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 September 30, 2005

 

 

 

OR

 

 

 

o

 

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  0-14289

 

GREENE COUNTY BANCSHARES, INC.

(Exact name of registrant as specified in its charter)

 

Tennessee

 

62-1222567

(State or other jurisdiction of

 

(I.R.S. Employer Identification No.)

incorporation or organization)

 

 

 

 

 

100 North Main Street, Greeneville, Tennessee

 

37743-4992

(Address of principal executive offices)

 

(Zip Code)

 

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

 

Registrant’s telephone number, including area code:  (423) 639-5111

 

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  ý  NO  o

 

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act.)  YES  ý  NO  o

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)  YES  o  NO  ý

 

As of November 2, 2005, the number of shares outstanding of the issuer’s common stock was: 9,760,906

 

 



 

PART 1 – FINANCIAL INFORMATION

 

ITEM 1.                 FINANCIAL STATEMENTS

 

The unaudited condensed consolidated financial statements of the Registrant and its wholly owned subsidiaries are as follows:

 

Condensed Consolidated Balance Sheets – September 30, 2005 and December 31, 2004.

 

 

 

Condensed Consolidated Statements of Income and Comprehensive Income - For the three and nine months ended September 30, 2005 and 2004.

 

 

 

Condensed Consolidated Statement of Shareholders’ Equity – For the nine months ended September 30, 2005.

 

 

 

Condensed Consolidated Statements of Cash Flows - For the nine months ended September 30, 2005 and 2004.

 

 

 

Notes to Condensed Consolidated Financial Statements.

 

 

1



 

GREENE COUNTY BANCSHARES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30, 2005 and December 31, 2004

(Amounts in thousands, except share and per share data)

 

 

 

September 30,
2005

 

December 31,
2004*

 

 

 

(Unaudited)

 

 

 

ASSETS

 

 

 

 

 

Cash and due from banks

 

$

35,464

 

$

30,727

 

Federal funds sold

 

10,857

 

39,921

 

Securities available for sale

 

53,778

 

35,318

 

Securities held to maturity (with a market value of $3,394 and $4,506)

 

3,380

 

4,381

 

FHLB, Bankers Bank and other stock, at cost

 

6,407

 

6,211

 

Loans held for sale

 

4,260

 

1,151

 

Loans

 

1,215,072

 

1,046,867

 

Less: Allowance for loan losses

 

(17,640

)

(15,721

)

Net loans

 

1,197,432

 

1,031,146

 

Premises and equipment, net

 

36,311

 

35,591

 

Goodwill and other intangible assets

 

23,131

 

23,695

 

Other assets

 

34,560

 

25,262

 

Total assets

 

$

1,405,580

 

$

1,233,403

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

Liabilities

 

 

 

 

 

Deposits

 

$

1,134,864

 

$

998,022

 

Repurchase agreements

 

11,393

 

13,868

 

FHLB advances and notes payable

 

70,240

 

85,222

 

Subordinated debentures

 

13,403

 

10,310

 

Accrued interest payable and other liabilities

 

15,373

 

17,263

 

Total liabilities

 

1,245,273

 

1,124,685

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

Common stock: $2 par, 15,000,000 shares authorized, 9,485,949 and 7,647,740 shares outstanding

 

18,972

 

15,296

 

Additional paid-in capital

 

64,634

 

24,160

 

Retained earnings

 

76,860

 

69,289

 

Accumulated other comprehensive loss

 

(159

)

(27

)

Total shareholders’ equity

 

160,307

 

108,718

 

 

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

1,405,580

 

$

1,233,403

 

 


* Derived from audited consolidated financial statements.

 

See accompanying notes.

 

2



 

GREENE COUNTY BANCSHARES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

Three and Nine Months Ended September 30, 2005 and 2004

(Amounts in thousands, except share and per share data)

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

 

2005

 

2004

 

2005

 

2004

 

 

 

(Unaudited)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

 

 

 

 

 

 

 

Interest and fees on loans

 

$

21,335

 

$

15,796

 

$

59,265

 

$

46,843

 

Investment securities

 

626

 

344

 

1,691

 

1,069

 

Federal funds sold and interest-earning deposits

 

154

 

2

 

597

 

29

 

 

 

22,115

 

16,142

 

61,553

 

47,941

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

 

 

 

 

 

 

 

Deposits

 

6,285

 

2,665

 

16,048

 

8,857

 

Borrowings

 

1,282

 

1,065

 

3,558

 

2,809

 

 

 

7,567

 

3,730

 

19,606

 

11,666

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

14,548

 

12,412

 

41,947

 

36,275

 

 

 

 

 

 

 

 

 

 

 

Provision for loan losses

 

1,704

 

1,062

 

4,386

 

3,747

 

 

 

 

 

 

 

 

 

 

 

Net interest income after provision for loan losses

 

12,844

 

11,350

 

37,561

 

32,528

 

 

 

 

 

 

 

 

 

 

 

Noninterest income

 

 

 

 

 

 

 

 

 

Service charges and fees

 

3,159

 

2,436

 

8,137

 

7,349

 

Other

 

637

 

584

 

2,298

 

1,835

 

 

 

3,796

 

3,020

 

10,435

 

9,184

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

5,366

 

4,800

 

15,710

 

13,971

 

Occupancy and furniture and equipment expense

 

1,821

 

1,494

 

5,334

 

4,445

 

Other

 

3,504

 

2,917

 

10,344

 

8,320

 

 

 

10,691

 

9,211

 

31,388

 

26,736

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

5,949

 

5,159

 

16,608

 

14,976

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

2,273

 

1,946

 

6,283

 

5,636

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

3,676

 

$

3,213

 

$

10,325

 

$

9,340

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income

 

$

3,639

 

$

3,418

 

$

10,193

 

$

9,226

 

 

 

 

 

 

 

 

 

 

 

Per share of common stock:

 

 

 

 

 

 

 

 

 

Basic earnings

 

$

0.48

 

$

0.42

 

$

1.35

 

$

1.22

 

Diluted earnings

 

$

0.47

 

$

0.42

 

$

1.33

 

$

1.21

 

Dividends

 

$

0.12

 

$

0.12

 

$

0.36

 

$

0.36

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

7,710,871

 

7,644,544

 

7,670,502

 

7,657,078

 

Diluted

 

7,805,458

 

7,710,335

 

7,765,343

 

7,724,756

 

 

See accompanying notes.

