<PAGE>
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Exhibit Index on Page 14
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 - Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
0-14511
-------
(Commission File Number)
TODAY'S BANCORP, INC.
---------------------
(Exact name of registrant as specified in its charter)
DELAWARE 36-2902424
(State or other jurisdiction of (IRS Employer Identification
incorporation or organization) Number)
TODAY'S Bank Center
P.O. Box 30
Freeport, Illinois 61032
- --------------------------------------- -----
Address of principal executive offices) (Zip Code)
(815) 235-8596
--------------
(Registrant's telephone number)
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
----- -----
Number of shares of common stock outstanding:
Shares outstanding
Title of each class March 31, 1996
------------------- ------------------
Common stock, par value
$5.00 per share 2,748,698
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Part I. Item I.
TODAY'S BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
unaudited
<TABLE>
<CAPTION>
March 31 December 31
----------------- -----------
1996 1995 1995
---- ---- ----
<S> <C> <C> <C>
ASSETS
Cash and due from banks................ $ 15,770 $ 14,881 $ 16,603
Federal funds sold..................... - 3,590 5,330
------- ------- -------
Total cash and cash equivalents 15,770 18,471 21,933
Mortgage loans held for sale........... 3,147 1,977 1,116
Time deposits in other banks........... 308 1,240 434
Trading account securities............. - 6,419 -
Securities available for sale, at fair
value................................ 73,811 68,201 76,933
Securities held to maturity with
aggregate fair values of $29,326,
$37,588, and $34,257, respectively... 30,780 37,806 34,037
Loans.................................. 364,906 337,952 362,418
Allowance for possible loan losses... (3,312) (2,972) (3,289)
------- ------- -------
Net loans 361,594 334,980 359,129
Premises and equipment................. 12,439 12,868 12,633
Accrued interest and other assets...... 11,820 12,531 12,269
------- ------- -------
Total assets $509,669 $494,493 $518,484
------- ------- -------
------- ------- -------
LIABILITIES
Deposits:
Non interest bearing................. $ 43,020 $ 40,823 $ 49,821
Interest bearing..................... 394,077 379,757 396,000
------- ------- -------
Total deposits 437,097 420,580 445,821
Federal funds purchased, securities
sold under agreements to repurchase,
and other short-term borrowings...... 8,539 11,289 8,298
Other liabilities...................... 4,387 3,620 4,354
Other borrowings....................... 12,497 16,797 13,497
------- ------- -------
Total liabilities 462,520 452,286 471,970
------- ------- -------
CAPITAL
Preferred stock, without par value:
Authorized - 200,000 shares, issuable
in series; none issued or outstanding - - -
Common stock, par value $5 per share:
Authorized - 6,000,000 shares;
Issued - 2,748,698, 2,710,490, and
2,742,865 shares, respectively;
Outstanding - 2,748,698, 2,710,490,
and 2,742,865 shares, respectively. 13,744 13,555 13,714
Capital surplus........................ 6,417 6,076 6,357
Retained earnings...................... 26,685 23,037 25,809
Unrealized gain (loss) on securities... 303 (461) 634
------- ------- -------
Total capital 47,149 42,207 46,514
------- ------- -------
Total liabilities and capital $509,669 $494,493 $518,484
------- ------- -------
------- ------- -------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
Page 3
TODAY'S BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
unaudited
<TABLE>
<CAPTION>
Three Months Ended
March 31
--------
INTEREST INCOME 1996 1995
---- ----
<S> <C> <C>
Interest and fees on loans....................... $8,011 $7,405
Interest on federal funds sold and
time deposits in other banks................... 52 108
Interest and fees on mortgage loans
originated for sale............................ 29 41
Interest on investment securities
Trading securities............................. - 97
Securities available for sale - taxable........ 1,125 967
Securities available for sale - exempt from
federal income taxes......................... 27 -
Securities held to maturity - taxable.......... 283 331
Securities held to maturity - exempt from
federal income taxes......................... 228 247
----- -----
TOTAL INTEREST INCOME 9,755 9,196
----- -----
INTEREST EXPENSE
Interest on deposits............................. 4,627 4,216
Interest on federal funds purchased,
securities sold under agreement to
repurchase, and other short-term borrowings.... 108 134
Interest on other borrowings..................... 220 242
----- -----
TOTAL INTEREST EXPENSE 4,955 4,592
----- -----
NET INTEREST INCOME 4,800 4,604
Provision for possible loan losses............... 280 165
----- -----
NET INTEREST INCOME AFTER PROVISION
FOR POSSIBLE LOAN LOSSES 4,520 4,439
----- -----
OTHER OPERATING INCOME
Trust department revenues........................ 476 408
