<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
FORM 10-QSB
Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of
1934 for the quarterly period ended March 31, 1996
Commission file number 0-25422
PAB BANKSHARES, INC.
PAB BANKSHARES, INC.
(Exact name of Small Business Issuer
as specified in its charter)
Georgia 58-1473302
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3102 North Oak Street Extension
Valdosta, Georgia
(Address of principal executive offices)
(912) 242-7758
(Issuer's telephone number)
Check whether the Issuer (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
----- -----
The number of shares outstanding of the Issuer's class of common stock at March
31, 1996 was 1,363,945 shares of common stock.
Transitional Small Business Disclosure Format (Check one): Yes No X
----- -----
PAGE 1
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PAB BANKSHARES, INC.
FORM 10-QSB
TABLE OF CONTENTS
-----------------
PAGE
----
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS:
CONSOLIDATED BALANCE SHEETS - MARCH 31, 1996
(UNAUDITED) AND DECEMBER 31, 1995 . . . . . . . . . . . . . . . 3
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) - THREE
MONTH PERIODS ENDED MARCH 31, 1996 AND 1995 . . . . . . . . . . 5
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED) - THREE MONTH PERIODS ENDED MARCH 31,
1996 AND 1995 . . . . . . . . . . . . . . . . . . . . . . . . . 7
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) -
THREE MONTH PERIODS ENDED MARCH 31, 1996 AND 1995 . . . . . . . 8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . . . 10
ACCOUNTANTS' DISCLAIMER OF OPINION . . . . . . . . . . . . . . . 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION . . . . . . . . . . . . . . . . . . . . . . . 12
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . 18
ITEM 2. CHANGES IN SECURITIES . . . . . . . . . . . . . . . . . . . . . . 18
ITEM 3. DEFAULTS UPON SENIOR SECURITIES . . . . . . . . . . . . . . . . . 18
ITEM 4. SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS . . . . . . . . . . . . . . . . . . . . . . 18
ITEM 5. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . 18
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . . . 18
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
PAGE 2
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<TABLE>
PAB BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
---------------------------
ASSETS
------
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
------------ ------------
(Unaudited)
<S> <C> <C>
Cash and Cash Equivalents:
Cash and due from banks $ 7,044,656 9,781,601
Interest-bearing deposits in other banks 1,393,581 2,133,269
Federal funds sold 7,145,000 7,010,000
------------ ------------
Total Cash and Cash Equivalents 15,583,237 18,924,870
Time Deposits 993,000 1,203,400
Investment Securities 63,066,213 62,690,720
Investment in Unconsolidated Subsidiary 120,923 135,180
Loans, Net of Allowance for Loan Losses ($2,360,138 - 1996; $2,293,723 - 1995)
and Unearned Interest 178,100,932 169,228,734
Bank Premises and Equipment 6,738,943 6,517,731
Property Acquired in Settlement of Loans and Other Real Estate Owned:
Land and building of former banking offices 459,235 125,000
Land held for future development 366,790 366,790
Property acquired in settlement of loans 435,096 443,378
Accrued Interest Receivable 3,129,511 3,033,991
Cash Value of Life Insurance 1,310,109 1,541,454
Goodwill 2,347,099 2,374,074
Other Assets 890,339 502,997
------------ ------------
Total Assets $273,541,427 267,088,319
============ ============
</TABLE>
PAGE 3
<PAGE> 4
<TABLE>
PAB BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
---------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
------------ ------------
(Unaudited)
<S> <C> <C>
Deposits:
Demand $ 32,103,927 34,530,746
NOW 53,618,927 52,883,974
Savings 17,553,350 17,192,176
Time, $100,000 and over 40,741,232 38,688,794
Other time 91,842,755 87,929,786
------------ ------------
235,860,191 231,225,476
Notes Payable 2,700,000 2,700,000
