<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)
<TABLE>
<S> <C> <C>
Georgia 001-12625 58-1793778
(State or other jurisdiction of (Commission File No.) (IRS Employer Identification No.)
incorporation or organization)
</TABLE>
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 audited
consolidated financial statements of Premier Bancshares, Inc. (the "Company")
for the fiscal years ended December 31, 1995, 1996 and 1997 and give retroactive
effect to the mergers of the Company 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
23.1 Consent of Ernst & Young LLP
23.2 Consent of Mauldin & Jenkins, LLC
23.3 Consent of Bricker & Melton, P.A.
99.1 Supplemental Selected Financial Data
99.2 Supplemental Management's Discussion and Analysis of
Financial Condition and Results of Operations for the
fiscal years ended December 31, 1995, 1996 and 1997
99.3 Supplemental Audited Consolidated Financial Statements and
Supplementary Data for fiscal years ended December 31,
1995, 1996 and 1997
99.4 Opinions of Mauldin & Jenkins, LLC (Premier Bancshares,
Inc. years ended December 31, 1995 and 1996)
99.5 Opinion of Mauldin & Jenkins, LLC (The Bank Holding Company
year ended December 31, 1997)
99.6 Opinion of Mauldin & Jenkins, LLC (Button Gwinnett
Financial Corporation year ended December 31, 1997)
99.7 Opinion of Bricker & Melton, P.A. (Lanier Bank & Trust
Company year ended December 31, 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 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 333-29941) pertaining to the Premier Bancshares, Inc. Directors' Stock
Option Plan and the Premier Bancshares, Inc. 1997 Stock Option Plan, in the
Registration Statement (Form S-3 No. 333-49979) and related Prospectus of
Premier Bancshares, Inc. and subsidiaries for the registration of 171,897 shares
of its common stock, in the Registration Statement (Form S-8 No. 333-59475)
pertaining to the Premier Bancshares, Inc. 1997 Stock Option Plan and the
Premier Bancshares, Inc. Directors' Deferred Stock Unit Plan (formerly the
Premier Bancshares, Inc. Directors' Stock Option Plan), in the Registration
Statement (Form S-3 No. 333-60245) and related Prospectus Of Premier Bancshares,
Inc. for the registration of 1,000,000 shares of its common stock, and in the
Registration Statement (Form S-8 No. 333-60249) pertaining to the Premier
Bancshares, Inc. Employee Stock Purchase Plan, of our report dated February 5,
1998, except for Note 2, as to which the date is July 2, 1998, with respect to
the supplemental consolidated financial statements of Premier Bancshares, Inc.
and subsidiaries included in its Current Report on Form 8-K dated September 30,
1998, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
September 29, 1998
Atlanta, Georgia
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use of our report, dated January 31, 1997,
except for Note 2 as to which the date is June 23, 1997, December 12, 1997,
June 9, 1998, July 1, 1998 and July 2, 1998, relating to the consolidated
financial statements of Premier Bancshares, Inc. and subsidiaries for the three
years ended December 31, 1996, included in this Current Report on Form 8-K and
incorporated by reference in the previously filed Registration Statements of
Premier Bancshares, Inc. on Forms S-8 (File Numbers 333-29941, 333-60249 and
333-59475), Form S-3 (File Number 333-49979) and Form S-3D (File Number 333-
60245).
/s/ MAULDIN & JENKINS, LLC
Atlanta, Georgia
September 28, 1998
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 333-29941) pertaining to the Premier Bancshares, Inc. Directors' Stock
Option Plan and the Premier Bancshares, Inc. 1997 Stock Option Plan, in the
Registration Statement (Form S-3 No. 333-49979) and related Prospectus of
Premier Bancshares, Inc. and subsidiaries for the registration of 171,897 shares
of its common stock, in the Registration Statement (Form S-8 No. 333-59475)
pertaining to the Premier Bancshares, Inc. 1997 Stock Option Plan and the
Premier Bancshares, Inc. Directors' Deferred Stock Unit Plan (formerly the
Premier Bancshares, Inc. Directors' Stock Option Plan), in the Registration
Statement (Form S-3 No. 333-60245) and related Prospectus Of Premier Bancshares,
Inc. for the registration of 1,000,000 shares of its common stock, and in the
Registration Statement (Form S-8 No. 333-60249) pertaining to the Premier
Bancshares, Inc. Employee Stock Purchase Plan, of our report dated January 16,
1998, with respect to the supplemental consolidated financial statements of
Premier Bancshares, Inc. and subsidiaries and our opinion included in its
Current Report on Form 8-K dated September 30, 1998, filed with the Securities
and Exchange Commission.
/s/ BRICKER & MELTON, P.A.
September 30, 1998
Duluth, Georgia
<PAGE>
EXHIBIT 99.1
SUPPLEMENTAL SELECTED FINANCIAL DATA.
The following table presents consolidated supplemental selected financial
data for the Company for each of the five years in the period ended December 31,
1997. The consolidated selected financial data for the Company has been restated
for all periods presented to reflect the business combinations of First Alliance
Bancorp, Inc. and Premier Bancshares, Inc. on August 31, 1996, of Central and
Southern Holding Company and the Company on June 23, 1997, of Citizens Gwinnett
Bankshares, Inc. and the Company on December 12, 1997, of Lanier Bank & Trust
Company and the Company on June 9, 1998, of Button Gwinnett Financial
Corporation and the Company on July 1, 1998, and of The Bank Holding Company and
the Company on July 2, 1998, all of which were accounted for as poolings of
interests. In addition, the consolidated selected financial data includes the
results of operations of Traditional Mortgage Corporation, Allatoona Federal
Savings Bank and Interim Alliance Corporation, which were accounted for as
purchase business combinations, from the respective dates of acquisition. Net
income per share has been restated for all periods presented to reflect stock
splits payable to shareholders of record on January 23, 1998 and March 6, 1997
as well as to conform to the requirements of Financial Accounting Standards
Board ("FASB") Statement No. 128 "Earnings Per Share". This financial data is
derived in part from, and should be read in conjunction with, the Supplemental
Consolidated Financial Statements and the related notes thereto contained
elsewhere in this report.
<TABLE>
<CAPTION>
Years Ended December 31
1997 1996 1995 1994 1993
-----------------------------------------------------------
(dollars in thousands except per share data)
<S> <C> <C> <C> <C> <C>
Interest income $ 95,857 $ 80,450 $ 68,544 $ 52,149 $ 52,855
Interest expense 42,782 36,811 30,823 21,653 23,224
Net interest income 53,075 43,639 37,721 30,496 29,631
Provision for credit losses 1,699 425 108 686 4,123
Other income 23,996 16,802 12,697 6,890 6,955
Other expense 47,927 41,317 34,403 27,068 27,608
Net income 18,077 13,081 10,828 6,255 3,391
Per share data:
Net income $ 0.74 $ 0.53 $ 0.44 $ 0.28 $ 0.15
Net income diluted 0.72 0.52 0.44 0.27 0.15
Cash dividends declared 0.15 0.18 0.06 0.03 0.04
Book value 4.57 3.88 3.59 3.05 2.82
Average total equity $ 102,955 $ 92,149 $ 83,534 $ 73,443 $ 67,334
Average total assets 1,120,959 953,937 810,740 688,749 680,260
Total assets 1,214,333 1,052,498 880,611 718,117 680,736
Securities available for sale $ 146,885 $ 184,491 $ 173,890 $145,598 $149,399
Securities held to maturity 46,003 32,467 26,376 27,867 23,999
Loans held for sale 62,738 26,550 27,304 27,602 4,446
Loans, net 793,163 619,997 502,936 417,495 378,907
Total deposits 1,016,180 904,285 739,029 605,037 602,073
Total borrowings 70,990 39,049 39,558 29,217 4,990
Total shareholders' equity 113,922 96,389 89,233 74,998 69,332
Ratios:
Net income to average assets 1.61% 1.37% 1.34% .91% .50%
Net income to average equity 17.56% 14.19 % 12.96% 8.52% 5.04%
Dividend payout ratio 20.27% 33.96% 13.64% 10.71% 26.67%
Average equity to average assets 9.18% 9.65% 10.30% 10.66% 9.90%
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
1997 1996 % Change
--------------------------------------------
(dollars in thousands)
<S> <C> <C> <C>
STATEMENT OF CONDITION
Assets $1,214,333 $1,052,498 15.38%
Loans held for sale 62,738 26,550 136.30%
Loans, net 793,163 619,997 27.93%
Deposits 1,016,180 904,285 12.37%
Shareholders' equity 113,922 96,389 18.19%
STATEMENT OF EARNINGS
Net interest income $ 53,075 $ 43,639 21.62%
Provision for credit losses 1,699 425 299.76%
Other income 23,996 16,802 42.64%
Other expense 47,927 41,317 16.00%
Net income 18,077 13,081 38.19%
</TABLE>
2
<PAGE>
EXHIBIT 99.2
ITEM 7. SUPPLEMENTAL MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
General
Premier Bancshares, Inc. (the "Company") is a bank and thrift holding
company organized and existing under the laws of the State of Georgia and
headquartered in Atlanta, Georgia. At December 31, 1997, the Company had five
subsidiaries: Premier Bank ("Premier Bank"), Premier Lending Corporation
("Premier Lending"), The Central and Southern Bank of Georgia ("Central and
Southern Bank"), The Central and Southern Bank of North Georgia F.S.B. ("North
Georgia") and Citizens Bank of Gwinnett ("Citizens Bank"). Through mergers
completed subsequent to December 31, 1997, the Company added four more
subsidiaries: Lanier Bank and Trust Company ("Lanier"), 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.
The Company's knowledge of both its product lines and local markets allows it to
compete effectively with larger institutions by offering a wide range of
products while maintaining strong community relationships and name recognition
within its markets. In addition, management believes that there continue to be
increased opportunities in the retail and small commercial loan product market
as larger competitors focus on the higher dollar and volume loan product
markets.
At December 31, 1997, through its eight wholly-owned financial
institution subsidiaries, Premier Bank, The Central and Southern Bank, North
Georgia, Citizens Bank, Lanier, Gwinnett County Bank, Henry County Bank and
Spalding County Bank (collectively, the "Banking Subsidiaries", or "Banks"), the
Company operated 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.
3
<PAGE>
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 telephone
number at that address is (404) 814-3090.
The following discussion should be read in conjunction with the
Supplemental Consolidated 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 Supplemental
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.
4
<PAGE>
AVERAGE BALANCES, INTEREST AND YIELDS
The following table details average balances of interest-earning assets
and interest-bearing liabilities, the fully taxable equivalent amount of
interest earned/paid, assuming a 34% effective tax rate and the fully taxable
equivalent yield/rate for each of the three years in the period ended December
31, 1997. Loan average balances include nonaccrual loans.
<TABLE>
<CAPTION>
1997 1996 1995
-----------------------------------------------------------------------------------------------
YIELD/ YIELD/ YIELD/
BALANCE INTEREST RATE BALANCE INTEREST RATE BALANCE INTEREST RATE
-----------------------------------------------------------------------------------------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Loans, net of unearned
interest(1) $ 767,454 $79,409 10.35% $593,697 $63,458 10.69% $ 499,324 $ 53,700 10.75%
Short term investments 1,979 200 10.11% 9,501 446 4.69% 4,897 223 4.56%
Investment securities:
Taxable 181,598 11,555 6.36% 181,823 11,235 6.18% 163,093 10,111 6.20%
Non-taxable 25,801 2,171 8.41% 26,331 2,318 8.80% 22,167 1,859 8.39%
Federal funds sold and
securities sold under
agreements to repurchase 64,367 3,260 5.06% 76,108 3,781 4.97% 58,897 3,283 5.57%
---------------------- -------------------- ------------------
Total interest earning assets 1,041,199 $96,595 9.28% 887,460 81,238 9.15% 748,378 $ 69,176 9.24%
========= ======== ========
Allowance for credit losses (12,216) (10,965) (10,162)
Other assets 91,976 77,442 72,524
============= ============ ===========
Total assets $1,120,959 $953,937 $810,740
============= ============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing demand,
Savings, and money market
deposits $ 277,462 $ 9,765 3.52% $242,417 $ 8,110 3.35% $188,047 $ 6,076 3.23%
Time deposits 519,345 29,838 5.75% 443,955 25,867 5.83% 381,739 22,170 5.81%
Repurchase agreements &
advances 31,737 2,446 7.71% 33,050 2,707 8.19% 37,872 2,348 6.20%
Other borrowings 20,853 733 3.52% 1,694 127 7.50% 2,084 229 10.99%
----------------------- ------------------- -------------------
Total interest-bearing
liabilities 849,397 42,782 5.04% 721,116 $36,811 5.10% 609,742 $30,823 5.06%
========= ======== =========
Demand deposits 154,762 129,005 105,988
Other liabilities 11,399 9,221 9,030
------------- ------------ ------------
Total liabilities 1,015,558 859,342 724,760
Redeemable preferred stock 2,446 2,446 2,446
Total shareholders' equity 102,955 92,149 83,534
------------- ============ ============
Total liabilities and
shareholders' equity $1,120,959 $953,937 $810,740
============= ============ ============
Net interest income $53,813 $44,427 $38,353
Net interest margin 5.17% 5.01% 5.12%
Net interest spread 4.24% 4.05% 4.18%
</TABLE>
(1) Includes loan fees of $5,501,000, $5,029,000, and $4,210,000, for 1997,
1996, and 1995, respectively.
5
<PAGE>
RATE - VOLUME ANALYSIS
The following table shows a summary of the changes in interest income
and interest expense on a fully taxable equivalent basis resulting from changes
in volume and changes in rates for each category of interest-earning assets and
interest-bearing liabilities for 1997/1996 and 1996/1995. Changes not solely
attributable to a change in rate or volume are allocated proportionately
relative to the total change of rate and volume.
<TABLE>
<CAPTION>
1997 VERSUS 1996 1996 VERSUS 1995
---------------- ----------------
INCREASE (DECREASE) INCREASE (DECREASE)
DUE TO CHANGE IN: DUE TO CHANGE IN:
VOLUME YIELD/ VOLUME YIELD/
OUTSTANDING RATE TOTAL OUTSTANDING RATE TOTAL
-------------------------------------- ---------------------------------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest income on:
Loans $18,572 $(2,621) $15,951 $10,149 $ (391) $9,758
Short term investments (353) 107 (246) 210 13 223
Investment securities:
Taxable (14) 334 320 1,161 (37) 1,124
Non-taxable (47) (100) (147) 349 110 459
Federal funds sold (583) 62 (521) 959 (461) 498
-------------------------------------- ---------------------------------------
Total interest income 17,575 (2,218) 15,357 12,828 (766) 12,062
Interest expense on:
Interest-bearing
demand, savings and
money market deposits
1,172 483 1,655 1,757 277 2,034
Time deposits 4,393 (422) 3,971 3,613 84 3,697
Repurchase agreements &
advances (108) (153) (261) (299) 658 359
Other borrowings 1,436 (830) 606 (43) (59) (102)
-------------------------------------- ---------------------------------------
Total interest expense 6,893 (923) 5,971 5,028 960 5,988
-------------------------------------- ---------------------------------------
Net interest income $10,682 $(1,295) $9,386 $ 7,800 $ (1,726) $6,074
====================================== =======================================
</TABLE>
6
<PAGE>
LOANS
A sound credit policy and careful, consistent credit review are vital
to a successful lending program. The Banks operate under written loan policies
which attempt to maintain a consistent lending philosophy, provide sound
traditional credit decisions, provide an adequate return and render service to
the communities in which the banks are located. Credit reviews and loan
examinations help confirm that the Banks are adhering to these loan policies.
The Banks make both secured and unsecured loans to individuals, firms
and corporations, and both consumer and commercial lending operations include
various types of credit for the Banks' customers. Secured loans include first
and second real estate mortgage loans. The Banks also make direct installment
loans to consumers on both a secured and unsecured basis.
