FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from
_____________________to____________________
For Quarter Ended Commission file number 0-15729
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, VA 24605
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number including area code (703) 322-2242
____________________________________________________________________________
(Former name, former address and former fiscal
year, if changed since last report).
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 the number of shares outstanding of each of the issuer's
classes of common stock, as of June 30, 1995.
Common stock, $2 par value - 4,987,802 shares.
INDEX
Page No.
Part I. Financial Information:
Item 1. Financial Statements
Consolidated Balance Sheets -
June 30, 1995 and December 31, 1994 3
Consolidated Statements of Income -
Six Months June 30, 1995 and 1994 4
Consolidated Statements of
Stockholders' Equity - Six Months
Ended June 30, 1995 and 1994 5
Consolidated Statements of Cash Flows
Six Months Ended June 30,
1995 and 1994 6
Notes to Consolidated Financial
Statements 7-10
Supplemental Financial Data
(Tables I-III) 11-13
Item 2. Management's Discussion and
Analysis of Financial Condition and
Results of Operations 14-15
Part II. Other Information:
Item 1. Legal Proceedings 16
Item 2. Changes in Securities 16
Item 3. Defaults Upon Senior Securities 16
Item 4. Submission of Matters to a Vote of 16
Item 5. Security Holders Other Information 16
Item 6. Exhibits and Reports on Form 8-K 16
<PAGE>
ITEM 1. FINANCIAL INFORMATION:
<TABLE>
PREMIER BANKSHARES CORPORATION AND AFFILIATES
CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars)
<CAPTION>
June 30, December 31,
1995 1994
<S> <C> <C>
ASSETS:
Cash and Due From Banks $ 30,123 $ 19,475
Interest-bearing Deposits in Banks
Securities Held to Maturity (Approximate
Market Value 98,883 88,766
$99,149 in 1995, $85,153 in 1994)
Securities Available for Sale (Amortized 147,172 142,682
Cost $149,586 in 1995, $151,980 in 1994) 56,004 17,240
Federal Funds Sold
Loans, Net of Unearned Income of $6,014 384,340 360,860
in 1995, $6,554 in 1994 and Allowance 16,013 14,259
for Loan Losses of $5,849 in 1995 and 22,154 11,911
$5,844 in 1994
Bank Premises and Equipment
Other Assets
TOTAL ASSETS $ 754,689 $ 655,193
LIABILITIES:
Deposits:
Demand $ 74,768 63,784
Interest-bearing Demand 78,356 67,518
Savings 148,735 160,323
Large Denomination Certificates
of Deposit 55,307 44,978
Other Time 298,771 232,807
TOTAL DEPOSITS $ 655,937 $ 569,410
Short-term Debt 17,158 21,377
Other Liabilities 4,938 2,213
Long-term Debt 8,900 1,900
TOTAL LIABILITIES $ 686,933 $ 594,900
SHAREHOLDERS' EQUITY:
Capital Stock-Common-$2 Par
10,000,000 Authorized; 4,987,802
Shares Issued in 1995 and 1994 $ 9,975 $ 9,975
Surplus 22,029 22,029
Undivided Profits 37,294 34,501
Net Unrealized Loss on Securities (1,542) (6,212)
TOTAL STOCKHOLDERS' EQUITY $ 67,756 $ 60,293
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 754,689 $ 655,193
</TABLE>
[FN]
Notes to financial statements are an integral part of these
statements.
