<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 SEPTEMBER 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 30326
(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 November 3, 1999
Common stock, $1.00 par value 29,390,967
<PAGE>
PREMIER BANCSHARES, INC. AND SUBSIDIARIES
FORM 10-Q
TABLE OF CONTENTS
Part I. Financial Information
Item 1. Consolidated Condensed Financial Statements....................... 3
Consolidated Condensed Statements of Condition (Unaudited)
as of September 30, 1999 and December 31, 1998
Consolidated Condensed Statements of Income (Unaudited)
for the Three Months Ended September 30, 1999 and 1998
Consolidated Condensed Statements of Income (Unaudited)
for the Nine Months Ended September 30, 1999 and 1998
Consolidated Condensed Statements of Cash Flows (Unaudited)
for the Nine Months Ended September 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........ 16
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K.................................. 16
Signatures.................................................................. 17
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>
September 30, December 31,
1999 1998
------------ ------------
(dollar amounts in thousands)
<S> <C> <C>
Assets
Cash and due from banks....................................................................... $ 52,311 $ 62,300
Interest-bearing deposits with other banks.................................................... --- 8,262
Federal funds sold............................................................................ 41,030 131,675
Securities available-for-sale................................................................. 198,742 152,636
Securities held-to-maturity .................................................................. --- 8,484
Loans held for sale........................................................................... 70,161 124,900
Loans......................................................................................... 1,284,945 1,162,392
Allowance for credit losses................................................................... (16,957) (15,681)
---------- ----------
Net loans..................................................................................... 1,267,988 1,146,711
Premises and equipment, net................................................................... 32,718 33,574
Goodwill and other intangibles................................................................ 4,387 4,500
Other real estate owned....................................................................... 1,494 1,889
Other assets.................................................................................. 24,487 19,237
---------- ----------
Total assets............................................................................... $1,693,318 $1,694,168
========== ==========
Liabilities, redeemable preferred stock and common stockholders' equity
Deposits:
Noninterest-bearing......................................................................... $ 210,715 $ 208,560
Interest-bearing............................................................................ 1,098,976 1,114,553
---------- ----------
Total deposits.............................................................................. 1,309,691 1,323,113
Federal funds purchased and securities sold under repurchase agreements....................... 28,227 21,782
Federal Home Loan Bank advances............................................................... 92,000 14,000
Guaranteed preferred beneficial interests in the Company's subordinated
debentures.................................................................................. 28,750 28,750
Other borrowings.............................................................................. 70,673 144,289
Other liabilities............................................................................. 11,203 14,085
---------- ----------
Total liabilities.......................................................................... 1,540,544 1,546,019
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; 28,274,582 and
27,829,873 shares issued at September 30, 1999 and December 31, 1998,
respectively................................................................................. 28,274 27,830
Capital surplus............................................................................... 62,630 59,758
Treasury stock, at cost (61,775 shares at September 30, 1999)................................. (1,222) ---
Retained earnings............................................................................. 63,193 57,692
Accumulated other comprehensive (loss) income................................................. (2,547) 423
---------- ----------
Total stockholders' equity................................................................. 150,328 145,703
---------- ----------
Total liabilities and stockholders' equity................................................. $1,693,318 $1,694,168
========== ==========
</TABLE>
See notes to consolidated condensed financial statements.
