<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q/A
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended Commission File No.
March 31, 1995 33-14902
SOUTHERN BANK GROUP, INC.
(Exact name of registrant as specified in its charter)
Georgia 58-1723394
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11180 Alpharetta Highway
Roswell, Georgia 30076
(Address of principal (Zip code)
executive offices)
Registrant's telephone number, including area code: (404) 475-2265
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $1.00 par value
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities and
Exchange Act of 1934 during the preceding 12 months, and (2) has been subject
to such filing requirements for the past 90 days.
YES X NO
------- -------
Indicate the number of shares outstanding or each of the issuer's
class of common stock, as of March 31, 1995.
Common Stock 1,838,601
<PAGE> 2
<TABLE>
<CAPTION>
SOUTHERN BANK GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
- ------------------------------------------------------------------------------------------------------
MARCH 31, December 31,
--------- ------------
1995 1994
--------- ------------
<S> <C> <C>
ASSETS
Cash and due from banks . . . . . . . . . . . . . . . . . . . . . . . . $ 3,601 $ 3,983
Federal funds sold. . . . . . . . . . . . . . . . . . . . . . . . . . . 5,340 5,540
Investment securities held to maturity, at cost (market value of
$7,394 and $7,771 respectively) . . . . . . . . . . . . . . . . . . . 7,508 8,017
Investment securities available for sale, at market . . . . . . . . . 12,761 10,784
Federal Home Loan Bank Stock, at cost . . . . . . . . . . . . . . . . . 314 314
Loans, less allowance for loan losses of
$1,031 and $1,028, respectively . . . . . . . . . . . . . . . . . . . 66,172 69,627
Premises and equipment, net . . . . . . . . . . . . . . . . . . . . . . 4,146 4,247
Other real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . 412 414
Accrued interest receivable and other assets . . . . . . . . . . . . . 1,469 1,448
-------- --------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . $101,723 $104,374
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Demand. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 14,275 $ 15,461
NOW accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,074 12,268
Money market accounts . . . . . . . . . . . . . . . . . . . . . . . 14,798 16,890
Savings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,938 4,674
Time, $100,000 and over . . . . . . . . . . . . . . . . . . . . . . 8,329 10,743
Other time. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,320 29,969
-------- --------
Total deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86,734 90,005
Accrued interest payable and other liabilities. . . . . . . . . . . . . . 692 474
-------- --------
Total liabilities . . . . . . . . . . . . . . . . . . . . 87,426 90,479
-------- --------
Shareholders' equity:
Common stock, $1 par value; 10,000,000 shares authorized;
1,838,601 shares issued and outstanding . . . . . . . . . . . . . . . . 1,839 1,839
Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,890 12,890
Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . (270) (525)
Unrealized holding (loss) gain on investment securities available
for sale, net of income tax effect. . . . . . . . . . . . . . . . . . . (162) (309)
-------- --------
Total shareholders' equity . . . . . . . . . . . . . . . . . . 14,297 13,895
-------- --------
Total liabilities and shareholders' equity . . . . . . . . . . $101,723 $104,374
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
(1)
<PAGE> 3
<TABLE>
<CAPTION>
SOUTHERN BANK GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
- ----------------------------------------------------------------------------------------------------------
For the three months ended March 31,
------------------------------------
1995 1994
---------- ----------
<S> <C> <C>
Interest income:
Interest and fees on loans. . . . . . . . . . . . . . . . . . . . . . . $ 1,765 $ 1,511
Federal funds sold . . . . . . . . . . . . . . . . . . . . . . . . . . 58 20
Investment securities held to maturity. . . . . . . . . . . . . . . . . 101 105
Investment securities available for sale. . . . . . . . . . . . . . . . 195 126
---------- ----------
Total interest income. . . . . . . . . . . . . . . . . . . . . 2,119 1,762
Interest expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 896 766
---------- ----------
Net interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,223 996
Provision for loan losses . . . . . . . . . . . . . . . . . . . . . . . . -- 5
---------- ----------
Net interest income after provision for loan losses . . . . . . . . . . . 1,223 991
---------- ----------
Non-interest income:
Service charges on deposit accounts . . . . . . . . . . . . . . . . . . 115 130
Credit card processing fees . . . . . . . . . . . . . . . . . . . . . . 59 47
Losses on sales of investment securities. . . . . . . . . . . . . . . . -- (9)
Gains on sales of loan participations . . . . . . . . . . . . . . . . . -- 15
Mortgage brokerage fees . . . . . . . . . . . . . . . . . . . . . . . . 5 8
Other income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 21
---------- ----------
Total non-interest income. . . . . . . . . . . . . . . . . . . 197 212
---------- ----------
Non-interest expense:
