-----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, nyOXS7qOFl6lTq5kf1HsSMtj+YP516EzsmCBn4P7sxChvhglTmXLEasEbPXMKDwS 5xWjOrD9j1JoC4ap1eR4+A== 0000950114-94-000117.txt : 19941116 0000950114-94-000117.hdr.sgml : 19941116 ACCESSION NUMBER: 0000950114-94-000117 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941114 SROS: NYSE 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: 94560034 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 September 30, 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, 43,278,025 shares outstanding as of the close of business on October 31, 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 September 30, 1994, attached hereto as Exhibit 19, are incorporated herein by reference:
Quarterly Report STATEMENT Reference - ------------------------------------------------------- ---------------- Consolidated Statement of Income - Three Months and Nine Months ended September 30, 1994 and 1993. Page 18 Consolidated Balance Sheet as of September 30, 1994 and December 31, 1993. Page 19 Consolidated Statement of Cash Flows - Nine Months ended September 30, 1994 and 1993. Page 21
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 for the 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. 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 Association, with total assets approximating $1.3 billion. Both of these acquisitions were accounted for as poolings-of-interests. The historical consolidated financial statements as of December 31, 1993 and for the three and nine month periods ended September 30, 1993 have been restated to reflect this transaction. 2 3 Net income and net income per share for the Registrant and the pooled companies prior to restatement were as follows:
($ in thousands except per share data) ---------------------- Three months ended Nine months ended September 30, 1993 September 30, 1993 ---------------------- ---------------------- REGISTRANT Net income $30,263 $85,531 Net income per share .85 2.43 METRO BANCORPORATION Net income 1,044 3,602 Net income per share 2.01 6.94 UNITED POSTAL BANCORP, INC. Net income 4,254 13,340 Net income per share .71 2.23
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 4 - 17 in the Quarterly Report of the Registrant to its Shareholders for the quarter ended September 30, 1994, is incorporated herein by reference. PART II-OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits: 19 Quarterly Report of the Registrant to its Shareholders for the quarter ended September 30, 1994. 27 Financial Data Schedule (b) Reports on Form 8-K: Registrant filed one (1) Current Report on Form 8-K during the quarter ended September 30, 1994. In that report dated October 3, 1994, under Item 5, Registrant disclosed that on September 21, 1994 it had entered into, and briefly described certain of the terms of, an Agreement and Plan of Merger (the "Merger Agreement") with Central Mortgage Bancshares, Inc. ("Central"). Pursuant to that Merger Agreement Registrant would acquire Central through merger of Central with and into a wholly-owned subsidiary of Registrant, with the shareholders of Central to receive 0.5970 of a share of Registrant common stock, par value $5.00 per share, for each share of Central common stock, par value $1.00 per share. Said Current Report also briefly described the terms of an Investment Agreement between Registrant and Central and Voting Agreements between Registrant and certain directors of Central entered into simultaneously with the execution of the Merger Agreement. 3 4 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MERCANTILE BANCORPORATION INC. (Registrant) Date November 14, 1994 s/W. Randolph Adams ------------------------- ------------------------------------- W. Randolph Adams Chief Financial Officer 4 5 EXHIBIT INDEX -------------
Exhibit No. Description Location - ----------- ----------- -------- 19 Quarterly Report of the Registrant to its Shareholders for the quarter ended September 30, 1994. Included herein 27 Financial Data Schedule Included herein
EX-19 2 MERCANTILE BANCORPORATION INC. QTRLY REP. TO SHAREHOLDERS 1 MERCANTILE BANCORPORATION INC. THIRD QUARTER REPORT 1994 Table of Contents Highlights...........................................................1 Letter to Shareholders...............................................2 Corporate News Developments..........................................3 Financial Section Financial Commentary................................................4 Condensed Consolidated Quarterly Statement of Income...............................................15 Consolidated Quarterly Average Balance Sheet.....................................................16 Financial Statements...............................................18 Banks and Other Subsidiaries........................................22 Directors and Executive Officers....................................23 Investor Information................................................24
2 HIGHLIGHTS
THIRD QUARTER NINE MONTHS ($ IN THOUSANDS EXCEPT PER SHARE DATA) 1994 1993 CHANGE 1994 1993 CHANGE - -------------------------------------------------------------------------------------------------------------------------------- PER SHARE DATA Net income $ .95 $ .84 13.1% $ 2.79 $ 2.42 15.3% Dividends declared .28 .24 3/4 13.1 .84 .74 1/4 13.1 Book value at September 30 24.12 22.19 8.7 24.12 22.19 8.7 Market price at September 30 36 7/8 33 5/8 9.7 36 7/8 33 5/8 9.7 Average common shares outstanding 43,203,882 42,526,822 1.6 43,034,158 42,338,859 1.6 - -------------------------------------------------------------------------------------------------------------------------------- OPERATING RESULTS Taxable-equivalent net interest income $131,854 $127,455 3.5% $388,569 $382,631 1.6% Tax-equivalent adjustment 2,236 2,430 (8.0) 6,833 7,234 (5.5) Net interest income 129,618 125,025 3.7 381,736 375,397 1.7 Provision for possible loan losses 8,511 12,906 (34.1) 24,909 41,440 (39.9) Other income 46,851 49,063 (4.5) 142,789 148,935 (4.1) Other expense 103,516 106,057 (2.4) 310,003 321,433 (3.6) Income taxes 23,399 19,564 19.6 69,512 58,986 17.8 Net income 41,043 35,561 15.4 120,101 102,473 17.2 - -------------------------------------------------------------------------------------------------------------------------------- ENDING BALANCES Total assets $12,237,672 $11,895,616 2.9% Loans and leases 7,873,054 7,369,829 6.8 Deposits 8,946,082 9,360,097 (4.4) Shareholders' equity 1,042,990 947,077 10.1 Reserve for possible loan losses 171,691 160,132 7.2 - -------------------------------------------------------------------------------------------------------------------------------- AVERAGE BALANCES Total assets $12,109,487 $12,253,688 (1.2)% $12,123,075 $12,249,546 (1.0)% Earning assets 11,099,439 11,139,329 (.4) 11,076,913 11,150,023 (.7) Loans and leases 7,702,126 7,348,597 4.8 7,508,800 7,431,455 1.0 Deposits 9,543,121 9,985,217 (4.4) 9,729,569 10,016,488 (2.9) Shareholders' equity 1,032,902 930,906 11.0 1,003,692 899,914 11.5 - -------------------------------------------------------------------------------------------------------------------------------- SELECTED RATIOS Return on assets 1.36% 1.16% 1.32% 1.12% Return on equity 15.89 15.28 15.95 15.18 Overhead ratio 57.93 60.08 58.34 60.47 Net interest rate margin 4.75 4.58 4.68 4.58 Equity to assets 8.52 7.96 Tier I capital to risk-adjusted assets 11.64 11.02 Total capital to risk-adjusted assets 15.58 14.56 Leverage 8.14 7.19 Reserve for possible loan losses to outstanding loans 2.18 2.17 Reserve for possible loan losses to non-performing loans 585.44 286.22 Non-performing assets to outstanding loans and foreclosed assets .76 1.39 - -------------------------------------------------------------------------------------------------------------------------------- SELECTED DATA Banks 41 41 Banking offices 244 243 Full-time equivalent employees 5,645 5,937 - -------------------------------------------------------------------------------------------------------------------------------- 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.
