10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2003

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                    to                    

Commission file number: 001-13901

ABC BANCORP

(A GEORGIA CORPORATION)

I.R.S. EMPLOYER IDENTIFICATION NUMBER 58-1456434

24 2nd AVENUE, S.E., MOULTRIE, GEORGIA 31768

TELEPHONE NUMBER: (229) 890-1111

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock, Par Value $1 Per Share

Check 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  ¨

Check if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  x

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 126-2).    Yes  x    No  ¨

As of the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of the voting and non-voting common equity held by nonaffiliates of the registrant was approximately $126,396,550 million. As of March 1, 2004, the registrant had outstanding 9,765,180 shares of common stock, $1.00 par value per share.

DOCUMENTS INCORPORATED BY REFERENCE

The information required by Part III of this Annual Report is incorporated by reference from the Registrant’s definitive proxy statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A not later than 120 days after the end of the fiscal year covered by this Annual Report.

PART I

ITEM 1. BUSINESS

ABC Bancorp (“ABC”) was organized as a bank holding company under the Federal Bank Holding Company Act of 1956, as amended in 1981 (the “BHCA”), and the bank holding company laws of Georgia.

ABC provides, through its commercial bank subsidiaries described below (sometimes hereinafter referred to as “Banks”), banking services to individuals and businesses in Southern Georgia, Southeastern Alabama and Northern Florida. ABC’s executive office is located at 24 2nd Avenue, S.E., Moultrie, Georgia 31768, its telephone number is (229) 890-1111 and its Internet address is http://www.abcbancorp.com. As a registered bank holding company, ABC is subject to the applicable provisions of the Federal Bank Holding Company Act and the Georgia Bank Holding Company Act, as well as to supervision by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation and the State of Georgia Department of Banking and Finance. ABC makes available, free of charge through its Internet website, copies of its annual reports and quarterly reports as soon as reasonably practicable after it electronically files such materials with the SEC. ABC will make available free of charge paper copies of its current reports on Form 8-K upon request.

Our primary business as a bank holding company is to manage the business and affairs of our Banks. Our Banks provide a broad range of retail and commercial banking services to its customers, including checking, savings, NOW, money market accounts, time deposit accounts of various types and IRAs; loans for business, agriculture, real estate, personal uses, home improvement and automobiles; credit cards through MBNA, N.A.; debit cards; overdraft protection services; Internet banking; letters of credit; brokerage services through Raymond James Financial Services, Inc.; fixed rate annuities through PFIC Corporation; safe deposit box rentals; bank official checks; and electronic funds transfer services, including wire transfers, automated teller machines and ACH transactions.

While we have decentralized certain of our management responsibilities, we maintain efficient centralized operating systems. As a result, corporate policy, strategy and certain administrative policies are established by our board of directors, while lending and community-specific marketing decisions are made primarily by each bank to allow it to respond to differing needs and demands of its own market. Data processing functions are centralized in ABC’s data processing division located in Moultrie, Georgia. Within this framework, our Banks focus on providing personalized services and quality products to their customers to meet the needs of the communities they serve. Our objective is to establish ABC as a major financial institution in Southern Georgia, Southeastern Alabama and Northern Florida. Management has pursued this objective through an acquisition-oriented growth strategy and a prudent operating strategy.

As a bank holding company, we perform central data processing functions, purchasing and other common functions and provide certain management services for our Banks. Traditional banking services are conducted by our Banks.

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Our Subsidiaries

Following is a list of our Banks, the market areas served by the Banks and the estimated relative size of the Banks as compared with their major competitors.

Subsidiary Bank	Principal Market Area	Estimated Relative Size Among Competitors
American Banking Company	Moultrie and Colquitt County, Georgia	Second largest of seven banks in Colquitt County, Georgia
Heritage Community Bank	Quitman and Brooks County, Georgia and Valdosta and Lowndes County, Georgia	Second largest of four banks in Brooks County, Georgia
Bank of Thomas County	Coolidge, Thomasville and Thomas County, Georgia	Fifth largest of seven banks in Thomas County, Georgia
Citizens Security Bank	Tifton and Tift County, Georgia, Ocilla and Irwin County, Georgia, Douglas and Coffee County, Georgia	Third largest of seven banks in Tift County, Georgia
Cairo Banking Company	Cairo and Grady County, Georgia, Meigs and Thomas County, Georgia	Third largest of five banks in Grady County, Georgia
Southland Bank	Dothan, Abbeville, Clayton, Eufaula and Headland, Alabama	Fifth largest of eleven banks in Houston County, Alabama
Central Bank & Trust Company	Cordele and Crisp County, Georgia	Third largest of five banks in Crisp County, Georgia
First National Bank of South Georgia	Albany and Dougherty County, Georgia and Lee County, Georgia	Seventh largest of ten banks in Dougherty County, Georgia
Merchants & Farmers Bank	Donalsonville and Seminole County, Georgia and Colquitt and Miller County, Georgia	Second largest of three banks in Seminole County, Georgia
Tri-County Bank	Trenton and Gilchrist County, Florida and Newberry and Alachua County, Florida	Largest of three banks in Gilchrist County, Florida
The First Bank of Brunswick	Brunswick, St. Simons Island, Jekyll Island and Glynn County, Georgia	Fourth largest of eight banks in Glynn County, Georgia

All of our Banks offer traditional loan and deposit services discussed elsewhere in this Annual Report on Form 10-K. Only American Banking Company provides trust services directly to its customers and to the customers of the other subsidiary banks. All of the Banks maintain correspondent relationships with other commercial banks and the Federal Home Loan Bank of Atlanta. As compensation for services provided by the correspondent banks, the Banks maintain certain balances in noninterest-bearing accounts with those banks. The principal correspondent bank for all of our Banks is SunTrust Bank in Atlanta, Georgia.

On August 30, 2001, ABC formed ABC Bancorp Capital Trust I, a Delaware statutory trust and a wholly-owned subsidiary of ABC (the “Trust”), for the purpose of (i) issuing and selling its common securities to ABC and its trust preferred securities to the public, and (ii) using the proceeds from the sale of the trust preferred securities to purchase 9.00% Subordinated Debentures (the “Subordinated Debentures”) from ABC. In the quarter ended December 31, 2001, the Trust sold its securities and used the proceeds to purchase the Subordinated Debentures, which are the sole asset of the Trust. ABC pays interest on the Subordinated Debentures to the Trust at the end of each quarter at an annual rate of 9.00%, which is equal to the dividend rate payable by the Trust to the holders of its preferred securities. The cost of the issuance of the Trust’s preferred securities is treated as a deferred asset and will be amortized over a period of five years to September 30, 2006, the earliest redemption date. Following the offer and sale of the Trust’s securities, ABC owned and currently holds all of the outstanding common securities of the Trust, its only voting securities, and as a result the Trust is a subsidiary of the Company. See Notes to ABC’s Consolidated Financial Statements included in this annual report for a further discussion regarding the issuance of Trust’s preferred securities.

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Our Market Areas and Competition

Our market area is located in Southern Georgia, Southeastern Alabama and Northern Florida. The Banks’ main offices and larger branches are located in the southern Georgia cities of Albany, Brunswick, Cairo, Colquitt, Cordele, Donalsonville, Douglas, Jekyll Island, Moultrie, Ocilla, Quitman, St. Simons Island, Thomasville, Tifton and Valdosta, the southern Alabama cities of Abbeville, Clayton, Dothan, Eufaula and Headland and the northern Florida cities of Trenton and Newberry. Our Banks have a total of 36 offices located in either the cities or counties in which the main offices are located or in nearby cities.

We have subsidiary banks in several high-growth market areas that offer favorable growth and profitability potential, including banks in the cities of Valdosta, Tifton, Brunswick, St. Simons and Cordele, which are located along the I-75 corridor of Georgia, a major north-south transportation artery. We also have banks in Albany, Georgia and Dothan, Alabama, both of which are developing commercial and industrial “hubs” where residents of the numerous smaller, surrounding cities find jobs, entertainment, consumer products and services and medical services.

The banking industry in Georgia, Alabama and Florida is highly competitive. In recent years, intense market demands, economic pressures, fluctuating interest rates and increased customer awareness of product and service differences among financial institutions have forced banks to diversify their services and become more cost effective. Each of our Banks faces strong competition in attracting deposits and making loans. Their most direct competition for deposits comes from other commercial banks, thrift institutions, credit unions and issuers of securities such as brokerage firms. Interest rates, convenience of office locations and marketing are all significant factors in our Banks’ competition for deposits.

Competition for loans comes from other commercial banks, thrift institutions, savings banks, insurance companies, consumer finance companies, credit unions and other institutional lenders. Our Banks compete for loan originations through the interest rates and loan fees they charge and the efficiency and quality of services they provide. Competition is affected by the general availability of lendable funds, general and local economic conditions, current interest rate levels and other factors that are not readily predictable.

Management expects that competition will become more intense in the future due to changes in state and federal laws and regulations and the entry of additional bank and nonbank competitors. See “Supervision and Regulation”.

Growth Strategy

We intend to grow within our existing markets, to branch into or acquire financial institutions in existing markets and to branch into or acquire financial institutions in other markets consistent with our capital requirements and management abilities.

We seek opportunities to acquire banks at acceptable prices. Our operating strategy is to provide high quality community banking services to our customers and increase market share through solicitation of new business, repeat business, referrals from customers and selected promotional strategies.

Lending Policy

We have sought to maintain a comprehensive lending policy that meets the credit needs of each of the communities served by our Banks, including low- and moderate-income customers, and to employ lending procedures and policies consistent with this approach. All loans are subject to our written loan policy, which is reviewed annually, updated as needed, and provides that lending officers have sole authority to approve loans of various maximum amounts commensurate with their seniority and experience. Each Bank’s president has sole discretion to approve loans in varying principal amounts up to specified limits established for each president. Each Bank’s Board of Directors reviews and approves loans that exceed management’s lending authority and, in certain instances, other types of loans. New credit extensions are reviewed daily by each Bank’s senior management and at least monthly by its Board of Directors.

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The lending officers at each Bank have authority to make loans only in the county in which the Bank is located and its contiguous counties. Occasionally, the Loan Committee of the Company will approve a loan for purposes outside of the market area of our Banks, provided the Bank has established a relationship with the borrower by making loans for purposes within the Banks’ market area. Our lending policy requires analysis of the borrower’s projected cash flow and ability to service the debt. For agricultural loans, the lending officer visits the borrower regularly during the growing season and re-evaluates the loan in light of the borrower’s updated cash flow projections. Each subsidiary bank is assigned an approval limit by the holding company, which serves as the maximum limit of new extensions of credit each Bank can approve. That approval limit is reviewed annually by the Holding Company and adjusted as needed. All extensions of credit in excess of the Banks’ internal approval limits are reviewed by ABC’s Senior Credit Officer. Further approval by the Holding Company Loan Committee may also be needed. Under our ongoing loan review program, all loans are subject to sampling and objective review by an assigned loan reviewer who is independent of the originating loan officer.

We actively market our services to qualified lending customers in both the commercial and consumer sectors. Our commercial lending officers actively solicit the business of new companies entering the market as well as longstanding members of that market’s business community. Through personalized professional service and competitive pricing, we have been successful in attracting new commercial lending customers. At the same time, we actively advertise our consumer loan products and continually seek to make our lending officers more accessible.

Each Bank continually monitors its loan portfolio to identify areas of concern and to enable management to take corrective action when necessary. Each Bank’s lending officers and Board of Directors meet periodically to review all past due loans, the status of large loans and certain other matters. Individual lending officers are responsible for reviewing collection of past due amounts and monitoring any changes in the financial status of the borrowers.

Lending Activities

General. We provide a broad range of commercial and retail lending services to corporations, partnerships and individuals, including agricultural, commercial business loans, commercial and residential real estate construction and mortgage loans, loan participations, consumer loans, revolving lines of credit and letters of credit. The loan department of each Bank makes loans to consumers and originates and services residential mortgages. We maintain a diversified loan portfolio and make no foreign or energy-related loans.

Real Estate Loans. Our real estate loans are for a term of years, although rarely more than ten, over which period the principal thereof is amortized, and are generally secured by residential real estate, farmland or commercial real estate. Real estate related loans represent a significant portion of the loan portfolio.

Agricultural Loans. Our agricultural loans are made to finance crop production expenses and to finance the purchase of farm-related equipment or farmland. Agricultural loans typically involve seasonal fluctuations in amounts. Although we typically look to an agricultural borrower’s cash flow as the principal source of repayment, agricultural loans are also generally secured by a security interest in the crops or the farm-related equipment and, in some cases, an assignment of crop insurance or a mortgage on real estate. In addition, a portion of our agricultural loans are guaranteed by the FmHA Guaranteed Loan Program.

Commercial and Industrial Loans. General commercial and industrial loans consist of loans made primarily to manufacturers, wholesalers and retailers of goods, service companies and other industries. Management believes that a significant portion of these loans are, to varying degrees, agricultural-related. Our Banks have also generated loans which are guaranteed by the U. S. Small Business Administration. Management believes that making such loans helps the local community and also provides ABC with a source of income and solid future lending relationships as such businesses grow and prosper. The primary repayment risk for commercial loans is the failure of the business due to economic or financial factors. Although we typically look to a commercial borrower’s cash flow as the principal source of repayment for such loans, some commercial loans are secured by inventory, equipment, accounts receivable and other assets.

Consumer Lending. Our consumer loans include motor vehicle, home improvement, home equity, student and signature loans and small personal credit lines. Many of our Banks also offer credit cards to their customers via a marketing agreement with MBNA.

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Compliance with Community Reinvestment Act. Each of our Banks has a Community Reinvestment Act Officer who develops and oversees that Bank’s Community Reinvestment Act program and makes quarterly reports to that Bank’s Board of Directors. Our Banks regularly sponsor or participate in community programs designed to ascertain and meet the credit needs of each of the communities they serve, including low and moderate income neighborhoods. Some of these activities include participating in community meetings to explain the availability of Small Business Administration, Farmers’ Home Loan Administration and Regional Development Center loans, and sponsoring educational seminars for area farmers. In addition, each of our Georgia Banks participate in the Georgia Residential Finance Authority program which makes low interest rate loans to rehabilitate low income rental housing.

Deposits

Checking, savings, NOW, money market accounts and other time accounts are the primary sources of our Banks’ funds for loans and investments. Our Banks obtain most of their deposits from individuals and from businesses in their respective market areas.

Our Banks have not had to attract new or retain old deposits by paying depositors rates of interest on certificates of deposit, money market and other interest-bearing accounts significantly above rates paid by other banks in our respective market areas. In the future, increasing competition among banks in our market areas may cause our Banks’ interest margins to shrink. Our Banks have never accepted deposits for which a broker’s commission was paid.

Investment Activities

Our investment policy is designed to maximize income from funds not needed to meet loan demand in a manner consistent with appropriate liquidity and risk objectives. Under this policy, our Banks may invest in federal, state and municipal obligations, corporate obligations, public housing authority bonds, industrial development revenue bonds and Government National Mortgage Association (“GNMA”) securities and satisfactorily rated trust preferred obligations. Our Banks’ investments must satisfy certain investment quality criteria. Our Banks’ investments must be rated at least “BAA” by either Moody’s or Standard and Poor’s. Securities rated below “A” are periodically reviewed for creditworthiness. Our Banks may purchase non-rated municipal bonds only if the issuer of such bonds is located in the Bank’s general market area and such bonds are determined by the purchasing Bank to have a credit risk no greater than the minimum ratings referred to above. Industrial development authority bonds, which normally are not rated, are purchased only if the issuer is located in the purchasing Bank’s market area and if the bonds are considered to possess a high degree of credit soundness. Our Banks typically have not purchased a significant amount of GNMA securities, which normally have higher yields than our Banks’ other investments.

While our investment policy permits our Banks to trade securities to improve the quality of yields or marketability or to realign the composition of the portfolio, our Banks historically have not done so to any significant extent.

Our investment committee implements the investment policy and portfolio strategies, monitors the portfolio and reports to each Bank’s Board and ALCO committees. Reports on all purchases, sales, net profits or losses and market appreciation or depreciation of the bond portfolio are reviewed by our Boards of Directors each month. Once a year, the written investment policy is reviewed by our Board of Directors.

The Banks’ securities are kept in safekeeping accounts at correspondent banks.

Asset/Liability Management

Our objective is to manage our assets and liabilities to provide a satisfactory, consistent level of profitability within the framework of established cash, loan, investment, borrowing and capital policies. The overall philosophy of our management is to support asset growth primarily through growth of core deposits, which include deposits of all categories made by individuals, partnerships, corporations and other entities. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

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Properties

The table below sets forth the location, size and other information with respect to our real properties. Except for the leased 120 Third Avenue, S.E., Moultrie, Georgia, Jekyll Island property and 1817 South Oates Street in Dothan, Alabama, all properties are owned by ABC or our Banks and are unencumbered.

Offices	Used By	Approximate Square Footage
310 First Street, S.E., Moultrie, GA	ABC	6,300
317 South Main Street, Moultrie, GA	ABC	2,200
308-314 First Street, S.E., Moultrie, GA	ABC	4,000
24 Second Avenue, S. E., Moultrie, GA	ABC	16,000
120 Third Avenue S. E., Moultrie, GA	ABC	7,800
305 South Main Street, Moultrie, GA	ABC and American Bank	7,048
225 South Main Street, Moultrie, GA	American Bank	9,100
1707 First Avenue, S.E., Moultrie, GA	American Bank	5,000
137 Broad Street, Doerun, GA	American Bank	2,500
2513 South Main Street, Moultrie, GA	American Bank	3,973
322 First Street, S.E., Moultrie, GA	American Bank	300
1000 West Screven Street, Quitman, GA	Heritage Bank	11,300
19540 Valdosta Hwy., Valdosta, GA	Heritage Bank	2,650
3140 Inner Perimeter Road, Valdosta, GA	Heritage Bank	3,462
2484 East Pinetree Boulevard, Thomasville, GA	Thomas Bank	4,400
529 Pine Street, Coolidge, GA	Thomas Bank	4,000
735 West Second Street, Tifton, GA	Citizens Security Bank	10,500
Magnolia & W 2nd Street, Tifton, GA	Citizens Security Bank	2,354
731 West Second Street, Tifton, GA	Citizens Security Bank	5,580
301 South Irwin Avenue, Ocilla, GA	Citizens Security Bank	10,675
100 South Pearle Avenue, Douglas, GA	Citizens Security Bank	4,964
201 South Broad Street, Cairo, GA	Cairo Bank	10,000
Highway 84 Drive-in, Cairo, GA	Cairo Bank	1,000
2023 East Depot Street, Meigs, GA	Cairo Bank	4,500
3299 Ross Clark Circle, Dothan, AL	Southland Bank	21,918
1817 South Oates Street, Dothan, AL	Southland Bank	4,000
204 Kirkland Street, Abbeville, AL	Southland Bank	5,300
211 Eufaula Street, Clayton, AL	Southland Bank	8,000
1140 South Eufaula Avenue, Eufaula, AL	Southland Bank	2,037
208 Main Street, Headland, AL	Southland Bank	2,037
502 Second Street South, Cordele, GA	Central Bank	5,800
1302 Sixteenth Avenue East, Cordele, GA	Central Bank	840
509 16th Avenue, Cordele, GA	Central Bank	1,500
2627 Dawson Road, Albany, GA	First National Bank	8,750
1607 U. S. Highway 19 South, Leesburg, GA	First National Bank	5,300
109 West Third Street, Donalsonville, GA	M & F Bank	9,100
Highway 374 and 253, Donalsonville, GA	M & F Bank	910
162 East Crawford Street, Colquitt, GA	M & F Bank	4,672
302 North Main Street, Trenton, FL	Tri-County Bank	5,000
25365 West Newberry Road, Newberry, FL	Tri-County Bank	9,487
3340 Cypress Mill Road, Brunswick, GA	First Bank of Brunswick	8,500
5340 New Jesup Highway, Brunswick, GA	First Bank of Brunswick	2,305
3811 Frederica Road, St. Simons Island, GA	First Bank of Brunswick	8,000
18-B Beachview Drive, Jekyll Island, GA	First Bank of Brunswick	5,532

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Employees

At December 31, 2003, our Company and our Banks employed approximately 500 employees. We consider our relationship with our employees to be satisfactory.

We have adopted one retirement plan for our employees, the ABC Bancorp 401(k) Profit Sharing Plan. This plan provides deferral of compensation by our employees and contributions by ABC. ABC and our Banks made contributions for all eligible employees in 2003. We also maintain a comprehensive employee benefits program providing, among other benefits, hospitalization and major medical insurance and life insurance. Management considers these benefits to be competitive with those offered by other financial institutions in our market areas. Our employees are not represented by any collective bargaining group.

SUPERVISION AND REGULATION

General

As a bank holding company, we are subject to the regulation, supervision and reporting requirements of the Federal Reserve Board, the Georgia Department of Banking and Finance, the Alabama State Banking Department and the Florida Department of Banking and Finance. Our Banks are state and federally chartered banks. The FDIC to the full extent permitted by law insures each of our Banks. As a result, our Banks are subject to the supervision, examination and reporting requirements of the Georgia Department of Banking and Finance, the Alabama State Banking Department, the Florida Department of Banking and Finance, the FDIC and the OCC.

The Bank Holding Company Act requires every bank holding company to obtain the prior approval of the Federal Reserve before:

• it may acquire direct or indirect ownership or control of any voting shares of any bank if, after the acquisition, the bank holding company will directly or indirectly own or control more than 5% of the voting shares of the bank;

• it or any of its subsidiaries, other than a bank, may acquire all or substantially all of the assets of any bank; or

• it may merge or consolidate with any other bank holding company.

The Bank Holding Company Act further provides that the Federal Reserve may not approve any transaction that would result in a monopoly or that would substantially lessen competition in the banking business, unless the public interest in meeting the needs of the communities to be served outweighs the anti-competitive effects. The Federal Reserve is also required to consider the financial and managerial resources and future prospects of the bank holding companies and banks involved and the convenience and needs of the communities to be served. Consideration of financial resources generally focuses on capital adequacy, and consideration of convenience and needs issues focuses, in part, on the performance under The Community Reinvestment Act of 1977, both of which are discussed in more detail.

The Bank Holding Company Act generally prohibits a bank holding company from engaging in activities other than:

• banking;

• managing or controlling banks or other permissible subsidiaries; and

• acquiring or retaining direct or indirect control of any company engaged in any activities other than activities closely related to banking or managing or controlling banks.

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The activities in which holding companies and their affiliates are permitted to engage were substantially expanded by The Gramm-Leach-Bliley Act, which was signed on November 12, 1999. The Gramm-Leach-Bliley Act repeals the anti-affiliation provisions of The Glass-Steagall Act to permit the common ownership of commercial banks, investment banks and insurance companies. The Gramm-Leach-Bliley Act also amends The Bank Holding Company Act to permit a financial holding company to, among other things, engage in any activity that the Federal Reserve determines to be (i) financial in nature or incidental to such financial activity or (ii) complementary to a financial activity and not a substantial risk to the safety and soundness of depository institutions or the financial system generally. The Federal Reserve must consult with the Secretary of the Treasury in determining whether an activity is financial in nature or incidental to a financial activity. Holding companies may continue to own companies conducting activities which had been approved by federal order or regulation on the day before The Gramm-Leach-Bliley Act was enacted. Effective August 24, 2000, pursuant to a previously-filed election with the Federal Reserve, ABC became a financial holding company.

In determining whether a particular activity is permissible, the Federal Reserve considers whether performing the activity can be expected to produce benefits to the public that outweigh possible adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interest or unsound banking practices. The Federal Reserve has the power to order a bank holding company or its subsidiaries to terminate any activity or control of any subsidiary when the continuation of the activity or control constitutes a serious risk to the financial safety, soundness or stability of any bank subsidiary of that bank holding company.

Our Banks are also subject to numerous state and federal statutes and regulations that affect their business, activities and operations, and each is supervised and examined by one or more state or federal bank regulatory agencies. The FDIC, the OCC, the Georgia Department of Banking and Finance, the Alabama State Banking Department and the Florida Department of Banking and Finance regularly examine the operations of our Banks and are given the authority to approve or disapprove mergers, consolidations, the establishment of branches and similar corporate actions. These agencies also have the power to prevent the continuance or development of unsafe or unsound banking practices or other violations of law.

Payment of Dividends and Other Restrictions

ABC is a legal entity separate and distinct from its subsidiaries. There are various legal and regulatory limitations under federal and state law on the extent to which our subsidiaries can pay dividends or otherwise supply funds to ABC.

The principal source of ABC’s cash revenues is dividends from its subsidiaries, and there are certain limitations under federal and state laws on the payment of dividends by our subsidiaries. The prior approval of applicable regulatory authorities, as the case may be, is required if the total dividends declared by any subsidiary Bank in any calendar year exceeds the Bank’s net profits (as defined) for that year combined with its retained net profits for the preceding two calendar years, less any required transfers to surplus or a fund for the retirement of any preferred stock or 50% of the Bank’s net profits for the previous year in the case of Georgia banks. The relevant federal and state regulatory agencies also have authority to prohibit a state member bank or bank holding company, which would include ABC and its Banks, from engaging in what, in the opinion of such regulatory body, constitutes an unsafe or unsound practice in conducting its business. The payment of dividends could, depending upon the financial condition of the subsidiary, be deemed to constitute an unsafe or unsound practice in conducting its business.

Under Georgia law (which would apply to any payment of dividends by the Georgia Banks to ABC), the prior approval of the Georgia Department of Banking and Finance is required before any cash dividends may be paid by a state bank if: (i) total classified assets at the most recent examination of such bank exceed 80% of the equity capital (as defined, which includes the reserve for loan losses) of such bank; (ii) the aggregate amount of dividends declared or anticipated to be declared in the calendar year exceeds 50% of the net profits (as defined) for the previous calendar year; or (iii) the ratio of equity capital to adjusted total assets is less than 6%.

Retained earnings of our Banks available for payment of cash dividends under all applicable regulations without obtaining governmental approval were approximately $7.7 million as of December 31, 2003.

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In addition, our Banks are subject to limitations under Section 23A of the Federal Reserve Act with respect to extensions of credit to, investments in, and certain other transactions with, ABC. Furthermore, loans and extensions of credit are also subject to various collateral requirements.

The Federal Reserve has issued a policy statement on the payment of cash dividends by bank holding companies, which expresses the Federal Reserve’s view that a bank holding company should pay cash dividends only to the extent that the holding company’s net income for the past year is sufficient to cover both the cash dividends and a rate of earning retention that is consistent with the holding company’s capital needs, asset quality and overall financial condition. The Federal Reserve also indicated that it would be inappropriate for a holding company experiencing serious financial problems to borrow funds to pay dividends. Furthermore, under the prompt corrective action regulations adopted by the Federal Reserve, the Federal Reserve may prohibit a bank holding company from paying any dividends if one or more of the holding company’s bank subsidiaries are classified as undercapitalized.

Bank holding companies are required to give the Federal Reserve prior written notice of any purchase or redemption of its outstanding equity securities if the gross consideration for the purchase or redemption, when combined with the net consideration paid for all such purchases or redemptions during the preceding 12 months, is equal to 10% or more of their consolidated net worth. The Federal Reserve may disapprove such a purchase or redemption if it determines that the proposal would constitute an unsafe or unsound practice or would violate any law, regulation, Federal Reserve order, or any condition imposed by, or written agreement with, the Federal Reserve. This notification requirement does not apply to any company that meets the well-capitalized standard for commercial banks, has a safety and soundness examination rating of at least a “2” and is not subject to any unresolved supervisory issues. As of December 31, 2003, ABC meets these requirements.

Capital Adequacy

ABC must comply with the Federal Reserve’s established capital adequacy standards, and our Banks are required to comply with the capital adequacy standards established by the FDIC and the OCC. The Federal Reserve has promulgated two basic measures of capital adequacy for bank holding companies: a risk-based measure and a leverage measure. A bank holding company must satisfy all applicable capital standards to be considered in compliance.

The risk-based capital standards are designed to:

• make regulatory capital requirements more sensitive to differences in risk profile among banks and bank holding companies;

• account for off-balance-sheet exposure; and

• minimize disincentives for holding liquid assets.

Assets and off-balance-sheet items are assigned to broad risk categories, each with appropriate weights. The resulting capital ratios represent capital as a percentage of total risk-weighted assets and off-balance-sheet items.

The minimum guideline for the ratio of total capital to risk-weighted assets is 8%. At least half of total capital must be comprised of Tier 1 Capital, which is common stock, undivided profits, minority interests in the equity accounts of consolidated subsidiaries and noncumulative perpetual preferred stock, less goodwill and certain other intangible assets. The remainder may consist of Tier 2 Capital, which is subordinated debt, other preferred stock and a limited amount of loan loss reserves. During 2001, we increased our consolidated ratios by issuing trust preferred securities in the amount of $34,500,000. At December 31, 2003, $30,191,000 (25% of total Tier 1 Capital) was included in Tier 1 Capital and the balance included in Tier 2 Capital. At December 31, 2003, ABC’s total risk-based capital ratio and its Tier 1 risk-based capital ratio were 15.60% and 13.85%, respectively.

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In addition, the Federal Reserve has established minimum leverage ratio guidelines for bank holding companies. These guidelines provide for a minimum ratio of Tier 1 Capital to average assets, less goodwill and certain other intangible assets, of 3% for bank holding companies that meet specified criteria. All other bank holding companies generally are required to maintain a minimum leverage ratio of 4%. ABC’s ratio at December 31, 2003 was 10.77%. The guidelines also provide that bank holding companies experiencing internal growth or making acquisitions will be expected to maintain strong capital positions substantially above the minimum supervisory levels without significant reliance on intangible assets. Furthermore, the Federal Reserve has indicated that it will consider a “tangible Tier 1 Capital leverage ratio” and other indicia of capital strength in evaluating proposals for expansion or new activities. The Federal Reserve has not advised ABC of any specific minimum leverage ratio or tangible Tier 1 Capital leverage ratio applicable to it.

Our Banks are subject to risk-based and leverage capital requirements adopted by the FDIC and the OCC that are substantially similar to those adopted by the Federal Reserve for bank holding companies. All of our Banks were in compliance with applicable minimum capital requirements as of December 31, 2003.

Neither ABC nor any of our Banks has been advised by any federal banking agency of any specific minimum capital ratio requirement applicable to it.

In January 2001, the Basel Committee on Banking Supervision issued a second consultative paper entitled “Proposal for a New Basel Capital Accord”. This proposal, which will apply to all banks and holding companies that are parents of banking groups, is expected to be finalized by the middle of 2004. Implementation of this new framework, to the extent it is adopted and promulgated by the Federal Reserve, is expected to begin at the end of 2006. The Company is monitoring the status and progress of this proposal.

Failure to meet capital guidelines could subject a bank to a variety of enforcement remedies, including issuance of a capital directive, the termination of deposit insurance by the FDIC, a prohibition on taking brokered deposits, and certain other restrictions on its business. As described below, the FDIC can impose substantial additional restrictions upon FDIC-insured depository institutions that fail to meet applicable capital requirements.

Prompt Corrective Action

The Federal Deposit Insurance Act (or “FDI Act”), among other things, requires the federal regulatory agencies to take “prompt corrective action” if a depository institution does not meet minimum capital requirements. The FDI Act establishes five capital tiers: “well capitalized”, “adequately capitalized”, “undercapitalized”, “significantly undercapitalized” and “critically undercapitalized”. A depository institution’s capital tier will depend upon how its capital levels compare to various relevant capital measures and certain other factors, as established by regulation.

The federal bank regulatory agencies have adopted regulations establishing relevant capital measurers and relevant capital levels applicable to FDIC-insured banks. The relevant capital measures are the Total Capital ratio, Tier 1 Capital ratio and the leverage ratio. Under the regulations, a FDIC-insured bank will be:

• “well capitalized” if it has a Total Capital ratio of 10% or greater, a Tier 1 Capital ratio of 6% or greater and a leverage ratio of 5% or greater and is not subject to any order or written directive by the appropriate regulatory authority to meet and maintain a specific capital level for any capital measure;

• “adequately capitalized” if it has a Total Capital ratio of 8% or greater, a Tier 1 Capital ratio of 4% or greater and a leverage ratio of 4% or greater (3% in certain circumstances) and is not “well capitalized”;

• “undercapitalized” if it has a Total Capital ratio of less than 8%, a Tier 1 Capital ratio of less than 4% or a leverage ratio of less than 4% (3% in certain circumstances);

• “significantly undercapitalized” if it has a Total Capital ratio of less than 6%, a Tier 1 Capital ratio of less than 3% or a leverage ratio of less than 3%; and

• “critically undercapitalized” if its tangible equity is equal to or less than 2% of average quarterly tangible assets.

An institution may be downgraded to, or deemed to be in, a capital category that is lower than is indicated by its capital ratios if it is determined to be in an unsafe or unsound condition or if it receives an unsatisfactory examination rating with respect to certain matters. As of December 31, 2003, all of our Banks had capital levels that qualify as “well capitalized” under such regulations.

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The Gramm-Leach-Bliley Act allows bank holding companies that are “well managed” and “well capitalized” and whose depositor subsidiaries have “satisfactory” or better Community Reinvestment Act ratings to become financial holding companies that may engage in a substantially broader range of nonbanking activities than are currently permissible, including insurance underwriting and securities activities. As previously stated, ABC became a financial holding company effective August 24, 2000.

The FDI Act generally prohibits an FDIC-insured bank from making a capital distribution (including payment of a dividend) or paying any management fee to its holding company if the bank would thereafter be “undercapitalized”. “Undercapitalized” banks are subject to growth limitations and are required to submit a capital restoration plan. The federal regulators may not accept a capital plan without determining, among other things, that the plan is based on realistic assumptions and is likely to succeed in restoring the bank’s capital. In addition, for a capital restoration plan to be acceptable, the bank’s parent holding company must guarantee that the institution will comply with such capital restoration plan. The aggregate liability of the parent holding company is limited to the lesser of: (i) an amount equal to 5% of the bank’s total assets at the time it became “undercapitalized”; and (ii) the amount which is necessary (or would have been necessary) to bring the institution into compliance with all capital standards applicable with respect to such institution as of the time it fails to comply with the plan. If a bank fails to submit an acceptable plan, it is treated as if it is “significantly undercapitalized”.

“Significantly undercapitalized” insured banks may be subject to a number of requirements and restrictions, including orders to sell sufficient voting stock to become “adequately capitalized”, requirements to reduce total assets and the cessation of receipt of deposits from correspondent banks. “Critically undercapitalized” institutions are subject to the appointment of a receiver or conservator. A bank that is not “well capitalized” is also subject to certain limitations relating to so-called “brokered” deposits.

Community Reinvestment Act

The Community Reinvestment Act requires federal bank regulatory agencies to encourage financial institutions to meet the credit needs of low- and moderate-income borrowers in their local communities. An institution’s size and business strategy determines the type of examination that it will receive. Large, retail-oriented institutions are examined using a performance-based lending, investment and service test. Small institutions are examined using a streamlined approach. All institutions may opt to be evaluated under a strategic plan formulated with community input and pre-approved by the bank regulatory agency.

The Community Reinvestment Act regulations provide for certain disclosure obligations. Each institution must post a notice advising the public of its right to comment to the institution and its regulator on the institution’s Community Reinvestment Act performance and to review the institution’s Community Reinvestment Act public file. Each lending institution must maintain for public inspection a file that includes a listing of branch locations and services, a summary of lending activity, a map of its communities and any written comments from the public on its performance in meeting community credit needs. The Community Reinvestment Act requires public disclosure of a financial institution’s written Community Reinvestment Act evaluations. This promotes enforcement of Community Reinvestment Act requirements by providing the public with the status of a particular institution’s community reinvestment record.

The Gramm-Leach-Bliley Act made various changes to The Community Reinvestment Act. Among other changes, Community Reinvestment Act agreements with private parties must be disclosed and annual Community Reinvestment Act reports must be made available to a bank’s primary federal regulator. A bank holding company will not be permitted to become a financial holding company and no new activities authorized under The Gramm-Leach-Bliley Act may be commenced by a holding company or by a bank financial subsidiary if any of its bank subsidiaries received less than a “satisfactory” Community Reinvestment Act rating in its latest Community Reinvestment Act examination.

Privacy

Financial institutions are required to disclose their policies for collecting and protecting confidential information. Customers generally may prevent financial institutions from sharing personal financial information with nonaffiliated third parties except for third parties which market the institutions’ own products and services. Additionally, financial institutions generally may not disclose consumer account numbers to any nonaffiliated third party for use in telemarketing, direct mail marketing or other marketing through electronic mail to consumers.

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The Gramm-Leach-Bliley Act also includes provisions to protect consumer privacy by prohibiting banks from disclosing non-public, personal, financial information to unaffiliated parties without the consent of the customer, and by requiring annual disclosure of the Banks’ privacy policies. Each Bank’s primary regulator is responsible for promulgating rules to implement these provisions.

Legislative and Regulatory Changes

On October 26, 2001, President Bush signed into law the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the “USA PATRIOT Act”). Among its other provisions, the USA PATRIOT Act requires each financial institution: (i) to establish an anti-money laundering program; (ii) to establish due diligence policies, procedures and controls with respect to its private banking accounts involving foreign individuals and certain foreign banks; and (iii) to avoid establishing, maintaining, administering, or managing correspondent accounts in the United States for, or on behalf of, foreign banks that do not have a physical presence in any country. The USA PATRIOT Act also requires the Secretary of the Treasury to prescribe, by regulations to be issued jointly with the federal banking regulators and certain other agencies, minimum standards that financial institutions must follow to verify the identity of customers, both foreign and domestic, when a customer opens an account. In addition, the USA PATRIOT Act contains a provision encouraging cooperation among financial institutions, regulatory authorities and law enforcement authorities with respect to individuals, entities and organizations engaged in, or reasonably suspected of engaging in, terrorist acts or money laundering activities. Most specific changes are to take effect October 1, 2003. At this time, the provisions of the USA PATRIOT Act will not have a material impact on the business of ABC and our banks.

On July 30, 2002, the President signed into law the Sarbanes-Oxley Act of 2002 (the “Sarbanes Act”), which mandated a variety of reforms intended to address corporate and accounting fraud. The Sarbanes Act provides for the establishment of a new Public Company Accounting Oversight Board (“PCAOB”) which will enforce auditing, quality control and independence standards for firms that audit Securities and Exchange Commission (“SEC”) reporting companies and the PCAOB will be funded by fees from all SEC reporting companies. The Sarbanes Act imposes higher standards for auditor independence and restricts provision of consulting services by auditing firms to companies they audit and in addition, certain audit partners must be rotated periodically. The Sarbanes Act requires chief executive officers and chief financial officers, or their equivalents, to certify to the accuracy of periodic reports filed with the SEC, subject to civil and criminal penalties if they knowingly or willfully violate this certification requirement. In addition, under the Sarbanes Act, counsel will be required to report specific violations. Directors and executive officers must report most changes in their ownership of a company’s securities and executives will have restrictions on trading, and loans. The Sarbanes Act also increases the oversight and authority of audit committees of publicly traded companies. Although ABC anticipates it will incur additional expense in complying with the provisions of the Sarbanes Act and the related rules, management does not expect that such compliance will have a material impact on ABC’s financial condition or results of operation. Certain provisions of the Sarbanes Act were effective immediately upon passage or at various times in fiscal 2003. Other provisions of the Sarbanes Act will be effective through fiscal 2004 and after.

Fiscal and Monetary Policy

Banking is a business which depends on interest rate differentials. In general, the difference between the interest paid by a bank on its deposits and its other borrowings, and the interest received by a bank on its loans and securities holdings, constitutes the major portion of a bank’s earnings. Thus, our earnings and growth will be subject to the influence of economic conditions generally, both domestic and foreign, and also to the monetary and fiscal policies of the United States and its agencies, particularly the Federal Reserve. The Federal Reserve regulates the supply of money through various means, including open market dealings in United States government securities, the discount rate at which banks may borrow from the Federal Reserve and the reserve requirements on deposits. The nature and timing of any changes in such policies and their effect on ABC cannot be predicted.

Current and future legislation and the policies established by federal and state regulatory authorities will affect our future operations. Banking legislation and regulations may limit our growth and the return to our investors by restricting certain of our activities.

In addition, capital requirements could be changed and have the effect of restricting our activities or requiring additional capital to be maintained. We cannot predict what changes, if any, will be made to existing federal and state legislation and regulations or the effect that such changes may have on our business.

