<PAGE>
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 Quarter Ended September 30, 1995, or
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file Number 0-4543
MARK TWAIN BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
Missouri 43-0895344
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
8820 Ladue Road
St. Louis, Missouri
(Address of principal executive offices)
63124
(Zip Code)
Registrant's telephone number, including area code:
(314) 727-1000
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 the number of shares outstanding of each of the issuer's
classes of common stock, as of the close of the period covered by
this report.
Class Outstanding at September 30, 1995
Common Stock, $1.25 par value 16,059,931
<PAGE> 2
MARK TWAIN BANCSHARES, INC.
AND SUBSIDIARIES
Index
Part I. - Financial Information
Item 1. - Financial Statements
Condensed Consolidated Balance Sheet
September 30, 1995 and 1994 (unaudited)
and December 31, 1994.................................3
Condensed Consolidated Statement of Income
for the three and nine month periods
ended September 30, 1995 and 1994 (unaudited).........4
Condensed Consolidated Statement of Cash
Flows for the nine month periods ended
September 30, 1995 and 1994 (unaudited)...............5
Notes to Condensed Consolidated Financial
Statements (unaudited)................................6
Item 2. - Management's Discussion and Analysis
of Financial Condition and Results of Operations......7
Part II. - Other Information...................................19
Item 6. - Exhibits and Reports on Form 8-K.................19
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM I - FINANCIAL STATEMENTS
<TABLE>
MARK TWAIN BANCSHARES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
<CAPTION>
September 30, September 30, December 31,
1995 1994 1994
------------ ------------- -----------
(in thousands of $)
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 122,380 $ 128,295 $ 139,947
Interest bearing deposits with banks - 53 54
Federal funds sold and securities
purchased under resale agreements 4,528 1,475 1,600
Trading account securities 62,697 128,356 32,909
Securities available for sale 245,312 243,851 228,359
Mortgage loans held for resale - 14,874 -
Investment securities 351,325 367,086 353,958
Loans, net of allowance for loan losses of
$30,048, $27,934 and $28,894, respectively 1,908,537 1,739,012 1,831,261
Premises and equipment 21,538 28,244 27,910
Accrued income receivable 18,500 16,137 17,572
Other assets 99,101 184,939 55,146
---------- ---------- ----------
Total assets $2,833,918 $2,852,322 $2,688,716
========== ========== ==========
LIABILITIES
Non-interest bearing deposits $ 428,686 $ 432,125 $ 461,958
Interest bearing deposits 1,905,133 1,769,915 1,810,099
---------- ---------- ----------
Total deposits 2,333,819 2,202,040 2,272,057
---------- ---------- ----------
Short-term borrowings 146,393 289,677 148,118
Other liabilities 70,422 108,805 14,103
Long-term debt 19,423 22,705 20,389
---------- ---------- ----------
Total liabilities $2,570,057 2,623,227 2,454,667
---------- ---------- ----------
SHAREHOLDERS' EQUITY
Preferred stock, $25.00 par value, authorized
and unissued 500,000 shares - - -
Common stock, $1.25 par value, authorized
30,000,000 shares, issued 16,449,510,
16,358,951 and 16,375,527 shares, respectively 20,562 20,449 20,469
Surplus 62,423 59,871 60,246
Undivided profits 185,115 150,361 154,890
---------- ---------- ----------
268,100 230,681 235,605
Less common treasury stock at cost, 389,579,
405,876 and 398,633 shares, respectively 4,239 1,586 1,556
---------- ---------- ----------
Total shareholders' equity 263,861 229,095 234,049
---------- ---------- ----------
Total liabilities and shareholders' equity $2,833,918 $2,852,322 $2,688,716
========== ========== ==========
</TABLE>
<PAGE> 4
<TABLE>
MARK TWAIN BANCSHARES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
<CAPTION>
For the Nine Months For the Three Months
Ended September 30, Ended September 30,
1995 1994 1995 1994
---- ---- ---- ----
(in thousands of $ except per share data)
<S> <C> <C> <C> <C>
INTEREST FROM EARNING ASSETS
Interest and fees on loans $135,477 $105,811 $46,251 $37,568
Interest on investment securities:
Taxable 17,235 18,788 5,744 5,797
Non-taxable 142 529 33 159
Interest on trading account securities 2,113 3,031 678 916
Interest on securities available for sale 11,139 11,155 3,730 3,788
Interest on mortgage loans held for resale - 2,453 - 276
Interest on deposits with banks - 3 - -
Interest on federal funds sold and securities
purchased under resale agreements 563 612 264 205
-------- -------- ------- -------
Total interest income 166,669 142,382 56,700 48,709
-------- -------- ------- -------
INTEREST EXPENSE
Interest on deposits 62,196 44,974 22,512 15,604
Interest on short-term borrowings 6,938 4,461 1,624 1,585
Interest on long-term debt 1,165 1,360 381 444
-------- -------- ------- -------
Total interest expense 70,299 50,795 24,517 17,633
-------- -------- ------- -------
Net interest income 96,370 91,587 32,183 31,076
Provision for loan losses 3,344 4,499 713 1,040
-------- -------- ------- -------
Net interest income after provision for loan losses 93,026 87,088 31,470 30,036
