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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1997 Commission file number 0-26350
ALLEGIANT BANCORP, INC.
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(Exact name of registrant as specified in its charter)
Missouri 43-1519382
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2122 Kratky Road, St. Louis, Missouri 63114
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (314) 692-8200
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Securities registered pursuant to Section 12(b) of the Act: None
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Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value
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(Title of Class)
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 .
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Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-B is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB.
For the fiscal year ended December 31, 1997, revenues totaled:
$41,063,000.
As of March 23, 1998, the aggregate market value of the voting stock
held by non-affiliates of the Registrant was approximately $66,965,000.
As of March 23, 1998, there were 5,126,594 shares of the Registrant's
Common Stock, $.01 par value, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
The following document is incorporated by reference into the indicated
Part of this Report:
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Document Part of Form 10-KSB
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<S> <C>
Proxy Statement for the 1998
Annual Meeting of Shareholders III
</TABLE>
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<TABLE>
ALLEGIANT BANCORP, INC.
FORM 10-KSB
TABLE OF CONTENTS
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PAGE
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<S> <C>
PART I
Item 1--Business 1
Item 2--Description of Properties 6
Item 3--Legal Proceedings 6
Item 4--Submission of Matters to a Vote of Security Holders 6
Item 4A--Executive Officers of the Registrant 6
PART II
Item 5--Market for Registrant's Common Equity and Related Shareholder
Matters 8
Item 6--Management's Discussion and Analysis or Plan of Operations 9
Item 7--Financial Statements 31
Item 8--Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure 53
PART III
Item 9--Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act 53
Item 10--Executive Compensation 53
Item 11--Security Ownership of Certain Beneficial Owners and Management 53
Item 12--Certain Relationships and Related Transactions 53
Item 13--Exhibits and Reports on Form 8-K 54
Signatures 55
</TABLE>
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PART I
ITEM 1. BUSINESS
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This report contains certain forward-looking statements with respect to
the financial condition, results of operations and business of Allegiant
Bancorp, Inc. (the "Company" or "Allegiant") 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 Allegiant Bank, a Missouri state-chartered bank (the "Bank"), and
Allegiant Bank, FSB, a federal savings bank (the "Savings Bank," and,
together with the Bank, the "Banks"). 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 Mortgage Services,
Inc. ("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 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
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$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.
The Company's primary service area is located in St. Louis County which
has a population of approximately 1.0 million and the City of St. Louis which
has a population of approximately 400 thousand. A key to market coverage is
accessibility. With the addition of the Mehlville retail banking office in
1996 and the St. Peters, Affton (the Savings Bank) and Crestwood retail
banking offices in 1997, management believes that the Company's retail
banking offices are within a 20-minute drive from all principal sectors of
the St. Louis SMSA. Upon consummation of the Branch Acquisition, the Bank
added retail banking offices in Warrenton, Missouri and Union, Missouri. The
Warrenton banking office is located in Warren County, which has a population
of approximately 23 thousand. With the addition of the Warrenton branch, the
Bank is believed to have the largest deposit market share in Warren County.
The Union banking office is located in Franklin County, which has a
population of approximately 87 thousand. Both the Warrenton and Union
banking offices are within a 45-minute drive from St. Louis County. The
recent branch openings, the Reliance Acquisition and the Branch Acquisition
are part of the Company's plan to expand into markets in St. Louis County and
contiguous counties to provide accessibility to its customers.
The Bank also has three retail banking offices in northeastern
Missouri, including the City of Kahoka, the City of Palmyra and Monroe City.
The Company intends to continue to expand its northeastern Missouri
operations into additional markets not currently served by existing
facilities.
COMPETITION
The Company's subsidiaries encounter substantial competition in
offering all of their banking and related financial products and services
from other banking institutions and from an increasing number of non-banking
institutions in its market area. Many of the Bank's non-bank competitors are
not subject to the extensive Federal and state of Missouri regulations which
govern the Company and its subsidiaries and, as a result, have a competitive
advantage over the Bank in providing certain services. Many of the financial
institutions with which the Bank competes are larger and have substantially
greater financial resources than the Bank.
SUPERVISION AND REGULATION
General. As a bank holding company, the Company is subject to
regulation under the Bank Holding Company Act of 1956, as amended (the
"BHCA"), and its examination and reporting requirements. Under the BHCA, a
bank holding company may not directly or indirectly acquire the
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ownership or control of more than 5% of the voting shares or substantially all
of the assets of any company, including a bank or savings and loan association,
without the prior approval of the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board"). In addition, bank holding companies
are generally prohibited under the BHCA from engaging in nonbanking
activities, subject to certain exceptions.
The Company and its subsidiaries are subject to supervision and
examination by applicable federal and state banking agencies. The earnings
of the Company's subsidiaries, and therefore the earnings of the Company, are
affected by general economic conditions, management policies and the
legislative and governmental actions of various regulatory authorities,
including the Federal Reserve Board, the Federal Deposit Insurance
Corporation (the "FDIC"), the Office of Thrift Supervision (the "OTS"), the
Missouri Division of Finance (the "Division of Finance") and various other
state financial institution regulatory agencies. In addition, there are
numerous governmental requirements and regulations that affect the activities
of the Company and its subsidiaries.
Certain Transactions with Affiliates. There are various legal
restrictions on the extent to which a bank holding company and certain of its
nonbank subsidiaries can borrow or otherwise obtain credit from its bank
subsidiaries. In general, these restrictions require that any such
extensions of credit must be on non-preferential terms and secured by
designated amounts of specified collateral and be limited, as to any one of
the holding company or such nonbank subsidiaries, to 10% of the lending
bank's capital stock and surplus, and as to the holding company and all such
nonbank subsidiaries in the aggregate, to 20% of such capital stock and
surplus.
Payment of Dividends. The Company is a legal entity separate and
distinct from the Banks, the Mortgage Company and Edge. The principal source
of the Company's revenues is dividends from the Banks. Various Federal
and/or state statutory provisions limit the amount of dividends the Banks can
pay to the Company without regulatory approval. The approval of appropriate
Federal or state bank regulatory agencies is required for any dividend if the
total of all dividends declared by the Bank or the Savings Bank in any
calendar year would exceed the total of such institution's net profits, as
defined by regulatory agencies, for such year combined with its retained net
profits for the preceding two years. The payment of dividends by the Banks
also may be affected by other factors, such as the maintenance of adequate
capital.
Capital Adequacy. The Federal Reserve Board has issued standards for
measuring capital adequacy for bank holding companies. These standards are
designed to provide risk-responsive capital guidelines and to incorporate a
consistent framework for use by financial institutions operating in major
international financial markets. The banking regulators have issued
standards for banks that are similar to, but not identical with, the
standards for bank holding companies.
In general, the risk-related standards require financial institutions
and financial institution holding companies to maintain capital levels based
on "risk adjusted" assets, so that categories of assets with potentially
higher credit risk will require more capital backing than categories with
lower credit risk. In addition, financial institutions and financial
institution holding companies are required to maintain capital to support
off-balance sheet activities such as loan commitments.
FDIC Insurance Assessments. The subsidiary depository institutions of
the Company are subject to FDIC deposit insurance assessments. The FDIC has
adopted a risk-based premium schedule. Each financial institution is
assigned to one of three capital groups--well capitalized,
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adequately capitalized or undercapitalized--and further assigned to one of three
subgroups within a capital group, on the basis of supervisory evaluations by the
institution's primary federal and, if applicable, state supervisors, and on the
basis of other information relevant to the institution's financial condition and
the risk posed to the applicable insurance fund. The actual assessment rate
applicable to a particular institution will, therefore, depend in part upon the
risk assessment classification so assigned to the institution by the FDIC. See
"--FIRREA and FDICIA."
Support of Subsidiary Banks. Under Federal Reserve Board policy, the
Company is expected to act as a source of financial strength to the Banks and
to commit resources to support the Banks in circumstances where it might not
choose to do so absent such a policy. This support may be required at times
when the Company may not find itself able to provide it. In addition, any
capital loans by the Company to the Banks also would be subordinate in right
of payment to deposits and certain other indebtedness of each such
subsidiary.
Consistent with this policy regarding bank holding companies serving as
a source of financial strength for their subsidiary banks, the Federal
Reserve Board has stated that, as a matter of prudent banking, a bank holding
company generally should not maintain a rate of cash dividends unless its net
income available to common shareholders has been sufficient to fully fund the
dividends and the prospective rate of earnings retention appears consistent
with the bank holding company's capital needs, asset quality and overall
financial condition.
FIRREA and FDICIA. The Financial Institutions Reform, Recovery and
Enforcement Act of 1989 ("FIRREA") contains a cross-guarantee provision that
could result in insured depository institutions owned by the Company being
assessed for losses incurred by the FDIC in connection with assistance
provided to, or the failure of, any other insured depository institution
owned by the Company. Under FIRREA, failure to meet the capital guidelines
could subject a banking institution to a variety of enforcement remedies
available to federal regulatory authorities, including the termination of
deposit insurance by the FDIC.
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") made extensive changes to the federal banking laws. FDICIA
instituted certain changes to the supervisory process, including provisions
that mandate certain regulatory agency actions against undercapitalized
institutions within specified time limits. FDICIA contains various other
provisions that may affect the operations of banks and savings institutions.
The prompt corrective action provision of FDICIA requires the federal
banking regulators to assign each insured institution to one of five capital
categories ("well capitalized," "adequately capitalized" or one of three
"undercapitalized" categories) and to take progressively more restrictive
actions based on the capital categorization, as specified below. Under
FDICIA, capital requirements would include a leverage limit, a risk-based
capital requirement and any other measure of capital deemed appropriate by
the federal banking regulators for measuring the capital adequacy of an
insured depository institution. All institutions, regardless of their
capital levels, are restricted from making any capital distribution or paying
any management fees that would cause the institution to fail to satisfy the
minimum levels for any relevant capital measure.
The FDIC and the Federal Reserve Board adopted capital-related
regulations under FDICIA. Under those regulations, a bank will be well
capitalized if it: (i) had a risk-based capital ratio of 10% or greater;
(ii) had a ratio of Tier 1 capital to risk-adjusted assets of 6% or greater;
(iii) had a
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ratio of Tier 1 capital to adjusted total assets of 5% or greater; and (iv) was
not subject to an order, written agreement, capital directive or prompt
corrective action directive to meet and maintain a specific capital level for
any capital measure. An association will be adequately capitalized if it was
not "well capitalized" and: (i) had a risk-based capital ratio of 8% or
greater; (ii) had a ratio of Tier 1 capital to risk-adjusted assets of 4% or
greater; and (iii) had a ratio of Tier 1 capital to adjusted total assets of 4%
or greater (except that certain associations rated "Composite 1" under the
federal banking agencies' CAMEL rating system may be adequately capitalized if
their ratios of core capital to adjusted total assets were 3% or greater).
FDICIA also makes extensive changes in existing rules regarding audits,
examinations and accounting. It generally requires annual on-site, full
scope examinations by each bank's primary federal regulator. It also imposes
new responsibilities on management, the independent audit committee and
outside accountants to develop or approve reports regarding the effectiveness
of internal controls, legal compliance and off-balance sheet liabilities and
assets.
Banking agencies have recently adopted final regulations that mandate
that regulators take into consideration concentrations of credit risk and
risks from non-traditional activities, as well as an institution's ability to
manage those risks, when determining the adequacy of an institution's
capital. This evaluation will be made as part of the institution's regular
safety and soundness examination. Banking agencies also have recently
adopted final regulations requiring regulators to consider interest rate risk
(when the interest rate sensitivity of an institution's assets does not match
the sensitivity of its liabilities or its off-balance-sheet position) in the
evaluation of a bank's capital adequacy. Concurrently, banking agencies have
proposed a methodology for evaluating interest rate risk. After gaining
experience with the proposed measurement process, these banking agencies
intend to propose further regulations to establish an explicit risk-based
capital charge for interest rate risk.
Depositor Preference Statute. Legislation enacted in August 1993
provides a preference for deposits and certain claims for administrative
expenses and employee compensation against an insured depository institution,
in the liquidation or other resolution of such an institution by any
receiver. Such obligations would be afforded priority over other general
unsecured claims against such an institution, including federal funds and
letters of credit, as well as any obligation to shareholders of such an
institution in their capacity as such.
The Interstate Banking and Community Development Legislation. The
Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 ("Riegle-
Neal"), enacted in 1994, facilitates the interstate expansion and
consolidation of banking organizations by permitting (i) bank holding
companies that are adequately capitalized and managed to acquire banks
located in states outside their home states regardless of whether such
acquisitions are authorized under the law of the host state, (ii) the
interstate merger of banks, except for banks located in Montana and Texas,
which states enacted legislation to "opt out" of this authority, (iii) banks
to establish new branches on an interstate basis provided that such action is
specifically authorized by the law of the host state, (iv) foreign banks to
establish, with approval of the regulators in the United States, branches
outside their home states to the same extent that national or state banks
located in the home state would be authorized to do so, and (v) banks to
receive deposits, renew time deposits, close loans, service loans and receive
payments on loans and other obligations as agent for any bank or thrift
affiliate, whether the affiliate is located in the same state or a different
state. One effect of Riegle-Neal is to permit the Company to acquire banks
located in any state and to permit bank holding companies located in any
state to acquire banks and bank holding companies in Missouri.
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There also have been a number of recent legislative and regulatory
proposals designed to strengthen the federal deposit insurance system and to
improve the overall financial stability of the United States banking system,
and to provide for other changes in the bank regulatory structure, including
proposals to reduce regulatory burdens on banking organizations and to expand
the nature of products and services banks and bank holding companies may
offer. It is not possible to predict whether or in what form these proposals
may be adopted in the future, and, if adopted, what their effect will be on
the Company.
EMPLOYEES
As of December 31, 1997, the Company and the Banks had approximately
209 full-time equivalent employees. None of these employees of the Company
or the Banks are subject to a collective bargaining agreement. The Company
considers its relationships with its employees and those of the Banks to be
good.
ITEM 2. DESCRIPTION OF PROPERTIES
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The Company operates its principal executive, administrative and
operational offices at 2122 Kratky Road in St. Louis, Missouri. As of
December 31, 1997, the Bank conducted its business and operations out of 11
locations in the greater St. Louis Metropolitan area and three locations in
Northeast Missouri. The Savings Bank and Edge each operate from their
respective offices in St. Louis County. The Company's physical properties,
which are either owned or leased, are in satisfactory condition, adequately
insured and suitable and adequate for present operations.
ITEM 3. LEGAL PROCEEDINGS
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Various claims and lawsuits, incidental to its ordinary course of
business, are pending against the Company and its subsidiaries. In the
opinion of management, after consultation with legal counsel, resolution of
these matters is not expected to have a material effect on the Company's
consolidated financial condition or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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There were no matters submitted during the quarter ended December 31,
1997 to a vote of the Company's shareholders, through the solicitation of
proxies or otherwise.
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
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The name, age and position with respect to each of the executive
officers of the Company are set forth below:
Marvin S. Wool, 69, has served as a Director of the Company since 1990
and as the Chairman and Chief Executive Officer of the Company and Chairman
of the Bank since March 1992. For more than the past five years, Mr. Wool
has served as the President and Chief Executive Officer of Dash Multi-Corp,
the holding company for ten subsidiary companies located in Georgia,
Mississippi, Missouri, New Jersey and California that are in the chemical,
cloth coating and carpet industries.
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Shaun R. Hayes, 38, has served as a Director and as the President of
the Company since 1989 and President and Chief Executive Officer of the Bank
since May 1992. From 1989 through 1994, Mr. Hayes served as Secretary of the
Company.
Sandra L. Friedman, 47, has served as Senior Vice President/Chief
Financial Officer of the Company and as Director and Executive Vice President
of the Bank since January 1998. From 1996 to 1997, Ms. Friedman served as
Senior Vice President/Risk Management of Mark Twain Bancshares, Inc. and from
1986 to 1996 as Vice President of Mark Twain Bancshares, Inc.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
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The Common Stock (symbol: "ALLE") has been traded on the Nasdaq
National Market since May 15, 1996. From January 1, 1996 to such date it was
traded on the Nasdaq Small Cap Market. As of March 20, 1998, the number of
shareholders of the Common Stock was approximately 1,300. The following
table sets forth the high and low trading prices, as well as dividends per
share for the periods shown, as reported by Nasdaq. Such prices reflect
interdealer prices, without retail mark-up, mark-down or commission, and have
been adjusted to reflect all stock splits and stock dividends.
