<PAGE> 1
FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[ 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 0-22008
-----------
MISSISSIPPI VALLEY BANCSHARES, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
MISSOURI 43-1336298
- --------------------------------------------------- -------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
700 Corporate Park Drive, St. Louis, Missouri 63105
- --------------------------------------------------- -------------------------
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (314) 268-2580
------------------------
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 .
----- -----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of April 16, 1997:
Common Stock, $1.00 par value 4,755,356
- ----------------------------- ------------------------
Class Number of Shares
<PAGE> 2
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING
SECURITIES THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
<TABLE>
MISSISSIPPI VALLEY BANCSHARES, INC.
-----------------------------------
INDEX
-----
<CAPTION>
Page No.
--------
<S> <C>
PART I. FINANCIAL INFORMATION
---------------------
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets --
March 31, 1997 and December 31, 1996 3
Condensed Consolidated Statements of
Income -- Quarters Ended March 31, 1997
and March 31, 1996 4
Consolidated Statements of Changes in
Shareholders' Equity -- Three Months
Ended March 31, 1997 and March 31, 1996 5
Condensed Consolidated Statements of
Cash Flows -- Three Months Ended
March 31, 1997 and March 31, 1996 6
Notes to Condensed Consolidated
Financial Statements 7
ITEM 2. Management's Discussion and Analysis
of Results of Operations and
Financial Condition 8-14
PART II. OTHER INFORMATION
-----------------
ITEM 6. Exhibits and Reports on Form 8-K 15
SIGNATURE 16
- ---------
EXHIBIT INDEX 17
- -------------
</TABLE>
2
<PAGE> 3
<TABLE>
I. FINANCIAL INFORMATION
- ------------------------
ITEM 1. FINANCIAL STATEMENTS
- ------------- --------------------
MISSISSIPPI VALLEY BANCSHARES, INC.
-----------------------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
<CAPTION>
March 31, December 31,
1997 1996
(Derived from
(Unaudited) Audited Statements)
----------- -------------------
(dollars in thousands)
<S> <C> <C>
Assets
- ------
Cash and due from banks $ 33,068 $ 30,951
Federal funds sold
Held to maturity securities
(fair value of $55,160 and
$59,649, respectively) 54,327 58,198
Available for sale securities 215,241 229,453
Trading account securities 303 20
Loans, net of
unearned income 766,362 731,019
Allowance for possible loan losses 12,992 12,624
---------- ----------
Net loans 753,370 718,395
Premises and equipment 11,931 11,700
Other assets 21,021 17,060
---------- ----------
TOTAL ASSETS $1,089,261 $1,065,777
========== ==========
Liabilities
- -----------
Deposits:
Non-interest bearing $ 86,509 $ 98,726
Interest bearing 818,712 819,286
---------- ----------
Total deposits 905,221 918,012
Securities sold under agreements
to repurchase 40,827 41,591
Other short-term borrowings 40,259 21,023
8% Convertible debentures, due 4-1-97 2,700 2,700
Guaranteed preferred beneficial interests
in subordinated debentures 14,950
Other liabilities 8,366 6,502
---------- ----------
TOTAL LIABILITIES 1,012,323 989,828
---------- ----------
Shareholders' Equity
- --------------------
Common stock-par value $1
Authorized 15,000,000 shares,
issued 4,517,756 in 1997
and 4,516,956 in 1996 4,518 4,517
Capital surplus 19,763 19,752
Retained earnings 53,869 51,159
Unrealized gain (loss) on available
for sale securities (1,212) 521
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 76,938 75,949
---------- ----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $1,089,261 $1,065,777
========== ==========
See accompanying notes.
</TABLE>
3
<PAGE> 4
<TABLE>
MISSISSIPPI VALLEY BANCSHARES, INC.
