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, 1999 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 March 31, 1999.
Common stock, $1.00 par value - 399,500 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 -
18
Part II. Other Information . . . . . . . . . . . . . . . . . . . .
19
SOUTH BANKING COMPANY
ALMA, GEORGIA
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
March 31, December 31,
1999 1998
ASSETS
Cash and due from banks $ 4,073,038 $ 6,122,085
Deposits in other banks -
interest bearing $ 1,340,000 $ 1,539,000
Investment securities:
Available for sale $ 16,486,883 $ 16,993,917
Held to maturity $ 747,626 $ 747,716
Georgia Bankers stock $ 547,283 $ 547,283
Federal Home Loan Bank stock $ 426,100 $ 396,200
Federal funds sold $ 12,646,000 $ 17,648,000
Loans $118,717,570 $114,959,844
Less: Unearned discount ( 154,545) ( 154,545)
Reserve for loan losses ( 2,046,172) ( 1,970,620)
$116,516,853 $112,834,679
Bank premises and equipment $ 4,093,843 $ 4,020,735
Goodwill $ 249,102 $ 262,137
Other assets $ 3,652,216 $ 3,778,990
Total Assets $160,778,944 $164,890,742
The accompanying notes are an integral part of these financial
statements.
SOUTH BANKING COMPANY
ALMA, GEORGIA
CONSOLIDATED BALANCE SHEETS (con't)
(UNAUDITED)
March 31, December 31,
1999 1998
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits: Demand - non-interest
bearing $ 22,168,764 $ 23,299,454
Demand - interest bearing 20,492,521 24,613,084
Savings 9,557,958 9,057,678
Time 88,980,230 89,019,729
$141,199,473 $145,989,945
Borrowing 3,137,952 3,156,096
Accrued expenses and other
liabilities 1,607,935 1,391,347
Federal funds purchased - -
Note payable - Federal Home Loan Bank 133,333 146,667
Total Liabilities $146,078,693 $150,684,055
Stockholders' Equity
Common stock $1 par value; shares
authorized - 1,000,000, shares
issued and outstanding -
1998 and 1997 - 399,500
and 399,500, respectively $ 399,500 $ 399,500
Surplus 3,070,831 3,070,831
Undivided profits 11,209,066 10,651,788
Accumulated other comprehensive
income 20,854 84,568
Total Stockholders' Equity $ 14,700,251 $ 14,206,687
Total Liabilities and
Stockholders' Equity $160,778,944 $164,890,742
The accompanying notes are an integral part of these financial
statements.
SOUTH BANKING COMPANY
ALMA, GEORGIA
CONSOLIDATED STATEMENT OF INCOME AND
COMPREHENSIVE INCOME
(UNAUDITED)
Three Months Three Months
Ended Ended
March 31, March 31,
1999 1998
Interest Income
Interest and fees on loans $ 3,051,810 $ 2,939,846
Interest on federal funds sold 155,146 140,878
Interest on deposits with other
banks 17,208 15,416
Interest on investment securities:
U. S. Treasury 42,009 52,229
U. S. government agencies 169,338 170,251
Mortgage backed securities 10,801 16,965
State and political subdivisions 22,877 23,068
Dividends 49,827 34,637
Total Interest Income $ 3,519,016 $ 3,393,290
Interest Expense
Interest on deposits $ 1,475,238 $ 1,453,482
Interest on other borrowings 57,692 64,807
Total Interest Expense $ 1,532,930 $ 1,518,289
Net Interest Income $ 1,986,086 $ 1,875,001
Provision for loan losses 75,000 54,000
Net interest income after provisions
for loan losses $ 1,911,086 $ 1,821,001
Other Operating Income
Service charge on deposit accounts $ 336,116 $ 280,274
Commission on insurance 15,275 21,889
Other income 112,117 61,872
Gain (loss) sale of securities 5 6
Computer income 86,585 42,199
Total Other Operating Income $ 550,098 $ 406,240
The accompanying notes are an integral part of these financial
statements.
