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 September 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 October 31, 1995.
Common Stock, without par value - 19,050,803 shares
MID AM, INC.
INDEX
PART I - FINANCIAL INFORMATION Page Number
Item 1. Financial Statements
Consolidated Statement of Condition
(Unaudited)
September 30, 1995 and December 31, 1994 3
Consolidated Statement of Earnings
(Unaudited)
Nine months ended September 30, 1995 and 1994 4
Consolidated Statement of Cash Flows
(Unaudited)
Nine months ended September 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 9
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 20
Item 6. Exhibits and Reports on Form 8-K 20
SIGNATURES 21
EXHIBIT INDEX 22
PART I. - FINANCIAL INFORMATION
MID AM, INC. Consolidated Statement of Condition-(Unaudited)
September 30, 1995 December 31, 1994
Assets (Dollars in thousands)
Cash and due from banks $ 68,277 $ 85,332
Int-bearing deposits in banks 4,873 2,232
Federal funds sold 73,667 8,160
Securities available for sale 231,131 212,437
Investment securities 65,817 71,700
Mortgage-backed securities 165,343 180,309
Loans held for sale 13,387 12,963
Loans 1,452,722 1,430,821
Allowance for credit losses (15,014) (14,722)
Net loans 1,437,708 1,416,099
Bank premises and equipment 49,788 50,171
Interest receivable and
other assets 42,516 39,386
Total Assets $2,152,507 $2,078,789
Liabilities
Demand deposits
(non-interest bearing) $ 172,871 $ 190,423
Savings deposits 574,326 586,140
Other time deposits 1,056,125 959,929
Total Deposits 1,803,322 1,736,492
Federal funds purchased and
securities sold under
agreement to repurchase 93,579 80,136
Capitalized lease
obligations and debt 50,246 65,434
Interest payable and
other liabilities 13,423 11,475
Total Liabilities 1,960,570 1,893,537
Shareholders' Equity
Preferred stock
Authorized-2,000,000
Issued - 1,446,399 and
1,608,000 shares 36,160 40,200
Common stock - no par value
Authorized-35,000,000
Issued at stated value of
$3.33 per share-19,069,163
and 17,359,633 shares 64,804 57,865
Surplus 91,313 75,624
Retained earnings 6,803 17,769
Treasury stock at cost
371,920 and 1,400 shares (5,864) (20)
Unrealized losses securities
available for sale (1,279) (6,186)
Total Shareholders' Equity 191,937 185,252
Total Liabilities and
Shareholders' Equity $2,152,507 $2,078,789
MID AM, INC. Consolidated Statement of Earnings-(Unaudited)
Three Mths Ended Nine Mths Ended
September 30, September 30,
1995 1994 1995 1994
(Dollars in thousands)
Interest Income
Int and fees on loans $33,025 $28,507 $96,896 $80,738
Int on deposits in banks 76 62 153 144
Int on federal funds sold 1,111 73 2,358 939
Int on investments-taxable 6,252 6,133 18,606 18,594
Int on investments-tax exempt 931 1,012 2,830 2,801
Total Interest Income 41,395 35,787 120,843 103,216
Interest Expense
Int on deposits 19,054 13,712 53,422 39,949
Int on borrowed funds 1,897 1,427 5,912 3,208
Total Interest Expense 20,951 15,139 59,334 43,157
Net Interest Income 20,444 20,648 61,509 60,059
Provision for credit losses 864 (910) 2,008 159
Net Interest Income After
Provision of Credit Losses 19,580 21,558 59,501 59,900
Non-interest Income
Service charge deposit accts 1,602 1,587 4,604 4,513
Net investment security gain 86 (10) 142 1,208
Net gains on sales of loans 1,535 503 3,514 3,227
Loan servicing fees 922 847 2,776 2,429
Collection agency fees 841 917 2,510 3,023
Brokerage fees & commissions 2,371 1,729 6,152 4,850
Other income 2,091 2,001 6,145 5,986
Total Non-interest Income 9,448 7,574 25,843 25,236
Non-interest Expense
Salaries & employee benefits 10,328 10,452 30,379 30,033
Net occupancy expense 1,353 1,298 3,884 4,024
Equipment expense 1,796 2,044 5,367 5,576
Other expenses 5,921 5,947 17,994 18,670
Total Non-interest Expense 19,398 19,741 57,624 58,303
