<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, 1997
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, 1997 was 2,817,645 shares of common stock.
Transitional Small Business Disclosure Format (Check one): Yes No X
----- -----
<PAGE> 2
PAB BANKSHARES, INC.
FORM 10-QSB
TABLE OF CONTENTS
-----------------
PAGE
----
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS:
CONSOLIDATED BALANCE SHEETS - MARCH 31, 1997
(UNAUDITED) AND DECEMBER 31, 1996 . . . . . . . . . . . . . . . 3
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) - THREE
MONTH PERIODS ENDED MARCH 31, 1997 AND 1996 . . . . . . . . . . 4
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED) - THREE MONTH PERIODS ENDED MARCH 31,
1997 AND 1996 . . . . . . . . . . . . . . . . . . . . . . . . . 5
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) -
THREE MONTH PERIODS ENDED MARCH 31, 1997 AND 1996 . . . . . . . 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . . . 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION . . . . . . . . . . . . . . . . . . . . . . . 8
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . 14
ITEM 2. CHANGES IN SECURITIES . . . . . . . . . . . . . . . . . . . . . . 14
ITEM 3. DEFAULTS UPON SENIOR SECURITIES . . . . . . . . . . . . . . . . . 14
ITEM 4. SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS . . . . . . . . . . . . . . . . . . . . . . 14
ITEM 5. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . 14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . . . 14
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
<PAGE> 3
<TABLE>
PAB BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
---------------------------
ASSETS
------
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996
------------ ------------
(Unaudited)
<S> <C> <C>
Cash and Cash Equivalents:
Cash and due from banks $ 11,860,846 9,739,420
Interest-bearing deposits in other banks 3,688,212 3,907,836
Federal funds sold and securities purchased under agreements to resell 4,155,000 14,515,000
------------ ------------
Total Cash and Cash Equivalents 19,704,058 28,162,256
Time Deposits 396,000 595,000
Investment Securities 55,833,087 56,783,089
Investment in Unconsolidated Subsidiary 181,886 130,872
Loans, Net of Allowance for Loan Losses ($2,612,517 - 1997; $2,550,242 - 1996)
and Unearned Interest 201,911,682 195,856,247
Bank Premises and Equipment 6,771,362 6,707,165
Property Acquired in Settlement of Loans and Other Real Estate Owned:
Land and building of former banking offices 441,630 445,457
Land held for future development 366,790 366,790
Property acquired in settlement of loans 57,051 334,596
Accrued Interest Receivable 3,288,306 3,175,569
Cash Value of Life Insurance 1,977,731 1,957,298
Goodwill 2,239,193 2,266,170
Other Assets 941,351 524,372
------------ ------------
Total Assets $294,110,127 297,304,881
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand $ 35,236,935 40,203,157
NOW 51,616,540 51,926,581
Savings 17,582,866 17,431,631
Time, $100,000 and over 45,451,638 45,525,141
Other time 97,358,772 94,587,414
------------ ------------
247,246,751 249,673,924
Notes Payable 1,200,000 1,200,000
Advances from Federal Home Loan Bank 15,505,249 17,096,499
Accrued Interest 665,115 725,549
Advance Payments by Borrowers for Taxes and Insurance 207,612 159,505
Dividends Payable 225,408 210,214
Income Taxes:
Current 471,789 -0-
Other Liabilities 677,285 1,172,677
------------ ------------
Total Liabilities 266,199,209 270,238,368
------------ ------------
Stockholders' Equity:
Common stock, no par value, 4,000,000 shares authorized,
2,899,801 shares (1996 - 2,892,639) issued and 2,817,645 shares
(1996 - 2,802,849) outstanding 1,263,745 1,263,745
Additional paid in capital 15,759,908 15,609,717
Retained earnings 12,039,436 11,246,210
Unrealized gains (losses) on available-for-sale securities, net of
applicable deferred income taxes (168,982) 21,388
------------ ------------
28,894,107 28,141,060
Treasury stock, at cost (82,156 shares; 1996 - 89,790) (983,189) (1,074,547)