Service charges on deposit accounts.............. 420 423
Mortgage banking fees and gain on sale of
mortgage servicing rights...................... 101 66
Securities gains, net............................ 7 57
Trading account securities gains................. - 69
Other income..................................... 204 268
----- -----
TOTAL OTHER OPERATING INCOME 1,208 1,291
----- -----
OTHER OPERATING EXPENSES
Salaries, wages, and employee benefits........... 1,885 1,917
Net occupancy expense............................ 395 375
Furniture and equipment expense.................. 321 326
Printing, stationery, and supplies............... 93 221
FDIC insurance expense........................... - 237
Data processing expense.......................... 301 276
Marketing and advertising........................ 109 127
Other expenses................................... 697 773
----- -----
TOTAL OTHER OPERATING EXPENSES 3,801 4,252
----- -----
Income before income taxes....................... 1,927 1,478
Income tax provision............................. 674 499
----- -----
NET INCOME $1,253 $ 979
----- -----
----- -----
Net income per common share...................... $ 0.46 $ 0.36
----- -----
----- -----
Dividends declared per common share.............. $0.1375 $0.125
------ -----
------ -----
</TABLE>
See accompanying notes to consolidated financial statements.
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Page 4
TODAY'S BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
unaudited
<TABLE>
<CAPTION>
Three Months Ended
March 31
--------
1996 1995
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net income....................................... $ 1,253 $ 979
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation................................. 399 419
Amortization of goodwill..................... 93 88
Benefit for deferred income taxes............ (139) (104)
Provision for possible loan losses........... 280 165
Amortization of premiums, net................ 81 98
Securities gains, net........................ (7) (57)
Trading account security gains............... - (69)
Loans originated for sale.................... (10,458) (6,628)
Loans sold................................... 8,427 5,939
Decrease in accrued interest and other assets 659 656
Increase (decrease) in other liabilities..... 78 (240)
-------- --------
Net cash provided by operating activities 666 1,246
-------- --------
INVESTING ACTIVITIES
Proceeds from maturities of time
deposits in other banks........................ 128 369
Securities available for sale:
Proceeds from sales, maturities, and repayments
of mortgage-backed securities................ 199 147
Proceeds from sales of investment securities... 1,261 5,038
Proceeds from calls and maturities of
investment securities........................ 4,459 6,000
Purchase of investment securities.............. (3,384) (15,006)
Securities held to maturity:
Proceeds from sales, maturities, and repayments
of mortgage-backed securities................ 1,557 570
Proceeds from sale of investment securities.... 351 347
Proceeds from calls and maturities of
investment securities........................ 1,340 1,395
Purchase of investment securities.............. (20) (3,914)
Net increase in loans held for portfolio......... (2,745) (7,507)
Purchases of premises and equipment.............. (205) (650)
------- -------
Net cash provided (used) by investing activities. 2,941 (13,211)
------- -------
</TABLE>
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TODAY'S BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
(dollars in thousands)
unaudited
<TABLE>
<CAPTION>
Three Months Ended
March 31
--------
1996 1995
---- ----
<S> <C> <C>
FINANCING ACTIVITIES
Net increase (decrease) in deposits.............. $ (8,724) $ 2,833
Net increase (decrease) in federal funds
purchased, securities sold under agreements to
repurchase, and other short-term borrowings.... 241 (1,841)
Payment on other borrowings...................... (1,000) -
Cash dividends paid.............................. (377) (338)
Proceeds from exercise of stock options.......... 90 68
Increase in other borrowings..................... - 3,000
------- -------
Net cash provided (used) by financing activities (9,770) 3,722
------- -------
Net decrease in cash and cash equivalents (6,163) (8,243)
Cash and cash equivalents at beginning of period 21,933 26,714
------- -------
Cash and cash equivalents at end of period $ 15,770 $ 18,471
------- -------
------- -------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
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TODAY'S BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Unaudited
(dollars in thousands)
Note 1 - Accounting Policies
The accompanying consolidated financial statements have been prepared in
accordance with accounting policies set forth in the Company's 1995 Annual
Report on Form 10-K and should be read in conjunction with the notes to the
consolidated financial statements contained therein.
