SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934 [Fee Required]
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934 [No Fee Required]
For the fiscal year ended December 31, 1994
Commission file number 0-16706
Allegiance Banc Corporation
(Exact name of registrant as specified in its charter)
Delaware
52-1494123
(State or other jurisdiction of (IRS
employer identification number)
incorporation or organization)
4719 Hampden Lane, Bethesda, MD 20814
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (301)
656-5300
Securities registered pursuant to section 12(b) of the Act:
None
Securities registered pursuant to section 12(g) of the Act:
Common Stock, par value $1.00 per share
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 Items 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. [ ]
As of January 31, 1995 there were 1,695,863 shares of
registrant's voting common stock outstanding. The aggregate
market value of common stock held by non-affiliates as of such
date was $ 9,440,167.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's definitive proxy statement for its
Annual Meeting of Stockholders to be held on May 9, 1995, are
incorporated by reference in response to certain items contained
in Part III of this Report.
Part I
Item 1. Business
Allegiance Banc Corporation, Inc. (the "Company") was
incorporated in Delaware on October 27, 1986 under the name
"Montgomery Bancorp, Inc.," for the purpose of becoming a bank
holding company. On March 16, 1987, the Company received
approval from the Federal Reserve Board (the "FRB") to become
a one bank holding company by acquiring control of Montgomery
National Bank ("Montgomery"). On March 7, 1990, the Company
received approval from the Federal Reserve Board to acquire
control of Prince George's National Bank ("Prince George's").
On February 11 and 12, 1992, the Boards of Directors of
Montgomery National Bank and Prince George's National Bank each
approved in principle the merger of the two subsidiaries into
a single bank. On February 26, 1992, the Board of Directors of
the Company ratified the proposed merger agreement. On December
10, 1992 final approval for the merger was received from bank
regulators and the merger was effected on that date, with the
new name of Allegiance Bank, N.A.("the Bank").
With the prior approval of the Federal Reserve Board, a
bank holding company may engage in non-banking activities
closely related to the business of banking, such as the making
and servicing of consumer finance loans made by other companies,
credit card issuance, mortgage financing, and commercial
financing. Further, the Federal Reserve Board presently takes
the position that among various other activities, giving
investment or financial advice, leasing of personal or real
property, and providing data processing and bank courier
services are activities so closely related to the business of
banking as to be permissible to bank holding companies. In
addition, the Federal Reserve Board permits bank holding
companies to form subsidiaries which may invest, subject to
certain limitations, in firms that engage in venture capital
activities. Although the Company does not presently engage in
any of the aforementioned activities, the Company may seek
approvals to do so, if favorable opportunities are presented in
the future.
The Company was initially capitalized with $8,000,000 from
an offering of 800,000 shares of common stock that was fully
subscribed on April 1, 1987. On June 15, 1987, the Company
purchased 600,000 shares, par value $5.00, of the common stock
of Montgomery. The remaining $2,000,000 of the proceeds of the
initial offering was retained in the Company until December 24,
1990 when the Company purchased an additional 75,000 shares of
the common stock of Montgomery for $750,000. On September 5,
1991 and December 31, 1991, the Company invested $350,000 and
$300,000 in Montgomery National Bank, respectively. These
transactions were effected as transfers to Montgomery's surplus
account. On January 3, 1989, 200,000 new shares of common stock
were issued as a 5 for 4 stock split effected in the form of a
stock dividend bringing the total shares outstanding to
1,000,000. On September 13, 1989, the Company offered an
additional 600,000 shares at $10.00 per share. The purpose of
this offering was to raise at least $4,000,000 in capital to be
used to form a new bank, Prince George's, which would be wholly
owned by the Company. The offering was concluded on December
8, 1989, after the Company received and elected to accept
subscriptions for 410,000 shares of stock representing
$4,100,000. Of this amount, $4,000,000 was used to capitalize
Prince George's and $100,000 to offset offering expenses and
other corporate purposes. The Company had 1,410,000 shares
outstanding.
On June 15, 1994, the Company issued a 20% dividend as a
result of a stock split. This resulted in 1,695,750 shares
outstanding after the split. The number of shares authorized was
also increased from 2,500,000 to 10,000,000 at the time of the
stock split.
Business of the Banks
Montgomery was granted permission by the Office of the
Comptroller of the Currency (the "OCC") to commence business on
June 15, 1987. It operated out of its main office location,
4719 Hampden Lane, Bethesda, Maryland. On November 18, 1987,
Montgomery's first branch commenced business at 838-C Rockville
Pike, Rockville, Maryland. On February 27, 1989, a second
branch commenced business at 2541 Ennalls Avenue, Wheaton,
Maryland.
Prince George's was granted permission by the OCC to
commence business on March 15, 1990. It operated out of its
main office location, 8401 Corporate Drive, Landover, Maryland.
On June 15, 1991, its first branch commenced business at 10533
Baltimore Boulevard, Beltsville, Maryland.
Montgomery National and Prince George's were given approval
by the OCC to merge on December 10, 1992. The name of the
resulting bank is Allegiance Bank, N.A.(the Bank). Allegiance
Bank, N.A. maintains its headquarters at it's main office
location at 4719 Hampden Lane, Bethesda, Maryland. It maintains
five other branches in Beltsville, Gaithersburg, Landover,
Rockville and Wheaton. At December 31, 1994, the Bank had 56
full-time employees, capital accounts of $9,677,795, deposits
of $93,208,187 and total assets of $105,521,135.
A. Market Areas
The Banks were formed to service the needs of the small to
medium sized businesses and professionals in Montgomery and
Prince George's Counties, Maryland while providing quality
service to consumers within the primary service areas of each
Bank. Since the merger of Montgomery and Prince George's,
Allegiance Bank, N.A. continues to provide the same services in
the same area.
The Bank has designated two primary service areas, one of
which is in southern Montgomery County, bordered on the North
by Briggs Chaney, Norbeck, Travilah, Darnestown and Gude roads.
It is bordered on the South by the District of Columbia and the
Potomac River. It is bordered on the East by Prince George's
County. It is bordered on the West by Piney Meetinghouse Road
and the Potomac River. Included within this service area are the
communities of Bethesda, Rockville, Wheaton, Kensington, Garrett
Park, Cabin John, Silver Spring and Potomac.
The other primary service area is in northern Prince
George's County and is bordered on the North by Howard County,
on the South by Route 4 (Pennsylvania Avenue) on the East by
State Route 301 and on the West by Montgomery County and the
District of Columbia. Included within this service area are the
communities of Landover, Lanham, Greenbelt, College Park,
Beltsville, Capitol Heights, Laurel, Bowie, Hyattsville,
Riverdale and Upper Marlboro. All of these communities are
considered potential branching opportunities.
The Bank, while attracting some loan and deposit business
from outside its service areas, continued to concentrate
marketing and business development efforts within its primary
areas. Growth has come from the areas in lower Montgomery
County accessible to Bethesda, Rockville and Wheaton and also
from the Landover/Lanham area, the Washington Business Park, and
the Ardwick-Ardmore area near the Landover branch, and from
Beltsville and Laurel, near the Beltsville branch.
As resources and growth patterns permit, the Bank will seek
to extend its services to other areas of the two counties. The
Directors believe that this pattern of growth will best satisfy
the Company objectives of servicing its target market, community
businesses and professionals.
B. Description of Services
The Bank offers full commercial banking services to its
business and professional clients as well as complete consumer
banking services to individuals living and/or working in its
service areas.
The loan portfolio consists primarily of business loans
with variable rates and/or short maturities, where the cash flow
of the borrower is the principal source of debt service with a
secondary emphasis on collateral. Real estate loans have been
granted for commercial and residential purposes, structured
using variable rates, short (three to five year) maturities
and/or fifteen year maturities. Consumer loans have been made
on the traditional installment basis for a variety of purposes.
In general, the following credit services are offered:
1) Commercial loans for business purposes including
working capital, equipment purchases, real estate, lines of
credit, and government contract financing. Asset based lending,
accounts receivable and inventory are available on a selective
basis.
2) Real estate loans for business and investment purposes.
Residential first mortgages for extended terms are an exception.
3) Traditional general purpose consumer installment loans
including automobile and personal loans. In addition, the Bank
offers personal lines of credit and equity lines of credit.
By loan type, the portfolio is weighted toward the real
estate (53.4%) and commercial (33.1%) sectors, with loans to
individuals accounting for the remaining 13.5% of outstanding
loan balances at 12/31/94. The trend is decidedly expansive for
real estate credits, with loans secured by various types of real
estate having grown by 46.4% in 1994. Conversely, commercial
loans decreased by 2.8% over the same period.
Industry concentrations of business related credits
include: companies operating and managing income producing real
estate (48.8%), retailers (7.4%), professional and consultant
services (2.7%), health care (2.9%), subcontractors (2.5%) and
publishers/printers (2.6%).
Collateral mix follows the portfolio concentration mix,
with orientation toward real estate secured credits that
constitute 62.7% of the total portfolio (53% as priority liens,
with the remaining 9.7% as subordinate liens).
The potential risks associated with the Bank's loan
portfolio are generally associated with economic influences
within the geographic market served. The greater Washington
D.C. market, was impacted greatly by the recent recession.
Recovery has been sluggish, due to the slow return of real
estate values. Improvements in the regional economy are
occurring, with retail properties being absorbed reasonably
well, as are office properties in most areas. However, certain
areas continue to reflect serious problems, such as the office
market in Northern Virginia as well as the resale market for
homes in the range of $300 thousand and above.
The Bank's underwriting standards are conservative, with
typically high coverage of debt service and low loan-to-value
ratios. Bank policy requires a loan-to-value ratio of 75% for
real estate used to secure loans considerably more conservative
than that required by regulators or as seen at competitive
banks. The Bank is equally as conservative in it's loan-to-value
requirements for other types of loans.
Deposit services include business and personal checking
accounts, NOW accounts, and a tiered savings/Money Market
Account. Certificates of deposits are offered using a tiered
rate structure and various maturities. The acceptance of
brokered deposits is not a part of current strategy. An IRA
program is also offered.
Other services for business accounts include cash
management services such as sweep accounts, account
reconciliation, credit card depository, and Automated Clearing
House origination. An after-hours depository and ATM service
is available.
C. Competition
In both Montgomery and Prince George's Counties, and in the
Washington, D.C. metropolitan area generally, competition is
exceptionally keen from large banking institutions headquartered
locally as well as in other regions of the country. In
addition, the Bank competes with strong savings and loan
associations, credit unions, mortgage companies, and others
providing financial services. Among the advantages that many
of these institutions have over the Bank is their ability to
finance extensive advertising campaigns and to directly offer
certain services, such as international banking, trust services
and sales of mutual funds, which are not offered directly by the
Bank. Further, the greater capitalization of the larger
institutions allows for substantially higher lending limits than
those of the Bank.
D. Supervision and Regulation
The Company. The Company is a bank holding company within
the meaning of the Bank Holding Company Act of 1956, as amended
(the "Holding Company Act") and is registered as such with, and
subject to supervision by, the Federal Reserve Board (FRB). The
FRB may make examinations of the Company and has the authority
to regulate certain bank holding company debt.
The Holding Company Act requires a bank holding company to
obtain the prior approval of the FRB before acquiring ownership
or control of more than 5% of the voting shares of, or
substantially all of the assets of, a holding company or a bank.
Under the Holding Company Act, it is impermissible for a bank
holding company to acquire ownership or control of any of the
voting shares of an out-of-state bank, unless applicable state
laws also specifically authorize such an acquisition. The
Holding Company Act also prohibits a bank holding company, with
certain exceptions, from engaging in or acquiring direct or
indirect control of more than 5% of the voting shares of any
company engaged in non-banking activities. A principal
exception to this latter prohibition, however, is that a bank
holding company may be permitted by the FRB, following notice
and determinations by the FRB and state banking authorities that
the proposed activity is in the public interest, to engage in
non-banking activities that are closely related to banking or
to managing or controlling banks. The Company does not
presently engage, nor does it have any immediate plans to
engage, in any non-banking activities which bank holding
companies are permitted to perform. The Company may seek
approvals to do so, however, if favorable opportunities are
presented in the future.
Every bank holding company is required to file with the FRB
an annual report and such additional information as the FRB may
require pursuant to the Holding Company Act. The FRB may also
make examinations of a bank holding company and any or all of
its subsidiaries.
