<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 March 31, 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 0-21292
--------
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)
14100 West National Avenue, PO Box 511160
New Berlin, Wisconsin 53151-1160
- -------------------------------------------------------------------------------
(Address of principal executive office)
(414) 827-6713
- -------------------------------------------------------------------------------
Registrant's telephone number, including area code:
573 West Lincoln Avenue
Milwaukee, Wisconsin 53207
- -------------------------------------------------------------------------------
(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 859,576 Shares
- --------------------------------------- --------------------------
Class Outstanding at May 1, 1997
<PAGE> 2
MERCHANTS AND MANUFACTURERS BANCORPORATION, INC.
FORM 10-Q
INDEX
PAGE NUMBER
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Statements of Financial Condition
as of March 31, 1997 and December 31, 1996 3
Condensed Consolidated Statements of Income for the Three
Months ended March 31, 1997 and 1996 4
Condensed Consolidated Statements of Cash Flows for the
Three Months ended March 31, 1997 and 1996 5
Notes to 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 - UNAUDITED
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996
-------- -----------
(In Thousands)
<S> <C> <C>
ASSETS
Cash and due from banks $ 11,011 $ 9,247
Interest-bearing deposits at other banks 15,559 9,667
Federal funds sold 4,940 3,358
-------- --------
Cash and cash equivalents 31,510 22,272
Securities available-for-sale (at fair value):
Investment securities 14,965 15,499
Mortgage-related securities 18,902 27,154
Loans receivable, net 194,704 189,791
Accrued interest receivable 1,546 1,470
Federal Home Loan Bank stock, at cost 1,118 1,118
Premises and equipment, net 8,340 7,800
Other assets 2,045 2,619
-------- --------
Total assets $273,130 $267,723
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $240,487 $232,933
Accrued interest payable 385 395
Short-term borrowings 4,900 6,850
Advance payments by borrowers for taxes and insurance 472 67
Other liabilities 544 1,098
-------- --------
Total liabilities 246,788 241,343
Stockholders' equity
Common stock, par value $1.00 per share: authorized--
1,500,000 shares; issued--897,812 898 898
Additional paid in capital 10,759 10,759
Unrealized loss on securities available-for-sale (305) (203)
Retained earnings, substantially restricted 16,001 15,868
Less treasury stock, at cost--35,145 shares and 32,845
shares, respectively (1,011) (942)
-------- --------
Total stockholders' equity 26,342 26,380
-------- --------
Total liabilities and stockholders' equity $273,130 $267,723
======== ========
</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 THREE MONTHS
ENDED ENDED
MARCH 31, MARCH 31,
1997 1996
------------ ------------
<S> <C> <C>
Interest income:
Loans, including fees $4,141 $3,547
Investment securities:
Taxable 322 223
Exempt from federal income taxes 0 43
Mortgage-related securities 380 686
Other 103 175
------ ------
Total interest income 4,946 4,674
Interest expense:
Deposits 2,057 1,977
Borrowings 111 47
------ ------
Total interest expense 2,168 2,024
Net interest income 2,778 2,650
Provision for loan losses 48 36
------ ------
Net interest income after provision for
loan losses 2,730 2,614
Non-interest income:
Service charges on deposit accounts 166 182
Service charges on loans 15 64
Net gain (loss) on securities sales 43 (2)
Other 172 124
------ ------
396 368
Non-interest expenses:
Salaries and employee benefits 1,620 1,423
Premises and equipment 332 365
Data processing fees 150 136
Federal deposit insurance premiums 18 54
Other 505 614
------ ------
2,625 2,592
Income before income taxes 501 390
Income taxes 196 133
------ ------
Net income $ 305 $ 257
====== ======
Primary earnings per share $ 0.35 $ 0.29
====== ======
Dividends per share $ 0.20 $ 0.17
====== ======
</TABLE>
See notes to unaudited consolidated financial statements.
