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 SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 FORM 10 - Q

( X ) QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) TO THE SECURITIES
 EXCHANGE ACT OF 1934

For the quarterly period ended            September 30, 2002

 (  ) TRANSITION REPORT UNDER SECTION 13 OR 15 (d) TO THE EXCHANGE ACT

For the transition period from  ____________ to  _____________

Commission File No:  0 - 14535

                            CITIZENS BANCSHARES CORPORATION                                      
                                       (Name of small business issuer in its charter)

              Georgia                                                                    58 - 1631302                      
(State or other jurisdiction of                                       (IRS Employer Identification No.)
   incorporation or organization)

175 John Wesley Dobbs Avenue, N.E., Atlanta, Georgia                    30303              
(Address of principal executive office)                                                (Zip Code)

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

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15 (d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the 90 days.   Yes  X       No       .

State the number of shares outstanding for each of the issuer's classes of common equity as of the latest practicable date: 1,989,069 shares of Common Stock, $1.00 par value and 90,000 shares of Non-Voting Common Stock, $1.00 par value outstanding on November 11, 2002. 

Part 1.    FINANCIAL INFORMATION

Item 1.    Financial statements

CITIZENS BANCSHARES CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 2002
(Unaudited)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Citizens Bancshares Corporation (the "Company") is a holding company that provides a full range of commercial banking and mortgage brokerage services to individual and corporate customers in metropolitan Atlanta and Columbus, Georgia through its wholly owned subsidiaries, Citizens Trust Bank (the "Bank") and Citizens Trust Bank Mortgage Services, Inc. ("Mortgage Services").   The Bank operates under a state charter and serves its customers through 11 full-service branches in metropolitan Atlanta and one full-service branch in Columbus, Georgia.

The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations for reporting on Form 10-Q.  Accordingly, certain disclosures required by generally accepted accounting principles are not included herein. These interim statements should be read in conjunction with the financial statements and notes thereto included in the Company's latest Annual Report on Form 10-KSB filed with the Securities and Exchange Commission for the year ended December 31, 2001.  The results of operations for the interim periods reported herein are not necessarily representative of the results expected for the full 2002 fiscal year.

The consolidated financial statements of the Company as of September 30, 2002 and for the three and nine month periods ended September 30, 2002 and 2001 are unaudited.  In the opinion of management, all adjustments necessary for a fair presentation of the financial position and results of operations and cash flows for the three month and nine month periods have been included.  All adjustments are of a normal recurring nature.  All significant intercompany accounts and transactions have been eliminated in consolidation.

ACCOUNTING POLICIES

The Company's consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"), which often require the judgment of management in the selection and application of certain accounting principles and methods.  Reference is made to the accounting policies of the Company described in the notes to the consolidated financial statements contained in the Company's Annual Report on Form 10-KSB for the year ended December 31, 2001.  The Company has followed those policies in preparing this report.  Management believes that the quality and reasonableness of its most critical policies enable the fair presentation of its financial position and of its results of operations.

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

Investment Securities- The Company classifies investments in one of three categories based on management's intent upon purchase: held to maturity securities which are reported at amortized cost, trading securities which are reported at fair value with unrealized holding gains and losses included in earnings, and available for sale securities which are recorded at fair value with unrealized holding gains and losses included as a component of accumulated other comprehensive income.  The Company had no investment securities classified as trading securities during 2002 or 2001.

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

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

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

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

A description of other accounting policies are summarized in Note 1, Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements of the Company's Annual Report on Form 10-KSB for the year ended December 31, 2001.  The Company has followed those policies in preparing this report.

TRUST PREFERRED SECURITIES

During the second quarter of 2002, Citizens Bancshares Corporation issued $5 million of pooled trust preferred securities ("Preferred Securities") through one issuance by a wholly-owned subsidiary grantor trust, Citizens (GA) Statutory Trust I (the "Trust").  The Preferred Securities accrue and pay distributions periodically at specified annual rates as provided in the indentures, Libor plus 3.45%.  The Trust used the net proceeds from the offering to purchase a like amount of Junior Subordinated Debentures (the "Debentures") of the Company.  The Debentures are the sole assets of the Trust and are eliminated, along with the related income statement effects, in the consolidated financial statements.  The Company's obligations under the Debentures and related documents, taken together, constitute a full and unconditional guarantee by the Company of the obligations of the Trust.  The Preferred Securities are mandatorily redeemable upon the maturity of the Debentures, or upon earlier redemption as provided in the indentures.  The Company has the right to redeem the Debentures in whole or in part on or after specific dates, at a redemption price specified in the indentures plus any accrued but unpaid interest to the redemption date.  At September 30, 2002, the interest rate on the Preferred Securities was 5.34%

