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 June 30, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For transition period from ________ to ________
Commission File Number 0-20878
MNB BANCSHARES, INC.
(Exact name of Registrant as specified in its charter)
Delaware 48-1120026
(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)
800 Poyntz Avenue, Manhattan, Kansas 66502
(Address of principal executive offices) (Zip Code)
(913) 565-2000
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No __
Indicate the number of shares outstanding of each of the Registrant's classes
of common stock as of the latest practicable date: As of June 30, 1996, the
Registrant had outstanding 576,514 shares of its common stock, $.01 par
value per share.
<PAGE>
MNB BANCSHARES, INC.
Form 10-Q Quarterly Report
Table of Contents
PART I
Page Number
Item 1. Financial Statements and Related Notes 1 - 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 5 - 11
PART II
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of
Security Holders 12
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
Form 10-Q Signature Page 14
<PAGE>
<TABLE>
MNB BANCSHARES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
June 30, December 31,
1996 1995
<S> <C> <C>
ASSETS (Unaudited)
Cash and cash equivalents:
Cash $1,909,259 $2,136,418
Interest-bearing deposits in other
financial institutions 200,000 787,599
Total cash and cash equivalents 2,109,259 2,924,017
Investment securities:
Held-to-maturity at amortized
cost 12,377,869 16,403,035
(estimated fair value of $12,371,000
and $16,495,000 respectively)
Available-for-sale at
estimated fair value 19,322,877 15,925,916
Loans, net 65,400,165 62,582,264
Premises and equipment, net 1,389,856 1,384,052
Other assets 2,019,747 1,965,652
Total assets $ 102,619,773 $ 101,184,936
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $ 84,608,215 $ 86,399,443
Federal funds purchased - 325,000
Other borrowings 6,055,914 2,555,915
Accrued expenses,
taxes and other liabilities 957,010 1,094,329
Total liabilities 91,621,139 90,374,687
Stockholders' equity:
Common stock, $.01 par,
600,000 shares authorized,
576,514 shares issued and
outstanding 5,765 5,765
Additional paid in capital 5,726,704 5,726,704
Retained earnings 5,745,750 5,410,733
Unrealized gain (loss) on
investment securities available-
for-sale, net of tax (123,670) 22,962
Unearned employee benefits (355,915) (355,915)
Total stockholders' equity 10,998,634 10,810,249
Total liabilities and
stockholders' equity $ 102,619,773 $ 101,184,936
<FN>
See accompanying notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
MNB BANCSHARES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
<CAPTION>
Pro-Forma
For the Six Months For the Six Months
Ended June 30, Ended June 30,
1995 (Note 3) 1996 1995
<S> <C> <C> <C>
Interest income:
Loans $2,749,203 $2,852,419 $2,492,401
Investment securities 793,347 887,116 696,508
Other 90,750 87,634 77,702
Total interest income 3,633,300 3,827,169 3,266,611
Interest expense:
Deposits 1,814,161 1,917,295 1,638,027
Borrowed funds 126,703 109,507 126,703
Total interest expense 1,940,864 2,026,802 1,764,730
Net interest income 1,692,436 1,800,367 1,501,881
Provision for loan losses 37,500 - 33,750
Net interest income after
provision for loan losses 1,654,936 1,800,367 1,468,131
Noninterest income:
Fees and service charges 201,344 259,956 174,441
Gains on sale of loans 34,867 27,252 34,867
Gain (loss) on sale
of investments - (13,940) -
Other 48,301 6,562 16,328
Total noninterest income 284,512 279,830 225,636
Noninterest expense:
Compensation and benefits 592,222 609,786 507,257
Occupancy and equipment 163,642 183,094 145,679
Federal deposit
insurance premiums 95,218 78,564 84,754
Data processing 56,647 65,229 50,619
Amortization 54,343 57,097 27,348
Advertising 38,532 35,908 37,522
Professional Fees 62,190 81,966 58,242
Stationery, printing and
office supplies 36,953 61,928 29,895
Other 258,755 288,629 227,019
Total noninterest expense 1,358,502 1,462,201 1,168,335
Earnings before income
taxes 580,946 617,996 525,432
Income tax expense 230,678 209,126 203,580
Net earnings $ 350,268 $ 408,870 $ 321,852
Net earnings per share $ 0.59 $ 0.69 $ 0.57
Dividends per share $ 0.1250 $ 0.1281 $ 0.1250
Average common and common
equivalent shares outstanding 591,005 595,618 560,812