Advances from Federal Home Loan Bank 8,981,989 7,941,073
Accrued Interest 698,865 680,618
Advance Payments by Borrowers for Taxes and Insurance 209,856 207,765
Dividends Payable 163,684 149,149
Income Taxes:
Current 403,343 24,235
Other Liabilities 473,192 781,272
------------ ------------
Total Liabilities 249,491,120 243,709,588
------------ ------------
Stockholders' Equity:
Common stock, no par value, 4,000,000 shares authorized, 1,425,364 shares
(1995 - 1,417,002) issued and 1,363,945 shares (1995 - 1,355,904) outstanding 1,263,745 1,263,745
Additional paid in capital 14,936,371 14,744,822
Retained earnings 9,264,365 8,646,738
Unrealized gains (losses) on available-for-sale securities, net of
applicable deferred income taxes 55,871 184,469
------------ ------------
25,520,352 24,839,774
Treasury stock, at cost (61,419 shares; 1995 - 61,098) (1,470,045) (1,461,043)
------------ ------------
24,050,307 23,378,731
------------ ------------
Total Liabilities and Stockholders' Equity $273,541,427 267,088,319
============ ============
</TABLE>
PAGE 4
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<TABLE>
PAB BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------------
1996 1995
---------- ----------
<S> <C> <C>
Interest Income:
Interest and fees on loans $ 4,192,695 3,708,635
Interest on investment securities:
Taxable 950,291 818,486
Tax exempt 50,413 37,148
Interest on federal funds sold 93,237 33,486
Interest on deposits in banks 26,364 78,878
----------- -----------
Total 5,313,000 4,676,633
----------- -----------
Interest Expense:
Interest on deposits 2,536,542 1,964,497
Interest on federal funds purchased 9,291 2,174
Interest on notes and mortgages 53,288 42,056
Interest on advances from Federal Home Loan Bank 121,465 67,180
----------- -----------
Total 2,720,586 2,075,907
----------- -----------
Net Interest Income 2,592,414 2,600,726
Provision for Loan Losses 76,250 75,000
----------- -----------
Net Interest Income After Provision for Loan Losses 2,516,164 2,525,726
----------- -----------
Other Income:
Service charges on deposit accounts 387,567 328,545
Insurance commissions 6,421 8,779
Fees on mortgage loans sold -0- 2,586
Equity in earnings of unconsolidated subsidiary 45,742 38,953
Gain (Loss) on sale of loans 3,543 (909)
Gain (Loss) on sale of assets 2,890 -0-
Other income 110,513 114,316
Securities gains (losses) 26,685 -0-
----------- -----------
Total 583,361 492,270
----------- -----------
Other Expenses:
Compensation 853,917 802,298
Other personnel expenses 182,393 216,354
Occupancy expense of bank premises 103,148 86,985
Furniture and equipment expense 183,975 164,639
Federal deposit insurance 34,061 114,730
Postage and courier services 45,629 52,011
Supplies 58,353 60,050
Amortization 26,977 29,525
Other operating expenses 433,550 362,974
----------- -----------
Total 1,922,003 1,889,566
----------- -----------
</TABLE>
PAGE 5
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<TABLE>
PAB BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------------
1996 1995
---------- ----------
<S> <C> <C>
Income Before Income Taxes 1,177,522 1,128,430
Income Taxes 396,211 366,617
----------- -----------
Net Income $ 781,311 761,813
=========== ===========
Earnings Per Share $ .57 .55
=========== ===========
Weighted Average Shares 1,362,152 1,392,568
=========== ===========
</TABLE>
PAGE 6
<PAGE> 7
<TABLE>
PAB BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
------------------------------------------
<CAPTION>
UNREALIZED GAINS (LOSSES) ON
AVAILABLE-FOR-SALE
SECURITIES,
NET OF
ADDITIONAL APPLICABLE
COMMON PAID IN RETAINED DEFERRED TREASURY
STOCK CAPITAL EARNINGS INCOME TAXES STOCK TOTAL
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balances, December 31, 1994 $1,263,745 9,793,831 6,230,933 (859,500) -0- 16,429,009
Issuance of 207,076 shares at $20 to
acquire First Federal Savings Bank of
Bainbridge -0- 4,141,520 -0- -0- -0- 4,141,520
Issuance of 2,488 shares at $20 to
directors in lieu of fees -0- 49,760 -0- -0- -0- 49,760
Issuance of 12,211.533 shares at $19.95 through