Note 2 - Consolidated Financial Statements
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principals for interim
financial information and with the instructions of Form 10-Q and Article 10 of
Regulation S-X except for the December 31, 1995 balance sheet which was derived
from audited financial statements, but does not include all disclosures required
by generally accepted accounting principles. Certain reclassifications, which
had no effect on net income, have been made in the prior period financial
statements to conform with the current period's presentation.
In the opinion of management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial position,
results of operations and cash flows at March 31, 1996 and for all periods
presented have been made. All significant inter-company balances and
transactions have been eliminated in consolidation. Results of operations for
interim periods are not necessarily indicative of the results that may be
expected for the entire fiscal year.
Note 3 - Non-cash Investing Activity
During the first three months of 1996, the securities available for sale were
written down $540 thousand to reflect the current market price at March 31,
1996. The offsetting entries were to other assets which were increased by $209
thousand to reflect the deferred income tax impact and to the capital account,
unrealized gain (loss) on securities, which was decreased by $331 thousand
moving from a positive position of $634 thousand at December 31, 1995 to a
positive $303 thousand at March 31, 1996.
Note 4 - Merger
On March 19, 1996, TODAY'S BANCORP, INC. ("TODAY") entered into a definitive
agreement to merge with Mercantile Bancorporation ("Mercantile") pursuant to
which Mercantile will acquire 100% of the common stock of TODAY in exchange for
a combination of Mercantile common stock and cash having a value of $87,250,000
as of March 19, 1996.
The transaction is subject to the approval of banking authorities and the
shareholders of TODAY. It is expected that the transaction will be consummated
in late 1996.
<PAGE>
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
(dollars in thousands)
The following discussion and analysis provides an overview of significant
factors which affected TODAY'S BANCORP, INC.'s ("TODAY" or the "Company")
financial statements and results of operations. This commentary is intended to
provide readers with a more comprehensive review than is apparent from the
consolidated financial statements and notes alone.
EARNINGS OVERVIEW
The Company's first quarter earnings of $1,253 or $0.46 per share, was $274, or
$.10 per share greater than the $979 or $0.36 per share recorded in the same
quarter of 1995.
The increase for the three month period ended March 31, 1996 was attributable to
continued earning improvements at the bank affiliates and the increased revenues
from trust operations. Net interest income increased as the Company continued to
experience loan growth.
Part of the earning improvements in the bank affiliates resulted from the
reduction in the FDIC insurance premiums paid and supply costs. During the
fourth quarter of 1995, the Federal Deposit Insurance Corporation's Board of
Directors voted to reduce the deposit insurance premiums paid from $0.04 per
$100 for "Well Capitalized Institutions" to the $2,000 per year minimum required
by law. The Company's supply costs returned to normal levels in the first
quarter of 1996. In the first quarter of 1995, the Company's name change and
reorganization of its affiliates resulted in higher than normal supply costs.
