<PAGE> 1
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 quarterly period ended September 30, 1996
------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
------------------- ----------------
Commission File Number 0-84254
PIONEER BANCSHARES, INC.
----------------------------------------------------
(Exact name of Registrant as specified in its Charter)
Delaware 62-1469913
- --------------------------------------------------------------------------------
(State of other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
801 Broad Street, Chattanooga, TN 37402
- --------------------------------------------------------------------------------
(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code 423-755-0000
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 September 30, 1996:
Title of Class Number of Shares Outstanding
-------------- ----------------------------
Common Stock, $.005 Par Value 3,759,912
<PAGE> 2
PIONEER BANCSHARES, INC.
<TABLE>
<CAPTION>
INDEX PAGE
- ----- ----
PART I. FINANCIAL INFORMATION
<S> <C> <C>
Item 1. Financial Statements
Consolidated Balance Sheets - September 30, 1996,
December 31, 1995 and September 30, 1995 1
Consolidated Statements of Income -
Three Months and Nine Months Ended 2
September 30, 1996 and September 30, 1995
Consolidated Statements of Changes in Shareholders' Equity -
Nine Months Ended September 30, 1996 and September 30, 1995 3
Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 1996 and September 30, 1995 4
Notes to Consolidated Financial Statements 5-6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
of Pioneer Bancshares, Inc. 7-19
PART II. OTHER INFORMATION 20
Signatures 21
Exhibit Index 22
</TABLE>
<PAGE> 3
PART 1
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CONDITION Unaudited Unaudited
(in thousands) September 30, December 31, September 30,
------------- ------------ ------------
ASSETS 1996 1995 1995
------------- ------------ ------------
<S> <C> <C> <C>
Cash and due from banks $ 56,055 $ 54,938 $ 52,689
Investment securities:
Held-to-maturity (fair value of $61,847 at
September 30, 1996, $78,260 at December 31,
1995, and $80,656 at September 30, 1995) 63,154 78,040 79,942
Available-for-sale 210,195 208,968 233,459
Federal funds sold 0 5,935 7,255
Loans 489,865 423,191 386,258
Less: Unearned income 1,598 1,688 1,598
Allowance for loan losses 5,270 5,872 5,609
--------- --------- ---------
Net loans 482,997 415,631 379,051
Premises and equipment, net of accumulated
depreciation 20,383 17,084 15,794
Intangible assets 6,657 7,271 7,494
Other assets 14,630 11,401 11,918
--------- --------- ---------
Total Assets $ 854,071 $ 799,268 $ 787,602
========= ========= =========
LIABILITIES
Deposits
Noninterest bearing demand deposits
129,609 127,776 123,937
Interest bearing demand deposits 118,606 118,084 115,969
Money market accounts 43,888 44,652 44,205
Savings deposits 95,569 88,556 85,289
Time deposits of less than $100,000 248,975 231,563 232,119
Time deposits of $100,000 or more 71,268 51,464 55,127
--------- --------- ---------
Total deposits 707,915 662,095 656,646
Federal funds purchased and securities
sold under agreements to repurchase 37,814 41,915 38,078
Other borrowings 10,000 0 0
Other liabilities 7,152 7,633 6,582
--------- --------- ---------
Total liabilities 762,881 711,643 701,306
--------- --------- ---------
STOCKHOLDERS' EQUITY
Common stock par value $.005 per share;
8,000,000 authorized; 3,759,912 issued 19 19 19
Surplus 64,728 64,728 64,728
Retained earnings 27,195 23,045 22,269
Unrealized appreciation/(depreciation) on
securities available for sale (726) 312 (346)
Less: treasury stock - at cost 26 479 374
--------- --------- ---------
Total stockholders' equity 91,190 87,625 86,296
--------- --------- ---------
Total Liabilities and Stockholders' Equity $ 854,071 $ 799,268 $ 787,602
========= ========= =========
</TABLE>
1
<PAGE> 4
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
<TABLE>
<CAPTION>
Unaudited Unaudited
Three months ended Nine months ended
September 30, September 30,
------------------- -------------------
INTEREST INCOME 1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Interest and fees on loans $ 10,500 $ 8,116 $ 29,961 $ 22,954
Interest on investment securities
Taxable 2,860 3,122 8,747 8,826
Tax exempt 980 995 2,970 3,005
Interest on federal funds sold 224 657 372 1,266
Interest on other earning assets 6 4 15 14
-------- -------- -------- --------
Total interest income 14,570 12,894 42,065 36,065
-------- -------- -------- --------
INTEREST EXPENSE
Interest bearing demand deposits 794 789 2,357 2,283
Money market accounts 428 328 1,221 954
Savings deposits 573 593 1,711 1,724
Time deposits of less than $100,000 3,435 3,394 9,863 8,394
Time deposits of $100,000 or more 813 695 2,304 2,056
Federal funds purchased and securities
sold under agreements to repurchase 500 476 1,575 1,219
Other borrowed money 142 0 375 0
-------- -------- -------- --------
Total interest expense 6,685 6,275 19,406 16,630
-------- -------- -------- --------
Net interest income 7,885 6,619 22,659 19,435
Provision for loan losses 221 179 756 289
-------- -------- -------- --------
Net interest income
after the provision for loan losses 7,664 6,440 21,903 19,146
-------- -------- -------- --------
NONINTEREST INCOME
Trust income 343 301 991 879
Service charge on deposit accounts 978 830 2,799 2,412
Net securities gains (losses) 157 14 220 (33)
Other income 618 367 1,743 1,105
-------- -------- -------- --------
Total noninterest income 2,096 1,512 5,753 4,363
-------- -------- -------- --------
NONINTEREST EXPENSE
Salaries and employee benefits 3,508 3,107 10,263 8,736
Occupancy 947 807 2,738 2,184
Other 1,913 1,704 5,769 5,518
-------- -------- -------- --------
Total noninterest expense 6,368 5,618 18,770 16,438
-------- -------- -------- --------
Income before provision for income taxes 3,392 2,334 8,886 7,071
Provision for income taxes 786 465 2,283 1,554
-------- -------- -------- --------
NET INCOME $ 2,606 $ 1,869 $ 6,603 $ 5,517
======== ======== ======== ========
Net income per common share 0.69 0.50 1.76 1.47
Dividends declared per common share 0.2175 0.2100 0.6525 0.6200
</TABLE>
2
<PAGE> 5
CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS' EQUITY
Pioneer Bancshares, Inc.
