<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, 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 $1.00
per share, at October 31, 1996 was 12,629,537.
1
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Part I. - FINANCIAL INFORMATION
ALLIED BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($ in thousands)
(Unaudited)
September 30, December 31, September 30,
1996 1995 1995
------------- ------------- -------------
ASSETS
Cash and Due From Banks $26,386 $23,494 $25,115
------------- ------------- -------------
Interest Bearing Deposits 316 318 319
------------- ------------- -------------
Funds Sold 16,420 870 4,650
------------- ------------- -------------
Securities Available-For-Sale (1) 91,151 96,736 87,285
------------- ------------- -------------
Securities - - 14,231
------------- ------------- -------------
Mortgage-Backed Securities
Available-For-Sale (2) 84,718 76,363 47,298
------------- ------------- -------------
Mortgage-Backed Securities - - 8,661
------------- ------------- -------------
Loans 306,025 308,285 318,459
Less Unearned Income (252) (317) (354)
Allowance for Loan Losses (3,879) (4,312) (4,245)
------------- ------------- -------------
Loans, net 301,894 303,656 313,860
------------- ------------- -------------
Premises and Equipment, net 13,653 13,809 13,918
------------- ------------- -------------
Goodwill and Intangible Assets 13,487 14,473 14,784
------------- ------------- -------------
Other Assets 9,369 8,680 8,771
------------- ------------- -------------
Total Assets $557,394 $538,399 $538,892
============= ============= =============
(1) Includes unrealized gains
(losses) on securities
available-for-sale, net $1,421 $2,449 $1,569
(2) Includes unrealized gains
(losses) on mortgage-backed
securities available-for-sale,
net $(997) $977 $602
[FN]
SEE NOTES TO CONSOLIDATED FINANCIAL STATMENTS
2
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ALLIED BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($ in thousands)
(UNAUDITED)
September 30, December 31, September 30,
1996 1995 1995
------------- ------------- -------------
LIABILITIES
Deposits
Non-Interest-Bearing $62,188 $57,706 $56,304
Interest-Bearing
NOW and Money Market Accounts 106,442 99,514 96,733
Savings 27,074 26,324 27,337
Other Time 246,770 238,041 235,687
------------- ------------- -------------
Total Deposits 442,474 421,585 416,061
Funds Purchased - 1,240 4,560
Short-Term Borrowings 11,741 39,232 45,139
Long-Term Debt 26,087 1,050 1,213
Other Liabilities 9,008 7,657 6,579
------------- ------------- ------------
Total Liabilities 489,310 470,764 473,552
------------- ------------- -------------
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
12,636,053 Shares Issued at
September 30, 1996, December
31, 1995, and September 30,
1995, respectively 12,655 12,649 12,636
Surplus 47,446 34,749 34,673
Retained Earnings 7,976 18,460 17,033
Less Treasury Stock at Cost,
24,956 Shares at September 30,
1996; 33,927 Shares at
December 31, 1995 and
September 30, 1995 (256) (348) (348)
Unrealized Gains on
Securities, net 263 2,125 1,346
------------- ------------- -------------
Total Stockholders' Equity 68,084 67,635 65,340
------------- ------------- -------------
Total Liabilities and
Stockholders' Equity $557,394 $538,399 $538,892
============= ============= =============
[FN]
SEE NOTES TO CONSOLIDATED FINANCIAL STATMENTS
3
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ALLIED BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
($ in thousands, except share data)
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
--------- --------- --------- ---------
INTEREST INCOME
Interest and Fees on Loans
Taxable Interest $ 7,817 $ 8,149 $23,434 $24,110
Tax-Exempt Interest 20 27 68 80
Interest on Mortgage-Backed Securities 1,336 978 4,449 3,118
Interest on Investment Securities
Taxable Interest 1,004 1,144 2,716 2,918
Tax-Exempt Interest 618 642 1,879 2,006
Interest on Funds Sold 183 98 471 315
--------- --------- --------- ---------
Total Interest Income 10,978 11,038 33,017 32,547
--------- --------- --------- ---------
INTEREST EXPENSE
Interest on Deposits 4,315 4,207 12,885 11,800
Interest on Funds Purchased 57 12 129 171
Interest on Short-Term Borrowings 106 694 903 2,390
