-----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, WCTJGIPVssk9iVKmOiCcIVaOo5ZiEV7G6N6IHSccIagX1kwDiUu8Mbfh6h78Tsq5 tuji07udzoy9JxbIxoJdKg== 0000931763-99-002394.txt : 19990817 0000931763-99-002394.hdr.sgml : 19990817 ACCESSION NUMBER: 0000931763-99-002394 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990816 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PREMIER BANCSHARES INC /GA CENTRAL INDEX KEY: 0000836616 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 581793778 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-12625 FILM NUMBER: 99690392 BUSINESS ADDRESS: STREET 1: 2180 ATLANTA PLAZA STREET 2: 950 EAST PACES FERRY ROAD CITY: ATLANTA STATE: GA ZIP: 30326 BUSINESS PHONE: 4048143090 MAIL ADDRESS: STREET 1: 2180 ATLANTA PLAZA STREET 2: 950 EAST PACES FERRY ROAD CITY: ATLANTA STATE: GA ZIP: 30326 FORMER COMPANY: FORMER CONFORMED NAME: FIRST ALLIANCE/PREMIER BANCSHARES INC DATE OF NAME CHANGE: 19970108 FORMER COMPANY: FORMER CONFORMED NAME: FIRST ALLIANCE BANCORP DATE OF NAME CHANGE: 19960711 10-Q 1 PREMIER BANCSHARES FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE PERIOD ENDED JUNE 30, 1999 ------------- Commission file number 1-12625 PREMIER BANCSHARES, INC. (Exact name of registrant as specified in its charter) Georgia 58-1793778 (State or other jurisdiction of (IRS employer identification no.) incorporation or organization) 2180 Atlanta Plaza 950 East Paces Ferry Road Atlanta, Georgia 31061 (address of principal (zip code) executive offices) Registrants telephone number, including area code 404-814-3090 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ____ ------ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at July 30, 1999 Common stock, $1.00 par value 26,167,965 PREMIER BANCSHARES, INC. AND SUBSIDIARIES FORM 10-Q TABLE OF CONTENTS Part I. Financial Information Item 1. Consolidated Condensed Financial Statements........................................................... 3 Consolidated Condensed Statements of Condition (Unaudited) as of June 30, 1999 and December 31, 1998 Consolidated Condensed Statements of Income (Unaudited) for the Three Months Ended June 30, 1999 and 1998 Consolidated Condensed Statements of Income (Unaudited) for the Six Months Ended June 30, 1999 and 1998 Consolidated Condensed Statements of Cash Flows (Unaudited) for the Six Months Ended June 30, 1999 and 1998 Notes to Unaudited Consolidated Condensed Financial Statements Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.................. 10 Item 3. Quantitative and Qualitative Disclosures About Market Risk............................................. 15 Part II. Other Information Item 4. Submission of Matters to a Vote of Securities Holders................................................... 16 Item 6. Exhibits and Reports on Form 8-K....................................................................... 16 Signatures...................................................................................................... 17
2 Part I. Financial Information Item 1. Consolidated Condensed Financial Statements PREMIER BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CONDITION (Unaudited)
June 30, December 31, 1999 1998 ------------------- --------------- (dollar amounts in thousands) Assets Cash and due from banks $ 37,965 $ 58,021 Interest-bearing deposits with other banks 445 8,262 Federal funds sold 73,943 123,740 Securities available-for-sale 165,622 133,232 Loans held for sale 67,908 124,900 Loans 1,107,550 1,033,561 Allowance for credit losses (14,845) (14,080) --------------- --------------- Net loans 1,092,705 1,019,481 Premises and equipment, net 30,047 30,787 Goodwill and other intangibles 4,287 4,500 Other real estate owned 1,896 1,889 Other assets 18,346 15,806 --------------- --------------- Total assets $1,493,164 $1,520,618 =============== =============== Liabilities, redeemable preferred stock and common stockholders' equity Deposits Noninterest-bearing $ 175,523 $ 187,998 Interest-bearing 986,126 991,964 --------------- --------------- Total deposits 1,161,649 1,179,962 Federal funds purchased and securities sold under repurchase agreements 30,106 21,782 Federal Home Loan Bank advances 50,000 --- Guaranteed preferred beneficial interests in the Company's subordinated 28,750 28,750 debentures Other borrowings 72,537 140,089 Other liabilities 9,806 11,496 --------------- --------------- Total liabilities 1,352,848 1,382,079 Redeemable preferred stock, par value $60, 2,000,000 shares authorized, 40,770 shares issued and outstanding 2,446 2,446 Common stockholders' equity: Common stock, $1 par value; 60,000,000 shares authorized; 26,167,265 and 26,000,409 shares issued at June 30, 1999 and December 31, 1998, respectively 26,167 26,000 Capital surplus 55,409 54,730 Treasury stock, at cost (83,900 shares at June 30, 1999) (1,671) --- Retained earnings 59,100 54,986 Accumulated other comprehensive (loss) income (1,135) 377 --------------- --------------- Total stockholders' equity 137,870 136,093 --------------- --------------- Total liabilities and stockholders' equity $1,493,164 $1,520,618 =============== =============== See notes to consolidated condensed financial statements.
3 PREMIER BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Unaudited)
Three Months Ended June 30, 1999 1998 ------------ ----------- (dollar amounts in thousands, except per share data) Interest Income: Loans, including fees $26,798 $24,689 Investment securities: Taxable 2,051 2,789 Tax-exempt 132 195 Federal funds sold 1,627 1,096 ------------ ----------- Total interest income 30,608 28,769 Interest Expense: Deposits 11,322 11,814 Other borrowings 3,346 1,732 ------------ ----------- Total interest expense 14,668 13,546 Net interest income 15,940 15,223 Provision for credit losses 520 165 ------------ ----------- Net interest income after provision for credit losses 15,420 15,058 Other Income: Service charges on deposit accounts 1,117 950 Securities transactions, net 2 15 Mortgage banking activities 6,212 6,744 Other noninterest income 1,401 2,274 ------------ ----------- Total other income 8,732 9,983 Other Expenses: Salaries and employee benefits 10,108 9,537 Net occupancy and equipment expense 2,029 2,000 Merger related expenses 551 360 Other noninterest expense 4,509 3,816 Total other expenses 17,197 15,713 ------------ ----------- Income before income taxes 6,955 9,328 Income taxes 3,064 2,886 ----------- ----------- Net income $ 3,891 $ 6,442 ============ =========== Per Share Information: Earnings per share Basic $ 0.15 $ 0.25 Weighted average common shares outstanding Basic 26,032,858 25,709,615 Earnings per share Diluted 0.15 $ 0.25 Weighted average common shares outstanding Diluted 26,397,251 26,162,373 Dividends declared per share $ 0.09 $ 0.14 See notes to consolidated condensed financial statements.
4 PREMIER BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Unaudited) Six Months Ended June 30, 1999 1998 -------------- ------------ (dollar in thousands, except per share data) Interest Income: Loans, including fees $ 52,759 $ 47,495 Investment securities: Taxable 3,958 5,279 Tax-exempt 277 517 Federal funds sold 2,653 2,241 Total interest income 59,647 55,532 ----------- ----------- Interest Expense: Deposits 22,332 23,268 Other borrowings 5,957 2,933 ----------- ----------- Total interest expense 28,289 26,201 Net interest income 31,358 29,331 Provision for credit losses 925 210 ----------- ----------- Net interest income after provision for credit losses 30,433 29,121 Other Income: Service charges on deposit accounts 2,266 2,092 Securities transactions, net 29 15 Mortgage banking activities 13,554 12,732 Other noninterest income 3,042 3,712 ----------- ----------- Total other income 18,891 18,551 Other Expenses: Salaries and employee benefits 19,399 18,216 Net occupancy and equipment expense 4,122 3,854 Merger related expenses 831 377 Other noninterest expense 9,026 7,378 --------- ---------- Total other expenses 33,378 29,825 ----------- ----------- Income before income taxes 15,946 17,847 Income taxes 6,279 5,716 ----------- ----------- Net income $ 9,667 $ 12,131 ============ =========== Per Share Information: Earnings per share - Basic $ 0.37 $ 0.47 Weighted average common shares outstanding - Basic 26,012,132 25,672,237 Earnings per share Diluted $ 0.36 $ 0.47 Weighted average common shares outstanding - Diluted 26,462,430 26,085,789 Dividends declared per share $ 0.18 $ 0.17
See notes to consolidated condensed financial statements. 5
PREMIER BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) Six months ended June 30, 1999 1998 --------- --------- (dollar amounts in thousands, except per share data) Cash flows from operating activities Net income $ 9,667 $ 12,131 Adjustments to reconcile net income to net cash provided by operating activities: Provision for credit losses 925 210 Depreciation expense 1,429 1,601 Amortization and accretion, net 143 304 Gain on sale of premises and equipment (393) (1,195) Gain on sale of securities (29) (15) (Gain) loss on sale of other real estate owned (162) 19 Net decrease in loans held for sale 56,992 11,543 Increase in other assets (2,079) (5,605) (Decrease) increase in other liabilities (1,690) 739 --------- ----------- Net cash provided by operating activities 64,803 19,732 Cash flows from investing activities Decrease in interest bearing deposits 7,817 2,516 Proceeds from maturities and paydowns of investment securities available-for-sale 47,766 42,775 Proceeds from maturities and paydowns of investment securities held-to-maturity --- 13,247 Proceeds from sales of investment securities available-for-sale 527 1,000 Purchases of investment securities available-for-sale (83,275) (39,492) Purchases of investment securities held-to-maturity --- (5,112) Net increase in loans (75,172) (81,066) Decrease (increase) in federal funds sold, net 49,797 (29,585) Purchases of premises and equipment (2,179) (3,160) Proceeds from sales of premises and equipment 1,883 1,047 Sale of bank branch - (7,122) Proceeds from sales of other real estate owned 1,178 770 ----------- ----------- Net cash used in investing activities (51,658) (104,182) Cash flows from financing activities Net (decrease) increase in deposits (18,313) 61,640 Net increase (decrease) in repurchase agreements 8,324 (8,456) Net increase (decrease) in FHLB advances 50,000 (1,000) Net (decrease) increase in other borrowings (67,552) 37,379 Dividends paid (4,990) (4,132) Purchase of treasury stock (1,671) --- Proceeds from exercise of stock options 1,001 1,070 ----------- ----------- Net cash (used in) provided by financing activities (33,201) 86,501 Net (decrease) increase in cash and cash equivalents (20,056) 2,051 Cash and due from banks, beginning of period 58,021 51,881 Cash and due from banks, end of period $ 37,965 $ 53,932 =========== ========= Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 29,483 $ 26,017 =========== ========= Income taxes $ 7,938 $ 7,108 ============ ==========
See notes to consolidated condensed financial statements. 6 PREMIER BANCSHARES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS June 30, 1999 (Unaudited) Note 1. BASIS OF PRESENTATION The accompanying consolidated condensed financial information of Premier Bancshares, Inc. and Subsidiaries (the "Company") is unaudited; however, such information reflects all adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial position and results of operations. As more fully discussed in Note 2, the Company completed four mergers in 1998 accounted for as poolings of interests. The accompanying consolidated condensed financial information has been restated for the three months and six months ended June 30, 1998 to reflect the effect of these mergers as if they had taken place on January 1, 1998. The results of operations for the three- and six-month periods ended June 30, 1999 are not necessarily indicative of the results to be expected for the full year. These statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1998. Note 2. BUSINESS COMBINATIONS Completed Combinations On December 17, 1998 the Company completed a business combination with Frederica Bank & Trust ("Frederica") by exchanging 1,013,500 shares of the Company's common stock for all of the common stock of Frederica. The combination was accounted for as a pooling of interests and, accordingly, the financial statements reflect the combination as if it took place on January 1, 1998. All prior period consolidated financial statements have been restated to include the results of Frederica. On July 2, 1998, the Company completed a business combination with The Bank Holding Company ("BHC") by exchanging 2,170,447 shares of the Company's common stock and 40,770 shares of the Company's redeemable preferred stock for all of the outstanding common and redeemable preferred stock of BHC. The combination was accounted for as a pooling of interests and, accordingly, the financial statements reflect the combination as if it took place on January 1, 1998. All prior period consolidated financial statements have been restated to include the results of BHC. On July 1, 1998, the Company completed a business combination with Button Gwinnett Financial Corporation ("Button Gwinnett") by exchanging 5,571,778 shares of the Company's common stock for all of the outstanding common stock of Button Gwinnett. The