-----------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
-------------------------------------------
(Unaudited)
<CAPTION>
Three Months Ended
March 31,
--------------------------------
1997 1996
-------- --------
(dollars in thousands, except per share data)
<S> <C> <C>
Interest income:
Interest and fees on loans $15,920 $14,153
Held to maturity securities:
Taxable 844 1,076
Tax-exempt 141 141
Available for sale securities 3,426 3,598
Other 169 97
------- -------
TOTAL INTEREST INCOME 20,500 19,065
------- -------
Interest expense:
Deposits 9,813 9,192
Short-term borrowings 798 406
Long-term borrowings 140 54
------- -------
TOTAL INTEREST EXPENSE 10,751 9,652
------- -------
NET INTEREST INCOME 9,749 9,413
Provision for possible loan losses 900 1,100
------- -------
NET INTEREST INCOME AFTER
PROVISION FOR POSSIBLE LOAN LOSSES 8,849 8,313
------- -------
Other income:
Service charges 441 364
Security gains/(losses), net on:
Sales of held to maturity securities (3)
Sales of available for sale securities 108 312
Trading profits and commissions 206 358
Other 509 302
------- -------
1,264 1,333
------- -------
Other expenses:
Employee compensation and
other benefits 2,427 2,228
Net occupancy 288 301
Equipment 294 290
Advertising 167 152
FDIC insurance expense 28 1
Other 1,678 1,476
------- -------
4,882 4,448
------- -------
INCOME BEFORE INCOME TAXES 5,231 5,198
Income taxes 1,888 1,935
------- -------
NET INCOME $ 3,343 $ 3,263
======= =======
Earnings per common share:
Primary $ .73 $ .71
Fully diluted $ .70 $ .68
See accompanying notes.
</TABLE>
4
<PAGE> 5
<TABLE>
MISSISSIPPI VALLEY BANCSHARES, INC.
-----------------------------------
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
----------------------------------------------------------
(Unaudited)
<CAPTION>
Unrealized Total
Preferred Stock Common Stock Gain, (Loss) Share-
------------------ ----------------- Capital Retained On Available for holders'
Shares Amount Shares Amount Surplus Earnings Sale Securities Equity
------ ------ ------ ------ ------- -------- ---------------- --------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1996 25,000 $2,500 4,508,006 $4,508 $19,802 $39,415 $ 3,882 $70,107
Net income 3,263 3,263
Issuance of common
stock 2,900 3 23 26
Cash dividends on:
common stock (496) (496)
preferred stock (58) (58)
Unrealized gain, (loss) net
of tax, on available
for sale securities (3,191) (3,191)
------ ------ --------- ------ ------- ------- ------- -------
Balance at March 31, 1996 25,000 $2,500 4,510,906 $4,511 $19,825 $42,124 $ 691 $69,651
====== ====== ========= ====== ======= ======= ======= =======
Balance at January 1, 1997 4,516,956 $4,517 $19,752 $51,159 $ 521 $75,949
Net income 3,343 3,343
Issuance of common
stock 800 1 11 12
Cash dividends on
common stock (633) (633)
Unrealized gain, (loss) net
of tax, on available
for sale securities (1,733) (1,733)
--------- ------ ------- ------- ------- -------
Balance at March 31, 1997 4,517,756 $4,518 $19,763 $53,869 $(1,212) $76,938
========= ====== ======= ======= ======= =======
See accompanying notes.
</TABLE>
5
<PAGE> 6
<TABLE>
MISSISSIPPI VALLEY BANCSHARES, INC.
