U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended March 31, 1996
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from ___________ to ____________
Commission File Number: 0-22116
MOUNTAIN PARKS FINANCIAL CORP.
(Exact name of small business issuer as specified in its charter)
Delaware 41-1517690
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
6565 East Evans Avenue
Denver, CO 80224
(Address of principal executive offices)
(303) 758-5509
(Issuer's telephone number)
Not Applicable
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 ___
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of May 6, 1996: 3,742,351.
Transitional Small Business Disclosure Format: _____ Yes X No
TABLE OF CONTENTS
Page
Part I FINANCIAL INFORMATION
Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis or Plan
of Operations 13
Part II OTHER INFORMATION
Item 1. Legal Proceedings 16
Item 2. Changes in Securities 16
Item 3. Defaults Upon Senior Securities 16
Item 4. Submission of Matters to a Vote of Security Holders 16
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8-K 16
Signatures 17
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Set forth below are the consolidated financial statements of Mountain Parks
Financial Corp.
Consolidated Statements of Financial Condition as of March 31, 1996 and December
31, 1995
Consolidated Statements of Income for the three-month periods ended March 31,
1996 and 1995
Consolidated Statements of Cash Flows for the three-month periods ended
March 31, 1996 and 1995
Consolidated Statement of Changes in Stockholders' Equity for the three-month
period ended March 31, 1996
Notes to Consolidated Financial Statements
MOUNTAIN PARKS FINANCIAL CORP. AND SUBSIDIARIES
Consolidated Statements of Financial Condition
(In Thousands, Except Share and Per Share Data)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
ASSETS (Unaudited)
<S> <C> <C>
CASH AND DUE FROM BANKS $ 29,130 $ 30,817
FEDERAL FUNDS SOLD 17,200 15,745
SECURITIES HELD TO MATURITY (market value of
$8,476 and $5,923)
8,386 5,849
SECURITIES AVAILABLE FOR SALE 84,811 81,395
OTHER SECURITIES 4,038 3,554
LOANS, net of allowance for loan losses
of $3,242 and $3,163 278,497 268,580
BANK PREMISES AND EQUIPMENT, net 16,586 15,797
ACCRUED INTEREST RECEIVABLE 3,856 2,822
OTHER ASSETS 7,630 7,499
COST IN EXCESS OF NET ASSETS ACQUIRED, net 12,758 11,131
462,892 443,189
LIABILITIES AND STOCKHOLDERS' EQUITY
DEPOSITS:
Noninterest-bearing $110,169 $118,022
Interest-bearing-
Savings and NOW accounts 186,509 180,818
Time accounts over $100,000 27,394 22,793
Other time accounts 50,281 48,142
Total deposits 374,353 369,775
SHORT-TERM BORROWED FUNDS 19,839 7,170
EXCHANGEABLE SUBORDINATED NOTES 11,500 11,500
OTHER LIABILITIES 6,692 6,799
Total liabilities 412,384 395,244
STOCKHOLDERS' EQUITY:
Common stock, $.001 par value, 5,000,000
shares authorized, 3,742,351 and 3,668,351
shares issued and outstanding at
March 31, 1996 and December 31, 1995
respectively. 4 4
Preferred stock, $.001 par value, 1,000,000
shares authorized, no shares issued or
outstanding at March 31, 1996 and
December 31, 1995 -- --
Capital surplus 24,037 22,642
Retained earnings 26,419 24,624
Net unrealized gain on securities available
for sale (net of tax) 48 675
Total stockholders' equity 50,508 47,945
462,892 443,189
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
MOUNTAIN PARKS FINANCIAL CORP. AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)
(In Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
For the Three Months Ended
March 31
1996 1995
<S> <C> <C>
INCOME:
Interest and fees on loans $ 7,802 $ 5,055
Interest on investment securities-
U.S. Treasury and agency 1,339 947
State and municipal 146 24
Other 322 220
Total interest income 9,609 6,246
INTEREST EXPENSE:
Deposits 2,333 1,239
Short-term borrowings 572 450
