<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended March 31, 2000
Commission file number 0-25422
PAB BANKSHARES, INC.
(Exact name of Registrant
as specified in its charter)
Georgia 58-1473302
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3250 North Valdosta Road
Valdosta, Georgia 31602
(Address of principal executive offices)
(912) 241-2775
(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
--- ---
The number of shares outstanding of the Issuer's class of common stock at
March 31, 2000 was 9,540,471 shares of common stock.
<PAGE> 2
PAB BANKSHARES, INC.
FORM 10-Q
TABLE OF CONTENTS
-----------------
PAGE
----
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS:
CONSOLIDATED BALANCE SHEETS - MARCH 31, 2000
(UNAUDITED) AND DECEMBER 31, 1999 . . . . . . . . . . . 3
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) - THREE
MONTH PERIODS ENDED MARCH 31, 2000 AND 1999 . . . . . . 4
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) -
THREE MONTH PERIODS ENDED MARCH 31, 2000 AND 1999 . . . 5
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED) - THREE MONTH PERIODS ENDED MARCH 31,
2000 AND 1999 . . . . . . . . . . . . . . . . . . . . . 6
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) -
THREE MONTH PERIODS ENDED MARCH 31, 2000 AND 1999 . . . 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . 9
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK . . . 16
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . 17
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS . . . . . . . . . . . 17
ITEM 3. DEFAULTS UPON SENIOR SECURITIES . . . . . . . . . . . . . . . . 17
ITEM 4. SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS . . . . . . . . . . . . . . . . . . 17
ITEM 5. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . 17
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . . . 17
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
INDEX OF EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
<PAGE> 3
<TABLE>
PABBANKSHARES,INC. ANDSUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
---------------------------
ASSETS
------
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
------------ ------------
(Unaudited)
<S> <C> <C>
Cash and Cash Equivalents:
Cash and due from banks $ 19,297,823 31,524,206
Interest-bearing deposits in other banks 10,603,282 11,616,628
Federal funds sold and securities purchased under
agreement to resell 8,750,000 21,405,000
------------- -------------
Total Cash and Cash Equivalents 38,651,105 64,545,834
Time Deposits 1,099,000 99,000
Investment Securities available-for-sale, at fair value 75,536,805 78,925,871
Investment in unconsolidated subsidiary 179,599 40,391
Loans, Net of Allowance for Loan Losses ($5,395,662 - 2000;
$5,037,074 - 1999) and Unearned Interest 515,921,547 489,380,093
Bank Premises and Equipment 16,989,191 16,076,124
Property Acquired in Settlement of Loans and Other Real Estate
Owned:
Land and building of former banking offices 297,719 302,759
Land and building held for lease 582,794 584,333
Property acquired in settlement of loans 864,605 762,667
Accrued Interest Receivable 6,434,066 6,666,640
Cash Value of Life Insurance 2,672,430 3,429,167
Goodwill and other intangible assets 2,267,932 2,357,098
Other Assets 2,110,388 1,798,716
------------- -------------
Total Assets $ 663,607,181 664,968,693
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Deposits:
Noninterest-bearing deposits $ 67,029,983 64,915,579
Interest-bearing deposits 459,287,292 451,288,404
------------- -------------
Total Deposits 526,317,275 516,203,983
Federal funds purchased and securities sold under
agreement to repurchase 4,976,422 4,673,036
Advances from Federal Home Loan Bank 52,150,054 60,112,240
Other borrowed funds 6,282,208 9,155,058
Accrued interest payable 1,953,545 1,914,285
Advance payments by borrowers for taxes and insurance 49,888 30,402
Dividends payable 938,212 986,417
Income taxes payable 117,031 0
Other liabilities 1,289,092 2,156,012
-------------- -------------
Total Liabilities 594,073,727 595,231,433
-------------- -------------
Preferred Stockholders' Equity in Subsidiaries 126,000 126,000
-------------- -------------
Stockholders' Equity:
Common stock, no par value, 98,500,000 shares authorized,
9,540,471 shares (1999 9,617,407) issued and 9,540,471
shares (1999 9,617,407) outstanding 1,217,065 1,217,065
Preferred stock, no par value, 1,500,000 shares authorized,
no shares issued or outstanding 0 0
Additional paid in capital 30,192,075 31,236,921
Retained earnings 38,458,756 37,336,119
Accumulated other comprehensive income (loss) (460,442) (178,845)
------------- --------------
69,407,454 69,611,260
------------- --------------