 

3



 

GREENE COUNTY BANCSHARES, INC.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

For the Nine Months Ended September 30, 2005

(Amounts in thousands, except share and per share data)

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Other

 

Total

 

 

 

 

 

Additional

 

 

 

Compre-

 

Share-

 

 

 

Common

 

Paid-in

 

Retained

 

hensive

 

holders’

 

 

 

Stock

 

Capital

 

Earnings

 

Loss

 

Equity

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, January 1, 2005

 

$

15,296

 

$

24,160

 

$

69,289

 

$

(27

)

$

108,718

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of 5,166 shares under stock option plan

 

10

 

67

 

 

 

77

 

Dividends paid ($.36 per share)

 

 

 

(2,754

)

 

(2,754

)

Issuance of 1,833,043 shares in public offering

 

3,666

 

40,407

 

 

 

44,073

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

10,325

 

 

10,325

 

Change in unrealized gains (losses), net of taxes

 

 

 

 

(132

)

(132

)

Total comprehensive income

 

 

 

 

 

 

 

 

 

10,193

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, September 30, 2005

 

$

18,972

 

$

64,634

 

$

76,860

 

$

(159

)

$

160,307

 

 

See accompanying notes.

 

4



 

GREENE COUNTY BANCSHARES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended September 30, 2005 and 2004

(Amounts in thousands)

 

 

 

September 30,

 

September 30,

 

 

 

2005

 

2004

 

 

 

(Unaudited)

 

Cash flows from operating activities

 

 

 

 

 

Net income

 

$

10,325

 

$

9,340

 

Adjustments to reconcile net income to net cash provided from operating activities

 

 

 

 

 

Provision for loan losses

 

4,386

 

3,747

 

Depreciation and amortization

 

2,673

 

2,297

 

Security amortization and accretion, net

 

23

 

83

 

FHLB stock dividends

 

(196

)

(162

)

Net gain on sale of mortgage loans

 

(339

)

(368

)

Originations of mortgage loans held for sale

 

(29,234

)

(36,085

)

Proceeds from sales of mortgage loans

 

26,463

 

38,134

 

Increase in cash surrender value of life insurance

 

(426

)

(358

)

Net losses from sales of fixed assets

 

20

 

47

 

Net loss on OREO and repossessed assets

 

66

 

216

 

Deferred tax (benefit) expense

 

(1,227

)

1,947

 

Net changes:

 

 

 

 

 

Other assets

 

(1,962

)

252

 

Accrued interest payable and other liabilities

 

(1,891

)

(643

)

Net cash provided from operating activities

 

8,681

 

18,447

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

Purchase of securities available for sale

 

(21,310

)

(5,000

)

Proceeds from maturities of securities held for sale

 

2,611

 

10,585

 

Proceeds from maturities of securities held to maturity

 

1,003

 

903

 

Purchase of life insurance

 

(3,657

)

(2,500

)

Net change in loans

 

(174,770

)

(36,005

)

Proceeds from sale of other real estate

 

2,088

 

3,150

 

Improvements to other real estate

 

 

(5

)

Proceeds from sale of fixed assets

 

8

 

20

 

Premises and equipment expenditures

 

(2,857

)

(2,886

)

Net cash used in investing activities

 

(196,884

)

(31,738

)

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

Net change in deposits

 

136,842

 

(29,027

)

Net change in repurchase agreements

 

(2,475

)

(2,426

)

Proceeds from notes payable

 

214,757

 

134,950

 

Proceeds from subordinated debentures

 

3,093

 

 

Repayments of notes payable

 

(229,737

)

(97,224

)

Dividends paid

 

(2,754

)

(2,754

)

Proceeds from issuance of common stock

 

44,150

 

141

 

Repurchase of common stock

 

 

(538

)

Net cash provided from financing activities

 

163,876

 

3,122

 

Net change in cash and cash equivalents

 

(24,327

)

(10,169

)

Cash and cash equivalents, beginning of year

 

70,648

 

41,341

 

Cash and cash equivalents, end of period

 

$

46,321

 

$

31,172

 

Supplemental disclosures – cash and noncash

 

 

 

 

 

Interest paid

 

$

19,507

 

$

12,585

 

Income taxes paid

 

4,951

 

3,527

 

Loans converted to other real estate

 

4,816

 

3,817

 

Unrealized loss on available for sale securities, net of tax

 

(132

)

(114

)

 

See accompanying notes.

 

5



 

GREENE COUNTY BANCSHARES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2005

Unaudited

(Amounts in thousands, except share and per share data)

 

NOTE 1 – PRINCIPLES OF CONSOLIDATION

 

The accompanying unaudited condensed consolidated financial statements of Greene County Bancshares, Inc. (the “Company”) and its wholly owned subsidiary, Greene County Bank (the “Bank”), have been prepared in accordance with accounting principles generally accepted in the United States of America for interim information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all the information and disclosures required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2005 are not necessarily indicative of the results that may be expected for the year ending December 31, 2005. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2004. Certain amounts from prior period financial statements have been reclassified to conform to the current year’s presentation.  These reclassifications had no effect on net income or shareholders’ equity as previously reported.

 

NOTE 2 – STOCK COMPENSATION

 

Employee compensation expense under stock option plans is reported if options are granted below market price at grant date, whereas expense for options granted at market price are reported on a pro forma basis.  Pro forma disclosures of net income and earnings per share are shown below using the fair value method of Statement of Financial Accounting Standards (“SFAS”) No. 123(R) , “Share-Based Payment” (“SFAS No. 123(R)”) to measure expense for options using the Black-Scholes option pricing model to estimate fair value.

