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U. S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549
 FORM 10-QSB/A
 (AMENDMENT NO. 1)
 þ
    
    Quarterly report under
Section 13 or 15 (d) of the Securities Exchange Act of
1934For the quarterly period ended March 31, 2005o
    
    Transition report under
Section 13 or 15 (d) of the Exchange ActFor the transition period from  to
 Commission file number 333-07914 CITIZENS EFFINGHAM BANCSHARES, INC. 
 GEORGIA
    
    58-2357619(State or Other Jurisdiction of Incorporation or Organization)
    
    (I.R.S. EmployerIdentification No.)
 802 South Laurel Street
Post Office Box 379
Springfield, Georgia 31329 
 912-754-0754 
 Not Applicable 
 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 past
90 days. Yes þ No o Indicate
by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). Yes o No þ APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuers classes of common equity, as of
the latest practicable date: Common Stock $1 par value, 512,000 shares outstanding at May 4,
2005 Transitional Small Business Disclosure Format (check one): Yes þ No o




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Explanatory Note

This Amendment No. 1 on Form
10-QSB/A for the quarter ended March 31, 2005 (Amendment No. 1) is
filed to correct Item 3. Controls and Procedures to
include our Principal Financial Officer and to include our Principal
Financial Officer in the conformed copies of Exhibits 31.1 and 32.1
to the original filing. The corrected conformed copy of such
certifications, each dated May 13, 2005, the date of the original
filing, are filed as Exhibits 31.1 and 32.1 to the Amendment No. 1 on
Form 10-QSB/A, respectively.

Pursuant to Rule 12b-15 under
the Securities Exchange Act of 1934, as a result of this Amendment
No. 1 on Form 10-QSB/A, the certifications pursuant to Section 302
and Section 906 of
the Sarbanes-Oxley Act of 2002, filed and furnished, respectively, as
exhibits to the original filing, have been re-executed and re-filed
as of the date of this Form 10-QSB/A and are included as Exhibits
31.2 and 32.2 hereto.

The remainder of the Form
10-QSB filed on May 13, 2005 is unchanged.





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##### 



Citizens Effingham Bancshares, Inc. and Subsidiary INDEX PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS  PAGEThe following financial statements are provided for Citizens Effingham Bancshares, Inc.
and the subsidiary bank, Citizens Bank of Effingham.Consolidated Balance Sheets (unaudited) March 31, 2005 and
December 31, 2004
    
    
    2Consolidated Statements of Income (unaudited) - For the Three Months
Ended March 31, 2005 and 2004
    
    
    3Consolidated Statements of Cash Flows (unaudited) - For the Three Months
Ended March 31, 2005 and 2004
    
    
    4Notes to Consolidated Financial Statements (unaudited)
    
    
    5ITEM 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    6ITEM 3. Controls and Procedures
    
    
    11PART II: OTHER INFORMATION
    
    
    12EX-31.1 SECTION 302, CERTIFICATION OF THE CEOEX-31.2 SECTION 302, CERTIFICATION OF THE CEOEX-32.1 SECTION 906, CERTIFICATION OF THE CEOEX-32.2 SECTION 906, CERTIFICATION OF THE CEO
  The consolidated financial statements furnished have not been examined by independent certified
public accountants, but reflect, in the opinion of management, all adjustments necessary for a fair
presentation of the results of operations for the periods presented. The results of operations for the three-month period ended March 31, 2005 are not necessarily
indicative of the results to be expected for the full year. -1-




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Citizens Effingham Bancshares, Inc. and Subsidiary 
 Consolidated Balance Sheets
March 31, 2005 and December 31, 2004
 March 31,
    
    
    December 31,2005
    
    
    2004AssetsCash and due from banks
    
    $
    3,526,742
    
    
    $
    2,610,499Interest-bearing cash
    
    
    363,610
    
    
    
    1,627Federal funds sold
    
    
    7,582,000
    
    
    
    5,347,000Total cash and cash equivalents
    
    
    11,472,352
    
    
    
    7,959,126Securities available for sale, at fair value
    
    
    10,611,491
    
    
    
    8,903,137Federal Home Loan Bank stock, restricted, at cost
    
    
    344,000
    
    
    
    306,500Loans, net of unearned income
    
    
    112,811,875
    
    
    
    106,675,834Less: allowance for loan losses
    
    
    (1,390,780
    )
    
    
    (1,253,685
    )Loans, net
    
    
    111,421,095
    
    
    
