FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
Commission File No. 0-10585
Mid Am, Inc.
(Exact Name of Registrant as Specified in its Charter)
Ohio 34-1580978
(State or Ohio Jurisdiction of (IRS Employer
Incorporation or Organization) Identification Number)
222 South Main Street, Bowling Green, Ohio 43402
(Address of Principal Executive Office) (Zip Code)
(419)352-5271
(Registrant's Telephone Number)
Indicate by check number 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
Indicate the number of shares outstanding of each of the
issuer's classes of common stock as of the close of business
on July 31, 1995.
Common Stock, without par value -19,035,485 shares
MID AM, INC.
INDEX
PART I - FINANCIAL INFORMATION Page Number
Item 1. Financial Statements
Consolidated Statement of Condition
(Unaudited)
June 30, 1995 and December 31, 1994 3
Consolidated Statement of Earnings
(Unaudited)
Six months ended June 30, 1995 and 1994 4
Consolidated Statement of Cash Flows
(Unaudited)
Six months ended June 30, 1995 and 1994 5
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis
of Financial Condition and
Results of Operations 8
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 19
Item 2. Changes in Securities 19
Item 3. Defaults Upon Senior Securities 19
Item 4. Submission of Matters to a Vote
of Security Holders 19
Item 5. Other Information 19
Item 6. Exhibits and Reports on Form 8-K 19
SIGNATURES 20
EXHIBIT INDEX 21
PART I. - FINANCIAL INFORMATION
MID AM, INC. Consolidated Statement of Condition-(Unaudited)
June 30, 1995 December 31, 1994
Assets (Dollars in thousands)
Cash and due from banks $2,171,637 $2,185,356
Int-bearing deposits in banks 1,763 1,762
Federal funds sold 55,169 8,160
Securities available for sale 232,844 212,439
Investment securities 69,425 71,698
Mortgage-backed securities 171,601 180,309
Loans held for sale 24,519 12,963
Loans 1,455,096 1,430,843
Allowance for credit losses (14,914) (14,722)
Net loans 1,440,182 1,416,121
Bank premises and equipment 48,824 50,066
Interest receivable and
other assets 40,268 38,928
Total Assets $2,156,232 $2,077,802
Liabilities
Demand deposits
(non-interest bearing) $ 175,461 $ 191,820
Savings deposits 574,019 585,927
Other time deposits 1,064,762 958,676
Total Deposits 1,814,242 1,736,423
Federal funds purchased and
securities sold under
agreement to repurchase 86,643 80,136
Capitalized lease
obligations and debt 51,321 65,434
Interest payable and
other liabilities 12,437 11,029
Total Liabilities 1,964,643 1,893,022
Shareholders' Equity
Preferred stock
Authorized-2,000,000
Issued - 1,488,667 and
1,608,000 shares 37,217 40,200
Common stock - no par value
Authorized-35,000,000
Issued at stated value of
$3.33 per share-19,033,129
and 17,045,133 shares 63,443 56,817
Surplus 91,518 76,600
Retained earnings 3,427 17,369
Treasury stock at cost
177,878 and 1,400 shares (2,825) (20)
Unrealized losses securities
available for sale (1,191) (6,186)
Total Shareholders' Equity 191,589 184,780
Total Liabilities and
Shareholders' Equity $2,156,232 $2,077,802
MID AM, INC. Consolidated Statement of Earnings-(Unaudited)
Three Mths Ended Six Mths Ended
June 30, June 30,
1995 1994 1995 1994
(Dollars in thousands)
Interest Income
Int and fees on loans $32,606 $26,461 $63,871 $52,231
Int on deposits in banks 55 44 74 79
Int on federal funds sold 1,023 288 1,247 866
Int on investments-taxable 6,130 6,410 12,354 12,461
Int on investments-tax exempt 1,049 939 1,899 1,789
Total Interest Income 40,863 34,142 79,445 67,426
Interest Expense
Int on deposits 18,393 13,052 34,368 26,237
Int on borrowed funds 1,924 926 4,015 1,781
Total Interest Expense 20,317 13,978 38,383 28,018
Net Interest Income 20,546 20,164 41,062 39,408
Provision for credit losses 734 711 1,144 1,069
Net Interest Income After
Provision of Credit Losses 19,812 19,453 39,918 38,339
Non-interest Income
Service charge deposit accts 1,543 1,508 3,002 2,915
Net investment security gains 22 464 56 1,218
Net gains on sales of loans 932 635 1,465 2,724
Loan servicing fees 885 824 1,819 1,583
