SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
1 QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2001
OR
0 TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For transition period from ________ to ________
Commission File Number 0-20878
MNB BANCSHARES, INC.
(Exact name of Registrant as specified in its charter)
Delaware 48-1120026
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
800 Poyntz Avenue, Manhattan, Kansas 66502
(Address of principal executive offices) (Zip Code)
(785) 565-2000
(Registrant's telephone number, including area code)
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. Yes X No __
Indicate the number of shares outstanding of each of the
Registrant's classes of common stock as of the latest practicable date: As of
May 9, 2001, the Registrant had outstanding 1,563,905 shares of its common
stock, $.01 par value per share.
MNB BANCSHARES, INC.
Form 10-Q Quarterly Report
Table of Contents
PART I
Page Number
Item 1. Financial Statements and Related Notes 2 - 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 6 - 12
Item 3. Quantitative and Qualitative Disclosures about
Market Risk 12
PART II
Item 1. Legal Proceedings 14
Item 2. Changes in Securities 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of
Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
Form 10-Q Signature Page 15
MNB BANCSHARES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2001 2000
ASSETS
(Unaudited)
Cash and cash equivalents $ 5,541,157 $ 3,833,693
Investment securities:
Held-to-maturity at amortized cost 907,023 914,309
(estimated fair value of $914,000 and
$916,000 respectively)
Available-for-sale at estimated fair value 43,135,228 45,275,452
Loans, net 97,097,863 94,057,104
Premises and equipment, net 2,237,599 2,253,729
Other assets 6,561,400 6,562,566
Total assets $ 155,480,270 $ 152,896,853
LIABILITIES AND
STOCKHOLDERS'
EQUITY
Liabilities:
Deposits $ 132,101,025 $ 130,186,060
Other borrowings 5,881,246 6,497,740
Accrued expenses, taxes and other liabilities 2,099,423 1,537,127
Total liabilities 140,081,694 138,220,927
Stockholders' equity:
Common stock, $.01 par, 3,000,000 shares
authorized,
1,563,905 and 1,534,828 shares issued and
outstanding at 2001 and 2000, respectively 15,639 15,348
Additional paid in capital 9,737,322 9,634,291
Retained earnings 5,111,615 4,931,576
Accumulated other comprehensive income 648,804 214,581
Unearned employee benefits (114,804) (119,870)
Total stockholders' equity 15,398,576 14,675,926
Total liabilities and
stockholders' equity $ 155,480,270 $ 152,896,853
See accompanying notes to condensed consolidated financial statements.
MNB BANCSHARES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
For the Three Months
Ended March 31,
2001 2000
Interest income:
Loans $ 2,159,988 $ 1,905,825
Investment securities 638,977 607,929
Other 33,963 32,760
Total interest income 2,832,928 2,546,514
Interest expense:
Deposits 1,470,997 1,148,036
Borrowed funds 08,708 223,562
Total interest expense 1,579,705 1,371,598
Net interest income 1,253,223 1,174,916
Provision for loan losses 25,000 15,000
Net interest income after
provision for loan losses 1,228,223 1,159,916
Noninterest income:
Fees and service charges 266,958 213,806
Gains on sale of loans 48,011 14,318
Other 11,700 17,018
Total noninterest income 326,668 245,142
Noninterest expense:
Compensation and benefits 580,481 555,898
Occupancy and equipment 183,003 161,719
Amortization 66,605 55,558
Data processing 35,990 35,061
Other 301,482 271,817
Total noninterest expense 1,167,561 1,080,083
Earnings before income taxes 387,330 324,975
Income tax expense 111,365 104,264
Net earnings $ 275,965 $ 220,711
Earnings per share:
Basic $ 0.18 $ 0.15
Diluted $ 0.18 $ 0.14
Dividends per share $ 0.0625 $ 0.0595
See accompanying notes to condensed consolidated financial statements.
