<PAGE> 1
================================================================================
FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _____________ TO ____________
COMMISSION FILE NUMBER: 0-23113
PRIME BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
TEXAS 76-0088973
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
12200 NORTHWEST FREEWAY
HOUSTON, TEXAS 77092
(Address of principal executive offices, including zip code)
(713) 209-6000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
As of August 12, 1999, there were 9,804,483 shares of the registrant's Common
Stock, par value $.25 per share outstanding.
================================================================================
<PAGE> 2
PRIME BANCSHARES, INC. AND SUBSIDIARIES
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION Page
----
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 1999 (unaudited) and December 31, 1998......................2
Consolidated Statements of Earnings for the Three Months and Six Months Ended
June 30, 1999 and 1998 (unaudited)...................................................................3
Consolidated Statement of Changes in Shareholders' Equity..............................................4
Consolidated Statements of Cash Flows for the Six Months
Ended June 30, 1999 and 1998 (unaudited).............................................................5
Notes to Interim Consolidated Financial Statements.....................................................6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations....................8
Item 3. Quantitative and Qualitative Disclosures about Market Risk..............................................18
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.......................................................................................19
Item 2. Changes in Securities...................................................................................19
Item 3. Defaults upon Senior Securities.........................................................................19
Item 4. Submission of Matters to a Vote of Security Holders.....................................................19
Item 5. Other Information.......................................................................................19
Item 6. Exhibits and Reports on Form 8-K........................................................................19
Signatures.......................................................................................................20
</TABLE>
1
<PAGE> 3
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PRIME BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
Cash and cash equivalents:
Cash and due from banks ................................................................ $ 31,817 $ 33,424
Federal funds sold and other temporary investments ..................................... 27,954 48,472
------------ ------------
Total cash and cash equivalents .................................................... 59,771 81,896
------------ ------------
Securities:
Available-for-sale ..................................................................... 23,861 70,406
Held-to-maturity ....................................................................... 512,563 366,908
------------ ------------
Total securities ................................................................... 536,424 437,314
------------ ------------
Loans, net of allowance for loan losses of $6,214 and $6,184 ........................... 570,603 526,220
Premises and equipment, net ............................................................ 17,211 16,566
Accrued interest receivable ............................................................ 6,270 6,151
Other assets ........................................................................... 9,427 10,185
------------ ------------
Total assets ....................................................................... $ 1,199,706 $ 1,078,332
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing .................................................................... $ 183,773 $ 188,689
Interest-bearing ....................................................................... 806,383 776,984
------------ ------------
Total deposits ..................................................................... 990,156 965,673
------------ ------------
Federal funds purchased and securities sold
under repurchase agreements ........................................................ 18,031 18,743
Other borrowings ....................................................................... 100,000 --
Other liabilities ...................................................................... 4,103 4,596
------------ ------------
Total liabilities .................................................................. 1,112,290 989,012
------------ ------------
Shareholders' equity:
Common stock ........................................................................... 3,063 3,060
Additional capital ..................................................................... 14,436 14,402
Retained earnings ...................................................................... 79,286 73,323
Accumulated other comprehensive income ................................................. (114) 160
------------ ------------
96,671 90,945
Less common stock held in treasury--at cost ............................................ 9,255 1,625
------------ ------------
Total shareholders' equity ......................................................... 87,416 89,320
------------ ------------
Total liabilities & shareholders' equity ........................................... $ 1,199,706 $ 1,078,332
============ ============
</TABLE>
See accompanying Notes to Interim Consolidated Financial Statements.
2
<PAGE> 4
PRIME BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
1999 1998 1999 1998
------------------------- -------------------------
<S> <C> <C> <C> <C>
Interest income:
Loans .................................................... $ 12,209 $ 11,741 $ 23,921 $ 22,921
Securities ............................................... 8,208 7,010 15,188 14,536
Federal funds sold and other temporary investments ....... 345 557 1,105 1,074
------------------------- -------------------------
Total interest income .............................. 20,762 19,308 40,214 38,531
Interest expense.......................................... 9,105 8,218 17,478 16,487
------------------------- -------------------------
Net interest income ................................ 11,657 11,090 22,736 22,044
Provision for loan losses ................................ 371 225 627 425
------------------------- -------------------------
Net interest income after provision for loan
losses ............................................. 11,286 10,865 22,109 21,619
Noninterest income:
Service charges .......................................... 1,945 2,009 3,877 3,991
Other operating income ................................... 569 593 1,158 1,117
------------------------- -------------------------
Total noninterest income ........................... 2,514 2,602 5,035 5,108
Noninterest expense:
Employee compensation and benefits ....................... 5,092 4,875 10,029 9,757
Net bank premises expense ................................ 537 466 1,041 895
Equipment rentals, depreciation and maintenance........... 404 370 849 745
Realized losses on sale of available for sale
securities ......................................... -- 46 -- 46
Other operating expenses ................................. 2,243 2,506 4,217 4,464
------------------------- -------------------------
Total noninterest expenses ......................... 8,276 8,263 16,136 15,907
------------------------- -------------------------
Earnings before income taxes ....................... 5,524 5,204 11,008 10,820
Provision for income taxes ............................... 1,907 1,880 3,841 3,873
------------------------- -------------------------
Net earnings before preferred stock dividends ...... 3,617 3,324 7,167 6,947
Preferred stock dividends .......................... -- -- -- 25
------------------------- -------------------------
Net earnings available to common shareholders ...... $ 3,617 $ 3,324 $ 7,167 $ 6,922
========================= =========================
Basic earnings per common share .................... $ 0.37 $ 0.32 $ 0.72 $ 0.68
Diluted earnings per common share .................. $ 0.36 $ 0.31 $ 0.70 $ 0.65
</TABLE>
See accompanying Notes to Interim Consolidated Financial Statements.
