<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
MAY 31, 1995
------------
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED)
MERCANTILE BANCORPORATION INC.
-------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MISSOURI 1-11792 43-0951744
- -------- ------- ----------
(STATE OR (COMMISSION FILE NO.) (I.R.S. EMPLOYER
OTHER JURISDICTION OF IDENTIFICATION NO.)
INCORPORATION)
P.O. BOX 524, ST. LOUIS, MISSOURI 63166-0524
- --------------------------------- ----------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(314) 425-2525
--------------
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
<PAGE> 2
ITEM 5. OTHER MATTERS
-------------
EFFECTIVE JANUARY 3, 1995, MERCANTILE BANCORPORATION INC.
("CORPORATION") ACQUIRED UNSL FINANCIAL CORP. ("UNSL").
EFFECTIVE MAY 1, 1995, THE CORPORATION ACQUIRED CENTRAL MORTGAGE
BANCSHARES, INC. ("CENTRAL MORTGAGE") AND TCBANKSHARES, INC.
("TCBANKSHARES"). ALL THREE TRANSACTIONS ARE ACCOUNTED FOR AS
POOLINGS-OF-INTERESTS. AUDITED SUPPLEMENTAL CONSOLIDATED
FINANCIAL STATEMENTS RESTATING THE CORPORATION'S HISTORICAL
CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED
DECEMBER 31, 1994, 1993 AND 1992 TO REFLECT ALL THREE
TRANSACTIONS ARE INCLUDED HEREIN. UNAUDITED SUPPLEMENTAL INTERIM
CONSOLIDATED FINANCIAL STATEMENTS RESTATING THE CORPORATION'S
HISTORICAL CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE
THREE MONTH PERIODS ENDED MARCH 31, 1995 AND 1994 TO REFLECT THE
CENTRAL MORTGAGE AND TCBANKSHARES TRANSACTIONS ARE ALSO INCLUDED
HEREIN.
<PAGE> 3
MERCANTILE
MERCANTILE
BANCORPORATION INC.
SUPPLEMENTAL
CONSOLIDATED
FINANCIAL STATEMENTS
DECEMBER 31, 1994, 1993 AND 1992
1
<PAGE> 4
MERCANTILE BANCORPORATION INC.
SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994, 1993 AND 1992
Effective January 3, 1995, Mercantile Bancorporation Inc.
("Corporation") acquired UNSL Financial Corp in a transaction
accounted for as a pooling-of-interests. Effective May 1, 1995,
Central Mortgage Bancshares, Inc. and TCBankshares, Inc. were
acquired in transactions accounted for as poolings-of-interests. The
following Supplemental Consolidated Financial Statements restate the
Corporation's historical consolidated financial statements as of and
for the years ended December 31, 1994, 1993 and 1992 to reflect
these transactions.
2
<PAGE> 5
<TABLE>
MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES
SUPPLEMENTAL CONSOLIDATED STATEMENT OF INCOME
<CAPTION>
YEAR ENDED DECEMBER 31
1994 1993 1992
---- ---- ----
(Thousands except per share data)
<S> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans and leases $757,571 $715,974 $ 742,173
Investments in debt and equity securities
Trading 527 678 593
Taxable 203,902 221,933 231,129
Tax-exempt 21,659 20,807 20,464
-------- -------- ----------
Total 226,088 243,418 252,186
Due from banks-interest bearing 2,843 3,428 8,306
Federal funds sold and repurchase agreements 8,394 8,662 8,879
-------- -------- ----------
Total Interest Income 994,896 971,482 1,011,544
INTEREST EXPENSE
Interest bearing deposits 319,709 340,952 430,446
Foreign deposits 5,398 1,363 870
Short-term borrowings 50,443 25,822 31,761
Bank notes 780 - -
Long-term debt 23,019 22,774 22,176
-------- -------- ----------
Total Interest Expense 399,349 390,911 485,253
-------- -------- ----------
NET INTEREST INCOME 595,547 580,571 526,291
PROVISION FOR POSSIBLE LOAN LOSSES 43,201 63,513 77,874
-------- -------- ----------
NET INTEREST INCOME AFTER PROVISION
FOR POSSIBLE LOAN LOSSES 552,346 517,058 448,417
OTHER INCOME
Trust 60,769 61,996 58,222
Service charges 68,783 67,144 62,670
Credit card fees 24,895 24,312 21,658
Mortgage banking 10,917 13,691 10,234
Investment banking and brokerage 8,301 8,486 8,918
Securities gains 2,177 5,121 5,590
Other 33,916 38,953 34,673
-------- -------- ----------
Total Other Income 209,758 219,703 201,965
OTHER EXPENSE
Salaries 208,690 197,569 180,385
Employee benefits 49,856 47,900 37,364
Net occupancy 31,675 32,737 28,523
Equipment 38,109 38,174 33,947
Other 163,740 191,663 191,684
-------- -------- ----------
Total Other Expense 492,070 508,043 471,903
-------- -------- ----------
INCOME BEFORE INCOME TAXES 270,034 228,718 178,479
INCOME TAXES 101,705 85,467 61,072
-------- -------- ----------
NET INCOME $168,329 $143,251 $ 117,407
======== ======== ==========
PER SHARE DATA
Average common shares outstanding 51,957,002 50,965,103 47,275,834
Net income $3.22 $2.79 $2.42
Dividends declared 1.12 .99 .93
</TABLE>
3
<PAGE> 6
<TABLE>
MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES
SUPPLEMENTAL CONSOLIDATED BALANCE SHEET
<CAPTION>
DECEMBER 31
1994 1993 1992
---- ---- ----
(Thousands)
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 770,710 $ 772,314 $ 745,095
Due from banks-interest bearing 29,166 164,573 92,993
Federal funds sold and repurchase agreements 128,264 211,762 264,747
Investments in debt and equity securities
Trading 14,299 15,735 17,684
Available-for-sale 416,059 419,756 89,424
Held-to-maturity (Estimated fair value of $3,301,207,
$3,811,026 and $4,083,673, respectively) 3,413,142 3,744,592 3,998,886
----------- ----------- -----------
Total 3,843,500 4,180,083 4,105,994
Loans held-for-sale 21,383 141,468 37,387
Loans and leases, net of unearned income 9,648,595 8,560,864 8,488,048
----------- ----------- -----------
Total Loans and Leases 9,669,978 8,702,332 8,525,435
Reserve for possible loan losses (194,515) (184,836) (178,735)
----------- ----------- -----------
Net Loans and Leases 9,475,463 8,517,496 8,346,700
Bank premises and equipment 248,318 243,363 234,021
Due from customers on acceptances 6,609 11,923 7,451
Other assets 304,314 321,565 392,859
----------- ----------- -----------
Total Assets $14,806,344 $14,423,079 $14,189,860
=========== =========== ===========
LIABILITIES
Deposits
Non-interest bearing $ 1,763,439 $ 1,928,441 $ 1,694,148
Interest bearing 9,206,676 9,643,983 9,915,502
Foreign 219,135 26,085 19,650
----------- ----------- -----------
Total Deposits 11,189,250 11,598,509 11,629,300
Federal funds purchased and repurchase agreements 1,495,540 660,643 789,081
Other short-term borrowings 315,425 541,750 242,393
Bank notes 100,000 - -
Long-term debt 298,664 287,949 309,845
Bank acceptances outstanding 6,609 11,923 7,451
Other liabilities 166,520 189,636 215,984
----------- ----------- -----------
Total Liabilities 13,572,008 13,290,410 13,194,054
Commitments and contingent liabilities - - -
<CAPTION>
SHAREHOLDERS' EQUITY
1994 1993 1992
---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Preferred stock-
no par value
Shares authorized 5,000 5,000 5,000
Shares issued 15 15 15 12,153 12,153 12,153
Common stock-
$5.00 par value
Shares authorized 100,000 70,000 70,000
Shares issued 52,167 51,666 50,392 260,836 258,332 251,960
Capital surplus 166,878 161,188 138,020
Retained earnings 797,423 700,996 593,673
Treasury stock, at cost 94 - - (2,954) - -
------------ ---------- ----------
Total Shareholders' Equity
1,234,336 1,132,669 995,806
----------- ----------- -----------
Total Liabilities and Shareholders' Equity
$14,806,344 $14,423,079 $14,189,860
=========== =========== ===========
The accompanying notes to supplemental consolidated financial statements are an integral part of these statements.
</TABLE>
4
<PAGE> 7
<TABLE>
MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES
SUPPLEMENTAL CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
<CAPTION>
COMMON STOCK
--------------------- TOTAL
OUTSTANDING PREFERRED CAPITAL RETAINED TREASURY SHAREHOLDERS'
SHARES DOLLARS STOCK SURPLUS EARNINGS STOCK EQUITY
----------- ------- ----- ------- -------- ------- ----------
($ in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1991, AS REPORTED 33,639,248 $168,196 $ - $ 95,124 $426,942 $ - $ 690,262
Adjustment to reflect poolings-of-interests 7,671,140 38,356 12,153 (17,233) 81,261 - 114,537
---------- -------- ------- --------- -------- ------ ----------
BALANCE AT DECEMBER 31, 1991, AS RESTATED 41,310,388 206,552 12,153 77,891 508,203 - 804,799
Net income 117,407 117,407
Dividends declared
Mercantile Bancorporation Inc.-
$.93 per share (27,506) (27,506)
Pooled companies prior to acquisition (5,953) (5,953)
Issuance of common stock
Acquisition of Ameribanc, Inc. 1,975,421 9,877 41,418 51,295
Employee incentive plans 195,679 978 2,854 3,832
Warrants and convertible notes 347,143 1,736 7,272 9,008
Change in valuation allowance
for marketable equity securities 1,522 1,522
Initial public offering of
United Postal Bancorp, Inc. 5,537,405 27,688 (818) 26,870
Public offering of Central
Mortgage Bancshares, Inc. 675,246 3,376 6,725 10,101
Other pre-merger transactions of
pooled companies 350,606 1,753 2,678 4,431
---------- -------- ------- -------- -------- ------- ----------
BALANCE AT DECEMBER 31, 1992 50,391,888 251,960 12,153 138,020 593,673 - 995,806
Net income 143,251 143,251
Dividends declared
Mercantile Bancorporation Inc.-
$.99 per share (34,840) (34,840)
Pooled companies prior to acquisition (8,370) (8,370)
Issuance of common stock
Acquisition of First National
Bank of Flora 232,503 1,162 6,879 8,041
Acquisition of Mt. Vernon Bancorp, Inc. 216,936 1,085 6,056 7,141
Employee incentive plans 161,912 809 1,929 2,738
Convertible notes 73,360 367 1,536 1,903
Public offering of Central
Mortgage Bancshares, Inc. 549,240 2,746 7,203 9,949
Change in valuation allowance for
marketable equity securities prior to
the adoption of FAS 115 3,554 3,554
Net fair value adjustment for available-
for-sale securities 3,636 3,636
Pre-merger transactions of pooled companies
and other 40,360 203 (435) 92 (140)
---------- -------- ------- -------- -------- ------- ----------
BALANCE AT DECEMBER 31, 1993 51,666,199 258,332 12,153 161,188 700,996 - 1,132,669
NET INCOME 168,329 168,329
DIVIDENDS DECLARED
MERCANTILE BANCORPORATION INC.-
$1.12 PER SHARE (48,329) (48,329)
POOLED COMPANIES PRIOR TO ACQUISITION (4,864) (4,864)
ISSUANCE OF COMMON STOCK
EMPLOYEE INCENTIVE PLANS 308,112 1,541 1,683 3,224
CONVERTIBLE NOTES 181,092 905 3,793 4,698
NET FAIR VALUE ADJUSTMENT FOR AVAILABLE-
FOR-SALE SECURITIES (18,808) (18,808)
PURCHASE OF TREASURY STOCK (93,500) (2,954) (2,954)
PRE-MERGER TRANSACTIONS OF POOLED COMPANIES
AND OTHER 11,450 58 214 99 371
---------- -------- ------- -------- -------- ------- ----------
BALANCE AT DECEMBER 31, 1994 52,073,353 $260,836 $12,153 $166,878 $797,423 $(2,954) $1,234,336
========== ======== ======= ======== ======== ======= ==========
</TABLE>
5
<PAGE> 8
<TABLE>
MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES
SUPPLEMENTAL CONSOLIDATED STATEMENT OF CASH FLOWS
<CAPTION>
YEAR ENDED DECEMBER 31
1994 1993 1992
---- ---- ----
(Thousands)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 168,329 $ 143,251 $ 117,407
Adjustments to reconcile net income to net cash
provided by operating activities
Provision for possible loan losses 43,201 63,513 77,874
Depreciation and amortization 31,936 30,064 27,687
Provision for deferred income taxes (credits) (8,751) 6,304 902
Net change in trading securities 1,436 1,949 5,953
Net change in loans held-for-sale 120,085 (104,081) 6,827
Net change in accrued interest receivable (14,584) 8,952 7,834
Net change in accrued interest payable 4,812 (7,014) (20,097)
Net change in accrued taxes payable (14,513) (9,203) 10,470
Other, net 10,133 14,598 (17,643)
----------- ----------- -----------
Net Cash Provided by Operating Activities 342,084 148,333 217,214
INVESTING ACTIVITIES
Investments in debt and equity securities, other than trading securities
Purchases (1,339,490) (1,760,526) (2,235,784)
Proceeds from maturities 1,533,108 1,746,639 1,216,708
Proceeds from sales of:
Held-to-maturity securities 1,985 32,749 274,677
Available-for-sale securities 23,704 27,141 7,953
Securities from acquired entities 79,388 14,491 58,219
Net change in loans and leases (1,381,784) (315,644) (69,031)
Purchases of loans and leases (78,730) (196,152) (178,496)
Proceeds from sales of loans and leases 302,580 538,051 266,566
Purchases of premises and equipment (41,720) (36,975) (35,400)
Proceeds from sales of premises and equipment 5,880 707 3,896
Proceeds from sales of foreclosed property 45,978 51,067 13,443
Cash and cash equivalents from acquisitions, net of cash paid 10,664 14,077 401,312
Other, net 30,384 23,197 12,803
----------- ----------- -----------
Net Cash Provided (Used) by Investing Activities (808,053) 138,822 (263,134)
FINANCING ACTIVITIES
Net change in time certificates of deposit under $100,000 (144,080) (517,390) (718,546)
Net change in time certificates of deposit $100,000 and over 11,657 (30,210) (124,781)
Net change in other time deposits (10,745) (88,231) 45,411
Net change in foreign deposits 193,050 6,435 5,713
Net change in other deposits (471,864) 286,261 666,762
Sale of branch deposits, net of premium received (3,796) (14,130) (4,552)
Net change in short-term borrowings 608,572 170,919 50,488
Issuance of bank notes 100,000 - -
Issuance of long-term debt 75,000 6,275 165,697
Principal payments on long-term debt (58,683) (29,576) (86,978)
Cash dividends paid (52,650) (43,210) (33,257)
Proceeds from issuance of common stock
Public offering of Central Mortgage Bancshares, Inc. - 9,949 10,101
Employee incentive plans and warrants 2,729 2,203 3,904
Initial public offering of United Postal Bancorp, Inc. - - 26,870
Purchase of treasury stock (2,954) - -
Other, net (776) (636) 1,816
----------- ----------- -----------
Net Cash Provided (Used) by Financing Activities 245,460 (241,341) 8,648
----------- ----------- -----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (220,509) 45,814 (37,272)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,148,649 1,102,835 1,140,107
----------- ----------- -----------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 928,140 $ 1,148,649 $ 1,102,835
=========== =========== ===========
The accompanying notes to supplemental consolidated financial statements are an integral part of these statements.
