<PAGE> 1
FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended March 31, 1994 Commission File Number 1-11792
---------------- ---------
Mercantile Bancorporation Inc.
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(Exact Name of Registrant as Specified in Its Charter)
Missouri 43-0951744
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(State of Incorporation) (IRS Employer Identification No.)
P.O. Box 524 St. Louis, Missouri 63166-0524
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (314) 425-2525
----------------------
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.
X
----- -----
Yes No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock, $5.00 par value, 42,971,865 shares outstanding as of the
close of business on April 30, 1994.
<PAGE> 2
PART I FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
The following consolidated financial statements, included in the Quarterly
Report of the Registrant to its Shareholders for the quarter ended March
31, 1994, attached hereto as Exhibit 19, are incorporated herein by
reference:
<CAPTION>
Quarterly Report
STATEMENT Reference
- - ----------------------------------------------------- -----------------
<S> <C>
Consolidated Statement of Income - Three Months
ended March 31, 1994 and 1993. Page 15
Consolidated Balance Sheet as of March 31, 1994
and December 31, 1993. Page 16
Consolidated Statement of Cash Flows - Three Months
ended March 31, 1994 and 1993. Page 18
</TABLE>
The following notes to the consolidated financial statements are included
as a part of this report:
Mercantile Bancorporation Inc. and Subsidiaries
Notes to Consolidated Financial Statements
NOTE 1
The consolidated financial statements include all adjustments which are,
in the opinion of management, necessary to a fair statement of the results
of these periods and are of a normal recurring nature.
NOTE 2
On February 10, 1994, the Registrant declared a three-for-two stock split,
in the form of a dividend, which was distributed on April 11, 1994 to
shareholders of record on March 10, 1994. All per share amounts and
average shares outstanding have been restated to give effect to the stock
split except for share amounts contained in Part II, Item 4 of this
report.
NOTE 3
Effective January 3, 1994, the Registrant acquired Metro Bancorporation, a
Waterloo, Iowa-based bank holding company with assets totaling $370
million. Effective February 1, 1994, the Registrant acquired United
Postal Bancorp, Inc., holding company for United Postal Savings Associa-
tion, with total assets approximating $1.3 billion. Both of these
acquisitions were accounted for as poolings-of-interests. The historical
consolidated financial statements as of December 31, 1993 and for the
period ended March 31, 1993 have been restated to reflect this transaction.
2
<PAGE> 3
<TABLE>
Net income and net income per share for the Registrant and the pooled
companies prior to restatement were as follows:
<CAPTION>
Three months ended
March 31, 1993
($ in thousands except
per share data)
-------------------
<S> <C>
REGISTRANT
Net income $27,179
Net income per share .78
METRO BANCORPORATION
Net income 883
Net income per share 1.70
UNITED POSTAL BANCORP, INC.
Net income 5,003
Net income per share .83
</TABLE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Management's Discussion and Analysis of Financial Condition and Results of
Operations, included on pages 3 - 14 in the Quarterly Report of the
Registrant to its Shareholders for the quarter ended March 31, 1994
is incorporated herein by reference.
PART II OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The annual meeting of shareholders of the Registrant was held on April
28, 1994. Of 28,616,629 shares issued, outstanding and eligible to be
voted at the meeting, 23,973,995 shares, constituting a quorum, were
represented in person or by proxy. Seven (7) matters were submitted to a
vote of the security-holders at the meeting.
<TABLE>
1. ELECTION OF DIRECTORS. The first matter was the election of six
---------------------
Class III director nominees to the Board of Directors. The Articles of
Incorporation of the Registrant allow cumulative voting in all director
elections and all shareholders were accordingly allowed to cumulate their
votes for directors if they so desired. Upon tabulation of the votes
cast, it was determined that all six director nominees had been elected.
The voting results are set forth below:
<CAPTION>
Name For Withheld
---- --- --------
<S> <C> <C>
Harry M. Cornell, Jr. 23,776,330 197,665
Bernard A. Edison 23,772,570 201,425
Thomas H. Jacobsen 23,786,137 187,858
Craig D. Schnuck 23,786,736 187,259
Robert W. Staley 23,776,082 197,913
Robert L. Stark 23,771,607 202,388
</TABLE>
3
<PAGE> 4
Because Registrant has a staggered Board, the term of office of the
following named Class I and Class II directors, who were not up for
election at the 1993 annual meeting, continued after the meeting:
Class I (continue in office until 1995)
Thomas A. Hays Patrick T. Stokes
James B. Malloy Francis A. Stroble
Harvey Saligman Joseph G. Werner
John A. Wright
Class II (continue in office until 1996)
Richard P. Conerly William A. Hall
Earl K. Dille William G. Heckman
J. Cliff Eason Charles H. Price
2. PROPOSAL TO AMEND THE ARTICLES OF INCORPORATION TO INCREASE THE
---------------------------------------------------------------
AUTHORIZED NUMBER OF SHARES OF COMMON STOCK. The second matter, a
- - -------------------------------------------
proposal to Amend the Articles of Incorporation of the Registrant to
increase the number of authorized shares of common stock, $5.00 par value,
of the Registrant from 70,000,000 shares to 100,000,000 shares, was
approved by a majority of the 28,616,629 shares of the Registrant's Common
Stock which were issued, outstanding and eligible to vote. The voting
results on this matter were as follows:
21,286,548 For
2,370,211 Against
317,236 Abstain
0 Broker Non-Votes
3. PROPOSAL TO ADOPT MERCANTILE BANCORPORATION INC. 1994 STOCK
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INCENTIVE PLAN. The third matter, a proposal to adopt the Mercantile
- - --------------
Bancorporation Inc. 1994 Stock Incentive Plan, a plan which provides for
the granting of stock options and other stock based awards to employees,
was approved by a vote of a majority of the shares of the Registrant's
Common Stock present and voting at the Annual meeting, as follows:
19,665,986 For
2,613,735 Against
477,365 Abstain
1,216,909 Broker Non-Votes
4. PROPOSAL TO QUALIFY RESTRICTED PERFORMANCE UNIT GRANTS UNDER
------------------------------------------------------------
MERCANTILE BANCORPORATION INC. 1994 STOCK INCENTIVE PLAN AS "PERFORMANCE-
- - -------------------------------------------------------------------------
BASED". The fourth matter, a proposal to approve the performance-based
- - ------
structure adopted by the Board of Directors and described in the Proxy
Statement for the grant of Restricted Performance Units under the
Mercantile Bancorporation Inc. 1994 Stock Incentive Plan, which approval
was necessary to qualify said grants as "Performance-Based", was approved
by a vote of a majority of the shares of the Registrant's Common Stock
present and voting at the Annual meeting, as follows:
21,381,748 For
1,906,680 Against
685,567 Abstain
0 Broker Non-Votes
4
<PAGE> 5
5. PROPOSAL TO ADOPT MERCANTILE BANCORPORATION INC. 1994 EXECUTIVE
---------------------------------------------------------------
INCENTIVE COMPENSATION PLAN. The fifth matter, a proposal to adopt the
- - ---------------------------
Mercantile Bancorporation Inc. 1994 Executive Incentive Compensation Plan,
a plan which provides senior Mercantile officers with annual bonus
opportunities based upon preestablished performance objectives, was
approved by a vote of a majority of the shares of the Registrant's Common
Stock present and voting at the Annual meeting, as follows:
20,856,873 For
2,546,415 Against
570,707 Abstain
0 Broker Non-Votes
6. PROPOSAL TO ADOPT MERCANTILE BANCORPORATION INC. VOLUNTARY DEFERRED
-------------------------------------------------------------------
COMPENSATION PLAN. The sixth matter, a proposal to adopt the Mercantile
- - -----------------
Bancorporation Inc. Voluntary Deferred Compensation Plan, a plan pursuant
to which qualifying employees are entitled to defer receipt of all or a
portion of their annual compensation, was approved by a vote of a majority
of the shares of the Registrant's Common Stock present and voting at the
Annual meeting, as follows:
22,318,639 For
1,098,986 Against
556,370 Abstain
0 Broker Non-Votes
7. PROPOSAL TO ADOPT MERCANTILE BANCORPORATION INC. 1994 STOCK
-----------------------------------------------------------
INCENTIVE PLAN FOR NON-EMPLOYEE DIRECTORS. The seventh and final matter,
- - -----------------------------------------
a proposal to adopt the Mercantile Bancorporation Inc. 1994 Stock
Incentive Plan for Non-Employee Directors, a plan which provides for the
granting of stock-based awards to directors of Mercantile Bancorporation
Inc. who are not employees of Mercantile or its subsidiaries, was adopted
by a vote of a majority of the shares of the Registrant's Common Stock
present and voting at the Annual meeting, as follows:
18,599,740 For
3,677,643 Against
545,775 Abstain
1,150,837 Broker Non-Votes
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
19 Quarterly Report of the Registrant to its Shareholders
for the quarter ended March 31, 1994.
5
<PAGE> 6
(b) Reports on Form 8-K:
Registrant filed one (1) Current Report on Form 8-K during the
quarter ended March 31, 1994. In that report, dated
February 11, 1994, under Item 2, Registrant disclosed that it
had, effective February 1, 1994, consummated its acquisition
of United Postal Bancorp, Inc. ("UPBI") through merger of UPBI
with and into a wholly owned subsidiary of Registrant, with
the shareholders of UPBI to receive an aggregate of approxi-
mately 6,351,000 (adjusted for three-for-two stock split
described in Note 2) shares of Registrant's common stock in
exchange for their UPBI shares.