Income before income taxes 9,630 9,391 27,720 26,833
Applicable income taxes 3,142 2,926 8,957 8,083
Net Income $ 6,488 $ 6,465 $18,763 $18,750
Net Income Available to
Common Shareholders $ 5,814 $ 5,736 $16,658 $16,562
Earnings per Common Share:
Primary $ .30 $ .30 $ .87 $ .87
Fully diluted $ .29 $ .29 $ .83 $ .83
MID AM, INC. Consolidated Statement of Cash Flows-(Unaudited)
Nine Months Ended September 30,
1995 1994
Operating Activities (Dollars in thousands)
Net income $ 18,763 $ 18,750
Adjustments to reconcile net
income to net cash used
for operating activities:
Provision for credit losses 2,008 159
Provision for depreciation
and amortization of assets 6,511 7,249
Proceeds from sales of mortgage
and other loans held for sale 211,031 300,876
Mortgage and other loans
originated for sale (212,052) (244,953)
Net gains on sales of assets (3,853) (4,499)
Increase in interest
receivable and other assets (10,261) (313)
Increase (decrease) in interest
payable and other liabilities 1,948 (5,509)
Net Cash Provided By
Operating Activities 14,095 71,760
Investing Activities
Net (increase) decrease in interest-
bearing deposits in banks (2,641) 3,671
Net (increase) decrease in
federal funds sold (65,506) 54,130
Proceeds from sales of securities
available for sale 13,689 82,551
Proceeds from maturities and paydowns
of securities available for sale 31,012 29,767
Purchases of securities
available for sale (53,012) (75,331)
Proceeds from maturities and paydowns
of investment securities 6,244 10,358
Purchases of investment securities (340) (18,462)
Proceeds from maturities and paydowns
of mortgage-backed securities 14,704 27,982
Purchase of mortgage-backed
investment securities (29,042)
Proceeds from sales of loans 41,054 10,048
Net increase in loans (62,148) (135,748)
Proceeds from sales of other
real estate owned 1,042 1,790
Proceeds from sales of bank
premises and equipment 536 734
Purchases of bank premises
and equipment (4,458) (3,777)
Cash acquired through acquisitions 575
Net Cash Used For
Investing Activities (79,249) (41,329)
MID AM, INC. Consolidated Statement of Cash Flows-(Unaudited)
Nine Months Ended September 30,
1995 1994
Financing Activities (Dollars in thousands)
Net decrease in demand
deposits and savings accounts (29,367) (61,706)
Net increase in
other time deposits 96,197 2,092
Net increase in federal
funds purchased and securities
sold under agreements repurchase 13,443 24,470
Repayment of capitalized lease
obligations and debt (64,138) (1,039)
Proceeds from issuance of debt 48,950 20,024
Proceeds from issuance common stock 1,929
Cash dividends paid (11,190) (10,103)
Treasury stk(net of reissuance,556) (5,844)
Preferred stock conversions,
fractional shares and other items 48 (86)
Net Cash Provided By (Used For)
Financing Activities 48,099 (24,419)
Net (decrease) increase in cash
and due from banks (17,055) 6,012
Cash and due from banks at the
beginning of the period 85,332 66,981
Cash and due from banks at the
end of the period $ 68,277 $ 72,993
Supplemental Schedule of Noncash
Investing and Financing Activities
Securitized loans held for sale $ 3,430 $ 8,704
Investment securities 31,148
Mortgage-backed invest securities 2,642
Transfers to securities
available for sale $ 3,340 $ 42,494
Transfers from loans to other
real estate owned $ 507 $ 971
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 $ 7,547 $ (10,378)
Adjustment to deferred tax asset (2,641) 3,635
Adjustment to shareholders' equity $ 4,906 $ (6,743)
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 wholly-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"), Mid Am of Michigan, Inc. ("MAOM"),
MFI Investments, Corp. and Mid Am Information Services, Inc.
("MAISI"). All significant intercompany transactions and
accounts have been eliminated in consolidation.