<FN>
See accompanying notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
MNB BANCSHARES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
<CAPTION>
For the Three Months
Ended June 30,
1996 1995
<S> <C> <C>
Interest income:
Loans $1,434,175 $1,401,733
Investment securities 442,426 406,931
Other 30,968 56,512
Total interest income 1,907,569 1,865,176
Interest expense:
Deposits 933,821 952,873
Borrowed funds 64,461 60,495
Total interest expense 998,282 1,013,368
Net interest income 909,287 851,808
Provision for loan losses - 18,750
Net interest income after
provision for loan losses 909,287 833,058
Noninterest income:
Fees and service charges 143,297 107,299
Gains on sale of loans 9,033 29,130
Gain (loss) on sale of
investment securities (13,029) -
Other 1,742 6,612
Total noninterest income 141,043 143,041
Noninterest expense:
Compensation and benefits 308,387 289,722
Occupancy and equipment 87,169 80,624
Federal deposit
insurance premiums 39,282 48,053
Data processing 41,429 27,194
Amortization 27,500 27,348
Advertising 14,456 16,027
Professional Fees 31,957 14,736
Stationery, printing and
office supplies 20,579 10,132
Other 155,632 145,495
Total noninterest expense 726,391 659,331
Earnings before income taxes 323,939 316,768
Income tax expense 88,978 130,998
Net earnings $234,961 $185,770
Net earnings per share $ 0.39 $ 0.31
Dividends per share $ 0.0656 $ 0.0625
Average common and common
equivalent shares outstanding 595,745 590,836
<FN>
See accompanying notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
MNB BANCSHARES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
For the Three Months
Ended June 30,
1996 1995
<S> <C> <C>
Net cash provided by
operating activities $ 378,638 $ 602,546
INVESTING ACTIVITIES
Net increase in loans (2,803,292) (186,620)
Maturities and prepayments of
investments held to maturity 4,012,148 4,895,719
Purchase of investment
held to maturity (242,465) (2,340,098)
Maturities and prepayments of
investments available for sale 2,392,148 1,765,607
Purchase of investments
available for sale (8,799,063) (4,247,505)
Proceeds from sale of
investment securities available
for sale 3,013,058 -
Proceeds from sales of other
real estate - 50,871
Net cash received from Auburn
acquisition - 380,829
Purchases of equipment and
building improvements (75,850) (86,801)
Net cash (used in) provided by
investing activities (2,503,316) 232,002
FINANCING ACTIVITIES
FHLB advances 2,975,000 900,000
Net increase (decrease)
in deposits (1,791,228) 1,063,119
Net increase in securities sold
under agreement to repurchase 200,000 -
Issuance of common stock under
stock option plan - 520
Cash dividends paid on common stock (73,852) (66,952)
Net cash provided by
financing activities 1,309,920 1,896,687
Net increase (decrease) in cash
and cash equivalents (814,758) 2,731,235
Cash and cash equivalents at
beginning of period 2,924,017 1,611,229
Cash and cash equivalents at
end of period $2,109,259 $4,342,464
Supplemental disclosure of cash flow information
Cash paid during period
for interest $2,178,000 $1,671,000
Cash paid during period
for taxes $ 286,000 $ 158,000
<FN>
See accompanying notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
MNB BANCSHARES, INC. AND SUBSIDIARY
Notes to Condensed Consolidated Financial Statements
1. Interim Financial Statements
The condensed consolidated financial statements of MNB Bancshares, Inc. and
subsidiary have been prepared in accordance with the instructions to Form
10-Q. To the extent that information and footnotes required by generally
accepted accounting principles for complete financial statements are
contained in or consistent with the audited financial statements incorporated
by reference in the Company's Annual Report on Form 10-K for the year ended
December 31, 1995, such information and footnotes have not been duplicated
herein. In the opinion of management, all adjustments, consisting of normal
recurring accruals, considered necessary for a fair presentation of financial
statements have been reflected herein. The December 31, 1995 condensed
consolidated balance sheet has been derived from the audited balance sheet
as of that date. The results of the period ended June 30, 1996 are not
necessarily indicative of the results expected for the year ended
December 31, 1996.
