<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE PERIOD ENDED JUNE 30, 1999
-------------
Commission file number 1-12625
PREMIER BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
Georgia 58-1793778
(State or other jurisdiction of (IRS employer identification no.)
incorporation or organization)
2180 Atlanta Plaza
950 East Paces Ferry Road
Atlanta, Georgia 31061
(address of principal (zip code)
executive offices)
Registrants telephone number, including area code 404-814-3090
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No ____
------
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at July 30, 1999
Common stock, $1.00 par value 26,167,965
<PAGE>
PREMIER BANCSHARES, INC. AND SUBSIDIARIES
FORM 10-Q
TABLE OF CONTENTS
Part I. Financial Information
<TABLE>
<S> <C> <C>
Item 1. Consolidated Condensed Financial Statements........................................................... 3
Consolidated Condensed Statements of Condition (Unaudited) as of
June 30, 1999 and December 31, 1998
Consolidated Condensed Statements of Income (Unaudited) for the
Three Months Ended June 30, 1999 and 1998
Consolidated Condensed Statements of Income (Unaudited) for the Six
Months Ended June 30, 1999 and 1998
Consolidated Condensed Statements of Cash Flows (Unaudited) for the
Six Months Ended June 30, 1999 and 1998
Notes to Unaudited Consolidated Condensed Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.................. 10
Item 3. Quantitative and Qualitative Disclosures About Market Risk............................................. 15
Part II. Other Information
Item 4. Submission of Matters to a Vote of Securities Holders................................................... 16
Item 6. Exhibits and Reports on Form 8-K....................................................................... 16
Signatures...................................................................................................... 17
</TABLE>
2
<PAGE>
Part I. Financial Information
Item 1. Consolidated Condensed Financial Statements
PREMIER BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CONDITION
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
------------------- ---------------
<S> <C> <C>
(dollar amounts in thousands)
Assets
Cash and due from banks $ 37,965 $ 58,021
Interest-bearing deposits with other banks 445 8,262
Federal funds sold 73,943 123,740
Securities available-for-sale 165,622 133,232
Loans held for sale 67,908 124,900
Loans 1,107,550 1,033,561
Allowance for credit losses (14,845) (14,080)
--------------- ---------------
Net loans 1,092,705 1,019,481
Premises and equipment, net 30,047 30,787
Goodwill and other intangibles 4,287 4,500
Other real estate owned 1,896 1,889
Other assets 18,346 15,806
--------------- ---------------
Total assets $1,493,164 $1,520,618
=============== ===============
Liabilities, redeemable preferred stock and common stockholders'
equity
Deposits
Noninterest-bearing $ 175,523 $ 187,998
Interest-bearing 986,126 991,964
--------------- ---------------
Total deposits 1,161,649 1,179,962
Federal funds purchased and securities sold under repurchase agreements 30,106 21,782
Federal Home Loan Bank advances 50,000 ---
Guaranteed preferred beneficial interests in the Company's subordinated 28,750 28,750
debentures
Other borrowings 72,537 140,089
Other liabilities 9,806 11,496
--------------- ---------------
Total liabilities 1,352,848 1,382,079
Redeemable preferred stock, par value $60, 2,000,000 shares authorized, 40,770 shares
issued and outstanding 2,446 2,446
Common stockholders' equity:
Common stock, $1 par value; 60,000,000 shares authorized; 26,167,265 and
26,000,409 shares issued at June 30, 1999 and December 31, 1998, respectively 26,167 26,000
Capital surplus 55,409 54,730
Treasury stock, at cost (83,900 shares at June 30, 1999) (1,671) ---
Retained earnings 59,100 54,986
Accumulated other comprehensive (loss) income (1,135) 377
--------------- ---------------
Total stockholders' equity 137,870 136,093
--------------- ---------------
Total liabilities and stockholders' equity $1,493,164 $1,520,618
=============== ===============
See notes to consolidated condensed financial statements.
</TABLE>
3
<PAGE>
PREMIER BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
1999 1998
------------ -----------
(dollar amounts in thousands, except per share data)
<S> <C> <C>
Interest Income:
Loans, including fees $26,798 $24,689
Investment securities:
Taxable 2,051 2,789
Tax-exempt 132 195
Federal funds sold 1,627 1,096
------------ -----------
Total interest income 30,608 28,769
Interest Expense:
Deposits 11,322 11,814
Other borrowings 3,346 1,732
------------ -----------
Total interest expense 14,668 13,546
Net interest income 15,940 15,223
Provision for credit losses 520 165
------------ -----------
Net interest income after provision for credit losses 15,420 15,058
Other Income:
Service charges on deposit accounts 1,117 950
Securities transactions, net 2 15
Mortgage banking activities 6,212 6,744
Other noninterest income 1,401 2,274
------------ -----------
Total other income 8,732 9,983
Other Expenses:
Salaries and employee benefits 10,108 9,537
Net occupancy and equipment expense 2,029 2,000
Merger related expenses 551 360
Other noninterest expense 4,509 3,816
Total other expenses 17,197 15,713
------------ -----------
Income before income taxes 6,955 9,328
Income taxes 3,064 2,886
----------- -----------
Net income $ 3,891 $ 6,442
============ ===========
Per Share Information:
Earnings per share Basic $ 0.15 $ 0.25
Weighted average common shares outstanding Basic 26,032,858 25,709,615
Earnings per share Diluted 0.15 $ 0.25
Weighted average common shares outstanding Diluted 26,397,251 26,162,373
Dividends declared per share $ 0.09 $ 0.14
See notes to consolidated condensed financial statements.
</TABLE>
4
<PAGE>
PREMIER BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
Six Months Ended
June 30,
1999 1998
-------------- ------------
<S> <C> <C>
(dollar in thousands, except per share data)
Interest Income:
Loans, including fees $ 52,759 $ 47,495
Investment securities:
Taxable 3,958 5,279
Tax-exempt 277 517
Federal funds sold 2,653 2,241
Total interest income 59,647 55,532
----------- -----------
Interest Expense:
Deposits 22,332 23,268
Other borrowings 5,957 2,933
----------- -----------
Total interest expense 28,289 26,201
Net interest income 31,358 29,331
Provision for credit losses 925 210
----------- -----------
Net interest income after provision for credit losses 30,433 29,121
Other Income:
Service charges on deposit accounts 2,266 2,092
Securities transactions, net 29 15
Mortgage banking activities 13,554 12,732
Other noninterest income 3,042 3,712
----------- -----------
Total other income 18,891 18,551
Other Expenses:
Salaries and employee benefits 19,399 18,216
Net occupancy and equipment expense 4,122 3,854
Merger related expenses 831 377
Other noninterest expense 9,026 7,378
--------- ----------
Total other expenses 33,378 29,825
----------- -----------
Income before income taxes 15,946 17,847
Income taxes 6,279 5,716
----------- -----------
Net income $ 9,667 $ 12,131
============ ===========
Per Share Information:
Earnings per share - Basic $ 0.37 $ 0.47
Weighted average common shares outstanding - Basic 26,012,132 25,672,237
Earnings per share Diluted $ 0.36 $ 0.47
Weighted average common shares outstanding - Diluted 26,462,430 26,085,789
Dividends declared per share $ 0.18 $ 0.17
</TABLE>
See notes to consolidated condensed financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
PREMIER BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Six months ended
June 30,
1999 1998
--------- ---------
<S> <C> <C>
(dollar amounts in thousands, except
per share data)
Cash flows from operating activities
Net income $ 9,667 $ 12,131
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses 925 210
Depreciation expense 1,429 1,601
Amortization and accretion, net 143 304
Gain on sale of premises and equipment (393) (1,195)
Gain on sale of securities (29) (15)
(Gain) loss on sale of other real estate owned (162) 19
Net decrease in loans held for sale 56,992 11,543
Increase in other assets (2,079) (5,605)
(Decrease) increase in other liabilities (1,690) 739
--------- -----------
Net cash provided by operating activities 64,803 19,732
Cash flows from investing activities
Decrease in interest bearing deposits 7,817 2,516
Proceeds from maturities and paydowns of investment securities available-for-sale 47,766 42,775
Proceeds from maturities and paydowns of investment securities held-to-maturity --- 13,247
Proceeds from sales of investment securities available-for-sale 527 1,000
Purchases of investment securities available-for-sale (83,275) (39,492)
Purchases of investment securities held-to-maturity --- (5,112)
Net increase in loans (75,172) (81,066)
Decrease (increase) in federal funds sold, net 49,797 (29,585)
Purchases of premises and equipment (2,179) (3,160)
Proceeds from sales of premises and equipment 1,883 1,047
Sale of bank branch - (7,122)
Proceeds from sales of other real estate owned 1,178 770
----------- -----------
Net cash used in investing activities (51,658) (104,182)
Cash flows from financing activities
Net (decrease) increase in deposits (18,313) 61,640
Net increase (decrease) in repurchase agreements 8,324 (8,456)
Net increase (decrease) in FHLB advances 50,000 (1,000)
Net (decrease) increase in other borrowings (67,552) 37,379
Dividends paid (4,990) (4,132)
Purchase of treasury stock (1,671) ---
Proceeds from exercise of stock options 1,001 1,070
----------- -----------
Net cash (used in) provided by financing activities (33,201) 86,501
Net (decrease) increase in cash and cash equivalents (20,056) 2,051
Cash and due from banks, beginning of period 58,021 51,881
Cash and due from banks, end of period $ 37,965 $ 53,932
=========== =========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 29,483 $ 26,017
=========== =========
Income taxes $ 7,938 $ 7,108
============ ==========
</TABLE>
See notes to consolidated condensed financial statements.
6
<PAGE>
PREMIER BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
June 30, 1999
(Unaudited)
Note 1. BASIS OF PRESENTATION
The accompanying consolidated condensed financial information of Premier
Bancshares, Inc. and Subsidiaries (the "Company") is unaudited; however, such
information reflects all adjustments (consisting solely of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
presentation of the financial position and results of operations. As more fully
discussed in Note 2, the Company completed four mergers in 1998 accounted for as
poolings of interests. The accompanying consolidated condensed financial
information has been restated for the three months and six months ended June 30,
1998 to reflect the effect of these mergers as if they had taken place on
January 1, 1998. The results of operations for the three- and six-month periods
ended June 30, 1999 are not necessarily indicative of the results to be expected
for the full year. These statements should be read in conjunction with the
consolidated financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1998.
Note 2. BUSINESS COMBINATIONS
Completed Combinations
On December 17, 1998 the Company completed a business combination with Frederica
Bank & Trust ("Frederica") by exchanging 1,013,500 shares of the Company's
common stock for all of the common stock of Frederica. The combination was
accounted for as a pooling of interests and, accordingly, the financial
statements reflect the combination as if it took place on January 1, 1998. All
prior period consolidated financial statements have been restated to include the
results of Frederica.
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 and 40,770 shares of the Company's redeemable preferred stock for all of
the outstanding common and redeemable preferred stock of BHC. The combination
was accounted for as a pooling of interests and, accordingly, the financial
statements reflect the combination as if it took place on January 1, 1998. All
prior period consolidated financial statements have been restated to include the
results of BHC.
On July 1, 1998, the Company completed a business combination with Button
Gwinnett Financial Corporation ("Button Gwinnett") by exchanging 5,571,778
shares of the Company's common stock for all of the outstanding common stock of
Button Gwinnett. The combination was accounted for as a pooling of interests
and, accordingly, the financial statements reflect the combination as if it took
place on January 1, 1998. All prior period consolidated financial statements
have been restated to include the results of Button Gwinnett.