The amount of loans outstanding by loan type at the indicated dates are shown in
the following tables according to type of loan:
<TABLE>
<CAPTION>
DECEMBER 31
1997 1996 1995 1994 1993
--------------------------------------------------------------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Commercial, financial and
Agricultural $ 196,319 $ 181,437 $ 156,378 $ 118,969 $ 117,293
Real estate-construction 203,458 185,202 133,249 96,863 60,363
Real estate-mortgage 347,136 203,835 171,122 156,047 127,270
Consumer and other 61,013 61,987 60,626 62,563 90,636
====================================================================
$ 807,926 $ 632,461 $ 521,375 $ 434,442 $ 395,562
====================================================================
Loans held for sale $ 62,738 $ 26,550 $ 27,304 $ 27,602 $ 4,446
====================================================================
Percent of loans by category to total loans
Excluding loans held for sale
Commercial, financial and agriculture 24% 29% 30% 27% 30%
Consumer installment 8% 10% 12% 15% 23%
Real estate 68% 61% 58% 58% 47%
===================================================================
100% 100% 100% 100% 100%
===================================================================
</TABLE>
The maturity of real estate construction and commercial, financial and
agricultural loans outstanding at December 31, 1997 are as follows:
LOAN MATURITIES
<TABLE>
<CAPTION>
REAL ESTATE COMMERCIAL, FINANCIAL
CONSTRUCTION AND AGRICULTURAL
------------------------------------------
(dollars in thousands)
<S> <C> <C>
In one year or less $156,644 $105,651
After one year but within five years 39,057 80,407
After five years 7,757 10,261
==========================================
Total $203,458 $196,319
==========================================
</TABLE>
7
<PAGE>
Of the real estate construction and commercial loans maturing after one
year, approximately $80,000,000 have fixed rates and approximately $57,000,000
have variable rates.
All loans carry some degree of risk. The risk is reflected in the
supplemental consolidated financial statements by the allowance for credit
losses, the amount of loans charged off and the provision for credit losses
charged to operating expense. It is the Company's policy that when a loss is
identified, it is charged against the credit loss allowance in the current
period. The policy regarding recognition of losses requires immediate
recognition of a loss if significant doubt exists as to principal repayment. In
addition, consumer installment credit is generally recognized as a loss when it
becomes 90 days or more past due, or the consumer has filed for protection under
the bankruptcy laws. A loss will not be recognized if the underlying collateral
or the customer's financial position makes a loss improbable.
The Company's provision for credit losses is a reflection of actual
losses experienced during the year and management's judgment as to the adequacy
of the allowance for credit losses. Some of the factors considered by management
in determining the amount of the provision and resulting allowance include: (1)
credit reviews of individual loans; (2) charge-offs and recoveries in the
current year; (3) growth in the loan portfolio; (4) the current level of the
allowance in relation to total loans and to historical loss levels, (5) past due
and nonaccruing loans; (6) collateral values of properties securing loans; (7)
the composition of the loan portfolio (types of loans); and (8) management's
estimate of future economic conditions and the resulting impact on the Company.
8
<PAGE>
ANALYSIS OF THE ALLOWANCE FOR CREDIT LOSSES
The following table summarizes loan balances at the end of each year, average
loans outstanding during the year and activity in the allowance for credit
losses for each of the last five years.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1997 1996 1995 1994 1993
-------------------------------------------------------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Allowance for credit losses at beginning of year $ 11,493 $ 10,328 $ 9,560 $ 9,701 $ 10,022
Loans charged off:
Commercial, financial, and agricultural 229 138 479 1,212 1,859
Real estate loans 229 196 690 1,384 1,113
Consumer installment 528 568 974 1,804 4,034
-------------------------------------------------------------
Total charged off 986 902 2,143 4,400 7,006
-------------------------------------------------------------
Recoveries of loans previously charged off:
Commercial, financial, and agricultural 420 217 462 594 290
Real estate loans 62 258 221 357 286
Consumer installment 742 1,167 1,826 2,198 1,986
-------------------------------------------------------------
Total recoveries 1,224 1,642 2,509 3,149 2,562
-------------------------------------------------------------
Net (recoveries) charge-offs (238) (740) (366) 1,251 4,444
-------------------------------------------------------------
Allowance acquired (disposed of) in business
combinations (74) - 294 424 -
Provision for credit losses 1,699 425 108 686 4,123
=============================================================
Allowance for credit losses at end of year $ 13,356 $ 11,493 $ 10,328 $ 9,560 $ 9,701
=============================================================
Loans outstanding, net of unearned interest,
excluding held for sale $ 806,519 $ 631,490 $ 513,264 $ 427,055 $ 388,608
=============================================================
Average loans outstanding, including held
for sale, net of unearned interest $ 767,454 $ 593,697 $ 499,324 $ 408,964 $ 378,651
Ratio of net charge-offs (recoveries) to average
net loans outstanding (0.03%) (0.12%) (0.07%) 0.31% 1.17%
Ratio of allowance for credit losses to net loans
(excluding held for sale) outstanding 1.66% 1.82% 2.01% 2.24% 2.50%
</TABLE>
A coordinated effort is undertaken to identify risks in the loan
portfolio for management purposes and to establish the credit loss provision and
resulting allowance. A regular, formal and ongoing loan review is conducted to
identify loans with unusual risks. The primary responsibility for this review
rests with the management of the individual banks. Their work is supplemented
with reviews by the Company's internal audit program and the use of external
loan review firms. Bank regulatory agencies provide additional levels of review.
This process provides information which helps in assessing the quality of the
portfolio, assists in the prompt identification of problems and potential
problems and aids in deciding if a loan represents a loss which should be
recorded immediately or a risk for which an allowance should be maintained.
Management believes this continuous effort will identify the majority of
potential problem loans and recognize their impact on future earnings.
9
<PAGE>
If, as a result of the Company's loan review and evaluation procedures,
it is determined that payment of interest on a commercial or real estate loan is
questionable, it is the Company's policy to reverse interest previously accrued
on the loan against interest income. Interest on such loans is thereafter
recorded on a "cash basis" and is included in earnings only when actually
received in cash and when full payment of principal is no longer doubtful. A
loan can be reinstated to full accrual status when and if the borrower's
financial condition and payment performance can justify sustainable performance
of all conditions and terms of the loan.
ALLOCATION OF ALLOWANCE FOR CREDIT LOSSES
The Company has allocated the allowance for credit losses according to
the amount deemed to be reasonably necessary at each year end to provide for
losses being incurred within the categories of loans set forth in the table
below, based on the previous year's gross charge-offs in each category as a
percentage of total charge-offs. The components of the allowance for credit
losses for each of the past five years are presented below.
Allowance allocation by loan category
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
-------------------------------------------------------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Commercial, financial and agriculture $ 2,661 $ 3,273 $ 2,912 $2,747 $2,614
Consumer installment 7,888 4,413 3,487 4,174 3,592
Real estate 2,807 3,807 3,929 2,639 3,495
=============================================================
$13,356 $11,493 $10,328 $9,560 $9,701
=============================================================
</TABLE>
Although it is the Company's policy to immediately charge off all loan
amounts judged uncollectible, historical experience indicates that certain
losses exist in the loan portfolio, which have not been specifically identified.
To anticipate and provide for these unidentifiable losses, the allowance for
credit losses is established by charging the provision for loan loss expense
against current earnings. No portion of the resulting allowance is in any way
allocated or restricted to any individual loan or group of loans. The entire
allowance is available to absorb losses from any and all loans.
The following table presents nonperforming loans at December 31, 1997,
1996, 1995, 1994 and 1993. Nonperforming loans consist solely of loans which are
contractually past due 90 days or more as to interest or principal payments and
still accruing (past-due loans) and loans accounted for on a nonaccrual basis
(nonaccrual loans).
NONPERFORMING LOANS
<TABLE>
<CAPTION>
PAST-DUE LOANS NONACCRUAL LOANS
--------------------------------------
(dollars in thousands)
<S> <C> <C>
December 31, 1997 $ 766 $3,459
December 31, 1996 526 2,023
December 31, 1995 853 2,012
December 31, 1994 729 3,083
December 31, 1993 1,278 4,953
</TABLE>
Total interest income recognized on nonperforming loans for the year
ended December 31, 1997 was $36,000. Additional interest income of $162,000
would have been recorded in 1997 if all nonperforming loans had performed in
accordance with their original terms.
10
<PAGE>
NONPERFORMING ASSETS
The following table analyzes nonperforming assets for each of the past three
years.
<TABLE>
<CAPTION>
1997 1996 1995
------------------------------------------
(dollars in thousands)
<S> <C> <C> <C>
Loans past due 90 days or more $ 766 $ 526 $ 853
Non accrual loans 3,459 2,023 2,012
------------------------------------------
Total nonperforming loans 4,225 2,549 2,865
Other real estate 1,349 2,406 2,574
------------------------------------------
Total nonperforming assets $5,574 $4,955 $5,439
==========================================
Nonperforming loans/Total loans, net of unearned* 0.52% 0.40% 0.56%
Nonperforming assets/Total assets 0.46% 0.47% 0.67%
Loan loss allowance/Total loans, net of unearned* 1.66% 1.82% 2.01%
Loan loss allowance/Nonperforming loans 316.12% 450.88% 360.49%
</TABLE>
* Total loans excluding held for sale
The table above includes all loans which management considers being potential
problem loans.
The allowance for credit losses as a percentage of nonperforming loans
(including loans past due 90 days or more) was 316% at December 31, 1997,
compared to 451% at December 31, 1996. Management considers the current level of
the allowance for credit losses more than adequate to absorb losses from loans
in the portfolio. Management's determination of the adequacy of the allowance
for credit losses, which is based on the factors and risk identification
procedures previously discussed, requires the use of judgments and estimations
that may change in the future. Unfavorable changes in the factors used by
management to determine the adequacy of the allowance, or the availability of
new information, could cause the allowance for credit losses to be increased or
decreased in future periods.
Generally, the Company's market areas have not experienced rapid
increases in real estate property values or significant overbuilding. Therefore,
in management's opinion, collateral values for real estate loans in the
Company's market areas should not be vulnerable to significant deterioration, as
would other market areas that have experienced rapidly increasing property
values and significant overbuilding. However, collateral values, are difficult
to estimate and are subject to change depending on economic conditions, the
supply of and demand for properties, and other factors. The Company attempts to
mitigate the risky nature of real estate lending by adhering to conservative
loan underwriting standards and by diversifying the portfolio within its market
area and within industry groups.
11
<PAGE>
INVESTMENT SECURITIES
The carrying values of investment securities at the indicated dates are
presented below:
<TABLE>
<CAPTION>
DECEMBER 31
1997 1996 1995
---------------------------------------------------
(dollars in thousands)
<S> <C> <C> <C>
U.S. Treasury and U.S. Government agencies $106,507 $127,680 $107,811
State and Municipals 27,502 28,288 24,966
Mortgage-backed securities 54,624 57,918 64,976
Other 4,255 3,074 2,513
---------------------------------------------------
Total $192,888 $219,960 $200,266
===================================================
</TABLE>
Investment portfolio policy stresses quality and liquidity. Expected
maturities differ from contractual maturities because security issuers have the
right to call or prepay obligations with or without call or prepayment
penalties. Securities purchased during the last several years have primarily
short to intermediate term maturities.
The following table shows the contractual maturities of investment
securities at December 31, 1997 and the average yields (for all obligations on a
fully taxable basis assuming a 34% tax rate) on such securities:
MATURITY DISTRIBUTION OF INVESTMENT SECURITIES
<TABLE>
<CAPTION>
DUE WITHIN ONE DUE AFTER ONE DUE AFTER FIVE
YEAR WITHIN FIVE YEARS WITHIN TEN YEARS DUE AFTER TEN YEARS
AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD
----------------------------------------------------------------------------------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury and U.S.
Government agencies $16,132 5.51% $62,824 6.25% $26,098 7.00% $1,453 6.81%
State and Municipals 2,246 8.75% 7,181 8.45% 4,417 9.71% 13,658 8.39%
Mortgage-backed securities
2,911 7.35% 10,771 6.23% 13,897 6.04% 34,584 6.26%
----------- ----------- ---------- -------------
Total $21,289 5.79% $80,776 6.19% $36,873 6.77% $49,695 6.12%
=========== =========== ========== =============
</TABLE>
The estimated fair market value of the Company's investment portfolio at
December 31, 1997, was approximately $1,271,000 above amortized cost. Market
values vary significantly as interest rates change; however, management expects
normal maturities in the portfolio to meet and exceed liquidity requirements.
Of the tax-free securities rated by Moody's Investors Service, Inc., 93%
are rated "A" or better. Non-rated securities are principally issued by various
political subdivisions within the State of Georgia. The portfolio is carefully
monitored to assure there is no unreasonable concentration of securities in the
obligations of a single debtor.
12
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
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, borrowed
funds, and retained earnings.
The investment portfolio is one of the Company's primary sources of
liquidity. Maturities of securities provide a constant flow of funds that are
available for cash needs. Contractual investment securities that mature within
one year total $21 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
Federal agency and state and municipals increase the forecasted cash flow from
the investment portfolio. Maturities in the loan portfolio also provide a steady
flow of funds. The Company's liquidity also continues to be enhanced by a
relatively stable core deposit base.
SELECTED STATISTICAL INFORMATION FOR DEPOSITS
The following table summarizes average deposits and related weighted
average rates for each of the three years in the period ended December 31, 1997.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
1997 1996 1995
AMOUNT RATE AMOUNT RATE AMOUNT RATE
-------------------------------------------------------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Noninterest-bearing demand deposits $154,762 $129,005 $105,988
Interest-bearing demand, savings, and
money market deposits 277,462 3.52% 242,417 3.35% 188,047 3.23%
Time deposits 519,345 5.75% 443,955 5.83% 381,739 5.81%
------------ ------------ ----------
Total average deposits $951,569 4.65% $815,377 4.17% $675,774 4.18%
============ ============ ==========
</TABLE>
The maturities of time deposits of $100,000 or more as of December 31, 1997 are
presented below:
<TABLE>
<CAPTION>
(dollars in
thousands)
----------------------
<S> <C>
3 months or less $ 43,167
Over 3 through 6 months 38,678
Over 6 through 12 months 39,892
Over 12 months 25,128
---------------------
$146,865
=====================
</TABLE>
13
<PAGE>
BORROWINGS
For a detailed discussion of the borrowings of the Company, see note 7 to
the Supplemental Consolidated Financial Statements included herein.
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 9.38% at December 31, 1997, compared to
9.16% at December 31, 1996 and 10.13% at December 31, 1995. The Company and the
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.
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 credit
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.
The following table summarizes the Company's capital ratios at December
31, 1997 and 1996.
<TABLE>
<CAPTION>
MINIMUM
1997 1996 REQUIREMENTS
---------------------------------------------
<S> <C> <C> <C>
Tier 1 Capital leverage ratio 13.47% 8.56% 3%
Tier 1 Risk-based capital ratio 16.98% 11.81% 4%
Tier 2 Risk-based capital ratio 1.25% 1.25%
-----------------------
Total Risk-based capital ratio 18.23% 13.06% 8%
</TABLE>
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. A more complete discussion of the
preferred securities can be found under note 8 of the Company's Supplemental
Consolidated Financial Statements included herein.
14
<PAGE>
The preferred securities issued by a subsidiary of the Company along
with the Company's sustainable internal growth rate have created the ability to
take advantage of growth opportunities that may exist in the southeast region
banking markets. The sustainable internal growth rate is computed by the
following:
1997 1996
-------------------------
Return on Average Equity 17.56% 14.20%
X
Retention Rate (1-dividend payout ratio) 79.73% 66.04%
-------------------------
=
Sustainable Internal Growth Rate 14.00% 9.38%
The Company's common stock has been traded on the American Stock
Exchange (AMEX) since first quarter 1997 under the symbol "PMB." Prior to 1997,
the stock was traded on a limited basis in the over-the-counter market and was
included in the National Association of Securities Dealers, Inc. Automated
Quotation System ("NASDAQ") under the symbol "FABC."