<PAGE> 5
MERCHANTS AND MANUFACTURERS BANCORPORATION, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
1997 1996
----------- -------------
(In Thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 305 $ 257
Adjustments to reconcile net income to cash provided by operating activities
Provision for loan losses 48 36
Provision for depreciation 119 117
Net amortization of investments securities premiums and discounts 43 79
Net realized investment security losses (gains) (43) 2
Increase in accrued interest receivable (76) (118)
Decrease in accrued interest payable (10) (34)
Other 78 4
-------- --------
Net cash provided by operating activities 464 343
INVESTING ACTIVITIES
Purchases of securities available for sale (486) (5,026)
Proceeds from redemptions and maturities of securities available for sale 1,310 3,263
Proceeds from sales of securities available for sale 7,803 335
Net decrease (increase) in loans (4,962) 461
Purchase of premises and equipment (659) (295)
Redemption of Federal Home Loan Bank stock 0 56
-------- --------
Net cash provided or (used) in investing activities 3,006 (1,206)
FINANCING ACTIVITIES
Net increase (decrease) in deposits 7,554 (6,384)
Payments of cash dividends to stockholders (172) (150)
Net decrease in borrowings (1,950) 0
Purchase of treasury stock (134) (332)
Proceeds from sale of treasury stock 65 0
Increase in advance payments by borrowers for taxes and insurance 405 269
-------- --------
Net cash provided or (used) in financing activities 5,768 (6,597)
Increase (decrease) in cash and cash equivalents 9,238 (7,460)
Cash and cash equivalents at beginning of period 22,272 28,447
-------- --------
Cash and cash equivalents at end of period $ 31,510 $ 20,987
======== ========
Supplemental cash flow information:
Interest paid $ 2,171 $ 2,058
Income taxes paid 185 154
Loans transferred to other real estate owned 0 100
</TABLE>
See notes to unaudited consolidated financial statements
5
<PAGE> 6
MERCHANTS AND MANUFACTURERS BANCORPORATION, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 1997
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 ("collectively the Banks"), Lincoln Community Bank, S.A. ("Lincoln
Community") formerly known as Lincoln Savings Bank, Achieve Mortgage
Corporation and M&M Services, Inc. Lincoln State Bank also includes the
accounts of its wholly owned subsidiary, M&M Lincoln Investment Corporation.
Lincoln Community Bank also includes the accounts of its wholly owned
subsidiary, Lincoln Investment Management Corporation. All significant
intercompany balances and transactions have been eliminated.
On January 1, 1997, Lincoln Savings Bank converted from a Wisconsin stock
savings bank to a Wisconsin commercial bank. Upon conversion Lincoln Savings
Bank changed its name to Lincoln Community Bank.
On January 1, 1997, Achieve Mortgage Corporation was formed to act as the
Corporation's mortgage broker.
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 three-month
period ended March 31, 1997 are not necessarily indicative of the results that
may be expected for the year ended December 31, 1997. 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, 1996.
6
<PAGE> 7
NOTE B -- EARNINGS PER SHARE INFORMATION
Primary earnings per share for the three months ended March 31, 1997, and 1996
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,
March 31,
1997 1996
- ------------------------------------------------------------------------
<S> <C> <C>
Net income $ 305,098 $ 256,705
Weighted average
shares outstanding 862,653 885,748
- ------------------------------------------------------------------------
Primary earnings per share $ 0.35 $ 0.29
=======================
</TABLE>
Statement of Financial Accounting Standard No. 128, Earnings Per Share, was
issued in February 1997 and will be effective for interim and annual periods
ending after December 15, 1997. Statement 128 replaces the presentation of
primary earnings per share ("EPS") with a presentation of basic EPS. Basic EPS
excludes dilution and is computed by dividing income available to common
stockholders by the weighted average number of common shares outstanding for
the period. Basic EPS will typically be higher than primary EPS. Statement
No. 128 also requires presentation of diluted EPS which is computed similarly
to fully diluted EPS under existing accounting rules.
