U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[ X] QUARTERLY REPORT UNDER SECTION 13 OF 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT
For the transition period from to
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Commission File No. 0-25546
Mississippi View Holding Company
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(Exact name of registrant as specified in its charter)
Minnesota 41-1795363
- --------------------------------------------- ----------------------
(State or other jurisdiction of incorporation (I.R.S. Employer
or jurisdiction) Identification No.)
35 East Broadway, Little Falls, Minnesota 56345-3093
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(address of principal executive offices)
(320) 632-5461
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(Registrant's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by Sections
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
---- ----
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date.
Class: Common Stock, par value $.10 per share
Outstanding shares at April 25, 1997: 818,743
<PAGE>
MISSISSIPPI VIEW HOLDING COMPANY
INDEX TO FORM 10-QSB
Page
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PART I. FINANCIAL INFORMATION
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Item 1. Financial Statements
Consolidated Statements of Financial Condition at March 31,
1997 (unaudited) and September 30, 1996 (audited) 2
Consolidated Statements of Income for the three and six
months ended March 31, 1997 and 1996 (unaudited) 3
Consolidated Statements of Cash Flows for the six months
ended March 31, 1997 and 1996 (unaudited) 4
Notes to Condensed Consolidated Financial
Statements (unaudited) 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
Non-Performing and Problem Assets 12
Capital Compliance 13
Liquidity Resources 14
Key Operating Ratios 15
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 16
Item 2. Changes in Securities 16
Item 3. Default 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
EXHIBITS
1
<PAGE>
MISSISSIPPI VIEW HOLDING COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
March 31, September 30,
1997 1996
ASSETS (Unaudited) (Audited)
------ ------------- -------------
Cash and cash equivalents:
<S> <C> <C>
Cash and due from banks ................................. $ 301,994 $ 317,777
Interest bearing deposits with banks .................... 2,334,185 2,265,877
Securities available for sale, at fair value ............... 13,215,992 12,235,145
Securities held to maturity, at amortized cost ............. 7,441,490 9,294,092
FHLB Stock, at cost ........................................ 650,700 650,700
Loans held for sale ........................................ 49,441 178,663
Loans receivable, net of allowance for loan losses of
$864,727 in 1997 and $877,094 in 1996 ................... 43,977,327 43,070,281
Accrued interest receivable ................................ 438,199 450,327
Premises and equipment, net of depreciation ................ 766,026 788,846
Foreclosed real estate (net of allowance for losses
of $15,700 for 1997 and $15,700 for 1996) ............... 33,871 --
Deferred tax asset (net of valuation allowance) ............ -- 163,903
Other assets ............................................... 545,588 595,208
------------ ------------
Total Assets ......................................... $ 69,754,813 $ 70,010,819
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Liabilities:
Demand deposits ......................................... $ 4,447,448 $ 4,471,137
Savings deposits ........................................ 14,315,221 14,087,832
Time deposits ........................................... 37,179,632 37,972,225
------------ ------------
Total deposits ....................................... 55,942,301 56,531,194
Advances from borrowers for taxes and insurance ......... 129,555 138,530
Accrual for income tax .................................. 54,823 --
Deferred tax liability .................................. 407,346 --
Other liabilities ....................................... 485,442 900,850
------------ ------------
Total Liabilities .................................... 57,019,467 57,570,574
Commitments and contingencies
Stockholders' equity:
Serial Preferred Stock, no par value; 5,000,000
shares authorized, no shares issued ................... -- --
Common Stock, $.10 par value, 10,000,000 shares
authorized; 1,007,992 shares issued; 724,696 and
776,713 shares outstanding ............................ 100,799 100,799
Paid in Capital ......................................... 7,524,481 7,510,397
Treasury Stock (189,249 and 130,278 shares), at cost .... (2,256,830) (1,536,689)
Retained Earnings, substantially restricted ............. 7,404,321 7,116,646
Unearned ESOP shares (62,495 and 66,527 shares), at cost (532,535) (566,736)
Unearned Management Stock Bonus Plan shares (31,552
and 34,474 shares), at cost ........................... (353,172) (387,412)
Net unrealized gain on available for sale securities .... 848,282 203,240
------------ ------------
Total Stockholders' Equity ........................... 12,735,346 12,440,245
------------ ------------
Total Liabilities and Stockholders' Equity ........... $ 69,754,813 $ 70,010,819
============ ============
</TABLE>
See Notes to consolidated financial statements.