(in thousands except for share data)
<TABLE>
<CAPTION>
Unrealized
Common Stock Appreciation
------------------- (Depreciation)
# of Par Capital Retained Available- Treasury Total
Shares Value Surplus Earnings for-Sale Sec Stock
--------- ----- -------- -------- ------------ -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances, December 31, 1994 1,879,956 $ 19 $ 64,728 $ 18,812 $ (5,591) $ (63) $ 77,905
Net income 5,517 5,517
Cash dividend (2,060) (2,060)
Net Changes in Unrealized
Appreciation on Securities
Available-for-Sale 5,245 5,245
Purchases of Treasury Stock (311) (311)
--------- ----- -------- -------- ------- -------- --------
Balances, September 30, 1995 (Unaudited) 1,879,956 $ 19 $ 64,728 $ 22,269 $ (346) $ (374) $ 86,296
========= ===== ======== ======== ======= ======== ========
Balances, December 31, 1995 1,879,956 $ 19 $ 64,728 $ 23,045 $ 312 $ (479) $ 87,625
Net income 6,603 6,603
Cash dividend (2,453) (2,453)
Stock dividend 1,879,956
Net Changes in Unrealized
Depreciation on
Securities Available-for-Sale (1,038) (1,038)
Sales of Treasury Stock 631 631
Purchases of Treasury Stock (178) (178)
--------- ----- -------- -------- ------- -------- --------
Balances, September 30, 1996 (Unaudited) 3,759,912 $ 19 $ 64,728 $ 27,195 $ (726) $ (26) $ 91,190
--------- ----- -------- -------- ------- -------- --------
</TABLE>
3
<PAGE> 6
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Unaudited
Nine months ended
OPERATING ACTIVITIES September 30,
---------------------------
1996 1995
-------- --------
<S> <C> <C>
Net income $ 6,603 $ 5,517
Adjustments to reconcile net income to cash
provided by operating activities:
Provision for loan losses 756 289
Depreciation on premises and equipment 1,372 1,072
Amortization and accretion of investment
securities 658 412
(Increase) decrease in other assets (3,229) 2,705
Increase (decrease) in other liabilities (481) 2,663
------- -------
Net cash provided by operating activities 5,679 12,658
------- -------
INVESTING ACTIVITIES
Proceeds from sales and maturities of
available-for-sale securities 53,540 36,774
Proceeds from maturities of
held-to-maturity securities 14,804 2,088
Purchases of investment securities (55,767) (87,727)
Net (increase) decrease in federal funds sold 5,935 385
Net (increase) decrease in loans (68,122) (48,784)
Purchases of premises and equipment (4,671) (2,693)
------- -------
Net cash used in investing activities (54,281) (99,957)
------- -------
FINANCING ACTIVITIES
Net increase (decrease) in demand deposits 2,355 7,569
Net increase (decrease) in savings and MMDA 6,249 (10,439)
Net increase (decrease) in time deposits 37,216 84,267
Net increase (decrease) in repurchase
agreements and federal funds purchased (4,101) (392)
Net increase (decrease) in other borrowings 10,000 0
Cash dividends paid (2,453) (2,060)
Sales of treasury stock 631 0
Purchase of treasury stock (178) (311)
------- -------
Net cash provided (used) by financing activities 49,719 78,634
------- -------
Increase (decrease) in cash and cash
equivalents 1,117 (8,665)
------- -------
Cash and cash equivalents at the beginning of
the period 54,938 61,354
------- -------
Cash and cash equivalents at the end of
the period $ 56,055 $ 52,689
======== ========
</TABLE>
4
<PAGE> 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PIONEER BANCSHARES, INC.
A. PRESENTATION OF FINANCIAL INFORMATION
The financial statements in this report have not been audited. The information
included herein should be read in conjunction with the notes to consolidated
financial statements included in the 1995 Annual Report to Shareholders which
was furnished to each shareholder of the Company on April 30, 1996. The
consolidated financial statements presented herein conform to generally
accepted accounting principles and to general industry practices. All prior
period financial statement data has been restated to reflect the pooling of
interest method of accounting. All prior period per share data has been
restated to reflect the two for one stock split approved at the annual meeting
of Pioneer Bancshares, Inc. stockholders held on May 21, 1996.
Consolidation
The accompanying consolidated financial statements include the accounts of
Pioneer Bancshares, Inc., its subsidiaries, Pioneer Bank and Valley Bank, and
Pioneer Bank's subsidiaries and trusteed affiliates. Pioneer Bank's
subsidiaries include Pioneer Securities, Inc. (PSI), Marion Properties, Inc.
and Center Finance Corporation. The trusteed affiliates of Pioneer Bank include
Frontier Corporation and Valley Company with Valley's wholly-owned subsidiary.
Collectively Pioneer Bancshares and its subsidiaries and trusteed affiliates
are referred to as the "Company." Frontier Corporation and Valley Company are
held in trust for the benefit of Pioneer Bank's shareholders for a period of
one hundred years from 1956. At any time, the trusts may be liquidated by a
two-thirds vote of Pioneer Bank's shareholders. Center Finance Corporation
specializes in consumer finance and related activities in Athens, Tennessee and
commenced operations in the third quarter of 1996.
Substantially all intercompany transactions, profits and balances have been
eliminated.
Accounting Policies
During interim periods, the Company follows the accounting policies set forth
in its Form 10-K for the year ended December 31, 1995, as filed with the
Securities and Exchange Commission. Since 1995, there have been no changes in
any accounting principles or practices, or in the method of applying any such
principles or practices.
Interim Financial Data (Unaudited)
In the opinion of Company management, the accompanying interim financial
statements contain all material adjustments, consisting only of normal
recurring adjustments necessary to present fairly the financial condition, the
results of operations, cash flows and stockholders' equity of the Company for
the interim periods. Results for interim periods are not necessarily indicative
of the results to be expected for a full year.
5
<PAGE> 8
Deferred Taxes
Deferred income taxes arise from temporary differences between the income tax
basis and the financial reporting basis of assets and liabilities. If it is
more likely than not that some portion or all of a deferred tax asset will not
be realized, a valuation allowance is recognized.
