SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-Q
Quarterly Report Under Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the Quarter Ended September 30, 1994, Commission File Number 0-13425
PREMIER FINANCIAL SERVICES, INC.
(Exact name of registrant as specified in its Charter)
Delaware 36-2852290
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
27 W. Main Street, Suite 101 61032
Freeport, Illinois (Zip Code)
(Address of Principal executive
offices)
Registrant's telephone number, including area code (815) 233-3671
Number of Shares of Common Stock ($5 Par Value) outstanding as of
September 30, 1994: 6,496,959
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
(This report contains 3 pages)
Part I
Item 1. Financial Statements.
The following consolidated financial statements of the Company, which
are included in the quarterly report of the registrant to its stockholders
for the quarter ended September 30, 1994, are submitted herewith as an
exhibit and are incorporated herein by reference:
1. Consolidated Balance Sheets, September 30, 1994, September 30,
1993 and December 31, 1993.
2. Consolidated Statements of Earnings, quarters ended September 30,
1994 and 1993 and nine months ended September 30, 1994 and 1993.
3. Consolidated Statements of Cash Flows, nine months ended September
30, 1994 and 1993.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Incorporated herein by reference to the Registrant's Quarterly Report
to its stockholders for the quarter ended September 30, 1994, which is
included as an exhibit to this report.
Part II
Item 6. Exhibits and Reports on Form 8-K.
1. The following documents are filed as a part of this report:
A. Consolidated Financial Statements of the Company which
are included in the quarterly report of the registrant
to its stockholders for the quarter ended September 30,
1994 as follows:
1. Consolidated Balance Sheets, September 30, 1994,
September 30, 1993 and December 31, 1993.
2. Consolidated Statements of Earnings, quarters ended
September 30, 1994 and 1993 and nine months ended
September 30, 1994 and 1993.
B. Exhibits as follows:
20. Premier Financial Services, Inc. Quarterly Report
dated September 30, 1994.
27. Financial Data Schedule, nine months ended September
30, 1994.
28. Consolidated Statements of Cash Flows, nine months
ended September 30, 1994 and 1993.
-2-
2. Reports on Form 8-K - The registrant has not filed any reports
on Form 8-K, nor has it been required to file such reports,
for the quarter ended September 30, 1994.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PREMIER FINANCIAL SERVICES, INC.
By: David L. Murray
David L. Murray, Executive Vice President
& Chief Financial Officer
November 4, 1994
(Date)
-3-
<TABLE>
Consolidated Balance Sheet
- - ------------------------------------------------------------------------------------------------------------------------------
September 30, September 30, December 31,
1994 1993 1993
- - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
Cash & non-interest bearing deposits $26,060,683 $35,622,826 $26,151,048
Interest bearing deposits 8,490,214 1,876,211 20,227,486
Federal funds sold 1,500,000 5,800,000 9,977,000
- - ------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents 36,050,897 43,299,037 56,355,534
- - ------------------------------------------------------------------------------------------------------------------------------
Investments held to maturity (approximate market value):
September 30, 1994 - $42,572,000;
September 30, 1993 - $43,801,000;
December 31, 1993 - $41,572,000; 42,163,626 41,983,922 39,787,245
Securities available for sale (approximate market value):
September 30, 1994 - $201,607,000;
September 30, 1993 - $143,955,000;
December 31, 1993 - $141,744,000; 201,607,134 141,986,972 140,699,066
Loans 277,054,199 345,431,135 331,905,335
Less: Unearned discount ( 374,989) ( 628,362) ( 517,932)
Allowance for possible loan losses ( 3,687,517) ( 4,241,965) ( 4,369,290)
- - ------------------------------------------------------------------------------------------------------------------------------
Net loans 272,991,693 340,560,808 327,018,113
- - ------------------------------------------------------------------------------------------------------------------------------
Bank premises & equipment 14,394,428 15,657,096 15,153,969
Excess cost over fair value of net assets acquired 21,998,691 24,791,140 23,193,016
Accrued interest receivable 6,463,862 6,043,626 5,070,332
Other assets 3,483,738 4,094,777 3,385,935
- - ------------------------------------------------------------------------------------------------------------------------------
Total assets $599,154,069 $618,417,378 $610,663,210
- - ------------------------------------------------------------------------------------------------------------------------------
Liabilities & stockholders' equity
Non-interest bearing deposits $92,161,850 $98,441,674 $104,976,862
Interest bearing deposits 414,473,622 422,841,213 413,042,081
- - ------------------------------------------------------------------------------------------------------------------------------
Deposits 506,635,472 521,282,887 518,018,943
- - ------------------------------------------------------------------------------------------------------------------------------
Short-term borrowings 19,295,000 20,885,000 12,410,000
Securities sold under agreements to repurchase 17,227,174 15,887,776 20,571,658
Accrued taxes & other expenses 2,482,959 3,789,152 3,667,295
Other liabilities 244,073 931,167 579,275
- - ------------------------------------------------------------------------------------------------------------------------------
Liabilities $545,884,678 $562,775,982 $555,247,171
