<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 June 30, 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 $1.00
per share, at July 31, 1996 was 12,629,581.
1
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Part I. - FINANCIAL INFORMATION
ALLIED BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($ in thousands)
(Unaudited)
June 30, December 31, June 30,
1996 1995 1995
------------- ------------- -------------
ASSETS
Cash and Due From Banks $28,806 $23,494 $22,549
------------- ------------- -------------
Interest Bearing Deposits 316 318 717
------------- ------------- -------------
Funds Sold 10,210 870 5,200
------------- ------------- -------------
Securities Available-For-Sale (1) 91,588 96,736 88,672
------------- ------------- -------------
Securities - - 14,692
------------- ------------- -------------
Mortgage-Backed Securities
Available-For-Sale (2) 87,301 76,363 48,960
------------- ------------- -------------
Mortgage-Backed Securities - - 8,725
------------- ------------- -------------
Loans 305,444 308,285 314,466
Less Unearned Income (298) (317) (347)
Allowance for Loan Losses (4,458) (4,312) (4,324)
------------- ------------- -------------
Loans, net 300,688 303,656 309,795
------------- ------------- -------------
Premises and Equipment, net 13,798 13,809 14,026
------------- ------------- -------------
Goodwill and Intangible Assets 13,822 14,473 15,066
------------- ------------- -------------
Other Assets 9,727 8,680 9,072
------------- ------------- -------------
Total Assets $556,256 $538,399 $537,474
============= ============= =============
(1) Includes unrealized gains
(losses) on securities
available-for-sale, net $372 $2,449 $1,056
(2) Includes unrealized gains
(losses) on mortgage-backed
securities available-for-
sale, net (1,705) 977 570
[FN]
SEE NOTES TO CONSOLIDATED FINANCIAL STATMENTS
2
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ALLIED BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($ in thousands)
(UNAUDITED)
(Continued)
June 30, December 31, June 30,
1996 1995 1995
------------- ------------- -------------
LIABILITIES
Deposits
Non-Interest-Bearing $60,581 $57,706 $59,795
Interest-Bearing
NOW and Money Market Accounts 102,711 99,514 89,017
Savings 26,875 26,324 28,691
Other Time 248,171 238,041 238,647
------------- ------------- -------------
Total Deposits 438,338 421,585 416,150
Funds Purchased 5,000 1,240 -
Short-Term Borrowings 12,727 39,232 50,249
Long-Term Debt 26,087 1,050 1,213
Other Liabilities 7,429 7,657 6,125
------------- ------------- ------------
Total Liabilities 489,581 470,764 473,737
------------- ------------- -------------
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;
12,629,581, 12,611,622 and
12,593,298 Shares Outstanding at
June 30, 1996, December 31, 1995
and June 30, 1995, respectively 12,655 12,649 12,631
Surplus 47,457 34,749 40,729
Retained Earnings 7,668 18,460 9,690
Less Treasury Stock, at Cost,
24,956 Shares at June 30, 1996;
33,927 Shares at December 31,
1995 and June 30, 1995,
respectively (256) (348) (348)
Unrealized Gains (Losses)
on Securities, net (849) 2,125 1,035
------------- ------------- -------------
Total Stockholders' Equity 66,675 67,635 63,737
------------- ------------- -------------
Total Liabilities and
Stockholders' Equity $556,256 $538,399 $537,474
============= ============= =============
[FN]
SEE NOTES TO CONSOLIDATED FINANCIAL STATMENTS
3
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ALLIED BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
($ in thousands, except share data)
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
--------- --------- --------- ---------
INTEREST INCOME
Interest and Fees on Loans
Taxable Interest $7,836 $7,975 $15,617 $15,961
Tax-Exempt Interest 24 27 48 53
Interest on Mortgage-Backed Securities 1,554 1,020 3,113 2,140
Interest on Investment Securities
Taxable Interest 765 875 1,712 1,774
Tax-Exempt Interest 634 681 1,261 1,364
Interest on Funds Sold 120 156 288 217
--------- --------- --------- ---------
Total Interest Income 10,933 10,734 22,039 21,509
--------- --------- --------- ---------
INTEREST EXPENSE
Interest on Deposits 4,265 4,000 8,570 7,593
Interest on Funds Purchased 18 35 72 159