Total interest expense 2,905 1,689
Net interest income 6,704 4,557
PROVISION FOR LOAN LOSSES 68 66
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 6,636 4,491
NONINTEREST INCOME:
Service charges 707 575
Net gain (loss) on sales of securities 3 (3)
Other 728 398
Total noninterest income 1,438 970
NONINTEREST EXPENSE:
Salaries and wages 2,824 1,607
Occupancy 493 279
Depreciation and amortization 553 238
Other 1,322 859
Total noninterest expense 5,192 2,983
INCOME BEFORE INCOME TAXES 2,882 2,478
INCOME TAXES 1,087 917
Net income 1,795 1,561
NET INCOME PER SHARE
Primary .47 .60
Fully diluted .47 .54
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
MOUNTAIN PARKS FINANCIAL CORP. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
For the Three Months Ended
March 31
1996 1995
<S> <C> <C>
OPERATING ACTIVITIES:
Net income 1,795 1,561
Adjustments to reconcile net income
to net cash provided by
operating activities-
Provision for loan losses 68 66
Depreciation and amortization 553 238
Change in accrued interest receivable (584) (122)
Change in other assets, net (2,611) (140)
Change in other liabilities, net (1,499) 595
Net cash provided by (used in)
operating activities (2,278) 2,198
INVESTING ACTIVITIES:
Proceeds of scheduled principal payments
and maturities of securities 5,909 640
Purchases of securities available for sale (10,043) (6,380)
Purchases of other securities (480) --
Net change in loans 1,503 (10,309)
Purchases of bank premises and equipment (985) (3,847)
Susidiary acquisition (net) 129 --
Net cash used in investing activities (3,967) (19,896)
FINANCING ACTIVITIES:
Net change in noninterest-bearing,
savings and NOW accounts (2,162) (8,487)
Net change in time accounts 6,740 11,114
Net change in short-term borrowings 1,286 11,808
Conversion of debentures -- (156)
Proceeds from options exercised 149 --
Net cash provided by financing activities 6,013 14,279
NET DECREASE IN CASH AND CASH EQUIVALENTS (232) (3,419)
CASH AND CASH EQUIVALENTS, beginning of period 46,562 19,648
CASH AND CASH EQUIVALENTS, end of period 46,330 16,229
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
MOUNTAIN PARKS FINANCIAL CORP. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
For the Three Months Ended
March 31
1996 1995
SUPPLEMENTAL CASH FLOW INFORMATION:
<S> <C> <C>
Interest paid 2,859 1,553
Income taxes paid 1,150 510
ALLOCATION OF PURCHASE PRICE IN CONNECTION
WITH THE STOCK ISSUED TO ACQUIRE SUBSIDIARY:
Cash 1,150 --
Real estate loans, net 11,455 --
Premises and equipment 109 --
Other assets 971 --
Cost in excess of net assets acquired, net 879 --
Liabilities assumed (12,205) --
Minority interest (92) --
Stock used to purchase subsidiary 1,246 --
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
MOUNTAIN PARKS FINANCIAL CORP. AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Equity
For the Three Months Ended March 31, 1996
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
Unrealized
Gain (Loss)
Common Stock on Securities
Capital Retained Available
Shares Amount Surplus Earnings For Sale Total
<S> <C> <C> <C> <C> <C> <C>
BALANCE,
December 31, 1995 3,668 $4 $22,642 $24,624 $675 $47,945
Net income -- -- -- 1,795 -- 1,795
Issuance of common
stock for acquisition 56 -- 1,246 -- -- 1,246
Issuance of common
stock for options
exercised 18 -- 149 -- -- 149
Change in unrealized
gain (loss) on
securities available
for sale (net of tax) -- -- -- -- (627) (627)
BALANCE,
March 31, 1996 3,742 $4 $24,037 $26,419 $48 $50,508
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
MOUNTAIN PARKS FINANCIAL CORP. AND SUBSIDIARIES
Notes To Consolidated Financial Statements
(Unaudited)
NOTE 1 -- Basis of Presentation
The accompanying consolidated financial statements include the accounts of
Mountain Parks Financial Corp. and its wholly-owned subsidiaries
(the "Company").
