<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
____________________
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____ to ____
Commission File No. 0-15518
ALLIED BANKSHARES, INC.
(Exact name of registrant as specified in its charter)
GEORGIA 58-1599653
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P. O. Box 1020, Thomson, Georgia 30824
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(706) 595-9500
_____________________
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 3 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 ( )
The number of shares outstanding of registrant's common stock, par value $1.00
per share, at October 31, 1995 was 11,456,919.
1
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Part I. - FINANCIAL INFORMATION
ALLIED BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($ in thousands)
(Unaudited)
September 30, December 31, September 30,
1995 1994 1994
------------- ------------- -------------
ASSETS
Cash and Due From Banks $25,115 $28,159 $25,028
------------- ------------- -------------
Interest Bearing Deposits 319 918 911
------------- ------------- -------------
Funds Sold 4,650 110 190
------------- ------------- -------------
Securities Available for Sale (1) 87,285 83,641 86,888
------------- ------------- -------------
Securities 14,231 14,662 15,024
------------- ------------- -------------
Mortgage-backed Securities
Available for Sale (2) 47,298 48,935 51,488
------------- ------------- -------------
Mortgage-backed Securities 8,661 14,930 8,830
------------- ------------- -------------
Loans 318,459 312,580 314,319
Less Unearned Income (354) (378) (453)
Allowance for Loan Losses (4,245) (4,635) (4,607)
------------- ------------- -------------
Loans, net 313,860 307,567 309,259
------------- ------------- -------------
Premises and Equipment, net 13,918 13,307 13,254
------------- ------------- -------------
Goodwill and Intangible Assets 14,784 13,426 13,326
------------- ------------- -------------
Other Assets 8,771 10,185 8,504
------------- ------------- -------------
Total Assets $538,892 $535,840 $532,702
============= ============= =============
(1) Includes unrealized gains
(losses) on securities
available for sale, $1,569 ($4,141) ($2,231)
(2) Includes unrealized gains
(losses) mortgage-backed
securities available for
sale, net $602 ($2,125) ($1,344)
[FN]
SEE NOTES TO CONSOLIDATED FINANCIAL STATMENTS
2
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ALLIED BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($ in thousands)
(UNAUDITED)
September 30, December 31, September 30,
1995 1994 1994
------------- ------------- -------------
LIABILITIES
Deposits
Non-interest-bearing $56,304 $54,097 $51,023
Interest-bearing
NOW and Money Market Accounts 96,733 103,622 94,908
Savings 27,337 28,873 31,189
Other Time 235,687 228,221 235,822
------------- ------------- -------------
Total Deposits 416,061 414,813 412,942
Funds Purchased 4,560 12,150 8,180
Short-term Borrowings 45,139 49,485 46,956
Long-term Debt 1,213 1,164 3,713
Other Liabilities 6,579 1,776 3,722
------------- ------------- ------------
Total Liabilities 473,552 479,388 475,513
------------- ------------- -------------
Commitments
STOCKHOLDERS' EQUITY
Preferred Stock, $1 Par Value,
25,000,000 Shares Authorized;
None Issued - - -
Common Stock, $1 Par Value,
50,000,000 Shares Authorized;
11,490,847, 11,474,434 and
10,597,913 Shares Issued at
September 30, 1995, December
31, 1994, and September 30,
1994, respectively 11,491 11,474 10,598
Surplus 35,818 35,668 36,976
Retained Earnings 17,033 13,311 12,403
Less Treasury Stock at Cost,
33,928 Shares at September 30,
1995 (348) - -
Unrealized Gains (Losses)
on Securities 1,346 (4,001) (2,288)
------------- ------------- -------------
Total Stockholders' Equity 65,340 56,452 57,689
------------- ------------- -------------
Total Liabilities and
Stockholders' Equity $538,892 $535,840 $533,202
============= ============= =============
[FN]
SEE NOTES TO CONSOLIDATED FINANCIAL STATMENTS
3
<PAGE>
ALLIED BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