------------ ------------
27,910,918 27,066,513
------------ ------------
Total Liabilities and Stockholders' Equity $294,110,127 297,304,881
============ ============
</TABLE>
<PAGE> 4
<TABLE>
PAB BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------------------
1997 1996
---------- ----------
<S> <C> <C>
Interest Income:
Interest and fees on loans $4,822,889 4,192,695
Interest on investment securities:
Taxable 880,484 950,291
Tax exempt 29,437 50,413
Interest on federal funds sold 81,050 93,237
Interest on deposits in banks 44,749 26,364
----------- -----------
Total 5,858,609 5,313,000
----------- -----------
Interest Expense:
Interest on deposits 2,504,829 2,536,542
Interest on federal funds purchased 14,116 9,291
Interest on notes and mortgages 22,250 53,288
Interest on advances from Federal Home Loan Bank 250,107 121,465
----------- -----------
Total 2,791,302 2,720,586
----------- -----------
Net Interest Income 3,067,307 2,592,414
Provision for Loan Losses 97,000 76,250
----------- -----------
Net Interest Income After Provision for Loan Losses 2,970,307 2,516,164
----------- -----------
Other Income:
Service charges on deposit accounts 399,559 387,567
Insurance commissions 22,378 6,421
Equity in earnings of unconsolidated subsidiary 51,013 45,742
Gain (Loss) on sale of loans 2,640 3,543
Gain (Loss) on sale of assets -0- 2,890
Gain (Loss) on sale of other real estate 869 -0-
Other income 166,690 110,513
Securities gains (losses) (307) 26,685
----------- -----------
Total 642,842 583,361
----------- -----------
Other Expenses:
Compensation 950,415 853,917
Other personnel expenses 233,785 182,393
Occupancy expense of bank premises 106,104 103,148
Furniture and equipment expense 147,389 183,975
Federal deposit insurance 10,518 34,061
Postage and courier services 58,760 45,629
Supplies 82,803 58,353
Amortization 26,977 26,977
Other operating expenses 465,015 433,550
----------- -----------
Total 2,081,766 1,922,003
----------- -----------
Income Before Income Taxes 1,531,383 1,177,522
Income Taxes 512,749 396,211
----------- -----------
Net Income $ 1,018,634 781,311
=========== ===========
Earnings Per Share $ .36 .29
=========== ===========
Weighted Average Shares 2,842,056 2,724,304
=========== ===========
</TABLE>
<PAGE> 5
<TABLE>
PAB BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
------------------------------------------
<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, 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
========== ========== ========== ========== ========== ==========
Balances, December 31, 1996 $ 1,263,745 15,609,717 11,246,210 21,388 1,074,547 27,066,513
Issuance of 6,517 shares
at $20.31 average
through dividend
reinvestment plan -0- 132,342 -0- -0- -0- 132,342
Issuance of 645 shares at
$21.375 through common
stock purchase plan -0- 13,780 -0- -0- -0- 13,780
Issuance of 7,634 shares
at $12.50 to Directors
in lieu of fees -0- 4,069 -0- -0- (91,358) 95,427
Net Income -0- -0- 1,018,634 -0- -0- 1,018,634
Dividends -0- -0- (225,408) -0- -0- (225,408)
Change in unrealized
gains and losses on
available-for-sale
securities, net of
applicable deferred
income taxes -0- -0- -0- (190,370) -0- (190,370)
---------- ---------- ---------- ---------- ---------- ----------
Balances, March 31, 1997(Unaudited) $1,263,745 15,759,908 12,039,436 (168,982) 983,189 27,910,918
========== ========== ========== ========== ========== ==========
</TABLE>
<PAGE> 6
<TABLE>
PAB BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-----------------------------
1997 1996
---------- ----------
<S> <C> <C>
Cash Flows From Operating Activities:
Net income $ 1,018,634 781,311
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 139,866 114,709
Deferred income taxes (7,177) (5,982)
Provision for loan losses 97,000 76,250
Amortization of goodwill 26,977 26,977
Amortization (accretion) of subsidiary acquisition adjustments (41,143) (77,517)
(Gain) loss on sale of loans (2,640) (3,543)