</TABLE>
6
<PAGE> 9
MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS
NOTE A
ACCOUNTING POLICIES
Mercantile Bancorporation Inc. ("Corporation" or "Mercantile") and
its subsidiaries follow generally accepted accounting principles and
reporting practices applicable to the banking industry. The
significant accounting policies are summarized below.
Basis of Presentation:
Consolidation: The Supplemental Consolidated Financial Statements
include the accounts of Mercantile Bancorporation Inc. and its
subsidiaries. Material intercompany transactions are eliminated.
Restatements: Effective January 3, 1995, Mercantile Bancorporation
Inc. acquired UNSL Financial Corp ("UNSL"), in a transaction
accounted for as a pooling-of-interests. Effective May 1, 1995,
Central Mortgage Bancshares, Inc. ("Central Mortgage") and
TCBankshares, Inc. ("TCBankshares") were acquired in transactions
accounted for as poolings-of-interests.
The Supplemental Consolidated Financial Statements give retroactive
effect to the transactions and, as a result, the Supplemental
Consolidated Statement of Income, Balance Sheet and Statement of
Cash Flows are presented as if the combining companies had been
consolidated for all periods presented. (As required by generally
accepted accounting principles, the Supplemental Consolidated
Financial Statements will become the historical consolidated
financial statements upon issuance of the financial statements for
the period that includes the date of the transactions.) The
Supplemental Consolidated Statement of Changes in Shareholders'
Equity reflects the accounts of Mercantile Bancorporation Inc. as if
the common and preferred stock issued in the UNSL, Central Mortgage
and TCBankshares acquisitions had been outstanding during all
periods presented. The Supplemental Consolidated Financial
Statements, including the notes thereto, should be read in
conjunction with the historical consolidated financial statements of
the Corporation included in its 1994 Annual Report on Form 10-K.
Reclassification: Certain reclassifications have been made to the
1993 and 1992 historical financial statements to conform with the
1994 presentation.
New Accounting Standards:
Financial Accounting Standard ("FAS") 119, "Disclosure about
Derivative Financial Instruments and Fair Value of Financial
Instruments," effective for fiscal years ending after December 15,
1994, has been adopted by the Corporation with the related
disclosure included in Note N to the Supplemental Consolidated
Financial Statements.
FAS 114, "Accounting by Creditors for Impairment of a Loan," as
amended by FAS 118, effective for fiscal years beginning after
December 15, 1994, requires impaired loans to be measured based on
the present value of expected future cash flows discounted at the
loan's effective interest rate. The adoption of FAS 114 is not
expected to have a material impact on the Corporation's financial
condition or results of operations.
FAS 121, "Accounting for the Impairment of Long-Lived Assets and
Long-Lived Assets to Be Disposed Of," effective for fiscal years
beginning after December 15, 1995, and FAS 122, "Accounting for
Mortgage Servicing Rights," effective for fiscal years beginning
after December 15, 1995, have not been adopted by the Corporation.
The effects of the adoptions of FAS 121 and FAS 122 are currently
being evaluated by the Corporation; however, they are not expected to
have a material impact on the Corporation's financial condition or
results of operations.
Earnings per Common Share:
Earnings per common share data is calculated by dividing net
income, after deducting dividends on preferred stock, by the
weighted average number of common shares outstanding during the
period.
Earnings of United Postal Bancorp, Inc. ("United Postal") are
excluded from the earnings per share calculation from January 1,
1992 through March 20, 1992, which is the date United Postal made
its initial public offering of common stock. Also on March 20, 1992,
United Postal Savings Association ("UPSA"), a wholly-owned
subsidiary of United Postal, converted from a Missouri state-
chartered mutual savings association to a Missouri state-chartered
stock association.
Investments in Debt and Equity Securities:
Trading securities, which include any security held primarily for
near-term sale, are valued at fair value. Gains and losses on
trading securities, both realized and unrealized, are recorded in
investment banking income.
Available-for-sale securities, which include any security for which
the Corporation has no immediate plan to sell but which may be sold
in the future under different circumstances, are valued at fair
value. Realized gains and losses, based on the amortized cost of the
specific security, are included in other income as securities gains.
Unrealized gains and losses are recorded, net of related income tax
effects, in retained earnings.
7
<PAGE> 10
Held-to-maturity securities, which include any security for which
the Corporation has the positive intent and ability to hold until
maturity, are valued at historical cost adjusted for amortization of
premiums and accretion of discounts computed by the level-yield
method. Prior to December 31, 1993, realized gains and losses, based
on the amortized cost of the specific security, were included in
other income as securities gains.
Prior to December 31, 1993, marketable equity securities were
stated at the lower of cost or fair value. Changes in the valuation
of marketable equity securities which were considered to be
temporary were recorded as adjustments to retained earnings. Since
December 31, 1993, these securities have been classified as
available-for-sale and accounted for as stated above.
Loans Held-for-Sale:
In its lending activities, the Corporation originates residential
and student loans with the intent to be sold in the secondary
market. Loans held-for-sale are carried at the lower of cost or fair
value which is determined on an aggregate basis. Gains or losses on
the sale of loans held-for-sale are determined on a specific
identification method.
Loans and Leases:
Interest income on loans not discounted is generally accrued on a
simple interest basis. Interest income on discounted loans is
computed on the sum-of-the-months'-digits method, which approximates
the interest method.
Loan fees and direct costs of loan originations are deferred and
amortized over the life of the loans under methods approximating the
interest method.
The finance method is used to account for direct and leveraged
equipment lease contracts. Income is recorded over the lease periods
in proportion to the unrecovered investment in the leases after
consideration of investment tax credits and other related income tax
effects.
When, in management's opinion, the collection of interest on a loan
is unlikely, or when either principal or interest is past due over
90 days, that loan is generally placed on non-accrual status. When a
loan is placed on non-accrual status, accrued interest for the
current year is reversed and charged against current earnings, and
accrued interest from prior years is charged against the reserve for
possible loan losses. Interest payments received on non-accrual
loans are applied to principal if there is doubt as to the
collectibility of such principal; otherwise, these receipts are
recorded as interest income. A loan remains on non-accrual status
until the loan is current as to payment of both principal and
interest, and/or the borrower demonstrates the ability to pay and
remain current.
Reserve for Possible Loan Losses:
The reserve for possible loan losses is increased by provisions
charged to expense and reduced by loans charged off, net of
recoveries. The reserve is maintained at a level considered adequate
to provide for potential loan losses based on management's
evaluation of current economic conditions, changes in the character
and size of the portfolio, past experience, expected future losses
and other pertinent factors.
Foreclosed Assets:
Foreclosed assets include real estate and other assets acquired
through foreclosure or other proceedings, and in-substance
foreclosures. In-substance foreclosures represent loans accounted
for as foreclosed assets due to the borrower having limited equity
in the underlying collateral, anticipated repayment only through the
operation or sale of the collateral, or the borrower either formally
or effectively abandoning control of the collateral. With the
adoption of FAS 114 in 1995, the in-substance foreclosure
classification will no longer be utilized. Foreclosed assets are
included in other assets in the Supplemental Consolidated Balance
Sheet.
Foreclosed assets are valued at the lower of cost or fair value
less estimated costs to sell. Losses arising at the time of transfer
from loans are charged to the reserve for possible loan losses.
Subsequent reductions in valuation based upon periodic appraisals
are charged against current earnings.
Bank Premises and Equipment:
Bank premises and equipment are stated at cost less accumulated
depreciation. Provisions for depreciation are computed principally
by the straight-line method and are based on estimated useful lives
of the assets. The carrying values of assets sold or retired and the
related accumulated depreciation are eliminated from the accounts,
and the resulting gains or losses are reflected in income.
Expenditures for maintenance and repairs are charged to expense,
while expenditures for major renewals are capitalized.
Intangible Assets:
Intangible assets, consisting primarily of goodwill and core
deposit premium, are included in other assets in the Supplemental
Consolidated Balance Sheet.
Goodwill, the excess of cost over the net assets acquired in
business combinations accounted for as purchases, is amortized using
the straight-line method over the estimated period to be benefited,
most recently 15 years, but not exceeding 40 years.
Core deposit premium represents the premiums paid, net of any
rebate on assets acquired, plus the insurance funds' entrance and
exit fees, for deposits acquired from failed thrift institutions in
Resolution Trust Corporation-assisted transactions. This intangible
asset is amortized, on an accelerated basis, over the estimated life
of the core deposit base acquired, but not exceeding 10 years.
Income Taxes:
Deferred income taxes, computed using the asset and liability
method, are provided on temporary differences between the financial
reporting basis and the tax basis of the assets and liabilities of
the Corporation.
8
<PAGE> 11
Treasury Stock:
The purchase of the Corporation's common stock is recorded at cost.
Upon subsequent reissue, the treasury stock account will be reduced
by the average cost basis of such stock.
Cash Equivalents:
Cash and due from banks, federal funds sold and repurchase
agreements are considered cash equivalents for purposes of the
Supplemental Consolidated Statement of Cash Flows.
