<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 June 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
(State or other jurisdiction of
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 June 30, 1995
Common Stock, $1.25 par value 16,020,666
<PAGE> 2
MARK TWAIN BANCSHARES, INC.
AND SUBSIDIARIES
Index
Part I. - Financial Information
Item 1. - Financial Statements
Condensed Consolidated Balance Sheet
June 30, 1995 and 1994 (unaudited)
and December 31, 1994................................ 3
Condensed Consolidated Statement of Income
for the three and six month periods
ended June 30, 1995 and 1994 (unaudited)..............4
Condensed Consolidated Statement of Cash
Flows for the six month periods ended
June 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>
June 30, June 30, December 31,
1995 1994 1994
------------ ------------ ------------
(in thousands of $)
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 122,345 $ 124,966 $ 139,947
Interest bearing deposits with banks - 53 54
Federal funds sold and securities
purchased under resale agreements 12,050 7,615 1,600
Trading account securities 29,988 45,784 32,909
Securities available for sale 233,155 218,988 228,359
Mortgage loans held for resale - 17,832 -
Investment securities 333,511 361,591 353,958
Loans, net of allowance for loan
losses of $29,961, $27,175
and $28,894, respectively 1,903,179 1,723,935 1,831,261
Premises and equipment 21,982 28,206 27,910
Accrued income receivable 17,940 15,839 17,572
Other assets 79,389 59,549 55,146
---------- ---------- ----------
Total assets $2,753,539 $2,604,358 $2,688,716
========== ========== ==========
LIABILITIES
Non-interest bearing deposits $ 425,575 $ 411,996 $ 461,958
Interest bearing deposits 1,892,080 1,775,427 1,810,099
---------- ---------- ----------
Total deposits 2,317,655 2,187,423 2,272,057
---------- ---------- ----------
Short-term borrowings 102,635 146,778 148,118
Other liabilities 57,545 24,180 14,103
Long-term debt 19,876 23,199 20,389
---------- ---------- ----------
Total liabilities $2,497,711 2,381,580 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 16,421,009, 16,327,871
and 16,375,527 shares, respectively 20,526 20,410 20,469
Surplus 61,837 59,248 60,246
Undivided profits 177,748 144,789 154,890
---------- ---------- ---------
260,111 224,447 235,605
Less common treasury stock at
cost, 400,343, 426,520 and 398,633
shares, respectively 4,283 1,669 1,556
---------- ---------- ---------
Total shareholders' equity 255,828 222,778 234,049
---------- ---------- ---------
Total liabilities and
shareholders' equity $2,753,539 $2,604,358 $2,688,716
========== ========== ==========
<FN>
See notes to condensed consolidated financial statements.
</FN>
</TABLE>
<PAGE> 4
<TABLE>
MARK TWAIN BANCSHARES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
<CAPTION>
For the Six Months For the Three Months
Ended June 30, Ended June 30,
1995 1994 1995 1994
---- ---- ---- ----
(in thousands of $ except for per share data)
<S> <C> <C> <C> <C>
INTEREST FROM EARNING ASSETS
Interest and fees on loans $89,226 $68,243 $45,773 $35,749
Interest on investment securities:
Taxable 11,491 12,991 5,666 6,198
Non-taxable 109 370 34 178
Interest on trading account securities 1,435 2,115 819 984
Interest on securities available for sale 7,409 7,367 3,674 3,660
Interest on mortgage loans held for resale - 2,177 - 652
Interest on deposits with banks - 3 - 1
Interest on federal funds sold and
securities purchased under resale
agreements 299 407 204 233
------- ------- ------- -------
Total interest income 109,969 93,673 56,170 47,655
------- ------- ------- -------
INTEREST EXPENSE
Interest on deposits 39,684 29,370 20,957 15,039
Interest on short-term borrowings 5,314 2,876 2,676 1,399
Interest on long-term debt 784 916 390 454
------- ------- ------- -------
Total interest expense 45,782 33,162 24,023 16,892
------- ------- ------- -------
Net interest income 64,187 60,511 32,147 30,763
Provision for loan losses 2,631 3,459 1,299 2,037
------- ------- ------- -------
Net interest income after provision
for loan losses 61,556 57,052 30,848 28,726
------- ------- ------- -------
OTHER INCOME
Service charges on deposit accounts 3,417 3,765 1,720 1,867
Securities transactions 46 309 - 309
Other income 14,842 15,343 7,621 7,339
------- ------- ------- -------
Total other income 18,305 19,417 9,341 9,515
------- ------- ------- -------
OTHER EXPENSES
Salaries 20,568 20,765 10,331 10,058
Employee benefits 3,633 3,721 1,727 1,681
Net occupancy expense 4,714 4,584 2,256 2,245
Furniture and equipment expense 1,977 2,274 965 1,149
Other expenses 12,988 14,906 6,676 7,575
------- ------- ------- -------
Total other expenses 43,880 46,250 21,955 22,708
------- ------- ------- -------
Income before income taxes 35,981 30,219 18,234 15,533
Applicable income taxes 12,988 10,727 6,609 5,615
------- ------- ------- -------
Net income $22,993 $19,492 $11,625 $ 9,918
======= ======= ======= =======
NET INCOME PER SHARE:
Primary $1.42 $1.21 $ .72 $ .62
===== ===== ===== =====
Fully diluted $1.38 $1.18 $ .70 $ .60
===== ===== ===== =====
COMMON DIVIDENDS PAID PER SHARE $ .54 $ .48 $ .27 $ .24
===== ===== ===== =====
<FN>
See notes to condensed consolidated financial statements.