Interest on Long-Term Debt 380 22 1,088 66
--------- --------- --------- ---------
Total Interest Expense 4,858 4,935 15,005 14,427
--------- --------- --------- ---------
NET INTEREST INCOME 6,120 6,103 18,012 18,120
Provision for Loan Losses 400 85 800 389
--------- --------- --------- ---------
Net Interest Income After Provision
for Loan Losses 5,720 6,018 17,212 17,731
--------- --------- --------- ---------
NON-INTEREST INCOME
Service Charges on Deposit Accounts 892 836 2,668 2,481
Gains on Sales of Mortgage Loans
Held-For-Sale 223 229 762 544
Gains on Sales of Securities, net 1 12 153 41
Credit Life Insurance Commissions 40 31 146 151
Mortgage Servicing Fees 29 27 96 87
Other Income 127 38 356 684
--------- --------- --------- ---------
Total Non-Interest Income 1,312 1,173 4,181 3,988
--------- --------- --------- ---------
[FN]
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4
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ALLIED BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
($ in thousands, except share data)
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
--------- --------- --------- ---------
NON-INTEREST EXPENSE
Salaries and Other Personnel Benefits 2,150 2,062 6,363 6,035
Net Occupancy and Equipment Expense 586 559 1,685 1,686
Writedown of Other Real Estate 350 - 700 -
Amortization of Goodwill
and Intangible Assets 338 313 994 875
Computer Expense 234 211 629 629
FDIC Insurance Premiums 69 75 209 556
FDIC Insurance Premiums - Special
SAIF Assessment 692 - 692 -
Office Supplies 123 123 359 344
Legal and Professional Expense 95 123 268 343
Postage 66 88 251 246
Other Expense 422 396 1,236 1,203
--------- --------- ---------- ---------
Total Non-Interest Expense 5,125 3,950 13,386 11,917
--------- --------- ---------- ---------
Income Before Provision for Income Taxes 1,907 3,241 8,007 9,802
Provision for Income Taxes 554 993 2,564 3,068
--------- --------- ---------- ---------
NET INCOME $1,353 $2,248 $5,443 $6,734
--------- --------- ---------- ---------
NET INCOME PER COMMON SHARE $0.11 $0.18 $0.43 $0.53
========= ========= ========== =========
Weighted Average Common Shares
(in thousands) 12,630 12,596 12,623 12,616
========= ========= ========== =========
[FN]
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5
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ALLIED BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in thousands)
(UNAUDITED)
Nine Months Ended
September 30,
1996 1995
--------- ---------
Increase In Cash And Cash Equivalents
Cash Flows From Operating Activities
Mortgage Loans Sold $43,782 $27,150
Interest and Fees on Loans 23,617 23,588
Interest on Mortgage-Backed Securities 4,521 3,198
Interest on Investment Securities 4,761 5,279
Interest on Funds Sold 471 315
Service Charges on Deposit Accounts 2,668 2,481
Other Non-Interest Income 578 806
Mortgage Loans Originated-For-Sale (43,642) (29,035)
Interest Paid on Deposits (11,420) (10,589)
Interest Paid on Borrowings (2,100) (2,786)
Salaries and Other Personnel Benefits (5,899) (5,833)
Other Non-Interest Expense (3,950) (4,028)
Income Taxes Paid (2,886) (4,160)
Income Taxes Refund Received 196 938
--------- ---------
Net Cash Provided by Operating Activities 10,697 7,324
--------- ---------
Cash Flows From Investing Activities
Net Decrease in Interest Bearing Deposits - 599
Proceeds From Acquisition of Washington, Ga. Branch - 25,733
Principal Payments on Mortgage-Backed Securities AFS 9,606 4,427
Principal Payments on Mortgage-Backed Securities - 134
Proceeds From Sales of Mortgage-Backed Securities AFS 3,840 6,017
Proceeds from Maturities of Investment Securities AFS 4,482 3,984
Proceeds from Maturities of Investment Securities - 500
Proceeds From Sales of Investment Securities AFS 3,681 -
Purchases of Investment Securities AFS (3,527) (1,907)
Purchases of Mortgage-Backed Securities AFS (23,627) -
Loans Made to Customers, Net of Principal
Collected on Loans (333) (4,900)
Recoveries on Loans Previously Charged Off 217 329
Puchases of Premises and Equipment (692) (294)
Proceeds From Sales of Premises and Equipment 85 307
Proceeds From Sale of Investment in Other
Financial Institution - 225
Collection of Receivable from Bonding Company - 1,854