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Federal Home Loan Bank System

All of our Banks have correspondent relationships with the Federal Home Loan Bank of Atlanta (“FHLB Atlanta”), which is one of 12 regional Federal Home Loan Banks (or “FHLBs”) that administer the home financing credit function of savings companies. Each FHLB serves as a reserve or central bank for its members within its assigned region. FHLBs are funded primarily from proceeds derived from the sale of consolidated obligations of the FHLB System and make loans to members (i.e., advances) in accordance with policies and procedures, established by the Board of Directors of the FHLB which are subject to the oversight of the Federal Housing Finance Board. All advances from the FHLB are required to be fully secured by sufficient collateral as determined by the FHLB. In addition, all long-term advances are required to provide funds for residential home financing.

FHLB Atlanta provides certain services to certain of our Banks such as processing checks and other items, buying and selling Federal funds, handling money transfers and exchanges, shipping coin and currency, providing security and safekeeping of funds or other valuable items, and furnishing limited management information and advice. As compensation for these services, our Banks maintain certain balances with FHLB Atlanta in interest-bearing accounts.

Under federal law, the FHLBs are required to provide funds for the resolution of troubled savings companies and to contribute to low- and moderately-priced housing programs through direct loans or interest subsidies on advances targeted for community investment and low- and moderate-income housing projects.

Title 6 of the GLB Act, entitled the Federal Home Loan Bank System Modernization Act of 1999 (called the “FHLB Modernization Act”), has amended the Federal Home Loan Bank Act by allowing for voluntary membership and modernizing the capital structure and governance of the FHLBs. The new capital structure established under the FHLB Modernization Act sets forth new leverage and risk-based capital requirements based on permanence of capital. It also requires some minimum investment in the stock of the FHLBs of all member entities. Capital will include retained earnings and two forms of stock: Class A stock redeemable within six months written notice and Class B stock redeemable within five years written notice. The FHLB Modernization Act provides a transition period to the new capital regime, which will not be effective until the FHLBs enact implementing regulations. The FHLB Modernization Act also reduces the period of time in which a member exiting the FHLB system must stay out of the system.

Real Estate Lending Evaluations

The federal regulators have adopted uniform standards for evaluations of loans secured by real estate or made to finance improvements to real estate. Banks are required to establish and maintain written internal real estate lending policies consistent with safe and sound banking practices and appropriate to the size of the institution and the nature and scope of its operations. The regulations establish loan to value ratio limitations on real estate loans. Our Bank’s loan policies establish limits on loan to value ratios that are equal to or less than those established in such regulations.

Changing Regulatory Structure

The laws and regulations affecting banks and bank holding companies are in a state of change. The rules and the regulatory agencies in this area have changed significantly over recent years, and there is reason to expect that similar changes will continue in the future. It is not possible to predict the outcome of these changes.

One of the major additional burdens imposed on the banking industry is the increased authority of federal agencies to regulate the activities of federal and state banks and their holding companies. The Federal Reserve, the OCC and the FDIC have extensive authority to police unsafe or unsound practices and violations of applicable laws and regulations by depository institutions and their holding companies. These agencies can assess civil money penalties. Other laws such as the Sarbanes Act have expanded the agencies’ authority in recent years, and the agencies have not yet fully tested the limits of their powers. In addition, the Georgia Department of Banking and Finance, the Alabama State Banking Department and the Florida Department of Banking and Finance possess broad enforcement powers to address violations of their banking laws by banks chartered in their respective states.

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Economic Environment

The policies of regulatory authorities, including the monetary policy of the Federal Reserve, have a significant effect on the operating results of bank holding companies and their subsidiaries. Among the means available to the Federal Reserve to affect the money supply are open market operations in U.S. government securities, changes in the discount rate on member bank borrowings, and changes in reserve requirements against member bank deposits. These means are used in varying combinations to influence overall growth and distribution of bank loans, investments and deposits and their use may affect interest rates charged on loans or paid on deposits.

The Federal Reserve’s monetary policies have materially affected the operating results of commercial banks in the past and are expected to continue to do so in the future. The nature of future monetary policies and the effect of these policies on the business and earnings of ABC and our Banks cannot be predicted.

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ITEM 2. PROPERTIES

Our principal properties consist of the properties of our Banks. For a description of our properties, see “Item 1 - Business - Properties” included elsewhere in this Annual Report.

ITEM 3. LEGAL PROCEEDINGS

Neither ABC nor any of our Banks is a party to, nor is any of their property the subject of, any material pending legal proceedings, other than ordinary routine proceedings incidental to the business of our Banks, nor to the knowledge of the management of ABC are any such proceedings contemplated or threatened against it or our Banks.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS

No matters were submitted to a vote of our shareholders during the fourth quarter of 2003.

ITEM 4.5 EXECUTIVE OFFICERS OF THE REGISTRANT

The following table sets forth certain information with respect to the executive officers of ABC.

Name, Age and Term as Officer	Position with the Registrant	Principal Occupation for the Last Five Years and Other Directorships
Kenneth J. Hunnicutt; 67 Officer since 1981	Chief Executive Officer, Director and Chairman of the Board	Chairman of the Board of ABC since May 2001, Chief Executive Officer since 1994 and President from 1981 to May 2001 and from August 2002 to November 2003. Mr. Hunnicutt served as Senior President of American Banking Company from 1989 to 1991 and as President of American Banking Company from 1975 to 1989. From 1985 to May 2002, he served as a director on each of the subsidiary bank boards.
Edwin W. Hortman, Jr.; 50 Officer since 2002	President and Chief Operating Officer, Regional Bank Executive for Northern Division and Director	President and Chief Operating Officer of ABC and a director since November 2003. Executive Vice President and Regional Bank Executive for Northern Division since August 2002. Since September 2002, Mr. Hortman has served on the board of each of the subsidiary banks in the Northern Division. President and Chief Executive Officer and Director of Citizens Security Bank from April 1998 to November 2003. Mr. Hortman served as Senior Vice President of Colony Bankcorp and President of Colony Management Services from September 1992 to April 1998.
W. Edwin Lane, Jr.; 49 Officer since 1995	Executive Vice President and Chief Financial Officer	Executive Vice President and Chief Financial Officer of ABC since January 1995. Mr. Lane served as Controller of First Liberty Bank, Macon, Georgia from August 1992 to December 1994. Mr. Lane was associated with Mauldin & Jenkins, Certified Public Accountants, from 1985 to 1992, where he served as an audit manager from 1989 to 1992.
Jon S. Edwards; 42 Officer since 1999	Executive Vice President and Regional Bank Executive for Southern Division and Director	Executive Vice President and Regional Bank Executive for Southern Division of ABC since August 2002. Director of Credit Administration from March 1999 to July 2003. Senior Vice President of ABC from March 1999 to August 2002. Since September 2002, Mr. Edwards has served on the board of each of the subsidiary banks in the Southern Division. Mr. Edwards served as the Manager of Loan Review of the GA/TN region of Nations Bank from March 1993 to March 1999.
Cindi Lewis; 50 Officer since 1987	Executive Vice President and Director of Human Resources and Corporate Secretary	Executive Vice President since May 2002 and Director of Human Resources and Corporate Secretary of ABC since May 2000. Senior Vice President of ABC from May 2000 to May 2002 and Vice President of Operations, Client Services and Assistant Corporate Secretary from April 1993 to May 2000. Ms. Lewis served in other positions within the Company from 1987 to 1992.

Officers serve at the discretion of the Board of Directors.

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PART II

ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

(a) ABC’s common stock, $1.00 par value per share (the “Common Stock”), is listed on the Nasdaq National Market System (or “Nasdaq-NMS”) under the symbol “ABCB”. The following table sets forth: (i) the high and low bid prices for the Common Stock as quoted on Nasdaq-NMS during 2003 and 2002; and (ii) the amount of quarterly dividends declared on the Common Stock during the periods indicated. The high and low bid prices reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

Calendar Period	Bid Prices				Cash Dividends Declared
2003	High		Low
First quarter	$	14.58	$	12.97	$	.12
Second quarter		14.98		13.55		.12
Third quarter		17.65		14.35		.14
Fourth quarter		17.65		15.25		.14

Calendar Period	Bid Prices				Cash Dividends Declared
2002	High		Low
First quarter	$	14.70	$	12.92	$	.12
Second quarter		16.50		13.10		.12
Third quarter		15.24		11.05		.12
Fourth quarter		14.14		12.50		.12

(b) As of March 1, 2004, there were approximately 2,028 holders of record of the Common Stock, excluding individuals in security position listings.

(c) ABC paid annual dividends on its Common Stock of $.52 and $.48 per share for fiscal years 2003 and 2002, respectively.

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ITEM 6. SELECTED FINANCIAL DATA

The following table presents selected consolidated financial information for ABC. The data set forth below are derived from the audited consolidated financial statements of ABC. The selected financial data should be read in conjunction with, and are qualified in their entirety by, the Consolidated Financial Statements and the Notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included elsewhere herein.

	Year Ended December 31,
	2003			2002			2001			2000			1999
	(Dollars in Thousands, Except Per Share Data)
Selected Balance Sheet Data:
Total assets	$	1,168,044		$	1,192,339		$	1,176,886		$	826,197		$	789,460
Total loans		840,539			833,447			805,076			587,381			530,225
Total deposits		906,524			916,047			931,156			679,885			640,658
Investment securities		196,289			184,081			156,835			162,105			146,990
Shareholders’ equity		113,613			107,484			104,148			80,656			76,016
Selected Income Statement Data:
Interest income	$	64,479		$	71,347		$	72,913		$	68,976		$	59,991
Interest expense		22,045			28,144			34,904			30,805			24,400
Net interest income		42,434			43,203			38,009			38,171			35,591
Provision for loan losses		3,945			5,574			4,566			1,712			2,154
Other income		14,622			15,610			11,725			8,215			7,752
Other expenses		35,147			37,807			30,843			30,233			27,942
Income before tax		17,964			15,432			14,325			14,441			13,247
Income tax expense		5,954			5,077			4,692			4,343			4,291
Net income	$	12,010		$	10,355		$	9,633		$	10,098		$	8,956
Per Share Data:
Net income - basic	$	1.23		$	1.05		$	1.05		$	1.19		$	1.03
Net income - diluted		1.22			1.05			1.04			1.19			1.03
Book value		11.61			11.00			10.42			9.66			8.71
Tangible book value		9.31			8.59			7.88			8.84			7.84
Dividends		0.52			0.48			0.48			0.46			0.35
Profitability Ratios:
Net income to average total assets		1.04	%		0.90	%		1.00	%		1.27	%		1.23	%
Net income to average stockholders’ equity		10.85			9.81			10.30			13.19			11.93
Net interest margin		3.97			4.08			4.28			5.14			5.31
Efficiency ratio		61.60			64.28			62.02			65.18			64.47

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SELECTED FINANCIAL DATA (Continued)

	Year Ended December 31,
	2003		2002		2001		2000		1999
	(Dollars in Thousands, Except Per Share Data)
Loan Quality Ratios:
Net charge-offs to total loans	0.46	%	0.68	%	0.54	%	0.30	%	0.46	%
Reserve for loan losses to total loans and OREO	1.78		1.78		1.85		1.67		1.86
Nonperforming assets to total loans and OREO	0.95		1.11		1.67		0.95		1.15
Reserve for loan losses to nonperforming loans	231.20		196.64		124.97		202.18		178.26
Reserve for loan losses to total nonperforming assets	187.58		160.74		111.00		175.38		162.59
Liquidity Ratios:
Loans to total deposits	92.72	%	90.98	%	86.46	%	86.39	%	82.76	%
Loans to average earnings assets	78.63		78.76		90.56		79.05		79.17
Noninterest-bearing deposits to total deposits	15.63		14.38		13.48		13.96		16.12
Capital Adequacy Ratios:
Common stockholders’ equity to total assets	9.73	%	9.01	%	8.85	%	9.76	%	9.63	%
Average total stockholders’ equity to average total assets	9.57		9.18		9.74		9.59		10.29
Dividend payout ratio	42.28		45.71		45.71		38.66		33.98

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Statement Regarding Forward-Looking Statements

ABC’s 2003 Annual Report contains forward-looking statements in addition to historical information. ABC cautions that there are various important factors that could cause actual results to differ materially from those indicated in the forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995; accordingly, there can be no assurance that such indicated results will be realized.

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. In order to comply with the terms of the safe harbor, ABC is required to note the variety of factors that could cause ABC’s actual results and experience to differ materially from the anticipated results or other expectations expressed in ABC’s forward-looking statements. These factors include legislative and regulatory initiatives regarding deregulation and restructuring of the banking industry; the extent and timing of the entry of additional competition in ABC’s markets; potential business strategies, including acquisitions or dispositions of assets or internal restructuring, that may be pursued by ABC, state and federal banking regulations; changes in or application of environmental and other laws and regulations to which ABC is subject; political, legal and economic conditions and developments; financial market conditions and the results of financing efforts; changes in commodity prices and interest rates; weather, natural disasters and other catastrophic events; and other factors discussed in ABC’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K. The words “believe”, “expect”, “anticipate”, “project”, and similar expressions signify such forward-looking statements.

Readers are cautioned not to place undue reliance on any forward-looking statements made by or on behalf of ABC. Any such statement speaks only as of the date the statement was made. ABC undertakes no obligation to update or revise any forward-looking statements. Additional information with respect to factors that may cause results to differ materially from those contemplated by such forward-looking statements is included in the ABC’s current and subsequent filings with the Securities and Exchange Commission.

CRITICAL ACCOUNTING POLICIES

ABC has established certain accounting and financial reporting policies to govern the application of accounting principles generally accepted in the United States of America in the preparation of our financial statements. Our significant accounting policies are described in the Notes to the Consolidated Financial Statements. Certain accounting policies involve significant judgments and assumptions by management which have a material impact on the carrying value of certain assets and liabilities; management considers these accounting policies to be critical accounting policies. The judgments and assumptions used by management are based on historical experience and other factors which are believed to be reasonable under the circumstances. Because of the nature of the judgments and assumptions made by management, actual results could differ from the judgments and estimates adopted by management which could have a material impact on the carrying values of assets and liabilities and the results of ABC’s operations. We believe the following accounting policies applied by ABC represent critical accounting policies.

Allowance for Loan Losses

We believe the allowance for loan losses is a critical accounting policy that requires the most significant judgments and estimates used in the preparation of our consolidated financial statements. The allowance for loan losses represents management’s estimate of probable loan losses inherent in the loan portfolio. Calculation of the allowance for loan losses represents a critical accounting estimate due to the significant judgment, assumptions and estimates related to the amount and timing of estimated losses, consideration of current and historical trends and the amount and timing of cash flows related to impaired loans.

Management believes that the allowance for loan losses is adequate. While management uses available information to recognize losses on loans, future additions to the allowance for loan losses may be necessary based on changes in economic conditions. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the subsidiary banks’ allowances for loan losses. Such agencies may require the subsidiary banks to recognize additions to the allowance for loan losses based on their judgments about information available to them at the time of their examination.

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Considering current information and events regarding a borrower’s ability to repay its obligations, management considers a loan to be impaired when the ultimate collectibility of all amounts due, according to the contractual terms of the loan agreement, is in doubt. When a loan is considered to be impaired, the amount of impairment is measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate. If the loan is collateral-dependent, the fair value of the collateral is used to determine the amount of impairment. Impairment losses are included in the allowance for loan losses through a charge to the provision for losses on loans.

Subsequent recoveries are credited to the allowance for loan losses. Cash receipts for accruing loans are applied to principal and interest under the contractual terms of the loan agreement. Cash receipts on impaired loans for which the accrual of interest has been discontinued are applied first to principal and then to interest income.

The accounting for impaired loans described above applies to all loans, except for large pools of smaller-balance, homogeneous loans that are collectively evaluated for impairment, loans that are measured at fair value or at the lower of cost or fair value, and debt securities. The allowance for loan losses for large pools of smaller-balance, homogeneous loans is established through consideration of such factors as changes in the nature and volume of the portfolio, overall portfolio quality, adequacy of the underlying collateral, loan concentrations, historical charge-off trends, and economic conditions that may affect the borrowers’ ability to pay.

Certain economic and interest rate factors could have a material impact on the determination of the allowance for loan losses. The national economy showed signs of rebounding during the fourth quarter of 2003. If the economy’s momentum continues, certain factors could evolve which would positively impact our net interest margin. An increase in interest rates by the Federal Reserve Bank would favorably impact our net interest margin. An improving economy could result in the expansion of businesses and creation of jobs which would positively affect ABC’s loan growth and improve our gross revenue stream. Conversely, certain factors could result from an expanding economy which could increase our credit costs and adversely impact our net earnings. A significant rapid rise in interest rates could create higher borrowing costs and shrinking corporate profits which could have a material impact on borrowers’ ability to pay. We will continue to concentrate on maintaining a high quality loan portfolio through strict administration of our loan policy.

Another factor that we have considered in the determination of the allowance for loan losses is loan concentrations to individual borrowers or industries. At December 31, 2003, we had 12 individual credit relationships that exceeded $5.0 million with none exceeding $12.0 million.

A substantial portion of our loan portfolio is in the commercial real estate and residential real estate sectors. Those loans are secured by real estate in ABC’s primary market area. A substantial of portion of other real estate owned is located in those same markets. Therefore, the ultimate collectibility of a substantial portion of our loan portfolio and the recovery of a substantial portion of the carrying amount of other real estate owned are susceptible to changes to market conditions in ABC’s primary market area.

We are closely monitoring certain portions of our loan portfolio that we believe have a higher credit risk profile under the current environment based solely upon their industry classification which includes agricultural and agribusiness loans. Based on current information, we have not identified any problem credits included in these categories, which are not already classified as nonperforming or impaired loans. However, if the economic recovery takes longer than expected, the allowance for loan losses could be impacted by adverse developments in these credits.

Income Taxes

SFAS No. 109, “Accounting for Income Taxes,” requires the asset and liability approach for financial accounting and reporting for deferred income taxes. We use the asset and liability method of accounting for deferred income taxes and provide deferred income taxes for all significant income tax temporary differences. See Note 11 to the Notes to Consolidated Financial Statements for additional details.

As part of the process of preparing our consolidated financial statements we are required to estimate our income taxes in each of the jurisdictions in which we operate. This process involves estimating our actual current tax exposure together with assessing temporary differences resulting from differing treatment of items, such as depreciation and the provision for loan losses, for tax and financial reporting purposes. These differences result in deferred tax assets and liabilities that are included in our consolidated balance sheet.

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We must also assess the likelihood that our deferred tax assets will be recovered from future taxable income, and to the extent we believe that recovery is not likely, we must establish a valuation allowance. Significant management judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities and any valuation allowance recorded against our net deferred tax assets. To the extent we establish a valuation allowance or adjust this allowance in a period, we must include an expense within the tax provisions in the statement of income.

We have recorded on our consolidated balance sheet net deferred tax assets of $4,363,000 which includes amounts relating to loss carryforwards. We believe there will be sufficient taxable income in the future allowing us to utilize these loss carryforwards in the tax jurisdictions where they exist.

Long-Lived Assets, Including Intangibles

We evaluate long-lived assets, such as property and equipment, specifically identifiable intangibles and goodwill, when events or changes in circumstances indicate that the carrying value of such assets might not be recoverable. Factors that could trigger an impairment include significant underperformance relative to historical or projected future operating results, significant changes in the manner of our use of the acquired assets and significant negative industry or economic trends.

The determination of whether an impairment has occurred is based on an estimate of undiscounted cash flows attributable to the assets as compared to the carrying value of the assets. If an impairment has occurred, the amount of the impairment loss recognized would be determined by estimating the fair value of the assets and recording a loss if the fair value was less than the book value.

In determining the existence of impairment factors, our assessment is based on market conditions, operational performance and legal factors of our Company and its subsidiary banks. Our review of factors present and the resulting appropriate carrying value of our goodwill, intangibles, and other long-lived assets are subject to judgments and estimates that management is required to make. Future events could cause us to conclude that impairment indicators exist and that our goodwill, intangibles and other long-lived assets might be impaired.

Performance Overview

We reported net income of $12.010 million, or $1.22 per diluted common share in 2003, compared to $10.355 million, or $1.05 per diluted common share in 2002 and $9.633 million, or $1.04 per diluted common share in 2001. The return on average assets was 1.04% in 2003 compared to .90% in 2002 and 1.00% in 2001. The return on average common shareholders’ equity was 10.85% in 2003 compared to 9.81% in 2002 and 10.30% in 2001. As a result of a new accounting rule issued by the Financial Accounting Standards Board (FASB), no amount of goodwill was expensed in 2003 or 2002, except for the impairment charge of $9,000 in 2003. During 2001, we expensed $668,000 or $.07 per diluted common share associated with goodwill.

During 2003, we focused on three priorities: preserving asset quality, minimizing shrinkage of our net interest margin and controlling noninterest expenses. As a result of our focus on asset quality, nonperforming assets decreased 13% during the year, our charge-off ratio was 22 basis points lower than the previous year, and the ratio of our allowance for loan losses to nonperforming assets increased 26 basis points during the year. Due to the improvement of asset quality, we reduced our provision for loan losses $1.7 million to $3.9 million in 2003 compared to $5.6 million in 2002.

Due to the record low interest rate environment during 2003, our net interest margin decreased $.8 million or 1.85% to $42.4 million in 2003 compared to $43.2 million in 2002. To lessen the adverse impact on net interest margins, we avoided paying excessive interest rates on non-core deposits and relied on lower cost alternative funding. Although this strategy lessened the adverse impact on interest margins, it resulted in a shrinkage of $4.1 million or .5% in average deposits during 2003 compared to 2002.

As a result of our focus on controlling noninterest expenses, we reduced noninterest expenses $2.7 million or 7.04% to $35.1 million in 2003 compared to $37.8 million in 2002.

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RESULTS OF OPERATIONS

General

Our principal asset is the ownership of our Banks. Accordingly, our results of operations are primarily dependent upon the results of operations of our Banks. Our Banks conduct a commercial banking business which consists of attracting deposits from the general public and applying those funds to the origination of commercial, consumer and real estate loans (including commercial loans collateralized by real estate). The Banks’ profitability depends primarily on net interest income, which is the difference between interest income generated from interest-earning assets (i.e., loans and investments) less the interest expense incurred on interest-bearing liabilities (i.e., customer deposits and borrowed funds). Net interest income is affected by the relative amounts of interest-earning assets and interest-bearing liabilities, and the interest rate paid and earned on these balances. Net interest income is dependent upon the Banks’ interest rate spread, which is the difference between the average yield earned on its interest-earning assets and the average rate paid on its interest-bearing liabilities. When interest-earning assets approximate or exceed interest-bearing liabilities, any positive interest rate spread will generate interest income. The interest rate spread is impacted by interest rates, deposit flows and loan demand. Additionally, and to a lesser extent, the profitability of the Banks is affected by such factors as the level of noninterest income and expenses, the provision for loan losses and the effective tax rate. Noninterest income consists primarily of service charges on deposit accounts and other fees and income from the sale of investment securities and origination of mortgage loans. Noninterest expenses consist of compensation and benefits, occupancy-related expenses and other operating expenses.

Earnings Summary

We reported earnings of $12.0 million for 2003 representing an increase of $1.6 million or 15% compared to earnings of $10.4 million for 2002. Diluted earnings per common share were $1.22 in 2003 compared to $1.05 per common share in 2002 and $1.04 per common share in 2001.

As a result of accounting changes required by FASB, we discontinued the amortization of goodwill in 2002. As required by FASB, we will periodically test goodwill to determine whether the carrying value of our goodwill is impaired. We continue to amortize core deposit premiums and other identifiable intangibles as a noncash charge that increases our operating expenses. Intangible asset amortization included as an operating expense amounted to $1.0 million, $1.8 million and $1.2 million in 2003, 2002 and 2001, respectively.

Net interest income, on a taxable-equivalent basis, decreased 1.85% in 2003 to $42.5 million from $43.3 million in 2002. Net interest income increased 12.47% in 2002 to $43.3 million from $38.5 million in 2001. The significant increase in net interest income in 2002 is attributable to bank acquisitions consummated in 2001 and accounted for as purchase transactions. The net interest margin decreased 11 basis points to 3.98% in 2003 from 4.09% in 2002. The net interest margin decreased 24 basis points to 4.09% in 2002 from 4.33% in 2001. Over the past three years, the net interest margin has been impacted by changes in balance sheet mix and fair market value purchase accounting adjustments related to recent purchase acquisitions which have affected the yields earned and rates paid on the underlying assets and liabilities. These factors, coupled with the decrease in general interest rates as a result of action undertaken by the Federal Reserve, have resulted in net interest margin compression over the past three years.

Our provision for loan losses totaled $3.9 million in 2003, $5.6 million in 2002 and $4.6 in 2001. The allowance for loan losses represented 1.78% of total loans outstanding at both December 31, 2003 and December 31, 2002. The allowance for loan losses represented 1.85% of total loans outstanding at December 31, 2001. The allowance for loan losses is discussed in more detail under “Summary of Loan Loss Experience.”

Noninterest income decreased 6.41% to $14.6 million in 2003 compared to $15.6 million in 2002. Noninterest income increased 33.3% in 2002 from $11.7 million in 2001. The decrease in noninterest income in 2003 is attributable to securities transactions. In 2002, we recorded gains on sales of securities in the amount of $1.6 million; whereas in 2003, we recorded losses on sales of securities in the amount of $5,000. We recorded an increase of $.2 million in mortgage origination fees in 2003 from the amount recorded in 2002. We also recorded in 2003 approximately $.6 million representing gains on the sale of bank property and the reversal of contingent liabilities recorded in connection with the sale of our credit card portfolio in 2002. The increase in noninterest income in 2002 compared to 2001 represented increases in service charges on deposit accounts and mortgage origination fees.

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Noninterest expense decreased $2.7 million to $35.1 million in 2003 from $37.8 million in 2002. Salaries and employee benefits increased $1.4 million; equipment and occupancy expense decreased $.3 million; and all other expenses decreased a net of $3.8 million. These reductions resulted from our focus on controlling expenses. Noninterest expense increased $7.0 million in 2002 compared to 2001. The majority of the increase resulted from the purchase acquisitions consummated in 2001.

Net Interest Income

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 assuming a 34% federal income tax rate.

Net interest income totaled $42.4 million in 2003 representing a decrease of $.8 million compared to net interest income of $43.2 million in 2002. Net interest income increased 13.68% in 2002 over 2001. The decrease in net interest income in 2003 was attributable to a decrease in general interest rates as a result of action undertaken by the Federal Reserve. In 2003, the net interest spread declined 6 basis points resulting in a net interest margin decline of 11 basis points. In 2002, the net interest spread increased 2 basis points, but the net interest margin declined 24 basis points. Net interest income in 2003 reflected a decrease in the average yield on earning assets of 70 basis points, while the average cost of interest-bearing liabilities declined only 64 basis points. In 2002, net interest income reflected a decrease in the average yield on earning assets of 150 points, while the average cost of interest-bearing liabilities declined 152 basis points. Over the past three years, the net interest margin has been impacted by changes in earning assets mix and the decrease in general interest rates precipitated by actions of the Federal Reserve.

The yield on loans decreased 62 basis points in 2003, 141 basis points in 2002 and 89 basis points in 2001 as a significant portion of our loan portfolio repriced as interest rates fell through 2003, 2002 and 2001. The cost of interest-bearing liabilities decreased 64 basis points in 2003, 152 basis points in 2002 and 34 basis points in 2001 as deposits repriced when interest rates declined. Average borrowings increased $4.3 million in 2003 and $35.4 million in 2002 as an alternative funding source when loan growth exceeded deposit growth. The average rate paid on borrowings in 2003 decreased 13 basis points to 3.93%. The effects of changes in rates and average volumes are set forth in the table titled “Rate/Volume Analysis.”

Average earning assets increased $9.2 million, or .87%, to $1,067.4 million in 2003 compared to $1,058.2 in 2002. In 2002, average earning assets increased $169.2 million, or 19.03%, from $889.0 million in 2001. Average loans increased $14.0 million, or 1.69%, to $841.9 million in 2003 compared to $827.9 in 2002. Average loans increased $129.6 million, or 18.56%, in 2002 compared to average loans of $698.3 million in 2001. Loan growth has remained strong in our market. The growth in average loans in 2002 also reflected the impact of acquisitions consummated in 2001 and accounted for as purchase transactions. The average balance of our securities portfolio increased $14.3 million, or 8.44% during 2003 and $10.0 million, or 6.30% during 2002. Average investment securities represented 15.83% of total average assets in 2003 and 14.68% of total average assets in 2002. All of our investment securities are classified as available for sale. Average earning assets as a percentage of total average assets was 92.28% in 2003 compared to 92.00% in 2002 and 92.60% in 2001.

Average interest-bearing liabilities decreased $8.3 million, or .90%, in 2003 compared to an increase of $159.2 million, or 20.91% in 2002 and an increase of $134.9 million, or 21.53% in 2001. Average interest-bearing deposits decreased $13.0 million, or 1.62%, in 2003 compared to an increase of $94.4 million, or 13.83%, in 2002 and an increase of $117.3 million, or 20.74% in 2001. The decrease in average interest-bearing deposits in 2003 resulted from management’s decision to avoid paying the relatively high interest rates on non-core deposits. The increase in average interest-bearing deposits in 2002 was attributable to the purchase acquisitions consummated in 2001. Approximately 14% of total average deposits were noninterest-bearing in 2003 compared to 13% for both 2002 and 2001.

Average short-term borrowings do not represent a material source of funds and the average amounts outstanding during the last three years have remained fairly constant. Other borrowings represent primarily advances by the Federal Home Loan Bank. Average other borrowings increased $3.1 million, or 2.99%, to $106.8 million in 2003 compared to $103.7 in 2002. Average other borrowings increased $34.5 million, or 49.86%, in 2002 compared to average borrowings of $69.2 million in 2001. The increase in average other borrowings in 2002 was attributable to greater utilization of Federal Home Loan advances to fund loan growth. In late 2001, we issued trust preferred securities in the amount of $34.5 million which have been included in interest-bearing liabilities and have remained unchanged since issue.

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Noninterest Income

Noninterest income totaled $14.6 million in 2003 compared to $15.6 million in 2002 and $11.7 million in 2001. The decrease of $1.0 million in 2003 resulted from a decrease of $1.6 million in gains on sale of investments securities offset by an increase of $.4 million in service charges on deposit accounts, mortgage origination fees, and other service charges and fees. Other net noninterest income increased $.2 million in 2003 attributable primarily to nonrecurring transactions related to sale of branch real estate and the reversal of contingent liabilities recorded in connection with the sale of our credit card portfolio in 2002.

Noninterest income increased $3.9 million in 2002 compared to 2001. Service charges on deposit accounts increased $2.8 million, or 36.64%, to $10.6 million in 2002 compared to $7.7 million in 2001 on an increase in average deposits of $112.9 million, or 14.46% to $893.8 million in 2002 from $780.9 million in 2001. The increase in service charges on deposit accounts and the increase in average deposits was directly related to the purchase acquisitions consummated in 2001. Origination fees on mortgage loans increased $.5 million or 52.34% to $1.4 million from $.9 million in 2001. The significant increase in mortgage fee income resulted from the volume of mortgage refinancing generated by the decrease in mortgage rates and the inclusion of results of operations for the entire year in 2002 for banks acquired in 2001, whose results of operations were included only since the date of acquisition in accordance with purchase accounting. In 2002, we realized $1. 6 million in gain on sale of securities as compared to $1.2 million in gain on sale of securities in 2001. All other noninterest income increased $214,000 or 20.74 % in 2002 from 2001 and $237,000 or 29.81% in 2001 from 2000. Such increases were primarily attributable to the 2001 bank acquisitions.

Following is a comparison of noninterest income for 2003, 2002 and 2001.

	Year Ended December 31,
	2003			2002		2001
	(Dollars in Thousands)
Service charges on deposit accounts	$	10,638		$	10,550	$	7,721
Mortgage origination fees		1,637			1,365		896
Other service charges, commissions and fees		917			806		823
Gain (loss) on sale of securities		(5	)		1,643		1,253
Other income		1,435			1,246		1,032
	$	14,622		$	15,610	$	11,725

Noninterest Expense

In compliance with the requirements of FASB Statement No. 91, “Accounting for Nonrefundable Fees and Costs Associated with Originating or Acquiring Loans and Initial Direct Costs of Leases”, we allocated $3.4 million of salaries to loan costs in 2003, $3.1 million in 2002 and $3.2 million in 2001. After adjusting salaries and benefits for amounts allocated to loan costs, total salaries and benefits increased $1.7 million, or 7.98%, to $23.0 million in 2003 compared to $21.3 million in 2002. The total full-time equivalent employees remained at approximately 500 employees for both 2003 and 2002. Salaries and employee benefits increased $3.0 million, or 16.39% to $21.3 in 2002 from $18.3 million in 2001. Approximately $2.0 million, or 66.66% of the increase, resulted from the inclusion of salaries and employee benefits for the entire year in expense for 2002 whereas salaries and benefits were included in expense in 2001 from the dates banks were acquired in accordance with purchase accounting. Salaries increased $1.9 million; bonuses increased $.6 million; retirement expense increased $.2 million; and all other employee benefits, including stock options and other grants, insurance and payroll taxes, increased $.3 million.

Equipment and occupancy expense decreased $.3 million to $4.7 million in 2003 compared to $5.0 million in 2002. Equipment and occupancy expense increased $.2 million to $5.0 million in 2002 from $4.8 million in 2001. The 2002 bank acquisitions had the effect of increasing equipment and occupancy expense $.5 million in 2002. This increase was offset by a reduction in leased equipment expense of $.2 million in 2002 and other reductions totaling $.1 million attributable to decreased depreciation .

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The decrease of $.8 million in amortization of intangible assets in 2003 compared to 2002 resulted from a reduction in amortization of core deposit premiums paid on prior acquisitions. Amortization of intangible assets charged to expense increased $.6 million in 2002 compared to 2001. As of January 1, 2002, we were required to adopt the provisions of SFAS No. 142, “Goodwill and Other Intangible Assets.” The adoption of this statement had the effect of reducing amortization expense by approximately $.6 million for amortization of goodwill charged to expense in 2001. Amortization expense for 2002 also included approximately $1.2 million additional amortization related to the 2001 bank acquisitions. The additional expense related to acquisitions, net of the nonamortization provisions of the newly adopted accounting statement resulted in a net increase in amortization expense in 2002 of $.6 million.

Data processing fees remained constant in 2003 compared to 2002. Data processing fees increased $.3 million to $1.5 million in 2002 from $1.2 million in 2001. The significant increase in fees was attributable to increased volume of transactions processed resulting from bank acquisitions and the inclusion of the acquired banks’ results of operations for the entire year in 2002 as opposed to inclusion of operations of the acquired banks from the dates of acquisition in 2001. Bank transactions and all accounting data are now processed online on equipment at the Banks, parent company offices or central operations.

All other noninterest expense decreased $3.1 million to $8.2 million in 2003 from $11.3 million in 2002. The decrease was attributed to management’s focus on controlling operating expenses in 2003. Significant reductions include decreases in conversion fees of $.7 million, accounting and auditing fees of $.3 million, OREO losses and other losses of $.2 million and postage, stationary and supplies of $.3 million. All other expense increased $2.8 million to $11.5 million in 2002 from $8.7 million in 2001. Approximately $.9 million, or 33.62% of the increase, was attributable to the 2001 acquisitions. Included in the 2002 expense was $.6 million resulting from other real estate losses and sale or abandonment of fixed assets. In 2002, we incurred $.7 million more in conversion charges compared to 2001, $.4 million in additional bank analysis charges and $.3 million in additional postage and stationery supplies. All other expense increased $1.1 million in 2002 over 2001.

Following is a comparison of noninterest expense for 2003, 2002 and 2001.

	Years Ended December 31,
	2003		2002		2001
	(Dollars in Thousands)
Salaries and employee benefits	$	19,599	$	18,192	$	15,100
Equipment and occupancy		4,725		5,039		4,784
Amortization of intangible assets		1,032		1,765		1,185
Data processing fees		1,587		1,546		1,250
Other expense		8,204		11,265		8,524
	$	35,147	$	37,807	$	30,843

Income Taxes

Income taxes totaled $6.0 million in 2003, $5.1 million in 2002 and $4.7 million in 2001. The effective tax rate was 33% for each of the years ended December 31, 2003, 2002 and 2001.

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 and our Banks to meet those needs. We seek to meet liquidity requirements primarily through management of short-term investments (principally interest-bearing deposits in banks) and monthly amortizing loans. Another source of liquidity is the repayment of maturing single payment loans. In addition, our Banks maintain relationships with correspondent banks which could provide funds to them on short notice, if needed.

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The liquidity and capital resources of ABC and our Banks are monitored on a periodic basis by state and federal regulatory authorities. At December 31, 2003, the Banks’ short-term investments were adequate to cover any reasonable anticipated immediate need for funds. During 2003, we increased our capital by retaining net earnings of $6,935,000 after payment of dividends. After recording a decrease in capital of $1,114,000 for unrealized losses on securities available for sale, net of taxes, an increase of $469,000 for restricted stock transactions, an increase of $9,000 for the exercise of stock options, a decrease of $170,000 for the repurchase of treasury shares, total capital increased $6,129,000 during 2003. At December 31, 2003, total capital of ABC amounted to $113,613,000. We are aware of no events or trends likely to result in a material change in our liquidity.

The following table summarizes short-term borrowings for the periods indicated:

	Years Ended December 31,
	2003				2002				2001
	Average Balance		Average Rate		Average Balance		Average Rate		Average Balance		Average Rate
Federal funds purchased and securities sold under agreement to repurchase	$	6,547	1.04	%	$	5,363	2.20	%	$	4,523	4.40	%
	Total Balance				Total Balance				Total Balance
Total maximum short-term borrowings outstanding at any month-end during the year	$	13,978			$	15,978			$	16,941

The following table sets forth certain information about contractual cash obligations as of December 31, 2003.

			Payments Due After December 31, 2003
	Total		1 Year Or Less		1 -3 Years		4 -5 Years		After 5 Years
Short-term borrowings	$	8,211	$	8,211	$	—	$	—	$	—
Time certificates of deposit		407,176		355,473		39,969		11,580		154
Long-term debt		1,681		1,462		219		—		—
Federal Home Loan Bank advances		95,864		22		16,044		—		79,798
Subordinated deferrable interest debentures		34,500		—		34,500		—		—
Total contractual cash obligations	$	547,432	$	365,168	$	90,732	$	11,580	$	79,952

Our operating leases represent short-term obligations, normally with maturities of one year or less. Many of the operating leases have thirty-day cancellation provisions. The total contractual obligations for operating leases do not require a material amount of our cash funds.

At December 31, 2003, we had $1,478,000 in binding commitments for capital expenditures.

In accordance with risk capital guidelines issued by the Federal Reserve Board, we are required to maintain a minimum standard of total capital to risk-weighted assets of 8%. Additionally, all member banks must maintain “core” or “Tier 1” capital of at least 4% of total assets (“leverage ratio”). Member banks operating at or near the 4% capital level are expected to have well-diversified risks, including no undue interest rate risk exposure, excellent control systems, good earnings, high asset quality, and well managed on- and off-balance sheet activities; and, in general, be considered strong banking organizations with a composite 1 rating under the CAMEL rating system of banks. For all but the most highly rated banks meeting the above conditions, the minimum leverage ratio is to be 4% plus an additional 100 to 200 basis points.

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The following table summarizes the regulatory capital levels of our Company at December 31, 2003.

	Actual				Required				Excess
	Amount		Percent		Amount		Percent		Amount		Percent
	(Dollars in Thousands)
Leverage capital	$	120,765	10.77	%	$	44,852	4.00	%	$	75,913	6.77	%
Risk-based capital:
Core capital		120,765	13.85			34,874	4.00			85,891	9.85
Total capital		136,022	15.60			69,748	8.00			66,274	7.60

Each Bank also met its individual regulatory capital requirements at December 31, 2003.

Commitments and Lines of Credit

In the ordinary course of business, our Banks have granted commitments to extend credit to approved customers. Generally, these commitments to extend credit have been granted on a temporary basis for seasonal or inventory requirements and have been approved by the Banks’ Board of Directors. Our Banks have also granted commitments to approved customers for standby letters of credit. These commitments are recorded in the financial statements when funds are disbursed or the financial instruments become payable. The Banks use the same credit policies for these off balance sheet commitments as they do for financial instruments that are recorded in the consolidated financial statements. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitment amounts expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.

