SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1993
Commission file no. Q-15729
PREMIER BANKSHARES CORPORATION
(Exact name of registrant as specified in its charter)
VIRGINIA 54-1377250
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
29 College Drive
P. O. Box 1199
Bluefield, Virginia 24605-1199
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code
(703) 322-2242
Securities registered pursuant to Section 12(g) of the Act:
Common Stock - $2 Par Value
(Title of Class)
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. ___.
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the voting stock held by
nonaffiliates of the registrant based on the average bid and
asked price as of March 15, 1995:
Common Stock, $2 par value - $88,533,539.00.
The number of shares outstanding of the issuer's classes of
common stock, as of March 15, 1995:
Common Stock, $2 par value - 4,987,805 Shares
DOCUMENTS INCORPORATED BY REFERENCE:
Registrant's proxy statement for the annual shareholders meeting
to be held April 20, 1995 is incorporated by reference into Part
III, Items 10, 11, 12 and 13.<PAGE>
PREMIER BANKSHARES CORPORATION
1994 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
PART I PAGE
Item 1. Business 2
Item 2. Properties 4
Item 3. Legal Proceedings 5
Item 4. Submission of Matters
to a Vote of Security
Holders 5
Executive Officers of
the Registrant 6
PART II
Item 5. Market for the Registrant's Common Stock
and Related Security Holder Matters 7
Item 6. Selected Financial Data 7
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operation 8
Item 8. Financial Statements and Supplementary Data 31
Item 9. Disagreements on Accounting and Financial Disclosure 60
PART III
Item 10. Directors and Executive Officers of the Registrant 60
Item 11. Executive Compensation 60
Item 12. Security Ownership of Certain Beneficial Owners and
Management 60
Item 13. Certain Relationships and Related Transactions 60
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K 61
Signatures 62
<PAGE>
PART I
ITEM 1. BUSINESS
Premier Bankshares Corporation ("Premier") was incorporated
in May 1986 to operate as a bank holding company and acquired its
first two affiliates, Bank of Speedwell, Inc. ("Speedwell"), and
Tazewell National Bank ("TNB") in November 1986. Peoples Bank,
Inc., ("Peoples") was acquired in July 1987 and Richlands
National Bank ("RNB") in August 1987. The merger of Premier and
Shawsville Bancorp, Inc., was consummated on September 29, 1990,
which added another affiliate, Bank of Shawsville, Inc.
("Shawsville"). Bank of Speedwell and Bank of Shawsville were
merged as of October 9, 1991, under the name Premier Bank, Inc.
("PBI"). These banks operate at 25 banking locations in the
Virginia Counties of Tazewell, Wythe, Pulaski, Russell, Scott,
Montgomery, Wise and City of Salem.
Dickenson-Buchanan Bank was acquired effective December 31, 1994,
adding three additional branches in Buchanan and Dickenson counties.
Premier's subsidiary banks offer a full range of banking
services, including commercial, installment and real estate
loans, as well as checking, savings, and individual retirement
accounts and certificates of deposit. Each bank has trust powers
and trust services are offered at each bank through the
administrative support of the trust department of TNB.
Premier's philosophy allows its affiliate banks to retain
their names and to exercise a degree of independence under their
respective boards of directors and officers, subject to
accountability for financial condition and operating results.
Premier believes that this preserves community contact and
customer loyalty without sacrificing the centralized direction
and operating efficiencies of a larger holding company. The
principal role of Premier is to assist subsidiary banks with
burdensome regulatory and administrative tasks, to coordinate
activities and ensure common direction, and to supervise overall
strategic and financial plans. Premier assists its affiliates in
management of their investment and loan portfolios and
coordinates pension, hospitalization, and other benefit plans for
employees. Premier also assists in developing and coordinating
auditing and marketing programs, and performs certain accounting
and planning functions for all subsidiaries.
Premier Bank Services Corporation, a nonbank subsidiary
Virginia corporation, was chartered February 16, 1989 to process
certain consumer loans for affiliate banks. Its Articles of
Incorporation were amended in 1990 to allow it to sell insurance
products. At December 21, 1993, this corporation was inactive.
Shawsville Bancorp, Inc., procured the incorporation of
Professional Financial Services of Virginia, Inc., a nonbank
subsidiary Virginia corporation, March 2, 1987, to render
accounting and tax return preparation services. This Corporation
is inactive.
Competition
Premier and its affiliate banks face strong competition in
their respective market areas from other commercial banks and
savings institutions. In addition, they face competition for
deposits from money market funds and similar investment vehicles.
Certain of its competitors are branches of much larger statewide
banks; others are affiliates of much larger bank holding
companies.
Supervision and Regulation
Premier is a bank holding company registered under the Bank
Holding Company Act of 1956, as amended ("the Act"). As a bank
holding company, Premier is required to file with the Board of
Governors of the Federal Reserve System (the "Federal Reserve
Board" or Board") periodic reports and such additional
information as the Board may require pursuant to the Act. The
Board also reviews and acts on all applications for establishing
nonbank subsidiaries. The act requires approval by the Board
prior to any acquisition by Premier of substantially all the
assets or ownership or control of any bank, if after such
acquisition, it would own or control, directly or indirectly,
more that five (5%) percent of the voting shares of such bank.
It also prohibits the acquisition by Premier of the stock or
substantially all the assets of any bank located in a state other
than Virginia unless the statutory law of the state in which such
bank is located specifically authorizes such acquisition.
Virginia and certain neighboring states, including West Virginia
(effective January 1, 1988) Kentucky and Tennessee, have
reciprocal agreements regarding limited interstate banking
activities.
The Act prohibits Premier, with certain exceptions, from
acquiring direct or indirect ownership or control of more than
five percent of the voting shares of any company which is not a
bank or bank holding company, and from engaging directly or
indirectly in any activity other than that of banking or of
managing or controlling banks. One of the principal exceptions
to this prohibition is for activities which the Federal Reserve
Board determines to be so closely related to banking or managing
or controlling banks as to be a proper incident thereto. In
making such determination, the Board is required to weigh the
expected benefits to the public (such as greater convenience,
increased competition or gains in efficiency) against the risks
of possible adverse effects (such as undue concentration of
resources, decreased or unfair competition, conflicts of interest
or unsound banking practices). The Board has adopted regulations
which specify certain permitted activities, subject to Board
approval in individual cases. No such activities are now
contemplated by management of Premier which are not already being
engaged in by the Banks.
The primary federal and state banking agencies responsible
for regulating the holding company and its subsidiaries are:
Premier Bankshares Corporation and Premier Bank, Inc., the
Federal Reserve Bank of Richmond and the Virginia Bureau of
Financial Institutions, respectively; Peoples Bank, Inc., the
Federal Deposit Insurance Corporation and the Virginia Bureau of
Financial Institutions, respectively; and Tazewell National Bank
and Richlands National Bank, the Office of the Comptroller of the
Currency, solely.
According to announcement of Paul G. Fritts, Executive
Director of the FDIC, Section 131 of the FDIC Improvement Act of
1991 (FDICIA) amends the Federal Deposit Insurance Act by adding
a new Section 38 that restricts or prohibits certain activities
and requires an insured institution to submit a capital
restoration plan when it becomes undercapitalized. None of the
above institutions have been required to submit a capital
restoration plan. The FDIC's final rule, effective December 19,
1992 applies primarily to state-chartered banks and insured U.S.
branches of foreign banks that are supervised by the FDIC, as
well as to directors and senior executive officers of those
institutions. Portions of the FDIC rule also apply to all
insured depository institutions that are deemed to be "critically
undercapitalized." The Federal Reserve Board, the Office of the
Comptroller of the Currency and the Office of Thrift Supervision
have adopted parallel rules for the institutions they supervise.
Three degrees of inadequate capitalization trigger separate
types of remedial action:
Undercapitalized: Failure to maintain a total risk-based
capital ratio of at least eight percent, or a Tier 1 risk-based
ratio of at least four percent, or a leverage ratio of at least
four percent renders a bank "undercapitalized." FDICIA mandates
that an undercapitalized institution file a capital restoration
plan with 45 days of the date it becomes undercapitalized. The
institution also is subject to automatic restrictions on dividend
and management fees, asset growth restriction, and prohibitions
against making acquisitions, opening branches or engaging in new
lines of business without the prior approval of its primary
federal regulator. Other harsher restrictions may be imposed on
a case-by-case basis.
Significantly Undercapitalized: Failure to maintain a total
risk-based capital ratio of less than six percent, a Tier 1 risk-
based capital ratio of less than three percent, or a leverage
ratio of less than three percent renders a bank "Significantly
Undercapitalized." Such an institution is subject to the
restrictions that automatically apply to undercapitalized banks
and thrifts, as well as to other limitations that include
mandatory prohibitions against the payment of bonuses and raises
to senior executive officers without the regulator's prior
approval. Other discretionary restrictions also may be imposed.
Critically Undercapitalized: Having "tangible equity" to
assets ratio of two percent or less renders a bank "Critically
Undercapitalized." "Tangible equity" combines elements of core
capital (such as common equity capital) and cumulative perpetual
preferred stock minus all intangible assets except for limited
amounts of purchased mortgage servicing rights. Critically
undercapitalized banks are subject to the restrictions that apply
to undercapitalized and significantly undercapitalized banks, as
well as to other prohibitions that the FDIC has been given
authority to enforce and the insurer of deposits.
At a minimum, any critically undercapitalized bank,
regardless of its primary federal regulator, must receive prior
written approval from the FDIC before it can take actions that
include: engaging in any material transactions other than in the
usual course of business, extending credit for highly leveraged
transactions (HLTs), amending its charter or bylaws, making any
material changes in accounting methods, engaging in certain
transactions with affiliates, paying excessive compensation or
bonuses, or paying above-market interest rates on deposits.
Under FDICIA, a critically undercapitalized bank generally is
prevented paying from principal and interest on its subordinated
debt and will be placed in conservatorship or receivership if its
capital level is not increased within a prescribed time limit.
The final rule also amends Part 308 of the FDIC's
regulations by establishing procedures for "downgrading" an
institution to a lower category. For example, the restrictions
for undercapitalized institutions may be applied to an
institution that meets minimum capital requirements but otherwise
is in a less-than-satisfactory condition, such as one that has
significant asset quality problems. The final rule also includes
procedures for issuing and contesting "prompt corrective action"
directives. Such directives include those from the FDIC
requiring an institution to dismiss directors and senior
executive officers.
Government Monetary Policies and Economic Controls
The earnings growth of the Registrant and its subsidiaries
are affected by the monetary policies of the Federal Reserve
System. An important function of the Federal Reserve System is
to regulate the national supply of credit in order to deal with
economic conditions. The instruments employed by the Federal
Reserve are open market operations of U. S. Government
securities, changes in the discount rate on member bank
borrowings, and changes in reserve requirements on bank deposits.
These policies influence in various ways the level of
investments, loans and deposits and rates earned on earning
assets and interest rates paid on liabilities.
Financial Information About Industry Segments
The information required by this item is included in the
Consolidated Financial Statements included elsewhere in this
filing.
Financial Information About Domestic Operations
The information required by this item is included in the
Management's Discussion and Analysis of Financial Condition and
Results of Operations included elsewhere in this filing.
ITEM 2. PROPERTIES
Premier purchased its current headquarters building, located in
Bluefield, Virginia, in October 1994.
TNB owns its main office at Hillsboro Drive and Market
Street, and branch offices on West Main Street and in the
Riverjack section, Tazewell, Virginia, and branch offices in
the Towns of Bluefield and Pocahontas, Virginia.
PBI owns the historic George Wythe Hotel building in the
town of Wytheville, remodeled for bank use in 1977. It owns
eight other bank premises in Wythe, Pulaski and Montgomery
Counties and the City of Salem, and an unimproved lot in the City
of Roanoke. The unimproved lot was bought by Bank of Shawsville,
Inc., into which Bank of Speedwell, Inc., was merged, and after
which its name was changed to Premier Bank, Inc. Bank of
Shawsville, Inc., bought the Roanoke lot for a branch location,
but no application for such use has yet been made. PBI leases
space in the George Wythe hotel building to others. The rent
received has no material effect on either the operations of
Premier Bank, Inc., or its parent, Premier Bankshares
Corporation.
Peoples owns its main office in the Town of Honaker, and
branch offices in the Towns of Lebanon, Cleveland, Dungannon,
Gate City in the unincorporated villages of Castlewood
and Duffield, all in Virginia.
RNB owns its main office premises in the heart of the Town
of Richlands, Virginia, a branch facility in the unincorporated
village of Raven, and a branch facility in the Town of Cedar
Bluff, Virginia. RNB also opened an additional branch in
the Claypool Hill area of Cedar Bluff, Virginia in 1994.