3
<PAGE>
PREMIER BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
1999 1998
----------- -----------
(dollar amounts in thousands,
except per share data)
<S> <C> <C>
Interest Income:
Loans, including fees.................................. $ 30,528 $ 28,175
Investment securities:
Taxable........................................ 3,016 3,262
Tax-exempt..................................... 130 392
Federal funds sold..................................... 694 1,682
----------- -----------
Total interest income.......................... 34,368 33,511
Interest Expense:
Deposits............................................... 12,877 13,691
Other borrowings....................................... 2,904 2,316
----------- -----------
Total interest expense......................... 15,781 16,007
Net interest income.................................... 18,587 17,504
Provision for credit losses............................ 687 255
----------- -----------
Net interest income after provision for credit losses.. 17,900 17,249
Other Income:
Service charges on deposit accounts.................... 1,144 1,017
Securities transactions, net........................... --- 1,151
Mortgage banking activities............................ 4,564 5,983
Other noninterest income............................... 1,497 2,871
----------- -----------
Total other income.................. 7,205 11,022
----------- -----------
Other Expenses:
Salaries and employee benefits......................... 10,804 11,147
Net occupancy and equipment expense.................... 2,250 2,317
Merger related expenses................................ 1,446 2,248
Other noninterest expense.............................. 5,401 3,669
----------- -----------
Total other expenses........................... 19,901 19,381
----------- -----------
Income before income taxes.................................. 5,204 8,890
Income taxes................................................ 2,033 3,538
----------- -----------
Net income.................................................. $ 3,171 $ 5,352
=========== ===========
Per Share Information:
Earnings per share - Basic............................. $0.11 $0.19
Weighted average common shares outstanding - Basic..... 28,024,345 27,718,598
Earnings per share - Diluted........................... $0.11 $0.19
Weighted average common shares outstanding - Diluted... 28,056,070 28,201,598
Dividends declared per share........................... $0.09 $0.08
</TABLE>
See notes to consolidated condensed financial statements.
4
<PAGE>
PREMIER BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1999 1998
----------- -----------
(dollar amounts in thousands,
except per share data)
<S> <C> <C>
Interest Income:
Loans, including fees................................... $ 89,850 $ 80,913
Investment securities:
Taxable......................................... 7,898 9,474
Tax-exempt...................................... 407 909
Federal funds sold...................................... 3,134 4,084
----------- -----------
Total interest income........................... 101,289 95,380
Interest Expense:
Deposits................................................ 38,507 39,825
Other borrowings........................................ 9,108 5,393
----------- -----------
Total interest expense.......................... 47,615 45,218
Net interest income..................................... 53,674 50,162
Provision for credit losses............................. 1,854 691
----------- -----------
Net interest income after provision for credit losses... 51,820 49,471
Other Income:
Service charges on deposit accounts..................... 3,469 3,190
Securities transactions, net............................ 29 1,166
Mortgage banking activities............................. 19,568 18,715
Other noninterest income................................ 3,946 7,412
----------- -----------
Total other income.............................. 27,012 30,483
Other Expenses:
Salaries and employee benefits.......................... 32,330 31,150
Net occupancy and equipment expense..................... 6,604 6,611
Merger related expenses................................. 2,382 2,625
Other noninterest expense............................... 15,263 11,960
----------- -----------
Total other expenses............................ 56,579 52,346
----------- -----------
Income before income taxes................................... 22,253 27,608
Income taxes................................................. 8,687 9,550
----------- -----------
Net income................................................... $ 13,566 $ 18,058
=========== ===========
Per Share Information:
Earnings per share - Basic.............................. $0.48 $0.65
Weighted average common shares outstanding - Basic...... 27,717,973 27,718,598
Earnings per share - Diluted............................ $0.48 $0.64
Weighted average common shares outstanding - Diluted.... 28,222,343 27,911,598
Dividends declared per share............................ $0.27 $0.24
</TABLE>
See notes to consolidated condensed financial statements.
