-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JAU6BgJEqujwlq3LmUn26Dhw/nZXmswakw3nmxr1/MMtloLsrC11FPj1Ba87m1KG p9Tn1qCRfE9F4Bn8cx6V3Q== 0000036340-96-000014.txt : 19960805 0000036340-96-000014.hdr.sgml : 19960805 ACCESSION NUMBER: 0000036340-96-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960802 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PREMIER FINANCIAL SERVICES INC CENTRAL INDEX KEY: 0000036340 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 362852290 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-13425 FILM NUMBER: 96603036 BUSINESS ADDRESS: STREET 1: 27 WEST MAIN ST STE 101 CITY: FREEPORT STATE: IL ZIP: 61032 BUSINESS PHONE: 8152333671 FORMER COMPANY: FORMER CONFORMED NAME: FIRST FREEPORT CORP DATE OF NAME CHANGE: 19840710 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 Form 10-Q Quarterly Report Under Section 13 or 15(d) of The Securities Exchange Act of 1934 For the Quarter Ended June 30, 1996, Commission File Number 0-13425 PREMIER FINANCIAL SERVICES, INC. (Exact name of registrant as specified in its Charter) Delaware 36-2852290 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 27 W. Main Street, Suite 101 61032 Freeport, Illinois (Zip Code) (Address of Principal executive offices) Registrant's telephone number, including area code (815) 233-3671 Number of Shares of Common Stock ($5 Par Value) outstanding as of June 30, 1996: 6,592,582 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 (This report contains 6 pages) Part I Item 1. Financial Statements. The following consolidated financial statements of the Company which are submitted herewith as an exhibit and are incorporated herein by reference: 1. Consolidated Balance Sheets, June 30, 1996 and December 31, 1995. 2. Consolidated Statements of Earnings, quarters ended June 30, 1996 and 1995 and six months ended June 30, 1996 and 1995. 3. Consolidated Statements of Cash Flows, six months ended June 30, 1996 and 1995. 4. Notes to the Unaudited Consolidated Financial Statements. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Results of Operations Premier Financial Services, Inc.'s earnings for the second quarter, 1996 totaled $1,493,000 or $.18 per share versus $1,374,000, or $.17 per share for the same quarter in 1995. Merger expenses, for the Company's previously announced intention to merge with Northern Illinois Financial Corporation into a new Company, Grand Premier Financial Inc., incurred in the second quarter of 1996 totaled $239,000 decreasing earnings per share by $.04. Year to date earnings increased by approximately $309,000 to $2,982,000, as compared to $2,673,000 in 1995. Year to date earnings per share increased to $.36, an increase of 12.5% over earnings per share of $.32 in the first six months of 1995. Return on average assets and common equity was .91% and 10.35%, respectively, for the six months ended June 30, 1996, as compared to .86% and 9.97% for the same period in 1995. Year-to-date net interest income totaled $11.1 million in 1996, as compared to $10.8 million in 1995. Net interest income in the second quarter of 1996 was $5.6 million, a slight increase from $5.5 million reported in both the first quarter of 1996 and the second quarter of 1995. The modest increase is primarily a result of earning asset volume as opposed to rate or net interest margin improvement. Average earning assets totaled $588.6 million at June 30, 1996, an increase of $4.1 million from $584.4 million reported at March 31, 1996 and an increase of $35.0 million from $553.6 million reported one year ago. Our net interest margin at 3.95% as of June 30, 1996, increased slightly from 3.94% at March 31, 1996 and reflects a 24 basis point decline from 4.19% at June 30, 1995. The loan loss provision for the second quarter of 1996 was $150,000, an increase of $99,000 from the same period in 1995 and $50,000 higher than the first quarter of 1996. The Company's provision for possible loan losses is determined as a result of management's evaluation system for accessing the adequacy of the allowance for possible loan losses. The system includes assigning a risk grade to individual loans based on credit risk, as well as reviewing overall loan portfolio composition, size, economic factors and estimation of potential losses. Net charge-offs for the quarter ending June 30, 1996 were $232,000 slightly higher than the $163,000 recorded for the same period in 1995. Year-to- date net charge-offs as of June 30, 1996 totaled $342,000, a decline of $302,000 as compared to $644,000 at June 30, 1995. Nonperforming loans (non-accrual loans, loans past due 90 days or more and still accruing and renegotiated loans) totaling $2.6 million were unchanged from December 31, 1995. The allowance for possible loan losses as a percent of nonperforming loans was 143.2% and 149.3% as of June 30, 1996 and December 31, 1995, respectively. Noninterest income increased $475,000, or 14.6% in the six months ended June 30, 1996 as compared to the