Also pursuant to Item 2, Registrant incorporated by reference
UPBI's consolidated financial statements and related notes
contained in UPBI's 1992 Annual Report on Form 10-K for the
fiscal year ended December 31, 1992 and the Independent
Auditors' Report relating to such financial statements
contained therein, and UPBI's consolidated financial state-
ments and related notes appearing in its Quarterly Reports on
Form 10-Q for the quarters ended March 31, June 30 and
September 30, 1993. In addition, certain required pro forma
financial information was incorporated by reference into the
Form 8-K from Registrant's Registration Statement on Form S-4
(Registration No. 33-50981).
6
<PAGE> 7
SIGNATURE
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.
MERCANTILE BANCORPORATION INC.
(Registrant)
Date May 13, 1994 s/W. Randolph Adams
----------------------- -------------------------------
W. Randolph Adams
Chief Financial Officer
7
<PAGE> 8
<TABLE>
EXHIBIT INDEX
-------------
<CAPTION>
Exhibit No. Description Page
- - ----------- ----------- ----
<C> <S> <C>
19 Quarterly Report of the Registrant to its ----
Shareholders for the quarter ended
March 31, 1994.
</TABLE>
<PAGE> 1
MERCANTILE
BANCORPORATION INC.
FIRST QUARTER REPORT 1994
<TABLE>
TABLE OF CONTENTS
<S> <C>
Highlights.......................................................... 1
Letter to Shareholders.............................................. 2
Financial Section
Financial Commentary............................................... 3
Condensed Consolidated Quarterly
Statement of Income...............................................12
Consolidated Quarterly Average
Balance Sheet.....................................................13
Financial Statements...............................................15
Banks and Other Subsidiaries........................................19
Directors and Executive Officers....................................20
Investor Information................................................21
</TABLE>
<PAGE> 2
<TABLE>
HIGHLIGHTS(1)
<CAPTION>
FIRST QUARTER
($ IN THOUSANDS EXCEPT PER SHARE DATA) 1994 1993 CHANGE
- - --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE DATA
Net income $ .91 $ .79 15.2%
Dividends declared .28 .24 3/4 13.1
Book value at March 31 22.94 20.83 10.1
Market price at March 31 31 7/8 34 5/8 (7.9)
Average common shares outstanding 42,857,806 42,078,489 1.9
- - -------------------------------------------------------------------------------------------------------------------------------
OPERATING RESULTS
Taxable-equivalent net interest income $127,702 $126,877 .7%
Tax-equivalent adjustment 2,309 2,497 (7.5)
Net interest income 125,393 124,380 .8
Provision for possible loan losses 8,383 14,049 (40.3)
Other income 48,922 49,640 (1.4)
Other expense 103,824 107,361 (3.3)
Income taxes 23,253 19,545 19.0
Net income 38,855 33,065 17.5
- - -------------------------------------------------------------------------------------------------------------------------------
ENDING BALANCES
Total assets $11,922,882 $11,847,906 .6%
Loans and leases 7,510,609 7,460,642 .7
Deposits 9,329,373 9,486,338 (1.7)
Shareholders' equity 984,963 877,212 12.3
Reserve for possible loan losses 165,373 155,658 6.2
- - -------------------------------------------------------------------------------------------------------------------------------
AVERAGE BALANCES
Total assets $12,213,848 $12,265,053 (.4)%
Earning assets 11,144,382 11,197,856 (.5)
Loans and leases 7,360,935 7,452,066 (1.2)
Deposits 9,938,134 10,050,862 (1.1)
Shareholders' equity 975,903 865,181 12.8
- - -------------------------------------------------------------------------------------------------------------------------------
SELECTED RATIOS
Return on assets 1.27% 1.08%
Return on equity 15.93 15.29
Overhead ratio 58.78 60.82
Net interest rate margin 4.58 4.53
Equity to assets 8.26 7.40
Tier I capital to risk-adjusted assets 11.56 10.30
Total capital to risk-adjusted assets 15.68 13.92
Leverage 7.52 6.61
Reserve for possible loan losses to outstanding loans 2.20 2.09
Reserve for possible loan losses to non-performing loans 404.93 194.45
Non-performing assets to outstanding loans
and foreclosed assets 1.00 1.68
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SELECTED DATA
Banks(2) 42 40
Banking offices(2) 252 237
Full-time equivalent employees 5,890 5,933
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<FN>
(1) All 1993 financial information has been restated to reflect the
January 3, 1994 merger with Metro Bancorporation and the February
1, 1994 merger with United Postal Bancorp, Inc., which were
accounted for as poolings-of-interests. All per share amounts and
average shares outstanding have been restated to give effect to a
three-for-two stock split distributed April 11, 1994.
(2) Includes United Postal Savings Association, a state-chartered
thrift institution.
</TABLE>
1 MERCANTILE BANCORPORATION INC.
<PAGE> 3
LETTER TO SHAREHOLDERS
Strategically-planned growth played an important role in Mercantile's
first quarter, as the corporation added two more financial
institutions to its four-state franchise. At the same time, earnings
continued to rise, driven by ongoing asset quality improvements and
operating expense reductions, a strong net interest rate margin, and
solid contributions from our core fee-based businesses.
During the first quarter, Mercantile completed its first merger in
Iowa, adding Mercantile Bank of Northern Iowa, based in Waterloo, to
its network of community banks. The corporation also strengthened its
St. Louis-area retail and mortgage banking presence with the
completion of its merger with United Postal Bancorp, parent company of
United Postal Savings Association.
Mercantile's net income for the first three months of 1994 was
$38,855,000, and was up 17.5% from first-quarter 1993 earnings of
$33,065,000. On a per share basis, net income rose 15.2% to $.91 from
$.79. Net interest income for the quarter was $125,393,000, and the
net interest rate margin was 4.58% this year compared to 4.53% in
1993.
The corporation's total assets were $11.9 billion, and return on
assets rose to 1.27% versus 1.08% the previous year. Return on equity
also increased to 15.93% in 1994 from 15.29% in 1993.
Asset quality gains continued during the first quarter of this year,
as non-performing loans declined to $40,840,000 or .54% of total loans
at March 31, 1994 from $57,483,000 or .78% at the end of 1993. Also
down were foreclosed assets, which finished the first quarter at
$34,417,000 compared with $36,014,000 at year-end.
The reserve for possible loan losses as of March 31 of this year was
$165,373,000 or 2.20% of total loans and reserve coverage increased to
404.93% of non-performing loans compared with 293.39% at December 31.
The board of directors, at its February meeting, declared a quarterly
dividend of $.28 per share, a 13.1% increase over the previously paid
dividend of $.24 3/4 per share. That dividend was paid April 1. At the
same meeting, the board declared a three-for-two stock split, which
was distributed April 11.
As Mercantile's growth continues and profitability steadily increases,
the corporation has begun to emerge as one of the top-performing
banking organizations in the United States. My thanks to our
employees, shareholders and customers, whose hard work, commitment and
support have been the driving forces behind this success.
/s/ THOMAS H. JACOBSEN
Thomas H. Jacobsen
Chairman of the Board and
Chief Executive Officer
April 29, 1994
2
<PAGE> 4
FINANCIAL COMMENTARY
PERFORMANCE SUMMARY
Net income for the first quarter of 1994 was $38,855,000, a 17.5%
increase from the $33,065,000 earned in the same period a year ago. On
a per share basis, net income was $.91, up 15.2% from the $.79 earned
in last year's first quarter. First-quarter results reflected a slight
improvement in net interest income, lower levels of operating
expenses, a decline in the provision for possible loan losses and a
small decrease in other income. Return on average assets improved to
1.27% this quarter compared with 1.08% in last year's first quarter,
while return on average equity was 15.93% in 1994, up from 15.29% last
year.
The financial statements have been restated to include the pre-
acquisition accounts and results of operations of United Postal
Bancorp, Inc. and Metro Bancorporation, which were merged with
Mercantile on February 1, 1994 and January 3, 1994, respectively, in
transactions accounted for as poolings-of-interests. In addition, the
restatement reflects the three-for-two stock split, which was paid in
the form of a dividend on April 11, 1994 to shareholders of record on
March 10, 1994.
Net interest income for the first quarter of 1994 was $125,393,000
compared with $124,380,000 in the year-earlier period, an increase of
.8%. The net interest rate margin of 4.58% was up five basis points
from 4.53% last year. Average earning assets of $11.1 billion declined
slightly from the $11.2 billion in the first quarter of 1993, as
average loan volume declined by $91,131,000 or 1.2%, investments in
debt and equity securities declined by $52,101,000 or 1.5%, and short-
term investments grew by $89,758,000 or 28.7%.
Other income was $48,922,000 in the first quarter of 1994, a decrease
of $718,000 or 1.4% from a year ago. Growth in trust fees, service
charges, credit card fees and mortgage banking income was largely
offset by a decline of $2,439,000 in net securities gains.
Non-interest expenses were down $3,537,000 or 3.3% from a year ago.
Total expenses were $103,824,000 for the quarter compared with
$107,361,000 last year. The reduction in expense levels resulted
primarily from the realization of synergies from mergers completed in
prior years and lower foreclosed property expense. The result was an
improvement in the overhead ratio to 58.78% compared with 60.82% last
year, and a lowering of the other expense to average assets ratio to
3.40% versus 3.50% in the first quarter of 1993.
