SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 1999
Commission File No: 0-22911
SOUTHERN SECURITY BANK CORPORATION
(Name of small business as specified in charter)
Delaware 65-0325364
(State or other jurisdiction (IRS Employer Identification
of incorporation) Number)
3475 Sheridan Street, Hollywood, FL 33021
(954) 985-3900
(Address and telephone number of principal executive offices)
Indicate by check mark 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 preriod that the registrant was required to file such reports)
and (2) has been subject to such filing requirements for the past 90 days.
Yes X No _____.
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the March 31, 1999 (latest practicable date):
(a) Class A Voting Common Stock: 5,412,641 shares
(b) Class B Non-Voting Common Stock: -0-
Transitional Small Business Disclosure Format (check one): YES____; NO X
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
SOUTHERN SECURITY BANK CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEETS - UNAUDITED
March 31, 1999 and December 31, 1998
ASSETS March 31, 1999 December 31, 1998
- ------ -------------- -----------------
Cash and due from banks $ 1,775,149 $ 1,012,269
Federal Funds sold 4,182,000 4,845,000
---------- ----------
Total cash and cash equivalents 5,957,149 5,857,269
Securities held to maturity 342,493 350,883
Securities available for sale 497,726 277,970
Federal Reserve Bank stock, at cost 84,300 84,300
Loans, net 13,633,888 14,612,998
Premises and equipment 328,209 344,592
Other real estate owned 414,298 414,298
Accrued interest receivable 111,288 136,854
Other assets 275,986 181,677
---------- ----------
Total Assets $ 21,645,337 $ 22,260,841
========== ==========
See Notes to Consolidated Condensed Financial Statements
<PAGE>
SOUTHERN SECURITY BANK CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEETS - UNAUDITED
March 31, 1999 and December 31, 1998
<TABLE>
<CAPTION>
LIABILITIES March 31, 1999 December 31 1998
- ----------- -------------- ----------------
<S> <C> <C>
Liabilities
Noninterest bearing deposits $ 4,755,270 $ 5,138,392
Interest-bearing deposits 14,723,514 15,105,654
---------- ----------
Total deposits 19,478,784 20,244,046
Federal funds purchased 0 0
Securities sold under repurchase agreements 0 0
Notes payable 100,000 100,000
Other liabilities 558,858 661,184
---------- ----------
Total liabilities 20,137,642 21,005,230
---------- ----------
Commitments and Contingencies 0 0
Minority interest in subsidiary 41,155 39,491
---------- ----------
Stockholders' equity
Series A Preferred Stock 0 0
(Authorized: 5,000,000; Outstanding: 0)
Class A Common Stock 54,126 45,676
(Authorized: 30,000,000; Outstanding: 5,412,641)
Class B Common Stock 0 0
(Authorized: 5,000,000; Outstanding: 0)
Surplus 5,951,319 5,537,269
Accumulated Profit/Loss (4,541,113) (4,370,251)
---------- ----------
1,464,332 1,212,694
Accumulated other comprehensive income 2,208 3,426
---------- ----------
Total stockholders' equity 1,466,540 1,216,120
---------- ----------
Total liabilities & stockholders equity $ 21,645,337 $ 22,260,841
========== ==========
</TABLE>
See Notes to Consolidated Condensed Financial Statements
<PAGE>
SOUTHERN SECURITY BANK CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS - UNAUDITED
Three Months Ended March 31, 1999 and 1998
<TABLE>
<CAPTION>
March 31, 1999 March 31 1998
-------------- -------------
<S> <C> <C>
Interest Income: $ $
Interest and fees on loans 323,043 339,210
Interest and dividends on securities 12,378 38,250
Interest on federal funds sold & repurchase agreement 40,278 47,990
--------- ---------
375,699 425,450
