<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of Earliest Event Reported): SEPTEMBER 30, 1998
-------------------
PREMIER BANCSHARES, INC.
(Exact name of Registrant as specified in its charter)
GEORGIA 001-12625 58-1793778
(State or other jurisdiction of (Commission File No.) (IRS Employer
incorporation or organization) Identification No.)
2180 ATLANTA PLAZA
950 EAST PACES FERRY ROAD
ATLANTA, GEORGIA 30326
(Address of principal executive offices, including zip code)
(404) 814-3090
(Registrant's telephone number, including area code)
================================================================================
<PAGE>
ITEM 5. OTHER EVENTS
This Form 8-K is being filed to report and file supplemental interim
unaudited consolidated financial statements of Premier Bancshares, Inc. (the
"Company") for the six months ended June 30, 1998 and June 30, 1997 and give
retroactive effect to the Company's mergers with Lanier Bank & Trust Company on
June 9, 1998, Button Gwinnett Financial Corporation on July 1, 1998 and The Bank
Holding Company on July 2, 1998, which have been accounted for using the pooling
of interests accounting method.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
99.1 Supplemental Management's Discussion and Analysis of Financial
Condition and Results of Operations for the six months ended
June 30, 1998 and June 30, 1997; and Supplemental Unaudited
Condensed Financial Statements for six months ended June 30,
1998 and June 30, 1997.
SIGNATURE
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 hereunto duly authorized.
PREMIER BANCSHARES, INC.
Date: September 30, 1998 /s/ Darrell D. Pittard
--------------------------------------
Darrell D. Pittard,
Chairman and Chief Executive Officer
<PAGE>
EXHIBIT 99.1
Supplemental Management's Discussion and Analysis of Financial Condition and
Results of Operations
Premier Bancshares, Inc. (the "Company") is a bank holding company organized and
existing under the laws of the State of Georgia and headquartered in Atlanta,
Georgia. At June 30, 1998, the Company had three subsidiaries: Premier Bank
("Premier Bank"), Premier Lending Corporation ("Premier Lending"), and The
Central and Southern Bank of Georgia ("Central and Southern Bank"). Through
mergers completed subsequent to June 30, 1998, the Company added three more
subsidiaries: The Bank of Gwinnett County ("Gwinnett County Bank"), First
Community Bank of Henry County ("Henry County Bank") and The Bank of Spalding
County ("Spalding County Bank"). The Company was incorporated in 1988 under the
laws of the State of Georgia.
The Company is a locally-focused, community-oriented financial services holding
company which offers various traditional banking services. Among these services
are commercial finance (including asset-based loans), Small Business
Administration ("SBA") lending, residential construction lending, residential
mortgage loan origination and commercial real estate mortgage loan origination.
Through its five wholly-owned financial institution subsidiaries, Premier Bank,
The Central and Southern Bank, Gwinnett County Bank, Henry County Bank and
Spalding County Bank (collectively, the "Banking Subsidiaries," or ("Banks"),
the Company operates 28 banking offices located in the Atlanta metropolitan area
and in northern and central Georgia. In these markets, the Banking Subsidiaries
provide a broad array of community banking services, including: loans to small
and medium-sized businesses; residential, construction and development loans;
commercial real estate loans; consumer loans and a variety of commercial and
consumer deposit accounts.
In addition, through its wholly-owned mortgage banking subsidiary, Premier
Lending, the Company operates eight mortgage loan production offices in the
Atlanta metropolitan area and one in each of Jacksonville, Florida; Charleston,
South Carolina; and Mobile, Alabama. Premier Lending is a retail originator of
residential mortgage loans which are sold to correspondent mortgage investors
and is an approved Federal National Mortgage Association ("FNMA") and Federal
Home Loan Mortgage Corporation ("FHLMC") seller-servicer of mortgage loans and
an approved Department of Housing and Urban Development "HUD") and Veterans
Administration ("VA") mortgage originator.
Acquisitions of unaffiliated financial institutions during the past two years
have been a principal source of the Company's growth. On August 31, 1996, the
Company acquired a thrift holding company then named Premier Bancshares, Inc.;
on June 23, 1997, the Company acquired Central and Southern Holding Company, a
bank and thrift holding company; on December 12, 1997, the Company acquired
Citizens Gwinnett Bankshares, Inc., a bank holding company; on June 9, 1998, the
Company acquired Lanier Bank & Trust Company; on July 1, 1998 the Company
acquired Button Gwinnett Financial Corporation, a bank holding company; and on
July 2, 1998, the Company acquired The Bank Holding Company, a bank holding
company. The historical financial statements of the Company have been restated
to give effect to these acquisitions which were accounted for as poolings of
interests.
On October 17, 1997, the Company acquired Traditional Mortgage Corporation
("Traditional"), a Georgia corporation specializing in mortgage banking, and
merged Traditional with and into Premier Lending, adding five loan production
offices to Premier Lending's existing franchise.
The Company's principal executive offices are located at 2180 Atlanta Plaza, 950
East Paces Ferry Road, Atlanta, Georgia 30326, and its
1
<PAGE>
telephone number at that address is (404) 814-3090.
