<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
for the transition period from to
------------------ -------------------
Commission File number 033-59399
LIBERTY BANCSHARES, INC.
(Exact name of registrants as specified in their charters)
43-1716068 Missouri
(IRS Employer (State or other jurisdiction of incorporation
Identification No.) or organization)
1414 East Primrose
Springfield, MO 65804
(Address of principal executive offices)
(Zip Code)
417 888-3000
(Registrants' telephone number, including area code)
Indicate by check mark whether the registrants (1) have 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
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days.
Yes X No
----- -----
<PAGE> 2
PART 1. - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1999 AND DECEMBER 31, 1998
<TABLE>
<CAPTION>
ASSETS
March 31, December 31,
1999 1998
------------- -------------
(Unaudited)
<S> <C> <C>
Cash $ 1,152,827 $ 914,839
Due from banks 6,946,508 8,653,420
Federal funds sold 7,700,000 4,839,087
------------- -------------
Cash and cash equivalents 15,799,335 14,407,346
Available-for-sale securities 24,876,240 14,037,078
Mortgage loans held for sale 1,711,586 1,672,018
Loans, net of allowance for loan losses of $1,979,848 and $1,108,687 186,364,521 108,088,021
Interest receivable 2,027,311 858,498
Premises and equipment, net 5,327,367 3,630,865
Deferred income taxes 244,091 80,921
Excess of cost over fair value of net assets acquired, net of accumulated
amortization of $56,714 3,348,961 --
Other 1,727,168 1,247,417
------------- -------------
Total Assets $ 241,426,580 $ 144,022,164
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits $ 200,342,315 $ 122,267,289
Securities sold under agreements to repurchase 5,858,470 5,252,773
Note payable 5,500,000 4,201,000
Advances from Federal Home Loan Bank 11,883,305 5,000,000
Accrued interest payable 1,069,421 423,054
Income taxes payable 337,109 148,213
Accrued expenses and other liabilities 154,110 62,349
------------- -------------
Total Liabilities 225,144,730 137,354,678
------------- -------------
STOCKHOLDERS' EQUITY
Capital stock
Class A common;
Par value $1 a share; 5,000,000 shares authorized, issued 819,835 shares
at March 31, 1999 and 511,090
shares at December 31, 1998 819,835 511,090
Additional paid-in capital 14,074,237 5,256,480
Retained earnings 1,435,053 804,720
Accumulated other comprehensive income -
unrealized appreciation on
available-for-sale securities, net of income taxes 5,194 95,196
------------- -------------
16,334,319 6,667,486
Treasury stock, at cost; March 31, 1999 - 1,775 shares (52,469) --
------------- -------------
Total Stockholders' Equity 16,281,850 6,667,486
------------- -------------
Total Liabilities and Stockholders' Equity $ 241,426,580 $ 144,022,164
============= =============
</TABLE>
<PAGE> 3
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1999 1998
(Unaudited) (Unaudited)
----------- -----------
<S> <C> <C>
INTEREST INCOME
Loans $ 3,796,697 $ 1,307,833
Available-for-sale securities 360,303 205,118
Federal funds sold and securities purchased
under agreements to resell 33,554 111,272
Deposits with banks 18,498 --
4,209,052 1,624,223
----------- -----------
INTEREST EXPENSE
Deposits 1,888,990 789,032
Federal funds purchased and securities sold
under agreements to repurchase 81,282 73,296
Notes payable and FHLB advances 246,764 21,840
----------- -----------
2,217,036 884,168
----------- -----------
NET INTEREST INCOME 1,992,016 740,055
PROVISION FOR LOAN LOSSES 70,000 50,000
----------- -----------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 1,922,016 690,055
----------- -----------
NONINTEREST INCOME
Gain on sale of loans held for sale 93,445 --
Gain on sale of available-for-sale securities 36,803 --
Service charges and fees 139,539 74,164
Other income 33,389 2,475
----------- -----------
303,176 76,639
----------- -----------
NONINTEREST EXPENSE
Salaries and employee benefits 653,825 319,133
Net occupancy expense 98,005 50,747
Deposit assessments and fees 13,902 4,462
Other operating expenses 462,127 153,918
----------- -----------
1,227,859 528,260
----------- -----------
INCOME BEFORE INCOME TAXES 997,333 238,434
PROVISION FOR INCOME TAXES 367,000 85,000