<TABLE>
<CAPTION>
Three Months Ended,
March 31,
1997 1996
- ------------------------------------------------------------------------
<S> <C> <C>
Basic earnings per share $ 0.35 $ 0.29
Diluted earnings per share $ 0.35 $ 0.29
</TABLE>
NOTE C -- LOANS RECEIVABLE
Loans are comprised of the following categories:
<TABLE>
<CAPTION>
March 31
1997 1996
------------------------
(In Thousands)
<S> <C> <C>
Commercial business loans $ 48,033 $ 36,871
Commercial real estate 60,488 41,688
Real estate mortgages 76,557 75,615
Installments 10,623 9,384
Other 1,059 1,089
------------------------
Total loans 196,760 164,647
Unearned income (74) (93)
------------------------
Loans, net of unearned income $ 196,686 $ 164,554
========================
</TABLE>
7
<PAGE> 8
The following table presents changes in the allowance for credit losses:
<TABLE>
<CAPTION>
March 31
1997 1996 1995
-----------------------------
(In Thousands)
<S> <C> <C> <C>
Balance at January 1 $ 1,939 $ 1,533 $ 1,464
Provisions 48 36 60
Charge-offs (5) (68) (28)
-----------------------------
Balance at March 31 $ 1,982 $ 1,501 $ 1,496
=============================
</TABLE>
NOTE D -- STOCKHOLDERS' EQUITY
Under federal law and regulations, the Corporation is required to meet certain
capital requirements. The Banks and Lincoln Community 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.
As of March 31, 1997, the most recent notification from Federal Deposit
Insurance Corporation categorized the Banks as well capitalized under the
regulatory framework for prompt corrective action. To be categorized as well
capitalized, the Banks must maintain minimum total risk-based, Tier I
risk-based, Tier I leverage ratios as set forth in the table. There are no
conditions or events since that notification that management believes have
changed the institutions' category.
<TABLE>
<CAPTION>
To Be Well Capitalized
For Capital Under Prompt Corrective
Actual Adequacy Purposes Action Provisions
------------------ -------------------- -----------------------
Amount Ratio Amount Ratio Amount Ratio
------------------ -------------------- -----------------------
<S> <C> <C> <C> <C> <C> <C>
AS OF MARCH 31, 1997
Total Capital (to Risk-
Weighted Assets):
Lincoln State Bank $11,815 11.41% $8,287 >8.00% $10,358 >10.00%
Franklin State Bank 2,747 10.35% 2,123 >8.00% 2,653 >10.00%
Lincoln Community 11,077 16.87% 5,252 >8.00% 6,566 >10.00%
Tier 1 Capital (to Risk-
Weighted Assets):
Lincoln State Bank 10,774 10.40% 4,143 >4.00% 6,215 >6.00%
Franklin State Bank 2,453 9.25% 1,061 >4.00% 1,592 >6.00%
Lincoln Community 10,431 15.89% 2,626 >4.00% 3,939 >6.00%
Tier 1 Capital (to Average
Assets):
Lincoln State Bank 10,774 8.33% 5,175 >4.00% 6,469 >5.00%
Franklin State Bank 2,453 7.47% 1,313 >4.00% 1,641 >5.00%
Lincoln Community 10,431 10.11% 4,129 >4.00% 5,161 >5.00%
</TABLE>
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Financial Condition
At March 31, 1997, the Corporation's consolidated total assets were $273.1
million as compared to $267.7 million at December 31, 1996. This increase was
due to a $7.6 million gain in total deposits, from $232.9 million at December
31, 1996 to $240.5 million at March 31, 1997.
Investment securities available-for-sale decreased $534,000, or 3.4%, from
$15.5 million at December 31, 1996 to $15.0 million at March 31, 1997.
Maturing investment securities in this category caused the reduction.
Mortgage-related securities available-for-sale decreased $8.3 million, or 30.4%
from $27.2 million at December 31, 1996, to $18.9 million at March 31, 1997.
The proceeds from sales, maturities and repayments are being used to fund new
loans rather than purchase additional mortgage-related securities.