 

The Company maintains a 2004 Long-Term Incentive Plan, pursuant to which 500,000 shares of the Company’s common stock have been reserved for issuance to directors and employees of the Company and the Bank.  The plan provides for the issuance of awards in the form of stock options, stock appreciation rights, restricted shares, restricted share units, deferred share units and performance awards.  Stock options granted under the plan are typically granted at exercise prices equal to the fair market value of the Company’s common stock on the date of grant and typically have terms of ten years and vest at an annual rate of 20%.

 

The following disclosures show the effect on income and earnings per share had the options’ fair value been recorded using an option pricing model.

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

 

2005

 

2004

 

2005

 

2004

 

Net income:

 

 

 

 

 

 

 

 

 

As reported

 

$

3,676

 

$

3,213

 

$

10,325

 

$

9,340

 

Add: Stock-based employee compensation expense included in reported net income, net of related tax effects

 

4

 

(8

)

11

 

11

 

Deduct: Total stock-based compensation expense determined under fair value-based method for all awards, net of tax

 

(40

)

(30

)

(170

)

(124

)

Pro forma

 

$

3,640

 

$

3 ,175

 

$

10,166

 

$

9 ,227

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

As reported

 

$

0.48

 

$

0.42

 

$

1.35

 

$

1.22

 

Pro forma

 

$

0.48

 

$

0.42

 

$

1.33

 

$

1.20

 

Diluted earnings per common share:

 

 

 

 

 

 

 

 

 

As reported

 

$

0.47

 

$

0.42

 

$

1.33

 

$

1.21

 

Pro forma

 

$

0.47

 

$

0.41

 

$

1.31

 

$

1.19

 

 

6



 

NOTE 3 – LOANS (NET)

 

Loans at September 30, 2005 and December 31, 2004 were as follows:

 

 

 

September 30,

 

December 31,

 

 

 

2005

 

2004

 

 

 

 

 

 

 

Commercial

 

$

224,021

 

$

165,975

 

Commercial real estate

 

612,731

 

484,088

 

Residential real estate

 

302,693

 

319,713

 

Consumer

 

81,747

 

82,532

 

Other

 

3,707

 

4,989

 

 

 

1,224,899

 

1,057,297

 

 

 

 

 

 

 

Less: Unearned interest income

 

(9,827

)

(10,430

)

Allowance for loan losses

 

(17,640

)

(15,721

)

 

 

 

 

 

 

Net Loans

 

$

1,197,432

 

$

1,031,146

 

 

Transactions in the allowance for loan losses and certain information about nonaccrual loans and loans 90 days past due but still accruing interest for the nine months ended September 30, 2005 and twelve months ended December 31, 2004 were as follows:

 

 

 

September 30,

 

December 31,

 

 

 

2005

 

2004

 

 

 

 

 

 

 

Balance at beginning of year

 

$

15,721

 

$

14,564

 

Add (deduct):

 

 

 

 

 

Reserve acquired in acquisition

 

 

363

 

Provision

 

4,386

 

5,836

 

Loans charged off

 

(3,806

)

(6,980

)

Recoveries of loans charged off

 

1,339

 

1,938

 

Ending balance

 

$

17,640

 

$

15,721

 

 

 

 

September 30,

 

December 31,

 

 

 

2005

 

2004

 

 

 

 

 

 

 

Loans past due 90 days still on accrual

 

$

1,077

 

$

664

 

Nonaccrual loans

 

6,023

 

6,242

 

Total

 

$

7,100

 

$

6,906

 

 

7



 

NOTE 4 – EARNINGS PER SHARE OF COMMON STOCK

 

Basic earnings per share (EPS) of common stock is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share of common stock is computed by dividing net income by the weighted average number of common shares and potential common shares outstanding during the period. Stock options are regarded as potential common shares. Potential common shares are computed using the treasury stock method. For the three and nine months ended September 30, 2005, 60,185 options are excluded from the effect of dilutive securities because they are anti-dilutive; 72,155 options are similarly excluded from the effect of dilutive securities for the three and nine months ended September 30, 2004.

 

The following is a reconciliation of the numerators and denominators used in the basic and diluted earnings per share computations for the three and nine months ended September 30, 2005 and 2004:

 

 

 

Three Months Ended September 30,

 

 

 

2005

 

2004

 

 

 

Income

 

Shares

 

Income

 

Shares

 

 

 

(Numerator)

 

(Denominator)

 

(Numerator)

 

(Denominator)

 

 

 

 

 

 

 

 

 

 

 

Basic EPS

 

 

 

 

 

 

 

 

 

Income available to common shareholders

 

$

3,676

 

7,710,871

 

$

3,213

 

7,644,544

 

 

 

 

 

 

 

 

 

 

 

Effect of dilutive securities

 

 

 

 

 

 

 

 

 

Stock options outstanding

 

 

94,587

 

 

65,791

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS

 

 

 

 

 

 

 

 

 

Income available to common shareholders plus assumed conversions

 

$

3,676

 

7,805,458

 

$

3,213

 

7,710,335

 

 

 

 

Nine Months Ended September 30,

 

 

 

2005

 

2004

 

 

 

Income

 

Shares

 

Income

 

Shares

 

 

 

(Numerator)

 

(Denominator)

 

(Numerator)

 

(Denominator)

 

 

 

 

 

 

 

 

 

 

 

Basic EPS

 

 

 

 

 

 

 

 

 

Income available to common shareholders

 

$

10,325

 

7,670,502

 

$

9,340

 

7,657,078

 

 

 

 

 

 

 

 

 

 

 

Effect of dilutive securities

 

 

 

 

 

 

 

 

 

Stock options outstanding

 

 

94,841

 

 

67,678

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS

 

 

 

 

 

 

 

 

 

Income available to common shareholders plus assumed conversions

 

$

10,325

 

7,765,343

 

$

9,340

 

7,724,756

 

 

8



 

NOTE 5 – SEGMENT INFORMATION

 

The Company’s operating segments include banking, mortgage banking, consumer finance, subprime automobile lending and title insurance. The reportable segments are determined by the products and services offered, and internal reporting. Loans, investments, and deposits provide the revenues in the banking operation; loans and fees provide the revenues in consumer finance, mortgage banking, and subprime lending; and insurance commissions provide revenues for the title insurance company. Consumer finance, subprime automobile lending and title insurance do not meet the quantitative threshold on an individual basis, and are therefore shown below in “Other Segments”. Mortgage banking operations are included in “Bank”.   All operations are domestic.