Total Liabilities and Stockholders' Equity $ 663,607,181 664,968,693
============= ==============
</TABLE>
<PAGE> 4
<TABLE>
PAB BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------------------
2000 1999
---------- ----------
<S> <C> <C>
Interest Income:
Interest and fees on loans $11,756,975 9,958,257
Interest on investment securities:
Taxable 1,048,937 1,304,672
Tax exempt 61,414 97,720
Interest on federal funds sold 283,947 196,777
Interest on deposits in banks 137,483 155,524
----------- ------------
Total 13,288,756 11,712,950
----------- -----------
Interest Expense:
Interest on deposits 5,235,081 5,038,257
Interest on federal funds purchased
and securities sold under agreement
to repurchase 53,532 38,006
Interest on other borrowed funds 83,969 28,934
Interest on advances from Federal
Home Loan Bank 850,470 597,221
----------- -----------
Total 6,223,052 5,702,418
----------- -----------
Net Interest Income 7,065,704 6,010,532
Provision for Loan Losses 391,437 162,250
----------- -----------
Net Interest Income After Provision
for Loan Losses 6,674,267 5,848,282
----------- -----------
Other Income:
Service charges on deposit accounts 913,260 815,241
Insurance commissions 53,311 59,646
Late charges and other loan fees 184,174 176,171
Equity in earnings of unconsolidated
subsidiary 139,208 257,154
Fees on mortgage loans originated
for sale 71,071 188,191
Gain (Loss) on sale of assets 8,048 16,318
Other income 160,000 185,495
Securities gains (losses) (5,879) (11,762)
----------- -----------
Total 1,523,193 1,686,454
----------- -----------
Other Expenses:
Compensation 2,263,653 2,032,633
Other personnel expenses 624,883 495,340
Occupancy expense of bank premises 267,825 241,564
Furniture and equipment expense 377,322 329,251
Federal deposit insurance 26,726 32,483
Postage and courier services 124,728 123,639
Supplies 133,888 148,097
Amortization 89,167 89,167
Other operating expenses 1,127,244 1,025,931
----------- -----------
Total 5,035,436 4,518,105
----------- -----------
Income Before Income Taxes 3,162,024 3,016,631
Income Taxes 1,037,635 973,867
------------ -----------
Net Income $ 2,124,389 2,042,764
============ ===========
Earnings Per Share:
Basic $ .22 .21
============ ===========
Diluted $ .22 .21
============ ===========
Weighted Average Shares:
Basic 9,574,465 9,609,307
============ ===========
Diluted 9,674,809 9,774,983
============ ===========
</TABLE>
<PAGE> 5
<TABLE>
PAB BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
-----------------------------------------------
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------------------
2000 1999
---------- ----------
<S> <C> <C>
Net income $2,124,389 2,042,764
---------- ----------
Other comprehensive income (loss),
net of tax:
Unrealized gains (losses) on securities:
Unrealized holding gains (losses)
arising during period (285,257) (545,640)
Less: reclassification adjustment
for (gains) losses included in
net income 3,660 7,323
---------- ----------
Other comprehensive income (loss) (281,597) (538,317)
---------- ----------
Comprehensive Income $1,842,792 1,504,447
========== ==========
</TABLE>
<PAGE> 6
<TABLE>
PAB BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
------------------------------------------
<CAPTION>
ACCUMULATED
OTHER
ADDITIONAL COMPREHENSIVE
COMMON STOCK PREFERRED PAID IN RETAINED INCOME
SHARES AMOUNT STOCK CAPITAL EARNINGS (LOSS) TOTAL
--------- ---------- --------- ----------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances, December 31,
1998 9,604,028 $1,217,065 0 31,095,359 32,334,269 1,416,771 66,063,464
Issuance of shares
to directors in
lieu of fees 9,503 0 0 114,630 0 0 114,630
Net Income 0 0 0 0 2,042,764 0 2,042,764
Dividends 0 0 0 0 (746,101) 0 (746,101)
Other comprehensive
income (loss) 0 0 0 0 0 (538,317) (538,317)
---------- ---------- ---------- ----------- ---------- ---------- ----------
Balances, March 31,
1999 (Unaudited) 9,613,531 $1,217,065 0 31,209,989 33,630,932 878,454 66,936,440
========== ========== ========== =========== ========== ========== ==========
Balances, December 31,
1999 9,617,407 $1,217,065 0 31,236,921 37,336,119 (178,845) 69,611,260
Shares acquired through
stock repurchase plan
and canceled (77,416) 0 0 (1,049,835) 0 0 (1,049,835)
Issuance of stock
upon exercise of
employee stock
options 480 0 0 4,989 0 0 4,989
Net Income 0 0 0 0 2,124,389 0 2,124,389
Dividends 0 0 0 0 (1,001,752) 0 (1,001,752)
Other comprehensive
income (loss) 0 0 0 0 0 (281,597) (281,597)
---------- ---------- ---------- ----------- ---------- ---------- ----------
Balances, March 31,
2000 (Unaudited) 9,540,471 $1,217,065 0 30,192,075 38,458,756 (460,442) 69,407,454
