UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
| X | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 2004 | |
| Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ____ to ____ |
Commission file number 0-15083
The South Financial
Group, Inc.
(Exact name of
registrant as specified in its charter)
| South Carolina | 57-0824914 | |
| (State or other
jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) |
| 102 South Main Street, Greenville, South Carolina | 29601 | |
| (Address of principal executive offices) | (ZIP Code) |
(864) 255-7900
Registrant’s telephone number, including area code
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
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange
Act).
Yes X No
The number of outstanding shares of the issuer’s $1.00 par value common stock as of May 5, 2004 was 59,682,627.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data) (Unaudited)
| March 31, | December 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2004 | 2003 | 2003 | ||||||||||
| Assets | ||||||||||||
| Cash and due from banks | $ | 220,636 | $ | 181,495 | $ | 184,057 | ||||||
| Interest-bearing bank balances | 1,048 | 59,515 | 2,048 | |||||||||
| Federal funds sold | 4,477 | -- | 137 | |||||||||
| Securities | ||||||||||||
| Trading | 1,462 | 1,418 | 480 | |||||||||
| Available for sale | 3,779,782 | 3,360,107 | 3,915,994 | |||||||||
| Held to maturity (market value $87,050, $63,789 and | ||||||||||||
| $93,188, respectively) | 84,876 | 61,403 | 91,097 | |||||||||
| Total securities | 3,866,120 | 3,422,928 | 4,007,571 | |||||||||
| Loans | ||||||||||||
| Loans held for sale | 15,850 | 60,202 | 29,619 | |||||||||
| Loans held for investment | 5,986,684 | 4,515,133 | 5,732,205 | |||||||||
| Allowance for loan losses | (74,871 | ) | (66,133 | ) | (73,287 | ) | ||||||
| Net loans | 5,927,663 | 4,509,202 | 5,688,537 | |||||||||
| Premises and equipment, net | 144,860 | 133,261 | 142,705 | |||||||||
| Accrued interest receivable | 47,914 | 49,253 | 48,365 | |||||||||
| Intangible assets | 352,003 | 242,420 | 353,079 | |||||||||
| Other assets | 309,913 | 367,137 | 292,902 | |||||||||
| $ | 10,874,634 | $ | 8,965,211 | $ | 10,719,401 | |||||||
| Liabilities and shareholders' equity | ||||||||||||
| Liabilities | ||||||||||||
| Deposits | ||||||||||||
| Noninterest-bearing | $ | 924,753 | $ | 757,149 | $ | 882,129 | ||||||
| Interest-bearing | 5,120,577 | 3,978,566 | 5,146,520 | |||||||||
| Total deposits | 6,045,330 | 4,735,715 | 6,028,649 | |||||||||
| Federal funds purchased and repurchase agreements | 1,115,432 | 956,709 | 834,866 | |||||||||
| Other short-term borrowings | 43,986 | 43,664 | 56,079 | |||||||||
| Long-term debt | 2,524,966 | 2,118,810 | 2,702,879 | |||||||||
| Debt associated with trust preferred securities | -- | 95,500 | -- | |||||||||
| Accrued interest payable | 23,090 | 22,926 | 24,520 | |||||||||
| Other liabilities | 96,009 | 270,403 | 92,539 | |||||||||
| Total liabilities | 9,848,813 | 8,243,727 | 9,739,532 | |||||||||
| Minority interest in consolidated subsidiary | -- | 86,484 | -- | |||||||||
| Shareholders' equity | ||||||||||||
| Preferred stock-no par value; authorized 10,000,000 shares; issued | ||||||||||||
| and outstandin- none | -- | -- | -- | |||||||||
| Common stock-par value $1 per share; authorized 100,000,000 shares; | ||||||||||||
| issued and outstanding 59,599,431, 46,405,600, and 59,064,375 | ||||||||||||
| shares, respectively | 59,599 | 46,406 | 59,064 | |||||||||
| Surplus | 720,758 | 406,839 | 712,788 | |||||||||
| Retained earnings | 240,027 | 164,463 | 216,678 | |||||||||
| Guarantee of employee stock ownership plan debt and nonvested | ||||||||||||
| restricted stock | (5,071 | ) | (3,035 | ) | (2,494 | ) | ||||||
| Common stock held in trust for deferred compensation | (706 | ) | (147 | ) | (151 | ) | ||||||
| Deferred compensation payable in common stock | 706 | 147 | 151 | |||||||||
| Accumulated other comprehensive income (loss), net of tax | 10,508 | 20,327 | (6,167 | ) | ||||||||
| Total shareholders' equity | 1,025,821 | 635,000 | 979,869 | |||||||||
| $ | 10,874,634 | $ | 8,965,211 | $ | 10,719,401 | |||||||
See notes to consolidated financial statements, which are an integral part of these statements.
THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share and per share data) (Unaudited)
| Three Months Ended March 31, |
|||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2004 | 2003 | ||||||||||
| Interest income | |||||||||||
| Interest and fees on loans | $ | 78,017 | $ | 67,333 | |||||||
| Interest and dividends on securities | |||||||||||
| Taxable | 37,210 | 30,299 | |||||||||
| Exempt from Federal income taxes | 1,759 | 1,221 | |||||||||
| Total interest and dividends on securities | 38,969 | 31,520 | |||||||||
| Interest on short-term investments | 28 | 118 | |||||||||
| Total interest income | 117,014 | 98,971 | |||||||||
| Interest expense | |||||||||||
| Interest on deposits | 19,450 | 17,999 | |||||||||
| Interest on borrowed funds | 15,548 | 15,501 | |||||||||
| Total interest expense | 34,998 | 33,500 | |||||||||
| Net interest income | 82,016 | 65,471 | |||||||||
| Provision for loan losses | 7,722 | 5,500 | |||||||||
| Net interest income after provision for loan losses | 74,294 | 59,971 | |||||||||
| Noninterest income | 29,288 | 19,886 | |||||||||
| Noninterest expenses | 57,271 | 48,890 | |||||||||
| Income before income taxes and minority interest | 46,311 | 30,967 | |||||||||
| Income taxes | 14,018 | 9,910 | |||||||||
| Income before minority interest | 32,293 | 21,057 | |||||||||
| Minority interest in consolidated subsidiary, net of tax | -- | (1,012 | ) | ||||||||
| Net income | $ | 32,293 | $ | 20,045 | |||||||
| Average common shares outstanding, basic | 59,214,344 | 47,325,448 | |||||||||
| Average common shares outstanding, diluted | 60,809,470 | 48,257,498 | |||||||||
| Basic earnings per share | $ | 0.55 | $ | 0.42 | |||||||
| Diluted earnings per share | $ | 0.53 | $ | 0.42 | |||||||
See notes to consolidated financial statements, which are an integral part of these statements.
THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME
(in thousands, except share and per share data) (Unaudited)
| Shares of Common Stock |
Common Stock |
Surplus | Retained Earnings and Other* |
Accumulated Other Comprehensive Income(Loss) |
Total | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Balance, December 31, 2002 | 47,347,375 | $ | 47,347 | $ | 427,448 | $ | 147,854 | $ | 24,150 | $ | 646,799 | |||||||||
| Net income | -- | -- | -- | 20,045 | -- | 20,045 | ||||||||||||||
| Other comprehensive loss, net of tax of $37 | -- | -- | -- | -- | (3,823 | ) | (3,823 | ) | ||||||||||||
| Comprehensive income | -- | -- | -- | -- | -- | 16,222 | ||||||||||||||
| Cash dividends declared | ||||||||||||||||||||
| ($0.14 per common share) | -- | -- | -- | (6,529 | ) | -- | (6,529 | ) | ||||||||||||
| Common stock activity: | ||||||||||||||||||||
| Repurchase of stock | (1,266,308 | ) | (1,266 | ) | (24,981 | ) | -- | -- | (26,247 | ) | ||||||||||
| Acquisitions | -- | -- | -- | 453 | -- | 453 | ||||||||||||||
| Dividend reinvestment plan | 39,339 | 39 | 721 | -- | -- | 760 | ||||||||||||||
| Employee stock purchase plan | 13,960 | 14 | 263 | -- | -- | 277 | ||||||||||||||
| Restricted stock plan | 68,793 | 69 | 2,179 | (478 | ) | -- | 1,770 | |||||||||||||
| Exercise of stock options | 202,441 | 203 | 1,188 | -- | -- | 1,391 | ||||||||||||||
| Common stock purchased by trust for | ||||||||||||||||||||
| deferred compensation | -- | -- | -- | (147 | ) | -- | (147 | ) | ||||||||||||
| Deferred compensation payable in common stock | ||||||||||||||||||||
| -- | -- | -- | 147 | -- | 147 | |||||||||||||||
| Miscellaneous | -- | -- | 21 | 83 | -- | 104 | ||||||||||||||
| Balance, March 31, 2003 | 46,405,600 | $ | 46,406 | $ | 406,839 | $ | 161,428 | $ | 20,327 | $ | 635,000 | |||||||||