The following table sets forth quarterly high and low sales prices per
share of common stock as reported by AMEX and NASDAQ for each of the last two
years. Stock prices have been restated for the effect of stock splits payable to
shareholders of record on March 6, 1997 and January 23, 1998.
<TABLE>
<CAPTION>
SALES PRICES
----------------------------------
HIGH LOW
---------------- -------------
<S> <C> <C>
Year ended December 31, 1996
First Quarter..................................... $ 6.55 $ 5.91
Second Quarter.................................... 7.20 6.19
Third Quarter..................................... 7.75 6.93
Fourth Quarter.................................... 7.85 6.93
Year ended December 31, 1997
First Quarter..................................... $ 9.46 $ 7.66
Second Quarter.................................... 11.67 9.17
Third Quarter..................................... 14.17 9.83
Fourth Quarter.................................... 17.92 12.83
First Quarter 1998 (through March 6, 1998) $26.44 $18.08
</TABLE>
As of September 17, 1998, the Company had approximately 2,236 shareholders
of record.
The following table presents dividends and earnings per share by quarter
for each of the last two years. Dividends and earnings per share have been
restated for the effect of stock splits. Stock prices have been restated for the
effect of stock splits payable to shareholders of record on March 6, 1997 and
January 23, 1998. In addition, earnings per share have been restated to conform
to the requirements of FASB Statement No. 128 "Earnings Per Share."
<TABLE>
<CAPTION>
1997 1996
DIVIDENDS EARNINGS DIVIDENDS EARNINGS
-------------------------------------------------------
<S> <C> <C> <C> <C>
First Quarter $.05 $0.17 $.08 $0.13
Second Quarter .04 0.19 .01 0.13
Third Quarter .04 0.21 .02 0.12
Fourth Quarter .02 0.18 .07 0.15
</TABLE>
15
<PAGE>
The board of directors has approved the Company's dividend policy of
paying out a portion of earnings to shareholders on a regular basis. It is the
current intent of the Company to increase the amount of dividends, given
earnings growth, to a level that will provide a reasonable return to the
shareholders of the Company.
At December 31, 1997, under dividend restrictions imposed under
federal and state laws, the Company's Banking Subsidiaries, without obtaining
governmental approvals, could declare aggregate dividends to the Company of
approximately $9.1 million.
RESULTS OF OPERATIONS
NET INTEREST INCOME
TAX EQUIVALENT BASIS
Net interest income for 1997, on a tax equivalent basis increased $9.4
million, or 21.1% from 1996. This increase can be attributed to the $153.7
million increase in average interest earning assets and especially to the $173.8
million increase in average loans outstanding. The average balance sheet for
1997 grew $167.0 million due to strong loan demand in the Company's markets. The
net interest margin increased by 16 basis points as the Company's yields on
earning assets increased while the cost of funds decreased. Management
anticipates continued improvement in the net interest margin for 1998 as loan
demand increases continue.
Net interest income for 1996, on a tax equivalent basis increased $6.1
million, or 15.8% from 1995. This increase can be attributed to the $139.1
million increase in average interest earning assets. The average balance sheet
for 1996 grew $143.2 million due to loan demand in the Company's markets. The
net interest margin was decreased as the Company's yields on earning assets
decreased while the cost of funds increased.
NET INTEREST MARGIN
The table below illustrates the changes in the net interest margin
over the past four years.
<TABLE>
<CAPTION>
1997 1996 1995 1994
-------------------------------------------------------------------------------------
% OF % OF % OF % OF
EARNING EARNING EARNING EARNING
AMOUNT ASSETS AMOUNT ASSETS AMOUNT ASSETS AMOUNT ASSETS
-------------------------------------------------------------------------------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest income $ 95,857 9.21% $ 80,450 9.07% $ 68,544 9.16% $ 52,149 8.15%
Tax-equivalent adjustment 738 0.07% 788 0.09% 632 0.08% 620 .10%
------------------------------------------------------------------------------------
Interest income, taxable equivalent 96,595 9.28% 81,238 9.15% 69,176 9.24% 52,769 8.25%
Interest expense 42,782 4.11% 36,811 4.15% 30,823 4.12% 21,653 3.38%
------------------------------------------------------------------------------------
Net interest income, taxable
Equivalent 53,813 5.17% 44,427 5.01% 38,353 5.12% 31,116 4.86%
============= =========== =========== ==========
Average earning assets $ 1,041,199 $ 887,460 $ 748,378 $639,915
============= =========== =========== ==========
</TABLE>
PROVISION FOR CREDIT LOSSES
The provision for credit losses is the charge to operating earnings
necessary to maintain an adequate allowance for credit losses. Through the
provision, the Company maintains an allowance for credit losses that management
believes is adequate to absorb losses inherent in the loan portfolio. However,
future additions to the allowance may be necessary based on changes in economic
conditions. In addition, various regulatory agencies, as an integral part of
their examination procedures, periodically review the Company's Subsidiary
Banks' allowance for credit losses. Based on their judgments about information
available to them at the time of their examination,
16
<PAGE>
such agencies may require the Company's subsidiary banks to recognize additions
to their allowance for credit losses.
Management's analysis of the allowance for credit 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 1.66%, nonperforming
loans to total loans (net of unearned interest) is 0.52% and net recoveries as a
percent of average loans (net of unearned interest) were .03% for the year ended
December 31, 1997.
OTHER INCOME
Total other income increased $7.2 million in 1997, or 42.8% as
compared to 1996. The majority of the increase was due to an increase in
mortgage banking income of $5.7 million, or 63.6%. The Company's mortgage
operation continues to expand as the market for mortgages grows and interest
rates remain low as well as through the Company's bank acquisition program. The
operation is conducted through Premier Lending, a mortgage-banking subsidiary.
Premier Lending is an approved Federal National Mortgage Association (Fannie
Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac) seller-servicer of
mortgages. Premier Lending originates mortgages and simultaneously sells these
loans under specified guidelines to investors. This pass through operation
mitigates the potential interest rate risk normally associated with a mortgage
lending operation.
Total other income increased $4.1 million in 1996 as compared to 1995.
The majority of the increase was associated with the Company's mortgage lending
operation. Mortgage banking income increased $2.9 million during the period.
OTHER EXPENSE
Total other expense increased $6.6 million in 1997, or 16.0% compared
to 1996. Management anticipates continued increases in other expense during
1998, as the expansion into select markets will require additional expenses.
Several areas that registered significant changes for the year were:
. Salaries and employee benefits increased $4.3 million for
the year due to the Company hiring staff for new branches,
staffing increases necessary for the rapid growth of the
Company's franchise, and the commission nature of the
mortgage lending operations.
. Net occupancy increased $1.1 million as three new branch
banks became operational during the year.
. Merger related expenses increased $0.8 million as the
Company closed three acquisitions and engaged three others
to close in early 1998.
Total other expense increased $.4 million in 1996, or 3.8% compared to
1995.
Several areas, which registered significant changes for the 1996 year,
were:
. Salaries and employee benefits increased $4.8 million for
the year.
. Net occupancy increased $1.2 million for the year.
INCOME TAX
The Company experienced pre-tax operating earnings of $27.4 million
for 1997, which resulted in a tax provision of $9.4 million. The effective rate
of 34.1% increased from an effective rate of 30.0% in 1996 as certain prior
period operating losses and tax credits were no longer available during 1997.
For more information on income taxes, see note 12 of the Supplemental
Consolidated Financial Statements included herein.
17
<PAGE>
OTHER INFORMATION
FOURTH QUARTER RESULTS
The Company had net income of $4.4 million for the fourth quarter
1997. Return on average assets was 1.54%, return on average equity was 16.67%.
The net interest margin was 5.15%, which compared to fourth quarter 1996's 4.75%
resulting in an increase of 40 basis points.
INFLATION
Inflation has an impact on financial assets that can be readily
identified in a market value economy. However, the past several years have seen
inflation fall to a level which has had a nominal effect on the banking
industry.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the FASB issued Statement No. 130, "Reporting Comprehensive
Income" ("Statement 130"), which establishes standards for reporting and display
of comprehensive income and its components in a full set of general-purpose
financial statements. Statement 130 requires that all items that are required to
be recognized under accounting standards as components of comprehensive income
be reported in a financial statement that is displayed with the same prominence
as other financial statements. The Company will adopt the provisions of
Statement 130 beginning in 1998. Adoption of Statement 130 by the Company is not
expected to have a material impact on the Company's consolidated financial
position or consolidated results of operations.
In June 1997, the FASB issued Statement No. 131, "Disclosure About Segments of
an Enterprise and Related Information" ("Statement 131"), which establishes
standards for the way that public business enterprises report information about
operating segments in annual and interim financial statements. The Company will
adopt the provisions of Statement 131 beginning in 1998. The adoption is not
expected to have a material impact on the Company's consolidated financial
position or consolidated results of operations.
18
<PAGE>
QUARTERLY RESULTS
The quarterly information reported previously on Form 10-Q for the
quarters indicated below have been restated to reflect mergers accounted for as
poolings of interests. Net income per share has been restated for all periods
presented to reflect stock splits payable to shareholders of record on January
23, 1998 and March 6, 1997 as well as to conform to the requirements of FASB
Statement No. 128 "Earnings Per Share".
<TABLE>
<CAPTION>
1997 QUARTER ENDED
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
--------------------------------------------------------------------
(dollars in thousands, except per share data)
<S> <C> <C> <C> <C>
Interest income $22,021 $23,439 $24,676 $25,721
Interest expense 9,878 10,218 11,010 11,676
Net interest income 12,143 13,221 13,666 14,045
Provision for credit losses 231 118 580 770
Securities gains (losses) (36) (9) 20 14
Earnings before income taxes 5,549 7,076 7,800 7,020
Net income 4,034 4,618 5,031 4,394
Net income per share 0.17 0.19 0.21 0.18
Net income per share assuming dilution 0.16 0.19 0.20 0.17
<CAPTION>
1996 QUARTER ENDED
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
--------------------------------------------------------------------
(dollars in thousands, except per share data)
<S> <C> <C> <C> <C>
Interest income $19,284 $10,688 $20,197 $21,281
Interest expense 8,727 8,896 9,313 9,875
Net interest income 10,557 10,792 10,884 11,406
Provision for credit losses 19 167 67 172
Securities gains (losses) 155 7 - 2
Earnings before income taxes 4,712 4,552 4,145 5,290
Net income 3,218 3,211 2,872 3,780
Net income per share 0.13 0.13 0.12 0.15
Net income per share assuming dilution 0.13 0.13 0.12 0.14
</TABLE>
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
19
<PAGE>
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 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.
20
<PAGE>
FORWARD LOOKING STATEMENTS
This Exhibit 99.1 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).
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.
ITEM 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company is exposed only to U.S. dollar interest rate changes and
accordingly, the Company manages exposure by considering the possible changes in
the net interest margin. The Company does not have any trading instruments nor
does it classify any portion of the investment portfolio as held for trading.
The Company does not engage in any hedging activities or enter into any
derivative instruments with a higher degree of risk than mortgage backed
securities which are commonly pass through securities. Finally, the Company has
no exposure to foreign currency exchange rate risk, commodity price risk, and
other market risks.
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 repriced 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 table
below has two measures of Gap, regulatory and management adjusted. The
regulatory Gap considers only contractual maturities or repricings. The
management adjusted Gap considers such things as prepayments on certain interest
rate sensitive assets and the circumstances under which core deposits are
repriced. Although interest-bearing transaction accounts are available to
reprice in the three-month window, historical experiences show these deposits
more stable over the course of one year. The management adjusted Gap indicates
the Company to be somewhat asset sensitive in relation to changes in market
interest rates. Being asset sensitive would result in net interest income
increasing in a rising rate environment and decreasing in a declining rate
environment.
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 flat interest rate scenarios allow management to monitor
and
21
<PAGE>
adjust interest rate sensitivity to minimize the impact of market interest rate
swings. The analysis of the impact on net interest income over a twelve month
period is subjected to a gradual 200 basis point increase or decrease in market
rates on net interest income and is monitored on a quarterly basis. The most
recent simulation model projects net interest income would increase 2.42% if
rates rise gradually over the next year. On the other hand, the model projects
net interest income to decline .80% if rate decline over the next year. Company
policy states that net interest income cannot change over +/- 5% using this
analysis and presently, the Company is within policy guidelines.
22
<PAGE>
CUMULATIVE GAP ANALYSIS
REGULATORY
DEFINED
1-YEAR
-----------------
(dollars in
thousands)
Rate Sensitive Assets (RSA) $698,573
Rate Sensitive Liabilities (RSL) 745,949
=================
RSA minus RSL (Gap) $(47,376)
=================
Gap Ratio (RSA/RSL) 0.94
=================
23
<PAGE>
EXHIBIT 99.3
ITEM 8. SUPPLEMENTAL FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Report of Independent Auditors
Board of Directors
Premier Bancshares, Inc.
We have audited the accompanying supplemental consolidated statement of
condition of Premier Bancshares, Inc. and subsidiaries (formed as a result of
the consolidation of Premier Bancshares, Inc., Lanier Bank and Trust Company,
Button Gwinnett Financial Corporation and The Bank Holding Company) as of
December 31, 1997, and the related supplemental consolidated statements of
income, shareholders' equity and cash flows for the year then ended. The
supplemental consolidated financial statements give retroactive effect to the
mergers of Premier Bancshares, Inc. with Lanier Bank and 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 method as described in the notes to the supplemental consolidated
financial statements. These supplemental financial statements are the
responsibility of the management of Premier Bancshares, Inc. Our responsibility
is to express an opinion on these supplemental financial statements based on our
audit. We did not audit the financial statements of Lanier Bank and Trust
Company, Button Gwinnett Financial Corporation and The Bank Holding Company,
which statements reflect total assets constituting 34.6% for December 31, 1997
of the related supplemental consolidated financial statement totals, and which
reflect net income constituting approximately 38.1% of the related supplemental
consolidated totals for the year ended December 31, 1997. Those statements were
audited by other auditors whose reports have been furnished to us, and our
opinion, insofar as it relates to data included for Lanier Bank and Trust
Company, Button Gwinnett Financial Corporation and The Bank Holding Company, is
based solely on the reports of the other auditors. The supplemental consolidated
financial statements of Premier Bancshares, Inc. and subsidiaries for the two
years in the period ended December 31, 1996 were audited by other auditors whose
report dated January 31, 1997, except for Note 2 as to which the date is June
23, 1997, December 12, 1997, June 9, 1998, July 1, 1998 and July 2, 1998,
expressed an unqualified opinion on those statements.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit and the reports of other auditors provide a reasonable
basis for our opinion.
In our opinion, based on our audit and the reports of other auditors, the 1997
supplemental financial statements referred to above present fairly, in all
material respects, the consolidated financial position of Premier Bancshares,
Inc. and subsidiaries as of December 31, 1997, and the consolidated results of
their operations and their cash flows for the year ended December 31, 1997,
after giving retroactive effect to the mergers with Lanier Bank and Trust
Company, Button Gwinnett Financial Corporation and The Bank Holding Company, as
described in the notes to the supplemental consolidated financial statements, in
conformity with generally accepted accounting principles.
Atlanta, Georgia
February 5, 1998, except
for Note 2, as to
which the date is July
2, 1998
24
<PAGE>
Premier Bancshares, Inc.
