<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 June 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 JULY 28, 2000:
Common Stock, $1.00 par value 9,369,112
----------------------------- -----------------------
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 --
June 30, 2000 and December 31, 1999 3
Condensed Consolidated Statements of
Income -- Quarters Ended June 30, 2000
and June 30, 1999 4
Consolidated Statements of Changes in
Shareholders' Equity -- Six Months
Ended June 30, 2000 and June 30, 1999 5
Condensed Consolidated Statements of
Cash Flows -- Six Months Ended
June 30, 2000 and June 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 4. Submission of Matters to a Vote
of Security Holders 17
ITEM 6. Exhibits and Reports on Form 8-K 17
SIGNATURE 18
---------
</TABLE>
2
<PAGE> 3
<TABLE>
PART I. FINANCIAL INFORMATION
------------------------------
ITEM 1. FINANCIAL STATEMENTS
------- --------------------
MISSISSIPPI VALLEY BANCSHARES, INC.
-----------------------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
<CAPTION>
June 30, December 31,
2000 1999
(Derived from
(Unaudited) Audited Statements)
------------- ----------------------
(dollars in thousands)
<S> <C> <C>
ASSETS
------
Cash and due from banks $ 37,761 $ 29,551
Federal funds sold 71,700 55,100
Held to maturity securities
(fair value of $96,915 and
$59,115, respectively) 97,046 59,116
Available for sale securities 267,922 257,899
Trading account securities 565
Loans, net of
unearned income 1,257,293 1,104,498
Allowance for possible loan losses 23,536 21,649
-------------- --------------
Net loans 1,233,757 1,082,849
Premises and equipment 40,805 37,658
Other assets 47,981 38,976
-------------- --------------
TOTAL ASSETS $1,797,537 $1,561,149
============== ==============
LIABILITIES
-----------
Deposits:
Non-interest bearing $ 139,295 $ 129,818
Interest bearing 1,401,087 1,185,898
-------------- --------------
Total deposits 1,540,382 1,315,716
Securities sold under agreements
to repurchase 88,858 35,049
Other short-term borrowings 16,972 70,590
Guaranteed preferred beneficial interests
in subordinated debentures 14,950 14,950
Other liabilities 13,864 12,278
-------------- --------------
TOTAL LIABILITIES 1,675,026 1,448,583
-------------- --------------
SHAREHOLDERS' EQUITY
--------------------
Common stock-par value $1
Authorized 20,000,000 shares,
issued 9,774,612 in 2000
and 9,661,262 in 1999 9,774 9,661
Capital surplus 21,962 20,272
Retained earnings 106,447 96,874
Accumulated other comprehensive income (loss) (2,556) (2,245)
Treasury stock, at cost, 412,300 shares
at June 30, 2000 and 364,900 shares
at December 31, 1999 (13,116) (11,996)
-------------- --------------
TOTAL SHAREHOLDERS' EQUITY 122,511 112,566
-------------- --------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $1,797,537 $1,561,149
============== ==============
See accompanying notes.
</TABLE>
3
<PAGE> 4
<TABLE>
MISSISSIPPI VALLEY BANCSHARES, INC.