<TABLE>
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HIGH LOW DIVIDENDS DECLARED
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1996
First Quarter $ 8.818 $ 8.818 $0.018
Second Quarter 8.818 7.818 0.018
Third Quarter 9.091 7.818 0.018
Fourth Quarter 9.874 9.727 0.018
1997
First Quarter $ 8.394 $ 8.178 $0.024
Second Quarter 11.521 11.271 0.024
Third Quarter 13.647 13.273 0.024
Fourth Quarter 14.077 13.774 0.024
</TABLE>
The future dividend policy of the Company is subject to the discretion
of the Board of Directors and will depend upon a number of factors, including
future earnings, financial condition, cash needs and general business
conditions. Holders of Common Stock will be entitled to receive dividends as
and when declared by the Board of Directors of the Company out of funds
legally available for that purpose. The Company effected a 10% stock
dividend in January 1996, a 10% stock dividend in January 1997 and a
five-for-four stock split (in the form of a stock dividend) in January 1998.
In September 1997, the Company's Board of Directors voted to increase the
dividend policy to a rate of $0.03 per share payable quarterly beginning with
the regular quarterly dividend scheduled for the first quarter of 1998.
Cash available for dividend distribution to the holders of Common Stock
must initially come from dividends paid to the Company by its subsidiaries.
Accordingly, restrictions on the subsidiaries' cash dividend payments
directly affect the payment of cash dividends by the Company. There can be
no assurance that the Board of Directors will declare any stock splits or
stock dividends in the future.
The FDIC, the OTS and/or the Division of Finance has the authority to
prohibit the payment of cash dividends by the Bank or the Savings Bank, as
the case may be, when it determines such payment to be an "unsafe or unsound
banking practice" under the then existing circumstances. The Federal Deposit
Insurance Corporation Act generally prohibits all payments of dividends by
any depository institution that is in default of any assessment to the FDIC.
The Company's bank stock loan agreement also restricts the amount of
dividends the Company may pay.
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ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
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RESULTS OF OPERATIONS
Earnings Summary
The Company reported record earnings for 1997 with consolidated net
income of $2.4 million, an increase of 33.6% over 1996 earnings of $1.8
million. Net income has increased at a compound rate of 82.3% over the past
five years. Basic earnings per share were $0.65 compared to $0.66 in 1996.
Diluted earnings per share were $0.59, a 1.7% increase over the $0.58 earned
in 1996. Average shares outstanding increased substantially in 1997 as the
Company continued to increase its equity base to keep pace with asset growth.
Diluted earnings per share have grown 33.3% compounded over the past five
years.
Return on average assets for 1997 was 0.52% compared to 0.59% in 1996.
Return on average shareholders' equity was 9.55% for the year compared to
12.17% for 1996.
Net interest income on a fully tax-equivalent basis increased to $16.3
million for 1997 compared to $10.1 million in 1996. Net interest margin
improved to 3.71% for 1997 compared to 3.39% for 1996. Average earning assets
increased 48.3% in 1997 compared to an increase of 36.5% in 1996.
The allowance for loan losses equaled 1.07% of loans outstanding at
December 31, 1997, essentially the same percentage level as 1996. Net
charge-offs as a percentage of average loans were 0.19% compared to 0.21% in
1996. Non-performing loans to total loans remained low at 0.28% at December
31, 1997 compared to 0.24% at year-end 1996. The Company believes that all
measures of loan quality remain relatively high.
Non-interest income increased 136.8% in 1997 following a 65.3% increase
in 1996. Non-interest income has increased at a five-year compound growth
rate of 62.9%. The increase in non-interest income in 1997 resulted
primarily from an increase of $988 thousand in mortgage banking gross
revenues generated by the Mortgage Company and the newly formed Edge. In
addition, service charges on deposit accounts grew by $301 thousand due to
the increased number of deposit accounts and an expanded base of service
chargeable products.
Non-interest expenses increased $6.1 million, or 86.2%, in 1997 following
an increase of $1.4 million, or 24.8%, in 1996. The Company's efficiency ratio
for 1997 was 67.7% compared to 61.3% in 1996. The 1997 increases were due to
the expansion of the Company's business lines, the addition of Edge and an
increased number of banking locations. These additions resulted in increased
salary and benefit expense, furniture and equipment costs and occupancy
expenses.
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The following ratios applicable to the Company are among those commonly
used in analyzing bank holding companies:
<TABLE>
RETURN ON EQUITY AND ASSETS
<CAPTION>
Year Ended December 31,
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1997 1996 1995 1994 1993
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<S> <C> <C> <C> <C> <C>
Return on average assets 0.52% 0.59% 0.56% 0.60% 0.30%
Return on average equity 9.55 12.17 10.86 9.91 5.47
Dividend payout ratio 20.23 12.00 11.73 7.59 10.49
Equity to assets ratio 5.46 4.81 5.14 6.05 5.47
</TABLE>
Net Interest Income
Net interest income increased $6.2 million, or 62.1%, in 1997 compared to
an increase of 25.0% in 1996. Net interest margin was 3.71% in 1997 compared
to 3.39% in 1996. The increase in net interest income and net interest margin
was due to a relatively stable rate environment, significant increases in loans
and deposits, substantial shifting of earning assets into higher yielding loans
and proportionately greater non-interest bearing deposits. These improvement
factors were partially offset by a decrease in the ratio of earning assets to
total assets.
Average earning assets increased $143.2 million, or 48.3%, in 1997
compared with an increase of $79.2 million in 1996. Average loans increased
$133.3 million, or 57.4%, in 1997 compared to an increase of $73.8 million, or
46.6%, in 1996. Growth was consistent during the year with the fourth quarter
also being positively impacted by acquisitions. The Company's securities
portfolio (held-to-maturity and available-for-sale) increased on average by
$4.5 million, or 7.4%, in 1997 compared with an increase in 1996 of 13.9%. The
majority of the increase in average securities was due to the investment of
approximately $5.0 million of cash received from the Branch Acquisition. The
Company's average earning assets comprised 94.9% of average total assets in
1997 compared to 95.9% in 1996. The decline in this percentage was primarily
the result of the Reliance Acquisition, the Branch Acquisition and new branch
facilities. The Company's target is to maintain this level at or above 94.0%.
Average interest bearing liabilities increased $127.2 million, or
46.9%, in 1997 compared to an increase of 36.8% in 1996. In 1997 only modest
shifts in the core deposit mix occurred, with the most significant being an
increase in certificates of deposit, an increase in non-interest bearing
deposits and increased short-term borrowings.
Average certificates of deposit increased $75.7 million, or 51.0%, in
1997. The increase in time deposits was positively impacted by the third
quarter acquisitions which added approximately $30.4 million to the yearly
average. The remaining increase resulted from new branches and growth across
existing facilities.
Average non-interest bearing deposits grew $15.7 million, or 73.5%,
during 1997 compared to an increase of 28.5% in 1996. This increase also was
the result of the Branch Acquisition, new branches and growth in existing
branches. The acquisitions consummated
- 10 -
<PAGE> 13
during 1997 accounted for approximately $9.3 million of the increase. The ratio
of non-interest bearing deposits to total interest bearing liabilities improved
to 9.3% in 1997 from 7.9% in 1996.
Average short-term borrowings increased by $25.2 million, or 91.8%,
following an increase of 25.7% in 1996. The increase in 1997 was primarily
composed of borrowing from the Federal Home Loan Bank ("FHLB"). The increase
occurred from the first through third quarters of 1997 to fund loan growth in
anticipation of the late third quarter acquisitions. Average short-term
borrowings peaked in the third quarter of 1997 at $68.1 million. Fourth
quarter average short-term borrowings decreased to $53.6 million. The
Company continues to utilize the FHLB as a primary cost-effective source of
funds.
The Company's net interest spread increased by 30 basis points from
2.92% in 1996 to 3.22% in 1997. This followed a decrease of 30 basis points
in 1996. The current year increase occurred as a result of an increase on
the yields on earning assets of 14 basis points and a 16 basis point decline
in rates paid on interest bearing liabilities. The increase of the yields on
earning assets of 14 basis points followed a decrease of 42 basis points in
1996. The increase in 1997 was due in large part to average loans comprising
83.2% of earning assets. Despite a 10 basis point decline in loan yields,
the increased volume of loans helped raise overall yield on earning assets.
Yields on taxable securities also improved by 35 basis points as a result of
reinvestment opportunities and the additional investment of $5 million
resulting from cash received in the third quarter from the Branch Acquisition.
The lower rates paid on interest bearing liabilities was the result of
generally lower rates in all categories with the exception of certificates of
deposit over $100 thousand. The decline in rates on certificates of deposits
under $100 thousand of 11 basis points had the most impact.
The following table sets forth the average balance sheets for the years
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:
- 11 -
<PAGE> 14
<TABLE>
DISTRIBUTION OF AVERAGE ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY AND INTEREST RATES
<CAPTION>
Year Ended December 31,
----------------------------------------------------------------------------
1997 1996
------------------------------------- ------------------------------------
Average Int. Earned/ Average Average Int. Earned/ Average
Balance Paid Yield<F1> Balance Paid Yield<F1>
------------------------------------- ------------------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Assets
Interest-earning assets:
Loans<F1> $365,615 $33,473 9.16% $232,314 $21,428 9.22%
Taxable investment securities 64,384 3,910 6.07 59,882 3,428 5.72
Non-taxable investment securities 1,130 56 4.96 1,115 49 4.39
Federal funds sold 8,492 326 3.84 3,079 151 4.90
-------- ------- -------- -------
Total interest earning assets 439,621 37,765 8.59 296,390 25,056 8.45
Non-interest earning assets:
Cash and due from banks $9,341 $6,382
Premises and equipment 6,869 4,698
Other assets 11,065 3,915
Reserve for possible loan losses (3,867) (2,401)
-------- --------
Total assets $463,029 $308,984
======== ========
Liabilities and Shareholders' equity
Interest bearing liabilities:
Money market accounts $ 81,711 $ 3,794 4.64% $ 61,144 $ 2,986 4.88%
NOW accounts 13,720 298 2.17 9,804 232 2.37
Savings deposits 9,665 279 2.89 6,985 227 3.25
Certificates of deposit 162,870 9,436 5.79 104,283 6,149 5.90
Certificates of deposit over $100,000 48,358 2,686 5.55 36,387 2,001 5.50
IRA certificates 12,780 760 5.95 7,673 465 6.06
-------- ------- ---- -------- -------
Total interest bearing deposits 329,104 17,253 5.24 226,276 12,060 5.33
Federal funds purchased, repurchase
agreements, and other short-term
borrowings 52,702 2,895 5.49 27,481 1,542 5.61
Long-term borrowings 16,658 1,318 7.61 17,482 1,397 7.99
-------- ------- -------- -------
Total interest bearing liabilities $398,464 $21,466 5.37 $271,239 $14,999 5.53
-------- ------- -------- -------
Non-interest bearing liabilities and equity:
Demand deposits $ 36,966 $ 21,312
Other liabilities 2,307 1,582
Shareholders' equity 25,292 14,851
-------- --------
Total liabilities and
shareholders' equity $463,029 $308,984
======== ========
Net interest income $16,299 $10,057
======= =======
Net interest margin 3.71% 3.39%
<FN>
- ------------------
<F1>Interest on non-accruing loans is not included for purposes of
calculating yields.
</TABLE>
- 12 -
<PAGE> 15
The following table sets forth for the periods indicated, the changes
in interest income and interest expense which were attributable to changes in
average volume and changes in average rates:
<TABLE>
RATE/VOLUME ANALYSIS
<CAPTION>
1997 1996
Compared to Compared to
1996 1995
-------------------------------------- ---------------------------------------
Volume Yield Net Change Volume Yield Net Change
------ ----- ---------- ------ ----- ----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest earned on:
Loans $12,186 $(141) $12,045 $6,906 $(1,479) $5,427
Taxable investment securities 267 216 482 409 81 490
Non-taxable securities 1 6 7 17 10 27
Federal funds sold and
other investments 213 (39) 175 (104) (37) (141)
------- ----- ------- ------ ------- ------
Total interest income 12,667 42 12,709 7,228 (1,425) 5,803
------- ----- ------- ------ ------- ------
Interest paid on:
Money market accounts 961 (153) 808 1,981 150 2,131
NOW accounts 86 (20) 66 36 2 38
Savings deposits 79 (27) 52 9 (44) (35)
Certificates of deposit 3,404 (117) 3,287 423 (10) 413
Certificates of deposit
over $100,000 666 19 685 380 (33) 347
IRA certificates 303 (8) 295 99 18 117
Federal funds purchased,
repurchase agreements
and other short-term
borrowings 1,386 (33) 1,353 860 (20) 840
Long-term borrowings (65) (14) (79) (68) 9 (59)
------- ----- ------- ------ ------- ------
Total interest expense 6,820 (353) 6,467 3,720 72 3,792
------- ----- ------- ------ ------- ------
Net interest income $ 5,847 $ 395 $ 6,242 $3,508 $(1,497) $2,011
======= ===== ======= ====== ======= ======
<FN>
- --------------------
Note: 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. Interest on non-accruing loans is not
included for purposes of the table above.
</TABLE>
- 13 -
<PAGE> 16
Other Income
Other income increased 136.8% for 1997 compared to 1996, and totaled $3.3
million for 1997. This followed a 113.0% increase in 1996 compared to 1995.
Other income, excluding securities gains and mortgage banking revenues,
increased $964 thousand, or 93.4%, in 1997 compared to the prior year.
Mortgage banking gross revenues increased $988 thousand, or 316.7%, in
1997 compared to the prior year. In 1997, the Company organized Edge, a
subsidiary of the Company. Edge generated $1.0 million of mortgage banking
revenues in 1997. The Bank's mortgage subsidiary, Allegiant Mortgage,
generated $653 thousand in gross revenues in 1997, which represented a $341
thousand, or 109.3%, increase over 1996 levels. During 1997, the mortgage
companies benefited from both an increase in mortgage refinancing resulting
from attractive mortgage rates, compared to the prior year, and an increased
customer base from the expansion of the retail banking operation.
In 1997, services charges on deposit accounts increased $301 thousand,
or 49.2%. This increase was primarily attributable to the increased number
of deposit accounts and the expanded base of service chargeable products
offered to the Company's customers. In addition, the increases reflected the
benefits of a revenue enhancement program implemented by the Company which
included a change in the Bank's fee structure.
Also included in other income are leasing revenues of $433 thousand and
brokerage revenues of $169 thousand. The Company entered into the retail
leasing business during 1997 and began offering brokerage services through
INVEST Financial Group beginning in March 1997.
Other Expense
Total operating expenses increased $6.1 million, or 86.2%, during 1997,
compared to a $1.4 million, or 24.8%, increase in 1996. Expansion of the
Company's business lines, two mortgage subsidiaries previously discussed, and
an increase in the number of banking locations were responsible for the
majority of the increase. The Company's efficiency ratio, determined by
dividing total operating expenses by the total tax-equivalent revenue, was
67.7% in 1997 as compared to 61.3% in 1996.
Total salaries and benefits increased $2.7 million, or 79.2%, for 1997
compared to a $646 thousand, or 23.0%, increase in 1996 over the prior year.
Salary expense increased $2.5 million, or 83.0%, and employee benefits
expense increased $235 thousand, or 53.7%, over 1996. The majority of the
salary and benefit expense increase in 1997 related to the opening of new
locations and the acquisitions previously discussed. As of December 31,
1997, the Company employed 209 full-time equivalent employees compared to 109
full-time equivalent employees in 1996. In 1994, the Company's Board of
Directors approved a Phantom Stock Plan (the "Plan") for the President of the
Company, under which the Company agreed to pay a cash award to the President
based upon the increase in book value of 60,500 shares of Common Stock, from
December 31, 1994 until the earlier of: (i) December 31, 1998; or (ii) the
end of the year immediately preceding the year the President's employment
with the Company terminates. The Company has accrued approximately $318
thousand of the amount payable under the Plan as salary and employee benefit
expense (including $225 thousand in 1997 and $55 thousand in 1996).
- 14 -
<PAGE> 17
Furniture and equipment expense increased $254 thousand, or 36.7%, in
1997. The increase in 1997 was attributable to the opening of three new
branches and the costs associated with investments in computer technology.
Depreciation expense on furniture and equipment increased $168 thousand,
repairs and maintenance costs increased $27 thousand, equipment service
contracts increased $34 thousand and other furniture and equipment costs
increased $26 thousand in 1997 compared to 1996.
Operating losses increased $794 thousand in 1997 compared to the prior
year. During the latter part of 1997, several events occurred which
culminated in increased levels of operating losses. In September 1997, the
Company acquired two branch offices as a result of the Branch Acquisition.
These branches were integrated into the Company's existing computer and
operating systems during September 1997. Substantial difficulties were
encountered in this integration process because of the different operating
policies and procedures between the organizations and because of the large
increase in transactional volumes. Shortly after integrating these branches,
the Company upgraded its computer systems to an entirely new operating system
designed to handle the substantially increased size and volumes resulting
from the branches, as well as provide capacity for future growth. The
computer systems conversions compounded the integration process due to
conversion anomalies and the subsequent differences in the computer operating
systems. Because of these events, the Company experienced impediments
reconciling accounts and researching and clearing reconciling items. The
differences that resulted totaled $752 thousand, which was charged to
operating losses in the fourth quarter. The Company believes that these
losses are not systemic and were non-recurring.
