-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FVt3vEE9I7Ypn5LUMDwuovJc9IteoGXGkAGTs4WxWmx7SnksgJmpXJWurVTowc2h +fQOJoRVy2ds3xPqN6/iug== /in/edgar/work/20000811/0000931763-00-001906/0000931763-00-001906.txt : 20000921 0000931763-00-001906.hdr.sgml : 20000921 ACCESSION NUMBER: 0000931763-00-001906 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000811 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ABC BANCORP CENTRAL INDEX KEY: 0000351569 STANDARD INDUSTRIAL CLASSIFICATION: [6022 ] IRS NUMBER: 581456434 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-13901 FILM NUMBER: 692534 BUSINESS ADDRESS: STREET 1: 310 FIRST ST NE CITY: MOULTRIE STATE: GA ZIP: 31768 BUSINESS PHONE: 9128901111 MAIL ADDRESS: STREET 1: PO BOX 1500 CITY: MOULTRIE STATE: GA ZIP: 31776 FORMER COMPANY: FORMER CONFORMED NAME: ABC HOLDING CO DATE OF NAME CHANGE: 19870119 10-Q 1 0001.txt FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2000 ------------- OR [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 0-16181 ------- ABC BANCORP - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) GEORGIA 58-1456434 ------------------ -------------- (State of incorporation) (IRS Employer ID No.) 24 SECOND AVE, SE MOULTRIE, GA 31768 --------------------------------------- (Address of principal executive offices) (912) 890-1111 --------------------------- (Registrant's telephone number) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- There were 8,422,408 shares of Common Stock outstanding as of June 30, 2000. 1 ABC BANCORP QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2000 TABLE OF CONTENTS PART I - FINANCIAL INFORMATION Item Page - ---- ---- 1. Financial Statements Consolidated Balance Sheets 3 Consolidated Statements of Income & Comprehensive Income 4 Consolidated Statements of Cash Flows 6 Notes to Consolidated Financial Statements 7 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 3. Quantitative and Qualitative Disclosures about Market Risk 14 PART II - OTHER INFORMATION 4. Submission of Matters to a Vote of Securities Holders 15 6. Exhibits and Reports on Form 8-K 15 Signature 16 2
ABC BANCORP AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in Thousands) (Unaudited) - ----------------------------------------------------------------------------------------------------------------- Jun 30 Dec 31 2000 1999 -------- -------- Assets - ------ Cash and due from banks $ 31,122 $ 80,130 Securities available for sale, at fair value 161,341 143,538 Loans 576,737 530,225 Less allowance for loan losses 10,241 9,895 -------- -------- Loans, net 566,496 520,330 -------- -------- Premises and equipment, net 20,232 19,540 Other assets 23,688 25,922 -------- -------- $802,879 $789,460 ======== ======== Liabilities and Stockholders' Equity - ------------------------------------ Deposits Noninterest-bearing demand $ 90,439 $103,279 Interest-bearing demand 146,879 147,561 Savings 49,421 52,659 Time, $100,000 and over 121,189 95,282 Other time 248,836 241,877 -------- -------- Total deposits 656,764 640,658 Federal funds purchased & securities sold under repurchase agreements 4,646 397 Other borrowings 59,779 66,150 Other liabilities 6,269 6,239 -------- -------- Total liabilities 727,458 713,444 -------- -------- Stockholders' equity - -------------------- Common stock, par value $1; 15,000,000 shares authorized 9,137,990 and 9,098,690 shares issued 9,138 9,099 Surplus 29,237 28,854 Retained earnings 45,161 42,188 Accumulated other comprehensive income (1,835) (1,507) Unearned Comp-Grants (792) (560) -------- -------- 80,909 78,074 Less cost of shares acquired for the treasury, 715,582 and 374,823 shares (5,488) (2,058) -------- -------- Total stockholders' equity 75,421 76,016 -------- -------- $802,879 $789,460 ======== ======== See Notes to Consolidated Financial Statements.