combination was accounted for as a pooling of interests and, accordingly, the financial statements reflect the combination as if it took place on January 1, 1998. All prior period consolidated financial statements have been restated to include the results of Button Gwinnett. On June 9, 1998, the Company completed a business combination with Lanier Bank & Trust Company ("Lanier") by exchanging 1,625,990 shares of the Company's common stock for all of the outstanding common stock of Lanier. The combination was accounted for as a pooling of interests and, accordingly, the financial statements reflect the combination as if it took place on January 1, 1998. All prior period consolidated financial statements have been restated to include the results of Lanier. Pending Combinations On May 20, 1999, the Company announced that a definitive merger agreement had been entered into with Bank Atlanta ("Bank Atlanta"). As of December 31, 1998, Bank Atlanta had total assets of $79,447,000, and for the year ended December 31, 1998, had revenue and net income of $7,346,000 and $1,405,000, respectively. The merger is expected to close in the third quarter of 1999 and is expected to be accounted for as a pooling of interests. On April 20, 1999, the Company announced that a definitive merger agreement had been entered into with Farmers & Merchants Bank ("Farmers"). As of December 31, 1998, Farmers had total assets of $165,981,000, and for the year ended December 31, 1998, had revenue and net income of $13,048,000 and $2,600,000, respectively. The merger is expected to close in the third quarter of 1999 and is expected to be accounted for as a pooling of interests. On April 6, 1999, the Company announced that a definitive merger agreement had been entered into with North Fulton Bancshares, Inc. ("North Fulton"). As of December 31, 1998, North Fulton had total assets of $173,600,000, and for the year ended December 31, 1998, had revenue and net income of $15,608,000 and $1,417,000, respectively. The merger is expected to close in the third quarter of 1999 and is expected to be accounted for as a pooling of interests. 7 Note 3. STOCKHOLDERS' EQUITY On April 13, 1999, the Company declared a quarterly cash dividend of $0.09 per share payable to shareholders of record as of April 27, 1999. The dividend was paid on May 10, 1999. On July 22, 1999, the Company declared a quarterly cash dividend of $.09 per share payable to shareholders of record as of August 5, 1999. The dividend is to be paid on August 19, 1999. Note 4. RECENT ACCOUNTING PRONOUNCEMENTS In June 1998, the FASB issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("Statement 133"). Statement 133 establishes new accounting and reporting activities for derivatives. The standard requires all derivatives to be measured at fair value and recognized as either assets or liabilities in the statement of condition. Under certain conditions, a derivative may be specifically designated as a hedge. Accounting for the changes in fair value of a derivative depends on the intended use of the derivative and the resulting designation. In July 1999, the FASB issued Statement of Financial Accounting Standards No. 137, "Accounting for Derivative Instruments and Hedging Activities-Deferral of the Effective Date of FASB Statement No. 133" ("Statement 137"), which deferred the effective date of Statement 133 to fiscal years beginning after June 15, 2000. The adoption is not expected to result in a material financial impact on the Company's financial position or results of operations. Note 5. EARNINGS PER SHARE Earnings per share for periods prior to 1999 have been restated to reflect the business combinations accounted for as poolings of interests. The following tables set forth the computation of basic and diluted earnings per share:
Quarter ended June 30, 1999 1998 --------------------------------------------- (In thousands, except per share data) Numerator: Net income $ 3,891 $ 6,442 Preferred stock dividends (49) (49) --------------------------------------------- Net income available to common shareholders $ 3,842 $ 6,393 ============================================= Denominator: Denominator for basic earnings per share - weighted 26,033 25,710 average shares Effect of dilutive securities - stock options 364 452 Denominator for diluted earnings per share - adjusted weighted average shares and assumed conversions 26,397 26,162 ============================================= Net income per share of common stock $ 0.15 $ 0.25 --------------------------------------------- Net income per share of common stock-diluted $ 0.15 $ 0.25 ============================================= Six Months ended June 30, 1999 1998 --------------------------------------------- (In thousands, except per share data) Numerator: Net income $ 9,667 $12,131 Preferred stock dividends (98) (98) --------------------------------------------- Net income available to common shareholders $ 9,569 $12,033 ============================================= Denominator: Denominator for basic earnings per share - weighted 26,012 25,672 average shares Effect of dilutive securities - stock options 450 414 Denominator for diluted earnings per share - adjusted weighted average shares and assumed conversions 26,462 26,086 ============================================= Net income per share of common stock $ 0.37 $ 0.47 --------------------------------------------- Net income per share of common stock-diluted $ 0.36 $ 0.47 =============================================
8 Note 6. OTHER COMPREHENSIVE INCOME Total comprehensive income was $2,889,000 and $6,256,000 for the quarter ended June 30, 1999 and 1998, respectively, and $8,155,000 and $12,809,000 for the six months ended June 30, 1999 and 1998, respectively. The Company's components of other comprehensive income consist solely of unrealized gains and losses on securities classified as available for sale and reclassification adjustments for securities gains and losses included in net income. Note 7. BUSINESS SEGMENT INFORMATION The Company's two major lines of business are Community Banking and Mortgage Lending. Community Banking encompasses all of the Company's traditional banking services, including: loans to small and medium-size businesses; residential, construction and development loans; commercial real estate loans; consumer loans and a variety of commercial and consumer deposit accounts. Included in Community Banking are certain corporate overhead expenses which have not been separately allocated. Mortgage Lending encompasses the retail origination of residential mortgage loans which are sold to correspondent mortgage investors.
Community Mortgage Banking Lending Eliminations Total ------------------------------------------------------------------ (dollars in thousands) Three months ended June 30, 1999: - --------------------------------- Net interest income $ 14,747 $ 673 - $ 15,420 Other income 2,220 6,563 (51) 8,732 Other expenses (11,183) (6,065) 51 (17,197) ---------------------------------------------------------------------- Income before income taxes $ 5,784 $ 1,171 - $ 6,955 ===================================================================== Average total assets $ 1,480,288 $109,544 $1,589,832 ==================================================================== Three months ended June 30, 1998: - -------------------------------- Net interest income $ 14,867 $ 191 - $ 15,058 Other income 2,931 7,052 - 9,983 Other expenses (10,686) (5,027) - (15,713) Income before income taxes $ 7,112 $ 2,216 - $ 9,328 ===================================================================== Average total assets $1, 374,026 $ 52,932 $1,426,958 ====================================================================== Community Mortgage Banking Lending Eliminations Total ------------------------------------------------------------------ (dollars in thousands) Three months ended June 30, 1999: - --------------------------------- Net interest income $ 28,987 $ 1,446 - $ 30,433 Other income 4,657 6,563 (98) 18,981 Other expenses (21,621) (11,855) 98 (33,378) --------------------------------------------------------------------- Income before income taxes $ 12,023 $ 3,923 - $ 15,946 ===================================================================== Average total assets $ 1,411,761 $112,824 $1,524,585 ==================================================================== Three months ended June 30, 1998: - -------------------------------- Net interest income $ 28,762 $ 359 - $ 29,121 Other income 5,340 13,211 - 18,551 Other expenses (20,593) (9,232) - (29,825) -------------------------------------------------------------------- Income before income taxes $ 13,509 $ 4,338 - $ 17,847 ===================================================================== Average total assets $ 1,336,398 $ 29,904 $1,366,302 =====================================================================
9 Note 8. SUBSEQUENT EVENT On July 28, 1999, the Company and BB&T Corporation ("BB&T") entered into an Agreement and Plan of Reorganization (the "Agreement"), pursuant to which BB&T will acquire all of the issued and outstanding shares of Premier common stock and preferred stock through the merger of Premier with and into BB&T. The transaction is subject to approval by the shareholders of Premier, appropriate regulatory approvals and the satisfaction of certain other conditions set forth in the Agreement. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Premier Bancshares, Inc. (the "Company") is a bank holding company organized and existing under the laws of the State of Georgia and headquartered in Atlanta, Georgia. At June 30, 1999, the Company consisted of Premier Bank ("Premier Bank") and Premier Lending Corporation ("Premier Lending"). The Company merged Central and Southern Bank of Georgia into Premier Bank during the first quarter of 1999, and merged First Community Bank of Henry County, The Bank of Spalding County, and Frederica Bank and Trust into Premier Bank in the second quarter of 1999. The Company was incorporated in 1988 under the laws of the State of Georgia. The Company is a locally-focused, community-oriented financial services holding company with several financial services industry products and services such as commercial finance (including asset-based loans), Small Business Administration ("SBA") lending, residential construction lending, residential mortgage loan origination and commercial real estate mortgage loan origination. The Company's knowledge of both its product lines and local markets allows it to compete effectively with larger institutions by offering a wide range of products while maintaining strong community relationships and name recognition within its markets. In addition, management believes that there continue to be increased opportunities in the retail and small to middle market commercial loan products as larger competitors focus on the higher dollar and volume loan product markets. Through its financial institution subsidiary, the Company operates 29 banking offices located in the Atlanta metropolitan area and in northern, central and coastal Georgia. In these markets, Premier Bank provides a broad array of community banking services, including: loans to small and medium-sized businesses; residential, construction and development loans; commercial real estate loans; consumer loans and a variety of commercial and consumer deposit accounts. In addition, through its wholly-owned mortgage banking subsidiary, Premier Lending, the Company operates 12 mortgage loan production offices in the Atlanta metropolitan area and Augusta, Georgia; Warner Robins, Georgia; St. Simons Island, Georgia; Charlotte, North Carolina; Chattanooga, Tennessee; Jacksonville, Florida; Charleston, South Carolina; and Mobile, Alabama. Premier Lending is a retail originator of residential mortgage loans which are sold to correspondent mortgage investors and is an approved Federal National Mortgage Association ("FNMA") and Federal Home Loan Mortgage Corporation ("FHLMC") seller-servicer of mortgage loans and an approved Department of Housing and Urban Development ("HUD") and Veterans Administration ("VA") mortgage originator. Acquisitions of unaffiliated financial institutions during the past three years have been a principal source of the Company's growth. On August 31, 1996, the Company acquired a thrift holding company then named Premier Bancshares, Inc.; on June 23, 1997, the Company acquired Central and Southern Holding Company, a bank and thrift holding company; on December 12, 1997, the Company acquired Citizens Gwinnett Bankshares, Inc., a bank holding company; on June 9, 1998, the Company acquired Lanier Bank & Trust Company, a Georgia bank; on July 1, 1998, the Company acquired Button Gwinnett Financial Corporation, a bank holding company; on July 2, 1998, the Company acquired The Bank Holding Company, a bank holding company; and on December 17, 1998, the Company acquired Frederica Bank & Trust, a Georgia bank. The historical financial statements of the Company have been restated to give effect to these acquisitions which were accounted for as poolings of interests. On April 6, 1999, the Company announced that a definitive merger agreement had been entered into with North Fulton Bancshares, Inc. ("North Fulton"). On April 20, the Company announced that a definitive merger agreement had been entered into with Farmers & Merchants Bank ("Farmers"). On May 20, the Company announced that a definitive merger agreement had been entered into with Bank Atlanta ("Bank Atlanta"). These mergers are expected to close in the second half of 1999 and are expected to be accounted for as poolings of interests. These mergers were entered into prior to the Companys Agreement with BB&T, and the completion of these mergers is not contingent upon the closing of the BB&T Merger. North Fulton Bancshares, Inc. and Bank Atlanta have scheduled meetings of their shareholders to consider these acquisitions on August 31, 1999 and September 14, 1999, respectively. The closing of the mergers with North Fulton Bancshares, Bank Atlanta, and Farmers & Merchants Bank is a condition to BB&T's obligations under its Agreement with Premier. On July 28, 1999, the Company entered into an Agreement and Plan of Reorganization with BB&T Corporation, pursuant to which the Company will be merged with and into BB&T and BB&T will be the surviving corporation. As a result of this merger, each share of the Company's common stock then outstanding will be converted into the right to receive 0.5155 shares of BB&T common stock, plus cash in lieu of any fractional shares interest. BB&T is a multi-bank holding company headquartered in Winston-Salem, North Carolina. BB&T conducts in operations in North Carolina, South Carolina, Georgia, Virginia, Maryland and Washington, D.C., primarily through its commercial banking subsidiaries, and to a lesser extent through its other subsidiaries. The merger of the Company with and into BB&T is subject to the approval of the Company's shareholders and banking regulators. The merger is expected to be accounted for as a pooling of interests and is expected to be completed in the first quarter of 2000. 