Following is a summary of the commitments outstanding at December 31, 2003 and 2002.

	2003		2002
	(Dollars in Thousands)
Commitments to extend credit	$	104,573	$	89,540
Financial standby letters of credit		2,536		5,315
	$	107,109	$	94,855

Impact of Inflation

The consolidated financial statements and related consolidated financial data presented herein have been prepared in accordance with generally accepted accounting principles and practices within the banking industry which require the measurement of financial position and operating results in terms of historical dollars without considering the changes in the relative purchasing power of money over time due to inflation. Unlike most industrial companies, virtually all the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates have a more significant impact on a financial institution’s performance than the effects of general levels of inflation.

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SELECTED STATISTICAL INFORMATION OF ABC BANCORP

The following statistical information should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operation” and the financial statements and related notes included elsewhere in this Annual Report and in the documents incorporated herein by reference.

Average Balances and Net Income Analysis

The following tables set forth the amount of the our interest income or interest expense for each category of interest-earning assets and interest-bearing liabilities and the average interest rate for total interest-earning assets and total interest-bearing liabilities, net interest spread and net yield on average interest-earning assets. Federally tax-exempt income is presented on a taxable-equivalent basis assuming a 34% federal tax rate.

	Year Ended December 31,
	2003							2002							2001
	Average Balance			Interest Income/ Expense		Average Yield/ Rate Paid		Average Balance			Interest Income/ Expense		Average Yield/ Rate Paid		Average Balance			Interest Income/ Expense		Average Yield/ Rate Paid
	(Dollars in Thousands)
ASSETS
Interest-earning assets:
Loans, net of unearned interest	$	841,857		$	57,707	6.85	%	$	827,939		$	61,864	7.47	%	$	698,292		$	61,980	8.88	%
Investment securities:
Taxable		179,925			6,079	3.38			164,899			8,275	5.02			141,378			9,072	6.42
Nontaxable		3,133			236	7.53			3,908			283	7.24			17,476			1,317	7.54
Interest-bearing deposits in banks		42,482			537	1.26			61,440			1,020	1.66			30,285			943	3.11
Federal funds sold		—			—	—			35			1	2.86			1,597			49	3.07
Total interest-earning assets		1,067,397			64,559	6.05			1,058,221			71,443	6.75			889,028			73,361	8.25
Noninterest-earning assets:
Cash		37,387							35,485							30,270
Allowance for loan losses		(15,867	)						(14,607	)						(12,121	)
Unrealized gain (loss) on available for sale securities		1,524							2,129							3,274
Other assets		66,194							69,038							49,580
Total noninterest-earning assets		89,238							92,045							71,003
Total assets	$	1,156,635						$	1,150,266						$	960,031

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Average Balances and Net Income Analysis (Continued)

	Year Ended December 31,
	2003						2002						2001
	Average Balance		Interest Income/ Expense		Average Yield/ Rate Paid		Average Balance		Interest Income/ Expense		Average Yield/ Rate Paid		Average Balance		Interest Income/ Expense		Average Yield/ Rate Paid
	(Dollars in Thousands)
LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing liabilities:
Savings and interest-bearing demand deposits	$	324,819	$	2,691	0.83	%	$	306,897	$	4,261	1.39	%	$	230,476	$	5,379	2.33	%
Time deposits		439,873		11,492	2.61			470,415		16,025	3.41			452,407		25,057	5.54
Other short-term borrowings		6,547		68	1.04			5,363		118	2.20			4,523		199	4.40
Other borrowings		106,809		4,392	4.11			103,698		4,314	4.16			69,159		3,768	5.45
Trust preferred securities		34,500		3,402	9.86			34,500		3,426	9.93			5,078		501	9.87
Total interest-bearing liabilities		912,548		22,045	2.42			920,873		28,144	3.06			761,643		34,904	4.58
Noninterest-bearing liabilities and stockholders’ equity:
Demand deposits		124,972						116,447						97,981
Other liabilities		8,421						7,377						6,877
Stockholders’ equity		110,694						105,569						93,530
Total noninterest-bearing liabilities and stockholders’ equity		244,087						229,393						198,388
Total liabilities and stockholders’ equity	$	1,156,635					$	1,150,266					$	960,031
Interest rate spread					3.63	%					3.69	%					3.67	%
Net interest income			$	42,514					$	43,299					$	38,457
Net interest margin					3.98	%					4.09	%					4.33	%

29

Rate and Volume Analysis

The following table reflects the changes in net interest income resulting from changes in interest rates and from asset and liability volume. Federally tax-exempt interest is presented on a taxable-equivalent basis assuming a 34% federal tax rate. The change in interest attributable to rate has been determined by applying the change in rate between years to average balances outstanding in the later year. The change in interest due to volume has been determined by applying the rate from the earlier year to the change in average balances outstanding between years. Thus, changes that are not solely due to volume have been consistently attributed to rate.

	Year Ended December 31,
	2003 vs. 2002									2002 vs. 2001
	Increase (Decrease)			Changes Due To						Increase (Decrease)			Changes Due To
				Rate			Volume						Rate			Volume
	(Dollars in Thousands)
Increase (decrease) in:
Income from earning assets:
Interest and fees on loans	$	(4,157	)	$	(5,197	)	$	1,040		$	(116	)	$	(11,623	)	$	11,507
Interest on securities:
Taxable		(2,196	)		(2,950	)		754			(797	)		(2,306	)		1,509
Tax exempt		(47	)		9			(56	)		(1,034	)		(12	)		(1,022	)
Interest-bearing deposits in banks		(483	)		(168	)		(315	)		77			(893	)		970
Interest on federal funds		(1	)		—			(1	)		(48	)		—			(48	)
Total interest income		(6,884	)		(8,306	)		1,422			(1,918	)		(14,834	)		12,916
Expense from interest-bearing liabilities:
Interest on savings and interest-bearing demand deposits		(1,570	)		(1,819	)		249			(1,118	)		(2,902	)		1,784
Interest on time deposits		(4,533	)		(3,493	)		(1,040	)		(9,032	)		(10,029	)		997
Interest on short-term borrowings		(50	)		(76	)		26			(81	)		(118	)		37
Interest on other borrowings		78			(51	)		129			546			(1,336	)		1,882
Interest on trust preferred securities		(24	)		(24	)		—			2,925			22			2,903
Total interest expense		(6,099	)		(5,463	)		(636	)		(6,760	)		(14,363	)		7,603
Net interest income	$	(785	)	$	(2,843	)	$	2,058		$	4,842		$	(471	)	$	5,313

30

Asset/Liability Management

A principal objective of our asset/liability management strategy is to minimize its exposure to changes in interest rates by matching the maturity and repricing horizons of interest-earning assets and interest-bearing liabilities. This strategy is overseen in part through the direction of our Asset and Liability Committee (the “ALCO Committee”) which establishes policies and monitors results to control interest rate sensitivity.

As part of our interest rate risk management policy, the ALCO Committee examines the extent to which its assets and liabilities are “interest rate-sensitive” and monitors its interest rate-sensitivity “gap”. An asset or liability is considered to be interest rate sensitive if it will reprice or mature within the time period analyzed, usually one year or less. The interest rate-sensitivity gap is the difference between the interest-earning assets and interest-bearing liabilities scheduled to mature or reprice within such time period. A gap is considered positive when the amount of interest rate-sensitive assets exceeds the amount of interest rate-sensitive liabilities. A gap is considered negative when the amount of interest rate-sensitive liabilities exceeds the interest rate-sensitive assets. During a period of rising interest rates, a negative gap would tend to adversely affect net interest income, while a positive gap would tend to result in an increase in net interest income. During a period of falling interest rates, a negative gap would tend to result in an increase in net interest income, while a positive gap would tend to adversely affect net interest income. If our assets and liabilities were equally flexible and moved concurrently, the impact of any increase or decrease in interest rates on net interest income would be minimal.

A simple interest rate “gap” analysis by itself may not be an accurate indicator of how net interest income will be affected by changes in interest rates. Accordingly, the ALCO Committee also evaluates how the repayment of particular assets and liabilities is impacted by changes in interest rates. Income associated with interest-earning assets and costs associated with interest-bearing liabilities may not be affected uniformly by changes in interest rates. In addition, the magnitude and duration of changes in interest rates may have a significant impact on net interest income. For example, although certain assets and liabilities may have similar maturities or periods of repricing, they may not react identically to changes in market interest rates. Interest rates on certain types of assets and liabilities fluctuate in advance of changes in general market interest rates, while interest rates on other types may lag behind changes in general market rates. In addition, certain assets, such as adjustable rate mortgage loans, have features (generally referred to as “interest rate caps”) which limit changes in interest rates on a short-term basis and over the life of the asset. In the event of a change in interest rates, prepayment and early withdrawal levels also could deviate significantly from those assumed in calculating the interest-rate gap. The ability of many borrowers to service their debts also may decrease in the event of an interest-rate increase.

31

The following table sets forth the distribution of the repricing of our earning assets and interest-bearing liabilities as of December 31, 2003, the interest rate sensitivity gap (i.e., interest rate sensitive assets divided by interest rate sensitivity liabilities), the cumulative interest rate sensitivity gap ratio (i.e., interest rate sensitive assets divided by interest rate sensitive liabilities) and the cumulative sensitivity gap ratio. The table also sets forth the time periods in which earning assets and liabilities will mature or may reprice in accordance with their contractual terms. However, the table does not necessarily indicate the impact of general interest rate movements on the net interest margin since the repricing of various categories of assets and liabilities is subject to competitive pressures and the needs of our customers. In addition, various assets and liabilities indicated as repricing within the same period may in fact reprice at different times within such period and at different rates.

	At December 31, 2003
	Maturing or Repricing Within
	Zero to Three Months		Three Months to One Year			One to Five Years		Over Five Years			Total
	(Dollars in Thousands)
Earning assets:
Interest-bearing deposits in banks	$	35,626	$	—		$	—	$	—		$	35,626
Restricted stock		5,694		—			—		—			5,694
Investment securities		3,181		36,249			131,217		19,948			190,595
Loans		351,186		249,597			224,096		15,660			840,539
		395,687		285,846			355,313		35,608			1,072,454
Interest-bearing liabilities:
Interest-bearing demand deposits (1)		—		91,890			199,825		—			291,715
Savings (1)		—		23,071			42,847		—			65,918
Certificates less than $100,000		74,824		150,045			32,162		154			257,185
Certificates, $100,000 and over		51,987		78,614			19,390		—			149,991
Other short-term borrowings		8,211		—			—		—			8,211
Other borrowings		16,682		1,022			2,543		77,298			97,545
Trust preferred securities		—		—			—		34,500			34,500
		151,704		344,642			296,767		111,952			905,065
Interest rate sensitivity gap	$	243,983	$	(58,796	)	$	58,546	$	(76,344	)	$	167,389
Cumulative interest rate sensitivity gap	$	243,983	$	185,187		$	243,733	$	167,389
Interest rate sensitivity gap ratio		2.61		0.83			1.20		0.32
Cumulative interest rate sensitivity gap ratio		2.61		1.37			1.31		1.18

(1) We have found that NOW and money-market checking deposits and savings deposits reprice between three months and one year or between one to five years depending on the competition in the market areas where the deposits are located. Therefore, we have placed portions of these deposits in the three months to one year horizon and the one to five years horizon based on estimated amounts repricing in each horizon.

32

INVESTMENT PORTFOLIO

We manage the mix of asset and liability maturities in an effort to control the effects of changes in the general level of interest rates on net interest income. See “—Asset/Liability Management.” Except for its effect on the general level of interest rates, inflation does not have a material impact on the portfolio due to the rate variability and short-term maturities of its earning assets. In particular, approximately 71% of the loan portfolio is comprised of loans which mature or reprice within one year or less. Mortgage loans, primarily with five to fifteen year maturities, are also made on a variable rate basis with rates being adjusted every one to five years. Additionally, 21% of the investment portfolio matures or reprices within one year or less.

Types of Investments

Securities

Following is a summary of the carrying value of investments, including restricted equity securities, as of the end of each reported period:

	December 31,
	2003		2002		2001
	(Dollars in Thousands)
U. S. Government and agency securities	$	79,545	$	73,773	$	50,473
State and municipal securities		3,733		3,529		5,339
Corporate debt securities		23,468		22,867		6,715
Mortgage-backed securities		83,108		77,314		89,111
Marketable equity securities		741		820		496
Restricted stock		5,694		5,778		4,701
	$	196,289	$	184,081	$	156,835

Maturities

The amounts of securities available for sale in each category as of December 31, 2003 are shown in the following table according to contractual maturity classifications (1) one year or less, (2) after one year through five years, (3) after five years through ten years, and (4) after ten years.

	U. S. Treasury and Other U. S. Government Agencies and Corporations				State and Political Subdivisions
	Amount		Yield (1)		Amount		Yield (1) (2)
	(Dollars in Thousands)
Maturity:
One year or less	$	39,110	3.46	%	$	319	7.47	%
After one year through five years		130,356	3.37			861	8.95
After five years through ten years		10,066	4.36			2,553	6.25
After ten years		7,330	7.59			—	—
	$	186,862	3.61	%	$	3,733	6.98	%

(1) Yields were computed using coupon interest, adding discount accretion or subtracting premium amortization, as appropriate, on a ratable basis over the life of each security. The weighted average yield for each maturity range was computed using the acquisition price of each security in that range.

(2) Yields on securities of state and political subdivisions are stated on a taxable-equivalent basis, using a tax rate of 34%.

33

LOAN PORTFOLIO

Types of Loans

Management believes that our loan portfolio is adequately diversified. The loan portfolio contains no foreign or energy-related loans or significant concentrations in any one industry, with the exception of residential and commercial real estate mortgages, which constituted approximately 55% of our loan portfolio as of December 31, 2003. The amount of loans outstanding at the indicated dates is shown in the following table according to type of loans.

	December 31,
	2003		2002		2001		2000		1999
	(Dollars in Thousands)
Commercial and financial	$	157,594	$	172,429	$	152,097	$	109,647	$	83,385
Agricultural		22,051		34,007		39,878		34,840		29,694
Real estate - construction		60,978		23,020		24,650		14,046		13,228
Real estate - mortgage, farmland		65,433		63,093		63,533		57,253		59,018
Real estate - mortgage, commercial		250,247		243,037		225,470		160,456		150,075
Real estate - mortgage, residential		209,172		209,485		202,447		128,614		117,936
Consumer installment loans		68,230		78,535		91,557		76,076		59,529
Other		6,834		9,841		5,444		6,449		17,360
		840,539		833,447		805,076		587,381		530,225
Less reserve for possible loan losses		14,963		14,868		14,944		9,832		9,895
Loans, net	$	825,576	$	818,579	$	790,132	$	577,549	$	520,330

Maturities and Sensitivity to Changes in Interest Rates

Total loans as of December 31, 2003 are shown in the following table according to maturity or repricing opportunities (1) one year or less, (2) after one year through five years, and (3) after five years.

	(Dollars in Thousands)
Maturity or Repricing Within:
One year or less	$	600,783
After one year through five years		224,096
After five years		15,660
	$	840,539

The following table summarizes loans at December 31, 2003 with the due dates after one year which (1) have predetermined interest rates and (2) have floating or adjustable interest rates.

	(Dollars in Thousands)
Predetermined interest rates	$	234,416
Floating or adjustable interest rates		5,340
	$	239,756

Records were not available to present the above information in each category listed in the first paragraph above and could not be reconstructed without undue burden.

34

Nonperforming Loans

A loan is placed on nonaccrual status when, in management’s judgment, the collection of the interest income appears doubtful. Interest receivable that has been accrued in prior years and is subsequently determined to have doubtful collectibility is charged to the allowance for possible loan losses. Interest on loans that are classified as nonaccrual is recognized when received. Past due loans are loans whose principal or interest is past due 90 days or more. In some cases, where borrowers are experiencing financial difficulties, loans may be restructured to provide terms significantly different from the original contractual terms.

	December 31,
	2003		2002		2001		2000		1999
	(Dollars in Thousands)
Loans accounted for on a nonaccrual basis	$	6,472	$	7,561	$	11,958	$	4,863	$	5,551
Installment loans and term loans contractually past due ninety days or more as to interest or principal payments and still accruing		25		171		691		81		48
Loans, the terms of which have been renegotiated to provide a reduction or deferral of interest or principal because of deterioration in the financial position of the borrower		—		—		—		—		—
Loans now current about which there are serious doubts as to the ability of the borrower to comply with present loan repayment terms		—		—		—		—		—

In the opinion of management, any loans classified by regulatory authorities as doubtful, substandard or special mention that have not been disclosed above do not (i) represent or result from trends or uncertainties which management reasonably expects will materially impact future operating results, liquidity or capital resources, or (ii) represent material credits about which management is aware of any information which causes management to have serious doubts as to the ability of such borrowers to comply with the loan repayment terms. Any loans classified by regulatory authorities as loss have been charged off.

35

SUMMARY OF LOAN LOSS EXPERIENCE

The allowance for loan losses represents a reserve for potential losses in the loan portfolio. The adequacy of the allowance for loan losses is evaluated periodically based on a review of all significant loans, with a particular emphasis on nonaccruing, past due and other loans that management believes require attention. We segregate our loan portfolio by type of loan and utilize this segregation in evaluating exposure to risks within the portfolio. In addition, based on internal reviews and external reviews performed by independent auditors and regulatory authorities, we further segregates our loan portfolio by loan classifications within each type of loan based on an assessment of risk for a particular loan or group of loans. Certain reviewed loans require specific allowances. Allowances are provided for other types and classifications of loans based on anticipated loss rates. Allowances are also provided for loans that are reviewed by management and considered creditworthy and loans for which management determines no review is required. In establishing allowances, management considers historical loan loss experience with an emphasis on current loan quality trends, current economic conditions and other factors in the markets where the subsidiary banks operate. Factors considered include among others, unemployment rates, effect of weather on agriculture and significant local economic events, such as major plant closings.

We have developed a methodology for determining the adequacy of the loan loss reserve which is followed by all our Banks and monitored by ABC’s senior credit officer and internal audit staff. Procedures provide for the assignment of a risk rating for every loan included in our total loan portfolio, with the exception of credit card receivables and overdraft protection loans which are treated as pools for risk rating purposes. The risk rating schedule provides seven ratings of which three ratings are classified as pass ratings and four ratings are classified as criticized ratings. Each risk rating is assigned a percent factor to be applied to the loan balance to determine the adequate amount of reserve. Many of the larger loans require an annual review by an independent loan officer. As a result of loan reviews certain loans may be assigned specific reserve allocations. Other loans that surface as problem loans may also be assigned specific reserves. Past due loans are assigned risk ratings based on the number of days past due.

The provision for loan losses is a charge to earnings in the current period to replenish the allowance and maintain it at a level management has determined to be adequate. The provision for loan losses charged to earnings amounted to $3.9 million in 2003, $5.6 million in 2002, and $4.6 million in 2001. The decrease in the provision for loan losses in 2003 resulted from a decrease in net charge-offs in 2003 and an improvement in the quality of the loan portfolio. The increase in the provision for loan losses in 2002 was necessary to cover an increase in average loans of 18.57% over 2001 and increase in net loan charge-offs of 29.05% in 2002 as compared to 2001. These charge-offs resulted from depressed economic conditions during the year.

Our allowance for loan losses was $15.0 million at December 31, 2003, representing 1.78% of year end total loans outstanding compared to $14.9 million at December 31, 2002, which also represented 1.78% of year end total loans outstanding. Management considers the allowance for loan losses adequate to cover potential loan losses.

Allocation of the Allowance for Loan Losses

The following table sets forth the breakdown of the allowance for loan losses by loan category for the periods indicated. Management believes the allowance can be allocated only on an approximate basis. The allocation of the allowance to each category is not necessarily indicative of future losses and does not restrict the use of the allowance to absorb losses in any other category.

	At December 31,
	2003				2002				2001				2000				1999
	Amount		Percent of Loans in Category to Total Loans		Amount		Percent of Loans in Category to Total Loans		Amount		Percent of Loans in Category to Total Loans		Amount		Percent of Loans in Category to Total Loans		Amount		Percent of Loans in Category to Total Loans
	(Dollars in Thousands)
Commercial, financial, industrial and agricultural	$	6,289	21	%	$	5,892	25	%	$	6,009	24	%	$	2,981	25	%	$	2,904	22	%
Real estate		2,431	70			2,651	65			2,825	64			2,925	61			3,213	64
Consumer		3,550	9			3,649	10			3,420	12			2,156	14			1,997	14
Unallocated		2,693	—			2,676	—			2,690	—			1,770	—			1,781	—
	$	14,963	100	%	$	14,868	100	%	$	14,944	100	%	$	9,832	100	%	$	9,895	100	%

36

The following table presents an analysis of our loan loss experience for the periods indicated:

	December 31,
	2003			2002			2001			2000			1999
	(Dollars in Thousands)
Average amount of loans outstanding	$	841,857		$	827,939		$	698,292		$	570,526		$	505,941
Balance of reserve for possible loan losses at beginning of period	$	14,868		$	14,944		$	9,832		$	9,895		$	10,192
Charge-offs:
Commercial, financial and agricultural		(3,114	)		(2,576	)		(3,534	)		(1,077	)		(1,383	)
Real estate		(781	)		(2,491	)		(626	)		(249	)		(933	)
Consumer		(1,443	)		(2,092	)		(1,328	)		(1,268	)		(1,417	)
Recoveries:
Commercial, financial and agricultural		963			502			203			302			434
Real estate		46			492			546			146			263
Consumer		479			515			361			371			585
Net charge-offs		(3,850	)		(5,650	)		(4,378	)		(1,775	)		(2,451	)
Additions to reserve charged to operating expenses		3,945			5,574			4,566			1,712			2,154
Allowance for loan losses of acquired subsidiary		—			—			4,924			—			—
Balance of reserve for possible loan losses at end of period	$	14,963		$	14,868		$	14,944		$	9,832		$	9,895
Ratio of net loan charge-offs to average loans		0.46	%		0.68	%		.63	%		.31	%		.48	%

37

DEPOSITS

Average amount of deposits and average rate paid thereon, classified as to noninterest-bearing demand deposits, interest-bearing demand and savings deposits and time deposits, for the periods indicated are presented below.

	Year Ended December 31,
	2003				2002
	Amount		Rate		Amount		Rate
	(Dollars in Thousands)
Noninterest-bearing demand deposits	$	124,972	—	%	$	116,447	—	%
Interest-bearing demand and savings deposits		324,819	0.83			306,897	1.39
Time deposits		439,873	2.61			470,415	3.41
Total deposits	$	889,664			$	893,759

We have a large, stable base of time deposits with little or no dependence on volatile deposits of $100,000 or more. The time deposits are principally certificates of deposit and individual retirement accounts obtained for individual customers.

The amounts of time certificates of deposit issued in amounts of $100,000 or more as of December 31, 2003, are shown below by category, which is based on time remaining until maturity of (1) three months or less, (2) over three through twelve months and (3) over twelve months.

	(Dollars in Thousands)
Three months or less	$	51,987
Over three through twelve months		78,614
Over twelve months		19,390
Total	$	149,991

RETURN ON ASSETS AND SHAREHOLDERS’ EQUITY

The following rate of return information for the periods indicated is presented below.

	Year Ended December 31,
	2003		2002		2001
Return on assets (1)	1.04	%	0.90	%	1.00	%
Return on equity (2)	10.85		9.81		10.30
Dividends payout ratio (3)	42.28		45.71		45.71
Equity to assets ratio (4)	9.57		9.18		9.74

(1) Net income divided by average total assets.

(2) Net income divided by average equity.

(3) Dividends declared per share divided by net income per share.

(4) Average equity divided by average total assets.

38

ITEM 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed only to U. S. Dollar interest rate changes and, accordingly, we manage exposure by considering the possible changes in the net interest margin. We do not have any trading instruments nor do we classify any portion of the investment portfolio as held for trading. We do 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, we have 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 our asset/liability management program, the timing of repriced assets and liabilities is referred to as Gap management. Our policy is to maintain a Gap ratio in the one-year time horizon of .80 to 1.20. As indicated by the Gap analysis included in this annual report, we are somewhat asset sensitive in relation to changes in market interest rates. Being asset sensitive would result in net interest income increasing in a rising rate environment and decreasing in a declining rate environment. See “Asset/Liability Management” included in this Annual Report.

We use 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 allow 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 points increase or 100 basis points decrease in market rates on net interest income and is monitored on a quarterly basis. Our most recent simulation model projects net interest income would increase 4.40% if rates rise 200 basis points gradually over the next year. On the other hand, the model projects net interest income to decrease 2.64% if rates decline 100 basis points over the next year.

39

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The following consolidated financial statements of ABC and its subsidiaries are included on pages F-1 through F-35 of this Annual Report on Form 10-K:

Consolidated Balance Sheets - December 31, 2003 and 2002

Consolidated Statements of Income - Years ended December 31, 2003, 2002 and 2001

Consolidated Statements of Comprehensive Income - Years ended December 31, 2003, 2002 and 2001

Consolidated Statements of Stockholders’ Equity - Years ended December 31, 2003, 2002 and 2001

Consolidated Statements of Cash Flows - Years ended December 31, 2003, 2002 and 2001

Notes to Consolidated Financial Statements.

Selected Quarterly Financial Data pursuant to Item 302 of Regulation S-K is provided below:

SELECTED QUARTERLY FINANCIAL DATA

	Quarters Ended December 31, 2003
	4		3		2		1
	(Dollars in Thousands, Except Per Share Data)
Selected Income Statement Data:
Interest income	$	15,695	$	15,959	$	16,292	$	16,533
Net interest income		10,814		10,723		10,476		10,421
Net income		3,587		2,844		2,810		2,769
Per Share Data:
Net income - basic		.37		.29		.29		.28
Net income - diluted		.36		.29		.29		.28
Dividends		.14		.14		.12		.12

	Quarters Ended December 31, 2002
	4		3		2		1
	(Dollars in Thousands, Except Per Share Data)
Selected Income Statement Data:
Interest income	$	17,618	$	18,086	$	17,641	$	18,002
Net interest income		10,843		11,237		10,748		10,375
Net income		2,730		2,570		2,883		2,172
Per Share Data:
Net income - basic		.28		.26		.29		.22
Net income - diluted		.28		.26		.29		.22
Dividends		.12		.12		.12		.12

40

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

During 2003 and 2002, the Company did not change its accountants and there was no disagreement on any matter of accounting principles or practices for financial statement disclosure that would have required the filing of a current report on Form 8-K.

ITEM 9A. CONTROLS AND PROCEDURES

Based on the evaluation conducted by ABC’s Chief Executive Officer and Chief Financial Officer of ABC’s controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this Annual Report, as required by paragraph (b) of Rules 13a-15 or 15d-15 of the Exchange Act, such officers have concluded that such controls and procedures are effective.

41

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by this Item is incorporated by reference to ABC’s definitive Proxy Statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this Annual Report (“ABC’s Proxy Statement”).

Information concerning ABC’s executive officers is included in Item 4.5 of Part I of this Annual Report.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this Item is incorporated by reference to ABC’s Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this Item is incorporated by reference to ABC’s Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this Item is incorporated by reference to ABC’s Proxy Statement.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following is a summary of the fees billed to ABC by Mauldin & Jenkins, ABC’s independent accountants, for professional services rendered for the fiscal years ended December 31, 2003 and December 31, 2002:

Fee Category	Fiscal 2003 Fees		Fiscal 2002 Fees
Audit fees	$	237,500	$	313,500
Audit related fees		42,500		43,850
Tax fees		51,500		58,700
All other fees		—		—
Total fees	$	331,500	$	416,050

Audit Fees

Consists of fees billed for professional services rendered for the audit of the ABC’s annual consolidated financial statements and review of the interim consolidated financial statements included in quarterly reports, and services that are normally provided by Mauldin & Jenkins in connection with statutory and regulatory filings or engagements.

Audit-Related Fees

Consists of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of ABC’s consolidated financial statements and are not reported under “Audit Fees.” These services include employee benefit plan audits, accounting consolidations in connection with acquisitions and divestitures, attest services that are not required by statute or regulation, and consultations concerning financial accounting and reporting standards.

42

Tax Fees

Consists of fees billed for professional services for tax compliance, tax advice and tax planning. These services include assistance regarding federal, state and local tax compliance, tax audit defense, custom and duties and acquisitions and divestitures tax planning.

All Other Fees

Consists of fees for products and services other than the services reported above. There were no fees paid to Mauldin & Jenkins in fiscal 2003 or 2002 that are not included in the above classifications.

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors

All services provided by Mauldin & Jenkins are subject to pre-approval by the Audit Committee of ABC’s Board of Directors. The Audit Committee has authorized the Chairman of the Audit Committee to approve services by Mauldin & Jenkins in the event there is a need for such approval prior to the next full Audit Committee meeting. However, a full report of any such interim approvals must be given at the next Audit Committee meeting. Before granting any approval, the Audit Committee must receive: (1) a detailed description of the proposed service; (2) a statement from management as to why they believe Mauldin & Jenkins is best qualified to perform the service; and (3) an estimate of the fees to be incurred. Before granting any approval, the Audit Committee gives due consideration to whether approval of the proposed service will have a detrimental impact on Mauldin & Jenkins’ independence.

43

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) The following documents are filed as part of this report:

1. Financial statements:

(a) ABC Bancorp and Subsidiaries:

(i) Consolidated Balance Sheets - December 31, 2003 and 2002;

(ii) Consolidated Statements of Income - Years ended December 31, 2003, 2002 and 2001;

(iii) Consolidated Statements of Comprehensive Income - Years ended December 31, 2003, 2002 and 2001;

(iv) Consolidated Statements of Stockholders’ Equity - Years ended December 31, 2003, 2002 and 2001;

(v) Consolidated Statements of Cash Flows - Years ended December 31, 2003, 2002 and 2001; and

(vi) Notes to Consolidated Financial Statements.

(b) ABC Bancorp (parent company only):

Parent company only financial information has been included in Note 19 of Notes to Consolidated Financial Statements.

2. Financial statement schedules:

All schedules are omitted as the required information is inapplicable or the information is presented in the financial statements or related notes.

3. A list of the Exhibits required by Item 601 of Regulation S-K to be filed as a part of this report is shown on the “Exhibit Index” filed herewith.

(b) ABC has filed a Current Report on Form 8-K dated October 9, 2003, concerning the issuance of its press release announcing ABC’s estimated third quarter results. The Current Report on Form 8-K was filed under Item 12 of Form 8-K, and no financial information concerning ABC was required to be filed therewith.

44

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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
Date:	March 11, 2004	By:	/s/ Kenneth J. Hunnicutt
			Kenneth J. Hunnicutt, Chief Executive Officer, Director and Chairman of the Board
Date:	March 11, 2004	By:	/s/ Edwin W. Hortman, Jr.
			Edwin W. Hortman, Jr., President, Chief Operating Officer and Director
Date:	March 11, 2004	By:	/s/ W. Edwin Lane, Jr.
			W. Edwin Lane, Jr., Executive Vice President and Chief Financial Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Kenneth J. Hunnicutt as his attorney-in-fact, acting with full power of substitution for him in his name, place and stead, in any and all capacities, to sign any amendments to this Form 10-K and to file the same, with exhibits thereto, and any other documents in connection therewith, with the Securities and Exchange Commission and hereby ratifies and confirms all that said attorney-in-fact, or his substitute or substitutes, may do or cause to be done by virtue thereof.

Pursuant to the requirements of the Exchange Act, this Form 10-K has been signed by the following persons in the capacities and on the dates indicated.

Date:	March 11, 2004	/s/ Kenneth J. Hunnicutt
		Kenneth J. Hunnicutt, Chief Executive Officer, Director and Chairman of the Board
Date:	March 11, 2004	/s/ Edwin W. Hortman, Jr.
		Edwin W. Hortman, Jr., President, Chief Operating Officer and Director
Date:	March 11, 2004	/s/ W. Edwin Lane, Jr.
		W. Edwin Lane, Jr., Executive Vice President and Chief Financial Officer
Date:	March 11, 2004	/s/ Johnny W. Floyd
		Johnny W. Floyd, Director
Date:	March 11, 2004	/s/ J. Raymond Fulp
		J. Raymond Fulp, Director
Date:	March 11, 2004	/s/ Daniel B. Jeter
		Daniel B. Jeter, Director
Date:
		Robert P. Lynch, Director
Date:
		Eugene M. Vereen, Jr., Director
Date:	March 11, 2004	/s/ Doyle Weltzbarker
		Doyle Weltzbarker, Director and Vice Chairman of the Board
Date:
		J. Thomas Whelchel, Director
Date:	March 11, 2004	/s/ Henry Wortman
		Henry Wortman, Director

45

EXHIBIT INDEX

Exhibit No.	Description
3.1	Articles of Incorporation of ABC, as amended (incorporated by reference to Exhibit 2.1 to ABC’s Regulation A Offering Statement on Form 1-A (File No. 24A-2630) filed August 14, 1987).
3.2	Amendment to Amended Articles of Incorporation dated May 26, 1995 (incorporated by reference to Exhibit 3.1.1 to ABC’s Form 10-K filed March 28, 1996).
3.3	Amendment to Amended Articles of Incorporation (filed as Exhibit 4.3 to ABC’s Registration on Form S-4 (Registration No. 333-08301), filed with the Commission on July 17, 1996 and incorporated herein by reference).
3.4	Bylaws of ABC, as amended (incorporated by reference to Exhibit 2.2 to ABC’s Regulation A Offering Statement on Form 1-A (File No. 24A-2630) filed August 14, 1987.
3.5	Form of Articles of Amendment to the Articles of Incorporation (incorporated by reference to Exhibit 3.5 to ABC’s Annual Report on Form 10-K (File No. 001-13901), filed with the Commission on March 25, 1998).
3.6	Form of Amendment to Bylaws (incorporated by reference to Exhibit 3.6 to ABC’s Annual Report on Form 10-K (File No. 001-13901), filed with the Commission on March 25, 1998).
3.7	Form of Articles of Amendment to the Articles of Incorporation (incorporated by reference to Exhibit 3.7 to ABC’s Annual Report on Form 10-K (File No. 001-13901), filed with the Commission on March 26, 1999).
3.8	Form of Amendment to Bylaws (incorporated by reference to Exhibit 3.8 to ABC’s Annual Report on Form 10-K (File No. 001-13901), filed with the Commission on March 26, 1999).
3.9	Articles of Amendment to the Articles of Incorporation dated May 17, 2001 (incorporated by reference to Exhibit 3.9 to ABC’s Annual Report on Form 10-K (File No. 001-13901), filed with the Commission on March 31, 2003).
4.1	Form of Indenture for Subordinated Debentures (incorporated by reference to Exhibit 4.1 to ABC’s Registration Statement on Form S-3/A (File No. 333-69140), filed with the Commission on November 2, 2001).
4.2	Form of Subordinated Debenture (incorporated by reference to Exhibit A to Exhibit 4.1 to ABC’s Registration Statement on Form S-3/A (File No. 333-69140), filed with the Commission on November 2, 2001).
4.3	Certificate of Trust of ABC Bancorp Capital Trust I (incorporated by reference to Exhibit 4.3 to ABC’s Registration Statement on Form S-3 (File No. 333-69140), filed with the Commission on September 7, 2001).
4.4	Trust Agreement of ABC Bancorp Capital Trust I (incorporated by reference to Exhibit 4.4 to ABC’s Registration Statement on Form S-3 (File No. 333-69140), filed with the Commission on September 7, 2001).
4.5	Form of Amended and Restated Trust Agreement of ABC Bancorp Capital Trust I (incorporated by reference to Exhibit 4.5 to ABC’s Registration Statement on Form S-3/A (File No. 333-69140), filed with the Commission on November 2, 2001).

46

Exhibit No.	Description
4.6	Form of ABC Bancorp Capital Trust I Preferred Securities Certificate (incorporated by reference to Exhibit D to Exhibit 4.5 to ABC’s Registration Statement on Form S-3/A (File No. 333-69140), filed with the Commission on November 2, 2001).
4.7	Form of Preferred Securities Guarantee Agreement (incorporated by reference to Exhibit 4.7 to ABC’s Registration Statement on Form S-3/A (File No. 333-69140), filed with the Commission on November 2, 2001).
4.8	Form of Agreement as to Expenses and Liabilities of ABC Bancorp Capital Trust I (incorporated by reference to Exhibit C to Exhibit 4.5 to ABC’s Registration Statement on Form S-3/A (File No. 333-69140), filed with the Commission on November 2, 2001).
10.1	Deferred Compensation Agreement for Kenneth J. Hunnicutt dated December 16, 1986 (filed as Exhibit 5.3 to ABC’s Regulation A Offering Statement on Form 1-A (File No. 24A-2630), filed with the Commission on August 14, 1987 and incorporated herein by reference).
10.2	Executive Salary Continuation Agreement dated February 14, 1984 (filed as Exhibit 10.6 to ABC’s Annual Report on Form 10-KSB (File Number 2-71257), filed with the Commission on March 27, 1989 and incorporated herein by reference).
10.3	1992 Incentive Stock Option Plan and Option Agreement for K. J. Hunnicutt (filed as Exhibit 10.7 to ABC’s Annual Report on Form 10-KSB (File Number 0-16181), filed with the Commission on March 30, 1993 and incorporated herein by reference).
10.4	Form of Omnibus Stock Ownership and Long-Term Incentive Plan (incorporated by reference to Exhibit 10.17 to ABC’s Annual Report on Form 10-K (File No. 001-13901), filed with the Commission on March 25, 1998).
10.5	Form of Rights Agreement between ABC Bancorp and SunTrust Bank dated as of February 17, 1998 (incorporated by reference to Exhibit 10.18 to ABC’s Annual Report on Form 10-K (File No. 001-13901), filed with the Commission on March 25, 1998).
10.6	ABC Bancorp 2000 Officer/Director Stock Bonus Plan (incorporated by reference to Exhibit 10.19 to ABC’s Annual Report on Form 10-K (File No. 001-13901), filed with the Commission on Mach 29, 2000).
10.7	Form of Severance Protection Agreement between ABC and certain of ABC’s other executive officers (incorporated by reference to Exhibit 10.21 to ABC’s Annual Report on Form 10-K (File No. 001-13901), filed with the Commission on March 29, 2001).
10.8	Executive Employment Agreement with W. Edwin Lane, Jr. dated as of August 21, 2001 (incorporated by reference to Exhibit 10.21 to ABC’s Quarterly Report on Form 10-Q (File No. 001-13901), filed with the Commission on October 19, 2001).
10.9	Agreement and Plan of Merger by and among ABC, Tri-County Bank and Tri-County Merger Sub, Inc. dated as of November 28, 2000, as amended by Amendment No. 1 thereto dated as of January 26, 2001, and by Amendment No. 2 thereto dated as of February 20, 2001 (incorporated by reference to Exhibit 2.1 to ABC’s Annual Report on Form 10-K (File No. 001-13901), filed with the Commission on March 29, 2001).

47

Exhibit No.	Description
10.10	Agreement and Plan of Merger by and between ABC and Golden Isles Financial Holdings, Inc. dated as of February 20, 2001 (incorporated by reference to Exhibit 2.1 to ABC’s Current Report on Form 8-K filed with the Commission on February 23, 2001 and incorporated herein by reference).
10.11	Commission Agreement by and between ABC and Jerry L. Keen dated as of September 12, 2002 (incorporated by reference to Exhibit 10.1 to ABC’s Quarterly Report on Form 10-Q (File No. 001-13901), filed with the Commission on November 14, 2002).
10.12	Termination Agreement by and between ABC and Mark D. Thomas dated as of August 8, 2002 (incorporated by reference to Exhibit 10.2 to ABC’s Quarterly Report on Form 10-Q (File No. 001-13901), filed with the Commission on November 14, 2002).
10.13	Asset Purchase Agreement by and between Southland Bank and MBNA America Bank, N.A. dated as of December 19, 2002 (incorporated by reference to Exhibit 10.16 to ABC’s Annual Report on Form 10-K (File No. 001-13901), filed with the Commission on March 31, 2003).
10.14	Interim Servicing Agreement by and between Southland Bank and MBNA America Bank, N.A. dated as of December 19, 2002 (incorporated by reference to Exhibit 10.17 to ABC’s Annual Report on Form 10-K (File No. 001-13901), filed with the Commission on March 31, 2003).
10.15	Joint Marketing Agreement by and between ABC Bancorp and MBNA America Bank, N.A. dated as of December 19, 2002 (incorporated by reference to Exhibit 10.18 to ABC’s Annual Report on Form 10-K (File No. 001-13901), filed with the Commission on March 31, 2003).
10.16	Executive Employment Agreement with Jon S. Edwards dated as of July 1, 2003 (incorporated by reference to Exhibit 10.1 to ABC’s Quarterly Report on Form 10-Q (File No. 001-13901), filed with the Commission on November 12, 2003).
10.17	Amended and Restated Executive Employment Agreement with Kenneth J. Hunnicutt dated as of May 24, 1999.
10.18	Amendment No. 1 to Amended and Restated Executive Employment Agreement with Kenneth J. Hunnicutt dated as of December 31, 2003.
10.19	Executive Employment Agreement with Edwin W. Hortman, Jr. dated as of December 31, 2003.
10.20	Executive Employment Agreement with Cindi H. Lewis dated as of December 31, 2003.
10.21	ABC Bancorp Code of Business Conduct and Ethics.
21.1	Schedule of subsidiaries of ABC Bancorp.
24.1	Power of Attorney relating to this Form 10-K is set forth on the signature pages of this Form 10-K.
31.1	Certification of ABC’s Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended.
31.2	Certification of ABC’s Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended.
32.1	Certification of ABC’s Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of ABC’s Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley-Act of 2002.