On June 9, 1998, the Company completed a business combination with Lanier Bank &
Trust Company ("Lanier") by exchanging 1,625,990 shares of the Company's common
stock for all of the outstanding common stock of Lanier. The combination was
accounted for as a pooling of interests and, accordingly, the financial
statements reflect the combination as if it took place on January 1, 1998. All
prior period consolidated financial statements have been restated to include the
results of Lanier.
Pending Combinations
On May 20, 1999, the Company announced that a definitive merger agreement had
been entered into with Bank Atlanta ("Bank Atlanta"). As of December 31, 1998,
Bank Atlanta had total assets of $79,447,000, and for the year ended December
31, 1998, had revenue and net income of $7,346,000 and $1,405,000, respectively.
The merger is expected to close in the third quarter of 1999 and is expected to
be accounted for as a pooling of interests.
On April 20, 1999, the Company announced that a definitive merger agreement had
been entered into with Farmers & Merchants Bank ("Farmers"). As of December 31,
1998, Farmers had total assets of $165,981,000, and for the year ended December
31, 1998, had revenue and net income of $13,048,000 and $2,600,000,
respectively. The merger is expected to close in the third quarter of 1999 and
is expected to be accounted for as a pooling of interests.
On April 6, 1999, the Company announced that a definitive merger agreement had
been entered into with North Fulton Bancshares, Inc. ("North Fulton"). As of
December 31, 1998, North Fulton had total assets of $173,600,000, and for the
year ended December 31, 1998, had revenue and net income of $15,608,000 and
$1,417,000, respectively. The merger is expected to close in the third quarter
of 1999 and is expected to be accounted for as a pooling of interests.
7
<PAGE>
Note 3. STOCKHOLDERS' EQUITY
On April 13, 1999, the Company declared a quarterly cash dividend of $0.09 per
share payable to shareholders of record as of April 27, 1999. The dividend was
paid on May 10, 1999.
On July 22, 1999, the Company declared a quarterly cash dividend of $.09 per
share payable to shareholders of record as of August 5, 1999. The dividend is to
be paid on August 19, 1999.
Note 4. RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the FASB issued Statement of Financial Accounting Standards No.
133, "Accounting for Derivative Instruments and Hedging Activities" ("Statement
133"). Statement 133 establishes new accounting and reporting activities for
derivatives. The standard requires all derivatives to be measured at fair value
and recognized as either assets or liabilities in the statement of condition.
Under certain conditions, a derivative may be specifically designated as a
hedge. Accounting for the changes in fair value of a derivative depends on the
intended use of the derivative and the resulting designation. In July 1999, the
FASB issued Statement of Financial Accounting Standards No. 137, "Accounting for
Derivative Instruments and Hedging Activities-Deferral of the Effective Date of
FASB Statement No. 133" ("Statement 137"), which deferred the effective date of
Statement 133 to fiscal years beginning after June 15, 2000. The adoption is not
expected to result in a material financial impact on the Company's financial
position or results of operations.
Note 5. EARNINGS PER SHARE
Earnings per share for periods prior to 1999 have been restated to reflect the
business combinations accounted for as poolings of interests.
The following tables set forth the computation of basic and diluted earnings per
share:
<TABLE>
<CAPTION>
Quarter ended June 30,
1999 1998
---------------------------------------------
<S> <C> <C> <C>
(In thousands, except per share data)
Numerator:
Net income $ 3,891 $ 6,442
Preferred stock dividends (49) (49)
---------------------------------------------
Net income available to common shareholders $ 3,842 $ 6,393
=============================================
Denominator:
Denominator for basic earnings per share - weighted 26,033 25,710
average shares
Effect of dilutive securities - stock options 364 452
Denominator for diluted earnings per share - adjusted
weighted average shares and assumed conversions 26,397 26,162
=============================================
Net income per share of common stock $ 0.15 $ 0.25
---------------------------------------------
Net income per share of common stock-diluted $ 0.15 $ 0.25
=============================================
Six Months ended June 30,
1999 1998
---------------------------------------------
(In thousands, except per share data)
Numerator:
Net income $ 9,667 $12,131
Preferred stock dividends (98) (98)
---------------------------------------------
Net income available to common shareholders $ 9,569 $12,033
=============================================
Denominator:
Denominator for basic earnings per share - weighted 26,012 25,672
average shares
Effect of dilutive securities - stock options 450 414
Denominator for diluted earnings per share - adjusted
weighted average shares and assumed conversions 26,462 26,086
=============================================
Net income per share of common stock $ 0.37 $ 0.47
---------------------------------------------
Net income per share of common stock-diluted $ 0.36 $ 0.47
=============================================
</TABLE>
8
<PAGE>
Note 6. OTHER COMPREHENSIVE INCOME
Total comprehensive income was $2,889,000 and $6,256,000 for the quarter ended
June 30, 1999 and 1998, respectively, and $8,155,000 and $12,809,000 for the six
months ended June 30, 1999 and 1998, respectively. The Company's components of
other comprehensive income consist solely of unrealized gains and losses on
securities classified as available for sale and reclassification adjustments for
securities gains and losses included in net income.
Note 7. BUSINESS SEGMENT INFORMATION
The Company's two major lines of business are Community Banking and Mortgage
Lending. Community Banking encompasses all of the Company's traditional banking
services, including: loans to small and medium-size businesses; residential,
construction and development loans; commercial real estate loans; consumer loans
and a variety of commercial and consumer deposit accounts. Included in
Community Banking are certain corporate overhead expenses which have not been
separately allocated. Mortgage Lending encompasses the retail origination of
residential mortgage loans which are sold to correspondent mortgage investors.
<TABLE>
<CAPTION>
Community Mortgage
Banking Lending Eliminations Total
------------------------------------------------------------------
<S> <C> <C> <C> <C>
(dollars in thousands)
Three months ended June 30, 1999:
- ---------------------------------
Net interest income $ 14,747 $ 673 - $ 15,420
Other income 2,220 6,563 (51) 8,732
Other expenses (11,183) (6,065) 51 (17,197)
----------------------------------------------------------------------
Income before income taxes $ 5,784 $ 1,171 - $ 6,955
=====================================================================
Average total assets $ 1,480,288 $109,544 $1,589,832
====================================================================
Three months ended June 30, 1998:
- --------------------------------
Net interest income $ 14,867 $ 191 - $ 15,058
Other income 2,931 7,052 - 9,983
Other expenses (10,686) (5,027) - (15,713)
Income before income taxes $ 7,112 $ 2,216 - $ 9,328
=====================================================================
Average total assets $1, 374,026 $ 52,932 $1,426,958
======================================================================
Community Mortgage
Banking Lending Eliminations Total
------------------------------------------------------------------
(dollars in thousands)
Three months ended June 30, 1999:
- ---------------------------------
Net interest income $ 28,987 $ 1,446 - $ 30,433
Other income 4,657 6,563 (98) 18,981
Other expenses (21,621) (11,855) 98 (33,378)
---------------------------------------------------------------------
Income before income taxes $ 12,023 $ 3,923 - $ 15,946
=====================================================================
Average total assets $ 1,411,761 $112,824 $1,524,585
====================================================================
Three months ended June 30, 1998:
- --------------------------------
Net interest income $ 28,762 $ 359 - $ 29,121
Other income 5,340 13,211 - 18,551
Other expenses (20,593) (9,232) - (29,825)
--------------------------------------------------------------------
Income before income taxes $ 13,509 $ 4,338 - $ 17,847
=====================================================================
Average total assets $ 1,336,398 $ 29,904 $1,366,302
=====================================================================
</TABLE>
9
<PAGE>
Note 8. SUBSEQUENT EVENT
On July 28, 1999, the Company and BB&T Corporation ("BB&T") entered into an
Agreement and Plan of Reorganization (the "Agreement"), pursuant to which BB&T
will acquire all of the issued and outstanding shares of Premier common stock
and preferred stock through the merger of Premier with and into BB&T. The
transaction is subject to approval by the shareholders of Premier, appropriate
regulatory approvals and the satisfaction of certain other conditions set forth
in the Agreement.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Premier Bancshares, Inc. (the "Company") is a bank holding company organized and
existing under the laws of the State of Georgia and headquartered in Atlanta,
Georgia. At June 30, 1999, the Company consisted of Premier Bank ("Premier
Bank") and Premier Lending Corporation ("Premier Lending"). The Company merged
Central and Southern Bank of Georgia into Premier Bank during the first quarter
of 1999, and merged First Community Bank of Henry County, The Bank of Spalding
County, and Frederica Bank and Trust into Premier Bank in the second quarter of
1999. 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 with several financial services industry products and services such as
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 to middle market commercial loan products
as larger competitors focus on the higher dollar and volume loan product
markets.
Through its financial institution subsidiary, the Company operates 29 banking
offices located in the Atlanta metropolitan area and in northern, central and
coastal Georgia. In these markets, Premier Bank provides 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 12 mortgage loan production offices in the Atlanta
metropolitan area and Augusta, Georgia; Warner Robins, Georgia; St. Simons
Island, Georgia; Charlotte, North Carolina; Chattanooga, Tennessee;
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 three 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, a Georgia bank; on July 1, 1998,
the Company acquired Button Gwinnett Financial Corporation, a bank holding
company; on July 2, 1998, the Company acquired The Bank Holding Company, a bank
holding company; and on December 17, 1998, the Company acquired Frederica Bank &
Trust, a Georgia bank. The historical financial statements of the Company have
been restated to give effect to these acquisitions which were accounted for as
poolings of interests.
On April 6, 1999, the Company announced that a definitive merger agreement had
been entered into with North Fulton Bancshares, Inc. ("North Fulton"). On April
20, the Company announced that a definitive merger agreement had been entered
into with Farmers & Merchants Bank ("Farmers"). On May 20, the Company
announced that a definitive merger agreement had been entered into with Bank
Atlanta ("Bank Atlanta"). These mergers are expected to close in the second half
of 1999 and are expected to be accounted for as poolings of interests.
These mergers were entered into prior to the Companys Agreement with BB&T, and
the completion of these mergers is not contingent upon the closing of the BB&T
Merger. North Fulton Bancshares, Inc. and Bank Atlanta have scheduled meetings
of their shareholders to consider these acquisitions on August 31, 1999 and
September 14, 1999, respectively. The closing of the mergers with North Fulton
Bancshares, Bank Atlanta, and Farmers & Merchants Bank is a condition to BB&T's
obligations under its Agreement with Premier.
On July 28, 1999, the Company entered into an Agreement and Plan of
Reorganization with BB&T Corporation, pursuant to which the Company will be
merged with and into BB&T and BB&T will be the surviving corporation. As a
result of this merger, each share of the Company's common stock then outstanding
will be converted into the right to receive 0.5155 shares of BB&T common stock,
plus cash in lieu of any fractional shares interest. BB&T is a multi-bank
holding company headquartered in Winston-Salem, North Carolina. BB&T conducts in
operations in North Carolina, South Carolina, Georgia, Virginia, Maryland and
Washington, D.C., primarily through its commercial banking subsidiaries, and to
a lesser extent through its other subsidiaries. The merger of the Company with
and into BB&T is subject to the approval of the Company's shareholders and
banking regulators. The merger is expected to be accounted for as a pooling of
interests and is expected to be completed in the first quarter of 2000.
