<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(Mark One)
[x] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarter period ended June 30, 1997
[ ] Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from ____________________ to _______________________
Commission file Number 0-24528
PREMIER BANCSHARES, INC.
------------------------
(Exact name of registrant as specified in its charter)
Georgia 58-1793778
(State of other jurisdiction of (I.R.S. Employer
incorporation organization) Identification No.)
2180 Atlanta Plaza
950 East Paces Ferry Road
Atlanta, Georgia 30326
(Address, including ZIP Code
of registrant's principal executive offices)
(404) 814-3090
(Issuer's Telephone Number,
including area code)
(Former Name, Former Address and Former Fiscal Year,
if changed from last report)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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.
x Yes No
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
7,923,298 SHARES OF COMMON STOCK, $1.00 PAR VALUE AS OF AUGUST 14, 1997.
<PAGE>
PREMIER BANCSHARES, INC.
QUARTERLY REPORT ON FORM 10-Q
For the Quarter Ended June 30, 1997
<TABLE>
<CAPTION>
Index Page No.
----- --------
<S> <C>
PART I. Financial Information
Item 1. Consolidated Financial Statements
(a) Consolidated Balance Sheets (unaudited) at June 30, 1997 and
December 31, 1996 3
(b) Consolidated Statements of Income (unaudited for the three
and six months ended June 30, 1997 and 1996 4
(c) Consolidated Statements of Cash Flows (unaudited) for the six
months ended June 30, 1997 and 1996 6
(d) Notes to Consolidated Financial Statements (unaudited) 7
Item 2. Management's Discussion and Analysis of Financial Condition and 8 - 15
Results of Operations
PART II. Other Information 16
Item 1. Legal Proceedings 16
Item 2. Changes in Securities 16
Item 3. Defaults Upon Senior Securities 16
Item 4. Submission of Matters to a Vote of Securities Holders 16
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8-K 16 - 18
(Signatures on Page 19)
</TABLE>
The Company has filed this Form 10-Q/A to revise certain financial information
of the Company.
<PAGE>
PREMIER BANCSHARES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1997 AND DECEMBER 31, 1996
(Unaudited)
================================================================================
<TABLE>
<CAPTION>
1997 1996
-------------------------------------
(In thousands)
Assets
------
<S> <C> <C>
Cash and due from banks $ 21,806 $ 19,541
Interest-bearing deposits in banks 8,870 2,697
Federal funds sold 20,138 42,896
Securities available-for-sale 99,706 99,732
Loans held for sale 40,333 24,408
Loans 378,342 313,289
Less allowance for loan losses 6,973 6,568
------------------ ------------------
Loans, net 371,369 306,721
Premises and equipment 12,986 12,565
Goodwill and other intangibles 2,699 2,827
Other assets 9,517 8,557
------------------ ------------------
Total assets $ 587,424 $ 519,944
================== ==================
Liabilities and Stockholders' Equity
------------------------------------
Deposits
Noninterest-bearing demand $ 58,586 $ 48,272
Interest-bearing 413,770 383,626
------------------ ------------------
Total deposits 472,356 431,898
Securities sold under repurchase agreements 25,005 11,865
Federal Home Loan Bank advances 14,625 4,625
Other borrowings 19,458 18,752
Other liabilities 5,625 5,610
------------------ ------------------
Total liabilities 537,069 472,750
------------------ ------------------
Minority interest in subsidiary - 14
------------------ ------------------
Commitments and contingent liabilities
Stockholders' equity
Common stock, par value $1;20,000,000 shares authorized:
7,917,298 and 8,026,765 issued 7,917 8,027
Capital surplus 23,886 25,046
Retained earnings 18,349 15,131
Unrealized gains on securities available-for-sale,
net of tax 203 109
------------------ ------------------
50,355 48,313
Treasury stock at cost (123,494 shares) - (1,133)
------------------ ------------------
Total stockholders' equity 50,355 47,180
------------------ ------------------
Total liabilities and stockholders' equity $ 587,424 $ 519,944
================== ==================
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
PREMIER BANCSHARES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED JUNE 30, 1997 AND 1996
AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(Unaudited)
<TABLE>
<CAPTION>
=================================================================================================================================
Three Months Ended June 30, Six Months Ended June 30,
------------------------------ ---------------------------
1997 1996 1997 1996
(In thousands except per share data)
<S> <C> <C> <C> <C>
Interest Income
Loans $ 10,062 $ 7,823 $ 18,735 $ 15,627
Taxable securities 1,562 1,437 3,071 2,999
Nontaxable securities 139 152 281 306
Deposits in banks 48 114 82 205
Other short-term investments 280 445 876 767
---------- ---------- ---------- ----------
Total interest income 12,091 9,971 23,045 19,904
---------- ---------- ---------- ----------
Interest expense
Deposits 5,136 4,275 10,092 8,367
Federal Home Loan Bank advances 172 79 260 243
Other borrowings 568 523 1,027 1,156
---------- ---------- ---------- ----------
Total interest expense 5,876 4,877 11,379 9,766
---------- ---------- ---------- ----------
Net interest income 6,215 5,094 11,666 10,138
Recovery of provisions for loan losses (102) (58) (130) (229)
---------- ---------- ---------- ----------
Net interest income after recovery of provisions
for loan losses 6,317 5,152 11,796 10,367
---------- ---------- ---------- ----------
Other income
Service charges on deposit accounts 463 438 898 840
Security transactions, net (6) (8) (41) 135
Mortgage income 2,857 2,040 5,376 3,926
Gain on sale of subsidiary 757 - 757 -
Other operating income 746 586 1,530 983
---------- ---------- ---------- ----------
Total other income 4,817 3,056 8,520 5,884
---------- ---------- ---------- ----------
Other expense
Salaries and employee benefits $ 4,785 $ 3,981 $ 9,024 $ 7,537
Occupancy and equipment expenses, net 970 754 1,876 1,489
Merger related expenses 346 39 394 234
Deposit insurance 34 41 46 64
Goodwill amortization 73 76 122 117
Other operating expenses 1,496 1,448 3,187 2,836
---------- ---------- ---------- ----------
7,704 6,339 14,649 12,277
---------- ---------- ---------- ----------
Income before income taxes and
minority interest in net income
of subsidiary 3,430 1,869 5,667 3,974
Income tax expense 1,201 412 1,571 1,009
---------- ---------- ---------- ----------
Net income before minority interest
in net income of subsidiary 2,229 1,457 4,096 2,965
Minority interest in net income of subsidiary 5 3 8 6
---------- ---------- ---------- ----------
Net income $ 2,224 $ 1,454 $ 4,088 $ 2,959
========== ========== ========== ==========
Per share of common stock
Net income $ .27 $ .18 $ .51 $ .37
========== ========== ========== ==========
Dividends $ .08 $ .02 $ .11 $ .16
========== ========== ========== ==========
Weighted average shares outstanding $8,095,829 $7,963,351 $8,062,259 $7,970,193
========== ========== ========== ==========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
PREMIER BANCSHARES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1997 1996
---------- ----------
(In thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net income before minority interest
in income of subsidiary $ 4,096 $ 2,965
Adjustments to reconcile net income to net
cash (used in) operating activities:
Depreciation 768 557
Amortization of intangibles 122 117
Provision for loan losses (130) (229)
Net increases in loans held
for sale (15,925) (4,667)
Net realized (gains) losses on securities
available-for-sale 41 (135)
Gain on sale of subsidiary (757) -
Other operating activities (1,010) (1,507)
---------- ----------
Net cash used in operating activities (12,795) (2,899)
---------- ----------
INVESTING ACTIVITIES
Purchases of securities available-for-sale (26,155) (20,678)
Proceeds from sales of securities
available-for-sale 15,053 12,978
Proceeds from maturities of securities
available for sale 11,224 8,921
Net decrease in Federal funds sold 22,758 4,147
Net (increase) decrease in interest-bearing
deposits in banks (6,173) 3,796
Net increase in loans (67,134) (36,775)
Purchase of premises and equipment (1,408) (2,498)
Net cash from sale of subsidiary 472 -
---------- ----------
Net cash used in investing activities (51,363) (30,109)
---------- ----------
FINANCING ACTIVITIES
Net increase in deposits 40,458 27,497
Net increase in repurchase agreements 13,141 1,306
Net increase in other borrowings 3,843 6,202
Net (increase) decrease in Federal Home
Loan Bank advances 10,000 (1,500)
Dividends paid (875) (1,322)
Dividends paid to minority shareholder (12) (15)
Proceeds from exercise of stock options 216 -
Purchase of treasury stock (348) (558)
---------- ----------
Net cash provided by financing activities 66,423 31,610
---------- ----------
</TABLE>
<PAGE>
PREMIER BANCSHARES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(Unaudited)
- --------------------------------------------------------------------------------
1997 1996
-------- --------
(in thousands)
Net increase (decrease) in cash and due
from banks $ 2,265 $(1,398)
Cash and due from banks at beginning of year 19,541 18,110
------- -------
Cash and due from banks at end of year $21,806 $16,712
======= =======
SUPPLEMENTAL DISCLOSURES
Cash paid for:
Interest $10,974 $10,006
Income taxes $ 1,085 $ 1,054
PREMIER BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. BASIS OF PRESENTATION
The consolidated financial information included herein is unaudited; however,
such information reflects all adjustments (consisting solely of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
statement of results for the interim periods.