-----------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
-------------------------------------------
(UNAUDITED)
<CAPTION>
Quarter Ended Six Months Ended
June 30 June 30
---------------------- ---------------------
2000 1999 2000 1999
--------- --------- --------- ---------
(dollars in thousands, except per share data)
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $27,569 $21,616 $52,593 $41,742
Held to maturity securities:
Taxable 1,434 471 2,656 951
Tax-exempt 121 143 246 287
Available for sale securities 4,503 4,146 8,847 9,420
Other 828 292 1,139 374
--------- --------- --------- ---------
TOTAL INTEREST INCOME 34,455 26,668 65,481 52,774
--------- --------- --------- ---------
Interest expense:
Deposits 18,440 11,719 33,055 23,465
Short-term borrowings 1,304 877 2,810 1,627
Long-term borrowings 304 252 584 508
--------- --------- --------- ---------
TOTAL INTEREST EXPENSE 20,048 12,848 36,449 25,600
--------- --------- --------- ---------
NET INTEREST INCOME 14,407 13,820 29,032 27,174
Provision for possible loan losses 561 1,256 1,330 3,005
--------- --------- --------- ---------
NET INTEREST INCOME AFTER
PROVISION FOR POSSIBLE LOAN LOSSES 13,846 12,564 27,702 24,169
--------- --------- --------- ---------
Other income:
Service charges 573 573 1,096 1,115
Securities gains/(losses), net on:
Sales of available for sale securities 415 919 (415)
Trading profits and commissions 1,007 1,587 1,628 4,637
Other 1,316 1,024 2,476 1,823
--------- --------- --------- ---------
2,896 3,599 6,119 7,160
--------- --------- --------- ---------
Other expenses:
Employee compensation and
other benefits 3,684 3,541 7,377 6,783
Net occupancy 582 396 1,194 752
Equipment 716 411 1,326 763
Advertising 473 312 899 592
Other 2,491 2,482 4,856 4,670
--------- --------- --------- ---------
7,946 7,142 15,652 13,560
--------- --------- --------- ---------
INCOME BEFORE INCOME TAXES 8,796 9,021 18,169 17,769
Income taxes 3,265 3,374 6,725 6,633
--------- --------- --------- ---------
NET INCOME $ 5,531 $ 5,647 $11,444 $11,136
========= ========= ========= =========
Earnings per common share:
Basic $ .60 $ .60 $ 1.23 $ 1.18
Diluted $ .59 $ .59 $ 1.22 $ 1.16
See accompanying notes.
</TABLE>
4
<PAGE> 5
<TABLE>
MISSISSIPPI VALLEY BANCSHARES, INC.
-----------------------------------
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
----------------------------------------------------------
YEAR TO DATE JUNE 30, 2000 AND 1999
(UNAUDITED)
(Dollars in Thousands)
<CAPTION>
Accumulated
Other
Compre- Total Compre-
Common Stock hensive Share- hensive
------------ Capital Retained Income Treasury holders' Income
Shares Amount Surplus Earnings (Loss) Stock Equity (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 11,136 11,136 11,136
Issuance of common stock 11,500 12 212 224
Treasury Stock Purchased (5,023) (5,023)
Cash dividends on:
common stock (1,696) (1,696)
Unrealized loss on
available for
sale securities (6,625) (6,625) (6,625)
--------- ------ ------- -------- ------- -------- -------- -------
Balance at June 30,
1999 9,642,812 $9,643 $19,839 $ 88,443 $ (360) $ (9,771) $107,794
========= ====== ======= ======== ======== ======== ========
Comprehensive Income $ 4,511
=======
2000
Balance at Jan. 1, 2000 9,661,262 $9,661 $20,272 $ 96,874 $(2,245) $(11,996) $112,566 $
Net Income 11,444 11,444 11,444
Issuance of common stock 113,350 113 1,690 1,803
Treasury stock purchased (1,120) (1,120)
Cash dividends on:
common stock (1,871) (1,871)
Unrealized loss on
available for
sale securities (311) (311) (311)
--------- ------ ------- -------- ------- -------- -------- -------
Balance at June 30,
2000 9,774,612 $9,774 $21,962 $106,447 $ (2,556) $(13,116) $122,511
========= ====== ======= ======== ======== ======== ========
Comprehensive Income $11,133
=======
See accompanying notes.
</TABLE>
5
<PAGE> 6
<TABLE>
MISSISSIPPI VALLEY BANCSHARES, INC.
