-----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, Impe75fPi44q7iwt2zc2638ihIm0JjKWQzyH/PvsCVhqFsuOGn7WZuiLdP24YE7W 9Lgd7SoGKWdSrbshRoQWSw== 0000946275-98-000061.txt : 19980217 0000946275-98-000061.hdr.sgml : 19980217 ACCESSION NUMBER: 0000946275-98-000061 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980212 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: SEC FILE NUMBER: 000-25546 FILM NUMBER: 98533386 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 December 31, 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 incorporation (I.R.S. Employer or jurisdiction) Identification No.) 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 February 6, 1998: 740,243 MISSISSIPPI VIEW HOLDING COMPANY INDEX TO FORM 10-QSB
Page ---- PART I. FINANCIAL INFORMATION --------------------- Item 1. Financial Statements Consolidated Statements of Financial Condition at December 31, 1997 (unaudited) and September 30, 1997 (audited) 2 Consolidated Statements of Income for the three months ended December 31, 1997 and 1996 (unaudited) 3 Consolidated Statements of Cash Flows for the three months ended December 31, 1997 and 1996 (unaudited) 4 Notes to Condensed Consolidated Financial Statements (unaudited) 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Non-Performing and Problem Assets 11 Capital Compliance 12 Liquidity Resources 13 Key Operating Ratios 14 PART II. OTHER INFORMATION ----------------- Item 1. Legal Proceedings 15 Item 2. Changes in Securities 15 Item 3. Default Upon Senior Securities 15 Item 4. Submission of Matters to a Vote of Security Holders 15 Item 5. Other Information 15 Item 6. Exhibits and Reports on Form 8-K 15 SIGNATURES
1 MISSISSIPPI VIEW HOLDING COMPANY AND SUBSIDIARY CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
December 31, September 30, 1997 1997 ------------- ---------------- ASSETS (Unaudited) (Audited) ------ ------------- ---------------- Cash and cash equivalents: Cash and due from banks ........................... $ 407,159 $ 214,934 Interest bearing deposits with banks .............. 3,063,423 889,660 Securities available for sale, at fair value .......... 11,526,081 12,963,344 Securities held to maturity, at amortized cost ........ 6,679,180 7,405,466 FHLB stock, at cost ................................... 650,700 650,700 Loans held for sale ................................... -- 135,550 Loans receivable, net of allowance for loan losses of $861,953 in 1998 and $861,170 in 1997 ............... 44,493,413 44,474,809 Accrued interest receivable ........................... 426,913 437,548 Premises and equipment ................................ 785,805 806,900 Other assets .......................................... 586,117 567,539 ------------ ------------ Total Assets .................................. $ 68,618,791 $ 68,546,450 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ Liabilities: Demand deposits ....................................... $ 4,329,750 $ 4,408,558 Savings deposits ...................................... 14,325,889 14,525,018 Time deposits ......................................... 36,211,228 36,250,011 ------------ ------------ Total deposits ..................................... 54,866,867 55,183,587 Advances from borrowers for taxes and insurance ....... 52,239 107,038 Accrued income taxes .................................. 67,245 66,352 Deferred tax liability ................................ 650,869 525,353 Other liabilities ..................................... 505,446 596,216 ------------ ------------ Total Liabilities ..................................... 56,142,666 56,478,546 Shareholders' 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; 656,629 and 653,151 shares outstanding .......................... 100,799 100,799 Paid in capital ....................................... 7,565,816 7,540,218 Treasury stock (267,749 and 267,749 shares), at cost .. (3,605,111) (3,605,111) Retained earnings, substantially restricted ........... 7,914,162 7,737,458 Unearned ESOP shares (56,447 and 58,463 shares), at cost ............................................... (483,330) (498,012) Unearned MSBP shares (27,167 and 28,629 shares), at cost ............................................... (303,206) (317,954) Unrealized appreciation on available-for-sale securities, net of tax ............................. 1,286,995 1,110,506 ------------ ------------ Total shareholders' equity ..................... 12,476,125 12,067,904 ------------ ------------ Total liabilities and shareholders' equity ..... $ 68,618,791 $ 68,546,450 ============ ============
The accompanying notes are an integral part of these consolidated financial statements. 2 MISSISSIPPI VIEW HOLDING COMPANY AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME
For the Three Months Ended December 31, ---------------------------- 1997 1996 ----------- ------------ Interest Income: Loans receivable .................................... $ 973,457 $ 942,489 Securities available for sale ....................... 171,696 173,997 Securities held to maturity ......................... 126,754 176,451 ---------- ----------- Total interest income ........................... 1,271,907 1,292,937 Interest Expense: Demand deposits ..................................... 9,451 9,973 Savings deposits .................................... 102,312 94,223 Time deposits ....................................... 514,287 530,099 ---------- ----------- Total interest expense .......................... 626,050 634,295 ---------- ----------- Net interest income ................................. 645,857 658,642 Provision for loan losses ........................... -- -- ---------- ----------- Net interest income after provision for loan loss 645,857 658,642 Noninterest Income: Other fees and service charges ...................... 17,458 13,989 Gain on sale of loans ............................... 2,535 2,246 Other ............................................... 22,196 21,282 ---------- ----------- Total noninterest income ....................... 42,189 37,517 Noninterest Expense: Compensation and employee benefits .................. 257,785 225,574 Occupancy ........................................... 22,771 21,933 Deposit insurance premium ........................... 14,677 38,185 Data processing ..................................... 18,541 21,402 Advertising ......................................... 6,828 8,086 Real estate owned expense, net ...................... 335 346 Other ............................................... 81,213 123,294 ---------- ----------- Total noninterest expense ...................... 402,150 438,820 ---------- ----------- Income before income taxes ............................ 285,896 257, 339 Income tax expense .................................... 109,192 84, 074 ---------- ----------- Net income ............................................ $ 176,704 $ 173,265 ========== =========== Basic earnings per share .............................. $ 0.27 $ 0.22 ========== =========== Diluted earnings per share ............................ $ 0.24 $ 0.22 ========== =========== Dividends declared during the period .................. $ -- $ -- ========== ===========
The accompanying notes are an integral part of these consolidated financial statements. 3 MISSISSIPPI VIEW HOLDING COMPANY AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended December 31, -------------------------- 1997 1996 ------------ ------------ Cash flows from operating activities: Interest received on loans and investments .. $ 1,273,811 $ 1,256,833 Interest paid ............................... (626,012) (634,127) Other fees, commissions, and income received 58,664 61,506 Cash paid to suppliers, employees and others (438,359) (781,205) Contributions to charities .................. (1,727) (3,749) Income taxes paid ........................... (94,037) -- Loans originated for sale ................... (232,783) (170,400) Proceeds from sale of loans ................. 370,868 231,391 ----------- ----------- Net cash provided by operating activities ... 310,425 (39,751) ----------- ----------- Cash flows from investing activities: Purchases of available-for-sale securities .. (882,527) -- Proceeds from maturities of available-for-sale securities .............. 2,610,643 632,860 Purchases of held-to-maturity securities .... (889,000) (988,000) Proceeds from maturities of held-to-maturity securities ................................ 1,615,033 1,951,990 Loan originations and principal payments on loans, net ................................ (21,535) (677,459) Purchases of property and equipment ......... (3,621) (12,266) ----------- ----------- Net cash provided by (used in) investing activities ........................... 2,428,993 907,125 ----------- ----------- Cash flows from financing activities: Net increase (decrease) in non-interest bearing demand and savings deposit accounts (278,075) 247,000 Net (decrease) increase in time deposits .... (38,682) (436,058) Net (decrease) increase in mortgage escrow funds ..................................... (54,800) (88,154) Acquisition of treasury stock ............... -- (275,000) Net increase in unearned MSBP shares ........ (1,873) (912) ----------- ----------- Net cash used by financing activities ....... (373,430) (553,124) ----------- ----------- Net (decrease) increase in cash and cash equivalents ................................. 2,365,988 314,250 Cash and cash equivalents at beginning of year 1,104,594 2,583,654 ----------- ----------- Cash and cash equivalents at end of year ...... $ 3,470,582 $ 2,897,904 =========== ===========
The accompanying notes are an integral part of these consolidated financial statements 4 MISSISSIPPI VIEW HOLDING COMPANY AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
For the Three Months Ended December 31, --------------------------- 1997 1996 ------------ ------------- RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Net Income .................................................... $ 176,704 $ 173,265 Adjustments: Provision for losses on loans and real estate ................ -- -- Depreciation ................................................. 24,716 20,951 Non-cash dividends ........................................... (1,385) (1,319) ESOP fair value adjustment ................................... 11,515 4,451 Amortization of ESOP compensation ............................ 14,681 14,359 Amortization of MSBP compensation ............................ 16,622 16,622 Tax benefit of MSBP vesting activities ....................... 14,083 3,052 Net amortization and accretion of premiums and ............... 4,934 993 discounts on securities Net loan fees deferred and amortized ......................... 2,932 10,334 Net mortgage loan servicing fees deferred .................... 