-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, jBfZ5+reilVuM+lwOYkEnPOWzHTIny5PgucUM5U858ZULjtflYlXGP/wg8iTb+hU 29DDZcWEU1D/OV5+GzUufA== 0000950114-94-000073.txt : 19940520 0000950114-94-000073.hdr.sgml : 19940520 ACCESSION NUMBER: 0000950114-94-000073 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940513 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MERCANTILE BANCORPORATION INC CENTRAL INDEX KEY: 0000064907 STANDARD INDUSTRIAL CLASSIFICATION: 6021 IRS NUMBER: 430951744 STATE OF INCORPORATION: MO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-11792 FILM NUMBER: 94528393 BUSINESS ADDRESS: STREET 1: ONE MECANTILE CENTER STREET 2: P O BOX 524 CITY: ST LOUIS STATE: MO ZIP: 63166-0524 BUSINESS PHONE: 3144252525 MAIL ADDRESS: STREET 1: P.O. BOX 524 CITY: ST LOUIS STATE: MO ZIP: 63166-0524 FORMER COMPANY: FORMER CONFORMED NAME: MERCANTILE TRUST CO DATE OF NAME CHANGE: 19720229 10-Q 1 MERCANTILE BANCORPORATION INC. FORM 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended March 31, 1994 Commission File Number 1-11792 ---------------- --------- Mercantile Bancorporation Inc. - - --------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Its Charter) Missouri 43-0951744 - - --------------------------------------------------------------------------- (State of Incorporation) (IRS Employer Identification No.) P.O. Box 524 St. Louis, Missouri 63166-0524 - - --------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, Including Area Code (314) 425-2525 ---------------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. X ----- ----- Yes No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, $5.00 par value, 42,971,865 shares outstanding as of the close of business on April 30, 1994. 2 PART I FINANCIAL INFORMATION Item 1. Financial Statements. The following consolidated financial statements, included in the Quarterly Report of the Registrant to its Shareholders for the quarter ended March 31, 1994, attached hereto as Exhibit 19, are incorporated herein by reference:
Quarterly Report STATEMENT Reference - - ----------------------------------------------------- ----------------- Consolidated Statement of Income - Three Months ended March 31, 1994 and 1993. Page 15 Consolidated Balance Sheet as of March 31, 1994 and December 31, 1993. Page 16 Consolidated Statement of Cash Flows - Three Months ended March 31, 1994 and 1993. Page 18
The following notes to the consolidated financial statements are included as a part of this report: Mercantile Bancorporation Inc. and Subsidiaries Notes to Consolidated Financial Statements NOTE 1 The consolidated financial statements include all adjustments which are, in the opinion of management, necessary to a fair statement of the results of these periods and are of a normal recurring nature. NOTE 2 On February 10, 1994, the Registrant declared a three-for-two stock split, in the form of a dividend, which was distributed on April 11, 1994 to shareholders of record on March 10, 1994. All per share amounts and average shares outstanding have been restated to give effect to the stock split except for share amounts contained in Part II, Item 4 of this report. NOTE 3 Effective January 3, 1994, the Registrant acquired Metro Bancorporation, a Waterloo, Iowa-based bank holding company with assets totaling $370 million. Effective February 1, 1994, the Registrant acquired United Postal Bancorp, Inc., holding company for United Postal Savings Associa- tion, with total assets approximating $1.3 billion. Both of these acquisitions were accounted for as poolings-of-interests. The historical consolidated financial statements as of December 31, 1993 and for the period ended March 31, 1993 have been restated to reflect this transaction. 2 3 Net income and net income per share for the Registrant and the pooled companies prior to restatement were as follows:
Three months ended March 31, 1993 ($ in thousands except per share data) ------------------- REGISTRANT Net income $27,179 Net income per share .78 METRO BANCORPORATION Net income 883 Net income per share 1.70 UNITED POSTAL BANCORP, INC. Net income 5,003 Net income per share .83
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Management's Discussion and Analysis of Financial Condition and Results of Operations, included on pages 3 - 14 in the Quarterly Report of the Registrant to its Shareholders for the quarter ended March 31, 1994 is incorporated herein by reference. PART II OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders The annual meeting of shareholders of the Registrant was held on April 28, 1994. Of 28,616,629 shares issued, outstanding and eligible to be voted at the meeting, 23,973,995 shares, constituting a quorum, were represented in person or by proxy. Seven (7) matters were submitted to a vote of the security-holders at the meeting. 1. ELECTION OF DIRECTORS. The first matter was the election of six --------------------- Class III director nominees to the Board of Directors. The Articles of Incorporation of the Registrant allow cumulative voting in all director elections and all shareholders were accordingly allowed to cumulate their votes for directors if they so desired. Upon tabulation of the votes cast, it was determined that all six director nominees had been elected. The voting results are set forth below:
Name For Withheld ---- --- -------- Harry M. Cornell, Jr. 23,776,330 197,665 Bernard A. Edison 23,772,570 201,425 Thomas H. Jacobsen 23,786,137 187,858 Craig D. Schnuck 23,786,736 187,259 Robert W. Staley 23,776,082 197,913 Robert L. Stark 23,771,607 202,388
3 4 Because Registrant has a staggered Board, the term of office of the following named Class I and Class II directors, who were not up for election at the 1993 annual meeting, continued after the meeting: Class I (continue in office until 1995) Thomas A. Hays Patrick T. Stokes James B. Malloy Francis A. Stroble Harvey Saligman Joseph G. Werner John A. Wright Class II (continue in office until 1996) Richard P. Conerly William A. Hall Earl K. Dille William G. Heckman J. Cliff Eason Charles H. Price 2. PROPOSAL TO AMEND THE ARTICLES OF INCORPORATION TO INCREASE THE --------------------------------------------------------------- AUTHORIZED NUMBER OF SHARES OF COMMON STOCK. The second matter, a - - ------------------------------------------- proposal to Amend the Articles of Incorporation of the Registrant to increase the number of authorized shares of common stock, $5.00 par value, of the Registrant from 70,000,000 shares to 100,000,000 shares, was approved by a majority of the 28,616,629 shares of the Registrant's Common Stock which were issued, outstanding and eligible to vote. The voting results on this matter were as follows: 21,286,548 For 2,370,211 Against 317,236 Abstain 0 Broker Non-Votes 3. PROPOSAL TO ADOPT MERCANTILE BANCORPORATION INC. 1994 STOCK ----------------------------------------------------------- INCENTIVE PLAN. The third matter, a proposal to adopt the Mercantile - - -------------- Bancorporation Inc. 1994 Stock Incentive Plan, a plan which provides for the granting of stock options and other stock based awards to employees, was approved by a vote of a majority of the shares of the Registrant's Common Stock present and voting at the Annual meeting, as follows: 19,665,986 For 2,613,735 Against 477,365 Abstain 1,216,909 Broker Non-Votes 4. PROPOSAL TO QUALIFY RESTRICTED PERFORMANCE UNIT GRANTS UNDER ------------------------------------------------------------ MERCANTILE BANCORPORATION INC. 1994 STOCK INCENTIVE PLAN AS "PERFORMANCE- - - ------------------------------------------------------------------------- BASED". The fourth matter, a proposal to approve the performance-based - - ------ structure adopted by the Board of Directors and described in the Proxy Statement for the grant of Restricted Performance Units under the Mercantile Bancorporation Inc. 1994 Stock Incentive Plan, which approval was necessary to qualify said grants as "Performance-Based", was approved by a vote of a majority of the shares of the Registrant's Common Stock present and voting at the Annual meeting, as follows: 21,381,748 For 1,906,680 Against 685,567 Abstain 0 Broker Non-Votes 4 5 5. PROPOSAL TO ADOPT MERCANTILE BANCORPORATION INC. 1994 EXECUTIVE --------------------------------------------------------------- INCENTIVE COMPENSATION PLAN. The fifth matter, a proposal to adopt the - - --------------------------- Mercantile Bancorporation Inc. 1994 Executive Incentive Compensation Plan, a plan which provides senior Mercantile officers with annual bonus opportunities based upon preestablished performance objectives, was approved by a vote of a majority of the shares of the Registrant's Common Stock present and voting at the Annual meeting, as follows: 20,856,873 For 2,546,415 Against 570,707 Abstain 0 Broker Non-Votes 6. PROPOSAL TO ADOPT MERCANTILE BANCORPORATION INC. VOLUNTARY DEFERRED ------------------------------------------------------------------- COMPENSATION PLAN. The sixth matter, a proposal to adopt the Mercantile - - ----------------- Bancorporation Inc. Voluntary Deferred Compensation Plan, a plan pursuant to which qualifying employees are entitled to defer receipt of all or a portion of their annual compensation, was approved by a vote of a majority of the shares of the Registrant's Common Stock present and voting at the Annual meeting, as follows: 22,318,639 For 1,098,986 Against 556,370 Abstain 0 Broker Non-Votes 7. PROPOSAL TO ADOPT MERCANTILE BANCORPORATION INC. 1994 STOCK ----------------------------------------------------------- INCENTIVE PLAN FOR NON-EMPLOYEE DIRECTORS. The seventh and final matter, - - ----------------------------------------- a proposal to adopt the Mercantile Bancorporation Inc. 1994 Stock Incentive Plan for Non-Employee Directors, a plan which provides for the granting of stock-based awards to directors of Mercantile Bancorporation Inc. who are not employees of Mercantile or its subsidiaries, was adopted by a vote of a majority of the shares of the Registrant's Common Stock present and voting at the Annual meeting, as follows: 18,599,740 For 3,677,643 Against 545,775 Abstain 1,150,837 Broker Non-Votes Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits: 19 Quarterly Report of the Registrant to its Shareholders for the quarter ended March 31, 1994. 5 6 (b) Reports on Form 8-K: Registrant filed one (1) Current Report on Form 8-K during the quarter ended March 31, 1994. In that report, dated February 11, 1994, under Item 2, Registrant disclosed that it had, effective February 1, 1994, consummated its acquisition of United Postal Bancorp, Inc. ("UPBI") through merger of UPBI with and into a wholly owned subsidiary of Registrant, with the shareholders of UPBI to receive an aggregate of approxi- mately 6,351,000 (adjusted for three-for-two stock split described in Note 2) shares of Registrant's common stock in exchange for their UPBI shares. Also pursuant to Item 2, Registrant incorporated by reference UPBI's consolidated financial statements and related notes contained in UPBI's 1992 Annual Report on Form 10-K for the fiscal year ended December 31, 1992 and the Independent Auditors' Report relating to such financial statements contained therein, and UPBI's consolidated financial state- ments and related notes appearing in its Quarterly Reports on Form 10-Q for the quarters ended March 31, June 30 and September 30, 1993. In addition, certain required pro forma financial information was incorporated by reference into the Form 8-K from Registrant's Registration Statement on Form S-4 (Registration No. 33-50981). 6 7 SIGNATURE 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. MERCANTILE BANCORPORATION INC. (Registrant) Date May 13, 1994 s/W. Randolph Adams ----------------------- ------------------------------- W. Randolph Adams Chief Financial Officer 7 8 EXHIBIT INDEX -------------
Exhibit No. Description Page - - ----------- ----------- ---- 19 Quarterly Report of the Registrant to its ---- Shareholders for the quarter ended March 31, 1994.