Interest on Short-Term Borrowings 240 836 797 1,696
Interest on Long-Term Debt 375 23 708 44
--------- --------- --------- ---------
Total Interest Expense 4,898 4,894 10,147 9,492
--------- --------- --------- ---------
NET INTEREST INCOME 6,035 5,840 11,892 12,017
Provision for Loan Losses 400 100 400 304
--------- --------- --------- ---------
Net Interest Income After Provision
for Loan Losses 5,635 5,740 11,492 11,713
--------- --------- --------- ---------
NON-INTEREST INCOME
Service Charges on Deposit Accounts 951 810 1,776 1,645
Gains on Sales of Mortgage Loans
Held-For-Sale 276 190 539 315
Gains on Sales of Securities, net 134 - 152 29
Credit Life Insurance Commissions 55 45 106 120
Mortgage Servicing Fees 34 30 67 60
Other Income 118 382 229 646
--------- --------- --------- ---------
Total Non-Interest Income 1,568 1,457 2,869 2,815
--------- --------- --------- ---------
[FN]
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4
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ALLIED BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
($ in thousands, except share data)
(UNAUDITED)
(Continued)
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
--------- --------- --------- ---------
NON-INTEREST EXPENSE
Salaries and Other Personnel Benefits 2,143 1,995 4,213 3,973
Net Occupancy and Equipment Expense 567 556 1,099 1,127
Amortization of Goodwill and
Intangible Assets 339 308 656 562
Computer Expense 243 212 395 418
Writedown of Other Real Estate 350 - 350 -
Office Supplies 128 93 236 221
Postage 91 65 185 158
Legal and Professional Expense 84 99 173 220
FDIC Insurance Premiums 64 244 140 481
Other Expense 419 397 814 807
--------- --------- ---------- ---------
Total Non-Interest Expense 4,428 3,969 8,261 7,967
--------- --------- ---------- ---------
Income Before Provision for Income Taxes 2,775 3,228 6,100 6,561
Provision for Income Taxes 946 1,047 2,010 2,075
--------- --------- ---------- ---------
NET INCOME $1,829 $2,181 $4,090 $4,486
--------- --------- ---------- ---------
NET INCOME PER COMMON SHARE $0.14 $0.17 $0.32 $0.36
========= ========= ========== =========
Weighted Average Common Shares
(in thousands) 12,624 12,488 12,619 12,626
========= ========= ========== =========
[FN]
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5
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ALLIED BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in thousands)
(UNAUDITED)
Six Months Ended
June 30,
1996 1995
--------- ---------
Increase In Cash And Cash Equivalents
Cash Flows From Operating Activities
Mortgage Loans Sold $31,692 $17,260
Interest and Fees on Loans 15,757 15,633
Interest on Mortgage-Backed Securities 3,157 2,191
Interest on Investment Securities 2,894 3,290
Interest on Funds Sold 288 217
Service Charges on Deposit Accounts 1,776 1,645
Other Non-Interest Income 402 710
Mortgage Loans Originated-For-Sale (31,769) (17,296)
Interest Paid on Deposits (7,755) (6,850)
Interest Paid on Borrowings (1,512) (2,186)
Salaries and Other Personnel Benefits (4,213) (3,753)
Other Non-Interest Expense (2,451) (2,789)
Income Taxes Paid (1,636) (2,800)
Income Tax Refunds Received 196 935
--------- ---------
Net Cash Provided by Operating Activities 6,826 6,207
--------- ---------
Cash Flows From Investing Activities
Net Decrease in Interest-Bearing Deposits - 201
Proceeds From Assumption of Branch Deposits - 25,733
Principal Payments on Mortgage-Backed Securities AFS 6,274 2,766
Principal Payments on Mortgage-Backed Securities - 70
Proceeds From Sales of Mortgage-Backed Securities AFS 3,839 6,017
Proceeds from Maturities of Investment Securities AFS 3,441 2,093
Proceeds From Sales of Investment Securities AFS 3,197 -
Purchases of Investment Securities AFS (3,527) (1,907)
Purchases of Mortgage-Backed Securities AFS (23,627) -
Loans Made to Customers, Net of Principal
Collected on Loans 1,609 (2,658)
Recoveries on Loans Previously Charged Off 161 194
Puchases of Premises and Equipment (476) (157)
Proceeds From Sales of Premises and Equipment - 309
Proceeds From Sale of Investment in Other
Financial Institution - 225
Receivable From Bonding Company - 1,853
Other, Net (38) 54
--------- ---------