Collection agency fees 785 1,049 1,669 2,106
Other income 2,109 1,926 4,088 3,925
Total Non-interest Income 6,276 6,406 12,099 14,471
Non-interest Expense
Salaries and employee benefit 8,096 8,289 16,685 16,880
Net occupancy expense 1,239 1,329 2,489 2,730
Equipment expense 1,790 1,746 3,523 3,460
Other expenses 5,900 6,534 11,839 12,387
Total Non-interest Expense 17,025 17,898 34,536 35,457
Income before income taxes 9,063 7,961 17,481 17,353
Applicable income taxes 2,972 2,259 5,616 5,145
Net Income $ 6,091 $ 5,702 $11,865 $12,208
Net Income Available to
Common Shareholders $ 5,388 $ 4,973 $10,434 $10,749
Earnings per Common Share:
Primary $ .28 $ .26 $ .55 $ .57
Fully diluted $ .27 $ .25 $ .53 $ .55
MID AM, INC. Consolidated Statement of Cash Flows-(Unaudited)
Six Months Ended June 30,
1995 1994
Operating Activities (Dollars in thousands)
Net income $ 11,865 $ 12,208
Adjustments to reconcile net
income to net cash used
for operating activities:
Provision for credit losses 1,144 1,069
Provision for depreciation
and amortization of assets 4,189 4,664
Proceeds from sales of mortgage
and other loans held for sale 94,029 241,865
Mortgage and other loans
originated for sale (108,265) (205,348)
Net gains on sales of assets (1,737) (4,041)
Increase (decrease) in interest
receivable and other assets (6,631) 645
Increase (decrease) in interest
payable and other liabilities 1,408 (5,941)
Net Cash (Used For) Provided By
Operating Activities (3,998) 45,121
Investing Activities
Net (increase) decrease interest-
bearing deposits in banks (1) 3,186
Net (increase) decrease in
federal funds sold (47,009) 55,833
Proceeds from sales of securities
available for sale 7,264 74,610
Proceeds from maturities and paydowns
of securities available for sale 19,338 17,670
Purchases of securities
available for sale (36,155) (67,208)
Proceeds from maturities and paydowns
of investment securities 2,572 7,772
Purchases of investment securities (340) (16,027)
Proceeds from maturities and paydowns
of mortgage-backed securities 8,528 20,274
Purchase of mortgage-backed
investment securities (24,256)
Proceeds from sales of loans 40,174 7,765
Net increase in loans (62,832) (66,005)
Proceeds from sales of other
real estate owned 333 1,398
Proceeds from sales of bank
premises and equipment 526 294
Purchases of bank premises
and equipment (2,045) (2,638)
Cash acquired through acquisitions 31
Net Cash (Used For) Provided By
Investing Activities (69,616) 12,668
MID AM, INC. Consolidated Statement of Cash Flows-(Unaudited)
Six Months Ended June 30,
1995 1994
Financing Activities (Dollars in thousands)
Net decrease in demand
deposits and savings accts (28,267) (35,976)
Net increase (decrease) in
other time deposits 106,086 (18,593)
Net increase (decrease) in federal
funds purchased and securities
sold under agreements repurchase 6,507 (8,023)
Repayment of capitalized lease
obligations and debt (63,063) (647)
Proceeds from issuance of debt 48,950 13,213
Proceeds from issuance-common stock 1,921
Cash dividends paid (7,483) (6,672)
Treasury stock (2,805)
Preferred stock conversions,
fractional shares and other items (30) (5)
Net Cash Provided By (Used For)
Financing Activities 59,895 (54,782)
Net (decrease) increase in cash
and due from banks (13,719) 3,007
Cash and due from banks at the
beginning of the period 85,356 66,632
Cash and due from banks at the
end of the period $ 71,637 $ 69,639
Supplemental Schedule of Noncash
Investing and Financing Activities
Securitized loans held for sale $ 3,430 $ 8,704
Investment securities 29,613
Mortgage-backed invest securities 2,642
Transfers to securities
available for sale $ 3,340 $ 40,959
Transfers from loans to other
real estate owned $ 464 $ 612
Loans on other real estate owned sold $ 252
Fair value of assets acquired $ 48
Intangible assets 246
Fair value of liabilities assumed (44)
Common stock issued $ 250
Unrealized gains (losses) on
securities available for sale $ 7,681 $ (9,897)
Adjustment to deferred tax asset (2,686) 3,422
Adjustment to shareholders' equity $ 4,995 $ (6,475)
MID AM, INC.
