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, 2004
| ¨ | 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 29, 2004: 51,228,331
GREATER BAY BANCORP
QUARTERLY REPORT ON FORM 10-Q
i
GREATER BAY BANCORP
QUARTERLY REPORT ON FORM 10-Q
INDEX (continued)
| 48 | ||
| 48 | ||
| 48 | ||
| 50 | ||
| 52 | ||
| 56 | ||
| 56 | ||
| 56 | ||
| 56 | ||
| 57 | ||
| Off-Balance Sheet Arrangements and Aggregate Contractual Obligations |
59 | |
| 60 | ||
| 67 | ||
| Item 3. Quantitative and Qualitative Disclosures About Market Risk |
||
| 68 | ||
| 69 | ||
| 70 | ||
| Part II. Other Information | ||
| 71 | ||
| Item 2. Changes in Securities, Use of Proceeds and Issuer Purchase of Equity Securities |
71 | |
| 71 | ||
| 71 | ||
| 73 | ||
| 73 | ||
| 74 | ||
ii
ITEM 1. Consolidated Financial Statements
GREATER BAY BANCORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
| (Dollars in thousands) |
June 30, 2004 |
December 31, 2003 |
||||||
| ASSETS |
||||||||
| Cash and cash equivalents |
$ | 264,517 | $ | 275,891 | ||||
| Securities: |
||||||||
| Securities available for sale, at fair value |
1,704,833 | 2,153,930 | ||||||
| Securities held to maturity, at amortized cost (fair value: $494,360) |
494,063 | — | ||||||
| Other securities |
57,943 | 73,222 | ||||||
| Total securities |
2,256,839 | 2,227,152 | ||||||
| Loans |
4,443,024 | 4,537,807 | ||||||
| Allowance for loan and lease losses |
(120,625 | ) | (126,168 | ) | ||||
| Total loans, net |
4,322,399 | 4,411,639 | ||||||
| Property, premises and equipment, net |
90,854 | 83,816 | ||||||
| Goodwill |
178,317 | 177,991 | ||||||
| Other intangible assets |
43,544 | 47,238 | ||||||
| Interest receivable and other assets |
456,825 | 377,696 | ||||||
| Total assets |
$ | 7,613,295 | $ | 7,601,423 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
| Deposits |
$ | 5,306,912 | $ | 5,312,667 | ||||
| Borrowings |
1,322,645 | 1,282,191 | ||||||
| Other liabilities |
253,396 | 240,746 | ||||||
| Total liabilities |
6,882,953 | 6,835,604 | ||||||
| Preferred stock of real estate investment trust subsidiaries |
15,302 | 15,302 | ||||||
| Commitments and contingencies (Note 13) |
||||||||
| SHAREHOLDERS’ EQUITY |
||||||||
| Preferred stock, no par value: 10,500,000 shares authorized |
— | — | ||||||
| 7.25% convertible preferred stock, stated value $50.00: 2,356,606 reserved shares; 1,823,093 and 1,825,504 shares issued and outstanding as of June 30, 2004 and December 31, 2003, respectively |
91,924 | 91,752 | ||||||
| Common stock, no par value: 160,000,000 shares authorized; 51,177,202 and 52,529,850 shares issued and outstanding as of June 30, 2004 and December 31, 2003, respectively |
256,658 | 252,650 | ||||||
| Unearned compensation |
(2,187 | ) | (344 | ) | ||||
| Accumulated other comprehensive income (loss) |
(29,474 | ) | 209 | |||||
| Retained earnings |
398,119 | 406,250 | ||||||
| Total shareholders’ equity |
715,040 | 750,517 | ||||||
| Total liabilities and shareholders’ equity |
$ | 7,613,295 | $ | 7,601,423 | ||||
See notes to consolidated financial statements.
