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 March 31, 1997
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 (540) 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 March 31, 1997.
Common stock, $2 par value - 6,650,083 shares.
INDEX
Page
No.
Part I. Financial Information:
Item 1. Financial Statements
Consolidated Balance Sheets -
March 31, 1997 and December 31, 1996 3
Consolidated Statements of Income -
Three Months March 31, 1997 and 1996 4
Consolidated Statements of
Stockholders' Equity - Three Months
Ended March 31, 1997 and 1996 5
Consolidated Statements of Cash Flows
Three Months Ended March 31,
1997 and 1996 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 14-16
Part II. Other Information:
Item 1. Legal Proceedings 17
Item 2. Changes in Securities 17
Item 3. Defaults Upon Senior Securities 17
Item 4. Submission of Matters to a Vote of 17
Item 5. Security Holders Other Information 17
Item 6. Exhibits and Reports on Form 8-K 17
ITEM 1. FINANCIAL INFORMATION:
PREMIER BANKSHARES CORPORATION AND AFFILIATES
CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars)
<TABLE>
March 31, December 31,
1997 1996
<S> <C> <C>
ASSETS:
Cash and Due From Banks $ 26,544 $ 28,086
Securities Held to Maturity (Approximate
Market Value $28,850 in 1997;
$34,192 in 1996) 28,604 33,789
Securities Available for Sale (Amortized
Cost $151,505 in 1997) $158,896 in 1996) 148,679 157,306
Federal Funds Sold 15,281 9,130
Loans, Net of Unearned Income of $3,619 in
1997, $4,430 in 1996 and Allowance for
Loan Losses Of $5,576 in 1997 and
$5,713 in 1996 502,736 492,215
Bank Premises and Equipment 16,950 17,483
Other Assets 22,701 23,095
TOTAL ASSETS $ 761,495 $ 761,104
LIABILITIES:
Deposits:
Demand $ 82,247 82,013
Interest-bearing Demand 89,038 86,844
Savings 136,306 134,980
Large Denomination Certificates
of Deposit 56,157 51,972
Other Time 303,164 309,989
TOTAL DEPOSITS $ 666,912 $ 665,798
Short-term Debt 8,499 10,347
Other Liabilities 6,829 6,394
Long-term Debt
TOTAL LIABILITIES $ 682,240 $ 682,539
SHAREHOLDERS' EQUITY:
Capital Stock-Common-$2 Par
10,000,000 Authorized; 6,650,083
Shares Issued in 1997 and 1996 $ 13,300 $ 13,300
Surplus 18,696 18,696
Undivided Profits 49,154 47,646
Net Unrealized Gain (Loss) on Securities (1,895) (1,077)
TOTAL STOCKHOLDERS' EQUITY $ 79,255 $ 78,565
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 761,495 $ 761,104
</TABLE>
Notes to financial statements are an integral part of these
statements.
PREMIER BANKSHARES CORPORATION AND AFFILIATES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands of Dollars)
<TABLE>
Three Months Ended
March 31,
1997 1996
<S> <C> <C>
INTEREST INCOME:
Loans and Fees $ 11,721 $ 10,160
Federal Funds Sold 203 332
Securities Held to Maturity 933 1,008
Securities Held for Sale 1,636 2,692
Total Interest Income $ 14,493 $ 14,192
INTEREST EXPENSE:
Demand Deposits $ 507 $ 514
Savings Deposits 980 1,068
Large Denomination Certificates
of Deposit 757 738
Other Time Deposits 3,814 4,197
Short-term Debt 106 194
Total Interest Expense $ 6,164 $ 6,711
Net Interest Income $ 8,329 $ 7,481
ADDITION TO ALLOWANCE FOR LOAN
AND LEASE LOSSES 140 35
Net Interest Income After Addition
to Allowance for Loan and Lease Losses $ 8,189 $ 7,446
OTHER INCOME:
Service Charges on Deposit Accounts $ 669 $ 688
Trust Department Income 60 41
Other Service Changes, Commissions and Fees 403 510
Other Operating Income 165 110
Security Gains (Losses) 4 (34)
Total Other Income $ 1,301 $ 1,315
OTHER EXPENSES:
Salaries $ 2,384 $ 2,268
Employee Benefits 539 585
Occupancy Expenses 317 317
Furniture and Equipment Expenses 322 309
Other Operating Expenses 2,456 1,939
Total Other Expense $ 6,018 $ 5,418
Income Before Income Taxes $ 3,472 $ 3,343
Applicable Income Taxes 1,033 840
Net Income $ 2,439 $ 2,503
NET INCOME PER SHARE $ 0.37 $ 0.38
CASH DIVIDENDS PER SHARE $ 0.14 $ 0.12
</TABLE>
The notes to financial statements are an integral part of these statements.