The results of operations for the three-month and six-month periods ended June
30, 1997 are not necessarily indicative of the results to be expected for the
full year.
Note 2. BUSINESS COMBINATIONS
On June 23, 1997, Premier Bancshares, Inc. merged with Central and Southern
Holding Company ("Central and Southern") of Milledgeville, Georgia. Each share
of Central and Southern's common stock issued and outstanding was converted into
and exchanged for the one share of Premier Bancshares, Inc.'s common stock. The
merger was accounted for as a pooling of interests. All financial information
has been restated to reflect the combined operations of Premier and Central and
Southern.
On August 31, 1996, First Alliance Bancorp, Inc. merged with Premier Bancshares,
Inc. The merger was accounted for as a pooling of interests. All financial
information has been restated to reflect the combined operations of First
Alliance Bancorp, Inc. and Premier Bancshares, Inc.
Note 3. COMMON STOCK SPLIT
On February 24, 1997, Premier Bancshares, Inc. declared a 1.8055 stock split for
shares of record as of March 6, 1997. The number of shares to effect the stock
split times the par value of $1 was transferred from capital surplus to common
stock on March 20, 1997. All prior financial information has been restated to
reflect the stock split.
<PAGE>
Note 4. CURRENT ACCOUNTING DEVELOPMENTS
The Financial Accounting Standards Board has issued SFAS No. 128, "Earnings Per
Share." SFAS No. 128 establishes standards for computing and presenting
earnings per share (EPS) and applies to entities with publicly held common stock
or potential common stock. This statement simplifies the standards for
computing earnings per share previously found in APB Opinion No. 15, Earnings
per Share, and makes them comparable to international EPS standards. It
replaces the presentation of primary EPS with a presentation of basic EPS. It
also requires dual presentation of basic and diluted EPS on the face of the
statement of income for all entities with complex capital structures and
requires a reconciliation of the numerator and denominator of the basic EPS
computation to the numerator and denominator of the diluted EPS computation.
The effective date of this Statement is for financial statements issued for the
periods ending after December 15, 1997. The adoption of this Statement is not
expected to have a material effect on earnings per share.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Background
Premier ("Company")was incorporated in 1988 under the laws of Georgia and is a
bank holding company registered under the regulations of the Federal Reserve,
and a registered thrift holding company under the regulations of the OTS. The
Company has two bank subsidiaries, Premier Bank and Central and Southern Bank of
Georgia. Premier Bank is a commercial bank which opened for business in 1984
known formerly as First Alliance Bank. Central and Southern Bank is a
commercial bank which opened for business in 1874. The Company has two thrift
subsidiaries, Central and Southern Bank of North Georgia and Premier Bank FSB.
The Company has one nonbank subsidiary, Premier Lending. Premier Lending
originates, processes, funds and sells residential mortgage loans, construction
loans and commercial finance loans.
<TABLE>
<CAPTION>
June 30, December 31,
------------------------- ----------------------------------------------------
Periods ended: 1997 1996 1995 1994 1993 1992
----------- ------------ ----------- ----------- ------------ ------------
(in thousands except per share data)
<S> <C> <C> <C> <C> <C> <C>
Interest income $23,045 $40,252 $33,575 $27,723 $31,234 $39,345
Interest expense 11,379 20,238 16,662 13,028 15,206 21,694
Net interest Income 11,666 20,014 16,913 14,695 16,028 17,651
Provision for possible loan losses (130) (418) (700) 285 3,732 12,283
Other income 8,520 13,118 9,087 4,622 4,025 3,683
Other expense 14,649 26,346 20,378 16,159 16,605 13,073
Net earnings (loss) 4,088 5,494 4,548 1,908 198 (2,829)
Per share data:
Net earnings (loss) 0.51 0.68 0.57 0.25 0.03 (0.47)
Cash dividends declared 0.11 0.41 0.09 0.07 N/A 0.04
Borrowings 59,088 35,242 34,462 21,144 4,399 756
Average total equity 47,266 46,167 43,498 37,506 35,035 33,309
Average total assets 543,548 471,340 409,992 374,707 394,999 435,715
Ratios:
Net earnings (loss) to average assets 1.50% 1.17% 1.11% 0.51% 0.05% (0.65)%
Net earnings (loss) to average equity 17.30% 11.90% 10.46% 5.09% 0.57% (8.49)%
Dividend payout ratio 21.57% 60.29% 15.79% 28.00 % N/A
Average equity to average assets 8.70% 9.79% 10.61% 10.01% 8.87% 7.64%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1996 1995 % Change
---------- ---------- --------
(in thousands except per share data)
Statement of condition:
<S> <C> <C> <C>
Assets $519,944 $445,374 16.74%
Loans held for sale 24,408 25,912 (5.80)%
Loans, net of unearned interest 313,289 246,945 26.87%
Deposits 431,898 358,927 20.33%
Stockholders' equity 47,180 46,090 2.36%
Statement of earnings:
Net interest income 20,014 16,913 18.34%
Provision for loan losses (418) (700) (40.29)%
Other income 13,118 9,087 44.36%
Other expense 26,346 20,378 29.29%
Net earnings 5,494 4,548 20.80%
Per share data
Book value 5.97 5.79 3.11%
Net earnings 0.68 0.57 19.30%
Cash dividends declared 0.41 0.09 355.56%
Performance ratios
Return on average total assets 1.17% 1.11%
Return on average total equity 11.90% 10.46%
</TABLE>
Liquidity and Capital Resources
Liquidity management involves the matching of the cash flow requirements of
customers who may be either depositors desiring to withdraw funds or borrowers
needing assurance that sufficient funds will be available to meet their credit
needs and the ability of the Company to meet those needs. The Company seeks to
meet liquidity requirements primarily through management of short-term
investments (principally Federal Funds sold and overnight funds), monthly
amortizing loans, repayment of single payment loans, periodic repayments of
mortgage backed securities, and draws on lines of credit. In addition, at June
30, 1997, Premier Bank and Central and Southern Bank had $18 million in
approved Federal Funds lines with correspondent banks which could provide funds
on an immediate basis if the need arose. Also, Premier Bank has access to
various Certificate of Deposit ("CD") networks which would allow it to raise
deposits from credit unions and other small banks for varying time periods at
rates comparable to the short-term U.S. Government Bond rate. These deposits are
not brokered and no fee outside of the market rate is paid.
Premier Bank and the Central and Southern Banks are members of the Federal Home
Loan Bank system. At June 30, 1997,the Company had the ability to borrow
approximately $39 million by pledging qualifying loans and securities as
collateral.
The liquidity and capital resources of the Company are monitored on a periodic
basis by federal regulatory authorities. In addition, management performs
liquidity analyses in the same manner as the federal regulatory agencies. As of
June 30, 1997, the various liquidity ratios were considered adequate by
regulatory definitions. In management's opinion, the Company maintained
liquidity that was adequate to meet its respective needs.