The following discussion should be read in conjunction with the Consolidated
Condensed Financial Statements, including the footnotes, and is qualified in its
entirety by the foregoing and other more detailed financial information
appearing elsewhere herein. Historical results of operations and the percentage
relationships among any amounts included in the Consolidated Statements of
Income, and any trends which may appear to be inferable therefrom, should not be
taken as being necessarily indicative of trends in operations or results of
operations for any future periods.
Comments in this Supplemental Management's Discussion and Analysis regarding the
Company's business which are not historical facts are forward-looking statements
that involve risks and uncertainties. Among these risks are that the Company is
in a highly competitive business and is pursuing a growth strategy that relies
in part on the completion of acquisitions of bank holding companies and other
financial institutions. There can be no assurance that in its highly competitive
business environment, the Company will successfully implement its growth
strategy.
Financial Condition
At the end of the second quarter of 1998, total assets increased $85,517,000 or
7.0% from December 31, 1997. Total loans (excluding mortgage loans held for
sale), increased $79,929,000 or 9.9% from December 31, 1997 to June 30, 1998.
The loan increases are primarily attributable to increased demand for loans in
the markets that the Company serves. Mortgage loans held for sale decreased
$13,735,000 or 21.9% during the same period. Federal funds sold increased
$26,505,000 or 48.7% from December 31, 1997 to June 30, 1998. Securities
available-for-sale decreased $4,002,000 or 2.7%, while securities held to
maturity decreased $8,598,000, or 18.7% during the same period due to maturities
and calls. The proceeds from securities sold or maturing were used to partially
fund the increase in loans.
Other borrowings increased by $37,969,000 or 311.3% as the result of the Company
funding its mortgage banking operation with a warehouse line from a regional
bank. Total liabilities increased by $76,555,000 or 7.0% from December 31, 1997
to June 30, 1998. Noninterest-bearing deposits increased by $18,267,000 or 10.7%
and interest-bearing deposits increased by $29,130,000 or 3.4% during the same
period as the Company has increased its market area through the acquisition of
Central and Southern Holding Company in June 1997, Citizens Gwinnett Bankshares
in December 1997, Lanier Bank & Trust Company in June 1998, The Bank Holding
Company and Button Gwinnett Financial Corporation in July 1998.
Results of Operations
For the three-month period ended June 30, 1998 the Company recorded net income
of $6,205,000 as compared to $4,619,000 for the same period in 1997. This
$1,586,000 or 34.3% increase is due primarily to the following:
. Net interest income increased $1,367,000
. Provision for credit losses increased $32,000
. Total noninterest income increased $4,215,000
. Total noninterest expense increased $3,666,000
. Income tax expense increased $298,000
The reasons for these changes are discussed more fully below.
For the six-month period ended June 30, 1998 the Company recorded net income of
$11,698,000 as compared to $8,653,000 for the same period in 1997. This
$3,045,000 or 35.2% increase is due primarily to the following:
. Net interest income increased $2,788,000
. Provision for credit losses decreased $169,000
. Total noninterest income increased $8,118,000
. Total noninterest expense increased $6,523,000
. Income tax expense increased $1,507,000
The reasons for these changes are discussed more fully below.
2
<PAGE>
Net Interest Income
- -------------------
Net interest income increased $1,367,000 or 10.3% for the three month period
ended June 30, 1998 compared to same period in 1997, due to an increase in
average earning assets. Average earning assets increased by approximately $197
million while average interest-bearing liabilities increased by approximately
$158 million. Yields on earning assets decreased by 14 basis points and costs of
interest-bearing liabilities increased by 21 basis points. The net interest
margin declined to 4.94% in the second quarter of 1998 from 5.24% in the
comparable period of 1997.
Net interest income increased $2,788,000 or 11.0%, for the six month period
ended June 30, 1998 compared to same period in 1997, due to an increase in
average earning assets. Average earning assets increased by approximately $178
million and average interest-bearing liabilities increased by approximately $143
million. Yields on earning assets decreased by 17 basis points and costs of
interest-bearing liabilities increased by 20 basis points. The net interest
margin declined to 4.88% in the second quarter of 1998 from 5.20% in the
comparable period of 1997.
Provision for Credit Losses
- ---------------------------
The Company recorded a provision for credit losses of $150,000 for the second
quarter of 1998. The Company has had net recoveries during the six month period
of $76,000 related to prior period charge offs, the majority of recoveries being
sales finance loans. Management will monitor and adjust the level of the
allowance for credit losses in relation to this net recovery stream, as well as
the overall level of the allowance for credit losses to loans outstanding and
management's assessment of credit losses inherent in the loan portfolio.