</FN>
</TABLE>
<PAGE> 5
<TABLE>
MARK TWAIN BANCSHARES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
<CAPTION>
For the Six Months
Ended June 30,
1995 1994
---- ----
(in thousands of $)
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 22,993 $ 19,492
Adjustments to reconcile net cash provided by operating activities:
Provision for loan losses 2,631 3,459
Provision for depreciation and amortization 2,459 3,099
Amortization of security premiums and accretion of discounts (433) (1,851)
Net decrease in mortgage loans held for resale - 94,472
Net (increase) decrease in trading account securities 2,921 (4,319)
Securities transactions (46) (309)
Increase in interest receivable (368) (1,268)
Increase in interest payable 1,173 908
Other 10,738 667
-------- --------
Net cash provided by operating activities 42,068 114,350
-------- --------
INVESTING ACTIVITIES
Net increase in loans (74,125) (36,167)
Net proceeds from sales of foreclosed real estate 1,903 1,420
Net (increase) decrease in premises and equipment 3,862 (745)
Purchase of assets to be leased (523) (1,570)
Proceeds from sales of securities available for sale 5,676 2,962
Proceeds from maturities and prepayments of securities available for sale 11,771 26,637
Purchase of securities available for sale (1,311) (33,875)
Proceeds from maturities and prepayments of investment securities 24,239 136,782
Purchase of investment securities (10,168) (199,503)
-------- --------
Net cash used by investing activities (38,676) (104,059)
-------- --------
FINANCING ACTIVITIES
Net increase (decrease) in deposits 45,598 (4,490)
Net increase (decrease) in short-term borrowings (45,483) 7,082
Payments on long-term debt (32) (527)
Cash dividends (8,660) (7,027)
Purchase of treasury stock (3,145) -
Reissuance of treasury stock 1,178 830
Other - 22
-------- --------
Net cash used by financing activities (10,544) (4,110)
-------- --------
Increase (decrease) in cash and cash equivalents (7,152) 6,181
Cash and cash equivalents at beginning of period 141,547 126,400
-------- --------
Cash and cash equivalents at end of period $134,395 $132,581
======== ========
</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 six month periods ended June 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 June 30, 1995 the Company achieved increases in total assets, loans,
earning assets and deposits. Net income for the six months ended June 30,
1995 was $22.993 million, an increase of $3.501 million or 17.96% from the
first six months of 1994. Selected balance sheet comparisons are as
follows (in millions of $):
<TABLE>
<CAPTION>
June 30, June 30,
1995 1994 % Change
------------- ------------- ---------
<S> <C> <C> <C>
Total assets $2,753.5 $2,604.4 5.73%
Total loans 1,933.1 1,751.1 10.40%
Total earning assets 2,541.8 2,403.0 5.78%
Total deposits 2,317.7 2,187.4 5.95%
</TABLE>
<TABLE>
NET INTEREST INCOME
--------------------
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
Three Months Ended June 30, 1995 1994 % Change
------------------------------------------------------------------------------------------------------------------------------
(in millions of $)
<S> <C> <C> <C>
Average loans $1,920.2 $1,744.9 10.05%
Average earning assets 2,563.5 2,451.8 4.56%
Average deposits 2,251.0 2,197.1 2.45%
Net interest income (FTE) 32.5 31.1 4.42%
Net interest margin 5.08% 5.09% <1> basis point
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
Six Months Ended June 30, 1995 1994 % Change
------------------------------------------------------------------------------------------------------------------------------
(in millions of $)
<S> <C> <C> <C>
Average loans $1,893.7 $1,727.8 9.60%
Average earning assets 2,535.1 2,459.1 3.09%
Average deposits 2,222.5 2,189.1 1.53%
Net interest income (FTE) 64.8 61.1 6.01%
Net interest margin 5.16% 5.01% 15 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, an increase of $1.4 million or 4.42% over
the second quarter of 1994. Net interest margin for the second quarter of
1995 declined one basis point to 5.08% from the second quarter of 1994.
