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 March 31, 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
incorporation or organization) Number)
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 March 31, 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
Part II. Other Information . . . . . . . . . . . . . . . 12
SOUTH BANKING COMPANY
ALMA, GEORGIA
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
1995 1994
ASSETS
Cash and due from banks $ 4,382,976 $ 3,447,596
Deposits in other banks -
interest bearing $ 895,000 $ 995,000
Investment securities
Available for sale $ 4,424,662 $ 4,063,412
Held to maturity $ 4,703,223 $ 5,069,898
Georgia Bankers stock $ 272,880 $ 272,880
Stock - Pineland Bank - at cost $ 130,463 $ -
Federal Funds Sold $ 7,405,000 $ 8,655,000
Loans $59,125,192 $57,201,948
Less: Unearned discount ( 57,479) ( 58,622)
Reserve for loan losses (1,008,795) ( 974,866)
$58,058,918 $56,168,460
Bank premises and equipment $ 3,242,603 $ 3,252,981
Other assets $ 2,447,137 $ 2,551,300
Total Assets $85,962,862 $84,476,527
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits: Demand - non-interest bearing $12,779,437 $14,751,893
Demand - interest bearing 15,014,734 15,350,308
Savings 6,900,180 7,172,540
Time 39,937,402 36,509,016
$74,631,753 $73,783,757
Borrowing 1,259,738 1,292,238
Accrued expenses and other liabilities 674,438 402,755
Total Liabilities $76,565,929 $75,478,750
The accompanying notes are an integral part of these financial statements.
SOUTH BANKING COMPANY
ALMA, GEORGIA
CONSOLIDATED BALANCE SHEETS (con't)
March 31, December 31,
1995 1994
Stockholders' Equity
Common stock $1 par value; shares
authorized - 1,000,000 shares issued
and outstanding 1995 and 1994,
405,283 and 405,283, respectively $ 405,283 $ 405,283
Surplus 3,136,238 3,136,238
Undivided profits 5,949,666 5,537,253
Unrealized gain (loss) on securities ( 94,254) ( 80,997)
Total Stockholders' Equity $ 9,396,933 $ 8,997,777
Total Liabilities and
Stockholders' Equity $85,962,862 $84,476,527
The accompanying notes are an integral part of these financial statements.
SOUTH BANKING COMPANY
ALMA, GEORGIA
CONSOLIDATED STATEMENT OF INCOME
Three Months Three Months
Ended Ended
March 31, March 31,
1995 1994
Interest Income
Interest and fees on loans $ 1,652,359 $ 1,300,221
Interest on federal funds sold 91,409 47,131
Interest on deposits with other
banks 7,823 18,808
Interest on investment securities:
U. S. Treasury 21,582 26,882
U. S. government agencies 63,318 61,202
Mortgage backed securities 36,125 24,715
State and political subdivisions 13,459 31,955
Other - -
Dividends - -
Total Interest Income $ 1,886,075 $ 1,510,914
Interest Expense
Interest on deposits $ 634,727 $ 498,124
Interest on other borrowings 32,894 11,217
Total Interest Expense $ 667,621 $ 509,341
Net Interest Income $ 1,218,454 $ 1,001,573
Provision for loan losses 16,800 11,500
Net interest income after provisions
for loan losses $ 1,201,654 $ 990,073
Other Operating Income
Service charge on deposit accounts $ 233,244 $ 252,403
Commission on insurance 14,483 8,879
Other income 176,006 46,329
Total Other Operating Income $ 423,733 $ 307,611
The accompanying notes are an integral part of these financial statements.
SOUTH BANKING COMPANY
ALMA, GEORGIA
CONSOLIDATED STATEMENT OF INCOME (Con't)
Three Months Three Months
Ended Ended
March 31, March 31,
1995 1994
Other Operating Expenses
Salaries $ 396,847 $ 357,603
Profit sharing and other personnel
expense 57,509 67,595
Occupancy expense 90,871 63,433
Furniture and fixtures expense 104,421 50,850
Payroll taxes 29,108 25,509
Data processing - 89,156
Other operating expenses 333,074 300,214
Total Other Operating Expenses $ 1,011,830 $ 954,360
Income before income taxes $ 613,557 $ 343,324
Applicable income taxes 201,144 97,872
Net income $ 412,413 $ 245,452
Per share data on weighted average
outstanding shares
Weighted average outstanding shares 405,283 405,563
Net income per share $ 1.0176 $ .6052
The accompanying notes are an integral part of these financial statements.
