<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
------------------------------------------------
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 0-26350
--------------------------------------------------------
ALLEGIANT BANCORP, INC.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Missouri 43-1519382
- ------------------------------------ ---------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or
organization)
2122 Kratky Road
St. Louis, Missouri 63114
- -------------------------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(314) 692-8200
- -------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
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. x Yes / / No
Title of class of Number of shares
common stock outstanding as of April 30, 1998
- ----------------------------------- --------------------------------------
Common stock, $0.01 par value 5,144,335
<PAGE> 2
ALLEGIANT BANCORP, INC.
FORM 10-Q
<TABLE>
INDEX
<CAPTION>
Page
----
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) 3
Consolidated Balance Sheets (Unaudited) -- March 31, 1998 and
December 31, 1997 3
Consolidated Statements of Income (Unaudited) -- Three Months
Ended March 31, 1998 and 1997 4
Consolidated Statement of Shareholders' Equity (Unaudited) --
Three Months Ended March 31, 1998 5
Consolidated Statements of Cash Flows (Unaudited) -- Three
Months Ended March 31, 1998 and 1997 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operation 8
Overview 8
Results of Operations 9
Item 3. Quantitative and Qualitative Disclosures About Market Risk 19
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 20
Item 2. Changes in Securities and Use of Proceeds 20
Item 3. Defaults Upon Senior Securities 20
Item 4. Submission of Matters to a Vote of Security Holders 20
Item 5. Other Information 20
Item 6. Exhibits and Reports on Form 8-K 20
SIGNATURES 21
EXHIBIT INDEX 22
</TABLE>
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<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
ALLEGIANT BANCORP, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<CAPTION>
March 31, December 31, March 31,
1998 1997 1997
--------- ------------ ---------
(Dollars in thousands)
<S> <C> <C> <C>
ASSETS:
- ------
Cash and due from banks $ 12,890 $ 14,872 $ 10,692
Federal funds sold and other overnight investments 7,940 1,600 25
Investment securities:
Available-for-sale (at estimated market value) 35,348 44,918 20,851
Held-to-maturity (approximate market value of
$22,999, $32,146 and $39,419 respectively) 22,843 31,951 39,572
Loans, net of allowance for possible loan losses of
$5,425, $5,193 and $3,456 respectively 501,731 479,669 310,811
Bank premises and equipment, net of accumulated
depreciation 10,987 10,801 5,842
Accrued interest and other assets 12,377 10,837 1,832
Cost in excess of fair value of net assets acquired 13,484 13,589 476
-------- -------- --------
Total assets $617,600 $608,237 $390,101
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Deposits:
Non-interest-bearing $ 44,262 $ 50,060 $ 31,294
Interest-bearing 390,803 382,370 231,024
Certificates of deposit of $100,000 or more 44,711 52,211 48,505
-------- -------- --------
Total deposits 479,776 484,641 310,823
-------- -------- --------
Short-term borrowings 51,038 53,579 41,275
Long-term borrowings 38,275 23,275 13,663
Accrued expenses and other liabilities 5,494 4,671 2,204
-------- -------- --------
Total liabilities 574,583 566,166 367,965
-------- -------- --------
Commitments and contingencies
Shareholders' equity:
Common Stock, $.01 par value - shares
authorized, 7,800,000; issued and outstanding,
5,140,000, 5,096,000 and $2,843,000 respectively 51 51 28
Capital surplus 39,770 39,504 21,248
Retained earnings 3,060 2,431 906
Net unrealized (depreciation) appreciation
on securities available-for-sale 136 85 (46)
-------- -------- --------
Total shareholders' equity 43,017 42,071 22,136
-------- -------- --------
Total liabilities and shareholders' equity $617,600 $608,237 $390,101
======== ======== ========
See notes to consolidated financial statements.
</TABLE>
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<PAGE> 4
<TABLE>
ALLEGIANT BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<CAPTION>
Three Months Ended
March 31,
----------------------------
1998 1997
---------- ----------
(In thousands, except share and per share data)
<S> <C> <C>
Interest income:
Interest and fees on loans $ 11,142 $ 6,566
Investment securities 1,086 913
Federal funds sold and overnight investments 42 57
---------- ----------
Total interest income 12,270 7,536
---------- ----------
Interest expense:
Interest on deposits 5,618 3,565
Interest on short-term borrowings 564 527
Interest on long-term debt 659 282
---------- ----------
Total interest expense 6,841 4,374
---------- ----------
Net interest income 5,429 3,162
Provision for possible loan losses 400 493
---------- ----------
Net interest income after
provision for possible loan losses 5,029 2,669
---------- ----------
Other income:
Service charges and other fees 1,097 636
Net gain on sale of securities 12 0
---------- ----------
Total other income 1,109 636
---------- ----------
Other expenses:
Salaries and employee benefits 2,314 994
Occupancy and other operating expenses 2,804 1,309
---------- ----------
Total other expenses 5,118 2,303
---------- ----------
Income before income taxes 1,020 1,002
Provision for income taxes 393 401
---------- ----------
Net income $ 627 $ 601
========== ==========
Per share data:
Basic:
Weighted average primary
common shares outstanding 5,106,830 3,002,491
Net income $ .12 $ .20
Diluted:
Weighted average diluted
common shares outstanding 5,527,022 3,287,126
Net income $ .11 $ .18
See notes to consolidated financial statements.