<PAGE>
PREMIER BANKSHARES CORPORATION AND AFFILIATES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands of Dollars)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
INTEREST INCOME:
Loans and Fees $ 9,246 $ 7,965 $ 17,979 $ 15,865
Federal Funds Sold 501 169 730 466
Money Market Deposits 9 20
Securities Held to Maturity 1,542 993 2,501 2,374
Securities Held for Sale 1,749 2,710 4,027 4,819
Total Interest Income $ 13,038 $ 11,846 $ 25,237 $ 23,544
INTEREST EXPENSE:
Demand Deposits $ 489 $ 444 $ 951 $ 884
Savings Deposits 1,185 1,475 2,419 3,032
Large Denomination Certificates
of Deposit 672 560 1,262 1,089
Other Time Deposits 3,387 2,426 6,137 4,785
Short-term Debt 256 154 477 268
Long-term Debt 82 119
Total Interest Expense $ 6,071 $ 5,059 $ 11,365 $ 10,058
Net Interest Income $ 6,967 $ 6,787 $ 13,872 $ 13,486
ADDITION TO ALLOWANCE FOR LOAN
AND LEASE LOSSES 127 156 315 248
Net Interest Income After
Addition to Allowance for
Loan and Lease Losses $ 6,840 $ 6,631 $ 13,557 $ 13,238
OTHER INCOME:
Service Charges on Deposit
Accounts $ 547 $ 511 $ 1,056 $ 958
Trust Department Income 78 35 117 70
Other Service Charges,
Commissions and Fees 396 369 782 730
Other Operating Income 94 60 211 140
Security Gains (Losses) (113) 10 (153) 682
Total Other Income $ 1,002 $ 985 $ 2,013 $ 2,580
OTHER EXPENSES:
Salaries $ 2,026 $ 1,879 $ 3,948 $ 3,719
Employee Benefits 500 516 985 1,047
Occupancy Expenses 195 217 420 444
Furniture and Equipment Expenses 292 249 591 539
Other Operating Expenses 2,164 1,852 4,051 3,588
Total Other Expense $ 5,177 $ 4,713 $ 9,995 $ 9,337
Income Before Income Taxes $ 2,665 $ 2,903 $ 5,575 $ 6,481
Applicable Income Taxes 677 686 1,385 1,649
Net Income $ 1,988 $ 2,217 $ 4,190 $ 4,832
NET INCOME PER SHARE $ 0.40 $ 0.45 $ 0.84 $ 0.97
CASH DIVIDENDS PER SHARE $ 0.14 $ 0.11 $ 0.28 $ 0.22
</TABLE>
[FN]
The notes to financial statements are an integral part of these statements.
<PAGE>
PREMIER BANKSHARES CORPORATION AND AFFILIATES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In Thousands of Dollars)
<TABLE>
<CAPTION> Six Months Ended
June 30,
1995 1994
<S> <C> <C>
Balance at Beginning of Year $ 60,293 $ 59,769
Net Income 4,190 4,832
Cash Dividends Declared (1,396) (1,150)
Change in Valuation Allowance for
Securities 4,669 (3,736)
Balance at End of Period $ 67,756 $ 59,715
</TABLE>
[FN]
The notes to financial statements are an integral part of these
statements.
<PAGE>
<TABLE>
PREMIER BANKSHARES CORPORATION AND AFFILIATES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of Dollars)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 1,988 $ 2,217 $ 4,190 $ 4,832
Adjustments to Reconcile to
Net Income to Cash Provided by
Operating Activities:
Depreciation and Amortization
of Premises and Equipment 247 215 488 446
Provision for Loan Losses 127 156 315 248
Amortization of:
Goodwill and Intangibles 149 67 221 128
Premiums and Accretion of
Discounts, Net 115 129 230 256
Security Gains (Losses) (193) (10) 153 (682)
Increase in Other Assets (9,963) (551) (10,460) (977)
Increase in Other Liabilities 484 (2,521) 2,725 (1,833)
Net Cash Provided by Operating
Activities $ (7,046) $ (298) $ (2,138) $ 2,418
CASH FLOWS FROM INVESTING ACTIVITIES:
Net (Increase) Decrease in
Temporary Investments $(39,051) $10,671 $ (38,764) $25,948
Sale of Securities
Available for Sale 6,355 2,362 11,616 7,403
Maturities of Securities
Available for Sale 1,784 13,737 5,471 27,536
Purchase of Securities
Available for Sale (15,730) (14,535) (17,215) (48,086)
Maturities of Securities
Held to Maturity 3,033 464 7,367 3,499
Purchases of Securities
Held to Maturity (16,365) (3,719) (17,560) (21,590)
Sale of Foreclosed Properties 483
Net Increase in Customer Loans (19,824) (14,008)(23,795) (17,239)
Premises and Equipment
Expenditures (2,577) (440) (2,866) (583)
Sales of Premises and
Equipment 620 4 620 4
Net Cash Used in Investing
Activities $ (81,755) $ (5,464) $(75,126) $(22,625)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Increase in Demand Deposits,
Now and Savings Accounts $ 25,973 $ 363 $ 10,234 $ 12,842
Net Increase in Time Deposits 67,763 6,700 76,293 7,109
Borrowings of Long-term Debt 7,000 7,000
Payments on Long-term Debt 100
Net Increase (Decrease) in
Short-term Debt (411) 118 (4,219) 4,968
Cash Dividends Paid (698) (621) (1,396) (1,150)
Net Cash Provided by Financing
Activities $ 99,727 $ 6,560 $ 87,912 $ 23,769
Net Increase in Cash and
Due From Banks $ 10,926 $ 798 $ 10,648 $ 3,562
CASH AND DUE FROM BANKS:
Beginning 19,197 17,821 19,475 15,057
Ending $ 30,123 $ 18,619 $ 30,123 $ 18,619
Supplemental Disclosures of
Cash Flow Information:
Cash Payments for Interest Paid:
To Depositors $ 4,598 $ 20,697 $ 10,838 $ 9,859
On Federal Funds Purchased and
Securities $ 224 $ 658 $ 392 $ 266
Sold Under Agreement to
Repurchase $ $ 2,475 $ 988 $ 1,487
</TABLE>
[FN]
The notes to financial statements are an integral part of these
statements.
