SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarter ended March 31, 2004
Commission file number 000-25128
MAIN STREET BANKS, INC.
(Exact name of registrant as specified in its charter)
| Georgia | 58-2104977 | |
| (State of Incorporation) | (I.R.S. Employer Identification No.) | |
| 676 Chastain Road, Kennesaw, GA | 30144 | |
| (Address of principal executive offices) | (Zip Code) | |
770-422-2888
(Registrant’s telephone number)
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 whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨
As of April 30th registrant had outstanding 19,348,932 shares of common stock.
TABLE OF CONTENTS
FORM 10-Q
March 31, 2004
| Page | ||||
| PART I. FINANCIAL INFORMATION | ||||
| Item 1. | ||||
| 2 | ||||
|
Consolidated Statements of Income (unaudited) |
3 | |||
| 4 | ||||
|
Consolidated Statements of Cash Flows (unaudited) |
5 | |||
| 6 | ||||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
11 | ||
| Item 3. | 19 | |||
| Item 4. | 19 | |||
| PART II. OTHER INFORMATION | ||||
| Item 1. | 20 | |||
| Item 2. | Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities |
20 | ||
| Item 3. | 20 | |||
| Item 4. | 20 | |||
| Item 5. | 20 | |||
| Item 6. | 20 | |||
| 21 | ||||
| Exhibits: |
||||
| Exhibit 31.1 Certification of Chief Executive Officer |
22 | |||
| Exhibit 31.2 Certification of Chief Financial Officer |
23 | |||
| Exhibit 32.1 Certification of Chief Executive Officer |
24 | |||
| Exhibit 32.2 Certification of Chief Financial Officer |
25 | |||
| Exhibit 99.1 Comments Concerning Forward Looking Statements |
26 | |||
1
Consolidated Balance Sheets
(amounts in thousands)
| (Unaudited) March 31, 2004 |
December 31, 2003 |
(Unaudited) March 31, 2003 |
||||||||||
| Assets |
||||||||||||
| Cash and due from banks |
$ | 31,901 | $ | 39,839 | $ | 35,914 | ||||||
| Interest-bearing deposits in banks |
589 | 1,021 | 833 | |||||||||
| Federal funds sold and securities purchased under agreements to resell |
5,644 | 31,820 | 5,455 | |||||||||
| Investment securities available for sale (cost of $257,220, $242,872, and $214,687 at March 31, 2004, December 31, 2003 and March 31, 2003, respectively) |
263,305 | 247,392 | 217,189 | |||||||||
| Investment securities held to maturity (fair value of $12,186, $10,800, and $752 at March 31, 2004, December 31, 2003 and March 31, 2003, respectively) |
11,998 | 10,788 | 688 | |||||||||
| Other investments |
19,205 | 19,651 | 7,934 | |||||||||
| Mortgage loans held for sale |
7,208 | 5,671 | 4,720 | |||||||||
| Loans, net of unearned income |
1,511,437 | 1,443,326 | 1,048,550 | |||||||||
| Allowance for loan losses |
(22,151 | ) | (21,152 | ) | (15,391 | ) | ||||||
| Loans, net |
1,489,286 | 1,422,174 | 1,033,159 | |||||||||
| Premises and equipment, net |
45,168 | 42,761 | 35,000 | |||||||||
| Other real estate |
2,256 | 1,845 | 797 | |||||||||
| Accrued interest receivable |
8,294 | 8,181 | 6,629 | |||||||||
| Goodwill and other intangible assets |
103,381 | 96,237 | 18,235 | |||||||||
| Bank owned life insurance |
41,596 | 35,773 | 31,367 | |||||||||
| Other assets |
15,802 | 8,612 | 7,005 | |||||||||
| Total assets |
$ | 2,045,633 | $ | 1,971,765 | $ | 1,404,925 | ||||||
| Liabilities |
||||||||||||
| Deposits: |
||||||||||||
| Noninterest-bearing demand |
$ | 232,576 | $ | 228,610 | $ | 182,313 | ||||||
| Interest-bearing demand and money market |
511,626 | 482,775 | 364,838 | |||||||||
| Savings |
50,475 | 49,832 | 46,062 | |||||||||
| Time deposits of $100,000 or more |
289,722 | 254,422 | 188,873 | |||||||||
| Other time deposits |
446,581 | 442,764 | 355,904 | |||||||||
| Total deposits |
1,530,980 | 1,458,403 | 1,137,990 | |||||||||
| Accrued interest payable |
3,211 | 3,020 | 3,316 | |||||||||
| Federal Home Loan Bank advances |
156,472 | 210,605 | 74,500 | |||||||||
| Federal funds purchased and securities sold under repurchase agreements |
83,930 | 43,859 | 47,220 | |||||||||
| Subordinated debentures |
51,547 | — | — | |||||||||
| Trust preferred securities |
— | 50,000 | 5,000 | |||||||||
| Other liabilities |
4,116 | 5,335 | 3,864 | |||||||||
| Total liabilities |
1,830,256 | 1,771,222 | 1,271,890 | |||||||||
| Shareholders’ Equity |
||||||||||||
| Common stock-no par value per share; 50,000,000 shares authorized; 19,340,676, 18,981,340 and 16,173,647 shares outstanding at March 31, 2004, December 31, 2003 and March 31, 2003, respectively |
109,117 | 100,876 | 47,223 | |||||||||