5
<PAGE>
PREMIER BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended
September 30,
1999 1998
---------- ----------
(dollar amounts in thousands,
except per share data)
<S> <C> <C>
Cash flows from operating activities
Net income........................................................................... $ 13,566 $ 18,058
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses.................................................... 1,854 691
Depreciation expense........................................................... 2,520 2,579
Amortization and accretion, net................................................ 292 458
Gain on sale of premises and equipment......................................... (672) (1,195)
Gain on sale of securities..................................................... (29) (1,166)
Gain on sale of other real estate owned........................................ (187) (235)
Net decrease in loans held for sale............................................ 54,739 15,261
Increase in other assets....................................................... (2,877) (3,563)
Decrease in other liabilities.................................................. (2,882) (1,188)
--------- ---------
Net cash provided by operating activities....................................... 66,324 29,700
Cash flows from investing activities
Decrease in interest bearing deposits............................................... 8,262 3,425
Proceeds from maturities and paydowns of investment securities available-for-sale... 62,355 69,927
Proceeds from maturities and paydowns of investment securities held-to-maturity..... 3,153 26,025
Proceeds from sales of investment securities available-for-sale..................... 527 32,365
Purchases of investment securities available-for-sale............................... (108,397) (52,812)
Purchases of investment securities held-to-maturity................................. --- (16,178)
Net increase in loans............................................................... (124,389) (132,057)
Decrease (increase) in federal funds sold, net...................................... 90,645 (72,053)
Purchases of premises and equipment................................................. (3,752) (3,975)
Proceeds from sales of premises and equipment....................................... 2,911 1,105
Sale of bank branch................................................................. --- (7,122)
Proceeds from sales of other real estate owned...................................... 1,689 1,348
--------- ---------
Net cash used in investing activities........................................... (66,996) (150,002)
--------- ---------
Cash flows from financing activities
Net (decrease) increase in deposits................................................. (13,422) 90,449
Net increase (decrease) in repurchase agreements.................................... 6,445 (10,686)
Net increase in FHLB advances....................................................... 78,000 10,000
Net (decrease) increase in other borrowings......................................... (73,616) 60,383
Dividends paid...................................................................... (7,382) (5,442)
Purchase of treasury stock.......................................................... (1,671) ---
Sale of treasury stock.............................................................. 452 ---
Proceeds from exercise of stock options............................................. 1,877 1,628
--------- ---------
Net cash (used in) provided by financing activities................................ (9,317) 146,332
Net (decrease) increase in cash and cash equivalents.............................. (9,989) 26,030
Cash and due from banks, beginning of period.......................................... 62,300 59,562
--------- ---------
Cash and due from banks, end of period................................................ $ 52,311 $ 85,592
========= =========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest......................................................................... $ 49,130 $ 45,032
========= =========
Income taxes..................................................................... $ 12,317 $ 8,894
========= =========
</TABLE>
See notes to consolidated condensed financial statements.
6
<PAGE>
PREMIER BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
September 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 and one merger
through September 30, 1999 accounted for as poolings of interests. The
accompanying consolidated condensed financial information has been restated for
all periods presented 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
nine-month periods ended September 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 August 31, 1999, the Company completed a business combination with North
Fulton Bancshares, Inc. ("North Fulton") by exchanging 1,829,464 shares of the
Company's common stock for all of the common stock of North Fulton. 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 North Fulton.
The following table illustrates the Company's net interest income and net income
on a consolidated basis for periods prior to the business combination discussed
above:
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1999 1998
------- -------
(in thousands)
<S> <C> <C>
Net interest income:
Premier Bancshares, Inc., exclusive of pre-acquisition amounts $48,353 $45,026
North Fulton 5,321 5,136
------- -------
Total $53,674 $50,162
======= =======
Net income:
Premier Bancshares, Inc., exclusive of pre-acquisition amounts $12,643 $17,078
North Fulton 923 980
------- -------
Total $13,566 $18,058
======= =======
</TABLE>
Results of operations for North Fulton subsequent to the acquisition date of
August 31, 1999 are included in the Company's amounts.
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.
7
<PAGE>
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.
On October 26, 1999, the Bank Atlanta shareholders approved the pending
acquisition which closed on October 27, 1999, with each common share of Bank
Atlanta stock outstanding converted into 1.4375 shares of the Company's common
stock, for a total of 1,021,920 shares. This transaction was accounted for under
the pooling of interests method of accounting.
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. On November 5, 1999, the Farmers shareholders approved the pending
acquisition which closed, with each common share of Farmers stock outstanding
converted into 4.028 shares of the Company's common stock, for a total of
2,900,160 shares. This transaction was accounted for under the purchase method
of accounting.
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 $0.09 per
share payable to shareholders of record as of August 5, 1999. The dividend was
paid on August 19, 1999.
On October 21, 1999, the Company declared a quarterly cash dividend of $0.09 per
share payable to shareholders of record as of November 4, 1999. The dividend is
to be paid on November 18, 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 of
Statement 133 is not expected to result in a material financial impact on the
Company's financial position or results of operations.