D-B Owns its main office in the town of Haysi, Virginia and operates
three additional branches in Davenport, Clintwood, and Pound, Virginia.
ITEM 3. LEGAL PROCEEDINGS
From time to time, Premier or its affiliate banks are
parties to lawsuits arising from the normal course of business,
in which claims for money damages are asserted. If such claims
now pending were resolved against Premier or its affiliates, and
awards made for the full amounts sought, the effect would be
material and adverse upon Premier's financial condition.
Management, after consultation with legal counsel handling these
claims, is of the opinion that the possibility of such awards is
remote, and that resolution of such claims, even if adverse to
Premier or its affiliates, will not have a material adverse
effect upon Premier's financial condition. In each pending
instance in which a claim is asserted against Premier or an
affiliate, the alternative of succumbing to an unfounded claim is
unacceptable. In each such instance there are undisputed facts
undergirding Premier's or its affiliate's positions. Having been
drawn into litigation by either a debtor's breach or by a claim
deemed after careful study to be without merit, Premier intends
to pursue and secure its legal remedies to the fullest extent
possible.
The litigation brought by the former president and chief executive officer
of Premier, previously disclosed, has been settled on terms satisfactory to
Premier.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security
holders during the fourth quarter of 1994.
<PAGE>
EXECUTIVE OFFICERS OF THE REGISTRANT
The following list sets forth Premier's executive officers, who
serve until the Board of Directors meeting following the next
annual meeting of stockholders. There are no family
relationships among these officers, nor any arrangements or
understanding between any officer and other person pursuant to
which the officer was selected.
Employed by
Premier or Name Age Position Affiliate Since
James R. Wheeling 38 President, CE0 and 1990
Director of Premier
J. Robert Buchanan 44 Vice President and 1991
Treasurer of Premier
R. Luke Lively 37 Vice President and 1990
Administrative Officer
of Premier
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED
SECURITY HOLDER MATTERS
Since August 1987, Premier's common stock has been traded on
The Nasdaq Stock Market under the symbol PBKC. Transfers thereof
occur from time to time, but management has no direct access to
the prices realized in trades of such stock.
<TABLE>
Per share data is listed below:
1994 Net Cash Book Price Sales
Income* Dividends* Value* High Low Volumes
<S> <C> <C> <C> <C> <C> <C>
1st Quarter 0.52 0.11 12.03 20.50 16.75 334598
2nd Quarter 0.45 0.11 11.97 19.00 16.50 49348
3rd Quarter 0.44 0.12 12.12 19.00 17.00 101059
4th Quarter 0.40 0.14 12.09 19.00 16.50 30218
Year 1.81 0.48 12.09 20.50 16.50 515223
1993
1st Quarter 0.52 0.11 11.30 24.00 20.00 107216
2nd Quarter 0.53 0.11 11.73 22.00 18.00 47649
3rd Quarter 0.46 0.11 12.07 20.00 18.00 31876
4th Quarter 0.38 0.11 12.34 22.00 18.00 124321
Year 1.89 0.44 12.34 24.00 18.00 311062
</TABLE>
The holders of common stock of Premier will be entitled to receive such
dividends as may be declared by its Board of Directors. Although its Board
intends to continue as a minimum the current level of dividend payments, the
ability of Premier to pay such dividends in the future will depend upon the
earnings and financial condition of Premier and its affiliate banks and is
subject to the restrictions described in Note 11 to the Notes to Consolidated
Financial Statements.
ITEM 6. SELECTED FINANCIAL DATA
The Consolidated Selected Financial Data for the five years ended
December 31, 1994 appears as Table I to the Management's Discussion and
Analysis of Financial Condition and Results of Operations.
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION AND SUMMARY
The information in this section should be read in
conjunction with the Consolidated Financial Statements and the
accompanying Notes to Consolidated Financial Statements included
elsewhere. References to average assets and liabilities and
changes thereto represent daily averages for the periods
indicated.
Summarized in Table I are selected key measures of financial
position and results of operations.
MERGER
Effective October 9, 1991, Bank of Speedwell and Bank of
Shawsville were merged using the "pooling of interests" method of
accounting creating a new affiliate, Premier Bank, Inc.,
headquartered in Wytheville, Virginia.
AFFILIATION
During 1994, Dickenson-Buchanan Bank was acquired in an exchange of stock
transaction in which 582,678 shares of Premier were issued for all of the
outstanding stock of Dickenson-Buchanan Bank. The transaction was accounted
for as a pooling-of-interest and all financial data has been restated
accordingly.
<PAGE>
TABLE I
<TABLE>
PREMIER BANKSHARES CORPORATION AND AFFILIATES
SELECTED FINANCIAL INFORMATION: FIVE YEAR SUMMARY
<CAPTION>(IN THOUSANDS OF DOLLARS EXCEPT PER SHARE DATA)
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Summary of Operations:
Interest Income 47892 44513 42699 43701 42741
Interest Expense 20307 19164 19533 24563 25652
Net Interest Income 27585 25349 23166 19138 17089
Provision for
Loan Losses 1144 857 1151 1396 2969
Other Income 4681 5033 4350 3710 2362
Other Expense 19092 17118 15150 13808 13179
Applicable Income Taxes 3024 2889 2955 1430 718
Net Income 9006 9519 8260 6214 2585
Per Share Data:
Net Income 1.81 1.91 1.66 1.24 .52
Cash Dividends Declared .48 .43 .37 .32 .29
Book Value 12.09 11.98 10.51 9.23 8.24
Average Balance Sheet Summary:
Loans, Net 357235 318764 289056 274323 265338
Securities 232898 202745 161484 133395 106106
Total Assets 651807 596069 506340 461235 436602
Deposits 567711 522796 444422 405698 385378
Capital 60135 56443 48534 43415 41672
End of Period Balance Sheet Summary:
Loans, Net 360860 332725 300898 277226 263135
Investment Securities 231448 230076 189761 143821 112095
Total Assets 655193 640590 546676 486921 447163
Deposits 569410 560744 480758 425120 395157
Capital 60293 59769 52421 46046 41259
Selected Ratios:
Average Equity to
Average Assets 9.23 9.47 9.59 9.41 9.54
Return on
Average Assets 1.38 1.60 1.63 1.35 .59
Return of
Average Equity 14.98 16.86 17.02 14.31 6.20
Cash Dividends Declared
as Percent of
Net Income 26.39 22.61 22.35 25.49 56.83
</TABLE>
<PAGE>
PREMIER BANKSHARES CORPORATION AND AFFILIATES
EARNINGS PERFORMANCE
Premier again acheived strong earnings performance in 1994, with net income
of $9,006,000. While this represents a 5.39% decrease from restated 1993
earnings of $9,519,000, several significant factors must be considerated when
comparing earnings performance.
Accounting Changes - Earnings were enhanced in 1993 by $1,053,000 due to
non-recurring changes in accounting requirements.
Security gains for 1994 decreased $614,000 compared to 1993. Abnormally high
1993 security gains resulted primarily from restructuring of investment
portfolios in anticipation of FASB 115 due to take effect in January, 1994.
In addition, a remaining net loss carryforward of $439,000 resulting from the
merger of Bank of Speedwell and Bank of Shawsville in 1991 was required to be
accelerated in 1993 following implementation of FASB 109.
Net income per share equaled a strong $1.81 with 4,987,877 shares outstanding
for 1993 and 1994.
<PAGE>
PREMIER BANKSHARES CORPORATION AND AFFILIATES
NET INTEREST INCOME
During 1994, management spent considerable time refining the asset/liability
management of the company. Strict systems were implemented to control costs of
funds, while greater emphasis was placed on improving yields. Coupled with
additional earning asset volume, Premeir increased net interest income
$2,236,000, or 8.82% in 1994; on a tax equivalent basis, $2,573,000 with
interest-bearing liabilities decreased by 13 basis points to 3.88%, while the
yield on average earning assets declined only 9 basis points to 8.15% in 1994.
As a result, the tax equivalent net yield on earning assets remained steady at
4.84% compared to 4.82% 1993 despite a rising interest rate environment and
Premier's liabilities sensitive position.
Total average loans increased 12.22% and average securities increased
14.49%. The average volume of earnings assets increased 9.21% to
$612,794,000, while the yield decreased, as mentioned earlier, only 9 basis
points to 9.21%. The average volume of interest bearing liabilities
increased 9.30% to $522,848,000. The average rate paid on these liabilities
decreased 13 basis points to 3.88%.
On a taxable-equivalent basis, 1993 net interest income
increased $2,236,000 or 9.01% with the volume assets increasing to $561,095,000
over 1992. Total average loans increased 9.57% and average securities increased
7.00%. The average volume of interest-bearing liabilities increased 18.56%
in 1993 to $478,339,000.
Forgone interest on non-performing loans amounted to
$194,000 in 1994, $262,000 in 1993, and $530,000 in 1992.
Net interest income for the years 1992 through 1994 is shown
in Table II. The presentation appears on a "taxable equivalent"
basis to adjust for the tax-exempt status of income earned on
certain loans and investments.
Table III summarizes the effect on net interest income of
changes in interest rates earned and paid, as well as changes in
volume.
<PAGE>
TABLE II
<TABLE>
PREMIER BANKSHARES CORPORATION AND AFFILIATES
NET INTEREST INCOME
<CAPTION>(IN THOUSANDS OF DOLLARS)
Increase(Decrease) Increase(Decrease)
1994 1993
1994 1993 1992 Amount Percent Amount Percent
<S> <C> <C> <C> <C> <C> <C> <C>
Interest Income
from Loans:
Demand and Time** 4519 4329 4698 190 4.39 (369) (7.85)
Real Estate 19307 17826 17075 1481 8.31 751 4.40
Installments 9018 8816 8746 202 2.29 70 .80
Total Loan Income 32844 30971 30519 1873 6.05 452 1.48
Interest Income
from Securities:
Taxable 10379 9277 8234 1102 11.88 1043 12.67
Non-taxable* 5947 4971 4755 976 19.63 216 4.54
Total Security Income* 16326 14248 12989 2078 14.58 1259 9.69
Federal Funds Sold
and Deposits 774 1009 854 (235) (23.29) 155 18.15
Total Interest Income 49944 46228 44362 3716 8.04 1866 4.21
Interest Expense:
Demand Deposits 1807 1691 1671 116 6.86 20 1.20
Savings 5851 5559 3686 292 5.25 1873 50.81
Large Denomination
Certificates 2108 2124 2478 (16) (.75) (354) (14.29)
Other Time Deposits 9870 9473 11345 397 4.19 (1872) (16.50)
Borrowed Funds 671 317 354 354 111.67 (37) (10.45)
Total Interest Expense 20307 19164 19534 1143 5.96 (370) (1.89)
Net Interest Income* 29637 27064 24828 2573 9.51 2236 9.01
</TABLE>
[FN]
* Fully Taxable Equivalent - Using the Statutory Rate of 34%.
** Partially Taxable Equivalent - Using the Statutory Rate of 34%.
***Nonaccruing loans are included in the daily average loan amounts outstanding.
PREMIER BANKSHARES CORPORATION AND AFFILIATES
RATE/VOLUME ANALYSIS OF CHANGES IN INTEREST
INCOME AND EXPENSE***
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>(IN THOUSANDS OF DOLLARS)
1994 vs 1993 1993 vs 1992
Increase (Decrease) In Increase (Decrease) In
Net Interest Income Net Interest Income
Volume Rate Total Volume Rate Total
<S> <C> <C> <C> <C> <C> <C>
Loans:
Demand and Time** (410) 600 190 (160) (209) (369)
Real Estate 2543 (1062) 1481 2401 (1650) 751
Installments 1883 (1681) 202 1008 (938) 70
Total Loans 3782 (1909) 1873 3249 (2797) 452
Securities:
Taxable 772 330 1102 2559 (1516) 1043
Non-taxable* 1503 (527) 976 694 (478) 216
Total Securities 2063 15 2078 3253 (1994) 1259
Federal Funds Sold and
Deposits (510) 275 (235) 605 (450) 155
Total Interest Income* 4260 (544) 3716 7107 (5241) 1866
Deposits:
Interest-bearing
Checking 387 (271) 116 377 (357) 20
Savings Deposits 496 (204) 292 2192 (319) 1873
Large Denomination
Certificates (176) 160 (16) 71 (425) (354)
Other Time Deposits 685 (288) 397 231 (2103) (1872)
Total Deposits 1756 (967) 789 2871 (3204) (333)
Borrowed Funds 197 157 354 144 (181) (37)
Total Interest Expense 1785 (642) 1143 3015 (3385) (370)
Net Interest Income* 2475 98 2573 4092 (1856) 2236
</TABLE>
[FN]
*Fully Taxable Equivalent - Using the Statutory Rate of 34%.
