<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
---------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------------ ---------------------
Commission file number 0-18918
Magna Bancorp, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 64-0793093
------------------------------- --------------------------
(State or other jurisdiction of (I.R.S. Employer Id. No.)
incorporation or organization)
100 West Front Street, Hattiesburg, MS 39401
---------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
601-545-4722
----------------------------------------------------
(Registrant's telephone number, including area code)
N/A
--------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. [X] Yes [ ] No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Outstanding
Class November 8, 1996
----------- ----------------
<S> <C>
Common Stock
Par Value $.01 13,741,018
</TABLE>
The index to exhibits is located on page 16.
<PAGE>
<PAGE> 2
<TABLE>
MAGNA BANCORP, INC.
INDEX
<CAPTION>
Page
<S> <C>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited):
Condensed Consolidated Statements of
Financial Condition..........................3
Condensed Consolidated Statements of
Earnings.....................................4
Condensed Consolidated Statements of
Cash Flows...................................5
Notes to Condensed Consolidated Financial
Statements..................................6-7
Independent Auditors' Review Report............8
Summary Consolidated Financial Information.....9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations...................................10-13
PART II. OTHER INFORMATION
Submission of Matter to a Vote of
Security Holders...............................14
Exhibits and Reports on Form 8-K..................14
Signatures........................................15
</TABLE>
2
<PAGE>
<PAGE> 3
<TABLE>
MAGNA BANCORP, INC.
AND SUBSIDIARIES
-------------------
Condensed Consolidated Statements of Financial Condition
--------------------------------------------------------
(UNAUDITED)
<CAPTION>
September 30, June 30,
1996 1996
------------ ----------
<S> <C> <C>
Assets
------
Loans held for investment.............. $ 845,635,896 836,286,838
Loans held for sale.................... 30,477,507 27,475,284
Mortgage-backed securities............. 12,049,267 12,727,245
Mortgage-backed securities available for
sale................................ 115,348,963 118,872,67
Mortgage-backed securities held for
trading............................. 35,348,051 34,486,798
Investment securities.................. 66,563,494 67,485,783
Investment securities available for
sale................................ 7,227,611 7,188,768
Stock in Federal Home Loan Bank of 11,537,100 12,027,000
Dallas..............................
Accrued interest receivable............ 11,255,329 11,059,971
Cash................................... 73,506,775 81,294,510
Real estate owned...................... 10,964,045 10,230,943
Premises and equipment, net............ 43,394,870 43,160,425
Mortgage servicing rights, net......... 6,984,939 5,788,245
Premium on purchased deposits, net..... 5,965,888 6,778,400
Prepaid expenses and other assets...... 25,979,190 33,794,935
------------- -------------
Total assets..................... $ 1,302,238,925 1,308,657,821
============= =============
Liabilities and Stockholders' Equity
------------------------------------
Liabilities:
Deposits............................ $ 912,593,315 922,370,122
Advances by borrowers for property
taxes and insurance.............. 12,358,145 11,219,490
Borrowings from Federal Home Loan
Bank of Dallas................... 217,016,993 221,961,222
Interest payable on deposits........ 6,380,480 5,320,261
Accrued expenses and other
liabilities...................... 28,069,295 21,968,146
------------- -------------
Total liabilities................ 1,176,418,228 1,182,839,241
------------- -------------
Stockholders' equity:
Serial preferred stock, $.01 par
value; authorized 500,000 shares,
not issued and outstanding....... - -
Common stock, $.01 par value;
authorized 14,500,000; issued and
outstanding 13,741,018 shares and
13,702,656 shares................ 137,410 137,027
Additional paid-in capital ......... 18,405,019 18,373,306
Retained earnings, substantially
restricted....................... 108,717,914 109,028,066
Unrealized losses on securities
available for sale, net.......... (1,439,646) (1,719,819)
------------- -------------
Net stockholders' equity......... 125,820,697 125,818,580
------------- -------------
Total liabilities and
stockholders' equity.......... $ 1,302,238,925 1,308,657,821
============= =============
----------------------
See accompanying Notes to Condensed Consolidated Financial
Statements.
</TABLE>
3
<PAGE>
<PAGE> 4
<TABLE>
MAGNA BANCORP, INC.
