EXHIBIT 13.1
MID AM, INC. 1995 ANNUAL REPORT
TABLE of CONTENTS
Message from Management Page 2
Banking Page 6
Technology Page 8
Collections Page 9
Brokerage Page 10
Selected Quarterly Data Page 11
Summary of Financial Data Page 12
Management's Discussion and Analysis Page 13
Report of Independent Accountants Page 29
Consolidated Financial Statements Page 30
Notes to Consolidated Financial Statements Page 35
Mid Am, Inc. Eight Year Performance Summary Page 47
Executive Officers and Boards of Directors Page 49
Affiliate Banking Center Boards Page 50
Affiliate Presidents Page 51
Mid Am, Inc. Board of Directors Page 52
Shareholder Information Inside Back
FINANCIAL HIGHLIGHTS
(Dollars in thousands, except
per share and ratio data)
Percentage
1995 1994 Change
For the Year
Net income $24,967 $23,253 7.37
Return on:
Average total assets 1.17 1.14
Average common shareholders'
equity 14.51 13.88
Per Common Share Data
Primary net income $1.16 $1.07 8.41
Fully diluted net income 1.11 1.03 7.77
Dividends 0.63 0.59 6.78
Book value at year end 8.40 7.61 10.38
At Year End
Assets $2,204,751 $2,078,789 6.06
Loans 1,475,651 1,433,289 2.96
Deposits 1,860,142 1,736,492 7.12
Common shareholders' equity 159,269 145,052 9.80
Total shareholders' equity 194,838 185,252 5.17
Average for the Year
Assets $2,138,638 $2,038,637 4.91
Loans 1,450,629 1,327,397 9.28
Deposits 1,788,386 1,725,169 3.66
Common shareholders' equity 153,112 146,473 4.53
Total shareholders' equity 191,072 186,710 2.34
OTHER FINANCIAL DATA
(Dollars in thousands, except per share data)
Fully
Net Provision Primary Diluted
Interest For Credit Net Earnings Earnings
Income Losses Income Per Share Per Share
1995
Fourth Quarter $20,718 $ 994 $6,220 $0.29 $0.28
Third Quarter 20,444 864 6,472 0.30 0.29
Second Quarter 20,552 734 6,467 0.30 0.28
First Quarter 20,513 410 5,808 0.27 0.26
1994
Fourth Quarter $20,948 $1,065 $4,503 $0.20 $0.20
Third Quarter 20,648 (910) 6,465 0.30 0.29
Second Quarter 20,165 711 5,744 0.26 0.25
First Quarter 19,246 358 6,541 0.31 0.29
Page 1
MESSAGE FROM MANAGEMENT
1995 was a record year for the Company and a particularly
rewarding year for the Company's shareholders. 1995's net income
of $25 million represents the highest earnings in the Company's
history. Fully diluted earnings per share in 1995 were $1.11, as
compared to $1.03 in 1994. The Company's return on average
common shareholders' equity of 14.51 percent and return on total
assets of 1.17 percent represent solid operating performance near
the Company's long-term earnings objectives.
The acid test of the performance of any company is, or should be,
its ability to increase shareholder value over time. 1995 was a
good year for bank stocks in general and for our Company in
particular. We are very pleased that our common shareholders saw
the value of their stock increase from $13.52 at December 31,
1994, to $16.41 at December 31, 1995. This appreciation, combined
with the dividend yield of 4.7 percent, provides an overall
return of 26.5 percent. This represents an outstanding return
for our shareholders but, even more importantly, by taking
advantage of our dividend reinvestment program, many of our
shareholders have received an annually compounded rate of return
of 17.8 percent since December 31, 1988, the year our Company was
formed. As the accompanying chart illustrates, on average since
its inception, an investment in Mid Am, Inc.'s common stock has
proven to be a very wise one.
Return to Investors
Compound Average Total Return Since 1988
Mid Am, Inc. 17.8 percent
S and P 500 15.5 percent
S and P Major Regional Bank Index 17.5 percent
Page 2
Even though we achieved record earnings, 1995 was not without its
difficulties. Significant pressure was placed on our net interest
margin from the combination of a declining rate environment and
a flattening yield curve. Simply put, our net interest margin -
the difference between what we pay our depositors and what we
receive from our borrowers - accounts for 70.15 percent of our
total income. We found it necessary to compensate for this
decline in margin by reducing our non-interest (or operating)
expense, as well as by increasing our non-interest income. Our
ability to decrease our operating expense was made possible by
the success of "The Perfect 10," an expense reduction program
announced in mid-year 1994. The objective of this program was to
reduce our operating expense by nearly $6.5 million in 1995. This
program was very successful and contributed greatly to our 1995
performance. We were also quite successful in increasing our
non-interest income.
A very significant event in 1995 was our merger with MFI
Investments Corp., a broker/dealer firm headquartered in Bryan,
Ohio. The merger was consummated on July 31, 1995. MFI is a
36-year-old company with 40 employees, along with 250 independent
brokers operating in 75 offices in 19 states throughout the
country. Our merger with MFI is very unique and has been followed
with interest in the financial press. Consequently, Mid Am, Inc.
is recognized as being on the leading edge of the evolution of
traditional banking into more broad-based financial services.
As sometimes happens, some of our best strategic initiatives
develop differently than we have planned. As we pursued MFI, our
initial intent was to acquire the framework and the expertise to
establish full service brokerage offices throughout our 87 branch
locations. While this will, in fact, be accomplished by our
merger with MFI, throughout the process we recognized that the
potential impact may be much broader. MFI's core broker/dealer
business has the potential to grow significantly and add a
corresponding amount of fee-based income to the Company's bottom
line.
We are just beginning to understand the full impact of the nearly
250 independent brokers throughout the country. Focus group
sessions with top producers and other exploratory conversations
quickly evidenced the brokers' significant need to provide bank
products to their clientele. Many of these brokers are financial
advisors and need the ability to fully service their clients.
