 12% 3,613> 4% 5,420 > 6% _
Tier 1 Capital (to Average Assets):
Consolidated $ 9,867 7% 5,652> 4% N/A N/A _
Bank $10,564 7% 5,651> 4% 7,064 > 5% _
As of December 31, 1995 ___
Total Capital (to Risk Weighted Assets):
Consolidated $10,238 14% 5,978> 8% N/A N/A _
Bank $11,106 15% 5,978> 8% 7,473 > 10% _
Tier 1 Capital (to Risk Weighted Assets):
Consolidated $ 9,302 12% 2,989> 4% N/AN/A _
Bank $10,170 14% 2,989> 4% 4,484 > 6%
Tier 1 Capital (to Average Assets):
Consolidated $ 9,302 7% 5,420> 4% N/A N/A _
Bank $10,170 8% 5,420> 4% 6,775 > 5% _ _
</TABLE>
F-38
<PAGE>
CITIZENS BANCSHARES CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements, continued
(14) Regulatory Matters, continued
Board Resolution
The Board of Directors of the Bank entered into a Board
Resolution (the Agreement ) dated March 15, 1995, with the
Georgia Department of Banking and Finance and the Federal
Reserve Bank of Atlanta ( Regulatory Authorities ) to take
corrective actions, which if not taken, could result in further
regulatory sanctions. During 1996, the Regulatory Authorities
lifted the Board Resolution and thus neither the Company nor
the Bank are under levels of regulatory scrutiny beyond that to
which all banks are subject.
Dividend Limitation
The amount of dividends paid to the Parent Company from the
Bank is limited by various banking regulatory agencies. Any
such dividends will be subject to maintenance of required
capital levels and will require prior approval from regulatory
authorities. The Georgia Department of Banking and Finance
requires prior approval for a bank to pay dividends in excess
of 50% of its prior year s earnings. The amount of dividends
available from the Bank for payment in 1997 is approximately
$320,000.
(15) Supplementary Income Statement Information
Components of other operating expenses in excess of 1% of total
income in any of the respective years are approximately as
follows:
<TABLE>
<CAPTION>
1996 1995 1994
--------- ------- --------
<S> <C> <C> <C>
Professional services legal $ 262,000 219,000 225,000
Professional services - other 198,000 179,000 162,000
Stationery and supplies 254,000 179,000 226,000
Advertising 147,000 152,000 118,000
Data processing 201,000 135,000 187,000
Postage 147,000 195,000 158,000
Telephone 216,000 157,000 185,000
FDIC insurance premiums 77,000 185,000 276,000
Other losses 471,000 217,000 352,000
</TABLE>
F-39
<PAGE>
ITEM 7. FINANCIAL STATEMENTS.
- ------ --------------------
The consolidated financial statements of the Company and the reports
of independent auditors are included in this Report beginning at page
F-1.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
- ------- --------------------------------
(a) Exhibits.
--------
Exhibit No. Description of Exhibit
- -------------------------------------------------------------------------------
3.1 Articles of Incorporation of Citizens Bancshares
Corporation.(1)
3.1.1 Amendment to Articles of Incorporation of Citizens
Bancshares Corporation.(2)
3.2 Bylaws of Citizens Bancshares Corporation.(1)
10.1 Citizens Trust Bank Pension Plan & Trust, as amended
and restated effective January 1, 1984.(1)(3)
10.2 Lease and Option Agreement by and between Citizens Trust
Bank and Resolution Trust Corporation, dated April 22,
1994.(4)
10.3 Employment Agreement dated June 30, 1992, between
Citizens Trust Bank and William L. Gibbs.(5)
10.3.1 First Amended and Restated Employment Agreement dated
September 18, 1995, between Citizens Trust Bank and William
L. Gibbs.(6)
10.4 Loan Agreement by and between Citizens Bancshares
Corporation and SunTrust Bank, Atlanta, dated April 22,
1996.(7)
10.5 KPMG Peat Marwick LLP letter dated September 9, 1996 to the
Securities and Exchange Commission regarding statements
listed in Item 8 of the Company's Form 10-KSB dated March
29, 1997.(7)
21 Subsidiaries of the Registrant.(8)
24 Power of Attorney.(7)
27 Financial Data Schedule.(7)
<PAGE>
______________________________
(1) Incorporated herein by reference to the exhibit of the same number in
Citizens Bancshares Corporation's Registration Statement on Form 10,
previously filed with the Commission. (File No. 0-14535).
(2) Incorporated herein by reference to Exhibits 3.3 and 4.2 to Citizens
Bancshares Corporation's Annual Report on Form 10-K for the fiscal
year ended December 31, 1987, previously filed with the Commission.
(File No. 0-14535).
(3) The indicated exhibit is a compensatory plan required to be filed as
an exhibit.
(4) Incorporated herein by reference to Exhibit 10.10 to Citizens
Bancshares Corporation's Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1994, previously filed with the Commission.
(File No. 0-14535).
(5) Incorporated herein by reference to Exhibit 10.6 to Citizens Bancshares
Corporation's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1993, previously filed with the Commission. (File
No. 0-14535).
(6) Incorporated herein by reference to Exhibit 10.11 to Citizens
Bancshares Corporation's Annual Report on Form 10-KSB for the year
ended December 31, 1995, previously filed with the Commission. (File
No. 0-14535).
(7) Incorporated herein by reference to the exhibit of the same number in
Citizens Bancshares Corporation's Annual Report on Form 10-KSB for the
year ended December 31, 1996, previously filed with the Commission.
(File No. 0-14535).
(8) Incorporated herein by reference to Exhibit 22 to Citizens Bancshares
Corporation's Registration Statement on Form 10, previously filed with
the Commission. (File No. 0-14535).
<PAGE>
(b) Reports on Form 8-K.
-------------------
No reports on Form 8-K were filed during the fourth quarter of the fiscal
year ended December 31, 1996.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has caused this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.
CITIZENS BANCSHARES CORPORATION
Date: October 21, 1997 By: /s/ Johnnie L. Clark
---------------------
Johnnie L. Clark
<PAGE>
EXHIBIT INDEX
-------------
Exhibit No. Description of Exhibit
- -------------------------------------------------------------------------------
99.1 Report of KPMG Peat Marwick LLP
