FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 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____________________
For Quarter Ended_____________ Commission file number 0-15729
PREMIER BANKSHARES CORPORATION
(Exact name of registrant as specified in its charter)
VIRGINIA 54-1377250
State or other jurisdiction of (I. R. S. Employer)
incorporation or organization Identification No.)
29 College Drive
P. O. Box 1199, Bluefield, VA 24605
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number including area code (540) 322-2242
___________________________________________________________________
(Former name, former address and former fiscal year, if changed
since last report).
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 June 30, 1996.
Common stock, $2 par value - 6,650,083 shares.
INDEX
Page No.
Part I. Financial Information:
Item 1. Financial Statements
Consolidated Balance Sheets -
June 30, 1996 and December 31, 1995 3
Consolidated Statements of Income -
Three and Six Months Ended June 30,
1996 and 1995 4
Consolidated Statements of
Stockholders' Equity - Six Months
Ended June 30, 1996 and 1995 5
Consolidated Statements of Cash Flows
Six Months Ended June 30,
1996 and 1995 6
Notes to Consolidated Financial
Statements 7-10
Supplemental Financial Data (Tables
I - III) 11-13
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 14-15
Part II. Other Information:
Item 1. Legal Proceedings 16
Item 2. Changes in Securities 16
Item 3. Defaults Upon Senior Securities 16
Item 4. Submission of Matters to a Vote of 16
Item 5. Security Holders Other Information 16
Item 6. Exhibits and Reports on Form 8-K 16
ITEM 1. FINANCIAL INFORMATION:
PREMIER BANKSHARES CORPORATION AND AFFILIATES
CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars)
June 30, December 31,
1996 1995
ASSETS:
Cash and Due From Banks $ 29,454 $ 28,957
Securities Held to Maturity (Approximate Market
Value $31,287 in 1996; $34,014 in 1995) 30,658 33,348
Securities Available for Sale (Amortized Cost
$208,468 in 1996 $233,545 in 1995) 205,567 234,183
Federal Funds Sold 12,150 24,105
Loans, Net of Unearned Income of $5,012 in 1996,
$5,386 in 1995 and Allowance for Loan Losses of
$5,329 in 1996 and $5,430 in 1995 439,502 400,569
Bank Premises and Equipment 17,151 17,242
Other Assets 22,595 23,631
TOTAL ASSETS $ 757,077 $ 762,035
LIABILITIES:
Deposits:
Demand $ 73,122 70,431
Interest-bearing Demand 84,935 89,558
Savings 136,926 141,142
Large Denomination Certificates
of Deposit 53,775 52,839
Other Time 307,393 307,943
TOTAL DEPOSITS $ 656,151 $ 661,913
Short-term Debt 21,023 17,407
Other Liabilities 5,478 9,492
Long-term Debt
TOTAL LIABILITIES $ 682,652 $ 688,812
SHAREHOLDERS' EQUITY:
Capital Stock-Common-$2 Par
10,000,000 Authorized; 6,650,083
Shares Issued in 1996 and 1995 $ 13,300 $ 13,300
Surplus 18,696 18,704
Undivided Profits 44,377 40,818
Net Unrealized Gain (Loss) on Securities (1,948) 401
TOTAL STOCKHOLDERS' EQUITY $ 74,425 $ 73,223
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 757,077 $ 762,035
Notes to financial statements are an integral part of these
statements.