The Holding Company Act prohibits a bank holding company
and its subsidiaries from engaging in certain tying arrangements
in connection with any extension or provision of credit, sale
or lease of property or furnishing of services. In addition,
under federal law, a bank holding company is deemed to be an
"affiliate" of its subsidiary banks, and, as such, the bank
subsidiaries are subject to statutory limitations in extending
credit to or making investments in their parent holding company,
and in accepting the parent holding company's securities or
other obligations as collateral for any advances made by such
banking subsidiaries to it or any other entity or person.
The FRB has approved capital guidelines which require bank
holding companies to maintain a total capital to risk-weighted
assets ratio of at least 8% and are substantially similar to the
requirements adopted by the Comptroller of the Currency for
national banks. See Item 7, Management's Discussion and
Analysis.
The Company is subject to the reporting requirements of
Section 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), which obligate the Company to file
periodic reports including Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
The Company also is subject to the proxy rules promulgated by
the Securities and Exchange Commission under Section 14(a) of
the Exchange Act and to various other regulations thereunder.
As a Delaware corporation, the Company is subject to
Delaware corporate law with respect to various matters,
including the payments of dividends and shareholder rights
issues.
The Bank. The Bank is subject to regulation, supervision
and regular examination by the Comptroller of the Currency and
to regulations of the FDIC. The Bank is a member of the Federal
Reserve System, and, as such, is subject to certain provisions
of the Federal Reserve Act and regulations issued by the Board
of Governors. The Bank is also subject to applicable provisions
of Maryland law, insofar as they do not conflict with or are not
preempted by federal law. The regulations of these various
agencies govern most aspects of the Bank's' business, including
setting required reserves against deposits, loans, investments,
mergers and acquisitions, borrowing, dividends and location and
number of branch offices.
The deposits of the Bank are insured by the FDIC to at
least $100,000 per depositor. The Bank pays a semiannual
statutory assessment and is subject to the rules and regulations
of the FDIC in exchange for federal deposit insurance
protection.
Supervision, regulation and examination of the Bank by bank
regulatory authorities are intended primarily for the protection
of depositors rather than for holders of the Company's
stock.
On January 22, 1992, Montgomery, now Allegiance Bank,
entered into an Agreement (the "Agreement") with the Comptroller
of the Currency pursuant to which the Bank was obligated to take
certain actions to remedy various matters raised by the
Comptroller in a report of examination of Montgomery dated May
31, 1991.
On April 27, 1993 the Bank signed a Memorandum of
Understanding with the Comptroller of the Currency and the
Agreement was terminated. The Memorandum requires the Bank to
operate in compliance with certain articles of the Memorandum
and is a lesser administrative action than the Agreement.
On April 10, 1994 the Bank received formal notice from the
Office of the Comptroller of the Currency that the Memorandum
of Understanding had been lifted.
The FDIC Improvement Act of 1991 grants significant new
authority to federal bank agencies over insured banks and their
holding companies. Banks or bank holding companies which are
undercapitalized and either have not timely approved a capital
plan or have failed to implement the plan become subject to
extraordinary powers pursuant to which the agencies may close
the bank, restrict its growth, force its sale, restrict interest
rates paid on deposits, and dismiss directors or senior
executive officers. Each agency is directed to prescribe
standards relating to internal controls and systems, loan
documentation, credit underwriting, interest rate exposure,
asset growth, compensation, fees and benefits, and such other
operational and managerial standards as the agency determines
to be appropriate. The agencies also are required to adopt
standards relating to asset quality, earnings, valuation and
compensation. Banks or bank holding companies which do not meet
such standards may be subject to restrictions and consequences
comparable to those which apply to undercapitalized banks and
bank holding companies. Authority to appoint a conservator or
receiver for a national bank is substantially broadened to
include grounds such as substantial dissipation of assets or
earnings due to violations of law or regulation or due to any
unsafe or unsound practices, an unsafe or unsound condition, and
certain violations of law or regulation likely to weaken the
institution's condition. The legislation also required bank
holding companies to guarantee compliance with a required
capital plan for the bank subsidiary; the liability under such
guarantee shall not exceed the lesser of (i) 5% of the bank's
total assets or (ii) the amount necessary to bring the bank into
compliance with capital standards.
The National Bank Act and regulations adopted by the
Comptroller thereunder prohibit national banks from paying any
dividend on common stock out of capital. Dividends can be paid
only to the extent of net profits then on hand, less losses and
bad debts.
Other Regulatory Matters. The Community Reinvestment Act
of 1977 (the "CRA") requires financial institutions to
demonstrate that their deposit facilities and credit services
serve the convenience and needs of the communities in which they
are chartered to do business. Regulations adopted pursuant to
the CRA by the OCC, the FRB and the FDIC require banks, in a CRA
statement made available to the public, to delineate
geographically the communities that they serve and to identify
the specific types of credit offered and other services provided
in those geographic areas. As part of their examination of
banks, the bank regulatory agencies are required to assess each
bank's record or performance in helping to meet the credit needs
of its entire community, including low and moderate income
neighborhoods, consistent with safe and sound operation of the
bank. The bank regulatory agencies also consider a bank's CRA
record or performance in ruling on applications for the
establishment of branches or other deposit facilities,
applications for the relocation of banking offices and
applications for the approval of mergers, acquisitions of
assets, consolidations or assumptions of liabilities. CRA
requires each bank regulatory agency to prepare a written
evaluation of an institution's record of meeting the credit
needs of its entire community, including low and moderate income
neighborhoods, and further requires that portions of these
written evaluations be made public.
Maryland has a community reinvestment act which requires
national banks located in Maryland to submit an annual report
to the Commissioner of Banking specifying steps taken to meet
community needs.
Recent Changes in Maryland Banking Laws. Maryland is one
of the increasing number of states which permits interstate
acquisitions of banks and bank holding companies on a reciprocal
basis if the acquirer is based in certain states or the District
of Columbia.
Effects of Government Regulation. The business and
operations of the Company and the Bank are substantially
affected by the policies of various governmental agencies of the
United States, particularly the FRB. From the Bank's point of
view, the most important function of the FRB is the regulation
of the money supply in light of general economic conditions
within the United States. The instruments of monetary policy
employed by the FRB for these purposes influence in various ways
overall levels of investments, loans, other extensions of credit
and deposits, and the interest rates paid on liabilities and
received on interest-earning assets.
Banking as a business is dependent upon interest rate
differentials. In general, the difference between the interest
paid by a bank on its deposits and other sources of funds and
the interest received by a bank on loans to customers and its
securities portfolio comprises the major portion of the Bank's
income. The earnings and gross income of the Bank are thus
subject to the influence of general economic conditions both
domestically and abroad, and also to monetary and fiscal
policies of the United States and, in particular, the FRB. The
nature and timing of any future changes in such policies and the
impact of any such changes on the Bank are not predictable.
E. Statistical Information
The following tables present statistical information
relating to the Company and Allegiance Bank, N.A. on a
consolidated basis.
DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY:
INTEREST RATES AND INTEREST DIFFERENTIALS
Table 1a CONSOLIDATED AVERAGE BALANCE SHEET
(Yield-Margin Analysis, dollars in thousands)
1994
1993 1992
Average Yields/ Average
Yields/ Average Yields/
Balance Interest Rates
Balance Interest Rates Balance Interest Rates
ASSETS
Loans:
Commercial $22,338 $1,931 8.63%
$20,471 $1,703 8.32% $26,317 $2,100 7.98%
Real estate 27,637 2,611 9.45
21,415 2,031 9.48 19,515 1,989 10.19
Consumer 2,426 248 10.22
2,255 226 10.01 2,395 256 10.68
Revolving credit 3,339 305 9.12
3,818 332 8.69 4,447 374 8.42
Total loans 55,740 5,095 9.14
47,959 4,292 8.95 52,674 4,719 8.96
Investment securities:
United States Treasury 12,209 752 6.16
17,243 1,079 6.26 20,552 1,320 6.42
Federal agencies 23,940 1,520 6.35
23,833 1,548 6.50 13,041 996 7.64
Other 510 29 5.69
384 25 6.51 630 43 6.84
Total investment securities 36,659 2,301 6.27
41,460 2,652 6.40 34,223 2,359 6.89
Federal funds sold 6,501 239 3.86
4,185 127 3.02 4,263 145 3.39
Total earning assets 98,900 7,635 7.72
93,604 7,071 7.55 91,160 7,223 7.92
Other non earning assets 5,774
6,253 5,741
Total assets $104,674
$99,857 $96,901
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing deposits:
Interest checking $ 8,727 196 2.25 $
8,351 154 1.85 $ 6,467 158 2.44
Money-market accounts 41,490 1,228 2.96
39,143 1,186 3.03 34,123 1,263 3.70
Certificates of deposit 27,048 1,331 4.92
28,530 1,424 4.99 34,627 1,964 5.67
Total interest-bearing
accounts 77,265 2,755 3.85
76,024 2,764 3.64 75,217 3,385 4.50
Federal funds purchased and securities
sold under agreements to repurchase
and other borrowings 1,093 51 5.44
102 4 3.64 115 4 3.90
Total interest bearing 78,358 2,806 3.58
76,126 2,768 3.64 75,332 3,389 4.50
Non interest-bearing deposit
and liabilities 16,260
14,663 13,898
Total Liabilities 94,618
90,789 89,230
Stockholders' Equity 10,056
9,068 7,671
Total Liabilities and
Stockholders' Equity $104,674
$99,857 $96,901
Interest Spread
4.14% 3.91% 3.42%
Net interest income/margin $4,829 4.88%
$4,303 4.60% $3,834 4.21%
Table 1b RATE/VOLUME ANALYSIS
A rate/volume analysis is included for 1994 compared to 1993 and 1993
compared to 1992.
1994 Compared to 1993 1993 Compared to 1992
Variance: Due to Change Variance: Due to Change
Increase or in Average Increase or in Average
(Decrease) Volume Rate (Decrease) Volume Rate
INTEREST EARNED ON:
*Loans:
Commercial $228 $155 $73
$(397) $ (467) $ 70
Real estate 580 590 (10)
42 194 (152)
Consumer 22 17 5
(30) (15) (15)
Revolving credit (27) (42) 15
(42) (52) 10
Total interest on loans 803 696 107
(427) (422) (5)
Investment securities:
United States Treasury (327) (315) (12)
(241) (213) (28)
Federal agencies (28) 7 (35)
552 825 (273)
Other 4 8 (4)
(18) (17) (1)
Total interest on investments (351) (307) (44)
293 496 (203)
Federal funds sold 112 70 42
(18) (3) (15)
Total interest on earning assets 564 400
164 (152) 194 (346)
INTEREST PAID ON:
Interest bearing deposits:
Interest checking 42 7 35
(4) 45 (49)
Money-market accounts 42 71 (29)
(77) 185 (262)
Certificates of deposit (93) (74) (19)
(540) (346) (194)
Total interest on deposits (9) 45 (54)
(621) 36 (657)
Federal funds purchased and securities sold
under agreements to repurchase and other
borrowings 47 39 8
0 0 (0)
Total interest on liabilities 38 81 (43)
(621) 36 (657)
Net interest income/margin $526 $319 $207
$469 $ 158 $ 311
* Loan interest includes loan fees
INVESTMENT
PORTFOLIO
Table 2a INVESTMENT SECURITIES
The estimated fair value of securities available for sale as of
December 31, 1994, 1993, and 1992.
December 31
(in thousands)
1994 1993 1992
U.S. Treasury Securities and obligations of
U.S. government agencies $2,536
$15,052$23,196
Mortgage-backed securities 6,364 12,022
9,363
CMOs - 35
114
Total debt securities 8,900 27,109
32,673
Equity securities 545 231
342
Total $9,445
$27,340$33,015
December 31
The amortized cost of securities held to maturity.
(in thousands)
1994 1993 1992
U.S. Treasury securities and obligations of
U.S. government agencies $18,564 $17,319 $6,991
Mortgage-backed securities - - 166
Total debt securities 18,564 17,319 7,157
Equity securities - - -
Total $18,564 $17,319 $7,157
Table 2b MATURITY DISTRIBUTION
(in thousands)
After One After
Five
Within Yr. Thru Yrs.Thru
After No Fixed
One Year Five Yrs. Ten Yrs.
