SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES |
AND EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2003
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES |
EXCHANGE ACT OF 1934 (No Fee Required)
For the transition period from to .
Commission file number 0-25034
GREATER BAY BANCORP
(Exact name of registrant as specified in its charter)
| California | 77-0387041 | |
| (State or other jurisdiction of Incorporation or organization) |
(I.R.S. Employer Identification No.) |
2860 West Bayshore Road, Palo Alto, California 94303
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: (650) 813-8200
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 by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes x No ¨
Outstanding shares of Common Stock, no par value, as of July 31, 2003: 52,045,162
GREATER BAY BANCORP
| Part I. Financial Information | ||||
| Item 1. |
Consolidated Financial Statements |
|||
| Consolidated Balance Sheets as of June 30, 2003 and December 31, 2002 |
3 | |||
| 4 | ||||
| 5 | ||||
| Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2003 and 2002 |
6 | |||
| 7 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
20 | ||
| Item 3. |
51 | |||
| Item 4. |
55 | |||
| Part II. Other Information | ||||
| Item 1. |
56 | |||
| Item 2. |
56 | |||
| Item 3. |
56 | |||
| Item 4. |
56 | |||
| Item 5. |
57 | |||
| Item 6. |
57 | |||
| 58 | ||||
2
GREATER BAY BANCORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| (Dollars in thousands) |
June 30, 2003 (unaudited) |
December 31, 2002 |
||||||
| ASSETS |
||||||||
| Cash and due from banks |
$ | 278,989 | $ | 300,514 | ||||
| Federal funds sold |
15,000 | 14,000 | ||||||
| Other short-term securities |
243 | — | ||||||
| Cash and cash equivalents |
294,232 | 314,514 | ||||||
| Investment securities: |
||||||||
| Available for sale, at fair value |
2,560,705 | 2,458,421 | ||||||
| Other securities |
78,767 | 104,565 | ||||||
| Investment securities |
2,639,472 | 2,562,986 | ||||||
| Total loans: |
||||||||
| Commercial |
1,992,499 | 2,067,142 | ||||||
| Term real estate - commercial |
1,650,330 | 1,610,277 | ||||||
| Total commercial |
3,642,829 | 3,677,419 | ||||||
| Real estate construction and land |
671,666 | 710,990 | ||||||
| Real estate other |
244,955 | 251,665 | ||||||
| Consumer and other |
162,928 | 166,331 | ||||||
| Deferred loan fees and discounts |
(14,803 | ) | (15,245 | ) | ||||
| Total loans, net of deferred fees |
4,707,575 | 4,791,160 | ||||||
| Allowance for loan and lease losses |
(130,030 | ) | (129,613 | ) | ||||
| Total loans, net |
4,577,545 | 4,661,547 | ||||||
| Property, premises and equipment, net |
52,298 | 52,069 | ||||||
| Goodwill |
145,005 | 144,181 | ||||||
| Other intangible assets |
44,294 | 47,722 | ||||||
| Interest receivable and other assets |
331,168 | 292,708 | ||||||
| Total assets |
$ | 8,084,014 | $ | 8,075,727 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
| Deposits: |
||||||||
| Demand, noninterest-bearing |
$ | 975,122 | $ | 1,028,672 | ||||
| MMDA, NOW and savings |
2,873,737 | 2,673,973 | ||||||
| Time certificates, $100,000 and over |
808,723 | 829,717 | ||||||
| Other time certificates |
890,669 | 739,911 | ||||||
| Total deposits |
5,548,251 | 5,272,273 | ||||||
| Borrowings |
1,295,373 | 1,737,243 | ||||||
| Company obligated mandatorily redeemable cumulative trust preferred securities of subsidiary trusts holding solely junior subordinated debentures |
204,000 | 204,000 | ||||||
| Other liabilities |
301,793 | 165,502 | ||||||
| Total liabilities |
7,349,417 | 7,379,018 | ||||||
| Preferred stock of real estate investment trust subsidiaries of the Banks |
15,302 | 15,650 | ||||||
| Commitments and contingencies |
||||||||
| SHAREHOLDERS’ EQUITY |
||||||||
| Preferred stock, no par value: 4,000,000 shares authorized |
— | — | ||||||
| 7.25% convertible preferred stock, stated value $50.00: recorded at fair value at issuance; 2,356,606 reserved shares; 1,630,504 and 1,673,898 shares issued and outstanding as of June 30, 2003 and December 31, 2002, respectively |
80,441 | 80,900 | ||||||
| Common stock, no par value: 80,000,000 shares authorized; 51,982,864 and 51,577,795 shares issued and outstanding as of June 30, 2003 and December 31, 2002, respectively |
239,636 | 234,627 | ||||||
| Unearned compensation |
(735 | ) | (1,450 | ) | ||||
| Accumulated other comprehensive income |
20,365 | 18,624 | ||||||
| Retained earnings |
379,588 | 348,358 | ||||||
| Total shareholders’ equity |
719,295 | 681,059 | ||||||
| Total liabilities and shareholders’ equity |
$ | 8,084,014 | $ | 8,075,727 | ||||
See notes to consolidated financial statements.