SOUTH BANKING COMPANY
ALMA, GEORGIA
STATEMENT OF CASH FLOWS
Three Months Three Months
Ended Ended
March 31, March 31,
1995 1994
Cash Flows From Operating Activities:
Net income $ 412,413 $ 245,452
Add expenses not requiring cash:
Provision for depreciation and
amortization 96,783 66,082
Provision for loan losses 16,800 11,500
Bond portfolio losses - -
Gain on sale of other real estate
owned ( 17,332) -
Increase (decrease) in taxes
payable 50,245 74,440
Increase (decrease) in interest
payable 100,870 102,133
Increase (decrease) in other
liabilities 120,568 65,754
(Increase) decrease in interest
receivable ( 39,482) ( 63,147)
(Increase) decrease in prepaid
expenses ( 77,489) ( 13,358)
(Increase) decrease in other assets ( 147,824) ( 139,131)
Recognition of unearned loan income ( 1,143) ( 9,238)
Net Cash Used in Operating Activities $ 514,409 $ 340,487
Cash Flows From Investing Activities:
Proceeds from maturities of investment
securities $ 970,192 $ 1,047,446
Purchase of investment securities ( 935,027) ( 804,721)
Net loans to customers (1,906,115) (1,919,194)
Purchase of premise and equipment ( 86,096) ( 518,604)
Proceeds from sale of premises
and equipment - -
Proceeds from other real estate owned 339,594 -
Purchase of stock - Pineland Bank ( 130,463) -
Options to purchase Pineland Bank stock 3,390 -
Net Cash Used in Investing Activities $(1,744,525) $(2,195,073)
The accompanying notes are an integral part of these financial statements.
SOUTH BANKING COMPANY
ALMA, GEORGIA
STATEMENT OF CASH FLOWS (Con't)
Three Months Three Months
Ended Ended
March 31, March 31,
1995 1994
Cash Flows From Financing Activities:
Net increase (decrease) in demand
deposits, NOW and money market $(2,308,030) $( 142,638)
Net increase (decrease) in savings
and time deposit 3,156,026 1,311,900
Net increase (decrease) in short-term
borrowings ( 32,500) -
Dividends paid - -
Redemptions of company stock - ( 3,300)
Net Cash Provided (Used) From
Financing Activities $ 815,496 $ 1,165,962
Net Increase (Decrease) in Cash
and Cash Equivalents $( 414,620) $( 688,624)
Cash and Cash Equivalents at
Beginning of Year 13,097,596 13,552,011
Cash and Cash Equivalents at
End of Period $12,682,976 $12,863,387
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.
Effective January 1, 1993, the company adopted FASB 109
regarding recording of deferred income taxes. Prior year
statements have been restated to reflect an adjustment required of
$58,508 reduction in deferred taxes and an increase in equity.
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 AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
During the first quarter of 1995, total assets increased
$1,486,335 or 1.8%. The banks have experienced a small increase in
deposits due to competitive structuring of certificate rates during
this period of improved economic activity. The banks have not been
aggressively attempting to maintain certificate of deposits that
are rate sensitive; however, the small increase occurred during
this quarter as the bank has attempted to stop the movement of
money and has been able to maintain more of the money of core
customers. The core bank deposits have remained solid. The demand
for loans resulted in a net increase in loans of $1,890,458 or
3.4%. The bank continues to scrutinize the loan portfolio and loan
request to insure quality loans rather than emphasizing growth.
The increase in assets in 1995 of 1.8% compared to a increase of
2.0% for 1994 is an indication of the stabilizing economy.
Net income increased by $166,961 for the period in 1995
compared to 1994. Net interest income increased by $203,558 or
20.06%. This increase in net interest income results from the
changes in the mix of interest earning assets and the increase in
higher yielding loans. Service charges have decreased by $19,159
or 7.6% over 1994. As the interest rate margins are squeezed
tighter, the banks have looked to other fee type income. Other
income increased due to fees from participation in SBA Loan
programs of $48,882 and services rendered by the data processing
center for nonrelated banks of $51,532. The data processing center
began operation during the second quarter of 1994.
Provision for loan losses have remained at levels lower than
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 as a total increased $57,470 or 6.02%. This
primary area of increase is in government areas such as increased
FDIC fees, salaries and expenses related to the new data processing
center. The bank data processing charges from an outside vendor
have been eliminated.
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 - None
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits
(27) Financial Data Schedule
The registrant has not filed any reports on Form 8-K
during the three month period ended March 31, 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: May 9, 1995 By: Valene Bennett
Valene Bennett
President
Date: May 9, 1995 By: Paul Bennett
Paul Bennett
Vice President
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