<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 March 31, 1996
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 March 31, 1996
Common Stock, $1.25 par value 16,140,007
<PAGE> 2
MARK TWAIN BANCSHARES, INC.
AND SUBSIDIARIES
Index
Part I. - Financial Information
Item 1. - Financial Statements
Condensed Consolidated Balance Sheet
March 31, 1996 and 1995 (unaudited)
and December 31, 1995.................................3
Condensed Consolidated Statement of Income
for the three month periods
ended March 31, 1996 and 1995 (unaudited).............4
Condensed Consolidated Statement of Cash
Flows for the three month periods ended
March 31, 1996 and 1995 (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......................................17
Item 6. - Exhibits and Reports on Form 8-K......................17
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM I - FINANCIAL STATEMENTS
<TABLE>
MARK TWAIN BANCSHARES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
<CAPTION>
March 31, December 31,
-------------------------
(in thousands of dollars) 1996 1995 1995
- ------------------------------------------------------------------------------------ ------------ ------------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 139,767 $ 108,335 $ 156,207
Federal funds sold and securities
purchased under resale agreements 1,300 16,350 7,900
Held to maturity securities 249,190 346,625 244,094
Available for sale securities 460,011 231,392 445,808
Trading securities 72,552 41,884 63,579
Loans, net of allowance for loan losses of
$31,198, $29,047 and $30,508, respectively 1,985,438 1,848,954 1,941,431
Premises and equipment 20,745 27,072 20,764
Accrued income receivable 19,896 17,371 17,830
Other assets 99,081 103,575 70,618
- ---------------------------------------------------------------------------------- ---------- ----------
Total assets $3,047,980 $2,741,558 $2,968,231
- ------------------------------------------------------------------------========== ========== ==========
LIABILITIES
Non-interest bearing deposits $ 440,853 $ 395,793 $ 519,155
Interest bearing deposits 1,978,463 1,846,372 1,938,237
- ---------------------------------------------------------------------------------- ---------- ----------
Total deposits 2,419,316 2,242,165 2,457,392
- ---------------------------------------------------------------------------------- ---------- ----------
Short-term borrowings 261,376 160,092 165,731
Other liabilities 88,815 73,584 50,712
Long-term debt 3,795 20,044 18,490
- ---------------------------------------------------------------------------------- ---------- ----------
Total liabilities 2,773,302 2,495,885 2,692,325
- ---------------------------------------------------------------------------------- ---------- ----------
SHAREHOLDERS' EQUITY
Common stock, $1.25 par value, authorized
30,000,000 shares, issued 16,508,220
16,410,444 and 16,508,220 shares, respectively 20,635 20,513 20,635
Surplus 64,092 61,555 63,630
Undivided profits 202,344 171,543 194,888
Net unrealized gains (losses) on available
for sale securities (2,167) (5,462) 1,026
- ---------------------------------------------------------------------------------- ---------- ----------
284,904 248,149 280,179
Less common treasury stock at cost, 368,213
346,061, and 362,685 shares, respectively 10,226 2,476 4,273
- ---------------------------------------------------------------------------------- ---------- ----------
Total shareholders' equity 274,678 245,673 275,906
- ---------------------------------------------------------------------------------- ---------- ----------
Total liabilities and shareholder's equity $3,047,980 $2,741,558 $2,968,231
- ------------------------------------------------------------------------========== ========== ==========
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE> 4
<TABLE>
MARK TWAIN BANCSHARES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
<CAPTION>
Three Months Ended
March 31,
(in thousands of dollars except per share data) 1996 1995
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans $44,775 $43,453
Interest on held to maturity securities:
Taxable 3,990 5,825
Non-taxable 34 75
Interest on available for sale securities 7,083 3,735
Interest on trading securities 1,194 616
Interest on federal funds sold and securities
purchased under resale agreements 38 95
- -----------------------------------------------------------------------------------------------------
Total interest income 57,114 53,799
- -----------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Interest on deposits 22,332 18,727
Interest on short-term borrowings 3,161 2,638
Interest on long-term debt 212 394
- -----------------------------------------------------------------------------------------------------
Total interest expense 25,705 21,759
- -----------------------------------------------------------------------------------------------------
Net interest income 31,409 32,040
Provision for loan losses 981 1,332
- -----------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 30,428 30,708