Common Stock Data
Earnings per share is computed by dividing the net income for the period by the
weighted average number of common shares outstanding during the period.
FASB Statements No. 114 & 118
The Company adopted FASB Statements No. 114 & 118 in the first quarter of 1995.
For purposes of these Statements, management maintains the following policy.
Impaired loans are divided into two classifications: doubtful and loss.
"Doubtful" loans indicate probable loss and are reserved at 50% of outstanding
principal regardless of underlying collateral value. If collateral value is
less than 50% of principal, then additional specific reserves are allocated.
"Loss" loans are deemed uncollectible by management and are reserved at 100% of
outstanding principal value. The Company charges-off loans that it deems to be
substantially uncollectible. The Directors Loan Committee approves all loan
charge-offs. The following table details impaired loans:
<TABLE>
<CAPTION>
September 30,
------------------------------
1996 1995
-------- --------
<S> <C> <C>
Principal balance $113,644 $ 73,024
Interest income recorded during loan impairment 0 0
Reserve for potential credit losses 64,900 40,570
Unreserved portion of impaired loans 48,744 32,454
Average principal balance quarter-to-date 193,909 84,708
Average principal balance year-to-date 166,446 156,934
</TABLE>
Impaired loans are identified according to the two classification methods in
the following table:
<TABLE>
<CAPTION>
September 30,
------------------------------
1996 1995
-------- --------
<S> <C> <C>
Doubtful loans outstanding. $ 97,486 $ 64,909
Loss loans outstanding 16,158 8,115
</TABLE>
6
<PAGE> 9
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OF PIONEER BANCSHARES, INC.
OVERVIEW
The Company ended the third quarter with total assets of $854.1 million, a 6.9%
increase from December 31, 1995. The Company reported net income of $6.6
million, or $1.76 per share, for the nine months ended September 30, 1996,
compared to $5.5 million, or $1.47 per share, for the same period in 1995.
NET INTEREST INCOME
Net interest income was $7.9 million for the three months ended September 30,
1996, compared to $6.6 million for the same period in 1995. This level of net
interest income resulted primarily from, among other things, an increase in net
interest spread of 42 basis points to 3.65% from 3.23% . The net interest
margin was 4.43% in the third quarter of 1996 compared to 4.08% in the third
quarter of 1995. The margin increased because the yield on interest earning
assets increased 32 basis points, while the rate paid on interest bearing
liabilities decreased 10 basis points. (See "ASSET/LIABILITY MANAGEMENT."
CASH AND DUE FROM BANKS
Cash and due from banks increased from $54.9 million as of December 31, 1995,
to $56.1 million as of September 30, 1996, representing a 2.0% increase. The
increase is indicative of normal business cycles in the industry. Cash and due
from bank balances will fluctuate depending on monthly cycles and the volume of
uncollected funds deposited by bank customers. It is management's desire to
maintain adequate cash reserves to meet our customers' cash needs.
INVESTMENTS
Investment securities decreased from $287.0 million to $273.3 million, or 4.8%
from December 31, 1995 to September 30, 1996. This decrease was due to
maturities in the held-to-maturity category which were not reinvested in
investment securities, but rather funded loan portfolio growth.
Over the course of 1996, slight volatility of long term interest rates has
effectively devalued the investment portfolio by $3.1 million. Interest rates
increased due to indices that reflect that the economy is generally strong, as
well as to curb inflation. Regarding the investment portfolio, management
intends to (i) buy securities only during those times when prices appear most
favorable, (ii) maintain maturities four years or less and (iii) avoid
mortgage-backed securities and structured notes.
7
<PAGE> 10
FASB 115 requires that the "Available for Sale" portfolio be valued at market
prices and any difference be recorded as a change in asset value of the
investment portfolio and capital. As of September 30, 1996, the FASB 115
adjustment resulted in a decrease in the asset value of the investment
portfolio of $1.1 million and an adjustment to the capital account of $726,000,
after reserving $374,000 for deferred taxes.
As of September 30, 1996, the Company had no investment in Federal Funds
compared to $5.9 million at December 31, 1995. Management continually monitors
the Company's liquidity position to determine the necessary balances of short
term investments and to consider alternative uses of such funds.
LOAN PORTFOLIO
Loans, net of unearned income increased $66.8 million or 15.8% from December
31, 1995 to September 30, 1996. The loan mix changed marginally from year end
1995 to quarter end, September 30, 1996. The largest dollar volume loan
category increase occurred in commercial loans by $20.1 million or 25.3% from
December 1995 to September 1996. Consumer installment loans increased $16.8
million or 32.9%, due to the indirect auto loan program. Residential real
estate loans exhibited strong growth of $19.3 million or 16.4% from December
31, 1995 to September 30, 1996. Real estate construction loans had the largest
percentage increase of 73.4% or $13.7 million, for the same period. This
increase in construction loans indicates a strong local economy.
The Company had no foreign loans or loans to lesser developed countries as of
September 30, 1996. The Company's loan mix is further described in the table
below.
8
<PAGE> 11
LOAN PORTFOLIO
(in thousands)
<TABLE>
<CAPTION>
September Percent December Percent
1996 of Total 1995 of Total
----------- -------- --------- --------
<S> <C> <C> <C> <C>
Commercial, financial
and agricultural $ 99,409 20.29% $ 79,324 18.74%
Real estate:
Construction and
land development 32,373 6.61% 18,671 4.41%
Residential 136,456 27.86% 117,182 27.69%
Commercial 149,626 30.54% 153,354 36.24%
Consumer
Credit cards 3,789 0.77% 3,253 0.77%
Installments 67,826 13.85% 51,040 12.06%
Lease financing 386 0.08% 367 0.09%
----------- ------- -------- -------
Total Gross Loans 489,865 100.00% 423,191 100.00%
======= =======
Less:
Unearned income 1,598 1,688
Allowance for
loan losses 5,270 5,872
----------- --------
Total Net Loans $ 482,997 $415,631
=========== ========
</TABLE>
Management does not anticipate the current loan mix to change significantly
over the remainder of 1996.