Ten Yrs. Maturity Total
Securities available for sale at amortized cost
U.S. Treasury securities and obligations of
U.S. Government agencies - 2,309 - - -
2,309
Mortgage-backed securities 1,626 1,803 1,044 2,486 -
6,959
Equity securities - - - - 545
545
Total Securities Available for Sale 1,626 4,112 1,044 2,486
545 9,813
Securities held to maturity
U.S. Treasury securities and obligations of
U.S. Government agencies 7,821 9,476 1,268 - -
18,565
Total investment securities $9,447 $13,588 $2,312 $2,486 $545
$28,378
Table 2c WEIGHTED AVERAGE YIELD
After One After Five
Within Yr. Thru Yrs. Thru After
No Fixed
One Year Five Yrs. Ten Yrs. Ten Yrs.
Maturity Total
Securities available for sale
U.S. Treasury securities and obligations of
U.S. Government agencies - 7.38% - -
- 7.38%
Mortgage-backed securities 7.25 6.14 6.11 8.52
- 7.24
Equity securities - - - -
5.71 5.71
Total available for sale yield 7.25 6.83 6.11 8.52
5.71 7.18
Securities held to maturity
U.S. Treasury securities and obligations of
U.S. Government agencies 5.76 5.48 5.45 -
- 5.60
Total portfolio yield 7.21% 5.89% 5.74% 8.52%
5.71% 6.14%
Note: The investment portfolio contained no tax free securities.
LOAN PORTFOLIO
Table 3a TYPE OF LOANS
(In thousands)
December 31
1994 1993 1992
Commercial $21,938 $20,745$23,621
Construction 870 - 0 - - 0 -
Real Estate Mortgage 35,444 27,830 19,946
Consumer 8,918 4,067 6,404
Total Loans $66,300 $52,642$49,971
Table 3b MATURITIES AND SENSITIVITIES OF LOANS TO CHANGES IN INTEREST
RATES
(Commercial and Construction Only)
(in thousands)
Due in Due After
One Yr. One Thru Due After
Or Less Five Yrs. Five Yrs.
LOANS MATURING:
Commercial loans $15,984 $1,956 $427
Construction $870 - 0 - - 0 -
LOANS DUE AFTER ONE YEAR:
Fixed interest rate $ 2,383
Floating Rate $ - 0 -
Table 3c NON PERFORMING LOANS
(In thousands)
December 31
1994 1993 1992
Non accrual loans $1,043 $1,387 $1,951
Loans contractually past due as to interest or principal - -
160
Other restructure debt - - 42
Other Real Estate Owned 1,307 471 513
Total $2,350 $1,858 $2,666
Non performing loans consist of (a) loans which are not accruing
interest due to questions regarding eventual collectability, (b) loans
which are ninety (90) days or more past
due, loans whose terms have been restructured to accommodate
deterioration in the financial condition of the borrower, and (d)
foreclosed real estate.
The Bank generally places loans on a non accrual basis after
ninety(90) days of delinquency except where a loan is fully secured or
when expectations are for an immediate
improvement in the financial condition of the borrower. Management
generally recommends for charge-off, accounts which are ninety (90) days
delinquent except where a loan is fully secured
and in the process of collection or when expectations are for an
immediate improvement in the financial condition of the borrower.
Non-accrual loans, totaling $1,043,000 at December 31, 1994,
consisted of eight (8) borrowers. Of this total, $777,000 were
commercial loans which were primarily real estate
related and $266,000 were real estate mortgages secured by commercial and
residential properties. Specific reserves set aside for these loans
total $58,000.
If the loans carried as non-accrual at year end had been current in
accordance with their original terms, the Bank would have collected
additional interest of $75,650 for the year.
There were no loans contractually past due as to interest or
principal.
Foreclosed real estate totaling $1,306,556 represents four
properties, one residential two commercial, and one tract of land which
management believes can be sold for the amount
booked by the Bank.
SUMMARY OF LOAN LOSS
EXPERIENCE
Table 4 ALLOWANCE FOR LOAN LOSSES
December 31
(in thousands)
1994 1993 1992
Balance at beginning of period $1,175 $1,474 $2,015
Charge offs:
Commercial 273 234 564
Real Estate 51 215 337
Consumer 10 37 93
Total loans charged-off $ 334 $486 $994
Recoveries:
Commercial 114 57 54
Real Estate - 29 8
Consumer 6 10 16
Total recoveries $ 120 $ 97 $ 78
Net charge offs 214 389 916
Provision charged to operations 70 90 375
Balance at end of period $1,031 $1,175 $1,474
Ratio of net charge offs during the period to average loans 0.38%
0.81% 1.73%
ALLOWANCE FOR LOAN AND LEASE LOSSES
POLICY STATEMENT
It is Management's policy to maintain an allowance for loan losses
sufficient to absorb losses inherent in the loan portfolio. On a
quarterly basis, the Loan Committee reviews
the adequacy of the loan loss reserve based on estimated charge offs for
the coming quarter, loan delinquencies, loan review findings, historical
loss experience, peer bank averages and
economic conditions, and plans allowance adjustments accordingly. To
facilitate this review, the Loan Committee is provided on a quarterly
basis a report detailing the following:
1) A portfolio breakdown by credit quality status in terms of
absolute dollars and number of loans.
2) A portfolio breakdown by collateral type in terms of absolute
dollars and number of loans.
3) A portfolio breakdown by industry concentration in terms of
absolute dollars and number of loans.
Each category within these breakdowns is assigned a reserve factor by
senior management based on perceived risk. The reserve factors for each
category are averaged for each breakdown
based upon the categories percentage relationship to the overall
portfolio. The reserve factors for each breakdown are compared and
adjusted based upon current delinquencies, economic
expectations and an individual evaluation of each problem credit. Based
on this data an overall reserve factor recommendation is made which can
be compared to peer banks and evaluated
based on balance sheet and earnings considerations.
Based upon management's analysis, the approximate anticipated losses from
charge-offs for 1995 is $275,000 in the commercial loan category, $50,000
in real estate loans and $25,000 in
consumer loans.
DEPOSITS
Table 5a AVERAGE DEPOSITS
Year ended
December 31
1994 1993
1992
Average Average Average Average
Average Average
Balance Rate Balance Rate
Balance Rate
(thousands) (thousands)
(thousands)
Noninterest-bearing demand deposits$15,980 - $13,954
- $13,369 -
Interest-bearing demand deposits 8,727 2.25% 8,351
1.85% 5,071 4.49%
Money Market Accounts 41,490 2.96% 39,143
3.03% 34,123 5.67%
Certificates of Deposit 27,048 4.92% 28,530
4.99% 34,627 7.32%
Total Average Deposits $93,245 $89,978
$88,586
Table 5b CERTIFICATE OF DEPOSIT MATURITY DISTRIBUTION
(In thousands)
3 mos. Over 12
or less 3-6 mos. 6-12 mos. mos. Total
CDS of $100,000 or more $3,386 $1,183 $1,381 $6,165 $12,115
Table 6a RETURN ON EQUITY AND ASSETS
1994 1993 1992
Return on Average Assets 1.13%
1.12% 0.39%
Return on Average Equity 12.21%
12.30% 4.49%
Dividend pay-out 0 0
0
Average Equity to Average Assets Ratio 9.25% 9.08%
7.92%
SHORT-TERM BORROWINGS
Repurchase agreements may be entered into with customers that
maintain other relations with the Bank. At year-end there were
outstanding repurchase agreements of $393,573.
The Bank may, from time to time, purchase federal funds. This source
of funding is used to offset temporary liquidity shortages. The Bank also
borrows on a secured basis from
the Federal Home Loan Bank of Atlanta as needed for Balance Sheet
management.
LONG-TERM BORROWINGS
Long-term borrowing consists of a secured advance from the FHLB of
Atlanta. This borrowing is fixed at 7.12% and matures on August 1, 1998.
Item 2. Properties
The main offices of both the Company and the Bank are located in
Montgomery County, Maryland. The Bank leases the space occupied at this
location, as well as the space
for three additional branches located in Montgomery County, Maryland, and
two branches located in Prince George's County, Maryland. The Bank's
internal operations, accounting and
audit departments are housed at one of the branch locations in Prince
George's County. For additional information regarding operating leases
see Note 7, Premises and Equipment, in the
Notes to Consolidated Financial Statements.
These locations have been adequate and suitable for the Company's
operation.
Item 3. Legal Proceedings
There were no legal proceedings pending or threatened against the
Company or the Bank at year end that was not ordinary litigation
incidental to business, or that were material.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of the security holders
during the fourth quarter of 1994.
Part II
Item 5. Market for the Registrant's Common Stock and Related Matters
Since May 1994, the Company's common stock has traded on the NASDAQ
Exchange under the symbol ALLG.
Information for trades known to the Company is shown by calendar
quarter, for the years indicated in the following table:
1994
High Low
First Quarter. . . . . . . . . . . . . . . . . . . . . . . $8.50
$6.50
Second Quarter . . . . . . . . . . . . . . . . . . . . . . .9.00
6.13
Third Quarter. . . . . . . . . . . . . . . . . . . . . . . .8.50
6.50
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . 9.00
7.00
1993
High
Low
First Quarter. . . . . . . . . . . . . . . . . . . . . . . . . . $3.50
$3.50
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . .4.00
4.00
Third Quarter. . . . . . . . . . . . . . . . . . . . . . . . . . .4.50
4.50
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . 6.00
4.75
The approximate number of holders of registrants' common stock at
January 31, 1995 is 765.
No cash dividends on the Company's common stock have yet been
declared. The current policy of the Board of Directors is to retain
earnings, in order to provide funds for the
growth and development of the Company's business. Any future payment of
dividends will depend upon the company's growth, financial condition,
capital needs, regulatory requirements
and such other factors as the Board of Directors may deem appropriate.
The ability of the Company to pay dividends is dependent upon the
ability of the subsidiary bank to pay cash dividends to the Company. See
"Item 1. Business - Supervision
and Regulation" for a description of regulatory restrictions on the
Banks' ability to pay dividends to the Company.
Item 6. Selected Financial Data
ALLEGIANCE BANC CORPORATION
AND SUBSIDIARY
(In thousands, except per share
information)
Year ended December 31
1994 1993
1992 1991
Earnings summary:
Interest income $7,763
$7,071 $7,283 $7,715
Interest expense 2,806
2,768 3,384 4,126
Net interest income 4,957
4,303 3,899 3,049
Provision for possible loan losses 70
90 375 2,001
Net interest income after provision for possible loan losses:
4,887 4,213 3,524 1,048
Gains on sales of securities (453) 259
163 163
Other operating income 695 781
749 593 Other operating expenses
4,615 4,138 4,058 3,662
Year ended December 31
1994 1993
1992 1991
Income (loss) before income taxes: 514 1,115
378 (1,858)
Income(loss) before extraordinary item 514 1,115
232 (1,858)
Net Income (Loss) $1,206 $1,115
$ 378 $(1,858)
Per share
Income(loss) before extra-
ordinary item* $ 0.71 $0.66
$0.14 $(1.10)
Net Income(Loss)* 0.71 0.66
0.23 (1.10)
Book value at year-end* 6.24 6.06
5.07 4.85
* Adjusted for stock split.
STATEMENT OF
CONDITION
(in thousands)
1994 1993
1992 1991
Total investments $28,009
$44,660 $40,172 $31,946
Total loans 66,300
52,642 49,972 54,956
Total assets 106,326
105,474 103,724 94,034
Total deposits 93,108
94,922 94,699 85,192
Total stockholders' equity 10,578
10,262 8,581 8,203
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The consolidated financial statements contained herein present the
financial condition of the Company and its subsidiary bank, Allegiance
Bank, N. A. (the Bank), for the years ended December
31, 1994 and 1993, and the results of operations for the years 1994, 1993
and 1992.
Financial Condition
At the end of 1994, the Company's assets had increased slightly from
the year end 1993 level by nearly $900 thousand, or 0.8%, to $106.3
million. The Company realized substantial growth
in loans, with a net increase of $13.7 million. The loan growth was
funded from the investment portfolio and by a long term borrowing of $1.0
million from the Federal Home Loan Bank of Atlanta
(the FHLB). Funds from the investment portfolio as well as short term
borrowings of $1.0 million from the FHLB and $400 thousand in customer
repurchase agreements were used to cover an
increase in cash and federal fund balances of $1.4 million, purchases of
furniture and equipment of $700 thousand and a decline in deposits of
$1.8 million.