10 The following discussion should be read in conjunction with the Consolidated Condensed Financial Statements, including the footnotes, and is qualified in its entirety by the foregoing and other more detailed financial information appearing elsewhere herein. Historical results of operations and the percentage relationships among any amounts included in the Consolidated Condensed Statements of Income, and any trends which may appear to be inferable therefrom, should not be taken as being necessarily indicative of trends in operations or results of operations for any future periods. Financial Condition At the end of the second quarter of 1999, total assets decreased $27,454,000 or 1.8% from December 31, 1998. Total loans (excluding mortgage loans held for sale) increased $73,989,000 or 7.2% from December 31, 1998. The increase in loans is primarily attributable to increased demand for loans in the markets that the Company serves. Mortgage loans held for sale decreased $56,992,000 or 45.6% during the same period, as the volume of loans sold to correspondent mortgage investors increased during 1999. Federal funds sold decreased $49,797,000 or 40.2% from December 31, 1998 to June 30, 1999. Securities available-for-sale increased $32,390,000 or 24.3% during the same period. Total deposits decreased $18,313,000 or 1.6% for the year-to-date due, in part, to a program to reduce the cost of deposits. Federal Home Loan Bank advances increased $50,000,000 as the Company initiated a plan to supplement deposits with lower cost funding. Other borrowings decreased by $67,552,000 or 48.2% as the result of decreases in the warehouse line of credit resulting from lower outstanding mortgage loans held for sale at period end. Total liabilities decreased by $29,231,000 or 2.1% from December 31, 1998 to June 30, 1999. Results of Operations For the three-month period ended June 30, 1999 the Company recorded net income of $3,891,000 as compared to $6,442,000 for the same period in 1998. This $2,551,000 or 39.6% decrease is due primarily to the following: Net interest income increased $717,000. Provision for credit losses increased $355,000. Total other income decreased $1,251,000. Total other expense increased $1,484,000. Income tax expense increased $178,000. The reasons for these changes are discussed more fully below. For the six-month period ended June 30, 1999 the Company recorded net income of $9,667,000 as compared to $12,131,000 for the same period in 1998. This $2,464,000 or 20.3% decrease is due primarily to the following: Net interest income increased $2,027,000. Provision for credit losses increased $715,000. Total other income increased $340,000. Total other expense increased $3,553,000. Income tax expense increased $563,000. The reasons for these changes are discussed more fully below. Net Interest Income - ------------------- Net interest income increased $717,000 or 4.7% for the three month period ended June 30, 1999 compared to the same period in 1998, due to an increase in average earning assets. Average earning assets increased by approximately $154,000,000 while average interest-bearing liabilities increased by approximately $137,000,000. Yields on earning assets decreased by 49 basis points and costs of interest-bearing liabilities decreased by 22 basis points. The net interest margin declined to 4.48% in the second quarter of 1999 from 4.83% in the same period of 1998. 11 Net interest income increased $2,027,000 or 6.9% for the six month period ended June 30, 1999 compared to the same period in 1998, due to an increase in average earning assets. Average earning assets increased by approximately $161,000,000 while average interest-bearing liabilities increased by approximately $143,000,000. Yields on earning assets decreased by 48 basis points and costs of interest-bearing liabilities decreased by 28 basis points. The net interest margin declined to 4.53% for the six-month period of 1999 from 4.81% in the same period of 1998. Provision for Credit Losses - --------------------------- The Company recorded a provision for credit losses of $520,000 for the second quarter of 1999 and $925,000 year-to-date. The Company had net charge-offs of $49,000 during the second quarter and $160,000 year-to-date. Management will continue to monitor and adjust the level of the allowance for credit losses in relation to net charge-offs, as well as the overall level of the allowance for credit losses to loans outstanding and management's assessment of credit losses inherent in the loan portfolio.
ASSET QUALITY June 30, December 31, 1999 1998 Change Percentage ---------------------------------------------------------------------- (dollars in thousands) Loans past due 90 days or more $ - $ 14 $ (14) (100.0)% Nonaccrual loans 3,204 3,843 (639) (16.6)% ---------------------------------------------------------------------- Total nonperforming loans 3,204 3,857 (653) (16.9)% Other real estate owned 1,896 1,889 7 0.4 % Total nonperforming assets $5,100 $5,746 $(646) (11.2)% ====================================================================== Nonperforming loans/Total loans 0.29% 0.37% Nonperforming assets/Total assets 0.34% 0.38%
The table above illustrates the changes in the level of nonperforming assets from December 31, 1998 to June 30, 1999. The level of nonperforming assets at June 30, 1999 decreased slightly from December 31, 1998. Management anticipates the levels of nonperforming loans and assets will remain at relatively low levels. Management is not aware of any potential problem loans other than those included in the table above. Other Income - ------------ The Company's main sources of other income are from mortgage banking activities and service charges on deposit accounts. Other income decreased $1,251,000 in the second quarter of 1999 compared to the same period in 1998. Service charges on deposit accounts increased by $167,000 due to the growth in outstanding deposits. Income from mortgage banking activities decreased $532,000 for the second quarter of 1999 compared to 1998 due to an increase in interest rates, as rates on 30-year mortgages increased almost 100 basis points during the quarter. As a result of continued increases in interest rates generally, since the end of June 1999, the volume of the Company's mortgage business and income continues to decline, and the mix of business has shifted to less profitable purchases of loans from correspondents. Income from mortgage production and gains on sales of mortgages have continued to decline, also. Other noninterest income decreased $873,000 for the second quarter of 1999 compared to 1998 due to a gain on the sale of a subsidiary branch banking location in 1998. For the year-to-date, other income increased $340,000. Service charges on deposits increased by $174,000 as outstanding deposits continued to increase in 1999 over the 1998 levels. Income from mortgage banking activities increased by $822,000 in 1999 compared to 1998, as mortgage production remained strong initially, but began to decline compared from the record levels of 1998 as interest rates increased and mortgage volumes began to decline. As a result of general increases in interest rates during Summer 1999, and expectation of additional upward pressure on interest rates from a strong economy, the Company presently expects that mortgage loan production, and income from the origination and sale of mortgage loans will continue to decline from abnormally high levels of 1998 and early 1999. Although Company management is taking steps to reduce the costs of its mortgage business consistent with the present environment, the costs resulting from the substantial expansion of this business in 1998 to take advantage of market opportunities and lower volumes of mortgage loans has resulted in approximately $50,000 loss on its mortgage business in July 1999. Other noninterest income declined by $670,000 for the year, again primarily due to the branch sale in 1998. 12 Other Expense - ------------- Other expense increased $1,484,000 for the three-month period ended June 30, 1999 compared to the same period in 1998. Salaries and employee benefits expense increased $571,000 primarily due to increased commissions on mortgage loan originations. Occupancy expense increased due to the Company's opening of two new bank branches during the third quarter of 1998 and a new bank branch during the second quarter of 1999. Merger expenses were $551,000 during the second quarter of 1999 compared to $360,000 in 1998 as the Company currently has three pending acquisitions in process. Other operating expense increased $693,000 over 1998 as the Company completed the conversion of the banks acquired during 1998 into Premier Bank. In addition, Premier Lending opened six new mortgage origination offices in late 1998. For the year-to-date, other expense increased $3,553,000. Salaries and employee benefits increased by $1,183,000; net occupancy expense by $268,000; merger expenses by $454,000; and other expense by $1,648,000 primarily due to the reasons discussed above. Income Tax Expense - ------------------ Income tax expense increased $178,000 for the three months ended June 30, 1999 compared to the same period in 1998. The effective tax rate for the second quarter of 1999 was 44.0% versus 30.9% for the same period in 1998. The Company's effective tax rate increased due to the nondeductibility of certain merger expenses and a decrease in tax-exempt interest income. For the year, income tax expense increased $563,000. The effective tax rate was 39.4% in 1999 versus 32.0% for 1998. Interest Rate Sensitivity Management Interest rates play a major part in the net interest income of a financial institution. The sensitivity to rate changes is known as "interest rate risk." The repricing of interest-earning assets and interest-bearing liabilities can influence the changes in net interest income. As part of the Company's asset/liability management program, the timing of repricing assets and liabilities is referred to as Gap management. It is the policy of the Company to maintain a Gap ratio in the one-year time horizon of .80 to 1.20. The current Gap analysis indicates that the Company is somewhat asset sensitive in relation to changes in market interest rates. The Company uses simulation analysis to monitor changes in net interest income due to changes in market interest rates. The simulation of rising, declining, and a most likely interest rate scenario allows management to monitor and adjust interest rate sensitivity to minimize the impact of market interest rate swings. Each month management updates all available data concerning cash flows of assets and liabilities, changes in market interest rates, and expectations as to new volumes of loans. During periods of rising interest rates, as has been experienced toward the end of the second quarter of 1999 and thereafter, mortgage originations, especially refinancings tend to decrease. This has been somewhat offset by the strong economies in which the Company operates, and continued housing sales. As the Company has sold loans in the secondary market, the reduction in origination volume, especially refinancings, has reduced the amounts of mortgage loans held available for sale, and the interest income earned by the Company and the potential for future gains on sale of mortgage loans. The margins on this business have also declined as costs have remained steady or increased compared to reduced income. With continued expectations in