<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities
----- Exchange Act of 1934
For the quarterly period ended SEPTEMBER 30, 1997
OR
Transition Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the transition period from ________ to ________
Commission File Number 0-11033
-------
MERCHANTS BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
Texas 76-0045946
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
5005 WOODWAY, SUITE 300
HOUSTON, TEXAS 77056
(Address of principal executive offices) (zip code)
(713) 622-0042
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
---- ----
As of November 1, 1997, Registrant had outstanding 1,951,839 shares of its $1.00
par value per share common stock.
<PAGE>
MERCHANTS BANCSHARES, INC.
INDEX TO FORM 10-Q
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The September 30, 1997 and 1996 financial statements included herein
are unaudited; however, such information reflects all adjustments
(consisting solely of normal recurring adjustments), which are, in the
opinion of management of the registrant, necessary to a fair statement
of the results for the interim periods.
PAGE
No.
Consolidated Balance Sheet at September 30, 1997 and
at December 31, 1996...................................... 3
Consolidated Statement of Income for the Three Months
Ended September 30, 1997 and 1996......................... 4
Consolidated Statement of Income for the Nine Months
Ended September 30, 1997 and 1996......................... 5
Consolidated Statement of Cash Flows for the Nine Months
Ended September 30, 1997 and 1996......................... 6
Notes to Interim Consolidated Financial Statements
for the Period Ended September 30, 1997................... 8
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS............................................. 9
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK...............................................14
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS...........................................15
ITEM 2. CHANGE IN SECURITIES........................................15
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.............................15
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.........15
ITEM 5. OTHER INFORMATION...........................................15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K............................15
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MERCHANTS BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
(Unaudited)
ASSETS
September 30, December 31,
1997 1996
------------- ------------
Cash and due from banks $ 27,357 $ 30,073
Time deposits in banks 1,000 1,000
Federal funds sold 13,550 6,375
Investment securities:
Available-for-Sale 103,379 123,076
Held-to-Maturity 18,730 20,196
Loans, net of allowance for
credit losses 331,872 291,811
Bank premises and equipment 14,893 14,797
Accrued interest receivable 3,545 3,663
Other assets 4,122 3,579
---------- ------------
Total Assets $ 518,448 $ 494,570
========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest bearing $ 132,304 $ 129,314
Interest bearing 326,727 309,729
---------- ------------
459,031 439,043
Accrued interest, taxes and
other liabilities 2,276 2,016
---------- ------------
Total Liabilities 461,307 441,059
---------- ------------
Stockholders' Equity:
Common stock 1,978 1,978
Paid-in capital 25,767 25,767
Retained earnings 29,577 25,954
Unrealized securities gains (losses) 141 81
---------- ------------
57,463 53,780
Less cost of stock held in treasury:
Common Stock (322) (269)
---------- ------------
Total Stockholders' Equity 57,141 53,511
---------- ------------
Total Liabilities and
Stockholders' Equity $ 518,448 $ 494,570
========== ============
See Notes to Interim Consolidated Financial Statements.
3
<PAGE>
MERCHANTS BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)
THREE MONTHS ENDED
SEPTEMBER 30,
-------------------
1997 1996
-------- --------
Interest Income:
Interest and fees on loans $ 7,906 $ 6,423
Investment securities:
Taxable 1,648 1,961
Non-taxable 208 237
Interest bearing deposits with bank 0 7
Time deposits with banks 20 35
Federal funds sold 257 209
------- -------
Total Interest Income 10,039 8,872
------- -------
Interest Expense:
Interest bearing deposits 3,114 2,787
------- -------
Total Interest Expense 3,114 2,787
------- -------
Net interest income 6,925 6,085
Provision for possible credit losses 435 178
------- -------
Net interest income after provision
for credit losses 6,490 5,907
------- -------
Non-Interest Income:
Service charges and fees 1,208 1,206
Other operating income 478 241
Securities gains (losses) 0 0
------- -------
Total Non-Interest Income 1,686 1,447
------- -------
Non-Interest Expense:
Salaries and employee benefits 2,823 2,832
Furniture, equipment and
occupancy expense 1,018 879
Other operating expenses 1,401 1,344
------- -------
Total Non-Interest Expense 5,242 5,055
------- -------
Income before income taxes 2,934 2,299
Income taxes 922 715
------- -------
Net Income $ 2,012 $ 1,584
======= =======
Per Share:
Net Income $ 1.03 $ .81
======= =======
Dividends - Common Stock $ .30 $ .20
======= =======
See Notes to Interim Consolidated Financial Statements.