PREMIER BANKSHARES CORPORATION AND AFFILIATES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In Thousands of Dollars)
<TABLE>
Three Months Ended
March 31,
1997 1996
<S> <C> <C>
Balance at Beginning of Year $ 78,565 $ 73,223
Net Income 2,439 2,503
Cash Dividends Declared (931) (798)
Other (7)
Change in Valuation Allowance for (818) (1,490)
Securities
Balance at End of Period $ 79,255 $ 73,431
</TABLE>
The notes to financial statements are an integral part of these
statements.
PREMIER BANKSHARES CORPORATION AND AFFILIATES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of Dollars)
<TABLE>
Three Months Ended
March 31,
1997 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 2,439 $ 2,503
Adjustments to Reconcile Net Income to Cash
Provided by Operating Activities:
Depreciation and Amortization of Premises
and Equipment 304 299
Provision for Loan Losses 140 35
Amortization of:
Goodwill and Intangibles 278 249
Premiums and Accretion of Discounts, Net 211 264
Sale of Originated Loans 325
Security (Gains) Losses (4) 34
Decrease (Increase) in Other Assets 118 (378)
Increase (Decrease) in Other Liabilities 435 (2,449)
Net Cash Provided by Operating Activities $ 4,256 $ 557
CASH FLOWS FROM INVESTING ACTIVITIES:
Net (Incrase) Decrease in Temporary Investments $ (6,151) $ 8,901
Sale of Securities Available for Sale 1,475 8,128
Maturities of Securities Available for Sale 10,125 (28,464)
Purchases of Securities Available for Sale (3,981) 9,374
Maturities of Securities Held to Maturity 5,168 1,794
Purchase of Securities Held to Maturity
Net Increase in Customer Loans (10,986) (20,448)
Premises and Equipment Expenditures (83) (230)
Sales of Premises and Equipment 310 20
Net Cash (Used in) Provided by Investing
Activities $ (4,123) $(7,867)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Increase (Decrease) in Demand Deposits,
Now and Savings Accounts $ 3,784 $ (489)
Net (Decrease) Increase in Time Deposits (2,640) 3,675
Borrowings of Long-term Debt
Payments on Long-term Debt
Net Decrease in Short-term Debt (1,848) (503)
Cash Dividends Paid (931) (797)
Net Cash Provided by (Used in) Financing
Activities $ (1,665) $ 1,886
Net Increase in Cash and Due from Banks $ (1,542) $ (5,424)
CASH AND DUE FROM BANKS:
Beginning 28,086 28,957
Ending $ 26,544 $ 23,533
Supplemental Disclosures of Cash
Flow Information:
Cash Payments for Interest Paid:
To Depositors $ 6,119 $ 4,598
On Federal Funds Purchased and Securities Sold
Under Agreement to Repurchase $ 107 $ 194
Income Taxes $ 1,047 $ 124
</TABLE>
The notes to financial statements are an integral part of these
statements.
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 March 31, 1997, and December 31,
1996, and the results of operations and cash flows for the three months
ended March 31, 1997 and 1996.