Financial Instruments:
Financial instruments include cash, evidence of an ownership
interest in an entity or a contract that both (a) imposes on the
Corporation a contractual obligation, (1) to deliver a financial
instrument to another party or (2), to exchange other financial
instruments on potentially unfavorable terms with another party; and
(b) conveys to another party a contractual right, (1) to receive a
financial instrument from the Corporation or (2), to exchange other
financial instruments on potentially favorable terms with the
Corporation.
NOTE B
SUBSIDIARIES
Acquisitions:
As described in Note A, effective May 1, 1995, the Corporation
acquired Central Mortgage, a three-bank holding company with assets
totaling $659 million, headquartered in Kansas City, Missouri. Also
effective May 1, 1995, Mercantile acquired North Little Rock,
Arkansas-based TCBankshares, a six-bank holding company with assets
totaling $1.4 billion. Effective January 3, 1995, the Corporation
acquired UNSL, holding company for Lebanon, Missouri-based United
Savings Bank, with assets totaling $508 million. A total of
2,537,723, 4,749,999 and 1,578,107 shares of Mercantile common stock
were issued in the Central Mortgage, TCBankshares and UNSL
transactions, respectively, which were accounted for as poolings-of-
interests.
<TABLE>
Net income and net income per share for the Corporation and the
pooled companies prior to restatement were as follows:
<CAPTION>
YEAR ENDED DECEMBER 31
1994 1993 1992
($ in Thousands except
per share data)
<S> <C> <C> <C>
Corporation
Net income $161,029 $118,864 $95,040
Net income per share 3.74 2.80 2.36
Central Mortgage
Net income $2,851 $5,130 $3,741
Net income per share .69 1.54 1.79
TCBankshares
Net income $ 8,729 $ 15,189 $ 13,398
Net income per share 3,616.30 6,646.69 5,806.53
UNSL
Net income (loss) $(4,280) $4,068 $5,228
Net income (loss) per share (2.71) 2.72 3.42
</TABLE>
During the fourth quarter of 1994, certain adjustments were
recorded by UNSL, Central Mortgage and TCBankshares to conform their
accounting and credit policies regarding loan, other real estate and
other asset valuations to those of the Corporation. These
adjustments consisted of an increase in the provision of $7,775,000,
an increase in other expense of $12,664,000 and a related tax
benefit of $3,739,000, for a total of $16,700,000 on an after-tax
basis.
Effective January 3, 1995, Mercantile completed a merger with Wedge
Bank ("Wedge"), an Alton, Illinois-based bank with assets totaling
$196 million. A total of 969,954 shares of Mercantile common stock
was issued in the Wedge transaction. The Wedge transaction meets the
requirements for treatment as a pooling-of-interests; however, due
to the immateriality of Wedge's financial condition and results of
operations to that of Mercantile's, the historical financial
statements of the Corporation will not be restated for the Wedge
pooling-of-interests transaction.
Effective February 1, 1994, the Corporation acquired United Postal,
holding company for St. Louis, Missouri-based UPSA, with assets
totaling $1.3 billion. Effective January 3, 1994, Mercantile
completed a merger with Metro Bancorporation, a Waterloo, Iowa-based
holding company for The Waterloo Savings Bank, with assets totaling
$370 million. A total of 5,631,953 and 1,638,278 shares of
Mercantile common stock were issued in the United Postal and Metro
Bancorporation transactions, respectively, which were accounted for
as poolings-of-interests.
<TABLE>
Net income and net income per share for the Corporation and the
pooled companies prior to restatement were as follows:
<CAPTION>
YEAR ENDED DECEMBER 31
1993 1992
($ in Thousands except
per share data)
<S> <C> <C>
Corporation
Net income $116,972 $85,295
Net income per share 3.32 2.53
United Postal
Net income (loss) $ (58) $7,259
Net income (loss) per share (.01) 1.21
Metro Bancorporation
Net income $1,950 $2,486
Net income per share 3.76 4.81
</TABLE>
During the fourth quarter of 1993, certain adjustments were
recorded by United Postal and Metro Bancorporation to conform their
accounting and credit policies regarding loan, other real estate and
other asset valuations to those of the Corporation. These
adjustments consisted of an increase in the provision of $8,700,000,
an increase in other expense of $12,728,000 and a related tax benefit
of $4,928,000, for a total of $16,500,000 on an after-tax basis.
9
<PAGE> 12
On September 1, 1993, Mercantile completed a merger with Mt. Vernon
Bancorp, Inc., a $113,128,000-asset holding company for First Bank
and Trust Co. in Mt. Vernon, Illinois. The total cost of the
acquisition was $1,805,000 in cash and 216,936 shares of Mercantile
common stock. The excess of the purchase price over the fair value
of net assets acquired was $4,700,000. On April 1, 1993, Mercantile
completed the merger with the $70,725,000-asset First National Bank
of Flora in Clay County, Illinois. The total cost of the acquisition
was $3,004,000 in cash and 232,503 shares of Mercantile common
stock. The excess of the purchase price over the fair value of net
assets acquired was $2,549,000. Both transactions were accounted for
as purchases and, accordingly, the results of operations, which were
not material, were included in the Supplemental Consolidated
Financial Statements from the respective acquisition dates.
On January 4, 1993, the Corporation acquired MidAmerican
Corporation and Johnson County Bankshares, Inc., two northeast
Kansas-based holding companies with assets totaling $1.1 billion. A
total of 4,736,424 shares of Mercantile common stock was issued in
the transaction, which was accounted for as a pooling-of-interests.
<TABLE>
Net income and net income per share for the Corporation,
MidAmerican Corporation and Johnson County Bankshares, Inc. prior to
restatement were as follows:
<CAPTION>
YEAR ENDED DECEMBER 31
1992
($ in Thousands except
per share data)
<S> <C>
Corporation
Net income $85,003
Net income per share 2.91
MidAmerican Corporation
Net income $1,007
Net income per share .30
Johnson County Bankshares, Inc.
Net loss $ (715)
Net loss per share (36.70)
</TABLE>
During the fourth quarter of 1992, certain adjustments were
recorded by MidAmerican Corporation and Johnson County Bankshares,
Inc. to conform their accounting and credit policies regarding loan,
other real estate and other asset valuations to those of the
Corporation. These adjustments consisted of an increase in the
provision of $5,800,000, an increase in other expense of
$5,600,000 and a related tax benefit of $3,400,000, for a
total of $8,000,000 on an after-tax basis.
MidAmerican Corporation acquired Jayhawk Bancshares, Inc., a
$52,000,000-asset, one-bank holding company in Lawrence, Kansas, in
July 1992. This acquisition was accounted for as a purchase and,
accordingly, the results of operations, which were not material,
were included in the Supplemental Consolidated Financial Statements
from the acquisition date. The total cost of the acquisition was
$10,872,000 in cash and $2,200,000 in notes. Upon maturity of the
final $1,900,000 in notes in August 1994, $1,391,000 was offset
against the fair value of net assets acquired, based upon the
outcome of certain losses in the loan portfolio of the acquired bank
subsidiary. The excess of the purchase price over the fair value of
net assets acquired was $7,956,000.
On April 30, 1992, the Corporation acquired Ameribanc, Inc., a $1.2
billion-asset, 11-bank holding company headquartered in St. Joseph,
Missouri. This acquisition was accounted for as a purchase and,
accordingly, the results of operations were included in the
Supplemental Consolidated Financial Statements from the acquisition
date. The total cost of the acquisition was $8,851,000 in cash and
1,975,421 shares of Mercantile common stock.
The following unaudited pro forma combined consolidated financial
information gives effect to the April 30, 1992 acquisition of
Ameribanc, Inc. as if it had been consummated on January 1, 1992.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1992
($ in Thousands except
per share data)
<S> <C>
Net interest income $468,362
Other income 188,053
Net income 95,115
Net income per share 2.32
</TABLE>
For all acquisitions accounted for as purchases, the unamortized
excess of cost over the fair value of assets acquired was
$58,663,000, $66,708,000 and $60,210,000 at December 31, 1994, 1993
and 1992, respectively.
RTC Transactions:
During 1992, certain subsidiaries of the Corporation acquired from
the Resolution Trust Corporation the deposits and certain assets of
failed thrift institutions. Transactions included: Mercantile Bank
of Joplin and Mercantile Bank of Kansas City acquired $222,304,000
in deposits of two branches of the former Home Federal Savings
Association in Joplin and Kansas City, Missouri in March 1992;
Mercantile Bank of West Central Missouri acquired $163,055,000 in
deposits and $156,818,000 in assets of First State Savings
Association of Sedalia in April 1992; and UPSA acquired $79,000,000
in deposits and $80,000,000 in assets of First Federal Savings and
Loan Association in Manchester, Missouri in December 1992.
Unamortized core deposit premium was $11,063,000, $14,738,000 and
$14,464,000 at December 31, 1994, 1993 and 1992, respectively.
10
<PAGE> 13
The effect of the Mt. Vernon, Flora, Jayhawk and Resolution Trust
Corporation acquisitions on the Corporation's operating results from
January 1, 1992 through the respective acquisition dates and for the
years ended December 31, 1994, 1993 and 1992, was not material.
Subsidiary Mergers:
During 1994, the Corporation effected several reorganization
transactions among certain subsidiaries. On December 9, 1994,
Mercantile Bank of Table Rock Lake was merged with Mercantile Bank
of Springfield. On August 16, 1994, certain assets and liabilities
of UPSA, primarily those associated with its Arnold and Crystal
City, Missouri branches, were sold to Mercantile Bank of Jefferson
County. On the same date, UPSA was merged with Mercantile Bank of
St. Louis N.A. On July 21, 1994, certain assets and liabilities of
the Troy, Missouri agency office of UPSA were sold to Mercantile
Bank of Pike County.
Pending Acquisitions:
The Corporation entered into an agreement dated December 23, 1994
to acquire the capital stock of Plains Spirit Financial Corporation,
holding company for the $439 million-asset First Federal Savings
Bank of Iowa headquartered in Davenport, Iowa. The acquisition, to
be accounted for as a purchase transaction, is expected to be
consummated in the third quarter of 1995.
The Corporation entered into an agreement dated January 27, 1995 to
acquire the capital stock of the $181 million-asset Southwest
Bancshares, Inc. ("Southwest"), the holding company for Southwest
Bank, which is based in Bolivar, Missouri. On February 17, 1995,
Mercantile announced an agreement to merge with AmeriFirst
Bancorporation ("AmeriFirst"), holding company for Sikeston,
Missouri-based AmeriFirst Bank, which had assets of $157 million.
The Southwest and AmeriFirst transactions meet the requirements for
treatment as poolings-of-interests; however, due to the
immateriality of Southwest's and AmeriFirst's financial condition
and results of operations to that of Mercantile's, the historical
financial statements of the Corporation will not be restated for the
Southwest and AmeriFirst pooling-of-interests transactions. These
two acquisitions are expected to be completed in the third quarter
of 1995.
NOTE C
CASH FLOWS
The Corporation paid interest on deposits, short-term borrowings,
bank notes and long-term debt of $397,336,000, $397,369,000 and
$498,863,000 in 1994, 1993 and 1992, respectively. The Corporation
paid Federal income taxes of $103,928,000, $70,449,000 and
$53,271,000 in 1994, 1993 and 1992, respectively.
<TABLE>
The following details cash and cash equivalents from acquisitions
accounted for as purchases, net of cash paid:
<CAPTION>
YEAR ENDED DECEMBER 31
1994 1993 1992
(Thousands)
<S> <C> <C> <C>
Fair value of assets purchased $ (6,089) $(373,379) $(1,679,456)
Liabilities assumed 16,753 334,038 1,603,529
Issuance of common stock - 15,182 51,295
------ --------- -----------
Net cash received (paid) for acquisitions 10,664 (24,159) (24,632)
Cash and cash equivalents acquired - 38,236 425,944
------ --------- -----------
CASH AND CASH EQUIVALENTS FROM ACQUISITIONS, NET OF
CASH PAID $10,664 $ 14,077 $ 401,312
======= ========= ===========
</TABLE>
NOTE D
CASH AND DUE FROM BANKS RESTRICTIONS
The Corporation's subsidiary banks are required to maintain average
reserve balances which place withdrawal and/or usage restrictions on
cash and due from banks balances. The average amount of these
restricted balances for the year ended December 31, 1994 was
$197,165,000.