same period in 1995. The largest contributors to this increase were net gains from sales of securities available for sale, trust fees, gains on sale of other real estate, and other fee income. Net gains from securities available for sale totaled $114,000 at June 30, 1996, up $54,000 as compared to $60,000 in 1995. Trust fees increased $89,000, or 6.9%, to $1,375,000 at June 30, 1996 from $1,286,000 at June 30, 1995. Net gains from sale of other real estate in 1996 totaled $108,000, whereas in 1995 no gains were recognized. Other fee income included premium income totaling approximately $126,000 from selling covered call options. The Company did not participate in covered call writing during the first six months of 1995. Total noninterest expense as of June 30, 1996 decreased by approximately $241,000 to $9,968,000 from $10,209,000 at June 30, 1995. The decrease was primarily due to federal deposit insurance premiums decreasing by $559,000. Other expense increased by $369,000, to $2,905,000 million at June 30, 1996 from $2,536,000 at June 30, 1995. The increase in other expense was primarily due to non tax deductible merger expenses (i.e. legal and professional) totaling $390,000. We anticipate merger expenses relating to consummating the transaction with Northern Illinois Financial Corporation to continue during the remainder of the year. Income taxes for the first six months of 1996 totaled $1.6 million, as compared to $1.1 million in 1995. The increase in the tax provision is due to higher pretax earnings, a decrease in tax exempt income and an increase in non-tax deductible expenses (i.e. merger expenses). The Company's effective tax rate for the period ended June 30, 1996 was 35.2% as compared to 29.45% for the same period in 1995. Financial Condition Total assets increased from $670.2 million at December 31, 1995 to $671.2 million at June 30, 1996, with no material changes in asset composition. Cash and cash equivalents declined by approximately $6.2 million from $38.1 million or 5.7% of total assets at December 31, 1995 to $31.9 million or 4.7% of total assets at June 30, 1996. The net change in cash and cash equivalents is shown in the Consolidated Statement of Cash Flows and arises from operating, investing and financing activities. The adjustments to reconcile net income to net cash from operating activities primarily consisted of $796,000 from amortization of intangible assets, $599,000 in net amortization of premiums in the investment portfolio, 494,000 from depreciation and amortization of fixed assets and $250,000 in provision for loan losses. These items represent expense included in net income which did not represent an expenditure of cash. Cash flows from investing activities related primarily to changes in loans and investments. Securities available for sale increased by $4.0 million, to $269.3 million at June 30, 1996 as compared to $265.3 million at December 31, 1995. Gross loans increased $4.0 million to $331.0 million at June 30, 1996 from $327.0 million at December 31, 1995. Net cash from financing activities totaled $5.9 million. The major cash sources from financing activities were net increases in deposits and securities sold under agreements to repurchase. Total deposits increased by approximately $16.4 million, from $551.5 million at December 31, 1995 to $567.9 million at June 30, 1996. The net increase was a combination of a $6.0 million decrease in non-interest bearing deposits offset by returning approximately $17.8 million of off-balance sheet discretionary funds back to interest bearing deposits. Securities sold under agreements to repurchase, which are generally short-term sources of funds and managed in conjunction with all funding sources, increased by $8.6 million during the same December 31, 1995 to June 30, 1996 time-frame. Short term borrowings, which include federal funds purchased and Federal Home Loan Bank advances declined by $17.8 million to $14.9 million at June 30, 1996 as compared to $32.7 million at December 31, 1995. The reduction in short term borrowing and payment of $1.3 million in cash dividends were the only cash usages from financing activities. Accrued taxes and other expenses decreased by $2.9 million from $5.0 million at December 31, 1995 to $2.1 million at June 30, 1996. A tax credit in the amount of $2.7 million relating to unrealized gain (loss) on securities available for sale was recorded in accordance with Statement of Financial Accounting Standards No. 115, Accounting for Certain Investments in Debt and Equity Securities. At June 30, 1996, stockholders' equity totaled $58.6 million, a decline from $62.1 million at December 31, 1995. The decline was due to recording $5.2 million decrease in the after tax unrealized gain (loss) on securities available for sale in accordance with SFAS No. 115. On July 17, 1996, the Company redeemed all of its Series A perpetual preferred stock in the amount of $5.0 million by increasing its note payable to a correspondent bank. Premier's total risk-based capital, tier 1 risk-based capital and leverage capital ratios subsequent to the redemption were 10.65%, 9.68% and 5.76%, respectively, as compared to 11.95%, 10.98% and 6.53% at June 30, 1996. All capital ratios continue to be well above the regulatory minimums of 8.00% for total risk-based capital, 4.00% for tier 1 risk base capital, and 3.00% for leverage. Part II Item 4. Submission of Matters to a Vote of Security Holders The following was submitted to a vote of security holders during the quarter ended June 30, 1996, at the Annual Meeting held May 15, 1996. 