</TABLE>
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<PAGE> 5
<TABLE>
ALLEGIANT BANCORP, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)
<CAPTION>
Accumulated
Other
Common Capital Retained Comprehensive Comprehensive Total Share-
Stock Surplus Earnings Income Income holders' Equity
----- ------- -------- ------------- ------------- ---------------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
Balance December 31 1997 $ 51 $ 39,504 $ 2,433 $ 85 $ $ 42,073
Net Income 627 627 627
Unrealized gain on available-for-sale
securities net of reclassification
adjustment (see below) 51 51 51
------
Comprehensive income $ 678
======
Stock Dividend 0
Warrants Exercised 4 4
New shares issued 141 141
Options Exercised 121 121
Dividends 0
------ -------- ------- ------ --------
Balance March 31, 1998 $ 51 $ 39,770 $ 3,060 $ 136 $ 43,017
====== ======== ======= ====== ========
Reclassification Adjustments
Unrealized gain on available-for-sale
securities 63
Less: Reclassification adjustment for gains
realized, included in net income (12)
------
Net unrealized gains on securities $ 51
======
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<PAGE> 6
</TABLE>
<TABLE>
ALLEGIANT BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<CAPTION>
Three Months Ended
March 31,
---------------------------
1998 1997
--------- ---------
(In thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
- --------------------
Net income $ 627 $ 601
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 723 184
Provision for loan losses 400 493
Loan recoveries 7 4
Deferred tax provision --- (118)
Changes in assets and liabilities:
Accrued interest receivable and
other assets (1,435) 2,130
Other liabilities 945 497
--------- ---------
Cash provided by operating activities 1,267 3,791
--------- ---------
INVESTING ACTIVITIES:
- --------------------
Proceeds from maturities of securities held to maturity 9,111 3,525
Purchase of investment securities held to maturity --- (4,610)
Proceeds from maturities of securities available for-sale 9,888 3,500
Proceeds from sales of securities held available for-sale 1,230 496
Purchase of investments securities available for-sale (1,500) (2,843)
Loans made to customers, net of repayments (22,700) (22,482)
Additions to premises and equipment (676) (497)
--------- ---------
Cash provided by (used in) investing activities (4,647) (22,911)
--------- ---------
FINANCING ACTIVITIES:
- --------------------
Net increase (decrease) in deposits (4,865) 2,153
Net proceeds from issuance of short-term debt (2,541) 5,138
Proceeds from issuance of long-term debt 15,000 ---
Retirement of long-term debt --- (1,000)
Proceeds from issuance of Common Stock 266 5,269
Payment of dividends (122) (52)
--------- ---------
Cash provided by (used in) financing activities 7,738 11,508
--------- ---------
Net (decrease) increase in cash and cash equivalents 4,358 (7,612)
Cash and cash equivalents, beginning of period 16,472 18,329
--------- ---------
Cash and cash equivalents, end of period $ 20,830 $ 10,717
========= =========
See notes to consolidated financial statements.
</TABLE>
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<PAGE> 7
ALLEGIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Basis of Presentation
The accompanying consolidated financial statements include the accounts
of Allegiant Bancorp, Inc. (the "Company") and its subsidiaries: Allegiant
Bank (the "Bank"); Allegiant Bank, FSB (the "Savings Bank" and, together with
the Bank, the "Banks"); and Edge Mortgage Services, Inc. ("Edge"). Unless
the context requires otherwise, a reference to the Company includes Allegiant
Bancorp, Inc. and its subsidiaries.
The consolidated balance sheet at March 31, 1998, the consolidated
statements of income for the three months ended March 31, 1998 and 1997, the
consolidated statement of shareholders' equity at March 31, 1998 and the
consolidated statements of cash flows for the three months ended March 31,
1998 and 1997 are unaudited, but, in the opinion of management of the
Company, reflect all adjustments (consisting only of normal recurring
accruals) necessary for a fair presentation. Reference is hereby made to the
consolidated financial statements, including the notes thereto, contained in
the Company's Annual Report on Form 10-KSB for the year ended December 31,
1997. The results of operations for the three months ended March 31, 1998
are not necessarily indicative of the results that may be obtained for the
full year ending December 31, 1998.
Comprehensive Income
As of January 1, 1998, the Company adopted FASB Statement No. 130,
"Reporting Comprehensive Income." Statement 130 establishes new rules for
the reporting and display of comprehensive income and its components;
however, the adoption of this Statement had no impact on the Company's net
income or shareholders' equity. Statement 130 requires unrealized gains or
losses on the Company's available-for-sale securities, which prior to
adoption were reported separately in shareholder's equity to be included in
other comprehensive income. Prior year financial statements have ben
reclassified to conform to the requirements of Statement 130.