<PAGE>
Premier Bank and Central and Southern Banks continue to be well-capitalized by
both industry and regulatory definitions. At June 30, 1997, The Company's
consolidated capital ratios were as follows:
<TABLE>
<CAPTION>
Minimum Regulatory
Requirement to be
June 30, 1997 Well-Capitalized
-------------------- --------------------
<S> <C> <C>
Leverage Capital Ratio 8.54% 5.00%
Risk Based Capital Ratios:
Tier #1 Capital 11.33% 6.00%
Total Capital 12.58% 10.00%
</TABLE>
Management is not aware of any current recommendations of the regulatory
authorities which, if they were implemented, would have a material effect on the
Company's liquidity, capital resources or operations.
The Company regularly evaluates business combination opportunities and conducts
due diligence activities in connection with possible business combinations. As a
result, business combination discussions and, in some cases, negotiations take
place, and future business combinations involving cash, debt or equity
securities may be expected. Any future business combination or series of
business combinations that the Company might undertake may be material, in terms
of assets acquired or liabilities assumed, to the Company's financial condition.
Asset/Liability Management
At June 30, 1997, the Company, utilizing a "static gap" view of interest
sensitivity, was positioned in an asset-sensitive position at three months, six
months, and a slightly liability-sensitive position at one year. This "static
gap" view of interest rate sensitivity at a point in time looks at the volume
of assets and liabilities that will mature or reprice within varying time
periods. Such a view does not necessarily indicate the impact of general
interest rate movements on the net interest margin since the repricing of
various categories of assets and liabilities is subject to competitive pressures
and the needs of the Company's customers. It is also probable that actual
repricing may happen at different times than estimated and at different rates
than anticipated.
Interest Rate Sensitivity
<TABLE>
<CAPTION>
Static GAP June 30, 1997
3-MONTH 6-MONTH 1-YEAR
------------ ------------ ------------
(in thousands)
<S> <C> <C> <C>
Rate Sensitive Assets (RSA) $299,003 $325,963 $361,416
Rate Sensitive Liabilities (RSL) 221,128 291,613 390,193
RSA minus RSL (Gap) $77,875 $34,350 $(28,777)
======== ======== ========
Cumulative Gap Ratio (RSA/RSL) 1.35 1.12 0.93
======== ======== ========
</TABLE>
<PAGE>
At December 31, 1996, the Company, utilizing a "static gap" view of interest
sensitivity, was positioned in an asset-sensitive position at three months, six
months, and a slightly liability-sensitive position at one year.
<TABLE>
<CAPTION>
Static GAP December 31, 1996
3-MONTH 6-MONTH 1-YEAR
----------------- ------------ ------------
(in thousands)
<S> <C> <C> <C>
Rate Sensitive Assets (RSA) $260,523 $287,632 $324,100
Rate Sensitive Liabilities (RSL) 209,242 276,134 345,242
RSA minus RSL (Gap) $51,281 $11,498 $(21,142)
======== ======== ========
Cumulative Gap Ratio (RSA/RSL) 1.25 1.04 0.94
======== ======== ========
</TABLE>
CHANGES IN FINANCIAL CONDITION
CASH AND SHORT-TERM ASSETS
Total assets increased by $67,500,000 at June 30, 1997 since December 31, 1996.
Non-earning cash and due from banks increased $2,300,000 at June 30, 1997 from
December 31, 1996. This change is representative of normal daily fluctuations
in cash and check clearings. Interest-earning deposits in other banks increased
$6,200,000 from December 31, 1996 to a balance of $8,870,000 at June 30, 1997.
This balance is primarily excess funds that are held at the Federal Home Loan
Bank and accrue interest at a rate approximately equal to the Federal Funds
rate. Federal Funds sold decreased $22,800,000 from December 31, 1996 to June
30, 1997. The decrease in Federal Funds is primarily the result of an increase
in loans outstanding during the first six months of 1997 and the above noted
increase in the Federal Home Loan Bank account balance.
Total assets as of December 31, 1996 increased $74,600,000 since December 31,
1995. The majority of the growth was in loans outstanding. Loan demand in the
markets served by the Company was strong during 1996.
<PAGE>
SECURITIES PORTFOLIO
<TABLE>
<CAPTION>
June 30 December 31,
1997 1996 1995 1994
----------- ----------- ----------- ----------
( in thousands)
<S> <C> <C> <C> <C>
U.S. Treasury and U.S. Gov't
agencies $42,496 $40,675 $46,373 $37,436
State and municipals 9,309 10,331 10,455 10,540
Mortgage-backed securities 45,478 46,302 51,595 54,212
Other 2,423 2,424 1,888 1,580
------- ------- -------- --------
Total $99,706 $99,732 $110,311 $103,768
======= ======= ======== ========
</TABLE>
All securities are held as available-for-sale and are reported at their fair
values.
MATURITIES
The amounts of securities in each category as of December 31, 1996 are shown in
the following table.
<TABLE>
<CAPTION>
Within One Five Years Ten Years After Ten Years
------------------ ------------------ ------------------ ------------------
Amount Yield Amount Yield Amount Yield Amount Yield
-------- ----- -------- ----- -------- ----- -------- ------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury and U.S. Gov't agencies $2,410 6.24% $35,865 6.28% $2,018 6.19% $382 6.05%
State and municipal 2,294 11.13% 4,011 9.16% 3,774 9.30% 252 11.50%
Mortgage-backed securities 1,925 4.93% 13,837 6.87% 8,550 6.01% 21,990 6.14%
Other 381 7.86% --- --- 2,043 6.67%
Total $7,010 7.57% $53,713 6.65% $14,342 6.90% $24,667 6.24%
</TABLE>
(1) Includes mortgage-backed securities based on their contractual maturity
date.
(2) Yields on municipal securities have been computed on a tax equivalent
basis.
(3) Yields were computed using coupon interest, adding discount accretion, or
subtracting premium amortization, as appropriate, on a ratable basis over
the life of each security. The weighted average yield for each maturity
range was computed using the carrying value of each security in that range.
The Company's investment portfolio consists of U.S. Government and agency
securities, municipal securities, various equity securities and Government
agency sponsored mortgage-backed securities. A mortgage-backed security relies
on the underlying mortgage pools of loans to provide a cash flow of principal
and interest. The actual maturities of these securities will differ from the
contractual maturities because these borrowers may have the right to prepay
obligations with or without prepayment penalties. Decreases in interest rates
will generally cause prepayments to accelerate. In a declining interest rate
environment, the Company may not be able to reinvest the proceeds from these
prepayments in assets which have comparable yields. However, because the
<PAGE>
majority of the mortgage-backed securities have adjustable rates, the negative
effects of changes in interest rates on earnings and the carrying values of
these securities are mitigated. At June 30, 1997, the Company had $10,730,000
in collateralized mortgage obligations ("CMOs") and $34,046,000 in mortgage-
backed pass-through securities of which 49% have variable interest rates and the
majority are issued by or backed by Federal agencies.
At December 31, 1996, the Company had $14,569,000 in collateralized mortgage
obligations ("CMOs") and $31,724,000 in mortgage-backed pass-through securities.
CHANGES IN SECURITIES PORTFOLIO
Securities available-for-sale decreased $26,000 on June 30, 1997 from December
31, 1996.
Securities available-for-sale on December 31, 1996 decreased $10,579,000 from
December 31, 1995. In the first quarter of 1996, Premier Bank sold
approximately $10,000,000 in securities from the available-for-sale portfolio.
These sales represented the termination of an arbitrage transaction made up of
these assets and various floating rate deposits and borrowings. These
securities were primarily floating rate collateralized mortgage obligations and
mortgage-backed passthroughs. The proceeds from the sale of securities provided
funding for the increase in loans.