SOUTH BANKING COMPANY
ALMA, GEORGIA
CONSOLIDATED STATEMENT OF INCOME AND
COMPREHENSIVE INCOME (Con't)
(UNAUDITED)
Three Months Three Months
Ended Ended
March 31, March 31,
1999 1998
Other Operating Expenses
Salaries $ 742,425 $ 595,839
Profit sharing and other personnel
expense 133,086 111,738
Occupancy expense 97,351 107,633
Furniture and fixtures expense 178,262 167,506
Payroll taxes 51,208 38,869
Data processing 83,150 40,785
Other operating expenses 379,636 402,990
Total Other Operating Expenses $ 1,665,118 $ 1,465,360
Income before income taxes $ 796,066 $ 761,881
Applicable income taxes 238,787 227,848
Net income $ 557,279 $ 534,033
Other comprehensive income, net of tax
Unrealized gains (losses) on
securities $( 63,714) $ 5,363
Other comprehensive income (loss) $( 63,714) $ 5,363
Comprehensive income $ 493,565 $ 539,396
Per share data on weighted average
outstanding shares
Weighted average outstanding shares 399,500 399,500
Net income per share $ 1.395 $ 1.337
The accompanying notes are an integral part of these financial
statements.
SOUTH BANKING COMPANY
ALMA, GEORGIA
STATEMENT OF CASH FLOWS
(UNAUDITED)
Three Months Three Months
Ended Ended
March 31, March 31,
1999 1998
Cash Flows From Operating Activities:
Net income $ 557,279 $ 534,033
Add expenses not requiring cash:
Provision for depreciation and
amortization 108,689 149,442
Provision for loan losses 75,000 54,000
Bond portfolio losses (gains) - 6
Gain on sale of other real estate
owned - -
Increase (decrease) in taxes payable 238,787 220,820
Increase (decrease) in interest payable 16,571 105,955
Increase (decrease) in other liabilities ( 38,770) ( 125,665)
(Increase) decrease in interest
receivable 67,662 24,550
(Increase) decrease in prepaid
expenses 33,567 ( 19,339)
(Increase) decrease in other assets 22,163 206,759
Recognition of unearned loan income - ( 6,699)
Net Cash Provided (Used) in Operating
Activities $ 1,080,948 $ 1,143,862
Cash Flows From Investing Activities:
Proceeds from maturities of investment
securities - available for sale $ 3,650,418 $ 1,565,386
Proceeds from maturities of investment
security - held to maturity - 838,117
Purchase of investment securities - AFS ( 3,150,000) ( 2,205,273)
Purchase of investment securities - HTM - ( 502,136)
Net loans to customers ( 3,757,174) ( 2,148,914)
Purchase of premise and equipment ( 222,389) ( 91,630)
Proceeds from sale of equipment - -
Proceeds from other real estate owned - -
Purchase of FHLB stock ( 29,900) ( 51,700)
Net Cash Provided (Used) in Investing
Activities $( 3,509,045) $( 2,596,150)
The accompanying notes are an integral part of these financial
statements.
SOUTH BANKING COMPANY
ALMA, GEORGIA
STATEMENT OF CASH FLOWS (Con't)
(UNAUDITED)
Three Months Three Months
Ended Ended
March 31, March 31,
1999 1998
Cash Flows From Financing Activities:
Net increase (decrease) in demand
deposits, NOW and money market $( 5,251,253) $( 1,747,798)
Net increase (decrease) in savings
and time deposit 460,781 2,284,713
Net increase (decrease) in borrowings ( 18,144) ( 32,500)
Dividends paid - -
Redemptions of company stock - -
Federal funds purchased - ( 150,000)
Net decrease - note payable - FHLB ( 13,334) -
Net Cash Provided (Used) From
Financing Activities $( 4,821,950) $ 354,415
Net Increase (Decrease) in Cash
and Cash Equivalents $( 7,250,047) $( 1,097,873)
Cash and Cash Equivalents at
Beginning of Year 25,309,085 19,448,444
Cash and Cash Equivalents at
End of Period $ 18,059,038 $ 18,350,571
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 January 11, 1996, the merger of Pineland State Bank into
South Banking Company was completed. The purchase method of
accounting was used to record this transaction. The activity of
Pineland State Bank since January 11, 1996 has been consolidated in
these statements.
