<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 September 30, 1995
------------------
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 0-16181
-------
ABC BANCORP
------------------------------------------------------
(Exact name of registrant 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 3,352,525 shares of Common Stock outstanding as of September 30,
1995.
1
<PAGE>
ABC BANCORP
QUARTERLY REPORT ON FORM 10-QSB
FOR THE QUARTER ENDED SEPTEMBER 30, 1995
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item Page
- ----- ----
1. Financial Statements
Consolidated Statements of Financial Condition 3
Consolidated Statements of Income 4 - 5
Consolidated Statements of Cash Flows 6 - 7
Notes to Consolidated Financial Statements 8
2. Management's Discussion and Analysis of Financial 9 - 13
Condition and Results of Operations
PART II - OTHER INFORMATION
3. Submission of Matters to a Vote of
Securities Holders 14
6. Exhibits and Reports on Form 8-K 14
Signatures 15
2
<PAGE>
ABC BANCORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1995
(DOLLARS IN THOUSANDS)
(UNAUDITED)
- ------------------------------------------------------------------------------
1995
--------
Cash and due from banks $ 18,540
Securities available for sale, at fair value 11,545
Securities held for investment, at cost (fair value $35,917) 35,858
Federal funds sold 19,630
Loans 215,073
Less allowance for loan losses 4,216
--------
Loans, net 210,857
--------
Premises and equipment, net 7,011
Other assets 10,527
--------
$313,968
========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Deposits
Noninterest -bearing demand $41,736
Interest-bearing demand 60,690
Savings 22,866
Time, $100,000 and over 36,513
Other time 109,333
--------
Total deposits 271,138
Federal funds purchased, securities sold
under repurchase agreements and other borrowings 2,159
Other liabilities 7,764
--------
Total liabilities 281,061
--------
COMMITMENTS AND CONTINGENT LIABILITIES
STOCKHOLDERS' EQUITY
Common stock,par value $1; 10,000,000 shares
authorized, 3,597,074 issued 3,597
Capital surplus 16,826
Retained earnings 14,099
Unrealized gains (losses) on securities available for sale,
net of taxes 65
--------
34,587
Less cost of 244,549 shares acquired for the treasury (1,680)
--------
Total stockholders' equity 32,907
--------
$313,968
========
SEE NOTE TO CONSOLIDATED FINANCIAL STATEMENTS.
3
<PAGE>
ABC BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(DOLLARS IN THOUSANDS)
(UNAUDITED)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED
1995 1994
------ ------
<S> <C> <C>
INTEREST INCOME
Income and fees on loans $5,861 $4,681
Interest on taxable securities 576 450
Interest on nontaxable securities 126 146
Interest on deposits in other banks 30 51
Interest on Federal funds sold 246 141
------ ------
6,839 5,469
------ ------
INTEREST EXPENSE
Interest on deposits 2,745 1,960
Interest on federal funds purchased, securities sold
under repurchase agreement and other borrowings 121 31
------ ------
2,866 1,991
------ ------
Net interest income 3,973 3,478
PROVISION FOR LOAN LOSSES 206 191
------ ------
Net interest income after provision for loan losses 3,767 3,287
------ ------
OTHER INCOME
Service charges on deposit accounts 693 626
Other service charges, commisions and fees 104 86
Other 70 51
------ ------
867 763
------ ------
OTHER EXPENSE
Salaries and employee benefits 1,593 1,409
Equipment expense 165 263
Occupancy expense 406 230
Amortization of intangible assets 79 68
Data processing fees 92 94
Directors fees 80 73
FDIC premiums (15) 138
Other operating expenses 568 395
------ ------
2,968 2,670
------ ------
Income before income taxes 1,666 1,380
Applicable income taxes 539 412
------ ------
NET INCOME $1,127 $968
====== ======
Income per common share $0.34 $0.29
===== =====
Average shares outstanding 3,352,525 3,352,525
</TABLE>
SEE NOTE TO CONSOLIDATED FINANCIAL STATEMENTS.