Occupancy expenses for 1997 increased $290 thousand, or 64.7%. The
increase was the result of the costs related to new branch openings and the
costs associated with operating the branches acquired as previously
discussed. Additionally, in November 1997, the Company opened a new facility
to provide the space required for the new computer operating equipment and
the increased back-office support staff.
Supplies expense increased $226 thousand, or 111.9%, in 1997 compared
to the prior year. The cost associated with the additional branches, the
increase of employees and the expanded customer base caused the variance from
the prior year.
Other non-interest expenses increased $1.7 million, or 84%, in 1997.
Increases in: goodwill amortization related to the acquisitions, $292
thousand; loan and collection expense, $221 thousand; legal expense, $139
thousand; entertainment expense, $131 thousand; automated teller machine
costs, $127 thousand; telephone expense, $100 thousand; amortization of
mortgage servicing rights, $76 thousand; postage expense, $72 thousand; and
advertising expense, $57 thousand, accounted for the largest portion of the
1997 increase compared to 1996.
- 15 -
<PAGE> 18
The following table sets forth the Company's summary of other income and
expense for the years indicated:
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------
1997 1996
------ ------
(In thousands)
<S> <C> <C>
Other income:
Mortgage banking revenues $ 1,300 $ 312
Service charges on deposit accounts 913 612
Leasing revenues 433 --
Brokerage division revenues 169 6
Gain on the sale of securities 2 49
Other non-interest income 481 414
------- ------
Total other income $ 3,298 $1,393
======= ======
Other expense:
Salaries and employee benefits $ 6,192 $3,455
Furniture and equipment 943 689
Operating losses 938 144
Occupancy 738 448
Supplies 428 202
Other non-interest expense 3,830 2,081
------- ------
Total other expense $13,069 $7,019
======= ======
</TABLE>
BALANCE SHEET ANALYSIS
Securities Portfolio
The Company's securities portfolio consists of securities classified as
held-to-maturity and available-for-sale. The Company designates these
securities upon purchase into one of these two categories. At December 31,
1997, held-to-maturity securities amounted to $32.0 million representing
those securities the Company intends to hold to maturity. Securities
designated as available-for-sale totaled $44.9 million representing
securities which the Company may sell to meet liquidity needs or in response
to significant changes in interest rates or prepayment patterns.
For purposes of the following discussion, held-to-maturity and
available-for-sale portfolios are described as the securities portfolio. At
December 31, 1997, the securities portfolio totaled $76.9 million, an
increase of $16.3 million, or 26.9%, from year-end 1996. Average securities
increased $4.5 million, or 7.4%, compared to an increase of 13.9% in 1996.
The increase in 1997 average levels was due to the investment of a portion of
the cash received as a result of the Branch Acquisition. Average securities
as a percentage of average earning assets declined to 14.9% during 1997
compared to 20.6% in 1996. The decline in the percentage of securities to
earning assets reflects management's decision to fund higher yielding loans
with available funds while maintaining a securities portfolio
- 16 -
<PAGE> 19
providing adequate liquidity. The Company maintains a traditional short-term
laddered portfolio investment strategy to insure optimal liquidity while
minimizing interest rate risk.
The book value of investment securities for the periods indicated were
as follows:
<TABLE>
INVESTMENT PORTFOLIO
<CAPTION>
December 31,
-----------------------
1997 1996
------ ------
(In thousands)
<S> <C> <C>
United States Treasury securities $ 9,478 $ 7,941
Obligations of other United States
government agencies 57,295 46,717
Federal Home Loan Bank stock 7,033 4,462
States and political subdivisions 1,563 1,199
Unrealized gain on securities
available-for-sale 129 35
Other equity securities 1,371 205
------- -------
Total $76,869 $60,559
======= =======
</TABLE>
The maturities and yield information of the investment securities
portfolio as of December 31, 1997 was as follows:
<TABLE>
INVESTMENT PORTFOLIO--MATURITIES AND YIELDS
<CAPTION>
Weighted Over One Weighted Over Five Weighted Weighted
One Year Average Through Average Through Average Over Ten Average
or Less Yield Five Years Yield Ten Years Yield Years Yield
-------- -------- ---------- -------- --------- -------- -------- --------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
United States Treasury securities $ 4,472 6.07% $ 5,006 6.19% $ -- --% $ -- --%
Obligations of United States
government agencies 11,435 5.37 27,792 6.12 1,193 6.63 16,875 6.71
Federal Home Loan Bank stock 7,033 7.00 -- -- -- -- -- --
States and political subdivisions 104 7.16 456 7.40 779 7.34 224 7.23
Unrealized gain on securities
held available-for-sale 129 -- -- -- -- -- -- --
Other equity securities 1,371 -- -- -- -- -- -- --
------- ---- ------- ---- ------ ---- ------- ----
Total investment securities $24,544 5.99% $33,254 6.15% $1,972 6.91% $17,099 6.71%
======= ======= ====== =======
Total portfolio $76,869 6.24%
=======
</TABLE>
- 17 -
<PAGE> 20
Loans
Loans, the largest component of interest earning assets, increased 66%
for the year ended December 31, 1997 which followed an increase of 61% in
1996. Average total loans outstanding for 1997 were $365.6 million, a 57%
increase over 1996 average outstandings. Average total loans outstanding for
1996 were $232.3 million, an increase of 47% over average total outstanding
loans in 1995. The loan growth in 1997 consisted of a 46% increase in
commercial loans, a 69% increase in real estate mortgage loans, a 210%
increase in real estate construction loans and a 39% increase in consumer
loans. Essentially all of the loans were generated within the Company's
primary market area. The Company has no foreign credits and has an
insignificant amount of participations purchased.
Commercial loans increased $34.8 million, from $75.1 million on
December 31, 1996 to $109.9 million on December 31, 1997. The increase in
commercial loans was largely due to marketing efforts of the Bank's
commercial loan team, strengthened by the additions during 1997 of experienced
personnel. The commercial loan portfolio is diversified from an industry
standpoint and includes businesses engaged in manufacturing, agribusiness,
wholesaling and retailing, financial services and other service businesses.
Emphasis is upon middle market and community businesses with known management
and financial stability. Consistent with the Bank's strategy and emphasis upon
relationship banking, most borrowing customers also maintain deposit accounts
and utilize other banking services. Real estate is often a material component
of collateral for the commercial and industrial loans even though repayment on
the loans may not be directly related to the real estate. This real estate
provides the Company with additional collateral protection.
While the Company traditionally has focused on small- to mid-sized
commercial lending, real estate mortgage loans represented 68% of the total
loan portfolio at December 31, 1997. Real estate mortgage loans increased by
$135.3 million in 1997, ending the year at $331.4 million compared to $196.1
million at December 31, 1996. Real estate mortgage loans are comprised of
59% one- to four-family residential properties and 41% commercial and
multi-family real estate. Residential mortgage loans increased $74.6 million
in 1997. The Mortgage Company was the key contributor to the increase in one-
to four-family mortgage loans, posting a record twelve-month performance with
$86.6 million in loans originated compared to $72.2 million in 1996. Real
estate loans originated by the Mortgage Company included $57.2 million of
loans which were placed into the Bank's loan portfolio.
Commercial real estate loans, which include commercial, industrial and
multi-family properties, increased 81% in 1997. The commercial mortgage
loans are represented by a broad base of properties which meet the Company's
underwriting standards for sponsorship, equity and cash flow. The increase
in commercial real estate loans was partially attributable to new business
relationships introduced to the Company by newly hired members of the
commercial lending staff.
Real estate construction loans increased by $18.4 million, from $8.8
million at December 31, 1996 to $27.2 million at the end of 1997. This 210%
increase was attributable to the continued economic growth in the Company's
primary market area. The growth consisted of a diversified number of
construction projects, with no concentration in any large individual
development project. Commercial and residential construction loans include a
diverse number of builders and developers in the Company's primary market area.
The Company monitors construction disbursements and controls the number of
display and inventory homes and lot inventory by builder.
- 18 -
<PAGE> 21
Consumer loans increased 39% from $12.1 million at December 31, 1996 to
$16.8 million at December 31, 1997. Consumer loans comprise 3.5% of total
loans at the end of 1997 compared to 4.1% in 1996.
<TABLE>
LOAN PORTFOLIO--MATURITIES AND SENSITIVITIES OF LOANS
<CAPTION>
December 31, 1997
-----------------------------------------------------------------------------------
Maturing After One Year Maturing After
Maturing in Through Five Years Five Years
One Year ----------------------- ------------------------
or Less Fixed-rate Variable Fixed-rate Variable Total
----------- ---------- -------- ---------- -------- --------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
Commercial, financial,
agricultural, municipal
and industrial
development $ 74,259 $ 16,602 $12,419 $ 1,581 $ 5,076 $109,937
Real estate 102,609 96,556 26,702 12,148 120,582 358,597
Installment and other 7,556 7,306 610 945 404 16,821
Less unearned income (493) -- -- -- -- (493)
-------- -------- ------- ------- -------- --------
Total loans $183,931 $120,464 $39,731 $14,674 $126,062 $484,862
======== ======== ======= ======= ======== ========
</TABLE>
- 19 -
<PAGE> 22
The following table summarizes the composition of the Company's loan
portfolio at the dates indicated:
<TABLE>
LOAN PORTFOLIO--TYPES OF LOANS
<CAPTION>
December 31,
--------------------------------------------------------------------------------
1997 1996 1995
------------------------ ------------------------ ------------------------
Percent of Percent of Percent of
Amount Total Loans Amount Total Loans Amount Total Loans
-------- ----------- -------- ----------- -------- -----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Commercial, financial, agricultural,
municipal and industrial
development $109,937 22.67% $ 75,129 25.75% $ 40,518 22.32%
Real estate--construction 27,181 5.60 8,763 3.00 8,777 4.83
Real estate--mortgage:
One- to four-family residential 195,964 40.42 121,386 41.58 71,260 39.25
Multi-family and commercial 135,452 27.94 74,721 25.60 52,795 29.08
Consumer and other 16,821 3.47 12,084 4.14 8,379 4.62
Less unearned income (493) (0.10) (157) (0.05) (185) (0.10)
-------- ------ -------- ------ -------- ------
Total loans<F1> $484,862 100.00% $291,926 100.00% $181,544 100.00%
======== ====== ======== ====== ======== ======
<CAPTION>
December 31,
--------------------------------------------------
1994 1993
------------------------ -----------------------
Percent of Percent of
Amount Total Loans Amount Total Loans
-------- ----------- -------- -----------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Commercial, financial, agricultural,
municipal and industrial
development $ 30,353 25.00% $19,954 28.60%
Real estate--construction 5,504 4.53 1,403 2.01
Real estate--mortgage:
One- to four-family residential 47,109 38.81 26,699 38.27
Multi-family and commercial 31,813 26.21 16,899 24.22
Consumer and other 6,881 5.67 4,959 7.11
Less unearned income (267) (0.22) (141) (0.20)
-------- ------ ------- ------
Total loans<F1> $121,393 100.00% $69,773 100.00%
======== ====== ======= ======
<FN>
- --------------------
<F1> The Bank had no outstanding foreign loans at the dates reported.
</TABLE>
- 20 -
<PAGE> 23
Asset Quality
The Company's reserve for possible loan losses increased 68%, from $3.1
million on December 31, 1996 to $5.2 million on December 31, 1997. The
majority of this increase was due to the provision of $2.4 million to the
reserve for possible loan losses during 1997. The 68% increase in the
reserve was directly related to the 66% increase during 1997 in the Company's
loan balance. The reserve for loan losses to total loans increased slightly
to 1.07% at December 31, 1997 from 1.06% at December 31, 1996. The reserve
for possible loan losses represented 377.12% of nonperforming loans at
December 31, 1997 compared to 447.98% at December 31, 1996.
Non-performing assets consist of the following: nonaccrual loans on
which the ultimate collectibility of the full amount of interest is
uncertain; loans which have been renegotiated to provide for a reduction or
deferral of interest or principal because of a deterioration in the financial
condition of the borrower; and loans past due 90 days or more as to principal
or interest and other real estate owned. Non-performing assets increased by
$685 thousand to $1.4 million at December 31, 1997, from $692 thousand on
December 31, 1996. The ratio of non-performing loans to total loans was
0.28% at December 31, 1997 compared to 0.24% as of December 31, 1996. The
largest component of this increase in non-performing loans was an increase of
$336 thousand in past due commercial loans and $456 thousand in past due real
estate loans. Two loans represented 76% of the total loans past due 90 days
or more at December 31, 1997, and the Company believes that both loans
ultimately will be collected without loss.
The Company continually analyzes its loan portfolio to identify
potential risk elements requiring management attention. The loan portfolio
is reviewed by lending management and the Company's internal loan review
staff. The Company believes that the reserve for possible loan losses at
December 31, 1997 was adequate to reflect the credit risk in the loan
portfolio. See "Allowance for Loan Losses."
As an integral part of their examination process, the various
regulatory agencies periodically review the Bank's reserve for possible loan
losses. Such agencies have the authority to require the Bank to recognize
additions to the reserve based upon their judgment. The Company believes
that the reserve for possible loan losses at December 31, 1997 was consistent
with applicable regulatory requirements.
- 21 -
<PAGE> 24
The following table summarizes, for the periods presented, non-performing
assets by category:
<TABLE>
RISK ELEMENTS--NONACCRUAL, PAST DUE AND RESTRUCTURED LOANS
<CAPTION>
December 31,
--------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Commercial, financial, agricultural and all other loans:
Past due 90 days or more $ 341 $ 5 $ 113 $ -- $ --
Non-accrual 360 207 109 40 --
Restructured terms -- -- -- -- --
Real estate--construction:
Past due 90 days or more -- 264 36 90 --
Non-accrual 108 84 20 35 11
Restructured terms -- -- 3 -- --
Real estate--mortgage:
Past due 90 days or more 456 -- -- -- --
Non-accrual 70 -- -- -- --
Restructured terms -- -- -- -- --
Installment loans to individuals:
Past due 90 days or more 21 23 12 8 --
Non-accrual 21 109 15 -- 3
Restructured terms -- -- -- -- --
-------- -------- -------- -------- --------
Total non-performing loans: $ 1,377 $ 692 $ 308 $ 173 $ 14
======== ======== ======== ======== ========
Other real estate -- -- 10 25 --
-------- -------- -------- -------- --------
Total non-performing assets: $ 1,377 $ 692 $ 318 $ 198 $ 14
======== ======== ======== ======== ========
Gross interest income that would have been recorded
in the period if the loans had been current in
accordance with the original terms and had been
outstanding throughout the period or since
origination:
Loans accounted for on
a non-accrual basis $ 57 $ 57 $ 30 $ 16 $ 1
Loans with restructured terms -- -- -- -- --
Balance sheet information (at year-end):
Total assets $608,237 $377,564 $280,386 $171,927 $104,416
Loans outstanding 484,862 291,926 181,544 121,393 69,733
Shareholders' equity 42,071 16,386 13,938 8,453 7,487
Allowance for possible loan loss 5,193 3,100 2,130 1,455 775
Ratios:
Non-performing loans to total loans outstanding 0.28% 0.24% 0.17% 0.14% 0.02%
Non-performing assets to total assets 0.23 0.18 0.11 0.12 0.01
Non-performing loans to shareholders' equity 3.26 4.22 2.28 2.34 0.19
Reserve for possible loan losses to total loans 1.07 1.06 1.17 1.20 1.11
Reserve for possible loan losses
to non-performing loans 377.12 447.98 691.56 841.04 5,535.71
(Table continued on following page)
- 22 -
<PAGE> 25
<S> <C> <C> <C> <C> <C>
Percent of categories to total end-of-period loans:
Commercial, financial, agricultural,
municipal and industrial development 22.67 25.74 22.32 25.00 28.60
Real estate--construction 5.60 3.00 4.83 4.53 2.01
Real estate--mortgage:
One- to four-family residential 40.42 41.58 39.25 38.81 38.27
Multi-family and commercial 27.94 25.60 29.08 26.21 24.22
Installment and consumer 3.47 4.11 4.62 5.67 7.11
Less unearned income (0.10) (0.05) (0.10) (0.22) (0.20)
-------- -------- -------- -------- --------
Total loans 100.00% 100.00% 100.00% 100.00% 100.00%
======== ======== ======== ======== ========
</TABLE>
Allowance For Loan Losses
The allowance for loan losses is provided at a level considered
adequate to provide for potential loan losses and, among other things, is
based on management's evaluation of the anticipated impact on the loan
portfolio of current economic conditions, changes in the character and size
of the portfolio, evaluation of potential problem loans identified based on
existing circumstances known to management, potential future loan losses on
loans to specific customers and/or industries, and recent loan loss
experience.
