pab bankshares, inc. - SNL Financial

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The quantitative risk factors used in determining these general reserves require a high degree of management judgment. At December 31, 2009, we had $5.58 million in general reserves on $467.1 million in loans compared to $7.79 million in general reserves on $696.4 million in loans one year ago. In addition, we had $2.2 million of unallocated reserves at December 31, 2009, compared to $785,000 of unallocated reserves at December 31, 2008. This increase in unallocated reserves is primarily due to the continued deterioration of overall economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. While we use the best information available to make the evaluation, future adjustments to the allowance may be necessary if there are significant changes in economic conditions or other environmental factors. In addition, regulatory agencies, as an integral part of their examination process, periodically review the Bank’s allowance for loan losses, and may require the Bank to make additions to the allowance based on their judgment about information available to them at the time of their examinations. Allocation of the Allowance for Loan Losses We have allocated the allowance for loan losses according to the amount deemed to be reasonably necessary at each year end to provide for the possibility of losses being incurred within the categories of loans set forth in the table below. 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. The components of the allowance for loan losses for each of the past five years are presented below. As of December 31, 2009 2008 2007 2006 2005 Percentage of Percentage of Percentage of Percentage of Percentage of Loans in Loans in Loans in Loans in Loans in Category Category Category Category Category to Total to Total to Total to Total to Total Amount Loans Amount Loans Amount Loans Amount Loans Amount Loans (Dollars in Thousands) Commercial and financial $ 1,415 10.5% $ 1,382 9.1% $ 229 8.6% $ 972 8.1% $ 2,670 6.7% Agricultural (including loans secured by farmland) 196 5.0% 112 5.1% 1,029 4.5% 1,184 5.3% 323 7.4% Real estate - construction 16,828 25.4% 11,950 33.0% 8,383 38.2% 4,875 35.9% 4,427 35.5% Real estate - commercial 5,121 34.3% 2,552 28.9% 2,008 27.0% 2,276 31.1% 2,280 30.8% Real estate - residential 3,179 21.7% 2,417 20.5% 815 18.9% 547 17.4% 208 16.9% Consumer and other loans 415 3.1% 176 3.4% 215 2.8% 255 2.2% 512 2.7% Unallocated 2,160 N/A 785 N/A 227 N/A 897 N/A 659 N/A Total $ 29,314 100.0% $ 19,374 100.0% $ 12,906 100.0% $ 11,006 100.0% $ 11,079 100.0% 42
Summary of Loan Loss Experience The following table summarizes the activity in the allowance for loan losses, the average balance of loans outstanding, and the ratio of net losses experienced for each of the last five years. For the Years Ended December 31, 2009 2008 2007 2006 (Dollars in Thousands) Balance at beginning of year $ 19,374 $ 12,906 $ 11,006 $ 11,079 $ 9,066 Charge-offs: Commercial and financial 5,965 709 66 115 31 Agricultural (including loans secured by farmland) 1,108 - 10 - - Real estate - construction and development 21,212 8,022 324 24 - Real estate – commercial 4,906 25 257 314 7 Real estate – residential 3,063 3,188 65 208 43 Installment loans to individuals and other loans 5,494 183 146 160 200 41,748 12,127 868 821 281 Recoveries: Commercial and financial 138 38 55 118 111 Agricultural (including loans secured by farmland) 38 38 56 41 247 Real estate - construction and development 8 2 - - - Real estate – commercial 19 340 28 335 394 Real estate – residential 38 33 108 87 148 Installment loans to individuals and other loans 259 94 121 167 205 500 545 368 748 1,105 Net charge-offs (recoveries) 41,248 11,582 500 73 (824) Additions provided to the allowance charged to operations 51,188 18,050 2,400 - 1,189 Balance at end of year $ 29,314 $ 19,374 $ 12,906 $ 11,006 $ 11,079 2005 Average balance of loans outstanding $ 915,674 $ 955,253 $ 883,334 $ 792,278 $ 706,052 Ratio of net charge-offs (recoveries) during the year to average loans outstanding during the year (%) 4.50 1.21 0.06 