The provision for possible loan losses for the quarter was $8,383,000
compared with $14,049,000 in 1993, a decline of 40.3%. Net charge-offs
were $11,661,000 and $23,966,000, respectively, and on an annualized
basis were .63% of average loans this quarter compared with 1.29% last
year. At March 31, 1994, the reserve for possible loan losses was
$165,373,000 and covered 404.93% of non-performing loans compared with
194.45% last March 31 and 293.39% at year-end 1993.
Non-performing loans as of March 31, 1994 were $40,840,000 or .54% of
total loans, down from the year-end 1993 figures of $57,483,000 or
.78% and March 31, 1993 levels of $80,052,000 or 1.07%. Foreclosed
assets, including in-substance foreclosures, declined to $34,417,000
compared with $36,014,000 at year's end and $45,780,000 last March 31.
3 MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES
<PAGE> 5
Earnings in the St. Louis Area (Mercantile Bank of St. Louis N.A.,
United Postal Savings Association and Mercantile Trust Company N.A.)
were $21,256,000, up 29.1% from 1993. The first quarter results
reflected a slightly improved level of net interest income, and
significant reductions in operating expenses and the provision for
possible loan losses, partially offset by reduced other income due to
a higher level of securities gains in the first quarter of 1993 at
United Postal. Return on average assets improved to 1.31% for the
first quarter of 1994 versus 1.03% in 1993.
In the 36 Community Banks, net income was $17,463,000, an increase of
8.4%, while return on average assets was 1.60% in 1994 versus 1.46%
last year. Earnings for the three banks in the Kansas City Area were
$4,799,000, up 17.0% from a year ago. Return on average assets was
1.20% compared with .99% last year.
<TABLE>
- - ---------------------------------------------------------------------------------------------------------------------------------
EXHIBIT 1
ORGANIZATIONAL CONTRIBUTION
($ IN THOUSANDS)
<CAPTION>
MARCH 31, 1994
--------------------------------------------------------------------------------
KANSAS PARENT
ST. LOUIS CITY COMMUNITY COMPANY AND
AREA* AREA BANKS ELIMINATIONS CONSOLIDATED
--------- ------ --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net income $ 21,256 $ 4,799 $ 17,463 $ (4,663) $ 38,855
Average assets 6,470,259 1,601,929 4,371,783 (230,123) 12,213,848
Return on assets 1.31% 1.20% 1.60% 1.27%
Net interest rate margin 4.12 4.52 5.15 4.58
Overhead ratio 54.80 61.29 54.25 58.78
Equity to assets 7.86 8.88 9.04 8.26
Reserve for possible loan losses to
outstanding loans 1.89 2.74 2.46 2.20
Reserve for possible loan losses to
non-performing loans 385.70 501.48 400.94 404.93
Non-performing loans to outstanding loans .49 .55 .61 .54
Non-performing assets to outstanding loans
and foreclosed assets 1.16 .99 .75 1.00
<FN>
*Includes the results of Mercantile Bank of St. Louis N.A., United Postal Savings Association, Mercantile Trust Company N.A.,
Mercantile Business Credit, Inc. (asset-based lending), Mercantile Investment
Services, Inc. (brokerage), Mississippi Valley Advisors Inc. (investment management) and Mississippi Valley Life
Insurance Co. (credit life).
- - -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Consolidated assets of $11.9 billion were up .6% from last March 31.
Core deposits declined by 1.6% to $8.8 billion, loans were $7.5
billion, up .7% from last year, and shareholders' equity of
$984,963,000 was 12.3% higher than at March 31, 1993. Tier I capital
to risk-adjusted assets improved to 11.56% compared with 10.30% last
year, while Total capital to risk-adjusted assets was 15.68% compared
with 13.92% at March 31, 1993.
The following financial commentary presents a more thorough discussion
and analysis of the results of operations and financial condition of
the Corporation for the first quarter of 1994.
4
<PAGE> 6
FINANCIAL COMMENTARY (CONT'D)
NET INTEREST INCOME
Net interest income for the first quarter of 1994 was $125,393,000, an
increase of .8% from the $124,380,000 earned last year. This was the
net result of a five-basis-point widening in the net interest rate
margin to 4.58%, offset by a .5% decline in average earning assets.
Factors contributing to the increase in the net interest rate margin
included significantly higher levels of average non-interest bearing
deposits and shareholders' equity, a decline in non-performing assets,
growth in the higher-yielding consumer and credit card loan
categories, the continued run-off of higher-costing retail
certificates of deposit, and the movement of consumer deposits from
certificates of deposit to lower-cost checking, savings and money
market accounts. The two major categories of earning assets decreased
in the first quarter of 1994 compared with last year. Average loans
declined by $91,131,000 or 1.2%, and investments in debt and equity
securities decreased by $52,101,000 or 1.5%. Short-term investments
grew by $89,758,000 or 28.7%.
Average loans in the St. Louis Area declined by 2.0%, while volume
at the Community Banks and Kansas City Area banks decreased by .4%.
When compared with the first quarter of 1993, average commercial
loans declined by $34,071,000 or 1.7%, while average commercial
real estate mortgage and construction loans declined by $63,540,000
or 4.3%. Residential mortgage loans on average decreased by
$132,584,000 or 5.5% through paydowns and refinancings into long-
term fixed-rate loans, which were sold into the secondary market
with servicing retained. Average credit card loans increased by
$134,903,000 or 22.1%, due primarily to cross-selling efforts,
successful targeted marketing campaigns for new accounts and
selected credit limit increases, while other consumer loans
increased by .6% due to strong growth in indirect loans offset by a
reduction in direct consumer loans.
<TABLE>
- - ---------------------------------------------------------------------------------------------------------------------------
EXHIBIT 2
LOANS AND LEASES
($ IN THOUSANDS)
<CAPTION>
MARCH 31
1994 1993 CHANGE
---- ---- ------
<S> <C> <C> <C>
Commercial $2,171,715 $2,049,358 6.0%
Real estate-commercial 1,264,655 1,344,655 (5.9)
Real estate-construction 145,985 149,915 (2.6)
Real estate-residential 2,246,470 2,368,024 (5.1)
Consumer 949,462 929,555 2.1
Credit card 732,142 617,637 18.5
Foreign 180 1,498 (88.0)
---------- ----------
Total Loans and Leases $7,510,609 $7,460,642 .7
========== ==========
- - ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
The 1.5% decline in average investments in debt and equity securities
included an $80,617,000 or 2.5% decrease in taxable securities and
growth of $30,008,000 or 13.9% in tax-exempt securities. Trading
securities are at approximately the same level as 1993. Short-term
investments are primarily used for short-term excess liquidity or
balancing the interest rate sensitivity of the Corporation, and on
average increased by $89,758,000 or 28.7% during the first quarter of
1994.
Significant changes in the mix of deposits reflected the continuing
strategy to be substantially funded by core deposits, and the
disintermediation of retail certificates of deposit into interest
bearing demand and savings accounts in the current low rate
environment. Core deposits decreased slightly to 94.69% of total
deposits from 94.74% a year ago and on average were down 1.2% from
last year. On average, interest bearing demand accounts increased by
$159,897,000 or 11.1% and savings accounts grew by $88,212,000 or
10.7%. Retail certificates of deposit declined by $484,304,000 or
13.2%. This more costly source of funds declined to 33.89% of total
core deposits from 38.58% in 1993, as customers preferred
5 MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES
<PAGE> 7
maturity flexibility with their investments. Short-term borrowings
decreased by $47,909,000 or 5.6%, while purchased deposits declined by
$1,296,000 or .2%.
Non-interest bearing funds grew substantially in the current quarter
compared with a year ago, thereby enhancing the level of net interest
income and the net interest rate margin. Average non-interest bearing
demand balances (net of cash and due from banks) grew by $160,641,000
or 14.5%, primarily due to new customer relationships and higher
compensating balance requirements for corporate services due to the
lower interest rate environment. Average shareholders' equity
increased by $110,722,000 or 12.8% due primarily to earnings retained,
new shares issued in the Mt. Vernon and Flora purchase transactions
during the second and third quarters of 1993, and stock issued under
employee benefit plans.
The factors discussed previously are consistent with Mercantile's
overall corporate policy relative to rate sensitivity and liquidity,
which is to produce the optimal yield and maturity mix consistent with
interest rate expectations and projected liquidity needs. The
Consolidated Quarterly Average Balance Sheet, with rates earned and
paid, is summarized by quarter on Pages 13 and 14.
OTHER INCOME
Non-interest income decreased 1.4% during the first quarter of 1994 to
$48,922,000. Trust fees, mortgage banking income, service charges and
credit card fees all improved from last year, while investment banking
revenue and miscellaneous income declined slightly. Securities gains
were $225,000 this quarter compared with $2,664,000 last year.
Trust fees continued to be the largest source of non-interest
income, and were $15,657,000 compared with $14,873,000 during the
first quarter of 1993, an increase of 5.3%. Personal trust fees
generated in the St. Louis Area are the largest source of trust
revenue, representing 29.44% of trust income. These fees declined
by 2.5% when compared to the first quarter of 1993, due primarily
to a reduction in termination fees. Trust revenues in the Kansas
City Area banks and Community Banks, which accounted for 27.40% of
total trust income, are largely personal trust fees and were flat
when compared with the first quarter of 1993. Trust income from
Mississippi Valley Advisors Inc., and from institutional and
corporate trust services represented 22.35% and 20.81%,
respectively, of the total trust income for the first quarter of
1994, and grew by 13.7% and 18.2%, respectively, when compared with
the first quarter of 1993, largely due to successful business
development efforts.