PENDING ACQUISITION

On May 30, 2002, the Company signed a definitive agreement to purchase CFS Bancshares, Inc., the parent company of Citizens Federal Savings Bank of Birmingham, Alabama.  At September 30, 2002, Citizens Federal Savings Bank had total assets of $106,827,000.  The completion of the purchase agreement is pending regulatory approval.

COMMON STOCK

Basic net income per share (EPS) is computed based on net income divided by the weighted average number of common share equivalents outstanding.  Diluted EPS is computed based on net income divided by the weighted average number of common and potential common shares. The Company's potential common shares are due to outstanding stock options, which were not dilutive during the nine months ended September 30, 2002 and 2001.

RECENT ACCOUNTING PRONOUNCEMENTS

In July 2001, the Financial accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 141, "Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible Assets."  SFAS No. 141 requires the purchase method of accounting to be used for all business combinations initiated after September 30, 2001 and establishes criteria for recognizing intangible assets.  The adoption of SFAS No. 141 did not have a material impact on the Company's financial statements.  SFAS No. 142 addresses the financial accounting and reporting standards for the acquisition of intangible assets outside a business combination and for goodwill and other intangible assets subsequent to their acquisition.  The adoption of SFAS No. 142 on January 1, 2002 did not have a material impact on the Company's consolidated financial statements.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," which addresses accounting for and reporting of the impairment or disposal of long-lived assets.  The Company adopted the provisions of SFAS No. 144 on January 1, 2002.  The adoption of SFAS No. 144 did not have a significant impact on the Company's results of operations, financial position, or cash flows; however, SFAS No. 144 may modify the presentation of the operating results from abandoned or disposed businesses and the Company's consolidated statement of operations in the future.

SEGMENTS

During the year ended December 31, 2001, the Company maintained two segments: the Bank and Mortgage Services.  In December 2001, the Company realigned Mortgage Services to become a department of the Bank.  As a result, in 2002 Mortgage Services is no longer managed as a separate segment of the Company.

RECLASSIFICATIONS

Certain 2001 amounts have been reclassified to conform to the 2002 presentation.

Item 2.                           MANAGEMENT'S DISCUSSION AND ANALYSIS

INTRODUCTION

 Citizens Bancshares Corporation (the "Company") is a holding company that provides a full range of commercial banking and mortgage brokerage services to individuals and corporate customers in its primary market areas, metropolitan Atlanta and Columbus, Georgia through its wholly owned subsidiaries, Citizens Trust Bank (the "Bank") and Citizens Trust Bank Mortgage Services, Inc. ("Mortgage Services").  The Bank is a member of the Federal Reserve System and operates under a state charter.  The Company serves its customers through 11 full-service branches in metropolitan Atlanta and one full-service branch in Columbus, Georgia.

Forward Looking Statements

This report contains forward-looking statements which are subject to numerous assumptions, risks and uncertainties.  In preparing this report, management is required to make estimates and assumptions that affect the reported amounts in the consolidated financial statements such as the allowance for loan losses and valuation allowances associated with the recognition of deferred tax assets.  Statements pertaining to future periods are subject to uncertainty because of the possibility of changes in underlying factors and assumptions. Actual results could differ materially from those contained in or implied by such forward-looking statements for a variety of factors including: sharp and/or rapid changes in interest rates; significant changes in the economic scenario from the current anticipated scenario which could materially change anticipated credit quality trends and the ability to generate loans; significant delay in or inability to execute strategic initiatives designed to grow revenues and/or control expenses; unanticipated issues during the integration of acquisitions; and significant changes in accounting, tax or regulatory policies or requirements.  The Company disclaims any obligations to update any such forward-looking statements.

The following discussion is of the Company's financial condition as of September 30, 2002 and the changes in the financial condition and results of operations for the three and nine month periods ended September 30, 2002 and 2001.