2
<PAGE>
MISSISSIPPI VIEW HOLDING COMPANY
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended March 31, Ended March 31,
----------------------- -----------------------
1997 1996 1997 1996
---------- ---------- ---------- -----------
Interest Income:
<S> <C> <C> <C> <C>
Loans receivable .................... $ 948,205 $ 912,284 $1,890,694 $ 1,851,759
Securities available for sale ....... 192,032 147,619 366,029 234,577
Securities held to maturity ......... 144,585 239,756 321,036 520,121
---------- ---------- ---------- -----------
Total interest income ............ 1,284,822 1,299,659 2,577,759 2,606,457
Interest Expense:
Demand deposits ..................... 9,024 9,276 18,997 18,801
Savings deposits .................... 97,496 78,604 191,719 155,637
Time deposits ....................... 514,532 548,882 1,044,631 1,084,404
---------- ---------- ---------- -----------
Total interest expense .......... 621,052 636,762 1,255,347 1,258,842
---------- ---------- ---------- -----------
Net interest income ................. 663,770 662,897 1,322,412 1,347,615
Provision for loan losses ........... -- -- -- --
---------- ---------- ---------- -----------
Net interest income after
provision for loan loss ....... 663,770 662,897 1,322,412 1,347,615
Noninterest Income:
Other fees and service charges ...... 14,397 25,979 28,386 20,054
Gain on sale of loans ............... 576 3,976 2,822 63,873
Net gain on sale of real estate owned -- -- -- 1,186
Contingency recovery ................ -- -- -- 81,023
Other ............................... 25,542 23,636 46,824 46,074
---------- ---------- ---------- -----------
Total noninterest income ........ 40,515 53,591 78,032 212,210
Noninterest Expense:
Compensation and employee benefits .. 236,772 206,771 462,346 437,675
Occupancy ........................... 26,938 26,451 48,871 46,167
Deposit insurance premium ........... 8,038 37,419 46,223 74,875
Data processing ..................... 22,687 18,136 44,089 36,924
Advertising ......................... 5,540 6,668 13,626 14,638
Real estate owned expense, net ...... 104 3,679 450 6,489
Other ............................... 98,786 118,658 222,080 212,924
---------- ---------- ---------- -----------
Total noninterest expense ....... 398,865 417,782 837,685 829,692
---------- ---------- ---------- -----------
Income before income taxes ............ 305,420 298,706 562,759 730,133
Income tax expense .................... 131,558 125,136 215,632 298,955
---------- ---------- ---------- -----------
Net income ............................ $ 173,862 $ 173,570 $ 347,127 $ 431,178
========== ========== ========== ===========
Dividends Declared Per Share .......... $ 0.08 $ 0.08 $ 0.08 $ 0.08
========== ========== ========== ===========
Primary Earnings Per Share ............ $ 0.22 $ 0.19 $ 0.43 $ 0.48
========== ========== ========== ===========
</TABLE>
See Notes to consolidated financial statements.
3
<PAGE>
MISSISSIPPI VIEW HOLDING COMPANY AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Six Months Ended
March 31,
----------------------------------
1997 1996
------------ --------------
OPERATING ACTIVITIES
<S> <C> <C>
Interest received on loans and investments ............ $ 2,567,175 $ 2,554,654
Interest paid ......................................... (1,255,620) (1,259,222)
Other fees, commissions, and interest received ........ 122,729 117,409
Cash paid to suppliers, employees and others .......... (1,113,271) (617,802)
Contributions to charities ............................ (4,114) (2,214)
Income taxes paid ..................................... -- (271,048)
Loans originated for sale ............................. (229,841) (1,155,533)
Proceeds from sale of loans ........................... 299,933 3,070,213
----------- ------------
Net cash provided by operating activities ......... 386,991 2,436,457
----------- ------------
INVESTING ACTIVITIES
Loans originations and principal payment on loans, net (896,663) (316,157)
Proceeds from maturities of:
Debt securities held to maturity .................... 3,731,000 4,952,346
Securities available for sale ....................... 2,971,381 3,446
Mortgage-backed securities held to maturity ......... 300,374 412,601
Mortgage-backed securities available for sale ....... 208,774 12,455
Proceeds from sale of real estate ..................... -- 1,186
Purchase of:
Debt securities held to maturity .................... (2,176,000) (1,783,000)
Securities available for sale ....................... (2,512,031) (3,058,045)
Mortgage-backed securities held to maturity ......... -- (327,532)
Mortgage-backed securities available for sale ....... (572,125) (539,181)
Equipment and property improvements ................. (18,146) (4,570)
----------- ------------
Net cash provided by (used in) investing activities 1,036,564 (646,451)
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FINANCING ACTIVITIES
Net increase (decrease) in demand accounts, passbook
accounts and certificates of deposit accounts ...... (588,619) 1,138,665
Net increase (decrease) in mortgage escrow funds .... (8,975) (35,537)
Acquisition of treasury stock ....................... (720,141) (606,838)
Net increase (decrease) in unearned MSBP shares ..... 996 (456,285)
Cash dividends paid ................................. (54,290) (73,946)
----------- ------------
Net cash (used in) financing activities ........... (1,371,029) (33,941)
----------- ------------
INCREASE IN CASH AND CASH EQUIVALENTS .................. 52,526 1,756,065
CASH AND CASH EQUIVALENTS - Beginning of year ........ 2,583,654 2,837,070
----------- ------------
CASH AND CASH EQUIVALENTS - End of period ........ $ 2,636,180 $ 4,593,135
=========== ============
</TABLE>
See Notes to consolidated financial statements.