For the three months ended March 31, 1996, the Company's trust operations
increased revenues by 17% from the same period in 1995. The increase was a
result of higher market values in the trust assets which is the basis for most
fees and the addition of new customers.
TODAY's annualized return on average equity was 10.60% and its return on average
assets was .98% for the three month period ending March 31, 1996. For the same
periods in 1995, the annualized return on average equity was 9.55%, while the
annualized return on average assets was .81%.
NET INTEREST INCOME
Net interest income, defined as the difference between interest income and
interest expense (the "margin"), remains TODAY's most significant source of
profitability. The first quarter margin increased by $196 or 4% from the first
quarter of 1995. The increase was due to loan growth at our banking affiliates
primarily in the commercial loans. The Company expects to continue to
experience loan growth as a result of the banking affiliates ongoing business
development efforts. Although the Company has been successful in attracting new
loan relationships,
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most of the success has been negated by higher costs associated with deposit
fundings. During the first quarter of 1996, deposit costs continued to increase
as asset yields remained relatively unchanged.
The Company believes it has a very stable deposit base and sound, high quality
loan and investment portfolios. While there may be some additional margin
compression in the future, the Company believes that the overall effect of this
will be minimal due to the limited rate risk associated with the affiliate
banks' repricing schedules. Given the competitive nature of deposit pricing,
additional loan related growth may be restrained.
OTHER OPERATING INCOME
TODAY's earnings from non-interest sources for the three months ended March 31,
1996 were $1.2 million, a decrease of $83, or 6% from the first quarter of 1995.
Trust department revenues for the first quarter were $476, an increase of $68,
or 17% from the same quarter in 1995. This increase was attributable to higher
market values in the trust assets which is the basis for most fees and the
addition of new customers.
Deposit fees remained flat between first quarters of 1996 and 1995. During
1995, the Company standardized related fees within the affiliates and adopted a
more aggressive posture of charging for accounts being overdrawn. Fee income is
down approximately $35 from the fourth quarter of 1995. Management is currently
looking at alternatives to improve fee income.
Mortgage activity recorded revenues of $101 for the current quarter as compared
to $66 for the same period in 1995. Interest rate fluctuations during the first
quarter resulted in lower than anticipated mortgage originations. Management
believes loan origination activity for the balance of the year will remain below
plan, but will increase substantially from 1995.
The Company had minimal security gains for the first quarter of 1996. During
the first quarter of 1995, the Company recorded market appreciation of $69 on a
mutual fund carried as a trading security. This fund was subsequently sold in
the second quarter of last year.
OTHER OPERATING EXPENSE
Total other operating expenses were $3.8 million for the first quarter as
compared to $4.3 million for the same period in 1995. During the first quarter
of 1995, the Company incurred $216 in costs over normal operating expenses
related to the changing of the Company's name and the reorganization of its
affiliates.
Personnel costs continue to be the largest component of other operating
expenses. Employee related costs totaled $1.9 million for the first quarter of
1996. This reflects a decrease of $32 or 2%, from the first quarter of 1995.
Mortgage banking employee
<PAGE>
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costs continued to decline due to efforts to reduce fixed costs at this
affiliate.
Employee costs represented 31% of net interest and non-interest revenues for the
first quarter, a decrease of 2% from the same quarter of the prior year. TODAY
will continue the efforts to improve in this area.
Net occupancy and equipment expenses for the first quarter were $716 as
compared to $701 for the three months ended March 31, 1995. This increase is
due to higher than anticipated utility costs from the cold weather conditions
experienced during the winter months. Also contributing to the increase was
higher than normal costs for snow removal.
Printing, stationery and supplies expenses were $93 for the first quarter of
1996. This represents a decrease of $128 or 58% from the first quarter of 1995.
This was attributable to higher costs during the first quarter of 1995 related
to the name change and the reorganization of affiliates.