Supplemental Consolidated Statements of Condition
(Dollars in thousands)
<TABLE>
<CAPTION>
DECEMBER 31
1997 1996
--------------------------------------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 50,049 $ 42,417
Interest-bearing deposits with banks 6,977 2,797
Federal funds sold and repurchase agreements 54,467 95,242
Investment securities available-for-sale 146,885 184,491
Investment securities held-to-maturity 46,003 32,467
Loans held for sale 62,738 26,550
Loans, net of unearned income 806,519 631,490
Allowance for credit losses (13,356) (11,493)
--------------------------------------------
Loans, net 793,163 619,997
Premises and equipment, net 30,055 27,239
Goodwill and other intangibles 5,001 5,196
Other real estate owned 1,237 2,052
Other assets 17,758 14,050
--------------------------------------------
Total assets $1,214,333 $1,052,498
============================================
LIABILITIES, REDEEMABLE PREFERRED STOCK AND COMMON SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand $ 170,864 $ 141,791
Interest-bearing demand 187,414 192,647
Savings and money market 112,012 94,127
Time, $100,000 and over 146,865 134,007
Other time 399,025 341,713
--------------------------------------------
Total deposits 1,016,180 904,285
Federal funds purchased and securities sold under repurchase agreements 27,168 15,364
Federal Home Loan Bank advances 2,875 4,625
Guaranteed preferred beneficial interests in the Company's subordinated
debentures (trust preferred securities) 28,750 -
Other borrowings 12,197 19,060
Other liabilities 10,795 10,329
--------------------------------------------
Total liabilities 1,097,965 953,663
Redeemable preferred stock, par value $60, 2,000,000 shares authorized,
40,770 shares issued and outstanding 2,446 2,446
Common shareholders' equity:
Common stock, $1 par value; 20,000,000 shares authorized(1); 24,915,045
issued and 24,545,340 outstanding at December 31, 1997; 19,700,958
issued and 18,999,014 outstanding at December 31, 1996 24,914 19,701
Capital surplus 47,649 51,232
Treasury stock, at cost 369,705 and 701,944 shares at
December 31, 1997 and 1996, respectively (1,186) (2,755)
Retained earnings 41,877 28,361
Unrealized gains on securities available-for-sale, net of tax 668 (150)
--------------------------------------------
Total common shareholders' equity 113,922 96,389
============================================
Total liabilities, redeemable preferred stock and common shareholders'
equity $1,214,333 $1,052,498
============================================
</TABLE>
(1) On June 30, 1998, increased to 60,000,000.
See accompanying notes.
25
<PAGE>
Premier Bancshares, Inc.
Supplemental Consolidated Statements of Income
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1997 1996 1995
----------------------------------------------------------
<S> <C> <C> <C>
Interest income:
Interest and fees on loans $79,409 $63,458 $53,700
Interest on investment securities:
Taxable 11,555 11,235 10,111
Nontaxable 1,433 1,530 1,227
Interest on deposits in banks 200 446 223
Interest on Federal Funds sold and repurchase
agreements 3,260 3,781 3,283
----------------------------------------------------------
Total interest income 95,857 80,450 68,544
Interest expense:
Interest on deposits 39,603 33,977 28,246
Interest on Federal Home Loan Bank advances 680 416 200
Interest on short-term borrowings 1,766 2,008 2,148
Interest on long-term debt 733 410 229
----------------------------------------------------------
Total interest expense 42,782 36,811 30,823
Net interest income 53,075 43,639 37,721
Provision for credit losses 1,699 425 108
----------------------------------------------------------
Net interest income after provision for credit losses 51,376 43,214 37,613
Other income:
Service charges on deposit accounts 4,369 4,077 3,651
Other service charges, commissions, and fees 2,063 1,376 893
Security transactions, net (13) 164 (236)
Mortgage banking activities 14,558 8,901 5,967
Gain on sale of loans 888 545 638
Other operating income 2,131 1,739 1,784
----------------------------------------------------------
Total other income 23,996 16,802 12,697
Other expenses:
Salaries and employee benefits 28,360 24,035 19,266
Net occupancy and equipment 6,351 5,280 4,091
Merger expenses 1,264 499 -
Stationery and supplies 762 725 535
Other operating expenses 11,190 10,778 10,511
----------------------------------------------------------
Total other expenses 47,927 41,317 34,403
----------------------------------------------------------
Income before income taxes 27,445 18,699 15,907
Income tax expense 9,368 5,618 5,079
==========================================================
Net income $18,077 $13,081 $10,828
==========================================================
Net income per share of common stock (1) $ .74 $ .53 $ .44
==========================================================
Net income per share of common stock, diluted (1) $ .72 $ .52 $ .44
==========================================================
</TABLE>
(1) After giving effect to stock splits payable to shareholders of record on
January 23, 1998 and March 6, 1997.
See accompanying notes.
26
<PAGE>
Premier Bancshares, Inc.
Supplemental Consolidated Statements of Shareholders' Equity
Years ended December 31, 1997, 1996 and 1995
(Dollars in thousands)
<TABLE>
<CAPTION>
UNREALIZED
GAINS (LOSSES)
ON SECURITIES
COMMON STOCK CAPITAL RETAINED AVAILABLE-FOR-
SHARES PAR VALUE SURPLUS EARNINGS SALE, NET OF TAX
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1995 17,383,176 $ 86,915 $(20,296) $12,194 $(3,074)
Net income - - - 10,828 -
Stock issued 284,773 1,424 1,698 - -
Stock options exercised 389 1 - - -
Stock dividend 134,244 671 735 (1,409) -
Cash paid to dissenting shareholders (7,650) (38) (230) - -
Cash dividends declared ($0.06 per share) - - - (1,579) -
Preferred stock dividends - - - (196) -
Purchase of treasury stock - - - - -
Net change in unrealized gains on
securities available-for-sale, net of tax - - - - 3,701
------------- -------------- -------------- -------------- ------------------
Balance, December 31, 1995 17,794,932 88,973 (18,093) 19,838 627
Net income - - - 13,081 -
Recapitalization - (71,178) 71,178 - -
Stock options exercised 10,057 10 43 - -
Cash dividends declared ($0.18 per share) - - - (4,362) -
Preferred stock dividends - - - (196) -
Purchase of treasury stock - - - - -
Net change in unrealized gains on
securities available-for-sale, net of tax - - - - (777)
Stock split 1,895,969 1,896 (1,896) - -
-----------------------------------------------------------------------------
Balance, December 31, 1996 19,700,958 19,701 51,232 28,361 (150)
<CAPTION>
TOTAL
TREASURY STOCK SHAREHOLDERS'
SHARES PAR VALUE EQUITY
-------------------------------------------------
<S> <C> <C> <C>
Balance, January 1, 1995 321,787 $ (741) $ 74,998
Net income - - 10,828
Stock issued - - 3,122
Stock options exercised - - 1
Stock dividend - - (3)
Cash paid to dissenting shareholders - - (268)
Cash dividends declared ($0.06 per share) - - (1,579)
Preferred stock dividends - - (196)
Purchase of treasury stock 301,074 (1,371) (1,371)
Net change in unrealized gains on
securities available-for-sale, net of tax - - 3,701
-------------------------------------------------
Balance, December 31, 1995 622,861 (2,112) 89,233
Net income - - 13,081
Recapitalization - - -
Stock options exercised - - 53
Cash dividends declared ($0.18 per share) - - (4,362)
Preferred stock dividends - - (196)
Purchase of treasury stock 79,083 (643) (643)
Net change in unrealized gains on
securities available-for-sale, net of tax - - (777)
Stock split - - -
---------------- ---------------- ---------------
Balance, December 31, 1996 701,944 (2,755) 96,389
</TABLE>
27
<PAGE>
Premier Bancshares, Inc.
Supplemental Consolidated Statements of Shareholders' Equity (Continued)
Years ended December 31, 1997, 1996 and 1995
(Dollars in thousands)
<TABLE>
<CAPTION>
UNREALIZED
GAINS (LOSSES)
ON SECURITIES
COMMON STOCK CAPITAL RETAINED AVAILABLE-FOR-
SHARES PAR VALUE SURPLUS EARNINGS SALE, NET OF TAX
------------- -------------- -------------- -------------- ------------------
<S> <C> <C> <C> <C> <C>
Net income - - - 18,077 -
Cash dividends declared ($0.15 per share) - - - (3,733) -
Preferred stock dividends - - - (196) -
Shares issued in business combination 114,598 114 1,719 - -
Stock options exercised 87,741 88 403 - -
Treasury stock purchased - - - - -
Treasury stock retired (136,094) (136) (1,190) - -
Net change in unrealized gains on securities
available-for-sale, net of tax - - - - 818
Stock split 5,147,842 5,147 (4,515) (632) -
------------- -------------- -------------- -------------- ------------------
Balance, December 31, 1997 24,915,045 $24,914 $47,649 $41,877 $ 668
============= ============== ============== ============== ==================
<CAPTION>
TOTAL
TREASURY STOCK SHAREHOLDERS'
SHARES PAR VALUE EQUITY
---------------- ---------------- -----------------
<S> <C> <C> <C>
Net income - - 18,077
Cash dividends declared ($0.15 per share) - - (3,733)
Preferred stock dividends - - (196)
Shares issued in business combination - - 1,833
Stock options exercised (384,421) 1,385 1,876
Treasury stock purchased 188,276 (1,142) (1,142)
Treasury stock retired (136,094) 1,326 -
Net change in unrealized gains on securities
available-for-sale, net of tax - - 818
Stock split - - -
---------------- ---------------- -----------------
Balance, December 31, 1997 369,705 $(1,186) $113,922
================ ================ =================
</TABLE>
See accompanying notes.
28
<PAGE>
Premier Bancshares, Inc.
Supplemental Consolidated Statements of Cash Flows
(Dollars in thousands)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1997 1996 1995
----------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 18,077 $ 13,081 $ 10,828
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation 2,664 2,018 1,674
Amortization of intangibles 423 384 357
Provision for credit losses 1,699 425 108
Deferred income taxes (2,080) (465) 192
Net (increase) decrease in loans held for sale (28,168) 923 (12,796)
Net realized losses (gains) on securities
available-for-sale 13 (164) 236
Gain on sale of subsidiary (757) - -
Gain on sale of thrift charter (297) - -
Increase in interest receivable (1,798) (695) (1,128)
Increase in interest payable 1,232 730 994
Other 327 (3,441) 1,863
----------------------------------------------------------
Net cash (used in) provided by operating activities (8,665) 12,796 2,328
INVESTING ACTIVITIES
Purchases of securities available-for-sale (47,127) (91,074) (54,667)
Proceeds from sales of securities available-for-sale 27,950 21,520 16,558
Proceeds from maturities of securities 58,674 58,653 16,899
available-for-sale
Purchases of securities held-to-maturity (23,184) (16,500) (30,057)
Proceeds from sales of securities held-to-maturity - - 4,561
Proceeds from maturities of securities held-to-maturity 9,648 10,407 27,472
Net decrease (increase) in federal funds sold 40,775 (39,825) (7,704)
Net (increase) decrease in interest-bearing deposits in
banks (4,180) 9,951 (11,241)
Net increase in loans (178,568) (112,244) (51,448)
Purchase of premises and equipment (4,835) (7,281) (688)
Proceeds from sales of OREO 1,039 1,013 977
Investment in subsidiary, net of cash acquired 694 - (5,217)
Proceeds from sale of subsidiary 800 - -
----------------------------------------------------------
Net cash used in investing activities (118,314) (165,380) (94,555)
</TABLE>
29
<PAGE>
Premier Bancshares, Inc.
Supplemental Consolidated Statements of Cash Flows (continued)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1997 1996 1995
----------------------------------------------------------
<S> <C> <C> <C>
Financing activities
Net increase in deposits 111,895 165,253 102,966
Net increase (decrease) in repurchase agreements 11,804 8,206 (5,566)
Net (decrease) increase in other borrowings (11,575) (2,214) 2,809
Net decrease in Federal Home Loan Bank advances (1,750) (6,500) (2,060)
Dividends paid (5,247) (3,240) (1,775)
Payments to dissenting shareholders - - (268)
Proceeds from exercise of stock options 1,876 53 1
Proceeds from issuance of guaranteed preferred
beneficial interests in the Company's subordinated
debentures 28,750 - -
Purchase of treasury stock (1,142) (643) (1,371)
Proceeds from issuance of common stock - - 3,122
----------------------------------------------------------
Net cash provided by financing activities 134,611 160,915 97,858
Net increase in cash and due from banks 7,632 8,331 5,631
Cash and due from banks at beginning of year 42,417 34,086 28,455
==========================================================
Cash and due from banks at end of year $ 50,049 $ 42,417 $ 34,086
==========================================================
SUPPLEMENTAL DISCLOSURES
Cash paid for:
Interest $ 41,551 $ 36,034 $ 29,890
==========================================================
Income taxes $ 8,882 $ 6,196 $ 4,960
==========================================================
Principal balances of loans transferred to other real
estate $ 1,067 $ 1,903 $ 1,865
==========================================================
BUSINESS COMBINATIONS
Net cash and due from banks acquired $ 694 $ - $ 678
==========================================================
Securities available-for-sale - - 1,564
Loans held for sale 8,020 - 7,829
Loans - - 37,518
Premises and equipment 413 - 1,402
Other assets 741 - 1,241
Goodwill 367 - 2,548
Deposits - - (31,031)
Advances from Federal Home Loan Bank - - (13,185)
Subordinated debentures - - (1,974)
Other liabilities (8,402) - (695)
----------------------------------------------------------
Net assets acquired, net of cash and due from banks $ 1,139 $ - $ 5,217
==========================================================
</TABLE>
See accompanying notes.
30
<PAGE>
Premier Bancshares, Inc.
Notes to Supplemental Consolidated Financial Statements
December 31, 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS
Premier Bancshares, Inc., (the "Company") is a bank and thrift holding company
whose business is conducted by its wholly owned subsidiaries, Premier Bank,
Central and Southern Bank of Georgia, Central and Southern Bank of North
Georgia, Citizens Bank of Gwinnett, and Premier Lending Corporation. In January
1997, the Company changed its name from First Alliance/Premier Bancshares, Inc.
to Premier Bancshares, Inc.
As more fully discussed in Note 2, the Company merged with Lanier Bank and Trust
Company, Button Gwinnett Financial Corporation and The Bank Holding Company on
June 9, 1998, July 1, 1998 and July 2, 1998, respectively, in business
combinations accounted for as poolings of interests. The supplemental
consolidated financial statements present financial information restated for all
periods presented.
Premier Bank ("Premier") is a commercial bank with operations in Atlanta,
Marietta, Acworth, and Kennesaw, Georgia. Premier provides a full range of
banking services to individual and corporate customers in metropolitan Atlanta,
Georgia. Premier was formed by the combination of First Alliance Bank and
Premier Bank during mid 1997. First Alliance was a commercial bank with
operations in Marietta and Kennesaw, Georgia. Premier Bank was acquired by the
Company during 1995 in a business combination accounted for as a purchase.
Premier Bank was a federally chartered thrift located in Acworth, Georgia.
Central and Southern Bank of Georgia ("Milledgeville") and Central and Southern
Bank of North Georgia, FSB ("North Georgia") were acquired by the Company on
June 23, 1997 in a business combination accounted for as a pooling of interests.
They provide a full range of banking services to individuals and corporate
customers in their primary market areas of central and north Georgia,
respectively.
Citizens Bank of Gwinnett ("Citizens") was acquired on December 12, 1997 and is
a commercial bank that serves Gwinnett, Fulton, and Forsyth counties and
provides traditional banking services to customers in those and surrounding
counties.
The Bank of Gwinnett County ("Gwinnett County") is a commercial bank that
provides a full range of banking services in Gwinnett County.
The Bank of Spalding County ("Spalding County") and First Community Bank of
Henry County ("Henry County") are commercial banks that provide a full range of
banking services in their respective primary market areas of Spalding and Henry
counties.
Lanier Bank and Trust Company ("Lanier") provides a full range of banking and
bank-related services to individual and corporate customers in Forsyth County
and the surrounding areas.
Premier Lending Corporation originates, processes, funds and sells residential
mortgage loans, construction loans and commercial finance loans primarily in the
metropolitan Atlanta area. The majority of the mortgage loans are sold to
independent third party investors with servicing released. A significant portion
of the construction and commercial finance loans are participated to affiliated
and non-affiliated financial institutions.
