SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
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)
(785) 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 November 13, 2000, the Registrant had outstanding
1,516,115 shares of its common stock, $.01 par value per share.
MNB BANCSHARES, INC.
Form 10-Q Quarterly Report
Table of Contents
PART I
Page Number
Item 1. Financial Statements and Related Notes 2 - 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations, including
Quantitative and Qualitative Disclosures about
Market Risk 7 - 13
PART II
Item 1. Legal Proceedings 14
Item 2. Changes in Securities 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of
Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
Form 10-Q Signature Page 15
MNB BANCSHARES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
September 30, December 31,
2000 1999
ASSETS (Unaudited)
<S> <C> <C>
Cash and cash equivalents $3,421,431 $4,315,013
Investments:
Held-to-maturity at amortized cost 1,204,892 1,603,268
(estimated fair value of $1,205,000
and $1,602,000 respectively)
Available-for-sale at estimated fair value 43,219,526 43,402,200
Loans, net 94,472,542 87,720,201
Premises and equipment, net 2,287,791 2,288,028
Other assets 4,943,496 3,933,590
__________ __________
Total assets $149,549,678 $143,262,300
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $127,770,127 $112,336,329
Other borrowings 6,591,935 16,698,857
Accrued expenses, taxes and other liabilities 1,182,924 936,730
___________ ___________
Total liabilities 135,544,986 129,971,916
___________ ___________
Stockholders' equity:
Common stock, $.01 par, 3,000,000 shares
authorized, 1,516,115 and 1,449,303
shares issued and outstanding at
2000 and 1999, respectively 15,161 14,493
Additional paid in capital 9,041,019 9,011,899
Retained earnings 5,243,615 4,821,937
Accumulated other comprehensive income (loss) (133,180) (384,098)
Unearned employee benefits (161,923) (173,847)
___________ __________
Total stockholders' equity 14,004,692 13,290,384
___________ __________
Total liabilities and stockholders' equity $149,549,678 $143,262,300
============ ============
<FN>
See accompanying notes to condensed consolidated financial statements.
</FN>
</TABLE>
MNB BANCSHARES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
<TABLE>
<S> <C> <C>
For the Nine Months
Ended September 30,
2000 1999
Interest income:
Loans $ 6,044,794 $ 5,000,638
Investments 1,951,121 2,034,282
Other 57,898 11,484
___________ ___________
Total interest income 8,053,813 7,046,404
Interest expense:
Deposits 3,796,702 3,226,210
Borrowed funds 658,104 446,814
_________ _________
Total interest expense 4,454,806 3,672,296
Net interest income 3,599,007 3,374,108
Provision for loan losses 65,000 -
___________ _________
Net interest income after
provision for loan losses 3,534,007 3,374,108
Noninterest income:
Fees and service charges 805,427 598,222
Gains on sale of loans 64,502 119,568
Gains (losses) on sale of investments (30,368) 7,147
Other 39,351 38,753
_______ _______
Total noninterest income 878,912 763,690
Noninterest expense:
Compensation and benefits 1,666,391 1,577,737
Occupancy and equipment 503,848 442,806
Amortization 171,314 170,525
Data processing 101,606 98,950
Other 846,785 842,225
_________ _________
Total noninterest expense 3,289,944 3,132,243
Earnings before income taxes 1,122,975 1,005,555
Income tax expense 352,723 341,357
_________ _________
Net earnings $ 770,252 $ 664,198
========= =========
Earnings per share:
Basic $ 0.51 $ 0.44
Diluted $ 0.50 $ 0.43
Dividends per share $ 0.1875 $ 0.1875
<FN>
See accompanying notes to condensed consolidated financial statements.