    105,422,149Bank premises and equipment, net
    
    
    2,644,972
    
    
    
    2,188,877Accrued interest receivable
    
    
    795,065
    
    
    
    637,618Cash surrender value life insurance
    
    
    2,131,444
    
    
    
    2,108,248Other real estate and repossessed assets
    
    
    135,000
    
    
    
    140,000Other assets and accrued income
    
    
    586,671
    
    
    
    412,702Total Assets
    
    $
    140,142,090
    
    
    $
    128,078,357Liabilities and Shareholders EquityDeposits:Non-interest bearing
    
    $
    22,399,065
    
    
    $
    17,231,585Interest bearing
    
    
    101,803,850
    
    
    
    98,845,797Total deposits
    
    
    124,202,915
    
    
    
    116,077,382Accrued interest payable
    
    
    375,288
    
    
    
    303,904Subordinated debentures
    
    
    3,093,000
    
    
    
    Other borrowed funds
    
    
    1,950,000
    
    
    
    1,950,000Other liabilities and accrued expenses
    
    
    321,799
    
    
    
    36,364Total liabilities
    
    
    129,943,002
    
    
    
    118,367,650Stockholders Equity:Common stock, $1 par value, authorized 20,000,000 shares,
issued and outstanding 512,000 shares
    
    
    512,000
    
    
    
    512,000Paid-in capital surplus
    
    
    4,608,000
    
    
    
    4,608,000Retained earnings
    
    
    5,188,450
    
    
    
    4,623,911Accumulated other comprehensive income
    
    
    (109,362
    )
    
    
    (33,204
    )Total stockholders equity
    
    
    10,199,088
    
    
    
    9,710,707Total Liabilities and Stockholders Equity
    
    $
    140,142,090
    
    
    $
    128,078,357
 -2-




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Citizens Effingham Bancshares, Inc. and Subsidiary 
 Consolidated Statements of Income 
For the Three Months Ended March 31, 2005 and 2004
 Three Months EndedMarch 31,2005
    
    
    2004Interest Income:Interest and fees on loans
    
    $
    1,943,819
    
    
    $
    1,371,093Income on federal funds sold
    
    
    30,901
    
    
    
    8,964Interest on investment securities
    
    
    96,311
    
    
    
    94,954Total interest income
    
    
    2,071,031
    
    
    
    1,475,011Interest Expense:Deposits
    
    
    561,454
    
    
    
    410,269Other interest expense
    
    
    15,420
    
    
    
    23,647Total interest expense
    
    
    576,874
    
    
    
    433,916Net interest income before provision for loan losses
    
    
    1,494,157
    
    
    
    1,041,095Less  provision for loan losses
    
    
    (126,000
    )
    
    
    (90,000
    )Net interest income after provision for loan losses
    
    
    1,368,157
    
    
    
    951,095Other Operating Income:Service charges on deposit accounts
    
    
    102,909
    
    
    
    108,154Other service charges, commissions and fees
    
    
    77,932
    
    
    
    62,176Gain on sale of other real estate
    
    
    5,000
    
    
    
    Other income
    
    
    32,566
    
    
    
    26,297Total other operating income
    
    
    218,407
    
    
    
    196,627Other Operating Expense:Salaries
    
    
    305,861
    
    
    
    275,350Employee Benefits
    
    
    84,159
    
    
    
    65,479Net occupancy expense
    
    
    30,983
    
    
    
    27,170Equipment rental and depreciation of equipment
    
    
    62,406
    
    
    
    53,328Other expenses
    
    
    233,815
    
    
    
    219,887Total other operating expenses
    
    
    717,224
    
    
    
    641,214Income Before Income Taxes
    
    
    869,340
    
    
    
    506,508Provision for income taxes
    
    
    (304,802
    )
    
    
    (139,798
    )Net Income
    
    $
    564,538
    
    
    $
    366,710Income Per Share:Basic
    
    $
    1.10
    
    
    $
    0.72Diluted
    
    $
    1.10
    
    
    $
    0.72
   *
    
    Net Income / weighted average outstanding shares of 512,000. -3-




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Citizens Effingham Bancshares, Inc. and Subsidiary 
 Consolidated Statements of Cash Flows 
For the Three Months Ended March 31, 2005 and 2004
 Three Months EndedMarch 31,2005
    
    
    2004Cash Flows from Operating Activities:Net income
    
    $
    564,538
    
    
    $
    366,710Adjustments to reconcile net income to net
cash provided by operating activities:Provision for loan losses
    