EX-19 2 QUARTERLY REPORT TO SHAREHOLDERS 1 MERCANTILE BANCORPORATION INC. FIRST QUARTER REPORT 1994 TABLE OF CONTENTS Highlights.......................................................... 1 Letter to Shareholders.............................................. 2 Financial Section Financial Commentary............................................... 3 Condensed Consolidated Quarterly Statement of Income...............................................12 Consolidated Quarterly Average Balance Sheet.....................................................13 Financial Statements...............................................15 Banks and Other Subsidiaries........................................19 Directors and Executive Officers....................................20 Investor Information................................................21
2 HIGHLIGHTS(1)
FIRST QUARTER ($ IN THOUSANDS EXCEPT PER SHARE DATA) 1994 1993 CHANGE - - -------------------------------------------------------------------------------------------------------------------------------- PER SHARE DATA Net income $ .91 $ .79 15.2% Dividends declared .28 .24 3/4 13.1 Book value at March 31 22.94 20.83 10.1 Market price at March 31 31 7/8 34 5/8 (7.9) Average common shares outstanding 42,857,806 42,078,489 1.9 - - ------------------------------------------------------------------------------------------------------------------------------- OPERATING RESULTS Taxable-equivalent net interest income $127,702 $126,877 .7% Tax-equivalent adjustment 2,309 2,497 (7.5) Net interest income 125,393 124,380 .8 Provision for possible loan losses 8,383 14,049 (40.3) Other income 48,922 49,640 (1.4) Other expense 103,824 107,361 (3.3) Income taxes 23,253 19,545 19.0 Net income 38,855 33,065 17.5 - - ------------------------------------------------------------------------------------------------------------------------------- ENDING BALANCES Total assets $11,922,882 $11,847,906 .6% Loans and leases 7,510,609 7,460,642 .7 Deposits 9,329,373 9,486,338 (1.7) Shareholders' equity 984,963 877,212 12.3 Reserve for possible loan losses 165,373 155,658 6.2 - - ------------------------------------------------------------------------------------------------------------------------------- AVERAGE BALANCES Total assets $12,213,848 $12,265,053 (.4)% Earning assets 11,144,382 11,197,856 (.5) Loans and leases 7,360,935 7,452,066 (1.2) Deposits 9,938,134 10,050,862 (1.1) Shareholders' equity 975,903 865,181 12.8 - - ------------------------------------------------------------------------------------------------------------------------------- SELECTED RATIOS Return on assets 1.27% 1.08% Return on equity 15.93 15.29 Overhead ratio 58.78 60.82 Net interest rate margin 4.58 4.53 Equity to assets 8.26 7.40 Tier I capital to risk-adjusted assets 11.56 10.30 Total capital to risk-adjusted assets 15.68 13.92 Leverage 7.52 6.61 Reserve for possible loan losses to outstanding loans 2.20 2.09 Reserve for possible loan losses to non-performing loans 404.93 194.45 Non-performing assets to outstanding loans and foreclosed assets 1.00 1.68 - - ------------------------------------------------------------------------------------------------------------------------------- SELECTED DATA Banks(2) 42 40 Banking offices(2) 252 237 Full-time equivalent employees 5,890 5,933 - - ------------------------------------------------------------------------------------------------------------------------------- (1) All 1993 financial information has been restated to reflect the January 3, 1994 merger with Metro Bancorporation and the February 1, 1994 merger with United Postal Bancorp, Inc., which were accounted for as poolings-of-interests. All per share amounts and average shares outstanding have been restated to give effect to a three-for-two stock split distributed April 11, 1994. (2) Includes United Postal Savings Association, a state-chartered thrift institution.
1 MERCANTILE BANCORPORATION INC. 3 LETTER TO SHAREHOLDERS Strategically-planned growth played an important role in Mercantile's first quarter, as the corporation added two more financial institutions to its four-state franchise. At the same time, earnings continued to rise, driven by ongoing asset quality improvements and operating expense reductions, a strong net interest rate margin, and solid contributions from our core fee-based businesses. During the first quarter, Mercantile completed its first merger in Iowa, adding Mercantile Bank of Northern Iowa, based in Waterloo, to its network of community banks. The corporation also strengthened its St. Louis-area retail and mortgage banking presence with the completion of its merger with United Postal Bancorp, parent company of United Postal Savings Association. Mercantile's net income for the first three months of 1994 was $38,855,000, and was up 17.5% from first-quarter 1993 earnings of $33,065,000. On a per share basis, net income rose 15.2% to $.91 from $.79. Net interest income for the quarter was $125,393,000, and the net interest rate margin was 4.58% this year compared to 4.53% in 1993. The corporation's total assets were $11.9 billion, and return on assets rose to 1.27% versus 1.08% the previous year. Return on equity also increased to 15.93% in 1994 from 15.29% in 1993. Asset quality gains continued during the first quarter of this year, as non-performing loans declined to $40,840,000 or .54% of total loans at March 31, 1994 from $57,483,000 or .78% at the end of 1993. Also down were foreclosed assets, which finished the first quarter at $34,417,000 compared with $36,014,000 at year-end. The reserve for possible loan losses as of March 31 of this year was $165,373,000 or 2.20% of total loans and reserve coverage increased to 404.93% of non-performing loans compared with 293.39% at December 31. The board of directors, at its February meeting, declared a quarterly dividend of $.28 per share, a 13.1% increase over the previously paid dividend of $.24 3/4 per share. That dividend was paid April 1. At the same meeting, the board declared a three-for-two stock split, which was distributed April 11. As Mercantile's growth continues and profitability steadily increases, the corporation has begun to emerge as one of the top-performing banking organizations in the United States. My thanks to our employees, shareholders and customers, whose hard work, commitment and support have been the driving forces behind this success. /s/ THOMAS H. JACOBSEN Thomas H. Jacobsen Chairman of the Board and Chief Executive Officer April 29, 1994 2 4 FINANCIAL COMMENTARY PERFORMANCE SUMMARY Net income for the first quarter of 1994 was $38,855,000, a 17.5% increase from the $33,065,000 earned in the same period a year ago. On a per share basis, net income was $.91, up 15.2% from the $.79 earned in last year's first quarter. First-quarter results reflected a slight improvement in net interest income, lower levels of operating expenses, a decline in the provision for possible loan losses and a small decrease in other income. Return on average assets improved to 1.27% this quarter compared with 1.08% in last year's first quarter, while return on average equity was 15.93% in 1994, up from 15.29% last year. The financial statements have been restated to include the pre- acquisition accounts and results of operations of United Postal Bancorp, Inc. and Metro Bancorporation, which were merged with Mercantile on February 1, 1994 and January 3, 1994, respectively, in transactions accounted for as poolings-of-interests. In addition, the restatement reflects the three-for-two stock split, which was paid in the form of a dividend on April 11, 1994 to shareholders of record on March 10, 1994. Net interest income for the first quarter of 1994 was $125,393,000 compared with $124,380,000 in the year-earlier period, an increase of .8%. The net interest rate margin of 4.58% was up five basis points from 4.53% last year. Average earning assets of $11.1 billion declined slightly from the $11.2 billion in the first quarter of 1993, as average loan volume declined by $91,131,000 or 1.2%, investments in debt and equity securities declined by $52,101,000 or 1.5%, and short- term investments grew by $89,758,000 or 28.7%. Other income was $48,922,000 in the first quarter of 1994, a decrease of $718,000 or 1.4% from a year ago. Growth in trust fees, service charges, credit card fees and mortgage banking income was largely offset by a decline of $2,439,000 in net securities gains. Non-interest expenses were down $3,537,000 or 3.3% from a year ago. Total expenses were $103,824,000 for the quarter compared with $107,361,000 last year. The reduction in expense levels resulted primarily from the realization of synergies from mergers completed in prior years and lower foreclosed property expense. The result was an improvement in the overhead ratio to 58.78% compared with 60.82% last year, and a lowering of the other expense to average assets ratio to 3.40% versus 3.50% in the first quarter of 1993. The provision for possible loan losses for the quarter was $8,383,000 compared with $14,049,000 in 1993, a decline of 40.3%. Net charge-offs were $11,661,000 and $23,966,000, respectively, and on an annualized basis were .63% of average loans this quarter compared with 1.29% last year. At March 31, 1994, the reserve for possible loan losses was $165,373,000 and covered 404.93% of non-performing loans compared with 194.45% last March 31 and 293.39% at year-end 1993. Non-performing loans as of March 31, 1994 were $40,840,000 or .54% of total loans, down from the year-end 1993 figures of $57,483,000 or .78% and March 31, 1993 levels of $80,052,000 or 1.07%. Foreclosed assets, including in-substance foreclosures, declined to $34,417,000 compared with $36,014,000 at year's end and $45,780,000 last March 31. 