31
<PAGE>
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
BASIS OF PRESENTATION
The supplemental consolidated financial statements include the accounts of the
Company and its subsidiaries. All significant intercompany transactions and
accounts have been eliminated in consolidation.
These supplemental consolidated financial statements give retroactive effect to
the mergers of Premier Bancshares, Inc. with Lanier Bank and 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 method as described in Note 2 to the supplemental consolidated
financial statements. Generally accepted accounting principles proscribe giving
effect to a consummated business combination accounted for by the pooling-of-
interests method in financial statements that do not include the date of
consummation. These financial statements do not extend through the date of
consummation. However, they will become the historical consolidated financial
statements of Premier Bancshares, Inc. and subsidiaries after financial
statements covering the date of consummation of the business combination are
issued.
The accounting and reporting policies of the Company conform to generally
accepted accounting principles and general practices within the financial
services industry. In preparing the supplemental financial statements,
management is required to make estimates and assumptions that affect the
reported amounts of assets and liabilities as of the date of the balance sheet
and revenues and expenses for the period. Actual results could differ from those
estimates. The most significant estimates relate to the determination of the
adequacy of the allowance for credit losses.
RECLASSIFICATIONS
Certain reclassifications have been made in prior year financial statements to
conform to current presentation.
CASH AND DUE FROM BANKS
Cash on hand, cash items in process of collection and amounts due from banks are
included in cash and due from banks.
INVESTMENT SECURITIES
Investment securities are classified based on management's intention on the date
of purchase. Such classification is reevaluated at the date of each statement of
condition. Securities which management has the intent and ability to hold to
maturity are classified as held-to-maturity and reported at amortized cost. All
other securities are classified as available-for-sale and carried at fair value
with net unrealized gains and losses included as a component of shareholders'
equity, net of tax.
Interest and dividends on investment securities, including amortization of
premiums and accretion of discounts, are included in interest income. Realized
gains and losses from the sales of securities are determined using the specific
identification method.
LOANS HELD FOR SALE
Loans held for sale include primarily mortgage loans which are carried at the
lower of aggregate cost or estimated market value. The determination of market
value includes consideration of outstanding commitments from investors, related
origination fees and costs, and commitment fees paid. Gains and losses on the
sale of loans are recognized at settlement date and are determined by the
difference between the selling price and the carrying value of the loans sold.
The Company sells mortgage loans on a servicing released basis.
32
<PAGE>
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
LOANS
Loans are carried at their principal amounts outstanding less unearned income,
net of deferred loan fees and costs and the allowance for credit losses.
Interest income on loans is credited to income based on the principal amount
outstanding and is accrued as earned.
Loan origination fees and certain direct costs incurred in originating loans are
deferred and recognized as income over the life of the loan.
The allowance for credit losses is maintained at a level that management
believes to be adequate to absorb losses inherent in the loan portfolio.
Management's determination of the adequacy of the allowance is based on an
evaluation of the portfolio, past loan loss experience, current economic
conditions, volume, growth, composition of the loan portfolio, and other risks
inherent in the portfolio.
The accrual of interest on impaired loans is discontinued when, in management's
opinion, the borrower may be unable to meet payments as they become due. When
accrual of interest is discontinued, all unpaid accrued interest is reversed.
Interest income on such loans is subsequently recognized only to the extent cash
payments are received, the full recovery of principal is anticipated, or after
full principal has been recovered when collection of principal is in question.
Management considers a loan as impaired when it is probable the Company will be
unable to collect all principal and interest payments due in accordance with the
original terms of the loan agreement. Individually identified impaired loans are
measured based on the present value of payments expected to be received, using
the contractual loan rate as the discount rate. Alternatively, measurement may
be based on observable market prices or, for loans that are solely dependent on
the collateral for repayment, measurement may be based on the fair value of the
collateral. If the recorded investment in the impaired loan exceeds the measure
of fair value, a valuation allowance is established as a component of the
allowance for credit losses. Changes to the valuation allowance are recorded as
a component of the provision for credit losses. The Company has not separately
evaluated smaller-balance homogeneous loans such as consumer and smaller balance
commercial loans as they are collectively evaluated for impairment.
GOODWILL AND OTHER INTANGIBLES
Goodwill and other intangibles are being amortized principally on the
straight-line method over periods of from 5 to 15 years. Accumulated
amortization was $1,792,000 and $1,369,000 at December 31, 1997 and 1996,
respectively. Amortization expense totaled $423,000, $384,000 and $357,000 for
1997, 1996 and 1995, respectively.
PREMISES AND EQUIPMENT
Premises and equipment are stated at cost less accumulated depreciation.
Depreciation is computed principally by the straight-line method over the
estimated useful lives of the assets.
OTHER REAL ESTATE OWNED
Other real estate owned represents properties acquired through foreclosure.
Other real estate owned is held for sale and is carried at the lower of the
recorded amount of the loan or fair value of the properties less estimated
selling costs. Any write-down to fair value at the time of transfer to other
real estate owned is charged to the allowance for credit losses. Subsequent
gains or losses on sale and any subsequent adjustment to the value are recorded
as other income or expense.
33
<PAGE>
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES
Income tax expense consists of current and deferred taxes. The current income
tax provision approximates taxes to be paid or refunded for the applicable year.
Deferred tax assets and liabilities are recognized for the temporary differences
between the bases of assets and liabilities as measured by tax laws and their
bases as reported in the financial statements. Deferred tax expense or benefit
is then recognized for the change in deferred tax assets or liabilities between
periods.
Recognition of deferred tax balance sheet amounts is based on management's
belief that it is more likely than not that the tax benefit associated with
certain temporary differences, tax operating loss carryforwards and tax credits
will be realized. A valuation allowance is recorded for those deferred tax items
for which it is more likely than not that realization will not occur.
The Company and its subsidiaries file a consolidated income tax return. Each
entity provides for income taxes based on its contribution to income taxes
(benefits) of the consolidated group.
INCOME PER COMMON SHARE
Effective December 15, 1997, the Company adopted the provisions of Financial
Accounting Standards Board ("FASB") Statement No. 128, "Earnings per Share"
("Statement 128"). Statement 128 replaced the calculation of primary and fully
diluted earnings per share with basic and diluted earnings per share. Unlike
primary earnings per share, basic earnings per share excludes any dilutive
effects of options, warrants and convertible securities. Diluted earnings per
share is very similar to the previously reported fully diluted earnings per
share. All earnings per share amounts for all periods presented have been
restated to conform to the requirements of Statement 128.
Earnings per share for periods prior to 1997 have been restated to reflect the
effect of business combinations accounted for as poolings of interests and stock
splits. Net income per common share and net income per common share, diluted,
have been adjusted $0.04 and $0.09 in 1996 and 1995, respectively, for business
combinations accounted for as poolings of interests and $(0.17) and $(0.13) in
1996 and 1995, respectively, for stock splits.
34
<PAGE>
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME PER COMMON SHARE (CONTINUED)
The following table sets forth the computation of basic and diluted earnings per
share:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1997 1996 1995
-----------------------------------------------------
(In thousands, except per share data)
<S> <C> <C> <C>
NUMERATOR:
Net income $18,077 $13,081 $10,828
Less: preferred stock dividends (196) (196) (196)
=====================================================
Net income attributable to common shareholders $17,881 $12,885 $10,632
=====================================================
DENOMINATOR:
Denominator for basic earnings per share - weighted
average shares 24,135 24,096 23,940
Effect of dilutive securities - stock options 772 651 440
=====================================================
Denominator for diluted earnings per share -
adjusted weighted average shares and assumed
conversions 24,907 24,747 24,380
=====================================================
Net income per share of common stock (1) $ .74 $ .53 $ .44
-----------------------------------------------------
Net income per share of common stock, assuming
dilution (1) $ .72 $ .52 $ .44
=====================================================
</TABLE>
(1) After giving effect to stock splits payable to shareholders of record on
January 23, 1998 and March 6, 1997.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the FASB issued Statement No. 130, "Reporting Comprehensive
Income" ("Statement 130"), which establishes standards for reporting and display
of comprehensive income and its components in a full set of general-purpose
financial statements. Statement 130 requires that all items that are required to
be recognized under accounting standards as components of comprehensive income
be reported in a financial statement that is displayed with the same prominence
as other financial statements. The Company will adopt the provisions of
Statement 130 beginning in 1998. Adoption of Statement 130 by the Company is not
expected to have a material impact on the Company's consolidated financial
position or consolidated results of operations.
In June 1997, the FASB issued Statement No. 131, "Disclosure About Segments of
an Enterprise and Related Information" ("Statement 131"), which establishes
standards for the way that public business enterprises report information about
operating segments in annual and interim financial statements. The Company will
adopt the provisions of Statement 131 beginning in 1998. The adoption is not
expected to have a material impact on the Company's consolidated financial
position or consolidated results of operations.
2. BUSINESS COMBINATIONS
On July 2, 1998, the Company completed a business combination with The Bank
Holding Company ("BHC") by exchanging 2,170,447 shares of the Company's common
stock for all of the outstanding common stock of BHC and 40,770 shares of the
Company's preferred stock for all of the outstanding preferred stock of BHC. The
combination was accounted for as a pooling of interests and, accordingly, all
prior period supplemental consolidated financial statements have been restated
to include the results of BHC.
35
<PAGE>
2. BUSINESS COMBINATIONS (CONTINUED)
On July 1, 1998, the Company completed a business combination with Button
Gwinnett Financial Corporation ("Button") by exchanging 5,571,778 shares of the
Company's common stock for all of the outstanding common stock of Button. The
combination was accounted for as a pooling of interests and, accordingly, all
prior period supplemental consolidated financial statements have been restated
to include the results of Button.
On June 9, 1998, the Company completed a business combination with Lanier Bank
and Trust Company ("Lanier") by exchanging 1,702,748 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, all prior period
supplemental 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 Bancshares, 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
current period financial statements reflect the combination as if it took place
on January 1, 1997, and all prior period supplemental 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 current period financial statements reflect the combination as
if it took place on January 1, 1997, and all prior period supplemental
consolidated financial statements have been restated to include the results of
Central and Southern.
On August 31, 1996, First Alliance Bancorp, Inc. ("First Alliance") completed a
business combination with the Company by exchanging 746,530 shares of its common
stock for all the outstanding common stock of the Company. Subsequent to the
business combination, the combined holding company changed its name to Premier
Bancshares, Inc. The combination was accounted for as a pooling of interests
and, accordingly, all prior period supplemental consolidated financial
statements have been restated to include the results of the former Premier
Bancshares, Inc.
36
<PAGE>
2. BUSINESS COMBINATIONS (CONTINUED)
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:
<TABLE>
<CAPTION>
1997 1996 1995
------------------- -------------------- -------------------
(dollars in thousands)
<S> <C> <C> <C>
Net interest income:
Premier Bancshares, Inc., exclusive of pre-
acquisition amounts $20,498 $ 9,765 $ 7,463
BHC 6,146 5,490 5,078
Button 10,982 9,482 8,729
Lanier 2,954 2,739 2,782
Citizens (1) 7,796 5,914 4,219
Central and Southern (2) 4,699 8,280 7,893
former Premier Bancshares, Inc. (3) - 1,969 1,557
======= ========= =========
Total $53,075 $ 43,639 $ 37,721
======= ========= =========
Net income:
Premier Bancshares, Inc. exclusive of pre-
acquisition amounts $ 7,744 $ 2,425 $ 1,850
BHC 1,219 1,442 1,275
Button 4,864 3,845 3,298
Lanier 800 789 702
Citizens (1) 1,935 1,511 1,005
Central and Southern (2) 1,515 2,954 2,559
former Premier Bancshares, Inc. (3) - 115 139
======= ========= =========
Total $18,077 $ 13,081 $ 10,828
======= ========= =========
</TABLE>
(1) 1997 amounts reflect the results of operations from January 1, 1997
through the effective merger date of December 12, 1997. Results of
operations for the period from December 13, 1997 through December 31,
1997 are included in Premier Bancshares, Inc. amounts.
(2) 1997 amounts reflect the results of operations from January 1, 1997
through the effective merger date of June 23, 1997. Results of operations
for the period from June 24, 1997 through December 31, 1997 are included
in Premier Bancshares, Inc. amounts.
(3) 1996 amounts reflect the results of operations from January 1, 1996
through the effective merger date of August 31, 1996. Results of
operations for the period from September 1, 1996 through December 31,
1996 are included in Premier Bancshares, Inc. amounts.
37
<PAGE>
2. BUSINESS COMBINATIONS (CONTINUED)
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 as set forth
below (in thousands):
Cash received $ 694
Loans held for sale 8,020
Premises and equipment 413
Other assets 741
Goodwill 367
Other liabilities (8,402)
=========
Purchase price $ 1,833
=========
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.
The following unaudited pro forma results of operations give effect to the
operations of Traditional as if the acquisition had occurred as of the beginning
of the periods presented. The pro forma results of operations do not purport to
represent what the Company's results of operations would have been had the
acquisition in fact occurred at the beginning of the years presented or to
project the Company's results of operations in any future period.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1997 1996
---------------------------------------------
(dollars in thousands, except per share data)
<S> <C> <C>
Revenue $126,346 $105,544
Net income 18,342 13,130
Net income per share of common stock, as restated
for stock splits
Basic .75 .54
Diluted .73 .53
</TABLE>
On May 1, 1995, Premier Bancshares, Inc. acquired all of the outstanding stock
of Allotoona Federal Savings Bank for $5,496,458, including expenses related to
the merger totaling $339,973. The purchase price was funded through the sale of
preferred stock and a loan obtained from a third party financial institution in
the amount of $3 million. The excess of the total acquisition cost over the fair
value of the net assets acquired of $2,779,772 is being amortized over a period
of fifteen years. The acquisition was accounted for as a purchase and the
results of operations of Allotoona Federal Savings Bank since the date of
acquisition are included in the consolidated financial statements.
On January 31, 1995, First Alliance acquired Interim Alliance Corporation (d/b/a
Alliance Finance) in exchange for 80% of the outstanding common stock owned
personally by the President of First Alliance. The price paid for the stock was
$28,000, which represents $25,000 for the initial capitalization of the Company
plus $3,000 of incidental expenses. The acquisition was accounted for as a
purchase. On June 30, 1997, the Company disposed of Alliance Finance and
recognized a gain on the disposition of $757,000.
38
<PAGE>
3. INVESTMENT SECURITIES
The amortized cost and fair value of investment securities are summarized as
follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
------------ -------------- --------------- ---------------
(dollars in thousands)
<S> <C> <C> <C> <C>
SECURITIES AVAILABLE FOR SALE
December 31, 1997:
U.S. Treasury and Government and
agency securities $ 73,505 $ 380 $ (157) $ 73,728
State and municipal securities 20,852 967 (2) 21,817
Mortgage backed securities 47,060 354 (329) 47,085
Equity securities 4,341 - (86) 4,255
======== ====== ======= ==========
$145,758 $1,701 $ (574) $ 146,885
======== ====== ======= ==========
</TABLE>
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
----------- ---------- ---------- ---------
(dollars in thousands)
<S> <C> <C> <C> <C>
SECURITIES HELD TO MATURITY
December 31, 1997:
U.S. Treasury and Government and
agency securities $ 32,779 $ 90 $ (29) $ 32,840
State and municipal securities 5,685 75 (1) 5,759
Mortgage backed securities 7,539 17 (8) 7,548
======== ====== ====== ========
$ 46,003 $ 182 $ (38) $ 46,147
======== ====== ====== ========
</TABLE>
39
<PAGE>
3. INVESTMENT SECURITIES (CONTINUED)
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
---------------- ---------------- --------------- -----------------
(dollars in thousands)
<S> <C> <C> <C> <C>
SECURITIES AVAILABLE FOR SALE
December 31, 1996:
U.S. Treasury and Government and
agency securities $ 99,828 $ 152 $ (600) $ 99,380
State and municipal securities 23,457 718 (56) 24,119
Mortgage backed securities 58,359 325 (766) 57,918
Equity securities 3,129 - (55) 3,074
================ ================ =============== =================
$184,773 $1,195 $(1,477) $184,491
================ ================ =============== =================
</TABLE>
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
---------------- ---------------- --------------- -----------------
(dollars in thousands)
<S> <C> <C> <C> <C>
SECURITIES HELD TO MATURITY
December 31, 1996:
U.S. Treasury and U.S. Government
and agency securities
$28,300 $ 67 $ (75) $ 28,292
State and municipal securities 4,167 72 (4) 4,235
================ ================ =============== =================
$32,467 $ 139 $ (79) $ 32,527
================ ================ =============== =================
</TABLE>
40
<PAGE>
3. INVESTMENT SECURITIES (CONTINUED)
The amortized cost and fair value of securities as of December 31, 1997 by
contractual maturity are shown below. Maturities may differ from contractual
maturities in mortgage-backed securities because the mortgages underlying the
securities may be called or prepaid with or without penalty. Therefore, these
securities and equity securities are not included in the maturity categories in
the following summary.