PROVISION AND ALLOWANCE FOR POSSIBLE LOAN LOSSES
The allowance for possible loan losses decreased $602,000 or 10.3% during the
nine months ended September 30, 1996. The provision charged to expense is based
on continuous analysis by the Company's management of potential losses in the
loan portfolio.
9
<PAGE> 12
ALLOWANCE FOR LOAN LOSSES
(in thousands)
<TABLE>
<CAPTION>
1996 1995
-------------------------------------- -----------------------
Quarter Ending Sept 30 June 30 Mar 31 Dec 31 Sept 30
-------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Balance at beginning of period $ 5,493 $ 5,741 $ 5,872 $ 5,609 $ 5,500
Loans charged-off 566 1,069 481 146 119
Loans recovered 122 566 70 80 49
------- ------- ------- ------- -------
Net charge-offs (recoveries) 444 503 411 66 70
Provision for loan losses charged
to expense 221 255 280 329 179
------- ------- ------- ------- -------
Balance at end of period $ 5,270 $ 5,493 $ 5,741 $ 5,872 $ 5,609
======= ======= ======= ======= =======
Allowance for loan losses as a percentage
of average loans outstanding
for the period 1.11% 1.19% 1.32% 1.45% 1.52%
Allowance for loan losses as a percentage
of nonperforming assets and loans 90
days past due outstanding
at end of the period 180.54% 145.66% 211.77% 255.64% 251.86%
Annualized QTD net charge-offs as
a percentage of average loans
outstanding for the period 0.37% 0.44% 0.38% 0.07% 0.08%
Annualized YTD net charge-offs as
a percentage of average loans
outstanding for the period 0.38% 0.41% 0.38% 0.03% 0.01%
</TABLE>
The Company's allowance for possible loan losses as a percentage of loans, net
of unearned income, was 1.11% at September 30, 1996 as compared to 1.45% at
December 31, 1995. The allowance for loan losses at September 30, 1996, and
December 31, 1995, provided 180.5% and 255.6% coverage, respectively, of
nonperforming assets and loans 90 days or more past due. Net charge-offs
(annualized as a percentage of average quarter-to-date loans) were 0.37% during
the third quarter of 1996 as compared to 0.08% for the same period one year
ago. At September 30, 1996, management believes that the allowance for possible
loan losses is sufficient to absorb potential losses.
NONPERFORMING ASSETS AND PAST DUE LOANS
Nonperforming assets include nonperforming loans, foreclosed real estate held
for sale and foreclosed other personal property held for sale. As of September
30, 1996, nonperforming assets were $2.1 million as compared to $1.9 million at
December 31, 1995. The ratio of nonperforming assets to loans, net of unearned
income, other real estate and other nonperforming assets was 0.45% at September
30, 1996, compared to 0.47% at December 31, 1995 and 0.43% at September 30,
1995.
10
<PAGE> 13
Total nonperforming loans to total average loans increased from 0.28% at
December 31, 1996, to 0.34% at September 30, 1996. Likewise, loans past due 90
days or more as a percentage of total average loans increased to 0.17% as of
September 30, 1996, compared to 0.09% as of December 31, 1995. Management
believes that asset quality will remain strong throughout the remainder of
1996.
Net loans charged off during the third quarter of 1996 were $444,000
compared to a $70,000 for the same period of 1995. Further detail of loan
charge-offs and recoveries is presented in the table "Allowance for Loan
Losses."
NONPERFORMING ASSETS AND PAST DUE LOANS
(in thousands)
<TABLE>
<CAPTION>
1996 1995
--------------------------------------- -------------------------
Quarter Ending Sept 30 June 30 Mar 31 Dec 31 Sept 30
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Avg loans, net of unearned income $475,430 $461,337 $434,323 $406,150 $369,385
======== ======== ======== ======== ========
Nonaccrual loans $ 1,618 $ 1,915 $ 1,160 $ 1,153 $ 881
Renegotiated or restructured loans 0 0 0 0 0
-------- -------- -------- -------- --------
Total nonperforming loans 1,618 1,915 1,160 1,153 881
Other real estate owned, net 421 480 840 761 699
Other non-performing assets 89 111 54 0 0
-------- -------- -------- -------- --------
Total nonperforming assets 2,128 2,506 2,054 1,914 1,580
======== ======== ======== ======== ========
Loans 90 days or more past due
and still accruing $ 791 $ 1,265 $ 711 $ 383 $ 647
Total nonperforming loans as a
percentage of total loans 0.34% 0.42% 0.27% 0.28% 0.24%
Total nonperforming assets as a
percentage of total loans, ORE
and other nonperforming assets 0.45% 0.54% 0.47% 0.47% 0.43%
Loans 90 days past due as a
percentage of total loans 0.17% 0.27% 0.16% 0.09% 0.18%
</TABLE>
DEPOSITS
Total deposits increased $45.8 million or 6.9% from $662.1 million at December
31, 1995 to $707.9 million at September 30, 1996. The increase is due primarily
to customers investing in time deposits to attain marginally higher yields over
other deposit products. Total time deposits increased $37.2 million from
December 31, 1995 to September 30, 1996.
Federal funds purchased and securities sold under agreements to repurchase
decreased $4.1 million or 9.8% from December 31, 1995 to September 30, 1996.
Counterparties to the agreements to repurchase are commercial account
customers, where excess funds from noninterest bearing checking accounts are
transferred nightly to a collateralized interest bearing repurchase account.
These accounts are not FDIC insured, therefore the Company collateralizes the
deposits with securities from the investment portfolio. For the quarter ended
September 30, 1996, none of the
11
<PAGE> 14
repurchased agreements were brokered. As of September 30, 1996, the Company's
federal funds purchased position was $4.4 million compared to $5.0 million as
of December 31, 1995.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity represents the ability to provide funding for lending and investment
activities, as well as to cover deposit withdrawals and pay debt and operating
obligations. Maintaining an adequate level of liquidity is an important
component of the Company's balance sheet management objectives.