<PAGE>
PREMIER BANKSHARES CORPORATION AND AFFILIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. General
The consolidated statements include the accounts of Premier and its
affiliates. All significant intercompany balances and transactions
have been eliminated. In the opinion of management, the
accompanying unaudited consolidated financial statements contain all
adjustments (consisting of only normal recurring accruals) necessary
to present fairly the financial positions as of June 30, 1995, and
December 31, 1994, and the results of operations and cash flows for
the six months ended June 30, 1995 and 1994.
The results of operations for the six months ended June 30, 1995,
are not necessarily indicative of the results to be expected for the
full year.
2. Investment Securities
Carrying amounts and fair values of securities being held to
maturity are summarized as follows:
<TABLE>
<CAPTION>
June 30, 1995
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
(In Thousands of Dollars)
<S> <C> <C> <C> <C>
U.S. Government Agencies and
Corporations $ 9,996 $ 6 $ 143 $ 9,859
Obligations of States and
Political Subdivisions 75,330 1,163 475 76,018
Corporate Securities 2,060 2 4 2,058
Mortgage-backed Securities 11,497 283 11,214
$ 98,883 $ 1,171 $ 905 $ 99,149
</TABLE>
<TABLE>
<CAPTION>
December 31, 1994
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
(In Thousands of Dollars)
<S> <C> <C> <C> <C>
U.S. Government Agencies and
Corporations $ 6,003 $ $ 613 $ 5,390
Obligation of States and Political
Subdivisions 70,712 798 2,698 68,812
Corporate Securities 449 23 426
Mortgage-backed Securities 11,602 8 1,085 10,525
$ 88,766 $ 806 $ 4,419 $ 85,153
</TABLE>
<PAGE>
2. Investment Securities (continued)
Amortized cost and carrying amount (estimated fair value) of
securities available for sale are summarized as follows:
<TABLE>
<CAPTION>
June 30, 1995
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
(In Thousands of Dollars)
<S> <C> <C> <C> <C>
U.S. Treasury Securities $ 17,582 $177 $ 73 $ 17,686
U.S. Government Agencies and
Corporations 34,106 59 342 33,823
Obligations of States and
Political Subdivisions 4,595 37 3 4,629
Corporate Securities 6,031 17 19 6,029
Mortgage-backed Securities 79,376 23 2,012 77,387
Marketable Equity 1,596 1 153 1,444
Other Debt Securities 6,300 2 128 6,174
$ 149,586 $ 316 $ 2,730 $ 147,172
</TABLE>
<TABLE>
<CAPTION>
December 31, 1994
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
(In Thousands of Dollars)
<S> <C> <C> <C> <C>
U.S. Treasury Securities $ 23,040 $ 29 $ 472 $ 22,597
U.S. Government Agencies and
Corporations 39,844 2 2,852 36,994
Obligations of States and
Political Subdivisions 7,285 47 137 7,195
Corporate Securities 3,885 27 146 3,766
Mortgage-backed Securities 74,643 8 5,519 69,132
Marketable Equity 1,596 222 1,374
Other Debt Securities 1,687 63 1,624
$ 151,980 $113 $ 9,411 $ 142,682
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1995 1994
(In Thousands of Dollars)
<S> <C> <C>
Gross proceeds from sales of Securities $ 11,922 $ 7,403
Gross Gains on Sale of Securities $ 30 $ 682
Gross Losses on Sale of Securities 183
