<PAGE>
<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 September 30, 2000
----------------------------------------
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.)
13205 Manchester Road, St. Louis, Missouri 63131
--------------------------------------------- ------------
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (314) 543-3512
-----------------
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 OCTOBER 30, 2000:
Common Stock, $1.00 par value 9,382,412
----------------------------- ----------------
Class Number of Shares
<PAGE>
<PAGE> 2
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING
SECURITIES THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
MISSISSIPPI VALLEY BANCSHARES, INC.
-----------------------------------
INDEX
-----
Page No.
--------
PART I. FINANCIAL INFORMATION
---------------------
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets --
September 30, 2000 and December 31, 1999 3
Condensed Consolidated Statements of
Income -- Quarters Ended September 30, 2000
and September 30, 1999 4
Consolidated Statements of Changes in
Shareholders' Equity -- Nine Months
Ended September 30, 2000 and September 30, 1999 5
Condensed Consolidated Statements of
Cash Flows -- Nine Months Ended
September 30, 2000 and September 30, 1999 6
Notes to Condensed Consolidated
Financial Statements 7-8
ITEM 2. Management's Discussion and Analysis
of Results of Operations and
Financial Condition 9-16
PART II. OTHER INFORMATION
-----------------
ITEM 6. Exhibits and Reports on Form 8-K 17
SIGNATURE
--------- 18
<PAGE>
<PAGE> 3
<TABLE>
PART I. FINANCIAL INFORMATION
------------------------------
ITEM 1. FINANCIAL STATEMENTS
------- --------------------
MISSISSIPPI VALLEY BANCSHARES, INC.
-----------------------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
<CAPTION>
September 30, December 31,
2000 1999
(Derived from
(Unaudited) Audited Statements)
----------- -------------------
(dollars in thousands)
<S> <C> <C>
ASSETS
------
Cash and due from banks $ 33,605 $ 29,551
Federal funds sold 5,000 55,100
Held to maturity securities
(fair value of $101,043 and
$59,115, respectively) 100,202 59,116
Available for sale securities 332,732 257,899
Trading account securities 715
Loans, net of
unearned income 1,292,429 1,104,498
Allowance for possible loan losses 22,578 21,649
---------- ----------
Net loans 1,269,851 1,082,849
Premises and equipment 40,945 37,658
Other assets 41,166 38,976
----------- ----------
TOTAL ASSETS $1,824,216 $1,561,149
=========== ==========
LIABILITIES
-----------
Deposits:
Non-interest bearing $ 133,517 $129,818
Interest bearing 1,450,713 1,185,898
---------- ----------
Total deposits 1,584,230 1,315,716
Securities sold under agreements
to repurchase 31,052 35,049
Other short-term borrowings 51,742 70,590
Guaranteed preferred beneficial interests
in subordinated debentures 14,950 14,950
Other liabilities 12,313 12,278
---------- ----------
TOTAL LIABILITIES 1,694,287 1,448,583
----------- ----------
SHAREHOLDERS' EQUITY
--------------------
Common stock-par value $1
Authorized 20,000,000 shares,
issued 9,377,912 in 2000
and 9,661,262 in 1999 9,794 9,661
Capital surplus 22,215 20,272
Retained earnings 110,988 96,874
Accumulated other comprehensive income (loss) 146 (2,245)
Treasury stock, at cost, 416,100 shares
at September 30, 2000 and 364,900
shares at December 31, 1999 (13,214) (11,996)
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 129,929 112,566
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,824,216 $1,561,149
========== ==========
See accompanying notes.
<PAGE>
<PAGE> 4
MISSISSIPPI VALLEY BANCSHARES, INC.