========== ========== ========== =========== ========== ========== ==========
</TABLE>
<PAGE> 7
<TABLE>
PAB BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-----------------------------
2000 1999
---------- ----------
<S> <C> <C>
Cash Flows From Operating Activities:
Net income $ 2,124,389 2,042,764
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 375,804 327,558
Deferred income taxes (14,494) (11,513)
Provision for loan losses 391,437 162,250
Amortization 89,167 89,167
Amortization (accretion) of securities 7,679 24,128
(Gain) loss on sale of assets (8,048) (16,318)
Securities (gains) losses 5,879 11,762
Minority interests 218 215
Equity in earnings of unconsolidated subsidiary (139,208) (257,154)
Dividend received from unconsolidated subsidiary 0 200,000
Increase in cash value of life insurance (34,170) (26,531)
Deferred charges, net 1,426 17,580
Change in assets and liabilities:
(Increase) decrease in accrued interest receivable 232,574 290,816
Increase (decrease) in accrued interest payable 39,260 98,375
(Increase) decrease in other assets (152,807) (80,596)
Increase (decrease) in income taxes payable 117,031 522,829
Increase (decrease) in other liabilities (867,138) (328,845)
----------- -----------
Net cash provided (used) by operating activities 2,168,999 3,066,487
----------- -----------
Cash Flows From Investing Activities:
Capital expenditures (1,306,801) (466,373)
Proceeds from sale of assets 32,557 0
(Increase) decrease in time deposits (1,000,000) 0
(Increase) decrease in loans (27,036,255) (7,861,547)
Proceeds of life insurance policy 790,907 0
Principal payments on mortgage-backed securities 1,057,438 2,420,819
Purchase of available-for-sale securities (160,084) (5,214,217)
Proceeds from sales and calls of available-for-sale securities 558,200 8,153,238
Proceeds from maturities of available-for-sale securities 1,493,985 2,591,305
----------- -----------
Net cash provided (used) by investing activities (25,570,053) (376,775)
----------- -----------
Cash Flows From Financing Activities:
Increase (Decrease) in federal funds purchased 303,386 239,277
Proceeds from additional stock issued 4,989 0
Increase (decrease) in time deposits 7,998,888 2,114,430
Increase (decrease) in other deposits 2,114,404 (11,459,455)
Advances from Federal Home Loan Bank 23,700,000 1,600,000
Payments on long-term indebtedness (31,662,186) (3,303,666)
Increase (Decrease) other borrowings (2,872,850) 1,623,323
Dividends paid (1,049,957) (1,197,343)
Acquisition of common stock (1,049,835) 0
Increase (Decrease) in advance payments by borrowers for
taxes and insurance 19,486 13,703
----------- -----------
Net cash provided (used) by financing activities (2,493,675) (10,369,731)
----------- -----------
Net Increase (Decrease) in Cash and Cash Equivalents (25,894,729) (7,680,019)
Cash and Cash Equivalents at Beginning of Period 64,545,834 55,144,860
----------- -----------
Cash and Cash Equivalents at End of Period $38,651,105 47,464,841
=========== ===========
Supplemental Disclosures of Cash Flow Information
- -------------------------------------------------
Cash Paid During The Period For:
Interest $ 6,183,792 5,604,044
=========== ===========
Income taxes $ 899,588 145,957
=========== ===========
Schedule of Non-Cash Investing and Financing Activities
- -------------------------------------------------------
Total increase (decrease) in unrealized losses on securities
available-for-sale $ 411,115 720,809
=========== ===========
Stock issued to directors in payment of fees and stock issued through dividend
reinvestment plan $ 0 114,630
=========== ===========
</TABLE>
<PAGE> 8
PAB BANKSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
Note 1 - 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-Q. 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, 2000 are not necessarily
indicative of the results that may be expected for the year ending December 31,
2000. For further information, refer to the consolidated financial statements
and footnotes thereto included in the Company's annual report on Form 10-K for
the year ended December 31, 1999.
Prior period financial information has been restated for a business combination
with Baxley Federal Savings Bank (Baxley) on November 30, 1999 and accounted for
as a pooling of interests in conformity with generally accepted accounting
principles.
Note 2 - Business Combinations
______________________________
On November 30, 1999, PAB Bankshares, Inc. (PAB) issued 1,323,533 shares of
common stock and a nominal amount of cash in lieu of fractional shares in
exchange for all of the outstanding stock of Baxley (Baxley, Georgia). This
transaction, accounted for as a pooling of interests, added $113.2 million in
assets.
