SECURITY AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For quarter ended September 30, 1995 Commission file number 2-71249
SOUTH BANKING COMPANY
(Exact name of registrant as specified in its charter)
Georgia 58-1418696
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
104 North Dixon Street, Alma, Georgia 31510
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (912) 632-8631
Former name, former address and former fiscal year, if changed since
last report.
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Sections 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such report(s), and (2)
has been subject to such filing requirement for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of September 30, 1995.
Common stock, $1.00 par value - 405,283 shares outstanding
SOUTH BANKING COMPANY
SOUTH BANKING COMPANY
ALMA, GEORGIA
Part I. Financial Information
Consolidated Financial Statements . . . . . . . . . . . .4 - 9
Notes to Consolidated Financial Statements . . . . . . . . 10
Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . 11
SOUTH BANKING COMPANY
ALMA, GEORGIA
CONSOLIDATED STATEMENT OF CONDITION
September 30, December 31,
1995 1994
ASSETS
Cash and due from banks $ 4,677,541 $ 3,447,596
Deposits in other banks -
interest bearing $ 795,000 $ 995,000
Investment securities
Available for sale $ 5,660,974 $ 4,063,412
Held to maturity $ 4,605,316 $ 5,069,898
Georgia Bankers' stock $ 272,880 $ 272,880
Stock - Pineland Bank - at cost $ 905,640 $ -
Federal Funds Sold $ 9,475,000 $ 8,655,000
Loans $63,091,659 $57,201,948
Less: Unearned discount ( 53,473) ( 58,622)
Reserve for loan losses (1,054,726) ( 974,866)
$61,983,460 $56,168,460
Bank premises and equipment $ 3,208,385 $ 3,252,981
Other assets $ 2,781,824 $ 2,551,300
Total Assets $94,366,020 $84,476,527
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits: Demand - non-interest bearing $13,953,231 $14,751,893
Demand - interest bearing 15,257,290 15,350,308
Savings 6,663,511 7,172,540
Time 45,460,305 36,509,016
$81,334,337 $73,783,757
Borrowing 1,983,905 1,292,238
Accrued expenses and other liabilities 908,776 402,755
Total Liabilities $84,227,018 $75,478,750
The accompanying notes are an integral part of these financial statements.
SOUTH BANKING COMPANY
ALMA, GEORGIA
CONSOLIDATED STATEMENT OF CONDITION (con't)
September 30, December 31,
1995 1994
Stockholders' Equity
Common stock $1 par value; shares
authorized - 1,000,000 shares
issued and outstanding September 30,
1995 and December 31, 1994,
405,283 and 405,283, respectively $ 405,283 $ 405,283
Surplus 3,136,238 3,136,238
Undivided profits 6,584,927 5,537,253
Unrealized gain (loss) on
securities 12,554 ( 80,997)
Total Stockholders' Equity $10,139,002 $ 8,997,777
Total Liabilities and
Stockholders' Equity $94,366,020 $84,476,527
The accompanying notes are an integral part of these financial statements.
SOUTH BANKING COMPANY
ALMA, GEORGIA
CONSOLIDATED STATEMENT OF INCOME
Three Three
Months Months Nine Months Nine Months
Ended Ended Ended Ended
September September September September
30, 1995 30, 1994 30, 1995 30, 1994
Interest Income:
Interest & fees
on loans $ 1,833,121 $ 1,458,005 $ 5,278,457 $ 4,159,555
Interest on federal
funds sold 121,322 84,326 299,317 194,003
Interest on deposits
with other banks 10,266 14,526 30,413 50,289
Interest on
investment
securities:
U.S. Treasury 21,237 32,869 63,152 88,449
U.S. Government
agencies 71,857 52,380 203,572 165,383
Mortgage backed
bonds 34,659 22,032 106,579 71,910
State & municipal
subdivisions 11,647 25,701 42,044 86,910
Other - - 9,655 12,880
Total Interest
Income $ 2,104,109 $ 1,689,839 $ 6,033,189 $ 4,829,379
Interest Expense:
Interest on
deposits $ 861,074 $ 568,685 $ 2,272,789 $ 1,580,708
Interest on other
borrowings 38,721 27,609 95,439 51,919
Total Interest
Expense $ 899,795 $ 596,294 $ 2,368,228 $ 1,632,627
Net Interest
Income $ 1,204,314 $ 1,093,545 $ 3,664,961 $ 3,196,752
Provision for loan
losses 11,800 16,500 45,400 44,500
Net interest income
after provision
for loan losses $ 1,192,514 $ 1,077,045 $ 3,619,561 $ 3,152,252
The accompanying notes are an integral part of these financial statements.