-----------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
-------------------------------------------
(UNAUDITED)
<CAPTION>
Quarter Ended Nine Months Ended
September 30 September 30
------------------------ -------------------------
2000 1999 2000 1999
-------- --------- --------- ----------
(dollars in thousands, except per share data)
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $29,344 $22,516 $81,937 $64,258
Held to maturity securities:
Taxable 1,449 523 4,105 1,474
Tax-exempt 120 127 366 414
Available for sale securities 5,062 4,272 13,909 13,692
Other 654 989 1,793 1,363
------- ------- ------- -------
TOTAL INTEREST INCOME 36,629 28,427 102,110 81,201
------- ------- ------- -------
Interest expense:
Deposits 20,721 12,835 53,776 36,300
Short-term borrowings 923 1,228 3,733 2,855
Long-term borrowings 301 267 885 775
------- ------- ------- -------
TOTAL INTEREST EXPENSE 21,945 14,330 58,394 39,930
------- ------- ------- -------
NET INTEREST INCOME 14,684 14,097 43,716 41,271
Provision for possible loan losses 1,230 803 2,560 3,808
------- ------- ------- -------
NET INTEREST INCOME AFTER
PROVISION FOR POSSIBLE LOAN LOSSES 13,454 13,294 41,156 37,463
------- ------- ------- -------
Other income:
Service charges 561 543 1,657 1,658
Securities gains/(losses), net on:
Sales of available for sale securities 229 (660) 1,148 (1,075)
Trading profits and commissions 261 1,284 1,889 5,921
Other 2,028 954 4,504 2,777
------- ------- ------- -------
3,079 2,121 9,198 9,281
------- ------- ------- -------
Other expenses:
Employee compensation and
other benefits 3,874 3,418 11,251 10,201
Net occupancy 618 407 1,812 1,159
Equipment 597 433 1,923 1,196
Advertising 312 311 1,211 903
Other 2,440 2,342 7,296 7,012
------- ------- ------- -------
7,841 6,911 23,493 20,471
------- ------- ------- -------
INCOME BEFORE INCOME TAXES 8,692 8,504 26,861 26,273
Income taxes 3,213 3,123 9,938 9,756
------- ------- ------- -------
NET INCOME $ 5,479 $ 5,381 $16,923 $16,517
======= ======= ======= =======
Earnings per common share:
Basic $ .58 $ .58 $ 1.81 $ 1.76
Diluted $ .58 $ .57 $ 1.80 $ 1.73
See accompanying notes.
<PAGE>
<PAGE> 5
MISSISSIPPI VALLEY BANCSHARES, INC.
-----------------------------------
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
----------------------------------------------------------
YEAR TO DATE SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
(Dollars in Thousands)
<CAPTION>
Accumulated Total
Other Share-
Common Stock Capital Retained Comprehensive Treasury holders' Comprehensive
Shares Amount Surplus Earnings Income (Loss) Stock Equity Income (Loss)
----- ------ ------- -------- ------------- -------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1999
Balance at
Jan. 1, 1999 9,631,312 $9,631 $19,627 $ 79,003 $ 6,265 $ (4,748) $109,778 $
Net Income 16,517 16,517 16,517
Issuance of
common stock 22,350 22 490 512
Treasury Stock
Purchased (7,248) (7,248)
Cash dividends on:
common stock (2,625) (2,625)
Unrealized loss
on available
for sale
securities (6,681) (6,681) (6,681)
--------- ------ ------- -------- ------- -------- -------- --------
Balance at
September 30,
1999 9,653,662 $9,653 $20,117 $ 92,895 $ (416) $(11,996) $110,253
========= ====== ======= ======== ======= ======== ========
Comprehensive
Income $ 9,836
========
2000
Balance at
Jan. 1, 2000 9,661,262 $9,661 $20,272 $ 96,874 $(2,245) $(11,996) $112,566 $
Net Income 16,923 16,923 16,923
Issuance of
common stock 132,750 133 1,943 2,076
Treasury stock
purchased (1,218) (1,218)
Cash dividends on:
common stock (2,809) (2,809)
Unrealized gain
on available
for sale
securities 2,391 2,391 2,391
--------- ------ ------- -------- ------- -------- -------- --------
Balance at
September 30,
2000 9,794,012 $9,794 $22,215 $110,988 $ 146 $(13,214) $129,929
========= ====== ======= ======== ======= ======== ========
Comprehensive
Income $ 19,314
========
See accompanying notes.