1 3 LETTER TO SHAREHOLDERS Mercantile's earnings for the third quarter of 1994 represented another record performance for the Corporation. As has been the case throughout this year, asset quality, expense reduction, a strong interest rate margin and increased loan demand were the principal contributors to improved earnings. Third quarter net income was $41,043,000, up 15.4% from $35,561,000 in 1993. Net income per share grew by 13.1% to $.95 from $.84 last year. Net interest income for the quarter was up a modest 3.7% to $129,618,000 in 1994 from $125,025,000 the previous year. This growth reflects a 17 basis point improvement in the net interest rate margin, which was 4.75% in the third quarter of 1994 versus 4.58% last year, and a 6.8% increase in total loans outstanding, which grew to $7.9 billion at September 30, 1994 compared with $7.4 billion one year earlier. Mercantile's asset quality continues to be among the best in the nation, as non-performing loans were $29,327,000 or .37% of total loans at the end of the quarter. The third quarter provision for possible loan losses declined 34.1% to $8,511,000 in 1994 from $12,906,000 last year and third quarter 1994 charge-offs were $9,313,000. The reserve of $171,691,000 at period end resulted in coverage ratios representing 2.18% of total loans compared with 2.17% the prior year and 585.44% of non-performing loans versus 286.22% in 1993. The Corporation continued the strategic expansion of its banking franchise by agreeing to a merger with Kansas City, Missouri-based Central Mortgage Bancshares, Inc., which owns four banks in the Kansas City area and western Missouri. Mercantile also completed the integration of the operations of United Postal Savings Association into its St. Louis-area banks during the quarter, enhancing its retail presence and mortgage lending business in the market. Mercantile has made tremendous strides over the past five years, and can now count itself among the best banks in the nation by many standards. The outstanding efforts of the Corporation's employees, and the continuing loyalty of our valued customers and shareholders has made this progress possible. We thank all of you for your past support and look forward to rewarding partnerships as we move ahead. /s/ THOMAS H. JACOBSEN Thomas H. Jacobsen Chairman of the Board and Chief Executive Officer October 28, 1994 2 MERCANTILE BANCORPORATION INC. 4 CORPORATE NEWS DEVELOPMENTS / / MERCANTILE BANK OF ST. LOUIS N.A., THROUGH AN ALLIANCE WITH FIRST CHICAGO CORPORATION, WILL DEVELOP A NATIONWIDE ELECTRONIC TAX PAYMENT SYSTEM FOR THE U.S. TREASURY DEPARTMENT. Mercantile's strong, long-term relationship with the IRS, and participation in the pilot program that led to the Electronic Federal Tax Payment System (EFTPS) were critical elements in the government's decision to award the contract. The Mercantile/First Chicago alliance was awarded a seven-year contract for the development, installation, operation and management of the EFTPS. Within a few years, the EFTPS will convert 135 million annual corporate tax payments worth $1 trillion from a paper-based system to an electronic system and may be used by up to 10 million individual taxpayers. / / MERCANTILE HAS AGREED TO MERGE WITH KANSAS CITY, MISSOURI-BASED CENTRAL MORTGAGE BANCSHARES, INC. Central Mortgage, which has approximately $629 million in assets, owns Citizens-Jackson County Bank, one of the largest institutions in the eastern suburbs of Kansas City. This addition will significantly strengthen Mercantile's presence in the area. Central also owns three other banks in the western portion of Missouri, and operates a mortgage banking unit based in Springfield, Missouri. / / AT ITS JULY MEETING, THE BOARD OF DIRECTORS DECLARED A THIRD- QUARTER DIVIDEND OF $.28 PER SHARE OF COMMON STOCK. The dividend was payable October 3, 1994 to shareholders of record September 10, 1994. / / MERCANTILE BANK OF SPRINGFIELD AND MERCANTILE BANK OF TABLE ROCK LAKE PLAN TO MERGE INTO A SINGLE BANK BY THE END OF 1994. The combined bank, which will retain the Mercantile Bank of Springfield name, will offer more banking locations and services for customers of both banks. With assets of approximately $300 million, the new Mercantile Bank of Springfield will be the fourth largest Springfield-based bank. / / MERCANTILE BANK OF MONTGOMERY CITY HAS CHANGED ITS NAME TO MERCANTILE BANK OF EAST CENTRAL MISSOURI. The new name more accurately reflects the expanding regional character of the bank, which is opening a second office in Warrenton, Missouri to serve customers in the Warren County area. 3 5 FINANCIAL COMMENTARY PERFORMANCE SUMMARY Net income for the third quarter of 1994 was $41,043,000, a 15.4% improvement from the $35,561,000 earned in the same period a year ago. On a per share basis, net income was $.95, up 13.1% from the $.84 earned in last year's third quarter. Return on assets improved to 1.36% in the third quarter compared with 1.33% in the second quarter of this year and 1.16% last year, while return on average equity was 15.89% versus 15.28% in 1993. For the first nine months of 1994, net income was $120,101,000, up 17.2% from the $102,473,000 earned last year, and on a per share basis was $2.79, an improvement of 15.3% from the $2.42 recorded in the first nine months of 1993. When compared with last year, year-to-date 1994 overall 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. For the first nine months of 1994, return on average assets was 1.32% compared with 1.12% last year, while return on average equity was 15.95% in 1994, up from 15.18% 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 reflected a 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. On July 6, 1994, Mercantile announced plans to expand its banking operations in southwestern Illinois through the acquisition of Wedge Bank, a $210 million-asset bank headquartered in Alton, Illinois. One week later, the Corporation reached an agreement to acquire UNSL Financial Corp of Lebanon, Missouri, a $464 million-asset Missouri- chartered savings and loan in southwestern Missouri. On September 21, 1994, Mercantile announced plans to acquire Central Mortgage Bancshares, Inc. of Kansas City, Missouri, a $629 million-asset bank holding company with four banking subsidiaries. All three transactions will be accounted for as poolings-of-interests. Net interest income increased 3.7% to $129,618,000 for the third quarter of 1994 and 1.7% to $381,736,000 for the first nine months of 1994. The net interest rate margin was 4.75% this quarter compared with 4.70% in the second quarter and 4.58% for the third quarter of 1993, while the year-to-date margin was 4.68% compared with 4.58% last year. Average earning assets for the first nine months of 1994 of $11.1 billion were flat with last year; however, a positive trend developed in the quarter as loans grew by $242,538,000 or 3.3% from the second quarter of 1994. Other income was $46,851,000 for the third quarter of 1994, a decrease of $2,212,000 or 4.5% from a year ago. For the nine months of 1994, other income was $142,789,000, a decrease of $6,146,000 or 4.1% from last year. Modest growth in trust fees, service charges, and credit card and letters of credit fees were offset by a significant decrease of $3,209,000 in net securities gains and by declines in mortgage banking income, investment banking income and miscellaneous revenues. 4 MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES 6 Third-quarter non-interest expenses were down 2.4% from a year ago and totaled $103,516,000 compared with $106,057,000 last year, and year- to-date were $310,003,000, down 3.6%. 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 year-to-date overhead ratio to 58.34% compared with 60.47% last year, and a lowering of the operating expense to average assets ratio to 3.41% versus 3.50% in the first nine months of 1993. The provision for possible loan losses for the third quarter of 1994 was $8,511,000 compared with $12,906,000 the prior year, and was $24,909,000 for the first nine months of 1994 compared with $41,440,000 in 1993. Net charge-offs for the first nine months of 1994 and 1993 were $21,869,000 and $49,125,000, respectively, and on an annualized basis were .39% of average loans compared with .88% last year. At September 30, 1994, the reserve for possible loan losses was $171,691,000 and covered 585.44% of non-performing loans compared with 293.39% at year-end and 286.22% last September 30. Non-performing loans as of September 30, 1994 were $29,327,000 or .37% of total loans, down from the year-end 1993 figures of $57,483,000 or .78%, and $55,948,000 or .76% at September 30, 1993. Foreclosed assets declined to $30,356,000 compared with $36,014,000 at year's end and $47,455,000 last September 30. - --------------------------------------------------------------------------------------------------------------------------------- EXHIBIT 1 ORGANIZATIONAL CONTRIBUTION ($ IN THOUSANDS)