LOAN PORTFOLIO
TYPES OF LOANS
Management realizes that the Company's loan portfolio is concentrated in loans
secured by real estate. Real estate loans include real estate mortgages, real
estate construction projects, and consumer home equity lines. The amount of
loans outstanding at the indicated dates are shown in the following table
according to the type of loan. The other concentration is in commercial,
financial and agricultural loans which are made primarily to businesses in the
Atlanta, Georgia metropolitan area. The following table presents this major
category of net loans for each period, excluding the allowance for loan losses
and mortgage loans held for sale.
<TABLE>
<CAPTION>
June 30 December 31,
1997 1996 1995 1994 1993 1992
-------- --------- --------- --------- -------- ---------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Commercial, financial and
agricultural 65,151 50,859 47,360 32,378 40,407 38,881
Real estate-construction 108,176 95,128 58,734 32,789 18,589 18,422
Real estate-mortgage 180,054 137,417 109,567 87,806 82,981 95,176
Consumer installment 24,961 29,885 31,284 37,808 66,195 104,203
------- ------- ------- ------ ------ -------
378,342 313,289 246,945 190,781 208,172 256,682
</TABLE>
MATURITIES AND SENSITIVITY TO CHANGES IN INTEREST RATES
Of the loans maturing after one year, approximately $89,000,000 have fixed rates
and approximately $93,000,000 have variable rates. The maturity of real estate
<PAGE>
construction and commercial, financial and agricultural loans outstanding at
December 31, 1996 are as follows:
<TABLE>
<CAPTION>
Real estate Commercial, financial
construction and agricultural
------------ ---------------------
(in thousands)
<S> <C> <C>
In one year or less $91,441 $30,196
After one year but within five years 1,629 19,381
After five years 2,058 1,282
------- -------
Total $95,128 $50,859
======= =======
</TABLE>
CHANGES IN LOAN PORTFOLIO
Loans held for sale increased $15,925,000 from December 31, 1996 to June 30,
1997. These loans represent first mortgage loans which have been originated by
Premier Lending and have been sold to third party investors and are waiting for
funding from the investor. This balance fluctuates based on time of month, new
loan volume and length of investor closing periods. Other loans grew by
$65,000,000 at June 30, 1997 from December 31, 1996. The primary reason for this
continued growth in loans is due to the continued strong loan demand and
consolidation of regional and community banks in the Atlanta metropolitan area.
Loans grew by $66,300,000 at December 31, 1996 from December 31, 1995. In
addition, at December 31, 1996, construction loans increased $36,394,000, real
estate mortgage loans increased $27,850,000, commercial loans increased
$3,499,000, and consumer loans decreased $1,399,000 from December 31, 1995. The
primary reason for these increases was the addition of five experienced real
estate and commercial loan officers. Loan officers at Premier Lending generate
loans that are specifically underwritten by Premier Bank. In prior periods, the
majority of these loans were sold to third party financial institutions.
DEPOSITS
Average deposits and the rates paid on those deposits classified as to
noninterest-bearing demand, savings and interest-bearing demand, and time
deposits, for the years indicated are presented below.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Years ended December 31,
- ---------------------------------------------------------------------------------------------------------------
1996 1995 1994
Amount Rate Amount Rate Amount Rate
----------- ------- ---------- ------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
Noninterest-bearing demand
deposits $ 45,886 $ 40,497 $ 39,656
Savings and interest-bearing
demand deposits 107,634 3.17% 90,898 3.17% 100,697 2.91%
Time deposits 236,639 5.94% 197,134 5.83% 182,380 5.16%
-------- ----- -------- ----- -------- -----
Total average deposits $390,159 4.48% $328,529 4.37% $322,733 3.83%
======== ===== ======== ===== ======== =====
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
The maturities of certificates of deposit of $100,000
or more as of December 31, 1996 are presented below:
<TABLE>
<CAPTION>
(in thousands)
<S> <C>
3 months or less $21,090
Over 3 through 6 months 24,996
Over 6 through 12 months 15,101
Over 12 months 13,117
-------
$74,304
</TABLE>
CHANGES IN DEPOSITS
Total deposits grew by $40,458,000 at June 30, 1997 from December 31, 1996 as
the Company continues to gain market share through its expansion program as well
as its quality service program.
<PAGE>
Total deposits grew $73,000,000 at December 31, 1996 from December 31, 1995.
Premier Bank aggressively marketed for deposits in several key submarkets in the
Company's market area and entered several new markets during the period.
OTHER BORROWINGS
Other borrowings grew $23,846,000 from December 31, 1996 to June 30, 1997. The
increase was primarily due to the purchase of seasoned $14,000,000 floating rate
mortgage loans and a temporary increase of $10,000,000 in mortgage loans held
for sale at the end of the second quarter. This mortgage held for sale increase
was due to increased production and timing of investor funding on several large
sales. Management expects that these temporary increases in the held for sale
balances will occur and funding sources are in place to manage.
<TABLE>
<CAPTION>
1996 1995 1994
------------ ---------------- -------------
(in thousands)
<S> <C> <C> <C>
Balance at December 31 35,242 34,462 21,144
Weighted average interest rate at December 31 6.43% 7.88% 6.83%
Maximum month end balance during year 35,242 63,331 36,314
Average amount outstanding during the year 30,448 34,093 12,075
Weighted average interest rate during the year 9.05% 6.72% 5.61%
</TABLE>
NON-PERFORMING LOANS
The following table presents nonperforming loans at June 30, 1997 and December
31, 1996, 1995, 1994, 1993 and 1992. Nonperforming loans consist solely of
loans which are contractually past due 90 days or more as to interest or
principal payments (past-due loans) and loans accounted for on a nonaccrual
basis (nonaccrual loans).
<TABLE>
<CAPTION>
COMBINED
Past-due Nonaccrual
loans loans
---------- -----------
(in thousands)
<S> <C> <C>
June 30, 1997 $227 $ 786
December 31, 1996 -- 1,425
December 31, 1995 13 1,064
December 31, 1994 205 1,664
December 31, 1993 226 3,070
December 31, 1992 684 5,771
</TABLE>
Total interest income recognized on nonperforming loans for the year ended
December 31, 1996 was $118,000. Additional interest income of $112,000 would
have been recorded in 1996 if all nonperforming loans had performed in
accordance with their original terms.
<PAGE>
NONPERFORMING ASSETS
The following table analyzes nonperforming assets for June 30, 1997 and each of
the past three years.
<TABLE>
<CAPTION>
1997 1996 1995 1994
(in thousands)
<S> <C> <C> <C> <C>
Loans past due 90 days or more $227 $ --- $13 $205
Non accrual loans 786 1,425 1,064 1,664
------ ------ ------ ------
Total nonperforming loans 1,013 1,425 1,077 1,869
Other real estate 682 949 907 1,608
------ ------ ------ ------
Total nonperforming assets $1,695 $2,374 $1,984 $3,477
====== ====== ====== ======
Nonperforming loans/Total loans, net of unearned 0.27% 0.45% 0.44% 0.98%
Nonperforming assets/Total assets 0.29% 0.46% 0.45% 0.98%
Loan loss allowance/Total loans, net of unearned 1.84% 2.10% 2.43% 2.95%
Loan loss allowance/Nonperforming loans 688.35% 460.91% 556.36% 300.42%
</TABLE>
Accrual of interest income is normally discontinued on loans when they become 90
days past due or, in the opinion of management, collection of interest becomes
doubtful. When a loan is determined to be impaired, all interest previously
accrued but not collected is reversed against current interest income. Accrual
of interest on such loans is resumed when, in management's judgment, the
collection of interest and principal becomes probable.
In the opinion of management, any loans classified by regulatory authorities as
doubtful, substandard, or special mention that have not been included in the
table above do not represent or result from trends or uncertainties which
management reasonably expects will materially impact future operating results,
liquidity, or capital resources. These classified loans do not represent (i)
material credits about which management is aware or (ii) any information which
causes management to have serious doubts as to the ability of such borrowers to
comply with the loan repayment terms. Any loans classified by regulatory
authorities as loss are charged off at the time such loans are identified.
Commitments and Lines of Credit
The Company enters into residential construction and commercial loan commitments
in advance of closing to fund loans to its customers at locked-in interest rates
in the normal course of business. These instruments, to the extent they are not
covered by investor purchase commitments, involve credit and interest rate risk
in excess of the amount recognized in the financial statements.