-------- -------- ------- -------
OTHER INCOME
Service charges on deposit accounts 5,220 5,606 1,803 1,841
Securities transactions 46 309 - -
Other income 22,123 21,217 7,281 5,874
-------- -------- ------- -------
Total other income 27,389 27,132 9,084 7,715
-------- -------- ------- -------
OTHER EXPENSES
Salaries 31,098 30,789 10,530 10,024
Employee benefits 5,202 5,169 1,569 1,448
Net occupancy expense 7,040 6,978 2,326 2,394
Furniture and equipment expense 2,894 3,418 917 1,144
Other expenses 18,386 21,411 5,398 6,505
-------- -------- ------- -------
Total other expenses 64,620 67,765 20,740 21,515
-------- -------- ------- -------
Income before income taxes 55,795 46,455 19,814 16,236
Applicable income taxes 20,579 16,593 7,591 5,866
-------- -------- ------- -------
Net income $ 35,216 $ 29,862 $12,223 $10,370
======== ======== ======= =======
NET INCOME PER SHARE:
Primary $2.17 $1.86 $ .75 $ .64
===== ===== ===== =====
Fully diluted $2.11 $1.81 $ .73 $ .63
===== ===== ===== =====
COMMON DIVIDENDS PAID PER SHARE $ .81 $ .72 $ .27 $ .24
===== ===== ===== =====
</TABLE>
<PAGE> 5
<TABLE>
MARK TWAIN BANCSHARES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
<CAPTION>
For the Nine Months
Ended September 30,
1995 1994
---- ----
(in thousands of $)
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 35,216 $ 29,862
Adjustments to reconcile net cash provided by operating activities:
Provision for loan losses 3,344 4,499
Provision for depreciation and amortization 3,561 4,408
Amortization of security premiums and accretion of discounts (799) (2,045)
Net decrease in mortgage loans held for resale - 97,430
Net increase in trading account securities (29,788) (82,301)
Securities transactions (46) (309)
Increase in accrued income receivable (928) (1,566)
Increase in interest payable 1,187 533
Other 3,664 (5,356)
-------- --------
Net cash provided by operating activities 15,411 45,155
-------- --------
INVESTING ACTIVITIES
Net increase in loans (78,086) (51,815)
Net proceeds from sales of foreclosed real estate 2,392 2,350
Net (increase) decrease in premises and equipment 3,415 (1,625)
Purchase of assets to be leased (2,783) (2,039)
Proceeds from sales of securities available for sale 5,676 2,962
Proceeds from maturities and prepayments of securities available for sale 19,495 38,924
Purchase of securities available for sale (17,269) (52,710)
Proceeds from maturities and prepayments of investment securities 37,112 151,686
Purchase of investment securities (45,268) (240,076)
-------- --------
Net cash used by investing activities (75,316) (152,343)
-------- --------
FINANCING ACTIVITIES
Net increase in deposits 61,762 10,127
Net increase (decrease) in short-term borrowings (1,725) 110,421
Payments on long-term debt (32) (527)
Cash dividends (12,986) (10,567)
Purchase of treasury stock (3,145) -
Reissuance of treasury stock 1,392 1,083
Other - 21
-------- --------
Net cash provided by financing activities 45,266 110,558
-------- --------
Increase (decrease) in cash and cash equivalents (14,639) 3,370
Cash and cash equivalents at beginning of period 141,547 126,400
-------- --------
Cash and cash equivalents at end of period $126,908 $129,770
======== ========
</TABLE>
<PAGE> 6
MARK TWAIN BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE A--BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q
and Article 10 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles 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 month periods ended September 30, 1995 are
not necessarily indicative of the results that may be expected for the year
ended December 31, 1995. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the year ended December 31, 1994.
NOTE B--ACQUISITION OF BANKS
On August 12, 1994, the Company acquired C.B. Bancshares, Inc., owner of
Century Bank in St. Louis, Missouri for 705,110 shares of the Company's
common stock. On September 12, 1994, Century Bank was merged into Mark
Twain Bank. On November 15, 1994, the Company acquired United Kansas Bank
Group, Inc., owner of United Kansas Bank & Trust in Merriam, Kansas for
473,866 shares of the Company's common stock. The acquisitions were
accounted for under the pooling-of-interests method of accounting and
accordingly, the financial statements for prior periods have been restated.
On February 6, 1995, United Kansas Bank & Trust was merged into Mark Twain
Kansas Bank.
NOTE C--ACCOUNTING BY CREDITORS FOR IMPAIRMENT OF A LOAN
Effective January 1, 1995, the Company adopted Statement of Financial
Accounting Standards No. 114, "Accounting by Creditors for Impairment of a
Loan." The adoption of the standard did not have a material impact on the
Company's financial position or results of operations.
NOTE D--PREMISES AND EQUIPMENT
In June 1995 the Company sold a low-to-moderate income housing project
which it owned and operated. The proceeds from the sale approximated the
book value of $5.0 million.
<PAGE> 7
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
- ----------------------
At September 30, 1995 the Company achieved increases in total loans,
earning assets and deposits. Total assets remained relatively unchanged.