</FN>
</TABLE>
MNB BANCSHARES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
<TABLE>
<S> <C> <C>
For the Three Months
Ended September 30,
2000 1999
Interest income:
Loans $2,151,581 $1,745,504
Investments 663,140 672,046
Other 42,662 333
__________ __________
Total interest income 2,857,383 2,417,883
Interest expense:
Deposits 1,470,360 1,056,646
Borrowed funds 147,614 191,580
__________ _________
Total interest expense 1,617,974 1,248,226
Net interest income 1,239,409 1,169,657
Provision for loan losses 30,000 -
__________ _________
Net interest income after
provision for loan losses 1,209,409 1,169,657
Noninterest income:
Fees and service charges 313,282 206,847
Gains on sale of loans 24,712 30,377
Other 10,470 9,526
_________ _________
Total noninterest income 348,464 246,750
Noninterest expense:
Compensation and benefits 565,489 535,494
Occupancy and equipment 175,063 148,729
Amortization 62,234 55,588
Data processing 32,249 31,725
Other 272,182 267,221
_________ _________
Total noninterest expense 1,107,217 1,038,757
Earnings before income taxes 450,656 377,650
Income tax expense 139,380 127,415
_________ _________
Net earnings $ 311,276 $ 250,235
========= =========
Earnings per share:
Basic $ 0.21 $ 0.16
Diluted $ 0.20 $ 0.16
Dividends per share $ 0.0625 $ 0.0625
<FN>
See accompanying notes to condensed consolidated financial statements.
</FN>
</TABLE>
MNB BANCSHAES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<S> <C> <C>
For the Nine Months
Ended September 30,
2000 1999
Net cash provided by operating activities $ 1,747,950 $ 1,948,311
INVESTING ACTIVITIES
Net increase in loans (7,010,754) (8,225,514)
Maturities and prepayments of
investments held to maturity 398,225 274,654
Maturities and prepayments of
investments available for sale 10,632,823 11,012,480
Proceeds from sale of investments
available for sale 2,280,547 5,049,734
Proceeds from sale of investments held
to maturity - 102,317
Purchase of investments available for sale (12,394,560) (14,182,740)
Net cash received from branch acquisitions 13,063,585 -
Proceeds from sale of foreclosed assets 29,636 50,000
Improvements of real estate owned (8,659) -
Purchases of premises and equipment, net (228,780) (161,699)
__________ ___________
Net cash provided by (used in)
investing activities 6,762,063 (6,080,768)
FINANCING ACTIVITIES
Net increase (decrease) in deposits 1,010,189 (3,023,305)
Federal Home Loan Bank borrowings
(repayment), net (10,164,998) 8,835,010
Proceeds (repayments) on note payable, net 70,000 (650,000)
Purchase of treasury stock (45,448) -
Issuance of common stock under stock option plan 3,142 62,882
Payment of dividends (276,480) (262,962)
___________ _________
Net cash provided by (used in)
financing activities (9,403,595) 4,961,616
___________ _________
Net decrease in cash and cash equivalents (1,261,298) 829,159
Cash and cash equivalents at beginning
of period 4,315,013 3,875,529
___________ _________
Cash and cash equivalents at end of
period $ 3,421,431 $ 4,704,688
============= ============
Supplemental disclosure of cash flow
information:
Cash paid during period for interest $ 4,361,000 $ 3,647,000
Cash paid during period for taxes $ 276,000 $ 158,000
Supplemental schedule of noncash investing
activities:
Transfer of loans to real estate owned $ 193,000 $ 105,000
<FN>
See accompanying notes to condensed consolidated financial statements.
</FN>
</TABLE>
MNB BANCSHARES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
1. Interim Financial Statements
The condensed consolidated financial statements of MNB
Bancshares, Inc. (the 'Company') and subsidiaries 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 Form 10-K for the year ended December 31,
1999, 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, 1999 condensed consolidated balance sheet has been
derived from the audited balance sheet as of that date. The results
of the interim periods ended September 30, 2000 are not necessarily
indicative of the results expected for the year ending December 31,
2000.
2. Earnings Per Share
Basic earnings per share have been computed based upon the
weighted average number of common shares outstanding during each
year. Diluted earnings per share include the effect of all potential
common shares outstanding during each year. Earnings per share for
all periods presented have been adjusted to give effect to the 5%
stock dividends paid by the Company annually since 1994.
