<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 March 31, 1996
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 $1.00
per share, at April 30, 1996 was 12,620,610.
1
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Part I. - FINANCIAL INFORMATION
ALLIED BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($ in thousands)
(Unaudited)
March 31, December 31, March 31,
1996 1995 1995
------------- ------------- -------------
ASSETS
Cash and Due From Banks $20,334 $23,494 $25,325
------------- ------------- -------------
Interest Bearing Deposits 318 318 918
------------- ------------- -------------
Funds Sold 6,180 870 7,130
------------- ------------- -------------
Securities Available-For-Sale (1) 97,965 96,736 86,277
------------- ------------- -------------
Securities - - 14,726
------------- ------------- -------------
Mortgage-Backed Securities
Available-For-Sale (2) 96,146 76,363 42,679
------------- ------------- -------------
Mortgage-Backed Securities - - 14,993
------------- ------------- -------------
Loans 308,563 308,285 310,985
Less Unearned Income (305) (317) (372)
Allowance for Loan Losses (4,240) (4,312) (4,462)
------------- ------------- -------------
Loans, net 304,018 303,656 306,151
------------- ------------- -------------
Premises and Equipment, net 13,741 13,809 12,994
------------- ------------- -------------
Goodwill and Intangible Assets 14,158 14,473 13,127
------------- ------------- -------------
Other Assets 8,870 8,680 11,192
------------- ------------- -------------
Total Assets $561,730 $538,399 $535,512
============= ============= =============
(1) Includes unrealized gains
(losses) on securities
available for sale, net $2,045 $2,449 ($1,222)
(2) Includes unrealized gains
(losses) mortgage-backed
securities available for
sale, net ($104) $977 ($892)
[FN]
SEE NOTES TO CONSOLIDATED FINANCIAL STATMENTS
2
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ALLIED BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($ in thousands)
(UNAUDITED)
March 31, December 31, March 31,
1996 1995 1995
------------- ------------- -------------
LIABILITIES
Deposits
Non-Interest-Bearing $49,361 $57,706 $51,843
Interest-Bearing
NOW and Money Market Accounts 106,676 99,514 92,258
Savings 27,032 26,324 27,101
Other Time 245,181 238,041 223,682
------------- ------------- -------------
Total Deposits 428,250 421,585 394,884
Funds Purchased 4,600 1,240 3,000
Short-Term Borrowings 26,421 39,232 71,108
Long-Term Debt 26,087 1,050 1,213
Other Liabilities 8,438 7,657 4,974
------------- ------------- ------------
Total Liabilities 493,796 470,764 475,179
------------- ------------- -------------
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;
12,654,537, 12,648,943 and
12,629,971 Shares Issued;
12,620,610, 12,611,622 and
12,629,971 Shares Outstanding
at March 31, 1996, December 31, 1995
and March 31, 1995, respectively 12,655 12,649 12,630
Surplus 47,448 34,749 39,306
Retained Earnings 6,974 18,460 9,690
Less Treasury Stock, at Cost,
33,927 Shares at March 31, 1996
and December 31, 1995 (348) (348) -
Unrealized Gains (Losses)
on Securities, net 1,205 2,125 (1,293)
------------- ------------- -------------
Total Stockholders' Equity 67,934 67,635 60,333
------------- ------------- -------------
Total Liabilities and
Stockholders' Equity $561,730 $538,399 $535,512
============= ============= =============
[FN]
SEE NOTES TO CONSOLIDATED FINANCIAL STATMENTS
3
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ALLIED BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
($ in thousands, except share data)
(UNAUDITED)
Three Months Ended
March 31,
1996 1995
--------- ---------
INTEREST INCOME
Interest and Fees on Loans
Taxable Interest $ 7,781 $ 7,986
Tax-Exempt Interest 24 26
Interest on Mortgage-Backed Securities 1,559 1,120
Interest on Investment Securities
Taxable Interest 947 899
Tax-Exempt Interest 627 683
Interest on Funds Sold 168 61
--------- ---------
Total Interest Income 11,106 10,775
--------- ---------
INTEREST EXPENSE
Interest on Deposits 4,305 3,593
Interest on Funds Purchased 54 124
Interest on Short-Term Borrowings 557 860
Interest on Long-Term Debt 333 21
--------- ---------
Total Interest Expense 5,249 4,598
--------- ---------
NET INTEREST INCOME 5,857 6,177
Provision for Loan Losses - 204
--------- ---------
Net Interest Income After Provision
for Loan Losses 5,857 5,973
--------- ---------
NON-INTEREST INCOME
Service Charges on Deposit Accounts 825 835
Gains on Sales of Mortgage Loans
Held-For-Sale 263 125
Gains on Sales of Securities, net 18 29
Credit Life Insurance Commissions 51 75
Mortgage Servicing Fees 33 30
Other Income 111 264
--------- ---------
Total Non-Interest Income 1,301 1,358
--------- ---------
[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
March 31,
1996 1995
--------- ---------