Notes to Consolidated Financial Information - (unaudited)
1. Accounting Principles
The consolidated financial statements include the accounts
of Mid Am, Inc. (the "Company") and its holly-owned
subsidiaries, Mid American National Bank and Trust Company
("Mid Am Bank"), First National Bank Northwest Ohio ("First
National"), American Community Bank, N.A. ("AmeriCom"),
AmeriFirst Bank, N.A. ("AmeriFirst"), Adrian State Bank
("Adrian"), Lucas County Credit Bureau, Inc., d/b/a
International Credit Service ("ICS"), MWN Corporation, d/b/a
CCB Services ("CCBS") and Mid Am Information Services, Inc.
("MAISI"). All significant intercompany transactions and
accounts have been eliminated in consolidation.
In the opinion of management of the Company, all adjustments
necessary to present fairly the financial position, results of
operations and cash flows as of and for the periods presented
have been made. Such adjustments consisted only of normal
recurring items.
2. Stock Dividend
On April 20, 1995, the Board of Directors of the Company
declared a 10% stock dividend on its common stock to all
shareholders of record on May 3, 1995. The stock dividend
was paid on May 17, 1995 and fractional shares were paid in
cash. As a result of the stock dividend, the Company
distributed approximately 1.7 million shares of common
stock to approximately 8,000 shareholders of record. Per
common share data for all periods presented and the statement
of condition at June 30, 1995 have been adjusted to reflect
this 10% stock dividend.
3. Repurchase Program
On April 20, 1995, the Board of Directors of the Company
authorized management to undertake purchases of up to
1,250,000 shares of the Company's outstanding common stock
over a twelve month period in the open market or in privately
negotiated transactions. The shares reacquired are reserved
for use in the Company's stock option plan and for future
stock dividend declarations. The program represents a maximum
of 7.5% of the Company's outstanding shares. As of June 30,
1995 the Company has repurchased approximately 177,878 shares.
4. Subsequent Events
As of July 12, 1995, the Company has repurchased approximately
284,000 shares through its repurchase program.
On July 31, 1995, Mid Am, Inc. completed the acquisition of
MFI Investments Corp of Bryan, Ohio. The acquisition was
structured as a stock-for-stock exchange, and the Company will
account for the acquisition under pooling of interests method.
MFI is a full service, independent broker/dealer which has
over 200 financial consultants in over 19 states and clears
its general securities through Bear Stearns Securities Corp.,
New York City. MFI will be operated under its current name as
an affiliate of Adrian State Bank, a wholly owned subsidiary
of Mid Am, Inc.
Item 2. - Management's Discussion and Analysis of Financial
Condition and Results of Operations
Three Months Ended June 30, 1995 and 1994
Results of Operations
For the three months ended June 30, 1995, net income increased
$389,000 to $6,091,000 compared to $5,702,000 for the same
period in 1994. The increase was primarily due to an increase
in net interest income and a decrease in non-interest expense.
Earnings per common share for the three months ended June 30,
1995 were $.28 ($.27 fully diluted), an increase from $.26
($.25 fully diluted) for the same period in 1994. For the
three months ended June 30, 1995, the annualized return on
average common shareholders' equity was 14.25% and the
annualized return on average assets was 1.14% compared to
13.64% and 1.13%, respectively, for the three months ended
June 30, 1994.