PREMIER BANKSHARES CORPORATION AND AFFILIATES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands of Dollars)
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
INTEREST INCOME:
Loans and Fees $ 10,514 $ 9,246 $ 20,674 $ 17,979
Federal Funds Sold 157 501 489 730
Securities Held to Maturity 972 1,542 1,980 2,501
Securities Held for Sale 2,574 1,749 5,266 4,027
Total Interest Income $ 14,217 $ 13,038 $ 28,409 $ 25,237
INTEREST EXPENSE:
Demand Deposits $ 515 $ 489 $ 1,029 $ 951
Savings Deposits 1,012 1,185 2,080 2,419
Large Denomination Certificates
of Deposit 746 672 1,484 1,262
Other Time Deposits 4,055 3,387 8,252 6,137
Short-term Debt 168 256 362 477
Long-term Debt 82 119
Total Interest Expense $ 6,496 $ 6,071 $ 13,207 $ 11,365
Net Interest Income $ 7,721 $ 6,967 $ 15,202 $ 13,872
ADDITION TO ALLOWANCE FOR LOAN AND
LEASE LOSSES 115 127 150 315
Net Interest Income After
Addition to Allowance for
Loan and Lease Losses $ 7,606 $ 6,840 $ 15,052 $ 13,557
OTHER INCOME:
Service Charges on Deposit Accounts $ 743 $ 547 $ 1,431 $ 1,056
Trust Department Income 59 78 100 117
Other Service Charges, Commissions
and Fees 404 396 914 782
Other Operating Income 112 94 222 211
Security Gains (Losses) (101) (113) (135) (153)
Total Other Income $ 1,217 $ 1,002 $ 2,532 $ 2,013
OTHER EXPENSES:
Salaries $ 2,142 $ 2,026 $ 4,410 $ 3,948
Employee Benefits 470 500 1,055 985
Occupancy Expenses 300 195 617 420
Furniture and Equipment Expenses 334 292 643 591
Other Operating Expenses 2,007 2,164 3,946 4,051
Total Other Expense $ 5,253 $ 5,177 $ 10,671 $ 9,995
Income Before Income Taxes $ 3,570 $ 2,665 $ 6,913 $ 5,575
Applicable Income Taxes 920 677 1,760 1,385
Net Income $ 2,650 $ 1,988 $ 5,153 $ 4,190
NET INCOME PER SHARE $ 0.39 $ 0.30 $ 0.77 $ 0.63
CASH DIVIDENDS PER SHARE $ 0.12 $ 0.105 $ 0.24 $ 0.21
The notes to financial statements are an integral part of these statements.
PREMIER BANKSHARES CORPORATION AND AFFILIATES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In Thousands of Dollars)
Six Months Ended
June 30,
1996 1995
Balance at Beginning of Year $ 73,223 $ 60,293
Net Income 5,153 4,190
Cash Dividends Declared (1,596) (1,396)
Other (7)
Change in Valuation Allowance for
Securities (2,348) 4,669
Balance at End of Period $ 74,425 $ 67,756
The notes to financial statements are an integral part of these
statements.
PREMIER BANKSHARES CORPORATION AND AFFILIATES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of Dollars)
Six Months Ended
June 30,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 5,153 $ 4,190
Adjustments to Reconcile Net Income to Cash
Provided by Operating Activities:
Depreciation and Amortization of Premises
and Equiment 607 488
Provision for Loan Losses 150 315
Amortization of:
Goodwill and Intangibles 296 221
Premiums and Accretion of Discounts, Net 556 230
Security Gains (Losses) 135 153
Increase in Other Assets 744 (10,460)
Increase in Other Liabilities (4,014) 2,725
Net Cash Provided by Operating Activities $ 3,627 $ (2,138)
CASH FLOWS FROM INVESTING ACTIVITIES:
Net Decrease in Temporary Investments $ 11,955 $ (38,764)
Sale of Securities Available for Sale 23,011 11,616
Maturities of Securities Available for Sale 28,687 5,471
Purchases of Securities Available for Sale (23,778) (17,215)
Maturities of Securities Held to Maturity 1,690 7,367
Purchase of Securities Held to Maturity (1,352) (17,560)
Sale of Foreclosed Properties
Net Increase in Customer Loans (39,083) (23,795)
Premises and Equipment Expenditures (1,043) (2,866)
Sales of Premises and Equipment 523 620
Net Cash (Used) in Provided by
Investing Activities $ 610 $ (75,126)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Decrease in Demand Deposits,
Now and Savings Accounts $ (6,148) $ 10,234
Net Increase in Time Deposits 386 76,293
Borrowings of Long-term Debt 7,000
Net Decrease in Short-term Debt 3,616 (4,219)
Cash Dividends Paid (1,594) (1,396)
Net Cash Provided by (Used) in
Financing Activities $ (3,740) $ 87,912
Net Increase in Cash and Due from Banks $ 497 $ 10,648
CASH AND DUE FROM BANKS:
Beginning 28,957 19,475
Ending $ 29,454 $ 30,123
Supplemental Disclosures of Cash Flow
Information:
Cash Payments for Interest Paid:
To Depositors $ 13,476 $ 10,838
On Federal Funds Purchased and Securities Sold
Under Agreement to Repurchase $ 363 $ 392
Income Taxes $ 1,150 $ 988
The notes to financial statements are an integral part of these
statements.