<TABLE>
- - ---------------------------------------------------------------------------------------------------------------------------
EXHIBIT 3
OTHER INCOME
($ IN THOUSANDS)
<CAPTION>
FIRST QUARTER
1994 1993 CHANGE
---- ---- ------
<S> <C> <C> <C>
Trust $15,657 $14,873 5.3%
Service charges 14,455 14,108 2.5
Credit card fees 5,801 5,446 6.5
Mortgage banking 2,405 1,793 34.1
Investment banking 2,369 2,591 (8.6)
Letters of credit fees 1,521 1,520 .1
Foreclosed property income 1,286 604 -
Securities gains 225 2,664 -
Other 5,203 6,041 (13.9)
------- -------
Total Other Income $48,922 $49,640 (1.4)
======= =======
- - ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
Service charge income was up 2.5% or $347,000 for the first quarter of
1994, as deposit volumes were flat with 1993, and corporate customers
opted to use deposit balances to offset service charges rather than
pay fees.
6
<PAGE> 8
FINANCIAL COMMENTARY (CONT'D)
Credit card fee income was $5,801,000 for the first quarter of 1994, a
$355,000 or 6.5% increase from the 1993 level. Credit card income
primarily represents fees charged merchants for processing credit card
transactions, fees received on transactions of Mercantile cardholders
and cardholders' annual fees.
Investment banking fees and commissions, which consist of transaction
fees for services performed as a dealer bank for both individual and
corporate customers, including sales of annuities and mutual funds,
profits earned on limited trading positions, and foreign exchange
revenue, were $2,369,000 compared with $2,591,000 last year, a
decrease of 8.6%. This source of revenue can vary depending on
movements in interest rates and overall market conditions.
Mortgage banking is now a meaningful line of business for Mercantile
with the incorporation of United Postal; these revenues increased by
$612,000 or 34.1% over the first quarter of 1993. Servicing fees grew
by 17.0% to $1,152,000, as total servicing exceeded $3.1 billion.
Gains on the sale of loans increased by $385,000 to $860,000 for the
first quarter of 1994.
Securities gains declined by $2,439,000 from the first quarter of
1993, when United Postal sold significant volumes of U.S. Treasury
securities in a portfolio restructuring. All other income was flat
when compared with a year ago.
OTHER EXPENSE
Expenses other than interest expense and the provision for possible
loan losses for the first quarter of 1994 were $103,824,000, a
decline of $3,537,000 or 3.3% from 1993. Total operating expenses
were 3.40% of average assets compared with 3.50% last year, and the
overhead ratio, defined as operating expenses as a percentage of
taxable-equivalent net interest income and other income, improved
to 58.78% compared with 60.82% last year.
Personnel costs increased 6.3% from the first quarter of 1993,
reflecting the costs associated with staffing additional offices,
support services and merit increases. Benefit costs were up by
10.4% due to the generally higher costs of employee benefit
programs. Occupancy and equipment costs were up 3.1% in the first
quarter, reflecting the costs of additional offices, and a
consistent program of upgrading systems and equipment to enhance
productivity.
<TABLE>
- - ---------------------------------------------------------------------------------------------------------------------------
EXHIBIT 4
OTHER EXPENSE
($ IN THOUSANDS)
<CAPTION>
FIRST QUARTER
1994 1993 CHANGE
---- ---- ------
<S> <C> <C> <C>
Salaries $ 44,348 $ 42,112 5.3%
Employee benefits 11,389 10,316 10.4
-------- --------
Total Personnel Expense 55,737 52,428 6.3
Net occupancy 6,460 6,319 2.2
Equipment 8,671 8,352 3.8
Advertising/business development 2,236 3,011 (25.7)
Postage and freight 3,675 3,432 7.1
Office supplies 2,001 2,114 (5.3)
Communications 1,584 1,477 7.2
Legal and professional 2,314 2,854 (18.9)
Credit card 2,243 2,442 (8.1)
FDIC insurance 5,299 5,732 (7.6)
Foreclosed property expense 405 2,448 (83.5)
Intangible asset amortization 1,738 1,821 (4.6)
Other 11,461 14,931 (23.2)
-------- --------
Total Other Expense $103,824 $107,361 (3.3)
======== ========
RATIOS
Overhead ratio 58.78% 60.82%
Other expense to
average assets 3.40 3.50
- - ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
Exhibit 4 details the composition of all other operating expenses,
which declined substantially from last year. Expenses related to
foreclosed property totaled $405,000
7 MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES
<PAGE> 9
compared with $2,448,000 last year, a decline of $2,043,000. FDIC
insurance costs decreased by 7.6%, as the deposit base is lower and
all Mercantile banks in 1994 are now assessed premiums at the lowest
$.23 rate. All other expenses were down largely due to greater expense
controls and acquisition consolidation efforts.
RESERVE FOR POSSIBLE LOAN LOSSES
The reserve for possible loan losses was $165,373,000 or 2.20% of
loans outstanding at March 31, 1994. This compared with
$168,651,000 or 2.28% at year's end and $155,658,000 or 2.09% at
March 31, 1993. The reserve coverage of non-performing loans
improved to 404.93% compared with 293.39% at year-end and 194.45%
last year, and the earnings coverage of net charge-offs improved to
6.05x from 2.78x last year.
The provision for possible loan losses for the first quarter of
1994 was $8,383,000 compared with $14,049,000 last year. The
annualized ratio of net charge-offs to average loans for the first
quarter was .63% compared with 1.29% last year, while the
corresponding net charge-off figures were $11,661,000 and
$23,966,000, respectively. Excluding charge-offs taken on three
United Postal commercial real estate loans for which reserves were
provided in the fourth quarter of 1993, the .63% charge-off ratio
is reduced to .42%.
In the St. Louis Area, the annualized ratio of net charge-offs to
average loans for the first quarter of 1994 was .70% compared with
1.82% in 1993, when significant write-downs were taken on two
commercial real estate loans and one commercial loan at Mercantile
Bank of St. Louis N.A. In the Kansas City Area banks, the ratio of
net charge-offs to average loans was .14% versus .25% last year.
For the Community Banks as a group, the comparative ratios were
.69% and .90%, respectively.
<TABLE>
- - --------------------------------------------------------------------------------------------------------------------
EXHIBIT 5
RESERVE FOR POSSIBLE LOAN LOSSES
($ IN THOUSANDS)
<CAPTION>
THREE MONTHS ENDED
MARCH 31
1994 1993
---- ----
<S> <C> <C>
BEGINNING BALANCE $168,651 $165,575
PROVISION 8,383 14,049
CHARGE-OFFS (15,709) (28,539)
RECOVERIES 4,048 4,573
-------- --------
NET CHARGE-OFFS(1) (11,661) (23,966)
-------- --------
ENDING BALANCE $165,373 $155,658
======== ========
LOANS AND LEASES
March 31 balance $7,510,609 $7,460,642
========== ==========
Average balance $7,360,935 $7,452,066
========== ==========
RATIOS
Reserve balance to outstanding loans 2.20% 2.09%
Reserve balance to non-performing loans 404.93 194.45
Earnings coverage of net
charge-offs 6.05X 2.78x
Net charge-offs to average loans:
Total .63% 1.29%
Total excluding United Postal Savings Association real
estate-commercial .42 1.29
Credit card 4.78 4.21
<FN>
(1)Net charge-offs (recoveries):
Credit card $ 8,899 $ 6,427
United Postal Savings Association
real estate-commercial 3,962 -
Other real estate-commercial loans (940) 8,696
All other loans (260) 8,843
------- -------
Total $11,661 $23,966
======= =======
- - -----------------------------------------------------------------------------------------------------------------------
</TABLE>
Credit card losses were 4.78% of average credit card loans compared
with 4.21% in 1993. Net credit card charge-offs were $8,899,000 in
1994 compared with $6,427,000 last year. In the first quarter of 1994,
Mercantile experienced net
8
<PAGE> 10
FINANCIAL COMMENTARY (CONT'D)
recoveries of $1,200,000 on loans excluding credit card and the three
United Postal commercial real estate credits previously discussed.
Mercantile evaluates the reserves of all banks on a quarterly basis to
ensure the timely charge-off of loans and to determine the adequacy of
those reserves. At March 31, 1994, individual Community Bank reserves
as a percentage of total loans outstanding ranged from 1.58% to 6.76%
with a combined ratio of 2.46%. The coverage of non-performing loans
was 400.94% on a combined basis. The St. Louis Area combined reserve
was 1.89% of loans with a coverage ratio of 385.70%, and the combined
reserves of the Kansas City Area banks were 2.74% of loans outstanding
with a coverage of non-performing loans of 501.48%. Management
believes the consolidated reserve of 2.20% of loans and 404.93% of
non-performing loans as of March 31, 1994 was adequate based on the
risks identified at such date in the portfolios.
NON-PERFORMING ASSETS
Non-performing loans (non-accrual and renegotiated loans) declined
to $40,840,000 or .54% of total loans at March 31, 1994 compared
with $57,483,000 or .78% at December 31, 1993, and $80,052,000 or
1.07% at March 31, 1993. Foreclosed assets dropped to $34,417,000
at March 31, 1994 compared with $36,014,000 at year's end and
$45,780,000 last year. The ratio of non-performing assets to
outstanding loans and foreclosed assets declined to 1.00% at March
31, 1994 compared with 1.26% at December 31, 1993 and 1.68% last
year. Loans past due 90 days and still accruing interest were
$14,066,000 at March 31, 1994 compared with $14,096,000 at year-end
and $12,460,000 at March 31, 1993.
