-----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, L06xP7at4AJQNq+0uszjxnIXIACs4JFzvmrEfUjcFPW3AhdvV8ln2L7YChHSvA92 /GtLmqVaJFONtpvFQ8v2Dw== 0000946275-97-000414.txt : 19970811 0000946275-97-000414.hdr.sgml : 19970811 ACCESSION NUMBER: 0000946275-97-000414 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970808 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MISSISSIPPI VIEW HOLDING CO CENTRAL INDEX KEY: 0000933404 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 411795363 STATE OF INCORPORATION: MN FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-25546 FILM NUMBER: 97653922 BUSINESS ADDRESS: STREET 1: 35 E BROADWAY CITY: LITTLE FALLS STATE: MN ZIP: 56345 BUSINESS PHONE: 6126325461 MAIL ADDRESS: STREET 1: 35 EAST BROADWAY CITY: LITTLE FALLS STATE: MN ZIP: 56345-3093 10QSB 1 FORM 10QSB U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB [ X] QUARTERLY REPORT UNDER SECTION 13 OF 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1997 OR [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT For the transition period from to --------------- ------------------ Commission File No. 0-25546 Mississippi View Holding Company ------------------------------------------------------ (Exact name of registrant as specified in its charter) Minnesota 41-1795363 - ------------------------------- ------------------------------------ (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or jurisdiction) 35 East Broadway, Little Falls, Minnesota 56345-3093 ---------------------------------------------------- (address of principal executive offices) (320) 632-5461 ---------------------------------------------------- (Registrant's telephone number, including area code) Check whether the issuer (1) filed all reports required to be filed by Sections 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- State the number of shares outstanding of each of the issuer's classes of common equity as of the latest practicable date. Class: Common Stock, par value $.10 per share Outstanding shares at July 31, 1997: 818,743 MISSISSIPPI VIEW HOLDING COMPANY INDEX TO FORM 10-QSB
Page ---- PART I. FINANCIAL INFORMATION --------------------- Item 1. Financial Statements Consolidated Statements of Financial Condition at June 30, 1997 (unaudited) and September 30, 1996 (audited) 2 Consolidated Statements of Income for the three and nine months ended June 30, 1997 and 1996 (unaudited) 3 Consolidated Statements of Cash Flows for the nine months ended June 30, 1997 and 1996 (unaudited) 4 Notes to Condensed Consolidated Financial Statements (unaudited) 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 Non-Performing and Problem Assets 12 Capital Compliance 13 Liquidity Resources 14 Key Operating Ratios 15 PART II. OTHER INFORMATION ----------------- Item 1. Legal Proceedings 16 Item 2. Changes in Securities 16 Item 3. Default Upon Senior Securities 16 Item 4. Submission of Matters to a Vote of Security Holders 16 Item 5. Other Information 16 Item 6. Exhibits and Reports on Form 8-K 16 SIGNATURES EXHIBITS
MISSISSIPPI VIEW HOLDING COMPANY AND SUBSIDIARY CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
June 30, September 30, 1997 1996 ----------- ------------- ASSETS (Unaudited) (Audited) ------ ----------- ------------- Cash and cash equivalents: Cash and due from banks .................................................... $ 190,721 $ 317,777 Interest bearing deposits with banks ....................................... 1,715,683 2,265,877 Securities available for sale, at fair value ................................. 13,857,250 12,235,145 Securities held to maturity, at amortized cost ............................... 7,201,996 9,294,092 FHLB Stock, at cost .......................................................... 650,700 650,700 Loans held for sale .......................................................... 210,590 178,663 Loans receivable, net of allowance for loan losses of $862,694 in 1997 and $877,094 in 1996 ........................................................... 44,146,953 43,070,281 Accrued interest receivable .................................................. 477,058 450,327 Premises and equipment, net of depreciation .................................. 790,991 788,846 Foreclosed real estate (net of allowance for losses of $15,700 for 1997 and $15,700 for 1996) .......................................................... - - Deferred tax asset (net of valuation allowance) .............................. - 163,903 Other assets ................................................................. 532,764 595,208 ----------- ----------- Total Assets ........................................................ $69,774,706 $70,010,819 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Liabilities: Demand deposits ............................................................ 4,278,966 4,471,137 Savings deposits ........................................................... 14,460,817 14,087,832 Time deposits ................................................................ 36,612,107 37,972,225 ----------- ----------- Total deposits 55,351,890 56,531,194 Advances from borrowers for taxes and insurance .............................. 50,819 138,530 Accrual for income tax ....................................................... 49,700 - Deferred tax liability ....................................................... 555,084 - Other liabilities ............................................................ 596,620 900,850 ----------- ----------- Total Liabilities.................................................... 