4
<PAGE>
MERCHANTS BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)
NINE MONTHS ENDED
SEPTEMBER 30,
------------------
1997 1996
------- -------
Interest Income:
Interest and fees on loans $ 22,198 $ 18,080
Investment securities:
Taxable 5,257 6,016
Non-taxable 639 698
Interest bearing deposits with bank 0 210
Time deposits with banks 50 86
Federal funds sold 770 1,006
------ ------
Total Interest Income 28,914 26,096
------ ------
Interest Expense:
Interest bearing deposits 9,061 8,293
Borrowed funds 0 9
------ ------
Total Interest Expense 9,061 8,302
------ ------
Net interest income 19,853 17,794
Provision for possible credit losses 1,305 340
------ ------
Net interest income after provision
for credit losses 18,548 17,454
------ ------
Non-Interest Income:
Service charges and fees 3,580 3,509
Other operating income 1,109 690
Securities gains (losses) 0 0
------ ------
Total Non-Interest Income 4,689 4,199
------ ------
Non-Interest Expense:
Salaries and employee benefits 8,455 8,614
Furniture, equipment and
occupancy expense 2,966 2,448
Other operating expenses 4,154 4,057
------ ------
Total Non-Interest Expense 15,575 15,119
------ ------
Income before income taxes 7,662 6,534
Income taxes 2,380 2,015
------ ------
Net Income $ 5,282 $ 4,519
====== ======
Per Share:
Net Income $ 2.70 $ 2.32
====== ======
Dividends - Common Stock $ .85 $ .57
====== ======
See Notes to Interim Consolidated Financial Statements.
5
<PAGE>
MERCHANTS BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Nine Months Ended
September 30,
------------------
1997 1996
-------- -------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 5,282 $ 4,519
ADJUSTMENTS TO RECONCILE NET INCOME TO
NET CASH PROVIDED BY OPERATING ACTIVITIES:
Provision for credit losses 1,305 340
Depreciation and amortization 1,458 1,286
Origination of mortgage loans for sale (8,903) (8,270)
Proceeds from mortgage loans sold 8,215 8,462
Provision for losses on real
estate and other assets 5 125
(Increase) decrease in interest
receivable 118 (15)
(Decrease) increase in accrued
interest and other liabilities (235) (122)
Other - net (145) (45)
-------- --------
NET CASH PROVIDED BY OPERATING
ACTIVITES 7,100 6,280
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase in time deposits
in banks 0 (602)
Proceeds from the maturities of held-to-
maturity investment securities 2,455 2,125
Proceeds from the maturities of available-
for-sale investment securities 32,397 28,752
Proceeds from the sale of available-
for-sale investment securities 68 2,003
Purchase of held-to-maturity
investment securities (1,011) (1,368)
Purchase of available-for-sale
investment securities (12,985) (23,383)
Net decrease (increase) in loans (40,286) (38,323)
Purchase of bank premise and equipment (1,160) (5,718)
Proceeds from sale of premises and equipment 232 118
Proceeds from sale of real estate
and other loan related assets 281 276
Other (908) (1,207)
-------- --------
NET CASH USED BY INVESTING ACTIVITIES (20,917) (37,327)
-------- --------
See Notes to Interim Consolidated Financial Statements.