SOUTH BANKING COMPANY
ALMA, GEORGIA
CONSOLIDATED STATEMENT OF INCOME (con't)
Three Three
Months Months Nine Months Nine Months
Ended Ended Ended Ended
September September September September
30, 1995 30, 1994 30, 1995 30, 1994
Other Operating Income:
Service charge on
deposit accounts $ 231,613 $ 249,633 $ 704,727 $ 753,948
Commission on
insurance 16,627 6,339 48,854 42,669
Other income 56,115 41,878 273,940 111,988
Total Other
Operating Income $ 304,355 $ 297,850 $ 1,027,521 $ 908,605
Other Operating Expenses:
Salaries $ 423,416 $ 400,838 $ 1,277,100 $ 1,190,452
Profit sharing &
personnel expense 70,582 56,020 193,582 167,790
Occupancy expense 111,315 109,385 278,029 249,355
Furniture &
fixtures expense 119,783 66,993 312,772 179,888
Payroll taxes 26,244 22,584 78,176 75,714
Data processing - 58,219 - 278,238
Other operating
Expenses 283,635 242,226 952,510 875,858
Total Other Operating
Expenses $ 1,034,975 $ 956,265 $ 3,092,169 $ 3,017,295
Income before
income taxes $ 461,894 $ 418,630 $ 1,554,913 $ 1,043,562
Applicable income
taxes 146,004 125,763 507,240 311,795
Net Income $ 315,890 $ 292,867 $ 1,047,673 $ 731,767
Per share data based
on weighted average
outstanding shares
Weighted average
outstanding
shares 405,283 405,283 405,283 405,376
Net Income $ .78 $ .72 $ 2.58 $ 1.81
The accompanying notes are an integral part of these financial statements.
SOUTH BANKING COMPANY
ALMA, GEORGIA
STATEMENT OF CASH FLOWS
Nine Months Nine Months
Ended Ended
September September
30, 1995 30, 1994
Cash Flows From Operating Activities:
Net income $ 1,047,673 $ 731,767
Add expenses not requiring cash:
Provision for depreciation and
amortization 266,744 215 332
Provision for loan losses 45,400 44,500
Bond portfolio gains (losses) - -
Gain on sale of other real estate owned 14,004 -
Increase (decrease) in taxes
payable ( 84,160) 24,795
Increase (decrease) in interest
payable 371,021 161,557
Increase (decrease) in other
liabilities 219,160 131,545
(Increase) decrease in interest
receivable ( 344,777) ( 510,418)
(Increase) decrease in prepaid
expenses 8,572 21,833
(Increase) decrease in other
assets ( 159,409) ( 15,415)
Recognition of unearned loan
income ( 5,149) ( 18,685)
Net Cash Used in Operating Activities $ 1,379,079 $ 786,811
Cash Flows From Investing Activities:
Proceeds from sale of investment
securities $ 1,033,659 $ -
Proceeds from maturities of
investment securities 2,190,509 3,119,093
Purchase of investment securities (4,328,427) (2,245,245)
Net loans to customers (5,855,251) (5,474,509)
Purchase of premise and equipment ( 245,825) ( 867,062)
Proceeds from sale of premises and
equipment - -
Proceeds from other real estate owned 339,594 -
Purchase stock - Pineland Bank ( 905,640) -
Net Cash Used in Investing Activities $(7,771,381) $(5,467,723)
The accompanying notes are an integral part of these financial statements.
SOUTH BANKING COMPANY
ALMA, GEORGIA
STATEMENT OF CASH FLOWS (Con't)
Nine Months Nine Months
Ended Ended
September September
30, 1995 30, 1994
Cash Flows From Financing Activities:
Net increase (decrease) in demand
deposits, NOW and money market $( 891,680) $ 700,321
Net increase (decrease) in savings
and time deposits 8,442,260 3,774,164
Net increase (decrease) in borrowings 691,667 650,000
Dividends paid - -
Redemptions of company stock - ( 3,300)
Net Cash Provided (Used) From
Financing Activities $ 8,242,247 $ 5,121,185
Net Increase (Decrease) in Cash
and Cash Equivalents $ 1,849,945 $ 440,273
Cash and Cash Equivalents at
Beginning of Year 13,097,596 13,552,011
Cash and Cash Equivalents at
End of Period $14,947,541 $13,992,284
The accompanying notes are an integral part of these financial statements.