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ABC BANCORP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME THREE MONTHS ENDED JUNE 30, 2000 AND 1999 (Dollars in Thousands) (Unaudited) - ------------------------------------------------------------------------------------------------------------------------------------ 2000 1999 ---------------- ---------------- Interest income Interest and fees on loans $ 14,249 $ 12,434 Interest on taxable securities 2,118 1,766 Interest on nontaxable securities 240 272 Interest on deposits in other banks 149 122 ----------- ----------- 16,756 14,594 ----------- ----------- Interest expense Interest on deposits 6,416 5,507 Interest on fed funds purchased and securities sold under agreements to repurchase 62 - Interest on other borrowings 823 281 ----------- ----------- 7,301 5,788 ----------- ----------- Net interest income 9,455 8,806 Provision for loan losses 271 477 ----------- ----------- Net interest income after provision for loan losses 9,184 8,329 ----------- ----------- Other income Service charges on deposit accounts 1,536 1,363 Other service charges, commissions and fees 493 589 Other 72 152 Loss on sale of securities - (37) ----------- ----------- 2,101 2,067 ----------- ----------- Other expense Salaries and employee benefits 4,265 3,893 Equipment and occupancy expense 1,058 1,025 Other operating expenses 2,339 2,205 ----------- ----------- 7,662 7,123 ----------- ----------- Income before income taxes 3,623 3,273 Applicable income taxes 1,185 1,154 Net income $ 2,438 $ 2,119 ----------- ----------- Other comprehensive income, net of tax: Unrealized holding gains (losses) arising during period, net of tax $ 60 $ (853) Reclassification adjustment for losses included in net income, net of tax $ - $ 24 ----------- ----------- Comprehensive income $ 2,498 $ 1,290 =========== =========== Income per common share-Basic $ 0.29 $ 0.24 =========== =========== Income per common share-Diluted $ 0.29 $ 0.24 =========== =========== Average shares outstanding 8,484,423 8,697,558 =========== =========== See Notes to Consolidated Financial Statements.
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ABC BANCORP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME SIX MONTHS ENDED JUNE 30, 2000 AND 1999 (Dollars in Thousands) (Unaudited) - ----------------------------------------------------------------------------------------------------------------------------------- 2000 1999 ------------------ ---------------- Interest income Interest and fees on loans $ 27,899 $ 24,529 Interest on taxable securities 4,147 3,740 Interest on nontaxable securities 481 543 Interest on deposits in other banks 392 313 ----------- ----------- 32,919 29,125 ----------- ----------- Interest expense Interest on deposits 12,308 11,207 Interest on fed funds purchased and securities sold under agreements to repurchase 62 - Interest on other borrowings 1,506 492 ----------- ----------- 13,876 11,699 ----------- ----------- Net interest income 19,043 17,426 Provision for loan losses 649 1,009 ----------- ----------- Net interest income after provision for loan losses 18,394 16,417 ----------- ----------- Other income Service charges on deposit accounts 2,982 2,644 Other service charges, commissions and fees 1,015 1,243 Other 120 208 Loss on sale of securities - (37) ----------- ----------- 4,117 4,058 ----------- ----------- Other expense Salaries and employee benefits 8,448 7,683 Equipment and occupancy expense 2,083 2,134 Other operating expenses 4,815 4,185 ----------- ----------- 15,346 14,002 ----------- ----------- Income before income taxes 7,165 6,473 Applicable income taxes 2,322 2,220 ----------- Net income $ 4,843 $ 4,253 ----------- ----------- Other comprehensive income, net of tax: Unrealized holding gains (losses) arising during period, net of tax $ (328) $ (1,058) Reclassification adjustment for losses included in net income, net of tax $ - $ 24 ----------- ----------- Comprehensive income $ 4,515 $ 3,219 =========== =========== Income per common share-Basic $ 0.57 $ 0.49 =========== =========== Income per common share-Diluted $ 0.56 $ 0.49 =========== =========== Average shares outstanding 8,565,870 8,692,193 =========== =========== See Notes to Consolidated Financial Statements.