3
GREATER BAY BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| Three months ended June 30, |
Six months ended June 30, | |||||||||||
| (Dollars in thousands, except per share amounts) |
2003 |
2002 |
2003 |
2002 | ||||||||
| INTEREST INCOME |
||||||||||||
| Loans |
$ | 81,139 | $ | 83,254 | $ | 162,016 | $ | 165,829 | ||||
| Investment securities: |
||||||||||||
| Taxable |
19,921 | 43,756 | 43,710 | 87,075 | ||||||||
| Tax-exempt |
1,241 | 1,780 | 2,464 | 3,212 | ||||||||
| Total interest on investment securities |
21,162 | 45,536 | 46,174 | 90,287 | ||||||||
| Other interest income |
1,149 | 2,002 | 2,604 | 4,101 | ||||||||
| Total interest income |
103,450 | 130,792 | 210,794 | 260,217 | ||||||||
| INTEREST EXPENSE |
||||||||||||
| Deposits |
16,045 | 20,801 | 32,578 | 41,735 | ||||||||
| Long-term borrowings |
4,901 | 5,875 | 7,805 | 12,192 | ||||||||
| Trust Preferred Securities |
4,222 | 5,025 | 9,029 | 10,005 | ||||||||
| Other borrowings |
4,478 | 10,444 | 11,411 | 20,084 | ||||||||
| Total interest expense |
29,646 | 42,145 | 60,823 | 84,016 | ||||||||
| Net interest income |
73,804 | 88,647 | 149,971 | 176,201 | ||||||||
| Provision for loan and lease losses |
6,700 | 9,000 | 13,195 | 25,000 | ||||||||
| Net interest income after provision for loan and lease losses |
67,104 | 79,647 | 136,776 | 151,201 | ||||||||
| NON-INTEREST INCOME |
||||||||||||
| Insurance agency commissions and fees |
27,945 | 27,601 | 58,587 | 38,492 | ||||||||
| Gain on sale of investments, net |
3,136 | 3,004 | 5,159 | 3,351 | ||||||||
| Service charges and other fees |
2,995 | 2,762 | 5,826 | 5,590 | ||||||||
| Loan and international banking fees |
2,421 | 2,273 | 4,459 | 4,800 | ||||||||
| Trust fees |
819 | 894 | 1,576 | 1,800 | ||||||||
| ATM network revenue |
445 | 628 | 851 | 1,211 | ||||||||
| Gain on sale of loans |
364 | 210 | 1,907 | 706 | ||||||||
| Other income |
4,196 | 2,138 | 8,720 | 6,152 | ||||||||
| Total |
42,321 | 39,510 | 87,085 | 62,102 | ||||||||
| OPERATING EXPENSES |
||||||||||||
| Compensation and benefits |
42,001 | 38,647 | 87,433 | 67,222 | ||||||||
| Occupancy and equipment |
10,171 | 10,267 | 19,813 | 19,105 | ||||||||
| Legal and other professional fees |
4,390 | 1,915 | 9,352 | 3,604 | ||||||||
| Telephone, postage and supplies |
1,878 | 1,918 | 3,624 | 3,551 | ||||||||
| Marketing and promotion |
1,822 | 1,617 | 2,937 | 3,069 | ||||||||
| Correspondent bank and ATM network fees |
1,717 | 1,508 | 3,418 | 2,849 | ||||||||
| Amortization of intangibles |
1,671 | 1,650 | 3,342 | 2,212 | ||||||||
| Data processing |
1,407 | 1,196 | 2,658 | 2,325 | ||||||||
| Insurance |
1,283 | 892 | 2,519 | 1,540 | ||||||||
| Depreciation - equipment leased to others |
1,072 | — | 1,807 | — | ||||||||
| Other real estate owned, net |
518 | — | 519 | —&n | ||||||||