 

Segment performance is evaluated using net interest income and noninterest income. Income taxes are allocated based on income before income taxes, and indirect expenses (includes management fees) are allocated based on time spent for each segment. Transactions among segments are made at fair value. Information reported internally for performance assessment follows.

 

Three months ended September 30, 2005

 

Bank

 

Other
Segments

 

Holding
Company

 

Eliminations

 

Totals

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income (expense)

 

$

13,366

 

$

1,410

 

$

(228

)

$

 

$

14,548

 

Provision for loan losses

 

1,408

 

296

 

 

 

1,704

 

Noninterest income

 

3,468

 

524

 

8

 

(204

)

3,796

 

Noninterest expense

 

9,672

 

1,072

 

151

 

(204

)

10,691

 

Income tax expense (benefit)

 

2,194

 

222

 

(143

)

 

2,273

 

Segment profit

 

$

3,560

 

$

344

 

$

(228

)

$

 

$

3,676

 

Segment assets at September 30, 2005

 

$

1,363,774

 

$

30,229

 

$

11,577

 

$

 

$

1,405,580

 

 

Three months ended September 30, 2004

 

Bank

 

Other
Segments

 

Holding
Company

 

Eliminations

 

Totals

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income (expense)

 

$

11,048

 

$

1,507

 

$

(143

)

$

 

$

12,412

 

Provision for loan losses

 

838

 

224

 

 

 

1,062

 

Noninterest income

 

2,830

 

384

 

4

 

(198

)

3,020

 

Noninterest expense

 

8,130

 

1,131

 

148

 

(198

)

9,211

 

Income tax expense (benefit)

 

1,870

 

194

 

(118

)

 

1,946

 

Segment profit

 

$

3,040

 

$

342

 

$

(169

)

$

 

$

3,213

 

Segment assets at September 30, 2004

 

$

1,087,230

 

$

30,978

 

$

2,020

 

$

 

$

1,120,228

 

 

Nine months ended September 30, 2005

 

Bank

 

Other
Segments

 

Holding
Company

 

Eliminations

 

Totals

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income (expense)

 

$

38,053

 

$

4,434

 

$

(540

)

$

 

$

41,947

 

Provision for loan losses

 

3,435

 

951

 

 

 

4,386

 

Noninterest income

 

9,411

 

1,442

 

197

 

(615

)

10,435

 

Noninterest expense

 

28,299

 

3,256

 

448

 

(615

)

31,388

 

Income tax expense (benefit)

 

5,983

 

655

 

(355

)

 

6,283

 

Segment profit

 

$

9,747

 

$

1,014

 

$

(436

)

$

 

$

10,325

 

 

Nine months ended September 30, 2004

 

Bank

 

Other
Segments

 

Holding
Company

 

Eliminations

 

Totals

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income (expense)

 

$

31,946

 

$

4,698

 

$

(369

)

$

 

$

36,275

 

Provision for loan losses

 

2,674

 

1,073

 

 

 

3,747

 

Noninterest income

 

8,409

 

1,175

 

178

 

(578

)

9,184

 

Noninterest expense

 

23,337

 

3,411

 

566

 

(578

)

26,736

 

Income tax expense (benefit)

 

5,447

 

527

 

(338

)

 

5,636

 

Segment profit

 

$

8,897

 

$

862

 

$

(419

)

$

 

$

9,340

 

 

9



 

Asset Quality Ratios

 

 

 

 

Bank

 

Other

 

Total

 

As of and for the period ended September 30, 2005

 

 

 

 

 

 

 

Nonperforming loans as a percentage of total loans net of unearned income

 

0.54

%

1.69

%

0.58

%

Nonperforming assets as a percentage of total assets

 

0.70

%

1.85

%

0.75

%

Allowance for loan losses as a percentage of total loans net of unearned income

 

1.26

%

7.92

%

1.45

%

Allowance for loan losses as a percentage of nonperforming assets

 

154.79

%

311.17

%

166.27

%

Annualized net charge-offs to average total loans, net of unearned income

 

0.17

%

4.21

%

0.29

%

 

 

 

Bank

 

Other

 

Total

 

As of and for the period ended September 30, 2004

 

 

 

 

 

 

 

Nonperforming loans as a percentage of total loans net of unearned income

 

0.77

%

2.24

%

0.83

%

Nonperforming assets as a percentage of total assets

 

1.01

%

3.18

%

1.10

%

Allowance for loan losses as a percentage of total loans net unearned income

 

1.25

%

8.28

%

1.51

%

Allowance for loan losses as a percentage of nonperforming assets

 

108.50

%

249.81

%

120.52

%

Annualized net charge-offs to average total loans, net of unearned income

 

0.30

%

5.31

%

0.47

%

 

 

 

Bank

 

Other

 

Total

 

As of and for the year ended December 31, 2004

 

 

 

 

 

 

 

Nonperforming loans as a percentage of total loans net of unearned income

 

0.60

%

2.22

%

0.66

%

Nonperforming assets as a percentage of total assets

 

0.61

%

2.90

%

0.69

%

Allowance for loan losses as a percentage of total loans net unearned income

 

1.27

%

7.77

%

1.50

%

Allowance for loan losses as a percentage of nonperforming assets

 

176.54

%

255.69

%

185.56

%

Net charge-offs to average total loans, net of unearned income

 

0.35

%

5.04

%

0.51

%

 

10



 

NOTE 6 – GOODWILL AND OTHER INTANGIBLE ASSETS

 

Goodwill

 

Goodwill was no longer amortized starting in 2002; however, it is periodically evaluated for impairment and no impairment was recognized during the second quarter of 2005.  Goodwill had a carrying amount of $18,282 at September 30, 2005 and December 31, 2004.