FINANCIAL CONDITION

Citizens Bancshares Corporation's total assets at September 30, 2002 increased by $15,367,000 from $252,201,000 - an increase of 6.09% compared to the same period a year ago.  The Company continues to focus on growth and expansion opportunities.  In January 2002, the Company opened its newest branch in the Stonecrest Mall located in Conyers, Georgia.  The Company's total assets at September 30, 2002 decreased by $26,932,000 or 9.14% compared to $267,568,000 at December 31, 2001.  The decrease is primarily due to corporate and governmental customers that make significant monthly deposits and withdrawals. These funds fluctuate monthly due to the operating needs of the corporate and public entities.  Additionally, to lower its interest expense on deposits and improve its net interest margin, the Company did not renew maturing time deposits requiring negotiated rates above current market rates. 

Accordingly, the Company's federal funds sold and interest-bearing deposits at other banks decreased by $1,560,000 or 100% and $32,018,000 or 85.94%, respectively, for the nine months ended September 30, 2002.  These decreases were partially offset by an $11,925,000 increase in available for sale securities.

From December 31, 2001 to September 30, 2002, net total loans decreased by  $1,382,000 or 0.89% due to the unstable economy which has slowed loan demand.  The Company has also tightened its lending standards to reduce the overall default risk in its loan portfolio.

Loans held for sale decreased $422,000 as these loans were sold during 2002.  Cash value of life insurance, a comprehensive compensation program for senior management and the directors of the Company, decreased $222,000 or 3.16%.  The decrease is due to the redemption of policies for several senior managers who were no longer with the Company.  Additionally in 2002, the Company collected on a policy and paid benefits to the surviving spouse.

Total liabilities decreased $28,773,000 to $243,954,000 at September 30, 2002 from December 31, 2001.  This decrease is primarily due to the $30,360,000 or 14.74% decrease in corporate and governmental interest-bearing deposits mentioned previously. During the nine months ended September 30, 2002, the Company repaid $530,000 of its outstanding notes payable.  On June 26, 2002, the Company issued debt of $5,000,000 in a pooled trust preferred securities transaction with an interest rate of LIBOR plus 3.45% which is callable after five years at the Company's discretion.  At September 30, 2002, the interest rate for the trust preferred securities was 5.34%.

INVESTMENT SECURITIES

The Company invests a portion of its assets in U.S. treasury bills and notes, U.S. government sponsored agency securities, mortgage backed bonds, as well as certain equity securities.  Other investments includes Federal Home Loan Bank stock and Federal Reserve Bank stock.  At September 30, 2002 and December 31, 2001, the Company's investment securities portfolio represented approximately 28.36% and 21.82% of total assets, respectively.

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

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

LOANS

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

IMPAIRED LOANS

Management considers a loan to be impaired when, based on current information and events, it is probable that all amounts due according to the contractual terms of the loan will not be collected.  Impaired loans are measured based on the present value of expected future cash flows discounted at the loan's effective interest rate, 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 in 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 recognized on the cash basis.

At September 30, 2002, the recorded investment in loans that are considered impaired was approximately $4,101,000, an increase of $784,000 from $3,317,000 at December 31, 2001.

NONPERFORMING ASSETS

Nonperforming assets include nonperforming loans, real estate acquired through foreclosure and repossessed assets.  Nonperforming loans consist of loans that are past due with respect to principal or interest more than 90 days or have been placed on nonaccrual status.

With the exception of the loans included within nonperforming assets in the table below, management is not aware of any loans classified for regulatory purposes as loss, doubtful, substandard, or special mention that have not been disclosed which (1) represent or result from trends or uncertainties which management reasonably expects will materially impact future operating results, liquidity, or capital resources, or (2) represent any information on material credits which management is aware that causes management to have serious doubts as to the abilities of such borrowers to comply with the loan repayment terms.

Nonperforming assets increased by $2,014,000 to $4,246,000 at September 30, 2002 from $2,232,000 at December 31, 2001.  This increase includes $1,076,000 of the guaranteed portion of Small Business Administration loans, which is considered fully recoverable once the Company completes the loan liquidation process. Nonperforming assets represented 2.71% of loans, net of unearned income, discounts and real estate acquired through foreclosure at September 30, 2002 as compared to 1.41% at December 31, 2001.

The table below presents a summary of the Company's nonperforming assets at September 30, 2002 and December 31, 2001.

ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses is primarily available to absorb losses inherent in the loan portfolio. Credit exposures deemed uncorrectable are charged against the allowance for loan losses. Recoveries of previously charged-off amounts are credited to the allowance for loan losses.

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

Loans are charged against the allowance when, in the opinion of management, such loans are deemed uncollectible and subsequent recoveries are added to the allowance.  For the nine months ended September 30, 2002, provisions for loan losses totaled $590,000 compared to $1,730,000 for the same period in 2001.  During the third quarter of 2001, the Company increased its provision for loan losses by $670,000 compared to $190,000 for the same period in 2002.  The Company realized a loss on a $2.2 million loan in default during 2001 and as a result, recorded specific provisions of $1,370,000 and $550,000 during the nine and three months ended September 30, 2001, respectively, related to this loan.

The allowance for loan losses for the nine month period ended September 30, 2002 was approximately $2,020,000, representing 1.29% of total loans, net of unearned income compared to approximately $2,003,000 at December 31, 2001, which represented 1.27% of total loans, net of unearned income.

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.

A substantial portion of the Company's loan portfolio is secured by real estate in the metropolitan Atlanta market, including a concentration of loans to area churches.  The Company's loans to area churches were approximately $41.0 million at September 30, 2002 and $43.8 million at December 31, 2001.  Accordingly, the ultimate collectability of the substantial portion of the Company's loan portfolio is susceptible to changes in market conditions in the metropolitan Atlanta area.

The following table summarizes loans, changes in the allowance for loan losses arising from loans charged off, recoveries on loans previously charged off by loan category, and additions to the allowance which have been charged to operating expense as of and for the nine month period ended September 30, 2002 and year ended December 31, 2001, respectively.

DEPOSITS

Deposits remain the Company's primary source of funding loan growth.  Total deposits for the nine month period ended September 30, 2002 decreased by 12.62% or $32,535,000 to $225,265,000.  Noninterest-bearing deposits decreased $2,176,000 or 4.20%, while interest-bearing deposits decreased by $30,360,000 or 14.74%.  These decreases are primarily due to corporate and governmental customers who make significant monthly deposits and withdrawals based on their budgetary needs.  Also, to lower its interest expense on deposits, match funding with loan demand and to improve its net interest margin, the Company did not renew maturing time deposits requiring negotiated rates above current market rates.

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

OTHER BORROWED FUNDS

While the Company continues to emphasize funding earning asset growth through deposits, the Company has relied on other borrowings as a supplemental funding source.  Other borrowings consist of Federal Home Loan Bank (the "FHLB") advances and short-term borrowings.  The Company's bank subsidiary had outstanding advances from the FHLB of $10,000,000 at September 30, 2002 and December 31, 2001.  The outstanding advances bear interest at a fixed rate of 5.82%.  The advances are collateralized by a blanket lien on the Company's 1-4 family mortgage loans.

During the second quarter of 2002, Citizens Bancshares Corporation issued $5 million of pooled trust preferred securities ("Preferred Securities") through one issuance by a wholly-owned subsidiary grantor trust, Citizens (GA) Statutory Trust I (the "Trust").  The Preferred Securities accrue and pay distributions periodically at specified annual rates as provided in the indentures, Libor plus 3.45%.  The Trust used the net proceeds from the offering to purchase a like amount of Junior Subordinated Debentures (the "Debentures") of the Company.  The Debentures are the sole assets of the Trust and are eliminated, along with the related income statement effects, in the consolidated financial statements.  The Company's obligations under the Debentures and related documents, taken together, constitute a full and unconditional guarantee by the Company of the obligations of the Trust.  The Preferred Securities are mandatorily redeemable upon the maturity of the Debentures, or upon earlier redemption as provided in the indentures.  The Company has the right to redeem the Debentures in whole or in part on or after specific dates, at a redemption price specified in the indentures plus any accrued but unpaid interest to the redemption date.  At September 30, 2002, the interest rate on the Preferred Securities was 5.34%.

The Company has an unsecured note payable of approximately $740,000 at September 30, 2002 and $940,000 at December 31, 2001.  The note bears interest at the lender's prime rate minus 50 basis points.

At December 31, 2001, the Mortgage Services had $330,000 outstanding under a secured warehouse line of credit.  The line was repaid and terminated during the first quarter of 2002.