- -----------------------------------------------------------------------------------------------------
OTHER INCOME
Service charges on deposit accounts 1,942 1,697
Securities transactions 234 46
Other income 7,791 7,221
- -----------------------------------------------------------------------------------------------------
Total other income 9,967 8,964
- -----------------------------------------------------------------------------------------------------
OTHER EXPENSES
Salaries 10,874 10,237
Employee benefits 2,117 1,906
Net occupancy expense 2,199 2,458
Furniture and equipment expense 873 1,012
Other expenses 4,931 6,312
- -----------------------------------------------------------------------------------------------------
Total other expenses 20,994 21,925
- -----------------------------------------------------------------------------------------------------
Income before income taxes 19,401 17,747
Applicable income taxes 6,880 6,379
- -----------------------------------------------------------------------------------------------------
Net income $12,521 $11,368
- ---------------------------------------------------------------------------------====================
NET INCOME PER SHARE
- -----------------------------------------------------------------------------------------------------
Primary $0.76 $0.70
- -----------------------------------------------------------------------------------==================
Fully diluted $0.75 $0.68
- -----------------------------------------------------------------------------------==================
COMMON DIVIDENDS PAID PER SHARE $0.31 $0.27
- -----------------------------------------------------------------------------------==================
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE> 5
<TABLE>
MARK TWAIN BANCSHARES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
<CAPTION>
Three Months Ended
March 31,
(in thousands of dollars) 1996 1995
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 12,521 $ 11,368
Adjustments to reconcile net cash provided by operating activities:
Provision for loan losses 981 1,332
Provision for depreciation and amortization 1,125 1,306
Amortization of security premiums and accretion of discounts (272) (178)
Net increase in trading securities (8,973) (8,975)
Securities transactions (234) (46)
(Increase) decrease in accrued income receivable (2,066) 201
Increase (decrease) in interest payable (19) 319
Other 10,865 7,647
- ----------------------------------------------------------------------------------------- --------
Net cash provided by operating activities 13,928 12,974
- ----------------------------------------------------------------------------------------- --------
INVESTING ACTIVITIES
Net increase in loans (45,370) (19,071)
Proceeds from sales of foreclosed property 223 748
Net increase in premises and equipment (713) (303)
Purchase of assets to be leased (15) (150)
Proceeds from sale of available for sale securities 36,175 5,676
Proceeds from maturities and prepayments of available for sale securities 11,387 5,093
Purchase of available for sale securities (65,839) -
Proceeds from maturities and prepayments of held to maturity securities 13,940 10,661
Purchase of held to maturity securities (19,073) (9,915)
- ----------------------------------------------------------------------------------------- --------
Net cash used by investing activities (69,285) (7,261)
- ----------------------------------------------------------------------------------------- --------
FINANCING ACTIVITIES
Net decrease in deposits (38,076) (29,892)
Net increase in short-term borrowings 95,645 11,974
Payments on long-term debt (11,580) (32)
Cash dividends (5,066) (4,337)
Purchase of treasury stock (9,544) (1,315)
Reissuance of treasury stock 938 1,027
- ----------------------------------------------------------------------------------------- --------
Net cash provided (used) by financing activities 32,317 (22,575)
- ----------------------------------------------------------------------------------------- --------
Decrease in cash and cash equivalents (23,040) (16,862)
Cash and cash equivalents at beginning of period 164,107 141,547
- ----------------------------------------------------------------------------------------- --------
Cash and cash equivalents at end of period $141,067 $124,685
- ---------------------------------------------------------------------------------======== ========
See notes to condensed consolidated financial statements.
</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 month period ended March 31, 1996 are not necessarily
indicative of the results that may be expected for the year ended December
31, 1996. 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, 1995.
NOTE B--MERGER OF BANKS
On February 6, 1995, United Kansas Bank & Trust, which was acquired in
November 1994, was merged into Mark Twain Kansas Bank. On November 6,
1995, Mark Twain Kansas Bank was merged into Mark Twain Kansas City Bank.
NOTE C--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.