($ in thousands, except share data)
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
--------- --------- --------- ---------
INTEREST INCOME
Interest and Fees on Loans
Taxable Interest $ 8,149 $ 6,005 $24,110 $17,246
Tax-Exempt Interest 27 41 80 137
Interest on Mortgage-backed Securities 978 887 3,118 2,862
Interest on Investment Securities
Taxable Interest 1,144 1,023 2,918 2,556
Tax-Exempt Interest 642 525 2,006 1,850
Interest on Funds Sold 98 7 315 175
--------- --------- --------- ---------
Total Interest Income 11,038 8,488 32,547 24,826
--------- --------- --------- ---------
INTEREST EXPENSE
Interest on Deposits 4,207 2,845 11,800 8,497
Interest on Funds Purchased 12 43 171 116
Interest on Short-term Borrowings 694 318 2,390 589
Interest on Long-term Debt 22 77 66 212
--------- --------- --------- ---------
Total Interest Expense 4,935 3,283 14,427 9,414
--------- --------- --------- ---------
NET INTEREST INCOME 6,103 5,205 18,120 15,412
Provision for Loan Losses 85 73 389 189
--------- --------- --------- ---------
Net Interest Income After Provision
for Loan Losses 6,018 5,132 17,731 15,223
--------- --------- --------- ---------
NON-INTEREST INCOME
Service Charges on Deposit Accounts 836 745 2,481 1,947
Gains on Sales of Mortgage Loans
Held for Sale 229 128 544 571
Gains on Sales of Securities, net 12 3 41 326
Gain on Sale of Mortgage Servicing
Rights - - - 207
Credit Life Insurance Commissions 31 42 151 120
Mortgage Servicing Fees 27 29 87 113
Gain on Sale of Databank South, Inc. - 96 - 132
Gain on Expired Securities Options
Premiums - - - 106
Other Income 38 97 684 397
--------- --------- --------- ---------
Total Non-Interest Income 1,173 1,140 3,988 3,919
--------- --------- --------- ---------
[FN]
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4
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ALLIED BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
($ in thousands, except share data)
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
--------- --------- --------- ---------
NON-INTEREST EXPENSE
Salaries and Other Personnel Benefits 2,062 1,945 6,035 5,513
Net Occupancy and Equipment Expense 559 489 1,686 1,516
Computer Expense 211 269 629 647
FDIC Insurance Premiums 75 218 556 616
Writedown of Loans Held For Sale to
Fair Value - - - 129
Amortization of Goodwill and
Intangible Assets 313 143 875 360
Office Supplies 123 127 344 302
Legal and Professional Expense 123 409 343 598
Postage 88 106 246 214
Other Expense 396 548 1,203 1,544
--------- --------- ---------- ---------
Total Non-Interest Expense 3,950 4,254 11,917 11,439
--------- --------- ---------- ---------
Income Before Provision for Income Taxes 3,241 2,018 9,802 7,703
Provision for Income Taxes 993 516 3,068 2,094
--------- --------- ---------- ---------
NET INCOME $2,248 $1,502 $6,734 $5,609
--------- --------- ---------- ---------
NET INCOME PER COMMON SHARE $0.20 $0.14 $0.59 $0.53
========= ========= ========== =========
Weighted Average Common Shares
(in thousands) 11,452 10,611 11,478 10,633
========= ========= ========== =========
[FN]
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5
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ALLIED BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in thousands)
(UNAUDITED)
Nine Months Ended
September 30,
1995 1994
--------- ---------
Increase (Decrease) In Cash And Cash Equivalents
Cash Flows From Operating Activities
Mortgage Loans Sold $27,150 $27,557
Interest and Fees on Loans 23,588 17,191
Interest on Mortgage-backed Securities 3,198 2,916
Interest on Investment Securities 5,279 3,987
Interest on Funds Sold 315 175
Service Charges on Deposit Accounts 2,481 1,947
Other Non-Interest Income 806 610
Mortgage Loans Originated For Sale (29,035) (28,279)
Interest Paid on Deposits (10,589) (9,052)
Interest Paid on Borrowings (2,786) (819)
Salaries and Other Personnel Benefits (5,833) (5,477)
Other Non-Interest Expense (4,028) (4,471)
Income Taxes Paid (4,160) (2,757)
Income Taxes Refund Received 938 -
--------- ---------
Net Cash Provided by (Used In) Operating Activities 7,324 3,528
