Ameris Bancorp Annual Report 2000

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FY2000 Annual Report · Ameris Bancorp

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2000 ANNUAL REPORT

A Future Borne of Relationships

Someone once observed that the future belongs to those who believe in the beauty of their dreams.

And though many people would not immediately associate the pragmatic world of financial services

with dream-fulfillment, that activity is actually central to our mission – guiding our clients and share-

holders toward futures filled with realized dreams and goals.

This mission requires strong personal relationships forged over time and reinforced by trust, respect

and performance. In the pages to follow, you will read about some of those relationships. They are

real-life people achieving real-life successes. They represent, more than anything, the power of dreams

harnessed to solid strategy and hard work.

As we evaluate the past year and advance into the present one, we do so, with specific performance

goals designed to maximize success for our existing client and shareholder relationships and to cultivate

new ones.

These goals include:

• Becoming a major financial services provider in Georgia, and expanding the ABC Bancorp

presence in Alabama and north central Florida.

• Gaining market share by delivering a broad range of superior products and services that

combine high technology with "high touch" personal service.

• Delivering consistent annual earnings growth, thus achieving and maintaining a level of

profitability consistent with the top quartile of banks as measured by ROA (Return on Assets).

• Attracting, retaining and rewarding a quality team of employees who recognize and pursue our

goal of exceptional client service.

These are but a few of our plans for 2001, as we continue to strive for excellence. Because in the

final analysis, our business is not only about facts and figures; but also about people and dreams – and

the relationships that pave the road to success.

* Pending Acquisitions

2000 Annual Report

Table of Contents

Office Location Map & Vision Statement............................................................................................................Inside Front Cover

Management’s Report to Shareholders......................................................................................................................................Page 2

Selected Financial Data..............................................................................................................................................................Page 3

Business Advantage Client: Sanders Security, Dothan, Alabama........................................................................................Page 4-5

New Horizons Client: Kayla Tillman, Tifton, Georgia........................................................................................................Page 6-7

Portfolio Plus Client: James & Peggy Maddox, Thomasville, Georgia................................................................................Page 8-9

Preference Plus Client: Lavonda Paulk, Albany, Georgia................................................................................................Page 10-11

ABC Bancorp Board of Directors ............................................................................................................................................Page 12

Senior Management & Subsidiary Bank Presidents..............................................................................................................Page 12

Management’s Discussion & Analysis of
Financial Condition and Results of Operations.............................................................................................................Page 13-19

Independent Auditor’s Report.................................................................................................................................................Page 20

Consolidated Balance Sheets...................................................................................................................................................Page 21

Consolidated Statements of Income.......................................................................................................................................Page 22

Consolidated Statements of Comprehensive Income............................................................................................................Page 23

Consolidated Statements of Stockholders’ Equity............................................................................................................Page 24-25

Consolidated Statements of Cash Flows...........................................................................................................................Page 26-27

Notes to Consolidated Financial Statements....................................................................................................................Page 28-56

Executive Officers and Directors & Senior Management......................................................................................................Page 57

Officers and Directors - Subsidiary Banks........................................................................................................................Page 58-59

Market for the Company’s Common Stock

and Dividends......................................................................................................................................................................Page 60

Availability of Information.......................................................................................................................................................Page 60

Annual Meeting of Shareholders.............................................................................................................................................Page 60

ABC Bancorp and Subsidiaries

2000 Annual Report

Management’s Report to Shareholders

We are delighted to report to you that 2000 was a year of promises fulfilled and possibilities realized. We focused on the critical
elements of expense control, net interest margin and asset quality. Among other gains, this focus resulted in a net income of
$10,098,000 or $1.19 per share for the year. Record earnings performance surpassed 1999 earnings of $8,956,000 or $1.03 per
share. Continued financial strength culminated in the Board of Directors approving our recommendation for a 37% increase in ABC
Bancorp’s annual dividend to $0.48 per share.

In addition to record earnings, 2000 also brought substantial improvements in our infrastructure. We continued to gain
efficiencies through the relocation of our mortgage, bankcard and a significant portion of our finance functions to our corporate
headquarters in Moultrie, Georgia. The rapidly growing market of Valdosta, Georgia, was entered. A new modern facility in Eufaula,
Alabama, greatly improved our prospects for growth. External growth plans in the attractive Florida and eastern coastal Georgia
markets were put into action with the signing of definitive agreements with Tri-County Bank of Trenton, Florida, and The First Bank
of Brunswick in Brunswick, Georgia.

Other prominent achievements include the implementation

of a customer needs-based sales and service approach.
Building upon this approach, two new product lines were
added – brokerage services and trust services. Offering
both traditional bank products as well as annuities
and mutual funds, allows our employees to
maintain the critical personal touch while
providing wealth management services second
to none.

Looking forward, our plans are continu-
ally guided by a balanced approach of core
asset growth and external acquisitions.
Reaping the rewards of our existing banking
network through expense management,
controlling interest margins, new fee initia-
tives and asset quality continue to be corner-
stones. We remain confident that our proven
performance and core values will continue to
attract companies looking to join the ABC
Bancorp approach to banking. We present this,
our annual report for 2000, with our continued
pledge to safety and soundness, profitable growth,
and superior personal service for our most valued
asset - our shareholders.

Kenneth J. Hunnicutt
President &
Chief Executive Officer

Mark D. Thomas
Executive Vice President &
Chief Operating Officer

Photographed at Spence Field, the home of Maule Air, Inc.,
an American Banking Company client in Moultrie, Georgia.

2000 Annual Report

Selected Financial Data

ABC Bancorp and Subsidiaries
(Dollars in thousands except per share data)

2000

1999

EARNINGS SUMMARY
Net interest income
Provision for loan losses
Non-interest income
Non-interest expense
Income taxes
Net income

PER SHARE SUMMARY

$ 38,171
1,712
8,215
30,233
4,343
10,098

Common shares outstanding
Weighted average shares
Income per weighted average share - basic
Dividends declared per share

8,347,008
8,460,230
$ 1.19
$ 0.46

ASSET QUALITY

$ 35,591
2,154
7,752
27,942
4,291
8,956

8,723,867
8,701,615
$ 1.03
$ 0.35

1998

$ 33,773
5,505
9,376
27,996
2,735
6,913

8,663,478
8,698,860
$ 0.79
$ 0.33

Non-performing assets
Net loan charge-offs (recoveries)
Reserve for loan loss to loans
Net loan charge-offs (recoveries) to average loans
Non-performing assets to reserve for loan loss
Non-performing assets to total assets

$ 5,606
$ 1,775

1.67 %
0.31 %
57.02 %
0.68 %

4.43 %
5.20 %
1.27 %
13.19 %
65.18 %

$ 9.66
$ 8.84

9.76 %

$
6,086
$ 2,451

$ 9,382
$ 2,940

1.87 %
0.48 %
61.51 %
0.77 %

4.69 %
5.40 %
1.23 %
11.93 %
64.47 %

2.14 %
0.59 %
92.05 %
1.29 %

4.59 %
5.36 %
0.99 %
10.07 %
64.88 %

$ 8.71
$ 7.84

9.63 %

$ 8.29
$ 7.32

9.91 %

OTHER KEY DATA

Net interest rate spread (a)
Net interest margin (a)
Return on average assets
Return on average equity
Efficiency ratio
Book value per share
Tangible book value per share
Stockholders’ equity to total assets

$826,197

$1.19

$1.03

$10,098

$789,460

$724,946

$0.79

$8,956

$6,913

19981998

1999
1999
Total Assets

2000
2000

19981998

1999
1999 2000
2000
Net Income
Per Average Share

19981998

1999
1999
Net Income

2000
2000

ABC Bancorp and Subsidiaries

(a) Computed using fully taxable-equivalent net income.

2000 Annual Report

The Security of Business Advantage...

John Sanders, President and Scott Sanders, Vice President of Sanders Security, Inc.

You might say that John Sanders has spent the past 28 years keeping an eye on things. And he’s done it very well. In fact, his thriv-

ing corporation, Sanders Security, Inc. of Dothan, Alabama, currently names many giants of American industry among its clients. And

it all began as a part-time job.

In 1971, while still an employee for Mack Electric, John took an evening job to supplement his growing family’s income. During

the next several years, John continued to work for Mack during the day, then moonlighted as an installer of radio-intercoms and vac-

uum systems in the evening. Often he would bring his young son, Scott, along too.

Soon, John’s reputation for quality workmanship grew, and he began to add burglar and fire alarm systems to his service reper-

toire. As this second career blossomed, so did John’s desire to own and operate his own company. Finally, in 1990, armed with a line

of credit from Southland Bank, John proudly opened the doors of Sanders Security. At his side was his new Vice President -- his son

Scott, now a college graduate. The rest, as they say, is history.

Today, Sanders Security has 33 employees and specializes in the design, installation and service of a full range of security, com-

munication and surveillance systems for both commercial and residential clients from Huntsville to Miami, Savannah to Houston.

Through it all, Southland Bank has been a silent partner. “They’ve just been extremely good about working with me. . . When I go in

to see them, they respect what I have to say, and everybody knows me. I like that.”

Though running the family business still occupies most of their time, both Sanders men are avid sportsmen, and enjoy hunting

and fishing in their favorite spots throughout Florida and Alabama. It’s a leisure time that has allowed John Sanders to reflect on his

life experience. “No matter how great your idea is, if you don’t have backing, like Southland Bank has done for us, your idea’s not

going very far. They’ve been a true friend to help get us where we’re at today.”

ABC Bancorp -- providing security and peace of mind for clients like John and Scott Sanders.

ABC Bancorp and Subsidiaries

2000 Annual Report

A New Horizon in Tifton...

Kayla Tillman, owner & publisher of Tifton Magazine

Sometimes you have to see the wider world to realize the truth in that old cliché, "there’s no place like home." In the case of Kayla

Tillman, home means Georgia. Born in tiny Surrency, in the southeast region of Georgia, Kayla knew early on that she wanted to be

a journalist.

Pursuing that dream, she earned a journalism degree from the University of Georgia and quickly gravitated to the turbulent

world of national politics. From her base in the National Press Building in Washington, D. C., Kayla helped chronicle newsmakers

and events in this stimulating, high-powered environment. Yet, as time went on, Kayla realized where her heart and her life’s work

really belonged – home in Georgia.

A chance interview soon led to a fateful choice. Offered city editor jobs at newspapers in both Augusta and Tifton, Kayla followed

her intuition. "I wanted to live in a small town and I just had a feeling about Tifton . . . that this was where I needed to be." Acting on

her hunch, Kayla settled in Tifton and established herself as a respected journalist at the Tifton Gazette.

In 1990, Kayla made the move from newspaper journalist to independent publisher. Partnering with her mother, a newly retired

schoolteacher, Kayla began compiling and publishing a local apartment guide. This initial project eventually led to others. Yet their

road to success was not without challenges.

"Being young, single and self-employed," Kayla recalls, "can make it difficult to just walk in a bank and ask for a loan. But Citizens

Security Bank approved an in-house loan and that has made all the difference. They gave me a real vote of confidence."

Today, Kayla, the proud owner of a recent MBA, also counts as accomplishments her keystone publication, Tifton Magazine, as well

as numerous newsletters and quarterlies, press releases, an editorial section in the regional telephone directory and more. "Citizens

Security Bank has always supported everything I’ve done – not only as a financial services partner but as an advertiser in my maga-

zine. They’ve really ‘pulled out all the stops’ whenever I needed it. You don’t forget something like that."

ABC Bancorp – publishing remarkable results for remarkable clients like Kayla Tillman.

ABC Bancorp and Subsidiaries

2000 Annual Report

A Coastal Life is their Portfolio...

James and Peggy Maddox, owners of Radoll Designs, Inc., Thomasville, Ga.

Chances are, if you use a computer, you’re also using one of James and Peggy Maddox’s products. And while you probably won’t

see their name linked with Bill Gates or any of the other high-profile computer gurus, their contribution to the computer industry

ranks high on the list of essentials. That’s because they manufacture the equipment that is used to produce printed circuit boards or

PCBs.