NOTE D--LONG-TERM DEBT
On January 16, 1996, the Company instructed the trustee to call the 8 1/2%
debentures due 1999 for redemption at a premium over par of 1% effective
March 1, 1996. The outstanding balance of the debentures at the time of
redemption was $11,579,000.
NOTE E--SUBSEQUENT EVENT
On May 8, 1996, the Company announced that it has reached an agreement with
Northland Bancshares, Inc. ($72 million in assets), owner of First National
Bank of Platte County, in Kansas City, Missouri, for the merger of
Northland Bancshares, Inc. into a Mark Twain subsidiary. Consummation of
this transaction is expected to occur in the third or fourth quarter of
1996 and will be accounted for as a pooling of interests.
<PAGE> 7
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
- ----------------------
At March 31, 1996 the Company achieved increases in total assets, total
loans, earning assets and deposits. Net income for the three month period
ended March 31, 1996 was $12.521 million, an increase of $1.153 million or
10.14% from the first three months of 1995. Selected balance sheet
comparisons are as follows (in millions of $):
<TABLE>
<CAPTION>
March 31,
-----------------------
1996 1995 % Change
---------------------------------------
<S> <C> <C> <C>
Total assets $3,048.0 $2,741.6 11.18%
Total loans 2,016.6 1,878.0 7.38%
Total earning assets 2,803.2 2,523.1 11.10%
Total deposits 2,419.3 2,242.2 7.90%
</TABLE>
<TABLE>
NET INTEREST INCOME
<CAPTION>
Three Months Ended
March 31,
1996 1995 % Change
----------------------------------------------
<S> <C> <C> <C>
Average loans $1,983.4 $1,866.9 6.24%
Average earning assets 2,756.9 2,506.4 9.99%
Average deposits 2,356.5 2,193.8 7.42%
Net interest income (FTE) 31.7 32.4 (2.18%)
Net interest margin 4.62% 5.24% (62 basis points)
</TABLE>
Measured on a fully tax equivalent basis, net interest income totaled $31.7
million for the first quarter of 1996 compared to $32.4 million for the
first quarter of 1995 and $32.1 million in the fourth quarter of 1995. Net
interest margin for the first quarter of 1996 was 4.62% compared to 5.24%
for the first quarter of 1995 and 4.85% for the fourth quarter of 1995.
Due to competitive factors, a decline in prime rate and increased
securities purchases this year, the net interest margin decline was
anticipated. The average prime rate for the first quarter of 1996 was 49
basis points less than the average prime rate for the first quarter of
1995. As earning assets and interest bearing liabilities repriced during
1995 with the gradual decline in interest rates and as the mix of earning
assets and interest bearing liabilities changed between periods, the gross
yield on earning assets decreased 39 basis points for the first three
months of 1996 compared to the same period last year. The average cost of
interest bearing liabilities increased 30 basis points for the first three
months of 1996 compared to the same period last year. The interest rate
spread for the first quarter of 1996 decreased 69 basis points to 3.71%
compared to the first quarter of 1995. The ratio of interest bearing
liabilities to earning assets decreased to 80.55% for the first quarter of
1996 compared to 80.67% for the first quarter of 1995.
<PAGE> 8
(Net Interest Income continued)
Average earning assets totaled $2,756.9 million for the first quarter of
1996 compared to $2,506.4 million for the first quarter of 1995, an
increase of $250.5 million or 9.99%. Average loan volume continued to show
steady increases with loans averaging $1,983.4 million for the first
quarter of 1996 compared to $1,866.9 million for the first quarter of 1995
(an increase of $116.5 million) and $1,938.7 million for the fourth quarter
of 1995 (an increase of $44.7 million). Available for sale and held to
maturity securities averaged $698.0 million for the first quarter of this
year, an increase of $101.9 million or 17.09% compared to the same period
last year. Average deposit volume for the first quarter of 1996 increased
$162.7 million or 7.42% to $2,356.5 million compared to the same period in
1995. Average time deposits increased $176.2 million or 19.88% in the
first quarter of 1996 as compared to the first quarter of 1995. Savings
and money market deposits decreased $23.5 million or 3.39% and interest
bearing demand deposits decreased $3.2 million or 1.36% for the same
respective periods. Non-interest bearing demand deposits increased $13.2
million or 3.42% and comprised 16.88% of average deposits for the first
quarter of 1996 compared to 17.54% for the same period last year. Average
long-term debt decreased $8.1 million, partially due to the redemption of
the 8 1/2% debentures on March 1, 1996 and also due to conversions of the
Company's 7% convertible subordinated capital notes.