Net Interest Income
Net interest income increased $382,000 or 2% to $20,546,000
in the second quarter of 1995, as compared to $20,164,000 for
the same period in 1994. Net interest income is affected by
changes in the volumes and rates of interest-earning assets
and interest-bearing liabilities and the type and mix of
interest-earning assets and interest-bearing liabilities. For
the three months ended June 30, 1995, net interest income
increased due to the volume of interest-earning assets
increasing at a greater rate than interest-bearing liabilities
as compared for the same period in 1994. The Company's net
interest margin for the three months ended June 30, 1995 was
4.26% compared to 4.43% for the same period in 1994. The net
interest margin decreased primarily due to the narrowing of
the Company's interest rate spread caused by the cost of funds
rising faster than yields on interest-earning assets.
Provision for Credit Losses
The provision for credit losses for the three months ended
June 30, 1995 increased $23,000 to $734,000 from a provision
of $711,000 for the same period in 1994. Net charge-offs were
$606,000 or 0.17% (annualized) of average loans during the
three months ended June 30, 1995, compared to $447,000 or
0.14% (annualized) for the same period in 1994. The provision
for credit losses reflects the amount necessary in
management's opinion to maintain an adequate allowance, based
upon its analysis of the loan portfolio (including the loan
growth rate and change in the mix of the loan portfolio) and
general economic conditions.
Non-Interest Income
For the three months ended June 30, 1995, non-interest income
decreased $130,000 or 2% to $6,276,000 compared to $6,406,000
for the same period in 1994. The decrease is due primarily to
a decrease of $442,000 or 95% in net investment securities
gains in the second quarter of 1995 as compared to the same
period in 1994 and to a decrease of $264,000 or 25% in
collection agency fees in the second quarter of 1995 as
compared to the same period in 1994. The decrease in
collection agency fees was due primarily to the loss of one
large customer in Florida and to collections being down in the
Toledo area. The decrease in non-interest income was
partially offset by increases in mortgage servicing income
($61,000), increases in net gains on sales of loans
($297,000), trust department fee income ($68,000) and various
other income items ($115,000).
Non-Interest Expense
For the three months ended June 30, 1995, non-interest expense
decreased $873,000 or 5% to $17,025,000 compared with
$17,898,000 for the same period in 1994. The decrease in
non-interest expense resulted from the Company's institution
of cost control measures during 1994. These cost control
measures have continued in 1995. For the three months ended
June 30, 1995, salaries and employee benefits expense
decreased $193,000 or 2% to $8,096,000 compared to $8,289,000
for the same period in 1994. The decrease in salaries and
benefits is attributable to a deferral of approximately
$340,000 of salaries and benefits in connection with the
origination of home equity and installment consumer loans for
which direct origination costs were previously expensed.
Other expenses decreased $634,000 or 10% to $5,900,000 for the
second quarter of 1995 as compared to $6,534,000 for the same
period in 1994. The decrease in other expenses was primarily
due to decreases in directors fees ($149,000), legal and other
professional fees ($150,000) and education ($94,000).
Income Taxes
The provision for income taxes for the second quarter of 1995
increased $713,000 or 32% to $2,972,000 compared to $2,259,000
for the same period in 1994. The increase was due primarily
to higher pretax income and a higher effective tax rate of 33%
for the second quarter of 1995 as compared to 28% for the same
period in 1994.
Six Months Ended June 30, 1995 and 1994
Results of Operations
For the six months ended June 30, 1995, net income decreased
$343,000 to $11,865,000 compared to $12,208,000 for the same
period in 1994. The decrease was primarily due to decreases
in gains on sales of loans and in net investment securities
gains partially offset by an increase in net interest income.
Earnings per common share for the six months ended June 30,
1995 were $.55 ($.53 fully diluted), a decrease from $.57
($.55 fully diluted) for the same period in 1994. For the six
months ended June 30, 1995, the annualized return on average
common shareholders' equity was 14.09% and the annualized
return on average assets was 1.14% compared to 14.87% and
1.21%, respectively, for the six months ended June 30, 1994.
Net Interest Income
Net interest income increased $1,654,000 or 4% to $41,062,000
in the first six months of 1995, as compared to $39,408,000
for the same period in 1994. Net interest income is affected
by changes in the volumes and rates of interest-earning assets
and interest-bearing liabilities and the type and mix of
interest-earning assets and interest-bearing liabilities.