3 MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES 5 Earnings in the St. Louis Area (Mercantile Bank of St. Louis N.A., United Postal Savings Association and Mercantile Trust Company N.A.) were $21,256,000, up 29.1% from 1993. The first quarter results reflected a slightly improved level of net interest income, and significant reductions in operating expenses and the provision for possible loan losses, partially offset by reduced other income due to a higher level of securities gains in the first quarter of 1993 at United Postal. Return on average assets improved to 1.31% for the first quarter of 1994 versus 1.03% in 1993. In the 36 Community Banks, net income was $17,463,000, an increase of 8.4%, while return on average assets was 1.60% in 1994 versus 1.46% last year. Earnings for the three banks in the Kansas City Area were $4,799,000, up 17.0% from a year ago. Return on average assets was 1.20% compared with .99% last year. - - --------------------------------------------------------------------------------------------------------------------------------- EXHIBIT 1 ORGANIZATIONAL CONTRIBUTION ($ IN THOUSANDS)
MARCH 31, 1994 -------------------------------------------------------------------------------- KANSAS PARENT ST. LOUIS CITY COMMUNITY COMPANY AND AREA* AREA BANKS ELIMINATIONS CONSOLIDATED --------- ------ --------- ------------ ------------ Net income $ 21,256 $ 4,799 $ 17,463 $ (4,663) $ 38,855 Average assets 6,470,259 1,601,929 4,371,783 (230,123) 12,213,848 Return on assets 1.31% 1.20% 1.60% 1.27% Net interest rate margin 4.12 4.52 5.15 4.58 Overhead ratio 54.80 61.29 54.25 58.78 Equity to assets 7.86 8.88 9.04 8.26 Reserve for possible loan losses to outstanding loans 1.89 2.74 2.46 2.20 Reserve for possible loan losses to non-performing loans 385.70 501.48 400.94 404.93 Non-performing loans to outstanding loans .49 .55 .61 .54 Non-performing assets to outstanding loans and foreclosed assets 1.16 .99 .75 1.00 *Includes the results of Mercantile Bank of St. Louis N.A., United Postal Savings Association, Mercantile Trust Company N.A., Mercantile Business Credit, Inc. (asset-based lending), Mercantile Investment Services, Inc. (brokerage), Mississippi Valley Advisors Inc. (investment management) and Mississippi Valley Life Insurance Co. (credit life). - - -------------------------------------------------------------------------------------------------------------------------------
Consolidated assets of $11.9 billion were up .6% from last March 31. Core deposits declined by 1.6% to $8.8 billion, loans were $7.5 billion, up .7% from last year, and shareholders' equity of $984,963,000 was 12.3% higher than at March 31, 1993. Tier I capital to risk-adjusted assets improved to 11.56% compared with 10.30% last year, while Total capital to risk-adjusted assets was 15.68% compared with 13.92% at March 31, 1993. The following financial commentary presents a more thorough discussion and analysis of the results of operations and financial condition of the Corporation for the first quarter of 1994. 4 6 FINANCIAL COMMENTARY (CONT'D) NET INTEREST INCOME Net interest income for the first quarter of 1994 was $125,393,000, an increase of .8% from the $124,380,000 earned last year. This was the net result of a five-basis-point widening in the net interest rate margin to 4.58%, offset by a .5% decline in average earning assets. Factors contributing to the increase in the net interest rate margin included significantly higher levels of average non-interest bearing deposits and shareholders' equity, a decline in non-performing assets, growth in the higher-yielding consumer and credit card loan categories, the continued run-off of higher-costing retail certificates of deposit, and the movement of consumer deposits from certificates of deposit to lower-cost checking, savings and money market accounts. The two major categories of earning assets decreased in the first quarter of 1994 compared with last year. Average loans declined by $91,131,000 or 1.2%, and investments in debt and equity securities decreased by $52,101,000 or 1.5%. Short-term investments grew by $89,758,000 or 28.7%. Average loans in the St. Louis Area declined by 2.0%, while volume at the Community Banks and Kansas City Area banks decreased by .4%. When compared with the first quarter of 1993, average commercial loans declined by $34,071,000 or 1.7%, while average commercial real estate mortgage and construction loans declined by $63,540,000 or 4.3%. Residential mortgage loans on average decreased by $132,584,000 or 5.5% through paydowns and refinancings into long- term fixed-rate loans, which were sold into the secondary market with servicing retained. Average credit card loans increased by $134,903,000 or 22.1%, due primarily to cross-selling efforts, successful targeted marketing campaigns for new accounts and selected credit limit increases, while other consumer loans increased by .6% due to strong growth in indirect loans offset by a reduction in direct consumer loans. - - --------------------------------------------------------------------------------------------------------------------------- EXHIBIT 2 LOANS AND LEASES ($ IN THOUSANDS)
MARCH 31 1994 1993 CHANGE ---- ---- ------ Commercial $2,171,715 $2,049,358 6.0% Real estate-commercial 1,264,655 1,344,655 (5.9) Real estate-construction 145,985 149,915 (2.6) Real estate-residential 2,246,470 2,368,024 (5.1) Consumer 949,462 929,555 2.1 Credit card 732,142 617,637 18.5 Foreign 180 1,498 (88.0) ---------- ---------- Total Loans and Leases $7,510,609 $7,460,642 .7 ========== ========== - - ---------------------------------------------------------------------------------------------------------------------------
The 1.5% decline in average investments in debt and equity securities included an $80,617,000 or 2.5% decrease in taxable securities and growth of $30,008,000 or 13.9% in tax-exempt securities. Trading securities are at approximately the same level as 1993. Short-term investments are primarily used for short-term excess liquidity or balancing the interest rate sensitivity of the Corporation, and on average increased by $89,758,000 or 28.7% during the first quarter of 1994. Significant changes in the mix of deposits reflected the continuing strategy to be substantially funded by core deposits, and the disintermediation of retail certificates of deposit into interest bearing demand and savings accounts in the current low rate environment. Core deposits decreased slightly to 94.69% of total deposits from 94.74% a year ago and on average were down 1.2% from last year. On average, interest bearing demand accounts increased by $159,897,000 or 11.1% and savings accounts grew by $88,212,000 or 10.7%. Retail certificates of deposit declined by $484,304,000 or 13.2%. This more costly source of funds declined to 33.89% of total core deposits from 38.58% in 1993, as customers preferred 5 MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES 7 maturity flexibility with their investments. Short-term borrowings decreased by $47,909,000 or 5.6%, while purchased deposits declined by $1,296,000 or .2%. Non-interest bearing funds grew substantially in the current quarter compared with a year ago, thereby enhancing the level of net interest income and the net interest rate margin. Average non-interest bearing demand balances (net of cash and due from banks) grew by $160,641,000 or 14.5%, primarily due to new customer relationships and higher compensating balance requirements for corporate services due to the lower interest rate environment. Average shareholders' equity increased by $110,722,000 or 12.8% due primarily to earnings retained, new shares issued in the Mt. Vernon and Flora purchase transactions during the second and third quarters of 1993, and stock issued under employee benefit plans. The factors discussed previously are consistent with Mercantile's overall corporate policy relative to