Net Securities Gains (Losses) $ (153) $ 682
</TABLE>
<PAGE>
PREMIER BANKSHARES CORPORATION AND AFFILIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
3. Loans
The following is a summary of loans outstanding at the end of
the periods indicated:
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
(In Thousands of Dollars)
<S> <C> <C>
Commercial, Financial, and Argicultural $ 131,252 $ 116,506
Real Estate - Construction 8,620 8,654
Real Estate - Mortgage 151,919 151,972
Loans to Individuals 101,179 94,520
Others 3,233 1,606
396,203 373,258
Less Unearned Income (6,014) (6,554)
390,189 366,704
Less Allowance for Loan and Lease (5,849) (5,844)
Losses
$ 384,340 $ 360,860
</TABLE>
The following schedule summarizes the changes in the allowance
for loan and lease losses:
<TABLE>
<CAPTION>
June 30, June 30, December 31,
1995 1994 1994
(In Thousands of Dollars)
<S> <C> <C> <C>
Balance, Beginning $ 5,844 $ 5,227 $ 5,226
Provision Charged Against
Income 315 247 1,144
Recoveries 211 234 446
Loans Charged Off (521) (299) (972)
Balance, Ending $ 5,849 $ 5,409 $ 5,844
</TABLE>
Nonperforming assets consist of the following:
June 30, December 31,
1995 1994
(In Thousands of Dollars)
[S] [C] [C]
Nonaccrual Loans $ 3,083 $ 3,018
Restructured Loans 781 1,172
Nonperforming Loans 3,864 4,190
Foreclosed Properties 945 677
Nonperforming Assets $ 4,809 $ 4,867
<TABLE>
Total loans past due 90 days or more and still accruing were
$294 on June 30, 1995 and $711 on December 31, 1994.
PREMIER BANKSHARES CORPORATION AND AFFILIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
4. Short-term Debt
Short-term debt consists of the following:
June 30, December 31,
1995 1994
(In Thousands of Dollars)
Federal Funds Purchased and Securities Sold
Under Agreements to Repurchase 17,158 19,877
Other Short-term Borrowing 1,500
Total Short-term Debt $ 17,158 $ 21,377
5. Long-term Debt
June 30, December 31,
1995 1994
(In Thousands of Dollars)
Note Dated 4/28/95 @ 7.187%
Quarterly Installments - $450,000 $ 7,200
Note Dated 9/16/94 @ 7.60%
Quarterly Installments - $100,000 $ 1,700 $ 1,900
Total Long-term Debt $ 8,900 $ 1,900
6. Earnings Per Share
Earnings per share are computed on the weighted average
common shares outstanding of 4,987,802 for both the three and six
months ended June 30, 1994 and 1995, respectively.
7. Capital Requirements
A comparison of the Company's capital as of June 30, 1995
with the minimum requirements is presented below.
Minimum
Actual Requirements
Tier I Risk-based 11.88 % 4.00 %
Capital
Total Risk-based 13.07 % 8.00 %
Capital
Leverage Ratio 7.74 % 4.00 %
8. Branch Acquisitions
In June 1995, the Company acquired seven branches from
NationsBank of which six branches were settled within the second
quarter of 1995. These acquisitions were accounted for under the
purchase method of accounting. The purchase prices were allocated
to the identifiable tangible and intangible assets acquired and
liabilities assumed based upon their estimated fair value at the
date of consummation. The intangibles are being amortized on a
straight-line basis over their respective lives.