As explained in Note 1, PAB restated prior period financial information for the
Baxley transaction. The following table presents net interest income, net
income and earnings per share as reported by PAB and Baxley and on a combined
basis for the three months ended March 31, 1999 (amounts in thousands, except
per share information):
<TABLE>
<CAPTION>
<S> <C>
Net Interest Income:
PAB $ 5,156
Baxley 855
----------
Combined $ 6,011
==========
Net Income:
PAB $ 1,722
Baxley 321
----------
Combined $ 2,043
==========
Basic Earnings Per Share:
PAB $ .21
Baxley .58
Combined .21
Diluted Earnings Per Share:
PAB $ .20
Baxley .58
Combined .21
<PAGE> 9
ITEM 2. MANAGEMENTS'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
On November 30, 1999, the Company completed its merger of Baxley Federal Savings
Bank. The transaction has been accounted for as a pooling of interests;
therefore, all prior period financial information has been restated to reflect
the merger. Current period financial information reflects the merger as if it
had occurred on January 1, 1999.
Results of Operations
- ---------------------
The Company, including the operations of its subsidiaries, reported consolidated
net income of $2,124,389 for the three months ended March 31, 2000 compared to
$2,042,764 for the three months ended March 31, 1999. Basic earnings per share
were $.22 for the three months ended March 31, 2000 compared to $.21 per share
for the quarter ended March 31, 1999. Diluted earnings per share were $.22 per
share for the three months ended March 31, 2000 compared to $.21 per share for
the three months ended March 31, 1999, an increase of 4.76%. Net interest
income after provision for loan losses was $6,674,267 and $5,848,282 for the
three months ended March 31, 2000 and 1999, respectively. The provision for
loan losses was $391,437 and $162,250 for the three months ended March 31, 2000
and 1999, respectively. Noninterest income totaled $1,523,193 and $1,686,454
for the three months ended March 31, 2000 and 1999, respectively, and
noninterest expenses totaled $5,035,436 and $4,518,105 for the three months
ended March 31, 2000 and 1999, respectively.
Comprehensive income was $1,842,792 and $1,504,447 for the three months ended
March 31, 2000 and 1999, respectively. Other comprehensive income consisted of
unrealized gains and losses on available-for-sale securities.
The return on average assets was 1.28% for 2000 compared to 1.33% for 1999. The
return on average equity was 12.23% for 2000 and 12.29% for 1999. Continued
strong loan demand contributed to an increase in the net interest margin to
4.62% for the quarter ended March 31, 2000 compared to 4.26% for the quarter
ended March 31, 1999.
The following table summarizes selected performance information for the Company:
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------
2000 1999
-------- --------
<S> <C> <C>
Annualized return on average assets 1.28% 1.33%
Annualized return on average equity 12.23% 12.29%
Annualized net interest margin as
percentage of average interest-earning
assets 4.62% 4.26%
Equity-to-assets at March 31 10.46% 10.93%
Book value per share at March 31 $7.28 $6.96
Efficiency Ratio 58.37% 58.25%
</TABLE>
<PAGE> 10
The following table summarizes the results of operations of the Company for the
three month periods ended March 31, 2000 and 1999.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------
2000 1999
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Interest income $ 13,289 11,713
Interest expense (6,223) (5,702)
-------- -------
Net interest income 7,066 6,011
Provision for loan losses (391) (162)
Noninterest income 1,523 1,686
Noninterest expense (5,036) (4,518)
-------- -------
Income before taxes 3,162 3,017
Income taxes (1,038) (974)
-------- -------
Net income 2,124 2,043
Other comprehensive income (loss),
net of tax (281) (539)
-------- -------
Comprehensive income $ 1,843 1,504
======== =======
</TABLE>
Interest Income
- ---------------
Total interest income increased approximately $1,576,000 for the three months
ended March 31, 2000 compared to the three months ended March 31, 1999. This
increase is attributed to the factors explained in the following paragraph.
This increase was the combined effect of an increase in the average loan
portfolio balance from approximately $442.6 million for the three months ended
March 31, 1999 to approximately $505.8 million for the three months ended March
31, 2000 and an increase in the average rate earned on the loan portfolio from
9.00% for the three months ended March 31, 1999 to 9.30% for the three months
ended March 31, 2000. The effect of these changes increased the interest income
earned on the loan portfolio from approximately $9,958,000 for the three months
ended March 31, 1999 to approximately $11,757,000 for the three months ended
March 31, 2000, an increase of $1,799,000.