6
<PAGE>
MERCHANTS BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)
(Dollars in thousands)
(Unaudited)
NINE MONTHS ENDED
SEPTEMBER 30,
------------------
1997 1996
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposits 19,988 332
Dividends paid (1,659) (1,109)
Sale of Treasury stock 0 30
Purchase of Treasury stock (53) 0
Repayment of borrowings 0 (3,083)
Purchase minority interest 0 (287)
------- --------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 18,276 (4,117)
------- --------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 4,459 (35,164)
CASH AND CASH EQUIVALENTS
BEGINNING OF PERIOD 36,448 81,552
------- --------
CASH AND CASH EQUIVALENTS
END OF PERIOD $40,907 $ 46,388
======= ========
For the nine months ended September 30:
Interest paid $ 9,003 $ 8,429
======= ========
Income taxes paid $ 2,800 $ 1,835
======= ========
Non-Cash Transactions:
Foreclosed properties transferred
to other real estate and loan
related assets $ 622 $ 681
======= ========
Bank loans for other real estate
and loan related assets sold $ 211 $ 746
======= ========
See Notes to Interim Consolidated Financial Statements.
7
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. PRESENTATION OF FINANCIAL INFORMATION
The accompanying unaudited consolidated interim financial statements have been
prepared in accordance with generally accepted accounting principles ("GAAP")
for interim financial information and with the rules and regulations of the
Securities and Exchange Commission. Accordingly, they do not include all of the
information and footnotes required by GAAP for complete financial statements. In
the opinion of management, all adjustments (consisting solely of normal
recurring items) considered necessary for a fair presentation have been
included. The results of operations for the three and nine months ended
September 30, 1997, are not necessarily indicative of results that may be
expected for the entire year ending December 31, 1997. For further information,
refer to the consolidated financial statements and footnotes thereto included in
the annual report on Form 10-K of Merchants Bancshares, Inc. (the "Company"),
for the year ended December 31, 1996.
NOTE 2. EARNINGS PER SHARE
Earnings per share amounts have been computed using the weighted average number
of common shares and common share equivalents outstanding during the period.
The number of such primary shares were 1,953,230 and 1,944,137 for the nine
months ended September 30, 1997 and 1996, respectively.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
ANALYSIS OF STATEMENT OF INCOME
The following analysis discusses material changes in the results of operations
for the third quarter of 1997 compared to the third quarter of 1996 and the
first nine months of 1997 as compared to the first nine months of 1996. The
Company recorded earnings of $2,012,000 in the third quarter of 1997 and
$5,282,000 in the first nine months of 1997 compared to $1,584,000 in the third
quarter of 1996 and $4,519,000 in the first nine months of 1996.
NET INTEREST INCOME
Net interest income increased 13.8% in the third quarter of 1997 when compared
to the same period in 1996 and increased by 11.6% during the first nine months
of 1997 as compared to the first nine months of 1996.
The increase of $2,059,000 for the first nine months of 1997 over the same
period in 1996 resulted from a $2,818,000 (10.8%) increase in interest income on
earning assets, partially offset by an increase of $759,000 (9.1%) in interest
expense. Higher volumes of interest earning assets, particularly loans, were
the primary reasons for the increase in net interest income.
The Company's subsidiary bank (the "Subsidiary Bank") attempts to adjust the
rates paid or earned on interest bearing liabilities and interest earning assets
to maintain a consistent net interest margin.
PROVISION FOR CREDIT LOSSES
The provision for credit losses increased by $257,000 for the third quarter of
1997 compared to the third quarter of 1996 and increased by $965,000 for the
first nine months of 1997 as compared to the same period in 1996. The provision
for credit losses for the first nine months of 1997 was offset by $530,000 in
net losses charged to the allowance as compared with net losses of $188,000 for
the same period in 1996. The primary reason for the increased provision is the
increase in loan volumes. The ratio of the allowance for credit losses to
outstanding loans was 1.04% on September 30, 1997, as compared to .93% on
September 30, 1996.
