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 March 31, 1996, 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
April 30, 1996: 6,572,803
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 4 pages)
Part I
Item 1. Financial Statements.
The following consolidated financial statements of the Company which
are submitted herewith as an exhibit and are incorporated herein by
reference:
1. Consolidated Balance Sheets, March 31, 1996, March 31,
1995 and December 31, 1995.
2. Consolidated Statements of Earnings, quarters ended March 31,
1996 and 1995.
3. Consolidated Statements of Cash Flows, three months ended March
31, 1996 and 1995.
4. Notes to the Unaudited Consolidated Financial Statements.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Premier Financial Services, Inc. earned $1.5 million for the first quarter
of 1996 or $.18 per share. Net earnings for the first quarter of 1995
totaled $1.3 million, or $.15 per share. Return on average assets and
common equity was .93% and 10.42%, respectively for the three months
ended March 31, 1996, compared to .85% and 9.77% for the same period in
1995.
Net interest income for the first quarter of 1996 was $5.5 million, as
compared to $5.3 million in 1995. The increase was essentially
attributable to growth in average earning assets. Average earning
assets were $584.4 million for the quarter ended March 31, 1996, an
increase of $39.0 million from the $545.4 million reported in 1995. An
analysis of first quarter results reflects a 21 basis point decrease in
the average yield on earning assets from 1995 to 1996, while the average
cost of funds increased 6 basis points, resulting in a lower net interest
margin (3.94% in 1996 as compared to 4.21% in 1995).
Premier recorded a loan loss provision of $100,000 in the first quarter
of 1996 as compared to $51,000 in the first quarter of 1995. At March
31, 1996 the allowance for possible loan losses totaled $3.9 million, or
1.19% of gross loans, compared to $3.3 million, or 1.14% of gross loans at
March 31, 1995. Nonperforming assets as a percentage of total assets
decreased to .59% as of March 31, 1996 as compared to .76% at March 31,
1995 and .60% at December 31, 1995. Management believes that the allowance
for possible loan losses is adequate based upon the composition of the
portfolio and credit quality as of March 31, 1996. Future provisions will
continue to be determined in relation to overall asset quality and loan
portfolio growth.
Total noninterest income increased $308,000, or 19.14% for the three months
ended March 31, 1996 as compared to the same period in 1995. Contributors
to the increase were net gains on loans sold to the secondary market, gains
on investment securities sold and other operating income. Income on real
estate loan originations and sales to the secondary market enhanced
earnings in 1996 by $95,000, an increase of $78,000 as compared to $17,000
recorded in 1995. Net gains from sales of investment securities totaled
$69,000 in the first quarter of 1996, up $46,000 from $23,000 in 1995.
The remaining increase was primarily from trust fees, sale of other real
estate and premiums received from selling options on securities available
for sale. Total noninterest expense decreased by approximately $103,000
in the first quarter of 1996 as compared to the same period in 1995. Non
tax deductible expenses totaling approximately $151,000 relating to the
proposed merger of Premier with Northern Illinois Financial Corporation
were more than offset by the $278,000 decrease in federal deposit insurance
premiums. Premier expects to continue to incur expenses related to the
proposed merger in the second and third quarters of 1996.
Income taxes for the first quarter of 1996 totaled $855,000 as compared to
$539,000 in 1995. The increase in the tax provision is due to higher
pretax earnings, a decrease in tax exempt income and an increase in non-tax
deductible expenses (i.e. merger related expenses and goodwill). The
Company's effective tax rate for the period ended March 31, 1996 was 36.46%
as compared to 29.34% for the same period in 1995.
Total liabilities increased modestly from $608.1 million at December 31,
1995 to $610.4 million at March 31, 1996. Total deposits declined by
approximately $4.8 million, due to an $11.5 million decrease in non-
interest bearing deposits, partially offset by a $6.7 million increase in
interest-bearing deposits. Premier has historically experienced a first-
quarter decrease in the amount of non-interest bearing deposits, following
an increase in such deposits during the fourth quarter. Securities sold
under agreements to repurchase, which are generally short-term sources of
funds and managed in conjunction with all funding sources, increased by $7.4
million during the same December 31, 1995 to March 31, 1996 time-frame.