The increase in net interest income was primarily due to
volume increases in interest-earning assets and
interest-bearing deposits. The Company's net interest margin
for the six months ended June 30, 1995 was 4.33% compared to
4.32% for the same period in 1994.
Provision for Credit Losses
The provision for credit losses for the six months ended
June 30, 1995 increased $75,000 to $1,144,000 from a
provision of $1,069,000 for the same period in 1994. Net
charge-offs were $988,000 or 0.14% (annualized) of average
loans during the six months ended June 30, 1995, compared to
$729,000 or 0.11% (annualized) for the same period in 1994.
The provision for credit losses reflects the amount necessary
in management's opinion to maintain an adequate allowance,
based upon its analysis of the loan portfolio (including the
loan growth rate and change in the mix of the loan portfolio)
and general economic conditions.
At June 30, 1995, the Company's allowance for credit losses
as a percentage of non-performing loans was 185% compared to
196% at December 31, 1994 and 168% at June 30, 1994. The
ratio of non-performing assets to total loans plus other real
estate owned was 0.65% at June 30, 1995, compared to 0.60% and
0.76% at December 31, 1994 and June 30, 1994, respectively.
See "Asset Quality."
Non-Interest Income
For the six months ended June 30, 1995, non-interest income
decreased $2,372,000 or 16% to $12,099,000 compared to
$14,471,000 for the same period in 1994. The decrease is due
primarily to a decrease of $1,259,000 or 46% in net gains on
sales of loans and a decrease of $1,162,000 or 95% in net
investment securities gains. Due to rising interest rates
commencing in the second quarter of 1994 and increased
competition, a significant decline in mortgage refinancing
activity has occurred in the first six months of 1995
compared to 1994 in the Company's mortgage banking activities.
In addition, this has lowered the profit margins realized on
sales of mortgage loans in 1995. The decrease in non-interest
income was partially offset by increases in mortgage servicing
income ($236,000) and trust department fee income ($150,000).
Collection agency fees decreased $437,000 to $1,669,000 for
the first six months in 1995 compared to $2,106,000 for the
same period in 1994. The decrease in collection agency fees
was due to the loss of one large customer in Florida and to
collections being down in the Toledo area.
Non-Interest Expense
For the six months ended June 30, 1995, non-interest expense
decreased $921,000 to $34,536,000 compared with $35,457,000
for the same period in 1994. The decrease in non-interest
expense resulted from the Company's institution of cost
control measures during 1994. These cost control measures
have continued in 1995. The $195,000 decrease in salaries and
employee benefits was primarily due to a decrease in salaries
($410,000) due to fewer full-time equivalent employees,
partially offset by a decrease in deferred salaries ($284,000)
due to lower volume of loans, despite expanding deferred
salaries to include home equity and consumer loans. For the
six months ended June 30, 1995, net occupancy expense
decreased $241,000 or 9% to $2,489,000 compared to $2,730,000
in 1994 due primarily to a decrease in building repairs and
maintenance ($46,000), grounds upkeep ($52,000) and certain
utility costs ($72,000). The decrease in other expenses was
primarily due to decreases in legal and other professional
fees ($201,000) and directors fees ($262,000).
Income Taxes
The provision for income taxes for the first six months of
1995 increased $471,000 or 9% to $5,616,000 compared to
$5,145,000 for the same period in 1994. The increase was due
primarily to higher pretax income and a higher effective tax
rate of 32% for the first six months of 1995 as compared to
30% for the same period in 1994.
Liquidity
The liquidity of a financial institution reflects its ability
to provide funds to meet loan requests, to accommodate
possible outflows in deposits and to take advantage of
interest rate market opportunities. Funding of loan requests,
providing for liability outflows, and management of interest
rate fluctuations require continuous analysis in order to
match the maturities of specific categories of short-term
loans and investments with specific types of deposits and
borrowings. Financial institution liquidity is thus normally
considered in terms of the nature and mix of the institution's
sources and uses of funds.
For the Company's subsidiaries, the primary sources of
liquidity have been federal funds sold, securities available
for sale and loans held for sale. At June 30, 1995, and
December 31, 1994, federal funds sold amounted to $55,169,000
and $8,160,000, respectively, securities available for sale
amounted to $232,844,000 and $212,439,000, respectively, and
loans held for sale amounted to $24,519,000 and $12,963,000,
respectively.