2. Earnings Per Share
Net earnings per share have been computed based on the average number of
shares and common equivalent shares outstanding during the period. All
periods presented reflect retroactive adjustment of the 5% stock dividends
declared by the Company on April 17, 1995 and April 18, 1994.
3. Acquisition
On April 1, 1995, the Company acquired Auburn Security Bancshares, Inc.
("Auburn"), and its wholly-owned subsidiary, Security State Bank.
Subsequently, Manhattan National Bank and Security State Bank were merged
and renamed Security National Bank. Auburn had consolidated assets of
approximately $20 million at the acquisition date. The Company acquired 100%
of the outstanding common stock of Auburn for approximately $2 million. The
purchase price, including related costs of acquisition, included cash of
approximately $975,000 and 60,270 shares of the Company's common stock.
The acquisition, which was accounted for as a purchase, resulted in a core
deposit intangible asset and goodwill of approximately $461,000 and
$512,000, respectively.
The consolidated operating results of the Company for the six months ended
June 30, 1995, on a proforma basis as though the acquisition had occurred on
January 1, 1995, are as shown on the condensed consolidated statements of
earnings.
<PAGE>
MNB BANCSHARES, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General. MNB Bancshares, Inc. (the "Company") is a bank holding company
incorporated under the laws of the State of Delaware and is engaged in the
banking business through its wholly-owned subsidiary, Security National Bank
(the "Bank"). The Company's results of operations depend primarily on net
interest income, which is the difference between interest income from
interest-earning assets and interest expense on interest-bearing liabilities.
The Company's operations are also affected by non-interest income, such as
service charges, loan fees and gains and losses from the sale of newly
originated loans. The Company's principal operating expenses, aside from
interest expense, consist of compensation and employee benefits, occupancy
costs, federal deposit insurance, data processing, and provision for loan
losses.
On April 1, 1995, the Company acquired all of the issued and outstanding
stock of Auburn Security Bancshares, Inc., a one-bank holding company which
owned 99% of the outstanding stock of Security State Bank. Subsequent to the
acquisition, the Company acquired all of the remaining stock of Security
State Bank. Consolidated assets acquired in this transaction were
approximately $20 million. This acquisition, which was accounted for using
the purchase method of accounting, is reflected in the June 30, 1996
consolidated balance sheet and the consolidated statement of earnings
compared to 1995. On December 31, 1995, the Company merged and consolidated
Manhattan National Bank and Security State Bank, and the resulting
institution was named Security National Bank. The home office for the Bank
is Manhattan, Kansas, with a branch operating in Auburn, Kansas.
Net earnings for the first six months of 1996 increased $87,018, or 27.0%,
to $408,870 compared to $321,852 for the first six months of 1995. Net
interest income, after provision for loan losses, increased $332,236 to
$1,800,367, or 22.6%, and fees and service charges increased 49.0% to
$259,956. Gains on sale of loans decreased 21.8%, or $7,615, to $27,252; and
non-interest expense increased $293,866, or 25.2%, to $1,462,201. A major
factor in the increase for the first six months of both net interest income
and fees and service charges is due to the fact that operating results of
Auburn are not reflected in the Company's results for the first quarter of
the six month period ending June 30, 1995. The increase in non-interest
expenses is also due substantially to this fact as well as to one-time
expenses of approximately $80,000 associated with the subsidiary
consolidation and change of name.