-----------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------
(Unaudited)
<CAPTION>
Three Months Ended
March 31,
--------------------------------
1997 1996
-------- --------
(dollars in thousands)
<S> <C> <C>
Operating activities
- --------------------
Net income $ 3,343 $ 3,263
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for possible loan losses 900 1,100
Provision for depreciation and amortization 329 232
Accretion of discounts and amortization of
premiums on securities (335) 25
Realized securities gains, net (108) (309)
Net decrease (increase) in trading account securities (283) 85
Decrease (increase) in interest receivable (620) 735
Increase (decrease) in interest payable 321 (130)
Other, net (776) 449
-------- --------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 2,771 5,450
-------- --------
Investing activities
- --------------------
Proceeds from sales and paydowns of
held to maturity securities 2,011
Proceeds from maturities of
held to maturity securities 6,000
Purchases of held to maturity securities (2,033)
Purchases of available for sale securities (53,901)
Proceeds from sales and paydowns of
available for sale securities 1,704 53,141
Proceeds from maturities of available for
sale securities 64,000
Purchases of premises and equipment (559) (859)
Increase in loans outstanding, net (35,875) (25,178)
-------- --------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES (20,664) 29,115
-------- --------
Financing activities
- --------------------
Net decrease in deposits (12,791) (31,607)
Net increase in repurchase agreements and other
short-term borrowings 18,472 2,826
Proceeds from sale of common stock 12 26
Proceeds from sale of subordinated debentures 14,950
Cash dividends (633) (554)
-------- --------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 20,010 (29,309)
-------- --------
INCREASE IN CASH
AND CASH EQUIVALENTS 2,117 5,256
Cash and cash equivalents at beginning of period 30,951 27,574
-------- --------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 33,068 $ 32,830
======== ========
See accompanying notes.
</TABLE>
6
<PAGE> 7
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
1. The condensed consolidated financial statements include the accounts of
Mississippi Valley Bancshares, Inc. (the "Company") and its wholly-owned
subsidiary, Southwest Bank of St. Louis (the "Bank"). Significant
intercompany accounts and transactions have been eliminated in consolidation.
The results of operations for the interim periods shown in this report are
not necessarily indicative of results to be expected for the entire year. In
the opinion of management, the information contained herein reflects all
adjustments necessary to make the results of operations for the interim
periods a fair statement of such operations. All such adjustments are of a
normal recurring nature.
2. Interest-Rate Risk Management - The Company's objective in managing
interest-rate risk is to maintain a balanced mix of interest-sensitive assets
and interest-sensitive liabilities over a designated time horizon. The
extent of interest rate sensitivity can vary within intervening time periods,
depending on current business conditions and management's interest rate
outlook. The principal objective of the Bank's asset-liability management
activities is to provide maximum levels of net interest income while
maintaining acceptable levels of interest rate and liquidity risk while
facilitating the funding needs of the Bank. To achieve that objective, the
Bank uses various derivative financial instruments. When such contracts are
not matched against a specifically designated group of assets or liabilities
and are held for trading purposes, the gains or losses from the change in the
market values of such contracts are recognized in current income and are
reported in other income.
During the fourth quarter of 1996 the Bank purchased a two-year
interest-rate floor contract as part of its asset-liability management
strategy to manage interest rate risk. For the fixed premium payment of
$345,000 the interest-rate floor contract requires the seller to pay the Bank
at specified future dates the amount, if any, by which a specified market
interest rate falls below the fixed floor rate, applied to a notional amount
of $50 million. The instrument is being held for trading purposes, and
therefore, all market value adjustments and income or expense on the
instrument is recognized on a current basis.
During the first quarter of 1997 the Bank purchased a three-year
interest-rate floor agreement as a hedge against reduced yields on its
floating rate loan portfolio in anticipation of a declining interest rate
environment. For the fixed premium payment of $215,000 the interest-rate
floor contract requires the seller to pay the Bank at specified future dates
the amount, if any, by which a specified market interest rate falls below the
fixed floor rate, applied to a notional amount of $25 million. Income or
expense on the instrument is recorded on an accrual basis as an adjustment to
the yield of the related interest-earning assets over the period covered by
the contract.