These sales-trained, commission-based professionals provide our
Company with a national distribution network without the cost
usually associated with an expansion of this magnitude. We intend
to develop a broad line of bank products to be sold on a
commission basis through this distribution network. We expect the
number of brokers to grow significantly and are quite excited
about the potential impact of this venture in the coming years.
Page 3
On June 1 we acquired Certified Credit Systems in Sarasota,
Florida, a small addition to the Company's collection affiliate,
CCB Services. The collection business is undergoing consolidation
and major technological change, providing unlimited
opportunities. We are pleased with the progress that we are
making with this relatively new line of business and expect to
experience significant growth.
Throughout 1995, our banking affiliates experienced strong
deposit growth. Total deposits increased $123 million or 7.1
percent over the prior year. On March 1, 1995, we completed a
merger with ASB Bankcorp, Inc., the parent of Adrian State Bank
in Adrian, Michigan. This is the Company's first venture
out-of-state. The $128 million Adrian State Bank is the beginning
of the Company's expected expansion into the southern Michigan
market. We are enthusiastic about this new market and
particularly pleased with the fine addition of the board of
directors, officers and employees to the Mid Am family. We
studied many other bank and savings and loan mergers and
acquisitions throughout 1995. However, the Company's continuing
policy of refusing to accept any significant dilution to its
existing shareholders precluded the possibility of these other
expansion opportunities.
Our Company has made a very significant investment in enhancing
our technological capabilities. Years ago we began to invest in
technology for the express purpose of reducing cost. Technology
is quite expensive, and the cost savings became less of a focus.
What technology has done, however, is greatly enhance customer
service and improve management information systems. Our Company
is dedicated to being on the leading edge of technology. We will
implement new technology that has been proven, and will carefully
evaluate experimental technology. While this strategy assumes
that some of the technology we implement will be very near the
cutting edge, we have chosen to be selective in implementing
products and services that meet existing and immediate customer
needs.
Our future remains challenging and quite exciting. We expect our
Company to become far more than just a bank. We are convinced
that five years from now banks will not even resemble banks of
five years ago. Overcapacity, consolidation, margin pressures,
cost containment, technological change, and nationwide banking
are combining to create an environment where change is not the
exception but, instead, the rule. Operating efficiently and
containing costs will be a key ingredient in our future success.
We have proven our ability to accomplish this objective
throughout 1994 and 1995. Most importantly, our ability to
generate non-interest income will determine the future success of
our Company. We have positioned ourselves for this effort, have
made significant progress and are committed to focusing all our
efforts on this, our primary objective. It is our plan to
increase our gross fee-based income by $20 million over the next
three years. These efforts are supported by a very strong balance
sheet with over $194 million in capital, a total market
capitalization of over $363 million and very little debt or
intangible burden.
Page 4
It's only fair to ask, "Well, that's all well and good, but I can
read that in most any company's annual report. What's different
about Mid Am, Inc. that will make it successful?" Many years ago,
Aristotle defined three significant characteristics that must be
present in a successful enterprise: logos, pathos and ethos. The
first is "logos" or ability. In an industry undergoing change at
a break-neck pace, a Company can only be as good as the knowledge
and ability of its management and employees allows. We are
dedicated to the education of our directors, officers and
employees, both internally and externally. We are committed to
attracting and retaining the best and the most talented
employees. We believe that, in fact, we have attracted one of the
finest teams of senior managers to be found in our business. We
are well prepared to succeed.
The second attribute, "pathos" or passion, is certainly a
requirement for success. Our Company's over 1,300 employees, 77
corporate and bank directors and 336 advisory board members
together provide extraordinary enthusiasm and an absolute passion
to excel. The Company's commitment to its employees, their
diversity, their empowerment, and the concept of teamwork combine
to create an environment of enthusiasm and, yes, outright
passion.
The third ingredient of success, "ethos" or ethics, is often more
elusive in corporate America. This attribute is perhaps the most
defining attribute of our Company. We are absolutely, totally
committed to doing what we say we'll do. We believe our Company
can only enjoy long-term success if we care not only for our
shareholders, but for our employees, customers and the
communities we serve. While downsizing and pink slips seem to be
standard practice in many companies, we feel an intense loyalty
to our employees and are pleased that even with our many
acquisitions, we have never had a layoff. We expect hard work,
long hours and total commitment from our employees. In turn, we
owe them our best efforts to ensure that their lives will not be
disrupted by a manager's short-sighted efforts to increase the
next month's or the next quarter's bottom line. We realize this
might seem old-fashioned to some of our competitors, but we are
confident that this dedication to our customers, our employees
and our communities will continue to be of substantial benefit to
our shareholders over time.
As the cover of this year's annual report aptly illustrates,
things change. Is Mid Am, Inc. a successful $2.2 billion bank
holding company? Take another look - we're becoming a whole lot
more.
Page 5
BANKING: A TRADITION OF INNOVATION
From the beginning, Mid Am, Inc. banking affiliates have done
things a little differently. In the 1960s, Mid American National
Bank & Trust Company was the first bank in Ohio to use Industrial
Revenue Bond financing to provide low cost funding for
businesses. In the 1970s, Mid Am became the first bank in the
country to provide an ESOP for its employees. In the '80s, the
bank became one of the first 25 Small Business Association
Preferred Lenders in the United States. In the 1990s, First
National Bank Northwest Ohio became the first national bank to
acquire an insolvent savings & loan without any government
assistance. Even with no layoffs, the merger was immediately
profitable. Doing things differently and leading the way to
change have become traditions for Mid Am, Inc. banks.
This innovative approach to a business long thought of as
conventional continues with all Mid Am, Inc. banking affiliates.
Mortgage lending is just one area in which Mid Am, Inc.
affiliates have challenged and improved long-standing practices.
The banks use third-party originators outside their market areas
to generate loans. Jim Burwell, President and CEO of First
National Bank Northwest Ohio, thinks this arrangement can be a
real advantage. "Not having bricks and mortar helps us to be
better. Many times, lenders tend to be anchored in banking
centers. This allows our lenders to be out in the market." The
third-party independent contractor originator concept has
expanded the banks' sales areas tremendously. In 1995, bank
affiliates' third-party originators were located in 15 cities
throughout the country and were responsible for over $10.5
million in new loans.