They have been prepared in accordance with the rules and regulations of the
Securities and Exchange Commission ( "SEC" ) and do not include all information
and footnotes required by generally accepted accounting principles for complete
financial statements. All significant intercompany balances and transactions
have been eliminated. In the opinion of management, the consolidated financial
statements contain the adjustments (all of which are normal and recurring in
nature) necessary to present fairly the financial position and results of
operations for the periods presented. Results of operations for the interim
periods presented are not necessarily indicative of results which may be
expected for any other interim period or for the year as a whole. These
statements should
be read in conjunction with the financial statements and notes thereto included
in the Company's Form 10-KSB for the year ended December 31, 1995.
Certain 1995 amounts have been reclassified to conform to the 1996
presentation.
These reclassifications had no effect on the Company's financial position or
result of operations.
NOTE 2 -- Earnings per Common Share
Earnings per common share are computed by dividing net income by the weighted
average number of shares of common stock outstanding during the period plus the
equivalent number of shares pertaining to common stock options, warrants and
convertible debentures if dilutive using the Treasury Stock method. See Exhibit
11 for the calculation of Earnings Per Share.
NOTE 3 -- Allowance for Loan Losses
The Company adopted Statement of Financial Accounting Standards ("SFAS")
No. 114,
"Accounting by Creditors for Impairment of a Loan", and SFAS No. 118,
"Accounting
by Creditors for Impairment of a Loan - Income Recognition and Disclosures"
effective January 1, 1995. SFAS No. 114 requires that certain impaired loans be
measured based on the present value of expected future cash flows discounted at
the loan's original effective interest rate. As a practical expedient,
impairment may be measured based on the loan's observable market price or the
fair value of the collateral if the loan is collateral dependent. When the
measure of the impaired loan is less than the recorded investment in the loan,
the impairment is recorded through a valuation allowance.
The Company had previously measured the allowance for credit losses using
methods
similar to those prescribed in SFAS No. 114. As a result of adopting these
statements, no additional allowance for loan losses was required as of January
1, 1995.
As of March 31, 1996, the Company's recorded investment in impaired loans was
$8.4 million and the related valuation allowance calculated under SFAS No. 114
was $381,000. This valuation allowance is included in the allowance for loan
losses on the balance sheet. The average recorded investment in impaired loans
for the three months ended March 31, 1996 was $7.1 million.
The following table sets forth information regarding changes in the Company's
allowance for loan losses for the three months ended March 31, 1996.
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1996
(Unaudited)
(In Thousands)
<S> <C>
BALANCE, BEGINNING OF PERIOD $ 3,163
Balance from acquired company 44
Provision charged to operations 68
Loans charged off (43)
Recoveries of loans previously charged off 10
BALANCE, END OF PERIOD $ 3,242
Ending loan portfolio $ 281,739
Allowance for loans as a percentage
of ending portfolio 1.15%
</TABLE>
The Company maintains its allowance for loan losses at a level considered by
Management to be adequate to cover the risk of loss in the loan portfolio at a
particular point in time.
NOTE 4 -- Completed Acquisitions
On July 7, 1995, the Company completed its acquisition of Financial Holdings,
Inc. ("FHI"), an unaffiliated company which owned Boulder Valley Bank & Trust,
Boulder, Colorado ("Boulder"), and The Bank of Louisville, Louisville, Colorado
("Louisville"). The purchase price was $12.5 million cash and was accounted for
using purchase accounting.
On September 15, 1995, the Company through its wholly-owned subsidiary, Mountain
Parks Bank - East ("MPB-East"), completed its acquisition of Midway Investment
Company ("Midway"), an unaffiliated company which owned Peoples Bank &
Trust Co.,
Aurora, Colorado ("Peoples"). The purchase price was $5.4 million cash. The
Midway acquisition was accounted for using purchase accounting.