At March 31, 1996, stockholders' equity totaled $60.7 million, down from
$62.1 million at December 31, 1995. This decrease was due primarily to
earnings net of common and preferred dividends being more than offset by
a $2.2 million decrease in the after tax unrealized gain (loss) recorded
on securities available for sale in accordance with Statement of Financial
Accounting Standards No. 115, Accounting for Certain Investments in Debt
and Equity Securities.
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
for the quarter ended March 31, 1996 as follows:
1. Consolidated Balance Sheets, March 31, 1996,
March 31, 1995 and December 31, 1995.
2. Consolidated Statements of Earnings, quarters ended
March 31, 1996 and 1995.
3. Consolidated Statements of Cash Flows, three months
ended March 31, 1996 and 1995.
4. Notes to unaudited Consolidated Financial
Statements.
B. Exhibits as follows:
4. Agreement, dated July 16, 1993, among Premier
Financial Services, Inc., Premier Acquisition
Company, First Northbrook Bancorp, Thomas D.
Flanagan and James M. Flanagan.
10. Premier Financial Services, Inc., 1988 Non-
qualified Stock Option Plan, effective as of
January 28, 1988.
27. Financial Data Schedule, three months ended March
31, 1996.
2. Reports on Form 8-K - The registrant filed a report on Form
8-K, dated January 18, 1996, reporting an Agreement and Plan
of Reorganization, among the Registrant, Northern Illinois
Financial Corporation and Grand Premier Financial, Inc.
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: /s/ David L. Murray
David L. Murray, Executive Vice President
& Chief Financial Officer
May 14, 1996
(Date)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation. The consolidated financial statements include
the accounts of Premier Financial Services, Inc. ("Premier") and its
subsidiaries, all of which are wholly owned. Significant intercompany
balances and transactions have been eliminated. The consolidated
financial statements as of March 31, 1996 and 1995 have not been
audited by independent public accountants. In the opinion of
management, the interim financial statements reflect all adjustments
(consisting only of adjustments of a normal recurring nature)
necessary for a fair presentation of Premier's financial position,
results of operations and cash flows for the interim periods
presented. The results for such interim periods are not necessarily
indicative of the results for the full year. These financial
statements should be read in conjunction with the consolidated
financial statements and the accompanying notes to the consolidated
financial statements included in Premier's 1995 Annual Report to
Stockholders.
2. Proposed Merger. On January 22, 1996, Premier signed a definitive
agreement to merge its assets and operations with Northern Illinois
Financial Corporation ("NIFCO") located in Wauconda, Illinois and form
a new financial services corporation to be named Grand Premier
Financial Inc. In the proposed merger, which is subject to
shareholder and regulatory approval, NIFCO common shareholders will
receive 4.25 shares of Grand Premier Financial, Inc. for each share
held. Premier common shareholders will receive 1.116 shares of Grand
Premier Financial, Inc. for each share held. At December 31, 1995,
NIFCO had total assets of approximately $954 million. It is expected
that the merger will be accounted for as a pooling-of-interest and be
consummated in the third quarter of 1996.
<TABLE>
Consolidated Balance Sheets
- -------------------------------------------------------------------------------------------------------------------------
March 31, March 31, December 31,
1996 1995 1995
- -------------------------------------------------------------------------------------------------------------------------
Assets (unaudited) (unaudited)
<S> <C> <C> <C>
Cash & non-interest bearing deposits $27,430,052 $33,752,596 $37,390,597
Interest bearing deposits 282,552 308,012 676,367
- -------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents 27,712,604 34,060,608 38,066,964
- -------------------------------------------------------------------------------------------------------------------------
Investments held to maturity (approximate market value):
March 31, 1995 - $39,473,000 - 39,167,317 -
Securities available for sale 278,935,759 218,484,899 265,326,397
Loans 323,691,555 285,861,308 326,975,311
Less: Unearned discount ( 264,296) ( 317,757) ( 278,242)
Allowance for possible loan losses ( 3,839,436) ( 3,257,973) ( 3,849,863)
- -------------------------------------------------------------------------------------------------------------------------
Net loans 319,587,823 282,285,578 322,847,206
- -------------------------------------------------------------------------------------------------------------------------
Bank premises & equipment 13,799,525 14,099,624 13,898,077
Excess cost over fair value of net assets acquired 19,610,042 21,202,475 20,008,150
Accrued interest receivable 7,539,812 6,378,192 6,514,630
Other assets 3,925,046 4,389,084 3,557,959
- -------------------------------------------------------------------------------------------------------------------------
Total assets $671,110,611 $620,067,777 $670,219,383
- -------------------------------------------------------------------------------------------------------------------------
Liabilities & stockholders' equity
Non-interest bearing deposits $71,189,774 $74,604,945 $82,694,865
Interest bearing deposits 475,471,833 446,769,918 468,797,581