Other, Net 37 279
--------- ---------
Net Cash (Used In) Provided By Investing Activities (6,231) 37,287
--------- ---------
[FN]
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6
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ALLIED BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in thousands)
(UNAUDITED)
(Continued)
Nine Months Ended
September 30,
1996 1995
--------- ---------
Cash Flows From Financing Activities
Net Increase (Decrease) in Deposits 20,889 (28,035)
Net Decrease in Funds Purchased (1,240) (7,590)
Net Decrease in Short-term Borrowings (27,491) (4,296)
Proceeds From the Issuance of Long-Term Debt 25,050 -
Repayment of Long-Term Debt (13) (1)
Issuance of Common Stock Through Dividend
Reinvestment Plan 298 140
Purchase of Common Stock Through Dividend
Reinvestment Plan (110) -
Purchase of Treasury Stock - (348)
Cash Dividends Paid (3,407) (2,985)
--------- ---------
Net Cash Provided By (Used In) Financing Activities 13,976 (43,115)
--------- ---------
Net Decrease In Cash And Cash Equivalents 18,442 1,496
Cash And Cash Equivalents At January 1, 24,364 28,269
--------- ---------
Cash And Cash Equivalents At September 30, $42,806 $29,765
========= =========
Net Income $5,443 $6,734
--------- ---------
Adjustments To Reconcile Net Income To Net Cash
Provided By Operating Activities
Depreciation and Amortization 1,753 1,654
Provision for Loan Losses 800 389
Writedown of Other Real Estate Owned 700 -
Gain on Sales of Mortgage Loans, net (762) (544)
Gain on Sales of Investment Securities (153) (41)
Gain on Sale of Fixed Assets - (116)
Net Change in Mortgage Loans Held-For-Sale 140 (1,885)
Decrease (Increase) in Interest Receivable 355 (212)
(Increase) Decrease in Other Assets, net (39) 37
Increase in Interest Payable 1,485 1,052
Provision (Benefit) For Deferred Taxes 761 (1,168)
(Decrease) Increase in Income Taxes Payable (887) 1,627
Increase (Decrease) in Other Liabilities, net 1,101 (203)
--------- ---------
Total Adjustments 5,254 590
--------- ---------
Net Cash Provided by Operating Activities $10,697 $7,324
========= =========
[FN]
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7
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ALLIED BANKSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 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 September 30, 1996 and 1995, the related
Consolidated Statements of Income for the three and nine months periods ended
September 30, 1996 and 1995 and Consolidated Statements of Cash Flows for the
nine months periods ended September 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 ("Regions") of Birmingham, Alabama. Under the terms of
the merger agreement, each share of the Company would be exchanged for .226
shares of Regions' common stock through a tax free exchange. This transaction,
which will be accounted for as a pooling of interests, is subject to regulatory
approvals and is expected to be consummated during the first quarter of 1997.
NOTE 3 - DECLARATION OF CASH DIVIDEND
On November 5, 1996, the Board of Directors declared a regular quarterly cash
dividend of $.09 per share. The dividend is payable on December 1, 1996 to
stockholders of record as of November 14, 1996.
8
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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 1996 were .98% and 7.92%, respectively, compared to 1.69% and 14.25%,
respectively, for the third quarter of 1995. Nonperforming assets were $5.6
million at September 30, 1996, down from $6.2 million at December 31, 1995 and
up from $5.1 million at September 30, 1995. The net interest margins were
5.16% and 5.05%, respectively, for the quarter and nine months ended September
30, 1996 and 5.32% and 5.33%, respectively, for the quarter and nine months
ended September 30, 1995.
At September 30, 1995, stockholders' equity was $68.1 million as compared to
$67.6 million at December 31, 1995 and $65.3 million at September 30, 1995.
Unrealized gains on securities, net of deferred taxes, was $.3 million at
September 30, 1996 as compared to $2.1 million at December 31, 1995 and
$1.3 million at September 30, 1995. During the first nine months of 1996 the
Company paid cash dividends of $3.41 million or $.27 per share.