Net Cash (Used In) Provided By Investing Activities (9,147) 34,793
--------- ---------
[FN]
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6
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ALLIED BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in thousands)
(UNAUDITED)
(Continued)
Six Months Ended
June 30,
1996 1995
--------- ---------
Cash Flows From Financing Activities
Net Increase (Decrease) in Deposits 16,753 (27,946)
Net Increase (Decrease) in Funds Purchased 3,760 (12,150)
Net (Decrease) Increase in Short-Term Borrowings (26,455) 814
Proceeds From Issuance of Long-Term Debt 25,000 -
Repayment of Long-Term Debt (13) (1)
Issuance of Common Stock Through Dividend
Reinvestment Plan 199 62
Purchase of Treasury Stock - (348)
Cash Dividends Paid (2,271) (1,951)
--------- ---------
Net Cash Provided By (Used In) Financing Activities 16,973 (41,520)
--------- ---------
Net Increase (Decrease) in Cash and Cash Equivalents 14,652 (520)
Cash And Cash Equivalents At January 1, 24,364 28,269
--------- ---------
Cash And Cash Equivalents At June 30, $39,016 $27,749
========= =========
Net Income $4,090 $4,486
--------- ---------
Adjustments To Reconcile Net Income To Net Cash
Provided By Operating Activities
Depreciation and Amortization 1,151 1,077
Provision for Loan Losses 400 304
Writedown of Other Real Estate Owned 350 -
Gain on Sales of Mortgage Loans, net (539) (315)
Gain on Sales of Investment Securities (152) (29)
Gain on Sale of Fixed Assets - (116)
Net Change in Mortgage Loans Held-For-Sale (77) (36)
Decrease (Increase) in Interest Receivable 47 (205)
Increase in Other Assets, net (30) (54)
Increase in Interest Payable 880 456
Increase in Income Taxes Payable 570 210
Decrease in Other Liabilities, net 136 429
--------- ---------
Total Adjustments 2,736 1,721
--------- ---------
Net Cash Provided By Operating Activities $6,826 $6,207
========= =========
[FN]
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7
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ALLIED BANKSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 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 June 30, 1996 and 1995, the related
Consolidated Statements of Income and Consolidated Statements of Cash Flows for
the three month and six month periods ended June 30, 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.
NOTE 2 - PROPOSED MERGER WITH REGIONS FINANCIAL CORPORATION
On June 13, 1996 the Company announced that it had agreed to merge with Regions
Financial Corporation of Birmingham, Alabama. Under the terms of the agreement,
each share of Allied is to be exchanged for .226 shares of Regions common stock
through a tax free exchange. This transaction is subject to regulatory approval
and is expected to be consummated in the first quarter of 1997.
8
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
A. Overview
For the second quarter of 1996 the Company's returns on average assets and
average equity were 1.31% and 10.94%, respectively, compared to 1.47% and 12.51%
respectively, for the second quarter of 1995. Nonperforming assets were $5.8
million at June 30, 1996, down from $6.2 million at December 31, 1995 and up
from $4.8 million at June 30, 1995. The net interest margins were 5.04% for
the quarter ended June 30, 1996 and 4.97% for the six months ended June 30, 1996
as compared to 5.24% for the quarter ended June 30, 1995 and 5.40% for the six
months ended June 30, 1995.
B. Consolidated Results of Operations
Second Quarter 1996 compared to Second Quarter 1995
Net income for the second quarter of 1996 was $1.8 million or $.14 per share as
compared to $2.2 million or $.17 per share for the second quarter of 1995.
The decrease in net income is due to increases in net interest income and non-
interest income offset by increases in the provision for loan losses and
non-interest expense.
Taxable equivalent net interest income increased by $203,000 in 1996 as compared
to 1995, the result of a favorable volume increase of $641,000 offset by an
unfavorable rate decrease of $438,000. The volume increase was due to a higher
level of mortgage-backed securities. The rate decline was due to a shift in
funding from short-term debt to less expensive long-term debt.