3
<PAGE> 5
PRIME BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Accumulated
other Total
compre- Common share-
Preferred Common Additional Retained hensive stock in holders'
stock stock capital earnings Income treasury equity
---------- ---------- ---------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1998 .... $ 1,000 $ 3,003 $ 13,781 $ 61,498 $ 770 $ (1,625) $ 78,427
Comprehensive income:
Net earnings ............... -- -- -- 13,824 -- -- 13,824
Unrealized losses on
securities, net of tax
and reclassification
adjustment ............... -- -- -- -- (610) -- (610)
----------
Comprehensive income .......... -- -- -- -- -- -- 13,214
Sale of common stock .......... -- 57 327 -- -- -- 384
Stock issuance costs .......... -- -- (22) -- -- -- (22)
Redemption of preferred stock (1,000) -- (20) -- -- -- (1,020)
Dividends ..................... -- -- -- (1,999) -- -- (1,999)
Benefits received related to
employee stock options ..... -- -- 336 -- -- -- 336
---------- ---------- ---------- ---------- ---------- ---------- ----------
Balance at December 31, 1998 -- 3,060 14,402 73,323 160 (1,625) $ 89,320
Comprehensive income:
Net earnings(1) ............ -- -- -- 7,167 -- -- 7,167
Unrealized losses
on securities(1) .......... -- -- -- -- (274) -- (274)
----------
Comprehensive income .......... -- -- -- -- -- -- 6,893
Sale of common stock(1) ....... -- 3 34 -- -- -- 37
Purchase of treasury stock(1) -- -- -- -- -- (7,630) (7,630)
Dividends(1) .................. -- -- -- (1,204) -- -- (1,204)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Balance at June 30, 1999(1) ... $ -- $ 3,063 $ 14,436 $ 79,286 $ (114) $ (9,255) $ 87,416
========== ========== ========== ========== ========== ========== ==========
</TABLE>
(1) Unaudited
See accompanying Notes to Interim Consolidated Financial Statements.
4
<PAGE> 6
PRIME BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Six months ended June 30,
-------------------------
1999 1998
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings ................................................................. $ 7,167 $ 6,947
Adjustments to reconcile net earnings to net cash provided (used) by
operating activities:
Depreciation and amortization ................................................ 1,224 1,105
Accretion of discounts, net of amortization of premiums on securities ........ 431 (177)
Provision for loan losses .................................................... 627 425
Loss (gain) on sale of premises, equipment and other real estate ............. 2 (230)
Change in assets and liabilities, net of effects resulting from the 1998
acquisition of a bank, and the purchase of certain branch
assets and liabilities:
Dividends on Federal Home Loan Bank stock ................................. (111) --
(Increase) decrease in accrued interest receivable ........................ (119) 658
Decrease in other assets .................................................. 376 484
Decrease in other liabilities ............................................. (346) (1,657)
---------- ----------
Net cash provided by operating activities ............................... 9,251 7,555
Cash flows from investing activities:
Purchases of held-to-maturity securities ..................................... (197,355) (44,472)
Purchases of available-for-sale securities ................................... (5,000) (62)
Proceeds from sales and maturities of available-for-sale securities .......... 51,277 63,991
Proceeds from maturities of held-to-maturity securities ...................... 51,227 35,760
Increase in loans, net of the effects resulting from the 1998 acquisition of a
bank, and the purchase of certain branch assets and liabilities ........... (45,010) (52,977)
Purchases of premises and equipment .......................................... (1,582) (586)
Proceeds from sale of premises, equipment and other real estate .............. 93 444
---------- ----------
Net cash (used) provided by investing activities ........................ (146,350) 2,098
Cash flows from financing activities:
Increase in deposits, net of the effects resulting from the 1998 acquisition
of a bank, and the purchase of certain branch assets and liabilities ......... 24,483 1,463
Decrease in federal funds purchased and securities sold under repurchase
agreements ................................................................ (712) (952)
Borrowings from the Federal Home Loan Bank of Dallas ......................... 100,000 --
Stock issuance cost .......................................................... -- (22)
Redemption of preferred stock ................................................ -- (1,020)
Sale of common stock ......................................................... 37 288
Purchase of treasury stock.................................................... (7,630) --
Dividends paid ............................................................... (1,204) (775)
---------- ----------
Net cash provided (used) by financing activities ........................ 114,974 (1,018)
---------- ----------
Net (decrease) increase in cash and cash equivalents .................... (22,125) 8,635
Cash and cash equivalents at beginning of period ................................. 81,896 67,721
---------- ----------
Cash and cash equivalents at end of period ....................................... $ 59,771 $ 76,356
========== ==========
</TABLE>
See accompanying Notes to Interim Consolidated Financial Statements.
5
<PAGE> 7
PRIME BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
(1) BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Prime
Bancshares, Inc. (the "Company") and its wholly-owned subsidiaries, IBID, Inc.
("IBID") and Prime Bank (the "Bank"). All significant intercompany transactions
and balances have been eliminated.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the rules and regulations of the Securities and
Exchange Commission. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, the statements reflect all
adjustments necessary for a fair presentation of the financial position, results
of operations and cash flows of the Company on a consolidated basis, and all
such adjustments are of a normal recurring nature. These financial statements
and the notes thereto should be read in conjunction with the Company's Annual
Report on Form 10-K. Operating results for the six month period ended June 30,
1999, are not necessarily indicative of the results that may be expected for the
year ending December 31, 1999.
(2) INCOME PER COMMON SHARE
Income per common share was computed based on the following:
<TABLE>
<CAPTION>
For the quarter ended For the six months ended
June 30, June 30,
--------------------------- ---------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net earnings available to common shareholders .. $ 3,617 $ 3,324 $ 7,167 $ 6,922
Weighted average common shares used in basic EPS 9,904,483 10,218,439 10,008,814 10,152,728
Potential dilutive common shares ............... 182,125 392,716 283,364 447,817
------------ ------------ ------------ ------------
Weighted average common and potential dilutive
common shares used in dilutive EPS ............. 10,086,608 10,611,155 10,292,178 10,600,545
------------ ------------ ------------ ------------
Basic earnings per common share ................ $ 0.37 $ 0.32 $ 0.72 $ 0.68
------------ ------------ ------------ ------------
Diluted earnings per common share .............. $ 0.36 $ 0.31 $ 0.70 $ 0.65
============ ============ ============ ============
</TABLE>
6
<PAGE> 8
PRIME BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
JUNE 30, 1999
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
(3) COMPREHENSIVE INCOME
Comprehensive income is a more inclusive financial reporting methodology
than net earnings and includes disclosure of certain financial information that
historically has not been recognized in the calculation of net earnings.