Interest earned on taxable investment securities decreased from approximately
$1,305,000 for the three months ended March 31, 1999 to approximately $1,049,000
for the three months ended March 31, 2000, a decrease of $256,000. This
decrease was the combined effect of a decrease in the average taxable investment
portfolio balance from approximately $86.5 million for the three months ended
March 31, 1999 to approximately $72.5 million for the three months ended March
31, 2000 and a decrease in the rate earned on the taxable investment portfolio
from 6.04% for the three months ended March 31, 1999 to 5.79% for the three
months ended March 31, 2000.
Interest earned on non-taxable investment securities decreased from
approximately $98,000 for the three months ended March 31, 1999 to approximately
$61,000 for the three months ended March 31, 2000, a decrease of $37,000. This
decrease was the combined effect of a decrease in the average non-taxable
investment portfolio from approximately $7.8 million for the three months ended
March 31, 1999 to approximately $5.3 million for the three months ended March
31, 2000 and a decrease in the rate earned on the non-taxable investment
portfolio from 5.00% for the three months ended March 31, 1999 to 4.60% for the
three months ended March 31, 2000.
As of March 31, 2000, the amortized cost of taxable and non-taxable investments
consisted of $65.1 million (85.5%) of U.S. Treasury securities and securities of
U.S. Government Agencies and Corporations, $5.2 million (6.9%) of obligations of
States, Counties and Municipalities and $5.9 million (7.6%) of equity
securities. The securities are predominantly at fixed rates. There are no
interest rates which change inversely to changes in interest rates.
<PAGE> 11
Interest earned on interest-bearing deposits in banks decreased from
approximately $156,000 for the three months ended March 31, 1999 to
approximately $137,000 for the three months ended March 31, 2000, a decrease of
$19,000. This decrease was the net effect of a decrease in the average
interest-bearing deposits balance from approximately $12.5 million for the three
months ended March 31, 1999 to approximately $10.2 million for the three months
ended March 31, 2000 and an increase in the rate earned on the interest-bearing
deposits from 4.96% for the three months ended March 31, 1999 to 5.42% for the
three months ended March 31, 2000.
Interest earned on federal funds sold and securities purchased under agreement
to resell increased from approximately $197,000 for the three months ended March
31, 1999 to approximately $284,000 for the three months ended March 31, 2000, an
increase of $87,000. This increase was the combined effect of an increase in
the average federal funds sold balance from approximately $15.1 million for the
three months ended March 31, 1999 to approximately $17.8 million for the three
months ended March 31, 2000 and an increase in the average rate earned from
5.23% for the three months ended March 31, 1999 to 6.37% for the three months
ended March 31, 2000.
Interest Expense
- ----------------
Total interest expense increased approximately $521,000 for the three months
ended March 31, 2000 compared to the three months ended March 31, 1999. This
increase is attributed to the factors explained in the following paragraph.
This increase was the net effect of an increase in the average balance of
interest-bearing deposits from approximately $433.5 million for the three months
ended March 31, 1999 to approximately $453.2 million for the three months ended
March 31, 2000 and a decrease in the average rate paid on interest-bearing
deposits from 4.65% for the three months ended March 31, 1999 to 4.62% for the
three months ended March 31, 2000. The effect of these changes increased the
interest expense on interest-bearing deposits from approximately $5,038,000 for
the three months ended March 31, 1999 to approximately $5,235,000 for the three
months ended March 31, 2000, an increase of $197,000. The increase in interest-
bearing deposits came primarily from the local communities served by the Banks.
Interest expense on advances from the Federal Home Loan Bank increased from
approximately $597,000 for the three months ended March 31, 1999 to
approximately $850,000 for the three months ended March 31, 2000, an increase of
$253,000. This increase was the combined effect of an increase in the average
balance of advances from approximately $38.2 million for the three months ended
March 31, 1999 to approximately $53.6 million for the three months ended March
31, 2000 and an increase in the average rate paid from 6.25% for the three
months ended March 31, 1999 to 6.34% for the three months ended March 31, 2000.
All other interest expense consisting of interest on federal funds purchased and
securities sold under agreements to repurchase and sweep agreements increased
from approximately $67,000 for the three months ended March 31, 1999 to
approximately $138,000 for the three months ended March 31, 2000, an increase of
$71,000. This increase was the combined effect of an increase in the average
balance of such indebtedness from approximately $7.0 million for the three
months ended March 31, 1999 to approximately $12.2 million for the three months
ended March 31, 2000 and an increase in the average rate paid from approximately
3.81% for the three months ended March 31, 1999 to approximately 4.52% for the
three months ended March 31, 2000.