Since the Company is a holding company and does not conduct
operations, its primary source of liquidity is dividends paid
to it by its subsidiary financial institutions. However,
certain restrictions exist regarding the ability of its
subsidiaries to transfer funds to the Company in the form of
cash dividends , loans or advances. For national banks, the
approval of the Office of the Comptroller of the Currency is
required in order to pay dividends in excess of the
subsidiaries' earnings retained for the current year plus
retained net profits for the preceding two years. Adrian
State Bank can pay dividends up to the total amount of
retained earnings as long as certain minimum capital ratios
are maintained. As of June 30, 1995, $20,307,000 was
available for distribution to the Company as dividends without
prior regulatory approval.
Cash and due from banks decreased by $13,719,000 during the
six months ended June 30, 1995 to $71,637,000 from $85,356,000
at December 31, 1994. Operating activities used $3,998,000 of
cash in the six months ended June 30, 1995 as compared to cash
provided of $45,121,000 for the same period in 1994. For the
six months ended June 30, 1995 and 1994, cash used for
operating activities was primarily attributable to mortgage
and other loans originated for sale. Due to increased
competition, a significant decline in mortgage refinancing
activity and rising interest rates, the Company's mortgage
banking activities resulted in lower volume of loans. The
Company originated approximately $108,265,000 of mortgage
loans in the six months ended June 30, 1995, as compared to
$205,348,000 for the same period in 1994. The reduction in
mortgage banking activity in 1995 compared to 1994 resulted in
a reduction in the amount of cash required to originate
mortgage loans, however, this reduction also resulted in a
decline in volume of sales of mortgage loans providing cash
(from $241,865,000 to $94,029,000) which more than offset the
cash flow increase from lower originations.
Cash of $69,616,000 was used for investing activities during
the six months ended June 30, 1995 compared to cash provided
by investing activities of $12,668,000 during the year earlier
period, an increase in cash outflows from investing activities
of $82,284,000. The primary reason for the increase in cash
flows used for investing activities was the net increase in
federal funds sold in 1995 of $47,009,000 compared to a
decrease of $55,833,000 for the same period in 1994. Also,
the net increase in loans of $62,832,000 for the first six
months of 1995 was partially offset by the proceeds from sales
of loans. The net increase in loans during the first half of
1994 was primarily due to the net increase in loans offset by
the proceeds from sales of securities available for sale.
Cash provided by financing activities was $59,895,000 during
the six months ended June 30, 1995 as compared to $54,782,000
of cash used for financing activities for the same period in
1994. The cash provided by financing activities in 1995 was
primarily due to an increase in other time deposits of
$106,086,000, partially offset by a net decrease in demand
deposits and savings accounts of $28,267,000. The increase in
other time deposits during the first half of 1995 was
primarily due to the Company marketing time deposits with
prepaid interest and time deposits at current market rates
outside the Company's market area. The cash used for
financing activities in 1994 was primarily due to a net
decrease in demand deposits and savings accounts of
$35,976,000.
Liquidity is within the Company's internal guidelines and
adequate to provide funds to meet loan requests and deposit
withdrawals.
Capital Resources
The Federal Reserve Board ("FRB") has established risk-based
capital guidelines that specify commonequity and total capital
requirements for bank holding companies and banks. Under
these guidelines, total qualifying capital is categorized into
two components -- Tier I and Tier II capital. Tier I capital
generally consists of common shareholders' equity, perpetual
preferred stock(subject to limitations) and minority interests
in subsidiaries. Subject to limitations, Tier II capital
includes certain other preferred stock and debentures, and a
portion of the reserve for credit losses. These ratios are
expressed as a percentage of risk-adjusted assets, which
include various risk-weighted percentages of off-balance sheet
exposures, as well as assets on the balance sheet. The FRB
regulations governing the various capital ratios do not
recognize the effects of SFAS 115 "Accounting for Certain
Investments in Debt and Equity Securities" on capital relating
to changes in market value of securities available for sale.
At June 30, 1995, a minimum Tier I capital ratio of 4.00% and
a total capital ratio of 8.00% are required. The Company's
qualifying capital at June 30, 1995 exceeds both the Tier I
and Tier II risk-based capital guidelines. In addition, a
capital leverage ratio is used in connection with the
risk-based capital standards which is defined as Tier I
capital divided by total assets adjusted for certain items.