----------- -----------
NET INCOME 630,333 153,434
OTHER COMPREHENSIVE INCOME
Unrealized depreciation on available-for-sale
securities, net of income taxes of $(39,241),
and $(9,128) for 1999 and 1998, respectively (66,816) (15,543)
Less: Reclassification adjustment for
appreciation included in net income, net of
income taxes of $(13,617) for 1999 (23,186) --
----------- -----------
COMPREHENSIVE INCOME $ 540,331 $ 137,891
=========== ===========
BASIC EARNINGS PER SHARE $ .78 $ .32
=========== ===========
DILUTED EARNINGS PER SHARE $ .77 $ .32
=========== ===========
</TABLE>
<PAGE> 4
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1999 1998
(Unaudited) (Unaudited)
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 630,333 $ 153,434
Items not requiring (providing) cash:
Depreciation and amortization 127,687 15,350
Provision for loan losses 70,000 50,000
Amortization of premiums and discounts (72,961) (3,181)
Deferred income taxes (45,558) (20,117)
Origination of loans held for sale (4,429,092) --
Proceeds from loans held for sale 4,481,458 --
Gain on sale of loans (93,445) (17,669)
Gain on sale of available-for-sale securities (36,803) --
Changes in:
Accrued interest receivable (53,757) (183,286)
Mortgage loans held for sale -- (509,638)
Prepaid expenses and other (53,888) (17,145)
Accrued interest payable 135,088 63,213
Accounts payable and accrued expenses 57,449 (109)
Income taxes payable (receivable) 211,230 (68,404)
------------ ------------
Net cash provided by (used in) operating activities 927,741 (537,552)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Net originations of loans (12,685,099) (12,724,374)
Purchase of premises and equipment (629,595) (499,923)
Payment for purchase of Sac River Valley Bank, net of cash acquired 7,010,469 --
Proceeds from sale of available-for sale securities 2,055,000 --
Proceeds from maturities of available-for-sale securities 5,870,000 500,000
Purchases of available-for-sale securities (3,272,801) (2,712,259)
------------ ------------
Net cash used in investing activities (1,652,026) (15,436,556)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in demand, money
market, NOW And savings deposits (7,338,869) 4,210,085
Net increase in time deposits 8,996,634 9,612,936
Repayments of FHLB advances (16,695) --
Proceeds from note payable 1,350,000 1,250,000
Repayments of note payable (51,000) --
Proceeds from issuance of common stock -- 750,400
Purchase of treasury stock (52,469) --
Net increase in securities sold under agreements to repurchase (771,327) (2,494,316)
------------ ------------
Net cash provided by financing activities 2,116,274 13,329,105
------------ ------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,391,989 (2,645,003)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 14,407,346 13,146,166
------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 15,799,335 $ 10,501,163
============ ============
</TABLE>
<PAGE> 5
NOTE 1. BASIS OF PRESENTATION
The accompanying unaudited interim 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
Rule 10-01 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 only of normal recurring accruals) considered necessary for a fair
presentation have been included.
NOTE 2. PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Liberty
Bancshares, Inc. ("Bancshares") and its 100%-owned subsidiary, Liberty Bank
("Bank"). Significant intercompany accounts and transactions have been
eliminated in consolidation.
NOTE 3. MERGER
On January 4, 1999, Sac River Valley Bank ("Sac River") of Stockton,
Missouri, merged with and into the Bank. Sac River held approximately $97
million in assets at the date of merger. In the transaction, accounted for as a
purchase, all of the outstanding stock of Sac River was exchanged for cash,
Bancshares common stock, or a combination of the two. Bancshares registered its
common stock issued in the merger with the Securities and Exchange Commission
("SEC"). The pro forma statement of income for March 31, 1998, included below is
based on the merger occurring at the beginning of that three-month period. The
pro forma balance sheet at December 31, 1998, included below, is based on the
merger occurring as of that date.