The shares used in the calculation of basic and diluted income
per share, which have been restated for the annual 5% stock dividends
are shown below:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
For the three months For the nine months
ended September 30, ended September 30,
2000 1999 2000 1999
Weighted average
common shares outstanding 1,516,115 1,521,397 1,517,690 1,515,358
Stock options 30,930 39,830 31,936 45,401
_________ _________ _________ _________
Total 1,547,045 1,561,227 1,549,626 1,560,759
</TABLE>
3. Comprehensive Income
The Company's only component of other comprehensive income is
the unrealized holding gains and losses on available for sale
investments.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
For the three For the nine
months ended months ended
September 30, September 30,
2000 1999 2000 1999
Net earnings $ 311,276 250,235 770,252 664,198
Unrealized holding gains (losses) 397,891 (188,363) 374,337 (780,580)
Less - reclassification
adjustment for gains(losses)
included in net earnings - - (30,368) 7,147
______ ________ _______ _______
Net unrealized gains
(losses) on investments 397,891 (188,363) 404,705 (787,727)
Income tax expense (benefit) 156,376 (71,578) 153,787 (299,336)
_______ _______ _______ ________
Total comprehensive income $ 552,791 $133,450 $1,021,170 $175,807
</TABLE>
MNB BANCSHARES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General. MNB Bancshares, Inc. 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 home office for the Bank is Manhattan, Kansas,
with additional branch locations in Auburn, Manhattan, Osage City,
Topeka and Wamego, Kansas. On January 6, 2000, we opened an in-store
supermarket branch in Manhattan. We also completed the purchase of
the Wamego and Osage City branches of Commercial Federal Bank on July
21, 2000, which had total deposits of $14 million and total loans of
$1 million. The acquisition and related costs of the acquisition
resulted in a premium of approximately $787,000, which is being
amortized over 15 (straight-line) years. Our 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. Our 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 and
investments. Our principal operating expenses, aside from interest
expense, consist of compensation and employee benefits, occupancy
costs, federal deposit insurance costs, data processing expenses and
provision for loan losses.
Net earnings for the first nine months of 2000 increased
$106,000, or 16%, to $770,000 as compared to the first nine months of
1999. Net interest income increased $225,000, or 7%, from $3.4
million, to $3.6 million. This improvement in net earnings and net
interest income was generally attributable to growth in the
commercial, commercial real estate and retail loan portfolios
resulting in an increase of approximately $11.5 million in net loans
outstanding from September 30, 1999. Noninterest income increased
$115,000, or 15%, from $764,000 to $879,000, as new fee and service
charge initiatives overcame a $55,000 decrease in gains on sale of
loans and a $30,000 loss on sale of investments. Noninterest expense
increased $158,000 or 5%, relating primarily to the opening during
January 2000 of our first supermarket branch in west Manhattan and
the Wamego and Osage City branch acquisitions during July 2000.
Net earnings for the third quarter of 2000 increased 24% to
$311,000 in comparison to the same period in 1999. Net interest
income increased $70,000, or 6%, to $1.2 million during this period.
Noninterest income increased 41% to $348,000 compared to $247,000 as
a result of increased fees and service charges which were partially
offset by gains on sale of loans declining and a loss on sale of
investments. Noninterest expense increased $68,000, or 7%.
Interest Income. Interest income increased $1.0 million, or
14%, to $8.1 million from $7.0 million in the first nine months of
2000. This increase was primarily related to the strong growth in
the loan portfolio, along with increased yields on our investment
portfolio. Average loans for the first nine months of 2000 were
$91.2 million, compared to $78.1 million for the first nine months of
1999.
Interest income for the third quarter of 2000 increased by
$440,000, or 18% compared to the same period of 1999. Average loans
for the third quarter of 2000 were $94.7 million, compared to $81.8
million for the third quarter of 1999.
Interest Expense. As compared to the same period a year
earlier, interest expense during the first nine months of 2000
increased by $783,000, or 21%. Interest expense on deposits
increased $571,000, or 18% while interest expense on borrowings,
consisting of advances from the Federal Home Loan Bank of Topeka and
funds borrowed for acquisitions, increased $211,000, or 47% during this
time period. This rise in interest expense resulted from an increase
in deposits, an increase in interest rates and additional borrowings
from the Federal Home Loan Bank, offset partially by principal repayments
on our note payable. Most of the increase in deposits resulted from the July,
2000 branch acquisitions.