On July 31, 1995 the Company completed its acquisition of
MFI Investments, Corp.("MFI"), Byran, Ohio. MFI will be operated
under its current name as an affiliate of Adrian State Bank, a
wholly-owned subsidiary of Mid Am, Inc. All financial
information for 1994 has been restated to give effect to the MFI
acquisition which was accounted for as a pooling-of-interests.
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. Adoption of SFAS 122
In the third quarter of 1995, the Company adopted Financial
Accounting Standard Board Statement No. 122 "Accounting for
Mortgage Servicing Rights" ("SFAS 122") retroactive to January 1,
1995. Accordingly, first and second quarter results have been
restated to give effect for SFAS 122 as follows:
Net Gains Primary
(Dollars in thousands, on Sales Net Earnings
except per share data) of Loans Income Per Share
First quarter 1995 as
previouly Reported $ 533 $5,742 $.26
Effect of SFAS 122
adjustment 102 66 .01
As restated $ 635 $5,808 $.27
Net Gains Primary
(Dollars in thousands, on Sales Net Earnings
except per share data) of Loans Income Per Share
Second quarter 1995 as
Previouly Reported $ 932 $6,199 $.29
Effect of SFAS 122
adjustment 412 268 .01
As restated $1,344 $6,467 $.30
The adoption of SFAS 122 accounted for $606,000 of the increase
in net gains on sales of loans for the third quarter of 1995.
3. 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 September 30, 1995 have been adjusted
to reflect this 10% stock dividend.
4. Bank Insurance Fund Refund
The Company received a refund of $716,000 ($466,000 after tax)
from previously paid insurance premiums to the Bank Insurance
Fund ("BIF") in the third quarter of 1995 which resulted in a
reduction of other expenses.
5. Repurchase Program
On April 20, 1995, the Board of Directors of the Company
authorized management to undertake purchases of up to
1,375,000 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 held in
Treasury and 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 September 30, 1995 the Company has repurchased
approximately 333,000 shares.
6. Subsequent Events
As of November 10, 1995, the Company has repurchased
approximately 410,000 shares through its repurchase program.
Item 2. - Management's Discussion and Analysis of Financial
Condition and Results of Operations
Three Months Ended September 30, 1995 and 1994
Results of Operations
For the three months ended September 30, 1995, net income
increased $23,000 to $6,488,000 compared to $6,465,000 for the
same period in 1994. Earnings per common share for the three
months ended September 30, 1995 were $.30 ($.29 fully diluted)
and $.30 ($.29 fully diluted) for the same period in 1994. For
the three months ended September 30, 1995, the annualized return
on average common shareholders' equity was 14.80% and the
annualized return on average assets was 1.19% compared to 15.54%
and 1.26%, respectively, for the same period in 1994.
Net Interest Income
Net interest income decreased $204,000 or 1% to $20,444,000
in the third quarter of 1995, as compared to $20,648,000 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 September 30, 1995, net interest income
decreased due to the rate of interest-bearing liabilities
increasing at a greater rate than interest-earning assets as
compared to the same period in 1994. The Company's net interest
margin for the three months ended September 30, 1995 was 4.12%
compared to 4.46% 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. The primary reason for
the cost of funds increase was due to higher interest rates and a
change in the deposit mix from lower rate deposit accounts to
higher rate certificates of deposit.
Provision for Credit Losses
The 1994 third quarter benefited from a $1,600,000 reversal of a
portion of the allowance for credit losses at one of the
Company's bank subsidiaries. The provision for loan losses of
$864,000 in the third quarter of 1995 compares to a credit of
$910,000 in the third quarter of 1994. Net charge-offs were
$764,000 or 0.21% (annualized) of average loans during the
three months ended September 30, 1995, compared to $511,000 or
0.15% (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 September 30, 1995, non-interest
income increased $1,874,000 or 25% to $9,448,000 compared to
$7,574,000 for the same period in 1994. The increase is due
primarily to an increase of $1,032,000 or 205% in net gains on
sales of loans in the third quarter of 1995 as compared to the
same period in 1994. The adoption of SFAS 122 accounted for
$606,000 of the increase in net gains on sales of loans.
Brokerage fees for the third quarter of 1995 increased $642,000
or 37% to $2,371,000 compared to $1,729,000 for the same period
in 1994.