In fact, the story of Radoll Designs reads like a textbook from American Enterprise 101. But it wasn’t always that way. James, a

Vietnam combat veteran, returned to Thomasville and opened a sawmill. Unfortunately it wasn’t a successful venture. "I lost my shirt,"

James candidly admits. But James Maddox’s luck was about to change.

In 1980, Jim went to went to work as a machinist for Carbide Products in Thomasville to recover from the setback. He quickly

learned a whole range of new skills, including the manufacture of PCBs. He also met Peggy, the woman who would become his wife.

Once at Carbide, James, in the tradition of canny entrepreneurs, watched, listened and learned. And as the company grew, so did

James’ responsibilities. But then he suffered another major setback in 1987 when Carbide Products abruptly relocated the company

to Chicago. The move northward was never an option for James—that’s when he took advantage of his relationship with the Bank

of Thomas County. With their help, James arranged to purchase the machinist portion of the business from Carbide and continue the

business in Thomasville with his wife Peggy. "They have been receptive to anything I’ve wanted to do. If I need anything, the Bank

of Thomas County has been there for me."

James and Peggy Maddox’s company, Radoll, Inc. now supplies PCB materials to American mega-corporations such as IBM, AT&T,

and Siemens and distributes worldwide to companies in Europe, India, the Far East and more.

Their success story also includes a family, a home on 15 acres of rambling Georgia countryside, and all the boating and fishing on

Mexico Beach that they can squeeze into their busy life.

"It helps to be at the right place at the right time," says James, "but it also helps to have the right relationship with the right finan-

cial institution. I do business with the Bank of Thomas County because they treat you like an individual, not a number."

ABC Bancorp – helping build American success stories like clients James and Peggy Maddox.

ABC Bancorp and Subsidiaries

2000 Annual Report

Real Estate is her Preference...

Lavonda Paulk, Broker Realtor, The Anderson Company

Every career path is filled with unexpected twists and turns, and an obstacle often turns out to be an opportunity in disguise. Such

was the experience of Lavonda Paulk. When she suffered an accident that made the daily operation of her beauty salon all but impos-

sible, this Albany, Georgia, professional did not despair. Instead, she opted for a career change, and in the process, turned misfortune

into destiny.

Studying for and receiving her real estate license, Lavonda was determined to succeed in her new vocation. And succeed she did.

Now, 21 years later, Lavonda is not only the owner/broker of the Anderson Company Realtors, but is a lifetime member of the Million

Dollar Club – garnering that honor for an amazing 19 consecutive years – and was voted the 1998 Realtor of the Year.

The secret of all this success? According to Lavonda, it is persistence, integrity, a ton of hard work and a financial partner that’s with

you all the way. In Lavonda’s case, that partner has been First National Bank of South Georgia. "They have an individual, hometown

approach. In my profession, I know how important that personal, one-on-one approach is, and that’s why I stay with them."

A dynamic go-getter, Lavonda does not restrict her enthusiasm to career alone. She actively supports the Boys & Girls Club, the

Salvation Army, The Bridge, a non-profit charity for the prevention of child abuse, and many others. Here again, she finds support

from First National Bank of South Georgia. "They are always ready to help. For example, when the flood that devastated so much of

this area in 1994 struck, First National Bank was one of the first organizations to donate funds for victims. I recommend them to new-

comers because they have that caring, personal touch."

ABC Bancorp – reaching up and reaching out with clients like Lavonda Paulk.

ABC Bancorp and Subsidiaries

2000 Annual Report

ABC Bancorp, Inc. Board of Directors

From left to right: Johnny W. Floyd, Robert P. Lynch, Daniel B. Jeter, Eugene M. Vereen, Jr., Kenneth J. Hunnicutt,
Doyle Weltzbarker, Chairman, Mark D. Thomas, Wycliffe R. Griffin, J. Raymond Fulp, Henry Wortman, John G. Briggs.

Senior Management & Subsidiary Bank Presidents

Front Row: Charles A. Robinson, Mark D. Thomas, C. Larry Young; Marc E. DeMott; Cindi H. Lewis;
Jon S. Edwards; Harris O. Pittman, III; Ervin E. Brock; Tim S. Jones; Second Row: Edgar B. Smith, III;
Edwin W. Hortman, Jr.; O. Leonard Dorminey, Jr.; Alan D. Moore; Ronnie F. Marchant; Back Row: John
C. Mosely; Robert L. Evans; Kenneth J. Hunnicutt, W. Edwin Lane, Jr., CPA; Michael F. McDonald.

ABC Bancorp and Subsidiaries

2000 Annual Report
2000 Annual Report

Management’s Discussion and Analysis of Financial
Condition and Results of Operations

Cautionary Statement Regarding Forward-Looking Information
ABC’s 2000 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 addi-

tional 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 obliga-

tion 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 includ-

ed in the ABC’s current and subsequent filings with the Securities and Exchange Commission.

General
ABC’s principal asset is its ownership of the Banks. Accordingly, its results of operations are primarily depen-

dent upon the results of operations of the Banks. The Banks conduct a commercial banking business which

consists of attracting deposits from the general public and applying those funds to the origination of com-

mercial, consumer and real estate loans (including commercial loans collateralized by real estate). The Banks'

profitablity depends primarily on net interest income, which is the difference between interest income gener-

ated 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 rates 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 rates paid on its interest-bear-

ing liabilities. When interest-earning assets approximates or exceeds 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

ABC Bancorp and Subsidiaries
ABC Bancorp and Subsidiaries

13
13

2000 Annual Report

Management’s Discussion and Analysis of Financial
Condition and Results of Operations (cont.)

factors as the level of noninterest income and expenses, the provision for loan losses and the effective tax rates.

Noninterest income consists primarily of service charges on deposit accounts and other fees and income from

the sale of loans and investment securities. Noninterest expenses consist of compensation and benefits, occu-

pancy-related expenses, and other operating expenses.

Results of Operations for Years Ended December 31, 2000,
1999 and 1998
ABC's results of operations are determined by its ability to effectively manage interest income and expense, to min-

imize loan and investment losses, to generate noninterest income and to control noninterest expense. Since inter-

est rates are determined by market forces and economic conditions beyond the control of ABC, the ability to gen-

erate net interest income is dependent upon the ability of the Banks to obtain an adequate spread between the

rates earned on interest-earning assets and the rates paid on interest-bearing liabilities. Thus, the key performance

measure for net interest income is the interest margin or net yield, which is taxable-equivalent net interest income

divided by average earning assets.

The primary component of consolidated earnings is net interest income, or the difference between interest income

on interest-earning assets and interest paid on interest-bearing liabilities. The net interest margin is net interest

income expressed as a percentage of average interest-earning assets. Interest-earning assets consist of loans, invest-

ment securities and federal funds sold. Interest-bearing liabilities consist of deposits, Federal Home Loan Bank

borrowings and other short-term borrowings. 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 present this income on a taxable-equivalent

basis.

The net interest margin decreased 20 basis points to 5.20% in 2000 as compared to 5.40% in 1999. This decrease

in net interest margin resulted from an increase of 31 basis points in average yield earned on interest-earning assets

accompanied by a greater increase of 57 basis points in average rate paid on interest-bearing liabilities. The

increase in average rate paid on interest-bearing liabilities resulted from an increase of $37,450,000 or 11.24% in

time deposits to $370,707,000 in 2000 as compared to $333,257,000 in 1999. Because the Company was more

aggressive in obtaining time deposits, the average rate paid on time deposits increased 58 basis points to 5.84% in

2000 as compared to 5.26% in 1999. The Company also increased its other borrowings, primarily Federal Home

Loan Bank advances, $22,978,000 or 71.04% to $55,322,000 in 2000 from $32,344,000 in 1999, with an

increase of 117 basis points in average interest paid to 6.55% in 2000 as compared to 5.38% in 1999. Average

interest-earning assets increased $73,259,000 or 10.94% to $743,011,000 in 2000 as compared to $669,752,000

in 1999. Average yield earned on interest-earning assets increased 31 basis points to 9.35% in 2000 as compared

to 9.04% in 1999. Average loans increased $64,585,000 or 12.77% to $570,526,000 in 2000 from $505,941,000

in 1999. Average yield earned on loans increased 22 basis points to 10.22% as compared to 10.00% in 1999.

Average investments increased $10,197,000 to $159,168,000 in 2000 from $148,971,000 in 1999. Average yield

earned on investments increased 28 basis points to 6.41% in 2000 as compared to 6.13% in 1999. The change

in average interest-bearing deposits in banks and the related yield on those assets did not have a material effect on

interest income. Because increasing interest rates had a greater impact on interest paid on interest-bearing liabili-

ABC Bancorp and Subsidiaries

2000 Annual Report

Management’s Discussion and Analysis of Financial
Condition and Results of Operations (cont.)

ties than they had on yield earned on interest-earning assets, ABC’s interest rate spread decreased 26 basis points

to 4.43% in 2000 from 4.69% in 1999. Net interest income on a taxable-equivalent basis was $38,665,000 in

2000 as compared to $36,150,000 in 1999, representing an increase of $2,515,000 or 6.96%. The increase in

average interest-earning assets was funded by an increase in average deposits of $40,665,000 or 6.63% and an

increased in average borrowings of $24,091,000. In 2000, approximately 14% of the average deposits were non-

interest-bearing deposits as compared to approximately 15% in 1999.

The net interest margin increased four basis points to 5.40% in 1999 as compared to 5.36% in 1998. This increase

in net interest margin resulted from a decrease of 44 basis points in average yield earned on interest-earning assets

accompanied by a decrease of 54 basis points in average rate paid on interest-bearing liabilities. Because declin-

ing interest rates had a greater favorable impact on interest paid on interest-bearing liabilities than they had on

yield earned on interest-earning assets, ABC actually increased its interest rate spread ten basis points to 4.69%

in 1999 from 4.59% in 1998. Net interest income on a taxable-equivalent basis was $36,150,000 in 1999 as com-

pared to $34,386,000 in 1998, representing an increase of $1,764,000 or 5.13%. Average interest-earning assets

increased $27,951,000 or 4.35% to $669,752,000 in 1999 from $641,801,000 in 1998. Average loans increased

$10,520,000; average investments, including interest-bearing deposits in banks, increased $19,361,000; and aver-

age federal funds sold decreased $1,005,000. The increase in average interest-earning assets was funded by an

increase in average deposits of $6,288,000 or 1.04% to $613,327,000 in 1999 from $607,039,000 in 1998. In

1999 and 1998, approximately 15% and 14%, respectively, of the average deposits were noninterest-bearing

deposits.

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. ABC segregates

its loan portfolio by type of loan and utilizes 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, ABC further segregates its 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.

The provision for loan losses is a charge to earnings in the current period to replenish the allowance and main-

tain it at a level management has determined to be adequate. The provision for loan losses charged to earnings

amounted to $1,712,000 in 2000, $2,154,000 in 1999 and $5,505,000 in 1998. Due to adverse economic con-

ditions in early 1998, it became apparent that several agriculturally related loans and commercial business loans

were not performing according to the loan agreements. Management intensified its efforts to identify those non-

performing loans, to charge off loans that were considered in the loss category and to adequately reserve for other

loans determined to be at risk. During 1999 net loan charge-offs decreased $489,000 or 16.63% to $2,451,000

ABC Bancorp and Subsidiaries

2000 Annual Report

Management’s Discussion and Analysis of Financial
Condition and Results of Operations (cont.)

as compared to $2,940,000 in 1998. During 2000 net loan charge-offs decreased $676,000 or 27.58% to

$1,775,000 as compared to $2,451,000 in 1999. Due to the improvement in the quality of the loan portfolio,

which resulted from management’s efforts to resolve problem loan situations, management determined that the

provision for loan losses in 2000 and 1999 could be significantly reduced from the provision recorded in 1998.

During 2000, average loans increased $64,585,000 or 12.12% over 1999 as compared to an increase in average

loans of $10,520,000 or 2.12% in 1999 as compared to 1998. The allowance for loan losses decreased $63,000

or .64% to $9,832,000 at December 31, 2000 from $9,895,000 at December 31, 1999. Net charge-offs repre-

sented 103.68% of the provision for loan losses in 2000 as compared to 113.79% in 1999. Net loan charge-offs

for 2000 represented .31% of average loans outstanding during the year as compared to .48% for 1999 and .59%

for 1998. At December 31, 2000, the allowance for loan losses was 1.67% of total loans outstanding as compared

to an allowance for loan losses of 1.87% of total loans outstanding at December 31, 1999 and 2.14% of total loans

outstanding at December 31, 1998. The determination of the allowance rests upon management's judgment about

factors affecting loan quality and assumptions about the local and national economy. Management considers the

year-end allowance for loan losses adequate to cover potential losses in the consolidated loan portfolio.

