-----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, Gm8VQWRlhyGc5Acvc8ukhLy5kGoUb3kxc+KpRjIwW68z3rdD6XXTTjtGHlVFWN2c dkGxIXmONbkeFj5GklX+Ww== 0000351616-98-000018.txt : 19981116 0000351616-98-000018.hdr.sgml : 19981116 ACCESSION NUMBER: 0000351616-98-000018 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ONE VALLEY BANCORP INC CENTRAL INDEX KEY: 0000351616 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 550609408 STATE OF INCORPORATION: WV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-12949 FILM NUMBER: 98747749 BUSINESS ADDRESS: STREET 1: ONE VALLEY SQ STREET 2: SUMMERS & LEE STS PO BOX 1793 CITY: CHARLESTON STATE: WV ZIP: 25326 BUSINESS PHONE: 3043487000 FORMER COMPANY: FORMER CONFORMED NAME: ONE VALLEY BANCORP OF WEST VIRGINIA INC DATE OF NAME CHANGE: 19920703 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [?] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1998 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 010042 One Valley Bancorp, Inc. (Exact name of registrant as specified in its charter) West Virginia 55-0609408 State or other jurisdiction (I.R.S Employer Of incorporation or organization Identification No.) One Valley Square, Charleston, West Virginia 25326 (Address of principal executive offices) (Zip Code) (304) 348-7000 (Registrant's telephone number, including area code) Not applicable _ (Former name, address, and fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant as required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X No The number of shares outstanding of each of the issuer's classes of common stock as of September 30, 1998 was: Common Stock, $10.00 par value -34,715,450 shares One Valley Bancorp, Inc. Part I. Financial Information Item 1. Financial Statements. The unaudited interim consolidated financial statements of One Valley Bancorp, Inc. (One Valley) or (Registrant) are included on pages 3 - 8 of this report. These consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for annual year-end financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal recurring nature. Operating results for the nine-month period ended September 30, 1998 are not necessarily indicative of the results that may be expected for the year ending December 31, 1998. For further information, refer to the consolidated financial statements and footnotes thereto included in the Registrant's Annual Report on Form 10-K for the year ended December 31, 1997. The Private Securities Litigation Act of 1995 indicates that the disclosure of forward-looking information is desirable for investors and encourages such disclosure by providing a safe harbor for forward-looking statements by corporate management. This Quarterly Report on Form 10-Q contains forward- looking statements that involve risk and uncertainty. In order to comply with the terms of the safe harbor, the corporation notes that a variety of factors could cause One Valley's actual results and experience to differ materially from the anticipated results or other expectations expressed in those forward- looking statements. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Management's discussion and analysis of financial condition and results of operations is included on pages 9 - 22 of this report. ONE VALLEY BANCORP, INC. AND SUBSIDIARIES Consolidated Balance Sheets (unaudited in thousands)
September 30 December 31 September 30 1998 1997 1997 ASSETS Cash and Due From Banks $144,495 $127,012 $145,140 Interest Bearing Deposits With Other Banks 4,843 2,162 5,783 Federal Funds Sold 47,951 20,310 49,475 ---------- ---------- ---------- Cash and Cash Equivalents 197,289 149,484 200,398 Securities Available-for-Sale, at fair value 1,320,845 1,216,749 1,177,818 Held-to-Maturity (Estimated Fair Value, September 30, 1998 - $264,816; December 31, 1997 - $355,820; September 30, 1997 - $341,337) 255,264 352,272 334,558 Loans Total Loans 3,902,448 3,302,536 3,227,413 Less: Allowance For Loan Losses 51,826 45,048 45,040 ---------- ---------- ---------- Net Loans 3,850,622 3,257,488 3,182,373 Premises & Equipment - Net 101,781 90,397 90,376 Other Assets 130,621 95,096 88,312 ---------- ---------- ---------- Total Assets $5,856,422 $5,161,486 $5,073,835 ========== ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Deposits Non-interest Bearing $538,451 $465,227 $422,162 Interest Bearing 3,895,150 3,468,947 3,458,192 ---------- ---------- ---------- Total Deposits 4,433,601 3,934,174 3,880,354 Short-term Borrowings Federal Funds Purchased 42,925 22,581 54,750 Repurchase Agreements and Other Borrowings 697,391 600,899 540,191 ---------- ---------- ---------- Total Short-term Borrowings 740,316 623,480 594,941 Long-term Borrowings 37,084 48,875 53,877 Other Liabilities 56,897 51,307 48,809 ---------- ---------- ---------- Total Liabilities 5,267,898 4,657,836 4,577,981 Shareholders' Equity: Preferred Stock-$10 par value; 1,000,000 shares authorized but none issued 0 0 0 Common Stock-$10 par value; 70,000,000 shares authorized, Issued 39,062,296 shares at September 30, 1998; 36,330,605 shares at December 31, 1997; 36,228,395 shares at September 30, 1997 390,623 363,306 362,284 Capital Surplus 94,019 71,782 71,834 Retained Earnings 189,425 157,730 146,658 Accumulated Other Comprehensive Income 9,552 5,927 4,929 Treasury Stock - 4,346,846 shares at September 30, 1998 and December 31, 1997; 4,211,746 shares at September 30, 1997; at cost (95,095) (95,095) (89,851) ---------- ---------- ---------- Total Shareholders' Equity 588,524 503,650 495,854 ---------- ---------- ---------- Total Liabilities and Shareholders' Equity $5,856,422 $5,161,486 $5,073,835 ========== ========== ==========
ONE VALLEY BANCORP, INC. AND SUBSIDIARIES Consolidated Statements of Income (unaudited in thousands, except per share data)
For The Three Months For The Nine Months Ended September 30 Ended September 30 1998 1997 1998 1997 INTEREST INCOME Interest and Fees on Loans Taxable $82,050 $70,020 $232,549 $205,790 Tax-Exempt 675 765 2,030 2,253 ------- -------- -------- -------- Total 82,725 70,785 234,579 208,043 Interest on Investment Securities Taxable 21,897 21,155 67,626 62,189 Tax-Exempt 3,118 2,990 9,239 8,988 -------- -------- -------- -------- Total 25,015 24,145 76,865 71,177 Other Interest Income 497 452 1,169 1,299 -------- -------- -------- -------- Total Interest Income 108,237 95,382 312,613 280,519 INTEREST EXPENSE Deposits 41,356 37,713 119,316 110,156 Short-term Borrowings 9,681 6,756 27,801 18,226 Long-term Borrowings 632 880 2,037 2,543 -------- -------- -------- -------- Total Interest Expense 51,669 45,349 149,154 130,925 -------- -------- -------- -------- Net Interest Income 56,568 50,033 163,459 149,594 Provision For Loan Losses 2,593 1,999 7,481 5,291 -------- -------- -------- -------- Net Interest Income After Provision For Loan Losses 53,975 48,034 155,978 144,303 OTHER INCOME Trust Department Income 2,762 2,557 8,722 7,733 Service Charges on Deposit Accounts 5,051 3,834 14,087 11,359 Real Estate Loan Processing & Servicing Fees 2,289 1,508 6,300 4,281 Other Service Charges and Fees 3,796 2,774 10,236 8,020 Other Operating Income 1,163 1,818 3,940 3,926 Securities Transactions 266 230 989 377 -------- -------- -------- -------- Total Other Income 15,327 12,721 44,274 35,696 OTHER EXPENSES Salaries and Employee Benefits 20,189 18,223 58,943 54,549 Occupancy Expense - Net 2,161 1,872 6,105 5,422 Equipment Expenses 2,955 2,348 8,494 6,851 Outside Data Processing 2,333 1,995 7,527 6,104 Other Operating Expenses 13,270 10,869 38,267 31,413 -------- -------- -------- -------- Total Other Expenses 40,908 35,307 119,336 104,339 -------- -------- -------- -------- Income Before Taxes 28,394 25,448 80,916 75,660 Applicable Income Taxes 9,409 8,709 27,401 25,876 -------- -------- -------- -------- NET INCOME $18,985 $16,739 $53,515 $49,784 ======== ======== ======== ======== NET INCOME PER SHARE Basic $ 0.56 $ 0.53 $ 1.63 $ 1.56 Diluted $ 0.55 $ 0.51 $ 1.60 $ 1.52 Average Shares Outstanding (in thousands) Basic 34,058 31,799 32,891 31,973 Diluted 34,635 32,504 33,513 32,668
