UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended September 30, 2004
Commission File Number 2-83157
SOUTHEASTERN BANKING CORPORATION
(Exact name of registrant as specified in its charter)
| Georgia | 58-1423423 | |
| (State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) |
P. O. Box 455, 1010 Northway, Darien, Georgia 31305
(Address of principal executive offices) (Zip Code)
(912) 437-4141
(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 ¨ No x
As of October 31, 2004, 3,304,149 shares of the registrant’s common stock, par value $1.25 per share, were outstanding.
| Page | ||||||
| Part I – Financial Information | ||||||
| Item 1. | Financial Statements (Unaudited): | |||||
| Consolidated Balance Sheets | 3 | |||||
| Consolidated Statements of Income | 4 | |||||
| Consolidated Statements of Shareholders’ Equity | 5 | |||||
| Consolidated Statements of Cash Flows | 6 | |||||
| Notes to Consolidated Financial Statements | 7 | |||||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 8 | ||||
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 22 | ||||
| Item 4. | Controls and Procedures | 22 | ||||
| Part II – Other Information | ||||||
| Item 1. | Legal Proceedings | 23 | ||||
| Item 2 | Unregistered Sales of Equity Securities and Use of Proceeds | 23 | ||||
| Item 3. | Defaults upon Senior Securities | 23 | ||||
| Item 4. | Submission of Matters to a Vote of Security Holders | 23 | ||||
| Item 5. | Other Information | 23 | ||||
| Item 6. | Exhibits | 23 | ||||
| Signatures | 25 | |||||
2
Part I - Financial Information
Southeastern Banking Corporation
Consolidated Balance Sheets
| (Unaudited) September 30, |
December 31, 2003 |
|||||||
| Assets |
||||||||
| Cash and due from banks |
$ | 19,304,285 | $ | 15,951,941 | ||||
| Federal funds sold |
— | 10,454,000 | ||||||
| Cash and cash equivalents |
19,304,285 | 26,405,941 | ||||||
| Investment securities |
||||||||
| Held-to-maturity (market value of approximately $39,387,000 and $39,677,000 at September 30, 2004 and December 31, 2003) |
37,265,033 | 37,416,385 | ||||||
| Available-for-sale, at market value |
92,215,006 | 94,342,665 | ||||||
| Total investment securities |
129,480,039 | 131,759,050 | ||||||
| Loans, gross |
219,988,565 | 205,896,094 | ||||||
| Unearned income |
(219,476 | ) | (215,715 | ) | ||||
| Allowance for loan losses |
(4,104,394 | ) | (3,832,651 | ) | ||||
| Loans, net |
215,664,695 | 201,847,728 | ||||||
| Premises and equipment, net |
9,048,885 | 8,933,755 | ||||||
| Intangible assets |
637,471 | 702,798 | ||||||
| Other assets |
4,705,784 | 4,718,462 | ||||||
| Total Assets |
$ | 378,841,159 | $ | 374,367,734 | ||||
| Liabilities and Shareholders’ Equity |
||||||||
| Liabilities |
||||||||
| Deposits |
||||||||
| Noninterest-bearing deposits |
$ | 66,960,482 | $ | 58,953,522 | ||||
| Interest-bearing deposits |
252,092,661 | 258,009,970 | ||||||
| Total deposits |
319,053,143 | 316,963,492 | ||||||
| Federal funds purchased |
1,072,000 | — | ||||||
| U. S. Treasury demand note |
1,114,024 | 733,936 | ||||||
| Federal Home Loan Bank advances |
5,000,000 | 5,000,000 | ||||||
| Other liabilities |
2,244,786 | 3,905,049 | ||||||
| Total liabilities |
328,483,953 | 326,602,477 | ||||||
| Shareholders’ Equity |
||||||||
| Common stock ($1.25 par value; 10,000,000 shares authorized; 3,580,797 shares issued; 3,304,149 and 3,312,539 shares outstanding at September 30, 2004 and December 31, 2003) |
4,475,996 | 4,475,996 | ||||||
| Additional paid-in-capital |
1,391,723 | 1,391,723 | ||||||
| Retained earnings |
48,357,598 | 45,330,975 | ||||||
| Treasury stock, at cost (276,648 and 268,258 shares at September 30, 2004 and December 31, 2003) |
(4,815,629 | ) | (4,600,167 | ) | ||||
| Realized shareholders’ equity |
49,409,688 | 46,598,527 | ||||||
| Accumulated other comprehensive income - unrealized gains on available-for-sale securities, net of tax |
947,518 | 1,166,730 | ||||||
| Total shareholders’ equity |
50,357,206 | 47,765,257 | ||||||
| Total Liabilities and Shareholders’ Equity |
$ | 378,841,159 | $ | 374,367,734 | ||||
See accompanying notes to consolidated financial statements.