Securities (gains) losses 307 (26,685)
(Gain) loss on sale of assets -0- (2,890)
(Gain) loss on sale of other real estate (869) -0-
Minority interests 151 93
Equity in earnings of unconsolidated subsidiary (51,013) (45,742)
Dividend received from unconsolidated subsidiary -0- 60,000
Increase in cash value of life insurance (20,433) (12,102)
Change in assets and liabilities:
(Increase) decrease in accrued interest receivable (112,737) (95,520)
Increase (decrease) in accrued interest payable (60,434) 18,247
(Increase) decrease in other assets (300,334) (304,072)
Increase (decrease) in income taxes payable 471,789 379,108
Increase (decrease) in other liabilities (400,116) (241,170)
----------- -----------
Net cash provided (used) by operating activities 757,828 641,472
----------- -----------
Cash Flows From Investing Activities:
Capital expenditures (200,236) (713,430)
Proceeds from sale of assets -0- 46,164
Principal payments on mortgage-backed securities 111,730 207,107
Purchase of available-for-sale securities (3,543,805) (4,545,493)
Proceeds from maturity of available-for-sale securities 3,927,183 3,865,659
Proceeds from sale of available-for-sale securities 194,700 -0-
(Increase) decrease in time deposits 199,000 210,400
(Increase) decrease in loans (5,870,190) (8,937,814)
(Increase) decrease in cash value of life insurance -0- 243,447
----------- -----------
Net cash provided (used) by investing activities (5,181,618) (9,623,960)
----------- -----------
Cash Flows From Financing Activities:
Proceeds of additional stock issued 13,780 23,300
Increase (decrease) in time deposits 2,697,855 5,965,407
Increase (decrease) in other deposits (5,125,028) (1,330,692)
Advances from Federal Home Loan Bank 1,050,000 8,958,000
Payments on long-term indebtedness (2,641,250) (7,917,084)
Dividends paid (77,872) (52,142)
Acquisition of treasury stock -0- (30,925)
Proceeds from sale of treasury stock -0- 22,900
Decrease in federal funds purchased -0-
Increase in advance payments by borrowers for taxes and insurance 48,107 2,091
----------- -----------
Net cash provided (used) by financing activities (4,034,408) 5,640,855
----------- -----------
Net Increase (Decrease) in Cash and Cash Equivalents (8,458,198) (3,341,633)
Cash and Cash Equivalents at Beginning of Period 28,162,256 18,924,870
----------- -----------
Cash and Cash Equivalents at End of Period $19,704,058 15,583,237
=========== ===========
Supplemental Disclosures of Cash Flow Information
- -------------------------------------------------
Cash Paid During The Period For:
Interest $ 2,851,736 2,702,339
=========== ===========
Income taxes $ 31,174 7,895
=========== ===========
Schedule of Non-Cash Investing and Financing Activities
- -------------------------------------------------------
Total increase (decrease) in unrealized losses on securities available-for-sale $ 305,959 203,525
=========== ===========
Stock issued to directors in payment of fees, stock issued through dividend
reinvestment plan and stock issued to acquire First Federal Savings Bank $ 227,769 167,272
=========== ===========
</TABLE>
<PAGE> 7
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, 1997 are not necessarily
indicative of the results that may be expected for the year ending December 31,
1997. 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, 1996.
<PAGE> 8
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 $1,018,634 for the three months ended March 31, 1997 compared to
$781,311 for the three months ended March 31, 1996. Net interest income after
provision for loan losses was $2,970,307 and $2,516,164 for the three months
ended March 31, 1997 and 1996, respectively. The provision for loan losses was
$97,000 and $76,250 for the three months ended March 31, 1997 and 1996,
respectively. Noninterest income totalled $642,842 and $583,361 for the three
months ended March 31, 1997 and 1996, respectively and noninterest expenses
totalled $2,081,766 and $1,922,003 for the three months ended March 31, 1997 and
1996, respectively.