For the year ended December 31, 1997, the provision for loan losses was
$2.4 million compared to $1.4 million for the year ended December 31, 1996,
an increase of $1.0 million or 71%. The increase in the annual provision for
possible loan losses was primarily a result of the 65.6% increase in total
loans outstanding at December 31, 1997 compared to December 31, 1996. The
provision to average loans outstanding was 0.71% in 1997 compared to 0.62% in
1996. Net loans charged off during 1997 was $707 thousand compared to $478
thousand for the year ended December 31, 1996 representing an increase of
48%. Net loans charged off as a percentage of average loans outstanding was
0.19% and 0.21% in 1997 and 1996, respectively. Total recoveries for the
twelve months ended December 31, 1997 were $52 thousand compared to $67
thousand in the corresponding period in 1996.
- 23 -
<PAGE> 26
The following table summarizes, for the periods indicated, activity in
the 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>
Year Ended December 31,
----------------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- -------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Allowance for possible loan losses
(beginning of period) $ 3,100 $ 2,130 $ 1,455 $ 775 $ 550
Loans charged off:
Commercial, financial, agricultural,
municipal and industrial development (536) (113) (183) (165) (3)
Real estate--mortgage (110) (364) (82) (31) --
Installment and consumer (113) (68) (58) (10) (7)
Other loans -- -- -- -- --
-------- -------- -------- -------- -------
Total loans charged off (759) (545) (323) (206) (10)
-------- -------- -------- -------- -------
Recoveries of loans previously charged off:
Commercial, financial, agricultural,
municipal and industrial development 12 54 11 35 --
Real estate--mortgage 10 3 -- -- --
Installment and consumer 30 10 10 2 2
Other loans -- -- -- -- --
-------- -------- -------- -------- -------
Total recoveries 52 67 21 37 2
-------- -------- -------- -------- -------
Net loans charged off (707) (478) (302) (169) (8)
-------- -------- -------- -------- -------
Acquired subsidiary balance 403 -- -- -- --
Provision for possible loan losses 2,397 1,448 977 849 233
-------- -------- -------- -------- -------
Allowance for possible loan losses (end of period) $ 5,193 $ 3,100 $ 2,130 $ 1,455 $ 775
======== ======== ======== ======== =======
Loans outstanding:
Average $365,615 $232,314 $158,503 $ 88,654 $55,517
End of period 484,862 291,926 181,544 121,393 69,773
Ratios:
Net charge-offs to average loans outstanding 0.19% 0.21% 0.19% 0.19% 0.01%
Net charge-offs to provision for loan losses 27.22 33.01 30.91 19.91 3.43
Provision for loan losses to average
loans outstanding 0.71 0.62 0.62 0.96 0.42
Allowance for loan loss to total loans outstanding 1.07 1.06 1.17 1.20 1.11
Allocation for possible loan losses at end of period:
Commercial, financial, agricultural,
municipal and industrial development $ 1,352 $ 833 $ 467 $ 315 $ 218
Real estate--construction 303 124 281 74 55
Real estate--mortgage 2,208 1,153 818 471 341
Installment loans to individuals 146 142 90 93 60
Lease financing 33 -- -- -- --
Unallocated 1,151 848 474 502 101
-------- -------- -------- -------- -------
Total $ 5,193 $ 3,100 $ 2,130 $ 1,455 $ 775
======== ======== ======== ======== =======
</TABLE>
- 24 -
<PAGE> 27
Deposits
Average deposits increased $118.5 million, or 47.9%, in 1997 following
an increase of $63.3 million, or 34.3%, in 1996. The increase in 1997 was due
to internal growth of approximately $67.5 million primarily from additional
branch openings in 1996 and 1997 and growth due to the Reliance Acquisition
and the Branch Acquisition of approximately $51.0 million. As shown in the
table below, total deposits at year-end 1997 increased by $174.7 million, or
56.6%. This growth rate, which is higher than the average growth rate, was due
to the aforementioned acquisitions taking place in the third quarter of 1997,
which therefore impacted average balances for the year to a lesser degree.
The mix of average deposits changed moderately during the year with
non-interest bearing deposits comprising 10.1% of total deposits compared to
8.6% in 1996. This increase is also the result of the previously mentioned
deposit acquisition having proportionately more non-interest bearing
accounts. Certificates of deposit under $100 thousand comprised 44.4% of
average deposits compared to 42.1% in 1996. The increase in 1997 was
primarily due to the thrift acquisition having proportionately more of these
deposits.
<TABLE>
DEPOSITS
<CAPTION>
December 31,
-------------------------------------------------------------------------
1997 1996
---------------------------------- -------------------------------
Percent Percent
of Total of Total
Amount Deposits Rate Amount Deposits Rate
------ -------- ---- ------ -------- ----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Demand deposits $ 50,060 10.33% --% $ 29,406 9.53% --%
NOW accounts 18,448 3.81 2.17 10,711 3.47 2.37
Money market
accounts 97,408 20.10 4.64 74,490 24.13 4.88
Savings deposits 16,157 3.33 2.89 6,083 1.97 3.25
Certificates of deposit 231,601 47.79 5.79 128,407 41.60 5.90
Certificates of deposit
over $100,000 52,211 10.77 5.55 50,825 16.47 5.50
IRA certificates 18,756 3.87 5.95 8,748 2.83 6.06
-------- ------ -------- ------
Total deposits $484,641 100.00% 5.24 $308,670 100.00% 5.33
======== ====== ======== ======
</TABLE>
<TABLE>
AMOUNTS AND MATURITIES OF TIME DEPOSITS OF $100,000 OR MORE
<CAPTION>
December 31, 1997
-----------------
(In thousands)
<S> <C>
Three months or less $26,694
Over three months through six months 5,604
Over six through twelve months 11,098
Over twelve months 8,815
-------
Total $52,211
=======
</TABLE>
- 25 -
<PAGE> 28
Interest Rate Sensitivity
The Company's asset/liability strategy is to minimize the sensitivity
of earnings to changes in interest rates while maintaining a net interest
margin within a range of Company objectives. The Company's asset/liability
committee monitors the interest rate sensitivity of the balance sheet on a
bi-weekly basis. The committee reviews asset and liability repricing in the
context of current and possible future interest rate scenarios affecting the
economic climate in the Company's market areas.
The Company's pricing policy is that all earning assets and interest
bearing liabilities be either based on floating rates or have a fixed rate
not exceeding five years. Real estate mortgage loans held by the Company,
while having long final maturities, are comprised of one-, two- or three-year
adjustable rate loans. The adjustable basis of these loans significantly
reduces interest rate risk.
The Company produces several asset/liability management reports
including gap analysis of periodic interest rate adjustments modeled by final
maturity and repricing frequency. Another system provides a simulation used
to forecast changes to the balance sheet under different rate scenarios. The
model shows changes to equity and net income under stable, rising, falling
and management's forecast of likely rate scenarios.
- 26 -
<PAGE> 29
The following table presents the Company's interest rate position for
various time bands as of December 31, 1997. This model does not take into
consideration interest rate caps or floors:
<TABLE>
<CAPTION>
0 to 3 4 to 12 1 to 5 Over
Months Months Years 5 Years Total
-------- -------- -------- -------- --------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Earning Assets:
Loans $172,407 $161,841 $124,424 $ 26,190 $484,862
Investment securities<F1> 40,122 13,875 16,929 5,943 76,869
Federal funds sold 1,600 -- -- -- 1,600
-------- -------- -------- -------- --------
Total earning assets $214,129 $175,716 $141,353 $ 32,133 $563,331
======== ======== ======== ======== ========
Funding Sources:
Money market accounts 97,408 -- -- -- 97,408
NOW accounts 18,448 -- -- -- 18,448
Savings 16,157 -- -- -- 16,157
Time deposits 54,552 104,831 71,844 374 231,601
Time deposits over $100,000 27,718 16,255 8,139 99 52,211
IRAs 3,079 8,066 7,082 529 18,756
Repurchase agreements 7,477 971 -- -- 8,252
Short-term borrowings--other 7,477 -- -- -- 7,477
Short-term FHLB borrowings 31,350 6,500 -- -- 37,850
Long-term FHLB borrowings -- -- 7,500 2,125 9,625
Long-term borrowings--other -- -- 13,650 -- 13,650
-------- -------- -------- -------- --------
Total funding sources $263,470 $136,623 $108,215 $ 3,127 $511,435
======== ======== ======== ======== ========
Interest sensitivity gap--$ $(49,341) $ 39,093 $ 33,138 $ 29,006 $ 51,896
Interest sensitivity gap--% 81.27% 128.61% 130.62% 1027.60% 110.15%
Cumulative gap--$ $(49,341) $(10,248) $ 22,890 $ 51,896
Cumulative gap--% 81.27% 97.44% 104.50% 110.15%
Cumulative gap as a percentage of total
earning assets -8.76% -1.82% 4.06% 9.21%
<FN>
- ---------------
<F1> Investment securities include mortgage-backed securities which have
effective maturities based upon current market conditions. This
stratification is based on management's estimates in relation to the
historical trends of these types of securities.
</TABLE>
Liquidity Management
Long-term liquidity is a function of the core deposit base and an
adequate capital base. The Company is committed to growth of its core deposit
base. This growth is both internally generated through product pricing and
product development and externally generated through acquisition. During
1997, both of these elements contributed heavily to developing and
maintaining long-term liquidity. The capital position of the Company has been
maintained through earnings retention and raising of capital. See "Capital
Resources."
Short-term liquidity needs arise from continuous fluctuations in the
flow of funds on both sides of the balance sheet resulting from growth and
seasonal and cyclical customer demands. The securities portfolio provides
stable long-term earnings as well as being a primary source of liquidity. The
designation of securities as available-for-sale and held-to-maturity does not
impact the portfolio as a source of liquidity due to the ability to transact
repurchase agreements using those securities.
- 27 -
<PAGE> 30
The Company anticipates continued loan demand in its market areas as
industry consolidation continues. The Company has and expects to continue to
utilize FHLB borrowings to fund a portion of future loan growth. The Company
has a $100.1 million secured credit facility with the FHLB, of which $47.5
million was outstanding at December 31, 1997.
Average short-term borrowings increased 91.8% during 1997 following an
increase of 125.7% in 1996. The increase reflects the above mentioned strategy
of utilizing lower cost FHLB borrowings to fund available loan growth while
continuing to systematically build the Company's deposit base. The Company
anticipates similar use of the FHLB facility in the immediate future. In
addition to the FHLB credit facility, the Company has available $24.1 million
of additional short-term borrowing capacity.
The following table summarizes short-term borrowings for the periods
indicated:
<TABLE>
AVERAGE SHORT-TERM BORROWINGS
<CAPTION>
Year Ended December 31,
-----------------------------------------------
1997 1996
---------------------- ----------------------
Average Average Average Average
Balance Rate Balance Rate
------- ----- ------- ----
(Dollars in thousands)
<S> <C> <C> <C> <C>
Federal funds purchased $ 2,851 5.14% $ 2,737 5.33%
Securities sold under agreement
to repurchase and other
short-term borrowings 49,851 5.51 24,744 5.65
------- -------
Total $52,702 5.49 $27,481 5.61
======= =======
Total maximum short-term borrowings
outstanding at any month-end
during the year $71,496 $51,060
</TABLE>
Capital Resources
Total shareholders' equity increased 156.7% to $42.1 million at
December 31, 1997 compared to $16.4 million at year-end 1996. Approximately
85% of this increase was attributable to the Common Stock rights offerings in
1997 and the issuance of Common Stock for the Reliance Acquisition.
In February 1997, the Company completed a rights offering in which it
raised net proceeds of approximately $5.2 million and issued 567,750 shares
of Common Stock to existing shareholders at a price of $9.375 per share.
In December 1997, the Company completed a rights offering in which it
raised net proceeds of approximately $6.0 million and issued 446,414 shares
of Common Stock to existing shareholders at a price of $13.50 per share.
- 28 -
<PAGE> 31
In August 1997, the Company acquired Reliance. In this transaction the
Company issued 599,132 shares of Common Stock in exchange for all of
Reliance's outstanding Common Stock. This purchase transaction was recorded
as an increase to the equity of the Company of $10.6 million.
The Company's capital requirements have been historically financed
through private offerings of debt and equity securities, retention of
retained earnings and borrowings from a commercial bank. The Bank also
utilized its borrowing capacity with the FHLB. The principal amount of the
Company's bank stock loan was $10.4 million as of December 31, 1997 and
matures in December of 1999. Additionally, the Company has $3.3 million of
outstanding subordinate debentures due in 2002.
The Company also analyzes its capital and the capital position of its
subsidiaries in terms of regulatory risked-based capital guidelines. This
analysis of capital is dependent upon a number of factors including asset
quality, earnings strength, liquidity, economic conditions and combinations
thereof. The Federal Reserve Board has issued standards for measuring
capital adequacy for bank holding companies. These standards are designed to
provide risk-responsive capital guidelines and to incorporate a consistent
framework for use by financial institutions. Management believes that, as of
December 31, 1997, the Company and its subsidiaries met all capital adequacy
requirements to which they were subject.
As of December 31, 1997, the Company and the Bank's capital ratios were
as follows:
<TABLE>
<CAPTION>
Company Allegiant Bank
------- --------------
<S> <C> <C>
Total capital (to risk-weighted assets) 8.14% 9.35%
Tier 1 capital (to risk-weighted assets) 6.39 8.27
Tier 1 capital (to average assets) 6.15 7.76
</TABLE>
- 29 -
<PAGE> 32
The capitalization of the Company as of December 31, 1997 was as
follows:
<TABLE>
<CAPTION>
December 31, 1997
-----------------
(In thousands)
<S> <C>
Long-term debt:
Note payable to financial institution, interest
payable at prime less one half of one percent
(8.00% at December 31, 1997), due December 31,
1999. The note is secured by the Bank's capital stock $10,400
Notes payable to FHLB, various interest rates from
5.62% to 7.82% principal balance due from
January 12, 1998 to October 15, 2003.
Secured by FHLB stock and certain loans 9,625
Subordinated debentures with certain shareholders,
interest payable at prime plus 3% (with a minimum
floor of 10%), due on May 31, 2002 3,250
-------
Total long-term debt $23,275
-------
Shareholders' equity:
Common Stock, $.01 par value; 7,800,000 shares
authorized; issued and outstanding 4,076,841 $ 51
Capital surplus 39,504
Retained earnings 2,431
Net unrealized appreciation on securities held
available-for-sale 85
-------
Total shareholders' equity 42,071
-------
Total capitalization $65,346
=======
</TABLE>
Year 2000 Compliance
The Company is aware of the issues associated with the programming code
in existing computer systems as the millennium (year 2000) approaches. The
"year 2000" problem is pervasive and complex as virtually every computer
operation will be affected in some way by the rollover of the two digit year
value to 00. The issue is whether computer systems will properly recognize
date sensitive information when the year changes to 2000. Systems that do
not properly recognize such information could generate erroneous data or
cause a system to fail.
The Company is utilizing both internal and external resources to
identify, correct or reprogram, and test the systems for the year 2000
compliance. It is anticipated that all reprogramming efforts will be
complete by December 31, 1998, allowing adequate time for testing. To date,
confirmations have been received from the Company's primary processing
vendors that plans are being developed to address processing of transactions
in the year 2000. Management has not yet assessed the year 2000 compliance
expense and related potential effect on the Company's earnings.
- 30 -
<PAGE> 33
Item 7. Financial Statements
--------------------
[Letterhead of BDO Seidman, LLP]
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
Allegiant Bancorp, Inc.
St. Louis, Missouri
We have audited the accompanying consolidated balance sheets of
Allegiant Bancorp, Inc. (a Missouri corporation) and subsidiaries as of
December 31, 1997 and 1996, and the related consolidated statements of
income, shareholders' equity and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Allegiant
Bancorp, Inc. and subsidiaries as of December 31, 1997 and 1996, and the
results of their operations and their cash flows for the years then ended, in
conformity with generally accepted accounting principles.
/s/ BDO Seidman, LLP
St. Louis, Missouri
March 13, 1998
- 31 -
<PAGE> 34
<TABLE>
ALLEGIANT BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
<CAPTION>
December 31,
--------------------------
1997 1996
-------- --------
(In thousands)
<S> <C> <C>
ASSETS:
- ------
Cash and due from banks $ 14,872 $ 7,554
Federal funds sold and other overnight investments 1,600 10,775
Investment securities (Notes 2, 7 and 8)
Available-for-sale (at estimated market value) 44,918 22,073
Held-to-maturity (estimated market value of $32,146,000
in 1997 and $38,500,000 in 1996) 31,951 38,487
Loans, net of allowance for possible loan losses of
$5,193,000 in 1997 and $3,100,000 in 1996 (Notes 3, 7 and 8) 479,669 288,826
Premises and equipment (Note 4) 10,801 5,514
Accrued interest and other assets (Notes 1, 5 and 6) 24,426 4,335
-------- --------
Total assets $608,237 $377,564
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY:
- ------------------------------------
Deposits:
Non-interest bearing $ 50,060 $ 29,406
Interest bearing 382,370 228,439
Certificates of deposit of $100,000 or more 52,211 50,825
-------- --------
Total deposits 484,641 308,670
-------- --------
Short-term borrowings (Notes 2, 7 and 8) 53,579 36,137
Long-term debt (Notes 1, 7 and 9) 23,275 14,663
Accrued expenses and other liabilities 4,671 1,708
-------- --------
Total liabilities 566,166 361,178
Commitments and contingencies (Notes 10, 11, 12, 13 and 14)
Shareholders' equity (Notes 8, 9, 11 and 16):
Common Stock, $.01 par value - shares
authorized, 7,800,000; issued and outstanding
5,096,000 in 1997 and 2,271,000 in 1996 51 23
Capital surplus 39,504 15,983
Retained earnings 2,431 357
Net unrealized appreciation on securities available
for sale (net of tax) 85 23
-------- --------
Total shareholders' equity 42,071 16,386
-------- --------
Total liabilities and shareholders' equity $608,237 $377,564
======== ========
See accompanying summary of accounting policies and notes to consolidated financial statements.