The tax effects for components of other comprehensive income are as
follows:
<TABLE>
<CAPTION>
Three months ended June 30,
--------------------------------------------------------------------------
1999 1998
----------------------------------- ------------------------------------
Before Tax Net of Before Tax Net of
Tax (Expense)/ Tax Tax (Expense)/ Tax
Amount Benefit Amount Amount Benefit Amount
----------------------------------- ------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Unrealized losses on securities
arising during the period............ $(157) $55 $(102) $(551) $193 $(358)
Less: Reclassification adjustment for
losses included in net earnings...... -- -- -- 46 (16) 30
----------------------------------- ------------------------------------
Other comprehensive income............. $(157) $55 $(102) $(505) $177 $(328)
=================================== ====================================
<CAPTION>
Six months ended June 30,
--------------------------------------------------------------------------
1999 1998
----------------------------------- ------------------------------------
Before Tax Net of Before Tax Net of
Tax (Expense)/ Tax Tax (Expense)/ Tax
Amount Benefit Amount Amount Benefit Amount
----------------------------------- ------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Unrealized losses on securities
arising during the period............ $(422) $148 $(274) $(618) $216 $(402)
Less: Reclassification adjustment for
losses included in net earnings...... -- -- -- 46 (16) 30
----------------------------------- ------------------------------------
Other comprehensive income............. $(422) $148 $(274) $(572) $200 $(372)
=================================== ====================================
</TABLE>
(4) SUBSEQUENT EVENT
On July 27, 1999, the Company executed an Agreement and Plan of
Reorganization with Wells Fargo & Company providing for the merger of a
wholly-owned subsidiary of Wells Fargo with and into the Company through an
exchange of stock. This transaction is subject to the approval of the Company's
shareholders and banking regulators.
7
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Prime Bancshares, Inc. (the "Company") is a registered bank holding company
that derives substantially all of its revenues and income from the operation of
Prime Bank (the "Bank"). The Bank is a full service bank that provides a broad
line of financial products and services to small and medium-sized businesses and
consumers through 21 full-service banking locations, 13 of which are located in
the greater Houston metropolitan area. The following Management's Discussion and
Analysis of Financial Condition and Results of Operations may contain certain
forward-looking statements regarding future financial condition, results of
operations, and the Company's business operations. Such statements involve
risks, uncertainties and assumptions, including, but not limited to, monetary
policy and general economic conditions in Texas and the Houston metropolitan
area, the actions of competitors and customers, the success of the Company in
implementing its strategic plan, and the effects of regulatory restrictions
imposed on banks and bank holding companies generally, as discussed in the
Company's Annual Report on Form 10-K filed with the Securities and Exchange
Commission. Should one or more of these risks or uncertainties materialize, or
should these underlying assumptions prove incorrect, actual outcomes may vary
materially from outcomes expected or anticipated by the Company.
OVERVIEW
Net earnings available to common shareholders were $3.6 million ($0.36 per
common share on a diluted basis) for the quarter ended June 30, 1999 compared
with $3.3 million ($0.31 per common share on a diluted basis) for the quarter
ended June 30, 1998, an increase of $293,000, or 8.8%. The Company posted
returns on average common equity of 16.93% and 16.28% and returns on assets of
1.22% and 1.26% for the quarters ended June 30, 1999 and 1998, respectively. For
the six months ended June 30, 1999, net earnings available to common
shareholders were $7.2 million ($0.70 per common share on a diluted basis)
compared with $6.9 million ($0.65 per common share on a diluted basis) for the
same period in 1998, an increase of $245,000, or 3.5%.
During the quarter ended June 30, 1998, the Company completed a merger with
Sunbelt National Bank. The merger was accounted for as a pooling of interests in
which the Company issued 747,463 shares of its common stock, $0.25 par value per
share ("Common Stock"). (The accompanying financial data for all periods include
Sunbelt.) The Company incurred a one-time charge of $506,000 for merger related
expenses. For the quarter ended June 30, 1998, excluding the one-time charge,
net earnings available to common shareholders would have been $3.7 million
($0.34 per common share on a diluted basis), and returns on average common
equity and average assets would have been 17.90% and 1.38%, respectively. For
the six months ended June 30, 1998, excluding the one-time charge, net earnings
available to common shareholders would have been $7.3 million ($0.68 per common
share on a diluted basis), and returns on average common equity and average
assets would have been 18.16% and 1.39%, respectively.
Total assets were $1.2 billion at June 30, 1999, compared with $1.1 billion
at December 31, 1998. Total loans increased to $576.8 million at June 30, 1999
from $532.4 million at December 31, 1998, an increase of $44.4 million, or 8.3%.
Total deposits were $990.2 million at June 30, 1999 compared with $965.7 million
at December 31, 1998. Shareholders' equity was $87.4 million at June 30, 1999
compared with $89.3 million at December 31, 1998, a decrease of $1.9 million, or
2.1%. The decrease was due to a stock repurchase by the Company of 500,000
shares, as well as dividends paid on common stock. This was partially offset by
net income of $7.2 million.
8
<PAGE> 10
RESULTS OF OPERATIONS
Interest Income
Interest income for the quarter ended June 30, 1999 was $20.8 million, an
increase of $1.5 million, or 7.5%, from the quarter ended June 30, 1998. The
increase in interest income was due primarily to a 13.5% increase in average
earning assets. This was partially offset by a decline in the yield on average
earning assets, which decreased 40 basis points from the second quarter of 1998
due to declining market interest rates. For the six months ended June 30, 1999,
interest income was $40.2 million, up $1.7 million, or 4.4%, from $38.5 million
for the same period in 1998, due mainly to higher average interest-earning
assets, including higher average loans.