AND SUBSIDIARIES
-------------------
Condensed Consolidated Statements of Earnings
---------------------------------------------
(UNAUDITED)
<CAPTION>
Three Months Ended
September 30
------------------
1996 1995
---- ----
<S> <C> <C>
Interest income:
Loans...................................... $ 22,804,546 21,920,383
Mortgage-backed securities................. 2,982,150 1,624,475
Investment securities...................... 1,410,270 1,589,658
Interest-earning cash balances............. 85,200 914,754
Other investments.......................... 170,438 127,128
---------- ----------
Total interest income................... 27,452,604 26,176,398
---------- ----------
Interest expense:
Deposits................................... 7,912,485 7,688,921
Borrowings from Federal Home Loan Bank of
Dallas................................... 3,302,873 2,350,101
---------- ----------
Total interest expense.................. 11,215,358 10,039,022
---------- ----------
Net interest income..................... 16,237,246 16,137,376
Provision for possible loan losses............ 732,883 132,598
---------- ----------
Net interest income after provision for
possible loan losses................. 15,504,363 16,004,778
---------- ----------
Non-interest income:
Loan servicing income, net................. 3,292,261 3,099,268
Service fees on deposits................... 4,564,771 3,785,986
Other service fees and commissions......... 482,222 335,175
Unrealized holding gains (losses) on
trading securities and loans
held for sale, net....................... (84,303) 5,606
Gains on sales of assets held for sale,
available for sale or held for trading,
net...................................... 350,170 712,590
Losses on sales and operation of real
estate owned, net........................ (314,714) (133,574)
Insurance fees, commissions and premiums,
net..................................... 668,026 760,513
Appraisal fees, net........................ 216,869 332,345
Other income, net.......................... 473,731 938,282
---------- ----------
Net non-interest income................. 9,649,033 9,836,191
---------- ----------
General and administrative expenses:
Compensation, payroll taxes and fringe
benefits................................ 8,010,071 7,362,473
Rent and other occupancy expense........... 1,662,318 1,552,219
Equipment and fixtures expense............. 1,005,454 1,035,863
Communication, postage, printing and office
supplies................................ 1,743,414 1,527,743
Deposit and other insurance premiums ...... 654,850 622,417
Special SAIF deposit insurance assessment.. 5,917,174 -
Advertising................................ 421,924 762,138
Expenses of officers, directors and 397,606 423,171
employees, including directors' fees....
Data processing expense.................... 759,952 691,333
Amortization of premium on purchased
deposits................................ 812,512 1,023,464
Professional fees.......................... 712,855 718,004
Mortgage servicing costs................... 501,652 613,911
Other expenses............................. 324,239 187,383
---------- ----------
Total general and administrative
expenses............................. 22,924,021 16,520,119
---------- ----------
Earnings before income taxes............ 2,229,375 9,320,850
Income tax expense............................ 478,184 3,605,593
---------- ----------
Net earnings............................ $ 1,751,191 5,715,257
========== ==========
Earnings per common share..................... $ 0.13 0.40
========== ==========
Weighted average number of common shares
outstanding.............................. 13,878,553 14,133,744
------------------------
See accompanying Notes to Condensed Consolidated Financial
Statements.
</TABLE>
4
<PAGE>
<PAGE> 5
<TABLE>
MAGNA BANCORP, INC.