10
<PAGE>
The following discussion should be read in conjunction with the Consolidated
Condensed Financial Statements, including the footnotes, and is qualified in its
entirety by the foregoing and other more detailed financial information
appearing elsewhere herein. Historical results of operations and the percentage
relationships among any amounts included in the Consolidated Condensed
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.
Financial Condition
At the end of the second quarter of 1999, total assets decreased $27,454,000 or
1.8% from December 31, 1998. Total loans (excluding mortgage loans held for
sale) increased $73,989,000 or 7.2% from December 31, 1998. The increase in
loans is primarily attributable to increased demand for loans in the markets
that the Company serves. Mortgage loans held for sale decreased $56,992,000 or
45.6% during the same period, as the volume of loans sold to correspondent
mortgage investors increased during 1999. Federal funds sold decreased
$49,797,000 or 40.2% from December 31, 1998 to June 30, 1999. Securities
available-for-sale increased $32,390,000 or 24.3% during the same period.
Total deposits decreased $18,313,000 or 1.6% for the year-to-date due, in part,
to a program to reduce the cost of deposits. Federal Home Loan Bank advances
increased $50,000,000 as the Company initiated a plan to supplement deposits
with lower cost funding. Other borrowings decreased by $67,552,000 or 48.2% as
the result of decreases in the warehouse line of credit resulting from lower
outstanding mortgage loans held for sale at period end. Total liabilities
decreased by $29,231,000 or 2.1% from December 31, 1998 to June 30, 1999.
Results of Operations
For the three-month period ended June 30, 1999 the Company recorded net income
of $3,891,000 as compared to $6,442,000 for the same period in 1998. This
$2,551,000 or 39.6% decrease is due primarily to the following:
Net interest income increased $717,000.
Provision for credit losses increased $355,000.
Total other income decreased $1,251,000.
Total other expense increased $1,484,000.
Income tax expense increased $178,000.
The reasons for these changes are discussed more fully below.
For the six-month period ended June 30, 1999 the Company recorded net income of
$9,667,000 as compared to $12,131,000 for the same period in 1998. This
$2,464,000 or 20.3% decrease is due primarily to the following:
Net interest income increased $2,027,000.
Provision for credit losses increased $715,000.
Total other income increased $340,000.
Total other expense increased $3,553,000.
Income tax expense increased $563,000.
The reasons for these changes are discussed more fully below.
Net Interest Income
- -------------------
Net interest income increased $717,000 or 4.7% for the three month period ended
June 30, 1999 compared to the same period in 1998, due to an increase in average
earning assets. Average earning assets increased by approximately $154,000,000
while average interest-bearing liabilities increased by approximately
$137,000,000. Yields on earning assets decreased by 49 basis points and costs of
interest-bearing liabilities decreased by 22 basis points. The net interest
margin declined to 4.48% in the second quarter of 1999 from 4.83% in the same
period of 1998.
11
<PAGE>
Net interest income increased $2,027,000 or 6.9% for the six month period ended
June 30, 1999 compared to the same period in 1998, due to an increase in average
earning assets. Average earning assets increased by approximately $161,000,000
while average interest-bearing liabilities increased by approximately
$143,000,000. Yields on earning assets decreased by 48 basis points and costs of
interest-bearing liabilities decreased by 28 basis points. The net interest
margin declined to 4.53% for the six-month period of 1999 from 4.81% in the same
period of 1998.
Provision for Credit Losses
- ---------------------------
The Company recorded a provision for credit losses of $520,000 for the second
quarter of 1999 and $925,000 year-to-date. The Company had net charge-offs of
$49,000 during the second quarter and $160,000 year-to-date. Management will
continue to monitor and adjust the level of the allowance for credit losses in
relation to net charge-offs, as well as the overall level of the allowance for
credit losses to loans outstanding and management's assessment of credit losses
inherent in the loan portfolio.
<TABLE>
<CAPTION>
ASSET QUALITY
June 30, December 31,
1999 1998 Change Percentage
----------------------------------------------------------------------
(dollars in thousands)
<S> <C> <C> <C> <C>
Loans past due 90 days or more $ - $ 14 $ (14) (100.0)%
Nonaccrual loans 3,204 3,843 (639) (16.6)%
----------------------------------------------------------------------
Total nonperforming loans 3,204 3,857 (653) (16.9)%
Other real estate owned 1,896 1,889 7 0.4 %
Total nonperforming assets $5,100 $5,746 $(646) (11.2)%
======================================================================
Nonperforming loans/Total loans 0.29% 0.37%
Nonperforming assets/Total assets 0.34% 0.38%
</TABLE>
The table above illustrates the changes in the level of nonperforming assets
from December 31, 1998 to June 30, 1999. The level of nonperforming assets at
June 30, 1999 decreased slightly from December 31, 1998. Management anticipates
the levels of nonperforming loans and assets will remain at relatively low
levels. Management is not aware of any potential problem loans other than those
included in the table above.
Other Income
- ------------
The Company's main sources of other income are from mortgage banking activities
and service charges on deposit accounts. Other income decreased $1,251,000 in
the second quarter of 1999 compared to the same period in 1998. Service charges
on deposit accounts increased by $167,000 due to the growth in outstanding
deposits. Income from mortgage banking activities decreased $532,000 for the
second quarter of 1999 compared to 1998 due to an increase in interest rates, as
rates on 30-year mortgages increased almost 100 basis points during the quarter.
As a result of continued increases in interest rates generally, since the end of
June 1999, the volume of the Company's mortgage business and income continues to
decline, and the mix of business has shifted to less profitable purchases of
loans from correspondents. Income from mortgage production and gains on sales of
mortgages have continued to decline, also. Other noninterest income decreased
$873,000 for the second quarter of 1999 compared to 1998 due to a gain on the
sale of a subsidiary branch banking location in 1998.
For the year-to-date, other income increased $340,000. Service charges on
deposits increased by $174,000 as outstanding deposits continued to increase in
1999 over the 1998 levels. Income from mortgage banking activities increased by
$822,000 in 1999 compared to 1998, as mortgage production remained strong
initially, but began to decline compared from the record levels of 1998 as
interest rates increased and mortgage volumes began to decline. As a result of
general increases in interest rates during Summer 1999, and expectation of
additional upward pressure on interest rates from a strong economy, the Company
presently expects that mortgage loan production, and income from the origination
and sale of mortgage loans will continue to decline from abnormally high levels
of 1998 and early 1999. Although Company management is taking steps to reduce
the costs of its mortgage business consistent with the present environment, the
costs resulting from the substantial expansion of this business in 1998 to take
advantage of market opportunities and lower volumes of mortgage loans has
resulted in approximately $50,000 loss on its mortgage business in July 1999.
Other noninterest income declined by $670,000 for the year, again primarily due
to the branch sale in 1998.
12
<PAGE>
Other Expense
- -------------
Other expense increased $1,484,000 for the three-month period ended June 30,
1999 compared to the same period in 1998. Salaries and employee benefits expense
increased $571,000 primarily due to increased commissions on mortgage loan
originations. Occupancy expense increased due to the Company's opening of two
new bank branches during the third quarter of 1998 and a new bank branch during
the second quarter of 1999. Merger expenses were $551,000 during the second
quarter of 1999 compared to $360,000 in 1998 as the Company currently has three
pending acquisitions in process. Other operating expense increased $693,000
over 1998 as the Company completed the conversion of the banks acquired during
1998 into Premier Bank. In addition, Premier Lending opened six new mortgage
origination offices in late 1998.
For the year-to-date, other expense increased $3,553,000. Salaries and employee
benefits increased by $1,183,000; net occupancy expense by $268,000; merger
expenses by $454,000; and other expense by $1,648,000 primarily due to the
reasons discussed above.
Income Tax Expense
- ------------------
Income tax expense increased $178,000 for the three months ended June 30, 1999
compared to the same period in 1998. The effective tax rate for the second
quarter of 1999 was 44.0% versus 30.9% for the same period in 1998. The
Company's effective tax rate increased due to the nondeductibility of certain
merger expenses and a decrease in tax-exempt interest income.
For the year, income tax expense increased $563,000. The effective tax rate was
39.4% in 1999 versus 32.0% for 1998.
Interest Rate Sensitivity Management
Interest rates play a major part in the net interest income of a financial
institution. The sensitivity to rate changes is known as "interest rate risk."
The repricing of interest-earning assets and interest-bearing liabilities can
influence the changes in net interest income. As part of the Company's
asset/liability management program, the timing of repricing assets and
liabilities is referred to as Gap management. It is the policy of the Company
to maintain a Gap ratio in the one-year time horizon of .80 to 1.20. The current
Gap analysis indicates that the Company is somewhat asset sensitive in relation
to changes in market interest rates.
The Company uses simulation analysis to monitor changes in net interest income
due to changes in market interest rates. The simulation of rising, declining,
and a most likely interest rate scenario allows management to monitor and adjust
interest rate sensitivity to minimize the impact of market interest rate swings.
Each month management updates all available data concerning cash flows of assets
and liabilities, changes in market interest rates, and expectations as to new
volumes of loans.
During periods of rising interest rates, as has been experienced toward the end
of the second quarter of 1999 and thereafter, mortgage originations, especially
refinancings tend to decrease. This has been somewhat offset by the strong
economies in which the Company operates, and continued housing sales. As the
Company has sold loans in the secondary market, the reduction in origination
volume, especially refinancings, has reduced the amounts of mortgage loans held
available for sale, and the interest income earned by the Company and the
potential for future gains on sale of mortgage loans. The margins on this
business have also declined as costs have remained steady or increased compared
to reduced income. With continued expectations in the market for increased
rates, management does not believe that the mortgage origination business will
improve in the near future although it is taking steps to reduce the costs.
Personnel disruptions from the announced merger of the Company and BB&T may also
adversely affect this business.
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, purchased funds, and
borrowed funds.
The investment portfolio is one of the Company's primary sources of liquidity.
Maturities of securities provide a constant flow of funds which are available
for liquidity needs. Investment securities that contractually mature within one
year total approximately $22 million. However, mortgage-backed securities and
securities with call provisions create cash flows earlier than the contractual
maturities. Mortgage loans held for sale and other short-term investments also
increase forecasted cash flows. Total short-term investments, which include
Federal funds sold, interest-earning deposits with other banks, loans held for
sale and investment securities maturing within one year, totaled $164 million at
June 30, 1999. Maturities in the loan portfolio also provide a steady flow of
funds. At June 30, 1999 and 1998, the loan-to-deposit ratio (excluding loans
held for sale) was 95.3% and 82.8%, respectively.
The Company has a revolving line of credit with a nonaffiliated institution
bearing interest at 30 day LIBOR plus 85 basis points. This rate adjusts monthly
and is payable quarterly. The outstanding balance is secured by 50% of the stock
of each banking subsidiary of the Company. The Company's warehouse line of
credit is with a nonaffiliated institution and bears interest at the Fed Funds
rate plus an index based on the Company's various mortgage loan tranches. This
rate is adjusted daily and is payable monthly. This line matures on August 1,
1999 and is secured by an assignment of first security interest in certain
mortgage loans. In connection with its lines of credit, the Company has agreed,
among other covenants, to maintain earnings, reserves for credit losses, and
capital at certain minimum levels.