    
    126,000
    
    
    
    90,000Depreciation
    
    
    41,606
    
    
    
    35,728Gain on the sale of other real estate
    
    
    5,000
    
    
    
    Changes in accrued income and other assets
    
    
    (222,380
    )
    
    
    (151,791
    )Changes in accrued expenses and other liabilities
    
    
    356,820
    
    
    
    72,648Net cash provided by operating activities
    
    
    871,584
    
    
    
    413,295Cash Flows from Investing Activities:Net change in loans to customers
    
    
    (6,124,946
    )
    
    
    (4,635,005
    )Purchase of available for sale securities
    
    
    (2,490,710
    )
    
    
    (1,000,000
    )Proceeds from maturities, calls and paydowns of
available for sale securities
    
    
    666,966
    
    
    
    684,999Purchase of Federal Home Loan Bank stock
    
    
    (37,500
    )
    
    
    (59,700
    )Property and equipment expenditures
    
    
    (497,701
    )
    
    
    (51,836
    )Investment in statutory trust
    
    
    (93,000
    )
    
    
    Net cash used in investing activities
    
    
    (8,576,891
    )
    
    
    (5,061,542
    )Cash Flows from Financing Activities:Net change in deposits
    
    
    8,125,533
    
    
    
    5,319,375Proceeds from long-term borrowings
    
    
    
    
    
    
    (2,333,333
    )Proceeds from issuance of subordinated debentures
    
    
    3,093,000
    
    
    
    Net cash provided by financing activities
    
    
    11,218,533
    
    
    
    2,986,042Net Increase (Decrease) in Cash and Cash Equivalents
    
    
    3,513,226
    
    
    
    (1,662,205
    )Cash and Cash Equivalents, Beginning of Period
    
    
    7,959,126
    
    
    
    9,595,357Cash and Cash Equivalents, End of Period
    
    $
    11,472,352
    
    
    $
    7,933,152Supplement Cash Flow Information:Cash paid for interest
    
    $
    505,490
    
    
    $
    434,972Cash paid for income taxes
    
    $
    181,000
    
    
    $
    46,244
 -4-




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Citizens Effingham Bancshares, Inc. and Subsidiary 
 Notes to Consolidated Financial Statements  (Unaudited)
  (1)
    Basis of PresentationThe accompanying unaudited financial statements have been prepared in accordance with U.S.
generally accepted accounting principles for interim financial information, and with the
instructions to Form 10-QSB and Item 310 (b) of Regulation S-B of the Securities and Exchange
Commission. Accordingly, they do not include all of the information and footnotes required by
U.S. generally accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for the three-month period ended
March 31, 2005, are not necessarily indicative of the results that may be expected for the year
ended December 31, 2005. For further information refer to the consolidated financial
statements and footnotes thereto included in the Companys Annual Report on Form 10-KSB for the
year ended December 31, 2004.(2)
    Other Comprehensive IncomeDuring the three months ended March 31, 2005, the Company had unrealized holding gains on
investment securities which were reported as comprehensive income. An analysis of accumulated
other comprehensive income since December 31, 2004 is as follows: Accumulated other comprehensive income (loss) at December 31, 2004
    
    $
    (33,204
    )Other comprehensive income, net of tax:Change in unrealized loss on securities available for sale
net of deferred income tax expense of $(39,233)
    
    
    (76,158
    )Less: Reclassification adjustment for gains realized in net income
    
    
    Accumulated other comprehensive income (loss) at March 31, 2005
    
    $
    (109,362
    )
  (3)
    Supplemental Financial DataComponents of other operating expenses greater than 1% of total interest income and other
income for the periods ended March 31, 2005 and 2004 are: Three Months EndedMarch 31,2005
    
    
    2004Directors fees
    
    $
    19,700
    
    
    $
    19,000Legal and accounting
    
    
    23,885
    
    
    
    21,206Supplies/printing
    
    
    20,407
    
    
    
    18,503Data processing
    
    
    35,018
    
    
    
    43,096ATM expense
    
    
    21,250
    
    
    