8
<PAGE>
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 September 30,
1999 1998
------- -------
(in thousands,
except per share data)
<S> <C> <C>
Numerator:
Net income..................................................................... $ 3,171 $ 5,352
Preferred stock dividends...................................................... (49) (49)
------- -------
Net income available to common shareholders.................................... $ 3,122 $ 5,303
======= =======
Denominator:
Denominator for basic earnings per share - weighted average shares............. 28,024 27,719
Effect of dilutive securities - stock options.................................. 32 483
------- -------
Denominator for diluted earnings per share - adjusted weighted average shares
and assumed conversions....................................................... 28,056 28,202
======= =======
Net income per share of common stock........................................... $ 0.11 $ 0.19
======= =======
Net income per share of common stock-diluted................................... $ 0.11 $ 0.19
======= =======
<CAPTION>
Nine Months ended September 30,
1999 1998
------- -------
(in thousands,
except per share data)
<S> <C> <C>
Numerator:
Net income..................................................................... $13,566 $18,058
Preferred stock dividends...................................................... (147) (147)
------- -------
Net income available to common shareholders.................................... $13,419 $17,911
======= =======
Denominator:
Denominator for basic earnings per share - weighted average shares............. 27,718 27,719
Effect of dilutive securities - stock options.................................. 504 193
------- -------
Denominator for diluted earnings per share - adjusted
weighted average shares and assumed conversions............................... 28,222 27,912
======= =======
Net income per share of common stock........................................... $ 0.48 $ 0.65
======= =======
Net income per share of common stock-diluted................................... $ 0.48 $ 0.64
======= =======
</TABLE>
Note 6. OTHER COMPREHENSIVE INCOME
Total comprehensive income was $2,233,000 and $4,777,000 for the quarters ended
September 30, 1999 and 1998, respectively, and $10,596,000 and $18,162,000 for
the nine months ended September 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.
9
<PAGE>
<TABLE>
<CAPTION>
Community Mortgage
Banking Lending Eliminations Total
------------ --------- ------------- -----------
(dollars in thousands)
<S> <C> <C> <C> <C>
Three months ended September 30, 1999:
- --------------------------------------
Net interest income..................... $ 16,807 $ 1,093 $ 17,900
Other income............................ 2,397 4,917 (109) 7,205
Other expenses.......................... (14,416) (5,594) 109 (19,901)
---------- -------- ---- ----------
Income before income taxes.............. $ 4,788 $ 416 $ 5,204
========== ======== ==========
Average total assets.................... $1,578,022 $110,139 $1,688,161
========== ======== ==========
Three months ended September 30, 1998:
- --------------------------------------
Net interest income..................... $ 17,031 $ 218 $ 17,249
Other income............................ 4,173 6,849 11,022
Other expenses.......................... (14,334) (5,047) (19,381)
---------- -------- ----------
Income before income taxes.............. $ 6,870 $ 2,020 $ 8,890
========== ======== ==========
Average total assets.................... $1,494,728 $ 75,604 $1,570,332
========== ======== ==========
Nine months ended September 30, 1999:
- -------------------------------------
Net interest income..................... $ 49,281 $ 2,539 $ 51,820
Other income............................ 7,970 19,249 (207) 27,012
Other expenses.......................... (39,337) (17,449) 207 (56,579)
---------- -------- ---- ----------
Income before income taxes.............. $ 17,914 $ 4,339 $ 22,253
========== ======== ==========
Average total assets.................... $1,568,467 $113,749 $1,682,216
========== ======== ==========
Nine months ended September 30, 1998:
- -------------------------------------
Net interest income..................... $ 48,894 $ 577 $ 49,471
Other income............................ 10,423 20,060 30,483
Other expenses.......................... (38,067) (14,279) (52,346)
---------- -------- ----------
Income before income taxes.............. $ 21,250 $ 6,358 $ 27,608
========== ======== ==========
Average total assets.................... $1,456,724 $ 49,992 $1,506,716
========== ======== ==========
</TABLE>
Note 8. PENDING MERGER
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 September 30, 1999, the Company consisted of Premier Bank ("Premier
Bank"), Milton National Bank ("Milton") 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 & Trust
into Premier Bank in the second quarter of 1999. The Company was incorporated in
1988 under the laws of the State of Georgia.