AND SUBSIDIARIES
-------------------
Condensed Consolidated Statements of Cash Flows
-----------------------------------------------
(UNAUDITED)
<CAPTION>
Three Months Ended
September 30
------------------
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net earnings................................$ 1,751,191 5,715,257
Adjustments to reconcile net earnings to
net cash used by operating activities:
Provision for possible loan losses...... 732,883 132,598
Depreciation and amortization........... 1,903,769 2,438,233
Amortization of premium on purchased
deposits............................. 812,512 1,023,464
Decrease in prepaid expenses and other
assets............................... 7,656,355 421,885
Increase in interest payable and other
liabilities.......................... 7,161,368 1,363,045
Gains on sales of real estate owned,
net.................................. (755,101) (297,956)
Unrealized holding losses (gains) on
trading securities and loans held
for sale............................. 84,303 (5,606)
Gains on sales of assets held for sale,
available for sale, or held for
trading, net......................... (350,170) (712,590)
Gains on sales of premises and equipment,
net.................................. (30,317) (425)
Accretion of deferred fees, discounts
and premiums, net.................... (1,352,862) (1,461,439)
Other, net.............................. (264,534) (266,908)
Proceeds from sales of assets held for
sale or held for trading................ 45,029,124 53,578,002
Principal payments on mortgage-backed
securities held for trading............. 556,800 355,913
Origination of loans held for sale.......... (35,362,831) (68,628,770)
---------- -----------
Net cash provided (used) by operating
activities........................ 27,572,490 (6,345,297)
---------- -----------
Cash flows from investing activities:
Net change in loans held for investment..... (21,633,085) (7,885,109)
Purchases of loans.......................... (2,334,548) (13,260,568)
Proceeds from sales of mortgage-backed
securities available for sale........... - 2,155,965
Proceeds from maturities of investment
securities.............................. 1,000,000 -
Principal payments on investment securities
and mortgage-backed securities.......... 4,151,510 2,798,994
Purchases of investment securities and
mortgage-backed securities held to
maturity................................ - (52,750)
Proceeds from sales of real estate owned.... 1,429,721 1,066,995
Purchases of mortgage servicing rights...... (1,603,980) -
Redemption of stock in Federal Home Loan Bank
of Dallas............................... 489,900 32,600
Proceeds from sales of premises and
equipment............................... 127,381 53,425
Additions to premises and equipment......... (1,375,495) (2,425,325)
---------- -----------
Net cash used by investing
activities........................ (19,748,596) (17,515,773)
---------- -----------
Cash flows from financing activities:
Net increase (decrease) in deposits......... (9,776,807) 5,733,264
Net increase (decrease) in advances from
Federal Home Loan Bank of Dallas........ (4,944,229) 49,703,483
Issuance of common stock.................... 34,086 6,460
Repurchase of common stock.................. (2,181) (1,481,785)
Cash dividends paid......................... (2,061,153) (697,264)
Increase in advance payments by borrowers
for property taxes and insurance........ 1,138,655 2,323,900
---------- -----------
Net cash provided (used) by financing
activities........................ (15,611,629) 55,588,058
---------- -----------
Net increase (decrease) in cash...... (7,787,735) 31,726,988
Cash at beginning of period.................... 81,294,510 85,391,455
---------- -----------
Cash at end of period..........................$ 73,506,775 117,118,443
========== ===========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest on deposits, advances and other
borrowings..............................$ 10,163,103 8,735,625
========== ===========
Income taxes............................$ 2,500 500,000
========== ===========
_________________________
See accompanying Notes to Condensed Consolidated
Financial Statements.
</TABLE>
5
<PAGE>
<PAGE> 6
MAGNA BANCORP, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Basis of Presentation
The condensed consolidated statements have been prepared by Magna Bancorp, Inc.
(the "Company") in accordance with the instructions to Form 10-Q without audit.
In the opinion of management, all adjustments (which include normal recurring
adjustments and those related to adoption of new accounting principles)
necessary to present fairly the financial position, results of operations and
cash flows at September 30, 1996 and for all periods presented have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that these condensed
consolidated financial statements be read in conjunction with the financial
statements and notes thereto for the year ended June 30, 1996 included in the
Company's Annual Report. The results of operations for the three-month period
ended September 30, 1996 are not necessarily indicative of the operating
results for the full fiscal year.
Note 2 - Allowance for possible loan losses
The following table summarizes the activity in the allowance for possible loan
losses for the quarter ended September 30, 1996.
<TABLE>
<CAPTION>
<S> <C>
Balance at June 30, 1996 $ 9,451,693
Chargeoffs (534,224)
Recoveries 44,341
Provision charged to operations 732,883
---------
Balance at September 30, 1996 $ 9,694,693
=========
Percentage of net chargeoffs during
the period to average loans
outstanding (annualized) 0.24%
</TABLE>
6
<PAGE>
<PAGE> 7
Note 3 -- Loans of Concern
At September 30, 1996, the Company had $21,465,560 of loans for which the
accrual of interest has been ceased or reduced. Accruing loans delinquent 90
days or more and loans on which the terms have been modified by reducing
interest rates and/or modifying payment terms under troubled debt
restructurings totaled $16,802,682 and $427,492, respectively, at
September 30, 1996.