In August, 1995, the FDIC's Board of Directors determined that the Bank
Insurance Fund (BIF) was recapitalized as of May 31, 1995 and voted to reduce
the insurance rates. In September of 1995, the FDIC refunded the insurance
premium overpayments made since the BIF was recapitalized on May 31, 1995.
During the fourth quarter of 1995, the FDIC announced all "Well Capitalized
Banks" with a 1A rating would not be required to pay deposit insurance in 1996
(except for the $2,000 minimum mandated by law). This resulted in FDIC
insurance for the first quarter of 1996 to be less than $1 compared to $237 for
the same period in 1995.
STATEMENT OF CONDITION
Total assets of $509.7 million were reported as of March 31, 1996. This
represents a $15.2 million, or 3% increase, over the $494.5 million reported as
of March 31, 1996 and a $8.8 million, or 2% decrease, over the $518.5 million
reported as of December 31, 1995. Most of the decrease since year end was in
the deposit accounts and federal funds sold and is attributable to the seasonal
run-off of excess balances held in non-interest bearing accounts by business
customers.
Mortgage loans held for sale increased $1.1 million to $3.1 million at March 31,
1996 from the same quarter of 1995 and they were $2.0 million higher than at
December 31, 1995. Mortgage loans held for sale are expected to decline
slightly in the foreseeable future. Funds from this reduction will be utilized
to sell federal funds and to fund portfolio loan growth.
Loans represent the largest component of TODAY's earning asset base, and lending
activities continue to show positive results. At the end of the current
quarter, total loans were $364.9 million. This represents a $26.6 million, or
8% increase from March 31, 1995 total of $335.0 million and a $2.5 million, or
1%
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increase, over the $362.4 million reported December 31, 1995. TODAY's strong
emphasis on sales to capture more business from current customers and to attract
new relationships by offering high quality and diversified loan products, should
allow for continued growth of the loan portfolio if cost effective fundings are
secured.
Securities, including time deposits in other banks, totaled $104.9 million at
March 31, 1996, a decrease of $8.8 million, or 8%, from the $113.7 million
reported for the same period ended in 1995 and a $6.5 million decrease over the
$111.4 million reported December 31, 1995. The funds from the securities which
were sold or matured were used previously to fund the Company's loan growth.
On the liability side of the balance sheet, deposits totaled $437.1 million at
March 31, 1996. Deposits increased $16.5 million, or 4%, from the $420.6
million reported on March 31, 1995, and declined $8.7 million, or 2% from the
$445.8 million reported on December 31, 1995. Much of the deposit growth during
1995 was attributable to increased market penetration in the Rockford area.
Specialized products were developed to meet the needs of targeted groups such as
small businesses. These new funding sources were specifically identified and
used to match commercial loan growth. The decline of deposits during the first
quarter of 1996, was attributable to the seasonal run-off of excess balances
held in non-interest bearing accounts by business customers.
Short-term borrowings totaled $8.5 million at March 31, 1996. This was a
decrease of $2.8 million or 24% from the same quarter in 1995, and an increase
of $200 or 3% from the $8.3 million reported at December 31, 1995. The decrease
in short-term borrowings from March 31, 1995 was attributable to a decline in
repurchase agreements.
Other borrowings decreased $4.3 million from March 31, 1995, to the current
balance of $12.5 million and declined $1.0 million since December 31, 1995. The
decline came in the form of payments on Federal Home Loan Bank notes and
corporate debt.
ASSET QUALITY
TODAY continues to emphasize asset quality as evidenced by its ratio of non-
performing loans being only .40% of gross loans at March 31, 1996. This
compares to .51% for the prior quarter and .83% for the same date last year.
Non-performing assets as a percent of capital have decreased to 4.23%, compared
to 5.22% for the prior quarter and 6.79% for the first quarter of 1995.
Annualized net charge-offs as a percent of average loans was .28% at March 31,
1996. This is slightly higher than TODAY's three year average. In comparison
to peer group data, these numbers continue to indicate better than average asset
quality.