During the first quarter of 1998 and 1997, total comprehensive income
amounted to $678 thousand and $555 thousand, respectively.
- 7 -
<PAGE> 8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operation
Overview
This report contains certain forward-looking statements with respect to
the financial condition, results of operations and business of the Company
and its subsidiaries. These forward looking statements involve certain risks
and uncertainties. For example, by accepting deposits at fixed rates, at
different times and for different terms, and lending funds at fixed rates for
fixed periods, a bank accepts the risk that the cost of funds may rise and
the use of the funds may be at a fixed rate. Similarly, the cost of funds
may fall, but a bank may have committed by virtue of the term of a deposit to
pay what becomes an above-market rate. Investments may decline in value in a
rising interest rate environment. Loans, and the reserve for loan losses,
have the risk that the borrower will not repay all funds in a timely manner
as well as the risk of total loss. Collateral may or may not have the value
attributed to it. The loan loss reserve, while believed adequate, may prove
inadequate if one or more large borrowers, or numerous mid-range borrowers,
or a combination of both, experience financial difficulty for individual,
national or international reasons. Because the business of banking is highly
regulated, decisions of governmental authorities, such as the rate of deposit
insurance, can have a major effect on operating results. Unanticipated
events associated with Year 2000 compliance, relating to work on developments
or modifications to computer systems and to software, including work
performed by suppliers or vendors, could affect Allegiant's future financial
condition and operating results. All of these uncertainties, as well as
others, are present in a banking operation and shareholders are cautioned
that management's view of the future on which it prices its products,
evaluates collateral, sets loan reserves and estimates costs of operation and
regulation may prove to be other than an anticipated.
The Company is a bank holding company that owns all of the capital
stock of the Bank, a Missouri state-chartered bank, and the Savings Bank, a
federal savings bank. The Company's banking subsidiaries provide personal
and commercial banking and related financial services from 11 locations in
the St. Louis Standard Metropolitan Statistical Area ("St. Louis SMSA"), the
16th largest metropolitan area in the United States, and three locations in
Northeast Missouri. Allegiant Mortgage Company (the "Mortgage Company"), a
wholly-owned subsidiary of the Bank, offers residential loans primarily to
customers in the St. Louis SMSA. Edge, a wholly-owned subsidiary of the
Company, offers residential loans to customers in the St. Louis SMSA who do
not qualify under standard mortgage loan criteria.
The Company was organized in May 1989 and acquired Allegiant State Bank
at that time. The Company acquired the Bank in 1990. In November 1994, the
Bank acquired the Mortgage Company. Effective January 1995, Allegiant State
Bank
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<PAGE> 9
merged into the Bank. Edge was organized in October 1996 and began
operations in January 1997. The Savings Bank was acquired in August 1997,
pursuant to an Agreement and Plan of Merger (the "Merger Agreement"), dated
March 20, 1997, by and between the Company and Reliance Financial, Inc.
("Reliance"), a Delaware corporation and the parent of Reliance Financial
Savings and Loan Association of St. Louis County ("RFSLA"). The Company
acquired Reliance through the merger of Reliance with and into the Company
(the "Reliance Acquisition"). RFSLA was renamed Allegiant Bank, FSB upon
consummation of the Reliance Acquisition. Under the Merger Agreement, the
Company acquired all of the outstanding capital stock of Reliance in exchange
for 599,126 shares of common stock, $0.01 par value, of the Company ("Common
Stock"). The transaction was completed on August 29, 1997. The Company
recorded total assets of $29.7 million, total deposits of $22.7 million, net
loans of $22.7 million and goodwill of $4.6 million in connection with the
Reliance Acquisition. The Company currently operates the Savings Bank as a
wholly-owned subsidiary.
Pursuant to separate Deposit Transfer and Asset Purchase Agreements,
dated May 8, 1997, by and between the Company and Roosevelt Bank
("Roosevelt"), a federal savings bank, the Bank assumed the deposits and
acquired the loans and real property of Roosevelt's branch offices in
Warrenton, Missouri and Union, Missouri (collectively, the "Branch
Acquisition"). The Branch Acquisition was completed on September 4, 1997.
The Bank assumed approximately $95.7 million of deposit liabilities, acquired
real property and related automated teller machines, furniture, fixtures,
equipment and other operating assets with an aggregate value of $0.9 million,
and approximately $2.9 million of consumer loans. The Bank recorded goodwill
of $8.8 million in connection with the Branch Acquisition.
Results of Operations
Net income for the three-month period ended March 31, 1998 was $627
thousand compared to $601 thousand for the same period in 1997, an increase
of 4.3%. Basic earnings per share declined to $0.12 for the first quarter of
1998 compared to $0.20 for the first quarter of 1997, a decline of 40.0%.