Effective January 1, 1993, the company adopted FASB 109
regarding the 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
Liquidity and Capital Resources
Liquidity management involves the matching of the cash flow
requirements of customers, who may be either depositors desiring to
withdraw funds or borrowers needing assurance that sufficient funds
will be available to meet their credit needs and the ability of South
Banking Company and its subsidiaries (the "Company") to meet those
needs. The Company strives to maintain an adequate liquidity position
by managing the balances and maturities of interest-earning assets and
interest-bearing liabilities so that the balance it has in short-term
investments (Federal funds sold) at any given time will adequately
cover any reasonably anticipated immediate need for funds.
Additionally, the subsidiary banks (the "Banks") maintain
relationships with correspondent banks, which could provide funds to
them on short notice, if needed.
The liquidity and capital resources of the Company is monitored
on a periodic basis by state and federal regulatory authorities. As
determined under guidelines established by these regulatory
authorities, the Banks' liquidity ratios at March 31, 1999 were
considered satisfactory but on the lower level. At that date, the
Banks' Federal funds sold were adequate to cover any reasonably
anticipated immediate need for funds. The Company is aware of no
events or trends likely to result in a material change in liquidity.
At March 31, 1999, the Company's and the Banks' capital asset ratios
were considered well capitalized based on guidelines established by
regulatory authorities. During the three months ended March 31, 1999,
total capital increased $493,564 to $14,700,251. This increase in
capital resulted from net earnings of $557,279 and a decrease of
$63,714 in unrealized gains on securities available for sale, net of
taxes.
At March 31, 1999, South Banking Company had no binding
commitments for capital expenditures. No additional mergers or
acquisitions requiring cash are being negotiated at present.
Results of Operations
The following discussion and analysis presents the significant
changes in financial condition and the results of operations of South
Banking Company and Subsidiary for the periods indicated. This
discussion and analysis should be read in conjunction with the
Company's 1998 Annual Report to Shareholders and Form 10-K.
SOUTH BANKING COMPANY
ALMA, GEORGIA
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations (Con't)
Since the primary business activities of South Banking Company are
conducted through its Banks, this discussion focuses primarily on the
financial condition and operations of the Banks. Included in this
discussion are forward looking statements based on management's
current expectations, actual results, however, may differ. Amounts
and percentages used in this discussion have been rounded.
Earnings Summary
Net income for the first quarter of 1999 was $557,279, up $23,246
from $534,033 in the first quarter of 1998. On a per share basis
earnings registered a similar increase from $1.337 to $1.395. These
levels of income represent annualized returns on average assets of
1.37% and 1.42%, respectively. Return on average equity also
decreased from 16.73% to 15.42%. Details concerning the Company's
results of operations are discussed in the following sections of this
report.
Net interest income for the first quarter of 1999 totaled
$1,986,086, up $111,085 from $1,875,001 in the first quarter of 1998.
Interest income is being impacted by the mix of assets, the level
of earning assets and a lower interest rate environment. Average
earning assets for the quarter of $151.9 million are $14.8 million in
excess of the first quarter 1998 average. These funds are primarily
being invested in the loan portfolio. The lower rate environment,
however, has caused loan income to increase only $111,964 from
$2,939,846 in the first quarter of 1998 to $3,051,810 in the first
quarter of 1999. This increase reflects the downward repricing of the
Bank's substantial portfolio of one-year adjustable rate loans.
Interest expense, the other component of net interest income,
increased $14,641 when compared to the first quarter of last year
despite the fact that the average balance of interest bearing
liabilities was up $8.8 million. This is the result of lower interest
rates. The overall cost of interest bearing liabilities for the
quarter of 4.94% is 33 basis points lower than in the first quarter of
1998 reflecting several rate reductions implemented in late 1998.
This combination of higher average balances and lower rates
produced a net interest margin of 4.33% for the quarter, down from
5.01% in the first quarter of last year but still at the peer average.