Salaries and other personnel. . . . . . . . . . . . . . . . . . . . . . 489 478
Occupancy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187 212
Postage and freight . . . . . . . . . . . . . . . . . . . . . . . . . . 29 30
Office supplies,printing and stationery . . . . . . . . . . . . . . . . 15 21
Data processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 43
Professional services . . . . . . . . . . . . . . . . . . . . . . . . . 64 59
Insurance and taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 79 81
Other real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . (6) 3
Credit Card Processing. . . . . . . . . . . . . . . . . . . . . . . . . 46 36
Other operating . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 78
---------- ----------
Total non-interest expense . . . . . . . . . . . . . . . . . . 1,033 1,041
---------- ----------
Income before income taxes. . . . . . . . . . . . . . . . . . . . . . . . 387 162
Income tax provision. . . . . . . . . . . . . . . . . . . . . . . . . . . (132) (55)
---------- ----------
Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 255 $ 107
========== ==========
Net income per share. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.14 $ 0.06
========== ==========
Weighted average common shares
outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,838,601 1,838,601
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
(2)
<PAGE> 4
<TABLE>
<CAPTION>
SOUTHERN BANK GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
- -----------------------------------------------------------------------------------------------------
For the three months
period ended March 31,
----------------------
1995 1994
-------- --------
<S> <C> <C>
Net cash provided by operating activities $ 440 $ 409
------- -------
Cash flows from investing activities:
Purchase of investment securities held to maturity -- (2,017)
Purchase of investment securities available for sale (1,893) (6)
Proceeds from maturities and prepayments of
investment securities held to maturity 504 --
Proceeds from maturities and prepayments of
investment securities available for sale 148 427
Net decrease (increase) in loans 3,490 (1,271)
Proceeds from sales of other real estate 2 27
Capital expenditures (2) (163)
------- -------
Net cash provided by (used in) investing activities 2,249 (3,003)
------- -------
Cash flows from financing activities:
Net (decrease) increase in deposits (3,271) 761
------- -------
Net cash (used in) provided by financing activities (3,271) 761
------- -------
Net decrease in cash and cash equivalents (582) (1,833)
Cash and cash equivalents at the beginning of the period 9,523 11,018
------- -------
Cash and cash equivalents at the end of the period $ 8,941 $ 9,185
======= =======
Supplemental disclosure of cash flow information:
Cash paid during the period:
Income taxes $ 100 $ --
======= =======
Interest $ 895 $ 842
======= =======
Supplemental disclosure of non-cash investing
and financing activities
Transfer of loans to other real estate $ -- $ --
======= =======
Loan financing of sales of other real estate $ -- $ 33
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
(3)
<PAGE> 5
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
Southern Bank Group, Inc. (the "Company"), is a bank holding company
which owns all the capital stock of Northside Bank and Trust Company (the
"Bank") and Southern Mortgage Group, Inc. (the "Mortgage Company"), which has
been inactive since October 22, 1991. The Bank is engaged in the general
commercial banking business in North Fulton County and the contiguous area. In
addition to the Bank's main office, the Bank has three branches, including one
branch located in a supermarket.
The following discussion and analysis sets forth the major factors
which affected the Company's results of operations and financial condition as
reflected in the unaudited financial statements for the three months ended
March 31, 1995 and 1994.
OVERVIEW
The Company reported net income of $255 and $107 for the quarter ended
March 31, 1995 and 1994, respectively. In general the improvement in the
Company's net income can be attributed to (1) an improving net interest margin
and (2) a reduction in non-interest expense.
Net interest income before a provision for loan losses for the first
three months of 1995 was up $227 or 23% from the same period in 1994. The
improvement relates to a rising interest rate environment which positively
impacted the Company's net interest margin on earning assets. (For further
discussion see the NET INTEREST INCOME section)
Return on average equity was 7.37% for the period ended March 31, 1995
compared to 3.19% for the same period in 1994. Return on average assets was
1.00% and .42% for the three months ended March 31, 1995 and 1994,
respectively.
(4)
<PAGE> 6
PROVISION FOR LOAN LOSSES
The Company did not make a provision for loan losses during the first
quarter of 1995 as the Bank reflected net recoveries of $3 and there was a
$3,455 decrease in the size of the loan portfolio. The Company did make a
provision for loan losses of $5 for the quarter ended March 31, 1994 as the
Bank experienced an increase in the credit card portfolio. See further
discussion in the ASSET QUALITY section. The allowance for loan losses as a
percentage of total loans was 1.53% and 1.42% at March 31, 1995 and 1994,
respectively.