13
<PAGE>
The Company began utilizing Federal Home Loan Bank ("FHLB") advances during the
first quarter of 1999. FHLB advances totaled $50,000,000 at June 30, 1999. The
advances mature at various dates in 2004 and bear interest payable quarterly at
fixed rates ranging from 4.84% to 5.12%. Advances are collateralized by a
blanket floating lien on qualifying first mortgage loans.
Stockholders' Equity
The Company maintains a ratio of stockholders' equity to total assets that is
adequate relative to industry standards. The Company's ratio of stockholders'
equity to total assets was 9.2% at June 30, 1999, compared to 8.9% at December
31, 1998.
The Company and its subsidiary banks are required to comply with capital
adequacy standards established by the Federal Reserve and the FDIC. Currently,
there are two basic measures of capital adequacy: risk-based measure and
leverage measure.
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.
The minimum standard for the ratio of total capital to risk-weighted assets is
8.0%. 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."
The Federal Reserve has established minimum leverage ratio guidelines for bank
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%. The
minimum leverage ratio for all other bank holding companies is 4.0%. Banking
organizations with supervisory, financial, operational, of managerial
weaknesses, as well as organizations that are anticipating or experiencing
significant growth, are expected to maintain capital ratios well above the
minimum levels.
Capital Levels
June 30, Minimum
1999 Requirement
--------------- -----------------
Tier I Capital Leverage Ratio 11.03% 3.0%
Tier I Risk-based Capital Ratio 13.00% 4.0%
Tier II Risk-based Capital Ratio 1.17%
----------- -----------
Total Risk-based Capital Ratio 14.17% 8.0%
=========== ===========
A subsidiary of the Company issued $28.7 million of cumulative preferred
securities in November 1997. The proceeds of the sale of cumulative 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.
14
<PAGE>
Cautionary Statements for Purposes of the "Safe Harbor" Provisions of the
Private Securities Litigation Reform Act
This quarterly report on Form 10-Q contains "forward looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. When used
in this report, the words "believes," "expects," "anticipates," "estimates," and
similar words and expressions are generally intended to identify forward-looking
statements. Statements that describe the Company's future strategic plans,
goals or objectives are also forward-looking statements, including those
regarding the intent, belief or current expectations of the Company or
management, are not guarantees of future performance, results or events and
involve risks and uncertainties, and that actual results and events may differ
materially from those in the forward-looking statements as a result of various
factors including, but not limited to, (i) general economic conditions in the
markets in which the Company operates, (ii) competitive pressures in the markets
in which the Company operates, (iii) the effect of future legislation or
regulatory changes on the Company's operations and (iv) other factors described
from time to time in the Company's filings with the Securities and Exchange
Commission. The forward-looking statements included in this report are made
only as of the date hereof. The Company undertakes no obligation to update such
forward-looking statements to reflect subsequent events or circumstances.
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 data processing service provider for the
banking subsidiaries has given the Company guarantees of Year 2000 compliance on
core loan, deposit and accounting related programming. Testing of the service
provider was completed during the third quarter of 1998 with test results
proving that accurate calculations will continue through the year 2000 and
beyond. With these test results, the Company's Year 2000 efforts are considered
to be substantially complete for core banking applications. Year 2000 upgrades
to the ATM machines are under contract and were completed in the first quarter
of 1999 as further versions of compliant software were released. Testing of
file servers and personal computers and networks is in process for recent
acquisitions with replacement and upgrades of mission critical components
complete and non-mission critical computers scheduled to be upgraded during the
remainder of 1999.
Customer mailings promoting awareness of the potential Year 2000 problem have
been provided on a periodic basis during 1998 and 1999. Larger credit
relationships have been reviewed and surveyed for Year 2000 issues assessing
their readiness and preparations related to the coming of the new millenium and
findings indicate minimal additional risks because of the Year 2000. Costs
associated with Year 2000 have been minimized due to the necessary upgrades of
our acquired banking offices prior to the merging of data processing systems.
Estimated costs for Year 2000 preparation including personnel costs are
$150,000. Management believes that all systems will be year 2000 ready.
Failure of mission critical systems is not likely because of Year 2000
preparations. Contingency plans continue to be developed and focus on manual
processes and backup procedures needed for temporary operations should there be
temporary malfunctions of utility providers. Contingency plans will be modified
on an ongoing basis as information dictates.
The Company determined during the first quarter of 1999 that it was necessary
for the Company to reassess and validate the Year 2000 readiness of its non-bank
subsidiary, Premier Lending, and to improve the documentation relating to such
readiness. The Company is in the process of revising and updating the Year 2000
plan for Premier Lending and has engaged an outside consultant to assist in
documenting the level of readiness. The testing of internal systems, the review
of third parties with whom a material relationship may exist, and the
development of Year 2000 business resumption contingency plans at Premier
Lending were completed during the second quarter of 1999. However, further
testing, assessment of third party risks, and modification of contingency plans
will continue to be undertaken during 1999 with respect to Premier Lending to
the extent deemed necessary by the Company.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company's primary market risk exposure is interest rate risk and, to a
lesser extent, credit risk and liquidity risk. The Company has little or no
risk related to trading accounts, commodities or foreign exchange. Interest
rate risk is the exposure of a banking organization's financial condition and
earnings ability to adverse movements in interest rates. The Company has
analyzed the assumed market value risk and earnings risk inherent in its
interest rate sensitive instruments related to interest-rate swings of 300 basis
points over a twenty four month horizon, both above and below current levels
(rate shock analysis). Earnings and fair value estimates are subjective in
nature and involve uncertainties and matters of significant judgment and,
therefore, cannot be determined with precision. There have been no significant
changes in the Company's market risk exposure since December 31, 1998.
15
<PAGE>
Part II. Other Information
Item 4. Submission of Matters to a Vote of Securities Holders
The following proposals were submitted to the Company's shareholders at its
annual shareholders' meeting on May 20, 1999:
1. The proposal to elect the following directors of Premier to serve until the
next annual meeting: William M. Evans, Jr., John H. Ferguson, D.D.S., Robert
E. Flournoy III, A. F. Gandy, Robin R. Howell, C. Steve McQuaig, M.D.,
Darrell D. Pittard, James E. Freeman, Billy H. Martin, James L. Coxwell, Sr.,
Robert C. Oliver, Thomas E. Owen, Jr., John D. Stephens and James E.
Sutherland. This proposal was approved with 18,484,294 shares or 70.83%
voting for the proposal and 228,801 or .87% withholding authority.
2. The proposal to ratify the selection of Ernst & Young LLP as Premier's
independent public accountants for the year ending December 31, 1999. This
proposal was approved with 18,416,858 shares or 70.5% voting for the
proposal, 19,948 or .07% voting against the proposal and 281,289 or 1.08%
abstaining from the proposal.
3. The proposal to amend the Premier Bancshares, Inc. 1997 Stock Option Plan to
increase the number of shares of common stock available for grant thereunder
from 3,000,000 to 4,000,000 shares. This proposal was approved with
16,841,956 shares or 64.52% voting for the proposal, 1,692,635 or 6.48%
voting against the proposal and 183,504 or .70% abstaining from the proposal.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
3.1 Restated Articles of Incorporation
10.1 Third Amendment to Mortgage Warehouse Loan and Security Agreement
10.2 Mortgage Warehouse Loan and Security Agreement
10.3 Line of Credit Promissory Note
10.4 Affiliate Collateral Pledge and Security Agreement
27.1 Financial Data Schedule
b. Reports on Form 8-K
The Company filed the following reports on Form 8-K during the quarter ended
June 30, 1999:
1. On April 9, 1999, the Company filed a current report on Form 8-K reporting
the execution of an Agreement and Plan of Reorganization with North Fulton
Bancshares, Inc.
2. On April 27, 1999, the Company filed a current report on Form 8-K reporting
the execution of an Agreement and Plan of Reorganization with Farmers &
Merchants Bank.
3. On May 27, 1999, the Company filed a current report on Form 8-K reporting
the execution of an Agreement and Plan of Reorganization with Bank Atlanta.
16
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PREMIER BANCSHARES, INC.
- -------------------------
Registrant
Date August 13, 1999 Darrell D. Pittard
------------------------ -------------------
Darrell D. Pittard
Chief Executive Officer
Date August 13, 1999 Michael E. Ricketson
------------------------ ---------------------
Michael E. Ricketson
Chief Accounting Officer
17
<PAGE>
Exhibit 3.1
RESTATED ARTICLES OF INCORPORATION
OF
PREMIER BANCSHARES, INC.
The Restated Articles were duly adopted by the Board of Directors on July
22, 1999, in accordance with the provisions of the Official Code of Georgia
Annotated, Section 14-2-1007 and any amendments thereto did not require
shareholder approval. These Restated Articles of Incorporation supersede the
original Articles of Incorporation and all amendments to them.
1.
The name of the Corporation is PREMIER BANCSHARES, INC.
2.
The Corporation is organized pursuant to the Georgia Business Corporation
Code.
3.
The Corporation shall have perpetual duration.
4.
The purposes for which the Corporation is organized are to conduct any
businesses and engage in any activities not specifically prohibited to
corporations for profit under the laws of the State of Georgia, and the
Corporation shall have all powers necessary to conduct such businesses and
engage in such activities, including, but not limited to, the powers enumerated
in the Georgia Business Corporation Code or any amendment thereto.
5.
(a) The Corporation shall have the authority to issue sixty million
(60,000,000) shares of common stock (the "Common Stock"), $1.00 par value,
and two million (2,000,000) shares of preferred stock (the "Preferred
Stock").
(b) The Board of Directors of the Corporation is authorized, subject
to limitations prescribed by law and the provisions of this Article, to
provide for the issuance of the shares of Preferred Stock in series, and by
filing a certificate pursuant to the applicable law of the State of Georgia
to establish from time to time the number of shares to be included in each
such series, and to fix the designation, powers, preferences, and relative
rights of the shares of each such series and the qualifications, or
restrictions thereof. The authority of the Board of Directors with respect
to each series shall include, but not be limited to, determination of the
following:
(i) The number of shares constituting that series and the
distinctive designation of that series;
<PAGE>
(ii) The dividend rate on the shares of that series, whether
dividends shall be cumulative, and, if so, from which date
or dates, and the relative rights of priority, if any, of
payments of dividends on shares of that series;
(iii) Whether that series shall have voting rights, in addition
to the voting rights provided by law, and, if so, the
terms of such voting rights;
(iv) Whether that series shall have conversion privileges, and,
if so, the terms and conditions of such conversion,
including provisions for adjustment of the conversion rate
in such events as the Board of Directors shall determine;
(v) Whether or not the shares of that series shall be
redeemable, and, if so, the terms and conditions of such
redemption, including the date or dates upon or after
which they shall be redeemable, and the amount per share
payable in case of redemption, which amount may vary under
different conditions and at different redemption rates;
(vi) Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and, if
so, the terms and amount of such sinking fund;
(vii) The rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution or
winding-up of the Corporation, and the relative rights of
priority, if any, of payment of shares of that series; and
(viii) Any other relative rights, preferences and limitations of
that series.
(c) The Corporation has issued 40,770 shares of Series A Preferred
Stock, $60.00 par value per share. The rights, preferences privileges and
restrictions granted to or imposed upon the Series A Preferred Stock are as
follows:
(i) Liquidation Preference. In the event of any liquidation,
----------------------
dissolution or winding up of the Corporation, either
voluntary or involuntary, the holders of the Preferred Stock
shall be entitled to receive, prior and in preference to any
distribution of any assets or surplus funds of the
Corporation to the holders of common stock of the
Corporation, an amount equal to $60.00 per share for such
Preferred Stock. If, upon such liquidation, dissolution or
winding up of the Corporation, the assets of the Corporation
available for distribution to the shareholders of the
Corporation are insufficient to provide for the payment of
the full aforesaid amount, such assets as are so available
shall be distributed among the holders of Preferred Stock in
proportion to the
<PAGE>
relative aggregate liquidation preferences
of the Preferred Stock so held.