NON-INTEREST EXPENSE
Salaries and Other Personnel Benefits 2,070 1,978
Net Occupancy and Equipment Expense 532 571
Computer Expense 152 206
FDIC Insurance Premiums 76 237
Amortization of Goodwill and
Intangible Assets 317 254
Office Supplies 108 128
Legal and Professional Expense 89 121
Postage 94 93
Other Expense 395 410
---------- ---------
Total Non-Interest Expense 3,833 3,998
---------- ---------
Income Before Provision for Income Taxes 3,325 3,333
Provision for Income Taxes 1,064 1,028
---------- ---------
NET INCOME $2,261 $2,305
---------- ---------
NET INCOME PER COMMON SHARE $0.18 $0.18
========== =========
Weighted Average Common Shares
(in thousands) 12,614 12,625
========== =========
[FN]
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5
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ALLIED BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in thousands)
(UNAUDITED)
Three Months Ended
March 31,
1996 1995
--------- ---------
Increase In Cash And Cash Equivalents
Cash Flows From Operating Activities
Mortgage Loans Sold $12,593 $ 7,421
Interest and Fees on Loans 7,908 7,813
Interest on Mortgage-Backed Securities 1,541 1,170
Interest on Investment Securities 1,732 1,847
Interest on Funds Sold 168 61
Service Charges on Deposit Accounts 825 835
Other Non-Interest Income 189 254
Mortgage Loans Originated For Sale (14,288) (7,378)
Interest Paid on Deposits (3,869) (3,366)
Interest Paid on Borrowings (943) (1,323)
Salaries and Other Personnel Benefits (2,070) (1,978)
Other Non-Interest Expense (1,360) (1,717)
Income Taxes Paid (250) -
Income Tax Refunds Received 55 900
--------- ---------
Net Cash Provided by Operating Activities 2,231 4,539
--------- ---------
Cash Flows From Investing Activities
Net Decrease in Interest-Bearing Deposits - 99
Principal Payments on Mortgage-Backed Securities AFS 2,685 1,403
Principal Payments on Mortgage-Backed Securities - 46
Proceeds From Sales of Mortgage-Backed Securities AFS 92 6,016
Proceeds from Maturities of Investment Securities AFS 242 2,000
Proceeds From Sales of Investment Securities AFS 676 -
Purchases of Investment Securities AFS (2,527) (1,907)
Purchases of Mortgage-Backed Securities AFS (23,627) -
Loans Made to Customers, Net of Principal
Collected on Loans 1,170 657
Recoveries on Loans Previously Charged Off 84 92
Puchases of Premises and Equipment (168) (157)
Proceeds From Sales of Premises and Equipment - 263
Other, Net 83 274
--------- ---------
Net Cash (Used In) Provided By Investing Activities (21,290) 8,786
--------- ---------
[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)
(Continued)
Three Months Ended
March 31,
1996 1995
--------- ---------
Cash Flows From Financing Activities
Net Increase (Decrease) in Deposits 6,665 (19,929)
Net Increase (Decrease) in Funds Purchased 3,360 (9,150)
Net (Decrease) Increase in Short-Term Borrowings (12,761) 21,673
Proceeds From Issuance of Long-Term Debt 25,000 -
Repayment of Long-Term Debt (13) (1)
Issuance of Common Stock Through Dividend
Reinvestment Plan 93 73
Cash Dividends Paid (1,135) (905)
--------- ---------
Net Cash Provided By (Used In) Financing Activities 21,209 (8,239)
--------- ---------
Net Increase In Cash And Cash Equivalents 2,150 5,086
Cash And Cash Equivalents At January 1, 24,364 28,269
--------- ---------
Cash And Cash Equivalents At March 31, $26,514 $33,355
========= =========
Net Income $2,261 $2,305
--------- ---------
Adjustments To Reconcile Net Income To Net Cash
Provided By Operating Activities
Depreciation and Amortization 563 638
Provision for Loan Losses - 204
Gain on Sales of Mortgage Loans, net (263) (125)
Gain on Sales of Investment Securities (18) (29)
Gain on Sale of Fixed Assets - (115)
Net Change in Mortgage Loans Held-For-Sale (1,695) 43
Increase in Interest Receivable 233 99
(Increase) Decrease in Other Assets, net (72) (318)
Increase (Decrease) in Interest Payable 437 (91)
Increase in Income Taxes Payable 869 1,928
Decrease in Other Liabilities, net (84) -
--------- ---------
Total Adjustments (30) 2,234
--------- ---------
Net Cash Provided By Operating Activities $2,231 $4,539
========= =========
[FN]
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7
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ALLIED BANKSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(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 March 31, 1996 and 1995, the related
Consolidated Statements of Income and Consolidated Statements of Cash Flows for
the three month periods ended March 31, 1996 and 1995 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 1995 amounts have been reclassified to conform with the 1996
presentation. All adjustments are of a normal recurring nature. All share and
per share amounts have been adjusted for the effect of a 10% stock dividend paid
by the Company on March 1, 1996.
