<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
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 0-21292
MERCHANTS AND MANUFACTURERS BANCORPORATION, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Wisconsin 39-1413328
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
573 West Lincoln Avenue
Milwaukee, Wisconsin 53207
- --------------------------------------------------------------------------------
(Address of principal executive office)
(414) 649-2073
- --------------------------------------------------------------------------------
Registrant's telephone number, including area code:
- --------------------------------------------------------------------------------
(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 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 .
--- ---
Applicable Only to Corporate Issuers
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
Common Stock, par value $1.00 per share 871,720 Shares
- --------------------------------------- ---------------------------------------
Class Outstanding at November 1, 1996
<PAGE> 2
MERCHANTS AND MANUFACTURERS BANCORPORATION, INC.
FORM 10-Q
INDEX
PAGE NUMBER
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Financial
Condition as of September 30, 1996 (Unaudited)
and December 31, 1995 3
Unaudited Condensed Consolidated Statements of
Income for the Three Months and the Nine Months
ended September 30, 1996 and 1995 4
Unaudited Condensed Consolidated Statements of
Cash Flows for the Nine Months ended September 30,
1996 and 1995 5
Notes to Unaudited Condensed Consolidated Financial
Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II. OTHER INFORMATION
Items 1-6 14
Signatures 15
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
MERCHANTS AND MANUFACTURERS BANCORPORATION, INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------- ------------
(UNAUDITED)
(In Thousands)
<S> <C> <C>
ASSETS
Cash and due from banks $ 12,755 $11,164
Interest-bearing deposits at other banks 1,458 8,737
Federal funds sold 2,787 8,546
------------- ------------
Cash and cash equivalents 17,000 28,447
Securities available-for-sale (at fair value):
Investment securities 17,433 15,833
Mortgage-related securities 35,469 44,251
Loans receivable, net 187,333 163,650
Accrued interest receivable 1,612 1,532
Federal Home Loan Bank stock, at cost 1,118 702
Premises and equipment, net 7,683 7,605
Other assets 3,108 2,227
------------- ------------
Total assets $270,756 $264,247
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $237,086 $233,083
Accrued interest payable 491 575
Short-term borrowings 3,800 3,000
Advance payments by borrowers for taxes and insurance 1,527 365
Other liabilities 1,914 681
------------- ------------
Total liabilities 244,818 237,704
Stockholders' equity
Common stock, par value $1.00 per share: authorized--
1,500,000 shares; issued--897,812 shares 898 898
Additional paid in capital 10,759 10,759
Unrealized loss on securities available-for-sale (468) (181)
Retained earnings, substantially restricted 15,455 15,249
Less treasury stock, at cost--24,992 shares and 7,013
shares, respectively (706) (182)
------------- ------------
Total stockholders' equity 25,938 26,543
------------- ------------
Total liabilities and stockholders' equity $270,756 $264,247
============= ============
</TABLE>
See notes to unaudited consolidated financial statements.
3
<PAGE> 4
MERCHANTS AND MANUFACTURERS BANCORPORATION, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995
--------- -------- ------- -------
(In Thousands, except per share data)
<S> <C> <C> <C> <C>
Interest income:
Loans, including fees $3,946 $3,432 $11,140 $10,018
Investment securities:
Taxable 321 208 849 549
Exempt from federal income taxes 41 28 126 92
Mortgage-related securities 599 691 1,924 2,323
Other 22 353 292 572
--------- -------- ------- -------
Total interest income 4,929 4,712 14,331 13,554
Interest expense:
Deposits 2,077 2,087 6,045 5,635
Borrowings 61 49 161 166
--------- -------- ------- -------
Total interest expense 2,138 2,136 6,206 5,801
Net interest income 2,791 2,576 8,125 7,753
Provision for loan losses 388 6 460 126
--------- -------- ------- -------
Net interest income after provision for
loan losses 2,403 2,570 7,665 7,627
Non-interest income:
Service charges on deposit accounts 181 179 542 536
Service charges on loans 47 29 156 67
Net gain on securities sales 11 1 18 11
Other 166 112 423 342
--------- -------- ------- -------
405 321 1,139 956
Non-interest expenses:
Salaries and employee benefits 1,340 1,156 3,965 3,514
Premises and equipment 343 300 1,035 880
Data processing fees 142 130 417 409
Federal deposit insurance premiums 657 68 763 321
Other 507 548 1,584 1,636
--------- -------- ------- -------
2,989 2,202 7,764 6,760
Income (loss) before income taxes (181) 689 1,040 1,823
Income taxes (62) 240 361 636
--------- -------- ------- -------
Net income (loss) ($ 119) $449 $679 $1,187
========= ======== ======= =======
Earnings (loss) per share ($ 0.14) $0.50 $0.77 $1.33
========= ======== ======= =======
Dividends per share $0.20 $0.17 $0.50 $0.47
========= ======== ======= =======
</TABLE>
See notes to unaudited consolidated financial statements.