SEPTEMBER 30, 1994 --------------------------------------------------------------------------- KANSAS PARENT ST. LOUIS CITY COMMUNITY COMPANY AND AREA AREA BANKS ELIMINATIONS CONSOLIDATED --------- ------ --------- ----------- ------------ Net income $ 65,371 $ 15,535 $ 51,701 $ (12,506) $ 120,101 Average assets 6,355,524 1,613,691 4,373,248 (219,388) 12,123,075 Return on assets 1.37% 1.28% 1.58% 1.32% Net interest rate margin 4.19 4.76 5.20 4.68 Overhead ratio 54.92 59.54 54.30 58.34 Equity to assets 8.14 8.90 9.01 8.52 Reserve for possible loan losses to outstanding loans 2.08 2.32 2.27 2.18 Reserve for possible loan losses to non-performing loans 669.63 544.60 521.31 585.44 Non-performing loans to outstanding loans .31 .43 .43 .37 Non-performing assets to outstanding loans and foreclosed assets .90 .64 .53 .76 Includes the results of Mercantile Bank of St. Louis N.A., Mercantile Trust Company N.A., Mercantile Business Credit, Inc. (asset-based lending), Mercantile Investment Services, Inc. (brokerage), Mississippi Valley Advisors Inc. (investment management), Mississippi Valley Life Insurance Co. (credit life) and Merc Mortgage (mortgage banking). - -----------------------------------------------------------------------------------------------------------------------------------
5 7 FINANCIAL COMMENTARY (cont'd) Earnings in the St. Louis Area banks (Mercantile Bank of St. Louis N.A. and Mercantile Trust Company N.A.) for the first nine months of 1994 were $65,371,000, up 16.5% from 1993. These results reflected significant reductions in operating expenses and the provision for possible loan losses, as well as a slight improvement in net interest income, partially offset by reduced other income, due largely to a higher level of securities gains during 1993 at United Postal, which was merged into Mercantile Bank of St. Louis N.A. on August 16, 1994. Return on average assets for the two banks was 1.37% compared with 1.16% for the first nine months of 1993. In the 36 Community Banks, net income was $51,701,000, an increase of 15.7%, while return on average assets improved to 1.58% compared with 1.35% last year. Earnings for the three banks in the Kansas City Area for the first nine months of 1994 were $15,535,000, up 21.6% from a year ago. Return on average assets was 1.28% compared with 1.05% last year. Consolidated assets of $12.2 billion were up 2.9% from last September 30. Core deposits decreased by 5.3% to $8.4 billion, loans were $7.9 billion, up 6.8% from last year, and shareholders' equity of $1.0 billion was 10.1% higher than at September 30, 1993. Tier I capital to risk-adjusted assets improved to 11.64% compared with 11.02% last year, while Total capital to risk-adjusted assets at September 30, 1994 and 1993 was 15.58% and 14.56%, respectively. The following financial commentary presents a more thorough discussion and analysis of the results of operations and financial position of the Corporation for the third quarter and first nine months of 1994. NET INTEREST INCOME Net interest income for the third quarter of 1994 was $129,618,000, a 3.7% increase over the $125,025,000 earned last year and for the first nine months of 1994 was $381,736,000, a 1.7% improvement over last year. This slight growth was the net result of a widening in the net interest rate margin, while average earning assets remained essentially flat. Factors contributing to the higher net interest rate margins in 1994 included higher levels of shareholders' equity, a continued decline in non-performing assets, a decrease in higher- costing retail certificates of deposit as a percentage of total funding, a contraction in lower-yielding money market investments, volume growth in the higher-yielding consumer loan categories, and the generally higher level of interest rates throughout 1994. For the first nine months of 1994, average loans increased slightly by $77,345,000 or 1.0%, while investments in debt and equity securities decreased by $62,367,000 or 1.8%. For the first nine months of 1994, average loans in the St. Louis Area banks and in the Community Banks increased by .1% and 2.9%, respectively, offset slightly by a volume decline in the Kansas City Area banks of .9%. A more 6 MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES 8 meaningful comparison of loan volumes is between the second and third quarters of 1994, during which average loans grew by 3.3% or $242,538,000, or 13.0% on an annualized basis. Year-to-date commercial loan growth was $35,706,000, up 1.8%. Residential mortgage loans were down 3.2%, but that trend has reversed as evidenced by the $107,937,000 growth in average residential mortgage loans from the second quarter to the third quarter of 1994. Average credit card loans grew by 14.8% from 1993 due to focused marketing. Other consumer loans increased by 6.7% due to strong growth in indirect auto lending. - ---------------------------------------------------------------------------------------------------------------------------- EXHIBIT 2 LOANS AND LEASES ($ IN THOUSANDS)
SEPTEMBER 30 1994 1993 CHANGE ---- ---- ------ Commercial $2,160,963 $1,985,346 8.8% Real estate-commercial 1,238,909 1,265,040 (2.1) Real estate-construction 189,702 162,769 16.5 Real estate-residential 2,419,633 2,302,239 5.1 Consumer 1,104,859 942,574 17.2 Credit card 758,554 710,930 6.7 Foreign 434 931 (53.4) ---------- ---------- Total Loans and Leases $7,873,054 $7,369,829 6.8 ========== ========== - ----------------------------------------------------------------------------------------------------------------------------
The year-to-date average investment portfolio declined by $62,367,000 or 1.8%. Approximately 10% of the portfolio was classified as available-for-sale; the FAS 115 impact on shareholders' equity was not material. The average maturity of the investment portfolio at September 30, 1994 was two years and three months. Short-term investments are primarily used for short-term excess liquidity or balancing the interest rate sensitivity of the Corporation, and on average decreased by $88,088,000 or 26.8% during the first nine months of 1994. Changes in the year-to-date 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. Core deposits were 94.39% of total deposits, yet on average were down 3.5% from last year. On average, interest bearing demand accounts increased by $90,797,000 or 6.1%, money market accounts grew by $5,707,000 or .3% and savings accounts grew by $61,694,000 or 7.2%, while retail certificates of deposit declined by $444,886,000 or 12.6%. This more costly source of funds declined to 33.69% of total core deposits from 37.18% in 1993, as customers preferred maturity flexibility with their investments. Average short-term borrowings increased by $57,862,000 or 6.8%, while purchased deposits increased by $47,647,000 or 9.6%. Average shareholders' equity increased by $103,778,000 or 11.5% due to earnings retained and stock issued under employee benefit plans. The factors discussed above 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. With increased loan demand, Mercantile is currently evaluating other funding sources to meet such demand and to enhance liquidity. Mercantile currently does not utilize derivative instruments for speculation and uses only a very small portfolio of derivative instruments for balance sheet hedging. The Consolidated Quarterly Average Balance Sheet, with rates earned and paid, is summarized by quarter on Pages 16 and 17. 7 9 FINANCIAL COMMENTARY (cont'd) OTHER INCOME Non-interest income decreased 4.5% during the third quarter of 1994 to $46,851,000, and for the nine months was $142,789,000 compared with $148,935,000 a year ago, a decline of 4.1%. Year-to-date trust fees, service charges, credit card and letters of credit fees all improved from last year while investment banking revenue, mortgage banking income and miscellaneous income declined. Net securities gains were $380,000 this year compared with $3,589,000 last year. - ------------------------------------------------------------------------------------------------------------------------------------ EXHIBIT 3 OTHER INCOME ($ IN THOUSANDS)
THIRD QUARTER NINE MONTHS 1994 1993 CHANGE 1994 1993 CHANGE ---- ---- ------ ---- ---- ------ Trust $14,270 $15,104 (5.5)% $ 45,844 $ 45,723 .3% Service charges 14,869 14,748 .8 43,810 43,367 1.0 Credit card fees 6,320 5,700 10.9 17,918 17,550 2.1 Mortgage banking 1,214 3,058 (60.3) 5,063 7,163 (29.3) Investment banking 1,827 1,878 (2.7) 6,459 6,653 (2.9) Letters of credit fees 2,024 1,783 13.5 5,051 4,720 7.0 Foreclosed property income 357 602 40.7 2,125 1,727 23.0 Securities gains (losses) (53) 910 - 380 3,589 (89.4) Other 6,023 5,280 14.1 16,139 18,443 (12.5) ------- ------- -------- -------- Total Other Income $46,851 $49,063 (4.5) $142,789 $148,935 (4.1) ======= ======= ======== ======== - ------------------------------------------------------------------------------------------------------------------------------------
Trust fees continued to be the largest source of non-interest income and were $14,270,000 for the third quarter of 1994; the 5.5% decrease was due primarily to reduced termination fees and weakness in the stock and bond markets. On a year-to-date basis, trust fees totaled $45,844,000, an increase of .3%. Exhibit 4 further details comparative trust revenue by line of business for 1994 and 1993. - ------------------------------------------------------------------------------------------------------------------------------------ EXHIBIT 4 TRUST INCOME ($ IN THOUSANDS)
THIRD QUARTER NINE MONTHS 1994 1993 CHANGE 1994 1993 CHANGE ---- ---- ------ ---- ---- ------ Personal trust-St. Louis Area banks $ 4,820 $ 4,862 (.9)% $14,898 $15,333 (2.8)% Mississippi Valley Advisors Inc. 3,037 3,219 (5.7) 9,483 9,413 .7 Corporate and institutional services 2,607 2,716 (4.0) 8,729 8,065 8.2 Kansas City Area banks and Community Banks 3,806 4,307 (11.6) 12,734 12,912 (1.4) ------- ------- ------- ------- Total Trust Income $14,270 $15,104 (5.5) $45,844 $45,723 .3 ======= ======= ======= ======= - ------------------------------------------------------------------------------------------------------------------------------------