Interest Expense:
Deposits 142,243 202,624
Other 2,248 0
--------- ---------
144,901 202,624
Net interest income 231,208 222,826
Provisions for loan losses 0 0
--------- ---------
Net interest income after provision for loan losses 231,208 222,826
--------- ---------
Other Income:
Service charges on deposit accounts 30,184 27,221
Securities gains (losses), net 0 0
Other 6,347 16,415
--------- ---------
Total other income 36,531 43,636
--------- ---------
Other Expenses:
Salaries and employee benefits 228,542 204,848
Occupancy and equipment 79,031 74,889
Data and item processing 26,366 14,628
Professional Fees 11,435 33,105
Insurance 12,962 13,080
Other 81,604 86,882
--------- ---------
Total other expenses 439,940 427,432
--------- ---------
Net Profit (loss) before minority
interest in net profit (loss) of subsidiary (172,201) (160,970)
Minority interest in net (profit) loss of subsidiary 1,339 580
--------- ---------
Net Income (loss) $ (170,862) $ (160,390)
--------- ---------
Basic earnings per share $ (0.03) $ (0.04)
--------- ---------
Diluted earnings per share $ (0.03) $ (0.04)
========= =========
Weighted average number of shares & common equivalent shares 4,990,141 4,299,763
--------- ---------
</TABLE>
See Notes to Consolidated Condensed Financial Statements
<PAGE>
SOUTHERN SECURITY BANK CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS - UNAUDITED
Three Months Ended March 31, 1999 and 1998
<TABLE>
<CAPTION>
March 31, 1999 March 31, 1998
-------------- --------------
<S> <C> <C>
Cash Flows from Operating Activities
Net Income (loss) $ (170,862) $ (160,390)
Adjustments to reconcile net profit
(loss) to net cash used in operating
activities:
Net accretion on securities (954) (525)
Provision for loan losses 0 0
Depreciation and amortization 24,522 19,681
Securities (gains) losses, net 0 0
Minority interest in net income (loss) of subsidiary 1,339 (580)
(Increase) decrease in Accrued Interest Receivable 25,566 (42,771)
(Increase) decrease in Other Assets (97,955) (74,104)
Increase (decrease) in other liabilities (102,326) 211,318
------------ ------------
Net cash provided by (used in) operating activities (320,670) (47,371)
------------ ------------
Cash Flows from Investing Activities
Net cash flows from securities (211,662) 25,694
(Purchase) Sale of Federal Reserve Bk/Federal
Home Loan Bk stock 0 0
Loan originations & principal collections on loans - net 979,110 142,515
Purchase of loans - net 0 (3,639,893)
Purchase of premises and equipment - net (4,136) (14,027)
(Increase) Decrease of other real estate owned 0 (15,000)
Increase (Decrease)in minority interest 0 0
------------ ------------
Net cash provided by (used in) investing activities 763,312 (3,500,711)
------------ ------------
Cash Flows From Financing Activities
Net increase (decrease) in federal funds purchased and
securities sold under repurchase agreements 0 (206,000)
Net increase (decrease) in deposits (765,262) 8,673,791
Net increase (decrease) in notes payable 0 0
Proceeds from issuance of stock 422,500 200,000
Dividends paid on stock 0 0
------------ ------------
Net cash provided by (used in) financing activities (342,762) 8,667,791
------------ ------------
Net increase (decrease) in cash and cash equivalents 99,880 5,119,709
Cash and cash equivalents, Beginning 5,857,269 1,107,669
------------ ------------
Cash and cash equivalents, Ending $ 5,957,149 $ 6,227,378
============ ============
</TABLE>
For purposes of reporting cash flows, cash and cash equivalents include cash on
hand, amounts due from banks and federal funds sold. Generally, federal funds
are purchased and sold for one-day periods.