<PAGE>
<PAGE> 6
MISSISSIPPI VALLEY BANCSHARES, INC.
-----------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------
(UNAUDITED)
<CAPTION>
Nine Months Ended
September 30,
---------------------------------------
2000 1999
--------- -----------
(dollars in thousands)
<S> <C> <C>
OPERATING ACTIVITIES
--------------------
Net income $ 16,923 $ 16,517
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for possible loan losses 2,560 3,808
Provision for depreciation and amortization 2,799 1,863
Accretion of discounts and amortization of
premiums on securities (1,179) (1,164)
Realized securities (gains) and losses, net (1,148) 1,075
Net increase in trading account securities (715) (280)
Net decrease (increase) in interest receivable (4,392) 1,413
Increase in interest payable 771 328
Other, net (263) (1,275)
--------- ---------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 15,356 22,285
--------- ---------
INVESTING ACTIVITIES
--------------------
Proceeds from maturities of held to maturity securities 7,400 2,995
Purchases of available for sale securities (215,895) (295,966)
Purchases of held to maturity securities (48,083) (9,909)
Proceeds from maturities of available for sale securities 88,000 139,000
Proceeds from sales and paydowns of
available for sale securities 58,665 253,006
Purchases of premises and equipment (5,226) (14,124)
Increase in loans outstanding, net (189,561) (142,830)
--------- ---------
NET CASH PROVIDED BY
(USED IN) INVESTING ACTIVITIES (304,700) (67,828)
--------- ---------
FINANCING ACTIVITIES
--------------------
Net increase in deposits 268,514 86,865
Net increase (decrease) in repurchase agreements
and other short-term borrowings (22,845) 23,494
Proceeds from sale of common stock 1,656 402
Purchase of treasury stock (1,218) (7,248)
Cash dividends (2,809) (2,625)
--------- ---------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 243,298 100,888
--------- ---------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (46,046) 55,345
Cash and cash equivalents at beginning of period 84,651 27,017
--------- ---------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 38,605 $ 82,362
========= =========
See accompanying notes.
</TABLE>
<PAGE> 7
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
1. Basis of Presentation
The condensed consolidated financial statements include the accounts of
Mississippi Valley Bancshares, Inc. (the "Company") and its wholly-owned
subsidiaries, Southwest Bank of St. Louis, Southwest Bank, Belleville (the
"Banks"), MVBI Capital Trust and Mississippi Valley Capital Company, a
venture capital subsidiary. 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.
For further information, refer to the consolidated financial statements
and footnotes thereto included in the Company's annual report on Form 10-K
for the year ended December 31, 1999.