Average total assets increased $68,258,000 or 9.35% to $798,221,000 in 2000 as compared to $729,963,000 in

1999. The increase in average total assets was accompanied by an increase in average deposits of $40,665,000

or 6.63% and an increase of average borrowings of $24,091,000. Average total assets increased $29,869,000 or

4.27% to $729,963,000 in 1999 as compared to $700,094,000 in 1998. The increase in average total assets was

accompanied by an increase in average total deposits of $6,288,000 or 5.39% to $613,327,000 in 1999 from

$607,039,000 in 1998 and an increase in average borrowings of $19,678,000.

Noninterest Income
Service charges on deposit accounts increased $697,000 or 12.24% to $6,393,000 in 2000 as compared to

$5,696,000 in 1999 on an increase in average deposits of $40,665,000 or 6.63% to $653,992,000 in 2000 from

$613,327,000 in 1999. The increase in service charges on deposit accounts was attributable primarily to the

increase in average deposits. Service charges on deposit accounts decreased $24,000 or .42% to $5,696,000 in

1999 as compared to $5,720,000 in 1998 on an increase in average deposits of $6,288,000 to $613,327,000 in

1999 from $607,039,000 in 1998. The decrease in service charges on deposit accounts was attributable to the

introduction of new products to meet increased competition in the Company’s market areas. Certain of these

products reduced service charge income. For example, overdraft protection extended to customers reduces the

amount of income generated from insufficient check charges or overdraft charges. A portion of this decrease in

other income is offset by an increase in interest and fees on loans. Origination fees on mortgage loans decreased

$383,000 or 48.64% to $405,000 in 2000 as compared to $788,000 in 1999. This decrease is attributable to the

decrease in mortgage lending activities, particularly the refinancing of mortgage loans, resulting from the stabi-

lization of interest rates during 2000. In comparison, origination fees on mortgage loans decreased $95,000 or

10.76% in 1999 as compared with 1998 due to the increase in interest rates on mortgage loans during 1999. In

1998, ABC recognized nontaxable income of $1,200,000 in life insurance benefits upon the death of a former offi-

cer and director of a subsidiary bank. This nonrecurring transaction represented 12.37% of total noninterest

income in 1998 and 17.36% of consolidated net income for 1998. All other noninterest income increased

ABC Bancorp and Subsidiaries

2000 Annual Report

Management’s Discussion and Analysis of Financial
Condition and Results of Operations (cont.)

$58,000 or 4.27% to $1,417,000 in 2000 as compared to $1,359,000 in 1999. All other noninterest income

increased $214,000 or 13.60% to $1,359,000 in 1999 as compared to $1,573,000 in 1998. The decrease in other

noninterest income was attributable to a decrease of $143,000 in net gains and losses on the sale of fixed assets

and other real estate and a decrease of $68,000 in gain on sale the of loans.

Following is a comparison of noninterest income for 2000, 1999 and 1998.

2000

Year Ended December 31,
1999
(Dollars in Thousands)

1998

Service charges on deposit accounts

6,393

5,696

5,720

Mortgage origination fees

Other service charges, commissions and fees

Nontaxable life insurance benefits

Other income

405

622

795

788

423

936

883

506

1,200

1,067

8,215

7,843

9,376

Noninterest Expense
Salaries and employee benefits increased $1,534,000 or 10.30% to $16,420,000 in 2000 from $14,886,000 in

1999. Salaries increased $547,000 (4.98%); bonuses increased $468,000 (47.76%); retirement expense increased

$242,000 (34.23%); and all other employee benefits, including stock options and other grants, insurance and

payroll taxes, increased $277,000 (12.44%). Stock options and other grants increased $192,000. Salaries and

employee benefits increased $861,000 or 6.14% to $14,886,000 in 1999 from $14,025,000 in 1998. This

increase was attributable to an increase of 14 full-time employees and five part-time employees during 1999 and

to normal increases in salaries and employee benefits.

Equipment and occupancy expense remained fairly constant during 2000, 1999 and 1998. Equipment and occu-

pancy expense increased $147,000 or 3.51% to $4,338,000 in 2000 as compared to $4,191,000 in 1999. The

increase in 2000 was attributable to an increase in depreciation expense of $201,000 over depreciation expense

for 1999. Equipment and occupancy expense decreased $129,000, or 2.99%, to $4,191,000 in 1999 as com-

pared to $4,320,000 in 1998. This decrease in expense was attributable primarily to a decrease of $155,000 in

depreciation expense.

Amortization of intangible assets remained the same in 2000 as the amount charged to expense in 1999.

Amortization of intangible assets decreased $47,000 in 1999 as compared to 1998 as a result of the completion of

amortization of core deposits acquired in an earlier bank acquisition.

Data processing fees increased $456,000 to $1,147,000 in 2000 as compared to $691,000 in 1999.

Approximately $200,000 of the increase was attributable to management’s decision in 2000 to classify certain

charges as data processing fess that were charged to other expense in 1999 and 1998. The reclassification of these

charges in 1999 and 1998 to data processing fees was not considered necessary.

ABC Bancorp and Subsidiaries

2000 Annual Report

Management’s Discussion and Analysis of Financial
Condition and Results of Operations (cont.)

In addition, ABC installed voice response units in all the Banks that accounted for an increase of approximately

$84,000 in 2000. Also, a billing error in 1999 resulted in the payment of an additional $100,000 in 2000 that

related to data processing fees in 1999. There were no significant change in data processing fees charged to

expense in 1999 as compared to 1998.

Following is an analysis of noninterest expense for 2000, 1999 and 1998.

2000

Year Ended December 31,
1999
(Dollars in Thousands)

1998

Salaries and employee benefits

16,420

14,886

14,025

Equipment and occupancy

Amortization of intangible assets

Data processing fees

Other expense

4,338

804

1,147

7,524

4,191

804

691

7,370

4,320

851

774

8,026

30,233

27,942

27,996

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 the Banks to meet those needs. ABC and the Banks seek to

meet liquidity requirements primarily through management of short-term investments (principally interest-bear-

ing deposits in banks and available for sale securities due in one year or less) and monthly amortizing loans.

Another source of liquidity is the repayment of maturing single payment loans. In addition, the Banks maintain

relationships with correspondent banks which could provide funds to them on short notice, if needed.

The liquidity and capital resources of ABC and the Banks are monitored on a periodic basis by state and federal

regulatory authorities. At December 31, 2000, the Banks’ short-term investments were adequate to cover any rea-

sonable anticipated immediate need for funds. During 2000, ABC increased its total capital by retaining net earn-

ings of $6,223,000 after payment of dividends. After recording an increase in capital of $2,192,000 for unreal-

ized gains on securities available for sale, net of taxes, an increase of $387,000 for restricted stock transactions, and

a decrease in capital of $4,162,000 for repurchase of treasury shares, by $4,640,000 during 2000. At December

31, 2000, total capital of ABC amounted to $80,656,000. ABC and the Subsidiary Banks are aware of no events

or trends likely to result in a material change in their liquidity.

In early 2001, the Company entered into definitive merger agreements with two financial institutions for the acqui-

sition of all of the outstanding stock of a bank holding company located in Georgia and a commercial bank locat-

ed in Florida in exchange for a combination of cash and the Company’s common stock. The mergers are subject

to the approval of the shareholders of both financial institutions and certain regulatory authorities and the regis-

tration of the Company’s common stock in the case of the pending merger with the bank holding company. If these

mergers are approved and consummated as planned, the total merger consideration will approximate $30.4 mil-

ABC Bancorp and Subsidiaries

2000 Annual Report

Management’s Discussion and Analysis of Financial
Condition and Results of Operations (cont.)

lion, of which approximately $13.4 million will be paid in cash and approximately 1,620,000 shares of the

Company’s common stock exchanged for the remaining shares of the two target companies. The Company intends

to obtain the funds required for the cash consideration from its primary correspondent bank under debt agree-

ments to be repaid over five years.

At December 31, 2000, ABC had binding commitments for capital expenditures of approximately $2,150,000.

In accordance with risk capital guidelines issued by the Federal Reserve Board, ABC is required to maintain a min-

imum 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% cap-

ital level are expected to have well-diversified risks, including no undue interest rate risk exposure, excellent con-

trol systems, good earnings, high asset quality, and well managed on- and off-balance sheet activities; and, in gen-

eral, 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.

The following table summarizes the regulatory capital levels of the Company at December 31, 2000 .

Actual

Required

Excess

Amount

Percent

Amount Percent Amount
(Dollars in Thousands)

Percent

Leverage capital

$ 79,954

9.86 % $ 32,422

4.00 % $ 47,532

5.86 %

Risk-based capital:

Core capital

Total capital

79,954

13.34

23,967

4.00

55,987

9.34

87,544

14.61

47,935

8.00

39,609

6.61

Each Bank also met its individual regulatory capital requirements at December 31, 2000.

ABC Bancorp and Subsidiaries

2000 Annual 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, 2000 and 1999, 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, 2000. These financial statements are the responsibility of the Company's management. Our respon-

sibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards. 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 sup-

porting 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, 2000 and 1999,

and the results of their operations and their cash flows for each of the three years in the period ended

December 31, 2000, in conformity with generally accepted accounting principles.

Albany, Georgia

January 23, 2001, except for note 17 as to
which the date is February 23, 2001

ABC Bancorp and Subsidiaries

2000 Annual Report

Consolidated Balance Sheets

DECEMBER 31, 2000 AND 1999

(Dollars in Thousands)

Assets
Cash and due from banks
Interest-bearing deposits in banks
Securities available for sale, at fair value

Loans
Less allowance for loan losses

Loans, net

Premises and equipment, net
Excess of cost over net assets of banks acquired
Other assets

Liabilities and Stockholders’ Equity
Deposits

Noninterest-bearing
Interest-bearing

Total deposits

Federal funds purchased and securities sold under agreements to repurchase
Other borrowings
Other liabilities

Total liabilities

Commitments and contingent liabilities

Stockholders’ equity

Common stock, par value $1; 15,000,000 shares authorized;

9,137,990 and 9,098,690 shares issued

Capital surplus
Retained earnings
Accumulated other comprehensive income (loss)
Unearned compensation

Less cost of shares acquired for the treasury, 790,982 and 374,823 shares

Total stockholders' equity

See Notes to Consolidated Financial Statements.

2000

1999

$ 38,411
4,952
162,105

$ 47,399
32,731
146,990

587,381
9,832
577,549

530,225
9,895
520,330

19,703
6,832
16,645
$ 826,197

19,540
7,636
14,834
$ 789,460

$ 94,917
584,968
679,885
2,653
55,350
7,653
745,541

$ 103,279
537,379
640,658
397
66,150
6,239
713,444

9,138
29,237
48,411
685
(595)
86,876
(6,220)
80,656

9,099
28,854
42,188
(1,507)
(560)
78,074
(2,058)
76,016

$ 826,197

$ 789,460

ABC Bancorp and Subsidiaries

2000 Annual Report

Consolidated Statements of Income

YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998

(Dollars in Thousands)

Interest income

Interest and fees on loans
Interest on taxable securities
Interest on nontaxable securities
Interest on deposits in other banks
Interest on federal funds sold

Interest expense

Interest on deposits
Interest on other borrowings

Net interest income
Provision for loan losses

Net interest income after provision for

loan losses

Other income

Service charges on deposit accounts
Other service charges, commissions and fees
Mortgage origination fees
Non-taxable life insurance benefits
Loss on sale of securities
Other

Other expenses

Salaries and employee benefits
Equipment expense
Occupancy expense
Amortization of intangible assets
Data processing fees
Other operating expenses

Income before income taxes

Applicable income taxes
Net income

Income per common share - Basic

Income per common share - Diluted

See Notes to Consolidated Financial Statements.