    22,312
 -5-




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Citizens Effingham Bancshares, Inc. and Subsidiary 
 Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations
For Each of the Three Months in the Periods Ended
March 31, 2005 and 2004
 The following discussion of financial condition as of March 31, 2005 compared to December 31, 2004,
and the results of operations for the three months ended March 31, 2005 compared to the three
months ended March 31, 2004 should be read in conjunction with the condensed financial statements
and accompanying footnotes appearing in this report. Advisory Note Regarding Forward-Looking Statements The statements contained in this report on Form 10-QSB that are not historical facts are
forward-looking statements subject to the safe harbor created by the Private Securities Litigation
Reform Act of 1995. We caution readers of this report that such forward-looking statements involve
known and unknown risks, uncertainties and other factors which may cause the actual results,
performance or achievements of us to be materially different from those expressed or implied by
such forward-looking statements. Although we believe that our expectations of future performance
are based on reasonable assumptions within the bounds of our knowledge of our business and
operations, there can be no assurance that actual results will not differ materially from our
expectations. Factors which could cause actual results to differ from expectations include, among other things:  
    the challenges, costs and complications associated with the continued
development of our branches;
    the potential that loan charge-offs may exceed the allowance for loan losses or
that such allowance will be increased as a result of factors beyond the control of us;
    our dependence on senior management;
    competition from existing financial institutions operating in our market areas
as well as the entry into such areas of new competitors with greater resources, broader
branch networks and more comprehensive services;
    adverse conditions in the stock market, the public debt market, and other
capital markets (including changes in interest rate conditions);
    changes in deposit rates, the net interest margin, and funding sources;
    inflation, interest rate, market, and monetary fluctuations;
    risks inherent in making loans including repayment risks and value of collateral;
    the strength of the United States economy in general and the strength of the
local economies in which we conduct operations may be different than expected resulting in,
among other things, a deterioration in credit quality or a reduced demand for credit,
including the resultant effect on our loan portfolio and allowance for loan losses;
    fluctuations in consumer spending and saving habits;
    the demand for our products and services;
    technological changes;
    the challenges and uncertainties in the implementation of our expansion and development strategies;
    the ability to increase market share;
    the adequacy of expense projections and estimates of impairment loss;
    the impact of changes in accounting policies by the Securities and Exchange Commission;
    unanticipated regulatory or judicial proceedings;
    the potential negative effects of future legislation affecting financial institutions (including without
limitation laws concerning taxes, banking, securities, and insurance);
    the effects of, and changes in, trade, monetary and fiscal policies and laws,
including interest rate policies of the Board of Governors of the Federal Reserve System;
    the timely development and acceptance of products and services, including
products and services offered through alternative delivery channels such as the Internet; -6-




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Citizens Effingham Bancshares, Inc. and Subsidiary
Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations
For Each of the Three Months in the Periods Ended
March 31, 2005 and 2004   
    the impact on our business, as well as on the risks set forth above, of various
domestic or international military or terrorist activities or conflicts;
    other factors described in this report and in other reports we have filed with
the Securities and Exchange Commission; and
    Our success at managing the risks involved in the foregoing. Forward-looking statements speak only as of the date on which they are made. We undertake no
obligation to update any forward-looking statement to reflect events or circumstances after the
date on which the statement is made to reflect the occurrence of unanticipated events. CRITICAL ACCOUNTING POLICIES Allowance for Loan Losses  A loan is considered impaired, based on current information and
events, if it is probable that the Company will be unable to collect the scheduled payments of
principal or interest when due according to the contractual terms of the loan agreement.
Uncollateralized loans are measured for impairment based on the present value of expected future
cash flows discounted at the historical effective interest rate, while all collateral-dependent
loans are measured for impairment based on the fair value of the collateral. The Bank uses several
factors in determining if a loan is impaired. The internal asset classification procedures include
a thorough review of significant loans and lending relationships and include the accumulation of
related data. This data includes loan payment status, borrowers financial data, and borrowers
operating factors such as cash flows, operating income or loss, etc. The allowance for loan losses is established through charges to earnings in the form of a provision
for loan losses. Increases and decreases in the allowance due to changes in the measurement of the
impaired loans are included in the provision for loan losses. Loans continue to be classified as
impaired unless they are brought fully current and the collection of scheduled interest and
principal is considered probable. When a loan or portion of a loan is determined to be
uncollectible, the portion deemed uncollectible is charged against the allowance and subsequent
recoveries, if any, are credited to the allowance. Managements periodic evaluation of the adequacy of the allowance also considers impaired loans and
takes into consideration the Banks past loan loss experience, known and inherent risks in the
portfolio, adverse situations that may affect the borrowers ability to repay, estimated value of
any underlying collateral, and current economic conditions. While management believes that it has
established the allowance in accordance with generally accepted accounting principles and has taken
into account the views of its regulators and the current economic environment, there can be no
assurance that in the future the Banks regulators or its economic environment will not require
further increases in the allowance. Interim Financial Condition Citizens Effingham Bancshares, Inc. (the Company) reported total assets of $140,142,090 as
of March 31, 2005, compared to $128,078,357 at December 31, 2004. The most significant changes in
the composition of assets were an increase in loans from $105,422,149 to $111,421,095, an increase
in securities available for sale from $8,903,137 to $10,611,491 and an increase in federal funds
sold from $5,347,000 to $7,582,000. -7-