Loans increased by 26.0%, or $13.7 million, from $52.6 million to
$66.3 million. Most of the loan growth occurred during the last six
months of the year as overall loan demand in the Bank's
geographic market area increased. Included in the net loan increase are
$4.7 million in local, seasoned loans purchased from a regional bank.
The largest increase in the portfolio was in real estate
loans which grew by $7.6 million, with consumer loans increasing by $4.9
million and commercial loans growing by $1.2 million. Loans secured by
various types of real estate represent 53.5%
of the total loan portfolio, compared to 52.9% at year end 1993. Total
loans represented 68.1% of earning assets at year end, compared to 52.0%
at year end 1993.
As of December 31, 1994, variable rate loans totaled $39.1 million,
which was 59.0% of the portfolio, with fixed rate loans at $27.2 million,
and 41.0 % of the portfolio. This compares to $27.5
million of loans with variable rates, or 52.3% of the portfolio at the
end of 1993 and $25.1 million, or 47.7% in fixed rate loans. No
significant amount of the loan portfolio is at below market rates.
The emphasis in 1995 will continue to be in the area of business
development. Management will continue to focus on the Bank's niche
lending segments of the market, small and medium sized
businesses and the professional community. Added features to the program
this year include an increased effort at cross-selling and deposit
generation, and achieving a better balance in the Bank's
commercial and residential loan portfolios.
The Bank's underwriting standards continue to be conservative, and
management anticipates no significant changes in this policy. However,
flexibility in the underwriting process is reflected
in the structuring of credit facilities. An increased reliance on
special programs, such as those provided by the Small Business
Administration and the Certified Development Corporation community,
will serve as important aids to the Bank in the future.
The Bank's primary geographic markets are central and southern
Montgomery and northern Prince George's counties. As much as possible,
the Bank concentrates on those areas which are
proximate to the branch locations. The Bank opened a new branch during
the year in Montgomery County at Gaithersburg. As the Bank has expanded,
the geographic factors have widened the market
considerably. Management foresees substantial opportunities in the
Gaithersburg/Airpark area, the Laurel/Beltsville area and the Silver
Spring/lower county markets.
Community reinvestment is a continuing and important segment of the
Bank's efforts. Bank employees participate in various areas of community
involvement, including special
government-sponsored lending programs, youth programs, ethnic programs
and efforts in affordable housing. Management plans to be involved in
local and regional housing authorities and the Federal
Home Loan Bank, which directly finance the production of affordable
housing units in both Montgomery and Prince George's Counties.
The investment portfolio underwent some dramatic changes in 1994.
The available for sale portfolio declined by $17.9 million, from $27.3
million at the end of 1993 to $9.4 million at year-end
1994. The held to maturity portfolio grew by $1.2 million, resulting in
a net reduction in the total securities portfolio of $16.7 million.
Securities were sold from the available for sale portfolio,
periodically during the year, to primarily fund $13.7 million of the loan
growth. The net unrealized holding gains on securities available for sale
changed from an unrealized gain of $600 thousand
at year end 1993 to a net unrealized loss of $300 thousand at year end
1994. The net unrealized holding losses represent a reduction in the
estimated fair value of the securities due to a rising interest
rate environment, and is not a reflection of credit risk. During the
second quarter of 1994, the Bank transferred a security with a par value
of $1.0 million and an estimated fair value of $810 thousand,
from the available for sale portfolio to the held to maturity portfolio.
The unrealized holding loss on this security
of $190 thousand is being amortized over its remaining life. The Bank
established a banking relationship with the Federal Home Loan Bank of
Atlanta during the second quarter of 1994 and purchased
$300 thousand of FHLB stock,
which is reflected in the investment portfolio as equity securities.
During the fourth quarter of 1994, the Company recorded previously
unrecognized deferred income tax assets totaling $892 thousand by
eliminating the valuation allowance established during
1993 upon the adoption of Statement of Financial Accounting Standards No.
109 (SFAS No. 109) "Accounting for Income Taxes". The elimination of the
valuation allowance was deemed appropriate
in light of the Company's continuing profitable operations in 1994 and
the projected level of future years' taxable income. In accordance with
SFAS No. 109, deferred tax assets are recognized only
if their realization is "more likely than not".
Management decided to offset the effect of the elimination of the
deferred
tax asset valuation reserve by selling certain investments in the
available for sale portfolio whose market value had been negatively
affected by the rising interest rate environment experienced during
1994. Management sold $7.8 million in securities resulting in $518
thousand in realized losses. The proceeds from these sales were
reinvested in securities with a weighted average yield of 7.72%,
in order to improve the overall yield of the portfolio, as well as future
years' earnings. The securities sold had a weighted average yield of
6.46%.
During 1994, the Bank opened a new branch, relocated an existing
branch, expanded to the third floor of the Bethesda location, installed a
Wide Area Network and purchased new equipment in
conjunction with the data processing conversion. As a result of these
activities, premises and equipment expenses increased by $743 thousand.
Non-interest bearing deposit balances increased $3.9 million, from
$15.0 to $18.9 million. On the other hand, interest bearing balances
declined by $5.7 million, leaving the bank with a net
deposit decrease in 1994 of $1.8 million, from $94.9 to $93.1 million.
The banking industry as a whole has been experiencing declines in
deposits as investors moved monies into U.S. Treasury
securities and mutual funds, seeking higher returns on their investments.
The recent increases in the prime lending rate is allowing the Bank to
counter this outflow by offering higher rates on deposits
without sacrificing interest rate spreads and margins. The Bank is
projecting additional deposit growth due to the opening of its new branch
in the fourth quarter of 1994 and the planned opening
of an additional branch by the end of the second quarter of 1995, as well
as planned growth in existing branches due to increased marketing efforts
and the introduction of new products and services.
During the fourth quarter of 1994, the Bank converted to a new data
processing system which has enhanced the Bank's ability to offer new
products and services.
At the end of 1994, short term borrowings in the form of customer
repurchase agreements were nearly $400 thousand greater than the 1993
year-end level. These repurchase agreement levels
fluctuate during the year, based on the customers' liquidity needs. A
short term borrowing of $1.0 million from the FHLB was being used to
cover temporary liquidity needs of the Bank at the end
of 1994. The Bank also borrowed $1.0 million, for a term of four years,
from the FHLB during the third quarter of 1994 to fund a specific loan.
Capital Resources and Adequacy
The increased equity of $316 thousand is the net result of the
year's net income of $1.2 million and the $906 thousand 1994 net
unrealized loss on the Company's available for sale investment
security portfolio.
Risk based capital regulations require banks and bank holding
companies to maintain minimum ratios of capital to risk-weighted assets
and off-balance sheet credit arrangements. Total capital
is classified into two tiers, referred to as Tier 1 and Tier 2. The
Bank's Tier 1 capital is composed of common stockholders' equity, while
Tier 2 capital is composed of the qualifying portion of
the allowance for loan and lease losses. For bank holding companies with
consolidated assets of less than $150 million, the risk-based capital
guidelines generally are applied on a bank-only basis.
The bank regulatory minimums for the Tier 1 risk-based capital and
total risk-based capital ratios are 4.0% and 8.0%, respectively. At
December 31, 1994, the Bank's Tier 1 ratio was 14.39%
and the total risk-based capital ratio was 15.64%. At December 31, 1993
the ratios were 15.54% and 16.80%, respectively. The decline in the
ratios is due to the change in the mix of the earning
assets from the securities portfolio, which carries a lower risk
weighting, to the loan portfolio which carries a higher risk weighting.
The Bank remains well in excess of regulatory minimums with
ample room to continue to increase the loan portfolio.
The Bank's capital leverage ratio, another regulatory measure, is
Tier 1 capital divided by average total assets. The regulatory minimum
for certain institutions is 3.0%, with most institutions
required to maintain a ratio of at least 4.0% to 5.0%, depending upon
risk profiles and other factors. At December 31, 1994, the Bank's
capital leverage ratio was 9.77%, compared to 8.97% at
the end of 1993.
Results of Operations
The Company's net income for 1994 was $1.2 million, an increase of
8.2% over net income of $1.1 million for 1993. Net income for 1993
increased by 195.2% over that of 1992, which was
$378 thousand. The 1994 net income is after net losses on sales of
securities of $453 thousand and income tax benefit of $693 thousand.
Two key measures of profitability, return on average assets and
return on average equity, improved on a annual basis from 1992 to 1994.
For 1994 the return on average assets was 1.13% versus
1.12% for 1993 and 0.39% for 1992. The return on average equity for 1994
was 12.21% versus 12.30% for 1993 and 4.49% for 1992. Net income per
share was $0.71, up 8.0% for 1994. Net
income per share was $0.66 and $0.23 for 1993 and 1992, respectively.
Net Interest Income
The excess of income on earning assets over the cost of funds is net
interest income. Earning assets consist of loans, investments and
interest earning balances at other banks, while deposits and
borrowings represent the interest-bearing liabilities. Several factors
influence net interest income, including market rates of interest and the
volume, mix and rate sensitivity of earning assets and
interest bearing liabilities.
Net interest income for 1994 was $5.0 million, compared to $4.3
million in 1993 and $3.9 million in 1992. The $654 thousand, or 15.2%,
growth in net interest income in 1994 was due to an
increase in total interest income of $693 thousand and to the interest
expense remaining flat. A change in the mix of earning assets is
reflected primarily in an increase in interest and fees on loans
of $931 thousand, which was due to the increase in loans outstanding as
well as increases in the prime lending rate. Interest on federal funds
sold increased by $112 thousand, due to an increase
in the volume of federal funds sold. Interest income on the investment
portfolio declined by $350 thousand due to the utilization of the
investment portfolio to fund loan growth. The $403 thousand,
or 10.3%, growth in net interest income in 1993 over that of 1992 is the
net result of a decline in total interest expense of $616 thousand and a
decline in total interest income of $213 thousand. This
decline in interest expense was due to the change in the mix of deposits
and to lower average rates paid on interest-bearing liabilities.
Certificate of deposit balances, which represent the highest cost
of funds, declined and the lower cost deposit balances increased.
Total interest income declined in 1993, from the 1992 level, due to
older, higher rate loans paying off during the year and being replaced
with lower rate loans, which resulted in lower average
yields on the loan portfolio. The average yield on the securities
investment portfolio declined slightly for 1993 due to reinvestment, at
lower rates, of principal repayments of mortgage-backed
securities, securities which matured, and other securities that were
sold. The underlying mortgages for higher rate mortgage-backed
securities were paying down at a faster speed in 1993, due to
the availability of lower rate mortgage funding.
During 1994, the Bank's net interest spread and margin, continued to
improve. The net interest spread is the difference between the yield on
interest-earning assets and rates paid on interest-bearing
liabilities. The spread for 1994 increased to 4.09% from 3.91% in 1993
and 3.42% in 1992. Net interest margin is a measurement of how
effectively the Bank utilizes its interest earning assets
in relationship to the interest cost of funding them. It is computed by
dividing net interest income by average interest-earning assets. The net
interest margin increased to 4.82% in 1994, from 4.57%
in 1993 and 4.23% in 1992.
Provision for Loan Losses
The Bank maintains an allowance for loan losses which represents the
amount considered by management to be adequate to cover losses which
could occur in the loan portfolio. The provision
for loan losses is a charge to earnings to maintain the allowance at an
adequate level. On a quarterly basis, management conducts a
comprehensive review of the loan portfolio, evaluating factors
such as economic conditions, loan mix and volume, delinquency trends,
identification of weak credits, historical loan loss experience and the
value of collateral, to ensure that an adequate provision
is maintained. Between reviews, events may occur which dictate immediate
adjustment to the allowance, and these situations are addressed as
required.
During 1994, the allowance was reduced by net charge-offs of $214
thousand and was increased by $70 thousand due to a provision for loan
losses through a charge to earnings. Net charge-offs
for 1993 and 1992 were $389 thousand and $916 thousand, respectively.