<TABLE>
<CAPTION>
ASSET QUALITY
June 30, 1998 December 31, 1997
Change Percentage
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
(dollars in thousands)
Loans past due 90 days or more and 668 766 (98) (13)%
Nonaccrual loans 3,868 3,459 409 12%
--------------------------------------------------------------
Total nonperforming loans 4,536 4,225 311 7%
Other real estate owned 2,546 1,349 1,197 89%
--------------------------------------------------------------
Total nonperforming assets $ 7,082 $ 5,574 $1,508 27%
==============================================================
Nonperforming loans/Total loans 0.51% 0.52%
Nonperforming assets/Total assets 0.54% 0.46%
</TABLE>
The table above illustrates the changes in the level of nonperforming assets
from December 31, 1997 to June 30, 1998. The level of nonperforming assets at
June 30, 1998 increased slightly from December 31, 1997. Management anticipates
the levels of nonperforming loans and assets to remain at relatively low levels.
Noninterest Income
- ------------------
The Company's main sources of noninterest income are gains on the sale of
mortgage loans and service charges on deposit accounts. Noninterest income
increased substantially in the second quarter of 1998 compared to the same
period in 1997. Income from mortgage banking activities increased $3,770,000 in
the three months ended June 30, 1998 compared to the same period in 1997 due to
the increased volume of mortgage loan originations in part due to the
acquisition of Traditional Mortgage Company in October 1997 and strong housing
demand in the Company's markets. Other operating income increased $555,000
primarily due to the sale of a subsidiary branch banking location.
Noninterest income increased substantially for the six months ended June 30,
1998 compared to the same period in 1997. Total noninterest income increased
$8,118,000, or 78.5% for the six months. Income from mortgage banking activities
increased $7,162,000, or 128.6% in the six months compared to the same period in
1997.
Noninterest Expense
- -------------------
Noninterest expense increased substantially for the three month and six month
periods ended June 30, 1998 compared to the same periods in 1997. Salaries and
employee benefits expense increased primarily due to increased commissions on
mortgage loan originations.
3
<PAGE>
Occupancy expense also increased due to the Company's opening of two new
branches of a subsidiary bank during the third quarter of 1997.
Income Tax Expense
- ------------------
Income tax expense increased slightly for the three months ended June 30, 1998
compared to the same period in 1997. The effective tax rate for second quarter
1998 was 31% compared to 35% for the same period in 1997. Second quarter 1997
accrued taxes were reduced by the utilization of tax credits and prior period
net operating loss carryforwards.
Income tax expense increased $1,507,000, or 37.9% for the six months ended June
30, 1998 compared to the same period in 1997. The effective tax rate for the six
months ended June 30, 1997 and June 30, 1998 was 31% and 32%, respectively.
Interest Rate Sensitivity Management
- ------------------------------------
Interest rates play a major part in the net interest income of a financial
institution. The sensitivity to rate changes is known as "interest rate risk."
The repricing of interest-earning assets and interest-bearing liabilities can
influence the changes in net interest income. As part of the Company's
asset/liability management program, the timing of repricing assets and
liabilities is referred to as Gap management. It is the policy of the Company to
maintain a Gap ratio in the one-year time horizon of .80 to 1.20. The Gap
analysis indicates that the Company is somewhat asset sensitive in relation to
changes in market interest rates.
The Company uses simulation analysis to monitor changes in net interest income
due to changes in market interest rates. The simulation of rising, declining,
and a most likely interest rate scenario allows management to monitor and adjust
interest rate sensitivity to minimize the impact of market interest rate swings.
Each month management updates all available data concerning cash flows of assets
and liabilities, changes in market interest rates, and expectations as to new
volumes of loans.
Liquidity
- ---------
Liquidity is an important factor in the financial condition of the Company and
affects the Company's ability to meet the borrowing needs and deposit withdrawal
requirements of its customers. Assets, consisting principally of loans and
investment securities, are funded by customer deposits, purchased funds, and
borrowed funds.
The investment portfolio is one of the Company's primary sources of liquidity.
Maturities of securities provide a constant flow of funds which are available
for cash needs. Investment securities that contractually mature within one year
total $43 million. However, mortgage-backed securities and securities with call
provisions create cash flows earlier than the contractual maturities. Estimates
of prepayments on mortgage-backed securities and call provisions on other
securities increase the forecasted cash flow from the investment portfolio
within one year to approximately $55 million. Maturities in the loan portfolio
also provide a steady flow of funds. The Company's liquidity also continues to
be enhanced by an increasing core deposit base. Deposits have increased $47
million since year end 1997, or approximately 4.7%. At June 30, 1998, the loan-
to-deposit (excluding loans held for sale) ratio was 83%.
Effective April 15, 1998, the Company and Premier Lending Corporation, a wholly
owned subsidiary, entered into a $90 million Mortgage Warehouse Line of Credit
Loan and Security Agreement with SunTrust Bank, Central Florida, National
Association, individually and as agent for Colonial Bank, CoreStates Bank, N.A.
and SouthTrust Bank, National Association. The proceeds of the line of credit
will be used to provide interim funds for the funding of eligible residential
mortgage loans prior to resale thereof to investors pre-approved by the agent.
Advances of the proceeds of the line of credit will be made from time to time by
the lenders, on a pro rata basis in accordance with their respective percentage
interest, upon written request of the Company and/or Premier Lending Corporation
in compliance with such advance conditions as may be established from time to
time by the agent. The term of the line of credit is one year. The line of
credit is secured by an assignment of and a grant of a first priority security
interest in the subject mortgage loans.