Net income for the nine months ended September 30, 1995 was $35.216
million, an increase of $5.354 million or 17.93% from the first nine months
of 1994. Net income for the three months ended September 30, 1995 was
$12.223 million, an increase of $1.853 million or 17.87% from the third
quarter of 1994. Selected balance sheet comparisons are as follows (in
millions of $):
<TABLE>
<CAPTION>
September 30, September 30,
1995 1994 % Change
------------- ------------- ---------
<S> <C> <C> <C>
Total assets $2,833.9 $2,852.3 (0.65%)
Total loans 1,938.6 1,766.9 9.71%
Total earning assets 2,602.4 2,522.6 3.16%
Total deposits 2,333.8 2,202.0 5.98%
</TABLE>
<TABLE>
NET INTEREST INCOME
- --------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Three Months Ended September 30, 1995 1994 % Change
- ------------------------------------------------------------------------------------------------------------------------------
(in millions of $)
<S> <C> <C> <C>
Average loans $1,938.6 $1,739.9 11.42%
Average earning assets 2,586.2 2,436.8 6.13%
Average deposits 2,323.3 2,188.3 6.17%
Net interest income (FTE) 32.5 31.4 3.37%
Net interest margin 4.98% 5.11% <13> basis points
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Nine Months Ended September 30, 1995 1994 % Change
- ------------------------------------------------------------------------------------------------------------------------------
(in millions of $)
<S> <C> <C> <C>
Average loans $1,908.8 $1,731.8 10.22%
Average earning assets 2,552.3 2,451.5 4.11%
Average deposits 2,256.5 2,188.7 3.10%
Net interest income (FTE) 97.3 92.6 5.12%
Net interest margin 5.10% 5.05% 5 basis points
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 8
(Net Interest Income continued)
Measured on a fully tax equivalent basis, net interest income totaled
$32.5 million for the quarter, a modest increase from second quarter 1995
and an increase of $1.1 million or 3.37% over the third quarter of 1994.
Net interest margin for the third quarter of 1995 was 4.98%, compared to
5.08% for second quarter 1995 and 5.11% for third quarter 1994. Net
interest income, fully tax equivalent, was $97.29 million for the first
nine months of 1995, an increase of $4.7 million or 5.12% from the same
period last year. Net interest margin for the first nine months of 1995
was 5.10% compared to 5.05% for the first nine months of 1994. Interest
rates generally increased during the first nine months of 1994 and began to
gradually decline during 1995. As earning assets and interest bearing
liabilities repriced during 1994 and 1995 and as the mix of earning assets
and interest bearing liabilities changed between periods, the gross yield
on earning assets increased 96 basis points for the first nine months of
1995 and 76 basis points for the third quarter of 1995 compared to 1994
levels. The average cost of interest bearing liabilities increased 118
basis points for the first nine months of 1995 and 115 basis points for the
third quarter of 1995 compared to 1994 levels. The interest rate spread
for the third quarter of 1995 decreased 39 basis points to 4.02% compared
to the third quarter of 1994. The ratio of interest bearing liabilities to
earning assets decreased to 79.66% for the quarter compared to 80.42% for
the third quarter of 1994. For the first nine months of 1995, the interest
rate spread decreased 22 basis points to 4.19% compared to the first nine
months of 1994. The ratio of interest bearing liabilities to earning
assets decreased to 80.32% for the first nine months of 1995 compared to
81.24% for the same period of 1994.
Average earning assets totaled $2,586.2 million during the third quarter
of 1995 as compared to $2,436.8 million during the third quarter of 1994,
an increase of $149.4 million or 6.13%. Average loan volume continued to
show steady increases with average loan outstandings of $1,938.6 million
for the third quarter of 1995 compared to $1,920.2 million for the second
quarter of 1995 (an increase of $18.4 million) and $1,739.9 million for the
third quarter of 1994 (an increase of $198.7 million). Proceeds from the
liquidation of the mortgage loans held for resale portfolio in 1994, which
averaged $14.2 million for third quarter 1994, were used to fund increases
in the loan portfolio in 1994. Securities averaged $586.7 million for the
third quarter, a decrease of $19.6 million or 3.24% compared to the same
period last year. Average deposit volume for the third quarter of 1995
increased $135.0 million or 6.17% to $2,323.3 million compared to the same
period in 1994. Average time deposits increased $224.1 million or 28.03%
in the third quarter of 1995 as compared to the third quarter of 1994.
Savings and money market deposits decreased $65.5 million or 8.93% and
interest bearing demand deposits decreased $26.7 million or 10.67% for the
same respective periods. Non-interest bearing demand deposits increased
$3.2 million or .78% and comprised 17.54% of average deposits during the
third quarter 1995 compared to 18.48% for the same period last year.
<PAGE> 9
<TABLE>
DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY; INTEREST RATES AND INTEREST DIFFERENTIAL
The following tables show the condensed average balance sheets for each of the interim periods presented, and the average yield on
such categories of interest earning assets and the average rates paid on such categories of interest bearing liabilities for each
of the periods reported.
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Nine Months Ended September 30, 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------
Avg. Avg.
Avg. Yield/ Avg. Yield/
Volume Interest Rate Volume Interest Rate
---------- --------- ------- ------- -------- ------
(in thousands of $)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest earning assets:
Loans <F1><F2> $1,908,842 $136,259 9.54% $1,731,811 $106,496 8.22%
Taxable investment securities 342,340 17,235 6.73% 357,622 18,788 7.02%
Non-taxable investment securities <F1> 3,450 218 8.45% 12,655 805 8.50%
Trading account securities 43,462 2,113 6.50% 64,195 3,031 6.31%
Securities available for sale <F1> 241,718 11,198 6.19% 220,101 11,158 6.78%
Mortgage loans held for resale - - - 44,807 2,453 7.32%
Interest bearing deposits with banks - - - 135 3 2.97%
Federal funds sold and securities
purchased under resale agreements 12,506 563 6.02% 20,193 612 4.05%
---------- -------- ------ ---------- -------- ------
Total interest earning assets 2,552,318 167,586 8.78% 2,451,519 143,346 7.82%
-------- ====== -------- ======
Non-interest earning assets:
Cash and due from banks 107,416 114,059
Other assets 122,492 101,890
FASB No. 115 allowance (7,483) (5,555)
Allowance for loan losses (29,559) (27,394)
---------- ----------
Total $2,745,184 $2,634,519
========== ==========
LIABILITES AND SHAREHOLDER'S EQUITY
Interest bearing liabilities:
Interest bearing demand deposits $ 227,050 3,631 2.14% $ 256,630 3,694 1.92%
Savings and money market deposits 677,893 19,401 3.83% 729,649 15,981 2.93%
Time deposits 956,563 39,164 5.47% 809,560 25,299 4.18%
Short-term borrowings 168,407 6,938 5.51% 172,055 4,461 3.47%
Long-term debt 19,986 1,165 7.79% 23,704 1,360 7.67%
---------- -------- ------ ---------- -------- ------
Total interest bearing liabilities 2,049,899 70,299 4.59% 1,991,598 50,795 3.41%
-------- ====== -------- ======
Non-interest bearing liabilities:
Non-interest bearing deposits 394,997 392,896
Other liabilities 49,764 28,736
Shareholders' equity 250,524 221,289
---------- ----------
Total $2,745,184 $2,634,519
========== ==========
Net interest income $ 97,287 $ 92,551
======== ========
Net interest margin 5.10% 5.05%
====== ======
<FN>
<F1>Fully tax-equivalent using tax rate of 35% in 1995 and 1994.