8 MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES 10 Service charge income of $14,869,000 was up .8% or $121,000 for the third quarter and up 1.0% or $443,000 for the first nine months of 1994, as deposit volumes were flat with 1993 and some corporate customers opted to use compensating deposit balances to offset account analysis charges rather than pay fees. Credit card fee income was $6,320,000 for the third quarter of 1994, 10.9% higher than the 1993 level. For the first nine months of 1994, credit card income was $17,918,000 or 2.1% better than the comparable 1993 period. Credit card income primarily represents fees charged merchants for processing credit card transactions, fees received on transactions of Mercantile cardholders and cardholders' annual fees. Competitive market factors have tightened credit card fee and transaction pricing. Mortgage banking is now a significant line of business for Mercantile, with the merger of United Postal; total mortgage loans serviced exceeded $3.3 billion at September 30, 1994. These revenues decreased by $2,100,000 or 29.3% from the first nine months of 1993 due to lower origination volume and losses on the sale of loans. A breakout of mortgage banking revenues is provided in Exhibit 5. - ------------------------------------------------------------------------------------------------------------------------------------ EXHIBIT 5 MORTGAGE BANKING INCOME ($ IN THOUSANDS)
THIRD QUARTER NINE MONTHS 1994 1993 CHANGE 1994 1993 CHANGE ---- ---- ------ ---- ---- ------ Servicing fees $1,083 $1,182 (8.4)% $3,817 $3,234 18.0% Gains on sales of loans 33 1,525 (97.8) 265 2,754 (90.4) Origination fees 34 142 (76.1) 317 496 (36.1) Other 64 209 (69.4) 664 679 (2.2) ------ ------ ------ ------ Total Mortgage Banking Income $1,214 $3,058 (60.3) $5,063 $7,163 (29.3) ====== ====== ====== ====== - ------------------------------------------------------------------------------------------------------------------------------------
Investment banking fees and commissions, which consists 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 revenues, were $1,827,000 for the third quarter of 1994, a decline of 2.7% from 1993. For the first nine months, revenues were down $194,000 or 2.9% from the 1993 results. This source of revenue can vary depending on movements in interest rates and overall market conditions. 9 11 FINANCIAL COMMENTARY (cont'd) Securities gains declined by $3,209,000 from the first nine months of 1993, when United Postal sold significant volumes of securities in a portfolio restructuring. All other non-interest income was up 14.1% for the quarter and down 12.5% year-to-date, as the first half of 1993 included significant lease termination gains. OTHER EXPENSE Expenses other than interest expense and the provision for possible loan losses for the third quarter of 1994 were $103,516,000, a decline of 2.4% from the third quarter of 1993. For the first nine months of 1994, total other expenses were $310,003,000, a 3.6% decrease from the 1993 level. Total operating expenses were 3.41% of average assets compared with 3.50% for the first nine months of 1993. The overhead ratio, defined as operating expenses as a percentage of taxable- equivalent net interest income and other income, improved to 57.93% in the current quarter from 58.32% last quarter, while the overhead ratio was 58.34% for the first nine months of 1994 compared with 60.47% last year. - ------------------------------------------------------------------------------------------------------------------------------------ EXHIBIT 6 OTHER EXPENSE ($ IN THOUSANDS)
THIRD QUARTER NINE MONTHS 1994 1993 CHANGE 1994 1993 CHANGE ---- ---- ------ ---- ---- ------ Salaries $ 43,993 $ 42,988 2.3% $132,542 $127,229 4.2% Employee benefits 10,875 11,179 (2.7) 33,290 32,578 2.2 -------- -------- -------- -------- Total Personnel Expense 54,868 54,167 1.3 165,832 159,807 3.8 Net occupancy 6,788 7,325 (7.3) 19,718 20,067 (1.7) Equipment 7,857 8,721 (9.9) 24,612 25,546 (3.7) Advertising/business development 2,602 2,555 1.8 7,433 8,293 (10.4) Postage and freight 3,483 3,289 5.9 10,776 10,039 7.3 Office supplies 2,118 2,348 (9.8) 5,985 6,740 (11.2) Communications 1,738 1,660 4.7 5,124 4,780 7.2 Legal and professional 2,095 2,615 (19.9) 6,764 8,043 (15.9) Credit card 2,876 3,098 (7.2) 7,994 8,353 (4.3) FDIC insurance 5,134 5,102 .6 15,737 16,411 (4.1) Foreclosed property expense (357) 1,406 - 394 5,461 (92.8) Intangible asset amortization 1,714 1,696 1.1 5,232 4,986 4.9 Other 12,600 12,075 4.3 34,402 42,907 (19.8) -------- -------- -------- -------- Total Other Expense $103,516 $106,057 (2.4) $310,003 $321,433 (3.6) ======== ======== ======== ======== RATIOS Overhead ratio 57.93% 60.08% 58.34% 60.47% Other expense to average assets 3.42 3.46 3.41 3.50 - ------------------------------------------------------------------------------------------------------------------------------------
10 MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES 12 Personnel costs increased 1.3% and 3.8%, respectively, during the third quarter and first nine months of 1994, reflecting the costs associated with staffing product expansion and merit increases. Year- to-date benefit costs were up by 2.2%, in line with the 4.2% growth in salaries. Occupancy and equipment costs declined by 2.8% during the first nine months of 1994, reflecting productivity gains and the closing of United Postal overlapping offices, offset by the costs of maintaining additional offices and a consistent program of upgrading systems and equipment. For the first nine months of 1994, expenses related to foreclosed property totaled only $394,000 compared with $5,461,000 last year, a decline of $5,067,000. FDIC insurance costs decreased by 4.1%, as the deposit base is lower and all Mercantile banks in 1994 are assessed premiums at the lowest $.23 rate. Exhibit 6 details the composition of all other operating expenses, which in general have declined due to greater expense controls and the benefits of acquisition consolidation efforts. RESERVE FOR POSSIBLE LOAN LOSSES The reserve for possible loan losses was $171,691,000 or 2.18% of loans outstanding at September 30, 1994. This compares favorably with $168,651,000 or 2.28% at year's end and $160,132,000 or 2.17% at September 30, 1993. The reserve for possible loan losses as a percentage of non-performing loans improved to 585.44% compared with 293.39% at year-end and 286.22% last year, and the earnings coverage of net charge-offs for the first nine months of 1994 was 9.81x compared with 4.13x last year. The year-to-date 1994 provision for possible loan losses was $24,909,000 compared with $41,440,000 last year, a decline of 39.9%. The annualized ratio of net charge-offs to average loans for the first nine months of 1994 was .39% compared with .88% last year, while the corresponding net charge-off figures were $21,869,000 and $49,125,000, respectively. In the St. Louis Area banks, the annualized ratio of net charge-offs to average loans for the first nine months of 1994 was .16% compared with 1.16% in 1993, when significant write-downs were taken on two commercial real estate loans and one commercial loan. The second quarter of 1994 included a significant recovery at Mercantile Bank of St. Louis N.A. on one commercial real estate loan, while the first quarter included charge-offs taken on three United Postal commercial real estate loans for which reserves were provided in the fourth quarter of 1993. In the Kansas City Area banks, the ratio of net charge-offs to average loans was .56% versus .33% last year. For the Community Banks as a group, the comparative ratios were .64% and .68% during the first nine months of 1994 and 1993, respectively. Credit card losses were 4.92% of average credit card loans in the first nine months of 1994 compared with 4.08% in 1993, as net credit card charge-offs were $27,275,000 compared with $19,690,000 last year. Excluding credit card net charge-offs, Mercantile experienced net recoveries of $5,406,000 for the first nine months of 1994. 11 13 FINANCIAL COMMENTARY (cont'd) - ------------------------------------------------------------------------------------------------------------------------------------ EXHIBIT 7 RESERVE FOR POSSIBLE LOAN LOSSES ($ IN THOUSANDS)
THIRD QUARTER NINE MONTHS 1994 1993 1994 1993 ---- ---- ---- ---- BEGINNING BALANCE $172,493 $151,694 $168,651 $165,575 PROVISION 8,511 12,906 24,909 41,440 CHARGE-OFFS (14,433) (11,129) (46,685) (67,744) RECOVERIES 5,120 5,414 24,816 18,619 -------- -------- -------- -------- NET CHARGE-OFFS (9,313) (5,715) (21,869) (49,125) ACQUIRED RESERVES - 1,247 - 2,242 ------- -------- ------- -------- ENDING BALANCE $171,691 $160,132 $171,691 $160,132 ======== ======== ======== ======== LOANS AND LEASES September 30 balance $7,873,054 $7,369,829 $7,873,054 $7,369,829 ========== ========== ========== ========== Average balance $7,702,126 $7,348,597 $7,508,800 $7,431,455 ========== ========== ========== ========== RATIOS Reserve balance to outstanding loans 2.18% 2.17% 2.18% 2.17% Reserve balance to non-performing loans 585.44 286.22 585.44 286.22 Earnings coverage of net charge-offs 7.83X 11.90x 9.81X 4.13x Net charge-offs to average loans .48% .31% .39% .88% Credit card net charge-offs to average credit card loans 4.98 3.87 4.92 4.08 - ------------------------------------------------------------------------------------------------------------------------------------