Shareholders' Equity
- --------------------
The Company maintains a ratio of shareholders' equity to total assets that is
adequate relative to industry standards. The Company's ratio of shareholders'
equity to total assets was 9.5% at June 30, 1998, compared to 9.4% at December
31, 1997.
The Company and its subsidiary banks are required to comply with capital
adequacy standards established by the Federal Reserve and the FDIC. Currently,
there are two basic measures of capital adequacy: risk-based measure and
leverage measure.
4
<PAGE>
The risk-based capital standards are designed to make regulatory capital
requirements more sensitive to differences in risk profile among banks and bank
holding companies, to account for off-balance sheet exposure and to enhance the
value of holding liquid assets. The resulting capital ratios represent capital
as a percentage of total risk-weighted assets and off-balance sheet items.
Recently the Federal Reserve and the FDIC proposed that interest rate risk be
considered in computing risk-based capital ratios.
The minimum standard for the ratio of total capital to risk-weighted assets is
8%. At least 50% of that capital level must consist of common equity, undivided
profits and noncumulative perpetual preferred stock, less goodwill and certain
other intangibles ("Tier I capital"). The remainder ("Tier II capital") may
consist of a limited amount of other preferred stock, mandatory convertible
securities, subordinated debt and a limited amount of the allowance for loan
losses. The sum of Tier I capital and Tier II capital is "total risk-based
capital."
In addition, the Federal Reserve has established minimum leverage ratio
guidelines for banking holding companies. The Federal Reserve has adopted a
final rule which provides that the minimum ratio of Tier I capital to total
assets less goodwill (the "leverage ratio") for the most highly-rated bank
holding companies is 3.0 percent. The minimum leverage ratio for all other bank
holding companies is 4.0 percent. Banking organizations with supervisory,
financial, operational, or managerial weaknesses, as well as organizations that
are anticipating or experiencing significant growth are expected to maintain
capital ratios well above the minimum levels.
Capital Levels
At June 30, 1998 Minimum Requirement
-------------------------------------------
Tier I Capital Leverage Ratio 11.64% 3%
Tier I Risk-based Capital Ratio 14.43% 4%
Tier II Risk-based Capital Ratio 1.25%
-------------------------------------------
Total Risk-based Capital Ratio 15.68% 8%
===========================================
A subsidiary of the Company issued $28.7 million of preferred securities in
November 1997. The proceeds of sale of preferred securities qualifies as Tier 1
capital with respect to the risk-based capital guidelines established by the
Federal Reserve. Federal Reserve guidelines for calculation of Tier 1 capital
limit the amount of cumulative preferred securities which can be included in
Tier 1 capital to 25% of total Tier 1 capital.
Impact of Year 2000
With respect to its internal systems, the Company is taking steps to prepare
both its information technology systems and its other equipment and machinery
for the Year 2000 date change. The Company expects to substantially complete
these efforts at the end of calendar year 1998, with testing to continue through
1999. Although the Company does not believe that it will incur any material
costs or experience material disruptions in its business associated with
preparing its internal systems for the Year 2000, there can be no assurances
that the Company will not experience unanticipated negative consequences and/or
material costs caused by undetected errors or defects in the technology used in
its internal systems. The Company is currently unable to estimate the most
reasonably likely worst-case effects of the Year 2000 and does not currently
have a contingency plan in place for any such unanticipated negative effects.
The Company intends to analyze the worst-case scenarios and the need for such
contingency planning once the measures described above have been completed and
testing of the Company's systems for Year 2000 compliance has begun.
The Company is currently unable to estimate whether it is exposed to significant
risk of being adversely affected by Year 2000 noncompliance by third parties.
During the third quarter of 1998, the Company intends to begin contacting third
parties with which it has material relationships, including its material
customers, to attempt to determine their preparedness with respect to Year 2000
issues and to analyze the risks to the Company in the event any such third
parties experience significant business interruptions as a result of Year 2000
noncompliance. The Company expects to complete this review and analysis and to
determine the need for contingency planning in this regard by March 31, 1999.
Forward Looking Statements
This Exhibit 99.2 contains certain forward-looking statements, as defined in the
Private Securities Litigation Reform Act of 1995, including or related to future
results of the Company (including certain projections and business trends).
5
<PAGE>
These and other statements, which are not historical facts, are based largely on
current expectations and assumptions of management and are subject to a number
of risks and uncertainties that could cause actual results to differ materially
from those contemplated by such forward-looking statements. Assumptions related
to forward-looking statements include that the Company will continue to price
and market its products competitively; that competitive conditions within its
respective markets will not change materially or adversely; that the demand for
the Company's products will remain strong; that the Company will retain key
personnel.