4
<PAGE>
MISSISSIPPI VIEW HOLDING COMPANY
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
<TABLE>
<CAPTION>
For the Six Months Ended
March 31,
-------------------------
1997 1996
--------- -------------
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
<S> <C> <C>
Net Income .......................................... $ 347,127 $ 431,178
Adjustments:
Depreciation ...................................... 40,965 41,885
Federal Home Loan Bank stock dividends ............ -- (12,800)
Non-cash dividends ................................ (2,658) (2,538)
ESOP fair value adjustment ........................ 11,031 8,314
Amortization of ESOP compensation ................. 29,040 37,375
Amortization of MSBP compensation ................. 33,243 33,244
Tax benefit of MSBP vesting activities ............ 3,052 --
Net amortization and accretion of premiums and
discounts on securities.......................... (1,889) 3,715
Net (gains) on sale of real estate owned .......... -- (1,186)
Net loan fees deferred and amortized .............. 17,699 (11,910)
Net mortgage loan servicing fees deferred and
amortized........................................ 726 (12,337)
Contingency recovery .............................. -- (81,023)
(Increase) decrease in:
Loans held for sale ............................ 67,270 1,908,163
Accrued interest receivable .................... 12,129 (7,368)
Tax refund receivable .......................... 23,892 --
Deferred tax assets ............................ 163,903 13,838
Other assets.................................... 25,002 64,975
Increase (decrease) in:
Accrued interest payable ....................... (273) (380)
Accrued income taxes ........................... 32,140 19,612
Other liabilities .............................. (415,408) 3,700
--------- -----------
Net cash provided by operating activities ........ $ 386,991 $ 2,436,457
========= ===========
</TABLE>
SUPPLEMENTAL SCHEDULE OF NON CASH INVESTING AND FINANCING ACTIVITIES
Refinancing of sales of real estate owned ....... $ -- $ 13,800
Non cash dividends .............................. $ 2,658 $ 2,538
Federal Home Loan Bank stock dividend ........... $ -- $ 12,800
Transfer of debt securities to available for sale
from securities held to maturity............... $ -- $ 2,449,446
Transfer of loans to held for sale from loans for
portfolio...................................... $ -- $ 2,135,339
Contingency Recovery ............................ $ -- $ 81,023
See Notes to consolidated financial statements.
5
<PAGE>
MISSISSIPPI VIEW HOLDING COMPANY AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997 (Unaudited)
Note 1: PRINCIPLES OF CONSOLIDATION
The unaudited consolidated financial statements as of and for the three
and six month periods ended March 31, 1997, include the accounts of Mississippi
View Holding Company (the "Company") and its wholly owned subsidiary Community
Federal Savings & Loan Association of Little Falls (the "Association"). All
significant intercompany accounts and transactions have been eliminated in
consolidation.
Note 2: BASIS OF PRESENTATION
General: The accompanying unaudited interim consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial information and instructions per Form 10-QSB.
Accordingly, they do not include all information and disclosures required by
generally accepted accounting principles for complete financial statements. The
accompanying consolidated financial statements do not purport to contain all the
necessary financial disclosures required by generally accepted accounting
principles that might otherwise be necessary in the circumstances and should be
read with the fiscal 1996 consolidated financial statements and notes of
Mississippi View Holding Company and Subsidiary included in their annual audit
report for the year ended September 30, 1996.
In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for fair presentations have been
included. The results of operations for the three and six month periods ended
March 31, 1997, are not necessarily indicative of the results that may be
expected for the entire fiscal year or any other period.
Reclassification: Certain items previously reported have been
reclassified to conform with the current period's reporting format.
Note 3. RECENT ACCOUNTING PRONOUNCEMENTS.
Accounting for Transfers and Servicing of Financial Assets and
Extinquishments of Liabilities. The FASB issued SFAS No. 125, Accounting for
Transfers and Servicing of Financial Assets and Extinquishments of Liabilities
(SFAS No. 125) and SFAS No. 127, Deferral of the Effective Date of Certain
Provisions of FASB Statement No. 125 (SFAS No. 127) in June and December 1996,
respectively. SFAS No. 125 provides accounting and reporting standards for
transfers and servicing of financial assets and extinquishments of liabilities.
