FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share data) | 2003 | 2002 | 2001 | 2000 | 1999 | |||||||||||||||
FOR THE YEAR | ||||||||||||||||||||
Net interest income | $ | 45,775 | $ | 47,422 | $ | 45,493 | $ | 42,095 | $ | 43,089 | ||||||||||
Provision for loan losses | 0 | 0 | 0 | 600 | 660 | |||||||||||||||
Noninterest income: | ||||||||||||||||||||
Securities gains (losses) | (1,172 | ) | 457 | 915 | (12 | ) | 309 | |||||||||||||
Other | 19,287 | 16,874 | 15,108 | 13,150 | 12,148 | |||||||||||||||
Noninterest expenses | 42,463 | 39,790 | 38,060 | 34,877 | 35,983 | |||||||||||||||
Income before income taxes | 21,427 | 24,963 | 23,456 | 19,756 | 18,903 | |||||||||||||||
Provision for income taxes | 7,411 | 9,677 | 9,326 | 7,668 | 7,119 | |||||||||||||||
Net income | 14,016 | 15,286 | 14,130 | 12,088 | 11,784 | |||||||||||||||
Core earnings1 | 22,781 | 24,461 | 22,624 | 20,459 | 19,439 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net income: | ||||||||||||||||||||
Diluted | 0.89 | 0.97 | 0.90 | 0.76 | 0.73 | |||||||||||||||
Basic | 0.91 | 1.00 | 0.91 | 0.76 | 0.74 | |||||||||||||||
Cash dividends declared | 0.46 | 0.37 | 0.35 | 0.32 | 0.30 | |||||||||||||||
Book value | 6.71 | 6.59 | 6.09 | 5.42 | 4.84 | |||||||||||||||
Dividends to net income | 50.60 | % | 37.30 | % | 37.60 | % | 41.60 | % | 39.80 | % | ||||||||||
AT YEAR END | ||||||||||||||||||||
Assets | $ | 1,353,823 | $ | 1,281,297 | $ | 1,225,964 | $ | 1,151,373 | $ | 1,081,032 | ||||||||||
Securities | 565,089 | 498,459 | 306,352 | 204,664 | 213,654 | |||||||||||||||
Net loans | 702,632 | 681,335 | 777,993 | 837,328 | 771,294 | |||||||||||||||
Deposits | 1,129,642 | 1,030,540 | 1,015,154 | 957,089 | 905,960 | |||||||||||||||
Shareholders’ equity | 104,084 | 100,747 | 93,519 | 84,263 | 77,111 | |||||||||||||||
Performance ratios: | ||||||||||||||||||||
Return on average assets | 1.07 | % | 1.26 | % | 1.22 | % | 1.09 | % | 1.11 | % | ||||||||||
Return on average equity | 13.73 | 15.75 | 15.62 | 14.09 | 14.64 | |||||||||||||||
Net interest margin2 | 3.69 | 4.13 | 4.12 | 4.03 | 4.34 | |||||||||||||||
Average equity to average assets | 7.82 | 7.99 | 7.78 | 7.76 | 7.57 | |||||||||||||||
1. | Income before taxes excluding the provision for loan losses, securities gains (losses) and expenses associated with foreclosed and repossessed asset management and dispositions. | |
2. | On a fully taxable equivalent basis |
Contents
Management’s Discussion & Analysis | 11 | |||
Financial Tables | 24 | |||
Management’s Statement of Responsibility | 37 | |||
Report of Independent Certified Public Accountants | 38 | |||
Audited Financial Statements | 39 |
Overview and Outlook
Seacoast Banking Corporation of Florida is a one-bank holding company located on Florida’s southeast coast whose southern market is Palm Beach County and northern market is Indian River County. The Company has 28 full service branches, three of which were opened within the last 12 months in Palm Beach County. The Company plans to open three more branches in Palm Beach County over the next two years. The markets in which the Company operates have population growth rates over the past 10 years of approximately 25 percent and estimated growth rates of over 20 percent over the next 10 years.
Results of Operation
Net Interest Income Net interest income (on a fully taxable equivalent basis) for 2003 totaled $45,920,000, $1,683,000 or 3.5 percent less than for 2002. Net interest margin on a tax equivalent basis declined 44 basis points to 3.69 percent for 2003 from 2002’s result. However, fourth quarter 2003’s net interest margin improved 38 points to 3.82 percent from third quarter after declining 19 basis points to 3.44 percent in the third quarter of 2003 from second quarter 2003, declining 26 basis points to 3.63 percent in the second quarter of 2003 from first quarter 2003, and declining 13 basis points to 3.89 percent in the first quarter of 2003 from fourth quarter 2002.
Noninterest Income
Noninterest Expenses
Interest Rate Sensitivity Fluctuations in rates may result in changes in the fair market value of the Company’s financial instruments, cash flows and net interest income. This risk is managed using simulation modeling to calculate the most likely interest rate risk utilizing estimated loan and deposit growth. The objective is to optimize the Company’s financial position, liquidity, and net interest income while limiting their volatility.
Market Risk Market risk refers to potential losses arising from changes in interest rates, and other relevant market rates or prices.
Critical Accounting Policies Management after consultation with the audit committee believes that the most critical accounting estimates which may affect the Company’s financial status and involve the most complex, subjective and ambiguous assessments are as follows:
The provision for loan losses; the allowance for loan losses; securities available for sale valuation and accounting; the value of goodwill; and the fair market value of mortgage servicing rights at acquisition and any impairment of that value. |
Disclosures intended to facilitate a reader’s understanding of the possible and likely events or uncertainties known to management that could have a material impact on the reported financial information of the Company related to the most critical accounting estimates are as follows:
Provision for Loan Losses No provision was recorded during 2003 or in 2002 and 2001, reflecting the Company’s credit quality, low nonperforming assets, and the decline in the loan portfolio. Net charge-offs totaled $666,000 or 0.10 percent of average loans for 2003 (principally due to the complete write-off of a single commercial credit for $439,000 in the second quarter),
Allowance for Loan Losses Table 12 provides certain information concerning the Company’s allowance for loan losses for the years indicated.
Nonperforming Assets Table 14 provides certain information concerning nonperforming assets for the years indicated.
Securities Available for Sale The fair value of the available for sale portfolio at December 31, 2003 was less than historical amortized cost, producing net unrealized losses of $3,757,000. The fair value of each security was obtained from independent pricing sources utilized by many financial institutions. However, actual values can only be determined in an arms-length transaction between a willing buyer and seller that can, and often do, vary from these reported values. Furthermore, significant changes in recorded values due to changes in actual and perceived economic conditions can occur rapidly, producing greater unrealized losses in the available for sale portfolio and realized losses for a trading portfolio.
Value of Goodwill Beginning January 1, 2002, the Company’s goodwill was no longer amortized, but tested annually for impairment. The amount of goodwill at December 31, 2003 totaled approximately $2.5 million and was acquired in 1995 as a result of the purchase of a community bank within the Company’s market. The Company has a commercial bank deposit market share of approximately 35 percent in this market, which had a population increase of over 25 percent during the past ten years.
Mortgage Servicing Rights A portion of the Company’s loan production involves loans for 1-4 family residential properties. As part of its efforts to manage interest rate risk, the Company has periodically securitized pools of loans and created U.S. Agency-guaranteed mortgage-backed securities. As part of the agreement with the agency, the Company is paid a servicing fee to manage the loan and collect the monthly loan payments. At December 31, 2003, the total estimated fair value of those rights was $244,000. The fair value of the mortgage servicing rights is based on judgments, assumptions and estimates as to the period the fee will be collected, current and future interest rates, and loan foreclosures. These judgments, assumptions and estimates are initially made at the time of securitization and reviewed at least quarterly. Impairment, if any, is recognized through a valuation allowance and charged against current earnings.
Liquidity Risk Management Liquidity risk involves the risk of being unable to fund assets with the appropriate duration and rate-based liability, as well as the risk of not being able to meet unexpected cash needs. Liquidity planning and management are necessary to ensure the ability to fund operations cost-effectively and to meet current and future potential obligations such as loan commitments and unexpected deposit outflows.
Contractual Commitments
December 31, 2003 | ||||||||||||||||
Over one year | ||||||||||||||||
One year | through | Over | ||||||||||||||
(In thousands) | Total | or less | three years | three years | ||||||||||||
Deposit maturities | $ | 1,129,642 | $ | 998,425 | $ 82,893 | $48,324 | ||||||||||
Short-term borrowings | 74,158 | 74,158 | ||||||||||||||
Long-term debt | 40,000 | 25,000 | 15,000 | |||||||||||||
Operating leases | 25,881 | 1,940 | 4,014 | 19,927 | ||||||||||||
$ | 1,269,681 | $ | 1,074,523 | $111,907 | $83,251 | |||||||||||
Funding sources primarily include customer-based core deposits, purchased funds, collateralized borrowings, cash flows from operations, and asset securitizations and sales.
Off-Balance Sheet Transactions In the normal course of business, we engage in a variety of financial transactions that, under generally accepted accounting principles, either are not recorded on the balance sheet or are recorded on the balance sheet in amounts that differ from the full contract or notional amounts. These transactions involve varying elements of market, credit and liquidity risk.
Derivative product assets | $ | 192,000 | ||
Derivative product liabilities | 439,000 |
Income Taxes Income taxes as a percentage of income before taxes were 34.6 percent for 2003, compared to 38.8 percent in 2002 and 39.8 percent for 2001. Beginning in January 2003 the Company formed a subsidiary and transferred certain real estate assets to a real estate investment trust (REIT). As a result, the Company’s state income tax liability was reduced. The decline in rate from 2001 to 2002 reflects lower state income taxes, the result of a decline in apportionment factors attributable to taxable income for the State of Florida.
Financial Condition Total assets increased $72,526,000 or 5.7 percent to $1,353,823,000 in 2003, after increasing $55,333,000 or 4.5 percent to $1,281,297,000 in 2002.
Capital Resources Table 8 summarizes the Company’s capital position and selected ratios. The Company’s ratio of shareholders’ equity to period end total assets was 7.69 percent at December 31, 2003, compared with 7.86 percent one year earlier. The Company manages the size of its equity through a program of share repurchases of its outstanding Common stock. A total of 796,000 stock option shares are outstanding, of which 572,000 are exercisable; during 2003, 146,000 shares were exercised (see “Note H — Employee Benefits”). In treasury stock at December 31, 2003, there were
Loan Portfolio Table 9 shows total loans (net of unearned income) by category outstanding.
2003 | 2002 | |||||||||||||||||||||||
(In millions) | Funded | Unfunded | Total | Funded | Unfunded | Total | ||||||||||||||||||
Office buildings | $ | 42.8 | $ | 2.1 | $ | 44.9 | $ | 38.2 | $ | 0.1 | $ | 38.3 | ||||||||||||
Retail trade | 39.5 | - | 39.5 | 31.5 | 2.4 | 33.9 | ||||||||||||||||||
Land development | 64.5 | 45.0 | 109.5 | 36.3 | 25.4 | 61.7 | ||||||||||||||||||
Industrial | 27.6 | 2.6 | 30.2 | 27.6 | 0.2 | 27.8 | ||||||||||||||||||
Healthcare | 26.5 | 2.7 | 29.2 | 26.1 | 6.7 | 32.8 | ||||||||||||||||||
Churches and educational facilities | 13.8 | 4.5 | 18.3 | 13.6 | 0.2 | 13.8 | ||||||||||||||||||
Recreation | 9.3 | - | 9.3 | 11.8 | 0.5 | 12.3 | ||||||||||||||||||
Multifamily | 7.5 | 8.3 | 15.8 | 5.8 | 4.5 | 10.3 | ||||||||||||||||||
Mobile home parks | 4.9 | - | 4.9 | 4.0 | - | 4.0 | ||||||||||||||||||
Land | 7.5 | 2.9 | 10.4 | 5.6 | 1.6 | 7.2 | ||||||||||||||||||
Lodging | 6.1 | - | 6.1 | 3.4 | - | 3.4 | ||||||||||||||||||
Restaurant | 1.8 | 0.1 | 1.9 | 3.1 | 0.1 | 3.2 | ||||||||||||||||||
Other | 52.0 | 2.3 | 54.3 | 46.8 | 1.1 | 47.9 | ||||||||||||||||||
Total | $ | 303.8 | $ | 70.5 | $ | 374.3 | $ | 253.8 | $ | 42.8 | $ | 296.6 | ||||||||||||
Loans and commitments for one-to-four family residential properties and commercial real estate are generally secured with first mortgages on property, with the loan to fair value of the property not exceeding 80 percent on the date the loan is made. The Company was also a creditor for consumer loans to individual customers
Deposits and Borrowings Total deposits increased $99,102,000 or 9.6 percent to $1,129,642,000 at December 31, 2003, compared to one year earlier. In comparison to 2001, deposits increased $15,386,000 or 1.5 percent in 2002 to $1,030,540,000. Certificates of deposits decreased $3,885,000 or 1.0 percent to $369,155,000 over the past twelve months, lower cost interest bearing deposits (NOW, savings and money markets deposits) increased $54,424,000 or 11.5 percent to $527,400,000, and noninterest bearing demand deposits increased $48,563,000 or 26.3 percent to $233,087,000. The Company’s success in marketing desirable products, in particular its tiered money market and Money Manager product offerings, enhanced growth in lower cost interest bearing deposits. Growth in business demand deposits of $26,645,000 and personal demand deposits of $15,907,000 comprised most of the increase in noninterest bearing deposits.