SOUTH BANKING COMPANY
ALMA, GEORGIA
MANGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Earnings Summary (Con't)
The provision for loan losses is a charge to earnings in the
current period to replenish the allowance for loan losses and maintain
it at the level management determines is adequate. The provision for
loan losses charged to earnings amounted to $75,000 and $54,000 during
the three months ended March 31, 1999 and 1998, respectively.
Noninterest Income
Following is a comparison of noninterest income for the three
months ended March 31, 1999 and 1998.
Three Three
Months Months
Ended Ended
March 31, March 31,
1999 1998
Service charges on deposits $ 336,116 $ 280,274
Other service charges, commissions
& fees 15,275 21,889
Other income 198,707 104,077
Total Noninterest Income $ 550,098 $ 406,240
Total noninterest income for the three months ended March 31,
1999 was $143,858 higher than during the same period in 1998. The
primary increase is related to additional computer processing income
from nonaffiliated banks and brokerage services.
During the third quarter of 1998, the Bank began offering
brokerage services, including stocks, bonds, mutual funds and
annuities, to its customers. The effect on the deposit base has been
limited as less than one quarter of the total sales have come from
Bank deposits. In the long-term, management believes this service
will actually increase deposits.
Noninterest Expense
Noninterest expense includes all items of expense other than
interest expense, the provision for loan losses, and income taxes.
Total noninterest expense for the first quarter of 1999 of $1,665,118
was $199,758, or 8.2%, greater than during the first quarter of 1998.
SOUTH BANKING COMPANY
ALMA, GEORGIA
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Noninterest Expense (Con't)
The majority of this increase was due to higher salary and
benefit costs, up $167,934 to $875,511. Salaries have increased as a
result of the retention of a full-time broker and a new branch
location, in addition to regular compensation adjustments. As a
consequence of this, payroll related taxes also increased. Increases
were also experienced in group insurance and pension expense.
Other increases were experienced in equipment costs and data
processing, while other noninterest expense decreased by $23,354 to
$379,635 for the quarter. This reflects decreases in a number of
items including postage, stationery and supplies, professional fees,
and educational expense. Management expects several of these items,
including stationery, professional fees, and educational expense, to
be reduced during the remainder of the year.
One category of noninterest expense, occupancy expense, decreased
during the quarter. Net occupancy expense fell by $10,282, or 9.55%
for the quarter.
Income Taxes
The Company's provision for income taxes, which totaled $238,787
in the first quarter of 1999 and $227,848 in the first quarter of
1998, includes both federal and state income taxes. The effective tax
rates during the two periods were 30.0% in 1999 and 29.9% in 1998.
Financial Condition
Average total assets during the first quarter of 1999 were
$162,834,843, up from $12.4 million from the first quarter of 1998. A
detailed discussion of the Bank's financial condition, and its various
balance sheet components follows.
Loan Portfolio
The loan portfolio, which represents South's largest asset, has
increased during the first quarter by $3,757,726 to $118,717,570.
Competitive pressures from auto manufacturers and a variety of
mortgage providers continue to make loan growth at acceptable yields
and risk levels difficult for those types of loans. However,
management believes that with the recent decline in the local farming
economy, there exists little opportunity to expand and develop the
agricultural loan portfolio. In the year since March 31, 1998 this
portfolio increased substantially. Commercial and real estate lending
remains the largest part of the portfolio.
SOUTH BANKING COMPANY
ALMA, GEORGIA
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Loan Portfolio (Con't)
The Bank is also a party to financial instruments with off-
balance sheet risk in the normal course of business to meet the
financing needs of its customers. These financial instruments include
commitments to extend credit and letters of credit. Those instruments
involve, to varying degrees, elements of credit and interest rate risk
in excess of the amount recognized in the consolidated balance sheets.
At March 31, 1999 commitments to extend credit, including unused lines
of credit, totaled $13,782,000 while letters of credit totaled
$669,000.