TODAY evaluates the allowance for possible loan losses on an on-going basis.
The results of these reviews are reported to the Board of Directors. The level
of the allowance is a matter of
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judgment and is dependent upon many factors, including a prospective view of
losses inherent in the loan portfolio, delinquency trends, historic charge-off
percentages and other factors management believes may affect the quality of the
portfolio. Based on current projections, TODAY is unaware of any information or
uncertainties concerning material credits that would significantly impact future
operations, liquidity or capital. However, given the continued growth in the
loan portfolio, prudent increases in the allowance may be necessary to
conservatively hedge against unforeseen and unanticipated loan problems.
INTEREST RATE SENSITIVITY AND LIQUIDITY
The Asset/Liability Committees of the affiliate banks continually monitor
TODAY's liquidity and rate sensitivity position. Management of rate sensitivity
seeks to maximize the growth of net interest income on a consistent basis by
minimizing the fluctuations associated with changing market interest rates along
with meeting cash flow requirements that may arise from increases in demand for
loans or other assets or from decreases in deposits or other funding sources.
TODAY's liquidity position has been influenced by its funding base and asset mix
as identified in the Consolidated Statement of Cash Flows. Funding for the
first three months of 1996 was primarily provided by proceeds from the sales,
calls and maturities of time deposits in other banks, investment securities and
mortgage-backed securities of $9.3 million and loans sold of $8.4 million. The
funds were primarily utilized to: purchase investment securities totaling $3.4
million, decrease in deposits of $8.7 million and provide $13.2 million for
lending activities.
The following rate sensitivity table reflects the earlier of the maturity or
repricing dates for various assets and liabilities at March 31, 1996:
<TABLE>
<CAPTION>
0-3 MO 4-12 MO 1-5 YR. > 5 YR. TOTAL
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
USES OF FUNDS
Investment securities,
excluding valuation
allowance $ 11,885 $ 29,514 $ 56,798 $ 5,942 $104,139
Time deposits in banks 134 174 - - 308
Mortgage loans held
for sale 3,147 - - - 3,147
Loans, excluding non-
accrual loans 153,477 58,962 127,496 24,119 364,054
- ----------------------------------------------------------------------------------------
Total Uses $168,643 $ 88,650 $184,294 $30,061 $471,648
- ----------------------------------------------------------------------------------------
SOURCES OF FUNDS
Int. bearing checking $ 46,731 $ - $ - $ - $ 46,731
Money market savings 39,947 - - 22,210 62,157
Regular savings 36,217 - - - 36,217
Time deposits 89,722 67,668 60,965 244 218,599
Other interest bearing 10,949 8.955 9,245 1,044 30,373
Short-term borrowings 8,539 - - - 8,539
Term borrowings and
advances from FHLB 6,322 6,175 - - 12,497
- ----------------------------------------------------------------------------------------
Total interest bearing 238,427 82,798 70,390 23,498 415,113
Net other sources - - - 56,535 56,535
- ----------------------------------------------------------------------------------------
Total Sources $238,427 $ 82,798 $ 70,390 $80,033 $471,648
- ----------------------------------------------------------------------------------------
CUMULATIVE MATURITY/RATE
SENSITIVE GAP ($69,784) ($63,932) $ 49,972 $ 0 $ 0
- ----------------------------------------------------------------------------------------
</TABLE>
<PAGE>
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On a cumulative basis, TODAY's one year interest gap resulted in $63.9 million
more interest sensitive liabilities than assets. This generally indicates that
net interest income would decline in a rising rate environment. However, in
tracking interest rate movements of deposit rates compared to market based rates
during past interest rate cycles, TODAY notes that certain deposit rates have a
tendency to lag. When the cumulative rate sensitivity gap is adjusted for this
factor, TODAY feels it is in a near matched position, allowing for limited
interest rate exposure.