Net cash provided by operating activities for the nine months ended September
30, 1996, totaled $5.7 million. For the same period, net cash used by investing
activities totaled $54.3 million consisting of proceeds from maturities and
sales of investment securities of $68.3 million, with cash outflows of $55.8
million in investment securities purchases, and a $68.1 million increase in
loans outstanding. Net cash provided by financing activities of $49.7 million
consisted of increases in demand deposits, savings deposits, time deposits and
other borrowings of $55.7 million. The payment of $2.5 million in common stock
dividends ($0.6525 per share) was funded from earnings. Management will stagger
the purchases of investment securities within a four year maturity horizon to
provide sufficient liquidity to the loan portfolio. Management does not
anticipate any unexpected funding needs in the near future that could not be
satisfied with current cash generated from investing activities.
Total stockholders' equity, adjusted for the unrealized appreciation on
securities available for sale, to total assets at September 30, 1996 and
December 31, 1995 was 10.76% and 10.92%, respectively. The Company's book value
per share increased from $23.31 at December 31, 1995 to $24.25 at September 30,
1996. The Company's Tier I risk based capital ratio, total risk based capital
ratio and leverage capital ratio at September 30, 1996 were 12.41%, 13.23% and
10.06%, respectively, exceeding the fully phased-in required capital ratios of
4.00%, 8.00% and 3.00%, respectively. These ratios as of December 31, 1995,
were 14.77%, 15.85% and 10.11%, respectively. Increased regulatory activity in
the financial industry as a whole will continue to impact the structure of the
industry; however, management does not anticipate any negative impact on the
capital resources or operations of the Company.
INTEREST RATE SENSITIVITY
The following table illustrates the Company's exposure to interest rate
fluctuations as of September 30, 1996:
12
<PAGE> 15
Interest Rate Sensitivity Analysis
as of September 30, 1996
(in thousands)
<TABLE>
<CAPTION>
-------------- --------------- --------------- --------------- --------------- --------------
Over 3 Over 1
Months Year Non-
3 Months through through Over Interest
or less 12 Months 5 Years 5 Years Sensitive Total
-------------- --------------- --------------- --------------- --------------- --------------
ASSETS:
Interest Earning Assets:
<S> <C> <C> <C> <C> <C> <C>
Loans, net of unearned
income $156,913 $69,567 $245,910 $15,877 $488,267
Less: Allowance for
loan losses $(5,270) (5,270)
-------- -------- -------- ------- ------- --------
Net loans 156,913 69,567 245,910 15,877 (5,270) 482,997
Investment securities 16,980 35,645 159,277 61,447 273,349
Federal funds sold 0 0
-------- -------- -------- ------- ------- --------
Total earning assets 173,893 105,212 405,187 77,324 (5,270) 756,346
Cash and other assets 97,725 97,725
-------- -------- -------- ------- ------- --------
Total assets $173,893 $105,212 $405,187 $77,324 $92,455 $854,071
======== ======== ======== ======= ======= ========
-------------- --------------- --------------- --------------- --------------- --------------
Over 3 Over 1
Months Year Non-
3 Months through through Over Interest
or less 12 Months 5 Years 5 Years Sensitive Total
-------------- --------------- --------------- --------------- --------------- --------------
LIABILITIES AND
STOCKHOLDERS'
EQUITY:
Interest Bearing
Liabilities:
Interest bearing demand
deposits $ 9,488 $ 14,233 $ 94,885 $118,606
Money market accts 8,778 17,555 17,555 43,888
Savings deposits 7,646 11,468 76,455 95,569
Other time deposits 97,422 116,650 34,860 $ 43 248,975
CD's of $100,000
or more 30,560 6,781 71,268
Federal funds purchased
and securities sold
under agreements
to repurchase 37,814 37,814
Other borrowings 10,000 10,000
-------- -------- -------- ------- ------- --------
Total interest bearing
liabilities 195,075 190,466 240,536 43 626,120
Non-interest bearing
demand deposits $129,609 $129,609
Other liabilities 7,152 7,152
Stockholders' equity 91,190 91,190
-------- -------- -------- ------- -------- --------
Total liabilities and
stockholders' equity $195,075 $190,466 $240,536 $ 43 $227,951 $854,071
======== ======== ======== ======= ======== ========
Interest sensitivity gap $(21,182) $(85,254) $164,651 $77,281
Cumulative interest
sensitivity gap $(21,182) $(106,436) $ 58,215 $135,496
Cumulative interest
sensitivity gap as a
percentage of
total earning assets -2.8% -14.1% 7.7% 17.9%
</TABLE>
13
<PAGE> 16
In analyzing the interest rate sensitivity at September 30, 1996, the Company
is liability sensitive in the less than twelve month categories in the amount
of $106.4 million. In the greater than one year categories, the Company is
asset sensitive in the amount of $241.9 million. Overall the Company is asset
sensitive in the amount of $135.5 million. During periods of increasing
interest rates, asset sensitivity would enable the Company to reprice earning
assets faster than interest bearing liabilities, therefore optimizing net
interest margins. During periods of decreasing interest rates, being asset
sensitive would narrow net interest margins, because interest earning assets
would reprice faster at lower rates before the repricing of the interest
bearing liabilities. Management maintains several interest rate risk models,
regularly meets with the Board of Directors to discuss asset/liability
management issues and believes this level of exposure to interest rate
fluctuations to be acceptable.
NET INCOME
Net income for the three months ended September 30, 1996 increased $737,000 or
39.4% over the same period in 1995. Net income per share for the quarter
increased $0.19 or 39.4% to $0.69 per share compared to $0.50 per share for the
same period one year ago. Annualized return on average assets for the three
months ending September 30, 1996 was 1.24% as compared to 0.96% for 1995. The
annualized return on average equity for the third quarter of 1996 was 11.53%
compared to 8.87% for the same period in 1995.
For the nine months ended September 30, 1996, net income increased $1.1 million
or 19.7% over net income for the nine months ended September 30, 1995. Earnings
per share increased $0.29 or 19.7% from $1.47 per share to $1.76 per share for
the same period. On an annualized basis, the return on average assets increased
from 1.02% as of September 30, 1995, to 1.07% as of September 30, 1996.
Likewise, the return on average equity increased to 9.79% for the three
quarters ended September 30, 1996, from 8.85% for the same period in 1995.
NET INTEREST MARGIN
The following table shows average balances, interest income and interest
expense, and yields/rates for the three months and for the nine months ending
September 30, 1996 and 1995.