ONE VALLEY BANCORP, INC. AND SUBSIDIARIES Consolidated Statements of Shareholders' Equity (unaudited in thousands)
Accumulated Other Common Capital Retained Treasury Comprehensive Stock Surplus Earnings Stock Income Total Balance December 31, 1997 $363,306 $71,782 $157,730 ($95,095) $5,927 $503,650 Nine Months Ended September 30, 1998 Comprehensive Income: Net Income 0 0 53,515 0 0 53,515 Other Comprehensive Income, net of tax: Net Unrealized Holding Gains on Available-For-Sale Securities Arising During The Period 0 0 0 0 4,218 4,218 Less: Reclassification Adjustment For Gains Realized in Net Income 0 0 0 0 (593) (593) -------- Other Comprehensive Income 3,625 -------- Comprehensive Income 57,140 Cash Dividends ($.66 per share) (21,820) (21,820) FFVA Treasury Shares Reissued 7,087 19,274 0 0 0 26,361 Issuance of common stock (1,826,637) 18,264 2,260 20,524 Stock Options Exercised 1,966 703 0 0 0 2,669 -------- -------- -------- -------- -------- -------- Balance September 30, 1998 $390,623 $94,019 $189,425 ($95,095) $9,552 $588,524 ======== ======== ======== ======== ======== ======== Balance December 31, 1996 $298,504 $66,641 $183,226 ($67,378) $2,065 $483,058 Nine Months Ended September 30, 1997 Comprehensive Income: Net Income 0 0 49,784 0 0 49,784 Other Comprehensive Income, net of tax: Net Unrealized Holding Gains on Available-For-Sale Securities Arising During The Period 0 0 0 0 3,090 3,090 Less: Reclassification Adjustment For Gains Realized in Net Income 0 0 0 0 (226) (226) -------- Other Comprehensive Income 2,864 -------- Comprehensive Income 52,648 Cash Dividends ($.59 per share) 0 0 (17,789) 0 0 (17,789) Five for Four Stock Split 62,960 (62,960) - FFVA Repurchase of Common Stock (1,795) 3,652 (5,603) 0 0 (3,746) Treasury Shares Purchased 0 0 0 (22,473) 0 (22,473) Stock Options Exercised 2,615 1,541 0 0 0 4,156 -------- -------- -------- -------- -------- -------- Balance September 30, 1997 $362,284 $71,834 $146,658 ($89,851) $4,929 $495,854 ======== ======== ======== ======== ======== ========
ONE VALLEY BANCORP, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (unaudited in thousands)
For The Nine Months Ended September 30 1998 1997 OPERATING ACTIVITIES Net Income $53,515 $49,784 Adjustments To Reconcile Net Income To Net Cash Provided by Operating Activities: Provision For Loan Losses 7,481 5,291 Depreciation 7,611 6,473 Amortization and Accretion 4,330 2,792 Net Gain From Sales of Assets (989) (363) Increase (Decrease) Due to Changes In: Accrued Interest Receivable (2,220) (694) Accrued Interest Payable (2,671) 2,086 Other Assets and Other Liabilities 9,572 (2,842) -------- -------- Net Cash Provided by Operating Activities 76,629 62,527 INVESTING ACTIVITIES Proceeds From Sales of Securities Available for Sale 53,045 37,974 Proceeds From Maturities of Securities Available for Sale 391,849 238,639 Proceeds From Maturities of Securities Held to Maturity 25,062 24,470 Purchases of Securities Available for Sale (404,463) (387,425) Purchases of Securities Held to Maturity (21,567) (59,178) Net Increase In Loans (328,241) (95,004) Acquisition of Branches and Subsidiary, Net of Cash Received 118,371 0 Purchases of Premises and Equipment (9,763) (6,401) -------- -------- Net Cash Used in Investing Activities (175,707) (246,925) FINANCING ACTIVITIES Net Increase in Interest Bearing and Non-interest Bearing Deposits 34,857 75,288 Net Increase in Federal Funds Purchased 20,344 37,472 Net Increase in Other Short-term Borrowings 96,492 121,395 Proceeds From Long-term Borrowings 0 25,000 Repayment of Long-term Debt (12,018) (2,015) Proceeds From Issuance of Common Stock 29,028 4,156 Repurchase of FFVA Common Stock 0 (3,746) Purchase of Treasury Stock 0 (22,473) Dividends Paid (21,820) (17,789) -------- -------- Net Cash Provided by Financing Activities 146,883 217,288 -------- -------- Increase in Cash and Cash Equivalents 47,805 32,890 Cash And Cash Equivalents at Beginning of Year 149,484 167,508 -------- -------- Cash And Cash Equivalents, September 30 $197,289 $200,398 ======== ========
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note A - Basis of Presentation The accounting and reporting policies of One Valley conform to generally accepted accounting principles and practices in the banking industry. The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. All significant intercompany accounts and transactions have been eliminated in consolidation. The interim financial information included in this report is unaudited. In the opinion of management, all adjustments necessary for a fair presentation of the results of the interim periods have been made. These notes are presented in conjunction with the Notes to Consolidated Financial Statements included in the Annual Report of One Valley. Note B - Accounting Change In February 1997, the Financial Accounting Standards Board (FASB) issued Statement No. 128, "Earnings Per Share" (FAS 128) which supercedes APB Opinion No. 15, "Earnings Per Share" (APB 15). FAS 128 is effective for financial statements for both interim and annual periods ending after December 15, 1997. Statement 128 requires the reporting of basic and diluted net income per common share. Basic net income per common share excludes any dilutive effects of stock options and is computed by dividing net income by the average common shares outstanding during the year. Diluted net income per common share is computed by dividing net income by the average common shares outstanding during the year adjusted for the dilutive effect of options under One Valley's stock option plans. The effect of dilutive stock options on average shares outstanding was 577,000 and 705,000 for the third quarter of 1998 and 1997 respectively, while the effect was 622,000 and 695,000 for the nine months ended September 30, 1998 and 1997, respectively. Net income per common share amounts for all periods presented have been restated to conform to Statement 128. In June 1997, the FASB issued Statement No. 131, "Disclosures About Segments of an Enterprise and Related Information," which is effective for fiscal years beginning