- -------------------------------------------------------------------------------------------------------------------------
Deposits 546,661,607 521,374,863 551,492,446
- -------------------------------------------------------------------------------------------------------------------------
Short-term borrowings 32,450,000 21,800,000 32,725,000
Securities sold under agreements to repurchase 26,051,804 17,175,262 18,635,335
Accrued taxes & other expenses 4,925,684 3,510,164 5,033,133
Other liabilities 305,232 205,668 226,065
- -------------------------------------------------------------------------------------------------------------------------
Total liabilities $610,394,327 $564,065,957 $608,111,979
- -------------------------------------------------------------------------------------------------------------------------
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, issued and outstanding 7,250,000 7,250,000 7,250,000
Series D perpetual, $1,000 stated value, 7.50%, 3,300 shares
authorized, 2,000 shares issued and outstanding 2,000,000 2,000,000 2,000,000
Common stock- $5.00 par value
March 31, March 31, December 31,
No. of Shares 1996 1995 1995
Authorized 15,000,000 15,000,000 15,000,000
Issued 6,550,113 6,526,227 6,544,347
Outstanding 6,550,113 6,524,217 6,544,347 32,750,565 32,631,135 32,721,735
Retained earnings 14,700,387 10,845,158 13,893,248
Unrealized gain (loss) on securities available for sale, net of tax ( 984,668) ( 1,708,128) 1,242,421
Less: Treasury stock, (2,010 shares at cost, March 31, 1995) - ( 16,345) -
- -------------------------------------------------------------------------------------------------------------------------
Stockholders' equity $60,716,284 $56,001,820 $62,107,404
- -------------------------------------------------------------------------------------------------------------------------
Total liabilities & stockholders' equity $671,110,611 $620,067,777 $670,219,383
- -------------------------------------------------------------------------------------------------------------------------
See notes to unaudited consolidated financial statements.
</TABLE>
<TABLE>
Consolidated Statements of Earnings
- -----------------------------------------------------------------------------------------------------------------------------------
Three Months Ended
March 31,
1996 1995
Interest income (unaudited) (unaudited)
<S> <C> <C>
Interest & fees on loans $7,089,366 $6,443,026
Interest & dividends on investment securities:
Taxable 3,490,074 3,333,761
Exempt from federal income tax 422,974 553,975
Other interest income 86,314 102,981
- -----------------------------------------------------------------------------------------------------------------------------------
Interest income 11,088,728 10,433,743
- -----------------------------------------------------------------------------------------------------------------------------------
Interest expense
Interest on deposits 5,071,831 4,535,318
Interest on short-term borrowings 537,714 563,787
- -----------------------------------------------------------------------------------------------------------------------------------
Interest expense 5,609,545 5,099,105
- -----------------------------------------------------------------------------------------------------------------------------------
Net interest income 5,479,183 5,334,638
Provision for possible loan losses 100,000 51,000
- -----------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for possible loan losses 5,379,183 5,283,638
- -----------------------------------------------------------------------------------------------------------------------------------
Other income
Trust fees 663,196 648,939
Service charges on deposits 487,151 499,677
Net gains on loans sold to secondary market 95,495 16,547
Investment securities gains, net 68,919 22,518
Other operating income 600,483 419,862
- -----------------------------------------------------------------------------------------------------------------------------------
Other income 1,915,244 1,607,543
- -----------------------------------------------------------------------------------------------------------------------------------
Other expenses
Salaries 1,984,716 2,007,503
Pension, profit sharing, & other employee benefits 353,246 320,017
Net occupancy of bank premises 563,846 538,409
Furniture & equipment 235,591 295,782
Federal deposit insurance premiums 1,500 280,774
Amortization of excess cost over fair value of net assets acquired 398,108 398,108
Other 1,412,951 1,212,479
- -----------------------------------------------------------------------------------------------------------------------------------
Other expense 4,949,958 5,053,072
- -----------------------------------------------------------------------------------------------------------------------------------
Earnings before income taxes 2,344,469 1,838,109
Applicable income taxes 854,730 539,306
- -----------------------------------------------------------------------------------------------------------------------------------
Net earnings $1,489,739 $1,298,803
===================================================================================================================================
Earnings per share
(On weighted average outstanding common
shares of 6,746,278 in 1996 and
6,676,422 in 1995) $.18 $.15
- -----------------------------------------------------------------------------------------------------------------------------------
See notes to unaudited consolidated financial statements.