The results of operations for the three months ended March 31, 1997, 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>
March 31, 1997
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
(In Thousands of Dollars)
<S> <C> <C> <C> <C>
U.S. Treasury Securities $ $ $ $
U.S. Government Agencies and
Corporations 28,064 398 152 28,850
Obligations of States and
Political Subdivisions
Other Debt Securities
$ 28,064 $ 398 $ 152 $ 28,850
</TABLE>
<TABLE>
December 31, 1996
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
(In Thousands of Dollars)
<S> <C> <C> <C> <C>
U.S. Treasury Securities $ 100 2 98
U.S. Government Agencies and
Corporations 1,950 1 18 1,933
Obligations of States and
Political Subdivisions 30,412 607 200 30,819
Other Debt Securities 1,327 17 2 1,342
$ 33,789 625 222 34,192
</TABLE>
2. Investment Securities (continued)
Amortized cost and carrying amount (estimated fair value) of securities
available for sale are summarized as follows:
<TABLE>
March 31, 1997
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
(In Thousands of Dollars)
<S> <C> <C> <C> <C>
U.S. Treasury Securities $ 6,052 $ $ 45 $ 6,007
U.S. Government Agencies and
Corporations 41,873 909 40,964
Obligations of States and
Political Subdivisions 42,223 592 92 42,723
Corporate Securities 1,032 5 1,027
Mortgage-backed Securities 52,086 2,168 49,918
Marketable Equity 1,596 193 1,403
Other Debt Securities 6,643 17 23 6,637
$ 151,505 $ 609 $ 3,435 $ 143,679
</TABLE>
<TABLE>
March 31, 1996
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
(In Thousands of Dollars)
<S> <C> <C> <C> <C>
U.S. Treasury Securities $ 6,947 $ 19 $ 5 $ 6,961
U.S. Government Agencies and
Corporations 43,074 5 561 42,518
Obligations of States
and Political Subdivisions 42,590 809 156 43,243
Corporate Securities 2,282 1 5 2,278
Mortgage-backed Securities 58,546 38 1,591 56,993
Marketable Equity 2,281 7 171 2,117
Other Debt Securities 3,176 20 3,196
$ 158,896 $ 899 $ 2,489 $ 157,306
</TABLE>
<TABLE>
Three Months Ended
March 31,
1996 1995
(In Thousands of Dollars)
<S> <C> <C>
Gross proceeds from sales of securities $ 1,475 $ 8,128
Gross Gains on Sale of Securities $ 4 $ 28
Gross Losses on Sale of Securities (62)
Net Securities Losses $ 4 $ (34)
</TABLE>
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>
March 31, December 31,
1997 1996
(In Thousands of Dollars)
<S> <C> <C>
Commercial, Financial, and
Agricultural $ 96,138 $ 159,572
Real Estate - Construction 19,452 17,321
Real Estate - Mortgage 295,785 219,342
Loans to Individuals 94,718 99,807
Others 5,838 6,316
511,931 502,358
Less Unearned Income (3,619) (4,430)
508,312 497,928
Less Allowance for Loan and Lease Losses (5,576) (5,713)
$ 502,736 $ 492,215
</TABLE>
The following schedule summarizes the changes in the allowance
for loan and lease losses:
<TABLE>
March 31, March 31, December 31,
1997 1996 1996
(In Thousands of Dollars)
<S> <C> <C> <C>
Balance, Beginning $ 5,713 $ 5,430 $ 5,430
Provision Charged Against
Income 140 35 880
Changes Incident to Merger 150
Recoveries 42 61 323
Loans Charged Off (319) (250) (1,070)
Balance, Ending $ 5,576 $ 5,276 $ 5,713
</TABLE>
Nonperforming assets consist of the following:
<TABLE>
March 31, December 31,
1997 1996
(In Thousands of Dollars)
<S> <C> <C>
Nonaccrual Loans $ 1,443 $ 888
Restructured Loans 1,033 1,078
Nonperforming Loans 2,476 1,966
Foreclosed Properties 684 718
Nonperforming Assets $ 3,160 $ 2,684
</TABLE>
Total loans past due 90 days or more and still accruing were
$2,701 on March 31, 1997 and $ 2,520 on December 31, 1996.
PREMIER BANKSHARES CORPORATION AND AFFILIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
4. Short-term Debt
Short-term debt consists of the following:
March 31, December 31,
1997 1996
(In Thousands of Dollars)
Federal Funds Purchased and Securities Sold
Under Agreements to Repurchase $ 8,499 $ 10,347
Total Short-term Debt $ 8,499 $ 10,347
5. Long-term Debt
There was no long-term debt outstanding as of March 31, 1997.
6. Earnings Per Share
Earnings per share are computed on the weighted average common shares
outstanding of 6,650,083 for the three months ended March 31, 1997
and 1996, respectively.