See notes to Consolidated Condensed Financial Statements
<PAGE>
SOUTHERN SECURITY BANK CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
Three Months Ended
COMPREHENSIVE INCOME March 31, 1999 March 31, 1998
- -------------------- -------------- --------------
Net Income (loss) $ (170,862) $ (160,390)
Other comprehensive Income (loss):
Unrealized holding gains (losses)
arising during period (1,218) (12,291)
--------- ----------
Comprehensive Income (loss) $ (172,080) (148,099)
--------- ----------
See Notes to Consolidated Condensed Financial Statements
<PAGE>
SOUTHERN SECURITY BANK CORPORATION AND SUBSIDIARY
ANALYSIS OF ALLOWANCE FOR LOAN AND LEASE LOSSES - UNAUDITED
Three Months Ended March 31, 1999 and Year Ended December 31, 1998
Three Months Ended Year Ended
March 31, 1999 December 31, 1998
-------------- -----------------
Balance, beginning of year $ 271,498 $ 288,802
Total charge-offs 744 65,096
Recoveries 1,524 7,792
Provision for loan & lease losses 0 40,000
----------- -----------
Allowance balance at end of period $ 272,278 271,498
Total loans and discount $13,633,888 $14,612,998
Allowance to total loans and discount 1.96% 1.82%
See Notes to Consolidated Condensed Financial Statements
<PAGE>
SOUTHERN SECURITY BANK CORPORATION AND SUBSIDIARY
CAPITAL ADEQUACY REVIEW
March 31, 1999
SOUTHERN SECURITY BANK CORPORATION
REGULATORY
SSB Corp "MINIMUM"
TIER 1 LEVERAGE RATIO: -------- -------
- ---------------------
Tier 1 Capital 1,466,540
----------
Consolidated Assets 21,645,337 = 6.78% 4.00%
"ADEQUATELY
SOUTHERN SECURITY BANK BANK CAPITALIZED"
- ---------------------- ---- -----------
TOTAL RISK-WEIGHTED RATIO:
- -------------------------
Tier 2 Capital + ALLL 1,808,043
----------
14,365,318 = 12.59% 8.00%
TIER 1 RISK WEIGHTED RATIO:
- --------------------------
Tier 1 Capital 1,627,332
----------
Risk Weighted Assets 14,365,318 = 11.33% 4.00%
TIER 1 LEVERAGE RATIO:
- ---------------------
Tier 1 Capital 1,627,332
----------
Average Quarterly Assets (1) 20,718,311 = 7.85% 4.00%
See Notes to Consolidated Condensed Financial Statements
<PAGE>
Notes to Consolidated Condensed Financial Statements (unaudited)
The accompanying unaudited consolidated condensed financial statements of
Southern Security Bank Corporation (the "Company") have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting only of normal recurring accruals)
considered necessary for a fair presentation of the results for the interim
period ended March 31, 1999, have been included. Operating results for the three
month period ended March 31, 1999, are not necessarily indicative of the results
that may be expected for the full year. For further information, refer to the
consolidated financial statements and the notes to consolidated financial
statements included in the Company's annual report on Form 10-KSB for the year
ended December 31, 1998, as filed with the Securities and Exchange Commission,
which are incorporated herein by reference. All capitalized terms used in these
notes to consolidated condensed financial statements that are not defined herein
have the meanings given to them in such consolidated condensed financial
statements and notes to consolidated condensed financial statements.
All material intercompany balances and transactions have been eliminated.
The Company is a bank holding company that owns 97.61% of the outstanding
capital stock of Southern Security Bank ("Bank"). The Company is organized under
the laws of the State of Delaware, while the Bank is a Florida State Chartered
Commercial Bank that is a member of the Federal Reserve System whose deposits
are insured by the Federal Deposit Insurance Corporation. The Bank provides a
full range of commercial banking and consumer banking services to businesses and
individuals. The Company is regulated by the Federal Reserve, its affiliate Bank
is regulated by the Florida Department of Banking and Finance and the Federal
Reserve.
As of January 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130 (SFAS 130), "Reporting Comprehensive Income." SFAS 130
establishes new rules for the reporting and display of comprehensive income and
its components; however, the adoption of this Statement had no impact on the
Company's net income or stockholders' equity. SFAS 130 requires unrealized gain
or losses on the Company's available-for-sale investments, which prior adoption
were reported separately in stockholders' equity, to be included in other
comprehensive income. All of the Company's other comprehensive income relates to
net unrealized gain (losses) on available-for-sale investments.