</TABLE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended March 31, 1996 and 1995 (unaudited)
1996 1995
------- -------
Cash flows from operating activities:
<S> <C> <C>
Net earnings $1,489,739 $1,298,803
Adjustments to reconcile net earnings
to net cash from operating activities:
Amortization net, related to:
Investment securities 286,744 354,946
Excess of cost over net assets acquired 398,108 398,108
Other 91,655 79,456
Depreciation 236,114 278,242
Provision for possible loan losses 100,000 51,000
Gain on sale related to:
Investment securities ( 68,919) ( 22,518)
Loans sold to secondary market ( 95,495) ( 16,547)
Change in:
Accrued interest receivable ( 1,025,182) ( 543,186)
Other assets ( 367,087) ( 691,812)
Accrued taxes & other expenses ( 107,449) 1,750,652
Other liabilities 1,226,455 ( 97,450)
-------------------------------------------------------------------------------------------------------
Net cash from operating activities 2,164,683 2,839,694
-------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Purchase of investment securities held-to-maturity - ( 910,701)
Purchase of securities available for sale ( 81,100,144) ( 29,281,919)
Proceeds from:
Maturities of investment securities held-to-maturity - 2,262,303
Maturities of securities available for sale 25,773,637 9,075,000
Sales of securities available for sale 38,124,943 12,044,237
Net (increase) decrease in loans 3,176,790 ( 1,618,275)
Purchase of bank premises & equipment ( 151,129) ( 136,685)
-------------------------------------------------------------------------------------------------------
Net cash from investing activities ( 14,175,903) ( 8,566,040)
-------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net increase (decrease) in:
Deposits ( 4,830,839) ( 2,318,540)
Securities sold under agreements to repurchase 7,416,469 1,089,390
Short term borrowings ( 275,000) ( 4,385,000)
Reissuance of treasury stock - 133,417
Exercised stock options 15,800 -
Cash dividends paid ( 669,570) ( 602,672)
-------------------------------------------------------------------------------------------------------
Net cash from financing activities 1,656,860 ( 6,083,405)
-------------------------------------------------------------------------------------------------------
Decrease in cash and cash equivalents ( 10,354,360) ( 11,809,751)
Cash and cash equivalents, beginning of year 38,066,964 45,870,359
-------------------------------------------------------------------------------------------------------
Cash and cash equivalents, for three months ended March 31 $27,712,604 $34,060,608
-------------------------------------------------------------------------------------------------------
See notes to unaudited consolidated financial statements.
</TABLE>
July 16, 1993
Mr. James M. Flanagan Thomas D. Flanagan, Esq.
Heil, Heil, Smart & Golee Flanagan, Bilton & Brannigan
1515 Chicago Avenue 130 E. Randolph Drive, Suite 1900
Evanston, Illinois 60204 Chicago, Illinois 60601
Board of Directors
First Northbrook Bancorp, Inc.
1300 Meadow Road
Northbrook, Illinois 60062
Re: Agreement and Plan of Reorganization
Ladies and Gentlemen:
We reference that certain Agreement and Plan of
Reorganization dated as of July 26, 1992 (the "Agreement"),
among Premier Financial Services, Inc. ("Premier"), Premier
Acquisition Company and First Northbrook Bancorp, Inc. Terms
defined in the Agreement are used herein with the same
meaning.
This letter agreement describes, as among ourselves, our
agreement that Premier will revise the terms of the Premier
Series B Preferred Stock and Premier Series D Preferred Stock to
provide that all dividends payable on account of such stock will
be cumulative as soon as such cumulative Premier Series B
Preferred Stock and Premier Series D Preferred Stock would
qualify as "Tier 1 Capital" pursuant to Appendix A of Regulation Y,
as promulgated by the Board of Governors of the Federal Reserve
System.