In the normal course of business, the Company has entered into off-balance-sheet
financial instruments which are not reflected in the financial statements.
These financial instruments include commitments to extend credit and standby
letters of credit. Such financial instruments are included in the financial
statements when funds are disbursed or the instruments become payable. These
instruments involve, to varying degrees, elements of credit risk in excess of
the amount recognized in the balance sheet.
The Company's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for unfunded mortgage loan commitments,
residential construction, and commercial loans commitments to extend credit and
standby letters of credit is represented by the contractual amount of those
instruments. A summary of the Company's commitments is as follows:
<PAGE>
<TABLE>
<CAPTION>
December 31,
(in thousands)
1996 1995
---------- ----------
<S> <C> <C>
Unfunded mortgage loan commitments 20,000 31,968
Residential construction and commercial loan commitments 27,277 18,526
Commitments to extend credit 71,518 33,682
Standby letters of credit 860 1,260
</TABLE>
Summary of Loan Loss Experience
The provision for possible loan losses is created by direct charges and credits
to operations. Losses on loans are charged against the allowance in the period
in which such loans, in management's opinion, become uncollectible. Recoveries
during the period are credited to the allowance. The factors that influence
management's judgment in determining the amount charged to operating expense are
past loan loss experience, composition of the loan portfolio, evaluation of
possible future losses, current economic conditions, and other relevant facts.
The allowance for loan losses is reviewed regularly based on management's
evaluation of current risk characteristics of the loan portfolio, as well as the
impact of prevailing and expected economic business conditions. Management
considers the allowance for loan loss adequate to cover possible loan losses on
the loans outstanding.
Premier is a bank holding company that is the result of the acquisition of six
financial institutions acquired over the last five years. Each institution
utilized various methodologies to determine loan loss allowance adequacy. The
methodologies utilized by current management are, in the opinion of management,
appropriate for the allowance adequacy determination at June 30, 1997.
Considering the primary factor that the economy in general and the Atlanta
metropolitan market in specific is performing in an outstanding manner,
management realizes and provides for any deterioration of the economy in the
future. At this time, management expects charge-offs in 1997 to be consistent
with 1996.
The allowance for loan losses could be allocated in the following manner for
June 30, 1997 and at December 31, for the following years:
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993 1992
--------- --------- ---------- --------- ---------- ---------
(in housands)
<S> <C> <C> <C> <C> <C> <C>
Allowance allocation by loan category
Commercial, financial and agriculture $1,132 $1,066 $1,148 $945 $1,188 $940
Consumer installment 666 628 766 1,147 2,089 2,822
Real estate 5,175 4,874 4,078 3,522 2,985 2,747
------ ------ ------ ------ ------ ------
$6,973 $6,568 $5,992 $5,614 $6,262 $6,509
Percent of loans by category to total loans
Commercial, financial and agriculture 17% 16% 19% 17% 19% 15%
Consumer installment 7% 10% 13% 20% 32% 41%
Real estate 76% 74% 68% 63% 49% 44%
------ ------ ------ ------ ------ ------
100% 100% 100% 100% 100% 100%
</TABLE>
<PAGE>
The following table summarizes average loan balances for June 30, 1997 and for
five prior year ends, changes in the allowance for loan losses arising from
loans charged off, recoveries on loans previously charged off, additions to the
reserve which have been charged to operating expense, and the ratio of net
charge-offs during the period to average loans.
<TABLE>
<CAPTION>
June 30 Years ended December 31,
1997 1996 1995 1994 1993 1992
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Amount of loans,excluding held for sale,
net of unearned income & allowance
for loan losses $371,369 $306,721 $240,953 $184,514 $201,909 $250,173
======== ========= ======== ======== ======== ========
Average loans, including held for sale,
net of unearned income $371,167 $300,618 $242,985 $204,352 $231,781 $268,465
======== ========= ======== ======== ======== ========
Allowance for loan losses at
beginning of period $6,568 $ 5,992 $5,614 $6,262 $6,509 $3,991
Loans charged off:
Commercial, financial, and agricultural 10 68 316 1,030 1,574 1,893
Real estate loans 13 49 412 1,139 819 4,203
Consumer installment 143 398 897 1,745 3,899 5,507
-------- --------- -------- -------- -------- --------
Total loans charged off 166 515 1,625 3,914 6,292 11,603
Recoveries of loans previously charged off:
Commercial, financial, and agricultural 343 195 456 573 215 44
Real estate loans 52 200 175 242 143 111
Consumer installment 380 1,114 1,778 2,166 1,955 1,223
-------- --------- -------- -------- -------- --------
Total loans recovered 775 1,509 2,409 2,981 2,313 1,378
Net (recoveries) charge-offs (609) (994) (784) 933 3,979 10,225
Allowance acquired (disposed of) in
business combinations (74) - 294 460
Provision for loan losses (130) (418) (700) 285 3,732 12,283
Allowance for loan losses at end of period $6,973 $ 6,568 $5,992 $5,614 $6,262 $6,509
======== ========= ======== ======== ======== ========
Ratio of net charge-offs
(recoveries) to average net loans
outstanding (0.164)% (0.331)% (0.32)% 0.46% 1.72% 3.81%
</TABLE>
PROVISION FOR LOAN LOSSES
Under normal circumstances, this expense is used to establish the allowance for
loan losses. Actual loan losses, net of recoveries, are charged directly to the
allowance. Expense recorded is a reflection of actual losses experienced during
the year and management's judgment as to the adequacy of the allowance to absorb
future losses.
<PAGE>
The Company did not make a provision for loan losses during 1996. Instead, the
Company made negative provisions which amounted to $418,000 for the year. The
negative provisions were based on the net recovery stream of previously charged
off loans which amounted to $994,000 for the year.
The Company did not make a provision for loan losses during 1995. Instead, the
Company made negative provisions which amounted to $700,000 for the year. The
negative provisions were based on the net recovery stream of previously charged
off loans which amounted to $784,000 for the year.
Management's analysis of the allowance for loan losses, nonperforming assets,
and net recoveries on a monthly basis concluded that the allowance was more than
adequate given the risk resident within the loan portfolio. The allowance as a
percent of total loans is 1.84%, nonperforming loans to total loans are .27%,
and net recoveries as a percent of average loans (net of unearned interest) were
.16% for the six months ended June 30, 1997.
RESULTS OF OPERATIONS
Net income for the three months ended June 30, 1997 was $2,224,000 as compared
to $1,454,000 for the three months ended June 30, 1996. On a per share basis,
net income was $.27 in the three months ended June 30, 1997 versus $.18 in the
three months ended June 30, 1996. This $.09 represents an increase of 50% in
per share income.
Net income for the first six months of 1997 was $4,088,000 as compared to
$2,959,000 for the first six months of 1996. Included in the first six months
of 1997 net income was $402,000 of utilized net operating loss carryforwards. On
a per share basis, net income was $0.51 in the first six months of 1997 versus
$.37 in the first six months of 1996. This $.14 increase represents an increase
of 38% in per share earnings.
The Company reported record annual earnings of $5,494,000 for the year ended
December 31, 1996. This amount was an increase of $946,000 or 21% from the
previous year's net income. This figure included merger expenses, data
processing conversion expenses, severance expenses, as well as the special SAIF
fund recapitalization assessment.
INTEREST INCOME AND INTEREST EXPENSE
The following table sets forth the amount of the Company's average balances,
interest income (fully taxable equivalent), and interest expense for each
category of interest-earning assets and interest-bearing liabilities, average
interest rates for interest-earning assets and interest yields for interest-
bearing liabilities, net interest spread, and net yield on average interest-
earning assets.