 

Core deposit and other intangibles

 

Other intangible assets consist of core deposit intangibles arising from whole bank and branch acquisitions.  They are initially measured at fair value and then are amortized on a straight-line method over their estimated useful lives, which is 10 years.

 

Core deposit intangibles had a gross carrying amount of $7,320 for the period ended September 30, 2005 and the year ended December 31, 2004 and accumulated amortization of $2,471 and $1,907 for the same periods, respectively.  Aggregate amortization expense for the three and nine months ended September 30, 2005 was $188 and $564, respectively, as compared to $156 and $462, respectively, for the same periods in 2004. Annual estimated amortization expense for the next five years is:

 

2005

 

$

752

 

2006

 

642

 

2007

 

642

 

2008

 

642

 

2009

 

642

 

Total

 

$

3,320

 

 

NOTE 7 – SUBORDINATED DEBENTURES

 

On June 28, 2005, the Company formed Greene County Capital Trust II (“GC Trust II”).  GC Trust II issued $3,000 of variable rate trust preferred securities as part of a pooled offering of such securities.  The Company issued $3,093 of subordinated debentures to the GC Trust II in exchange for the proceeds of the offering, which debentures represent the sole asset of GC Trust.  The debentures pay interest quarterly at the three-month LIBOR plus 1.68% adjusted quarterly.  The Company may redeem the subordinated debentures, in whole or in part, beginning July 2010 at a price of 100% of face value.  The subordinated debentures must be redeemed no later than 2035.

 

In September 2003, the Company formed Greene County Capital Trust I (“GC Trust”).  GC Trust issued $10,000 of variable rate trust preferred securities as part of a pooled offering of such securities.  The Company issued $10,310 of subordinated debentures to the GC Trust in exchange for the proceeds of the offering, which debentures represent the sole asset of GC Trust.  The debentures pay interest quarterly at the three-month LIBOR plus 2.85% adjusted quarterly.  The Company may redeem the subordinated debentures, in whole or in part, beginning October 2008 at a price of 100% of face value.  The subordinated debentures must be redeemed no later than 2033.

 

In accordance with FASB Interpretation No. 46R, GC Trust and GC Trust II are not consolidated with the Company.  Accordingly, the Company does not report the securities issued by GC Trust and GC Trust II as liabilities, and instead reports as liabilities the subordinated debentures issued by the Company and held by GC Trust and GC Trust II.  However, the Company has fully and unconditionally guaranteed the repayment of the variable rate trust

 

11



 

preferred securities.  These trust preferred securities currently qualify as Tier 1 capital for regulatory capital requirements of the Company.

 

NOTE 8 – REVOLVING CREDIT AGREEMENT

 

On August 30, 2005, the Company entered into and became obligated under a Revolving Credit Agreement (the “Credit Agreement”) by and between the Company and SunTrust Bank (“SunTrust”) pursuant to which SunTrust has agreed to loan the Company up to $35,000, with such maximum amount available under the Credit Agreement being reduced to $15,000 after November 30, 2005 (the “Loan”).

 

SunTrust’s obligation to make the Loan to the Company terminates on August 29, 2006, unless the Loan is extended or earlier terminated, in accordance with the terms of the Credit Agreement. Advances under the Loan will bear interest, at the Company’s discretion, at a rate of one, two, three or six month LIBOR plus 1.75% per annum from August 30, 2005 to November 30, 2005 and at a rate of one, two, three or six month LIBOR plus 1.25% per annum from November 30, 2005 to the end of the Loan’s term.  The Company also must pay SunTrust a commitment fee equal to 0.15% per annum on the average daily amount of the Loan that has not been borrowed by the Company.

 

The Loan is secured by SunTrust’s lien and security interest in all of the outstanding common stock of the Bank pursuant to the terms of a Security Agreement entered into by and between the Company and SunTrust dated as of August 30, 2005.  The Credit Agreement contains certain financial covenants that require the Company and the Bank to, among other things, (i) maintain a ratio of tangible net worth to total tangible assets of at least 4.5% from August 30, 2005 to November 30, 2005 and of at least 6.5% thereafter; (ii) achieve a return on total average assets of not less than 0.80% for each fiscal quarter and the previous three fiscal quarters; (iii) keep its ratio of nonperforming assets to total loans and other real estate owned below 1.75%; and (iv) achieve certain capital ratios.

 

NOTE 9 – SUBSEQUENT EVENT

 

On October 7, 2005 the Bank completed the purchase of five branch offices in Clarksville, Tennessee, from Old National Bank, Evansville, Indiana.  In the acquisition, the Bank assumed a total of approximately $173,000 in deposits and acquired approximately $115,000 in loans outstanding and $11,000 in fixed assets, including buildings and equipment.