the market for increased rates, management does not believe that the mortgage origination business will improve in the near future although it is taking steps to reduce the costs. Personnel disruptions from the announced merger of the Company and BB&T may also adversely affect this business. Liquidity and Capital Resources Liquidity is an important factor in the financial condition of the Company and affects the Company's ability to meet the borrowing needs and deposit withdrawal requirements of its customers. Assets, consisting principally of loans and investment securities, are funded by customer deposits, purchased funds, and borrowed funds. The investment portfolio is one of the Company's primary sources of liquidity. Maturities of securities provide a constant flow of funds which are available for liquidity needs. Investment securities that contractually mature within one year total approximately $22 million. However, mortgage-backed securities and securities with call provisions create cash flows earlier than the contractual maturities. Mortgage loans held for sale and other short-term investments also increase forecasted cash flows. Total short-term investments, which include Federal funds sold, interest-earning deposits with other banks, loans held for sale and investment securities maturing within one year, totaled $164 million at June 30, 1999. Maturities in the loan portfolio also provide a steady flow of funds. At June 30, 1999 and 1998, the loan-to-deposit ratio (excluding loans held for sale) was 95.3% and 82.8%, respectively. The Company has a revolving line of credit with a nonaffiliated institution bearing interest at 30 day LIBOR plus 85 basis points. This rate adjusts monthly and is payable quarterly. The outstanding balance is secured by 50% of the stock of each banking subsidiary of the Company. The Company's warehouse line of credit is with a nonaffiliated institution and bears interest at the Fed Funds rate plus an index based on the Company's various mortgage loan tranches. This rate is adjusted daily and is payable monthly. This line matures on August 1, 1999 and is secured by an assignment of first security interest in certain mortgage loans. In connection with its lines of credit, the Company has agreed, among other covenants, to maintain earnings, reserves for credit losses, and capital at certain minimum levels. 13 The Company began utilizing Federal Home Loan Bank ("FHLB") advances during the first quarter of 1999. FHLB advances totaled $50,000,000 at June 30, 1999. The advances mature at various dates in 2004 and bear interest payable quarterly at fixed rates ranging from 4.84% to 5.12%. Advances are collateralized by a blanket floating lien on qualifying first mortgage loans. Stockholders' Equity The Company maintains a ratio of stockholders' equity to total assets that is adequate relative to industry standards. The Company's ratio of stockholders' equity to total assets was 9.2% at June 30, 1999, compared to 8.9% at December 31, 1998. The Company and its subsidiary banks are required to comply with capital adequacy standards established by the Federal Reserve and the FDIC. Currently, there are two basic measures of capital adequacy: risk-based measure and leverage measure. The risk-based capital standards are designed to make regulatory capital requirements more sensitive to differences in risk profile among banks and bank holding companies, to account for off-balance sheet exposure and to enhance the value of holding liquid assets. The resulting capital ratios represent capital as a percentage of total risk-weighted assets and off-balance sheet items. The minimum standard for the ratio of total capital to risk-weighted assets is 8.0%. At least 50% of that capital level must consist of common equity, undivided profits and noncumulative perpetual preferred stock, less goodwill and certain other intangibles ("Tier I capital"). The remainder ("Tier II capital") may consist of a limited amount of other preferred stock, mandatory convertible securities, subordinated debt and a limited amount of the allowance for credit losses. The sum of Tier I capital and Tier II capital is "total risk-based capital." The Federal Reserve has established minimum leverage ratio guidelines for bank holding companies. The Federal Reserve has adopted a final rule which provides that the minimum ratio of Tier I capital to total assets less goodwill (the "leverage ratio") for the most highly-rated bank holding companies is 3.0%. The minimum leverage ratio for all other bank holding companies is 4.0%. Banking organizations with supervisory, financial, operational, of managerial weaknesses, as well as organizations that are anticipating or experiencing significant growth, are expected to maintain capital ratios well above the minimum levels. Capital Levels June 30, Minimum 1999 Requirement --------------- ----------------- Tier I Capital Leverage Ratio 11.03% 3.0% Tier I Risk-based Capital Ratio 13.00% 4.0% Tier II Risk-based Capital Ratio 1.17% ----------- ----------- Total Risk-based Capital Ratio 14.17% 8.0% =========== =========== A subsidiary of the Company issued $28.7 million of cumulative preferred securities in November 1997. The proceeds of the sale of cumulative preferred securities qualifies as Tier 1 capital with respect to the risk-based capital guidelines established by the Federal Reserve. Federal Reserve guidelines for calculation of Tier 1 capital limit the amount of cumulative preferred securities which can be included in Tier 1 capital to 25% of total Tier 1 capital. 14 Cautionary Statements for Purposes of the "Safe Harbor" Provisions of the Private Securities Litigation Reform Act This quarterly report on Form 10-Q contains "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this report, the words "believes," "expects," "anticipates," "estimates," and similar words and expressions are generally intended to identify forward-looking statements. Statements that describe the Company's future strategic plans, goals or objectives are also forward-looking statements, including those regarding the intent, belief or current expectations of the Company or management, are not guarantees of future performance, results or events and involve risks and uncertainties, and that actual results and events may differ materially from those in the forward-looking statements as a result of various factors including, but not limited to, (i) general economic conditions in the markets in which the Company operates, (ii) competitive pressures in the markets in which the Company operates, (iii) the effect of future legislation or regulatory changes on the Company's operations and (iv) other factors described from time to time in the Company's filings with the Securities and Exchange Commission. The forward-looking statements included in this report are made only as of the date hereof. The Company undertakes no obligation to update such forward-looking statements to reflect subsequent events or circumstances. Year 2000 With respect to its internal systems, the Company is taking steps to prepare both its information technology systems and its other equipment and machinery for the Year 2000 date change. The data processing service provider for the banking subsidiaries has given the Company guarantees of Year 2000 compliance on core loan, deposit and accounting related programming. Testing of the service provider was completed during the third quarter of 1998 with test results proving that accurate calculations will continue through the year 2000 and beyond. With these test results, the Company's Year 2000 efforts are considered to be substantially complete for core banking applications. Year 2000 upgrades to the ATM machines are under contract and were completed in the first quarter of 1999 as further versions of compliant software were released. Testing of file servers and personal computers and networks is in process for recent acquisitions with replacement and upgrades of mission critical components complete and non-mission critical computers scheduled to be upgraded during the remainder of 1999. Customer mailings promoting awareness of the potential Year 2000 problem have been provided on a periodic basis during 1998 and 1999. Larger credit relationships have been reviewed and surveyed for Year 2000 issues assessing their readiness and preparations related to the coming of the new millenium and findings indicate minimal additional risks because of the Year 2000. Costs associated with Year 2000 have been minimized due to the necessary upgrades of our acquired banking offices prior to the merging of data processing systems. Estimated costs for Year 2000 preparation including personnel costs are $150,000. Management believes that all systems will be year 2000 ready. Failure of mission critical systems is not likely because of Year 2000 preparations. Contingency plans continue to be developed and focus on manual processes and backup procedures needed for temporary operations should there be temporary malfunctions of utility providers. Contingency plans will be modified on an ongoing basis as information dictates. The Company determined during the first quarter of 1999 that it was necessary for the Company to reassess and validate the Year 2000 readiness of its non-bank subsidiary, Premier Lending, and to improve the documentation relating to such readiness. The Company is in the process of revising and updating the Year 2000 plan for Premier Lending and has engaged an outside consultant to assist in documenting the level of readiness. The testing of internal systems, the review of third parties with whom a material relationship may exist, and the development of Year 2000 business resumption contingency plans at Premier Lending were completed during the second quarter of 1999. However, further testing, assessment of third party risks, and modification of contingency plans will continue to be undertaken during 1999 with respect to Premier Lending to the extent deemed necessary by the Company. Item 3. Quantitative and Qualitative Disclosures About Market Risk The Company's primary market risk exposure is interest rate risk and, to a lesser extent, credit risk and liquidity risk. The Company has little or no risk related to trading accounts, commodities or foreign exchange. Interest rate risk is the exposure of a banking organization's financial condition and earnings ability to adverse movements in interest rates. The Company has analyzed the assumed market value risk and earnings risk inherent in its interest rate sensitive instruments related to interest-rate swings of 300 basis points over a twenty four month horizon, both above and below current levels (rate shock analysis). Earnings and fair value estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. There have been no significant changes in the Company's market risk exposure since December 31, 1998. 15 Part II. Other Information Item 4. Submission of Matters to a Vote of Securities Holders The following proposals were submitted to the Company's shareholders at its annual shareholders' meeting on May 20, 1999: 1. The proposal to elect the following directors of Premier to serve until the next annual meeting: William M. Evans, Jr., John H. Ferguson, D.D.S., Robert E. Flournoy III, A. F. Gandy, Robin R. Howell, C. Steve McQuaig, M.D., Darrell D. Pittard, James E. Freeman, Billy H. Martin, James L. Coxwell, Sr., Robert C. Oliver, Thomas E. Owen, Jr., John D. Stephens and James E. Sutherland. This proposal was approved with 18,484,294 shares or 70.83% voting for the proposal and 228,801 or .87% withholding authority. 2. The proposal to ratify the selection of Ernst & Young LLP as Premier's independent public accountants for the year ending December 31, 1999. This proposal was approved with 18,416,858 shares or 70.5% voting for the proposal, 19,948 or .07% voting against the proposal and 281,289 or 1.08% abstaining from the proposal. 3. The proposal to amend the Premier Bancshares, Inc. 1997 Stock Option Plan to increase the number of shares of common stock available for grant thereunder from 3,000,000 to 4,000,000 shares. This proposal was approved with 16,841,956 shares or 64.52% voting for the proposal, 1,692,635 or 6.48% voting against the proposal and 183,504 or .70% abstaining from the proposal. Item 6. Exhibits and Reports on Form 8-K a. Exhibits 3.1 Restated Articles of Incorporation 10.1 Third Amendment to Mortgage Warehouse Loan and Security Agreement 10.2 Mortgage Warehouse Loan and Security Agreement 10.3 Line of Credit Promissory Note 10.4 Affiliate Collateral Pledge and Security Agreement 27.1 Financial Data Schedule b. Reports on Form 8-K The Company filed the following reports on Form 8-K during the quarter ended June 30, 1999: 1. On April 9, 1999, the Company filed a current report on Form 8-K reporting the execution of an Agreement and Plan of Reorganization with North Fulton Bancshares, Inc. 2. On April 27, 1999, the Company filed a current report on Form 8-K reporting the execution of an Agreement and Plan of Reorganization with Farmers & Merchants Bank. 3. On May 27, 1999, the Company filed a current report on Form 8-K reporting the execution of an Agreement and Plan of Reorganization with Bank Atlanta. 