14
<PAGE> 17
CONSOLIDATED AVERAGE BALANCE SHEET
INTEREST INCOME/EXPENSE AND
YIELD/RATES
Taxable Equivalent Basis
(in thousands)
<TABLE>
<CAPTION>
Three months ended
September 30,
-------------------------------------------------------------------------
Assets 1996 1995
-------------------------------------------------------------------------
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
------------ ----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Earning assets:
Loans, net of unearned income $ 475,430 $ 10,403 8.75% $ 369,385 $ 8,151 8.83%
Investment securities 263,600 4,437 6.73% 290,787 4,630 6.37%
Other earning assets 17,232 225 5.22% 42,843 661 6.17%
---------- --------- ---------- ---------
Total earning assets 756,262 15,065 7.97% 703,015 13,442 7.65%
--------- ---------
Allowance for loan losses (5,432) (5,609)
Cash and other assets 86,714 79,477
---------- ---------
TOTAL ASSETS $ 837,544 $ 776,883
========== =========
Liabilities and Stockholders' Equity
Interest bearing liabilities:
Interest bearing demand deposits $ 120,264 794 2.64% $113,301 789 2.79%
Savings deposits 86,225 573 2.65% 85,422 593 2.78%
Time deposits 296,969 3,863 5.20% 274,098 3,722 5.43%
Time deposits of $100,000 or more 59,611 813 5.45% 54,534 695 5.10%
Federal funds purchased and securities
sold under agreement to repurchase 45,073 500 4.45% 40,384 476 4.71%
Other borrowings 10,548 142 5.39% 0 0 0.00%
---------- --------- ---------- ---------
Total interest bearing liabilities 618,690 6,685 4.32% 567,739 6,275 4.42%
--------- ---------
Net interest spread $ 8,380 3.65% $ 7,167 3.23%
========= =========
Noninterest bearing demand deposits 120,671 118,279
Accrued expenses and other liabilities 7,791 6,582
Stockholders' equity 90,392 84,283
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 837,544 $ 776,883
========== ==========
Net yield on earning assets 4.43% 4.08%
Taxable equivalent adjustment:
Loans $ 41 $ 35
Investment securities 571 513
---------- -----------
Total adjustment $ 611 $ 548
========== ===========
</TABLE>
15
<PAGE> 18
CONSOLIDATED AVERAGE BALANCE SHEET
INTEREST INCOME/EXPENSE AND
YIELD/RATES
(in thousands)
Taxable Equivalent Basis
<TABLE>
<CAPTION>
Nine months ended
September 30,
-------------------------------------------------------------------------
Assets 1996 1995
-------------------------------------------------------------------------
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
------------ ----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Earning assets:
Loans, net of unearned income $ 457,030 $ 29,908 8.73% $ 353,969 $ 23,056 8.68%
Investment securities 274,834 13,410 6.51% 279,105 13,379 6.39%
Other earning assets 9,460 372 5.25% 28,428 1,280 6.00%
----------- ----------- ------------ -----------
Total earning assets 741,324 43,691 7.86% 661,502 37,715 7.60%
----------- -----------
Allowance for loan losses (5,668) (5,516)
Cash and other assets 84,436 65,318
----------- -----------
TOTAL ASSETS $ 820,092 $ 721,304
=========== ===========
Liabilities and Stockholders' Equity
Interest bearing liabilities:
Interest bearing demand deposits $ 118,894 2,357 2.64% $ 110,072 2,283 2.77%
Savings deposits 87,193 1,711 2.62% 83,229 1,724 2.76%
Time deposits 285,489 11,084 5.18% 244,856 9,348 5.09%
Time deposits of $100,000 or more 55,161 2,304 5.57% 51,184 2,056 5.36%
Federal funds purchased and securities
sold under agreement to repurchase 47,841 1,575 4.39% 33,739 1,219 4.82%
Other borrowings 9,186 375 5.44% 0 0 0.00%
----------- ----------- ------------ -----------
Total interest bearing liabilities 603,764 19,406 4.29% 523,080 16,630 4.24%
-----------
Net interest spread $ 24,285 3.57% $ 21,085 3.36%
=========== ===========
Noninterest bearing demand deposits 118,583 109,843
Accrued expenses and other liabilities 7,825 5,265
Stockholders' equity 89,920 83,116
----------- ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 820,092 $ 721,304
=========== ============
Net yield on earning assets 4.37% 4.25%
Taxable equivalent adjustment:
Loans $ 115 $ 102
Investment securities 1,612 1,548
----------- -----------
Total adjustment $ 1,728 $ 1,650
=========== ===========
</TABLE>
16
<PAGE> 19
ASSET/LIABILITY MANAGEMENT
The net yield on earning assets increased 35 basis points from the third
quarter of 1995 to the third quarter of 1996, 4.08% to 4.43%, respectively. The
increase resulted from changes in rates, volumes and mix of interest earning
assets and interest bearing liabilities. In addition, the average balance of
noninterest bearing demand deposits increased $2.4 million or 2.02%. On a tax
equivalent basis, interest income on earning assets increased $1.6 million or
12.1% due to an increase of $53.2 million or 7.6% in the average volume of
interest earning assets. Although the rates earned on the loans decreased and
the rates on investment securities increased marginally, the development of the
mix of interest earning assets is the primary factor of the improved yields and
earning assets as a whole. The average balances of loans increased $106.0
million or 28.7%, while the average balance of securities decreased $27.2
million or 9.3% and the average balance of other earning assets, primarily
federal funds sold, decreased $25.6 million or 59.8%. As a percentage of total
earning assets, loans increased from 52.5% to 62.9%, investment securities
decreased from 41.4% to 34.9%, and other earning assets decreased from 6.1% to
2.3%, for the third quarter of 1995 and the third quarter of 1996,
respectively. Rates earned on loans decreased eight basis points, while rates
earned on investment securities increased 36 basis points. The rates earned on
other earning assets decreased 95 basis points. The rate on total earning
assets increased 32 basis points due to the change in mix. Interest expense on
deposits increased $410,000 or 6.5% in the third quarter of 1996 compared to
the same period last year. Average balances on interest bearing liabilities
increased by $51.0 million or 9.0%. The average balances of interest bearing
demand deposits increased from third quarter of 1995 to third quarter of 1996
by $7.0 million or 6.1%. Savings accounts increased for the same time periods
by $803,000 or 0.9%. The rates paid on these type of accounts during the three
months ending September 30, 1996, and 1995, decreased 15 and 13 basis points,
for interest bearing demand deposits and savings deposits, respectively. The
average balance of time deposits, including time deposits over $100,000,
increased $27.9 million or 8.5% and the rate paid decreased 13 basis points.
