-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PbA0YdKEwevCUx4wgwweBec/DqTmc6Q0MxDYCg33HJTTwB+C0kGhYvbnYv8IP+nj Cp4yW8Fqc4p+lZL4bqP15A== 0000950114-97-000423.txt : 19970926 0000950114-97-000423.hdr.sgml : 19970926 ACCESSION NUMBER: 0000950114-97-000423 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970925 ITEM INFORMATION: FILED AS OF DATE: 19970925 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MERCANTILE BANCORPORATION INC CENTRAL INDEX KEY: 0000064907 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 430951744 STATE OF INCORPORATION: MO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-11792 FILM NUMBER: 97685355 BUSINESS ADDRESS: STREET 1: 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 8-K 1 MERCANTILE BANCORPORATION INC. FORM 8-K 1 =============================================================================== SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): September 25, 1997 MERCANTILE BANCORPORATION INC. (Exact name of registrant as specified in its charter) MISSOURI 1-11792 43-0951744 (State or other (Commission File (I.R.S. Employer jurisdiction of Number) Identification organization) Number) 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 =============================================================================== 2 ITEM 5. OTHER EVENTS Effective July 1, 1997, Mercantile Bancorporation Inc. ("MBI" or the "Corporation") acquired Roosevelt Financial Group, Inc. ("Roosevelt") in a transaction accounted for as a purchase. The following unaudited pro forma combined consolidated balance sheet gives effect to the acquisition of Roosevelt as if the acquisition was consummated on June 30, 1997. The following pro forma combined consolidated income statements for the six months ended June 30, 1997 and for the year ended December 31, 1996 set forth the results of operations of the Corporation combined with the results of operations of Roosevelt as if the acquisition of Roosevelt had occurred as of the first day of each period presented. The Unaudited Pro Forma Combined Consolidated Financial Statements should be read in conjunction with the accompanying Notes to the Pro Forma Combined Consolidated Financial Statements and with the historical financial statements of the Corporation and Roosevelt, which were filed in the Corporation's Current Reports on Form 8-K dated May 13, 1997 and July 1, 1997, respectively. These Unaudited Pro Forma Combined Consolidated Financial Statements may not be indicative of the results of operations that actually would have occurred if the acquisition of Roosevelt had been consummated on the dates assumed above or of the results of operations that may be achieved in the future. - 2 - 3 MERCANTILE BANCORPORATION INC. PRO FORMA COMBINED CONSOLIDATED BALANCE SHEET JUNE 30, 1997 (THOUSANDS) (UNAUDITED)
Pro Forma Roosevelt Combined MBI Roosevelt Adjustments Consolidated ----------- ---------- --------------- ------------ ASSETS Cash and due from banks $ 1,053,338 $ 100,169 $ 374,477) $ 733,008 12,478 (2,700) (55,800) Due from banks-interest bearing 180,445 12,460 192,905 Federal funds sold and repurchase agreements 420,988 -- 420,988 Investments in debt and equity securities Trading 73,429 -- 73,429 Available-for-sale 4,336,067 2,670,293 (14,500) 6,991,860 Held to maturity 303,214 -- 303,214 ----------- ---------- --------- ----------- Total 4,712,710 2,670,293 (14,500) 7,368,503 Loans and leases 15,421,311 4,240,478 19,661,789 Reserve for possible loan losses (234,684) (20,139) (13,800) (268,623) ----------- ---------- --------- ----------- Net loans and leases 15,186,627 4,220,339 (13,800) 19,393,166 Goodwill 166,786 6,175 607,253 774,039 (6,175) Other assets 858,715 242,549 411,027 1,068,172 (33,092) (411,027) ----------- ---------- --------- ----------- Total Assets $22,579,609 $7,251,985 $ 119,187 $29,950,781 =========== ========== ========= =========== LIABILITIES Deposits Non-interest bearing $ 3,105,751 $ 217,066 $ $ 3,322,817 Interest bearing 13,577,786 5,100,448 18,678,234 Foreign 270,908 -- 270,908 ----------- ---------- --------- ----------- Total Deposits 16,954,445 5,317,514 -- 22,271,959 Short-term borrowings 2,449,526 1,210,851 3,660,377 Bank notes 175,000 -- 175,000 Long-term debt 796,049 121,000 917,049 Company-obligated mandatorily redeemable preferred securities of Mercantile Capital Trust I 150,000 150,000 Other liabilities 294,337 160,739 4,065 432,741 (26,400) ----------- ---------- --------- ----------- Total Liabilities 20,819,357 6,810,104 (22,335) 27,607,126 SHAREHOLDERS' EQUITY Common stock 1,179 469 123 1,302 (469) Capital surplus 582,567 265,240 374,343 956,910 138,459 (403,699) Retained earnings 1,436,641 176,172 6,859 1,385,800 (169,313) (6,859) (57,700) Treasury stock (260,135) -- 259,778 (357) ----------- ---------- --------- ----------- Total Shareholders' Equity 1,760,252 441,881 141,522 2,343,655 ----------- ---------- --------- ----------- Total Liabilities and Shareholders' Equity $22,579,609 $7,251,985 $ 119,187 $29,950,781 =========== ========== ========= =========== See Notes to Pro Forma Combined Consolidated Financial Statements.