Net interest income, fully tax equivalent, for the quarter showed a $96
thousand increase over first quarter of 1995 despite a decline in net
interest margin from the 5.24% reported for first quarter. Net interest
margin for the first six months of 1995 was 5.16% compared to 5.01% for the
first six months of 1994. The performance is attributed to an increase in
short-term and long-term interest rates (including the prime rate) and an
increase in earning assets which was greater than the increase in interest
bearing liabilities. The interest rate spread for the second quarter of
1995 decreased 27 basis points to 4.18% compared to the second quarter of
1994. The ratio of interest bearing liabilities to earning assets
decreased to 80.6% for the quarter compared to 81.3% for the second quarter
of 1994. For the first six months of 1995, the interest rate spread
decreased 12 basis points to 4.28% compared to the first six months of
1994. The ratio of interest bearing liabilities to earning assets
decreased to 80.7% for the first half of 1995 compared to 81.6% for the
same period of 1994.
Average earning assets totaled $2,563.5 million during the second quarter
of 1995 as compared to $2,451.8 million during the second quarter of 1994,
an increase of $111.7 million or 4.56%. Average loan volume continued to
show steady increases with average loan outstandings of $1,920.2 million
for the second quarter of 1995 as compared to $1,866.9 million for the
first quarter of 1995 (an increase of $53.3 million) and $1,744.9 million
for the second quarter of 1994 (an increase of $175.3 million). Proceeds
from the liquidation of the mortgage loans held for resale portfolio in
1994, which averaged $35.3 million for second quarter 1994, were used to
fund increases in the loan portfolio in 1994. Securities averaged $579.8
million for the second quarter, a decrease of $13.1 million or 2.20%
compared to the same period last year. Average deposit volume for the
second quarter of 1995 increased $53.9 million or 2.45% to $2,251.0 million
compared to the same period in 1994. Average time deposits increased
$135.7 million or 16.48% in the second quarter of 1995 as compared to the
second quarter of 1994. Savings and money market deposits decreased $65.8
million or 8.91% and interest bearing demand deposits decreased $18.7
million or 7.61% for the same respective periods. Non-interest bearing
demand deposits increased $2.7 million or .70% and comprised 17.44% of
average deposits during the quarter ended June 30, 1995 compared to 17.74%
for the same period the previous 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>
-----------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 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 (A) $1,893,702 $89,760 9.56% $1,727,820 $68,681 8.02%
Taxable investment securities 343,366 11,491 6.75% 354,831 12,991 7.38%
Non-taxable investment securities (A) 3,949 168 8.58% 13,135 564 8.66%
Trading account securities 43,666 1,435 6.63% 67,309 2,115 6.34%
Securities available for sale (A) 240,615 7,449 6.24% 214,317 7,367 6.93%
Mortgage loans held for resale - - - 60,353 2,177 7.27%
Interest bearing deposits with banks - - - 177 3 3.42%
Federal funds sold and securities
purchased under resale agreements 9,795 299 6.16% 21,165 407 3.88%
--------- ------- ------ ---------- ------- -------
Total interest earning assets 2,535,093 110,602 8.80% 2,459,107 94,305 7.73%
------- ====== ------- =======
Non-interest earning assets:
Cash and due from banks 106,511 112,638
Other assets 121,351 101,553
FASB No. 115 allowance (9,784) (3,359)
Allowance for loan losses (29,281) (27,230)
---------- ----------
Total $2,723,890 $2,642,709
========== ==========
LIABILITIES AND SHAREHOLDER'S EQUITY
Interest bearing liabilities:
Interest bearing demand deposits $ 228,762 2,419 2.13% $ 247,613 2,500 2.04%
Savings and money market deposits 682,632 12,862 3.80% 739,472 10,327 2.82%
Time deposits 922,510 24,403 5.33% 814,788 16,543 4.09%
Short-term borrowings 190,713 5,314 5.62% 181,777 2,876 3.19%
Long-term debt 20,123 784 7.86% 24,120 916 7.66%
---------- ------- ------ ---------- ------- ------
Total interest bearing liabilities 2,044,740 45,782 4.52% 2,007,770 33,162 3.33%
------- ====== ------- ======
Non interest bearing liabilities:
Non-interest bearing deposits 388,635 387,231
Other liabilities 45,053 28,682
Shareholders' equity 245,462 219,026
---------- ----------
Total $2,723,890 $2,642,709
========== ==========
Net interest income $64,820 $61,143
======= =======
Net interest margin 5.16% 5.01%
===== =====
<FN>
(A) Fully tax-equivalent using tax rate of 35% in 1995 and 1994.
