U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15 (d)
of the Securities Exchange
Act of 1934
| For the Quarter Ended: March 31, 2003 |
Commission File No.: 0-22836 |
SOUTHERN FINANCIAL BANCORP, INC.
| Virginia (State or other jurisdiction of incorporation or organization) |
54-1779978 (IRS Employer Identification Number) |
| 37 East Main Street Warrenton, Virginia (address of principal executive office) |
20186 (Zip Code) |
Registrant’s Telephone Number, including area code: (540) 349-3900
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 Exchange Act of 1934 during the preceding 12 months (or for such shorter period 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 o
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes x No o
As of April 30, 2003, there were 5,471,169 shares of the registrant’s Common Stock outstanding.
SOUTHERN FINANCIAL BANCORP, INC.
QUARTERLY REPORT ON FORM 10-Q
March 31,
2003
TABLE OF CONTENTS
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| PART I. |
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FINANCIAL INFORMATION |
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Item 1. |
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Financial Statements |
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Consolidated Balance Sheets as of March 31, 2003 (Unaudited) and December 31, 2002 |
3 |
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Consolidated Statements of Income for the Three Months Ended March 31, 2003 and 2002 (Unaudited) |
4 |
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Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2003 and 2002 (Unaudited) |
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Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2003 and 2002 (Unaudited) |
6 |
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7 - 12 | |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
13 - 18 |
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Item 3. |
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18 - 19 | |
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Item 4. |
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19 | |
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| PART II. |
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OTHER INFORMATION |
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Item 1. |
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20 | |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 5. |
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Item 6. |
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| PART III. |
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| 22 - 23 |
2
SOUTHERN FINANCIAL BANCORP, INC.
FINANCIAL STATEMENTS
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March 31, |
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December 31, |
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| Assets |
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| Cash and due from banks |
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$ |
27,571,539 |
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$ |
28,705,185 |
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| Overnight earning deposits |
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47,733,464 |
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64,692,873 |
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| Investment securities - available for sale |
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166,796,018 |
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203,562,648 |
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| Investment securities - held to maturity |
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78,526,035 |
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— |
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| Loan held for sale |
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6,587,828 |
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513,784 |
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| Loans receivable, net |
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625,921,362 |
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594,323,270 |
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| Cash surrender value of life insurance |
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22,619,133 |
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22,287,418 |
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| Premises and equipment, net |
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8,949,487 |
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8,264,400 |
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| Intangible assets, net |
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14,406,990 |
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14,557,779 |
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| Other assets |
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28,145,972 |
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33,319,634 |
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| Total assets |
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$ |
1,027,257,828 |
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$ |
970,226,991 |
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| Liabilities and Stockholders’ Equity |
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| Liabilities |
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| Deposits |
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$ |
791,372,851 |
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$ |
776,082,670 |
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| Advances from Federal Home Loan Bank - short term |
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10,000,000 |
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| Advances from Federal Home Loan Bank - long term |
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89,941,584 |
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65,000,000 |
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| Company-obligated mandatorily redeemable securities of subsidiary holding solely parent debentures |
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13,000,000 |
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13,000,000 |
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| Securities sold under agreements to repurchase |
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26,450,208 |
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18,455,614 |
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| Other liabilities |
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13,789,284 |
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16,385,601 |
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| Total liabilities |
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944,553,927 |
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888,923,885 |
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| Stockholders’ equity |
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| Preferred stock |
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129 |
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129 |
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| Common stock |
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54,712 |
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54,412 |
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| Capital in excess of par |
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81,616,042 |
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81,166,827 |
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| Retained earnings |
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1,981,121 |
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| Accumulated other comprehensive income (loss) |
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(948,103 |
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81,738 |
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| Total stockholders’ equity |
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82,703,901 |
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81,303,106 |
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| Total liabilities and stockholders’ equity |
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$ |
1,027,257,828 |
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$ |
970,226,991 |
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The accompanying notes are an integral part of these consolidated financial statements.
3
SOUTHERN FINANCIAL BANCORP, INC.
FINANCIAL STATEMENTS (UNAUDITED)
CONSOLIDATED STATEMENTS OF INCOME
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Three Months Ended |
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2003 |
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2002 |
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| Interest Income |
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| Loans |
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$ |
10,060,798 |
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$ |
8,035,356 |
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| Investment securities |
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2,872,049 |
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4,784,886 |
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| Total interest income |
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12,932,847 |
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12,820,242 |
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| Interest Expense |
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| Deposits |
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2,683,582 |
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3,718,160 |
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| Borrowings |
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846,897 |
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972,502 |
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| Total interest expense |
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3,530,479 |
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4,690,662 |
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| Net interest income |
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9,402,368 |
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8,129,580 |
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| Provision for loan losses |
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1,215,000 |
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1,500,000 |
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| Net interest income after provision for loan losses |
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8,187,368 |
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6,629,580 |
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| Other Income |
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| Account maintenance and electronic banking fees |
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776,932 |
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643,781 |
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| Commercial service fees |
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169,547 |
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116,689 |
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| Other loan fees |
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131,768 |
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94,619 |
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| System maintenance and license fees |
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53,916 |
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74,313 |
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| Income from bank owned life insurance |
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331,715 |
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247,931 |
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| Gain on sale of loans |
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298,662 |
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99,247 |
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| Loss on investment securities, net |
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(896,542 |
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(385,474 |
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| Other |
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37,919 |
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2,499 |
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| Total other income |
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903,917 |
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893,605 |
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| Other expenses |
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| Employee compensation and benefits |
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2,873,585 |
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2,351,932 |
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| Premises, equipment and data processing |
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1,483,723 |
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1,221,021 |
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| Other |
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836,611 |
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681,022 |
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| Total other expenses |
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5,193,919 |
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4,253,975 |
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| Income before income taxes |
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3,897,366 |
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3,269,210 |
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| Provision for income taxes |
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1,190,700 |
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1,041,192 |
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| Net income |
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$ |
2,706,666 |
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$ |
2,228,018 |
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| Earnings per common share: |
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| Basic |
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$ |
0.50 |
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$ |
0.45 |
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| Diluted |
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0.48 |
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0.43 |
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| Dividends declared per common share |
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0.13 |
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0.10 |
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| Weighted average shares outstanding: |
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| Basic |
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5,424,692 |
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4,927,283 |
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| Diluted |
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5,697,478 |
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5,135,726 |
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The accompanying notes are an integral part of these consolidated financial statements
4
SOUTHERN FINANCIAL BANCORP, INC.
FINANCIAL STATEMENTS (UNAUDITED)
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
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Three Months Ended |
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2003 |
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2002 |
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| Net income |
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$ |
2,706,666 |
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$ |
2,228,018 |
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| Other comprehensive income: |
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| Cash flow hedge: |
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| Unrealized holding gain/(loss) |
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(89,572 |
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45,202 |
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