PRO FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1998
(IN THOUSANDS)
(UNAUDITED)
ASSETS
<TABLE>
<S> <C>
Cash and cash equivalents $ 11,847
Available-for-sale securities 29,680
Loans, net of allowance for loan losses of $1,982 175,420
Premises and equipment, net 4,746
Interest receivable 1,974
Excess of cost over fair value of net assets acquired 3,403
Other 1,609
--------
Total Assets $228,679
========
</TABLE>
<PAGE> 6
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<S> <C>
Deposits $ 187,630
Federal funds purchased and securities sold under
agreements to repurchase 6,630
Note payable 5,551
Advances from Federal Home Loan Bank 11,900
Other liabilities 1,227
---------
Total Liabilities 212,938
STOCKHOLDERS' EQUITY
Common stock 820
Additional paid-in capital 14,074
Retained earnings 804
Accumulated other comprehensive income -
unrealized appreciation on
available-for-sale securities, net of income taxes 95
---------
15,793
Treasury stock, at cost (52)
---------
Total Stockholders' Equity 15,741
---------
Total Liabilities and Stockholders' Equity $ 228,679
=========
</TABLE>
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<S> <C>
INTEREST INCOME
Loans $2,708
Available-for-sale securities 513
Held-to-maturity securities 89
Federal funds sold and securities purchased
under agreements to resell 184
Deposits with banks 13
------
3,507
------
INTEREST EXPENSE
Deposits 1,465
Federal funds purchased and securities sold
under agreements to repurchase 248
Notes payable and FHLB advances 165
------
1,878
------
NET INTEREST INCOME 1,629
PROVISION FOR LOAN LOSSES 50
------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 1,579
------
NONINTEREST INCOME
Service charges and fees 167
Other income 20
------
187
------
NONINTEREST EXPENSE
Salaries and employee benefits 474
Net occupancy expense 82
</TABLE>
<PAGE> 7
<TABLE>
<S> <C>
Deposit assessments and fees 46
Other operating expenses 333
------
935
------
INCOME BEFORE INCOME TAXES 831
PROVISION FOR INCOME TAXES 307
------
NET INCOME $ 524
======
BASIC AND DILUTED EARNINGS PER SHARE
$ .70
======
</TABLE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
General
The following discussion of financial condition and results of
operations should be read in conjunction with the consolidated financial
statements of Liberty Bancshares. As used in the following discussion, the terms
"Company" and "Bancshares" refer to Liberty Bancshares and its subsidiary on a
consolidated basis; the terms "Liberty" and "Bank" refer to Liberty Bank; and
the term "Liberty Bancshares" refers to Liberty Bancshares, Inc., on a parent
company only basis.
The discussion set forth below, as well as other portions of this Form
10-Q, may contain forward-looking comments. Such comments are based upon the
information currently available to management of the Company and management's
perception thereof as of the date of this Form 10-Q. Actual results of the
Company's operations could materially differ from those forward-looking
comments. The differences could be caused by a number of factors or combination
of factors including, but not limited to; changes in the availability and/or
cost of capital; changes in demand for banking services; changes in the
portfolio composition; changes in the interest rate yield on the Company's
investments; changes in management strategy; increased competition from both
bank and non-bank companies; changes in the economic, political or regulatory
environments in the United States; litigation involving the Company and/or its
subsidiaries; and changes in the availability of qualified labor. Readers should
take these factors into account in evaluating any such forward-looking comments.
The consolidated interim financial statements as of March 31, 1999,
included in this report have been prepared by Bancshares without audit. In the
opinion of management, all adjustments (consisting only of normal recurring
accruals) necessary for a fair presentation are reflected in the March 31, 1999,
interim financial statements. The consolidated pro forma financial statements as
of March 31, 1998 and December 31, 1998, included in Note 3 have been prepared
by Bancshares without audit. The results of operations for the period indicated
March 31, 1999 and pro forma March 31, 1998 are not necessarily indicative of
the operating results for the full year. The December 31, 1998, Consolidated
Balance Sheet presented with the interim financial statements was included in
the 1998 annual financial statements on which the Company's independent
accountants expressed an unqualified opinion.
<PAGE> 8
Bancshares has enjoyed rapid growth since its commencement of
operations in late October 1995. Total assets have increased from $12,223,000 at
December 31, 1995, to $241,427,000 at March 31, 1999. The Bank's rapid growth
since its opening is a result of numerous factors including merging with Sac
River, opening locations in Springfield and surrounding areas, hiring
experienced lending officers, adding depositors as a result of area bank
mergers, the economic vitality of the Springfield area, and the Bank's marketing
program.
The Bank's rapid growth has required the periodic injection of
additional capital to ensure that the Bank remains well capitalized. Bancshares
has provided additional capital for the Bank by borrowing under its line of
credit and by issuing additional shares of capital stock to Bancshares' existing
shareholders. In conjunction with the merger, Bancshares paid out cash of $6.2
million to Sac River shareholders, of which Bancshares borrowed $1,426,000, and
also issued 309,000 of additional shares of Bancshares common stock to former
Sac River shareholders. At March 31, 1999, Bancshares had total borrowings of
$5,500,000 and $3,000,000 of availability under its line of credit.