after December 15, 1997. This statement requires public companies to disclose certain information about reportable operating segments in complete sets of financial statements of the company and in interim condensed financial statements. However, the provision of this statement do not require the disclosure of segment information in interim financial statements in the initial year of application, therefore, no such disclosures are required herein. These disclosure requirements will have no effect on One Valley's financial position or results of operations. As of January 1, 1998, the One Valley adopted FASB Statement No. 130, "Reporting Comprehensive Income" (FAS 130). FAS 130 establishes new rules for the reporting and display of comprehensive income and its components; however, the adoption of this Statement had no impact on One Valley's net income or shareholders' equity. FAS 130 requires unrealized gains or losses on the One Valley's available-for-sale securities, which prior to adoption were reported separately in shareholders' equity, to be included in other comprehensive income. Prior period financial statements have been reclassified to conform to the requirements of FAS 130. During the third quarter of 1998 and 1997, total comprehensive income amounted to $22,942 and $19,953, respectively. As of January 1, 1998, One Valley adopted the provision of FASB Statement No. 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities," relating to repurchase agreements, securities lending, and other similar transactions and pledged collateral, which had been delayed by FASB statement 127 "Deferral of the Effective Date of Certain Provisions of FASB Statement 125, an Amendment of FASB Statement 125." The effect of adopting the additional provisions of Statement 125, as amended by Statement 127, had no material impact on One Valley's financial position or results of operations. In June 1998, the FASB issued Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities," (FAS 133) which requires all derivatives to be recorded on the balance sheet at fair value and establishes "special" accounting for fair value, cash flow, and foreign currency hedges. FAS 133 is effective for years beginning after June 15, 1999 and the impact of adopting this statement in year 2000 cannot be determined at this time. Note C - Mergers and Acquisitions At the close of business on March 30, 1998, One Valley acquired all of the outstanding stock of FFVA Financial Corporation, in exchange for 5,518,668 shares of One Valley common stock. This combination was accounted for as a pooling-of-interests. Accordingly, all prior period financial information has been restated to reflect the merger of the two companies as though they had always been combined. At the close of business on August 7, 1998, One Valley acquired all of the outstanding stock of Summit Bankshares, Inc., in exchange for 1,826,637 shares of One Valley common stock. The transaction was accounted for as a pooling- of-interests. However, the balances and results of operations of Summit Bankshares have been included in the financial statements of One Valley only from the date of acquisition due to the relative size of Summit to One Valley. One Valley Bancorp, Inc. Management's Discussion and Analysis of Financial Condition and Results of Operations September 30, 1998 INTRODUCTION AND SUMMARY Net income for the third quarter of 1998 totaled $19.0 million, a 13.4% increase over the $16.7 million earned in the same quarter of 1997. On a per share basis, basic net income per share increased by 5.7% to $0.56 from the $0.53 earned in the third quarter of 1997. The improvement in earnings during the quarter is primarily due to higher net interest income and non-interest income which more than offset the increase in non-interest expense. Net income for the first nine months of 1998 totaled $53.5 million, a 7.5% increase over the $49.8 million earned in the first nine months of 1997. On a per share basis, basic net income per share for the nine-month period was $1.63, a 4.5% increase from the $1.56 reported for the first nine months of 1997. First quarter 1998 earnings were lowered by approximately $0.03 per share due to the impact of one-time charges connected with the acquisition of FFVA Financial Corporation in Lynchburg, Virginia. Return on average assets (ROA) measures how effectively One Valley utilizes its assets to produce net income. ROA was 1.28% for the first nine months of 1998, a decrease from the 1.35% earned during the same period of 1997. Return on average equity (ROE) also decreased to 13.05% from the 13.64% reported for the third quarter of 1997. The decline in ROA and ROE was primarily the result of acquisition activity during 1998 as more fully explained below. The following discussion is an analysis of the financial condition and results of operations of One Valley for the first nine months of 1998. This discussion should be read in conjunction with the 1997 Annual Report to Shareholders and the other financial information included in this report. Acquisitions At the close of business on February 19, 1998, One Valley acquired fifteen branches in central Virginia. Through this purchase One Valley acquired $124.9 million in loans and $283.2 million in deposits. This transaction was treated as a purchase and accordingly, the balances and results of the operations of the branches are included in the financial statements of One Valley only from the date of purchase. Also, at the close of business on March 30, 1998, One Valley Bancorp merged with FFVA Financial Corporation, a $580.0 million bank headquartered in Lynchburg, Virginia. Pursuant to the merger agreement, One Valley exchanged 1.05 shares of One Valley Bancorp stock for each share of FFVA Financial common stock outstanding. The combination was accounted for as a pooling-of-interests and as a result, all prior financial results have been restated and reported on a combined basis. In addition, on August 7, 1998, One Valley acquired Summit Bankshares, Inc. a $199.7 million bank holding company operating nine branches in Virginia with $148.7 million in total loans and $181.4 million in deposits. The transaction was accounted for as a pooling-of-interest. However, the balances and results of operations of Summit are included in the financial statements of One Valley only from the date of acquisition due to the relative size of Summit and One Valley. RESULTS OF OPERATIONS Net Interest Income Net interest income for the nine months ended September 30, 1998, was $169.5 million on a fully tax-equivalent basis, an 8.9% increase over the $155.6 million earned during the same period in 1997. This increase is largely due to a $444.8 million or 14.1% increase in average total loans and a $174.5 million or 12.0% increase in average securities during the first nine- month comparison. In total, average earning assets increased by $609.1 million or 13.2% in the first nine months of 1998 over the same period in 1997, while average interest bearing liabilities increased by $503.7 million or 12.6% in the