- 3 - 4 MERCANTILE BANCORPORATION INC. PRO FORMA COMBINED CONSOLIDATED INCOME STATEMENT FOR THE SIX MONTHS ENDED JUNE 30, 1997 (THOUSANDS EXCEPT PER SHARE DATA) (UNAUDITED)
Pro Forma Roosevelt Combined MBI Roosevelt Adjustments Consolidated ------------ --------- --------------- ------------ Interest Income $ 809,625 $272,169 $ $ 1,081,794 Interest Expense 382,101 178,306 858 577,477 16,212 ------------ -------- -------- ------------ Net Interest Income 427,524 93,863 (17,070) 504,317 Provision for Possible Loan Losses 46,138 3,474 -- 49,612 ------------ -------- -------- ------------ Net Interest Income after Provision for Possible Loan Losses 381,386 90,389 (17,070) 454,705 Other Income Trust 46,823 -- 46,823 Service charges 45,389 13,018 58,407 Credit card fees 10,772 -- 10,772 Net loss from financial instruments -- (35,630) (35,630) Securities gains 2,867 -- 2,867 Other 70,176 10,038 80,214 ------------ -------- -------- ------------ Total Other Income 176,027 (12,574) -- 163,453 Other Expense Salaries and employee benefits 195,974 23,717 219,691 Net occupancy and equipment 53,967 9,291 63,258 Other 136,129 36,555 20,242 192,926 ------------ -------- -------- ------------ Total Other Expense 386,070 69,563 20,242 475,875 ------------ -------- -------- ------------ Income Before Income Taxes 171,343 8,252 (37,312) 142,283 Income Taxes 64,169 7,630 (6,145) 65,654 ------------ -------- -------- ------------ Net Income $ 107,174 $ 622 $(31,167) $ 76,629 ============ ======== ======== ============ Per Share Data Average Common Shares Outstanding 113,450,600 128,699,484 Net Income $0.94 $0.60 See Notes to Pro Forma Combined Consolidated Financial Statements.