rate sensitivity and liquidity, which is to produce the optimal yield and maturity mix consistent with interest rate expectations and projected liquidity needs. The Consolidated Quarterly Average Balance Sheet, with rates earned and paid, is summarized by quarter on Pages 13 and 14. OTHER INCOME Non-interest income decreased 1.4% during the first quarter of 1994 to $48,922,000. Trust fees, mortgage banking income, service charges and credit card fees all improved from last year, while investment banking revenue and miscellaneous income declined slightly. Securities gains were $225,000 this quarter compared with $2,664,000 last year. Trust fees continued to be the largest source of non-interest income, and were $15,657,000 compared with $14,873,000 during the first quarter of 1993, an increase of 5.3%. Personal trust fees generated in the St. Louis Area are the largest source of trust revenue, representing 29.44% of trust income. These fees declined by 2.5% when compared to the first quarter of 1993, due primarily to a reduction in termination fees. Trust revenues in the Kansas City Area banks and Community Banks, which accounted for 27.40% of total trust income, are largely personal trust fees and were flat when compared with the first quarter of 1993. Trust income from Mississippi Valley Advisors Inc., and from institutional and corporate trust services represented 22.35% and 20.81%, respectively, of the total trust income for the first quarter of 1994, and grew by 13.7% and 18.2%, respectively, when compared with the first quarter of 1993, largely due to successful business development efforts. - - --------------------------------------------------------------------------------------------------------------------------- EXHIBIT 3 OTHER INCOME ($ IN THOUSANDS)
FIRST QUARTER 1994 1993 CHANGE ---- ---- ------ Trust $15,657 $14,873 5.3% Service charges 14,455 14,108 2.5 Credit card fees 5,801 5,446 6.5 Mortgage banking 2,405 1,793 34.1 Investment banking 2,369 2,591 (8.6) Letters of credit fees 1,521 1,520 .1 Foreclosed property income 1,286 604 - Securities gains 225 2,664 - Other 5,203 6,041 (13.9) ------- ------- Total Other Income $48,922 $49,640 (1.4) ======= ======= - - ---------------------------------------------------------------------------------------------------------------------------
Service charge income was up 2.5% or $347,000 for the first quarter of 1994, as deposit volumes were flat with 1993, and corporate customers opted to use deposit balances to offset service charges rather than pay fees. 6 8 FINANCIAL COMMENTARY (CONT'D) Credit card fee income was $5,801,000 for the first quarter of 1994, a $355,000 or 6.5% increase from the 1993 level. Credit card income primarily represents fees charged merchants for processing credit card transactions, fees received on transactions of Mercantile cardholders and cardholders' annual fees. Investment banking fees and commissions, which consist of transaction fees for services performed as a dealer bank for both individual and corporate customers, including sales of annuities and mutual funds, profits earned on limited trading positions, and foreign exchange revenue, were $2,369,000 compared with $2,591,000 last year, a decrease of 8.6%. This source of revenue can vary depending on movements in interest rates and overall market conditions. Mortgage banking is now a meaningful line of business for Mercantile with the incorporation of United Postal; these revenues increased by $612,000 or 34.1% over the first quarter of 1993. Servicing fees grew by 17.0% to $1,152,000, as total servicing exceeded $3.1 billion. Gains on the sale of loans increased by $385,000 to $860,000 for the first quarter of 1994. Securities gains declined by $2,439,000 from the first quarter of 1993, when United Postal sold significant volumes of U.S. Treasury securities in a portfolio restructuring. All other income was flat when compared with a year ago. OTHER EXPENSE Expenses other than interest expense and the provision for possible loan losses for the first quarter of 1994 were $103,824,000, a decline of $3,537,000 or 3.3% from 1993. Total operating expenses were 3.40% of average assets compared with 3.50% last year, and the overhead ratio, defined as operating expenses as a percentage of taxable-equivalent net interest income and other income, improved to 58.78% compared with 60.82% last year. Personnel costs increased 6.3% from the first quarter of 1993, reflecting the costs associated with staffing additional offices, support services and merit increases. Benefit costs were up by 10.4% due to the generally higher costs of employee benefit programs. Occupancy and equipment costs were up 3.1% in the first quarter, reflecting the costs of additional offices, and a consistent program of upgrading systems and equipment to enhance productivity. - - --------------------------------------------------------------------------------------------------------------------------- EXHIBIT 4 OTHER EXPENSE ($ IN THOUSANDS)
FIRST QUARTER 1994 1993 CHANGE ---- ---- ------ Salaries $ 44,348 $ 42,112 5.3% Employee benefits 11,389 10,316 10.4 -------- -------- Total Personnel Expense 55,737 52,428 6.3 Net occupancy 6,460 6,319 2.2 Equipment 8,671 8,352 3.8 Advertising/business development 2,236 3,011 (25.7) Postage and freight 3,675 3,432 7.1 Office supplies 2,001 2,114 (5.3) Communications 1,584 1,477 7.2 Legal and professional 2,314 2,854 (18.9) Credit card 2,243 2,442 (8.1) FDIC insurance 5,299 5,732 (7.6) Foreclosed property expense 405 2,448 (83.5) Intangible asset amortization 1,738 1,821 (4.6) Other 11,461 14,931 (23.2) -------- -------- Total Other Expense $103,824 $107,361 (3.3) ======== ======== RATIOS Overhead ratio 58.78% 60.82% Other expense to average assets 3.40 3.50 - - ---------------------------------------------------------------------------------------------------------------------------
Exhibit 4 details the composition of all other operating expenses, which declined substantially from last year. Expenses related to foreclosed property totaled $405,000 7 MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES 9 compared with $2,448,000 last year, a decline of $2,043,000. FDIC insurance costs decreased by 7.6%, as the deposit base is lower and all Mercantile banks in 1994 are now assessed premiums at the lowest $.23 rate. All other expenses were down largely due to greater expense controls and acquisition consolidation efforts. RESERVE FOR POSSIBLE LOAN LOSSES The reserve for possible loan losses was $165,373,000 or 2.20% of loans outstanding at March 31, 1994. This compared with $168,651,000 or 2.28% at year's end and $155,658,000 or 2.09% at March 31, 1993. The reserve coverage of non-performing loans improved to 404.93% compared with 293.39% at year-end and 194.45% last year, and the earnings coverage of net charge-offs improved to 6.05x from 2.78x last year. The provision for possible loan losses for the first quarter of 1994 was $8,383,000 compared with $14,049,000 last year. The annualized ratio of net charge-offs to average loans for the first quarter was .63% compared with 1.29% last year, while the corresponding net charge-off figures were $11,661,000 and $23,966,000, respectively. Excluding charge-offs taken on three United Postal commercial real estate loans for which reserves were provided in the fourth quarter of 1993, the .63% charge-off ratio is reduced to .42%. In the St. Louis Area, the annualized ratio of net charge-offs to average loans for the first quarter of 1994 was .70% compared with 1.82% in 1993, when significant write-downs were taken on two commercial real estate loans and one commercial loan at Mercantile Bank of St. Louis N.A. In the Kansas City Area banks, the ratio of net charge-offs to average loans was .14% versus .25% last year. For the Community Banks as a group, the comparative ratios were .69% and .90%, respectively. - - -------------------------------------------------------------------------------------------------------------------- EXHIBIT 5 RESERVE FOR POSSIBLE LOAN LOSSES ($ IN THOUSANDS)
THREE MONTHS ENDED MARCH 31 1994 1993 ---- ---- BEGINNING BALANCE $168,651 $165,575 PROVISION 8,383 14,049 CHARGE-OFFS (15,709) (28,539) RECOVERIES 4,048 4,573 -------- -------- NET CHARGE-OFFS(1) (11,661) (23,966) -------- -------- ENDING BALANCE $165,373 $155,658 ======== ======== LOANS AND LEASES March 31 balance $7,510,609 $7,460,642 ========== ========== Average balance $7,360,935 $7,452,066 ========== ========== RATIOS Reserve balance to outstanding loans 2.20% 2.09% Reserve balance to non-performing loans 404.93 194.45 Earnings coverage of net charge-offs 6.05X 2.78x Net charge-offs to average loans: Total .63% 1.29% Total excluding United Postal Savings Association real estate-commercial .42 1.29 Credit card 4.78 4.21 (1)Net charge-offs (recoveries): Credit card $ 8,899 $ 6,427 United Postal Savings Association real estate-commercial 3,962 - Other real estate-commercial loans (940) 8,696 All other loans (260) 8,843 ------- ------- Total $11,661 $23,966 ======= ======= - - -----------------------------------------------------------------------------------------------------------------------