48

ABC BANCORP

INDEX TO FINANCIAL STATEMENTS AND SCHEDULES

Consolidated financial statements:
Independent Auditor’s Report	F-2
Consolidated Balance Sheets - December 31, 2003 and 2002	F-3
Consolidated Statements of Income - Years ended December 31, 2003, 2002 and 2001	F-4
Consolidated Statements of Comprehensive Income - Years ended December 31, 2003, 2002 and 2001	F-5
Consolidated Statements of Stockholders’ Equity - Years ended December 31, 2003, 2002 and 2001	F-6
Consolidated Statements of Cash Flows - Years ended December 31, 2003, 2002 and 2001	F-7
Notes to Consolidated Financial Statements	F-9

All schedules are omitted as the required information is inapplicable or the information is presented in the financial statements or related notes.

F-1

INDEPENDENT AUDITOR’S REPORT

To the Board of Directors

ABC Bancorp

Moultrie, Georgia

We have audited the accompanying consolidated balance sheets of ABC Bancorp and Subsidiaries as of December 31, 2003 and 2002, and the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2003. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of ABC Bancorp and Subsidiaries as of December 31, 2003 and 2002, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2003, in conformity with accounting principles generally accepted in the United States of America.

/s/ Mauldin & Jenkins, LLC

Albany, Georgia

January 26, 2004

F-2

ABC BANCORP AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2003 AND 2002

(Dollars in Thousands)

	2003			2002
Assets
Cash and due from banks	$	44,854		$	45,098
Interest-bearing deposits in banks		35,626			77,979
Securities available for sale, at fair value		190,595			178,303
Restricted stock		5,694			5,778
Loans, net of unearned income		840,539			833,447
Less allowance for loan losses		14,963			14,868
Loans, net		825,576			818,579
Premises and equipment, net		25,537			25,327
Intangible assets		3,286			4,309
Goodwill		19,231			19,240
Other assets		17,645			17,726
	$	1,168,044		$	1,192,339
Liabilities and Stockholders’ Equity
Deposits
Noninterest-bearing	$	141,715		$	131,611
Interest-bearing		764,809			784,436
Total deposits		906,524			916,047
Federal funds purchased and securities sold under agreements to repurchase		8,211			8,204
Other borrowings		97,545			117,290
Other liabilities		7,651			8,814
Subordinated deferrable interest debentures		34,500			34,500
Total liabilities		1,054,431			1,084,855
Commitments and contingencies
Stockholders’ equity
Common stock, par value $1; 30,000,000 shares authorized; 10,849,922 and 10,824,257 shares issued		10,850			10,824
Capital surplus		46,446			45,946
Retained earnings		66,145			59,210
Accumulated other comprehensive income		522			1,636
Unearned compensation		(491	)		(443	)
		123,472			117,173
Less cost of 1,066,068 and 1,053,321 shares acquired for the treasury		(9,859	)		(9,689	)
Total stockholders’ equity		113,613			107,484
	$	1,168,044		$	1,192,339

See Notes to Consolidated Financial Statements.

F-3

ABC BANCORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001

(Dollars in Thousands)

	2003			2002		2001
Interest income
Interest and fees on loans	$	57,707		$	61,864	$	61,980
Interest on taxable securities		6,079			8,275		9,072
Interest on nontaxable securities		156			187		869
Interest on deposits in other banks		537			1,020		943
Interest on federal funds sold		—			1		49
		64,479			71,347		72,913
Interest expense
Interest on deposits		14,183			20,286		30,480
Interest on other borrowings		7,862			7,858		4,424
		22,045			28,144		34,904
Net interest income		42,434			43,203		38,009
Provision for loan losses		3,945			5,574		4,566
Net interest income after provision for loan losses		38,489			37,629		33,443
Other income
Service charges on deposit accounts		10,638			10,550		7,721
Other service charges, commissions and fees		917			806		823
Mortgage origination fees		1,637			1,365		896
Gain (loss) on sale of securities		(5	)		1,643		1,253
Other		1,435			1,246		1,032
		14,622			15,610		11,725
Other expenses
Salaries and employee benefits		19,599			18,192		15,100
Equipment expense		2,112			2,451		2,833
Occupancy expense		2,613			2,588		1,951
Amortization of intangible assets		1,032			1,765		1,185
Data processing fees		1,587			1,546		1,250
Other operating expenses		8,204			11,265		8,524
		35,147			37,807		30,843
Income before income taxes		17,964			15,432		14,325
Applicable income taxes		5,954			5,077		4,692
Net income	$	12,010		$	10,355	$	9,633
Basic earnings per share	$	1.23		$	1.05	$	1.05
Diluted earnings per share	$	1.22		$	1.05	$	1.04

See Notes to Consolidated Financial Statements.

F-4

ABC BANCORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001

(Dollars in Thousands)

	2003			2002			2001
Net income	$	12,010		$	10,355		$	9,633
Other comprehensive income (loss):
Net unrealized holding gains (losses) arising during period, net of tax (benefits) of $(575), $869 and $606		(1,117	)		1,687			1,176
Reclassification adjustment for (gains) losses included in net income, net of (tax) benefits of $2, $(558) and $(426)		3			(1,085	)		(827	)
Total other comprehensive income (loss)		(1,114	)		602			349
Comprehensive income	$	10,896		$	10,957		$	9,982

See Notes to Consolidated Financial Statements.

F-5

ABC BANCORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001

(Dollars in Thousands)

	Common Stock			Capital Surplus		Retained Earnings			Accumulated Other Comprehensive Income			Unearned Compensation			Treasury Stock
	Shares	Par Value													Shares	Cost			Total
Balance, December 31, 2000	9,137,990	$	9,138	$	29,237	$	48,411		$	685		$	(595	)	790,982	$	(6,220	)	$	80,656
Net income	—		—		—		9,633			—			—		—		—			9,633
Cash dividends declared, $.48 per share	—		—		—		(4,460	)		—			—		—		—			(4,460	)
Adjustments to record acquisition of purchased subsidiaries	1,588,347		1,588		15,768		—			—			—		—		—			17,356
Issuance of restricted shares of common stock under employee incentive plan	62,800		63		600		—			—			(663	)	—		—			—
Amortization of unearned compensation, net of forfeitures	—		—		—		—			—			602		—		—			602
Proceeds from exercise of stock options	1,232		1		11		—			—			—		—		—			12
Other comprehensive income	—		—		—		—			349			—		—		—			349
Balance, December 31, 2001	10,790,369		10,790		45,616		53,584			1,034			(656	)	790,982		(6,220	)		104,148
Net income	—		—		—		10,355			—			—		—		—			10,355
Cash dividends declared, $.48 per share	—		—		—		(4,729	)		—			—		—		—			(4,729	)
Issuance of restricted shares of common stock under employee incentive plan	15,300		16		215		—			—			(231	)	—		—			—
Amortization of unearned compensation, net of forfeitures	—		—		—		—			—			444		—		—			444
Proceeds from exercise of stock options	18,588		18		115		—			—			—		—		—			133
Repurchase of shares for treasury	—		—		—		—			—			—		262,339		(3,469	)		(3,469	)
Other comprehensive income	—		—		—		—			602			—		—		—			602
Balance, December 31, 2002	10,824,257		10,824		45,946		59,210			1,636			(443	)	1,053,321		(9,689	)		107,484
Net income	—		—		—		12,010			—			—		—		—			12,010
Cash dividends declared, $.52 per share	—		—		—		(5,075	)		—			—		—		—			(5,075	)
Issuance of restricted shares of common stock under employee incentive plan	24,800		25		386		—			—			(411	)	—		—			—
Amortization of unearned compensation, net of forfeitures	—		—		—		—			—			363		—		—			363
Proceeds from exercise of stock options	865		1		8		—			—			—		—		—			9
Reduction in income taxes payable resulting from vesting of restricted shares	—		—		106		—			—			—		—		—			106
Repurchase of shares for treasury	—		—		—		—			—			—		12,747		(170	)		(170	)
Other comprehensive loss	—		—		—		—			(1,114	)		—		—		—			(1,114	)
Balance, December 31, 2003	10,849,922	$	10,850	$	46,446	$	66,145		$	522		$	(491	)	1,066,068	$	(9,859	)	$	113,613

See Notes to Consolidated Financial Statements.

F-6

ABC BANCORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001

(Dollars in Thousands)

	2003			2002			2001
OPERATING ACTIVITIES
Net income	$	12,010		$	10,355		$	9,633
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,858			2,241			2,438
Amortization of intangible assets		1,032			1,765			1,185
Amortization of unearned compensation		363			444			602
Net gains (losses) on sale of securities available for sale		5			(1,643	)		(1,253	)
Net (gains) losses on sale or disposal of premises and equipment		3			320			(13	)
Provision for loan losses		3,945			5,574			4,566
Provision for deferred taxes		(157	)		(65	)		(726	)
Decrease in interest receivable		944			1,120			2,233
Decrease in interest payable		(667	)		(1,216	)		(672	)
Increase (decrease) in taxes payable		(284	)		588			167
Net other operating activities		(533	)		2,964			(900	)
Total adjustments		6,509			12,092			7,627
Net cash provided by operating activities		18,519			22,447			17,260
INVESTING ACTIVITIES
(Increase) decrease in interest-bearing deposits in banks		42,353			28,193			(97,267	)
Purchases of securities available for sale		(129,998	)		(140,148	)		(86,585	)
Proceeds from maturities of securities available for sale		89,533			78,632			82,511
Proceeds from sale of securities available for sale		26,479			37,903			42,996
(Increase) decrease in restricted stock, net		84			(1,077	)		(1,215	)
Decrease in federal funds sold		—			44			13,942
Increase in loans, net		(10,942	)		(34,021	)		(53,244	)
Purchase of premises and equipment		(2,071	)		(1,726	)		(1,896	)
Proceeds from sale of premises and equipment		—			—			28
Net cash received from acquisitions		—			—			11,609
Net cash provided by (used in) investing activities		15,438			(32,200	)		(89,121	)
FINANCING ACTIVITIES
Increase (decrease) in deposits		(9,523	)		(14,971	)		24,591
Increase in federal funds purchased and securities sold under agreements to repurchase		7			4,412			1,139
Proceeds from other borrowings		15,000			25,100			69,738
Repayment of other borrowings		(34,745	)		(2,908	)		(39,515	)
Dividends paid		(4,885	)		(4,749	)		(4,262	)
Proceeds from exercise of stock options		9			133			12
Proceeds from issuance of trust preferred securities		—			—			34,500
Reduction in income taxes payable resulting from vesting of restricted shares		106			—			—
Payment for debt issue costs		—			—			(1,450	)
Purchase of treasury shares		(170	)		(3,469	)		—
Net cash provided by (used in) financing activities		(34,201	)		3,548			84,753
Net increase (decrease) in cash and due from banks		(244	)		(6,205	)		12,892
Cash and due from banks at beginning of year		45,098			51,303			38,411
Cash and due from banks at end of year	$	44,854		$	45,098		$	51,303

F-7

ABC BANCORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001

(Dollars in Thousands)

	2003		2002		2001
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest	$	22,712	$	29,360	$	35,576
Income taxes	$	6,395	$	4,554	$	5,251
NONCASH TRANSACTIONS
Principal balances of loans transferred to other real estate owned	$	2,096	$	3,930	$	2,216
Common stock issued in connection with business acquisitions	$	—	$	—	$	17,590

See Notes to Consolidated Financial Statements.

F-8

ABC BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

ABC Bancorp (the “Company”) is a multi-bank holding company whose business is presently conducted by its subsidiary banks (the “Banks”). Through the Banks, the Company operates a full service banking business and offers a broad range of retail and commercial banking services to its customers located in a market area which includes South and Southeast Georgia, North Florida and Southeast Alabama. The Company and the Banks are subject to the regulations of certain federal and state agencies and are periodically examined by those regulatory agencies.

Basis of Presentation and Accounting Estimates

The consolidated financial statements include the accounts of the Company and its subsidiaries. Significant intercompany transactions and balances have been eliminated in consolidation.

In preparing the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the balance sheet date and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses, the valuation of foreclosed real estate, contingent assets and liabilities, impairment of intangible assets and goodwill. The determination of the adequacy of the allowance for loan losses is based on estimates that are susceptible to significant changes in the economic environment and market conditions. In connection with the determination of the estimated losses on loans and the valuation of foreclosed real estate, management obtains independent appraisals for significant collateral. Management also tests intangible assets and goodwill for impairment on an annual basis.

Cash, Due from Banks and Cash Flows

For purposes of reporting cash flows, cash and due from banks includes cash on hand, cash items in process of collection and amounts due from banks. Cash flows from loans, federal funds sold, deposits, interest-bearing deposits in banks and federal funds purchased and securities sold under agreements to repurchase are reported net.

The Banks are required to maintain reserve balances in cash or on deposit with the Federal Reserve Bank, based on a percentage of deposits. The total of those reserve balances was approximately $7,845,000 and $6,438,000 at December 31, 2003 and 2002, respectively.

Securities

Debt securities that management has the positive intent and ability to hold to maturity are classified as held to maturity and recorded at amortized cost. Management has not classified any of its debt securities as held to maturity. Securities not classified as held to maturity, including equity securities with readily determinable fair values, are classified as available for sale and recorded at fair value with unrealized gains and losses excluded from earnings and reported in accumulated other comprehensive income, net of the related deferred tax effect. Equity securities, including restricted stock, without a readily determinable fair value are classified as available for sale and recorded at cost.

The amortization of premiums and accretion of discounts are recognized in interest income using methods approximating the interest method over the life of the securities. Realized gains and losses, determined on the basis of the cost of specific securities sold, are included in earnings on the settlement date. Declines in the fair value of securities available for sale below their cost that are deemed to be other than temporary are reflected in earnings as realized losses.

F-9

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Loans

Loans are reported at their outstanding principal balances less unearned income, net deferred fees and the allowance for loan losses. Interest income is accrued on the outstanding principal balance. Loan origination fees, net of certain direct loan origination costs, are deferred and recognized as an adjustment of the related loan yield over the life of the loan using a method which approximates a level yield.

The accrual of interest on loans is discontinued when, in management’s opinion, the borrower may be unable to meet payments as they become due, unless the loan is well-secured. All interest accrued, but not collected for loans that are placed on nonaccrual or charged off, is reversed against interest income, unless management believes that the accrued interest is recoverable through the liquidation of collateral. Interest income on nonaccrual loans is subsequently recognized only to the extent cash payments are received until the loans are returned to accrual status. Loans are returned to accrual status when all the principal and interest amounts are brought current and future payments are reasonably assured.

A loan is considered impaired when it is probable, based on current information and events, the Company will be unable to collect all principal and interest payments due in accordance with the contractual terms of the loan agreement. Impaired loans are measured by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price or the fair value of the collateral if the loan is collateral dependent. The amount of impairment, if any, and any subsequent changes are included in the allowance for loan losses. Interest on accruing impaired loans is recognized as long as such loans do not meet the criteria for nonaccrual status.

Allowance for Loan Losses

The allowance for loan losses is established through a provision for loan losses charged to expense. Loan losses are charged against the allowance when management believes the collectibility of the principal is unlikely. Subsequent recoveries are credited to the allowance.

The allowance is an amount that management believes will be adequate to absorb estimated losses relating to specifically identified loans, as well as probable credit losses inherent in the balance of the loan portfolio, based on an evaluation of the collectibility of existing loans and prior loss experience. This evaluation also takes into consideration such factors as changes in the nature and volume of the loan portfolio, overall portfolio quality, review of specific problem loans, concentrations and current economic conditions that may affect the borrower’s ability to pay. This evaluation does not include the effects of expected losses on specific loans or groups of loans that are related to future events or expected changes in economic conditions. While management uses the best information available to make its evaluation, future adjustments to the allowance may be necessary if there are significant changes in economic conditions. In addition, regulatory agencies, as an integral part of their examination process, periodically review the Banks’ allowance for loan losses and may require the Banks to make additions to the allowance based on their judgment about information available to them at the time of their examinations.

The allowance consists of specific, general and unallocated components. The specific component relates to loans that are classified as either doubtful, substandard or special mention. For such loans that are also classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. The general component covers non-classified loans and is based on historical loss experience adjusted for qualitative factors. An unallocated component is maintained to cover uncertainties that could affect management’s estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio.

F-10

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Premises and Equipment

Land is carried at cost. Premises and equipment are carried at cost less accumulated depreciation computed principally on the straight-line method over the estimated useful lives:

	Years
Buildings	39
Furniture and equipment	5-7

Goodwill and Intangible Assets

Goodwill represents the excess of cost over the fair value of the net assets purchased in business combinations. Goodwill is required to be tested annually for impairment or whenever events occur that may indicate that the recoverability of the carrying amount is not probable. In the event of an impairment, the amount by which the carrying amount exceeds the fair value is charged to earnings. The Company performed its annual test of impairment in the fourth quarter and determined that there was impairment of approximately $9,000 in the carrying value of goodwill allocated to a subsidiary bank as of October 1, 2003.

Intangible assets consist of core deposit premiums acquired in connection with the business combinations. The core deposit premium is initially recognized based on a valuation performed as of the consummation date. The core deposit premium is amortized over the average remaining life of the acquired customer deposits, or five to eight years. Amortization periods are reviewed annually in connection with the annual impairment testing of goodwill.

For the years ended December 31, 2003 and December 31, 2002, no amortization of goodwill was included in the consolidated statements of income, except for the impairment charge of $9,000 in 2003. For the year ended December 31, 2001, charges in the amount of $668,000 were included in the consolidated statements of income for amortization of goodwill. Included in the consolidated statements of income for December 31, 2003, 2002 and 2001 were charges for amortization of identifiable intangible assets in the amounts of $1,023,000, $1,765,000 and $517,000, respectively.

Other Real Estate Owned

Other real estate owned represents properties acquired through or in lieu of loan foreclosure and is initially recorded at the lower of cost or fair value less estimated costs to sell. Any write-down to fair value at the time of transfer to other real estate owned is charged to the allowance for loan losses. Costs of improvements are capitalized, whereas costs relating to holding other real estate owned and subsequent adjustments to the value are expensed. The carrying amount of other real estate owned at December 31, 2003 and 2002 was $1,503,139 and $1,534,200, respectively.

Income Taxes

Deferred income tax assets and liabilities are determined using the balance sheet method. Under this method, the net deferred tax asset or liability is determined based on the tax effects of the temporary differences between the book and tax bases of the various balance sheet assets and liabilities and gives current recognition to changes in tax rates and laws.

F-11

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Stock-Based Compensation

The Company has two stock-based employee compensation plans, which are described more fully in Note 13. The Company accounts for those plans under the recognition and measurement principles of APB Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations. No stock-based employee compensation cost is reflected in net income, as all options granted under those plans had an exercise price equal to the market value of the underlying stock on the date of grant.

The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of FASB Statement No. 123, Accounting for Stock-Based Compensation, to stock-based employee compensation.

	Years Ended December 31,
	2003			2002			2001
	(Dollars in Thousands)
Net income, as reported	$	12,010		$	10,355		$	9,633
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects		(70	)		(54	)		(39	)
Pro forma net income	$	11,940		$	10,301		$	9,594
Earnings per share:
Basic - as reported	$	1.23		$	1.05		$	1.05
Basic - pro forma	$	1.22		$	1.04		$	1.04
Diluted - as reported	$	1.22		$	1.05		$	1.04
Diluted - pro forma	$	1.21		$	1.04		$	1.04

Treasury Stock

The Company’s repurchases of shares of its common stock are recorded at cost as “Treasury Stock” and result in a reduction of “Stockholders’ Equity.” When treasury shares are reissued, the Company uses a first-in, first-out method and any difference in repurchase cost and reissuance price is recorded as an increase or reduction in “Capital Surplus.”

Earnings Per share

Basic earnings per common share are computed by dividing net income by the weighted-average number of shares of common stock outstanding. Diluted earnings per common share are computed by dividing net income by the effect of the issuance of potential common shares that are dilutive by the sum of the weighted-average number of shares of common stock outstanding and potential common shares. Potential common shares consist of stock options for the years ended December 31, 2003, 2002 and 2001. The weighted-average number of shares outstanding for the years ended December 31, 2003, 2002 and 2001 was 9,772,166, 9,858,463 and 9,214,276, respectively. The weighted-average number of shares outstanding and potential shares for the years ended December 31, 2003, 2002 and 2001 was 9,838,590, 9,908,663 and 9,250,040, respectively.

Potential common shares not included due to the fact that they would be anti-dilutive at December 31, 2003, 2002 and 2001 were 62,577, 89,944 and 30,696, respectively.

F-12

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Comprehensive Income

Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on securities available for sale, are reported as a separate component of the equity section of the balance sheet, such items, along with net income, are components of comprehensive income.

Recent Accounting Standards

In November 2002, the FASB issued Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, an interpretation of FASB Statements No. 5, 57 and 107 and a rescission of FASB Interpretation No. 34”. The interpretation discusses the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under guarantees issued. It also clarifies that a guarantor is required to recognize, at inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing a guarantee. The initial recognition and initial measurement provisions of the interpretation are applicable to guarantees issued or modified after December 31, 2002. The disclosure requirements in the interpretation are effective for financial statements of interim or annual periods ending after December 15, 2002. The adoption of the interpretation did not have a material effect on the Company’s financial condition or results of operations.

In December 2002, the FASB issued Statement No. 148, “Accounting for Stock-Based Compensation—Transition and Disclosure, an amendment of FASB Statement No. 123”. The Statement amends Statement No. 123, “Accounting for Stock-Based Compensation”, to provide alternative methods of transition for a voluntary change to the fair value method of accounting for stock-based employee compensation. In addition, the statement amends the disclosure requirements of Statement No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based compensation and the effect on reported results of operations. The disclosure requirements of the statement are required for fiscal years ending after December 15, 2002 and interim periods beginning after December 15, 2002. The Company has not adopted Statement No. 123 for accounting for stock-based compensation as of December 31, 2003; however, all required disclosures of Statement No. 148 are included above under the heading “Stock-Based Compensation”.

In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities, an interpretation of ARB No. 51” and, on December 24, 2003, the FASB issued FASB Interpretation No. 46 (Revised December 2003), “Consolidation of Variable Interest Entities” which replaced FIN 46. The interpretation addresses consolidation by business enterprises of variable interest entities. A variable interest entity is defined as an entity subject to consolidation according to the provisions of the interpretation. The revised interpretation provided for special effective dates for entities that had fully or partially applied the original interpretation as of December 24, 2003. Otherwise, application of the interpretation is required in financial statements of public entities that have interests in special-purpose entities, or SPEs, for periods ending after December 15, 2003. Application by public entities, other than small business issuers, for all other types of variable interest entities (i.e., non-SPEs) is required in financial statements for periods ending after March 15, 2004. Application by small business issuers to variable interest entities other than SPEs and by nonpublic entities to all types of variable interest entities is required at various dates in 2004 and 2005. The Company has determined that the provisions of FIN 46 may require deconsolidation of subsidiary trusts which issued subordinated debentures. The Company plans to adopt the provisions under the revised interpretation in the first quarter of 2004. The adoption of FIN 46 and related revisions is not expected to have a material impact on the Company’s consolidated financial statements.

F-13

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recent Accounting Standards (Continued)

In May 2003, the FASB issued Statement No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity”. The statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. The statement requires that an issuer classify a financial instrument that is within its scope as a liability. Many of those instruments were previously classified as equity. The statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003, except for mandatorily redeemable financial instruments of nonpublic entities. Mandatorily redeemable financial instruments of nonpublic entities are subject to the provisions of the statement for the first fiscal period beginning after December 15, 2003. The adoption of the statement did not have a material effect on the Company’s financial condition or results of operations.

Reclassification of Certain Items

Certain items in the consolidated financial statements as of and for the years ended December 31, 2002 and 2001 have been reclassified, with no effect on net income, to be consistent with the classifications adopted for the year ended December 31, 2003.

NOTE 2. SECURITIES

The amortized cost and fair value of securities available for sale are summarized as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(Dollars in Thousands)
December 31, 2003:
U. S. Government and agency securities	$	78,826	$	727	$	(8	)	$	79,545
State and municipal securities		3,584		149		—			3,733
Corporate debt securities		23,057		418		(7	)		23,468
Mortgage-backed securities		83,550		131		(573	)		83,108
Equity securities		788		—		(47	)		741
	$	189,805	$	1,425	$	(635	)	$	190,595
December 31, 2002:
U. S. Government and agency securities	$	72,326	$	1,488	$	(41	)	$	73,773
State and municipal securities		3,362		179		(12	)		3,529
Corporate debt securities		22,838		384		(355	)		22,867
Mortgage-backed securities		76,439		921		(46	)		77,314
Equity securities		859		—		(39	)		820
	$	175,824	$	2,972	$	(493	)	$	178,303

F-14

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2. SECURITIES (Continued)

The amortized cost and fair value of securities available for sale as of December 31, 2003 by contractual maturity are shown below. Maturities may differ from contractual maturities in mortgage-backed securities because the mortgages underlying the securities may be called or repaid without penalty. Therefore, these securities are not included in the maturity categories in the following maturity summary.

	Amortized Cost		Fair Value
	(Dollars in Thousands)
Due in one year or less	$	37,330	$	37,793
Due from one year to five years		57,171		57,893
Due from five to ten years		6,340		6,375
Due after ten years		4,626		4,685
Mortgage-backed securities		83,550		83,108
Equity securities		788		741
	$	189,805	$	190,595

Securities with a carrying value of $125,547,653 and $84,535,517 at December 31, 2003 and 2002, respectively, were pledged to secure public deposits and for other purposes required or permitted by law.

Gains and losses on sales of securities available for sale consist of the following:

	December 31,
	2003			2002		2001
	(Dollars in Thousands)
Gross gains on sales of securities	$	87		$	1,643	$	1,253
Gross losses on sales of securities		(92	)		—		—
Net realized gains on sales of securities available for sale	$	(5	)	$	1,643	$	1,253

The following table shows the gross unrealized losses and fair value of securities aggregated by category and length of time that securities have been in a continuous unrealized loss position at December 31, 2003.

	Less Than 12 Months				12 Months or More				Total
Description of Securities	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U. S. Government and agency securities	$	1,912	$	8	$	—	$	—	$	1,912	$	8
Corporate debt securities		1,012		7		—		—		1,012		7
Mortgage-backed securities		59,838		572		982		1		60,820		573
Subtotal, debt securities		62,762		587		982		1		63,744		588
Equity securities		—		—		221		47		221		47
Total temporarily impaired securities	$	62,762	$	587	$	1,203	$	48	$	63,965	$	635

The majority of debt securities containing unrealized losses at December 31, 2003 represent mortgage-backed securities. Nine (9) securities contained unrealized losses greater than two percent (2%) of their costs. None of the securities contained an unrealized loss greater than 2.50% of its cost. One equity security representing an investment in a mutual fund reflected an unrealized loss of 17% of its cost. The unrealized loss in this security represented 7.4% of the total unrealized losses in the Company’s investment portfolio. The unrealized losses are considered temporary because each security carries an acceptable investment grade and the repayment sources of principal and interest are government backed.

F-15

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3. LOANS AND ALLOWANCE FOR LOAN LOSSES

The composition of loans is summarized as follows:

	December 31,
	2003		2002
	(Dollars in Thousands)
Commercial and financial	$	157,594	$	172,429
Agricultural		22,051		34,007
Real estate – construction		60,978		23,020
Real estate - mortgage, farmland		65,433		63,093
Real estate - mortgage, commercial		250,247		243,037
Real estate - mortgage, residential		209,172		209,485
Consumer installment loans		68,230		78,535
Other		6,834		9,841
		840,539		833,447
Allowance for loan losses		14,963		14,868
	$	825,576	$	818,579

The following is a summary of information pertaining to impaired loans:

	As of and For the Years Ended December 31,
	2003		2002		2001
Impaired loans without a valuation allowance	$	—	$	—	$	—
Impaired loans with a valuation allowance		6,472		7,561		11,958
Total impaired loans	$	6,472	$	7,561	$	11,958
Valuation allowance related to impaired loans	$	1,105	$	1,358	$	1,984
Average investment in impaired loans	$	8,619	$	8,966	$	8,249
Interest income recognized on impaired loans	$	27	$	26	$	6
Forgone interest income on impaired loans	$	842	$	792	$	666

Loans on nonaccrual status amounted to approximately $6,472,000, $7,561,000 and $11,958,000 at December 31, 2003, 2002 and 2001, respectively. There were $25,000, $171,000 and $691,000 of loans past due ninety days or more and still accruing interest at December 31, 2003, 2002 and 2001, respectively.

F-16

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3. LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

Changes in the allowance for loan losses for the years ended December 31, 2003, 2002, and 2001 are as follows:

	December 31,
	2003			2002			2001
	(Dollars in Thousands)
Balance, beginning of year	$	14,868		$	14,944		$	9,832
Provision for loan losses		3,945			5,574			4,566
Loans charged off		(5,226	)		(7,159	)		(5,488	)
Recoveries of loans previously charged off		1,376			1,509			1,110
Acquired loan loss reserve		—			—			4,924
Balance, end of year	$	14,963		$	14,868		$	14,944

In the ordinary course of business, the Company has granted loans to certain directors, executive officers and their affiliates. The interest rates on these loans were substantially the same as rates prevailing at the time of the transaction and repayment terms are customary for the type of loan. Changes in related party loans are summarized as follows:

	December 31,
	2003			2002
	(Dollars in Thousands)
Balance, beginning of year	$	42,807		$	34,488
Advances		19,467			33,424
Repayments		(29,966	)		(26,285	)
Transactions due to changes in related parties		2,934			1,180
Balance, end of year	$	35,242		$	42,807

NOTE 4. PREMISES AND EQUIPMENT

Premises and equipment are summarized as follows:

	December 31,
	2003			2002
	(Dollars in Thousands)
Land	$	6,694		$	6,096
Buildings		23,030			22,618
Furniture and equipment		17,275			17,889
Construction in progress; estimated cost to complete, $1,478,000		1,026			472
		48,025			47,075
Accumulated depreciation		(22,488	)		(21,748	)
	$	25,537		$	25,327

F-17

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5. INTANGIBLE ASSETS

Following is a summary of information related to acquired intangible assets:

	As of December 31, 2003				As of December 31, 2002
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
	(Dollars in Thousands)
Amortized intangible assets Core deposit premiums	$	8,896	$	5,610	$	8,896	$	4,587

The aggregate amortization expense for intangible assets was $1,023,000, $1,765,000 and $1,185,000 for the years ended December 31, 2003, 2002, and 2001, respectively.

The estimated amortization expense for each of the next five years is as follows:

2004	$	790,000
2005		642,000
2006		549,000
2007		490,000
2008		287,000

Changes in the carrying amount of goodwill are as follows:

	For the Year Ended December 31,
	2003			2002
	(Dollars in Thousands)
Beginning balance	$	19,240		$	19,240
Goodwill written off at a subsidiary Bank		(9	)		—
Ending balance	$	19,231		$	19,240

Following is a summary of net income and earnings per share that would have been reported exclusive of amortization expense recognized in those periods related to goodwill and intangible assets that are no longer being amortized.

	For the Years Ended December 31,
	2003		2002		2001
	(Dollars in Thousands)
Reported net income	$	12,010	$	10,355	$	9,633
Add back goodwill amortization		—		—		668
Adjusted net income	$	12,010	$	10,355	$	10,301

F-18

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5. INTANGIBLE ASSETS (Continued)

	For the Years Ended December 31,
	2003		2002		2001
	(Dollars in Thousands)
Basic earnings per share:
Reported net income	$	1.23	$	1.05	$	1.05
Goodwill amortization		—		—		.07
Adjusted net income	$	1.23	$	1.05	$	1.12
Diluted earnings per share:
Reported net income	$	1.22	$	1.05	$	1.04
Goodwill amortization		—		—		.07
Adjusted net income	$	1.22	$	1.05	$	1.11

NOTE 6. DEPOSITS

The aggregate amount of time deposits in denominations of $100,000 or more at December 31, 2003 and 2002 was $149,991,000 and $155,048,000, respectively. The scheduled maturities of time deposits at December 31, 2003 are as follows:

	(Dollars in Thousands)
2004	$	355,470
2005		30,634
2006		9,338
2007		6,855
2008		4,725
Later years		154
	$	407,176

At December 31, 2003 and 2002, overdraft demand deposits reclassified to loans totaled $1,402,000 and $1,226,000, respectively.

NOTE 7. SECURITIES SOLD UNDER REPURCHASE AGREEMENTS

Securities sold under repurchase agreements, which are secured borrowings, generally mature within one to four days from the transaction date. Securities sold under repurchase agreements are reflected at the amount of cash received in connection with the transactions. The Company may be required to provide additional collateral based on the fair value of the underlying securities. The Company monitors the fair value of the underlying securities on a daily basis. Securities sold under repurchase agreements at December 31, 2003 and 2002 were $8,211,000 and $8,204,000, respectively.

F-19

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8. EMPLOYEE BENEFIT PLANS

The Company has established a retirement plan for eligible employees. The ABC Bancorp 401(k) Profit Sharing Plan allows a participant to defer a portion of his compensation and provides that the Company will match a portion of the deferred compensation. The plan also provides for nonelective and discretionary contributions. All full-time and part-time employees are eligible to participate in the 401(k) Profit Sharing Plan provided they have met the eligibility requirements. Generally, a participant must have completed twelve months of employment with a minimum of 1,000 hours.

In 2002, the Company terminated the ABC Bancorp Money Purchase Pension Plan. All fully funded employee benefits under the plan were transferred to the 401(k) profit sharing plan.

Aggregate expense under the two plans charged to operations during 2003, 2002 and 2001 amounted to $1,149,000, $877,000 and $655,000, respectively.

NOTE 9. DEFERRED COMPENSATION PLANS

The Company and two subsidiary banks have entered into separate deferred compensation arrangements with certain executive officers and directors. The plans call for certain amounts payable at retirement, death or disability. The estimated present value of the deferred compensation is being accrued over the remaining expected service period. The Company and Banks have purchased life insurance policies which they intend to use to finance this liability. Cash surrender value of life insurance of $1,231,000 and $1,038,000 at December 31, 2003 and 2002, respectively, is included in other assets. Accrued deferred compensation of $1,105,000 and $1,012,000 at December 31, 2003 and 2002, respectively, is included in other liabilities. Aggregate compensation expense under the plans were $94,000, $93,000 and $74,000 for 2003, 2002 and 2001, respectively, and is included in other operating expenses.

NOTE 10. OTHER BORROWINGS

Other borrowings consist of the following:

	December 31,
	2003		2002
	(Dollars in Thousands)
Advances under revolving credit agreement with SunTrust Bank with interest at LIBOR plus 1.15% (2.02% at December 31, 2003) due on May 31, 2004, secured by subsidiary bank stock.	$	—	$	100
Advances from SunTrust Bank with 5 quarterly principal payments of $366,000 at sixty-day LIBOR rate plus .9% (2.07% at December 31, 2003), maturing July 23, 2005.		1,681		8,044
Advances from Federal Home Loan Bank with interest at adjustable rate (4.08% at December 31, 2003), due February 10, 2005.		15,000		26,000
Advances from Federal Home Loan Bank with interest at a fixed rate of 6.72%, due in annual installments due November 1, 2006.		65		152
Advances from Federal Home Loan Bank with interest at a fixed rate (ranging from 3.66% to 6.12%) convertible to a variable rate at option of Federal Home Loan Bank, due at various dates from September 28,2004 through August 6, 2012.		80,799		82,994
	$	97,545	$	117,290

F-20

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10. OTHER BORROWINGS (Continued)

The advances from Federal Home Loan Bank are collateralized by the pledging of a blanket lien on all first mortgage loans and other specific loans, as well as FLHB stock.

Other borrowings at December 31, 2003 have maturities in future years as follows:

	(Dollars in Thousands)
2004	$	1,484
2005		16,241
2006		22
2007		—
2008		—
Later years		79,798
	$	97,545

The Company and subsidiaries have available unused lines of credit with various financial institutions totaling approximately $80,100,000 at December 31, 2003. There were no other advances outstanding at December 31, 2003 or 2002.

NOTE 11. INCOME TAXES

The income tax expense in the consolidated statements of income consists of the following:

	Years Ended December 31,
	2003			2002			2001
	(Dollars in Thousands)
Current	$	6,111		$	5,142		$	5,418
Deferred		(157	)		(65	)		(726	)
	$	5,954		$	5,077		$	4,692

The Company’s income tax expense differs from the amounts computed by applying the federal income tax statutory rates to income before income taxes. A reconciliation of the differences is as follows:

	Years Ended December 31,
	2003			2002			2001
	(Dollars in Thousands)
Tax at federal income tax rate	$	6,108		$	5,247		$	4,871
Increase (decrease) resulting from:
Tax-exempt interest		(201	)		(224	)		(476	)
Amortization of intangible assets		13			33			274
Other		34			21			23
Provision for income taxes	$	5,954		$	5,077		$	4,692

F-21

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11. INCOME TAXES (Continued)

Net deferred income tax assets of $4,363,000 and $3,632,000 at December 31, 2003 and 2002, respectively, are included in other assets. The components of deferred income taxes are as follows:

	December 31,
	2003		2002
	(Dollars in Thousands)
Deferred tax assets:
Loan loss reserves	$	5,022	$	4,942
Deferred compensation		376		344
Unearned compensation related to restricted stock		287		295
Nonaccrual interest		134		235
Net operating loss tax carryforward		91		115
Other		232		121
		6,142		6,052
Deferred tax liabilities:
Depreciation and amortization		419		242
Unrealized gain on securities available for sale		269		843
Intangible assets		1,091		1,335
		1,779		2,420
Net deferred tax assets	$	4,363	$	3,632

NOTE 12. SUBORDINATED DEFERRABLE INTEREST DEBENTURES

In 2001, the Company formed a wholly-owned grantor trust to issue cumulative trust preferred securities to the public. The grantor trust invested the proceeds of the trust preferred securities in junior subordinated debentures of the Company. The trust preferred securities can be redeemed prior to maturity at the option of the Company on or after September 30, 2006. The sole assets of the guarantor trust are the Junior Subordinated Deferrable Interest Debentures of the Company (the Debentures) held by the grantor trust. The Debentures have the same interest rate (9%) as the trust preferred securities. The Company has the right to defer interest payments on the Debentures at any time or from time to time for a period not exceeding 20 consecutive quarters provided that no extension period may extend beyond the stated maturity of the related Debentures. During any such extension period, distributions on the trust preferred certificates would also be deferred.

The trust preferred securities are subject to mandatory redemption upon repayment of the related Debentures at their stated maturity date or their earlier redemption at a redemption price equal to their stated maturity date or their earlier redemption at a redemption price equal to their liquidation amount plus accrued distributions to the date fixed for the redemption upon concurrent repayment of the related Debentures. The trust preferred securities may be redeemed in whole or part at any time on or after September 30, 2006.

Payment of periodic cash distributions and payment upon liquidation or redemption with respect to the trust preferred securities are guaranteed by the Company to the extent of funds held by the grantor trust (the Preferred Securities Guarantee). The Preferred Securities Guarantee, when taken together with the Company’s other obligations under the Debentures, constitute a full and unconditional guarantee, on a subordinated basis, by the Company of payments due on the trust preferred securities.