--------- ---------
Cash Flows From Investing Activities
Net Decrease in Interest Bearing Deposits 599 -
Consideration Paid for Citizens Bank & Trust - (7,131)
Consideration Paid for Jefferson Bancshares, Inc. - (842)
Proceeds From Acquisition of Washington, Ga. Branch 25,733 -
Principal Payments on Mortgage-backed Securities AFS 4,427 11,062
Principal Payments on Mortgage-backed Securities 134 589
Proceeds From Sales of Mortgage-backed Securities AFS 6,017 -
Proceeds from Maturities of Investment Securities AFS 3,984 2,184
Proceeds from Maturities of Investment Securities 500 -
Proceeds From Sales of Investment Securities AFS - 17,882
Purchases of Investment Securities AFS (1,907) (24,163)
Purchases of Mortgage-backed Securities AFS - (10,431)
Loans Made to Customers, Net of Principal
Collected on Loans (4,900) (21,094)
Recoveries on Loans Previously Charged Off 329 225
Proceeds From Sale of Databank South, Inc. - 171
Puchases of Premises and Equipment (294) (1,260)
Proceeds From Sales of Premises and Equipment 307 77
Proceeds From Sale of Investment in Other
Financial Institution 225 -
Collection of Receivable from Bonding Company 1,854 -
Other, Net 279 (16)
--------- ---------
Net Cash Provided By (Used In) Investing Activities 37,287 (32,747)
--------- ---------
[FN]
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6
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ALLIED BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in thousands)
(UNAUDITED)
Nine Months Ended
September 30,
1995 1994
--------- ---------
Cash Flows From Financing Activities
Net Decrease in Deposits (28,035) (16,700)
Net Decrease in Funds Purchased (7,590) (2,117)
Net Increase (Decrease) in Short-term Borrowings (4,296) 32,977
Repayment of Long-term Debt (1) (13)
Issuance of Common Stock Through Dividend
Reinvestment Plan 140 329
Purchase of Treasury Stock (348) -
Cash Dividends Paid (2,985) (2,294)
--------- ---------
Net Cash Used In Financing Activities (43,115) 12,182
--------- ---------
Net Decrease In Cash And Cash Equivalents 1,496 (17,037)
Cash And Cash Equivalents At January 1, 28,269 42,255
--------- ---------
Cash And Cash Equivalents At September 30, $29,765 $25,218
--------- ---------
Net Income $6,734 $5,609
--------- ---------
Adjustments To Reconcile Net Income To Net Cash
Provided By Operating Activities
Depreciation and Amortization 1,654 1,273
Provision for Loan Losses 389 189
Gain on Sales of Mortgage Loans, net (544) (442)
Gain on Sales of Investment Securities (41) (326)
Gain on Sale of Databank South, Inc. - (132)
Gain on Sale of Mortgage Servicing Rights - (207)
Gain on Sale of Fixed Assets (116) -
Loss on Settlement with Bonding Company 76 -
Sales of Securities Option Premiums - (106)
Net Change in Mortgage Loans Held for Sale (1,885) (722)
Increase in Interest Receivable (212) (687)
(Increase) Decrease in Other Assets, net (39) 49
Increase (Decrease) in Interest Payable 1,052 (457)
Increase (Decrease) in Income Taxes Payable 459 (663)
Increase (Decrease) in Other Liabilities, net (203) 150
--------- ---------
Total Adjustments 590 (2,081)
--------- ---------
Net Cash Provided by Operating Activities $7,324 $3,528
========= =========
[FN]
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7
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ALLIED BANKSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1995
(UNAUDITED)
NOTE 1 - PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
its subsidiaries. All significant intercompany transactions have been
eliminated. All of the entities included in the Consolidated Financial
Statements are hereinafter referred to as the "Company."
The Consolidated Balance Sheets as of September 30, 1995 and 1994, the related
Consolidated Statements of Income for the three and nine month periods ended
September 30, 1995 and 1994 and Consolidated Statements of Cash Flows for the
nine month periods ended September 30, 1995 and 1994 are unaudited; in the
opinion of management all adjustments necessary for a fair presentation of such
financial statements have been included.