Interest Expense
Interest expense on deposits and other interest-bearing liabilities was
$9.1 million for the quarter ended June 30, 1999 compared with $8.2 million for
the quarter ended June 30, 1998, an increase of $887,000, or 10.8%. This was
caused by an increase of $126.7 million in average interest bearing liabilities
from quarter to quarter. The increase in interest bearing liabilities is mainly
due to the balance-sheet-leveraging strategy implemented during the first
quarter of 1999. The increase in interest expense was partially offset by the
decrease of 19 basis points in the average interest rate paid. For the six
months ended June 30, 1999, interest expense was $17.5 million compared with
$16.5 million for the same period in 1998, an increase of $991,000, or 6.0%. The
increase primarily resulted from higher average interest-bearing liabilities.
Net Interest Income
Net interest income was $11.7 million for the quarter ended June 30, 1999
compared with $11.1 million for the quarter ended June 30, 1998, an increase of
$567,000, or 5.1%. The increase in net interest income resulted primarily from
growth in average interest-earning assets to $1.1 billion for the quarter ended
June 30, 1999 from $1.0 billion for the quarter ended June 30, 1998, an increase
of $135.0 million, or 13.5%. This was partially offset by a decrease in the net
interest margin of 32 basis points to 4.11% for the second quarter of 1999. The
decrease in the net interest margin from quarter to quarter is primarily due to
the balance-sheet-leveraging strategy implemented in the first quarter.
Likewise, net interest income increased to $22.7 million for the six months
ended June 30, 1999 from $22.0 million for the six months ended June 30, 1998,
an increase of $692,000, or 3.1%, due mainly to higher average interest-earning
assets and higher average loans.
9
<PAGE> 11
The Company's net interest income is affected by changes in the amount and
mix of interest-earning assets and interest-bearing liabilities, referred to as
a "volume change." It is also affected by changes in yields earned on
interest-earning assets and rates paid on interest-bearing deposits and other
borrowed funds, referred to as a "rate change." The following tables set forth,
for each category of interest-earning assets and interest-bearing liabilities,
the average amounts outstanding, the interest earned or paid on such amounts,
and the average rate earned or paid for the quarters ended June 30, 1999 and
1998 and for the six months ended June 30, 1999 and 1998. The tables also set
forth the average rate earned on total interest-earning assets, the average rate
paid on total interest-bearing liabilities, and the net interest margin on
average total interest-earning assets for the same periods.
<TABLE>
<CAPTION>
Three months ended June 30,
----------------------------------------------------------------------------------
1999 1998
--------------------------------------- -------------------------------------
Average Interest Average Average Interest Average
Outstanding Earned/ Yield/ Outstanding Earned/ Yield/
Balance Paid Rate Balance Paid Rate
----------------------------------------------------------------------------------
ASSETS: (Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans ................................. $ 565,912 $ 12,209 8.65% $ 519,765 $ 11,741 9.06%
Securities ............................ 548,596 8,208 6.00% 442,423 7,010 6.36%
Federal funds sold and other
temporary investments .............. 23,440 345 5.90% 40,807 557 5.47%
----------------------------------------- ------------------------------------
Total interest-earning assets .... 1,137,948 $ 20,762 7.32% 1,002,995 $ 19,308 7.72%
Less allowance for loan losses .............. (6,219) (5,875)
----------- ----------
Total interest-earning assets, net
of allowance ............................. 1,131,729 997,120
Nonearning assets ........................... 59,281 62,104
----------- ----------
Total assets ..................... $ 1,191,010 $1,059,224
=========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Interest-bearing liabilities:
Interest-bearing demand deposits ...... $ 128,286 $ 554 1.73% $ 127,674 $ 539 1.69%
Savings and money market accounts ..... 203,760 1,500 2.95% 183,829 1,400 3.05%
Certificates of deposit ............... 463,717 5,631 4.87% 459,311 6,078 5.31%
Federal funds purchased and securities
sold under repurchase agreements ... 18,574 197 4.25% 16,630 197 4.74%
Other borrowings ...................... 100,000 1,223 4.91% 175 4 9.20%
----------------------------------------- ------------------------------------
Total interest-bearing
liabilities.................... 914,337 $ 9,105 3.99% 787,619 $ 8,218 4.18%
----------------------------------------- ------------------------------------
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits ... 186,801 183,463
Other liabilities ..................... 4,183 6,271
----------- ----------
Total liabilities ................ 1,105,321 977,353
Shareholders' equity ........................ 85,689 81,871
----------- ----------
Total liabilities and
shareholders'
equity ......................... $ 1,191,010 $1,059,224
=========== ==========
Net interest income ......................... $ 11,657 $ 11,090
========== ==========
Net interest spread ......................... 3.33% 3.54%
========== ==========
Net interest margin ......................... 4.11% 4.43%
========== ==========
</TABLE>
10
<PAGE> 12
<TABLE>
<CAPTION>
Six months ended June 30,
---------------------------------------------------------------------------------
1999 1998
--------------------------------------- -----------------------------------
Average Interest Average Average Interest Average
Outstanding Earned/ Yield/ Outstanding Earned/ Yield/
Balance Paid Rate Balance Paid Rate
-------------------------------------------------------------------------------
ASSETS: (Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans................................. $555,042 $23,921 8.69% $506,580 $22,921 9.12%
Securities............................ 507,726 15,188 6.03% 455,662 14,536 6.43%
Federal funds sold and other
temporary investments............ 42,188 1,105 5.28% 39,675 1,074 5.46%
------------------------------------- ---------------------------------
Total interest-earning assets.... 1,104,956 $40,214 7.34% 1,001,917 $38,531 7.76%
Less allowance for loan losses.............. (6,243) (5,869)
-------------- ------------
Total interest-earning assets, net
of allowance............................. 1,098,713 996,048
Nonearning assets........................... 60,000 62,938
-------------- ------------
Total assets..................... $1,158,713 $1,058,986
============== ============
LIABILITIES AND SHAREHOLDERS' EQUITY:
Interest-bearing liabilities:
Interest-bearing demand deposits...... $132,120 $1,161 1.77% $128,881 $1,119 1.75%
Savings and money market accounts..... 197,353 2,861 2.92% 183,207 2,783 3.06%
Certificates of deposit............... 465,400 11,366 4.92% 461,355 12,171 5.32%
Federal funds purchased and securities
sold under repurchase agreements... 18,641 393 4.25% 16,942 404 4.80%
Other borrowings...................... 69,613 1,697 4.92% 278 10 7.30%
------------------------------------- ---------------------------------
Total interest-bearing
liabilities................... 883,127 $17,478 3.99% 790,663 $16,487 4.20%
------------------------------------- ---------------------------------
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits... 183,961 181,169
Other liabilities..................... 4,229 6,622
-------------- ------------
Total liabilities................ 1,071,317 978,454
Shareholders' equity....................... 87,396 80,532
-------------- ------------
Total liabilities and
shareholders'
equity.......................... $1,158,713 $1,058,986
============== ============
Net interest income........................ $22,736 $22,044
=========== ==========
Net interest spread........................ 3.35% 3.56%
========== =========
Net interest margin........................ 4.15% 4.44%
========== =========
</TABLE>
11
<PAGE> 13
The following table presents the dollar amount of changes in interest
income and interest expense for the major components of interest-earning assets
and interest-bearing liabilities and distinguishes between the increase
(decrease) related to outstanding balances and the volatility of interest rates.