4
<PAGE> 5
MERCHANTS AND MANUFACTURERS BANCORPORATION, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
1996 1995
-------------- --------------
(In Thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $679 $1,187
Adjustments to reconcile net income to cash provided by
operating activities:
Provision for loan losses 460 126
Provision for depreciation 310 281
Net amortization of investments securities premiums and discounts 236 262
Net realized investment security gains (18) (11)
Increase in accrued interest receivable (80) (308)
Increase (decrease) in accrued interest payable (84) 260
Other 503 (537)
-------------- --------------
Net cash provided by operating activities 2,006 2,334
INVESTING ACTIVITIES
Purchases of securities available for sale (12,318) (8,982)
Proceeds from redemptions and maturities of securities available for sale 11,884 7,109
Proceeds from sales of securities available for sale 6,960 10,425
Purchases of investment securities 0 (992)
Net increase in loans (24,243) (7,774)
Purchase of premises and equipment (388) (1,804)
Proceeds from sales of real estate 100 0
Purchase of Federal Home Loan Bank stock (416) (38)
-------------- --------------
Net cash used in investing activities (18,421) (2,056)
FINANCING ACTIVITIES
Net increase in deposits 4,003 5,882
Payments of cash dividends to stockholders (473) (418)
Net increase in short-term borrowings 800 3,000
Purchase of treasury stock (628) (73)
Proceeds from sale of treasury stock 104 34
Increase in advance payments by borrowers for taxes and insurance 1,162 1,239
Proceeds from dividend reinvestment plan 0 99
-------------- --------------
Net cash provided in financing activities 4,968 9,763
Increase (decrease) in cash and cash equivalents (11,447) 10,041
Cash and cash equivalents at beginning of period 28,447 17,694
-------------- --------------
Cash and cash equivalents at end of period $17,000 $27,735
============== ==============
Supplemental cash flow information:
Interest paid $6,268 $5,532
Income taxes paid 729 590
Loans transferred to other real estate owned 100 0
</TABLE>
See notes to unaudited consolidated financial statements
5
<PAGE> 6
MERCHANTS AND MANUFACTURERS BANCORPORATION, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
September 30, 1996
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements include
the accounts of Merchants and Manufacturers Bancorporation, Inc. (the
Corporation) and its wholly owned subsidiaries, Lincoln State Bank, Franklin
State Bank ("the Banks"), Lincoln Savings Bank, S.A. ("Lincoln Savings") and
M&M Services, Inc. Lincoln State Bank also includes the accounts of its wholly
owned subsidiary, M&M Lincoln Investment Corporation. Lincoln Savings Bank
also includes the accounts of its wholly owned subsidiary, Lincoln Investment
Management Corporation. All significant intercompany balances and transactions
have been eliminated.
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for the nine-month
period ended September 30, 1996 are not necessarily indicative of the results
that may be expected for the year ended December 31, 1996. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Corporation's Form 10-K for the year ended December 31,
1995.
NOTE B -- EARNINGS PER SHARE INFORMATION
Earnings per share of common stock for the nine months ended September 30,
1996, and 1995 have been determined by dividing net income for the respective
periods by the weighted average number of shares of common stock and common
stock equivalents outstanding during the period.