Another revolutionary mortgage lending innovation is the 1/10
Program. Mortgage loan applicants actually receive an approval
decision within one hour, and may close their loan in 10 days.
This timeframe was unheard of in the industry until it was
implemented by Pat Kennedy, President and CEO of Mid American
National Bank & Trust Company. As Pat explains, "Many banks
across the country have come to our bank to learn how to offer
this program. Most importantly, credit quality has been
scrupulously maintained, and customers are delighted with the
responsiveness and speed of the program."
The SchoolBus Card is another unique innovation that has become
quite popular. An affinity credit card, this eye-catching design
can be marketed on behalf of any school system to support school
activities. Developed in 1995, the card was used to support 35
schools and school districts by year-end.
Other innovations this year include the Instant Interest CD, a
certificate of deposit that pays all the interest upon purchase
instead of at the end of the term. Also new for Mid Am, Inc.
banks will be the offering of insurance financial products.
Page 6
In addition to First National Bank's successful conversion of a
savings and loan in the early 1990s, two Mid Am, Inc. affiliates
were actually formed by combining savings and loans to create
national banks. Converting the characteristICS of a savings and
loan balance sheet into those of a bank has been an ongoing
challenge for both. In 1992, Mid Am, Inc.'s Lima and
Bellefontaine affiliates merged and formed AmeriCom Bank. And in
1993, Xenia and Cincinnati affiliates merged as well, forming
AmeriFirst Bank.
AmeriCom President Cathy Oxner has completed extensive market
research in her communities. "We needed to determine what our
customers wanted and how to best meet their needs." A resulting
slogan, "Giving You More of What You're Asking For" aptly
describes the AmeriCom Bank philosophy.
The AmeriFirst affiliate not only began as a combination of two
savings and loans, it serves two very different geographic
markets, Xenia/Dayton and Cincinnati/Hamilton County. This, too,
creates ongoing challenges for President Don Southwick. "We have
implemented Business Team Unit Accounting to determine the profit
and loss for each banking center. In creating separate balance
sheets and profit and loss statements, each banking center
manager really functions as if he or she were a bank president."
This approach fosters empowerment and accountability of
AmeriFirst employees.
The newest Mid Am, Inc. banking affiliate is actually quite an
old institution. Founded in 1893, the Adrian State Bank became a
Mid Am, Inc. bank in February of 1995. Although the bank is long
established, President Bernie Sikorski is no stranger to
innovation. "We have traditionally chosen our customers; we know
them well and have a long-standing reputation for treating them
well. We combine this reputation with a responsiveness to their
changing needs." In recent surveys, for example, the bank
determined that customers wanted extended hours and indeed, the
new hours have been well received.
Some things have not changed for Mid Am, Inc. banking affiliates.
Asset quality, as always, remains quite strong and exceeds
industry performance. Banking center boards continue to provide
great support for each affiliate. The distinguished men and women
who serve on these boards provide vital information to the banks
to help them serve their communities. The autonomy and
independence of the affiliates are balanced with their
interrelationships and assistance to each other. All mergers have
been completed without any layoffs. This unique philosophy
creates an environment where employees are committed to the
success of the banks. These principles serve as a foundation for
the ever-increasing number of innovations initiated by each
banking affiliate.
"Banking, as it existed in the past, is no longer a viable
business. Dramatic changes in the industry are required to ensure
that banks retain their dominant position in the financial
system," says David Francisco, President and Chief Operating
Officer of Mid Am, Inc. "Our affiliates are leaders in creating
and implementing the dramatic changes required."
Page 7
TECHNOLOGY: IMPROVING CUSTOMER SERVICE THROUGH
TECHNOLOGICAL INNOVATION
Technological improvements for all Mid Am, Inc. affiliates have
been a strong focus for Mid Am Information Services, Inc.
(MAISI). While viewed in the beginning as primarily a cost
saving, efficiency measure, the focus has rapidly moved to
improvements in customer service.
In just the past 2 years, a number of client-focused banking
services have been provided through MAISI. These include:
MAXXUS_A direct deposit and bill collection service,
encompassing cash concentration, state tax payments and
corporate-to-corporate transfers.
EXECUBANC_A computer service where customers can access
account information, transfer funds, issue stop payments,
initiate wire transfers and communicate via E-mail.
TELEBANC_A telephone system for account transactions,
inquiries and payments, as well as deposit and loan rate
inquiries.
In 1995, MAISI's Loan Servicing Department responded to over
39,000 customer inquiries, and MAISI paid over 30,000 tax bills
for an aggregate of over $10 million. MAISI also created an
Internet Home Page to provide potential Mid Am, Inc. investors
with additional information (address:
http://www.wcnet.org/-midaminc).
This focus on customer service is reflected in MAISI's vision
statement. Expressed simply, MAISI employees want to give
customers a great experience and great service. As they say it,
the company is "In Pursuit of WOW!"
Customer service innovations are in addition to the advances made
in services provided to MAISI's internal customers, all Mid Am,
Inc. affiliates. MAISI staffs a 12-hour help desk for all
technology users in the Company. Last year, couriers logged a
million miles in travel, carrying interoffice mail. And
intra-company E-mail messages delivered over the wide-area
network numbered 330,000 in 1995.
The addition of non-banking affiliates is the newest challenge
for MAISI. Both MFI, the brokerage affiliate, and ICS/CCB, the
collections affiliates, rely extensively on the latest
technological developments. Working with MAISI, these two
affiliates can vastly improve the support to their own employees,
as well as service to their clients. MAISI will be an integral
part of their continued success and further development.
Says Mid Am, Inc. Chairman and CEO Edward J. Reiter, "MAISI will
continue to be at the forefront of technological innovation.
Their support and expertise fosters the competitive edge needed
by all of our affiliates."