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ABC BANCORP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 2000 AND 1999 (Dollars in Thousands) (Unaudited) - -------------------------------------------------------------------------------------------------------------------------------- 2000 1999 ------------ ------------ OPERATING ACTIVITIES Net Income $ 4,843 $ 4,253 --------- --------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 1,019 994 Provision for loan losses 649 1,009 Amortization of intangible assets 402 426 Net loss on securities available for sale - (37) Other prepaids, deferrals and accruals, net 2,221 4,260 --------- --------- Total adjustments 4,291 6,652 --------- --------- Net cash provided by operating activities 9,134 10,905 --------- --------- INVESTING ACTIVITIES Proceeds from maturities of investment securities 4,150 48,848 Purchase of investment securities (22,450) (45,220) Proceeds from sales of securities available for sale - 9,839 Increase in loans (46,815) (33,408) Purchase of premises and equipment (1,711) (1,396) --------- --------- Net cash used in investing activities (66,826) (21,337) --------- --------- FINANCING ACTIVITIES Net increase (decrease) in deposits 16,106 (23,121) Net increase in repurchase agreements 4,249 144 Increase (decrease) in long-term borrowings 11,950 (2,052) Increase (decrease) in other borrowings (18,321) 21,371 Dividends paid (1,870) (1,449) Purchase treasury stock (3,430) (88) --------- --------- Net cash provided by (used in) financing activities 8,684 (5,195) --------- --------- Net decrease in cash and due from banks $(49,008) $(15,627) Cash and due from banks at beginning of period 80,130 56,475 --------- --------- Cash and due from banks at end of period $ 31,122 $ 40,848 ========= ========= See Notes to Consolidated Financial statements.
6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - ------------------------------------------------------------------------------- NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting and reporting policies of ABC Bancorp and subsidiaries ("the Company") conform to generally accepted accounting principles and to general practices within the banking industry. The interim consolidated financial statements included herein are unaudited, but reflect all adjustments which, in the opinion of management, are necessary for a fair presentation of the consolidated financial position and results of operations for the interim periods presented. All adjustments reflected in the interim financial statements are of a normal, recurring nature. Such financial statements should be read in conjunction with the financial statements and notes thereto and the report of independent auditors included in the Company's Form 10-K Annual Report for the year ended December 31, 1999. The results of operations for the six months ended June 30, 2000 are not necessarily indicative of the results to be expected for the full year. 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources Liquidity management involves the matching of the cash flow requirements of customers, who may be either depositors desiring to withdraw funds or borrowers needing assurance that sufficient funds will be available to meet their credit needs, and the ability of ABC Bancorp and its subsidiaries (the "Company") to meet those needs. The Company strives to maintain an adequate liquidity position by managing the balances and maturities of interest-earning assets and interest-bearing liabilities so that the balance it has in short-term investments at any given time will adequately cover any reasonably anticipated immediate need for funds. Additionally, the subsidiary banks (the "Banks") maintain relationships with correspondent banks which could provide funds to them on short notice, if needed. The liquidity and capital resources of the Company is monitored on a periodic basis by state and Federal regulatory authorities. As determined under guidelines established by these regulatory authorities, the Company's and the Banks' liquidity ratios at June 30, 2000 were considered satisfactory. At that date, the Banks' short term investments were adequate to cover any reasonably anticipated immediate need for funds. The Company is aware of no events or trends likely to result in a material change in liquidity. During the six months ended June 30, 2000, total capital decreased $595,000 to $75,421,000. This decrease in capital resulted from the retention of net earnings of $2,973,000 (after deducting dividends to shareholders of $1,870,000), less $3,430,000 for the purchase of 340,759 shares acquired for the treasury, plus $190,000 accrual for award grants, and an increase of approximately $328,000 in unrealized losses on securities available for sale, net of taxes. At June 30, 2000, ABC had no binding commitments for capital expenditures. The Company anticipates that approximately $500,000 will be required for capital expenditures during the remainder of 2000. Additional expenditures may be required for other mergers and acquisitions. No additional mergers or acquisitions requiring cash are being negotiated at present. 