<F2>Includes non-accrual loans.
</FN>
</TABLE>
<PAGE> 10
<TABLE>
DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY; INTEREST RATES AND INTEREST DIFFERENTIAL
(continued)
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Three Months Ended September 30, 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------
Avg. Avg.
Avg. Yield/ Avg. Yield/
Volume Interest Rate Volume Interest Rate
---------- --------- ------- ------- -------- ------
(in thousands of $)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest earning assets:
Loans <F1><F2> $1,938,629 $46,499 9.52% $1,739,888 $37,815 8.62%
Taxable investment securities 340,321 5,744 6.70% 363,116 5,797 6.33%
Non-taxable investment securities <F1> 2,469 50 8.03% 11,709 241 8.17%
Trading account securities 43,060 678 6.25% 58,069 916 6.26%
Securities available for sale <F1> 243,887 3,749 6.10% 231,479 3,791 6.50%
Mortgage loans held for resale - - - 14,223 276 7.70%
Interest bearing deposits with banks - - - 54 - -
Federal funds sold and securities
purchased under resale agreements 17,839 264 5.87% 18,281 205 4.45%
---------- ------- ------ ---------- ------- ------
Total interest earning assets 2,586,205 56,984 8.74% 2,436,819 49,041 7.98%
------- ====== ------- ======
Non-interest earning assets:
Cash and due from banks 109,197 116,913
Other assets 124,735 102,546
FASB No. 115 allowance (2,955) (9,873)
Allowance for loan losses (30,105) (27,717)
---------- ----------
Total $2,787,077 $2,618,688
========== ==========
LIABILITES AND SHAREHOLDER'S EQUITY
Interest bearing liabilities:
Interest bearing demand deposits $ 223,681 1,212 2.15% $ 250,386 1,194 1.89%
Savings and money market deposits 668,569 6,539 3.88% 734,093 5,654 3.06%
Time deposits 1,023,558 14,761 5.72% 799,482 8,756 4.35%
Short-term borrowings 124,524 1,624 5.17% 152,927 1,585 4.11%
Long-term debt 19,716 381 7.67% 22,883 444 7.70%
---------- ------- ------ ---------- ------- ------
Total interest bearing liabilities 2,060,048 24,517 4.72% 1,959,771 17,633 3.57%
------- ====== ------- ======
Non-interest bearing liabilities:
Non-interest bearing deposits 407,513 404,358
Other liabilities 59,032 28,820
Shareholders' equity 260,484 225,739
---------- ----------
Total $2,787,077 $2,618,688
========== ==========
Net interest income $32,467 $31,408
======= =======
Net interest margin 4.98% 5.11%
====== ======
<FN>
<F1>Fully tax-equivalent using tax rate of 35% in 1995 and 1994.
<F2>Includes non-accrual loans.
</FN>
</TABLE>
<PAGE> 11
<TABLE>
The following tables set forth, on a tax equivalent basis, the effect of changes in interest income and interest
expense resulting from changes in volumes and rates for the nine and three months ended September 30, 1995.
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Nine Months Ended September 30, 1995 Compared to 1994
- -----------------------------------------------------------------------------------------------------------------------------
(in thousands of $) Increase (Decrease) Due to:(1)
Volume Rate Net
------ ------ -----
<S> <C> <C> <C>
Interest earned on:
Loans $11,567 $18,196 $29,763
Taxable investment securities (786) (767) (1,553)
Non-taxable investment securities (582) (5) (587)
Trading account securities (1,006) 88 (918)
Securities available for sale 1,046 (1,006) 40
Mortgage loans held for resale (2,453) - (2,453)
Interest bearing deposits with banks (3) - (3)
Federal funds sold and securities
purchased under resale agreements (283) 234 (49)
------- ------- -------
Total interest earned on assets 7,500 16,740 24,240
------- ------- -------
Interest paid on:
Interest bearing demand deposits (450) 387 (63)
Savings and money market deposits (1,199) 4,619 3,420
Time deposits 5,120 8,745 13,865
Short-term borrowings (97) 2,574 2,477
Long-term debt (216) 21 (195)
-------- -------- --------
Total interest paid on liabilities 3,158 16,346 19,504
-------- -------- --------
Net interest income $ 4,342 $ 394 $ 4,736
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Three Months Ended September 30, 1995 Compared to 1994
- -----------------------------------------------------------------------------------------------------------------------------
(in thousands of $) Increase (Decrease) Due to:(1)
Volume Rate Net
------ ------ -----
<S> <C> <C> <C>
Interest earned on:
Loans $4,554 $4,130 $8,684
Taxable investment securities (375) 322 (53)
Non-taxable investment securities (187) (4) (191)
Trading account securities (236) (2) (238)
Securities available for sale 197 (239) (42)
Mortgage loans held for resale (276) - (276)
Interest bearing deposits with banks - - -
Federal funds sold and securities
purchased under resale agreements (5) 64 59
------- ------- -------
Total interest earned on assets 3,672 4,271 7,943
------- ------- -------
Interest paid on:
Interest bearing demand deposits (135) 153 18
Savings and money market deposits (539) 1,424 885
Time deposits 2,819 3,186 6,005
Short-term borrowings (326) 365 39
Long-term debt (61) (2) (63)
------- ------- -------
Total interest paid on liabilities 1,758 5,126 6,884
------- ------- -------
Net interest income $1,914 $ (855) $1,059
======= ======= =======
<FN>
(1) For the purposes of this table, changes which are not due solely to volume changes or rate changes are
allocated to such categories based on the respective percentage changes in average balances and average rates.