430 363 (Increase) decrease in: Loans held for sale ....................................... 135,550 58,745 Accrued interest receivable ............................... 10,634 (26,552) Prepaid income tax ........................................ -- (71,640) Deferred tax asset ........................................ -- 163,903 Other assets .............................................. (19,008) 31,873 Increase (decrease) in: Accrued interest payable .................................. 38 168 Accrued income taxes ...................................... 8,749 (8,272) Other liabilities ......................................... (90,770) (431,047) --------- -------- Net cash provided by operating activities .................... $ 310,425 $(39,751) ========= ======== SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES Noncash dividends ............................................ $ 1,385 $ 1,319
The accompanying notes are an integral part of these consolidated financial statements. 5 MISSISSIPPI VIEW HOLDING COMPANY AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1997 (Unaudited) Note 1: PRINCIPLES OF CONSOLIDATION The unaudited consolidated financial statements as of and for the three month period ended December 31, 1997, include the accounts of Mississippi View Holding Company (the "Company") and its wholly owned subsidiary Community Federal Savings & Loan Association of Little Falls (the "Association"). All significant intercompany accounts and transactions have been eliminated in consolidation. Note 2: BASIS OF PRESENTATION General: The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and instructions per Form 10-QSB. Accordingly, they do not include all information and disclosures required by generally accepted accounting principles for complete financial statements. The accompanying consolidated financial statements do not purport to contain all the necessary financial disclosures required by generally accepted accounting principles that might otherwise be necessary in the circumstances and should be read with the fiscal 1997 consolidated financial statements and notes of Mississippi View Holding Company and Subsidiary included in their annual audit report for the year ended September 30, 1997. 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 month period ended December 31, 1997, are not necessarily indicative of the results that may be expected for the entire fiscal year or any other period. Reclassification: Certain items previously reported have been reclassified to conform with the current period's reporting format. Note 3. RECENT ACCOUNTING PRONOUNCEMENTS. SFAS No. 130, "Reporting Comprehensive Income" - issued June 1997, establishes standards for reporting and displaying comprehensive income and its components in general-purpose financial statements. Comprehensive income includes net income and several other items that current accounting standards require to be recognized outside of net income. This statement requires entities to display comprehensive income and its components in the financial statements with presentation of the accumulated balances of other comprehensive income reported in stockholder's equity separately from retained earnings and additional paid-in capital. SFAS No. 130 is effective for fiscal years beginning after December 15, 1997. Reclassification of financial statements for earlier periods that are presented for comparative purposes is required. 6 SFAS No. 131, "Disclosures about Segments of Enterprise and Related Information" - issued June 1997, requires public business enterprises to report information about their operating segments in a complete set of financial statements to shareholders. This statement also requires entities to report enterprise-wide information about their products and services, their activities in different geographic areas, and their reliance on major customers. Certain segment information is also to be reported in interim financial statements. The basis for determining an enterprise's operating segments is the manner in which management operates the business. Specifically, financial information is required to be reported on the basis that is used internally by the enterprise's chief operating decision maker in making decisions related to resource allocation and segment performance. SFAS No. 131 is effective for financial statements for years beginning after December 31, 1997. Management believes adoption of the above-described Statements will not have a material effect on financial position and the results of operations, nor will adoption require additional capital resources. Note 4. EARNINGS PER SHARE. In 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 128, Earnings per Share. Statement 128 replaced the previously reported primary and fully diluted earnings per share with basic and diluted earnings per share. Unlike primary earnings per share, basic earnings per share excludes any dilutive effects of options, warrants, and convertible securities. Diluted earnings per share is very similar to the previously reported fully diluted earnings per share. All earnings per share amounts for all periods have been presented, and where necessary restated, to conform to the Statement 128 requirements. The following tables set forth the computation of basic and diluted earnings per share: For the Three Months Ended December 