SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------
Form 10-K/A
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999 COMMISSION FILE NUMBER 333-49459
NEW SOUTH BANCSHARES, INC.
(Exact name of Registrant as specified in its charter)
- --------------------------------------------------------------------------------
DELAWARE 63-1132716
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1900 Crestwood Boulevard
Birmingham, Alabama 35210
(Address of Principal Executive Offices) (Zip Code)
(205) 951-4000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which
to be so Registered Each Class is to be Registered
------------------------------------- ------------------------------
Cumulative Trust Preferred Securities American Stock Exchange
(and the Guarantee with respect thereto)
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
-------- ---------
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Number of shares of Common Stock, $1.00 Par Value, outstanding as of March 1,
2000: 1,255,537.10
DOCUMENTS INCORPORATED BY REFERENCE
None, except Exhibits
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
The following information summarizes selected consolidated financial data
for the last five years. The summary below should be read in conjunction with
"Management's Discussion and Analysis of Financial Conditions and Results of
Operations" and the Company's Consolidated Financial Statements and Notes
included therein.
December 31
--------------------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- -------- -------- --------
(In thousands, except percentage and per share data)
Summary of Operations Data
Interest income $ 85,356 $ 83,251 $ 75,491 $ 65,535 $ 55,064
Interest expense 53,584 52,299 47,723 43,158 37,523
---------- ---------- -------- -------- --------
Net interest income 31,772 30,952 27,768 22,377 17,541
Provision for loan losses 3,638 3,944 2,954 2,492 572
---------- ---------- -------- -------- --------
Net interest income after
provision for loan losses 28,134 27,008 24,814 19,885 16,969
Noninterest income
Loan administration income 12,427 6,191 4,915 4,870 4,547
Gain on sale of loan 9,979 11,387 5,079 457 629
Other income 15,563 15,992 5,320 2,998 1,490
---------- ---------- -------- -------- --------
Total 37,969 33,570 15,314 8,325 6,666
Noninterest expense:
Salaries and benefits 34,347 26,286 16,024 7,424 5,371
Other expense 27,759 22,467 15,398 15,742 12,633
---------- ---------- -------- -------- --------
Total 62,106 48,753 31,422 23,166 18,004
Income before income taxes 3,997 11,825 8,706 5,044 5,631
Income taxes expense 1,406 5,088 3,990 2,482 2,265
---------- ---------- -------- -------- --------
Net Income $ 2,591 $ 6,737 $ 4,716 $ 2,562 $ 3,366
========== ========== ======== ======== ========
Per Share Data
Earnings per share $ 2.06 $ 5.05 $ 3.42 $ 1.84 $ 2.42
Weighted average shares
outstanding 1,255 1,333 1,377 1,391 1,393
Selected Year End Balances
Total assets $1,021,107 $1,142,622 $994,053 $822,980 $746,518
Investment securities
available for sale 132,482 109,591 197,135 94,451 96,678
Loans, net of unearned
income 748,277 812,877 727,854 681,730 561,611
Allowance for loan losses 11,114 9,107 7,333 5,904 4,562
Deposits 745,085 775,448 695,365 660,668 539,011
Federal Home Loan Bank
Advances 128,417 198,418 179,420 95,388 104,000
Total liabilities 973,799 1,094,182 941,739 775,039 700,738
Shareholders' equity 47,308 48,440 52,314 47,941 45,780
Performance Ratios
Return on average assets 0.24% 0.65% 0.51% 0.31% 0.47%
Return of average equity 5.44 13.71 9.17 5.22 7.75
Interest rate spread 2.56 2.72 2.74 2.53 2.28
Net interest margin 3.04 3.22 3.21 2.94 2.65
Ratio of average
interest-earning assets
to average interest-bearing
liabilities 109.40 109.14 108.46 107.19 106.56
Ratio of noninterest expense
to average assets 5.71 4.71 3.42 2.84 2.52