Note 4 -- Special SAIF Deposit Insurance Assessment
The deposits of savings associations such as Magnolia Federal Bank are insured
by the Savings Association Insurance Fund ("SAIF"), which together with the
Bank Insurance Fund ("BIF"), are the two insurance funds administered by the
Federal Deposit Insurance Corporation ("FDIC"). In 1995, the FDIC recognized
that the BIF was fully capitalized at its statutory reserve ratio and reduced
the premium schedule for BIF insured banks to a rate as low as zero percent in
1996. Federal legislation signed into law September 30, 1996 provides for a
one-time special assessment of 0.657% to be imposed on all SAIF deposits in
order to recapitalize the SAIF and provide for an ultimate merger of the BIF
and the SAIF. This one-time assessment resulted in a $5.9 million charge to
the Company's pretax earnings for the quarter ended September 30, 1996. The
SAIF recapitalization plan also provides for a reduction in annual SAIF assess-
ment rates in future periods that will result in an estimated annual benefit to
the Company of $1.5 million before income taxes.
Note 5 -- Stock Dividends
On July 19, 1996, the Company declared a two-for-one stock split in the form of
a 100% stock dividend payable on August 15, 1996. This split increased the
number of shares outstanding from 6,870,509 to 13,741,018. All references to
the number of common shares and per common share amounts in the financial
statements have been adjusted for such stock split.
7
<PAGE>
<PAGE> 8
Independent Auditors' Review Report
-----------------------------------
The Board of Directors
Magna Bancorp, Inc.:
We have reviewed the condensed consolidated statement of financial condition of
Magna Bancorp, Inc. and subsidiaries as of September 30, 1996, the related
condensed consolidated statements of earnings and cash flows for the three-
month periods ended September 30, 1996 and 1995. These financial statements
are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical review
procedures to financial data and making inquiries of persons responsible for
financial and accounting matters. It is substantially less in scope than an
audit in accordance with generally accepted auditing standards, the objective
of which is the expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the condensed consolidated financial statements referred to above
for them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated statement of financial condition of Magna Bancorp,
Inc. and subsidiaries as of June 30, 1996, and the related consolidated state-
ments of earnings, stockholders' equity and cash flows for the year then ended
(not presented herein); and in our report dated August 23, 1996, we expressed
an unqualified opinion on those consolidated financial statements. In our
opinion, the information set forth in the accompanying condensed consolidated
statement of financial condition as of June 30, 1996, is fairly stated, in all
material respects, in relation to the consolidated statement of financial
condition from which it has been derived.
Jackson, Mississippi KPMG Peat Marwick LLP
October 22, 1996
8
<PAGE>
<PAGE> 9
<TABLE>
MAGNA BANCORP, INC.
AND SUBSIDIARIES
----------------
Consolidated Summary of Financial Information
---------------------------------------------
(UNAUDITED)
<CAPTION>
At and For the Three
Months Ended
----------------------------
09-30-96 06-30-96 09-30-95
-------- -------- --------
(Dollars in millions
except per share data)
<S> <C> <C> <C>
SELECTED CONSOLIDATED
FINANCIAL CONDITION DATA
------------------------
Total assets................................. $ 1,302.2 1,308.7 1,222.1
Loans receivable, net (1).................... 876.1 863.8 833.7
Deposits..................................... 912.6 922.4 923.5
Stockholders' equity......................... 125.8 125.8 118.9
SELECTED CONSOLIDATED
OPERATIONS DATA
---------------
Net interest income.......................... 16.2 16.9 16.1
Provision for possible loan losses........... 0.7 0.6 0.1
Non-interest income.......................... 9.6 10.3 9.8
Operating expenses, excluding special SAIF
deposit insurance assessment.............. 17.0 17.8 16.5
Special SAIF deposit insurance
assessment (2)............................ 5.9 - -
Net earnings................................. 1.8 5.4 5.7
PER SHARE DATA
- - --------------
Book value at end of period.................. 9.16 9.18 8.53
Earnings per share........................... 0.13 0.39 0.40
OTHER DATA
- - ----------
Yield on average earning assets.............. 9.67% 9.82% 9.88%
Cost of funds................................ 4.65% 4.54% 4.48%
Net interest margin (3)...................... 5.72% 5.95% 6.09%
Annualized return on average assets, excluding
the effect of the special SAIF deposit
insurance assessment (2).................. 1.68% 1.68% 1.92%
Annualized return on average assets.......... 0.54% 1.68% 1.92%
Annualized return on average equity, excluding
the effect of the special SAIF deposit
insurance assessment (2).................. 17.17% 17.35% 19.63%
Annualized return on average equity.......... 5.56% 17.35% 19.63%
Efficiency ratio (4)......................... 60.44% 61.21% 57.87%
Stockholders' equity as a percentage of total
assets.................................... 9.66% 9.61% 9.73%
Non-performing assets as a percentage of
total assets (5).......................... 2.52% 2.52% 2.48%
Dividend payout percentage................... 115.38% 19.23% 12.35%
<FN>
- - -----------------------
<F1> (1) Includes loans held for investment and loans held for sale.