Please acknowledge your acceptance hereof by executing
this letter agreement in the space provided below. The parties
acknowledge that this letter is being given to induce James M.
Flanagan and Thomas D. Flanagan to consummate the
transactions contemplated by the Agreement.
Very truly yours,
PREMIER FINANCIAL SERVICES, INC. PREMIER ACQUISITION
COMPANY
By: /s/ Richard L. Geach By: /s/ Richard L. Geach
Richard L. Geach Richard L. Geach
President President
PREMIER FINANCIAL SERVICES, INC.
1988 NON-QUALIFIED STOCK OPTION PLAN
SECTION 1. Establishment. There is hereby
established the 1988 Non-Qualified Stock Option Plan
pursuant to which key employees of PREMIER FINANCIAL
SERVICES, INC. (the "Company"), a Delaware corporation,
and its subsidiaries may be granted options to purchase
shares of common stock of the Company, par value $5.00
per share ("Common Stock").
SECTION 2. Purpose. The purpose of the Plan is to
provide a means whereby key employees of the Company or
any Subsidiary may be given the opportunity to purchase
stock of the Company under options. The Plan is intended
to advance the interests of the Company by encouraging
stock ownership or additional stock ownership by key
employees of the Company or any Subsidiary and to advance
the interests of the Company by strengthening its ability
to hire and retain highly qualified personnel and to give
such personnel added incentive.
SECTION 3. Eligibility. All key employees of the
Company or any of its Subsidiaries, who have substantial
management responsibilities and are employed at the time
of the adoption of this Plan or thereafter, shall be
eligible to be granted options to purchase share of
Common Stock under this Plan. Whether a key employee
becomes an Optionee under this Plan shall be determined
in accordance with Section 5.
SECTION 4. Number of shares Covered by Options.
The total number of shares which may be issued and sold
pursuant to options granted under this Plan shall be
100,000 shares of the Company's Common Stock. The Stock
to be optioned under the Plan may be either authorized
and unissued shares or issued shares which shall have
been reacquired by the Company. Such shares are subject
to adjustment in accordance with the provisions of
Section 7 hereof. The shares involved in the unexercised
portion of any terminated or expired options under the
Plan may again be optioned under the Plan.
SECTION 5. Granting of Options. Subject to the
provisions of this Plan, the Board of Directors of the
Company ("Board of Directors") may, within ten years
from the date this Plan is adopted from time to time
grant options to any key employee ("Optionee") for such
number of shares of Common Stock and upon such terms and
conditions as in the judgment of the Board of Directors
shall be desirable. Nothing contained in this Plan shall
be deemed to give any employee any right to be granted an
option to purchase shares of Common Stock except to the
extent and upon such terms and conditions as may be
determined by the Board of Directors. The vote of any
person who is eligible for an option pursuant to Section
3 of the Plan shall not be counted in calculating the
total number of Directors of the Company voting in favor
of or against any matter relating to any option granted
or to be granted hereunder to such person.
SECTION 6. Terms of Options. Each option granted
under this Plan shall be evidenced by an agreement
("Stock Option Agreement") which shall be executed by the
President of the Company and by the employee to whom such
option is granted, and shall be subject to the following
terms and conditions:
(a) The price at which each share of Common Stock
covered by each option may be purchased shall be
determined in each case on the date of grant by the
Board of Directors, but shall not be less than the
fair market value of shares of Common Stock at the
time the option is granted. For purposes of this
Section, the fair market value of shares of Common
Stock on any day shall be the bid price of a share
of Common Stock in the over-the-counter market as
reported on the date of grant in the Midwest Edition
of The Wall Street Journal, or, if there is no sale
in the over-the-counter market on such day, such
fair market value shall be the average of (i) the
bid price on the day immediately preceding such day
on which there was a sale and (ii) the bid price on
the day next succeeding such day on which there is a
sale, or as otherwise determined by the Board of
Directors in its discretion.
(b) The option price of the shares to be purchased
pursuant to each option shall be paid in full in
cash at the time of the exercise of the option and
prior to the issuance of any Stock purchased
thereto.
(c) Each Stock Option Agreement shall provide that
such option may be exercised by the Optionee in such
parts and at such times as may be specified in such
Agreement. Any option granted hereunder shall
expire not later than the first to occur of the
following:
(i) The expiration of ten years from the date
such option is granted (hereinafter called the
"Option Period").