-----------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------
(UNAUDITED)
<CAPTION> Six Months Ended
June 30,
----------------------
2000 1999
--------- ---------
(dollars in thousands)
<S> <C> <C>
OPERATING ACTIVITIES
--------------------
Net income $ 11,444 $ 11,136
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for possible loan losses 1,330 3,005
Provision for depreciation and amortization 1,853 1,190
Accretion of discounts and amortization of
premiums on securities (923) (206)
Realized securities (gains) and losses, net (919) 415
Net increase in trading account securities (565) (825)
Net decrease (increase) in interest receivable (3,638) 765
Increase (decrease) in interest payable 553 (253)
Other, net (4,292) (512)
--------- ---------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 4,843 14,715
--------- ---------
INVESTING ACTIVITIES
--------------------
Proceeds from maturities of held to maturity securities 3,400 2,000
Purchases of available for sale securities (130,688) (90,357)
Purchases of held to maturity securities (41,068)
Proceeds from maturities of available for sale securities 81,000 40,000
Proceeds from sales and paydowns of
available for sale securities 40,767 174,797
Purchases of premises and equipment (4,455) (8,522)
Increase in loans outstanding, net (152,238) (114,747)
--------- ---------
NET CASH PROVIDED BY
(USED IN) INVESTING ACTIVITIES (203,282) 3,171
--------- ---------
FINANCING ACTIVITIES
--------------------
Net increase in deposits 224,666 47,218
Net increase in repurchase agreements
and other short-term borrowings 191 17,080
Proceeds from sale of common stock 1,383 224
Purchase of treasury stock (1,120) (5,023)
Cash dividends (1,871) (1,696)
--------- ---------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 223,249 57,803
--------- ---------
INCREASE IN CASH
AND CASH EQUIVALENTS 24,810 75,689
Cash and cash equivalents at beginning of period 84,651 27,017
--------- ---------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 109,461 $ 102,706
========= =========
See accompanying notes.
</TABLE>
6
<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 Six Months Ended June 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 $ 441 $ 155 $ 286
Less: reclassification adjustment
for gains realized in net
income 919 322 597
-------- ------- -------
Net unrealized losses (478) (167) (311)
-------- ------- -------
Other comprehensive income (loss) $ (478) $ (167) $ (311)
======== ======= =======
<CAPTION>
For the Six Months Ended June 30, 1999
--------------------------------------
Before-Tax Tax Net-of-Tax
Amount Expense Amount
---------- ------ ----------
(dollars in thousands)
<S> <C> <C> <C>
Unrealized losses on
available for sale securities $(10,607) $(3,712) $(6,895)
Less: reclassification adjustment
for losses realized in net
income (415) (145) (270)
-------- ------- -------
Net unrealized losses (10,192) (3,567) (6,625)
-------- ------- -------
Other comprehensive
income (loss) $(10,192) $(3,567) $(6,625)
======== ======= =======
</TABLE>
7
<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 Six Months Ended
June 30, June 30,
----------------------- -----------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
(dollars in thousands, except per share data)
<S> <C> <C> <C> <C>
BASIC:
Average common shares outstanding 9,355,916 9,367,253 9,341,238 9,431,050
========== ========== ========== ==========
Net income $ 5,531 $ 5,647 $ 11,444 $ 11,136
========== ========== ========== ==========
Basic earnings per common share $ .60 $ .60 $ 1.23 $ 1.18
========== ========== ========== ==========
</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 Six Months Ended
June 30, June 30,
----------------------- -----------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
(dollars in thousands, except per share data)
<S> <C> <C> <C> <C>
DILUTED:
Average common shares outstanding 9,355,916 9,367,253 9,341,238 9,431,050
Average common stock equivalents of
options outstanding-based on the
treasury stock method using market price 30,825 150,348 44,415 151,181
---------- ---------- ---------- ----------
9,386,741 9,517,601 9,385,653 9,582,231
========== ========== ========== ==========
Net income $ 5,531 $ 5,647 $ 11,444 $ 11,136
========== ========== ========== ==========
Diluted earnings per common share $ .59 $ .59 $ 1.22 $ 1.16
========== ========== ========== ==========
</TABLE>
8
<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 second quarter of 2000 was $5,531,000,
down $116,000 or 2.1% from $5,647,000 earned during the second quarter of
1999. On a per share basis, net income was $.59 in the second quarter of
each year. Increased net interest income and a reduced provision for
possible loan losses were offset by reduced noninterest income and higher
overhead expense.