56,604,113 57,570,574 Commitments and contingencies Stockholders' equity: Serial Preferred Stock, no par value; 5,000,000 shares authorized, no shares issued ................................................................... - - Common Stock, $.10 par value, 10,000,000 shares authorized; 1,007,992 shares issued; 728,174 and 776,713 shares outstanding ........................... 100,799 100,799 Paid in Capital ............................................................ 7,531,799 7,510,397 Treasury Stock (189,249 and 130,278 shares), at cost ....................... (2,256,830) (1,536,689) Retained Earnings, substantially restricted ................................ 7,551,964 7,116,646 Unearned ESOP shares (60,479 and 66,527 shares), at cost ................... (517,854) (566,736) Unearned Management Stock Bonus Plan shares (30,090 and 34,474 shares), at cost .................................................................. (336,503) (387,412) Net unrealized gain on available for sale securities ....................... 1,097,218 203,240 ----------- ----------- Total Stockholders' Equity .......................................... 13,170,593 12,440,245 ----------- ----------- Total Liabilities and Stockholders' Equity .......................... $69,774,706 $70,010,819 =========== ===========
See Notes to consolidated financial statements. 2 MISSISSIPPI VIEW HOLDING COMPANY UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
For the Three Months For the Nine Months Ended June 30, Ended June 30, 1997 1996 1997 1996 --------- --------- --------- --------- Interest Income: Loans receivable .................... 952,026 906,969 2,842,720 2,758,728 Securities available for sale ....... 197,545 167,197 563,574 401,775 Securities held to maturity ......... 142,044 206,774 463,080 726,895 --------- --------- --------- --------- Total interest income .......... 1,291,615 1,280,940 3,869,374 3,887,398 Interest Expense: Demand deposits .................... 9,069 9,115 28,066 27,915 Savings deposits ................... 100,785 84,922 292,504 240,559 Time deposits ...................... 511,222 539,711 1,555,853 1,624,115 Total interest expense ............. 621,076 633,748 1,876,423 1,892,589 Net interest income ................ 670,539 647,192 1,992,951 1,994,809 Provision for loan losses .......... - 1,451 - 3,725 ---------- ---------- ---------- ---------- Net interest income after provision for loan loss ...... 670,539 645,741 1,992,951 1,991,084 Noninterest Income: Other fees and service charges ...... 19,958 27,769 48,344 47,823 Gain on sale of loans ............... 4,156 4,252 6,978 68,124 Net gain on sale of real estate owned 12,848 9,753 12,848 10,939 Contingency recovery ................ - - - 81,023 Other ............................... 23,836 36,426 70,660 82,500 ---------- ---------- ---------- ---------- Total noninterest income ....... 60,798 78,200 138,830 290,409 Noninterest Expense: Compensation and employee benefits .. 248,732 229,014 711,078 666,689 Occupancy ........................... 21,937 21,501 70,808 67,668 Deposit insurance premium ........... 15,102 37,065 61,325 111,940 Data processing ..................... 20,231 19,110 64,320 56,034 Advertising ......................... 6,632 7,551 20,258 22,189 Real estate owned expense, net ...... 965 826 1,415 5,041 Other ............................... 86,978 104,229 309,058 317,153 ---------- ---------- ---------- ---------- Total noninterest expense ...... 400,577 419,296 1,238,262 1,246,714 ---------- ---------- ---------- ---------- Income before income taxes ............ 330,760 304,645 893,519 1,034,779 Income tax expense .................... 122,779 108,504 338,411 407,460 ---------- ---------- ---------- ---------- Net income ............................ $ 207,981 $ 196,141 $ 555,108 $ 627,319 ========== ========== ========== ========== Dividends Declared Per Share .......... $ 0.08 $ 0.08 $ 0.16 $ 0.16 ========== ========== ========== ========== Primary Earnings Per Share ............ $ 0.26 $ 0.24 $ 0.69 $ 0.72 ========== ========== ========== ==========
See Notes to consolidated financial statements. 3 MISSISSIPPI VIEW HOLDING COMPANY AND SUBSIDIARY UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended June 30, ------------------------ 1997 1996 ---------- ---------- OPERATING ACTIVITIES Interest received on loans and investments ........................... $3,815,487 $3,847,680 Interest paid ........................................................ (1,877,480) (1,893,534) Other fees, commissions, and interest received ....................... 211,792 220,789 Cash paid to suppliers, employees and others.......................... (1,311,243) (957,039) Contributions to charities............................................ (28,974) (4,429) Income taxes paid..................................................... (151,000) (505,619) Loans originated for sale............................................. (789,829) (1,879,643) Proceeds from sale of loans........................................... 702,928 3,919,746 ---------- ---------- Net cash provided by operating activities............................. 571,681 2,747,951 ---------- ---------- INVESTING ACTIVITIES Loans originations and principal payment on loans, net ........... (1,048,450) (1,013,433) Proceeds from maturities of: Debt securities held to maturity ................................. 4,823,000 6,845,346 Securities available for sale .................................... 3,516,468 1,081,880 Mortgage-backed securities held to maturity ...................... 537,470 697,618 Mortgage-backed securities available for sale .................... 458,979 36,160 Proceeds from sale of real estate .................................. 