Loans receivable increased $4.9 million, or 2.6%, from $189.8 million at
December 31, 1996 compared to $194.7 million at March 31, 1997. 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 March 31, 1997 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 March 31, 1997 was $26.3 million compared to $26.4
million at December 31, 1996, a decrease of $38,000. The change in
stockholders' equity consists of net income of $305,000, less payments of
dividends to shareholders of $172,000, less the net purchase of treasury stock
of $69,000 and the $102,000 decrease in the market value of securities
categorized as available for sale. The Banks 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>
March 31, December 31,
1997 1996
--------- ------------
(In Thousands, Except Percentages)
<S> <C> <C>
Non-accrual loans:
Mortgage loans
One-to-four family $ 471 $ 616
Commercial real estate 82 94
------ -------
Total mortgage loans 553 710
Commercial business 148 176
Consumer and other 56 52
------ -------
Total non-accrual loans
757 938
Other real estate owned 0 0
------ -------
Total nonperforming assets $ 757 $ 938
====== =======
RATIOS:
Non-accrual loans to total loans 0.3 9% 0.49%
Nonperforming assets to total assets 0.28 0.35
Loan loss allowance to non-accrual loans 261.82 206.72
Loan loss allowance to total loans 1.01 1.01
</TABLE>
Nonperforming assets decreased by $181,000 from $938,000 at December 31, 1996
to $757,000 at March 31, 1997, a decrease of 19.3%. Payments collected on
nonperforming loans caused the decrease. Management believes that losses will
be minimal on the remaining balances, due to the collateral position in each
situation.
Results of Operations
Net interest income for the three months ended March 31, 1997 was $2.78
million, an increase of 4.8% from the $2.65 million reported for the same
period in 1996. Even though the weighted average rate paid on deposits and
borrowings increased from 3.54% at March 31, 1996 to 3.65% at March 31, 1997,
the volume of new loans receivable was able to offset the increase in the
average cost of funds.
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 yield earned
and rates paid and the net interest margin during the three months ended March
31, 1997 and 1996.
During the
Three Months Ended
March 31,
1997 1996
------------------
Weighted average yield on
Interest-earning assets 8.00% 7.86%
Weighted average rate paid on
Deposit and borrowings 3.65 3.54
------------------
Net interest spread 4.35% 4.32%
==================
Net interest margin (net interest
Income divided by average
Earning assets) 4.54% 4.46%
==================
The provision for loan losses for the three month period ended March 31, 1997
was $48,000 compared to $36,000 for the three months ended March 31, 1996, a
increase of $12,000, or 33.3%. The higher provision is primarily due to
increases in the loan portfolio and not 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 in the future financial conditions of borrowers cannot be predicted
and may result in increased future provisions to the loan loss allowance.
Service charges and other income for the three months ended March 31, 1997 was
$353,000 compared to $370,000 for the three months ended March 31, 1996, a
decrease of $17,000, or 4.6%. The decrease is due to a reduction in the
service charges collected on loans. Service charges collected from loans were
$15,000 for the three months end March 31, 1997 compared to $64,000 for the
same in 1996. The difference can be attributed to higher than normal loan fees
collected in 1996.
Non-interest expense for the three months ended March 31, 1997 was $2.63
million compared to $2.59 million for the three months ended March 31, 1996, an
increase of $33,000, or 1.3%. Salaries and employee benefits increased
$197,000 or 13.8% from $1.42 million for the three-month period ended March 31,
1996 compared to $1.62 million for the three-month period 1997. Employee bonus
payments, higher benefit costs and changes in personnel accounted for the
change. The increase in salaries and employee benefits was offset by
reductions in premises and equipment expense, FDIC insurance premiums and other
operating expenses. Premises and equipment expense decreased $33,000 or 9.0%
from $365,000 for the three month period ended March 31, 1996 compared to
$332,000 for the three month period ended March 31, 1997. Start-up costs
associated with the opening of two Lincoln State Bank branches caused the
higher expenses in 1996. The decrease in FDIC insurance premiums can be
attributed to the reduction in fees being charged to Lincoln Community Bank.