Credit card losses were 4.78% of average credit card loans compared with 4.21% in 1993. Net credit card charge-offs were $8,899,000 in 1994 compared with $6,427,000 last year. In the first quarter of 1994, Mercantile experienced net 8 10 FINANCIAL COMMENTARY (CONT'D) recoveries of $1,200,000 on loans excluding credit card and the three United Postal commercial real estate credits previously discussed. Mercantile evaluates the reserves of all banks on a quarterly basis to ensure the timely charge-off of loans and to determine the adequacy of those reserves. At March 31, 1994, individual Community Bank reserves as a percentage of total loans outstanding ranged from 1.58% to 6.76% with a combined ratio of 2.46%. The coverage of non-performing loans was 400.94% on a combined basis. The St. Louis Area combined reserve was 1.89% of loans with a coverage ratio of 385.70%, and the combined reserves of the Kansas City Area banks were 2.74% of loans outstanding with a coverage of non-performing loans of 501.48%. Management believes the consolidated reserve of 2.20% of loans and 404.93% of non-performing loans as of March 31, 1994 was adequate based on the risks identified at such date in the portfolios. NON-PERFORMING ASSETS Non-performing loans (non-accrual and renegotiated loans) declined to $40,840,000 or .54% of total loans at March 31, 1994 compared with $57,483,000 or .78% at December 31, 1993, and $80,052,000 or 1.07% at March 31, 1993. Foreclosed assets dropped to $34,417,000 at March 31, 1994 compared with $36,014,000 at year's end and $45,780,000 last year. The ratio of non-performing assets to outstanding loans and foreclosed assets declined to 1.00% at March 31, 1994 compared with 1.26% at December 31, 1993 and 1.68% last year. Loans past due 90 days and still accruing interest were $14,066,000 at March 31, 1994 compared with $14,096,000 at year-end and $12,460,000 at March 31, 1993. As noted in Exhibit 6, non-accrual loans declined by $13,178,000 from the year-end level and $35,234,000 from last year. In the St. Louis Area, non-accrual loans declined from the year-end level by $12,395,000 to $15,613,000 at March 31, 1994. The current year decline was primarily in the commercial and commercial real estate loan portfolios of United Postal Savings Association, as write- downs were taken on two credits and a significant credit was resolved. At the Kansas City Area banks and in the Community Banks as a group, non-accrual loan levels were down slightly from the totals reported at year-end. - - -------------------------------------------------------------------------------------------------------------------------- EXHIBIT 6 NON-PERFORMING ASSETS ($ IN THOUSANDS)
MAR. 31 DEC. 31 MAR. 31 1994 1993 1993 ------- ------- ------- NON-ACCRUAL LOANS Commercial $10,409 $11,949 $30,119 Real estate-commercial 14,229 25,059 27,315 Real estate-construction 279 785 995 Real estate-residential 8,978 9,407 10,382 Consumer 1,945 1,818 2,263 ------- ------- ------- Total Non-accrual Loans 35,840 49,018 71,074 RENEGOTIATED LOANS 5,000 8,465 8,978 ------- ------- ------- TOTAL NON-PERFORMING LOANS $40,840 $57,483 $80,052 ======= ======= ======= FORECLOSED ASSETS Foreclosed real estate $31,582 $16,771 $40,847 In-substance foreclosures 1,679 18,044 3,133 Other foreclosed assets 1,156 1,199 1,800 ------- ------- ------- TOTAL FORECLOSED ASSETS $34,417 $36,014 $45,780 ======= ======= ======= TOTAL NON-PERFORMING ASSETS $75,257 $93,497 $125,832 ======= ======= ======== PAST-DUE LOANS (90 DAYS OR MORE) $14,066 $14,096 $12,460 ======= ======= ======= RATIOS Non-performing loans to outstanding loans .54% .78% 1.07% Non-performing assets to outstanding loans and foreclosed assets 1.00 1.26 1.68 Non-performing assets to total assets .63 .77 1.06 - - --------------------------------------------------------------------------------------------------------------------------
9 MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES 11 Renegotiated loans declined to $5,000,000 from $8,465,000 at December 31, 1993, due largely to improvements in the United Postal portfolio. All loans classified as renegotiated were paying in accordance with their modified terms at March 31, 1994. Loans past due 90 days and still accruing interest were near the same level as year-end 1993, and consisted largely of credit card loans and residential real estate mortgage loans. CAPITAL RESOURCES The current economic and regulatory environment continues to place emphasis on capital strength. Capital provides a solid foundation for anticipated future asset growth, and promotes depositor and investor confidence. Capital management is a continuous process at Mercantile, and ensures that capital is provided for current needs and anticipated growth. Mercantile's strong capital position has enabled it to profitably expand both its asset and deposit bases over the past four years, while maintaining capital ratios at levels comparable to other quality banking organizations and substantially in excess of regulatory standards. At March 31, 1994, shareholders' equity was $984,963,000, an increase of 12.3% from March 31, 1993. Net earnings retained, the common shares issued in the Mt. Vernon and Flora purchase transactions, and stock issued under various employee benefit plans accounted for the majority of the increase. Equity represented 8.26% of assets compared with 7.40% at March 31, 1993. The Corporation's Tier I capital to risk-adjusted assets ratio was 11.56% at March 31, 1994, while the Total capital ratio was 15.68%. These ratios compared favorably with established regulatory minimums of 4.0% and 8.0%, respectively, and the March 31, 1993 ratios of 10.30% and 13.92%. - - -------------------------------------------------------------------------------------------------------------------------- EXHIBIT 7 RISK-BASED CAPITAL ($ IN THOUSANDS)
MAR. 31 DEC. 31 MAR. 31 1994 1993 1993 ------- ------- ------- Capital Tier I $ 912,830 $ 883,162 $ 805,791 Total 1,238,259 1,161,071 1,088,711 Risk-adjusted assets 7,899,137 7,985,847 7,822,674 Tier I capital to risk-adjusted assets Capital ratio 11.56% 11.06% 10.30% Regulatory minimum ratio 4.00 4.00 4.00 Total capital to risk-adjusted assets Capital ratio 15.68 14.54 13.92 Regulatory minimum ratio 8.00 8.00 8.00 Leverage 7.52 7.33 6.61 Double leverage 110.38 111.97 115.11 Long-term debt to total capitalization 22.96 22.15 23.91 Intangible assets $70,204 $71,759 $71,421 - - ---------------------------------------------------------------------------------------------------------------------------
The capital ratios at all Mercantile banks also continued to be strong. The equity to assets ratio for all Community Banks was 9.04% as of March 31, 1994 while the three St. Louis Area financial institutions as a group had an equity to assets ratio of 7.86%; the Kansas City Area banks' combined ratio was 8.88%. The ratio of long-term debt to total capitalization was 22.96% at March 31, 1994 compared with 22.15% at December 31, 1993. The Parent Company double leverage ratio was 110.38% compared with 111.97% at December 31, 1993. 10 12 FINANCIAL COMMENTARY (CONT'D) Mercantile Bank of St. Louis N.A. issued $75,000,000 of 6.375% 10-year, non-callable subordinated debt on January 25, 1994, which qualifies as Tier II capital. The bank used the proceeds to prepay the $23,653,000 8.25% mortgage outstanding on its headquarters building on February 1, 1994. The Corporation also prepaid the $30,550,000 of 8.50% debentures due in 2004 on February 23, 1994. Book value per share was $22.94 at March 31, 1994 compared with $20.83 a year earlier, an increase of 10.1%. On February 10, 1994, the Board of Directors declared a quarterly cash dividend of $.28 per share, which was paid April 1, 1994. This represented an increase of 13.1% and a 30.77% payout ratio of first-quarter 1994 earnings. An increase in the authorized common stock of the Corporation from 70,000,000 shares to 100,000,000 shares was approved by shareholders on April 28, 1994. Further information relating to dividends, as well as quarterly stock prices, is included in the Investor Information summary on Page 21 of this report. 11 MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES 13 CONDENSED CONSOLIDATED QUARTERLY STATEMENT OF INCOME (THOUSANDS EXCEPT PER SHARE DATA)