16 Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PREMIER BANCSHARES, INC. - ------------------------- Registrant Date August 13, 1999 Darrell D. Pittard ------------------------ ------------------- Darrell D. Pittard Chief Executive Officer Date August 13, 1999 Michael E. Ricketson ------------------------ --------------------- Michael E. Ricketson Chief Accounting Officer 17 EX-3.1 2 RESTATED ARTICLES OF INCORPORATION Exhibit 3.1 RESTATED ARTICLES OF INCORPORATION OF PREMIER BANCSHARES, INC. The Restated Articles were duly adopted by the Board of Directors on July 22, 1999, in accordance with the provisions of the Official Code of Georgia Annotated, Section 14-2-1007 and any amendments thereto did not require shareholder approval. These Restated Articles of Incorporation supersede the original Articles of Incorporation and all amendments to them. 1. The name of the Corporation is PREMIER BANCSHARES, INC. 2. The Corporation is organized pursuant to the Georgia Business Corporation Code. 3. The Corporation shall have perpetual duration. 4. The purposes for which the Corporation is organized are to conduct any businesses and engage in any activities not specifically prohibited to corporations for profit under the laws of the State of Georgia, and the Corporation shall have all powers necessary to conduct such businesses and engage in such activities, including, but not limited to, the powers enumerated in the Georgia Business Corporation Code or any amendment thereto. 5. (a) The Corporation shall have the authority to issue sixty million (60,000,000) shares of common stock (the "Common Stock"), $1.00 par value, and two million (2,000,000) shares of preferred stock (the "Preferred Stock"). (b) The Board of Directors of the Corporation is authorized, subject to limitations prescribed by law and the provisions of this Article, to provide for the issuance of the shares of Preferred Stock in series, and by filing a certificate pursuant to the applicable law of the State of Georgia to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences, and relative rights of the shares of each such series and the qualifications, or restrictions thereof. The authority of the Board of Directors with respect to each series shall include, but not be limited to, determination of the following: (i) The number of shares constituting that series and the distinctive designation of that series; (ii) The dividend rate on the shares of that series, whether dividends shall be cumulative, and, if so, from which date or dates, and the relative rights of priority, if any, of payments of dividends on shares of that series; (iii) Whether that series shall have voting rights, in addition to the voting rights provided by law, and, if so, the terms of such voting rights; (iv) Whether that series shall have conversion privileges, and, if so, the terms and conditions of such conversion, including provisions for adjustment of the conversion rate in such events as the Board of Directors shall determine; (v) Whether or not the shares of that series shall be redeemable, and, if so, the terms and conditions of such redemption, including the date or dates upon or after which they shall be redeemable, and the amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption rates; (vi) Whether that series shall have a sinking fund for the redemption or purchase of shares of that series, and, if so, the terms and amount of such sinking fund; (vii) The rights of the shares of that series in the event of voluntary or involuntary liquidation, dissolution or winding-up of the Corporation, and the relative rights of priority, if any, of payment of shares of that series; and (viii) Any other relative rights, preferences and limitations of that series. (c) The Corporation has issued 40,770 shares of Series A Preferred Stock, $60.00 par value per share. The rights, preferences privileges and restrictions granted to or imposed upon the Series A Preferred Stock are as follows: (i) Liquidation Preference. In the event of any liquidation, ---------------------- dissolution or winding up of the Corporation, either voluntary or involuntary, the holders of the Preferred Stock shall be entitled to receive, prior and in preference to any distribution of any assets or surplus funds of the Corporation to the holders of common stock of the Corporation, an amount equal to $60.00 per share for such Preferred Stock. If, upon such liquidation, dissolution or winding up of the Corporation, the assets of the Corporation available for distribution to the shareholders of the Corporation are insufficient to provide for the payment of the full aforesaid amount, such assets as are so available shall be distributed among the holders of Preferred Stock in proportion to the relative aggregate liquidation preferences of the Preferred Stock so held. (ii) Voting Rights. The holders of Preferred Stock shall not ------------- be entitled to vote except as provided in this section. If at any time when the Corporation shall be in default in the payment of the dividends specified herein for two consecutive years, and until such default is cured, the holders of Preferred Stock shall be entitled to vote, share for share with the common shareholders, on all matters coming before the shareholders at all regular and called shareholders' meetings, but shall not otherwise have any right to compel the payment of dividends. (iii) Dividends. The holders of the Preferred Stock shall be --------- entitled to a dividend of eight percent (8%) of the par value of the Preferred Stock each year from current earnings or undivided profits, which dividend shall be cumulative but subordinate to the rights of trade creditors. Said dividends shall be payable to the holders of the Preferred Stock within six months following the end of each calendar year. (iv) Redemption. Beginning on January 1, 2000 and each year ---------- thereafter, the Corporation shall have the right to redeem up to twenty percent (or 8,154 shares) of the 40,770 originally issued shares of the Preferred Stock issued, at a redemption price of $60.00 per share plus all accrued and unpaid dividends. If any Preferred Stock remains issued and outstanding after May 20, 2004, the holders may require the Corporation to redeem the Preferred Stock at a redemption price of $60.00 per share plus all accrued and unpaid dividends. 6. Shares of the Corporation may be issued by the Corporation for such consideration, not less than the par value thereof, as shall be fixed from time to time by the Board of Directors. 7. No shareholder shall have any preemptive right to subscribe for or to purchase any shares or other securities issued by the Corporation. 8. Subject to the provisions of Section 14-2-91 of the Georgia Business Corporation Code, the Board of Directors shall have the power to distribute a portion of the assets of the Corporation, in cash or in property, to holders of shares of the Corporation out of the capital surplus of the Corporation. 9. The Corporation shall have the full power to purchase and otherwise acquire, and dispose of, its own shares and securities granted by the laws of the State of Georgia and shall have the right to purchase its shares out of its unreserved and unrestricted capital surplus available therefor as well as out of its unreserved and unrestricted earned surplus available therefor. 10. No director of the Corporation shall be personally liable to the Corporation or its shareholders for monetary damages for a breach of duty of care or other duty as a director, provided that this elimination of liability shall not eliminate or limit the liability of a director (i) for an appropriation, in violation of his duties, of any business opportunity of the Corporation; (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (iii) for the types of liability set forth in Section 14-2-154 of the Georgia Business Corporation Code or (iv) for any transaction from which the director derived an improper personal benefit. IN WITNESS WHEREOF, the undersigned has executed these Restated Articles of Incorporation this 22nd day of July, 1999. /s/ Darrell D. Pittard ____________________________________ Darrell D. Pittard, Chairman and Chief Executive Officer EX-10.1 3 AMEND. TO MORTGAGE WHSE LOAN & SECURITY AGREEMENT Exhibit 10.1 THIRD AMENDMENT TO MORTGAGE WAREHOUSE LOAN AND SECURITY AGREEMENT ---------------------------------------------- THIS THIRD AMENDMENT TO MORTGAGE WAREHOUSE LOAN AND SECURITY AGREEMENT ("Amendment") is made and dated as of March 31, 1999, by and between the Lenders party hereto from time to time, SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION, a national banking association, as agent for Lenders, PREMIER BANCSHARES, INC., a Georgia corporation, and PREMIER LENDING CORPORATION, a Georgia corporation. Capitalized terms not otherwise defined herein are defined in Article I of the Existing Loan Agreement referred to below. R E C I T A L S --------------- A. Premier Bancshares and its direct Wholly-Owned Subsidiary, Premier Lending, and Lenders are parties to that certain Mortgage Warehouse Loan and Security Agreement dated as of April 15, 1998, as amended by a First Amendment thereto dated as of October 30, 1998 and by a Second Amendment thereto dated as of November 17, 1998 (collectively, the "Existing Loan Agreement"), pursuant to which Premier Lending and Premier Bancshares, as co-borrowers, have obtained Loans from the Lenders which were parties to the Existing Loan Agreement on a revolving basis in the maximum aggregate amount of $130,000,000.00. B. Borrowers have now requested that the Maturity Date of such revolving credit be extended and that certain other modifications be made to the Existing Agreement. C. Pursuant to Borrowers' request, Agent and each Lender have agreed to such extension of the Maturity Date and to such modifications to the Existing Agreement upon the terms and conditions set forth herein. ACCORDINGLY, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows: 1. Amendments to Existing Agreement. The Existing Agreement is amended as -------------------------------- of the date first above written as follows: 1. Paragraph (1) under the definition of "Eligible Mortgage Loan" in Section 1.1 Defined Terms of ARTICLE I DEFINITIONS of the Existing ------------- ----------- Agreement is hereby deleted in its entirety and the following new paragraph (1) is inserted in its place: (1) if the promissory note for such Mortgage Loan (or any other documentation relating thereto) has been withdrawn from the possession of Agent on terms and subject to conditions set forth in Section 4.5 hereof, (i) such note or other documentation has been released to the applicable Borrower for purposes of correcting clerical or other non-substantive documentation problems pursuant to a trust receipt as permitted under Section 4.5(a) hereof, (x) such release has occurred within the immediately preceding ten (10) days and (y) the collateral value of the Mortgage Loan for which such note or other documentation has been released, when added to the collateral value of other Mortgage Loans included in any of the Borrowing Bases for which notes or other documentation have been similarly released to either Borrower, does not exceed $3,000,000.00; or (ii) the promissory note and any related documentation for such Mortgage Loan has been shipped by Agent directly to an Approved Investor for purchase, as permitted under Section 4.5(b) hereof, (x) such shipment has occurred within the immediately preceding ninety (90) days, (y) if the Approved Investor is a housing authority constituting a Governmental Authority, the collateral value of such Mortgage Loan, when added to the collateral value of other Mortgage Loans included in any of the Borrowing Bases for which notes or other documents have been similarly shipped does not exceed $10,000,000.00, and (z) the collateral value of all such Mortgage Loans included in any of the Borrowing Bases for which notes or other documents have been similarly shipped and which remain unpurchased for more than forty-five (45) days from the date of such shipment does not exceed $2,500,000.00 during the period March 31, 1999 to April 15, 1999 and $1,500,000.00 from April 16, 1999 and thereafter; b. The definition of "Maturity Date" in Section 1.1 Defined Terms ------------- of ARTICLE I DEFINITIONS of the Existing Agreement is hereby ----------- deleted in its entirety and the following new definition is inserted in its place: "Maturity Date" shall mean June 1, 1999; provided that upon -------- the written request of 2 Borrowers to Agent, Lenders may elect to extend the Maturity Date on such terms and conditions as they deem appropriate in their sole discretion. 2. Acknowledgment of Outstanding Loans. Borrowers hereby acknowledge, ----------------------------------- certify and agree that pursuant to the Existing Agreement, Lenders have made Loans to Borrowers that are outstanding as of the date hereof in the aggregate principal amount of $ ; Borrowers' --------------- obligation to pay the outstanding Loans to Lenders in each Lender's Commitment Percentage is not subject to any defense, claim, counterclaim, setoff, right of recoupment, abatement or other determination; and the Loans are and shall continue to be governed and secured by the terms and provisions of the Existing Agreement as amended by this Amendment. 