2000

1999

1998

58,328
8,750
959
939
-
68,976

26,753
4,052
30,805
38,171
1,712

50,603
7,488
1,086
814
-
59,991

22,424
1,976
24,400
35,591
2,154

51,584
6,313
1,190
1,077
53
60,217

25,411
1,033
26,444
33,773
5,505

36,459

33,437

28,268

6,393
622
405
-
-
795
8,215

16,420
2,484
1,854
804
1,147
7,524
30,233
14,441
4,343
10,098

1.19

5,696
423
788
-
(91)
936
7,752

14,886
2,348
1,843
804
691
7,370
27,942
13,247
4,291
8,956

1.03

5,720
506
883
1,200
-
1,067
9,376

14,025
2,442
1,878
851
774
8,026
27,996
9,648
2,735
6,913

0.79

ABC Bancorp and Subsidiaries

2000 Annual Report

Consolidated Statements of Comprehensive Income

YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998

(Dollars in Thousands)

Net income
Other comprehensive income (loss):

Net unrealized holding gains (losses) arising during period,
net of tax (benefits) of $1,129, ($973) and $32
Reclassification adjustment for losses included in the net
income, net of tax of $31

Total other comprehensive income (loss)

2000
$ 10,098

1999

8,956

1998
6,913

2,192

(1,889)

2,192

60)

(1,829)

Comprehensive income

$ 12,290

7,127

6,993

See Notes to Consolidated Financial Statements

ABC Bancorp and Subsidiaries

2000 Annual Report

Consolidated Statements of Stockholder’s Equity

YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998

(Dollars in Thousands)

Balance, December 31, 1997

Net Income
Cash dividends declared, $.33 per share
Net treasury stock transactions
Other comprehensive income

Balance, December 31, 1998

Net income
Cash dividends declared, $.35 per share
Six-for-five stock split
Issuance of restricted shares of common stock

Common Stock

Par Value

Capital
Surplus

7,524,718
-
-
-
-
7,524,718
-
-
1,516,142

7,525
-
-
-
-
7,525
-
-
1,516

29,677
-
-
-
-
29,677
-
-
(1,516)

under employee incentive plan

57,830

693

Amortization of unearned compensation,

net of forfeitures

Net treasury stock transactions
Other comprehensive loss
Balance, December 31, 1999

Net income
Cash dividends declared, $.46 per share
Issuance of restricted shares of common stock

-
-
-
9,098,690
-
-

-
-
-
9,099
-
-

-
-
-
28,854
-
-

under employee incentive plan

39,300

383

Amortization of unearned compensation,

net of forfeitures

Net treasury stock transactions
Other comprehensive income

Balance, December 31, 2000

See Notes to Consolidated Financial Statements.

-
-
-
9,137,990

-
-
-
9,138

-
-
-
29,237

ABC Bancorp and Subsidiaries

2000 Annual Report

Accumulated
Other
Comprehensive
Income
(Loss)

Retained
Earnings

32,264
6,913
(2,897)
-
-
36,280
8,956
(3,048)
-

-
-
-
42,188
10,098
(3,875)

242
-
-
-
80
322
-
-
-

-
-
(1,829)
(1,507)
-
-

Unearned
Compensation

Treasury Stock

Cost

Total

-
-
-
-
-
-
-
-
-

(751)

191
-
-
(560)
-
-

272,353
-
-
32,800
-
305,153
-
-
62,470

(1,555)
-
-
(415)
-
(1,970)
-
-
-

68,153)
6,913)
(2,897)
(415)
80)
71,834)
8,956)
(3,048)
-)

-
7,200
-
374,823
-
-

-
(88)
-
(2,058)
-
-

191)
(88)
(1,829)
76,016)
10,098)
(3,875)

(422)

-
-
-
48,411

-
-
2,192
685

387
-
-
(595)

-
416,159
-
790,982

-
(4,162)
-
(6,220)

387)
(4,162)
2,192)
80,656)

ABC Bancorp and Subsidiaries

2000 Annual Report

Consolidated Statements of Cash Flows

YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998

(Dollars in Thousands)

OPERATING ACTIVITIES

Net income
Adjustments to reconcile net income to net cash

provided by operating activities:
Depreciation and amortization
Amortization of intangible assets
Amortization of unearned compensation
Net losses on sale of securities available for sale
Net (gains) losses on sale or disposal
of premises and equipment
Gain from life insurance benefits
Provision for loan losses
Provision for deferred taxes
(Increase) decrease in interest receivable
Increase (decrease) in interest payable
Decrease in taxes receivable
Increase (decrease) in taxes payable
Other prepaids, deferrals and accruals, net
Total adjustments

2000

1999

1998

$ 10,098)

8,956)

6,913)

2,189)
804)
387)
-

7)
-)
1,712)
(634)
(1,970)
578)
-
(1)
371)
3,443)

1,988)
804)
191)
91)

36)
-)
2,154)
(87)
(75)
57)
526)
328)
(378)
5,635)

2,143)
851)
- )
- )

(188)
(1,200)
5,505)
(1,170)
1,271)
(38)
-
(485)
663)
7,352)

Net cash provided by operating activities

13,541)

14,591)

14,265)

INVESTING ACTIVITIES

(Increase) decrease in interest-bearing

deposits in banks

Purchases of securities available for sale
Purchases of securities held to maturity
Proceeds from maturities of securities

available for sale

Proceeds from sale of securities available for sale
Proceeds from maturities of securities

held to maturity

Decrease in federal funds sold
(Increase) decrease in loans, net
Purchase of premises and equipment
Proceeds from sale of premises and equipment
Proceeds from life insurance benefits

27,779)
(26,961)
-

15,167)
-

-
-
(58,931)
(2,359)
-
-

(18,314)
(70,410)
-

(12,129)
(110,362)
(400)

58,994)
17,149)

3,283)
-
(55,482)
(2,631)
-
-

67,936)
- )

11,807)
890)
10,110)
(2,383)
708)
1,671)

Net cash used in investing activities

(45,305)

(67,411)

(32,152)

ABC Bancorp and Subsidiaries

2000 Annual Report

Consolidated Statements of Cash Flows

YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998

(Dollars in Thousands)

FINANCING ACTIVITIES

Increase in deposits
Increase (decrease) in federal funds purchased

and securities sold under agreements to repurchase

Proceeds from other borrowings
Repayment of other borrowings
Dividends paid
Purchase of treasury shares

2000

1999

1998

39,227

7,333

32,614

2,256
109,800
(120,600)
(3,745)
(4,162)

(486)
338,950
(284,650)
(2,898)
(88)

223
5,500
(9,050)
(2,900)
(415)

Net cash provided by financing activities

22,776

58,161

25,972

Net increase (decrease) in cash and due from banks

(8,988)

5,341

8,085

Cash and due from banks at beginning of year

47,399

42,058

33,973

Cash and due from banks at end of year

38,411

47,399

42,058

SUPPLEMENTAL DISCLOSURES

OF CASH FLOW INFORMATION

Cash paid during the year for:

Interest

$ 30,227

24,343

26,482

Income taxes

4,978

3,524

4,390

NONCASH TRANSACTION

Transfer of securities held to maturity to

securities available for sale

See Notes to Consolidated Financial Statements.

15,330

ABC Bancorp and Subsidiaries

2000 Annual Report - 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 con-

ducted 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 Georgia 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

The preparation of financial statements in conformity with generally accepted accounting principles

requires management to make estimates and assumptions that affect the reported amounts of 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 particu-

larly susceptible to significant change in the near term relate to the determination of the allowance for

loan losses, the valuation of foreclosed real estate and deferred taxes.

The Company's consolidated financial statements include the accounts of the Company and its sub-

sidiaries. All significant intercompany transactions and accounts have been eliminated in consolidation.
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 and federal funds purchased are reported net.

The Company maintains amounts due from banks which, at times, may exceed federally insured

limits. The Company has not experienced any losses in such accounts.
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. 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 other comprehen-

sive income. Equity securities, including restricted stock, without a readily determinable fair value are

classified as available-for-sale and recorded at cost.

As of December 31, 1999, the Company transferred all debt securities classified as securities held to

maturity to securities available for sale.

ABC Bancorp and Subsidiaries

2000 Annual Report - Notes to Consolidated Financial Statements

Summary of Significant Accounting Policies (Cont.)

Securities (continued)

Interest and dividends, including amortization of premiums and accretion of discounts, are included

in interest income. Gains and losses on the sale of securities are determined using the specific identi-

fication method. Declines in the fair value of any security below its cost that is deemed to be other

than temporary is reflected in earnings as realized losses.
Loans

Loans are reported at their outstanding unpaid principal balances less unearned income, deferred fees

or costs on originated loans, and the allowance for loan losses. Interest income is accrued on the unpaid

principal balance.

Loan origination fees, net of certain direct origination costs of consumer and instalment loans are rec-

ognized at the time the loan is placed on the books. Because these loan fees are not significant and the

majority of loans have maturities of one year or less, the results of operations are not materially differ-

ent than the results which would be obtained by accounting for loan fees and costs in accordance with

generally accepted accounting principles. Loan origination fees net of certain direct loan origination

costs for all other loans are deferred and recognized as an adjustment of the yield over the life of the

loan.

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.

Interest income on nonaccrual loans is subsequently recognized only to the extent cash payments are

received until the loans are returned to accrual status.

The allowance for loan losses is established through a provision for loan losses charged to expense.

Loans 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 in

the loan portfolio. The allowance for loan losses is evaluated on a regular basis by management and is

based upon management’s periodic review of the collectibility of the loans in light of historical experi-

ence, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s abil-

ity to repay, estimated value of any underlying collateral and prevailing economic conditions. This eval-

uation is inherently subjective as it requires estimates that are susceptible to significant revision as more

information becomes available. 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.

ABC Bancorp and Subsidiaries

2000 Annual Report - Notes to Consolidated Financial Statements

Summary of Significant Accounting Policies (Cont.)

Loans (continued)

A loan is considered impaired when it is probable the Bank 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 based on the present value of expected future cash flows discounted at the loan’s effective

interest rate, the loan’s observable 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.
Premises and Equipment
Land is carried at cost. Premises and equipment are carried at cost less accumulated depreciation com-

puted principally on the straight-line method over the estimated useful lives of the assets.
Other Real Estate Owned

Other real estate owned (OREO) represents properties acquired through foreclosure or other proceed-

ings. OREO is held for sale and is carried at the lower of the recorded amount of the loan or fair value

of the properties less estimated costs of disposal. Any write-down to fair value at the time of transfer to

OREO is charged to the allowance for loan losses. Property is evaluated regularly to ensure the record-

ed amount is supported by its current fair value and valuation allowances to reduce the carrying amount

to fair value less estimated costs to dispose are recorded as necessary. Subsequent decreases in fair value

and increases in fair value, up to the value established at foreclosure, are recognized as charges or cred-

its to noninterest expense. OREO is reported net of allowance for losses in the Company's financial

statements. The carrying amount of other real estate owned at December 31, 2000 and 1999 was

$620,000 and $461,000, respectively.
Transfers of Financial Assets

Transfers of financial assets are accounted for as sales, when control over the assets has been surren-

dered. Control over transferred assets is deemed to be surrendered when (1) the assets have been iso-

lated from the Bank, (2) the transferee obtains the right (free of conditions that constrain it from taking

advantage of that right) to pledge or exchange the transferred assets, and (3) the Bank does not main-

tain effective control over the transferred assets through an agreement to repurchase them before their

maturity.
Intangible Assets

Intangible assets, arising from excess of purchase price over net assets acquired of purchased banks, are

being amortized on the straight-line method over various periods not exceeding 25 years for banks

acquired prior to 1996. Excess acquisition cost of Southland Bank acquired in 1996 and the

Douglas branch of Citizens Security Bank acquired in 1997 are being amortized on the straight-line

method over 15 years.

ABC Bancorp and Subsidiaries

2000 Annual Report - Notes to Consolidated Financial Statements

Summary of Significant Accounting Policies (Cont.)

Income Taxes

Income tax expense consists of current and deferred taxes. Current income tax provisions approximate

taxes to be paid or refunded for the applicable year. Deferred tax assets and liabilities are recognized on

the temporary differences between the bases of assets and liabilities as measured by tax laws and their

bases as reported in the financial statements. Deferred tax expense or benefit is then recognized for the

change in deferred tax assets or liabilities between periods.

