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, 2001
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 2-83157
SOUTHEASTERN BANKING CORPORATION
--------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
GEORGIA 58-1423423
------------------------------- -------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
P.O. BOX 455, 1010 NORTHWAY STREET, 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 [ ]
As of April 30, 2001, 3,402,063 shares of the Registrant's common stock, par
value $1.25 per share, were outstanding.
SOUTHEASTERN BANKING CORPORATION
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
MARCH 31, December 31,
2001 2000
==============================================================================================================
ASSETS
Cash and due from banks $ 14,410,793 $ 15,852,283
Federal funds sold 42,920,000 3,210,000
--------------------------------------------------------------------------------------------------------------
Cash and cash equivalents 57,330,793 19,062,283
Investment securities
Held-to-maturity (market value of approximately $28,472,000
and $26,941,000 at March 31, 2001 and December 31, 2000) 27,784,017 26,679,250
Available-for-sale, at market value 103,695,348 118,375,887
--------------------------------------------------------------------------------------------------------------
Total investment securities 131,479,365 145,055,137
Loans, gross 162,374,879 174,555,359
Unearned income (654,431) (752,940)
Allowance for loan losses (2,858,549) (3,159,165)
--------------------------------------------------------------------------------------------------------------
Loans, net 158,861,899 170,643,254
Premises and equipment, net 6,608,348 6,723,135
Intangible assets 1,047,879 1,095,560
Other assets 7,654,101 6,999,183
--------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 362,982,385 $ 349,578,552
==============================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Noninterest-bearing deposits $ 57,552,212 $ 55,125,661
Interest-bearing deposits 250,966,040 240,610,650
--------------------------------------------------------------------------------------------------------------
Total deposits 308,518,252 295,736,311
U. S. Treasury demand note 538,949 1,001,957
Federal Home Loan Bank advances 5,000,000 5,000,000
Other liabilities 3,601,287 3,500,109
--------------------------------------------------------------------------------------------------------------
Total liabilities 317,658,488 305,238,377
--------------------------------------------------------------------------------------------------------------
Common stock ($1.25 par value; 10,000,000 shares authorized; 3,580,797 shares
issued; 3,404,063 and 3,436,696 shares
outstanding at March 31, 2001 and December 31, 2000) 4,475,996 4,475,996
Additional paid-in-capital 1,391,723 1,391,723
Retained earnings 41,965,241 41,327,784
Treasury stock, at cost (176,734 and 144,101 shares at March 31,
2001 and December 31, 2000) (2,973,950) (2,485,742)
--------------------------------------------------------------------------------------------------------------
Realized shareholders' equity 44,859,010 44,709,761
Accumulated other comprehensive income - unrealized
gains (losses) on available-for-sale securities, net of tax 464,887 (369,586)
--------------------------------------------------------------------------------------------------------------
Total shareholders' equity 45,323,897 44,340,175
--------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 362,982,385 $ 349,578,552
==============================================================================================================
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
1
SOUTHEASTERN BANKING CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
THREE MONTHS ENDED MARCH 31, 2001 2000
===================================================================================
INTEREST INCOME
Loans, including fees $4,319,209 $4,334,499
Federal funds sold 320,112 104,270
Investment securities
Taxable 1,774,021 1,859,038
Tax-exempt 305,853 314,532
Other assets 19,337 19,690
-----------------------------------------------------------------------------------
Total interest income 6,738,532 6,632,029
-----------------------------------------------------------------------------------
INTEREST EXPENSE
Deposits 2,936,513 2,673,704
Federal funds purchased -- 1,002
U. S. Treasury demand note 10,365 13,242
Federal Home Loan Bank advances 74,000 12,333
-----------------------------------------------------------------------------------
Total interest expense 3,020,878 2,700,281
-----------------------------------------------------------------------------------
Net interest income 3,717,654 3,931,748
PROVISION FOR LOAN LOSSES 300,000 300,000
-----------------------------------------------------------------------------------
Net interest income after provision for loan losses 3,417,654 3,631,748
-----------------------------------------------------------------------------------
NONINTEREST INCOME
Service charges on deposit accounts 582,688 586,548
Investment securities gains, net -- 6,900
Other operating income 291,384 249,174
-----------------------------------------------------------------------------------
Total noninterest income 874,072 842,622
-----------------------------------------------------------------------------------
NONINTEREST EXPENSE
Salaries and employee benefits 1,567,805 1,529,912
Occupancy and equipment, net 528,731 469,278
Other operating expense 765,011 667,746
-----------------------------------------------------------------------------------
Total noninterest expense 2,861,547 2,666,936
-----------------------------------------------------------------------------------
Income before income taxes 1,430,179 1,807,434
INCOME TAX EXPENSE 418,275 539,876
-----------------------------------------------------------------------------------
NET INCOME $1,011,904 $1,267,558
===================================================================================
NET INCOME PER AVERAGE SHARE - BASIC $ 0.30 $ 0.35
===================================================================================
Average common shares - basic 3,413,618 3,580,797
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
2
SOUTHEASTERN BANKING CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(UNAUDITED)
ACCUMULATED
ADDITIONAL OTHER
COMMON PAID-IN RETAINED TREASURY COMPREHENSIVE
STOCK CAPITAL EARNINGS STOCK INCOME TOTAL
===================================================================================================================================
BALANCE, DECEMBER 31, 1999 $ 4,475,996 $ 1,391,723 $ 38,159,815 -- $ (2,874,598) $ 41,152,936
Comprehensive income:
Net income -- -- 1,267,558 -- -- 1,267,558
Other comprehensive income, net
of tax effect of $16,207:
Change in unrealized gains
(losses) on available-for-sale
securities -- -- -- -- (31,460) (31,460)
-------------
Comprehensive income 1,236,098
-------------
Cash dividends declared
($0.10 per share) -- -- (358,079) -- -- (358,079)
------------------------------------------------------------------------------------------------------------------------------------
BALANCE, MARCH 31, 2000 $ 4,475,996 $ 1,391,723 $ 39,069,294 -- $ (2,906,058) $ 42,030,955