3. New accounting standard - SFAS No. 128 - In March, 1997, the FASB
issued SFAS No. 128, Earnings per Share. SFAS No. 128 is effective for
financial statements for both interim and annual periods ending after
December 15, 1997. Earlier application is not permitted. Under the
standard, primary EPS is replaced with a calculation called basic EPS. Basic
EPS would be calculated by dividing income available to common shareholders
by the weighted average number of common shares outstanding. Options, would
be excluded from the calculation for the Company. Fully diluted EPS would
not change significantly but would be renamed diluted EPS. SFAS No. 128 is
not expected to have a material effect on the Company's reported earnings per
share.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
- ------- -----------------------------------------------
OF OPERATIONS AND FINANCIAL CONDITION
-------------------------------------
The following discussion should be read in conjunction with the
attached condensed consolidated financial statements and notes thereto, and
with the Company's audited financial statements and notes thereto for the
year ended December 31, 1996.
SUMMARY OF EARNINGS
- -------------------
Consolidated net income for the first quarter of 1997 was $3,343,000,
up $80,000 or 2.5% from $3,263,000 earned in the first quarter of 1996. On a
per share basis, net income was $.70, up 2.9% from $.68 in the same period of
the prior year. The improved performance was due primarily to higher net
interest income. Limiting the effects of the improved net interest earnings
were lower noninterest income and greater overhead expenses.
For the quarter, the Company's return on average assets was 1.27% in
1997, compared to 1.36% in the same period last year. The Company's return on
equity was 17.19%, down from 18.27% in the first three months of 1996. Total
assets at March 31, 1997 were $1.089 billion, total loans outstanding were
$766 million and deposits were $905 million at the Company's five banking
locations. At March 31, 1997, total equity capital was $76.9 million, or
7.06% of assets, up from $75.9 million at the end of 1996. During the first
quarter of 1997 net earnings exceeded the sum of the unrealized loss, net of
tax, on available for sale securities and dividends paid on common stock.
NET INTEREST INCOME
- -------------------
The following discussion and tables set forth the composition of
average interest-earning assets and interest-bearing liabilities along with
accompanying interest income, expense, yields and rates, on a tax-equivalent
basis. The tax-equivalent adjustments was approximately $62,000 for the
three months ended March 31, 1997 and 1996. Net interest income on a tax
equivalent basis, divided by average interest-earning assets, represents the
Company's net interest margin.
Three months ended March 31, 1997 and 1996
- ------------------------------------------
Total tax-equivalent interest income for the three months ended March
31, 1997 was $20,562,000, up $1,435,000 as compared to the same period in
1996. The $98 million increase in average loans outstanding was the most
significant factor advancing the period's total interest earnings. Reducing
the loan volume driven earnings growth were lower yields earned on loans and
a lower volume of security holdings. Overall asset yields were 8.20% in the
first quarter of 1997, nearly identical to the 8.19% earned in the same
period of 1996. Partially funding the Company's loan growth was a net $45
million increase in deposits. Money market deposits
8
<PAGE> 9
declined $62 million, however certificates of deposit grew $98 million compared
to the first three months of 1996. All other deposits, average shareholders'
equity and short-term borrowings provided the remainder of the funding used to
support the comparative average loan volume growth in the first three months of
1997.
Total interest expense for the first quarter of 1997 was $10,751,000,
up $1,099,000 from $9,652,000 in the first quarter of 1996. The greater
certificates of deposit and short-term borrowings volume were primarily
responsible for the comparative interest expense increase. Overall rates
paid on total interest-bearing liabilities rose 15 basis points to 4.91% from
4.76% in the first quarter of 1996.
Total tax-equivalent net interest income increased $336,000 as interest
income growth exceeded that of interest expense. The Company's net interest
margin was 3.90% in the first quarter of 1997, down from 4.05% in the same
period of 1996, a primary result of the increase in rates paid on total
interest bearing-liabilities in 1997.