</FN>
</TABLE>
<PAGE> 10
<TABLE>
DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY; INTEREST RATES AND INTEREST DIFFERENTIAL
(continued)
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED JUNE 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 (A) $1,920,233 $46,045 9.62% $1,744,868 $35,976 8.27%
Taxable investment securities 338,519 5,666 6.71% 361,505 6,198 6.88%
Non-taxable investment securities (A) 2,613 53 8.14% 12,526 272 8.71%
Trading account securities 50,168 819 6.55% 59,481 984 6.64%
Securities available for sale (A) 238,717 3,694 6.21% 218,869 3,660 6.71%
Mortgage loans held for resale - - - 35,256 652 7.42%
Interest bearing deposits with banks - - - 100 1 4.01%
Federal funds sold and securities
purchased under resale agreements 13,218 204 6.19% 19,168 233 4.88%
--------- ------- ------ --------- -------- -------
Total interest earning assets 2,563,468 56,481 8.84% 2,451,773 47,976 7.85%
------- ====== -------- =======
Non-interest earning assets:
Cash and due from banks 107,076 112,456
Other assets 138,240 101,187
FASB No. 115 allowance (6,519) (7,839)
Allowance for loan losses (29,471) (27,070)
---------- ----------
Total $2,772,794 $2,630,507
========== ==========
LIABILITIES AND SHAREHOLDER'S EQUITY
Interest bearing liabilities:
Interest bearing demand deposits $ 226,533 1,199 2.12% $ 245,183 1,226 2.01%
Savings and money market deposits 673,272 6,499 3.87% 739,092 5,329 2.89%
Time deposits 958,640 13,259 5.55% 822,979 8,484 4.13%
Short-term borrowings 188,805 2,676 5.68% 163,170 1,399 3.44%
Long-term debt 19,980 390 7.83% 23,780 454 7.66%
---------- ------ ------ ---------- ------- ------
Total interest bearing liabilities 2,067,230 24,023 4.66% 1,994,204 16,892 3.40%
------ ====== ------- ======
Non-interest bearing liabilities:
Non-interest bearing deposits 392,525 389,811
Other liabilities 62,980 26,716
Shareholders' equity 250,059 219,776
---------- ----------
Total $2,772,794 $2,630,507
========== ==========
Net interest income $32,458 $31,084
======= =======
Net interest margin 5.08% 5.09%
===== =====
<FN>
(A) Fully tax-equivalent using tax rate of 35% in 1995 and 1994.
</FN>
</TABLE>
<PAGE> 11
<TABLE>
The following table 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 six and three months ended June 30, 1995.
