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 June 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
June 30, 1994: 2,163,107
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 June 30, 1994, are submitted herewith as an exhibit
and are incorporated herein by reference:
1. Consolidated Balance Sheets, June 30, 1994, June 30, 1993 and
December 31, 1993.
2. Consolidated Statements of Earnings, quarters ended June 30, 1994
and 1993 and six months ended June 30, 1994 and 1993.
3. Consolidated Statements of Cash Flows, six months ended June 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 June 30, 1994, which is included
as an exhibit to this report.
Part II
Item 4. Submission of Matters to a Vote of Security Holders
The following was submitted to a vote of security holders during
the quarter ended June 30, 1994, at the Annual Meeting held April
28, 1994.
1. Election of Directors. Stockholders voted to elect to the
Board of Directors three nominees to serve until the Annual
Meeting in 1997. The following Directors were nominated and
elected: Donald E. Bitz, David L. Murray and Joseph C.
Piland.
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 June 30,
1994 as follows:
1. Consolidated Balance Sheets, June 30, 1994, June
30, 1993 and December 31, 1993.
2. Consolidated Statements of Earnings, quarters ended
June 30, 1994 and 1993 and six months ended June 30,
1994 and 1993.
-2-
B. Exhibits as follows:
20. Premier Financial Services, Inc. Quarterly Report
dated June 30, 1994.
28. Consolidated Statements of Cash Flows, six months
ended June 30, 1994 and 1993.
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 June 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
August 1, 1994
(Date)
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<TABLE>
Consolidated Balance Sheets
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June 30, June 30, December 31,
<C> <C> <C>
1994 1993 1993
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Assets
Cash & non-interest bearing deposits $21,720,917 $18,457,418 $26,151,048
Interest bearing deposits 13,562,111 931,903 20,227,486
Federal funds sold 5,150,000 2,000,000 9,977,000
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Cash and cash equivalents 40,433,028 21,389,321 56,355,534
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Investments held to maturity (approximate market value):
June 30, 1994 - $42,939,000;
June 30, 1993 - $31,105,000;
December 31, 1993 - $41,572,000; 42,149,854 29,616,898 39,787,245
Securities available for sale (approximate market value):
June 30, 1994 - $198,257,000;
June 30, 1993 - $ 70,415,000;
December 31, 1993 - $141,744,000; 198,256,942 68,883,594 140,699,066
Loans 278,074,998 219,537,221 331,905,335
Less: Unearned discount ( 403,662) ( 168,271) ( 517,932)
Allowance for possible loan losses ( 3,603,729) ( 2,719,297) ( 4,369,290)
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Net loans 274,067,607 216,649,653 327,018,113
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Bank premises & equipment 14,624,346 11,347,294 15,153,969
Excess cost over fair value of net assets acquired 22,396,801 2,912,852 23,193,016
Accrued interest receivable 5,455,475 3,573,851 5,070,332
Other assets 3,870,163 1,164,284 3,385,935
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Total assets $601,254,216 $355,537,747 $610,663,210
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Liabilities & stockholders' equity
Non-interest bearing deposits $86,903,784 $40,270,526 $104,976,862
Interest bearing deposits 426,780,657 258,283,572 413,042,081
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Deposits 513,684,441 298,554,098 518,018,943
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Short-term borrowings 16,385,000 5,250,000 12,410,000
Securities sold under agreements to repurchase 13,341,421 16,159,776 20,571,658
Accrued taxes & other expenses 2,376,866 1,534,477 3,667,295
Other liabilities 481,335 350,540 579,275
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Liabilities $546,269,063 $321,848,891 $555,247,171
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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
Series B convertible, $1,000 stated value, 7.50%, 7,250 shares
authorized, 5,950 shares issued and outstanding; 5,950,000 - 5,950,000
Series C perpetual, $1,000 stated value, 7.00%, 1,950 shares
authorized, issued and outstanding; 1,950,000 - 1,950,000
Series D perpetual, $1,000 stated value, 9.00%, 3,300 shares
authorized, issued and outstanding; 3,300,000 - 3,300,000
Common stock- $5.00 par value
June 30, June 30, December 31,
No. of Shares 1994 1993 1993
Authorized 15,000,000 2,500,000 2,500,000
Issued 2,172,863 1,993,146 2,172,863
Outstanding 2,163,107 1,927,536 2,163,107 10,864,315 9,965,730 10,864,315
Surplus 16,134,180 12,533,290 16,134,180
Retained earnings 13,963,211 11,940,359 12,426,322
Unrealized loss on securities available for sale (net of tax) ( 1,967,775)
Less: Treasury stock, (9,756 shares at cost,
June 30, 1994 and December 31, 1993
and 65,610 shares at cost, June 30, 1993) ( 208,778) ( 750,523) ( 208,778)
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Stockholders' equity $54,985,153 $33,688,856 $55,416,039
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Total liabilities & stockholders' equity $601,254,216 $355,537,747 $610,663,210
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</TABLE>
<TABLE>
Consolidated Statements of Earnings
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Six Months Ended Three Months Ended
June 30, June 30,
<C> <C> <C> <C>
1994 1993 1994 1993
Interest income
Interest & fees on loans $11,825,963 $9,165,402 $5,832,297 $4,563,639
Interest & dividends on investment securities:
Taxable 4,218,572 2,354,096 2,321,267 1,127,952
Exempt from federal income tax 1,095,888 782,058 568,473 390,600
Other interest income 317,858 33,250 191,729 10,479
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Interest income 17,458,281 12,334,806 8,913,766 6,092,670
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Interest expense
Interest on deposits 6,244,038 4,705,377 3,184,400 2,299,735
Interest on short-term borrowings 704,039 533,002 386,731 250,802
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Interest expense 6,948,077 5,238,379 3,571,131 2,550,537