Company policy requires those loans which are past due 90 days or
more be placed on nonaccrual status unless they are both well secured
and in the process of collection. The following table provides a
summary of past due loans and nonperforming assets.
Summary of Past Due Loans and Nonperforming Assets
(in thousands)
-------March 31------
- -
1999 1998
(Unaudited)
Loans past due 90 or more days
still accruing interest $ 285 $ 183
Nonperforming assets:
Nonaccruing loans $ 254 $ 625
Other real estate owned 182 183
$ 436 $ 808
Management makes this determination by its analysis of overall
loan quality, changes in he mix and size of the loan portfolio,
previous loss experience, general economic conditions, information
about specific borrowers and other factors. At March 31, 1999, the
allowance for loan losses was $2,046,172 or 1.61% of gross loans.
Given the inherent risk contained in the portfolio, including the
nonaccrual loan described above as well as commitments to extend
credit, this level is considered adequate. Management is not aware of
any trends, uncertainties or other information relating to the loan
portfolio which it expects will materially impact future operating
results, liquidity, or capital resources.
The provision for loan losses is a charge to earnings which is
made to maintain the allowance for loan losses at a sufficient level.
The provision totaled $75,000 during the first quarter of 1999 and
$54,000 during the first quarter of 1998.
SOUTH BANKING COMPANY
ALMA, GEORGIA
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Securities Portfolio and Federal Funds Sold
The Bank's securities portfolio consists of available for sale
and held to maturity securities while no securities are maintained in
a trading account. At March 31, 1999, the held to maturity portfolio
totaled $747,626.
Management also attempts to emphasize the available for sale
portfolio due to the flexibility it allows in managing the balance
sheet structure and addressing asset/liability issues. At March 31,
1999 this portfolio had an estimated fair value of $17,460,266,
$31,597 in excess of the amortized cost. Such excess represents an
unrealized gain.
This portfolio, which represents 90.5% of the total securities
portfolio, is invested primarily in U.S. Treasury and agency
obligations and tax exempt municipals. The treasury and agency
portion of the portfolio, including agency backed mortgage securities,
total $15,103,553 at quarter-end or 86.5% of the available for sale
portfolio. Tax exempt municipals totaling $1,083,324 comprised 6.2%.
The remainder of the portfolio, which totals $1,273,383, consists of
Georgia Bankers Stock, C. B. Financial Corp Stock and stock which the
Bank is required to hold for membership in the Federal Reserve Bank
and the Federal Home Loan Bank.
The Bank has typically favored investments with maturities of
five years or less which have known cash flow patterns. Such
instruments typically provide greater safety, less market value
fluctuation and more simplified asset/liability issues. However, some
callable securities and mortgage backed securities may be purchased
from time to time for their increased yield.
The Bank generally tries to minimize its involvement in the
overnight federal funds sold market, instead relying on the
continually maturing securities portfolio to provide the liquidity
needed to fund loans or meet deposit withdraw demands. Nonetheless,
at any given time the execution of specific investing or funding
strategies, or normal fluctuations in deposit and loan balances may
require the bank to sell, or buy, funds on an overnight basis. In
addition, any daily excess funds are maintained in Federal Funds until
demands on accounts are determined.
Deposits and Other Funding Sources
Total deposits at March 31, 1999 of $141,199,473 were down from
their year-end total of $145,989,945. The first quarter has
traditionally not been a growth period, however, while first quarter
deposits have decreased, they are well above the first quarter 1998
totals of $133,139,007.
SOUTH BANKING COMPANY
ALMA, GEORGIA
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Deposits and Other Funding Sources (Con't)
Noninterest bearing deposit decreased $1,130,690 to $22,168,764
during the quarter. In contrast to this, interest bearing deposits
declined $3,659,782 or 3.0%, to $122,690,491 during the quarter. The
area of greatest decline was NOW accounts which decreased by
$4,120,563 to $20,492,521 due to the lower interest rates which have
been in effect since the fourth quarter of 1998. Increases were
experienced in savings accounts.
In addition to deposits the Bank may generate funding by the use
of borrowings.
