x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended   March 31, 2003

o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number: 0-49789

Henry County Bancshares, Inc.

(Exact name of small business issuer as specified in its charter) 

Georgia

58-1485511

(State or other jurisdiction of incorporation or organization)

(IRS Employer Identification No.)

4806 N. Henry Blvd., Stockbridge, Georgia  30281

(Address of principal executive offices)

(770) 474-7293

(Issuer’s telephone number)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Yes   x

No   o

Page

PART I.

FINANCIAL INFORMATION

Item 1.   Financial Statements

Consolidated Balance Sheets- March 31, 2003 and December 31, 2002

3

Consolidated Statements of Income and Comprehensive Income - Three Months Ended March 31, 2003 and 2002

4

Consolidated Statements of Cash Flows - Three Months Ended March 31, 2003 and 2002

5

Notes to Consolidated Financial Statements

6-7

Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations

8-14

Item 3.   Quantitative and Qualitative Disclosures About Market Risk

14

Item 4.    Controls and Procedures

15

PART II.

OTHER INFORMATION

Item 4 - Submission of Matters to a Vote of Security Holders

16

Item 6 - Exhibits and Reports on Form 8-K

16

Signatures

17

2003

2002

Assets

Cash and due from banks

$

27,635,433

$

35,459,970

Interest bearing deposits in banks

1,004,034

1,148,764

Federal funds sold

4,400,000

22,300,000

Securities available-for-sale, at fair value

55,561,527

62,088,707

Securities held-to-maturity, at cost, (fair value 2003 867,000; 2002 $938,000)

866,770

899,208

Restricted equity securities, at cost

1,483,473

1,483,473

Loans held for sale

2,704,751

5,796,885

Loans

369,659,200

350,276,958

Less allowance for loan losses

3,988,459

3,827,270

Loans, net

365,670,741

346,449,688

Premises and equipment

8,483,838

8,571,401

Other assets

5,396,530

4,954,606

Total assets

$

473,207,097

$

489,152,702

Liabilities and Stockholders’ Equity

Deposits

Noninterest-bearing

$

79,332,459

$

81,412,273

Interest-bearing

327,678,752

338,737,025

Total deposits

407,011,211

420,149,298

Other borrowings

15,180,141

20,287,289

Other liabilities

3,168,133

2,048,139

Total liabilities

425,359,485

442,484,726

Commitments and contingencies

Stockholders’ equity

Common stock, par value $2.50; 10,000,000 shares authorized; 7,237,066 shares issued

18,092,664

18,092,664

Capital surplus

739,560

739,560

Retained earnings

29,882,142

28,647,251

Accumulated other comprehensive income

526,662

581,917

Treasury stock, 76,074 shares

(1,393,416

)

(1,393,416

)

Total stockholders’ equity

47,847,612

46,667,976

Total liabilities and stockholders’ equity

$

473,207,097

$

489,152,702

Three Months Ended
March 31,

2003

2002

Interest income

Loans

$

5,731,713

$

5,661,452

Taxable securities

416,235

1,081,480

Nontaxable securities

123,463

199,461

Deposits in banks

6,877

36,031

Federal funds sold

46,950

78,281

Total interest income

6,325,238

7,056,705

Interest expense

Deposits

2,195,760

2,776,845

Other borrowings

201,128

260,021

Total interest expense

2,396,888

3,036,866

Net interest income

3,928,350

4,019,839

Provision for loan losses

150,000

150,000

Net interest income after provision for loan losses

3,778,350

3,869,839

Other operating income

Service charges on deposit accounts

593,429

476,259

Other service charges and fees

210,893

151,701

Mortgage banking income

629,263

456,837

Total other income

1,433,585

1,084,797

Other expenses

Salaries and employee benefits

1,487,072

1,387,428

Occupancy and equipment expenses

366,592

341,133

Other operating expenses

538,804

472,817

Total other expenses

2,392,468

2,201,378

Income before income taxes

2,819,467

2,753,258

Income tax expense

1,011,697

1,011,916

Net income

1,807,770

1,741,342

Other comprehensive loss:

Unrealized losses on securities available-for-sale, net of tax

(55,255

)

(153,559

)

Comprehensive income

$

1,752,515

$

1,587,783

Earnings per share (weighted average shares outstanding- 7,160,992 and 7,163,496)

$

0.25

$

0.24

Cash dividends per share

$

0.08

$

0.08

2003

2002

OPERATING ACTIVITIES

Net income

$

1,807,770

$

1,741,342

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation

131,215

142,167

Net decrease in loans held for sale

3,092,134

1,052,858

Provision for loan losses

150,000

150,000

Increase in interest receivable

(62,936

)

(33,454

)

Decrease in interest payable

(70,430

)

(138,546

)

Net other operating activities

839,900

1,773,411

Net cash provided by operating activities

5,887,653

4,687,778

INVESTING ACTIVITIES

Purchases of securities available-for-sale

(10,910,836

)

(11,271,890

)

Proceeds from maturities of securities available-for-sale

17,354,297

17,517,666

Proceeds from maturities of securities held-to-maturity

32,438