same period. Both total interest income and total interest expense increased from the prior year due to the increases in volume and changes in the mix of assets and liabilities. Approximately one-third of the growth in average earning assets was attributable to the acquisition activity during 1998. As shown in the consolidated average balance sheets (page 22), the yield on earning assets declined to 8.16% for the first nine months of 1998 from 8.31% earned during the same period in 1997. During the same period, the cost of interest bearing liabilities increased five basis points to 4.44% from last year's 4.39% level. The slight increase in cost of funds has resulted from a planned increase in short-term borrowed funds. The cost of interest-bearing deposits has not declined as rapidly as earning asset yields due to higher costs to attract customer deposits in an increasingly competitive market. Additional discussion of the changes in balance sheet mix is included later in this report. With the lower yield earned on earning assets and the higher cost of interest bearing liabilities, the net interest margin decreased to 4.34% during the first nine months of 1998, from the 4.51% during the first nine months of 1997. Internal interest rate risk simulations indicate that over the next twelve months a sharp rise in interest rates would have a slight positive influence on net interest income; whereas, a sharp decline in rates would have a slight negative influence on net interest income. Normal fluctuations in market interest rates should not have a significant impact on One Valley's net interest margin. Credit Experience The provision for loan losses was $7.5 million for the nine months ended September 30, 1998, a $2.2 million increase from the provision made during the same period of 1997. As a percentage of average total loans, the provision for loan losses through the first nine months of 1998 was 0.28% on an annualized basis, compared with 0.22% for the same period of 1997. The increase in the provision for loan losses was based upon One Valley's continual evaluation process of the adequacy of the allowance for loan losses and to provide for the increase in the portfolio as a result of the loans acquired through acquisitions in 1998. Net charge-offs as a percentage of average total loans in the first nine months of 1998 decreased to 0.17% on an annualized basis, down from an annualized 0.22% during the same period in 1997, and from the 0.24% charge-off ratio for the full year of 1997. The decrease is primarily due to a lower volume of consumer installment charge- offs. Total non-performing assets at September 30, 1998, were 0.23% of period- end loans, down from the 0.30% at December 31, 1997 and 0.38% at September 30, 1997. Non-accrual loans totaled $7.2 million at September 30, 1998, $3.6 million or 33.1% below last year's level resulting in a decline in total non- performing assets from the level one year ago. The allowance for loan losses is sufficient to absorb nearly six times the amount of those non-performing assets. At September 30, 1998, loans past due over 90 days were 0.22% of outstanding loans, up from the 0.19% at year-end 1997 and up from the 0.20% at September 30, 1997. An analysis of the allowance for loan losses and non- performing assets is included on page 21. With the continued growth of loans outstanding, the allowance for loan losses in relationship to loans outstanding has declined to 1.33% at September 30, 1998 compared to 1.36% at year-end and 1.40% one year ago. In management's opinion, the allowance for loan losses is adequate to absorb the current estimated risk of loss in the existing loan portfolio. Non-Interest Income and Expense The net overhead ratio (non-interest expense less non-interest income excluding security transactions divided by average earning assets) is a measure of One Valley's ability to control costs and equalizes the comparison of various sized operations. As this ratio decreases, more of the net interest margin flows to net income. One Valley's net overhead ratio for the first nine months of 1998 was 1.94%, down from 2.09% during all of 1997 and down slightly from the 2.00% for the first nine months of 1997. The improvement in the net overhead ratio during the first nine months of 1998 was the result of a 13.2% growth in average earning assets from one year ago while net overhead increased by 10.2% from the same period in 1997. The increase in net overhead is primarily due to the operations of the fifteen branches purchased in February and the nine locations acquired through the merger of Summit Bankshares along with the expenses related to the FFVA merger. Total non-interest income excluding securities transactions was $43.3 million through the first nine months of 1998, up 22.6% from the $35.3 million non-interest income earned during the same period in 1997. Trust income increased by 12.8% from the same period last year due to new business and increases in the market value of trust assets managed. Service charges on deposit accounts increased by 24.0% in the first nine-month comparison mainly due to a higher level of customer activity from the twenty-four new branches (which include the fifteen purchased in February and the nine acquired through the Summit merger in August) acquired in Virginia in 1998. Real estate loan processing and service fees increased by 47.2% when compared to the first nine months of 1997 due to a higher level of residential mortgage loans sold in the secondary market and the increased refinancing activity by customers taking advantage of the lower interest rate environment. Other service charges and fees increased by 27.6% over the first nine months of 1997, primarily due to increases in credit/debit card activity and other banking services provided to customers. Total non-interest expense was $119.3 million during the nine months ended September 30, 1998, a 14.4% increase from the $104.3 million during the same period in 1997. This increase is largely due to the operations of the fifteen branches acquired during the first quarter, the nine branches acquired through the Summit merger, and the one time expenses related to the acquisition of FFVA. Staff costs increased by 8.1% from the level one-year ago primarily due to the additional staff from the new branches and normal salary and benefit increases. Occupancy expense increased by 12.6% from the same period last year principally due to the increased facilities cost related to the twenty-four new branches. Equipment expenses increased 24.0% from last year's level primarily due to higher maintenance and depreciation costs related to technology upgrades that occurred in 1997 and are continuing in 1998. Outside data processing expense increased by 23.3% from the same period in 1997. This increase is due to conversion and processing costs associated with the expansion of operations in Virginia and the processing costs related to the increased activity of the Visa Checkcard and ATM products. Other operating expenses increased by $6.9 million or 21.8% in the first