NON-INTEREST INCOME
Non-interest income consists primarily of service charges on deposit
accounts, gains on investment securities transactions, credit card fees and
other miscellaneous income.
Non-interest income was $197 and $212 for the first quarter of 1995
and 1994, respectively. Although non-interest income remained relatively flat,
fees from the credit card program did increase $12 or 26% from $47 reported for
the first quarter of 1994. The Bank became a direct issuer of
MasterCard/Visa(R) credit cards during the third quarter of 1993. Becoming a
direct card issuer has allowed the Bank to earn interest income on the credit
card balances, fees associated with the cardholder services and fees from the
credit card merchant program. As this program grows, fees are expected to rise.
There were no gains on sales of loan participations during the first
quarter of 1995 but the Bank did report gains of $15 for the same period in
1994. During the past three years, the Company had curtailed its efforts to
originate SBA-guaranteed loans in order to focus attention on improving asset
quality. With the improvement in asset quality over the past two years, the
Company has begun underwriting SBA-guaranteed loans and selling the guaranteed
portion in the secondary market.
Service and other charges on deposit accounts were down $15 or 12%
from 1994. Most of the decrease relates to a reduction in non-sufficient funds
charges as customers are encouraged to avoid overdraft conditions and to take
advantage of overdraft protection transfer and credit arrangements.
NON-INTEREST EXPENSE
Non-interest expenses were $1,033 and $1,041 for the quarter ended
March 31, 1995 and 1994, respectively.
Salary expense for the quarter ended March 31, 1995 was $489 compared
to salary expense of $478 for the same period in 1994. Actual salary expense
for the quarter ended March 31, 1995, decreased $70 due to a reduction in
full-time equivalent employees ("FTE"). At March 31, 1994, the Company had 64
FTE employees compared to 56 at March 31, 1995. Some of the reduction (2 FTEs)
can be attributed to a revision in the Company's management structure with
remainder attributed to staff vacancies created by normal attrition. Management
has elected not replace certain positions in anticipation of the proposed sale
of the Company. See PROPOSED SALE OF COMPANY section. Although actual salary
expense decreased, total personnel expenses increased due to the accrual of $81
in bonuses to be paid to certain employees in connection with the pending sale
of the Company.
(5)
<PAGE> 7
There was no provision made during the first quarter of 1995 and
management has concluded through the actions described above that the level of
the allowance is adequate to meet any specific or unforeseen loan losses that
may occur. Bank management is committed to the maintenance of an adequate
allowance.
AN ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES:
<TABLE>
<CAPTION>
MARCH 31, March 31,
1995 1994
-------- --------
<S> <C> <C>
Balance at beginning of year $1,028 $1,016
Charge-offs:
Commercial, financial and agricultural. . . . . . . . . . . . . . . . . 73 3
Real estate - construction and land
development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 1
Real estate - mortgage. . . . . . . . . . . . . . . . . . . . . . . . . 17 27
Installment loans to individuals. . . . . . . . . . . . . . . . . . . . 31 4
------ ------
121 35
Recoveries:
Commercial, financial and agricultural. . . . . . . . . . . . . . . . . 99 22
Real estate - construction and land
development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- --
Real estate - mortgage. . . . . . . . . . . . . . . . . . . . . . . . . 23 --
Installment loans to individuals. . . . . . . . . . . . . . . . . . . . 2 23
------ ------
124 45
Net recoveries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 10
Additions charged to operations . . . . . . . . . . . . . . . . . . . . . -- 5
------ ------
Balance at end of period. . . . . . . . . . . . . . . . . . . . . . . . . $1,031 $1,031
====== ======
Ratio of net recoveries to average loans
outstanding during the period . . . . . . . . . . . . . . . . . . . . . .004% .14%
====== ======
Ratio of allowance for loan losses to loans
at end of period. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.53% 1.42%
====== ======
</TABLE>
Net recoveries of $3 were credited to the allowance during the first
quarter of 1995 versus net recoveries of $10 for the same period in 1994.