RESULTS OF OPERATIONS

Net Interest Income:

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

During 2001 the Company's net interest income was affected by the Federal Reserve adjusting the federal funds target rate downward 11 times to its current target of 1.75% at September 30, 2002, as well as a slowdown in the economy.  Loan volume also slowed as net loans decreased $1,382,000 or 0.89% for the nine month period ended September 30, 2002.  As a result, interest income on loans, including fees decreased $2,088,000 or 18.19% for the nine month period in 2002.  Similarly, interest expense on deposits decreased $1,819,000 or 34.37% compared to September 30, 2001 as the Company was able to reprice a significant portion of its interest bearing deposits to offset lower loan yields and volume.  Investment securities income increased $736,000 or 32.04% while federal funds and interest-bearing deposits with banks decreased $206,000 or 41.28%.   The Company reallocated its excess liquidity to higher yielding investment assets during the second quarter of 2002.  As a result, net interest income for the nine month period increased slightly by $176,000 to $8,669,000 compared to $8,493,000 for the same period in 2001.

For the three month period ended September 30, 2002, interest income on loans, including fees decreased $498,000 or 13.55% compared to the same period of the previous year due to decreased loan volume and interest rates.  Interest expense on deposits also decreased $621,000 or 38.77% compared to the three month period ended September 30, 2001 as the Company did not renew several high price time deposits.  Investment securities income increased $315,000 or 43.93% compared to the three month period ended September 30, 2001 due to the Company reallocating excess liquidity to higher yielding investment assets during the second quarter of 2002.  Net interest income for the three month period increased $285,000 to $3,025,000 compared to $2,740,000 for the same period in 2001.

Noninterest income:

Noninterest income consists of revenues generated from a broad range of financial services and activities, including fee-based services, loan origination fees, and profits and commissions earned through securities and insurance sales.  In addition, gains and losses realized from the sale of investment portfolio securities and sales of assets are included in noninterest income.  Noninterest income decreased $441,000 to $1,292,000 for the third quarter of 2002 compared to the third quarter of 2001. For the nine month period ended September 30, 2002, noninterest income totaled $4,106,000, a decrease of $2,623,000 or 38.96% compared to the same period ended September 30, 2001. 

Fee income from service charges on deposit accounts decreased slightly by $95,000 for the third quarter of 2002 compared with the same period in 2001.  It decreased $206,000 for the nine month period ended September 30, 2002 compared to the same period in 2001.  A large component of the Company's service charges on deposit accounts is related to insufficient funds, returned check charges, and other customer service fees.  These fees fluctuate from month to month.

Gain on sales of assets and investment securities totaled $321,000 for the nine month period ended September 30, 2002 compared to $1,368,000 for the same period in 2001.  During the second quarter of 2001, the Company liquidated a large portion of its equity investment portfolio in anticipation of changes in market conditions and realized a pretax gain of $924,000.  The Company also realized a pretax gain of $390,000 on the sale two branch buildings for the nine month period ended September 30, 2001. 

Loan origination fees decreased $1,218,000 or 87.18% for the nine month period ended September 30, 2002.  Over the past two years, Mortgage Services have been unfavorably impacted by decreased loan volume.  In December 2001, management implemented corrective actions to improve the mortgage subsidiary's financial performance by reducing excess staff and overhead cost to a level to match loan volume.  Additionally in December 2001, the Company realigned the operations of Mortgage Services to become a department of the Bank.  For the same reason, origination fees decreased $405,000 for the three month period ended September 30, 2002 as compared to the same period last year.

For the third quarter of 2002, other operating income increased slightly by $34,000 compared to the third quarter of 2001.  Other operating income decreased $153,000 to $982,000 for the nine month period ended September 30, 2002 compared to $1,135,000 for the same period in 2001.  This decrease is attributed to various immaterial components of other operating income including investment services and other recoveries. 

Noninterest expense:

Noninterest expense totaled $3,769,000 for the three month period ended September 30, 2002, a decrease of $830,000 or 18.05% compared to the same period last year.  For the nine month period ended September 30, 2002, noninterest expense decreased $1,569,000 or 12.47% compared to the same period last year.  These decreases, in large part, are due to management's efforts taken last year to reduce overhead expenses by consolidating and closing several under performing branches and restructuring the Company's mortgage subsidiary.  Accordingly, salaries and employee benefits expense decreased $340,000 or 5.91% for the nine month period ended September 30, 2002 compared to the same period in 2001.  During the third quarter of 2002, salaries and employee benefits expense was similar to the third quarter of 2001, increasing slightly by $10,000 to $1,902,000.