The minimum leverage ratio under this standard is 3% for the
highest rated bank holding companies which are not undertaking
significant expansion programs. An additional 1% to 2% may be
required for other companies, depending upon their regulatory
ratings and expansion plans. The primary regulatory
authorities of the Company and its subsidiaries have not
advised the Company of its minimum Tier I leverage ratio, and
therefore, it is not possible to calculate the minimum
leverage ratio. At June 30, 1995, the Company's leverage
ratio, Tier I, and combined Tier I and Tier II (total capital)
ratios were 8.42%, 12.07% and 13.07%, respectively. The
Company's capital ratios, assuming the acquisition had been
consummated on June 30, 1995, would have been above required
levels.
Capital ratios applicable to the Company's banking
subsidiaries at June 30, 1995 are as follows:
Total
Tier I Risk-based
Leverage Capital Capital
Regulatory Capital Requirements
Minimum 3.00% 4.00% 8.00%
Well-capitalized 6.00 8.00 10.00
Bank Subsidiaries
Mid Am Bank 8.02 10.45 11.65
First National 7.14 10.31 10.83
AmeriCom 8.01 11.81 12.75
AmeriFirst 6.78 11.30 12.46
Adrian 7.33 12.36 13.61
Asset/Liability Management
As of June 30, 1995, the Company is maintaining a manageable
negative gap position for asset and liability repricing within
a twelve-month period, and therefore does not expect to
experience any significant fluctuations in its net interest
income as a consequence of changes in interest rates.
Asset Quality
At June 30, 1995, the Company's percentage of non-performing
loans (non-accrual loans, loans past due 90 days or more and
restructured loans) to total loans was 0.55%, as compared to
0.52% at December 31, 1994 and 0.70% at June 30, 1994.
Non-performing loans at June 30, 1995 aggregated $8,053,000,
an increase of $560,000 or 7% from December 31, 1994. The
Company's percentage of net charge-offs for the six months
ended June 30, 1995 and June 30, 1994 to average loans
outstanding were 0.14% (annualized) and 0.11% (annualized),
respectively. At June 30, 1995, the Company's allowance for
credit losses was 1.02% of total loans, as compared to 1.03%
and 1.17% at December 31, 1994 and June 30, 1994,
respectively. The allowance for credit losses as a percentage
of non-performing loans at June 30, 1995 was 185% compared to
196% at December 31, 1994 and 168% at June 30, 1994. The
ratio of non-performing assets (constituting the sum of
non-performing loans and other real estate owned) to total
loans plus other real estate owned was 0.65% at June 30, 1995,
compared to 0.60% and 0.76% at December 31, 1994 and June 30,
1994, respectively. As of June 30, 1995, based upon a review
of the loan portfolio (including the loan growth rate and
change in the mix of the loan portfolio), management believes
the allowance for credit losses is adequate.
Loans now current but where some concerns exist as to the
ability of the borrower to comply with present loan repayment
terms, excluding non-performing loans, approximated
$38,032,000 and $36,371,000 at June 30, 1995 and December 31,
1994, respectively, and are being monitored by management and
the Boards of Directors of the subsidiaries. The
classification of these loans, however, does not mean to imply
that management expects losses on each of these loans, but
believes that a higher level of scrutiny is prudent under the
circumstances. At June 30, 1995 and December 31, 1994,
specific allocations of the allowance for credit losses
related to these loans aggregated $3,511,000 and $3,408,000,
respectively. Specific allocations for 1995 were made under
the provisions of SFAS 114. The provision for these loans is
based on the Company's assessment of the adequacy of the
current level of the allowance for credit losses, recent
charge-off experience, the increase in the level of recoveries
and other factors delineated in the Company's reserve policy.
The following table presents asset quality information for
each of the Company's banking subsidiaries at June 30, 1995.