</TABLE>
- 32 -
<PAGE> 35
<TABLE>
ALLEGIANT BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
Years Ended December 31,
-------------------------
1997 1996
------- -------
(In thousands, except per share data)
<S> <C> <C>
Interest income:
Interest and fees on loans $33,473 $21,428
Investment securities 3,966 3,477
Federal funds sold and overnight investments 326 151
------- -------
Total interest income 37,765 25,056
------- -------
Interest expense:
Interest on deposits 17,253 12,060
Interest on short-term borrowings 2,895 1,542
Interest on long-term debt 1,318 1,397
------- -------
Total interest expense 21,466 14,999
------- -------
Net interest income 16,299 10,057
Provision for possible loan losses (Note 3) 2,397 1,448
------- -------
Net interest income after provision for possible loan losses 13,902 8,609
------- -------
Other income:
Service charges on deposits 913 612
Net gain on sale of securities (Note 2) 2 49
Other income 2,383 732
------- -------
Total other income 3,298 1,393
------- -------
Other expenses:
Salaries and employee benefits (Note 10) 6,192 3,455
Occupancy and furniture and equipment 1,681 1,137
Other expense (Note 15) 5,196 2,427
------- -------
Total other expenses 13,069 7,019
------- -------
Income before income taxes 4,131 2,983
Provision for income taxes (Note 6) 1,716 1,175
------- -------
Net income $ 2,415 $ 1,808
======= =======
Basic earnings per share $ 0.65 $ 0.66
Diluted earnings per share $ 0.59 $ 0.58
See accompanying summary of accounting policies and notes to consolidated financial statements.
</TABLE>
- 33 -
<PAGE> 36
<TABLE>
ALLEGIANT BANCORP, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<CAPTION>
Net
Unrealized
Appreciation
(Depreciation)
on Available- Total
Common Capital Retained for-Sale Shareholders'
Stock Surplus Earnings Securities Equity
------ ------- -------- -------------- -------------
(In thousands)
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1996 $18 $11,374 $ 2,637 $(91) $13,938
--- ------- ------- ---- -------
Net income -- -- 1,808 -- 1,808
Cash dividends declared -- -- (187) -- (187)
Issuance of Common Stock coinciding with:
Stock dividends (Note 9) 4 3,897 (3,901) -- --
Conversion of Subordinate Debentures 1 503 -- -- 504
Exercise of Common Stock Warrants/Options -- 25 -- -- 25
Various stock issuance plans -- 184 -- -- 184
Change in net unrealized gains (losses)
on securities available-for-sale (Note 2) -- -- -- 114 114
--- ------- ------- ---- -------
Balance, December 31, 1996 $23 $15,983 $ 357 $ 23 $16,386
--- ------- ------- ---- -------
Net income -- -- 2,415 -- 2,415
Cash dividends declared -- -- (331) -- (331)
Issuance of Common Stock coinciding with:
Five-for-four stock split (Note 9) 10 -- (10) -- --
Rights Offering 10 11,231 -- -- 11,241
Acquisition of Reliance Financial, Inc. (Note 1) 6 10,581 -- -- 10,587
Exercise of Common Stock Warrants/Options 2 1,510 -- -- 1,512
Various stock issuance plans -- 199 -- -- 199
Change in net unrealized gains
on securities available-for-sale (Note 2) -- -- -- 62 62
--- ------- ------- ---- -------
Balance, December 31, 1997 $51 $39,504 $ 2,431 $ 85 $42,071
=== ======= ======= ==== =======
See accompanying summary of accounting policies and notes to consolidated financial statements.
</TABLE>
- 34 -
<PAGE> 37
<TABLE>
ALLEGIANT BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Years Ended December 31,
---------------------------
1997 1996
--------- ---------
(In thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 2,415 $ 1,808
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 1,057 536
Provision for loan losses 2,397 1,448
Net realized gains on securities available-for-sale (2) (49)
Deferred tax provision (685) (282)
Changes in assets and liabilities:
Accrued interest receivable and
other assets (4,069) (938)
Accrued expenses and other liabilities 623 768
--------- ---------
Cash provided by operating activities 1,736 3,291
--------- ---------
INVESTING ACTIVITIES:
Net cash received in acquisition of Reliance Financial, Inc. (Note 1) 1,533 --
Net cash received in acquisition of branches (Note 1) 83,596 --
Proceeds from maturities of securities held-to-maturity 17,019 41,343
Purchase of investment securities held-to-maturity (10,396) (25,279)
Proceeds from maturities of securities available-for-sale 25,020 36,797
Proceeds from sales of securities available-for-sale 2,949 3,882
Purchase of investments securities available-for-sale (39,211) (34,457)
Loans made to customers, net of repayments (175,387) (120,070)
Additions to premises and equipment (4,710) (1,574)
--------- ---------
Cash used in investing activities (99,587) (99,358)
--------- ---------
FINANCING ACTIVITIES:
Net increase in deposits 57,518 77,362
Net increase in short-term borrowings 17,442 22,029
Proceeds from issuance of long-term debt 8,625 --
Repayment of long-term debt (13) (4,552)
Proceeds from issuance of Common Stock 12,753 61
Payment of dividends (331) (187)
--------- ---------
Cash provided by financing activities 95,994 94,713
--------- ---------
Net (decrease) increase in cash and cash equivalents (1,857) (1,354)
Cash and cash equivalents, beginning of year 18,329 19,683
--------- ---------
Cash and cash equivalents, end of year $ 16,472 $ 18,329
========= =========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest on deposits and borrowings $ 20,930 $ 14,750
Income taxes 2,768 1,393
Noncash transactions:
Transfers to other real estate owned in settlement of loans $ 330 $ --
Loans securitized 7,102 9,209
Common Stock issued in acquisition of Reliance Financial, Inc.
(Note 1) 10,587 --
Conversion of Subordinate Debentures to Common Stock -- 504
Conversion of directors' fees to Common Stock 136 148
Conversion of employee stock bonus to Common Stock 63 --
See accompanying summary of accounting policies and notes to consolidated financial statements.
</TABLE>
- 35 -
<PAGE> 38
ALLEGIANT BANCORP, INC.
SUMMARY OF ACCOUNTING POLICIES
Basis of Accounting. The accompanying consolidated financial
statements include the accounts of Allegiant Bancorp, Inc. (the "Company")
and its subsidiaries, Allegiant Bank (the "Bank"), Allegiant Bank, FSB,
Allegiant Mortgage Company and Edge Mortgage Services, Inc. The financial
statements have been prepared in conformity with generally accepted
accounting principles and reporting practices applicable to the banking
industry. All significant intercompany transactions and balances have been
eliminated.
Business. The Bank provides a full range of banking services to
individual and corporate customers in the St. Louis, Missouri metropolitan
area as well as northeast Missouri. The Bank is subject to intense
competition from other financial institutions. The Bank also is subject to
the regulations of certain federal and state agencies and undergoes periodic
examination by those regulatory authorities.
Investment Securities. Securities are classified as held-to-maturity,
available-for-sale or trading. Only those securities classified as
held-to-maturity, and which management has the intent and ability to hold to
maturity, are reported at amortized cost. Available-for-sale and trading
securities are reported at fair value with unrealized gains and losses, net
of related deferred income taxes, included in shareholders' equity or
income, respectively. Realized securities gains or losses are reported in
the Consolidated Statements of Income. The cost of securities sold is based
on the specific identification method.
Loans. Loans that management has the intent and ability to hold for
the foreseeable future or until maturity or pay-off are reported at their
outstanding principal adjusted for any charge-offs, the allowance for loan
losses and any deferred fees or costs on originated loans and unamortized
premiums or discounts on purchased loans.
Loan origination fees and certain direct origination costs are
capitalized and recognized as an adjustment of the yield of the related loan.
The accrual of interest on impaired loans is discontinued when, in
management's opinion, the borrower may be unable to meet payments as they
become due. When interest accrual is discontinued, all unpaid accrued
interest is reversed. Interest income is subsequently recognized only to the
extent cash payments are received.
Statement of Financial Accounting Standards ("SFAS") No. 125,
"Accounting for Transfer and Servicing of Financial Assets and
Extinguishments of Liabilities," was adopted January 1, 1997 and provides
accounting and reporting standards for transfers and servicing of financial
assets and extinguishments of liabilities. The adoption of SFAS No. 125 did
not have a material effect on the Consolidated Financial Statements.
Allowance for loan losses. The allowance for loan losses is increased
by charges to income and decreased by charge-offs (net of recoveries).
Management's periodic evaluation of the adequacy of the allowance is based on
the Bank's past loan loss experience, known and inherent risks in the
portfolio, adverse situations that may affect the borrower's ability to
repay, the estimated value of any underlying collateral and current economic
conditions.
- 36 -
<PAGE> 39
ALLEGIANT BANCORP, INC.
SUMMARY OF ACCOUNTING POLICIES
Bank Premises and Equipment. Premises and equipment are stated at cost
less accumulated depreciation. The provision for depreciation is computed
using the straight-line method over the estimated useful lives of the
individual assets for book purposes and accelerated methods for tax purposes.
Ordinary maintenance and repairs are charged to operations as incurred.
Mortgage Servicing Rights and Amortization. SFAS No. 122, "Accounting
for Mortgage Servicing Rights," as superseded by SFAS No. 125, requires an
entity that sells mortgage loans with servicing rights retained to allocate
the total cost of the mortgage loans to the servicing rights and the loans
based on the relative fair values. The resulting servicing rights are
amortized in proportion to, and over the period of, estimated net servicing
revenues. Servicing rights are assessed for impairment periodically based on
fair value, with any impairment recognized through a valuation allowance.
For purposes of measuring impairment, the rights are stratified based on
interest rate and original maturity. The adoption of SFAS No. 122 on January
1, 1996 did not have a material effect on the Consolidated Financial
Statements.
Real Estate Owned. Real estate acquired in settlement of loans is
initially recorded at the lower of fair market value of the assets received
(less estimated selling costs) or the recorded investment in the loan at date
of foreclosure. Any adjustment to fair market value is charged against the
allowance for real estate. Subsequent write-downs are charged against
operating expense including charges relating to operating, holding or
disposing of the property. Real estate owned was approximately $330 thousand
at December 31, 1997.
Intangible Assets. Goodwill and other intangibles are amortized on a
straight-line basis generally over a period of up to 15 years. Intangible
assets, net of accumulated amortization included in accrued interest and
other assets, at December 31, 1997 and 1996, totaled $13.6 million and $491
thousand, respectively. Management reviews intangible assets for possible
impairment if there is a significant event that detrimentally affects
operations. Impairment is measured using estimates of the discounted future
earnings potential of the entity or assets acquired.
Income Taxes. Income taxes are accounted for under the asset and
liability method in which deferred income taxes are recognized as a result of
temporary differences between the financial reporting basis and the tax basis
of the assets and liabilities of the Company.
Earnings Per Share. Earnings per share is calculated by dividing net
income for the period by the weighted average number of shares of Common
Stock outstanding during the period. The assumed exercise of stock options
and warrants is included in the calculation of diluted earnings per share.
SFAS No. 128, "Earnings Per Share," was adopted for 1997 with all
prior-period earnings per share data restated. The statement requires dual
presentation of earnings per share and diluted earnings per share on the
Consolidated Statements of Income and other computational changes. The
adoption of SFAS No. 128 did not have a material effect on previously
reported earnings per share.
- 37 -
<PAGE> 40
ALLEGIANT BANCORP, INC.
SUMMARY OF ACCOUNTING POLICIES
Consolidated Statements of Cash Flows. For purposes of reporting cash
flows, the Company considers cash and due from banks, federal funds sold and
other overnight investments to be cash equivalents.
Reclassifications. Certain reclassifications have been made to the
1996 financial statements to conform to the 1997 presentation. These
reclassifications had no effect on net income.
Accounting Estimates. The preparation of financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
estimates.
New Accounting Pronouncements. In June 1997, the Financial Accounting
Standards Board ("FASB") issued SFAS No. 130, "Reporting Comprehensive Income."
SFAS No. 130 requires the reporting of comprehensive income and its components
in the 1998 financial statements. Comprehensive income is defined as the
change in equity from transactions and other events and circumstances from
non-owner sources, and excludes investments by and distributions to owners.
Comprehensive income includes net income and other items of comprehensive
income meeting the above criteria. The Company's most significant component
of other comprehensive income is the unrealized holding gains and losses on
available-for-sale securities.
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information." SFAS No. 131 requires reporting
about operating segments, products and services, geographic areas and major
customers. Its objective is to provide information about the different types
of business activities and economic environments in which businesses operate.
The first disclosures will be required in the Company's 1998 Annual Report.
The Company does not expect substantial changes in its definition of segments.
In February 1998, the FASB issued SFAS No. 132, "Employers' Disclosures
about Pensions and Other Postretirement Benefits," which standardizes the
disclosure requirements for pensions and other postretirement benefits and
requires additional information on changes in the benefit obligations and
fair values of plan assets that will facilitate financial analysis. SFAS 132
is effective for years beginning after December 15, 1997, and requires
comparative information for earlier years to be restated, unless such
information is not readily available. The Company has no pensions or
postretirement benefits plans in place at this time. There is no impact on
the Company's financial statements due to the issuance of this statement.
- 38 -
<PAGE> 41
ALLEGIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. ACQUISITIONS:
In August 1997, the Company acquired all the outstanding capital stock
of Reliance Financial, Inc. in exchange for 599,126 shares of the Company's
Common Stock. In September 1997, the Company purchased two bank branch
offices from Roosevelt Bank. As part of the agreement, the Company assumed
deposits of $96 million in exchange for loans of $3 million, premises and
equipment of $1 million and cash of $84 million. Total goodwill and core
deposit intangible assets recorded by the Company in connection with this
acquisition was $8.8 million. Both acquisitions were recorded using the
purchase method of accounting. Results of operations of companies and
branches acquired in purchase business combinations are included from the
date of acquisition.
NOTE 2. INVESTMENT SECURITIES:
Debt and equity securities have been classified in the Consolidated
Balance Sheets according to management's intent. The carrying amount of
securities and their approximate fair values at December 31 were as follows
(in thousands):
<TABLE>
<CAPTION>
Securities Available-for-Sale
December 31,
-------------------------------------------------------------------------------------------
1997 1996
-------------------------------------------- --------------------------------------------
Gross Gross Gross Gross
Amortized Unrealized Unrealized Fair Amortized Unrealized Unrealized Fair
Cost Gains Losses Value Cost Gains Losses Value
--------- ---------- ---------- ------- --------- ---------- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. government and
agency securities $26,545 $106 $ (9) $26,642 $15,432 $28 $(64) $15,396
State and municipal securities 597 -- -- 597 -- -- -- --
Mortgage-backed securities 9,243 33 (1) 9,275 1,939 71 -- 2,010
Federal Home Loan Bank
stock 7,033 -- -- 7,033 4,462 -- -- 4,462
Other equity securities 1,371 -- -- 1,371 205 -- -- 205
------- ---- ---- ------- ------- --- ---- -------
Total $44,789 $139 ($10) $44,918 $22,038 $99 ($64) $22,073
======= ==== ==== ======= ======= === ==== =======
<CAPTION>
Securities to be Held-to-Maturity
December 31,
-------------------------------------------------------------------------------------------
1997 1996
-------------------------------------------- --------------------------------------------
Gross Gross Gross Gross
Amortized Unrealized Unrealized Fair Amortized Unrealized Unrealized Fair
Cost Gains Losses Value Cost Gains Losses Value
--------- ---------- ---------- ------- --------- ---------- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. government and
agency securities $21,712 $ 50 ($131) $21,631 $21,096 $ 35 ($229) $20,902
State and municipal
securities 966 24 -- 990 1,199 20 -- 1,219
Mortgage-backed securities 9,273 253 (1) 9,525 16,192 227 -- 16,419
------- ---- ----- ------- ------- ---- ----- -------
Total $31,951 $327 ($132) $32,146 $38,487 $282 ($229) $38,540
======= ==== ===== ======= ======= ==== ===== =======
</TABLE>
Gross realized gains and gross realized losses on sale of securities
available-for-sale were $15 thousand and $13 thousand, respectively, in 1997,
and $56 thousand and $7 thousand, respectively, in 1996.