<TABLE>
<CAPTION>
Three Months Ended, Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
- -------------------------------------------------- --------------------------
<S> <C> <C> <C> <C>
Net income (loss) ($ 119,237) $448,816 $679,263 $1,187,155
Weighted average
shares outstanding 872,221 890,097 877,097 889,478
- -------------------------------------------------- --------------------------
Earnings (loss) per
share ($ 0.14) $ 0.50 $ 0.77 $ 1.33
============================== ==========================
</TABLE>
6
<PAGE> 7
NOTE C -- LOANS RECEIVABLE
Loans are comprised of the following categories:
<TABLE>
<CAPTION>
September 30 December 31
1996 1995
-------------------------
(In Thousands)
<S> <C> <C>
Commercial business loans $ 45,665 $ 36,605
Commercial real estate 54,548 44,594
Real estate mortgages 78,013 71,943
Installments 9,847 10,810
Other 1,292 1,326
-------------------------
Total loans 189,365 165,278
Unearned income (85) (95)
-------------------------
Loans, net of unearned income $189,280 $165,183
=========================
</TABLE>
The following table presents changes in the allowance for credit losses:
<TABLE>
<CAPTION>
Three Months Ended, Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
--------------------- --------------------
(In Thousands)
<S> <C> <C> <C> <C>
Beginning balance $1,561 $1,544 $1,533 $1,464
Provisions 388 6 460 126
Charge-offs (2) 0 (75) (40)
Recoveries 0 0 29 0
--------------------- --------------------
Ending balance $1,947 $1,550 $1,947 $1,550
===================== ====================
</TABLE>
NOTE D -- STOCKHOLDERS' EQUITY
Under federal law and regulations, the Corporation is required to meet certain
capital requirements. The Banks and Lincoln Savings are required to meet
leverage and risk-based capital requirements. The leverage ratio, in general,
is stockholders' equity as a percentage of total assets. The risk-based
capital ratio, in general, is stockholders' equity plus general loan loss
allowances (within certain limitations) as a percentage of risk adjusted
assets.
The risk-based capital requirements presently address credit risk related to
both recorded and off-balance sheet commitments and obligations. As a
state-chartered savings institution, Lincoln Savings is also subject to minimum
regulatory capital requirements of the State of Wisconsin.
7
<PAGE> 8
The following summarizes the September 30, 1996 actual capital levels and
ratios and those required by federal regulations for the banks and the State of
Wisconsin for Lincoln Savings.
<TABLE>
<CAPTION>
Amount Ratios
--------------------------------- ----------------------------------
Actual Required Excess Actual Required Excess
--------------------------------- ----------------------------------
(In Thousands, Except Percentages)
<S> <C> <C> <C> <C> <C> <C>
Lincoln State Bank:
Leverage $10,565 $5,172 $5,393 8.17% 4.00% 4.17%
Risk-based 11,595 7,829 3,766 11.87 8.00 3.87
Franklin State Bank:
Leverage 2,396 1,281 1,115 7.48 4.00 3.48
Risk-based 2,678 1,901 777 11.27 8.00 3.27
Lincoln Savings:
Leverage 9,957 4,223 5,734 9.43 4.00 5.43
Risk-based 10,590 5,074 5,516 16.70 8.00 8.70
State of Wisconsin: 10,270 6,335 3,935 9.73 6.00 3.73
</TABLE>
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Financial Condition
At September 30, 1996, the Corporation's consolidated total assets were $270.8
million as compared to $264.2 million at December 31, 1995. This increase was
primarily funded by a $4.0 million increase in deposits and a $800,000 increase
in short-term borrowings.
Investment securities increased $1.6 million, or 10.1%, from $15.8 million at
December 31, 1995 to $17.4 million at September 30, 1996. Purchases of new
investments in this category accounted for the increase.
Mortgage-related securities available-for-sale decreased $8.8 million, or 19.8%
from $44.3 million at December 31, 1995, to $35.5 million at September 30,
1996. The proceeds from sales, maturities and repayments of mortgage-related
securities are being used to fund new loans and purchase other tpye of
investment securities rather than purchase additional mortgage-related
securities.
Loans receivable increased $23.7 million, or 14.5%, from $163.7 million at
December 31, 1995 compared to $187.3 million at September 30, 1996. This
increase was primarily due to new commercial loan relationships. This movement
corresponds to the Corporation's strategic plan of emphasizing commercial
business. These assets tend to be rate-sensitive and will add interest income
in a rising interest rate environment. Currently, loans receivable consists
mainly of mortgages secured by residential properties located in the
Corporation's primary market area and commercial loans secured by business
assets, real estate, and guarantees. At September 30, 1996 the Corporation has
not designated any loans held for sale. Past loan sales have been loan
participations sold to correspondent banks when the borrowers reached their
lending limit at the Corporation's subsidiary Banks.
Stockholders' equity at September 30, 1996 was $25.9 million compared to $26.5
million at December 31, 1995, a decrease of $605,000, or 2.3%. The change in
stockholders' equity consists of net income of $679,000, less payments of
dividends to shareholders of $473,000, less the purchase of treasury stock of
$524,000 and the $287,000 decrease in the market value of securities
categorized as available for sale. The Banks and Lincoln Savings continue to
exceed their regulatory capital requirements.