Assumptions relating to forward-looking statements involve judgments with
respect to, among other things, future economic, competitive and market
conditions and future business decisions, all of which are difficult or
impossible to predict accurately and many of which are beyond the control of the
Company. When used in this Exhibit with respect to the Company, the words
"estimate," "project," "intend," and "expect" and similar expressions are
intended to identify forward-looking statements. Although the assumptions
underlying the forward-looking statements are believed by the Company to be
reasonable, any of the assumptions could prove inaccurate and, therefore, there
can be no assurance that the results contemplated in the forward-looking
information will be realized. Management decisions are subjective in many
respects and susceptible to interpretations and periodic revisions based on
actual experience and business developments, the impact of which may cause the
Company to alter its business strategy or capital expenditure plans which may,
in turn, affect the Company's results of operations. In light of the significant
uncertainties inherent in the forward-looking information included herein, the
inclusion of such information should not be regarded as a representation by the
Company or any other person that any strategy, objectives or other plans will be
achieved. The forward-looking statements contained herein speak only as of the
date hereof, and the Company does not undertake any obligation to publicly
update or revise any of these forward-looking statements.
Quantitative and Qualitative Disclosures About Market Risk
The Company's primary market risk exposure is interest rate risk and, to a
lesser extent, credit risk and liquidity risk. The Company has little or no risk
related to trading accounts, commodities or foreign exchange. Interest rate risk
is the exposure of a banking organization's financial condition and earnings
ability to adverse movements in interest rates. The Company has analyzed the
assumed market value risk and earnings risk inherent in its interest rate
sensitive instruments related to interest-rate swings of 200 basis points, both
above and below current levels (rate shock analysis). Earnings and fair value
estimates are subjective in nature and involve uncertainties and matters of
significant judgment and, therefore, cannot be determined with precision. There
have been no significant changes in the Company's market risk exposure since
December 31, 1997.
6
<PAGE>
PREMIER BANCSHARES, INC. AND SUBSIDIARIES
PREMIER BANCSHARES, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONSOLIDATED CONDENSED STATEMENTS OF CONDITION
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
--------------- --------------
(dollar amounts in thousands)
<S> <C> <C>
Assets
Cash and due from banks $ 53,243 $ 50,049
Interest-bearing deposits with other banks 3,961 6,977
Federal funds sold 80,972 54,467
Securities available for sale 142,883 146,885
Securities held-to-maturity 37,405 46,003
Loans held for sale 49,003 62,738
Loans 886,448 806,519
Allowance for credit losses (13,582) (13,356)
-------------- ----------------
Net loans 872,866 793,163
Premises and equipment, net 30,769 30,055
Goodwill and other intangibles 4,725 5,001
Other real estate owned 2,523 1,237
Other assets 21,500 17,758
-------------- ----------------
Total assets $ 1,299,850 $ 1,214,333
============== ================
Liabilities
Deposits
Noninterest-bearing $ 189,131 $ 170,864
Interest-bearing 874,446 845,316
-------------- ----------------
Total deposits 1,063,577 1,016,180
Federal funds purchased and securities sold under repurchase agreements 18,122 27,168
Federal Home Loan Bank advances 1,875 2,875
Guaranteed preferred beneficial interests in the Company's subordinated
debentures 28,750 28,750
Other borrowings 50,166 12,197
Other liabilities 12,030 10,795
-------------- ----------------
Total liabilities 1,174,520 1,097,965
Redeemable preferred stock, par value $60, 2,000,000 shares authorized, 40,770
shares issued and outstanding 2,446 2,446
Shareholders' Equity
Common stock, $1 par value; 60,000,000 shares authorized;
24,790,555 and 24,915,045 shares issued at June 30, 1998 and
December 31, 1997, respectively 24,791 24,914
Capital surplus 50,362 47,649
Treasury stock, at cost 701,944 shares at December 31, 1997 --- (1,186)
Retained earnings 46,409 41,877
Unrealized gains on securities available-for-sale, net 1,322 668
------------- ----------------
Total shareholders' equity 122,884 113,922
------------- ----------------
Total liabilities, redeemable preferred stock
and shareholders' equity $ 1,299,850 $ 1,214,333
============= ================
</TABLE>
See notes to supplemental consolidated condensed financial statements.
7
<PAGE>
PREMIER BANCSHARES, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30,
1998 1997
--------------- ----------------
<S> <C> <C>
(dollar amounts in thousands except
per share data)
Interest Income
Loans, including fees $ 23,552 $ 19,309
Investment securities:
Taxable 2,550 3,051
Tax-exempt 195 361
Federal funds sold 901 662
Other interest income 92 56
--------------- ----------------
Total interest income 27,290 23,439
Interest Expense
Deposits 10,989 9,468
Other borrowings 1,713 750
--------------- ----------------
Total interest expense 12,702 10,218
Net interest income 14,588 13,221
Provision for credit losses 150 118
--------------- ----------------
Net interest income after provision for credit losses 14,438 13,103
Noninterest Income
Service charges on deposit accounts 973 1,094
Securities transactions, net 2 (9)
Mortgage banking activities 6,745 2,975
Other noninterest income 2,229 1,674
--------------- ----------------
Total noninterest income 9,949 5,734
Noninterest Expense
Salaries and employee benefits 9,397 7,024
Net occupancy and equipment expense 1,950 1,538
Merger related expenses 360 346
Other noninterest expense 3,719 2,852
--------------- ----------------
Total noninterest expense 15,426 11,760
--------------- ----------------
Income before income taxes 8,961 7,077
Income taxes 2,756 2,458
--------------- ----------------
Net income $6,205 $4,619
=============== ================
Per Share Information(1):
Basic earnings per share $ 0.25 $ 0.19
Weighted average shares outstanding - Basic 24,696,115 24,344,414
Earnings per share - Diluted $ 0.25 $ 0.19
Weighted average shares outstanding 25,148,873 24,612,211
Dividends declared per share $ 0.14 $ 0.04
</TABLE>
See notes to supplemental consolidated condensed financial statements.