**Partially Taxable Equivalent - Using the Statutory Rate of 34%.
***Variances caused by the rate times the change in volume are
allocated to rate.<PAGE>
PREMIER BANKSHARES CORPORATION AND AFFILIATES
OTHER INCOME AND EXPENSES
Total Other Income of $4,681,000 in 1994 represents a $262,000, or a 6.94%
increase over 1993, when considered net of security gains. This inprovement is
primarily attributed to an increase in service fee income.
Corporate Expansion - In 1994, significant restructuring took place within
Premier. These
changes include: the affiliation of Dickenson-Buchanan Bank; the accusition of
the Pocahontas Branch from First Union; the construction of a new branch in
Claypool Hill; centralization of item processing; establishment of Premier
Trust Company; relocation of corporate headquarters to Bluefield, Virginia;
and preparations for the future acquisition of seven NationsBank offices. As a
result, 1994 reflected significant increases in salries and benefits,
occupancy, legal, and other operating exepnses. Although total other expenses
increased $1,974,000 or 11.53%, to $19,092,000, management considers
these expenses as investments in the comapnie's infrastructure, providing a
foundation for future growth. Dispite these growth related expenses, Premier
continues to operate quite efficiently compared to peers.
Other increases/decreases were generally in the normal course of business.
The major components of other income and expenses are shown in Table IV
and V.
<PAGE>
TABLE IV
<TABLE>
PREMIER BANKSHARES CORPORATION AND AFFILIATES
OTHER INCOME
<CAPTION>(IN THOUSANDS OF DOLLARS)
Increase(Decrease)Increase(Decrease)
1994 1993
1994 1993 1992 Amount Percent Amount Percent
<S> <C> <C> <C> <C> <C> <C> <C>
Service Charges on
Deposit Accounts 2006 1817 1620 189 10.40 197 12.16
Trust Fees 240 254 275 (14) (5.51) (21) (7.64)
Other Service Charges,
Commissions, and Fees 1496 1518 1239 (22) (1.45) 279 22.52
Other Operating Income 297 222 274 75 33.78 (52) 18.98
Security Gains 642 1256 1005 (614) (48.89) 251 24.98
Trading Account Gains
(Losses) (34) (63) 34 N/A 29 N/A
Total Other Income 4681 5033 4350 (352) (6.99) 683 15.70
</TABLE>
<PAGE>
TABLE V
<TABLE>
PREMIER BANKSHARES CORPORATION AND AFFILIATES
OTHER EXPENSES
<CAPTION>(IN THOUSANDS OF DOLLARS)
Increase(Decrease) Increase(Decrease)
1993 1992
1994 1993 1992 Amount Percent Amount Percent
<S> <C> <C> <C> <C> <C> <C> <C>
Salaries and Wages 7480 7012 6128 468 6.67 884 14.43
Employee Benefits 2259 1783 1369 476 26.70 414 30.24
Total Employee
Benefits 9739 8795 7497 944 10.73 1298 17.31
Other Operating
Expenses:
Occupancy 1050 848 741 202 23.82 107 14.44
Equipment 895 922 807 (27) (2.93) 115 14.25
Other Operating
Expenses 7408 6553 6105 855 (13.05) 448 7.34
Total Other Operating
Expenses 9353 8323 7653 1030 12.38 670 8.76
Total Other Expenses 19092 17118 15150 1974 11.53 1968 12.99
</TABLE>
<PAGE>
PREMIER BANKSHARES CORPORATION AND AFFILIATES
ALLOWANCE FOR LOAN LOSSES
Net charge offs decreased to $526,000 in 1994, a decrease of $416,000, or
44% compared to 1993. The improvements made in charge-offs and asset quality
did not deter Premier's commitment to maintain reserve adequacy that is
irrefutable. To demonstrate Premier's commitment to asset quality and
conservative mode of operation. Provisions to the reserve of $1,144,000, an
increase of $288,000, or 34% were made over 1993.
An allowance for loan losses is maintained in accordance
with periodic reviews of loans. Additions are made to this
allowance as needed. Losses are charged to the allowance rather
than being reported as a direct expense. In 1993, $856,000 was
expensed as a loan loss provision, while net chargeoffs amounted
to $942,000. Problem assets as a percentage of total assets decreased from
1.02% in 1993 to 0.74% in 1994. Non-performing assets at year end 1994
included $3,018,000 of nonaccural loans, $1,172,000 restructured loans,
and $677,000 of other real estate owned. Reserves totaling $5,844,000 are
considered adequate to cover future losses expected from non-performing
assets.
Table VI reflects the activity in the Allowance for Loan and
Lease Losses, while Table VII shows the allocation of the
allowance by type of loan. Table VIII outlines non-performing
assets.
<PAGE>
TABLE VI
<TABLE>
PREMIER BANKSHARES CORPORATION AND AFFILIATES
ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES
<CAPTION>(IN THOUSANDS OF DOLLARS)
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Balance at Beginning of Period 5226 5312 5217 4447 4847
Charge-offs:
Commercial, Financial and
Agricultural 171 367 553 389 2048
Real Estate - Construction 250
Real Estate - Mortgage 116 623 117 158 687
Loans to Individuals 685 735 939 805 1084
Other Loans
Total charge-offs 972 1725 1609 1352 4069
Recoveries:
Commercial, Financial and
Agriculture 178 209 240 240 307
Real Estate - Construction
Real Estate - Mortgage 44 104 61 178 105
Loans to Individuals 224 470 252 308 288
Other Loans
Total Recoveries 446 783 553 726 700
Net Charge-offs (Recoveries) 526 942 1056 626 3369
Additions Charged to Operations 1144 856 1151 1396 2969
Balance at End of Period 5844 5226 5312 5217 4447
Ratio of Net Charge-offs
(Recoveries) to Average
Outstanding Loans .15 .28 .35 .23 1.28
Ratio of Allowance for
Loan Losses to Average
Outstanding Loans 1.61 1.57 1.77 1.88 1.69
Ratio of Provision for
Loan Losses to Average
Outstanding Loans .32 .26 .38 .50 1.13
</TABLE>
TABLE VII
PREMIER BANKSHARES CORPORATION AND AFFILIATES
ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
[CAPTION](IN THOUSANDS OF DOLLARS)
<TABLE>
1994 1993 1992 1991 1990
% of % of % of % of % of
Loans to Loans to Loans to Loans to Loans to
Total Total Total Total Total
Amount Loans Amount Loans Amount Loans Amount Loans Amount Loans
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Domestic
Commercial,
Financial
& Agric. 2658 31.21 2465 30.63 2401 18.74 2040 12.29 1952 12.03
Real Estate-
Construct 105 2.32 90 1.64 83 1.60 85 1.69 68 1.34
Real Estate-
Mortgage 982 40.72 875 41.76 805 52.75 770 56.08 790 54.90
Loans to
Individual 1549 25.32 1384 25.41 1302 26.35 1268 28.83 1189 30.51
Other Loans 20 .43 20 .56 20 .56 24 1.11 28 1.22
Foreign
Unallocated 530 393 701 1030 420
Totals 5844 100 5227 100 5312 100 5217 100 4447 100
</TABLE>
PREMIER BANKSHARES CORPORATION AND AFFILIATES
INCOME TAXES
Applicable income taxes on 1994 earnings amounted to
$3,024,000 or 25.14% of income before income taxes,
compared to $2,889,000 or 23.28% for 1993. The recognition of
the tax benefit from the anticipated utilization of operating
loss carryforward under FASB Statement No. 109, Accounting for
Income Taxes, resulted in a decrease in effective rate for 1993
BALANCE SHEET ANALYSIS
The Corporation had total assets of $655 million at the end
of 1994, an increase of 2.28% over 1993. Average earning assets
increased 9.21% during 1994, and comprised 94.01% of average
total assets.
LOANS
Total loans, net of unearned income, at year-end totaled
$366,704 million, an increase of 28.7 million or 8.51% over 1993.
Substantially all real estate loans are originated as Adjustable
Rate Mortgages and can be repriced at the end of 1, 3, 5, or 10
years. Loan demand was moderate during 1994. The ratio of net
chargeoffs to average loans outstanding was 0.15% for the year,
compared to 0.28% for 1993. Loans delinquent 90 days or more and
still accruing decreased from $1,407,000 to $711,000, and
nonaccrual loans decreased from $4,006,000 to $3,018,000.
Foreclosed properties increased from $892,000 in 1992 to
$1,382,000 in 1993; restructured loans increased from $1,128,000
in 1993 to $1,172,000 in 1994. Nonaccrual loans and foreclosed
properties amounted to 0.56% of total assets at year end 1994.
Real estate mortgages representing 41.44% of the December 31, 1994
loan portfolio net of unearned interest, have been, and
should continue to be, the major lending activity of Premier's
subsidiary banks. Management further intends as a part of its
lending policy, to satisfy this demand as long as deposit growth
and liquidity remain satisfactory. To assist in this, Premier
Bank, Inc., obtained approval in 1992, from the Federal National
Mortgage Association to become a seller/servicer of its mortgage
products, and continues to close, sell and service qualified
loans, thus creating a new income source while releasing funds
for additional loan activities.
Table VIII reflects loans by type while Table IX shows
average rates earned and other significant data on loans.
<PAGE>
INVESTMENTS
The size of the investment portfolio remained relatively the same at
December 31, 1994, totaling $231,448,000 when compared to $230,076,000 at
year end 1993. 79.32% of all securities were rated "A" or better at year-end.
The investment portfolio had an average taxable equivalent yield of 7.00% at
year end.
Management primarily purchases securities with an intent to
hold to maturity. However, because of changes in accounting
rules due to the Financial Accounting Standards Board
pronouncement 115, effective for premier beginning January 1,
1994, securities must now be segregated into three categories
with distinctively different accounting treatments.
Securities which management has a positive intent and
ability to hold to maturity are segregated as "Held to Maturity"
where they are accounted for using historic cost methods.
Securities which may have more volatile characteristics, or for
which management anticipates a higher likelihood of active
management through sales prior to maturity are segregated as
"Available For Sale" and accounted for using methods which adjust
capital accounts for fluctuations in the securities' market
values. Securities purchased with the intent of profiting from
fluctuations in values that result from short term interest rate
changes are segregated into a "Trading Account", with such value
fluctuations accounted for as adjustments to income.
The impending changes in accounting treatment required by
FASB 115 resulted in a significant investment portfolio
restructuring during 1993, and material increase in net income.
Such restructuring will maximize the company's long term overall
return.
DEPOSITS
Total deposits increased $8,666,000, or 1.55% to $569,410,000
at year end 1994 over 1993. This moderate deposit growth resulted from
management's aggressive control of deposit cost, in the absence of strong loan
demand. Demand deposits increased 20%, interest bearing demand 10%,
saving decreased 9%, large denomination certificates decreased 11%, and other
time deposits increased 6%.
Table X shows average rates paid and other significant data
on deposits. Maturities of $100,000 or more certificates of
deposit are shown in Table XIV.
STOCKHOLDERS' EQUITY
Common stockholders' equity at year-end was $60,293,000
compared to $59,769,000 for 1993. Beginning in 1994, FASB 115 requires a monthly
adjustment to capital, for financial accounting purposes, equal to the net
increase or decrease in the market value of the available for sale portfolio.
As of year end 1994, this adjustment decreased capital $6,212,000. At year end
the leverage capital ratio was 10.05%.
As mentioned earlier, during 1994, Dickenson-Buchanan Bank was acquired in
a stock exchange transaction. A total of 582,678 shares of Premier were
issued for all of the outstanding stock of Dickenson-Buchanan Bank.
Cash dividends of $2,377,000, or $.48 per share were declared in 1994.