<PAGE> 12
Noninterest Income
- ------------------
The following table presents the principal components of noninterest income for
the three month and nine month periods ended March 31, 2000 and 1999.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------
2000 1999
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Service charges on deposit
accounts $ 913 815
Insurance commissions 54 60
Late charges and other loan fees 184 176
Fees on mortgage loans
originated for sale 71 188
Gain (Loss) on sale of assets 8 16
Securities gains (losses) (6) (12)
Equity in earnings of unconsolidated
subsidiary 139 257
Other income 160 186
-------- --------
Total Noninterest Income $ 1,523 1,686
======== ========
</TABLE>
Noninterest income for the three months ended March 31, 2000 as compared to the
three months ended March 31, 1999 decreased approximately $163,000.
Service charges on deposit accounts for the three months ended March 31, 2000 as
compared to the three months ended March 31, 1999, increased approximately
$98,000. 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 Community Bank of Southwest Georgia (a subsidiary of the
Company), decreased $118,000. Gain on sale of assets decreased $8,000 for the
three months ended March 31, 2000 as compared to the three months ended March
31, 1999. Fees on mortgage loans originated for sale decreased $117,000 due to
the effect of higher interest rates on loan origination activity undertaken by
the Company. All other income decreased approximately $18,000 for the three
months ended March 31, 2000.
Noninterest Expenses
- --------------------
The following table presents the principal components of noninterest expenses
for the three month periods ended March 31, 2000 and 1999.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------
2000 1999
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Compensation $ 2,264 2,033
Other personnel expenses 625 495
Occupancy expense of bank premises 268 242
Furniture and equipment expense 377 329
Federal deposit insurance 27 32
Postage and courier services 125 124
Supplies 134 148
Amortization 89 89
Other operating expenses 1,127 1,026
-------- --------
Total Noninterest Expenses $ 5,036 4,518
======== ========
</TABLE>
<PAGE> 13
Noninterest expenses for the three months ended March 31, 2000 as compared to
the three months ended March 31, 1999, increased approximately $518,000 or
11.5%. Compensation and other personnel expenses increased approximately
$361,000 for the three months ended March 31, 2000 as compared to the three
months ended March 31, 1999. This increase reflects increases in the number of
employees, in wage levels and in the cost of employee benefits. All other
expenses increased approximately $157,000 or 7.9% for the three months ended
March 31, 2000 compared to the three months ended March 31, 1999. 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, 2000 was
$391,437 compared to $162,250 for the three months ended March 31, 1999. The
balance of the allowance for loan losses was approximately $5,396,000 (1.04% of
outstanding loans) at March 31, 2000 and approximately $5,202,000 (1.16% of
outstanding loans) at March 31, 1999. Actual loan charge-offs net of recoveries
were approximately $33,000 for the three months ended March 31, 2000 and
approximately $132,000 for the three months ended March 31, 1999. Non-accrual
loans were approximately $2,069,000 at March 31, 2000 as compared to $2,395,000
at December 31, 1999. Loans ninety days or more past due and still accruing
amounted to approximately $1,413,000 at March 31, 2000, $465,000 at December 31,
1999 and $817,000 at March 31, 1999.
A schedule of our non-performing assets is as follows:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31, MARCH 31,
2000 1999 1999
---------- ---------- -----------
<S> <C> <C> <C>
Foreclosed real estate $ 865 763 522
Non-accrual loans 2,069 2,395 2,149
Loans 90 days or more past
due and still accruing 1,413 (A) 465 817
---------- --------- ---------
Total non-performing assets
and loans 90 days or more
past due $ 4,347 3,623 3,488
========== ========= =========
</TABLE>
- -----------------------------
(A) Includes the unguaranteed portion of $500,000 of a loan of $5,000,000
guaranteed by USDA.
Non-performing assets amounted to $4,347,000 at March 31, 2000 compared to
$3,488,000 at March 31, 1999. The Company had one loan, as noted above, which
increased our 90 day past due numbers. However, the loan is now current.
Because of credit quality concerns industry-wide, management has taken a more
conservative approach to recognizing potential problem credits. These loans are
being closely monitored to minimize possible losses and reduce the volume of
non-performing assets. 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, 2000 was 32.8%
compared to 32.3% for the three months ended March 31, 1999.
<PAGE> 14
Financial Condition
- -------------------
The Company, including its subsidiaries, reported consolidated total assets of
approximately $663.6 million at March 31, 2000, $665.0 million at December 31,
1999 and $611.5 million at March 31, 1999, representing a decrease of
approximately $1.4 million from December 31, 1999 and an increase of $52.1
million from March 31, 1999. Total deposits increased approximately $10.1
million during the quarter ended March 31, 2000.