<PAGE>
TABLE I
Consolidated Selected Financial Data
(Amounts in thousands, except per share data)
<CAPTION>
1995
Second First
Quarter Quarter
<S> <C> <C>
Interest Income $ 13,038 $ 12,199
Interest Expense 6,071 5,294
Net Interest Income 6,967 6,905
Provision for Loan Losses 127 188
Net Income 1,988 2,202
Per Share Data:
Net Income 0.40 0.44
Cash Dividends Paid 0.14 0.14
Total Average Stockholders'Equity $ 62,968 $ 59,938
Total Average Assets $ 681,947 $ 653,074
Ratios:
Average Stockholders'Equity
to Total Average Assets 9.23 % 9.18 %
Retirm on Average Equity 12.63 % 14.70 %
Return on Average Assets 1.17 % 1.35 %
</TABLE>
<TABLE>
<CAPTION>
1994
Fourth Third Second First
Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C>
Interest Income $ 12,232 $ 12,059 $ 11,930 $ 11,671
Interest Expense 5,210 5,042 5,056 4,999
Net Interest Income 7,022 7,017 6,874 6,672
Provision for Loan
Losses 441 456 155 92
Net Income 1,974 2,197 2,255 2,580
Per Share Data:
Net Income 0.40 0.44 0.45 0.52
Cash Dividends Paid 0.14 0.12 0.11 0.11
Total Average
Stockholders' Equity $ 60,583 $ 61,215 $ 59,664 $ 59,349
Total Average Assets $ 655,553 $ 656,902 $ 666,663 $ 652,270
Ratios:
Average
Stockholders' Equity
to Total Average Assets 9.24 % 9.32 % 8.95 % 9.10 %
Return on Average Equity 13.03 % 14.36 % 15.12 % 17.39 %
Return on Average Assets 1.20 % 1.34 % 1.35 % 1.58 %
</TABLE>
<PAGE>
TABLE II
DISTRIBUTION OF ASSETS, LIABILITIES, STOCKHOLDERS' EQUITY,
INTEREST RATES AND INTEREST DIFFERENTIAL
The following schedule presents the condensed consolidated average balance
sheets and the average rates earned and paid by Premier and its affiliates
on a fully taxable equivalent basis assuming a 34% tax rate for the six
months ended June 30, 1995 and 1994. Nonaccruing loans are included in the
total loans.
<TABLE>
<CAPTION>
1995 1994
Average Interest Yield/ Average Interest Yield
Balance And Fees Rate Balance And Fees Rate
(In Thousands of Dollars)
<S> <C> <C> <C> <C> <C> <C>
Assets
Interest-earning Assets:
Loans and Leases $ 374,508 $ 17,979 9.60 % $ 342,727 $15,865 9.26%
Taxable Investment
Securities 150,794 4,608 6.11 179,867 5,276 5.87
Nontaxable Investment
Securities 72,423 2,909 8.03 72,222 2,905 8.04
Interest-bearing Deposits
with Other Banks 410 20 9.76
Federal Funds Sold and
Securities Purchased Under
Agreements to Resell 25,392 730 5.75 27,462 466 3.39
Total Interest-earning
Assets $ 623,117 $ 26,226 8.42 % $ 622,688 $ 24,532 7.88 %
Noninterest-earning Assets:
Cash and Noninterest-
bearing Deposits $ 24,626 $ 18,362
Premises and Equipment,
Net 14,508 11,245
Other Assets 11,230 11,719
Less Allowance for Loan and
Lease Losses (5,969) (5,352)
Total Assets $ 667,512 $ 658,662
Liabilities and Stockholders'Equity
Interest-bearing Liabilities:
Demand Deposits $ 68,188 $ 951 2.79 % $63,672 $ 884 2.78 %
Savings Deposits 148,735 2,419 3.25 180,011 3,032 3.37
Large Denomination Certificates
of Deposits 50,055 1,262 5.04 48,483 1,089 4.49
Other Time Deposits 249,035 6,137 4.93 218,933 4,785 4.25
Short-term Borrowings 17,731 477 5.38 17,862 268 2.84
Long-term Debt 4,292 119 5.55
Total Interest-bearing
Liabilities $ 538,036 $11,365 4.22 % $535,906 $10,058 3.75 %
Liabilities
Noninterest-bearing
Liabilities:
Demand Deposits 70,086 59,980
Other Liabilities (2,065) 4,705
Stockholders' Equity 61,455 58,017
Total Liabilities and
Stockholders' Equity $667,512 $658,662
Net Interest Differential 4.20 % 4.13 %
Net Interest Earnings $14,861 $14,474
Net Yield on Interest-earning
Assets 4.77 % 4.65 %
</TABLE>
<PAGE>
TABLE III
A summary of the increases and decreases of the items included in the
Consolidated Statements of Income are shown below:
<TABLE>
<CAPTION>
Net Increases (Decreases)
Three Months Ended Six Months Ended
June 30, June 30,
1995 and 1994 1995 and 1994
(In Thousands of Dollars)
Amount Percent Amount Percent
<S> <C> <C> <C> <C>