The charge to earnings for the loan loss provision in 1993 was $90
thousand and in 1992 was $375 thousand. The $70
thousand provision added to the allowance in 1994 reflected management's
judgment of the current loan portfolio, with improved asset quality and
substantial net loan growth. The $13.7 million
increase in net loans outstanding at year end 1994 represented,
principally, gains in the real estate segment of the portfolio.
Historical loss experience for real estate loans, as reviewed through
migration analysis, has been negligible, therefore minimizing
requirements for additions to the allowance. The Bank retains an
independent consulting firm which conducts an annual review of the
allowance for loan losses after evaluating the overall quality of the
loan portfolio. Both the independent consulting firm and Bank management
believe that the Bank's allowance was adequate. At
year-end 1994, the allowance was at $1.0 million, or 1.6% of loans
outstanding and 43.9% of non-performing loans. At year-end 1993 the
allowance stood at $l.2 million, or 2.2% of loans outstanding and 63.3%
of non-performing loans, compared to $1.5 million
or 3.0% of loans outstanding and 55.3% of non-performing loans for 1992.
Non-accrual loans at year-end 1994 were at $1.0 million, or 1.6% of
total loans. This represents a continued improvement in the level of
non-accrual loans, over the total at year-end 1993 of
$1.4 million, or 2.6% of total loans and year-end 1992 when non-accrual
loans were at $2.0 million or 4.0% of loans outstanding. Of the 1994
total, $777 thousand were real estate mortgages secured
by commercial and residential properties, with the remaining $265
thousand representing commercial loans, of which $235 thousand were fully
guaranteed by the U.S. Small Business Administration.
The 1993 non-accruals were comprised of $800 thousand in real estate
mortgages secured by commercial and residential properties, and $600
thousand in commercial loans, of which $300 thousand
were real estate secured. At year end 1992, of the $2.0 million in
non-accruals, $1.0 million were real estate mortgages secured by
commercial and residential properties, and $1.0 million were
commercial loans with $500 thousand being real estate secured. There
were no loans past due for 90 days or more at the end of 1994, as was
also the case at the end of 1993. Loans past due for
90 days or more at year-end 1992 totaled $200 thousand.
Non-Interest Income
Total non-interest income declined to $242 thousand in 1994, due
primarily to net losses on sales of securities of $453 thousand, (as
discussed in the Financial Condition section) and to some
extent to a decline in deposit account service fee income and
miscellaneous other income. The decline in fee income occurred due to
the reduction in
deposit accounts and to customers' management of their account balances
to avoid service charges, mainly overdraft fees. The 1993 non-interest
income figure of $1.0 million included net gains
on sales of securities of $259 thousand and non-recurring income of $42
thousand. 1993 non-interest income increased by $129 thousand, or 14.1%
over that of 1992, which was $912 thousand.
The majority of the increase for 1993 was due to an increase in gains on
sales of securities, with smaller increases in services charges on
deposit accounts and miscellaneous other fee income. Other
fee income is collected for wire transfers, issuance of official checks,
processing of special collections and safe deposit box rentals.
Management projects that service fee income will increase during
1995 and beyond, consistent with anticipated account growth, as discussed
in the Financial Condition section relative to branch and deposit growth.
Non-Interest Expense
Total non-interest expense was $4.6 million for 1994, which was an
11.5% increase over the 1993 total of $4.1 million. In 1993,
non-interest expense increased by 2.0%, or $80 thousand over
1992.
Higher salaries and employee benefits, up $342 thousand or 17.3%,
represented the largest increase in non-interest expense and were mainly
due to increased staffing in the lending area and the
branch system, to merit increases and, to a lesser extent, performance
bonuses. Related expenses, such as medical and payroll tax expense,
increased accordingly. The rise in salaries and benefits
was $117 thousand, or 6.3%, in 1993 and was due primarily to merit
increases and to a lesser extent, increased costs of medical benefits.
The other non-interest expense categories, with the exception of
advertising expense which increased by $92 thousand due to a planned
increase in the advertising budget, increased minimally
during 1994. In 1993, the FDIC insurance premiums increase was $43
thousand, or 22.1%, due to an increase in deposits as of the assessment
dates, as well as an increase in the insurance rates.
The remainder of the non-interest expense categories increased minimally
in 1993 as well.
Liquidity and Interest Rate Sensitivity
Liquidity is a measure of the Bank's ability to generate and
maintain sufficient cash flows to fund operations, and to meet financial
obligations to depositors and borrowers promptly and in a cost-effective
manner.
The Bank's liquidity is provided by amortizing and maturing loans,
maturities and pay downs of investment securities, federal funds sold,
readily marketable available for sale investment securities and
securities that
can serve as collateral for borrowing. In the event necessary, the Parent
Company would sell securities from its portfolio to fund its own
liquidity needs.
The Bank's liquidity sources and needs are measured on a monthly
basis. The analysis includes a review of current lending commitments and
projections of future loan demand and anticipated deposit growth or
contraction. At December 31, 1994 the Bank's liquidity sources were 2.1
times anticipated liquidity needs, well in excess of the established
management guidelines of 1.3 times anticipated liquidity needs. At the
end of 1993, liquidity sources were 3.3 times projected liquidity needs.
Because of the significant impact interest rate fluctuations may
have on the Bank's performance, management continually monitors the
interest rate sensitivity of its assets and liabilities. The common
measurement
term is "gap", which refers to the relationship of earning assets to
interest-bearing liabilities within the time period in which they will
mature or reprice. A positive gap, wherein earning assets exceed
interest-bearing
liabilities, positions the Bank to respond to rising interest rates. A
negative gap, wherein interest-bearing liabilities exceed earning assets,
positions the Bank to respond to declining interest rates.
Management strives to forecast far enough into the future so they
can fine tune the earning assets to respond to changes in rates. As a
guide, management tries to maintain a gap not greater than 15.0% of
earning
assets, either positive or negative, for the various periods of
measurement. At December 31, 1994, the Bank had a cumulative negative
gap out to one year of 7.3% of earning assets. During 1994, the Bank has
narrowed its liability sensitive position by increasing variable rate
assets and shortening the maturities and repricing periods of a portion
of the investment portfolio.
The following table presents the Bank's gap measurements as of
December 31, 1994:
(In Thousands)
Assets and Liabilities Maturing or Repricing Within
0-3 Over 3-12 Over 1-5 Over 5
Months Months Years Years
RATE SENSITIVE ASSETS (RSA)
Investment securities $ 5,134 $ 4,518 $13,321 $ 4,531
Loans $40,397 $ 1,127 $ 9,738 $15,076
Federal funds sold $ 3,003 $ - $ -
$ -
Total RSA $48,534 $ 5,645 $23,059
$19,607
RATE SENSITIVE LIABILITIES (RSL)
Interest bearing demand deposits $ 9,016 - -
-
Money market investment accounts $37,711 -
- -
Certificates of deposit $ 5,493 $ 7,657 $14,253 $ 21
Other $ 1,394 - $ 1,000 -
Total RSL $53,614 $ 7,657 $15,253
$ 21
Cumulative gap $(5,080) $(7,092) $ 714
$20,300
Ratio of cumulative gap to
earning assets (5.3%) (7.3%)
0.7% 21.0%
Taxes
The Company recorded a $693 thousand income tax benefit during 1994
resulting from the recognition of deferred tax assets which previously
had been eliminated through a valuation reserve. The
valuation reserve was deemed unnecessary as of December 31, 1994 because
realization of the deferred tax assets was considered probable. The
Company's increased level of projected future years'
taxable income and the recent three years earnings trend supported the
elimination of the valuation allowance. The resulting deferred tax asset
is comprised primarily of net operating loss carry forward
($392 thousand) and the tax effect of the unrealized holding losses on
investment securities ($214 thousand). The remaining $325 thousand is the
result of other temporary differences between financial
and tax bases of assets and liabilities such as the allowance for loan
losses, deferred loan fee income and depreciation. For the year ended
December 31, 1993 the Company was able to utilize a portion
of the total net operating loss carryforward to eliminate applicable
income taxes in the amount of $433 thousand. In 1992, prior to the
adoption of SFAS No. 109, the tax benefit from the utilization
of the net operating loss is reflected as an extraordinary item of $145
thousand. For 1995 and subsequent years, the Company expects to record
income tax expense at the statutory rates which will
significantly impact earnings.
The Company files a consolidated federal tax return, and is taxed at
the prevailing statutory rate on net income. The current statutory rate
is 34.0%. Franchise tax returns are filed by the Bank
with the State of Maryland. At December 31, 1994, the Company had a
federal net operating loss carryforward of approximately $1.0 million
which expires in 2007, and can be used to offset future
tax liability.
Market Price of Common Stock and Dividends
Since May, 1994, the Company's common stock has traded through the
NASDAQ Exchange under the symbol ALLG. The approximate number of
shareholders of record as of January 31, 1995
is 765. Information for high and low sales prices, as known by the
Company, is shown by calendar quarter for the years indicated in the
following table:
1994
High Low
First Quarter $8.50 $6.50
Second Quarter 9.00 6.13
Third Quarter 8.50 6.50
Fourth Quarter 9.00 7.00
1993
First Quarter $3.50 $3.50
Second Quarter 4.00 4.00
Third Quarter 4.50 4.50
Fourth Quarter 6.00 4.75
No cash dividends on the Company's common stock have yet been
declared. In June 1994, the Company issued 282,200 shares of stock as
the result of a stock split, effected in the form of a 20%
stock dividend. The current policy of the Board of Directors is to retain
earnings in order to provide funds for the growth and development of the
Company's business. Any future payment of cash
dividends will depend upon the Company's growth, financial condition,
capital needs, regulatory requirements and such other factors as the
Board of Directors may deem appropriate.
Item 8. Financial Statements and Supplementary Data
The information called for by Item 8, Financial Statements and
Supplementary Data, is hereby incorporated by reference from the
information and financial statements set forth under the caption
"Financial Statements" (Item 14, section 1) incorporated as part of this
filing.
Item 9. Changes in Disagreements with Accountants on Accounting and
Financial Disclosure
There have been no changes in or disagreements with accountants on
accounting and financial disclosure.
Part III
Item 10. Directors and Executive Officers of the Registrant
The information called for by Item 10, Directors and Executive
Officers of the Registrant, is hereby incorporated herein by reference
from the information set forth under the captions "Directors
and Executive Officers," and "Meetings and Committees of the Board," on
the Proxy Statement.
Item 11. Executive Compensation
The information called for by Item 11, Executive Compensation, is
hereby incorporated herein by reference from the information set forth
under the caption "Remuneration of Directors and
Officers," on the Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information called for by Item 12, Security Ownership of
Certain Beneficial Owners and Management, is hereby incorporated herein
by reference from the information set forth under the
caption Directors and Executive Officers, on the Proxy Statement.
Item 13. Certain Relationships and Related Transactions
During fiscal year 1994 there were no transactions with related
parties which exceeded $60,000 or exceeded 5% of gross revenues of the
provider of services.
Directors and officers of the Company and the Bank, and persons,
corporations and organizations with whom or which they are associated,
have had, and expect to have in the future, banking
transactions with the Bank in the ordinary course of the bank's business.
In the opinion of the management of the Company and the Bank, all loans
to directors and officers and their associates have
been made on substantially the same terms including interest rates and
collateral, as those prevailing at the time for comparable transactions
with other persons, and have not involved more than the
normal risk of collectibility or presented other unfavorable features.
The aggregate balance of loans outstanding to directors and officers and
their associates was $2,990,545 (29.1% of the Company's
stockholders' equity) at December 31, 1994.
Part IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form
8-K.