Effective for the year ended December 31, 1997, the Company adopted the
Statement of Financial Standards No. 128, "Earnings Per Share" ("SFAS 128"). In
accordance with SFAS 128, the Company is required to provide basic and dilutive
earnings per common share information.
Following is information about the computation of earnings per share data for
the periods ended March 31, 1999 and March 31, 1998.
Per-Share
Numerator Denominator Amounts
Three Months Ended March 31, 1999
---------------------------------
Net Profit (loss) $ (170,862)
Basic and diluted earnings per share,
income available to common
shareholders
$ (170,862) 4,990,141 $(0.03)
----------- --------- ------
Three Months Ended March 31, 1998
---------------------------------
Net Profit (loss) $ (160,390)
Basic and diluted earnings per share,
income available to common
shareholders
$(160,390) 4,299,763 $(0.04)
---------- --------- ------
Options for the purchase of 863,687 shares at March 31, 1999 and 810,207 shares
at March 31, 1998 have not been included in the computation of diluted earnings
per share for March 31, 1999 and March 31, 1998 because their inclusion would
have been antidilutive as a result of losses being reported for these periods.
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation
The following discussion and analysis presents a review of the consolidated
condensed operating results and financial condition of Southern Security Bank
Corporation ("Company") and its subsidiary Southern Security Bank ("Bank") for
the three month period ended March 31, 1999 and 1998. This discussion and
analysis should be read in conjunction with the Consolidated Condensed Financial
Statements and Notes thereto contained in the Company's Annual Report on Form
10-KSB for the year ended December 31, 1998.
DISCUSSION OF FINANCIAL CONDITION CHANGES FROM DECEMBER 31, 1998 TO MARCH 31,
1999
FINANCIAL CONDITION
Total assets decreased by $.7 million, or 2.8%, from $22.3 million at December
31, 1998, to $21.6 million at March 31, 1999, with the decrease consisting
principally of consumer loans and federal funds sold.
The Company's short-term investments, primarily consisting of Federal Funds Sold
("fed funds") and available- for-sale investments, decreased by $.4 million to
$4.7 million at March 31, 1999, from $5.1 million at December 31, 1998. This
decrease in short-term investments is the result of decreased deposits of $.7
million or 3.5% since December 31, 1998.
The Company's net loans receivable decreased by $1.0 million or 6.9%, to $13.6
million at March 31, 1999, from $14.6 million at December 31, 1998.
The Allowance For Credit Losses reflects management's judgement of the level of
allowance adequate to provide for reasonably foreseeable losses, based upon the
following factors: (i) the general economic conditions; (ii) the credit
condition of its customers, as well as the underlying collateral, if any; (iii)
historical experience; and (iv) the average maturity of its loan portfolio.
Deposits decreased by $.7 million, or 3.5%, to $19.5 million at March 31, 1999
from $20.2 million at December 31, 1998. Management believes this decrease is
attributable to the offering of competitive interest rates in a market area
dominated by super-regional banks.
CAPITAL
The Company's total stockholders' equity was $1,466,539 at March 31, 1999, an
increase of $253.8 thousand, or 20.9%, from $1,212,694 at December 31, 1998. The
increase is due primarily to the issuance of 845,000 shares of Class A Common
stock during the first three months of 1999 pursuant to an offering to warrant
holders with net proceeds of $422,500.
The Company and the Bank are subject to various regulatory capital requirements
administered by the regulatory banking agencies. Failure to meet minimum capital
requirements can result in certain mandatory and possibly additional
discretionary actions by regulators that, if undertaken, could have a direct
material effect on the Company's financial statements. The regulations require
the Company and the Bank to meet specific capital adequacy guidelines that
involve quantitative measures of their assets, liabilities and certain off-
balance sheet items as calculated under regulatory accounting practices. The
Company's and the Bank's capital classification is also subject to qualitative
judgement by the regulators about interest rate risk, concentration of credit
risk and other factors.