The recapitalization of the Savings Association Insurance Fund in 1996 reduced
the fees charged to Lincoln Community Bank. Other expenses decreased $109,000
in the first quarter. This can be attributed to the control of operating
expenses such as office supplies, legal fees, accounting fees and check losses.
11
<PAGE> 12
Income before taxes for the three month period ended March 31, 1997 was
$501,000 compared to $390,000 for the three months ended March 31, 1996, an
increase of $111,000 or 28.5%. On an after tax basis, the Corporation reported
net income of $305,000 for the three month period ended March 31, 1997 compared
to $257,000 for the same period in 1996.
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 $31.5 million and $22.3 million at
March 31, 1997 and December 31, 1996, respectively.
Management believes liquidity and capital levels are adequate at March 31,
1997. 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 March 31, 1997.
<TABLE>
<CAPTION>
AMOUNTS MATURING OR REPRICING AS OF MARCH 31, 1997
------------------------------------------------------------------
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 $ 14,835 $ 18,602 $ 54,024 $ 7,053 $ 94,514
Adjustable-rate mortgage loans 18,395 7,352 15,653 0 41,400
-----------------------------------------------------------------
Total mortgage loans 33,230 25,954 69,677 7,053 135,914
Commercial business loans 30,177 2,753 14,440 663 48,033
Consumer loans 6,427 1,237 4,341 59 12,064
Tax-exempt loans 0 675 0 0 675
Mortgage-related securities 7,778 6,675 4,439 0 18,902
Fixed rate investment securities and other 3,267 3,343 4,302 0 10,912
Variable rate investment securities and other 24,552 1,118 0 0 25,670
-----------------------------------------------------------------
Total interest-earning assets $105,441 $ 41,755 $ 97,199 $ 7,775 $252,170
=================================================================
Interest-bearing liabilities:
Deposits
Time deposits $ 74,993 $ 32,194 $ 12,761 $ 4 $119,952
NOW accounts 1,324 1,324 13,242 6,180 22,070
Savings accounts 4,070 3,597 35,974 16,788 60,429
Money market accounts 417 417 4,174 1,948 6,956
-----------------------------------------------------------------
Total deposits 80,804 37,532 66,151 24,920 209,407
Borrowings 4,900 0 0 0 4,900
-----------------------------------------------------------------
Total interest-bearing liabilities $ 85,704 $ 37,532 $ 66,151 $ 24,920 $214,307
=================================================================
Interest-earning assets less interest-bearing
liabilities $ 19,737 $ 4,223 $ 31,048 ($17,145) $ 37,863
=================================================================
Cumulative interest rate sensitivity gap $ 19,737 $ 23,960 $ 55,008 $ 37,863
==================================================
Cumulative interest rate sensitivity gap
as a percentage of total assets 7.23% 8.77% 20.14% 13.86%
==================================================
</TABLE>
At March 31, 1997, the Corporation's ratio of cumulative interest rate
sensitivity gap as a percentage of total assets was 7.23% for six months and
8.77% 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
above table. 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 increase.
13
<PAGE> 14
Part II. Other Information
Item 1. Legal Proceedings
As of March 31, 1997 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 - On January 1, 1997, Lincoln Savings Bank
converted from a Wisconsin stock savings bank to a Wisconsin
commercial bank. Upon conversion Lincoln Savings Bank changed
its name to Lincoln Community Bank.
On January 1, 1997, Achieve Mortgage Corporation was formed to act
as the Corporation's mortgage broker.
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 March 31, 1997. 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 on its behalf by the
undersigned thereunto duly authorized.
MERCHANTS AND MANUFACTURERS
BANCORPORATION, INC.
---------------------------
(Registrant)
Date May 12, 1997 -------------------------------------
--------------------- Michael J. Murry
Chief Executive Officer & Chairman
of the Board of Directors
Date May 12, 1997 -------------------------------------
--------------------- James C. Mroczkowski
Vice President & Chief Financial
Officer Principal Financial Officer
15
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 11,011
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0
0
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</TABLE>