8 Results of Operations The Company's results of operations are determined by its ability to effectively manage interest income and expense, to minimize loan and investment losses, to generate noninterest income and to control noninterest expense. Since interest rates are determined by market forces and economic conditions beyond the control of the Company, the ability to generate net interest income is dependent upon the Banks' ability to obtain an adequate spread between the rate earned on interest-earning assets and the rate paid on interest-bearing liabilities. Thus, the key performance measure for net interest income is the interest margin or net yield, which is taxable-equivalent net interest income divided by average earning assets. The primary component of consolidated earnings is net interest income, or the difference between interest income on interest-earning assets and interest paid on interest-bearing liabilities. The net interest margin is net interest income expressed as a percentage of average interest-earning assets. Interest- earning assets consist of loans, investment securities and Federal funds sold. Interest-bearing liabilities consist of deposits and borrowings such as Federal funds purchased, securities sold under repurchase agreements and Federal Home Loan Bank advances. A portion of interest income is earned on tax-exempt investments, such as state and municipal bonds. In an effort to state this tax- exempt income and its resultant yields on a basis comparable to all other taxable investments, an adjustment is made to analyze this income on a taxable- equivalent basis. 9 Comparison of Statements of Income The net interest margin was 5.43% and 5.44% during the six months ended June 30, 2000 and 1999, respectively, a decrease of 1 basis point. These variances are primarily attributable to fluctuations in the average rates charged and fees earned on loans. Net interest income on a taxable-equivalent basis was $19.4 million as compared to $17.8 million during the six months ended June 30, 2000 and 1999, respectively, representing an increase of 8.9%. The provision for loan losses is a charge to earnings in the current period to replenish the allowance for loan losses and maintain it at the level management determines is adequate. The provision for loan losses charged to earnings amounted to $649,000 and $1,009,000 during the six months ended June 30, 2000 and 1999, respectively, a decrease of $360,000, or 35.6%. The allowance for loan losses represents a reserve for potential losses in the loan portfolio. The adequacy of the allowance for loan losses is evaluated quarterly based on a review of all significant loans, with a particular emphasis on non-accruing, past due and other loans that management believes require attention. Another factor used in determining the adequacy of the reserve is management's judgment about factors affecting loan quality and assumptions about the local and national economy. The allowance for loan losses was 1.78% and 1.87% of total loans outstanding at June 30, 2000 and December 31, 1999. As of June 30, 2000, nonperforming assets were $6,977,000 compared to $6,086,000 in nonperforming assets as of December 31, 1999. Management considers the allowance for loan losses as of June 30, 2000 adequate to cover potential losses in the loan portfolio. 10 Following is a comparison of noninterest income for the six months ended June 30, 2000 and 1999 (dollars in thousands).
Six Months Ended ------------------------------- June 30, 2000 June 30,1999 ------------- ---------------- Service charges on deposits $2,982 $2,644 Other service charges, commissions & fees 1,015 1,243 Other income 120 171 ------ ------ Total noninterest income $4,117 $4,058 ====== ======
Total noninterest income for the six months ended June 30, 2000 was $59,000 higher than during the same period in 1999. Following is an analysis of noninterest expense for the six months ended June 30, 2000 and 1999 (dollars in thousands).
Six Months Ended ---------------------------- June 30, 2000 June 30, 1999 ------------- ------------- Salaries and employee benefits $ 8,448 $ 7,683 Occupancy and equipment expense 2,083 2,134 Other expense 4,815 4,185 ------- ------- Total noninterest expense $15,346 $14,002 ======= =======
Total noninterest expense for the six months ended June 30, 2000 was $1,344,000 higher than during the same period in 1999. Salaries and employee benefits for the six months ended June 30, 2000 were $765,000 or 9.96% higher than during the same period in 1999. Approximately $107,000 or 27.2% of this increase was the result of incentive compensation to employees under the ABC Bancorp 2000 Officer/Director Stock Bonus Plan. The Company does not anticipate that this cost will be repeated in the foreseeable future. The balance of the increase is due to additional bonus accruals under the Company's incentive compensation plan due to improved performance of the Company and normal increases in salaries and benefits. 11 Other expense for the six months ended June 30, 2000 increased $630,000 or 15.1% as compared to the same period in 1999. Approximately $107,000 or 21.6% of this increase was the result of incentive compensation to directors of the Company and its subsidiaries under the ABC Bancorp 2000 Officer/Director Stock Bonus Plan. The Company does not anticipate that this cost will be repeated in the foreseeable future. Data processing costs were approximately $115,000 higher during the first quarter due to the implementation of several projects. The balance of the increase is due to normal increases in costs between periods. Following is a condensed summary of net income during the six months ended June 30, 2000 and 1999 (dollars in thousands).