Diluted earnings per share for the first quarter of 1998 were $0.11, down
38.9% from the first quarter of 1997 level of $0.18. The decline in earnings
per share was due to the increase in average shares outstanding of 2,240,000
on a diluted basis. This 68.1% increase in average diluted shares resulted
from two rights offerings in 1997 and additional Common Stock issued in
connection with the Reliance Acquisition in 1997. Total assets at March 31,
1998 were $617.6 million, an increase of 58.3% compared to March 31, 1997
total assets of $390.1 million, and were up 1.5% from December 31, 1997 total
assets. Total loans also increased substantially, growing to $501.7 million
at March 31, 1998, compared to $310.8 million at March 31, 1997 and $479.8
million at December 31, 1997. Total deposits were $479.8 million at March
31, 1998,
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<PAGE> 10
up 54.4% from March 31, 1997 and down 1.0% from December 31, 1997. March 31,
1998 shareholders' equity increased to $43.0 million, up 94.3% compared to
March 31, 1997 and 2.3% compared to year-end 1997.
Net Interest Income
Net interest income increased $2.3 million in the first quarter of 1998
to $5.4 million compared to $3.2 million in the first quarter of 1997. The
interest margin for the first quarter of 1998 was up 27 basis points to 3.76%
compared to 3.49% in the first quarter of 1997. The change in the interest
rate spread was similar, an increase in the first quarter of 1998 of 28 basis
points to 3.28% compared to 3.00% in the first quarter of 1997. Both of
these increases were primarily the result of earning asset yields improving
by 18 basis points between comparable quarters while the cost of interest-
bearing liabilities declined 10 basis points. First quarter of 1998 loan
yields were comparable to the first quarter of 1997, increasing by 2 basis
points. However, the increase in the ratio of loans to total earning assets
improved to 87.5% in the first quarter of 1998 compared to 82.4% in the first
quarter of 1997. With substantially more of the Company's earning assets
consisting of loans, the overall yield on earning assets improved.
Additionally, improved yields on the securities portfolio also had a minor
impact on improving the earning asset yield. The decline in the cost of
interest-bearing liabilities was a result of decreased short-term borrowing
costs and lower rates paid on money market and NOW accounts, which were
partially offset by higher certificate of deposits costs.
As discussed in the Company's Annual Report on Form 10-KSB for the year
ended December 31, 1997, significant changes in all balance sheet categories
resulted from both internal growth and growth due to acquisitions. The
following discussion should be read with reference to the aforementioned
annual report.
Average earning assets increased to $577.8 million in the first quarter
of 1998 compared to $362.9 million in the first quarter of 1997. Compared to
the fourth quarter of 1997, average earning assets grew approximately $46.0
million. Average loans grew significantly during the first quarter of 1998,
increasing $206.8 million, or 69.2%, from the first quarter of 1997 and $51.3
million, or 11.3%, from the fourth quarter of 1997. The majority of this
loan growth for the comparable periods was concentrated in real estate
mortgage loans on one- to four-family properties. In comparing the first
quarter of 1998 with the first quarter of 1997, investment securities
increased $8.8 million, or 14.6%. Management of the Company decreased the
level of investment securities by $2.5 million in the first quarter of 1998
from the fourth quarter of 1997 level of $71.3 million in order to help fund
additional loan volume. Average total deposits increased to $481.5 million
in the first quarter of 1998, up $176.6 million, or 57.9%, compared to the
first quarter of 1997. Average deposits for the first quarter of 1998 also
increased by $3.5 million compared to the
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<PAGE> 11
fourth quarter of 1997. Total interest-bearing liabilities increased $196.0
million, or 59.6%, in the first quarter of 1998 compared to the first quarter
of 1997, totaling $525.2 million compared to $329.2 million, respectively.
In comparing the two quarters, all categories of average interest-bearing
liabilities showed large increases. Money market and NOW account balances
increased 38.7%, savings deposits increased 174.4%, certificates of deposit
increased 62.1%, short-term borrowings increased 41.4% and long-term
borrowings increased 151.4%. Average non-interest-bearing demand deposits
also substantially increased $17.7 million, or 62.8%, in the first quarter of
1998 compared to the first quarter of 1997. Average non-interest-bearing
liabilities increased $29.6 million, or 6.0%, during the first quarter of
1998 as compared to the fourth quarter of 1997. The increases in short-term
and long-term borrowings were due to the Company taking advantage of
favorable borrowing rates from the Federal Home Loan Bank (FHLB). The
incremental borrowing rates were substantially below the rates at which the
Company could have raised deposits and represented an opportunity to obtain
cost effective funds on a term basis.