===================================================================================================================================
BALANCE, DECEMBER 31, 2000 $ 4,475,996 $ 1,391,723 $ 41,327,784 $ (2,485,742) $ (369,586) $ 44,340,175
Comprehensive income:
Net income -- -- 1,011,904 -- -- 1,011,904
Other comprehensive income, net
of tax effect of $429,880:
Change in unrealized gains
(losses) on available-for-sale
securities -- -- -- -- 834,473 834,473
-------------
Comprehensive income 1,846,377
-------------
Cash dividends declared
($0.11 per share) -- -- (374,447) -- -- (374,447)
Acquisition of treasury stock -- -- -- (488,208) -- (488,208)
------------------------------------------------------------------------------------------------------------------------------------
Balance, March 31, 2001 $ 4,475,996 $ 1,391,723 $ 41,965,241 $ (2,973,950) $ 464,887 $ 45,323,897
===================================================================================================================================
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
3
SOUTHEASTERN BANKING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED MARCH 31, 2001 2000
==========================================================================================================
OPERATING ACTIVITIES
Net income $ 1,011,904 $ 1,267,558
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 300,000 300,000
Depreciation 193,095 171,002
Amortization and accretion, net (43,011) 50,919
Investment securities gains, net -- (6,900)
Net losses (gains) on other real estate 34,605 (50,734)
Changes in assets and liabilities:
Decrease in other assets 1,026,699 504,221
Increase (decrease) in other liabilities 448,437 (38,738)
----------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 2,971,729 2,197,328
----------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Principal collections and maturities of investment securities:
Held-to-maturity 230,000 1,771,400
Available-for-sale 36,028,926 1,835,044
Purchases of investment securities held-to-maturity (1,342,264) (809,134)
Purchases of investment securities available-for-sale (19,985,847) (7,489,980)
Net decrease (increase) in loans 9,334,955 (7,503,577)
Proceeds from sales of other real estate 300 231,086
Capital expenditures, net (78,308) (678,862)
----------------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities 24,187,762 (12,644,023)
----------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Net increase in deposits 12,781,941 11,926,612
Net decrease in federal funds purchased -- (3,950,000)
Net decrease in U. S. Treasury demand note (463,008) (1,165,154)
Proceeds from Federal Home Loan Bank advances -- 5,000,000
Purchase of treasury stock (488,208) --
Dividends paid (721,706) (608,735)
----------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 11,109,019 11,202,723
----------------------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents 38,268,510 756,028
Cash and cash equivalents at beginning of year 19,062,283 16,816,035
----------------------------------------------------------------------------------------------------------
Cash and cash equivalents at March 31 $ 57,330,793 $ 17,572,063
==========================================================================================================
SUPPLEMENTAL DISCLOSURE
CASH PAID DURING THE PERIOD
Interest $ 2,340,045 $ 2,797,493
NONCASH INVESTING AND FINANCING ACTIVITIES
Real estate acquired through foreclosure $ 2,146,402 $ 151,394
Loans made in connection with sales of foreclosed real estate $ -- $ 229,458
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
4
SOUTHEASTERN BANKING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. ACCOUNTING AND REPORTING POLICY FOR INTERIM PERIODS
The accompanying unaudited consolidated financial statements of
Southeastern Banking Corporation (the Company) have been prepared in
accordance with generally accepted accounting principles for interim
financial information. These statements do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statement presentation. In the
opinion of management, all adjustments necessary for a fair
presentation have been made. These adjustments, consisting of normal,
recurring accruals, include estimates for various fringe benefit and
other transactions normally determined or settled at year-end.
Operating results for the quarter ended March 31, 2001 are not
necessarily indicative of trends or results to be expected for the year
ended December 31, 2001. For further information, refer to the
consolidated financial statements and related notes included in the
Company's Annual Report on Form 10-K for the year ended December 31,
2000.
2. RECLASSIFICATIONS
Certain prior year amounts have been restated to conform with the
current year financial statement presentation.
5
SOUTHEASTERN BANKING CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
THIS ANALYSIS SHOULD BE READ IN CONJUNCTION WITH THE 2000 ANNUAL REPORT ON FORM
10-K AND THE CONSOLIDATED FINANCIAL STATEMENTS & RELATED NOTES ON PAGES 1 - 5 OF
THIS QUARTERLY FILING.
DESCRIPTION OF BUSINESS
Southeastern Banking Corporation (the Company), with assets of $363 million, is
a financial services company with operations in southeast Georgia and northeast
Florida. Southeastern Bank (SEB), the Company's principal subsidiary, offers a
full line of commercial and retail services to meet the financial needs of its
customer base through its fourteen branch locations and atm network. Services
offered include traditional deposit and credit services, long-term mortgage
originations, and credit cards. SEB also offers 24-hour delivery channels
including internet and telephone banking. The Company's insurance subsidiary,
SBC Financial Services, Inc. (SBCF), provides insurance agent and investment
brokerage services with an emphasis on financial planning. In addition to
traditional insurance, products offered include fixed and indexed annuities,
mutual funds, retirement plans, and long-term care policies. SBCF had a nominal
impact on the Company's financial condition and results of operations at March
31, 2001 and 2000.
FINANCIAL CONDITION
The company's total assets increased $13,403,833 at March 31, 2001 when compared
to December 31, 2000. This 3.83% increase during the first quarter of 2001 was
the result of an increase in federal funds sold of approximately $39,710,000.
The growth in federal funds sold was primarily the result of a reduction in
loans, down $11,781,000, investments, down $13,576,000, and deposits increasing
$12,781,941. During the year-earlier period, total assets grew 3.64% or
$12,400,083. In 2000, the asset growth was funded by increases in deposits and a
$5,000,000 advance from the Federal Home Loan Bank.
Investment Securities
On a carrying value basis, investment securities declined $13,575,772 or 9.35%
at March 31, 2001 as compared to December 31, 2000. The decline in the
securities portfolio was due to the exercise of the callable feature of U S
Government Agency bonds as a result of interest rate reductions during the first
quarter of 2001. Securities comprised 39% of earning assets at quarter-end 2001
compared to 45% and 46% at December 31, 2000 and March 31, 2000, respectively.