(ii) Voting Rights. The holders of Preferred Stock shall not
-------------
be entitled to vote except as provided in this section.
If at any time when the Corporation shall be in default
in the payment of the dividends specified herein for
two consecutive years, and until such default is cured,
the holders of Preferred Stock shall be entitled to
vote, share for share with the common shareholders, on
all matters coming before the shareholders at all
regular and called shareholders' meetings, but shall
not otherwise have any right to compel the payment of
dividends.
(iii) Dividends. The holders of the Preferred Stock shall be
---------
entitled to a dividend of eight percent (8%) of the par
value of the Preferred Stock each year from current
earnings or undivided profits, which dividend shall be
cumulative but subordinate to the rights of trade
creditors. Said dividends shall be payable to the
holders of the Preferred Stock within six months
following the end of each calendar year.
(iv) Redemption. Beginning on January 1, 2000 and each year
----------
thereafter, the Corporation shall have the right to
redeem up to twenty percent (or 8,154 shares) of the
40,770 originally issued shares of the Preferred Stock
issued, at a redemption price of $60.00 per share plus
all accrued and unpaid dividends. If any Preferred
Stock remains issued and outstanding after May 20,
2004, the holders may require the Corporation to redeem
the Preferred Stock at a redemption price of $60.00 per
share plus all accrued and unpaid dividends.
6.
Shares of the Corporation may be issued by the Corporation for such
consideration, not less than the par value thereof, as shall be fixed from time
to time by the Board of Directors.
7.
No shareholder shall have any preemptive right to subscribe for or to
purchase any shares or other securities issued by the Corporation.
8.
Subject to the provisions of Section 14-2-91 of the Georgia Business
Corporation Code, the Board of Directors shall have the power to distribute a
portion of the assets of the Corporation, in cash or in property, to holders of
shares of the Corporation out of the capital surplus of the Corporation.
<PAGE>
9.
The Corporation shall have the full power to purchase and otherwise
acquire, and dispose of, its own shares and securities granted by the laws of
the State of Georgia and shall have the right to purchase its shares out of its
unreserved and unrestricted capital surplus available therefor as well as out of
its unreserved and unrestricted earned surplus available therefor.
10.
No director of the Corporation shall be personally liable to the
Corporation or its shareholders for monetary damages for a breach of duty of
care or other duty as a director, provided that this elimination of liability
shall not eliminate or limit the liability of a director (i) for an
appropriation, in violation of his duties, of any business opportunity of the
Corporation; (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; (iii) for the types of
liability set forth in Section 14-2-154 of the Georgia Business Corporation Code
or (iv) for any transaction from which the director derived an improper personal
benefit.
IN WITNESS WHEREOF, the undersigned has executed these Restated Articles of
Incorporation this 22nd day of July, 1999.
/s/ Darrell D. Pittard
____________________________________
Darrell D. Pittard,
Chairman and Chief Executive Officer
<PAGE>
Exhibit 10.1
THIRD AMENDMENT
TO
MORTGAGE WAREHOUSE LOAN AND SECURITY AGREEMENT
----------------------------------------------
THIS THIRD AMENDMENT TO MORTGAGE WAREHOUSE LOAN AND SECURITY AGREEMENT
("Amendment") is made and dated as of March 31, 1999, by and between the Lenders
party hereto from time to time, SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL
ASSOCIATION, a national banking association, as agent for Lenders, PREMIER
BANCSHARES, INC., a Georgia corporation, and PREMIER LENDING CORPORATION, a
Georgia corporation. Capitalized terms not otherwise defined herein are defined
in Article I of the Existing Loan Agreement referred to below.
R E C I T A L S
---------------
A. Premier Bancshares and its direct Wholly-Owned Subsidiary, Premier
Lending, and Lenders are parties to that certain Mortgage Warehouse Loan and
Security Agreement dated as of April 15, 1998, as amended by a First Amendment
thereto dated as of October 30, 1998 and by a Second Amendment thereto dated as
of November 17, 1998 (collectively, the "Existing Loan Agreement"), pursuant to
which Premier Lending and Premier Bancshares, as co-borrowers, have obtained
Loans from the Lenders which were parties to the Existing Loan Agreement on a
revolving basis in the maximum aggregate amount of $130,000,000.00.
B. Borrowers have now requested that the Maturity Date of such revolving
credit be extended and that certain other modifications be made to the Existing
Agreement.
C. Pursuant to Borrowers' request, Agent and each Lender have agreed to
such extension of the Maturity Date and to such modifications to the Existing
Agreement upon the terms and conditions set forth herein.
ACCORDINGLY, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound,
the parties hereto agree as follows:
1. Amendments to Existing Agreement. The Existing Agreement is amended as
--------------------------------
of the date first above written as follows:
1. Paragraph (1) under the definition of "Eligible Mortgage Loan" in
Section 1.1 Defined Terms of ARTICLE I DEFINITIONS of the Existing
------------- -----------
Agreement is hereby deleted in its entirety and the following new
paragraph (1) is inserted in its place:
<PAGE>
(1) if the promissory note for such Mortgage Loan (or any
other documentation relating thereto) has been withdrawn from the
possession of Agent on terms and subject to conditions set forth
in Section 4.5 hereof, (i) such note or other documentation has
been released to the applicable Borrower for purposes of
correcting clerical or other non-substantive documentation
problems pursuant to a trust receipt as permitted under Section
4.5(a) hereof, (x) such release has occurred within the
immediately preceding ten (10) days and (y) the collateral value
of the Mortgage Loan for which such note or other documentation
has been released, when added to the collateral value of other
Mortgage Loans included in any of the Borrowing Bases for which
notes or other documentation have been similarly released to
either Borrower, does not exceed $3,000,000.00; or (ii) the
promissory note and any related documentation for such Mortgage
Loan has been shipped by Agent directly to an Approved Investor
for purchase, as permitted under Section 4.5(b) hereof, (x) such
shipment has occurred within the immediately preceding ninety (90)
days, (y) if the Approved Investor is a housing authority
constituting a Governmental Authority, the collateral value of
such Mortgage Loan, when added to the collateral value of other
Mortgage Loans included in any of the Borrowing Bases for which
notes or other documents have been similarly shipped does not
exceed $10,000,000.00, and (z) the collateral value of all such
Mortgage Loans included in any of the Borrowing Bases for which
notes or other documents have been similarly shipped and which
remain unpurchased for more than forty-five (45) days from the
date of such shipment does not exceed $2,500,000.00 during the
period March 31, 1999 to April 15, 1999 and $1,500,000.00 from
April 16, 1999 and thereafter;
b. The definition of "Maturity Date" in Section 1.1 Defined Terms
-------------
of ARTICLE I DEFINITIONS of the Existing Agreement is hereby
-----------
deleted in its entirety and the following new definition is
inserted in its place:
"Maturity Date" shall mean June 1, 1999; provided that upon
--------
the written request of
2
<PAGE>
Borrowers to Agent, Lenders may elect to extend the Maturity Date
on such terms and conditions as they deem appropriate in their
sole discretion.
2. Acknowledgment of Outstanding Loans. Borrowers hereby acknowledge,
-----------------------------------
certify and agree that pursuant to the Existing Agreement, Lenders have
made Loans to Borrowers that are outstanding as of the date hereof in
the aggregate principal amount of $ ; Borrowers'
---------------
obligation to pay the outstanding Loans to Lenders in each Lender's
Commitment Percentage is not subject to any defense, claim,
counterclaim, setoff, right of recoupment, abatement or other
determination; and the Loans are and shall continue to be governed and
secured by the terms and provisions of the Existing Agreement as
amended by this Amendment.
3. Ratification of Loan Documents. Borrowers hereby ratify and affirm
------------------------------
each of the Loan Documents in their entirety, and acknowledge and agree
that (i) the Loan Documents are in full force and effect, (ii) all
representations and warranties contained therein are true and correct
on and as of the date hereof, (iii) Borrowers are in full compliance
with all covenants and agreements established thereunder, (iv) no Event
of Default or Potential Default exists thereunder and (v) the Loan
Documents are legal, valid and binding obligations of Borrowers and are
enforceable by Agent, on behalf of Lenders, against Borrowers in
accordance with their respective terms.
4. Counterparts. This Amendment may be signed in one or more counterpart
-------------
copies, each of which constitutes an original, but all of which, when
taken together, shall constitute one agreement binding upon all of the
parties hereto.
5. Governing Law, Etc. This Amendment shall be governed by and
-------------------
construed in accordance with the applicable terms and provisions of
Section 10.7 of ARTICLE X MISCELLANEOUS PROVISIONS of the Existing
------------------------
Agreement, which terms and provisions are incorporated herein by
reference.
6. No Other Modifications. Except as hereby amended, no other term,
-----------------------
condition or provision of the Existing Agreement shall be deemed
modified or amended, and this Amendment shall not be considered a
novation.
[SIGNATURE PAGES FOLLOW]
3
<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this Amendment
as of the date first above written.
BORROWERS:
PREMIER BANCSHARES, INC.
By:
----------------------------------------
Name: Darrell D. Pittard
Title: Chairman & CEO
STATE OF GEORGIA
COUNTY OF
----------------
On this day of , 1999, personally appeared Darrell D. Pittard,
--- ----------
as Chairman & CEO of PREMIER BANCSHARES, INC., a Georgia corporation, and before
me executed the attached Third Amendment to Mortgage Warehouse Loan and Security
Agreement, dated as of March 31, 1999, by and between SUNTRUST BANK, CENTRAL
FLORIDA, NATIONAL ASSOCIATION, as Agent and Lender, and SOUTHTRUST BANK,
NATIONAL ASSOCIATION, FIRST UNION NATIONAL BANK, successor by merger to
CoreStates Bank, N.A., COLONIAL BANK and NATIONAL CITY BANK OF KENTUCKY, as
Lenders, and PREMIER BANCSHARES, INC. and PREMIER LENDING CORPORATION, as
Borrowers.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal in the
County and State last aforesaid.
Signature of Notary Public-State of Georgia
Print Name: Notary Public, State of Georgia
Personally Known
---------------------------------
Produced Identification
--------------------------
Type of Identification:
--------------------------
(NOTARIAL SEAL)
4
<PAGE>
PREMIER LENDING CORPORATION
By:
---------------------------------------
Name: George S. Phelps
Title: President
STATE OF GEORGIA
COUNTY OF
---------------
On this day of , 1999, personally appeared George S. Phelps,
--- ----------
as President of PREMIER LENDING CORPORATION, a Georgia corporation, and before
me executed the attached Third Amendment to Mortgage Warehouse Loan and Security
Agreement, dated as of March 31, 1999, by and between SUNTRUST BANK, CENTRAL
FLORIDA, NATIONAL ASSOCIATION, as Agent and Lender, and SOUTHTRUST BANK,
NATIONAL ASSOCIATION, FIRST UNION NATIONAL BANK, successor by merger to
CoreStates Bank, N.A., COLONIAL BANK and NATIONAL CITY BANK OF KENTUCKY, as
Lenders, and PREMIER BANCSHARES, INC. and PREMIER LENDING CORPORATION, as
Borrowers.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal in the
County and State last aforesaid.