- 39 -
<PAGE> 42
ALLEGIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In 1997, the Bank transferred four separate pools of residential
mortgages aggregating $7.1 million into an equivalent number of Federal
National Mortgage Association ("FNMA") mortgage-backed securities. These
investments were classified as available-for-sale at the same amount. There
was no gain or loss recorded on the sale of these loans.
In 1996, the Bank transferred seven separate pools of residential
mortgages aggregating $9.2 million into an equivalent number of FNMA
mortgage-backed securities. These investments were classified as
held-to-maturity at the same amount. There was no gain or loss recorded on
the sale of these loans.
The scheduled maturities of securities held-to-maturity and securities
(other than equity securities) available-for-sale at December 31, 1997 were
as follows (in thousands):
<TABLE>
<CAPTION>
December 31, 1997
------------------------------------------------------
Securities to be Held- Securities
to-Maturity Available-for-Sale
------------------------- ---------------------
Amortized Fair Amortized Fair
Cost Value Cost Value
--------- ------- --------- -------
<S> <C> <C> <C> <C>
Due in one year or less $10,320 $10,327 $ 4,487 $ 4,485
Due from one year to five years 11,952 11,870 21,558 21,657
Due from five years to ten years 380 397 899 899
Due after ten years 26 27 198 198
------- ------- ------- -------
Subtotal 22,678 22,621 27,142 27,239
Mortgage-backed securities 9,273 9,525 9,243 9,275
------- ------- ------- -------
Total $31,951 $32,146 $36,385 $36,514
======= ======= ======= =======
</TABLE>
NOTE 3. LOANS:
The components of loans in the Consolidated Balance Sheets were as
follows (in thousands):
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------
1997 1996
-------- --------
<S> <C> <C>
Commercial $109,937 $ 75,129
Real estate 331,416 196,107
Real estate construction 27,181 8,763
Installment and other 16,821 12,084
-------- --------
Total loans 485,355 292,083
Net deferred loan fees, premiums and discounts (493) (157)
Allowance for possible loan losses (5,193) (3,100)
-------- --------
Net loans $479,669 $288,826
======== ========
</TABLE>
- 40 -
<PAGE> 43
ALLEGIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
An analysis of the change in the allowance for possible loan losses
follows (in thousands):
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1997 1996
------ ------
<S> <C> <C>
Balance, beginning of period $3,100 $2,130
Acquired subsidiary balance (Note 1) 403 --
Loans charged off (759) (545)
Recoveries 52 67
------ ------
Net loans charged off (707) (478)
Provision for possible loan losses 2,397 1,448
------ ------
Balance, end of year $5,193 $3,100
====== ======
</TABLE>
The recorded investment in loans that are considered to be impaired
under SFAS No. 114, as amended by SFAS No. 118, was $559 thousand in 1997
and $147 thousand in 1996 (these impaired loans were all classified as non-
accrual loans). The related allowance for these impaired loans was $86
thousand in 1997 and $41 thousand in 1996. The average balance of impaired
loans during 1997 and 1996 was $353 thousand and $196 thousand, respectively.
Interest income that would have been recognized for non-accrual loans was
$57 thousand in 1997 and $18 thousand in 1996.
The Company and the Bank have entered into transactions with their
directors, significant shareholders and affiliates (related parties). Such
transactions were made in the ordinary course of business on substantially
the same terms and conditions, including interest rates and collateral, as
those prevailing at the same time for comparable transactions with other
customers, and did not, in the opinion of management, involve more than
normal credit risk or present other unfavorable features. The aggregate
amount of loans to such related parties at December 31, 1997 and 1996 was
$18.4 million and $15.5 million, respectively.
- 41 -
<PAGE> 44
ALLEGIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4. PREMISES AND EQUIPMENT:
Components of premises and equipment at December 31, 1997 and 1996 were
as follows (in thousands):
<TABLE>
<CAPTION>
December 31,
---------------------------
1997 1996
------- -------
<S> <C> <C>
Land $ 2,618 $ 1,515
Bank premises 5,019 2,542
Furniture, equipment and automobiles 5,630 3,379
------- -------
Total cost 13,267 7,436
Less accumulated depreciation (2,466) (1,922)
------- -------
Net book value $10,801 $ 5,514
======= =======
</TABLE>
NOTE 5. MORTGAGE SERVICING RIGHTS:
The components of mortgage servicing rights were as follows (in
thousands):
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------
1997 1996
------ ------
<S> <C> <C>
Balance, beginning of period $280 $212
Additions 13 103
Amortization
Scheduled (71) (35)
Unscheduled (40) --
---- ----
Balance, end of period $182 $280
==== ====
</TABLE>
As of December 31, 1997, the estimated fair value of the Company's
capitalized mortgage servicing rights was in excess of its carrying value.
Fair value is determined by discounting estimated net future cash flows from
mortgage servicing activities using discount rates that approximate current
market rates and estimated prepayments, among other assumptions.
NOTE 6. INCOME TAXES:
The Company's results include income tax expense as follows (in
thousands):
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------
1997 1996
------ ------
<S> <C> <C>
Current $2,401 $1,457
Deferred (685) (282)
------ ------
Total $1,716 $1,175
====== ======
</TABLE>
- 42 -
<PAGE> 45
ALLEGIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The tax effects of temporary differences that gave rise to the deferred
tax assets and liabilities are presented below (in thousands):
<TABLE>
<CAPTION>
December 31,
---------------------------
1997 1996
------ ------
<S> <C> <C>
Deferred tax assets:
Reserve for possible loan losses $1,536 $ 852
Deferred loan fees 194 52
Deferred compensation 74 32
Accrued expenses 63 41
Mark-to-market securities adjustments 44 12
Other 72 69
------ ------
Total deferred tax assets 1,983 1,107
------ ------
Deferred tax liabilities:
Depreciation (461) (226)
Other (29) (15)
------ ------
Total deferred tax liabilities (490) (241)
------ ------
Net deferred tax assets $1,493 $ 776
====== ======
</TABLE>
A valuation allowance would be provided on deferred tax assets when it
is more likely than not that some portion of the assets will not be realized.
The Company has not established a valuation allowance as of December 31, 1997
or 1996, due to management's belief that all criteria for recognition have
been met, including the existence of a history of taxes paid sufficient to
support the realization of the deferred tax assets.
Income tax expense as reported differs from the amounts computed by
applying the statutory federal income tax rate to pre-tax income as follows
(in thousands):
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------
1997 1996
------ ------
<S> <C> <C>
Computed expected tax expense $1,405 $1,014
Tax-exempt income (38) (19)
State and local income taxes, net of federal tax benefits 258 143
Goodwill amortization 24 23
Other, net 67 14
------ ------
Total tax expense $1,716 $1,175
====== ======
</TABLE>
NOTE 7. SHORT-TERM BORROWINGS:
Short-term borrowings were as follows (in thousands):
<TABLE>
<CAPTION>
December 31,
-----------------------
1997 1996
------- -------
<S> <C> <C>
Securities sold under agreements to repurchase $ 8,252 $11,637
Federal funds purchased 6,500 --
Federal Home Loan Bank advances 37,850 24,500
Other short-term borrowings 977 --
------- -------
Total short-term borrowings $53,579 $36,137
======= =======
</TABLE>
- 43 -
<PAGE> 46
ALLEGIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As collateral for the FHLB advances, the Bank has entered into a
blanket agreement that pledges first mortgage loans with principal balances
aggregating 150% of the outstanding advances.
NOTE 8. LONG-TERM DEBT:
Long-term debt consisted of the following at year-end (in thousands):
<TABLE>
<CAPTION>
December 31,
-------------------------
1997 1996
------- -------
<S> <C> <C>
Note payable to a financial institution, interest
payable quarterly at prime less one half of one percent (8%
on December 31, 1997), principal payment of
$6,000,000 payable on June 30, 1998, and the balance outstanding
payable on December 31, 1999, secured by Bank stock $10,400 $ 4,400
Notes payable to FHLB, interest payable monthly at rates varying
from 5.62% to 7.82%, principal balance due at maturity ranging
from January 12, 1998 to October 15, 2003,
secured by stock in FHLB and certain loans (Note 7) 9,625 7,000
Subordinated debentures with certain shareholders,
interest payable quarterly at prime plus 3% (with a minimum
floor of 10%), maturing on May 31, 2002 3,250 3,263
------- -------
Total long-term debt $23,275 $14,663
======= =======
</TABLE>
Under the terms of the note payable to the financial institution, the
Company and/or its subsidiaries are required to maintain certain financial
ratios and are limited with respect to cash dividends, capital expenditures
and the incurrence of additional indebtedness without prior approval.
Common stock warrants of 144,224, exercisable at $6.61 per share, which
were issued in connection with the subordinated debentures, remained
outstanding at December 31, 1997.
A summary of annual principal reductions of long-term debt as of
December 31, 1997 is as follows (in thousands):
<TABLE>
<CAPTION>
Annual
Principal
Year Reductions
---- ----------
<S> <C>
1998 $ 9,000
1999 6,900
2000 2,000
2001 --
2002 3,875
Thereafter 1,500
-------
Total $23,275
=======
</TABLE>
NOTE 9. COMMON STOCK:
SFAS No. 128 required the reporting of two measurements of performance
over the reporting periods. Basic income per share is computed by dividing
income available to common shareholders by the weighted average number of
common shares outstanding during the year. Diluted income per share gives
effect to all dilutive potential common shares that were outstanding during the
- 44 -
<PAGE> 47
ALLEGIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
year. The shares used in the calculation of basic and diluted income per share
are shown below (in thousands):
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1997 1996
-------- ---------
<S> <C> <C>
Denominator for basic earnings per share - weighted average
common shares outstanding 3,735 2,749
Effect of dilutive securities:
Stock options 270 306
Warrants 66 36
----- -----
336 342
Denominator for diluted earnings per share - adjusted weighted average
Common shares outstanding 4,071 3,091
===== =====
</TABLE>
On September 19, 1997, the Company's Board of Directors declared a
five-for-four stock split (in the form of a stock dividend) of the Company's
Common Stock to shareholders of record on January 7, 1998, payable on January
21, 1998. Common Stock was credited and capital surplus was charged for the
aggregate par value of the shares that were issued. The stated par value of
each share was not changed from $.01.
On September 19, 1996, the Company's Board of Directors declared a 10%
stock dividend to shareholders of record on January 2, 1997, payable on
January 15, 1997. The transaction was valued based on the closing market
price of the Company's Common Stock at the date of declaration.
All per share data in this report has been restated to reflect the
aforementioned stock split and stock dividend.
NOTE 10. EMPLOYEE BENEFITS:
Pension Plan. The Company has a defined contribution pension plan in
effect for substantially all full-time employees. Salaries and employee
benefits expense include $39 thousand in 1997 and $30 thousand in 1996 for
such plans. Contributions under the defined contribution plan are made at
the discretion of Company management.
Phantom Stock Plan. In December 1994, the Company's Board of Directors
approved a Phantom Stock Plan for the President, under which the Company
agreed to pay a cash award to the President of the Company based on the
increase in book value on shares of Common Stock, from December 31, 1994
until the earlier of December 31, 1998 or the year immediately preceding the
year the President's employment terminates. The annual provision under this
plan for the years ended December 31, 1997 and 1996 was approximately $225
thousand and $55 thousand, respectively. Deferred compensation included in
accrued expenses and other liabilities totaled $318 thousand and $93 thousand
at December 31, 1997 and 1996, respectively.
NOTE 11. STOCK OPTION PLANS AND DIRECTORS STOCK PURCHASE PLAN
The Company has reserved 1,454,000 shares of its Common Stock for the
issuance under various stock option plans offered to certain key employees of
the Company and its subsidiaries.
- 45 -
<PAGE> 48
ALLEGIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Options are granted, by action of the Board of Directors, to acquire stock at
110% of fair market value at the date of the grant, for a term of up to ten
years.
At December 31, 1997, 670 thousand shares remained available for option
grants under these programs. The following tables summarize option activity
over the last two years and current options outstanding:
<TABLE>
<CAPTION>
1997 1996
------------------------------ ------------------------------
Weighted- Weighted-
Average Average
Shares Option Price Shares Option Price
--------- ------------ -------- ------------
<S> <C> <C> <C> <C>
Outstanding, beginning of period 576,656 $ 6.13 424,948 $ 4.58
Granted 236,894 11.04 158,538 10.25
Exercised (170,483) 6.95 (6,554) 4.58
Canceled (2,875) 12.00 (276) 9.60
--------- --------
Outstanding, end of period 640,192 7.70 576,656 6.13
========= ========
Weighted-average fair value of
options granted during the year $ 2.74 $ 2.74
========= ========
<CAPTION>
Options Outstanding Options Exercisable
- ----------------------------------------------------------------------------- -------------------------------
Weighted
Number Average Weighted Number Weighted
Outstanding at Remaining Average Exercisable at Average
Range of December 31, Contractual Exercise December 31, Exercise
Exercise Price 1997 Life Price 1997 Price
- ----------------------------------------------------------------------------- -------------------------------
<S> <C> <C> <C> <C> <C>
$ 3.31 - $ 3.97 76,820 3.4 years $ 3.62 76,820 $ 3.62
$ 4.76 - $ 5.16 240,740 1.0 years 4.79 179,226 4.78
$ 8.32 - $10.55 173,250 3.3 years 9.56 173,250 9.56
$11.61 - $15.33 149,382 4.3 years 12.35 54,500 12.45
------- -------
$ 3.31 - $15.33 640,192 2.7 years 7.70 483,796 7.20
======= =======
</TABLE>
The Company has a directors stock purchase plan whereby outside
directors of the Company and its subsidiaries may elect to use their
directors' fees to purchase Common Stock at market value. In 1997, 11
thousand shares were purchased at an average price of $12.89 and in 1996, 17
thousand shares were purchased at an average price of $8.72.
- 46 -
<PAGE> 49
ALLEGIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company applies Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees," and related interpretations in
accounting for its plans. Accordingly, no compensation expense has been
recognized for its stock-based compensation plans. Had compensation cost for
the Company's stock-based compensation plans been determined based upon the
fair value of the grant date for the awards under these plans consistent with
the methodology prescribed under SFAS No. 123, "Accounting for Stock-Based
Compensation," the Company's net income and earnings per share would have
been reduced to the pro forma amounts indicated below (in thousands, except
per share data):
<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------------
1997 1996
------ ------
<S> <C> <C> <C>
Net income As reported $2,415 $1,808
Pro forma 1,988 1,534
Basic earnings per share As reported 0.65 0.66
Pro forma 0.53 0.56
Diluted earnings
per share As reported 0.59 0.58
Pro forma 0.49 0.50
</TABLE>
The fair value of each option granted is estimated on the date of grant using
the Black-Scholes option-pricing model using the following weighted-average
assumptions:
<TABLE>
<CAPTION>
Years ended December 31,
------------------------
1997 1996
-------- --------
<S> <C> <C>
Dividend yield .90% .93%
Volatility 16.38 34.23
Risk-free interest rate 6.44 6.41
Expected life 5 years 5 years
</TABLE>
- 47 -
<PAGE> 50
ALLEGIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12. COMMITMENTS AND CONTINGENCIES:
Leases. The Bank leases various banking facilities under operating
leases expiring at various dates through September 2012. These operating
leases have options to renew. Future minimum lease payments required under
operating leases which have initial or remaining non-cancelable terms in
excess of one year as of December 31, 1997 were approximately as follows:
<TABLE>
<CAPTION>
Year Ended
December 31, (in thousands)
------------ --------------
<S> <C>
1998 $ 160
1999 166
2000 183
2001 193
2002 175
Thereafter 1,315
------
Total minimum lease payments $2,192
</TABLE> ======
Total rent expense amounted to approximately $210 thousand in 1997 and
$149 thousand in 1996.
NOTE 13. CONCENTRATIONS OF CREDIT:
Substantially all of the Bank's loans, commitments and commercial and
standby letters of credit have been granted to customers in the Bank's market
area. All such customers are depositors of the Bank. Investments in state
and municipal securities also involve governmental entities within the Bank's
market area. The concentrations of credit by type of loan are set forth in
Note 3. The distribution of commitments to extend credit approximates the
distribution of loans outstanding. Commercial and standby letters of credit
were granted primarily to commercial borrowers.
NOTE 14. FINANCIAL INSTRUMENTS:
The Bank is a party to financial instruments with off-balance-sheet
risk in the normal course of business to meet the financing needs of its
customers. These financial instruments include commitments to extend credit,
standby letters of credit and financial guarantees. Those instruments
involve, to varying degrees, elements of credit and interest-rate risk in
excess of the amount recognized in the Consolidated Balance Sheets. The
contract or notional amounts of those instruments reflect the extent of the
Bank's involvement in particular classes of financial instruments.