Non-Interest Expense
For the three months ended September 30, 1995, non-interest
expense decreased $343,000 or 2% to $19,398,000 compared with
$19,741,000 for the same period in 1994. For the three months
ended September 30, 1995, salaries and employee benefits expense
decreased $124,000 or 1% to $10,328,000 compared to $10,452,000
for the same period in 1994. Salary costs deferred in 1995 as
part of loan origination costs were $405,000 higher than 1994,
which caused a corresponding decrease in the amount of salary and
employee benefit expense reported in 1995. This increase in
salary costs deferred is related to higher levels of home equity
loan and installment loan originations. Equipment expense
decreased $248,000 or 12% to $1,796,000 for the third quarter of
1995 as compared to $2,044,000 for the same period in 1994. The
decrease in equipment expense was primarily due to decreases in
machine service agreements ($89,000) and depreciation expense
($112,000). Other expenses remained constant for the three
months ended September 30, 1995 as compared to the same period
for 1994. During the third quarter, the Company's banking
subsidiaries received a one time refund of FDIC premiums
($716,000). This decrease in other expenses was offset by
increases in advertising ($120,000), other professional fees
($280,000) and credit card processing expense ($130,000).
Income Taxes
The provision for income taxes for the third quarter of 1995
increased $216,000 or 7% to $3,142,000 compared to $2,926,000
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 third quarter of 1995 as compared to 31% for the same
period in 1994.
Nine Months Ended September 30, 1995 and 1994
Results of Operations
For the nine months ended September 30, 1995, net income
increased $13,000 to $18,763,000 compared to $18,750,000 for the
same period in 1994. Earnings per common share for the nine
months ended September 30, 1995 were $.87 ($.83 fully diluted),
and $.87 ($.83 fully diluted) for the same period in 1994. For
the nine months ended September 30, 1995, the annualized return
on average common shareholders' equity was 14.68% and the
annualized return on average assets was 1.18% compared to 15.14%
and 1.23%, respectively, for the nine months ended September 30,
1994.
Net Interest Income
Net interest income increased $1,450,000 or 2% to $61,509,000
in the first nine months of 1995, as compared to $60,059,000
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 the volume
of interest-earning assets rising at a faster rate than
interest-bearing deposits. The Company's net interest margin
for the nine months ended September 30, 1995 was 4.26% compared
to 4.37% 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. The primary reason for
the cost of funds increase was due to higher interest rates and a
change in the deposit mix from lower rate deposit accounts to
higher rate certificates of deposit.
Provision for Credit Losses
The provision for credit losses for the nine months ended
September 30, 1995 increased $1,849,000 to $2,008,000 from a
provision of $159,000 for the same period in 1994. The increase
is due primarily to a $1,600,000 reversal of a portion of the
allowance for credit losses at one of the Company's bank
subsidiaries in the third quarter of 1994. Net charge-offs were
$1,752,000 or 0.16% (annualized) of average loans during the nine
months ended September 30, 1995, compared to $1,240,000 or 0.13%
(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 September 30, 1995, the Company's allowance for credit losses
as a percentage of non-performing loans was 140% compared to
196% at December 31, 1994 and 167% at September 30, 1994. The
ratio of non-performing assets to total loans plus other real
estate owned was 0.79% at September 30, 1995, compared to
0.60% and 0.68% at December 31, 1994 and September 30, 1994,
respectively. See "Asset Quality."
Non-Interest Income
For the nine months ended September 30, 1995, non-interest income
increased $607,000 or 2% to $25,843,000 compared to $25,236,000
for the same period in 1994. The increase is due primarily to a
increase of $1,302,000 or 27% in brokerage fees and a decrease of
$1,066,000 or 88% in net investment securities gains. Collection
agency fees decreased $513,000 to $2,510,000 for the first nine
months in 1995 compared to $3,023,000 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. Net gains on sales of loans increased $287,000
for the nine months ended September 30, 1995 as compared to the
same period for 1994. The primary reason for the increase was
the adoption of SFAS 122 ($1,120,000), partially offset by lower
volumes of loan sales during 1995.