1993 1994 1ST QTR. 2ND QTR. 3RD QTR. 4TH QTR. 1ST QTR. -------- -------- -------- -------- -------- INTEREST INCOME Interest and fees on loans and leases $157,087 $156,551 $154,388 $153,960 $150,324 Investments in debt and equity securities 52,557 50,751 47,366 46,526 46,219 Short-term investments 2,688 1,878 3,673 2,505 3,470 -------- -------- -------- -------- -------- Total Interest Income 212,332 209,180 205,427 202,991 200,013 Tax-equivalent adjustment 2,497 2,307 2,430 2,340 2,309 -------- -------- -------- -------- -------- TAXABLE-EQUIVALENT INTEREST INCOME 214,829 211,487 207,857 205,331 202,322 INTEREST EXPENSE Deposits 75,969 71,538 68,866 66,611 62,888 Borrowed funds 11,983 11,650 11,536 10,581 11,732 -------- -------- -------- -------- -------- Total Interest Expense 87,952 83,188 80,402 77,192 74,620 -------- -------- -------- -------- -------- TAXABLE-EQUIVALENT NET INTEREST INCOME 126,877 128,299 127,455 128,139 127,702 PROVISION FOR POSSIBLE LOAN LOSSES 14,049 14,485 12,906 19,573 8,383 OTHER INCOME Trust 14,873 15,746 15,104 15,415 15,657 Service charges 14,108 14,511 14,748 15,144 14,455 Credit card fees 5,446 6,404 5,700 6,510 5,801 Mortgage banking 1,793 2,312 3,058 3,378 2,405 Investment banking 2,591 2,184 1,878 1,833 2,369 Securities gains 2,664 15 910 153 225 Other 8,165 9,060 7,665 7,790 8,010 -------- -------- -------- -------- -------- Total Other Income 49,640 50,232 49,063 50,223 48,922 OTHER EXPENSE Personnel expense 52,428 53,212 54,167 55,526 55,737 Net occupancy and equipment 14,671 14,896 16,046 17,025 15,131 Other 40,262 39,907 35,844 50,925 32,956 -------- -------- -------- -------- -------- Total Other Expense 107,361 108,015 106,057 123,476 103,824 -------- -------- -------- -------- -------- TAXABLE-EQUIVALENT INCOME BEFORE INCOME TAXES 55,107 56,031 57,555 35,313 64,417 INCOME TAXES Income taxes 19,545 19,877 19,564 16,582 23,253 Tax-equivalent adjustment 2,497 2,307 2,430 2,340 2,309 -------- -------- -------- -------- -------- Adjusted Income Taxes 22,042 22,184 21,994 18,922 25,562 -------- -------- -------- -------- -------- NET INCOME $ 33,065 $ 33,847 $ 35,561 $ 16,391 $ 38,855 ======== ======== ======== ======== ======== NET INCOME PER SHARE $.79 $.80 $.84 $.38 $.91
MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES 12 14 CONSOLIDATED QUARTERLY AVERAGE BALANCE SHEET ($ IN THOUSANDS)
1993 1ST QTR. 2ND QTR. 3RD QTR. --------------- --------------- -------------- VOLUME RATE* VOLUME RATE* VOLUME RATE* ------ ----- ------ ----- ------ ----- ASSETS Earning Assets Loans and leases, net of unearned income Commercial $ 2,029,956 6.56% $ 2,072,698 6.46% $ 1,970,795 6.60% Real estate-commercial 1,323,304 8.01 1,340,876 7.96 1,275,280 8.05 Real estate-construction 158,195 7.49 149,783 6.83 154,679 7.33 Real estate-residential 2,391,674 8.05 2,363,734 7.99 2,334,896 7.81 Consumer 936,745 9.21 928,809 9.13 929,740 8.97 Credit card 610,553 16.62 637,894 16.30 682,604 16.22 Foreign 1,639 6.83 1,035 8.12 603 5.97 ----------- ----------- ----------- Total Loans and Leases 7,452,066 8.47 7,494,829 8.39 7,348,597 8.45 Investments in debt and equity securities Trading 12,008 5.80 14,073 4.92 14,417 5.60 Taxable 3,204,699 6.15 3,152,093 6.01 3,090,005 5.68 Tax-exempt 216,373 8.93 230,660 8.59 237,107 8.30 ----------- ----------- ----------- Total 3,433,080 6.32 3,396,826 6.18 3,341,529 5.87 Short-term investments 312,710 3.44 221,869 3.39 449,203 3.27 ----------- ----------- ----------- Total Earning Assets 11,197,856 7.67 11,113,524 7.61 11,139,329 7.46 Non-earning Assets 1,067,197 1,116,500 1,114,359 ----------- ----------- ----------- Total Assets $12,265,053 $12,230,024 $12,253,688 =========== =========== =========== LIABILITIES Acquired Funds Deposits Non-interest bearing $ 1,799,185 $ 1,886,413 $ 2,022,041 Interest bearing demand 1,435,068 2.21 1,501,234 2.13 1,520,332 2.12 Money market accounts 1,659,430 2.77 1,629,303 2.75 1,628,648 2.78 Savings 823,718 2.70 862,268 2.53 878,280 2.52 Consumer time certificates under $100,000 3,673,361 4.89 3,529,399 4.69 3,416,365 4.56 Other time 130,999 2.82 102,285 2.86 56,703 2.40 ----------- ----------- ----------- Total Core Deposits 9,521,761 3.67 9,510,902 3.50 9,522,369 3.42 Time certificates $100,000 and over 498,721 3.94 458,022 3.85 441,198 3.92 Foreign 30,380 3.27 45,184 3.20 21,650 6.23 ----------- ----------- ----------- Total Purchased Deposits 529,101 3.90 503,206 3.79 462,848 4.03 ----------- ----------- ----------- Total Deposits 10,050,862 3.68 10,014,108 3.52 9,985,217 3.46 Short-term borrowings 861,397 3.00 830,904 2.95 852,097 2.84 Long-term debt 276,850 7.99 274,491 8.03 274,074 8.01 ----------- ----------- ----------- Total Acquired Funds 11,189,109 3.75 11,119,503 3.60 11,111,388 3.54 Other Liabilities 210,763 207,588 211,394 SHAREHOLDERS' EQUITY 865,181 902,933 930,906 ----------- ----------- ----------- Total Liabilities and Shareholders' Equity $12,265,053 $12,230,024 $12,253,688 =========== =========== =========== SIGNIFICANT RATIOS Net interest rate spread 3.92% 4.01% 3.92% Net interest rate margin 4.53 4.62 4.58 Return on assets 1.08 1.11 1.16 Return on equity 15.29 14.99 15.28 *Taxable-equivalent basis. 13 MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES 15 1993 1994 4th QTR. lst QTR. --------------- ---------------- VOLUME RATE* VOLUME RATE* ------ ----- ------ ----- ASSETS Earning Assets Loans and leases, net of unearned income Commercial $ 1,962,432 6.53% $ 1,995,885 6.35% Real estate-commercial 1,264,795 7.97 1,274,504 7.62 Real estate-construction 160,112 7.44 143,455 7.46 Real estate-residential 2,298,589 7.76 2,259,090 7.39 Consumer 941,992 8.73 942,256 8.31 Credit card 728,730 16.05 745,456 16.64 Foreign 845 5.21 289 5.54 ----------- ----------- Total Loans and Leases 7,357,495 8.41 7,360,935 8.20 Investments in debt and equity securities Trading 15,493 5.06 10,516 5.44 Taxable 3,130,103 5.50 3,124,082 5.48 Tax-exempt 251,136 7.93 246,381 8.00 ----------- ----------- Total 3,396,732 5.68 3,380,979 5.66 Short-term investments 291,897 3.43 402,468 3.45 ----------- ----------- Total Earning Assets 11,046,124 7.44 11,144,382 7.26 Non-earning Assets 1,068,428 1,069,466 ----------- ----------- Total Assets $12,114,552 $12,213,848 =========== =========== LIABILITIES Acquired Funds Deposits Non-interest bearing $ 2,024,089 $ 2,023,107 Interest bearing demand 1,570,416 2.01 1,594,965 1.85 Money market accounts 1,653,236 2.74 1,658,069 2.66 Savings 894,558 2.51 911,930 2.31 Consumer time certificates under $100,000 3,310,430 4.46 3,189,057 4.27 Other time 38,588 2.66 33,201 2.75 ----------- ----------- Total Core Deposits 9,491,317 3.32 9,410,329 3.14 Time certificates $100,000 and over 442,615 3.78 486,406 3.68 Foreign 27,297 6.10 41,399 4.51 ----------- ----------- Total Purchased Deposits 469,912 3.92 527,805 3.74 ----------- ----------- Total Deposits 9,961,229 3.36 9,938,134 3.18 Short-term borrowings 728,648 2.79 813,488 2.95 Long-term debt 273,500 8.05 298,915 7.68 ----------- ----------- Total Acquired Funds 10,963,377 3.45 11,050,537 3.31 Other Liabilities 194,045 187,408 SHAREHOLDERS' EQUITY 957,130 975,903 ----------- ----------- Total Liabilities and Shareholders' Equity $12,114,552 $12,213,848 =========== =========== SIGNIFICANT RATIOS Net interest rate spread 3.99% 3.95% Net interest rate margin 4.64 4.58 Return on assets .54 1.27 Return on equity 6.85 15.93 *Taxable-equivalent basis.
14 16 CONSOLIDATED STATEMENT OF INCOME (THOUSANDS EXCEPT PER SHARE DATA)
THREE MONTHS ENDED MARCH 31 1994 1993 ---- ---- INTEREST INCOME Interest and fees on loans and leases $150,324 $157,087 Investments in debt and equity securities Trading 126 158 Taxable 42,722 49,156 Tax-exempt 3,371 3,243 -------- -------- Total 46,219 52,557 Due from banks-interest bearing 1,134 442 Federal funds sold and repurchase agreements 2,336 2,246 -------- -------- Total Interest Income 200,013 212,332 INTEREST EXPENSE Interest bearing deposits 62,421 75,721 Foreign deposits 467 248 Short-term borrowings 5,996 6,450 Long-term debt 5,736 5,533 -------- -------- Total Interest Expense 74,620 87,952 -------- -------- NET INTEREST INCOME 125,393 124,380 PROVISION FOR POSSIBLE LOAN LOSSES 8,383 14,049 -------- -------- NET INTEREST INCOME AFTER PROVISION FOR POSSIBLE LOAN LOSSES 117,010 110,331 OTHER INCOME Trust 15,657 14,873 Service charges 14,455 14,108 Credit card fees 5,801 5,446 Mortgage banking 2,405 1,793 Investment banking 2,369 2,591 Securities gains 225 2,664 Other 8,010 8,165 -------- -------- Total Other Income 48,922 49,640 OTHER EXPENSE Salaries 44,348 42,112 Employee benefits 11,389 10,316 Net occupancy 6,460 6,319 Equipment 8,671 8,352 Other 32,956 40,262 -------- -------- Total Other Expense 103,824 107,361 -------- -------- INCOME BEFORE INCOME TAXES 62,108 52,610 INCOME TAXES 23,253 19,545 -------- -------- NET INCOME $ 38,855 $ 33,065 ======== ======== PER SHARE DATA Average common shares outstanding 42,857,806 42,078,489 Net income* $.91 $.79 Dividends declared .28 .24 3/4 *Based on weighted average common shares outstanding.
