UNITED STATES
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 EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2004
| ¨ | 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 0-18868
PREMIER COMMUNITY BANKSHARES, INC.
(Exact name of registrant as specified in its charter)
| Virginia | 54-1560968 | |
| (State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) | |
| 4095 Valley Pike Winchester, Virginia | 22602 | |
| (Address of Principal Executive Offices) | (Zip Code) | |
(Registrant’s telephone number, including area code) (540) 869-6600
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
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 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: 4,886,734, $1.00 par value, as of May 11, 2004.
| Item 1. |
Financial Statements | |||
| The following financial statements are provided at the page numbers indicated. | ||||
| Consolidated Balance Sheets As of March 31, 2004 and December 31, 2003 | 3 | |||
| Consolidated Statements of Income for the Three Months Ended March 31, 2004 and 2003 | 4 | |||
| Consolidated Statements of Changes in Shareholders’ Equity for the Three Months Ended March 31, 2004 and 2003 | 5 | |||
| Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2004 and 2003 | 6 | |||
| Notes to Consolidated Financial Statements | 7-11 | |||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 12–16 | ||
| Item 3. |
Quantitative and Qualitative Disclosures about Market Risk | 16-18 | ||
| Item 4. |
Controls and Procedures | 18 | ||
| 19 | ||||
| 20 | ||||
2
PREMIER COMMUNITY BANKSHARES, INC.
Consolidated Balance Sheets
(In Thousands, Except for Share Data)
| March 31, 2004 |
December 31, 2003 | |||||
| (Unaudited) | ||||||
| Assets: |
||||||
| Cash and due from banks |
$ | 25,067 | $ | 22,394 | ||
| Interest-bearing deposits in other banks |
181 | 208 | ||||
| Federal funds sold |
6,692 | 16,901 | ||||
| Securities available for sale, at fair value |
16,176 | 15,694 | ||||
| Securities held to maturity (fair value: March 31, 2004, $8,099; December 31, 2003, $8,207) |
8,159 | 8,357 | ||||
| Loans, net of allowance for loan losses (allowance: $4,525 March 31, 2004, $4,104 December 31, 2003) |
422,709 | 382,459 | ||||
| Bank premises and equipment, net |
11,569 | 10,962 | ||||
| Accrued interest receivable |
1,457 | 1,678 | ||||
| Other real estate |
— | 67 | ||||
| Other assets |
6,229 | 4,179 | ||||
| $ | 498,239 | $ | 462,899 | |||
| Liabilities and Shareholders’ Equity: |
||||||
| Liabilities: |
||||||
| Deposits: |
||||||
| Non-interest bearing demand deposits |
$ | 67,472 | $ | 61,123 | ||
| Savings and interest-bearing demand deposits |
138,436 | 130,312 | ||||
| Time deposits |
218,656 | 205,910 | ||||
| Total deposits |
424,564 | 397,345 | ||||
| Federal Home Loan Bank advances |
10,000 | 10,000 | ||||
| Short-term borrowings |
7,467 | 541 | ||||
| Accounts payable and accrued expenses |
2,769 | 2,948 | ||||
| Capital lease payable |
185 | 188 | ||||
| Trust Preferred Capital Notes |
13,000 | 13,000 | ||||
| $ | 457,985 | $ | 424,022 | |||
| Shareholders’ Equity: |
||||||
| Preferred stock, Series A, 5% noncumulative, no par value; 1,000,000 shares authorized and unissued |
— | — | ||||
| Common stock, $1 par value, 20,000,000 shares authorized March 31, 2004, 4,886,484 shares issued and outstanding; December 31, 2003, 4,881,084 shares issued and outstanding |
4,887 | 4,881 | ||||
| Capital surplus |
19,349 | 19,328 | ||||
| Retained earnings |
15,721 | 14,400 | ||||
| Accumulated other comprehensive income |
297 | 268 | ||||
| Total shareholders’ equity |
40,254 | 38,877 | ||||
| $ | 498,239 | $ | 462,899 | |||
See Accompanying Notes to Consolidated Financial Statements
3
PREMIER COMMUNITY BANKSHARES, INC.