1. Election of Directors. Stockholders voted to elect to the Board of Directors three nominees to serve until the Annual Meeting in 1999. The following Directors were nominated and elected: R. Gerald Fox, Richard L. Geach, and Edward G. Maris. Item 6. Exhibits and Reports on Form 8-K. 1. The following documents are filed as a part of this report: A. Consolidated Financial Statements of the Company for the quarter ended June 30, 1996 as follows: 1. Consolidated Balance Sheets, June 30, 1996 and December 31, 1995. 2. Consolidated Statements of Earnings, quarters ended June 30, 1996 and 1995 and six months ended June 30, 1996 and 1995. 3. Consolidated Statements of Cash Flows, six months ended June 30, 1996 and 1995. 4. Notes to unaudited Consolidated Financial Statements. B. Exhibits as follows: 27. Financial Data Schedule, six months ended June 30, 1996. 2. Reports on Form 8-K - The registrant has not filed any reports on Form 8-K, nor has it been required to file such reports, for the quarter ended June 30, 1996. 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 FINANCIAL SERVICES, INC. By: /s/ David L. Murray David L. Murray, Executive Vice President & Chief Financial Officer August 2, 1996 (Date) NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of Presentation. The consolidated financial statements include the accounts of Premier Financial Services, Inc. ("Premier") and its subsidiaries, all of which are wholly owned. Significant intercompany balances and transactions have been eliminated. The consolidated financial statements as of June 30, 1996 and 1995 have not been audited by independent public accountants. In the opinion of management, the interim financial statements reflect all adjustments (consisting only of adjustments of a normal recurring nature) necessary for a fair presentation of Premier's financial position, results of operations and cash flows for the interim periods presented. The results for such interim periods are not necessarily indicative of the results for the full year. These financial statements should be read in conjunction with the consolidated financial statements and the accompanying notes to the consolidated financial statements included in Premier's 1995 Annual Report to Stockholders. 2. Proposed Merger. On January 22, 1996, Premier signed a definitive agreement to merge its assets and operations with Northern Illinois Financial Corporation ("NIFCO") located in Wauconda, Illinois and form a new financial services corporation to be named Grand Premier Financial Inc. In the proposed merger, which is subject to shareholder and regulatory approval, NIFCO common shareholders will receive 4.25 shares of Grand Premier Financial, Inc. for each share held. Premier common shareholders will receive 1.116 shares of Grand Premier Financial, Inc. for each share held. Regulatory approval has been obtained from the Federal Reserve Board in a letter dated May 24, 1996 and from the Office of Banks & Real Estate of the State of Illinois in a letter dated July 16, 1996. Special meetings for shareholder approval are scheduled for August 21, 1996. At March 31, 1996, NIFCO had total assets of approximately $945 million. It is expected that the merger will be accounted for as a pooling-of- interest and be consummated in August of 1996. Consolidated Balance Sheets - --------------------------------------------------------------------------------------------------------------- June 30, December 31, 1996 1995 - --------------------------------------------------------------------------------------------------------------- (unaudited) Assets Cash & non-interest bearing deposits $29,290,971 $37,390,597 Interest bearing deposits 1,282,324 676,367 Federal funds sold 1,325,000 - - --------------------------------------------------------------------------------------------------------------- Cash and cash equivalents 31,898,295 38,066,964 - --------------------------------------------------------------------------------------------------------------- Securities available for sale 269,313,341 265,326,397 Loans 331,027,351 326,975,311 Less: Unearned discount ( 235,375) ( 278,242) Allowance for possible loan losses ( 3,757,870) ( 3,849,863) - --------------------------------------------------------------------------------------------------------------- Net loans 327,034,106 322,847,206 - --------------------------------------------------------------------------------------------------------------- Bank premises & equipment 13,562,479 13,898,077 Excess cost over fair value of net assets acquired 19,211,934 20,008,150 Accrued interest receivable 6,237,713 6,514,630 Other assets 3,918,746 3,557,959 - --------------------------------------------------------------------------------------------------------------- Total assets $671,176,614 $670,219,383 - --------------------------------------------------------------------------------------------------------------- Liabilities & stockholders' equity Non-interest bearing deposits $76,662,097 $82,694,865 Interest bearing deposits 491,223,599 468,797,581 - --------------------------------------------------------------------------------------------------------------- Deposits 567,885,696 551,492,446 - --------------------------------------------------------------------------------------------------------------- Short-term borrowings 14,895,000 32,725,000 Securities sold under agreements to repurchase 27,200,316 18,635,335 Accrued taxes & other expenses 2,105,851 5,033,133 Other liabilities 502,534 226,065 - --------------------------------------------------------------------------------------------------------------- Total liabilities $612,589,397 $608,111,979 - --------------------------------------------------------------------------------------------------------------- Stockholders' equity Preferred stock - $1 par value, 1,000,000 shares authorized: Series A perpetual, $1,000 stated value, 8.25%, 7,000 shares authorized, 5,000 shares issued and outstanding 5,000,000 5,000,000 Series B convertible, $1,000 stated value, 7.50%, 7,250 shares authorized, issued and outstanding 7,250,000 7,250,000 Series D perpetual, $1,000 stated value, 7.50%, 3,300 shares authorized, 2,000 shares issued and outstanding 2,000,000 2,000,000 Common stock- $5.00 par value June 30, December 31, No. of Shares 1996 1995 Authorized 15,000,000 15,000,000 Issued 6,592,582 6,544,347 Outstanding 6,592,582 6,544,347 32,962,910 32,721,735 Retained earnings 15,446,582 13,893,248 Unrealized gain (loss) on securities available for sale, net of tax ( 4,072,275) 1,242,421 - --------------------------------------------------------------------------------------------------------------- Stockholders' equity $58,587,217 $62,107,404 - --------------------------------------------------------------------------------------------------------------- Total liabilities & stockholders' equity $671,176,614 $670,219,383 - --------------------------------------------------------------------------------------------------------------- See notes to unaudited consolidated financial statements.
Consolidated Statements of Earnings - ----------------------------------------------------------------------------------------------------------------------------------- Six Months Ended Three Months Ended June 30, June 30, 1996 1995 1996 1995 Interest income Interest & fees on loans $14,232,232 $13,301,848 $7,142,866 $6,858,822 Interest & dividends on investment securities: Taxable 7,243,718 6,957,988 3,753,644 3,624,227 Exempt from federal income tax 835,783 1,112,889 412,809 558,914 Other interest income 135,588 151,235 49,274 48,254 - ----------------------------------------------------------------------------------------------------------------------------------- Interest income 22,447,321 21,523,960 11,358,593 11,090,217 - ----------------------------------------------------------------------------------------------------------------------------------- Interest expense Interest on deposits 10,164,867 9,513,580 5,093,036 4,978,262 Interest on short-term borrowings 1,199,218 1,172,909 661,504 609,122 - ----------------------------------------------------------------------------------------------------------------------------------- Interest expense 11,364,085 10,686,489 5,754,540 5,587,384 - ----------------------------------------------------------------------------------------------------------------------------------- Net interest income 11,083,236 10,837,471 5,604,053 5,502,833 Provision for possible loan losses 250,000 102,000 150,000 51,000 - ----------------------------------------------------------------------------------------------------------------------------------- Net interest income after provision for possible loan losses 10,833,236 10,735,471 5,454,053 5,451,833 - ----------------------------------------------------------------------------------------------------------------------------------- Other income Trust fees 1,374,657 1,285,976 711,461 637,037 Service charges on deposits 974,449 1,001,561 487,298 501,884 Net gains on loans sold to secondary market 74,418 59,940 ( 21,077) 43,393 Investment securities gains, net 113,895 60,273 44,976 37,755 Other operating income 1,200,810 855,003 600,327 435,141 - ----------------------------------------------------------------------------------------------------------------------------------- Other