Effects of Inflation and Changing Prices The financial statements and related financial data presented herein have been prepared in accordance with generally accepted accounting principles, which require the measurement of financial position and operating results in terms of historical dollars, without considering changes in the relative purchasing power of money, over time, due to inflation.
Unlike most industrial companies, virtually all of the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates have a more significant impact on a financial institution’s performance than the general level of inflation. However, inflation affects financial institutions’ increased cost of goods and services purchased, the cost of salaries and benefits, occupancy expense, and similar items. Inflation and related increases in interest rates generally decrease the market value of investments and loans held and may adversely affect liquidity, earnings, and shareholders’ equity. Mortgage originations and re-financings tend to slow as interest rates increase, and may reduce the Company’s fee income from such activities.
Securities Information related to yields, maturities, carrying values and unrealized gains (losses) of the Company’s securities is set forth in Tables 15-18.
Table 1 – Condensed Income Statement*
(Tax equivalent basis) | 2003 | 2002 | 2001 | ||||||||||||
Net interest income | 3.52 | % | 3.92 | % | 3.93 | % | |||||||||
Provision for loan losses | 0.00 | 0.00 | 0.00 | ||||||||||||
Noninterest income | |||||||||||||||
Securities gains (losses) | (0.09 | ) | 0.04 | 0.08 | |||||||||||
Other | 1.48 | 1.39 | 1.30 | ||||||||||||
Noninterest expenses | 3.26 | 3.28 | 3.27 | ||||||||||||
Income before income taxes | 1.65 | 2.07 | 2.04 | ||||||||||||
Provision for income taxes including tax equivalent adjustment | 0.58 | 0.81 | 0.82 | ||||||||||||
Net Income | 1.07 | % | 1.26 | % | 1.22 | % | |||||||||
* | As a Percent of Average Assets |
Table 2 – Changes in Average Earning Assets
Increase/(Decrease) | Increase/(Decrease) | ||||||||||||||||
(Dollars in thousands) | 2003 vs 2002 | 2002 vs 2001 | |||||||||||||||
Securities: | |||||||||||||||||
Taxable | $ | 187,266 | 50.9 | % | $ | 127,227 | 52.8 | % | |||||||||
Nontaxable | (886 | ) | (23.9 | ) | (1,583 | ) | (29.9 | ) | |||||||||
Federal funds sold and other short term investments | (25,794 | ) | (80.3 | ) | 941 | 3.0 | |||||||||||
Loans, net | (70,597 | ) | (9.4 | ) | (82,157 | ) | (9.9 | ) | |||||||||
TOTAL | $ | 89,899 | 7.8 | % | $ | 44,428 | 4.0 | % | |||||||||
Table 3 – Rate/ Volume Analysis (on a Tax Equivalent Basis)
2003 vs 2002 | 2002 vs 2001 | ||||||||||||||||||||||||||||||||||
Due to change in: | Due to change in: | ||||||||||||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||||||||||
Amount of increase (decrease) | Volume | Rate | Mix | Total | Volume | Rate | Mix | Total | |||||||||||||||||||||||||||
EARNING ASSETS | |||||||||||||||||||||||||||||||||||
Securities | |||||||||||||||||||||||||||||||||||
Taxable | $ | 7,261 | $ | (3,633 | ) | $ | (1,848 | ) | $ | 1,780 | $ | 7,120 | $ | (4,141 | ) | $ | (2,187 | ) | $ | 792 | |||||||||||||||
Nontaxable | (70 | ) | 1 | 0 | (69 | ) | (126 | ) | (2 | ) | 1 | (127 | ) | ||||||||||||||||||||||
7,191 | (3,632 | ) | (1,848 | ) | 1,711 | 6,994 | (4,143 | ) | (2,186 | ) | 665 | ||||||||||||||||||||||||
Federal funds sold and other short term investments | (422 | ) | (172 | ) | 138 | (456 | ) | 39 | (802 | ) | (24 | ) | (787 | ) | |||||||||||||||||||||
Loans | (5,236 | ) | (4,748 | ) | 448 | (9,536 | ) | (6,514 | ) | (4,262 | ) | 421 | (10,355 | ) | |||||||||||||||||||||
TOTAL EARNING ASSETS | 1,533 | (8,552 | ) | (1,262 | ) | (8,281 | ) | 519 | (9,207 | ) | (1,789 | ) | (10,477 | ) | |||||||||||||||||||||
INTEREST BEARING LIABILITIES | |||||||||||||||||||||||||||||||||||
NOW | 50 | (241 | ) | (21 | ) | (212 | ) | 59 | (561 | ) | (30 | ) | (532 | ) | |||||||||||||||||||||
Savings deposits | 48 | (615 | ) | (21 | ) | (588 | ) | 53 | (1,726 | ) | (29 | ) | (1,702 | ) | |||||||||||||||||||||
Money market accounts | 357 | (1,079 | ) | (130 | ) | (852 | ) | 1,100 | (1,571 | ) | (447 | ) | (918 | ) | |||||||||||||||||||||
Time deposits | (526 | ) | (4,696 | ) | 165 | (5,057 | ) | (2,124 | ) | (6,809 | ) | 622 | (8,311 | ) | |||||||||||||||||||||
(71 | ) | (6,631 | ) | (7 | ) | (6,709 | ) | (912 | ) | (10,667 | ) | 116 | (11,463 | ) | |||||||||||||||||||||
Federal funds purchased and other short term borrowings | 104 | (130 | ) | (24 | ) | (50 | ) | 98 | (940 | ) | (62 | ) | (904 | ) | |||||||||||||||||||||
Long term borrowings | 1,340 | (775 | ) | (405 | ) | 161 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||
TOTAL INTEREST BEARING LIABILITIES | 1,373 | (7,536 | ) | (435 | ) | (6,598 | ) | (814 | ) | (11,607 | ) | 54 | (12,367 | ) | |||||||||||||||||||||
NET INTEREST INCOME | $ | 160 | $ | (1,015 | ) | $ | (827 | ) | $ | (1,683 | ) | $ | 1,333 | $ | 2,400 | $ | (1,843 | ) | $ | 1,890 | |||||||||||||||
Table 4 – Changes in Average Interest Bearing Liabilities
Increase/(Decrease) | Increase/(Decrease) | |||||||||||||||||
(Dollars in thousands) | 2003 vs 2002 | 2002 vs 2001 | ||||||||||||||||
NOW | $ | 5,362 | 8.7 | % | $ | 3,097 | 5.3 | % | ||||||||||
Savings deposits | 5,019 | 3.4 | 2,458 | 1.7 | ||||||||||||||
Money market accounts | 30,553 | 12.1 | 55,907 | 28.4 | ||||||||||||||
Time deposits | (13,429 | ) | (3.5 | ) | (38,335 | ) | (9.1 | ) | ||||||||||
Federal funds purchased and other short term borrowings | 9,979 | 18.1 | 3,412 | 6.6 | ||||||||||||||
Other borrowings | 20,890 | 52.2 | 0 | 0 | ||||||||||||||
TOTAL | $ | 58,374 | 6.2 | % | $ | 26,539 | 2.9 | % | ||||||||||
Table 5 – Three Year Summary
2003 | 2002 | 2001 | |||||||||||||||||||||||||||||||||||||||||
Average | Yield/ | Average | Yield/ | Average | Yield/ | ||||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | Balance | Interest | Rate | Balance | Interest | Rate | Balance | Interest | Rate | ||||||||||||||||||||||||||||||||||
EARNING ASSETS | |||||||||||||||||||||||||||||||||||||||||||
Securities | |||||||||||||||||||||||||||||||||||||||||||
Taxable | $ | 555,407 | $ | 16,054 | 2.89 | % | $ | 368,141 | $ | 14,274 | 3.88 | % | $ | 240,914 | $ | 13,482 | 5.60 | % | |||||||||||||||||||||||||
Nontaxable | 2,818 | 223 | 7.91 | 3,704 | 292 | 7.88 | 5,287 | 419 | 7.93 | ||||||||||||||||||||||||||||||||||
558,225 | 16,277 | 2.92 | 371,845 | 14,566 | 3.92 | 246,201 | 13,901 | 5.65 | |||||||||||||||||||||||||||||||||||
Federal funds sold and other short term investments | 6,348 | 70 | 1.10 | 32,142 | 526 | 1.64 | 31,201 | 1,313 | 4.21 | ||||||||||||||||||||||||||||||||||
Loans2 | 678,339 | 46,010 | 6.78 | 748,936 | 55,546 | 7.42 | 831,093 | 65,901 | 7.93 | ||||||||||||||||||||||||||||||||||
TOTAL EARNING ASSETS | 1,242,912 | 62,357 | 5.02 | 1,152,923 | 70,638 | 6.13 | 1,108,495 | 81,115 | 7.32 | ||||||||||||||||||||||||||||||||||
Allowance for loan losses | (6,407 | ) | (6,895 | ) | (7,187 | ) | |||||||||||||||||||||||||||||||||||||
Cash and due from banks | 40,455 | 39,886 | 31,138 | ||||||||||||||||||||||||||||||||||||||||
Bank premises and equipment | 16,528 | 15,456 | 16,057 | ||||||||||||||||||||||||||||||||||||||||
Other assets | 12,333 | 13,096 | 13,945 | ||||||||||||||||||||||||||||||||||||||||
$ | 1,305,821 | $ | 1,214,466 | $ | 1,162,448 | ||||||||||||||||||||||||||||||||||||||
INTEREST BEARING LIABILITIES | |||||||||||||||||||||||||||||||||||||||||||
NOW | $ | 66,705 | $ | 363 | 0.54 | % | $ | 61,343 | $ | 575 | 0.94 | % | $ | 58,246 | $ | 1,107 | 1.90 | % | |||||||||||||||||||||||||
Savings deposits | 152,908 | 835 | 0.55 | 147,889 | 1,423 | 0.96 | 145,431 | 3,125 | 2.15 | ||||||||||||||||||||||||||||||||||
Money market accounts | 283,070 | 2,097 | 0.74 | 252,517 | 2,949 | 1.17 | 196,610 | 3,867 | 1.97 | ||||||||||||||||||||||||||||||||||
Time deposits | 368,037 | 9,892 | 2.69 | 381,466 | 14,949 | 3.92 | 419,801 | 23,260 | 5.54 | ||||||||||||||||||||||||||||||||||
Federal funds purchased and other short term borrowings | 64,994 | 523 | 0.80 | 55,015 | 573 | 1.04 | 51,603 | 1,477 | 2.86 | ||||||||||||||||||||||||||||||||||
Other borrowings | 60,890 | 2,727 | 4.48 | 40,000 | 2,566 | 6.42 | 40,000 | 2,566 | 6.42 | ||||||||||||||||||||||||||||||||||
TOTAL INTEREST BEARING LIABILITIES | 996,604 | 16,437 | 1.65 | 938,230 | 23,035 | 2.46 | 911,691 | 35,402 | 3.88 | ||||||||||||||||||||||||||||||||||
Demand deposits | 201,921 | 174,154 | 154,990 | ||||||||||||||||||||||||||||||||||||||||
Other liabilities | 5,229 | 5,010 | 5,285 | ||||||||||||||||||||||||||||||||||||||||
1,203,754 | 1,117,394 | 1,071,966 | |||||||||||||||||||||||||||||||||||||||||
Shareholders’ equity | 102,067 | 97,072 | 90,482 | ||||||||||||||||||||||||||||||||||||||||
$ | 1,305,821 | $ | 1,214,466 | $ | 1,162,448 | ||||||||||||||||||||||||||||||||||||||
Interest expense as % of earning assets | 1.32 | % | 2.00 | % | 3.19 | % | |||||||||||||||||||||||||||||||||||||
Net interest income/yield on earning assets | $ | 45,920 | 3.69 | % | $ | 47,603 | 4.13 | % | $ | 45,713 | 4.12 | % | |||||||||||||||||||||||||||||||
1. | The tax equivalent adjustment is based on a 34% tax rate. |
2. | Nonaccrual loans are included in loan balances. Fees on loans are included in interest on loans. |
Table 6 – Noninterest Income
Year Ended | % Change | |||||||||||||||||||||
(Dollars in thousands) | 2003 | 2002 | 2001 | 03/02 | 02/01 | |||||||||||||||||
Service charges on deposit accounts | $ | 4,907 | $ | 5,105 | $ | 5,110 | (3.9 | )% | (0.1 | )% | ||||||||||||
Trust fees | 2,043 | 2,177 | 2,497 | (6.2 | ) | (12.8 | ) | |||||||||||||||
Mortgage banking fees | 4,423 | 3,364 | 2,456 | 31.5 | 37.0 | |||||||||||||||||
Brokerage commissions and fees | 1,863 | 2,045 | 1,805 | (8.9 | ) | 13.3 | ||||||||||||||||
Marine finance fees | 3,161 | 1,408 | 743 | 124.5 | 89.5 | |||||||||||||||||
Debit card income | 1,169 | 980 | 735 | 19.3 | 33.3 | |||||||||||||||||
Other deposit based EFT fees | 441 | 376 | 312 | 17.3 | 20.5 | |||||||||||||||||