Nonperforming Assets and Allowance for Losses
Generally a loan is classified as nonaccrual and the accrual of interest on
such loan is discontinued when the contractual payment of principal or interest
has become 90 days past due or management has serious doubts about further
collectibility of principal or interest, even though the loan currently is
performing. Generally, loans are restored to accrual status when the
obligation is brought current, has performed in accordance with the contractual
terms for a reasonable period of time and the ultimate collectibility of the
total contractual principal and interest is no longer in doubt.
9
<PAGE> 10
Nonperforming assets are summarized, for the dates indicated, as follows:
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
-------------- ------------
(In Thousands, Except Percentages)
<S> <C> <C>
Non-accrual loans:
Mortgage loans
One-to-four family $ 450 $ 355
Commercial mortgage 83 148
------ ------
Total mortgage loans 533 503
Commercial business 180 94
Consumer and other 41 61
------ ------
Total non-accrual loans 754 658
Other real estate owned 0 0
------ ------
Total nonperforming assets $ 754 $ 658
====== ======
RATIOS:
Non-accrual loans to total loans 0.40% 0.40%
Nonperforming assets to total assets 0.27 0.25
Loan loss allowance to non-accrual loans 258.09 232.98
Loan loss allowance to total loans 1.03 0.93
</TABLE>
Nonperforming assets increased by $96,000 from $658,000 at December 31, 1995 to
$754,000 at September 30, 1996, a increase of 14.6%. A $86,000 increase in
non-accrual commercial business loans accounted for the majority of the
increase. Although the amount of non-accrual loans increased, management
believes that losses will be minimal on the remaining balances, due to the
collateral position in each situation.
Results of Operation
Net interest income, for the three months ended September 30, 1996 was $2.79
million, an increase of 8.1% from the $2.58 million reported for the same
period in 1995. The increase in loans receivable and the stabilization of
rates paid on deposit products were the major contributing factors to the
increase in net interest income. Net interest income for the nine months ended
September 30, 1996 was $8.13 million, an increase of 4.8% from the $7.75
million reported for the same period in 1995. The continued asset shift from
investments to higher yielding loans and stable net interest margins were the
primary reasons for the improvement in the year-to-date net interest income as
well.
10
<PAGE> 11
The following table sets forth the weighted average yield earned on the
Corporation's consolidated loan and investment portfolios, the weighted average
interest paid on deposits and borrowings, the net spread between yields earned
and rates paid and the net interest margin during the nine and three months
ended September 30, 1996 and 1995.
<TABLE>
<CAPTION>
During the During the
Three Months Ended Nine Months
September 30, Ended September 30,
1996 1995 1996 1995
---------------------------------------------
<S> <C> <C> <C> <C>
Weighted average yield on
interest-earning assets 7.95% 7.83% 7.87% 7.80%
Weighted average rate paid on
interest-bearing liabilities 3.56 3.69 3.53 3.46
---------------------------------------------
Net interest spread 4.39% 4.14% 4.34% 4.34%
=============================================
Net interest margin (net interest
income divided by average
earning assets) 4.64% 4.53% 4.46% 4.46%
=============================================
</TABLE>
The provision for loan losses for the three month period ended September 30,
1996 was $388,000 compared to $6,000 for the three months ended September 30,
1995. For the nine months ended September 30, 1996, the provision for loan
losses was $460,000 compared to $126,000 for than the same period in 1995. The
change is primarily due to increases in the loan portfolio and not to any
anticipated loan losses. In fact, the Corporation's ratio of nonperforming
loans to total loans is well below its peer group average. The Corporation
uses a risk-based assessment of its loan portfolio to determine the level of
the loan loss allowance. This procedure is based on internal reviews intended
to determine the adequacy of the loan loss allowance in view of presently known
factors. However, changes in economic conditions and the future financial
conditions of borrowers cannot be predicted and may result in increased future
provisions to the loan loss allowance.
Service charges on deposits and other income for the three months ended
September 30, 1996 was $405,000 compared to $321,000 for the three months ended
September 30, 1995, an increase of $84,000, or 26.2%. Service charges on
deposits and other income for the nine months ended September 30, 1996 was
$1.14 million compared to $956,000 for the nine months ended September 30,
1995, an increase of $184,000, or 19.2%. The increases are due to fees
collected on loans, income from new products and services and a continued
evaluation of fees charged on our depository accounts.