Signature of Notary Public-State of Georgia
Print Name: Notary Public, State of Georgia
Personally Known
----------------------------------------------
Produced Identification
---------------------------------------
Type of Identification:
---------------------------------------
(NOTARIAL SEAL)
5
<PAGE>
AGENT/LENDERS:
SUNTRUST BANK, CENTRAL FLORIDA,
NATIONAL ASSOCIATION, As Agent and
as a Lender
By:
---------------------------------------
Name: Thomas A. Pizurie
Title: Vice President
STATE OF FLORIDA
COUNTY OF ORANGE
On this day of , 1999, personally appeared Thomas A. Pizurie,
--- ----------
as Vice President of SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION, and
before me executed the attached Third Amendment to Mortgage Warehouse Loan and
Security Agreement, dated as of March 31, 1999, by and between SUNTRUST BANK,
CENTRAL FLORIDA, NATIONAL ASSOCIATION, as Agent and Lender, and SOUTHTRUST BANK,
NATIONAL ASSOCIATION, FIRST UNION NATIONAL BANK, successor by merger to
CoreStates Bank, N.A., COLONIAL BANK and NATIONAL CITY BANK OF KENTUCKY, as
Lenders, and PREMIER BANCSHARES, INC. and PREMIER LENDING CORPORATION, as
Borrowers.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal in the
County and State last aforesaid.
Signature of Notary Public-State of
--------------
Print Name: Notary Public, State of
--------------
Personally Known
---------------------------------
Produced Identification
--------------------------
Type of Identification:
--------------------------
(NOTARIAL SEAL)
6
<PAGE>
SOUTHTRUST BANK, NATIONAL
ASSOCIATION, as a Lender
By:
---------------------------------------
Name:
--------------------------------------
Title:
------------------------------------
STATE OF ALABAMA
COUNTY OF
-----------------
On this day of , 1999, personally appeared
--- ----------
, as of SOUTHTRUST BANK, NATIONAL
- -------------------- --------------------
ASSOCIATION, and before me executed the attached Third Amendment to Mortgage
Warehouse Loan and Security Agreement, dated as of March 31, 1999, by and
between SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION, as Agent and
Lender, and SOUTHTRUST BANK, NATIONAL ASSOCIATION, FIRST UNION NATIONAL BANK,
successor by merger to CoreStates Bank, N.A., COLONIAL BANK and NATIONAL CITY
BANK OF KENTUCKY, as Lenders, and PREMIER BANCSHARES, INC. and PREMIER LENDING
CORPORATION, as Borrowers.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal in the
County and State last aforesaid.
Signature of Notary Public-State of Alabama
Print Name: Notary Public, State of Alabama
Personally Known
-------------------------------------
Produced Identification
------------------------------
Type of Identification:
------------------------------
(NOTARIAL SEAL)
7
<PAGE>
FIRST UNION NATIONAL BANK, successor
by merger to CoreStates Bank, N.A.,
as a Lender
By:
---------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
STATE OF PENNSYLVANIA
COUNTY OF
------------------
On this day of , 1999, personally appeared
--- ----------
, as of FIRST UNION NATIONAL BANK,
- ------------------- -----------------
successor by merger to CoreStates Bank, N.A., and before me executed the
attached Third Amendment to Mortgage Warehouse Loan and Security Agreement,
dated as of March 31, 1999, by and between SUNTRUST BANK, CENTRAL FLORIDA,
NATIONAL ASSOCIATION, as Agent and Lender, and SOUTHTRUST BANK, NATIONAL
ASSOCIATION, FIRST UNION NATIONAL BANK, successor by merger to CoreStates Bank,
N.A., COLONIAL BANK and NATIONAL CITY BANK OF KENTUCKY, as Lenders, and PREMIER
BANCSHARES, INC. and PREMIER LENDING CORPORATION, as Borrowers.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal in the
County and State last aforesaid.
Signature of Notary Public-State of Pennsylvania
Print Name: Notary Public, State of Pennsylvania
Personally Known
-------------------------------------
Produced Identification
------------------------------
Type of Identification:
------------------------------
(NOTARIAL SEAL)
8
<PAGE>
COLONIAL BANK, as a Lender
By:
----------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
STATE OF FLORIDA
COUNTY OF ORANGE
On this day of , 1999, personally appeared
--- ----------
, as of COLONIAL BANK, and before me
- --------------------- ---------------
executed the attached Third Amendment to Mortgage Warehouse Loan and Security
Agreement, dated as of March 31, 1999, by and between SUNTRUST BANK, CENTRAL
FLORIDA, NATIONAL ASSOCIATION, as Agent and Lender, and SOUTHTRUST BANK,
NATIONAL ASSOCIATION, FIRST UNION NATIONAL BANK, successor by merger to
CoreStates Bank, N.A., COLONIAL BANK and NATIONAL CITY BANK OF KENTUCKY, as
Lenders, and PREMIER BANCSHARES, INC. and PREMIER LENDING CORPORATION, as
Borrowers.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal in the
County and State last aforesaid.
Signature of Notary Public-State of Florida
Print Name: Notary Public, State of Florida
Personally Known
-----------------------------------
Produced Identification
-----------------------------
Type of Identification:
-----------------------------
(NOTARIAL SEAL)
9
<PAGE>
NATIONAL CITY BANK OF KENTUCKY, as a
Lender
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
STATE OF KENTUCKY
COUNTY OF
---------------
On this day of , 1999, personally appeared
--- ----------
, as of NATIONAL CITY BANK OF KENTUCKY,
- ---------------------- ---------------
and before me executed the attached Third Amendment to Mortgage Warehouse Loan
and Security Agreement, dated as of March 31, 1999, by and between SUNTRUST
BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION, as Agent and Lender, and SOUTHTRUST
BANK, NATIONAL ASSOCIATION, FIRST UNION NATIONAL BANK, successor by merger to
CoreStates Bank, N.A., COLONIAL BANK and NATIONAL CITY BANK OF KENTUCKY, as
Lenders, and PREMIER BANCSHARES, INC. and PREMIER LENDING CORPORATION, as
Borrowers.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal in the
County and State last aforesaid.
Signature of Notary Public-State of Kentucky
Print Name: Notary Public, State of Kentucky
Personally Known
------------------------------------
Produced Identification
----------------------------
Type of Identification:
----------------------------
(NOTARIAL SEAL)
10
<PAGE>
Exhibit 10.2
FOURTH AMENDMENT
TO
MORTGAGE WAREHOUSE LOAN AND SECURITY AGREEMENT
----------------------------------------------
THIS FOURTH AMENDMENT TO MORTGAGE WAREHOUSE LOAN AND SECURITY AGREEMENT
("Amendment") is made and dated as of June 1, 1999, by and between the Lenders
party hereto from time to time (as of the date hereof, being only SunTrust Bank,
Central Florida, National Association), SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL
ASSOCIATION, a national banking association, individually and as agent for
Lenders, PREMIER BANCSHARES, INC., a Georgia corporation, and PREMIER LENDING
CORPORATION, a Georgia corporation. Capitalized terms not otherwise defined
herein are defined in Article I of the Existing Loan Agreement referred to
below.
R E C I T A L S
---------------
A. Premier Bancshares and its direct Wholly-Owned Subsidiary, Premier
Lending, and Lenders are parties to that certain Mortgage Warehouse Loan and
Security Agreement dated as of April 15, 1998, as amended by a First Amendment
thereto dated as of October 30, 1998, a Second Amendment thereto dated as of
November 17, 1998 and a Third Amendment thereto dated as of March 31, 1999
(collectively, the "Existing Loan Agreement"), pursuant to which Premier Lending
and Premier Bancshares, as co-borrowers, have obtained Loans from the Lenders
which were parties to the Existing Loan Agreement on a revolving basis in the
maximum aggregate amount of $130,000,000.00.
B. Pursuant to Section 2.6 of the Existing Loan Agreement, Borrowers have
notified the Agent of their intention to terminate the Commitments, effective as
of June 1, 1999, but have requested that the Maturity Date of such revolving
credit be extended until August 1, 1999 in order to allow the outstanding Loans
to be repaid in the ordinary course of business from sales of the Mortgage Loans
to Approved Investors and, in connection therewith, that certain other
modifications be made to the Existing Agreement.
C. In order to accommodate Borrowers' request, Agent, in its capacity as a
Lender, has agreed, as of June 1, 1999, (i) to increase its Commitment and
advance Loans to Borrowers in an aggregate amount sufficient to pay off the
Loans heretofore made by the other Lenders, (ii) as evidence thereof, to
consolidate the resulting total outstanding indebtedness due to it from
Borrowers under the Existing Agreement into a single, non-revolving, renewal
promissory note with a final Maturity Date of August 1, 1999, and (iii) to make
certain other modifications to the Existing Agreement upon the terms and
conditions set forth herein.
<PAGE>
ACCORDINGLY, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound,
the parties hereto agree as follows:
1. Amendments to Existing Agreement. The Existing Agreement is amended as
--------------------------------
of the date first above written as follows:
1. The definition of "Maturity Date" in Section 1.1 Defined
-------
Terms of ARTICLE I DEFINITIONS of the Existing Agreement is
----- -----------
hereby deleted in its entirety and the following new
definition is inserted in its place:
"Maturity Date"' shall mean August 1, 1999; provided
--------
that upon the written request of Borrowers to Agent, Lenders
may elect to extend the Maturity Date on such terms and
conditions as they deem appropriate in their sole discretion.
2. Section 2.1 Commitments and Borrowing Base of ARTICLE II
------------------------------
AMOUNTS AND TERMS OF LOANS of the Existing Agreement is
--------------------------
hereby amended to delete any obligation of Lenders to make
any further Loans to Borrowers after the date of this Fourth
Amendment. Accordingly, the line of credit contemplated by
the Existing Agreement shall no longer be on a revolving
basis and the aggregate amount outstanding thereunder as of
June 1, 1999, following the advances made by Agent in its
individual capacity as a Lender to Borrowers to pay off the
Loans of the other Lenders thereunder, shall be due and owing
solely to Agent in such individual capacity, shall be
evidenced by a Fourth Renewal Promissory Note dated the date
hereof from Borrowers in favor of Agent in its individual
capacity in the principal amount set forth in paragraph 2
below and shall be repaid in the manner and at the times
specified in the Existing Agreement.
3. SCHEDULE 1 Lenders and Commitments of the Existing Agreement
-----------------------
is hereby modified to reflect SunTrust Bank, Central Florida,
National Association as the sole Lender in the Commitment
Amount of $ and Commitment Percentage of 100%.
--------------
2. Acknowledgment of Outstanding Loans. Borrowers hereby acknowledge,
-----------------------------------
certify and agree that pursuant to the
2
<PAGE>
Existing Agreement, Agent, in its individual capacity as a Lender, has
made Loans to Borrowers that are outstanding as of the date hereof in
the aggregate principal amount of $ ; Borrowers'
--------------
obligation to pay the outstanding Loans to Agent is not subject to any
defense, claim, counterclaim, setoff, right of recoupment, abatement or
other determination; and the Loans are and shall continue to be
governed and secured by the terms and provisions of the Existing
Agreement as amended by this Amendment.