4
<PAGE>
ABC BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(DOLLARS IN THOUSANDS)
(UNAUDITED)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NINE MONTHS ENDED
1995 1994
------- -------
<S> <C> <C>
INTEREST INCOME
Income and fees on loans $16,653 $12,931
Interest on taxable securities 1,648 1,379
Interest on nontaxable securities 395 469
Interest on deposits in other banks 81 113
Interest on Federal funds sold 821 515
------- -------
19,598 15,407
------- -------
INTEREST EXPENSE
Interest on deposits 7,584 5,572
Interest on federal funds purchased, securities sold
under repurchase agreements and other borrowings 256 192
------- -------
7,840 5,764
------- -------
Net interest income 11,758 9,643
PROVISION FOR LOAN LOSSES 566 603
------- -------
Net interest income after provision for loan losses 11,192 9,040
------- -------
OTHER INCOME
Service charges on deposit accounts 1,921 1,798
Other service charges, commissions and fees 457 382
Other 169 173
------- -------
2,547 2,353
------- -------
OTHER EXPENSE
Salaries and employee benefits 4,698 4,295
Equipment expense 715 742
Occupancy expense 868 665
Amortization of intangible assets 238 242
Data processing fees 277 331
Directors fees 235 218
FDIC premiums 276 420
Other operating expenses 1,730 1,419
------- -------
9,037 8,332
------- -------
Income before income taxes 4,702 3,061
Applicable income taxes 1,518 909
------- -------
NET INCOME $ 3,184 $ 2,152
======= =======
Income per common share $0.95 $0.76
====== ======
Average shares outstanding 3,352,525 2,823,160
</TABLE>
SEE NOTE TO CONSOLIDATED FINANCIAL STATEMENTS.
5
<PAGE>
ABC BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(DOLLARS IN THOUSANDS)
(UNAUDITED)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 3,184 $ 2,153
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 637 487
Provision for loan losses 566 603
Amortization of intangible assets 201 259
Other prepaids, deferrals and accruals, net (2,091) (286)
-------- --------
Total adjustments (687) 1,063
-------- --------
Net cash provided by (used in) operating activities 2,497 3,216
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities of securities held
for investment 10,784 5,797
Purchase of securities available for sale (10,943) --
Purchase of securities held for investment (620) (4,753)
(Increase) decrease in interest-bearing
deposits in bank -- 257
(Increase)decrease in Federal funds sold 2,222 19,100
(Increase) decrease in loans (23,336) (28,133)
Purchase of premises and equipment (478) (1,972)
-------- --------
Net cash provided by (used in) investing activities (22,371) (9,704)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits 14,584 2,087
Net increase (decrease) in repurchase
agreements (597) (935)
Sale of common stock, net of expense -- 8,514
Increase (decrease) of long-term debt 4,774 (4,662)
Cash purchase of fractional shares (3) --
Dividends paid (838) (646)
-------- --------
Net cash provided by (used in) financing activities 17,920 4,358
-------- --------
</TABLE>
6
<PAGE>
ABC BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30 1995 AND 1994
(DOLLARS IN THOUSANDS)
(UNAUDITED)
- ------------------------------------------------------------------------------
1995 1994
------- -------
Net increase (decrease) in cash and due from banks $(1,954) $(2,130)
Cash and due from banks at beginning of year 20,494 16,994
------- -------
Cash and due from banks at end of quarter $18,540 $14,864
======= =======
SEE NOTE TO CONSOLIDATED FINANCIAL STATEMENTS.
7
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
NOTE 1. 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
nine months ended September 30, 1995 are not necessarily indicative of the
results to be expected for the full year.
NOTE 2. STOCKHOLDERS' EQUITY
As of July 17, 1995, a 4-for-3 stock split in the form of a Common Stock
dividend on the outstanding shares of the Company's Common Stock became
effective. Fractional shares were paid in cash. All per share information
reflects retroactively this stock split.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Liquidity management involves the matching of 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 and the ability of the ABC Bancorp and subsidiaries (the
"Company") 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 subsidiary banks
(the "Banks") maintain relationships with correspondent banks which could
provide funds to them on short notice, if needed.
The liquidity and capital resources of the Company is 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 September 30, 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 liquidity. At September 30, 1995, the Company's
and the Banks' capital asset ratios were considered adequate based on guidelines
established by regulatory authorities. After recording an increase in capital
of $20,032 for unrealized gains on securities, net of taxes, total capital
increased during the third quarter of 1995 by $766,893. At September 30, 1995,
total capital of the Company amounted to $32,906,421. At September 30, 1995,
there were no outstanding commitments for any 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 earning assets.
9
<PAGE>
RESULTS OF OPERATION (CONTINUED)
The primary component of consolidated earnings is net interest income,
or the difference between interest income on interest-earning assets and
interest paid on interest-bearing liabilities. The net interest margin is net
interest income expressed as a percentage of average interest-earning assets.