9
<PAGE> 10
<TABLE>
AVERAGE BALANCES, INTEREST AND RATES
<CAPTION>
Three Months Ended March 31,
-------------------------------------------------------------
1997 1996
------------------------------ ----------------------------
Interest Interest
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
----------- ------- ------ -------- ------- ------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Assets
Interest-earning assets:
Loans<F1><F2>
Taxable..................................... $ 724,908 $15,920 8.89% $626,984 $14,152 9.05%
Tax-exempt<F3>.............................. 69 1 8.58
Held to maturity securities
Taxable..................................... 50,135 844 6.83 64,563 1,076 6.68
Tax-exempt<F3>.............................. 7,541 203 10.75 7,438 203 10.90
Available for sale securities....................... 220,035 3,426 6.28 230,847 3,598 6.25
Trading account securities.......................... 711 14 8.16 676 11 6.66
Federal Funds sold and other short-
term investments............................... 11,938 155 5.28 6,062 86 5.69
---------- ------- -------- -------
Total interest-earning assets 1,015,268 20,562 8.20 936,639 19,127 8.19
------- -------
Noninterest-earning assets:
Cash and due from banks............................ 24,484 21,264
Bank premises and equipment........................ 11,844 9,455
Other assets....................................... 14,003 10,997
Allowance for possible loan losses................. (12,642) (10,988)
---------- --------
Total assets....................... $1,052,957 $967,367
========== ========
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
NOW accounts....................................... $ 22,509 $ 95 1.71% $ 19,797 $ 84 1.70%
Money market accounts.............................. 305,563 3,151 4.18 367,822 3,881 4.23
Savings deposits................................... 23,192 170 2.97 22,132 164 2.98
Time deposits of $100,000 or more.................. 39,349 530 5.47 31,248 414 5.31
Other time deposits................................ 427,788 5,867 5.56 337,509 4,649 5.52
---------- ------- -------- -------
Total interest-bearing deposits............ 818,401 9,813 4.86 778,508 9,192 4.75
Federal funds purchased, repurchase
agreements and other short-term
borrowings.................................... 62,991 798 5.11 32,637 406 4.98
Convertible debentures............................. 2,700 54 8.00 2,700 54 8.00
Trust preferred debentures......................... 4,485 86 7.68
---------- ------- -------- -------
Total interest-bearing liabilities......... 888,577 10,751 4.91 813,845 9,652 4.76
------- -------
Noninterest-bearing liabilities:
Demand deposits.................................... 83,712 78,172
Other liabilities.................................. 2,900 3,499
Shareholders' equity..................................... 77,768 71,851
---------- --------
Total liabilities and
shareholders' equity.................... $1,052,957 $967,367
========== ========
Net interest income........................ $ 9,811 $ 9,475
======= =======
Net interest margin........................ 3.90% 4.05%
===== =====
<FN>
- ------------------------
<F1> For purposes of these computations, nonaccrual loans are included in the
average loan amounts outstanding. Interest on nonaccrual loans is
recorded when received.
<F2> Interest income on loans includes loan fees, which were not material to
any period presented.
<F3> Information is presented on a tax-equivalent basis assuming a tax rate
of 35%. The tax-equivalent adjustments were approximately $62,000 for
each of the three months ended March 31, 1997 and 1996.
</TABLE>
10
<PAGE> 11
The following table indicates, on a tax-equivalent basis, the changes in
interest income and interest expense which are attributable to changes in
average volume and changes in average rates, in comparison with the same
period in the preceding year. The change in interest due to the combined
rate-volume variance has been allocated to rate and volume changes in
proportion to the absolute dollar amounts of the changes in each.