Recognition of deferred tax balance sheet amounts is based on management's belief that it is more like-

ly than not that the tax benefit associated with certain temporary differences, tax operating loss carry-

forwards, and tax credits will be realized. A valuation allowance is recorded for those deferred tax items

for which it is more likely than not that realization will not occur.

The Company and its subsidiaries file a consolidated income tax return. Each subsidiary provides for

income taxes based on its contribution to income taxes (benefits) of the consolidated group.
Stock Compensation Plans

Statement of Financial Accounting Standards ("SFAS") No. 123, Accounting for Stock-Based

Compensation, encourages all entities to adopt a fair value based method of accounting for employee

stock compensation plans, whereby compensation cost is measured at the grant date based on the value

of the award and is recognized over the service period, which is usually the vesting period. However,

it also allows an entity to continue to measure compensation cost for those plans using the intrinsic value

based method of accounting prescribed by Accounting Principles Board Opinion No. 25, Accounting

for Stock Issued to Employees, whereby compensation cost is the excess, if any, of the quoted market

price of the stock at the grant date (or other measurement date) over the amount an employee must pay

to acquire the stock. Stock options issued under the Company’s stock option plan have no intrinsic

value at the grant date, and under Opinion No. 25 no compensation cost is recognized for them. The

Company has elected to continue with the accounting methodology in Opinion No. 25 and, as a result,

has provided pro forma disclosures of net income and earnings per share and other disclosures, as if the

fair value based method of accounting had been applied.
Earnings Per Share

Basic earnings per common share are computed by dividing net income by the weighted-average num-

ber of shares of common stock outstanding. Diluted earnings per common share are computed by

dividing net income after adjustments for the after-tax income effect of the issuance of potential com-

mon shares that are dilutive by the sum of the weighted-average number of shares of common stock

outstanding and potential common shares. The weighted-average number of shares outstanding for the

years ended at December 31, 2000, 1999, and 1998 was 8,460,230; 8,701,615; and 8,698,860, respec-

tively. The weighted-average number of shares outstanding and potential shares for the years ended

December 31, 2000, 1999 and 1998 was 8,465,669; 8,710,685; and 8,713,177, respectively.

ABC Bancorp and Subsidiaries

2000 Annual Report - Notes to Consolidated Financial Statements

Summary of Significant Accounting Policies (Cont.)

Earnings Per Share (continued)

The weighted average shares and potential common shares for 1998 have been adjusted to reflect the

six-for-five split effected in the form of a 20% stock dividend to shareholders of record as of December

15, 1999.
Comprehensive Income

Accounting principles generally require that recognized revenue, expenses, gains and losses be includ-

ed in net income. Although certain changes in assets and liabilities, such as unrealized gains and loss-

es on available-for-sale securities, are reported as a separate component of the equity section of the bal-

ance sheet, such items, along with net income, are components of comprehensive income.
Recent Developments

In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative Instruments and Hedging

Activities, effective for fiscal years beginning after June 15, 2000. This Statement establishes account-

ing and reporting standards for derivative instruments and hedging activities, including certain deriva-

tive instruments embedded in other contracts, and requires that an entity recognize all derivatives as

assets or liabilities in the balance sheet and measure them at fair value. If certain conditions are met, an

entity may elect to designate a derivative as follows: (a) a hedge of the exposure to changes in the fair

value of a recognized asset or liability or an unrecognized firm commitment, (b) a hedge of the expo-

sure to variable cash flows of a forecasted transaction, or (c) a hedge of the foreign currency exposure

of an unrecognized firm commitment, an available-for-sale security, a foreign currency denominated

forecasted transaction, or a net investment in a foreign corporation. The Statement generally provides

for matching the timing of the recognition of the gain or loss on derivatives designated as hedging instru-

ments with the recognition of the changes in the fair value of the item being hedged. Depending on the

type of hedge, such recognition will be in either net income or other comprehensive income. For a

derivative not designated as a hedging instrument, changes in fair value will be recognized in net income

in the period of change. Management is currently evaluating the impact of adopting this Statement on

the financial statements, but does not anticipate that it will have a material impact.
Reclassification of Certain Items

Certain items in the consolidated financial statements as of and for the years ended December 31, 1999

and 1998 have been reclassified, with no effect on net income, to be consistent with the classifications

adopted for the year ended December 31, 2000.

ABC Bancorp and Subsidiaries

2000 Annual Report - Notes to Consolidated Financial Statements

NOTE 2. Investments in Securities

As permitted by Financial Accounting Standards Board Statement No. 115, "Accounting for Certain

Investments in Debt and Equity Securities", the Company elected on December 31, 1999, to transfer all

debt securities classified as securities held to maturity to securities available for sale. Upon election, the

Company transferred debt securities with a market value of $15,420,000 to securities available for sale.

These securities were marked to fair value resulting in a net unrealized gain of $90,000 which was

included in stockholders’ equity at $59,000, net of related taxes of $31,000.

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

Securities Available for Sale

December 31, 2000:
U. S. Government and
agency securities

State and municipal securities
Corporate debt securities
Mortgage-backed securities
Equity securities
Restricted equity securities

December 31, 1999:
U. S. Government and
agency securities

State and municipal securities
Corporate debt securities
Mortgage-backed securities
Marketable equity securities
Restricted equity securities

Amortized
Cost

Gross
Gross
Unrealized
Unrealized
Gains
Losses
(Dollars in Thousands)

Fair
Value

60,467
19,206
6,101
71,160
647
3,486
$ 161,067

49,741
20,059
4,449
70,700
872
3,452
149,273

892
330
114
563
-
-
1,899

9
209
-
122
-
-
340

(173)
(68)
(85)
(502)
(33)
-
(861)

61,186
19,468
6,130
71,221
614
3,486
$ 162,105

(939)
(134)
(105)
(1,345)
(100)
-
(2,623)

48,811
20,134
4,344
69,477
772
3,452
146,990

ABC Bancorp and Subsidiaries

2000 Annual Report - Notes to Consolidated Financial Statements

Investments in Securities (Cont.)

The amortized cost and fair value of debt securities as of December 31, 2000 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.

Securities Available
for Sale

Amortized
Cost

Fair
Value

(Dollars in Thousands)

Due in one year or less

19,747

19,701

Due from one year to five years

Due from five to ten years

Due after ten years

Mortgage-backed securities

Equity securities

Restricted equity securities

28,205

36,394

1,428

71,160

647

3,486

28,400

37,204

1,479

71,221

614

3,486

161,067

162,105

Securities with a carrying value of $82,568,979 and $78,388,000 at December 31, 2000 and 1999,

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:

Gross gains on sales of securities

Gross losses on sales of securities

Net realized (losses) on sales of
securities available for sale

2000

December 31,
1999
(Dollars in Thousands)

1998

(95)

(91)

ABC Bancorp and Subsidiaries

2000 Annual Report - Notes to Consolidated Financial Statements

NOTE 3. Loans and Allowance for Loan Losses

The composition of loans is summarized as follows:

Commercial and financial

109,647

83,385

December 31,

2000

1999

(Dollars in Thousands)

Agricultural

Real estate - construction

Real estate - mortgage, farmland

Real estate - mortgage, commercial

Real estate - mortgage, residential

Consumer installment loans

Other

Allowance for loan losses

34,840

14,046

57,253

160,456

128,614

76,076

6,449

587,381

9,832

29,694

13,228

59,018

150,075

117,936

59,529

17,360

530,225

9,895

The following is a summary of information pertaining to impaired loans as of and for the years ended:

577,549

520,330

2000

December 31,
1999
(Dollars in Thousands)

1998

Impaired loans without a valuation allowance

Impaired loans with a valuation allowance

4,863

5,551

Total impaired loans

$ 4,863

Valuation allowance related to impaired loans

$ 1,020

Average investment in impaired loans

Interest income recognized on impaired loans

Foregone interest income on impaired loans

$ 5,603

541

8,767

1,846

5,551

953

6,447

$ 12,730

593

160

1,160

ABC Bancorp and Subsidiaries

2000 Annual Report - Notes to Consolidated Financial Statements

Loans and Allowance for Loan Losses (Cont.)

In the ordinary course of business, the Company has granted loans to certain directors, executive offi-

cers, 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 relat-

ed party loans for the years ended December 31, 2000 and 1999 are as follows:

Balance, beginning of year
Advances
Repayments
Transactions due to change(s)

in related parties
Balance, end of year

December 31,

2000

1999

(Dollars in Thousands)

27,457)
28,802)
(23,082)

3,144
36,321

19,356)
21,527)
(13,031)

(395)
27,457)

Changes in the allowance for loan losses for the years ended December 31, 2000, 1999, and 1998 are

as follows:

Balance, beginning of year

Provision charged to operations
Loans charged off
Recoveries of loans previously charged off

Balance, end of year

2000

December 31,
1999
(Dollars in Thousands)
$ 10,192)
2,154)
(3,733)
1,282)
9,895)

9,895)
1,712)
(2,594)
819)
$ 9,832)

1998

7,627)
5,505)
(4,030)
1,090)
10,192)

ABC Bancorp and Subsidiaries

2000 Annual Report - Notes to Consolidated Financial Statements

NOTE 4. Premises and Equipment, Net

Premises and equipment are summarized as follows:

December 31,

2000

1999

(Dollars in Thousands)
4,857
16,604
17,419

471
39,351
19,648
19,703

4,903
14,776
15,977

1,502
37,158
17,618
19,540

Land
Buildings
Equipment
Construction in progress,

estimated cost to complete; $2,150

Accumulated depreciation

NOTE 5. Deposits

The aggregate amount of time deposits in denominations of $100,000 or more at December 31, 2000

and 1999 was $120,670,000 and $95,282,000, respectively. The scheduled maturities of time deposits

at December 31, 2000 are as follows:

2001
2002
2003
2004
2005
Later years

(Dollars in
Thousands)
345,864
$
22,319
9,012
3,574
2,927
17
383,713

NOTE 6. Employee Benefit Plans

Prior to 1998, the Company and its subsidiaries maintained simplified employee pension plans for sub-

stantially all employees. These plans were SEP-IRA defined contribution plans.

Effective January 1, 1998, the Company established two retirement plans to replace the simplified

employee pension plans. 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 com-

pensation. The plan also provides for nonelective and discretionary contributions to be made at the sole

discretion of the Company. The ABC Bancorp Money Purchase Pension Plan was established to sup-

plement a participant’s income upon retirement. The Plan is fully funded by the Company. The Plan

provides for a fixed rate of contribution, currently 5%, of the participant’s eligible compensation.

ABC Bancorp and Subsidiaries

2000 Annual Report - Notes to Consolidated Financial Statements

Employee Benefit Plans (Cont.)

The rate of contribution is established by the Compensation Committee of ABC Bancorp’s Board of

Directors. The Plan must be amended to change the fixed rate of 5% established by the Compensation

Committee in December 1997. All full-time and part-time employees are eligible to participate in both

plans provided they have met the eligibility requirements. Generally, a participant must have complet-

ed twelve months of employment with a minimum of 1,000 hours. Aggregate expense under the two

plans charged to operations during 2000, 1999 and 1998 amounted to $949,000, $707,000 and

$644,000, respectively.

NOTE 7. Deferred Compensation Plans

The Company and two subsidiary banks have entered into separate deferred compensation arrange-

ments with certain executive officers and directors. The plans call for certain amounts payable at retire-

ment, death or disability. The estimated present value of the deferred compensation is being accrued

over the remaining expected term of active employment. The Company and Banks have purchased life

insurance policies which they intend to use to finance this liability. Aggregate compensation expense

under the plans were $75,000, $70,000 and $78,000 for 2000, 1999 and 1998, respectively, and is

included in other operating expenses.

ABC Bancorp and Subsidiaries

2000 Annual Report - Notes to Consolidated Financial Statements

NOTE 8. Other Borrowings

Other borrowings consist of the following:

Advances under revolving credit agreement with SunTrust Bank
with interest at sixty-day LIBOR rate plus .9% (7.46%
at December 31, 2000) due on May 31, 2001; unsecured.