Other | 1,280 | 1,419 | 1,450 | (9.8 | ) | (2.1 | ) | |||||||||||||||
19,287 | 16,874 | 15,108 | 14.3 | 11.7 | ||||||||||||||||||
Securities gains (losses) | (1,172 | ) | 457 | 915 | n/m | (50.1 | ) | |||||||||||||||
TOTAL | $ | 18,115 | $ | 17,331 | $ | 16,023 | 4.5 | % | 8.2 | % | ||||||||||||
n/m = not meaningful
Table 7 – Noninterest Expenses
Year Ended | % Change | |||||||||||||||||||||
(Dollars in thousands) | 2003 | 2002 | 2001 | 03/02 | 02/01 | |||||||||||||||||
Salaries and wages | $ | 16,641 | $ | 15,761 | $ | 14,776 | 5.6 | % | 6.7 | % | ||||||||||||
Employee benefits | 4,595 | 4,304 | 3,866 | 6.8 | 11.3 | |||||||||||||||||
Outsourced data processing costs | 5,265 | 4,795 | 4,468 | 9.8 | 7.3 | |||||||||||||||||
Occupancy | 3,956 | 3,365 | 3,358 | 17.6 | 0.2 | |||||||||||||||||
Furniture and equipment | 1,739 | 1,989 | 2,190 | (12.6 | ) | (9.2 | ) | |||||||||||||||
Marketing | 2,119 | 2,036 | 1,908 | 4.1 | 6.7 | |||||||||||||||||
Legal and professional fees | 1,336 | 1,538 | 1,230 | (13.1 | ) | 25.0 | ||||||||||||||||
FDIC assessments | 163 | 173 | 177 | (5.8 | ) | (2.3 | ) | |||||||||||||||
Amortization of intangibles | 150 | 252 | 552 | (40.5 | ) | (54.3 | ) | |||||||||||||||
Other | 6,499 | 5,577 | 5,535 | 16.5 | 0.8 | |||||||||||||||||
TOTAL | $ | 42,463 | $ | 39,790 | $ | 38,060 | 6.7 | % | 4.5 | % | ||||||||||||
n/m = Not Meaningful
Table 8 – Capital Resources
December 31 | |||||||||||||||
(Dollars in thousands) | 2003 | 2002 | 2001 | ||||||||||||
TIER 1 CAPITAL | |||||||||||||||
Common stock | $ | 1,710 | $ | 1,555 | $ | 1,555 | |||||||||
Additional paid in capital | 26,911 | 26,994 | 26,887 | ||||||||||||
Retained earnings | 95,336 | 89,960 | 80,886 | ||||||||||||
Restricted stock awards | (1,947 | ) | 0 | 0 | |||||||||||
Treasury stock | (15,350 | ) | (18,578 | ) | (17,239 | ) | |||||||||
Valuation allowance | 0 | (15 | ) | (12 | ) | ||||||||||
Intangibles | (2,658 | ) | (2,840 | ) | (2,976 | ) | |||||||||
TOTAL TIER 1 CAPITAL | 104,002 | 97,076 | 89,101 | ||||||||||||
TIER 2 CAPITAL | |||||||||||||||
Allowance for loan losses, as limited | 6,160 | 6,826 | 7,034 | ||||||||||||
TOTAL TIER 2 CAPITAL | 6,160 | 6,826 | 7,034 | ||||||||||||
TOTAL RISK-BASED CAPITAL | $ | 110,162 | $ | 103,902 | $ | 96,135 | |||||||||
Risk weighted assets | $ | 797,352 | $ | 754,099 | $ | 760,640 | |||||||||
Tier 1 risk based capital ratio | 13.04 | % | 12.87 | % | 11.71 | % | |||||||||
Total risk based capital ratio | 13.80 | 13.77 | 12.64 | ||||||||||||
Regulatory minimum | 8.00 | 8.00 | 8.00 | ||||||||||||
Tier 1 capital to adjusted total assets | 7.81 | 7.99 | 7.49 | ||||||||||||
Regulatory minimum | 4.00 | 4.00 | 4.00 | ||||||||||||
Shareholders’ equity to assets | 7.69 | 7.86 | 7.63 | ||||||||||||
Average shareholders’ equity to average total assets | 7.82 | 7.99 | 7.78 | ||||||||||||
Table 9 – Loans Outstanding
December 31 | ||||||||||||||||
(In thousands) | 2003 | 2002 | 2001 | |||||||||||||
Construction and land development | $ | 107,315 | $ | 77,909 | $ | 70,630 | ||||||||||
Real estate mortgage | ||||||||||||||||
Residential real estate | ||||||||||||||||
Adjustable | 108,863 | 106,070 | 139,376 | |||||||||||||
Fixed rate | 75,226 | 119,013 | 181,755 | |||||||||||||
Home equity mortgages | 48,986 | 41,436 | 41,989 | |||||||||||||
Home equity lines | 10,950 | 12,219 | 11,407 | |||||||||||||
244,025 | 278,738 | 374,527 | ||||||||||||||
Commercial real estate | 226,366 | 199,385 | 200,058 | |||||||||||||
470,391 | 478,123 | 574,585 | ||||||||||||||
Commercial and financial | 46,310 | 40,491 | 36,617 | |||||||||||||
Installment loans to individuals | ||||||||||||||||
Automobiles and trucks | 36,189 | 45,268 | 54,159 | |||||||||||||
Marine Loans | 28,098 | 23,032 | 27,176 | |||||||||||||
Other | 20,225 | 23,007 | 21,425 | |||||||||||||
84,512 | 91,307 | 102,760 | ||||||||||||||
Other loans | 264 | 331 | 435 | |||||||||||||
TOTAL | $ | 708,792 | $ | 688,161 | $ | 785,027 | ||||||||||
Table 10 – Loan Maturity Distribution
December 31, 2003 | |||||||||||||||
Commercial, | Construction | ||||||||||||||
Financial & | and Land | ||||||||||||||
(In thousands) | Agricultural | Development | Total | ||||||||||||
In one year or less | $ | 15,193 | $ | 87,614 | $ | 102,807 | |||||||||
After one year but within five years: | |||||||||||||||
Interest rates are floating or adjustable | 5,684 | 19,479 | 25,163 | ||||||||||||
Interest rates are fixed | 13,149 | 54 | 13,203 | ||||||||||||
In five years or more: | |||||||||||||||
Interest rates are floating or adjustable | 5,795 | 0 | 5,795 | ||||||||||||
Interest rates are fixed | 6,489 | 168 | 6,657 | ||||||||||||
TOTAL | $ | 46,310 | $ | 107,315 | $ | 153,625 | |||||||||
Table 11 – Maturity of Certificates of Deposit of $100,000 or More
December 31 | ||||||||||||||||||
% of | % of | |||||||||||||||||
(Dollars in thousands) | 2003 | Total | 2002 | Total | ||||||||||||||
Maturity Group: | ||||||||||||||||||
Under 3 months | $ | 27,376 | 25.8 | % | $ | 22,666 | 24.2 | % | ||||||||||
3 to 6 months | 13,450 | 12.6 | 16,526 | 17.6 | ||||||||||||||
6 to 12 months | 23,768 | 22.4 | 22,139 | 23.6 | ||||||||||||||
Over 12 months | 41,657 | 39.2 | 32,454 | 34.6 | ||||||||||||||
TOTAL | $ | 106,251 | 100.0 | % | $ | 93,785 | 100.0 | % | ||||||||||
Table 12 – Summary of Loan Loss Experience
Year Ended December 31 | |||||||||||||||||||||||
(Dollars in thousands) | 2003 | 2002 | 2001 | 2000 | 1999 | ||||||||||||||||||
Beginning balance | $ | 6,826 | $ | 7,034 | $ | 7,218 | $ | 6,870 | $ | 6,343 | |||||||||||||
Provision for loan losses | 0 | 0 | 0 | 600 | 660 | ||||||||||||||||||
Charge offs: | |||||||||||||||||||||||
Commercial and financial | 646 | 152 | 32 | 98 | 2 | ||||||||||||||||||
Consumer | 320 | 371 | 395 | 432 | 458 | ||||||||||||||||||
Commercial real estate | 78 | 6 | 27 | 35 | 46 | ||||||||||||||||||
Residential real estate | 9 | 2 | 2 | 78 | 120 | ||||||||||||||||||
TOTAL CHARGE OFFS | 1,053 | 531 | 456 | 643 | 626 | ||||||||||||||||||
Recoveries: | |||||||||||||||||||||||
Commercial and financial | 77 | 36 | 54 | 93 | 111 | ||||||||||||||||||
Consumer | 192 | 261 | 182 | 226 | 230 | ||||||||||||||||||
Commercial real estate | 108 | 2 | 22 | 39 | 136 | ||||||||||||||||||
Residential real estate | 10 | 24 | 14 | 33 | 16 | ||||||||||||||||||
TOTAL RECOVERIES | 387 | 323 | 272 | 391 | 493 | ||||||||||||||||||
Net loan charge offs | 666 | 208 | 184 | 252 | 133 | ||||||||||||||||||
ENDING BALANCE | $ | 6,160 | $ | 6,826 | $ | 7,034 | $ | 7,218 | $ | 6,870 | |||||||||||||
Loans outstanding at end of year* | $ | 708,792 | $ | 688,161 | $ | 785,027 | $ | 844,546 | $ | 778,164 | |||||||||||||
Ratio of allowance for loan losses to loans outstanding at end of year | 0.87 | % | 0.99 | % | 0.90 | % | 0.85 | % | 0.88 | % | |||||||||||||
Daily average loans outstanding* | $ | 678,339 | $ | 748,936 | $ | 831,093 | $ | 820,429 | $ | 743,010 | |||||||||||||
Ratio of net charge offs to average loans outstanding | 0.10 | % | 0.03 | % | 0.02 | % | 0.03 | % | 0.02 | % | |||||||||||||
* | Net of unearned income. |
Table 13 – Allowance for Loan Losses
December 31 | ||||||||||||||||||||||
(Dollars in thousands) | 2003 | 2002 | 2001 | 2000 | 1999 | |||||||||||||||||
ALLOCATION BY LOAN TYPE | ||||||||||||||||||||||
Commercial and financial loans | $ | 786 | $ | 850 | $ | 738 | $ | 844 | $ | 677 | ||||||||||||
Real estate loans | 4,353 | 4,745 | 4,924 | 4,970 | 4,913 | |||||||||||||||||
Installment loans | 1,021 | 1,231 | 1,372 | 1,404 | 1,280 | |||||||||||||||||
TOTAL | $ | 6,160 | $ | 6,826 | $ | 7,034 | $ | 7,218 | $ | 6,870 | ||||||||||||
YEAR END LOAN TYPES AS A PERCENT OF TOTAL LOANS | ||||||||||||||||||||||
Commercial and financial loans | 6.6 | % | 5.9 | % | 4.7 | % | 4.7 | % | 4.3 | % | ||||||||||||
Real estate loans | 81.5 | 80.8 | 82.1 | 84.6 | 85.6 | |||||||||||||||||
Installment loans | 11.9 | 13.3 | 13.2 | 10.7 | 10.1 | |||||||||||||||||
TOTAL | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||||
Table 14 – Nonperforming Assets
December 31 | ||||||||||||||||||||||
(Dollars in thousands) | 2003 | 2002 | 2001 | 2000 | 1999 | |||||||||||||||||
Nonaccrual loans1 | $ | 1,091 | $ | 2,241 | $ | 2,423 | $ | 2,099 | $ | 2,407 | ||||||||||||
Renegotiated loans | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||
Other real estate owned | 1,954 | 8 | 119 | 346 | 339 | |||||||||||||||||
TOTAL NONPERFORMING ASSETS | $ | 3,045 | $ | 2,249 | $ | 2,542 | $ | 2,445 | $ | 2,746 | ||||||||||||
Amount of loans outstanding at end of year2 | $ | 708,792 | $ | 688,161 | $ | 785,027 | $ | 844,546 | $ | 778,164 | ||||||||||||
Ratio of total nonperforming assets to loans outstanding and other real estate owned at end of period | 0.43 | % | 0.33 | % | 0.32 | % | 0.29 | % | 0.35 | % | ||||||||||||
Accruing loans past due 90 days or more | $ | 8 | $ | 0 | $ | 134 | $ | 108 | $ | 498 | ||||||||||||
1. | Interest income that could have been recorded during 2003 related to nonaccrual loans was $106,000, none of which was included in interest income or net income. All nonaccrual loans are secured. |
2. | Net of unearned income. |
Table 15 – Securities Held For Sale
December 31 | |||||||||||||||||||
Amortized | Fair | Unrealized | Unrealized | ||||||||||||||||
(Dollars in thousands) | Cost | Value | Gains | Losses | |||||||||||||||
U.S. Treasury and other U.S. government agencies and corporations | |||||||||||||||||||
2003 | $ | 1,002 | $ | 1,002 | $ | - | $ | - | |||||||||||
2002 | 2,493 | 2,508 | 15 | - | |||||||||||||||
Mortgage-backed securities | |||||||||||||||||||
2003 | 480,775 | 477,018 | 663 | (4,420 | ) | ||||||||||||||
2002 | 455,314 | 456,655 | 2,452 | (1,111 | ) | ||||||||||||||
Other | |||||||||||||||||||
2003 | 6,203 | 6,203 | - | - | |||||||||||||||
2002 | 7,138 | 7,115 | - | (23 | ) | ||||||||||||||
Total Securities Held For Sale | |||||||||||||||||||
2003 | $ | 487,980 | $ | 484,223 | $ | 663 | $ | (4,420 | ) | ||||||||||
2002 | 464,945 | 466,278 | 2,467 | (1,134 | ) | ||||||||||||||
Table 16 – Securities Held For Investment