(ii) The expiration of three months after the
date of either (a) the retirement of the
Optionee under any retirement plan of the
Company or any Subsidiary or (b) the
termination of the employment of the Optionee
with the Company or any Subsidiary due to total
and permanent disability. The Board of
Directors of the Company may provide by
resolution, however, that any terms of this
subparagraph (ii) of paragraph (c) shall not
apply to any option or portion of an option.
(iii) The expiration of the period of six
months after the date of the Optionee's death,
or
(iv) The expiration of the Option Period, by
the person or persons entitled to do so under
the Optionee's will, or if the Optionee shall
fail to make testamentary disposition of said
Option, or shall die interstate, by the
Optionee's legal representative or
representatives.
(v) The termination of employment of the
Optionee with the Company or any Subsidiary for
a reason other than those expressed in
subparagraphs (ii) and (iii) of this paragraph
(c).
(d) Notwithstanding anything herein to the
contrary, no option granted under the Plan prior to
approval of the Plan by the stockholders may be
exercised before such approval, and in the event
this Plan is disapproved by the stockholders, then
any option granted hereunder shall become null and
void.
(e) Each option and right granted under this Plan
shall by its terms be non-transferable by the
Optionee except to their trust, or by will or by the
law of descent and distribution, and each option or
right shall be exercisable during the Optionee's
lifetime only by him.
(f) The Stock Option Agreement entered into
pursuant hereto may contain such other terms,
provision and conditions not inconsistent herewith
as shall be determined by the Board of Directors
including, without limitation, provisions (i)
requiring the giving of satisfactory assurances by
the Optionee that the shares are purchased for
investment and not with a view to resale in
connection with the distribution of such shares, and
will not be transferred in violation of applicable
securities laws, (ii) restricting the
transferability of such shares during a specific
period and (iii) requiring the resale of such shares
to the Company at the option price if the employment
of the Optionee terminates prior to a specified
time.
SECTION 7. Adjustment of Number of Shares. In the
event that a dividend shall be declared upon the shares
of Common Stock payable in shares of Common Stock, the
number of shares of Common Stock then subject to any
option granted hereunder and the number of shares
reserved for issuance pursuant to this Plan but not yet
covered by an option, shall be adjusted by adding to each
of such shares the number of shares which would be
distributable thereon if such share had been outstanding
on the date fixed for determining the stockholders
entitled to receive such stock dividend. In the event
that the outstanding shares of Common Stock shall be
changed into or exchanged for a different number or kink
of shares of stock or other securities of the Company or
of another corporation, whether through reorganization,
recapitalization, stock split-up, combination of shares,
merger or consolidation then there shall be substituted
for each share of Common Stock subject to any such option
and for each share of Common Stock reserved for issuance
pursuant to the Plan but not yet covered by an option,
the number and kind of share of stock or other securities
into which each outstanding share of Common Stock shall
be so changed or for which each such share shall be
exchanged; provided, however, that in the event that such
change or exchange results from a merger or
consolidation, and in the judgment of the Board of
Directors such substitution cannot be effected or would
be inappropriate, or if the Company shall sell all or
substantially all of its assets, the Company shall use
reasonable efforts to effect some other adjustment of
each then outstanding option which the Board of
Directors, in its sole discretion, shall deem equitable.
In the event that there shall be any change, other
than as specified above in this Section 7, in the number
of kind of outstanding shares of Common Stock, then if
the Board of Directors shall determine that such change
equitably requires an adjustment in the number or kind of
shares theretofore reserved for issuance pursuant to the
Plan but not yet covered by an option and of the shares
of Common Stock then subject to an option or options,
such adjustment shall be made by the Board of Directors
and shall be effective and binding for all purposes of
this Plan and of each Stock Option Agreement. In the
case of any such substitution or adjustment as provided
for in the is Section, the option price in each Stock
Option Agreement for each share covered thereby prior to
such substitution or adjustment will be the option price
for all shares of stock or other securities which shall
have been substituted for such shares or to which such
share shall have been adjusted pursuant to this Section 7
shall require the Company, in any Stock Option Agreement,
to sell a fractional share, and the total substitution or
adjustment with respect to each Stock Option Agreement
shall be limited accordingly.