F-22

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12. SUBORDINATED DEFERRABLE INTEREST DEBENTURES (Continued)

The Company is required by the Federal Reserve Board to maintain certain levels of capital for bank regulatory purposes. The Federal Reserve Board has determined that certain cumulative preferred securities having the characteristics of trust preferred securities qualify as minority interest, which is included in Tier 1 capital for bank and financial holding companies. In calculating the amount of Tier l qualifying capital, the trust preferred securities can only be included up to the amount constituting 25% of total Tier 1 capital elements (including trust preferred securities). Such Tier 1 capital treatment provides the Company with a more cost-effective means of obtaining capital for bank regulatory purposes than if the Company were to issue preferred stock.

The trust preferred securities and the related Debentures were issued on November 8, 2001. Both financial instruments bear an identical annual rate of interest of 9%. Distributions on the trust preferred securities are paid quarterly on March 31, June 30, September 30 and December 31 of each year. Interest on the Debentures is paid on the corresponding dates. The aggregate principal amount of trust preferred certificates outstanding at December 31, 2003 and 2002 was $34,500,000. The aggregate principal amount of Debentures outstanding at those dates was $35,567,000.

The Company will be required to adopt the provisions of FIN 46 in the first quarter of 2004 and may be required to deconsolidate the trust subsidiary. The adoption of FIN 46 is not expected to have a material effect on the Company’s consolidated financial statements.

NOTE 13. STOCK OPTION PLANS

The Company has two fixed stock option plans under which it has granted options to its Chief Executive Officer to purchase common stock at the fair market price on the date of grant. All of the options are intended to be incentive stock options qualifying under Section 422 of the Internal Revenue Code for favorable tax treatment. Under the 1992 Plan, options to purchase 10,000 shares were granted. All of these options were exercised during 2002. Under the 1997 Plan, options to purchase 67,500 shares were granted. Options under the 1997 Plan are fully vested and are exercisable over a period of ten years subject to certain limitations as to aggregate fair market value (determined as of the date of the grant) of all options exercisable for the first time by the optionee during any calendar year (the “$100,000 Per-Year Limitation”). Under the 1997 Plan, options to purchase 60,150 shares were exercisable as of December 31, 2003.

At the annual meeting on April 15, 1997, the shareholders approved the ABC Bancorp Omnibus Stock Ownership and Long-Term Incentive Plan (the “Omnibus Plan”). Awards granted under the Omnibus Plan may be in the form of Qualified or Nonqualified Stock Options, Restricted Stock, Stock Appreciation Rights (“SARS”), Long-Term Incentive Compensation Units consisting of a combination of cash and Common Stock, or any combination thereof within the limitations set forth in the Omnibus Plan. The Omnibus Plan provides that the aggregate number of shares of the Company’s Common Stock which may be subject to award may not exceed 637,500 subject to adjustment in certain circumstances to prevent dilution. As of December 31, 2003, the Company has issued a total of 211,596 restricted shares under the Omnibus Plan as compensation for certain employees. These shares carry dividend and voting rights. Sale of these shares is restricted prior to the date of vesting, which is three years from the date of the grant. Shares issued under this plan were recorded at their fair market value on the date of their grant with a corresponding charge to equity. The unearned portion is being amortized as compensation expense on a straight-line basis over the related vesting period. Compensation expense related to these grants was $363,000, $444,000 and $602,000 for 2003, 2002 and 2001, respectively. In addition to the granting of restricted shares, options to purchase 276,039 shares of the Company’s common stock have been granted under the Omnibus Plan as of December 31, 2003.

F-23

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13. STOCK OPTION PLANS (Continued)

Other pertinent information related to the options is as follows:

	December 31,
	2003				2002				2001
	Number		Weighted- Average Exercise Price		Number		Weighted- Average Exercise Price		Number		Weighted- Average Exercise Price
Under option, beginning of the year	313,988		$	11.95	285,943		$	10.95	239,553		$	11.00
Granted	40,250			16.50	81,950			14.42	71,550			10.60
Exercised	(865	)		9.90	(18,589	)		7.17	(1,232	)		10.09
Forfeited	(9,834	)		13.16	(35,316	)		12.06	(23,928	)		10.47
Under option, end of year	343,539			12.46	313,988			11.95	285,943			10.95
Exercisable at end of year	182,757		$	11.75	130,352		$	11.67	99,625		$	11.09
Weighted-average fair value per option of options granted during year			$	3.13			$	2.96			$	1.84

Information pertaining to options outstanding at December 31, 2003 is as follows:

		Options Outstanding			Options Exercisable
Range of Exercise Prices		Number Outstanding	Weighted- Average Contractual Life in Years	Weighted- Average Exercise Price	Number Outstanding	Weighted- Average Exercise Price
$	11.33	67,500	3.3	11.33	60,150	11.33
	15.94	22,327	4.0	15.94	22,327	15.94
	14.17	6,000	4.3	14.17	6,000	14.17
	10.39	600	5.1	10.39	480	10.39
	9.90	21,462	5.1	9.90	17,170	9.90
	10.11	6,000	5.3	10.11	4,800	10.11
	10.83	2,400	5.9	10.83	1,920	10.83
	10.38	56,000	6.1	10.38	33,600	10.38
	9.94	3,000	6.5	9.94	1,800	9.94
	10.50	44,550	7.1	10.50	17,820	10.50
	11.20	10,000	7.5	11.20	4,000	11.20
	13.25	8,000	8.2	13.25	1,600	13.25
	14.55	55,450	8.7	14.55	11,090	14.55
	16.50	40,250	9.3	16.50	—	—
		343,539	6.32	12.46	182,757	11.75

24

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13. STOCK OPTION PLANS (Continued)

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:

	Years Ended December 31,
	2003		2002		2001
Dividend yield	3.60	%	3.60	%	3.60	%
Expected life	7 years		7 years		10 years
Expected volatility	22.30	%	22.80	%	15.04	%
Risk-free interest rate	4.03	%	4.60	%	5.05	%

NOTE 14. EARNINGS PER SHARE

Presented below is a summary of the components used to calculate basic and diluted earnings per share:

	Years Ended December 31,
	2003		2002		2001
Net income	$	12,010	$	10,355	$	9,633
Weighted average number of common shares outstanding		9,772		9,859		9,214
Effect of dilutive options		66		50		36
Weighted average number of common shares outstanding used to calculate dilutive earnings per share		9,838		9,909		9,250

F-25

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15. COMMITMENTS AND CONTINGENT LIABILITIES

Loan Commitments

The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. They involve, to varying degrees, elements of credit risk and interest rate risk in excess of the amount recognized in the balance sheets.

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments. A summary of the Company’s commitments is as follows:

	December 31,
	2003		2002
	(Dollars in Thousands)
Commitments to extend credit	$	104,573	$	89,540
Financial standby letters of credit		2,536		5,315
	$	107,109	$	94,855

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the party.

Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. Collateral is required in instances which the Company deems necessary.

At December 31, 2003 and 2002, the carrying amount of liabilities related to the Company’s obligation to perform under financial standby letters of credit was insignificant. The Company has not been required to perform on any financial standby letters of credit and the Company has not incurred any losses on financial standby letters of credit for the years ended December 31, 2003 and 2002.

Contingencies

In the normal course of business, the Company is involved in various legal proceedings. In the opinion of management, any liability resulting from such proceedings would not have a material adverse effect on the Company’s financial statements.

F-26

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 16. CONCENTRATIONS OF CREDIT

The Banks make commercial, residential, construction, agricultural, agribusiness and consumer loans to customers primarily in counties in South and Southeast Georgia, North Florida and Southeast Alabama. A substantial portion of the Company’s customers’ abilities to honor their contracts is dependent on the business economy in the geographical area served by the Banks.

A substantial portion of the Company’s loans are secured by real estate in the Company’s primary market area. In addition, a substantial portion of the other real estate owned is located in those same markets. Accordingly, the ultimate collectibility of a substantial portion of the Company’s loan portfolio and the recovery of a substantial portion of the carrying amount of other real estate owned are susceptible to changes in market conditions in the Company’s primary market area.

Although the Company’s loan portfolio is diversified, there is a relationship in this region between the agricultural economy and the economic performance of loans made to nonagricultural customers. The Company’s lending policies for agricultural and nonagricultural customers require loans to be well-collateralized and supported by cash flows. Collateral for agricultural loans include equipment, crops, livestock and land. Credit losses from loans related to the agricultural economy is taken into consideration by management in determining the allowance for loan losses.

The Company has a concentration of funds on deposit at its two primary correspondent banks at December 31, 2003 as follows:

Noninterest-bearing accounts	$	28,412
Interest-bearing accounts	$	33,847

NOTE 17. REGULATORY MATTERS

The Banks are subject to certain restrictions on the amount of dividends that may be declared without prior regulatory approval. At December 31, 2003, approximately $7,664,000 of retained earnings were available for dividend declaration without regulatory approval.

The Company and the Banks are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Banks must meet specific capital guidelines that involve quantitative measures of the Company’s and Banks’ assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. Capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

F-27

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 17. REGULATORY MATTERS (Continued)

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Banks to maintain minimum amounts and ratios of total and Tier I capital to risk-weighted assets, as defined, and of Tier I capital to average assets, as defined. Management believes, as of December 31, 2003 and 2002, the Company and the Banks met all capital adequacy requirements to which they are subject.

As of December 31, 2003, the most recent notification from the regulatory authorities categorized the Banks as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Banks must maintain minimum total risk-based, Tier I risk-based and Tier I leverage ratios as set forth in the following table. There are no conditions or events since that notification that management believes have changed the Banks’ category. Prompt corrective action provisions are not applicable to bank holding companies.

The Company and Banks’ actual capital amounts and ratios are presented in the following table.

	Actual				For Capital Adequacy Purposes				To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
	(Dollars in Thousands)
As of December 31, 2003
Total Capital to Risk Weighted Assets:
Consolidated	$	136,022	15.60	%	$	69,748	8.00	%		- - - N/A- - -
American Banking Company	$	16,812	13.06	%	$	10,295	8.00	%	$	12,869	10.00	%
Heritage Community Bank	$	7,865	11.11	%	$	5,663	8.00	%	$	7,078	10.00	%
Bank of Thomas County	$	4,521	13.22	%	$	2,737	8.00	%	$	3,421	10.00	%
Citizens Security Bank	$	15,697	12.02	%	$	10,445	8.00	%	$	13,056	10.00	%
Cairo Banking Company	$	6,885	13.50	%	$	4,080	8.00	%	$	5,100	10.00	%
Southland Bank	$	18,285	12.58	%	$	11,627	8.00	%	$	14,534	10.00	%
Central Bank and Trust	$	5,012	11.33	%	$	3,538	8.00	%	$	4,423	10.00	%
First National Bank of South Georgia	$	7,077	11.08	%	$	5,111	8.00	%	$	6,389	10.00	%
Merchants and Farmers Bank	$	8,402	14.00	%	$	4,802	8.00	%	$	6,002	10.00	%
Tri-County Bank	$	7,093	16.93	%	$	3,351	8.00	%	$	4,189	10.00	%
First Bank of Brunswick	$	15,963	13.36	%	$	9,560	8.00	%	$	11,950	10.00	%

F-28

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 17. REGULATORY MATTERS (Continued)

	Actual				For Capital Adequacy Purposes				To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
	(Dollars in Thousands)
As of December 31, 2003 (Continued)
Tier I Capital to Risk Weighted Assets:
Consolidated	$	120,765	13.85	%	$	34,874	4.00	%		- - -N/A- - -
American Banking Company	$	15,200	11.81	%	$	5,148	4.00	%	$	7,722	6.00	%
Heritage Community Bank	$	6,979	9.86	%	$	2,831	4.00	%	$	4,247	6.00	%
Bank of Thomas County	$	4,085	11.94	%	$	1,368	4.00	%	$	2,052	6.00	%
Citizens Security Bank	$	14,059	10.77	%	$	5,222	4.00	%	$	7,833	6.00	%
Cairo Banking Company	$	6,244	12.24	%	$	2,040	4.00	%	$	3,060	6.00	%
Southland Bank	$	16,460	11.33	%	$	5,814	4.00	%	$	8,720	6.00	%
Central Bank and Trust	$	4,456	10.08	%	$	1,769	4.00	%	$	2,654	6.00	%
First National Bank of South Georgia	$	6,275	9.82	%	$	2,556	4.00	%	$	3,834	6.00	%
Merchants and Farmers Bank	$	7,648	12.74	%	$	2,401	4.00	%	$	3,601	6.00	%
Tri-County Bank	$	6,568	15.68	%	$	1,675	4.00	%	$	2,513	6.00	%
First Bank of Brunswick	$	14,464	12.10	%	$	4,780	4.00	%	$	7,170	6.00	%
Tier I Capital to Average Assets:
Consolidated	$	120,765	10.77	%	$	44,852	4.00	%		- - - N/A- - -
American Banking Company	$	15,200	8.47	%	$	7,178	4.00	%	$	8,973	5.00	%
Heritage Community Bank	$	6,979	8.04	%	$	3,472	4.00	%	$	4,340	5.00	%
Bank of Thomas County	$	4,085	8.65	%	$	1,889	4.00	%	$	2,361	5.00	%
Citizens Security Bank	$	14,059	8.79	%	$	6,398	4.00	%	$	7,997	5.00	%
Cairo Banking Company	$	6,244	7.45	%	$	3,352	4.00	%	$	4,191	5.00	%
Southland Bank	$	16,460	7.09	%	$	9,286	4.00	%	$	11,608	5.00	%
Central Bank and Trust	$	4,456	7.92	%	$	2,251	4.00	%	$	2,813	5.00	%
First National Bank of South Georgia	$	6,275	7.92	%	$	3,169	4.00	%	$	3,961	5.00	%
Merchants and Farmers Bank	$	7,648	8.60	%	$	3,557	4.00	%	$	4,447	5.00	%
Tri-County Bank	$	6,568	9.61	%	$	2,734	4.00	%	$	3,417	5.00	%
First Bank of Brunswick	$	14,464	10.29	%	$	5,623	4.00	%	$	7,028	5.00	%

F-29

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 17. REGULATORY MATTERS (Continued)

	Actual				For Capital Adequacy Purposes				To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
	(Dollars in Thousands)
As of December 31, 2002
Total Capital to Risk Weighted Assets:
Consolidated	$	127,577	14.87	%	$	68,649	8.00	%		- - -N/A- - -
American Banking Company	$	17,374	13.63	%	$	10,200	8.00	%	$	12,750	10.00	%
Heritage Community Bank	$	8,210	12.30	%	$	5,342	8.00	%	$	6,678	10.00	%
Bank of Thomas County	$	4,813	11.67	%	$	3,299	8.00	%	$	4,124	10.00	%
Citizens Security Bank	$	14,937	11.95	%	$	10,002	8.00	%	$	12,502	10.00	%
Cairo Banking Company	$	7,236	13.85	%	$	4,181	8.00	%	$	5,226	10.00	%
Southland Bank	$	19,782	14.13	%	$	11,198	8.00	%	$	13,998	10.00	%
Central Bank and Trust	$	5,721	13.04	%	$	3,509	8.00	%	$	4,386	10.00	%
First National Bank of South Georgia	$	6,772	11.21	%	$	4,833	8.00	%	$	6,041	10.00	%
Merchants and Farmers Bank	$	8,266	14.40	%	$	4,591	8.00	%	$	5,739	10.00	%
Tri-County Bank	$	6,589	16.20	%	$	3,254	8.00	%	$	4,067	10.00	%
First Bank of Brunswick	$	14,342	12.15	%	$	9,443	8.00	%	$	11,804	10.00	%
Tier I Capital to Risk Weighted Assets:
Consolidated	$	109,733	12.79	%	$	34,325	4.00	%		- - -N/A- - -
American Banking Company	$	15,776	12.37	%	$	5,100	4.00	%	$	7,650	6.00	%
Heritage Community Bank	$	7,375	11.04	%	$	2,671	4.00	%	$	4,007	6.00	%
Bank of Thomas County	$	4,296	10.42	%	$	1,649	4.00	%	$	2,474	6.00	%
Citizens Security Bank	$	13,366	10.69	%	$	5,001	4.00	%	$	7,501	6.00	%
Cairo Banking Company	$	6,577	12.58	%	$	2,090	4.00	%	$	3,136	6.00	%
Southland Bank	$	18,019	12.87	%	$	5,599	4.00	%	$	8,399	6.00	%
Central Bank and Trust	$	5,169	11.79	%	$	1,754	4.00	%	$	2,631	6.00	%
First National Bank of South Georgia	$	6,015	9.96	%	$	2,416	4.00	%	$	3,625	6.00	%
Merchants and Farmers Bank	$	7,543	13.14	%	$	2,295	4.00	%	$	3,443	6.00	%
Tri-County Bank	$	6,104	15.01	%	$	1,627	4.00	%	$	2,440	6.00	%
First Bank of Brunswick	$	12,861	10.90	%	$	4,722	4.00	%	$	7,083	6.00	%

F-30

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 17. REGULATORY MATTERS (Continued)

	Actual				For Capital Adequacy Purposes				To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
	(Dollars in Thousands)
As of December 31, 2002 (Continued)
Tier I Capital to Average Assets:
Consolidated	$	109,733	9.49	%	$	46,252	4.00	%		- - -N/A- - -
American Banking Company	$	15,776	9.02	%	$	6,996	4.00	%	$	8,745	5.00	%
Heritage Community Bank	$	7,375	9.21	%	$	3,203	4.00	%	$	4,004	5.00	%
Bank of Thomas County	$	4,296	8.37	%	$	2,053	4.00	%	$	2,566	5.00	%
Citizens Security Bank	$	13,366	8.01	%	$	6,675	4.00	%	$	8,343	5.00	%
Cairo Banking Company	$	6,577	8.09	%	$	3,252	4.00	%	$	4,065	5.00	%
Southland Bank	$	18,019	6.83	%	$	10,553	4.00	%	$	13,191	5.00	%
Central Bank and Trust	$	5,169	8.44	%	$	2,450	4.00	%	$	3,062	5.00	%
First National Bank of South Georgia	$	6,015	8.04	%	$	2,993	4.00	%	$	3,741	5.00	%
Merchants and Farmers Bank	$	7,543	8.11	%	$	3,720	4.00	%	$	4,650	5.00	%
Tri-County Bank	$	6,104	9.19	%	$	2,657	4.00	%	$	3,321	5.00	%
First Bank of Brunswick	$	12,861	9.29	%	$	5,538	4.00	%	$	6,922	5.00	%

NOTE 18. FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of a financial instrument is the current amount that would be exchanged between willing parties, other than in a forced liquidation. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair value is based on discounted cash flows or other valuation techniques. These techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. SFAS 107, Disclosures about Fair Value of Financial Instruments, excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.

The following methods and assumptions were used by the Company in estimating the fair value of its financial instruments.

Cash, Due From Banks, Interest-Bearing Deposits in Banks: The carrying amount of cash, due from banks and interest-bearing deposits in banks approximates fair value.

Securities: Fair value of securities is based on available quoted market prices. The carrying amount of equity securities with no readily determinable fair value approximates fair value.

F-31

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 18. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Loans: The carrying amount of variable-rate loans that reprice frequently and have no significant change in credit risk approximates fair value. The fair value of fixed-rate loans is estimated based on discounted contractual cash flows, using interest rates currently being offered for loans with similar terms to borrowers with similar credit quality. The fair value of impaired loans is estimated based on discounted contractual cash flows or underlying collateral values, where applicable.

Deposits: The carrying amount of demand deposits, savings deposits and variable-rate certificates of deposit approximates fair value. The fair value of fixed-rate certificates of deposit is estimated based on discounted contractual cash flows using interest rates currently being offered for certificates of similar maturities.

Federal Funds Purchased, Repurchase Agreements and Other Borrowings: The carrying amount of variable rate borrowings, federal funds purchased and securities sold under repurchase agreements approximate fair value. The fair value of fixed rate other borrowings are estimated based on discounted contractual cash flows using the current incremental borrowing rates for similar type borrowing arrangements.

Subordinated Deferrable Interest Debentures: The fair value of the Company’s fixed rate trust preferred securities are based on available quoted market prices.

Accrued Interest: The carrying amount of accrued interest approximates their fair value.

Off-Balance-Sheet Instruments: The carrying amount of commitments to extend credit and standby letters of credit approximates fair value. The carrying amount of the off-balance-sheet financial instruments is based on fees charged to enter into such agreements.

The carrying amount and estimated fair value of the Company’s financial instruments were as follows:

	December 31, 2003				December 31, 2002
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(Dollars in Thousands)
Financial assets:
Cash, due from banks and interest-bearing deposits in banks	$	80,480	$	80,480	$	123,077	$	123,077
Securities available for sale	$	190,595	$	190,595	$	178,303	$	178,303
Restricted stock	$	5,694	$	5,694	$	5,778	$	5,778
Loans	$	840,539	$	843,095	$	833,447	$	837,057
Allowance for loan losses		14,963		—		14,868		—
Loans, net	$	825,576	$	843,095	$	818,579	$	837,057
Accrued interest receivable	$	8,702	$	8,702	$	9,647	$	9,647

F-32

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 18. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

	December 31, 2003				December 31, 2002
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(Dollars in Thousands)
Financial liabilities:
Deposits	$	906,524	$	908,079	$	916,185	$	919,406
Federal funds purchased and securities sold under agreements to repurchase	$	8,211	$	8,211	$	8,204	$	8,204
Other borrowings	$	97,545	$	97,515	$	117,290	$	117,094
Accrued interest payable	$	1,728	$	1,728	$	2,395	$	2,395
Trust preferred securities	$	34,500	$	38,019	$	34,500	$	37,088

NOTE 19. CONDENSED FINANCIAL INFORMATION OF ABC BANCORP (PARENT COMPANY ONLY)

CONDENSED BALANCE SHEETS

DECEMBER 31, 2003 AND 2002

(Dollars in Thousands)

	2003		2002
Assets
Cash	$	1,547	$	3,535
Interest bearing deposits in banks		17,575		14,933
Investment in subsidiaries		125,477		128,286
Other assets		8,252		6,232
Total assets	$	152,851	$	152,986
Liabilities
Other borrowings	$	1,681	$	8,144
Other liabilities		3,057		2,858
Trust preferred securities		34,500		34,500
Total liabilities		39,238		45,502
Stockholders’ equity		113,613		107,484
Total liabilities and stockholders’ equity	$	152,851	$	152,986

F-33

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 19. CONDENSED FINANCIAL INFORMATION OF ABC BANCORP (PARENT COMPANY ONLY) (Continued)

CONDENSED STATEMENTS OF INCOME

YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001

(Dollars in Thousands)

	2003			2002			2001
Income
Dividends from subsidiaries	$	17,464		$	4,220		$	7,386
Interest		165			334			212
Fee income		10,440			9,865			9,252
Other income		2,049			1,416			1,002
Total income		30,118			15,835			17,852
Expense
Interest		3,536			3,650			955
Amortization and depreciation		839			1,129			1,599
Other expense		12,221			12,239			10,072
Total expense		16,596			17,018			12,626
Income (loss) before income tax benefits and equity in undistributed earnings of subsidiaries (distributions in excess of earnings)		13,522			(1,183	)		5,226
Income tax benefits		1,232			1,860			590
Income before equity in undistributed earnings of subsidiaries (distributions in excess of earnings)		14,754			677			5,816
Equity in undistributed earnings of subsidiaries (distributions in excess of earnings)		(2,744	)		9,678			3,817
Net income	$	12,010		$	10,355		$	9,633

F-34

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 19. CONDENSED FINANCIAL INFORMATION OF ABC BANCORP (PARENT COMPANY ONLY) (Continued)

CONDENSED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001

(Dollars in Thousands)

	2003			2002			2001
OPERATING ACTIVITIES
Net income	$	12,010		$	10,355		$	9,633
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		476			685			698
Amortization of intangible assets		—			—			299
Amortization of unearned compensation		363			444			602
(Undistributed earnings of subsidiaries) distributions in excess of earnings		2,744			(9,678	)		(3,817	)
(Increase) decrease in interest receivable		5			(9	)		(2	)
Increase (decrease) in interest payable		—			(58	)		58
Increase (decrease) in taxes payable		(564	)		4			(552	)
Provision for deferred taxes		80			(27	)		(284	)
(Increase) decrease in due from subsidiaries		(178	)		301			(61	)
Other operating activities		(709	)		624			(729	)
Total adjustments		2,217			(7,714	)		(3,788	)
Net cash provided by operating activities		14,227			2,641			5,845
INVESTING ACTIVITIES
Increase in interest-bearing deposits in banks		(2,642	)		(11,376	)		(3,557	)
Purchases of premises and equipment		(1,121	)		(369	)		(111	)
Contribution of capital to subsidiary bank		(1,050	)		—			(8,500	)
Proceeds from sale of premises and equipment		—			—			422
Net cash paid for purchased subsidiaries		—			—			(11,681	)
Net cash used in investing activities		(4,813	)		(11,745	)		(23,427	)
FINANCING ACTIVITIES
Repayment of other borrowings		(6,462	)		(1,463	)		(7,131	)
Purchase of treasury shares		(170	)		(3,469	)		—
Dividends paid		(4,885	)		(4,749	)		(4,262	)
Proceeds from other borrowings		—			—			14,738
Proceeds from issuance of trust preferred		—			—			34,500
Reduction in income taxes payable resulting from vesting of restricted shares		106			—			—
Proceeds from exercise of stock options		9			133			12
Net cash provided by (used in) financing activities		(11,402	)		(9,548	)		37,857
Net increase (decrease) in cash		(1,988	)		(18,652	)		20,275
Cash at beginning of year		3,535			22,187			1,912
Cash at end of year	$	1,547		$	3,535		$	22,187
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for interest	$	3,239		$	3,388		$	853

F-35

EX-10.17

Exhibit 10.17

AMENDED AND RESTATED

EXECUTIVE EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (the “Agreement”), is made and dated as of May 24, 1999 by and between ABC BANCORP, a Georgia corporation (“Employer”), and KENNETH J. HUNNICUTT, an individual resident of Moultrie, Georgia (“Executive”).

W I T N E S S E T H:

WHEREAS, Executive and Employer are parties to that certain Executive Employment Agreement dated as of September 20, 1994, as amended by the Amendment No.1 thereto dated as of September 30, 1996 (as so amended, the “Original Agreement”);

WHEREAS, Executive and Employer each wish to modify and amend and restate the Original Agreement in the manner set forth herein;

WHEREAS, Executive is and has been employed by Employer as its President and Chief Executive Officer and makes and has made valuable contributions to the profitability and financial strength of Employer;

WHEREAS, Employer desires to encourage Executive to continue to make valuable contributions to Employer’s business operations and not to seek or accept employment elsewhere;

WHEREAS, Executive desires to be assured of a secure minimum compensation from Employer for his services over a defined term;

WHEREAS, Employer desires to assure the continued services of Executive on behalf of Employer on an objective and impartial basis and without distraction or conflict of interest in the event of an attempt by any person to obtain control of Employer;

WHEREAS, Employer recognizes that when faced with a proposal for a change of control of Employer, Executive will have a significant role in helping the Board of Directors assess the options and advising Employer’s Board of Directors (the “Board”) on what is in the best interests of Employer and its shareholders, and it is necessary for Executive to be able to provide this advice and counsel without being influenced by the uncertainties of his own situation;

WHEREAS, Employer desires to provide fair and reasonable benefits to Executive on the terms and subject to the conditions set forth in this Agreement; and

WHEREAS, Employer desires reasonable protection of its confidential business and customer information which it has developed over the years at substantial expense and assurance that Executive will not compete with Employer for a reasonable period of time after termination of his employment with Employer, except as otherwise provided herein.

NOW, THEREFORE, in consideration of these premises, the mutual covenants and undertakings herein contained and the continued employment of Executive by Employer as its President and Chief Executive Officer, each intending to be legally bound, covenant and agree as follows:

1. Employment. Upon the terms and subject to the conditions set forth in this Agreement, Employer employs Executive as Employer’s President and Chief Executive Officer, and Executive accepts such employment.

2. Position and Duties. Executive agrees to serve as the President and Chief Executive Officer of Employer and to perform such duties in that office as may reasonably be assigned to him by the Board; provided, however, that such duties shall be performed in or from the offices of Employer currently located at Moultrie, Georgia, and shall be of the same character as those previously performed by Executive and generally associated with the office held by Executive. Executive shall not be required to be absent from the location of the principal executive offices of Employer on travel status or otherwise more than sixty (60) days in any calendar year. Employer shall not, without the written consent of Executive, relocate or transfer Executive to a location more than fifty (50) miles from his principal residence. Executive shall render services to Employer as its President and Chief Executive Officer in substantially the same manner and to substantially the same extent as Executive rendered his services to Employer before the date hereof. While employed by Employer, Executive shall devote substantially all his business time and efforts to Employer’s business and shall not engage in any other related business; provided, however, that Executive may use his discretion in fixing his hours and schedule of work consistent with the proper discharge of his duties.

3. Term. The term of this Agreement shall begin on the date hereof (the “Effective Date”) and, unless otherwise earlier terminated pursuant to Section 7 hereof, shall end on the date which is five (5) years following the Effective Date (such term shall herein be referred to as the “Term”); provided, however, that the term of this Agreement shall not expire prior to the expiration of twenty-four (24) months after the occurrence of a Change of Control (as hereinafter defined).

2

4. Compensation.

(A) Executive shall receive an annual salary of TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000) (“Base Compensation”) payable at regular intervals in accordance with Employer’s normal payroll practices now or hereafter in effect. Employer may consider and declare from time to time increases in the salary it pays Executive and thereby increase the Base Compensation. Prior to (but not after) a Change of Control, Employer may also declare decreases in the salary it pays Executive if the operating results of Employer are significantly less favorable than those for the fiscal year ended December 31, 1998, and Employer makes similar decreases in the salary it pays to other executive officers of Employer. After a Change of Control, Employer shall consider and declare salary increases based upon the following standards:

(1) Inflation;

(2) Adjustments to the salaries of other senior management personnel; and

(3) Past performance of Executive and the contribution which Executive makes to the business and profits of Employer during the Term.

Any and all increases or decreases in Executive’s salary pursuant to this Section 4(A) shall cause the level of Base Compensation to be increased or decreased by the amount of each such increase or decrease for purposes of this Agreement. The increased or decreased level of Base Compensation as provided in this Section 4(A) shall become the level of Base Compensation for the remainder of the Term of this Agreement until there is a further increase or decrease in Base Compensation as provided herein.

(B) In addition to the Base Compensation, Executive shall be awarded, for each fiscal year during the Term, an annual bonus (an “Annual Bonus”) either pursuant to a bonus or incentive plan of Employer or otherwise on terms no less favorable than those currently in effect as of the date hereof.

5. Compensation Pursuant to Plans. So long as Executive is employed by Employer pursuant to this Agreement, he shall be included as a participant in all present and future employee benefit, retirement and compensation plans generally available to employees of Employer, consistent with his Base Compensation and his position as President and Chief Executive Officer, including, without limitation, Employer’s pension plan, stock option plans, and hospitalization, major medical, disability and group life insurance plans, each of which Employer agrees to continue in effect on terms no less favorable than those currently in effect as of the date hereof (as permitted by law) during the Term of this Agreement (i) unless prior to a Change of Control the operating results of Employer are significantly less favorable than those for the fiscal year ended December 31, 1998, or (ii) unless (either before

3

or after a Change of Control) (a) changes in the accounting or tax treatment of such plans would adversely affect Employer’s operating results or financial condition in a material way, and (b) the Board concludes that modifications to such plans need to be made to avoid such adverse effects.

6. Expenses. So long as Executive is employed by Employer pursuant to this Agreement, Executive shall receive reimbursement from Employer for all reasonable business expenses incurred in the course of his employment by Employer, upon submission to Employer of written vouchers and statements for reimbursement. So long as Executive is employed by Employer pursuant to the terms of this Agreement, Employer shall continue in effect vacation policies applicable to Executive no less favorable from his point of view than those written vacation policies in effect on the date hereof. So long as Executive is employed by Employer pursuant to this Agreement, Executive shall be entitled to office space and working conditions no less favorable from his point of view than were in effect for him on the date hereof and the use of an automobile (together with the payment of related expenses) on terms no less favorable than those currently in effect as of the date hereof.

7. Termination. Subject to the respective continuing obligations of the parties, including, but not limited to, those set forth in Subsections 9(A), 9(B), 9(C) and 9(D) hereof, Executive’s employment by Employer hereunder may be terminated prior to the expiration of the Term of this Agreement as follows:

(A) Employer, by action of the Board and upon written notice to the Executive, may terminate Executive’s employment with Employer immediately for cause. For purposes of this Subsection 7(A), “cause” for termination of the Executive’s employment shall exist if the Executive has been convicted of a felony or a felony prosecution has been brought against the Executive or if the termination is evidenced by a resolution adopted in good faith by two-thirds of the Board that the Executive (a) intentionally and continually failed substantially to perform his reasonably assigned duties with the Company (other than a failure resulting from the Executive’s incapacity due to physical or mental illness or from the Executive’s assignment of duties that would constitute “Good Reason” as hereinafter defined) which failure continued for a period of at least thirty (30) days after a written notice of demand for substantial performance has been delivered to the Executive specifying the manner in which the Executive has failed substantially to perform, or (b) intentionally engaged in conduct which is demonstrably and materially injurious to the Company; provided, however, that (i) where the Executive has been terminated for cause because a felony prosecution has been brought against him and no conviction or plea of guilty or plea of nolo contendere or its equivalent results therefrom, then said termination shall no longer be deemed to have been for cause and the Executive shall be entitled to all the benefits provided by Sections 4 and 5 hereof from and after the date on which the prosecution of the Executive has been dismissed or a judgement of acquittal has been entered, whichever shall first occur, until the expiration of the Term; and (ii) no termination of the Executive’s employment shall be for cause as set forth in clause (b) above until (x) there shall have been delivered to the Executive a copy of a written notice setting forth that the Executive was

4

guilty of the conduct set forth in clause (b) and specifying the particulars thereof in detail, and (y) the Executive shall have been provided an opportunity to be heard in person by the Board (with the assistance of the Executive’s counsel if the Executive so desires). No act, nor failure to act, on the Executive’s part shall be considered “intentional” unless the Executive has acted or failed to act with a lack of good faith and with a lack of reasonable belief that the Executive’s action or failure to act was in the best interest of the Company.

(B) Executive, by written notice to Employer, may terminate his employment with Employer immediately for good reason. For purposes of this Subsection 7(B), “good reason” shall mean a good faith determination by Executive, in Executive’s sole and absolute judgment, that any one or more of the following events has occurred, without Executive’s express written consent, after a Change of Control:

(1) a change in Executive’s reporting responsibilities, titles or offices as in effect immediately prior to the Change of Control, or any removal of the Executive from, or any failure to re-elect the Executive to, any of such positions which has the effect of diminishing Executive’s responsibility or authority;

(2) a reduction by Employer in Executive’s Base Compensation as in effect immediately prior to the Change of Control or as the same may be increased from time to time or a change in the eligibility requirements or performance criteria under any bonus, incentive or compensation plan, program or arrangement under which Executive is covered immediately prior to the Change of Control which adversely affects Executive;

(3) Employer requires Executive to be based anywhere other than within fifty (50) miles of Executive’s job location at the time of the Change of Control, provided that if Executive’s job location at such time is not within fifty (50) miles of Employer’s principal executive offices, then Employer may thereafter require Executive to be based within such fifty (50) mile radius without such event constituting good reason hereunder;

(4) without replacement by a plan providing benefits to Executive equal to or greater than those discontinued, the failure by Employer to continue in effect, within its maximum stated term, any pension, bonus, incentive, stock ownership, purchase, option, life insurance, health, accident disability, or any other employee benefit plan, program or arrangement in which Executive is participating at the time of the Change of Control, or the taking of any action by Employer that would adversely affect Executive’s participation or materially reduce Executive’s benefits under any of such plans;

(5) the taking of any action by Employer that would materially adversely affect the physical conditions existing at the time of the Change of Control in or under which Executive performs his employment duties, provided that Employer may take

5

action with respect to such conditions after a Change of Control so long as such conditions are at least commensurate with the conditions in or under which an officer of Executive’s status would customarily perform his employment duties; or

(6) a material change in the fundamental business philosophy, direction, and precepts of Employer and its subsidiaries, considered as a whole, as the same existed prior to the Change of Control.

Any event described in this Subsection 7(B)(1) through (6) which occurs prior to a Change of Control but which Executive reasonably demonstrates (A) was at the request of a third party who has indicated an intention, or taken steps reasonably calculated, to effect a Change of Control or (B) otherwise arose in connection with, or in anticipation of, a Change of Control which actually occurs, shall constitute good reason for purposes hereof, notwithstanding that it occurred prior to a Change of Control.

(C) Executive, upon ninety (90) days written notice to Employer, may terminate his employment with Employer without good reason.

(D) Executive’s employment with Employer shall terminate in the event of Executive’s death or disability. For purposes of this Agreement, “disability” shall be defined as Executive’s inability by reason of illness or other physical or mental incapacity to perform the duties required by his employment for any consecutive one hundred eighty (180) day period.

(E) For purposes of this Agreement, a “Change in Control” shall have occurred if:

(1) a majority of the directors of the Company shall be persons other than persons: (a) for whose election proxies shall have been solicited by the Board, or (b) who are then serving as directors appointed by the Board to fill vacancies on the Board caused by death or resignation (but not by removal) or to fill newly-created directorships;

(2) a majority of the outstanding voting power of the Company shall have been acquired or beneficially owned (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended, or any successor rule thereto) by any person (other than the Company, a subsidiary of the Company or the Executive) or Group (as defined below), which Group does not include the Executive; or

(3) there shall have occurred:

(a) a merger or consolidation of the Company with or into

6

another corporation (other than (1) a merger or consolidation with a subsidiary of the Company or (2) a merger or consolidation in which (aa) the holders of voting stock of the Company immediately prior to the merger as a class continue to hold immediately after the merger at least a majority of all outstanding voting power of the surviving or resulting corporation or its parent and (bb) all holders of each outstanding class or series of voting stock of the Company immediately prior to the merger or consolidation have the right to receive substantially the same cash, securities or other property in exchange for their voting stock of the Company as all other holders of such class or series);

(b) a statutory exchange of shares of one or more classes or series of outstanding voting stock of the Company for cash, securities or other property;

(c) the sale or other disposition of all or substantially all of the assets of the Company (in one transaction or a series of transactions); or

(d) the liquidation or dissolution of the Company;

unless more than twenty-five percent (25%) of the voting stock (or the voting equity interest) of the surviving corporation or the corporation or other entity acquiring all or substantially all of the assets of the Company (in the case of a merger, consolidation or disposition of assets) or of the Company or its resulting parent corporation (in the case of a statutory share exchange) is beneficially owned by the Executive or a Group that includes the Executive.

For purposes of this Agreement, “Group” shall mean any two or more persons acting as a partnership, limited partnership, syndicate, or other group acting in concert for the purpose of acquiring, holding or disposing of voting stock of the Company.

8. Compensation Upon Termination. In the event of termination of Executive’s employment with Employer pursuant to Section 7 hereof, compensation shall continue to be paid by Employer to Executive as follows:

(A) In the event of termination pursuant to Subsection 7(A) or 7(C), compensation provided for herein (including Base Compensation and an Annual Bonus) shall continue to be paid, and Executive shall continue to participate in the employee benefit, retirement, compensation plans and other perquisites as provided in Sections 5 and 6 hereof, through and including the Date of Termination (as hereinafter defined) specified in the Notice of

7

Termination (as hereinafter defined). Any benefits payable under insurance, health, retirement and bonus plans as a result of Executive’s participation in such plans through such date shall be paid when due under those plans.