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
Six Months Ended June 30, 1995 Compared to 1994
-----------------------------------------------------------------------------------------------------------------------------
(in thousands of $) Increase (Decrease) Due to:(1)
Volume Rate Net
------ ------ -----
Interest earned on:
<S> <C> <C> <C>
Loans $ 7,016 $14,063 $21,079
Taxable investment securities (410) (1,090) (1,500)
Non-taxable investment securities (391) (5) (396)
Trading account securities (773) 93 (680)
Securities available for sale 854 (772) 82
Mortgage loans held for resale (2,177) - (2,177)
Interest bearing deposits with banks (3) - (3)
Federal funds sold and securities
purchased under resale agreements (280) 172 (108)
------- ------- -------
Total interest earned on assets 3,836 12,461 16,297
------- ------- -------
Interest paid on:
Interest bearing demand deposits (196) 115 (81)
Savings and money market deposits (844) 3,379 2,535
Time deposits 2,388 5,472 7,860
Short-term borrowings 148 2,290 2,438
Long-term debt (155) 23 (132)
-------- -------- --------
Total interest paid on liabilities 1,341 11,279 12,620
-------- -------- --------
Net interest income $ 2,495 $ 1,182 $ 3,677
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
Three Months Ended June 30, 1995 Compared to 1994
-----------------------------------------------------------------------------------------------------------------------------
(in thousands of $) Increase (Decrease) Due to:(1)
Volume Rate Net
------ ------ -----
Interest earned on:
<S> <C> <C> <C>
Loans $ 3,840 $ 6,229 $10,069
Taxable investment securities (387) (145) (532)
Non-taxable investment securities (202) (17) (219)
Trading account securities (152) (13) (165)
Securities available for sale 318 (284) 34
Mortgage loans held for resale (652) - (652)
Interest bearing deposits with banks (1) - (1)
Federal funds sold and securities
purchased under resale agreements (83) 54 (29)
-------- -------- --------
Total interest earned on assets 2,681 5,824 8,505
-------- -------- --------
Interest paid on:
Interest bearing demand deposits (96) 69 (27)
Savings and money market deposits (508) 1,678 1,170
Time deposits 1,554 3,221 4,775
Short-term borrowings 248 1,029 1,277
Long-term debt (74) 10 (64)
-------- -------- --------
Total interest paid on liabilities 1,124 6,007 7,131
-------- -------- --------
Net interest income $ 1,557 $ (183) $ 1,374
======== ======== ========
<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>
---------------------------------------------------------------------------------------------------------------------
Six Months Ended June 30, 1995 1994 % Change
---------------------------------------------------------------------------------------------------------------------
(in thousands of $)
<S> <C> <C> <C>
Service charges on deposit accounts $ 3,417 $ 3,765 (9.24%)
Securities transactions 46 309 (85.11%)
Bond Division revenue 6,118 4,604 32.88%
Brokerage revenue 2,065 2,677 (22.86%)
Trust Division revenue 3,062 3,118 (1.80%)
Mortgage Division revenue - 1,647 NM
Net losses on foreclosed real estate (53) (155) (65.81%)
All other income 3,650 3,452 5.74%
------- ------- -------
Total non-interest income $18,305 $19,417 (5.73%)
======= ======= =======
</TABLE>
Non-interest income decreased $1.112 million or 5.73% for the first six
months of 1995 as compared to the same period of 1994. Non-interest income
for the second quarter of 1995 decreased $174 thousand or 1.83% compared to
the same period last year.
The first six months of 1994 reflected $1.647 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 $348 thousand
or 9.24% in the first six 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. The earnings credit rate is tied to general
interest rates and has increased as rates have increased between periods.
Gains totalling $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.
Bond Division revenues increased 32.88% or $1.514 million in the first
six months of 1995 as compared to the same period of 1994. Revenues for
the quarter were up $1.329 million over second quarter 1994. The Bond
Division's foreign exchange operation saw record volumes resulting from the
dollar's volatility in the first half of 1995. Foreign exchange revenues
for the first six months of 1995 increased $1.539 million over the first
six months of 1994.
<PAGE> 13
(Non-interest Income continued)
Brokerage Division revenues decreased $612 thousand or 22.86% in the
first half of 1995 as compared to the same period last year. Revenues
decreased $230 thousand for the quarter compared to second quarter 1994.
Brokerage volumes in the second quarter of 1995 improved over the first
quarter of 1995. The general decrease in Brokerage volumes from last year
are indicative of the general levels experienced in the industry.
A net loss on foreclosed real estate of $53 thousand was recognized in
the first six months of 1995 primarily due to adjustments to the carrying
values for declines in market values. Proceeds from sales of foreclosed
real estate totaled $1.903 million to date this year. A net loss on
foreclosed real estate of $155 thousand in the first six months of 1994
resulted from sales of $1.420 million of foreclosed real estate and
adjustments to the carrying values for declines in market values.
