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 June 30, 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) | |
(540) 869-6600
(Registrant’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 ¨
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: 4,890,423, $1.00 par value, as of August 9, 2004.
| PART I. FINANCIAL INFORMATION |
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| Item 1. Financial Statements |
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| The following financial statements are provided at the page numbers indicated. |
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| Consolidated Balance Sheets as of June 30, 2004 and December 31, 2003 |
3 | |
| 4 | ||
| 5 | ||
| Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2004 and 2003 |
6 | |
| 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 |
17-18 | |
| Item 4. Controls and Procedures |
18 | |
| Part II. OTHER INFORMATION |
19-20 | |
| 21 | ||
2
PREMIER COMMUNITY BANKSHARES, INC.
Consolidated Balance Sheets
(In Thousands, Except for Share Data)
| June 30, 2004 |
December 31, 2003 | |||||
| Assets: |
||||||
| Cash and due from banks |
$ | 25,622 | $ | 22,394 | ||
| Interest-bearing deposits in other banks |
164 | 208 | ||||
| Federal funds sold |
26,387 | 16,901 | ||||
| Securities available for sale, at fair value |
17,509 | 15,694 | ||||
| Securities held to maturity (fair value: June 30, 2004, $7,858; December 31, 2003, $8,207) |
8,203 | 8,357 | ||||
| Loans, net of allowance for loan losses of $4,786 June 30, 2004, $4,104 December 31, 2003 |
445,073 | 382,459 | ||||
| Bank premises and equipment, net |
11,723 | 10,962 | ||||
| Accrued interest receivable |
1,700 | 1,678 | ||||
| Other real estate |
132 | 67 | ||||
| Other assets |
6,307 | 4,179 | ||||
| $ | 542,820 | $ | 462,899 | |||
| Liabilities and Shareholders’ Equity: |
||||||
| Liabilities: |
||||||
| Deposits: |
||||||
| Non-interest bearing demand deposits |
$ | 73,269 | $ | 61,123 | ||
| Savings and interest-bearing demand deposits |
141,290 | 130,312 | ||||
| Time deposits |
240,406 | 205,910 | ||||
| Total deposits |
454,965 | 397,345 | ||||
| Federal Home Loan Bank advances |
30,000 | 10,000 | ||||
| Short-term borrowings |
533 | 541 | ||||
| Accounts payable and accrued expenses |
2,673 | 2,948 | ||||
| Capital lease payable |
183 | 188 | ||||
| Trust Preferred Capital Notes |
13,000 | 13,000 | ||||
| $ | 501,354 | $ | 424,022 | |||
| Shareholders’ Equity: |
||||||
| Preferred stock, Series A, 5% noncumulative, no par value; 1,000,000 shares authorized and unissued |
$ | 0 | $ | 0 | ||
| Common stock, $1 par value, 20,000,000 shares authorized June 30, 2004, 4,890,423 shares issued and outstanding; December 31, 2003, 4,881,084 shares issued and outstanding |
4,890 | 4,881 | ||||
| Capital surplus |
19,338 | 19,328 | ||||
| Retained earnings |
17,224 | 14,400 | ||||
| Accumulated other comprehensive income |
14 | 268 | ||||
| Total shareholders’ equity |
41,466 | 38,877 | ||||
| $ | 542,820 | $ | 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) |
(Unaudited) | |||||||||||
| For the Three Months Ended June 30, |
For the Six Months Ended June 30, | |||||||||||
| 2004 |
2003 |
2004 |
2003 | |||||||||
| Interest and dividend income: |
||||||||||||
| Interest and fees on loans |
$ | 7,177 | $ | 6,256 | $ | 13,999 | $ | 12,161 | ||||
| Interest on investment securities: |
||||||||||||