The cumulative rate sensitivity gap provides a general indication of interest
sensitivity at a specific point in time. TODAY further utilizes simulation to
analyze the impact of changes in interest rates and volumes on the net interest
income.
During the fourth quarter of 1995, to reduce the impact of changes in interest
rate on its money market deposit accounts, the Company entered into an interest
rate swap agreement with a notional amount of $5.0 million for five years. The
Company will receive the three-month LIBOR rate in exchange for a fixed rate of
5.855%.
CAPITAL
The Company's capital position provides a margin of safety for depositors and
stockholders which enables the Company to take advantage of profitable
investment opportunities and provide for future growth. Each of the subsidiary
banks is subject to regulatory capital guidelines as shown below. At March 31,
1996, TODAY had Tier I capital of 10.5%, Tier II capital of 11.4% and a leverage
ratio of 8.1%.
The following table illustrates in tabular form the various ratios:
<TABLE>
<CAPTION>
MINIMUM
REGULATORY
AMOUNT RATIO GUIDELINES
- --------------------------------------------------------------
<S> <C> <C> <C>
RISK-BASED CAPITAL RATIOS
Tier I capital $ 40,775 10.5% 4.0%
Tier II capital 44,087 11.4 8.0
Risk-weighted assets 386,743 - -
SUPPLEMENTAL RATIOS
Leverage ratio 40,775 8.1 3.0
Total average assets 504,751 - -
</TABLE>
Bank regulators have established risk-based capital guidelines which are
intended to reflect the varying degrees of risk associated with different
balance sheet and off-balance-sheet items. Tier I capital includes equity
capital less goodwill to risk-weighted assets, and Tier II capital includes Tier
I capital plus the allowed portion of the allowance for possible loan losses to
risk-weighted assets. The leverage ratio is defined as Tier I capital to total
assets.
Under the risk-based capital guidelines presently in effect for banks and bank
holding companies, minimum capital levels are based on the perceived risk in the
various asset categories.
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Certain off-balance-sheet instruments such as loan commitments and letters of
credit require capital allocations. Bank holding companies are required to
maintain minimum risk-basked capital ratios. TODAY's ratios are above the
regulatory minimum guide-lines and each of its subsidiary banks met the
regulatory criteria to be categorized as "Well Capitalized" institutions at
March 31, 1996. For each of the subsidiary banks, the "well capitalized"
classification permits the banks to minimize the cost of FDIC insurance
assessments by being charged a lesser rate than those who do not meet this
definition. Designation as a "Well Capitalized" institution does not constitute
a recommend-ation by federal bank regulators. During 1995, TODAY's premium per
$100 of deposits declined from $.23 to $.04 per $100 of deposits. No premiums
are expected to be assessed during 1996 at this time.
The deposits of the Company are insured up to $100,000 per insured member (as
defined by law and regulation) by the FDIC with such insurance backed by the
full faith and credit of the United States government. The Company's deposits
are insured by the Bank Insurance Fund ("BIF") which is administered by the
FDIC.
As insurer, the FDIC assesses deposit insurance premiums and is authorized to
conduct examinations of, and require reporting by, FDIC-insured institutions.
Deposit insurance premiums are based upon risk classifications that are
determined by the insured institution's capital ratios and the result of such
institution's supervisory examinations. Institutions assigned higher risk
classifications pay deposit insurance premiums at a higher rate than the
institutions assigned lower risk classifications.
Federal banking regulators and law makers are believed to favor the merging of
the BIF and Savings Association Insurance Fund ("SAIF"). Congressional hearings
on the resolution of the issues have been held and future hearings are
scheduled. The outcome of such hearings and the impact of deposit insurance
premiums assessed and the likelihood of the merger of the BIF and SAIF cannot be
determined at this time.
OTHER DEVELOPMENTS
Management is not aware of any trends, events, or uncertainties, other than
those discussed above, or of any recommendations by regulatory authorities
which, if they were to be implemented, would impact the future operations,
liquidity, or capital of the company.