The following is a list of certain documents filed as a part of this
Report:
1. Financial Statements.
Report of Independent Auditors 34
Balance Sheets 37
Statements of Income 38
Statements of Changes in Shareholders' Equity 39
Statements of Cash Flows 40 - 41
Notes to Consolidated Financial Statements 42 - 57
2. Financial Statement Schedules.
None
3. Exhibits.
Exhibit Number
3.1 Certificate of Incorporation of Registrant, as amended1
3.2 By-Laws of Registrant1
10.1 Lease Agreement, dated September 11, 1986, between
Hampden Lane Limited Partnership and Montgomery National Bank1
10.3 Form of Warrant Agreement June , 1994
10.4 Lease, dated October 1, 1991 between Montgomery
National Bank and DOC Limited Partnership5
10.5 Commercial Lease Agreement, dated November 26, 1984, by
and between Triangle Park Associates-1 and Southern Permanent Building
Association2
10.6 Sublease Agreement, dated November 28, 1988, by and
between Triangle Park Associates, Republic Federal Savings Bank, and
Montgomery National Bank2
10.7 Lease, dated August 4, 1989, between Montgomery
Bancorp, Inc. and Landmark Associates of Maryland4
10.8 Lease, dated March 6, 1990, between Montgomery Bancorp,
Inc. and Leonard W. Kraisel.3
10.9 Lease, dated June 10, 1994, between Allegiance Bank and
Wheaton Commercial Center Associates7
10.10 Lease, dated June 24, 1994, between Allegiance Bank and
G & G Airpark Associates7
10.11 Lease, dated June 30, 1994, between Allegiance Bank and
COMAC, Inc.7
10.12 Sub Lease, dated October 27, 1994, between Allegiance
Bank and David H. Baris7
22 Subsidiary of Registrant6
1 Filed as an exhibit of the same number to the Company's Registration
Statement on Form S-1 under the Securities Act of 1933, Registration No.
33-10682, and incorporated herein by
reference.
2 Incorporated by reference from the registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1988.
3 Incorporated by reference from the registrant's Annual Report in
Form 10-K for the fiscal year ended December 31, 1990.
4 Incorporated by reference from the Company's Registration Statement
on Form S-1 under the Securities Act of 1933, Registration No. 33-30282,
and incorporated herein by reference.
5 Incorporated by reference from the registrant's Annual Report in
Form 10-K for the fiscal year ended December 31, 1991.
6 Incorporated by reference from the registrant's Annual Report in
Form 10-K for the fiscal year ended December 31, 1992.
7 Incorporated by reference from the registrant's Annual Report in
Form 10-K for the fiscal year ended December 31, 1994.
No Current Reports on Form 8-K were filed by the registrant during the
last quarter of the period covered by this report.
Item 14.1
Financial
Statements
ALLEGIANCE BANC CORPORATION
AND SUBSIDIARY
REPORT ON AUDITS
OF
CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE YEARS
ENDED
DECEMBER 31, 1994, 1993
AND 1992
No extracts from this report may be
published without our written consent
Stegman &
Company
TABLE OF
CONTENTS
INDEPENDENT AUDITORS' REPORT
CONSOLIDATED FINANCIAL STATEMENTS
Page
Consolidated Balance Sheets
1
Consolidated Statements of Income
2
Consolidated Statements of Changes in Shareholders' Equity
3
Consolidated Statements of Cash Flows
4-5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6-21
ALLEGIANCE BANC CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
December 31,
1994 1993
ASSETS
Cash and due from banks $ 5,338,702 $
3,810,118
Federal funds sold 3,000,000
3,100,000
Investment securities:
Available for sale-at fair value 9,444,781
27,340,249
Held to maturity-at amortized cost-fair
value of $16,739,186 (1994) and $17,373,840 (1993) 18,564,708
17,319,356
Loans
66,300,37852,642,166
Less: allowance for loan losses (1,030,895)
(1,174,964)
Loans - net 65,269,483
51,467,202
Premises and equipment - net 1,530,210
1,013,757
Other real estate owned 1,306,556
470,947
Deferred income tax benefits 930,644
0
Accrued interest receivable and other assets 941,110
952,360
TOTAL ASSETS $106,326,194 $105,473,989
LIABILITIES
Deposits:
Non-interest bearing $18,855,398 $
14,976,451
Interest bearing 74,252,542
79,945,434
Total deposits 93,107,940 94,921,885
Short-term borrowings 1,393,573
3,303
Long-term borrowing 1,000,000
0
Accrued expenses and other liabilities 246,416
286,617
Total liabilities 95,747,929 95,211,805
SHAREHOLDERS' EQUITY
Common stock - $1 par value; 10,000,000 shares authorized
and 1,695,750 shares issued and outstanding (1994);2,500,000
shares authorized and 1,410,000 shares issued and outstanding (1993)
1,695,750 1,410,000
Surplus 10,640,450
10,628,000
Accumulated deficit (1,417,881)
(2,341,759)
Net unrealized holding (losses) gains on securities (340,054)
565,943
Total shareholders' equity 10,578,265 10,262,184
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $106,326,194
$105,473,989
See accompanying notes.
ALLEGIANCE BANC CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
Years ended December 31,
1994 1993 1992
INTEREST INCOME
Interest and fees on loans $ 5,222,903 $
4,292,030 $ 4,748,045
Taxable interest and dividends on investment securities
2,301,519 2,652,012 2,390,564
Interest on federal funds sold 238,916
126,564 144,571 Total interest income
7,763,338 7,070,606 7,283,180
INTEREST EXPENSE
Interest on deposits 2,756,160 2,764,439
3,379,545
Interest on short-term borrowings 20,548 3,698
4,478
Interest on long-term borrowing 29,679
0 0
Total
interest expense 2,806,387 2,768,137
3,384,023
NET INTEREST INCOME 4,956,951 4,302,469
3,899,157
PROVISION FOR LOAN LOSSES 70,000
90,000 375,054
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 4,886,951
4,212,469 3,524,103
OTHER OPERATING INCOME
Service charges on deposit accounts 601,548 622,547
607,175
Gain (loss) on sales of securities (453,193) 259,355
162,578
Gain on sale of fixed assets 7,090 0
0
Other income 86,157
158,400 141,847
Total other operating
income 241,602 1,040,302 911,600
OTHER OPERATING EXPENSE
Salaries and employee benefits 2,318,790 1,976,933
1,859,114
Net occupancy and equipment expense 881,549 842,972
836,503
Other real estate owned expense 23,523 59,951
86,679
Director and committee fees 114,696 106,469
148,778
FDIC insurance 223,296 236,203
193,410
Data processing expense 100,689 96,407
97,155
Advertising 148,651 56,677
30,463
Other insurance 96,884 91,510
97,155
Other expense 706,742 670,521
708,692
Total other
operating expense 4,614,820
4,137,643 4,057,949
INCOME BEFORE INCOME TAXES
AND EXTRAORDINARY ITEM 513,733 1,115,128
377,754
APPLICABLE INCOME TAXES (BENEFIT)
net of tax benefit of operating loss carry forward
of $199,824 for 1994, $432,821 for 1993 and -0- for 1992 (692,613)
0 145,328
INCOME BEFORE EXTRAORDINARY ITEM 1,206,346
1,115,128 232,426
EXTRAORDINARY ITEM - Tax benefit from
realization of net operating loss carry forward 0
0 145,328
NET INCOME $ 1,206,346 $
1,115,128 $ 377,754
PER SHARE INFORMATION
Income before extraordinary item $ .71
$ .66 $ .14
Extraordinary item $ .00
$ .00 $ .09
NET INCOME $ .71
$ .66 $ .23
See accompanying notes.
ALLEGIANCE BANC CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
Net
unrealized
holding
gains (losses)
Common Accumulated on
securities
Stock Surplus Deficit Available
for Sale
Balances at January 1, 1992 $1,410,000$10,628,000 $(3,834,641)
$ 0
Net income 0 0 377,754
0
Balances at December 31, 1992 1,410,000 10,628,000 (3,456,887)
0
Net income 0 0 1,115,128
0
Cumulative effect of the initial
application of Statement of Financial
Accounting Standards No. 115 0 0 0
565,943
Balances at December 31, 1993 1,410,000 10,628,000 (2,341,759)
565,943
6 for 5 stock split 282,200 0 (282,200)
0
Fractional shares retired 0 0 (268)
0
Stock options exercised 3,550 12,450 0
0
Net income 0 0 1,206,346
0
Net change in unrealized holding gains
on available for sale securities,
net of taxes of $ 213,959 0 0 0
(905,997)
Balances at December 31, 1994 $ 1,695,750 $ 10,640,450 $
(1,417,881) $ (340,054)
See accompanying notes.
ALLEGIANCE BANC CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31,
1994 1993
1992
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $1,206,346 $ 1,115,128 $
377,754
Adjustments to reconcile net income to
net cash provided by operating activities:
Extraordinary item 0 0
(145,328)
Provision for loan losses 70,000 90,000
375,054
Depreciation and amortization 226,896 220,037
229,556
Loss on disposal of equipment 0 3,477
0
Net gains on sales of securities 0 (259,355)
(162,578)
Net loss on sales of investment securities
available for sale 453,193 0 0
Deferred income taxes
(692,613) 0 145,328 Net gain on
sale of premises and equipment (7,090) (24,603)
0 Decrease in accrued interest
receivable and other assets 11,250 66,922
14,103 Decrease in accrued expenses
and other
liabilities (40,201) (9,363) (168,346)
Other - net
(452,182) (389,042) (916,136)
Net cash provided by
operating activities 775,599 813,201
(250,593)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of available for sale investment securities
(8,845,752) 0 0
Proceeds from sales of available for sale
investment securities 23,145,307 0
0
Proceeds from maturities and principal payments
of available for sale investment securities 2,796,006
0 0
Purchases of held to maturity investment securities
(3,018,594) (31,936,986) (19,536,901)
Proceeds from sales of held to maturity
investment securities 0 23,788,228
5,210,410
Proceeds from maturities and principal
payments of held to maturity investment securities1,000,000
4,486,162 6,263,774
Net (increase) decrease in loans (9,547,423) (2,670,665)
4,984,947
Purchase of loans
(4,732,357) 0 0
Bank premises and equipment acquired (743,349) (83,302)
(133,305)
Proceeds from sales of premises and equipment 7,090
3,500 0
Net cash
provided (used) by investing activities 60,928 (6,413,063)
(3,211,084)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) increase in deposits (1,813,945) 222,973
9,507,298 Net increase (decrease) in short-term
borrowings 1,390,270
(144,489) (27,208)
Proceeds from long-term borrowing 1,000,000 0
0
Proceeds from sale of common stock 15,732 0
0
Net cash provided by financing activities 592,057
78,484 9,480,090
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 1,428,584 (5,521,378)
6,018,413
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 6,910,118 12,431,496
6,413,083
CASH AND CASH EQUIVALENTS AT
END OF YEAR $ 8,338,702 $ 6,910,118
$12,431,496
Supplemental Cash Flow Information:
1994 1993 1992
Interest paid $ 2,786,814 $ 2,778,041 $
3,522,904
Income taxes paid $ 0$ 0$
0
Assets acquired in foreclosure $ 835,609 $ 220,947 $
250,000
Reclassification of available for sale
securities to held to maturity (at estimated fair value) $
810,000 $ 0 $ 0
See accompanying notes.
ALLEGIANCE BANC CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements include the accounts of
Allegiance Banc Corporation (the Company) and its subsidiary bank,
Allegiance Bank, N.A. (the Bank), with all
significant intercompany transactions eliminated. The investment in
subsidiary is recorded on the books of the holding company on the basis
of its equity in the net assets of the
subsidiary. Certain reclassification have been made to amounts
previously reported to conform with the classifications made in 1994.
Securities Available For Sale
Securities available for sale are stated at fair value, based on
quoted market prices. They represent those securities which management
may sell as part of its asset/liability strategy, or
which may be sold in response to changing interest rates, changes in
prepayment risk or other similar factors. Premiums and discounts are
recognized in interest income using the interest
method over the period to maturity. The cost of securities sold is
determined by the specific identification method.
Securities Held To Maturity
Securities held to maturity are stated at cost, adjusted for
amortization of premiums and accretion of discount which are recognized
in interest income using the interest method over
the period to maturity. The Company has the positive intent and ability
to hold these securities until maturity.
Loans Receivable
Loans receivable that management has the intent and ability to hold
for the foreseeable future, or until maturity or payoff, are reported at
their outstanding unpaid principal balances
reduced by any chargeoffs or specific valuation accounts and net of any
deferred fees or costs on originated loans, or unamortized premiums or
discounts on purchased loans.
Interest on Loans
Interest income on loans is accrued at the contractual rate on the
principal amount outstanding. When scheduled principal or interest
payments are past due 90 days or more on any
loan not fully secured by marketable collateral, which may include real
estate, the accrual of interest income is discontinued and recognized
only as collected. When loans are placed on
nonaccrual status, previously accrued interest is charged against
interest income. The loan is restored to an accruing status when all
amounts past due have been paid and the borrower
has demonstrated the ability to continue such payments.