Net income for the first half of 2000 was $11,444,000, up $308,000 or
2.8% from $11,136,000 for the first half of 1999. One a per share basis, net
income was $1.22, up from $1.16 in the first half of 1999. Greater net
interest income and a lower provision for loan losses were the primary
contributors to the improved earnings performance. The Company's loan loss
provision was $1,330,000, down from $3,005,000 for the first six months of
1999 primarily because of net loan recoveries of $557,000 in 2000 compared
with net loan charge-offs of $771,000 in the first half of 1999. Total
noninterest income was $6,119,000 for the first six months of 2000, down from
$7,160,000 for the same period in 1999 due primarily to reduced profits on
derivative trading activities. Total noninterest expenses were $15,652,000
for the first six months of 2000, up from $13,560,000 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 six months ended June 30, 2000, the Company's return
on average assets was 1.30% and 1.40%, down from 1.58% and 1.57% in the same
periods in 1999, respectively. At June 30, 2000, total equity capital was
$122,511,000, up from $107,794,000 at June 30, 1999. The Company's return on
average equity was 18.35% and 19.30% for the quarter and six months ended
June 30, 2000, down from 20.67% and 20.14% for the same periods in 1999,
respectively. Total assets reached $1,797,537,000 with loans up to
$1,257,293,000 at the end of June, 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, $64,000,
$143,000 and $127,000 for the three months ended June 30, 2000 and 1999, and
for the six months ended June 30, 2000 and 1999, respectively.
9
<PAGE> 10
Net interest income on a tax-equivalent basis, divided by average interest
earning assets, represents the Company's net interest margin.
Three months ended June 30, 2000 and 1999
-----------------------------------------
Total tax-equivalent interest income for the three months ended June 30,
2000 was $34,526,000, up $7,794,000 compared to the same period in 1999. The
$177 million increase in the volume of average loans and the higher yields
earned thereon were primarily responsible for the increase in interest
earnings for the second quarter of 2000. Overall asset yields were 8.55% in
the second three months of 2000, up 74 basis points from 7.81% earned in the
same period in 1999 as nearly all asset yields rose in the current upward
interest rate cycle. Funding the Company's loan growth were increased money
market and time deposits.
Total interest expense for the second quarter of 2000 was $20,049,000, up
$7,201,000 from $12,848,000 in the second three months of 1999. Increased
deposits and the higher rates paid on all fund sources, particularly money
market deposits, were responsible for the greater interest expense costs in
2000.
Overall tax-equivalent net interest income increased only $593,000 as the
rise in interest income was largely offset by the interest expense increase.
The Company's net interest margin declined to 3.58%, down 47 basis points
from 4.05% in the same period in 1999 primarily due to the greater increase
in rates paid than in yields earned.
Six months ended June 30, 2000 and 1999
---------------------------------------
Total tax-equivalent interest income for the first six months of 2000 was
$65,624,000, up $12,723,000 from $52,901,000 in the same period in 1999. The
$176 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. Overall asset yields were 8.46% for the first
six months of 2000, up from 7.81% for the same period in 1999. Funding the
asset growth in the first half of 2000 were increased money market accounts
and time deposits.
Total interest expense for the first half of 2000 was $36,449,000, up
$10,849,000 from $25,600,000 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 the first half of 2000.
Overall rates paid on total interest bearing liabilities rose to 5.31% from
4.35% in the first six months of 1999.
In summary, total tax-equivalent net interest income increased $1,874,000
as the increased interest income was offset to a significant degree by the
interest expense increase. The Company's net interest margin for the first
six months of 2000 was 3.76%, down from 4.02% in the same period in 1999.