The following table summarizes the results of operations of the Company for the
three month periods ended March 31, 1997 and 1996.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------
1997 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Interest income $ 5,858 5,313
Interest expense (2,791) (2,721)
-------- --------
Net interest income 3,067 2,592
Provision for loan losses (97) (76)
Noninterest income 643 583
Noninterest expense (2,081) (1,922)
-------- --------
Income before taxes 1,532 1,177
Income taxes (513) (396)
-------- --------
Net income $ 1,019 781
======== ========
</TABLE>
Interest Income
- ---------------
Total interest income increased approximately $545,000 for the three months
ended March 31, 1997 compared to the three months ended March 31, 1996.
This increase was the effect of an increase in the average loan portfolio
balance from approximately $176.0 million for the three months ended March 31,
1996 to approximately $202.0 million for the three months ended March 31, 1997.
The average rate earned on the loan portfolio was unchanged at 9.5%. The effect
of these changes increased the interest income earned on the loan portfolio from
approximately $4,193,000 for the three months ended March 31, 1996 to
approximately $4,823,000 for the three months ended March 31, 1997, an increase
of $630,000.
Interest earned on taxable investment securities decreased from approximately
$950,000 for the three months ended March 31, 1996 to approximately $880,000 for
the three months ended March 31, 1997, a decrease of $70,000. This decrease was
the net effect of a decrease in the average taxable investment portfolio balance
from approximately $59.7 million for the three months ended March 31, 1996 to
approximately $54.5 million for the three months ended March 31, 1997 and an
increase in the rate earned on the taxable investment portfolio from 6.37% for
the three months ended March 31, 1996 to 6.46% for the three months ended March
31, 1997.
<PAGE> 9
Interest earned on nontaxable investment securities decreased from approximately
$50,000 for the three months ended March 31, 1997 to approximately $29,000 for
the three months ended March 31, 1996, a decrease of $21,000. This decrease was
the combined effect of a decrease in the average non-taxable investment
portfolio from approximately $3.0 million for the three months ended March 31,
1996 to approximately $2.3 million for the three months ended March 31, 1997 and
a decrease in the rate earned on the non-taxable investment portfolio from 6.73%
for the three months ended March 31, 1996 to 5.02% for the three months ended
March 31, 1997.
As of March 31, 1997, the amortized cost of taxable and non-taxable investments
consisted of U.S. Treasury securities (27.7%), securities of U.S. Government
Agencies and Corporations (62.9%), obligations of States, Counties and
Municipalities (4.2%) and equity securities (5.2%). 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 losses.
Interest earned on interest-bearing deposits in banks increased from
approximately $26,000 for the three months ended March 31, 1996 to approximately
$45,000 for the three months ended March 31, 1997, an increase of $19,000. This
increase was the combined effect of an increase in the average interest-bearing
deposits balance from approximately $2.9 million for the three months ended
March 31, 1996 to approximately $4.8 million for the three months ended March
31, 1997 and an increase in the rate earned on the interest-bearing deposits
from 3.69% for the three months ended March 31, 1996 to 3.70% for the three
months ended March 31, 1997.
Interest earned on federal funds sold decreased from approximately $93,000 for
the three months ended March 31, 1996 to approximately $81,000 for the three
months ended March 31, 1997, a decrease of $12,000. This decrease was the
effect of a decrease in the average federal funds sold balance from
approximately $7.1 million for the three months ended March 31, 1996 to
approximately $6.2 million for the three months ended March 31, 1997. The
average rate earned on the federal funds sold was unchanged at 5.27%.
Interest Expense
- ----------------
Total interest expense increased approximately $70,000 for the three months
ended March 31, 1997 compared to the three months ended March 31, 1996.