During January 1996, MPB-East acquired an 80% interest in Equity Lending, Inc.
("ELI"), a residential, non-conforming mortgage lender operating primarily in
the
Minneapolis-St. Paul, Minnesota and Milwaukee, Wisconsin, metropolitan areas.
This acquisition was completed with the Company issuing 56,000 shares of its
stock (with an approximate market value of $1,246,000 at closing) for the 80%
interest in ELI. ELI will be operated as a "loan production office" of MPB-East
and makes asset-based, single family residential mortgage loans to individuals
who do not have access to credit from traditional lending sources but who have
substantial equity in their homes. The risk profile associated with this type
of lending is different than traditional commercial banking. This acquisition
was accounted for as a purchase.
In February, 1996, the Company formed Mountain Parks Financial Services, Inc.
("Financial Services") as a wholly-owned subsidiary of MPB-East. Financial
Services is a specialized consumer finance company to indirectly finance the
purchase of used automobiles and other products by customers who possess an
overall sub-prime credit profile. Financial Services' customers will
likely fall
into two main categories; (i) persons who have a very limited credit background
and need to establish their credit and (ii) persons who have had credit problems
in the past and need to re-establish their credit. The risk profile associated
with this type of lending is different than traditional commercial banking.
Management of Financial Services is experienced in this type of lending and has
adopted polices and procedures to address this higher risk. Management of the
Company believes that the risk-adjusted return on this type of activity
justifies
the increased risk. There are many finance companies that are competing
directly
or indirectly in this market niche; however, the market is fragmented with no
single competitor in a prominent position. During its start-up phase Financial
Services will analyze and test all aspects of its markets, products and
operations before entering a specific market segment.
NOTE 5 -- Pending Acquisitions
The Company routinely solicits and reviews acquisition opportunities and,
at any given time, may have bids outstanding or may be involved in negotiations
with the owners of financial institutions or other parties relative to a
particular financial institution, its branches or its deposit accounts. At
present, the Company is in the process of completing each of the acquisitions
described below.
On December 29, 1995, the Company entered into an agreement to acquire
through the issuance of 182,000 shares of the Company's common stock, Charter
Bancorporation, a bank holding company which in turn owns Charter Bank & Trust,
Englewood, Colorado ("Charter"). Charter operates one banking facility which is
located directly across from the Park Meadows shopping mall which, when
completed
in mid 1996, will be one of the largest regional shopping malls in metropolitan
Denver. In addition to its commercial banking business, Charter is one of the
largest independent originators of single family residential mortgages in the
Denver area having originated in excess of $50 million of such mortgages during
1995. The Company intends to expand mortgage originations in the Banks utilizing
the expertise and staff of Charter.
Charter serves the growing community of southeast metropolitan Denver along
the "I-25 Corridor". Most of the residents of the area commute to either
downtown Denver or to office complexes in the Denver Tech Center area. Because
of the significant residential growth in the Charter trade territory,
construction financing and permanent real estate mortgages are currently the
bank's major line of business. Under the Company's management, Charter expects
to expand its lines of business to serve the numerous small businesses
associated
with the Park Meadows Mall and the surrounding strip shopping centers.
Additionally, the Company plans to establish the bank as the provider of
superior
quality banking products and services to the expanding areas of Englewood and
Highlands Ranch. At closing, Charter will be merged into, and operated as a
branch of MPB-East. As of December 31, 1995, Charter had net loans of $13.0
million, total assets of $25.1 million and equity capital of $2.1 million. The
acquisition will be accounted for as a purchase.
During March, 1996, the Company entered into an agreement to acquire High
Plains Bank Corp., the parent holding company of Kiowa State Bank ("Kiowa") for
$7.1 million cash. Kiowa has offices located in Kiowa, Elizabeth and Parker,
Colorado. As of December 31, 1995, Kiowa had net loans of $25.2 million, total
assets of $41.3 and equity capital of $3.1. The areas served by Kiowa are the
rural communities of Elizabeth and Kiowa and the southeast Denver suburb of
Parker. To differing extents, each of these areas are "bedroom" communities for
persons working in and around Denver. The Company believes it will be able to
attract small business customers and consumers, and to generate construction and
long term residential mortgages in each of these communities. Additionally, the
Company plans to establish the bank as the provider of superior quality banking
products and services to the communities it serves. After the Kiowa acquisition
is completed, the three offices will be operated as branches of MPB-East. The
acquisition is expected to be completed during the third quarter of 1996 and
will be accounted for as a purchase.