Net earnings for the second quarter of 1996 increased 26.5% to $234,961 in
comparison to the same period in 1995. Net interest income, after provision
for loan losses, showed an increase from $833,058 to $909,287, or 9.2%,
during this period. Decreased gains on sale of loans of $20,097, losses on
sale of investment securities available for sale of $13,029 and increased
non-interest expense of $67,060 partially offset this increase.
<PAGE>
MNB BANCSHARES, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
Interest Income. Interest income increased by $560,558, or 17.2%, to $3.8
million during the first six months of 1996. This increase was the result of
an increase in interest on loans of 14.4%, or $360,018 and interest on
investment securities of $190,608 or 27.4%. The interest on loans is higher
due to both an increase in average loans outstanding and loans repricing at
higher rates. Interest earned on securities increased as securities matured
and were reinvested in securities yielding higher interest rates. Interest
income on other investments increased 12.8% to $87,634. This was a result
of funds being available for investment in short-term overnight interest-
bearing deposits and other shrt-term investments during the first quarter
of 1996. Additionally, the results were impacted by the inclusion of
Auburn's operating results for the entire six months ended June 30, 1996,
as compared to only being included in the first three months of the six
month period ending June 30, 1995. The impact of this is demonstrated in
the pro-forma column of the Condensed Consolidated Statements of Earnings.
Interest income for the second quarter of 1996 increased by $42,393, or 2.3%,
compared to the same period of 1995. Interest on loans and investment
securities increased as loans increased and as loans repriced and maturing
securities were reinvested at higher rates. Interest income on loans
increased $32,442, or 2.3%, and investment securities increased $35,495, or
8.7%, to $442,426. Other interest income decreased $25,544, or 45.2%, because
of a higher demand of funds for loans decreasing the funds available for
investment in short-term overnight interest-bearing deposits.
Interest Expense. Interest expense rose by $262,072, or 14.9%, to $2.0
million during the first six months of 1996. This increase is due to
increases in interest rates paid on deposits and the acquisition of Auburn
on April 1, 1995. Deposit interest expense increased from $1.6 million to
$1.9 million or 17.1%. Interest expense on borrowings, consisting of
securities sold under agreements to repurchase and advances from the Federal
Home Loan Bank of Topeka (the "FHLB"), declined $17,196, or 13.6%, during
the same time period, as these liabilities have been liquidated as they
matured.
Interest expense for the second quarter of 1996 decreased 1.5% to $998,282
from $1,013,368 in 1995. Deposit interest expense decreased $19,052, or
2.0%, to $933,821. This was partially offset by an increase of $3,966, or
6.6%, on borrowings to $64,461. This increase was a result of borrowings on
the Company's Federal Home Loan Bank (the "FHLB") line of credit to fund
increased loan demand.
Provision for Loan Losses. No provision for loan losses was made during the
first six months of 1996 as compared to $33,750 for 1995. Management
determined that an increased provision was prudent during 1995 as a result of
discussions by the Department of Defense regarding downsizing of the Armed
Forces and the potential downsizing or
<PAGE>
MNB BANCSHARES, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
closure of Fort Riley, which is located near Manhattan, Kansas, by the 1996
Base Realignment and Closure Commission. The downsizing of Fort Riley which
occurred did not have a materially adverse impact on the Company's portfolio
or collateral values, therefore the provision was reduced during the third
quarter of 1995. Beginning in 1996, it was decided that no provision was
necessary due to the quality and performance of the portfolio and an analysis
of economic conditions. No provision was made during the second quarter of
1996 compared to a provision of $18,750 for 1995. Management will continue
to assess all factors on a continuing basis and further changes in the
provision will be made if circumstances warrant. The loan loss reserve at
June 30, 1996 was $832,706, or 1.3% of the gross loans outstanding and loans
held for sale.