Loan origination and commitment fees and certain direct loan
origination costs are being deferred, and the net amount is amortized
over the contractual life of the loan as an adjustment
of the loan's yield.
Allowance for Loan Losses
The allowance for loan losses is increased by charges to income and
decreased by chargeoffs (net of recoveries). Management's periodic
evaluation of the adequacy of the allowance is
based on the Bank's past loan loss experience, known and inherent risks
in the portfolio, adverse situations that may affect the borrower's
ability to repay, the estimated value of any
underlying collateral, and current economic conditions.
Other Real Estate Owned
Real estate acquired through foreclosure of loans is carried at cost
or fair value minus estimated costs of disposal, whichever is lower.
Fair value is based on independent appraisals
and other relevant factors. At the time of acquisition, any excess of
the loan balance over fair value is charged to the allowance for loan
losses. Gains and losses on sales of other real
estate are included in non-interest income.
Premises and Equipment
Premises and equipment are stated at cost less accumulated
depreciation and amortization computed predominantly by straight-line
methods over the estimated useful lives of the
properties. Expenditures for maintenance, repairs and minor renewals are
charged to operations; expenditures for betterment are charged to the
property accounts.
Income Taxes
Income taxes are based on income and expense amounts in the
statement of income. Under the liability method, deferred taxes are
determined based on the differences between the tax
and financial bases of assets and liabilities and are measured at the
enacted tax rates expected to be in effect at the time these differences
reverse. Deferred tax assets are recognized for
future deductible temporary differences and tax loss carryforwards if
their realization is "more likely than not".
Net Income Per Common Share
Primary net income is computed by dividing net income by the
weighted average number of common
shares outstanding during the year, giving retroactive effect to stock
splits. Although stock options granted and warrants outstanding are
considered common stock equivalents for the
purpose of computing the net income per share, they have been excluded
since they have no dilutive effect.
Cash Flows
The Company has defined cash and cash equivalents as those amounts
included in the balance sheet captions "Cash and due from banks" and
"Federal funds sold."
2. ADOPTION OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
Effective January 1, 1993, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 109, "Accounting for Income
Taxes." This statement requires that deferred
income taxes reflect the future years' tax consequences of differences
between the tax and financial accounting bases of assets and liabilities.
The initial adoption of SFAS No. 109 had no effect on the Company's
financial statements because all deferred tax assets were eliminated
through a valuation allowance for the year
ended December 31, 1993.
On December 31, 1993, the Company adopted the provisions of SFAS
No. 115, "Accounting for Certain Investments in Debt and Equity
Securities." This statement requires the
Company to identify and segregate those investment securities it intends
to hold to maturity, those securities which are available for sale and
those securities which are trading securities.
Investment securities held to maturity are carried at amortized cost,
while investment securities available for sale are carried at estimated
fair value. Net unrealized holding gains and
losses on securities available for sale are reported as a separate
component of shareholders' equity. The Company does not have any
securities designated as trading securities. The
initial application of SFAS No. 115 resulted in recording a net
unrealized gain of $565,943, relating to the Company's investment
securities available for sale.
Effective January 1, 1993, the Company adopted SFAS No. 106,
"Accounting for Post Retirement Welfare Benefits." The adoption of this
standard had no material impact on the
results of operations or financial condition of the Company.
In November 1993, the Financial Accounting Standards Board issued
SFAS No. 112, "Employers' Accounting for Post Employment Benefits".
Statement 112 establishes accounting
standards for employers who provide benefits to former or inactive
employees after employment but before retirement. This Statement is
effective for fiscal years beginning after
December 15, 1993. The adoption of SFAS No. 112 had no effect on the
Company's financial statements.
3. PROSPECTIVE ACCOUNTING CHANGES
In May 1993 the Financial Accounting Standards Board issued SFAS
No. 114, "Accounting by Creditors for Impairment of a Loan". SFAS No. 114
applies to loans that are
considered impaired, where it is probable that the creditor will not
collect all principal and interest payments according to the loan's
contractual terms. Under SFAS No. 114, impaired
loans must be measured utilizing methods that consider the present value
of the expected future cash flows discounted at the loan's effective
interest rate, observable market price of the
loan or fair value of the collateral. If the measure of an impaired loan
is less than the recorded investment, valuation allowance must be
established through a corresponding charge to
provision for loan losses. This standard is effective for fiscal years
beginning after December 15, 1994. The future adoption of SFAS No. 114 is
not expected to have a material impact
on the Company.
"Disclosures About Fair Value of Financial Instruments", SFAS 107,
extends existing fair value disclosure practices for some instruments by
requiring all entities to disclose the fair
value of financial instruments, both assets and liabilities recognized
and not recognized in the balance sheets, for which it is practicable to
estimate fair value. This statement is effective
for annual periods ending after December 15, 1992 except for entities
with less than $150 million in total assets, for which the effective date
is for annual periods ending after December
15, 1995. The future adoption of SFAS 107 is not expected to have a
material impact on the Company.
4. RESTRICTIONS ON CASH AND DUE FROM BANKS
In accordance with Federal Reserve Board Regulation D, the Bank
maintains reserve balances with the Federal Reserve Bank based on the
overall levels of transaction account
balances. The average amount of those reserve balances, net of vault
cash, for the years ended December 31, 1994 and 1993 was $750,000 and
$450,000, respectively.
5. INVESTMENT SECURITIES
The amortized cost and estimated fair values of securities
available for sale are as follows:
1994
Gross Gross Estimated
Amortized UnrealizedUnrealized Fair
Cost Gains
Losses Value
U.S. Treasury securities and
obligations of U.S. government
agencies $2,609,439 $ 0
$73,953 $2,535,486
Mortgage-backed securities 6,658,395 0 294,300
6,364,095
Total debt securities 9,267,834 0 368,253
8,899,581
Equity securities 545,200 0 0
545,200
$9,813,034 $ 0 $368,253 $9,444,781
1993
Gross Gross Estimated
Amortized UnrealizedUnrealized Fair
Cost Gains
Losses Value
U.S. Treasury securities and
obligations of U.S. government
agencies $14,698,422 $424,925 $
71,125 $15,052,222
Mortgage-backed securities 11,810,317 284,725 72,892
12,022,150
Collateralized mortgage obligations 35,067 310 0
35,377
Total debt securities 26,543,806 709,960
144,017 27,109,749
Equity securities 230,500 0 0
230,500
$26,774,306 $709,960 $144,017
$27,340,249
The amortized cost and estimated fair values of investment securities
held to maturity are as follows:
1994
Gross Gross Estimated
Amortized UnrealizedUnrealized Fair
Cost Gains
Losses Value
U.S. Treasury securities and
obligations of U.S. government
agencies $18,564,708$
0$1,825,522 $16,739,186
1993
Gross Gross Estimated
Amortized UnrealizedUnrealized Fair
Cost Gains
Losses Value
U.S. Treasury securities and
obligations of U.S. government
agencies $17,319,356 $200,343
$145,859 $17,373,840
The amortized cost and estimated fair value of debt securities at
December 31, 1994 by contractual maturity, are shown below. Expected
maturities will differ from
contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties.
Available For Sale Portfolio Held To Maturity
Portfolio Estimated
Estimated
Amortized Fair Amortized Fair
Cost Value Cost Value
Due in one year or less $ 300,000 $
249,000$7,820,631$6,937,159
Due after one year
through five years 2,309,439 2,286,486 9,476,476
8,698,128
Due after five years
through ten years 0 0 1,267,601
1,103,899
Total 2,609,439
2,535,48618,564,708 16,739,186
Mortgage-backed securities 6,658,395 6,364,095 0
0
Total debt securities $9,267,834$8,899,581
$18,564,708 $16,739,186
Proceeds from sales of investments in mortgage backed securities were
$10,619,963 in 1994, $2,165,423
in 1993 and $2,046,105 in 1992. Gross gains of $28,452 and gross losses
of $483,224 were realized on the 1994 sales, gross gains of $107,709 were
realized on the 1993 sales and gross
gains of $17,187 were realized on the 1992 sales. Proceeds from sales of
investments in all other securities were $12,525,344 in 1994, $21,622,805
in 1993 and $3,164,296 in 1992.
Gross gains of $120,593 and gross losses of $119,014 were realized on the
1994 sales. Gross gains of $204,784 and gross losses of $53,138 were
realized on the 1993 sales. Gross gains
of $145,391 were realized on the 1992 sales, with no losses occurring.
At December 31, 1994, available for sale securities with book and
estimated fair values of $982,829 and $970,545, respectively; and held to
maturity securities with book and
estimated fair values of $3,527,841 and $3,222,691, respectively, were
pledged as collateral for certain deposits as required or permitted by
law.
6. LOANS AND ALLOWANCE FOR LOAN LOSSES
At December 31, 1994 and 1993, loans were as follows:
1994 1993
Real estate construction $819,550 $ 1,483,500
Real estate mortgage 34,624,58826,346,730
Commercial and financial 21,937,70020,744,954
Loans to individuals 8,918,540 4,066,982
Total loans $66,300,378
$52,642,166
The composition of fixed and variable rate loans as of December 31,
1994 and 1993 was as follows:
1994 1993
Variable rate $39,123,661
$27,547,711
Fixed rate 27,176,717
25,094,455
$66,300,378 $52,642,166
Changes in the allowance for loan losses for 1994,1993 and 1992 were
as follows:
1994 1993 1992
Balance at January 1 $1,174,964 $1,474,006
$2,015,088
Provision charged to operating expenses 70,000 90,000 375,054
Recoveries 120,147
97,432 78,243
Loans charged off (334,216) (486,474)
(994,379)
Balance at December 31 $1,030,895 $1,174,964
$1,474,006
Nonaccrual loans totaled $1,043,260, $1,386,529 and $1,950,976 at
December 31, 1994, 1993 and 1992, respectively. If interest on these
loans had been accrued, such
income would have approximated $75,650, $158,378 and $142,967 for 1994,
1993 and 1992, respectively.
7. PREMISES AND EQUIPMENT
Premises and equipment consisted of the following at December 31,
1994 and 1993:
1994 1993
Leasehold improvements $1,149,060
$ 886,005
Equipment 1,795,046
1,321,842
2,944,106 2,207,847
Accumulated depreciation and amortization
(1,413,896) (1,194,090) Premises and equipment - net
$1,530,210 $1,013,757
The Bank rents certain bank premises under lease agreements, the
initial terms of which range from 5 to 15 years. In addition to minimum
rentals, the leases have escalation
clauses based upon price indices and include provisions for additional
payments to cover taxes, insurance and maintenance. Total rental expense
for 1994, 1993 and 1992 was $512,595,
$487,485 and $451,228, respectively.
At December 31, 1994, the aggregate minimum net rental commitments
under noncancelable operating leases on bank premises are as follows:
Minimum
Rentals
1995 $ 513,347
1996 576,809
1997 566,520
1998 579,118
1999 567,551
Thereafter 1,134,362
Total $3,937,707
A portion of the Bank's main facility is occupied by a sub-tenant
under a lease which commenced in November 1994 and expires September
1999. Annual rent under the lease
is $42,120. Additionally, the sub-tenant shares in the operating expenses
of the facility.
8. DEPOSITS
Included in interest bearing deposits are certificates of deposit in
denominations of $100,000 or more which totaled $12,115,424 and
$12,946,188 at December 31, 1994 and
1993, respectively.
Interest on deposits for the years ended December 31, 1994, 1993 and
1992 consisted of the following:
1994 1993 1992
Certificates of deposit ($100,000 or more)$ 573,261 $ 590,185$
781,024
Other time deposits 758,017
834,0641,182,953
Other interest bearing accounts 1,424,882 1,340,190
1,415,568
Total interest on deposits $2,756,160
$2,764,439$3,379,545
9. SHORT-TERM BORROWINGS
Federal funds purchased, securities sold under agreements to
repurchase and other short-term borrowings
represent funds acquired for short-term liquidity needs. Federal funds
purchased mature on the business day after execution. Selected balances
and rates are as follows:
Federal funds purchased, securities sold under agreements to repurchase
and other short-term borrowings:
1994 1993
Maximum month-end balance $1,736,915 $450,555
Average daily balance 676,975 101,525
Amount outstanding at December 31 1,393,573 3,303
Average rate during the year 3.04%
3.64%
Average rate at December 31 4.37%
2.86%
10. LONG-TERM BORROWING
Long-term borrowing consists of an advance from the Federal Home Loan
Bank of Atlanta which matures August 1, 1998. The interest rate on the
long-term borrowing is fixed at
7.12%. Collateral for this borrowing consists of U. S. Treasury
securities with book values and estimated fair values of $1,267,601 and
$1,103,899, respectively, as of December 31,
1994.