12,848 10,939 Purchase of: Debt securities held to maturity ................................. (3,269,000) (2,875,000) Securities available for sale .................................... (3,545,313) (4,556,638) Mortgage-backed securities held to maturity ...................... -- (327,532) Mortgage-backed securities available for sale .................... (572,125) (1,041,821) Equipment and property improvements............................... (63,125) (10,204) ---------- ---------- Net cash provided by (used in) investing activities............. 850,752 (1,152,685) ---------- ---------- FINANCING ACTIVITIES Net increase (decrease) in demand accounts, passbook accounts and certificates of deposit accounts ................................. (1,178,247) 1,068,886 Net increase (decrease) in mortgage escrow funds ................... (87,711) (119,690) Acquisition of treasury stock ...................................... (720,141) (1,160,439) Net increase (decrease) in unearned MSBP shares .................... 1,044 (456,266) Cash dividends paid ................................................ (114,628) (140,917) ---------- ---------- Net cash (used in) financing activities ............................ (2,099,683) (808,426) ---------- ---------- INCREASE IN CASH AND CASH EQUIVALENTS ................................ (677,250) 786,840 CASH AND CASH EQUIVALENTS - Beginning of year ........................ 2,583,654 2,837,070 ---------- ---------- CASH AND CASH EQUIVALENTS - End of period ............................ $1,906,404 $3,623,910 ========== ==========
See Notes to consolidated financial statements. 4 MISSISSIPPI VIEW HOLDING COMPANY UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
For the Nine Months Ended June 30, ------------------------ 1997 1996 ---------- ---------- RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Net Income .................................................................... $ 555,108 $ 627,319 Adjustments: Depreciation ................................................................ 60,979 62,828 Federal Home Loan Bank stock dividends ...................................... - (12,800) Non-cash dividends .......................................................... (4,024) (3,775) ESOP fair value adjustment .................................................. 18,350 11,822 Amortization of ESOP compensation ........................................... 43,721 51,733 Amortization of MSBP compensation ........................................... 49,865 49,865 Tax benefit of MSBP vesting activities ...................................... 3,052 - Net amortization and accretion of premiums and discounts on securities ...... 14,499 7,746 Net (gains) on sale of real estate owned .................................... (12,848) (10,939) Net loan fees deferred and amortized ........................................ 33,731 3,147 Net mortgage loan servicing fees deferred and amortized ..................... 1,492 (11,974) Contingency recovery ........................................................ - (81,023) (Increase) decrease in: Loans held for sale ....................................................... (93,879) 2,029,334 Accrued interest receivable ............................................... (26,730) 16,377 Tax refund receivable ..................................................... 23,892 - Deferred tax assets ....................................................... 163,903 15,807 Other assets .............................................................. 37,059 31,134 Increase (decrease) in: Accrued interest payable .................................................. (1,057) (944) Accrued income taxes ...................................................... 8,798 (106,085) Other liabilities ......................................................... (304,230) 68,379 ---------- ---------- Net cash provided by operating activities ................................... $ 571,681 $2,747,951 ========== ========== SUPPLEMENTAL SCHEDULE OF NON CASH INVESTING AND FINANCING ACTIVITIES Refinancing of sales of real estate owned ........................................ $ - $ 37,200 Transfer of loans to real estate acquired through foreclosure .................... $ - $ 4,989 Non cash dividends ............................................................... $ 4,024 $ 3,775 Federal Home Loan Bank stock dividend ............................................ $ - $ 12,800 Transfer of debt securities to available for sale from securities held to maturity $ - $2,449,446 Transfer of loans to held for sale from loans for portfolio ...................... $ - $2,135,339 Contingency Recovery ............................................................. $ - $ 81,023
See Notes to consolidated financial statements. 5 MISSISSIPPI VIEW HOLDING COMPANY AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1997 (Unaudited) Note 1: PRINCIPLES OF CONSOLIDATION The unaudited consolidated financial statements as of and for the three and nine month periods ended June 30, 1997, include the accounts of Mississippi View Holding Company (the "Company") and its wholly owned subsidiary Community Federal Savings & Loan Association of Little Falls (the "Association"). All significant intercompany accounts and transactions have been eliminated in consolidation. Note 2: BASIS OF PRESENTATION General: The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and instructions per Form 10-QSB. Accordingly, they do not include all information and disclosures required by generally accepted accounting principles for complete financial statements. The accompanying consolidated financial statements do not purport to contain all the necessary financial disclosures required by generally accepted accounting principles that might otherwise be necessary in the circumstances and should be read with the fiscal 1996 consolidated financial statements and notes of Mississippi View Holding Company and Subsidiary included in their annual audit report for the year ended September 30, 1996. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentations have been included. The results of operations for the three and nine month periods ended June 30, 1997, are not necessarily indicative of the results that may be expected for the entire fiscal year or any other period. Reclassification: Certain items previously reported have been reclassified to conform with the current period's reporting format. Note 3. RECENT ACCOUNTING PRONOUNCEMENTS. Accounting for Transfers and Servicing of Financial Assets and Extinquishments of Liabilities. The FASB issued SFAS No. 125, Accounting for Transfers and Servicing of Financial Assets and Extinquishments of Liabilities (SFAS No. 125) and SFAS No. 127, Deferral of the Effective Date of Certain Provisions of FASB Statement No. 125 (SFAS No.127) in June and December 1996, respectively. SFAS No. 125 provides accounting and reporting standards for transfers and servicing of financial assets and extinquishments of liabilities. It requires entities to recognize servicing assets and liabilities for all contracts to service financial assets, unless the assets are securitized and all servicing is retained. The servicing assets will be measured initially at fair value, and will be amortized over the 6 estimated useful lives of the servicing assets. In addition, the impairment of servicing assets will be recognized through a valuation allowance. SFAS No. 125 also addresses the accounting and reporting standards for securities lending, dollar-rolls, repurchase agreements and similar transactions. The Company will prospectively adopt SFAS No. 125 on January 1, 1997. However, in accordance with SFAS No. 127, the Company will defer adoption of the standard as it relates to securities lending, dollar-rolls, repurchase agreements and similar transactions until January 1, 1998. The Company does not expect the adoption of SFAS No. 125 to have a material impact on its consolidated financial statements. Earnings per Share. On March 3, 1997, the FASB issued SFAS No. 128, Earnings per Share (SFAS No. 128) which is effective for financial statements issued for periods ending after December 15, 1997. SFAS No. 128 replaces APB Opinion 15, Earnings per Share, and simplifies the computation of earnings per share (EPS) by replacing the presentation of primary EPS with a presentation of basic EPS. In addition, the Statement requires dual presentation of basic and diluted EPS by entities with complex capital structures. Basic EPS includes no dilution and is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution of securities that could share in the earnings of an entity, similar to fully diluted EPS. The computation of EPS will be compatible with international standards, as the International Accounting Standards Committee recently issued a comparable standard. Disclosure of Information about Capital Structure. The FASB issued SFAS No. 129, Disclosure of Information about Capital Structure, which is effective for financial statements issued for periods ending after December 15, 1997. SFAS No. 129 establishes standards for disclosing information about an entity's capital structure by consolidation of disclosure requirements under various present accounting standards. Management's Discussion and Analysis of Financial Condition for September 30, 1996 and June 30, 1997 General. Total assets of Mississippi View Holding Company, (the "Company") decreased by $236,113 from September 30, 1996, to June 30, 1997. The reduced assets were the net result of increased loans receivable of $1,108,599, increased accrued interest receivable of $26,731 offset by reduced cash equivalents of $677,250, reduced securities of $469,991, reduced tax deferred assets of $163,903 and reduced other assets of $62,444. Cash and Cash Equivalents. Cash and cash equivalents consisting of interest-bearing and noninterest bearing deposits, decreased $677,250. Liquidity decreased primarily due to deposit withdrawals and the purchase of treasury stock exceeding maturing security investments and cash provided by operating activities. 7 Securities Available for Sale. Securities available for sale increased $1,622,105. Security purchases exceeded maturities and principal payments increasing the portfolio by $141,990. In addition, the mark to market value of these securities increased by $1,489,963 of which $1,006,684 was due to an error in the recorded number of shares of stock of the Federal Home Loan Mortgage Corporation (FHLMC) owned by the Association on September 30, 1996. The additional shares issued in a previous 3-for-1 stock split were not recorded which resulted in the amount of stock owned being understated by 8,792 shares. The market value adjustment had no effect on net income or earnings per share but did have an effect on certain balance sheet items and their corresponding ratios. Any future increase or decrease in the market value of such securities will have a corresponding positive or negative effect on stockholders' equity. Securities Held to Maturity. Debt and mortgage-backed securities held to maturity decreased $2,092,096, or 22.51%, from $9,294,092 on September 30, 1996, to $7,201,996 on June 30, 1997. Maturing debt securities of $1,749,672 and principal amortization of mortgage-backed securities of $538,424 were offset by purchases of certificates of deposit of $196,000. This liquidity was used to