3
Southeastern Banking Corporation
Consolidated Statements of Income
(Unaudited)
| Quarter |
Nine Months | ||||||||||||
| Period Ended September 30, |
2004 |
2003 |
2004 |
2003 | |||||||||
| Interest income |
|||||||||||||
| Loans, including fees |
$ | 3,812,624 | $ | 3,720,280 | $ | 11,105,832 | $ | 10,899,588 | |||||
| Federal funds sold |
21,790 | 5,916 | 72,127 | 94,892 | |||||||||
| Investment securities |
|||||||||||||
| Taxable |
999,436 | 1,015,233 | 3,073,370 | 3,523,558 | |||||||||
| Tax-exempt |
382,500 | 387,338 | 1,145,110 | 1,179,228 | |||||||||
| Other assets |
9,348 | 10,341 | 27,639 | 34,022 | |||||||||
| Total interest income |
5,225,698 | 5,139,108 | 15,424,078 | 15,731,288 | |||||||||
| Interest expense |
|||||||||||||
| Deposits |
771,731 | 851,716 | 2,355,516 | 3,332,967 | |||||||||
| Federal funds purchased |
1,977 | 3,061 | 2,016 | 3,061 | |||||||||
| U. S. Treasury demand note |
1,968 | 2,105 | 4,192 | 5,827 | |||||||||
| Federal Home Loan Bank advances |
75,645 | 75,645 | 225,289 | 224,467 | |||||||||
| Total interest expense |
851,321 | 932,527 | 2,587,013 | 3,566,322 | |||||||||
| Net interest income |
4,374,377 | 4,206,581 | 12,837,065 | 12,164,966 | |||||||||
| Provision for loan losses |
188,500 | 233,500 | 612,483 | 684,500 | |||||||||
| Net interest income after provision for loan losses |
4,185,877 | 3,973,081 | 12,224,582 | 11,480,466 | |||||||||
| Noninterest income |
|||||||||||||
| Service charges on deposit accounts |
654,994 | 671,554 | 1,921,447 | 1,978,654 | |||||||||
| Investment securities (losses) gains, net |
— | — | (3,309 | ) | 10,988 | ||||||||
| Other operating income |
294,611 | 310,495 | 914,785 | 971,587 | |||||||||
| Total noninterest income |
949,605 | 982,049 | 2,832,923 | 2,961,229 | |||||||||
| Noninterest expense |
|||||||||||||
| Salaries and employee benefits |
1,754,481 | 1,721,538 | 5,215,785 | 5,116,821 | |||||||||
| Occupancy and equipment, net |
617,132 | 607,884 | 1,837,026 | 1,853,016 | |||||||||
| Other operating expense |
632,470 | 658,401 | 1,874,743 | 2,012,779 | |||||||||
| Total noninterest expense |
3,004,083 | 2,987,823 | 8,927,554 | 8,982,616 | |||||||||
| Income before income tax expense |
2,131,399 | 1,967,307 | 6,129,951 | 5,459,079 | |||||||||
| Income tax expense |
652,688 | 606,986 | 1,862,618 | 1,637,587 | |||||||||
| Net income |
$ | 1,478,711 | $ | 1,360,321 | $ | 4,267,333 | $ | 3,821,492 | |||||
| Basic earnings per common share |
$ | 0.45 | $ | 0.41 | $ | 1.29 | $ | 1.15 | |||||
| Weighted average common shares outstanding |
3,307,712 | 3,332,546 | 3,310,371 | 3,332,939 | |||||||||
See accompanying notes to consolidated financial statements.
4
Southeastern Banking Corporation
Consolidated Statements of Shareholders’ Equity
(Unaudited)
| Common Stock |
Additional Paid-In Capital |
Retained Earnings |
Treasury Stock |
Accumulated Other Comprehensive Income |
Total |
|||||||||||||||||
| Balance, December 31, 2002 |
$ | 4,475,996 | $ | 1,391,723 | $ | 43,449,597 | $ | (4,124,263 | ) | $ | 2,336,117 | $ | 47,529,170 | |||||||||
| Comprehensive income: |
||||||||||||||||||||||
| Net income |
— | — | 3,821,492 | — | — | 3,821,492 | ||||||||||||||||
| Other comprehensive income, net of tax effect of $532,617: |
||||||||||||||||||||||
| Change in unrealized gains on available-for-sale securities |
— | — | — | — | (1,033,903 | ) | (1,033,903 | ) | ||||||||||||||
| Total comprehensive income |
2,787,589 | |||||||||||||||||||||
| Cash dividends declared ($0.36 per share) |
— | — | (1,199,619 | ) | — | — | (1,199,619 | ) | ||||||||||||||
| Purchase of treasury stock |
— | — | — | |||||||||||||||||||