FINANCIAL CONDITION
TOTAL ASSETS
The Company's total assets increased from $228,679,000 at pro forma
December 31, 1998, to $241,427,000 at March 31, 1999, or 5.6%. This increase was
driven by the growth of total deposits during the period.
NET LOANS
Loans, net of loan loss allowances, were the principal component of
Bancshares' asset growth. Net loans increased from $175,420,000 at pro forma
December 31, 1998, to $186,365,000 at March 31, 1999, or 6.2%. Loan growth
consisted principally of increases in all major loan categories.
AVAILABLE-FOR-SALE SECURITIES
Available-for-sale securities matured or were sold during the first
quarter of 1999, to meet liquidity needs and fund loan growth. As a result,
securities available-for-sale decreased $4,804,000, or 16.2% from pro forma
December 31, 1998 to March 31, 1999.
DEPOSITS
Deposits grew as a result of the Bank opening a new branch in El Dorado
Springs, Missouri and its marketing efforts. Total deposits at March 31, 1999,
were $200,342,000, a $12,712,000 or 6.8%, increase over $187,630,000 at pro
forma December 31, 1998.
<PAGE> 9
BORROWINGS
Short-term borrowings, in the form of repurchase agreements, decreased
from $6,630,000 at pro forma December 31, 1998, to $5,858,000 at March 31, 1999,
an 11.6% decline. The decrease was primarily a result of fluctuations in the
accounts of customers who had repurchase agreements with the Bank.
Borrowings under Bancshares' note payable decreased $51,000 from pro
forma December 31, 1998 to $5,500,000 at March 31, 1999. The reduction is a
result of the pay-off of Bancshares line of credit with excess funds available
following the completion of the merger.
Advances from the Federal Home Loan Bank ("FHLB") decreased $17,000 due
to scheduled principal amortization from pro forma December 31, 1998 to
$11,883,000 at March 31, 1999.
STOCKHOLDERS EQUITY
Growth of retained earnings increased stockholders' equity by $541,000,
or 3.4%, from $15,741,000 at pro forma December 31, 1998, to $16,282,000 at
March 31, 1999.
RESULTS OF OPERATIONS
NET INCOME
Net income for the three months ended March 31, 1999, was $630,000,
compared to $524,000 for the pro forma period a year earlier, a 20.2% increase.
INTEREST INCOME
The Company's interest income has increased principally because of the
Bank's asset growth. Interest income for the three months ended March 31, 1999,
was $4,209,000, a $702,000, or 20.0%, increase over the pro forma period in the
prior year.
INTEREST EXPENSE
Interest expense primarily reflected the growth in the Bank's interest
bearing deposits. Interest expense for the three months ended March 31, 1999 was
$2,217,000, an increase of $339,000, or 18.1%, over the pro forma period in the
prior year.
NET INTEREST INCOME
As a result of the above increases in interest income and interest
expense, net interest income increased $363,000 or 22.3%, to $1,992,000 in the
three months ended March 31, 1999, compared to the pro forma period in the prior
year.
<PAGE> 10
PROVISION FOR LOAN LOSSES
The provision for loan losses for the three-month period ended March
31, 1999, was $70,000, as compared to a provision of $50,000 during the pro
forma period in 1998. The Bank periodically reviews its allowance for loan
losses and makes adjustments to the balance based on management's evaluation of
the loan portfolio, the amount of non-performing and classified assets and
general economic conditions. Although the Bank maintains its allowance for loan
losses at a level that it considers to be sufficient to provide for potential
losses, there can be no assurance that future losses will not exceed internal
estimates. In addition, the amount of the allowance for loan losses is subject
to review by regulatory agencies that can order the establishment of additional
loss provisions.
NONINTEREST INCOME
Noninterest income grew by 62.0% to $303,000 for the three months ended
March 31, 1999, over the pro forma period in the prior year. The increase was
principally due to gains on the sale of loans held-for-sale and of securities
available-for-sale.
NONINTEREST EXPENSE
Noninterest expense includes the cost of operations, including overhead
and expenses associated with the opening of new branches and departments in the
Bank, including the costs of additional personnel. Noninterest expense was
$1,228,000 for the three months ended March 31, 1999, an increase of $293,000 or
31.3% over the $935,000 recorded in the pro forma period in the prior year. This
increase is primarily attributable to a new location opening during February
1999 and the additional staffing costs to service the Bank's growth. Salaries
and employee benefits accounted for $180,000 of the increase with sizeable
increases in other areas as well.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity risk is managed by the Company through the composition of its
assets and liabilities in an effort to meet efficiently the borrowing needs and
withdrawal requirements of its customers. Cash and cash equivalents include
cash, amounts due from banks and federal funds sold. The primary sources of the
Company's liquidity are cash and cash equivalents, investment securities with
short-term maturities, and a $3,000,000 available under a bank line of credit.