3. Ratification of Loan Documents. Borrowers hereby ratify and affirm ------------------------------ each of the Loan Documents in their entirety, and acknowledge and agree that (i) the Loan Documents are in full force and effect, (ii) all representations and warranties contained therein are true and correct on and as of the date hereof, (iii) Borrowers are in full compliance with all covenants and agreements established thereunder, (iv) no Event of Default or Potential Default exists thereunder and (v) the Loan Documents are legal, valid and binding obligations of Borrowers and are enforceable by Agent, on behalf of Lenders, against Borrowers in accordance with their respective terms. 4. Counterparts. This Amendment may be signed in one or more counterpart ------------- copies, each of which constitutes an original, but all of which, when taken together, shall constitute one agreement binding upon all of the parties hereto. 5. Governing Law, Etc. This Amendment shall be governed by and ------------------- construed in accordance with the applicable terms and provisions of Section 10.7 of ARTICLE X MISCELLANEOUS PROVISIONS of the Existing ------------------------ Agreement, which terms and provisions are incorporated herein by reference. 6. No Other Modifications. Except as hereby amended, no other term, ----------------------- condition or provision of the Existing Agreement shall be deemed modified or amended, and this Amendment shall not be considered a novation. [SIGNATURE PAGES FOLLOW] 3 IN WITNESS WHEREOF, the parties have executed and delivered this Amendment as of the date first above written. BORROWERS: PREMIER BANCSHARES, INC. By: ---------------------------------------- Name: Darrell D. Pittard Title: Chairman & CEO STATE OF GEORGIA COUNTY OF ---------------- On this day of , 1999, personally appeared Darrell D. Pittard, --- ---------- as Chairman & CEO of PREMIER BANCSHARES, INC., a Georgia corporation, and before me executed the attached Third Amendment to Mortgage Warehouse Loan and Security Agreement, dated as of March 31, 1999, by and between SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION, as Agent and Lender, and SOUTHTRUST BANK, NATIONAL ASSOCIATION, FIRST UNION NATIONAL BANK, successor by merger to CoreStates Bank, N.A., COLONIAL BANK and NATIONAL CITY BANK OF KENTUCKY, as Lenders, and PREMIER BANCSHARES, INC. and PREMIER LENDING CORPORATION, as Borrowers. IN WITNESS WHEREOF, I have hereunto set my hand and official seal in the County and State last aforesaid. Signature of Notary Public-State of Georgia Print Name: Notary Public, State of Georgia Personally Known --------------------------------- Produced Identification -------------------------- Type of Identification: -------------------------- (NOTARIAL SEAL) 4 PREMIER LENDING CORPORATION By: --------------------------------------- Name: George S. Phelps Title: President STATE OF GEORGIA COUNTY OF --------------- On this day of , 1999, personally appeared George S. Phelps, --- ---------- as President of PREMIER LENDING CORPORATION, a Georgia corporation, and before me executed the attached Third Amendment to Mortgage Warehouse Loan and Security Agreement, dated as of March 31, 1999, by and between SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION, as Agent and Lender, and SOUTHTRUST BANK, NATIONAL ASSOCIATION, FIRST UNION NATIONAL BANK, successor by merger to CoreStates Bank, N.A., COLONIAL BANK and NATIONAL CITY BANK OF KENTUCKY, as Lenders, and PREMIER BANCSHARES, INC. and PREMIER LENDING CORPORATION, as Borrowers. IN WITNESS WHEREOF, I have hereunto set my hand and official seal in the County and State last aforesaid. Signature of Notary Public-State of Georgia Print Name: Notary Public, State of Georgia Personally Known ---------------------------------------------- Produced Identification --------------------------------------- Type of Identification: --------------------------------------- (NOTARIAL SEAL) 5 AGENT/LENDERS: SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION, As Agent and as a Lender By: --------------------------------------- Name: Thomas A. Pizurie Title: Vice President STATE OF FLORIDA COUNTY OF ORANGE On this day of , 1999, personally appeared Thomas A. Pizurie, --- ---------- as Vice President of SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION, and before me executed the attached Third Amendment to Mortgage Warehouse Loan and Security Agreement, dated as of March 31, 1999, by and between SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION, as Agent and Lender, and SOUTHTRUST BANK, NATIONAL ASSOCIATION, FIRST UNION NATIONAL BANK, successor by merger to CoreStates Bank, N.A., COLONIAL BANK and NATIONAL CITY BANK OF KENTUCKY, as Lenders, and PREMIER BANCSHARES, INC. and PREMIER LENDING CORPORATION, as Borrowers. IN WITNESS WHEREOF, I have hereunto set my hand and official seal in the County and State last aforesaid. Signature of Notary Public-State of -------------- Print Name: Notary Public, State of -------------- Personally Known --------------------------------- Produced Identification -------------------------- Type of Identification: -------------------------- (NOTARIAL SEAL) 6 SOUTHTRUST BANK, NATIONAL ASSOCIATION, as a Lender By: --------------------------------------- Name: -------------------------------------- Title: ------------------------------------ STATE OF ALABAMA COUNTY OF ----------------- On this day of , 1999, personally appeared --- ---------- , as of SOUTHTRUST BANK, NATIONAL - -------------------- -------------------- ASSOCIATION, and before me executed the attached Third Amendment to Mortgage Warehouse Loan and Security Agreement, dated as of March 31, 1999, by and between SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION, as Agent and Lender, and SOUTHTRUST BANK, NATIONAL ASSOCIATION, FIRST UNION NATIONAL BANK, successor by merger to CoreStates Bank, N.A., COLONIAL BANK and NATIONAL CITY BANK OF KENTUCKY, as Lenders, and PREMIER BANCSHARES, INC. and PREMIER LENDING CORPORATION, as Borrowers. IN WITNESS WHEREOF, I have hereunto set my hand and official seal in the County and State last aforesaid. Signature of Notary Public-State of Alabama Print Name: Notary Public, State of Alabama Personally Known ------------------------------------- Produced Identification ------------------------------ Type of Identification: ------------------------------ (NOTARIAL SEAL) 7 FIRST UNION NATIONAL BANK, successor by merger to CoreStates Bank, N.A., as a Lender By: --------------------------------------- Name: -------------------------------------- Title: ------------------------------------- STATE OF PENNSYLVANIA COUNTY OF ------------------ On this day of , 1999, personally appeared --- ---------- , as of FIRST UNION NATIONAL BANK, - ------------------- ----------------- successor by merger to CoreStates Bank, N.A., and before me executed the attached Third Amendment to Mortgage Warehouse Loan and Security Agreement, dated as of March 31, 1999, by and between SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION, as Agent and Lender, and SOUTHTRUST BANK, NATIONAL ASSOCIATION, FIRST UNION NATIONAL BANK, successor by merger to CoreStates Bank, N.A., COLONIAL BANK and NATIONAL CITY BANK OF KENTUCKY, as Lenders, and PREMIER BANCSHARES, INC. and PREMIER LENDING CORPORATION, as Borrowers. IN WITNESS WHEREOF, I have hereunto set my hand and official seal in the County and State last aforesaid. Signature of Notary Public-State of Pennsylvania Print Name: Notary Public, State of Pennsylvania Personally Known ------------------------------------- Produced Identification ------------------------------ Type of Identification: ------------------------------ (NOTARIAL SEAL) 8 COLONIAL BANK, as a Lender By: ---------------------------------------- Name: ------------------------------------- Title: ------------------------------------ STATE OF FLORIDA COUNTY OF ORANGE On this day of , 1999, personally appeared --- ---------- , as of COLONIAL BANK, and before me - --------------------- --------------- executed the attached Third Amendment to Mortgage Warehouse Loan and Security Agreement, dated as of March 31, 1999, by and between SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION, as Agent and Lender, and SOUTHTRUST BANK, NATIONAL ASSOCIATION, FIRST UNION NATIONAL BANK, successor by merger to CoreStates Bank, N.A., COLONIAL BANK and NATIONAL CITY BANK OF KENTUCKY, as Lenders, and PREMIER BANCSHARES, INC. and PREMIER LENDING CORPORATION, as Borrowers. IN WITNESS WHEREOF, I have hereunto set my hand and official seal in the County and State last aforesaid. Signature of Notary Public-State of Florida Print Name: Notary Public, State of Florida Personally Known ----------------------------------- Produced Identification ----------------------------- Type of Identification: ----------------------------- (NOTARIAL SEAL) 9 NATIONAL CITY BANK OF KENTUCKY, as a Lender By: ---------------------------------------- Name: -------------------------------------- Title: ------------------------------------- STATE OF KENTUCKY COUNTY OF --------------- On this day of , 1999, personally appeared --- ---------- , as of NATIONAL CITY BANK OF KENTUCKY, - ---------------------- --------------- and before me executed the attached Third Amendment to Mortgage Warehouse Loan and Security Agreement, dated as of March 31, 1999, by and between SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION, as Agent and Lender, and SOUTHTRUST BANK, NATIONAL ASSOCIATION, FIRST UNION NATIONAL BANK, successor by merger to CoreStates Bank, N.A., COLONIAL BANK and NATIONAL CITY BANK OF KENTUCKY, as Lenders, and PREMIER BANCSHARES, INC. and PREMIER LENDING CORPORATION, as Borrowers. IN WITNESS WHEREOF, I have hereunto set my hand and official seal in the County and State last aforesaid. Signature of Notary Public-State of Kentucky Print Name: Notary Public, State of Kentucky Personally Known ------------------------------------ Produced Identification ---------------------------- Type of Identification: ---------------------------- (NOTARIAL SEAL) 10 EX-10.2 4 MORTGAGE WAREHOUSE LOAN AND SECURITY AGREEMENT Exhibit 10.2 FOURTH AMENDMENT TO MORTGAGE WAREHOUSE LOAN AND SECURITY AGREEMENT ---------------------------------------------- THIS FOURTH AMENDMENT TO MORTGAGE WAREHOUSE LOAN AND SECURITY AGREEMENT ("Amendment") is made and dated as of June 1, 1999, by and between the Lenders party hereto from time to time (as of the date hereof, being only SunTrust Bank, Central Florida, National Association), SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION, a national banking association, individually and as agent for Lenders, PREMIER BANCSHARES, INC., a Georgia corporation, and PREMIER LENDING CORPORATION, a Georgia corporation. Capitalized terms not otherwise defined herein are defined in Article I of the Existing Loan Agreement referred to below. R E C I T A L S --------------- A. Premier Bancshares and its direct Wholly-Owned Subsidiary, Premier Lending, and Lenders are parties to that certain Mortgage Warehouse Loan and Security Agreement dated as of April 15, 1998, as amended by a First Amendment thereto dated as of October 30, 1998, a Second Amendment thereto dated as of November 17, 1998 and a Third Amendment thereto dated as of March 31, 1999 (collectively, the "Existing Loan Agreement"), pursuant to which Premier Lending and Premier Bancshares, as co-borrowers, have obtained Loans from the Lenders which were parties to the Existing Loan Agreement on a revolving basis in the maximum aggregate amount of $130,000,000.00. B. Pursuant to Section 2.6 of the Existing Loan Agreement, Borrowers have notified the Agent of their intention to terminate the Commitments, effective as of June 1, 1999, but have requested that the Maturity Date of such revolving credit be extended until August 1, 1999 in order to allow the outstanding Loans to be repaid in the ordinary course of business from sales of the Mortgage Loans to Approved Investors and, in connection therewith, that certain other modifications be made to the Existing Agreement. C. In order to accommodate Borrowers' request, Agent, in its capacity as a Lender, has agreed, as of June 1, 1999, (i) to increase its Commitment and advance Loans to Borrowers in an aggregate amount sufficient to pay off the Loans heretofore made by the other Lenders, (ii) as evidence thereof, to consolidate the resulting total outstanding indebtedness due to it from Borrowers under the Existing Agreement into a single, non-revolving, renewal promissory note with a final Maturity Date of August 1, 1999, and (iii) to make certain other modifications to the Existing Agreement upon the terms and conditions set forth herein. ACCORDINGLY, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows: 1. Amendments to Existing Agreement. The Existing Agreement is amended as -------------------------------- of the date first above written as follows: 1. The definition of "Maturity Date" in Section 1.1 Defined ------- Terms of ARTICLE I DEFINITIONS of the Existing Agreement is ----- ----------- hereby deleted in its entirety and the following new definition is inserted in its place: "Maturity Date"' shall mean August 1, 1999; provided -------- that upon the written request of Borrowers to Agent, Lenders may elect to extend the Maturity Date on such terms and conditions as they deem appropriate in their sole discretion. 