The amortized cost and gross unrealized gains and losses, and estimated fair
value of available for sale and held to maturity securities are delineated in
the table below:
====================================================================================================================
INVESTMENT SECURITIES BY CATEGORY AMORTIZED UNREALIZED UNREALIZED FAIR
MARCH 31, 2001 COST GAINS LOSSES VALUE
====================================================================================================================
(IN THOUSANDS)
Available-for-sale:
Government agencies $75,577 $ 763 $ 40 $76,299
Mortgage-backed securities 25,879 42 66 25,855
Corporate securities 1,535 5 - 1,540
--------------------------------------------------------------------------------------------------------------------
102,991 810 106 103,695
Held-to-maturity:
States and political subdivisions 27,784 760 72 28,472
--------------------------------------------------------------------------------------------------------------------
Total investment securities $130,775 $ 1,570 $ 178 $132,167
====================================================================================================================
6
SOUTHEASTERN BANKING CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
The Company does not have a concentration in the obligations of any issuer other
than the U.S. Government and its agencies.
Loans
Loans, net of unearned income, declined 6.95% or $12,084,971 at March 31, 2001
compared to December 31, 2000. The decline in the loan portfolio was due
primarily to the normal pay-offs of commercial loans and pay down of land
development loans. In addition, a large commercial loan was foreclosed and
placed in other real estate owned during the first quarter. Additional details
on this commercial loan are provided in the Nonperforming Assets section. Since
December 31, 2000, balances in the real estate-construction portfolio have
declined approximately $824,000 or 10.63%. Most of the loans in the real
estate-construction portfolio are preparatory to customers' attainment of
permanent financing or developer's sale and are, by nature, short-term and
somewhat cyclical; swings in these account balances are normal and to be
expected. Although the Company, like peer institutions of similar size,
originates permanent mortgages for new construction, it traditionally does not
hold or service long-term mortgage loans for its own portfolio. Rather,
permanent mortgages are typically brokered through a mortgage underwriter or
government agency. The Company receives mortgage origination fees for its
participation in these origination transactions.
Real estate-mortgage loans increased $478,000 or 0.78% at March 31, 2001
compared to December 31, 2000. Consumer loans fell approximately $513,000 during
the first quarter of 2001 compared to year end 2000. A softening of consumer
demand in the Company's trade areas was the prime element in this reduction.
Consumer loans remain the Company's highest-yielding interest-earning asset, and
the Company is committed to reversing the decline in this portfolio. Despite
declines in the first quarter of 2001, management is optimistic that loan
volumes will increase during the remainder of 2001. Strategies implemented by
management to increase loan production include utilization of more competitive
pricing on loan products and development of additional loan relationships, all
without compromising portfolio quality. During the same period in 2000, net
loans grew $7,480,679 or 4.51%. Loans outstanding are presented by type in the
table below:
===================================================================================================================
MARCH 31, DECEMBER 31, MARCH 31,
LOANS BY CATEGORY 2001 2000 2000
===================================================================================================================
(IN THOUSANDS)
Commercial, financial, and agricultural(1) $58,853 $70,175 $71,323
Real estate - construction 6,926 7,750 8,234
Real estate - mortgage(2) 61,735 61,257 59,730
Consumer, including credit cards 34,860 35,373 35,569
-------------------------------------------------------------------------------------------------------------------
Loans, gross 162,374 174,555 174,856
Unearned income 654 753 1,381
-------------------------------------------------------------------------------------------------------------------
Loans, net $161,720 $173,802 $173,475
===================================================================================================================
(1) Includes obligations of states and political subdivisions.
(2) Typically have final maturities of 15 years or less.
The Company had no concentration of loans to borrowers engaged in any single
industry that exceeded 10% of total loans for any of the periods presented.
Although the Company's loan portfolio is diversified, significant portions of
its loans are collateralized by real estate. At March 31, 2001 and December 31,
2000, gross loans secured by real estate approximated $103,951,000 and
$113,570,000. As required by policy, real estate loans are collateralized based
on certain loan-to-appraised value ratios.
7
SOUTHEASTERN BANKING CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
A geographic concentration in loans arises given the Company's operations within
a regional area of southeast Georgia and northeast Florida.
NONPERFORMING ASSETS
Nonperforming assets consist of nonaccrual loans, restructured loans, and
foreclosed real estate balances. Overall, nonperforming assets aggregated
approximately $4,174,000, or 1.15% of total assets, at March 31, 2001.
Nonperforming loans were down approximately $1,835,000 or 53.26% at quarter-end
2001. As a percent of net loans, nonperforming loans totaled 1.00% at
quarter-end 2001 versus 1.98% and 0.54% at December 31, 2000 and March 31, 2000
respectively. The 2001 decrease in nonperforming loans resulted predominantly
from the movement of a single commercial real estate loan on nonaccrual status
to foreclosed real estate during the first quarter. Specifically, the balance at
March 31, 2001 included an impaired real estate loan totaling approximately
$2,100,000. This loan, secured by a first lien on income-producing commercial
real estate, was charged-down by $400,000 in December 2000 and prior to
foreclosure in February 2001, an additional $300,000. Impairment of the loan was
based on the fair value of the underlying collateral, less estimated selling
expenses, as determined by a third party appraisal. To maintain and maximize
collateral value, the Company engaged an operating company with expertise in
managing commercial properties to handle day-to-day operations as management
focuses on marketing the property to potential buyers. The Company is presently
negotiating with a third party to purchase this property. The transaction is
expected to conclude prior to July 2001. Management expects no further loss
associated with this property. Pending furtherance of various legal proceedings,
management is optimistic that various costs associated with the property may
ultimately be recovered. During the first quarter of 2001 a single credit with
principal balance of $615,000 was placed on nonaccrual status. This credit is
secured by timber and farmlands with accompanying tobacco and peanut allotments.
Due to a loan to appraised value ratio of 55%, no loss, other than possibly
foregone interest, is expected. This property will be foreclosed in June 2001
unless bankruptcy or other legal proceedings stop the foreclosure.