December 31 | |||||||||||||||||||
Amortized | Fair | Unrealized | Unrealized | ||||||||||||||||
(Dollars in thousands) | Cost | Value | Gains | Losses | |||||||||||||||
U.S. Treasury and other U.S. government agencies and corporations | |||||||||||||||||||
2003 | $ | 4,998 | $ | 4,933 | $ | - | $ | (65 | ) | ||||||||||
2002 | - | - | - | - | |||||||||||||||
Mortgage-backed securities | |||||||||||||||||||
2003 | 73,585 | 72,392 | 140 | (1,333 | ) | ||||||||||||||
2002 | 28,555 | 29,345 | 800 | (10 | ) | ||||||||||||||
Obligations of states and political subdivisions | |||||||||||||||||||
2003 | 2,283 | 2,416 | 133 | - | |||||||||||||||
2002 | 3,626 | 3,823 | 197 | - | |||||||||||||||
Total Securities Held For Investment | |||||||||||||||||||
2003 | $ | 80,866 | $ | 79,741 | $ | 273 | $ | (1,398 | ) | ||||||||||
2002 | 32,181 | 33,168 | 997 | (10 | ) | ||||||||||||||
Table 17 – Maturity Distribution of Securities Held For Investment
December 31, 2003 | ||||||||||||||||||||||||||||||||
No | Average | |||||||||||||||||||||||||||||||
1 Year | 1-5 | 5-10 | After 10 | Contractual | Maturity | |||||||||||||||||||||||||||
(Dollars in thousands) | Or Less | Years | Years | Years | Maturity | Total | In Years | |||||||||||||||||||||||||
AMORTIZED COST | ||||||||||||||||||||||||||||||||
U.S. Treasury and other U.S. government agencies and corporations | $ | 4,998 | $ | 4,998 | 2.49 | |||||||||||||||||||||||||||
Mortgage-backed securities | $ | 2,481 | 55,619 | $ | 15,485 | 73,585 | 4.09 | |||||||||||||||||||||||||
Obligations of states and political subdivisions | 855 | 436 | $ | 992 | 2,283 | 5.39 | ||||||||||||||||||||||||||
Total Securities Held For Investment | $ | 3,336 | $ | 61,053 | $ | 15,485 | $ | 992 | $ | 80,866 | 4.03 | |||||||||||||||||||||
FAIR VALUE | ||||||||||||||||||||||||||||||||
U.S. Treasury and other U.S. government agencies and corporations | $ | 4,933 | $ | 4,933 | ||||||||||||||||||||||||||||
Mortgage-backed securities | $ | 2,505 | 55,303 | $ | 14,584 | 72,392 | ||||||||||||||||||||||||||
Obligations of states and political subdivisions | 867 | 472 | $ | 1,077 | 2,416 | |||||||||||||||||||||||||||
Total Securities Held For Investment | $ | 3,372 | $ | 60,708 | $ | 14,584 | $ | 1,077 | $ | 79,741 | ||||||||||||||||||||||
WEIGHTED AVERAGE YIELD (FTE) | ||||||||||||||||||||||||||||||||
U.S. Treasury and other U.S. government agencies and corporations | 1.87 | % | 1.87 | % | ||||||||||||||||||||||||||||
Mortgage-backed securities | 8.10 | % | 4.13 | % | 3.74 | % | 4.18 | % | ||||||||||||||||||||||||
Obligations of states and political subdivisions | 8.15 | % | 7.98 | % | 7.69 | % | 7.92 | % | ||||||||||||||||||||||||
Total Securities Held For Investment | 8.12 | % | 3.97 | % | 3.74 | % | 7.69 | % | 4.14 | % | ||||||||||||||||||||||
Table 18 – Maturity Distribution of Securities Held For Sale
December 31, 2003 | ||||||||||||||||||||||||||||||
After | No | Average | ||||||||||||||||||||||||||||
1 Year | 1-5 | 5-10 | 10 | Contractual | Maturity | |||||||||||||||||||||||||
(Dollars in thousands) | Or Less | Years | Years | Years | Maturity | Total | In Years | |||||||||||||||||||||||
AMORTIZED COST | ||||||||||||||||||||||||||||||
U.S. Treasury and other U.S. government agencies and corporations | $ | 1,002 | $ | 1,002 | 0.08 | |||||||||||||||||||||||||
Mortgage-backed securities | 25,764 | $ | 433,711 | $ | 21,300 | 480,775 | 2.69 | |||||||||||||||||||||||
Other | $ | 6,203 | 6,203 | * | ||||||||||||||||||||||||||
Total Securities Held For Sale | $ | 26,766 | $ | 433,711 | $ | 21,300 | $ | 0 | $ | 6,203 | $ | 487,980 | 2.68 | |||||||||||||||||
FAIR VALUE | ||||||||||||||||||||||||||||||
U.S. Treasury and other U.S. government agencies and corporations | $ | 1,002 | $ | 1,002 | ||||||||||||||||||||||||||
Mortgage-backed securities | 25,549 | $ | 431,063 | $ | 20,406 | 477,018 | ||||||||||||||||||||||||
Other | $ | 6,203 | 6,203 | |||||||||||||||||||||||||||
Total Securities Held For Sale | $ | 26,551 | $ | 431,063 | $ | 20,406 | $ | 0 | $ | 6,203 | $ | 484,223 | ||||||||||||||||||
WEIGHTED AVERAGE YIELD (FTE) | ||||||||||||||||||||||||||||||
U.S. Treasury and other U.S. government agencies and corporations | 0.95 | % | 0.95 | % | ||||||||||||||||||||||||||
Mortgage-backed securities | 2.41 | % | 3.35 | % | 3.43 | % | 3.30 | % | ||||||||||||||||||||||
Other | 2.78 | % | 2.78 | % | ||||||||||||||||||||||||||
Total Securities Held For Sale | 2.35 | % | 3.35 | % | 3.43 | % | 2.78 | % | 3.29 | % | ||||||||||||||||||||
* | Other Securities excluded from calculated average for total securities |
Table 19 – Interest Rate Sensitivity1
December 31, 2003 | ||||||||||||||||||||||
(Dollars in thousands) | 0-3 Months | 4-12 Months | 1-5 Years | Over 5 Years | Total | |||||||||||||||||
Federal funds sold and interest bearing deposits | $ | 255 | $ | 0 | $ | 0 | $ | 0 | $ | 255 | ||||||||||||
Securities2 | 65,271 | 95,844 | 313,787 | 93,944 | 568,846 | |||||||||||||||||
Loans3 | 193,687 | 169,311 | 313,620 | 31,083 | 707,701 | |||||||||||||||||
Earning assets | 259,213 | 265,155 | 627,407 | 125,027 | 1,276,802 | |||||||||||||||||
Savings deposits4 | 527,400 | 0 | 0 | 0 | 527,400 | |||||||||||||||||
Certificates of deposit | 99,580 | 138,358 | 131,075 | 142 | 369,155 | |||||||||||||||||
Borrowings | 99,158 | 0 | 0 | 15,000 | 114,158 | |||||||||||||||||
Interest bearing liabilities | 726,138 | 138,358 | 131,075 | 15,142 | 1,010,713 | |||||||||||||||||
Interest rate swaps | (54,000 | ) | 25,000 | 29,000 | 0 | 0 | ||||||||||||||||
Interest sensitivity gap | $ | (520,925 | ) | $ | 151,797 | $ | 525,322 | $ | 109,885 | $ | 266,089 | |||||||||||
Cumulative gap | $ | (520,925 | ) | $ | (369,128 | ) | $ | 156,204 | $ | 266,089 | ||||||||||||
Cumulative gap to total earning assets (%) | (40.8 | ) | (28.9 | ) | 12.2 | 20.8 | ||||||||||||||||
Earning assets to interest bearing liabilities (%) | 35.7 | 191.6 | 478.7 | 825.7 | ||||||||||||||||||
1. | The repricing dates may differ from maturity dates for certain assets due to prepayment assumptions. |
2. | Securities are stated at amortized cost. |
3. | Excludes nonaccrual loans. |
4. | This category is comprised of NOW, savings and money market deposits. If NOW and savings deposits (totaling $170,838) were deemed repriceable in “4-12 months,” the interest sensitivity gap and cumulative gap would be $350,087 indicating 27.4% of earning assets and 46.7% of earning assets to interest bearing liabilities for the “0-3 months” category. |
Consolidated Quarterly Average Balances, Yields and Rates1
2003 Quarters | ||||||||||||||||||||||||||
Fourth | Third | Second | ||||||||||||||||||||||||
(Dollars in thousands) | Average Balance | Yield/ Rate | Average Balance | Yield/ Rate | Average Balance | Yield/ Rate | ||||||||||||||||||||
EARNING ASSETS | ||||||||||||||||||||||||||
Securities | ||||||||||||||||||||||||||
Taxable | $ | 567,859 | 3.21 | % | $ | 575,915 | 2.56 | % | $ | 555,142 | 2.68 | % | ||||||||||||||
Nontaxable | 2,183 | 7.88 | 2,924 | 7.93 | 2,980 | 8.05 | ||||||||||||||||||||
TOTAL SECURITIES | 579,042 | 3.22 | 578,839 | 2.58 | 555,122 | 2.71 | ||||||||||||||||||||
Federal funds sold and other short term investments | 4,649 | 0.94 | 7,265 | 0.98 | 6,769 | 1.19 | ||||||||||||||||||||
Loans2 | 689,353 | 6.49 | 662,425 | 6.60 | 671,740 | 7.00 | ||||||||||||||||||||
TOTAL EARNING ASSETS | 1,273,044 | 4.97 | 1,248,529 | 4.69 | 1,236,631 | 5.03 | ||||||||||||||||||||
Allowance for loan losses | (6,177 | ) | (6,123 | ) | (6,542 | ) | ||||||||||||||||||||
Cash and due from banks | 36,116 | 31,240 | 47,638 | |||||||||||||||||||||||
Bank premises and equipment | 16,781 | 16,858 | 16,339 | |||||||||||||||||||||||
Other assets | 14,056 | 11,472 | 11,687 | |||||||||||||||||||||||
$ | 1,333,820 | $ | 1,301,976 | $ | 1,305,753 | |||||||||||||||||||||
INTEREST BEARING LIABILITIES | ||||||||||||||||||||||||||
NOW | $ | 70,682 | 0.47 | % | $ | 61,928 | 0.47 | % | $ | 66,854 | 0.58 | % | ||||||||||||||
Savings deposits | 157,089 | 0.51 | 154,759 | 0.51 | 150,818 | 0.55 | ||||||||||||||||||||
Money market accounts | 292,293 | 0.66 | 290,248 | 0.67 | 283,526 | 0.79 | ||||||||||||||||||||
Time deposits | 359,342 | 2.45 | 365,558 | 2.58 | 375,143 | 2.78 | ||||||||||||||||||||
Federal funds purchased and other short term borrowings | 68,718 | 0.77 | 50,596 | 0.60 | 62,430 | 0.83 | ||||||||||||||||||||
Other borrowings | 56,576 | 4.11 | 65,000 | 4.43 | 65,000 | 4.49 | ||||||||||||||||||||
TOTAL INTEREST BEARING LIABILITIES | 1,004,700 | 1.46 | 988,089 | 1.58 | 1,003,771 | 1.73 | ||||||||||||||||||||
Demand deposits | 218,489 | 205,740 | 196,451 | |||||||||||||||||||||||
Other liabilities | 5,633 | 6,069 | 4,406 | |||||||||||||||||||||||
TOTAL | 1,228,822 | 1,199,898 | 1,204,628 | |||||||||||||||||||||||
Shareholders’ equity | 104,998 | 102,078 | 101,125 | |||||||||||||||||||||||
$ | 1,333,820 | $ | 1,301,976 | $ | 1,305,753 | |||||||||||||||||||||
Interest expense as % of earning assets | 1.15 | % | 1.25 | % | 1.40 | % | ||||||||||||||||||||
Net interest income as % of earning assets | 3.82 | 3.44 | 3.63 | |||||||||||||||||||||||
1. | The tax equivalent adjustment is based on a 35% tax rate. All yields/rates are calculated on an annualized basis. |
2. | Nonaccrual loans are included in loan balances. Fees on loans are included in interest on loans. |
2002 Quarters | ||||||||||||||||||||||||||||||||||||||||||
First | Fourth | Third | Second | First | ||||||||||||||||||||||||||||||||||||||
Average | Yield/ | Average | Yield/ | Average | Yield/ | Average | Yield/ | Average | Yield/ | |||||||||||||||||||||||||||||||||
Balance | Rate | Balance | Rate | Balance | Rate | Balance | Rate | Balance | Rate | |||||||||||||||||||||||||||||||||
$ | 512,781 | 3.15 | % | $ | 411,457 | 3.49 | % | $ | 374,898 | 3.86 | % | $ | 371,208 | 4.11 | % | $ | 313,853 | 4.15 | % | |||||||||||||||||||||||
3,193 | 7.77 | 3,505 | 7.99 | 3,653 | 7.99 | 3,654 | 7.77 | 4,009 | 7.78 | |||||||||||||||||||||||||||||||||