15 MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES 17 CONSOLIDATED BALANCE SHEET (THOUSANDS)
MARCH 31 DECEMBER 31 MARCH 31 1994 1993 1993 -------- ----------- -------- ASSETS Cash and due from banks $ 560,473 $ 705,673 $ 551,787 Due from banks-interest bearing 85,480 144,538 5,376 Federal funds sold and repurchase agreements 61,037 186,962 18,761 Investments in debt and equity securities Trading 6,622 15,735 15,953 Available-for-sale 315,340 393,140 45,084 Held-to-maturity (Estimated fair value of $3,056,092, $3,033,347 and $3,427,585, respectively) 3,047,121 2,992,303 3,343,168 ----------- ----------- ----------- Total 3,369,083 3,401,178 3,404,205 Loans and leases, net of unearned income 7,510,609 7,381,774 7,460,642 Reserve for possible loan losses (165,373) (168,651) (155,658) ----------- ----------- ----------- Net Loans and Leases 7,345,236 7,213,123 7,304,984 Bank premises and equipment 199,047 199,363 198,692 Due from customers on acceptances 9,979 11,923 7,371 Other assets 292,547 278,367 356,730 ----------- ----------- ----------- Total Assets $11,922,882 $12,141,127 $11,847,906 =========== =========== =========== LIABILITIES Deposits Non-interest bearing $ 1,472,519 $ 1,713,275 $ 1,316,327 Interest bearing 7,808,087 7,862,723 8,130,430 Foreign 48,767 26,085 39,581 ----------- ----------- ----------- Total Deposits 9,329,373 9,602,083 9,486,338 Federal funds purchased and repurchase agreements 575,454 602,997 773,651 Other short-term borrowings 526,802 520,650 206,309 Long-term debt 293,572 272,778 275,606 Bank acceptances outstanding 9,979 11,923 7,371 Other liabilities 202,739 172,139 221,419 ----------- ----------- ----------- Total Liabilities 10,937,919 11,182,570 10,970,694 Commitments and contingent liabilities - - - MARCH 31 DEC. 31 MARCH 31 1994 1993 1993 -------- ------- -------- SHAREHOLDERS' EQUITY Preferred stock-no par value Shares authorized 5,000 5,000 5,000 Shares issued - - - - - - Common stock-$5.00 par value Shares authorized 70,000 70,000 70,000 Shares issued and outstanding 42,931 42,802 42,120 214,657 214,012 210,601 Capital surplus 165,080 164,448 149,138 Retained earnings 605,226 580,097 517,473 ----------- ----------- ----------- Total Shareholders' Equity 984,963 958,557 877,212 ----------- ----------- ----------- Total Liabilities and Shareholders' Equity $11,922,882 $12,141,127 $11,847,906 =========== =========== ===========
MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES 16 18 CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY ($ IN THOUSANDS)
COMMON STOCK TOTAL ----------------------- CAPITAL RETAINED SHAREHOLDERS' SHARES DOLLARS SURPLUS EARNINGS EQUITY ------ ------- ------- -------- ------------- BALANCE AT DECEMBER 31, 1992, AS RESTATED 42,031,973 $210,160 $148,089 $493,075 $851,324 Net income 33,065 33,065 Dividends declared Mercantile Bancorporation Inc.--$.24 3/4 per share (8,616) (8,616) Pooled companies prior to acquisition (1,031) (1,031) Issuance of common stock Employee incentive plans 81,680 408 988 1,396 Convertible notes 2,935 15 61 76 Change in valuation allowance for marketable equity securities 980 980 Pre-merger transactions of pooled companies 3,412 18 18 ---------- -------- -------- -------- -------- BALANCE AT MARCH 31, 1993 42,120,000 $210,601 $149,138 $517,473 $877,212 ========== ======== ======== ======== ======== BALANCE AT DECEMBER 31, 1993, AS RESTATED 42,802,322 $214,012 $164,448 $580,097 $958,557 Net income 38,855 38,855 Dividends declared--$.28 per share (12,019) (12,019) Issuance of common stock Employee incentive plans 115,686 579 533 1,112 Convertible notes 534 3 11 14 Net fair value adjustment for securities available-for-sale (1,707) (1,707) Pre-merger transactions of pooled companies 12,562 63 88 151 ---------- -------- -------- -------- -------- BALANCE AT MARCH 31, 1994 42,931,104 $214,657 $165,080 $605,226 $984,963 ========== ======== ======== ======== ========
17 MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES 19 CONSOLIDATED STATEMENT OF CASH FLOWS (THOUSANDS)
THREE MONTHS ENDED MARCH 31 1994 1993 ---- ---- OPERATING ACTIVITIES Net income $ 38,855 $ 33,065 Adjustments to reconcile net income to net cash provided by operating activities Provision for possible loan losses 8,383 14,049 Depreciation and amortization 6,843 6,502 Provision for deferred income taxes 534 4,037 Net change in trading securities 9,113 1,731 Net change in accrued interest receivable 1,485 837 Net change in accrued interest payable (4,580) (3,067) Net change in accrued taxes payable 27,195 13,701 Other, net (9,665) (726) ---------- --------- Net Cash Provided by Operating Activities 78,163 70,129 INVESTING ACTIVITIES Investments in debt and equity securities, other than trading securities Purchases (399,112) (373,219) Proceeds from maturities 342,923 311,750 Proceeds from sales of: Held-to-maturity securities - 22,078 Available-for-sale securities 146,399 71,675 Securities from acquired entities 74,014 7,171 Net change in loans and leases (335,990) (36,786) Purchases of loans and leases (20,063) (20,816) Proceeds from sales of loans and leases 65,662 24,082 Purchases of premises and equipment (7,080) (4,965) Proceeds from sales of premises and equipment 491 - Proceeds from sales of foreclosed property 4,430 7,839 Other, net 4,048 4,553 ---------- --------- Net Cash Provided (Used) by Investing Activities (124,278) 13,362 FINANCING ACTIVITIES Net change in non-interest bearing, savings, interest bearing demand and money market deposit accounts (222,065) (297,560) Net change in time certificates of deposit under $100,000 (114,500) (183,815) Net change in time certificates of deposit $100,000 and over 45,371 20,888 Net change in other time deposits (4,198) (1,065) Net change in foreign deposits 22,682 19,931 Net change in short-term borrowings (21,391) (5,434) Issuance of long-term debt 75,000 - Principal payments on long-term debt (54,211) (23,446) Cash dividends paid (12,019) (9,647) Proceeds from issuance of common stock 1,112 1,055 Other, net 151 18 ---------- --------- Net Cash Used by Financing Activities (284,068) (479,075) ---------- --------- DECREASE IN CASH AND CASH EQUIVALENTS (330,183) (395,584) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,037,173 971,508 ---------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 706,990 $ 575,924 ========== =========
MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES 18 20 BANKS AND OTHER SUBSIDIARIES
TOTAL ASSETS MAR. 31, 1994 BANK MAIN OFFICE (THOUSANDS) - - ---- ----------- ------------- Mercantile Bank of St. Louis N.A. St. Louis, MO $4,938,280 United Postal Savings Association St. Louis, MO 1,221,774 Mercantile Bank of Kansas City Kansas City, MO 784,425 Mercantile Bank of Kansas Overland Park, KS 603,031 Mercantile Bank of Joplin N.A. Joplin, MO 385,373 Mercantile Bank of Illinois N.A. Alton, IL 369,477 Mercantile Bank of Northern Iowa Waterloo, IA 360,823 Mercantile Bank of St. Joseph N.A. St. Joseph, MO 327,843 Mercantile Bank of Springfield Springfield, MO 225,688 Mercantile Bank of Lawrence N.A. Lawrence, KS 216,386 Mercantile Bank of Topeka N.A. Topeka, KS 197,517 Mercantile Bank of Cape Girardeau Cape Girardeau, MO 163,937 Mercantile Bank of West Central Missouri Sedalia, MO 159,819 Mercantile Bank of North Central Missouri Macon, MO 157,282 Mercantile Bank of the Mineral Area Farmington, MO 156,565 Mercantile Bank of Franklin County Washington, MO 149,003 Mercantile Bank of Lake of the Ozarks Eldon, MO 127,975 Mercantile Bank of Jefferson County High Ridge, MO 123,904 Mercantile Bank of Poplar Bluff Poplar Bluff, MO 112,564 Mercantile Bank of Mt. Vernon Mt. Vernon, IL 100,963 Mercantile Bank of Centralia N.A. Centralia, IL 99,019 Mercantile Bank of Trenton N.A. Trenton, MO 85,185 TOTAL ASSETS MAR. 31, 1994 BANK MAIN OFFICE (THOUSANDS) - - ---- ----------- ------------- Mercantile Bank of Monett N.A. Monett, MO $84,713 Mercantile Bank of Missouri Valley Richmond, MO 84,569 Mercantile Bank of Stoddard/Bollinger Counties N.A. Dexter, MO 82,185 Mercantile Bank of Flora N.A. Flora, IL 69,261 Mercantile Bank of Perryville Perryville, MO 69,089 Mercantile Bank of Phelps County Rolla, MO 64,118 Mercantile Bank of Table Rock Lake Branson West, MO 55,617 Mercantile Bank of Memphis Memphis, MO 52,805 Mercantile Bank of Doniphan N.A. Doniphan, MO 51,959 Mercantile Bank of Ste. Genevieve Ste. Genevieve, MO 51,071 Mercantile Bank of Pike County Bowling Green, MO 47,755 Mercantile Bank of Montgomery City N.A. Montgomery City, MO 47,135 Mercantile Bank of Northwest Missouri Maryville, MO 44,957 Mercantile Bank of Carlyle Carlyle, IL 42,178 Mercantile Bank of Wright County Hartville, MO 41,305 Mercantile Bank of Boone County Columbia, MO 41,084 Mercantile Bank of Willow Springs Willow Springs, MO 40,842 Mercantile Bank of Plattsburg Plattsburg, MO 38,725 Mercantile Bank of Sikeston Sikeston, MO 37,836 Mercantile Trust Company N.A. St. Louis, MO 7,258