1) After giving effect to stock splits payable to stockholders of record on
January 23, 1998 and March 6, 1997.
8
<PAGE>
PREMIER BANCSHARES, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Six months ended June 30,
1998 1997
-------------- --------------
(dollar amounts in thousands
except per share data)
<S> <C> <C>
Interest Income
Loans, including fees $ 45,313 $36,689
Investment securities:
Taxable 4,814 6,120
Tax-exempt 517 736
Federal funds sold 1,860 1,818
Other interest income 205 98
-------------- --------------
Total interest income 52,709 45,461
Interest Expense
Deposits 21,661 18,797
Other borrowings 2,895 1,299
---------------- --------------
Total noninterest income 24,556 20,096
Net interest income 28,153 25,365
Provision for credit losses 180 349
-------------- --------------
Net interest income after provision for credit losses 27,973 25,016
Noninterest Income
Service charges on deposit accounts 2,077 2,130
Securities transactions, net 9 (45)
Mortgage banking activities 12,732 5,570
Other noninterest income 3,637 2,682
-------------- --------------
Total noninterest income 18,455 10,337
Noninterest Expense
Salaries and employee benefits 17,934 13,469
Net occupancy and equipment expense 3,758 2,997
Merger related expenses 377 394
Other noninterest expenses 7,181 5,867
-------------- --------------
Total noninterest expense 29,250 22,727
-------------- --------------
Income before income taxes 17,178 12,626
Income taxes 5,480 3,973
-------------- --------------
Net Income $11,698 $ 8,653
============== ==============
Per share information(1):
Basic earnings per share $ 0.47 $0.36
Weighted average shares outstanding - Basic 24,658,737 24,344,414
Earnings per share - Diluted $ 0.47 $0.35
Weighted average shares outstanding 25,072,289 24,561,856
Dividends $ 0.17 $0.09
</TABLE>
See notes to supplemental consolidated condensed financial statements.
(1) After giving effect to stock splits payable to stockholders of record on
January 23, 1998 and March 6, 1997.
9
<PAGE>
PREMIER BANCSHARES, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six months ended June 30,
1998 1997
------------- -------------
(dollar amounts in thousands)
<S> <C> <C>
Cash flows from operating activities
Net income $11,649 $ 8,653
Adjustments to reconcile net earnings to net cash provided by
operating activities:
Provision for credit losses 180 374
Depreciation expense 1,572 1,241
Amortization and accretion, net 304 263
Gain on sale of premises and equipment (538) --
Gain on sale of Branch (657) --
Gain on sale of subsidiary -- (757)
Gain on sale of securities (8) 45
Gain on sale of mortgage loans (12,126) (5,376)
Net originations of mortgage loans 23,669 (8,693)
Changes in other assets and liabilities
Increase in other assets (4,958) (2,909)
Increase (decrease) increase in other liabilities 618 214
------------- ----------------------
Net cash used in operating activities 19,705 (6,945)
Cash flows from investing activities
Decrease (increase) in interest bearing deposits 2,516 (6,173)
Proceeds from maturities and paydowns of investment 52,090 30,413
Proceeds from sales of investment securities available-for- 15,053
Purchases of investment securities available-for-sale (38,059) (37,482)
Net increase in loans (78,484) (103,131)
Increase in federal funds sold, net (26,505) 41,109
Additions to premises and equipment (3,160) (2,340)
Proceeds from sales of premises and equipment 1,047 --
Sale of bank branch (7,122) --
------------- ----------------------
Net cash used in investing activities (97,677) (62,551)
Cash flows from financing activities
Net increase in deposits 56,261 47,804
Net increase in short term borrowings 27,923 27,933
Cash dividends paid (4,083) (1,993)
Purchase of treasury stock -- (1,277)
Proceeds from exercise of stock options 1,070 451
------------- ----------------------
Net cash provided by financing activities 81,171 72,918
------------- ----------------------
Net increase in cash and cash equivalents 3,199 3,422
Cash and cash equivalents, beginning of period 50,049 42,417
------------- ----------------------
Cash and cash equivalents, end of period $53,248 $ 45,839
============= ======================
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest 24,482 19,708
============= ======================
Income taxes 6,915 3,187
============= ======================
</TABLE>
See notes to supplemental consolidated condensed financial statements.