Non-Interest Expense
For the nine months ended June 30, 1995, non-interest expense
decreased $679,000 to $57,624,000 compared with $58,303,000
for the same period in 1994. The $346,000 increase in salaries
and employee benefits was primarily due to a increase in
commissions paid by MFI, partially offset by lower salary expense
due to fewer full-time equivalent employees. Net occupancy
expense decreased $140,000 to $3,884,000 for the nine months
ended September 30, 1995 as compared to $4,024,000 for the same
period in 1994. Equipment expense decreased $209,000 to
$5,367,000 for the nine months ended September 30, 1995 as
compared to $5,576,000 for the same period in 1994. For the nine
months ended September 30, 1995, other expenses decreased
$676,000 or 4% to $17,994,000 compared to $18,670,000 in 1994,
due primarily to a decrease in FDIC premiums ($749,000). The
primary reason for the decrease in FDIC premiums was due to a one
time refund of $716,000.
Income Taxes
The provision for income taxes for the first nine months of
1995 increased $874,000 or 11% to $8,957,000 compared to
$8,083,000 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 nine 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 managing 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 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 September 30, 1995, and
December 31, 1994, federal funds sold amounted to $73,667,000
and $8,160,000, respectively, securities available for sale
amounted to $231,131,000 and $212,437,000, respectively, and
loans held for sale amounted to $13,387,000 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 September 30, 1995, $15,980,000 was
available for distribution to the Company as dividends without
prior regulatory approval.
Cash and due from banks decreased by $17,054,000 during the
nine months ended September 30, 1995 to $68,277,000 from
$85,332,000 at December 31, 1994. Operating activities provided
$14,095,000 of cash in the nine months ended September 30, 1995
as compared to cash provided of $71,760,000 for the same period
in 1994. For the nine months ended September 30, 1995, cash
provided for operating activities was primarily attributable to
net income as compared to proceeds from sales of mortgage and
other loans held for sale for the same period in 1994. Due to
increased competition, a 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 $212,052,000 of mortgage loans in the
nine months ended September 30, 1995, as compared to
$244,953,000 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 $300,876,000 to $211,031,000) which more than offset the
cash flow increase from lower originations.
Cash of $79,249,000 was used for investing activities during
the nine months ended September 30, 1995 compared to cash used
for investing activities of $41,329,000 during the nine months
ended September 30, 1994, an increase in cash outflows from
investing activities of $37,920,000. The primary reason for the
increase in cash flows used for investing activities was the net
increase in federal funds sold in 1995 of $65,506,000 compared to
a net decrease of $54,130,000 for the same period in 1994. The
net increase in loans of $135,748,000 for the first nine months
of 1994 was partially offset by the $82,551,000 of proceeds from
sales of securities available for sale.
Cash provided by financing activities was $48,099,000 during
the nine months ended September 30, 1995 as compared to
$24,419,000 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
$96,197,000, partially offset by a net decrease in demand
deposits and savings accounts of $29,367,000. The increase in
other time deposits during the first nine months 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 $61,706,000, partially offset by
net increases of $24,470,000 in federal funds purchased and
securities sold under agreements to repurchase and Federal Home
Loan Bank advances ($20,024,000). Common stock repurchases
aggregating $6,400,000 were made for the nine months ending
September 30, 1995 in connection with the Company's repurchase
program authorized by the Board of Directors on April 20, 1995.
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 common equity 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 September 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 September 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 September 30, 1995, the Company's
leverage ratio, Tier I, and combined Tier I and Tier II (total
capital) ratios were 8.35%, 11.88% and 12.87%, respectively.
Capital ratios applicable to the Company's banking
subsidiaries at September 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 7.60 9.92 11.14
First National 6.89 9.74 10.23
AmeriCom 8.04 13.53 14.55
AmeriFirst 6.79 9.74 10.72
Adrian 7.19 11.55 12.80
Asset/Liability Management
As of September 30, 1995, the Company is maintaining a manageable
positive 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 September 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 0.74%, as compared to
0.52% at December 31, 1994 and 0.61% at September 30, 1994.