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 each bank's reserve for possible loan losses. At September 30, 1994, the level of the individual Community Bank reserves as a percentage of total loans outstanding ranged from 1.42% to 6.35%, with a combined ratio of 2.27%. The coverage of non-performing loans was 521.31% on a combined basis. The St. Louis Area banks combined reserve was 2.08% of loans with a resulting coverage ratio of 669.63%, while the Kansas City Area banks combined reserve was 2.32% with 544.60% coverage of non-performing loans. Management believes the consolidated reserve of 2.18% of total loans and 585.44% of non-performing loans as of September 30, 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) continued their decline to $29,327,000 or .37% of total loans outstanding at September 30, 1994 compared with $34,833,000 or .46% at June 30, 1994 and $55,948,000 or .76% at September 30, 1993. Foreclosed assets at September 30, 1994 also were reduced to $30,356,000 compared with 12 MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES 14 $31,608,000 at June 30, 1994 and $47,455,000 last year. The ratio of non-performing assets to outstanding loans and foreclosed assets declined to .76% at September 30, 1994 compared with .87% at June 30, 1994 and 1.39% last year. - ------------------------------------------------------------------------------------------------------------------------------------ EXHIBIT 8 NON-PERFORMING ASSETS ($ IN THOUSANDS)
SEPT. 30 DEC. 31 SEPT. 30 1994 1993 1993 -------- ------- -------- NON-ACCRUAL LOANS Commercial $ 4,726 $11,949 $15,601 Real estate-commercial 13,055 25,059 19,750 Real estate-construction 128 785 537 Real estate-residential 6,910 9,407 8,838 Consumer 1,719 1,818 1,883 ------- ------- ------- Total Non-accrual Loans 26,538 49,018 46,609 RENEGOTIATED LOANS 2,789 8,465 9,339 ------- ------- ------- TOTAL NON-PERFORMING LOANS $29,327 $57,483 $55,948 ======= ======= ======= FORECLOSED ASSETS Foreclosed real estate $27,222 $16,771 $29,196 In-substance foreclosures 1,651 18,044 17,034 Other foreclosed assets 1,483 1,199 1,225 ------- ------- ------- TOTAL FORECLOSED ASSETS $30,356 $36,014 $47,455 ======= ======= ======= TOTAL NON-PERFORMING ASSETS $59,683 $93,497 $103,403 ======= ======= ======== PAST-DUE LOANS (90 DAYS OR MORE) $16,283 $14,096 $13,290 ======= ======= ======= RATIOS Non-performing loans to outstanding loans .37% .78% .76% Non-performing assets to outstanding loans and foreclosed assets .76 1.26 1.39 Non-performing assets to total assets .49 .77 .87 - ------------------------------------------------------------------------------------------------------------------------------------
As noted in Exhibit 8, non-performing loans declined by $28,156,000 from the year-end level and were down $5,506,000 since June 30, 1994. The current-year decline was primarily in the commercial and commercial real estate loan portfolios of United Postal, due to first quarter write-downs on two credits and the resolution of two significant credits. In the Kansas City Area banks and in the Community Banks as a group, non-performing loans continued their decline and were down significantly from year-end. Exhibit 8 also summarizes comparative data on loans past due 90 days yet still accruing interest. The past due loans consisted largely of credit card and residential mortgage loans. CAPITAL RESOURCES The current economic and regulatory environment has placed an increased 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 in the past four years, while maintaining its capital ratios at levels comparable to other quality banking organizations and substantially in excess of regulatory standards. 13 15 FINANCIAL COMMENTARY (cont'd) At September 30, 1994, shareholders' equity was $1,042,990,000, an increase of 10.1% from September 30, 1993. Net earnings retained and stock issued under various employee benefit plans accounted for the majority of the increase. Equity represented 8.52% of assets at September 30, 1994 compared with 7.96% a year ago. Significant capital ratios and intangible assets are summarized in Exhibit 9, while Exhibit 1 details the equity capital ratios of the St. Louis Area, Kansas City Area and Community Banks in total. The Corporation has restructured its long-term debt over the past two years and there are no maturities before 1999, other than the 8% convertible subordinated capital notes due April 1, 1995. - ------------------------------------------------------------------------------------------------------------------------------------ EXHIBIT 9 RISK-BASED CAPITAL ($ IN THOUSANDS)
SEPT. 30 DEC. 31 SEPT. 30 1994 1993 1993 -------- ------- -------- Capital Tier I $ 980,002 $ 883,162 $ 876,367 Total 1,311,873 1,161,071 1,157,550 Risk-adjusted assets 8,419,326 7,985,847 7,952,570 Tier I capital to risk-adjusted assets 11.64% 11.06% 11.02% Total capital to risk-adjusted assets 15.58 14.54 14.56 Leverage 8.14 7.33 7.19 Double leverage 107.86 111.97 112.01 Long-term debt to total capitalization 21.66 22.15 22.42 Intangible assets $65,510 $71,759 $70,710 - ------------------------------------------------------------------------------------------------------------------------------------
Book value per share was $24.12 at September 30, 1994 compared with $22.19 a year earlier, an increase of 8.7%. On July 14, 1994, the Board of Directors declared a cash dividend of $.28 per share, which was paid October 3, 1994, representing a 29.47% payout of third quarter 1994 earnings. Further information relating to dividends, as well as to quarterly stock prices, is included in the Investor Information summary on Page 24 of this report. 14 MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES 16 CONDENSED CONSOLIDATED QUARTERLY STATEMENT OF INCOME (THOUSANDS EXCEPT PER SHARE DATA)
1993 1994 1ST QTR. 2ND QTR. 3RD QTR. 4TH QTR. 1ST QTR. 2ND QTR. 3RD QTR. -------- -------- -------- -------- -------- -------- -------- INTEREST INCOME Interest and fees on loans and leases $157,087 $156,551 $154,388 $153,960 $150,324 $155,434 $165,427 Investments in debt and equity securities 52,557 50,751 47,366 46,526 46,219 45,333 43,750 Short-term investments 2,688 1,878 3,673 2,505 3,470 1,684 1,880 -------- -------- -------- -------- -------- -------- -------- Total Interest Income 212,332 209,180 205,427 202,991 200,013 202,451 211,057 Tax-equivalent adjustment 2,497 2,307 2,430 2,340 2,309 2,288 2,236 -------- -------- -------- -------- -------- -------- -------- TAXABLE-EQUIVALENT INTEREST INCOME 214,829 211,487 207,857 205,331 202,322 204,739 213,293 INTEREST EXPENSE Deposits 75,969 71,538 68,866 66,611 62,888 62,474 64,155 Borrowed funds 11,983 11,650 11,536 10,581 11,732 13,252 17,284 -------- -------- -------- -------- -------- -------- -------- Total Interest Expense 87,952 83,188 80,402 77,192 74,620 75,726 81,439 -------- -------- -------- -------- -------- -------- -------- TAXABLE-EQUIVALENT NET INTEREST INCOME 126,877 128,299 127,455 128,139 127,702 129,013 131,854 PROVISION FOR POSSIBLE LOAN LOSSES 14,049 14,485 12,906 19,573 8,383 8,015 8,511 OTHER INCOME Trust 14,873 15,746 15,104 15,415 15,657 15,917 14,270 Service charges 14,108 14,511 14,748 15,144 14,455 14,486 14,869 Credit card fees 5,446 6,404 5,700 6,510 5,801 5,797 6,320 Mortgage banking 1,793 2,312 3,058 3,378 2,405 1,444 1,214 Investment banking 2,591 2,184 1,878 1,833 2,369 2,263 1,827 Securities gains (losses) 2,664 15 910 153 225 208 (53) Other 8,165 9,060 7,665 7,790 8,010 6,901 8,404 -------- -------- -------- -------- -------- -------- -------- Total Other Income 49,640 50,232 49,063 50,223 48,922 47,016 46,851 OTHER EXPENSE Personnel expense 52,428 53,212 54,167 55,526 55,737 55,227 54,868 Net occupancy and equipment 14,671 14,896 16,046 17,025 15,131 14,554 14,645 Other 40,262 39,907 35,844 50,925 32,956 32,882 34,003 -------- -------- -------- -------- -------- -------- -------- Total Other Expense 107,361 108,015 106,057 123,476 103,824 102,663 103,516 -------- -------- -------- -------- -------- -------- -------- TAXABLE-EQUIVALENT INCOME BEFORE INCOME TAXES 55,107 56,031 57,555 35,313 64,417 65,351 66,678 INCOME TAXES Income taxes 19,545 19,877 19,564 16,582 23,253 22,860 23,399 Tax-equivalent adjustment 2,497 2,307 2,430 2,340 2,309 2,288 2,236 -------- -------- -------- -------- -------- -------- -------- Adjusted Income Taxes 22,042 22,184 21,994 18,922 25,562 25,148 25,635 -------- -------- -------- -------- -------- -------- -------- NET INCOME $ 33,065 $ 33,847 $ 35,561 $ 16,391 $ 38,855 $ 40,203 $ 41,043 ======== ======== ======== ======== ======== ======== ======== NET INCOME PER SHARE $.79 $.80 $.84 $.38 $.91 $.93 $.95 SIGNIFICANT RATIOS Return on assets 1.08% 1.11% 1.16% .54% 1.27% 1.33% 1.36% Return on equity 15.29 14.99 15.28 6.85 15.93 16.05 15.89
MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES 15 17 CONSOLIDATED QUARTERLY AVERAGE BALANCE SHEET ($ 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 $12,253,688 =========== =========== ============ SIGNIFICANT RATIOS Net interest rate spread 3.92% 4.01% 3.92% Net interest rate margin 4.53 4.62 4.58 Taxable-equivalent basis.