All other income increased $198 thousand or 5.74% for the first six
months of 1995 as compared to the same period of 1994. The first half of
1995 reflects a $1.160 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 $336 thousand appreciation in market
value. This is offset by a decrease in other income due primarily to $250
thousand in gains recorded on sale of assets previously under lease
financing agreements, a decrease of $110 thousand in international income
(primarily letter of credit fees), $84 thousand interest on a 1992 tax
refund received in 1994 and a decrease in rental income from one parcel of
other real estate owned and a general decline in SBA transaction fees for
the first half of 1995 as compared to the same period of 1994.
<PAGE> 14
<TABLE>
NON-INTEREST EXPENSE
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
Six Months Ended June 30, 1995 1994 % Change
-----------------------------------------------------------------------------------------------------------------------
(in thousands of $)
<S> <C> <C> <C>
Salary expense $20,568 $20,765 (0.95%)
Employee benefits 3,633 3,721 (2.36%)
Net occupancy 4,714 4,584 2.84%
FDIC premiums 2,457 2,396 2.55%
Furniture & equipment 1,977 2,274 (13.06%)
Advertising 1,015 1,116 (9.05%)
Data processing 2,261 2,215 2.08%
Legal fees 428 676 (36.69%)
Postage & freight 777 774 .39%
Amortization expense 410 942 (56.48%)
Expenses on foreclosed real estate 185 304 (39.14%)
Taxes other than income 215 264 (18.56%)
Other 5,240 6,219 (15.74%)
------- ------- -------
Total non-interest expense $43,880 $46,250 (5.12%)
======= ======= =======
</TABLE>
Non-interest expense for the first six months of 1995 was $43.880
million as compared to $46.250 million for the first six months of 1994, a
decrease of $2.370 million or 5.12%. Non-interest expense for the second
quarter of 1995 was $21.955 million as compared to $22.708 million for the
second quarter of 1994, a decrease of $753 thousand or 3.32%.
Salary expense for the six month period of 1995 decreased $197 thousand
or .95% as compared to the same period last year. Excluding the effect of
commissions and bonuses, salary expense decreased 8.92%. The decrease from
year-to-year can be attributed primarily due to a reduction in the number
of full time equivalent employees (971 at June 30, 1995 compared to 1,019
at March 31, 1995 and 1,009 at June 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 can be attributed to the Bond Division's performance
exceeding the previous years as discussed earlier. Employee benefit
expense decreased $88 thousand or 2.36% for the first six months of 1995 as
compared to the same period in 1994. Employee insurance expense decreased
$54 thousand or 6.96% for the first six months of 1995 as compared to the
first six months of 1994 primarily due to favorable experience in medical
claims and additional discounts obtained through the point-of-service
health plan put in place during the first quarter of 1994. Employee
retirement and pension expense increased $36 thousand or 3.21% as a result
of changes in actuarial assumptions.
Net occupancy expense increased $130 thousand or 2.84% for the first
half of 1995 as compared to the same period last year. The increase
primarily relates to higher building rent expense. Second quarter 1995
expense increased $11 thousand compared to the second quarter of 1994.
Furniture and equipment expense decreased $297 thousand or 13.06% for
the first six 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.
<PAGE> 15
(Non-interest Expense continued)
Legal fees decreased 36.69% or $248 thousand for the first six 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.
Amortization expense decreased $532 thousand or 56.48% for the six
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 $119 thousand or 39.14%
for the first half of 1995 compared to the first half of last year. Other
real estate owned at June 30, 1995 was $9.520 million compared to $10.479
million at June 30, 1994.
Taxes other than income, primarily corporate franchise tax, decreased
$49 thousand for the first six months of 1995 compared to the same period
last year and decreased $125 thousand for the second quarter of 1995
compared to the same period last year. The variances primarily relate to
state tax credits which are first applied to the Company's franchise tax
liability.
Other non-interest expense in the first six months of 1995 decreased
15.74% or $979 thousand from the same period last year. A $750 thousand
settlement payment was recorded in the second quarter of 1994. An
agreement was 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 decreased
$229 thousand or 4.19% from period to period. Loan and collection expense
related to the Mortgage Division operations decreased $252 thousand for the
first six months of 1995 compared to the first six months of 1994.