The Subsidiary Bank's policy is to maintain a level in the allowance for credit
losses that is adequate to cover the loan losses sustained plus provide for any
future possible losses on problem loans. The adequacy of the allowance is
continually monitored and management considers the current level to be
appropriate based on an evaluation of the Subsidiary Bank's loan portfolio. The
transactions in the allowance for credit losses were as follows:
9
<PAGE>
PROVISION FOR CREDIT LOSSES (CONTINUED)
FOR THE NINE MONTHS
ENDED SEPTEMBER 30,
---------------------------
1997 1996
------------- ------------
Loans outstanding at period end $335,360,000 $276,591,000
============ ============
Allowance at beginning of period $ 2,713,000 $ 2,411,000
------------ ------------
Provision charged to expense 1,305,000 340,000
------------ ------------
Loans charged off:
Commercial and industrial (223,000) (114,000)
Real estate (146,000) (15,000)
Installment (329,000) (190,000)
------------ ------------
Total (698,000) (319,000)
------------ ------------
Loans recovered:
Commercial and industrial 55,000 69,000
Real estate 10,000 17,000
Installment 103,000 45,000
------------ ------------
Total 168,000 131,000
------------ ------------
Net Loans recovered (charged off) (530,000) (188,000)
------------ ------------
Allowance at end of period $ 3,488,000 $ 2,563,000
============ ============
Ratios:
Allowance as a percent of
loans outstanding 1.04% .93%
============ ============
Allowance as a percent of
nonperforming loans 108.5% 77.6%
============ ============
NON-PERFORMING ASSETS
All loans which cause management to have doubt as to the borrower's ability to
substantially comply with present loan repayment terms are included in the
schedule of non-performing loans.
Non-performing loans consist of loans on which interest is not being accrued and
loans which are 90 days or more past due as to principal and/or interest payment
and not yet in a non-accruing status. The policy of the Subsidiary Bank is to
continue to accrue interest on loans which are 90 days or more past due if
periodic payments are being made on the loans. If a loan is classified as past
due and payments then resume on the loan, it continues to be classified as past
due until all past due amounts are paid.
10
<PAGE>
NON-PERFORMING ASSETS (CONTINUED)
The following table discloses information regarding non-performing assets for
the indicated periods:
September 30,
-----------------------
1997 1996
----------- ----------
Non-accrual loans $2,473,000 $2,185,000
Past due 90 days or more 741,000 1,119,000
---------- ----------
Total 3,214,000 3,304,000
Other real estate owned 936,000 1,430,000
---------- ----------
Total non-performing assets $4,150,000 $4,734,000
========== ==========
NON-INTEREST INCOME
The components included in non-interest income for the indicated periods are as
follows:
FOR THE QUARTER
ENDED SEPTEMBER 30,
-------------------------
1997 1996
------------ -----------
Service charges and fees $ 1,208,000 $ 1,206,000
Other operating income 478,000 241,000
Securities transactions 0 0
--------- ----------
Total non-interest income $ 1,686,000 $ 1,447,000
========== ===========
FOR THE NINE MONTHS
ENDED SEPTEMBER 30,
-------------------------
1997 1996
------------ -----------
Service charges and fees $ 3,580,000 $ 3,509,000
Other operating income 1,109,000 690,000
Securities transactions 0 0
------------ -----------
Total non-interest income $ 4,689,000 $ 4,199,000
============ ===========
Noninterest income increased $239,000 or 16.5% for the third quarter of 1997
compared to the same period in 1996 and increased $490,000 or 11.7% for the
first nine months of 1997 compared to the first nine months of 1996. The
increases in other operating income are primarily due to increased volumes of
fees charged for non-sufficient funds and ATM fees.
The Company maintains a policy of constantly monitoring and evaluating service
charges and fees to ensure that the fees charged reflect the cost of service
provided and remain competitive with other financial institutions located in the
Subsidiary Bank's market area.
11
<PAGE>
NON-INTEREST EXPENSE
Non-interest expense increased by 3.7% for the third quarter of 1997 over the
third quarter of 1996 and increased 3.0% for the first nine months of 1997
compared to the first nine months of 1996. The totals were as follows:
FOR THE QUARTER
ENDED SEPTEMBER 30,
-----------------------------
1997 1996
----------- -----------
Salaries and employee benefits $ 2,823,000 $ 2,832,000
Furniture, equipment and occupancy
expense 1,018,000 879,000
Other operating expenses 1,401,000 1,344,000
----------- ------------
Total non-interest expenses $ 5,242,000 $ 5,055,000
=========== ============
FOR THE NINE MONTHS
ENDED SEPTEMBER 30,
-----------------------------
1997 1996
----------- -----------
Salaries and employee benefits $ 8,455,000 $ 8,614,000
Furniture, equipment and occupancy
expense 2,966,000 2,448,000
Other operating expenses 4,154,000 4,057,000
----------- ------------
Total non-interest expenses $15,575,000 $ 15,119,000
=========== ============
Salaries and employee benefits are the most significant operating expenses of
the Company. These expenses decreased by .3% and 1.9% for the third quarter and
the first nine months of 1997, respectively, as compared to the same periods in
1996 and are attributable to staff reduction.