Interest expense for the third quarter of 2000 increased 30% to
$1.6 million from $1.2 million in 1999. Deposit interest expense
increased $414,000, or 39%, to $1.5 million. These increases were
also the result of an increase in deposits and an increase in
interest rates, offset partially by principal repayments on our note
payable and reductions in our Federal Home Loan Bank borrowings.
Provision for Loan Losses. The provision for loan losses for
the third quarter of 2000 was $30,000, bringing the total for the
first nine months of 2000 to $65,000. No provision was made during
the first nine months of 1999. While the loan portfolio quality
remains strong, management's review of the portfolio, coupled with
the increase in loans experienced during 1999 and 2000, prompted an
increased provision. At September 30, 2000, the allowance for loan
losses was $1.3 million, or 1.3% of gross loans outstanding, compared
to $1.2 million at December 31, 1999, or 1.4% of gross loans
outstanding.
Noninterest Income. Noninterest income increased $115,000, or
15%, for the first nine months of 2000 to $879,000 compared to the
same period in 1999. Fees and service charges increased from
$598,000 to $805,000, of which approximately $191,000 was
attributable to an increase in overdraft fee income. Partially
offsetting this increase was a decline of 46% in gains on sale of
loans from $120,000 to $65,000, as refinancings declined due to the
increase in home mortgage rates over the past year. Also offsetting
the increase was a $30,000 loss on sale of investments, as we
restructured our investment portfolio to obtain higher yielding
investments with a projected break even point in the fourth quarter
of 2000.
Noninterest income for the third quarter of 2000 increased 41%
to $348,000, compared to $247,000 for the third quarter of 1999.
Contributing to this increase was an increase in fee and service
charge income of $106,000, offset by a decline in gains on sale of
loans of $6,000.
Noninterest Expense. Noninterest expense increased $158,000, or
5%, to $3.3 million for the first nine months of 2000 over the same
period in 1999, resulting from increased expenses for compensation
and benefits, advertising, and occupancy and equipment. These
increased expense categories, related primarily to opening and
operating expenses of our new Dillons supermarket branch which opened
in January 2000, and our Wamego and Osage City branch acquisitions
during July 2000, were partially offset by reductions in professional
fees and federal deposit insurance premiums. Noninterest expense for
the third quarter of 2000 increased $68,000, or 7% as compared to the
same period in 1999, with the results generally mirroring those of
the nine month periods.
Asset Quality and Distribution. Total assets increased to
$149.5 million at September 30, 2000 compared to $143.3 million at
December 31, 1999. Our 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.
Our primary investing activities are the origination of
mortgage, consumer, and commercial loans and the purchase of
investment and mortgage backed securities. Generally, long term
fixed rate residential mortgage loans are originated for immediate
sale and we do not warehouse loans to speculate on interest rates.
Management believes that the quality of the loan portfolio
continues to be strong as evidenced by the small number and amount of
loans past due one month or more. As of September 30, 2000, nineteen
real estate loans were more than one month past due with a total
balance of $1.0 million, which was 1.1% of total loans outstanding.
Five of these loans, totaling $335,000, were on non-accrual status as
of September 30, 2000. With the exception of guaranteed student
loans, twenty-one consumer loans totaling $123,000, or 0.1%, were
over one month past due as of September 30, 2000 and three of these
loans with a combined balance of $35,000 were on non-accrual.
Additionally, one commercial loan totaling $50,000 was past due and
also on non-accrual status.
During the nine months ended September 30, 2000, investment
securities available for sale were purchased in the amount of $12.4
million. This was funded primarily by maturities of investment
securities of $10.6 million, along with deposit growth and proceeds
from the sale of investments available for sale of $2.3 million.
Liability Distribution. At September 30, 2000, total deposits
had a net increase of $15.4 million from December 31, 1999, while
borrowings decreased $10.1 million. The change in the liability mix
was primarily related to the July 2000 branch acquisitions.
Noninterest bearing demand accounts at the end of the third
quarter of 2000 totaled $10.1 million, or 8% of deposits, compared to
approximately 9%, or $10.1 million at December 31, 1999.