<F2> (2) Legislation to recapitalize the Savings Association Insurance Fund
("SAIF") was signed into law on September 30,1996 and requires
SAIF-insured savings institutions to pay a one-time special
assessment of approximately 0.657% of deposits.
<F3> (3) Net interest income divided by average interest-earning assets.
<F4> (4) Operating expense excluding amortization of premium on purchased
deposits and one-time special deposit insurance assessment divided
by operating income excluding amortization of mortgage servicing
rights gain/loss on real estate owned, gain/loss on loans and
securities and gain on sale of servicing.
<F5> (5) Non-performing assets, net of unearned discounts, deferred fees and
undisbursed loan funds, consist of non-accruing loans, troubled debt
restructurings and foreclosed real estate. Non-performing assets do
not include accruing loans that are in a delinquent status.
</TABLE>
9
<PAGE>
<PAGE> 10
MAGNA BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion reviews the financial condition of Magna Bancorp, Inc.
(the "Company") and its wholly-owned subsidiaries, including Magnolia Federal
Bank for Savings (the "Bank"), as of September 30, 1996, and the results of
operations for the three-month period then ended.
Financial Condition
- - -------------------
Total consolidated assets of the Company decreased $6.4 million, or 0.5%, to
$1.3 billion at September 30, 1996 from June 30, 1996. This decrease was
primarily in receivables outstanding and in the amount of cash held in
overnight investment accounts offset by an increase in loans. Loans held for
investment increased $9.3 million, or 1.1%, to $845.6 million at September
30, 1996 from $836.3 million at June 30, 1996. The expansion of the Company's
loan production capabilities through its retail offices and
broker/correspondent network and the favorable market for the Company's non-
conforming loan products resulted in the continued growth of the Bank's loan
portfolio. Mortgage-backed securities declined slightly from $166.1 million at
June 30, 1996 to $162.7 million at September 30, 1996 as no new mortgage-backed
securities were issued or purchased to replace repayments. Total assets do not
include the balance of the Bank's portfolio of loans serviced for others, which
decreased slightly during this period to $2.9 billion. Deposits declined $9.8
million, or 1.1%, during the three-month period to $912.6 million at September
30, 1996 primarily from a $10.7 million decrease in transaction account
balances. This decrease was partially offset by an increase certificates of
deposits as higher rates paid attracted new deposits. Borrowings from the
Federal Home Loan Bank of Dallas decreased $4.9 million during the three-month
period ended September 30, 1996.