Net occupancy and equipment expense decreased by $58,000 or 9.55% for the third quarter of 2002 compared to 2001.  Year to date, net occupancy and equipment expense decreased $279,000 or 14.45% to $1,653,000 for the nine month period in 2002 compared to the same period in 2001.  This decrease is primarily the result of the Company consolidating three branches during the fiscal year ended December 31, 2001.  Two of the branches were consolidated during the six month period ended June 30, 2001, the third branch was consolidated in November 2001.

Similarly, other operating expenses decreased $782,000 or 37.17% to $1,322,000 for the third quarter of 2002, compared to $2,104,000 for the same period in 2001.  This decrease was due to a $247,000 write-off in the third quarter of 2001 of miscellaneous assets determined to have no future value.  Additionally, during the third quarter of 2001, the Company experienced $180,000 in check losses and  $130,000 in legal costs associated with legal action taken against a borrower who was in default of a loan agreement.  For the first nine months of 2002, other operating expenses decreased $950,000 compared to the same period last year. 

INTEREST RATE SENSITIVITY MANAGEMENT

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

One method of measuring the impact of interest rate sensitivity is the cumulative gap analysis.  The difference between interest rate sensitive assets and interest rate sensitive liabilities at various time intervals is referred to as the gap.  The Company is liability sensitive on a short-term basis as reflected in the following table.  Generally, a net liability sensitive position indicates that there would be a negative impact on net interest income in an increasing rate environment.  However, interest rate sensitivity gap does not necessarily indicate the impact of general interest rate movements on the net interest margin, since all interest rates and yields do not adjust at the same velocity and the repricing of various categories of assets and liabilities is subject to competitive pressures and the needs of the Company's customers.  In addition, various assets and liabilities indicated as repricing within the same period may in fact reprice at different times within such period and at different rates.  For conservative purposes, the Company has included demand deposits such as NOW, money market and savings accounts in the three month category.  However, the actual repricing of these accounts may lag beyond twelve months.  The interest rate sensitivity gap  is only a general indicator of potential effects of interest rate changes on net interest income.

The following table sets forth the distribution of the repricing of the Company's interest rate sensitive assets and interest rate sensitive liabilities as of September 30, 2002.

LIQUIDITY

Liquidity is the ability of the Company to convert assets into cash or cash equivalents without significant loss and to raise additional funds by increasing liabilities. Liquidity management involves maintaining the Company's ability to meet the day-to-day cash flow requirements of its customers, whether they are depositors wishing to withdraw funds or borrowers requiring funds to meet their credit needs.  Without proper liquidity management, the Company would not be able to perform the primary function of a financial intermediary and would, therefore, not be able to meet the needs of the communities we serve.  Additionally, the parent holding company requires cash for various operating needs including: dividends to shareholders; business combinations; capital injections to its subsidiaries; the servicing of debt; and the payment of general corporate expenses.

The primary source of liquidity for the parent holding company is dividends from the Bank. The amount of dividends paid by the Bank to the Company is limited by various banking regulatory agencies.  The Georgia Department of Banking and Finance regulates dividend payments and must approve dividend payments that exceed 50% of the Bank's net income for the prior year. The total dividends that could be paid by the Bank to the Company in 2002 without prior regulatory approval is approximately $1,022,000, while continuing to meet the capital requirements for "well-capitalized" banks.  Also, the Company has access to various capital markets. The Company does not anticipate any liquidity requirements in the near future that it will not be able to meet.  In February 2002, the Bank paid cash dividends totaling $941,000 to the Company.

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

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

The liability portion of the balance sheet provides liquidity through various customers' interest bearing and noninterest bearing deposit accounts. Federal funds purchased, securities sold under agreements to repurchase, and other short-term borrowings are additional sources of liquidity and represent the Company's incremental borrowing capacity. These sources of liquidity are short-term in nature and are used as necessary to fund asset growth and meet short-term liquidity needs.