The Company has a relatively high volume of its loans and certificates
of deposit ("CD's") that mature in one year or less. Management believes its
CD's, used primarily to fund loans, are relatively stable source of funds. Since
the Bank's inception, a large majority of the loans and CD's originated by the
Bank have been renewed at maturity. In addition, the Bank continues to be
competitive on interest rates for both loans and CD's. If necessary to retain
CD's for liquidity purposes, the Bank could raise CD rates to remain
competitive.
If a significant portion of CD's were not replaced, the Bank could draw
on its available line of credit, utilize borrowings available from the FHLB or
purchase federal funds
<PAGE> 11
from correspondent banks. The Bank's investment securities are all classified as
available-for-sale and could provide liquidity sources to the extent they are
not pledged for public funds.
The Company can also increase its liquidity by causing the Bank to sell
SBA guaranteed loans and participations in commercial loans. The Company
believes its process of asset/liability management allows adequate reaction time
for trends in the marketplace as they occur, minimizing the negative impact of
such trends on the net interest margin.
If a significant amount of loans that mature over the next year were
not renewed, the Bank could participate in loans originated by other financial
institutions, purchase additional available-for-sale securities, or lower
interest rates charged on loans to remain competitive.
REGULATORY CAPITAL
At March 31, 1999, the Bank exceeded all regulatory capital
requirements to which it is subject. The Bank had Tier 1 Capital of $18,434,000
(8.0% of average assets); Tier 1 Risk-Based Capital of $18,434,000 (10.2% of
risk-weighted assets) and Total Risk-Based Capital of $20,414,000 (11.3% of
risk-weighted assets). Under current regulatory guidelines, the Bank is
considered to be "well-capitalized."
YEAR 2000
Liberty relies upon computer hardware, software, and data processing
services to operate and maintain customer accounts, loan accounts, investments,
ATM systems, and other functions which are susceptible to the "Year 2000"
problem. This means that software and microprocessors could report January 1,
2000, and subsequent dates as January 1, 1900, or other incorrect twentieth
century dates. This incorrect dating could make it very difficult for Liberty to
conduct business electronically.
In 1997, Liberty formed a committee of bank employees to assess and
coordinate the Bank's Year 2000 compliance. The committee reports to Liberty's
Board of Directors quarterly on the status of the Bank's compliance efforts. The
committee has undertaken activities to identify potential problems, arrange
testing of systems, prepare contingency and liquidity plans, install compliant
versions of affected properties, and assess customer readiness, among others.
As of March 31, 1999, vendors have conducted extensive tests on
Liberty's core data processing system and teller software. Management is in the
process of reviewing the results of these tests. The Bank's software for
communicating with the Federal Reserve, loan processing software and ATM
software is believed to be compliant. Liberty plans to have all remaining
software and embedded technology fully tested by June 30, 1999.
Third party vendors have borne most of the cost of making Liberty Year
2000 compliant. Costs incurred by Liberty have largely been in the form of the
compensation and benefits provided existing bank employees who have conducted
the compliance activities.
<PAGE> 12
To date, Liberty has not incurred any non-employee expenses in implementing its
compliance program and expects that its total non-employee costs through January
1, 2000, will be $15,000 or less.
While Bank management believes that its systems and technology will be
compliant on January 1, 2000, and thereafter, it faces an unquantifiable risk
that third parties, such as customers, will encounter Year 2000 problems that
cause them to reduce their use of bank services, default on loans, or reduce
levels of future borrowings. There is also a risk that other financial
organizations that Liberty maintains relations with could experience Year 2000
issues that would adversely affect Liberty. Finally, if other service providers,
such as public utilities or telephone companies, are not Year 2000 compliant,
Liberty could experience service interruptions that would make it difficult to
conduct business.
Bank management has developed a contingency plan to address some of
these uncertainties. Back-up generators may be employed as needed to provide
electric power beginning January 1, 2000. Plans are in place for a cellular
based modern communication system to maintain communication with data service
providers in the event that landline communications are disrupted. Immediately
before the change of the century, electronic trial balances with extended
information are to be downloaded for import into local database files. A
complete back-up of all files before the century change, and critical
information is expected to be printed in hard copy. Management anticipates
taking other steps to assure both liquidity and security.