<TABLE>
<CAPTION>
SECURITIES
---------------------------------------
AMORTIZED FAIR
COST VALUE
----------------------------------------
(dollars in thousands)
<S> <C> <C>
SECURITIES AVAILABLE FOR SALE
Due in one year or less $ 4,847 $ 4,819
Due from one year to five years 47,984 48,202
Due from five to ten years 29,590 30,042
Due after ten years 12,272 12,826
Mortgage-backed securities 46,724 46,742
Equity securities 4,341 4,254
========================================
$ 145,758 $ 146,885
========================================
</TABLE>
<TABLE>
<CAPTION>
SECURITIES
----------------------------------------
AMORTIZED FAIR
COST VALUE
----------------------------------------
(dollars in thousands)
<S> <C> <C>
SECURITIES HELD TO MATURITY
Due in one year or less $ 10,042 $ 10,041
Due from one year to five years 25,869 25,982
Due from five to ten years 403 425
Due after ten years 2,150 2,150
Mortgage-backed securities 7,539 7,549
========================================
$ 46,003 $ 46,147
========================================
</TABLE>
Securities with a carrying value of approximately $84,560,000 and $77,486,0 00
at December 31, 1997 and 1996, respectively, were pledged to secure public
deposits and for other purposes.
Gains and losses on sales of securities consist of the following:
<TABLE>
<CAPTION>
HELD TO MATURITY AVAILABLE FOR SALE
----------------------- ------------- ------------ -----------
1995 1997 1996 1995
----------------------- ------------- ------------ -----------
(dollars in thousands) (dollars in thousands)
<S> <C> <C> <C> <C>
Gross gains $ 1 $ 17 $232 $ 138
Gross losses (31) (30) (68) (344)
======================== ========== ========= =========
Net realized gains (losses) $(30) $(13) $164 $(206)
======================= ========== ========== =========
</TABLE>
The related income tax expense (benefit) on sales of securities is $(4,000),
$56,000, and $(80,000) for 1997, 1996, and 1995, respectively.
41
<PAGE>
3. INVESTMENT SECURITIES (CONTINUED)
In late 1995, the FASB issued an implementation guide relating to Statement No.
115. Included in this guide was a one-time opportunity to reallocate investments
between categories without calling into question the validity of the
classifications. Accordingly, in December 1995, the Company transferred a
portion of its held-to-maturity portfolio to available-for-sale. The transfer
resulted in a net unrealized gain of $539,000, net of tax of $212,000, which is
included in shareholders' equity.
4. LOANS
The composition of loans is summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31
1997 1996
---------------------------------------------
(dollars in thousands)
<S> <C> <C>
Commercial $196,319 $181,437
Real estate-construction 203,458 185,202
Real estate-mortgage 409,874 230,385
Consumer 59,591 61,906
Other 1,422 82
Less: loans held for sale (62,738) (26,550)
---------------------------------------------
807,926 632,462
Less unearned income (2,678) (994)
Net deferred loan (fees) costs 1,271 22
Less allowance for credit losses (13,356) (11,493)
=============================================
Loans, net $793,163 $619,997
=============================================
</TABLE>
The Company had loan participations sold in the amount of $42,328,000 and
$73,802,000 at December 31, 1997 and 1996, respectively.
42
<PAGE>
4. LOANS (CONTINUED)
Changes in the allowance for credit losses for the years ended December 31,
1997, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
1997 1996 1995
-----------------------------------------------------------
(dollars in thousands)
<S> <C> <C> <C>
Balance, beginning of year $11,493 $10,328 $ 9,560
Allowance acquired (disposed)
in acquisitions and disposals (74) - 294
Provision for credit losses 1,699 425 108
Loans charged off (986) (902) (2,143)
Recoveries 1,224 1,642 2,509
-----------------------------------------------------------
Balance, end of year $13,356 $11,493 $10,328
===========================================================
</TABLE>
Loans in nonaccrual status at December 31, 1997 and 1996 totaled $3,459,000 and
$2,023,000, respectively. The total recorded investment in impaired loans was
$3,568,000 and $1,977,000 at December 31, 1997 and 1996, respectively. These
loans had a specific allowance for credit losses of $45,000 at December 31, 1997
and 1996. The average recorded investment in impaired loans for 1997, 1996 and
1995 was $1,897,000, $1,923,000 and $2,552,000, respectively. Interest income on
impaired loans of $36,000, $125,000 and $34,000 was recognized for cash payments
received for the years ended 1997, 1996 and 1995, respectively. Interest income
lost on impaired loans during 1997, 1996, and 1995 was $162,000, $223,000, and
$139,000, respectively.
The Company has granted loans to certain related parties including directors,
executive officers, and their related entities. The interest rates on these
loans were substantially the same as rates prevailing at the time of the
transaction and repayment terms are customary for the type of loan involved.
Changes in related party loans for the year ended December 31, 1997 are as
follows in thousands:
Balance, beginning of year $ 21,234
Advances 9,722
Repayments (12,596)
-----------------
Balance, end of year $ 18,360
=================
5. PREMISES AND EQUIPMENT
Premises and equipment are summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31
1997 1996
---------------------------------------------
(dollars in thousands)
<S> <C> <C>
Land $ 7,708 $ 6,626
Buildings and improvements 20,412 19,097
Furniture and equipment 18,815 15,095
---------------------------------------------
46,935 40,818
Accumulated depreciation (16,880) (13,579)
---------------------------------------------
Premises and equipment, net $ 30,055 $ 27,239
=============================================
</TABLE>
43
<PAGE>
6. DEPOSITS
Time deposits over $100,000 as of December 31, 1997 and 1996 were $146,865,000
and $134,007,000, respectively. Related interest expense was $8,062,000,
$6,378,000, and $6,243,000 for the years ended 1997, 1996, and 1995,
respectively. Included in demand and savings and money market deposits were NOW
accounts totaling $117,444,000, $100,679,000 and $76,731,000 at December 31,
1997, 1996 and 1995, respectively. Time deposits of $427,976,000, $54,222,000,
$26,042,000, $18,755,000 and $18,895,000 mature in 1998, 1999, 2000, 2001 and
2002, respectively.
7. BORROWINGS
The Company's borrowings are summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31
1997 1996
-------------------------------------------------
(dollars in thousands)
<S> <C> <C>
Federal funds purchased and securities sold
under repurchase agreements $27,168 $15,364
FHLB advances 2,875 4,625
Other borrowings 12,197 19,060
-------------------------------------------------
Total borrowings $42,240 $39,049
=================================================
</TABLE>
As of December 31, 1997, the Company had entered into four repurchase agreements
totaling $27,168,000. Interest is payable monthly at 4.00% to 4.64%. The Company
has pledged various U.S. Government and agency securities as collateral.
Advances from the Federal Home Loan Bank totaled $2,875,000 at December 31,
1997. The advances have maturity dates ranging from January 2, 1998 through
August 1, 2001. Interest is payable monthly at rates ranging from 5.91% to
8.41%. Advances are collateralized by a blanket floating lien on qualifying
first mortgages and pledges of certain securities and the Company's Federal Home
Loan Bank stock.
Included in other borrowings at December 31, 1997 are subordinated debentures, a
line of credit, and treasury, tax and loan deposits. The subordinated debentures
total $537,000 at December 31, 1997. Certain of the subordinated debentures are
payable on demand, and may be repaid by the Company at a price equal to 100% of
the principal balance plus accrued interest to date of redemption without
penalty. Other subordinated debentures are payable in annual installments of
$15,000 with interest payable semi-annually at prime (8.50% at December 31,
1997). The Company's line of credit is with a nonaffiliated institution bearing
interest at prime minus 75 basis points (7.75% at December 31, 1997), payable
quarterly. The outstanding balance at December 31, 1997 is $10,160,000 and the
available balance is $4,840,000. This line matures on June 30, 2008 and is
secured by all stock of the Company and its subsidiaries. Treasury, tax and loan
deposits, which total $1,500,000 at December 31, 1997, are made by local
businesses to be remitted to the government. Interest on these deposits is
payable monthly at a rate of 5.28%.
In connection with the line of credit, the Company has agreed, among other
covenants, to maintain earnings, reserves for credit losses, and capital at
certain minimum levels. During 1997, the Company was in compliance with these
covenants.
The Company's weighted-average interest rate on short-term borrowings as of
December 31, 1997 and 1996 was 7.31% and 7.57%, respectively.
44
<PAGE>
7. BORROWINGS (CONTINUED)
Principal maturities of borrowings outstanding as of December 31, 1997 are
summarized as follows:
AMOUNT
-----------------------
(dollars in thousands)
1998 $40,318
1999 890
2000 16
2001 1,016
2002 -
Thereafter -
-----------------------
Total $42,240
=======================
8. TRUST PREFERRED SECURITIES
In November 1997, the Company issued, through a wholly owned subsidiary, Premier
Capital Trust I (the "Trust"), 9.00% Cumulative Trust Preferred Securities
("Preferred Securities") with an aggregate liquidation amount of $28,750,000,
which are redeemable at the option of the Company on or after December 31, 2007
or upon the occurrence of certain regulatory events. Holders of Preferred
Securities are entitled to receive cumulative cash distributions, at the annual
rate of 9.00% of the liquidation amount of $25.00 per Preferred Security,
accruing from the date of original issuance and payable quarterly in arrears.
The Company has guaranteed the payment of distributions and payments on
liquidation of redemption of the Preferred Securities, but only in each case to
the extent of funds held by the Trust.
The Preferred Securities represent preferred undivided beneficial interests in
the assets of the Trust, which consist solely of 9.00% Subordinated Debentures
(the "Subordinated Debentures") issued by the Company to the Trust. The
Subordinated Debentures bear interest at 9.00%, payable quarterly. The
Subordinated Debentures are unsecured and are effectively subordinated to all
existing and future liabilities of the Company. The Company has the right, at
any time, so long as no event of default has occurred, to defer payments of
interest on the Subordinated Debentures for a period not to exceed 20
consecutive quarters. Exercise of this right by the Company will result in the
deferral of quarterly distributions on the Preferred Securities; however,
interest will continue to accrue on the Subordinated Debentures and unpaid
dividends accumulate on the Preferred Securities. The proceeds from the
Preferred Securities qualifies as Tier I capital with respect to the Company
under the risk-based capital guidelines established by the Federal Reserve.
Federal Reserve guidelines for calculation of Tier I capital limit the amount of
cumulative preferred stock which can be included in Tier I capital to 25% of
total Tier I capital.
9. REDEEMABLE PREFERRED STOCK
Redeemable Preferred stock pays an 8% annual dividend which is cumulative but
subordinate to the rights of trade creditors. Holders of the preferred shares
will be entitled to redeem the shares on or after October 3, 2004. The Company
has the right to redeem up to 20% of the preferred shares each year beginning on
October 3, 1999.
45
<PAGE>
10. EMPLOYEE BENEFIT PLANS
The Company has various defined-contribution employee benefit plans
incorporating provisions of section 401(k) of the Internal Revenue Code.
Generally, employees of the company must have from 60 days to one year of
service to become eligible. Under the plans' provisions, a plan member may make
contributions, on a tax-deferred basis, from 1% to 20% of total compensation not
to exceed the maximum established annually by the Internal Revenue Service. The
Company makes discretionary contributions and matching contributions in amounts
ranging from 1% to 75% of total contributions by a plan member, to a maximum of
between 4% and 6% of the employee's total calendar year compensation.
Contributions to the plans charged to expense were $551,000, $215,000 and
$152,000 for the years ended December 31, 1997, 1996 and 1995, respectively.
11. STOCK OPTION PLANS
Stock options to purchase shares of the Company's common stock are issued under
the following plans:
The Company has a Directors' Deferred Stock Unit Plan ("Unit Plan") which
replaces the former Directors' Stock Option Plan. Under the Unit Plan, each
eligible director can elect to defer payment of directors fees to be received as
shares of the Company's common stock at 85% of the market price on the award
date. A total of 225,000 shares of common stock have been reserved for issuance
under the Unit Plan. Awards made under the Unit Plan are deemed to be
immediately vested but cannot be exercised until the date the Director is no
longer a board member.
The Company had a Directors' Stock Option Plan ("Directors' Plan") under which
the Company could grant options to purchase shares of common stock to eligible
directors. The purchase price of the stock was not less than the fair market
value of the stock on the date the option was granted. Under the Directors'
Plan, the number of shares issued did not to exceed an aggregate of 30,000
shares. The option period does not exceed ten years from the date of grant. All
available options under the Plan have been granted.
The Company has a 1997 Stock Option Plan ("Employee Plan") under which the
Company can grant options to purchase shares of common stock to certain key
employees. The purchase price of the stock will not be less than the fair market
value of such shares on the date the option is granted. Under the Employee Plan,
the number of shares issued is not to exceed an aggregate of 1,125,000 shares.
The option period will not exceed ten years from the date of grant.
The Company has a 1995 Stock Option Plan whereby the Company may grant incentive
stock options and nonqualified stock options to certain key employees to
purchase up to 112,500 shares of the Company's common stock at a price not less
than the fair market value of such shares on the date the option is granted. The
option period will not exceed ten years from the date of grant. All available
options under the Plan have been granted.
The Company has a 1993 Employee Stock Option Plan whereby the Company can grant
options to purchase an aggregate of 60,000 shares of common stock to certain key
employees at a price not less than the fair market value of the stock on the
date the option is granted. The option period will not exceed ten years from the
date of grant. All available options under the Plan have been granted.
The Company has an Employee Stock Option Plan with 17,400 remaining common stock
options available to grant to key employees. Option prices are determined by the
Company's Stock Option Plan Committee, but cannot be less than 100% of the fair
value of the Company's common stock on the date of the grant. The options expire
in ten years from date of grant.
The Company has granted stock options in 1997 to an executive officer of the
Company under an employment agreement. The agreement provides for the purchase
of 58,500 shares of common stock. The exercise price is based on the book value
of the Company's common stock at the date of exercise ($4.57 at December 31,
1997). The options are exercisable in 3,900 shares annual increments.
46
<PAGE>
11. STOCK OPTION PLANS (CONTINUED)
The Company has a nonqualified incentive stock option plan covering certain
officers and employees under which options to purchase shares of the Company's
common stock are granted at either the fair market value or the book value per
share of the date of grant. Options may be granted upon the discretion to the
Board of Directors, but must be exercised within ten years from the date of
grant. Options were established for 66,825 shares of the Company's common stock.
During 1996, the Company's shareholders approved a fixed option plan which
allows for a total of 118,800 options to be granted to members of the Board of
Directors. The exercise price for each option shall be the greater of $8.33 per
share or the book value per share of the stock at the date of grant.
Options are to be granted annually, based on Board service, and expire five
years after the date of grant.