nine months of 1998. One-sixth ($1.1 million) of the increase was directly related to one-time charges for investment banking and legal fees related to the FFVA merger. The remainder was primarily due to increases in advertising expense and other expenses associated with the operations of the twenty-four new branches. Income tax expense increased by $1.5 million, or 5.9%, for the first nine months of 1998 compared with the same period in 1997. The increase in taxes is primarily a result of the 6.9% growth in pretax earnings. One Valley's effective income tax rate for the first nine months of 1998 was 33.9% compared to 34.2% during the first nine months of 1997. FINANCIAL CONDITION Asset Structure Total loans at September 30, 1998, exceeded September 30, 1997 levels by 20.9% or $675.0 million. Since year-end 1997, total loans have increased by 18.2% or $600.0 million. The consolidated loan-to-deposit ratio has increased to 88.0% at September 30, 1998, compared to 83.2% at September 30, 1997. Approximately $124.9 million in loans were acquired through the fifteen branches purchased during the first quarter of 1998 and $148.7 million were acquired through the merger with Summit Bankshares. The increase in total loans is primarily in one-to-four family, home equity loans, commercial real estate loans, and consumer auto loans. Investment portfolio assets increased $7.1 million or 0.5% from the level at year-end and by $63.7 million or 4.2% from the level one-year ago. One Valley acquired approximately $108.2 million of investable funds through the fifteen branches purchased. These funds were primarily invested in government agency and mortgage backed securities. These investment decisions were made in accordance with One Valley's asset/liability strategy, which strives to minimize interest rate risk while enhancing the financial position of the Company. Since that time, maturing investments have been used to fund the strong loan growth. Securities designated as available-for-sale at September 30, 1998, had a historical cost of $1.305 billion, with an unrealized gain of approximately $15.4 million. This unrealized gain increased shareholders' equity by $9.6 million, net of $5.8 million in deferred income taxes. At year-end December 31, 1997, and September 30, 1997, securities available-for-sale had a historical cost of $1.207 billion and $1.170 billion, with an unrealized gain of approximately $9.7 million at year-end, and an unrealized gain of approximately $8.1 million at September 30, 1997. The unrealized gains increased shareholders' equity by $5.9 million and $4.9 million, net of $3.8 and $3.2 million in deferred income taxes, respectively. On March 30, 1998, in accordance with the provisions in FAS Statement 115, One Valley reclassified as available-for-sale approximately $96.2 million of investments that were previously categorized as held-to-maturity by FFVA. The reclassification enabled One Valley to incorporate FFVA's investment portfolio into its own investment policy and asset/liability management strategies. At the date of transfer, these securities had a carrying value of $95.3 million with an unrealized gain of approximately $0.9 million. Similarly, on August 7, 1998, One Valley reclassified as held-to-maturity approximately $6.9 million of investments that were previously categorized as available-for-sale by Summit Bankshares. The reclassification enabled One Valley to incorporate Summit's investment portfolio into its own investment policy and asset/liability management strategies. At the date of transfer, these securities had a carrying value of $6.8 million with an unrealized gain of approximately $0.1 million. At the time of purchase, management determines the appropriate classification of securities. Securities to be held for indefinite periods of time and not intended to be held to maturity or on a long-term basis are classified as available-for-sale and carried at fair value. The corresponding difference between the historical cost and the current fair value of these securities, the unrealized gain or loss, is an adjustment to shareholders' equity, net of deferred income taxes. Securities available-for-sale include securities that management intends to use as part of its asset/liability management strategy and that may be sold in response to changes in interest rates, resultant prepayment risk, and other related risk factors. If management has the positive intent and One Valley has the ability at the time of purchase to hold securities until maturity, they are classified as held- for-investment and carried at amortized historical cost adjusted for amortization of premiums and accretion of discounts, which are recognized as adjustments to interest income. In order to improve its fully tax equivalent net interest income and to hedge against higher income tax rates, One Valley increased its holdings of tax-exempt securities that were offering attractive yields over the last several years. As shown on the consolidated average balance sheets (page 22), average tax-exempt securities in the first nine months of 1998 increased by 4.9% or $11.0 million over the average during the first nine months of 1997. One Valley will continue to monitor its investment opportunities and may purchase additional tax-exempt securities of similar yield and quality. Federal funds sold at September 30, 1998, were $48.0 million, up $27.6 million from year-end but down only slightly from one year ago. Fluctuations in federal funds sold are normal and largely due to planned changes in the Company's asset/liability structure in order to maximize the return on investment in response to changes in the interest rate environment. Liability Structure Total deposits at September 30, 1998, increased by $499.4 million or 12.7% from the level at year-end and $553.2 million or 14.3% since September 30, 1997. Approximately $464.6 million of the increase in total deposits was attributable to the acquisition activity in 1998. Over the past few years, growth in banking deposits has been modest. Due to the current low interest rate environment compared to the early 1990's, deposit customers are shortening the maturities of their deposit reinvestments and seeking higher yielding non-traditional investment alternatives. The majority of the growth in One Valley's core deposits, exclusive of the new branches, has been in money market and Valley index accounts. The average rate paid on interest bearing deposits was 4.29% in the first nine months of 1998, relatively unchanged from the 4.31% average rate paid for all of 1997, and the 4.30% average rate paid in the first nine months of 1997. In an effort to meet customer expectations for an integrated financial service delivery system, One Valley also operates a fully licensed NASD Broker/Dealer subsidiary, an Insurance Agency subsidiary and continues to expand other product lines. Total short-term borrowings increased by $116.8 million or 18.7% from the year-end level, and increased $145.4 million or 24.4% from the level at September 30, 1997. Short-term borrowings