10-K/A 1 d10ka.txt AMENDMENT TO FORM 10-K 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, 2001 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 35210 Birmingham, Alabama (Zip Code) (Address of Principal Executive Offices) (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, 2002: 1,255,537.1 DOCUMENTS INCORPORATED BY REFERENCE None, except Exhibits 1 FIVE-YEAR SUMMARY OF SELECTED CONSOLIDATED FINANCIAL DATA (Amounts in thousands, except ratios and per share data)
December 31 ----------------------------------------------------------------------- 2001 2000 1999 1998 1997 ---------------- -------------- ------------- -------------- ----------- (In thousands, except percentages and per share data) Summary of Operations Data: Interest income ......................................... $ 91,507 $ 98,004 $ 85,356 $ 83,251 $ 75,491 Interest expense ........................................ 62,767 66,588 53,584 52,299 47,723 ---------------- -------------- ------------- -------------- ----------- Net interest income ..................................... 28,740 31,416 31,772 30,952 27,768 Provision for loan losses ............................... 5,363 5,565 3,638 3,944 2,954 ---------------- -------------- ------------- -------------- ----------- Net interest income after provision for loan losses........................................ 23,377 25,851 28,134 27,008 24,814 Non interest income: Loan administration income............................... 11,277 11,409 10,348 5,143 4,333 Gain on sale of loans and mortgage servicing rights...... 19,212 14,599 12,058 12,435 5,661 Other income............................................. 18,908 13,532 15,563 15,992 5,320 ---------------- -------------- ------------- -------------- ----------- Total ................................................... 49,397 39,540 37,969 33,570 15,314 Non interest expense: Salaries and benefits.................................... 34,639 31,005 34,347 26,286 16,024 Other expense............................................ 24,083 23,627 27,759 22,467 15,398 ---------------- -------------- ------------- -------------- ----------- Total.................................................... 58,722 54,632 62,106 48,753 31,422 Income before income taxes and cumulative effect of a change in accounting principle.. .......... 14,052 10,759 3,997 11,825 8,706 Income taxes expense..................................... 720 644 1,406 5,088 3,990 ---------------- -------------- ------------- -------------- ----------- Income before cumulative effect of a change in accounting principle............................... 13,332 10,115 2,591 6,737 4,716 Cumulative effect of a change in accounting principle.... ....................................... 1,124 - - - - ---------------- -------------- ------------- -------------- ----------- Net Income............................................... $ 12,208 $ 10,115 $ 2,591 $ 6,737 $ 4,716 ================ ============== ============= ============== =========== Per Share Data -------------- Earnings per share....................................... $ 9.72 $ 8.05 $ 2.06 $ 5.05 $ 3.42 Weighted average shares outstanding...................... 1,256 1,256 1,255 1,333 1,377 Selected Year End Balances -------------------------- Total assets............................................. $1,305,321 $1,222,777 $1,021,107 $1,142,622 $ 994,053 Investment securities available for sale................. 302,608 168,176 135,703 109,591 197,135 Loans, net of unearned income............................ 789,238 895,186 748,277 812,877 727,854 Allowance for loan losses................................ 12,613 13,513 11,114 9,107 7,333 Deposits................................................. 873,057 916,226 745,085 775,448 695,365 Federal Home Loan Bank Advances.......................... 120,025 133,415 128,417 198,418 179,420 Total liabilities........................................ 1,254,721 1,162,769 973,799 1,094,182 941,739 Shareholders' equity..................................... 50,600 60,008 47,308 48,440 52,314 Performance Ratios ------------------ Return on average assets................................. 1.01% 0.89% 0.24% 0.65% 0.51% Return on average equity/(1)/............................ 21.09 19.93 5.27 13.84 9.33 Interest rate spread..................................... 2.29 2.48 2.56 2.72 2.74 Net interest margin ..................................... 2.55 2.89 3.04 3.22 3.21 Ratio of average interest-earning assets to average interest-bearing liabilities...... ....... 104.69 106.72 109.40 109.14 108.46 Ratio of non interest expense to average assets.......... 4.85 4.80 5.71 4.71 3.42 Efficiency ratio......................................... 75.15 76.99 89.05 75.56 72.94 Average equity to average assets/(1)/.................... 4.78 4.46 4.52 4.70 5.50 Asset Quality Data ------------------ Net charge-offs to average loans, net of unearned income....... ....................... 0.75% 0.35% 0.18% 0.28% 0.21% Nonperforming assets to average total assets............. 2.22 2.12 1.33 1.16 1.11 Nonperforming loans to average total loans, net of unearned income...... ........................ 2.53 2.21 1.19 1.38 1.27 Allowance for loan losses to total loans, net of unearned income......... ..................... 1.60 1.51 1.49 1.12 1.01 Allowance for loan losses to total nonperforming assets..... ........................... 47.02 56.12 77.08 75.92 71.75 Capital Ratios/(2)/ ------------------- Tangible capital (tier 1 to total assets)................ 7.66% 8.05% 8.64% 7.00% 6.17% Tier 1 capital (to risk weighted assets)................. 10.64 10.02 11.86 9.96 9.51 Total risk-based capital (to risk weighted assets)....... 11.78 11.04 12.10 10.38 10.48
/(1)/ Equity used to calculate this ratio excludes components of other comprehensive income. /(2)/ Capital ratio data for all periods presented are for New South only. 13 Analysis of Changes in Net Interest Income