INTEREST INCOME:
Interest and Fees on Loans $ 1,281 16.08 % $ 2,114 13.32 %
Federal Funds Sold 332 196.45 % 264 56.65 %
Money Market Deposits (9) N/A % (20) N/A %
Interest on Investments Held to
Maturity Nontaxable 549 55.29 % 127 5.35 %
Interest on Securities Held for
Sale, Taxable (961) (35.46)% (792) (16.43)%
Total Interest Income 1,192 10.06 % 1,693 7.19 %
INTEREST EXPENSE:
Demand Deposits 45 10.14 % 67 7.58 %
Savings Deposits (290) (19.66)% (613) (20.22) %
Large Denomination Certificates
of Deposits 112 20.00 % 173 15.89 %
Other Time Deposits 961 39.61 % 1,352 28.25 %
Short-term Debt 102 66.23 209 77.99%
Long-term Debt 82 N/A 119 N/A
Total Interest Expense 1,012 20.00 % 1,307 12.99 %
Net Interest Income 180 2.65 % 386 2.86 %
ADDITION TO ALLOWANCE FOR LOAN
LEASE LOSSES (29) (18.59) % 67 27.02 %
Net Interest Income After
Addition to Allowance for
Loan and Lease Losses 209 3.15 % 319 2.41 %
OTHER INCOME:
Service Charges on Deposit
Accounts 36 7.05 % 98 10.23 %
Trust Department Income 43 122.86 % 47 67.14 %
Other Service Charges,
Commissions and Fees 27 7.32 % 52 7.12 %
Other Operating Income 34 56.67 % 71 50.71 %
Security Gains (Losses) (123) N/A % (835) N/A %
Total Other Income 17 1.73 % (567) (21.98) %
OTHER EXPENSES:
Salaries 147 7.82 % 229 6.16 %
Employees Benefits (16) (3.10)% (62) (5.92) %
Occupancy Expenses (22) (10.14)% (24) (5.41) %
Furniture and Equipment
Expenses 43 17.27% 52 9.65 %
Other Operating Expenses 312 16.84% 463 12.90%
Total Other Expense 464 9.85% 658 7.05 %
Income Before Income Taxes (238) (8.20)% (906) (13.98) %
Applicable Income Taxes (9) (1.31)% (264) (16.01) %
NET INCOME $(229) (10.33)% $ (642) (13.29) %
</TABLE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION:
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Premier's non-bank subsidiaries, Premier Bank Services Corporation and
Professional Financial Services of Virginia, Inc. remain inactive.
Premier formed a new non-bank trust subsidiary, Premier Trust Company in
January 1995 which is now operating. In addition, Premier acquired the
former Dickenson-Buchanan Bank located in Clintwood, Virginia at year-
end 1994 using the pooling-of-interest method of accounting. Prior year
financial data reflects this purchase. Premier recorded six of the
seven branches purchased from Nationsbank, adding approximately
$105,000,000 in assets during the second quarter 1995.
EARNINGS PERFORMANCE
Net income for the first six months of 1995 was $4,190,000, a
$642,000 or 13.29% decrease over the $4,832,000 earned for the same
period in 1994 due largely to a decrease in security gains of $835,000.
One affiliate bank during the first quarter of 1994 disposed of bonds
backed by the failed Executive Life Insurance Company, which were in
default and had previously been written down, adding approximately
$513,000 in security gains; $339,000, net of the tax effect. On a per
share basis, net income for the first six months of 1995 decreased to
$0.84 compared to $0.97 for the same period in 1994, with 4,987,802
average shares outstanding for the six months ending June 30, 1995 and
1994, respectively.
NET INTEREST INCOME
Net interest income, before provision for loan losses for the six
months ended June 30, 1995, was $13,872,000, a $386,000, or 2.86%
increase from $13,486,000 recorded for the same period of 1994. The net
interest differential for this period (the difference between the tax-
equivalent yield on interest-bearing assets and the rate paid on
interest-bearing liabilities) increased 7 basis points to 4.20%. The
tax-equivalent yield on earning assets increased from 7.88% in 1994 to
8.42%, or 54 basis points in 1995 while the rate paid on interest-
bearing liabilities increased 47 basis points to 4.22%.
The net yield (fully taxable equivalent) on earning assets
increased 12 basis points in 1995 to 4.77% compared to 4.65% in 1994.