consist of Federal funds purchased from correspondent banks, repurchase agreements with large corporate and public entities, advances on credit lines available to One Valley, and commercial paper. The increased level of short-term borrowings has been used to fund the loan growth and the higher level of investment portfolio assets as planned under One Valley's asset/liability management program. The average rate paid on these short-term borrowings has also increased from 4.85% during the first nine months of 1997 to 5.14% during the same period of 1998. Long-term borrowings decreased $16.8 million or 31.2% since September 30, 1997, primarily as a result of payments on long-term advances from the Federal Home Loan Bank (FHLB). As a result, One Valley now has $37.1 million of long-term borrowings, primarily FHLB borrowings, with repayment schedules from one to six years. Capital Structure and Liquidity One Valley's equity-to-asset ratio was 10.0% at September 30, 1998, up from the 9.8% at December 31, 1997 and at September 30, 1997. One Valley's commitment to a strong capital ratio has facilitated the company's expansion into the central Virginia markets thus increasing prospects for improving long-term profitability and shareholder value. One Valley's cash dividend, totaling $0.24 per share for the third quarter of 1998, was up 14.3% over the $0.21 per share dividend during the same period in 1997. One Valley's dividend policy, coupled with the continued growth in net income, demonstrates management's commitment to a strong equity-to-asset ratio benefiting both the investor and the customer in the local community. One Valley's risk based capital ratio at September 30, 1998 was 15.33%, well above the 8.0% required, while its Tier I capital ratio was 14.08%. One Valley's strong capital position is demonstrated further by its leverage ratio of 9.01% compared to regulatory guidance of 4.0% to 5.0%. The capital ratios of the banking subsidiaries also remain strong and allow them to effectively serve the communities in which they are located. In order to account for the FFVA merger under the pooling-of-interests method of accounting, FFVA Corporation reissued 675,000 treasury shares in a private placement offering. As a result, approximately $26.4 million of additional equity was raised in the first quarter of 1998. The capital positions of the banks, coupled with proper asset/liability matching and the stable nature of the primarily consumer base of core deposits, results in the maintenance of a strong liquidity position. The liquidity of the parent company is dependent upon dividends from its banking subsidiaries, which, although restricted by banking regulations, are adequate to meet its cash needs. Effects of Changing Prices The results of operations and financial condition presented in this report are based on historical cost, unadjusted for the effects of inflation. Inflation affects One Valley in two ways. One is that inflation can result in increased operating costs, which must be absorbed or recovered through increased prices for services. The second effect is on the purchasing power of the corporation. Virtually all of a bank's assets and liabilities are monetary in nature. Regardless of changes in prices, most assets and liabilities of the banking subsidiaries will be converted into a fixed number of dollars. Non-earning assets, such as premises and equipment, do not comprise a major portion of One Valley's assets; therefore, most assets are subject to repricing on a more frequent basis than in other industries. One Valley's ability to offset the effects of inflation and potential reductions in future purchasing power depends primarily on its ability to maintain capital levels by adjusting prices for its services and to improve net interest income by maintaining an effective asset/liability mix. YEAR 2000 READINESS DISCLOSURE Introduction One Valley recognizes the significant potential risk associated with the "Year 2000" (Y2K) issue and the challenge its poses. The Y2K problem arose because many existing computer programs use only the last two digits to refer to a year. Therefore, these computer programs do not properly recognize a year that begins with 20XX instead of 19XX. Beginning January 1, 2000, computer applications that use dates for computations, comparisons and sorting may produce incorrect results or fail due to an invalid interpretation of the date. The potential risk is not limited to computers and related software applications, but extends to telephones, security systems, copiers, FAX machines or any apparatus that utilizes computer technology. The full extent of the potential impact of Y2K is not yet known, but it could adversely affect national and global economies. As a financial institution, the ability of One Valley to promptly and accurately capture, record, process and communicate its customers' financial transactions and related data is vital to its ongoing operations. The Y2K problem could impede One Valley's ability to do so in several significant respects. Recognizing this potential risk, One Valley has undertaken a comprehensive project to address the Year 2000 issues that may affect One Valley and its customers. One Valley's preparations began in late 1996 under the guidance of Management and with oversight by the Board of Directors. Project Overview One Valley's project includes five phases: Awareness, Assessment, Renovation (or remediation), Validation (or testing), and Implementation. The Awareness Phase consisted of formal updates to One Valley management, employees and the Board of Directors about the issues relating to Y2K. In this stage management gathered information and attended conferences, appointed a project steering team and coordinators, began preliminary discussions with third party vendors, and distributed preliminary information to its employees and customers. This phase was completed in October, 1997, however One Valley continues on-going efforts to keep its customers and employees up to date. In the Assessment Phase, One Valley identified its critical information technology (IT) systems and performed a company-wide inventory of all systems, software, hardware, equipment and components that potentially could be affected by Y2K. During this phase, One Valley established project time lines, allocated resources and established the methodology to monitor the Y2K readiness of the IT systems provided by third parties, as well as its non-IT systems. One Valley also determined the Y2K readiness of its in-house IT systems and components, and reported progress to senior management and the Board of Directors on a regular basis. During this phase, One Valley identified four general areas of potential susceptibility to Y2K issues: Major IT Systems provided by third parties, Internal IT Systems, Non-IT Systems, including communications infrastructure and physical facilities, and customer business interruption. The Assessment Phase was completed in the fourth quarter of 1997. In the Renovation Phase, One Valley's third-party IT providers implemented