8
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
A. Overview
For the first quarter 1996 the Company's returns on average assets and average
equity were 1.62% and 14.16%, respectively, compared to 1.78% and 15.45%,
respectively, for the first quarter of 1995. Nonperforming assets were $6.4
million at March 31, 1996, up from $6.2 million at December 31, 1995 and $4.5
million at March 31, 1995. For the first quarter of 1996 the net interest
margin was 4.91% as compared to 5.55% for the first quarter of 1995.
B. Consolidated Results of Operations
First Quarter 1996 compared to First Quarter 1995
Net income per share for the first quarter of 1996 was $.18 per share as
compared to $.18 per share for the first quarter of 1995. First quarter 1996
net income was $2.3 million as compared to $2.3 million for 1995.
Taxable equivalent net interest income declined $.3 million from $6.5 million
for the first quarter of 1995 to $6.2 million for the first quarter of 1996
primarily due to an unfavorable rate change of $1.6 million offset by a
favorable volume change of $1.3 million. During the first quarter of 1996
the Company increased long-term debt by $25.0 million which was borrowed at a
fixed rate of 5.755% and is due in 2001. These funds were used to purchase
additional mortgage-backed securities. The yield on average mortgage-backed
securities declined 62 basis points from 7.44% to 6.82% for the first
quarter of 1996 as compared to the first quarter of 1995. Additionally, the
Company experienced increased competition for deposits which resulted in an
unfavorable rate increase on deposits.
The decrease in taxable equivalent net interest income of $.3 million, along
with a decrease in non-interest income of $.1 million was offset by a
decrease in the provision for loan losses of $.2 million and a decline in
non-interest expense of $.2 million, primarily due to reduced FDIC insurance
premium expense.
C. Liquidity and Capital Resources
Management of the Company believes that the Company has available adequate
liquidity sources. Through its subsidiary banks, the Company has the ability to
sell and borrow Federal funds on a short-term basis to meet its liquidity
needs.
The Company also has the ability to generate cash through the sale of its
securities available-for-sale portfolio. Management of the Company believes
that its capital resources are adequate. At March 31, 1996, the Company's
ratio of equity capital to total assets was 12.1%. At March 31, 1996,
unrealized gains (losses) on securities, net, was $1.2 million as compared to
$2.1 million at December 31, 1995.
9
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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: May 14, 1996 By:/s/ Boone A. Knox
Boone A. Knox
Chairman and
Chief Executive Officer
Date: May 14, 1996 By:/s/ Ben O. Howell, Jr.
Ben O. Howell, Jr.
Chief Financial Officer and
Principal Accounting Officer
10
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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.
11
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 20,334
<INT-BEARING-DEPOSITS> 318
<FED-FUNDS-SOLD> 6,180
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 194,111
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 308,258
<ALLOWANCE> 4,240
<TOTAL-ASSETS> 561,730
<DEPOSITS> 428,250
<SHORT-TERM> 31,021
<LIABILITIES-OTHER> 8,438
<LONG-TERM> 26,087
<COMMON> 12,655
0
0
<OTHER-SE> 55,279
<TOTAL-LIABILITIES-AND-EQUITY> 561,730
<INTEREST-LOAN> 7,805
<INTEREST-INVEST> 3,133
<INTEREST-OTHER> 168
<INTEREST-TOTAL> 11,106
<INTEREST-DEPOSIT> 4,305
<INTEREST-EXPENSE> 5,249
<INTEREST-INCOME-NET> 5,857
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 18
<EXPENSE-OTHER> 3,833
<INCOME-PRETAX> 3,325
<INCOME-PRE-EXTRAORDINARY> 3,325
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,261
<EPS-PRIMARY> .18
<EPS-DILUTED> .18
<YIELD-ACTUAL> 4.91
<LOANS-NON> 2,039
<LOANS-PAST> 1,823
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 4,312
<CHARGE-OFFS> 156
<RECOVERIES> 84
<ALLOWANCE-CLOSE> 4,240
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 562
</TABLE>