SOUTH BANKING COMPANY
ALMA, GEORGIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Basis of Presentation
The accompanying consolidated financial statements in this
report have not been audited. The statements have been prepared in
accordance with generally accepted accounting principles and
general practice within the banking industry.
On February 28, 1990, the merger of Georgia Peoples
Bankshares, Inc. into South Banking Company was completed. The
purchase method of accounting was used to record this transaction.
The activity of Georgia Peoples Bankshares, Inc. since February 28,
1990 has been consolidated in these statements.
In the opinion of management, all adjustments for the fair
presentation of the financial position and results of operations
for the interim periods have been made.
SOUTH BANKING COMPANY
ALMA, GEORGIA
MANAGEMENT'S DISCUSSION
During the third quarter of 1995, total assets increased
$5,440,026 or 6.1% compared to an increase of $3,555,844 for the
same period in 1994. The increase for the third quarter continues
the trend of the first two quarters of the year. Part of this
quarter's increase is attributable to seasonal banking practices in
the communities served by the banks; however, the banks have
continued to be competitive for local deposits. The banks have
made concerted efforts to retain good stable core deposits. Loan
demand has increased substantially during this year as the economy
improved; however, a decrease in loans occurred in the third
quarter as seasonal agricultural loans began to repay.
Net income increased in the third quarter of 1995 compared to
1994 by $23,023 or 7.86% and for the first nine months of 1995 by
$315,906 or 43.17%. The third quarter net interest income
continues to improve in comparison to prior year, reflecting the
banks management of its interest bearing assets and liabilities.
As customers begin to move to high paying certificates of deposits,
the bank has attempted to reinvest its resources into higher yield
securities and/or loans to maintain proper spreads. As loan rates
have declined since last year, the loans are repricing at lower
rates than previously recorded on books. This trend has resulted
in the net interest margins being reduced. Management continues to
monitor the changes in the loan rates to insure proper
asset/liability management. Other factors affecting these
statements compared to last year are the income from participation
in SBA loan programs during the first six months of the year. A
factor in the net income of the company has been the conversion
from outside vendors for computer processing to Bankers Data
Services, Inc., a subsidiary formed to handle the banks data
processing.
Provision for loan losses have continued to decrease from
prior years as the reserve for loan losses continue to be adequate
for the loan portfolio. The reserve was increased substantially in
1991 and management feels current provision levels are adequate
based on current conditions.
Operating expense for the quarter as a total increased $78,710
or 8.2% compared to prior year and increased $74,874 this year
compared to last year. This relatively small increase for the year
can be attributed to the computer conversion, FDIC fee reductions
and increased monitoring by management.
The bank continues to monitor the economy and operations to
insure proper actions are taken as the economy and banking climate
continue to change.
SOUTH BANKING COMPANY
ALMA, GEORGIA
PART II. OTHER INFORMATION
Item 1. Legal Proceedings - No change.
Item 5. (A) On October 5, 1995, final agreement was reached with the
shareholders of Pineland State Bank of Metter, Georgia to acquire
the stock in Pineland State Bank by South Banking Company. The
acquisition is to be consummated in two steps. South Banking
Company obtained options to purchase 13,837 shares (38.98%) of
which over 12,000 were exercised prior to September 30, 1995. On
October 5th the remaining shareholders agreed to sell their
shares effective January 5, 1996. All transactions will be for
cash for a total purchase price of $2,729,712.50. Pineland State
Bank is a state charter bank with total assets of $27,270,281.
(B) On October 5, 1995, the chairmen of the board and the
largest shareholder of South Banking Company died. The Company
does not expect this death to have any significant effect on the
bank or the availability of shares to the public.
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits - None
(A) The registrant has not filed any reports on Form 8-K
during the nine month period ended September 30, 1995.
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.
SOUTH BANKING COMPANY
(Registrant)
Date: By:
Paul Bennett
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