| Nontaxable |
47 | 55 | 94 | 111 | ||||||||
| Taxable |
71 | 79 | 141 | 166 | ||||||||
| Interest and dividends on securities available for sale: |
||||||||||||
| Nontaxable |
68 | 58 | 134 | 99 | ||||||||
| Taxable |
79 | 79 | 159 | 165 | ||||||||
| Dividends |
27 | 27 | 41 | 37 | ||||||||
| Interest on deposits in banks |
0 | 0 | 1 | 3 | ||||||||
| Interest on federal funds sold |
25 | 58 | 75 | 120 | ||||||||
| Total interest and dividend income |
$ | 7,494 | $ | 6,612 | $ | 14,644 | $ | 12,862 | ||||
| Interest expense: |
||||||||||||
| Interest on deposits |
$ | 1,839 | $ | 1,917 | $ | 3,623 | $ | 3,902 | ||||
| Interest on capital lease obligations |
3 | 4 | 7 | 8 | ||||||||
| Interest on borrowings |
269 | 178 | 517 | 339 | ||||||||
| Total interest expense |
$ | 2,111 | $ | 2,099 | $ | 4,147 | $ | 4,249 | ||||
| Net interest income |
$ | 5,383 | $ | 4,513 | $ | 10,497 | $ | 8,613 | ||||
| Provision for loan losses |
316 | 250 | 745 | 490 | ||||||||
| Net interest income after prov. for loan losses |
$ | 5,067 | $ | 4,263 | $ | 9,752 | $ | 8,123 | ||||
| Noninterest income: |
||||||||||||
| Service charges on deposit accounts |
$ | 809 | $ | 731 | $ | 1,530 | $ | 1,093 | ||||
| Commissions and fees |
228 | 251 | 375 | 445 | ||||||||
| Other |
135 | 77 | 302 | 123 | ||||||||
| Total noninterest income |
$ | 1,172 | $ | 1,059 | $ | 2,207 | $ | 1,661 | ||||
| Noninterest expense: |
||||||||||||
| Salaries and employee benefits |
$ | 2,166 | $ | 1,627 | $ | 4,170 | $ | 3,124 | ||||
| Net occupancy expense of premises |
228 | 146 | 436 | 304 | ||||||||
| Furniture and equipment |
272 | 163 | 507 | 381 | ||||||||
| Other |
1,381 | 1,281 | 2,715 | 2,219 | ||||||||
| Total noninterest expenses |
$ | 4,047 | $ | 3,217 | $ | 7,828 | $ | 6,028 | ||||
| Income before income taxes |
$ | 2,192 | $ | 2,105 | $ | 4,131 | $ | 3,756 | ||||
| Provision for income taxes |
689 | 659 | 1,307 | 1,206 | ||||||||
| Net income |
$ | 1,503 | $ | 1,446 | $ | 2,824 | $ | 2,550 | ||||
| Average shares: |
||||||||||||
| Basic |
4,887,088 | 4,562,584 | 4,885,455 | 4,561,692 | ||||||||
| Assuming dilution |
5,048,158 | 4,694,407 | 5,046,932 | 4,687,603 | ||||||||
| Earnings per common share: |
||||||||||||
| Basic |
$ | 0.31 | $ | 0.32 | $ | 0.58 | $ | 0.56 | ||||
| Assuming dilution |
0.30 | 0.31 | 0.56 | 0.54 | ||||||||
See Accompanying Notes to Consolidated Financial Statements
4
PREMIER COMMUNITY BANKSHARES, INC.
Consolidated Statements of Changes in Shareholders’ Equity
For the Six Months Ended June 30, 2004 and 2003
(In Thousands, Except for Share Data)
(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 |
2,550 | 2,550 | 2,550 | |||||||||||||||
| Other Comprehensive Income, unrealized gain on available for sale securities (net of tax $86) |
169 | 169 | 169 | |||||||||||||||
| Total comprehensive income |
$ | 2,719 | ||||||||||||||||
| Issuance of common stock- |
||||||||||||||||||
| exercise of stock options (7,100 shares) |
7 | 43 | 50 | |||||||||||||||
| Balances – June 30, 2003 |
$ | 4,562 | $ | 15,020 | $ | 12,573 | $ | 438 | $ | 32,593 | ||||||||
| 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 |
2,824 | $ | 2,824 | 2,824 | |||||||||||||||||||
| Other Comprehensive Income (Loss), unrealized loss on available for sale securities (net of tax $132) |
(254 | ) | (254 | ) | (254 | ) | |||||||||||||||||
| Total comprehensive income |
$ | 2,570 | |||||||||||||||||||||