Non-performing assets (including non-accruing loans of $21.5 million; troubled
debt restructuring of $0.4 million; and foreclosed real estate of $11.0
million) totaled $32.9 million, or 2.52% of assets, at September 30, 1996,
compared to $33.0 million, or 2.52% of assets, at June 30, 1996. Foreclosed
real estate increased $733,000 during the current quarter as a result of
increased single-family foreclosures in the Company's market area. In order to
obtain the highest sales prices and mitigate its losses, the Company makes any
needed repairs before aggressively marketing these properties. Accruing loans
delinquent 90 days or more totaled $16.8 million at September 30, 1996 compared
to $19.5 million at June 30, 1996. The high level of delinquent accruing loans
is primarily attributable to the purchases of high-rate 90-day delinquent
FHA/VA insured/guaranteed loans from the Bank's GNMA mortgage loan servicing
portfolio. The loans are purchased from GNMA pools to eliminate the cost of
advancing funds on these high-rate loans to the security holders as required by
GNMA and result in no increase in risk to the Bank. The quarterly decrease in
the accruing delinquent GNMA loans was due to the Company's curtailment of
repurchasing loans with low yields. On a quarterly basis the Bank evaluates
its loan and real estate portfolios, reviews its historical loss experience,
10
<PAGE>
<PAGE> 11
considers current economic conditions, and determines the adequacy of the
allowance for possible loan losses. The allowance for possible loan losses
was $9.7 million at September 30, 1996, representing 29.5% of the Bank's non-
performing assets and 1.1% of loans receivable at such date. Real estate
loans, net, which accounted for 89.7% of the Company's loan portfolio, was
allocated $8.1 million of the allowance for possible loan losses. Consumer
loans of $92.8 million were allocated an allowance for possible loan losses
of $1.6 million. The $490,000 in net chargeoffs during the period resulted in
an annualized net charge off percentage to average loans outstanding of 0.24%
for the three month period ended September 30, 1996.
Liquidity and Capital Resources
- - -------------------------------
The Bank is required by regulation to maintain minimum levels of liquid assets
(cash and certain investment securities generally having remaining maturities
of less than five years) to meet the funding demands of loan commitments,
deposit withdrawals and other obligations. At September 30, 1996, the Bank's
liquidity ratio (cash and eligible securities as a percentage of net withdraw-
able savings and borrowings due within one year) was 8.8%, exceeding the
minimum requirement of 5.0%. The Bank had forward sales commitments of $28.0
million in mortgage-backed securities at September 30, 1996 and had designated
$30.5 million of loans and $35.3 million in mortgage-backed securities to serve
as the source for meeting such commitments. At September 30, 1996, the Bank
had outstanding commitments to originate loans of $55.8 million.
At September 30, 1996, the Company's total stockholders' equity was $125.8
million, or $9.16 per share of common stock, compared to $125.8 million at June
30, 1996, or $9.18 per share. The Bank's regulatory capital at September 30,
1996 exceeds the three current minimum requirements as follows:
<TABLE>
Capital Summary
---------------
(Dollars in thousands)
<CAPTION>
Capital Actual % of Requirement % of Excess % of
Requirement Amount Assets Amount Assets Amount Assets
----------- ------ ------ ----------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Tangible 100,993 7.79 19,436 1.50 81,557 6.29
Core 100,993 7.79 38,872 3.00 62,121 4.79
Risk-based 109,498 15.93 54,987 8.00 54,511 7.93
</TABLE>
11
<PAGE>
<PAGE> 12
Results of Operations
- - ---------------------
The Company had consolidated net earnings of $1.8 million, or $0.13 per share,
for the three-month period ended September 30, 1996, compared with net earnings
of $5.7 million, or $0.40 per share, for the three-month period ended September
30, 1995. Annualized return on average assets and return on average equity
were 0.54% and 5.56%, respectively, for the current period, compared to 1.92%
and 19.63% for the same period a year ago. In the current period, the Company
recognized a $5.9 million special one-time Savings Association Insurance Fund
("SAIF") deposit insurance assessment. Legislation to recapitalize the SAIF of
the Federal Deposit Insurance Corporation ("FDIC") was signed into law on
September 30, 1996 and requires SAIF-insured savings institutions, such as the
Bank, to pay a one-time special assessment of 0.657% of deposits to
recapitalize the insurance fund. Declines in future annual SAIF assessments of
approximately $1.5 million are expected to enhance future earnings and offset
the negative impact on the current quarter's earnings. Before considering the
special assessment, net earnings were $5.4 million, or $0.39 per share, and
annualized return on average assets and return on average equity were 1.68% and
17.17%, respectively, for the current quarter.
Net interest income increased slightly to $16.2 million for the three-month
period ended September 30, 1996, compared to $16.1 million for the three-
month period ended September 30, 1995. Net interest margin for the three-
month period ended September 30, 1996 declined to 5.72% from 6.09% for the same
period a year ago, reflecting a tightening of the spread between the yield on
the Company's interest-earning assets and cost of interest-bearing liabilities.
