UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
| x | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2004
OR
| ¨ | 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 0-20251
Crescent Banking Company
(Exact Name of Registrant as Specified in its Charter)
| Georgia | 58-1968323 | |
| (State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) |
| 251 Highway 515, Jasper, GA | 30143 | |
| (Address of Principal Executive Offices) | (Zip Code) |
(706) 692-2424
(Registrant’s Telephone Number, Including Area Code)
Not applicable
(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 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 ¨ No x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
As of May 14, 2004, Crescent Banking Company had 2,492,135 shares of its common stock, par value $1.00 per share, issued and outstanding, of which 16,668 shares were held by Crescent Banking Company as treasury stock.
INDEX
| Page No. | ||||
| Part I. | Financial Information | |||
| Item 1. | Consolidated Financial Statements | |||
| 1 | ||||
| Consolidated Statements of Operations and Comprehensive Income |
2 | |||
| 4 | ||||
| 5 | ||||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 10 | ||
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 27 | ||
| Item 4. | Controls and Procedures | 28 | ||
| Part II. | Other Information | |||
| Item 1. | Legal Proceedings | 29 | ||
| Item 2. | Changes in Securities | 29 | ||
| Item 3. | Defaults Upon Senior Securities | 29 | ||
| Item 4. | Submission of Matters to a Vote of Security Holders | 29 | ||
| Item 5. | Other Information | 29 | ||
| Item 6. | Exhibits and Reports on Form 8-K | 29 | ||
i
Item 1. Consolidated Financial Statements
CRESCENT BANKING COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| March 31, 2004 |
December 31, 2003 |
|||||||
| Assets |
||||||||
| Cash and due from banks |
$ | 9,021,491 | $ | 16,850,685 | ||||
| Interest-bearing deposits in banks |
797,999 | 40,287 | ||||||
| Federal fund sold |
18,448,000 | 13,241,000 | ||||||
| Investment securities available-for-sale |
17,896,755 | 16,591,617 | ||||||
| Investment securities held-to-maturity, at cost (fair value of $2,848,918 and $4,176,810, respectively) |
2,563,429 | 3,941,091 | ||||||
| Restricted equity securities |
1,215,975 | 1,291,175 | ||||||
| Mortgage loans held for sale |
2,537,711 | 2,641,426 | ||||||
| Loans |
313,110,588 | 274,536,053 | ||||||
| Less allowance for loan losses |
(3,659,293 | ) | (3,243,177 | ) | ||||
| Loans, net |
309,451,295 | 271,292,876 | ||||||
| Premises and equipment |
8,395,320 | 8,178,157 | ||||||
| Other real estate owned |
5,021,104 | 5,423,704 | ||||||
| Mortgage servicing rights |
3,336,627 | 3,507,707 | ||||||
| Cash surrender value of life insurance |
5,605,901 | 5,551,149 | ||||||
| Deposit intangible |
389,169 | 407,701 | ||||||
| Deferred tax asset |
718,710 | 700,640 | ||||||
| Accounts receivable-brokers and escrow agents |
1,537,671 | 3,617,638 | ||||||
| Other assets |
5,536,102 | 10,084,793 | ||||||
| Assets related to discontinued operations |
314,013 | 3,073,743 | ||||||
| Total Assets |
$ | 392,787,272 | $ | 366,435,389 | ||||
| Liabilities |
||||||||
| Deposits |
||||||||
| Noninterest-bearing |
$ | 33,837,982 | $ | 27,767,517 | ||||
| Interest-bearing |
273,964,529 | 256,822,583 | ||||||
| Total deposits |
307,802,511 | 284,590,100 | ||||||
| Long-term borrowings |
28,640,000 | 12,640,000 | ||||||
| Deferred income taxes |
— | — | ||||||
| Accrued interest and other liabilities |
4,366,607 | 5,904,495 | ||||||
| Liabilities related to discontinued operations |
131,237 | 11,590,726 | ||||||
| Total liabilities |
340,940,355 | 314,725,321 | ||||||
| Shareholders’ equity |
||||||||
| Common stock, par value $1.00; 10,000,000 shares authorized; 2,492,135 and 2,466,285 issued, respectively |
2,492,135 | 2,466,285 | ||||||
| Capital Surplus |
16,964,352 | 16,727,731 | ||||||
| Retained earnings |
32,519,359 | 32,525,038 | ||||||
| Treasury stock, 16,668 and 6,668 shares, respectively |
(296,091 | ) | (36,091 | ) | ||||
| Accumulated other comprehensive income |
167,162 | 27,105 | ||||||
| Total shareholders’ equity |
51,846,917 | 51,710,068 | ||||||
| Total liabilities and shareholders’ equity |
$ | 392,787,272 | $ | 366,435,389 | ||||
See notes to Consolidated Financial Statements.