3. Ratification of Loan Documents. Borrowers hereby ratify and affirm
------------------------------
each of the Loan Documents in their entirety, and acknowledge and agree
that (i) the Loan Documents are in full force and effect, (ii) all
representations and warranties contained therein are true and correct
on and as of the date hereof, (iii) Borrowers are in full compliance
with all covenants and agreements established thereunder, (iv) no Event
of Default or Potential Default exists thereunder and (v) the Loan
Documents are legal, valid and binding obligations of Borrowers and are
enforceable by Agent, on behalf of Lenders, against Borrowers in
accordance with their respective terms.
4. Counterparts. This Amendment may be signed in one or more counterpart
-------------
copies, each of which constitutes an original, but all of which, when
taken together, shall constitute one agreement binding upon all of the
parties hereto.
5. Governing Law, Etc. This Amendment shall be governed by and construed
-------------------
in accordance with the applicable terms and provisions of Section 10.7
of ARTICLE X MISCELLANEOUS PROVISIONS of the Existing Agreement, which
------------------------
terms and provisions are incorporated herein by reference.
6. No Other Modifications. Except as hereby amended, no other term,
-----------------------
condition or provision of the Existing Agreement shall be deemed
modified or amended, and this Amendment shall not be considered a
novation.
[SIGNATURE PAGES FOLLOW]
3
<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this Amendment
as of the date first above written.
BORROWERS:
PREMIER BANCSHARES, INC.
By:
---------------------------------------
Name: George S. Phelps
Title: Executive Vice President
STATE OF GEORGIA
COUNTY OF
-------------
On this day of , 1999, personally appeared George S. Phelps,
--- ----------
as Executive Vice President of PREMIER BANCSHARES, INC., a Georgia corporation,
and before me executed the attached Fourth Amendment to Mortgage Warehouse Loan
and Security Agreement, dated as of June 1, 1999, by and between SUNTRUST BANK,
CENTRAL FLORIDA, NATIONAL ASSOCIATION, as Agent and Lender, and PREMIER
BANCSHARES, INC. and PREMIER LENDING CORPORATION, as Borrowers.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal in the
County and State last aforesaid.
Signature of Notary Public-State of Georgia
Print Name: Notary Public, State of Georgia
Personally Known
----------------------------------
Produced Identification
---------------------------
Type of Identification:
---------------------------
(NOTARIAL SEAL)
4
<PAGE>
PREMIER LENDING CORPORATION
By:
--------------------------------------
Name: George S. Phelps
Title: President
STATE OF GEORGIA
COUNTY OF
-----------------
On this day of , 1999, personally appeared George S. Phelps,
--- ----------
as President of PREMIER LENDING CORPORATION, a Georgia corporation, and before
me executed the attached Fourth Amendment to Mortgage Warehouse Loan and
Security Agreement, dated as of June 1, 1999, by and between SUNTRUST BANK,
CENTRAL FLORIDA, NATIONAL ASSOCIATION, as Agent and Lender, and PREMIER
BANCSHARES, INC. and PREMIER LENDING CORPORATION, as Borrowers.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal in the
County and State last aforesaid.
Signature of Notary Public-State of Georgia
Print Name: Notary Public, State of Georgia
Personally Known
---------------------------------
Produced Identification
--------------------------
Type of Identification:
--------------------------
(NOTARIAL SEAL)
5
<PAGE>
AGENT/LENDER:
SUNTRUST BANK, CENTRAL FLORIDA,
NATIONAL ASSOCIATION, As Agent and
as a Lender
By:
----------------------------------------
Name: Thomas A. Pizurie
Title: Vice President
STATE OF FLORIDA
COUNTY OF ORANGE
On this day of , 1999, personally appeared Thomas A. Pizurie,
--- ----------
as Vice President of SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION, and
before me executed the attached Fourth Amendment to Mortgage Warehouse Loan and
Security Agreement, dated as of June 1, 1999, by and between SUNTRUST BANK,
CENTRAL FLORIDA, NATIONAL ASSOCIATION, as Agent and Lender, and PREMIER
BANCSHARES, INC. and PREMIER LENDING CORPORATION, as Borrowers.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal in the
County and State last aforesaid.
Signature of Notary Public-State of
----------------
Print Name: Notary Public, State of
----------------
Personally Known
----------------------------------
Produced Identification
----------------------------
Type of Identification:
----------------------------
(NOTARIAL SEAL)
6
<PAGE>
Exhibit 10.3
LINE OF CREDIT
PROMISSORY NOTE
Atlanta, Georgia
$150,000,000.00 May 11, 1999
FOR VALUE RECEIVED, the undersigned promises to pay PREMIER BANK, up
to the aggregate principal sum of ONE HUNDRED FIFTY MILLION AND NO/100
($150,000,000.00) DOLLARS, with interest on the unpaid principal balance from
the date of this Note, until paid, at the rate specified hereinafter. The
principal and interest shall be payable at Premier Bank, 100 Atlanta Plaza, 950
East Paces Ferry Road, Atlanta, Georgia 30326, or such other place as the
holder hereof may designate in writing, until the entire indebtedness evidenced
hereby is fully paid, except that any remaining indebtedness, if not sooner
paid, shall be due and payable on May 11, 2000.
It is intended that the holder may make advances of funds to the
undersigned from time to time in order to fund the mortgage lending operations
of the undersigned and for general corporate purposes of the undersigned.
The interest rate applicable with respect to each advance made
hereunder shall be the same interest rate as is applicable with respect to each
advance made from time to time to Premier Bank ("Bank Advance") under a
$150,000,000.00 Warehouse Line of Credit approved May 11, 1999 in connection
with that certain Agreement for Advances and Security Agreement With Blanket
Floating Lien by and between Premier Bank and the Federal Home Loan Bank of
Atlanta (the "Bank") dated as of March 5, 1997 (such agreement, including any
amendments thereto and any successor agreement that may be entered into by
Premier Bank and Bank in substitution therefor, hereinafter the "Advances
Agreement"), which interest rate may be a variable rate and which rate may
increase and decrease during the term of each Bank Advance pursuant to the terms
of the applicable variable rate program of the Bank. The undersigned shall
repay to Premier Bank each advance made hereunder at such time and in such equal
amount as Premier Bank shall be obligated to repay to Bank for each Bank Advance
pursuant to the terms and conditions of the Advances Agreement and the terms and
conditions of the applicable "Application" or "Confirmation of Advance"
evidencing each such Bank Advance. The undersigned shall repay to Premier Bank
accrued interest on each advance made hereunder at such time and in such equal
amount as Premier Bank shall be obligated to repay to the Bank for accrued
interest on each Bank Advance at the times specified by the Bank in writing,
with interest being charged for each day that a Bank Advance is outstanding at
the interest rate applicable to such Bank Advance. The undersigned shall repay
to Premier Bank any and all "per loan" fees, collateral fees and other fees or
charges ("Fees") incurred at such times and in such equal amounts as Premier
Bank shall be obligated to repay to the Bank for Fees incurred with respect to
each Bank Advance pursuant to the terms and conditions of the
<PAGE>
Advances Agreement and the terms and conditions of the applicable "Application"
or "Confirmation of Advance" evidencing each such Bank Advance.
The indebtedness evidenced by this Note may be prepaid at any time and
from time to time before maturity, in whole or in part, without penalty.
Prepayments shall be applied against the outstanding principal balance of this
Note and shall not extend or postpone the due date of any payments due
hereunder unless the holder hereof shall agree otherwise in writing.
If any payment under this Note is not paid when due, the entire
principal amount outstanding hereunder and accrued interest thereon shall at
once become due and payable, at the option of the holder hereof. The holder
hereof may exercise this option to accelerate during any default by the
undersigned regardless of any prior forbearance. In the event of any default in
the payment of this Note, and if the same is referred to an attorney at law for
collection or any action at law or in equity is brought with respect hereto,
the undersigned shall pay the holder hereof all expenses and costs, including,
but not limited to, reasonable attorney's fees.
From time to time, without affecting the obligation of the undersigned
or the successors or assigns of the undersigned to pay the outstanding principal
balance of this Note and observe the covenants of the undersigned contained
herein, without giving notice to or obtaining the consent of the undersigned,
the successors or assigns of the undersigned, and without liability on the part
of the holder hereof, the holder hereof may, at the option of the holder hereof,
extend the time for payment of said outstanding principal balance or any part
thereof, reduce the payments thereon, release anyone liable on any of said
outstanding principal balance, accept a renewal of this Note, modify the terms
and time of payment of said outstanding principal balance, join in any extension
or subordination agreement, release any security given heretofore, take or
release other or additional security, and agree in writing with the undersigned
to modify the rate of interest or term of this Note or change the amount of the
interest payments payable hereunder. No one or more of such actions shall
constitute a novation.
Presentment, notice of dishonor, and protest are hereby waived by all
makers, sureties, guarantors and endorsers hereof.
This Note shall be governed by the law of the State of Georgia.
2
<PAGE>
To the extent the indebtedness evidenced hereby is secured in any way
whatsoever, whether now or at any time in the future, by any property of the
undersigned, any lien, mortgage, security interest or other form of encumbrance
whatsoever that the holder may have to secure the indebtedness evidenced hereby
is and shall at all times be junior and subordinate to any lien, mortgage,
security interest or other form of encumbrance which secures that certain
Multiple Disbursement Revolving Note from Premier Bancshares, Inc. and the
undersigned to SunTrust Bank, Atlanta in the amount of $30,000,000.00, dated
February 2, 1999 (such note, including any amendments thereto and any successor
note that may be entered into by the undersigned in favor of SunTrust Bank,
Atlanta, the "SunTrust Indebtedness"), whether or not such lien, mortgage,
security interest or other form of encumbrance securing the SunTrust
Indebtedness is now in existence or arises at any time in the future.
WITNESS the hand and corporate seal of the undersigned.
PREMIER LENDING CORPORATION
By:
-----------------------------------
George S. Phelps, President
[CORPORATE SEAL]
3
<PAGE>
Exhibit 10.4
AFFILIATE COLLATERAL PLEDGE AND SECURITY AGREEMENT
--------------------------------------------------
THIS AFFILIATE COLLATERAL PLEDGE AND SECURITY AGREEMENT ("Pledge
Agreement"), dated as of April 22, 1999, is made by and among Premier Lending
Corporation, a corporation organized and existing under the laws of the State of
Georgia ("Pledgor"), Premier Bank, a bank organized and existing under the laws
of the State of Georgia ("Borrower"), and the Federal Home Loan Bank of Atlanta
("Bank").
WHEREAS, Borrower is a member and stockholder of the Bank;
WHEREAS, Pledgor is an Affiliate of Borrower (for purposes of this Pledge
Agreement, Affiliate means any person or company which controls, is controlled
by, or is under common control with, Borrower, including any holding company,
any subsidiary, or any service corporation of the Borrower);
WHEREAS, Borrower and the Bank have entered into an Agreement for Advances
and Security Agreement with Blanket Floating Lien or an Advances, Specific
Collateral Pledge and Security Agreement, dated as of March 5, 1997 (such
agreement, including any amendments thereto and any successor agreement that may
be entered into by Borrower and the Bank in substitution therefor, hereinafter
the "Borrower Advances Agreement"), pursuant to which the Bank may advance funds
from time to time to Borrower and Borrower may pledge certain collateral from
time to time to the Bank; and
WHEREAS, at the request of Borrower, and in order to induce the Bank to
make additional advances to Borrower, Pledgor has agreed to pledge certain of
its property as collateral to and for the benefit of the Bank, to secure the
obligations of Borrower to the Bank,
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Pledgor, Borrower, and the Bank agree as follows:
1. Pledgor's Receipt of Borrower Advances Agreement; Definitions. Pledgor
-------------------------------------------------------------
hereby acknowledges and agrees that it has received a copy of the Borrower
Advances Agreement (including all amendments thereto) and that it is familiar
with the terms and conditions thereof. Unless otherwise defined herein or the
context otherwise requires, all capitalized terms used herein shall have the
same meanings as in the Borrower Advances Agreement, except that "Borrower" as
used herein shall be synonymous with "Member" as used in the Borrower Advances
Agreement.