</FN>
</TABLE>
<PAGE> 12
<TABLE>
NON-INTEREST INCOME
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Nine Months Ended September 30, 1995 1994 % Change
- ---------------------------------------------------------------------------------------------------------------------
(in thousands of $)
<S> <C> <C> <C>
Service charges on deposit accounts $ 5,220 $ 5,606 (6.89%)
Securities transactions 46 309 (85.11%)
Bond Division revenue 8,831 6,306 40.04%
Brokerage revenue 3,108 3,990 (22.11%)
Trust Division revenue 4,607 4,581 0.57%
Mortgage Division revenue - 1,786 NM
Net losses on foreclosed real estate (77) (146) (47.26%)
All other income 5,654 4,700 20.30%
------- ------- -------
Total non-interest income $27,389 $27,132 0.95%
======= ======= =======
</TABLE>
Non-interest income increased $257 thousand or .95% for the first nine
months of 1995 as compared to the same period of 1994. Non-interest income
for the third quarter of 1995 increased $1.369 million or 17.74% compared
to the same period last year.
The first nine months of 1994 reflected $1.786 million of Mortgage
Division revenues. The Company made a decision to curtail mortgage as a
line of business during 1994 due to decreasing volumes and a lack of
profitability associated with the decrease in mortgage refinancings as
interest rates rose during 1994.
Service charges on deposit accounts showed a decrease of $386 thousand
or 6.89% in the first nine months of 1995 as compared to the same period in
1994. Fees charged on commercial deposit accounts are lower as a result of
higher earnings credit rates.
Gains totaling $46 thousand on sales of available-for-sale securities
were realized in the first quarter of 1995. Proceeds from the sale of
these available-for-sale securities were $5.676 million. The sales
reflected a restructuring of United Kansas Bank and Trust's securities
portfolio upon merger with Mark Twain Kansas Bank in February 1995. Gains
of $309 thousand on the sale of investment securities (proceeds of $35.319
million) and available-for-sale securities (proceeds of $2.962 million)
were realized in the second quarter of 1994. The investment securities
sold were all within ninety days of scheduled maturity and are reflected as
maturities in the consolidated statement of cash flows. The securities
were sold in order to reinvest the relatively small individual security
balances at one time.
The Capital Markets Group (including Bond and Brokerage operations)
showed increases in revenues of 15.96% and 24.58% for the nine and three
month periods ending September 30, 1995 as compared to the same periods
last year. Bond Division revenues increased $2.525 million or 40.04% in
the first nine months of 1995 as compared to the same period of 1994.
Revenues for the quarter were up $1.011 million over third quarter 1994.
The Bond Division's foreign exchange operation saw record volumes resulting
from the dollar's volatility in the first nine months of 1995. Foreign
exchange revenues for the first nine months of 1995 increased $2.065
million over the first nine months of 1994. Brokerage Division revenues
<PAGE> 13
(Non-interest Income continued)
decreased $882 thousand or 22.11% in the first nine months of 1995 as
compared to the same period last year. Revenues decreased $270 thousand
for the third quarter of 1995 compared to the third quarter of 1994.
A net loss on foreclosed real estate of $77 thousand was recognized in
the first nine months of 1995 primarily due to adjustments to the carrying
values for declines in market values. Proceeds from sales of foreclosed
real estate totaled $2.392 million to date this year. A net loss on
foreclosed real estate of $146 thousand in the first nine months of 1994
resulted from sales of $2.350 million of foreclosed real estate and
adjustments to the carrying values for declines in market values.
All other income increased $954 thousand or 20.30% for the first nine
months of 1995 as compared to the same period of 1994. The first nine
months of 1995 reflects a $1.716 million appreciation in the market value
of the trading account portfolio of the parent company since year-end 1994.
The same period last year reflected a $129 thousand appreciation in market
value. The third quarter of 1995 includes $206 thousand in gain on sale of
a low-to-moderate income housing project owned and operated by the Company.
This is offset by a decrease in rental income of $275 thousand relating to
the low-to-moderate income housing project sold. Also contributing to a
decrease in other income are $258 thousand in gains recorded last year on
sale of assets previously under lease financing agreements, a decrease of
$104 thousand in international income (primarily letter of credit fees),
$84 thousand interest on a 1992 tax refund received in 1994, a decrease in
rental income from one parcel of other real estate owned and a general
decline in SBA transaction fees for the first nine months of 1995 as
compared to the same period of 1994.