<PAGE>
TABLE VIII
PREMIER BANKSHARES CORPORATION AND AFFILIATES
LOAN CLASSIFICATION SUMMARY
[CAPTION](IN THOUSANDS OF DOLLARS)
<TABLE>
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Domestic:
Commercial, Financial and
Agricultural 72684 72233 58966 35925 33355
Real Estate- Construction 8654 5667 5028 4948 3701
Real Estate - Mortgage 195794 176452 165996 163923 152220
Loans to Individuals 94520 89412 82922 84255 84592
Other Loans 1606 1573 1764 3237 3390
Foreign:
Total Gross Loans 373258 345337 314676 292288 277258
Less:
Unearned Income 6554 7385 9026 10312 10094
Allowance for Loan Losses 5844 5227 5312 5217 4447
Net Loans 360860 332725 300338 276759 262717
Non-performing Assets:
Non-accrual Loans 3018 4006 4287 4650 5062
Loans Past Due Over 90 Days 711 1407 1538 2245 4639
Other Real Estate Owned 677 1382 892 811 1687
Restructured Debt 1172 1128 1286
Total 5578 7923 8003 7706 11388
</TABLE>
<PAGE>
TABLE IX
PREMIER BANKSHARES CORPORATION AND AFFILIATES
EARNING ASSETS AND INTEREST BEARING LIABILITIES
[CAPTION](IN THOUSANDS OF DOLLARS)
<TABLE>
Percent of Change
Average Outstanding** Prior Year Average Rate*
1994 1993 1992 1994 1993 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C>
Earning Assets:
Loans:
Demand and Time 46517 51375 53234 (9.46) (3.49) 9.71 8.43
Real Estate 221469 193823 170029 14.26 13.99 8.72 9.20
Installments 94993 78266 70417 21.37 11.15 9.49 11.26
Total Loans 362979 323464 293680 12.22 10.14 9.05 9.57
Securities:
Taxable 158304 146147 111482 8.32 31.09 6.56 6.35
Non-taxable 74594 57284 50002 30.22 14.56 7.97 8.68
Total Securities 232898 203431 161484 14.49 25.98 7.01 7.00
Federal Funds Sold and
Deposits 16917 34200 20274 (50.54) 68.69 4.58 2.95
Total Eaning Assets 612794 561095 475438 9.21 18.02 8.15 8.24
Other Assets, Net of
Allowance for Loan
Losses 39013 34974 30902 11.55 13.18
651807 596069 506340 9.35 17.72
</TABLE>
[FN]
* Average Rate Calculated on the Fully Taxable Equivalent - Using
the Statutory Rate of 34%.
** Nonaccruing loans are included in the daily average loan
amounts outstanding.
<PAGE>
TABLE X
<TABLE>
PREMIER BANKSHARES CORPORATION AND AFFILIATES
EARNING ASSETS AND INTEREST BEARING LIABILITIES, Continued
<CAPTION>(IN THOUSANDS OF DOLLARS)
Percent of Change
Average Outstanding Prior Year Average Rate*
1994 1993 1992 1994 1993 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C>
Interest-bearing
Liabilities:
Interest-bearing
Checking 66605 54200 44208 22.89 22.60 2.71 3.12
Savings Deposits 162890 149558 93607 8.91 59.77 3.59 3.72
Large Denomination
Certificates 44283 48275 46968 (8.27) 2.78 4.76 4.40
Time Deposits 230254 214715 210443 7.24 2.03 4.29 4.41
Borrowed Funds 18816 11591 8232 62.33 40.80 3.57 2.73
Total Interest-bearing
Liabilities 522848 478339 403458 9.30 13.72 3.88 4.01
Demand Deposit 63679 55882 49140 13.95 18.56
Other Liabilities 5145 5405 5208 (4.81) 3.78
Stockholders' Equity 60135 56443 48534 6.54 16.30
Total Liabilties and
Stockholders' Equity 651807 596069 506340 9.35 17.72
Net Yield on Earnings Assets 4.84 4.82
</TABLE>
[FN]
*Average Rate Calculated on the Fully Taxable Equivalent - Using
Statutory Rate of 34%.
<PAGE>
PREMIER BANKSHARES CORPORATION AND AFFILIATES
LIQUIDITY AND INTEREST SENSITIVITY
Banks maintain liquidity for two major reasons, to fund
unforeseen demands for withdrawals of deposits and to fund
additional loan requests. The adequacy of a bank's liquidity can
not be effectively measured in an absolute sense, but must be
viewed relative to the bank's probable needs. Based on perceived
needs, a bank may employ a variety of techniques to control
liquidity. The four most common techniques involve maintaining
cash reserves, carefully planning cash flows, structuring other
types of assets in a manner which will allow them to be quickly
converted to cash, or to develop commitments from other
institutions to loan the bank cash in the event such is needed.
Premier's deposit base has become somewhat more volatile
since deregulation, but continues to be very stable relative to
industry standards. Also, loan demand throughout Premier's trade
area has traditionally been modest. Combined, these factors
mitigate much of the need for short term liquidity.
To the extent liquidity is required, it can normally be
handled using cash flows from operations. As shown in the
Consolidated Statements of Cash Flows, net increases in deposits
amounted to $8,666,000 in 1994 versus net loan increases of
$30,182,000. In 1993 net deposit increases amounted to
$79,985,000 versus net loan increases of $34,549,000 in 1993.
Should unforeseen liquidity needs arise, they can be handled
using federal funds sold, investments maturing within one year,
and stand by federal funds purchase commitments.
In order to allow regular repricing on a large portion of
Premier's loan portfolio, most real estate can be
repriced over a period of one to ten years. Premier's policy is
to maintain the relationship between rate-sensitive assets and
rate-sensitive liabilities which will best maximize profits and
continue future profit levels in keeping with the trend and
expectations of interest rates.
Premier's current gap position is such that in periods of
rising rates earnings would be negatively impacted as interest on
interest-bearing accounts would rise more sharply than interest
on earning assets. Conversely, in periods of falling rates,
earnings would rise. Management, through constant monitoring of
Premier's gap position and market interest trends and forecasts,
can minimize the negative impact of a rise in the market interest
rate.
Tables XI through XIV reflect additional data on liquidity
and interest sensitivity.
INFLATION
Since the assets and liabilities of banks are primarily
monetary in nature, the performance of banks is affected more by
changes in interest rates than by inflation. Interest rates
generally increase as the rate of inflation increases, but the
change may not necessarily be the same.
During periods of high inflation, banks will normally
experience growth in assets and deposits, which will result in increased
operating expenses.
<TABLE>
PREMIER BANKSHARES CORPORATION AND AFFILIATES
INVESTMENT SECURITY ANALYSIS
<CAPTION>(IN THOUSANDS OF DOLLARS)
Total 0 - 1 1 - 5 5 - 10 10 and Over
Amount Rate Amount Rate Amount Rate Amount Rate Amount Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1994
U.S. Treasury and
Agency Securities 154516 5.81 13994 4.53 67762 5.42 37681 5.95 35079 6.95
State and Political
Subdivisions* 77997 8.03 3268 7.56 28446 7.30 39468 8.44 6815 8.88
Other Securities 8233 5.76 5610 6.08 262 5.84 2361 5.02
Totals 240746 6.53 17262 5.10 101818 5.98 77411 7.22 44255 7.14
1993
U.S. Treasury and
Agency Securities 153845 6.25 6663 7.30 53268 5.60 48520 6.02 45394 7.09
State and Political
Subdivisions* 68088 8.39 2326 7.50 18427 7.97 38610 8.46 8725 9.19
Other Securities 8143 6.65 2900 6.68 2436 6.82 782 8.53 2025 5.68
Totals 230076 6.90 11889 7.19 74131 6.23 87912 7.11 56141 7.37
</TABLE>
[FN]
* Fully Taxable Equivalent - Using the Statutory Rate of 34%.
<PAGE>
TABLE XI (Continued)
<TABLE>
PREMIER BANKSHARES CORPORATION AND AFFILIATES
INVESTMENT SECURITY ANALYSIS
<CAPTION>(IN THOUSANDS OF DOLLARS)
Total 0 - 1 1 - 5 5 - 10 10 and Over
Amount Rate Amount Rate Amount Rate Amount Rate Amount Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1992
U.S. Treasury and
Agency Securities 122060 6.93 10405 6.18 57407 6.61 29380 7.61 24868 7.15
State and Political
Subdivisions* 57757 9.22 5751 10.62 13804 8.60 28547 9.02 9655 9.83
Other Securities 9944 6.93 1199 8.89 1292 7.36 534 9.73 6919 6.30
Totals 189761 7.62 17355 7.84 72503 7.00 58461 8.32 41442 7.63
</TABLE>
[FN]
* Fully Taxable Equivalent - Using the Statutory Rate of 34%.
<PAGE>
TABLE XII
<TABLE>
PREMIER BANKSHARES CORPORATION AND AFFILIATES
INTEREST RATE SENSITIVITY
<CAPTION>(IN THOUSANDS OF DOLLARS)
DECEMBER 31, 1994
Interest-Sensitive Beyond
1-90 91-365 One Year Total
<S> <C> <C> <C> <C>
Earnings Assets:
Loans 73799 61863 237596 373258
Investment Securities 2396 7034 222018 231448
Fed Funds Sold 17240 17240
Total Earning Assets 93435 68897 459614 604706
Interest-bearing Liabilities:
Interest-bearing Demand 34777 34777
Savings Deposits 160323 160323
Large Denomination CD's 9406 20005 15567 44978
Other Time Deposits 43929 79874 109004 232807
Money Market Instruments 32741 32741
Total Interest-bearing
Deposits 281176 99879 124571 505626
Other Short-term Debt 21377 21377
Total Interest-bearing
Liabilities 302553 99879 124571 527003
Cumulative Interest-
Sensitivity Excess (GAP) (209118) (240100) N/A N/A
</TABLE>
<PAGE>
TABLE XIII
<TABLE>
PREMIER BANKSHARES CORPORATION AND AFFILIATES
MATURITY AND RATE SENSITIVITY ANALYSIS
<CAPTION>(IN THOUSANDS OF DOLLARS)
DECEMBER 31, 1994
Due In Due In One To Five Years Due After Five Years
One Year Fixed Floating Fixed Floating
Total Or Less Rate Rate Rate Rate
<S> <C> <C> <C> <C> <C> <C>
Domestic:
Commercial,
Financial
& Agricultural 82531 36561 25568 11152 7699 1551
Real Estate -
Construction 7619 3895 891 706 1827 300
Other (Excluding
Consumer Installment
and Residential
Mortgage Loans) 50169 15088 23089 5688 6304
Foreign 140319 55544 49548 17546 15830 1851
Totals
</TABLE>
<PAGE>
TABLE XIV
<TABLE>
PREMIER BANKSHARES CORPORATION AND AFFILIATES
MATURITY SCHEDULE - LARGE DENOMINATION CERTIFICATES OF DEPOSIT
<CAPTION>(IN THOUSANDS OF DOLLARS)
Time Certificates of Deposit, in amounts of $100,000 or more,
outstanding at December 31, 1994, mature as follows:
<S> <C>
Three Months or Less 9827
Over Three Months Through Six Months 8807
Over Six Months Through Twelve Months 12734
Over Twelve Months 13610
44978
</TABLE>
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The report of independent auditors and consolidated
financial statements of Bankshares and its affiliates appear
herein.
Quarterly Results of Operations is included in the Notes to
Consolidated Financial Statements as Note 19.
Persinger & Company, L.L.C.
204 George Street
Beckley, West Virginia 25801
Telephone (304) 255-1978
Fax (304) 255-1971
INDEPENDENT AUDITOR'S REPORT
Board of Directors and Stockholders
Premier Bankshares Corporation
Bluefield, Virginia
We have audited the accompaying consolidated balance sheets of Premier
Bankshares Corporation and Affiliates as of December 31, 1994 and 1993, and the
related consolidated statements of income, stockholders' equity, and cash flows
for each of the years in the three-year period ended December 31, 1994. These
financial statements are the responsiblity of the Company's management. Our
responsibilty is to express an opinion on these financial statements based on
our audits. We did not audit the financial statements of Dickenson-Buchanan
Bank, a consolidated subsidiary, which statements reflect total assets and
revenue constituting 13% and 14%, respectively, in 1994, 13% and 12%,
respectively, in 1993, and revenue constituting 9% in 1992 of the related
consolidated totals. Those statements were audited by other auditors whose
report has been furnished to us, and our opinion, insofar as it relates to the
amounts included for Dickenson-Buchanan Bank, is based solely on the report of
the other auditors.
We conducted our audits in accoudance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain resonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used in significant
estimates made by management, as well as evaluating the over all financial
statement presentation. We believe that our audits and the report of the other
auditors provide a resonable basis for our opinion.
In our opinion, based on our audits and the report of the other
auditors, the consoldiated financial statements referred to above present
fairly, in all material respects, the financial position of Premier Bankshares
Corporation and Affiliates as of December 31, 1994 and 1993, and the
results of their operations and their cash flows for each of the years in
the three-year period ended Decmeber 31, 1994, in conformity with generally
accepted accounting principles.
/s/ Persinger & Company, L.L.C.
Beckley, West Virginia
January 14, 1995
Brown, Edwards & Company
Tennessee, Virginia, West Virginia
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Dickenson-Buchanan Bank
Haysi, Virginia
We have audited the balance sheets of Dickenson-Buchanan Bank as of
December 31, 1994 and 1993, and the related statements of income, stockholders'
equity, and cash flows for each of the years in the three-year period ended
December 31, 1994. The financial statements are the resposibilty of the Bank's
management. Our resposibility is to express an opinion on the these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and preform the audit to obtain
resonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
accessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a resonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly
in all material respects, the financial position of Dickenson-Buchanan Bank
as of December 31, 1994 and 1993, and the results of its operations and its
cash flows for each of the years in the three-year period ended December 31,
1994, in conformity with generally accepted accounting principles.