In accordance with risk-based capital guidelines issued by the Federal Reserve
Board, the Company and the Bank are each required to maintain a minimum ratio of
total capital to weighted risk assets as well as maintaining minimum leverage
ratios (set forth in the table below). Holding Companies and Member banks
operating at or near the minimum ratio levels are expected to have well
diversified risks, including no undue interest rate risk exposure, excellent
control systems, good earnings, high asset quality, high liquidity, and well
managed on- and off-balance sheet activities, and in general be considered
strong organizations with a composite 1 rating under the CAMEL rating system of
banks and BOPEC rating system for holding companies. For all but the most highly
rated banks and bank holding companies meeting the above conditions, the minimum
leverage ratio may require an additional 100 to 200 basis points. The Leverage
Ratio of the Company as well as the Tier 1 Capital, Total Capital, and Leverage
Ratio of the Bank are set forth in the table below.
Company Capital Ratios March 31, 1999 December 31, 1998 Minimum
Leverage: 6.78% 4.95% 4.00%
Bank Capital Ratios March 31, 1999 December 31, 1998 Adequate
Total risk-weighted capital: 12.59% 11.78% 8.00%
Tier I risk-weighted capital: 11.33% 10.53% 4.00%
Leverage: 7.85% 6.25% 4.00%
The Bank entered into a written agreement ("Agreement") with the Federal Reserve
Bank of Atlanta (the "FRB") and the State of Florida Department of Banking and
Finance (the "Department")on November 13, 1998. The Agreement includes the
requirement that, in the event the Bank's leverage ratio after January 1,1999
falls below 7.00%, the Bank notify the FRB and the Department about the capital
deficiency and submit a written statement detailing the steps to be taken to
increase the leverage ratio.
LIQUIDITY
The Company's principal sources of liquidity and funding are generated by the
operations of its subsidiary Southern Security Bank ("Bank") through its diverse
deposit base as well as loan participations. For banks, liquidity represents the
ability to meet loan commitments, withdrawals of deposit funds, and operating
expenses. The level and maturity of deposits necessary to support the Company's
lending and investment activities is determined through monitoring loan demand
and through its asset/liability management process. Considerations in managing
the Company's liquidity position include scheduled cash flows from existing
assets, contingencies and liabilities, as well as projected liquidity conducive
to efficient operations and is continuously evaluated as part of the
asset/liability management process.
Historically, the Company has increased its level of deposits to allow for its
planned asset growth. The level of deposits is influenced by general interest
rates, economic conditions and competition, among other things.
The Company's liquidity at March 31, 1999, consisted of $6.0 million in cash and
cash equivalents and $.5 million in available-for-sale investments, for a total
of $6.5 million, compared with a total of $6.2 million at year-end 1998, an
increase of approximately $.3 million.
RESULTS OF OPERATIONS
Comparison of results in this section are for the three month periods ended
March 31, 1999 and March 31, 1998.
The net loss recognized for the three months ended March 31, 1999 was $170,862
compared to a loss of $160,970 for the three month period ended March 31, 1998.
This was a negative change of $10,472. Earnings for the three months as compared
to the same quarter last year were primarily impacted by an increase in
operating expenses consisting primarily of salaries and data processing
expenses.
NET INTEREST INCOME
Net interest income before provision for loan losses for the three months ended
March 31, 1999 was $231,208 as compared to $222,826 for the three months ended
March 31, 1998, an increase of $8,382 or 3.8%.
The increase in net interest income for the three months ended March 31, 1999
was in part due to lower rates on deposits. Income from interest earning
deposits, securities and mortgage-backed related securities (available-for-sale
and held-to-maturity)and Federal Reserve Bank stock decreased by $33,584 from
$86,240 for the three-month period ended March 31, 1998, compared to the
three-month period ended March 31, 1999, due to the decrease of the yield on
these assets. The balance of net loans decreased by $1.0 million to $13.6
million, and the investment portfolio increased by $.2 million to $.9 million
from December 31, 1998 to March 31, 1999.