dividend reinvestment plan -0- 243,620 -0- -0- -0- 243,620
Net Income -0- -0- 761,813 -0- -0- 761,813
Acquisition of 153.628 shares of treasury stock -0- -0- -0- -0- 3,226 (3,226)
Change in unrealized gains and losses on
available-for-sale securities, net of
applicable deferred income taxes -0- -0- -0- 537,716 -0- 537,716
---------- ---------- ---------- ---------- ---------- ----------
Balances, March 31, 1995 (Unaudited) $1,263,745 14,228,731 6,992,746 (321,784) 3,226 22,160,212
========== ========== ========== ========== ========== ==========
Balances, December 31, 1995 $1,263,745 14,744,822 8,646,738 184,469 1,461,043 23,378,731
Issuance of 4,084 shares at $23.75 through
dividend reinvestment plan -0- 97,007 -0- -0- -0- 97,007
Issuance of 932 shares at $25.00 through
common stock purchase plan -0- 23,300 -0- -0- -0- 23,300
Issuance of 3,346 shares at $21.00 to Directors
in lieu of fees -0- 70,265 -0- -0- -0- 70,265
Net Income -0- -0- 781,311 -0- -0- 781,311
Acquisition of 1,237 shares of treasury stock -0- -0- -0- -0- 30,925 (30,925)
Sale of 916 shares of treasury stock -0- 977 -0- -0- (21,923) 22,900
Dividends -0- -0- (163,684) -0- -0- (163,684)
Change in unrealized gains and losses on
available-for-sale securities, net of
applicable deferred income taxes -0- -0- -0- (128,598) -0- (128,598)
---------- ---------- ---------- ---------- ---------- ----------
Balances, March 31, 1996 (Unaudited) $1,263,745 14,936,371 9,264,365 55,871 1,470,045 24,050,307
========== ========== ========== ========== ========== ==========
</TABLE>
PAGE 7
<PAGE> 8
<TABLE>
PAB BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-----------------------
1996 1995
---------- ----------
<S> <C> <C>
Cash Flows From Operating Activities:
Net income $ 781,311 761,813
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 114,709 81,102
Deferred income taxes (5,982) 86,965
Provision for loan losses 76,250 75,000
Amortization of goodwill 26,977 29,525
Amortization (accretion) of subsidiary acquisition adjustments (77,517) (51,182)
(Gain) loss on sale of loans (3,543) 909
Securities (gains) losses (26,685) -0-
(Gain) loss on sale of assets (2,890) -0-
Minority interests 93 120
Equity in earnings of unconsolidated subsidiary (45,742) (38,953)
Dividend received from unconsolidated subsidiary 60,000 50,000
Change in assets and liabilities:
(Increase) decrease in accrued interest receivable (95,520) 67,242
Increase (decrease) in accrued interest payable 18,247 61,329
(Increase) decrease in other assets (304,072) (134,650)
Increase (decrease) in income taxes payable 379,108 -0-
Increase (decrease) in other liabilities (241,170) (212,885)
----------- -----------
Net cash provided (used) by operating activities 653,574 776,335
----------- -----------
Cash Flows From Investing Activities:
Capital expenditures (713,430) (95,234)
Proceeds from sale of assets 46,164 -0-
Principal payments on mortgage-backed securities 207,107 188,618
Purchase of available-for-sale securities (7,545,493) (1,490,865)
Purchase of held-to-maturity securities -0- (125,000)
Proceeds from maturity of available-for-sale securities 6,865,659 2,185,165
Proceeds from maturity of held-to-maturity securities -0- 100,000
(Increase) decrease in time deposits 210,400 97,773
(Increase) decrease in loans (8,937,814) (3,196,381)
(Increase) decrease in cash value of life insurance 231,345 (40,795)
Cash disbursed to acquire First Federal Savings Bank -0- (3,901,055)
Cash and cash equivalent assets received upon acquisition of First Federal Savings Bank -0- 3,915,646
----------- -----------
Net cash provided (used) by investing activities (9,636,062) (2,362,128)
----------- -----------
Cash Flows From Financing Activities:
Proceeds of additional stock issued 23,300 -0-
Increase (decrease) in time deposits 5,965,407 7,548,962
Increase (decrease) in other deposits (1,330,692) (4,898,351)
Advances from Federal Home Loan Bank 8,958,000 1,500,000
Payments on long-term indebtedness (7,917,084) (111,250)
Dividends paid (52,142) (166,191)
</TABLE>
PAGE 8