SECTION 8. Administration. The Board of Directors
of the Company shall interpret the Plan and may
prescribe, amend and rescind rules and regulations
relating to the Plan by majority vote of those Directors
who are disinterested parties tot he Plan. In addition
to determining the terms and conditions of the respective
Option Agreements it shall make all other determinations
deemed necessary or advisable for the administration of
the Plan; provided, that any such determination shall not
be inconsistent with the provisions of this Plan.
SECTION 9. Amendments. This Plan may be terminated
or amended from time to time by vote of the Board of
Directors; provided, however, that no amendment which
shall increase the total number of shares which may be
issued and sold pursuant to options granted under this
Plan, nor any amendment that materially modifies the
requirements contained in SECTION 3. Eligibility hereof,
shall be effective without the approval of stockholders.
SECTION 10. Effective Date and Stockholder
Approval. The Plan becomes initially effective upon
adoption by the Board of Directors of the Company,
subject, however, to approval at the next annual meeting
of the stockholders, or at any prior meeting of the
stockholders at which the Plan is submitted for approval.
SECTION 11. Termination. The Plan shall terminate
of January 28, 1998; provided however, that the Board of
Directors may terminate the Plan at any time prior
thereto. Termination of the Plan shall not impair any of
the rights or obligations under any option granted under
the Plan without the consent of the Optionee.
SECTION 12. Employment Status. The transfer of
employment from the Company to a Subsidiary of the
Company, or from a Subsidiary to the Company, or from a
Subsidiary to another Subsidiary, shall not constitute a
termination of employment for the purpose of the Plan.
Options granted under the Plan shall not be affected by
any change of status in connection with the employment of
the Optionee or by leave of absence authorized by the
Company or a Subsidiary.
SECTION 13. Proceeds from Sale of Stock. Proceeds
from the sale of Stock issued upon the exercise of
options granted pursuant to the Plan shall be added to
the general funds of the Company.
SECTION 14. Exemption from Liability. The members
of the Board of Directors of the Company and each of
them, shall be free from all liability, joint or several,
for their acts, omissions and conduct, and for the acts,
omissions and conduct of their duly constituted agents,
in carrying out the responsibilities of said Board of
Directors under the Plan, and the Company shall indemnify
and save them and each of them harmless from the effects
and consequences of their acts, omissions and conduct in
their official capacity, except to the extent that such
effects and consequences shall result from their own
willful misconduct.
SECTION 15. Right to Repurchase. In the event a
person who has acquired Stock pursuant to an option
granted under the Plan offers to sell shares of such
Stock, the Company shall have the first right of
purchase. Such person shall make a written offer to the
Company and the Company shall have first right of
purchase, and if it exercises this right, and so long as
its stock is traded over-the-counter, the amount payable
for each share of Stock shall be the mean of the bid and
ask prices as of the most recently published quotation of
the bid and ask prices prior to the date of offer to sell
as such published quotation is evidenced in the Midwest
Edition of The Wall Street Journal for such Stock. If
the Company wishes to exercise its right to purchase, the
Company must express its decision in a written statement
signed by an official representative of the Company and
the statement must be delivered to the person offering
the Stock within two regular business days from the date
the person offers to sell the Stock.
SECTION 16. Governing Laws. The Plan shall be
construed, administered and governed in all respects
under and by the Laws of the State of Illinois. Each
Option Agreement granted under the Plan shall be
construed, administered and governed all respects under
and by the laws of the of the State of Illinois.
SECTION 17. Date of Adoption. This Plan was
adopted by the Board of Directors of the Company on
January 28, 1988, which is the effective date of the
Plan.
SECTION 18. Adoption by Subsidiaries. Any
subsidiary of the Company may adopt the Plan by means of
a resolution of such subsidiary's board of directors for
the benefit of its key employees; provided, however, such
adoption must have a prior approval of the Board of
Directors of the Company as evidenced by a resolution of
the Board.
* * * * * * * * * * * * * *
IN WITNESS WHEREOF, PREMIER FINANCIAL SERVICES, INC.
has caused this Plan to be executed by its President and
attested by its Secretary and caused its corporate seal
to be hereunto affixed.
Dated this 28th day of January, 1988, but effective
January 28, 1988.
PREMIER FINANCIAL SERVICES, INC.
By: /S/ Richard L. Geach
President
ATTEST:
By: /s/ Michael J. Lester
Secretary
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