515,974 | 3.17 | 414,962 | 3.53 | 378,551 | 3.90 | 374,862 | 4.15 | 317,862 | 4.20 | |||||||||||||||||||||||||||||||||
6,723 | 1.27 | 17,001 | 1.40 | 9,933 | 1.72 | 32,979 | 1.68 | 69,478 | 1.66 | |||||||||||||||||||||||||||||||||
690,022 | 7.05 | 718,650 | 7.14 | 742,176 | 7.30 | 754,021 | 7.53 | 781,662 | 7.59 | |||||||||||||||||||||||||||||||||
1,212,719 | 5.39 | 1,150,613 | 5.74 | 1,130,660 | 6.10 | 1,161,862 | 6.28 | 1,169,002 | 6.33 | |||||||||||||||||||||||||||||||||
(6,795 | ) | (6,817 | ) | (6,867 | ) | (6,906 | ) | (6,993 | ) | |||||||||||||||||||||||||||||||||
47,048 | 44,982 | 34,386 | 39,336 | 40,855 | ||||||||||||||||||||||||||||||||||||||
16,122 | 16,161 | 15,257 | 15,111 | 15,287 | ||||||||||||||||||||||||||||||||||||||
12,105 | 12,357 | 12,976 | 13,265 | 13,806 | ||||||||||||||||||||||||||||||||||||||
$ | 1,281,199 | $ | 1,217,296 | $ | 1,186,412 | $ | 1,222,668 | $ | 1,231,957 | |||||||||||||||||||||||||||||||||
$ | 67,373 | 0.66 | % | $ | 61,321 | 0.77 | % | $ | 55,841 | 0.92 | % | $ | 63,146 | 0.94 | % | $ | 65,168 | 1.11 | % | |||||||||||||||||||||||
148,857 | 0.62 | 145,226 | 0.80 | 147,232 | 0.96 | 151,219 | 0.97 | 147,916 | 1.12 | |||||||||||||||||||||||||||||||||
265,843 | 0.86 | 254,627 | 1.01 | 256,811 | 1.20 | 256,021 | 1.20 | 242,428 | 1.27 | |||||||||||||||||||||||||||||||||
372,273 | 2.94 | 376,043 | 3.36 | 376,684 | 3.71 | 379,228 | 4.08 | 394,162 | 4.51 | |||||||||||||||||||||||||||||||||
78,495 | 0.96 | 54,876 | 0.88 | 35,664 | 0.90 | 54,444 | 1.13 | 75,515 | 1.17 | |||||||||||||||||||||||||||||||||
56,944 | 4.90 | 40,000 | 6.42 | 40,000 | 6.42 | 40,000 | 6.41 | 40,000 | 6.42 | |||||||||||||||||||||||||||||||||
989,785 | 1.83 | 932,093 | 2.13 | 912,232 | 2.40 | 944,058 | 2.52 | 965,189 | 2.77 | |||||||||||||||||||||||||||||||||
186,613 | 180,763 | 171,255 | 176,869 | 167,618 | ||||||||||||||||||||||||||||||||||||||
4,787 | 5,637 | 4,905 | 4,856 | 4,709 | ||||||||||||||||||||||||||||||||||||||
1,181,185 | 1,118,493 | 1,088,392 | 1,125,783 | 1,137,516 | ||||||||||||||||||||||||||||||||||||||
100,014 | 98,803 | 98,020 | 96,885 | 94,441 | ||||||||||||||||||||||||||||||||||||||
$ | 1,281,199 | $ | 1,217,296 | $ | 1,186,412 | $ | 1,222,668 | $ | 1,231,957 | |||||||||||||||||||||||||||||||||
1.50 | % | 1.73 | % | 1.94 | % | 2.05 | % | 2.28 | % | |||||||||||||||||||||||||||||||||
3.89 | 4.02 | 4.17 | 4.23 | 4.05 | ||||||||||||||||||||||||||||||||||||||
Quarterly Consolidated Income Statement
2003 Quarters | 2002 Quarters | ||||||||||||||||||||||||||||||||||
(Dollars in thousands, | |||||||||||||||||||||||||||||||||||
except per share data) | Fourth | Third | Second | First | Fourth | Third | Second | First | |||||||||||||||||||||||||||
Net interest income: | |||||||||||||||||||||||||||||||||||
Interest income | $ | 15,923 | $ | 14,734 | $ | 15,478 | $ | 16,077 | $ | 16,614 | $ | 17,348 | $ | 18,134 | $ | 18,361 | |||||||||||||||||||
Interest expense | 3,703 | 3,940 | 4,317 | 4,477 | 5,010 | 5,515 | 5,926 | 6,584 | |||||||||||||||||||||||||||
Net interest income | 12,220 | 10,794 | 11,161 | 11,600 | 11,604 | 11,833 | 12,208 | 11,777 | |||||||||||||||||||||||||||
Provision for loan losses | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||
Net interest income after provision for loan losses | 12,220 | 10,794 | 11,161 | 11,600 | 11,604 | 11,833 | 12,208 | 11,777 | |||||||||||||||||||||||||||
Noninterest income: | |||||||||||||||||||||||||||||||||||
Service charges on deposit accounts | 1,209 | 1,279 | 1,202 | 1,217 | 1,297 | 1,321 | 1,270 | 1,217 | |||||||||||||||||||||||||||
Trust fees | 498 | 494 | 527 | 524 | 503 | 535 | 542 | 597 | |||||||||||||||||||||||||||
Mortgage banking fees | 464 | 1,098 | 1,223 | 1,638 | 1,338 | 630 | 620 | 776 | |||||||||||||||||||||||||||
Brokerage commissions and fees | 493 | 364 | 586 | 420 | 469 | 463 | 570 | 543 | |||||||||||||||||||||||||||
Marine finance fees | 592 | 903 | 859 | 807 | 713 | 189 | 339 | 167 | |||||||||||||||||||||||||||
Debit Card income | 259 | 301 | 320 | 289 | 252 | 253 | 252 | 223 | |||||||||||||||||||||||||||
Other deposit based EFT fees | 114 | 106 | 105 | 116 | 97 | 88 | 90 | 101 | |||||||||||||||||||||||||||
Other income | 205 | 347 | 368 | 360 | 335 | 375 | 350 | 359 | |||||||||||||||||||||||||||
Securities gains (losses) | 0 | (4 | ) | (11 | ) | (1,157 | ) | 2 | (9 | ) | 398 | 66 | |||||||||||||||||||||||
Total noninterest income | 3,834 | 4,888 | 5,179 | 4,214 | 5,006 | 3,845 | 4,431 | 4,049 | |||||||||||||||||||||||||||
Noninterest expenses: | |||||||||||||||||||||||||||||||||||
Salaries and wages | 3,995 | 4,214 | 4,273 | 4,159 | 4,206 | 3,940 | 3,855 | 3,760 | |||||||||||||||||||||||||||
Employee benefits | 1,044 | 1,123 | 1,212 | 1,216 | 1,129 | 1,064 | 1,063 | 1,048 | |||||||||||||||||||||||||||
Outsourced data processing costs | 1,297 | 1,367 | 1,315 | 1,286 | 1,181 | 1,183 | 1,185 | 1,246 | |||||||||||||||||||||||||||
Occupancy | 1,009 | 977 | 976 | 994 | 874 | 831 | 831 | 829 | |||||||||||||||||||||||||||
Furniture and equipment | 362 | 451 | 427 | 499 | 452 | 503 | 499 | 535 | |||||||||||||||||||||||||||
Marketing | 559 | 492 | 518 | 550 | 511 | 498 | 514 | 513 | |||||||||||||||||||||||||||
Legal and professional fees | 219 | 339 | 370 | 408 | 391 | 367 | 455 | 325 | |||||||||||||||||||||||||||
FDIC assessments | 37 | 44 | 41 | 41 | 42 | 44 | 44 | 43 | |||||||||||||||||||||||||||
Amortization of intangibles | 0 | 24 | 63 | 63 | 63 | 63 | 63 | 63 | |||||||||||||||||||||||||||
Other | 1,593 | 1,637 | 1,610 | 1,659 | 1,250 | 1,428 | 1,493 | 1,406 | |||||||||||||||||||||||||||
Total noninterest expenses | 10,115 | 10,668 | 10,805 | 10,875 | 10,099 | 9,921 | 10,002 | 9,768 | |||||||||||||||||||||||||||
Income before income taxes | 5,939 | 5,014 | 5,535 | 4,939 | 6,511 | 5,757 | 6,637 | 6,058 | |||||||||||||||||||||||||||
Provision for income taxes | 2,111 | 1,599 | 1,985 | 1,716 | 2,467 | 2,250 | 2,588 | 2,372 | |||||||||||||||||||||||||||
Net income | $ | 3,828 | $ | 3,415 | $ | 3,550 | $ | 3,223 | $ | 4,044 | $ | 3,507 | $ | 4,049 | $ | 3,686 | |||||||||||||||||||
PER COMMON SHARE DATA | |||||||||||||||||||||||||||||||||||
Net income diluted | $ | 0.24 | $ | 0.22 | $ | 0.23 | $ | 0.21 | $ | 0.25 | $ | 0.23 | $ | 0.25 | $ | 0.24 | |||||||||||||||||||
Net income basic | 0.25 | 0.22 | 0.23 | 0.21 | 0.26 | 0.23 | 0.26 | 0.24 | |||||||||||||||||||||||||||
Cash dividends declared: | |||||||||||||||||||||||||||||||||||
Common stock | 0.13 | 0.13 | 0.10 | 0.10 | 0.10 | 0.09 | 0.09 | 0.09 | |||||||||||||||||||||||||||
Market price common stock: | |||||||||||||||||||||||||||||||||||
Low close | 16.670 | 13.851 | 14.864 | 16.145 | 15.211 | 14.527 | 14.015 | 13.348 | |||||||||||||||||||||||||||
High close | 18.100 | 18.600 | 17.817 | 18.091 | 18.318 | 19.636 | 17.494 | 14.518 | |||||||||||||||||||||||||||
Bid price at end of period | 17.350 | 17.400 | 15.664 | 17.627 | 17.127 | 17.436 | 17.494 | 14.334 | |||||||||||||||||||||||||||
Management’s Report on Responsibilities for Financial Reporting
Management is responsible for the preparation and content of the accompanying financial statements and the other information contained in this report. Management believes that the financial statements have been prepared in conformity with appropriate, generally accepted accounting principles applied on a consistent basis and present fairly Seacoast Banking Corporation of Florida’s consolidated financial condition and results of operations. Where amounts must be based on estimates and judgments, they represent the best estimates of management.
In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, shareholder’s equity and of cash flows present fairly, in all material respects, the financial position of Seacoast Banking Corporation of Florida and its subsidiaries (the “Company”) at December 31, 2003 and 2002, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. The Company’s consolidated financial statements as of December 31, 2001 and for the year then ended, prior to the revisions described in Notes A and S, were audited by other independent accountants who have ceased operations. Those independent accountants expressed an unqualified opinion on those financial statements in their report dated January 14, 2002.
For the Year Ended December 31 | |||||||||||||
(Dollars in thousands, except per share data) | 2003 | 2002 | 2001 | ||||||||||
INTEREST INCOME | |||||||||||||
Interest on securities | |||||||||||||
Taxable | $16,054 | $14,274 | $13,482 | ||||||||||
Nontaxable | 147 | 195 | 285 | ||||||||||
Interest and fees on loans | 45,941 | 55,462 | 65,815 | ||||||||||
Interest on federal funds sold and interest bearing deposits | 70 | 526 | 1,313 | ||||||||||
Total interest income | 62,212 | 70,457 | 80,895 | ||||||||||
INTEREST EXPENSE | |||||||||||||
Interest on savings deposits | 3,295 | 4,947 | 8,099 | ||||||||||
Interest on time certificates | 9,892 | 14,949 | 23,260 | ||||||||||
Interest on borrowed money | 3,250 | 3,139 | 4,043 | ||||||||||
Total interest expense | 16,437 | 23,035 | 35,402 | ||||||||||
NET INTEREST INCOME | 45,775 | 47,422 | 45,493 | ||||||||||
Provision for loan losses | 0 | 0 | 0 | ||||||||||
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES | 45,775 | 47,422 | 45,493 | ||||||||||
NONINTEREST INCOME | |||||||||||||
Securities gains (losses) | (1,172 | ) | 457 | 915 | |||||||||
Other | 19,287 | 16,874 | 15,108 | ||||||||||
Total noninterest income | 18,115 | 17,331 | 16,023 | ||||||||||
NONINTEREST EXPENSES | 42,463 | 39,790 | 38,060 | ||||||||||
INCOME BEFORE INCOME TAXES | 21,427 | 24,963 | 23,456 | ||||||||||
Provision for income taxes | 7,411 | 9,677 | 9,326 | ||||||||||
NET INCOME | $14,016 | $15,286 | $14,130 | ||||||||||
PER SHARE DATA | |||||||||||||
Net income per share common stock | |||||||||||||
Diluted | $ 0.89 | $ 0.97 | $ 0.90 | ||||||||||
Basic | 0.91 | 1.00 | 0.91 | ||||||||||
Average shares outstanding | |||||||||||||
Diluted | 15,667,015 | 15,717,893 | 15,756,982 | ||||||||||
Basic | 15,334,765 | 15,350,353 | 15,521,265 | ||||||||||
See notes to consolidated financial statements.