Advances from Federal Home Loan Bank with interest at adjustable
rates (ranging from 6.48% to 6.93% at December 31, 2000) due
at various dates from January 31, 2001 to September 8, 2009.

Advance from Federal Home Loan Bank with interest at a fixed rate
(6.48% at December 31, 2000) due in annual installments of
$50,000 through June 6, 2005.

Advances from Federal Home Loan Bank with interest at a fixed rate
(ranging from 5.63% to 5.98%) due at various dates from
January 31, 2000 to June 15, 2000.

Advances from Federal Home Loan Bank with interest at a fixed rate
(ranging from 5.07% to 5.52%), convertible to a variable rate at
option of Federal Home Loan Bank in 2000, due at various dates
from April 2, 2003 to October 29, 2009.

December 31,
2000

1999

(Dollars in Thousands)
$
2,500

2,000 $

53,100

25,350

250

300

15,000

23,000

$ 55,350 $

66,150

The advances from Federal Home Loan Bank are collateralized by the pledging of first mortgage loans
and other specific loans.

Other borrowings at December 31, 2000 have maturities in future years as follows:

2001

2002

2003

2004

2005

Later years

(Dollars in

Thousands)

29,150

1,050

15,050

10,000

55,350

ABC Bancorp and Subsidiaries

2000 Annual Report - Notes to Consolidated Financial Statements

NOTE 9. Income Taxes

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

2000

Years Ended December 31,
1999
(Dollars in Thousands)

1998

Current
Deferred

4,977
(634)
4,343

4,378
(87)
4,291

3,905
(1,170)
2,735

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:

2000

Years Ended December 31,
1999
(Dollars in Thousands)

1998

Tax at federal income tax rate

4,910

4,504

3,280

Increase (decrease) resulting from:

Tax-exempt interest
Amortization of excess

cost over assets acquired

Tax-exempt life insurance proceeds
Other

Provision for income taxes

(497)

(392)

(407)

162
-
(232)
4,343

167
-
12
4,291

167
(408)
103
2,735

ABC Bancorp and Subsidiaries

2000 Annual Report - Notes to Consolidated Financial Statements

Income Taxes (Cont.)

Net deferred income tax assets of $2,710,000 and $3,981,000 at December 31, 2000 and 1999, respec-

tively, are included in other assets. The components of deferred income taxes are as follows:

December 31,
2000

1999

Deferred Tax Assets
Loan loss reserves
Deferred compensation
Unearned compensation related to restricted stock
Nonaccrual interest
Net operating loss tax carryforward
Unrealized loss on securities available for sale

Deferred Tax Liabilities:

Deprecation and amortization
Unrealized gain on securities available for sale

(Dollars in Thousands)
$
3,040
171
66
193
188
776
4,434

3,343
196
196
216
164
-
4,115

276
1,129
1,405

453
-
453

Net deferred tax assets

2,710

3,981

NOTE 10. 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 10,001 shares were granted. None

of these options have been exercised, however, all of the options were exercisable as of December 31,

2000. Options under the 1992 Plan expire in 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 34,050 shares were exer-

cisable as of December 31, 2000.

ABC Bancorp and Subsidiaries

2000 Annual Report - Notes to Consolidated Financial Statements

Stock Option Plans (Cont.)

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 cir-

cumstances to prevent dilution. As of December 31, 2000, the Company has issued a total

of 108,696 restricted shares under the Omnibus Plan as compensation for certain key salaried employ-

ees. 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 peri-

od. Compensation expense related to these grants was $387,000 and $191,000 for 2000 and 1999,

respectively. In addition to the granting of restricted shares, options to purchase 162,052 shares of the

Company’s common stock have been granted under the Omnibus Plan as of December 31,2000.

A summary of the status of the three fixed plans at December 31, 2000, 1999 and 1998 and changes

during the years ended on those dates is as follows:

2000

December 31,
1999

1998

Weighted-
Average
Exercise
Price

Number

Weighted-
Average
Exercise
Price

Number

Weighted-
Average
Exercise
Price

Number

159,151 $ 11.40
10.30
86,000
-
-)
11.79
(5,598)
11.00
239,553

115,966 $
51,280
-)
(8,095)
159,151

77,501 $ 10.45
12.18
15.66
42,274
10.02
-
-
-
15.66
13.74
(3,809)
12.18
11.40 115,966

65,781

41,260

26,651

1.78

2.97

3.41

Under option, beginning
of the year
Granted
Exercised
Forfeited
Under option, end of year

Exercisable at end of year
Weighted-average fair value
per option of options
granted during year

ABC Bancorp and Subsidiaries

2000 Annual Report - Notes to Consolidated Financial Statements

Stock Option Plans (Cont.)

A further summary about options outstanding at December 31, 2000 is as follows:

Options Outstanding

Options Exercisable

Weighted- Weighted-
Average
Average
Exercise
Contractual
Price
Life in Years

Number
Outstanding

Range of
Exercise
Prices
4.50
11.33
15.94
14.17
10.39
9.90
10.11
10.83
10.38
10.00
9.94
8.75

Number
Outstanding
10,001
67,500
25,775
6,000
600
25,777
18,000
2,400
75,500
2,000
3,000
3,000
239,553

2.0
6.3
7.0
7.3
8.1
8.1
8.3
8.9
9.1
9.4
9.5
9.9
7.59

4.50
11.33
15.94
14.17
10.39
9.90
10.11
10.83
10.38
10.00
9.94
8.75
11.00

Weighted-
Average
Exercise
Price
$

4.50
11.33
15.94
14.17
10.39
9.90
10.11
10.83

-
-
-
-

10,001
34,050
9,975
2,400
120
5,155
3,600
480

-
-
-
-

65,781

10.91

As permitted by Statement of Financial Accounting Standard No. 123, "Accounting for Stock-Based

Compensation" (SFAS No. 123), the Company recognizes compensation cost for stock-based employ-

ee compensation awards in accordance with APB Opinion No. 25, "Accounting for Stock Issued to

Employees". The Company recognized no compensation cost under the fixed stock option plan for the

years ended December 31, 2000, 1999 and 1998. If the Company had recognized compensation cost

in accordance with SFAS No. 123, net income and net income per share would have been reduced as

follows:

As reported
Stock based

2000

Basic
Net
Income
Per Share

Net
Income

December 31,
1999

Basic
Net
Income
Per Share

Net
Income

1998

Basic
Net
Income
Per Share

Net
Income

$ 10,098 $

1.19

8,956 $

1.03

$ 6,913 $

0.79

compensation, net of
related tax effect

(33)

As adjusted

$ 10,065 $

-
1.19

(13)
8,943 $

(18)

1.03

$ 6,895 $

0.79

2000

Diluted
Net
Income
Per Share

Net
Income

December 31,
1999

Diluted
Net
Income
Per Share

Net
Income

1998

Diluted
Net
Income
Per Share

Net
Income

$ 10,098 $

1.19

8,956 $

1.03

$ 6,913 $

0.79

(33)

$ 10,065 $

-
1.19

(13)
8,943 $

(18)

1.03

$ 6,895 $

0.79

As reported
Stock based

compensation, net of
related tax effect

As adjusted

ABC Bancorp and Subsidiaries

2000 Annual Report - Notes to Consolidated Financial Statements

Stock Option Plans (Cont.)

TThe fair value of the options granted in 2000 was based upon the discounted value of future cash flows

of the options using the following assumptions:

Risk-free interest rate
Expected life of the options
Expected dividends (as a percent of the fair value of the stock)
Expected volatility

5.76%
10 years
4.57%
17.34%

NOTE 11. Earnings Per Common Share

The following is a reconciliation of net income (the numerator) and the weighted average shares out-

standing (the denominator) used in determining basic and diluted earnings per share. All amounts are

presented in thousands, except per share amounts.

Year Ended December 31, 2000
Shares
(Denominator)

Income
(Numerator)

Per Share
Amount

Basic earnings per share
Net income
Effect of Dilutive Securities
Stock options
Dilutive earnings per share
Net income

10,098

8,460

1.19

10,098

8,465

1.19

Year Ended December 31, 1999
Shares
(Denominator)

Income
(Numerator)

Per Share
Amount

Basic earnings per share
Net income
Effect of Dilutive Securities
Stock options
Dilutive earnings per share
Net income

8,956

8,702

1.03

8,711

1.03

Year Ended December 31, 1998
Shares
(Denominator)

Per Share
Amount

Income
(Numerator)

Basic earnings per share
Net income
Effect of Dilutive Securities
Stock options
Dilutive earnings per share
Net income

6,913

8,699

0.79

6,913

8,713

0.79

ABC Bancorp and Subsidiaries

2000 Annual Report - Notes to Consolidated Financial Statements

NOTE 12. Commitments and Contingent Liabilities

The Company is party to financial instruments with off-balance-sheet risk in the normal course of busi-

ness 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 finan-

cial instrument for commitments to extend credit and standby letters of credit is represented by the con-

tractual amount of those instruments. The Company uses the same credit policies in making commit-

ments and conditional obligations as it does for on-balance-sheet instruments. A summary of the

Company's commitments is as follows:

Commitments to extend credit

Credit card commitments

Standby letters of credit

December 31,

2000
(Dollars in Thousands)

1999

$ 75,007

84,150

10,471

5,179

9,162

3,415

$ 90,657

96,727

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. 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

Company evaluates each customer's creditworthiness on a case-by-case basis. The amount of collateral

obtained, if deemed necessary by the Company upon extension of credit, is based on management's credit

evaluation of the customer.

Credit card commitments are unsecured.

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 borrow-

ing 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.

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 effect on the Company's

financial statements.

ABC Bancorp and Subsidiaries

2000 Annual Report - Notes to Consolidated Financial Statements

NOTE 13. Concentrations of Credit

The Banks make agricultural, agribusiness, commercial, residential and consumer loans to customers

primarily in counties in south Georgia 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.

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-col-

lateralized and supported by cash flows. Collateral for agricultural loans include equipment, crops, live-

stock and land. Credit losses from loans related to the agricultural economy is taken into consideration

by management in determining the allowance for loan losses.

A substantial portion of the Company's loans are secured by real estate in the Company's primary mar-

ket area. In addition, a substantial portion of the 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 real estate owned are susceptible to changes

in market conditions in the Company's primary market area.

The Company has a concentration of funds on deposit at its primary correspondent bank at December

31, 2000, as follows:

Noninterest-bearing accounts

28,937

ABC Bancorp and Subsidiaries

2000 Annual Report - Notes to Consolidated Financial Statements

NOTE 14. 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, 2000, approximately $9,500,000 of retained earnings were

available for dividend declaration without regulatory approval.

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 financial statements. Under capital adequacy guidelines and the regulatory framework for prompt

corrective action, the Banks must meet specific capital guidelines that involve quantitative measures of

the assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting prac-

tices. The Banks capital amounts and classification are also subject to qualitative judgments by the reg-

ulators about components, risk weightings, and other factors. Prompt corrective action provisions are

not applicable to bank holding companies.

Quantitative measures established by regulation to ensure capital adequacy require the Banks to main-

tain minimum amounts and ratios of total and Tier I capital to risk-weighted assets and of Tier I capital

to average assets. Management believes, as of December 31, 2000, the Banks meet all capital adequacy

requirements to which they are subject.

As of December 31, 2000, the most recent notification from the regulatory authorities categorized the

Banks as well capitalized under the regulatory framework for prompt corrective action. To be catego-

rized 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 table. There are no conditions or events since that notification

that management believes have changed the Banks' category.

ABC Bancorp and Subsidiaries

2000 Annual Report - Notes to Consolidated Financial Statements

Regulatory Matters (Cont.)