<PAGE>
Distribution of Assets, Liabilities, and Stockholders' Equity Interest Rates and
Interest Differentials
<TABLE>
<CAPTION>
1996 1995 1994
---------------------------- ---------------------------- --------------------------------
Yield/ Yield/ Yield/
Avg.Bal. Int. Rate Avg.Bal. Int. Rate Avg.Bal. Int. Rate
-------- ------- ------ -------- ------- ------ -------- ------- ------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Loans, net of unearned interest $300,618 $31,734 10.56% $242,985 $25,077 10.32% $204,352 $19,868 9.72%
Interest-bearing deposits other
banks 9,113 427 4.69% 3,925 174 4.43% 523 18 3.44%
Investment securities:
Taxable 95,809 5,910 6.17% 100,589 6,266 6.23% 104,616 5,700 5.45%
Non-taxable 9,892 901 9.11% 9,894 1,017 10.28% 13,690 1,380 10.08%
Federal funds sold 28,144 1,543 5.48% 23,731 1,388 5.85% 28,790 1,227 4.26%
-------- ------- -------- ------- -------- -------
Total interest earning assets $443,576 $40,515 9.13% $381,124 $33,922 8.90% $351,971 $28,193 8.01%
Allowance for loan losses (6,396) (5,982) (6,241)
Other assets 34,160 34,850 28,977
-------- -------- --------
Total assets $471,340 $409,992 $374,707
LIABILITIES AND STOCKHOLDERS'
EQUITY
Savings and interest-bearing
Demand deposits $107,634 $3,417 3.17% $ 90,898 $2,880 3.17% $100,697 $2,932 2.91%
Time deposits 236,639 14,065 5.94% 197,134 11,492 5.83% 182,380 9,418 5.16%
Other borrowings 30,448 2,756 9.05% 34,093 2,290 6.72% 12,075 678 5.61%
-------- ------- -------- ------- -------- -------
Total interest-bearing liabilities $374,721 $20,238 5.40% $322,125 $16,662 5.17% $295,152 $13,028 4.41%
Demand deposits 45,886 40,497 39,656
Other liabilities 4,566 3,872 2,393
-------- -------- --------
Total liabilities 425,173 366,494 337,201
Total stockholders' equity 46,167 43,498 37,506
-------- -------- --------
Total liabilities and
stockholders' equity $471,340 $409,992 $374,707
Net interest income $20,277 $17,260 $15,165
Net interest margin 4.57% 4.53% 4.31%
Net interest spread 3.73% 3.73% 3.60%
</TABLE>
(1) Average balances were determined using the daily average balances.
(2) Average taxable securities represent securities available-for-sale are
based on their fair values.
<PAGE>
Average loans include nonaccrual loans and are stated net of unearned income.
Income on nonaccrual loans is recognized on the cash basis.
Nontaxable securites income is presented on a fully taxable equivalent basis.
Net interest income increased $1,121,000 in the second quarter of 1997 compared
with the second quarter of 1996. The primary reason for the increased income
was an increase of $79,396,000 in average earning assets as compared with June
30, 1996. The net interest margin increased to 4.83% from 4.70% in comparable
periods.
Net interest income increased $1,528,000 in the first six months of 1997
compared with the first six months of 1996. The primary reason for the
increased income was an increase of $76,583,000 in average earning assets as
compared with June 30, 1996. The net interest margin increased to 4.71% from
4.42% for the comparable periods.
Net interest income increased by $3,017,000 during fiscal 1996. The following
table reflects the changes in net interest income resulting from changes in
interest rates and from asset and liability volume. The change in interest
attributable to rate has been determined by applying the change in rate between
years to average balances outstanding in the earlier year. The change in
interest due to volume has been determined by applying the rate from the earlier
year to change in average balances outstanding between years. Thus, changes
that are not solely due to rate or volume have been consistently allocated
between rate and volume.
<TABLE>
<CAPTION>
1996 versus 1995 1995 versus 1994
------------------------------------- --------------------------------------
Increase (decrease) due to change in: Increase (decrease) due to change in:
Volume Yield/ Volume Yield/
Outstanding Rate Total Outstanding Rate Total
----------- ------- --------- ------------ ----- --------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Interestr income on:
Deposits with other banks 243 10 253 149 7 156
Loans 6,072 585 6,657 3,930 1,279 5,209
Investment securities:
Taxable (295) (61) (356) (226) 792 566
Non-taxable -- (116) (116) (389) 26 (363)
Federal funds sold 245 (90) 155 (241) 402 161
----- --- ----- ----- ----- -----
Total interest income 6,265 328 6,593 3,223 2,506 5,729
----- --- ----- ----- ----- -----
Interest expense on:
Saving and interest-bearing
demand deposits 531 6 537 (299) 247 (52)
Time deposits 2,344 229 2,573 800 1,274 2,074
Other borrowings (275) 741 466 1,455 157 1,612
----- --- ----- ----- ----- -----
Total interest expense 2,600 976 3,576 1,956 1,678 3,634
Net interest income 3,665 (648) 3,017 1,267 828 2,095
===== ==== ===== ===== ===== =====
</TABLE>
NON-INTEREST INCOME
Non-interest income increased $1,761,000 for the three months ended June 30,
1997 as compared to the same period in 1996. The increase was due to an
$817,000 increase in mortgage income and the sale of Alliance Finance, an 80%
owned non bank subsidiary with assets of approximately $3,000,000,which
resulted in a gain of $757,000.
<PAGE>
Non-interest income increased $2,636,000 for the first six months of 1997 versus
the same period in 1996. The increase was due to increases in mortgage
originations and sales of mortgages of $1,450,000 and the sale of Alliance
Finance.
Total non-interest income increased $4,031,000 in fiscal 1996 over fiscal 1995.
This was primarily due to the increase in mortgage loan activity resulting in an
increase in related income of $2,934,000
NON-INTEREST EXPENSE
Non-interest expense increased $1,365,000 in the three months ended June 30,
1997 over the same period in 1996. Salaries, commissions and employee benefits
were up $804,000. The majority of this increase was due to commissions on the
increased mortgage loan activity. Occupancy and equipment expense was up
$216,000 due to expansion of banking facilities. Merger related expenses were
up $307,000 in comparing the two quarters.
Non-interest expense increased $2,372,000 in the first six months of 1997 over
the same period in 1996. Salaries, commissions and employee benefits were up
$1,487,000 mainly due to the mortgage related activity.
Non-interest expense increased $5,968,000, or 29% in fiscal 1996 over fiscal
1995. The Company absorbed the cost of associated mergers and the opening of
several new branches during this period.
Income Taxes
Consolidated income taxes increased $789,000 in the three months ended June 30,
1997 as compared to the same period of 1996. The effective tax rate for the
Company has reached 35% as tax credits have been utilized as well as a
declining tax free securities portfolio.
Consolidated income taxes were up $562,000 in the first six months of 1997
versus the first six months of 1996. The Company has utilized the majority of
all tax credits and net operating loss carryforwards from prior periods.
Consolidated income taxes decreased in 1996 by $62,500 as compared to 1995. The
Company was able to utilize NOL carryforwards of $237,000 in Premier Bank and
Premier Lending which had been incurred and not utilized in 1994 and 1995.
<PAGE>
Return on Equity and Assets
The following rate of return information for June 30, 1997 and the years
indicated is presented below.
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------
1997 1996 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Return on assets(1) 1.50% 1.17% 1.11% 0.51%
Return on equity(2) 17.30% 11.90% 10.46% 5.09%
Cash dividend payout ratio(3) 21.57% 60.29% 15.79% 28.00%
Equity to assets ratio(4) 8.70% 9.79% 10.61% 10.01%
</TABLE>
________________
(1) Net income divided by average total assets.
(2) Net income divided by average equity.
(3) Cash dividends declared divided by net income.
(4) Average equity divided by average total assets.
<PAGE>
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There have been no material legal proceedings commenced or terminated during the
second quarter of fiscal 1997.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS ON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF STOCKHOLDERS
The annual meeting of the Company was held on June 16, 1997. At the annual
meeting, all of the incumbent directors were reelected. Such directors are
Darrell D. Pittard, J. Edward Mulkey, Jr., James E. Freeman, Billy H. Martin,
James L. Coxwell, N. Michael Anderson, William M. Evans, Jr., and Robin R.