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<TABLE>
PAB BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-----------------------
1996 1995
---------- ----------
<S> <C> <C>
Acquisition of treasury stock (30,925) (3,226)
Proceeds from sale of treasury stock 22,900 -0-
Decrease in federal funds purchased -0- (870,000)
Increase in advance payments by borrowers for taxes and insurance 2,091 25,216
----------- -----------
Net cash provided (used) by financing activities 5,640,855 3,025,160
----------- -----------
Net Increase (Decrease) in Cash and Cash Equivalents (3,341,633) 1,439,367
Cash and Cash Equivalents at Beginning of Period 18,924,870 12,808,797
----------- -----------
Cash and Cash Equivalents at End of Period $15,583,237 14,248,164
=========== ===========
Supplemental Disclosures of Cash Flow Information
- -------------------------------------------------
Cash Paid During The Period For:
Interest $ 2,702,339 2,014,578
=========== ===========
Income taxes $ 7,895 40,280
=========== ===========
Schedule of Non-Cash Investing and Financing Activities
- -------------------------------------------------------
Total increase (decrease) in unrealized losses on securities available-for-sale $ 203,525 (681,577)
=========== ===========
Stock issued to directors in payment of fees, stock issued through dividend
reinvestment plan and stock issued to acquire First Federal Savings Bank $ 167,272 4,434,900
=========== ===========
</TABLE>
PAGE 9
<PAGE> 10
PAB BANKSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
Basis of Presentation
- ---------------------
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal and recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three months ended March 31, 1996 are not necessarily
indicative of the results that may be expected for the year ending December 31,
1996. For further information, refer to the consolidated financial statements
and footnotes thereto included in the Company's annual report on Form 10-KSB for
the year ended December 31, 1995.
PAGE 10
<PAGE> 11
Board of Directors
PAB Bankshares, Inc. and Subsidiaries
Valdosta, Georgia
The accompanying consolidated balance sheet of PAB Bankshares, Inc. and
Subsidiaries as of March 31, 1996, and the related statements of income,
stockholders' equity and cash flows, for the three months ended March 31, 1996
and 1995 were not audited by us and, accordingly, we do not express an opinion
on them.
We have audited, in accordance with generally accepted auditing standards, the
consolidated balance sheet of PAB Bankshares, Inc. and Subsidiaries as of
December 31, 1995, and the related consolidated statements of income,
stockholders' equity and cash flows for the year then ended (not presented
herein); and in our report dated January 25, 1996, we expressed an unqualified
opinion on those consolidated financial statements.
In our opinion, the information set forth in the accompanying 1995 consolidated
financial statements is fairly stated, in all material respects, in relation to
the consolidated financial statements from which it has been derived.
STEWART, FOWLER & STALVEY, P.C.
- -----------------------------------------
Valdosta, Georgia
April 11, 1996
PAGE 11
<PAGE> 12
MANAGEMENTS'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Results of Operations
- ---------------------
The Company, including the operations of its subsidiaries, reported consolidated
net income of $781,311 for the three months ended March 31, 1996 compared to
$761,813 for the three months ended March 31, 1995. Net interest income after
provision for loan losses was $2,516,164 and $2,525,726 for the three months
ended March 31, 1996 and 1995, respectively. The provision for loan losses was
$76,250 and $75,000 for the three months ended March 31, 1996 and 1995,
respectively. Noninterest income totalled $583,361 and $492,270 for the three
months ended March 31, 1996 and 1995, respectively and noninterest expenses
totalled $1,922,003 and $1,889,566 for the three months ended March 31, 1996 and
1995, respectively.