 

12



 

ITEM 2.                             MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Forward-Looking Statements

 

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  Forward-looking statements, which are based on assumptions and estimates and describe our future plans, strategies and expectations, are generally identifiable by the use of the words “anticipate,” “will,” “believe,” “may,” “could,” “would,” “should,” “estimate,” “expect,” “intend,” “seek,” or similar expressions.  These forward-looking statements may address, among other things, the Company’s business plans, objectives or goals for future operations or expansion, the Company’s forecasted revenues, earnings, assets or other measures of performance, or estimates of risks and future costs and benefits.  Although these statements reflect the Company’s good faith belief based on current expectations, estimates and projections, they are subject to risks, uncertainties and assumptions and are not guarantees of future performance.  Important factors that could cause actual results to differ materially from the forward-looking statements we make in this Quarterly Report on Form 10-Q include, but are not limited to, the following:

 

                                          the Company’s potential growth, including its entrance or expansion into new markets, and the need for sufficient capital to support that growth;

 

                                          changes in the quality or composition of the Company’s loan or investment portfolios, including adverse developments in borrower industries or in the repayment ability of individual borrowers or issuers;

 

                                          an insufficient allowance for loan losses as a result of inaccurate assumptions;

 

                                          changes in interest rates, yield curves and interest rate spread relationships;

 

                                          the strength of the economies in the Company’s target market areas, as well as general economic, market or business conditions;

 

                                          changes in demand for loan products and financial services;

 

                                          increased competition or market concentration;

 

                                          concentration of credit exposure;

 

                                          new state or federal legislation, regulations, or the initiation or outcome of litigation; and

 

                                          other circumstances, many of which may be beyond the Company’s control.

 

If one or more of these risks or uncertainties materialize, or if any of the Company’s underlying assumptions prove incorrect, the Company’s actual results, performance or achievements may vary materially from future results, performance or achievements expressed or implied by these forward-looking statements.  All forward-looking statements included in this Quarterly Report on Form 10-Q are expressly qualified in their entirety by the cautionary statements in this section.  The Company does not intend to and assumes no responsibility for updating or revising any forward-looking statements contained in or incorporated by reference into this Quarterly Report on Form 10-Q, whether as a result of new information, future events or otherwise.

 

13



 

Presentation of Amounts

 

All dollar amounts set forth below, other than per-share amounts, are in thousands unless otherwise noted.

 

General

 

Greene County Bancshares, Inc. (the “Company”) is the bank holding company for Greene County Bank (the “Bank”), a Tennessee-chartered commercial bank that conducts the principal business of the Company.  The Company is the second largest bank holding company headquartered in Tennessee.  The Bank currently maintains a main office in Greeneville, Tennessee and 42 full-service bank branches primarily in East and Middle Tennessee.  In addition to its commercial banking operations, the Bank conducts separate businesses through its three wholly-owned subsidiaries: Superior Financial Services, Inc. (“Superior Financial”), a consumer finance company; GCB Acceptance Corporation (“GCB Acceptance”), a subprime automobile lending company; and Fairway Title Co., a title company formed in 1998. The Bank also operates a mortgage banking operation which has its main office in Knox County, Tennessee, and a trust and money management function doing business as Presidents Trust from an office in Wilson County, Tennessee.

 

Growth Strategy

 

The Company expects that, over the intermediate term, its growth from mergers and acquisitions, including acquisitions of both entire financial institutions and selected branches of financial institutions, will continue.  De novo branching is also expected to be a method of growth, particularly in high-growth and other demographically desirable markets.  Since 2003, the Company has focused on bringing its community-focused style of banking to Middle Tennessee, including the Nashville metropolitan statistical area, and on continuing its growth in the Knoxville metropolitan statistical area.

 

On November 21, 2003, the Company entered the Middle Tennessee market by completing its acquisition of Gallatin, Tennessee-based Independent Bankshares Corporation (“IBC”).  IBC was the bank holding company for First Independent Bank, which had four offices in Gallatin and Hendersonville, Tennessee, and Rutherford Bank and Trust, with three offices in Murfreesboro and Smyrna, Tennessee.  First Independent Bank and Rutherford Bank and Trust were subsequently merged with the Bank, with the Bank as the surviving entity.

 

On November 15, 2004 the Company established banking operations in Nashville, Tennessee, in Davidson County, with the opening of a full-service branch operating under the name of Middle Tennessee Bank & Trust.  This new branch, like all of the Bank’s bank brands, operates within the Bank’s structure.  This new branch expanded the Company’s presence in the Middle Tennessee market and helped fill in the market between Sumner and Rutherford Counties.  In 2005, Middle Tennessee Bank & Trust has opened a new branch in Williamson County, Tennessee and expects to open another new branch in Davidson County, Tennessee in the fourth quarter.

 

The Company opened a new branch in Knoxville, Tennessee in late 2003 and expects to open its second branch in that city during the first-half of 2006.

 

On December 10, 2004 the Company purchased three full-service branches from National Bank of Commerce located in Lawrence County Tennessee.  This purchase (“NBC transaction”) adds to the Bank’s presence in Middle Tennessee.

 

On October 7, 2005, the Company purchased five bank branches in Clarksville, Tennessee from Old National Bank, Evansville, Indiana. (the “Clarksville transaction”)  In the acquisition, the Bank assumed a total of approximately $173,000 in deposits and acquired approximately $115,000 in loans outstanding and $11,000 in fixed assets, including buildings and equipment.

 

Overview

 

The Company’s results of operations for the third quarter and the nine month period ended September 30, 2005, compared to the same periods in 2004, reflected an increase in interest income due primarily to loan growth as a result of the Company’s expansion initiatives, offset, in part, by an increase in interest expense as a result of increased deposit levels resulting from its expansion efforts and competitive deposit pricing pressures.

 

14



 

The increase in net interest income was also offset, in part, by an increase in noninterest expense which was reflective of the Company’s expansion efforts into Middle Tennessee and the Company’s branch expansion in its Knoxville, Tennessee market as well as expenses associated with the establishment of the Company’s High Performance Checking Program.  The Company’s provision for loan losses also increased, particularly in the three months ended September 30, 2005 as compared to the same period in 2004, reflective primarily of the Company’s loan growth.  Noninterest income also increased for both the three and nine months ended September 30, 2005 as compared to the comparable periods in 2004 as a result of increased deposit service charges and Non-Sufficient Funds (“NSF”) fees resulting from the Company’s expansion efforts and recently introduced High Performance Checking Program.