11
<PAGE> 14
NOTE E
INVESTMENTS IN DEBT AND EQUITY SECURITIES
Available-for-Sale:
<TABLE>
The amortized cost, estimated fair values, and unrealized gains and
losses of available-for-sale securities were as follows:
<CAPTION>
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
(Thousands)
<S> <C> <C> <C> <C>
DECEMBER 31, 1994
U.S. government $359,552 $ 258 $11,092 $348,718
State and political subdivisions-tax-exempt 12,582 156 24 12,714
Other 55,302 1,468 2,143 54,627
-------- ------ ------ --------
Total $427,436 $1,882 $13,259 $416,059
======== ====== ======= ========
DECEMBER 31, 1993
U.S. government $359,362 $2,289 $ 604 $361,047
State and political subdivisions-tax-exempt 14,259 925 11 15,173
Other 40,540 4,240 1,244 43,536
-------- ------ ------ --------
Total $414,161 $7,454 $1,859 $419,756
======== ====== ====== ========
DECEMBER 31, 1992
U.S. government $89,424 $2,672 $ - $92,096
======= ====== === =======
</TABLE>
Held-to-Maturity:
<TABLE>
The amortized cost, estimated fair values, and unrealized gains and
losses of held-to-maturity securities were as follows:
<CAPTION>
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
(Thousands)
<S> <C> <C> <C> <C>
DECEMBER 31, 1994
U.S. government $2,849,318 $ 7,877 $104,366 $2,752,829
State and political subdivisions
Tax-exempt 372,641 3,853 9,764 366,730
Taxable 157,992 49 9,067 148,974
---------- ------- -------- ----------
Total State and Political Subdivisions 530,633 3,902 18,831 515,704
Other 33,191 - 517 32,674
---------- ------ -------- ----------
Total $3,413,142 $11,779 $123,714 $3,301,207
========== ======= ======== ==========
DECEMBER 31, 1993
U.S. government $3,121,831 $54,852 $6,038 $3,170,645
State and political subdivisions
Tax-exempt 378,531 17,109 638 395,002
Taxable 101,852 338 671 101,519
---------- ------- ------ ----------
Total State and Political Subdivisions 480,383 17,447 1,309 496,521
Other 142,378 1,809 327 143,860
---------- ------- ------ ----------
Total $3,744,592 $74,108 $7,674 $3,811,026
========== ======= ====== ==========
DECEMBER 31, 1992
U.S. government $3,259,804 $77,090 $8,602 $3,328,292
State and political subdivisions
Tax-exempt 320,253 12,422 1,232 331,443
Taxable 12,195 317 131 12,381
---------- ------- ------ ----------
Total State and Political Subdivisions 332,448 12,739 1,363 343,824
Other 406,634 5,782 859 411,557
---------- ------- ------ ----------
Total $3,998,886 $95,611 $10,824 $4,083,673
========== ======= ======= ==========
</TABLE>
12
<PAGE> 15
On October 1, 1994, the Corporation transferred securities from the
available-for-sale classification to the held-to-maturity
classification. The securities transferred had an amortized cost
basis of $238,018,000 and an estimated fair value of $225,792,000 on
the transfer date. The unrealized loss on the date of the transfer
remained in shareholders' equity and will be accreted over the
remaining life of the transferred securities. The amortized cost
basis of the Company's held-to-maturity securities is reduced by a
valuation allowance of $11,444,000 relating to the unaccreted
holding losses as of December 31, 1994.
Securities with a carrying value of $2,324,721,000 at December 31,
1994, $2,331,278,000 at December 31, 1993 and $2,403,907,000 at
December 31, 1992 were pledged to secure public and trust deposits,
securities sold under agreements to repurchase, and for other
purposes required by law.
Included in other held-to-maturity securities at December 31, 1992
were marketable equity securities with a cost of $16,675,000 and a
carrying value of $13,121,000. At December 31, 1993 and 1994, these
same securities were classified as available-for-sale upon the
adoption of FAS 115, "Accounting for Certain Investments in Debt and
Equity Securities." Additional securities with carrying values of
$752,000 became marketable equity securities during 1993, and at
December 31, 1993 and 1994, these securities were classified as
available-for-sale.
The following table presents proceeds from sales of securities and
the components of net securities gains. There were no securities
classified as held-to-maturity during 1994 that were transferred to
available-for-sale securities or sold. Held-to-maturity securities
gains and losses in 1994 resulted from portfolio restructurings in
connection with subsidiary bank acquisitions or calls by the
security issuer prior to maturity.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1994 1993 1992
(Thousands)
<S> <C> <C> <C>
Proceeds from sales of:
Held-to-maturity securities $ 1,985 $32,749 $274,677
Available-for-sale securities 23,704 27,141 7,953
Securities from acquired entities 79,388 14,491 58,219
Securities gains on:
Held-to-maturity securities $ 471 $ 2,396 $7,367
Available-for-sale securities 5,141 5,230 1,001
------ ------- ------
Total Securities Gains 5,612 7,626 8,368
Securities losses on:
Held-to-maturity securities 262 867 1,907
Available-for-sale securities 3,173 1,638 871
------ ------- ------
Total Securities Losses 3,435 2,505 2,778
------ ------- ------
Before Income Taxes 2,177 5,121 5,590
Applicable income taxes (762) (1,792) (1,901)
------- ------- -------
Net Securities Gains $1,415 $ 3,329 $3,689
====== ======= ======
</TABLE>
NOTE F
LOANS AND LEASES
<TABLE>
Loans and leases consisted of the following:
<CAPTION>
DECEMBER 31
1994 1993 1992
(Thousands)
<S> <C> <C> <C>
Commercial $2,353,493 $2,157,554 $2,216,938
Real estate-commercial 1,580,380 1,451,781 1,500,786
Real estate-construction 300,081 282,370 264,971
Real estate-residential 3,108,748 2,896,855 2,853,269
Consumer 1,481,823 1,150,067 1,077,368
Credit card 845,028 763,243 610,429
Foreign 425 462 1,674
---------- ---------- ----------
Loans and Leases $9,669,978 $8,702,332 $8,525,435
========== ========== ==========
</TABLE>
<TABLE>
Changes in the reserve for possible loan losses were as follows:
<CAPTION>
YEAR ENDED DECEMBER 31
1994 1993 1992
(Thousands)
<S> <C> <C> <C>
Beginning Balance $184,836 $178,735 $157,842
Provision 43,201 63,513 77,874
Charge-offs (66,601) (87,326) (91,156)
Recoveries 32,632 24,443 16,187
-------- -------- --------
Net Charge-offs (33,969) (62,883) (74,969)
Acquired Reserves 447 5,471 17,988
-------- -------- --------
Ending Balance $194,515 $184,836 $178,735
======== ======== ========
</TABLE>
<TABLE>
Non-performing loans consisted of the following:
<CAPTION>
DECEMBER 31
1994 1993 1992
(Thousands)
<S> <C> <C> <C>
Non-accrual $27,687 $53,375 $ 99,462
Renegotiated 5,872 13,058 21,634
------- ------- --------
Non-performing Loans $33,559 $66,433 $121,096
======= ======= ========
</TABLE>
Certain directors and executive officers of the Corporation and
Mercantile Bank of St. Louis N.A. were loan customers of the
Corporation's banks during 1994, 1993 and 1992. Such loans were made
in the ordinary course of business at normal terms, including
interest rate and collateralization, and did not represent more than
a normal risk. Loans to those persons, their immediate families and
companies in which they were principal owners were $6,067,000,
$7,122,000 and $39,133,000 at December 31, 1994, 1993 and 1992,
respectively. During 1994, $25,225,000 of new loans were made to
these persons; repayments totaled $26,280,000.
13
<PAGE> 16
NOTE G
BANK PREMISES AND EQUIPMENT
<TABLE>
Bank premises and equipment were as follows:
<CAPTION>
DECEMBER 31
1994 1993 1992
(Thousands)
<S> <C> <C> <C>
Land $ 43,028 $ 42,710 $ 39,705
Bank premises 219,564 234,238 224,007
Leasehold improvements 41,553 22,776 19,701
Furniture and equipment 204,337 192,493 174,790
--------- --------- ---------
Total Cost 508,482 492,217 458,203
Accumulated depreciation (260,164) (248,854) (224,182)
--------- --------- ---------
Net Carrying Value $ 248,318 $ 243,363 $ 234,021
========= ========= =========
</TABLE>
<TABLE>
At December 31, 1994, the Corporation had certain long-term leases,
none of which were considered to be capital leases, which were
principally related to the use of land, buildings and equipment. The
following table summarizes the future minimum rental commitments for
all noncancelable operating leases which had initial or remaining
noncancelable lease terms in excess of one year:
<CAPTION>
PERIOD MINIMUM RENTAL
(Thousands)
<S> <C>
1995 $ 5,494
1996 5,361
1997 5,096
1998 3,557
1999 3,131
2000 and later 7,544
-------
Total $30,183
=======
</TABLE>
Net rental expense for all operating leases was $7,714,000 in 1994,
$8,103,000 in 1993 and $8,172,000 in 1992.
NOTE H
SHORT-TERM BORROWINGS
<TABLE>
Short-term borrowings were as follows:
<CAPTION>
DECEMBER 31
1994 1993 1992
(Thousands)
<S> <C> <C> <C>
Federal funds purchased and repurchase agreements $1,495,540 $ 660,643 $ 789,081
Treasury tax and loan notes 166,545 503,360 216,621
Commercial paper 26,800 18,390 9,198
Other short-term borrowings 122,080 20,000 16,574
---------- ---------- ----------
Total $1,810,965 $1,202,393 $1,031,474
========== ========== ==========
</TABLE>
The Corporation had unused lines of credit arrangements with
unaffiliated banks in support of commercial paper outstanding of
$40,000,000 at December 31, 1994.
NOTE I
BANK NOTES AND LONG-TERM DEBT
Bank Notes:
Beginning in 1994, Mercantile Bank of St. Louis N.A., Mercantile
Bank of Illinois N.A., Mercantile Bank of Kansas City, Mercantile
Bank of Kansas and Mercantile Bank of Springfield may offer
unsecured bank notes in aggregate principal amounts of up to $1
billion. Note maturities can range from 30 days to 15 years from the
date of issue and can be issued with fixed or floating interest
rates. Each bank note issued will be an obligation solely of that
issuing bank and will not be an obligation of, or otherwise
guaranteed by, the other issuing banks or the Corporation. The bank
notes are being offered and sold only to institutional investors,
and are not insured by the Federal Deposit Insurance Corporation or
any other governmental agency.
On November 16, 1994, Mercantile Bank of St. Louis N.A. issued
$100,000,000 of two-year bank notes, with a floating interest rate
equal to the three-month LIBOR plus 1/8%. The coupon rate on the
issued bank notes was 5.9375% at December 31, 1994.
Long-term Debt:
<TABLE>
Long-term debt consisted of the following:
<CAPTION>
DECEMBER 31
1994 1993 1992
(Thousands)
<S> <C> <C> <C>
MERCANTILE BANCORPORATION INC. (PARENT COMPANY ONLY)
7.625% subordinated notes, due 2002 $150,000 $150,000 $150,000
8.500% debentures, due 2004 - 30,550 31,171
8.000% convertible subordinated
capital notes, due April 1, 1995 8,822 13,522 15,426
Notes issued in acquisitions - - 120
------- ------- --------
Total 158,822 194,072 196,717
SECOND-TIER HOLDING COMPANIES 11,319 16,469 35,411
BANKS AND OTHER SUBSIDIARIES
6.375% subordinated debt, due 2004 75,000 - -
9.000% mortgage-backed notes, due 1999 53,450 53,041 52,966
Mortgage payable - 23,653 24,337
Other 73 714 414
-------- -------- --------
Total 128,523 77,408 77,717
-------- -------- --------
Total Long-term Debt $298,664 $287,949 $309,845
======== ======== ========
</TABLE>
On October 15, 1992, the Corporation issued $150,000,000 of
subordinated notes with a 10-year maturity and a coupon rate of
7.625% to yield 7.741%. These notes qualify as Tier II capital under
current regulatory guidelines.
14
<PAGE> 17
On January 25, 1994, Mercantile Bank of St. Louis N.A. issued
$75,000,000 of 6.375% 10-year, non-callable subordinated debt, due
January 15, 2004. This debt qualifies as Tier II capital. The
Corporation used the proceeds of this subordinated debt issue to:
(1) prepay in full on February 23, 1994 the $30,550,000 8.500%
unsecured debentures of the Corporation; and (2) prepay in full on
February 1, 1994 the $23,653,000 8.250% mortgage secured by the
Corporation's headquarters building.