supplement increased lending activities and deposit withdrawals. Loans Held for Sale. Loans held for sale increased $31,927 from $178,663 (3 loans) on September 30, 1996, to $210,590 (5 loans) on June 30, 1997. This increase was the result of seasonal activity. Management's strategy is to sell in the secondary market lower-yielding fixed rate mortgage loans rather than maintaining them for portfolio. These loans are presold in the secondary market prior to origination. The balance is the amount sold, yet unfunded as of the period end. Loans Receivable, Net. Loans receivable increased $1,076,672, or 2.50%, from $43,070,281 on September 30, 1996, to $44,146,953 on June 30, 1997. This increase was due to new loan originations exceeding principal amortizations and loan payoffs. Foreclosed Real Estate. Foreclosed real estate remained unchanged from September 30, 1996, to June 30, 1997, at $0.00. Deferred Tax Asset. Deferred tax asset, net of valuation allowance, decreased $163,903 during this nine month period primarily as a result of the reversing temporary difference in the SAIF assessment tax deduction. Other Assets. Other assets decreased $62,444, or 10.49%, from $595,208 as of September 30, 1996, to $532,764 as of June 30, 1997. This decrease was the result of a reduced accrued income tax refund of $23,892, the reduced prepaid federal deposit insurance premium of $29,410, and reduced prepaid insurance of $15,296. Deposits. Deposits, after interest credited, decreased by $1,179,304, or 2.09%, to $55,351,890 at June 30, 1997, from $56,531,194 at September 30, 1996. The decrease was due, in part, to management's deposit pricing strategy. Advances from Borrowers for Taxes and Insurance. Advances from borrowers for taxes and insurance decreased $87,711 from $138,530 on September 30, 1996, to $50,819 on June 30, 1997, due to the cyclical nature of these payments. 8 Deferred Tax Liability. Deferred tax liability increased from $0.00 at September 30, 1996, to $555,084 on June 30, 1997 due primarily to the increase in net unrealized gains on available for sale securities. See also "Securities Available for Sale" Other Liabilities. Other liabilities decreased by $304,230, or 33.77%, from $900,850 on September 30, 1996, to $596,620 on June 30, 1997. Decreased liabilities resulted from reduced custodial account balances for servicing on sold loans of $11,891, payment of the Savings Association Insurance Fund (SAIF) assessment during the fourth quarter 1996 of $362,557, reduced accrued compensation and bonus expenses of $25,515, and reduced accrued audit expense of $13,585. These liability decreases were offset by increased deferred executive compensation of $15,849, a cash dividend of $65,499 declared by the Company payable on August 15, 1997, and a five year pledge/commitment of $26,250, of which $20,250 is outstanding at June 30, 1997, to Unity Family Healthcare/St. Gabriel's Hospital, a local healthcare/hospital facility, for renovation and expansion. Stockholders' Equity. Stockholders' equity increased by $730,348, or 5.87%, from $12,440,245 on September 30, 1996, to $13,170,593 on June 30, 1997. This increase is the net effect of the following changes in equity: a paid in capital increase of $21,402 resulting from the fair market value adjustment to earned and committed to be released Employee Stock Ownership Plan ("ESOP") shares, net of taxes, and the permanent tax/book benefit resulting from the vesting of Management Stock Bonus Plan (MSBP) shares; an increase of $48,882 as a result of accounting for earned ESOP shares; an increase of $50,909 as a result of accounting for earned MSBP shares; an increase of $893,978 resulting from an increase in net unrealized gains on available for sale securities (see also "Securities Available for Sale"); an increase of $555,108 from net operational income for the nine month period just ended; a decrease to retained earnings due to a dividend declared and paid of $119,790, and a decrease of $720,141 resulting from open market purchases of common stock of the Company. Comparison of Operating Results for the Three Months Ended June 30, 1997 and 1996 Net Income. Net income increased by $11,840, for the three months ended June 30, 1997, when compared to the three months ended June 30, 1996. Due to interest income increasing and interest expense decreasing, net interest income increased by $23,347. Noninterest expense decreased more than noninterest income, but was offset by increased income tax expense. Therefore, income for the comparative three month periods ended June 30, 1997 and 1996 were $207,981 and $196,141, respectively. Total Interest Income. Interest income increased $10,675, or 0.83%, from $1,280,940 for the three month period ended June 30, 1996, to $1,291,615 for the three month period ended June 30, 1997. Interest income from loans receivable increased $45,057 due to the increase in the average loan balances offset by lower rates paid on such balances over the period. Available for sale security investment income increased $30,348 due to the increased average rate of return of these investments. Held to maturity investment security income decreased $64,730 due to a decrease in the average balance of such securities as maturities were not reinvested in such investments. 