Year 2000 Compliance
Historically, certain computerized systems have had two digits
rather than four digits to define the applicable year, which could
result in recognizing a date using 00 as the year 1900 rather than the
year 2000. This could result in failures or miscalculations and is
generally referred to as the Year 2000 issue.
Because the Bank, as well as some of its suppliers, customers and
service providers, is heavily dependent on computers to conduct its
business operations it recognizes and seeks to responsibly address the
Year 2000 issue. Failure to address Year 2000 issues could result in
business disruption that could materially affect the Company's
operations, liquidity or capital resources. A Year 2000 Task Team has
been assembled to study, test, and remedy Year 2000 issues. This team
includes members of senior management and reports regularly to the
Board of Directors. The team has inventoried all computer related or
dependent hardware and software, identified those which are critical,
and assessed the year 2000 compliance of each component. Testing of
critical items, which involve a third party software vendor, are being
jointly conducted with that processor. During 1998, such tests of the
processors' major functions were successful. Additional testing is
scheduled for the second quarter of 1999. Backup systems for
noncritical functions have also been identified and are also subject
to testing. The Bank also has contingency plans which will be
implemented in the event of a Year 2000 failure. In addition, the
Bank has contacted those customers and vendors, who, if unable to cope
with the Year 2000 issue may negatively impact the Bank, to attempt to
determine their degree of readiness.
Through March 31, 1999, the Bank expenditures have been non-
material in preparation for the Year 2000. It is not expected that
additional capital expenditures of a significant amount will be
needed.
SOUTH BANKING COMPANY
ALMA, GEORGIA
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Year 2000 Compliance (Con't)
While the Bank believes the tests and procedures in place should
minimize the Year 2000 risks and enable it to meet the needs of its
customers in the Year 2000, the Bank cannot quantify the potential
impact of any unforeseen Year 2000 failures that might occur either
internally or from external third parties.
Impact of Inflation
The consolidated financial statements and related data included
in this report were prepared in accordance with generally accepted
accounting principles, which require the Company's financial position
and results of operations to be measured in terms of historical
dollars, except for the available for sale securities portfolio.
Consequently, the relative value of money generally is not considered.
Nearly all of the Company's assets and liabilities are monetary in
nature and, as a result, interest rates and competition in the market
area tend to have a more significant impact on the Company's
performance than the effect of inflation.
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, 1999.
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 13, 1999 By:
Paul Bennett
President
Date: May 13, 1999 By:
Olivia Bennett
Vice President
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 4,073,038
<INT-BEARING-DEPOSITS> 1,340,000
<FED-FUNDS-SOLD> 12,646,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 16,486,883
<INVESTMENTS-CARRYING> 747,625
<INVESTMENTS-MARKET> 756,811
<LOANS> 118,717,570
<ALLOWANCE> 2,046,172
<TOTAL-ASSETS> 160,778,944
<DEPOSITS> 141,199,473
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1,607,935
<LONG-TERM> 3,271,285
0
0
<COMMON> 399,500
<OTHER-SE> 14,300,751
<TOTAL-LIABILITIES-AND-EQUITY> 160,778,944
<INTEREST-LOAN> 3,051,810
<INTEREST-INVEST> 294,852
<INTEREST-OTHER> 172,354
<INTEREST-TOTAL> 3,519,016
<INTEREST-DEPOSIT> 1,475,238
<INTEREST-EXPENSE> 1,532,930
<INTEREST-INCOME-NET> 1,986,086
<LOAN-LOSSES> 75,000
<SECURITIES-GAINS> 5
<EXPENSE-OTHER> 1,665,118
<INCOME-PRETAX> 796,066
<INCOME-PRE-EXTRAORDINARY> 796,066
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 557,279
<EPS-PRIMARY> 1.39
<EPS-DILUTED> 1.39
<YIELD-ACTUAL> 0
<LOANS-NON> 254,000
<LOANS-PAST> 285,000
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,970,620
<CHARGE-OFFS> 27,001
<RECOVERIES> 27,553
<ALLOWANCE-CLOSE> 2,046,172
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 2,046,172
</TABLE>