Interest-earning assets consist of loans, investment securities and Federal
funds sold. Interest-bearing liabilities consist of deposits,(of which
approximately 16% are noninterest-bearing) and borrowings such as Federal funds
purchased, securities sold under repurchase agreements and Federal Home Loan
Bank advances. A portion of interest income is earned on tax-exempt
investments, such as state and municipal bonds. In an effort to state this tax-
exempt income and its resultant yields on a basis comparable to all other
taxable investments, an adjustment is made to analyze this income on a taxable-
equivalent basis.
The net interest margin was 5.92% and 5.48% during the nine months
ended September 30, 1995 and 1994, respectively, an increase of 8.3%. This
increase in net interest margin was achieved by an increase of 10 basis points
on average yield earned on interest-earning assets accompanied by a decrease of
6 basis points in average rate paid on interest-bearing liabilities. Net
interest income on a taxable-equivalent basis was $11,962,000 as compared to
$9,885,000 during the nine months ended September 30, 1995 and 1994,
respectively, representing an increase of 21.0%. Net interest income on a
taxable-equivalent basis was $4,038,000 as compared to $3,553,000 during the
three months ended September 30, 1995 and 1994, respectively, representing an
increase of 13.7%.
Average interest-earning assets increased by $23,668,000 to
$264,620,000 during the nine months ended September 30, 1995 from $240,952,000
during the nine months ended September 30, 1994. Average loans increased by
$24,410,000; average investments increased by $2,713,941; and average Federal
funds sold decreased by $536,900. The increase in average interest-earning
assets was funded by an increase in average deposits of $20,724,000 or 8.6% to
$260,618,000 during the nine months ended September 30, 1995 from $239,894,000
during the nine months ended September 30, 1994. Approximately 16% of the
average deposits were noninterest-bearing during the nine months ended September
30, 1995 as compared to 16% during the nine months ended September 30, 1994.
10
<PAGE>
RESULTS OF OPERATION (CONTINUED)
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
believes require 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 $206,000 and $566,000 during the three and nine months ended
September 30, 1995 and $191,000 and $603,000 during the three and nine months
ended September 30, 1994. Charge-offs, net of recoveries, amounted to $57,000
and $44,000 during the nine months ended September 30, 1995 and 1994,
respectively. The allowance for loan losses was 2.0% and 2.3% of total loans
outstanding at September 30, 1995 and 1994, respectively. 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 three and nine
months ended September 30, 1995 and 1994. (dollars in thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------- % INC
Sept 1995 Sept 1994 (DEC)
--------- --------- ------
<S> <C> <C> <C>
Service charges on deposits $693 $626 10.70%
Other service charges & fees 104 86 20.93%
Other income 70 51 37.25%
---- ---- ------
$867 $763 13.63%
==== ==== ======
NINE MONTHS ENDED
---------------------- % INC
Sept 1995 Sept 1994 (DEC)
--------- --------- -----
<S> <C> <C> <C>
Service charges on deposits $1,921 $1,798 6.84%
Other service charges & fees 457 382 19.63%
Other income 169 173 (2.31%)
------ ------ ------
$2,547 $2,353 8.24%
====== ====== ======
</TABLE>
11
<PAGE>
RESULTS OF OPERATIONS (CONTINUED)
The increase in service charges on deposits for the nine months ended September
30, 1995 is attributable to an increase in average deposits of $20,724,000 as
compared to the nine months ended September 30, 1994. The increase in other
service charges and fees is attributable to an increase in the volume of loans.
Following is an analysis of noninterest expense for the three and nine
months ended September 30, 1995 and 1994. (dollars in thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------- % INC
Sept 1995 Sept 1994 (DEC)
----------- ----------- ---------
<S> <C> <C> <C>
Salaries and employee benefits $1,593 $1,409 13.06%
Occupancy and equipment expense 571 493 15.82%
Deposit insurance premium (15) 138 (110.13%)
Data processing fees 92 94 (2.13%)
Other expense 728 536 35.82%
------ ------ -------
$2,968 $2,670 11.16%
====== ====== =======
NINE MONTHS ENDED
---------------------- % INC
Sept 1995 Sept 1994 (DEC)
----------- ----------- --------
<S> <C> <C> <C>
Salaries and employee benefits $4,698 $4,295 9.38%
Occupancy and equipment expense 1,583 1,407 12.51%
Deposit insurance premium 276 420 (34.29%)
Data processing fees 277 331 (16.31%)
Other expense 2,203 1,879 (17.24%)
------ ------ -------
$9,037 $8,332 8.46%
====== ====== =======
</TABLE>
Salaries and employee benefits for the nine months ended September 30,
1995 was $403,000 higher than during the same period in 1994. Salaries
increased $210,715; bonuses increased $78,431; and employee benefits increased
$114,030.