For purposes of this table, changes attributable to both rate and volume which
can be segregated have been allocated.
<TABLE>
<CAPTION>
Three months ended June 30,
--------------------------------------
1999 vs. 1998
--------------------------------------
Increase (decrease)
due to
------------------------
Volume Rate Total
---------- ---------- ----------
(Dollars in thousands)
<S> <C> <C> <C>
Interest-earning assets:
Loans ....................................................... $ 1,042 $ (574) $ 468
Securities .................................................. 1,682 (484) 1,198
Federal funds sold and other temporary
investments ............................................... (237) 25 (212)
---------- ---------- ----------
Total increase in interest income ....................... 2,487 (1,033) 1,454
---------- ---------- ----------
Interest-bearing liabilities:
Interest-bearing demand deposits ............................ 3 12 15
Savings and money market accounts ........................... 152 (52) 100
Certificates of deposit ..................................... 58 (505) (447)
Federal funds purchased and securities sold
under repurchase agreements ............................... 23 (23) --
Other borrowings ............................................ 1,222 (3) 1,219
---------- ---------- ----------
Total increase in interest expense ...................... 1,458 (571) 887
---------- ---------- ----------
Increase in net interest income ............................. $ 1,029 $ (462) $ 567
========== ========== ==========
</TABLE>
Provision and Allowance for Loan Losses
In originating loans, the Company recognizes that credit losses will be
experienced and the risk of loss will vary with, among other things, general
economic conditions, the type of loan being made, the creditworthiness of the
borrower over the term of the loan and, in the case of a collateralized loan,
the quality of the collateral for such loan. The Company maintains an allowance
for loan losses based upon, among other things, such factors as historical
experience, the volume and type of lending conducted by the Company, the amount
of nonperforming assets, regulatory policies, generally accepted accounting
principles, general economic conditions, and other factors related to the
collectibility of loans in the Company's portfolio. In addition to unallocated
allowances, specific allowances are provided for individual loans when ultimate
collection is considered questionable by management after reviewing the current
status of loans which are contractually past due and considering the net
realizable value of the collateral for the loan.
Management actively monitors the Company's asset quality and provides
specific loss allowances when necessary. Loans are charged-off against the
allowance for loan losses when appropriate. Although management believes it uses
the best information available to make determinations with respect to the
allowance for loan losses, future adjustments may be necessary if economic
conditions differ from the assumptions used in making the initial
determinations. As of June 30, 1999, the allowance for loan losses amounted to
$6.2 million or 1.08% of total loans. The allowance for loan losses as a
percentage of nonperforming loans was 555.8% at June 30, 1999.
Provisions for loan losses are charged to income to bring the total
allowance for loan losses to a level deemed appropriate by management of the
Company based on such factors as historical experience, the volume and type of
lending conducted by the Company, the amount of nonperforming assets, regulatory
policies, generally accepted accounting principles, general economic conditions,
and other factors related to the collectibility of loans in the Company's
portfolio.
12
<PAGE> 14
The provision for loan losses for the quarter ended June 30, 1999 was
$371,000 compared with $225,000 for the quarter ended June 30, 1998. The
increase resulted from continued growth in loans. For the six months ended June
30, 1999, net charge-offs were $597,000, or 0.22%, of average loans.