10
<PAGE>
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 subsidiaries, the Company operates 27 banking
offices located in the Atlanta metropolitan area and in northern, central and
coastal Georgia. In these markets, Premier Bank and Milton provide a broad
array of community banking services, including: loans to small and medium-sized
businesses; residential, construction and development loans; commercial real
estate loans; consumer loans and a variety of commercial and consumer deposit
accounts.
In addition, through its wholly-owned mortgage banking subsidiary, Premier
Lending, the Company operates 12 mortgage loan production offices in the Atlanta
metropolitan area; 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; on December 17, 1998, the Company acquired Frederica Bank &
Trust, a Georgia bank; and on August 31, 1999, the Company acquired North Fulton
Bancshares, Inc., a Georgia bank holding company. The historical financial
statements of the Company have been restated to give effect to these
acquisitions which were accounted for as poolings of interests.
On 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"). The Bank Atlanta merger closed on October 27, 1999,
and was accounted for as a pooling of interests. The Farmers merger closed on
November 5, 1999 and was accounted for as a purchase.
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 share interest. BB&T is a multi-bank holding
company headquartered in Winston-Salem, North Carolina. BB&T conducts its
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 completed in the first quarter
of 2000.
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.
11
<PAGE>
Financial Condition
- -------------------
At the end of the third quarter of 1999, total assets decreased $850,000 or
0.05% from December 31, 1998. Total loans (excluding mortgage loans held for
sale) increased $122,553,000 or 10.5% 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 $54,739,000 or
43.8% during the same period, as the volume of loans sold to correspondent
mortgage investors increased during 1999. Federal funds sold decreased
$90,645,000 or 68.8% from December 31, 1998 to September 30, 1999. Investment
securities increased $37,622,000 or 23.4% during the same period.
Total deposits decreased $13,422,000 or 1.0% for the year-to-date due, in part,
to a program to reduce the cost of deposits. Federal Home Loan Bank advances
increased $78,000,000 as the Company initiated a plan to supplement deposits
with lower cost funding. Other borrowings decreased by $73,616,000 or 51.0% as
the result of decreases in the warehouse line of credit resulting from lower
outstanding mortgage loans held for sale at period end.
Results of Operations
- ---------------------
For the three-month period ended September 30, 1999, the Company recorded net
income of $3,171,000 as compared to $5,352,000 for the same period in 1998. This
$2,181,000 or 40.8% decrease is due primarily to the following:
Net interest income increased $1,083,000.
Provision for credit losses increased $432,000.
Total other income decreased $3,817,000.
Total other expense increased $520,000.
Income tax expense decreased $1,505,000.
The reasons for these changes are discussed more fully below.
For the nine-month period ended September 30, 1999 the Company recorded net
income of $13,566,000 as compared to $18,058,000 for the same period in 1998.
This $4,492,000 or 24.9% decrease is due primarily to the following:
Net interest income increased $3,512,000.
Provision for credit losses increased $1,163,000.
Total other income decreased $3,471,000.
Total other expense increased $4,233,000.
Income tax expense decreased $863,000.
The reasons for these changes are discussed more fully below.
Net Interest Income
Net interest income increased $1,083,000 or 6.2% for the three-month period
ended September 30, 1999 compared to the same period in 1998, due to an increase
in average earning assets. Average earning assets increased by approximately
$135,000,000 while average interest-bearing liabilities increased by
approximately $112,000,000. Yields on earning assets decreased by 56 basis
points and costs of interest-bearing liabilities decreased by 52 basis points.
The net interest margin declined to 4.62% in the third quarter of 1999 from
4.76% in the same period of 1998.
Net interest income increased $3,512,000 or 7.0% for the nine-month period ended
September 30, 1999 compared to the same period in 1998, due to an increase in
average earning assets. Average earning assets increased by approximately
$143,000,000 while average interest-bearing liabilities increased by
approximately $172,000,000. Yields on earning assets decreased by 32 basis
points and costs of interest-bearing liabilities decreased by 48 basis points.