Page 8
COLLECTIONS: AN INNOVATIVE PROFESSIONAL APPROACH
When Mark Mandula was originally approached about the collection
business in 1988, his first thought was based on stereotypes. "I
would never want to be in the collection business," he said to
his eventual partners, with whom he purchased both International
Credit Service (ICS) in Toledo, Ohio and CCB Services (CCB) in
Clearwater, Florida.
Mandula is now the President and CEO of both ICS and CCB. Why the
change? Mark learned that the collection business is primarily a
technology and sales business. His goal is to motivate consumers
to solve financial problems. He leads his employees in
accomplishing this in a professional and profitable manner. His
65 highly trained employees take a very professional approach in
working with delinquent consumers. Of those employees, 26 are
certified by the American Collectors Association of America.
Like banks, collection companies have had to learn to work
smarter, faster, and more profitably. "A common problem in the
collection industry is a lack of capital for technological
investment. This crucial need has been addressed by our
affiliation with Mid Am, Inc.," says Mandula.
ICS is a credit card collection agency, started in the late 1950s
to serve the oil and gas card industry. In addition, ICS now
serves banks, retail and private label card issuers. This
industry segment is extremely competitive, which is
understandable considering the prevalent use of credit cards.
Over one billion cards are in circulation, with the average
person holding 9.2 cards, and an average amount owed of $2,614.
The collection process gets more and more difficult as each
additional marginal account is added. ICS plans to expand into
check collections and into collections for all Mid Am, Inc.
affiliates.
CCB was 95 percent dependent on check collections when it was
acquired in 1993 by Mandula and his partners. This, too, is an
extremely significant market. Almost $170 million in checks
bounce every day. $60.98 billion in checks were written in 1994
alone. Mandula and his partners recognized the need for
diversification, and CCB now serves commercial accounts as well
as workers' compensation and medical industry collections.
Customers include the Home Shopping Network and Home Depot.
The addition of collection services to the Mid Am, Inc. family of
affiliates is a natural extension for the financial services
company. Not only can banking affiliates prosper from affiliated
collection professionals, but so can the banks' clients. Says
David Francisco, President and COO of Mid Am, Inc., "The
collection industry involves a business that we as bankers know
and understand. It is an industry in the early stages of
consolidation, and we expect these affiliates to grow
significantly, contributing to our non-interest income."
Page 9
BROKERAGE: A NATIONWIDE NETWORK OF INNOVATIVE ENTREPRENEURS
MFI Investments began as a small, storefront broker/dealer in
1959. Chairman and CEO, Cliff Oberlin, joined his father Earl
(one of the original founders) in 1977. The firm began using
independent contractor investment representatives, and its
network of experienced entrepreneurs has grown tremendously since
the firm's inception. MFI recruits only established brokers with
well developed books of business. MFI has increased its field
force by an average of 418 percent a year over the last five
years. MFI was named to the Inc. 500 list of America's Fastest
Growing Private Companies in each of the last three years.
MFI provides back office support, due diligence, continuing
education, flexibility, networking, and recognition to its reps.
The firm prides itself on its emphasis on compliance and its
commendable regulatory history. MFI brokers do not offer any
proprietary products, so they are free to offer products which
best suit their clients' needs.
In recent years, banks have struggled with their need to offer
clients a wider range of products and more competitive rates of
return. One answer has been the formation of alliances with
financial service providers, often providing space and support in
the banks themselves. Too often, this relationship has not been
particularly beneficial, especially to the banks.
Mid Am, Inc. has taken a different approach. Although the initial
plan was to purchase a full service brokerage operation to be
placed in banking centers, executives discovered a better way.
"Gradually, we realized that MFI has about 250 independent reps
in 19 states, which could become a nationwide distribution system
for a lot of our bank products, without the costs associated with
bricks and mortar," explains David Francisco, Mid Am, Inc.
President and COO.
MFI independent brokers will begin to offer home mortgages and
CDs, and will eventually expand to offer a full spectrum of
banking services to their existing clients. In-bank brokers will
also be placed by MFI, and they will be paid an extra incentive
to look for clients outside the bank's own client base. MFI's
brokers are extremely eager to begin selling bank products to
improve their overall client relationship. MFI President Robert
M. Gioia says, "Our experienced brokers are well suited to offer
this full range of products. The arrangement is perfect for our
entrepreneurial approach to the business."
The addition of MFI to the Mid Am, Inc. group aptly demonstrates
the Company's philosophies of support for entrepreneurs and full
financial service to clients.
Page 10
Mid Am, Inc. Selected Quarterly Data
Quarter Ended Dec.31 Sept.30 June 30 March 31
1995
Net interest income $20,718 $20,444 $20,552 $20,513
Provision for credit losses 994 864 734 410
Net income 6,220 6,472 6,467 5,808
Earnings per common share:
Primary 0.29 0.30 0.30 0.27
Fully diluted 0.28 0.29 0.28 0.26
Return on average
total assets (1) 1.13 1.19 1.21 1.13
Return on average common
shareholders' equity (1) 14.07 14.76 15.21 13.99
Net interest margin (1)(2) 4.16 4.13 4.24 4.41
Net charge-offs to
average loans (1) 0.31 0.21 0.17 0.11
1994
Net interest income $20,948 $20,648 $20,165 $19,246
Provision for
credit losses (3) 1,065 (910) 711 358
Net income 4,503 6,465 5,744 6,541
Earnings per common share:
Primary 0.20 0.30 0.26 0.31
Fully diluted 0.20 0.29 0.25 0.29
Return on average
total assets (1) 0.87 1.26 1.14 1.30
Return on average common
shareholders' equity (1) 10.20 15.54 13.72 16.18
Net interest margin (1)(2) 4.45 4.46 4.42 4.21
Net charge-offs to
average loans (1) 0.12 0.15 0.14 0.09
(1) Calculated on an annualized basis.
(2) Net interest income as a percentage of interest-earning
assets, on a tax equivalent basis.