As the result of the foreclosed commercial real estate loan discussed in the
preceding paragraph, foreclosed real estate increased $2,167,000 at quarter-end
2001 compared to declining $254,000 for the first quarter of 2000. Loans past
due 90 days and still accruing interest grew $206,000 at quarter end. Management
is unaware of any material concentration within these past due balances. The
table on the next page provides further information about nonperforming assets
and loans past due 90 days or more.
===================================================================================================================
MARCH 31, DECEMBER 31, MARCH 31,
NONPERFORMING ASSETS 2001 2000 2000
===================================================================================================================
(IN THOUSANDS)
Nonaccrual loans:
Commercial, financial, and agricultural $1,110 $2,894 $463
Real estate - construction - - --
Real estate - mortgage 149 189 104
Consumer, including credit cards 20 21 3
-------------------------------------------------------------------------------------------------------------------
Total nonaccrual loans 1,279 3,104 580
Restructured loans(1) 331 341 336
-------------------------------------------------------------------------------------------------------------------
Total nonperforming loans 1,610 3,445 936
Foreclosed real estate(2) 2,564 397 604
-------------------------------------------------------------------------------------------------------------------
Total nonperforming assets $4,174 $3,842 $1,540
===================================================================================================================
Accruing loans past due 90 days or more $1,397 $1,191 $1,855
===================================================================================================================
(1) Does not include restructured loans that yield a market rate.
(2) Includes only other real estate acquired through foreclosure or in
settlement of debts previously contracted.
8
SOUTHEASTERN BANKING CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
POLICY NOTE. Loans classified as nonaccrual have been placed in nonperforming,
or impaired, status because the borrower's ability to make future principal
and/or interest payments has become uncertain. The Company considers a loan to
be nonaccrual with the occurrence of any one of the following events: a)
interest or principal has been in default 90 days or more, unless the loan is
well-secured and in the process of collection; b) collection of recorded
interest or principal is not anticipated; or c) the income on the loan is
recognized using the cash versus accrual basis of accounting due to
deterioration in the financial condition of the borrower. Smaller balance
consumer loans are generally not subject to the above-referenced guidelines and
are normally placed on nonaccrual status or else charged-off when payments have
been in default 90 days or more. Nonaccrual loans are reduced to the lower of
the principal balance of the loan or the market value of the underlying real
estate or other collateral. Any impairment in the principal balance is charged
against the allowance for loan losses. Accrued interest on any loan switched to
nonaccrual status is reversed. Interest income on nonaccrual loans, if
subsequently recognized, is recorded on a cash basis. No interest is
subsequently recognized on nonaccrual (or former nonaccrual) loans until all
principal has been collected. Loans are classified as restructured when either
interest or principal has been reduced or deferred because of deterioration in
the borrower's financial position. Foreclosed real estate represents real
property acquired by foreclosure or directly by title or deed transfer in
settlement of debt. Provisions for subsequent devaluations of foreclosed real
estate are charged to operations, while costs associated with improving the
properties are generally capitalized. Refer to the footnotes accompanying the
Consolidated Financial Statements for more details on the Company's accounting
and reporting policies on impaired loans and other real estate.
ALLOWANCE FOR LOAN LOSSES
The Company maintains an allowance for loan losses available to absorb potential
losses in the loan portfolio. The allowance to net loans ratio totaled 1.78% at
March 31, 2001 versus 1.82% at December 31, 2000 and 1.97% for the first quarter
in 2000. Net charge-offs totaled $601,000, up substantially or $500,000, from
2000's $101,000, which was down $457,000 from 1999. Approximately 43%, or
$300,000, of 2001 charge-offs was attributable to the non-performing loan
forclosed in the first quater of 2001 discussed earlier. Long-term strategies
implemented by management to reduce and minimize charge-off levels include: a) a
revised loan grading system, b) periodic external loan review, c) formation of a
full-time collection department, and d) managerial and staff changes at various
locations. The provision from income totaled $300,000 in all periods. Activity
in the allowance is presented in the table on the next page.
9
SOUTHEASTERN BANKING CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
===================================================================================================================
ALLOWANCE FOR LOAN LOSSES
THREE MONTHS ENDED MARCH 31, 2001 2000 1999
===================================================================================================================
(DOLLARS IN THOUSANDS)
Allowance for loan losses at beginning of year $ 3,160 $ 3,223 $ 3,407
Provision for loan losses 300 300 300
Charge-offs:
Commercial, financial, and agricultural 433 34 268
Real estate - construction - - 263
Real estate - mortgage 68 25 12
Consumer, including credit cards 204 192 220
-------------------------------------------------------------------------------------------------------------------
Total charge-offs 705 251 763
-------------------------------------------------------------------------------------------------------------------
Recoveries:
Commercial, financial, and agricultural 6 13 43
Real estate - construction - - -
Real estate - mortgage 1 15 1
Consumer, including credit cards 97 122 161
-------------------------------------------------------------------------------------------------------------------
Total recoveries 104 150 205
-------------------------------------------------------------------------------------------------------------------
Net charge-offs 601 101 558
-------------------------------------------------------------------------------------------------------------------
Allowance for loan losses at March 31 $ 2,859 $ 3,422 $ 3,149
===================================================================================================================
Net loans outstanding1 at March 31 $161,720 $173,475 $163,079
===================================================================================================================
Average net loans outstanding1 at March 31 $168,255 $166,406 $164,000
===================================================================================================================
Ratios:
Allowance to net loans 1.77% 1.97% 1.93%
===================================================================================================================
Net charge-offs to average loans 1.45% 0.24% 1.36%
===================================================================================================================
Provision to average loans 0.71% 0.72% 0.73%
===================================================================================================================
(1) Net of unearned income
Management believes the allowance was adequate at March 31, 2001 based on
conditions reasonably known to management; however, the allowance may increase
or decrease based on loan growth, changes in internally generated credit
ratings, changes in general economic conditions of the Company's trade areas,
changes in customer bankruptcy filings, or historical loan loss experience.