PREMIER BANKSHARES CORPORATION AND AFFILIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. General
The consolidated statements include the accounts of Premier and its
affiliates. All significant intercompany balances and transactions have
been eliminated. In the opinion of management, the accompanying
unaudited consolidated financial statements contain all adjustments
(consisting of only normal recurring accruals) necessary to present
fairly the financial positions as of June 30, 1996, and December 31,
1995, and the results of operations and cash flows for the six months
ended June 30, 1996 and 1995.
The results of operations for the six months ended June 30, 1996, are not
necessarily indicative of the results to be expected for the full year.
2. Investment Securities
Carrying amounts and fair values of securities being held to maturity
are summarized as follows:
June 30, 1996
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
(In Thousands of Dollars)
Obligations of States and
Political Subdivisions $ 30,658 $ 877 $ 248 $ 31,287
$ 30,658 $ 877 $ 248 $ 31,287
December 31, 1995
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
(In Thousands of Dollars)
Obligations of States and Political
Subdivisions $ 33,282 $ 844 $ 178 $ 33,948
Other Debt Securities 66 66
$ 33,348 $ 844 $ 178 $ 34,014
2. Investment Securities (continued)
Amortized cost and carrying amount (estimated fair value) of securities
available for sale are summarized as follows:
June 30, 1996
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
(In Thousands of Dollars)
U.S. Treasury Securities $ 8,437 $ 1 $ 35 $ 8,403
U.S. Government Agencies and
Corporations 71,061 9 1,049 70,021
Obligations of States and
Political Subdivisions 47,240 680 140 47,780
Corporate Securities 11,047 3 14 11,036
Mortgage-backed Securities 63,289 5 2,109 61,185
Marketable Equity 1,596 201 1,395
Other Debt Securities 5,798 1 52 5,747
$ 208,468 $ 699 $ 3,600 $ 205,567
December 31, 1995
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
(In Thousands of Dollars)
U.S. Treasury Securities $ 10,492 $ 62 $ $ 10,554
U.S. Government Agencies and
Corporations 107,857 471 425 107,903
Obligations of States and
Political Subdivisions 52,022 1,355 128 53,249
Corporate Securities 13,700 97 5 13,792
Mortgage-backed Securities 46,084 46 693 45,437
Marketable Equity 1,596 1 131 1,466
Other Debt Securities 1,794 1 13 1,782
$ 233,545 $ 2,033 $ 1,395 $ 234,183
Six Months Ended
June 30,
1996 1995
(In Thousands of Dollars)
Gross proceeds from sales of Securities $ 23,011 11,616
Gross Gains on Sale of Securities $ 81 $ 30
Gross Losses on Sale of Securities 216 183
Net Securities Losses $ (135) $ (153)
PREMIER BANKSHARES CORPORATION AND AFFILIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
3. Loans
The following is a summary of loans outstanding at the end of
the periods indicated:
June 30, December 31,
1996 1995
(In Thousands of Dollars)
Commercial, Financial, and
Agricultural $ 153,176 $ 132,601
Real Estate - Construction 14,830 12,393
Real Estate - Mortgage 177,619 165,900
Loans to Individuals 97,487 97,554
Others 6,731 2,937
449,843 411,385
Less Unearned Income (5,012) (5,386)
444,831 405,999
Less Allowance for Loan and Lease Losses (5,329) (5,430)
$ 439,502 $ 400,569
The following schedule summarizes the changes in the allowance
for loan and lease losses:
June 30, June 30, December 31,
1996 1995 1995
(In Thousands of Dollars)
Balance, Beginning $ 5,430 $ 5,844 $ 5,844
Provision Charged
Against Income 150 315 315
Recoveries 197 211 314
Loans Charged Off (448) (521) (1,043)
Balance, Ending $ 5,329 $ 5,849 $ 5,430
Nonperforming assets consist of the following:
June 30, December 31,
1996 1995
(In Thousands of Dollars)
Nonaccrual Loans $ 1,737 $ 1,925
Restructured Loans 715 714
Nonperforming Loans 2,452 2,639
Foreclosed Properties 962 881
Nonperforming Assets $ 3,414 $ 3,520
Total loans past due 90 days or more and still accruing were $2,069 on
June 30, 1996 and $1,548 on December 31, 1995.