Insurance expense decreased $222 thousand for the first six 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. Charitable contribution expense increased $193 thousand
for the first half 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 second quarter of 1995 compared to
the second quarter of 1994, excluding the non-recurring expense of $750
thousand, increased $349 thousand. The largest component of the increase
can be attributed to contribution expense (primarily the donation of other
real estate owned) which increased $193 thousand in the second quarter of
1995 compared to the same quarter of 1994.
<PAGE> 16
<TABLE>
SUMMARY OF ALLOWANCE FOR LOAN LOSSES
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
(in thousands of $) 1995 1994 1995 1994
------------------------ -------------------------
<S> <C> <C> <C> <C>
Balance, beginning of period $28,894 $27,012 $29,047 $27,108
Provision for loan losses 2,631 3,459 1,299 2,037
Charge-offs (2,047) (3,711) (774) (2,277)
Recoveries 483 415 389 307
------ ------ ----- ------
Net charge-offs (1,564) (3,296) (385) (1,970)
------- ------- ------- -------
Balance, end of period $29,961 $27,175 $29,961 $27,175
======= ======= ======= =======
Loans, net of unearned income $1,933,140 $1,751,110 $1,933,140 $1,751,110
Average loan balance for the period $1,893,702 $1,727,820 $1,920,233 $1,744,868
Allowance as % of loans at
end of period 1.55% 1.55%
Allowance as % of non-performing loans 287.23% 265.93%
Net charge-offs as % of average loans
for the period .08% .19% .02% .11%
Annualized net charge-offs as % of
average loans for the period .17% .38% .08% .45%
</TABLE>
The provision for loan losses for the first six months of 1995
decreased $828 thousand or 23.94% compared to the first six months of 1994.
Net charge-offs totaled $1.564 million for the first six months of 1995
compared to $3.296 million for the first six months of 1994, a decrease of
$1.732 million. Charge-offs for the first half of 1994 included $1.719
million relating to one credit. Annualized net charge-offs were .17% of
average loans for the first six months of 1995 compared to .38% 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 June 30, 1995, the
level of the affiliate bank reserves as a percentage of total loans
outstanding ranged from 1.52% 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>
June 30, March 31, December 31,
(in thousands of $) 1995 1995 1994
-------- -------- -----------
<S> <C> <C> <C>
Non-accrual loans $ 9,165 $ 9,509 $ 6,813
Restructured loans 484 484 484
Foreclosed real estate 9,520 10,478 10,523
------- ------- -------
Total non-performing assets $19,169 $20,471 $17,820
======= ======= =======
Percentage of non-performing
assets to loans plus foreclosed
real estate .99% 1.08% .95%
Loans contractually past due
ninety days or more $782 $543 $1,132
Percentage of non-performing
assets plus ninety days past due
to loans plus foreclosed real estate 1.03% 1.11% 1.01%
Percentage of allowance to
non-performing loans 287.23% 275.69% 342.79%
Percentage of allowance to total
non-performing assets 156.30% 141.89% 162.14%
Percentage of allowance to
risk elements* 150.17% 138.23% 152.46%
Percentage of risk elements*
to total average assets .73% .79% .72%
<FN>
* Risk elements include total non-performing assets plus loans contractually past due ninety days or more.
</FN>
</TABLE>
<TABLE>
The following table summarizes the changes in non-performing assets for the six month period ended June 30, 1995.
(in thousands of $)
<S> <C>
Balance, beginning of year $17,820
Additions 10,034
Payments received and loans
returned to accrual status (4,776)
Sales of foreclosed real estate (2,021)
Charge-offs and writedowns (1,888)
-------
Balance, end of period $19,169
=======
</TABLE>
Loan quality remained strong at the end of second quarter 1995
reflecting the Company's continued focus on maintaining high quality
assets. Non-performing assets at June 30, 1995 represent .99% of loans
plus foreclosed real estate, compared to 1.08% at the end of first quarter
1995 and .95% at year-end 1994. Non-performing assets of $19.169 million
at June 30, 1995 were $1.302 million or 6.36% lower than at March 31, 1995.