Certificates of deposit increased to $63.8 million at September 30,
2000 from $55.1 million, or 15.7%. Money market and NOW accounts
increased 19% from December 31, 1999 to $44.0 million from $37.1
million, and were 34% of total deposits, while savings accounts
decreased from $10.0 million to $9.9 million. The increase in money
market and NOW accounts and certificates of deposit primarily
resulted from the July 2000 branch acquisitions.
Liquidity. Our most liquid assets are cash and cash equivalents
and investment securities available for sale. The level of these
assets are dependent on the operating, financing, lending and
investing activities during any given period. At September 30, 2000,
and December 31, 1999 respectively, these liquid assets totaled $46.6
million and $47.7 million. During periods in which we are not able
to originate a sufficient amount of loans and/or periods of high
principal prepayments, we increase our liquid assets by investing in
short-term U. S. Government and agency securities.
Liquidity management is both a daily and long-term function of
the management strategy. Excess funds are generally invested in
short-term investments. In the event funds are required beyond the
ability to generate them internally, additional funds are generally
available through the use of Federal Home Loan Bank advances, a line
of credit with the Federal Home Loan Bank or through sales of
securities. At September 30, 2000, we had outstanding Federal Home
Loan Bank advances of $4.0 million and had $1.5 million outstanding
on our $27.5 million line of credit. Additionally, we have
guaranteed a loan made to our Employee Stock Ownership Plan with an
outstanding balance of $161,923 at September 30, 2000, to fund the
plan's purchase of shares in our common stock offering in 1993.
Total borrowings were $6.6 million at September 30, 2000, compared to
$16.7 million at December 31, 1999.
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 regulations. The regulations provide
that such standards will generally be applied on a bank-only (rather
than a consolidated) basis in the case of a bank holding company with
less than $150 million in total consolidated assets, which includes
our organization. It is anticipated that we will have in excess of
$150 million of total assets at the end of the fourth quarter of
2000. Our total capital of $14.0 million is well in excess of the
Federal Reserve Board's consolidated minimum capital requirements.
At September 30, 2000, Security National Bank continued to
maintain a sound Tier 1 capital ratio of 8.18% and a risk based
capital ratio of 13.96%. As shown by the following table, Security
National Bank's capital exceeded the minimum capital requirements
(dollars in thousands):
<TABLE>
<CAPTION>
<S> <C> <C> <C>
September 30, 2000
Amount Percent Required
Tier 1 Capital $12,238 8.18% 4.00%
Risk Based (Total)
Capital 13,442 13.96% 8.00%
</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 establishes a
bank rating system based on the capital levels of banks. Security
National Bank is rated "well capitalized", which is the highest
rating available under this capital-based rating system.
Recent Accounting Developments. The Financial Accounting
Standards Board issued Statements of Financial Accounting Standards
('SFAS') No. 133, 'Accounting for Derivative Instruments and Hedging
Activities,' in June 1998. SFAS No. 133 establishes accounting and
reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts, and for hedging
activities. It requires that an entity recognize all derivatives as
either assets or liabilities in the statement of financial position
and measure those instruments at fair value. This statement, as amended
by SFAS No. 137, is effective for all fiscal quarters beginning after
December 15, 2000. We believe adoption of SFAS Nos. 133 and 137 will not
have a material effect on our financial position or results of operations,
nor will adoption require additional capital resources.
Recent Regulatory Developments. The Gramm-Leach-Bliley Act (the
'Act'), which was enacted in November, 1999, allows eligible bank
holding companies to engage in a wider range of nonbanking
activities, including greater authority to engage in securities and
insurance activities. Under the Act, an eligible bank holding company
that elects to become a financial holding company may engage in any
activity that the Board of Governors of the Federal Reserve System
(the 'Federal Reserve'), in consultation with the Secretary of the
Treasury, determines by regulation or order is financial in nature,
incidental to any such financial activity, or complementary to any
such financial activity and does not pose a substantial risk to the
safety or soundness of depository institutions or the financial
system generally. National banks are also authorized by the Act to
engage, through 'financial subsidiaries,' in certain activity that is
permissible for financial holding companies (as described above) and
certain activity that the Secretary of the Treasury, in consultation
with the Federal Reserve, determines is financial in nature or
incidental to any such financial activity.