MNB BANCSHAES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Three Months
Ended March 31,
2001 2000
Net cash provided by
operating activities $ 331,602 $ 986,095
INVESTING ACTIVITIES
Net increase in loans (2,723,388) (1,135,009)
Maturities and prepayments
of investments held to maturity 7,292 102,970
Maturities and prepayments
of investments available for sale 3,045,155 3,334,737
Purchase of investments
available for sale (201,000) (4,171,956)
Improvements of real estate
owned (1,022) (8,659)
Purchases of premises and
equipment, net (62,108) (70,328)
Net cash provided by (used
in) investing activities 64,929 (1,948,245)
FINANCING ACTIVITIES
Net increase (decrease) in
deposits 1,914,965 (1,444,566)
Federal Home Loan Bank
borrowings 20,725,000 27,510,000
Federal Home Loan Bank
repayments (21,236,428) (29,486,428)
Proceeds (repayments) on
note payable (100,000) (100,000)
Purchase of treasury stock - (45,448)
Issuance of common stock
under stock option plan 103,332 3,142
Payment of dividends (95,926) (90,582)
Net cash provided by (used
in) financing activities 1,310,933 (564,750)
Net increase (decrease) in cash 1,707,464 (1,526,900)
Cash at beginning of period 3,833,693 4,315,013
Cash at end of period $ 5,541,157 $ 2,788,113
Supplemental disclosure of cash flow information:
Cash paid during period for
interest $ 1,567,000 $ 1,344,000
Cash paid during period for
taxes $ - $ -
Supplemental schedule of noncash investing activities:
Transfer of loans to real
estate owned $ 50,000 $ 98,000
See accompanying notes to condensed consolidated financial statements.
MNB BANCSHARES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
1. Interim Financial Statements
The condensed consolidated financial statements of MNB Bancshares,
Inc. (the "Company") and subsidiaries have been prepared in accordance with
the instructions to Form 10-Q. To the extent that information and footnotes
required by accounting principles generally accepted in the United States of
America for complete financial statements are contained in or consistent with
the consolidated audited financial statements incorporated by reference in
the Company's Form 10-K for the year ended December 31, 2000, such
information and footnotes have not been duplicated herein. In the opinion of
management, all adjustments, consisting of normal recurring accruals,
considered necessary for a fair presentation of financial statements have
been reflected herein. The December 31, 2000 condensed consolidated balance
sheet has been derived from the audited consolidated balance sheet as of that
date. The results of the interim period ended March 31, 2001 are not
necessarily indicative of the results expected for the year ending December
31, 2001.
2. Earnings Per Share
Basic earnings per share have been computed based upon the weighted
average number of common shares outstanding during each year. Diluted
earnings per share include the effect of all potential common shares
outstanding during each year. Earnings per share for all periods presented
have been adjusted to give effect to the 5% stock dividends paid by the
Company annually since 1994.
The shares used in the calculation of basic and diluted income per
share, which have been restated for the annual 5% stock dividends are shown
below:
For the quarters ended March 31,
2001 2000
Weighted average common
shares outstanding (basic) 1,553,890 1,520,840
Stock options 21,341 32,686
Weighted average common
shares (diluted) 1,575,231 1,553,526
3. Comprehensive Income
The Company's only component of other comprehensive income is the
unrealized holding gains and losses on available for sale securities.
For the three months
ended March 31,
2001 2000
Net income $275,965 $220,711
Unrealized holding
gains (losses) 700,362 (116,670)
Less reclassification
adjustment for gain (loss)
included on net income - -
Net unrealized gain
(losses) on securities 700,362 (116,670)
Income tax expense (benefit) 266,139 (44,335)
Total comprehensive income $710,188 $148,376
MNB BANCSHARES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
General. MNB Bancshares, Inc. is a bank holding company incorporated
under the laws of the State of Delaware and is engaged in the banking
business through its
wholly-owned subsidiary, Security National Bank. The home office for the Bank
is Manhattan, Kansas, with additional branch locations in Auburn, Manhattan,
Osage City, Topeka and Wamego, Kansas. On January 6, 2000, we opened an
in-store supermarket branch in Manhattan. We also completed the purchase of
the Wamego and Osage City branches of Commercial Federal Bank on July 21,
2000, which had total deposits of $14 million and total loans of $1 million.