2. Comprehensive Income
Following is a summary of other comprehensive income components and
related income tax effects:
<TABLE>
<CAPTION>
For the Nine Months Ended September 30, 2000
--------------------------------------------
Before-Tax Tax Net-of-Tax
Amount Expense Amount
---------- ------- ----------
(dollars in thousands)
<S> <C> <C> <C>
Unrealized gains on available
for sale securities $4,826 $1,689 $3,137
Less: reclassification adjustment
for gains realized in net
income 1,148 402 746
------ ----- ------
Net unrealized gains 3,678 1,287 2,391
------ ------ ------
Other comprehensive income $3,678 $1,287 $2,391
====== ====== ======
<CAPTION>
For the Nine Months Ended September 30, 1999
--------------------------------------------
Before-Tax Tax Net-of-Tax
Amount (Benefit) Amount
---------- --------- ----------
(dollars in thousands)
<S> <C> <C> <C>
Unrealized losses on
available for sale securities $(11,353) $(3,973) $(7,380)
Less: reclassification adjustment
for losses realized in net
income (1,075) (376) (699)
-------- ------- -------
Net unrealized losses (10,278) (3,597) (6,681)
-------- ------- -------
Other comprehensive
income (loss) $(10,278) $(3,597) $(6,681)
======== ======= =======
</TABLE>
<PAGE>
<PAGE> 8
3. Earnings per Share
Basic earnings per share is computed by dividing net income by the
weighted average common shares outstanding.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- -------------------------
2000 1999 2000 1999
---------- ---------- ----------- -----------
(dollars in thousands, except per share data)
<S> <C> <C> <C> <C>
BASIC:
Average common shares outstanding 9,372,791 9,313,980 9,351,829 9,391,598
========== ========== ========== ==========
Net income $ 5,479 $ 5,381 $ 16,923 $ 16,517
========== ========== ========== ==========
Basic earnings per common share $ .58 $ .58 $ 1.81 $ 1.76
========== ========== ========== ==========
</TABLE>
Diluted earnings per share gives effect to the weighted average shares
outstanding and average dilutive common share equivalents outstanding.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------- --------------------------
September 30, September 30,
2000 1999 2000 1999
---------- ---------- ------------ ---------
(dollars in thousands, except per share data)
<S> <C> <C> <C> <C>
DILUTED:
Average common shares outstanding 9,372,791 9,313,980 9,351,829 9,391,598
Average common stock equivalents of
options outstanding-based on the
treasury stock method using market price 40,277 142,267 43,029 148,177
---------- ---------- ---------- ----------
9,413,068 9,456,247 9,394,858 9,539,775
========== ========== ========== ==========
Net income $ 5,479 $ 5,381 $ 16,923 $16,517
========== ========== ========== ==========
Diluted earnings per common share $ .58 $ .57 $ 1.80 $ 1.73
========== ========== ========== ==========
</TABLE>
<PAGE>
<PAGE> 9
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, 1999.
SUMMARY OF EARNINGS
-------------------
Consolidated net income for the third quarter of 2000 was $5,479,000, up
$98,000 or 1.8% from $5,381,000 earned during the third quarter of 1999. On
a per share basis, net income was $.58, up from $.57 in the same period in
the prior year. Increased net interest earnings were largely offset by a
greater provision for possible loan losses and greater noninterest income was
offset by increased noninterest expenses.
Net income for the first nine months of 2000 was $16,923,000, up $406,000
or 4.0% from $16,517,000 for the first nine months of 1999. On a per share
basis, net income was $1.80, up from $1.73 in the first nine months of 1999.
Greater net interest income and a reduced provision for possible loan losses
for the nine months ended September 30, 2000 were the principal contributors
to the improved earnings performance. Limiting the benefits of greater net
interest income were increased noninterest expenses. Total noninterest
expenses were $23,493,000 for the first nine months of 2000, up from
$20,471,000 for the same period in 1999 due to Company growth and operating
costs for the Des Peres office which opened in the fourth quarter of 1999.
For the quarter and nine months ended September 30, 2000, the Company's
return on average assets was 1.23% and 1.34%, down from 1.42% and 1.52% in
the same periods in 1999, respectively. At September 30, 2000, total equity
capital was $129,929,000, up from $110,253,000 at September 30, 1999. The
Company's return on average equity was 17.22% and 18.57% for the quarter and
nine months ended September 30, 2000, down from 19.55% and 19.95% for the
same periods in 1999, respectively. Total assets reached $1,824,216,000 with
loans up to $1,292,429 at the end of September 2000.
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 were approximately $70,000, $55,000,
$213,000 and $182,000 for the three months ended September 30, 2000 and 1999,
and for the nine months ended September 30, 2000 and 1999, respectively. Net
interest income on a tax-equivalent basis, divided by average interest
earning assets, represents the Company's net interest margin.
<PAGE> 10
Three Months Ended September 30, 2000 and 1999
----------------------------------------------
Total tax-equivalent interest income for the three months ended September
30, 2000 was $36,699,000, up $8,216,000 compared to the same period in 1999.