It requires entities to recognize servicing assets and liabilities for all
contracts to service financial assets, unless the assets are securitized and all
servicing is retained. The servicing assets will be measured initially at fair
value, and will be amortized over the estimated useful lives of the servicing
assets. In addition, the impairment of servicing assets will be recognized
through a valuation allowance. SFAS No. 125 also addresses the accounting and
reporting
6
<PAGE>
standards for securities lending, dollar-rolls, repurchase agreements and
similar transactions. The Company will prospectively adopt SFAS No. 125 on
January 1, 1997. However, in accordance with SFAS No. 127, the Company will
defer adoption of the standard as it relates to securities lending,
dollar-rolls, repurchase agreements and similar transactions until January 1,
1998. The Company does not expect the adoption of SFAS No. 125 to have a
material impact on its consolidated financial statements.
Earnings per Share. On March 3, 1997, the FASB issued SFAS No. 128,
Earnings per Share (SFAS No. 128) which is effective for financial statements
issued for periods ending after December 15, 1997. SFAS No. 128 replaces APB
Opinion 15, Earnings per Share, and simplifies the computation of earnings per
share (EPS) by replacing the presentation of primary EPS with a presentation of
basic EPS. In addition, the Statement requires dual presentation of basic and
diluted EPS by entities with complex capital structures. Basic EPS includes no
dilution and is computed by dividing income available to common stockholders by
the weighted-average number of common shares outstanding for the period. Diluted
EPS reflects the potential dilution of securities that could share in the
earnings of an entity, similar to fully diluted EPS. The computation of EPS will
be compatible with international standards, as the International Accounting
Standards Committee recently issued a comparable standard.
Management's Discussion and Analysis of Financial Condition
for September 30, 1996 and March 31, 1997
General. Total assets of Mississippi View Holding Company, (the "Company")
decreased by $256,006 from September 30, 1996, to March 31, 1997. The reduced
assets were the net result of increased loans receivable of $777,824 and
increased cash equivalents of $52,525 offset by reduced securities of $871,755,
reduced tax deferred assets of $163,903 and reduced other assets of $49,620.
Cash and Cash Equivalents. Cash and cash equivalents consisting of
interest-bearing and noninterest bearing deposits, increased $52,525. Liquidity
increased primarily due to maturing security investments exceeding cash
disbursements for loan originations and deposit withdrawals.
Securities available for sale. Securities available for sale increased
$980,847. Security maturities and principal payments exceeded purchases reducing
the portfolio by $95,999. This decrease was offset by an increase in the mark to
market value of these securities of $1,075,070 of which $1,006,684 was due to an
error in the recorded number of shares of stock of the Federal Home Loan
Mortgage Corporation (FHLMC) owned by the Association. The additional shares
issued in a previous 3-for-1 stock split were not recorded which resulted in the
amount of stock owned being understated by 8,792 shares. The market value
adjustment had no effect on net income or earnings per share but did have an
effect on certain balance sheet items and their corresponding ratios. Any future
increase or decrease in the market value of such securities will have a
corresponding positive or negative effect on stockholders' equity.
7
<PAGE>
Securities held to maturity. Debt and mortgage-backed securities held to
maturity decreased $1,852,602, or 19.93%, from $9,294,092 on September 30, 1996,
to $7,441,490 on March 31, 1997. Maturing debt securities of $1,749,672 and
principal amortization of mortgage-backed securities of $297,930 were offset by
purchases of certificates of deposit of $195,000. This liquidity was used to
supplement increased lending activities and deposit withdrawals.
Loans Held for Sale. Loans held for sale decreased $129,222 from $178,663
(3 loans) on September 30, 1996, to $49,441 (1 loan) on March 31, 1997. This
decrease was the result of seasonal activity. Management's strategy is to sell
in the secondary market lower-yielding fixed rate mortgage loans rather than
maintaining them for portfolio. These loans are presold in the secondary market
prior to origination. The balance is the amount sold, yet unfunded as of the
period end.
Loans Receivable, Net. Loans receivable increased $907,046, or 2.11%, from
$43,070,281 on September 30, 1996, to $43,977,327 on March 31, 1997. This
increase was due to new loan originations exceeding principal amortizations and
loan payoffs.
Foreclosed Real Estate. Foreclosed real estate increased $33,871, or 100%,
from $0.00 at September 30, 1996, to $33,871 at March 31, 1997, due to the
repossession of a multi-family residential unit.
Deferred Tax Asset. Deferred tax asset, net of valuation allowance,
decreased $163,903 during this six month period primarily as a result of the
reversing temporary difference in the SAIF assessment tax deduction.
Other Assets. Other assets decreased $49,620, or 8.34%, from $595,208 as
of September 30, 1996, to $545,588 as of March 31, 1997. This decrease was the
result of a reduced accrued income tax refund of $23,892 and the reduced prepaid
federal deposit insurance premium of $23,083.
Deposits. Deposits, after interest credited, decreased by $588,893, or
1.04%, to $55,942,301 at March 31, 1997, from $56,531,194 at September 30, 1996.
The decrease was due to management's deposit pricing strategy.
