MOUNTAIN BANK HOLDING CO - 10-Q Quarterly Report

U.S. 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 quarterly period ended March 31, 2004

¨	Transition Report Under Section 13 or 15(d) of the Exchange Act

For the transition period from to

Commission File Number : 0-28394

MOUNTAIN BANK HOLDING COMPANY

(Exact Name of Registrant as Specified in Its Charter)


WASHINGTON		91-1602736
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification Number)

501 Roosevelt Avenue

Enumclaw, Washington 98022

(Address of Principal Executive Offices)

(360) 825-0100

(Issuer’s Telephone Number, Including Area Code)

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 ¨

Check whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act): Yes ¨ No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


CLASS		SHARES OUTSTANDING AT MARCH 31, 2004
Common Stock - no par value		2,188,127 Shares


		Page

PART I - Financial Information

Item 1. Financial Statements (unaudited)

Consolidated Condensed Balance Sheets as of March 31, 2004, and December 31, 2003		3

Consolidated Condensed Statements of Income for the three months ended March 31, 2004 and 2003		4

Consolidated Condensed Statements of Shareholders’ Equity for the three months ended March 31, 2004 and 2003		5

Consolidated Condensed Statements of Cash Flows for the three months ended March 31, 2004 and 2003		6

Notes to consolidated condensed financial statements		7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results Of Operations		9

Item 3. Quantitative and Qualitative Disclosures about Market Risk		16

Item 4. Controls and Procedures		16

PART II - Other Information

Item 1. Legal Proceedings		17

Item 2. Change in Securities, Use of Proceeds, and Issuer Purchases of Equity Securities		17

Item 3. Defaults Upon Senior Securities		17

Item 4. Submission of Matters to a Vote of Security Holders		17

Item 5. Other Information		18

Item 6. Exhibits and Reports on Form 8-K		18

Signatures		19

MOUNTAIN BANK HOLDING COMPANY AND SUBSIDIARY

CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited)


	March 31, 2004		December 31, 2003
	*(in thousands)*
Assets
Cash and due from banks	$	1,697	$	1,641
Interest bearing deposits at other financial institutions		15,988		13,920
Securities available for sale		33,854		32,290
Federal Home Loan Bank and Federal Reserve Bank stock, at cost		698		693
Loans held for sale		852		—

Loans		101,688		98,744
Allowance for credit losses		1,167		1,101

Net loans		100,521		97,643

Premises and equipment		5,492		5,586
Foreclosed real estate		139		140
Accrued interest receivable		606		656
Bank owned life insurance		3,700		3,358
Other assets		286		349

Total assets	$	163,833	$	156,276

Liabilities
Deposits:
Demand, non-interest bearing	$	24,150	$	23,756
Savings and interest-bearing demand		69,531		66,720
Time		52,250		48,299

Total deposits		145,931		138,775

Accrued interest payable		156		159
Note payable		34		34
Other liabilities		581		413

Total liabilities		146,702		139,381

Shareholders’ Equity
Common stock (no par value); authorized 10,500,000 shares; issued and outstanding: 2004 - 2,188,127 shares; 2003 - 2,176,677 shares		1,094		1,088
Additional paid-in capital		9,721		9,655
Retained earnings		6,051		6,002
Accumulated other comprehensive income		265		150

Total shareholders’ equity		17,131		16,895

Total liabilities and shareholders’ equity	$	163,833	$	156,276

MOUNTAIN BANK HOLDING COMPANY AND SUBSIDIARY

CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Unaudited)


	Three Months Ended March 31,
	2004			2003
	(in thousands, except per share data)
Interest Income
Loans	$	1,836		$	1,722
Deposits in banks		41			48
Investment Income:
Taxable		250		$	253
Tax-exempt		2		$	5
Dividends on stock		5		$	15

Total interest income		2,134			2,043

Interest Expense
Deposits		451			516
Note payable		1			1

Total interest expense		452			517

Net interest income		1,682			1,526

Provision for credit losses		69			58

Net interest income after provision for credit losses		1,613			1,468

Noninterest income
Service charges on deposit accounts		145			134
Gains on mortgage loans sold		46			143
Gain on sale of securities available for sale-net		12			—
Bank owned life insurance income		41			41
Other		60			67

Total noninterest income		304			385

Noninterest expense
Salaries and employee benefits		903			852
Occupancy and equipment		228			186
Other		404			392

Total noninterest expenses		1,535			1,430

Income before income tax expense		382			423

Income tax expense		(115	)		(127	)

Net income	$	267		$	296

Per share data:
Basic earnings per share	$	0.12		$	0.13
Diluted earnings per share	$	0.12		$	0.13

MOUNTAIN BANK HOLDING COMPANY AND SUBSIDIARY

CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS’ EQUITY (Unaudited) (In thousands)

Balance Ended March 31


	Common Stock		Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Income		Total
Balance at December 31, 2002	$	1,073	$	9,472	$	4,626		$	370	$	15,541
Exercise of options, including tax benefit	$	4	$	37		—			—		41
Sale of common stock under employee stock purchase plan		1		17		—			—		18
Comprehensive income:
Net income		—		—		296			—		296
Other comprehensive income, net of tax:		—		—		—			—		—
Change in fair value of securities, available for sale		—		—		—			8		8
Comprehensive Income		—		—		—			—		304
Balance Ended March 31, 2003	$	1,078	$	9,526	$	4,922		$	378	$	15,904

	Common Stock		Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Income		Total
Balance at December 31, 2003	$	1,088	$	9,655	$	6,002		$	150	$	16,895
Exercise of options, including tax benefit	$	6	$	66		—			—		72
Payment of cash dividend ($.10 per share)		—		—		(218	)		—		(218	)
Comprehensive income:
Net income		—		—		267			—		267
Other comprehensive income, net of tax:		—		—		—			—		—
Change in fair value of securities, available for sale		—		—		—			115		115
Comprehensive Income		—		—		—			—		382
Balance at March 31, 2004	$	1,094	$	9,721	$	6,051		$	265	$	17,131

MOUNTAIN BANK HOLDING COMPANY AND SUBSIDIARY

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)


	Three Months Ended March 31,
	2004			2003
	*(in thousands)*
Net income	$	267		$	296
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Provision for credit losses		69			58
Depreciation and amortization		143			115
Loss on sale of premises and equipment		—			3
Net amortization and accretion of bond premiums and discounts		88			92
Gain on sales of securities available for sale		(12	)		—
Stock dividends received		(5	)		—
Gain on loans sold		(46	)		(143	)
Originations of loans held for sale		3,597			(10,185	)
Proceeds from sales of loans		(4,403	)		11,101
Bank owned life insurance income		(41	)		(41	)
(Increase) decrease in accrued interest receivable		50			(16	)
(Decrease) increase in accrued interest payable		(3	)		16
Other, net		(103	)		125

Net cash provided by (used in) operating activities		(399	)		1,421

Cash Flows from Investing Activities
Net increase (decrease) in interest bearing deposits in banks		(2,068	)		(14	)
Activity in securities available for sale and Federal Reserve Bank and FHLB stock purchases		(10,655	)		(2,149	)
Maturities, prepayments and calls		9,189			3,831
Increase in loans made to customers, net of principal collections		(2,947	)		(3,186	)
Proceeds from sale of other real estate owned		1			—
Additions to premises and equipment		(49	)