These factors are analyzed and reviewed on a continual basis to determine if any
changes to the provision for loan losses should be made. Consistent with 2000
and 1999 levels, management has budgeted a loan loss provision of $1,200,000 in
fiscal 2001.
Other Assets
The Company had no material plans or commitments for capital expenditures as of
March 31, 2001.
Adjusted for foreclosed real estate previously mentioned, other assets fell
approximately $1,512,000 or 23.16% at March 31, 2001 compared to December 31,
2000. A decline in the deferred tax effects of investment securities designated
as available-for-sale together with a $660,000 decline in accrued interest
receivable on loans and investments were the overriding factors for the decline.
The decline in intangible assets was attributable to regular amortization.
Deposit base premiums and goodwill compose the intangible assets balance.
10
SOUTHEASTERN BANKING CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
LIQUIDITY
Liquidity is managed to ensure sufficient cash flow to satisfy demands for
credit, deposit withdrawals, and other corporate needs. The Company meets most
of its daily liquidity needs through the management of cash and federal funds
sold. Additional liquidity is provided by payments and maturities, including
both principal and interest, of the loan and investment securities portfolios.
At March 31, 2001, loans(1) and investment securities with carrying values
exceeding $57 million and $17 million were scheduled to mature in one year or
less. The investment portfolio has also been structured to meet liquidity needs
prior to asset maturity when necessary. The Company's liquidity position is
further strengthened by its access, on both a short- and long-term basis, to
local and regional funding sources.
Funding sources primarily comprise customer-based core deposits but also include
borrowed funds and cash flows from operations. Customer-based core deposits, the
Company's largest and most cost-effective source of funding, comprised 85% of
the funding base at quarter-end 2001, virtually unchanged from 2000 levels.
Borrowed funds, which variously encompass U.S. Treasury demand notes, federal
funds purchased, and FHLB advances, totaled $5,538,949 at March 31, 2001
versus $6,001,957 at December 31, 2000. More specifically, the maximum amount of
U.S. Treasury demand notes available to the Company at December 31, 2000 totaled
$3,000,000, of which $538,949 was outstanding. Unused borrowings under unsecured
federal funds lines of credit from other banks, each with varying terms and
expiration dates, totaled $24,000,000. Additionally, under a credit facility
with the FHLB, the Company can borrow up to 16% of SEB's total assets; at March
31, 2001, unused borrowings approximated $53 million. Refer to the subsection
entitled FHLB Advances for details on the Company's outstanding balance with the
FHLB. Cash flows from operations also constitute a significant source of
liquidity. Net cash from operations derives primarily from net income adjusted
for noncash items such as depreciation and amortization, accretion, and the
provision for loan losses.
Management believes the Company has the funding capacity, from operating
activities or otherwise, to meet its financial commitments in 2001. Refer to the
Capital Adequacy section of this Analysis for details on treasury stock
purchases and intercompany dividend policy.
(1) No cash flow assumptions other than final contractual maturities have been
made for installment loans. Nonaccrual loans are excluded.
Deposits
Deposits were approximately $308 million at March 31, 2001, increasing
$12,781,941 or 4.32% from December 31, 2000. Noninterest-bearing deposits grew
$2,426,551 or 4.40%, while interest-bearing deposits increased $10,355,390 or
4.30%. Noninterest-bearing deposits comprised 18.65%, and interest-bearing
deposit comprised, 81.35%, of total deposits at March 31, 2001. The distribution
of interest-bearing balances at quarter-end 2001, 2000, and year-end 2000 is
shown in the table on the next page.
11
SOUTHEASTERN BANKING CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
======================================================================================================================
MARCH 31, 2001 DECEMBER 31, 2000 MARCH 31, 2000
------------------------- ------------------------- ------------------------
PERCENT PERCENT PERCENT
DEPOSITS BALANCES OF TOTAL BALANCES OF TOTAL BALANCES OF TOTAL
======================================================================================================================
(DOLLARS IN THOUSANDS)
Interest-bearing demand deposits(1) $54,322 21.65% $50,309 20.91% $44,755 19.07%
Savings 76,981 30.67% 73,781 30.66% 79,854 32.57%
Time certificates < $100,000 73,607 29.33% 72,207 30.01% 72,620 29.61%
Time certificates >= $100,000 46,056 18.35% 44,314 18.42% 45,979 18.75%
----------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits $250,966 100.00% $240,611 100.00% $243,208 100.00%
======================================================================================================================
(1) NOW and money market accounts.
FHLB Advances
Advances outstanding with the FHLB totaled $5 million at March 31, 2001. The
outstanding advance, which matures March 17, 2010, accrues interest at an
effective rate of 6.00%, payable quarterly. The advance is convertible into a
three-month Libor-based floating rate on or after March 17, 2001 at the option
of the FHLB. Proceeds from the advance were used to fund the purchase of various
U.S. Agency securities. Mortgage-backed securities with aggregate carrying
values of approximately $11.3 million were pledged to collateralize current and
future advances under this line of credit.
INTEREST RATE AND MARKET RISK/INTEREST RATE SENSITIVITY
The normal course of business activity exposes the Company to interest rate
risk. Fluctuations in interest rates may result in changes in the fair market
value of the Company's financial instruments, cash flows, and net interest
income. The asset/liability committee regularly reviews the Company's exposure
to interest rate risk and formulates strategy based on appropriate levels of
interest rate risk. The overall objective of this process is to optimize the
Company's financial position, liquidity, and net interest income, while limiting
volatility to net interest income from changes in interest rates. The Company
uses gap analysis and simulation modeling to measure and manage interest rate
sensitivity.
An indicator of interest rate sensitivity is the difference between interest
rate sensitive assets and interest rate sensitive liabilities; this difference
is known as the interest rate sensitivity gap. In an asset sensitive, or
positive, gap position, the amount of interest-earning assets maturing or
repricing within a given period exceeds the amount of interest-bearing
liabilities maturing or repricing within that same period. Conversely, in a
liability sensitive, or negative, gap position, the amount of interest-bearing
liabilities maturing or repricing within a given period exceeds the amount of
interest-earning assets maturing or repricing within that time period. During a
period of rising rates, a negative gap would tend to affect net interest income
adversely, while a positive gap would theoretically result in increased net
interest income. In a falling rate environment, a negative gap would tend to
result in increased net interest income, while a positive gap would affect net
interest income adversely. The gap analysis on the next page provides a snapshot
of the Company's interest rate sensitivity position at March 31, 2001.