As noted in Exhibit 6, non-accrual loans declined by $13,178,000
from the year-end level and $35,234,000 from last year. In the St.
Louis Area, non-accrual loans declined from the year-end level by
$12,395,000 to $15,613,000 at March 31, 1994. The current year
decline was primarily in the commercial and commercial real estate
loan portfolios of United Postal Savings Association, as write-
downs were taken on two credits and a significant credit was
resolved. At the Kansas City Area banks and in the Community Banks
as a group, non-accrual loan levels were down slightly from the
totals reported at year-end.
<TABLE>
- - --------------------------------------------------------------------------------------------------------------------------
EXHIBIT 6
NON-PERFORMING ASSETS
($ IN THOUSANDS)
<CAPTION>
MAR. 31 DEC. 31 MAR. 31
1994 1993 1993
------- ------- -------
<S> <C> <C> <C>
NON-ACCRUAL LOANS
Commercial $10,409 $11,949 $30,119
Real estate-commercial 14,229 25,059 27,315
Real estate-construction 279 785 995
Real estate-residential 8,978 9,407 10,382
Consumer 1,945 1,818 2,263
------- ------- -------
Total Non-accrual Loans 35,840 49,018 71,074
RENEGOTIATED LOANS 5,000 8,465 8,978
------- ------- -------
TOTAL NON-PERFORMING LOANS $40,840 $57,483 $80,052
======= ======= =======
FORECLOSED ASSETS
Foreclosed real estate $31,582 $16,771 $40,847
In-substance foreclosures 1,679 18,044 3,133
Other foreclosed assets 1,156 1,199 1,800
------- ------- -------
TOTAL FORECLOSED ASSETS $34,417 $36,014 $45,780
======= ======= =======
TOTAL NON-PERFORMING ASSETS $75,257 $93,497 $125,832
======= ======= ========
PAST-DUE LOANS
(90 DAYS OR MORE) $14,066 $14,096 $12,460
======= ======= =======
RATIOS
Non-performing loans to outstanding loans .54% .78% 1.07%
Non-performing assets to outstanding loans and
foreclosed assets 1.00 1.26 1.68
Non-performing assets to total assets .63 .77 1.06
- - --------------------------------------------------------------------------------------------------------------------------
</TABLE>
9 MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES
<PAGE> 11
Renegotiated loans declined to $5,000,000 from $8,465,000 at December
31, 1993, due largely to improvements in the United Postal portfolio.
All loans classified as renegotiated were paying in accordance with
their modified terms at March 31, 1994. Loans past due 90 days and
still accruing interest were near the same level as year-end 1993, and
consisted largely of credit card loans and residential real estate
mortgage loans.
CAPITAL RESOURCES
The current economic and regulatory environment continues to place
emphasis on capital strength. Capital provides a solid foundation
for anticipated future asset growth, and promotes depositor and
investor confidence. Capital management is a continuous process at
Mercantile, and ensures that capital is provided for current needs
and anticipated growth. Mercantile's strong capital position has
enabled it to profitably expand both its asset and deposit bases
over the past four years, while maintaining capital ratios at
levels comparable to other quality banking organizations and
substantially in excess of regulatory standards.
At March 31, 1994, shareholders' equity was $984,963,000, an
increase of 12.3% from March 31, 1993. Net earnings retained, the
common shares issued in the Mt. Vernon and Flora purchase
transactions, and stock issued under various employee benefit plans
accounted for the majority of the increase. Equity represented
8.26% of assets compared with 7.40% at March 31, 1993. The
Corporation's Tier I capital to risk-adjusted assets ratio was
11.56% at March 31, 1994, while the Total capital ratio was 15.68%.
These ratios compared favorably with established regulatory
minimums of 4.0% and 8.0%, respectively, and the March 31, 1993
ratios of 10.30% and 13.92%.
<TABLE>
- - --------------------------------------------------------------------------------------------------------------------------
EXHIBIT 7
RISK-BASED CAPITAL
($ IN THOUSANDS)
<CAPTION>
MAR. 31 DEC. 31 MAR. 31
1994 1993 1993
------- ------- -------
<S> <C> <C> <C>
Capital
Tier I $ 912,830 $ 883,162 $ 805,791
Total 1,238,259 1,161,071 1,088,711
Risk-adjusted assets 7,899,137 7,985,847 7,822,674
Tier I capital to risk-adjusted assets
Capital ratio 11.56% 11.06% 10.30%
Regulatory minimum ratio 4.00 4.00 4.00
Total capital to risk-adjusted assets
Capital ratio 15.68 14.54 13.92
Regulatory minimum ratio 8.00 8.00 8.00
Leverage 7.52 7.33 6.61
Double leverage 110.38 111.97 115.11
Long-term debt to total
capitalization 22.96 22.15 23.91
Intangible assets $70,204 $71,759 $71,421
- - ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
The capital ratios at all Mercantile banks also continued to be
strong. The equity to assets ratio for all Community Banks was 9.04%
as of March 31, 1994 while the three St. Louis Area financial
institutions as a group had an equity to assets ratio of 7.86%; the
Kansas City Area banks' combined ratio was 8.88%.
The ratio of long-term debt to total capitalization was 22.96% at
March 31, 1994 compared with 22.15% at December 31, 1993. The Parent
Company double leverage ratio was 110.38% compared with 111.97% at
December 31, 1993.
10
<PAGE> 12
FINANCIAL COMMENTARY (CONT'D)
Mercantile Bank of St. Louis N.A. issued $75,000,000 of 6.375%
10-year, non-callable subordinated debt on January 25, 1994, which
qualifies as Tier II capital. The bank used the proceeds to prepay the
$23,653,000 8.25% mortgage outstanding on its headquarters building on
February 1, 1994. The Corporation also prepaid the $30,550,000 of
8.50% debentures due in 2004 on February 23, 1994.
Book value per share was $22.94 at March 31, 1994 compared with $20.83
a year earlier, an increase of 10.1%. On February 10, 1994, the Board
of Directors declared a quarterly cash dividend of $.28 per share,
which was paid April 1, 1994. This represented an increase of 13.1%
and a 30.77% payout ratio of first-quarter 1994 earnings. An increase
in the authorized common stock of the Corporation from 70,000,000
shares to 100,000,000 shares was approved by shareholders on April 28,
1994. Further information relating to dividends, as well as quarterly
stock prices, is included in the Investor Information summary on Page
21 of this report.
11 MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES
<PAGE> 13
<TABLE>
CONDENSED CONSOLIDATED QUARTERLY STATEMENT OF INCOME
(THOUSANDS EXCEPT PER SHARE DATA)
<CAPTION>
1993 1994
1ST QTR. 2ND QTR. 3RD QTR. 4TH QTR. 1ST QTR.
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans and leases $157,087 $156,551 $154,388 $153,960 $150,324
Investments in debt and equity securities 52,557 50,751 47,366 46,526 46,219
Short-term investments 2,688 1,878 3,673 2,505 3,470
-------- -------- -------- -------- --------
Total Interest Income 212,332 209,180 205,427 202,991 200,013
Tax-equivalent adjustment 2,497 2,307 2,430 2,340 2,309
-------- -------- -------- -------- --------
TAXABLE-EQUIVALENT INTEREST INCOME 214,829 211,487 207,857 205,331 202,322
INTEREST EXPENSE
Deposits 75,969 71,538 68,866 66,611 62,888
Borrowed funds 11,983 11,650 11,536 10,581 11,732
-------- -------- -------- -------- --------
Total Interest Expense 87,952 83,188 80,402 77,192 74,620
-------- -------- -------- -------- --------
TAXABLE-EQUIVALENT NET INTEREST INCOME 126,877 128,299 127,455 128,139 127,702
PROVISION FOR POSSIBLE LOAN LOSSES 14,049 14,485 12,906 19,573 8,383
OTHER INCOME
Trust 14,873 15,746 15,104 15,415 15,657
Service charges 14,108 14,511 14,748 15,144 14,455
Credit card fees 5,446 6,404 5,700 6,510 5,801
Mortgage banking 1,793 2,312 3,058 3,378 2,405
Investment banking 2,591 2,184 1,878 1,833 2,369
Securities gains 2,664 15 910 153 225
Other 8,165 9,060 7,665 7,790 8,010
-------- -------- -------- -------- --------
Total Other Income 49,640 50,232 49,063 50,223 48,922
OTHER EXPENSE
Personnel expense 52,428 53,212 54,167 55,526 55,737
Net occupancy and equipment 14,671 14,896 16,046 17,025 15,131
Other 40,262 39,907 35,844 50,925 32,956
-------- -------- -------- -------- --------
Total Other Expense 107,361 108,015 106,057 123,476 103,824
-------- -------- -------- -------- --------
TAXABLE-EQUIVALENT INCOME BEFORE INCOME TAXES 55,107 56,031 57,555 35,313 64,417
INCOME TAXES
Income taxes 19,545 19,877 19,564 16,582 23,253
Tax-equivalent adjustment 2,497 2,307 2,430 2,340 2,309
-------- -------- -------- -------- --------
Adjusted Income Taxes 22,042 22,184 21,994 18,922 25,562
-------- -------- -------- -------- --------
NET INCOME $ 33,065 $ 33,847 $ 35,561 $ 16,391 $ 38,855
======== ======== ======== ======== ========
NET INCOME PER SHARE $.79 $.80 $.84 $.38 $.91
</TABLE>
MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES 12
<PAGE> 14
<TABLE>
CONSOLIDATED QUARTERLY AVERAGE BALANCE SHEET
($ IN THOUSANDS)
<CAPTION>
1993
1ST QTR. 2ND QTR. 3RD QTR.