December 31 | |||||||||||
(Dollars in thousands, except per share data) | 2003 | 2002 | |||||||||
ASSETS | |||||||||||
Cash and due from banks | $ | 44,928 | $ | 49,571 | |||||||
Federal funds sold and interest bearing deposits | 255 | 251 | |||||||||
Total cash and cash equivalents | 45,183 | 49,822 | |||||||||
Securities held for sale (at fair value) | 484,223 | 466,278 | |||||||||
Securities held for investment (fair values: 2003 – $79,741 and 2002 – $33,168) | 80,866 | 32,181 | |||||||||
Total securities | 565,089 | 498,459 | |||||||||
Loans available for sale | 5,403 | 13,814 | |||||||||
Loans | 708,792 | 688,161 | |||||||||
Less: Allowance for loan losses | (6,160 | ) | (6,826 | ) | |||||||
Net loans | 702,632 | 681,335 | |||||||||
Bank premises and equipment, net | 16,847 | 16,045 | |||||||||
Other real estate owned | 1,954 | 8 | |||||||||
Other assets | 16,715 | 21,814 | |||||||||
TOTAL ASSETS | $ | 1,353,823 | $ | 1,281,297 | |||||||
LIABILITIES | |||||||||||
Deposits | |||||||||||
Demand deposits (noninterest bearing) | $ | 233,087 | $ | 184,524 | |||||||
Savings deposits | 527,400 | 472,976 | |||||||||
Other time deposits | 262,904 | 279,255 | |||||||||
Time certificates of $100,000 or more | 106,251 | 93,785 | |||||||||
Total deposits | 1,129,642 | 1,030,540 | |||||||||
Federal funds purchased and securities sold under agreement to repurchase, maturing within 30 days | 74,158 | 102,967 | |||||||||
Other borrowings | 40,000 | 40,000 | |||||||||
Other liabilities | 5,939 | 7,043 | |||||||||
1,249,739 | 1,180,550 | ||||||||||
Commitments and Contingencies (Notes I and N) | |||||||||||
SHAREHOLDERS’ EQUITY | |||||||||||
Preferred stock, par value $1.00 per share – authorized 4,000,000 shares, none issued or outstanding | 0 | 0 | |||||||||
Common stock, par value $.10 per share authorized 22,000,000 shares, issued 17,103,650 and outstanding 15,358,526 shares in 2003 and issued 15,549,378 and outstanding 13,890,001 shares in 2002 | 1,710 | 1,555 | |||||||||
Additional paid-in capital | 26,911 | 26,994 | |||||||||
Retained earnings | 95,336 | 89,960 | |||||||||
Less: Restricted stock awards (145,100 shares issued and outstanding in 2003) | (1,947 | ) | 0 | ||||||||
Less: Treasury stock (1,600,024 shares in 2003 and 1,659,377 shares in 2002), at cost | (15,350 | ) | (18,578 | ) | |||||||
106,660 | 99,931 | ||||||||||
Accumulated other comprehensive income (loss), net | (2,576 | ) | 816 | ||||||||
TOTAL SHAREHOLDERS’ EQUITY | 104,084 | 100,747 | |||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 1,353,823 | $ | 1,281,297 | |||||||
See notes to consolidated financial statements.
For The Year Ended December 31 | |||||||||||||||
(Dollars in thousands) | 2003 | 2002 | 2001 | ||||||||||||
Increase (Decrease) in Cash and Cash Equivalents | |||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||||||
Interest received | $ | 71,467 | $ | 76,018 | $ | 82,120 | |||||||||
Fees and commissions received | 19,562 | 17,382 | 15,450 | ||||||||||||
Interest paid | (16,616 | ) | (23,383 | ) | (35,645 | ) | |||||||||
Cash paid to suppliers and employees | (41,305 | ) | (36,094 | ) | (34,468 | ) | |||||||||
Income taxes paid | (7,476 | ) | (9,408 | ) | (9,761 | ) | |||||||||
Trading securities activity | 74,648 | 0 | 0 | ||||||||||||
Change in loans sold and available for sale, net | 8,411 | 5,321 | (17,105 | ) | |||||||||||
Net change in other assets | 5,138 | (7,349 | ) | (485 | ) | ||||||||||
Net cash provided by operating activities | 113,829 | 22,487 | 106 | ||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||||||
Maturities of securities held for sale | 258,672 | 306,103 | 97,156 | ||||||||||||
Maturities of securities held for investment | 110,485 | 3,301 | 3,660 | ||||||||||||
Proceeds from sale of securities held for sale | 141,771 | 38,131 | 154,018 | ||||||||||||
Purchase of securities held for sale | (507,348 | ) | (535,733 | ) | (334,597 | ) | |||||||||
Purchase of securities held for investment | (158,884 | ) | (9,997 | ) | (15,798 | ) | |||||||||
Net new loans and principal repayments | (23,384 | ) | 96,576 | 59,247 | |||||||||||
Proceeds from the sale of other real estate owned | 78 | 216 | 305 | ||||||||||||
Additions to bank premises and equipment | (2,610 | ) | (2,583 | ) | (757 | ) | |||||||||
Net cash used in investing activities | (181,220 | ) | (103,986 | ) | (36,766 | ) | |||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||||||
Net increase in deposits | 98,920 | 15,388 | 58,068 | ||||||||||||
Net increase (decrease) in federal funds purchased and repurchase agreements | (28,809 | ) | 31,263 | 6,684 | |||||||||||
Exercise of stock options | 899 | 653 | 1,281 | ||||||||||||
Net treasury stock acquired | (1,172 | ) | (2,391 | ) | (4,457 | ) | |||||||||
Dividends paid | (7,086 | ) | (5,706 | ) | (5,307 | ) | |||||||||
Net cash provided by financing activities | 62,752 | 39,207 | 56,269 | ||||||||||||
Net increase (decrease) in cash and cash equivalents | (4,639 | ) | (42,292 | ) | 19,609 | ||||||||||
Cash and cash equivalents at beginning of year | 49,822 | 92,114 | 72,505 | ||||||||||||
Cash and cash equivalents at end of year | $ | 45,183 | $ | 49,822 | $ | 92,114 | |||||||||
See Note P for supplemental disclosures.
See notes to consolidated financial statements.
Common Stock | Accumulated | ||||||||||||||||||||||||||||||||||||
Additional | Restricted | Other | |||||||||||||||||||||||||||||||||||
Class A | Class B | Paid-in | Retained | Stock | Treasury | Comprehensive | Comprehensive | ||||||||||||||||||||||||||||||
(In thousands) | Stock | Stock | Capital | Earnings | Awards | Stock | Income, Net | Income | |||||||||||||||||||||||||||||
BALANCE AT DECEMBER 31, 2000 | $ | 482 | $ | 36 | $ | 27,831 | $ | 72,562 | $ | 0 | $ | (14,470 | ) | $ | (2,178 | ) | |||||||||||||||||||||
Comprehensive Income: | |||||||||||||||||||||||||||||||||||||
Net income | 14,130 | $ | 14,130 | ||||||||||||||||||||||||||||||||||
Net unrealized gain on securities | 3,608 | 3,608 | |||||||||||||||||||||||||||||||||||
Comprehensive income | 17,738 | ||||||||||||||||||||||||||||||||||||
Cash dividends | (5,307 | ) | |||||||||||||||||||||||||||||||||||
Exchange of Class B common stock for Class A common stock | 1 | (1 | ) | ||||||||||||||||||||||||||||||||||
Treasury stock acquired | (4,523 | ) | |||||||||||||||||||||||||||||||||||
Common stock issued from Treasury: | |||||||||||||||||||||||||||||||||||||
For employee benefit plans | 64 | ||||||||||||||||||||||||||||||||||||
For stock options and awards | 93 | (499 | ) | 1,690 | |||||||||||||||||||||||||||||||||
BALANCE AT DECEMBER 31, 2001 | 483 | 35 | 27,924 | 80,886 | 0 | (17,239 | ) | 1,430 | |||||||||||||||||||||||||||||
Effect of capital simplification | 35 | (35 | ) | ||||||||||||||||||||||||||||||||||
Effect of three for one stock split | 1,037 | (1,037 | ) | ||||||||||||||||||||||||||||||||||
Comprehensive Income: | |||||||||||||||||||||||||||||||||||||
Net income | 15,286 | 15,286 | |||||||||||||||||||||||||||||||||||
Net unrealized loss on securities | (844 | ) | (844 | ) | |||||||||||||||||||||||||||||||||
Net reclassification adjustment | 230 | ||||||||||||||||||||||||||||||||||||
Comprehensive income | 14,442 | ||||||||||||||||||||||||||||||||||||
Cash dividends | (5,706 | ) | |||||||||||||||||||||||||||||||||||
Treasury stock acquired | (2,482 | ) | |||||||||||||||||||||||||||||||||||
Common stock issued from Treasury: | |||||||||||||||||||||||||||||||||||||
For employee benefit plans | 91 | ||||||||||||||||||||||||||||||||||||
For stock options and awards | 107 | (506 | ) | 1,052 | |||||||||||||||||||||||||||||||||
BALANCE AT DECEMBER 31, 2002 | 1,555 | 0 | 26,994 | 89,960 | 0 | (18,578 | ) | 816 | |||||||||||||||||||||||||||||
Effect of 10% stock dividend paid as a stock split | 155 | (155 | ) | ||||||||||||||||||||||||||||||||||
Comprehensive Income: | |||||||||||||||||||||||||||||||||||||
Net income | 14,016 | 14,016 | |||||||||||||||||||||||||||||||||||
Net unrealized loss on securities | (2,790 | ) | (2,790 | ) | |||||||||||||||||||||||||||||||||
Net unrealized loss on cash flow interest rate swap | (270 | ) | (270 | ) | |||||||||||||||||||||||||||||||||
Net reclassification adjustment | (332 | ) | |||||||||||||||||||||||||||||||||||
Comprehensive income | 10,956 | ||||||||||||||||||||||||||||||||||||
Cash dividends | (7,086 | ) | |||||||||||||||||||||||||||||||||||
Treasury stock acquired | (1,313 | ) | |||||||||||||||||||||||||||||||||||
Common stock issued from Treasury: | |||||||||||||||||||||||||||||||||||||
For employee benefit plans | (4 | ) | 145 | ||||||||||||||||||||||||||||||||||
For stock options and awards | 72 | (1,550 | ) | (1,947 | ) | 4,396 | |||||||||||||||||||||||||||||||
BALANCE AT DECEMBER 31, 2003 | $ | 1,710 | $ | 0 | $ | 26,911 | $ | 95,336 | $ | (1,947 | ) | $ | (15,350 | ) | $ | (2,576 | ) | ||||||||||||||||||||
See notes to consolidated financial statements.
Note A
(In thousands, except per share data) | 2003 | 2002 | 2001 | ||||||||||
Net income | |||||||||||||
As Reported | $ | 14,016 | $ | 15,286 | $ | 14,130 | |||||||
Stock Based Employee Compensation Cost, Net of Tax | (17 | ) | (7 | ) | (244 | ) | |||||||
Pro Forma | 13,999 | 15,279 | 13,886 | ||||||||||
Per Share (Diluted): | |||||||||||||
As Reported | 0.89 | 0.97 | 0.90 | ||||||||||
Pro Forma | 0.89 | 0.97 | 0.88 | ||||||||||
Note B
Note C
Proceeds from sales of securities during 2003 were $141,771,000 with gross gains of $1,223,000 and gross losses of $401,000. During 2002, proceeds from sales of securities were $38,131,000 with gross gains of $517,000 and gross losses of $60,000. During 2001, proceeds from sales of securities were $154,018,000 with gross gains of $1,053,000 and gross losses of $138,000.