The following table summarizes the results of operations of the Company for the
three month periods ended March 31, 1996 and 1995.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------
1996 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Interest income
$ 5,313 4,677
Interest expense (2,721) (2,076)
-------- --------
Net interest income 2,592 2,601
Provision for loan losses (76) (75)
Noninterest income 583 492
Noninterest expense (1,922) (1,890)
-------- --------
Income before taxes
1,177 1,128
Income taxes (396) (366)
-------- --------
Net income
$ 781 762
======== ========
</TABLE>
Interest Income
- ---------------
Total interest income increased approximately $636,000 for the three months
ended March 31, 1996 compared to the three months ended March 31, 1995.
This increase was the effect of an increase in the average loan portfolio
balance from approximately $155.7 million for the three months ended March 31,
1995 to approximately $176.0 million for the three months ended March 31, 1996.
The average rate earned on the loan portfolio was unchanged at 9.53%. The
effect of these changes increased the interest income earned on the loan
portfolio from approximately $3,709,000 for the three months ended March 31,
1995 to approximately $4,193,000 for the three months ended March 31, 1996, an
increase of $484,000.
Interest earned on taxable investment securities increased from approximately
$818,000 for the three months ended March 31, 1995 to approximately $950,000 for
the three months ended March 31, 1996, an increase of $132,000. This increase
was the net effect of an increase in the average taxable investment portfolio
balance from approximately $51.2 million for the three months ended March 31,
1995 to approximately $59.7 million for the three months ended March 31, 1996
PAGE 12
<PAGE> 13
and a decrease in the rate earned on the taxable investment portfolio from 6.39%
for the three months ended March 31, 1995 to 6.37% for the three months ended
March 31, 1996.
Interest earned on nontaxable investment securities increased from approximately
$37,000 for the three months ended March 31, 1996 to approximately $50,000 for
the three months ended March 31, 1996, an increase of $13,000. This increase
was the combined effect of an increase in the average non-taxable investment
portfolio from approximately $2.5 million for the three months ended March 31,
1995 to approximately $3.0 million for the three months ended March 31, 1996 and
an increase in the rate earned on the non-taxable investment portfolio from
5.83% for the three months ended March 31, 1995 to 6.73% for the three months
ended March 31, 1996.
As of March 31, 1996, the amortized cost of taxable and non-taxable investments
consisted of U.S. Treasury securities (30.3%), securities of U.S. Government
Agencies and Corporations (61.0%), obligations of States, Counties and
Municipalities (5.1%), equity securities (3.5%) and other debt securities (.1%).
The securities are predominantly at fixed rates. There are no interest rates
which change inversely to changes in interest rates. As further discussed under
"Financial Condition", the portfolio reflects unrealized gains.
Interest earned on interest-bearing deposits in banks decreased from
approximately $79,000 for the three months ended March 31, 1995 to approximately
$26,000 for the three months ended March 31, 1996, a decrease of $53,000. This
decrease was the combined effect of a decrease in the average interest-bearing
deposits balance from approximately $5.2 million for the three months ended
March 31, 1995 to approximately $2.9 million for the three months ended March
31, 1996 and a decrease in the rate earned on the interest-bearing deposits from
6.07% for the three months ended March 31, 1995 to 3.69% for the three months
ended March 31, 1996.
Interest earned on federal funds sold increased from approximately $33,000 for
the three months ended March 31, 1995 to approximately $93,000 for the three
months ended March 31, 1996, an increase of $60,000. This increase was the
combined effect of an increase in the average federal funds sold balance from
approximately $2.9 million for the three months ended March 31, 1995 to
approximately $7.1 million for the three months ended March 31, 1996 and an
increase in the rate earned on the federal funds sold from 4.62% for the three
months ended March 31, 1995 to 5.27% for the three months ended March 31, 1996.
Interest Expense
- ----------------
Total interest expense increased approximately $645,000 for the three months
ended March 31, 1996 compared to the three months ended March 31, 1995.