The acquisition and related costs of the acquisition resulted in a premium of
approximately $787,000, which is being amortized over 15 (straight-line)
years.
We announced on April 19, 2001, an agreement to enter into a merger of equals
with Landmark Bancshares, Inc. Landmark Bancshares is the holding company for
Landmark Federal Savings Bank based in Dodge City, Kansas. It had total assets
of $223 million at March 31, 2001 with branches in Dodge City, Garden City,
Great Bend, Hoisington and La Crosse, Kansas and a loan production office in
Overland Park, Kansas. Pursuant to the agreement to merge, Landmark and MNB will
merge into a newly-formed corporation, Landmark Merger Company, which at the
closing of the merger will change its name to Landmark Bancshares, Inc. As a
result of the merger, each issued and outstanding share of Landmark common stock
will be converted into the right to receive 1.0 shares of the new company common
stock and each issued and outstanding share of MNB common stock will be
converted into the right to receive .523 shares of the new company common stock.
At the closing of the merger, Landmark Federal Savings Bank will merge with and
into Security National Bank which will change its name to Landmark National
Bank. After the merger, it is expected that the combined company's common stock
will be traded on the Nasdaq National Market System. We expect the closing date
of this merger transaction to occur late in the third quarter or in the fourth
quarter of this year, subject to stockholder and regulatory approvals.
Our results of operations depend primarily on net interest income, which is the
difference between interest income from interest-earning assets and interest
expense on interest-bearing liabilities. Our operations are also affected by
non-interest income, such as service charges, loan fees and gains and losses
from the sale of newly originated loans and investments. Our principal operating
expenses, aside from interest expense, consist of compensation and employee
benefits, occupancy costs, federal deposit insurance costs, data processing
expenses and provision for loan losses.
Net earnings for the first three months of 2001 increased
$55,000, or 25%, to $276,000 as compared to the first three months of 2000. Net
interest income increased $78,000, or 7%, from $1.2 million, to $1.3 million.
This
improvement in net earnings and net interest income was generally
attributable to growth in the commercial, commercial real estate and retail
loan portfolios resulting in an increase of approximately $8.6 million in net
loans outstanding from March 31, 2000. Noninterest income increased $82,000,
or 33%, from $245,000 to $327,000, as new fee and service charge initiatives
resulted in a $53,000 increase and gains on sale of loans increased $34,000
compared to the prior year. Noninterest expense increased $87,000 or 8%,
relating primarily to operating expenses associated with our Wamego and Osage
City branch acquisitions during July 2000.
The first three months of 2001 resulted in diluted earnings per
share of $0.18 compared to $0.14 for the same period in 2000. Return on
average assets was 0.73% for the period compared to
MNB BANCSHARES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
0.62% for the same period in 2000. Return on average stockholders' equity was
7.56% for the period compared to 6.67% for the same period in 2000. Return on
average tangible equity capital for the period equaled 9.35% compared to 8.05%
for the same period in 2000.
The tradition of quality assets continues and management's ongoing
strategy to diversify the deposit and loan portfolios in order to increase
profitability in the future has been successful. Focusing on customers' needs
and the development of full service banking relationships has been
instrumental to our success. We believe that our strong capital position puts
us on solid ground and provides an excellent base for further growth and
expansion.