<PAGE> 9
<TABLE>
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY; INTEREST RATES AND INTEREST DIFFERENTIAL
The following table shows 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>
Three Months Ended March 31, 1996 Three Months Ended March 31, 1995
------------------------------------- -------------------------------------
Average Yield/ Average Yield/
(in thousands of dollars) Balance Interest Rate Balance Interest Rate
- ------------------------------------------------------------------------------ -----------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest earning assets:
Loans <F1><F2> $1,983,358 $44,991 9.12% $1,866,877 $43,715 9.50%
Taxable held to maturity securities 245,801 3,990 6.53% 348,268 5,825 6.78%
Non-taxable held to maturity securities<F1> 2,596 52 8.06% 5,300 115 8.80%
Available for sale securities<F1> 449,564 7,098 6.35% 242,534 3,755 6.28%
Trading securities 73,213 1,194 6.56% 37,092 616 6.74%
Federal funds sold and securities
purchased under resale agreements 2,359 38 6.48% 6,334 95 6.08%
- ------------------------------------------------------------------------------ ----------------------------------
Total interest earning assets 2,756,891 57,363 8.37% 2,506,405 54,121 8.76%
- ------------------------------------------------------------------------------ ----------------------------------
Cash and due from banks 108,319 105,940
Other assets 113,659 104,272
FASB No. 115 allowance 1,615 (13,085)
Allowance for loan losses (30,647) (29,089)
- ------------------------------------------------------ ----------
Total $2,949,837 $2,674,443
- --------------------------------------------========== ==========
LIABILITIES AND SHAREHOLDER'S EQUITY
Interest bearing demand deposits $ 227,880 1,129 1.99% $ 231,016 1,220 2.14%
Savings and money market deposits 668,600 6,064 3.65% 692,095 6,363 3.73%
Time deposits 1,062,137 15,139 5.73% 885,979 11,144 5.10%
Short-term borrowings 249,817 3,161 5.09% 192,642 2,638 5.55%
Long-term debt 12,168 212 7.01% 20,268 394 7.88%
- ------------------------------------------------------------------------------ ----------------------------------
Total interest bearing liabilities 2,220,602 25,705 4.66% 2,022,000 21,759 4.36%
- ------------------------------------------------------------------------------ ----------------------------------
Non-interest bearing deposits 397,873 384,702
Other liabilities 52,121 26,927
Shareholders' equity 279,241 240,814
- ------------------------------------------------------ ----------
Total $2,949,837 $2,674,443
- --------------------------------------------========== ==========
Net interest income $31,658 $32,362
- ------------------------------------------------------------======= =======
Net interest margin 4.62% 5.24%
- -------------------------------------------------------------------------===== =====
<FN>
<F1>Adjusted to a fully taxable basis using federal statutory rate of 35% in 1996 and 1995.
<F2>Includes non-accrual loans.
</FN>
</TABLE>
<PAGE> 10
<TABLE>
The following table sets 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 three months ended March 31, 1996.