Held for Investment | Held for Sale | |||||||||||||||
Amortized | Fair | Amortized | Fair | |||||||||||||
(In thousands) | Cost | Value | Cost | Value | ||||||||||||
Due in less than one year | $ | 855 | $ | 867 | $ | 1,002 | $ | 1,002 | ||||||||
Due after one year through five years | 5,434 | 5,405 | - | - | ||||||||||||
Due after ten years | 992 | 1,077 | - | - | ||||||||||||
7,281 | 7,349 | 1,002 | 1,002 | |||||||||||||
Mortgage backed securities | 73,585 | 72,392 | 480,775 | 477,018 | ||||||||||||
No contractual maturity | 6,203 | 6,203 | ||||||||||||||
$ | 80,866 | $ | 79,741 | $ | 487,980 | $ | 484,223 | |||||||||
December 31, 2003 | |||||||||||||||||
Gross | Gross | Gross | |||||||||||||||
Amortized | Unrealized | Unrealized | Fair | ||||||||||||||
(In thousands) | Cost | Gains | Losses | Value | |||||||||||||
SECURITIES HELD FOR SALE | |||||||||||||||||
U.S. Treasury and U.S. Government agencies | $ | 1,002 | $ | – | $ | – | $ | 1,002 | |||||||||
Mortgage backed securities | 480,775 | 663 | (4,420 | ) | 477,018 | ||||||||||||
Other securities | 6,203 | – | – | 6,203 | |||||||||||||
$ | 487,980 | $ | 663 | $ | (4,420 | ) | $ | 484,223 | |||||||||
SECURITIES HELD FOR INVESTMENT | |||||||||||||||||
U.S. Treasury and U.S. Government agencies | $ 4,998 | $ | – | $ | (65 | ) | $ 4,933 | ||||||||||
Mortgage backed securities | 73,585 | 140 | (1,333 | ) | 72,392 | ||||||||||||
Obligations of states and political subdivisions | 2,283 | 133 | – | 2,416 | |||||||||||||
$80,866 | $ | 273 | $ | (1,398 | ) | $79,741 | |||||||||||
December 31, 2002 | |||||||||||||||||
Gross | Gross | Gross | |||||||||||||||
Amortized | Unrealized | Unrealized | Fair | ||||||||||||||
(In thousands) | Cost | Gains | Losses | Value | |||||||||||||
SECURITIES HELD FOR SALE | |||||||||||||||||
U.S. Treasury and U.S. Government agencies | $ | 2,493 | $ | 15 | $ | – | $ | 2,508 | |||||||||
Mortgage backed securities | 455,314 | 2,452 | (1,111 | ) | 456,655 | ||||||||||||
Other securities | 7,138 | – | (23 | ) | 7,115 | ||||||||||||
$ | 464,945 | $ | 2,467 | $ | (1,134 | ) | $ | 466,278 | |||||||||
December 31, 2002 | |||||||||||||||||
Gross | Gross | Gross | |||||||||||||||
Amortized | Unrealized | Unrealized | Fair | ||||||||||||||
(In thousands) | Cost | Gains | Losses | Value | |||||||||||||
SECURITIES HELD FOR INVESTMENT | |||||||||||||||||
U.S. Treasury and U.S. Government agencies | |||||||||||||||||
Mortgage backed securities | $28,555 | $ | 800 | $ | (10 | ) | $ | 29,345 | |||||||||
Obligations of states and political subdivisions | 3,626 | 197 | 3,823 | ||||||||||||||
$32,181 | $ | 997 | $ | (10 | ) | $ | 33,168 | ||||||||||
Temporarily Impaired Securities
December 31, 2003 | |||||||||||||||||||||||||||
Less than 12 months | 12 months or longer | Total | |||||||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | ||||||||||||||||||||||
(In thousands) | Value | Losses | Value | Losses | Value | Losses | |||||||||||||||||||||
U.S. Treasury and U.S. Government agencies | $ | 4,933 | $ | (65 | ) | $ | – | $ | – | $ | 4,933 | $ | (65 | ) | |||||||||||||
Mortgage backed securities | 385,642 | (5,577 | ) | 13,107 | (176) | 398,749 | (5,753 | ) | |||||||||||||||||||
Total temporarily impaired securities | $ | 390,575 | $ | (5,642 | ) | $ | 13,107 | $ | (176) | $ | 403,682 | $ | (5,818 | ) | |||||||||||||
Note D
An analysis of loans at December 31 are summarized as follows:
(In thousands) | 2003 | 2002 | ||||||
Real estate mortgage | $ | 470,391 | $ | 478,123 | ||||
Construction and land development | 107,315 | 77,909 | ||||||
Commercial and financial | 46,310 | 40,491 | ||||||
Installment loans to individuals | 84,512 | 91,307 | ||||||
Other | 264 | 331 | ||||||
TOTAL | $ | 708,792 | $ | 688,161 | ||||
Note E
(In thousands) | 2003 | 2002 | 2001 | |||||||||||
Balance, beginning of year | $ | 6,826 | $ | 7,034 | $ | 7,218 | ||||||||
Provision charged to operating expense | 0 | 0 | 0 | |||||||||||
Charge offs | (1,053 | ) | (530 | ) | (455 | ) | ||||||||
Recoveries | 387 | 322 | 271 | |||||||||||
Balance, end of year | $ | 6,160 | $ | 6,826 | $ | 7,034 | ||||||||
Note F
Bank premises and equipment are summarized as follows:
Accumulated | Net | |||||||||||||
Depreciation & | Carrying | |||||||||||||
(In thousands) | Cost | Amortization | Value | |||||||||||
December 31, 2003 | ||||||||||||||
Premises (including land of $3,867) | $ | 23,997 | $ | 10,150 | $ | 13,847 | ||||||||
Furniture and equipment | 12,221 | 9,221 | 3,000 | |||||||||||
$ | 36,218 | $ | 19,371 | $ | 16,847 | |||||||||
December 31, 2002 | ||||||||||||||
Premises (including land of $2,967) | $ | 22,761 | $ | 9,509 | $ | 13,252 | ||||||||
Furniture and equipment | 12,390 | 9,597 | 2,793 | |||||||||||
$ | 35,151 | $ | 19,106 | $ | 16,045 | |||||||||
Note G
(In thousands) | 2003 | 2002 | 2001 | |||||||||||
Maximum amount outstanding at any month end | $ | 99,462 | $ | 102,967 | $ | 71,704 | ||||||||
Weighted average interest rate at end of year | 0.90 | % | 1.17 | % | 1.19 | % | ||||||||
Average amount outstanding | $ | 64,994 | $ | 55,015 | $ | 51,603 | ||||||||
Weighted average interest rate | 0.80 | % | 1.04 | % | 2.86 | % | ||||||||
On July 31, 1998, the Company acquired $15,000,000 in other borrowings from the Federal Home Loan Bank (FHLB), principal payable on November 12, 2009 with interest payable quarterly at a fixed rate of 6.10%. The debt is subject to early termination on November 12, 2004 in accordance with the terms of the agreement. On March 9, 2000, the Company acquired $25,000,000 in additional borrowings from FHLB, principal payable on March 9, 2002 with interest payable quarterly at a fixed rate of 6.99%; the borrowing was restructured to a 3-year term on December 1, 2000 at 6.55% and matured at December 1, 2003. On Janu-
Note H
Number | Weighted Average | Option Price | Weighted Average | ||||||||||||||
of Shares | Fair Value | Per Share | Exercise Price | ||||||||||||||
Options outstanding, January 1, 2001 | 993,300 | $ | 3.56– 8.79 | $ | 7.49 | ||||||||||||
Exercised | (178,200 | ) | 5.30– 8.79 | 6.65 | |||||||||||||
Cancelled | (13,200 | ) | 7.73– 8.79 | 8.42 | |||||||||||||
Options outstanding, December 31, 2001 | 801,900 | 3.56– 8.79 | 7.65 | ||||||||||||||
Exercised | (75,900 | ) | 3.56– 8.79 | 7.08 | |||||||||||||
Options outstanding, December 31, 2002 | 726,000 | 5.30– 8.79 | 7.73 | ||||||||||||||
Exercised | (146,000 | ) | 5.38– 8.79 | 6.10 | |||||||||||||
Granted | 216,000 | $ | 4.08 | 17.08 | 17.08 | ||||||||||||
Options outstanding, December 31, 2003 | 796,000 | $ | 5.30–17.08 | $ | 10.56 | ||||||||||||
Options exercisable, December 31, 2003 | 572,000 | $ | 5.30– 8.79 | $ | 8.14 | ||||||||||||
Options Outstanding | Options Exercisable | |||||||||||||||||||||
Weighted | ||||||||||||||||||||||
Average | Weighted | Weighted | ||||||||||||||||||||
Number | Remaining | Average | Number | Average | ||||||||||||||||||
Exercise | of Shares | Contractual | Exercise | of Shares | Exercise | |||||||||||||||||
Prices | Outstanding | Life in Years | Price | Exercisable | Price | |||||||||||||||||
$ | 5.30 | 34,000 | 1.17 | $ | 5.30 | 34,000 | $ | 5.30 | ||||||||||||||
6.59 | 61,000 | 2.50 | 6.59 | 61,000 | 6.59 | |||||||||||||||||
7.46 | 13,000 | 6.22 | 7.46 | 9,000 | 7.46 | |||||||||||||||||
7.73 | 99,000 | 3.58 | 7.73 | 99,000 | 7.73 | |||||||||||||||||
8.22 | 10,000 | 6.62 | 8.22 | 6,000 | 8.22 | |||||||||||||||||
8.79 | 363,000 | 4.54 | 8.79 | 363,000 | 8.79 | |||||||||||||||||
17.08 | 216,000 | 9.88 | 17.08 | 0 | 17.08 | |||||||||||||||||
796,000 | 5.62 | $ | 10.56 | 572,000 | $ | 8.14 | ||||||||||||||||
Note I
(In thousands) | ||||
2004 | $ | 1,940 | ||
2005 | 2,009 | |||
2006 | 2,005 | |||
2007 | 1,770 | |||
2008 | 1,359 | |||
Thereafter | 16,798 | |||
$ | 25,881 | |||
Note J
Year Ended December 31 | |||||||||||||||
(In thousands) | 2003 | 2002 | 2001 | ||||||||||||
Current | |||||||||||||||
Federal | $ | 7,512 | $ | 8,746 | $ | 8,034 | |||||||||
State | 9 | 1,380 | 1,335 | ||||||||||||
Deferred | |||||||||||||||
Federal | (95 | ) | (379 | ) | (34 | ) | |||||||||
State | (15 | ) | (70 | ) | (9 | ) | |||||||||
TOTAL | $ | 7,411 | $ | 9,677 | $ | 9,326 | |||||||||
Year Ended December 31 | ||||||||||||||
(Dollars in thousands) | 2003 | 2002 | 2001 | |||||||||||
Depreciation | $ | 60 | $ | (100 | ) | $ | (155 | ) | ||||||
Allowance for loan losses | 257 | 80 | 71 | |||||||||||
Interest and fee income | (229 | ) | (420 | ) | (428 | ) | ||||||||
Other real estate owned | (32 | ) | 0 | 3 | ||||||||||
Other | (166 | ) | (9 | ) | 466 | |||||||||
TOTAL | $ | (110 | ) | $ | (449 | ) | $ | (43 | ) | |||||
The difference between the total expected tax expense (computed by applying the U.S. Federal tax rate of 35% to pretax income in 2003, 2002 and 2001) and the reported income tax expense relating to income before income taxes is as follows:
Year Ended December 31 | |||||||||||||||
(In thousands) | 2003 | 2002 | 2001 | ||||||||||||
Tax rate applied to income before income taxes | $ | 7,499 | $ | 8,737 | $ | 8,210 | |||||||||
Increase (decrease) resulting from the effects of: | |||||||||||||||
Tax-exempt interest on obligations of states and political subdivisions | (93 | ) | (117 | ) | (136 | ) | |||||||||
State income taxes | 2 | (459 | ) | (464 | ) | ||||||||||
Dividend exclusion | 0 | 0 | (7 | ) | |||||||||||
Amortization of intangibles | 53 | 88 | 193 | ||||||||||||
Other | (44 | ) | 118 | 204 | |||||||||||
Federal tax provision | 7,417 | 8,367 | 8,000 | ||||||||||||
State tax provision | (6 | ) | 1,310 | 1,326 | |||||||||||
Applicable income taxes | $ | 7,411 | $ | 9,677 | $ | 9,326 | |||||||||
The net deferred tax assets (liabilities) are comprised of the following:
December 31 | |||||||||||
(In thousands) | 2003 | 2002 | |||||||||
Allowance for loan losses | $ | 2,044 | $ | 2,301 | |||||||
Interest and fee income | 181 | 0 | |||||||||
Net unrealized securities losses | 1,450 | 0 | |||||||||
Cash flow interest rate swaps | 168 | 0 | |||||||||
Other | 152 | 0 | |||||||||
Gross deferred tax assets | 3,995 | 2,301 | |||||||||
Depreciation | (330 | ) | (270 | ) | |||||||
Interest and fee income | 0 | (48 | ) | ||||||||
Net unrealized securities gains | 0 | (513 | ) | ||||||||
Other | 0 | (46 | ) | ||||||||
Gross deferred tax liabilities | (330 | ) | (877 | ) | |||||||
Deferred tax asset valuation allowance | 0 | 0 | |||||||||
Net deferred tax assets | $ | 3,665 | $ | 1,424 | |||||||
The tax effects of unrealized gains (losses) for securities and cash flow interest rate swaps included in the calculation of comprehensive income as presented in the Statements of Shareholder’s Equity for the three years ended December 31, are as follows:
(In thousands) | ||||||
2003 | $ | (2,131 | ) | |||
2002 | (358 | ) | ||||
2001 | 2,573 | |||||
Note K
Details of noninterest income and expenses follow:
Year Ended December 31 | |||||||||||||
(In thousands) | 2003 | 2002 | 2001 | ||||||||||
Noninterest income | |||||||||||||
Service charges on deposit accounts | $ | 4,907 | $ | 5,105 | $ | 5,110 | |||||||
Trust fees | 2,043 | 2,177 | 2,497 | ||||||||||
Mortgage banking fees | 4,423 | 3,364 | 2,456 | ||||||||||
Brokerage commissions and fees | 1,863 | 2,045 | 1,805 | ||||||||||
Marine finance fees | 3,161 | 1,408 | 743 | ||||||||||
Debit card income | 1,169 | 980 | 735 | ||||||||||
Other deposit based EFT fees | 441 | 376 | 312 | ||||||||||
Other | 1,280 | 1,419 | 1,450 | ||||||||||
19,287 | 16,874 | 15,108 | |||||||||||
Securities gains (losses) | (1,172 | ) | 457 | 915 | |||||||||
TOTAL | $ | 18,115 | $ | 17,331 | $ | 16,023 | |||||||
Noninterest expenses | |||||||||||||
Salaries and wages | $ | 16,641 | $ | 15,761 | $ | 14,776 | |||||||
Employee benefits | 4,595 | 4,304 | 3,866 | ||||||||||
Outsourced data processing costs | 5,265 | 4,795 | 4,468 | ||||||||||
Occupancy | 3,956 | 3,365 | 3,358 | ||||||||||
Furniture and equipment | 1,739 | 1,989 | 2,190 | ||||||||||
Marketing | 2,119 | 2,036 | 1,908 | ||||||||||
Legal and professional fees | 1,336 | 1,538 | 1,230 | ||||||||||
FDIC assessments | 163 | 173 | 177 | ||||||||||
Amortization of intangibles | 150 | 252 | 552 | ||||||||||
Other | 6,499 | 5,577 | 5,535 | ||||||||||
TOTAL | $ | 42,463 | $ | 39,790 | $ | 38,060 | |||||||
Note L
Required Regulatory Capital
Minimum To Be Well | |||||||||||||||||||||||||||
Minimum for | Capitalized Under | ||||||||||||||||||||||||||
Capital Adequacy | Prompt Corrective | ||||||||||||||||||||||||||
Purposes | Action Provisions | ||||||||||||||||||||||||||
(Dollars in thousands) | Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||||||||||
At December 31, 2003: | |||||||||||||||||||||||||||
Total Capital (to risk-weighted assets) | $ | 110,162 | 13.80 | % | $ | 63,788 | >8.00 | % | $ | 79,735 | >10.00 | % | |||||||||||||||
Tier 1 Capital (to risk-weighted assets) | 104,002 | 13.04 | 31,894 | >4.00 | 47,841 | > 6.00 | |||||||||||||||||||||
Tier 1 Capital (to adjusted average assets) | 104,002 | 7.81 | 53,246 | >4.00 | 66,558 | > 5.00 | |||||||||||||||||||||
At December 31, 2002: | |||||||||||||||||||||||||||
Total Capital (to risk-weighted assets) | $ | 103,902 | 13.77 | % | $ | 60,327 | >8.00 | % | $ | 75,405 | >10.00 | % | |||||||||||||||
Tier 1 Capital (to risk-weighted assets) | 97,076 | 12.87 | 30,164 | >4.00 | 45,243 | > 6.00 | |||||||||||||||||||||
Tier 1 Capital (to adjusted average assets) | 97,076 | 7.99 | 48,599 | >4.00 | 60,748 | > 5.00 | |||||||||||||||||||||
The above ratios are comparable for the Company’s wholly owned subsidiary.