program changes to accommodate the Y2K issues and conducted internal testing, which was substantially completed in the third quarter of 1998. In addition, during this phase One Valley began reprogramming its internal IT and non-IT systems to accommodate Y2K. It also focused on its customers' readiness for and susceptibility to Y2K concerns. One Valley anticipates this phase will be completed by the second quarter of 1999. In the Validation Phase, One Valley and its third party IT providers will perform testing on the renovated applications and components to make sure they are Y2K ready. This phase is expected to be very active during late 1998 and early 1999. Once validated, One Valley and its service providers will begin the Implementation Phase. During this phase, the applications, systems and other components will be fine-tuned and final programs put into production prior to January 1, 2000. The major portion of this final phase will not be complete until the second quarter of 1999. Project Status Most of One Valley's major IT Systems are processed by the largest third party service providers in the world, which have indicated to One Valley that they have adequate resources to perform Y2K remediation, testing and implementation, and are leading firms in their respective lines of business. The major IT systems provided by third parties include mortgage loans, credit cards, commercial and installment loans, and deposits. One Valley has been informed by these third parties that these systems have each been renovated, are in various stages of testing and implementation, and will be placed into production at the earliest possible time. One Valley has continually monitored the Y2K progress of these third parties and has determined that progress to date is acceptable, with validation of these primary third party systems anticipated to be completed by the first quarter of 1999. Two other IT systems provided by third parties which provide investment and trust services are substantially renovated, with testing and implementation scheduled to occur during the first half of 1999. One Valley's Internal IT Systems are primarily used to capture and prepare data to be transmitted to its third party IT Systems providers. One Valley is in various stages of renovating, validating and implementing these systems, with completion anticipated during the second quarter of 1999. In addition, One Valley has a total of 280 ATMs in its network; all but 49 of which have been validated. These will be upgraded for Y2K by the end of 1998. One Valley's IT systems also include personal computers, network servers, routers and related software. The upgrading or replacement of this infrastructure is 80% to 90% complete and is expected to be finished by the first quarter of 1999. Another important part of One Valley's operations includes its non-IT systems, primarily facilities and equipment. Basic utilities, such as telephone, gas and electrical service, as well as heating and cooling systems could be adversely affected by the Y2K. One Valley has performed a complete inventory of its facilities and has tested or developed plans to test, to the extent possible, applicable equipment for Year 2000 compliance. Outside companies, primarily utilities, which provide these services, have indicated to One Valley that they are Y2K ready, and to date One Valley is not aware of any non-IT system provider with a Y2K issue that would materially impact One Valley's operations. However, One Valley has no means of insuring or verifying that these non-IT systems will be Y2K ready, and the impact of a failure in these systems is not determinable. Another area that could potentially impact One Valley is interruption of its customers' business, which among other things could potentially affect the ability of its commercial loan and other customers to repay loans from One Valley, thus increasing One Valley's delinquency ratios, non-performing assets and loans losses. To help minimize these problems and heighten customer awareness, One Valley has established a Y2K Corporate Customer Action Plan. As part of this plan, One Valley has mailed Year 2000 brochures to all commercial customers, hosted Y2K information seminars featuring a nationally known expert for its customers, made FDIC Year 2000 brochures available in the lobby of all its branches, and published a Year 2000 questions and answer sheet. One Valley has also incorporated a Y2K readiness assessment in its credit risk evaluations of corporate borrowers. As of June 30, 1998, corporate borrowers were preliminarily assessed as to their Year 2000 readiness. A full assessment of medium and high risk customers and industries will be completed by the middle of the fourth quarter 1998. Those customers and industries judged to be high risk will be closely monitored and estimated loan losses resulting from potential Y2K exposure will be incorporated in the evaluation of the adequacy of the loan loss reserve. Furthermore, credit analyses on new and existing credits include evaluation of Year 2000 readiness. Although One Valley has implemented and made significant progress toward completing its Y2K project, there are uncertainties which, due to their unprecedented nature, simply cannot be fully evaluated. For example, the extent of interplay between payment systems is unclear, and it is not known how the potential failure of one aspect of that complex system might adversely impact other elements. In addition, although testing will be completed for each significant system, it is not possible to independently verify each vendor's vendor. It is unknown how a problem at one discrete point in the chain of service could impact an entire system. Management believes it has an effective project in place to resolve the Y2K issue in a timely manner. In the event of a vendor or other Y2K failure, the Company may be unable to perform some or all of the functions related to its customers' financial transactions. The impact and duration of such inability would depend upon the extent of the Y2K-related failure or failures. While One Valley believes that it is taking the steps appropriate to prevent a Y2K failure, in a matter such as this, certainty is not possible. In addition, the potential for disruptions in the economy generally resulting from Y2K issues remains unknown and could also materially adversely affect One Valley. If system failures occur for any reason, One Valley could also be subject to litigation. The likelihood of such events and their impact on One Valley cannot be reasonably estimated at this time. One Valley is in the process of developing its overall strategy for Y2K contingency plans in the event that it does not complete all phases of the Y2K project, or that Y2K issues at a vendor or customer affect One Valley. As part of that process it will assess the potential business impact of the failure of each of its important systems to determine the need for contingency planning on a system by system basis. To date, some contingency plans have been developed for mission critical