<CAPTION>
Three Months Ended March 31,
1996 Compared to 1995
Increase (Decrease) Due to: <F1>
(in thousands of dollars) Volume Rate Net
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INTEREST INCOME
Loans $ 2,671 $(1,395) $ 1,276
Taxable held to maturity securities (1,668) (167) (1,835)
Non-taxable held to maturity securities (55) (8) (63)
Available for sale securities 3,267 76 3,343
Trading securities 589 (11) 578
Federal funds sold and securities
purchased under resale agreements (64) 7 (57)
- ----------------------------------------------------------------------------- ------- -------
Total increase (decrease) in interest earned on assets 4,740 (1,498) 3,242
- ----------------------------------------------------------------------------- ------- -------
INTEREST EXPENSE
Interest bearing demand deposits (16) (75) (91)
Savings and money market deposits (214) (85) (299)
Time deposits 2,392 1,603 3,995
Short-term borrowings 736 (213) 523
Long-term debt (144) (38) (182)
- ----------------------------------------------------------------------------- ------- -------
Total increase in interest paid on liabilities 2,754 1,192 3,946
- ----------------------------------------------------------------------------- ------- -------
Total increase (decrease) in net interest income $ 1,986 $(2,690) $ (704)
- ----------------------------------------------------------------------======= ======= =======
<FN>
<F1> 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> 11
<TABLE>
NON-INTEREST INCOME
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Three Months Ended March 31, 1996 1995 % Change
- -----------------------------------------------------------------------------------------------------------------
(in thousands of dollars)
<S> <C> <C> <C>
Service charges on deposit accounts $1,942 $1,697 14.44%
Securities transactions 234 46 408.70%
Bond Division revenue 3,817 2,808 35.93%
Brokerage revenue 1,345 1,016 32.38%
Trust Division revenue 1,704 1,529 11.45%
Net gains on foreclosed real estate 30 8 275.00%
All other income 895 1,860 (51.88%)
- ------------------------------------------------------------------ ------ -------
Total non-interest income $9,967 $8,964 11.19%
- ------------------------------------------------------------====== ====== =======
</TABLE>
Non-interest income of $9.967 million increased $1.003 million or 11.19%
for the first three months of 1996 as compared to the same period of 1995.
Service charges on deposit accounts showed an increase of $245 thousand or
14.44% in the first three months of 1996 as compared to the same period in
1995. Commercial account service charges increased $99 thousand or 14.62%
period to period as a result of a reduction in the earnings credit rates
paid to commercial accounts to offset the cost of deposit services. An
increase in the fee charged for NSF checks resulted in an $80 thousand
increase period to period.
Gains totaling $234 thousand on sales of available for sale securities were
realized in the first quarter of 1996. Proceeds from the sale of these
securities were $36.175 million. In the first quarter of 1995, $5.676
million of available for sale securities were sold with gains totaling $46
thousand.
The Capital Markets Group (including Bond and Brokerage operations) showed
continued growth in revenues, with an increase of $1.338 million or 34.99%
for the three month period ending March 31, 1996 as compared to the same
period last year. Bond Division revenues increased $1.009 million or
35.93% in the first three months of 1996 compared to first quarter 1995.
Revenues for the quarter were up $745 thousand over fourth quarter 1995.
Brokerage revenues increased $329 thousand or 32.38% in the first three
months of 1996 compared to the same period last year. Revenues increased
$238 thousand over fourth quarter 1995.
Trust Division revenues increased $175 thousand or 11.45% as a result of an
expanded customer base and fees associated from increased sales of
proprietary mutual funds.
A net gain on sale of foreclosed property of $30 thousand was recognized in
the first three months of 1996. Proceeds from sales of foreclosed property
totaled $223 thousand to date this year. A net gain on foreclosed property
of $8 thousand in the first quarter of 1995 resulted from foreclosed
property sales of $748 thousand.
<PAGE> 12
(Non-interest Income continued)
All other income decreased $965 thousand or 51.88% for the first three
months of 1996 as compared to the same period of 1995. Changes in the
market value of the Company's proprietary trading accounts showed a net
loss of $78 thousand for the first quarter of 1996 compared to a net gain
of $594 thousand in the first quarter of 1995, resulting in a decrease
period to period of $672 thousand. Rental income decreased $249 thousand
for the first three months of 1996 compared to the same period last year
due to the sale of a low-to-moderate-income housing project, owned and
operated by the Company, in June of 1995.
<TABLE>
NON-INTEREST EXPENSE
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Three Months Ended March 31, 1996 1995 % Change
- -----------------------------------------------------------------------------------------------------------------------
(in thousands of $)
<S> <C> <C> <C>
Salary expense $10,874 $10,237 6.22%
Employee benefits 2,117 1,906 11.07%
Net occupancy 2,199 2,458 (10.54%)
FDIC premiums 3 1,222 (99.75%)
Furniture & equipment 873 1,012 (13.74%)
Advertising 333 516 (35.47%)
Data processing 1,190 1,113 6.92%
Legal fees 241 103 133.98%
Postage & freight 430 400 7.50%
Amortization expense 358 201 78.11%
Expenses on foreclosed property 51 108 (52.78%)
Taxes other than income 125 150 (16.67%)
Other 2,200 2,499 (11.96%)
- -------------------------------------------------------------------- ------- -------
Total non-interest expense $20,994 $21,925 (4.25%)
- -------------------------------------------------------------======= ======= =======
</TABLE>
Non-interest expense for the first three months of 1996 was $20.994 million
as compared to $21.925 million for the first three months of 1995, a
decrease of $.931 million or 4.25%.