2. Creation of Security Interest. As security for all Indebtedness now or
-----------------------------
hereafter outstanding from the Borrower to the Bank under the Borrower Advances
Agreement, Pledgor hereby assigns, transfers and pledges to the Bank, and grants
to the Bank a security interest in, certain property which is (i) specifically
listed and identified in Attachment A hereto or any amendment thereto or any
substitute Attachment A that may be provided by the Pledgor with the agreement
of the Bank from time to time, or (ii) all of the proceeds of the foregoing
(collectively, the "Pledgor Collateral").
<PAGE>
The Pledgor Collateral shall constitute Collateral for all purposes under
the Borrower Advances Agreement and, in addition to any rights or duties with
respect to the Pledgor Collateral created by this Pledge Agreement, the Pledgor
and the Bank shall have the same rights and duties with respect to the Pledgor
Collateral as do Borrower and the Bank, respectively, with respect to Collateral
under the Borrower Advances Agreement; provided, however, that if the Bank has
not requested or required delivery of Pledgor Collateral in accordance with
Paragraph 3 below, then (a) Borrower shall, at all times, hold the Pledgor
Collateral in trust for the benefit of, and subject to the direction and control
of, the Bank and physically safeguard the Pledgor Collateral with at least the
same degree of care as the Borrower uses in physically safeguarding its other
property; and, if so requested by the Bank in writing, and (b) Borrower shall
hold each set of First Mortgage Documents and all Other Mortgage Documents which
are a part of the Pledgor's Collateral in a separate file folder with each file
folder clearly labeled with the loan identification number and the name of the
borrower(s). Each such file folder shall be clearly marked or stamped with the
statement: "The Mortgage/Deed of Trust and Note Relating to this Loan Have Been
Assigned to the Federal Home Loan Bank of Atlanta" or such other statement that
may be approved by the Bank from time to time. If so requested by the Bank, in
writing, Borrower shall physically segregate First Mortgage Documents and Other
Mortgage Documents which are a part of such Pledgor Collateral from all other
property of the Borrower or the Pledgor in a manner satisfactory to the Bank.
3. Delivery. Upon the Bank's written or oral request, or promptly at any
--------
time that the Borrower becomes subject to any mandatory collateral delivery
requirements that may be established in writing by the Bank, and in either case
from time to time thereafter, the Pledgor shall deliver (or, in the case of
uncertificated securities, otherwise transfer) to the Bank, or to a custodian
designated by the Bank, Pledgor Collateral in an amount determined by the Bank.
Pledgor Collateral delivered to the Bank or to a custodian designated by the
Bank shall be endorsed or assigned in recordable form by the Pledgor as directed
by the Bank.
4. Right of Bank to Proceed Against Pledgor Collateral; Waivers; Borrower
----------------------------------------------------------------------
Acknowledgment.
- --------------
(a) Pledgor agrees that, following an Event of Default, as defined in
the Borrower Advances Agreement and as modified by this Pledge Agreement,
the Bank may proceed against the Pledgor Collateral in accordance with the
terms of the Borrower Advances Agreement as though Pledgor were the Member
thereunder. Pledgor hereby waives and agrees not to assert: (i) any and all
right to presentment, protest, demand for payment, notice of default,
dishonor or nonpayment and all other notices to or upon Borrower or
Pledgor, including, without limitation, notice as to the making of any
advance or other extension of credit to Borrower or the exercise of any
right by the Bank hereunder or under the Borrower Advances Agreement; and
(ii) any and all right to require the Bank to proceed against Borrower or
any Collateral pledged by Borrower before enforcing the Bank's rights
against the Pledgor Collateral, and any other defense based upon an
election of remedies.
2
<PAGE>
(b) By execution hereof, Borrower acknowledges its consent to the
terms and conditions hereof and Borrower hereby waives and agrees not to
assert any and all right to require the Bank to proceed against Pledgor or
Pledgor Collateral before enforcing the Bank's rights against the
Collateral and any other defense based upon an election of remedies.
5. Representations and Agreements by Pledgor. Pledgor hereby represents,
-----------------------------------------
warrants to, and agrees with the Bank that:
(a) Each item of Pledgor Collateral satisfies all the criteria for
Qualifying Collateral set forth in the Borrower Advances Agreement, except
that the Pledgor Collateral is owned by Pledgor, rather than by Borrower,
free and clear of any liens, encumbrances or other interests other than the
assignment to the Bank hereunder;
(b) Pledgor has full power, right and authority to grant the security
interest in the Pledgor Collateral created hereby and has taken all
corporate action necessary to authorize the execution and delivery of this
Pledge Agreement;
(c) The security interest in the Pledgor Collateral created hereby has
been duly and validly granted by Pledgor and such security interest, and
this Pledge Agreement, are enforceable in accordance with the terms hereof;
(d) This Pledge Agreement has been authorized or ratified and approved
by Pledgor's Board of Directors and will be maintained continuously among
Pledgor's official records;
(e) A certified copy of the Board of Director's resolution evidencing
its approval hereof is attached hereto as Attachment "B," the form of which
has been previously approved by the Bank or its counsel;
(f) An opinion of Pledgor's counsel that Pledgor has the power, right
and authority to grant the security interest in the Pledgor Collateral
created hereby, that Pledgor has taken all corporate action necessary to
authorize the execution and delivery of this Pledge Agreement, that there
is no impediment to the Bank enforcing its interests against the Pledgor
Collateral under this Pledge Agreement has been provided to and accepted by
the bank, a copy of which is attached hereto as attachment "C";
(g) All information contained in any report, schedule or other
documentation provided from time to time by Pledgor to the Bank will be
true and correct as of the time given; and
(h) Pledgor agrees to make, execute, record and deliver to the Bank
such financing statements, notices, assignments, listings, powers and other
documents with respect to the Pledgor Collateral and the Bank's security
interest therein in such form as the Bank may require.
3
<PAGE>
6. Representation and Warranties by Borrower. Borrower hereby represents,
-----------------------------------------
warrants and agrees to and with the Bank that:
(a) Borrower has full power, right and authority to enter into this
Pledge Agreement and has taken all corporate action necessary to authorize
the execution and delivery of this Pledge Agreement;
(b) This Pledge Agreement is enforceable against Borrower in
accordance with the terms hereof;
(c) This Pledge Agreement has been authorized or ratified and approved
by Borrower's Board of Directors and will be maintained continuously among
Borrower's official records;
(d) A certified copy of the Board of Director's resolution evidencing
its approval hereof is attached hereto as Attachment "D," the form of which
has been previously approved by the Bank or its counsel;
(e) Borrower agrees to make, execute, record, and deliver to the Bank
such financing statements, notices, assignments, listings, powers and other
documents with respect to the Pledgor Collateral and the Bank's security
interest therein in such form as the Bank may require; and
(f) Borrower agrees that a failure by either Borrower or Pledgor to
perform any of the rights, responsibilities, duties, representations,
warranties, and agreements under this Pledge Agreement shall constitute an
Event of Default under the Borrower Advances Agreement.
7. Governing Law. In addition to the terms and conditions specifically
-------------
set forth herein, this Pledge Agreement shall be governed by the statutory and
common law of the United States and, to the extent state law is applicable, by
the laws of the State of Georgia (without giving effect to choice of law
principles included therein). Notwithstanding the foregoing, the Uniform
Commercial Code as in effect in the State of Georgia shall be applicable to this
Pledge Agreement, to the security interest created hereby, and to the pledge of
Pledgor Collateral hereunder.
8. Partial Exercise; Amendment; Severability. No delay on the part of the
-----------------------------------------
Bank in exercising any right, power or privilege shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
privilege preclude other or further exercise thereof or the exercise of any
other right, power or privilege or be construed to be a waiver of any Event of
Default under the Borrower Advances Agreement. No waiver by the Bank of any such
Event of Default shall be effective unless in writing and signed by an
authorized officer of the Bank, and no such waiver shall be deemed to be a
waiver of a subsequent Event of Default under the Borrower Advances Agreement or
be deemed to be a continuing waiver. No course of dealing between Borrower or
Pledgor, respectively, and the Bank or its agents or employees shall be
effective to change, modify or discharge any provision of this Pledge Agreement,
or the Borrower Advances Agreement or to constitute a waiver of any Event of
Default
4
<PAGE>
thereunder. If any provision of this Pledge Agreement is held invalid or
unenforceable to any extent or in any application, the remainder of this
agreement, or application of such provision to different persons or
circumstances or in different jurisdictions, shall not be affected thereby.
IN WITNESS WHEREOF, each of Pledgor, Borrower, and the Bank has
respectively caused this Pledge Agreement to be signed in its name by its duly
authorized representative as of the date first above mentioned.
<TABLE>
<CAPTION>
FEDERAL HOME LOAN BANK OF ATLANTA Premier Lending Corporation
---------------------------
(Pledgor)
<S> <C>
By: By: /s/ George S. Phelps
-------------------------------- ---------------------------
Title: Title: President
--------------------------
By:
--------------------------------
Title:
------------------------
ACCEPTED, ACKNOWLEDGED, AND APPROVED:
Premier Bank
- ------------
(Borrower)
By: /s/ Michael E. Ricketson
-----------------------------------
Title: Chief Financial Officer
---------------------------
</TABLE>
5
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 37,965
<INT-BEARING-DEPOSITS> 445
<FED-FUNDS-SOLD> 73,943
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 165,622
<INVESTMENTS-CARRYING> 167,424
<INVESTMENTS-MARKET> 165,622
<LOANS> 1,175,458
<ALLOWANCE> 14,845
<TOTAL-ASSETS> 1,493,164
<DEPOSITS> 1,161,649
<SHORT-TERM> 102,643
<LIABILITIES-OTHER> 9,806
<LONG-TERM> 78,750
0
2,446
<COMMON> 26,167
<OTHER-SE> 111,703
<TOTAL-LIABILITIES-AND-EQUITY> 1,493,164
<INTEREST-LOAN> 52,759
<INTEREST-INVEST> 4,235
<INTEREST-OTHER> 2,653
<INTEREST-TOTAL> 59,647
<INTEREST-DEPOSIT> 22,332
<INTEREST-EXPENSE> 5,957
<INTEREST-INCOME-NET> 31,358
<LOAN-LOSSES> 925
<SECURITIES-GAINS> 29
<EXPENSE-OTHER> 33,378
<INCOME-PRETAX> 15,946
<INCOME-PRE-EXTRAORDINARY> 15,946
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,667
<EPS-BASIC> .37
<EPS-DILUTED> .36
<YIELD-ACTUAL> 4.53
<LOANS-NON> 3,204
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 14,168
<CHARGE-OFFS> 572
<RECOVERIES> 324
<ALLOWANCE-CLOSE> 14,845
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