/s/ Brown, Edwards & Company
Certified Public Accountants
1969 Lee Highway
Bristol, Virginia
January 13, 1995
<PAGE>
CONSOLIDATED BALANCE SHEETS
<TABLE>
PREMIER BANKSHARES CORPORATION AND AFFILIATES
<CAPTION>(In Thousands of Dollars)
December 31,
ASSETS 1994 1993
<S> <C> <C>
Cash and Due From Banks (Note 18) 19475 15057
Interest- Bearing Deposits in Banks 350
Securities Available for Sale (Note 4) 142682
Securities Held to Maturity (Note 4) 88766 19031
Securities Held for Sale (Note 4) 211045
Federal Funds Sold 17240 39544
Loans, Net (Notes 5 and 6) 360860 332725
Bank Premises and Equipment, Net (Note 7) 14259 11216
Accrued Income Receivable 5268 4616
Other Assets 6643 7006
655193 640590
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Demand 63784 53142
Now Accounts 67518 61356
Savings 160323 175636
Time, $100,000 and Over 44978 50497
Other Time 232807 220113
569410 560744
Short-term Debt (Note 8) 21377 15331
Accrued Interest and Other Liabilities 2213 4746
Long-term Debt (Note 9) 1900
TOTAL LIABILITIES 594900 580821
Commitments and Contingencies (Note 13 and 16)
Stockholders' Equity (Note 11):
Capital Stock:
Common, $2 Par Value; Authorized 10,000,000 shares;
Issued 4,987,805 in 1994 and 1993 9975 9975
Surplus 22029 22029
Retained Earnings 34501 27872
Net Unrealized Loss on
Securities Available for Sale (6212) (107)
60293 59769
655193 640590
<FN>See notes to consolidated financial statments
</TABLE>
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
PREMIER BANKSHARES CORPORATION AND AFFILIATES
<CAPTION>(In Thousands of Dollars Except Per Share Data)
Years Ended December 31,
1994 1993 1992
<S> <C> <C> <C>
INTEREST INCOME
Loans and Fees 32814 30938 30473
Securities Available For Sale 9404
Securities Held to Maturity 4900 1306 11360
Securities Held for Sale 11167
Federal Funds Sold 751 1009 664
Money Market Deposits 23 76 193
Trading Account Income 17 9
47892 44513 42699
INTEREST EXPENSE
Deposits 19636 18853 19181
Short-term Debt 632 293 250
Long-term Debt 39 18 102
20307 19164 19533
Net Interest Income 27585 25349 23166
PROVISION FOR POSSIBLE LOAN LOSSES (NOTE 6) 1144 856 1151
Net Interest Income After Provision For
Possible Loan Losses 26441 24493 22015
OTHER INCOME
Trust Department Income 240 254 275
Service Fees 2006 1817 1620
Security Gains 642 1256 1005
Trading Account Security Losses (34) (63)
Other Service Charges, Commissions and Fees 1496 1518 1239
Other (Note 15) 297 222 274
4681 5033 4350
OTHER EXPENSES
Salaries and Wages 7480 7012 6128
Pensions and Other Employee Benefits
(Notes 12 and 13) 2259 1783 1369
Occupancy Expenses 1050 848 741
Equipment Rentals, Depreciation and Maintenance 895 922 807
Other Operating Expenses (Note 15) 7408 6553 6105
19092 17118 15150
Income Before Income Taxes 12030 12408 11215
FEDERAL INCOME TAXES (NOTE 10) 3024 2889 2955
NET INCOME 9006 9519 8260
EARNINGS PER COMMON SHARE (NOTE 11) 1.81 1.91 1.66
CASH DIVIDENDS PER COMMON SHARE .48 .43 .37
<FN>See notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
PREMIER BANKSHARES CORPORATION AND AFFILIATES
<CAPTION>(In Thousands of Dollars)
Years Ended December 31, 1994, 1993,and 1992
Net Unrealized
Loss on Securities
Capital Stock Retained Available for
Shares Amount Surplus Earnings Sale Total
<S> <C> <C> <C> <C> <C> <C>
BALANCE-DECEMBER 31, 1991
as originally reported 3671215 7342 8484 26455 (56) 42225
Stock Issued for Pooled
Bank in 1994 485553 970 531 2320 3821
BALANCE-DECEMBER 31, 1991
as restated 4156768 8312 9015 28775 (56) 46046
Net Income 8260 8260
Cash Dividends Declared (1846) (1846)
20% Stock Dividend 831368 1663 13021 (14684)
Change in Valuation
Allowance for Marketable
Equity Securities (39) (39)
BALANCE-DECEMBER 31, 1992 4988136 9975 22036 20505 (95) 52421
Net Income 9519 9519
Cash Dividends Declared (2152) (2152)
Stock Repurchased (331) (7) (7)
Change in Valuation
Allowance for Marketable
Equity Securities (12) (12)
BALANCE-DECEMBER 31,1993 4987805 9975 22029 27872 (107) 59769
Net Income 9006 9006
Cash Dividends Declared (2377) (2377)
Change in Unrealized Loss On
Securities Available for
Sale, Net (6105) (6105)
BALANCE-DECEMBER 31,1994 4987805 9975 22029 34501 (6212) 60293
<FN>See notes to consolidated financial statements.
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
PREMIER BANKSHARES CORPORATION AND AFFILIATES
<CAPTION>(In Thousands of Dollars)
Years Ended December 31,
1994 1993 1992
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income 9006 9519 8260
Adjustments to Reconcile Net Income to Cash
Provided by Operating Activities:
Depreciation and Amortization of
Premises and Equipment 847 823 720
Provision for Possible Loan Losses 1144 856 1151
Provision for Deferred (Prepaid) Income Taxes (39) (401) 70
Amortization of Goodwill and Intangibles 288 372 378
Amortization of Premiums and Accretion of
Discounts, Net 680 408 281
Securities Gains (642) (1256) (1005)
Loss (Gain) on Foreclosed Properties 52 119 (2)
(Increase) Decrease in Accrued Income Receivable (652) 147 (349)
Increase in Other Assets (374) (5) (206)
(Decrease) Increase in Accrued Interest Payable
and other Liabilities (2533) 30 (1455)
Net Cash Provided by Operating Activities 7777 10612 7843
CASH FLOWS FROM INVESTING ACTIVITIES
Net Decrease (Increase) in Temporary Investments 22654 (20456) 10272
Proceeds From Sales of Securities Held to Maturity 3324 77257
Proceeds From Maturities of Securities Held
to Maturity 26001 1300 35691
Purchase of Securities Held to Maturity (15481) (1545) (158322)
Proceeds From Sales of Securities Available for Sale 18648
Proceeds From Maturities of Securities Available
for Sale 31524
Purchases of Securities Available for Sale (68224)
Proceeds From Sales of Securities Held for Sale 71533
Proceeds From Maturities of Securities Held for Sale 37867
Purchases of Securities Held for Sale (152071)
Net Increase in Customer Loans (30182) (34549) (25341)
Proceeds From Sales of Foreclosed Properties 1356 777 411
Purchases of Premises and Equipment (3978) (1011) (2727)
Proceeds From Sales of Premises and Equipment 88 39 13
Net Cash Used In Investing Activities (17594) (94792) (62746)
CASH FLOWS FROM FINANCING ACTIVITIES
Net Increase in Demand, NOW and Savings Accounts 1491 67697 60390
Net (Decrease) Increase in Time Deposits 7175 12288 (4752)
Net (Decrease) Increase in Short-term Debt 6046 7187 (462)
Cash Dividends (2377) (2152) (1846)
Purchase of Capital Stock (7)
Proceeds from Long-term Borrowings 2000
Payments on Long-term Borrowings (100) (776) (341)
Net Cash Provided by Financing Activities 14235 84237 52989
Net (Decrease)Increase In Cash and Due From Banks 4418 57 (1914)
<FN>See notes to consolidated financial statements.
</TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
<TABLE>
PREMIER BANKSHARES CORPORATION AND AFFILIATES
<CAPTION>(In Thousands of Dollars)
Years Ended December 31,
1994 1993 1992
<S> <C> <C> <C>
CASH AND DUE FROM BANKS
Beginning 15057 15000 16914
Ending 19475 15057 15000
Supplemental Disclosures of Cash Flow Information
Cash Payments of Interest Paid:
To Depositors 19565 18885 19852
On Federal Funds Purchased and Securities Sold
Under Agreements to Repurchase 670 285 320
Income Taxes 3229 3122 3127
Supplemental Schedule of Noncash Investing and Financing
Activities
Other Real Estate Acquired in Settlement of Loans 903 1214 574
Net Change in Unrealized Losses on Securities
Available for Sale 6105
<FN>See notes to consolidated financial statements.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Nature of Business: The Company, through its banking affiliates, grants
commercial, residential and installment loans to customers located in Southwest
Virginia. Although the loan portfolio is diversified, a substantial portion
of its debtors' abilities to honor their contracts is dependent upon the coal
and agribusiness economic sectors.
Summary of the Company's significant accounting policies:
Consolidation: The consolidated statements include accounts of
Premier and its Affiliates. All significant intercompany balances and
transactions have been eliminated.
Reclassification: Certain reclassification's have been made to prior
financial statements to place them on a comparable basis with the current year.
Cash and Cash Equivalents: For purposes of reporting cash flows,
cash and due from banks includes cash on hand and amounts due from banks
including cash items in process of clearing. Cash
flows from loans originated by the affiliate banks, deposits, and federal funds
purchased and sold are reported net. Temporary investments include federal
funds sold, trading securities, and interest-bearing deposits in banks.
The Company maintains amounts due from banks which, at times, may exceed
federally insured limits. The Company has not experienced any losses in such
accounts.
Trust Assets: Assets of the trust department, other than cash on deposit at
the affiliate banks, are not included in these financial statements because they
are not assets of the Company.
Securities and Accounting Change: The Company adopted provisions of Statement
of Financial Accounting Standards No. 115, Accounting for Certain Investments
in Debt and Equity Securities, as of January 1, 1994. Statement 115 requires
that management determine the appropriate classification of securities at the
date of adoption, and thereafter at the date individual investment securities
are acquired, and that the appropriateness of such classification be reassessed
at each balance sheet date.
Securities availablae for sale are those debt securities that the Company
intends to hold for an indefinite period of time, but not necessarily to
maturity. Any decision to sell a security classified as a available for sale
would be based on various factors, including significant movements in interest
rates, changes in the maturity mix of the Company's assets and liabilities,
liquidity needs, regulatory capital considerations, and other similar factors.
Securities available for slae are carried at fair value. Unrealized gains or
losses are reported as increases or decreases in stockholders' equity, net
of the related deferred tax effect.
Securities classified as held to maturity are those debt securities the Company
has both the intent and ability to hold to maturity regardless of changes in
market conditions, liquidity needs or changes in general economic conditions.
<PAGE>
Trading securities, which are generally held for the short term in anticipation
of market gains, are carried at fair value. Realized and unrealized gains and
losses on trading account assets are included in other income. The Company does
not classify any securities as trading securities at this time.
Prior to the adoption of Statement 115, the Company stated its securities held
for sale at the lower of aggregate cost or market value. Securities classified
as held for sale were part of the Company's asset and liability management
strategy and were sold in response to changes in interest rates, changes in
prepayment risk, the need to increase regulatory capital and other factors.
Marketable equity securities were stated at the lower of their aggregtate
cost or market value. Under both the newly adopted standard and the Company's
former accounting practices, premiums and discounts on investments in debt
securities are amortized over their contractual lives. The method of
amortization results in a constant effective yield on those securities (the
interest method). Interest on debt securities is recognized in income as
accrued, and dividends on marketable equity securities are recognized in income
where declared. Realized gains and losses, including losses from declines in
value of specified securities determinded by management other-than-temporary,
are included in income. Realized gains and losses are determined on the
basis of specific securities sold.
Note 4 to the consolidated financial statements provides further information
about the effect of adopting Statement 115.
Loans: Loans are stated at the amount of unpaid principal, reduced by unearned
discount and fees and an allowance for possible loan losses.
The allowance for possible loan losses is maintained at a level consider
adequate to provide for losses that can be reasonably anticipated. The
allowance is increased by provisions charged to operating expense and reduced
by net charge-offs. Management makes continuous credit reviews of the loan
portfolio and considers current economic conditions, historical loan loss
experience, review of specific problem loans, and other factors in determing
adequacy of the allowance for possible loan losses.
NOTE 1 - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
(continued)
The decision to charge off a loan is based upon the borrower's continued
failure to pay principal or interest when due, or circumstances indicating the
principal will not or cannot be paid, along with the evaluation of any
collateral securing the loan.