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

For Capital
Adequacy
Purposes

To Be Well
Capitalized Under
Prompt Corrective
Action Provisions
Ratio Amount Ratio

Actual

Amount

Ratio Amount

As of December 31, 2000
Total Capital
to Risk Weighted Assets:
Consolidated
American Banking Company
Heritage Community Bank
Bank of Thomas County
Citizens Security Bank
Cairo Banking Company
Southland Bank
Central Bank and Trust
First National Bank of
South Georgia
Merchants and Farmers Bank
Tier I Capital
to Risk Weighted Assets:
Consolidated
American Banking Company
Heritage Community Bank
Bank of Thomas County
Citizens Security Bank
Cairo Banking Company
Southland Bank
Central Bank and Trust
First National Bank of
South Georgia
Merchants and Farmers Bank

Tier I Capital

to Average Assets:
Consolidated
American Banking Company
Heritage Community Bank
Bank of Thomas County
Citizens Security Bank
Cairo Banking Company
Southland Bank
Central Bank and Trust
First National Bank of

South Georgia

Merchants and Farmers Bank

(Dollars in Thousands)

$ 87,544 14.61%
$ 14,877 12.43%
$ 5,195 10.88%
$ 3,282 11.65%
$ 12,486 13.75%
$ 7,147 13.49%
$ 17,024 13.36%
$ 5,122 12.26%

$47,935
8.00%
$ 9,574 8.00%
$ 3,819 8.00%
$ 2,253 8.00%
$ 7,263
8.00%
$ 4,237 8.00%
$10,194 8.00%
$ 3,342 8.00%

- - -N/A - - -
$11,967 10.00%
$ 4,774
10.00%
$ 2,816 10.00%
$ 9,079 10.00%
$ 5,297 10.00%
$12,742 10.00%
$ 4,178 10.00%

$ 6,443 10.44%
$ 4,766 14.56%

$ 4,936 8.00%
$ 2,618 8.00%

$ 6,170
10.00%
$ 3,273 10.00%

$ 79,954 13.34%
$ 13,378 11.18%
9.69%
$ 4,624
$ 2,929 10.40%
$ 11,319 12.47%
$ 6,477 12.23%
$ 15,381 12.07%
$ 4,596 11.00%

$23,967
4.00%
$ 4,787 4.00%
$ 1,910 4.00%
$ 1,126 4.00%
$ 3,631 4.00%
$ 2,119 4.00%
$ 5,097 4.00%
$ 1,671 4.00%

- - - N/A - - -

$ 7,180
$ 2,864
$ 1,690
$ 5,447
$ 3,178
$ 7,645
$ 2,507

6.00%
6.00%
6.00%
6.00%
6.00%
6.00%
6.00%

$ 5,672
9.19%
$ 4,355 13.31%

$ 2,468 4.00%
$ 1,309 4.00%

$ 3,702
$ 1,964

6.00%
6.00%

$ 79,954
$ 13,378
$ 4,624
$ 2,929
$ 11,319
$ 6,477
$ 15,381
$ 4,596

9.86%
8.79%
8.03%
7.64%
7.98%
8.41%
8.37%
7.48%

$32,422
$ 6,091
$ 2,302
$ 1,534
$ 5,672
$ 3,079
$ 7,350
$ 2,456

4.00%
4.00%
4.00%
4.00%
4.00%
4.00%
4.00%
4.00%

- - - N/A - - -

$ 7,614
$2,877
$1,917
$ 7,091
$ 3,849
$ 9,187
$ 3,070

5.00%
5.00%
5.00%
5.00%
5.00%
5.00%
5.00%

$ 5,672
$ 4,355

8.04%
8.92%

$ 2,822
$ 1,954

4.00%
4.00%

$ 3,527
$ 2,442

5.00%
5.00%

ABC Bancorp and Subsidiaries

2000 Annual Report - Notes to Consolidated Financial Statements

Regulatory Matters (Cont.)

For Capital
Adequacy
Purposes

To Be Well
Capitalized Under
Prompt Corrective
Action Provisions
Ratio Amount Ratio

Amount

Actual
Amount Ratio

(Dollars in Thousands)

$ 76,167
$ 13,533
4,443
$
$
3,232
$ 12,771
6,829
$
$ 14,398
5,429
$

14.37 %
13.45 %
12.07 %
13.52 %
15.14 %
15.61 %
12.11 %
14.72 %

$ 42,402
$ 8,049
$ 2,945
$ 1,912
$ 6,747
$ 3,501
$ 9,511
$ 2,950

8.00 %
8.00 %
8.00 %
8.00 %
8.00 %
8.00 %
8.00 %
8.00 %

- - - N/A - - -

10.00 %
$ 10,062
$ 3,682 10.00 %
$ 2,390 10.00 %
$ 8,433 10.00 %
$ 4,376 10.00 %
$ 11,889 10.00 %
$ 3,687 10.00 %

$
$

5,681
4,110

11.20 %
$ 4,058
12.27 % $ 2,680

8.00 %
8.00 %

$ 5,073 10.00 %
$ 3,350 10.00 %

$ 69,501
$ 12,269
3,982
$
$
2,932
$ 11,709
6,272
$
$ 13,389
4,963
$

13.11 %
12.19 %
10.82 %
12.27 %
13.88 %
14.33 %
10.85 %
13.46 %

$ 21,201
$ 4,025
$ 1,473
$
956
$ 3,373
$ 1,750
$ 4,935
$ 1,475

4.00 %
4.00 %
4.00 %
4.00 %
4.00 %
4.00 %
4.00 %
4.00 %

- - -N/A - - -
$ 6,037
$ 2,209
$ 1,434
$ 5,060
$ 2,625
$ 7,402
$ 2,212

6.00 %
6.00 %
6.00 %
6.00 %
6.00 %
6.00 %
6.00 %

$
$

5,047
3,690

9.95 %
11.02 %

$ 2,029
$ 1,340

4.00 %
4.00 %

$ 3,044
$ 2,010

6.00 %
6.00 %

- - - N/A - - -

$ 69,501
$ 12,269
3,982
$
$
2,932
$ 11,709
6,272
$
$ 13,389
4,963
$

9.16 % $30,350
8.66 % $ 5,667
7.62 % $ 2,090
8.20 % $ 1,430
8.30 % $ 5,643
8.30 % $ 3,023
7.52 % $ 7,122
8.70 % $ 2,282

4.00 %
4.00 % $ 7,084
4.00 % $ 2,613
4.00 % $ 1,788
4.00 % $ 7,054
4.00 % $ 3,778
4.00 % $ 8,902
4.00 % $ 2,853

5.00 %
5.00 %
5.00 %
5.00 %
5.00 %
5.00 %
5.00 %

$
$

5,047
3,690

8.49 % $ 2,378
7.76 % $ 1,902

4.00 % $ 2,972
4.00 % $ 2,378

5.00 %
5.00 %

As of December 31, 1999
Total Capital

to Risk Weighted Assets:
Consolidated
American Banking Company
Heritage Community Bank
Bank of Thomas County
Citizens Security Bank
Cairo Banking Company
Southland Bank
Central Bank and Trust
First National Bank of
South Georgia
Merchants and Farmers Bank

Tier I Capital

ABC Bancorp and Subsidiaries

2000 Annual Report - Notes to Consolidated Financial Statements

Regulatory Matters (Cont.)

NOTE 15. 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 finan-

cial instruments. In cases where quoted market prices are not available, fair values are based on esti-

mates using present value or other valuation techniques. Those 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

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 fair values of

financial instruments as disclosed herein:

Cash, Due From Banks, Interest-Bearing Deposits, and Federal
Funds Sold:

The carrying amounts of cash, due from banks, interest-bearing deposits in banks, and federal funds

sold/purchased approximate fair values.

Securities:

Fair values for securities are based on available quoted market prices. The carrying values of equity

securities with no readily determinable fair value approximate fair values.

ABC Bancorp and Subsidiaries

2000 Annual Report - Notes to Consolidated Financial Statements

Fair Value of Financial Instruments (Cont.)

Loans:

For variable-rate loans that reprice frequently and have no significant change in credit risk, fair values

are based on carrying values. For other loans, the fair values are estimated using discounted cash flow

analyses, using interest rates currently being offered for loans with similar terms to borrowers with sim-

ilar credit quality. Fair values for impaired loans are estimated using discounted cash flow analyses or

underlying collateral values.

Deposits:

The carrying amounts of demand deposits, savings deposits, and variable-rate certificates of deposit

approximate their fair values. Fair values for fixed-rate certificates of deposit are estimated using a

discounted cash flow calculation that applies interest rates currently being offered on certificates to a

schedule of aggregated expected monthly maturities on time deposits.

Accrued Interest:

The carrying amounts of accrued interest approximate their fair values.

ABC Bancorp and Subsidiaries

2000 Annual Report - Notes to Consolidated Financial Statements

Fair Value of Financial Instruments (Cont.)

Off-Balance-Sheet Instruments:

Fair values of the Company's off-balance-sheet financial instruments are based on fees currently charged

to enter into similar agreements. Since the majority of the Company’s off-balance-sheet instruments

consist of nonfee-producing, variable-rate commitments, the Company has determined they do not

have a distinguishable fair value.

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

December 31, 2000

December 31, 1999

Carrying
Amount

Fair
Value

Carrying
Amount

Fair
Value

(Dollars in Thousands)

Financial assets:

Cash and short-term investments

43,363

80,130

Investments in securities

$ 162,105

$ 146,990

Loans

$ 587,381

$ 576,607

$ 530,225

$ 529,093

Allowance for loan losses

9,832

(9,895)

Loans, net

$ 577,549

$ 576,607

$ 520,330

$ 529,093

Accrued interest receivable

$ 11,091

9,121

Financial liabilities:

Deposits

Federal funds purchased and securities

$ 679,885

$ 680,844

$ 640,658

$ 640,216

sold under agreements to repurchase $

2,653

Other borrowings
Accrued interest payable

$ 55,350
3,265
$

$ 55,432
3,265
$

$
$

397

66,150
2,687

$
$

397

64,625
2,687

ABC Bancorp and Subsidiaries

2000 Annual Report - Notes to Consolidated Financial Statements

NOTE 16. Condensed Financial Information of ABC
Bancorp (Parent Company Only)

CONDENSED BALANCE SHEETS

DECEMBER 31, 2000 AND 1999

(Dollars in Thousands)

Assets
Cash
Interest bearing deposits in banks
Investment in subsidiaries
Other assets

Total assets

Liabilities
Other borrowings
Other liabilities

Total liabilities

Stockholders’ equity

2000

1999

1,912
-
75,290
7,761

2,102
1,200
69,162
7,672

$ 84,963

$ 80,136

2,000
2,307

4,307

2,500
1,620

4,120

80,656

76,016

Total liabilities and stockholders’ equity

$ 84,963

$ 80,136

ABC Bancorp and Subsidiaries

2000 Annual Report - Notes to Consolidated Financial Statements

NOTE 16. Condensed Financial Information of ABC
Bancorp (Parent Company Only) (Cont.)

CONDENSED STATEMENTS OF INCOME

YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998

(Dollars in Thousands)

Income

Dividends from subsidiaries
Interest
Fee income
Other income
Total income

2000

1999

1998

$ 7,645
52
8,424
645
16,766

5,582
94
6,804
967
13,447

$ 8,942
69
6,702
962
16,675

Expense

Interest
Amortization and depreciation
Other expense
Total expense

Income before income tax benefits

and equity in undistributed earnings
(distributions in excess of earnings)
of subsidiaries
Income tax benefits

Income before equity in undistributed earnings

(distributions in excess of earnings)
of subsidiaries

Equity in undistributed earnings (distributions in excess

of earnings) of subsidiaries

174
935
9,716
10,825

5,941
621

6,562

3,536

170
721
7,990
8,881

223
636
7,597
8,456

4,566
200

8,219
77

4,766

8,296

4,190

(1,383)

Net income

$ 10,098

8,956

$ 6,913

ABC Bancorp and Subsidiaries

2000 Annual Report - Notes to Consolidated Financial Statements

NOTE 16. Condensed Financial Information of ABC
Bancorp (Parent Company Only) (Cont.)