(3) In the third quarter of 1994, First National reduced the
level of its allowance for credit losses by $1.6 million. See the
discussion of"Provision for Credit Losses" and "Summary of Credit
Loss Experience."
The following discussion and analysis represent a review of
Mid Am, Inc.'s consolidated financial condition and results of
operations. Mid Am, Inc. (the Company), a bank holding company,
has five bank subsidiaries, Mid American National Bank & Trust
Company (Mid Am Bank), First National Bank Northwest Ohio (First
National), American Community Bank, N.A. (AmeriCom), AmeriFirst
Bank, N.A. (AmeriFirst), and Adrian State Bank (Adrian); two
collection and credit services companies, Lucas County Credit
Bureau, Inc. dba International Credit Service (ICS) and CCB
Services, Inc. (CCBS); a securities broker/dealer, MFI
Investments Corp. (MFI); MFI Insurance Agency, Inc.; and a data
processing company, Mid Am Information Services, Inc. (MAISI).
This review should be read in conjunction with the consolidated
financial statements and other financial data presented elsewhere
herein. The financial information presented in the Summary
Financial Information and in Management's Discussion and Analysis
and Statistical Information on the following pages has been
restated for all prior periods for the Adrian and MFI mergers
which have been accounted for as poolings-of-interests. Also, all
per share data for prior periods have been restated to reflect
the stock dividend declared and paid in 1995. The major
components of the Company's results of operations and statements
of condition and selected financial ratios for the past five
years are summarized in the following table:
Page 11
Mid Am, Inc. Summary Financial Data
Year Ended December 31,
(Dollars in thousands, except
shares, per share and ratio data)
Consolidated Statement
of Earnings Data 1995 1994 1993 1992 1991
Interest income $162,543 $140,571 $139,387 $129,735 $141,290
Interest expense 80,316 59,564 61,057 64,379 84,113
Net interest income 82,227 81,007 78,330 65,356 57,177
Provision for credit losses 3,002 1,224 3,991 4,917 15,142
Net interest income after
provision for credit losses 79,225 79,783 74,339 60,439 42,035
Non-interest and other income 35,955 32,554 34,002 20,002 15,566
Non-interest and other expense 78,416 78,579 72,962 56,151 48,790
Income before income taxes,
extraordinary item and change
in accounting principle 36,764 33,758 35,379 24,290 8,811
Applicable income taxes 11,797 10,505 10,698 6,454 1,798
Income before extraordinary
item and change in
accounting principle 24,967 23,253 24,681 17,836 7,013
Realization of operating
loss carryforward 433
Cumulative effect of change
in accounting principle 1,373
Net income $ 24,967 $ 23,253 $ 24,681 $ 19,209 $ 7,446
Net income available to
common shareholders $ 22,216 $ 20,336 $ 21,763 $ 17,602 $ 7,446
Year Ended December 31,
(Dollars in thousands, except
shares, per share and ratio data)
Consolidated Statement of
Condition Data (Year End) 1995 1994 1993 1992 1991
Total assets $2,204,751 $2,078,789 $2,067,371 $1,871,849 $1,573,067
Securities available for sale 461,997 212,437 238,125 63,800
Investment and
mortgage-backed securities 252,009 270,623 349,749 360,260
Loans held for sale 12,642 12,963 88,131 68,968 31,506
Loans, net of unearned income 1,475,651 1,433,289 1,265,945 1,200,512 1,028,854
Allowance for credit losses 14,859 14,722 15,157 15,718 12,938
Total deposits 1,860,142 1,736,492 1,769,083 1,630,141 1,447,192
Shareholders' equity 194,838 185,252 183,425 164,792 101,545
Weighted average common shares
outstanding - primary 19,205,000 19,046,000 18,736,000 17,062,000 16,806,000
Weighted average common shares
outstanding - fully diluted 22,592,000 22,627,000 22,310,000 19,026,000 16,950,000
Per Common Share Data
Cash dividends declared $0.63 $0.59 $0.54 $0.50 $0.48
Shareholders' equity 8.40 7.61 7.76 7.29 6.41
Primary:
Income before extraordinary
item and change in
accounting principle 1.16 1.07 1.16 0.95 0.42
Net income 1.16 1.07 1.16 1.03 0.44
Fully diluted:
Income before extraordinary
item and change in
accounting principle 1.11 1.03 1.11 0.94 0.41
Net income 1.11 1.03 1.11 1.01 0.44
Year Ended December 31,
(Dollars in thousands, except
shares, per share and ratio data)
1995 1994 1993 1992 1991
Selected Financial Ratios
Return on average total assets 1.17 1.14 1.23 1.18 0.49
Return on average common
shareholders' equity 14.51 13.88 16.39 16.22 7.36
Net interest margin 4.23 4.38 4.30 4.43 4.12
Average loans to average deposits 81.11 76.94 71.54 71.93 73.87
Leverage ratio (1) 8.44 8.36 8.19 8.40 6.16
Average total shareholders' equity
to average total assets 8.93 9.16 8.65 8.04 6.60
Allowance for credit losses to
period end loans 1.01 1.03 1.20 1.31 1.26
Allowance for credit losses to
total non-performing loans 151.14 196.66 156.35 161.66 125.25
Non-performing loans to
period end loans 0.67 0.52 0.77 0.81 1.00
Net charge-offs to average loans 0.20 0.12 0.41 0.31 1.21
(1) The leverage ratio has been calculated by dividing
shareholders' equity, lessintangible assets, by the quarterly
average total assets, less intangible assets.
Page 12
MANAGEMENT'S DISCUSSION/ANALYSIS AND STATISTICAL INFORMATION
The following discussion and analysis represents a review of the
Company's consolidated financial condition, results of
operations, liquidity and capital resources. This review should
be read in conjunction with the consolidated financial
statements.