Interest expense on deposits decreased $60,381 from $202,624 at March 31, 1998
to $142,243 at March 31, 1999. The actual interest expense decrease was the
result of a corresponding decrease in rates paid.
OPERATING EXPENSES
Operating expenses increased by $12,508, or 2.93% from $427,432 at March 31,
1998 to $439,940 at March 31, 1999. The increase for the three months ended
March 31, 1999 as compared to the three months ended March 31, 1998 consists
primarily of increases in salaries and employee benefits. Additionally, there
was an increase in occupancy and equipment of $4,142 for the three months ended
March 31, 1999 as compared to the three months ended March 31, 1998. The
category Other, which includes all not elsewhere classified, decreased from
$86,882 for the three months ended March 31, 1998 to $81,604 for the three
months ended March 31, 1999.
PROVISION FOR LOAN LOSSES
Although management uses its best judgement in underwriting each loan, industry
experience indicates that a portion of the Bank's loans will become delinquent.
Regardless of the underwriting criteria utilized by financial institutions,
losses may be experienced as a result of many factors beyond their control
including among other things, changes in market conditions affecting the value
of security and unrelated problems affecting the credit of the borrower. Due to
the concentration of loans in South Florida, adverse economic conditions in this
area could result in a decrease in the value of a significant portion of the
Bank's collateral. In the normal course of business, the Bank has recognized and
will continue to recognize losses resulting from the inability of certain
borrowers to repay loans and the insufficient realizable value of collateral
securing such loans. Accordingly, management has established an allowance for
loan losses, which totaled $272,278 at March 31, 1999. The allowance for credit
losses is maintained at a level believed adequate by management to absorb
estimated credit losses. Management's periodic evaluation of the adequacy of the
allowance is based on the Company's past loan loss experience, known and
inherent risks in the portfolio, adverse situations that may affect the
borrower's ability to repay (including the timing of future payments), the
estimated value of any underlying collateral, composition of the loan portfolio,
current economic conditions, and other relevant factors. This evaluation is
inherently subjective as it requires material estimates including the amounts
and timing of future cash flows expected to be received on impaired loans that
may be susceptible to significant change. The Bank's allowance for loan and
credit losses was analyzed and deemed to be adequate at March 31, 1999, and no
additional provision was expensed during the first three months of 1999.
PROVISION FOR INCOME TAXES
The Company has recorded a valuation allowance on the deferred tax assets to
reduce the total to an amount that management believes is more likely than not
to be realized. Realization of deferred tax assets is dependent upon sufficient
future taxable income during the period that deductible temporary differences
and carry forwards are expected to be available to reduce taxable income. No
income tax benefits have been provided for the three months ending March 31,
1999 and 1998 because the results of operations do not provide evidence that the
net operating losses available for carryforward will be utilized in the future.
YEAR 2000
The Company and the Bank began the process of assessing and preparing its
computer systems and applications to be functional on January 1, 2000 in 1996.
The Company utilizes extensive electronic data processing hardware and software
in its banking operations, among other things, to process and record customer
transactions, determine and collect revenue to be earned and expenses to be paid
in connection with customer transactions, maintain and report customer
transaction information, record and manage the Company's short-term and
long-term investments, accounting and financial management, and risk management.
The Company also relies on certain vendors to provide critical services to the
Company's banking operations, including telecommunications and correspondent
banking. Failure of the electronic data processing hardware or software of the
Company, its third party service bureaus, or certain vendors to properly
recognize the Year 2000 could result in a significant disruption of the
Company's banking operations.