Efficiency ratio 89.05 75.56 72.94 75.45 74.38
Average equity to
average assets 4.38 4.75 5.59 6.02 6.08
Asset Quality Data
Net charge-offs to average
loans, net of unearned income 0.18% 0.28% 0.21% 0.18% 0.22%
Nonperforming assets to
total assets 1.18 0.94 0.93 1.20 0.78
Nonperforming loans to
total loans, net of
unearned income 1.17 1.19 1.12 1.21 0.69
Allowance for loan losses to
total loans, net of
unearned income 1.49 1.12 1.01 0.87 0.81
Allowance for loan losses
to total nonperforming
assets 92.53 84.57 78.97 59.99 78.43
Capital Ratios(1)
Tangible capital (tier 1
to total assets) 8.64% 7.00% 6.17% 6.89% 7.24%
Tier 1 capital (to risk
weighted assets) 11.87% 9.96% 9.51% 10.27% 11.12%
Total risk-based capital
(to risk weighted assets) 12.10% 10.38% 10.48% 11.10% 11.78%
(1) Capital ratio data for all period presented are for New South only
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Nonperforming Assets
The following table sets forth the Company's nonperforming assets for the
periods indicated.
Nonperforming Assets
As of December 31,
----------------------------------------------
1999 1998 1997 1996 1995
------- ------- ------ ------- -------
(In thousands, except percentages)
Nonaccrual loans(1) $ 5,813 $ 7,629 $6,065 $6,168 $1,639
Restructured loans 2,910 2,010 2,062 2,088 2,241
------- ------- ------ ------ ------
Total nonperforming loans 8,723 9,639 8,127 8,256 3,880
Foreclosed properties and repossessed assets 3,288 1,129 1,159 1,585 1,937
------- ------- ------ ------ ------
Total nonperforming assets $12,011 $10,768 $9,286 $9,841 $5,817
======= ======= ====== ====== ======
Nonperforming assets to period end loans, net of
unearned income, and foreclosed properties 1.60% 1.32% 1.27% 1.44% 1.03%
(1) Includes all loans contractually past due 90 days or more as to principal or
interest
Management closely monitors loans and other assets which are classified as
nonperforming assets. Nonperforming assets include nonaccrual loans,
restructured loans, foreclosed properties, and repossessions. Management
utilizes tracking and monitoring systems to identify potential problem assets
within all lending portfolios. It is the Company's policy to place on nonaccrual
status any loan that is contractually 90 days or more past due with respect to
principal or interest. When a loan is placed in nonaccrual status, all accrued
but unpaid interest is reversed and deducted from interest income. No additional
interest is accrued on the loan balance until collection of both principal and
interest is reasonably certain.
The amount of interest income earned in 1999 on the $5.8 million of
nonaccruing loans outstanding at year-end was approximately $217,000. If these
loans had been current in accordance with their original terms, approximately
$606,000 would have been earned on these loans in 1999. Additional interest
income of approximately $4,000 would have been earned in 1999 under the
original terms of the $2.9 million in restructured loans outstanding at December
31, 1999. Approximately $287,000 in interest income was actually earned in 1999
on these loans, due in part to recognition of interest foregone in prior years.
Total nonperforming assets as a percentage of loans, net of unearned
income, and foreclosed properties has increased from 1.32 percent at December
31, 1998 to 1.60 percent at December 31, 1999. This increase is due to
additional foreclosures in the nonconforming residential mortgage loan
portfolio, as this portfolio continues to grow and mature. The percentage
increase at year end 1999 was also due to a lower level of outstanding loans in
the nonconforming category as a result of securitizations during 1999.
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The following tables set forth nonperforming loans by portfolio for the
periods presented.