- - ------------------------------------------------------------------------------- ASSET-BASED LENDING Mercantile Business Credit, Inc. 12443 Olive Blvd. St. Louis, MO 63141-6432 BROKERAGE SERVICES Mercantile Investment Services, Inc. Mercantile Tower St. Louis, MO 63101-1643 CREDIT CARD SERVICES Mercantile Card Services Inc. 12443 Olive Blvd. St. Louis, MO 63141-6432 CREDIT LIFE INSURANCE Mississippi Valley Life Insurance Co. Mercantile Tower St. Louis, MO 63101-1643 INSURANCE AGENCY Mercantile Insurance Services, Inc. Mercantile Tower St. Louis, MO 63101-1643 INVESTMENT MANAGEMENT Mississippi Valley Advisors Inc. Mercantile Tower St. Louis, MO 63101-1643 OFF-SHORE BRANCH Mercantile Bank of St. Louis N.A. Cayman Branch Grand Cayman, B.W.I. 19 MERCANTILE BANCORPORATION INC. 21 DIRECTORS AND EXECUTIVE OFFICERS DIRECTORS RICHARD P. CONERLY(1,3) Chairman Orion Capital Inc. HARRY M. CORNELL, JR.(2,4) Chairman and Chief Executive Officer Leggett & Platt, Inc. EARL K. DILLE(3,5,6) Retired President Union Electric Company J. CLIFF EASON(1) President, Network Services Southwestern Bell Telephone Company BERNARD A. EDISON(2,3) Director Emeritus Edison Brothers Stores, Inc. WILLIAM A. HALL(1) Assistant to the Chairman Hallmark Cards, Inc. THOMAS A. HAYS(2,3,4) Deputy Chairman The May Department Stores Company WILLIAM G. HECKMAN(3,6) Chairman Emeritus Arch Mineral Corporation THOMAS H. JACOBSEN(3,4) Chairman and Chief Executive Officer Mercantile Bancorporation Inc. JAMES B. MALLOY(2,6) Chairman and Chief Executive Officer Smurfit Packaging Corporation CHARLES H. PRICE II(6) Chairman Mercantile Bank of Kansas City HARVEY SALIGMAN(2) Managing Partner Cynwyd Investments CRAIG D. SCHNUCK(5) Chairman and Chief Executive Officer Schnuck Markets, Inc. ROBERT W. STALEY(6) Vice Chairman Emerson Electric Co. ROBERT L. STARK(6) Dean University of Kansas Regents Center PATRICK T. STOKES(1) President Anheuser-Busch, Inc. FRANCIS A. STROBLE(1) Retired Chief Financial Officer Monsanto Company JOSEPH G. WERNER(5) President Werner Investments JOHN A. WRIGHT(1) President and Chief Executive Officer Big River Minerals Corp. [FN] (1) Member of Audit Committee (2) Member of Compensation and Management Development Committee (3) Member of Executive Committee (4) Member of Nominating and Board Affairs Committee (5) Member of Community Relations Committee (6) Member of Credit Policy Committee - - ------------------------------------------------------------------------------- EXECUTIVE OFFICERS THOMAS H. JACOBSEN Chairman and Chief Executive Officer RALPH W. BABB, JR. Vice Chairman W. RANDOLPH ADAMS Executive Vice President and Chief Financial Officer JOHN Q. ARNOLD Executive Vice President and Chief Credit Officer JOHN H. BEIRISE President and Chief Institutional Banking Officer Mercantile Bank of St. Louis N.A. RICHARD H. GOLDBERG Executive Vice President Mercantile Bank of St. Louis N.A. Operations MICHAEL J. GORMAN Chairman and Chief Consumer Banking Officer Mercantile Bank of St. Louis N.A. RICHARD C. KING President and Chief Executive Officer Mercantile Bank of Kansas City JOHN W. MCCLURE Executive Vice President Community Banking JON W. BILSTROM General Counsel and Secretary JON P. PIERCE Senior Vice President Human Resources PATRICK STRICKLER Senior Vice President Public Affairs ARTHUR G. HEISE Senior Vice President and Auditor MICHAEL T. NORMILE Senior Vice President and Treasurer MERCANTILE BANCORPORATION INC. 20 22 INVESTOR INFORMATION NEW YORK STOCK EXCHANGE: MTL(1) SELECTED DATA
MARCH 31 1994 1993 ---- ---- Market Price $31 7/8 $34 5/8 Yield 3.51% 2.86% Price Earnings Ratio 10.88X 13.96x Book Value $22.94 $20.83 Shares Outstanding Average 42,857,806 42,078,489 Period-end 42,931,104 42,120,000 Shareholders of Record 13,422 14,070 Average Daily Volume(2) 62,279 126,042
- - ------------------------------------------------------------------------------------------------------------------------- COMMON STOCK INFORMATION
MARKET PRICE AVERAGE ----------------------------------- DAILY DIVIDEND HIGH LOW CLOSE VOLUME(2) DECLARED ---- --- ----- --------- -------- 1994 1ST QUARTER $34 1/8 $29 7/8 $31 7/8 62,279 $.28 1993 1st Quarter $35 5/8 $30 5/8 $34 5/8 126,042 $.24 3/4 2nd Quarter 37 5/8 29 3/8 32 7/8 54,552 .24 3/4 3rd Quarter 34 3/8 31 5/8 33 5/8 43,167 .24 3/4 4th Quarter 34 5/8 29 1/8 30 1/8 52,058 .24 3/4 -------- Total $.99 ======== - - --------------------------------------------------------------------------------------------------------------------------- (1) Generally appears as MercBcpMO or MercBc in newspaper stock tables. (2) The average daily volume subsequent to March 24, 1993 reflects the listing of Mercantile Bancorporation Inc. common stock on the New York Stock Exchange.
DIVIDEND REINVESTMENT PLAN AND DIVIDEND DIRECT DEPOSIT If you wish to participate in or want further information concerning the Dividend Reinvestment Plan or Dividend Direct Deposit, please contact Society Shareholder Services, Inc., One Mercantile Center, Suite 2120, St. Louis, MO 63101-1673, telephone 314-241-4002. DIVIDEND DATES Dividends are normally paid the first business day of January, April, July and October. 21 MERCANTILE BANCORPORATION INC. 23 DEBT SECURITIES OUTSTANDING (THOUSANDS)
MARCH 31 1994 -------- 7.625% Subordinated Notes, due 2002 $150,000 6.375% Subordinated Notes, due 2004 75,000 9.000% Mortgage-backed Notes, due 1999 53,060 8.000% Convertible Subordinated Capital Notes, due 1995 13,508
- - ------------------------------------------------------------------------------- DEBT RATINGS
THOMSON STANDARD MOODY'S FITCH BANKWATCH & POOR'S ------- ----- --------- -------- MERCANTILE BANCORPORATION INC. Issuer Rating B Commercial Paper P-2 TBW-1 A-2 Subordinated Debt 7.625% Subordinated Notes, due 2002 Baa1 BBB+ BBB MERCANTILE BANK OF ST. LOUIS N.A. 6.375% Subordinated Notes, due 2004 A3 A- A- BBB+ Certificates of Deposit TBW-1 A-/A-2 Letters of Credit TBW-1 A-/A-2 UNITED POSTAL SAVINGS ASSOCIATION 9.000% Mortgage-backed Notes, due 1999 AAA
- - ------------------------------------------------------------------------------- INVESTOR RELATIONS Ralph W. Babb, Jr. Vice Chairman Mercantile Bancorporation Inc. P.O. Box 524 St. Louis, MO 63166-0524 GENERAL COUNSEL Thompson & Mitchell One Mercantile Center St. Louis, MO 63101-1693 TRANSFER AGENT Society National Bank P.O. Box 6477 Cleveland, OH 44101-1477 INDEPENDENT ACCOUNTANTS KPMG Peat Marwick 1010 Market Street St. Louis, MO 63101-2085 22 24 MERCANTILE BANCORPORATION INC. FIRST QUARTER REPORT 1994 Mercantile Bancorporation Inc. Mercantile Tower P.O. Box 524 St. Louis, MO 63166-0524 25 APPENDIX There is a bar-graph titled "COMMON STOCK PRICE RANGE" on page 21 of the printed First Quarter Report. The graph plots Fiscal Quarters to Dollars on the X and Y axis respectively. This graph shows five quarters of market price ranges from the first quarter of 1993 to the first quarter of 1994. Each bar indicates the dollar range of the stock price for the period. The high price is printed above and the low price below the bar. These figures correspond with the Common Stock Information table also on page 21. -----END PRIVACY-ENHANCED MESSAGE-----