Non-performing assets at June 30, 1995 increased $1.349 million or 7.57%
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>
JUNE 30, JUNE 30,
(in thousands of $) 1995 1994
--------- ----------
<S> <C> <C>
At June 30,
-------------
Total shareholders' equity $255,828 $222,778
Long-term debt $19,876 $23,199
Per Share Data
--------------
Dividend payout 38.03% 39.67%
Common dividends paid $8,660 $7,027
Dividends paid per share $0.54 $0.48
Book value per share $15.97 $14.01
Fully diluted book value per share $15.96 $14.07
Selected Ratios
---------------
Return on YTD average assets 1.70% 1.49%
Return on YTD average common equity 18.89% 17.95%
YTD average equity to average assets 9.01% 8.29%
YTD average equity to average loans 12.96% 12.68%
YTD average loans to average deposits 85.20% 78.93%
Period end total tier 1 capital to total risk-weighted assets 11.14% 10.91%
Period end total capital to total risk-weighted assets 12.76% 12.63%
Efficiency ratio 52.82% 57.63%
</TABLE>
The Company's total shareholders' equity was $255.828 million at June
30, 1995 which reflects a 14.84% or $33.050 million increase as compared to
June 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 June 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 $385,129 $(98,041) $(29,592) $(192,595) $462,352
Cumulative Gap 385,129 287,088 257,496 64,901 527,253
</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 April 12, 1995 reporting the Company's
earnings release for the first quarter ending March 31, 1995.
Report of Form 8-K dated April 26, 1995 announcing a new stock
purchase program.
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.
<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: August 11, 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 SHARE
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
(in thousands of $ except for per share data) 1995 1994 1995 1994
------------------------ -------------------------
<S> <C> <C> <C> <C>
PRIMARY
Earnings:
Net income $22,993 $19,492 $11,625 $9,918
======= ======= ======= ======
Shares:
Weighted average number of common
shares outstanding 16,038,369 15,825,494 16,018,107 15,851,764
Weighted average number of common
share equivalents 190,063 243,105 219,115 246,020
---------- ---------- ---------- ----------
16,228,432 16,068,599 16,237,222 16,097,784
========== ========== ========== ==========
Primary earnings per common share $1.42 $1.21 $.72 $.62
===== ===== ==== ====
ASSUMING FULL DILUTION
Earnings:
Net income $22,993 $19,492 $11,625 $ 9,918
Add: After tax interest applicable to
Convertible Notes 189 228 93 112
Amortization of capital note fees 21 34 10 21
------- ------- ------- ------
Fully diluted net income $23,203 $19,754 $11,728 $10,051
======= ======= ======= =======
Shares:
Weighted average number of common
shares outstanding 16,038,369 15,825,494 16,018,107 15,851,764
Assuming conversion of Convertible Notes
and dilutive stock options 779,689 900,033 764,062 882,599
---------- ---------- ---------- ----------
16,818,058 16,725,527 16,782,169 16,734,363
========== ========== ========== ==========
Earnings per common share assuming full dilution $1.38 $1.18 $.70 $.60
===== ===== ==== ====
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
SEC FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1995 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 122,345
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 12,050
<TRADING-ASSETS> 29,988
<INVESTMENTS-HELD-FOR-SALE> 233,155
<INVESTMENTS-CARRYING> 333,511
<INVESTMENTS-MARKET> 334,694
<LOANS> 1,933,140
<ALLOWANCE> 29,961
<TOTAL-ASSETS> 2,753,539
<DEPOSITS> 2,317,655
<SHORT-TERM> 102,635
<LIABILITIES-OTHER> 57,545
<LONG-TERM> 19,876
<COMMON> 20,526
0
0
<OTHER-SE> 235,302
<TOTAL-LIABILITIES-AND-EQUITY> 2,753,539
<INTEREST-LOAN> 89,226
<INTEREST-INVEST> 19,009
<INTEREST-OTHER> 299
<INTEREST-TOTAL> 109,969
<INTEREST-DEPOSIT> 39,684
<INTEREST-EXPENSE> 45,782
<INTEREST-INCOME-NET> 64,187
<LOAN-LOSSES> 2,631
<SECURITIES-GAINS> 46
<EXPENSE-OTHER> 43,880
<INCOME-PRETAX> 35,981
<INCOME-PRE-EXTRAORDINARY> 22,993
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22,993
<EPS-PRIMARY> 1.42
<EPS-DILUTED> 1.38
<YIELD-ACTUAL> 5.16
<LOANS-NON> 9,165
<LOANS-PAST> 782
<LOANS-TROUBLED> 484
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 28,894
<CHARGE-OFFS> 2,047
<RECOVERIES> 483
<ALLOWANCE-CLOSE> 29,961
<ALLOWANCE-DOMESTIC> 29,961
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