The net interest margin declined to 4.54% for the nine-month period of 1999 from
4.66% in the same period of 1998.
12
<PAGE>
Provision for Credit Losses
- ---------------------------
The Company recorded a provision for credit losses of $687,000 for the third
quarter of 1999 and $1,854,000 year-to-date. The Company had net charge-offs of
$371,000 during the third quarter and $578,000 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
Sept. 30, December 31,
1999 1998 Change Percentage
---------- ----------- ----------- -----------
(dollars in thousands)
<S> <C> <C> <C> <C>
Loans past due 90 days or more..... $ 29 $ 695 $ (666) (95.8)%
Nonaccrual loans................... 3,298 4,016 (718) (17.9)%
------ ------ ------- ------
Total nonperforming loans..... 3,327 4,711 (1,384) (29.4)%
Other real estate owned............ 1,494 1,889 (395) (20.9)%
------ ------ ------- ------
Total nonperforming assets.... $4,821 $6,600 $(1,779) (27.0)%
====== ====== ======= ======
Nonperforming loans/Total loans.... 0.26% 0.41%
Nonperforming assets/Total assets.. 0.28% 0.39%
</TABLE>
The table above illustrates the changes in the level of nonperforming assets
from December 31, 1998 to September 30, 1999. The level of nonperforming assets
at September 30, 1999 decreased by $1,779,000 from December 31, 1998. Management
presently anticipates the levels of nonperforming loans and assets will remain
at approximately current 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 $3,817,000 in
the third quarter of 1999 compared to the same period in 1998. Service charges
on deposit accounts increased by $127,000 due to the growth in outstanding
deposits. Income from mortgage banking activities decreased $1,419,000 for the
third quarter of 1999 compared to 1998 due to an increase in interest rates, as
rates on 30-year residential first mortgages increased almost 100 basis points
compared to 1998. As a result of increases in interest rates generally, 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 also declined. During the third quarter of 1998 the Company recognized
$1,151,000 in gains on sales of investment securities compared to zero for the
third quarter of 1999. Other noninterest income decreased $1,374,000 for the
third quarter of 1999 compared to 1998 primarily due to decreases in gains on
sales of SBA loans and various asset sales in 1998 as a result of the subsidiary
bank acquisitions.
For the year-to-date, other income decreased $3,471,000. Service charges on
deposits increased by $279,000 as outstanding deposits continued to increase in
1999 over the 1998 levels. Income from mortgage banking activities increased by
$853,000 in 1999 compared to 1998 due to the strong growth in originations
during late 1998 and early 1999. As discussed above, this growth has slowed
dramatically during the second and third quarters of 1999. As a result of
general increases in interest rates during the summer of 1999 and the
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
the abnormally high levels of 1998 and early 1999. Other noninterest income
declined by $3,466,000 for the year-to-date primarily due to non-recurring asset
sales in 1998.
Other Expense
- -------------
Other expense increased $520,000 for the three-month period ended September 30,
1999 compared to the same period in 1998. Salaries and employee benefits expense
decreased $343,000 primarily due to decreased commissions on mortgage loan
originations. Occupancy expense decreased $67,000 due to improvements in
efficiencies as a result of the subsidiary bank consolidations during 1999.
Merger expenses decreased by $802,000 as several acquisitions were completed
during the third quarter of 1998. Other operating expense increased $1,732,000
over 1998 as Premier Lending opened six new mortgage origination offices in late
1998.
13
<PAGE>
For the year-to-date, other expense increased $4,233,000. Salaries and employee
benefits increased by $1,180,000 due to increased mortgage loan commissions
during the first six months of 1999 compared to 1998. Occupancy expense
remained relatively constant for the nine-month periods, decreasing slightly by
$7,000. Merger expenses decreased by $243,000 due to fewer completed
acquisitions during the first nine months of 1999. Other operating expense
increased by $3,303,000 due to the additional mortgage origination offices
opened in late 1998 as well as increases in various expenses incurred in the
consolidation of the acquired bank subsidiaries.