Advances from Borrowers for Taxes and Insurance. Advances from borrowers
for taxes and insurance decreased $8,975 from $138,530 on September 30, 1996, to
$129,555 on March 31, 1997, due to the cyclical nature of these payments.
Deferred Tax Liability. Deferred tax liability increased from $0.00 at
September 30, 1996, to $407,346 on March 31, 1997 due primarily to the increase
in net unrealized gains on available for sale securities.
Other Liabilities. Other liabilities decreased by $415,408, or 46.11%,
from $900,850 on September 30, 1996, to $485,442 on March 31, 1997. Decreased
liabilities resulted from reduced custodial account balances for servicing on
sold loans of $14,662, payment of the Savings Association Insurance Fund (SAIF)
assessment during the fourth quarter 1996 of $362,557, reduced accrued
compensation and bonus expenses of $48,420, and reduce accrued audit expense of
$18,000. These liability decreases were offset by increased deferred executive
compensation of $10,352 and a five year pledge/commitment of $26,250, of which
$20,250 is outstanding at March 31, 1997, to Unity Family Healthcare/St.
Gabriel's Hospital, a local healthcare/hospital facility, for renovation and
expansion.
8
<PAGE>
Stockholders' Equity. Stockholders' equity increased by $295,101, or 2.37%, from
$12,440,245 on September 30, 1996, to $12,735,346 on March 31, 1997. This
increase is the net effect of the following changes in equity: a paid in capital
increase of $14,084 resulting from the fair market value adjustment to earned
and committed to be released Employee Stock Ownership Plan ("ESOP") shares, net
of taxes, and the permanent tax/book benefit resulting from the vesting of
Management Stock Bonus Plan (MSBP) shares; an increase of $34,201 as a result of
accounting for earned ESOP shares; an increase of $34,240 as a result of
accounting for earned MSBP shares; an increase of $645,042 resulting from an
increase in net unrealized gains on available for sale securities (see also
"Securities Available for Sale"); an increase of $347,127 from net operational
income for the six month period just ended; a decrease to retained earnings due
to a dividend declared and paid of $59,452, and a decrease of $720,141 resulting
from open market purchases of common stock of the Company.
Comparison of Operating Results for the Three Months Ended
March 31, 1997 and 1996
Net Income. Net income remained substantially unchanged, an increase of
$292, for the three months ended March 31, 1997, when compared to the three
months ended March 31, 1996. Due to interest income and interest expense
decreasing equally, net interest income increased by only $873. Noninterest
expense decreased more than noninterest income, but was offset by increased
income tax expense. Therefore, income for the comparative three month periods
ended March 31, 1997 and 1996 were $173,862 and $173,570, respectively.
Total Interest Income. Interest income decreased $14,837, or 1.14%, from
$1,299,659 for the three month period ended March 31, 1996, to $1,284,822 for
the three month period ended March 31, 1997. Interest income from loans
receivable increased $35,921 due to the increase in the average loan balances
along with lower rates paid on such balances over the period. Available for sale
security investment income increased $44,413 due to the increased average rate
of return of these investments. Held to maturity investment security income
decreased $95,171 due to a decrease in the average balance of such securities as
maturities were not reinvested in such investments.
Total Interest Expense. Interest expense decreased $15,710, or 2.47%,
for the comparative three month periods ending March 31, 1996 and 1997. This
decrease was due to lower average deposit balances.
Net Interest Income. Net interest income increased $873, or 0.13%, from
$662,897 for the three months ended March 31, 1996, to $663,770 for the three
month period ended March 31, 1997. The minimal change was the result of matching
asset and liability maturities and rate repricings.
Provision for Loan Losses. The Association currently maintains an
allowance for loan losses based upon management's periodic evaluation of known
and inherent risks in the loan portfolio, the Association's past loss
experience, adverse situations that may affect the borrowers' ability to repay
loans, estimated value of the underlying collateral, and current and expected
market conditions. Provisions for loan losses remained unchanged at $0.00 for
the periods ended March 31, 1996 and 1997. Management's assessment of the loan
portfolio and market conditions determined that no provisions needed to be
recorded at this time. While management maintains its allowance for losses at a
level which it considers to be adequate to provide for potential losses, there
can be no assurances that further
9
<PAGE>
additions will not be made to the loss allowances and that such losses will not
exceed the estimated amounts.
Due to the size of the institution and the minimal amount of nonperforming
loans the percentage of nonperforming loans to allowance for loan losses will
seem high. Movement of even one loan into or out of nonperforming status per
reporting period may result in a large percentage change due to the size of the
portfolio.
Noninterest Income. Noninterest income decreased by $13,076, or 24.40%,
during the three month period ended March 31, 1997, as compared to the same
period ended March 31, 1996. This decrease was primarily due to the reduced
service fee income of $11,582 earned from loans originated and then sold in the
secondary market.