applications and One Valley will continue to develop similar plans as it finalizes evaluation of remaining systems. Project Costs Expenses directly related to Y2K have been incurred such as staff costs and informational conferences and seminars for employees and customers, however, these have been immaterial to date. Since One Valley utilizes third party providers for most of its IT systems, One Valley has no direct expense as a result of upgrades to those systems as a result of Y2K concerns, although these vendors may attempt to recover some of their costs by way of future price increases upon renewal of their respective contracts. One Valley has been very aggressive in upgrading its internal IT Systems infrastructure, most of which are capital improvements attributed to planned upgrades in technology to modernize the way One Valley performs its day-to-day operations, and not solely the result of Y2K concerns. One Valley plans to replace systems which are not certified as Y2K ready, including its item processing system, with equipment that is verified as Y2K ready. The total cost of the Y2K project, consisting primarily of computer upgrades for One Valley's IT Systems which were the result of or accelerated by Y2K concerns, is estimated to be approximately $5.0 million. To date, One Valley has incurred approximately $3.5 million of these total estimated expenditures. One Valley does not separately track the internal costs incurred for the Y2K project, which are principally payroll costs for its information technology employees. Virtually all of the project costs are attributable to the purchase of new software and operations equipment, which will be capitalized. ONE VALLEY BANCORP, INC. AND SUBSIDIARIES Analysis of Loan Losses and Non-Performing Assets (unaudited in thousands)
For The Three Months For The Nine Months Ended September 30 Ended September 30 1998 1997 1998 1997 ALLOWANCE FOR LOAN LOSSES Balance, Beginning of Period $48,907 $44,437 $45,048 $45,055 Loan Losses 2,066 2,301 6,048 7,118 Loan Recoveries 535 905 1,516 1,812 ------- ------- ------- ------- Net Charge-offs 1,531 1,396 4,532 5,306 Balance of Acquired Subsidiaries 1,857 0 3,829 0 Provision For Loan Losses 2,593 1,999 7,481 5,291 ------- ------- ------- ------- Balance, End of Period $51,826 $45,040 $51,826 $45,040 ======= ======= ======= ======= Total Loans, End of Period $3,902,448 $3,227,413 Allowance For Loan Losses As a % of Total Loans 1.33 1.40 ========== ========== NON-PERFORMING ASSETS AT QUARTER END Non-Accrual Loans $7,189 $10,740 Foreclosed Properties 1,852 1,632 Restructured Loans 0 0 ------- ------ Total Non-Performing Assets $9,041 $12,372 ======= ======= Non-Performing Assets As a % of Total Loans 0.23 0.38 Loans Past Due Over 90 Days $8,590 $6,409 Loans Past Due Over 90 Days As a % of Total Loans 0.22 0.20
ONE VALLEY BANCORP, INC. AND SUBSIDIARIES Consolidated Average Balance Sheets (unaudited in thousands)
Three Months Ended September 30 Nine Months Ended September 30 1998 1997 1998 1997 Amount Yield/Rate Amount Yield/Rate Amount Yield/Rate Amount Yield/Rate (pct.) (pct.) (pct.) (pct.) ASSETS Loans Taxable $3,775,930 8.64 $3,156,635 8.82 $3,561,122 8.72 $3,114,629 8.82 Tax-Exempt 42,520 9.69 44,414 10.51 42,744 9.77 44,477 10.42 ---------- ---------- ---------- ---------- Total 3,818,450 8.66 3,201,049 8.84 3,603,866 8.74 3,159,106 8.86 Less: Allowance for Losses 50,954 44,869 48,662 45,209 ---------- ---------- ---------- ---------- Net Loans 3,767,496 8.77 3,156,180 8.97 3,555,204 8.85 3,113,897 8.98 Securities Taxable 1,374,818 6.37 1,270,328 6.66 1,397,864 6.45 1,234,370 6.72 Tax-Exempt 241,737 7.94 226,241 8.13 236,569 8.01 225,566 8.17 ---------- ---------- ---------- ---------- Total 1,616,555 6.61 1,496,569 6.88 1,634,433 6.68 1,459,936 6.94 Federal Funds Sold & Other 36,465 5.41 35,324 5.08 27,720 5.64 34,416 5.05 ---------- ---------- ---------- ---------- Total Earning Assets 5,420,516 8.10 4,688,073 8.28 5,217,357 8.16 4,608,249 8.31 Other Assets 375,658 322,832 361,032 317,996 ---------- ---------- ---------- ---------- Total Assets $5,796,174 $5,010,905 $5,578,389 $4,926,245 ========== ========== ========== ========== LIABILITIES AND EQUITY Interest Bearing Liabilities Deposits $3,834,624 4.28 $3,454,301 4.33 $3,720,519 4.29 $3,426,045 4.30 Short-term Borrowings 752,854 5.10 544,098 4.93 722,552 5.14 502,761 4.85 Long-term Borrowings 41,685 6.02 57,876 6.03 45,148 6.03 55,751 6.10 ---------- ---------- ---------- ---------- Total Interest Bearing Liabilities 4,629,163 4.43 4,056,275 4.44 4,488,219 4.44 3,984,557 4.39 Non-interest Bearing Deposits 539,190 415,944 494,817 406,984 Other Liabilities 52,283 46,708 48,665 47,886 ---------- ---------- ---------- ---------- Total Liabilities 5,220,636 4,518,927 5,031,701 4,439,427 Shareholders' Equity 575,538 491,978 546,688 486,818 ---------- ---------- ---------- ---------- Total Liabilities & Equity $5,796,174 $5,010,905 $5,578,389 $4,926,245 ========== ========== ========== ========== Interest Income To Earning Assets 8.10 8.28 8.16 8.31 Interest Expense To Earning Assets 3.78 3.84 3.82 3.80 ------ ------ ------ ------ Net Interest Margin 4.32 4.44 4.34 4.51 ====== ====== ====== ====== Note: Yields are computed on a fully taxable equivalent basis using the rate of 35%.
One Valley Bancorp, Inc. Part II. Other Information Item 6. Exhibits and Reports on Form 10-Q a) Exhibits 27. Financial Data Schedule - electronic filing only. b) Reports on Form 8-K 1. July 30, 1998 - One Valley Bancorp, Inc. announced the new closing date for the Summit Bankshares, Inc. merger. 2. August 7,1998 - One Valley Bancorp, Inc. announced the completion of the Summit Bankshares, Inc. merger. 3. September 15, 1998 - One Valley Bancorp, Inc. announced third quarter dividends. 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. One Valley Bancorp, Inc. DATE: November 13, 1998 BY /s/ J. Holmes Morrison J. Holmes Morrison President and Chief Executive Officer BY /s/ Laurance G. Jones Laurance G. Jones Executive Vice President and Chief Financial Officer EX-27 2
9 This schedule contains summary financial information extracted from the consolidated balance sheets and statements of income of One Valley Bancorp as well as supplemental schedules of the analysis of loan losses and non-performing assets and the consolidated average balance sheets and is qualified in it entirety by reference to such financial statements and supplemental schedules. 9-MOS 9-MOS DEC-31-1998 DEC-31-1997 SEP-30-1998 SEP-30-1997 144495 145140 4843 5783 47951 49475 0 0 1320845 1177818 255264 334558 264816 341337 3902448 3227413 51826 45040 5856422 5073835 4433601 3880354 740316 594941 56897 48809 37084 53877 0 0 0 0 390623 362284 197901 133570 5856422 5073835 234579 208043 76865 71177 1169 1299 312613 280519 119316 110156 149154 130925 163459 149594 7481 5291 989 377 119336 104339 80916 75660 80916 75660 0 0 0 0 53515 49784 1.63 1.56 1.60 1.52 8.16 8.31 7189 10740 8590 6409 0 0 0 0 45048 45055 6048 7118 1516 1812 51826 45040 51826 45040 0 0 0 0
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