The 8.000% convertible subordinated capital notes were issued by
Ameribanc, Inc. prior to its acquisition by the Corporation. At
December 31, 1994, these notes were convertible into approximately
339,000 shares of the Corporation's common stock.
Notes issued in acquisitions by the parent company with an interest
rate of 6.500% matured in November 1993.
Second-tier holding company debt was issued by MidAmerican
Corporation, Johnson County Bankshares, Inc., Central Mortgage and
TCBankshares, prior to their acquisition by the Corporation. All
second-tier holding company debt issued by MidAmerican Corporation
or Johnson County Bankshares, Inc. has been paid off or matured
prior to December 31, 1994.
As of December 31, 1994, second-tier holding company debt issued by
Central Mortgage consisted of (1) a note due in 1996 with annual
principal payments of $500,000 plus quarterly interest at a rate of
6.61% and (2), an obligation secured by approximately 112,000 shares
of the Corporation's common stock.
The second-tier holding company debt issued by TCBankshares as of
December 31, 1994 consisted of (1) an 8.5% note due in 1997 with
quarterly principal payments of $185,000 and (2), an amortizing
revolving line of credit of $2,035,000 with an interest rate equal
to LIBOR plus 2.25%.
In July 1989, UPSA issued $100 million of 9.000% fixed-rate
mortgage-backed notes with a maturity date of July 1999. UPSA used a
portion of the proceeds from the sale of the notes as, or to
purchase, eligible collateral which was pledged to the trustee
simultaneously with the initial sale of the notes. During 1990,
$46,550,000 of the mortgage-backed notes were repurchased on the
open market at a discount. In 1994 the mortgage-backed securities
collateralizing these notes were replaced with U.S. government
securities of a like amount.
A summary of annual principal reductions of long-term debt is
presented below:
<TABLE>
<CAPTION>
ANNUAL
PERIOD PRINCIPAL REDUCTIONS
(Thousands)
<C> <S>
1995 $ 12,559
1996 3,739
1997 3,484
1998 432
1999 53,450
2000 and later 225,000
--------
Total $298,664
========
</TABLE>
15
<PAGE> 18
NOTE J
INCOME TAXES
<TABLE>
The Corporation's results include income tax expense as follows:
<CAPTION>
CURRENT DEFERRED TOTAL
(Thousands)
<S> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1994
U.S. FEDERAL $ 98,940 $(8,350) $ 90,590
STATE AND LOCAL 11,516 (401) 11,115
-------- ------- --------
TOTAL $110,456 $(8,751) $101,705
======== ======= ========
Year ended December 31, 1993
U.S. Federal $67,917 $5,578 $73,495
State and local 11,246 726 11,972
------- ------ -------
Total $79,163 $6,304 $85,467
======= ====== =======
Year ended December 31, 1992
U.S. Federal $52,132 $642 $52,774
State and local 8,038 260 8,298
------- ---- -------
Total $60,170 $902 $61,072
======= ==== =======
</TABLE>
The tax effects of temporary differences that gave rise to the
deferred tax assets and deferred tax liabilities are presented
below.
<TABLE>
<CAPTION>
DECEMBER 31
1994 1993 1992
(Thousands)
<S> <C> <C> <C>
Deferred tax assets
Reserve for possible loan losses $ 62,383 $ 58,602 $ 59,378
Foreclosed property 2,560 2,842 3,415
Deferred compensation 2,447 2,792 1,874
Net operating losses from pooled subsidiary 1,494 4,527 10,377
Expenses not currently allowable for tax purposes 11,079 7,598 5,802
State tax liabilities 2,239 1,266 1,567
Investments in debt and equity securities-FAS 115 8,168 - -
Retirement expenses in excess of tax deduction 5,274 2,404 1,670
Other 5,856 1,575 11,089
-------- -------- --------
Total Gross Deferred Tax Assets 101,500 81,606 95,172
Deferred tax liabilities
Leasing (56,776) (55,050) (55,187)
Pension settlement gain (6,005) (6,005) (5,833)
Intangible assets (9,078) (10,726) (10,965)
Depreciation (2,163) (3,610) (3,861)
Investments in debt and equity securities-FAS 115 - (1,959) -
Other (8,162) (3,818) (10,648)
--------- -------- --------
Total Gross Deferred Tax Liabilities (82,184) (81,168) (86,494)
--------- -------- --------
Net Deferred Tax Assets $ 19,316 $ 438 $ 8,678
======== ======== ========
</TABLE>
The 1992 and 1993 net deferred tax assets reflect amounts
attributable to entities acquired in purchase transactions.
<TABLE>
Income tax expense as reported differs from the amounts computed by
applying the statutory U.S. Federal income tax rate to pretax income
as follows:
<CAPTION>
YEAR ENDED DECEMBER 31
1994 1993 1992
(Thousands)
<S> <C> <C> <C>
Computed "expected" tax expense $ 94,512 $80,051 $60,683
Increase (reduction) in income taxes resulting from
Tax-exempt income (8,096) (8,109) (6,113)
State and local income taxes, net of federal income tax
benefit 6,937 7,501 5,216
Thrift bad debt recapture 3,615 6,070 -
Other, net 4,737 (46) 1,286
-------- ------- -------
Total Tax Expense $101,705 $85,467 $61,072
======== ======= =======
</TABLE>
15A
<PAGE> 19
NOTE K
RETIREMENT PLANS
Pension Plans:
The Corporation maintains both qualified and nonqualified
noncontributory pension plans that cover all employees meeting
certain age and service requirements.
The qualified plan provides pension benefits based on the
employee's length of service and compensation earned during the five
years prior to retirement. The Corporation's funding policy is to
contribute annually at least the minimum amount required by
government funding standards but not more than is tax deductible. No
contribution was required during 1994, 1993 or 1992.
UNSL is a member of the Financial Institutions Retirement Fund
("Fund"). This trust provides retirement and death benefits to
multiple employers. All contributions to the Fund are commingled,
and all assets of the Fund are invested on a pooled basis, without
allocation to the individual employers. Therefore, UNSL's pension
plan assets and actuarial liabilities are not included in the
qualified plan tables listed below. The contribution policy of UNSL
is to fund the pension cost accrued in each year. The annual
contributions for 1994, 1993 and 1992 were $406,000, $237,000 and
$61,000, respectively.
<TABLE>
The net periodic pension expense related to the qualified plan
included in the Supplemental Consolidated Statement of Income is
summarized as follows:
<CAPTION>
YEAR ENDED DECEMBER 31
1994 1993 1992
(Thousands)
<S> <C> <C> <C>
Service cost-benefits earned during
the period $ 6,665 $ 5,088 $ 3,970
Interest cost on projected benefit obligation 8,382 7,744 6,237
Actual (return) loss on plan assets 1,863 (10,117) (7,972)
Net amortization and deferral (14,254) (1,132) (1,721)
-------- -------- -------
Net Periodic Pension Expense $ 2,656 $ 1,583 $ 514
======== ======== =======
</TABLE>
<TABLE>
The table below sets forth the funded status and amounts recognized
in the Supplemental Consolidated Balance Sheet for the qualified
plan:
<CAPTION>
DECEMBER 31
1994 1993 1992
(Thousands)
<S> <C> <C> <C>
Actuarial present value of
Vested benefit obligation $ 78,380 $ 81,790 $ 67,043
======== ======== ========
Accumulated benefit obligation $ 87,122 $ 89,131 $ 72,310
======== ======== ========
Projected benefit obligation $104,949 $109,718 $ 88,965
Plan assets at fair value 121,799 123,299 116,609
-------- -------- --------
Plan assets in excess of projected benefit obligation (16,850) (13,581) (27,644)
Unrecognized net gain (loss) (8,964) (12,213) 1,505
Unrecognized prior service cost 2,922 1,895 1,666
Unrecognized net asset at December 31 5,664 7,229 7,181
-------- -------- --------
Prepaid Pension $ (17,228) $ (16,670) $(17,292)
========= ========= ========
<CAPTION>
Assumptions used were as follows:
1994 1993 1992
<S> <C> <C> <C>
Discount rate in determining benefit obligations 8.50% 7.50% 8.00%
Rate of increase in compensation levels 5.00 5.00 5.25
Expected long-term rate on assets 9.00 9.00 8.50
</TABLE>
At December 31, 1994, approximately 58% of the plan's assets were
invested in listed common stocks, 36% were invested in government and
corporate bonds rated A or better, and the remaining 6% were invested
in short-term cash equivalents. A nominal amount of common stock of
the Corporation was held by the plan.
The nonqualified plans provide pension benefits which would have
been provided under the qualified plan in the absence of limits
placed on qualified plan benefits by the Internal Revenue Service.
The Corporation's funding policy is to fund benefits as they are
paid. Contributions under the nonqualified plans were not material
for the three years ended December 31, 1994, 1993 and 1992. The
expense related to these plans was $1,612,000 in 1994, $1,641,000 in
1993 and $1,337,000 in 1992.
Other Postretirement Benefits:
In addition to the pension plans described above, the Corporation
provides other postretirement benefits, largely medical benefits and
life insurance, to its retirees.
16
<PAGE> 20
The Corporation adopted FAS 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions," in the first quarter
of 1993, which required the recording of the unrecognized transition
obligation for postretirement benefits other than pensions. That
liability is being amortized over a 20-year period. The net periodic
postretirement benefit expense included in the Supplemental
Consolidated Statement of Income is summarized as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1994 1993
(Thousands)
<S> <C> <C>
Service cost-benefits earned during the period $ 734 $ 591
Interest cost on accumulated postretirement benefit
obligation 2,539 2,661
Net amortization and deferral 1,633 1,679
------ ------
Net Periodic Postretirement
Benefit Cost $4,906 $4,931
====== ======
</TABLE>
The cash basis postretirement benefit cost prior to the adoption of
FAS 106 was $2,235,000 in 1992.
<TABLE>
The table below sets forth the funded status and the amount
recognized in the Supplemental Consolidated Balance Sheet regarding
other postretirement benefits:
<CAPTION>
DECEMBER 31
1994 1993 1992
(Thousands)
<S> <C> <C> <C>
Accumulated postretirement benefit obligation
("APBO")
Retirees $24,493 $ 25,956 $ 25,900
Active employees fully eligible for benefits 1,085 1,437 1,149
Other active employees 6,609 7,856 6,523
------- -------- --------
Total 32,187 35,249 33,572
Assets at fair value - - -
------ ------- -------
APBO in excess of assets 32,187 35,249 33,572
Unrecognized net gain (loss) 2,436 (1,268) -
Unrecognized prior service cost (155) - -
Unrecognized transition obligation December 31 (28,470) (30,393) (33,572)
-------- -------- --------
Accrued Postretirement Benefit Obligation $ 5,998 $ 3,588 $ -
======= ======== =======
<CAPTION>
Assumptions used were as follows:
1994 1993 1992
<S> <C> <C> <C>
Discount rate in determining benefit obligations 8.50% 7.50% 8.00%
Health care cost trend
First year 11.00 12.00 13.00
Ultimate (2001 and after) 6.00 6.00 6.00
</TABLE>
An increase in the health care cost trend of one percent would
increase the aggregate of service and interest cost components of
net periodic postretirement benefit costs by $120,000 in 1994
compared with $136,000 in 1993. The APBO would increase by
$1,443,000 as of December 31, 1994 compared with $1,675,000 as of
December 31, 1993.
NOTE L
SHAREHOLDERS' EQUITY
Common Stock:
The authorized common stock of the Corporation consists of
100,000,000 shares as of December 31, 1994 and 70,000,000 shares as
of December 31, 1993 and 1992, $5.00 par value, of which 52,073,353,
51,666,199 and 50,391,888 shares were outstanding at December 31,
1994, 1993 and 1992, respectively.
The Corporation's Dividend Reinvestment Plan ("Plan") allows
shareholders of record to reinvest dividends and/or make
voluntary cash contributions to purchase additional shares of
the Corporation's common stock. Under the Plan, stock is
purchased in the open market by the Plan Trustee with no
service charge to the shareholder.