16 MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES 18 CONSOLIDATED QUARTERLY AVERAGE BALANCE SHEET ($ IN THOUSANDS)
1993 1994 4TH QTR. 1ST QTR. 2ND QTR. -------------------------------------------------------------------------- VOLUME RATE 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% $ 2,079,564 6.92% Real estate-commercial 1,264,795 7.97 1,274,504 7.62 1,267,588 8.07 Real estate-construction 160,112 7.44 143,455 7.46 164,641 8.06 Real estate-residential 2,298,589 7.76 2,259,090 7.39 2,246,892 7.43 Consumer 941,992 8.73 942,256 8.31 970,836 8.29 Credit card 728,730 16.05 745,456 16.64 729,883 16.10 Foreign 845 5.21 289 5.54 184 6.52 ----------- ----------- ----------- Total Loans and Leases 7,357,495 8.41 7,360,935 8.20 7,459,588 8.37 Investments in debt and equity securities Trading 15,493 5.06 10,516 5.44 6,028 6.57 Taxable 3,130,103 5.50 3,124,082 5.48 3,113,623 5.39 Tax-exempt 251,136 7.93 246,381 8.00 243,617 8.08 ----------- ----------- ----------- Total 3,396,732 5.68 3,380,979 5.66 3,363,268 5.58 Short-term investments 291,897 3.43 402,468 3.45 164,557 4.09 ----------- ----------- ----------- Total Earning Assets 11,046,124 7.44 11,144,382 7.26 10,987,413 7.45 Non-earning Assets 1,068,428 1,069,466 1,059,623 ----------- ----------- ----------- Total Assets $12,114,552 $12,213,848 $12,047,036 =========== ============ =========== LIABILITIES Acquired Funds Deposits Non-interest bearing $ 2,024,089 $ 2,023,107 $ 1,885,405 Interest bearing demand 1,570,416 2.01 1,594,965 1.85 1,589,551 1.83 Money market accounts 1,653,236 2.74 1,658,069 2.66 1,646,808 2.82 Savings 894,558 2.51 911,930 2.31 928,529 2.30 Consumer time certificates under $100,000 3,310,430 4.46 3,189,057 4.27 3,088,914 4.23 Other time 38,588 2.66 33,201 2.75 33,587 3.38 ----------- ----------- ----------- Total Core Deposits 9,491,317 3.32 9,410,329 3.14 9,172,794 3.14 Time certificates $100,000 and over 442,615 3.78 486,406 3.68 458,541 3.91 Foreign 27,297 6.10 41,399 4.51 80,465 4.15 ----------- ----------- ----------- Total Purchased Deposits 469,912 3.92 527,805 3.74 539,006 3.95 ----------- ----------- ----------- Total Deposits 9,961,229 3.36 9,938,134 3.18 9,711,800 3.19 Short-term borrowings 728,648 2.79 813,488 2.95 839,894 3.68 Long-term debt 273,500 8.05 298,915 7.68 292,487 7.54 ----------- ----------- ----------- Total Acquired Funds 10,963,377 3.45 11,050,537 3.31 10,844,181 3.38 Other Liabilities 194,045 187,408 201,219 SHAREHOLDERS' EQUITY 957,130 975,903 1,001,636 ----------- ----------- ----------- Total Liabilities and Shareholders' Equity $12,114,552 $12,213,848 $12,047,036 =========== =========== =========== SIGNIFICANT RATIOS Net interest rate spread 3.99% 3.95% 4.07% Net interest rate margin 4.64 4.58 4.70 Taxable-equivalent basis.
17 CONSOLIDATED QUARTERLY AVERAGE BALANCE SHEET ($ IN THOUSANDS)
1994 1993 1994 3RD QTR. NINE MONTHS NINE MONTHS -------------------------------------------------------------------------- VOLUME RATE VOLUME RATE VOLUME RATE ------ -------- ------ -------- ------ -------- ASSETS Earning Assets Loans and leases, net of unearned income Commercial $ 2,103,305 7.52% $ 2,024,266 6.54% $ 2,059,972 6.94% Real estate-commercial 1,248,970 8.30 1,312,979 8.01 1,263,597 8.00 Real estate-construction 183,451 8.75 154,206 7.22 163,995 8.13 Real estate-residential 2,354,829 7.56 2,363,226 7.95 2,287,286 7.46 Consumer 1,068,096 8.39 931,742 9.10 994,196 8.33 Credit card 743,139 15.98 643,947 16.36 739,484 16.24 Foreign 336 7.14 1,089 7.10 270 6.42 ----------- ----------- ----------- Total Loans and Leases 7,702,126 8.63 7,431,455 8.44 7,508,800 8.40 Investments in debt and equity securities Trading 12,736 4.24 13,508 5.42 9,768 5.15 Taxable 2,989,445 5.41 3,148,516 5.95 3,075,222 5.43 Tax-exempt 238,442 8.00 228,118 8.59 242,785 8.03 ----------- ----------- ----------- Total 3,240,623 5.59 3,390,142 6.13 3,327,775 5.62 Short-term investments 156,690 4.79 328,426 3.34 240,338 3.90 ----------- ----------- ----------- Total Earning Assets 11,099,439 7.69 11,150,023 7.58 11,076,913 7.47 Non-earning Assets 1,010,048 1,099,523 1,046,162 ----------- ----------- ----------- Total Assets $12,109,487 $12,249,546 $12,123,075 =========== =========== =========== LIABILITIES Acquired Funds Deposits Non-interest bearing $ 1,848,011 $ 1,903,360 $ 1,918,201 Interest bearing demand 1,545,999 1.86 1,485,859 2.15 1,576,656 1.85 Money market accounts 1,629,590 2.98 1,639,013 2.76 1,644,720 2.82 Savings 909,527 2.33 854,959 2.58 916,653 2.31 Consumer time certificates under $100,000 3,005,688 4.36 3,538,765 4.72 3,093,879 4.29 Other time 34,204 3.17 96,388 2.76 33,669 3.10 ----------- ----------- ----------- Total Core Deposits 8,973,019 3.24 9,518,344 3.53 9,183,778 3.17 Time certificates $100,000 and over 433,991 4.43 465,771 3.91 459,453 4.00 Foreign 136,111 4.80 32,373 3.90 86,338 4.53 ----------- ----------- ----------- Total Purchased Deposits 570,102 4.52 498,144 3.91 545,791 4.08 ----------- ----------- ----------- Total Deposits 9,543,121 3.33 10,016,488 3.56 9,729,569 3.23 Short-term borrowings 1,061,746 4.44 848,095 2.93 905,957 3.75 Long-term debt 289,218 7.62 275,127 8.01 293,505 7.61 ----------- ----------- ----------- Total Acquired Funds 10,894,085 3.60 11,139,710 3.63 10,929,031 3.43 Other Liabilities 182,500 209,922 190,352 SHAREHOLDERS' EQUITY 1,032,902 899,914 1,003,692 ----------- ----------- ----------- Total Liabilities and Shareholders' Equity $12,109,487 $12,249,546 $12,123,075 =========== =========== =========== SIGNIFICANT RATIOS Net interest rate spread 4.09% 3.95% 4.04% Net interest rate margin 4.75 4.58 4.68 Taxable-equivalent basis.