--------------- --------------- --------------
VOLUME RATE* VOLUME RATE* VOLUME RATE*
------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Earning Assets
Loans and leases, net of unearned income
Commercial $ 2,029,956 6.56% $ 2,072,698 6.46% $ 1,970,795 6.60%
Real estate-commercial 1,323,304 8.01 1,340,876 7.96 1,275,280 8.05
Real estate-construction 158,195 7.49 149,783 6.83 154,679 7.33
Real estate-residential 2,391,674 8.05 2,363,734 7.99 2,334,896 7.81
Consumer 936,745 9.21 928,809 9.13 929,740 8.97
Credit card 610,553 16.62 637,894 16.30 682,604 16.22
Foreign 1,639 6.83 1,035 8.12 603 5.97
----------- ----------- -----------
Total Loans and Leases 7,452,066 8.47 7,494,829 8.39 7,348,597 8.45
Investments in debt and equity securities
Trading 12,008 5.80 14,073 4.92 14,417 5.60
Taxable 3,204,699 6.15 3,152,093 6.01 3,090,005 5.68
Tax-exempt 216,373 8.93 230,660 8.59 237,107 8.30
----------- ----------- -----------
Total 3,433,080 6.32 3,396,826 6.18 3,341,529 5.87
Short-term investments 312,710 3.44 221,869 3.39 449,203 3.27
----------- ----------- -----------
Total Earning Assets 11,197,856 7.67 11,113,524 7.61 11,139,329 7.46
Non-earning Assets 1,067,197 1,116,500 1,114,359
----------- ----------- -----------
Total Assets $12,265,053 $12,230,024 $12,253,688
=========== =========== ===========
LIABILITIES
Acquired Funds
Deposits
Non-interest bearing $ 1,799,185 $ 1,886,413 $ 2,022,041
Interest bearing demand 1,435,068 2.21 1,501,234 2.13 1,520,332 2.12
Money market accounts 1,659,430 2.77 1,629,303 2.75 1,628,648 2.78
Savings 823,718 2.70 862,268 2.53 878,280 2.52
Consumer time certificates under $100,000 3,673,361 4.89 3,529,399 4.69 3,416,365 4.56
Other time 130,999 2.82 102,285 2.86 56,703 2.40
----------- ----------- -----------
Total Core Deposits 9,521,761 3.67 9,510,902 3.50 9,522,369 3.42
Time certificates $100,000 and over 498,721 3.94 458,022 3.85 441,198 3.92
Foreign 30,380 3.27 45,184 3.20 21,650 6.23
----------- ----------- -----------
Total Purchased Deposits 529,101 3.90 503,206 3.79 462,848 4.03
----------- ----------- -----------
Total Deposits 10,050,862 3.68 10,014,108 3.52 9,985,217 3.46
Short-term borrowings 861,397 3.00 830,904 2.95 852,097 2.84
Long-term debt 276,850 7.99 274,491 8.03 274,074 8.01
----------- ----------- -----------
Total Acquired Funds 11,189,109 3.75 11,119,503 3.60 11,111,388 3.54
Other Liabilities 210,763 207,588 211,394
SHAREHOLDERS' EQUITY 865,181 902,933 930,906
----------- ----------- -----------
Total Liabilities and Shareholders' Equity $12,265,053 $12,230,024 $12,253,688
=========== =========== ===========
SIGNIFICANT RATIOS
Net interest rate spread 3.92% 4.01% 3.92%
Net interest rate margin 4.53 4.62 4.58
Return on assets 1.08 1.11 1.16
Return on equity 15.29 14.99 15.28
<FN>
*Taxable-equivalent basis.
13 MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES
<PAGE> 15
<CAPTION>
1993 1994
4th QTR. lst QTR.
--------------- ----------------
VOLUME RATE* VOLUME RATE*
------ ----- ------ -----
ASSETS
Earning Assets
Loans and leases, net of unearned income
Commercial $ 1,962,432 6.53% $ 1,995,885 6.35%
Real estate-commercial 1,264,795 7.97 1,274,504 7.62
Real estate-construction 160,112 7.44 143,455 7.46
Real estate-residential 2,298,589 7.76 2,259,090 7.39
Consumer 941,992 8.73 942,256 8.31
Credit card 728,730 16.05 745,456 16.64
Foreign 845 5.21 289 5.54
----------- -----------
Total Loans and Leases 7,357,495 8.41 7,360,935 8.20
Investments in debt and equity securities
Trading 15,493 5.06 10,516 5.44
Taxable 3,130,103 5.50 3,124,082 5.48
Tax-exempt 251,136 7.93 246,381 8.00
----------- -----------
Total 3,396,732 5.68 3,380,979 5.66
Short-term investments 291,897 3.43 402,468 3.45
----------- -----------
Total Earning Assets 11,046,124 7.44 11,144,382 7.26
Non-earning Assets 1,068,428 1,069,466
----------- -----------
Total Assets $12,114,552 $12,213,848
=========== ===========
LIABILITIES
Acquired Funds
Deposits
Non-interest bearing $ 2,024,089 $ 2,023,107
Interest bearing demand 1,570,416 2.01 1,594,965 1.85
Money market accounts 1,653,236 2.74 1,658,069 2.66
Savings 894,558 2.51 911,930 2.31
Consumer time certificates under $100,000 3,310,430 4.46 3,189,057 4.27
Other time 38,588 2.66 33,201 2.75
----------- -----------
Total Core Deposits 9,491,317 3.32 9,410,329 3.14
Time certificates $100,000 and over 442,615 3.78 486,406 3.68
Foreign 27,297 6.10 41,399 4.51
----------- -----------
Total Purchased Deposits 469,912 3.92 527,805 3.74
----------- -----------
Total Deposits 9,961,229 3.36 9,938,134 3.18
Short-term borrowings 728,648 2.79 813,488 2.95
Long-term debt 273,500 8.05 298,915 7.68
----------- -----------
Total Acquired Funds 10,963,377 3.45 11,050,537 3.31
Other Liabilities 194,045 187,408
SHAREHOLDERS' EQUITY 957,130 975,903
----------- -----------
Total Liabilities and Shareholders' Equity $12,114,552 $12,213,848
=========== ===========
SIGNIFICANT RATIOS
Net interest rate spread 3.99% 3.95%
Net interest rate margin 4.64 4.58
Return on assets .54 1.27
Return on equity 6.85 15.93
<FN>
*Taxable-equivalent basis.
</TABLE>
14
<PAGE> 16
<TABLE>
CONSOLIDATED STATEMENT OF INCOME
(THOUSANDS EXCEPT PER SHARE DATA)
<CAPTION>
THREE MONTHS ENDED
MARCH 31
1994 1993
---- ----
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans and leases $150,324 $157,087
Investments in debt and equity securities
Trading 126 158
Taxable 42,722 49,156
Tax-exempt 3,371 3,243
-------- --------
Total 46,219 52,557
Due from banks-interest bearing 1,134 442
Federal funds sold and repurchase agreements 2,336 2,246
-------- --------
Total Interest Income 200,013 212,332
INTEREST EXPENSE
Interest bearing deposits 62,421 75,721
Foreign deposits 467 248
Short-term borrowings 5,996 6,450
Long-term debt 5,736 5,533
-------- --------
Total Interest Expense 74,620 87,952
-------- --------
NET INTEREST INCOME 125,393 124,380
PROVISION FOR POSSIBLE LOAN LOSSES 8,383 14,049
-------- --------
NET INTEREST INCOME AFTER PROVISION
FOR POSSIBLE LOAN LOSSES 117,010 110,331
OTHER INCOME
Trust 15,657 14,873
Service charges 14,455 14,108
Credit card fees 5,801 5,446
Mortgage banking 2,405 1,793
Investment banking 2,369 2,591
Securities gains 225 2,664
Other 8,010 8,165
-------- --------
Total Other Income 48,922 49,640
OTHER EXPENSE
Salaries 44,348 42,112
Employee benefits 11,389 10,316
Net occupancy 6,460 6,319
Equipment 8,671 8,352
Other 32,956 40,262
-------- --------
Total Other Expense 103,824 107,361
-------- --------
INCOME BEFORE INCOME TAXES 62,108 52,610
INCOME TAXES 23,253 19,545
-------- --------
NET INCOME $ 38,855 $ 33,065
======== ========
PER SHARE DATA
Average common shares outstanding 42,857,806 42,078,489
Net income* $.91 $.79
Dividends declared .28 .24 3/4
<FN>
*Based on weighted average common shares outstanding.