Years Ended December 31, ----------------------------------------------------------- 2001 Compared to 2000 2000 Compared to 1999 Change Attributable to Change Attributable to ---------------------------- --------------------------- Volume Rate Mix Volume Rate Mix --------- ----------- ------- -------- ------- -------- (In thousands) Earning Assets Total loans, net of unearned income/(1)/...................................... $ (5,661) $ (6,626) $ 446 $ (316) $ 7,632 $ (32) Federal funds sold................................. 476 (159) (146) (482) 430 (252) Investment securities available for sale........... 6,885 (675) (603) 2,187 913 483 Other investments.................................. (246) (197) 9 997 851 237 --------- ---------- ------- --------- -------- ------- Total interest income.............................. 1,454 (7,657) (294) 2,386 9,826 436 Interest Bearing Liabilities Other interest bearing deposits.................... 42 (33) (9) 6 (0) (0) Savings deposits................................... 455 (764) (100) (421) 103 (12) Time deposits...................................... 2,370 (2,307) (124) 2,715 5,235 397 Federal funds purchased and securities - - - sold under agreements to repurchase ........... 2,648 (1,351) (838) 954 761 324 Other borrowings................................... 396 (55) (35) 137 169 183 Federal Home Loan Bank - - - advances...................................... (2,055) (2,539) 478 86 2,343 24 Guaranteed preferred beneficial interests in the Company's subordinated debt............ - - - - - - --------- ---------- ------- --------- -------- ------- Total interest expense............................. 3,856 (7,049) (628) 3,477 8,611 916 --------- ---------- ------- --------- -------- ------- Net interest income................................ $ (2,402) $ (608) $ 334 $(1,091) $ 1,215 $ (480) ========= ========== ======= ========= ======== =======
/(1)/ "Loans, net of unearned income" includes nonaccrual loans for all years presented. Interest Sensitivity and Market Risk Interest Sensitivity Through policies established by the Bank's Asset/Liability Management Committee ("ALCO"), the Bank monitors and manages the repricing and maturity of its assets and liabilities in order to diminish the potential adverse impact that changes in interest rates could have on its net interest income. The ALCO uses a combination of earnings and market value sensitivity analyses and traditional gap analysis. These analyses compare the repricings, maturities, and prepayments, as applicable, of New South's interest-earning assets and interest-bearing liabilities and off balance sheet instruments in order to measure, monitor, and manage interest rate risk. The differences in the various maturities or repricings, known as GAP, are summarized in the analysis below as of December 31, 2001: 20 Borrowed Funds Borrowed funds consist primarily of, Security Repo Agreements, and advances from the FHLB. The following table sets forth information regarding the Company's borrowings over the periods indicated.
Weighted Average Average Average Maximum Ending Interest Rate at Rate Balance Outstanding Balance Year-End Paid ---------- ------------ ---------- ------------------- -------- (In thousands, except percentages) As of and for the year ending December 31, 2001 Federal funds purchased and securities sold under agreement to repurchase............................ $ 97,419 $ 207,123 $196,749 3.11% 4.86% FHLB advances....................................... 130,196 288,415 120,025 4.49% 5.22% As of and for the year ending December 31, 2000 Federal funds purchased and securities sold under agreement to repurchase............................ $ 60,132 $ 83,808 $ 53,213 6.66% 7.10% FHLB advances....................................... 160,397 193,416 133,415 6.44% 6.80% As of and for the year ending December 31, 1999 Federal funds purchased and securities sold under agreement to repurchase............................ $ 42,132 $ 73,054 $ 50,923 6.09% 5.29% FHLB advances......................................... 158,782 218,418 128,417 5.87% 5.33%
FHLB advances were $120.0 million at December 31, 2001 and $133.4 million at December 31, 2000, a decrease of $13.4 million, or 10.0%. Average FHLB advances for 2001 were $130.1 million compared to $160.4 million for 2000, a decrease of $30.2 million, or 18.8%. These decreases reflect the application of proceeds from the 2001 Securitization to reduce outstanding advances. The Company intends to continue using FHLB advances as a significant funding source. Federal funds purchased and Security Repo Agreements totaled $196.7 million at December 31, 2001 and $53.2 million at December 31, 2000, an increase of $143.5 million. Average Federal funds purchased and Security Repo Agreements for 2001 were $97.4 million compared to $60.1 million for 2000, an increase of $37.3 million, or 62.0%. These increases reflect the utilization of this funding source in the GNMA Strategy. The Company anticipates the continued use of Security Repo Agreements as a funding source for its investment portfolio. CAPITAL The OTS requires thrift financial institutions to maintain capital at adequate levels based on a percentage of assets and off-balance sheet exposures, adjusted for risk weights ranging from 0 percent to 100 percent. Under the risk-based standard, capital is classified into two tiers. Tier 1 capital of New South consists of common shareholder's equity, excluding the unrealized gain or loss on securities available for sale, plus minority interest in consolidated subsidiaries. New South's Tier 2 capital consists of the general reserve for possible loan losses subject to certain limitations. Certain capital ratios require deductions from Tier 1 capital for certain high loan-to-value ratio loans and low level recourse assets. Consolidated regulatory capital requirements do not apply to thrift holding companies. The following table sets forth the specific capital amounts and ratios for the indicated periods: 37 SIGNATURES Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the Company has duly caused this 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 and Director Pursuant to the requirements of the Securities Exchange Act of 1934, this 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 8, 2002 ------------------------- William T. Ratliff, III* /s/ Richard W. Edwards Vice President April 8, 2002 ------------------------- Chief Financial Officer Richard W. Edwards Director and Vice President April 8, 2002 ------------------------- William T. Ratliff, Jr.* /s/ Lizabeth R. Nichols Director and Vice President April 8, 2002 ------------------------- Lizabeth R. Nichols Director April 8, 2002 ------------------------- David W. Whitehurst* * Lizabeth R. Nichols hereby signs this Report on April 8, 2002 on behalf of each of the indicated persons for whom she is attorney-in-fact purusant 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 44