Unearned interest on discounted loans is amortized to income over the life of
the loans, using the sum-of-the-months digits (78ths) method. For
all other
loans, interest is accrued daily on the outstanding balances. The methods
collectively produce a result that is not materially different the level
yield method. Accrual of interest is discontinued on a loan when management
believes,after considering collection efforts and other factors, that the
borrower's financial condition is such that collection of interest is
doubtful. Upon such discontinuance, all unpaid accrued interest is reversed.
Loan commitment fees and certain direct loan costs are deferred and
the net amount amortized as an adjustment of the related loan's yield. The
Company is generally amortizing these amounts over the contractual life.
Bank Premises and Equipment: Bank premises and equipment are stated at
cost less accumulated depreciation. Depreciation is computed by the
straight-line method over the following estimated useful lives:
<TABLE>
Years
<S> <C>
Buildings 10 - 50
Furniture and Equipment 5 - 10
</TABLE>
Costs of ordinary maintenance and repairs are charged to expense as
incurred,
while major improvements are capitalized.
Other Real Estate Owned: Other real estate owned (OREO) represents
properties acquired through foreclosure or other proceedings OREO
is held for sale and is recorded at the lower of the recorded amount of the
loan or fair value of the properties less estimanted cost of disposal.
Any write-down to fair value at the time of transfer to OREO is charged
to the allowance for possible loan losses. Property is evaluated regularly
to ensure the recorded amount is supported by its current fair value
and valuation allowances to reduce the carrying amount to fair value
less estimated costs to dispose are recorded as necessary. Depreciation
is recorded based on the recorded amount of depreciable assets after
they have been owned for one year. Depreciation and additions to
or reductions from valuation allowances are recorded in income.
Intangible Assets: Included in other assets are net intangible
assets of
$1,808,000 and $1,690,000 at December 31, 1994 and 1993,
respectively. At December 31, 1994, intangible assets consisted primarily
of $275,000 of building premiums, and $1,533,000 of goodwill.
Intangibles are being amortized over periods ranging from one to
thirty-five years.
Pension Plan: Generally, Premier and its affiliates fund pension costs as
incurred.
Income Taxes and Accounting Change: Effective January 1, 1993, the Company
adopted Statement of Financial Accounting Standards No. 109, Accounting for
Income Taxes. This adoption of Statement 109 changes the Company's method
of accounting for income taxes from the deferred method to a liability method.
Under
the deferred method, the Company deferred the past tax effects of
timing differences between financial reporting and taxable income.
The application of Statement 109 had no material effect on the
accompanying financial statements.
Deferred taxes are provided on a liability method whereby
deferred tax assets are recognized for deductible temporary
differences
and operating loss and tax credit carryforwards and deferred tax
liabilities are recognized for taxable temporary differences.
Temporary differences are the differences between the reported amounts of
assets and liabilities and their taxbases.
Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management,
it is more likely than not that some portion or all of the deferred
tax assets will not be realized deferred tax assets and liabilities are
adjusted for the effects of changes in tax
laws and rates on the date of enactment. The operating results of the
Parent Company and its affiliates are included
in a consolidated federal income tax return. Each affiliate pays
its allocation of federal income taxes to the Parent Company, or
receives payment from the Parent Company to the extent that tax benefits
are realized.
Earnings Per Share: Earnings per share are computed on the
weighted average number of shares outstanding.
Current Accounting Developments: The Financial Accounting
Standards Board has
issued Statement No. 114, Accounting by Creditors for Impairment of
a Loan, as amended by Statement No. 118, Accounting by Creditors for Imparement
which becomes effective for years beginning after December 15, 1994.
Earlier application is permitted. The Statement generally requires
Imapared Loans
to be measured on the present value of expected future cash
flows discounted at the loan's effective interest rate, or as an expedient,
at the loan's observable market price or the fair value of the collateral if the
loan is collateral dependent. A loan is impaired when it is probable the
creditor will be unable to collect all contractual principal and interest
payments due in accordance with the terms of the loan agreement. The Company
has not adopted this Statement, for the year ended December 31, 1994, but
believes the overall effect of adoption will be immaterial to the financial
statements.
NOTE 2 - BUSINESS COMBINATION
During 1994, Dickenson-Buchanan Bank was acquired in an exchange of stock
transaction in which 582,678 shares of Premier were issued for all of the
outstanding stock of Dickenson-Buchanan Bank. The transaction was accounted
for as a pooling-of-interest and all financial data has been restated
accordingly. The effect of Premier's previously reported operations and
stockholders' equity follows.
<TABLE>
<CAPTION>
December 31, 1993
Previously
Reported Acquisition Restated
(In Thousands of Dollars Except Per Share Data)
<S> <C> <C> <C>
Interest Income 38327 6186 44513
Net Interest Income 21670 3679 25349
Net Income 8343 1176 9519
Net Income Per Share 1.89 15.68 1.91
Stockholders' Equity
Common Stock 8810 750 9975
Surplus 21693 750 22029
Retained Earning 23943 3929 27872
Unrealized Loss on Marketable
Equity Securities (107) (107)
Total Stockholders' Equity 54339 5429 59769
</TABLE>
<TABLE>
<CAPTION>
December 31, 1992
Previously
Reported Acquisition Restated
(In Thousands of Dollars Except Per Share Data)
<S> <C> <C> <C>
Interest Income 37213 5486 42699
Net Interest Income 20231 2935 23166
Net Income 7508 752 8260
Net Income Per Share 1.70 10.03 1.66
Stockholders' Equity
Common Stock 8810 750 9975
Surplus 21700 750 22036
Retained Earnings 17583 2922 20505
Unrealized Loss on Marketable
Equity Securities (95) (95)
Total Stockholders' Equity 47998 4422 52421
</TABLE>
NOTE 3- FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate that
value:
Cash and Short-term Investments: For those short-term instruments, the
carrying amount is a reasonable estimate of fair value.
Securities: The fair values of securities held for trading purposes and
marketable equity securities held for investment purposes are based on quoted
market prices or dealer quotes. For other securities held as investment,
fair value equals quoted market price
if available.If a quoted market price is not available,
fair value is estimated using quoted market prices for similar
securities.
Loan Receivables: The fair value of loans is estimated by discounting
the future cash flows using the current rates at which similar loans would be
made to borrowers with similar credit ratings and for the same remaining
maturities.
Deposit Liabilities: The fair value of demand deposits, savings accounts, and
certain money market deposits is the amount payable on demand at the reporting
date. The fair value of fixed-maturity certificates of deposit is estimated
using the rates currently offered for deposits of similar remaining maturities.
Short-term Debt: The fair value of debt due on demand or with a maturity of
three months or less is the amount payable on demand at the reporting date.
Long-term Debt: Rates currently available to the Company for debt with similar
terms and remaining maturities are used to estimate fair value of existing debt.
Commitments to Extend Credit, Standby Letters of Credit, and Financial
Guarantees Written: The fair value of commitments is estimated using the
fees currently charged to enter into similar agreements,
taking into account the remaining terms of the agreements and the present
credit worthiness of the counterparties. For fixed-rate loan commitments, fair
value also considers the difference between current levels of interest rates
and the committed rates. The fair value of guarantees and letters of
credit is based on fees currently charged for similar agreements or on the
estimated cost to terminate them or otherwise settle the obligations with the
counterparties at the reporting date.
NOTE 3-FAIR VALE OF FINANCIAL INSTRUMENTS (CONTINUED)
The estimated fair values in thousands of dollars of the Company's financial
instruments at December 31, 1994 and 1993 are as follows:
<TABLE>
December 31, 1994 December 31, 1993
Carrying Fair Carrying Fair
Amount Value Amount Value
<S> <C> <C> <C> <C>
Financial Assets:
Cash and Short-term Investments 36715 36715 54951 54951
Securities 231448 227835 230076 235082
Loans 366704 375930 337951 346187
Less: Allowance for Possible Loan Losses 5844 5844 5226 5226
Net Loans 360860 370086 332725 340961
Financial Liabilities:
Deposits 569410 567820 560744 562154
Short-term Debt 21377 21377 15331 15417
Long-term Debt 1900 1900
Unrecognized Financial Instruments:
Standby Letters of Credit 1518 2064
Unused Commercial Line Commitments 15740 8001
Revolving Home Equity Lines 1425 786
Credit Card Lines 3920 2848
Other 690 430
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - SECURITIES
As discussed in Note 1, the Company adopted Statement of Financial Accounting
Standards No. 115 as of January 1, 1994. In accordance with Statement 115,
the 1993 comparative consolidated financial statements have not been restated
for the change in accounting principle. The January 1, 1994, cumulative effect
of adopting Statement 115 was immaterial.
NOTE 4 - SECURITIES (CONTINUED)
Carrying amounts and fair values of securitiies availiable for sale as of
December 31, 1994 are summarized as follows:
<TABLE>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
<CAPTION> (In Thousands ofDollars)
<S> <C> <C> <C> <C>
U.S. Treasury Securities 23040 29 472 22597
U.S. Government Agencies
and Corporations 39844 2 2852 36994
Obligations of States and
Political Subdivisions 7285 47 137 7195
Corporate Securities 3885 27 146 3766
Mortgage-backed Securities 74643 8 5519 69132
Marketable Equity Securities 1596 222 1374
Other Debt Securities 1687 1624
151980 113 9411 142682
</TABLE>
The amortized cost and fair value of securities available for sale as of
December 31, 1994 by contractual maturity are shown below. Maturities may
differ from contractual maturities in morgage-backed securiites because the
mortgages underlying the securities may be called or repaid without any
penalities.
<TABLE>
Amortized Fair
Cost Value
(In Thousands of Dollars)
<S> <C> <C>
Due in One Year or Less 10305 10180
Due After One Year, Through Five Years 54751 52649
Due After Five Years, Through Ten Years 40940 37461
Due After Ten Years 45984 42392
151980 142682
</TABLE>
Carrying amounts and fair values of securities being held to maturity as of
December 31, 1994 and 1993 are summarized as follows:
<TABLE>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
<CAPTION> (In Thousands ofDollars)
<S> <C> <C> <C> <C>
U.S. Government Agencies
and Corporations 6003 613 5390
Obligations of States and
Political Subdivisions 70712 798 2698 68812
Corporate Securities 449 23 426
Mortgage-backed Securities 11602 8 1085 10525
88766 806 4419 85153
</TABLE>
NOTE 4 - SECURITIES (continued)
<TABLE>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
1993
<CAPTION> (In Thousands ofDollars)
<S> <C> <C> <C> <C>
U.S. Treasury Securities 7246 367 7613
U.S. Government Agencies
and Corporation 3410 147 3557
Obligations of State and
Political Subdivisions 6682 314 6996
Mortgage-backed Securities 1118 68 1186
Other Debt Securities 575 575
19031 896 19927
</TABLE>
Carrying amounts and fair values of securities held for sale as of
December 31, 1993 are summarized as follows:
<TABLE>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
<CAPTION> (In Thousands ofDollars)
<S> <C> <C> <C> <C>
U.S. Trasury Securities 5783 329 6112
U.S. Government Agencies and
Corporation 81153 347 463 81037
Obligations of States and
Political Subdivisions 61406 3732 147 64991
Corporation Securities 302 4 3 303
Morgage-backed Securities 55134 678 459 55353
Marketable Equity Securities 1489 1489
Other Debt Securities 5778 120 28 5870
211045 5210 1100 215155
</TABLE>
The amortized cost and fair value of securities being held to maturity as of
December 31, 1994 by contractual maturity are shown below. Maturities may
differ from contractual maturities in mortgage-backed securities because the
mortgages underlying the securities may be called or repaid without penalties.
<TABLE>
Caryying Fair
Amount Value
<CAPTION>
(In Thousands of Dollars)
<S> <C> <C>
Due in One Year or Less 1038 1027
Due After One Year Through Five Years 27941 26936
Due After Five Years, Through Ten Years 47187 45484
Due After Ten Years 12600 11706
88766 85153
</TABLE>
Gross gains and losses from sales of securities for the years ending
December 31, 1994, 1993 and 1992 are as follows:
<TABLE>
1994 1993 1992
<S> <C> <C> <C>
Realized Gains 795 1382 1253
Realized Losses (153) (126) (248)
Net Gains and Losses 642 1256 1005
</TABLE>
In connection with an internal review of the accounting policies of the
Company, management modified its accounting policy for its investment
portfolio in 1993. This modification divided the portfolio into securities
held for sale and securities held to maturity. The securities held for sale
were accounted for at the lower of aggregate cost or market. No losses
resulted from the reclassification.