0.01 (0.12) Deposits Our total deposit portfolio decreased $78.5 million, or 7.0%, in 2009. Brokered deposits decreased $73.6 million during 2009, from $206.6 million at December 31, 2008 to $133.0 million at December 31, 2009. Noninterest-bearing demand deposits increased $9.3 million, while non-brokered time deposits decreased $12.3 million and interest-bearing demand and savings decreased $1.9 million. The average rate paid on time deposits decreased 75 basis points from 4.26% in 2008 to 3.51% in 2009. As with most community banks in the Southeast, loan volume has been the driver for the remainder of our balance sheet. When we have had strong loan demand, we have been more competitive for retail time deposits within our markets and when loan demand is less, we have been less competitive in pricing for retail time deposits in our markets. The amounts on deposit at the indicated dates are presented in the following table according to type of deposit account: As of December 31, 2009 2008 2007 2006 2005 (Dollars in Thousands) Noninterest-bearing demand $ 100,458 $ 91,114 $ 89,423 $ 100,911 $ 107,917 Interest-bearing demand and savings 250,232 252,122 354,743 328,828 284,126 Retail time deposits < $100,000 314,148 328,329 312,722 279,936 250,250 Retail time deposits > $100,000 217,833 198,845 187,662 161,054 131,279 Retail time deposits placed in CDARS program 29,532 46,690 - - - Brokered time deposits 133,012 206,603 35,599 37,754 42,109 Total deposits $ 1,045,215 $ 1,123,703 $ 980,149 $ 908,483 $ 815,681 43
Page 1 and 2: 2009 Annual Report
Page 3 and 4: UNITED STATES SECURITIES AND EXCHAN
Page 5 and 6: TABLE OF CONTENTS Item Page Caution
Page 7 and 8: PART I ITEM 1. BUSINESS General PAB
Page 9 and 10: North Georgia During the fourth qua
Page 11 and 12: Supervision and Regulation The bank
Page 13 and 14: Payment of Dividends PAB is a legal
Page 15 and 16: An institution that is categorized
Page 17 and 18: USA Patriot Act of 2001 In October
Page 19 and 20: If our allowance for loan losses is
Page 21 and 22: Our net interest income could be ne
Page 23 and 24: We may need to raise additional cap
Page 25 and 26: If we fail to continue to meet all
Page 27 and 28: Performance Graph The following gra
Page 29 and 30: GAAP Reconciliation and Management
Page 31 and 32: The three primary reasons for this
Page 33 and 34: At December 31, 2009, commercial re
Page 35 and 36: Average Balances, Interest and Yiel
Page 37 and 38: Loan Portfolio We make both secured
Page 39 and 40: A summary of loans from each market
Page 41 and 42: The following table summarizes our
Page 43: The first component of the allowanc
Page 47 and 48: The following table summarizes our
Page 49 and 50: On September 4, 2009, the Company b
Page 51 and 52: Provision for Loan Losses The provi
Page 53 and 54: Income Taxes The provision for inco
Page 55 and 56: We have reduced the level of asset-
Page 57 and 58: MANAGEMENT’S REPORT ON INTERNAL C
Page 59 and 60: Because of its inherent limitations
Page 61 and 62: PAB BANKSHARES, INC. AND SUBSIDIARI
Page 69 and 70: NOTES TO CONSOLIDATED FINANCIAL STA
Page 95 and 96:
NOTES TO CONSOLIDATED FINANCIAL STA
Page 97 and 98:
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Page 103 and 104:
Page 105 and 106:
Page 107 and 108:
Page 109 and 110:
JAMES W. GODBEE, JR Certified Publi
Page 111 and 112:
KENNITH D. MCLEOD Certified Public
Page 113 and 114:
The Audit Committee is a separately
Page 115 and 116:
SECTION 16(a) BENEFICIAL OWNERSHIP
Page 117 and 118:
Compensation Benchmarks and Use of
Page 119 and 120:
The following table summarizes in t
Page 121 and 122:
Base Salaries The Company’s philo
Page 123 and 124:
Page 125 and 126:
(1) The listed stock option grants
Page 127 and 128:
Potential Payments Upon Termination
Page 129 and 130:
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(5) Includes 1,659,310 shares owned
Page 133 and 134:
All related party transactions set
Page 135 and 136:
10.5 Rescission Agreement, dated De
Page 137 and 138:
SIGNATURES Pursuant to the requirem
Page 139 and 140:
Shareholder Information Corporate O
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