This increase was the net effect of an increase in the average balance of
interest-bearing deposits from approximately $200.2 million for the three months
ended March 31, 1996 to approximately $209.2 million for the three months ended
March 31, 1997 and a decrease in the average rate paid on interest-bearing
deposits from 5.07% for the three months ended March 31, 1996 to 4.79% for the
three months ended March 31, 1997. The effect of these changes decreased the
interest expense on interest-bearing deposits from approximately $2,537,000 for
the three months ended March 31, 1996 to approximately $2,505,000 for the three
months ended March 31, 1997, a decrease of $32,000. The increase in interest-
bearing deposits came from the local communities served by the Banks.
<PAGE> 10
All other interest expense consisting principally of notes and mortgages
payable, increased from approximately $184,000 for the three months ended March
31, 1996 to approximately $286,000 for the three months ended March 31, 1997, an
increase of $102,000. This increase was the combined effect of an increase in
the average balance of notes and mortgages payable from approximately $11.2
million for the three months ended March 31, 1996 to approximately $18.2 million
for the three months ended March 31, 1997 and an increase in the average rate
paid on notes and mortgages payable from 6.26% for the three months ended March
31, 1996 to 6.31% for the three months ended March 31, 1997. Other interest
expense included interest on federal funds purchased of approximately $14,000
for the three months ended March 31, 1997 and $9,000 for the three months ended
March 31, 1996. As of March 31, 1997, the notes and mortgages payable consisted
of advances from the Federal Home Loan Bank in the amount of $15.5 million with
fixed and variable interest rates ranging from 5.20% to 7.24% at March 31, 1997
with maturities through 2011 and notes payable to a correspondent bank in the
amount of $1.2 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. Principal payments on the loan have been prepaid
through 2000. 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, 1997 and 1996.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------
1997 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Service charges on deposit
accounts $ 400 387
Insurance commissions 22 6
Gain (Loss) on sale of loans 3 4
Gain (Loss) on sale of assets -0- 3
Securities gains (losses) -0- 27
Equity in earnings of unconsolidated
subsidiary 51 46
Other income 167 110
-------- --------
Total Noninterest Income $ 643 583
======== ========
</TABLE>
Noninterest income for the three months ended March 31, 1997 as compared to the
three months ended March 31, 1996 increased approximately $60,000.
Service charges on deposit accounts for the three months ended March 31, 1997 as
compared to the three months ended March 31, 1995, increased approximately
$13,000. 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 $5,000. All
other income increased approximately $42,000.
<PAGE> 11
Noninterest Expenses
- --------------------
The following table presents the principal components of noninterest expenses
for the three month periods ended March 31, 1997 and 1996.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------
1997 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Compensation $ 950 854
Other personnel expenses 234 182
Occupancy expense of bank premises 106 103
Furniture and equipment expense 147 184
Federal deposit insurance 10 34
Postage and courier services 59 46
Supplies 83 58
Amortization 27 27
Other operating expenses 465 434
-------- --------
Total Noninterest Expenses $ 2,081 1,922
======== ========
</TABLE>
Noninterest expenses for the three months ended March 31, 1997 as compared to
the three months ended March 31, 1996, increased approximately $159,000 or 8.3%.
Compensation and other personnel expenses increased approximately $148,000 for
the three months ended March 31, 1997 as compared to the three months ended
March 31, 1996. This increase reflects increases in the number of employees, in
wage levels and in the cost of employee benefits. All other expenses increased
approximately $11,000 or 1.2% for the three months ended March 31, 1997
compared to the three months ended March 31, 1996. 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, 1997 was
$97,000 compared to $76,000 for the three months ended March 31, 1996. The
balance of the allowance for loan losses was approximately $2,613,000 (1.3% of
outstanding loans) at March 31, 1997 and approximately $2,360,000 (1.3% of
outstanding loans) at March 31, 1996. Actual loan charge-offs net of recoveries
were approximately $34,000 for the three months ended March 31, 1997 and
approximately $10,000 for the three months ended March 31, 1996. Non-accrual
loans were approximately $255,000 at March 31, 1997 as compared to $291,000 at
December 31, 1996. Loans ninety days or more past due and still accruing
amounted to approximately $396,000 at March 31, 1997 and $241,000 at December
31, 1996. 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, 1997 was 33.5%
compared to 33.7% for the three months ended March 31, 1996.