9 Total Interest Expense. Interest expense decreased $12,672, or 2.00%, for the comparative three month periods ending June 30, 1996 and 1997. This decrease was due to lower average deposit balances. Net Interest Income. Net interest income increased $23,347, or 3.61%, from $647,192 for the three months ended June 30, 1996, to $670,539 for the three month period ended June 30, 1997. The Company's net interest rate spread improved from 2.92% to 3.11% as the yield earned on interest-earning assets increased faster then the cost of interest-bearing deposits. Provision for Loan Losses. The Association currently maintains an allowance for loan losses based upon management's periodic evaluation of known and inherent risks in the loan portfolio, the Association's past loss experience, adverse situations that may affect the borrowers' ability to repay loans, estimated value of the underlying collateral, and current and expected market conditions. Provisions for loan losses decreased by $1,451 from June 30, 1996 to June 30, 1997. Management's assessment of the loan portfolio and market conditions determined that no provisions needed to be recorded at this time. While management maintains its allowance for losses at a level which it considers to be adequate to provide for potential losses, there can be no assurances that further additions will not be made to the loss allowances and that such losses will not exceed the estimated amounts. Due to the size of the institution and the minimal amount of nonperforming loans the percentage of nonperforming loans to allowance for loan losses will seem high. Movement of even one loan into or out of nonperforming status per reporting period may result in a large percentage change due to the size of the portfolio. Noninterest Income. Noninterest income decreased by $17,402, or 22.25%, during the three month period ended June 30, 1997, as compared to the same period ended June 30, 1996. This decrease was due to reduced fee and service charge fee income of $7,811 and reduced other noninterest income of $12,590. The noninterest income decrease was the result of a tax settlement between our data processor and the IRS, from which we received a payment of $11,900 in June of 1996. These decreases were offset by a $3,095 increase in the gain on sale of real estate owned. Noninterest Expense. Noninterest expense decreased $18,719, or 4.46%, from $419,296 to $400,577 during the comparative three month periods ending June 30, 1996 and 1997, respectively. The decreased noninterest expense was the result of the reduced federal deposit insurance of $21,963 due to the recapitalization of the SAIF in September 1996 and other expenses of $17,251 offset by increased compensation of $19,718, of which $6,350 is due to an adjustment for the current fair value of the vested ESOP shares exceeding the value at the time of purchase. Income Tax. Income tax expense increased $14,275, or 13.16%, from $108,504 for the three month period ended June 30, 1996, to $122,779 for the three month period ended June 30, 1997, primarily due to increased earnings. 10 Comparison of Operating Results for the Nine Months Ended June 30, 1997 and 1996 Net Income. Net income decreased $72,211, or 11.51%, from $627,319 for the nine months ended June 30, 1996, to $555,108 for the nine months ended June 30, 1997. Noninterest income decreased $151,579 offset by reduced noninterest expense of $8,452 and reduced income tax expense of $69,049. Total Interest Income. Interest income decreased $18,024, or 0.46%, from $3,887,398 for the nine month period ended June 30, 1996, to $3,869,374 for the nine month period ended June 30, 1997. Interest income from loans receivable increased $83,992 due to the increase in the average loan balances offset by lower rates paid on such balances over the period. Available for sale security investment income increased $161,799 due to the increase in the average investment balance along with increased average rate of return of these investments. Held to maturity investment security income decreased $263,815 due to a decrease in the average balance of such securities as maturities were not reinvested in such investments. Total Interest Expense. Interest expense decreased $16,166, or 0.85%, for the comparative nine month periods ending June 30, 1996 and 1997. This decrease was due to lower rates paid on deposits offset somewhat by an increase in the average balance of deposits. Net Interest Income. Net interest income decreased $1,858, or 0.09%, from $1,994,809 for the nine months ended June 30, 1996, to $1,992,951 for the nine month period ended June 30, 1997. The Company's interest rate spread improved from 3.01% to 3.09% as the yield earned on interest earning assets increased faster than the cost of interest-bearing deposits. Noninterest Income. Noninterest income decreased by $151,579, or 52.20%, during the nine month period ended June 30, 1997, as compared to the same period ended June 30, 1996. This decrease was primarily due to a gain on sale of loans, a contingency recovery, and a payment received from the Association's previous data processor recorded during the nine months ended June 30, 1996. Noninterest Expense. Noninterest expense decreased $8,452, or 0.68%, from $1,246,714 to $1,238,262 during the comparative nine month periods ending June 30, 1996 and 1997, respectively. The decrease was the result of reduced deposit insurance premiums of $50,615 and other expenses of $8,095 offset by increased compensation and benefits of $44,389 and increased data processing costs of $8,286. Income Tax. Income tax expense decreased $69,049 or 16.95%, from $407,460 for the nine month period ended June 30, 1996, to $338,411 for the nine month period ended June 30, 1997, primarily due to decreased earnings. 11 Non-performing and Problem Assets The following table sets forth information regarding non-accrual loans, real estate owned, and other repossessed assets, and loans 90 days or more delinquent but on which the Association was accruing interest at the date indicated.