Non-performing loans at September 30, 1995 aggregated
$10,722,000, an increase of $3,229,000 or 43% from December 31,
1994. The increase in non-performing loans is primarily due to
two large commercial loans. The Company's percentage of net
charge-offs for the nine months ended September 30, 1995 and
September 30, 1994 to average loans outstanding were 0.16%
(annualized) and 0.13% (annualized), respectively. At September
30, 1995, the Company's allowance for credit losses was 1.03% of
total loans, as compared to 1.03% and 1.01% at December 31, 1994
and September 30, 1994, respectively. The allowance for credit
losses as a percentage of non-performing loans at September 30,
1995 was 140% compared to 196% at December 31, 1994 and 167% at
September 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
0.79% at September 30, 1995, compared to 0.60% and 0.68% at
December 31, 1994 and September 30, 1994, respectively. As of
September 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
$33,989,000 and $36,371,000 at September 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
September 30, 1995 and December 31, 1994, specific allocations of
the allowance for credit losses related to these loans aggregated
$3,334,000 and $3,796,000, 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 September 30, 1995.
(Dollars in thousands)
Mid Am First
Bank National AmeriCom AmeriFirst Adrian
Non-accrual $6,713 $337 $1,205 $671 $307
Contractually
past due 90
days or more 46 440 667 190 65
Restructured 0 0 81 0 0
Total
non-performing
loans 6,759 777 1,953 861 372
Other real
estate owned 195 0 305 275 0
Total
non-performing
assets $6,954 $777 $2,258 $1,136 $372
Non-performing
loans to
total loans 1.27% .22% .80% .38% .38%
Non-performing
assets to total
loans+other real
estate owned 1.30 .22 .92 .50 .38
(Dollars in thousands)
Mid Am First
Bank National AmeriCom AmeriFirst Adrian
Allowance credit
losses to total
non-performing
loans 111.97 229.21 126.11 232.64 322.31
Allowance credit
losses to total
non-performing
assets 108.83 229.21 109.08 176.32 322.31
Ratio of net
charge-offs to
average loans
outstanding .35 .01 .10 .08 (.01)
Ratio of
allowance for
credit losses
to total loans 1.42 .51 1.00 .88 1.23
The following table sets forth the Company's allocation of
the allowance for credit losses as of September 30, 1995 and
December 31, 1994.
(Dollars in thousands)
September 30,1995 December 31, 1994
Specific allowance
Real estate $ 322 $ 1,178
Commercial 2,859 2,568
Installment 153 50
Total specific allowance 3,334 3,796
General allowance
Real estate 538 654
Commercial 1,823 3,361
Installment 646 1,299
Other 462 463
Total general allowance 3,469 5,777
Unallocated allowance 8,211 5,149
Allowance for credit losses $15,014 $14,722
The following table presents a summary of the Company's
credit loss experience for the nine months ended
September 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 96 430
Commercial, financial
and agricultural 1,802 1,411
Installment and credit card 944 593
Other loans 63 0
Total loans charged-off 2,905 2,434
Recoveries of loans previously
charged-off:
Real estate 198 56
Commercial, financial
and agricultural 621 706
Installment and credit card 330 432
Other loans 4 0
Total recoveries of loans 1,153 1,194
Net charge-offs 1,752 1,240
Addition to allowance
charged to expense 2,008 159
Transfer of other real
estate owned allowance
relating to in-substance
foreclosure loans 36
Allowance for credit losses $15,014 $14,075
Ratio of net charge-offs to
average loans outstanding .16% .13%
Ratio of allowance for credit
losses to total loans 1.03 1.01
Ratio of allowance for credit
losses to total
non-performing loans 140.03 167.36
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 adverse 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: November 13, 1995
MID AM, INC.
EXHIBIT INDEX
Exhibit No. Description Page Number
(1) Statement Re Computation of
Earnings Per Common Share 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 September 30, 1995 and 1994, and nine months
ended September 30, 1995 and 1994 (adjusted for 10% stock
dividend paid May 17, 1995).
Three Months Ended September 30,
1995 1994
Primary weighted average
number of common shares
for computation of
earnings per common share 19,245,000 19,098,000
Fully diluted weighted
average number of common
shares for computation of
earnings per common share 22,556,000 22,680,000
Nine Months Ended September 30,
1995 1994
Primary weighted average
number of common shares
for computation of
earnings per common share 19,203,000 19,040,000
Fully diluted weighted
average number of common
shares for computation of
earnings per common share 22,657,000 22,617,000