During the three months ended March 31, 2000, cash and due from banks decreased
$12.2 million, deposits increased $10.1 million, federal funds sold and
securities purchased under agreement to resell decreased $12.7 million, federal
funds purchased and securities sold under agreement to repurchase increased $.3
million, investments decreased $3.0 million and operations generated $2.9
million which provided $41.2 million of funds which were used to fund increases
in loans of $26.9 million, decrease other borrowed funds $2.9 million, decrease
long-term debt $8.0 million, pay dividends of $1.0 million, fund capital
expenditures of $1.3 million and repurchase shares of common stock for capital
management purposes through the Company s stock repurchase plan of $1.1 million.
A number of factors contribute to the changes 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 and securities
purchased under agreement to resell, 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 (losses) for the available-for-sale category of
approximately ($705,000) (($460,000) net of income tax effect). All securities
were held in the available-for-sale category as of March 31, 2000. Pursuant to
Financial Accounting Standards Board Statement No. 115 and as amended by
Statement No. 130, a valuation allowance has been provided for the available-
for-sale category and is reflected as a separate component of shareholders'
equity as other comprehensive income (loss).
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, 2000, a comparison of the minimum required
and actual capital ratios are as follows:
<TABLE>
<CAPTION>
TO BE WELL
CAPITALIZED
UNDER
PROMPT
FOR CAPITAL CORRECTIVE
ADEQUACY ACTION
ACTUAL PURPOSES PROVISIONS
---------------- --------------- ---------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
-------- ----- -------- ----- -------- -----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
As of March 31, 2000
Total Capital
(to Risk Weighted
Assets) $73,127 14.37% 40,711 8.00% 50,889 10.00%
Tier 1 Capital
(to Risk Weighted
Assets) 67,731 13.31% 20,355 4.00% 30,532 6.00%
Tier 1 Capital
(to Average Assets) 67,731 10.30% 26,303 4.00% 32,879 5.00%
</TABLE>
Each entity was in full compliance with its respective regulatory capital
requirements.
<PAGE> 15
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, 2000, the Company's
cash and due from banks were approximately $16.4 million in excess of its
reserve requirements of approximately $2.9 million, its short-term deposits with
financial institutions were approximately $11.7 million and its federal funds
sold and securities purchased under agreement to resell were approximately $8.8
million. All of the above can be converted to cash on short notice. The sale
of investments which had a market value of approximately $75.5 million at March
31, 2000 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 $46.0 million were pledged
as of March 31, 2000.
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 $52.5 million
at March 31, 2000, at fixed and variable rates ranging from 5.20% to 7.24% as of
March 31, 2000.
The Board of Directors approved a dividend for the first quarter of $.105 per
share, an increase of 16.7% over the $.09 per share for the first quarter of
1999. The primary source of funds available for the payment of cash dividends
by the Company are dividends from the subsidiary banks. Holders of the common
stock of the Company are entitled to share ratably in dividends, if and when,
declared by the Board of Directors of the Company, out of funds legally
available therefore. Georgia Banking Law provides that dividends may be
declared and paid only from a bank's cumulative retained earnings which have not
been appropriated as permanent capital. Generally, a bank may pay dividends if
and when declared by the Board of Directors, and without prior approval of the
Georgia Department of Banking and Finance, as long as (i) a bank's ratio of
equity capital to adjusted total assets equals or exceeds 6%, (ii) the aggregate
amount of dividends declared or anticipated to be declared by a bank in the
calendar year does exceed 50% of such bank's net profits after taxes, but before
dividends, for the prior calendar year and (iii) the total classified assets at
the most recently completed and delivered examination of the bank do not exceed
80% of the equity capital reflected at such examination.
<PAGE> 16
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's financial performance is impacted by, among other factors,
interest rate risk and credit risk. The Company utilizes no derivatives to
mitigate its credit risk, relying instead on strict underwriting standards, loan
review and an adequate loan loss reserve.
The Company has reviewed its market risk information disclosed in its 1999
Annual Report to Stockholders in relation to market risk information for the
three months ended March 31, 2000 and has determined that there has been no
material changes in its market risk disclosures from those presented in its 1999
Annual Report.
<PAGE> 17
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
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.
-----------
11 Statement re Computation of Per Share
Earnings
27.1 Financial Data Schedule-Three Months Ended
March 31, 2000
27.2 Financial Data Schedule-Three Months Ended
March 31, 1999
(b) Reports on Form 8-K.
Initially, the Company filed a current report on Form 8-K on
December 6, 1999 regarding consummation of the acquisition of
Baxley Federal Savings Bank on November 30, 1999. Item 7 of the
Form 8-K reported that the financial statements of Baxley
Federal Savings Bank and the pro forma financial information
concerning Baxley Federal Savings Bank and PAB Bankshares, Inc.
would be filed no later than February 13, 2000. On February 11,
2000, the Company filed an amendment to the Form 8-K referred to
above to include the financial statements of Baxley Federal
Savings and the pro forma financial information concerning
Baxley Federal Savings Bank and PAB Bankshares, Inc.