Set forth below is an analysis of the allowance for loan losses for the six
months ended June 30, 1999:
<TABLE>
<CAPTION>
Six months
ended
June 30, 1999
-------------
(Dollars in
thousands)
<S> <C>
Average loans outstanding ................................... $ 555,042
Gross loans outstanding at end of period .................... 576,817
Allowance for loan losses at beginning of period ............ 6,184
Provision for loan losses ................................... 627
Charge-offs:
Commercial and industrial ............................... (114)
Real estate ............................................. (14)
Consumer ................................................ (653)
Recoveries:
Commercial and industrial ............................... 8
Real estate ............................................. 18
Consumer ................................................ 158
----------
Net loan (charge-offs) recoveries ........................... (597)
----------
Allowance for loan losses at end of period .................. $ 6,214
==========
Ratio of allowance to end of period loans ................... 1.08%
Ratio of net charge-offs to average loans ................... 0.22%
Ratio of allowance to end of period nonperforming loans ..... 555.81%
</TABLE>
Noninterest Income
The Company's primary sources of noninterest income are service charges on
deposit accounts and other banking service related fees. Noninterest income for
the quarter ended June 30, 1999 decreased to $2.5 million from $2.6 million for
the quarter ended June 30, 1998, a decrease of $88,000, or 3.4%. The following
table presents, for the periods indicated, the major categories of noninterest
income:
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
------------------ ----------------
1999 1998 1999 1998
------ ------ ------ ------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Service charges on deposit accounts ................... $1,945 $2,009 $3,877 $3,991
Retail services income ................................ 377 324 790 679
Mortgage banking ...................................... 80 101 134 127
Investment services ................................... 64 93 111 152
Securities lending .................................... 4 3 14 13
Other noninterest income .............................. 44 72 109 146
------ ------ ------ ------
Total noninterest income ........................ $2,514 $2,602 $5,035 $5,108
====== ====== ====== ======
</TABLE>
The decrease in noninterest income for the quarter and six months ended
June 30, 1999 over the same periods in 1998 was due primarily to a decline in
fees collected from insufficiently funded checks. In addition, investment
services income declined from last year due to a decrease in annuity and mutual
fund sales. This is partially offset by
13
<PAGE> 15
an increase in Retail Services income over last year, primarily as a result of
an increase in ATM surcharges collected and printed check income.
Noninterest Expenses
Noninterest expenses were relatively flat for the quarter ended June 30,
1999 compared to the same period in 1998, increasing by only $13,000. The
following table presents, for the periods indicated, the major categories of
noninterest expenses:
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
--------------------- ---------------------
1999 1998 1999 1998
--------- --------- --------- ---------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Employee compensation and benefits .................... $ 5,092 $ 4,875 $ 10,029 $ 9,757
Non-staff expenses:
Net bank premises expense ...................... 537 466 1,041 895
Equipment rentals, depreciation
and maintenance ............................ 404 370 849 745
Data processing ................................ 356 669 710 1,133
Professional fees .............................. 347 520 614 786
Regulatory assessments ......................... 78 80 155 165
Ad valorem and franchise taxes ................. 165 167 250 345
Loss on sale of available-for-sale
securities ................................. ---- 46 ---- 46
Other .......................................... 1,297 1,070 2,488 2,035
--------- --------- --------- ---------
Total non-staff expenses .............. 3,184 3,388 6,107 6,150
--------- --------- --------- ---------
Total noninterest expenses ............ $ 8,276 $ 8,263 $ 16,136 $ 15,907
========= ========= ========= =========
</TABLE>
Employee compensation and benefits expenses were $5.1 million for the
quarter ended June 30, 1999 and $10.0 million for the six months ended June 30,
1999, increases of $217,000, or 4.5%, and $272,000, or 2.8%, compared with the
respective periods in 1998. The increase was due primarily to normal salary
increases.
Non-staff expenses were $3.2 million for the quarter ended June 30, 1999, a
decrease of $204,000, or 6.0%, from the same period in 1998. Excluding expenses
related to the acquisition of Sunbelt National Bank, non-staff expenses would
have increased $302,000, or 10.5%. This increase was primarily caused by
increases in rent expense, telecommunications costs, depreciation expense, and
courier fees, as well as a write-down in other real estate owned.
Income Taxes
Income tax expense increased $27,000 to $1.9 million for the quarter
ended June 30, 1999. The increase was primarily attributable to higher pretax
net earnings.
14
<PAGE> 16
FINANCIAL CONDITION
Loan Portfolio
Total loans increased to $576.8 million at June 30, 1999 from $532.4
million at December 31, 1998, an increase of $44.4 million, or 8.3%. Loan growth
occurred primarily in commercial and industrial loans, construction and land
development loans, and commercial mortgages. Loans comprised 50.5% of total
earning assets at June 30, 1999 compared with 52.3% at December 31, 1998.
The following table summarizes the loan portfolio of the Company by type of
loan as of June 30, 1999 and December 31, 1998:
<TABLE>
<CAPTION>
June 30, 1999 December 31, 1998
----------------------- -----------------------
Amount Percent Amount Percent
---------- ---------- ---------- ----------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Commercial and industrial .............................. $ 68,594 11.89% $ 50,644 9.51%
Real estate:
Construction and land development ................ 47,313 8.20 38,673 7.26
1-4 family residential ........................... 110,275 19.12 105,882 19.89
Commercial mortgages ............................. 187,749 32.55 174,668 32.81
Farmland ......................................... 1,085 0.19 722 0.14
Multi-family residential ......................... 6,860 1.19 7,363 1.38
Consumer:
Indirect ......................................... 94,692 16.42 96,243 18.08
Direct ........................................... 60,249 10.44 58,209 10.93
---------- ---------- ---------- ----------
Total loans ................................. $ 576,817 100.00% $ 532,404 100.00%
========== ========== ========== ==========
</TABLE>
NONPERFORMING ASSETS
Nonperforming assets were $1.7 million at June 30, 1999 compared with $1.9
million at December 31, 1998, a decrease of $159,000, or 8.4%. The ratios of
nonperforming assets to total loans and other real estate were 0.30% and 0.31%
at June 30, 1999 and December 31, 1998, respectively.
The following table presents information regarding nonperforming assets as
of the dates indicated:
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
---------- ------------
(Dollars in thousands)
<S> <C> <C>
Nonaccrual loans ....................................... $ 1,105 $ 808
Restructured loans ..................................... 13 69
---------- ----------
Total nonperforming loans .............................. 1,118 877
Other real estate ...................................... 616 774
---------- ----------
Total nonperforming assets ............................. $ 1,734 $ 1,651
========== ==========
Accruing loans 90 or more days past due ................ $ 187 $ 699
</TABLE>
15
<PAGE> 17
SECURITIES
Securities totaled $536.4 million at June 30, 1999 compared with $437.3
million at December 31, 1998, an increase of $99.1 million, or 22.7%. The
increase occurred primarily due to an increase in available funds resulting from
the balance-sheet-leveraging strategy. At June 30, 1999, securities represented
47.0% of total earning assets compared with 42.9% of total earning assets at
December 31, 1998. The yield on average securities for the quarter ended June
30, 1999 was 6.00% compared with 6.36% for the same period in 1998. At June 30,
1999, securities included $63.3 million in U.S. Treasury securities, $436.3
million in mortgage-backed securities, $12.2 million in collateralized mortgage
obligations, and $19.4 million in municipal securities. The average life of the
securities portfolio at June 30, 1999 was approximately five years and four
months.