NOTE 6 -- Change in Accounting Principles
The Financial Accounting Standards Board has issued SFAS No. 121 "Accounting for
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of."
This standard requires impairment losses on long-lived assets to be recognized
when an asset's book value exceeds its expected future cash flows (discounted).
The Company adopted this standard on January 1, 1996. The adoption of SFAS No.
121 does not have a material impact on the financial position or results of
operations.
Financial Accounting Standards Board - Statement No. 123, "Accounting for Stock-
Based Compensation" ("Statement No. 123"), issued in October 1995 and effective
for fiscal years beginning after December 15, 1995, encourages, but does not
require, a fair value based method of accounting for employee stock options or
similar equity instruments. It also allows an entity to elect to continue to
measure compensation cost under Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" ("APB No. 25"), but requires pro
forma
disclosures of net income and earnings per share as if the fair value based
method of accounting had been applied. The Company expects to adopt Statement
No. 123 in 1996. While the Company is still evaluating Statement No. 123, it
currently expects to elect to continue to measure compensation cost under
APB No. 25 and comply with the pro forma disclosure requirements. If the
Company makes
this election, this statement will have no impact on the Company's results of
operations or financial position because the Company's plans are fixed stock
option plans which have no intrinsic value at the grant date under APB No. 25.
Item 2. Management's Discussion and Analysis or Plan of Operations
GENERAL
COMPARISON OF FINANCIAL CONDITION AT
MARCH 31, 1996 AND DECEMBER 31, 1995
ASSETS. The total assets of the Company increased $19.7 million, or 4.4%,
from $443.2 million at December 31, 1995 to $462.9 million at March 31, 1996.
Net loans outstanding increased $9.9 million. This increase was attributable to
the real estate loans associated with the acquisition of ELI. Investment
securities increased $6.4 million.
ALLOWANCE FOR LOAN LOSSES.
The Company maintains its allowance for loan losses at a level considered by
Management to be adequate to cover the risk of loss in the loan portfolio at a
particular point in time. Management's judgment as to the adequacy of the
allowance for loan losses takes into consideration a number of factors,
including
loss experience in relation to outstanding loans and the existing level of the
allowance for loan losses, a continuing review of problem loans and overall
portfolio quality, regular examinations of loan portfolios conducted by the
Company's staff and by State and Federal supervisory authorities and economic
conditions. Management believes that the Company's allowance for loan losses is
adequate to cover anticipated losses. There can be no assurance, however, that
the allowance for loan losses will not be increased in the future; this could
adversely affect the Company's earnings. Further, there can be no
assurance that
the Company's actual loan losses will not exceed its allowance for loan losses.
NONPERFORMING ASSETS. The following table sets forth information concerning the
Company's nonperforming assets as of the dates indicated (In Thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
(Unaudited)
<S> <C> <C>
NONPERFORMING LOANS:
Nonaccrual loans $ 412 $ 512
Restructured loans -- 2
TOTAL NONPERFORMING LOANS $ 412 $ 514
OTHER REAL ESTATE OWNED 216 --
TOTAL NONPERFORMING ASSETS $ 628 $ 514
ALLOWANCE FOR LOAN LOSSES $3,242 $3,163
RATIO OF TOTAL NONPERFORMING ASSETS
TO TOTAL ASSETS 0.14% 0.12%
RATIO OF TOTAL NONPERFORMING LOANS
TO TOTAL LOANS 0.15% 0.19%
RATIO OF ALLOWANCE FOR LOAN LOSSES
TO TOTAL NONPERFORMING LOANS 786.89% 615.37%
</TABLE>
Nonperforming loans consist of loans on a nonaccrual basis (which includes all
loans contractually past due 90 days or more) and loans on which the original
terms have been restructured. This definition is applied to the commercial bank
subsidiaries. However, due to the nature of lending in the non-bank
subsidiaries, this definition is not applied to identify nonperforming
loans made by such subsidiaries.