12
SOUTHEASTERN BANKING CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
======================================================================================================================
REPRICING WITHIN
----------------------------------------------------------
MORE
INTEREST RATE SENSITIVITY 0 - 3 4 - 12 ONE - FIVE THAN FIVE
MARCH 31, 2001 MONTHS MONTHS YEARS YEARS TOTAL
======================================================================================================================
(DOLLARS IN THOUSANDS)
INTEREST RATE SENSITIVE ASSETS
Federal funds sold $ 42,920 $42,920
Securities(1) 1,861 $15,739 $ 76,540 $ 36,634 130,774
Loans, gross(2) 51,201 21,288 63,739 24,868 161,096
----------------------------------------------------------------------------------------------------------------------
Total interest rate sensitive assets 95,982 37,027 140,279 61,502 334,790
----------------------------------------------------------------------------------------------------------------------
INTEREST RATE SENSITIVE LIABILITIES
Deposits(3) 156,198 68,603 26,078 87 250,966
U.S. Treasury demand note 539 - - - 539
Federal Home Loan Bank advances - - 5,000 5,000
----------------------------------------------------------------------------------------------------------------------
Total interest rate sensitive
liabilities 156,737 68,603 26,078 5,087 256,505
----------------------------------------------------------------------------------------------------------------------
Interest rate sensitivity gap $(60,755) $(31,576) $ 7,041 $ 56,415 $78,285
======================================================================================================================
CUMULATIVE GAP $(60,755) $(92,331) $(85,290) $(28,875)
======================================================================================================================
Ratio of cumulative gap to total
rate sensitive assets (18.15)% (27.58)% (25.48)% (8.62)%
======================================================================================================================
Ratio of cumulative rate sensitive
assets to rate sensitive liabilities 61.24% 59.03% 108.70% 130.52%
======================================================================================================================
Cumulative gap at December 31, 2000 $(91,308) $(117,955) $15,283 $73,662
======================================================================================================================
Cumulative gap at March 31, 2000 $(96,871) $(134,893) $12,175 $79,981
======================================================================================================================
(1) Distribution of maturities for available-for sale-securities is based on
amortized cost. Additionally, distribution of maturities for mortgage-
backed securities is based on expected average lives which may be different
from the contractual terms. Equity securities are excluded.
(2) No cash flow assumptions other than final contractual maturities have been
made for installment loans with fixed rates. Nonaccrual loans are excluded.
(3) NOW, money market, and savings account balances are included in the 0-3
months repricing category.
As shown in the table above, the Company's gap position remained negative
through the short-term repricing intervals at quarter-end 2001, totaling
$(60,755) at three months and $(92,331) through one-year. A negative gap
position indicates that the Company is liability sensitive, which means that its
rate sensitive liabilities reprice faster than its rate sensitive assets. The
cumulative gap at quarter-end March 31, 2001, resulted in a narrowing of the
negative gap when compared to December 31, 2000, $30,553, and $36,116 compared
to March 31, 2000, at the three months time interval. An increase in federal
funds sold was the primary reason for this improvement in the negative gap. As
mentioned earlier in this Analysis, investments that were called following the
Federal Reserve Bank's 200 basis points reductions in the interest rates during
the quarter and the normal pay-off of large commercial loans, resulted in the
$39,710,000 increase in the federal funds sold at quarter-end 2001. Unless more
interest rates cuts are forthcoming, reductions in investments caused by the
callable feature should be minimal in the second quarter of 2001. Since federal
funds sold account is a temporary investment, management now faces the challenge
of finding investments and loans that will maximize income while maintaining
quality.
The gap analysis does not fully reflect the complexities of the Company's
interest rate sensitivity position and the impact of interest rate movements on
the Company's financial position, cash flows, and interest income. For example,
the gap analysis presumes that all loans(2) and securities(1) will perform
according to their contractual maturities when, in many cases, actual loan terms
are much shorter than the original terms and securities are subject to early
redemption. In addition, the repricing of various categories of assets and
liabilities is subject to competitive pressures, customer needs, and other
external factors. Although the Company monitors and adjusts its exposure to
interest rate risks within specific policy guidelines based on its view of
current and expected market conditions, the Company's financial position and
results of operations could be significantly impacted by changes in interest
rate and market risks.
Refer to the 2000 Annual Report on Form 10-K for details on simulation modeling
also used to test the interest rate sensitivity of net interest income and the
balance sheet.
The Company has not in the past, but may in the future, utilize interest rate
swaps, financial options, financial futures contracts, or other rate protection
instruments to reduce interest rate and market risks.
13
SOUTHEASTERN BANKING CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
IMPACT OF INFLATION
The effects of inflation on the local economy and the Company's operating
results have been relatively modest the last several years. Because
substantially all the Company's assets and liabilities, including cash,
securities, loans, and deposits, are monetary in nature, their values are less
sensitive to the effects of inflation than to changing interest rates. As
discussed in the preceding section, the Company attempts to control the impact
of interest rate fluctuations by managing the relationship between its interest
sensitive assets and liabilities.
CAPITAL ADEQUACY
Federal banking regulators have established certain capital adequacy standards
required to be maintained by banks and bank holding companies. These regulations
define capital as either Tier 1 (primarily shareholders' equity) or Tier 2
(certain debt instruments and a portion of the allowance for loan losses). The
Company and SEB are subject to a minimum Tier 1 capital ratio (Tier 1 capital to
risk-weighted assets) of 4%, total capital ratio (Tier 1 plus Tier 2 to
risk-weighted assets) of 8%, and Tier 1 leverage ratio (Tier 1 to average
quarterly assets) of 4%. To be considered a "well-capitalized" institution, the
Tier 1 capital, total capital, and Tier 1 leverage ratios must equal or exceed
6%, 10%, and 5%, respectively. Banks and bank holding companies are prohibited
from including unrealized gains and losses on debt securities in the calculation
of risk-based capital but are permitted to include up to 45 percent of net
unrealized pre-tax holding gains on equity securities in Tier 2 capital. The
Company did not have any unrealized gains on equity securities includible in the
risk-based capital calculations for any of the periods presented. The Company is
committed to maintaining its well-capitalized status.