Cash Earnings. In addition to the traditional measurement of net
income, we also calculate cash earnings which exclude the after-tax effect of
purchase accounting adjustments and the effect such expenses had on net
earnings. We believe the reporting of cash earnings along with accounting
principles generally accepted in the United States of America earnings
provides further insight into our operating performance. Cash earnings per
share, cash return on average assets and cash return on average equity
capital are detailed as follows:
For the three months ended March 31, 2001
Other
Reported Goodwill Intangibles Cash
Earnings Amortization Amortization Earnings
Earnings before income tax $ 387,330 43,015 23,590 453,935
Income tax expense 111,365 - 9,053 120,418
Net earnings $ 275,965 43,015 14,537 333,517
Diluted earnings per share $ 0.18 $ 0.21
Return on average assets (1) 0.73% 0.88%
Return on average equity (1) 7.56% 9.14%
Return on average tangible equity (1) 9.35% 11.30%
(1) The ratio has been annualized and is not necessarily indicative of the
results for the entire year.
Summary of Results. Our net income for the quarter ended March 31, 2001, was
$276,000, an increase of $55,000 over the same period for 2000. The primary
reason for the 25% increase in net income was our continued earning asset growth
resulting in an increase of net interest income. The following table summarizes
net income and key performance measures for the two periods presented.
MNB BANCSHARES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
For the three months ended March 31,
2001 2000
Net Income $275,965 $220,711
Basic earnings per share $.18 $.15
Diluted earnings per share $.18 $.14
Earnings ratios:
Return on average assets (1) .73% . 62%
Return on average equity (1) 7.56% 6.67%
Average equity to average assets 9.67% 9.30%
Dividend payout ratio 34.72% 42.5%
Efficiency ratio 68.28% 70.97%
Net interest margin (1) 3.56% 3.49%
(1) The ratio has been annualized and is not necessarily indicative of the
results for the entire year.
Interest Income. Interest income increased $286,000, or 11%, to $2.8 million
from $2.5 million in the first three months of 2000. This increase was primarily
related to the strong growth in the loan portfolio, along with increased yields
on our investment portfolio. Average loans for the first three months of 2001
were $96.3 million, compared to $88.6 million for the first three months of
2000.
Interest Expense. As compared to the same period a year
earlier, interest expense during the first three months of 2001 increased by
$208,000, or 15%. Interest expense on deposits increased $323,000, or 28% while
interest expense on borrowings, consisting of advances from the Federal
Home Loan Bank of Topeka and funds borrowed for acquisitions, decreased
$115,000, or 51% during this time period. This increase in interest expense
resulted from an increase in deposits, offset partially by reduced borrowings
from the Federal Home Loan Bank and principal repayments on our note payable.
Most of the increase in deposits resulted from the July 2000 branch
acquisitions.
Net Interest Income. Net interest income for the first quarter of
2001 totaled $1.3 million, a 7% increase as compared to $1.2 million from the
comparable period in 2000. The improvement was reflective of our overall
growth. Average earning assets during the first quarter of 2001 totaled
$142.8 million, versus $135.3 million during the same quarter of 2000. Net
interest margin on earning assets was 3.56% for the 2001 quarter, up from
3.49% in the first quarter of 2000. The increase in net interest margin
reflected the continued growth in non- residential mortgage loans and the
repositioning of our investment portfolio during 2000. The increase was
offset partically by a reduction of 1.50% in the prime rate during the first
quarter, which followed Federal Reserve Board rate reductions. Our balance of
variable rate loans which will reprice immediately exceeds our ability to
immediately reduce liability costs in a similar fashion. However, our balance
sheet is liability sensitive on a 1 year horizon and therefore, we anticipate
that a couple of months following market interest rate reductions, our
liability repricing should exceed corresponding reductions in our asset
yields.
MNB BANCSHARES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
Provision for Loan Losses. The provision for loan losses for the first quarter
of 2001 was $25,000, compared to a provision of $15,000 during the first quarter
of 2000. While the loan portfolio quality remains strong, management's review of
the portfolio, coupled with the increase in loans during the past two years has
prompted an increased provision. At March 31, 2001 and December 31, 2000, the
allowance for loan losses was $1.3 million, or 1.3% of gross loans outstanding.