(Dollars in thousands)
Mid Am First
Bank National AmeriCom AmeriFirst Adrian
Non-accrual $4,688 $267 $1,030 $458 $285
Contractually
past due 90
days or more 74 420 618 143 70
Restructured 0 0 0 0 0
Total
non-performing
loans 4,762 687 1,648 601 355
Other real
estate owned 550 43 455 378 45
Total
non-performing
assets $5,312 $730 $2,103 $979 $400
Non-performing
loans to
total loans .87% .20% .67% .28% .37%
Non-performing
assets to total
loans plus other
real estate owned .97 .21 .85 .46 .42
(Dollars in thousands)
Mid Am First
Bank National AmeriCom AmeriFirst Adrian
Allowance credit
losses to total
non-performing
loans 154.07 261.43 155.89 335.27 337.18
Allowance credit
losses to total
non-performing
assets 138.12 246.03 122.16 205.82 299.25
Ratio of net
charge-offs to
average loans
outstanding .33 .00 .06 .00 (.03)
Ratio of
allowance for
credit losses
to total loans 1.34 .51 1.04 .95 1.24
The following table sets forth the Company's allocation of
the allowance for credit losses as of June 30, 1995 and
December 31, 1994.
(Dollars in thousands)
June 30,1995 December 31, 1994
Specific allowance
Real estate $ 335 $ 1,178
Commercial 2,996 2,568
Installment 180 50
Total specific allowance 3,511 3,796
General allowance
Real estate 487 654
Commercial 2,238 3,361
Installment 650 1,299
Other 500 463
Total general allowance 3,875 5,777
Unallocated allowance 7,528 5,149
Allowance for credit losses $14,914 $14,722
The following table presents a summary of the Company's
credit loss experience for the six months ended June 30,
1995 and 1994.
(Dollars in thousands)
1995 1994
Balance of allowance at
beginning of year $14,722 $15,156
Loans actually charged-off:
Real estate 78 408
Commercial, financial
and agricultural 1,318 529
Installment and credit card 423 448
Other loans 28 0
Total loans charged-off 1,847 1,385
Recoveries of loans previously
charged-off:
Real estate 155 35
Commercial, financial
and agricultural 448 332
Installment and credit card 253 289
Other loans 3 0
Total recoveries of loans 859 656
Net charge-offs 988 729
Addition to allowance
charged to expense 1,144 1,069
Transfer of other real
estate owned allowance
relating to in-substance
foreclosure loans 36
Allowance for credit losses $14,914 $15,496
Ratio of net charge-offs to
average loans outstanding .14% .11%
Ratio of allowance for credit
losses to total loans 1.02 1.17
Ratio of allowance for credit
losses to total
non-performing loans 185.20 167.98
PART II. - OTHER INFORMATION
Item 1. - Legal Proceedings
The Company is subject to various pending and threatened
lawsuits in which claims for monetary damages are asserted in
the ordinary course of business. While any litigation
involves an element of uncertainty, in the opinion of
management, liabilities, if any, arising from such litigation
or threat thereof will not have a material effect on the
financial condition of the Company.
Item 2. - Changes in Securities
Not applicable.
Item 3. - Defaults 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
1. Statement Re Computation of Earnings Per
Common Share
(b) Reports on Form 8-K
Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly
authorized.
MID AM, INC.
BY: Donald P. Hileman
Donald P. Hileman
Senior Vice President / Finance
DATE: August 11, 1995
MID AM, INC.
EXHIBIT INDEX
Exhibit No. Description Page Number
(1) Statement Re Computation of
Earnings Per Common Share 22 - 23
EXHIBIT 1
Statement Recomputation of Earnings Per Common Share
MID AM, INC.
Statement Re Computation of Earnings Per Common Share
Attached to and made part of Part II of Form 10-Q for the
three months ended June 30, 1995 and 1994, and six months
ended June 30, 1995 and 1994 (adjusted for 10% stock
dividend paid May 17, 1995).
Three Months Ended June 30,
1995 1994
Primary weighted average
number of common shares
for computation of
earnings per common share 18,914,000 18,751,000
Fully diluted weighted
average number of common
shares for computation of
earnings per common share 22,412,000 22,327,000
Six Months Ended June 30,
1995 1994
Primary weighted average
number of common shares
for computation of
earnings per common share 18,863,000 18,697,000
Fully diluted weighted
average number of common
shares for computation of
earnings per common share 22,388,000 22,271,000