The Bank's exposure to credit loss in the event of nonperformance by
the other party to the financial instrument for commitments to extend credit,
standby letters of credit and financial guarantees written is represented by
the contractual or notional amount of those instruments. The Bank uses the
same credit policies in making commitments and conditional obligations as it
does for on-balance-sheet instruments.
- 48 -
<PAGE> 51
ALLEGIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A summary of the notional amounts of the Banks' financial instruments
with off-balance-sheet risk at December 31, 1997 and 1996 follows:
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Commitments to extend credit $84,604,000 $73,522,000
Standby letters of credit 3,868,000 1,310,000
</TABLE>
Commitments to extend credit are agreements to lend to a customer as
long as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination
clauses and may require payment of a fee. Since many of the commitments are
expected to expire without being drawn upon, the total commitment amounts do
not necessarily represent future cash requirements. The Bank evaluates each
customer's creditworthiness on a case-by-case basis. The amount of collateral
obtained, if it is deemed necessary by the Bank upon extension of credit, is
based on management's credit evaluation of the counterparts. Collateral held
varies but may include accounts receivable, inventory, property, plant,
equipment and real estate.
Standby letters of credit and financial guarantees written are
conditional commitments issued by the Bank to guarantee the performance of a
customer to a third party. Those guarantees are primarily issued to support
contractual obligations of Bank customers. The credit risk involved in
issuing letters of credit is essentially the same as that involved in
extending loan facilities to customers.
The carrying amount and estimated fair values of the Company's
financial instruments were as follows (in thousands):
<TABLE>
<CAPTION>
December 31, 1997 December 31, 1996
----------------------- -----------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Financial Assets:
Cash and due from banks, federal
Funds sold and other
overnight investments $ 16,472 $ 16,472 $ 18,329 $ 18,329
Securities available-for-sale 44,918 44,918 22,073 22,073
Securities held-to-maturity 31,951 32,146 38,487 38,540
Loans 479,670 479,502 288,826 291,483
Financial Liabilities:
Deposits $484,641 $484,728 $308,670 $309,028
Short-term borrowings 53,579 53,663 36,137 36,137
Long-term debt 23,275 23,817 14,663 14,785
</TABLE>
The following methods and assumptions were used by the Company in
estimating fair values of financial instruments as disclosed herein:
Cash and Short-Term Instruments: The carrying amounts of cash and due
from banks and federal funds sold approximate their fair value.
Securities: Fair values for held-to-maturity and available-for-sale
securities are based on quoted market prices or dealer quotes, where
available. If quoted market prices are not available for a specific
security, fair values are based on quoted market prices of comparable
instruments.
- 49 -
<PAGE> 52
ALLEGIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Loans: For variable-rate loans that reprice frequently and with no
significant change in credit risk, fair values are based on carrying values.
The fair values for fixed-rate loans are estimated using discounted cash flow
analyses, applying interest rates currently being offered for loans with
similar terms to borrowers of similar credit quality. The fair values for
non-performing loans are estimated using assumptions regarding current
assessments of collectibility and historical loss experience.
Deposits: The fair values disclosed for deposits generally payable on
demand, such as non-interest bearing checking accounts, savings accounts, NOW
accounts and market rate deposit accounts, are by definition, equal to the
amount payable on demand at the reporting date. The carrying amounts for
variable-rate, fixed-term market rate deposit accounts and certificates of
deposit approximate their fair values at the reporting date. Fair values for
fixed-rate certificates of deposit are estimated using a discounted cash flow
calculation that applies interest rates currently being offered on
certificates of similar remaining maturities to a schedule of aggregated
monthly maturities on time deposits.
Short-Term Borrowings: The carrying amounts of federal funds purchased,
borrowings under repurchase agreements and other short-term borrowings
approximate their fair values at the reporting date.
Long-Term Debt: The fair value of the Company's long-term debt is based
on quoted market prices for similar issues or estimates using discounted cash
flow analyses, based on the Company's current incremental borrowing rates for
similar types of debt instruments.
Off-Balance Sheet Financial Instruments: The fair value of commitments
to extend credit and standby letters of credit are estimated using the fees
currently charged to enter into similar agreements, taking into account the
remaining terms of the agreements, the likelihood of the counterparties
drawing on such financial instruments and the present credit worthiness of
such counterparties. The Company believes such commitments have been made on
terms which are competitive in the markets in which it operates; however, no
premium or discount is offered thereon and accordingly, the Company has not
assigned a value to such instruments for the purposes of this disclosure.
Fair value estimates are made at a specific point in time, based on
relevant market information and information about the financial instrument.
These estimates do not reflect any premium or discount that could result from
offering for sale at one time the Company's entire holdings of a particular
financial instrument. Because no market exists for a significant portion of
the Company's financial instruments, fair value estimates are based on
judgments regarding future expected loss experience, current economic
conditions, risk characteristics of various financial instruments and other
factors. These estimates are subjective in nature and involve uncertainties
and matters of significant judgment and, therefore, cannot be determined with
precision. Changes in assumptions could significantly affect the estimates.
Fair value estimates are based on existing on and off balance sheet
financial instruments without attempting to estimate the value of anticipated
future business and the value of assets and
- 50 -
<PAGE> 53
ALLEGIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
liabilities that are not considered financial instruments. In addition, the
tax ramifications related to the realization of the unrealized gains and losses
can have a significant effect on fair value estimates and have not been
considered in many of the estimates.
NOTE 15. SIGNIFICANT FOURTH QUARTER EVENTS:
Results for the fourth quarter of 1997 were negatively impacted by
approximately $752 thousand in operating losses associated with several
events that occurred within that period. The Company acquired two branches
from a savings and loan in September 1997 (see Note 1). Although these
branches were integrated into the Bank's existing systems upon being
acquired, substantial difficulties were encountered because of the different
operating policies and procedures followed between the organizations.
Additionally, the increase in volumes from these two locations was
significant and over burdened the soon to be replaced operational systems. A
conversion of the Company's data processing system and upgrade in technology
was already planned in early 1997 to occur in November 1997 in order to
adequately manage the Bank's growth and to provide more financial product
lines for its customers. This computer system conversion in November 1997
and the branch integration process further compounded the problems normally
experienced in any major change of systems. Because of these events, the
Company experienced impediments with reconciling internal accounts along with
researching and clearing outstanding items. The variances that resulted
total $752 thousand, which was charged to operating losses in the fourth
quarter. Management believes that these losses are not systemic and were
non-recurring in nature.
NOTE 16. REGULATORY MATTERS:
The Company and the Bank are subject to various regulatory capital
requirements administered by the Federal banking agenices. Failure to meet
minimum capital requirements can initiate certain mandatory, and possibly
additional discretionary, actions by regulators that, if undertaken, could have
a direct material effect on the Company's financial statements. Under capital
adequacy guidelines and the regulatory framework for prompt corrective action,
the Company and the Bank must meet specific capital guidelines that involve
quantitative measures of the Company's and the Bank's assets, liabilities and
certain off-balance sheet items as calculated under regulatory accounting
practices. The Company's and the Bank's capital amounts and classification
also are subject to qualitative judgments by the regulators about components,
risk weightings and other factors.
Quantitative measures established by regulations to ensure capital
adequacy require the Company and the Bank to maintain minimum amounts and ratios
(set forth in the table below) of total and Tier 1 capital (as defined in the
regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as
defined) to average assets (as defined). Management believes that, as of
December 31, 1997, the Company and the Bank met all capital adequacy
requirements to which they are subject.
As of June 30, 1997, the date of the most recent notification from the
regulatory agencies, the Bank was categorized as well capitalized under the
regulatory framework.
- 51 -
<PAGE> 54
ALLEGIANT BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The actual and required capital amounts and ratios as of December 31,
1997 and 1996 for the Company and the Bank are listed in the following table
(dollars in thousands):
<TABLE>
<CAPTION>
TO BE WELL
CAPITALIZED UNDER
MINIMUM CAPITAL PROMPT CORRECTIVE
ACTUAL ADEQUACY REQUIREMENTS ACTION PROVISIONS
------------------- --------------------- -----------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
-------- ----- -------- ----- ------ -----
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1997:
Total Capital
(to Risk-Weighted Assets)
Allegiant Bancorp, Inc. $36,250 8.14% $35,646 8.00% $ N/A N/A %
Allegiant Bank 39,820 9.35 34,081 8.00 42,601 10.00
Tier 1 Capital
(to Risk-Weighted Assets)
Allegiant Bancorp, Inc. 28,457 6.39 17,823 4.00 N/A N/A
Allegiant Bank 35,237 8.27 17,040 4.00 25,560 6.00
Tier 1 Capital
(to Average Assets)
Allegiant Bancorp, Inc. 28,457 6.15 18,521 4.00 N/A N/A
Allegiant Bank 35,237 7.76 18,156 4.00 22,695 5.00
As of December 31, 1996:
Total Capital
(to Risk-Weighted Assets)
Allegiant Bancorp, Inc. 22,213 8.55 20,784 8.00 N/A N/A
Allegiant Bank 26,118 10.06 20,767 8.00 25,959 10.00
Tier 1 Capital
(to Risk-Weighted Assets)
Allegiant Bancorp, Inc. 15,850 6.10 10,393 4.00 N/A N/A
Allegiant Bank 23,018 8.68 10,384 4.00 15,575 6.00
Tier 1 Capital
(to Average Assets)
Allegiant Bancorp, Inc. 15,850 4.38 14,475 4.00 N/A N/A
Allegiant Bank 23,018 6.37 14,449 4.00 18,061 5.00
</TABLE>
Various Federal and state statutory provisions limit the amount of
dividends the Bank can pay to the Company without regulatory approval. The
approval of appropriate Federal or state bank regulatory agencies is required
for any dividend if the total of all dividends declared by the Bank in any
calendar year would exceed the total of the institution's net profits, as
defined by regulatory agencies, for such year combined with its retained net
profits for the preceding two years. The payment of dividends by the Bank
also may be affected by other factors, such as the maintenance of adequate
capital.
NOTE 17. OTHER INCOME AND EXPENSES:
A summary of the components of other income and other expenses exceeding
one percent of revenues in any of the years presented is as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------
1997 1996
------- -------
(In thousands)
<S> <C> <C>
Mortgage banking revenue $ 1,300 $ 312
Service charges on deposit accounts 913 612
Leasing revenue 433 --
Salaries and employee benefits 6,192 3,455
Furniture and equipment 943 689
Operating losses 938 144
Occupancy 738 448
Supplies 428 202
</TABLE>
- 52 -
<PAGE> 55
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
---------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
Not applicable.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
-------------------------------------------------------------
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
-------------------------------------------------
Information regarding the Company's directors is contained in the
Company's Proxy Statement for the 1998 Annual Meeting of Shareholders under
the caption "Item 1. Election of Directors" and is incorporated herein by
reference. Information regarding the Company's executive officers is
contained in this report under Item 4A--"Executive Officers of the
Registrant" and is incorporated herein by reference.
Information regarding compliance with Section 16(a) of the
Securities Exchange Act of 1934 is included in the Company's Proxy Statement
for the 1998 Annual Meeting of Shareholders under the caption "Compliance
with Section 16(a) of the Securities Exchange Act of 1934," and is
incorporated herein by reference.
ITEM 10. EXECUTIVE COMPENSATION
----------------------
Information regarding executive compensation is contained in the
Company's Proxy Statement for the 1998 Annual Meeting of Shareholders under
the captions "Board of Directors and Committees," "Directors' Fees" and
"Compensation of Executive Officers," and is incorporated herein by
reference.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------
Information regarding security ownership of certain beneficial
owners and management is contained in the Company's Proxy Statement for the
1998 Annual Meeting of Shareholders under the caption "Security Ownership of
Certain Beneficial Owners and Management," and is incorporated herein by
reference.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
Information regarding certain relationships and related
transactions is contained in Company's Proxy Statement for the 1998 Annual
Meeting of Shareholders under the captions "Certain Relationships and Related
Transactions" and "Board of Directors and Committees," and is incorporated
herein by reference.
- 53 -
<PAGE> 56
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits:
See Exhibit Index on page 57 hereto.
(b) Reports on Form 8-K.
The Company filed no reports on Form 8-K during the three months ended
December 31, 1997.
- 54 -
<PAGE> 57
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, as amended, the registrant caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized as of the 19th day of
March 1998.
ALLEGIANT BANCORP, INC.
(Registrant)
By /s/ Marvin S. Wool
---------------------------------------------
Marvin S. Wool, Chairman of the Board and
Chief Executive Officer
In accordance with the Securities Exchange Act of 1934, as amended,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<C> <S> <C>
/s/ Marvin S. Wool Chairman of the Board March 19, 1998
- ------------------------------ and Chief Executive Officer
Marvin S. Wool
/s/ Shaun R. Hayes President and Director March 19, 1998
- ------------------------------
Shaun R. Hayes
/s/ Sandra B. Friedman Senior Vice President and March 19, 1998
- ------------------------------ Chief Financial Officer
Sandy B. Friedman
/s/ Leland B. Curtis Director March 19, 1998
- ------------------------------
Leland B. Curtis
/s/ Kevin R. Farrell Director March 19, 1998
- ------------------------------
Kevin R. Farrell
- 55 -
<PAGE> 58
/s/ Leon A. Feldman Director March 19, 1998
- ------------------------------
Leon A. Feldman
/s/ C. Virginia Kirkpatrick Director March 19, 1998
- ------------------------------
C. Virginia Kirkpatrick
/s/ Charles E. Polk Director March 19, 1998
- ------------------------------
Charles E. Polk
/s/ John T. Straub Director March 19, 1998
- ------------------------------
John T. Straub
/s/ Lee S. Wielansky Director March 19, 1998
- ------------------------------
Lee S. Wielansky
</TABLE>
- 56 -
<PAGE> 59
<TABLE>
EXHIBIT INDEX
<CAPTION>
Ex. No. Description
- ------- -----------
<C> <S>
3.1 Articles of Incorporation, as amended, of the Registrant, filed as Exhibit 3.1 to Registrant's
Registration Statement on Form 10-SB (Reg. No. 0-26350) is hereby incorporated by reference.
3.2 By-laws of the Registrant, as currently in effect, filed as Exhibit 3.2 to Registrant's
Registration Statement on Form 10-SB (Reg. No. 0-26350) is hereby incorporated by reference.
4.1 Form of Stock Certificate for Common Stock, filed as Exhibit 4.2 to Registrant's Registration
Statement on Form 10-SB (Reg. No. 0-26350) is hereby incorporated by reference.
4.2 Form of Warrant Agreement, filed as Exhibit 4.3 to Registrant's Registration Statement on Form
10-SB (Reg. No. 0-26350) is hereby incorporated by reference.
4.3 Form of Junior Subordinated Debenture, filed as Exhibit 4.4 to Registrant's Registration
Statement on Form 10-SB (Reg. No. 0-26350) is hereby incorporated by reference.
10.1 Term Loan Agreement, dated as of August 31, 1990, by and between Mercantile Bank of St. Louis
National Association and the Company, filed as Exhibit 10.1 to Registrant's Registration
Statement on Form 10-SB (Reg. No. 0-26350) is hereby incorporated by reference.
10.2 First Amendment to Term Loan Agreement, dated as of November 30, 1993, by and between Mercantile
Bank of St. Louis National Association and the Company, filed as Exhibit 10.2 to Registrant's
Registration Statement on Form 10-SB (Reg. No. 0-26350) is hereby incorporated by reference.
10.3 Second Amendment to Term Loan Agreement, dated as of July 27, 1994, by and between Mercantile
Bank of St. Louis National Association and the Company, filed as Exhibit 10.3 to Registrant's
Registration Statement on Form 10-SB (Reg. No. 0-26350) is hereby incorporated by reference.
10.4 Third Amendment to Term Loan Agreement, dated as of November 26, 1996, by and between Mercantile
Bank of St. Louis National Association and the Company, filed as Exhibit 10.4 to Registrant's
Annual Report on Form 10-KSB for the year ended December 31, 1996 is hereby incorporated by
reference.
10.5 Lease, dated June 26, 1991, between Thos. J. White Company and Allegiant Bank, filed as Exhibit
10.4 to Registrant's Registration Statement on Form 10-SB (Reg. No. 0-26350) is hereby
incorporated by reference.
- 57 -
<PAGE> 60
10.6 Lease, dated January 1, 1994, by and between C and R Markets and Allegiant State Bank, filed as
Exhibit 10.5 to Registrant's Registration Statement on Form 10-SB (Reg. No. 0-26350) is hereby
incorporated by reference.
10.7 Lease Agreement, dated February 7, 1994, by and between Clayton Land Company L.P. and
Allegiant Bank, filed as Exhibit 10.6 to Registrant's Registration Statement on Form 10-SB
(Reg. No. 0-26350) is hereby incorporated by reference.