Salary expense for the three month period of 1996 increased $637 thousand
or 6.22% as compared to the same period last year. Excluding the effect of
commissions and bonuses, salary expense increased $271 thousand or 3.49%.
The number of full time equivalent employees was 987 at March 31, 1996
compared to 1,019 at March 31, 1995. Commission and bonus expense
increased 14.75% from first quarter 1996 compared to first quarter 1995.
The increase is directly related to the sales revenues reported by the
Company's fee divisions and can be attributed to the Capital Markets Group
performance exceeding the first quarter of last year as discussed earlier.
Employee benefit expense increased $211 thousand or 11.07% for the first
three months of 1996 as compared to the same period in 1995 and is
primarily due to increased employee retirement expense resulting from
changes in actuarial assumptions.
Net occupancy expense decreased $259 thousand or 10.54% for the first
quarter of 1996 as compared to the same period last year. As discussed
earlier, the sale of a low-to-moderate-income housing project owned and
operated by the Company resulted in a $213 thousand reduction in expenses
associated with the property from period to period.
<PAGE> 13
(Non-interest Expense continued)
FDIC premiums expense decreased $1.219 million or 99.75%. In August 1995,
the FDIC Board of Directors voted to reduce deposit insurance premiums to
$.04 from $.23 per $100 of assessable deposits. The effective date for the
premium change was June 1, 1995.
Furniture and equipment expense decreased $139 thousand or 13.74% for the
first three months of 1996 compared to the same period in 1995. The
decline is due to a general decrease in depreciation expense and includes
computer hardware which became fully depreciated in the second quarter of
1995.
Advertising expense decreased $183 thousand or 35.47% for the first three
months of 1996 from the first quarter of 1995. First quarter 1995 expense
includes television advertising expense that was not incurred this year.
Legal fees increased $138 thousand or 133.98% for the first three months of
1996 as compared to the same period last year. First quarter 1996 legal
expense on an annualized basis is comparable with the level of legal
expenses incurred for all of 1995. The increase quarter to quarter relates
to differences in the timing of legal fees incurred.
Amortization expense increased $157 thousand or 78.11% for the first three
months of 1996 compared to the same period of 1995 and is primarily
attributed to increased capital note fee amortization. On March 1, 1996
the Company called for the redemption of its 8 1/2% debentures due 1999 at
a 1% premium over par. Amortization expense increased $106 thousand
related to these debentures for first quarter 1996 compared to first
quarter 1995. Because of the high volume of 7% convertible subordinated
notes in the first quarter of 1996, amortization expense associated with
these notes increased $44 thousand for first quarter 1996 over first
quarter 1995.
Expenses on foreclosed property decreased $57 thousand or 52.78% for the
first three months of 1996 compared to the first three months of last year.
Foreclosed property at March 31, 1996 totaled $6.105 million compared to
$10.478 million at March 31, 1995, a decrease of $4.373 million.
Other non-interest expense in the first three months of 1996 decreased $299
thousand or 11.96% from the same period last year. Insurance expense
decreased $210 thousand for the first three months of 1996 as compared to
the same period in 1995 related to an increase in the cash surrender value
of life insurance policies offsetting the premium expense. Operating
expenses related to a low-to-moderate income housing project sold in June
1995, as discussed earlier, decreased $91 thousand from the same period
last year. These decreases in non-interest expense were offset by a 1%
call premium of $116 thousand paid on the redemption of the 8 1/2%
debentures on March 1, 1996.
