<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(MARK ONE)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1995
--------------
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 0-16181
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ABC BANCORP
-------------------------------------------------------------
(Exact name of regisrtant as specified in its charter)
GEORGIA 58-1456434
-------------------------- -----------------------
(STATE OF INCORPORATION) (IRS EMPLOYER ID NO.)
310 FIRST STREET, SE MOULTRIE, GA 31768
------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(912)890-1111
---------------------------------
(REGISTRANT'S TELEPHONE NUMBER)
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
----- -----
THERE WERE 2,514,575 SHARES OF COMMON STOCK OUTSTANDING AS OF MARCH 31, 1995.
Page 1 of 13
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ABC BANCORP
QUARTERLY REPORT ON FORM 10-QSB
FOR THE QUARTER ENDED MARCH 31, 1995
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
PART I - FINANCIAL INFORMATION
ITEM 1. Consolidated Statements of Financial Condition
- Consolidated Balance Sheets 3
- Consolidated Statements of Income 4
- Consolidated Statements of Cash Flows 5-6
- Note to Consolidated Financial Statements 7
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-11
PART II - OTHER INFORMATION
ITEM 3. Submission of Matters to a Vote of
Securities Holders 12
ITEM 6. Exhibits and Reports on Form 8-k 12
</TABLE>
SIGNATURES
- 2 -
<PAGE>
ABC BANCORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1995
(DOLLARS IN THOUSANDS)
(UNAUDITED)
________________________________________________________________________________
<TABLE>
<CAPTION>
ASSETS 1995
- - - - - - ------ ---------------
<S> <C>
Cash and due from banks $16,502
Securities available for sale, at fair value 2,680
Securities held for investment, at cost (fair value $43,832) 43,535
Federal funds sold 23,515
Loans 195,387
Less allowance for loan losses 3,970
---------------
Loans, net 191,417
---------------
Premises and equipment, net 7,188
Other assets 9,105
---------------
$293,942
===============
LIABILITIES AND STOCKHOLDERS' EQUITY
- - - - - - ------------------------------------
Deposits
Noninterest-bearing demand $42,733
Interest-bearing demand 57,567
Savings 22,545
Time, $100,000 and over 34,315
Other time 99,374
---------------
Total deposits 256,534
Federal funds purchased and securities sold
under repurchase agreements 1,558
Accrued interest and other liabilities 4,599
---------------
Total liabilities 262,691
---------------
COMMITMENTS AND CONTINGENT LIABILITIES
STOCKHOLDERS' EQUITY
Common stock par value $1; 3,000,000 shares
authorized, 2,697,987 issued and 1,950,487 shares issued 2,698
Capital surplus 17,728
Retained earnings 12,530
Unrealized gain (losses) on securities available for sale (25)
---------------
32,931
Less cost of 183,412 shares acquired for the treasury stock (1,680)
---------------
Total stockholders' equity 31,251
---------------
$293,942
===============
</TABLE>
SEE NOTE TO CONSOLIDATED FINANCIAL STATEMENTS.
-3-
<PAGE>
ABC BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(DOLLARS IN THOUSANDS)
________________________________________________________________________________
<TABLE>
<CAPTION>
1995 1994
--------------- ------------------
<S> <C> <C>
INTEREST INCOME
Income and fees on loans $5,176 $3,962
Interest on taxable securities 516 452
Interest on nontaxable securities 133 163
Interest on deposits in other banks 18 26
Interest on Federal funds sold 314 209
-------------- ------------------
6,157 4,812
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INTEREST EXPENSE
Interest on deposits 2,291 1,770
Interest on securities sold under repurchase agreements
and other borrowings 57 78
-------------- ------------------
2,348 1,770
-------------- ------------------
Net interest income 3,809 3,042
PROVISION FOR LOAN LOSSES 108 207
-------------- ------------------
Net interest income after provision for loan losses 3,629 2,835
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OTHER INCOME
Service charges on deposit accounts 602 553
Other service charges, commisions and fee 229 224
Other 55 69
-------------- ------------------
886 846
-------------- ------------------
OTHER EXPENSE
Salaries and employee benefits 1,519 1,446
Equipment expense 278 241
Occupancy expense 231 215
Amortization of intangible assets 79 87
Data processing fees 85 89
Directors fees 28 24
FDIC premiums 145 141
Other operating expenses 635 648
-------------- ------------------
3,000 2,891
-------------- ------------------
Income before income taxes 1,515 790
Applicable income taxes 487 194
-------------- ------------------
NET INCOME $1,028 $596
============== ===================
Income per common share $0.41 $0.38
============== ===================
Average shares outstanding 2,514,575 1,767,075
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-4-
<PAGE>
ABC BANCROP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(DOLLARS IN THOUSANDS)
(UNAUDITED)
________________________________________________________________________________
<TABLE>
<CAPTION>
1995 1994
-------------------- --------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $1,028 $518
-------------------- --------------------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 199 159
Provision for loan losses 180 207