Noninterest Expense. Noninterest expense decreased $18,917, or 4.53%, from
$417,782 to $398,865 during the comparative three month periods ending March 31,
1996 and 1997, respectively. The decreased noninterest expense was the result of
the reduced federal deposit insurance primarily of $29,381 and other expenses of
$19,537 offset by increased compensation and benefits of $30,001.
Income Tax. Income tax expense increased $6,422, or 5.13%, from $173,570
for the three month period ended March 31, 1996, to $131,862 for the three month
period ended March 31, 1997, primarily due to increased earnings.
Comparison of Operating Results for the Six Months Ended
March 31, 1997 and 1996
Net Income. Net income decreased $84,051, or 19.49%, from $431,178 for the
six months ended March 31, 1996, to $347,127 for the six months ended March 31,
1997. Net interest income decreased due to reduced interest income. Lower
noninterest income with increased noninterest expense offset by lower income tax
expense were factors in the reduced net income.
Total Interest Income. Interest income decreased $28,698, or 1.10%, from
$2,606,457 for the six month period ended March 31, 1996, to $2,577,759 for the
six month period ended March 31, 1997. Interest income from loans receivable
increased $38,935 due to the increase in the average loan balances along with
lower rates paid on such balances over the period. Available for sale security
investment income increased $131,452 due to the increased average rate of return
of these investments. Held to maturity investment security income decreased
$199,085 due to a decrease in the average balance of such securities as
maturities were not reinvested in such investments.
Total Interest Expense. Interest expense decreased $3,495, or 0.28%, for
the comparative six month periods ending March 31, 1996 and 1997. This decrease
was due to lower rates paid on deposits offset somewhat by an increase in the
average balance of deposits.
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<PAGE>
Net Interest Income. Net interest income decreased $25,203, or 1.87%, from
$1,347,615 for the six months ended March 31, 1996, to $1,322,412 for the six
month period ended March 31, 1997. Interest income reduced faster than interest
expense the first three months during this six month period. However, during the
second three months of this period minimal change in net interest income
resulted, due to the matching of asset and liability maturities and rate
repricings. Furthermore, the Company's interest rate spread improved from 3.05%
to 3.08% as the yield earned on interest earning assets increased faster than
the cost of interest-bearing deposits.
Noninterest Income. Noninterest income decreased by $134,178, or 63.23%,
during the six month period ended March 31, 1997, as compared to the same period
ended March 31, 1996. This decrease was primarily due to a gain on sale of loans
and a contingency recovery recorded during the six months ended March 31, 1996.
Noninterest Expense. Noninterest expense increased $7,993, or 0.96%, from
$829,692 to $837,685 during the comparative six month periods ending March 31,
1996 and 1997, respectively. The increase was the result of increased
compensation and benefits of $24,671 and other expenses of $11,974 offset by
decreases in deposit insurance premiums of $28,652.
Income Tax. Income tax expense decreased $83,323 or 27.87%, from $431,178
for the six month period ended March 31, 1996, to $215,632 for the six month
period ended March 31, 1997, primarily due to decreased earnings.
11
<PAGE>
Non-performing and Problem Assets
The following table sets forth information regarding non-accrual loans,
real estate owned, and other repossessed assets, and loans 90 days or more
delinquent but on which the Association was accruing interest at the date
indicated. As of the date indicated, the Association had no loans categorized as
trouble debt restructuring within the meaning of SFAS 15.
At March 31,
---------------------
1997 1996
--------- ---------
(In Thousands)
Loans accounted for on a non-accrual basis:
Mortgage loans:
Permanent loans secured by 1-4 dwelling units ... $ 100 $ 45
All other mortgages ............................. -- --
Non-mortgage loans:
Commercial business loans ....................... -- --
Consumer loans .................................. 12 --
-------- --------
Total ............................................. 112 45
Accruing loans which are contractually past due 90
days or more:
Mortgage loans:
Construction loans .............................. -- --
Permanent loans secured by 1-4 dwelling units ... 31 32
All other mortgage loans ........................ -- --
Non-mortgage loans:
Consumer loans .................................. -- 9
-------- --------
Total ............................................. 31 41
-------- --------
Total non-accrual and accrual loans ............... 143 86
-------- --------
REO (net) ......................................... 34 13
Other non-performing assets ....................... -- --
-------- --------
Total non-performing assets ....................... $ 177 $ 99
======== ========
Total non-accrual and accrual loans to net loans .. 0.33% 0.21%
Total non-accrual and accrual loans to total assets 0.21% 0.12%
Total non-performing assets to total assets ....... 0.25% 0.14%
Allowance for loan losses to non-performing loans . 604.05% 1019.19%
Interest income that would have been recorded on loans accounted for on a
nonaccrual basis under the original terms of such loans was $3,909 for the six
month period ended March 31, 1997. No interest income on non-accrual loans was
included in income for the six month period ended March 31, 1997.