7. Capital Requirements
A comparison of the Company's capital as of March 31, 1997 with the
minimum requirements is presented below.
Minimum
Actual Requirements
Tier I Risk-based Capital 14.30 % 4.00 %
Total Risk-based Capital 15.44 % 8.00 %
Leverage Ratio 9.34 % 4.00 %
TABLE I
Consolidated Selected Financial Data
(Amounts in thousands, except per share data)
<TABLE>
1997
<S> <C>
Interest Income $ 14,493
Interest Expense 6,164
Net Interest Income 8,329
Provision for Loan Losses 140
Net Income 2,439
Per Share Data:
Net Income 0.37
Cash Dividends Paid 0.14
Total Average Stockholders' Equity $ 79,915
Total Average Assets $ 760,535
Ratios:
Average Stockholders' Equity
to Total Average Assets 10.51 %
Return on Average Equity 12.21 %
Return on Average Assets 1.28 %
</TABLE>
<TABLE>
1996
Fourth Third Second First
Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C>
Interest Income $ 14,319 $ 14,366 $ 14,217 $ 14,192
Interest Expense 6,164 6,298 6,496 6,711
Net Interest Income 8,155 8,068 7,721 7,481
Provision for Loan Losses 505 225 115 35
Net Income 2,298 2,700 2,650 2,503
Per Share Data:
Net Income 0.35 0.41 0.39 0.38
Cash Dividends Paid 0.12 0.12 0.12 0.12
Total Average
Stockholders' Equity 78,344 75,148 $73,879 73,987
Total Average Assets $ 747,757 $ 744,853 $ $758,564 $ 759,329
Ratios:
Average Stockholders' Equity
to Total Average Assets 10.48 % 10.09 % 9.74 % 9.74 %
Return on Aververage Equity 11.73 % 14.37 % 14.35 % 13.53 %
Return on Average Assets 1.23 % 1.45 % 1.40 % 1.32 %
</TABLE>
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 three
months ended March 31, 1997 and 1996. Nonaccruing loans are included in the
total loans.
<TABLE>
1997 1996
Average Interest Yield/ Average Interest Yield/
Balance And Fees Rate Balance And Fees Rate
(In Thousands of Dollars) (In Thousands of Dollars)
<S> <C> <C> <C> <C> <C> <C>
Assets
Interest-earning Assets:
Loans and Leases $502,546 $ 11,759 9.36 %$413,270 $ 10,160 9.83%
Taxable Investment
Securities 114,586 1,689 5.90 185,591 2,692 5.80
Nontaxable Investment
Securities 69,511 1,333 7.67 77,871 1,527 7.84
Interest-bearing Deposits
with Other Banks Federal
Funds Sold and Securities
Purchased Under Agreements
to Resell 15,761 203 5.15 23,868 332 5.56
Total Interest-earning
Assets $702,404 $ 14,984 8.53 %$700,600 $ 14,711 8.40%
Noninterest-earning Assets:
Cash and Noninterest-
bearing Deposits $ 24,011 $ 23,343
Premises and
Equipment, Net 17,380 17,194
Other Assets 22,440 23,597
Less Allowance for Loan
and Lease Losses (5,700) (5,405)
Total Assets $760,535 $759,329
Liabilities and Stockholders' Equity
Interest-bearing Liabilities:
Demand Deposits $ 87,576 $ 507 2.32 %$ 83,140 $ 514 2.47%
Savings Deposits 134,948 980 2.90 140,507 1,068 3.04
Large Denomination Certificates
of Deposit 55,190 757 5.49 53,813 738 5.49
Other Time Deposits 305,512 3,814 4.99 310,963 4,197 5.40
Short-term Borrowings 9,948 106 4.26 16,290 194 4.76
Long-term Debt
Total Interest-bearing
Liabilities $593,174 $ 6,164 4.16 %$604,713 $ 6,711 4.44%
Noninterest-bearing Liabilities:
Demand Deposits 81,033 73,519
Other Liabilities 6,413 7,110
Stockholders' Equity 79,915 73,987
Total Liabilities and
Stockholders' Equity $760,535 $759,329
Net Interest Differential 4.37 % 3.96%
Net Interest Earnings $ 8,820 $ 8,000
Net Yield on Interest-earning Assets 5.02 % 4.57%
</TABLE>
TABLE III
A summary of the increases and decreases of the items included in the
Consolidated Statements of Income are shown below:
<TABLE>
Net Increases (Decreases)
Three Months Ended
March 31,
1997 and 1996
(In Thousands of Dollars)
Amount Percent
<S> <C> <C>
INTEREST INCOME:
Interest and Fees on Loans $ 1,561 15.36 %
Federal Funds Sold (129) (38.86)
Interest on Investments Held to
Maturity Nontaxable (75) (7.44)
Interest on Securities Held for