PREMIER BANKSHARES CORPORATION AND AFFILIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
4. Short-term Debt
Short-term debt consists of the following:
June 30, December 31,
1996 1995
(In Thousands of Dollars)
Federal Funds Purchased and
Securities Sold $ 21,023 $ 17,407
Under Agreements to Repurchase
Total Short-term Debt $ 21,023 $ 17,407
5. Long-term Debt
The long-term note dated 9/16/94 was paid off in December,
1995. As a result, there was no long-term debt outstanding as of
June 30, 1996 or December 31, 1995.
6. Earnings Per Share
Earnings per share are computed on the weighted average
common shares outstanding of 6,650,083 for the six months ended
June 30, 1996 and 1995, respectively.
7. Capital Requirements
A comparison of the Company's capital as of June 30, 1996
with the minimum requirements is presented below.
Minimum
Actual Requirements
Tier I Risk-based Capital 13.42 % 4.00 %
Total Risk-based Capital 14.51 % 8.00 %
Leverage Ratio 8.68 % 4.00 %
8. Branch Acquisitions
In June 1995, the Company acquired seven branches from
NationsBank of which six branches were settled in the second
quarter of 1995, the seventh in the third quarter, 1995. These
acquisitions were accounted for under the purchase method of
accounting. The purchase prices were allocated to the identifiable
tangible and intangible assets acquired and liabilities assumed
based upon their estimated fair value at the date of consummation.
The intangibles are being amortized on a straight-line basis over
their respective lives.
TABLE I
Consolidated Selected Financial Data
(Amounts in thousands, except per share data)
1996
Second First
Quarter Quarter
Interest Income $ 14,217 $ 14,192
Interest Expense 6,496 6,711
Net Interest Income 7,721 7,481
Provision for Loan Losses 115 35
Net Income 2,650 2,503
Per Share Data:
Net Income 0.39 0.38
Cash Dividends Paid 0.12 0.12
Total Average Stockholders' Equity $ 73,879 $ 73,987
Total Average Assets $ 758,564 $ 759,329
Ratios:
Average Stockholders' Equity
to Total Average Assets 9.74 % 9.74 %
Return on Average Equity 14.35 % 13.53 %
Return on Average Assets 1.40 % 1.32 %
1995
Fourth Third Second First
Quarter Quarter Quarter Quarter
Interest Income $ 14,125 $ 14,281 $ 13,038 $ 12,199
Interest Expense 6,802 6,856 6,071 5,294
Net Interest Income 7,323 7,425 6,967 6,905
Provision for Loan
Losses 127 188
Net Income 2,553 2,468 1,988 2,202
Per Share Data:
Net Income 0.39 0.37 0.30 0.33
Cash Dividends Paid 0.115 0.105 0.105 0.105
Total Average
Stockholders' Equity $ 70,387 $ 68,803 $ 62,968 $ 59,938
Total Average Assets $ 756,507 $ 755,186 $ 681,947 $ 653,074
Ratios:
Average Stockholders'Equity to Total
Average Assets 9.30 % 9.11 % 9.23 % 9.18 %
Return on Average Equity 14.51 % 14.35 % 12.63 % 14.70 %
Return on Average Assets 1.35 % 1.31 % 1.17 % 1.35 %
TABLE II
DISTRIBUTION OF ASSETS, LIABILITIES, STOCKHOLDERS' EQUITY,
INTEREST RATES AND INTEREST DIFFERENTIAL
The following schedule presents the condensed consolidated average balance
sheets and the average rates earned and paid by Premier and its affiliates
on a fully taxable equivalent basis assuming a 34% tax rate for the six
months ended June 30, 1996 and 1995. Nonaccruing loans are included in the
total loans.