The Company's customer transactions are processed through a network of
electronic data processing workstations in its banking office and loan servicing
department and are recorded on electronic data processing hardware and software,
a substantial portion of which are maintained by two third party service
bureaus. The Company has replaced its hardware and software to the extent
necessary to ensure their compliance with Year 2000 issues. Both of the
Company's third party service bureaus are working with the Company to convert
its customer transaction software to a more advanced version which is expected
to be completed by June 1999 and which will also be Year 2000 compliant. The
Company is also seeking Year 2000 compliance certifications from its major
telecommunications and correspondent banking vendors. Management of the Bank is
in regular contact with its service bureaus, major telecommunication providers
and correspondent banking vendors and closely monitors their reports on their
progress in becoming year 2000 ready. Based on their most recent reports, each
asserts it has completed the assessment and evaluation phases. The Bank's
service bureaus, major telecommunication providers and correspondent banking
vendors assure management that they will achieve year 2000 compliance by July
1999. Management is unable to predict whether each will achieve year 2000
readiness on a timely basis or the magnitude of the financial consequences to
the Bank in the event of their failure to achieve such readiness. Consequently,
the Bank has contacted other providers of such services, who assert they are
year 2000 ready, to determine the latest possible date the Bank could convert to
their systems. The Bank is currently working on contingency plans which address
operational policies and procedures in the event of data processing, electrical
power supply and other mission critical system failures. While a portion of the
Company's financial assets and liabilities are with commercial businesses and
government sponsored entities, the Company's loans and deposits are primarily
with individuals. As a result, the Company does not expect any significant
disruptions resulting from customers that may not be Year 2000 compliant.
The Company has designated a Year 2000 task force under the direction of a
senior officer of the Company which is identifying and coordinating the
Company's efforts to become Year 2000 compliant. Additionally, the Company and
its banking subsidiary are subject to regulation and supervision by Federal and
State Banking Regulators which regularly conduct reviews of the safety and
soundness of the Company's operations, including the Company's progress in
becoming Year 2000 compliant. Failure by the Company to adequately prepare for
Year 2000 issues could negatively impact the Company's banking operations
resulting in restrictions on its banking operations by the regulators. No such
restrictions exist at this time, nor does the Company expect any such
restrictions resulting from failure to address Year 2000 issues.
The Company is in the process of preparing a budget of the costs associated with
becoming Year 2000 compliant. The bank's utilization of third party vendors
minimizes the direct expense of year 2000 compliance. Management has concluded
that the total cost of upgrading its non-compliant personal computers and
desktop software will be $10,000 which has already been incurred. Those costs
are being capitalized and expensed in conformity with generally accepted
accounting principles. The Company is unable at this time to estimate the amount
of third party costs; however, management does not anticipate that the total
costs to be Year 2000 compliant will be material to the Company's financial
condition or results of operations.
<PAGE>
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Securities Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits. The following exhibits are filed as part of this report.
2.1 Agreement and Plan of Merger by and between Southern Security
Financial Corporation and Southern Security Bank Corporation,
dated October 31, 1997 (1)
2.2 Certificate of Merger of Southern Security Bank Corporation into
Southern Security Financial Corporation, under Florida law, dated
November 10, 1997 (1)
2.3 Articles of Merger of Southern Security Bank Corporation into
Southern Security Financial Corporation, under Florida law, dated
November 12, 1997 (1)
3.(i) Articles of Incorporation
(a) Certificate of Incorporation of Southern Security Bank
Corporation, dated October 3, 1996 (2)
(b) Certificate of Amendment of Certificate of Incorporation of
Southern Security Bank Corporation, dated January 17, 1998
(2)
(c) Certificate of Amendment of Certificate of Incorporation of
Southern Security Financial Corporation, dated November 12,
1997 (changing name to Southern Security Bank Corporation
(1)
(ii) By-laws of the registrant (3)
4.1 Stock Certificate for Class A Common Stock (3)
10.1 Executive Employment Agreement of Philip C. Modder, dated
June 11, 1992, together with Amendment No.1 thereto (3) *
10.2 Executive Employment Agreement of James L. Wilson, dated June
11, 1992, together with Amendment No. 1 thereto (3) *
10.3 Minutes of Meeting of June 6, 1997, of the Board of Directors
of the registrant relating to modification of the
compensation arrangements for Philip C. Modder and James L.