Noninterest Income. Noninterest income increased $54,194, or 24.0%, for the
first six months of 1996. An increase of 49.0% in fees and service charges
from $174,441 to $259,956 was the result of the acquisition of Auburn and a
restructuring of fees and service charges on deposit accounts. This was
partially offset by a decrease in the gains on sale of loans of $7,615 from
$34,867 to $27,252, or 21.8%, and a loss on sale of investment securities
available for sale of $13,940 as the Company sought to reposition its
portfolio and lengthen its maturities. Some lower-yield short term securities
were sold and the proceeds reinvested in intermediate term securities. The
analysis done on this transaction indicated that it will be income-neutral
for 1996.
Noninterest income for the second quarter of 1996 remained flat at $141,043
compared to $143,041. Fees and service charges increased $35,998 or 33.6% to
$143,297 due to the price restructuring of fees and service charges on
deposit accounts. This increase was offset by decreased gains on sale of
loans of 69.0% from $29,130 to $9,033. This decrease in gains on sale of
loans was a result of a declining profit margin of loans sold to the
secondary market as a result of increased competition and rising interest
rates. Loss onsale of investment securities of $13,029 was incurred during
this quarter as part of the repositioning of the securities portfolio
previously mentioned.
Noninterest Expense. Noninterest expense increased 25.2% to $1,462,201 for
the first six months of 1996. The inclusion of Auburn's operating results
for the full six months of 1996 and several one-time expenses due to the
consolidation of the two banks contributed substantially to this increase.
The amortization of goodwill and core deposit intangibles related to the
acquisition of Auburn increased $29,749, or 108.8%. Professional fees
increased $23,724, or 40.7% to $81,966 along with an increase in stationery,
printing and office supplies of $32,033, or 107.2% as a result of the change
of name and the consolidation of the bank subsidiaries. Occupancy and
equipment expense increased $37,415, or 25.7%, and data processing increased
28.9% to $65,229 as the acquisition was reflected for the entire six months
ending June 30, 1996, and several one-
<PAGE>
MNB BANCSHARES, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
time expenses were incurred during the conversion of the Auburn branch to the
same data processing system as the main Manhattan facility. Other noninterest
expense increased $61,610, or 27.1%, once again reflecting the acquisition.
Total noninterest expense increased 10.2% to $726,391 for the second quarter
of 1996. Occupancy and equipment and data processing expenses increased
$6,545 and $14,235, respectively, as a result of several one-time expenses
incurred due to the conversion of the Auburn branch to the same data
processing system as the Manhattan facility. Professional fees increased
116.9% to $31,957 compared to $14,736, as the Company used the services of a
professional recruitment agency to obtain an additional commercial loan
officer. Stationery, printing and office supplies increased to $20,579
compared to $10,132, or by 103.1%, as part of the consolidation expense.
Other expenses increased 7.0% to $155,632.
Asset Quality and Distribution. The Company's total assets grew to $102.6
million at June 30, 1996 compared to $101.2 million at December 31, 1995.
The Company's primary ongoing sources of funds are deposits, proceeds from
principal and interest payments on loans and investment securities, and
proceeds from the sale of mortgage loans and investment securities. While
maturities and scheduled amortization of loans are a predictable source of
funds, deposit flows and mortgage prepayments are greatly influenced by
general interest rates, economic conditions, competition, and the
restructuring of the financial services industry.
The primary investing activities of the Company are the origination of loans
and the purchase of investment securities. During the first six months of
1996, the Company originated mortgage loans in the amount of $16.0 million
compared to $8.4 million during the first six months of 1995. Generally, the
Company originates fixed rate residential mortgage loans for immediate sale
and does not warehouse loans to speculate on interest rates. During the
first six months of 1996, the Company originated consumer and commercial
non-mortgage loans of $5.7 million cmpared to $4.7 million during the same
time period for 1995.
The quality of the loan portfolio continues to be strong as evidenced by the
small number and amount of loans past due 30 days or more. As of June 30,
1996, six real estate loans were more than 30 days past due, with a total
balance of $239,888, which was 0.4% of total loans outstanding.
Additionally, three residential mortgage loans totaling $60,182 were on
non-accrual status as of June 30, 1996. Excluding guaranteed student loans,
there were six consumer loans in the amount of $26,520, or 0.1% of the total
loan portfolio, over 30 days past due and no commercial loans past due. At
June 30, 1996, the
<PAGE>
MNB BANCSHARES, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
Company had outstanding loan commitments of $6.2 million. The Company
believes sufficient funds will be available to meet existing loan commitments.