The Consolidated Financial Statements and Notes are presented as permitted by
Form 10-Q, and do not contain certain information included in the Company's
annual financial statements and notes as filed in Form 10-K. The accounting
policies employed are the same as shown in Note 1 to the Consolidated Financial
Statements of Form 10-K.
Certain 1994 amounts have been reclassified to conform with the 1995
presentation. All adjustments are of a normal recurring nature. All share and
per share amounts have been adjusted for the effect of one 25% stock dividend
paid by the Company on December 1, 1994.
NOTE 2 - ADOPTION OF ACCOUNTING STANDARDS
The Company adopted SFAS No. 114, Accounting by Creditors for Impairment of a
Loan, and SFAS No. 118, Accounting by Creditors for Impairment of a Loan, Income
Recognition and Disclosure, as of January 1, 1995. SFAS No. 114 requires that
certain impaired loans be measured based on the present value of expected future
cash flows discounted at the loans' original effective interest rate. As a
practical expedient, impairment may be measured based on the loans' observable
market price or the fair value of the collateral if the loans are collateral
dependent. When the measure of the impaired loan is less than recorded
investment in the loan, the impairment is recorded through a valuation
allowance.
8
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The Company previously measured the allowance for credit losses using methods
similar to those prescribed in SFAS No. 114. As a result of adopting these
statements, no additional allowance for loan losses was required as of January
1, 1995. As of January 1, 1995, the Company's recorded investment in impaired
loans and the related valuation allowance calculated under SFAF No. 114 is as
follows:
($ in thousands)
Impaired Loans
Valuation Allowance Required $1,026
No Valuation Allowance Required 2,600
------
Total Impaired Loans $3,626
======
This valuation allowance is included in the allowance for loan losses on the
balance sheet.
NOTE 3 - PURCHASE OF WASHINGTON, GEORGIA BRANCH
On May 12, 1995, the Company purchased a branch banking location in Washington,
Georgia from First Union National Bank of Georgia for a deposit premium of $2.2
million. The Company received $25.7 million in cash in comnnection with the
purchase as follows:
($ in thousands)
Loans $ (272)
Fixed Assets (1,246)
Deposit Premium (2,183)
Other (52)
Deposits Acquired 29,283
Interest Payable on Deposits 203
-------
Net Cash Received $25,733
=======
NOTE 4 - DECLARATION OF CASH DIVIDEND
On October 17, 1995, the Board of Directors declared a regular cash dividend
of $.09 per share. The dividend is payable on December 1, 1995 to stockholders
of record as of November 15, 1995.
9
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
A. Overview
The Company's returns on average assets and average equity for the third quarter
of 1995 were 1.69% and 14.03%, respectively, compared to 1.37% and 11.94%,
respectively, for the third quarter of 1994. Nonperforming assets were $5.1
million at September 30, 1995, down from $6.2 million at December 31, 1994 and
up from $5.0 million at September 30, 1994. The net interest margins were
5.32% for the quarter ended September 30, 1995 and 5.33% for the nine months
ended September 30, 1995.
At September 30, 1995, stockholders' equity was $65.3 million as compared to
$56.5 million at December 31, 1994 and $57.2 million at September 30, 1994.
Unrealized gains (losses) on securities (net of deferred taxes) was a net gain
of $ 1.3 million at September 30, 1995 as compared to a loss of $4.0 million at
December 31, 1994 and a loss of $2.3 million at September 30, 1994. During the
first nine months of 1995 the Company paid cash dividends of $2.98 million.
B. Consolidated Results of Operations
Third Quarter 1995
Net income per share for the third quarter of 1995 was $2.2 million or $.20 per
share as compared to $1.5 million or $.14 per share for the third quarter of
1994. The increase in net income is attributed to increased net interest income
and decreased non-interest expense. Net interest income increased due to the
inclusion of Citizens Bank and Trust ("Citizens") and Jefferson Bancshares, Inc.
("Jefferson") results after the merger on September 30, 1994. The third quarter
1994 results do not include Citizens' or Jefferson's results.