1
CRESCENT BANKING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
| For the three months ended March 31, |
||||||||
| 2004 |
2003 |
|||||||
| Interest income |
||||||||
| Loans |
$ | 4,284,745 | $ | 3,170,917 | ||||
| Mortgage loans held for sale |
17,363 | 428,045 | ||||||
| Taxable securities |
250,452 | 345,397 | ||||||
| Nontaxable securities |
— | 1,279 | ||||||
| Deposits in banks |
1,808 | 4,709 | ||||||
| Federal funds sold |
40,209 | 2,671 | ||||||
| Total interest income |
4,594,577 | 3,953,018 | ||||||
| Interest expense |
||||||||
| Deposits |
1,614,525 | 1,749,874 | ||||||
| Other borrowings |
108,709 | 49,092 | ||||||
| Total interest expense |
1,723,234 | 1,798,966 | ||||||
| Net interest income |
2,871,343 | 2,154,052 | ||||||
| Provision for loan losses |
517,000 | 353,000 | ||||||
| Net interest income after provision for loan losses |
2,354,343 | 1,801,052 | ||||||
| Non-interest income |
||||||||
| Service charges on deposit accounts |
235,770 | 175,693 | ||||||
| Mortgage servicing fee income |
520,805 | 645,089 | ||||||
| Gains on call of investment securities |
3,008 | 215,406 | ||||||
| Gains on sales of SBA loans |
13,602 | 18,075 | ||||||
| Other operating income |
350,382 | 425,811 | ||||||
| Total non-interest income |
1,123,567 | 1,480,074 | ||||||
| Non-interest expenses |
||||||||
| Salaries and employee benefits |
1,609,609 | 1,193,321 | ||||||
| Capitalized loan origination costs |
(412,559 | ) | (392,204 | ) | ||||
| Occupancy and equipment |
229,473 | 155,452 | ||||||
| Supplies, postage, and telephone |
177,411 | 162,750 | ||||||
| Advertising |
99,409 | 71,222 | ||||||
| Insurance expense |
45,200 | 43,958 | ||||||
| Depreciation and amortization |
368,090 | 316,105 | ||||||
| Legal and professional |
168,489 | 161,052 | ||||||
| Director fees |
58,050 | 43,250 | ||||||
| Mortgage subservicing expense |
229,612 | 247,163 | ||||||
| Other operating expenses |
311,888 | 247,854 | ||||||
| Total non-interest expenses |
2,884,672 | 2,249,923 | ||||||
| Income from continuing operations before income taxes |
593,238 | 1,031,203 | ||||||
| Income tax expense |
231,409 | 391,762 | ||||||
| Income from continuing operations |
361,829 | 639,441 | ||||||
| Income (loss) from operations of discontinued mortgage subsidiary, net of tax (benefit) of $(108,269) and $2,423,572 |
(169,824 | ) | 3,953,988 | |||||
| Net income |
192,005 | 4,593,429 | ||||||
| Other comprehensive income |
||||||||
| Unrealized gains (losses) on securities available for sale arising during period, net of tax |
140,057 | (77,169 | ) | |||||
| Comprehensive income |
$ | 332,062 | $ | 4,516,260 | ||||
See Notes to Consolidated Financial Statements
2
CRESCENT BANKING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Continued)
| For the three months ended March 31, | |||||||
| 2004 |
2003 | ||||||
| Earnings per share |
|||||||
| Basic earnings per share |
$ | 0.08 | $ | 1.89 | |||
| Diluted earnings per share |
$ | 0.08 | $ | 1.81 | |||
| Earnings per share from continuing operations |
|||||||
| Basic earnings per share from continuing operations |
$ | 0.15 | $ | 0.26 | |||
| Diluted earnings per share from continuing operations |
$ | 0.14 | $ | 0.25 | |||
| Earnings (loss) per share from discontinued operations |
|||||||
| Basic earnings (loss) per share from discontinued operations |
$ | (0.07 | ) | $ | 1.63 | ||
| Diluted earnings (loss) per share from discontinued operations |
$ | (0.07 | ) | $ | 1.56 | ||
| Cash dividends per share of common stock |
$ | 0.0800 | $ | 0.0775 | |||
See Notes to Consolidated Financial Statements
3
CRESCENT BANKING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the three months ended March 31, |
||||||||
| 2004 |
2003 |
|||||||
| Operating Activities |
||||||||
| Net Income |
$ | 192,005 | $ | 4,593,429 | ||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
||||||||
| Net (income) loss of discontinued operations |
169,824 | (3,953,988 | ) | |||||
| Accretion of discount on securities |
(104,038 | ) | (317,476 | ) | ||||
| Amortization of deposit intangible |
18,532 | 18,532 | ||||||
| Net gain on call of investment securities |
(3,007 | ) | (215,406 | ) | ||||
| Net gain on sale of other real estate owned |
(50,422 | ) | — | |||||
| Amortization of mortgage servicing rights |
172,527 | 141,356 | ||||||
| Provision for loan losses |
517,000 | 353,000 | ||||||
| Depreciation |
177,031 | 156,219 | ||||||
| Gains on sales of mortgage servicing rights |
— | (13,159,504 | ) | |||||
| Net decrease in mortgage loans held for sale |
103,715 | — | ||||||
| Acquisition of mortgage servicing rights |
(1,447 | ) | (1,218,085 | ) | ||||
| Proceeds from sales of mortgage servicing rights |
— | 13,424,576 | ||||||
| Income on life insurance policies |
(54,752 | ) | (57,015 | ) | ||||
| Decrease in deferred income taxes |
(18,070 | ) | — | |||||
| (Increase) decrease in interest receivable |
(146,228 | ) | 259,690 | |||||
| Decrease in accounts receivable – brokers and escrow agents |
2,079,967 | 507,225 | ||||||
| Decrease in interest payable |
(12,326 | ) | (36,994 | ) | ||||
| Net cash provided by (used in) discontinued operations |
(8,090,544 | ) | 27,754,766 | |||||
| Net other operating activities |
2,857,650 | 2,274,648 | <||||||