Due to the continued purchase of treasury stock, capital ratios declined
marginally at March 31, 2001 compared to December 31, 2000. capital amounts and
ratios for the most recent periods are presented in the table below:
===================================================================================================================
MARCH 31, DECEMBER 31, MARCH 31,
CAPITAL RATIOS 2001 2000 2000
===================================================================================================================
(DOLLARS IN THOUSANDS)
Tier 1 capital:
Realized shareholders' equity $45,324 $44,710 $44,937
Intangible assets and other adjustments (1,535) (1,117) (1,261)
-------------------------------------------------------------------------------------------------------------------
Total Tier 1 capital 43,789 43,593 43,676
-------------------------------------------------------------------------------------------------------------------
Tier 2 capital:
Portion of allowance for loan losses 2,307 2,374 2,376
Allowable long-term debt - - -
-------------------------------------------------------------------------------------------------------------------
Total Tier 2 capital 2,307 2,374 2,376
-------------------------------------------------------------------------------------------------------------------
Total risk-based capital $46,096 $45,967 $46,052
===================================================================================================================
Risk-weighted assets $184,023 $189,139 $189,073
===================================================================================================================
Risk-based ratios:
Tier 1 capital 23.80% 23.05% 23.10%
===================================================================================================================
Total risk-based capital 25.05% 24.30% 24.36%
===================================================================================================================
Tier 1 leverage ratio 12.38% 12.56% 12.62%
===================================================================================================================
Realized shareholders' equity to assets 12.37% 12.78% 12.63%
===================================================================================================================
14
SOUTHEASTERN BANKING CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
On a per share basis, realized book value grew $0.04 since year-end 2000 to
$13.05 at March 31, 2001. Dividends declared totaled $0.11 year-to-date at March
31,2001, up $0.01 from 2000, which was unchanged from 1999. For specifics on the
Company's dividend policy, refer to the subsection immediately following.
Accumulated other comprehensive income, which measures net fluctuations in the
fair values of investment securities, improved $834,473 at the end of the first
quarter of 2001 compared to year-end 2000. Movement in interest rates remained
the dominant factor in the fair value results. Further details on investment
securities and associated fair values are contained in the Financial Condition
section of this Analysis.
On March 14, 2000, the Board of Directors authorized the purchase of up to
$7,000,000 in Company common stock. In April 2000, the Company purchased 144,101
shares from one group of shareholders at a purchase price of $17.25 per share
and during the first quarter of 2001, an additional 32,633 shares was purchased
on the open market and through private transactions at an average price of
$14.93 per share. Since inception, the treasury stock program has reduced the
Company's outstanding common stock from 3,580,797 shares to 3,404,063 shares.
The maximum consideration available for additional treasury purchases, at prices
to be determined in the future, is $4,026,050. Any acquisition of additional
shares will be dictated by market conditions. In accordance with generally
accepted accounting principles, no prior period amounts have been restated to
reflect the treasury stock purchases.
Dividend Policy
The Parent Company is a legal entity separate and distinct from its
subsidiaries, and its revenues and liquidity position depend primarily on the
payment of dividends from its subsidiaries. State banking regulations limit the
amount of dividends SEB may pay without prior approval of the regulatory
agencies. Year-to-date, SEB has paid $625,000 in dividends to the Company. Cash
dividends available from SEB for payment in 2001 without prior approval total
approximately $2,500,000. The Company uses regular dividends paid by SEB in
order to pay quarterly dividends to its own shareholders. Management anticipates
that the Company will continue to pay cash dividends on a recurring basis.
RESULTS OF OPERATIONS
Net income declined $255,654 during the first quarter of 2001 when compared to
the same period in 2000, which grew $162,882 over the same period in 1999.
Similarly, per share income fell $0.05 to $0.30 in 2001 from $0.35 in 2000. The
decline in earnings in the first quarter of 2001 was attributable to a decline
of $214,094 or 5.44% in net interest income. Earnings increased $162,882 or
14.74% in the first quarter of 2000 compared to 1999. The most significant
factor affecting 2000-1999 comparative results was an increase in interest
income and a decline in interest expense. The return on beginning equity for the
quarter ended March 31, 2001, 2000 and 1999 totaled 9.15%, 11.52%, and 10.81%.
Net Interest Income
As mentioned above, net interest income was down $214,094 or 5.44% in the first
quarter of 2001 compared to 2000. The net interest margin and spread totaled
4.52% and 3.27% in 2001, respectively, versus 5.07% and 3.97% in 2000. Interest
earnings on loans and investment securities decreased $109,339 from the March
31, 2000 quarter results while earnings on federal funds sold increased
$215,842. The 2001 improvement was attributable to increases in average balances
outstanding in federal funds sold, the results of reductions in loans and
investments outstanding. Interest expense on deposits and other borrowed funds
increased $320,597 or 11.87% in 2001 compared to 2000. Approximately 82%, or
$262,809, of the increased interest expense was attributable to cost of
deposits. Given the aggressive rate cuts made by the Federal Reserve in 2001 to-
15
SOUTHEASTERN BANKING CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
date, management expects net interest income to continue to decline during 2001
versus 2000 as substantial amounts of investment securities with early
redemption features and loans tied to prime and similar indexes reprice at lower
rates. Expected declines in average loans outstanding during the first half of
2001, as discussed in the Loan section of this Analysis, will exert further
pressure on the net interest results. Interest expense on deposits will also
decline, but due to the lag inherent in repricing maturity deposits, the decline
in asset yields is expected to initially exceed any drop in costs of funds. Net
interest income increased $261,785 or 7.13% in the first quarter of 2000 over
the same period in 1999. Overall an improvement in 2000 was precipitated by an
increase in average asset balances because yield increased only marginally.