31, --------------------------- 1997 1996 ------------ ------------- Numerator: Net income - Numerator for basic earnings per share and diluted earnings per share - income available to common shareholders $176,704 $173,265 ======== ======== Denominator: Denominator for basic earnings per shares - 654,941 771,742 weighted-average shares Effect of dilutive securities: stock options and employee stock-based compensation 68,243 8,760 -------- -------- Denominator for diluted earnings per share - adjusted weighted-average shares and assumed conversions 723,184 780,502 ======== ======== Basic earnings per share $ 0.27 $ 0.22 Diluted earnings per share $ 0.24 $ 0.22 7 Management's Discussion and Analysis of Financial Condition for September 30, 1997 and December 31, 1997 General. Total assets of Mississippi View Holding Company, (the "Company") increased by $72,341 from September 30, 1997, to December 31, 1997. The increased assets were the net result of increased cash equivalents of $2,365,988, increased loans receivable of $18,604, increased other assets of $18,578 offset by reduced securities of $2,163,549, reduced loans held for sale of $135,550, reduced accrued interest receivable of $10,635 and reduced premises and equipment of $21,095. Cash and Cash Equivalents. Cash and cash equivalents consisting of interest-bearing and noninterest bearing deposits, increased $2,365,988. Liquidity increased primarily due to cash receipts from investment securities and the sale of held for sale loans, offset by deposit withdrawals. Securities Available for Sale. Securities available for sale decreased $1,437,263, or 11.09%, from $12,963,344 at September 30, 1997 to $11,526,081 at December 31, 1997. Security maturities and principal payments exceeded purchases by $1,728,116. The cash received from this activity was reinvested in short term liquid investments and is reported as cash and cash equivalents in the statement of condition. The reduced investment balance was offset by an increase in the market value of available for sale securities of $294,149. 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 $726,286, or 9.81%, from $7,405,466 on September 30, 1997, to $6,679,180 on December 31, 1997. Maturing debt securities of $1,302,476 and principal amortization of mortgage-backed securities of $312,557 were offset by purchases of certificates of deposit of $889,000. Liquidity not reivested in certificates of deposit was reinvested in short term liquid investments and is reported as cash and cash equivalents in the statement of condition. Loans Held for Sale. Loans held for sale decreased $135,550 from $135,550 (2 loans) on September 30, 1997, to no loans held for sale on December 31, 1997. This decrease was the result of seasonal activity. Management's strategy is to sell in the secondary market lower-yielding fixed rate mortgage loans rather than maintaining them for portfolio. These loans are presold in the secondary market prior to origination. The balance is the amount sold, yet unfunded as of the period end. Loans Receivable, Net. Loans receivable increased $18,604 from $44,474,809 on September 30, 1997, to $44,493,413 on December 31, 1997. This increase was due to new loan originations exceeding principal amortizations and loan payoffs. Other Assets. Other assets increased $18,578, or 3.27%, from $567,539 as of September 30, 1997, to $586,117 as of December 31, 1997. This increase was primarily the net result of increased prepaid insurance premiums of $28,947 offset by the reduced prepaid federal deposit insurance premium of $14,677. Deposits. Deposits, after interest credited, decreased by $316,720, or 0.57%, to $54,866,867 at December 31, 1997, from $55,183,587 at September 30, 1997. The decrease was due, in part, to management's deposit pricing strategy. 8 Advances from Borrowers for Taxes and Insurance. Advances from borrowers for taxes and insurance decreased $54,799 from $107,038 on September 30, 1997, to $52,239 on December 31, 1997, due to the cyclical nature of these payments. Deferred Tax Liability. Deferred tax liability increased $125,516, or 23.89%, from $525,353 at September 30, 1997, to $650,869 on December 31, 1997, due primarily to the increase in net unrealized gains on available for sale securities. Other Liabilities. Other liabilities decreased by $90,770, or 15.22%, from $596,216 on September 30, 1997, to $505,446 on December 31, 1997. Decreased liabilities resulted from reduced custodial account balances for servicing sold loans of $5,305 and payment of accrued compensation and bonus expenses after the fiscal year ended of $77,958. Stockholders' Equity. Stockholders' equity increased by $408,221, or 3.38%, from $12,067,904 on September 30, 1997, to $12,476,125 on December 31, 1997. This increase is the net effect of the following changes in equity: a paid in capital increase of $25,598 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 $14,682 as a result of accounting for earned ESOP shares; an increase of $14,748 as a result of accounting for earned MSBP shares; an increase of $176,489 resulting from an increase in net unrealized gains on available for sale securities; and an increase of $176,704 from net operational income for the three month period just ended. Comparison of Operating Results for the Three Months Ended December 31, 1997 and 1996 Net Income. Net income increased by $3,439, for the