<TABLE>
NON-INTEREST EXPENSE
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Nine Months Ended September 30, 1995 1994 % Change
- -----------------------------------------------------------------------------------------------------------------------
(in thousands of $)
<S> <C> <C> <C>
Salary expense $31,098 $30,789 1.00%
Employee benefits 5,202 5,169 0.64%
Net occupancy 7,040 6,978 0.89%
FDIC premiums 2,334 3,615 (35.44%)
Furniture & equipment 2,894 3,418 (15.33%)
Advertising 1,486 1,569 (5.29%)
Data processing 3,166 3,332 (4.98%)
Legal fees 730 830 (12.05%)
Postage & freight 1,124 1,133 (0.79%)
Amortization expense 621 1,233 (49.64%)
Expenses on foreclosed real estate 263 461 (42.95%)
Taxes other than income 390 338 15.38%
Other 8,272 8,900 (7.06%)
------- ------- -------
Total non-interest expense $64,620 $67,765 (4.64%)
======= ======= =======
</TABLE>
Non-interest expense for the first nine months of 1995 was $64.620
million as compared to $67.765 million for the first nine months of 1994, a
decrease of $3.145 million or 4.64%. Non-interest expense for the third
quarter of 1995 was $20.740 million as compared to $21.515 million for the
third quarter of 1994, a decrease of $775 thousand or 3.60%.
<PAGE> 14
(Non-interest Expense continued)
Salary expense for the nine month period of 1995 increased $309
thousand or 1.00% as compared to the same period last year. Excluding the
effect of commissions and bonuses, salary expense decreased 8.18%. The
decrease from year-to-year can be attributed primarily due to a reduction
in the number of full time equivalent employees (979 at September 30, 1995
compared to 971 at June 30, 1995 and 1,018 at September 30, 1994). A
significant portion of the reduction relates to the reduction in support
staff in the Company's Mortgage Division. A significant portion of the
increase in commission and bonus expense is directly related to the sales
revenues reported by the Company's fee divisions and can be attributed to
the Bond Division's performance exceeding the previous year as discussed
earlier. The increase can also be attributed to other incentive based
compensation linked to the overall financial performance of the Company.
Employee benefit expense increased $33 thousand or .64% for the first nine
months of 1995 as compared to the same period in 1994.
FDIC premiums expense decreased $1.281 million for the first nine
months of 1995 compared to the same period last year. On August 8, 1995,
the FDIC Board of Directors voted to reduce the deposit insurance premiums.
This change resulted in the premium rates charged to the Company's banking
subsidiaries to be reduced to $.04 from $.23 per $100 of assessable
deposits. The effective date for the premium change was June 1, 1995. As
a result of this rate change, the Company's banking subsidiaries received a
refund of previously paid insurance premiums of approximately $1.369
million, of which $1.040 million relates to third quarter 1995 premiums and
$.329 million relates to second quarter 1995 premiums. This refund was
received on September 15, 1995 and was recorded as a reduction of FDIC
premium expense for the third quarter.
Furniture and equipment expense decreased $524 thousand or 15.33% for
the first nine months of 1995 compared to the same period in 1994. The
variance can be primarily attributed to the expiration of a computer
equipment lease and subsequent equipment acquisition in October 1994.
Data processing expense decreased $166 thousand or 4.98% for the first
nine months of 1995 compared to the same period last year. During the
third quarter of 1995, $355 thousand was recorded as a reduction of data
processing expense. This amount represents a settlement of a contract
dispute with a systems vendor. The settlement essentially reimburses the
Company for the difference between the contract rates and actual expenses
paid by the Company due to nonperformance under the contract.
Legal fees decreased 12.05% or $100 thousand for the first nine months
of 1995 as compared to the same period last year. Legal fees were higher
in 1994 partially due to legal fees incurred with respect to the U.S.
Treasury Department settlement noted below.
<PAGE> 15
(Non-interest Expense continued)
Amortization expense decreased $612 thousand or 49.64% for the first
nine months of 1995 compared to the same period of 1994. A reduction in
amortization of mortgage servicing rights and excess servicing fees
resulted from the Company's decision to curtail its mortgage operations in
1994, which included the sale of the Company's mortgage loan servicing
portfolio, as noted previously.
Expenses on foreclosed real estate decreased $198 thousand or 42.95%
for the first nine months of 1995 compared to the first nine months of last
year. Other real estate owned at September 30, 1995 was $10.726 million
compared to $10.189 million at September 30, 1994.
Other non-interest expense in the first nine months of 1995 decreased
7.06% or $628 thousand from the same period last year. A $750 thousand
settlement payment was recorded in the second quarter of 1994 for an
agreement reached in principle with the U.S. Treasury Department regarding
compliance by a subsidiary with record keeping and reporting requirements
under the Currency and Foreign Transactions Reporting Act. Excluding this
non-recurring expense, other non-interest expense increased $122 thousand
or 1.50% from period to period. Loan and collection expense related to the
Mortgage Division operations decreased $328 thousand for the first nine
months of 1995 compared to the first nine months of 1994. Insurance
expense decreased $238 thousand for the first nine months of 1995 as
compared to the same period in 1994 resulting from increases in the cash
surrender value of life insurance policies offsetting the policy's premium
expense and premiums paid on the Company's other insurance policies
remaining stable. Operating expenses related to a low-to-moderate income
housing project sold in June 1995, as discussed earlier, decreased $101
thousand from the same period last year. Convention and meeting expense
increased $305 thousand for the first nine months of 1995 compared to the
same period last year related to a Director Trip in September 1995.
Consulting expense increased $352 thousand over the same respective period
primarily due to two consulting engagements for the purpose of enhancing
banking division based non-interest revenues and improving operational
flow. Charitable contribution expense increased $219 thousand for the
first nine months of 1995 as compared to the same period of 1994 and was
primarily due to the donation of a parcel of other real estate owned for
$125 thousand.