Amortization of intangible assets 67 82
Other prepaids, deferrals and accruals, net (941) 223
-------------------- --------------------
Total adjustments (495) 671
-------------------- --------------------
Net cash provided by (used in) operating activities 533 1,189
------------------- --------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities of securities held
for investments 3,928 3,679
Purchase of securities available for sale (3,607) --
Purchase of securities held for investment -- (3,487)
(Increase) decrease in interest-bearing
deposits in bank -- 7
Increase (decrease) in Federal funds sold (1,663) 11,770
(Increase) decrease in loans (3,510) (10,801)
Purchase of premises and equipment (217) (50)
-------------------- --------------------
Net cash provided by (used in investing activities (5,069) 1,118
-------------------- --------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits (20) (4,292)
Net increase (decrease) in repurchase
agreements (1,198) (714)
Repayment of long-term debt 2,000 --
Dividends paid (239) --
-------------------- --------------------
Net cash provided by (used in) financing activities 543 (5,006)
-------------------- --------------------
</TABLE>
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<PAGE>
ABC BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31 1995 AND 1994
(DOLLARS IN THOUSANDS)
(UNAUDITED)
________________________________________________________________________________
<TABLE>
<CAPTION>
1995 1994
---------------- ----------------
<S> <C> <C>
Net increase (decrease) in cash and due from banks ($3,993) ($2,699)
Cash and due from banks at beginning of quarter 20,495 16,994
---------------- ----------------
Cash and due from banks at end of quarter $16,502 $14,295
================ ================
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
-6-
<PAGE>
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of ABC Bancorp and Subsidiaries (the
"Company") conform to generally accepted accounting principles and to
general practices within the banking industry. The interim consolidated
financial statements included herein are unaudited, but reflect all
adjustments which, in the opinion of management, are necessary for a fair
presentation of the consolidated financial position and results of
operations for the interim periods presented. All adjustments reflected in
the interim financial statements are of a normal, recurring nature. Such
financial statements should be read in conjunction with the financial
statements and notes thereto and the report of independent auditors
included in the Company's Form 10-KSB Annual Report for the year ended
December 31, 1994. The results of operations for the three months ended
March 31, 1995 are not necessarily indicative of the results to be expected
for the full year.
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Liquidity management involves matching the cash flow requirements of
customers, who may be either depositors desiring to withdraw funds or borrowers
needing assurance that sufficient funds will be available to meet their credit
needs, with the ability of ABC Bancorp and its subsidiaries (the "Company",
collectively) to meet those needs. The Company seeks to meet liquidity
requirements primarily through management of short-term investments (principally
Federal funds sold) and monthly- amortizing loans. Another source of liquidity
is the repayment of maturing single-payment loans. Also, the Company maintains
relationships with correspondent banks from which it could borrow funds on short
notice, if necessary.
The liquidity and capital resources of the subsidiary banks (the "Banks")
are monitored on a periodic basis by state and Federal regulatory authorities.
As determined under guidelines established by these regulatory authorities, the
Banks' liquidity ratios at March 31, 1995 were considered satisfactory. At that
date, the Banks' short-term investments were adequate to cover any reasonably
anticipated immediate need for funds. The Company is aware of no events or
trends likely to result in a material change in its liquidity. At March 31,
1995, the Company's capital asset ratios were considered adequate based on
guidelines established by regulatory authorities. Total capital of the Company
amounted to $31.5 million and $20.3 million at March 31, 1995 and 1994,
respectively, an increase of $11.2 million. This increase was mostly the result
of net proceeds of $8.3 million (after deducting stock issuance costs) from a
public offering of the Company's common stock. At March 31, 1995, there were no
outstanding commitments for major capital expenditures.
RESULTS OF OPERATIONS
The Company's results of operations are determined by its ability to
effectively manage interest income and expense, to minimize loan and investment
losses, to generate noninterest income and to control noninterest expense.
Since interest rates are determined by market forces and economic conditions
beyond the control of the Company, the ability to generate net interest income
is dependent upon the Banks' ability to obtain an adequate spread between the
rate earned on interest-earning assets and the rate paid on interest-bearing
liabilities. Thus, the key performance measure for net interest income is the
interest margin or net yield, which is taxable-equivalent net interest income
divided by average interest-earning assets.