CONDENSED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998

(Dollars in Thousands)

OPERATING ACTIVITIES

Net income
Adjustments to reconcile net income to

net cash provided by operating activities:
Depreciation and amortization
Amortization of intangible assets
Amortization of compensation expense
Distributions in excess of earnings

(undistributed earnings) of subsidiaries

(Increase) decrease in interest receivable
Decrease in interest payable
Increase (decrease) in taxes payable
Provision for deferred taxes
(Increase) decrease in due from subsidiaries
Other prepaids, deferrals and accruals, net

Total adjustments

2000

1999

1998

$ 10,098

8,956

$ 6,913

636
299
387

(3,536)
2
-
91
(203)
(117)
302
(2,139)

408
313
191

(4,190)
(2)
(1)
866
(104)
29
(312)
(2,802)

276
360
-

1,383
-
(82)
(812)
47
(79)
102
1,195

Net cash provided by operating activities

7,959

6,154

8,108

INVESTING ACTIVITIES

(Increase) decrease in interest-bearing deposits in banks
Purchases of premises and equipment
Contribution of capital to subsidiary bank
Purchase of securities available for sale
Proceeds from sale of premises and equipment
Net cash provided by (used in) investing activities

1,200
(1,521)
(400)
-
979
258

(1,200)
(1,792)
(600)
(221)
-)
(3,813)

-)
(1,458)
(350)
-)
-)
(1,808)

ABC Bancorp and Subsidiaries

2000 Annual Report - Notes to Consolidated Financial Statements

NOTE 16. Condensed Financial Information of ABC
Bancorp (Parent Company Only) (Cont.)

CONDENSED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998

(Dollars in Thousands)

FINANCING ACTIVITIES

Repayment of other borrowings
Treasury stock transactions, net
Dividends paid

Net cash used in financing activities

Net increase (decrease) in cash
Cash at beginning of year
Cash at end of year

SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION
Cash paid during the year for interest

2000

1999

1998

(500)
(4,162)
(3,745)
(8,407)
(190)
2,102
$ 1,912

- )
(88)
(2,898)
(2,986)
(645)
2,747
$ 2,102

$ (2,500)
(415)
(2,900)
(5,815)
485
2,262
$ 2,747

174

171

305

NOTE 17. Pending Acquisitions

The Company has entered into a definitive merger agreement with Golden Isles Financial Holdings, Inc.,

Brunswick, Georgia whereby it would acquire all of the outstanding stock of Golden Isles Financial

Holdings, Inc. in exchange for a combination of cash and the Company’s stock. The total merger con-

sideration will approximate $23.3 million. Total assets of Golden Isles Financial Holdings, Inc. at

December 31, 2000 were approximately $146.8 million. The merger is subject to approval by Golden

Isles Financial Holdings, Inc. shareholders and certain regulatory authorities and the registration of the

Company’s common stock to be issued in connection with the merger. As a result of the merger, The

First Bank of Brunswick, a wholly-owned subsidiary of Golden Isles Financial Holdings, Inc., will

become a wholly-owned subsidiary of the Company. The merger will be accounted for as a purchase

transaction.

The Company has also entered into a definitive merger agreement with Tri-County Bank, Trenton,

Florida whereby it would acquire all of the outstanding stock of Tri-County Bank in exchange for a com-

bination of cash and the Company’s common stock. The total merger consideration will approximate

$7.2 million. Total assets of Tri-County Bank at December 31, 2000 were approximately $47.5 million.

The merger is subject to approval by Tri-County Bank shareholders and certain regulatory authorities.

As a result of the merger, Tri-County Bank will become a wholly-owned subsidiary of the Company. The

merger will be accounted for as a purchase transaction.

ABC Bancorp and Subsidiaries

2000 Annual Report

ABC Bancorp Subsidiary Banks Executive Officers and Directors

Executive Officers

President
& Chief Executive Officer
Kenneth J. Hunnicutt

Executive Vice President
& Chief Operating Officer
Mark D. Thomas

Executive Vice President
& Chief Financial Officer
W. Edwin Lane, Jr., CPA

Directors

Doyle Weltzbarker, Chairman
Occupation: Farm Products
Main Employer: West End Milling

John G. Briggs
Occupation: Auto Parts
Main Employer: Briggs Auto
Parts, Inc.

Johnny W. Floyd
Occupation: Timber and Realty
Main Employer: Floyd Timber
Company & Cordele Realty, Inc.

J. Raymond Fulp
Occupation: Pharmacist
Main Employer: CVS Pharmacy

Mark D. Thomas
Occupation: Banker
Main Employer: ABC Bancorp

Henry Wortman
Occupation: Dairyman
Main Employer: Jackson &
Wortman

Chairman Emeritus
Eugene M. Vereen, Jr.
Occupation: Real Estate & Investing
Main Employer: M.I.A., Co.

Wycliffe R. Griffin
Occupation: Distribution of Farm
Chemicals
Main Employer: Triangle Chemical
& Cardinal Chemical

Kenneth J. Hunnicutt
Occupation: Banker
Main Employer: ABC Bancorp

Daniel B. Jeter
Occupation: Consumer Finance
Main Employer: Standard Discount

Robert P. Lynch
Occupation: Automobile Dealer
Main Employer: Motor Finance
Company

ABC Bancorp Senior Management Team

Senior Vice President &

Director of Internal Audit

Charles A. Robinson

Senior Vice President &
Director of Automation & Operations
Marc E. DeMott

Senior Vice President &
Director of Retail Banking
Michael F. McDonald

President & Chief Executive Officer
Kenneth J. Hunnicutt

Executive Vice President &
Chief Operating Officer
Mark D. Thomas

Executive Vice President &
Chief Financial Officer
W. Edwin Lane, Jr., CPA

Senior Vice President &
Director of Credit Administration
Jon S. Edwards

Senior Vice President &
Director of Human Resources
Cindi Lewis

ABC Bancorp and Subsidiaries

2000 Annual Report

ABC Bancorp Subsidiary Banks Executive Officers and Directors

Officers and Directors - Subsidiary Banks

American Banking Company
Moultrie, Georgia

Cairo Banking Company
Cairo, Georgia

Citizens Security Bank
Tifton, Georgia

President & Chief Executive Officer
Ronnie F. Marchant

President & Chief Executive Officer
Edgar B. Smith, III

President & Chief Executive Officer
Edwin W. Hortman, Jr.

Directors
Lynn L. Jones, Chairman
John G. Briggs
Robert M. Brown, MD
Jack C. Chastain
C. Wayne Cooper
Thomas L. Estes, MD
Robert A. Faircloth
Kenneth J. Hunnicutt
Ronnie F. Marchant
J. Mark Mobley, Jr.
Thomas W. Rowell
Joan V. Stallings
Mark D. Thomas
President Emeritus
Eugene M. Vereen, Jr.

Bank of Thomas County
Thomasville, Georgia

President & Chief Executive Officer
Ervin E. Brock

Directors
L. Maurice Chastain, Chairman
Dale E. Aldridge
Mark Brewer, MD
Ervin E. Brock
Gene Hickey
Kenneth J. Hunnicutt
Zeke Johnson
Dr. Terrel M. Solana
Mark D. Thomas
F. Keith Wortman

Directors
Jeffrey F. (Jet) Cox, Chairman
Nancy C. Clark
Ronnie L. Gainous
Cuy Harrell, III
Kenneth J. Hunnicutt
Winburn Knight
William J. Morton, MD
G. Ashley Register, MD
Edgar B. Smith, III
Mark D. Thomas

Central Bank & Trust
Cordele, Georgia

President & Chief Executive Officer
Robert L. Evans

Directors
Johnny W. Floyd, Chairman
Robert E. Barr, MD
Charles W. Clark
Robert L. Evans
William T. Greene
William H. Griffin, III
Kenneth J. Hunnicutt
Mark D. Thomas
Henry M. Turton, Jr.
David N. Rainwater

Directors
J. Raymond Fulp, Chairman
Austin L. Coarsey
E. M. Flowers, Jr.**
Stewart D. Gilbert, MD
Edwin W. Hortman, Jr.
Kenneth J. Hunnicutt
John Alan Lindsey
Loran A. Pate
Joel Spivey
Mark D. Thomas
Clifford A. Walker, Sr., DMD

Citizens Security Bank
Douglas, Georgia

City President
Alan D. Moore

City Directors
Robert Fender, Chairman
Earl Brice
Anthony Deal
Sherman Dudley
Faye Hennesy
Edwin W. Hortman, Jr.
Kenneth J. Hunnicutt
Alan D. Moore
Donnie Smith
Joel Spivey
Oscar Street
Mark D. Thomas

** Deceased

ABC Bancorp and Subsidiaries

2000 Annual Report

ABC Bancorp Subsidiary Banks Executive Officers and Directors

Officers and Directors - Subsidiary Banks

Citizens Security Bank
Ocilla, Georgia

Heritage Community Bank
Quitman, Georgia

Southland Bank
Dothan, Alabama

City President
C. Larry Young

City Directors
Loran A. Pate, Chairman
Gary Paulk
Wycliffe R. Griffin
Edwin W. Hortman, Jr.
Kenneth J. Hunnicutt
Howard C. McMahan
Daniel M. Paulk
Mark D. Thomas
C. Larry Young

First National Bank
of South Georgia
Albany, Georgia

President & Chief Executive Officer
O. Leonard Dorminey, Jr.

Directors
Glen A. Kirbo, Chairman
Willie Adams, Jr., MD
Robert V. Barkley
O. Leonard Dorminey, Jr.
Waddell M. Hagins, Jr.
Kenneth J. Hunnicutt
Russell E. Martin
Reid E. Mills
W. Thomas Mitcham, MD
R. Douglas Oliver
Mark D. Thomas
W. Paul Wallace, Jr.

President & Chief Executive Officer
Tim S. Jones

President & Chief Executive Officer
Harris O. Pittman, III

Directors
Robert Dale Ezzell, Chairman
J. Granger Danford**
Joe M. Davis
John D. DeLoach
Kenneth J. Hunnicutt
Harris O. Pittman, III
Mark D. Thomas

Directors
Doyle Weltzbarker, Chairman
William P. Cooper, Jr.
Kenneth J. Hunnicutt
Tim S. Jones
Ronald B. Miller
Mark D. Thomas
Henry Wortman

Merchants & Farmers Bank
Donalsonville, Georgia

President & Chief Executive Officer
John C. Mosely

Directors
Jerry G. Mitchell, Chairman
Charles R. Burke, Sr.
H. Wayne Carr
Joseph S. Hall
Rufus G. Heard
Kenneth J. Hunnicutt
Newton E. King, Jr.
John C. Mosely
Dan E. Ponder, Jr.
Mark D. Thomas
Directors Emeritus
John B. Clarke, Sr.
Newton E. King, Sr.

** Deceased

ABC Bancorp and Subsidiaries

2000 Annual Report

MARKET FOR THE COMPANY’S COMMON STOCK
AND DIVIDENDS

ABC Bancorp Common Stock is quoted through the National Market System of the National
Association of Securities Dealers (NASDAQ) under the symbol “ABCB”.

The following table sets forth the low and high sales prices for the common stock as quoted on
Nasdaq-NMS during 2000.

Table Info:

Calendar Period
2000

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

Sales Prices

Low

9.63

9.50

9.00

8.00

High

11.13

11.00

10.75

10.50

Quarterly dividends of $.08-1/3 per share were declared for the first three quarters of 1999 and divi-
dends of $.10 per share were declared for the fourth quarter of 1999. Quarterly dividends of $ .10 per
share were declared for the first quarter of 2000 and dividends of $ .12 per share were declared for
the last three quarters of 2000.

AVAILABILITY OF INFORMATION

ABC Bancorp will provide without charge, upon written request, a copy of the Annual Report on
Form 10-K, including the financial statements and the financial statement schedules, required to be
filed with the Securities and Exchange Commission for fiscal year 2000.

Please direct requests to:
ABC Bancorp, Attention: W. Edwin Lane, Jr., P.O. Box 3668, Moultrie, GA 31776-3668.

ANNUAL MEETING OF SHAREHOLDERS

The 2001 Annual Meeting of Shareholders of ABC Bancorp will be held at 4:15 p.m. EST,
Tuesday, May 15, 2001, at the location specified in the proxy.

310 First Street Southeast • Moultrie, Georgia 31768
(229) 890-1111 • www.ABCBancorp.com

ABC Bancorp and Subsidiaries

You Work
Hard
for Your
Money...
We Work
Hard for
you.

Proud Members of the
ABC Bancorp Team:

• American Banking Company

• Citizens Security Bank

• Bank of Thomas County

• First National Bank of South Georgia

• Cairo Banking Company

• Heritage Community Bank

• Central Bank & Trust

• Merchants & Farmers Bank

• Southland Bank

Member FDIC