Although various bank regulatory agencies have issued
regulations as mandated by the Act, except for the jointly issued
privacy regulations, the Act and its implementing regulations have
had little impact on our daily operations or the daily operations of
Security National Bank and, at this time, it is not possible to
predict the impact the Act and its implementing regulations may have
on us or Security National Bank. As of the date of this filing, we
have not applied for or received approval to operate as a financial
holding company. In addition, Security National Bank has not applied
for or received approval to establish any financial subsidiaries.
Less than 10% of all bank holding companies have elected to become
financial holding companies.
Quantitative and Qualitative Disclosures About Market Risk. Our
assets and liabilities are principally financial in nature and the
resulting net interest income thereon is subject to changes in market
interest rates and the mix of various assets and liabilities.
Interest rates in the financial markets affect our decision on
pricing our assets and liabilities which impacts net interest income,
a significant cash flow source for us. As a result, a substantial
portion of our risk management activities relates to managing
interest rate risk.
Our Asset/Liability Management Committee monitors the interest
rate sensitivity of our balance sheet using earnings simulation
models and interest sensitivity GAP analysis. We have set policy
limits of interest rate risk to be assumed in the normal course of
business and monitor such limits through our simulation process.
We have been successful in meeting the interest rate sensitivity
objectives set forth in our policy. Simulation models are prepared
to determine the impact on net interest income for the coming twelve
months, including one using rates at September 30, 2000 and
forecasting volumes for the twelve-month projection. This position
is then subjected to a shift in interest rates of 200 basis points
rising and 200 basis points falling with an impact to our net
interest income on a one year horizon as follows:
Scenario $ change in net % of net int. income
interest income
200 basis point rising ($347,000) (6.88%)
200 basis point falling 424,000 8.40%
We believe that no significant changes in our interest rate
sensitivity position have occurred since September 30, 2000. We also
believe we are appropriately positioned for future interest rate
movements, although we may experience some fluctuations in net
interest income due to short term timing differences between the
repricing of assets and liabilities.
Safe Harbor Statement Under the Private Securities Litigation
Reform Act of 1995. This quarterly report contains certain forward
looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended and Section 21E of the Securities
Exchange Act of 1934, as amended. We intend such forward-looking
statements to be covered by the safe harbor provisions for
forward-looking statements contained in the Private Securities Reform
Act of 1995, and is including this statement for purposes of these
safe harbor provisions. Forward-looking statements, which are based
on certain assumptions and describe future plans, strategies and
expectations are generally identifiable by use of the words
'believe,' 'expect,' 'intend,' 'anticipate,' 'estimate,' 'project' or
similar expressions. Our ability to predict results or the actual
effect of future plans or strategies is inherently uncertain.
Factors which could have a material adverse affect on the operations
and future prospects of the Company and the subsidiary include, but
are not limited to, changes in: interest rates, general economic
conditions, legislative/regulatory changes, monetary and fiscal
policies of the U.S. Government, including policies of the U.S.
Treasury and the Federal Reserve Board, the quality or composition of
the loan or investment portfolios, demand for loan products, deposit
flows, competition, demand for financial services in our market area,
our implementation of new technologies, our ability to develop and
maintain secure and reliable electronic systems and accounting
principles, policies and guidelines. These risks and uncertainties
should be considered in evaluating forward-looking statements and
undue reliance should not be placed on such statements. Further
information concerning us and our business, including additional
factors that could materially affect our financial results, is
included in our filings with the Securities and Exchange
Commission.
MNB BANCSHARES, INC. AND SUBSIDIARIES
PART II
ITEM 1. LEGAL PROCEEDINGS.
There are no material pending legal proceedings to which
MNB Bancshares, Inc. or its subsidiaries is 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.
None
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
A report on Form 8-K was filed on October 25, 2000 to
report under Item 5, the issuance of a press release
announcing our earnings for the quarter ended
September 30, 2000 and our declaration of a cash
dividend to our stockholders.
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: November 13, 2000 __________________________________
/s/Patrick L. Alexander
President and Chief Executive Officer
Date: November 13, 2000 __________________________________
/s/Mark A. Herpich
Vice President, Secretary, Treasurer
and Chief Financial Officer