Furniture, equipment and occupancy expenses increased by 15.8% for the third
quarter of 1997 as compared to the third quarter of 1996 and increased by 21.2%
for the first nine months of 1997 compared to the same period in 1996. The
opening of two branch facilities in the latter part of 1996 is responsible for
the increases. Other operating expenses increased 4.2% and 2.4% for the third
quarter and first nine months of 1997 as compared to the previous year.
ANALYSIS OF BALANCE SHEET
EARNING ASSETS
When comparing the total of earning assets at September 30, 1997, to the total
at December 31, 1996, earning assets increased 6.1%. The increase of
$26,848,000 was due to increases of $7,175,000 and $40,836,000 in federal funds
sold and loans, respectively. The increases were partially offset by a decrease
of $21,163,000 in investment securities. The majority of the increase in loans
is attributable to the two branch facilities which were opened in the latter
part of 1996.
Included in the total of earning assets at September 30, 1997 are loans totaling
$2,473,000 which are on a non-accrual status. This compares to non-accrual
loans totaling $2,185,000 and $2,129,000 at September 30, 1996 and December 31,
1996, respectively.
12
<PAGE>
DEPOSITS
The most important funding source for earning asset growth is deposits. Total
deposits increased by 4.6% from December 31, 1996 to September 30, 1997,
compared to a increase of .1% from December 31, 1995, to September 30, 1996.
Non-interest bearing deposits increased 2.3% from December 31, 1996 to September
30, 1997, while interest bearing deposits increased 5.5% for the same period.
CAPITAL
Shareholders' equity increased $3,630,000, or 6.8% for the nine months ended
September 30, 1997, as compared to an increase of $2,274,000 for the first nine
months ended September 30, 1996. The ratio of shareholders' equity to total
assets was 11.0% on September 30, 1997, as compared to 10.8% on December 31,
1996 and 10.6% on September 30, 1996.
Bank holding companies and their bank subsidiaries are required to maintain
certain capital ratios. The Federal Reserve Board's guidelines classify capital
into two tiers, referred to as Tier 1 and Tier 2. Tier 1 capital consists of
common and qualifying preferred shareholders' equity less goodwill. Tier 2
capital consists of mandatory convertible debt, preferred stock not qualifying
as Tier 1, qualifying subordinated debt and the allowance for credit losses up
to 1.25% of risk-weighted assets. The minimum ratio for the sum of Tier 1 and
Tier 2 to risk weighted assets is 8.0%, at least one-half of which should be in
the form of Tier 1 capital. At September 30, 1997, core capital (Tier 1) and
total capital (Tier 1 and Tier 2) as a percentage of risk-weighted assets was
16.10% and 17.10%, respectively. The Subsidiary Bank at September 30, 1997 had
core capital of 15.06% and total capital of 16.07% as a percentage of risk
weighted assets.
In addition to the foregoing ratios, bank holding companies are required to
maintain a minimum ratio of core capital to total assets (hereinafter referred
to as the "Leverage Ratio") of at least 3.0%. At September 30, 1997, the
Company's Leverage Ratio was 10.84%. A similar leverage ratio applicable to the
Subsidiary Bank has been adopted by the FDIC. At September 30, 1997, the
Subsidiary Bank's ratio was 9.86%.
LIQUIDITY AND CAPITAL COMMITMENTS
Liquidity is the ability of the Company and the Subsidiary Bank to meet their
short-term needs for cash arising from demands such as operating expenses,
withdrawal of deposits and demand for loans. The liquidity of the Company is
primarily provided by dividends from the Subsidiary Bank and interest on time
deposits in financial institutions.