- - ------------------------------------------------------------------------------------------------------------------------------
Stockholders' equity
Preferred stock - $1 par value, 1,000,000 shares authorized:
Series A perpetual, $1,000 stated value, 8.25%, 7,000 shares
authorized, 5,000 shares issued and outstanding; 5,000,000 5,000,000 5,000,000
Series B convertible, $1,000 stated value, 7.50%, 7,250 shares
authorized, 7,250 shares issued and outstanding at 9/30/94,
5,950 shares issued and outstanding at 9/30/93 and 12/31/93; 7,250,000 5,950,000 5,950,000
Series C perpetual, $1,000 stated value, 7.00%, 1,950 shares
authorized, 1,950 shares issued and outstanding at 9/30/93,
and 12/31/93; - 1,950,000 1,950,000
Series D perpetual, $1,000 stated value, 7.50%, 3,300 shares
authorized, 2,000 shares issued and outstanding at 9/30/94,
3,300 shares issued and outstanding at 9/30/93 and 12/31/93; 2,000,000 3,300,000 3,300,000
Common stock- $5.00 par value
September 30, September 30, December 31,
No. of Shares 1994 1993 1993
Authorized 15,000,000 2,500,000 2,500,000
Issued 6,526,227 2,172,863 2,172,863
Outstanding 6,496,959 2,163,107 2,163,107 32,631,135 10,864,315 10,864,315
Surplus - 16,134,180 16,134,180
Retained earnings 9,379,189 12,651,679 12,426,322
Unrealized loss on securities available for sale (net of tax) ( 2,782,155) - -
Less: Treasury stock, (29,268 shares at cost,
September 30, 1994, and 9,756 at
December 31, 1993 and September 30, 1993) ( 208,778) ( 208,778) ( 208,778)
- - ------------------------------------------------------------------------------------------------------------------------------
Stockholders' equity $53,269,391 $55,641,396 $55,416,039
- - ------------------------------------------------------------------------------------------------------------------------------
Total liabilities & stockholders' equity $599,154,069 $618,417,378 $610,663,210
- - ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
Consolidated Statements of Earnings
- - -----------------------------------------------------------------------------------------------------------------------------------
Nine Months Ended Three Months Ended
September 30, September 30,
1994 1993 1994 1993
Interest income <C> <C> <C> <C>
Interest & fees on loans $17,620,563 $15,767,530 $5,794,600 $6,602,128
Interest & dividends on investment securities:
Taxable 7,095,935 4,106,758 2,877,363 1,752,662
Exempt from federal income tax 1,714,937 1,403,829 619,049 621,771
Other interest income 452,912 116,509 135,054 83,259
- - -----------------------------------------------------------------------------------------------------------------------------------
Interest income 26,884,347 21,394,626 9,426,066 9,059,820
- - -----------------------------------------------------------------------------------------------------------------------------------
Interest expense
Interest on deposits 9,647,262 8,073,454 3,403,224 3,368,077
Interest on short-term borrowings 1,125,152 916,344 421,113 383,342
- - -----------------------------------------------------------------------------------------------------------------------------------
Interest expense 10,772,414 8,989,798 3,824,337 3,751,419
- - -----------------------------------------------------------------------------------------------------------------------------------
Net interest income 16,111,933 12,404,828 5,601,729 5,308,401
Provision for possible loan losses 125,000 320,000 100,000 170,000
- - -----------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision
for possible loan losses 15,986,933 12,084,828 5,501,729 5,138,401
- - -----------------------------------------------------------------------------------------------------------------------------------
Other income
Trust fees 1,792,374 1,617,750 577,458 539,250
Service charges on deposits 1,392,951 986,053 455,483 513,613
Net gains on loans sold to secondary market 235,824 539,412 32,013 191,497
Investment securities gains, net 33,284 20,579 26,288 185
Other operating income 1,682,291 832,812 519,603 358,724
- - -----------------------------------------------------------------------------------------------------------------------------------
Other income 5,136,724 3,996,606 1,610,845 1,603,269
- - -----------------------------------------------------------------------------------------------------------------------------------
Other expenses
Salaries 5,778,809 4,797,019 1,956,218 1,994,932
Pension, profit sharing, & other employee benefits 1,015,025 656,697 328,139 273,364
Net occupancy of bank premises 1,506,809 1,044,271 499,748 476,314
Furniture & equipment 808,529 889,708 252,142 504,700
Federal deposit insurance premiums 880,099 618,862 281,440 277,360
Amortization of excess cost over fair value
of net assets acquired 1,194,325 346,891 398,109 249,793
Other 3,670,913 2,629,365 1,084,246 1,191,747
- - -----------------------------------------------------------------------------------------------------------------------------------
Other expense 14,854,509 10,982,813 4,800,042 4,968,210
- - -----------------------------------------------------------------------------------------------------------------------------------
Earnings before income taxes 6,269,148 5,098,621 2,312,532 1,773,460
Applicable income taxes 1,908,828 1,444,690 697,635 533,347
- - -----------------------------------------------------------------------------------------------------------------------------------
Net earnings $4,360,320 $3,653,931 $1,614,897 $1,240,113
===================================================================================================================================
Earnings per share:
Average weighted shares outstanding 6,633,096 6,116,557 6,636,783 6,503,622
Net earnings $.52 $.55 $.20 $.15
- - -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
Exhibit 28
CONSOLIDATED STATEMENTS OF CASH FLOWS
Quarters ended September 30, 1994 and 1993
1994 1993
------ ------
Cash flows from operating activities:
<S> <C> <C>
Net earnings $4,360,320 $3,384,712
Adjustments to reconcile net earnings
to net cash from operating activities:
Amortization net, related to:
Investment securities 1,443,407 686,084
Excess of cost over net assets acquired 1,194,325 346,891
Other 173,858 137,194
Depreciation 862,072 634,121
Provision for possible loan losses 125,000 320,000
Gain on sale related to:
Investment securities ( 33,284) ( 20,579)
Loans sold to secondary market ( 235,824) ( 539,412)
Change in:
Securities available for sale (61,473,430) ( 65,131,064)
Accrued interest receivable ( 1,393,530) ( 2,347,388)
Other assets ( 97,803) ( 6,732,728)
Accrued taxes & other expenses ( 1,184,336) 1,702,790
Other liabilities ( 335,202) 630,287
- - -------------------------------------------------------------------------------------------------------------------
Net cash from operating activities (56,594,427) ( 66,929,092)
- - -------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Cash portion of acquisition, net of
cash and cash equivalents acquired - ( 2,390,348)
Purchase of investment securities ( 9,439,020) ( 18,939,390)
Proceeds from:
Maturities of investment securities 2,754,555 2,394,438
Sales of investment securities 681,167 2,874,626
Net (increase) decrease in loans 54,004,086 (123,155,039)
Purchase of bank premises & equipment ( 143,231) ( 4,661,939)
- - -------------------------------------------------------------------------------------------------------------------
Net cash from investing activities 47,857,557 (143,877,652)
- - -------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net increase (decrease) in:
Deposits (10,346,971) 212,389,775
Securities sold under agreements to repurchase ( 4,380,984) 1,033,366
Short term borrowings 6,885,000 14,733,000
Purchase of treasury stock - ( 208,778)
Exercised stock options 19,000 -
Issuance of Series A preferred stock - 5,000,000
Redemption of Series C preferred stock ( 1,950,000) -
Cash dividends paid ( 1,793,812) ( 722,182)
- - -------------------------------------------------------------------------------------------------------------------
Net cash from financing activities (11,567,767) 232,225,181
- - -------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents (20,304,637) 21,418,437
Cash and cash equivalents, beginning of year 56,355,534 21,880,600
- - -------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, nine months
ended September 30, 1994 and 1993 $36,050,897 $43,299,037
- - -------------------------------------------------------------------------------------------------------------------
</TABLE>
TO OUR STOCKHOLDERS:
We're very pleased with our third quarter performance. Net earnings for the
quarter ended September 30, 1994, totaled $1,614,897, an increase of 30.2%
over the third quarter of 1993. On a comparative basis, per share earnings
increased from $.15 in 1993 to $.20 in 1994; net
interest income improved by 5.5%; and, other expenses show a decrease of 3.4%.
Asset quality also continues to improve. In September, 1993, non-performing
assets totaled approximately $12 million, or 1.93% of total assets. In
September, 1994, non-performing assets were $8.5 million, representing a
better than peer 1.43% of total assets.
As you review this report, you'll note a number of significant balance sheet
changes between the quarter ended September 30, 1994, the previous quarter,
and the third quarter of 1993.
The first of those changes is in Stockholders' Equity. On July 1, 1994, we
redeemed all of the outstanding Series C Preferred Stock. In addition, we
converted $1,300,000 of Series D Preferred Stock to Series B Convertible
Preferred Stock, effectively lowering the dividend rate on the entire
$3,300,000 of previously outstanding Series D shares from 9.00% to 7.50%.
Secondly, loans have declined by close to $68 million since September 30,
1993. As mentioned last quarter, much of the decrease is related to our
efforts to improve portfolio quality. At the same time, a good share of the
new loans we've generated over the past year have been real estate loans
which we've sold to the secondary market. By continuing to service these
loans without carrying them on our balance sheet we've locked in an income
stream without taking an interest rate risk as rates rise. We anticipate
loan demand will begin to increase in future quarters and plan to continue
focusing on selective portfolio growth.
Finally, the number of authorized and outstanding shares has increased
substantially as a result of the 3-for-1 stock split, in the form of a 200%
stock dividend, on July 1, 1994. All per share information in this report
has been adjusted to reflect this change. On the effective date of the
"split", the bid price of Premier Stock on the NASDAQ National Over-
the-Counter market was $7.25. Recent trades indicate a range of $7.50 to
$8.25.
We remain encouraged by Premier's financial outlook as 1994 draws to a close. .
Through the end of the third quarter, we've already exceeded 1993's year end
net income. Per share earnings for the first nine months this year are only
$.03 lower than those recorded for all of 1993. We appreciate your support
and confidence, and are committed to superior
performance on your behalf.
Cordially,
Richard L. Geach David L. Murray
President & Executive Vice President &
Chief Executive Officer Chief Financial Officer
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