three months ended December 31, 1997, when compared to the three months ended December 31, 1996. Net interest income decreased by $12,785 due to interest income decreasing more then interest expense. Noninterest income increased at the same time noninterest expense decreased, but was offset by increased income tax expense. Therefore, income for the comparative three month periods ended December 31, 1997 and 1996 were $176,704 and $173,265, respectively. Total Interest Income. Interest income decreased $21,030, or 1.63%, from $1,292,937 for the three month period ended December 31, 1996, to $1,271,907 for the three month period ended December 31, 1997. Interest income from loans receivable increased $30,968 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 decreased $2,301 due to the decrease in the average balance of such securities. Held to maturity investment security income decreased $49,697 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 $8,245, or 1.30%, for the comparative three month periods ending December 31, 1996 and 1997. This decrease was due to lower average deposit balances. 9 Net Interest Income. Net interest income decreased $12,785, or 1.94%, from $658,642 for the three months ended December 31, 1996, to $645,857 for the three month period ended December 31, 1997. This was primarily due to the reduced interest income from the lower rate of return earned on investment securities. 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. Loans are considered impaired if full principal and interest payments are not anticipated to be made in accordance with the contractual terms. Impaired loans are carried at the present value of expected future cash flows discounted at the loan's effective interest rate or at the fair value of the collateral if the loan is collateral dependent. A portion of the allowance for loan losses is allocated to impaired loans if the value of such loans is deemed to be less than the unpaid balance. If these allocations cause the allowance for loan losses to require an increase, such an increase is reported as a component of the provision for loan losses. Management's assessment of the loan portfolio and market conditions determined that no provisions needed to be recorded for the three months ended December 31, 1997 and 1996. 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 increased by $4,672, or 12.45%, during the three month period ended December 31, 1997, as compared to the same period ended December 31, 1996. This increase was due to increased fee and service charge fee income of $3,469, an increase in gain of sale of loans of $289, and an increase in other noninterest income of $914. Noninterest Expense. Noninterest expense decreased $36,670, or 8.36%, from $438,820 to $402,150 during the comparative three month periods ending December 31, 1996 and 1997, respectively. The decreased noninterest expense was the result of the reduced federal deposit insurance of $23,508, reduced data processing charges of $2,861, reduced advertising expense of $1,258 and reduced other expenses primarily legal expense, consulting fees, audit expense and charitable contributions of $42,081, offset by increased compensation of $32,211. Income Tax. Income tax expense increased $25,118, or 29.88%, from $84,074 for the three month period ended December 31, 1996, to $109,192 for the three month period ended December 31, 1997, primarily due to increased earnings. 10 Non-performing and Problem Assets. The following table sets forth information regarding non-accrual loans, real estate owned, and other repossessed assets, and loans 90 days or more delinquent but on which the Association was accruing interest at the date indicated. As of the date indicated, the Association had no loans categorized as trouble debt restructuring within the meaning of Statement of Financial Accounting Standards ("SFAS") No. 15. At December 31, ------------------- 1997 1996 ------ ----- (In Thousands) ------------------- Loans accounted for on a non-accrual basis: Mortgage loans: Permanent loans secured by 1-4 dwelling units ..... $ 287 $ 120 All other mortgages ............................... -- -- Non-mortgage loans ................................ 10 65 ----- ----- Total ........................................... 297 185 Accruing loans which are contractually past due 90 days or more: Mortgage loans: Construction loans ................................ -- -- Permanent loans secured by 1-4 dwelling units ..... 85 30 All other mortgage loans .......................... -- -- Non-mortgage loans ................................ -- 45 ----- ----- Total ............................................. 85 75 ----- ----- Total non-accrual and accrual loans ............... 382 260 ----- ----- Real estate owned ................................. -- -- Other non-performing assets ....................... -- -- ----- ----- Total non-performing assets ....................... $ 382 $ 260 ===== ===== Total non-accrual and accrual loans to net loans .. 0.86% 0.59% Total non-accrual and accrual loans to total assets 0.56% 0.37% Total non-performing assets to total assets ....... 0.56% 0.37% Interest income that would have been recorded on loans accounted for on a nonaccrual basis under the original terms of such loans was $13,025 and $9,961 for the three months ended December 31, 1997 and 1996, respectively. No interest income on non-accrual loans was included in income for the three months ended December 31, 1997 and 1996. 