This increase was the combined effect of an increase in the average balance of
interest-bearing deposits from approximately $180.8 million for the three months
ended March 31, 1995 to approximately $200.2 million for the three months ended
March 31, 1996 and an increase in the average rate paid on interest-bearing
deposits from 4.35% for the three months ended March 31, 1995 to 5.07% for the
three months ended March 31, 1996. The effect of these changes increased the
interest expense on interest-bearing deposits from approximately $1,964,000 for
the three months ended March 31, 1995 to approximately $2,537,000 for the three
months ended March 31, 1996, an increase of $573,000. The increase in interest-
bearing deposits came from the local communities served by the Banks.
All other interest expense consisting principally of notes and mortgages
payable, increased from approximately $111,000 for the three months ended March
31, 1995 to approximately $184,000 for the three months ended March 31, 1996, an
PAGE 13
<PAGE> 14
increase of $73,000. This increase was the combined effect of an increase in
the average balance of notes and mortgages payable from approximately $7.3
million for the three months ended March 31, 1995 to approximately $11.2 million
for the three months ended March 31, 1996 and an increase in the average rate
paid on notes and mortgages payable from 5.97% for the three months ended March
31, 1995 to 6.26% for the three months ended March 31, 1996. Other interest
expense included interest on federal funds purchased of approximately $9,000 for
the three months ended March 31, 1996 and $2,000 for the three months ended
March 31, 1995. As of March 31, 1996, the notes and mortgages payable consisted
of advances from the Federal Home Loan Bank in the amount of $9.0 million with
fixed and variable interest rates ranging from 5.20% to 6.66% at March 31, 1996
with maturities through 2011 and notes payable to a correspondent bank in the
amount of $2.7 million at prime less .50% subject to a ceiling of 9.50% until
July 1, 1999, secured by the stock of First Federal Savings Bank of Bainbridge
which was acquired effective January 1, 1995. Annual principal payments are
scheduled to begin July 1, 1997 and continue through the maturity date of July
1, 2004. This loan was to partially fund the acquisition of First Federal
Savings Bank of Bainbridge. The advances from the Federal Home Loan Bank were
primarily to fund mortgage loans made.
Noninterest Income
- ------------------
The following table presents the principal components of noninterest income for
the three month periods ended March 31, 1996 and 1995.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------
1996 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Service charges on deposit
accounts
$ 387 328
Insurance commissions 6 9
Fees on mortgage loans sold -0- 3
Gain (Loss) on sale of loans 4 (1)
Gain (Loss) on sale of assets 3 -0-
Securities gains (losses) 27 -0-
Equity in earnings of unconsolidated
subsidiary 46 39
Other income 110 114
-------- --------
Total Noninterest Income
$ 583 492
======== ========
</TABLE>
Noninterest income for the three months ended March 31, 1996 as compared to the
three months ended March 31, 1995 increased approximately $91,000.
Service charges on deposit accounts for the three months ended March 31, 1996 as
compared to the three months ended March 31, 1995, increased approximately
$59,000. This increase was related primarily to an increase in the number of
transaction deposit accounts with NSF charges. Equity in earnings of
unconsolidated subsidiary, which represents the Company's 50% interest in the
earnings of Empire Financial Services, Inc., an unconsolidated subsidiary which
is owned by First Federal Savings Bank of Bainbridge, increased $7,000. All
other income increased approximately $25,000.
PAGE 14
<PAGE> 15
Noninterest Expenses
- --------------------
The following table presents the principal components of noninterest expenses
for the three month periods ended March 31, 1996 and 1995.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------
1996 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Compensation
$ 854 802
Other personnel expenses 182 216
Occupancy expense of bank premises 103 87
Furniture and equipment expense 184 165
Federal deposit insurance 34 115
Postage and courier services 46 52
Supplies 58 60
Amortization 27 30
Other operating expenses 434 363
-------- --------
Total Noninterest Expenses
$ 1,922 1,890
======== ========
</TABLE>
Noninterest expenses for the three months ended March 31, 1996 as compared to
the three months ended March 31, 1995, increased approximately $32,000 or 1.7%.
Compensation and other personnel expenses increased approximately $18,000 for
the three months ended March 31, 1996 as compared to the three months ended
March 31, 1995. This increase reflects increases in the number of employees, in
wage levels and in the cost of employee benefits. All other expenses increased
approximately $14,000 or 1.6% for the three months ended March 31, 1996
compared to the three months ended March 31, 1995. This increase was primarily
the result of a larger volume of business.