Other non-interest expense for the third quarter of 1995 compared to
the third quarter of 1994 increased $351 thousand. The largest component
of the increase can be attributed to convention and meeting expense which
increased $223 thousand in the third quarter of 1995 compared to the same
quarter of 1994.
<PAGE> 16
<TABLE>
SUMMARY OF ALLOWANCE FOR LOAN LOSSES
<CAPTION>
Nine Months Ended Three Months Ended
September 30, September 30,
(in thousands of $) 1995 1994 1995 1994
------------------------ -------------------------
<S> <C> <C> <C> <C>
Allowance at beginning of period $28,894 $27,012 $29,961 $27,175
Charge-offs (2,957) (4,418) (910) (707)
Recoveries 767 841 284 426
------- ------- ------- -------
Net charge-offs (2,190) (3,577) (626) (281)
Additions to allowance charged to expense 3,344 4,499 713 1,040
------- ------- ------- -------
Allowance at end of period $30,048 $27,934 $30,048 $27,934
======= ======= ======= =======
Loans, net of unearned income at
end of period $1,938,585 $1,766,946
Average loan balance for the period $1,908,842 $1,731,811 $1,938,629 $1,739,888
Allowance as % of loans at
end of period 1.55% 1.58%
Allowance as % of non-performing loans 323.90% 266.34%
Net charge-offs as % of average loans
for the period .11% .21% .03% .02%
Annualized net charge-offs as % of
average loans for the period .15% .28% .13% .06%
</TABLE>
The provision for loan losses for the first nine months of 1995
decreased $1.155 million or 25.67% compared to the first nine months of
1994. Net charge-offs totaled $2.190 million for the first nine months of
1995 compared to $3.577 million for the first nine months of 1994, a
decrease of $1.387 million. Charge-offs for the first nine months of 1994
included $1.719 million relating to one credit. Annualized net charge-offs
were .15% of average loans for the first nine months of 1995 compared to
.28% for the same period in 1994.
The Company evaluates the reserves of its subsidiary banks on an
ongoing basis to ensure the timely charge-off of loans and to determine the
adequacy of each bank's allowance for loan losses. At September 30, 1995,
the level of the affiliate bank reserves as a percentage of total loans
outstanding ranged from 1.42% to 1.80% with a combined ratio of 1.55%.
Management believes the current consolidated allowance at 1.55% of total
loans outstanding is adequate to absorb future possible losses.
<PAGE> 17
<TABLE>
NON-PERFORMING ASSETS
<CAPTION>
September 30, June 30, March 31, December 31,
(in thousands of $) 1995 1995 1995 1994
---------------------------------------------------------------
<S> <C> <C> <C> <C>
Non-accrual loans $ 8,629 $ 9,165 $ 9,509 $ 6,813
Restructured loans 109 484 484 484
Foreclosed real estate 10,726 9,520 10,478 10,523
------- ------- ------- -------
Total non-performing assets $19,464 $19,169 $20,471 $17,820
======= ======= ======= =======
Percentage of non-performing
assets to loans plus foreclosed
real estate 1.00% .99% 1.08% .95%
Loans contractually past due
ninety days or more $539 $782 $543 $1,132
Percentage of non-performing
assets plus ninety days past due
to loans plus foreclosed real estate 1.03% 1.03% 1.11% 1.01%
Percentage of allowance to
non-performing loans 323.90% 287.23% 275.69% 342.79%
Percentage of allowance to total
non-performing assets 154.38% 156.30% 141.89% 162.14%
Percentage of allowance to
risk elements* 150.22% 150.17% 138.23% 152.46%
Percentage of risk elements*
to total average assets .73% .73% .79% .72%
* Risk elements include total non-performing assets plus loans contractually past due ninety days or more.
</TABLE>
<TABLE>
The following table summarizes the changes in non-performing assets for the nine month period ended September 30, 1995.
(in thousands of $)
<S> <C>
Balance, beginning of year $17,820
Additions 13,840
Payments received and loans
returned to accrual status (6,946)
Sales of foreclosed real estate (2,512)
Charge-offs and writedowns (2,738)
-------
Balance, end of period $19,464
=======
</TABLE>
Loan quality remained strong at the end of third quarter 1995
reflecting the Company's continued focus on maintaining high quality
assets. Non-performing assets at September 30, 1995 were 1.00% of loans
plus foreclosed real estate, compared to .99% at the end of second quarter
1995 and .95% at year-end 1994. Non-performing assets of $19.464 million
at September 30, 1995 were $295 thousand or 1.54% higher than at June 30,
1995. Non-performing assets at September 30, 1995 increased $1.644 million
or 9.23% from the December 31, 1994 total of $17.820 million primarily due
to one credit placed on non-accrual status during the first quarter of
1995.
<PAGE> 18
<TABLE>
CAPITAL RESOURCES AND LIQUIDITY
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30,
(in thousands of $) 1995 1994
------------ ------------
<S> <C> <C>
At September 30,
- -------------
Total shareholders' equity $263,861 $229,095
Long-term debt $19,423 $22,705
Per Share Data
- --------------
Dividend payout ratio 37.33% 38.71%
Common dividends paid $12,986 $10,567
Dividends paid per share $0.81 $0.72
Book value per share $16.43 $14.36
Fully diluted book value per share $16.41 $14.40
Selected Ratios
- ---------------
Return on YTD average assets 1.72% 1.52%
Return on YTD average common equity 18.79% 18.04%
YTD average equity to average assets 9.13% 8.40%
YTD average equity to average loans 13.12% 12.78%
YTD average loans to average deposits 84.59% 79.12%
Period end total tier 1 capital to total risk-weighted assets 11.08% 10.62%
Period end total capital to total risk-weighted assets 12.66% 12.29%
Efficiency ratio 51.85% 56.77%
</TABLE>
The Company's total shareholders' equity was $263.861 million at
September 30, 1995 which reflects a 15.18% or $34.766 million increase as
compared to September 30, 1994. The Company authorized a stock buy-back
program in the first quarter of 1995 and to date a total of 100,000 shares
have been acquired with total cost of $3.145 million. The shares were
purchased to fund commitments for employee stock plans and programs.