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Net interest income 10,510,204 7,096,427 5,342,635 3,542,133
Provision for possible loan losses 25,000 150,000 25,000 75,000
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Net interest income after provision
for possible loan losses 10,485,204 6,946,427 5,317,635 3,467,133
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Other income
Trust fees 1,214,916 1,078,500 607,458 539,250
Service charges on deposits 937,468 472,440 473,525 229,487
Net gains on loans sold to secondary market 203,811 347,915 47,971 285,556
Investment securities gains, net 6,996 20,394 6,996 -
Other operating income 1,162,688 474,088 542,205 257,165
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Other income 3,525,879 2,393,337 1,678,155 1,311,458
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Other expenses
Salaries 3,822,591 2,802,087 1,920,576 1,394,017
Pension, profit sharing, & other employee benefits 686,886 383,333 337,646 178,177
Net occupancy of bank premises 1,007,061 567,957 483,621 286,462
Furniture & equipment 556,387 385,008 271,864 197,486
Federal deposit insurance premiums 598,659 341,501 299,329 170,751
Amortization of excess cost over fair value
of net assets acquired 796,216 97,098 398,108 48,549
Other 2,586,667 1,437,619 1,288,285 767,187
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Other expense 10,054,467 6,014,603 4,999,429 3,042,629
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Earnings before income taxes 3,956,616 3,325,161 1,996,361 1,735,962
Applicable income taxes 1,211,193 911,343 605,572 479,435
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Net earnings $2,745,423 $2,413,818 $1,390,789 $1,256,527
===================================================================================================================================
Earnings per share:
Average weighted shares outstanding 2,210,434 1,959,791 2,215,273 1,954,791
Net earnings $.95 $1.23 $.48 $.64
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</TABLE>
TO OUR STOCKHOLDERS:
Net earnings for the quarter ended June 30, 1994 were $1,390,789, up slightly
from the $1,354,634 earned in the previous quarter. Per share earnings rose
from $.47 in the first quarter to $.48 this quarter. Year-to-date net earnings
total $2,745,423, a 13.7% improvement over the first six months of 1993.
So far this year, we've experienced many of the financial changes we expected
concurrent with our efforts to improve asset quality. Total loans have declined
by more than $53 million since year end 1993, with much of the decline a result
of collection actions. Net charge-offs for the current quarter were just under
$800,000, but were covered by previous provisions from earnings. Over the
remainder of 1994 we plan to continue our efforts to improve overall asset
quality while beginning to selectively focus on growing our loan portfolio.
In addition to the loan related changes, our balance sheet has also changed in
several other areas; 1) Securities available for sale, and 2) Stockholders'
Equity.
The increase in Securities available for sale was the result of returning
approximately $15 million of discretionary funds to interest bearing deposits
and investing the proceeds. Although the change occurred in late June, this
action should benefit our net interest income in future quarters.
The current interest rate environment, typified by rising short term rates,
resulted in recording a $1,967,775 unrealized loss on Securities available for
sale. The unrealized loss is recorded in Stockholders' Equity. It's unlikely
we will realize these reported losses.
We're encouraged by the improvement this quarter in net interest income.
Despite the decline in loans, interest income increased by just over $369,000
as compared to the first three months this year. Coupled with a comparably
smaller 5.8% increase in interest expense, net interest
last quarter. Other income, particularly Trust fees, also continues to
improve.
Thank you for your support and confidence.
Cordially,
<TABLE>
Exhibit 28
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months ended June 30, 1994 and 1993
<C> <C>
1994 1993
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Cash flows from operating activities:
Net earnings $2,745,423 $2,413,818
Adjustments to reconcile net earnings
to net cash from operating activities:
Amortization net, related to:
Investment securities 956,580 42,452
Excess of cost over net assets acquired 796,215 97,098
Other 96,481 ( 11,386)
Depreciation 585,110 425,085
Provision for possible loan losses 25,000 150,000
Gain on sale related to:
Investment securities ( 6,996) ( 20,394)
Loans sold to secondary market ( 203,811) ( 347,915)
Change in:
Securities available for sale (56,833,510) 8,637,404
Accrued interest receivable ( 385,143) 122,387
Other assets ( 484,228) ( 452,084)
Accrued taxes & other expenses ( 1,290,429) ( 551,885)
Other liabilities ( 97,940) 49,660
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Net cash from operating activities (54,097,248) 10,554,240
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Cash flows from investing activities:
Purchase of investment securities ( 8,813,221) ( 3,158,862)
Proceeds from:
Maturities of investment securities 2,144,928 1,833,917
Sales of investment securities 663,955 -
Net (increase) decrease in loans 53,059,969 809,477
Purchase of bank premises & equipment ( 82,620) ( 131,795)
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Net cash from investing activities 46,973,011 ( 647,263)
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Cash flows from financing activities:
Net increase (decrease) in:
Deposits ( 3,298,002) ( 10,339,014)
Securities sold under agreements to repurchase ( 8,266,737) 1,305,366
Short term borrowings 3,975,000 ( 902,000)
Cash dividends paid ( 1,208,530) ( 462,608)
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Net cash from financing activities ( 8,798,269) ( 10,398,256)
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Increase (decrease) in cash and cash equivalents (15,922,506) ( 491,279)
Cash and cash equivalents, beginning of year 56,355,534 21,880,600
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Cash and cash equivalents six months
ended June 30, 1994 and 1993 $40,433,028 $21,389,321
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</TABLE>