1996 1995
Average Interest Yield/ Average Interest Yield /
Balance And Fees Rate Balance And Fees Rate
(In Thousands of Dollars) (In Thousands of Dollars)
Interest-earning Assets:
Loans and Leases $425,366 $ 20,674 9.72 % $374,508 $ 17,979 9.60%
Taxable Investment
Securities 180,579 5,266 5.83 150,794 4,608 6.11
Nontaxable Investment
Securities 76,694 2,909 7.59 72,423 2,909 8.03
Interest-bearing Deposits
with Other Banks
Federal Funds Sold and Securities
Purchased Under Agreement
to Resell 18,041 489 5.42 25,392 730 5.75
Total Interest-earning
Assets $700,680 $ 29,338 8.37 % $623,117 $ 26,226 8.42 %
Noninterest-earning Assets:
Cash and Noninterest-
bearing Deposits $ 24,258 $ 24,626
Premises and Equipment, Net 17,196 14,508
Other Assets 22,145 11,230
Less Allowance for Loan and
Lease Losses (5,333) (5,969)
Total Assets $758,946 $667,512
Liabilities and Stockholders'Equity
Interest-bearing Liabilities:
Demand Deposits $ 83,367 $ 1,029 2.47 % $ 68,188 $ 951 2.79 %
Savings Deposits 139,132 2,080 2.99 148,735 2,419 3.25
Large Denomination
Certificates of Deposit 54,226 1,484 5.47 50,055 1,262 5.04
Other Time Deposits 309,978 8,252 5.32 249,035 6,137 4.93
Short-term Borrowings 16,109 362 4.49 17,731 477 5.38
Long-term Debt 4,292 119 5.55
Total Interest-bearing
Liabilities $602,812 $ 13,207 4.38% $ 538,036 $11,365 4.22 %
Noninterest-bearing
Liabilities:
Demand Deposits 75,606 70,086
Other Liabilities 6,595 (2,065)
Stockholders' Equity 73,933 61,455
Total Liabilities and
Stockholders' Equity $758,946 $667,512
Net Interest Differential 3.99 % 4.20 %
Net Interest Earnings $ 16,131 $ 14,861
Net Yield on Interest-earning Assets 4.60 % 4.77 %
TABLE III
A summary of the increases and decreases of the items included in the
Consolidated Statements of Income are shown below:
Net Increase (Decreases)
Three Months Ended Six Months Ended
June 30, June 30,
1996 and 1995 1996 and 1995
(In Thousands of Dollars)
Amount Percent Amount Percent
INTEREST INCOME:
Interest and Fees on Loans $ 1,268 13.71 % $ 2,695 14.99 %
Federal Funds Sold (344) (68.66) % (241) (33.01) %
Interest on Investments Held to
Maturity Nontaxable (570) (36.96) % (521) (20.83) %
Interest on Securities Held for
Sale, Taxable 825 47.16 % 1,239 30.77 %
Total Interest Income 1,179 9.04 % 3,172 12.57 %
INTEREST EXPENSE:
Demand Deposits 26 5.32 % 78 8.20 %
Savings Deposits (173) (14.60) % (339) (14.01) %
Large Denomination Certificates
of Deposits 74 11.01 % 222 17.59 %
Other Time Deposits 668 19.72 % 2,115 34.46 %
Short-term Debt (88) (34.38) % (115) (24.11) %
Long-term Debt (82) (100.00) % (119) (100.00) %
Total Interest Expense 425 7.00 % 1,842 16.21 %
Net Interest Income 754 10.82 % 1,330 9.59 %
ADDITION TO ALLOWANCE FOR LOAN
LEASE LOSSES (12) (9.45) % (165) (52.38) %
Net Interest Income After
Addition to Allowance for
Loan and Lease Losses 766 11.20 % 1,495 11.03 %
OTHER INCOME:
Service Charges on Deposit
Accounts 196 35.83 % 375 35.51 %
Trust Department Income (19) (24.36) % (17) (14.53) %
Other Service Charges,
Commissions and Fees 8 2.02 % 132 16.88 %
Other Operating Income 18 19.15 % 11 5.21 %
Security Gains (Losses) 12 10.62 % 18 11.76 %
Total Other Income 215 21.46 % 519 25.78 %
OTHER EXPENSES:
Salaries 116 5.73 % 462 11.70 %
Employees Benefits (30) (6.00) % 70 7.11 %
Occupancy Expenses 105 53.85 % 197 46.90 %