Howell. Other matters presented to shareholders at the meeting including (i)
the proposal to adopt the Agreement and Plan of Reorganization by and between
the Company and the Central and Southern Holding Company; (ii) the proposal to
adopt the Premier Bancshares, Inc. Directors' Stock Option Plan; and (iii) the
proposal to adopt the Premier Bancshares, Inc. 1997 Stock Option Plan.
The proposal to approve the Agreement and Plan of Reorganization was approved
with 3,001,758 shares or 70.64% voting for the proposal, 6,493 or voting against
the proposal, 2,983 or .07% abstaining from the proposal. There were 49,112 or
1.16% broker non-votes in connection with this proposal.
With regard to the proposal to elect the incumbent directors, 3,050,338 or
71,78% voted for the proposal, 2,512 or .06% voted against this proposal and
7,496 or .18% abstained.
With regard to the proposal to approve the 1997 Stock Option Plan, 2,937,824 or
69.14% voted for the proposal, 65,829 or 1.55% voted against the proposal, and
7,580 or .17% abstained. There were 49,112 or 1.16% of broker non-votes in
connection with this proposal.
With regard to the proposal to approve the Directors' Stock Option Plan,
2,945,105 or 69.31% voted for the proposal, 65,571 or 1.64% voted against the
proposal, and 8,232 shares or .19% abstained. There were 37,438 or .88% broker
non-votes in connection with this proposal.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following are the Exhibits required by Item 601 of Regulation S-K:
<PAGE>
<TABLE>
Exhibit
Number Description of Exhibits
- ----------- -----------------------
<S> <C>
2.1 Agreement and Plan of Reorganization dated June 24, 1997, between Premier and
Citizens Gwinnett Bankshares, Inc.
2.2 Amendment to Agreement and Plan of Reorganization dated July 24, 1997, between
Premier and Citizens.
3.1 Articles of Incorporation of the Registrant, as amended, through February 6, 1997.
(Incorporated by reference as Exhibit 3.1 to the Registrant's Form 10-K for the
fiscal year ended December 31, 1996).
3.2 Articles of Amendment dated February 6, 1997 (Incorporated by reference as Exhibit
3.1 to the Registrant's Form 10-K for the fiscal year ended December 31, 1996.)
3.3 Bylaws of the Registrant (Incorporated by reference as Exhibit 3.2 from the
Registrant's Form 10-QSB for the quarter ended September 30, 1996).
4.1 Form of Stock Certificate (Incorporated by reference as Exhibit 4.1 to the
Registrant's Form 10-K for the fiscal year ended December 31, 1996).
10.1 Individual Director's Defined Benefit Plan Agreements, dated January 1, 1994,
between First Alliance Bank and each of its directors. (Incorporated by reference
as Exhibit 10.6 to the Registrant's Form 10-KSB for the year ended December 31,
1996).
10.2 Employment Agreement dated as of July 1, 1995 by and among Premier, First Alliance
Bank and J. Edward Mulkey, Jr. (Incorporated by reference as Exhibit 10.5 to the
Registrant's Form 10-KSB for the fiscal year ended December 31, 1995).1
10.3 First Alliance Bank 1995 Stock Option Plan, dated as of August 8, 1995 and amended
as of March 12, 1996, and related form of employee incentive stock option agreement.
(Incorporated by reference as Exhibit 10.5 to the Registrant's Form 10-KSB for the
fiscal year ended December 31, 1995).
10.4 Guaranty, dated March 25, 1996 by Premier relating to a $2,000,000 loan made by The
Bankers Bank to Interim Alliance Corporation (d/b/a Alliance Finance).
(Incorporated by reference as Exhibit 10.5 to the Registrant's Form 10-KSB for the
fiscal year ended December 31, 1995).
10.5 Employment Agreement dated as of January 1, 1997 by and between Premier Lending
Corporation and George S. Phelps. (Incorporated by reference as Exhibit 10.4 to
the Registrant's Form 10-K for the fiscal year ended December 31, 1996).
10.6 Employment Agreement dated as of January 1, 1997 by and between Premier Lending
Corporation and Michael W. Lane. (Incorporated by reference as Exhibit 10.5 to the
Registrant's Form 10-K for the fiscal year ended December 31, 1996).1
10.7 Employment Agreement dated as of January 1, 1997 by and between Premier Lending
Corporation and Brian D. Schmitt. (Incorporated by reference as Exhibit 10.6 to
the Registrant's Form 10-K for the fiscal year ended December 31, 1996).1
</TABLE>
<PAGE>
<TABLE>
Exhibit
Number Description of Exhibits
- ----------- -----------------------
<S> <C>
10.8 Amendment to Employment Agreement dated as of January 1, 1997 by and between First
Alliance/Premier Bancshares, Inc. and Darrell D. Pittard. (Incorporated by
reference as Exhibit 10.7 to the Registrant's Form 10-K for the fiscal year ended
December 31, 1996)./1/
10.9 Form of Employment Agreement by and among Premier Bancshares, Inc., Premier Lending
Corporation and Darrell D. Pittard. (Incorporated by reference as Exhibit 10.8 to
the Registrant's Form 10-K for the fiscal year ended December 31, 1996).
10.10 Amended and Restated Stock Purchase Agreement by and between Premier Bancshares,
Inc. (formerly known as First Alliance/Premier Bancshares, Inc.) and Net.B@nk, Inc.
dated December 19, 1996. (Incorporated by reference as Exhibit 10.9 to the
Registrant's Form 10-K for the fiscal year ended December 31, 1996.)
10.11 First Amendment to the Amended and Restated Stock Purchase Agreement by and between
Premier Bancshares, Inc. and Net.B@nk, Inc. dated December 19, 1996. (Incorporated
by reference as Exhibit 10.10 to the Registrant's Form 10-K for the fiscal year
ended December 31, 1996.)
10.12 Second Amendment to the Amended and Restated Stock Purchase Agreement by and between
Premier Bancshares, Inc. and Net.B@nk, Inc. dated May 31, 1997.
10.13 Purchase and Assumption Agreement by and between Premier Bank, FSB and First
Alliance Bank dated December 19, 1996. (Incorporated by reference as Exhibit 10.11
to the Registrant's Form 10-K for the fiscal year ended December 31, 1996.)
10.14 First Amendment to Purchase and Assumption Agreement by and between Premier Bank,
FSB and First Alliance Bank dated March 13, 1997. (Incorporated by reference as
Exhibit 10.12 to the Registrant's Form 10-K for the fiscal year ended December 31,
1996.)
10.15 Second Amendment to Purchase and Assumption Agreement by and between Premier Bank,
FSB and First Alliance Bank dated March 25, 1997. (Incorporated by reference as
Exhibit 10.13 to the Registrant's Form 10-K for the fiscal year ended December 31,
1996.)
10.16 Third Amendment to Purchase and Assumption Agreement by and between Premier Bank,
FSB and First Alliance Bank dated May 31, 1997.
10.17 Premier Bancshares, Inc. 1997 Stock Option Plan./1/ (Incorporated by reference from
Appendix D to the Joint Proxy Statement/Prospectus contained in Premier's Form S-4
Registration Statement No. 333-24537.)
10.18 Premier Bancshares, Inc. Directors' Stock Option Plan./1/ (Incorporated by
reference from Appendix E to the Joint Proxy Statement/Prospectus contained in
Premier's Form S-4 Registration Statement No. 333-24537.)
10.19 Agreement and Plan of Reorganization, dated February 3, 1997, between Premier and
Central and Southern Holding Company (included as Appendix A to the Joint Proxy
Statement/Prospectus contained in Premier's Form S-4 Registration Statement No.
333-24537).
</TABLE>
<PAGE>
<TABLE>
Exhibit
Number Description of Exhibits
- ----------- -----------------------
<S> <C>
10.20 Amendment to Agreement and Plan of Reorganization dated March 26, 1997, between
Premier and Central and Southern Holding Company (included as Appendix 'A' to the
Joint Proxy Statement/Prospectus contained in Premier's Form S-4 Registration
Statement No.333-24537).
10.21 Agreement for Purchase of Certain Assets and Assumption of Certain Liabilities by
and between The Central and Southern Bank of North Georgia, FSB and The Central and
Southern Bank of Georgia of Georgia dated August 11, 1997.