Consolidated Statements of Income
(In Thousands, Except for Share Data)
| (Unaudited) | ||||||
| For the Three Months Ended March 31, | ||||||
| 2004 |
2003 | |||||
| Interest and dividend income: |
||||||
| Interest and fees on loans |
$ | 6,822 | $ | 5,905 | ||
| Interest on investment securities |
||||||
| Nontaxable |
47 | 56 | ||||
| Taxable |
70 | 87 | ||||
| Interest and dividends on securities available for sale: |
||||||
| Nontaxable |
66 | 41 | ||||
| Taxable |
80 | 86 | ||||
| Dividends |
14 | 10 | ||||
| Interest on deposits in banks |
1 | 6 | ||||
| Interest on federal funds sold |
50 | 59 | ||||
| Total interest and dividend income |
$ | 7,150 | $ | 6,250 | ||
| Interest expense: |
||||||
| Interest on deposits |
$ | 1,784 | $ | 1,985 | ||
| Interest on capital lease obligations |
4 | 4 | ||||
| Interest on borrowings |
248 | 161 | ||||
| Total interest expense |
$ | 2,036 | $ | 2,150 | ||
| Net interest income |
$ | 5,114 | $ | 4,100 | ||
| Provision for loan losses |
429 | 240 | ||||
| Net interest income after provision for loan losses |
$ | 4,685 | $ | 3,860 | ||
| Noninterest income |
||||||
| Service charges on deposit accounts |
$ | 721 | $ | 362 | ||
| Commissions and fees |
147 | 194 | ||||
| Other |
167 | 46 | ||||
| Total noninterest income |
$ | 1,035 | $ | 602 | ||
| Noninterest expense |
||||||
| Salaries and employees |
$ | 2,004 | $ | 1,497 | ||
| Net occupancy expense of premises |
209 | 158 | ||||
| Furniture and equipment |
235 | 218 | ||||
| Other |
1,333 | 938 | ||||
| Total noninterest expenses |
$ | 3,781 | $ | 2,811 | ||
| Income before income taxes |
$ | 1,939 | $ | 1,651 | ||
| Provision for income taxes |
618 | 547 | ||||
| Net income |
$ | 1,321 | $ | 1,104 | ||
| Average shares: |
||||||
| Basic |
4,883,804 | 4,560,791 | ||||
| Assuming dilution |
5,045,687 | 4,680,790 | ||||
| Earnings per common per share: |
||||||
| Basic |
$ | 0.27 | $ | 0.24 | ||
| Assuming dilution |
$ | 0.26 | $ | 0.24 | ||
See Accompanying Notes to Consolidated Financial Statements
4
PREMIER COMMUNITY BANKSHARES, INC.
Consolidated Statement of Changes in Shareholders’ Equity
For the Three Months Ended March 31, 2004 and 2003
(In Thousands)
(Unaudited)
| Common Stock |
Capital Surplus |
Retained Earnings |
Accumulated Other Comprehensive Income |
Comprehensive Income |
Total Shareholders’ Equity | |||||||||||||
| Balance December 31, 2002 |
$ | 4,555 | $ | 14,977 | $ | 10,023 | $ | 269 | $ | 29,824 | ||||||||
| Comprehensive Income |
||||||||||||||||||
| Net income |
1,104 | $ | 1,104 | 1,104 | ||||||||||||||
| Other comprehensive income, net of tax |
— | — | — | |||||||||||||||
| Unrealized gain on available for sale securities (net of tax $29) |
$ | 57 | 57 | 57 | ||||||||||||||
| Total comprehensive income |
$ | 1,161 | ||||||||||||||||
| Issuance of common stock - exercise of stock options (7,100 shares) |
7 | 43 | 50 | |||||||||||||||
| Balances - March 31, 2003 |
$ | 4,562 | $ | 15,020 | $ | 11,127 | $ | 326 | $ | 31,035 | ||||||||
| Common Stock |
Capital Surplus |
Retained Earnings |
Accumulated Other Comprehensive Income |
Comprehensive Income |
Total Shareholders’ Equity | |||||||||||||
| Balance December 31, 2003 |
$ | 4,881 | $ | 19,328 | $ | 14,400 | $ | 268 | $ | 38,877 | ||||||||
| Comprehensive Income |
||||||||||||||||||
| Net income |
1,321 | $ | 1,321 | 1,321 | ||||||||||||||
| Other comprehensive income, net of tax |
— | — | — | |||||||||||||||
| Unrealized gain on available for sale securities (net of tax $15) |
29 | 29 | 29 | |||||||||||||||
| Total comprehensive income |
$ | 1,350 | ||||||||||||||||
| Issuance of common stock - exercise of stock options (5,400 shares) |
6 | 21 | 27 | |||||||||||||||
| Balances - March 31, 2004 |
$ | 4,887 | $ | 19,349 | $ | 15,721 | $ | 297 | $ | 40,254 | ||||||||
See Accompanying Notes to Consolidated Financial Statements
5
PREMIER COMMUNITY BANKSHARES, INC.
Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 2004 and 2003
(In Thousands)
(Unaudited)
| 2004 |
2003 |
|||||||
| CASH FLOWS FROM OPERATING ACTIVITIES |
||||||||
| Net income |
$ | 1,321 | $ | 1,104 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and Amortization |
246 | 199 | ||||||
| Net amortization and (accretion) on securities |
13 | 3 | ||||||
| Provision for loan loss |
429 | 240 | ||||||
| Gain on sale of other real estate |
(7 | ) | — | |||||
| Changes in assets and liabilities: |
||||||||
| (Increase) in other assets |
(1,186 | ) | (68 | ) | ||||
| Decrease in accrued interest receivable |
221 | 4 | ||||||
| Increase (Decrease) in accounts payable and accrued expenses |
(213 | ) | 439 | |||||
| Increase in interest expense payable |
34 | 3 | ||||||
| Net cash provided by operating activities |
$ | 858 | $ | 1,924 | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES |
||||||||
| Proceeds from maturities, calls and principal payments on securities held to maturity |
$ | 196 | $ | 558 | ||||
| Proceeds from maturities, calls and principal payments on securities available for sale |
1,131 | 3,511 | ||||||
| Purchase of securities available for sale |
(1,580 | ) | (1,256 | ) | ||||
| Purchase of securities held to maturity |
— | (1,806 | ) | |||||
| Net (increase) in loans |
(40,679 | ) | (20,658 | ) | ||||
| Proceeds from sale of other real estate |
74 | — | ||||||