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<PAGE> 12
The following table sets forth the condensed average balance sheets for
the periods reported and the percentage of each principal category of assets,
liabilities and shareholders' equity to total assets. Also shown is the
average yield on each category of interest-earning assets and the average
rate paid on interest-bearing liabilities for each of the periods reported:
<TABLE>
DISTRIBUTION OF AVERAGE ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY AND INTEREST RATES
<CAPTION>
Three Months Ended March 31,
-------------------------------------------------------------------------------
1998 1997
--------------------------------------- -------------------------------------
Average Int. Earned/ Yield/ Average Int. Earned/ Yield/
Balance Expense Rate<F1><F2> Balance Expense Rate<F1><F2>
------- ------- ------------ ------- ------- ------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Assets:
Interest-earning assets:
Loans <F1> $ 505,618 $ 11,142 8.81% $ 298,820 $ 6,566 8.79%
Taxable investment securities 67,330 1,072 6.37 58,841 880 5.98
Non-taxable investment securities 1,478 14 3.79 1,173 15 5.12
Federal funds sold 3,407 42 4.93 4,047 75 7.41
--------- -------- --------- -------
Total interest-earning assets 577,833 12,270 8.49 362,881 7,536 8.31
--------- -------- --------- -------
Non-interest-earning assets:
Cash and due from banks 9,876 8,384
Bank premises and equipment 10,615 5,335
Other assets 28,650 5,190
Reserve for possible loan losses (5,349) (3,177)
--------- ---------
Total assets $ 621,625 $ 378,613
========= =========
Liabilities and shareholders' equity:
Interest-bearing liabilities:
Money market/NOW accounts $ 116,030 $ 1,186 4.09 $ 83,665 $ 886 4.25
Savings deposits 16,322 109 2.67 5,949 44 2.96
Certificates of deposit 233,878 3,356 5.74 129,833 1,859 5.73
Certificates of deposit
over $100,000 48,988 672 5.49 48,068 640 5.33
IRA certificates 20,423 295 5.78 9,206 136 5.91
--------- -------- --------- -------
Total interest-bearing deposits 435,641 5,618 5.16 276,721 3,565 5.15
--------- -------- --------- -------
Federal funds purchased, repurchase
agreements, and other short-term
borrowings 54,429 564 4.14 38,500 527 5.48
Long-term borrowings 35,163 659 7.50 13,985 282 8.07
--------- -------- --------- -------
Total interest-bearing liabilities 525,233 6,841 5.21 329,206 4,374 5.31
--------- -------- --------- -------
Non-interest-bearing liabilities:
Demand deposits 45,846 28,166
Other liabilities 8,002 1,998
Shareholders' equity 42,544 19,243
--------- ---------
Total liabilities and
shareholders' equity $ 621,625 $ 378,613
========= =========
Net interest income $ 5,429 $ 3,162
======== =======
Net interest margin 3.76 3.49
<FN>
- ---------------
<F1> Interest on non-accruing loans is not included for purposes of
calculating yields.
<F2> All yields are annualized.
</TABLE>
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<PAGE> 13
The composition of the investment portfolio is summarized as follows:
<TABLE>
INVESTMENT SECURITIES PORTFOLIO
<CAPTION>
March 31, December 31, March 31,
1998 1997 1997
--------- ------------ ---------
(In thousands)
<S> <C> <C> <C>
United States Treasury securities $ 9,486 $ 9,478 $ 8,955
Obligations of United States government agencies 38,446 57,295 45,663
Federal Home Loan Bank stock 7,033 7,033 4,462
States and political subdivisions 1,563 1,563 1,173
Less unrealized gain on securities held
available-for-sale 215 129 (69)
Other 1,448 1,371 239
------- ------- -------
Total investment securities $58,191 $76,869 $60,423
======= ======= =======
</TABLE>
The composition of the loan portfolio is summarized as follows:
<TABLE>
LENDING AND CREDIT MANAGEMENT<F1>
<CAPTION>
March 31, December 31, March 31,
1998 1997 1997
-------------------- --------------------- --------------------
Percent Percent Percent
of Total of Total of Total
Amount Loans Amount Loans Amount Loans
------ -------- ------ -------- ------ --------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Commercial, financial,
agricultural municipal and
industrial development $ 93,888 18.51% $109,937 22.67% $ 81,162 25.83%
Real estate--construction 26,622 5.25 27,181 5.60 10,938 3.48
Real estate--mortgage
One- to four-family 224,758 44.32 195,964 40.42 132,730 42.23
Multi-family and commercial 145,808 28.75 135,452 27.94 76,810 24.44
Consumer and other 16,605 3.27 16,821 3.47 12,789 4.07
Less unearned income (525) (0.10) (493) (0.10) (162) (.05)
-------- ------ -------- ------ -------- ------
Total loans(1) $507,156 100.00% $484,862 100.00% $314,267 100.00%
======== ====== ======== ====== ======== ======
<FN>
- ---------------
<F1> The Bank had no outstanding foreign loans at the dates reported.