The $218 million increase in average loans and higher yields earned on nearly
all assets were primarily responsible for generating the increase in interest
earnings from 1999 to 2000. Increased investment securities also contributed
to greater interest earnings for the third quarter of 2000. Overall asset
yields were 8.61% in the three months ended September 30, 2000, up 82 basis
points from 7.79% earned in the same period in 1999 as nearly all asset
yields rose in the 2000 upward interest rate cycle. Funding the Company's
loan growth were increased money market deposits.
Total interest expense for the third quarter of 2000 was $21,945,000, up
$7,615,000 from $14,330,000 in the same period in 1999. Increased money
market deposits and the higher rates paid on nearly all fund sources were
responsible for the greater interest expense costs in 2000.
Overall tax-equivalent net interest income increased only $601,000 as the
rise in interest income was largely offset by the interest expense increase.
The Company's net interest margin declined to 3.47%, down 40 basis points
from 3.87% in the same period in 1999 primarily due to the greater increase
in rates paid than in yields earned.
Nine Months Ended September 30, 2000 and 1999
---------------------------------------------
Total tax-equivalent interest income for the first nine months of 2000
was $102,323,000, up $20,939,000 from $81,384,000 in the same period in 1999.
The $190 million increase in average loans and higher yields earned on assets
were primarily responsible for generating the increase in interest earnings
from 1999 to 2000. Overall asset yields were 8.51% for the first nine months
of 2000, up from 7.80% for the same period in 1999. Funding the asset growth
were increased money market accounts and time deposits.
Total interest expense for the first nine months of 2000 was $58,394,000,
up $18,463,000 from $39,931,000 in the same period in 1999. Increased
deposits and short-term borrowings along with the higher rates paid on nearly
all fund sources combined to advance interest expense costs in 2000.
Overall, rates paid on total interest bearing liabilities rose to 5.47% from
4.38% in the first nine months of 1999.
In summary, total tax-equivalent net interest income increased $2,476,000
as the increased interest income was offset to a large degree by the interest
expense increase. The Company's net interest margin for the first nine
months of 2000 was 3.65%.
<PAGE>
<PAGE> 11
<TABLE>
AVERAGE BALANCES, INTEREST AND RATES
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30,
--------------------------------------------------------------------------------
2000 1999
--------------------------------------- ----------------------------------------
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 $1,263,218 $29,308 9.23% $1,047,643 $22,514 8.53%
Tax-exempt<F3> 2,000 55 10.95 65 2 14.56
Held to maturity securities
Taxable 88,430 1,449 6.56 33,457 524 6.25
Tax-exempt<F3> 6,875 172 10.00 7,173 182 10.15
Available for sale securities 296,734 5,062 6.82 287,540 4,272 5.91
Trading account securities 1,351 21 6.28 725 11 6.06
Federal Funds sold and other
short-term investments 39,426 632 6.37 75,814 978 5.12
---------- ------- ---------- -------
Total interest-earning
assets 1,698,034 36,699 8.61 1,452,417 28,483 7.79
------- -------
Noninterest-earning assets:
Cash and due from banks 31,461 29,440
Bank premises and equipment 40,801 31,062
Other assets 37,388 21,633
Allowance for possible
loan losses (23,382) (20,684)
---------- ----------
Total assets $1,784,302 $1,513,868
========== ==========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
NOW accounts $ 26,951 $ 73 1.08% $ 27,418 $ 79 1.15%
Money market accounts 990,742 14,978 6.01 734,327 7,975 4.31
Savings deposits 27,394 205 2.98 27,758 208 2.97
Time deposits of
$100,000 or more 53,601 778 5.77 44,239 522 4.68
Other time deposits 335,756 4,687 5.55 332,481 4,051 4.83
---------- ------- ---------- -------
Total interest-bearing
deposits 1,434,444 20,721 5.75 1,166,223 12,835 4.37
Federal funds purchased,
repurchase agreements
and other short-term
borrowings 63,074 923 5.82 98,702 1,229 4.94
Guaranteed Preferred
Beneficial Interests
in Subordinated Debentures 14,950 301 8.06 14,950 266 7.13
---------- ------- ---------- -------
Total interest-bearing
liabilities 1,512,468 21,945 5.77 1,279,875 14,330 4.44
------- -------
Noninterest-bearing liabilities:
Demand deposits 135,767 124,210
Other liabilities 8,798 (312)
Shareholders' equity 127,269 110,095
---------- ----------
Total liabilities and
shareholders' equity $1,784,302 $1,513,868
========== ==========
Net interest income $14,754 $14,153
======= =======
Net interest margin 3.47% 3.87%
==== ====
<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 $70,000 and
$55,000 for the three months ended September 30, 2000 and 1999,
respectively.