Information related to the various option plans has been restated for stock
splits and is summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31
1997 1996 1995
------------------------------------------------------------------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
NUMBER PRICE NUMBER PRICE NUMBER PRICE
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Under option, beginning of
year 1,241,610 $3.39 1,130,761 $3.07 885,834 $3.46
Granted 428,309 7.95 126,495 6.27 257,504 4.02
Exercised (397,380) 3.70 (14,290) 3.67 (389) 2.90
Expired (4,554) 5.04 (1,356) 3.69 (12,188) 4.15
------------------------------------------------------------------------------
Under option, end of year 1,267,985 $5.50 1,241,610 $3.39 1,130,761 $3.07
==============================================================================
</TABLE>
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED AVERAGE
AVERAGE REMAINING
EXERCISE CONTRACTUAL LIFE
NUMBER PRICE PRICE IN YEARS
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Options outstanding, end of year 716,045 $1.78 - 3.86 3.03 5.91
551,940 4.18 - 10.67 6.39 8.75
--------------
1,267,985
==============
Options exercisable, end of year 657,101 $1.78 - 4.17 2.98 5.81
200,527 4.18 - 8.33 6.11 6.60
--------------
857,628
==============
</TABLE>
As permitted by FASB Statement No. 123, "Accounting for Stock-Based
Compensation" (Statement 123), the Company recognizes compensation cost for
stock-based employee compensation awards in accordance with Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees". The
Company recognized no compensation for stock-based employee compensation expense
awards for the years ended December 31, 1997, 1996 and 1995.
47
<PAGE>
11. STOCK OPTION PLANS (CONTINUED)
If the Company had recognized compensation expense in accordance with Statement
123, net income and net income per share would have been as follows:
<TABLE>
<CAPTION>
NET INCOME NET INCOME PER NET INCOME PER
SHARE SHARE (DILUTED)
-------------------------------------------------
(dollars in thousands, except per share data)
<S> <C> <C> <C>
DECEMBER 31, 1997
As reported $18,077 $ 0.74 $ 0.72
Stock based compensation, net of
related tax effect (374) (0.01) (0.02)
-------------------------------------------------
As adjusted $17,703 $ 0.73 $ 0.70
=================================================
DECEMBER 31, 1996
As reported $13,081 $ 0.53 $ 0.52
Stock based compensation, net of
related tax effect (150) - (0.01)
-------------------------------------------------
As adjusted $12,931 $ .53 $ 0.51
=================================================
DECEMBER 31, 1995
As reported $10,828 $ 0.44 $ 0.44
Stock based compensation, net of
related tax effect (80) - (0.01)
-------------------------------------------------
As adjusted $10,748 $ 0.44 $ 0.43
=================================================
</TABLE>
The per share weighted-average fair value of stock options granted during 1997,
1996 and 1995 was $3.06, $1.69, and $0.70, respectively, using the Black Scholes
option-pricing model. The fair value of the options granted during the year was
based upon the discounted value of future cash flows of the options using the
following assumptions:
<TABLE>
<CAPTION>
1997 1996 1995
----------------------------------------------------
<S> <C> <C> <C>
Risk free interest rate 6.45% 6.45% 6.45%
Expected life of the options 7 - 10 Years 7 - 10 Years 7 - 10 Years
Expected dividends (as a percent of the fair
value of the stock) 1.00% 2.68% 3.85%
Volatility 32.20% 9.73% 10.03%
</TABLE>
48
<PAGE>
12. INCOME TAXES
Income tax expense (benefit) consists of the following:
<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
------------------------------------------------------------
(dollars in thousands)
<S> <C> <C> <C>
1997:
Federal $ 9,582 $(1,369) $8,213
State 1,866 (711) 1,155
------------------------------------------------------------
Total 11,448 (2,080) 9,368
============================================================
1996:
Federal 5,171 (395) 4,776
State 912 (70) 842
------------------------------------------------------------
Total 6,083 (465) 5,618
============================================================
1995:
Federal 4,155 163 4,318
State 732 29 761
------------------------------------------------------------
Total 4,887 192 5,079
============================================================
</TABLE>
The Company's income tax expense differs from the amounts computed by applying
the Federal income tax statutory rates to income before income taxes. A
reconciliation of the differences is as follows in thousands:
<TABLE>
<CAPTION>
DECEMBER 31
1997 1996 1995
-----------------------------------------------
<S> <C> <C> <C>
Income taxes at statutory rate $9,497 $6,363 $5,412
State tax, net of federal benefit 566 175 196
Tax-exempt interest income (517) (462) (358)
Disallowed merger expenses 430 142 36
Valuation allowance adjustment (554) (691) (262)
Other items, net (54) 91 55
-----------------------------------------------
Income tax expense $9,368 $5,618 $5,079
===============================================
</TABLE>
49
<PAGE>
12. INCOME TAXES (CONTINUED)
The components of deferred income taxes are as follows:
<TABLE>
<CAPTION>
DECEMBER 31
1997 1996
---------------------------------------------
(dollars in thousands)
<S> <C> <C>
Deferred tax assets:
Loan loss reserves $2,378 $1,421
Deferred compensation 160 151
Deferred loan fees, net of costs 246 -
Other real estate 174 155
Non-accrual loans 34 26
Investment securities available-for-sale - 131
Write-down of mutual funds 19 19
Net operating loss carryforward 713 585
Georgia tax credits carryforward 147 240
Pension 64 45
Post-retirement benefits other than pensions 70 48
Alternative minimum tax carryforwards 589 589
Other 10 19
Valuation allowance - (554)
---------------------------------------------
4,604 2,875
---------------------------------------------
Deferred tax liabilities:
Depreciation and amortization 1,153 1,105
Deferred loan fees, net of cost - 122
Investment securities available-for-sale 444 -
Cash method accounting on certain receivables - 144
Other 34 36
---------------------------------------------
1,631 1,407
---------------------------------------------
Net deferred tax assets $2,973 $1,468
=============================================
</TABLE>
Management has evaluated the need for a valuation allowance for all or a portion
of the deferred tax assets and believes that the deferred tax assets will be
more likely than not realized. Accordingly, no valuation allowance has been
recognized in 1997.
At December 31, 1997, the Company has available net operating loss carryforwards
of approximately $762,000 and $7,561,000 for Federal and State income tax
purposes, respectively. At December 31, 1997 the Company had AMT carryforwards
of $1,630,000 and state income tax credit carryforwards of $2,455,000. If
unused, the carryforwards will expire beginning in 2009. Utilization of the net
operating loss carryforwards is subject to the separate return limitations and
change of ownership rules of the Internal Revenue Code.
13. COMMITMENTS AND CONTINGENCIES
The Company enters into firm commitments to sell at agreed upon prices mortgage
loans which it has originated. The sales price for the loans is set based on
market rates at the time the commitment is entered into. The Company generally
has ten days after a mortgage loan closes in which to provide the investor with
the loan documentation, at which time the investor will fund the loan. The
investor bears the interest rate risk on the loan from the time of the
commitment. The Company's risk is limited to specific recourse provisions within
the agreement with the investor and its ability to provide the required loan
documentation to the investor within the commitment period.
50
<PAGE>
13. COMMITMENTS AND CONTINGENCIES (CONTINUED)
The Company sells mortgage loans to investors under various blanket agreements.
Under the agreements, investors generally have a limited right of recourse to
the Company for normal representations and warranties and, in some cases, for
delinquencies within the first three to six months which lead to loan default
and foreclosure. Management believes that the risk of loss to the Company as a
result of these provisions is insignificant.
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 enters 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 loan commitments, 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:
<TABLE>
<CAPTION>
DECEMBER 31
1997 1996
---------------------------------------------
(dollars in thousands)
<S> <C> <C>
Unfunded mortgage loan commitments $ 17,643 $ 20,000
Construction and commercial real estate commitments 135,807 117,399
Standby letters of credit 81,500 72,802
---------------------------------------------
$234,950 $210,201
=============================================
</TABLE>
Commitments to extend credit generally have fixed expiration dates or other
termination clauses and may require payment of a fee. Since many of the
commitments are expected to expire without being drawn upon, the total
commitment amounts do not necessarily represent future cash requirements. The
credit risk involved in issuing these financial instruments is essentially the
same as that involved in extending loans to customers. The Company evaluates
each customer's creditworthiness on a case-by-case basis. The amount of
collateral obtained, if deemed necessary by the Company upon extension of
credit, is based on management's credit evaluation of the customer. Collateral
held varies but may include real estate and improvements, marketable securities,
accounts receivable, inventory, equipment and personal property.
Standby letters of credit are conditional commitments issued by the Company to
guarantee the performance of a customer to a third party. Those guarantees are
primarily issued to support public and private borrowing arrangements. The
credit risk involved in issuing letters of credit is essentially the same as
that involved in extending loan facilities to customers. Collateral held varies
as specified above and is required in instances which the Company deems
necessary.
At December 31, 1997, the Company had agreements with unaffiliated institutions
allowing it to sell participations in loans at the Company's option. The unused
participation amount was $8,741,000 at December 31, 1997.
51
<PAGE>
13. COMMITMENTS AND CONTINGENCIES (CONTINUED)
In the normal course of business, the Company is involved in various legal
proceedings. In the opinion of management of the Company, any liability
resulting from such proceedings would not have a material effect on the
Company's consolidated financial statements.
The Company leases office facilities and certain equipment under noncancelable
lease agreements. Future minimum lease commitments at December 31, 1997 are
summarized as follows:
<TABLE>
<S> <C>
Year ending December 31,
1998 $1,385
1999 1,218
2000 993
2001 735
2002 675
Thereafter 3,986
-------------------
$8,992
===================
</TABLE>
Rental expense for the years ended December 31, 1997, 1996 and 1995 was
$1,102,000, $825,000 and $179,000, respectively.
The Federal Reserve Board requires that banks maintain cash on hand and reserves
in the form of average deposit balances at the Federal Reserve Bank based on
their average deposits. The Company's average reserve requirement was
$18,080,000 and $15,492,000 during 1997 and 1996, respectively.
14. CONCENTRATIONS OF CREDIT
The Company originates primarily commercial, residential, and consumer loans to
customers in the greater metropolitan Atlanta area and surrounding counties. The
ability of the majority of the Company's customers to honor their contractual
loan obligations is dependent on the economy in the metro Atlanta area.
A substantial portion of the Company's loan portfolio is secured by real estate.
A substantial portion of these loans is secured by real estate in the Company's
primary market area.
15. REGULATORY MATTERS
The banking and thrift subsidiaries of the Company are subject to certain
restrictions on the amount of dividends that may be declared without prior
regulatory approval. At December 31, 1997, approximately $9,099,000 of retained
earnings were available for dividend declaration without supervisory approval.
The Company and its banking and thrift subsidiaries are subject to various
regulatory capital requirements administered by the federal banking agencies.
Failure to meet minimum capital requirements can initiate certain mandatory-and
possibly additional discretionary-actions by regulators that, if undertaken,
could have a direct material effect on the financial statements. Under capital
adequacy guidelines and the regulatory framework for prompt corrective action,
the Company and Banks must meet specific capital guidelines that involve
quantitative measures of the assets, liabilities, and certain off-balance-sheet
items as calculated under regulatory accounting practices. The Company and
Bank's capital amounts and classification are also subject to qualitative
judgments by the regulators about components, risk weightings, and other
factors.
52
<PAGE>
15. REGULATORY MATTERS (CONTINUED)
Quantitative measures established by regulation to ensure capital adequacy
require the Company and its banking subsidiaries to maintain minimum amounts of
capital. Management believes, as of December 31, 1997, the Company and its
subsidiaries meet all capital adequacy requirements to which they are subject.
As of December 31, 1997, all but one of the Company's banking and thrift
subsidiaries were well capitalized under the regulatory framework for prompt
corrective action. To be categorized as well capitalized, the Company and its
subsidiaries must each maintain minimum total risk-based, Tier I risk-based, and
Tier I leverage ratios as set forth in the following table. There are no
conditions or events that management believes have changed the Company's or its
subsidiaries' category.
The Company and its banking and thrift subsidiaries' actual capital amounts and
ratios at December 31, 1997 and 1996 are as shown below: .
<TABLE>
<CAPTION>
DECEMBER 31, 1997
-----------------------------------------------------------------------
TO BE WELL
CAPITALIZED UNDER
FOR CAPITAL ADEQUACY PROMPT CORRECTIVE
ACTUAL PURPOSES ACTION PROVISIONS
------------ ---------- ------------ ---------- ------------ ----------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
------------ ---------- ------------ ---------- ------------ ----------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Total capital (to Risk Weighted
Assets):
Consolidated $161,140 18.23% $70,715 8.00% $88,394 10.00%
Premier 29,017 10.44% 22,229 8.00% 27,787 10.00%
Milledgeville 20,453 18.09% 9,039 8.00% 11,299 10.00%
North Georgia 7,377 8.97% 6,579 8.00% 8,223 10.00%
Citizens 13,768 10.20% 10,803 8.00% 13,504 10.00%
Henry 6,412 11.51% 4,456 8.00% 5,570 10.00%
Spalding 5,821 14.01% 3,325 8.00% 4,156 10.00%
Button 23,907 14.83% 12,897 8.00% 16,121 10.00%
Lanier 10,018 17.40% 4,618 8.00% 5,772 10.00%
Tier I Capital (to Risk Weighted
Assets):
Consolidated $150,091 16.98% $35,357 4.00% $53,036 6.00%
Premier 26,370 9.47% 11,115 4.00% 16,672 6.00%
Milledgeville 19,021 16.59% 4,520 4.00% 6,779 6.00%
North Georgia 6,347 7.70% 3,289 4.00% 4,934 6.00%
Citizens 12,263 9.08% 5,401 4.00% 8,102 6.00%
Henry 5,867 10.53% 2,228 4.00% 3,342 6.00%
Spalding 5,302 12.76% 1,663 4.00% 2,494 6.00%
Button 21,892 13.58% 6,449 4.00% 9,673 6.00%
Lanier 9,510 16.50% 2,309 4.00% 3,463 6.00%
</TABLE>
53
<PAGE>
15. REGULATORY MATTERS (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, 1997
----------------------------------------------------------------------
TO BE WELL
CAPITALIZED UNDER
FOR CAPITAL ADEQUACY PROMPT CORRECTIVE
ACTUAL PURPOSES ACTION PROVISIONS
------------ ----------- ----------- ---------- ----------- ----------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
------------ ----------- ----------- ---------- ----------- ----------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Tier I Capital (to Average Assets):
Consolidated 150,091 13.47% 44,554 4.00% 55,693 5.00%
Premier 26,320 7.43% 14,163 4.00% 17,702 5.00%
Milledgeville 19,021 12.27% 6,200 4.00% 7,750 5.00%
Citizens 12,263 7.41% 6,621 4.00% 8,276 5.00%
Henry 5,867 8.43% 2,785 4.00% 3,481 5.00%
Spalding 5,302 8.80% 2,410 4.00% 3,012 5.00%
Button 21,892 10.42% 8,406 4.00% 10,508 5.00%
Lanier 9,510 14.90% 3,463 4.00% 3,196 5.00%
Core Capital
North Georgia 6,347 6.73% 2,829 3.00%
Tangible Capital
North Georgia 6,347 6.73% 1,414 1.50%
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1996
----------------------------------------------------------------------
TO BE WELL
CAPITALIZED UNDER
FOR CAPITAL ADEQUACY PROMPT CORRECTIVE
ACTUAL PURPOSES ACTION PROVISIONS
------------ ----------- ----------- ---------- ----------- ----------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
------------ ----------- ----------- ---------- ----------- ----------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Total capital (to Risk Weighted
Assets):
Consolidated $90,981 13.06% $55,742 8.00% $69,677 10.00%
First Alliance Bank 18,716 14.02% 10,680 8.00% 13,350 10.00%
Premier 6,221 8.57% 5,807 8.00% 7,259 10.00%
Milledgeville 19,064 20.00% 7,805 8.00% 9,757 10.00%
North Georgia 5,810 12.00% 3,946 8.00% 4,933 10.00%
Citizens 11,338 10.90% 8,315 8.00% 10,394 10.00%
Henry 5,566 13.42% 3,318 8.00% 4,148 10.00%
Spalding 5,643 12.51% 3,609 8.00% 4,511 10.00%
Button 20,957 15.58% 10,764 8.00% 13,454 10.00%
Lanier 9,520 19.30% 3,956 8.00% 4,945 10.00%
</TABLE>
54
<PAGE>
15. REGULATORY MATTERS (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, 1996
----------------------------------------------------------------------
TO BE WELL
CAPITALIZED UNDER
FOR CAPITAL ADEQUACY PROMPT CORRECTIVE
ACTUAL PURPOSES ACTION PROVISIONS
------------ ----------- ----------- ---------- ----------- ----------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
------------ ----------- ----------- ---------- ----------- ----------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Tier I Capital (to Risk Weighted
Assets):
Consolidated 82,271 11.81% 27,871 4.00% 41,806 6.00%
First Alliance Bank 17,044 12.74% 5,351 4.00% 8,027 6.00%
Premier 5,819 8.02% 2,902 4.00% 4,353 6.00%
Milledgeville 17,822 18.00% 3,903 4.00% 5,854 6.00%
North Georgia 5,187 11.00% 1,973 4.00% 2,960 6.00%
Citizens 10,303 9.90% 4,158 4.00% 6,236 6.00%
Henry 5,216 12.58% 1,659 4.00% 2,488 6.00%
Spalding 5,113 11.33% 1,805 4.00% 2,708 6.00%
Button 19,268 14.32% 5,380 4.00% 8,070 6.00%
Lanier 8,902 18.00% 1,978 4.00% 2,967 6.00%
Tier I Capital (to Average Assets):
Consolidated 82,271 8.56% 38,445 4.00% 48,056 5.00%
First Alliance Bank 17,044 8.89% 7,669 4.00% 9,586 5.00%
Premier 5,819 6.86% 3,393 4.00% 4,241 5.00%
Milledgeville 17,822 12.00% 6,004 4.00% 7,505 5.00%
Citizens 10,303 6.70% 6,161 4.00% 7,702 5.00%
Henry 5,216 9.94% 2,099 4.00% 2,624 5.00%
Spalding 5,113 8.39% 2,438 4.00% 3,047 5.00%
Button 19,268 10.72% 7,192 4.00% 8,991 5.00%
Lanier 8,902 15.00% 1,776 4.00% 2,960 5.00%
Core Capital
Premier 5,819 5.85% 2,984 3.00%
North Georgia 5,187 7.00% 2,140 3.00%
Tangible Capital
Premier 5,819 5.85% 1,492 1.50%
North Georgia 5,187 7.00% 1,070 1.50%
</TABLE>
16. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Company in estimating its
fair value disclosures for financial instruments. In cases where quoted market
prices are not available, fair values are based on estimates using discounted
cash flow methods. Those methods are significantly affected by the assumptions
used, including the discount rates and estimates of future cash flows. In that
regard, the derived fair value estimates cannot be substantiated by comparison
to independent markets and, in many cases, could not be realized in immediate
settlement of the instrument. The use of different methodologies may have a
material effect on the estimated fair value amounts. Also, the fair value
estimates presented herein are based on pertinent information available to
management as of December 31, 1997 and 1996. Such amounts have not been revalued
for purposes of these financial statements since those dates and, therefore,
current estimates of fair value may differ significantly from the amounts
presented herein.