Net interest spread and net interest spread rate increased from third quarter
1995 to third quarter 1996 by $1.2 million and 42 basis points, respectively.
The Company experienced an increase of 12 basis point in the net yield on
interest earning assets for the nine months ended September 30, 1996, compared
to the same period in 1995. This increase resulted from changes in rates,
volumes and mix of interest earning assets and interest bearing liabilities. In
addition, the average balance of non-interest bearing demand deposits increased
$8.7 million or 8.0%. Tax equivalent interest income on earning assets
increased $6.0 million or 15.8% due to an increase of $79.8 million or 12.1% in
the average volume of interest earning assets, as well as an increase in the
rate earned on total interest earning assets. The mix of interest earning
assets changed significantly with the average balance of loans increasing
$103.1 million or 29.1%, the average balance of investment securities
decreasing $4.3 million and the average balance of other earning assets
decreasing $19.0 million, respectively. As a percentage of total earning
assets, loans increased from 53.5% in 1995 to 61.7% in 1996, investment
securities decreased from 42.2% to 37.1% and other earning assets decreased
from 4.3% to 1.3%. Rates earned on loans and securities increased five basis
points and 12 basis points, respectively, from 1995 to 1996. Rates earned on
other earning assets decreased 75 basis points. Interest expense on deposits
increased by $2.8
17
<PAGE> 20
million or 16.7% from $16.6 million in 1995 to $19.4 million
in 1996. Average balances on interest bearing liabilities increased by $80.7
million or 15.4%. The average balances of interest bearing demand deposits and
savings accounts increased by 8.0% and 4.8%, respectively. The rates paid on
these type of accounts declined 31 and 45 basis points, respectively. The
average balance of time deposits, including time deposits over $100,000,
increased $44.6 million or 15.1% and the rate paid increased 10 basis points.
Net interest spread increased $3.2 million or 15.2% from 1995 to 1996, as did
the spread rate increase 21 basis points.
NONINTEREST INCOME
Noninterest income consists of revenues generated from a broad range of
financial services and activities including fee-based services and commissions.
NONINTEREST INCOME
(in thousands)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
--------------------- Percent -------------------- Percent
1996 1995 Change 1996 1995 Change
---------- ---------- -------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Service charge on deposit
accounts $ 978 $ 830 17.83% $ 2,799 $ 2,412 16.04%
Trust fees 343 301 13.95% 991 879 12.74%
Net securities gains realized 157 14 1021.43% 220 (33) 766.67%
Other income 618 367 68.39% 1,743 1,105 57.74%
---------- ---------- -------- -------- --------- -------
TOTAL $ 2,096 $ 1,512 38.62% $ 5,753 $ 4,363 31.86%
========== ========== ======== ======== ========= =======
</TABLE>
Service charges increased $148,000 or 17.8% for the three months ended
September 30, 1996, as compared to the quarter ended September 30, 1995. Trust
fees increased $42,000 or 13.9% from the third quarter of 1995 compared to the
third quarter of 1996. Net securities gains of $157,000 were realized in the
third quarter of 1996, compared to the gain of $14,000 realized in the same
period of 1995. In June 1996, Pioneer Bank wrote down the value of an
investment security by $110,000 to a level that is reasonably expected to be
realized at maturity. Two months subsequent to the write down, Pioneer Bank
fully recovered this investment security, thus realizing a one time gain in
this quarter. Management believes that this is a non recurring event. Other
noninterest income increased $251,000 or 68.4% for the third quarter 1996
compared to the third quarter of 1995.
For the nine months ended September 30, 1996, service charges on deposit
accounts increased $387,000 or 16.0% over the same period in 1995. The primary
reason for the increase is because the service charges applied to the deposits
acquired via the Marion County Branch Purchase, consummated on June 15, 1995,
were earned in 1996 but not for the majority of 1995. Other income increased
$638,000 or 57.7%, for the period ending September 30, 1996, compared to the
same period in 1995.
18
<PAGE> 21
NONINTEREST EXPENSE
Salaries and benefits increased $401,000 or 12.9% for the three months ending
September 30, 1996, as compared to September 30, 1995. Occupancy expenses
increased $140,000 or 17.3% due to depreciation on the properties put into
commission in the 1996. Management anticipates this level of spending for
occupancy expense to increase through the remainder of the year of 1996 as
renovations for expanding the downtown office continue. Other expenses
increased $209,000 or 12.3% over these same periods.
NONINTEREST EXPENSE
(in thousands)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
-------------------- Percent --------------------- Percent
1996 1995 Change 1996 1995 Change
---------- --------- ------ ----------- ---------- ------
<S> <C> <C> <C> <C> <C> <C>
Salaries and benefits $ 3,508 $ 3,107 12.91% $ 10,263 $ 8,736 17.48%
Net occupancy expense 947 807 17.35% 2,738 2,184 25.37%
Other expense 1,913 1,704 12.27% 5,769 5,518 4.55%
--------- --------- ---------- --------- ------
TOTAL $ 6,368 $ 5,618 13.35% $ 18,770 $ 16,438 14.19%
========= ========= ========== ========= ======
</TABLE>
For the nine months ended September 30, 1996, total noninterest expense
increased $2.3 million or 14.2% over the nine months ended September 30, 1995.
The increase is due primarily to the addition of employees with the Marion
County Purchase, as well as additional properties commissioned in the second
half of 1995 and 1996.
PROVISION FOR INCOME TAXES
The Company's provision for income taxes increased $321,000 or 69.0% to
$786,000 for the three months ended September 30, 1996, as compared to $465,000
for the same period in 1995. The effective tax rate was 23.2% for the three
months ended September 30, 1996 as compared to 20.0% for September 30, 1995.
For the nine months ended September 30, 1996, income taxes increased $729,000
or 46.9% compared to the same nine months of 1995. For the same period the
effective tax rate increased from 22.0% to 25.7%. The notes to the financial
statements provide additional information regarding the Company's taxes.