</TABLE>
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<PAGE> 14
The following table summarizes deposit activity:
<TABLE>
DEPOSIT LIABILITY COMPOSITION
<CAPTION>
March 31, December 31, March 31,
1998 1997 1997
--------------------- ---------------------- ---------------------
Percent Percent Percent
of Total of Total of Total
Amount Deposits Amount Deposits Amount Deposits
------ -------- ------ -------- ------ --------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Demand deposits $ 44,262 9.23% $ 50,060 10.33% $ 31,294 10.07%
NOW accounts 19,066 3.97 18,448 3.81 11,957 3.85
Money market accounts 101,859 21.23 97,408 20.10 73,269 23.57
Savings deposits 16,666 3.47 16,157 3.33 6,152 1.98
Certificates of deposit 233,120 48.59 231,601 47.79 130,024 41.83
Certificates of deposit
over $100,000 44,711 9.32 52,211 10.77 48,505 15.61
IRA certificates 20,092 4.19 18,756 3.87 9,622 3.10
-------- ------ -------- ------ -------- ------
Total deposits $479,776 100.00% $484,641 100.00% $310,823 100.00%
======== ====== ======== ====== ======== ======
</TABLE>
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<PAGE> 15
The following table summarizes, for the periods indicated, activity in
the Bank's allowance for possible loan losses, including amounts of loans
charged off, amounts of recoveries and additions to the allowance charged to
operating expenses:
<TABLE>
SUMMARY OF LOAN LOSS EXPERIENCE AND RELATED INFORMATION--ALLOCATION
OF THE ALLOWANCE FOR LOAN LOSSES
<CAPTION>
Three Months Ended March 31,
---------------------------------
1998 1997
--------- ---------
(Dollars in thousands)
<S> <C> <C>
Allowance for possible loan losses
(beginning of period) $ 5,193 $ 3,100
Loans charged off:
Commercial, financial, agricultural,
municipal and industrial development (105) (78)
Real estate--mortgage (49) (12)
Installment--and consumer (17) (51)
Other loans (4) --
---------- ---------
Total loans (175) (141)
--------- ---------
Recoveries of loans previously charged off:
Commercial, financial, agricultural,
municipal and industrial development 1 0
Real estate--mortgage 0 0
Installment and consumer 1 4
Other loans 5 0
--------- ---------
Total recoveries 7 4
--------- ---------
Net loans charged off (168) (137)
--------- ---------
Provision for possible loan losses 400 493
--------- ---------
Allowance for possible loan losses (end of period) $ 5,425 $ 3,456
========= =========
Loans outstanding:
Average $ 505,619 $ 298,820
End of period 507,156 314,267
Ratios:
Net charge-offs to average loans outstanding .03% .05%
Net charge-offs to provision for loan losses 42.00 27.79
Provision for loan losses
to average loans outstanding .08 .16
Allowance for loan loss to total loans outstanding 1.07 1.10
Allocation for possible loan losses at end of period:
Commercial, financial, agricultural,
municipal and industrial development $ 1,248 $ 1,402
Real estate--construction 303 125
Residential real estate loans, first deeds of trust 2,159 817
Installment loans to individuals 130 145
All other loans 33 0
Unallocated 1,552 967
--------- ---------
Total $ 5,425 $ 3,456
========= =========
</TABLE>
The provision for loan losses for the first three months of 1998 was
$400 thousand compared to $493 thousand for the first three months of 1997.
Net charge-offs totaled $168 thousand for the first three months of 1998
compared to $137 thousand for the first three months of 1997. Net charge-offs
to average loans outstanding for the first quarter of 1998 was .03% compared to
.05% for the first quarter of 1997. The annualized first quarter rate of 12
basis points compares favorably with the low 19 basis points charged off during
1997. The allowance for
- 15 -
<PAGE> 16
loan losses to total loans was 1.04% at March 31, 1998 compared to 1.10% at
March 31, 1997 and 1.07% at December 31, 1997. The Company evaluates the
allowance for loan losses on an ongoing basis to ensure the timely charge-off
of loans and to determine the overall adequacy of the allowance. Based on the
evaluation process, the Company believes that its reserve is adequate to absorb
future potential losses.