17 19 CONSOLIDATED STATEMENT OF INCOME (THOUSANDS EXCEPT PER SHARE DATA)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 1994 1993 1994 1993 ---- ---- ---- ---- INTEREST INCOME Interest and fees on loans and leases $165,427 $154,388 $471,185 $468,026 Investments in debt and equity securities Trading 127 185 345 499 Taxable 40,368 43,864 124,999 140,282 Tax-exempt 3,255 3,317 9,958 9,893 -------- -------- -------- -------- Total 43,750 47,366 135,302 150,674 Due from banks-interest bearing 96 759 1,812 1,282 Federal funds sold and repurchase agreements 1,784 2,914 5,222 6,957 -------- -------- -------- -------- Total Interest Income 211,057 205,427 613,521 626,939 INTEREST EXPENSE Interest bearing deposits 62,520 68,529 186,581 215,426 Foreign deposits 1,635 337 2,936 947 Short-term borrowings 11,775 6,046 25,508 18,634 Long-term debt 5,509 5,490 16,760 16,535 -------- -------- -------- -------- Total Interest Expense 81,439 80,402 231,785 251,542 -------- -------- -------- -------- NET INTEREST INCOME 129,618 125,025 381,736 375,397 PROVISION FOR POSSIBLE LOAN LOSSES 8,511 12,906 24,909 41,440 -------- -------- -------- -------- NET INTEREST INCOME AFTER PROVISION FOR POSSIBLE LOAN LOSSES 121,107 112,119 356,827 333,957 OTHER INCOME Trust 14,270 15,104 45,844 45,723 Service charges 14,869 14,748 43,810 43,367 Credit card fees 6,320 5,700 17,918 17,550 Mortgage banking 1,214 3,058 5,063 7,163 Investment banking 1,827 1,878 6,459 6,653 Securities gains (losses) (53) 910 380 3,589 Other 8,404 7,665 23,315 24,890 -------- -------- -------- -------- Total Other Income 46,851 49,063 142,789 148,935 OTHER EXPENSE Salaries 43,993 42,988 132,542 127,229 Employee benefits 10,875 11,179 33,290 32,578 Net occupancy 6,788 7,325 19,718 20,067 Equipment 7,857 8,721 24,612 25,546 Other 34,003 35,844 99,841 116,013 -------- -------- -------- -------- Total Other Expense 103,516 106,057 310,003 321,433 -------- -------- -------- -------- INCOME BEFORE INCOME TAXES 64,442 55,125 189,613 161,459 INCOME TAXES 23,399 19,564 69,512 58,986 -------- -------- -------- -------- NET INCOME $ 41,043 $ 35,561 $120,101 $102,473 ======== ======== ======== ======== PER SHARE DATA Average common shares outstanding 43,203,882 42,526,822 43,034,158 42,338,859 Net income $.95 $.84 $2.79 $2.42 Dividends declared .28 .24 3/4 .84 .74 1/4 Based on weighted average common shares outstanding.
18 MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES 20 CONSOLIDATED BALANCE SHEET (THOUSANDS)
SEPT. 30 DEC. 31 SEPT. 30 1994 1993 1993 -------- ------- -------- ASSETS Cash and due from banks $ 667,577 $ 705,673 $ 590,814 Due from banks-interest bearing 231 144,538 144,324 Federal funds sold and repurchase agreements 225,472 186,962 46,872 Investments in debt and equity securities Trading 17,290 15,735 21,685 Available-for-sale 271,709 415,283 114,867 Held-to-maturity (Estimated fair value of $2,815,964, $3,020,591 and $3,305,273, respectively) 2,859,335 2,970,160 3,239,589 ----------- ----------- ----------- Total 3,148,334 3,401,178 3,376,141 Loans held-for-sale 20,581 117,290 92,105 Loans and leases, net of unearned income 7,852,473 7,264,484 7,277,724 ----------- ----------- ----------- Total Loans and Leases 7,873,054 7,381,774 7,369,829 Reserve for possible loan losses (171,691) (168,651) (160,132) ----------- ----------- ----------- Net Loans and Leases 7,701,363 7,213,123 7,209,697 Bank premises and equipment 202,372 199,363 200,471 Due from customers on acceptances 5,928 11,923 12,483 Other assets 286,395 278,367 314,814 ----------- ----------- ----------- Total Assets $12,237,672 $12,141,127 $11,895,616 =========== =========== =========== LIABILITIES Deposits Non-interest bearing $ 1,456,287 $ 1,713,275 $ 1,445,096 Interest bearing 7,397,091 7,862,723 7,882,860 Foreign 92,704 26,085 32,141 ----------- ----------- ----------- Total Deposits 8,946,082 9,602,083 9,360,097 Federal funds purchased and repurchase agreements 1,455,765 602,997 583,848 Other short-term borrowings 338,362 520,650 536,392 Long-term debt 288,447 272,778 273,751 Bank acceptances outstanding 5,928 11,923 12,483 Other liabilities 160,098 172,139 181,968 ----------- ----------- ----------- Total Liabilities 11,194,682 11,182,570 10,948,539 Commitments and contingent liabilities - - - SEPT. 30 DEC. 31 SEPT. 30 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 100,000 70,000 70,000 Shares issued and outstanding 43,235 42,802 42,677 216,175 214,012 213,388 Capital surplus 168,974 164,448 163,784 Retained earnings 657,841 580,097 569,905 ----------- ----------- ----------- Total Shareholders' Equity 1,042,990 958,557 947,077 ----------- ----------- ----------- Total Liabilities and Shareholders' Equity $12,237,672 $12,141,127 $11,895,616 =========== =========== ===========
MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES 19 21 CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY ($ 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 $851,324 Net income 102,473 102,473 Dividends declared Mercantile Bancorporation Inc.-$.74 1/4 per share (26,075) (26,075) Pooled companies prior to acquisition (3,122) (3,122) Issuance of common stock Acquisition of First National Bank of Flora 232,503 1,162 6,879 8,041 Acquisition of Mt. Vernon Bancorp, Inc. 216,936 1,085 6,056 7,141 Employee incentive plans 143,910 719 1,752 2,471 Convertible notes 64,011 320 1,340 1,660 Change in valuation allowance for marketable equity securities 3,554 3,554 Pre-merger transactions of pooled companies (9,623) (47) (301) (348) Other (2,250) (11) (31) (42) ---------- --------- -------- -------- -------- BALANCE AT SEPTEMBER 30, 1993 42,677,460 $213,388 $163,784 $569,905 $947,077 ========== ======== ======== ======== ======== BALANCE AT DECEMBER 31, 1993, AS RESTATED 42,802,322 $214,012 $164,448 $580,097 $958,557 Net income 120,101 120,101 Dividends declared-$.84 per share (36,199) (36,199) Issuance of common stock Employee incentive plans 283,946 1,420 1,456 2,876 Convertible notes 138,991 695 2,911 3,606 Net fair value adjustment for available-for-sale securities (6,158) (6,158) Pre-merger transactions of pooled companies 12,562 63 88 151 Other (3,064) (15) 71 56 ---------- -------- -------- -------- ---------- BALANCE AT SEPTEMBER 30, 1994 43,234,757 $216,175 $168,974 $657,841 $1,042,990 ========== ======== ======== ======== ==========
20 MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES 22 CONSOLIDATED STATEMENT OF CASH FLOWS (THOUSANDS)
NINE MONTHS ENDED SEPTEMBER 30 1994 1993 ---- ---- OPERATING ACTIVITIES Net income $ 120,101 $ 102,473 Adjustments to reconcile net income to net cash provided by operating activities Provision for possible loan losses 24,909 41,440 Depreciation and amortization 19,890 20,001 Provision for deferred income taxes (1,653) 718 Net change in trading securities (1,555) (4,001) Net change in accrued interest receivable (6,908) 5,512 Net change in accrued interest payable (5,146) (5,903) Net change in accrued taxes payable (15,862) 2,167 Other, net 10,471 25,202 ---------- ----------- Net Cash Provided by Operating Activities 144,247 187,609 INVESTING ACTIVITIES Investments in debt and equity securities, other than trading securities Purchases (670,265) (1,088,896) Proceeds from maturities 827,742 1,155,703 Proceeds from sales of: Held-to-maturity securities - 22,749 Available-for-sale securities 276,657 349,215 Securities from acquired entities 79,388 12,254 Net change in loans and leases (954,045) (354,780) Purchases of loans and leases (20,063) (23,117) Proceeds from sales of loans and leases 154,754 152,929 Purchases of premises and equipment (25,166) (18,451) Proceeds from sales of premises and equipment 2,296 486 Proceeds from sales of foreclosed property 14,560 35,036 Cash and cash equivalents from acquisitions, net of cash paid - 11,085 Other, net 24,816 18,619 ---------- ----------- Net Cash Provided (Used) by Investing Activities (289,326) 272,832 FINANCING ACTIVITIES Net change in non-interest bearing, savings, interest bearing demand and money market deposit accounts (474,344) (172,002) Net change in time certificates of deposit under $100,000 (259,603) (444,026) Net change in time certificates of deposit $100,000 and over 10,773 (42,785) Net change in other time deposits 554 (69,781) Net change in foreign deposits 66,619 12,491 Sale of branch deposits, net of premium received - (14,130) Net change in short-term borrowings 670,480 134,846 Issuance of long-term debt 75,000 - Principal payments on long-term debt (54,743) (26,990) Cash dividends paid (36,199) (29,197) Proceeds from issuance of common stock 2,442 1,983 Other, net 207 (348) ---------- ----------- Net Cash Provided (Used) by Financing Activities 1,186 (649,939) ---------- ----------- DECREASE IN CASH AND CASH EQUIVALENTS (143,893) (189,498) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,037,173 971,508 ---------- ----------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 893,280 $ 782,010 ========== ===========