(B) In the event of termination pursuant to Subsection 7(B), compensation provided for herein (including Base Compensation and an Annual Bonus) shall continue to be paid, and Executive shall continue to participate in the employee benefit, retirement, compensation plans and other perquisites as provided in Sections 5 and 6 hereof, through the Date of Termination specified in the Notice of Termination. Any benefits payable under insurance, health, retirement and bonus plans as a result of Executive’s participation in such plans through such date shall be paid when due under those plans. In addition, Executive shall be entitled to continue to receive from Employer for three (3) additional 12-month periods (1) his Base Compensation at the rates in effect at the time of termination and (2) a Bonus Amount equal to the greater of (i) the most recent Annual Bonus paid or payable to Executive or, if greater, the Annual Bonus paid or payable for the full fiscal year ended prior to the fiscal year during which a Change of Control occurred or (ii) the average of the Annual Bonuses paid or payable during the three full fiscal years ended prior to the Date of Termination or, if greater, the three full fiscal years ended prior to the Change of Control (or, in each case, such lesser period for which Annual Bonuses were paid or payable to Executive), and during such periods, Employer shall maintain in full force and effect for the continued benefit of Executive each employee welfare benefit plan (as such term is defined in the Executive Retirement Income Security Act of 1974, as amended) in which Executive was entitled to participate immediately prior to the date of his termination, unless an essentially equivalent and no less favorable benefit is provided by a subsequent employer of Executive. If the terms of any employee welfare benefit plan of Employer or applicable laws do not permit continued participation by Executive, Employer will arrange to provide to Executive a benefit substantially similar to, and no less favorable than, the benefit he was entitled to receive under such plan at the end of the period of coverage.

(C) In the event of termination pursuant to Subsection 7(D), compensation provided for herein (including Base Compensation and an Annual Bonus) shall continue to be paid, and Executive shall continue to participate in the employee benefit, retirement, and compensation plans and other perquisites as provided in Sections 5 and 6 hereof, (1) in the event of Executive’s death, through the date of death, or (2) in the event of Executive’s disability, through the Date of Termination specified in the Notice of Termination. Any benefits payable under insurance, health, retirement and bonus plans as a result of Executive’s participation in such plans through such date shall be paid when due under those plans.

(D) Employer will permit Executive or his personal representative(s) or heirs, during a period of three (3) months following Executive’s termination of employment by Employer for the reasons set forth in Subsection 7(B) to require Employer, upon written request, to purchase all outstanding stock options previously granted to Executive under any Employer stock option plan then in effect whether or not such options are then exercisable or

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have terminated at a cash purchase price equal to the amount by which the aggregate “fair market value” of the shares subject to such options exceeds the aggregate option price for such shares. For purposes of this Agreement, the term “fair market value” shall mean the higher of (1) the average of the highest asked prices for the shares Employer’s common stock in the over-the-counter market as reported on the NASDAQ system if the shares are traded on such system for the thirty (30) business days preceding such termination, or (2) the average per share price actually paid for the most highly priced 1% of the Employer’s shares acquired in connection with the Change of Control of Employer by any person or group acquiring such control.

9. Restrictive Covenants. In order to induce Employer to enter into this Agreement, Executive hereby agrees as follows:

(A) While Executive is employed by Employer and for a period of two years after termination of such employment for reasons other than those set forth in Subsection 7(B) of this Agreement, Executive shall not divulge or furnish any trade secrets (as defined in §10-1-761 of the Official Code of Georgia Annotated) of Employer or any confidential information acquired by him while employed by Employer concerning the policies, plans, procedures or customers of Employer to any person, firm or corporation, other than Employer or upon its written request, or use any such trade secret or confidential information (which shall at all times remain the property of Employer) directly or indirectly for Executive’s own benefit or for the benefit of any person, firm or corporation other than Employer.

(B) For a period of two years after termination of Executive’s employment by Employer for reasons other than those set forth in Subsection 7(B) of this Agreement, Executive shall not directly or indirectly provide banking or bank-related services to, or solicit the banking or bank-related business of, any customer of Employer at the time of such provision of services or solicitation which Executive served either alone or with others while employed by Employer in any city, town, borough, township, village or other place in which Executive performed services for Employer while employed by it, or assist any actual or potential competitor of Employer to provide banking or bank-related services to or solicit any such customer’s banking or bank-related business in any such place.

(C) While Executive is employed by Employer and for a period of one year after termination of Executive’s employment by Employer for reasons other than those set forth in Subsection 7(B) of this Agreement, Executive shall not, directly or indirectly, as principal, agent, or trustee, or through the agency of any corporation, partnership, trade association, agent or agency, engage in any banking or bank-related business or venture which competes with the business of Employer as conducted during Executive’s employment by Employer within a radius of fifty (50) miles of Employer’s main office.

(D) If Executive’s employment by Employer is terminated for reasons other than those set forth in Subsection 7(B) of this Agreement, Executive will turn over immediately thereafter to Employer all business correspondence, letters, papers, reports, customers’ lists,

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financial statements, credit reports or other confidential information or documents of Employer or its affiliates in the possession or control of Executive, all of which writings are and will continue to be the sole and exclusive property of Employer or its affiliates.

If Executive’s employment by Employer is terminated during the Term of this Agreement for reasons set forth in Subsection 7(B) of this Agreement, Executive shall have no obligations to Employer with respect to trade secrets, confidential information or non-competition under this Section 9. Executive acknowledges that irreparable loss and injury would result to Employer upon the breach of any of the covenants contained in this Section 9 and that damages arising out of such breach would be difficult to ascertain. Executive hereby agrees that, in addition to all other remedies provided at law or at equity, Employer may petition and obtain from a court of law or equity both temporary and permanent injunctive relief to prevent a breach by Executive of any covenant contained in this Section 9.

10. Notice of Termination and Date of Termination. Any termination of Executive’s employment with Employer as contemplated by Section 7 hereof, except in the circumstances of Executive’s death, shall be communicated by written “Notice of Termination” by the terminating party to the other party hereto. Any “Notice of Termination” pursuant to Subsections 7(A), 7(B) or 7(D) shall indicate the specific provisions of this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for such termination. For purposes of this Agreement, “Date of Termination” shall mean: (A) if Executive’s employment is terminated because of disability, thirty (30) days after Notice of Termination is given (unless Executive shall have returned to the performance of Executive’s duties on a full-time basis during such thirty (30) day period); or (B) if Executive’s employment is terminated for cause, retirement, good reason or pursuant to Subsection 7(C) hereof, the date specified in the Notice of Termination; provided, however, that if within thirty (30) days after any such Notice of Termination is given, the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the Date of Termination shall be the date on which the dispute is finally resolved, either by mutual agreement of the parties or by a final judgment, order or decree of a court of competent jurisdiction (the time for appeal therefrom having expired and no appeal having been perfected).

11. Excess Parachute Payments and One Million Dollar Deduction Limit.

(A) Notwithstanding anything contained herein to the contrary, if any portion of the payments and benefits provided hereunder and benefits provided to, or for the benefit of, Executive under any other plan or agreement of Employer (such payments or benefits are collectively referred to as the “Payments”) would be subject to the excise tax (the “Excise Tax”) imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), or would be nondeductible by Employer pursuant to Section 280G of the Code, the Payments shall be reduced (but not below zero) if and to the extent necessary so that no portion of any Payment to be made or benefit to be provided to Executive shall be subject to the Excise Tax or shall be nondeductible by Employer pursuant to Section 280G of the Code

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(such reduced amount is hereinafter referred to as the “Limited Payment Amount”). Unless Executive shall have given prior written notice specifying a different order to Employer to effectuate the Limited Payment Amount, Employer shall reduce or eliminate the Payments, by first reducing or eliminating those payments or benefits which are not payable in cash and then by reducing or eliminating cash payments, in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time from the Determination (as hereinafter defined). Any notice given by Executive pursuant to the preceding sentence shall take precedence over the provisions of any other plan, arrangement or agreement governing Executive’s rights and entitlements to any benefits or compensation.

(B) An initial determination as to whether the Payments shall be reduced to the Limited Payment Amount pursuant to the Code and the amount of such Limited Payment Amount shall be made by an accounting firm at Employer’s expense selected by Employer which is designated as one of the six largest accounting firms in the United States (the “Accounting Firm”). The Accounting Firm shall provide its determination (the “Determination”), together with detailed supporting calculations and documentation to Employer and Executive within thirty (30) days of the Termination Date, if applicable, and if the Accounting Firm determines that no Excise Tax is payable by Executive with respect to a Payment or Payments, it shall furnish Executive with an opinion reasonably acceptable to Executive that no Excise Tax will be imposed with respect to any such Payment or Payments. Within ten (10) days of the delivery of the Determination to Executive, Executive shall have the right to dispute the Determination (the “Dispute”). If there is no Dispute, the Determination shall be binding, final and conclusive upon Employer and Executive subject to the application of Subsection 11(c) below.

(C) As a result of the uncertainty in the application of Sections 4999 and 280G of the Code, it is possible that the Payments to be made to, or provided for the benefit of, Executive either have been made or will not be made by Employer which, in either case, will be inconsistent with the limitations provided in Section 11(a) (hereinafter referred to as an “Excess Payment” or “Underpayment”, respectively). If it is established pursuant to a final determination of a court or an Internal Revenue Service (the “IRS”) proceeding which has been finally and conclusively resolved, that an Excess Payment has been made, such Excess Payment shall be deemed for all purposes to be a loan to Executive made on the date Executive received the Excess Payment and Executive shall repay the Excess Payment to Employer on demand (but not less than ten (10) days after written notice is received by Executive), together with interest on the Excess Payment at the “Applicable Federal Rate” (as defined in Section 1274(d) of the Code) from the date of Executive’s receipt of such Excess Payment until the date of such repayment. In the event that it is determined by (1) the Accounting Firm, Employer (which shall include the position taken by Employer, or together with its consolidated group, on its federal income tax return) or the IRS, (2) pursuant to a determination by a court, or (3) upon the resolution to Executive’s satisfaction of the Dispute, that an Underpayment has occurred, Employer shall pay an amount equal to the Underpayment to Executive within ten (10) days of such determination or resolution, together with interest on such amount at the Applicable Federal Rate from the date such amount would have been paid to Executive until the date of payment.

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(D) Notwithstanding anything contained herein to the contrary, if any portion of the Payments would be nondeductible by Employer pursuant to Section 162(m) of the Code, the Payments to be made to Executive in any taxable year of Employer shall be reduced (but not below zero) if and to the extent necessary so that no portion of any Payment to be made or benefit to be provided to Executive in such taxable year of Employer shall be nondeductible by Employer pursuant to Section 162(m) of the Code. The amount by which any Payment is reduced pursuant to the immediately preceding sentence, together with interest thereon at the Applicable Federal Rate, shall be paid by Employer to Executive on or before the fifth business day of the immediately succeeding taxable year of Employer, subject to the application of the limitations of the immediately preceding sentence and this Section 11. Unless Executive shall have given prior written notice specifying a different order to Employer to effectuate this Section 11, Employer shall reduce or eliminate the Payments in any one taxable year of Employer by first reducing or eliminating those payments or benefits which are not payable in cash and then by reducing or eliminating cash payments, in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time from the Section 162(m) Determination (as hereinafter defined). Any notice given by Executive pursuant to the preceding sentence shall take precedence over the provisions of any other plan, arrangement or agreement governing Executive’s rights and entitlements to any benefits or compensation.

(E) The determination as to whether the Payments shall be reduced pursuant to Section 11(d) hereof and the amount of the Payments to be made in each taxable year after the application of Section 11(d) hereof shall be made by the Accounting Firm at Employer’s expense. The Accounting Firm shall provide its determination (the “Section 162(m) Determination”), together with detailed supporting calculations and documentation to Employer and Executive within thirty (30) days of the termination date specified in the Notice of Termination. The Section 162(m) Determination shall be binding, final and conclusive upon Employer and Executive.

12. Legal Fees and Expenses. If a dispute arises regarding the termination of Executive pursuant to Section 7 hereof or as to the interpretation or enforcement of this Agreement and Executive obtains a final judgment in his favor in a court of competent jurisdiction or his claim is settled by Employer prior to the rendering of a judgment by such a court, all reasonable legal fees and expenses incurred by Executive in contesting or disputing any such termination or seeking to obtain or enforce any right or benefit provided for in this Agreement or otherwise pursuing his claim shall be paid by Employer, to the extent permitted by law.

13. Payments After Death. Should Executive die after termination of his employment with Employer while any amounts are payable to him hereunder, this Agreement shall inure to the benefit of and be enforceable by Executive’s executors,

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administrators, heirs, distributees, devisees and legatees and all amounts payable hereunder shall be paid in accordance with the terms of this Agreement to Executive’s devisee, legatee or other designee or, if there is no such designee, to his estate.

14. Notices. For purposes of this Agreement, notices and all other communications provided for herein shall be in writing and shall be deemed to have been given when delivered or mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

If to Executive:	Kenneth J. Hunnicutt
	766 Georgia Highway 111
	Moultrie, Georgia 31768
If to Employer:	ABC Bancorp
	310 First Street, S.E.
	Moultrie, Georgia 31768

or to such address as either party hereto may have furnished to the other party in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

15. Governing Law. The validity, interpretation, and performance of this Agreement shall be governed by the laws of the State of Georgia without giving effect to the conflicts of laws principles thereof.

16. Successors. Employer shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of Employer, by agreement in form and substance satisfactory to Executive, to expressly assume and agree to perform this Agreement in the same manner and same extent that Employer would be required to perform it if no such succession had taken place. Failure of Employer to obtain such agreement prior to the effectiveness of any such succession shall be a material intentional breach of this Agreement and shall entitle Executive to terminate his employment with Employer for good reason pursuant to Subsection 7(B) hereof. As used in this Agreement, “Employer” shall mean Employer as hereinbefore defined and any successor to its business or assets as aforesaid.

17. Modification. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by Executive and Employer. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of dissimilar provisions or conditions at the same or any prior subsequent time. No agreements or representation, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement.

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18. Severability. The invalidity or unenforceability of any provisions of this Agreement shall not affect the validity or enforceability of any other provisions of this Agreement which shall remain in full force and effect.

19. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same agreement.

20. Assignment. This Agreement is personal in nature and neither party hereto shall, without consent of the other, assign or transfer this Agreement or any rights or obligations hereunder except as provided in Sections 13 and 16 above. Without limiting the foregoing, Executive’s right to receive compensation hereunder shall not be assignable or transferable, whether by pledge, creation of a security interest or otherwise, other than a transfer by his will or by the laws of descent or distribution as set forth in Section 13 hereof, and in the event of any attempted assignment or transfer contrary to this Section 20, Employer shall have no liability to pay any amounts so attempted to be assigned or transferred.

21. Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto and supersedes all prior agreements, if any, understandings and arrangements, oral or written, between the parties hereto with respect to the subject matter hereof.

IN WITNESS WHEREOF, Executive has executed, sealed and delivered this Agreement, and Employer has caused this Agreement to be executed, sealed and delivered, all as of the day and year first above set forth.

	ABC BANCORP
[CORPORATE SEAL]
Attest:	By:	/s/ Doyle Weltzbarker
	Its:	Chairman
/s/ Sara R. Hall
Secretary
		/s/ Kenneth J. Hunnicutt    (SEAL)
		KENNETH J. HUNNICUTT

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EX-10.18

Exhibit 10.18

EXECUTION COPY

AMENDMENT NO. 1 TO

AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT

THIS AMENDMENT NO. 1 (the “Amendment”) to the AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT dated as of May 24, 1999 (the “Employment Agreement”; capitalized terms not otherwise defined in this Amendment shall have the meanings ascribed to such terms in the Employment Agreement), between KENNETH J. HUNNICUTT, an individual resident of the State of Georgia (“Executive”), and ABC BANCORP, a Georgia corporation (“Employer”), is made as of the 31^st day of December, 2003 by and between Executive and Employer.

W I T N E S S E T H:

WHEREAS, Executive and Employer each desire to amend the Employment Agreement to amend the Term and to provide for the execution and delivery on January 1, 2005 of an Executive Consulting Agreement between Executive and Employer in the form attached hereto as Exhibit A and incorporated herein by this reference, all as more particularly set forth herein;

NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements set forth herein, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto hereby agree as follows:

SECTION 1. Amendment to Section 3 of the Employment Agreement. Section 3 of the Employment Agreement is hereby amended by deleting Section 3 of the Employment Agreement in its entirety and substituting the following in lieu thereof:

“3. Term. The term of this Agreement shall begin on the date hereof (the “Effective Date”) and, unless otherwise earlier terminated pursuant to Section 7 hereof, shall end on January 1, 2005 (such term shall herein be referred to as the “Term”), on which date Executive and Employer each agree to execute and deliver the form of Executive Consulting Agreement attached hereto as Exhibit A and incorporated herein by this reference; provided, however, that the term of this Agreement shall not expire prior to the expiration of twenty-four (24) months after the occurrence of a Change of Control (as hereinafter defined).”

SECTION 2. Representations, Warranties and Acknowledgements. Each party hereto represents, warrants and acknowledges to the other party hereto that (a) no interest in the Employment Agreement has been sold, hypothecated, assigned or otherwise transferred by such party, and there are no defaults by such party under the Employment Agreement as of the date hereof; and (b) except as otherwise expressly set forth herein, such party did not rely and has not relied upon any representation, warranty, acknowledgement or statement made by such other party or by any of such other party’s agents, representatives or attorneys with regard to the subject matter, basis or effect of this Amendment.

SECTION 3. Voluntary Agreement. The parties to this Amendment agree that they have thoroughly discussed all aspects of this Amendment with their own attorneys, that they have read and fully understand all the provisions of this Amendment, and that they are voluntarily entering into this Amendment.

SECTION 4. Further Assurances. Executive shall execute and deliver to Employer such further documents and do such other acts and things as Employer may reasonably require in order to carry out the purposes of this Amendment.

SECTION 5. Effect on Employment Agreement. Except as otherwise specifically provided herein, the Employment Agreement shall not be amended and shall remain in full force and effect.

SECTION 6. Binding Effect; Headings. The covenants contained herein shall bind, and the benefits hereof shall inure to, the respective heirs, personal representatives, successors and permitted assigns, as the case may be, of the parties hereto. The Section headings contained in this Amendment are for reference purposes only and will not affect in any way the meaning or interpretation of this Amendment.

SECTION 7. Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Georgia, without regard to the conflicts of laws principles thereof.

SECTION 8. Counterparts. This Amendment may be executed simultaneously in counterparts, each of which will be deemed an original, and all of which together will constitute one and the same instrument. Executed counterparts may be delivered via facsimile transmission.

IN WITNESS WHEREOF, Executive has executed and delivered this Amendment, and Employer has caused this Amendment to be executed and delivered by its duly authorized officer, all as of the day and year first above written.

/s/ Kenneth J. Hunnicutt
KENNETH J. HUNNICUTT
ABC BANCORP
By:	/s/ Edwin W. Hortman, Jr.
Its:	President

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EXHIBIT A

EXECUTIVE CONSULTING AGREEMENT

THIS EXECUTIVE CONSULTING AGREEMENT (the “Agreement”) is made and entered into as of the 1^st day of January, 2005 between KENNETH J. HUNNICUTT, an individual resident of the State of Georgia (“Consultant”), and ABC BANCORP, a Georgia corporation (the “Company”).

W I T N E S S E T H:

WHEREAS, on December 31, 2003, the Company and Consultant amended that certain Amended and Restated Executive Employment Agreement dated as of May 24, 1999 between the Company and Consultant (the “Employment Agreement”) pursuant to the terms and conditions of Amendment No.1 thereto, to which this Agreement is attached as Exhibit A;

WHEREAS, Consultant has heretofore served as the Company’s Chairman of the Board, Chief Executive Officer and President, and Consultant desires to change his role with the Company in order to make himself available to provide consulting services to the Company and facilitate its retention of a new chief executive officer;

WHEREAS, simultaneously herewith Consultant has voluntarily resigned as an executive officer and employee of the Company; and

WHEREAS, the Company and Consultant each desire to enter into this Agreement to set forth in writing the terms and conditions of Consultant’s relationship with the Company from and after the date hereof;

NOW, THEREFORE, in consideration of the premises and of the promises and agreements hereinafter set forth, the parties hereto, intending to be legally bound, do hereby agree as follows:

SECTION 1. Term. The term of this Agreement shall begin on the date hereof (the “Effective Date”) and, unless otherwise earlier terminated pursuant to Section 3 hereof, shall end on the date of the Company’s annual meeting of shareholders held during calendar year 2007, but in no event later than May 31, 2007 (hereinafter referred to as the “Term”).

SECTION 2. Consulting Services. Consultant hereby agrees to provide such consulting services to the Company during the Term with respect to such matters pertaining to the Company’s business and affairs as may be requested of Consultant from time to time by the Company’s Board of Directors (the “Board”) or President, provided that Consultant shall not be obligated to consult on any matter that would not be appropriate for an executive-level consultant or a member of senior management. In this regard, Consultant shall be generally available to provide consulting services to the Board during normal business hours, upon reasonable notice, throughout the Term, it being the intent of the parties that Consultant may provide such services

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on or off the Company’s premises, unless it shall be necessary for Consultant to be on-site at a specific Company location in connection with a specific project (e.g., such as attending management meetings); provided, however, that Consultant may (a) serve as a director or officer of any charitable, religious, civic, educational, or trade organization, and (b) provide consulting services to any other person or entity that is not engaged in a Competing Business, in each case to the extent that such activities, individually or in the aggregate, do not interfere with the performance of Consultant’s duties and responsibilities under this Agreement. In performing Consultant’s services hereunder, Consultant shall be an independent contractor and shall not be, or be deemed to be, an employee or agent of the Company. Except as may be specifically authorized in a writing in advance by the President or the Board of Directors of the Company, Consultant shall have no right or authority to act for or on behalf of the Company or otherwise to enter into any agreements or make any commitments with third parties binding upon the Company.

SECTION 3. Early Termination.

3.1 Right to Terminate. The Term may be terminated prior to its expiration upon the occurrence of any of the following events:

(a) the mutual written agreement of the parties hereto to terminate the Term;

(b) the Company’s termination of the Term, upon written notice to Consultant, for “good cause,” which shall exist (i) if Consultant is convicted of (from which no appeal may be taken), or pleads guilty to, any act of fraud, misappropriation or embezzlement, or any felony, (ii) if Consultant has engaged in conduct or activity materially damaging to the business of the Company (it being understood, however, that neither conduct nor activity pursuant to Consultant’s exercise of his good faith business judgment nor unintentional physical damage to any property of the Company by Consultant shall be a ground for such a determination by the Company), or (iii) Consultant breaches the terms of this Agreement and, within ten (10) days following written notice by the Company to Consultant of such breach, the Consultant has failed to cure such breach; or

(c) the Consultant’s termination of the Term, upon written notice to the Company, if the Company breaches the terms of this Agreement and, within ten (10) days following written notice by the Consultant to the Company of such breach, the Company has failed to cure such breach.

3.2 Consequences of Good Cause Termination and Wrongful Termination. In the event that the Company terminates the Term for “good cause” pursuant to Section 3.1(b) hereof, then, in addition to other remedies available to the Company at law or in equity, the Company shall have no further obligation (a) to make any payments to Consultant under Section 4.1 hereof or (b) to provide Consultant with office space or secretarial assistance under Section 4.3 hereof, provided that in such event the Company shall continue to offer COBRA continuation coverage to Consultant, at Consultant’s expense, for the remainder of the unexpired Term. In the event that the Company terminates Consultant hereunder alleging “good cause” under Section 3.1(b) hereof and it is subsequently determined pursuant to the arbitration

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procedure provided for in Section 10.9 hereof that the termination was not for “good cause”, then the Company shall be obligated to promptly pay Consultant, as liquidated damages and in lieu of all other amounts payable hereunder or damages arising therefrom, (i) a lump-sum amount (retroactive to the date of termination) equal to all remaining unpaid compensation pursuant to Section 4.1 hereof which would otherwise have been payable to Consultant during the Term had the Agreement not been terminated; and (ii) all of Consultant’s reasonable attorneys’ fees and costs incurred in connection therewith. In the event that the Consultant terminates the Term in accordance with Section 3.1(c), then, in addition to other remedies available to the Consultant at law or in equity, the Consultant shall have no further obligation (a) to provide services to the Company pursuant to Section 2 or 5 hereof or (b) to comply with the provisions of Section 6.2 hereof.

3.3 Consequences of Mutual Early Termination. In the event that the Company and Consultant mutually agree to terminate the Term pursuant to Section 3.1(a) hereof, the parties’ respective rights and obligations under this Agreement shall terminate unless and except to the extent that the parties expressly agree otherwise at the time of such mutual termination.

SECTION 4. Compensation and Related Matters.

4.1 Compensation. During the Term, the Company hereby agrees to pay to Consultant the sum of $13,333.00 per month, such payments to be made on or before the 1^st calendar day of each month commencing February 1, 2005. The amounts payable under this Section 4.1 shall be paid without deduction for state or federal withholding taxes, social security or other like sums, and, by virtue of being an independent contractor hereunder, Consultant alone shall be responsible for the payment of all such taxes and sums levied or assessed with respect to the amounts paid to Consultant hereunder.

4.2 Out-of-Pocket Expenses. Consultant shall be entitled to receive reimbursement for all reasonable expenses incurred during the Term in connection with the fulfillment of Consultant’s duties hereunder upon presentation of appropriate vouchers therefor, provided that Consultant has complied with all reasonable policies and procedures relating to the reimbursement of such expenses as shall, from time to time, be established by the Company for its employees.

4.3 Office Space and Secretarial Assistance. During the Term, the Company shall provide Consultant with reasonable office space and secretarial assistance.

4.4 Acknowledgement of Bylaw Indemnification. The Company and Consultant acknowledge and agree that nothing herein is intended to modify, diminish or affect Consultant’s right to indemnification in the manner contemplated by the Company’s Bylaws in effect as of the Effective Date.

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SECTION 5. Board Position and Other Positions. During the Term, Consultant shall continue to serve as Chairman of the Board (without any additional compensation therefor except for customary directors’ fees). Simultaneously with the execution of this Agreement, Consultant has resigned as an officer and employee of the Company and as an officer, director, manager, trustee, agent and employee of each of the Company’s subsidiaries and affiliates.

SECTION 6. Restrictive Covenants

6.1 Acknowledgments. Consultant acknowledges that the covenants herein are essential to the negotiated consulting arrangements contemplated hereby, are necessary to protect the goodwill and other value of the Company and are given by Consultant in consideration of the compensation payable hereunder to Consultant by the Company and that irreparable injury would befall the Company should Consultant breach such covenants. Consultant further acknowledges that (i) his prior services as an employee of the Company were, and his services hereunder are, of a special, unique and extraordinary character and that his positions with the Company have placed him in a position of confidence and trust with the key relationships and employees of the Company and have allowed him access to Confidential Information (as hereinafter defined), (ii) the type and periods of restrictions imposed by the covenants in this Section 6 are fair and reasonable and that such restrictions will not prevent Consultant from earning a livelihood, (iii) Consultant is receiving payments hereunder during the operative term of these covenants in consideration of these covenants, (iv) the Company is engaged in the business of providing banking and bank-related services; (v) the Company conducts its business activity in and throughout the Area (as hereinafter defined); and (vi) Competing Businesses (as hereinafter defined) are engaged in businesses like and similar to the business of the Company.

6.2 Covenants. Having acknowledged the foregoing, Consultant covenants and agrees with the Company that, during the Term and for a period of one (1) year thereafter, he will not, directly or indirectly, (i) disclose or use for his own benefit or the benefit of any other person, except as may be necessary in the performance of his duties hereunder, any Confidential Information disclosed to the Consultant or of which Consultant became aware by reason of his prior employment with or service as a consultant to the Company; (ii) solicit or divert or appropriate to any Competing Business, directly or indirectly, on his own behalf or in the service of or on behalf of any Competing Business, or attempt to solicit or divert or appropriate to any such Competing Business, within the Area, any person or entity who was a customer of the Company at any time during the preceding twelve (12) months of Consultant’s relationship with the Company and with whom Consultant had contact during such period; (iii) employ or attempt to employ or assist anyone else in employing in any Competing Business in the Area any managerial or key employee of the Company (whether or not such employment is full time or is pursuant to a written contract with the Company); and (iv) engage in or render any services to or be employed by any Competing Business in the Area in the capacity of officer, managerial or executive employee, director, management consultant or shareholder (other than as the owner of less than five (5%) percent of the shares of a publicly-owned corporation.

6.3 Return of Information. Consultant agrees that, upon the termination of this Agreement for any reason whatsoever, he will not take with him or retain without written authorization from the Company’s Chairman of the Board or President, and he will promptly

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deliver to the Company, originals and all copies of all papers, files or other documents containing any Confidential Information and all other property belonging to the Company and in his possession or under his control. Notwithstanding the immediately preceding sentence, Consultant shall be permitted to retain any personal memorabilia belonging to him, notes taken by him as a member of the Board, or any committee thereof, and any other such materials which Consultant deems to be of value to him in the event the same may be needed by Consultant in connection with the defense of any lawsuit, action or proceeding brought against him for any reason whatsoever.

6.4 Definitions and Construction. For purposes of this Agreement, (i) “Area” means a fifty (50) mile radius of Moultrie, Georgia; (ii) “Competing Business” means the business of providing banking or bank-related services; and (iii) “Confidential Information” means any and all data and information relating to the business of the Company (whether or not constituting a trade secret) that is, has been or will be disclosed to the Consultant or of which Consultant became or becomes aware as a consequence of or though his relationship as an employee of or consultant to the Company and that has value to the Company and is not generally known by its competitors. Confidential Information shall not include any data or information that has been voluntarily disclosed to the public by the Company (except where such public disclosure has been made without authorization by the Company), that has been independently developed and disclosed by others, or that otherwise enters the public domain through lawful means. Confidential Information includes, without limitation, information relating to the Company’s financial affairs, processes, services, customers, employees or employees’ compensation, research, development, purchasing, accounting or marketing. The parties hereto agree that all references to the Company in this Section 6 shall include, unless the context otherwise requires, all subsidiaries and controlled affiliates of the Company.

6.5 Survival of Restrictive Covenants. The covenants and obligations of Consultant under this Section 6 are independent of and separate from the other provisions hereof and shall survive any earlier termination of the Term in accordance with Section 3.1 hereof, unless the parties expressly agree in writing to the contrary.

SECTION 7. Representations and Warranties of Consultant. The Consultant represents and warrants that:

(a) this Agreement constitutes the legal, valid and binding obligation of the Consultant, enforceable against him in accordance with its terms;

(b) Consultant has no claims or rights against, or interests in, the Company, its subsidiaries or its controlled affiliates, other than (i) those cancelled, exchanged, waived, superseded and replaced by this Agreement, and (ii) Consultant’s rights as a holder of the Company’s common stock and of options to acquire common stock pursuant to employee stock options granted to the Consultant; and

(c) Consultant has no right, title, interest or claim in, to or under any Confidential Information or trade secrets of the Company.

SECTION 8. Waivers. Neither party shall be deemed, as a consequence of any act,

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delay, failure, omission, forbearance or other indulgences granted from time to time by such party, or for any other reason, (i) to have waived, or to be estopped from exercising, any of such party’s rights or remedies under this Agreement, or (ii) to have modified, changed, amended, terminated, rescinded, or superseded any of the terms of this Agreement.

SECTION 9. Injunctive Relief. The Consultant acknowledges (i) that any violation of this Agreement will result in irreparable injury to the Company, (ii) that damages at law would not be reasonable or adequate compensation to the Company for violation of this Agreement, and (iii) that the Company shall be entitled to have the provisions of this Agreement specifically enforced by preliminary and permanent injunctive relief without the necessity of proving actual damages and without posting bond or other security, as well as to an equitable accounting of all earnings, profits and other benefits arising out of any such violation.

SECTION 10. Miscellaneous.

10.1 Binding Effect. This Agreement shall inure to the benefit of and shall be binding upon Consultant, Consultant’s executor, administrator, heirs, personal representatives and assigns, and upon the Company and its successors and assigns; provided, however, that the obligations and duties of Consultant may not be assigned or delegated.

10.2 Governing Law. This Agreement shall be deemed to be made in, and in all respects shall be interpreted, construed and governed by and in accordance with, the laws of the State of Georgia, without giving effect to any conflicts of laws principles.

10.3 Invalid Provisions. The parties herein hereby agree that the agreements, provisions and covenants contained in this Agreement are severable and divisible, that none of such agreements, provisions or covenants depends upon any other provision, agreement or covenant for its enforceability, and that each such agreement, provision and covenant constitutes an enforceable obligation between the Company and Consultant. Consequently, the parties hereto agree that neither the invalidity nor the unenforceability of any agreement, provision or covenant of this Agreement shall affect the other agreements, provisions or covenants hereof, and this Agreement shall remain in full force and effect and be construed in all respects as if such invalid or unenforceable agreement, provision or covenant were omitted.

10.4 Headings. The section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

10.5 Notices. All notices and other communications under this Agreement shall be in writing and may be given by any of the following methods: (i) personal delivery; (ii) registered or certified mail, postage prepaid, return receipt requested; or (iii) overnight delivery service requiring acknowledgment of receipt. Any such notice or communication shall be sent to the appropriate party at its address given below (or at such other address for such party as shall be specified by notice given hereunder):

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If to Consultant, addressed to:

Mr. Kenneth J. Hunnicutt

766 Georgia Highway 111

Moultrie, Georgia 31768

If to the Company, addressed to:

ABC Bancorp

24 Second Ave., S.E.

Moultrie, Georgia 31768

Attention: Chief Executive Officer

All such notices and communications shall be deemed received (i) upon actual receipt thereof by the addressee, or (ii) upon actual delivery thereof to the appropriate address as evidenced by an acknowledged receipt.

10.6 Facsimile Signature; Counterparts. This Agreement may be executed by facsimile signature and in one or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument.

10.7 Waiver of Breach. The waiver by the Company of a breach of any provision, agreement or covenant of this Agreement by Consultant shall not operate or be construed as a waiver of any prior or subsequent breach of the same or any other provision, agreement or covenant by Consultant.

10.8 Amendment. This Agreement may not be amended, modified or supplemented except by written agreement of the parties hereto.

10.9 Arbitration. Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be settled by arbitration in Moultrie, Georgia in accordance with the commercial arbitration rules of the American Arbitration Association then in effect. The decision of the arbitrators shall be final and binding as to any matter submitted to them under this Agreement, and judgment on any award rendered by the arbitrators may be entered in any court having jurisdiction thereof.

10.10 Entire Agreement; Termination of Employment Agreement. This Agreement (together with any document or agreement referred to herein) constitutes the full and entire understanding and agreement between the parties with regard to the subject matter hereof and supersedes and replaces all prior agreements (written or oral) by and between, and all contractual rights of, the Company and Consultant.

10.11 Representations and Warranties of the Company. The Company hereby represents and warrants to the Consultant that: (i) this Agreement has been duly authorized by the Board, executed and delivered by the Company, and constitutes the valid and binding agreement of the Company, enforceable against it in accordance with its terms; and (ii)

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the Company has the full power authority to execute, deliver and perform this Agreement and has taken all necessary action to secure all approvals required in connection herewith.

10.12 Attorneys’ Fees. If there is any legal action, arbitration or proceeding between Consultant and the Company arising from or based on this Agreement or the interpretation or enforcement of any provisions hereof, then the unsuccessful party to such action, arbitration or proceeding shall pay to the prevailing party all costs and expenses, including, without limitation, reasonable attorneys’ fees, incurred by such prevailing party in such action, arbitration or proceeding, in any appeal in connection therewith and in any action or proceeding taken to enforce any judgment or order so obtained by the prevailing party. If such prevailing party recovers a judgment in any such action, arbitration, proceeding or appeal, then such costs, expenses and attorneys’ fees shall be included in and as a part of such judgment.

IN WITNESS WHEREOF, Consultant has executed and delivered this Agreement, and the Company has caused this Agreement to be duly executed and delivered by its officer thereunto duly authorized, all as of the day and year first written above.

KENNETH J. HUNNICUTT
ABC BANCORP
By:
Name:	Edwin W. Hortman, Jr.
Title:	President

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EX-10.19

Exhibit 10.19

EXECUTION COPY

EXECUTIVE EMPLOYMENT AGREEMENT

THIS EXECUTIVE EMPLOYMENT AGREEMENT (the “Agreement”), is entered into as of the 31^st day of December, 2003, by and between ABC BANCORP, a Georgia corporation (“Employer”), and EDWIN W. HORTMAN, JR., an individual resident of the State of Georgia (“Executive”).

W I T N E S S E T H:

WHEREAS, Employer wishes to employ Executive as its President and Chief Operating Officer, and Executive wishes to serve in such position, on the terms and conditions set forth herein;

WHEREAS, Executive desires to be assured of a secure minimum compensation from Employer for his services over a defined term;

WHEREAS, Employer desires to assure the continued services of Executive on behalf of Employer on an objective and impartial basis and without distraction or conflict of interest in the event of an attempt by any person or entity to obtain control of Employer;

WHEREAS, Employer desires to provide fair and reasonable benefits to Executive on the terms and subject to the conditions set forth in this Agreement; and

WHEREAS, Employer desires reasonable protection of its confidential business and customer information which it has developed over the years at substantial expense and assurance that Executive will not compete with Employer for a reasonable period of time after termination of his employment with Employer, except as otherwise provided herein;

NOW, THEREFORE, in consideration of these premises, the mutual covenants and undertakings herein contained, Employer and Executive, each intending to be legally bound, covenant and agree as follows:

1. Employment. Upon the terms and subject to the conditions set forth in this Agreement, Employer employs Executive as its President and Chief Operating Officer, and Executive hereby accepts such employment.

2. Position and Duties. Executive agrees to serve as the President and Chief Operating Officer of Employer as set forth in Section 1 hereof and to perform such duties as may reasonably be assigned to him by the Board of Directors (the “Board”) or the Chief Executive Officer of Employer; provided, however, that such duties shall be of the same character as those generally associated with the office held by Executive. Employee shall be based, and shall

perform his duties, at Employer’s principal executive offices, which are currently located in Moultrie, Georgia, and Employer shall not, without the written consent of Executive, relocate or transfer Executive to a location other than its principal executive offices. During the Term of this Agreement, Executive agrees that he will serve Employer faithfully and to the best of his ability and that he will devote his full business time, attention and skills to Employer’s business; provided, however, that the foregoing shall not be deemed to restrict Executive from devoting a reasonable amount of time and attention to the management of his personal affairs and investments, so long as such activities do not interfere with the responsible performance of Executive’s duties hereunder; and provided further, however, that Executive may serve as a director or officer of any charitable, religious, civic, educational, or trade organizations to the extent that such activities, individually or in the aggregate, do not interfere with the performance of Executive’s duties and responsibilities under this Agreement.

3. Term. The term of Executive’s employment under this Agreement shall commence on the date hereof (the “Effective Date”), and shall continue thereafter for a continuously (on a daily basis) renewing, three (3) year term, without any further action by either Employer or Executive, unless either Executive or Employer shall provide written notice to the other parties hereto not to renew such term, specifying in such notice the date of such non-renewal, in which case this Agreement shall expire on the date that is three (3) years after the date specified in such non-renewal notice. Notwithstanding the foregoing, this Agreement may be earlier terminated by Employer or Executive in accordance with the terms of Section 8 hereof; provided, however, that, notwithstanding any notice by Employer not to extend, the Term shall not expire prior to the expiration of twelve (12) months after the occurrence of a Change of Control (as defined in Subsection 23(B) hereof); and provided further, however, that this Agreement shall automatically terminate (and the Term shall thereupon end) without notice when Executive attains 65 years of age. For purposes of this Agreement, references to the “Term” of the Executive’s employment hereunder shall mean the period commencing on the Effective Date and ending at the end of such three-year term.

4. Compensation.

(A) Executive shall receive an annual salary of Two Hundred Fifteen Thousand Dollars ($215,000.00) (“Base Compensation”) payable at regular intervals in accordance with Employer’s normal payroll practices now or hereafter in effect. Employer may consider and declare from time to time increases in the salary it pays Executive and thereby increase the Base Compensation. Any and all increases in Executive’s salary pursuant to this Section 4(A) shall cause the level of Base Compensation to be increased by the amount of each such increase for purposes of this Agreement. The increased level of Base Compensation as provided in this Section 4(A) shall become the level of Base Compensation for the remainder of the Term until there is a further increase in Base Compensation as provided herein.

(B) In addition to his Base Compensation, Executive shall be awarded, during each calendar year during the Term hereof, an annual bonus (an “Annual Bonus”) either pursuant to a bonus or incentive plan of Employer or otherwise on terms no less favorable than those awarded to other executive officers of Employer.