CAPITAL RESOURCES

Shareholders' equity increased $1,841,000 for the nine months ended September 30, 2002, due to the net change in retained earnings and an increase in accumulated other comprehensive gain.  On March 15, 2002, the Company paid a cash dividend of approximately $341,000 to stockholders of record as of March 1, 2002.  The annual dividend rate in 2002 was $0.16 per common share.  For the nine month period ended September 30, 2002, accumulated other comprehensive gain increased $1,480,000 to $1,331,000, compared with an accumulated other comprehensive loss of $150,000 at December 31, 2001.

Quantitative measures established by regulation to ensure capital adequacy require the Company to maintain minimum amounts and ratios of total and Tier 1 capital to risk weighted assets, and Tier 1 capital to average assets.  As of September 30, 2002, the Company's bank subsidiary's total and Tier 1 capital to risk weighted assets and Tier 1 to average assets were 18%, 16% and 10% respectively.  As of September 30, 2002, the Company meets all capital adequacy requirements to which it is subject.

ITEM 3.            QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Quantitative information about market risk is as follows (in thousands):

The Company has adopted an asset/liability management program to monitor the Company's interest rate sensitivity and to ensure that the Company is competitive in the loans and deposit markets.  Management seeks to manage the relationship between interest-sensitive assets and liabilities in order to protect against wide interest rate fluctuations, including those resulting from inflation.  The Company has not entered into any derivative financial instruments such as futures, forwards, swaps or options.  Additionally, refer to our interest sensitive management and liquidity disclosures within Part 1, Item 2, of this Form 10-Q.

ITEM 4.            CONTROLS AND PROCEDURES

Within 90 days prior to the date of this report, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures pursuant to Exchange Act Rule 13a-14.  Based upon that evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) that is required to be included in the Company's periodic filings with the Securities and Exchange Commission.  There have been no significant changes in the Company's internal controls or, to the Company's knowledge, in other factors that could significantly affect those internal controls subsequent to the date the Company carried out its evaluation, and there have been no corrective actions with respect to significant deficiencies and material weaknesses

PART II.  OTHER INFORMATION

ITEM 1.      LEGAL PROCEEDINGS

The Company is not aware of any material pending legal proceedings to which the Company or its subsidiary is a party or to which any of their property is subject.

ITEM 2.      CHANGES IN SECURITIES

      None.

ITEM 3.      DEFAULTS UPON SENIOR SECURITIES

      None

ITEM 4.      SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

      None

ITEM 5.      OTHER INFORMATION

      None

ITEM 6.      EXHIBITS AND REPORTS ON FORM 8-K

      None

CERTIFICATION

Each of the undersigned hereby certifies in his capacity as an officer of Citizens Bancshares Corporation and subsidiaries (the "Company") that the Quarterly Report of the Company on Form 10-Q for the period ended September 30, 2002 fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that the information contained in such report fairly presents, in all material respects, the financial condition of the Company at the end of such period and the results of operations of the Company for such period.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

                                                        CITIZENS BANCSHARES CORPORATION

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

I, James E. Young, Chief Executive Officer, certify that:

1.                  I have reviewed this quarterly report on Form 10‑Q of September 30, 2002;

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

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

4.                  The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

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

b)      evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

c)      presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.                  The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

a)      all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

b)      any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6.                  The registrant's other certifying officers and I have indicated in this quarterly report if there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: November 13, 2002

            /s/ James E. Young 
            Chief Executive Officer

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

I, Willard C. Lewis, Chief Operating Officer, certify that:

1.                  I have reviewed this quarterly report on Form 10‑Q of September 30, 2002;

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

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

4.                  The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

d)      designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

e)      evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

f)        presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.                  The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

c)      all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

d)      any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6.                  The registrant's other certifying officers and I have indicated in this quarterly report if there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: November 13, 2002

            /s/ Willard C. Lewis 
            Chief Operating Officer

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

I, Samuel J. Cox, Chief Financial Officer, certify that:

1.                  I have reviewed this quarterly report on Form 10‑Q of September 30, 2002;

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

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

4.                  The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

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

b)      evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

c)      presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.                  The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

a)      all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

b)      any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6.                  The registrant's other certifying officers and I have indicated in this quarterly report if there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: November 13, 2002

            /s/ Samuel J. Cox           
            Chief Financial Officer