Furniture and Equipment Expenses 42 14.38 % 52 8.80 %
Other Operating Expenses (157) (7.26) % (105) (2.59) %
Total Other Expense 76 1.47 % 676 6.76 %
Income Before Income Taxes 905 33.96 % 1,338 24.00 %
Applicable Income Taxes 243 35.89 % 375 27.08 %
NET INCOME $ 662 33.30 %$ 963 22.98 %
ITEM 2. MANAGEMENT'S DISCUSSION:
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Premier's non-bank subsidiaries, Premier Bank Services Corporation and
Professional Financial Services of Virginia, Inc. remain inactive.
Premier formed a new non-bank trust subsidiary, Premier Trust Company in
January 1995 which is now operating. In addition, Premier acquired the
former Dickenson-Buchanan Bank located in Clintwood, Virginia at year-
end 1994 using the pooling-of-interest method of accounting. Prior year
financial data reflects this acquisition. Premier recorded seven
branches purchased from Nationsbank, adding approximately $116,000,000
in assets during the first three quarters 1995.
EARNINGS PERFORMANCE
Net income for the first six months of 1996 was $5,153,000, a
$963,000, or 22.98% increase over the $4,190,000 earned for the same
period in 1995. This increase was largely the result of an increase in
net interest income of $1,330,000. On a per share basis, net income for
the first six months of 1996 increased to $0.77 compared to $0.63 for
the same period in 1995, with 6,650,083 average shares outstanding for
both the six months ending June 30, 1996 and 1995, respectively.
NET INTEREST INCOME
Net interest income, before provision for loan losses for the six
months ended June 30, 1996, was $15,202,000, a $1,330,000, or 9.59%
increase from $13,872,000 recorded for the same period of 1995. The net
interest differential for this period (the difference between the tax-
equivalent yield on interest-bearing assets and the rate paid on
interest-bearing liabilities) decreased 21 basis points to 3.99%. The
tax-equivalent yield on earning assets decreased from 8.42% in 1995 to
8.37%, or 5 basis points in 1996 while the rate paid on interest-bearing
liabilities increased 16 basis points to 4.38%.
The net yield (fully taxable equivalent) on earning assets
decreased 17 basis points in 1996 to 4.60% compared to 4.77% in 1995.
Yields on loans increased 12 basis points from 9.60% to 9.72% with the
average balance increasing $50,858,000 over 1995. The average yield on
taxable and nontaxable investment securities decereased 28 and 44 basis
points, while the average balances increased $29,785,000 and
$4,271,000, respectively. The average rate earned on fed funds dropped
33 basis points in 1996 when compared to 1995, while the average balance
decreased $7,351,000. The average rates paid on demand deposits and
savings decreased by 32 and 26 basis points, respectively. Rates on
large denomination and other time deposit rates increased 43 and 39
basis points, respectively. The rate paid on short-term borrowings
decreased 89 basis points. The long-term debt outstanding in as of June
1995 was paid off in December 1995 and no other currently exists. The
average balance of interest-bearing liabilities increased $64,776,000
over June 1995. The increased volume of earning assets and liabilities
in 1996 over 1995 was largely due to the purchase of the seven
NationsBank branches.