</TABLE>
<PAGE>
<PAGE> 12
<TABLE>
AVERAGE BALANCES, INTEREST AND RATES
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------------------------------------------------------
2000 1999
------------------------------------- ---------------------------------------
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 $1,197,773 $ 81,830 9.12% $1,009,745 $64,257 8.51%
Tax-exempt<F3> 2,000 164 10.95 22 2 14.56
Held to maturity securities
Taxable 84,485 4,105 6.48 31,388 1,474 6.27
Tax-exempt<F3> 6,938 523 10.04 7,807 596 10.18
Available for sale securities 276,117 13,909 6.72 309,051 13,692 5.91
Trading account securities 1,316 67 6.81 870 42 6.46
Federal Funds sold
and other short-term
investments 35,974 1,725 6.41 35,125 1,321 5.03
---------- -------- ---------- -------
Total interest-earning assets 1,604,603 102,323 8.51 1,394,008 81,384 7.80
-------- -------
Noninterest-earning assets:
Cash and due from banks 31,545 26,648
Bank premises and equipment 39,947 26,593
Other assets 34,590 22,126
Allowance for possible
loan losses (22,728) (19,749)
---------- ----------
Total assets $1,687,957 $1,449,626
========== ==========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
NOW accounts $ 27,247 $ 224 1.10% $ 27,905 $ 259 1.24%
Money market accounts 854,051 36,378 5.69 726,360 22,992 4.23
Savings deposits 27,719 616 2.97 26,761 593 2.96
Time deposits of $100,000
or more 53,020 2,204 5.55 38,762 1,370 4.73
Other time deposits 357,917 14,354 5.36 300,673 11,087 4.93
---------- -------- ---------- -------
Total interest-
bearing deposits 1,319,954 53,776 5.44 1,120,461 36,301 4.33
Federal funds purchased,
repurchased agreements
and other short-term
borrowings 90,492 3,733 5.51 83,122 2,855 4.59
Guaranteed Preferred Beneficial
Interests in Subordinated
debentures 14,950 885 7.89 14,950 775 6.91
---------- -------- ---------- -------
Total interest-
bearing liabilities 1,425,396 58,394 5.47 1,218,533 39,931 4.38
-------- -------
Noninterest-bearing liabilities:
Demand deposits 132,634 118,995
Other liabilities 8,421 1,687
Shareholders' equity 121,506 110,411
---------- ----------
Total liabilities and
shareholders' equity $1,687,957 $1,449,626
========== ==========
Net interest income $ 43,929 $41,453
======== =======
Net interest margin 3.65% 3.97%
==== ====
<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 $213,000 and
$182,000 for the nine months ended September 30, 2000 and 1999,
respectively.