Restructured loans are those for which concessions, including the reduction of
interest rates below a rate otherwise available to that borrower or the deferral
of interest or principal, have been granted due to the borrower's weakened
financial condition.
The other real estate owned in the amount of $216,000 at March 31, 1996 was an
asset acquired with the ELI acquisition.
LIABILITIES. Deposits increased by $4.6 million, or 1.2%, from $369.8
million at December 31, 1995 to $374.4 million at March 31, 1996. This net
change is the result of an increase of $12.4 million in interest-bearing
deposits offset by a $7.9 million decrease in noninterest-bearing accounts.
Short-term borrowed funds increased by $12.7 million or 176.7% from December 31,
1995 to March 31, 1996. This increase is associated with seasonal deposit
trends and the use of short-term borrowings to fund the ELI loan portfolio.
STOCKHOLDERS' EQUITY. The Company's equity capital increased $2.6 million
during the first three months of 1996, consisting of $1.8 million from net
earnings of the Company, an additional $1.4 million of capital surplus from the
issuance of 56,000 shares of common stock for the 80% interest in ELI and the
exercise of stock options on 18,000 shares. These increases were partially
offset by a decline in the net unrealized gain on securities available for sale
in the amount of $627,000. At March 31, 1996 the Company had 3,742,351 shares
of common stock outstanding compared with 3,668,351 at December 31, 1995.
RESULTS OF OPERATIONS FOR THE
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
GENERAL. Net income increased $234,000, or 15.0%, from $1,561,000 for the
first three months of 1995 to $1,795,000 for the same period of 1996.
Primary and
fully diluted earnings per share declined from $0.60 and $0.54 to $.47 and $.47
for the respective periods of 1995 and 1996. The first quarter 1995 return on
average equity was 26.8% and the return on average assets was 2.24%
compared with
14.5% and 1.58%, respectively, for the same period of 1996.
NET INTEREST INCOME. Net interest income increased $2,147,000, or 47.1%,
from
$4,557,000 during the firtst quarter of 1995 to $6,704,000 during the same
quarter of 1996. This increase was due to an increase in overall interest
income
of $3,363,000, with $2,747,000 (81.7%) relating to increased interest and fees
on loans. Net interest margin on a fully tax equivalent basis declined from
7.43% in the first quarter of 1995 to 6.87% in the comparable quarter of 1996.
The yield on earning assets decreased from 10.17% in the first quarter of 1995
to 9.83% in the same period of 1996. This decrease was due primarily to a
decline in the yield on loans and leases from 11.40% to 11.06%.
Total interest expense increased $1,216,000 from $1,689,000 during the quarter
ended March 31, 1995 to $2,905,000 during the same quarter of the current year.
The overall cost of interest-bearing liabilities increased from 3.84% in the
first quarter of 1995 to 4.04% in the current quarter of 1996. This increase
resulted from a rise in the cost of interest-bearing deposits (3.30% in 1995
compared with 3.63% in 1996) plus an increase in the cost of other borrowed
funds
(6.29% in 1995 versus 7.59% in 1996). Management believes that the reliance on
borrowed funds will remain high during the remainder of 1996 as this is the
source of funding loans for ELI and potentially for Financial Services.
PROVISION FOR LOAN LOSSES. During the first quarter of 1996 a provision for
loan losses of $68,000 was recorded by the subsidiary banks and ELI. This
compares with a provision for loan losses of $66,000 which was recorded during
the same period of 1995. The 1996 provision for loan loss is intended to
reflect
general growth in the overall loan portfolio and is not indicative of decreased
loan quality in any subsidiary bank or in any type of market served by the
Company.