<PAGE> 14
<TABLE>
SUMMARY OF ALLOWANCE FOR LOAN LOSSES
<CAPTION>
Three Months Ended
March 31,
(in thousands of dollars) 1996 1995
- -----------------------------------------------------------------------------------
<S> <C> <C>
Allowance at beginning of period $30,508 $28,894
Charge-offs (749) (1,273)
Recoveries 458 94
- ----------------------------------------------------------------- -------
Net charge-offs (291) (1,179)
- ----------------------------------------------------------------- -------
Additions to allowance charged to expense 981 1,332
- ----------------------------------------------------------------- -------
Allowance at end of period $31,198 $29,047
- ----------------------------------------------------------======= =======
Loans, net of unearned income at end of period $2,016,636 $1,878,001
Average loan balance for the period $1,983,358 $1,866,877
Allowance as % of loans at end of period 1.55% 1.55%
Allowance as % of non-performing loans 358.23% 275.69%
Net charge-offs as % of average loans for the period .01% .06%
Annualized net charge-offs as % of average loans
for the period .06% .25%
</TABLE>
The provision for loan losses for the first three months of 1996
decreased $351 thousand or 26.35% compared to the first three months of
1995. Net charge-offs totaled $291 thousand for the first three months of
1996 compared to $1.179 million for the first three months of 1995, a
decrease of $888 thousand. Annualized net charge-offs were .06% of average
loans for the first three months of 1996 compared to .25% for the same
period in 1995.
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 March 31, 1996, the
level of the affiliate bank reserves as a percentage of total loans
outstanding ranged from 1.50% to 1.57% 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> 15
<TABLE>
NON-PERFORMING ASSETS
<CAPTION>
March 31, March 31, December 31,
(in thousands of dollars) 1996 1995 1995
- ----------------------------------------------------- ----------- ------------
<S> <C> <C> <C>
Non-accrual loans $ 7,764 $ 9,509 $13,663
Restructured loans 109 484 109
Foreclosed property 6,105 10,478 6,099
- ---------------------------------------------------- ------- -------
Total non-performing assets $13,978 $20,471 $19,871
- ---------------------------------------------======= ======= =======
Percentage of non-performing assets
to loans plus foreclosed property 0.69% 1.08% 1.00%
Loans contractually past due ninety
days or more $836 $543 $530
Percentage of non-performing assets
plus ninety days past due to loans
plus foreclosed property 0.73% 1.11% 1.03%
Percentage of allowance to
non-performing loans 358.23% 275.69% 213.31%
Percentage of allowance to total
non-performing assets 223.19% 141.89% 153.53%
Percentage of allowance to
risk elements <F1> 210.60% 138.23% 149.54%
Percentage of risk elements <F1>
to total average assets .50% .79% .74%
<FN>
<F1> 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 three month period ended March 31, 1996
(in thousands of dollars):
<S> <C>
Balance, beginning of year $19,871
Additions 1,234
Payments received and loans
returned to accrual status (6,275)
Sales of foreclosed property (190)
Charge-offs and writedowns (662)
- ----------------------------------------------------
Balance, end of period $13,978
- ---------------------------------------------=======
</TABLE>
Loan quality remained strong at the end of first quarter 1996
reflecting the Company's continued focus on maintaining high quality
assets. Non-performing assets at March 31, 1996 were .69% of loans plus
foreclosed property compared to 1.00% at December 31, 1995 and 1.08% at the
end of first quarter 1995. Non-performing assets of $13.978 million at
March 31, 1996 were $5.893 million or 29.66% lower than at December 31,
1995 and $6.493 million or 31.72% lower than at March 31, 1995.
<PAGE> 16
<TABLE>
CAPITAL RESOURCES AND LIQUIDITY
<CAPTION>
MARCH 31, MARCH 31,
(in thousands of dollars) 1996 1995
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
At March 31,
- -------------
Total shareholders' equity $274,678 $245,673
Long-term debt $ 3,795 $20,044
Per Share Data
- --------------
Dividend payout ratio 40.79% 38.57%
Common dividends paid $ 5,066 $ 4,337
Dividends paid per share $0.31 $0.27
Book value per share $17.02 $15.29
Fully diluted book value per share $17.00 $15.30
Selected Ratios
- ---------------
Return on YTD average assets 1.71% 1.72%
Return on YTD average common equity 18.03% 19.14%
Return on YTD average realized common equity 18.10% 18.51%
YTD average equity to average assets 9.47% 9.00%
YTD average equity to average loans 14.08% 12.90%
YTD average loans to average deposits 84.17% 85.10%
Period end total tier 1 capital to total risk-weighted assets 11.32% 10.84%
Period end total capital to total risk-weighted assets 12.73% 12.47%
Efficiency ratio 50.72% 53.11%
</TABLE>
The Company's total shareholders' equity was $274.678 million at March
31, 1996 which reflects a 11.81% or $29.005 million increase as compared to
March 31, 1995. The Company authorized a stock buy-back program in the
first quarter of 1995. The shares were purchased to fund commitments for
employee stock plans and programs. The Company acquired a total of 244,200
shares and 40,000 shares during the first quarters of 1996 and 1995,
respectively.