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Citizens Effingham Bancshares, Inc. and Subsidiary
Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations
For Each of the Three Months in the Periods Ended
March 31, 2005 and 2004  Asset Quality Nonperforming assets which include non-accruing loans, repossessed collateral and loans for
which payments are more than 90 days past due totaled $286,000 at March 31, 2005, a decrease of
$79,000 from December 31, 2004. There were no related party loans which were considered
nonperforming at March 31, 2005. The composition of the nonperforming assets is presented in the
following table: March 31,
    
    
    December 31,2005
    
    
    2004Loans on nonaccrual
    
    $
    130,000
    
    
    $
    197,000Loans greater than 90 days past due
    
    
    21,000
    
    
    
    28,000Other real estate owned
    
    
    135,000
    
    
    
    140,000Total nonperforming assets
    
    $
    286,000
    
    
    $
    365,000Total nonperforming assets as a percentage
of total loans (gross) and other real estate
    
    
    0.25
    %
    
    
    0.32
    %
 The allowance for loan losses totaled $1,390,780 at March 31, 2005, a net increase of $137,095 from
December 31, 2004. The allowance for loan losses represented 1.2% of total loans at March 31, 2005
and December 31, 2004. An analysis of the allowance for loan losses since December 31, 2004
follows: Allowance for loan losses at December 31, 2004
    
    $
    1,253,685Charge-offs:Commercial
    
    
    Real Estate
    
    
    Installment
    
    
    8,880Total
    
    
    8,880Recoveries:Commercial
    
    
    2,627Real Estate
    
    
    10,505Installment
    
    
    6,843Total
    
    
    19,975Provision charged to income
    
    
    126,000Allowance for loan losses at March 31, 2005
    
    $
    1,390,780
 -8-




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Citizens Effingham Bancshares, Inc. and Subsidiary
Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations
For Each of the Three Months in the Periods Ended
March 31, 2005 and 2004  The loan portfolio is reviewed periodically to evaluate the outstanding loans and to measure the
performance of the portfolio and the adequacy of the allowance for loan losses. This analysis
includes a review of delinquency trends, actual losses, and internal credit ratings. Managements
judgment as to the adequacy of the allowance is based upon a number of assumptions about future
events which it believes to be reasonable, but which may or may not be reasonable. However,
because of the inherent uncertainty of assumptions made during the evaluation process, there can be
no assurance that loan losses in future periods will not exceed the allowance for loan losses of
that additional allocations to the allowance will not be required. The Bank was most recently examined by its primary regulatory authority in September, 2003. There
were no recommendations by the regulatory authority that in managements opinion will have material
effects on the Banks liquidity, capital resources or operations. Results of Operations Net interest income before provision for loan losses for the first quarter of 2005 was
$1,494,157, an increase of $453,062 (43.5%) compared to the same period for 2004. Interest income
for the first quarter of 2005 was $2,071,031 representing an increase of $596,020 (40.4%) over the
same period in 2004. The increase in interest income was due to an increase in interest rates on
loans and the increase in average loan balances. Interest expense for the first quarter of 2005
increased $142,958 (32.9%) compared to the same period in 2004. The increase in interest expense is
primarily due to an increase in average interest rates charged on interest bearing deposits and a
growth in average deposit balances. Amounts charged to expense related to the allowance for loan losses for the three months ended
March 31, 2005 and 2004 were $126,000 and $90,000, respectively. Other operating income for the first quarter of 2005 was $218,407, an increase of $21,780 compared
to the same period in 2004. Other operating expenses for the first quarter of 2005 were $717,224, an increase of $76,010 (1.2%)
compared to the same period for 2004. The increase is primarily attributable to an increase of
employee salaries, benefits, and other expenses. Liquidity The Banks liquid assets as a percentage of total deposits were 9.24% at March 31, 2005,
compared to 6.86% at December 31, 2004. The Company has approximately $5,000,000 in available
federal fund lines of credit with correspondent banks. There were no advances outstanding on these
lines as of March 31, 2005 and December 31, 2004. The Company also has approximately $12,800,000
in an available line of credit with the Federal Home Loan Bank. The Company had $1,950,000 advanced
on these lines as of March 31, 2005 and December 31, 2004. At least monthly, management analyzes
the level of off-balance sheet commitments such as unfunded loan equivalents,
loan repayments, maturity of investment securities, liquid investment and available fund lines in
an attempt to minimize the possibility that a potential shortfall will exist. -9-