Securities with carrying values of $46,447,000 and $51,472,000 at
December 31, 1994 and 1993, respectively, were pledged as collateral
on public deposits and for other purposes as required or permitted by law.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 - LOANS
<TABLE>
December 31,
1994 1993
<CAPTION> (In Thousands of Dollars)
<S> <C> <C>
Commercial, Financial, and Agricultural 116506 105773
Real Estate-construction 8654 5667
Real Estate-mortgage 151972 144204
Loans to Individuals 94520 87741
Other 1606 1951
373258 345336
Deduct:
Unearned discount and net loan fees 6554 7385
Allowance for possible loan losses 5844 5226
360860 332725
</TABLE>
Nonperforming assets consist of the following:
<TABLE>
December 31,
1994 1993 1992
<CAPTION> (In Thousands ofDollars)
<S> <C> <C> <C>
Nonaccrual Loans 3018 4006 4287
Restructured Loans 1172 1128 1286
Nonperforming Loans 4190 5134 5573
Foreclosed Properties 677 1382 892
Nonperforming Assets 4867 6516 6465
</TABLE>
There were no commitments to lend additional funds to customers
whose loans
were classified as nonperforming at December 31, 1994 and 1993. The
following table
shows the proforma interest that would have been earned on
nonaccrual loans
and restructured loans if they had been current in accordance with
their original
terms and the recorded interest that was included in income on these
loans:
<TABLE>
Years Ended December 31,
1994 1993 1992
<CAPTION> (In Thousands ofDollars)
<S> <C> <C> <C>
Interest Earned 269 244 162
Interest That Would Have Been Earned 463 506 692
Interest Lost 194 262 530
Loss Per Common Share .04 .05 .11
</TABLE>
NOTE 6 - ALLOWANCE FOR POSSIBLE LOAN LOSSES
Changes in the allowance for possible loan losses are as follows:
<TABLE>
Years Ended December 31,
1994 1993 1992
<CAPTION> (In Thousands ofDollars)
<S> <C> <C> <C>
Balance, Beginning 5226 5312 5217
Provision Charged to Operating Expenses 1144 856 1151
Recoveries of Amounts Charged Off 446 783 553
6816 6951 6921
Amounts Charged Off 972 1725 1609
Balance, Ending 5844 5226 5312
</TABLE>
NOTE 7 - BANK PREMISES AND EQUIPMENT
The major classes of bank premises and equipment and the total
accumulated depreciation are as follows:
<TABLE>
December 31,
1994 1993
<CAPTION> (In Thousands of Dollars)
<S> <C> <C>
Land 2984 2070
Buildings and Improvements 10718 8747
Furniture and Equipment 8858 7856
22560 18673
Less Accumulated Depreciation 8301 7457
14259 11216
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8 - SHORT-TERM DEBT
Short-term debt and weighted average interest rates at December 31,
1994 and 1993, and the maximum amount outstanding at any month-end during
the year are summarized as follows:
<TABLE>
December 31, 1994
Year-end Maximum
Amount Weighted Average Outstanding
Out- Average Out- Average at any
standing Rate standing Rate Month-End
<S> <C> <C> <C> <C> <C>
<CAPTION> (In Thousands ofDollars)
Federal Funds Purchased and
Securities Sold Under Agreements
to Repurchase 19877 4.56 17288 3.36 25597
Other Short-term Borrowing 1500 6.75 17 5.85 1500
21377 4.71 17305 3.37 27097
</TABLE>
<TABLE>
December 31, 1993
Year-end Maximum
Amount Weighted Average Outstanding
Out- Average Out- Average at any
standing Rate standing Rate Month-End
<S> <C> <C> <C> <C> <C>
<CAPTION> (In Thousands ofDollars)
Federal Funds Purchased and
Securities Sold Under Agreements
to Repurchase 15271 2.79 11053 2.51 18623
Other Short-term Borrowing 60 6.00 109 6.0 200
15331 2.78 11162 2.54 18823
</TABLE>
Federal funds purchased include reserves at the Federal Reserve or
correspondent
bank purchases on a daily basis to satisfy reserve requirements.
Securities sold under repurchase agreements mature daily or on demand.
At December 31, 1994, Premier had unused demand lines of credit of
$500,000.
<PAGE>
NOTE 9 - LONG-TERM DEBT
The company has an unsecured term loan executed on September 16, 1994 with
a face value of $2,000,000. The loan is payable
in quarterly installments of $100,000 plus interest at the fixed rate of 7.60%.
The remaining balance at December 31, 1994 was $1,900,000. The agreement
contains restrictions to maintain prescribed levels of risk-based and
other capital ratios, keep nonperforming assets below an established
minimum percentage of loans, and certain other restrictions. At
December 31, 1994, the Company was in substantial compliance with all
covenants.
NOTE 10 - INCOME TAXES
Net deferred tax assets consist of the following components:
<TABLE>
<CAPTION> December 31,
1994 1993
<S> <C> <C>
Deferred Tax Assets:
Securities Available for Sale 3086
Allowance for Loan Losses 1456 1107
Deferred Compensation Plans 523 468
Net Operating Loss Carryforwards 292 348
Permanent Decline in Securities 260
Deferred Loan Fees, Net 77 76
Other Real Estate Write-downs 76
Capital Loss Carryforwards 35 35
Investment Tax Credit Carryforwards 31 31
Other 122 33
5622 2434
Valuation Allowance 66 66
5556 2368
Deferred Tax Liabilities:
Bank Premises and Equipment 828 761
Accretion of Discounts, Net 131 135
959 896
4597 1472
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10 - INCOME TAXES (continued)
The components of consolidated income tax expense are as follows:
<TABLE>
Years Ended December 31,
<CAPTION> 1994 1993 1992
(In Thousands of Dollars)
<S> <C> <C> <C>
Current Payable 3063 3290 2885
Deferred (Prepaid) (39) (401) 70
3024 2889 2955
</TABLE>
A reconciliation of the expected income tax expense computed at 34%
to the
income tax expense included in the consolidated statement of income
is as follows:
<TABLE>
Years Ended December 31,
1994 1993 1992
<CAPTION> (In Thousands of Dollars)
<S> <C> <C> <C>
Computed Expected Tax Expense 4090 4218 3813
Tax-exempt Interest (1346) (1153) (1148)
Disallowed Interest Expense to
Carry Tax-exempt Obligations 138 117 132
Utilization of Tax-loss Carryforward (405) (57)
Tax Effect of Timing Differences
Recognized 127 129
Other, Net 142 (15) 86
3024 2889 2955
</TABLE>
At December 31, 1994, the Company had net operating loss
carryforwards of
$857,706 expiring between the years ending 1994 through 2004.
The net operating loss deduction is limited to $166,857 per year, to be
utilized against the earnings of an affiliated bank as defined by
Internal Revenue Code Section 382.
<PAGE>
NOTE 11 - STOCKHOLDERS' EQUITY
Premier dividend payments are made from dividends received from
affiliates
which amounted to $3,004,000, $2,659,918, and $2,450,741, for December 31, 1994
1993 and 1992, respectively.
Under applicable federal law, the Comptroller of the Currency
(relating to
Premier's affiliate banks which are national banking associations)
restricts
total dividend payments in any calendar year to net profits of that
year,
as defined, combined with retained net profits for the two preceding years.
At December 31, 1994 and 1993, retained net profits, free of such restriction,
amounted to $7,353,000 and $6,748,000, respectively.
Notwithstanding the aforementioned amounts available for dividends,
there is a further restriction that each bank must meet prescribed levels of
capital.
Premier has three affiliate banks organized under the laws of Virginia. The
ability to pay dividends is principally governed by prescribed capital
levels under regulations of the FDIC.
Legal lending limits on loans to Premier (Parent) are governed by
Federal Reserve Act 23A, and differ
from legal lending limits on loans to external customers.
Generally, a bank
may lend up to 10% of its capital and surplus to its Parent, if the
loan is secured. If collateral is in the form of stocks, bonds
debentures or similar obligations, it must have a market value when
the loan is made of at least 20% more than the amount of the loan, and if
obligations of a state or political subdivision or agency thereof, it must have
a market value of at least 10% more than the amount of the loan. If such loans
are secured by obligations of the United States or agencies thereof, or by
notes, drafts, bills of exchange or bankers' acceptances eligible for
rediscount or purchase by a Federal Reserve Bank,
requirements for collateral in excess of loan amount do not apply.
Under this definition, combined legal lending limit for Premier banks on loans
to Parent
is $1,814,000 at December 31, 1994. On December 31, 1994 the Parent Company
was indebted to an affiliate bank for the sum of $200,000. Under the terms of
the credit arrangement, the loan was secured by equipment and payable on demand.
Substantially all undivided profits of the Parent are represented
by undistributed earnings of affiliates.
Earnings per share are computed on weighted average number of
shares outstanding of 4,987,805, 4,987,805 and 4,988,136, shares at
December 31, 1994, 1993 and 1992, respectively.
On December 16, 1992, the Company declared a twenty-percent stock dividend to
shareholders of record January 15, 1993. All per share data has been
restated to account for this stock dividend, including the acquired affiliate
accounted for as a pooling-of-interest.
Federal regulatory agencies have adopted various capital standards for financial
institutions, including risk-based capital standards. The primary objectives
of comparing capital positions of financial institutions are to take into
account the different risks among financial institutions' assests and
off-balance-sheet items.
Risk based capital standards have been supplemented with requirements for a
minimum leverage ratio. The leverage ratio is the Company's Tier I Capital
divided by the amount of the Company's total assets as reported on the
balance sheet. In addition, the regulatory agencies consider the published
capital levels as minimum levels and may require a Financial Institution to
maintain capital at higher levels.
A comparison of the Company's capital as of December 31, 1994 with the
minimum requirements for well capitalized and adequately capitalized
institutions is presented below.
Minimum Requirements
Well Adequately
Actual Capitalized Capitalized
Tier I Risk-based Capital 16.79% 6.00% 4.00%
Total Risk-based Capital 18.04% 10.00% 8.00%
Leverage Ratio 10.05% 5.00% 4.00%
<PAGE>
NOTE 12 - EMPLOYEE BENEFIT PLANS
Discretionary profit sharing plan and a defined contribution
retirement plan are maintained for employees. Total expenses (funded as
accrued) related to these plans were $814,000, $812,000, and $689,000 for the
years ended December 31, 1994, 1993, and 1992, respectively. Except for an
annual ten percent of participants' eligible compensation minimum funding
requirement in the defined contribution plan, there are no other liabilities
or commitments for any of these plans.
NOTE 13 - DEFERRED COMPENSATION PLANS
Deferred compensation plans exist for selected directors and officers of all
affiliated banks. Under plan provisions, certain directors and officers
entered agreements with the banks which required annual payment for ten years
certain, beginning at age 65 or at death. Participants have agreed to waive
certain future compensation to reduce overall plan costs.
Another plan available to certain officers of one affiliate bank
provides for annual payemnts for fifteen years certain. Payments on this latter
plan begin upon retirement with certain reductions of benefits in the event of
pre-retirement death.
Lives of participants of all plans have been insured for amounts that will
partially discharge these obligations. These policies had cash surrender
values of $947,000 and $906,000 at December 31, 1994 and 1993, respectively,
which are reflected in other assets.
At December 31, 1994 and 1993, $1,538,000 and $1,376,000, respectively, had
been accrued under these contracts. This liability and related deferred income
tax charges of $523,000 and $468,000 arising from nondeductibility of
deferred compensation for income tax purposes until paid, are reflected in
the financial statements.
The increase in estimated present values of future benefits under these plans
is charged to operations annually and amounted to $233,000, $195,007, and
$221,000 for the years ended December 31, 1994, 1993 and 1992, respectively.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 14 - LEASE OBLIGATIONS
In the normal course of business, affiliates have entered into
operating leases for equipment. Operating lease expense for the years ended
December 31, 1994, 1993 and 1992 was $27,000, $17,000, and $19,000,
respectively. At December 31, 1994, Premier and its affiliates were not
obligated under significant long-term operating or capital leases.
NOTE 15 - OTHER INFORMATION
The principal components of other income and other expenses in the
consolidated statements of income are:
<TABLE>
Years Ended December 31,
1994 1993 1992
<CAPTION> (In Thousands of Dollars)
<S> <C> <C> <C>
Other Income (Includes no items
in excess of 1% of total
revenue) 297 222 274
Other Expense
Data Processing Fees 622 963 948
FDIC Assessment 1279 1092 889
Other (Includes no items
in excess of 1% of
total revenue) 5507 4498 4268
7408 6553 6105
</TABLE>
NOTE 16 - COMMITMENTS AND CONTINGENT LIABILITIES
Financial Instruments With Off-balance-sheet Risk: The Company is a party to
financial instruments with off-balance-sheet risk in the normal course of
business to meet the financing needs of its customers. These financial
instruments include commitments to extend credit, standby letters of credit
and revolving home equity lines.
These instruments involve, to varying degrees, elements of credit risk in excess
of the amount recognized in the consolidated balance sheets. The contractual
amounts of these instruments reflect the extent of Company involvement in
particular classes of financial instruments.
The Company's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend
credit and standby letters of credit is represented by the contractual amount
of those instruments. The Company uses the same credit policies in making
commitments and conditional obligations as it does for on-balance-sheet
instruments.