11 Capital Compliance. The following table sets forth the Association's capital position at December 31, 1997, as compared to the minimum regulatory capital requirements imposed on the Association by the Office of Thrift Supervision ("OTS") at that date. At December 31, 1997 ---------------------------- Percentage of Amount Adjusted Assets ---------- ---------------- GAAP Capital ........... $12,164,090 $ 17.73% =========== ======= Tangible Capital: (1) Regulatory requirement 997,107 1.50% Actual capital ....... 10,876,187 16.36% ----------- ------- Excess ............. $ 9,879,080 $ 14.86% =========== ======= Core Capital: (1) Regulatory requirement 1,994,214 3.00% Actual capital ....... 10,876,187 16.36% ----------- ------- Excess ............. 8,881,973 13.36% =========== ======= Risk-Based Capital: (2) Regulatory requirement 2,733,752 8.00% Actual capital ........ 11,308,704 33.09% ----------- ------- Excess .............. 8,574,952 25.09% =========== ======= (1) Regulatory capital reflects modifications from GAAP capital due to valuation adjustments for available for sale securities and unallowable mortgage servicing rights. (2) Based on risk weighted assets of $34,171,906. 12 Liquidity Resources The Office of Thrift Supervision (OTS) issued a final rule (12 CFR Part 566) that updates, simplifies, and streamlines it liquidity regulation effective November 24, 1997. The final rule has lowered the liquidity requirements for savings associations from 5 to 4 percent of the institution's liquidity base, the lowest level permitted by current law. The rule also eliminates a separate requirement that thrifts hold assets equal to 1 percent of a thrifts liquidity base in cash or short term liquid assets. Additionally, OTS streamlined the calculations used to measure compliance with liquidity requirements, expanded the types of investments considered to be liquid assets to conform with provisions of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, and reduced the liquidity base by modifying the definition of net withdrawable account to exclude accounts with maturities exceeding one year. The final rule requires the calculation once each quarter rather than monthly. Another change removes the requirement that certain obligations must mature in five years or less in order to qualify as a liquid asset. The OTS minimum required liquidity ratio is 4%. At December 31, 1997, the Association's total liquidity was 17.64%. The Association liquidity level was 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 its 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. 13 Key Operating Ratios The table below sets forth certain performance ratios of the Company for the periods indicated.
At or for the Three Months Ended December 31, --------------------------- 1997 (1) 1996 (1) ------------- ------------- Performance Ratios: Return on average assets (net income divided by average total assets) ..... 1.07% 1.00% Return on average equity (net income divided by average equity) ........... 6.36% 5.64% Average interest earning assets to average interest bearing liabilities ... 122.33% 123.23% Net interest rate spread .................................................. 3.10% 3.01% Net yield on average interest-earning assets .............................. 3.96% 3.88% Net interest income after provision for loan losses to total other expenses 160.60% 150.09% Capital Ratios: Book value per share (2) .................................................. $ 16.85 $ 15.25 Average equity to average assets ratio (average equity divided by average total assets) ................................. 16.78% 17.81% Shareholders' equity to assets at period end .............................. 18.18% 18.53%
(1) The ratios for the three month period are annualized. (2) The number of shares outstanding as of December 31, 1997 was 740,243, includes shares sold to the ESOP and purchased by the Management Stock Bonus Plan ("MSBP") and 854,714 as of December 31, 1996, includes shares sold to ESOP and purchased by the MSBP. 14 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 On January 21, 1998, the Company declared a cash dividend of $0.08 per share payable to stockholders of record on February 2, 1998. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits - Exhibit 27 - Financial Data Schedule (only included in electronic filing) (b) Reports on Form 8-K - None 15 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: 02/06/98 By: /s/ Thomas J. Leiferman ---------- ---------------------------------- Thomas J. Leiferman President and Chief Executive Officer (Principal Executive Officer) Date: 02/06/98 By: /s/ Larry D. Hartwig ---------- ------------------------------------ Larry D. Hartwig Vice President (Principal Accounting and Financial Officer) EX-27 2 ARTICLE 9 FDS FOR FORM 10QSB
9 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION DERIVED FROM THE QUARTERLY REPORT ON FORM 10-QSB AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL INFORMATION. 1000 3-MOS SEP-30-1997 DEC-31-1997 407 3,063 0 0 11,526 6,679 6,723 45,628 862 68,619 54,867 0 1,276 0 0 0 101 12,375 68,619 973 298 0 1,272 626 626 646 0 0 402 286 177 0 0 177 .27 .24 7.66 297 85 0 1,369 861 0 1 862 862 0 698 BASIC EARNINGS PER SHARE
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