 

The Company’s net interest margin for the three and nine months ended September 30, 2005 continued to experience compression, primarily as a result of deposit and other liability pricing pressures that the Company continued to experience as it aggressively attempted to support its loan growth.  The Company’s net interest margin also experienced compression as a result of the Company’s competitive pricing of its loans, particularly in its Middle Tennessee market, and its emphasis on originating more traditional loans while controlling the growth of its higher-yielding subprime loans at its non-bank subsidiaries.  The Company believes that it will continue to experience compression in its net interest margin for the remainder of 2005 as a result of loan and deposit pricing pressures.

 

At September 30, 2005, the Company had total consolidated assets of approximately $1,405,580, total consolidated deposits of approximately $1,134,864, total consolidated net loans, net of unearned income and allowance for loan losses, of approximately $1,201,692, and total consolidated shareholders’ equity of approximately $160,307.  The Company’s annualized return on average shareholders’ equity for the three and nine months ended September 30, 2005, was 12.52% and 12.08%, respectively, and its return on average total assets for the same periods was 1.07% and 1.04%, respectively.  The Company expects that its total assets, total consolidated deposits, total consolidated net loans and total shareholders’ equity will continue to increase over the remainder of 2005 as a result of its expansion efforts, including its branch expansions in the Middle Tennessee, Knoxville, and also the Clarksville transaction.

 

On September 28, 2005, the Company consummated the sale of 1,833,043 shares of its common stock in a public offering in which it received proceeds, after deducting the underwriting discount and the expenses of the offering, of approximately $44,100.  The Company contributed approximately $35,000 of these net proceeds to the Bank to provide capital for the Clarksville transaction.  On October 19, 2005, the underwriters in the public offering exercised their option to cover over-allotments and the Company sold an additional 274,957 shares of its common stock for net proceeds of approximately $6,700.

 

Critical Accounting Policies and Estimates

 

The Company’s consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America.  The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported periods.

 

Management continually evaluates the Company’s accounting policies and estimates it uses to prepare the consolidated financial statements.  In general, management’s estimates are based on historical experience, information from regulators and third party professionals and various assumptions that are believed to be reasonable under the facts and circumstances.  Actual results could differ significantly from those estimates made by management.

 

The Company believes its critical accounting policies and estimates include the valuation of the allowance for loan losses and the fair value of financial instruments and other accounts.  Based on management’s calculation, an allowance of $17,640, or 1.45%, of total loans, net of unearned interest, was an adequate estimate of losses within the loan portfolio as of September 30, 2005.  This estimate resulted in a provision for loan losses on the income statement of $1,704 and $4,386, respectively, for the three and nine months ended September 30, 2005.  If the mix and amount of future charge-off percentages differ significantly from those assumptions used by management in making its determination, the allowance for loan losses and provision for loan losses on the income statement could be materially affected.

 

15



 

The consolidated financial statements include certain accounting and disclosures that require management to make estimates about fair values. Estimates of fair value are used in the accounting for securities available for sale, loans held for sale, goodwill, other intangible assets, and acquisition purchase accounting adjustments.  Estimates of fair values are used in disclosures regarding securities held to maturity, stock compensation, commitments, and the fair values of financial instruments. Fair values are estimated using relevant market information and other assumptions such as interest rates, credit risk, prepayments and other factors.  The fair values of financial instruments are subject to change as influenced by market conditions.

 

Changes in Results of Operations

 

Net income.  Net income for the three months ended September 30, 2005 was $3,676 as compared to $3,213 for the same period in 2004. This increase of $463, or 14.41%, resulted primarily from a $2,136, or 17.21%, increase in net interest income reflecting principally increased volume of interest-earning assets arising primarily from the Company’s expansion initiatives and related growth in the loan portfolio. Offsetting this increase was a $1,480, or 16.07%, increase in total noninterest expense from $9,211 for the three months ended September 30, 2004 to $10,691 for the same period of 2005. This increase is also primarily attributable to the Company’s expansion initiatives, as discussed above.

 

Net income for the nine months ended September 30, 2005 was $10,325 as compared to $9,340 for the same period in 2004.  The increase of $985, or 10.55%, reflects substantially the same trends that existed during the quarter ended September 30, 2005.

 

Net Interest Income.  The largest source of earnings for the Company is net interest income, which is the difference between interest income on interest-earning assets and interest paid on deposits and other interest-bearing liabilities. The primary factors which affect net interest income are changes in volume and yields of interest-earning assets and interest-bearing liabilities, which are affected in part by management’s responses to changes in interest rates through asset/liability management. During the three months ended September 30, 2005, net interest income was $14,548 as compared to $12,412 for the same period in 2004, representing an increase of 17.21%. While the Company’s average balances of interest-earning assets increased more than the average balances of interest-bearing liabilities in the three months ended September 30, 2005, as compared to the same quarter in 2004, thus enhancing net interest income, such increase was offset, in part, by the smaller increase in yield on these interest-earning assets as compared to the cost of interest-bearing liabilities. Nevertheless, the Company experienced a substantial increase in net interest income, as noted above, in the three months ended September 30, 2005 as compared to the same quarter in 2004.

 

The Company’s net interest margin decreased to 4.54% for the three months September 30, 2005 as compared to 4.82% for the same period in 2004, and declined three basis points from the 4.57% net interest margin for the three months ended June 30, 2005.  The Company’s net interest margin also declined for the nine months ended September 30, 2005, falling to 4.58% when compared to 4.73% for the same period in 2004. In order to fund its strong loan growth, the Company has pursued aggressive deposit rates throughout all its markets, resulting in margin compression. In addition, management has been controlling the growth of higher-yielding subprime loans in the Bank’s subsidiaries and focusing on increasing the balances of its traditional commercial, commercial real estate and residential real estate loans, thus reducing the percentage of subprime loans in the Company’s portfolio. This trend in the loan mix, together with the competitive pricing the Company is experiencing in its Middle Tennessee and Knoxville area markets, also constrains the increases in loan yields during a rising interest rate environment notwithstanding the Company’s asset-sensitive balance sheet. Based on the Company’s current mix of interest-earning assets and interest-bearing liabilities, the Company believes its net interest margin will continue to experience compression for the remainder of 2005 and into 2006 as a result of loan and deposit pricing pressures.