<TABLE>
RISK ELEMENTS--NONACCRUAL, PAST DUE AND RESTRUCTURED LOANS
<CAPTION>
March 31, December 31, March 31,
1998 1997 1997
--------- ------------ ---------
(Dollars in thousands)
<S> <C> <C> <C>
Commercial, financial, agricultural and all other loans:
Past due 90 days or more $ 0 $ 341 $ 12
Nonaccrual 319 360 386
Restructured terms 0 0 0
Real estate--construction:
Past due 90 days or more 0 0 114
Nonaccrual 24 108 71
Restructured terms 0 0 0
Real estate--mortgage:
Past due 90 days or more 491 456 71
Nonaccrual 113 70 55
Restructured terms 0 0 0
Installment loans to individuals:
Past due 90 days or more 30 21 0
Nonaccrual 14 21 58
Restructured terms 0 0 0
-------- -------- --------
Total non-performing loans: $ 991 $ 1,377 $ 767
======== ======== ========
Ratios:
Non-performing loans to total loans outstanding 0.20% 0.28% 0.24%
Non-performing assets to total assets 0.23 0.23 0.20
Non-performing loans to shareholders' equity 2.30 3.26 3.46
Reserve for possible loan losses to total loans 1.07 1.07 1.10
Reserve for possible loan losses
to non-performing loans 547.43 377.12 450.59
</TABLE>
- 16 -
<PAGE> 17
The following table sets forth the Company's summary consolidated
non-interest income and expense for the periods indicated:
<TABLE>
NON-INTEREST INCOME AND NON-INTEREST EXPENSE
<CAPTION>
Three Months Ended March 31,
-------------------------------
1998 1997
------- -------
(In thousands)
<S> <C> <C>
Non-interest income:
Service charges on deposit accounts $ 253 $ 147
Securities gains (losses) 12 0
Other non-interest income 844 489
------- -------
Total non-interest income $ 1,109 $ 636
======= =======
Non-interest expense:
Salaries and employee benefits $ 2,314 $ 994
Occupancy expense 403 172
Furniture and equipment 431 207
Supplies 147 56
Postage 112 28
Professional fees 125 139
Advertising 144 38
Operating lease expenses 295 48
Intangible amortization 233 35
Other non-interest expense 914 586
------- -------
Total non-interest expense $ 5,118 $ 2,303
======= =======
</TABLE>
Non Interest Income
Non-interest income increased 74.4% in the first quarter of 1998
compared to the first quarter of 1997, totaling $1.109 million compared to
$636 thousand. Service charges on deposits increased 72.1%, totaling $253
thousand for the three months ended March 31, 1998 compared to $147 thousand
for the three months ended March 31, 1997. This increase was due to the
significant increase in the number of deposit accounts from acquisitions
completed during 1997. Other income increased 75.1% in the first quarter of
1998 compared to the first quarter of 1997. Mortgage fees for the three
months ended March 31, 1998 were $622 thousand compared to $318 thousand for
the three months ended March 31, 1997. This increase was due to a favorable
interest rate environment and a continued expansion of new and existing home
sales in the Company's market areas. Fees from the sale of investment
products, which was begun during the second quarter of 1997 totaled $68
thousand for the three months ended March 31, 1998.
- 17 -
<PAGE> 18
Non Interest Expense
Salary and employee benefits expense increased $1.320 million, or
132.8%, reaching $2.314 million for the three months ended March 31, 1998
compared to $994 thousand for the three months ended March 31, 1997. This
increase was due to the planned expansion of the Company during 1997 which
added seven additional locations and almost doubled the asset size of the
Company. Full-time equivalent employees (FTE) increased to 255 during the
first quarter of 1998 compared to 137 during the first quarter of 1997.
Total annualized cost per FTE increased to $36,298 for the three months ended
March 31, 1998 compared to $29,022 for the comparable period of 1997 as a
result of the Company recruiting additional executive, sales and support
personnel to manage the larger organization.
Net occupancy expenses totaled $403 thousand for the three months ended
March 31, 1998 compared to $172 thousand for the three months ended March 31,
1997. This increase was due to the additional sales locations opened or
acquired during 1997, as well as the additional expense associated with
locating the Company's executive and support functions to a new location.
The increases in furniture and equipment costs, postage and supplies also
were directly related to the additional locations mentioned above, as well as
expenditures made to upgrade the Company's computer operating systems.
Advertising costs were $144 thousand for the first quarter of 1998
compared to $38 thousand for the first quarter of 1997. This increase
reflected management's decision to commit more resources to promoting the
substantially larger organization. The level of advertising expense is
expected to be lower for the remainder of 1998 as most of the advertising
campaigns have been developed for the year.
Operating lease expenses increased to $295 thousand for the first
quarter of 1998, up $247 thousand from $48 thousand for the first quarter of
1997. The large increase was due to the Company's expansion into the
consumer leasing business during 1997 with substantial growth occurring in
the latter half of 1997.
Intangible amortization increased to $233 thousand for the three months
ended March 31, 1998 compared to $35 thousand as compared to the same period
of 1997. The increased amortization was the direct result of purchase
acquisitions which occurred during the second half of 1997.
The increase in other expenses was generally related to the increased
customer base, locations and employees existing during the first quarter of
1998 compared to the first quarter of 1997.
- 18 -
<PAGE> 19
The Company's efficiency ratio was 78.3% at March 31, 1998 compared to
60.6% at March 31, 1997. While revenues have increased substantially,
operating expenses have increased ahead of expected revenue increases. The
Company is committed to improving its overall efficiency by continuing to
emphasize revenue growth while maintaining or decreasing its current level of
operating expenses.
Capital Resource And Liquidity
As mentioned in the discussion of net interest income, interest-bearing
deposits and borrowed funds increased substantially from the prior year's
first quarter and from the fourth quarter of 1997. Growth in these funding
sources has kept pace with growth in earning assets for the same periods.
While the Company's long-term objective is to increase the level of core
deposits, in the short term the Company believes that utilizing FHLB advances
is often the most cost effective and efficient means of acquiring funds while
maintaining profitability. The Company continues to have available outside
resources to handle temporary liquidity needs.