10
<PAGE> 11
<TABLE>
AVERAGE BALANCES, INTEREST AND RATES
<CAPTION>
THREE MONTHS ENDED JUNE 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 $1,208,734 $27,534 9.16% $1,033,976 $21,617 8.38%
Tax-exempt<F3> 2,000 54 10.95
Held to maturity securities
Taxable 88,523 1,433 6.48 29,966 471 6.29
Tax-exempt<F3> 6,850 172 10.04 8,143 207 10.17
Available for sale securities 265,866 4,504 6.79 276,724 4,145 6.00
Trading account securities 1,187 22 7.50 1,307 21 6.44
Federal Funds sold and other short-
term investments 48,845 807 6.64 22,653 271 4.79
---------- ------- ---------- -------
Total interest-earning assets 1,622,005 34,526 8.55 1,372,769 26,732 7.81
------- -------
Noninterest-earning assets:
Cash and due from banks 33,179 26,643
Bank premises and equipment 40,291 26,171
Other assets 34,140 21,241
Allowance for possible loan losses (22,944) (20,101)
---------- ----------
Total assets $1,706,671 $1,426,723
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
NOW accounts $ 27,864 $ 76 1.10% $ 29,027 $ 88 1.21%
Money market accounts 863,711 12,649 5.89 729,014 7,617 4.19
Savings deposits 27,751 203 2.95 26,833 196 2.93
Time deposits of $100,000 or more 52,534 721 5.52 35,642 408 4.60
Other time deposits 361,716 4,791 5.33 280,091 3,410 4.88
---------- ------- ---------- -------
Total interest-bearing deposits 1,333,576 18,440 5.56 1,100,607 11,719 4.27
Federal funds purchased, repurchase
agreements and other short-term
borrowings 94,170 1,305 5.57 80,033 876 4.38
Guaranteed Preferred Beneficial
Interests in Subordinated Debentures 14,950 304 8.14 14,950 253 6.76
---------- ------- ---------- -------
Total interest-bearing liabilities 1,442,696 20,049 5.59 1,195,590 12,848 4.31
------- -------
Noninterest-bearing liabilities:
Demand deposits 134,703 120,275
Other liabilities 8,737 1,589
Shareholders' equity 120,535 109,269
---------- ----------
Total liabilities and
shareholders' equity $1,706,671 $1,426,723
========== ==========
Net interest income $14,477 $13,884
======= =======
Net interest margin 3.58% 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 $70,000 and
$64,000 for the three months ended June 30, 2000 and 1999, respectively.
</TABLE>
11
<PAGE> 12
<TABLE>
AVERAGE BALANCES, INTEREST AND RATES
<CAPTION>
SIX MONTHS ENDED JUNE 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 $1,164,691 $52,522 9.06% $ 990,482 $41,743 8.49%
Tax-exempt<F3> 2,000 109 10.95
Held to maturity securities
Taxable 82,492 2,656 6.44 30,337 950 6.28
Tax-exempt<F3> 6,969 350 10.06 8,130 414 10.19
Available for sale securities 265,695 8,847 6.67 319,984 9,420 5.91
Trading account securities 1,298 46 7.09 943 31 6.61
Federal Funds sold and other short-
term investments 34,229 1,094 6.43 14,443 343 4.79
---------- ------- ---------- -------
Total interest-earning assets 1,557,374 65,624 8.46 1,364,319 52,901 7.81
------- -------
Noninterest-earning assets:
Cash and due from banks 31,587 25,229
Bank premises and equipment 39,516 24,321
Other assets 33,176 22,377
Allowance for possible loan losses (22,397) (19,273)
---------- ----------
Total assets $1,639,256 $1,416,973
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
NOW account $ 27,396 $ 151 1.11% $ 28,153 $ 180 1.29%
Money market accounts 784,955 21,400 5.48 722,311 15,017 4.19
Savings deposits 27,884 411 2.96 26,254 384 2.95
Time deposits of $100,000 or more 52,727 1,426 5.44 35,978 849 4.76
Other time deposits 369,119 9,667 5.27 284,506 7,036 4.99
---------- ------- ---------- -------
Total interest-bearing deposits 1,262,081 33,055 5.26 1,097,202 23,466 4.31
Federal funds purchased, repurchase
agreements and other short-term
borrowings 104,352 2,810 5.42 75,201 1,626 4.35
Guaranteed Preferred Beneficial
Interests in Subordinated debentures 14,950 584 7.81 14,950 508 6.80
---------- ------- ---------- -------
Total interest-bearing liabilities 1,381,383 36,449 5.31 1,187,353 25,600 4.35
------- -------
Noninterest-bearing liabilities:
Demand deposits 131,050 116,344
Other liabilities 8,231 2,704
Shareholders' Equity 118,592 110,572
---------- ----------
Total liabilities and
shareholders' equity $1,639,256 $1,416,973
========== ==========
Net interest income $29,175 $27,301
======= =======
Net interest margin 3.76% 4.02%
===== =====
<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 $143,000 and
$127,000 for the six months ended June 30, 2000 and 1999, respectively.