Sale, Taxable (1,056) (39.23)
Total Interest Income 301 2.12
INTEREST EXPENSE:
Demand Deposits (7) (1.36)
Savings Deposits (88) (8.24)
Large Denomination Certificates
of Deposits 19 2.57
Other Time Deposits (383) (9.13)
Short-term Debt (88) (45.36)
Long-term Debt 0 0
Total Interest Expense (547) (8.15)
Net Interest Income 848 11.34
ADDITION TO ALLOWANCE FOR LOAN
LEASE LOSSES 105 300.00
Net Interest Income After
Addition to Allowance for
Loan and Lease Losses 743 9.98
OTHER INCOME:
Service Charges on Deposit Accounts (19) (2.76)
Trust Department Income 19 46.34
Other Service Charges,
Commissions and Fees (107) (20.98)
Other Operating Income 55 50.00
Security Gains (Losses) 38 N/A
Total Other Income (14) (1.06)
OTHER EXPENSES:
Salaries 116 5.11
Employees Benefits (46) (7.86)
Occupancy Expenses 0 0
Furniture and Equipment Expenses 13 4.21
Other Operating Expenses 517 26.66
Total Other Expense 600 11.07
Income Before Income Taxes 129 3.86
Applicable Income Taxes 193 22.98
NET INCOME $ (64) (2.56) %
</TABLE>
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 and began operating a new non-bank trust subsidiary,
Premier Trust Company in January 1995. 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 acquisition. Premier recorded seven
branches purchased from Nationsbank, adding approximately $116,000,000
in assets during the first three quarters 1995.
EARNINGS PERFORMANCE
Net income for the first three months of 1997 was $2,439,000, a
$64,000, or 2.56% decrease over the $2,503,000 earned for the same
period in 1996. This decrease was largely the result of two
nonrecurring expenses (exercise of director and officer stock options
and loss on sale of former bank premises, explained below) along with
increased provisions for loan losses which, together, offset an increase
in net interest income. Other less significant increases and decreases
accounted for the difference. On a per share basis, net income for the
first three months of 1997 decreased to $0.37 compared to $0.38 for the
same period in 1996. There were 6,650,083 average shares outstanding
for both the three months ending March 31, 1997 and 1996, respectively.
NET INTEREST INCOME
Net interest income, before provision for loan losses for the three
months ended March 31, 1997 was $8,329,000 compared to $7,481,000 in
1996, an increase of $848,000, or 11.34%. 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 41 basis points for the three months ended March
31, 1997 to 4.37% compared to the same period in 1996. The tax-
equivalent yield on earning assets increased from 8.40% in 1996 to
8.53%, or 13 basis points in 1997 while the rate paid on interest-
bearing liabilities decreased 28 basis points to 4.16% compared to
4.44% in 1996.
The net yield (fully taxable equivalent) on earning assets
increased 45 basis points in 1997 to 5.02% compared to 4.57% in 1996.
Yields on loans decreased 47 basis points to 9.36% with the average
balance increasing $89,276,000 over 1996. The average yield on taxable
investment securities increased 10 basis points while the yield on
nontaxable securities decreased 17 basis points; the average balances
decreased $71,005,000 and $8,360,000, respectively. The average rate
earned on fed funds dropped 41 basis points in 1997 when compared to
1996, while the average balance decreased $8,107,000. The average rates
paid on demand deposits and savings decreased by 15 and 14 basis points,
respectively. Rates on large denomination deposits remained the same
while other time deposit rates decreased 41 basis points. The rate paid
on short-term borrowings decreased 50 basis points. Premier had no long-
term debt in 1997 or 1996. The average balance of interest-bearing
liabilities decreased $11,539,000 over March 1996; average interest
earning assets increased only $1,804,000.