Provision for Loan Losses
- -------------------------
The provision for loan losses for the three months ended March 31, 1996 was
$76,000 compared to $75,000 for the three months ended March 31, 1995. The
balance of the allowance for loan losses was approximately $2,360,000 (1.3% of
outstanding loans) at March 31, 1996 and approximately $2,040,000 (1.3% of
outstanding loans) at March 31, 1995. Actual loan charge-offs net of recoveries
were approximately $10,000 for the three months ended March 31, 1996 and
approximately $14,000 for the three months ended March 31, 1995. Non-accrual
loans were approximately $238,000 at March 31, 1996 as compared to $198,000 at
December 31, 1995. Loans ninety days or more past due and still accruing
amounted to approximately $451,000 at March 31, 1996 and $302,000 at December
31, 1995. In determining an adequate level of loan loss reserves, such loans
were included in such consideration. The amount of the provision for loan
losses is a result of the amount of loans charged off, the amount of loans
recovered and management's conclusion concerning the level of the allowance for
loan losses. The level of the allowance for loan losses is based upon a number
of factors including the Banks' past loan loss experience, management's
evaluation of the collectibility of loans including specific impaired loans, the
general state of the economy and other relevant factors.
Income Taxes
- ------------
The effective tax rate for the three months ended March 31, 1996 was 33.6%
compared to 32.5% for the three months ended March 31, 1995.
PAGE 15
<PAGE> 16
Financial Condition
- -------------------
The Company, including its subsidiaries, reported consolidated total assets of
approximately $273.5 million at March 31, 1996 and approximately $267.1 million
at December 31, 1995 representing an increase of approximately $6.4 million.
During the three months ended March 31, 1996, deposits increased $4.6 million,
cash decreased $2.7 million, advances from the Federal Home Loan Bank increased
$1.0 million, operations generated $.7 million, interest bearing deposits
decreased $1.0 million which provided $10.0 million of funds which were used to
fund increases in loans of $8.9 million, increase investments $.4 million and
fund capital expenditures of $.7 million. The capital expenditures represented
the remaining cost related to the construction of a new main office facility for
the Company's subsidiary, Farmers and Merchants Bank of Adel. The new facility
was occupied in January 1996.
A number of factors contribute to the increases in loans and deposits as
discussed under "Results of Operations" and "Financial Condition". Such factors
include the growth in the customer base due to business development efforts of
the management team, the pricing of loans and deposits and the favorable
economic conditions experienced in the markets served by the subsidiary banks.
The changes in interest rates as previously discussed are reflective of interest
rates in general, market conditions and competition. Changes in short-term
funds including cash and due from banks, federal funds sold, interest-bearing
deposits and investment securities are reflective of the liquidity position of
the company.
The investment securities portfolio of the Company, including its subsidiaries,
reflected unrealized gains for the available-for-sale category of approximately
$105,000 ($56,000 net of income tax effect). All securities were held in the
available-for-sale category as of March 31, 1996. Pursuant to Financial
Accounting Standards Board Statement No. 115 effective January 1, 1994, a
valuation allowance has been provided for the available-for-sale category with a
resulting charge or credit to stockholders' equity (net of income tax effect).
The Company and its subsidiary banks are required to maintain minimum amounts of
capital to total "risk weighted" assets, as defined by the banking regulators.
On a consolidated basis, at March 31, 1996, a comparison of the minimum required
and actual capital ratios are as follows:
<TABLE>
<CAPTION>
CONSOLIDATED
__________________
MINIMUM
REQUIRED ACTUAL
-------- --------
<S> <C> <C>
Leverage Capital Ratio 4.0 9.0
Tier One Capital to
"Risk Weighted" Assets 4.0 14.3
Tier Two Capital to
"Risk Weighted" Assets 8.0 15.5
</TABLE>
Each entity was in full compliance with its respective regulatory capital
requirements.