Noninterest Income. Noninterest income increased $82,000, or 33%,
for the first three months of 2001 to $327,000 compared to the same period in
2000. Fees and service charges increased from $214,000 to $267,000, of which
approximately $59,000 was attributable to an increase in overdraft fee
income. Also contributing to this increase was an improvement of 235% in
gains on sale of loans from $14,000 to $48,000, as residential mortgage
financing activity increased due to the decline in home mortgage rates over
the past six months. Higher mortgage
refinancing activity is expected to continue as long as interest rates remain
favorable for mortgage originations.
March 31 Noninterest income:
2001 2000
Fees and service charges $266,957 $213,806
Gains on sales of loans 48,011 14,318
Other 11,700 17,018
Total noninterest income $326,668 $245,142
Noninterest Expense. Noninterest expense increased $87,000, or 8%,
to $1.2 million for the first three months of 2001 over the same period in
2000, resulting from increased expenses for compensation and benefits,
amortization and occupancy and equipment. These increased expense categories,
related primarily to operating expenses associated with our Wamego and Osage
City branch acquisitions during July 2000.
Asset Quality and Distribution. Total assets increased to $155.5
million at March 31, 2001 compared to $152.9 million at December 31, 2000.
Our primary ongoing sources of funds are deposits, proceeds from principal
and interest payments on loans and investment securities and proceeds from
the sale of mortgage loans and investment securities. While maturities and
scheduled amortization of loans are a predictable source of funds, deposit
flows and mortgage prepayments are greatly influenced by general interest
rates, economic conditions, competition, and the restructuring of the
financial services industry.
Our primary investing activities are the origination of mortgage,
consumer, and commercial loans and the purchase of investment and mortgage
backed securities. Generally, long term fixed rate residential mortgage loans
are originated for immediate sale and we do not warehouse loans to speculate
on interest rates.
MNB BANCSHARES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
Management believes that the quality of the loan portfolio continues
to be strong as evidenced by the small number and amount of loans past due
one month or more. As of March 31, 2001, twenty real estate loans were more
than one month past due with a total balance of $870,000, which was 0.9% of
total loans outstanding. Nine of these loans, totaling $326,000, were on
non-accrual status as of March 31, 2001. With the exception of guaranteed
student loans,
twenty-six consumer loans totaling $283,000, or 0.3%, were over one month
past due as of March 31, 2001 and five of these loans with a combined balance
of $57,000 were on non-accrual. Additionally, eight commercial loans totaling
$448,000 were over one month past due.
Along with the other financial institutions, management shares a
concern for the possible continued softening of the economy in 2001. Should
the economic climate continue to deteriorate, borrowers may experience
difficulty, and the level of non-performing loans, charge- offs, and
delinquencies could rise and require further increases in the provision.
During the three months ended March 31, 2001, net loans, excluding
loans held for sale, increased $2.7 million. This was funded primarily by
maturities of investment securities totalling $3.1 million, along with
deposit growth.
Liability Distribution. At March 31, 2001, total deposits increased
$1.9 million from December 31, 2000, while borrowings decreased $616,000.
The deposit base has remained relatively consistent since year end
2000. Noninterest bearing demand accounts at the end of the first quarter of
2001 totaled $10.6 million, or 8% of deposits, compared to approximately
$10.7 million or 8%, at December 31, 2000. Certificates of deposit decreased
to $62.7 million at March 31, 2001 from $63.1 million, or 1% from December
31, 2000. Money market and NOW accounts increased 15% from December 31, 2000
to $46.7 million from $44.4 million, and were 35% of total deposits, while
savings accounts increased from $12.0 million to $12.1 million.
Certificates of deposit at March 31, 2001, which were scheduled to
mature in one year or less, totaled $52.8 million. Historically, maturing
deposits have generally remained with our bank and we believe that a
significant portion of the deposits maturing in one year or less will remain
with us upon maturity.