Non interest expense decreased due to the recognition of non recurring merger
charges of $424,000 in the third quarter of 1994 as opposed to $0. non recurring
charges in 1995 and a decrease in FDIC insurance expense reflecting the recent
FDIC premium reduction.
10
<PAGE>
Nine Months Ended September 30, 1995 ("1995") Compared to Nine Months Ended
September 30, 1994 ("1994")
Net income for the nine months ended September 30, 1995 was $6.7 million or $.59
per share compared to $5.6 million or $.53 per share for 1994. Non interest
income increased by $69,000 despite a decline in Gains on Sale of Securities of
$285,000 and a decline in Gain on Expired Options Premiums of $106,000. These
declines were offset by an increase in Service Charges on Deposit Accounts of
$534,000.
The provision for loan losses increased $200,000 from 1994 to 1995 resulting
primarily from problem loans from the 1994 acquisitions of Citizens, Jefferson
and First Savings Bank, F.S.B. ("First Savings").
Non interest expense increased $478,000 primarily due to increased amortization
expenses of $515,000 from goodwill related to the 1994 mergers of Citizens and
Jefferson.
For the nine months ended September 30, 1995, the returns on average assets and
average equity were 1.70% and 14.71%, respectively, as compared to 1.72% and
15.00%, respectively, for the nine months ended September 30, 1994.
C. Liquidity and Capital Resources
At September 30, 1995, total assets were $539,000 million. Total equity capital
was $65.3 million or 12.1% of total assets at September 30, 1995. The Company
had unrealized gains on securities and mortgage backed securities available for
sale of $2.2 million at September 30, 1995. The Company has available adequate
sources of long and short term credit. The Company's strategy has been to
minimize long-term debt. The Company has met its liquidity needs primarily by
using short-term borrowings. Management believes that the Company has adequate
sources of liquidity.
11
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings. - None
Item 2. Changes in Securities. - None
Item 3. Defaults Upon Senior Securities. - None
Item 4. Submission of Matters to a Vote
of Security Holders. - None
Item 5. Other Information. - None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. - None
(b) Reports on Form 8-K. - None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ALLIED BANKSHARES, INC.
(Registrant)
Date: November 13, 1995 By: /S/ Boone A. Knox
Boone A. Knox, Chairman
and Chief Executive Officer
Date: November 13, 1995 By: /S/ Ben O. Howell, Jr.
Ben O. Howell. Jr.
Chief Financial Officer and
Principal Accounting Officer
12
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EXHIBIT INDEX
-------------
EXHIBIT
NO. DESCRIPTION
--------- -----------
27 Financial Data Schedule, which is submitted electronically
to the Securities and Exchange Commission and not filed.
13
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 25,115
<INT-BEARING-DEPOSITS> 319
<FED-FUNDS-SOLD> 4,650
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 134,583
<INVESTMENTS-CARRYING> 22,892
<INVESTMENTS-MARKET> 23,035
<LOANS> 318,105
<ALLOWANCE> 4,245
<TOTAL-ASSETS> 538,892
<DEPOSITS> 416,061
<SHORT-TERM> 49,699
<LIABILITIES-OTHER> 6,579
<LONG-TERM> 1,213
<COMMON> 11,491
0
0
<OTHER-SE> 53,849
<TOTAL-LIABILITIES-AND-EQUITY> 538,892
<INTEREST-LOAN> 24,190
<INTEREST-INVEST> 8,042
<INTEREST-OTHER> 315
<INTEREST-TOTAL> 32,547
<INTEREST-DEPOSIT> 11,800
<INTEREST-EXPENSE> 14,427
<INTEREST-INCOME-NET> 18,120
<LOAN-LOSSES> 389
<SECURITIES-GAINS> 41
<EXPENSE-OTHER> 11,917
<INCOME-PRETAX> 9,802
<INCOME-PRE-EXTRAORDINARY> 9,802
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,734
<EPS-PRIMARY> .59
<EPS-DILUTED> .59
<YIELD-ACTUAL> 9.36
<LOANS-NON> 1,719
<LOANS-PAST> 1,122
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 4,635
<CHARGE-OFFS> 1,108
<RECOVERIES> 329
<ALLOWANCE-CLOSE> 4,245
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 562
</TABLE>