Results of Operations
Net income in 1995 increased $1,714,000 or 7 percent to
$24,967,000, as compared to net income in 1994 of $23,253,000 and
$24,681,000 in 1993. Fully diluted earnings per share were $1.11,
up from $1.03 in 1994 and no change from $1.11 in 1993. In 1995,
return on average common shareholders' equity was 14.51 percent,
and return on average assets was 1.17 percent as compared to
13.88 percent and 1.14 percent in 1994, and 16.39 percent and
1.23 percent in 1993. The increase in 1995 earnings was
primarily due to an increase in net gains on sales of loans of
$1,572,000 caused by increased volume in mortgage banking
activities and the adoption of Financial Accounting Standards
Board Statement No. 122, "Accounting for Mortgage Servicing
Rights," expense control and a decrease in deposit premium
expense. The decrease in 1994 earnings compared to 1993 was
primarily attributable to a decrease in net gains on sales of
loans of $6,757,000, offset partially by an increase in net
interest margin and a lower provision for credit losses.
The provision for credit losses increased $1,778,000 or 145
percent in 1995 to $3,002,000. The 1995 provision for credit
losses compared to 1993 was $989,000 lower, a decrease of 25
percent. The 1994 provision was lower than the provisions taken
in 1995 and 1993 because of the reversal of $1,600,000 in the
allowance for credit losses at First National in the third
quarter.
Acquisitions
On July 31, 1995, the Company completed its merger with MFI
Investments Corp. (MFI) of Bryan, Ohio, a full-service,
independent broker/dealer which has approximately 250 financial
consultants in over 19 states. The transaction was accounted for
as a pooling-of-interests and was consummated by the issuance of
314,530 shares of Mid Am, Inc. common stock to MFI shareholders,
of which 156,097 shares are held in escrow at December 31, 1995,
pending resolution of litigation filed against MFI prior to the
merger.
On March 1, 1995, the Company completed its merger with ASB
Bankcorp, Inc. (ASB), parent company of $128 million asset Adrian
State Bank, headquartered in Adrian, Michigan. The transaction
was accounted for as a pooling-of-interests and was consummated
by the issuance of 1,546,662 shares of Mid Am, Inc. common stock
to ASB shareholders.
On November 30, 1994, the Company completed its mergers with
International Credit Service (ICS) and CCB Services, Inc. (CCBS),
collection and credit service companies headquartered in Ohio and
Florida, repectively, with aggregate net collection fee revenues
of $2.4 million for the year ended December 31, 1993. The
transactions were accounted for as poolings-of-interests and were
consummated by the issuance of 483,998 shares of Mid Am, Inc.
common stock to ICS and CCBS shareholders.
On June 4, 1994, the Company completed its merger with Farmers
Savings Bank (Farmers), a $66 million asset bank in Northwood,
Ohio. The transaction was accounted for as a pooling-of-interests
and was consummated by the issuance of 688,084 shares of Mid Am,
Inc. common stock to Farmers shareholders.
On July 6, 1993, the Company completed its merger with Colonial
Federal Savings Bank (Colonial), a $79 million asset thrift in
Bellefontaine, Ohio. The transaction was accounted for as a
pooling-of-interests and was consummated by the issuance of
1,027,644 shares of Mid Am, Inc. common stock to Colonial
shareholders and the payment of $814,417 to dissenting Colonial
shareholders. Colonial was merged with and into AmeriCom on
July 6, 1993.
On April 16, 1993, the Company completed the purchase of four
branch facilities from Home Savings of America, F.S.B. In
connection with the purchase, the Company received tangible
assets of $4,290,000, identifiable intangible assets of
$1,120,000, assumed deposit liabilities of $186,905,000, recorded
goodwill of $4,118,000 and received cash of $177,377,000 which
was subsequently invested in marketable securities.
On March 19, 1993, the Company completed its merger with Apollo
Savings and Loan Company (Apollo), a $93 million asset thrift in
Cincinnati, Ohio. The transaction was accounted for as a
pooling-of-interests and was consummated by the issuance of
1,177,402 shares of Mid Am, Inc. common stock to Apollo
shareholders. At the time of the merger, Apollo merged with Ultra
Bancorp (Ultra), a wholly owned thrift subsidiary of the Company
acquired in 1992, to form AmeriFirst. In September 1993,
AmeriFirst converted from a thrift to a national bank.
Page 13
Net Interest Income
Net interest income, the difference between interest income
earned on interest-earning assets and interest expense incurred
on interest-bearing liabilities, is the most significant
component of the Company's earnings. 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 following table, presented on a tax equivalent basis,
summarizes net interest income for each of the three years in the
period ended December 31, 1995:
Year Ended December 31,
(Dollars in thousands) 1995 1994 1993
Interest income (1) $164,794 $142,714 $141,378
Interest expense 80,316 59,564 61,057
Net interest income
(tax equivalent basis) $ 84,478 $ 83,150 $ 80,321
Change from prior year 1995 vs. 1994 1994 vs. 1993
Amount Percent Amount Percent
Interest income (1) $22,080 15.47 $ 1,336 0.94
Interest expense 20,752 34.84 (1,493) (2.45)
Net interest income
(tax equivalent basis) $ 1,328 1.60 $ 2,829 3.52
(1) Interest income on securities of states and political
subdivisions and certain loans is exempt from federal income tax.
A tax equivalent adjustment has been made to income received from
these sources to provide comparability to taxable income. Tax
equivalent adjustments reflect a federal tax rate of 35 percent
for 1995, 1994 and 1993. Included in interest income are
amortized loan fees of $1,965,000 in 1995, $2,725,000 in 1994 and
$1,609,000 in 1993.
1995 Average Interest-Earning Asset Mix
Average interest-earning assets in 1995 totalled $1,995,004,000
as compared with $1,897,079,000 in 1994 and $1,867,140,000 in
1993. In 1995, average loans (including loans held for sale) and
investment securities (including securities available for sale),
the two largest components of interest-earning assets, comprised
73 percent and 23 percent, respectively, of average
interest-earning assets as compared to 72 percent and 26 percent
in 1994, and 71 percent and 26 percent in 1993. The decline in
securities in volume and as a percentage of interest-earning
assets resulted from maturities and sales of securities during
1995, which in part were not reinvested in new securities because
of flattening of the yield curve and anticipated loan demand at
higher yields. Yields on new securities, even at extended
maturities, were not significantly better than overnight federal
funds investments.