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5. Other Benefits. So long as Executive is employed by Employer pursuant to this Agreement, he shall be included as a participant in all present and future employee benefit, retirement and compensation plans of Employer generally available to its employees, consistent with his Base Compensation and his position with Employer, including, without limitation, Employer’s 401(k) Profit Sharing Plan, and Executive and his dependents shall be included in Employer’s hospitalization, major medical, disability and group life insurance plans. Executive acknowledges that, notwithstanding any of the provisions of this Agreement, any of Employer’s benefit plans and programs may be modified from time to time and that Employer is not required to continue any plan or program currently in effect or adopted hereafter; provided, however, that each of the above benefits shall continue in effect on terms no less favorable than those for other executive officers of Employer (as permitted by law) during the Term hereof.

6. Expenses. So long as Executive is employed by Employer pursuant to this Agreement, Executive shall receive reimbursement from Employer for all reasonable business expenses incurred in the course of his employment by Employer upon proper submission to Employer of written vouchers and statements for reimbursement. In addition, Employer shall (A) provide to Executive an automobile and pay for all costs associated therewith during the Term hereof, and (B) reimburse Executive for all mileage driven by Executive in his personal automobile in connection with his duties hereunder in accordance with Employer’s mileage reimbursement policy as in effect from time to time. Employer shall also use its reasonable best efforts to provide to Executive a country club membership for business and personal use and shall pay for all initiation fees and monthly dues related thereto; provided, however, that, if such membership is not already owned by Executive as of the date hereof, then such membership shall be and remain the sole property of Employer.

7. Vacation. Executive shall be entitled to four (4) weeks paid vacation during each calendar year of Executive’s employment hereunder.

8. Termination. Subject to the respective continuing obligations of the parties hereto, including, without limitation, those set forth in Subsections 10(A), 10(B), 10(C) and 10(D) hereof, Executive’s employment by Employer hereunder may be terminated prior to the expiration of the Term hereof as follows:

(A) Employer, by action of the Board and upon written notice to Executive, may terminate Executive’s employment with Employer immediately for cause. For purposes of this Subsection 8(A), “cause” for termination of Executive’s employment shall exist (a) if Executive is convicted of (from which no appeal may be taken), or pleads guilty or nolo contendere to, any act of fraud, misappropriation or embezzlement, or any felony, (b) if, in the determination of the Board, Executive has engaged in gross or willful misconduct materially damaging to the business of Employer (it being understood, however, that neither conduct pursuant to Executive’s exercise of his good faith business judgment nor unintentional physical damage to any property of Employer by Executive shall be a ground for such a determination by the Board), or (c) if Executive has failed, without reasonable cause, to follow reasonable written instructions of the Board consistent with Executive’s position with Employer and, after written notice from the Board of such failure, Executive at any time thereafter again so fails.

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(B) Executive, by written notice to Employer, may terminate his employment with Employer immediately for good reason. For purposes of this Subsection 8(B), “good reason” for termination shall mean a good faith determination by Executive, in Executive’s sole and absolute judgment, that any one or more of the following events has occurred, without Executive’s express written consent:

(1) after a Change of Control, a change in Executive’s reporting responsibilities, titles or offices as in effect immediately prior to the Change of Control, or any removal of Executive from, or any failure to re-elect Executive to, any of Executive’s positions that he held immediately prior to the Change of Control, which has the effect of diminishing Executive’s responsibility or authority;

(2) after a Change of Control, a reduction by Employer in Executive’s Base Compensation as in effect immediately prior to the Change of Control or as the same may be increased from time to time or a change in the eligibility requirements or performance criteria under any bonus, incentive or compensation plan, program or arrangement under which Executive is covered immediately prior to the Change of Control which adversely affects Executive;

(3) at the time of a Change of Control, Employer requires Executive to be based anywhere other than within a fifty (50) mile radius of Moultrie, Georgia;

(4) after a Change of Control and without replacement by a plan providing benefits to Executive substantially equal to or greater than those discontinued, the failure by Employer to continue in effect, within its maximum stated term, any pension, bonus, incentive, stock ownership, purchase, option, life insurance, health, accident, disability, or any other employee benefit plan, program or arrangement in which Executive is participating at the time of the Change of Control, or the taking of any action by Employer after a Change of Control that would adversely affect Executive’s participation or materially reduce Executive’s benefits under any of such plans;

(5) after a Change of Control, the taking of any action by Employer that would materially adversely affect the physical conditions existing at the time of the Change of Control in or under which Executive performs his employment duties, provided that Employer may take action with respect to such conditions after a Change of Control so long as such conditions are at least commensurate with the conditions in or under which an officer of Executive’s status would customarily perform his employment duties; or

(6) after a Change of Control, a material change in the fundamental business philosophy, direction and precepts of Employer and its subsidiaries, considered as a whole, as the same existed prior to the Change of Control.

Any event described in Subsection 8(B)(1) through (6) hereof which occurs prior to a Change of Control but which Executive reasonably demonstrates (x) was at the request of a third party who has indicated an intention, or taken steps reasonably calculated, to effect a Change of Control or

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(y) otherwise arose in connection with, or in anticipation of, a Change of Control which actually occurs, shall constitute good reason for purposes hereof, notwithstanding that it occurred prior to a Change of Control.

(C) Executive, upon ninety (90) days written notice to Employer, may terminate his employment with Employer without good reason.

(D) Employer, upon ninety (90) days written notice to Executive, may terminate Executive’s employment with Employer without cause.

(E) Executive’s employment with Employer shall terminate in the event of Executive’s death or disability. For purposes of this Agreement, “disability” shall be defined as Executive’s inability by reason of illness or other physical or mental incapacity to perform the duties required by his employment for any consecutive one hundred eighty (180) day period.

9. Compensation Upon Termination. In the event of termination of Executive’s employment with Employer pursuant to Section 8 hereof, compensation shall continue to be paid by Employer to Executive as follows:

(A) In the event of a termination pursuant to Subsection 8(A) or Subsection 8(C) hereof, compensation provided for herein (including, without limitation, Base Compensation and an Annual Bonus) shall continue to be paid, and Executive shall continue to participate in the employee benefit, retirement, compensation plans and other perquisites as provided in Section 5 hereof, through and including the Date of Termination (as hereinafter defined) specified in the Notice of Termination (as hereinafter defined). Any benefits payable under insurance, health, retirement and bonus plans as a result of Executive’s participation in such plans through the Date of Termination specified in the Notice of Termination shall be paid when due under such plans.

(B) In the event of a termination pursuant to Subsection 8(B) or Subsection 8(D) hereof, compensation provided for herein (including, without limitation, Base Compensation and an Annual Bonus) shall continue to be paid, and Executive shall continue to participate in the employee benefit, retirement, compensation plans and other perquisites as provided in Section 5 hereof, through the Date of Termination specified in the Notice of Termination, and any benefits payable under insurance, health, retirement and bonus plans as a result of Executive’s participation in such plans through the Date of Termination specified in the Notice of Termination shall be paid when due under such plans. In addition, if the event of termination pursuant to Subsection 8(B) hereof occurs within twelve (12) months after the date of a Change of Control, then, subject to the terms of Section 12 hereof, (1) Executive shall be entitled to continue to receive from Employer for three (3) additional 12-month periods his Base Compensation at the rates in effect at the time of termination plus an Annual Bonus in an amount equal to at least forty percent (40%) of such Base Compensation as of the date of the event of termination, payable in accordance with Employer’s standard payment practices then existing; (2) Executive shall be entitled to continue to participate for three (3) additional 12-month periods in each employee welfare benefit plan (as such term is defined in the Employment Retirement Income Security Act of 1974, as amended) in which Executive was entitled to participate immediately prior to the date of his termination, unless an essentially equivalent and no less

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favorable benefit is provided by a subsequent employer of Executive, provided that if the terms of any such employee welfare benefit plan or applicable laws do not permit continued participation by Executive, Employer will arrange to provide to Executive a benefit substantially similar to, and no less favorable than, the benefit he was entitled to receive under such plan at the end of the period of coverage; (3) Employer shall contribute the maximum contributions allowable under Employer’s 401(k) Profit Sharing Plan, or any successor plans thereto, for the benefit of Executive; and (4) Executive shall be entitled to receive payment from Employer for reasonable relocation expenses if Executive relocates within five hundred (500) miles of his job location at the time of such Change of Control if such relocation occurs within one hundred eighty (180) days after the Date of Termination specified in the Notice of Termination.

(C) In the event of a termination pursuant to Subsection 8(E) hereof, compensation provided for herein (including, without limitation, Base Compensation and an Annual Bonus) shall continue to be paid, and Executive shall continue to participate in the employee benefit, retirement, and compensation plans and other perquisites as provided in Section 5 hereof, (1) in the event of Executive’s death, through the date of death, or (2) in the event of Executive’s disability, through the Date of Termination specified in the Notice of Termination. Any benefits payable under insurance, health, retirement and bonus plans as a result of Executive’s participation in such plans through the date of death or the Date of Termination specified in the Notice of Termination, as the case may be, shall be paid when due under those plans.

(D) Employer will permit Executive or his personal representative(s) or heirs, during a period of ninety (90) days following the Date of Termination of Executive’s employment by Employer (as specified in the Notice of Termination) for the reasons set forth in Subsection 8(B) or Subsection 8(D) hereof, to purchase all of the stock of Employer that would be issuable under all outstanding stock options, if any, previously granted by Employer to Executive under any Employer stock option plan then in effect, whether or not such options are then exercisable, at a cash purchase price equal to the purchase price as set forth in such outstanding stock options.

10. Restrictive Covenants.

(A) Executive acknowledges that (1) Employer has separately bargained and paid additional consideration for the restrictive covenants herein; and (2) Employer will provide certain benefits to Executive hereunder in reliance on such covenants in view of the unique and essential nature of the services Executive will perform on behalf of Employer and the irreparable injury that would befall Employer should Executive breach such covenants.

(B) Executive further acknowledges that his services are of a special, unique and extraordinary character and that his position with Employer will place him in a position of confidence and trust with employees of Employer and its subsidiaries and affiliates and with Employer’s other constituencies and will allow him access to trade secrets and confidential information concerning Employer and its subsidiaries and affiliates.

(C) Executive further acknowledges that the type and periods of restrictions imposed by the covenants in this Section 10 are fair and reasonable and that such restrictions will not prevent Executive from earning a livelihood.

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(D) Having acknowledged the foregoing, Executive covenants and agrees with Employer as follows:

(1) For a period of two (2) years after the termination of Executive’s employment by Employer for any reason or for no reason, Executive shall not divulge or furnish any confidential information of Employer acquired by him while employed by Employer to any person, firm or corporation, other than to Employer or upon its written request, or use any such confidential information (which shall at all times remain the property of Employer) directly or indirectly for Executive’ own benefit or for the benefit of any person, firm or corporation other than Employer. For purposes hereof, the term “confidential information” means data and information relating to the Banking Business (as hereinafter defined) (which does not rise to the status of a Trade Secret, as such term is defined in Section 10-1-761 of the Official Code of Georgia Annotated) which is or has been disclosed to Executive or of which Executive became aware as a consequence of or through Executive’s relationship to Employer and which has value to Employer and is not generally known to its competitors. Without limiting the foregoing, “confidential information” shall include: (a) all items of information that could be classified as a Trade Secret pursuant to Georgia law; (b) the names, addresses and banking requirements of the customers of Employer or its subsidiaries and the nature and amount of business done with such customers; (c) the names and addresses of employees and other business contacts of Employer or its subsidiaries; (d) the particular names, methods and procedures utilized by Employer or its subsidiaries in the conduct and advertising of their business; (e) application, operating system, communication and other computer software and derivatives thereof, including, without limitation, sources and object codes, flow charts, coding sheets, routines, subrouting and related documentation and manuals of Employer or its subsidiaries; and (f) marketing techniques, purchasing information, pricing policies, loan policies, quoting procedures, financial information, customer data and other materials or information relating to Employer’s or its subsidiaries’ manner of doing business. Confidential information shall not include any data or information that has been voluntarily disclosed to the public by Employer (except where such public disclosure has been made by Executive without authorization) or that has been independently developed and disclosed by others, or that otherwise enters the public domain through lawful means.

(2) Executive hereby agrees that he will not directly or indirectly disclose to anyone, or use or otherwise exploit for his own benefit or for the benefit of anyone other than Employer and its subsidiaries any trade secrets (as defined in §10-1-761 of the Official Code of Georgia Annotated) of Employer for as long as they remain trade secrets.

(3) While Executive is employed by Employer and for a period of one (1) year after termination of Executive’s employment pursuant to Subsection 8(A), 8(C) or 8(E) hereof, Executive shall not (except on behalf of or with the prior written consent of Employer), on Executive’s own behalf or in the service or on behalf of others, solicit, divert or appropriate, or attempt to solicit, divert or appropriate, directly or by assisting

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others, any Banking Business from any of the customers of Employer or its subsidiaries, including actively sought prospective customers, with whom Executive has or had material contact during the last two (2) years of Executive’s employment, for purposes of providing products or services that are competitive with those provided by Employer or its subsidiaries. The term “Banking Business” shall mean the business conducted by Employer and its subsidiaries, which is the business of banking, including the solicitation of time and demand deposits and the making of residential, consumer, commercial and corporate loans.

(4) While Executive is employed by Employer and for a period of one (1) year after termination of Executive’s employment pursuant to Subsection 8(A), 8(C) or 8(E) hereof, Executive shall not, either directly or indirectly, on his own behalf or in the service or on behalf of others, as an executive employee or in any other capacity which involves duties and responsibilities similar to those undertaken for Employer, engage in any business which is the same as or essentially the same as the Banking Business within a fifty (50) mile radius of Moultrie, Georgia.

(5) While Executive is employed by Employer and for a period of one (1) year after termination of Executive’s employment pursuant to Subsection 8(A), 8(C) or 8(E) hereof, Executive will not on Executive’s own behalf or in the service or on behalf of others, solicit, recruit or hire away, or attempt to solicit, recruit or hire away, directly or by assisting others, any employee of Employer or its subsidiaries, whether or not such employee is a full-time employee or a temporary employee of Employer or its subsidiaries and whether or not such employment is pursuant to written agreement and whether or not such employment is for a determined period or is at will.

(6) If Executive’s employment is terminated pursuant to Subsection 8(A), 8(C) or 8(E) hereof, and Executive subsequently (a) solicits, diverts or appropriates, or attempts to solicit, divert or appropriate, directly or by assisting others, on Executive’s own behalf or in the service or on behalf of others, any Banking Business from any of the customers of Employer or its subsidiaries, including actively sought prospective customers, with whom Executive has or had material contact during the last two (2) years of Executive’s employment, for purposes of providing products or services that are competitive with those provided by Employer or its subsidiaries, (b) engages, either directly or indirectly, on his own behalf or in the service or on behalf of others, as an executive employee or in any other capacity which involves duties and responsibilities similar to those undertaken for Employer, in any business which is the same as or essentially the same as the Banking Business within a fifty (50) mile radius of Moultrie, Georgia, or (c) solicits, recruits or hires away, or attempts to solicit, recruit or hire away, directly or by assisting others, on Executive’s own behalf or in the service or on behalf of others, any employee of Employer or its subsidiaries, whether or not such employee is a full-time employee or a temporary employee of Employer or its subsidiaries and whether or not such employment is pursuant to written agreement and whether or not such employment is for a determined period or is at will, then, in addition to any other remedies available to Employer hereunder, Employer may immediately terminate and shall not be required to continue on behalf of the Executive or his dependents and

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beneficiaries any compensation provided for herein (including, without limitation, Base Compensation and any Annual Bonus) and any employee benefit, retirement and compensation plans and other prerequisites provided in Section 5 hereof other than those benefits that Employer may be required to maintain for Executive under applicable federal or state law.

(7) If Executive’s employment is terminated pursuant to Subsection 8(B) or Subsection 8(D) hereof, then Executive may thereafter (a) solicit, divert or appropriate, or attempt to solicit, divert or appropriate, directly or by assisting others, on Executive’s own behalf or in the service or on behalf of others, any Banking Business from any of the customers of Employer or its subsidiaries, including actively sought prospective customers, with whom Executive has or had material contact during the last two (2) years of Executive’s employment, for purposes of providing products or services that are competitive with those provided by Employer or its subsidiaries, (b) engage, either directly or indirectly, on his own behalf or in the service or on behalf of others, as an executive employee or in any other capacity which involves duties and responsibilities similar to those undertaken for Employer, in any business which is the same as or essentially the same as the Banking Business within a fifty (50) mile radius of Moultrie, Georgia, or (c) solicit, recruit or hire away, or attempt to solicit, recruit or hire away, directly or by assisting others, on Executive’s own behalf or in the service or on behalf of others, any employee of Employer or its subsidiaries, whether or not such employee is a full-time employee or a temporary employee of Employer or its subsidiaries and whether or not such employment is pursuant to written agreement and whether or not such employment is for a determined period or is at will; provided, however, that if Executive engages in the activities described in clause (a), (b) or (c) of this Subsection 10(D)(7), then Employer may immediately terminate and shall not be required to continue on behalf of Executive or his dependents and beneficiaries any compensation provided for herein (including, without limitation, Base Compensation, any Annual Bonus and any payments pursuant to Subsection 9(B) hereof) and any employee benefit, retirement and compensation plans and other perquisites provided in Section 5 hereof other than those benefits that Employer may be required to maintain for Executive under applicable federal or state law.

(8) If Executive’s employment by Employer is terminated for any reason or for no reason, Executive will turn over immediately thereafter to Employer all business correspondence, letters, papers, reports, customer lists, financial statements, credit reports or other confidential information or documents of Employer in the possession or control of Executive, all of which writings are and will continue to be the sole and exclusive property of Employer.

(E) Executive acknowledges that irreparable loss and injury would result to Employer upon the breach of any of the covenants contained in this Section 10 and that damages arising out of such breach would be difficult to ascertain. Executive hereby agrees that, in addition to all other remedies provided at law or in equity, Employer may petition and obtain from a court of law or equity, without the necessity of proving actual damages and without posting any bond or other security, both temporary and permanent injunctive relief to prevent a breach by Executive

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of any covenant contained in this Section 10, and shall be entitled to an equitable accounting of all earnings, profits and other benefits arising out of any such breach. In the event that the provisions of this Section 10 should ever be deemed to exceed the time, geographic or any other limitations permitted by applicable law, then such provisions shall be deemed reformed to the maximum extent permitted thereby.

11. Notice of Termination and Date of Termination. Any termination of Executive’s employment with Employer as contemplated by Section 8 hereof, except in the circumstances of Executive’s death, shall be communicated by written notice of termination (the “Notice of Termination”) by the terminating party to the other party hereto. Any Notice of Termination given pursuant to Subsections 8(A), 8(B) or 8(E) hereof shall indicate the specific provisions of this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for such termination. Any Notice of Termination given pursuant to Subsection 8(D) hereof shall indicate the provision of this Agreement relied upon, but need not state any basis for such termination. For purposes of this Agreement, “Date of Termination” shall mean: (A) if Executive’s employment is terminated because of disability, thirty (30) days after Notice of Termination is given (unless Executive shall have returned to the performance of Executive’s duties on a full-time basis during such thirty (30) day period); or (B) if Executive’s employment is terminated for cause, good reason or pursuant to Subsection 8(C) or Subsection 8(D) hereof, the date specified in the Notice of Termination; provided, however, that if within thirty (30) days after any such Notice of Termination is given, the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the Date of Termination shall be the date on which the dispute is finally resolved, either by mutual agreement of the parties or by a final judgment, order or decree of a court of competent jurisdiction (the time for appeal therefrom having expired and no appeal having been perfected).

12. Excess Parachute Payments and One Million Dollar Deduction Limit.

(A) Notwithstanding anything contained herein to the contrary, if any portion of the payments and benefits provided hereunder and benefits provided to, or for the benefit of, Executive under any other plan or agreement of Employer (such payments or benefits are collectively referred to as the “Payments”) would be subject to the excise tax (the “Excise Tax”) imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), or would be nondeductible by Employer pursuant to Section 280G of the Code, the Payments shall be reduced (but not below zero) if and to the extent necessary so that no portion of any Payment to be made or benefit to be provided to Executive shall be subject to the Excise Tax or shall be nondeductible by Employer pursuant to Section 280G of the Code (such reduced amount is hereinafter referred to as the “Limited Payment Amount”). Unless Executive shall have given prior written notice specifying a different order to Employer to effectuate the Limited Payment Amount, Employer shall reduce or eliminate the Payments, by first reducing or eliminating those payments or benefits which are not payable in cash and then by reducing or eliminating cash payments, in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time from the Determination (as hereinafter defined). Any notice given by Executive pursuant to the preceding sentence shall take precedence over the provisions of any other plan, arrangement or agreement governing Executive’s rights and entitlements to any benefits or compensation.

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(B) An initial determination as to whether the Payments shall be reduced to the Limited Payment Amount pursuant to the Code and the amount of such Limited Payment Amount shall be made by an accounting firm at Employer’s expense selected by Employer which is designated as one of the four largest accounting firms in the United States (the “Accounting Firm”). The Accounting Firm shall provide its determination (the “Determination”), together with detailed supporting calculations and documentation to Employer and Executive within thirty (30) days of the Termination Date, if applicable, and if the Accounting Firm determines that no Excise Tax is payable by Executive with respect to a Payment or Payments, it shall furnish Executive with an opinion reasonably acceptable to Executive that no Excise Tax will be imposed with respect to any such Payment or Payments. Within ten (10) days of the delivery of the Determination to Executive, Executive shall have the right to dispute the Determination (the “Dispute”). If there is no Dispute, the Determination shall be binding, final and conclusive upon Employer and Executive subject to the application of Subsection 12(C) below.

(C) As a result of the uncertainty in the application of Sections 4999 and 280G of the Code, it is possible that the Payments to be made to, or provided for the benefit of, Executive either have been made or will not be made by Employer which, in either case, will be inconsistent with the limitations provided in Section 12(A) hereof (hereinafter referred to as an “Excess Payment” or “Underpayment”, respectively). If it is established pursuant to a final determination of a court or an Internal Revenue Service (the “IRS”) proceeding which has been finally and conclusively resolved that an Excess Payment has been made, such Excess Payment shall be deemed for all purposes to be a loan to Executive made on the date Executive received the Excess Payment, and Executive shall repay the Excess Payment to Employer on demand (but not less than ten (10) days after written notice is received by Executive), together with interest on the Excess Payment at the “Applicable Federal Rate” (as defined in Section 1274(d) of the Code) from the date of Executive’s receipt of such Excess Payment until the date of such repayment. In the event that it is determined (1) by the Accounting Firm, Employer (which shall include the position taken by Employer, or together with its consolidated group, on its federal income tax return) or the IRS; (2) pursuant to a determination by a court; or (3) upon the resolution of the Dispute to Executive’s satisfaction, that an Underpayment has occurred, Employer shall pay an amount equal to the Underpayment to Executive within ten (10) days of such determination or resolution, together with interest on such amount at the Applicable Federal Rate from the date such amount would have been paid to Executive until the date of payment.

(D) Notwithstanding anything contained herein to the contrary, if any portion of the Payments would be nondeductible by Employer pursuant to Section 162(m) of the Code, the Payments to be made to Executive in any taxable year of Employer shall be reduced (but not below zero) if and to the extent necessary so that no portion of any Payment to be made or benefit to be provided to Executive in such taxable year of Employer shall be nondeductible by Employer pursuant to Section 162(m) of the Code. The amount by which any Payment is reduced pursuant to the immediately preceding sentence, together with interest thereon at the Applicable Federal Rate, shall be paid by Employer to Executive on or before the fifth business

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day of the immediately succeeding taxable year of Employer, subject to the application of the limitations of the immediately preceding sentence and this Section 12. Unless Executive shall have given prior written notice specifying a different order to Employer to effectuate this Section 12, Employer shall reduce or eliminate the Payments in any one taxable year of Employer by first reducing or eliminating those payments or benefits which are not payable in cash and then by reducing or eliminating cash payments, in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time from the Section 162(m) Determination (as hereinafter defined). Any notice given by Executive pursuant to the immediately preceding sentence shall take precedence over the provisions of any other plan, arrangement or agreement governing Executive’s rights and entitlements to any benefits or compensation.

(E) The determination as to whether the Payments shall be reduced pursuant to Section 12(D) hereof and the amount of the Payments to be made in each taxable year after the application of Section 12(D) hereof shall be made by the Accounting Firm at Employer’s expense. The Accounting Firm shall provide its determination (the “Section 162(m) Determination”), together with detailed supporting calculations and documentation to Employer and Executive within thirty (30) days of the termination date specified in the Notice of Termination. The Section 162(m) Determination shall be binding, final and conclusive upon Employer and Executive.

13. Payments After Death. Should Executive die after termination of his employment with Employer while any amounts are payable to him hereunder, this Agreement shall inure to the benefit of and be enforceable by Executive’s executors, administrators, heirs, distributees, devisees and legatees, and all amounts payable hereunder shall be paid in accordance with the terms of this Agreement to Executive’s devisee, legatee or other designee or, if there is no such designee, to his estate.

14. Full Settlement. The respective obligations of the parties hereto to make payments or otherwise to perform hereunder shall not be affected by any rights of set-off, counterclaim, recoupment, defense or other claim, right or action which one party hereto may have against the other party hereto. In no event shall Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts which may be payable to Executive by Employer hereunder.

15. Notices. For purposes of this Agreement, notices and all other communications provided for herein shall be in writing and shall be deemed to have been given when delivered or mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

If to Executive:	Edwin W. Hortman, Jr.
	39 Cherokee Road
	Moultrie, Georgia 31768

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If to Employer:	ABC Bancorp
	24 Second Avenue, S.E.
	Moultrie, Georgia 31768
	Attention: Chief Executive Officer

or to such address as either party hereto may have furnished to the other party in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

16. Governing Law. The validity, interpretation and performance of this Agreement shall be governed by the laws of the State of Georgia, without giving effect to the conflicts of laws principles thereof.

17. Successors. Employer shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of Employer, by agreement in form and substance reasonably satisfactory to Executive, to expressly assume and agree to perform this Agreement in the same manner and same extent that Employer would be required to perform it if no such succession had taken place. Failure of Employer to obtain such agreement prior to the effectiveness of any such succession shall be a material, intentional breach of this Agreement and shall entitle Executive to terminate his employment with Employer for good reason pursuant to Subsection 9(B) hereof. All references to Employer in this Agreement shall include, unless the context otherwise requires, all subsidiaries and controlled affiliates of Employer.

18. Modification and Waiver. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by Executive and Employer. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of dissimilar provisions or conditions at the same or any prior subsequent time. No agreements or representation, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement.

19. Severability. The invalidity or unenforceability of any provisions of this Agreement shall not affect the validity or enforceability of any other provisions of this Agreement, which shall remain in full force and effect.

20. Counterparts. This Agreement may be executed (and delivered via facsimile) in one or more counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same Agreement.

21. Assignment. This Agreement is personal in nature, and neither party hereto shall, without the prior written consent of the other, assign or transfer this Agreement or any rights or obligations hereunder except as provided in Sections 13 and 17 above. Without limiting the foregoing, Executive’s right to receive compensation hereunder shall not be assignable or transferable, whether by pledge, creation of a security interest or otherwise, other than a transfer

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by his will or by the laws of descent or distribution as set forth in Section 13 hereof, and in the event of any attempted assignment or transfer contrary to this Section 21, Employer shall have no liability to pay any amounts so attempted to be assigned or transferred.

22. Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto and supersedes all prior agreements, understandings and arrangements, oral or written, between the parties hereto with respect to the subject matter hereof.

23. Construction; Definition of Change of Control.

(A) Whenever the singular number is used in this Agreement and when required by the context, the same shall include the plural and vice versa, and the masculine gender shall include the feminine and neuter genders and vice versa. The headings in this Agreement are for convenience only and are in no way intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any of its provisions. All references to Employer in this Agreement shall include, unless the context otherwise requires, all subsidiaries and controlled affiliates of Employer.

(B) For purposes of this Agreement, a “Change of Control” shall have occurred if:

(a) a majority of the directors of Employer shall be persons other than persons: (A) for whose election proxies shall have been solicited by the Board, or (B) who are then serving as directors appointed by the Board to fill vacancies on the Board caused by death or resignation (but not by removal) or to fill newly-created directorships;

(b) twenty-five percent (25%) of the outstanding voting power of Employer shall have been acquired or beneficially owned (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended, or any successor rule thereto) by any person (other than Employer, a subsidiary of Employer or Executive) or by any two or more persons acting as a partnership, limited partnership, syndicate or other group acting in concert for the purpose of acquiring, holding or disposing of any voting stock of Employer (hereinafter a “Group”), which Group does not include Executive; or

(c) there shall have occurred:

(A) a merger or consolidation of Employer with or into another corporation (other than (1) a merger or consolidation with a subsidiary of Employer or (2) a merger or consolidation in which (aa) the holders of voting stock of Employer immediately prior to the merger as a class continue to hold immediately after the merger at least a majority of all outstanding voting power of the surviving or resulting corporation or its parent and (bb) all holders of each outstanding class or series of voting stock of Employer immediately prior to the merger or consolidation have the right to receive substantially the same cash, securities or other property in exchange for their voting stock of Employer as all other holders of such class or series);

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(B) a statutory exchange of shares of one or more classes or series of outstanding voting stock of Employer for cash, securities or other property;

(C) the sale or other disposition of all or substantially all of the assets of Employer (in one transaction or a series of transactions); or

(D) the liquidation or dissolution of Employer;

unless twenty-five percent (25%) or more of the voting stock (or the voting equity interest) of the surviving corporation or the corporation or other entity acquiring all or substantially all of the assets of Employer (in the case of a merger, consolidation or disposition of assets) or of Employer or its resulting parent corporation (in the case of a statutory share exchange) is beneficially owned by the Executive or a Group that includes the Executive.

24. Representations and Warranties of Employer. Employer hereby represents and warrants to Executive that: (i) this Agreement has been duly authorized by the Board, executed and delivered by Employer, and constitutes the valid and binding agreement of Employer, enforceable against Employer in accordance with its terms; and (ii) Employer has the full power authority to execute, deliver and perform this Agreement and has taken all necessary action to secure all approvals required in connection herewith.

25. Arbitration. Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be settled by arbitration in Moultrie, Georgia in accordance with the commercial arbitration rules of the American Arbitration Association then in effect. The decision of the arbitrators shall be final and binding as to any matter submitted to them under this Agreement, and judgment on any award rendered by the arbitrators may be entered in any court having jurisdiction thereof.

26. Attorneys’ Fees. If there is any legal action, arbitration or proceeding between Executive and the Employer arising from or based on this Agreement or the interpretation or enforcement of any provisions hereof, then the unsuccessful party to such action, arbitration or proceeding shall pay to the prevailing party all costs and expenses, including, without limitation, reasonable attorneys’ fees, incurred by such prevailing party in such action, arbitration or proceeding, in any appeal in connection therewith and in any action or proceeding taken to enforce any judgment or order so obtained by the prevailing party. If such prevailing party recovers a judgment in any such action, arbitration, proceeding or appeal, then such costs, expenses and attorneys’ fees shall be included in and as a part of such judgment.

[Signatures next page]

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IN WITNESS WHEREOF, Executive has executed, sealed and delivered this Agreement, and Employer has caused this Agreement to be executed, sealed and delivered, all as of the day and year first above set forth.

ABC BANCORP
By:	/s/ Kenneth J. Hunnicutt
Name:	Kenneth J. Hunnicutt
Title:	Chief Executive Officer
/s/ Edwin W. Hortman, Jr.		(SEAL)
EDWIN W. HORTMAN, JR.

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EX-10.20

Exhibit 10.20

EXECUTIVE EMPLOYMENT AGREEMENT

THIS EXECUTIVE EMPLOYMENT AGREEMENT (the “Agreement”), is entered into as of the 31st day of December, 2003, by and between ABC BANCORP, a Georgia corporation (“Employer”), and Cindi H. Lewis, an individual resident of the State of Georgia (“Executive”).

W I T N E S S E T H:

WHEREAS, Employer wishes to employ Executive as its Director of Human Resources, and Executive wishes to continue to serve in such position, on the terms and conditions set forth herein;

WHEREAS, Employer and Executive are parties to that certain Severance Protection and Non-Competition Agreement dated as of September 1, 1998 (the “Severance Protection Agreement”), and Employer and Executive each desire to terminate the Severance Protection Agreement contemporaneous with the execution and delivery hereof;

WHEREAS, Executive desires to be assured of a secure minimum compensation from Employer for her services over a defined term;

WHEREAS, Employer desires to assure the continued services of Executive on behalf of Employer on an objective and impartial basis and without distraction or conflict of interest in the event of an attempt by any person or entity to obtain control of Employer;

WHEREAS, Employer desires to provide fair and reasonable benefits to Executive on the terms and subject to the conditions set forth in this Agreement; and

WHEREAS, Employer desires reasonable protection of its confidential business and customer information which it has developed over the years at substantial expense and assurance that Executive will not compete with Employer for a reasonable period of time after termination of her employment with Employer, except as otherwise provided herein;

NOW, THEREFORE, in consideration of these premises, the mutual covenants and undertakings herein contained, Employer and Executive, each intending to be legally bound, covenant and agree as follows:

1. Termination of Severance Protection Agreement. Notwithstanding any of the terms and conditions of the Severance Protection Agreement to the contrary with respect to the termination thereof or otherwise, Employer and Executive hereby terminate the Severance Protection Agreement, effective as of the date hereof. Employer and Executive acknowledge and agree that neither party to the Severance Protection Agreement shall have or possess any rights against or obligations to the other party thereto with respect to any of the representations,

warranties, covenants and agreements set forth therein. In addition, Employer and Executive covenant and agree that the termination of the Severance Protection Agreement and the rights granted therein shall not constitute a breach thereof or default thereunder or create any further or additional duties or obligations of the parties thereto.

2. Employment. Upon the terms and subject to the conditions set forth in this Agreement, Employer employs Executive as its Director of Human Resources, and Executive hereby accepts such employment. Notwithstanding the foregoing, during the Initial Term (as hereinafter defined) or any Additional Term (as hereinafter defined) hereof, Employer may, based on reasonable business considerations, modify the responsibilities or duties of the foregoing position, or at its sole discretion, assign Executive to other positions; provided, however, that such duties shall be of the same character as those generally associated with the office held by Executive.

3. Position and Duties. Executive agrees to serve as the Director of Human Resources of Employer as set forth in Section 2 hereof and to perform such duties as may reasonably be assigned to her by the Board of Directors (the “Board”) or the Chief Executive Officer of Employer; provided, however, that such duties shall be of the same character as those generally associated with the office held by Executive. Employer shall not, without the written consent of Executive, relocate or transfer Executive to a location other than a location within the geographic boundaries of the State of Georgia. During the Initial Term or any Additional Term of this Agreement, Executive agrees that she will serve Employer faithfully and to the best of her ability and that she will devote her full business time, attention and skills to Employer’s business; provided, however, that the foregoing shall not be deemed to restrict Executive from devoting a reasonable amount of time and attention to the management of her personal affairs and investments, so long as such activities do not interfere with the responsible performance of Executive’s duties hereunder.

4. Term. The term of this Agreement shall begin on the date hereof (the “Effective Date”) and, unless otherwise earlier terminated pursuant to Section 9 hereof, shall end on the date which is one (1) year following the Effective Date (hereinafter referred to as the “Initial Term”). The Initial Term shall be extended automatically for an additional one (1) year term (each, an “Additional Term”) on the last day of the Initial Term or each Additional Term hereof unless either party hereto gives written notice to the other party not to so extend no later than ninety (90) days prior to the expiration of the Initial Term or any subsequent Additional Term, as the case may be, in which case no further extension shall occur and the term of this Agreement shall end at the end of the Initial Term or the Additional Term during which such notice not to so extend was given; provided, however, that, notwithstanding any notice by Employer not to extend, the term of this Agreement shall not expire prior to the expiration of twelve (12) months after the occurrence of a Change of Control (as hereinafter defined); and provided further, however, that this Agreement shall automatically terminate (and the Initial Term or any Additional Term shall thereupon end) without notice when Executive attains 65 years of age.

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5. Compensation.

(A) Executive shall receive an annual salary of Eighty-Three Thousand, Nine Hundred & no/100 Dollars ($83,900.00) (“Base Compensation”) payable at regular intervals in accordance with Employer’s normal payroll practices now or hereafter in effect. Employer may consider and declare from time to time increases in the salary it pays Executive and thereby increase the Base Compensation. Prior to (but not after) a Change of Control, Employer may also declare decreases in the salary it pays Executive if the operating results of Employer are significantly less favorable than those for its immediately preceding fiscal year, and Employer makes similar decreases in the salary it pays to other executive officers of Employer; provided, however, that Employer shall not be permitted to decrease Executive’s annual salary below $83,900.00 during the Initial Term hereof. After a Change of Control, Employer shall consider and declare salary increases based upon the following standards: (1) inflation; (2) adjustments to the salaries of other senior management personnel; and (3) past performance of Executive and the contribution which Executive makes to the business and profits of Employer. Any and all increases or decreases in Executive’s salary pursuant to this Section 5(A) shall cause the level of Base Compensation to be increased or decreased by the amount of each such increase or decrease for purposes of this Agreement. The increased or decreased level of Base Compensation as provided in this Section 5(A) shall become the level of Base Compensation for the remainder of the Initial Term or any Additional Term until there is a further increase or decrease in Base Compensation as provided herein.

(B) In addition to her Base Compensation, Executive shall be awarded, during each calendar year during the Initial Term or any Additional Term hereof, an annual bonus (an “Annual Bonus”) either pursuant to a bonus or incentive plan of Employer or otherwise on terms no less favorable than those awarded to other executive officers of Employer.

6. Other Benefits. So long as Executive is employed by Employer pursuant to this Agreement, she shall be included as a participant in all present and future employee benefit, retirement and compensation plans of Employer generally available to its employees, consistent with her Base Compensation and her position with Employer, including, without limitation, Employer’s 401(k) Profit Sharing Plan, and Executive and her dependents shall be included in Employer’s hospitalization, major medical, disability and group life insurance plans. Executive acknowledges that, notwithstanding any of the provisions of this Agreement, any of Employer’s benefit plans and programs may be modified from time to time and that Employer is not required to continue any plan or program currently in effect or adopted hereafter; provided, however, that each of the above benefits shall continue in effect on terms no less favorable than those for other executive officers of Employer (as permitted by law) during the Initial Term or any Additional Term hereof (A) unless prior to a Change of Control, the operating results of Employer are significantly less favorable than those for its immediately preceding fiscal year, or (B) unless (either before or after a Change of Control) (1) changes in the accounting or tax treatment of such plans would materially adversely affect Employer’s operating results or financial condition, and (2) the Board concludes that modifications to such plans need to be made to avoid such adverse effects.

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7. Expenses. So long as Executive is employed by Employer pursuant to this Agreement, Executive shall receive reimbursement from Employer for all reasonable business expenses incurred in the course of her employment by Employer upon proper submission to Employer of written vouchers and statements for reimbursement. [In addition, Employer shall (A) reimburse Executive for all mileage driven by Executive in her personal automobile in connection with her duties hereunder in accordance with Employer’s mileage reimbursement policy as in effect from time to time. Employer shall also use its reasonable best efforts to provide to Executive a country club membership for business and personal use and shall pay for all initiation fees and monthly dues related thereto; provided, however, that, if such membership is not already owned by Executive as of the date hereof, then such membership shall be and remain the sole property of Employer.]

8 Vacation. Executive shall be entitled to four (4) weeks paid vacation during each calendar year of Executive’s employment hereunder.

9. Termination. Subject to the respective continuing obligations of the parties hereto, including, without limitation, those set forth in Subsections 11(A), 11(B), 11(C) and 11(D) hereof, Executive’s employment by Employer hereunder may be terminated prior to the expiration of the Initial Term or any Additional Term hereof as follows:

(A) Employer, by action of the Board [or the Chief Executive Officer of Employer] and upon written notice to Executive, may terminate Executive’s employment with Employer immediately for cause. For purposes of this Subsection 9(A), “cause” for termination of Executive’s employment shall exist (a) if Executive is convicted of (from which no appeal may be taken), or pleads guilty or nolo contendere to, any act of fraud, misappropriation or embezzlement, or any felony, (b) if, in the determination of the Board or the Chief Executive Officer of Employer, Executive has engaged in gross or willful misconduct materially damaging to the business of Employer (it being understood, however, that neither conduct pursuant to Executive’s exercise of her good faith business judgment nor unintentional physical damage to any property of Employer by Executive shall be a ground for such a determination by the Board), or (c) if Executive has failed, without reasonable cause, to follow reasonable written instructions of the Board or the Chief Executive Officer of Employer consistent with Executive’s position with Employer and, after written notice from Employer of such failure, Executive at any time thereafter again so fails.