OTHER INCOME AND EXPENSES
Total other income decreased only $14,000 for the period, or 1.06%,
to $1,301,000. Service charges on deposit accounts decreased $19,000
(2.76%), trust department income increased $19,000 (46.34%), other
service charges commissions and fees decreased $107,000, or 20.98% (due
primarily to origination fees on the large loan volume in 1996), and
other operating income increased $55,000 (50.00%). Net security gains
for the three months of 1997 compared to security losses in 1996 of
$34,000 combine to make a net increase of $38,000 when comparing March
1997 to 1996.
Other expenses increased $600,000 or 11.07% when compared to last
year. Of this increase, salaries increased $116,000 (5.11%) for the
three months of 1997 while employee benefits decreased $46,000.
Occupancy expenses remained the same while furniture and equipment
expenses increased only slightly, $13,000, or 4.21%. Other operating
expenses increased $517,000, and as mentioned earlier, two items were
considered nonrecurring and were of significance. First, director and
officer stock options were exercised in the amount of $415,000. Second,
one subsidiary, Premier Bank-Central, N.A. sold former bank premises it
occupied in Big Stone Gap, Virginia, booking a loss on the sale of
property of $123,000. Less significant increases and decreases account
for the difference.
INVESTMENTS, LOANS, AND DEPOSITS
Net loans increased $10,521,000, or 2.14%, while investments
decreased $13,812,000 (7.23%), fed funds sold increased $6,151,000 and
cash and due from banks decreased $1,542,000 from December 1996. Total
assets increased only $391,000. Total deposits increased $1,114,000.
Demand deposit accounts, interest-bearing demand, savings, and large
denomination certificates increased $234,000, $2,194,000, $1,326,000 and
$4,185,000, respectively. Other time deposits decreased $6,825,000.from
December 1996. Short-term debt, which includes fed funds purchased and
repurchase agreements, decreased $1,848,000 over year end 1996.
ALLOWANCE FOR LOAN AND LEASE LOSSES
The allowance for loan and lease losses on March 31, 1997 was
$5,576,000 compared to $5,713,000 at December 31, 1996, and $5,276,000
at March 31, 1996. The ratio of allowance for loan and lease losses to
total loans net of unearned income was 1.09% at March 31, 1997. Charge-
offs were $319,000 for the first three months of 1997 compared to
$250,000 for the same period in 1996. Recoveries of $42,000 were booked
in the first three months of 1997; $61,000 in 1996. Management believes
the allowance is adequate at the March 31,1997 level, with year to date
provisions made of $140,000.
CAPITAL RESOURCES
Total stockholders equity or capital amounted to $79,255,000 at
March 31, 1997. The leverage ratio at March 31, 1997 was 9.34%.
LIQUIDITY AND INTEREST SENSITIVITY
Premier's cash and cash equivalent, defined as cash and due from
banks, is a product of its operating, investing and financing
activities. Cash from operations for the three months ended March 31,
1997 amounted to $4,246,000 compared to $557,000 for the same period
last year. The difference being caused primarily by increases and
decreases in other assets and other liabilities. The net cash used in
financing activities of $1,665,000 for 1997 reflects a modest increase
in deposits being offset by a decrease in short-term debt. The net cash
used by Investing Activities of $4,123,000 during 1997 continues the
trend of net funds used in this activity and reflects the net decrease
in investments over increases in loans. In 1997, Management chose the
liquidation of selected investments rather than a more aggressive
pursuit of higher cost deposits.
LIQUIDITY AND INTEREST SENSITIVITY (Continued)
Almost the entire deposit base is made up of core deposits with
only 8.42% of total deposits composed of certificates of deposit of
$100,000 and over. At March 31, 1997, federal funds and investment
securities maturing within one year amounted to $31,796,000,or 4.77% of
total deposits. In addition, $72,691,000 of investment securities or 10.90%
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 of its behalf by the
undersigned thereunto duly authorized.
PREMIER BANKSHARES CORPORATION
Date: March 15, 1996 BY /s/ James R. Wheeling
James R. Wheeling,President
Date: March 15, 1996 BY /s/ Ellen Simpson
Ellen Simpson, Secretary
(Accounting Officer)
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