2. Section 2.1 Commitments and Borrowing Base of ARTICLE II ------------------------------ AMOUNTS AND TERMS OF LOANS of the Existing Agreement is -------------------------- hereby amended to delete any obligation of Lenders to make any further Loans to Borrowers after the date of this Fourth Amendment. Accordingly, the line of credit contemplated by the Existing Agreement shall no longer be on a revolving basis and the aggregate amount outstanding thereunder as of June 1, 1999, following the advances made by Agent in its individual capacity as a Lender to Borrowers to pay off the Loans of the other Lenders thereunder, shall be due and owing solely to Agent in such individual capacity, shall be evidenced by a Fourth Renewal Promissory Note dated the date hereof from Borrowers in favor of Agent in its individual capacity in the principal amount set forth in paragraph 2 below and shall be repaid in the manner and at the times specified in the Existing Agreement. 3. SCHEDULE 1 Lenders and Commitments of the Existing Agreement ----------------------- is hereby modified to reflect SunTrust Bank, Central Florida, National Association as the sole Lender in the Commitment Amount of $ and Commitment Percentage of 100%. -------------- 2. Acknowledgment of Outstanding Loans. Borrowers hereby acknowledge, ----------------------------------- certify and agree that pursuant to the 2 Existing Agreement, Agent, in its individual capacity as a Lender, has made Loans to Borrowers that are outstanding as of the date hereof in the aggregate principal amount of $ ; Borrowers' -------------- obligation to pay the outstanding Loans to Agent is not subject to any defense, claim, counterclaim, setoff, right of recoupment, abatement or other determination; and the Loans are and shall continue to be governed and secured by the terms and provisions of the Existing Agreement as amended by this Amendment. 3. Ratification of Loan Documents. Borrowers hereby ratify and affirm ------------------------------ each of the Loan Documents in their entirety, and acknowledge and agree that (i) the Loan Documents are in full force and effect, (ii) all representations and warranties contained therein are true and correct on and as of the date hereof, (iii) Borrowers are in full compliance with all covenants and agreements established thereunder, (iv) no Event of Default or Potential Default exists thereunder and (v) the Loan Documents are legal, valid and binding obligations of Borrowers and are enforceable by Agent, on behalf of Lenders, against Borrowers in accordance with their respective terms. 4. Counterparts. This Amendment may be signed in one or more counterpart ------------- copies, each of which constitutes an original, but all of which, when taken together, shall constitute one agreement binding upon all of the parties hereto. 5. Governing Law, Etc. This Amendment shall be governed by and construed ------------------- in accordance with the applicable terms and provisions of Section 10.7 of ARTICLE X MISCELLANEOUS PROVISIONS of the Existing Agreement, which ------------------------ terms and provisions are incorporated herein by reference. 6. No Other Modifications. Except as hereby amended, no other term, ----------------------- condition or provision of the Existing Agreement shall be deemed modified or amended, and this Amendment shall not be considered a novation. [SIGNATURE PAGES FOLLOW] 3 IN WITNESS WHEREOF, the parties have executed and delivered this Amendment as of the date first above written. BORROWERS: PREMIER BANCSHARES, INC. By: --------------------------------------- Name: George S. Phelps Title: Executive Vice President STATE OF GEORGIA COUNTY OF ------------- On this day of , 1999, personally appeared George S. Phelps, --- ---------- as Executive Vice President of PREMIER BANCSHARES, INC., a Georgia corporation, and before me executed the attached Fourth Amendment to Mortgage Warehouse Loan and Security Agreement, dated as of June 1, 1999, by and between SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION, as Agent and Lender, and PREMIER BANCSHARES, INC. and PREMIER LENDING CORPORATION, as Borrowers. IN WITNESS WHEREOF, I have hereunto set my hand and official seal in the County and State last aforesaid. Signature of Notary Public-State of Georgia Print Name: Notary Public, State of Georgia Personally Known ---------------------------------- Produced Identification --------------------------- Type of Identification: --------------------------- (NOTARIAL SEAL) 4 PREMIER LENDING CORPORATION By: -------------------------------------- Name: George S. Phelps Title: President STATE OF GEORGIA COUNTY OF ----------------- On this day of , 1999, personally appeared George S. Phelps, --- ---------- as President of PREMIER LENDING CORPORATION, a Georgia corporation, and before me executed the attached Fourth Amendment to Mortgage Warehouse Loan and Security Agreement, dated as of June 1, 1999, by and between SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION, as Agent and Lender, and PREMIER BANCSHARES, INC. and PREMIER LENDING CORPORATION, as Borrowers. IN WITNESS WHEREOF, I have hereunto set my hand and official seal in the County and State last aforesaid. Signature of Notary Public-State of Georgia Print Name: Notary Public, State of Georgia Personally Known --------------------------------- Produced Identification -------------------------- Type of Identification: -------------------------- (NOTARIAL SEAL) 5 AGENT/LENDER: SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION, As Agent and as a Lender By: ---------------------------------------- Name: Thomas A. Pizurie Title: Vice President STATE OF FLORIDA COUNTY OF ORANGE On this day of , 1999, personally appeared Thomas A. Pizurie, --- ---------- as Vice President of SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION, and before me executed the attached Fourth Amendment to Mortgage Warehouse Loan and Security Agreement, dated as of June 1, 1999, by and between SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION, as Agent and Lender, and PREMIER BANCSHARES, INC. and PREMIER LENDING CORPORATION, as Borrowers. IN WITNESS WHEREOF, I have hereunto set my hand and official seal in the County and State last aforesaid. Signature of Notary Public-State of ---------------- Print Name: Notary Public, State of ---------------- Personally Known ---------------------------------- Produced Identification ---------------------------- Type of Identification: ---------------------------- (NOTARIAL SEAL) 6 EX-10.3 5 LINE OF CREDIT PROMISSORY NOTE Exhibit 10.3 LINE OF CREDIT PROMISSORY NOTE Atlanta, Georgia $150,000,000.00 May 11, 1999 FOR VALUE RECEIVED, the undersigned promises to pay PREMIER BANK, up to the aggregate principal sum of ONE HUNDRED FIFTY MILLION AND NO/100 ($150,000,000.00) DOLLARS, with interest on the unpaid principal balance from the date of this Note, until paid, at the rate specified hereinafter. The principal and interest shall be payable at Premier Bank, 100 Atlanta Plaza, 950 East Paces Ferry Road, Atlanta, Georgia 30326, or such other place as the holder hereof may designate in writing, until the entire indebtedness evidenced hereby is fully paid, except that any remaining indebtedness, if not sooner paid, shall be due and payable on May 11, 2000. It is intended that the holder may make advances of funds to the undersigned from time to time in order to fund the mortgage lending operations of the undersigned and for general corporate purposes of the undersigned. The interest rate applicable with respect to each advance made hereunder shall be the same interest rate as is applicable with respect to each advance made from time to time to Premier Bank ("Bank Advance") under a $150,000,000.00 Warehouse Line of Credit approved May 11, 1999 in connection with that certain Agreement for Advances and Security Agreement With Blanket Floating Lien by and between Premier Bank and the Federal Home Loan Bank of Atlanta (the "Bank") dated as of March 5, 1997 (such agreement, including any amendments thereto and any successor agreement that may be entered into by Premier Bank and Bank in substitution therefor, hereinafter the "Advances Agreement"), which interest rate may be a variable rate and which rate may increase and decrease during the term of each Bank Advance pursuant to the terms of the applicable variable rate program of the Bank. The undersigned shall repay to Premier Bank each advance made hereunder at such time and in such equal amount as Premier Bank shall be obligated to repay to Bank for each Bank Advance pursuant to the terms and conditions of the Advances Agreement and the terms and conditions of the applicable "Application" or "Confirmation of Advance" evidencing each such Bank Advance. The undersigned shall repay to Premier Bank accrued interest on each advance made hereunder at such time and in such equal amount as Premier Bank shall be obligated to repay to the Bank for accrued interest on each Bank Advance at the times specified by the Bank in writing, with interest being charged for each day that a Bank Advance is outstanding at the interest rate applicable to such Bank Advance. The undersigned shall repay to Premier Bank any and all "per loan" fees, collateral fees and other fees or charges ("Fees") incurred at such times and in such equal amounts as Premier Bank shall be obligated to repay to the Bank for Fees incurred with respect to each Bank Advance pursuant to the terms and conditions of the Advances Agreement and the terms and conditions of the applicable "Application" or "Confirmation of Advance" evidencing each such Bank Advance. The indebtedness evidenced by this Note may be prepaid at any time and from time to time before maturity, in whole or in part, without penalty. Prepayments shall be applied against the outstanding principal balance of this Note and shall not extend or postpone the due date of any payments due hereunder unless the holder hereof shall agree otherwise in writing. If any payment under this Note is not paid when due, the entire principal amount outstanding hereunder and accrued interest thereon shall at once become due and payable, at the option of the holder hereof. The holder hereof may exercise this option to accelerate during any default by the undersigned regardless of any prior forbearance. In the event of any default in the payment of this Note, and if the same is referred to an attorney at law for collection or any action at law or in equity is brought with respect hereto, the undersigned shall pay the holder hereof all expenses and costs, including, but not limited to, reasonable attorney's fees. From time to time, without affecting the obligation of the undersigned or the successors or assigns of the undersigned to pay the outstanding principal balance of this Note and observe the covenants of the undersigned contained herein, without giving notice to or obtaining the consent of the undersigned, the successors or assigns of the undersigned, and without liability on the part of the holder hereof, the holder hereof may, at the option of the holder hereof, extend the time for payment of said outstanding principal balance or any part thereof, reduce the payments thereon, release anyone liable on any of said outstanding principal balance, accept a renewal of this Note, modify the terms and time of payment of said outstanding principal balance, join in any extension or subordination agreement, release any security given heretofore, take or release other or additional security, and agree in writing with the undersigned to modify the rate of interest or term of this Note or change the amount of the interest payments payable hereunder. No one or more of such actions shall constitute a novation. Presentment, notice of dishonor, and protest are hereby waived by all makers, sureties, guarantors and endorsers hereof. This Note shall be governed by the law of the State of Georgia. 