Non-interest expense for the three months ended September 30, 1996 was $2.99
million compared to $2.20 million for the three months ended September 30,
1995, an increase of $787,000, or 35.7%. Non-interest expense for the nine
months ended September 30, 1996 was $7.76 million compared to $6.76 million for
the nine months ended September 30, 1995, an increase of $1.0 million, or
14.9%. The congressionally mandated one-time assessment to recapitalize the
Savings Association Insurance Fund accounted for $604,000 of this increase.
The other operating expense increases consisted primarily of premises and
equipment costs related to the opening of two new branch locations of Lincoln
State Bank.
11
<PAGE> 12
Net income (losses) before taxes for the three month period ended September 30,
1996 was ($181,000) compared to $689,000 for the three months ended September
30, 1995, a decrease of $870,000. Income before taxes for the nine month
period ended September 30, 1996 was $1.04 million compared to $1.82 million for
the nine months ended September 30, 1995, a decrease of $783,000. On an after
tax basis, the Corporation reported a loss of $119,000 for the three month
period ended September 30, 1996 compared to income of $449,000 for the same
period in 1995; and for the nine month period ended September 30, 1996, the
Corporation reported net income of $679,000 compared to $1.19 million for the
same period in 1995.
Liquidity and Capital Resources
Liquidity management involves the ability to meet the cash flow requirements of
customers who may be either depositors wanting to withdraw funds or borrowers
needing assurance that sufficient funds will be available to meet their credit
needs. The Corporation had liquid assets of $17.0 million and $28.4 million at
September 30, 1996 and December 31, 1995, respectively.
Management believes liquidity and capital levels are adequate at September 30,
1996. For a discussion of regulatory requirements, see Note D to the Unaudited
Condensed Consolidated Financial Statements.
Asset/Liability Management
Financial institutions are subject to interest rate risk to the extent their
interest-bearing liabilities (primarily deposits) mature or reprice at
different times and on a different basis than their interest-earning assets
(consisting primarily of loans and securities). Interest rate sensitivity
management seeks to match maturities on assets and liabilities and avoid
fluctuating net interest margins while enhancing net interest income during
periods of changing interest rates. The difference between the amount of
interest-earning assets maturing or repricing within a specific time period and
the amount of interest-bearing liabilities maturing or repricing within the
same time period is referred to as an interest rate gap. A gap is considered
positive when the amount of interest rate sensitive assets exceeds the amount
of interest rate sensitive liabilities. A gap is considered negative when the
amount of interest rate sensitive liabilities exceeds the amount of interest
rate sensitive assets. During periods of rising interest rates, a negative gap
tends to adversely affect net interest income while a positive gap tends to
result in an increase in net interest income. During a period of falling
interest rates, a negative gap tends to result in an increase in net interest
income while a positive gap tends to adversely affect net interest income.
Assumptions regarding prepayment and withdrawal rates are based upon the
Corporation's historical experience, and management believes such assumptions
are reasonable.
12
<PAGE> 13
The following table shows the interest rate sensitivity gap for four different
time intervals as of September 30, 1996.
<TABLE>
<CAPTION>
AMOUNTS MATURING OR REPRICING
--------------------------------------------------------------
WITHIN SIX TO TWELVE ONE TO FIVE OVER
SIX MONTHS MONTHS YEARS FIVE YEARS TOTAL
--------------------------------------------------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Interest-earning assets:
Fixed-rate mortgage loans $18,608 $11,921 $52,969 $6,704 $90,202
Adjustable-rate mortgage loans 16,850 9,031 15,680 0 41,561
--------------------------------------------------------------
Total mortgage loans 35,458 20,952 68,649 6,704 131,763
Commercial business loans 29,843 2,947 12,690 29 45,509
Consumer loans 5,682 1,301 4,264 11 11,258
Tax-exempt loans 750 0 0 0 750
Mortgage-related securities 14,336 9,888 9,210 2,035 35,469
Fixed rate investment securities and other 4,174 3,176 5,845 0 13,195
Variable rate investment securities and other 8,483 1,118 0 0 9,601
--------------------------------------------------------------
Total interest-earning assets $98,726 $39,382 $100,658 $8,779 $247,545
==============================================================
Interest-bearing liabilities:
Deposits
Time deposits $68,005 $31,790 $13,185 $4 $112,984
NOW accounts 1,403 1,403 14,028 6,547 23,381
Savings accounts 3,757 3,757 37,567 17,531 62,612
Money market accounts 397 397 3,972 1,854 6,620
--------------------------------------------------------------
Total deposits 73,562 37,347 68,752 25,936 205,597
Borrowings 3,800 0 0 0 3,800
--------------------------------------------------------------
Total interest-bearing liabilities $77,362 $37,347 $68,752 $25,936 $209,397
==============================================================
Interest-earning assets less interest-bearing
liabilities $21,364 $2,035 $31,906 ($17,157) $38,148
--------------------------------------------------------------
Cumulative interest rate sensitivity gap $21,364 $23,399 $55,305 $38,148
---------------------------------------------------
Cumulative interest rate sensitivity gap as a
percentage of total assets 7.89% 8.64% 20.43% 14.09%
===================================================
</TABLE>
At September 30, 1996, the Corporation's cumulative ratio of interest-rate
sensitive assets to interest-rate sensitive liabilities was 7.89% for six
months and 8.64% for one year maturities. Therefore, the Corporation is
positively gapped and may benefit from rising interest rates.