Wilson (3) *
10.4 Agreements between Southern Security Bank Corporation and
the Federal Reserve Bank of Atlanta, dated February 13, 1995
(4)
11.0 Statement of Computation of Per Share Earnings -- N/A
15.0 Letter on Unaudited Interim Financial Information -- N/A
18.0 Letter re change in accounting principles --N/A
19.0 Reports furnished to security holders --N/A
22.0 Published report re matters submitted to vote N/A
23.0 Consent of experts and counsel -- N/A
24.0 Power of attorney -- N/A
27.0 Financial Data Schedule -- filed herewith.
99.0 Additional Exhibits -- N/A
(1) Filed as an exhibit to Form 8-K of the registrant on November 25, 1997.
(2) Filed as an exhibit to Form 10-SB of the registrant filed on July 1997.
(3) Filed as an exhibit to Form 10-SB of the registrant filed on April 2, 1998.
(4) Filed as an exhibit to Form 10-SB/A of the registrant filed on June 10,
1998.
* Management compensation plan or arrangement.
(b) Reports on Form 8-K. The following reports on Form 8-K were filed
during the period covered by this report:
<PAGE>
EXHIBIT INDEX
2.1 Agreement and Plan of Merger by and between Southern Security Financial
Corporation and Southern Security Bank Corporation, dated October 31, 1997
(1)
2.2 Certificate of Merger of Southern Security Bank Corporation into Southern
Security Financial Corporation, under Florida law, dated November 10, 1997
(1)
2.3 Articles of Merger of Southern Security Bank Corporation into Southern
Security Financial Corporation, under Florida law, dated November 12, 1997
(1)
3.(i) Articles of Incorporation
(a) Certificate of Incorporation of Southern Security Bank Corporation,
dated October 3, 1996 (2)
(b) Certificate of Amendment of Certificate of Incorporation of Southern
Security Bank Corporation, dated January 17, 1998 (2)
(c) Certificate of Amendment of Certificate of Incorporation of Southern
Security Financial Corporation, dated November 12, 1997 (changing name
to Southern Security Bank Corporation (1)
(ii) By-laws of the registrant (3)
4.1 Stock Certificate for Class A Common Stock (3)
10.1 Executive Employment Agreement of Philip C. Modder, dated June 11,
1992, together with Amendment No.1 thereto (3) *
10.2 Executive Employment Agreement of James L. Wilson, dated June 11,
1992, together with Amendment No. 1 thereto (3) *
10.3 Minutes of Meeting of June 6, 1997, of the Board of Directors of the
registrant relating to modification of the compensation arrangements
for Philip C. Modder and James L. Wilson (3) *
10.4 Agreements between Southern Security Bank Corporation and the Federal
Reserve Bank of Atlanta, dated February 13, 1995 (4)
11.0 Statement of Computation of Per Share Earnings -- N/A
15.0 Letter on Unaudited Interim Financial Information -- N/A
18.0 Letter re change in accounting principles --N/A
19.0 Reports furnished to security holders --N/A
22.0 Published report re matters submitted to vote N/A
23.0 Consent of experts and counsel -- N/A
24.0 Power of attorney -- N/A
27.0 Financial Data Schedule -- filed herewith.
99.0 Additional Exhibits -- N/A
(1) Filed as an exhibit to Form 8-K of the registrant on November 25, 1997.
(2) Filed as an exhibit to Form 10-SB of the registrant filed on July 1997.
(3) Filed as an exhibit to Form 10-SB of the registrant filed on April 2, 1998.
(4) Filed as an exhibit to Form 10-SB/A of the registrant filed on June 10,
1998.
* Management compensation plan or arrangement.
<PAGE>
SIGNATURES
Pursuant to the Requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SOUTHERN SECURITY BANK CORPORATION
Dated: May 11, 1999 By: /s/James L. Wilson
-----------------------
James L. Wilson,
Chief Executive Officer
Dated: May 11, 1999 By: /s/Floyd D. Harper
-----------------------
Floyd D. Harper
Senior Vice President and Secretary
(Chief Financial Officer)