19
<PAGE> 22
PART II
OTHER INFORMATION
ITEM 1. Legal Proceedings
None
ITEM 2. Change in Securities
None
ITEM 3. Defaults Upon Senior Securities
None
ITEM 4. Submission of Matters to a Vote of Security Holders
The annual meeting of Pioneer Bancshares, Inc. stockholders was held on
May 21, 1996 at the corporate offices of Pioneer Bank. Only those
items disclosed within the Pioneer Bancshares, Inc. Proxy Statement
were voted.
ITEM 5. Other Information
None
ITEM 6. Exhibits and Reports on Form 8-K
(a) The exhibits filed as part of the Report are as follows:
Exhibit
Number Description
3(a) Certificate of Incorporation, incorporated herein by reference
from Registrant's Registration Statement on Form S-4
(Registration No. 33-49360).
3(b) By-laws, incorporated herein by reference from Registrant's
Registration Statement on Form S-4 (Registration No. 33-49360)
11 Statement Re Computation of Per Share Earnings
27 Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K.
None
20
<PAGE> 23
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.
Pioneer Bancshares, Inc.
Date: November 11, 1996 /s/ Rodger B. Holley
---------------------
Rodger B. Holley
President and CEO
Date: November 11, 1996 /s/ Gregory B. Jones
---------------------
Gregory B. Jones
Executive Vice President and Treasurer
Date: November 11, 1996 /s/ William L. Lusk, Jr.
-------------------------
William L. Lusk, Jr.
Vice President and Controller
21
<PAGE> 24
PIONEER BANCSHARES, INC. AND SUBSIDIARIES
INDEX TO EXHIBITS
Exhibit
Number Description
3(a) Certificate of Incorporation, incorporated herein
by reference from Registrant's Registration
Statement on Form S-4 (Registration No. 33-49360).
3(b) By-laws, incorporated herein by reference from
Registrant's Registration Statement on Form S-4
(Registration No. 33-49360).
11 Statement Regarding Computation of Net Earnings
per Share
27 Financial Data Schedule (for SEC use only)
22
<PAGE> 1
PIONEER BANCSHARES, INC.
Form 10-Q, Part II, Item 6
Exhibit 11 - Statement Regarding Computation of
Net Earnings Per Share
<TABLE>
<CAPTION>
For the three months ended September 30, 1996 1995
---- ----
<S> <C> <C>
Income as reported in consolidated
statements of income $2,606,000 $1,869,000
========== ==========
Per share computation of common and
dilutive common equivalent shares:
Weighted average number of
shares outstanding 3,759,912 3,759,912
Weighted average number of shares
issuable upon exercise of stock options
applying the treasury stock method 0 0
---------- ----------
Weighted average number of shares
outstanding used to calculate per share
data assuming no dilution 3,759,912 3,759,912
========== ==========
Net income per common and common
equivalent share $ 0.69 $ 0.50
========== ==========
Per share computation assuming full dilution:
Weighted average number of shares
outstanding 3,759,912 3,759,912
Weighted average number of shares
issuable upon exercise of stock options
applying the treasury stock method 0 0
---------- ----------
Weighted average number of shares
outstanding used to calculate per share
data assuming full dilution 3,759,912 3,759,912
========== ==========
Net income per common and common
equivalent share assuming full dilution $ 0.69 $ 0.50
========== ==========
</TABLE>
<PAGE> 2
PIONEER BANCSHARES, INC.
Form 10-Q, Part II, Item 6
Exhibit 11 - Statement Regarding Computation of
Net Earnings Per Share
<TABLE>
<CAPTION>
For the nine months ended September 30, 1996 1995
---- ----
<S> <C> <C>
Income as reported in consolidated
statements of income $6,603,000 $5,517,000
========== ==========
Per share computation of common and
dilutive common equivalent shares:
Weighted average number of
shares outstanding 3,759,912 3,759,912
Weighted average number of shares
issuable upon exercise of stock options
applying the treasury stock method 0 0
---------- ----------
Weighted average number of shares
outstanding used to calculate per share
data assuming no dilution 3,759,912 3,759,912
========== ==========
Net income per common and common
equivalent share $ 1.76 $ 1.47
========== ==========
Per share computation assuming full dilution:
Weighted average number of shares
outstanding 3,759,912 3,759,912
Weighted average number of shares
issuable upon exercise of stock options
applying the treasury stock method 0 0
---------- ----------
Weighted average number of shares
outstanding used to calculate per share
data assuming full dilution 3,759,912 3,759,912
========== ==========
Net income per common and common
equivalent share assuming full dilution $ 1.76 $ 1.47
========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF PIONEER BANCSHARES, INC. FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1996 AND IS QUALIFIED ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 55,855
<INT-BEARING-DEPOSITS> 200
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 210,195
<INVESTMENTS-CARRYING> 63,154
<INVESTMENTS-MARKET> 61,847
<LOANS> 488,267
<ALLOWANCE> 5,270
<TOTAL-ASSETS> 854,071
<DEPOSITS> 707,915
<SHORT-TERM> 37,814
<LIABILITIES-OTHER> 7,152
<LONG-TERM> 0
0
0
<COMMON> 19
<OTHER-SE> 91,171
<TOTAL-LIABILITIES-AND-EQUITY> 854,071
<INTEREST-LOAN> 29,961
<INTEREST-INVEST> 11,717
<INTEREST-OTHER> 387
<INTEREST-TOTAL> 42,065
<INTEREST-DEPOSIT> 17,456
<INTEREST-EXPENSE> 19,406
<INTEREST-INCOME-NET> 22,659
<LOAN-LOSSES> 756
<SECURITIES-GAINS> 220
<EXPENSE-OTHER> 18,770
<INCOME-PRETAX> 8,886
<INCOME-PRE-EXTRAORDINARY> 6,603
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,603
<EPS-PRIMARY> 1.76
<EPS-DILUTED> 1.76
<YIELD-ACTUAL> 7.86
<LOANS-NON> 1,618
<LOANS-PAST> 791
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 114
<ALLOWANCE-OPEN> 5,872
<CHARGE-OFFS> 2,116
<RECOVERIES> 758
<ALLOWANCE-CLOSE> 5,270
<ALLOWANCE-DOMESTIC> 5,270
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