Certain shortcomings are inherent in the method of analysis presented in the
schedule above. For example, although certain assets and liabilities may have
similar maturities or periods of repricing, they may react in different degrees
to changes in market interest rates. Also, the interest rates on certain types
of assets and liabilities may fluctuate in advance of changes in market
interest rates, while interest rates on other types may lag behind changes in
market rates. Additionally, certain assets, such as adjustable rate mortgage
loans, have features that restrict changes in interest rates, on a short term
basis over the life of the asset. Further, in the event of a change in
interest rates, prepayment and early withdrawal levels would likely deviate
significantly from those assumed in calculating the schedule. Finally, the
ability of many borrowers to service their debt may decrease in the event of an
interest rate decrease.
13
<PAGE> 14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
As of September 30, 1996 there were no material pending
legal proceedings, other than ordinary routine
litigation incidental to the business of the
Corporation, to which the Corporation or any of its
subsidiaries was a party or to which any of their
property was subject.
Item 2. Changes in Securities - NONE
Item 3. Defaults upon Senior Securities - NONE
Item 4. Submission of Matters to Vote of Security Holders - NONE
Item 5. Other Information - NONE
Item 6. Exhibits and Reports on Form 8-K
The Corporation did not file any reports on Form 8-K during the three months
ended September 30, 1996. Required exhibits are incorporated by reference to
previously filed Securities Act registration statements.
14
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed by on its behalf by the
undersigned thereunto duly authorized.
MERCHANTS AND MANUFACTURERS
BANCORPORATION, INC.
------------------------------
(Registrant)
Date November 7, 1996
------------------- ----------------------------------
Michael J. Murry
Chief Executive Officer & Chairman
of the Board of Directors
Date November 7, 1996
-------------------- ----------------------------------
James C. Mroczkowski
Vice President & Chief Financial
Officer
Principal Financial Officer
15
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 12,755
<INT-BEARING-DEPOSITS> 1,458
<FED-FUNDS-SOLD> 2,787
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 52,902
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 189,280
<ALLOWANCE> 1,947
<TOTAL-ASSETS> 270,756
<DEPOSITS> 237,086
<SHORT-TERM> 3,800
<LIABILITIES-OTHER> 3,932
<LONG-TERM> 0
0
0
<COMMON> 898
<OTHER-SE> 25,938
<TOTAL-LIABILITIES-AND-EQUITY> 270,756
<INTEREST-LOAN> 11,140
<INTEREST-INVEST> 2,899
<INTEREST-OTHER> 292
<INTEREST-TOTAL> 14,331
<INTEREST-DEPOSIT> 6,045
<INTEREST-EXPENSE> 6,206
<INTEREST-INCOME-NET> 8,125
<LOAN-LOSSES> 460
<SECURITIES-GAINS> 18
<EXPENSE-OTHER> 7,764<F1>
<INCOME-PRETAX> 1,040
<INCOME-PRE-EXTRAORDINARY> 1,040
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 679
<EPS-PRIMARY> .77
<EPS-DILUTED> .77
<YIELD-ACTUAL> 7.87
<LOANS-NON> 754
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,533
<CHARGE-OFFS> 75
<RECOVERIES> 29
<ALLOWANCE-CLOSE> 1,947
<ALLOWANCE-DOMESTIC> 1,947
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
<FN>
<F1>OTHER EXPENSES INCLUDE 604,000 ONE TIME SAIF ASSESSMENT
</FN>
</TABLE>