1
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) |
2004 |
2003 |
2004 |
2003 | ||||||||
| INTEREST INCOME |
||||||||||||
| Loans |
$ | 71,434 | $ | 81,139 | $ | 144,561 | $ | 162,016 | ||||
| Securities: |
||||||||||||
| Taxable |
20,037 | 19,921 | 41,674 | 43,710 | ||||||||
| Tax-exempt |
1,147 | 1,241 | 2,263 | 2,464 | ||||||||
| Total interest on securities |
21,184 | 21,162 | 43,937 | 46,174 | ||||||||
| Other interest income |
986 | 1,149 | 1,851 | 2,604 | ||||||||
| Total interest income |
93,604 | 103,450 | 190,349 | 210,794 | ||||||||
| INTEREST EXPENSE |
||||||||||||
| Deposits |
12,182 | 16,045 | 23,457 | 32,578 | ||||||||
| Long-term borrowings |
6,741 | 9,123 | 13,929 | 16,834 | ||||||||
| Other borrowings |
2,799 | 4,478 | 5,710 | 11,411 | ||||||||
| Total interest expense |
21,722 | 29,646 | 43,096 | 60,823 | ||||||||
| Net interest income |
71,882 | 73,804 | 147,253 | 149,971 | ||||||||
| Provision for loan and lease losses |
2,000 | 6,700 | 4,000 | 13,195 | ||||||||
| Net interest income after provision for loan and lease losses |
69,882 | 67,104 | 143,253 | 136,776 | ||||||||
| NON-INTEREST INCOME |
||||||||||||
| Insurance commissions and fees |
32,916 | 27,945 | 67,497 | 58,587 | ||||||||
| Rental revenues on operating leases |
2,665 | 1,234 | 4,982 | 2,111 | ||||||||
| Service charges and other fees |
2,624 | 2,995 | 5,247 | 5,826 | ||||||||
| Gain on sale of securities, net |
2,117 | 3,136 | 3,283 | 5,159 | ||||||||
| Loan and international banking fees |
2,026 | 2,421 | 4,000 | 4,459 | ||||||||
| Trust fees |
974 | 819 | 1,825 | 1,576 | ||||||||
| Gain on sale of loans |
635 | 364 | 1,035 | 1,907 | ||||||||
| ATM network revenue |
333 | 445 | 693 | 851 | ||||||||
| Other income |
2,335 | 2,962 | 5,536 | 6,609 | ||||||||
| Total non-interest income |
46,625 | 42,321 | 94,098 | 87,085 | ||||||||
| OPERATING EXPENSES |
||||||||||||
| Compensation and benefits |
45,626 | 42,001 | 95,210 | 87,433 | ||||||||
| Occupancy and equipment |
10,251 | 10,171 | 20,456 | 19,813 | ||||||||
| Amortization of intangibles |
2,072 | 1,671 | 4,143 | 3,342 | ||||||||
| Dividends paid on preferred stock of real estate investment trusts |
456 | 454 | 912 | 907 | ||||||||
| Other expenses |
18,670 | 17,949 | 36,398 | 34,093 | ||||||||
| Total operating expenses |
77,075 | 72,246 | 157,119 | 145,588 | ||||||||
| Income before provision for income taxes |
39,432 | 37,179 | 80,232 | 78,273 | ||||||||
| Provision for income taxes |
14,899 | 14,054 | 30,847 | 30,051 | ||||||||
| Net income |
$ | 24,533 | $ | 23,125 | $ | 49,385 | $ | 48,222 | ||||
| Net income per common share - basic |
$ | 0.45 | $ | 0.42 | $ | 0.89 | $ | 0.87 | ||||
| Net income per common share - diluted |
$ | 0.43 | $ | 0.41 | $ | 0.86 | $ | 0.86 | ||||
| Cash dividends per share of common stock |
$ | 0.1425 | $ | 0.1350 | $ | 0.2850 | $ | 0.2700 | ||||
See notes to consolidated financial statements.
2
GREATER BAY BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
| Three months ended June 30, |
Six months ended June 30, |
|||||||||||||||
| (Dollars in thousands) |
2004 |
2003 |
2004 |
2003 |
||||||||||||
| Net income |
$ | 24,533 | $ | 23,125 | $ | 49,385 | $ | 48,222 | ||||||||