10
<PAGE>
PREMIER BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO SUPPLEMENTAL CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
(Unaudited)
Note 1. BASIS OF PRESENTATION
The accompanying supplemental consolidated condensed financial information of
Premier Bancshares, Inc. and Subsidiaries (the "Company") 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, 1998 are not necessarily
indicative of the results to be expected for the full year.
These supplemental condensed consolidated financial statements give retroactive
effect to the mergers of Premier Bancshares, Inc. with Button Gwinnett Financial
Corporation on July 1, 1998 and The Bank Holding Company on July 2, 1998, which
have been accounted for using the pooling of interests method as described in
Note 2 to the supplemental condensed consolidated financial statements.
Note 2. BUSINESS COMBINATIONS
Completed Combinations.
On July 1, 1998, the Company completed a business combination with Button
Gwinnett Financial Corporation ("Button Gwinnett") by exchanging 5,571,778
shares of the Company's common stock for all of the outstanding common stock of
Button Gwinnett. The combination was accounted for as a pooling of interests.
On July 2, 1998, the Company completed a business combination with Bank Holding
Company ("BHC") by exchanging 2,170,447 shares of the Company's common stock
and 40,770 shares of the Company's preferred stock for all of the outstanding
common and preferred stock of BHC. The combination was accounted for as a
pooling of interests.
On June 9, 1998, the Company completed a business combination with Lanier Bank &
Trust Company ("Lanier") by exchanging 1,625,990 shares of the Company's common
stock for all of the outstanding common stock of Lanier. The combination was
accounted for as a pooling of interests and, accordingly, the financial
statements reflect the combination as if it took place on January 1, 1998. All
prior period consolidated financial statements have been restated to include the
results of Lanier.
On December 12, 1997, the Company completed a business combination with Citizens
Gwinnett Bankshares, Inc. ("Citizens") by exchanging 2,066,834 shares of the
Company's common stock for all of the outstanding common stock of Citizens. The
combination was accounted for as a pooling of interests and, accordingly, the
financial statements reflect the combination as if it took place on January 1,
1997, and all prior period consolidated financial statements have been restated
to include the results of Citizens.
On June 23, 1997, the Company completed a business combination with Central and
Southern Holding Company ("Central and Southern") by exchanging 3,653,523 shares
of the Company's common stock for all of the outstanding common stock of Central
and Southern. The combination was accounted for as a pooling of interests and,
accordingly, the financial statements reflect the combination as if it took
place on January 1, 1997, and all prior period consolidated financial statements
have been restated to include the results of Central and Southern.
11
<PAGE>
The following table illustrates the Company's net interest income and net income
on a consolidated basis for periods prior to the business combinations discussed
above:
Six months ended June 30,
1998 1997
(dollars in thousands)
Net interest income:
Premier Bancshares, Inc. exclusive of
pre-acquisition amounts $17,894 $ 6,967
Bank Holding Company (1) 2,730 2,958
Button Gwinnett (2) 6,042 5,218
Lanier (3) 1,487 1,457
Citizens (4) -- 4,066
Central and Southern (5) -- 4,699
------------- ---------------
Total $28,153 $25,365
============= ===============
Net income:
Premier Bancshares, Inc., exclusive of
pre-acquisition amounts $ 7,533 $ 2,573
Bank Holding Company (1) 870 788
Button Gwinnett (2) 2,954 2,332
Lanier (3) 341 352
Citizens (4) -- 1,093
Central and Southern (5) -- 1,515
------------- ---------------
Total $11,698 $ 8,653
============= ===============
1. 1998 amounts reflect the results of operations from January 1, 1998 through
June 30, 1998.
2. 1998 amounts reflect the results of operations from January 1, 1998 through
June 30, 1998.
3. 1998 amounts reflect the results of operations from January 1, 1998 through
the effective merger date of June 9, 1998. Results of operations for the
period from June 10, 1998 through June 30, 1998 are included in Premier
Bancshares, Inc. amounts.
4. 1997 amounts reflect the results of operations from January 1, 1997 through
June 30, 1997.
5. 1997 amounts reflect the results of January 1, 1997 through the effective
merger date of June 23, 1997. Results of operations for the period from June
24, 1997 through June 30, 1997 are included in Premier Bancshares, Inc.
amounts.
Effective October 17, 1997, the Company acquired Traditional Mortgage
Corporation ("Traditional") for 114,598 shares of the Company's common stock at
a fair market value of $1,833,000. Traditional originates residential mortgage
loans primarily for sale to independent third party investors. Traditional was
merged with Premier Lending Corporation. The acquisition was accounted for as a
purchase and the results of operations for Traditional from the date of
acquisition are included in the consolidated financial statements. The purchase
price was allocated to the acquired assets and liabilities based on the fair
value of those assets and liabilities as determined by the Company. The excess
of the total acquisition cost over the fair value of the assets and liabilities
acquired is being amortized on a straight-line basis over a period of fifteen
years.
Subsequent and Pending Combinations
On July 9, 1998, the Company announced that a definitive merger agreement had
been entered into with Frederica Bank & Trust ("Frederica"). As of December 31,
1997, Frederica had total assets of $66,166,000 and for the year ended December
31, 1997, had revenue and net income of $5,420,000 and $660,000, respectively.