Yields on loans and fed funds sold increased 34 and 236 basis points
while the yield on taxable investment securities increased 24 basis
points and the yield on nontaxable remained the same. Average rates
paid on demand deposits remained the same while savings decreased 12
basis points. Rates on large denomination and other time deposit rates
increased 55, and 68 basis points, respectively. The rate paid on short-
term borrowings increased 254 basis points. Also, long-term debt was
outstanding in 1995 with and average rate of 5.55% that did not exist in
1994.
OTHER INCOME AND EXPENSES
Total other income decreased $567,000 or 21.98% to $2,013,000 due
largely to net security losses in 1995 of $153,000 compared to net
security gains of $682,000 in 1994. As mentioned previously, the
majority of the 1994 security gains was from a $513,000 gain by one
affiliate bank from the sale of bonds which were in default and had been
previously written down. Service charges on deposit accounts increased
by $98,000, or 10.23%, trust department income increased $47,000, and
other service charges commissions and fees increased $52,000. Other
operating income increased $71,000 largely due to an increase in gains
on sales of foreclosed properties of $21,000 and an increase in safe
deposit box income of $32,000.
Other expenses increased $658,000 or 7.05% over June 30, 1994.
Salaries increased 6.16%, or $229,000 and employee benefits decreased
$62,000 or 5.92%. The most significant changes in other operating
expenses were an increase in data processing fees of $156,000,
increased stationary and supplies expense of $87,000, accounting and
auditing expense of $81,000, and an increase in bank franchise tax of
$43,000. There was a substantial decrease of $307,000 in legal fees
between the first six months of 1995 when compared to the same period of
1994 following the settlement of a suit which had been pending and
accrued for in 1994. Also, due to the branch acquisitions, amortization
of goodwill increased $84,000 for the first six months of 1995 compared
to 1994. Occupancy and furniture and fixtures costs increased
$52,000 or 9.65%. Less significant increases and decreases account for
the difference.
INVESTMENTS, LOANS, AND DEPOSITS
Largely due to the purchase of six additional branches in the
second quarter 1995, net loans increased $23,480,000 or 6.51%,
investments increased $14,607,000 or 6.31%, fed funds sold increased
$38,764,000 or 224.85%, with an increase in total assets of $99,496,000
or 15.19% for the first six months of 1995. Demand deposits, interest-
bearing demand deposits, large denomination certificates and other time
deposits increased 17.22%, 16.05%, 22.96%, and 28.33%, respectively.
Savings decreased by 7.23% from December 1994. Short-term debt which
includes fed funds purchased, repurchase agreements and short-term
borrowings decreased $4,219,000 over year end 1994. Also, during the
second quarter 1995, the parent company borrowed $7,200,000 to provide
additional capital to two of its affiliates, thereby increasing long-
term debt by $7,000,000 over December 1994.
ALLOWANCE FOR LOAN AND LEASE LOSSES
The allowance for loan and lease losses on June 30, 1995 was
$5,849,000 compared to $5,844,000 at December 31, 1994, and $5,409,000
at June 30, 1994. The ratio of allowance for loan and lease losses to
total loans net of unearned income was 1.50% at June 30, 1995. Charge-
offs were $521,000 for the first six months of 1995 compared to $299,000
for the same period in 1994. Recoveries of $211,000 were booked in the
first six months of 1995; $234,000 in 1994. Management believes the
allowance is adequate at the June 30,1995 level, after making provisions
during the year of $315,000.
CAPITAL RESOURCES
Total stockholders equity or capital amounted to $67,756,000 at
June 30, 1995. The leverage ratio at June 30, 1995 was 7.74%.
LIQUIDITY AND INTEREST SENSITIVITY
Almost the entire deposit base is made up of core deposits with
only 8.43% of total deposits composed of certificates of deposit of
$100,000 and over. At June 30, 1995, federal funds and investment
securities maturing within one year amounted to $73,462,000, or 11.20%
of total deposits. In addition, $95,054,000 of investment securities or
14.49% of deposits, mature within the 1-5 year range.
The policy of Premier is to maintain the relationship between rate-
sensitive assets and rate-sensitive liabilities which will maximize
future profit levels, given existing expectations of interest rate
movements.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - None
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders -
None
Item 5. Other Information - None
Item 6. Exhibits and reports on Form 8-K
a) Exhibits - None
b) Form 8-K - None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
PREMIER BANKSHARES CORPORATION
Date: August 11, 1995 BY /s/ James R. Wheeling
James R. Wheeling,
President
Date: August 11, 1995 BY /s/ Ellen Simpson
Ellen Simpson, Secretary
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