11. INCOME TAXES
Applicable income taxes for the years ended December 31, 1994, 1993
and 1992 were as follows:
1994 1993 1992
Current
Federal $ 0 $ 0 $ 0
State 0 0
0
Total current 0 0 0
Deferred
Federal (567,075) 0 118,987
State (125,538) 0
26,341
Total deferred (692,613) 0 145,328
Total income tax expense $(692,613) $ 0 $145,328
Components of deferred income taxes for the years ended December 31
1994,1993 and 1992 were as follows:
1994 1993 1992
Provision for loan losses $(115,618) $140,202 $248,134
Loan fees and costs (100,704) (36,024) (5,575)
Depreciation (54,220) (8,631) (11,876)
Loan income (29,216) (5,952) (55,214)
Net operating loss carryforward (568,134) (89,595) (30,141)
Other (24,545) 0 0
$(692,613) $ 0 $145,328
The valuation allowance for deferred tax assets decreased by $675,209
in 1994 due to the Company's ability to realize more tax benefits as a
result of higher taxable income than
previously anticipated for 1994 and future years. The increased level of
projected future taxable income reflects the Company's improved earnings
capacity. The net deferred tax assets at
December 31, 1994 are expected to be realized through expected future
taxable income.
Income tax expense for the year ended December 31, 1992 contains
charges in lieu of federal income taxes that would have been required to
be recognized had the Company not
been able to utilize an operating loss carryforward . The tax benefit
resulting from such utilization is shown as an extraordinary item. The
Company has a federal net operating loss
carryforward of approximately $1,016,000 which expires in 2007 and may be
used to offset future tax liability.
A reconciliation between actual tax expense and taxes computed at the
statutory rate for the years ended December 31, 1994, 1993 and 1992 is as
follows:
1994
1993 1992
Percent
Percent Percent
of Pretax
of Pretax of Pretax
Amount income Amount
income Amount income
Tax computed at statutory rate $174,669 34.0% $379,144
34.0% $128,436 34.0%
State income taxes
net of federal income tax benefit 23,905 4.7% 48,690
4.4% 16,892 4.5%
Utilization of net operating
loss carryforward 0 0% (432,821)
(38.4%) 0 0%
Tax exempt interest (3,694) (.7%) 0
0% 0 0%
Non-deductible expenses 4,944 .9% 0
0% 0 0%
Recognition of deferred tax asset (892,437) (173.7%) 0
0% 0 0%
Actual tax (benefit) expense $(692,613) (134.8)% 0
0% $145,328 38.5%
The tax effects of each type of significant item that gave rise to
deferred income taxes as of December 31 were as follows:
1994 1993
Deferred tax assets:
Provision for loan losses $115,618 $171,536
Loan fees and costs 100,704 86,949
Loan income 29,216 61,166
Depreciation 54,220 40,823
Unrealized holding losses on investment
securities available for sale 213,959 0
Net operating loss carryforward 392,382 533,302
Other 24,545 0
930,644 893,776
Valuation allowance for
deferred tax assets 0 (675,209)
Total deferred tax assets $930,644 $218,567
Deferred tax liabilities:
Unrealized holding gains on investment
securities available for sale $ 0 $218,567
Net deferred tax assets $930,644 $ 0
12. PROFIT SHARING PLAN
The subsidiary bank has a 401(k) profit sharing plan covering all
employees who meet certain service requirements. Contributions made to
the plan for the years ended December 31,
1994, 1993 and 1992 were $26,787, $37,045 and $19,448, respectively.
13. STOCK OPTIONS AND WARRANTS
In 1994, the Company renewed a five-year stock option plan providing
for the periodic granting of options to certain employees to purchase
shares of the Company's stock. Under the
terms of the plan, 78,000 unissued shares have been allocated for this
purpose. Options are exercisable at a price at least equal to the fair
market value at the date of the grant and expire
not later than five years from the date of the grant. As of December 31,
1994, options granted under the plan are as follows:
Price
Number Per Year
of Shares Share Expires
4,020 $8.33 1995
6,900 6.67 1996
4,080 3.33 1997
18,000 5.00 1998
24,620 6.67 1999
57,620
At December 31, 1994, the Company had outstanding warrants to
purchase 108,000 shares of the Company's common stock at a price of $5.00
per share, adjusted for splits,
expiring in 1999.
14. RELATED PARTY TRANSACTIONS
In the ordinary course of business, loans are made to officers and
directors of the Company and its subsidiary. These loans are made on
substantially the same terms and
conditions as those prevailing at the time for comparable transactions
with outsiders and are not considered to involve more than the normal
risk of collectibility.
For the years ended December 31, 1994, 1993 and 1992 an analysis of
such aggregate loans is as follows:
1994 1993 1992
Balance at January 1 $2,990,545
$3,209,821$3,267,535
New loans 2,895,727 1,567,758
1,933,092
Repayments (2,556,668)
(1,787,034) (1,990,806)
Balance at December 31 $3,329,604$
2,990,545$3,209,821
15. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
In the normal course of business, to meet the financial needs of its
customers, the Bank is a party to financial instruments with off-balance
sheet risk. These financial
instruments include commitments to extend credit, standby letters of
credit and purchase commitments.
The Bank's exposure to credit loss in the event of nonperformance by
the other party to these financial instruments is represented by the
contractual amount of the instruments.
The Bank uses the same credit policies in making commitments and
conditional obligations as it does for on-balance sheet instruments.
The Bank generally requires collateral or other security to support
the financial instruments with credit risk. The amount of collateral or
other security is determined based on
management's credit evaluation of the counterparty.
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 drawn upon, the total
commitment amount does not necessarily represent future cash
requirements. The Bank evaluates each customer's creditworthiness on a
case-by-case basis.
Standby letters of credit are conditional commitments issued by the
Bank to guarantee the performance of a customer to a third party. The
credit risk involved in issuing
letters of credit is essentially the same as that involved in extending
loan facilities to customers.
Contract Amount
1994 1993
Financial instruments whose contract
amounts represent credit risk:
Commitments to extend credit $13,654,007 $9,480,709
Standby letters of credit 568,438 798,203
16. RESTRICTIONS ON DIVIDENDS
The Bank is subject to certain requirements imposed by federal
banking statutes and regulations. These requirements, among other
things, establish minimum levels for capital
and restrict the amounts of dividends that can be distributed. Currently
no dividends may be paid by the Bank without approval by the Comptroller
of the Currency.
17. REGULATORY MATTERS
On April 10, 1994 the Bank received formal notice from the Office of
the Comptroller of the Currency that the Memorandum of Understanding
dated April 27, 1993 had been
lifted.
18. CONSOLIDATED QUARTERLY SUMMARY OF OPERATIONS (UNAUDITED)
1994
1993
FOURTH THIRD SECOND FIRST FOURTHTHIRD SECOND
FIRST
QUARTER QUARTERQUARTERQUARTER
QUARTERQUARTER QUARTER QUARTER
(Dollars in
Thousands, except per share data)
INTEREST INCOME $2,066$1,946 $1,846 $1,905
$1,854$1,804$1,746$1,666
INTEREST EXPENSE 785 711 649 661 701 689 675
703
NET INTEREST INCOME 1,281 1,235 1,197 1,244 1,153 1,115 1,071
963
PROVISION FOR LOAN LOSSES 0 0 10 60 60 0 0
30
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES1,281 1,235 1,187 1,184 1,093 1,115 1,071
933
OTHER INCOME (368) 196 199 214 232 244 254
310
OTHER EXPENSES 1,307 1,093 1,136 1,079 1,069 982 1,037
1,049
INCOME (LOSS) BEFORE
INCOME TAXES (394) 338 250 319 256 377 288
194
INCOME TAX BENEFIT (693) 0 0 0 0 0 0
0
NET INCOME $299 $338 $250 $319 $256 $377 $288
$194
PER SHARE DATA
AVERAGE COMMON
SHARES OUTSTANDING 1,693 1,693 1,693 1,410 1,410 1,410 1,410
1,410
NET INCOME $.17 $.20 $.15 $.19 $.16 $.22 $.17
$.11
DIVIDENDS 0 0 0 0 0 0 0
0
MARKET PRICE
HIGH 9.00 8.50 9.00 8.50 6.00 4.50 4.00
3.50
LOW 7.00 6.50 6.13 6.50 4.75 4.50 4.00
3.50
19. PARENT COMPANY FINANCIAL INFORMATION
Condensed financial information for Allegiance Banc Corporation (parent
company only) is as follows:
CONDENSED BALANCE SHEETS
December
31,
1994 1993
ASSETS
Cash $ 100,247 $
210,707
Investment securities available for sale 453,042
539,164
Loans 95,125
0
Investment in subsidiary
9,867,774 9,465,079
Deferred income tax benefits
55,155 0
Other assets
12,479 53,707
TOTAL ASSETS
$10,583,822 $10,268,657
LIABILITIES
Other liabilities
$ 5,557 $ 6,473
SHAREHOLDERS' EQUITY
Common stock
1,695,750 1,410,000
Surplus 10,640,450
10,628,000
Accumulated deficit
(1,417,881) (2,341,759)
Net unrealized holding gains on securities available for sale
(340,054) 565,943
Total shareholders' equity
10,578,265 10,262,184
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$10,583,822$10,268,657
CONDENSED STATEMENTS OF INCOME (LOSS)
Years
ended December 31,
Income: 1994 1993 1992
Taxable interest income $ 46,217$
44,927 $ 54,446
Other operating income 51
0 21,867
Total income 46,268
44,927 76,313
Interest and other expenses 137,959
86,816 123,290
Loss before equity in
income of subsidiary (91,691)
(41,889) (46,977)
Equity in income of subsidiary 1,266,862 1,157,017
424,731
Net income before income tax benefit 1,175,171 1,115,128
377,754
Income tax benefit
(31,175) 0 0
Net income $ 1,206,346
$ 1,115,128 $ 377,754
CONDENSED STATEMENTS OF CASH FLOWS
Years
ended December 31,
1994 1993
1992
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $
1,206,346 $ 1,115,128 $ 377,754
Equity in income of subsidiaries (1,266,862)
(1,157,017) (424,731)
Decrease in other assets
10,053 2,385 132
(Decrease) increase in other liabilities (916) 3,815
2,568
Net cash used by operating activities (51,379)
(35,689) (44,187)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities and principal
payments of available for sale investment securities 120,265
205,277 335,012
Purchases of available for sale investment securities (99,953)
(300,000) (399,621)
(Increase) decrease in loans (95,125)
200,000 195,511
Net cash (used) provided by investing activities (74,813)
105,277 130,902
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock 15,732 0
0
NET (DECREASE) INCREASE IN
CASH AND CASH EQUIVALENTS (110,460) 69,588
86,715
CASH AND CASH EQUIVALENTS
AT BEGINNING OF YEAR 210,707
141,119 54,404
CASH AND CASH EQUIVALENTS
AT END OF YEAR $ 100,247
$ 210,707 $ 141,119
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the registrant has duly caused this
report to be signed on its behalf by the undersigned,
thereunto duly authorized.
ALLEGIANCE BANC CORPORATION
By:
Leonard L. Abel
President and
Chairman of the Board
Date: March , 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and
on the dates indicated.
Signature Title
Date
Chairman of
the Board March ,1995
(Leonard L. Abel) and President
(Principal Executive Officer)
Vice
President March ,1995
(Thomas E. Beery) and Director
(Principal Financial Officer)
Director
March ,1995
(Dudley C. Dworken)
Director
March ,1995
(William A. Koier)
Director
March ,1995
(Ronald E. Parr)
Director
March ,1995
(Ronald D. Paul)
Director
March ,1995
(Thomas L. Phillips)
Vice
President and Controller March ,1995
(Stephen C. Jones)