<TABLE>
CHANGES IN INTEREST INCOME AND EXPENSE VOLUME AND RATE VARIANCES
Three Months Ended
March 31, 1997
Compared to
March 31, 1996
----------------------------------------------
Increase (decrease) attributable to change in:
Yield/ Net
Volume Rate Change
------ ------- ------
(dollars in thousands)
<S> <C> <C> <C>
Interest earned on:
Loans<F1><F2>............................................ $2,031 $(264) $1,767
Held to maturity securities:
Taxable................................................ (254) 22 (232)
Tax-exempt<F1>......................................... 3 (3)
Available for sale securities............................ (187) 15 (172)
Trading account securities............................... 1 2 3
Federal funds sold and other short-
term investments....................................... 75 (6) 69
------ ----- ------
Total interest income................................ 1,669 (234) 1,435
------ ----- ------
Interest paid on:
NOW accounts............................................. 11 11
Money market accounts.................................... (683) (47) (730)
Savings.................................................. 7 (1) 6
Time deposits of $100,000 or more........................ 104 12 116
Other time deposits...................................... 1,186 32 1,218
Federal funds purchased, repurchase
agreements and other short-term
borrowings............................................. 390 2 392
Long-term borrowings..................................... 43 43 86
------ ----- ------
Total interest expense............................... 1,058 41 1,099
------ ----- ------
Net interest income................................. $ 611 $(275) $ 336
====== ===== ======
<FN>
- --------------
<F1> Information is presented on a tax-equivalent basis assuming a tax rate
of 35%. The approximate tax equivalent adjustments were $62,000 for
each of the three months ended March 31, 1997 and 1996.
<F2> Average balances included nonaccrual loans.
</TABLE>
11
<PAGE> 12
PROVISION FOR POSSIBLE LOAN LOSSES
- ----------------------------------
The provision for possible loan losses for the first quarter of 1997
was $900,000, down from $1,100,000 for the same period last year. The
annualized ratio of net charge-offs to average loans for the first three
months of 1997 was .29% the same as for the first quarter last year. Net
loan charge-offs were $532,000 and $454,000 for the first quarter of 1997 and
1996, respectively.
The allowance for possible loan losses was $13.0 million or 1.70% of
loans outstanding at March 31, 1997. This compared to $12.6 million at the end
of 1996 and $11.4 million, or 1.76% of loans, at March 31, 1996. In
management's judgement, the allowance for possible loan losses is considered
adequate to absorb potential losses in the loan portfolio.
The following table summarizes, for the periods indicated, activity in
the allowance for possible loan losses:
<TABLE>
Summary of Loan Loss Experience and Related Information
-------------------------------------------------------
<CAPTION>
Three Months
--------------------
Ended March 31,
1997 1996
-------- --------
(dollars in thousands)
<S> <C> <C>
Allowance for possible loan losses
(beginning of period) $ 12,624 $ 10,789
Loans charged off (655) (535)
Recoveries of loans previously
charged off 123 81
-------- --------
Net loans charged off (532) (454)
-------- --------
Provision for possible loan losses 900 1,100
-------- --------
Allowance for possible loan losses
(end of period) $ 12,992 $ 11,435
======== ========
Loans outstanding:
Average $724,908 $627,053
End of period 776,362 648,500
Ratio of allowance for possible
loan losses to loans outstanding:
Average 1.79% 1.82%
End of period 1.70 1.76
Ratio of net charge-offs to
average loans outstanding, annualized: .29 .29
</TABLE>
12
<PAGE> 13
The following table summarizes nonperforming assets at the dates
indicated:
<TABLE>
<CAPTION>
March 31, December 31, March 31,
1997 1996 1996
---------- ------------ ----------
(dollars in thousands)
<S> <C> <C> <C>
Nonaccrual loans $ 7,752 $ 5,745 $ 2,727
Loans past due 90 days or more 177
Restructured loans 168 788 717
-------- -------- --------
Total nonperforming loans 7,920 6,710 3,444
Other real estate 716 569
-------- -------- --------
Total nonperforming assets $ 8,636 $ 7,279 $ 3,444
======== ======== ========
Loans, net of unearned discount $766,362 $731,019 $648,500
Allowance for possible loan
losses to loans 1.70% 1.73% 1.76%
Nonperforming loans to loans 1.03 .92 .53
Allowance for possible loan losses
to nonperforming loans 164.04 188.14 332.03
Nonperforming assets to loans
and foreclosed assets 1.13 .99 .53
</TABLE>
NONINTEREST INCOME
- ------------------
For the first quarter of 1997 total noninterest income was $1,264,000,
down from $1,333,000 in the same period of 1996. Net securities gains of
$108,000 in 1997, were down from net securities gains of $309,000 realized
in the first quarter of 1996. Mark-to-market adjustments, as well as
realized gains and losses on interest-rate derivative instrument trading
activities reduced 1997 trading profits and commissions by approximately
$195,000. Limiting the impact of trading activity losses were greater security
sales commissions in 1997, as customer activity improved from the prior year.