The Subsidiary Bank's liquidity is primarily provided by maturing loans,
deposits, cash, short-term investments, time deposits in other banks, federal
funds sold and profits. With bank regulators critically reviewing liquidity,
the Company has adopted a policy of maintaining a minimum liquidity level of 20%
as measured by the FDIC formula, at the Subsidiary Bank. As of September 30,
1997, the liquidity level of the Subsidiary Bank was 29.68%.
The Company believes that both it and the Subsidiary Bank have sufficient
capital and financial resources to meet its current and anticipated capital
commitments.
13
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable.
14
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal proceedings.
Not applicable
Item 2. Changes in securities.
Not applicable
Item 3. Defaults upon senior securities.
Not applicable
Item 4. Submission of matters to a vote of security holders.
Not applicable
Item 5. Other information.
Not applicable
Item 6. Exhibits and reports on Form 8-K.
(a) Exhibits
See Index to Exhibits
(b) Reports of Form 8-K
No reports on Form 8-K were filed during the period ending
September 30, 1997.
15
<PAGE>
INDEX TO EXHIBITS
(IF APPLICABLE)
INCORPORATED BY REFERENCE FROM
-------------------------------
EXHIBIT NUMBER AND DESCRIPTION FORM DATE FILE NO. EXHIBIT
- -------------------------------- ---- ---- -------- -------
(3) Articles of Incorporation and Bylaws
3.1 Articles of Incorporation, together
with amendments thereto 8-K 04/23/96 0-11033 3(i)
3.2 Bylaws of the Registrant 8-K 04/23/96 0-11033 3(ii)
(10) Material contracts
10.3 Merchants Bancshares, Inc.
401 (k) Plan 10-K 12/31/89 0-11033 10.3
10.4 Merchants Bancshares, Inc.
Defined Benefit Pension Plan 10-K 12/31/94 0-11033 10.4
10.5 Merchants Bancshares, Inc.
1997 Flexible Incentive Plan N/A N/A N/A N/A
(27) Financial Data Schedule
27.1 Financial Data Schedule N/A N/A N/A N/A
16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MERCHANTS BANCSHARES, INC.
Date: November 3, 1997 BY: /s/ J. W. Lander, Jr.
---------------------
J. W. Lander, Jr., Chairman
Date: November 3, 1997 BY: /s/ J. W. Lander, III
---------------------
J. W. Lander, III, President
(principal financial and chief
accounting officer)
17
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 27,357,000
<INT-BEARING-DEPOSITS> 1,000,000
<FED-FUNDS-SOLD> 13,550,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 103,379,000
<INVESTMENTS-CARRYING> 122,109,000
<INVESTMENTS-MARKET> 122,534,000
<LOANS> 335,360,000
<ALLOWANCE> 3,488,000
<TOTAL-ASSETS> 518,448,000
<DEPOSITS> 459,031,000
<SHORT-TERM> 0
<LIABILITIES-OTHER> 2,276,000
<LONG-TERM> 0
0
0
<COMMON> 1,978,000
<OTHER-SE> 55,163,000
<TOTAL-LIABILITIES-AND-EQUITY> 518,448,000
<INTEREST-LOAN> 22,198,000
<INTEREST-INVEST> 5,896,000
<INTEREST-OTHER> 820,000
<INTEREST-TOTAL> 28,914,000
<INTEREST-DEPOSIT> 9,061,000
<INTEREST-EXPENSE> 0
<INTEREST-INCOME-NET> 18,548,000
<LOAN-LOSSES> 1,305,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 15,575,000
<INCOME-PRETAX> 7,622,000
<INCOME-PRE-EXTRAORDINARY> 7,662,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,282,000
<EPS-PRIMARY> 2.70
<EPS-DILUTED> 2.70
<YIELD-ACTUAL> 5.61
<LOANS-NON> 2,473,000
<LOANS-PAST> 741,000
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,713,000
<CHARGE-OFFS> 698,000
<RECOVERIES> 168,000
<ALLOWANCE-CLOSE> 3,488,000
<ALLOWANCE-DOMESTIC> 3,488,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