12
<PAGE>
RESULTS OF OPERATION (CONTINUED)
Following is a condensed summary of net income during the three and
nine months ended September 30, 1995 and 1994. (dollars in thousands)
<TABLE>
CAPTION>
THREE MONTHS ENDED
-------------------- INC
Sept 1995 Sept 1994 (DEC)
--------- --------- -------
<S> <C> <C> <C>
Net interest income $3,973 $3,478 $495
Provision for loan losses 206 191 15
Other income 867 763 104
Other expense 2,968 2,670 298
------ ------ ----
Income before income
taxes 1,666 1,380 286
Applicable income taxes 539 412 127
------ ------ ----
Net Income $1,127 $ 968 $159
====== ====== ====
NINE MONTHS ENDED
-------------------- INC
Sept 1995 Sept 1994 (DEC)
--------- --------- -------
<S> <C> <C> <C>
Net interest income $11,758 $9,643 $2,115
Provision for loan losses 566 603 (37)
Other income 2,547 2,353 194
Other expense 9,037 8,332 705
------- ------ ------
Income before income
taxes 4,702 3,061 1,641
Applicable income taxes 1,518 909 609
------- ------ ------
Net Income $ 3,184 $2,152 $1,032
======= ====== ======
</TABLE>
13
<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 September 30, 1995.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits - None.
B. There have been no reports filed on Form 8-K for the quarter
ended September 30, 1995.
14
<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
November 9, 1995 /s/ W. Edwin Lane, Jr.
- ------------------ ----------------------------------------
DATE W. EDWIN LANE, JR.
EXECUTIVE VICE PRESIDENT &
CHIEF FINANCIAL OFFICER
(Duly authorized officer and
principal financial/accounting
officer)
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1994
<PERIOD-START> JUN-30-1995 JUN-30-1994
<PERIOD-END> SEP-30-1995 SEP-30-1994
<CASH> 18,540 14,864
<INT-BEARING-DEPOSITS> 0 1,000
<FED-FUNDS-SOLD> 19,630 12,475
<TRADING-ASSETS> 0 0
<INVESTMENTS-HELD-FOR-SALE> 35,858 44,870
<INVESTMENTS-CARRYING> 11,545 0
<INVESTMENTS-MARKET> 47,462 43,832
<LOANS> 215,073 189,823
<ALLOWANCE> 4,216 4,117
<TOTAL-ASSETS> 313,968 274,976
<DEPOSITS> 271,138 240,312
<SHORT-TERM> 2,159 2,245
<LIABILITIES-OTHER> 7,764 2,423
<LONG-TERM> 0 15
<COMMON> 3,597 2,698
0 0
0 0
<OTHER-SE> 32,907 29,981
<TOTAL-LIABILITIES-AND-EQUITY> 313,968 274,976
<INTEREST-LOAN> 5,861 4,687
<INTEREST-INVEST> 702 596
<INTEREST-OTHER> 276 192
<INTEREST-TOTAL> 6,839 5,469
<INTEREST-DEPOSIT> 2,745 1,960
<INTEREST-EXPENSE> 121 31
<INTEREST-INCOME-NET> 3,973 3,478
<LOAN-LOSSES> 206 191
<SECURITIES-GAINS> 0 0
<EXPENSE-OTHER> 2,968 2,670
<INCOME-PRETAX> 1,666 1,380
<INCOME-PRE-EXTRAORDINARY> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1,127 968
<EPS-PRIMARY> .34 .29
<EPS-DILUTED> 0 0
<YIELD-ACTUAL> 10.08 9.16
<LOANS-NON> 2,690 3,752
<LOANS-PAST> 4,426 4,587
<LOANS-TROUBLED> 0 0
<LOANS-PROBLEM> 0 0
<ALLOWANCE-OPEN> 3,758 3,571
<CHARGE-OFFS> 404 422
<RECOVERIES> 295 365
<ALLOWANCE-CLOSE> 4,216 4,117
<ALLOWANCE-DOMESTIC> 0 0
<ALLOWANCE-FOREIGN> 0 0
<ALLOWANCE-UNALLOCATED> 4,216 4,117
</TABLE>