- 4 - 5 MERCANTILE BANCORPORATION INC. PRO FORMA COMBINED CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 1996 (THOUSANDS EXCEPT PER SHARE DATA) (UNAUDITED)
Pro Forma Roosevelt Combined MBI Roosevelt Adjustments Consolidated ------------ --------- --------------- ------------ Interest Income $ 1,552,863 $640,311 $ $ 2,193,174 Interest Expense 724,910 462,724 10,290 1,233,299 35,375 ------------ -------- -------- ------------ Net Interest Income 827,953 177,587 (45,665) 959,875 Provision for Possible Loan Losses 73,015 1,262 74,277 ------------ -------- -------- ------------ Net Interest Income after Provision for Possible Loan Losses 754,938 176,325 (45,665) 885,598 Other Income Trust 86,616 -- 86,616 Service charges 88,916 17,157 106,073 Credit card fees 27,962 -- 27,962 Net loss from financial instruments -- (76,634) (76,634) Securities losses (83) -- (83) Other 134,069 23,510 157,579 ------------ -------- -------- ------------ Total Other Income 337,480 (35,967) -- 301,513 Other Expense Salaries and employee benefits 365,729 42,304 408,033 Net occupancy and equipment 103,715 18,081 121,796 Other 249,224 63,024 40,484 352,732 ------------ -------- -------- ------------ Total Other Expense 718,668 123,409 40,484 882,561 ------------ -------- -------- ------------ Income Before Income Taxes 373,750 16,949 (86,149) 304,550 Income Taxes 128,535 5,835 (16,439) 117,931 ------------ -------- -------- ------------ Income Before Extraordinary Items $ 245,215 $ 11,114 $(69,710) $ 186,619 ============ ======== ======== ============ Per Share Data Average Common Shares Outstanding 115,938,311 134,887,195 Income Before Extraordinary Items $2.11 $1.38 See Notes to Pro Forma Combined Consolidated Financial Statements.
- 5 - 6 MERCANTILE BANCORPORATION INC. NOTES TO PRO FORMA COMBINED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) [FN] Represents the Corporation's restated historical consolidated financial statements reflecting the acquisition of Hawkeye Bancorporation, effective January 2, 1996, and Mark Twain Bancshares, Inc. ("Mark Twain"), effective April 25, 1997. Such acquisitions were accounted for as poolings-of-interests. The acquisition of First Sterling Bancorp, Inc. ("Sterling") by the Corporation and the acquisition of Northland Bancshares, Inc. by Mark Twain were also accounted for as poolings-of-interests; however, due to the immateriality of the financial condition and results of operations of Sterling and Northland Bancshares, Inc. to that of the Corporation and Mark Twain, the historical financial statements were not restated. Therefore, Sterling and Northland Bancshares, Inc. are included in these pro forma financial statements only from their respective acquisition dates forward. Each of Security Bank of Conway, F.S.B., Metro Savings Bank, F.S.B., Peoples State Bank, First Financial Corporation of America, TODAY'S Bancorp, Inc., Regional Bancshares, Inc. and First City Bancshares, Incorporated, each of which was accounted for as a purchase, is included in these pro forma financial statements only from its respective acquisition date forward. The full impact of these acquisitions is immaterial to the Unaudited Pro Forma Combined Consolidated Financial Statements. All per share data reflects the 3-for-2 stock split declared by the Corporation on July 16, 1997, which is payable on October 1, 1997. The acquisition of Roosevelt will be accounted for as a purchase transaction. Included herein is the amortization of goodwill over a 15-year period (see footnote 7 below) and interest expense related to the issuance of subordinated debt securities and notes as described in footnotes 8 and 9 below. The impact of interest income lost on the cash consideration and stock buybacks is immaterial to the Pro Forma Combined Consolidated Financial Statements through June 30, 1997. Goodwill is considered nondeductible. The income tax benefit associated with taxable income statement adjustments is computed at an effective tax rate of 36%. Purchase entry of Roosevelt, which was calculated as follows: Total share consideration, including 6,668,451 treasury shares purchased at an average cost of $38.956 per share 18,948,884 Closing price of MBI Common Stock on December 20, 1996, the business date preceding the public announcement of the merger with Roosevelt $ 33.833 ------------ $ 641,103,000 Cash consideration 374,477,000 -------------- Total consideration of acquisition 1,015,580,000(A) Shareholders' equity of Roosevelt at June 30, 1997 441,881,000 July 1, 1997 impact of transaction-related adjustments, including the sale of Missouri State Bank (see footnote 4 below) (30,854,000) ------------ Adjusted Roosevelt equity 411,027,000(B) Investment banking fees paid by MBI after June 30, 1997 2,700,000(C) -------------- Goodwill (A) minus (B) (see footnote 7 below) plus (C) $ 607,253,000 ============== - --------------- Of the 10,500,000 shares authorized to be repurchased in conjunction with the Roosevelt acquisition, only 6,668,451 shares were repurchased. The Corporation currently does not plan to repurchase additional shares relative to the Roosevelt acquisition prior to the expiration on September 30, 1997 of the authorization by the Board of Directors of the Corporation of the repurchase.