At June 30, ----------------------------- 1997 1996 -------------- ------------- (In Thousands) ----------------------------- Loans accounted for on a non-accrual basis: Mortgage loans: Permanent loans secured by 1-4 dwelling units ................ $ 187 $ 92 All other mortgages .......................................... - 208 Non-mortgage loans: Commercial business loans .................................... - - Consumer loans ............................................... 6 21 -------------- ------------- Total .......................................................... 193 321 Accruing loans which are contractually past due 90 days or more: Mortgage loans: Construction loans ........................................... - - Permanent loans secured by 1-4 dwelling units ................ 40 31 All other mortgage loans ..................................... - - Non-mortgage loans: Consumer loans ............................................... - - -------------- ------------- Total .......................................................... 40 31 -------------- ------------- Total non-accrual and accrual loans ............................ 233 352 -------------- ------------- REO (net) ...................................................... - - Other non-performing assets .................................... - - -------------- ------------- Total non-performing assets .................................... $233 $352 ============== ============= Total non-accrual and accrual loans to net loans ............... 0.53% 0.84% Total non-accrual and accrual loans to total assets ............ 0.33% 0.51% Total non-performing assets to total assets .................... 0.33% 0.51% Allowance for loan losses to non-performing loans .............. 370.26% 248.90%
Interest income that would have been recorded on loans accounted for on a nonaccrual basis under the original terms of such loans was $7,935 for the nine month period ended June 30, 1997. No interest income on non-accrual loans was included in income for the nine month period ended June 30, 1997. 12 Capital Compliance The following table sets forth the Association's capital position at June 30, 1997, as compared to the minimum regulatory capital requirements imposed on the Association by the Office of Thrift Supervision ("OTS") at that date. At June 30, 1997 --------------------------------- Percentage of Amount Adjusted Assets ------------ --------------- GAAP Capital.................$ 11,745,636 16.83% =========== =============== Tangible Capital: (1) Regulatory Requirement.....$ 1,019,189 1.50% Actual Capital............. 10,647,406 15.67% ----------- --------------- Excess.................$ 9,628,217 14.17% =========== =============== Core Capital: (1) Regulatory Requirement.....$ 2,038,378 3.00% Actual Capital............. 10,647,406 15.67% ----------- --------------- Excess.................$ 8,609,028 12.67% =========== =============== Risk-Based Capital: (2) Regulatory Requirement $ 2,695,680 8.00% Actual Capital............. 11,074,056 32.86% ----------- --------------- Excess.................$ 8,378,376 24.86% =========== =============== (1) Regulatory capital reflects modifications from GAAP capital due to valuation adjustments for available for sale securities and unallowable mortgage servicing rights. (2) Based on risk weighted assets of $33,695,998. 13 Liquidity Resources The Association is required to maintain minimum levels of liquid assets as defined by the OTS regulations. The OTS minimum required liquidity ratio is 5% and the minimum short term liquidity is 1%. At June 30, 1997, the Association's total liquidity was 23.03%. Short term liquidity at June 30, 1997, was 15.06%. Both levels were well in excess of regulation requirements. The Association adjusts its liquidity levels in order to meet funding needs for deposit outflows, payment of real estate taxes from escrow accounts on mortgage loans, loan funding commitments, and repayment of borrowings, when applicable. The Association adjusts it liquidity level as appropriate to meet its asset/liability objectives. The primary sources of funds are deposits, amortization and prepayments of loans and mortgage-backed securities, maturity of investments, and funds provided from operations. As an alternative to supplement liquidity needs, the Association has the ability to borrow from the Federal Home Loan Bank of Des Moines. Scheduled loan amortization and maturing investment securities are a relatively predictable source of funds, however, deposit flow and loan prepayments are greatly influenced by, among other things, market interest rates, economic conditions and competition. The Association's liquidity, represented by cash, cash equivalents, securities (held to maturity and available for sale), is a product of its operating, investing, and financing activities. Impact of Inflation and Changing Prices The unaudited consolidated financial statements of the Company and notes thereto, presented elsewhere herein, have been prepared in accordance with GAAP, which requires the measurement of financial position and operating results in terms of historical dollars without considering the change in the relative purchasing power of money over time due to inflation. The impact of inflation is reflected in the increased cost of the Company's operations. Unlike most industrial companies, nearly all the assets and liabilities of the Company are financial. As a result, interest rates have a greater impact on the Company's performance than do the general levels of inflation. Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services. 14 Key Operating Ratios The table below sets forth certain performance ratios of the Company for the periods indicated.