-8-
<PAGE>
RESULTS OF OPERATIONS (CONTINUED)
Interest-earning assets consist of loans, investment securities and Federal
funds sold. Interest-bearing liabilities consist of deposits, of which
approximately 17% are noninterest-bearing. A portion of interest income is
earned on tax-exempt investments, such as state and municipal bonds. For
comparative and analytical purposes, tax-exempt income and resultant yields are
restated on a taxable-equivalent basis which is comparable to all other taxable
investments.
The net interest margin increased by 17.1% to 5.68% in March 1995 as
compared to 4.85% in 1994. Net interest income on a taxable-equivalent basis
was $3.9 million during the three months ended March 31, 1995 as compared to
$3.0 million during the three months ended March 31, 1994, representing an
increase of 27.2%.
Average interest-earning assets were $257.1 million and $233.2 million
for the quarters ended March 31, 1995 and 1994, respectively, an increase of
$23.9 million. In comparing the two quarters, average loans increased by $27.9
million, average investments increased by $.1 million and average Federal funds
sold decreased by $4.1 million. The increase in average interest-earning assets
was funded by an increase in average deposits of $18.5 million, or 7.8%, to
$255.3 million during the quarter ended March 31, 1995 from $236.8 million
during the same quarter a year earlier. Approximately 17% of average deposits
during the quarter ended March 31, 1995 were noninterest-bearing, compared to
16% during the quarter ended March 31, 1994.
The allowance for loan losses represents a reserve for potential losses in
the loan portfolio. The adequacy of the allowance for loan losses is evaluated
periodically based on a review of all significant loans, with a particular
emphasis on nonaccruing, past due and other loans that management has recognized
as requiring special attention.
The provision for loan losses is a charge to earnings in the current period
to replenish the allowance and maintain it at a level management has determined
to be adequate. The provision for loan losses charged to earnings amounted to
$180,000 and $207,000 during the quarters ended March 31, 1995 and 1994,
respectively, a decrease of $27,000 or 15%. Recoveries, net of chargeoffs,
amounted to $33,000 for the quarter ended March 31, 1995. This represents an
improvement of $95,000 over the $62,000 net chargeoffs recorded during the
quarter ended March 31, 1994. The decrease in loan charge-offs during the most
recent period ended resulted from an improvement in the quality of the
collateral held as security on loans and the ability of creditors to service
their debt.
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<PAGE>
RESULTS OF OPERATIONS (CONTINUED)
At March 31, 1995, the allowance for loan losses was 2.07% of total loans
outstanding as compared to an allowance of 2.20% of total loans at March 31,
1994. The determination of the allowance rests upon management's judgment about
factors affecting loan quality and assumptions about the local and national
economy. Management considers the quarter-end allowance for loan losses adequate
to cover potential losses in the loan portfolio.
Following is a comparison of noninterest income for the quarters ended
March 31, 1995 and 1994 (DOLLARS IN THOUSANDS).
<TABLE>
<CAPTION>
MARCH 31,
---------
1995 1994
---- ----
<S> <C> <C>
Service charges on deposit
accounts $ 712 $ 558
Other service charges,
commissions & fees 120 117
Other income 54 170
----- ----
$ 886 $ 845
===== ====
</TABLE>
The most significant increase in noninterest income, when comparing the two
quarters ended March 31, 1995 and March 31, 1994, was an increase in service
charges on deposit accounts of $154,000 or 27.6%. This increase resulted mainly
from an increase in average deposits of $18,485,530 during the quarter ended
March 31, 1995 as compared to the same quarter a year ago. Also, contributing
to this increase was an increase in service charge fees to customers that was
effective for only part of first quarter 1994.
Following is an analysis of noninterest expense for the quarters ended
March 31, 1995 and 1994 (DOLLARS IN THOUSANDS).
<TABLE>
<CAPTION>
MARCH 31,
---------
1995 1994
---- ----
<S> <C> <C>
Salaries and employee benefits $ 1,519 $ 1,446
Occupancy and equipment expense 509 407
Deposit insurance premium 145 141
Data processing fees 337 262
Other expense 490 635
----- -----
$ 3,000 $ 2,891
===== =====
</TABLE>
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<PAGE>
RESULTS OF OPERATIONS (CONTINUED)
Salaries and employee benefits increased $73,000, or 5.1% during the
quarter ended March 31, 1995 as compared to the quarter ended March 31, 1994.