<PAGE> 12
Financial Condition
- -------------------
The Company, including its subsidiaries, reported consolidated total assets of
approximately $294.1 million at March 31, 1997 and approximately $297.3 million
at December 31, 1996 representing a decrease of approximately $3.2 million
reflecting higher than average deposits at December 31, 1996 due to certain
governmental entity deposits which were withdrawn in the normal course of
business after year end.
During the three months ended March 31, 1997, securities decreased $.7 million,
federal funds sold decreased $10.4 million, operations generated $.8 million and
interest bearing deposits decreased $.4 million which provided $12.3 million of
funds which were used to fund increases in loans of $5.9 million, decrease
deposits $2.4 million, decrease Federal Home Loan Bank advances $1.6 million,
increase cash $2.1 million, pay dividends of $.1 million and fund capital
expenditures of $.2 million.
A number of factors contribute to the charges 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 losses for the available-for-sale category of approximately
$(259,000) (($169,000) net of income tax effect). All securities were held in
the available-for-sale category as of March 31, 1997. 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, 1997, a comparison of the minimum required
and actual capital ratios are as follows:
<TABLE>
<CAPTION>
TO BE WELL
CAPITALIZED
UNDER
PROMPT
CORRECTIVE
FOR CAPITAL ACTION
ACTUAL ADEQUACY PURPOSES PROVISIONS
---------------- ---------------- ----------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
---------- ----- ---------- ----- ---------- -----
<S> <C> <C> <C> <C> <C> <C>
As of March 31, 1997
Total Capital
(to Risk Weighted
Assets) $28,293 13.78% 16,426 8.0% 20,532 10.0%
Tier I Capital
(to Risk Weighted
Assets) 25,726 12.53% 8,213 4.0% 12,319 6.0%
Tier I Capital
(to Average Assets) 25,726 8.84% 11,641 4.0% 14,551 5.0%
</TABLE>
Each entity was in full compliance with its respective regulatory capital
requirements.
<PAGE> 13
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
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, 1997, the Company's
cash and due from banks were approximately $10.8 million in excess of its
reserve requirements of approximately $1.0 million, its short-term deposits with
financial institutions were approximately $4.1 million and its federal funds
sold were approximately $4.2 million. All of the above can be converted to cash
on short notice. The sale of investments which had a market value of
approximately $55.8 million at March 31, 1997 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 $18.5 million were pledged as of March 31, 1997.
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 $15.5 million
at March 31, 1997, at fixed and variable rates ranging from 5.20% to 7.24%.
Through the Company's dividend reinvestment and common stock purchase plans, an
additional 7,162 shares at an average of $20.40 per share was issued during the
three months ended March 31, 1997.
<PAGE> 14
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> 15
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 14, 1997
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 11,860,846
<INT-BEARING-DEPOSITS> 4,084,212
<FED-FUNDS-SOLD> 4,155,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 55,833,087
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 204,524,199
<ALLOWANCE> 2,612,517
<TOTAL-ASSETS> 294,110,127
<DEPOSITS> 247,246,751
<SHORT-TERM> 0
<LIABILITIES-OTHER> 2,247,209
<LONG-TERM> 16,705,249
<COMMON> 1,263,745
0
0
<OTHER-SE> 26,647,173
<TOTAL-LIABILITIES-AND-EQUITY> 294,110,127
<INTEREST-LOAN> 4,822,889
<INTEREST-INVEST> 909,921
<INTEREST-OTHER> 125,799
<INTEREST-TOTAL> 5,858,609
<INTEREST-DEPOSIT> 2,504,829
<INTEREST-EXPENSE> 2,791,302
<INTEREST-INCOME-NET> 3,067,307
<LOAN-LOSSES> 97,000
<SECURITIES-GAINS> (307)
<EXPENSE-OTHER> 2,081,766
<INCOME-PRETAX> 1,531,383
<INCOME-PRE-EXTRAORDINARY> 1,018,634
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,018,634
<EPS-PRIMARY> .36
<EPS-DILUTED> .36
<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>