- 6 - 7 Roosevelt completed three acquisitions in the fourth quarter of 1996. Roosevelt acquired Community Charter Corporation, a commercial bank holding company, Mutual Bancompany, Inc., parent company of Mutual Savings Bank, and Sentinel Financial Corporation, a thrift holding company. The impact of these acquisitions is immaterial to the Unaudited Pro Forma Combined Consolidated Financial Statements. Impact of transaction-related adjustment entries, including the sale of Missouri State Bank. Individual line items on the pro forma combined consolidated balance sheet are not adjusted for the sale of Missouri State Bank. The net impact is reflected in other assets and shareholders' equity; the impact on individual balance sheet line items is not material. These entries reduced Roosevelt's shareholders' equity by $30,854,000 from the June 30, 1997 level; such reduction increased MBI's goodwill related to the Roosevelt purchase acquisition. Elimination of the Corporation's investment in Roosevelt. This entry reflects the impact of purchase accounting adjustments and the sale of Missouri State Bank (see footnote 4 above). Balance sheet impact of conforming adjustments related to the merger with Roosevelt (see footnote 10 below). These adjustments, excluding the reserve for possible loan losses and investment securities entries, will be initially recorded as a credit to accrued liabilities. Because they will be paid out in cash within an estimated 18-month period following the merger with Roosevelt, the Unaudited Pro Forma Combined Consolidated Financial Statements reflect the cash outlay. An income tax benefit at an effective tax rate of 31% is included in this adjustment. The pro forma excess of cost over fair value of net assets acquired was $607,253,000 for Roosevelt as of June 30, 1997. The annual amount of goodwill amortization, given a 15-year amortization period, is $40,484,000. On January 29, 1997, the Corporation issued $150,000,000 of subordinated debt securities, which were issued at a floating rate equal to the three-month LIBOR plus 85 basis points. The rate assumed in calculating the expense for the Unaudited Pro Forma Combined Consolidated Financial Statements is 6.86%. On June 11, 1997, the Corporation issued $200,000,000 of subordinated notes due 2007 at 7.3%, $150,000,000 of senior notes due 2001 at 6.8% and $150,000,000 of senior notes due 2004 at 7.05%. - 7 - 8 Upon consummation of the acquisition of Roosevelt, the Corporation recorded certain transaction-related entries to conform accounting and credit policies to those of the Corporation. The pre-tax adjustments are approximated as follows:
$(000's) -------- -- Adjustment of lives over which investment securities are amortized to conform with MBI's policies $14,500 -- Adjustment to reserve for possible loan losses to conform to MBI's reserving policies 13,800 -- Write-downs to fair value of branches and equipment to be disposed of 13,500 -- Transition and duplicative costs related to system standardization and signage 12,000 -- Accruals for severance and change of control payments 8,600 -- Contract cancellation penalties 8,500 -- Loss incurred on the sale of interest rate floors 8,500 -- Environmental exposure and other 4,700 ------- Total $84,100 =======
The computation of year-to-date average shares as restated for the pooling-of-interests with Mark Twain and the 3-for-2 stock split payable on October 1, 1997 is as follows:
FOR THE YEAR ENDED FOR THE SIX MONTHS ENDED DECEMBER 31, 1996 JUNE 30, 1997 ------------------ ------------------------ Shares of MBI Common Stock issued and outstanding 115,938,311 113,450,600 Shares of MBI Common Stock to be issued in the Roosevelt acquisition 18,948,884 18,948,884 Less effect of treasury share purchases from January 1, 1997 through June 30, 1997 -- (3,700,000) ----------- ----------- Pro Forma Combined 134,887,195 128,699,484 =========== ===========
- 8 - 9 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 hereunto duly authorized. Dated: September 24, 1997 MERCANTILE BANCORPORATION INC. By: /s/ John Q. Arnold ---------------------------------------------- John Q. Arnold Senior Executive Vice President and Chief Financial Officer - 9 - -----END PRIVACY-ENHANCED MESSAGE-----