10.22 Agreement and Plan of Merger by and among Premier Bancshares, Inc., Premier Bank and
The Central and Southern Bank of North Georgia, FSB dated August 11, 1997.
11.1 Statement of Per Share Earnings.
27 Financial Data Schedule.
</TABLE>
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1 Registrant's plans, management contracts and compensatory
arrangements.
(b) Reports on Form 8-K
On June 26, 1997, the Company filed a Form 8-K reporting that it had closed its
merger with The Central and Southern Holding Company.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Amendment to its Annual Report on Form 10-Q
to be signed on its behalf by the undersigned thereunto duly authorized.
PREMIER BANCSHARES, INC.
Date: November 5, 1997
By: /s/ Darrell D. Pittard
------------------------
Darrell D. Pittard
Chairman and Chief Executive Officer (Principal Executive Officer)
Date: November 5, 1997
By: /s/ Michael E. Ricketson
-------------------------
Michael E. Ricketson
Executive Vice President and Chief Financial Officer (Principal Financial
Officer and Chief Accounting Officer)
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibits
- ----------- -----------------------
<C> <S>
2.1 Agreement and Plan of Reorganization dated June 24, 1997, between Premier and
Citizens Gwinnett Bankshares, Inc.
2.2 Amendment to Agreement and Plan of Reorganization dated July 24, 1997, between
Premier and Citizens Gwinnett Bankshares, Inc.
3.1 Articles of Incorporation of the Registrant, as amended, through February 6, 1997.
(Incorporated by reference as Exhibit 3.1 to the Registrant's Form 10-K for the
fiscal year ended December 31, 1996).
3.2 Articles of Amendment dated February 6, 1997 (Incorporated by reference as Exhibit
3.1 to the Registrant's Form 10-K for the fiscal year ended December 31, 1996.)
3.3 Bylaws of the Registrant (Incorporated by reference as Exhibit 3.2 from the
Registrant's Form 10-QSB for the quarter ended September 30, 1996).
4.1 Form of Stock Certificate (Incorporated by reference as Exhibit 4.1 to the
Registrant's Form 10-K for the fiscal year ended December 31, 1996).
10.1 Individual Director's Defined Benefit Plan Agreements, dated January 1, 1994,
between First Alliance Bank and each of its directors. (Incorporated by reference
as Exhibit 10.6 to the Registrant's Form 10-KSB for the year ended December 31,
1996).
10.2 Employment Agreement dated as of July 1, 1995 by and among Premier, First Alliance
Bank and J. Edward Mulkey, Jr. (Incorporated by reference as Exhibit 10.5 to the
Registrant's Form 10-KSB for the fiscal year ended December 31, 1995)./1/
10.3 First Alliance Bank 1995 Stock Option Plan, dated as of August 8, 1995 and amended
as of March 12, 1996, and related form of employee incentive stock option agreement.
(Incorporated by reference as Exhibit 10.5 to the Registrant's Form 10-KSB for the
fiscal year ended December 31, 1995).
10.4 Guaranty, dated March 25, 1996 by Premier relating to a $2,000,000 loan made by The
Bankers Bank to Interim Alliance Corporation (d/b/a Alliance Finance).
(Incorporated by reference as Exhibit 10.5 to the Registrant's Form 10-KSB for the
fiscal year ended December 31, 1995).
10.5 Employment Agreement dated as of January 1, 1997 by and between Premier Lending
Corporation and George S. Phelps. (Incorporated by reference as Exhibit 10.4 to
the Registrant's Form 10-K for the fiscal year ended December 31, 1996).
10.6 Employment Agreement dated as of January 1, 1997 by and between Premier Lending
Corporation and Michael W. Lane. (Incorporated by reference as Exhibit 10.5 to the
Registrant's Form 10-K for the fiscal year ended December 31, 1996)./1/
10.7 Employment Agreement dated as of January 1, 1997 by and between Premier Lending
Corporation and Brian D. Schmitt. (Incorporated by reference as Exhibit 10.6 to
the Registrant's Form 10-K for the fiscal year ended December 31, 1996)./1/
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibits
- ----------- -----------------------
<C> <S>
10.8 Amendment to Employment Agreement dated as of January 1, 1997 by and between First
Alliance/Premier Bancshares, Inc. and Darrell D. Pittard. (Incorporated by
reference as Exhibit 10.7 to the Registrant's Form 10-K for the fiscal year ended
December 31, 1996)./1/
10.9 Form of Employment Agreement by and among Premier Bancshares, Inc., Premier Lending
Corporation and Darrell D. Pittard. (Incorporated by reference as Exhibit 10.8 to
the Registrant's Form 10-K for the fiscal year ended December 31, 1996).
10.10 Amended and Restated Stock Purchase Agreement by and between Premier Bancshares,
Inc. (formerly known as First Alliance/Premier Bancshares, Inc.) and Net.B@nk, Inc.
dated December 19, 1996. (Incorporated by reference as Exhibit 10.9 to the
Registrant's Form 10-K for the fiscal year ended December 31, 1996.)
10.11 First Amendment to the Amended and Restated Stock Purchase Agreement by and between
Premier Bancshares, Inc. and Net.B@nk, Inc. dated December 19, 1996. (Incorporated
by reference as Exhibit 10.10 to the Registrant's Form 10-K for the fiscal year
ended December 31, 1996.)
10.12 Second Amendment to the Amended and Restated Stock Purchase Agreement by and between
Premier Bancshares, Inc. and Net.B@ank, Inc. dated May 31, 1997.
10.13 Purchase and Assumption Agreement by and between Premier Bank, FSB and First
Alliance Bank dated December 19, 1996. (Incorporated by reference as Exhibit 10.11
to the Registrant's Form 10-K for the fiscal year ended December 31, 1996.)
10.14 First Amendment to Purchase and Assumption Agreement by and between Premier Bank,
FSB and First Alliance Bank dated March 13, 1997. (Incorporated by reference as
Exhibit 10.12 to the Registrant's Form 10-K for the fiscal year ended December 31,
1996.)
10.15 Second Amendment to Purchase and Assumption Agreement by and between Premier Bank,
FSB and First Alliance Bank dated March 25, 1997. (Incorporated by reference as
Exhibit 10.13 to the Registrant's Form 10-K for the fiscal year ended December 31,
1996.)
10.16 Third Amendment to Purchase and Assumption Agreement by and between Premier Bank,
FSB and First Alliance Bank dated May 31, 1997.
10.17 Premier Bancshares, Inc. 1997 Stock Option Plan.1 (Incorporated by reference from
Appendix D to the Joint Proxy Statement/Prospectus contained in Premier's Form S-4
Registration Statement No. 333-24537.)
10.18 Premier Bancshares, Inc. Directors' Stock Option Plan.1 (Incorporated by
reference from Appendix E to the Joint Proxy Statement/Prospectus contained in
Premier's Form S-4 Registration Statement No. 333-24537.)
10.19 Agreement and Plan of Reorganization, dated February 3, 1997, between Premier and
Central and Southern Holding Company (included as Appendix A to the Joint Proxy
Statement/Prospectus contained in Premier's Form S-4 Registration Statement No.
333-24537).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibits
- ----------- -----------------------
<S> <C>
10.20 Amendment to Agreement and Plan of Reorganization dated March 26, 1997, between
Premier and Central and Southern Holding Company (included as Appendix 'A' to the
Joint Proxy Statement/Prospectus contained in Premier's Form S-4 Registration
Statement No.333-24537).
10.21 Agreement for Purchase of Certain Assets and Assumption of Certain Liabilities by
and between The Central and Southern Bank of North Georgia, FSB and The Central and
Southern Bank of Georgia dated August 11, 1997.
10.22 Agreement and Plan of Merger by and among Premier Bancshares, Inc., Premier Bank and
The Central and Southern Bank of North Georgia, FSB dated August 11, 1997.
11.1 Statement of Per Share Earnings.
27 Financial Data Schedule.
</TABLE>
- --------------
1 Registrant's plans, management contract and compensatory arrangements