</TABLE>
12
<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 SIX MONTHS ENDED
JUNE 30, 2000 JUNE 30, 2000
COMPARED TO COMPARED TO
JUNE 30, 1999 JUNE 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> $3,866 $ 2,105 $5,971 $ 7,867 $ 3,021 $10,888
Held to maturity securities:
Taxable 948 14 962 1,681 25 1,706
Tax-exempt<F1> (32) (3) (35) (59) (5) (64)
Available for sale securities (168) 527 359 (1,706) 1,133 (573)
Trading account securities (2) 3 1 13 2 15
Federal funds sold and other short-
term investments 404 132 536 603 148 751
------ ------- ------ ------- ------- -------
Total interest income 5,016 2,778 7,794 8,399 4,324 12,723
------ ------- ------ ------- ------- -------
INTEREST PAID ON:
NOW accounts (4) (8) (12) (5) (24) (29)
Money market accounts 1,574 3,458 5,032 1,403 4,980 6,383
Savings 6 1 7 26 1 27
Time deposits of $100,000 or more 220 93 313 442 135 577
Other time deposits 1,049 332 1,381 2,214 417 2,631
Federal funds purchased, repurchase
agreements and other short-term
borrowings 193 236 429 786 398 1,184
Long-term borrowings. 51 51 76 76
------ ------- ------ ------- ------- -------
Total interest expense 3,038 4,163 7,201 4,866 5,983 10,849
------ ------- ------ ------- ------- -------
Net interest income $1,978 $(1,385) $ 593 $ 3,533 $(1,659) $ 1,874
====== ======= ====== ======= ======= =======
<FN>
--------------------------------
<F1> Information is presented on a tax-equivalent basis assuming a tax rate
of 35%. The approximate tax equivalent adjustments were $70,000,
$64,000, $143,000 and $127,000 for the three months ended June 30, 2000
and 1999, and for the six months ended June 30, 2000 and 1999,
respectively.
<F2> Average balances included nonaccrual loans.
</TABLE>
13
<PAGE> 14
PROVISION FOR POSSIBLE LOAN LOSSES
----------------------------------
The provision for possible loan losses for the second quarter of 2000 was
$561,000, down from $1,256,000 last year. For the first half of 2000 the
provision for possible loan losses was $1,330,000, down from $3,005,000 for
the same period last year. Because of net loan recoveries of $557,000 in 2000
and net loan charge-offs of $771,000 in the first half of 1999, the Company
reduced its loan loss provision expense in 2000.
The allowance for possible loan losses was $23,536,000 or 1.87% of loans
outstanding at June 30, 2000. This compared to $21,649,000 at the end of
1999, and $20,378,000 at June 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 Six Months Ended
June 30, June 30,
------------------------- -------------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
(dollars in thousands)
<C> <C> <C> <C> <C>
Allowance for possible loan losses
(beginning of period) $ 22,570 $ 19,677 $ 21,649 $ 18,144
Loans charged off (15) (888) (647) (1,355)
Recoveries of loans previously
charged off 420 333 1,204 584
---------- ---------- ---------- ----------
Net loans (charged off) recoveries 405 (555) 557 (771)
---------- ---------- ---------- ----------
Provision for possible loan losses 561 1,256 1,330 3,005
---------- ---------- ---------- ----------
Allowance for possible loan losses
(end of period) $ 23,536 $ 20,378 $ 23,536 $ 20,378
========== ========== ========== ==========
Loans outstanding:
Average $1,210,734 $1,033,976 $1,166,691 $ 990,482
End of period 1,257,293 1,039,937 1,257,293 1,039,937
Ratio of allowance for possible
loan losses to loans outstanding:
Average 1.94% 1.97% 2.02% 2.06%
End of period 1.87 1.96 1.87 1.96
Ratio of net charge-offs to
average loans outstanding, annualized: not meaningful .21 not meaningful .16
</TABLE>
14
<PAGE> 15
The following table summarizes nonperforming assets at the dates
indicated:
<TABLE>
<CAPTION>
June 30, December 31, June 30,
2000 1999 1999
---------- ---------- ----------
(dollars in thousands)
<S> <C> <C> <C>
Nonaccrual loans $ 2,228 $ 2,756 $ 972
Loans past due 90 days or more 34 371 13
Restructured loans 170 90 104
---------- ---------- ----------
Total nonperforming loans 2,432 3,217 1,089