Salaries increased $45,000; bonuses increased $13,000; employee benefits
increased $8,000; and taxes withheld increased $7,000. Year-end bonuses are
based on net income. As a result of the increased net income for the quarter
ended March 31, 1995 as compared to the same quarter a year earlier, the bonus
accrual was higher.
Average total assets increased $27.1 million or 10.3% to $289.0 million in
March 1995 as compared to $261.9 million in March 1994. The increase in average
total assets was accompanied by an increase in average deposits of $18.5 million
or 7.8%.
Average total assets of the Company were $289.0 million and $261.9 million
at March 31, 1995 and 1994, respectively, an increase of $27.1 million or 10.4%.
Following is a detail of the components of net income during the quarter
ended March 31, 1995 as compared to the quarter ended March 31, 1994 (DOLLARS IN
THOUSANDS).
<TABLE>
<CAPTION>
Increase
MARCH 31, (Decrease)
--------- in Net
1995 1994 Income
---- ---- ------
<S> <C> <C> <C>
Net interest income $3,809 $2,964 $ 845
Provision for loan losses 180 207 27
Other income 886 846 40
Other expense 3,000 2,891 (109)
------ ------ --------
Income before income
taxes 1,515 712 803
Applicable income taxes 487 194 293
------ ------ -----
Net Income $1,028 $ 518 $ 510
====== ===== ======
</TABLE>
-11-
<PAGE>
PART II - OTHER INFORMATION
ITEM 3. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
There were no matters submitted to a vote of securities
holders during the quarter ended March 31, 1995.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits filed in accordance with Item 601 of Regulation S-B
27 Financial Data Schedule
(b) The Company has not filed any reports on Form 8-k with the
Securities and Exchange Comission during the three months
ended March 31, 1995
-12-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
Undersigned thereunto duly authorized:
ABC BANCORP
5/11/95 /s/ W. EDWIN LANE, JR.
- - - - - - ------------------- --------------------------------------
DATE W. EDWIN LANE, JR.
EXECUTIVE VICE PRESIDENT &
CHIEF FINANCIAL OFFICER
(Duly authorized officer and
principal financial/accounting
officer)
-13-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1995
<PERIOD-START> JAN-01-1995 JAN-01-1994
<PERIOD-END> MAR-31-1995 MAR-31-1994
<CASH> 16,502 14,295
<INT-BEARING-DEPOSITS> 0 1,250
<FED-FUNDS-SOLD> 2,3515 0
<TRADING-ASSETS> 0 0
<INVESTMENTS-HELD-FOR-SALE> 2,680 0
<INVESTMENTS-CARRYING> 43,535 45,733
<INVESTMENTS-MARKET> 43,832 45,723
<LOANS> 195,387 172,487
<ALLOWANCE> 3,970 3,716
<TOTAL-ASSETS> 293,942 263,514
<DEPOSITS> 256,534 233,933
<SHORT-TERM> 1,558 2,466
<LIABILITIES-OTHER> 4,599 2,129
<LONG-TERM> 0 4,677
<COMMON> 2,698 1,950
0 0
0 0
<OTHER-SE> 28,553 18,359
<TOTAL-LIABILITIES-AND-EQUITY> 293,942 263,514
<INTEREST-LOAN> 5,176 3,962
<INTEREST-INVEST> 649 615
<INTEREST-OTHER> 332 235
<INTEREST-TOTAL> 6,157 4,812
<INTEREST-DEPOSIT> 2,291 1,770
<INTEREST-EXPENSE> 57 78
<INTEREST-INCOME-NET> 3,809 3,042
<LOAN-LOSSES> 180 207
<SECURITIES-GAINS> 0 0
<EXPENSE-OTHER> 3,000 2,891
<INCOME-PRETAX> 1,515 790
<INCOME-PRE-EXTRAORDINARY> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1,028 596
<EPS-PRIMARY> .41 .38
<EPS-DILUTED> 0 0
<YIELD-ACTUAL> 8.16 6.94
<LOANS-NON> 3,944 3,976
<LOANS-PAST> 4,942 5,215
<LOANS-TROUBLED> 0 809
<LOANS-PROBLEM> 0 0
<ALLOWANCE-OPEN> 3,757 3,571
<CHARGE-OFFS> (80) (270)
<RECOVERIES> 113 208
<ALLOWANCE-CLOSE> 3,970 3,716
<ALLOWANCE-DOMESTIC> 0 0
<ALLOWANCE-FOREIGN> 0 0
<ALLOWANCE-UNALLOCATED> 3,970 3,716
</TABLE>