Nonperforming Loans
As of December 31,
---------------------------------------------
1999 1998
--------------------- ---------------------
% of % of
Average Average
Loans per Loans per
Balance Category Balance Category
------- --------- ------- ---------
(In thousands, except percentages)
Residential mortgage 8,287 1.38% $7,074 1.68%
Automobile installment 339 .30 555 0.51
Commercial real estate 97 .05 2,010 1.62
------ ------
Total Loans(1) $8,723 0.97 $9,639 1.26
====== ======
(1) There were no nonperforming loans or net charge-offs in the residential
construction and land portfolio or the commercial portfolios for periods
presented above.
Total nonperforming loans decreased from $9.6 million at December 31, 1998
to $8.7 million at December 31, 1999. The decline is attributable to decreases
in commercial real estate.
The following table sets forth, for the periods indicated, loan
originations by significant category.
Loan Originations
For the Year Ended December 31,
------------------------------------
1999 1998 1997
---------- ---------- --------
(In thousands)
Residential
Conforming(1) $ 709,418 $ 985,630 $304,508
Nonconforming 248,375 246,581 186,150
Automobile installment
Prime(2) 134,687 111,349 67,926
Nonprime 10,131 12,241 7,856
Manufactured housing
Mortgage 17,173 1,556 -
Nonmortgage 82,963 12,420 -
Residential construction and land 233,629 230,453 129,277
Commercial real estate(3) 59,064 135,431 155,025
Commercial 8,532 4,600 1,846
---------- ---------- --------
$1,503,972 $1,740,261 $852,588
========== ========== ========
(1) Includes only those loans originated from July 1, 1997, the effective date
of the Transfer.
(2) Includes certain other nonautomobile loans.
(3) Consists primarily of commercial real estate loans generated by Collateral,
for which Collateral earns an origination fee. The loans are funded by New
South and close in New South's name.
Noninterest Income and Expense
Noninterest Income
Noninterest income consists primarily of fees from mortgage banking
activities, including origination fees, loan administration fees, gains or
losses on sales of loans, and gains or losses on securities sales. Total
noninterest income increased $4.4 million, or 13.1 percent, from $33.6 million
in 1998 to $38.0 million in 1999. The following table sets forth, for the
periods indicated the principal components of noninterest income.
25
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) The following documents are filed as part of this report:
1. Financial Statements (Item 8)
2. Financial Statement Schedules (see index annexed)
3. Exhibits:
The exhibits listed in the Exhibit Index on page 23 of this Form
10-K are filed herewith or are incorporated herein by reference. No
management contract or compensatory plan or arrangement is required
to be filed as an exhibit to this form. The Registrant will furnish
a copy of any of the exhibits listed upon the payment of $5.00 per
exhibit to cover the cost of the Registrant in furnishing the
exhibit.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed by the Company during the fourth
quarter.
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act
of 1934, the Company has duly caused this amended Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
NEW SOUTH BANCSHARES, INC.
/s/ Robert M. Couch
---------------------------------------
By: Robert M. Couch
Executive Vice President
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Pursuant to the requirements of the Securities Exchange Act of 1934, this
amended Report has been signed below by the following persons on behalf of the
Company and in the capacities and on the dates indicated.
CAPACITY IN WHICH
SIGNATURE SIGNED DATE
- ------------------------------ Chairman and President April 7, 2000
William T. Ratliff, III *
/s/ Cheryl R. Stone
- ------------------------------ Acting Controller April 7, 2000
Cheryl R. Stone
- ------------------------------ Director and Vice President April 7, 2000
William T. Ratliff, Jr. *
- ------------------------------ Director and Vice President April 7, 2000
J. K. V. Ratliff *
- ------------------------------ Director April 7, 2000
David W. Whitehurst*
* Lizabeth R. Nichols hereby signs this Report on April 7, 2000 on behalf of
each of the indicated persons for whom she is attorney-in-fact pursuant to
powers of attorney duly executed by such persons and filed with the
Securities and Exchange Commission.
/s/ Lizabeth R. Nichols
--------------------------------
Lizabeth R. Nichols
Attorney-In-Fact
80