During the six months ended June 30, 1996, the Company purchased securities
to be held to maturity in the amount of $.2 million and available for sale in
the amount of $8.8 million. These activities were funded primarily by
deposits, proceeds from the sale of fixed rate mortgage loans totaling $4.0
million and $3.0 million of securities being held as available for sale which
were sold.
Liability Distribution. At June 30, 1996, total deposits and borrowings had
a net increase of $1.4 million from December 31, 1995 with deposits
decreasing $1.8 million. Other borrowings increased $3.5 million due to an
increase in utilization of the line of credit with the FHLB for overnight
borrowings.
Checking and NOW accounts at the end of the first six months of 1996 were
20.6% of deposits and totaled $17.4 million, compared to $17.8 million at
December 31, 1995. Money market deposit accounts were 17.2% of the deposit
portfolio and totaled $14.6 million, compared to $13.9 million at December
31, 1995. Certificates of deposit were $47.0 million, or 55.6% of the
portfolio compared to $48.7 million, or 56.4% at December 31, 1995.
Liquidity. The Company's most liquid assets are cash and cash equivalents
and investment securities available for sale. The level of these assets are
dependent on the Company's operating, financing, lending and investing
activities during any given period. At June 30, 1996, and December 31, 1995,
these liquid assets totaled $21.4 million and $18.8 million respectively.
During periods in which the Company is not able to originate a sufficient
amount of loans and/or periods of high principal prepayments, the Company
increases its liquid assets by investing in short-term U.S. Government
and agency securities.
Liquidity management is both a daily and long-term function of management's
strategy. Excess funds are generally invested in short-term investments. In
the event the Company requires funds beyond its ability to generate them
internally, additional funds are available through the use of FHLB advances,
a line of credit with the FHLB or through sales of securities. At June 30,
1996, the Company had outstanding FHLB advances of $2.3 million, $3.2 million
outstanding on its $7.9 million line of credit with the FHLB, and $200,000
in repurchase agreements. Additionally, the Company has guaranteed a loan
made to the Company's Employee Stock Ownership Plan (the "ESOP"), with an
outstanding balance of $355,915 at June 30, 1996, to fund the ESOP's purchase
of shares
<PAGE>
MNB BANCSHARES, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
in the Company's 1993 common stock offering. The total of these borrowings
by the Company was approximately $6.1 million at June 30, 1996.
Capital. The Federal Reserve Board has established capital requirements for
bank holding companies which generally parallel the capital requirements for
national banks under the Office of the Comptroller of the Currency (the
"OCC") regulations. The regulations provide that such standards will
generally be applied on a bank-only basis (rather than a consolidated basis)
in the case of a bank holding company with less than $150 million in total
consolidated assets, such as the Company. The Company's total capital of
$11.0 million is, however, well in excess of the Federal Reserve Board's
consolidated capital requirements.
At June 30, 1996, the Bank continued to maintain a sound Tier 1 capital
ratio of 8.8% and a risk based capital ratio of 17.9%. As shown by the
following table, the Bank's capital exceeded the minimum capital
requirements: (dollars in thousands)
<TABLE>
<CAPTION>
June 30, 1996
Amount Percent Required
<S> <C> <C> <C>
Tier 1 Capital $8,950 8.8% 3.0%
Risk Based Capital 9,623 17.9% 8.0%
</TABLE>
Banks and bank holding companies are generally expected to operate at or
above the minimum capital requirements. The above ratios are well in excess
of regulatory minimums and should allow the Company to operate without
capital adequacy concerns. The Federal Deposit Insurance Corporation
Improvement Act of 1991 established a bank rating system based on the capital
levels of banks. The Bank is rated "well capitalized", which is the highest
rating available under this capital-based rating system.