Management believes it has completed the majority of the actions
necessary to achieve Year 2000 compliance for its core systems and all of the
work necessary to achieve overall compliance. Management expects the Bank will
be Year 2000 compliant before the century date change. There remains, however,
the possibility that problems encountered by third parties, including customers,
financial organizations and other service providers, could adversely affect the
Bank.
<PAGE> 13
PART II. - OTHER INFORMATION AND SIGNATURES
ITEM 1. LEGAL PROCEEDINGS.
Not Applicable
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Not Applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
Not Applicable
ITEM 5. OTHER INFORMATION
Not Applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
NO. TITLE
--- -----
<S> <C>
2.1* Agreement and Plan of Merger
3.1 and 4.1* Articles of Incorporation, Liberty Bancshares, Inc.
3.2 and 4.2* By-Laws, Liberty Bancshares, Inc.
10.1* Garry Robinson Employment Agreement
10.2* Restated Liberty Bank
Incentive Stock Option Plan
10.3* Amendment to Restatement of Incentive Stock
Option Plan
10.4* Second Amendment to Restatement of
Incentive Stock Option Plan
10.5** Loan Agreement between Liberty Bancshares, Inc. and Mercantile Bank
National Association dated December 29, 1998
</TABLE>
<PAGE> 14
<TABLE>
<S> <C>
11.1 Statement re Computation of per share earnings
27.1 Financial Data Schedule
99.1* Articles of Association, Liberty Bank
99.2* By-Laws, Liberty Bank
</TABLE>
* Incorporated by Reference to Bancshares Registration Statement on Form S-4,
No. 333-59399
** Incorporated by Reference to Bancshares Annual Report on Form 10-K for the
fiscal year ended December 31, 1998.
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter for
which this report is filed.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereto duly authorized.
LIBERTY BANCSHARES, INC.
By: /s/ Gary E. Metzger
----------------------------------------
Gary E. Metzger, President and Chief
Executive Officer
By: /s/ Alana R. Patterson
----------------------------------------
Alana R. Patterson, Principal Financial
or Chief Accounting Officer
Dated: May 14, 1999
<PAGE> 1
EXHIBIT 11.1 - STATEMENT RE COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three months ended
March 31,
1999 1998
-------------------------
<S> <C> <C>
Basic:
Average shares outstanding 804,417 477,060
Net income $630,333 $153,434
Per share amount $ .78 $ .32
Diluted:
Average shares outstanding 804,417 477,060
Net effect of dilutive stock options 9,030 3,270
------------------------
Diluted shares 813,447 480,330
Net income $630,333 $153,434
Per share amount $ .77 $ .32
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
unaudited Balance Sheet and the unaudited Statement of Income filed as part
of the quarterly report on Form 10-Q and is qualified in its entirety by
reference to such quarterly report on Form 10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 1,153
<INT-BEARING-DEPOSITS> 1,402
<FED-FUNDS-SOLD> 7,700
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 24,876
<INVESTMENTS-CARRYING> 24,876
<INVESTMENTS-MARKET> 24,876
<LOANS> 188,345
<ALLOWANCE> 1,980
<TOTAL-ASSETS> 241,427
<DEPOSITS> 200,342
<SHORT-TERM> 5,876
<LIABILITIES-OTHER> 491
<LONG-TERM> 17,365
0
0
<COMMON> 820
<OTHER-SE> 15,462
<TOTAL-LIABILITIES-AND-EQUITY> 241,427
<INTEREST-LOAN> 3,797
<INTEREST-INVEST> 360
<INTEREST-OTHER> 52
<INTEREST-TOTAL> 4,209
<INTEREST-DEPOSIT> 1,889
<INTEREST-EXPENSE> 2,217
<INTEREST-INCOME-NET> 1,992
<LOAN-LOSSES> 70
<SECURITIES-GAINS> 37
<EXPENSE-OTHER> 1,228
<INCOME-PRETAX> 997
<INCOME-PRE-EXTRAORDINARY> 997
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 630
<EPS-PRIMARY> .78
<EPS-DILUTED> .77
<YIELD-ACTUAL> 4.06
<LOANS-NON> 32
<LOANS-PAST> 941
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 1,810
<ALLOWANCE-OPEN> 1,981
<CHARGE-OFFS> 71
<RECOVERIES> 6
<ALLOWANCE-CLOSE> 1,980
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 79
</TABLE>