Income Tax Expense
Income tax expense decreased $1,505,000 for the three months ended September 30,
1999 compared to the same period in 1998 primarily due to the decrease in pretax
income. The effective tax rate for the third quarter of 1999 was 39.1% versus
39.8% for the same period in 1998.
For the year, income tax expense decreased $863,000. The effective tax rate was
39.0% in 1999 versus 34.6% for 1998. The Company's effective tax rate increased
due to the nondeductibility of certain merger expenses and a decrease in tax-
exempt interest income.
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 during 1999,
mortgage originations, especially refinancings, tend to decrease. This has been
somewhat offset by the strong economies in which the Company operates and
continued strong 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 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 $24 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 $136 million at
September 30, 1999. Maturities in the loan portfolio also provide a steady flow
of funds. At September 30, 1999 and 1998, the loan-to-deposit ratio (excluding
loans held for sale) was 98.1% and 83.6%, respectively.
14
<PAGE>
The Company's warehouse line of credit with the Federal Home Loan bank bears
interest at the Fed Funds rate plus fifty basis points. This rate is adjusted
daily and is payable monthly. This line matures on May 31, 2000 and is secured
by an assignment of first security interests in certain mortgage loans. The
Company has a total of $92,000,000 in Federal Home Loan Bank advances as of
September 30, 1999. The advances mature at various dates from 2000 to 2009 and
bear interest payable quarterly at fixed rates ranging from 4.84% to 5.40%. The
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 8.9% at September 30, 1999, compared to 8.6% 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 4.0-5.0%. Banking
organizations with supervisory, financial, operational, or managerial
weaknesses, as well as organizations that are anticipating or experiencing
significant growth, are expected to maintain capital ratios well above the
minimum levels.
Capital Levels
Sept. 30, Minimum
1999 Requirement
---------- ---------------
Tier I Capital Leverage Ratio..... 11.14% 3.0%
Tier I Risk-based Capital Ratio... 13.47% 4.0%
Tier II Risk-based Capital Ratio.. 1.22%
-----
Total Risk-based Capital Ratio.... 14.69% 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.
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) interest rates and general economic
conditions in the markets in which the
15
<PAGE>
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
24 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.
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
27.1 Financial Data Schedule
16
<PAGE>
b. Reports on Form 8-K
The Company filed a report on Form 8-K on August 3, 1999, reporting the
execution of an Agreement and Plan of Reorganization with BB&T Corporation.
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 November 12, 1999 Darrell D. Pittard
----------------- ------------------
Darrell D. Pittard
Chief Executive Officer
Date November 12, 1999 Michael E. Ricketson
----------------- --------------------
Michael E. Ricketson
Chief Accounting Officer
17
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 52,311
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 41,030
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 198,742
<INVESTMENTS-CARRYING> 202,592
<INVESTMENTS-MARKET> 198,742
<LOANS> 1,355,106
<ALLOWANCE> 16,957
<TOTAL-ASSETS> 1,693,318
<DEPOSITS> 1,309,691
<SHORT-TERM> 98,900
<LIABILITIES-OTHER> 11,203
<LONG-TERM> 120,750
0
2,446
<COMMON> 28,274
<OTHER-SE> 122,054
<TOTAL-LIABILITIES-AND-EQUITY> 1,693,318
<INTEREST-LOAN> 89,850
<INTEREST-INVEST> 8,305
<INTEREST-OTHER> 3,134
<INTEREST-TOTAL> 101,289
<INTEREST-DEPOSIT> 38,507
<INTEREST-EXPENSE> 9,108
<INTEREST-INCOME-NET> 53,674
<LOAN-LOSSES> 1,854
<SECURITIES-GAINS> 29
<EXPENSE-OTHER> 56,579
<INCOME-PRETAX> 22,253
<INCOME-PRE-EXTRAORDINARY> 22,253
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,566
<EPS-BASIC> 0.48
<EPS-DILUTED> 0.48
<YIELD-ACTUAL> 4.54
<LOANS-NON> 3,298
<LOANS-PAST> 29
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 15,681
<CHARGE-OFFS> 1,055
<RECOVERIES> 477
<ALLOWANCE-CLOSE> 16,957
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