Mark Twain's Asset/Liability Committee meets monthly to review balance
sheet structure and liquidity needs. The goal is to maximize net interest
income and maintain adequate liquidity while operating within defined risk
parameters. The period gap set forth in the table below is the difference
between earning assets and interest bearing liabilities with the repricing
maturities indicated. The cumulative gap figure accumulates the period
figures for the maturity range in question and all shorter maturities. The
position of Mark Twain with respect to these gaps at September 30, 1995 was
as follows (dollars in thousands):
<TABLE>
<CAPTION>
0-31 32-92 93-183 184-365 Over 365
Days Days Days Days Days
<S> <C> <C> <C> <C> <C>
Period Gap $327,585 $(47,154) $(175,773) $(168,303) $595,143
Cumulative Gap 327,585 280,431 104,658 63,645 531,498
</TABLE>
<PAGE> 19
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 11. Statement of Computation of Earnings Per Common Share
Exhibit 27. Financial Data Schedule
(b) Reports on Form 8-K
Report on Form 8-K dated July 12, 1995 reporting the Company's
earnings release for the second quarter and year ending June 30,
1995.
Report on Form 8-K dated October 12, 1995 reporting the Company's
earnings release for the third quarter and year ending September 30,
1995.
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
MARK TWAIN BANCSHARES, INC.
(Registrant)
Date: November 13, 1995 KEITH MILLER
----------------- -------------------------------
Keith Miller
Senior Vice President - Finance
and Chief Financial Officer
JOHN P. DUBINSKY
-------------------------------
John P. Dubinsky
President and Chief
Executive Officer
<PAGE>
EXHIBIT 11
<TABLE>
MARK TWAIN BANCSHARES, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
<CAPTION>
Nine Months Ended Three Months Ended
September 30, September 30,
(in thousands of $ except per share data) 1995 1994 1995 1994
------------------------ -------------------------
<S> <C> <C> <C> <C>
PRIMARY
Earnings:
Net income $35,216 $29,862 $12,223 $10,370
======= ======= ======= =======
Shares:
Weighted average number of common
shares outstanding 16,037,190 15,861,309 16,034,868 15,931,771
Weighted average number of common
share equivalents 210,972 224,538 252,493 205,386
---------- ---------- ---------- ----------
16,248,162 16,085,847 16,287,361 16,137,157
========== ========== ========== ==========
Primary earnings per common share $2.17 $1.86 $.75 $.64
===== ===== ==== ====
ASSUMING FULL DILUTION
Earnings:
Net income $35,216 $29,862 $12,223 $10,370
After tax interest applicable to
convertible notes 277 329 88 102
After tax amortization of capital
note fees 34 50 13 15
------- ------- ------- -------
Fully diluted net income $35,527 $30,241 $12,324 $10,487
======= ======= ======= =======
Shares:
Weighted average number of common
shares outstanding 16,037,190 15,861,309 16,034,868 15,931,771
Assuming conversion of convertible notes
and dilutive stock options 791,370 855,024 769,089 785,395
---------- ---------- ---------- ----------
16,828,560 16,716,333 16,803,957 16,717,166
========== ========== ========== ==========
Earnings per common share assuming full dilution $2.11 $1.81 $.73 $.63
===== ===== ==== ====
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET, CONSOLIDATED STATEMENT OF INCOME AND
CONSOLIDATED STATEMENT OF CASH FLOWS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 122,380
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 4,528
<TRADING-ASSETS> 62,697
<INVESTMENTS-HELD-FOR-SALE> 245,312
<INVESTMENTS-CARRYING> 351,325
<INVESTMENTS-MARKET> 351,388
<LOANS> 1,938,585
<ALLOWANCE> 30,048
<TOTAL-ASSETS> 2,833,918
<DEPOSITS> 2,333,819
<SHORT-TERM> 146,393
<LIABILITIES-OTHER> 70,422
<LONG-TERM> 19,423
<COMMON> 20,562
0
0
<OTHER-SE> 243,299
<TOTAL-LIABILITIES-AND-EQUITY> 2,833,918
<INTEREST-LOAN> 135,477
<INTEREST-INVEST> 28,516
<INTEREST-OTHER> 563
<INTEREST-TOTAL> 166,669
<INTEREST-DEPOSIT> 62,196
<INTEREST-EXPENSE> 70,299
<INTEREST-INCOME-NET> 96,370
<LOAN-LOSSES> 3,344
<SECURITIES-GAINS> 46
<EXPENSE-OTHER> 64,620
<INCOME-PRETAX> 55,795
<INCOME-PRE-EXTRAORDINARY> 35,216
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 35,216
<EPS-PRIMARY> 2.17
<EPS-DILUTED> 2.11
<YIELD-ACTUAL> 5.10
<LOANS-NON> 8,629
<LOANS-PAST> 539
<LOANS-TROUBLED> 109
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 28,894
<CHARGE-OFFS> 2,957
<RECOVERIES> 767
<ALLOWANCE-CLOSE> 30,048
<ALLOWANCE-DOMESTIC> 30,048
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