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 March 31, 1996 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 $80 $(138,417) $ (71,217) $ (29,638) $798,749
Cumulative Gap 80 (138,337) (209,554) (239,192) 559,557
</TABLE>
<PAGE> 17
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 January 16, 1996 reporting the Company's
earnings release for the fourth quarter and year ending December 31,
1995.
Report on Form 8-K dated April 11, 1996 reporting the Company's
earnings release for the first quarter and year ending March 31,
1996.
<PAGE> 18
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: May 10, 1996 /s/ KEITH MILLER
----------------- -------------------------------
Keith Miller
Executive Vice President - Finance
and Chief Financial Officer
/s/ 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>
For The Three Months Ended
March 31,
(in thousands of dollars except per share data) 1996 1995
- -------------------------------------------------------------------------------------
<S> <C> <C>
PRIMARY
Earnings:
Net income $12,521 $11,368
- -----------------------------------------------------------========== ==========
Shares:
Weighted average number of common shares outstanding 16,206,002 16,058,857
Weighted average number of common share equivalents 285,953 161,011
- --------------------------------------------------------------------- ----------
16,491,955 16,219,868
- -----------------------------------------------------------========== ==========
Primary earnings per common share $0.76 $0.70
- -----------------------------------------------------------========== ==========
ASSUMING FULL DILUTION
Earnings:
Net income $12,521 $11,368
After tax interest applicable to convertible notes 31 96
After tax amortization of capital note fees 39 11
- --------------------------------------------------------------------- ----------
Fully diluted net income $12,591 $11,475
- -----------------------------------------------------------========== ==========
Shares:
Weighted average number of common shares outstanding 16,206,002 16,058,857
Assuming conversion of Convertible Notes and dilutive
stock options 571,247 744,130
- --------------------------------------------------------------------- ----------
16,777,249 16,802,987
- -----------------------------------------------------------========== ==========
Earnings per common share assuming full dilution $0.75 $0.68
- -----------------------------------------------------------========== ==========
</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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 139,767
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 1,300
<TRADING-ASSETS> 72,552
<INVESTMENTS-HELD-FOR-SALE> 460,011
<INVESTMENTS-CARRYING> 249,190
<INVESTMENTS-MARKET> 247,921
<LOANS> 2,016,636
<ALLOWANCE> 31,198
<TOTAL-ASSETS> 3,047,980
<DEPOSITS> 2,419,316
<SHORT-TERM> 261,376
<LIABILITIES-OTHER> 88,815
<LONG-TERM> 3,795
0
0
<COMMON> 20,635
<OTHER-SE> 254,043
<TOTAL-LIABILITIES-AND-EQUITY> 3,047,980
<INTEREST-LOAN> 44,775
<INTEREST-INVEST> 11,107
<INTEREST-OTHER> 38
<INTEREST-TOTAL> 57,114
<INTEREST-DEPOSIT> 22,332
<INTEREST-EXPENSE> 25,705
<INTEREST-INCOME-NET> 31,409
<LOAN-LOSSES> 981
<SECURITIES-GAINS> 234
<EXPENSE-OTHER> 20,994
<INCOME-PRETAX> 19,401
<INCOME-PRE-EXTRAORDINARY> 12,521
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,521
<EPS-PRIMARY> .76
<EPS-DILUTED> .75
<YIELD-ACTUAL> 4.62
<LOANS-NON> 7,764
<LOANS-PAST> 836
<LOANS-TROUBLED> 109
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 30,508
<CHARGE-OFFS> 749
<RECOVERIES> 458
<ALLOWANCE-CLOSE> 31,198
<ALLOWANCE-DOMESTIC> 31,198
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