2 To the extent the indebtedness evidenced hereby is secured in any way whatsoever, whether now or at any time in the future, by any property of the undersigned, any lien, mortgage, security interest or other form of encumbrance whatsoever that the holder may have to secure the indebtedness evidenced hereby is and shall at all times be junior and subordinate to any lien, mortgage, security interest or other form of encumbrance which secures that certain Multiple Disbursement Revolving Note from Premier Bancshares, Inc. and the undersigned to SunTrust Bank, Atlanta in the amount of $30,000,000.00, dated February 2, 1999 (such note, including any amendments thereto and any successor note that may be entered into by the undersigned in favor of SunTrust Bank, Atlanta, the "SunTrust Indebtedness"), whether or not such lien, mortgage, security interest or other form of encumbrance securing the SunTrust Indebtedness is now in existence or arises at any time in the future. WITNESS the hand and corporate seal of the undersigned. PREMIER LENDING CORPORATION By: ----------------------------------- George S. Phelps, President [CORPORATE SEAL] 3 EX-10.4 6 AFFILIATE COLLATERAL PLEDGE & SECURITY AGREEMENT Exhibit 10.4 AFFILIATE COLLATERAL PLEDGE AND SECURITY AGREEMENT -------------------------------------------------- THIS AFFILIATE COLLATERAL PLEDGE AND SECURITY AGREEMENT ("Pledge Agreement"), dated as of April 22, 1999, is made by and among Premier Lending Corporation, a corporation organized and existing under the laws of the State of Georgia ("Pledgor"), Premier Bank, a bank organized and existing under the laws of the State of Georgia ("Borrower"), and the Federal Home Loan Bank of Atlanta ("Bank"). WHEREAS, Borrower is a member and stockholder of the Bank; WHEREAS, Pledgor is an Affiliate of Borrower (for purposes of this Pledge Agreement, Affiliate means any person or company which controls, is controlled by, or is under common control with, Borrower, including any holding company, any subsidiary, or any service corporation of the Borrower); WHEREAS, Borrower and the Bank have entered into an Agreement for Advances and Security Agreement with Blanket Floating Lien or an Advances, Specific Collateral Pledge and Security Agreement, dated as of March 5, 1997 (such agreement, including any amendments thereto and any successor agreement that may be entered into by Borrower and the Bank in substitution therefor, hereinafter the "Borrower Advances Agreement"), pursuant to which the Bank may advance funds from time to time to Borrower and Borrower may pledge certain collateral from time to time to the Bank; and WHEREAS, at the request of Borrower, and in order to induce the Bank to make additional advances to Borrower, Pledgor has agreed to pledge certain of its property as collateral to and for the benefit of the Bank, to secure the obligations of Borrower to the Bank, NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Pledgor, Borrower, and the Bank agree as follows: 1. Pledgor's Receipt of Borrower Advances Agreement; Definitions. Pledgor ------------------------------------------------------------- hereby acknowledges and agrees that it has received a copy of the Borrower Advances Agreement (including all amendments thereto) and that it is familiar with the terms and conditions thereof. Unless otherwise defined herein or the context otherwise requires, all capitalized terms used herein shall have the same meanings as in the Borrower Advances Agreement, except that "Borrower" as used herein shall be synonymous with "Member" as used in the Borrower Advances Agreement. 2. Creation of Security Interest. As security for all Indebtedness now or ----------------------------- hereafter outstanding from the Borrower to the Bank under the Borrower Advances Agreement, Pledgor hereby assigns, transfers and pledges to the Bank, and grants to the Bank a security interest in, certain property which is (i) specifically listed and identified in Attachment A hereto or any amendment thereto or any substitute Attachment A that may be provided by the Pledgor with the agreement of the Bank from time to time, or (ii) all of the proceeds of the foregoing (collectively, the "Pledgor Collateral"). The Pledgor Collateral shall constitute Collateral for all purposes under the Borrower Advances Agreement and, in addition to any rights or duties with respect to the Pledgor Collateral created by this Pledge Agreement, the Pledgor and the Bank shall have the same rights and duties with respect to the Pledgor Collateral as do Borrower and the Bank, respectively, with respect to Collateral under the Borrower Advances Agreement; provided, however, that if the Bank has not requested or required delivery of Pledgor Collateral in accordance with Paragraph 3 below, then (a) Borrower shall, at all times, hold the Pledgor Collateral in trust for the benefit of, and subject to the direction and control of, the Bank and physically safeguard the Pledgor Collateral with at least the same degree of care as the Borrower uses in physically safeguarding its other property; and, if so requested by the Bank in writing, and (b) Borrower shall hold each set of First Mortgage Documents and all Other Mortgage Documents which are a part of the Pledgor's Collateral in a separate file folder with each file folder clearly labeled with the loan identification number and the name of the borrower(s). Each such file folder shall be clearly marked or stamped with the statement: "The Mortgage/Deed of Trust and Note Relating to this Loan Have Been Assigned to the Federal Home Loan Bank of Atlanta" or such other statement that may be approved by the Bank from time to time. If so requested by the Bank, in writing, Borrower shall physically segregate First Mortgage Documents and Other Mortgage Documents which are a part of such Pledgor Collateral from all other property of the Borrower or the Pledgor in a manner satisfactory to the Bank. 3. Delivery. Upon the Bank's written or oral request, or promptly at any -------- time that the Borrower becomes subject to any mandatory collateral delivery requirements that may be established in writing by the Bank, and in either case from time to time thereafter, the Pledgor shall deliver (or, in the case of uncertificated securities, otherwise transfer) to the Bank, or to a custodian designated by the Bank, Pledgor Collateral in an amount determined by the Bank. Pledgor Collateral delivered to the Bank or to a custodian designated by the Bank shall be endorsed or assigned in recordable form by the Pledgor as directed by the Bank. 4. Right of Bank to Proceed Against Pledgor Collateral; Waivers; Borrower ---------------------------------------------------------------------- Acknowledgment. - -------------- (a) Pledgor agrees that, following an Event of Default, as defined in the Borrower Advances Agreement and as modified by this Pledge Agreement, the Bank may proceed against the Pledgor Collateral in accordance with the terms of the Borrower Advances Agreement as though Pledgor were the Member thereunder. Pledgor hereby waives and agrees not to assert: (i) any and all right to presentment, protest, demand for payment, notice of default, dishonor or nonpayment and all other notices to or upon Borrower or Pledgor, including, without limitation, notice as to the making of any advance or other extension of credit to Borrower or the exercise of any right by the Bank hereunder or under the Borrower Advances Agreement; and (ii) any and all right to require the Bank to proceed against Borrower or any Collateral pledged by Borrower before enforcing the Bank's rights against the Pledgor Collateral, and any other defense based upon an election of remedies. 2 (b) By execution hereof, Borrower acknowledges its consent to the terms and conditions hereof and Borrower hereby waives and agrees not to assert any and all right to require the Bank to proceed against Pledgor or Pledgor Collateral before enforcing the Bank's rights against the Collateral and any other defense based upon an election of remedies. 5. Representations and Agreements by Pledgor. Pledgor hereby represents, ----------------------------------------- warrants to, and agrees with the Bank that: (a) Each item of Pledgor Collateral satisfies all the criteria for Qualifying Collateral set forth in the Borrower Advances Agreement, except that the Pledgor Collateral is owned by Pledgor, rather than by Borrower, free and clear of any liens, encumbrances or other interests other than the assignment to the Bank hereunder; (b) Pledgor has full power, right and authority to grant the security interest in the Pledgor Collateral created hereby and has taken all corporate action necessary to authorize the execution and delivery of this Pledge Agreement; (c) The security interest in the Pledgor Collateral created hereby has been duly and validly granted by Pledgor and such security interest, and this Pledge Agreement, are enforceable in accordance with the terms hereof; (d) This Pledge Agreement has been authorized or ratified and approved by Pledgor's Board of Directors and will be maintained continuously among Pledgor's official records; (e) A certified copy of the Board of Director's resolution evidencing its approval hereof is attached hereto as Attachment "B," the form of which has been previously approved by the Bank or its counsel; (f) An opinion of Pledgor's counsel that Pledgor has the power, right and authority to grant the security interest in the Pledgor Collateral created hereby, that Pledgor has taken all corporate action necessary to authorize the execution and delivery of this Pledge Agreement, that there is no impediment to the Bank enforcing its interests against the Pledgor Collateral under this Pledge Agreement has been provided to and accepted by the bank, a copy of which is attached hereto as attachment "C"; (g) All information contained in any report, schedule or other documentation provided from time to time by Pledgor to the Bank will be true and correct as of the time given; and (h) Pledgor agrees to make, execute, record and deliver to the Bank such financing statements, notices, assignments, listings, powers and other documents with respect to the Pledgor Collateral and the Bank's security interest therein in such form as the Bank may require. 3 6. Representation and Warranties by Borrower. Borrower hereby represents, ----------------------------------------- warrants and agrees to and with the Bank that: (a) Borrower has full power, right and authority to enter into this Pledge Agreement and has taken all corporate action necessary to authorize the execution and delivery of this Pledge Agreement; (b) This Pledge Agreement is enforceable against Borrower in accordance with the terms hereof; (c) This Pledge Agreement has been authorized or ratified and approved by Borrower's Board of Directors and will be maintained continuously among Borrower's official records; (d) A certified copy of the Board of Director's resolution evidencing its approval hereof is attached hereto as Attachment "D," the form of which has been previously approved by the Bank or its counsel; (e) Borrower agrees to make, execute, record, and deliver to the Bank such financing statements, notices, assignments, listings, powers and other documents with respect to the Pledgor Collateral and the Bank's security interest therein in such form as the Bank may require; and (f) Borrower agrees that a failure by either Borrower or Pledgor to perform any of the rights, responsibilities, duties, representations, warranties, and agreements under this Pledge Agreement shall constitute an Event of Default under the Borrower Advances Agreement. 7. Governing Law. In addition to the terms and conditions specifically ------------- set forth herein, this Pledge Agreement shall be governed by the statutory and common law of the United States and, to the extent state law is applicable, by the laws of the State of Georgia (without giving effect to choice of law principles included therein). Notwithstanding the foregoing, the Uniform Commercial Code as in effect in the State of Georgia shall be applicable to this Pledge Agreement, to the security interest created hereby, and to the pledge of Pledgor Collateral hereunder. 8. Partial Exercise; Amendment; Severability. No delay on the part of the ----------------------------------------- Bank in exercising any right, power or privilege shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or privilege preclude other or further exercise thereof or the exercise of any other right, power or privilege or be construed to be a waiver of any Event of Default under the Borrower Advances Agreement. No waiver by the Bank of any such Event of Default shall be effective unless in writing and signed by an authorized officer of the Bank, and no such waiver shall be deemed to be a waiver of a subsequent Event of Default under the Borrower Advances Agreement or be deemed to be a continuing waiver. No course of dealing between Borrower or Pledgor, respectively, and the Bank or its agents or employees shall be effective to change, modify or discharge any provision of this Pledge Agreement, or the Borrower Advances Agreement or to constitute a waiver of any Event of Default 4 thereunder. If any provision of this Pledge Agreement is held invalid or unenforceable to any extent or in any application, the remainder of this agreement, or application of such provision to different persons or circumstances or in different jurisdictions, shall not be affected thereby. IN WITNESS WHEREOF, each of Pledgor, Borrower, and the Bank has respectively caused this Pledge Agreement to be signed in its name by its duly authorized representative as of the date first above mentioned.
FEDERAL HOME LOAN BANK OF ATLANTA Premier Lending Corporation --------------------------- (Pledgor) By: By: /s/ George S. Phelps -------------------------------- --------------------------- Title: Title: President -------------------------- By: -------------------------------- Title: ------------------------ ACCEPTED, ACKNOWLEDGED, AND APPROVED: Premier Bank - ------------ (Borrower) By: /s/ Michael E. Ricketson ----------------------------------- Title: Chief Financial Officer ---------------------------
5 EX-27 7 FINANCIAL DATA SCHEDULE
9 1,000 6-MOS DEC-31-1999 JAN-01-1999 JUN-30-1999 37,965 445 73,943 0 165,622 167,424 165,622 1,175,458 14,845 1,493,164 1,161,649 102,643 9,806 78,750 0 2,446 26,167 111,703 1,493,164 52,759 4,235 2,653 59,647 22,332 5,957 31,358 925 29 33,378 15,946 15,946 0 0 9,667 .37 .36 4.53 3,204 0 0 0 14,168 572 324 14,845 0 0 0
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