NONINTEREST INCOME. Noninterest income increased $468,000, or 48.2%, from
$970,000 in the first quarter of 1995 to $1,438,000 in the same quarter of
1996.
This increase was primarily the result of an increase in service charges on
deposit accounts and other income. The increases are related to the acquisition
growth that occurred in the third quarter of 1995 when six additional locations
were added to the Company. In addition, other income has grown primarily in the
area of trust service fees, credit card fees and other fee producing activities
that exist in the acquired locations.
NONINTEREST EXPENSE. Noninterest expense increased $2,209,000, or 74.1%,
from
$2,983,000 for the three months ended March 31, 1995 to $5,192,000 for the three
months ended March 31, 1996. This increase was due to personnel costs rising
$1,217,000 or 75.7%. Depreciation and amortization climbed from $238,000 to
$553,000 or 132.4%. In addition, other expenses increased $463,000 or 53.9% for
the three months ended March 31, 1996 as compared to the period ending March 31,
1995. These increases are principally related to the acquisitions described in
Note 4 of Notes to Consolidated Financial Statements. The average balance of
assets increased $176 million or 62.4% in comparing the first quarter of 1996 to
first quarter 1995. In addition, the Company incurred additional expenses
in the startup of Financial Services and the closing of its Minneapolis office
in the quarter ending March 31, 1996.
INCOME TAX EXPENSE. Federal and state income taxes increased by $170,000, or
18.5%, from $917,000 for the three months ended March 31, 1995 to $1,087,000 for
the three months ended March 31, 1996. This increase was primarily the result
of an increase in pre-tax income, a slight change in the mix of earning assets
and an increase in state income taxes paid.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
At the present time, neither the Company nor any of the subsidiaries is engaged
in any legal proceedings of a material nature. From time to time, the
subsidiaries are parties to legal proceedings wherein they enforce their rights
with respect to loans.
Item 2. Changes in Securities.
None
Item 3. Defaults Upon Senior Securities.
None
Item 4. Submission of Matters to a Vote of Security Holders.
None
Item 5. Other Information.
None
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
The Exhibit Index on page 17 of this Form 10-QSB lists the
exhibits that are filed
as a part of this report.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the quarter ended March 31,
1996.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
MOUNTAIN PARKS FINANCIAL CORP.
(Registrant)
Date: May 10, 1996 By _________________________________
George A. Rosenbaum, Jr.
Chief Financial Officer
(Authorized officer and principal
financial officer of the
Registrant)
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
11 Statement regarding Computation of Per Share Earnings.
Exhibit 11
MOUNTAIN PARKS FINANCIAL CORP. AND SUBSIDIARIES
Statement Regarding Computation Of Per Share Earnings
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Primary earnings per share -
Weighted average number of
shares outstanding 3,729,406 2,556,220
Computed shares outstanding
under the Company's Stock Option
Plans utilizing the treasury
stock method 53,570 53,080
Computed shares outstanding for
the Company's Warrant utilizing
the treasury stock method -- 12,202
Shares outstanding used to compute
primary earnings per share 3,782,976 2,621,502
Net Income $1,795,000 $1,561,000
Primary earnings per share $ 0.47 $ 0.60
Fully diluted earnings per share -
Weighted average number of
shares outstanding 3,729,406 2,556,220
Computed shares outstanding under
the Company's Stock Option Plans
utilizing the treasury stock method 55,957 53,080
Computed shares outstanding for
the Company's Warrant utilizing
the treasury stock method -- 12,202
Computed shares outstanding for
the Company's 7.375% Convertible
Debentures utilizing the if
converted method -- 379,642
Shares outstanding used to compute
fully diluted earnings per share 3,785,363 3,001,144
Income before income taxes $2,882,000 $2,478,000
Interest expense on 7.375%
Convertible Debentures -- 81,000
Adjusted income before income taxes 2,882,000 2,559,000
Adjusted income tax provision 1,087,000 947,000
Adjusted net income $1,795,000 $1,612,000
Fully diluted earnings per share $ 0.47 $ 0.54
</TABLE>