1995 Average Interest-Bearing Liability Mix
Average interest-bearing liabilities in 1995 totalled
$1,756,602,000 as compared with $1,667,605,000 in 1994 and
$1,657,935,000 in 1993. In 1995, average time deposits and
savings deposits, the two largest components of interest-bearing
liabilities, comprised 59 percent and 26 percent, respectively,
of average interest-bearing liabilities as compared to 57 percent
and 31 percent, respectively, in both 1994 and 1993. The increase
in time deposits as a percentage of interest-bearing liabilities
from 1994 and 1993 is primarily the result of increased rates on
the first half of the year, introduction of new time deposit
products, and various special rates on time deposits throughout
the Company for the purpose of increasing deposits. As a result
of rising rates and special rates on time deposits, savings
deposits as a percentage of interest-bearing liabilities
declined. A number of customers moved their deposits from lower
rate savings deposits to money market accounts and time deposits.
1995 Average Interest-Earning Asset Mix
Loans Held for Sale 0.6 percent
Securities Available for Sale 12.4 percent
Investment Securities 11.0 percent
Other Short-term Investments 3.3 percent
Loans 72.7 percent
1995 Average Interest-Bearing Liability Mix
Short-term and Long-term Borrowings 8.1 percent
Savings Deposits 15.3 percent
Money Market Accounts 6.9 percent
Demand Interest-bearing 10.6 percent
Time Deposits 59.1 percent
The following table reflects the components of the Company's net
interest income, for each of the three years ended December 31,
1995, setting forth: (i) average assets, liabilities, and
shareholders' equity, (ii) interest income earned on
interest-earning assets and interest expense incurred on
interest-bearing liabilities, (iii) average yields earned on
interest-earning assets and average rates incurred on
interest-bearing liabilities, (iv) the net interest rate spread
(i.e., the average yield earned on interest-earning assets less
the average rate incurred on interest-bearing liabilities) and
(v) the net interest margin (i.e., net interest income divided by
average interest-earning assets). Rates are computed on a tax
equivalent basis. Non-accrual loans have been included in the
average balances.
Page 14
Year Ended December 31,
(Dollars in thousands) 1995 1994 1993
Interest Average Interest Average Interest Average
Average Income/ Yields/ Average Income/ Yields/ Average Income/ Yields/
Balance Expense Rates Balance Expense Rates Balance Expense Rates
Assets
Interest-earning assets:
Securities available
for sale $ 250,886 $ 15,023 5.99 $ 223,800 $ 13,028 5.82 $ 103,644 $ 6,282 6.06
Fair value adj. (4,754) (2,201) (178)
Investment securities:
Taxable 165,773 10,793 6.51 205,150 11,973 5.84 336,032 21,001 6.25
Tax exempt 53,925 4,606 8.54 60,843 5,214 8.57 43,882 4,310 9.82
Federal funds sold 62,095 3,610 5.81 32,835 1,228 3.74 55,161 1,611 2.92
Loans held for sale 12,641 1,170 9.26 46,018 3,388 7.36 86,302 6,582 7.63
Loans and leases
receivable 1,450,629 129,374 8.92 1,327,397 107,759 8.12 1,236,086 101,379 8.20
Time deposits in
other banks 3,809 218 5.72 3,237 124 3.83 6,211 213 3.43
Total interest-
earning assets 1,995,004 164,794 8.26 1,897,079 142,714 7.52 1,867,140 141,378 7.57
Noninterest-earning assets:
Cash and due
from banks 66,647 63,431 62,172
Premises and
equipment 49,530 51,931 47,886
Other assets 42,496 41,446 39,874
Allowance for
credit losses (15,039) (15,250) (15,737)
Total noninterest-
earning assets 143,634 141,558 134,195
Total assets $2,138,638 $2,038,637 $2,001,335
Liabilities and Shareholders' Equity
Interest-bearing
liabilities:
Savings deposits $ 455,149 10,981 2.41 $ 522,324 12,446 2.38 $ 515,546 13,600 2.64
Money market acct 121,459 4,230 3.48 91,834 2,331 2.54 102,603 2,909 2.84
Time deposits 1,037,277 57,316 5.53 942,156 39,912 4.24 951,403 41,398 4.35
Total interest-
bearing deposit 1,613,885 72,527 4.49 1,556,314 54,689 3.51 1,569,552 57,907 3.69
Short-term
borrowings and
other liability 90,368 4,169 4.61 74,508 2,743 3.68 67,512 1,923 2.85
Long-term
liabilities 52,349 3,620 6.92 36,783 2,132 5.80 20,871 1,227 5.88
Total interest-
bearing
liabilities 1,756,602 80,316 4.57 1,667,605 59,564 3.57 1,657,935 61,057 3.68
Noninterest-bearing
liabilities:
Demand deposits 174,501 168,855 158,351
Other liabilities 16,463 15,467 11,977
Total noninterest-
bearing liability 190,964 184,322 170,328
Shareholders'equity 191,072 186,710 173,072
Total liabilities
and shareholders'
equity $2,138,638 $2,038,637 $2,001,335
Net interest income
(tax equivalent basis) 84,478 83,150 80,321
Reversal of tax
equivalent adjustment (2,251) (2,143) (1,991)
Net interest income $ 82,227 $ 81,007 $ 78,330
Net interest rate spread
(tax equivalent basis) 3.69 3.95 3.89
Net interest margin
(net interest income as
a percentage of
interest-earning assets,
tax equivalent basis) 4.23 4.38 4.30
Page 15
The net interest margin decreased 15 basis points to 4.23 percent
in 1995 and increased 8 basis points in 1994 to 4.38 percent. The
decrease in the Company's net interest margin in 1995 is due
primarily to a decline in interest rates during the second half
of the year, a flattening of the yield curve, and a change in
deposit mix. The Company is slightly asset sensitive and,
therefore, as interest rates decline its earning asset yields
decline faster than its cost of funds. The flattening of the
yield curve resulted in an increase in investments of lower
yielding short-term liquid assets and a decline in longer term
marketable securities, where yields compared to short-term
investment yields did not justify the Company investing in these
assets. The change in the Company's deposit mix from lower cost
savings accounts to higher cost time deposits caused a
significant portion of the decline in the net interest margin.