OTHER INCOME AND EXPENSES
Total other income increased $519,000 or 25.78% to $2,532,000
almost entirely due to an increase in service charges on deposit
accounts of $375,000 and an increase in other service charges,
commissions and fees of $132,000. These increases were due in part to
the increased volume of loans and deposits and the restructuring and
standardization in 1995 of deposit accounts and service charges. Net
security losses in 1996 were $135,000 compared to net losses of $153,000
in 1995. Trust department income was $100,000 for the six months ended
June 30, 1996, compared to $117,000 for the same period of 1995.
OTHER INCOME AND EXPENSES (Continued)
Other expenses increased $676,000 or 6.76% over June 30, 1995. Of
this increase, salaries and employee benefits accounted for $462,000 and
$70,000, respectively; occupancy and furniture and equipment expenses
for $197,000 and $52,000, respectively. As mentioned earlier, these
increased expenses were impacted by the purchase of the seven additional
branches during 1995. The most significant changes in other operating
expenses were a decrease in FDIC assessments of $652,000 and an increase
in the amortization of goodwill of $244,000, which resulted from the
branch acquisitions. Less significant increases and decreases account
for the difference.
INVESTMENTS, LOANS, AND DEPOSITS
Net loans increased $38,933,000, or 9.72%, while investments
decreased $31,306,000 (11.70%), fed funds sold decreased $11,955,000 and
cash and due from banks decreased $497,000 from December 1995. Total
assets decreased $4,958,000. Demand deposits and large denomination
certificates of deposit increased by $2,691,000, $936,000, respectively.
Interest-bearing demand, savings, and other time deposits decreased
$4,623,000, $4,216,000 and $550,000 from December 1995. Short-term
debt, which includes fed funds purchased and repurchase agreements,
increased $3,616,000 over year end 1995.
ALLOWANCE FOR LOAN AND LEASE LOSSES
The allowance for loan and lease losses on June 30, 1996 was
$5,329,000 compared to $5,430,000 at December 31, 1995, and $5,849,000
at June 30, 1995. The ratio of allowance for loan and lease losses to
total loans net of unearned income was 1.20% at June 30, 1996. Charge-
offs were $448,000 for the first six months of 1996 compared to $521,000
for the same period in 1995. Recoveries of $197,000 were booked in the
first six months of 1996; $211,000 in 1995. Management believes the
allowance is adequate at the June 30,1996 level, with year to date
provisions made of $150,000.
CAPITAL RESOURCES
Total stockholders equity or capital amounted to $74,425,000 at
June 30, 1996. The leverage ratio at March 31, 1996 was 8.68%.
LIQUIDITY AND INTEREST SENSITIVITY
Almost the entire deposit base is made up of core deposits with
only 8.20% of total deposits composed of certificates of deposit of
$100,000 and over. At June 30, 1996, federal funds and investment
securities maturing within one year amounted to $41,354,000, or 6.30% of
total deposits. In addition, $89,463,000 of investment securities or
13.63% of deposits, mature within the 1-5 year range.
The policy of Premier is to maintain the relationship between rate-
sensitive assets and rate-sensitive liabilities which will maximize
future profit levels, given existing expectations of interest rate
movements.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - None
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information - None
Item 6. Exhibits and reports on Form 8-K
a) Exhibits - None
b) Form 8-K - None
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 BANKSHARES CORPORATION
Date: August 15, 1996 BY /s/ James R. Wheeling
James R. Wheeling, President
Date: August 15, 1996 BY /s/ Ellen Simpson
Ellen Simpson, Secretary
(Accounting Officer)