Preferred Stock:
The authorized preferred stock of the Corporation consists of
5,000,000 shares, no par value, of which 14,806 shares were issued
and outstanding at December 31, 1994, 1993 and 1992. In addition,
1,000,000 shares were reserved at December 31, 1994 for issuance
pursuant to the Preferred Share Purchase Rights Plan.
As of December 31, 1994, 1993 and 1992, there were two series of
preferred stock issued. Series B-1 consists of 5,306 shares which
are redeemable by the Corporation and which have non-cumulative
dividends as declared by Mercantile's Board of Directors. Series B-2
represents 9,500 shares with a cumulative annual dividend at the
rate of $85 per share. The Series B-2 preferred shares are also
redeemable by the Corporation.
Preferred Share Purchase Rights Plan:
One Preferred Share Purchase Right ("Right") is attached to each
share of common stock and trades automatically with such shares. The
Rights, which can be redeemed by the Board of Directors in certain
circumstances and expire by their terms on June 3, 1998, have no
voting rights.
The Rights become exercisable and will trade separately from the
common stock 10 days after a person or a group either becomes the
beneficial owner or announces an intention to commence a tender
offer for 20% or more of the Corporation's outstanding common stock.
When exercisable, each Right entitles the registered holder to
purchase from the Corporation 1/100 of a share of Series A Junior
Participating Preferred Stock for $100 per 1/100 of a preferred
share.
17
<PAGE> 21
In the event a person acquires beneficial ownership of 20% or more
of the Corporation's common stock, holders of Rights (other than the
acquiring person or group) may purchase, at the Rights' then current
exercise price, common stock of the Corporation having a value at
that time equal to twice the exercise price. In the event the
Corporation merges into or otherwise transfers 50% or more of its
assets or earnings power to any person after the Rights become
exercisable, holders of Rights may purchase, at the then current
exercise price, common stock of the acquiring entity having a value
at that time equal to twice the exercise price.
Stock Options:
<TABLE>
The Corporation had stock options outstanding under various plans
at December 31, 1994, including plans assumed in acquisitions. The
original Mercantile plans provide for the granting to employees of
the Corporation and its subsidiaries of options to purchase shares
of common stock of the Corporation over periods of up to 10 years at
a price not less than the market value of the shares at the date the
options are granted. The plans provide for the granting of options
which either qualify or do not qualify as Incentive Stock Options as
defined by Section 422 of the Internal Revenue Code of 1986, as
amended. A summary of the plans follows:
<CAPTION>
SHARES PRICE
------ -----
<S> <C> <C>
AT DECEMBER 31, 1994
Available for grant 1,836,130
Outstanding 2,847,549 $5.41-38.88
Exercisable 1,524,073 5.41-34.33
<CAPTION>
Changes in options outstanding were as follows:
SHARES PRICE
------ -----
<S> <C> <C>
BALANCE AT DECEMBER 31, 1991 1,269,106 $ 7.54-$21.78
Granted 1,146,347 5.41- 29.00
Exercised (332,913) 5.41- 24.09
Canceled (71,186) 12.26- 26.33
Assumed 72,223 14.60- 25.83
---------
BALANCE AT DECEMBER 31, 1992 2,083,577 5.41- 29.00
Granted 729,935 14.62- 34.33
Exercised (269,920) 5.41- 26.33
Canceled (40,225) 17.17- 32.67
---------
BALANCE AT DECEMBER 31, 1993 2,503,367 5.41- 34.33
GRANTED 718,489 18.44- 38.88
EXERCISED (319,080) 5.41- 32.50
CANCELED (55,227) 12.50- 32.67
---------
BALANCE AT DECEMBER 31, 1994 2,847,549 5.41- 38.88
=========
</TABLE>
No amounts have been charged to expense in connection with any
plan.
Debt and Dividend Restrictions:
Consolidated retained earnings at December 31, 1994 were not
restricted under any debenture agreement as to payment of dividends
or reacquisition of common stock.
The primary source of funds for dividends paid by the Corporation
to its shareholders is dividends received from bank subsidiaries. At
December 31, 1994, approximately $388,034,000 of the equity of bank
subsidiaries was available for distribution as dividends to the
Parent Company without prior regulatory approval or without reducing
the capital of the respective subsidiary banks below present minimum
standards. An additional $106,797,000 would be available for loans
to the Parent Company under Federal Reserve regulations. The
remaining equity of bank subsidiaries approximating $766,651,000 was
restricted as to transfers to the Parent Company.
NOTE M
CONCENTRATIONS OF CREDIT
The Corporation's primary market area is the state of Missouri and
the lower Midwest. At December 31, 1994, approximately 93% of the
total loan portfolio, and 90% of the commercial and commercial real
estate loan portfolio, were to borrowers within this region. The
diversity of the region's economic base tends to provide a stable
lending environment.
Real estate lending constituted the only other significant
concentration of credit risk. Real estate-related financial
instruments (loans, commitments and standby letters of credit)
comprised 36% of all such instruments of the Corporation. However,
of this total, approximately 63% was consumer-related in the form of
residential real estate mortgages and home equity lines of credit.
The Corporation is, in general, a secured lender. At December 31,
1994, approximately 85% of the loan portfolio was secured.
Collateral is required in accordance with the normal credit
evaluation process based upon the creditworthiness of the customer
and the credit risk associated with the particular transaction.
NOTE N
FINANCIAL INSTRUMENTS
Fair Values:
Fair values for financial instruments are management's estimates of
the values at which the instruments could be exchanged in a
transaction between willing parties. These estimates are subjective
and may vary significantly from amounts that would be realized in
actual transactions. In addition, certain financial instruments and
all non-financial instruments are excluded from the fair value
disclosure requirements of FAS 107, "Disclosures about Fair Value of
Financial Instruments." Therefore, the fair values presented
below should not be construed as the underlying value of
the Corporation.
18
<PAGE> 22
The following methods and assumptions were used in estimating fair
values for financial instruments.
Cash and Due from Banks, Short-term Investments and Short-term
Borrowings: The carrying values reported in the Supplemental
Consolidated Balance Sheet approximated fair values.
Investments in Debt and Equity Securities: Fair values for held-
to-maturity and available-for-sale securities were based upon
quoted market prices where available. Fair values for trading
securities, which also were the amounts reported in the
Supplemental Consolidated Balance Sheet, were based on quoted
market prices where available. If quoted market prices were not
available, fair values were based upon quoted market prices of
comparable instruments.
Loans and Leases: The fair values for most fixed-rate loans were
estimated by utilizing discounted cash flow analysis, applying
interest rates currently being offered for similar loans to
borrowers with similar risk profiles. The discount rates used
therefore include a credit risk premium. The fair values of
variable-rate loans and residential mortgages were estimated by
utilizing the same type of discounted cash flows, but over a range
of interest rate scenarios, in order to incorporate the value of
the options imbedded in these assets. Loans with similar
characteristics were aggregated for purposes of these
calculations. The fair value of credit card loans was assumed to
be the same as the par value. The fair value estimate of the
credit card portfolio does not include any value attributable to
the ongoing cardholder relationship. That component was estimated
to be approximately $150,000,000 to $185,000,000 in excess of the
fair value at December 31, 1994.
Deposits: The fair values disclosed for deposits generally payable
on demand (i.e., interest bearing and non-interest bearing demand,
savings, and money market accounts) were considered equal to their
respective carrying amounts as reported in the Supplemental
Consolidated Balance Sheet. Fair values for certificates of
deposit and foreign deposits were estimated using a discounted
cash flow calculation that applied interest rates generally
offered on similar certificates to a schedule of aggregated
expected monthly maturities of time deposits. The fair value
estimate of the deposit portfolio has not been adjusted for any
value derived from the retention of those deposits for an expected
future period of time. That component, commonly referred to as
core deposit premium, was estimated to be approximately
$205,000,000 to $305,000,000 at December 31, 1994 and was neither
considered in the fair value amounts below nor recorded as an
intangible asset on the Supplemental Consolidated Balance Sheet.
Bank Notes and Long-term Debt: The fair value of publicly traded
debt was based upon quoted market prices, where available, or upon
quoted market prices of comparable instruments. The fair values of
bank notes and long-term debt were estimated using discounted cash
flow analysis, based on the Corporation's current incremental
borrowing rates for similar types of borrowing arrangements.
Off-Balance-Sheet Instruments: Fair values of foreign exchange
contracts and interest rate contracts were determined from quoted
market prices. Fair values of commitments to extend credit,
standby letters of credit and commercial letters of credit were
based on fees currently charged to enter into similar agreements,
taking into account the remaining terms of the agreements and the
counterparties' credit standings.
<TABLE>
The estimated fair values of the Corporation's financial
instruments were as follows:
<CAPTION>
DECEMBER 31
1994 1993 1992
-----------------------------------------------------------------------------------
(Thousands)
CARRYING FAIR CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE VALUE VALUE
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL ASSETS
Cash and due from banks and short-term
investments $ 928,140 $ 928,140 $1,148,649 $1,148,649 $ 1,102,835 $ 1,102,835
Trading securities 14,299 14,299 15,735 15,735 17,684 17,684
Held-to-maturity securities 3,413,142 3,301,207 3,744,592 3,811,026 3,998,886 4,083,673
Available-for-sale securities 416,059 416,059 419,756 419,756 89,424 92,096
Net loans and leases 9,475,463 9,533,598 8,517,496 8,779,353 8,346,700 8,628,878
FINANCIAL LIABILITIES
Deposits 11,189,250 11,175,045 11,598,509 11,661,355 11,629,300 11,714,630
Short-term borrowings 1,810,965 1,810,965 1,202,393 1,202,393 1,031,474 1,031,474
Bank notes and long-term debt 398,664 377,730 287,949 317,652 309,845 312,932
OFF-BALANCE-SHEET
Foreign exchange contracts purchased $ 6,641 $ 5,375 $(2,034)
Foreign exchange contracts sold (6,199) (6,890) 1,392
Interest rate contracts (184) (4,125) (5,300)
Commitments to extend credit (8,817) (11,950) (9,307)
Standby letters of credit (1,955) (2,247) (2,051)
Commercial letters of credit (3,988) (4,321) (4,774)
</TABLE>
19
<PAGE> 23
Off-Balance-Sheet Risk:
The Corporation is, in the normal course of business, a party to
certain off-balance-sheet financial instruments with inherent credit
and/or market risk. These instruments, which include commitments to
extend credit, standby letters of credit, interest options written,
interest futures contracts and foreign exchange contracts, are used
by the Corporation to meet the financing needs of its customers and,
to a lesser degree, to reduce its own exposure to interest rate
fluctuations. These instruments involve, to varying degrees, credit
and market risk in excess of the amount recognized in the
Supplemental Consolidated Balance Sheet.
<TABLE>
Financial instruments with off-balance-sheet credit risk for which
the contract amounts represent potential credit risk were as
follows:
<CAPTION>
DECEMBER 31
1994 1993 1992
(Thousands)
<S> <C> <C> <C>
Commitments to extend credit
Commercial $1,829,221 $1,613,817 $1,587,487
Consumer 3,905,890 3,061,311 2,638,905
---------- ---------- ----------
Total $5,735,111 $4,675,128 $4,226,392
========== ========== ==========
Standby letters of credit $207,121 $237,718 $216,054
======== ======== ========
Interest rate contracts $21,000 $37,500 $71,000
======= ======= =======
</TABLE>
The Corporation's maximum exposure to credit loss under commitments
to extend credit and standby letters of credit is the equivalent of
the contractual amount of those instruments. The same credit
policies are used by the Corporation in granting commitments and
conditional obligations as are used in the extension of credit.
Commitments to extend credit are legally binding agreements to lend
to a borrower as long as the borrower performs in accordance with
the terms of the contract. Commitments generally have fixed
expiration dates or other termination clauses, and may require
payment of a fee. As many of the commitments are expected to expire
without being drawn upon, the total commitment amount does not
necessarily represent future cash requirements. Included in consumer
commitments are the unused portions of lines of credit for credit
card and home equity credit line loans.
Standby letters of credit are commitments issued by the Corporation
to guarantee specific performance of a customer to a third party.
Collateral is required for both commitments and standby letters of
credit in accordance with the normal credit evaluation process based
upon the creditworthiness of the customer and the credit risk
associated with the particular transaction. Collateral held varies,
but may include commercial real estate, accounts receivable,
inventory or equipment.
Included in interest rate contracts are interest rate exchange
agreements with major investment banking firms to convert short-
term, variable-rate liabilities into long-term, fixed-rate
liabilities, to secure interest margins and to hedge against
interest rate movements.