Interest income increased $1.3 million, or 4.9%, for the three-month period
ended September 30, 1996, compared with the prior period as a result of
increases in average interest-earning asset balances. Interest expense
increased $1.2 million during the three-month period eneded September 30, 1996,
reflecting increases in short-term market interest rates as well as increases
in the average balances of non-deposit borrowings. The Bank's average cost of
funds was 4.65% for the three-month period ended September 30, 1996, compared
to 4.48% for the same period in the prior year.
The provision for possible loan losses was $733,000 for the three-month period
ended September 30, 1996, compared to $133,000 in the same period the prior
year. This increase reflects the higher level of consumer loan delinquencies
and charge-offs, current economic conditions in the Bank's market area, and an
increase in the Company's loan portfolio. The provision for possible loan
losses is based on management's continued evaluation of the real estate and
consumer loan portfolios and the potential impact of the local and national
economies. It reflects management's on-going strategy to maintain the general
loan loss allowance at an appropriate level designed to help insulate the Bank
against potential future losses. Although management uses available
information to recognize possible loan losses and to determine that the
carrying value of real estate owned does not exceed its fair market value,
future additions to the allowance or future writedowns to real estate owned
may be necessary based on changes in economic or market conditions.
12
<PAGE>
<PAGE> 13
Non-interest income decreased slightly to $9.6 million for the three-month
period ended September 30, 1996, from $9.8 million for the same period a year
ago. Gains on sales of loans and securities decreased $362,000, primarily
due to a decline in loan origination activity attributable to the current
increase in long-term interest rates in recent months. The lower volume of
loan refinancings resulted in decreases in insurance commissions, appraisal
fees and other sources of income related to loan closings in the current period
compared to the related 1995 period. Loan servicing income, which is reported
net of amortization of purchased mortgage servicing rights of $688,000 and
originated servicing rights of $172,000, increased $193,000 compared to the
same period in 1995. Service fees on deposits increased $779,000 for the
three-month period ended September 30, 1996 compared to the same period a year
ago due to an increase in the number of checking accounts to 157,000 at
September 30, 1996 from 146,000 at September 30, 1995. The increase in long-
term market interest rates during the current three-month period ended
September 30, 1996 impacted the market value of the Company's portfolio of
loans and securities and resulted in an unrealized loss of $84,000 on trading
securities and loans held for sale compared to a $6,000 unrealized gain
recorded for the same period a year ago.
General and administrative expenses increased $6.4 million, or 38.8%, to
$22.9 million for the three-month period ended September 30, 1996 compared to
the same period in the prior year. Excluding the $5.9 million expense
related to the special SAIF deposit insurance assessment, general and
administrative expenses increased slightly in the current quarter to $17.0
million from $16.5 million for the same quarter a year ago. Compensation
expense, the primary source of the increase in recurring expenses, increased
$648,000, or 8.8%, during the current period compared to the three-month
period ended September 30, 1995, primarily due to the higher cost of employee
benefits offered by the Bank to its employees.
13
<PAGE>
<PAGE> 14
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) The 1996 Annual Meeting of Stockholders was held on
October 23, 1996.
(b) Directors Elected:
Robert S. Duncan
Zach T. Hederman, Jr.
Directors Continuing in Office:
Lou Ann Poynter
George P. Hopkins, Jr.
H. A. Moore, III
(c) At the 1996 Annual Meeting of Stockholders, the Stockholders
considered the election of two directors of the Company.
The vote on the election of two directors was as follows:
<TABLE>
<CAPTION>
FOR WITHHELD
--- --------
<S> <C> <C>
Robert S. Duncan 12,458,215 16,063
Zach T. Hederman, Jr. 12,456,943 17,335
</TABLE>
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits
Exhibit 11 - Statement re: computation of per share earnings
Exhibit 15 - Letter re: unaudited interim financial
information
Exhibit 27 - Financial Data Schedule
(b) No Form 8-Ks were filed during the period covered by this
report.
14
<PAGE>
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this amendment to be signed on its behalf
by the undersigned, thereunto duly authorized.
MAGNA BANCORP, INC.