</TABLE>
<PAGE>
<PAGE> 13
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
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 2000 SEPTEMBER 30, 2000
COMPARED TO COMPARED TO
SEPTEMBER 30, 1999 SEPTEMBER 30, 1999
---------------------------------- --------------------------------------
INCREASE (DECREASE) ATTRIBUTABLE TO CHANGE IN:
--------------------------------------------------------------------------
YIELD/ NET YIELD/ NET
VOLUME RATE CHANGE VOLUME RATE CHANGE
------- --------- ------- -------- --------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
INTEREST EARNED ON:
Loans<F1> <F2> $4,888 $ 1,959 $6,847 $12,785 $ 4,950 $17,735
Held to maturity securities:
Taxable 898 27 925 2,580 51 2,631
Tax-exempt<F1> (7) (3) (10) (65) (8) (73)
Available for sale securities 136 654 790 (1,549) 1,766 217
Trading account securities 10 10 23 2 25
Federal funds sold and other short-
term investments (546) 200 (346) 33 371 404
------ ------- ------ ------- ------- -------
Total interest income 5,379 2,837 8,216 13,807 7,132 20,939
------ ------- ------ ------- ------- -------
INTEREST PAID ON:
NOW accounts (1) (5) (6) (6) (29) (35)
Money market accounts 3,288 3,715 7,003 4,517 8,869 13,386
Savings (4) 1 (3) 21 2 23
Time deposits of $100,000 or more 121 135 256 566 268 834
Other time deposits 40 596 636 2,240 1,027 3,267
Federal funds purchased, repurchase
agreements and other short-term
borrowings (726) 420 (306) 269 609 878
Long-term borrowings 35 35 110 110
------ ------- ------ ------- ------- -------
Total interest expense 2,718 4,897 7,615 7,607 10,856 18,463
------ ------- ------ ------- ------- -------
Net interest income $2,661 $(2,060) $ 601 $ 6,200 $(3,724) $ 2,476
====== ======= ====== ======= ======= =======
</TABLE>
[FN]
------
<F1> Information is presented on a tax-equivalent basis assuming a tax rate
of 35%. The approximate tax equivalent adjustments were $70,000,
$55,000, $213,000 and $182,000 for the three months ended September
30, 2000 and 1999, and for the nine months ended September 30, 2000
and 1999, respectively.
<F2> Average balances included nonaccrual loans.
<PAGE> 14
PROVISION FOR POSSIBLE LOAN LOSSES
----------------------------------
The provision for possible loan losses for the third quarter of 2000 was
$1,230,000, up from $803,000 last year. For the nine months of 2000 the
provision for possible loan losses was $2,560,000, down from $3,808,000 for
the same period last year.
The allowance for possible loan losses was $22,578,000 or 1.75% of loans
outstanding at September 30, 2000. This compared to $21,649,000 at the end
of 1999, and $20,927,000 at September 30, 1999 each 1.96% of loans
outstanding. 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 Nine Months Ended
September 30, September 30,
--------------------------- ----------------------------
2000 1999 2000 1999
----------- ------------ ------------- -------------
(dollars in thousands)
<S> <C> <C> <C> <C>
Allowance for possible loan losses
(beginning of period) $ 23,536 $ 20,378 $ 21,649 $ 18,144
Loans charged off (2,293) (324) (2,940) (1,679)
Recoveries of loans previously
charged off 105 70 1,309 654
---------- ---------- ---------- ----------
Net loans (charged off) recoveries (2,188) (254) (1,631) (1,025)
---------- ---------- ---------- ----------
Provision for possible loan losses 1,230 803 2,560 3,808
---------- ---------- ---------- ----------
Allowance for possible loan losses
(end of period) $ 22,578 $ 20,927 $ 22,578 $ 20,927
========== ========== ========== ==========
Loans outstanding:
Average $1,265,218 $1,047,708 $1,199,773 $1,009,767
End of period 1,292,429 1,067,765 1,292,429 1,067,765
Ratio of allowance for possible
loan losses to loans outstanding:
Average 1.78% 2.00% 1.88% 2.07%
End of period 1.75 1.96 1.75 1.96
Ratio of net charge-offs to
average loans outstanding, annualized: .69 .10 .18 .14
</TABLE>
<PAGE>
<PAGE> 15
The following table summarizes nonperforming assets at the dates
indicated:
<TABLE>
<CAPTION>
September 30, December 31, September 30,
2000 1999 1999
------------- ------------- --------------
(dollars in thousands)
<S> <C> <C> <C>
Nonaccrual loans $ 7,437 $ 2,756 $ 959
Loans past due 90 days or more 260 371
Restructured loans 168 90 103
---------- ---------- ----------
Total nonperforming loans 7,865 3,217 1,062
Other real estate 24 10 10
---------- ---------- ----------
Total nonperforming assets $ 7,889 $ 3,227 $ 1,072
========== ========== ==========
Loans, net of unearned discount $1,292,429 $1,104,498 $1,067,765
Allowance for possible loan
losses to loans 1.75% 1.96% 1.96%
Nonperforming loans to loans .61 .29 .10
Allowance for possible loan losses
to nonperforming loans 287.07 672.96 1,970.53
Nonperforming assets to loans
and foreclosed assets .61 .29 .10
</TABLE>
NONINTEREST INCOME
------------------
For the third quarter of 2000, total noninterest income was $3,079,000,
up $958,000 from $2,121,000 in the same period in 1999. Net realized
securities gains of $229,000 compared to securities losses of $660,000 in the
third quarter of 1999. Trading profits and commissions for the third quarter
of 2000 were $261,000 down from $1,284,000 in the same period in 1999.