12
<PAGE>
Capital Compliance
The following table sets forth the Association's capital position at March
31, 1997, as compared to the minimum regulatory capital requirements imposed on
the Association by the Office of Thrift Supervision ("OTS") at that date.
At March 31, 1997
---------------------------
Percentage of
Adjusted
Amount Assets
---------- --------------
GAAP Capital ........... 11,703,614 16.78%
========== =====
Tangible Capital: (1)
Regulatory Requirement 1,033,517 1.50%
Actual Capital ....... 10,848,403 15.74%
---------- -----
Excess ............. 9,814,886 14.24%
========== =====
Core Capital: (1)
Regulatory Requirement 2,067,035 3.00%
Actual Capital ....... 10,848,403 15.74%
---------- -----
Excess ............. 8,781,368 12.74%
========== =====
Risk-Based Capital: (2)
Regulatory Requirement 2,729,393 8.00%
Actual Capital ....... 11,280,281 33.06%
---------- -----
Excess ............. 8,550,888 25.06%
========== =====
(1) Regulatory capital reflects modifications from GAAP capital due to
valuation adjustments for available for sale securities and unallowable
mortgage servicing rights.
(2) Based on risk weighted assets of $34,117,415.
13
<PAGE>
Liquidity Resources
The Association is required to maintain minimum levels of liquid assets as
defined by the OTS regulations. The OTS minimum required liquidity ratio is 5%
and the minimum short term liquidity is 1%. At March 31, 1997, the Association's
total liquidity was 23.85%. Short term liquidity at March 31, 1997, was 16.09%.
Both levels were well in excess of regulation requirements. The Association
adjusts its liquidity levels in order to meet funding needs for deposit
outflows, payment of real estate taxes from escrow accounts on mortgage loans,
loan funding commitments, and repayment of borrowings, when applicable. The
Association adjusts it liquidity level as appropriate to meet its
asset/liability objectives.
The primary sources of funds are deposits, amortization and prepayments of
loans and mortgage-backed securities, maturity of investments, and funds
provided from operations. As an alternative to supplement liquidity needs, the
Association has the ability to borrow from the Federal Home Loan Bank of Des
Moines. Scheduled loan amortization and maturing investment securities are a
relatively predictable source of funds, however, deposit flow and loan
prepayments are greatly influenced by, among other things, market interest
rates, economic conditions and competition. The Association's liquidity,
represented by cash, cash equivalents, securities (held to maturity and
available for sale), is a product of its operating, investing, and financing
activities.
Impact of Inflation and Changing Prices
The unaudited consolidated financial statements of the Company and notes
thereto, presented elsewhere herein, have been prepared in accordance with GAAP,
which requires the measurement of financial position and operating results in
terms of historical dollars without considering the change in the relative
purchasing power of money over time due to inflation. The impact of inflation is
reflected in the increased cost of the Company's operations. Unlike most
industrial companies, nearly all the assets and liabilities of the Company are
financial. As a result, interest rates have a greater impact on the Company's
performance than do the general levels of inflation. Interest rates do not
necessarily move in the same direction or to the same extent as the prices of
goods and services.
14
<PAGE>
Key Operating Ratios
The table below sets forth certain performance ratios of the Company for the
periods indicated.
<TABLE>
<CAPTION>
At or for the Three Months At or for the Six Months
Ended March 31, Ended March 31,
-------------------------- ------------------------
1997 (1) 1996 (1) 1997 (1) 1996 (1)
------------- ------------ ------------ -----------
Performance Ratios:
Return on average assets (net income
<S> <C> <C> <C> <C>
divided by average total assets) ...... 1.02% 1.00% 1.01% 1.24%
Return on average equity (net income
divided by average equity) ........... 5.89% 5.08% 5.77% 6.27%
Average interest earning assets to
average interest bearing liabilities .. 122.53% 124.58% 122.78% 124.97%
Net interest rate spread ................ 3.12% 2.97% 3.08% 3.05%
Net yield on average interest-
earning assets ........................ 3.96% 3.89% 3.93% 3.98%
Net interest income after provision
for loan losses to total other expenses 166.41% 158.67% 157.87% 162.42%
Capital Ratios:
Book value per share (2) ................ $ 15.55 $ 13.78 $ 15.55 $ 13.78
Average equity to average assets ratio
(average equity divided by average
total assets) ......................... 17.28% 19.60% 17.55% 19.82%
Stockholders' equity to assets at period
end ................................... 18.26% 18.86% 18.26% 18.86%
</TABLE>
(1) The ratios for the three and six month periods are annualized where
appropriate.
(2) Based upon shares outstanding at March 31, 1997 and 1996, of 818,743 and
957,593 respectively.