Unless noted otherwise, the Company requires that off-balance-sheet financial
instruments be collateralized by real estate.
<PAGE>
NOTE 16 - COMMITMENTS AND CONTINGENT LIABILITIES (continued)
<TABLE>
Contractual Amounts
at December 31,
<CAPTION> 1994 1993
(In Thousands of Dollars)
<S> <C> <C>
Financial instruments whose contract amounts represent credit risk:
Standby Letters of Credit 1664 1742
Unused Commercial Line Commitments 18584 7158
Revolving Home Equity Lines 1452 808
Credit Card Lines 3717 2640
Other 1967 364
Commitments to extend credit are agreements to lend to a customer as long
as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination
clauses and may require payment of a fee. Since many of the commitments are
expected to expire without being used, the total commitment amounts do not
necessarily represent future cash requirements. The Company evaluates each
customer's credit worthiness on a case-by-case basis. The amount of collateral
obtained,if deemed necessary by the Company upon extension of credit, is
based on management's credit evaluation. Collateral held varies but may
include accounts receivable, crops, livestock, inventory, property, plant,
and equipment, residential real estate, and income-producing commercial
properties.
Standby letters of credit are conditional commitments issued by the Company
to guarantee the performance of a customer to a third party. Those
guarantees are primarily issued to support public and private borrowing
arrangements, including commercial paper, bond financing, and similar
transactions. The credit risk involved in issuing letters of credit is
essentially the same as that involved in extending loan facilities to customers.
Collateral held varies as specified above required in instances the Company
deems necessary.
Committment: On November 21, 1994, Premier executed an agreement with
NationsBank of Virginia, N.A. to purchase seven branch locations throughout
Premier's market area. The agreement is contingent upon both parties
obtaining regualtory approval. It is anticipated the transaction will be
consummated by the close of the second quarter of 1995.
Contingencies: In the normal course of business, the Company is involved in
various legal proceedings. In the opinion of management, any liability
resulting from such proceedings would not have a material adverse effect on the
Company's consolidated financial statements.
NOTE 17- TRANSACTIONS WITH RELATED PARTIES
The Company's affilate banks conduct banking transactions in the ordinary
course of business with directors, principal officers, their immediate
families and affiliated companies in which they are principal
stockholders (commonly referred to as related
parties), all of which have been, in the opinion of management, on the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with others.
Aggregate loan transactions with related parties were as follows:
</TABLE>
<TABLE>
Years Ended December 31,
<CAPTION> 1994 1993
(In Thousands of Dollars)
<S> <C> <C>
Balance, Beginning 7752 6082
New Loans 18303 6960
Repayments (17001) (4892)
Relationship Changes 356 (398)
Balance, Ending 9410 7752
</TABLE>
NOTE 18 - RESTRICTIONS ON CASH AND DUE FROM BANKS
To comply with banking regulations, the banks are required to
maintain certain
average cash reserve balances. The daily average cash reserve
requirement was approximately $2,763,000 and $2,402,000 for
the two-week period including December 31, 1994 and 1993, respectively.
<PAGE>
NOTE 19 - UNAUDITED INTERIM FINANCIAL INFORMATION
The following unaudited data includes, in the opinion of
management, all
adjustments (consisting only of normal, recurring accruals)
necessary to
present fairly the results of operations for such periods:
<TABLE>
<CAPTION>
1994
Three Months Ended
March 31 June 30 September 30 December 31
(In Thousands of Dollars Except Per Share Data)
<S> <C> <C> <C> <C>
Interest Income 11671 11930 12059 12232
Interest Expense 4999 5056 5042 5210
Provision for Possible
Loan Losses 92 155 456 441
Securities Gains(Losses) 672 10 (15) (25)
Other Income 902 948 1128 1061
Other Expense 4630 4716 4810 4936
Income Before Tax Expense 3524 2961 2864 2681
Income Tax Expense 944 706 667 707
Net Income 2580 2255 2197 1974
Net Income Per Share .52 .45 .44 .40
</TABLE>
<TABLE>
<CAPTION>
1993
Three Months Ended
March 31 June 30 September 30 December 31
(In Thousands of Dollars Except Per Share Data)
<S> <C> <C> <C> <C>
Interest Income 10731 10991 11301 11490
Interest Expense 4504 4654 4914 5092
Provision for Possible
Loan Losses 220 267 205 164
Securities Gains 97 879 269 11
Other Income 888 999 1048 842
Other Expense 4100 4309 4291 4418
Income Before Tax Expense 2892 3639 3208 2669
Income Tax Expense 309 1008 867 705
Net Income 2583 2631 2341 1964
Net Income Per Share .52 .53 .47 .39
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 20 - PARENT COMPANY FINANCIAL INFORMATION
Condensed financial information of Premier Bankshares Corporation
(Parent
Company) is presented below:
Balance Sheets
<TABLE>
<CAPTION>
December 31,
1994 1993
(In Thousands of Dollars)
<S> <C> <C>
Assets
Cash and Noninterest Bearing
Deposits in Banks 690 425
Interest-bearing Deposits in Banks 51
Investments 200
Investments in Affiliated Banks,
at Equity 58406 57345
Loans, Net 38 1096
Furniture and Fixtures, Net 2989 217
Other Assets 249 193
Intangibles 1052 1225
63675 60501
Liabilities
Accounts Payable and Accrued
Liabilities 1282 672
Short-term Debt 200 60
Long-term Debt 1900
3382 732
Stockholders' Equity
Common Stock 9975 9975
Capital Surplus 22029 22029
Retained Earnings 34501 27872
Net Unrealized Loss on Securities
Available for Sale (6212) (107)
60293 59769
63675 60501
</TABLE>
<PAGE>
NOTE 20 - PARENT COMPANY FINANCIAL INFORMATION (continued)
Statements of Income
<TABLE>
<CAPTION>
Years Ended December 31,
1994 1993 1992
(In Thousands of Dollars)
<S> <C> <C> <C>
Income
Dividends from Banking
Affiliates 3004 2660 2451
Service Fees 273 279 158
Interest 5 4 4
3282 2943 2613
Expenses
Salaries and Employee
Benefits 737 590 361
Interest on Short-term Debt 1 8 12
Interest on Long-term Debt 39 18 61
Equipment Rentals,
Depreciation and Maintenance 112 148 113
Professional Fees 675 84 137
Amortization of Goodwill and
Other Intangibles 173 270 275
Other 274 171 95
2011 1289 1054
Income Before Income Tax Benefit and
Equity in Undistributed
Income of Affiliates 1271 1654 1559
Federal Income Tax Benefit 499 213 210
Income Before Equity in Undistributed Income
of Affiliates 1770 1867 1769
Equity in Undistributed Income
of Affiliates 7236 7652 6491
Net Income 9006 9519 8260
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 20 - PARENT COMPANY FINANCIAL INFORMATION (continued)
Statements of Cash Flows
<TABLE>
Years Ended December 31,
1994 1993 1992
(In Thousands of Dollars)
<S> <C> <C> <C>
Cash Flows From Operating Activities
Net Income 9006 9519 8260
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Depreciation of Furniture and Fixtures 80 69 61
Deferred Tax Assets 93
Amortization of Intangibles 173 270 275
Increase in Equity in Undistributed
Income of Affiliates (7236) (7652) (6491)
Increase in Other Assets (149) (104) (43)
Increase In Accounts Payable and Accrued
Liabilities 610 129 86
Net Cash Provided By Operating
Activities 2577 2231 2148
Cash Flows From Investing Activities
Net Increase in Temporary Investments (51)
Purchase Of Investment Security (200)
Repayment of Loan Receivable From Affiliate 1041 959
Investment in Affiliates 70 169 150
Purchase of Customer Loan (55)
Net Decrease In Customer Loan 17
Premises and Equipment Expenditures (2852) (17) (297)
Net Cash Provided By (Used In)
Investing Activity (1975) 1111 (202)
Cash Flows From Financing Activities
Increase (Decrease) in Short-term Debt 140 (140) 200
Issuance of Long-term Debt 2000
Payment of Long-term Debt (100) (776) (341)
Purchase of Capital Stock (7)
Cash Dividends (2377) (2152) (1846)
Net Cash Used in Financing Activities (337) (3075) (1987)
Net Increase (Decrease) in Cash and
Due from Banks 265 267 (41)
Cash Due from Banks
Beginning 425 158 199
Ending 690 425 158
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT*
ITEM 11. EXECUTIVE COMPENSATION*
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT*
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS*
*This information is incorporated by reference from the registrant's
definitive proxy statement pursuant to
Instruction G of Form 10-K since the Registrant has filed with
the Securities and Exchange Commission a definitive Proxy
Statement in respect to its 1995 Annual Stockholders Meeting.
<PAGE>
PART IV
ITEM 14, EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a) (1) and (2) The following documents are filed as a part of
this report:
Financial Statements:
The report of independent auditors and consolidated
financial stements of Premier Bankshares
Corporation and Affiliates as listed in the accompanying
Index to Financial Statements and Schedules are
included herein.
Financial Statement Schedules:
None
Exhibits:
The Exhibits required by Regulation S-K are listed in the
Exhibit Index.
(b) No reports on Form 8-K were filed for the three months ended
December 31, 1994.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) 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 BANKSHARES CORPORATION
(Registrant)
By: /s/ James R. Wheeling
James R. Wheeling, President, Chief
Executive Officer and Director
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the
dates indicated.
/s/ Claude H. VanDyke, Director /s/ Robert C. James, Director
Date Executed: 03-25-95 Date Executed: 02-16-95
/s/ Charles C. Henley, Director /s/ John A. Johnston, Director
Date Executed: 03-25-95 Date Executed: 03-23-95
/s/ Harris Hart, II, Director /s/ Stanley King, Sr., Director
Date Executed: 03-23-95 Date Executed: 03-23-95
/s/ George R. Smith, Director /s/ Jack P. Chambers, Director
Date Executed: 03-25-95 Date Executed: 03-25-95
/s/ James E. Childress, Director
Date Executed: 02-25-95
/s/ J. Robert Buchanan, Treasurer /s/ Ellen Simpson, Controller
J. Robert Buchanan, VP & Treasurer Ellen Simpson, Controller
(Principal Financial Officer) (Principal Accounting Officer)
<PAGE>
ANNUAL REPORT ON FORM 10-K
ITEM 14 (a) (1) and (2) and (c)
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
CERTAIN EXHIBITS
YEAR ENDED DECEMBER 31, 1994
PREMIER BANKSHARES CORPORATION
BLUEFIELD, VIRGINIA
<PAGE>
FORM 10-K--ITEM 14 (a) (1) and (2)
PREMIER BANKSHARES CORPORATION AND AFFILIATES
Index to Financial Statements and Schedules
Page
The following report of independent auditors and consolidated
financial statements of Premier Bankshares Corporation and
Affiliates for the year ended December 31, 1993 are included in
Item 8:
Report of Independent Auditors 32
Consolidated Balance Sheets - December 31, 1994 and 1993
33
Statements of Consolidated Income - Years ended December 31,
1994, 1993 and 1992 34
Statements of Changes in Stockholders' Equity - Years ended
December 31, 1994, 1993 and 1992 35
Statements of Consolidated Cash Flows - Years ended December 31,
1994, 1993 and 1992 36-37
Notes to Consolidated Financial Statements 38-58
Schedules to the consolidated financial statements required by
Article 9 of Regulation S-X are not required under the related
instructions or are inapplicable and there fore have been
omitted.
NOTE: ANY EXHIBITS WILL BE FURNISHED UPON REQUEST AND UPON
PAYMENT OF REASONABLE COST TO PREMIER FOR PREPARING AND
DELIVERING COPY.
<PAGE>
EXHIBIT INDEX
13. Annual Report to Security Holders.
22. Subsidiaries of Registrant.
23. Consents of Experts and Counsel
Consent of Brown, Edwards & Company
<PAGE>
EXHIBIT 22
Parent and Subsidiaries
Registrant:
Premier Bankshares Corporation
29 College Drive
P.O. Box 1199
Bluefield, Virginia 24605
Subsidiaries of Registrant:
Percentage Owned Organized Under Jurisdiction
of Parent Corporation
Dickenson-Buchanan Bank 100.00 Laws of the State of Virginia Registrant
Tazewell National Bank 100.00 The United States of America
Registrant
Premier Bank, Inc. 100.00 Laws of the State of Virginia
Registrant
Peoples Bank, Inc. 100.00 Laws of the State of Virginia
Registrant
Richlands National Bank 100.00 The United States of America
Registrant
Premier Bank Services Corporation 100.00Laws of the State of
Virginia
Registrant
Professional Financial Services of Virginia, Inc. 100.00Laws of
nthe State of Virginia
Registrant
</TABLE>