Liquidity. Our most liquid assets are cash and cash equivalents and
investment securities available for sale. The level of these assets are
dependent on the operating, financing, lending and investing activities
during any given period. At March 31, 2001, and December 31, 2000
respectively, these liquid assets totaled $48.7 million and $49.1 million.
During periods in which we are not able to originate a sufficient amount of
loans and/or periods of high principal prepayments, we increase our liquid
assets by investing in short-term U. S. Government and agency securities.
Liquidity management is both a daily and long-term function of the
management strategy. Excess funds
are generally invested in short-term investments. In the event funds are
required beyond the ability to generate them internally, additional funds are
generally available through the use of
MNB BANCSHARES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
Federal Home Loan Bank advances, a line of credit with the Federal Home Loan
Bank or through sales of securities. At March 31, 2001, we had outstanding
Federal Home Loan Bank advances of $5.1 million and had no borrowings
outstanding on our line of credit with the Federal Home Loan Bank. At March 31,
2001, our total borrowings capacity with the Federal Home Loan Bank was $23.5
million. Additionally, we have guaranteed a loan made to our Employee Stock
Ownership Plan with an outstanding balance of $115,000 at March 31, 2001, to
fund the plan's purchase of shares in our common stock offering in 1993. Our
total borrowings were $5.9 million at March 31, 2001, which included $645,000
borrowed for the acquisition of Freedom Bancshares.
At March 31, 2001, we had outstanding loan commitments of $17.7
million. We anticipate that sufficient funds will be available to meet
current loan commitments. These commitments consist of letters of credit,
unfunded lines of credit and commitments to finance real estate loans.
Capital. The Federal Reserve Board has established capital
requirements for bank holding companies which generally parallel the capital
requirements for national banks under the Office of the Comptroller of the
Currency regulations. The regulations provide that such standards will
generally be applied on a consolidated (rather than a bank-only) basis in the
case of a bank holding company with more than $150 million in total
consolidated assets.
At March 31, 2001, we continued to maintain a sound leverage ratio
of 7.8% and a total risk based capital ratio of 13.1%. As shown by the
following table, our capital exceeded the minimum capital requirements at
March 31, 2001 (dollars in thousands):
Actual Actual Required Required
Amount Percent Percent Amount
Leverage $11,969 7.8% 4.0% $6,121
Tier 1 Capital $11,969 11.9% 4.0% $4,039
Total Capital $13,231 13.1% 8.0% $8,077
Banks and bank holding companies are generally
expected to operate at or above the minimum capital requirements. The above
ratios are well in excess of regulatory minimums and should allow us to
operate without capital adequacy concerns. The Federal Deposit Insurance
Corporation Improvement Act of 1991 establishes a bank rating system based on
the capital levels of banks. As of March 31, we are rated "well capitalized",
which is the highest rating available under this capital-based rating system.
Recent Accounting Developments. The Financial Accounting Standards
Board issued Statements of Financial Accounting Standards ("SFAS") No. 133,
"Accounting for Derivative Instruments and Hedging Activities," in June 1998.
SFAS No. 133 establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. It requires that an entity recognize
all derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. This statement, as
amended by SFAS No. 138, is effective for all
MNB BANCSHARES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
fiscal quarters beginning after December 15, 2000. The adoption of SFAS Nos. 133
and 138 did not have a material effect on our financial position or results of
operations, and did not require additional capital resources.
Quantitative and Qualitative Disclosures About Market Risk. Our
assets and liabilities are principally financial in nature and the resulting
net interest income thereon is subject to changes in market interest rates
and the mix of various assets and liabilities. Interest rates in the
financial markets affect our decision on pricing our assets and liabilities
which impacts net interest income, a significant cash flow source for us. As
a result, a substantial portion of our risk management activities relates to
managing interest rate risk.
Our Asset/Liability Management Committee monitors the interest rate
sensitivity of our balance sheet using earnings simulation models and
interest sensitivity GAP analysis. We have set policy limits of interest rate
risk to be assumed in the normal course of business and monitor such limits
through our simulation process.