</TABLE>
15 MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES
<PAGE> 17
<TABLE>
CONSOLIDATED BALANCE SHEET
(THOUSANDS)
<CAPTION>
MARCH 31 DECEMBER 31 MARCH 31
1994 1993 1993
-------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and due from banks $ 560,473 $ 705,673 $ 551,787
Due from banks-interest bearing 85,480 144,538 5,376
Federal funds sold and repurchase agreements 61,037 186,962 18,761
Investments in debt and equity securities
Trading 6,622 15,735 15,953
Available-for-sale 315,340 393,140 45,084
Held-to-maturity (Estimated fair value of
$3,056,092, $3,033,347 and $3,427,585, respectively) 3,047,121 2,992,303 3,343,168
----------- ----------- -----------
Total 3,369,083 3,401,178 3,404,205
Loans and leases, net of unearned income 7,510,609 7,381,774 7,460,642
Reserve for possible loan losses (165,373) (168,651) (155,658)
----------- ----------- -----------
Net Loans and Leases 7,345,236 7,213,123 7,304,984
Bank premises and equipment 199,047 199,363 198,692
Due from customers on acceptances 9,979 11,923 7,371
Other assets 292,547 278,367 356,730
----------- ----------- -----------
Total Assets $11,922,882 $12,141,127 $11,847,906
=========== =========== ===========
LIABILITIES
Deposits
Non-interest bearing $ 1,472,519 $ 1,713,275 $ 1,316,327
Interest bearing 7,808,087 7,862,723 8,130,430
Foreign 48,767 26,085 39,581
----------- ----------- -----------
Total Deposits 9,329,373 9,602,083 9,486,338
Federal funds purchased and repurchase agreements 575,454 602,997 773,651
Other short-term borrowings 526,802 520,650 206,309
Long-term debt 293,572 272,778 275,606
Bank acceptances outstanding 9,979 11,923 7,371
Other liabilities 202,739 172,139 221,419
----------- ----------- -----------
Total Liabilities 10,937,919 11,182,570 10,970,694
Commitments and contingent liabilities - - -
<CAPTION>
MARCH 31 DEC. 31 MARCH 31
1994 1993 1993
-------- ------- --------
SHAREHOLDERS' EQUITY
Preferred stock-no par value
Shares authorized 5,000 5,000 5,000
Shares issued - - - - - -
Common stock-$5.00 par value
Shares authorized 70,000 70,000 70,000
Shares issued and outstanding 42,931 42,802 42,120 214,657 214,012 210,601
Capital surplus 165,080 164,448 149,138
Retained earnings 605,226 580,097 517,473
----------- ----------- -----------
Total Shareholders' Equity 984,963 958,557 877,212
----------- ----------- -----------
Total Liabilities and Shareholders' Equity $11,922,882 $12,141,127 $11,847,906
=========== =========== ===========
</TABLE>
MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES 16
<PAGE> 18
<TABLE>
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
($ IN THOUSANDS)
<CAPTION>
COMMON STOCK TOTAL
----------------------- CAPITAL RETAINED SHAREHOLDERS'
SHARES DOLLARS SURPLUS EARNINGS EQUITY
------ ------- ------- -------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1992, AS RESTATED 42,031,973 $210,160 $148,089 $493,075 $851,324
Net income 33,065 33,065
Dividends declared
Mercantile Bancorporation Inc.--$.24 3/4 per share (8,616) (8,616)
Pooled companies prior to acquisition (1,031) (1,031)
Issuance of common stock
Employee incentive plans 81,680 408 988 1,396
Convertible notes 2,935 15 61 76
Change in valuation allowance for marketable
equity securities 980 980
Pre-merger transactions of pooled companies 3,412 18 18
---------- -------- -------- -------- --------
BALANCE AT MARCH 31, 1993 42,120,000 $210,601 $149,138 $517,473 $877,212
========== ======== ======== ======== ========
BALANCE AT DECEMBER 31, 1993, AS RESTATED 42,802,322 $214,012 $164,448 $580,097 $958,557
Net income 38,855 38,855
Dividends declared--$.28 per share (12,019) (12,019)
Issuance of common stock
Employee incentive plans 115,686 579 533 1,112
Convertible notes 534 3 11 14
Net fair value adjustment for securities
available-for-sale (1,707) (1,707)
Pre-merger transactions of pooled companies 12,562 63 88 151
---------- -------- -------- -------- --------
BALANCE AT MARCH 31, 1994 42,931,104 $214,657 $165,080 $605,226 $984,963
========== ======== ======== ======== ========
</TABLE>
17 MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES
<PAGE> 19
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS
(THOUSANDS)
<CAPTION>
THREE MONTHS ENDED
MARCH 31
1994 1993
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 38,855 $ 33,065
Adjustments to reconcile net income to net cash provided by
operating activities
Provision for possible loan losses 8,383 14,049
Depreciation and amortization 6,843 6,502
Provision for deferred income taxes 534 4,037
Net change in trading securities 9,113 1,731
Net change in accrued interest receivable 1,485 837
Net change in accrued interest payable (4,580) (3,067)
Net change in accrued taxes payable 27,195 13,701
Other, net (9,665) (726)
---------- ---------
Net Cash Provided by Operating Activities 78,163 70,129
INVESTING ACTIVITIES
Investments in debt and equity securities, other than trading securities
Purchases (399,112) (373,219)
Proceeds from maturities 342,923 311,750
Proceeds from sales of:
Held-to-maturity securities - 22,078
Available-for-sale securities 146,399 71,675
Securities from acquired entities 74,014 7,171
Net change in loans and leases (335,990) (36,786)
Purchases of loans and leases (20,063) (20,816)
Proceeds from sales of loans and leases 65,662 24,082
Purchases of premises and equipment (7,080) (4,965)
Proceeds from sales of premises and equipment 491 -
Proceeds from sales of foreclosed property 4,430 7,839
Other, net 4,048 4,553
---------- ---------
Net Cash Provided (Used) by Investing Activities (124,278) 13,362
FINANCING ACTIVITIES
Net change in non-interest bearing, savings, interest bearing demand and
money market deposit accounts (222,065) (297,560)
Net change in time certificates of deposit under $100,000 (114,500) (183,815)
Net change in time certificates of deposit $100,000 and over 45,371 20,888
Net change in other time deposits (4,198) (1,065)
Net change in foreign deposits 22,682 19,931
Net change in short-term borrowings (21,391) (5,434)
Issuance of long-term debt 75,000 -
Principal payments on long-term debt (54,211) (23,446)
Cash dividends paid (12,019) (9,647)
Proceeds from issuance of common stock 1,112 1,055
Other, net 151 18
---------- ---------
Net Cash Used by Financing Activities (284,068) (479,075)
---------- ---------
DECREASE IN CASH AND CASH EQUIVALENTS (330,183) (395,584)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,037,173 971,508
---------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 706,990 $ 575,924
========== =========
</TABLE>
MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES 18
<PAGE> 20
<TABLE>
BANKS AND OTHER SUBSIDIARIES
<CAPTION>
TOTAL ASSETS
MAR. 31, 1994
BANK MAIN OFFICE (THOUSANDS)
- - ---- ----------- -------------
<S> <C> <C>
Mercantile Bank of St. Louis N.A. St. Louis, MO $4,938,280
United Postal Savings Association St. Louis, MO 1,221,774
Mercantile Bank of Kansas City Kansas City, MO 784,425
Mercantile Bank of Kansas Overland Park, KS 603,031
Mercantile Bank of Joplin N.A. Joplin, MO 385,373
Mercantile Bank of Illinois N.A. Alton, IL 369,477
Mercantile Bank of Northern Iowa Waterloo, IA 360,823
Mercantile Bank of St. Joseph N.A. St. Joseph, MO 327,843
Mercantile Bank of Springfield Springfield, MO 225,688
Mercantile Bank of Lawrence N.A. Lawrence, KS 216,386
Mercantile Bank of Topeka N.A. Topeka, KS 197,517
Mercantile Bank of Cape Girardeau Cape Girardeau, MO 163,937
Mercantile Bank of West Central Missouri Sedalia, MO 159,819
Mercantile Bank of North Central Missouri Macon, MO 157,282
Mercantile Bank of the Mineral Area Farmington, MO 156,565
Mercantile Bank of Franklin County Washington, MO 149,003
Mercantile Bank of Lake of the Ozarks Eldon, MO 127,975
Mercantile Bank of Jefferson County High Ridge, MO 123,904
Mercantile Bank of Poplar Bluff Poplar Bluff, MO 112,564
Mercantile Bank of Mt. Vernon Mt. Vernon, IL 100,963
Mercantile Bank of Centralia N.A. Centralia, IL 99,019
Mercantile Bank of Trenton N.A. Trenton, MO 85,185
<CAPTION>
TOTAL ASSETS
MAR. 31, 1994
BANK MAIN OFFICE (THOUSANDS)
- - ---- ----------- -------------
Mercantile Bank of Monett N.A. Monett, MO $84,713
Mercantile Bank of Missouri Valley Richmond, MO 84,569
Mercantile Bank of Stoddard/Bollinger
Counties N.A. Dexter, MO 82,185
Mercantile Bank of Flora N.A. Flora, IL 69,261
Mercantile Bank of Perryville Perryville, MO 69,089
Mercantile Bank of Phelps County Rolla, MO 64,118
Mercantile Bank of Table Rock Lake Branson West, MO 55,617
Mercantile Bank of Memphis Memphis, MO 52,805
Mercantile Bank of Doniphan N.A. Doniphan, MO 51,959
Mercantile Bank of Ste. Genevieve Ste. Genevieve, MO 51,071
Mercantile Bank of Pike County Bowling Green, MO 47,755
Mercantile Bank of Montgomery
City N.A. Montgomery City, MO 47,135
Mercantile Bank of Northwest Missouri Maryville, MO 44,957
Mercantile Bank of Carlyle Carlyle, IL 42,178
Mercantile Bank of Wright County Hartville, MO 41,305
Mercantile Bank of Boone County Columbia, MO 41,084
Mercantile Bank of Willow Springs Willow Springs, MO 40,842
Mercantile Bank of Plattsburg Plattsburg, MO 38,725
Mercantile Bank of Sikeston Sikeston, MO 37,836
Mercantile Trust Company N.A. St. Louis, MO 7,258
</TABLE>
- - -------------------------------------------------------------------------------
ASSET-BASED LENDING
Mercantile Business Credit, Inc.