On February 18, 2000, the Company filed an additional amendment
to the Form 8-K referred to above to amend certain information
reported in the February 11, 2000 filing.
<PAGE> 18
SIGNATURES
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.
PAB BANKSHARES, INC.
By:/s/ R. Bradford Burnette
-------------------------------------------------
R. Bradford Burnette
(President and
Chief Executive Officer)
By:/s/ Michael E. Ricketson
-------------------------------------------------
Michael E. Ricketson
(Chief Financial Officer)
Date: May 15, 2000
<PAGE> 19
PAB BANKSHARES, INC.
FORM 10-Q
INDEX OF EXHIBITS
-----------------
The following exhibits are filed as part of the report.
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ----------- ----
11 Statement re computation of
per share earnings 20
27.1 Financial data schedule-Three Months
Ended March 31, 2000 21
27.2 Financial data schedule-Three Months
Ended March 31, 1999 23
[MULTIPLIER] 1
EXHIBIT 11
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
PAB BANKSHARES, INC.
--------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------
2000 1999
---------- ----------
<S> <C> <C>
Basic Earnings Per Share:
- ------------------------
Average shares outstanding 9,574,465 9,609,307
========== ==========
Diluted Earnings Per Share:
- --------------------------
Average shares outstanding 9,574,465 9,609,307
---------- ----------
Average options outstanding:
With exercise price of $6.250 128,000 144,000
With exercise price of $6.67 3,677 7,353
With exercise price of $10.063 130,600 131,250
With exercise price of $12.063 44,600 47,500
With exercise price of $14.00 0 10,000
---------- ----------
Proceeds from assumed exercise of options
outstanding $2,676,764 2,982,806
Average market price per share during the period $ 12.96 17.10
---------- ----------
Assumed shares repurchased 206,533 174,427
---------- -----------
Common stock equivalents of options outstanding 100,344 165,676
---------- ----------
Average shares outstanding 9,674,809 9,774,983
========== ==========
Earnings Per Share:
- ------------------
Net Income $2,124,389 2,042,764
========== ==========
Basic Earnings Per Share $ .22 .21
========== ==========
Diluted Earnings Per Share $ .22 .21
========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 19,298
<INT-BEARING-DEPOSITS> 11,702
<FED-FUNDS-SOLD> 8,750
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 75,537
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 521,317
<ALLOWANCE> 5,396
<TOTAL-ASSETS> 663,607
<DEPOSITS> 526,317
<SHORT-TERM> 11,385
<LIABILITIES-OTHER> 4,348
<LONG-TERM> 52,150
<COMMON> 1,217
0
0
<OTHER-SE> 68,190
<TOTAL-LIABILITIES-AND-EQUITY> 663,607
<INTEREST-LOAN> 11,757
<INTEREST-INVEST> 1,110
<INTEREST-OTHER> 422
<INTEREST-TOTAL> 13,289
<INTEREST-DEPOSIT> 5,235
<INTEREST-EXPENSE> 6,223
<INTEREST-INCOME-NET> 7,066
<LOAN-LOSSES> 391
<SECURITIES-GAINS> (6)
<EXPENSE-OTHER> 5,035
<INCOME-PRETAX> 3,162
<INCOME-PRE-EXTRAORDINARY> 2,124
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,124
<EPS-BASIC> .22
<EPS-DILUTED> .22
<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>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 21,976
<INT-BEARING-DEPOSITS> 12,954
<FED-FUNDS-SOLD> 12,930
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 91,672
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 448,143
<ALLOWANCE> 5,202
<TOTAL-ASSETS> 611,540
<DEPOSITS> 494,742
<SHORT-TERM> 8,026
<LIABILITIES-OTHER> 4,481
<LONG-TERM> 37,354
<COMMON> 1,217
0
0
<OTHER-SE> 65,720
<TOTAL-LIABILITIES-AND-EQUITY> 611,540
<INTEREST-LOAN> 9,958
<INTEREST-INVEST> 1,402
<INTEREST-OTHER> 353
<INTEREST-TOTAL> 11,713
<INTEREST-DEPOSIT> 5,038
<INTEREST-EXPENSE> 5,702
<INTEREST-INCOME-NET> 6,011
<LOAN-LOSSES> 162
<SECURITIES-GAINS> (12)
<EXPENSE-OTHER> 4,518
<INCOME-PRETAX> 3,017
<INCOME-PRE-EXTRAORDINARY> 2,043
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,043
<EPS-BASIC> .21
<EPS-DILUTED> .21
<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>