MERCANTILE BANCORPORATION INC. AND SUBSIDIARIES 21 23 BANKS AND OTHER SUBSIDIARIES
TOTAL ASSETS SEPT. 30, 1994 BANK MAIN OFFICE (THOUSANDS) - ---- ----------- ------------------------ Mercantile Bank of St. Louis N.A. St. Louis, MO $6,356,923 Mercantile Bank of Kansas City Kansas City, MO 787,282 Mercantile Bank of Kansas Overland Park, KS 591,562 Mercantile Bank of Joplin Joplin, MO 386,345 Mercantile Bank of Illinois N.A. Alton, IL 365,599 Mercantile Bank of Northern Iowa Waterloo, IA 364,803 Mercantile Bank of St. Joseph St. Joseph, MO 320,163 Mercantile Bank of Springfield Springfield, MO 244,098 Mercantile Bank of Lawrence N.A. Lawrence, KS 223,887 Mercantile Bank of Jefferson County High Ridge, MO 210,362 Mercantile Bank of Topeka N.A. Topeka, KS 193,548 Mercantile Bank of Cape Girardeau Cape Girardeau, MO 165,117 Mercantile Bank of North Central Missouri Macon, MO 158,338 Mercantile Bank of the Mineral Area Farmington, MO 158,302 Mercantile Bank of Franklin County Washington, MO 156,340 Mercantile Bank of West Central Missouri Sedalia, MO 151,942 Mercantile Bank of Lake of the Ozarks Eldon, MO 125,627 Mercantile Bank of Poplar Bluff Poplar Bluff, MO 107,672 Mercantile Bank of Mt. Vernon Mt. Vernon, IL 94,286 Mercantile Bank of Centralia N.A. Centralia, IL 93,853 Mercantile Bank of Missouri Valley Richmond, MO 84,053 TOTAL ASSETS SEPT. 30, 1994 BANK MAIN OFFICE (THOUSANDS) - ---- ----------- ------------------------- Mercantile Bank of Monett Monett, MO $80,657 Mercantile Bank of Trenton Trenton, MO 79,927 Mercantile Bank of Stoddard/Bollinger Counties Dexter, MO 78,444 Mercantile Bank of Phelps County Rolla, MO 68,927 Mercantile Bank of Perryville Perryville, MO 68,404 Mercantile Bank of Flora N.A. Flora, IL 67,666 Mercantile Bank of Table Rock Lake Branson West, MO 57,394 Mercantile Bank of Pike County Bowling Green, MO 56,801 Mercantile Bank of Memphis Memphis, MO 52,580 Mercantile Bank of Ste. Genevieve Ste. Genevieve, MO 51,232 Mercantile Bank of Doniphan Doniphan, MO 50,388 Mercantile Bank of East Central Missouri Montgomery City, MO 49,079 Mercantile Bank of Boone County Columbia, MO 46,040 Mercantile Bank of Northwest Missouri Maryville, MO 45,554 Mercantile Bank of Carlyle Carlyle, IL 39,015 Mercantile Bank of Willow Springs Willow Springs, MO 38,753 Mercantile Bank of Sikeston Sikeston, MO 38,615 Mercantile Bank of Wright County Hartville, MO 38,339 Mercantile Bank of Plattsburg Plattsburg, MO 36,667 Mercantile Trust Company N.A. St. Louis, MO 7,683
- ------------------------------------------------------------------------ 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. PENDING AFFILIATIONS Wedge Bank Alton, IL UNSL Financial Corp Lebanon, MO Central Mortgage Bancshares, Inc. Kansas City, MO 22 MERCANTILE BANCORPORATION INC. 24 DIRECTORS AND EXECUTIVE OFFICERS DIRECTORS RICHARD P. CONERLY Chairman Orion Capital Inc. HARRY M. CORNELL, JR. Chairman and Chief Executive Officer Leggett & Platt, Inc. EARL K. DILLE Retired President Union Electric Company J. CLIFF EASON President, Network Services Southwestern Bell Telephone Company BERNARD A. EDISON Director Emeritus Edison Brothers Stores, Inc. WILLIAM A. HALL Assistant to the Chairman Hallmark Cards, Inc. THOMAS A. HAYS Deputy Chairman The May Department Stores Company WILLIAM G. HECKMAN Chairman Emeritus Arch Mineral Corporation THOMAS H. JACOBSEN Chairman and Chief Executive Officer Mercantile Bancorporation Inc. JAMES B. MALLOY Chairman and Chief Executive Officer Smurfit Packaging Corporation CHARLES H. PRICE II Chairman Mercantile Bank of Kansas City HARVEY SALIGMAN Managing Partner Cynwyd Investments CRAIG D. SCHNUCK Chairman and Chief Executive Officer Schnuck Markets, Inc. ROBERT W. STALEY Vice Chairman Emerson Electric Co. ROBERT L. STARK Dean University of Kansas Regents Center PATRICK T. STOKES President Anheuser-Busch, Inc. FRANCIS A. STROBLE Retired Chief Financial Officer Monsanto Company JOSEPH G. WERNER President Werner Investments JOHN A. WRIGHT President and Chief Executive Officer Big River Minerals Corp. Member of Audit Committee Member of Compensation and Management Development Committee Member of Executive Committee Member of Nominating and Board Affairs Committee Member of Community Relations Committee 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 P. PIERCE Executive Vice President Human Resources JON W. BILSTROM General Counsel and Secretary 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. 23 25 INVESTOR INFORMATION NEW YORK STOCK EXCHANGE: MTL SELECTED DATA
SEPTEMBER 30 1994 1993 ---- ---- Market Price $36 7/8 $33 5/8 Yield 3.04% 2.94% Price Earnings Ratio 11.63X 11.97x Book Value $24.12 $22.19 Shares Outstanding Average 43,034,158 42,338,859 Period-end 43,234,757 42,677,460 Shareholders of Record 13,471 13,958 Average Daily Volume 52,815 74,150
- ------------------------------------------------------------------------ COMMON STOCK INFORMATION
MARKET PRICE AVERAGE ----------------------------------- DAILY DIVIDEND HIGH LOW CLOSE VOLUME DECLARED ---- --- ----- ---------- -------- 1994 1ST QUARTER $34 1/8 $29 7/8 $31 7/8 62,279 $.28 2ND QUARTER 38 1/8 31 1/8 35 1/8 48,340 .28 3RD QUARTER 39 1/4 34 7/8 36 7/8 47,814 .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 ======== - ------------------------------------------------------------------------ Generally appears as MercBcpMO or MercBc in newspaper stock tables. 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 The Dividend Reinvestment Plan provides shareholders of record a regular way of investing cash dividends in additional shares at an average market price and/or investing optional cash payments without payment of brokerage commissions or service charges. Dividend Direct Deposit is a timesaving method of receiving cash dividends through automatic deposit on date of payment to a checking, savings or money market account at any financial institution which participates in an Automated Clearing House. If you wish to participate in or want further information concerning the Dividend Reinvestment Plan or Dividend Direct Deposit, please contact KeyCorp 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. 24 MERCANTILE BANCORPORATION INC. 26 DEBT SECURITIES OUTSTANDING (THOUSANDS)
SEPT. 30 1994 ------ 7.625% Subordinated Notes, due 2002 $150,000 6.375% Subordinated Notes, due 2004 75,000 9.000% Mortgage-backed Notes, due 1999 53,450 8.000% Convertible Subordinated Capital Notes, due 1995 9,915
- ------------------------------------------------------------------------ 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+ 9.000% Mortgage-backed Notes, due 1999 AAA Certificates of Deposit TBW-1 A-/A-2 Letters of Credit TBW-1 A-/A-2
- ------------------------------------------------------------------------ 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 LLP 1010 Market Street St. Louis, MO 63101-9982 25 27 - ------------------------------------------------------------------------ MERCANTILE BANCORPORATION INC. THIRD QUARTER REPORT 1994 Mercantile Bancorporation Inc. Mercantile Tower P.O. Box 524 St. Louis, MO 63166-0524 28 APPENDIX There is a bar-graph titled "COMMON STOCK PRICE RANGE" on page 24 of the printed Third Quarter Report. The graph plots Fiscal Quarters to Dollars on the X and Y axis respectively. This graph shows seven quarters of market price ranges from the first quarter of 1993 to the third 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 24. EX-27 3 ARTICLE 9 FDS FOR FORM 10-Q
9 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE QUARTERLY REPORT OF MERCANTILE BANCORPORATION INC. TO ITS SHAREHOLDERS FOR THE QUARTER ENDED SEPTEMBER 30, 1994, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT. 1,000 9-MOS DEC-31-1994 JAN-01-1994 SEP-30-1994 667,577 231 225,472 17,290 271,709 2,859,335 2,815,964 7,873,054 171,691 12,237,672 8,946,082 1,794,127 166,026 288,447 0 0 216,175 826,815 12,237,672 471,185 135,302 7,034 613,521 189,517 231,785 381,736 24,909 380 310,003 189,613 189,613 0 0 120,101 2.79 2.79 4.68 26,538 16,283 2,789 0 168,651 46,685 24,816 171,691 0 0 0 Information not currently available; is reported on an annual basis only.
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