The Company's equity position was significantly strengthened by two
rights offerings in 1997 and by the shares of Common Stock issued in
connection with the Reliance Acquisition during 1997. At March 31, 1998,
total shareholders' equity was $43.017 million, an increase of 94.3% from the
first quarter of 1997 and an increase of 2.3% from December 31, 1997. The
Company remains committed to maintaining a strong equity base through
earnings retention and controlled asset growth.
Regulatory guidelines require that Tier 1 capital equal or exceed 4.00%
of risk weighted assets and that total capital equal or exceed 8.00% of risk
weighted assets. At March 31, 1998 and December 31, 1997, the Company's Tier
1 capital was 6.52% and 6.39%, respectively, and total risk based capital was
8.29% and 8.14%, respectively. The minimum required ratio of Tier 1 capital
to total assets, or leverage ratio, is 3.00%. At March 31, 1998 and December
31, 1997, the Company's leverage ratios were 4.84% and 6.15%, respectively.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
- 19 -
<PAGE> 20
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in Securities and Use of Proceeds
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
See Exhibit Index on page 21 hereto.
(b) Reports on Form 8-K:
The Company did not file any Current Reports on Form 8-K for the
quarter ended March 31, 1998.
- 20 -
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized. The undersigned signed this report in
her dual responsibilities as a duly authorized officer of the registrant and
also as the registrant's Chief Financial Officer.
ALLEGIANT BANCORP, INC.
(Registrant)
May 13, 1998 By: /s/ Sandra L. Friedman
---------------------------------------
Sandra L. Friedman, Senior Vice
President and Chief Financial Officer
- 21 -
<PAGE> 22
<TABLE>
EXHIBIT INDEX
<CAPTION>
Ex. No. Description
- ------- -----------
<S> <C>
27.1 Financial Data Schedule for the quarter ended March 31, 1998.
27.2 Restated Financial Data Schedule for the quarter ended March 31, 1997.
</TABLE>
- 22 -
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 12,890
<INT-BEARING-DEPOSITS> 390,803
<FED-FUNDS-SOLD> 7,940
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 35,348
<INVESTMENTS-CARRYING> 58,191
<INVESTMENTS-MARKET> 58,347
<LOANS> 507,156
<ALLOWANCE> 5,425
<TOTAL-ASSETS> 617,600
<DEPOSITS> 479,776
<SHORT-TERM> 51,038
<LIABILITIES-OTHER> 5,494
<LONG-TERM> 38,275
0
0
<COMMON> 51
<OTHER-SE> 42,966
<TOTAL-LIABILITIES-AND-EQUITY> 617,600
<INTEREST-LOAN> 11,142
<INTEREST-INVEST> 1,086
<INTEREST-OTHER> 42
<INTEREST-TOTAL> 12,270
<INTEREST-DEPOSIT> 5,618
<INTEREST-EXPENSE> 1,223
<INTEREST-INCOME-NET> 5,429
<LOAN-LOSSES> 400
<SECURITIES-GAINS> 12
<EXPENSE-OTHER> 5,118
<INCOME-PRETAX> 1,020
<INCOME-PRE-EXTRAORDINARY> 1,020
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 627
<EPS-PRIMARY> 0.12
<EPS-DILUTED> 0.11
<YIELD-ACTUAL> 3.76
<LOANS-NON> 470
<LOANS-PAST> 521
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 5,193
<CHARGE-OFFS> 176
<RECOVERIES> 7
<ALLOWANCE-CLOSE> 5,425
<ALLOWANCE-DOMESTIC> 5,425
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,552
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<RESTATED>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 10,692
<INT-BEARING-DEPOSITS> 231,024
<FED-FUNDS-SOLD> 25
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 20,851
<INVESTMENTS-CARRYING> 39,572
<INVESTMENTS-MARKET> 39,419
<LOANS> 314,267
<ALLOWANCE> 3,456
<TOTAL-ASSETS> 390,101
<DEPOSITS> 310,823
<SHORT-TERM> 41,275
<LIABILITIES-OTHER> 2,204
<LONG-TERM> 13,663
0
0
<COMMON> 28
<OTHER-SE> 22,108
<TOTAL-LIABILITIES-AND-EQUITY> 22,136
<INTEREST-LOAN> 6,884
<INTEREST-INVEST> 913
<INTEREST-OTHER> 57
<INTEREST-TOTAL> 7,854
<INTEREST-DEPOSIT> 3,565
<INTEREST-EXPENSE> 4,374
<INTEREST-INCOME-NET> 3,480
<LOAN-LOSSES> 493
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2,303
<INCOME-PRETAX> 1,002
<INCOME-PRE-EXTRAORDINARY> 1,002
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 601
<EPS-PRIMARY> .20
<EPS-DILUTED> .18
<YIELD-ACTUAL> 3.49
<LOANS-NON> 625
<LOANS-PAST> 268
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0<F1>
<ALLOWANCE-OPEN> 3,100
<CHARGE-OFFS> 141
<RECOVERIES> 4
<ALLOWANCE-CLOSE> 3,456
<ALLOWANCE-DOMESTIC> 2,489
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 967
<FN>
<F1>Only reported at year end.
</TABLE>