12443 Olive Blvd.
St. Louis, MO 63141-6432
BROKERAGE SERVICES
Mercantile Investment Services, Inc.
Mercantile Tower
St. Louis, MO 63101-1643
CREDIT CARD SERVICES
Mercantile Card Services Inc.
12443 Olive Blvd.
St. Louis, MO 63141-6432
CREDIT LIFE INSURANCE
Mississippi Valley Life Insurance Co.
Mercantile Tower
St. Louis, MO 63101-1643
INSURANCE AGENCY
Mercantile Insurance Services, Inc.
Mercantile Tower
St. Louis, MO 63101-1643
INVESTMENT MANAGEMENT
Mississippi Valley Advisors Inc.
Mercantile Tower
St. Louis, MO 63101-1643
OFF-SHORE BRANCH
Mercantile Bank of St. Louis N.A.
Cayman Branch
Grand Cayman, B.W.I.
19 MERCANTILE BANCORPORATION INC.
<PAGE> 21
DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS
RICHARD P. CONERLY(1,3)
Chairman
Orion Capital Inc.
HARRY M. CORNELL, JR.(2,4)
Chairman and
Chief Executive Officer
Leggett & Platt, Inc.
EARL K. DILLE(3,5,6)
Retired President
Union Electric Company
J. CLIFF EASON(1)
President, Network Services
Southwestern Bell Telephone Company
BERNARD A. EDISON(2,3)
Director Emeritus
Edison Brothers Stores, Inc.
WILLIAM A. HALL(1)
Assistant to the Chairman
Hallmark Cards, Inc.
THOMAS A. HAYS(2,3,4)
Deputy Chairman
The May Department Stores
Company
WILLIAM G. HECKMAN(3,6)
Chairman Emeritus
Arch Mineral Corporation
THOMAS H. JACOBSEN(3,4)
Chairman and
Chief Executive Officer
Mercantile Bancorporation Inc.
JAMES B. MALLOY(2,6)
Chairman and
Chief Executive Officer
Smurfit Packaging Corporation
CHARLES H. PRICE II(6)
Chairman
Mercantile Bank of Kansas City
HARVEY SALIGMAN(2)
Managing Partner
Cynwyd Investments
CRAIG D. SCHNUCK(5)
Chairman and
Chief Executive Officer
Schnuck Markets, Inc.
ROBERT W. STALEY(6)
Vice Chairman
Emerson Electric Co.
ROBERT L. STARK(6)
Dean
University of Kansas
Regents Center
PATRICK T. STOKES(1)
President
Anheuser-Busch, Inc.
FRANCIS A. STROBLE(1)
Retired Chief
Financial Officer
Monsanto Company
JOSEPH G. WERNER(5)
President
Werner Investments
JOHN A. WRIGHT(1)
President and
Chief Executive Officer
Big River Minerals Corp.
[FN]
(1) Member of Audit Committee
(2) Member of Compensation and
Management Development
Committee
(3) Member of Executive Committee
(4) Member of Nominating and Board
Affairs Committee
(5) Member of Community Relations
Committee
(6) Member of Credit Policy
Committee
- - -------------------------------------------------------------------------------
EXECUTIVE OFFICERS
THOMAS H. JACOBSEN
Chairman and
Chief Executive Officer
RALPH W. BABB, JR.
Vice Chairman
W. RANDOLPH ADAMS
Executive Vice President
and Chief Financial Officer
JOHN Q. ARNOLD
Executive Vice President and
Chief Credit Officer
JOHN H. BEIRISE
President and Chief Institutional
Banking Officer
Mercantile Bank of St. Louis N.A.
RICHARD H. GOLDBERG
Executive Vice President
Mercantile Bank of St. Louis N.A.
Operations
MICHAEL J. GORMAN
Chairman and Chief
Consumer Banking Officer
Mercantile Bank of St. Louis N.A.
RICHARD C. KING
President and Chief Executive Officer
Mercantile Bank of Kansas City
JOHN W. MCCLURE
Executive Vice President
Community Banking
JON W. BILSTROM
General Counsel and
Secretary
JON P. PIERCE
Senior Vice President
Human Resources
PATRICK STRICKLER
Senior Vice President
Public Affairs
ARTHUR G. HEISE
Senior Vice President and
Auditor
MICHAEL T. NORMILE
Senior Vice President and
Treasurer
MERCANTILE BANCORPORATION INC. 20
<PAGE> 22
INVESTOR INFORMATION
<TABLE>
NEW YORK STOCK EXCHANGE: MTL(1)
SELECTED DATA
<CAPTION>
MARCH 31
1994 1993
---- ----
<S> <C> <C>
Market Price $31 7/8 $34 5/8
Yield 3.51% 2.86%
Price Earnings Ratio 10.88X 13.96x
Book Value $22.94 $20.83
Shares Outstanding
Average 42,857,806 42,078,489
Period-end 42,931,104 42,120,000
Shareholders of Record 13,422 14,070
Average Daily Volume(2) 62,279 126,042
</TABLE>
<TABLE>
- - -------------------------------------------------------------------------------------------------------------------------
COMMON STOCK INFORMATION
<CAPTION>
MARKET PRICE AVERAGE
----------------------------------- DAILY DIVIDEND
HIGH LOW CLOSE VOLUME(2) DECLARED
---- --- ----- --------- --------
<S> <C> <C> <C> <C> <C>
1994
1ST QUARTER $34 1/8 $29 7/8 $31 7/8 62,279 $.28
1993
1st Quarter $35 5/8 $30 5/8 $34 5/8 126,042 $.24 3/4
2nd Quarter 37 5/8 29 3/8 32 7/8 54,552 .24 3/4
3rd Quarter 34 3/8 31 5/8 33 5/8 43,167 .24 3/4
4th Quarter 34 5/8 29 1/8 30 1/8 52,058 .24 3/4
--------
Total $.99
========
- - ---------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Generally appears as MercBcpMO or MercBc in newspaper stock tables.
(2) The average daily volume subsequent to March 24, 1993 reflects the listing of Mercantile Bancorporation Inc. common
stock on the New York Stock Exchange.
</TABLE>
DIVIDEND REINVESTMENT PLAN AND DIVIDEND DIRECT DEPOSIT
If you wish to participate in or want further information concerning
the Dividend Reinvestment Plan or Dividend Direct Deposit, please
contact Society Shareholder Services, Inc., One Mercantile Center,
Suite 2120, St. Louis, MO 63101-1673, telephone 314-241-4002.
DIVIDEND DATES
Dividends are normally paid the first business day of January, April,
July and October.
21 MERCANTILE BANCORPORATION INC.
<PAGE> 23
<TABLE>
DEBT SECURITIES OUTSTANDING
(THOUSANDS)
<CAPTION>
MARCH 31
1994
--------
<S> <C>
7.625% Subordinated Notes, due 2002 $150,000
6.375% Subordinated Notes, due 2004 75,000
9.000% Mortgage-backed Notes, due 1999 53,060
8.000% Convertible Subordinated Capital
Notes, due 1995 13,508
</TABLE>
- - -------------------------------------------------------------------------------
<TABLE>
DEBT RATINGS
<CAPTION>
THOMSON STANDARD
MOODY'S FITCH BANKWATCH & POOR'S
------- ----- --------- --------
<S> <C> <C> <C> <C>
MERCANTILE BANCORPORATION INC.
Issuer Rating B
Commercial Paper P-2 TBW-1 A-2
Subordinated Debt
7.625% Subordinated Notes, due 2002 Baa1 BBB+ BBB
MERCANTILE BANK OF ST. LOUIS N.A.
6.375% Subordinated Notes, due 2004 A3 A- A- BBB+
Certificates of Deposit TBW-1 A-/A-2
Letters of Credit TBW-1 A-/A-2
UNITED POSTAL SAVINGS ASSOCIATION
9.000% Mortgage-backed Notes, due 1999 AAA
</TABLE>
- - -------------------------------------------------------------------------------
INVESTOR RELATIONS
Ralph W. Babb, Jr.
Vice Chairman
Mercantile Bancorporation Inc.
P.O. Box 524
St. Louis, MO 63166-0524
GENERAL COUNSEL
Thompson & Mitchell
One Mercantile Center
St. Louis, MO 63101-1693
TRANSFER AGENT
Society National Bank
P.O. Box 6477
Cleveland, OH 44101-1477
INDEPENDENT
ACCOUNTANTS
KPMG Peat Marwick
1010 Market Street
St. Louis, MO 63101-2085
22
<PAGE> 24
MERCANTILE
BANCORPORATION INC.
FIRST QUARTER REPORT 1994
Mercantile Bancorporation Inc.
Mercantile Tower
P.O. Box 524
St. Louis, MO 63166-0524
<PAGE> 25
APPENDIX
There is a bar-graph titled "COMMON STOCK PRICE RANGE" on page 21 of the
printed First Quarter Report. The graph plots Fiscal Quarters to Dollars on
the X and Y axis respectively. This graph shows five quarters of market price
ranges from the first quarter of 1993 to the first quarter of 1994. Each bar
indicates the dollar range of the stock price for the period. The high price
is printed above and the low price below the bar. These figures correspond
with the Common Stock Information table also on page 21.