 

For the nine months ended September 30, 2005, net interest income increased by $5,672, or 15.64%, to $41,947 from $36,275 for the same period in 2004, and the same trends outlined above with respect to the three months ended September 30, 2005 were observed.

 

16



 

The following tables set forth certain information relating to the Company’s consolidated average interest-earning assets and interest-bearing liabilities and reflects the average yield on assets and average cost of liabilities for the periods indicated.  These yields and costs are derived by dividing income or expense by the average daily balance of assets or liabilities, respectively, for the periods presented.

 

 

 

Three Months Ended

 

 

 

September 30,

 

 

 

2005

 

2004

 

 

 

Average

 

 

 

Average

 

Average

 

 

 

Average

 

 

 

Balance

 

Interest

 

Rate

 

Balance

 

Interest

 

Rate

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans(1)

 

$

1,190,852

 

$

21,335

 

7.11

%

$

986,540

 

$

15,796

 

6.37

%

Investment securities

 

62,860

 

626

 

3.95

%

38,084

 

344

 

3.59

%

Other short-term investments

 

18,123

 

154

 

3.37

%

708

 

2

 

1.12

%

Total interest-earning assets

 

$

1,271,835

 

$

22,115

 

6.90

%

$

1,025,332

 

$

16,142

 

6.26

%

Noninterest earning assets

 

104,047

 

 

 

 

 

95,583

 

 

 

 

 

Total assets

 

$

1,375,882

 

 

 

 

 

$

1,120,915

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

Now accounts, money market and Savings

 

$

406,431

 

$

1,449

 

1.41

%

$

323,058

 

$

395

 

0.49

%

Time deposits

 

611,800

 

4,836

 

3.14

%

442,605

 

2,270

 

2.04

%

Total interest-bearing deposits

 

$

1,018,231

 

$

6,285

 

2.45

%

$

765,663

 

$

2,665

 

1.38

%

Securities sold under repurchase agreements and short-term borrowings

 

13,551

 

98

 

2.87

%

17,050

 

45

 

1.05

%

Notes payable

 

78,090

 

974

 

4.95

%

101,304

 

877

 

3.44

%

Subordinated debentures

 

13,403

 

210

 

6.22

%

10,310

 

143

 

5.52

%

Total interest-bearing liabilities

 

$

1,123,275

 

$

7,567

 

2.67

%

$

894,327

 

$

3,730

 

1.66

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

120,460

 

 

 

 

 

105,343

 

 

 

 

 

Other liabilities

 

14,686

 

 

 

 

 

13,359

 

 

 

 

 

Total noninterest bearing liabilities

 

135,146

 

 

 

 

 

118,702

 

 

 

 

 

Total liabilities

 

1,258,421

 

 

 

 

 

1,013,029

 

 

 

 

 

Shareholders’ equity

 

117,461

 

 

 

 

 

107,886

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

1,375,882

 

 

 

 

 

$

1,120,915

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

 

$

14,548

 

 

 

 

 

$

12,412

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate spread

 

 

 

 

 

4.23

%

 

 

 

 

4.60

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net yield on interest-earning assets

 

 

 

 

 

4.54

%

 

 

 

 

4.82

%

 


(1)          Average loan balances include nonaccrual loans. Interest income collected on nonaccrual loans has been included.

 

17



 

 

 

Nine Months Ended

 

 

 

September 30,

 

 

 

2005

 

2004

 

 

 

Average

 

 

 

Average

 

Average

 

 

 

Average

 

 

 

Balance

 

Interest

 

Rate

 

Balance

 

Interest

 

Rate

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans(1)

 

$

1,137,400

 

$

59,265

 

6.97

%

$

979,946

 

$

46,843

 

6.39

%

Investment securities

 

58,229

 

1,691

 

3.88

%

40,118

 

1,069

 

3.56

%

Other short-term investments

 

28,446

 

597

 

2.81

%

4,110

 

29

 

0.94

%

Total interest-earning assets

 

$

1,224,075

 

$

61,553

 

6.72

%

$

1,024,174

 

$

47,941

 

6.25

%

Noninterest earning assets

 

103,577

 

 

 

 

 

98,509

 

 

 

 

 

Total assets

 

$

1,327,652

 

 

 

 

 

$

1,122,683

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

Now accounts, money market and savings

 

$

399,016

 

$

3,476

 

1.16

%

$

334,421

 

$

1,200

 

0.48

%

Time deposits

 

578,403

 

12,572

 

2.91

%

463,710

 

7,657

 

2.21

%

Total interest-bearing deposits

 

$

977,419

 

$

16,048

 

2.20

%

$

798,131

 

$

8,857

 

1.48

%

Securities sold under repurchase agreements and short-term borrowings

 

15,646

 

282

 

2.41

%

16,901

 

112

 

0.89

%

Notes payable

 

76,978

 

2,771

 

4.81

%

74,893

 

2,328

 

4.15

%

Subordinated debentures

 

11,364

 

505

 

5.94

%

10,310

 

369

 

4.78

%

Total interest-bearing liabilities

 

$

1,081,407

 

$

19,606

 

2.42

%

$

900,235

 

$

11,666

 

1.73

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

117,930

 

 

 

 

 

103,624

 

 

 

 

 

Other liabilities

 

14,387

 

 

 

 

 

12,984

 

 

 

 

 

Total noninterest bearing liabilities

 

132,317

 

 

 

 

 

116,608

 

 

 

 

 

Total liabilities

 

1,213,724

 

 

 

 

 

1,016,843

 

 

 

 

 

Shareholders’ equity

 

113,928

 

 

 

 

 

105,840