The intense competition for loans and deposits continued in 2001 and shows no
sign of abating. The high number of new and existing financial institutions in
the Company's market areas essentially guarantees downward pressure on net
interest spreads and margins as all participants struggle to amass and grow
market share. Volume of assets and deposits will become even more important as
margins decline. Strategies implemented by management to increase average loans
outstanding emphasize utilization of more competitive pricing on loan products
and development of additional loan relationships, all without compromising
portfolio quality. Management's strategy for deposits is to reduce costs of
funds and employ alternative sources of financing when feasible.
Noninterest Income and Expense
Noninterest income increased $31,450 or 3.73% in the first quarter of 2001
compared to 2000. A $42,210 or16.94% increase in other income was the principal
factor in the 2001 results. By type and amount, the chief components of other
operating income in 2000 were mortgage origination fees, $65,312; commissions on
the sale of credit life insurance (generated by SEB), $53,337; safe deposit box
rentals, $43,483; and other miscellaneous income, $94,763. Salaries and employee
benefits increased 2.48% or $37,893 in the first quarter of 2001 compared to
2000. The vast majority, or 83%, of employee expenses remained concentrated in
salaries and other direct compensation, including related payroll taxes, in
2001. The division of employee expenses between compensation, profit-sharing,
and other fringe benefits remained consistent with historical norms in 2000 and
1999. When compared to the same period in the prior year, net occupancy and
equipment expense increased 12.67% or $59,453 year-to-date March 31, 2001 and
5.17% or $23,068 March 31, 2000. The increase both years resulted largely from
higher computer costs, including depreciation expense associated with the new
check imaging, internet banking, and voice banking systems. Other operating
expenses grew 14.57% or $97,265 at March 31, 2001 compared to March 31, 2000.
This increase is due primarily to the cost associated with operating the income
producing property in foreclosed real estate. Other operating expenses fell
11.36% or $85,574 year-to-date at March 31, 2000. A net improvement on sales of
foreclosed real estate was the key element in the 2000 results. No individual
component of other operating expenses aggregated or exceeded 10% of the total in
2001. Ongoing operating costs associated with a major parcel of foreclosed
commercial real estate, as discussed in earlier sections of this Analysis, are
expected to increase noninterest expenses until the property is sold.
RECENT ACCOUNTING PRONOUNCEMENTS
Various accounting proposals affecting the banking industry are pending with the
Financial Accounting Standards Board. Given the inherent uncertainty of the
proposal process, the Company cannot assess the impact of any such proposals on
its financial condition or results of operations.
16
SOUTHEASTERN BANKING CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 (the Act) provides a safe
harbor for forward-looking statements made by or on behalf of the Company. The
Company and its representatives have made, and may continue to make, various
written or oral forward-looking statements with respect to business and
financial matters, including statements contained in this report, filings with
the Securities and Exchange Commission, and reports to shareholders. Generally,
the words "believe," "expect," "intend," "estimate," "anticipate," "project,"
"will," "should," and similar expressions identify forward-looking statements.
All statements which address operating performance, events or developments that
we expect or anticipate will occur in the future, including statements related
to loan growth, deposit growth, per share growth, and statements expressing
general sentiment about future operating results and non-historical information,
are forward-looking statements within the meaning of the Act. The
forward-looking statements are and will be based on management's then current
views and assumptions regarding future events and operating performance. The
Company undertakes no obligation to publicly update or revise any
forward-looking statements in light of new information or future events.
Certain factors that could affect financial performance or cause actual results
to vary significantly from estimates contained in or underlying forward-looking
statements include:
o Interest rate fluctuations and other market conditions.
o Strength of the consumer and commercial credit sectors as well as
real estate markets.
o Changes in laws and regulations, including changes in accounting
standards, monetary policies, and taxation requirements
(including tax rate changes, new tax laws, and revised tax law
interpretations).
o Competitive pricing and other pressures on loans and deposits and
the Company's ability to maintain market shares in its trade
areas.
o Management of costs associated with expansion of existing and
development of new distribution channels, and ability to realize
increased revenues from these distribution channels.
o The outcome of litigation which depends on judicial
interpretations of law and findings of juries.
o Other risks and uncertainties as detailed from time to time in
Company filings with the Securities and Exchange Commission.
The foregoing list of factors is not exclusive. This Analysis should be read in
conjunction with the Consolidated Financial Statements and related notes.
17
SOUTHEASTERN BANKING CORPORATION
PART II - OTHER INFORMATION
23
ITEM 1. LEGAL PROCEEDINGS
(NOT APPLICABLE)
ITEM 2. CHANGES IN SECURITIES
(NOT APPLICABLE)
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
(NOT APPLICABLE)
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders (the Meeting) of the
Company was held on May 8, 2001. At the Meeting, the following
individuals were elected directors: Leslie H. Blair, David H.
Bluestein, Gene F. Brannen, William Downey, Alyson Gray,
Cornelius P. Holland, III, Alva J. Hopkins, III, G. Norris
Johnson, and S. Michael Little. Votes for all nominees totaled
2,398,499, and votes withheld totaled 0. No votes were cast
against any of the nominees.
The shareholders also approved setting the number of Directors
at 12, with 3 to be vacant until the elected Board deems it in
the Company's best interest to fill same. Votes for this
proposal were 2,341,357; against, 48,297; and abstained, 8,845
shares. The shareholders further approved the appointment of
independent auditors by the Audit Committee. Votes approving
the appointment totaled 2,398,421; against, 0; and abstained,
78 shares.
ITEM 5. OTHER INFORMATION
(NOT APPLICABLE)
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Index to Exhibits:
None
(b) Reports on Form 8-K - NONE
18
SOUTHEASTERN BANKING CORPORATION
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
SOUTHEASTERN BANKING CORPORATION
(REGISTRANT)
By: /s/ S. MICHAEL LITTLE
-------------------------------------------
S. MICHAEL LITTLE, EXECUTIVE VICE PRESIDENT
Date: MAY 14, 2001
----------------
19