AN ANALYSIS OF NON-ACCRUAL LOANS:
<TABLE>
<CAPTION>
MARCH 31, December 31,
1995 % 1994 %
-------- --- ----------- ---
<S> <C> <C> <C> <C>
Commercial, financial and
agricultural. . . . . . . . . . . . . . . . . . . . . . . . . $ 516 77% $ 278 48%
Real estate - construction and
land development. . . . . . . . . . . . . . . . . . . . . . . -- -- -- --
Real estate - mortgage. . . . . . . . . . . . . . . . . . . . . 132 20 326 40
Installment and other consumer. . . . . . . . . . . . . . . . . 19 3 45 12
----- --- ----- ---
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 667 100% $ 649 100%
===== === ===== ===
</TABLE>
(6)
<PAGE> 8
CAPITAL RESOURCES
At March 31, 1995, consolidated shareholders' equity was $14,297
compared with $13,895 at December 31, 1994. Average shareholders' equity as a
percentage of average assets was 14% for the quarter ended March 31, 1995 versus
13% for the year ended December 31, 1994. Management believes present capital
levels are adequate to support the Bank's operating activities.
The Company and the Bank are subject to capital requirements of the
Georgia Department of Banking and Finance and the FDIC. The FDIC has established
minimum capital ratios ("leverage ratio") of tier one capital (as defined) to
total average assets of 4.00%. At March 31, 1995, the Bank's leverage ratio was
11.21%.
The FDIC and Federal Reserve Bank (the "FRB") have adopted final
risk-based capital guidelines for banks and bank holding companies. Under these
guidelines as of December 31, 1992, the Company and the Bank are expected to
meet a minimum ratio of total capital to risk-weighted assets of 8.00% (of which
at least 4.00% must consist of Tier 1 Capital, as defined).
The following table sets forth information with respect to the
Company's capital ratios at March 31, 1995 when compared with existing leverage
and risk-based ratios.
<TABLE>
<CAPTION>
MARCH 31, 1995
--------------------
COMPANY
AMOUNT RATIO
--------------------
<S> <C> <C>
RISK BASED CAPITAL RATIOS:
Tier 1 Capital . . . . . . . . . . . . . . . . . . . . . . . . . $14,157 18.79%
Tier 1 Capital, Minimum Requirement. . . . . . . . . . . . . . . 3,014 4.00%
--------------------
Excess . . . . . . . . . . . . . . . . . . . . . . . . . . . . $11,143 14.79%
====================
Total Capital. . . . . . . . . . . . . . . . . . . . . . . . . . $15,099 20.04%
Total Capital, Minimum Requirement . . . . . . . . . . . . . . . 6,028 8.00%
--------------------
Excess . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,071 12.04%
====================
</TABLE>
(1) For purposes of computing capital ratios, $305 of the Bank's deferred tax
asset was not included in Tier 1 or Tier 2 capital as a majority of the
balance is not expected to be realized as a reduction of income taxes
otherwise payable within the next twelve months.
(2) For purposes of computing capital ratios, the unrealized losses on
investments securities available for sale were not included in Tier 1 or
Tier 2 capital in compliance with the guidelines set forth by the Bank's
primary regulator for the treatment of this item.
(7)
<PAGE> 9
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 BANK GROUP, INC.
Date: June 7, 1995 By: /s/ Dana F. Ponder
------------------
Dana F. Ponder
Principal Accounting Officer
(Duly Authorized Officer)
Date: June 7, 1995 By: /s/ Dana F. Ponder
------------------
Dana F. Ponder
Principal Accounting Officer
<PAGE> 10
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
27 Financial Data Schedule (for SEC use only)
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF SOUTHERN BANK GROUP, INC. FOR THE THREE MONTHS ENDED
MARCH 31, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 3,601
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 5,340
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 12,761
<INVESTMENTS-CARRYING> 7,508
<INVESTMENTS-MARKET> 7,394
<LOANS> 66,172
<ALLOWANCE> 1,031
<TOTAL-ASSETS> 101,723
<DEPOSITS> 86,724
<SHORT-TERM> 0
<LIABILITIES-OTHER> 692
<LONG-TERM> 0
<COMMON> 1,839
0
0
<OTHER-SE> 12,458
<TOTAL-LIABILITIES-AND-EQUITY> 101,723
<INTEREST-LOAN> 1,765
<INTEREST-INVEST> 296
<INTEREST-OTHER> 58
<INTEREST-TOTAL> 2,119
<INTEREST-DEPOSIT> 896
<INTEREST-EXPENSE> 896
<INTEREST-INCOME-NET> 1,223
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,033
<INCOME-PRETAX> 387
<INCOME-PRE-EXTRAORDINARY> 387
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 255
<EPS-PRIMARY> .14
<EPS-DILUTED> 0
<YIELD-ACTUAL> 9.08
<LOANS-NON> 667
<LOANS-PAST> 2
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 669
<ALLOWANCE-OPEN> 1,028
<CHARGE-OFFS> 121
<RECOVERIES> 124
<ALLOWANCE-CLOSE> 1,031
<ALLOWANCE-DOMESTIC> 1,031
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