Other real estate 10 10 10
---------- ---------- ----------
Total nonperforming assets $ 2,442 $ 3,227 $ 1,099
========== ========== ==========
Loans, net of unearned discount $1,257,293 $1,104,498 $1,039,937
Allowance for possible loan
losses to loans 1.87% 1.96% 1.96%
Nonperforming loans to loans .19 .29 .10
Allowance for possible loan losses
to nonperforming loans 967.76 672.96 1,871.26
Nonperforming assets to loans
and foreclosed assets .19 .29 .11
</TABLE>
NONINTEREST INCOME
------------------
For the second quarter of 2000 total noninterest income was $2,896,000, down
$703,000 from $3,599,000 in the same period in 1999. The Company had trading
profits of $632,000 on hedging activities in the second quarter of 2000
compared with $1,205,000 in the second three months of 1999. There were no
securities sales in the second quarter of 2000 compared with net gains of
$415,000 on sales of investment securities in the same period in 1999.
Merchant credit card income and operating lease income were also up in 2000
compared with 1999.
For the first six months of 2000 total noninterest income was $6,119,000,
down from $7,160,000 in the first half of 1999. Realized gains on
interest-rate derivative trading activities generated trading profits and
commissions of $3,901,000 for the first six months of 1999 compared with
$632,000 in 2000. Net gains of $919,000 were realized on securities sales in
2000 versus net losses of $415,000 on sales of available for sale securities in
the first half of 1999. Other portions of 2000 noninterest income including
merchant credit card fees, leasing income and commissions and fees from
customer securities activities were up from 1999.
NONINTEREST EXPENSE
-------------------
Total noninterest expense for the second quarter of 2000 was $7,946,000, up
$804,000 from $7,142,000 in the second three months of 1999. For the first
half of 2000 total noninterest expenses were $15,652,000, up $2,092,000 from
the same period in 1999. Overall Company growth and operating costs for the
new Des Peres bank and Company headquarters were primarily responsible for
the increase.
15
<PAGE> 16
CAPITAL MANAGEMENT AND RESOURCES
--------------------------------
As of June 30, 2000, the Company's total shareholders' equity was $122.5
million. New capital was provided by the Company's first quarter 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 47,400 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 June 30, 2000 and December 31, 1999 the Company's Tier 1
capital was 10.29% and 10.97% of risk-weighted assets, and total risk-based
capital was 11.54% 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 June 30, 2000 and
December 31, 1999, the Company's leverage ratio was 8.18% 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.
16
<PAGE> 17
PART II. OTHER INFORMATION
-----------------------------
ITEM 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
On April 19, 2000 at the Company's Annual Meeting of Stockholders,
stockholders took the following actions:
a. Elected or re-elected all Management nominees to the Board of
Directors. Vote tallies were as follows:
<TABLE>
<CAPTION>
Votes Votes
In Favor Abstaining
------- ----------
<S> <C> <C>
Andrew S. Baur 7,754,562 11,982
Alice C. Behan 7,755,194 11,350
William H. T. Bush 7,757,289 9,255
Franklin J. Cornwell, Jr. 7,758,144 8,400
Frederick O. Hanser 7,757,289 8,255
G. Watts Humphrey, Jr. 7,758,110 8,434
</TABLE>
b. Approved an amendment to the Corporation's 1991 Stock Option
Plan with 7,466,305 shares voted in favor; 264,843 shares voted
against, and 35,396 shares abstained.
c. Ratified the selection of Ernst & Young LLP as independent
accountants for 2000 with 7,754,812 shares voted in favor,
4,881 shares voted against and 6,851 shares abstained.
ITEM 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits: NONE
(b) Reports on Form 8-K: NONE
17
<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: August 11, 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)
18