| Retained earnings |
109,300 | 104,539 | 89,848 | |||||||||
| Accumulated other comprehensive income, net of tax |
5,749 | 3,917 | 4,751 | |||||||||
| Treasury stock, at cost, 564,082 shares at March 31, 2004, December 31, 2003 and March 31, 2003, respectively |
(8,789 | ) | (8,789 | ) | (8,787 | ) | ||||||
| Total shareholders’ equity |
215,377 | 200,543 | 133,035 | |||||||||
| Total liabilities and shareholders’ equity |
$ | 2,045,633 | $ | 1,971,765 | $ | 1,404,925 | ||||||
See accompanying notes to consolidated financial statements
2
Consolidated Statements of Income (Unaudited)
(amounts in thousands except per share data)
| Three months ended March 31, | ||||||
| 2004 |
2003 | |||||
| (unaudited) | ||||||
| Interest income: |
||||||
| Loans, including fees |
$ | 24,782 | $ | 18,934 | ||
| Investment securities: |
||||||
| Taxable |
2,247 | 2,075 | ||||
| Non-taxable |
418 | 439 | ||||
| Federal funds sold and other short-term investments |
30 | 56 | ||||
| Interest-bearing deposits in banks |
5 | 9 | ||||
| Other investments |
206 | 32 | ||||
| Total interest income |
27,688 | 21,545 | ||||
| Interest expense: |
||||||
| Interest-bearing demand and money market |
1,322 | 1,386 | ||||
| Savings |
89 | 90 | ||||
| Time deposits |
4,463 | 4,183 | ||||
| Other time deposits |
56 | 99 | ||||
| Federal funds purchased |
35 | 13 | ||||
| Federal Home Loan Bank advances |
866 | 230 | ||||
| Trust preferred securities |
575 | 55 | ||||
| Other interest expense |
356 | 414 | ||||
| Total interest expense |
7,762 | 6,470 | ||||
| Net interest income |
19,926 | 15,075 | ||||
| Provision for loan losses |
1,561 | 1,047 | ||||
| Net interest income after provision for loan losses |
18,365 | 14,028 | ||||
| Non-interest income: |
||||||
| Service charges on deposit accounts |
1,881 | 1,741 | ||||
| Other customer service fees |
357 | 364 | ||||
| Mortgage banking income |
883 | 647 | ||||
| Investment agency commissions |
315 | 84 | ||||
| Insurance agency income |
2,772 | 1,180 | ||||
| Income from SBA lending |
486 | 379 | ||||
| Income on bank owned life insurance |
822 | 462 | ||||
| Investment securities gains |
304 | 184 | ||||
| Other income |
21 | 236 | ||||
| Total non-interest income |
7,841 | 5,277 | ||||
| Non-interest expense: |
||||||
| Salaries and other compensation |
8,041 | 5,615 | ||||
| Employee benefits |
1,640 | 1,204 | ||||
| Net occupancy and equipment expense |
1,860 | 1,356 | ||||
| Data processing fees |
557 | 310 | ||||
| Professional services |
438 | 376 | ||||
| Communications & supplies |
1,051 | 827 | ||||
| Marketing expense |
370 | 155 | ||||
| Regulatory agency assessments |
91 | 61 | ||||
| Amortization of intangible assets |
141 | 60 | ||||
| Other expense |
1,390 | 1,144 | ||||
| Total non-interest expense |
15,579 | 11,108 | ||||
| Income before income taxes |
10,627 | 8,197 | ||||
| Income tax expense |
3,030 | 2,447 | ||||
| Net income |
$ | 7,597 | $ | 5,750 | ||
| Earnings per share - Basic |
$ | 0.39 | $ | 0.36 | ||
| Earnings per share - Diluted |
$ | 0.38 | $ | 0.34 | ||
| Dividends declared per share |
$ | 0.135 | $ | 0.120 | ||
| Weighted average common shares outstanding - Basic |
19,281 | 16,218 | ||||
| Weighted average common shares outstanding - Diluted |
19,911 | 16,829 | ||||
3
Consolidated Statements of Comprehensive Income (Unaudited)
(amounts in thousands)
| Three Months Ended |
||||||||
| March 31, 2004 |
March 31, 2003 |
|||||||
| (unaudited) | ||||||||
| Net income |
$ | 7,597 | $ | 5,750 | ||||
| Other comprehensive income, net of tax: |
||||||||
| Unrealized gains (losses) on securities available for sale |
1,371 | (870 | ) | |||||
| Unrealized gains (losses) on derivative contracts |
662 | (62 | ) | |||||
| Less reclassification adjustment for net (gains) losses included in net income |
(201 | ) | 122 | |||||
| Comprehensive income |
$ | 9,429 | $ | 4,940 | ||||
4
Consolidated Statements of Cash Flows (Unaudited)
(amounts in thousands)
| Three months ended March 31, |
||||||||
| 2004 |
2003 |
|||||||
| (Unaudited) | ||||||||
| Operating activities |
||||||||
| Net income |
$ | 7,597 | $ | 5,750 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Provision for loan losses |
1,561 | 1,047 | ||||||
| Depreciation and amortization of premises and equipment |
1,147 | 688 | ||||||
| Amortization of intangible assets |
141 | 56 | ||||||
| Loss on sales of other real estate |
125 | |||||||