PREMISES AND EQUIPMENT
Premises and equipment totaled $17.2 million at June 30, 1999, an increase
of $645,000, or 3.9%, from $16.6 million at December 31, 1998. The increase is
primarily due to the purchase of property for banking center expansion.
DEPOSITS
Total deposits were $990.2 million at June 30, 1999 compared with $965.7
million at December 31, 1998, an increase of $24.5 million. At June 30, 1999
demand and savings deposits accounted for approximately 53.4% of total deposits,
while certificates of deposit made up 46.6%. Noninterest-bearing demand deposits
totaled $183.8 million, or 18.6%, of total deposits at June 30, 1999 compared
with $188.7 million, or 19.5%, of total deposits at December 31, 1998. The
average cost of deposits, including noninterest-bearing demand deposits, was
3.14% for the quarter ended June 30, 1999 compared with 3.37% for the same
period in 1998. The decline in average cost of deposits was due mainly to a
decline in the average rate paid on certificates of deposits.
BORROWINGS
Fed funds purchased and securities sold under repurchase agreements totaled
$18.0 million at June 30, 1999. These short-term borrowings represent customers'
funds. Separately, the Company has access to purchased funds from correspondent
banks. The Company also has $100.0 million in outstanding borrowings from the
Federal Home Loan Bank of Dallas in order to facilitate its
balance-sheet-leveraging strategy.
LIQUIDITY
The Company's Asset/Liability Management Policy is intended to maintain
adequate liquidity for the Company and thereby enhance its ability to raise
funds to support asset growth, meet deposit withdrawals and lending needs,
maintain reserve requirements and otherwise sustain operations. The Company
accomplishes this primarily through management of the maturities of its
interest-earning assets and interest-bearing liabilities. The Company believes
that its present liquidity position is adequate to meet current and future
needs.
Asset liquidity is provided by cash and assets which are readily marketable
or which will mature in the near future. As of June 30, 1999, the Company had
cash and cash equivalents of $59.8 million, down from $76.4 million at June 30,
1998. The decline was due primarily to a decline in federal funds sold.
The Company's cash flows are composed of three classifications: cash flows
from operating activities, cash flows from investing activities, and cash flows
from financing activities. Net cash provided by operating activities was $9.3
million and $7.6 million for the six months ended June 30, 1999 and 1998,
respectively.
Net cash (used) provided by investing activities was $(146.4) million and
$2.1 million for the six months ended June 30, 1999 and 1998, respectively. The
difference primarily relates to the increase in the amount of securities
purchased.
Net cash provided (used) by financing activities was $115.0 million and
$(1.0) million for the six months ended June 30, 1999 and 1998, respectively.
The difference primarily relates to the borrowing from the Federal Home Loan
Bank, as well as an increase in deposits.
16
<PAGE> 18
CAPITAL RESOURCES
Total shareholders' equity was $87.4 million at June 30, 1999 compared with
$89.3 million at December 31, 1998, a decrease of $1.9 million, or 2.1%. The
decrease was due to a stock repurchase by the Company of 500,000 shares, as well
as dividends paid on common stock. This was partially offset by net income of
$7.2 million.
Both the Board of Governors of the Federal Reserve System, with respect to
the Company, and the Federal Deposit Insurance Corporation, with respect to the
Bank, have established certain minimum risk-based capital standards that apply
to bank holding companies and federally insured banks. The Company's risk-based
capital ratios remain above the levels designated as "well capitalized" on June
30, 1999, with Tier 1 capital, total risk-based capital and leverage capital
ratios of 12.61%, 13.56% and 7.02%, respectively. The Bank's risk-based capital
ratios remain above the levels designated as "well capitalized" on June 30,
1999, with Tier-1 capital, total risk-based capital and leverage capital ratios
of 12.52%, 13.47% and 6.92%, respectively.
YEAR 2000 COMPLIANCE
General.
The Company continues to monitor and revise its Year 2000 project plan to
ensure there will be no material adverse effect on customers or disruption to
business operations as a result of a failure of the Company or third parties to
properly process any data on or after January 1, 2000.
State of Readiness
The Company has in place a task force, established in January, 1996, to
address the millennium change issues and to ensure there will be no material
adverse effect on customers or disruption to business operations as a result of
a failure of the Bank or third parties to properly process any data on or after
January 1, 2000. The task force has executive sponsorship from, and reports to,
the Data Processing Steering Committee, which in turn reports to the Board of
Directors. The task force consists of the project manager and the respective
task force members. This group meets periodically to review the project schedule
and its progress.
The project plan consists of five phases: Awareness, Assessment,
Renovation, Validation, and Implementation. This plan has been patterned after
the FFIEC interagency statement of May 5, 1997. The Awareness, Assessment,
Renovation, and Validation phases are substantially complete; the Implementation
phase is currently in process and on schedule.
The Company has drafted a Year 2000 business recovery contingency and
testing plan in accordance with FFIEC directives. All mission critical software
utilized has been provided by established software companies who retain the
responsibility for Year 2000 compliance. The core application processing systems
(demand and time deposit accounting, loan accounting, general ledger accounting,
and the customer information processing systems) of the Company, and the
hardware upon which it is processed, were tested during the fourth quarter 1998
and, based upon the results, the Company believes these systems to be compliant.
As of March 31, 1999, 100% of the mission critical systems have been either
validated through testing, or have been represented as compliant by the
respective vendor and coupled with an appropriate recovery contingency plan in
the unlikely event of non-compliance.
The FDIC examined the Company's overall compliance efforts, specifically
regarding Year 2000 issues, in March 1998 and March 1999. An outside consulting
firm was engaged in November 1998 to review the Company's testing plan and again
in March 1999 to review the business recovery contingency plans.