Hedging activities begun in the first quarter of 1999 provided $910,000 of
trading profits in the third quarter of 1999. There were no derivative
hedging activities in the third quarter of 2000. Other noninterest income in
2000 also included proceeds of $717,000 from the sale of appreciated stock
warrants held in connection with a loan contract. No similar gains were
included in the third quarter of 1999. Merchant credit card income and
operating lease income were also up in 2000 compared with 1999.
For the first nine months of 2000, total noninterest income was
$9,198,000, down slightly from $9,281,000 in the same period in 1999.
Realized gains on interest-rate derivative trading activities generated
trading profits of $4,810,000 for the first nine months of 1999 compared with
$632,000 in 2000. Net gains of $1,148,000 were realized on securities sales
in 2000 versus net losses of $1,075,000 on sales of available for sale
securities in the first nine months of 1999. Other portions of 2000
noninterest income including merchant credit card fees, leasing income and
commissions and fees from customer securities activities were also up from
1999.
NONINTEREST EXPENSE
-------------------
Total noninterest expense for the third quarter of 2000 was $7,841,000,
up $930,000 from $6,911,000 in the third quarter of 1999. For the first nine
months of 2000 total noninterest expenses were $23,493,000, up $3,022,000
from the same period in 1999. Overall Company growth and operating costs for
the new Des Peres bank and Company headquarters, including compensation,
benefits, occupancy and equipment, were primarily responsible for the
increase.
<PAGE>
<PAGE> 16
CAPITAL MANAGEMENT AND RESOURCES
--------------------------------
As of September 30, 2000, the Company's total shareholders' equity was
$129.9 million. New capital was provided by the Company's net earnings and
by the exercise of stock options. Offsetting the Company's capital
accumulation were the payments of cash dividends on common stock and the
repurchase of 51,200 shares of common stock in connection with the Company's
stock repurchase plan.
The Company formed MVBI Capital Trust ("MVBI Capital"), a statutory
business trust in 1997. 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%. 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 capital ratio equal or
exceed 8.00%. As of September 30, 2000 and December 31, 1999 the Company's
Tier 1 capital was 10.42% and 10.97% of risk-weighted assets, and total
risk-based capital was 11.68% and 12.23% 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 September 30, 2000 and
December 31, 1999, the Company's leverage ratio was 8.10% and 8.40%,
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.
<PAGE>
<PAGE> 17
PART II. OTHER INFORMATION
----------------------------
ITEM 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits: NONE
(b) Reports on Form 8-K: NONE
<PAGE>
<PAGE> 18
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: November 13, 2000 /s/ Paul M. Strieker
----------------- --------------------------------
Paul M. Strieker, Executive Vice
President, Controller and Chief
Financial Officer (on behalf of
the Registrant and as Principal
Financial and Accounting Officer)