15
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Not Applicable
Item 2. Changes in Securities
Not Applicable
Item 3. Default Upon Senior Securities
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
The annual meeting of stockholders of the Corporation was held January 22,
1997, and the following items were acted upon:
Election of Directors Thomas J. Leiferman and Neil Adamek for terms of
three years ending in 2000. Thomas J. Leiferman received 812,707 votes in
favor and 956 votes were withheld. Neil Adamek received 811,532 in favor
and 2,131 votes were withheld.
The approval of the Mississippi View Holding Company 1997 Stock Option
Plan. The 1997 Stock Option Plan was approved with 752,616 votes for,
34,106 no votes, and 1,600 abstentions.
Ratification of the appointment of Bertram Cooper and Company, LLP as the
Corporation's auditors for the 1997 fiscal year. Bertram Cooper and
Company, LLP was ratified as the Corporation's auditors with 812,382 votes
for, 681 no votes, and 600 abstentions.
Item 5. Other Information
The Company filed an application with the Office of Thrift Supervision
("OTS") for approval to waive the regulatory restrictions on stock
repurchases in the third year following conversion to the stock form of
ownership. The OTS approved the repurchase of up to 10% of the outstanding
shares of common stock (i.e., 81,879 shares of Common Stock). Repurchased
shares will become treasury shares and will be utilized for general
corporate and other purposes, including the issuance of shares in
connection with the exercise of stock options.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - Exhibit 11 - Statement re Computation of Per Share
Earnings.
- Exhibit 27 - Financial Data Schedule (only included in
electronic filing)
(b) Reports on Form 8-K - On January 17, 1997, the Company filed a Form
8-K announcing corrections to 1996 financial information.
<PAGE>
MISSISSIPPI VIEW HOLDING COMPANY
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.
Mississippi View Holding Company
Date: 05/01/97 By: /s/ Thomas J. Leiferman
------------- ---------------------------------------
Thomas J. Leiferman
President and Chief Executive Officer
(Principal Executive Officer)
Date: 05/01/97 By: /s/ Larry D. Hartwig
------------- ---------------------------------------
Larry D. Hartwig
Vice President
(Principal Accounting and Financial Officer)
17
MISSISSIPPI VIEW HOLDING COMPANY
EXHIBIT 11
STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended March 31, Ended March 31,
-------------------- ------------------
1997 1996 1997 1996
-------- ------- ------- -------
<S> <C> <C> <C> <C>
Net Income ............................................................... $ 173,862 $173,570 $347,127 $431,178
Weighted Average Shares Outstanding....................................... 773,226 888,374 783,718 891,477
--------- -------- -------- --------
Common stock equivalents due to dilutive effect of stock options.......... 25,122 3,680 15,319 2,083
Total weighted average common shares and equivalents outstanding ......... 798,348 892,054 799,037 893,560
========= ======== ======== ========
Primary Earnings Per Share ............................................... $ 0.22 $ 0.19 $ 0.43 $ 0.48
========= ======== ======== ========
Weighted Average Shares Outstanding ...................................... 773,226 888,374 783,718 891,477
Additional dilutive shares using end of period
market value versus average market value for
period when utilizing the treasury stock method
regarding stock options ................................................ 38,563 -- 38,563 --
--------- -------- ------- -------
Total weighted average common shares and equivalents
outstanding for fully diluted coputation ............................... 811,789 888,374 822,281 891,477
========= ======== ======== ========
Fully diluted earnings per share ......................................... $ 0.21 $ 0.19 $ 0.42 $ 0.48
========= ======== ======== ========
</TABLE>
Earnings per share of common stock for the three and six month periods ended
March 31, 1996 and 1997, have been determined by dividing net income for the
period by the weighted average number of shares of common stock outstanding, net
of unearned ESOP shares.
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 302
<INT-BEARING-DEPOSITS> 2,334
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 13,216
<INVESTMENTS-CARRYING> 7,441
<INVESTMENTS-MARKET> 7,458
<LOANS> 45,146
<ALLOWANCE> 865
<TOTAL-ASSETS> 69,755
<DEPOSITS> 55,942
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1,077
<LONG-TERM> 0
0
0
<COMMON> 101
<OTHER-SE> 12,635
<TOTAL-LIABILITIES-AND-EQUITY> 69,755
<INTEREST-LOAN> 1,891
<INTEREST-INVEST> 687
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 2,578
<INTEREST-DEPOSIT> 1,255
<INTEREST-EXPENSE> 1,255
<INTEREST-INCOME-NET> 1,322
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 838
<INCOME-PRETAX> 563
<INCOME-PRE-EXTRAORDINARY> 347
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 347
<EPS-PRIMARY> 0.43
<EPS-DILUTED> 0.42
<YIELD-ACTUAL> 7.62
<LOANS-NON> 112
<LOANS-PAST> 31
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 1,763
<ALLOWANCE-OPEN> 877
<CHARGE-OFFS> 13
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 865
<ALLOWANCE-DOMESTIC> 865
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 677
</TABLE>