The merger is expected to be accounted for as a pooling of interests.
Note 3. SHAREHOLDERS' EQUITY AND DIVIDENDS PER SHARE
The Company declared a three-for-two stock split on January 8, 1998 for
stockholders of record as of January 23, 1998. All per share data has been
restated to reflect the split.
12
<PAGE>
On February 24, 1997, the Company declared a 1.8055 stock split for stockholders
of record as of March 6, 1997. All per share data has been restated to reflect
the split.
On June 23, 1998, the Company declared dividends of $0.14 per share payable to
shareholders of record as of June 30, 1998 (restated for pooling of interests).
During the quarter ended June 30, 1997, the Company declared cash dividends of
$0.07 per share (restated for stock splits and pooling of interests).
Note 4. CURRENT ACCOUNTING DEVELOPMENTS
On January 1, 1998, the Company adopted the provisions of Financial Accounting
Standards Board ("FASB") Statement No. 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities," ("Statement
125"), relating to repurchase agreements, securities lending and other similar
transactions and pledged collateral, which had been delayed until after December
31, 1997 by FASB Statement No. 127, "Deferral of the Effective Date of Certain
Provisions of FASB Statement No. 125, an amendment of FASB Statement No. 125,"
("Statement 127"). Statement 125 provides accounting and reporting standards for
transfers and servicing of financial assets and extinguishment of liabilities
based on a consistent application of a "financial-components approach" that
focuses on control. Under that approach, after a transfer of financial assets,
an entity recognizes the financial and servicing assets it controls and the
liabilities it has incurred, derecognizes financial assets when control has been
surrendered and derecognizes liabilities when extinguished. Statement 125
provides standards for consistently distinguishing transfers of financial assets
that are sales from transfers that are secured borrowings. The adoption of the
additional provisions of Statement 125 as amended by Statement 127 resulted in
no material impact on the Company's financial condition or results of
operations.
As of January 1, 1998, the Company adopted FASB Statement No. 130, "Reporting
Comprehensive Income" ("Statement 130"). Statement 130 establishes new rules for
the reporting and display of comprehensive income and its components; however,
the adoption of this Statement had no impact on the Company's net income or
shareholders' equity. Statement 130 requires unrealized gains or losses on the
Company's available-for-sale securities, which prior to adoption were reported
separately in shareholders' equity, to be included in other comprehensive
income. Prior year financial statements have been reclassified to conform to the
requirements of Statement 130. During the three and six months ended June 30,
1998, total comprehensive income totaled $6,239,000 and $12,352,000,
respectively. During the three and six months ended June 30, 1997. Comprehensive
income totaled $4,377,000 and $8,915,000, respectively.
Effective January 1, 1998, the Company adopted FASB Statement No. 131,
"Disclosures about Segments of an Enterprise and Related Information"
("Statement 131"). Statement 131 superseded FASB Statement No. 14, "Financial
Reporting for Segments of a Business Enterprise". Statement 131 establishes
standards for the way that public business enterprises report information about
operating segments in annual financial statements and requires that those
enterprises report selected information about operating segments in interim
financial reports. Statement 131 also establishes standards for related
disclosures about products and services, geographic areas, and major customers.
The adoption of Statement 131 did not affect results of operations or financial
position.
Note 5. EARNINGS PER SHARE
Earnings per share for periods prior to 1998 have been restated to reflect the
effect of business combinations accounted for as poolings of interests. For the
quarter ended June 30, 1997, net income per common share and net income per
common share, diluted, have been adjusted $0.02. For the six months ended June
30, 1997, net income per common share and net income per common share, diluted,
have been adjusted $0.01.
The following tables sets forth the computation of basic and diluted earnings
per share:
<TABLE>
<CAPTION>
Quarter ended June 30,
1998 1997
------------------------------------------
<S> <C> <C>
(In thousands, except per share data)
Numerator:
Net income $ 6,205 $ 4,619
==========================================
Denominator:
Denominator for basic earnings per share - weighted average 24,696 24,344
shares
Effect of dilutive securities - stock options 453 268
------------------------------------------
Denominator for diluted earnings per share - adjusted
weighted average shares and assumed conversions 25,149 24,612
==========================================
Net income per share of common stock $ 0.25 $ 0.19
------------------------------------------
Net income per share of common stock - diluted $ 0.25 $ 0.19
==========================================
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
Six Months ended June 30,
1998 1997
------------------------------------------
<S> <C> <C>
(In thousands, except per share data)
Numerator:
Net income $11,698 $ 8,653
==========================================
Denominator:
Denominator for basic earnings per share - weighted average 24,659 24,344
shares
Effect of dilutive securities - stock options 413 218
------------------------------------------
Denominator for diluted earnings per share - adjusted
weighted average shares and assumed conversions 25,072 24,562
==========================================
Net income per share of common stock $ 0.47 $ 0.36
------------------------------------------
Net income per share of common stock - diluted $ 0.47 $ 0.35
==========================================
</TABLE>
14