<PAGE>
MNB BANCSHARES, INC. AND SUBSIDIARY
PART II
ITEM 1. LEGAL PROCEEDINGS.
There are no material pending legal proceedings to which the Company or its
subsidiary are a party other than ordinary routine litigation incidental to
their respective businesses.
ITEM 2. CHANGES IN SECURITIES.
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS.
On May 20, 1996, the annual meeting of stockholders was held. At the
meeting, Patrick L. Alexander, Rolla W. Goodyear, and Jerry R. Pettle were
elected to serve as Class I directors with terms expiring in 1999.
Continuing as Class II directors (term expires in 1997) are C. Clyde Jones,
Dennis A. Mullin and Donald J. Wissman; and continuing as Class III directors
(term expires in 1998) are Brent A. Bowman, Charles D. Green, and Vernon C.
Larson. The stockholders approved the amendment to the Certificate of
Incorporation increasing the number of authorized shares of the Company's
Common Stock, $0.01 par value, from 600,000 to 1,500,000 shares and also
ratified the appointment of KPMG Peat Marwick LLP as the Company's
independent public accountants for the year ending December 31, 1996.
There were 576,514 issued and outstanding shares of Common Stock at the time
of the annual meeting. The voting on the above-described at the annual
meeting was as follows:
<TABLE>
<CAPTION>
For Withheld
<S> <C> <C>
Election of Directors
Patrick L. Alexander 441,103 275
Rolla W. Goodyear 441,103 275
Jerry R. Pettle 441,103 275
</TABLE>
<TABLE>
<CAPTION>
For Not For Abstain Broker Non-Votes Total
<S> <C> <C> <C> <C> <C>
Proposal to increase number
of authorized shares 423,013 15,477 3,439 3,831 445,760
</TABLE>
<PAGE>
MNB BANCSHARES, INC. AND SUBSIDIARY
PART II (continued)
ITEM 5. OTHER INFORMATION.
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
A. Exhibits
Exhibit 27. Financial Data Schedule
B. Reports on Form 8-K
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MNB BANCSHARES, INC.
Date: August 7, 1996 /s/Patrick L. Alexander
President and Chief Executive Officer
Date: August 7, 1996 /s/Susan E. Roepke
Vice President, Secretary,
Treasurer and Chief Financial Officer
<PAGE>
INDEX TO EXHIBITS
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NUMBER
27 Financial Data Schedule 16
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0000891284
<NAME> SUSAN E ROEPKE
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,909,259
<INT-BEARING-DEPOSITS> 200,000
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 19,322,877
<INVESTMENTS-CARRYING> 12,377,869
<INVESTMENTS-MARKET> 12,371,000
<LOANS> 66,225,620
<ALLOWANCE> 825,455
<TOTAL-ASSETS> 102,619,773
<DEPOSITS> 84,608,215
<SHORT-TERM> 5,200,000
<LIABILITIES-OTHER> 957,010
<LONG-TERM> 855,914
0
0
<COMMON> 5,765
<OTHER-SE> 10,992,869
<TOTAL-LIABILITIES-AND-EQUITY> 102,619,773
<INTEREST-LOAN> 2,852,419
<INTEREST-INVEST> 887,116
<INTEREST-OTHER> 87,634
<INTEREST-TOTAL> 3,827,169
<INTEREST-DEPOSIT> 1,917,295
<INTEREST-EXPENSE> 2,026,802
<INTEREST-INCOME-NET> 1,800,367
<LOAN-LOSSES> 0
<SECURITIES-GAINS> (13,940)
<EXPENSE-OTHER> 1,462,201
<INCOME-PRETAX> 617,996
<INCOME-PRE-EXTRAORDINARY> 617,996
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 408,870
<EPS-PRIMARY> .69
<EPS-DILUTED> .69
<YIELD-ACTUAL> 3.67
<LOANS-NON> 60,182
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 826,364
<CHARGE-OFFS> 1,213
<RECOVERIES> 304
<ALLOWANCE-CLOSE> 825,455
<ALLOWANCE-DOMESTIC> 624,964
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 200,491
</TABLE>