We have been successful in meeting the interest rate sensitivity
objectives set forth in our policy. Simulation models are prepared to
determine the impact on net interest income for the coming twelve months,
including one using rates at March 31, 2001 and forecasting volumes for the
twelve-month projection. This position is then subjected to a shift in
interest rates of 200 basis points rising and 200 basis points falling with
an impact to our net interest income on a one year horizon as follows:
Scenario $ change in net interest income % of net interest income
200 basis point rising ($338,000) (6.7%)
200 basis point falling 396,000 7.8%
We believe that no significant changes in our interest rate sensitivity position
have occurred since March 31, 2001. We also believe we are appropriately
positioned for future interest rate movements, although we may experience some
fluctuations in net interest income due to short term timing differences between
the repricing of assets and liabilities
Safe Harbor Statement Under the Private Securities Litigation Reform
Act of 1995. This quarterly report contains certain forward looking
statements within the meaning of Section 27A of the Securities Act of 1933,
as amended and Section 21E of the Securities Exchange Act of 1934, as
amended. We intend such forward-looking statements to be covered by the safe
harbor provisions for forward-looking statements contained in the Private
Securities Reform Act of 1995, and is including this statement for purposes
of these safe harbor provisions. Forward-looking statements, which are based
on certain assumptions and describe future plans, strategies and expectations
are generally identifiable by use of the words "believe," "expect," "intend,"
"anticipate," "estimate," "project" or similar expressions. Our ability to
predict results or the actual effect of future plans or strategies is
inherently uncertain. Factors which could have a material adverse affect on
the operations and future prospects of the Company and the subsidiary
include, but are not limited to, changes in: interest rates, general economic
conditions, legislative/regulatory changes, monetary and fiscal policies of
the U.S. Government, including policies of the U.S. Treasury and the Federal
Reserve Board, the quality or composition of the loan or investment
portfolios, demand for loan products, deposit flows, competition, demand for
financial services in our market area, our implementation of new
technologies, our ability to develop and maintain secure and reliable
electronic systems and accounting principles, policies and guidelines. These
risks and uncertainties should be considered in evaluating forward-looking
statements and undue reliance should not be placed on such statements.
Further information concerning us and our business, including additional
factors that could materially affect our financial results, is included in
our filings with the Securities and Exchange Commission.
MNB BANCSHARES, INC. AND SUBSIDIARIES
PART II
ITEM 1. LEGAL PROCEEDINGS.
There are no material pending legal proceedings to which the Company
or its
subsidiaries is a party other than ordinary routine litigation incidental to
their respective businesses.
ITEM 2. CHANGES IN SECURITIES.
None
ITEM 3. DEFAULTS UPON SENIOR
SECURITIES.
None
ITEM 4. SUBMISSION OF MATTERS TO VOTE
OF SECURITY HOLDERS.
None
ITEM 5. OTHER INFORMATION.
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
A. Exhibits
None
B. Reports on Form 8-K
A report on Form 8-K was filed on March 21, 2001, to report under Item 5 that
the Company had issued a press release announcing the adoption of a
stockholders' rights plan.
A report on Form 8-K was filed on April 19, 2001, to report under Item 5 that
the Company had issued a press release announcing a proposed merger with
Landmark Bancshares, Inc.
A report on Form 8-K was filed on April 25, 2001, to report under Item 5 that
the Company had issued a press release announcing earnings for the quarter
ended March 31, 2001 and the declaration of a cash dividend
to stockholders.
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.
MNB BANCSHARES, INC.
Date: May 14, 2001 /s/ Patrick L. Alexander
-----------------------------
Patrick L. Alexander
President and Chief Executive Officer
Date: May 14, 2001 /s/ Mark A. Herpich
-----------------------------
Mark A. Herpich
Vice President, Secretary, Treasurer
and Chief Financial Officer