(B) Executive, by written notice to Employer, may terminate her employment with Employer immediately for good reason. For purposes of this Subsection 9(B), “good reason” for termination shall mean a good faith determination by Executive, in Executive’s sole and absolute judgment, that any one or more of the following events has occurred, without Executive’s express written consent:

(1) after a Change of Control, a change in Executive’s reporting responsibilities, titles or offices as in effect immediately prior to the Change of Control, or any removal of Executive from, or any failure to re-elect Executive to, any of Executive’s positions that she held immediately prior to the Change of Control, which has the effect of diminishing Executive’s responsibility or authority;

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(2) after a Change of Control, a reduction by Employer in Executive’s Base Compensation as in effect immediately prior to the Change of Control or as the same may be increased from time to time or a change in the eligibility requirements or performance criteria under any bonus, incentive or compensation plan, program or arrangement under which Executive is covered immediately prior to the Change of Control which adversely affects Executive;

(3) at the time of a Change of Control, Employer requires Executive to be based anywhere other than a job location within the geographic boundaries of the State of Georgia;

(4) after a Change of Control and without replacement by a plan providing benefits to Executive substantially equal to or greater than those discontinued, the failure by Employer to continue in effect, within its maximum stated term, any pension, bonus, incentive, stock ownership, purchase, option, life insurance, health, accident, disability, or any other employee benefit plan, program or arrangement in which Executive is participating at the time of the Change of Control, or the taking of any action by Employer after a Change of Control that would adversely affect Executive’s participation or materially reduce Executive’s benefits under any of such plans;

(5) after a Change of Control, the taking of any action by Employer that would materially adversely affect the physical conditions existing at the time of the Change of Control in or under which Executive performs her employment duties, provided that Employer may take action with respect to such conditions after a Change of Control so long as such conditions are at least commensurate with the conditions in or under which an officer of Executive’s status would customarily perform her employment duties; or

(6) after a Change of Control, a material change in the fundamental business philosophy, direction and precepts of Employer and its subsidiaries, considered as a whole, as the same existed prior to the Change of Control.

Any event described in Subsection 9(B)(1) through (6) hereof which occurs prior to a Change of Control but which Executive reasonably demonstrates (x) was at the request of a third party who has indicated an intention, or taken steps reasonably calculated, to effect a Change of Control or (y) otherwise arose in connection with, or in anticipation of, a Change of Control which actually occurs, shall constitute good reason for purposes hereof, notwithstanding that it occurred prior to a Change of Control.

(C) Executive, upon ninety (90) days written notice to Employer, may terminate her employment with Employer without good reason.

(D) Executive’s employment with Employer shall terminate in the event of Executive’s death or disability. For purposes of this Agreement, “disability” shall be defined as Executive’s inability by reason of illness or other physical or mental incapacity to perform the duties required by her employment for any consecutive one hundred eighty (180) day period.

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(E) A “Change of Control” shall mean any of the following events:

(1) Unless approved by the affirmative vote of at least two-thirds (2/3) of those members of the Board who are in office immediately prior to the event(s) and who are not employees of Employer:

(a) the merger or consolidation of Employer with, or the sale of all or substantially all of the assets of Employer to, any person or entity or group of associated persons or entities; or

(b) the direct or indirect beneficial ownership, in the aggregate, of securities of Employer representing twenty percent (20%) or more of the total combined voting power of Employer’s then issued and outstanding securities by any person or entity, or group of associated persons or entities acting in concert, not affiliated (within the meaning of the Securities Act of 1933, as amended) with Employer as of the date hereof; provided, however, that the Board may, at any time and in its sole discretion, increase the ownership percentage threshold of this item (b) to an amount not exceeding forty percent (40%); or

(c) the shareholders of Employer approve any plan or proposal for the liquidation or dissolution of Employer.

(2) A change in the composition of the Board at any time during any consecutive twenty-four (24) month period such that the “Continuity Directors” cease for any reason to constitute at least a seventy percent (70%) majority of the Board. For purposes of this Agreement, “Continuity Directors” shall mean those members of the Board who either:

(a) were directors at the beginning of such consecutive twenty-four (24) month period; or

(b) were elected by, or on the nomination or recommendation of, at least a two-thirds (2/3) majority of the Board.

10. Compensation Upon Termination. In the event of termination of Executive’s employment with Employer pursuant to Section 9 hereof, compensation shall continue to be paid by Employer to Executive as follows:

(A) In the event of a termination pursuant to Subsection 9(A) or Subsection 9(C) hereof, compensation provided for herein (including Base Compensation and an Annual Bonus) shall continue to be paid, and Executive shall continue to participate in the employee benefit, retirement, compensation plans and other perquisites as provided in Section 6 hereof, through and including the Date of Termination (as hereinafter defined) specified in the Notice of

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Termination (as hereinafter defined). Any benefits payable under insurance, health, retirement and bonus plans as a result of Executive’s participation in such plans through the Date of Termination specified in the Notice of Termination shall be paid when due under such plans.

(B) In the event of a termination pursuant to Subsection 9(B) hereof, compensation provided for herein (including Base Compensation and an Annual Bonus) shall continue to be paid, and Executive shall continue to participate in the employee benefit, retirement, compensation plans and other perquisites as provided in Section 6 hereof, through the Date of Termination specified in the Notice of Termination, and any benefits payable under insurance, health, retirement and bonus plans as a result of Executive’s participation in such plans through the Date of Termination specified in the Notice of Termination shall be paid when due under such plans. In addition, if the event of termination pursuant to Subsection 9(B) hereof occurs within twelve (12) months after the date of a Change of Control, then, subject to the terms of Section 13 hereof, (1) Executive shall be entitled to continue to receive from Employer for one (1) additional 12-month period her Base Compensation at the rates in effect at the time of termination plus an Annual Bonus in an amount equal to at least forty percent (40%) of such Base Compensation as of the date of the event of termination, payable in accordance with Employer’s standard payment practices then existing; (2) Executive shall be entitled to continue to participate for one (1) additional 12-month period in each employee welfare benefit plan (as such term is defined in the Employment Retirement Income Security Act of 1974, as amended) in which Executive was entitled to participate immediately prior to the date of her termination, unless an essentially equivalent and no less favorable benefit is provided by a subsequent employer of Executive, provided that if the terms of any such employee welfare benefit plan or applicable laws do not permit continued participation by Executive, Employer will arrange to provide to Executive a benefit substantially similar to, and no less favorable than, the benefit she was entitled to receive under such plan at the end of the period of coverage; (3) Employer shall contribute the maximum contributions allowable under Employer’s 401(k) Profit Sharing Plan, or any successor plans thereto, for the benefit of Executive; and (4) Executive shall be entitled to receive payment from Employer for reasonable relocation expenses if Executive relocates within five hundred (500) miles of Moultrie, Georgia if such relocation occurs within one hundred eighty (180) days after the Date of Termination specified in the Notice of Termination.

(C) In the event of a termination pursuant to Subsection 9(D) hereof, compensation provided for herein (including Base Compensation and an Annual Bonus) shall continue to be paid, and Executive shall continue to participate in the employee benefit, retirement, and compensation plans and other perquisites as provided in Section 6 hereof, (1) in the event of Executive’s death, through the date of death, or (2) in the event of Executive’s disability, through the Date of Termination specified in the Notice of Termination. Any benefits payable under insurance, health, retirement and bonus plans as a result of Executive’s participation in such plans through the date of death or the Date of Termination specified in the Notice of Termination, as the case may be, shall be paid when due under those plans.

(D) Employer will permit Executive or her personal representative(s) or heirs, during a period of ninety (90) days following the Date of Termination of Executive’s employment by Employer (as specified in the Notice of Termination) for the reasons set forth in Subsection 9(B) hereof, to purchase all of the stock of Employer that would be issuable under all outstanding

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stock options, if any, previously granted by Employer to Executive under any Employer stock option plan then in effect, whether or not such options are then exercisable, at a cash purchase price equal to the purchase price as set forth in such outstanding stock options.

11. Restrictive Covenants.

(A) Executive acknowledges that (1) Employer has separately bargained and paid additional consideration for the restrictive covenants herein; and (2) Employer will provide certain benefits to Executive hereunder in reliance on such covenants in view of the unique and essential nature of the services Executive will perform on behalf of Employer and the irreparable injury that would befall Employer should Executive breach such covenants.

(B) Executive further acknowledges that her services are of a special, unique and extraordinary character and that her position with Employer will place her in a position of confidence and trust with employees of Employer and its subsidiaries and affiliates and with Employer’s other constituencies and will allow her access to trade secrets and confidential information concerning Employer and its subsidiaries and affiliates.

(C) Executive further acknowledges that the type and periods of restrictions imposed by the covenants in this Section 11 are fair and reasonable and that such restrictions will not prevent Executive from earning a livelihood.

(D) Having acknowledged the foregoing, Executive covenants and agrees with Employer as follows:

(1) For a period of two (2) years after the date hereof, Executive shall not divulge or furnish any confidential information of Employer acquired by her while employed by Employer to any person, firm or corporation, other than to Employer or its subsidiaries or upon its or their written request, or use any such confidential information (which shall at all times remain the property of Employer) directly or indirectly for Executive’ own benefit or for the benefit of any person, firm or corporation other than Employer. For purposes hereof, the term “confidential information” shall mean Employer’s and its subsidiaries’ non-public, confidential or proprietary information, including, without limitation, any and all tangible and intangible information, whether oral, in writing or in any other medium, whether developed by Executive or furnished to Executive by third parties at the direction of Employer, concerning the policies, plans, procedures or customers of Employer or its subsidiaries or the business, financial condition, operations, assets, liabilities and contingencies of Employer or its subsidiaries.

(2) Executive hereby agrees that she will not directly or indirectly disclose to anyone, or use or otherwise exploit for her own benefit or for the benefit of anyone other than Employer and its subsidiaries any trade secrets (as defined in §10-1-761 of the Official Code of Georgia Annotated) of Employer or any of its subsidiaries for as long as they remain trade secrets.

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(3) For a period of one (1) year after termination of Executive’s employment (a) by Employer for any of the reasons set forth in Subsection 9(A) of this Agreement, or (b) by Executive pursuant to Section 4 or Subsection 9(C) of this Agreement, Executive shall not directly or indirectly provide Banking Business (as hereinafter defined) to, or solicit the Banking Business of, any customer of Employer or any of its subsidiaries at the time of such provision of services or solicitation which Executive served either alone or with others while employed by Employer in any city, town, borough, township, village or other place in which Executive performed services for Employer while employed by it, or assist any actual or potential competitor of Employer or any of its subsidiaries to provide banking or bank-related services to or solicit any such customer’s banking or bank-related business in any such place. The term “Banking Business” shall mean the business of operating a financial institution or bank holding company, including the provision of retail, commercial, trust, mortgage and investment banking products and services and the management of companies that provide such products and services, as conducted by Employer and its subsidiaries during Executive’s employment by Employer.

(4) While Executive is employed by Employer and for a period of two (2) years after termination of Executive’s employment (a) by Employer for any of the reasons set forth in Subsection 9(A) of this Agreement, or (b) by Executive pursuant to Section 4 or Subsection 9(C) of this Agreement, Executive shall not, directly or indirectly, as principal, agent, or trustee, or through the agency of any corporation, partnership, trade association, agent or agency, engage in any business or venture which competes with the Banking Business within a 50-mile radius of any office or branch office location of Employer or any of its subsidiaries as of the date hereof.

(5) If Executive’s employment by Employer is terminated for reasons other than those set forth in Subsection 9(B) of this Agreement, and Executive subsequently (a) provides Banking Business to, or solicits the Banking Business of, any customer of Employer or any of its subsidiaries at the time of such provision of services or solicitation which Executive served either alone or with others while employed by Employer in any city, town, borough, township, village or other place in which Executive performed services for Employer while employed by it, or assists any actual or potential competitor of Employer or any of its subsidiaries to provide Banking Business to or solicit any such customer’s Banking Business in any such place, or (b) engages, directly or indirectly, as principal, agent, or trustee, or through the agency of any corporation, partnership, trade association, agent or agency, in any business or venture which competes with the Banking Business within a 50-mile radius of any office or branch office location of Employer or any of its subsidiaries as of the date hereof, then Employer may immediately terminate and shall not be required to continue on behalf of the Executive or her dependents and beneficiaries any compensation provided for herein (including Base Compensation and any Annual Bonus) and any employee benefit, retirement and compensation plans and other prerequisites provided in Section 6 hereof other than those benefits that Employer may be required to maintain for Executive under applicable federal or state law.

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(6) If Executive’s employment by Employer is terminated for any of the reasons set forth in Subsection 9(B) of this Agreement, then Executive may thereafter (a) provide Banking Business to, or solicit the Banking Business of, any customer of Employer or any of its subsidiaries at the time of such provision of services or solicitation which Executive served either alone or with others while employed by Employer in any location within a 50-mile radius of any office or branch office location of Employer or any of its subsidiaries as of the date hereof, or assist any actual or potential competitor of Employer or any of its subsidiaries to provide Banking Business to or solicit any such customer’s Banking Business in any such place, or (b) engage, directly or indirectly, as principal, agent or trustee, or through the agency of any corporation, partnership, trade association, agent or agency, in any business or venture which competes with the Banking Business within a 50-mile radius of any office or branch office location of Employer or any of its subsidiaries as of the date hereof; provided, however, that if Executive engages in any such activities after a termination under Subsection 9(B) hereof, then Employer may immediately terminate and shall not be required to continue on behalf of Executive or her dependents and beneficiaries any compensation provided for herein (including, without limitation, Base Compensation, any Annual Bonus and any payments pursuant to Subsection 10(B) hereof) and any employee benefit, retirement and compensation plans and other perquisites provided in Section 6 hereof other than those benefits that Employer may be required to maintain for Executive under applicable federal or state law.

(7) If Executive’s employment by Employer is terminated for any reason or for no reason, Executive will turn over immediately thereafter to Employer all business correspondence, letters, papers, reports, customer lists, financial statements, credit reports or other confidential information or documents of Employer or its affiliates in the possession or control of Executive, all of which writings are and will continue to be the sole and exclusive property of Employer or its affiliates, as the case may be.

(E) Executive acknowledges that irreparable loss and injury would result to Employer upon the breach of any of the covenants contained in this Section 11 and that damages arising out of such breach would be difficult to ascertain. Executive hereby agrees that, in addition to all other remedies provided at law or in equity, Employer may petition and obtain from a court of law or equity, without the necessity of proving actual damages and without posting any bond or other security, both temporary and permanent injunctive relief to prevent a breach by Executive of any covenant contained in this Section 11, and shall be entitled to an equitable accounting of all earnings, profits and other benefits arising out of any such breach. In the event that the provisions of this Section 11 should ever be deemed to exceed the time, geographic or any other limitations permitted by applicable law, then such provisions shall be deemed reformed to the maximum extent permitted thereby.

12. Notice of Termination and Date of Termination. Any termination of Executive’s employment with Employer as contemplated by Section 9 hereof, except in the circumstances of Executive’s death, shall be communicated by written notice of termination (the “Notice of Termination”) by the terminating party to the other party hereto. Any Notice of Termination given pursuant to Subsections 9(A), 9(B) or 9(D) hereof shall indicate the specific

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provisions of this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for such termination. For purposes of this Agreement, “Date of Termination” shall mean: (A) if Executive’s employment is terminated because of disability, thirty (30) days after Notice of Termination is given (unless Executive shall have returned to the performance of Executive’s duties on a full-time basis during such thirty (30) day period); or (B) if Executive’s employment is terminated for cause, good reason or pursuant to Subsection 9(C) hereof, the date specified in the Notice of Termination; provided, however, that if within thirty (30) days after any such Notice of Termination is given, the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the Date of Termination shall be the date on which the dispute is finally resolved, either by mutual agreement of the parties or by a final judgment, order or decree of a court of competent jurisdiction (the time for appeal therefrom having expired and no appeal having been perfected).

13. Excess Parachute Payments and One Million Dollar Deduction Limit.

(A) Notwithstanding anything contained herein to the contrary, if any portion of the payments and benefits provided hereunder and benefits provided to, or for the benefit of, Executive under any other plan or agreement of Employer (such payments or benefits are collectively referred to as the “Payments”) would be subject to the excise tax (the “Excise Tax”) imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), or would be nondeductible by Employer pursuant to Section 280G of the Code, the Payments shall be reduced (but not below zero) if and to the extent necessary so that no portion of any Payment to be made or benefit to be provided to Executive shall be subject to the Excise Tax or shall be nondeductible by Employer pursuant to Section 280G of the Code (such reduced amount is hereinafter referred to as the “Limited Payment Amount”). Unless Executive shall have given prior written notice specifying a different order to Employer to effectuate the Limited Payment Amount, Employer shall reduce or eliminate the Payments, by first reducing or eliminating those payments or benefits which are not payable in cash and then by reducing or eliminating cash payments, in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time from the Determination (as hereinafter defined). Any notice given by Executive pursuant to the preceding sentence shall take precedence over the provisions of any other plan, arrangement or agreement governing Executive’s rights and entitlements to any benefits or compensation.

(B) An initial determination as to whether the Payments shall be reduced to the Limited Payment Amount pursuant to the Code and the amount of such Limited Payment Amount shall be made by an accounting firm at Employer’s expense selected by Employer which is designated as one of the four largest accounting firms in the United States (the “Accounting Firm”). The Accounting Firm shall provide its determination (the “Determination”), together with detailed supporting calculations and documentation to Employer and Executive within thirty (30) days of the Termination Date, if applicable, and if the Accounting Firm determines that no Excise Tax is payable by Executive with respect to a Payment or Payments, it shall furnish Executive with an opinion reasonably acceptable to Executive that no Excise Tax will be imposed with respect to any such Payment or Payments. Within ten (10) days of the delivery of the Determination to Executive, Executive shall have the right to dispute the Determination (the “Dispute”). If there is no Dispute, the Determination shall be binding, final and conclusive upon Employer and Executive subject to the application of Subsection 13(C) below.

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(C) As a result of the uncertainty in the application of Sections 4999 and 280G of the Code, it is possible that the Payments to be made to, or provided for the benefit of, Executive either have been made or will not be made by Employer which, in either case, will be inconsistent with the limitations provided in Section 13(A) hereof (hereinafter referred to as an “Excess Payment” or “Underpayment”, respectively). If it is established pursuant to a final determination of a court or an Internal Revenue Service (the “IRS”) proceeding which has been finally and conclusively resolved that an Excess Payment has been made, such Excess Payment shall be deemed for all purposes to be a loan to Executive made on the date Executive received the Excess Payment, and Executive shall repay the Excess Payment to Employer on demand (but not less than ten (10) days after written notice is received by Executive), together with interest on the Excess Payment at the “Applicable Federal Rate” (as defined in Section 1274(d) of the Code) from the date of Executive’s receipt of such Excess Payment until the date of such repayment. In the event that it is determined (1) by the Accounting Firm, Employer (which shall include the position taken by Employer, or together with its consolidated group, on its federal income tax return) or the IRS; (2) pursuant to a determination by a court; or (3) upon the resolution of the Dispute to Executive’s satisfaction, that an Underpayment has occurred, Employer shall pay an amount equal to the Underpayment to Executive within ten (10) days of such determination or resolution, together with interest on such amount at the Applicable Federal Rate from the date such amount would have been paid to Executive until the date of payment.

(D) Notwithstanding anything contained herein to the contrary, if any portion of the Payments would be nondeductible by Employer pursuant to Section 162(m) of the Code, the Payments to be made to Executive in any taxable year of Employer shall be reduced (but not below zero) if and to the extent necessary so that no portion of any Payment to be made or benefit to be provided to Executive in such taxable year of Employer shall be nondeductible by Employer pursuant to Section 162(m) of the Code. The amount by which any Payment is reduced pursuant to the immediately preceding sentence, together with interest thereon at the Applicable Federal Rate, shall be paid by Employer to Executive on or before the fifth business day of the immediately succeeding taxable year of Employer, subject to the application of the limitations of the immediately preceding sentence and this Section 13. Unless Executive shall have given prior written notice specifying a different order to Employer to effectuate this Section 13, Employer shall reduce or eliminate the Payments in any one taxable year of Employer by first reducing or eliminating those payments or benefits which are not payable in cash and then by reducing or eliminating cash payments, in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time from the Section 162(m) Determination (as hereinafter defined). Any notice given by Executive pursuant to the immediately preceding sentence shall take precedence over the provisions of any other plan, arrangement or agreement governing Executive’s rights and entitlements to any benefits or compensation.

(E) The determination as to whether the Payments shall be reduced pursuant to Section 13(D) hereof and the amount of the Payments to be made in each taxable year after the application of Section 13(D) hereof shall be made by the Accounting Firm at Employer’s expense. The Accounting Firm shall provide its determination (the “Section 162(m)

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Determination”), together with detailed supporting calculations and documentation to Employer and Executive within thirty (30) days of the termination date specified in the Notice of Termination. The Section 162(m) Determination shall be binding, final and conclusive upon Employer and Executive.

14. Payments After Death. Should Executive die after termination of her employment with Employer while any amounts are payable to her hereunder, this Agreement shall inure to the benefit of and be enforceable by Executive’s executors, administrators, heirs, distributees, devisees and legatees, and all amounts payable hereunder shall be paid in accordance with the terms of this Agreement to Executive’s devisee, legatee or other designee or, if there is no such designee, to her estate.

15. Full Settlement and Legal Expenses. The respective obligations of the parties hereto to make payments or otherwise to perform hereunder shall not be affected by any rights of set-off, counterclaim, recoupment, defense or other claim, right or action which one party hereto may have against the other party hereto. In no event shall Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts which may be payable to Executive by Employer hereunder. If any legal action, proceeding in arbitration or other proceeding is brought for the enforcement of this Agreement, or because of any alleged dispute, breach, default or misrepresentation in connection with any provision of this Agreement, the successful or prevailing party or parties shall be entitled to recover reasonable attorneys’ fees, court costs and all expenses incurred in that action or proceeding, even if not taxable as court costs, plus in each case interest at the Applicable Federal Rate, in addition to any other relief to which such party or parties may be entitled.

16. Notices. For purposes of this Agreement, notices and all other communications provided for herein shall be in writing and shall be deemed to have been given when delivered or mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

If to Executive:	Cindi Lewis
	P. O. Box 391
	Moultrie, Georgia 31776
If to Employer:	ABC Bancorp
	24 2nd Avenue, S.E.
	Moultrie, Georgia 31768
	Attention: Chief Executive Officer

or to such address as either party hereto may have furnished to the other party in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

17. Governing Law. The validity, interpretation and performance of this Agreement shall be governed by the laws of the State of Georgia, without giving effect to the conflicts of laws principles thereof.

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18. Successors. Employer shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of Employer, by agreement in form and substance reasonably satisfactory to Executive, to expressly assume and agree to perform this Agreement in the same manner and same extent that Employer would be required to perform it if no such succession had taken place. Failure of Employer to obtain such agreement prior to the effectiveness of any such succession shall be a material, intentional breach of this Agreement and shall entitle Executive to terminate her employment with Employer for good reason pursuant to Subsection 9(B) hereof. As used in this Agreement, “Employer” shall mean Employer as hereinbefore defined and any successor to its business or assets as aforesaid.

19. Modification and Waiver. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by Executive and Employer. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of dissimilar provisions or conditions at the same or any prior subsequent time. No agreements or representation, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement.

20. Severability. The invalidity or unenforceability of any provisions of this Agreement shall not affect the validity or enforceability of any other provisions of this Agreement, which shall remain in full force and effect.

21. Counterparts. This Agreement may be executed (and delivered via facsimile) in one or more counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same Agreement.

22. Assignment. This Agreement is personal in nature, and neither party hereto shall, without the prior written consent of the other, assign or transfer this Agreement or any rights or obligations hereunder except as provided in Sections 14 and 18 above. Without limiting the foregoing, Executive’s right to receive compensation hereunder shall not be assignable or transferable, whether by pledge, creation of a security interest or otherwise, other than a transfer by her will or by the laws of descent or distribution as set forth in Section 14 hereof, and in the event of any attempted assignment or transfer contrary to this Section 22, Employer shall have no liability to pay any amounts so attempted to be assigned or transferred.

23. Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto and supersedes all prior agreements, understandings and arrangements, oral or written, between the parties hereto with respect to the subject matter hereof.

24. Construction. Whenever the singular number is used in this Agreement and when required by the context, the same shall include the plural and vice versa, and the masculine gender shall include the feminine and neuter genders and vice versa. The headings in this Agreement are for convenience only and are in no way intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any of its provisions.

[Signatures Next Page]

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IN WITNESS WHEREOF, Executive has executed, sealed and delivered this Agreement, and Employer has caused this Agreement to be executed, sealed and delivered, all as of the day and year first above set forth.

		ABC BANCORP
		By:	/s/ Kenneth J. Hunnicutt
[Corporate Seal]			Kenneth J. Hunnicutt,
			Chief Executive Officer
Attest:	/s/ Debbie Boyd
	Debbie Boyd, Assistant Corporate Secretary
			/s/ Cindi H. Lewis	(SEAL)
			Cindi H. Lewis

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EX-10.21

Exhibit 10.21

ABC BANCORP

CODE OF BUSINESS CONDUCT AND ETHICS

Adopted by the Board of Directors

on February 17, 2004

Introduction

This Code of Business Conduct and Ethics (the “Code”) of ABC Bancorp (the “Company”) covers a wide range of business practices and procedures. It does not cover every issue that may arise, but it sets out basic principles to guide all employees of the Company, including our executive and senior financial officers. All of our employees must conduct themselves accordingly and seek to avoid even the appearance of improper behavior. The Code should also be provided to and followed by the Company’s agents and representatives, including consultants.

If a law conflicts with a policy in this Code, you must comply with the law. If you have any questions about these conflicts, you should ask your supervisor how to handle the situation.

Those who violate the standards in this Code will be subject to disciplinary action, up to (and including) termination of employment. If you are in a situation which you believe may violate or lead to a violation of this Code, follow the guidelines described in Section 14 of this Code.

1. Compliance with Laws, Rules and Regulations

Obeying the law, both in letter and in spirit, is the foundation on which the Company’s ethical standards are built. All employees must respect and obey the laws of the cities, states and country in which we operate. Although not all employees are expected to know the details of these laws, it is important to know enough to determine when to seek advice from supervisors, managers or other appropriate personnel.

If requested, the Company will hold information and training sessions to promote compliance with laws, rules and regulations, including insider-trading laws.

2. Conflicts of Interest

A “conflict of interest” exists when a person’s private interest interferes in any way with the interests of the Company. A conflict situation can arise when an employee, officer or director takes actions or has interests that may make it difficult to perform his or her work for the Company objectively and effectively. Conflicts of interest may also arise when an employee, officer or director, or members of his or her family, receives improper personal benefits as a result of his or her position in the Company. Loans to, or guarantees of obligations of, employees and their family members may also create conflicts of interest.

It is almost always a conflict of interest for a Company employee to work simultaneously for a competitor, customer or supplier. You are not allowed to work for a competitor as a consultant or board member. The best policy is to avoid any direct or indirect business connection with our customers, suppliers or competitors, except on our behalf. Conflicts of interest are prohibited as a matter of Company policy, except under guidelines approved by the Board of Directors. Conflicts of interest may not always be clear-cut, so if you have a question, you should consult with higher levels of management or the Company’s legal counsel. Any employee, officer or director who becomes aware of a conflict or potential conflict should bring it to the attention of a supervisor, manager or other appropriate personnel or consult the procedures described in Section 14 of this Code.

3. Insider Trading

Employees who have access to confidential information are not permitted to use or share that information for stock trading purposes or for any other purpose except the conduct of our business. All non-public information about the Company should be considered confidential information. To use non-public information for personal financial benefit or to “tip” others who might make an investment decision on the basis of this information is not only unethical but also illegal. In order to assist with compliance with laws against insider trading, the Company has adopted a specific policy governing employees’ trading in securities of the Company. This policy has been distributed to every employee. If you have any questions, please contact Cindi H. Lewis at (229) 890-1111 to discuss.

4. Corporate Opportunities

Employees, officers and directors are prohibited from taking for themselves personally opportunities that are discovered through the use of corporate property, information or position without the consent of the Board of Directors. No employee may use corporate property, information, or position for improper personal gain, and no employee may compete with the Company directly or indirectly. Employees, officers and directors owe a duty to the Company to advance its legitimate interests when the opportunity to do so arises.

5. Competition and Fair Dealing

We seek to outperform our competition fairly and honestly. Stealing proprietary information, possessing trade secret information that was obtained without the owner’s consent, or inducing such disclosures by past or present employees of other companies is prohibited. Each employee should endeavor to respect the rights of and deal fairly with the Company’s customers, suppliers, competitors and employees. No employee should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other intentional unfair-dealing practice.

The purpose of business entertainment and gifts in a commercial setting is to create good will and sound working relationships, not to gain unfair advantage with customers. No gift or entertainment should ever be offered, given, provided or accepted by any Company

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employee, family member of an employee or agent unless it: (1) is not a cash gift, (2) is consistent with customary business practices, (3) is not excessive in value, (4) cannot be construed as a bribe or payoff, and (5) does not violate any laws or regulations. Please discuss with your supervisor any gifts or proposed gifts which you are not certain are appropriate.

6. Discrimination and Harassment

The diversity of the Company’s employees is a tremendous asset. We are firmly committed to providing equal opportunity in all aspects of employment and will not tolerate any illegal discrimination or harassment of any kind. Examples include, but are not limited to, derogatory comments based on racial or ethnic characteristics and unwelcome sexual advances.

7. Health and Safety

The Company strives to provide each employee with a safe and healthy work environment. Each employee has responsibility for maintaining a safe and healthy workplace for all employees by following safety and health rules and practices and reporting accidents, injuries and unsafe equipment, practices or conditions.

Violence and threatening behavior are not permitted. Employees should report to work in condition to perform their duties, free from the influence of illegal drugs or alcohol. The use of illegal drugs in the workplace will not be tolerated.

8. Record-Keeping

The Company requires honest and accurate recording and reporting of information in order to make responsible business decisions. For example, only the true and actual number of hours worked should be reported.

Many employees regularly use business expense accounts, which must be documented and recorded accurately. If you are not sure whether a certain expense is legitimate, ask your supervisor or your controller.

All of the Company’s books, records, accounts and financial statements must be maintained in reasonable detail, must appropriately reflect the Company’s transactions and must conform both to applicable legal requirements and to the Company’s system of internal controls. Unrecorded or “off the books” funds or assets should not be maintained unless permitted by applicable law or regulation.

Business records and communications often become public, and we should avoid exaggeration, derogatory remarks, guesswork or inappropriate characterizations of people and companies that can be misunderstood. This applies equally to e-mail, internal memos and formal reports. Records should always be retained or destroyed according to the Company’s record retention policies. In accordance with those policies, in the event of litigation or governmental investigation please consult the Company’s legal counsel.

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9. Confidentiality

Employees must maintain the confidentiality of confidential information entrusted to them by the Company or its customers, except when disclosure is authorized by the Legal Department or required by laws or regulations. Confidential information includes all non-public information that might be of use to competitors, or harmful to the Company or its customers, if disclosed. It also includes information that suppliers and customers have entrusted to us. The obligation to preserve confidential information continues even after employment ends.

10. Protection and Proper Use of Company Assets

All employees should endeavor to protect the Company’s assets and ensure their efficient use. Theft, carelessness and waste have a direct impact on the Company’s profitability. Any suspected incident of fraud or theft should be immediately reported for investigation. Company equipment should not be used for non-Company business, though incidental personal use may be permitted.

The obligation of employees to protect the Company’s assets includes its proprietary information. Proprietary information includes intellectual property such as trade secrets, patents, trademarks and copyrights, as well as business, marketing and service plans, engineering and manufacturing ideas, designs, databases, records, salary information and any unpublished financial data and reports. Unauthorized use or distribution of this information would violate Company policy. It could also be illegal and result in civil or even criminal penalties.

11. Payments to Government Personnel

The U.S. Foreign Corrupt Practices Act prohibits giving anything of value, directly or indirectly, to officials of foreign governments or foreign political candidates in order to obtain or retain business. It is strictly prohibited to make illegal payments to government officials of any country.

In addition, the U.S. government has a number of laws and regulations regarding business gratuities which may be accepted by U.S. government personnel. The promise, offer or delivery to an official or employee of the U.S. government of a gift, favor or other gratuity in violation of these rules would not only violate Company policy but could also be a criminal offense. State and local governments, as well as foreign governments, may have similar rules. The Company’s legal counsel can provide guidance to you in this area.

12. Waivers of the Code of Business Conduct and Ethics

Any waiver of this Code for executive officers or directors maybe made only by the Board of Directors or a committee of the Board of Directors responsible for ethics oversight and will be promptly disclosed as required by law or stock exchange regulation.

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13. Reporting any Illegal or Unethical Behavior

Employees are encouraged to talk to supervisors, managers or other appropriate personnel about observed illegal or unethical behavior and when in doubt about the best course of action in a particular situation. It is the policy of the Company not to allow retaliation for reports of misconduct by others made in good faith by employees. Employees are expected to cooperate in internal investigations of misconduct. Further, any employee may submit a good-faith concern regarding questionable accounting or auditing matters without fear of dismissal or retaliation of any kind.

14. Compliance Procedures

We must all work to ensure prompt and consistent action against violations of this Code. However, in some situations it is difficult to know if a violation has occurred. Since we cannot anticipate every situation that will arise, it is important that we have a way to approach a new question or problem. These are the steps to keep in mind:

• Make sure you have all the facts. In order to reach the right solutions, we must be as fully informed as possible.

• Ask yourself: What specifically am I being asked to do? Does it seem unethical or improper? This will enable you to focus on the specific question you are faced with, and the alternatives you have. Use your judgment and common sense; if something seems unethical or improper, it probably is.

• Clarify your responsibility and role. In most situations, there is shared responsibility. Are your colleagues informed? It may help to get others involved and discuss the problem.

• Discuss the problem with your supervisor. This is the basic guidance for all situations. In many cases, your supervisor will be more knowledgeable about the question and will appreciate being brought into the decision-making process. Remember that it is your supervisor’s responsibility to help solve problems.

• Seek help from Company resources. In the rare case where it may not be appropriate to discuss an issue with your supervisor, or where you do not feel comfortable approaching your supervisor with your question, discuss it locally with your office manager or your Human Resources manager.

• You may report ethical violations in confidence and without fear of retaliation. If your situation requires that your identity be kept secret, your anonymity will be protected. The Company does not permit retaliation of any kind against employees for good faith reports of ethical violations.

• Always ask first, act later: If you are unsure of what to do in any situation, seek guidance before you act.

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15. Special Considerations for Chief Executive and Senior Financial Officers

In addition to the foregoing provisions of this Code, the Chief Executive Officer and all senior financial officers, including the Chief Financial Officer and principal accounting officer, are subject to the following additional specific policies:

• The Chief Executive Officer and all senior financial officers are responsible for full, fair, accurate, timely and understandable disclosure in the periodic reports required to be filed by the Company with the Securities and Exchange Commission. Accordingly, it is the responsibility of the Chief Executive Officer and each senior financial officer promptly to bring to the attention of the Board any material information of which he or she may become aware that affects the disclosures made by the Company in its public filings or otherwise assist the Board in fulfilling its responsibilities.

• The Chief Executive Officer and each senior financial officer shall promptly bring to the attention of the Board of Directors and the Audit Committee any information he or she may have concerning (a) significant deficiencies in the design or operation of internal controls which could adversely affect the Company’s ability to record, process, summarize and report financial data or (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s financial reporting, disclosures or internal controls.

• The Chief Executive Officer and each senior financial officer shall promptly bring to the attention of the Board of Directors, the Company’s legal counsel and the Audit Committee any information he or she may have concerning any violation of this Code, including any actual or apparent conflicts of interest between personal and professional relationships, involving any management or other employees who have a significant role in the Company’s financial reporting, disclosures or internal controls.

• The Chief Executive Officer and each senior financial officer shall promptly bring to the attention of the Board of Directors, the Company’s legal counsel and the Audit Committee any information he or she may have concerning evidence of a material violation of the securities or other laws, rules or regulations applicable to the Company and the operation of its business, by the Company or any agent thereof, or of violation of this Code.

• The Board of Directors shall determine, or designate appropriate persons to determine, appropriate actions to be taken in the event of violations of this Code by the Chief Executive Officer and the Company’s senior financial officers. Such actions shall be reasonably designed to deter wrongdoing and to promote accountability for adherence to this Code, and shall include written notices to the individual involved that the Board of Directors has determined that there has been a violation, censure by the Board of Directors,

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demotion or re-assignment of the individual involved, suspension with or without pay or benefits (as determined by the Board of Directors) and termination of the individual’s employment. In determining what action is appropriate in a particular case, the Board of Directors or such designee shall take into account all relevant information, including the nature and severity of the violation, whether the violation was a single occurrence or repeated occurrences, whether the violation appears to have been intentional or inadvertent, whether the individual in question had been advised prior to the violation as to the proper course of action and whether or not the individual in question had committed other violations in the past.

* * * * *

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EX-21.1

Exhibit 21.1

REGISTRANT’S SUBSIDIARIES

Following is a list of the Registrant’s subsidiaries and the state of incorporation or other jurisdiction.

Name of Subsidiary	State of Incorporation or Other Jurisdiction
ABC Bancorp Capital Trust I	State of Delaware
American Banking Company	State of Georgia
Moultrie Holding Company, Inc.	State of Delaware
Moultrie Real Estate Holdings, Inc.	State of Delaware
Heritage Community Bank	State of Georgia
Quitman Holding Company, Inc.	State of Delaware
Quitman Real Estate Holdings, Inc.	State of Delaware
Bank of Thomas County	State of Georgia
Thomas Holding Company, Inc.	State of Delaware
Thomas Real Estate Holdings, Inc.	State of Delaware
Citizens Security Bank	State of Georgia
Citizens Holding Company, Inc.	State of Delaware
Citizens Real Estate Holdings, Inc.	State of Delaware
Cairo Banking Company	State of Georgia
Cairo Holding Company, Inc.	State of Delaware
Cairo Real Estate Holdings, Inc.	State of Delaware
Southland Bank	State of Alabama
Southland Real Estate Holdings, Inc.	State of Alabama
Central Bank & Trust	State of Georgia
Cordele Holding Company, Inc.	State of Delaware
Cordele Real Estate Holdings, Inc.	State of Delaware
First National Bank of South Georgia	The Comptroller of the Currency
First National Holding Company, Inc.	State of Delaware
First National Real Estate Holdings, Inc.	State of Delaware
Merchants & Farmers Bank	State of Georgia
M&F Holding Company, Inc.	State of Delaware
M&F Real Estate Holdings, Inc.	State of Delaware
Tri-County Bank	State of Florida
Tri-County Holding Company, Inc.	State of Delaware
Tri-County Real Estate Holdings, Inc.	State of Delaware
First Bank of Brunswick	State of Georgia

Each subsidiary conducts business under the name listed above.

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Kenneth J. Hunnicutt, certify that:

1. I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2003, of ABC Bancorp;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or cause such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	March 11, 2004	/s/ Kenneth J. Hunnicutt
		Kenneth J. Hunnicutt, Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, W. Edwin Lane, Jr., certify that:

1. I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2003, of ABC Bancorp;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or cause such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	March 11, 2004	/s/ W. Edwin Lane, Jr.
		W. Edwin Lane, Jr., Chief Financial Officer

EX-32.1

Exhibit 32.1

SECTION 906 CERTIFICATION

I, Kenneth J. Hunnicutt, Chief Executive Officer of ABC Bancorp (the “Company”) do hereby certify, in accordance with 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1. The Annual Report on Form 10-K of the Company for the year ended December 31, 2003 (the “Periodic Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:	March 11, 2004	/s/ Kenneth J. Hunnicutt
		KENNETH J. HUNNICUTT, Chief Executive Officer

EX-32.2

Exhibit 32.2

SECTION 906 CERTIFICATION

I, W. Edwin Lane, Jr., Chief Financial Officer of ABC Bancorp (the “Company”) do hereby certify, in accordance with 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1. The Annual Report on Form 10-K of the Company for the year ended December 31, 2003 (the “Periodic Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:	March 11, 2004
		/s/ W. Edwin Lane, Jr.
		W. EDWIN LANE, JR., Chief Financial Officer