income 3,738,229 3,262,753 1,822,985 1,655,210 - ----------------------------------------------------------------------------------------------------------------------------------- Other expenses Salaries 4,053,822 4,043,789 2,069,106 2,036,286 Pension, profit sharing, & other employee benefits 675,747 660,080 322,501 340,063 Net occupancy of bank premises 1,095,401 1,051,687 531,555 513,278 Furniture & equipment 439,245 559,454 203,654 263,672 Federal deposit insurance premiums 3,000 561,548 1,500 280,774 Amortization of excess cost over fair value of net assets acquired 796,216 796,216 398,108 398,108 Other 2,905,051 2,536,207 1,492,100 1,323,728 - ----------------------------------------------------------------------------------------------------------------------------------- Other expense 9,968,482 10,208,981 5,018,524 5,155,909 - ----------------------------------------------------------------------------------------------------------------------------------- Earnings before income taxes 4,602,983 3,789,243 2,258,514 1,951,134 Applicable income taxes 1,620,564 1,116,017 765,834 576,711 - ----------------------------------------------------------------------------------------------------------------------------------- Net earnings $2,982,419 $2,673,226 $1,492,680 $1,374,423 =================================================================================================================================== Earnings per share: Average weighted shares outstanding 6,754,189 6,686,431 6,763,153 6,683,825 Net earnings $.36 $.32 $.18 $.17 - -----------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS Six months ended June 30, 1996 and 1995 (unaudited) 1996 1995 ------- ------- Cash flows from operating activities: Net earnings $2,982,419 $2,673,226 Adjustments to reconcile net earnings to net cash from operating activities: Amortization net, related to: Investment securities 598,503 687,934 Excess of cost over net assets acquired 796,216 796,216 Other 168,334 167,679 Depreciation 494,292 552,884 Provision for possible loan losses 250,000 102,000 Gain on sale related to: Investment securities ( 113,895) ( 60,273) Loans sold to secondary market ( 74,418) ( 59,940) Change in: Accrued interest receivable 276,917 ( 956,897) Other assets ( 360,787) ( 726,466) Accrued taxes & other expenses ( 2,927,282) 2,742,264 Other liabilities 3,014,343 132,254 ------------------------------------------------------------------------------------------------------- Net cash from operating activities 5,104,642 6,050,881 ------------------------------------------------------------------------------------------------------- Cash flows from investing activities: Purchase of investment securities held-to-maturity - ( 1,249,800) Purchase of securities available for sale (139,388,180) ( 81,762,186) Proceeds from: Maturities of investment securities held-to-maturity - 2,881,563 Maturities of securities available for sale 39,602,762 18,396,359 Sales of securities available for sale 87,261,296 50,709,062 Net (increase) decrease in loans ( 4,503,683) ( 17,367,939) Purchase of bank premises & equipment ( 185,827) ( 617,184) ------------------------------------------------------------------------------------------------------- Net cash from investing activities ( 17,213,632) ( 29,010,125) ------------------------------------------------------------------------------------------------------- Cash flows from financing activities: Net increase (decrease) in: Deposits 16,393,250 20,485,234 Securities sold under agreements to repurchase 8,564,981 657,712 Short term borrowings ( 17,830,000) ( 8,755,000) Reissuance of treasury stock - 149,762 Exercised stock options 152,860 - Cash dividends paid ( 1,340,770) ( 1,205,545) ------------------------------------------------------------------------------------------------------- Net cash from financing activities 5,940,321 11,332,163 ------------------------------------------------------------------------------------------------------- Decrease in cash and cash equivalents ( 6,168,669) ( 11,627,081) Cash and cash equivalents, beginning of year 38,066,964 45,870,359 ------------------------------------------------------------------------------------------------------- Cash and cash equivalents, for six months ended June 30 $31,898,295 $34,243,278 ------------------------------------------------------------------------------------------------------- See notes to unaudited consolidated financial statements.
EX-27 2
9 6-MOS DEC-31-1996 JUN-30-1996 29,290,971 1,282,324 1,325,000 0 269,313,341 0 0 331,027,351 3,757,870 671,176,614 567,885,696 14,895,000 29,808,701 0 32,962,910 0 14,250,000 11,374,307 671,176,614 14,232,232 8,079,501 135,588 22,447,321 10,164,867 11,364,085 11,083,236 250,000 113,895 9,968,482 4,602,983 2,982,419 0 0 2,982,419 .36 .36 3.95 1,408,443 1,130,889 85,303 0 3,849,863 544,919 202,926 3,757,870 2,706,870 0 1,051,000
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