Derivative Financial Instruments:
Held or Issued for Trading Purposes:
In the normal course of business, the Corporation maintains minimal
trading positions in a variety of derivative financial instruments.
Most of the Corporation's trading activities are customer oriented,
with trading positions established to meet the financing and foreign
exchange transaction needs of customers. This activity complements
the Corporation's traditional money and capital markets trading
business, which also exists to meet customers' demands.
Net revenue recognized on interest rate contracts and foreign
exchange contracts totaled $2,558,000 in 1994. For interest options
written, foreign exchange contracts purchased and foreign exchange
contracts sold, the notional amounts of $62,725,000, $184,079,000
and $173,378,000, respectively, at December 31, 1994, do not
represent exposure to credit loss. These commitments are generally
entered into on behalf of customers and result in the Corporation
being in a matched position. Credit risk in the transactions is
minimal. The Corporation manages the potential credit exposure
through established credit approvals, risk control limits and other
monitoring procedures. Market risk to the Corporation could result
from non-performance by a counterparty to a contract.
Held or Issued for Purposes Other Than Trading:
Of the commitments to extend credit discussed in the preceding
paragraphs, $74,966,000 and $35,289,000 were entered into with fixed
rates at December 31, 1994 for commercial and consumer (residential
mortgage) loan customers, respectively. Fixed-rate commitments to
extend credit are defined as fixed-rate commercial loan commitments
with remaining maturities greater than one year, fixed-rate
residential mortgage loan commitments, and adjustable-rate
residential mortgage loan commitments for loans with adjustment
periods greater than one year.
Fixed-rate mortgage loans held for resale are partially hedged with
contracts for forward delivery in the secondary mortgage market.
This hedging activity is designed to protect the Corporation from
changes in interest rates. Gains and losses from the hedging
transactions on mortgage loans held for resale are deferred and
included in the cost of the loans for determining the gain or loss
when the loans are sold. As of December 31, 1994, the Company had
$6,932,000 of forward delivery contracts outstanding.
20
<PAGE> 24
NOTE O
CONTINGENT LIABILITIES
In the ordinary course of business, there are various legal
proceedings pending against the Corporation and its subsidiaries.
Management, after consultation with legal counsel, is of the opinion
that the ultimate resolution of these proceedings will have no
material adverse effect on the consolidated financial condition or
results of operations of the Corporation.
NOTE P
PARENT COMPANY FINANCIAL INFORMATION
Following are the condensed financial statements of Mercantile
Bancorporation Inc. (Parent Company Only) for the periods indicated.
For the Statement of Cash Flows (Parent Company Only), cash and
short-term investments were considered cash equivalents. Interest
paid on commercial paper and long-term debt was $15,099,000,
$15,881,000 and $10,618,000 for the years ended December 31, 1994,
1993 and 1992, respectively.
<TABLE>
STATEMENT OF INCOME
<CAPTION>
YEAR ENDED DECEMBER 31
1994 1993 1992
(Thousands)
<S> <C> <C> <C>
INCOME
Dividends from banking subsidiaries $104,950 $ 77,548 $ 44,077
Other interest and dividends 4,644 5,538 3,320
Management fees 13,879 13,392 12,320
Other 3,546 2,687 2,994
-------- -------- --------
Total Income 127,019 99,165 62,711
EXPENSE
Interest on commercial paper 1,199 733 416
Interest on long-term debt 12,607 15,157 12,497
Personnel expense 14,463 11,544 10,489
Other operating expenses 16,019 14,301 15,743
-------- -------- --------
Total Expense 44,288 41,735 39,145
INCOME BEFORE INCOME TAX CREDITS AND EQUITY IN UNDISTRIBUTED
INCOME OF SUBSIDIARIES 82,731 57,430 23,566
Income tax credits 6,482 6,708 6,469
-------- -------- --------
INCOME BEFORE EQUITY IN UNDISTRIBUTED INCOME OF SUBSIDIARIES 89,213 64,138 30,035
Equity in undistributed income of subsidiaries 79,116 79,113 87,372
-------- -------- --------
NET INCOME $168,329 $143,251 $117,407
======== ======== ========
<CAPTION>
BALANCE SHEET
DECEMBER 31
1994 1993 1992
(Thousands)
<S> <C> <C> <C>
ASSETS
Cash $ - $ 609 $ 156
Short-term investments 82,405 47,776 63,766
Available-for-sale securities 12,539 16,569 -
Marketable equity securities - - 13,121
Investment in subsidiaries 1,270,456 1,190,526 1,061,904
Goodwill 48,557 45,912 27,383
Loans and advances to subsidiaries
26,849 53,390 44,248
Other assets 3,849 7,865 12,265
---------- ---------- ----------
Total Assets $1,444,655 $1,362,647 $1,222,843
========== ========== ==========
LIABILITIES
Commercial paper $ 26,800 $ 18,390 $ 9,198
Long-term debt 158,822 194,072 196,717
Other liabilities 24,697 17,516 21,122
---------- ---------- ----------
Total Liabilities 210,319 229,978 227,037
SHAREHOLDERS' EQUITY 1,234,336 1,132,669 995,806
---------- ---------- ----------
Total Liabilities and Shareholders' Equity $1,444,655 $1,362,647 $1,222,843
========== ========== ==========
</TABLE>
21
<PAGE> 25
<TABLE>
STATEMENT OF CASH FLOWS
<CAPTION>
YEAR ENDED DECEMBER 31
1994 1993 1992
(Thousands)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 168,329 $ 143,251 $ 117,407
Adjustments to reconcile net income
to net cash provided by operating
activities
Net income of subsidiaries (184,066) (156,661) (131,449)
Dividends from subsidiaries 98,666 62,430 44,077
Other, net 14,263 2,038 4,023
--------- --------- ---------
Net Cash Provided by
Operating Activities 97,192 51,058 34,058
INVESTING ACTIVITIES
Investments in debt and equity
securities
Purchases (948) (2,054) (1,858)
Proceeds from maturities 5,417 5,878 1,807
Contributions of capital to subsidiaries (21,505) (31,705) (31,209)
Investment in note from banking subsidiary - - (35,000)
Other, net 25,143 (9,280) (1,412)
--------- --------- ---------
Net Cash Provided (Used) by
Investing Activities 8,107 (37,161) (67,672)
FINANCING ACTIVITIES
Cash dividends paid by Mercantile Bancorporation Inc. (48,329) (34,840) (27,506)
Issuance of common stock
Employee incentive plans and warrants 2,923 2,203 3,904
Purchase of treasury stock (2,954) - -
Issuance of long-term debt - - 150,000
Principal payments on
long-term debt (30,552) (742) (60,207)
Acquisitions - (4,809) (8,347)
Net change in commercial paper 8,410 9,192 1,271
Other, net (777) (438) (4,305)
--------- --------- ---------
Net Cash Provided (Used) by
Financing Activities (71,279) (29,434) 54,810
--------- --------- ---------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 34,020 (15,537) 21,196
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 48,385 63,922 42,726
--------- --------- ---------
CASH AND CASH EQUIVALENTS AT
END OF YEAR $ 82,405 $ 48,385 $ 63,922
========= ========= =========
</TABLE>
22
<PAGE> 26
INDEPENDENT AUDITORS' REPORT
Shareholders and Board of Directors
Mercantile Bancorporation Inc.:
We have audited the accompanying supplemental consolidated balance
sheets of Mercantile Bancorporation Inc. and subsidiaries as of
December 31, 1994, 1993, and 1992, and the related supplemental
consolidated statements of income, changes in shareholders' equity,
and cash flows for the years then ended. These supplemental
consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion
on these consolidated financial statements based on our audits. The
supplemental consolidated financial statements give retroactive
effect to the mergers of Central Mortgage Bancshares, Inc. and
TCBankshares, Inc. on May 1, 1995, and UNSL Financial Corp on
January 3, 1995, which have been accounted for using the pooling of
interests method as described in the notes to the supplemental
consolidated financial statements. Generally accepted accounting
principles proscribe giving effect to consummated business
combinations accounted for by the pooling of interest method in
financial statements that do not include the dates of consummation.
These financial statements do not extend through the dates of
consummation; however, they will become the historical consolidated
financial statements of Mercantile Bancorporation Inc. and
subsidiaries after financial statements covering the dates of
consummation of the business combinations are issued.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the supplemental consolidated financial statements
referred to above present fairly, in all material respects, the
financial position of Mercantile Bancorporation Inc. and
subsidiaries as of December 31, 1994, 1993, and 1992, and the
results of their operations and their cash flows for the years then
ended in conformity with generally accepted accounting principles
applicable after financial statements are issued for a period which
includes the date of consummation of the business combinations.
/s/ KPMG Peat Marwick LLP
May 31, 1995
24
<PAGE> 27
MERCANTILE BANCORPORATION INC.
SUPPLEMENTAL
INTERIM CONSOLIDATED
FINANCIAL STATEMENTS
MARCH 31, 1995 and 1994
<TABLE>
CONSOLIDATED STATEMENT OF INCOME
(THOUSANDS EXCEPT PER SHARE DATA)
<CAPTION>
THREE MONTHS ENDED
MARCH 31
1995 1994
---- ----
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans and leases $220,430 $175,223
Investments in debt and equity securities
Trading 163 126
Taxable 50,351 51,560
Tax-exempt 5,691 5,285
-------- --------
Total 56,205 56,971
Due from banks-interest bearing 342 1,317
Federal funds sold and repurchase agreements 2,812 2,595
-------- --------
Total Interest Income 279,789 236,106
INTEREST EXPENSE
Interest bearing deposits 93,030 77,689
Foreign deposits 3,196 468
Short-term borrowings 23,560 6,697
Bank notes 1,670 -
Long-term debt 5,590 5,937
-------- --------
Total Interest Expense 127,046 90,791
-------- --------
NET INTEREST INCOME 152,743 145,315
PROVISION FOR POSSIBLE LOAN LOSSES 13,975 8,879
-------- --------
NET INTEREST INCOME AFTER PROVISION
FOR POSSIBLE LOAN LOSSES 138,768 136,436
OTHER INCOME
Trust 15,398 15,877
Service charges 16,500 17,034
Credit card fees 6,576 5,858
Mortgage banking 2,078 3,647
Investment banking and brokerage 1,416 2,399
Securities gains (losses) (43) 1,418
Other 14,878 8,861
-------- --------
Total Other Income 56,803 55,094
OTHER EXPENSE
Salaries 51,488 50,964
Employee benefits 13,270 12,813
Net occupancy 7,578 7,776
Equipment 9,551 9,750
Other 37,356 38,581
-------- --------
Total Other Expense 119,243 119,884
-------- --------
INCOME BEFORE INCOME TAXES 76,328 71,646
INCOME TAXES 26,625 26,051
-------- --------
NET INCOME $ 49,703 $ 45,595
======== ========
PER SHARE DATA
Average common shares outstanding 52,919,978 51,723,559
Net income<F*> $.93 $.88
Dividends declared .33 .28
<FN>
<F*>Based on weighted average common shares outstanding.