-------------------
Registrant
DATE: November 11, 1996 BY: /S/LOU ANN POYNTER
--------------------------
LOU ANN POYNTER, President
DATE: November 11, 1996 BY: /S/KAREN K. GRIFFIS
--------------------------
KAREN K. GRIFFIS, Treasurer
15
<PAGE>
<PAGE> 16
INDEX TO EXHIBITS
Exhibit
Number
11 Statement re: computation of per share earnings
15 Letter re: unaudited interim financial information
27 Financial Data Schedule
16
<PAGE>
<PAGE> 17
<TABLE>
MAGNA BANCORP, INC.
AND SUBSIDIARIES
Computation of Per Share Earnings
(UNAUDITED)
<CAPTION>
For the Three Months Ended
--------------------------
09-30-96 09-30-95
-------- --------
<S> <C> <C>
Weighted average number of
shares outstanding.................... 13,740,804 14,070,808
Common stock equivalents
Stock options......................... 132,802 184,784
Shares issuable under compensation
plan............................... 5,148 --
Common stock repurchased................. (201) (121,848)
---------- ----------
Weighted average shares, primary and
fully diluted......................... 13,878,553 14,133,744
========== ==========
Computation of net earnings per share
Net earnings.......................... $ 1,751,191 5,715,257
========== ==========
Earnings per share, primary and
fully diluted........................ $ 0.13 0.40
========== ==========
</TABLE>
17
<PAGE>
<PAGE> 18
Magna Bancorp, Inc.
Hattiesburg, Mississippi
Members of the Board:
Re: September 30, 1996 Quarterly Report of Form 10-Q
With respect to the subject Quarterly Report, we acknowledge our
awareness of the use therein of our report dated October 22, 1996
related to our review of interim financial information.
Pursuant to Rule 436(c) under the Securities Act, such report is not
considered a part of a Registration Statement prepared or certified by an
accountant or a report prepared or certified by an accountant within the
meaning of Sections 7 and 11 of the Act.
Very truly yours,
KPMG Peat Marwick LLP
Jackson, Mississippi
November 1, 1996
18
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION, CONDENSED CONSOLIDATED
STATEMENTS OF EARNINGS, SUMMARY OF CONSOLIDATED FINANCIAL INFORMATION, AND
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> SEP-30-1996
<CASH> 73,506,775<F1>
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 35,348,051
<INVESTMENTS-HELD-FOR-SALE> 122,576,574
<INVESTMENTS-CARRYING> 78,612,761
<INVESTMENTS-MARKET> 0
<LOANS> 885,808,096
<ALLOWANCE> 9,694,693
<TOTAL-ASSETS> 1,302,238,925
<DEPOSITS> 912,593,315
<SHORT-TERM> 217,016,993<F2>
<LIABILITIES-OTHER> 46,807,920
<LONG-TERM> 0
0
0
<COMMON> 137,410
<OTHER-SE> 125,683,287
<TOTAL-LIABILITIES-AND-EQUITY> 1,302,238,925
<INTEREST-LOAN> 22,804,546
<INTEREST-INVEST> 4,562,858<F3>
<INTEREST-OTHER> 85,200
<INTEREST-TOTAL> 27,452,604
<INTEREST-DEPOSIT> 7,912,485
<INTEREST-EXPENSE> 11,215,358
<INTEREST-INCOME-NET> 16,237,246
<LOAN-LOSSES> 732,883
<SECURITIES-GAINS> 350,170
<EXPENSE-OTHER> 22,924,021
<INCOME-PRETAX> 2,229,375
<INCOME-PRE-EXTRAORDINARY> 1,751,191
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,751,191
<EPS-PRIMARY> 0.13
<EPS-DILUTED> 0.13
<YIELD-ACTUAL> 5.72
<LOANS-NON> 21,465,560
<LOANS-PAST> 16,802,682
<LOANS-TROUBLED> 427,492
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 9,451,693
<CHARGE-OFFS> 534,224
<RECOVERIES> 44,341
<ALLOWANCE-CLOSE> 9,694,693
<ALLOWANCE-DOMESTIC> 9,694,693
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
<FN>
<F1>INCLUDES INTEREST-BEARING DEPOSITS.
<F2>INCLUDES DEBT DUE BEYOND ONE YEAR.
<F3>INCLUDES TRADING ACCOUNT INTEREST.
</FN>
</TABLE>