Service charges on depository accounts along with fees for other
customer services were $950,000, up sharply from $666,000 in the first
quarter of 1996. A combination of increased merchant credit card fees and
operating lease rental income were primarily responsible for the increase in
other fee income. Increased costs, associated with these expanded fee
earning activities, were also reflected in noninterest expenses.
NONINTEREST EXPENSE
- -------------------
Total noninterest expense for the first quarter of 1997 was $4,882,000,
up $434,000 from $4,448,000 in the first three months of 1996. Additional
personnel and merit increases were primarily responsible for the increased
compensation and benefit costs in the first three months of 1997. Other
significant noninterest expense increases included greater other expenses
related to operating leases and increased credit card activity expenses.
13
<PAGE> 14
CAPITAL MANAGEMENT AND RESOURCES
- --------------------------------
As of March 31, 1997, the Company's total shareholders' equity was
$76.9 million. New capital was provided by the Company's first quarter net
earnings and minimally by the exercise of stock options. Offsetting the
Company's capital accumulation were the payments of cash dividends on common
stock and the recording of unrealized losses, net of tax, on available for
sale securities. During the first quarter of 1997 the fair market values of
the Company's available for sale securities declined from their level at the
end of 1996.
During the first quarter of 1997 the Company also formed MVBI Capital
Trust ("MVBI Capital"), a statutory business trust. The Company owns all the
common stock of MVBI Capital. MVBI Capital sold 598,000 preferred securities,
having a liquidation amount of $25 per security, for a total of $14,950,000.
The distributions payable on the preferred securities will float with the
3-Month Treasury plus 2.25%. All accounts of MVBI Capital are included in the
consolidated financial statements of the Company. The preferred securities are
considered long-term borrowings and entitled "Guaranteed preferred beneficial
interests in subordinated debentures" for financial reporting purposes. For
risk-based capital guidelines the amount is considered to be Tier 1 capital.
The analysis of capital is dependent upon a number of factors including
asset quality, earnings strength, liquidity, economic conditions and
combinations thereof. The two primary criteria currently in effect are the
risk-based capital guidelines and the minimum capital to total assets or
leverage ratio requirement.
These regulatory guidelines require that Tier 1 capital equal or exceed
4.00% of risk-weighted assets, and that the risk-based total capital ratio
equal or exceed 8.00%. As of March 31, 1997 and December 31, 1996 the
Company's Tier 1 capital was 11.90% and 10.20% of risk-weighted assets, and
total risk-based capital was 13.15% and 11.45% of risk-weighted assets,
respectively.
The minimum acceptable ratio of Tier 1 capital to total assets, or
leverage ratio, has been established at 3.00%. As of March 31, 1997 and
December 31, 1996, the Company's leverage ratio was 8.84% and 7.20%,
respectively.
Management believes that a strong capital position provided by a mix of
equity and long-term debt is essential. It provides safety and security for
depositors, and enhances Company value for shareholders by providing
opportunities for growth with the selective use of leverage.
14
<PAGE> 15
PART II. OTHER INFORMATION
-----------------
ITEM 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) For a list of Exhibits, see "Exhibits Index" appearing elsewhere herein.
(b) Reports on Form 8-K: NONE
15
<PAGE> 16
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MISSISSIPPI VALLEY BANCSHARES, INC.