</TABLE>
MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES
<PAGE> 28
<TABLE>
CONSOLIDATED BALANCE SHEET
(THOUSANDS)
<CAPTION>
MARCH 31 MARCH 31
1995 1994
-------- --------
<S> <C> <C>
ASSETS
Cash and due from banks $ 680,581 $ 625,519
Due from banks-interest bearing 23,441 103,744
Federal funds sold and repurchase agreements 146,389 72,978
Investments in debt and equity securities
Trading 11,542 6,622
Available-for-sale 439,061 781,389
Held-to-maturity (Estimated fair value of $3,357,438
and $3,370,662, respectively) 3,400,420 3,364,107
----------- -----------
Total 3,851,023 4,152,118
Loans held-for-sale 51,310 90,947
Loans and leases, net of unearned income 10,023,067 8,725,392
Reserve for possible loan losses (195,683) (182,551)
----------- -----------
Net Loans and Leases 9,878,694 8,633,788
Bank premises and equipment 254,891 243,223
Due from customers on acceptances 5,985 9,979
Other assets 309,567 338,574
----------- -----------
Total Assets $15,150,571 $14,179,923
=========== ===========
LIABILITIES
Deposits
Non-interest bearing $ 1,610,841 $ 1,666,618
Interest bearing 9,482,958 9,567,159
Foreign 239,499 48,767
----------- -----------
Total Deposits 11,333,298 11,282,544
Federal funds purchased and repurchase agreements 1,608,407 641,537
Other short-term borrowings 191,322 554,189
Bank notes 250,000 -
Long-term debt 290,302 307,270
Bank acceptances outstanding 5,985 9,979
Other liabilities 199,084 220,806
----------- -----------
Total Liabilities 13,878,398 13,016,325
Commitments and contingent liabilities - -
</TABLE>
<TABLE>
<CAPTION>
MARCH 31 MARCH 31
1995 1994
-------- --------
<S> <C> <C> <C> <C>
SHAREHOLDERS' EQUITY
Preferred stock-no par value
Shares authorized 5,000 5,000
Shares issued 15 15 12,153 12,153
Common stock-$5.00 par value
Shares authorized 100,000 70,000
Shares issued 53,514 51,798 267,573 258,991
Capital surplus 176,011 161,886
Retained earnings 843,710 730,568
Treasury stock, at cost 765 - (27,274) -
----------- ----------
Total Shareholders' Equity 1,272,173 1,163,598
----------- -----------
Total Liabilities and Shareholders' Equity $15,150,571 $14,179,923
=========== ===========
</TABLE>
MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES
<PAGE> 29
<TABLE>
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
($ IN THOUSANDS)
<CAPTION>
COMMON STOCK
----------------------- TOTAL
OUTSTANDING PREFERRED CAPITAL RETAINED TREASURY SHAREHOLDERS'
SHARES DOLLARS STOCK SURPLUS EARNINGS STOCK EQUITY
------------ ------- --------- ------- -------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1993, AS RESTATED 51,666,199 $258,332 $12,153 $161,188 $700,996 $ _ $1,132,669
Net income 45,595 45,595
Dividends declared
Mercantile Bancorporation Inc._
$.28 per share (12,018) (12,018)
Pooled companies prior to acquisition (989) (989)
Issuance of common stock
Employee incentive plans 115,686 579 533 1,112
Convertible notes 534 3 11 14
Net fair value adjustment for
available-for-sale securities (3,038) (3,038)
Pre-merger transactions of pooled companies 15,423 77 154 22 253
---------- -------- ------- -------- -------- -------- ----------
BALANCE AT MARCH 31, 1994 51,797,842 $258,991 $12,153 $161,886 $730,568 $ _ $1,163,598
========== ======== ======= ======== ======== ======== ==========
BALANCE AT DECEMBER 31, 1994, AS RESTATED 52,073,353 $260,836 $12,153 $166,878 $797,423 $ (2,954) $1,234,336
Net income 49,703 49,703
Dividends declared
Mercantile Bancorporation Inc._
$.33 per share (15,066) (15,066)
Pooled companies prior to acquisition (1,895) (1,895)
Issuance of common stock
Acquisition of Wedge Bank 969,954 4,850 1,649 7,314 13,813
Employee incentive plans 47,634 232 82 38 352
Convertible notes 331,075 1,655 6,935 8,590
Net fair value adjustment for
available-for-sale securities 6,231 6,231
Purchase of treasury stock (672,500) (24,358) (24,358)
Pre-merger transactions of pooled companies 467 467
---------- -------- ------- -------- -------- -------- ----------
BALANCE AT MARCH 31, 1995 52,749,516 $267,573 $12,153 $176,011 $843,710 $(27,274) $1,272,173
========== ======== ======= ======== ======== ======== ==========
</TABLE>
MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES
<PAGE> 30
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS
(THOUSANDS)
<CAPTION>
THREE MONTHS ENDED
MARCH 31
1995 1994
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 49,703 $ 45,595
Adjustments to reconcile net income to net cash
provided by operating activities
Provision for possible loan losses 13,975 8,879
Depreciation and amortization 7,808 7,900
Provision for deferred income taxes (2,403) (561)
Net change in trading securities 2,757 9,113
Net change in loans held-for-sale (29,927) 50,521
Net change in accrued interest receivable (64) 2,260
Net change in accrued interest payable 5,465 (2,069)
Net change in accrued taxes payable 26,041 27,195
Other, net 4,816 27,207
--------- ----------
Net Cash Provided by Operating Activities 78,171 176,040
INVESTING ACTIVITIES
Investments in debt and equity securities, other than
trading securities
Purchases (238,341) (595,043)
Proceeds from maturities 306,699 482,239
Proceeds from sales of:
Available-for-sale securities 1,190 13,881
Securities from acquired entities - 73,914
Net change in loans and leases (259,300) (228,508)
Purchases of loans and leases (48,289) (20,063)
Proceeds from sales of loans and leases 21,713 67,471
Purchases of premises and equipment (13,419) (8,733)
Proceeds from sales of premises and equipment 692 385
Proceeds from sales of foreclosed property 3,687 6,482
Cash and cash equivalents from acquisitions, net of cash paid 7,968 -
Other, net 3,543 4,048
--------- ----------
Net Cash Used by Investing Activities (213,857) (203,927)
FINANCING ACTIVITIES
Net change in non-interest bearing, savings, interest bearing demand
and money market deposit accounts (362,302) (243,031)
Net change in time certificates of deposit under $100,000 124,317 (116,346)
Net change in time certificates of deposit $100,000 and over 110,576 19,417
Net change in other time deposits 98,228 1,313
Net change in foreign deposits 20,364 22,682
Net change in short-term borrowings (39,788) (6,667)
Issuance of bank notes 150,000 -
Issuance of long-term debt 1,330 75,000
Principal payments on long-term debt (804) (54,846)
Cash dividends paid (19,958) (13,082)
Proceeds from issuance of common stock 352 1,195
Purchase of treasury stock (24,358) -
Other, net - (4,156)
--------- ----------
Net Cash Provided (Used) by Financing Activities 57,957 (318,521)
--------- ----------
DECREASE IN CASH AND CASH EQUIVALENTS (77,729) (346,408)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 928,140 1,148,649
--------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 850,411 $ 802,241
========= ==========
MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES
</TABLE>
<PAGE> 31
Note A -- Basis of Presentation
Effective May 1, 1995, Mercantile Bancorporation Inc. ("Corporation")
acquired Central Mortgage Bancshares, Inc. ("Central Mortgage") and
TCBankshares, Inc. ("TCBankshares"). Both transactions are accounted
for as poolings-of-interests. These Unaudited Supplemental Interim
Consolidated Financial Statements restate the Corporation's historical
interim consolidated financial statements as of and for the three month
periods ended March 31, 1995 and 1994 to reflect the Central Mortgage
and TCBankshares transactions.
The Unaudited Interim Consolidated Financial Statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments considered necessary for a fair presentation
have been included.
<PAGE> 32
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
---------------------------------
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED:
Not Applicable
(b) PRO FORMA FINANCIAL INFORMATION:
Not Applicable
(c) EXHIBITS:
(23) Consent of KPMG Peat Marwick LLP
(27) Financial Data Schedules
<PAGE> 33
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 hereunto duly authorized.
MERCANTILE BANCORPORATION INC.
Dated as of May 31, 1995 By /s/ MICHAEL T. NORMILE
Michael T. Normile
Senior Vice President Finance and Control
<PAGE> 34
EXHIBIT INDEX
(23) Consent of KPMG Peat Marwick LLP.
(27) Financial Data Schedules.
<PAGE> 1
Independent Auditors' Consent
-----------------------------
The Board of Directors
Mercantile Bancorporation Inc.:
We consent to the incorporation by reference in the Registration Statements
No. 2-78395, No. 33-15265, No. 33-33870, No. 33-35139, No. 33-43694,
No. 33-48952, and No. 33-57543, each on Form S-8, and No. 33-45863,
No. 33-52986, No. 33-50981, No. 33-50579, No. 33-55439, No. 33-56603 and
No. 33-58467, each on Form S-4, of Mercantile Bancorporation Inc., of our
report dated May 31, 1995, relating to the supplemental consolidated
balance sheets of Mercantile Bancorporation Inc. and subsidiaries as of
December 31, 1994, 1993 and 1992, and the related supplemental consolidated
statements of income, changes in shareholders' equity, and cash flows for each
of the years in the three-year period ended December 31, 1994, which report
appears in the Current Report on Form 8-K dated May 31, 1995 of Mercantile
Bancorporation Inc.
/s/ KPMG Peat Marwick LLP
St. Louis, Missouri
May 31, 1995
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 129,091
<INT-BEARING-DEPOSITS> 29,166
<FED-FUNDS-SOLD> 120,344
<TRADING-ASSETS> 14,299
<INVESTMENTS-HELD-FOR-SALE> 416,059
<INVESTMENTS-CARRYING> 3,413,142
<INVESTMENTS-MARKET> 3,301,207
<LOANS> 9,669,978
<ALLOWANCE> 194,515
<TOTAL-ASSETS> 14,806,344
<DEPOSITS> 11,189,250
<SHORT-TERM> 1,810,965
<LIABILITIES-OTHER> 173,129
<LONG-TERM> 298,644
<COMMON> 257,882
0
12,153
<OTHER-SE> 964,301
<TOTAL-LIABILITIES-AND-EQUITY> 14,806,344
<INTEREST-LOAN> 757,571
<INTEREST-INVEST> 226,088
<INTEREST-OTHER> 11,237
<INTEREST-TOTAL> 994,896
<INTEREST-DEPOSIT> 325,107
<INTEREST-EXPENSE> 399,349
<INTEREST-INCOME-NET> 595,547
<LOAN-LOSSES> 43,201
<SECURITIES-GAINS> 1,727
<EXPENSE-OTHER> 492,070
<INCOME-PRETAX> 270,034
<INCOME-PRE-EXTRAORDINARY> 168,329
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 168,329
<EPS-PRIMARY> 3.22
<EPS-DILUTED> 3.22
<YIELD-ACTUAL> 4.55
<LOANS-NON> 27,687
<LOANS-PAST> 21,814
<LOANS-TROUBLED> 5,872
<LOANS-PROBLEM> 24,502<F1>
<ALLOWANCE-OPEN> 184,836
<CHARGE-OFFS> 66,601
<RECOVERIES> 32,632
<ALLOWANCE-CLOSE> 194,515
<ALLOWANCE-DOMESTIC> 194,515
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 77,130
<FN>
<F1> This amount represents Mercantile Bancorporation Inc.
potential problem loans excluding the effects of the
poolings-of-interests transactions with UNSL Financial Corp,
Central Mortgage Bancshares, Inc. and TCBankshares, Inc.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 105,603
<INT-BEARING-DEPOSITS> 23,441
<FED-FUNDS-SOLD> 138,265
<TRADING-ASSETS> 11,542
<INVESTMENTS-HELD-FOR-SALE> 439,061
<INVESTMENTS-CARRYING> 3,400,420
<INVESTMENTS-MARKET> 3,357,438
<LOANS> 10,074,377
<ALLOWANCE> 195,683
<TOTAL-ASSETS> 15,150,571
<DEPOSITS> 11,333,298
<SHORT-TERM> 1,799,729
<LIABILITIES-OTHER> 205,069
<LONG-TERM> 290,302
<COMMON> 267,573
0
12,153
<OTHER-SE> 1,019,721
<TOTAL-LIABILITIES-AND-EQUITY> 15,150,571
<INTEREST-LOAN> 219,540
<INTEREST-INVEST> 56,205
<INTEREST-OTHER> 3,145
<INTEREST-TOTAL> 279,789
<INTEREST-DEPOSIT> 96,226
<INTEREST-EXPENSE> 127,046
<INTEREST-INCOME-NET> 152,743
<LOAN-LOSSES> 13,975
<SECURITIES-GAINS> (43)
<EXPENSE-OTHER> 119,243
<INCOME-PRETAX> 76,328
<INCOME-PRE-EXTRAORDINARY> 49,703
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 49,703
<EPS-PRIMARY> .93
<EPS-DILUTED> .93
<YIELD-ACTUAL> 4.47
<LOANS-NON> 32,386
<LOANS-PAST> 22,511
<LOANS-TROUBLED> 3,439
<LOANS-PROBLEM> 0<F1>
<ALLOWANCE-OPEN> 194,515
<CHARGE-OFFS> 18,605
<RECOVERIES> 3,749
<ALLOWANCE-CLOSE> 195,683
<ALLOWANCE-DOMESTIC> 195,683
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0<F1>
<FN>
<F1> Information only reported at year-end.
</TABLE>