55
<PAGE>
16. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
The following methods and assumptions were used by the Company in estimating
fair values of financial instruments as disclosed herein:
CASH, DUE FROM BANKS, AND FEDERAL FUNDS SOLD
The carrying amounts of cash, due from banks, and Federal funds sold
approximate their fair value.
SECURITIES AVAILABLE-FOR-SALE
Fair values for securities are based on quoted market prices. The
carrying values of equity securities with no readily determinable fair
value approximate fair values.
LOANS
For variable-rate loans that reprice frequently and have no significant
change in credit risk, fair values are based on carrying values. For
other loans, the fair values are estimated using discounted cash flow
methods, using interest rates currently being offered for loans with
similar terms to borrowers of similar credit quality. Fair values for
impaired loans are estimated using discounted cash flow methods or
underlying collateral values. The carrying amount of loans held for sale
approximates fair value.
DEPOSITS
The carrying amounts of demand deposits, savings deposits, and
variable-rate certificates of deposit approximate their fair values. Fair
values for fixed-rate certificates of deposit are estimated using
discounted cash flow methods, using interest rates currently being
offered on such certificates.
SECURITIES SOLD UNDER REPURCHASE AGREEMENTS, FEDERAL HOME LOAN BANK
ADVANCES, TRUST PREFERRED SECURITIES AND OTHER BORROWINGS
The fair values of Federal Home Loan Bank advances, Trust Preferred
Securities and other borrowings are estimated using discounted cash flow
methods based on the Company's current incremental borrowing rates for
similar types of borrowing arrangements. The fair value of variable-rate
other borrowings and securities sold under repurchase agreements
approximate the carrying value.
ACCRUED INTEREST
The carrying amounts of accrued interest approximate their fair values.
OFF-BALANCE-SHEET INSTRUMENTS
Fair values of the Company's off-balance sheet financial instruments are
based on fees charged to enter into similar agreements. However,
commitments to extend credit do not represent a significant value to the
Company until such commitments are funded or closed. The Company has
determined that these instruments do not have a distinguishable fair
value and no fair value has been assigned.
56
<PAGE>
16. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
The estimated fair values of the Company's financial instruments were as
follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1997 DECEMBER 31, 1996
---------------------------------------------------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
---------------------------------------------------------------
(dollar in thousands)
<S> <C> <C> <C> <C>
Financial assets:
Cash, due from banks,
interest-bearing deposits in banks
and Federal funds sold $ 111,493 $ 111,493 $140,456 $140,456
Securities available-for-sale 146,885 146,885 184,491 184,491
Securities held-to-maturity 46,003 46,147 32,467 32,527
Loans 855,901 861,043 646,547 650,630
Accrued interest receivable 9,108 9,108 7,276 7,276
Financial liabilities:
Deposits 1,016,180 1,018,046 904,285 907,168
Federal funds purchased and
securities sold under repurchase
agreements 27,168 27,168 15,364 15,364
Federal Home Loan Bank advances 2,875 2,920 4,625 4,722
Trust Preferred Securities 28,750 28,750 - -
Other borrowings 12,197 12,197 19,060 19,062
Accrued interest payable 7,239 7,239 6,051 6,051
Preferred stock 2,446 2,446 2,446 2,446
</TABLE>
17. SHAREHOLDERS' EQUITY
The Company declared a three for two stock split on January 8, 1998 for
shareholders of record as of January 23, 1998. All per share data presented for
1997, 1996 and 1995 has been restated to reflect the split.
On February 24, 1997, the Company declared a 1.8055 stock split for shareholders
of record as of March 6, 1997. All per share data has been restated to reflect
the split.
On August 31, 1996, the Company changed the par value of its common stock from
five dollars to one dollar per share.
57
<PAGE>
18. PARENT COMPANY SUPPLEMENTAL FINANCIAL INFORMATION
The following information presents the condensed balance sheets of Premier
Bancshares, Inc. at December 31, 1997 and 1996, and the supplemental statements
of income and cash flows for the years ended December 31, 1997, 1996 and 1995:
CONDENSED SUPPLEMENTAL BALANCE SHEETS
<TABLE>
<CAPTION>
1997 1996
--------------------------------------
(In Thousands)
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 24,378 $ 1,981
Investment in subsidiaries 117,740 101,825
Securities available-for-sale 481 -
Other assets 3,544 2,219
--------------------------------------
Total assets $146,143 $106,025
======================================
LIABILITIES
9.00% Subordinated debentures due 2027 $ 29,701 $ 77
Other borrowings - 5,649
Other liabilities 74 1,464
--------------------------------------
29,775 7,190
Redeemable preferred stock 2,446 2,446
Shareholders' equity 113,922 96,389
--------------------------------------
Total liabilities and shareholders' equity $146,143 $106,025
======================================
</TABLE>
58
<PAGE>
18. PARENT COMPANY SUPPLEMENTAL FINANCIAL INFORMATION (CONTINUED)
CONDENSED SUPPLEMENTAL STATEMENTS OF INCOME
<TABLE>
<CAPTION>
1997 1996 1995
-------------------------------------------------------------------
(dollar in thousands)
<S> <C> <C> <C>
Income:
Interest on deposits $ 166 $ 53 $ 1,201
Interest and fees on loans - - 424
Dividends from subsidiaries 7,078 5,463 3,713
Other income 1,101 93 401
-------------------------------------------------------------------
8,345 5,609 5,739
-------------------------------------------------------------------
Expenses:
Salaries and employee benefits 284 56 911
Interest 743 392 486
Merger related expenses 859 468 -
Legal and professional 186 42 80
Other expenses 645 621 739
-------------------------------------------------------------------
Total expenses 2,717 1,579 2,216
-------------------------------------------------------------------
Income before income tax benefits and
equity in undistributed income of
subsidiaries 5,628 4,030 3,523
Benefit for income taxes 840 802 483
-------------------------------------------------------------------
Income before equity in undistributed
income of subsidiary 6,468 4,832 4,006
Equity in undistributed income of
subsidiary 11,609 8,249 6,822
-------------------------------------------------------------------
Net income $18,077 $13,081 $10,828
===================================================================
</TABLE>
59
<PAGE>
18. PARENT COMPANY SUPPLEMENTAL FINANCIAL INFORMATION (CONTINUED)
CONDENSED SUPPLEMENTAL STATEMENTS OF INCOME
<TABLE>
<CAPTION>
1997 1996 1995
--------------------------------------------------------------------
(dollar in thousands)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 18,077 $13,081 $10,828
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation 13 10 7
Amortization 10 33 30
Undistributed income of (11,609) (8,249) (6,822)
subsidiaries
Gain on sale of subsidiary (757) - -
Gain on sale of thrift charter (297) - -
Net increase in loans held for sale - - (457)
Other (1,428) 521 137
--------------------------------------------------------------------
Net cash provided by operating 4,009 5,396 3,723
activities
INVESTING ACTIVITIES
Net increase in loans - - (1,647)
Purchase of premises and equipment - (1,113) -
Investment in subsidiaries (1,889) (1,684) (7,739)
Proceeds from sale of subsidiary 800 - -
Proceeds from sale of premises and
equipment - - 20
--------------------------------------------------------------------
Net cash used in investing activities (1,089) (2,797) (9,366)
FINANCING ACTIVITIES
Net (decrease) increase in other (5,649) 1,879 4,679
borrowings
Dividends paid (5,247) (3,240) (1,775)
Proceeds from exercise of stock options 1,876 53 1
Purchase of treasury stock (1,142) (642) (1,371)
Proceeds from common stock issued - - 3,122
Proceeds from issuance of 9.00%
Subordinated Debentures 29,639 - -
Payments to dissenting shareholders - - (268)
--------------------------------------------------------------------
Net cash provided by (used in)
financing activities 19,477 (1,950) 4,388
Net increase (decrease) in cash 22,397 649 (1,255)
Cash at beginning of year 1,981 1,332 2,587
--------------------------------------------------------------------
Cash at end of year $ 24,378 $ 1,981 $ 1,332
====================================================================
</TABLE>
60
<PAGE>
EXHIBIT 99.4
INDEPENDENT AUDITOR'S REPORT
TO THE BOARD OF DIRECTORS
PREMIER BANCSHARES, INC.
AND SUBSIDIARIES
ATLANTA, GEORGIA
We have audited the accompanying consolidated balance sheets of PREMIER
BANCSHARES, INC. AND SUBSIDIARIES as of December 31, 1996 and 1995, and the
related statements of income, stockholders' equity and cash flows for each of
the three years in the period ended December 31, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We did not audit the financial statements of Central and Southern
Holding Company, Citizens Gwinnett Bankshares, Inc. and Lanier Bank & Trust
Company, three companies which were pooled with Premier Bancshares, Inc. 1997
and 1998, as explained in Note 2 to the consolidated financial statements, which
statements are included in the restated 1996 financial statements and reflect
total assets of $453.2 million and $375.4 million as of December 31, 1996 and
1995, respectively, and total revenues of $35.4 million, $30.1 million and $28.6
million for the three years in the period ended December 31, 1996. Those
statements were audited by other auditors whose report has been furnished to us,
and our opinion, insofar as it relates to data included for Central and Southern
Holding Company, Citizens Gwinnett Bankshares, Inc. and Lanier Bank & Trust
Company, is based solely on the report of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
<PAGE>
In our opinion, based upon our audits and the report of other auditors,
the consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Premier Bancshares, Inc. and
subsidiaries as of December 31, 1996 and 1995, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting principles.
/s/ Mauldin & Jenkins, LLC
Atlanta, Georgia
January 31, 1997, except for Note 2 as to which the date is
June 23, 1997, December 12, 1997, June 9, 1998, July 1,
1998 and July 2, 1998
<PAGE>
EXHIBIT 99.5
INDEPENDENT AUDITOR'S REPORT
- --------------------------------------------------------------------------------
To the Board of Directors
The Bank Holding Company and Subsidiaries
Griffin, Georgia
We have audited the accompanying consolidated balance sheets of THE BANK
HOLDING COMPANY AND SUBSIDIARIES as of December 31, 1997 and 1996, and the
related consolidated statements of income, common stockholders' equity, and cash
flows for the three years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of The Bank
Holding Company and subsidiaries as of December 31, 1997 and 1996, and the
results of their operations and their cash flows for the three years then ended,
in conformity with generally accepted accounting principles.
/s/ MAULDIN & JENKINS, LLC
Atlanta, Georgia
January 29, 1998
<PAGE>
EXHIBIT 99.6
INDEPENDENT AUDITOR'S REPORT
- --------------------------------------------------------------------------------
TO THE BOARD OF DIRECTORS
BUTTON GWINNETT FINANCIAL CORPORATION AND SUBSIDIARY
LAWRENCEVILLE, GEORGIA
We have audited the accompanying consolidated balance sheets of BUTTON
GWINNETT FINANCIAL CORPORATION AND SUBSIDIARY as of December 31, 1997 and 1996,
and the related consolidated statements of income, stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Button
Gwinnett Financial Corporation and subsidiary as of December 31, 1997 and 1996,
and the results of their operations and their cash flows for each of the three
years in the period ended December 31, 1997, in conformity with generally
accepted accounting principles.
/s/ MAULDIN & JENKINS, LLC
Atlanta, Georgia
January 14, 1998, except for Note 14 as to
which the date is February 5, 1998
<PAGE>
EXHIBIT 99.7
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Lanier Bank & Trust Company
Cumming, Georgia
We have audited the accompanying balance sheets of Lanier Bank & Trust
Company as of December 31, 1997 and 1996, and the related statements of
income, changes in stockholders' equity and cash flows for each of the three
years in the period ended December 31, 1997. These financial statements are
the responsibility of Lanier Bank & Trust Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Lanier Bank & Trust
Company as of December 31, 1997 and 1996, and the results of its operations
and its cash flows for each of the three years in the period ended December
31, 1997, in conformity with generally accepted accounting principles.
The accompanying financial statements as of and for the year ended
December 31, 1997, have been prepared assuming Lanier Bank & Trust Company will
continue in existence in its current corporate structure and retain its bank
charter. As discussed in Note B, on December 16, 1997, Lanier Bank & Trust
Company entered into a definitive agreement to be merged into another financial
institution. These financial statements do not include any adjustments that
might result from Lanier Bank & Trust Company being merged into or acquired by
another entity.
Bricker & Melton, P.A.
January 16, 1998
Duluth, Georgia