Six Months Ended ---------------- June 30, 2000 June 30, 1999 ------------- ------------- Net interest income $19,043 $17,426 Provision for loan losses 649 1,009 Other income 4,117 4,058 Other expense 15,346 14,002 Income before income taxes 7,165 6,473 Applicable income taxes 2,322 2,220 ------- ------- Net income $ 4,843 $ 4,253 ======= =======
Net income increased $590,000 or 13.9% to $4,843,000 for the six months ended June 30, 2000 as compared to $4,253,000 for the six months ended June 30, 1999. Net interest income of ABC and its subsidiaries increased $1,617,000, the provision for loan losses decreased by $360,000 and all other noninterest expense increased by $1,344,000. 12 Comparison of Balance Sheets Total assets increased by $13.4 million, or 1.7% to $802.9 million at June 30, 2000 from $789.5 million at December 31, 1999. Total earning assets increased by $34.8 million, or 4.9%, to $743.2 million at June 30, 2000 from $708.5 million at December 31, 1999. Total loans, net of the allowance for loan losses, increased by $46.2 million, or 8.9% to $566 million at June 30, 2000 from $520 million at December 31, 1999. Total deposits increased by $16.1 million, or 2.5%, to $657 million at June 30, 2000 from $641 million at December 31, 1999. Approximately 13.8% and 16.1% of deposits were noninterest-bearing as of June 30, 2000 and December 31, 1999, respectively. 13 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The company is exposed only to U. S. Dollar interest rate changes and, accordingly, the Company manages exposure by considering the possible changes in the net interest margin. The Company does not have any trading instruments nor does it classify any portion of the investment portfolio as held for trading. The Company does not engage in any hedging activities or enter into any derivative instruments with a higher degree of risk than mortgage backed securities which are commonly pass through securities. Finally, the Company has no exposure to foreign currency exchange rate risk, commodity price risk, and other market risks. Interest rates play a major part in the net interest income of a financial institution. The sensitivity to rate changes is known as "interest rate risk." The repricing of interest earning assets and interest-bearing liabilities can influence the changes in net interest income. As part of the Company's asset/liability management program, the timing of repriced assets and liabilities is referred to as Gap management. It is the policy of the Company to maintain a Gap ratio in the one-year time horizon of .80 to 1.20 The Company uses simulation analysis to monitor changes in net interest income due to changes in market interest rates. The simulation of rising, declining and flat interest rate scenarios allows management to monitor and adjust interest rate sensitivity to minimize the impact of market interest rate swings. The analysis of the impact on net interest income over a twelve month period is subjected to a gradual 200 basis point increase or decrease in market rates on net interest income and is monitored on a quarterly basis. The most recent simulation model projects net interest income would decrease 1.17% if rates rise gradually over the next year. On the other hand, the model projects net interest income to increase .47% if rates decline over the next year. 14 Part II. Other Information Item 4. Submission of Matters to a Vote of Securities Holders The Annual Meeting of the Shareholders of the Company was held on May 9, 2000. At this meeting proxies were solicited under Regulation 14a of the Securities and Exchange Act of 1934. Total shares outstanding, net of 524,823 shares held for the treasury amounted to 8,609,267. A total of 7,435,203 shares were represented by shareholders in attendance or by proxy. Director nominees were elected by a vote of 6,581,652 shares for, and 853,551 withholding authority, representing 76% in favor of the following directors elected to serve as Class III directors, until the annual meeting to be held in 2003. Kenneth J. Hunnicutt Eugene M. Vereen, Jr. Doyle Weltzbarker Ratification of the appointment of Mauldin & Jenkins, LLC as the Company's independent accountants for the fiscal year ended December 31, 1999, by a vote of 6,666,343 for, 8,302 against, 30,557 abstaining representing 77% in favor. Item 6. Exhibits and Reports on Form 8-K There were no exhibits and reports filed on Form 8-K during the quarter ended June 30, 2000. 15 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the Undersigned thereunto duly authorized: ABC BANCORP 8/9/00 /s/ W. EDWIN LANE, JR. - ---------------------- ------------------------------------- DATE W. EDWIN LANE, JR. EXECUTIVE VICE PRESIDENT & CHIEF FINANCIAL OFFICER (Duly authorized officer and principal financial/accounting officer) 16 EX-27 2 0002.txt FINANCIAL DATA SCHEDULE
9 1,000 6-MOS DEC-31-2000 JAN-01-2000 JUN-30-2000 25,905 5,217 0 0 161,341 0 0 576,737 10,241 802,879 656,764 48,061 6,269 16,364 0 0 9,138 66,283 802,879 27,899 4,628 392 32,919 12,308 13,876 19,043 649 0 15,346 7,165 7,165 0 0 4,843 .57 .56 5.43 6,246 0 0 6,246 9,895 829 526 10,241 10,241 0 10,241
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