--------------------------------------
(Registrant)
Date: May 12, 1997 / s / Paul M. Strieker
------------ ---------------------------------
Paul M. Strieker, Executive Vice
President, Controller and Chief
Financial Officer and Assistant
Secretary (on behalf of the
Registrant and as Principal
Financial and Accounting Officer)
16
<PAGE> 17
<TABLE>
MISSISSIPPI VALLEY BANCSHARES, INC.
EXHIBIT INDEX
FORM 10-Q
For the quarterly period ended March 31, 1997
<CAPTION>
Exhibit
Number Description of Exhibit
------- ----------------------
<C> <S>
11 Computation of Earnings
per Common Share
</TABLE>
17
<PAGE> 1
EXHIBIT NO. 11
--------------
COMPUTATION OF EARNINGS PER
---------------------------
COMMON SHARE
------------
Primary earnings per share is computed by dividing net income, less
dividends on preferred stock, by the weighted average common shares and
dilutive common share equivalents outstanding.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------------
1997 1996
---------- ----------
(dollars in thousands, except per share data)
<S> <C> <C>
Primary:
Average common shares outstanding 4,517,338 4,510,032
Common stock equivalents of warrants and
options outstanding-based on the
treasury stock method using market price 82,294 31,925
---------- ----------
4,599,632 4,541,957
========== ==========
Net income $ 3,343 $ 3,263
Less: Dividends on preferred stock (58)
---------- ----------
$ 3,343 $ 3,205
========== ==========
Primary earnings per common share $ .73 $ .71
========== ==========
</TABLE>
Fully diluted earnings per share gives effect to the increase in the
weighted average shares outstanding which would have resulted from conversion
of the outstanding convertible debentures and to the related reduction in
interest expense on an after-tax basis.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------------
1997 1996
---------- ----------
(dollars in thousands, except per share data)
<S> <C> <C>
Fully diluted:
Average common shares outstanding 4,517,338 4,510,032
Common stock equivalents of warrants and
options outstanding-based on the
treasury stock method using market price 82,294 31,925
Convertible debenture common stock equivalents 237,600 237,600
---------- ----------
4,837,232 4,779,557
========== ==========
Net income $ 3,343 $ 3,263
Less: Dividends on preferred stock (58)
Plus: Convertible debenture interest,
net of federal income tax effect 35 35
---------- ----------
$ 3,378 $ 3,240
========== ==========
Fully diluted earnings per common share $ .70 $ .68
========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 33,068
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 303
<INVESTMENTS-HELD-FOR-SALE> 215,241
<INVESTMENTS-CARRYING> 54,327
<INVESTMENTS-MARKET> 55,160
<LOANS> 766,362
<ALLOWANCE> 12,992
<TOTAL-ASSETS> 1,089,261
<DEPOSITS> 905,221
<SHORT-TERM> 81,086
<LIABILITIES-OTHER> 8,366
<LONG-TERM> 17,650
0
0
<COMMON> 4,518
<OTHER-SE> 72,420
<TOTAL-LIABILITIES-AND-EQUITY> 1,089,261
<INTEREST-LOAN> 15,920
<INTEREST-INVEST> 4,411
<INTEREST-OTHER> 169
<INTEREST-TOTAL> 20,500
<INTEREST-DEPOSIT> 9,813
<INTEREST-EXPENSE> 10,751
<INTEREST-INCOME-NET> 9,749
<LOAN-LOSSES> 900
<SECURITIES-GAINS> 108
<EXPENSE-OTHER> 4,882
<INCOME-PRETAX> 5,231
<INCOME-PRE-EXTRAORDINARY> 3,343
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,343
<EPS-PRIMARY> .73
<EPS-DILUTED> .70
<YIELD-ACTUAL> 3.90
<LOANS-NON> 7,752
<LOANS-PAST> 0
<LOANS-TROUBLED> 168
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 12,624
<CHARGE-OFFS> 655
<RECOVERIES> 123
<ALLOWANCE-CLOSE> 12,992
<ALLOWANCE-DOMESTIC> 8,937
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 4,055
</TABLE>