10.8 Lease Agreement, dated August 7, 1995, by and between Hilvin Investment Corporation and
Allegiant Bank, is filed as Exhibit 10.8 to Registrant's Annual Report on form 10-KSB for the
year ended December 31, 1996 is hereby incorporated by reference.
10.9 Allegiant Bancorp, Inc. 1994 Stock Option Plan, filed as Exhibit 10.7 to Registrant's
Registration Statement on Form 10-SB (Reg. No. 0-26350) is hereby incorporated by reference.<F*>
10.10 Allegiant Bancorp, Inc. 1996 Stock Option Plan, filed as Exhibit 4.4 to Registrant's Form S-8
(Reg. No. 0-26350) is hereby incorporated by reference.<F*>
10.11 Allegiant Bancorp, Inc. Directors Stock Option Plan, filed as Exhibit 4.5 to Registrant's Form
S-8 (Reg. No. 0-26350) is hereby incorporated by reference.<F*>
10.12 Allegiant Bancorp, Inc. 1989 Stock Option Plan, filed as Exhibit 4.6 to Registrant's Form S-8
(Reg. No. 0-26350) is hereby incorporated by reference.<F*>
10.13 Convertible Subordinated Debenture Purchase Agreement, filed as Exhibit 10.8 to Registrant's
Registration Statement on Form 10-SB (Reg. No. 0-26350) is hereby incorporated by reference.
10.14 Form of Subordinated Convertible Debenture, filed as Exhibit 4.1 to Registrant's Registration
Statement on Form 10-SB (Reg. No. 0-26350) is hereby incorporated by reference.
10.15 Agreement and Plan of Merger between the Registrant and Reliance dated as of March 20, 1997
filed on Exhibit 2.1 to the Registrant's Registration Statement on form S-4/A (Reg. No. 0-26433)
is hereby incorporated by reference.
10.16 Deposit Transfer and Asset Purchase Agreement, dated May 8, 1997, between Roosevelt Bank and
Allegiant Bancorp, Inc., filed as Exhibit 10.15 to Registrant's Registration Statement on Form
S-4/A (Reg. No. 0-26433) is hereby incorporated by reference.
10.17 Deposit Transfer and Asset Purchase Agreement, dated May 8, 1997, between Roosevelt Bank and
Allegiant Bancorp, Inc., filed as Exhibit 10.16 to Registrant's Registration Statement on Form S-4/A
(Reg. No. 0-26433) is hereby incorporated by reference.
- 58 -
<PAGE> 61
21.1 Subsidiaries of the Registrant is filed herewith.
23.1 Consent of BDO Seidman, L.L.P. is filed herewith.
24.1 Power of Attorney (included on signature page hereto).
27.1 Financial Data Schedule is filed herewith (December 31, 1997).
27.2 Restated Financial Data Schedule (September 30, 1997). <F**>
27.3 Restated Financial Data Schedule (June 30, 1997). <F**>
27.4 Restated Financial Data Schedule (March 31, 1997). <F**>
27.5 Restated Financial Data Schedule (December 31, 1996). <F**>
27.6 Restated Financial Data Schedule (September 30, 1996). <F**>
27.7 Restated Financial Data Schedule (June 30, 1996). <F**>
27.8 Restated Financial Data Schedule (March 31, 1996). <F**>
<FN>
- --------------------
<F*> Management contract or compensatory plan or arrangement.
<F**> Exhibits 27.2 through 27.8 represent previously filed Financial Data
Schedules that have been restated to reflect the effects of Statement of
Financial Accounting Standards No. 128, "Earnings Per Share," and to reflect
the five-for-four stock split discussed in Note 9 to the Consolidated
Financial Statements (included in Item 8). All amounts, except for the
earnings per share amounts, are the same as previously reported.
</TABLE>
- 59 -
<PAGE> 1
Exhibit 21.1
SUBSIDIARIES OF REGISTRANT
(AS OF MARCH 30, 1998)
Allegiant Bank Missouri
Allegiant Bank, FSB Federal
Allegiant Mortgage Company Missouri
Edge Mortgage Services, Inc. Missouri
<PAGE> 1
Exhibit 23.1
[Letterhead of BDO Seidman, LLP]
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Allegiant Bancorp, Inc.
St. Louis, Missouri
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (File Nos. 333-13451 and 333-26433) of Allegiant
Bancorp, Inc. (the Company) of our report dated March 13, 1998, relating to
the consolidated financial statements of the Company appearing in the
Company's Annual Report on Form 10-KSB as of and for the year ended December
31, 1997.
St. Louis, Missouri /s/ BDO Seidman, LLP
March 27, 1998
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
ALLEGIANT BANCORP, INC.'S ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR
ENDED DECEMBER 31, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH REPORT.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 14,872
<INT-BEARING-DEPOSITS> 362,370
<FED-FUNDS-SOLD> 1,600
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 44,918
<INVESTMENTS-CARRYING> 76,869
<INVESTMENTS-MARKET> 77,064
<LOANS> 474,476
<ALLOWANCE> 5,193
<TOTAL-ASSETS> 608,237
<DEPOSITS> 484,641
<SHORT-TERM> 53,579
<LIABILITIES-OTHER> 4,671
<LONG-TERM> 23,275
0
0
<COMMON> 51
<OTHER-SE> 42,020
<TOTAL-LIABILITIES-AND-EQUITY> 608,237
<INTEREST-LOAN> 33,473
<INTEREST-INVEST> 3,966
<INTEREST-OTHER> 326
<INTEREST-TOTAL> 37,765
<INTEREST-DEPOSIT> 17,253
<INTEREST-EXPENSE> 21,466
<INTEREST-INCOME-NET> 16,299
<LOAN-LOSSES> 2,397
<SECURITIES-GAINS> 2
<EXPENSE-OTHER> 13,069
<INCOME-PRETAX> 4,131
<INCOME-PRE-EXTRAORDINARY> 4,131
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,415
<EPS-PRIMARY> 0.65
<EPS-DILUTED> 0.59
<YIELD-ACTUAL> 9.95
<LOANS-NON> 559
<LOANS-PAST> 818
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,100
<CHARGE-OFFS> 759
<RECOVERIES> 52
<ALLOWANCE-CLOSE> 5,193
<ALLOWANCE-DOMESTIC> 5,193
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,151
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
ALLEGIANT BANCORP, INC.'S QUARTERLY REPORT ON FORM 10-QSB FOR THE QUARTER
ENDED SEPTEMBER 30, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH REPORT.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 17,242
<INT-BEARING-DEPOSITS> 375,572
<FED-FUNDS-SOLD> 20,360
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 41,091
<INVESTMENTS-CARRYING> 35,266
<INVESTMENTS-MARKET> 35,500
<LOANS> 439,510
<ALLOWANCE> 4,842
<TOTAL-ASSETS> 578,700
<DEPOSITS> 473,384
<SHORT-TERM> 52,486
<LIABILITIES-OTHER> 2,305
<LONG-TERM> 15,663
0
0
<COMMON> 37
<OTHER-SE> 34,825
<TOTAL-LIABILITIES-AND-EQUITY> 578,700
<INTEREST-LOAN> 23,855
<INTEREST-INVEST> 2,827
<INTEREST-OTHER> 246
<INTEREST-TOTAL> 26,928
<INTEREST-DEPOSIT> 11,587
<INTEREST-EXPENSE> 14,728
<INTEREST-INCOME-NET> 12,200
<LOAN-LOSSES> 1,677
<SECURITIES-GAINS> 25
<EXPENSE-OTHER> 8,186
<INCOME-PRETAX> 3,561
<INCOME-PRE-EXTRAORDINARY> 2,139
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,139
<EPS-PRIMARY> 0.62
<EPS-DILUTED> 0.58
<YIELD-ACTUAL> 8.85
<LOANS-NON> 597
<LOANS-PAST> 180
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,100
<CHARGE-OFFS> 374
<RECOVERIES> 32
<ALLOWANCE-CLOSE> 4,842
<ALLOWANCE-DOMESTIC> 4,842
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,404
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
ALLEGIANT BANCORP, INC.'S QUARTERLY REPORT ON FORM 10-QSB FOR THE
QUARTER ENDED JUNE 30, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH REPORT.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 9,144
<INT-BEARING-DEPOSITS> 235,235
<FED-FUNDS-SOLD> 1,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 22,649
<INVESTMENTS-CARRYING> 39,749
<INVESTMENTS-MARKET> 39,482
<LOANS> 347,634
<ALLOWANCE> 3,976
<TOTAL-ASSETS> 427,481
<DEPOSITS> 315,017
<SHORT-TERM> 74,214
<LIABILITIES-OTHER> 1,729
<LONG-TERM> 13,663
0
0
<COMMON> 30
<OTHER-SE> 22,828
<TOTAL-LIABILITIES-AND-EQUITY> 427,481
<INTEREST-LOAN> 14,513
<INTEREST-INVEST> 1,840
<INTEREST-OTHER> 66
<INTEREST-TOTAL> 16,419
<INTEREST-DEPOSIT> 7,184
<INTEREST-EXPENSE> 8,999
<INTEREST-INCOME-NET> 7,420
<LOAN-LOSSES> 1,121
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 4,778
<INCOME-PRETAX> 2,167
<INCOME-PRE-EXTRAORDINARY> 2,167
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,301
<EPS-PRIMARY> .40
<EPS-DILUTED> .36
<YIELD-ACTUAL> 8.75
<LOANS-NON> 753
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<LOANS-PAST> 119
<ALLOWANCE-OPEN> 3,100
<CHARGE-OFFS> 259
<RECOVERIES> 13
<ALLOWANCE-CLOSE> 3,976
<ALLOWANCE-DOMESTIC> 3,976
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,152
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
ALLEGIANT BANCORP, INC.'S QUARTERLY REPORT ON FORM 10-QSB FOR THE
QUARTER ENDED MARCH 31, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH REPORT.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 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> 8.66
<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>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
ALLEGIANT BANCORP, INC.'S QUARTERLY REPORT ON FORM 10-QSB FOR THE
YEAR ENDED DECEMBER 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH REPORT.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 7,554
<INT-BEARING-DEPOSITS> 29,406
<FED-FUNDS-SOLD> 10,775
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 22,073
<INVESTMENTS-CARRYING> 38,487
<INVESTMENTS-MARKET> 38,540
<LOANS> 291,926
<ALLOWANCE> 3,100
<TOTAL-ASSETS> 377,564
<DEPOSITS> 308,670
<SHORT-TERM> 36,137
<LIABILITIES-OTHER> 1,708
<LONG-TERM> 14,663
0
0
<COMMON> 23
<OTHER-SE> 16,363
<TOTAL-LIABILITIES-AND-EQUITY> 377,564
<INTEREST-LOAN> 21,740
<INTEREST-INVEST> 3,477
<INTEREST-OTHER> 151
<INTEREST-TOTAL> 25,368
<INTEREST-DEPOSIT> 12,060
<INTEREST-EXPENSE> 14,999
<INTEREST-INCOME-NET> 10,369
<LOAN-LOSSES> 1,448
<SECURITIES-GAINS> 49
<EXPENSE-OTHER> 7,019
<INCOME-PRETAX> 2,983
<INCOME-PRE-EXTRAORDINARY> 2,983
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,808
<EPS-PRIMARY> .66
<EPS-DILUTED> .58
<YIELD-ACTUAL> 3.50
<LOANS-NON> 400
<LOANS-PAST> 292
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,130
<CHARGE-OFFS> 545
<RECOVERIES> 67
<ALLOWANCE-CLOSE> 3,100
<ALLOWANCE-DOMESTIC> 2,252
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 848
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
ALLEGIANT BANCORP, INC.'S QUARTERLY REPORT ON FORM 10-QSB FOR THE
QUARTER ENDED SEPTEMBER 30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH REPORT.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 6,528
<INT-BEARING-DEPOSITS> 242,487
<FED-FUNDS-SOLD> 1,550
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 22,605
<INVESTMENTS-CARRYING> 39,703
<INVESTMENTS-MARKET> 39,397
<LOANS> 274,260
<ALLOWANCE> 2,724
<TOTAL-ASSETS> 351,204
<DEPOSITS> 267,873
<SHORT-TERM> 51,060
<LIABILITIES-OTHER> 1,381
<LONG-TERM> 15,580
0
0
<COMMON> 20
<OTHER-SE> 15,290
<TOTAL-LIABILITIES-AND-EQUITY> 351,204
<INTEREST-LOAN> 15,646
<INTEREST-INVEST> 2,580
<INTEREST-OTHER> 121
<INTEREST-TOTAL> 18,347
<INTEREST-DEPOSIT> 8,609
<INTEREST-EXPENSE> 10,639
<INTEREST-INCOME-NET> 7,708
<LOAN-LOSSES> 950
<SECURITIES-GAINS> 49
<EXPENSE-OTHER> 5,182
<INCOME-PRETAX> 2,308
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,403
<EPS-PRIMARY> .51
<EPS-DILUTED> .46
<YIELD-ACTUAL> 8.77
<LOANS-NON> 378
<LOANS-PAST> 88
<LOANS-TROUBLED> 0<F1>
<LOANS-PROBLEM> 0<F1>
<ALLOWANCE-OPEN> 2,130
<CHARGE-OFFS> 410
<RECOVERIES> 54
<ALLOWANCE-CLOSE> 2,724
<ALLOWANCE-DOMESTIC> 2,140
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 584
<FN>
<F1>Only reported at year end.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
ALLEGIANT BANCORP, INC.'S QUARTERLY REPORT ON FORM 10-QSB FOR THE
QUARTER ENDED JUNE 30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH REPORT.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 6,856
<INT-BEARING-DEPOSITS> 184,744
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 21,269
<INVESTMENTS-CARRYING> 35,531
<INVESTMENTS-MARKET> 35,186
<LOANS> 222,805
<ALLOWANCE> 2,290
<TOTAL-ASSETS> 292,421
<DEPOSITS> 237,479
<SHORT-TERM> 22,557
<LIABILITIES-OTHER> 1,017
<LONG-TERM> 16,680
0
0
<COMMON> 20
<OTHER-SE> 14,668
<TOTAL-LIABILITIES-AND-EQUITY> 14,688
<INTEREST-LOAN> 9,598
<INTEREST-INVEST> 1,742
<INTEREST-OTHER> 49
<INTEREST-TOTAL> 5,731
<INTEREST-DEPOSIT> 2,749
<INTEREST-EXPENSE> 3,330
<INTEREST-INCOME-NET> 2,401
<LOAN-LOSSES> 251
<SECURITIES-GAINS> 17
<EXPENSE-OTHER> 1,707
<INCOME-PRETAX> 678
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 425
<EPS-PRIMARY> .33
<EPS-DILUTED> .29
<YIELD-ACTUAL> 8.69
<LOANS-NON> 559
<LOANS-PAST> 79
<LOANS-TROUBLED> 0<F1>
<LOANS-PROBLEM> 0<F1>
<ALLOWANCE-OPEN> 2,130
<CHARGE-OFFS> 323
<RECOVERIES> 52
<ALLOWANCE-CLOSE> 2,290
<ALLOWANCE-DOMESTIC> 1,913
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 377
<FN>
<F1>Only reported at year end.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from Allegiant
Bancorp, Inc.'s Quarterly Report on Form 10-QSB for the quarter ended March 31,
1996, and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 16,093
<INT-BEARING-DEPOSITS> 20,985
<FED-FUNDS-SOLD> 3,860
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 20,133
<INVESTMENTS-CARRYING> 35,330
<INVESTMENTS-MARKET> 35,186
<LOANS> 193,825
<ALLOWANCE> 2,257
<TOTAL-ASSETS> 275,266
<DEPOSITS> 227,034
<SHORT-TERM> 12,664
<LIABILITIES-OTHER> 1,500
<LONG-TERM> 19,693
0
0
<COMMON> 20
<OTHER-SE> 14,355
<TOTAL-LIABILITIES-AND-EQUITY> 14,375
<INTEREST-LOAN> 4,720
<INTEREST-INVEST> 938
<INTEREST-OTHER> 68
<INTEREST-TOTAL> 5,726
<INTEREST-DEPOSIT> 2,825
<INTEREST-EXPENSE> 3,425
<INTEREST-INCOME-NET> 2,301
<LOAN-LOSSES> 180
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,517
<INCOME-PRETAX> 783
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 470
<EPS-PRIMARY> .17
<EPS-DILUTED> .16
<YIELD-ACTUAL> 8.75
<LOANS-NON> 398
<LOANS-PAST> 1,373
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0 <F1>
<ALLOWANCE-OPEN> 2,130
<CHARGE-OFFS> 90
<RECOVERIES> 37
<ALLOWANCE-CLOSE> 53
<ALLOWANCE-DOMESTIC> 1,715
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 542
<FN>
<F1>Information only reported at fiscal year-end date.
</TABLE>