Liquidity and Capital Resources
- -------------------------------
Liquidity management involves the matching of the cash flow requirements of
customers, for the withdrawal of funds or the funding of additional loans, and
the ability of the Banks to meet those requirements. Management monitors and
maintains appropriate levels of assets and liabilities so that maturities of
PAGE 16
<PAGE> 17
assets are such that adequate funds are provided to meet estimated customer
withdrawals and loan requests.
The Banks' liquidity position depends primarily upon the liquidity of its assets
relative to its need to respond to short-term demand for funds caused by
withdrawals from deposit accounts and loan funding commitments. Primary sources
of liquidity are scheduled payments on its loans and interest on the Banks'
investments. The Banks may also utilize their cash and due from banks, short-
term deposits with financial institutions, federal funds sold and investment
securities to meet liquidity requirements. At March 31, 1996, the Company's
cash and due from banks were approximately $6.2 million in excess of its reserve
requirements of approximately $.9 million, its short-term deposits with
financial institutions were approximately $2.4 million and its federal funds
sold were approximately $7.1 million. All of the above can be converted to cash
on short notice. The sale of investments which had a market value of
approximately $63.1 million at March 31, 1996 can also be used to meet liquidity
requirements, to the extent the investments are not pledged to secure public
funds on deposit as required by law. Securities with a market value of
approximately $25.8 million were pledged as of March 31, 1996.
The Banks' funding needs are based primarily on the volume of lending. The
primary funding source is from new deposits. The Banks seek to attract new
deposits by paying rates of interest on deposit accounts which are competitive
in their respective primary service areas. The Banks' generally do not pay
brokers' commissions in connection with the obtaining of deposits or have
deposits outside the primary service area. The Banks do not pay premiums to
attract deposits. The Banks continue to expect that new deposits will serve as
their primary funding source.
The Banks also have the ability, on short-term basis, to borrow and purchase
federal funds from other financial institutions. The Banks are members of the
Federal Home Loan Bank of Atlanta and as such have the ability to secure
advances therefrom, although the cost of such advances exceed lower cost
alternatives such as deposits from the local communities. The Banks had
advances outstanding from the Federal Home Loan Bank of Atlanta of $9.0 million
at March 31, 1996, at fixed and variable rates ranging from 5.20% to 6.66%.
Through the Company's dividend reinvestment and common stock purchase plans, an
additional 5,016 shares at an average of $24.00 per share was issued during the
three months ended March 31, 1996.
PAGE 17
<PAGE> 18
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 2. CHANGES IN SECURITIES.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
Exhibit No.
-----------
27.1 Financial Data Schedule
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the period
covered by this Report.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
PAGE 18
<PAGE> 19
SIGNATURES
In accordance with the requirements of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
PAB BANKSHARES, INC.
By: R. BRADFORD BURNETTE
-----------------------------------------
R. Bradford Burnette
President
(Principal Executive Officer)
By: C. LARRY WILKINSON
----------------------------------------
C. Larry Wilkinson
(Vice President, Principal
Financial Officer, and
Principal Accounting Officer)
Date:May 13, 1996
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 7,044,656
<INT-BEARING-DEPOSITS> 2,386,581
<FED-FUNDS-SOLD> 7,145,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 63,066,213
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 180,461,070
<ALLOWANCE> 2,360,138
<TOTAL-ASSETS> 273,541,427
<DEPOSITS> 235,860,191
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1,948,940
<LONG-TERM> 11,681,989
<COMMON> 1,263,745
0
0
<OTHER-SE> 22,786,562
<TOTAL-LIABILITIES-AND-EQUITY> 273,541,427
<INTEREST-LOAN> 4,192,695
<INTEREST-INVEST> 1,000,704
<INTEREST-OTHER> 119,601
<INTEREST-TOTAL> 5,313,000
<INTEREST-DEPOSIT> 2,536,542
<INTEREST-EXPENSE> 2,720,586
<INTEREST-INCOME-NET> 2,592,414
<LOAN-LOSSES> 76,250
<SECURITIES-GAINS> 26,685
<EXPENSE-OTHER> 1,922,003
<INCOME-PRETAX> 1,177,522
<INCOME-PRE-EXTRAORDINARY> 781,311
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 781,311
<EPS-PRIMARY> .57
<EPS-DILUTED> .57
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