The Company entered into a definitive agreement to merge with Mercantile
Bancorporation pursuant to which Mercantile Bancorporation will acquire 100% of
the common stock of TODAY in exchange for a combination of Mercantile
Bancorporation common stock and cash having a value of $87.3 million as of March
19, 1996. The transaction is subject to the approval of banking authorities and
the shareholders of TODAY. It is expected that the transaction will be
consummated in late 1996.
<PAGE>
Page 14
Part II.
Item 5. Other Information
On April 18, 1996, the Board of Directors approved an $0.15 per share cash
dividend to all shareholders of record as of May 1, 1995, payable on May 10,
1995.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 11, Computation of Per Share Income is presented on page 16.
(b) A report Form 8-K dated March 19, 1996 reported that the Company had
entered into a definitive agreement to merge with Mercantile Bancorporation
pursuant to which Mercantile Bancorporation will acquire 100% of the common
stock of the Company in exchange for a combination of Mercantile
Bancorporation common stock and cash.
<PAGE>
Page 15
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.
TODAY'S BANCORP, INC.
---------------------
(Registrant)
DATE: May 14, 1996
---------------------------
Richard W. Owen
Executive Vice President
and Chief Financial Officer
<PAGE>
Page 16
TODAY'S BANCORP, INC.
Exhibit 11 - Computation of Per Share Income
for the Three Months ended March 31
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Net income $1,253,000 $979,000
--------- -------
--------- -------
Weighted average shares outstanding* 2,747,904 2,707,765
Net additional shares resulting from assumed
exercise of stock options** 39,666 18,040
------ ------
Total weighted average common shares and
equivalents outstanding 2,787,570 2,725,805
--------- ---------
--------- ---------
Net income per common share:
Primary $0.46 $0.36
----- -----
----- -----
Assuming full dilution $0.45 $0.36
----- -----
----- -----
</TABLE>
- ----------------------------------
* The average number of shares outstanding is used for the computation of
primary earnings per share since the change caused by common stock
equivalents is less than 3% and thus does not need to be considered as
dilutive.
**Assumes proceeds from exercise of stock options used to purchase treasury
shares at market on the last business day of the quarter.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 15,770
<INT-BEARING-DEPOSITS> 308
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 73,811
<INVESTMENTS-CARRYING> 30,780
<INVESTMENTS-MARKET> 29,326
<LOANS> 364,906
<ALLOWANCE> 3,312
<TOTAL-ASSETS> 509,669
<DEPOSITS> 437,097
<SHORT-TERM> 8,539
<LIABILITIES-OTHER> 4,387
<LONG-TERM> 12,497
0
0
<COMMON> 13,744
<OTHER-SE> 33,405
<TOTAL-LIABILITIES-AND-EQUITY> 509,669
<INTEREST-LOAN> 8,040
<INTEREST-INVEST> 1,715
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 9,755
<INTEREST-DEPOSIT> 4,627
<INTEREST-EXPENSE> 4,955
<INTEREST-INCOME-NET> 4,800
<LOAN-LOSSES> 280
<SECURITIES-GAINS> 7
<EXPENSE-OTHER> 3,801
<INCOME-PRETAX> 1,927
<INCOME-PRE-EXTRAORDINARY> 1,927
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,253
<EPS-PRIMARY> .46
<EPS-DILUTED> .45
<YIELD-ACTUAL> 4.06
<LOANS-NON> 852
<LOANS-PAST> 344
<LOANS-TROUBLED> 280
<LOANS-PROBLEM> 3,495
<ALLOWANCE-OPEN> 3,289
<CHARGE-OFFS> 327
<RECOVERIES> 70
<ALLOWANCE-CLOSE> 3,312
<ALLOWANCE-DOMESTIC> 1,208
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 2,104
</TABLE>