During the second quarter of 1996, the Company's provision for loan losses was
$400,000 as compared to $100,000 for 1995. Also, in the second quarter of 1996
the Company changed its marketing strategy concerning other real estate owned
and, as a result, wrote down other real estate owned by $350,000 in the second
quarter of 1996. The Company may incur additional writedowns as necessary in
future quarters, depending on market conditions, to facilitate the disposition
of the remaining properties carried in other real estate owned.
Six Months Ended June 30, 1996 Compared to Six Months Ended June 30, 1995
Net income for the six months ended June 30, 1996 was $4.1 million or $.32 per
share as compared to $4.5 million or $.36 per share for the six months ended
June 30, 1995.
The decrease in net income is due to increases in net interest income and
non-interest income offset by increases in the provision for loan
losses and non-interest expense.
Taxable-equivalent net interest income for the six months ended June 30, 1996
decreased by $108,000 as compared to 1995, the result of a favorable volume
increase of $863,000 offset by an unfavorable rate decrease of $971,000. Non-
interest income increased by $54,000 while non-interest expense increased
$294,000 primarily due to the $350,000 writedown in 1996 of other real estate
owned.
9
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C. Liquidity and Capital Resources
Management of the Company believes that the Company has available adequate
liquidity sources. Through its subsidiary banks, the Company has the ability
to sell and borrow Federal funds on a short-term basis to meet its liquidity
needs.
The Company also has the ability to generate cash through the sale of its
securities available-for-sale portfolio. Management of the Company believes
that its capital resources are adequate. At June 30, 1996, the Company's
ratio of stockholders'equity to total assets was 12.0%. At June 30, 1996,
unrealized gains (losses) on securities, net, was a loss of ($.8) million
as compared to a gain of $2.1 million at December 31, 1995.
10
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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
On June 21, 1996, the Company filed Form 8-K to report
its Agreement and Plan of Merger dated June 13, 1996,
by and between the Company and Regions Financial Corporation.
The following exhibits were filed with Form 8-K:
Exhibit
2.1 Agreement and Plan of Merger, dated as of June 13, 1996,
by and between Regions Financial Corporation and Allied
Bankshares, Inc.
2.2 Stock Option Agreement, dated as of June 13 1996, issued
by Allied Bankshares, Inc. to Regions Financial
Corporation.
99.1 Text of Joint Press Release, dated June 14, 1996, issued
by Regions Financial Corporation and Allied Bankshares,
Inc.
11
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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: August 13, 1996 By:/s/ Boone A. Knox
--------------------
Boone A. Knox
Chairman and
Chief Executive Officer
Date: August 13, 1996 By:/s/ Ben O. Howell, Jr.
-------------------------
Ben O. Howell, Jr.
Chief Financial Officer and
Principal Accounting Officer
EXHIBIT INDEX
-------------
EXHIBIT
NO. DESCRIPTION
--------- -----------
27 Financial Data Schedule, which is submitted electronically
to the Securities and Exchange Commission and not filed.
12
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 28,806
<INT-BEARING-DEPOSITS> 316
<FED-FUNDS-SOLD> 10,210
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 178,889
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 305,444
<ALLOWANCE> 4,458
<TOTAL-ASSETS> 556,256
<DEPOSITS> 438,338
<SHORT-TERM> 17,727
<LIABILITIES-OTHER> 7,429
<LONG-TERM> 26,087
0
0
<COMMON> 12,655
<OTHER-SE> 54,020
<TOTAL-LIABILITIES-AND-EQUITY> 556,256
<INTEREST-LOAN> 15,665
<INTEREST-INVEST> 6,086
<INTEREST-OTHER> 288
<INTEREST-TOTAL> 22,039
<INTEREST-DEPOSIT> 8,570
<INTEREST-EXPENSE> 10,147
<INTEREST-INCOME-NET> 11,892
<LOAN-LOSSES> 400
<SECURITIES-GAINS> 152
<EXPENSE-OTHER> 8,261
<INCOME-PRETAX> 6,100
<INCOME-PRE-EXTRAORDINARY> 6,100
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,090
<EPS-PRIMARY> .32
<EPS-DILUTED> .32
<YIELD-ACTUAL> 4.97
<LOANS-NON> 956
<LOANS-PAST> 1,528
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 4,312
<CHARGE-OFFS> 407
<RECOVERIES> 153
<ALLOWANCE-CLOSE> 4,458
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 562
</TABLE>