The Company will concentrate its efforts on customer communications and
business resumption contingency plan validation and testing during the remainder
of 1999.
17
<PAGE> 19
Costs of Compliance
Management has prepared an estimate of costs necessary to validate and/or
remediate mission critical systems. Based upon this estimate, management does
not expect that costs for bringing the Company's computer applications into Year
2000 compliance will have a materially adverse effect on the Company's financial
condition, results of operations or liquidity. The estimated costs of validation
and remediation is $310,000, of which approximately $260,000 has been expended
with another $50,000 to be expended during the remainder of 1999. However,
management's ability to predict the cost associated with Year 2000 compliance is
subject to some uncertainties. While the Company has made efforts to obtain
appropriate representations and assurances from third party vendors and other
organizations that such entities will be able to meet all of their obligations
to the Company without disruption as a result of the Year 2000 issues, there can
be no assurance that the Company will not be adversely impacted by the failure
of such third-party entities to achieve Year 2000 compliance.
Risk Related to Third Parties
The Company has performed due diligence with respect to the impact of Year
2000 noncompliance by funds takers, funds providers, and other third parties.
This impact cannot be accurately gauged. The Company has identified and
contacted customers with borrowing relationships of $1.0 million or more to
evaluate their readiness compliance efforts and will continue to monitor any
potential impact to the Company. Management does not believe the amounts
identified through this process are material in amount to adjust its current
methodology for making provisions to the allowance for loan losses although
there are no assurances that this amount will not be substantially higher than
management's estimate. Contingency Plans
The Company is in the process of testing its business recovery contingency
plans with respect to the Year 2000 date change, and believes that it will be
able to process its own mission critical systems even in the event of a failure
of third parties such as electricity or telecommunications for an extended
period of time and without significant losses. In addition, the Company has
formulated plans for providing funds necessary for liquidity needs of its
customers through ongoing monitoring and funding arrangements with other
financial institutions, including the Federal Reserve.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company manages market risk, which for the Company is primarily
interest rate risk, through its Investment Committee. Senior officers and
directors of the Company and the Bank compose the Investment Committee, and they
periodically get advice from external sources to assist in the management of
market risk. The Investment Committee functions in accordance with policies
approved by the Company's Board of Directors.
The Company uses simulation analysis to examine the potential effects of
market changes on net interest income and market value. It considers
macroeconomic variables, Company strategy, liquidity and other factors as it
quantifies market risk. At June 30, 1999, the Company estimated that a 200 basis
point rise or decline in market interest rates over the next twelve months would
affect its net interest income for the same period by less than 5.0%.
18
<PAGE> 20
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Not applicable
ITEM 2. CHANGES IN SECURITIES.
(a) Not applicable
(b) Not applicable
(c) Not applicable
(d) Not applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On April 15, 1999 the Company held its Annual Meeting of shareholders to
consider and act upon the following items: (i) the election of two persons as
Class II directors to serve on the Board of Directors of the Company until the
Company's 2002 Annual Meeting of Shareholders and until their successors are
duly elected and qualified and (ii) a proposal to ratify the appointment of
Grant Thornton LLP as the independent auditors of the books and accounts of the
Company for the year ending December 31, 1999.
With respect to election of directors, the voting was as follows:
<TABLE>
<CAPTION>
Broker
Nominee For Withheld Non-Vote
- ------------------ ------------- ----------- -----------
<S> <C> <C> <C>
Nominee #1 9,181,593 5,480 0
Nominee #2 9,181,593 5,480 0
</TABLE>
With respect to appointment of the independent auditors, the vote was as
follows:
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Vote
------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
(ii) 9,177,231 2,220 7,622 0
</TABLE>
There was no other business to come before the meeting.
ITEM 5. OTHER INFORMATION.
Not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) The following exhibit is filed with this report:
Exhibit 27. Financial Data Schedule
(b) No reports on Form 8-K were filed by the Company during the three
months ended June 30, 1999.
19
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PRIME BANCSHARES, INC.
Registrant
Date: August 12, 1999 By: /s/ FREDRIC M. SAUNDERS
-----------------------------------------
Fredric M. Saunders
Chairman of the Board and Chief
Executive Officer
(Principal Executive Officer)
Date: August 12, 1999 By: /s/ L. ANDERSON CREEL
-----------------------------------------
L. Anderson Creel
Senior Vice President and Chief
Financial Officer
(Principal Financial Officer)
20
<PAGE> 22
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 31,817
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 27,954
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 23,861
<INVESTMENTS-CARRYING> 512,563
<INVESTMENTS-MARKET> 503,836
<LOANS> 576,817
<ALLOWANCE> 6,214
<TOTAL-ASSETS> 1,199,706
<DEPOSITS> 990,156
<SHORT-TERM> 18,031
<LIABILITIES-OTHER> 4,103
<LONG-TERM> 100,000
0
0
<COMMON> 3,063
<OTHER-SE> 84,353
<TOTAL-LIABILITIES-AND-EQUITY> 1,199,706
<INTEREST-LOAN> 23,921
<INTEREST-INVEST> 15,188
<INTEREST-OTHER> 1,105
<INTEREST-TOTAL> 40,214
<INTEREST-DEPOSIT> 15,388
<INTEREST-EXPENSE> 17,478
<INTEREST-INCOME-NET> 22,736
<LOAN-LOSSES> 627
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 16,136
<INCOME-PRETAX> 11,008
<INCOME-PRE-EXTRAORDINARY> 11,008
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,167
<EPS-BASIC> 0.72
<EPS-DILUTED> 0.70
<YIELD-ACTUAL> 7.34
<LOANS-NON> 1,105
<LOANS-PAST> 187
<LOANS-TROUBLED> 13
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 6,184
<CHARGE-OFFS> 781
<RECOVERIES> 184
<ALLOWANCE-CLOSE> 6,214
<ALLOWANCE-DOMESTIC> 6,214
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