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Citizens Effingham Bancshares, Inc. and Subsidiary
Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations
For Each of the Three Months in the Periods Ended
March 31, 2005 and 2004  During the first quarter of 2005, the Company formed a second subsidiary whose sole purpose was to
issue $3,000,000 in Trust Preferred Securities through a private placement through JP Morgan Chase
Bank, N.A. The Trust Preferred Securities have a maturity of 30 years and are redeemable after
five years with certain exceptions. At March 31, 2005, the floating rate securities had a 4.99
percent interest rate, which will reset quarterly at the three-month LIBOR rate plus 1.90 percent. The Trust Preferred Securities are recorded as a liability on the balance sheet, but subject to
certain limitations qualify as Tier 1 Capital for regulatory capital purposes. The proceeds from
the offering were used to inject capital into the bank subsidiary. Capital The capital of the Company totaled $10,199,088 as of March 31, 2005. The capital of the
Company and the Bank exceeded all prescribed regulatory capital guidelines. Regulations require
that the most highly rated banks maintain a Tier 1 leverage ratio of 3% plus an additional cushion
of at least 1 to 2 percentage points. Tier 1 capital consists of common shareholders equity, less
certain intangibles. The Banks Tier 1 leverage ratio was 10.02% at March 31, 2005, compared to
7.73% at December 31, 2004. Regulations require that the Bank maintain a minimum total risk
weighted capital ratio of 8%, with one-half of this amount, or 4%, made up of Tier 1 capital.
Risk-weighted assets consist of balance sheet assets adjusted by risk category, and off-balance
sheet assets or equivalents similarly adjusted. At March 31, 2005, the Bank had a risk-weighted
total capital ratio of 12.61% compared to 9.99% at December 31, 2004, and a Tier I risk-weighted
capital ratio of 11.42%, compared to 8.85% at December 31, 2004. Investment Securities At March 31, 2005, the Bank had $10,611,491 in investment securities available for sale. The
net unrealized loss on available for sale securities, net of deferred tax benefit, was $(109,362)
on March 31, 2005. During the period ended March 31, 2005, the Bank purchased $2,000,000 in
investment securities available for sale. Also, as of March 31, 2005, the maturities and calls of
investment securities totaled $500,000 resulting in neither a gain nor a loss. The Bank invests
primarily in obligations of the United States or obligations guaranteed as to principal and
interest by the United States and other taxable and tax-exempt securities. -10-




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Citizens Effingham Bancshares, Inc. and Subsidiary 
 Item 3. Controls and Procedures
For the Three Months Ended March 31, 2005
 As
of the end of the period covered by this report, we carried out an
evaluation, under the supervision and with the participation of our
management, including our Chief Executive Officer and Principal
Financial Officer, of the design and operation of our disclosure
controls and procedures. Based on this evaluation, our Chief
Executive Officer and Principal Financial Officer have concluded that
our disclosure controls and procedures are effective. -11-




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Citizens Effingham Bancshares, Inc. and Subsidiary 
 Part II. Other Information
For the Three Months Ended March 31, 2005
 PART II: OTHER INFORMATION: Item 1. Legal Proceedings There are no material legal proceedings to which the Company is a party or of which their
property is the subject. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds None Item 3. Defaults Upon Senior Securities Not Applicable Item 4. Submission of Matters to a Vote of Security-Holders There were no matters submitted to security holders for a vote during the three months ended
March 31, 2005. Item 5. Other Information None Item 6. Exhibits A. Exhibit 31.1
     B. Exhibit 31.2
     C. Exhibit 32.1
     D. Exhibit 32.2 
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SIGNATURES In accordance with the requirements of the Securities Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized. Citizens Effingham Bancshares, Inc. /s/ Harry H. ShearouseHarry H. Shearouse
President, Chief Executive Officer and Principal Financial OfficerDate:
February 17, 2006
 -13-