Balance Sheets
December 31 | |||||||||
(In thousands) | 2003 | 2002 | |||||||
Assets | |||||||||
Cash | $ | 10 | $ | 10 | |||||
Securities purchased under agreement to resell with subsidiary bank, maturing within 30 days | 5,029 | 2,105 | |||||||
Investment in subsidiaries | 98,816 | 98,390 | |||||||
Other assets | 283 | 463 | |||||||
$ | 104,138 | $ | 100,968 | ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||
Liabilities | $ | 54 | $ | 221 | |||||
Shareholders’ equity | 104,084 | 100,747 | |||||||
$ | 104,138 | $ | 100,968 | ||||||
Statements of Income
Year Ended December 31 | ||||||||||||||
(In thousands) | 2003 | 2002 | 2001 | |||||||||||
Income | ||||||||||||||
Dividends | ||||||||||||||
Subsidiary | $ | 10,520 | $ | 9,150 | $ | 8,700 | ||||||||
Other | 0 | 0 | 27 | |||||||||||
Interest/other | 29 | 25 | 70 | |||||||||||
10,549 | 9,175 | 8,797 | ||||||||||||
Expenses | 529 | 919 | 706 | |||||||||||
Income before income tax credit and equity in undistributed income of subsidiaries | 10,020 | 8,256 | 8,091 | |||||||||||
Income tax credit | 175 | 313 | 242 | |||||||||||
Income before equity in undistributed income of subsidiaries | 10,195 | 8,569 | 8,333 | |||||||||||
Equity in undistributed income of subsidiaries | 3,821 | 6,717 | 5,797 | |||||||||||
Net income | $ | 14,016 | $ | 15,286 | $ | 14,130 | ||||||||
Statements of Cash Flows
Year Ended December 31 | ||||||||||||||||
(In thousands) | 2003 | 2002 | 2001 | |||||||||||||
Increase (Decrease) in Cash | ||||||||||||||||
Cash flows from operating activities | ||||||||||||||||
Interest received | $ | 29 | $ | 25 | $ | 57 | ||||||||||
Dividends received | 10,520 | 9,150 | 8,730 | |||||||||||||
Income taxes received | 420 | 335 | 264 | |||||||||||||
Cash paid to suppliers | (686 | ) | (1,000 | ) | (814 | ) | ||||||||||
Net cash provided by operating activities | 10,283 | 8,510 | 8,237 | |||||||||||||
Cash flows from investing activities | ||||||||||||||||
Decrease (increase) in securities purchased under agreement to resell, maturing in 30 days | (2,924 | ) | (1,066 | ) | (254 | ) | ||||||||||
Maturities of securities held for sale | 0 | 0 | 500 | |||||||||||||
Net cash provided by (used in) investing activities | (2,924 | ) | (1,066 | ) | 246 | |||||||||||
Cash flows from financing activities | ||||||||||||||||
Exercise of stock options | 899 | 653 | 1,281 | |||||||||||||
Treasury stock purchased | (1,172 | ) | (2,391 | ) | (4,457 | ) | ||||||||||
Dividends paid | (7,086 | ) | (5,706 | ) | (5,307 | ) | ||||||||||
Net cash used in financing activities | (7,359 | ) | (7,444 | ) | (8,483 | ) | ||||||||||
Net change in cash | 0 | 0 | 0 | |||||||||||||
Cash at beginning of year | 10 | 10 | 10 | |||||||||||||
Cash at end of year | $ | 10 | $ | 10 | $ | 10 | ||||||||||
RECONCILIATION OF NET INCOME TO CASH PROVIDED BY OPERATING ACTIVITIES | ||||||||||||||||
Net income | $ | 14,016 | $ | 15,286 | $ | 14,130 | ||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||
Equity in undistributed income of subsidiaries | (3,821 | ) | (6,717 | ) | (5,797 | ) | ||||||||||
Other, net | 88 | (59 | ) | (96 | ) | |||||||||||
Net cash provided by operating activities | $ | 10,283 | $ | 8,510 | $ | 8,237 | ||||||||||
Note N
December 31 | |||||||||||
(In thousands) | 2003 | 2002 | |||||||||
Contract or Notional Amount | |||||||||||
Financial instruments whose contract amounts represent credit risk: | |||||||||||
Commitments to extend credit | $ | 168,448 | $ | 135,685 | |||||||
Standby letters of credit and financial guarantees written: | |||||||||||
Secured | 4,960 | 1,439 | |||||||||
Unsecured | 303 | 621 | |||||||||
Note O
(In thousands) | 2003 | 2002 | |||||||||
Unamortized balance at beginning of year | $ | 857 | $ | 1,208 | |||||||
Origination of mortgage servicing rights | 0 | 57 | |||||||||
Amortization | (491 | ) | (408 | ) | |||||||
366 | 857 | ||||||||||
Valuation allowance: | |||||||||||
Beginning balance | (258 | ) | (158 | ) | |||||||
Deletion (addition) recorded to operations | 136 | (100 | ) | ||||||||
(122 | ) | (258 | ) | ||||||||
TOTAL | $ | 244 | $ | 599 | |||||||
December 31 | ||||||||
(In thousands) | 2003 | 2002 | ||||||
Unpaid principal balance of serviced loans for which mortgage servicing rights are capitalized | $ | 38,882 | $ | 82,660 | ||||
Unpaid principal balance of serviced loans for which there are no servicing rights capitalized | $ | 8,156 | $ | 13,582 | ||||
Note P
Year Ended December 31 | |||||||||||||||
(In thousands) | 2003 | 2002 | 2001 | ||||||||||||
Net income | $ | 14,016 | $ | 15,286 | $ | 14,130 | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities | |||||||||||||||
Depreciation and amortization | 10,718 | 8,187 | 3,565 | ||||||||||||
Trading securities activity | 74,648 | 0 | 0 | ||||||||||||
Change in loans sold and available for sale, net | 8,411 | 5,321 | (17,105 | ) | |||||||||||
Credit for deferred taxes | (110 | ) | (449 | ) | (43 | ) | |||||||||
Loss (gain) on sale of securities | 1,172 | (457 | ) | (915 | ) | ||||||||||
Gain on sale of loans | (79 | ) | 0 | 0 | |||||||||||
Loss (gain) on sale and write down of foreclosed assets | 63 | (23 | ) | 10 | |||||||||||
Loss on disposition of equipment | 25 | 8 | 7 | ||||||||||||
Change in interest receivable | 824 | 21 | 580 | ||||||||||||
Change in interest payable | (179 | ) | (348 | ) | (243 | ) | |||||||||
Change in prepaid expenses | 421 | 257 | 172 | ||||||||||||
Change in accrued taxes | 57 | 723 | (382 | ) | |||||||||||
Change in other assets | 5,138 | (7,349 | ) | (485 | ) | ||||||||||
Change in other liabilities | (1,296 | ) | 1,310 | 815 | |||||||||||
TOTAL ADJUSTMENTS | 99,813 | 7,201 | (14,024 | ) | |||||||||||
Net cash provided by operating activities | $ | 113,829 | $ | 22,487 | $ | 106 | |||||||||
Supplemental disclosure of non cash investing activities: | |||||||||||||||
Market value adjustment to securities | $ | (5,110 | ) | $ | (1,008 | ) | $ | 5,849 | |||||||
Transfers from loans to other real estate owned | 2,087 | 82 | 88 | ||||||||||||
Transfers from securities held for sale to trading securities | 74,905 | 0 | 0 | ||||||||||||
Note Q
At December 31 | |||||||||||||||||||
2003 | 2002 | ||||||||||||||||||
Carrying | Fair | Carrying | Fair | ||||||||||||||||
(In thousands) | Amount | Value | Amount | Value | |||||||||||||||
Financial Assets | |||||||||||||||||||
Cash and cash equivalents | $ | 45,183 | $ | 45,183 | $ | 49,822 | $ | 49,822 | |||||||||||
Securities | 565,089 | 563,964 | 498,459 | 499,446 | |||||||||||||||
Loans, net | 702,632 | 710,373 | 681,335 | 693,482 | |||||||||||||||
Loans available for sale | 5,403 | 5,514 | 13,814 | 14,021 | |||||||||||||||
Derivative product assets | 213 | 213 | 0 | 0 | |||||||||||||||
Financial Liabilities Deposits | 1,129,642 | 1,134,370 | 1,030,540 | 1,038,418 | |||||||||||||||
Borrowings | 114,158 | 116,034 | 142,967 | 146,384 | |||||||||||||||
Derivative product liabilities | 439 | 439 | 0 | 0 | |||||||||||||||
Note R
Year Ended December 31 | |||||||||||||
(Dollars in thousands, | Net | Per Share | |||||||||||
except per share data) | Income | Shares | Amount | ||||||||||
2003 | |||||||||||||
Basic Earnings Per Share | |||||||||||||
Income available to common shareholders | $ | 14,016 | 15,334,765 | $ | 0.91 | ||||||||
Options issued to executives (see Note H) | 332,250 | ||||||||||||
Diluted Earnings Per Share | |||||||||||||
Income available to common shareholders plus assumed conversions | $ | 14,016 | 15,667,015 | $ | 0.89 | ||||||||
2002 | |||||||||||||
Basic Earnings Per Share | |||||||||||||
Income available to common shareholders | $ | 15,286 | 15,350,353 | $ | 1.00 | ||||||||
Options issued to executives (see Note H) | 367,500 | ||||||||||||
Diluted Earnings Per Share | |||||||||||||
Income available to common shareholders plus assumed conversions | $ | 15,286 | 15,717,853 | $ | 0.97 | ||||||||
2001 | |||||||||||||
Basic Earnings Per Share | |||||||||||||
Income available to common shareholders | $ | 14,130 | 15,521,265 | $ | 0.91 | ||||||||
Options issued to executives (see Note H) | 235,717 | ||||||||||||
Diluted Earnings Per Share | |||||||||||||
Income available to common shareholders plus assumed conversions | $ | 14,130 | 15,756,982 | $ | 0.90 | ||||||||
Note S
(In thousands, except per share data) | 2003 | 2002 | 2001 | |||||||||
Reported net income | $ | 14,016 | $ | 15,286 | $ | 14,130 | ||||||
Goodwill amortization (net of tax) | 0 | 0 | 184 | |||||||||
Adjusted net income | $ | 14,016 | $ | 15,286 | $ | 14,314 | ||||||
Net income per share Common Stock | ||||||||||||
Diluted as reported | $ | 0.89 | $ | 0.97 | $ | 0.90 | ||||||
Goodwill (net of tax) | 0.00 | 0.00 | 0.01 | |||||||||
Adjusted net income | $ | 0.89 | $ | 0.97 | $ | 0.91 | ||||||
Basic as reported | $ | 0.91 | $ | 1.00 | $ | 0.91 | ||||||
Goodwill (net of tax) | 0.00 | 0.00 | 0.01 | |||||||||
Adjusted net income | $ | 0.91 | $ | 1.00 | $ | 0.92 | ||||||
Note T
Carrying | Fair | ||||||||
(In thousands) | Amount | Value | |||||||
Derivative Product Assets | |||||||||
Interest rate swap which does qualify for hedge accounting | $ | 192 | $ | 192 | |||||
Derivative contracts which do not qualify for hedge accounting | 21 | 21 | |||||||
Derivative Product Liabilities | |||||||||
Cash flow interest rate swap which does qualify for hedge accounting | 439 | 439 | |||||||
Notes
SEACOAST BANKING CORPORATION OF FLORIDA