At or for the Three Months At or for the Nine Months Ended June 30, Ended June 30, -------------------------- ------------------------- 1997 (1) 1996 (1) 1997 (1) 1996 (1) ----------- ----------- ------------ ----------- Performance Ratios: Return on average assets (net income divided by average total assets) ... 1.22% 1.13% 1.08% 1.21% Return on average equity (net income divided by average equity) ......... 6.91% 6.14% 6.15% 6.23% Average interest earning assets to average interest bearing liabilities 123.92% 123.65% 123.16% 124.53% Net interest rate spread ............. 3.11% 2.92% 3.09% 3.01% Net yield on average interest-earning assets ............................. 3.99% 3.81% 3.95% 3.92% Net interest income after provision for loan losses to total other expenses...................... 167.39% 154.01% 160.95% 159.71% Capital Ratios: Book value per share (2) ............. $ 16.09 $ 14.02 $ 16.09 $ 14.02 Average equity to average assets ratio (average equity divided by average total assets) ....................... 17.61% 18.44% 17.57% 19.36% Stockholders' equity to assets at period end ........................... 18.88% 18.40% 18.88% 18.40%
(1) The ratios for the three and nine month periods are annualized where appropriate. (2) Based upon shares outstanding at June 30, 1997 and 1996, of 818,743 and 909,714 respectively. 15 PART II - OTHER INFORMATION Item 1. Legal Proceedings Not Applicable Item 2. Changes in Securities Not Applicable Item 3. Default Upon Senior Securities Not Applicable Item 4. Submission of Matters to a Vote of Security Holders Not Applicable Item 5. Other Information Not Applicable Item 6. Exhibits and Reports on Form 8-K (a) Exhibits - Exhibit 11 - Statement re Computation of Per Share Earnings. - Exhibit 27 - Financial Data Schedule (only included in electronic filing) (b) Reports on Form 8-K - On April 2, 1997, the Company filed a Form 8-K announcing OTS approval to implement a stock repurchase program. 16 MISSISSIPPI VIEW HOLDING COMPANY SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Mississippi View Holding Company Date: 08/04/97 By: /s/ Thomas J. Leiferman ------------- -------------------------------- Thomas J. Leiferman President and Chief Executive Officer (Principal Executive Officer) Date: 08/04/97 By: /s/ Larry D. Hartwig ------------- ----------------------------- Larry D. Hartwig Vice President (Principal Accounting and Financial Officer) 17 EX-11 2 STATEMENT REGARDING COMPUTATION OF EARNINGS MISSISSIPPI VIEW HOLDING COMPANY EXHIBIT 11 STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE
For the Three Months For the Nine Months Ended June 30, Ended June 30, ------------------------- --------------------------- 1997 1996 1997 1996 ------------ ----------- ------------ ------------- Net Income ............................. $ 207,981 $ 196,141 $ 555,108 $ 627,319 ========== ========== ========== =========== Weighted Average Shares Outstanding .... 757,256 823,009 784,726 868,737 Common stock equivalents due to dilutive effect of stock options .............. 31,981 756 21,445 1,639 ---------- ---------- ---------- ----------- Total weighted average common shares and equivalents outstanding .............. 789,237 823,765 806,171 870,376 ========== ========== ========== =========== Primary Earnings Per Share ............. $ 0.26 $ 0.24 $ 0.69 $ 0.72 ========== ========== ========== =========== Weighted Average Shares Outstanding .... 757,256 823,009 784,726 868,737 Additional dilutive shares using end of period market value versus average market value for period when utilizing the treasury stock method regarding stock options .............. 32,152 2,168 32,152 2,168 ---------- ---------- ---------- ----------- Total weighted average common shares and equivalents outstanding for fully diluted computation .................. 789,408 825,177 816,878 870,905 ========== ========== ========== =========== Fully diluted earnings per share ....... $ 0.26 $ 0.24 $ 0.68 $ 0.72 ========== ========== ========== ===========
Earnings per share of common stock for the three and nine month periods ended June 30, 1996 and 1997, have been determined by dividing net income for the period by the weighted average number of shares of common stock outstanding, net of unearned ESOP shares. 18 EX-27 3 FDS 10-Q
9 1,000 9-MOS SEP-30-1997 JUN-30-1997 191 1,716 0 0 13,857 7,202 7,253 45,490 863 69,775 55,352 0 1,252 0 0 0 101 13,070 69,775 2,843 1,026 0 3,869 1,876 1,876 1,993 0 0 1,238 894 555 0 0 555 .69 .68 7.61 193 40 0 1,468 877 15 0 863 863 0 680
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