B. Consolidated Results of Operations
Third Quarter 1996 Compared to Third Quarter 1995
Net income per share for the third quarter of 1996 was $1.4 million or $.11 per
share as compared to $2.2 million or $.18 per share for the third quarter of
1995. The increase in net income is attributed to increased 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 $32,000 in 1996 as compared
to 1995, the result of a favorable volume increase of $366,000 offset by an
unfavorable rate increase of $334,000. The volume increase was due to a higher
level of average mortgage-backed securities offset by a decline in average
loans. The rate increase was due to a decrease in the rate on average earning
assets and an increase in the average cost of funds.
For the third quarter of 1996 the loan loss provision was $400,000 compared to
$85,000 for the third quarter of 1995. Also, in the third quarter of 1996 the
Company wrote down other real estate owned by $350,000 compared to no writedown
for 1995. 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.
Additionally, a one-time charge of $692,000 for a special FDIC Savings
Association Insurance Fund Deposit Assessment was recognized in the third
quarter of 1996.
9
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Nine Months Ended September 30, 1996 ("1996") Compared to Nine Months Ended
September 30, 1995 ("1995")
Net income for the nine months ended September 30, 1996 was $5.4 million or $.43
per share compared to $6.7 million or $.53 per share for 1994. Taxable
equivalent net interest income decreased by $76,000 in 1996 as compared to 1995.
The provision for loan losses increased $411,000 from 1995 to 1996. During
1996 charged off loans, net of recoveries, were $1.2 million compared to $.8
million for 1995.
Non-interest expense increased $1.5 million primarily due to a one-time $.7
million insurance premium assessment on SAIF insured deposits, a $.7 million
writedown of other real estate, an increase in salaries and personnel benefits,
an increase in amortization of goodwill and intangible assets due to the
acquisition of the Washington, Georgia branch in May 1995, offset by a
reduction in ongoing FDIC insurance deposit premium expense due to lower rates.
For the nine months ended September 30, 1996, the returns on average assets and
average equity were 1.69% and 14.25%, respectively, as compared to 1.70% and
14.59%, respectively, for the nine months ended September 30, 1995.
C. Liquidity and Capital Resources
At September 30, 1996, total assets were $557 million. Total equity capital
was $68.1 million or 12.2% of total assets at September 30, 1996. The Company
had unrealized gains on securities and mortgage-backed securities, net, of
$.3 million at September 30, 1996. The Company has available adequate sources
of long and short term credit. The Company has met its liquidity needs
primarily by using short-term borrowings. Management believes that the Company
has adequate sources of liquidity.
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. - 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, 1996 By: /S/ Boone A. Knox
Boone A. Knox, Chairman
and Chief Executive Officer
Date: November 13, 1996 By: /S/ Ben O. Howell, Jr.
Ben O. Howell. Jr.
Chief Financial Officer and
Principal Accounting Officer
11
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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.
12
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 26,386
<INT-BEARING-DEPOSITS> 316
<FED-FUNDS-SOLD> 16,420
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 175,869
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 305,773
<ALLOWANCE> 3,879
<TOTAL-ASSETS> 557,394
<DEPOSITS> 442,474
<SHORT-TERM> 11,741
<LIABILITIES-OTHER> 9,008
<LONG-TERM> 26,087
<COMMON> 12,655
0
0
<OTHER-SE> 55,429
<TOTAL-LIABILITIES-AND-EQUITY> 557,394
<INTEREST-LOAN> 23,502
<INTEREST-INVEST> 9,044
<INTEREST-OTHER> 471
<INTEREST-TOTAL> 33,017
<INTEREST-DEPOSIT> 12,885
<INTEREST-EXPENSE> 15,005
<INTEREST-INCOME-NET> 18,012
<LOAN-LOSSES> 800
<SECURITIES-GAINS> 153
<EXPENSE-OTHER> 13,386
<INCOME-PRETAX> 8,007
<INCOME-PRE-EXTRAORDINARY> 8,007
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,443
<EPS-PRIMARY> .43
<EPS-DILUTED> .43
<YIELD-ACTUAL> 9.41
<LOANS-NON> 776
<LOANS-PAST> 1,608
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 4,635
<CHARGE-OFFS> 1,450
<RECOVERIES> 217
<ALLOWANCE-CLOSE> 3,879
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 562
</TABLE>