The increase in the Company's net interest margin in 1994 is due
primarily to a slight decline in interest rates paid on deposits
and to a significant volume increase in net loans of
approximately $91,311,000 or 7 percent, which improved the
interest-earning asset mix between loans and other earning assets
which have lower yields. The increase in interest rates during
1994 improved the Company's net interest margin since the Company
was slightly asset sensitive throughout 1994, with a large
portion of its commercial and commercial real estate loan
portfolio tied to the prime rate.
Net interest income may also be analyzed by segregating the
volume and rate components of interest income and interest
expense. The following table presents an analysis of increases
and decreases in interest income and expense in terms of changes
in volume and interest rates during the three years ended
December 31, 1995. Changes not due solely to either a change in
volume or a change in rate have been allocated based on the
respective percentage changes in average balances and average
rates. The table is presented on a tax equivalent basis:
(Dollars in thousands)
1995 vs. 1994 1994 vs. 1993
Increase (Decrease) Increase (Decrease)
Due to Change in Total Due to Change in Total
Average Average Increase Average Average Increase
Volume Rate (Decrease) Volume Rate (Decrease)
Interest Income:
Securities available
for sale $ 1,577 $ 418 $ 1,995 $ 7,283 $ (537) $ 6,746
Investment securities:
Taxable (2,298) 1,118 (1,180) (8,180) (848) (9,028)
Tax exempt (593) (15) (608) 1,666 (762) 904
Federal funds sold 1,094 1,288 2,382 (652) 269 (383)
Interest on
loans held for sale (2,457) 239 (2,218) (3,072) (122) (3,194)
Interest and fees
on loans (1) 10,004 11,611 21,615 7,489 (1,109) 6,380
Time deposits
in other banks 22 72 94 (102) 13 (89)
Total interest income 7,349 14,731 22,080 4,432 (3,096) 1,336
Interest Expense:
Savings (1,601) 136 (1,465) 179 (1,333) (1,154)
Money market accounts 752 1,147 1,899 (305) (273) (578)
Time 4,030 13,374 17,404 (402) (1,084) (1,486)
Total 3,181 14,657 17,838 (528) (2,690) (3,218)
Short-term borrowings
and other liabilities 584 842 1,426 199 621 820
Long-term borrowings 902 586 1,488 935 (30) 905
Total interest expense 4,667 16,085 20,752 606 (2,099) (1,493)
Change in
net interest income $ 2,682 $(1,354) $ 1,328 $ 3,826 $ (997) $ 2,829
(1) Included in loan interest income are amortized loan fees of
$1,965,000 in 1995, $2,725,000 in 1994 and $1,609,000 in 1993.
Provision for Credit Losses
The provision for credit losses increased $1,778,000 or 145
percent to $3,002,000 in 1995. The increase was due primarily to
a low provision for credit losses in 1994 caused by improved
asset quality and a reversal of $1,600,000 in the allowance for
credit losses at First National. The Company's allowance for
credit losses as a percentage of loans at December 31, 1995, was
1.01 percent as compared to 1.03 percent and 1.20 percent at
December 31, 1994 and 1993, respectively. At December 31, 1995,
the Company's allowance for credit losses represented 151 percent
of non-performing loans as compared to 197 percent and 156
percent at December 31, 1994 and 1993, respectively. See "Summary
of Credit Loss Experience."
Page 16
Non-Interest Income
Non-interest income is an increasingly important source of
revenue to the Company as it continues to expand its offerings of
bank-related financial services. Non-interest income increased
$3,401,000 or 10 percent in 1995 to $35,955,000 and decreased
$1,448,000 or 4 percent in 1994 to $32,554,000. The increase in
non-interest income in 1995 was primarily due to an increase in
mortgage banking activities and brokerage commissions. The
primary non-interest income components are set forth below:
Trust service fees increased $142,000 or 12 percent in 1995 to
$1,337,000, and $285,000 or 31 percent in 1994 to $1,195,000. Of
the $142,000 1995 increase in trust fees, $102,000 is
attributable to reporting trust income on the accrual versus cash
basis used before 1995. Since 1993, the Company has had a trust
officer at each of its affiliate banks. Trust assets, which bear
a relationship to trust fees earned, have increased by 29 percent
in 1995 and 15 percnet in 1994.
Service charges on deposit accounts increased $164,000 or 3
percent in 1995 to $6,200,000 and $217,000 or 4 percent in 1994
to $6,036,000, which is consistent with the growth in the number
of the Company's deposit accounts.
Net securities gains amounted to $350,000 in 1995 compared to
$1,231,000 in 1994, a decrease of $881,000 or 72 percent. The
decrease in net securities gains since 1993 is attributable to an
increase in interest rates which have made the sale of securities
available for sale less attractive, as the market values of these
securities have been depressed over most of this period.
Mortgage banking revenue increased $1,828,000 or 27 percent in
1995 to $8,522,000 and decreased $5,623,000 or 46 percent in 1994
to $6,694,000. Mortgage banking revenue consists primarily of net
gains on sale of loans and mortgage loan servicing fees. Net
gains on sale of loans increased $1,572,000 or 46 percent in 1995
to $5,002,000 and decreased $6,757,000 or 66 percent in 1994 to
$3,430,000. The increase in net gains on sales of loans in 1995
was primarily the result of the adoption of SFAS No. 122,
"Accounting for Mortgage Servicing Rights" which increased net
gains on sales of loans by $1,794,000. The remaining increase is
the result of higher margins realized on loans sold which more
than offset the effect of a $48,942,000 decrease in the amount of
loans sold. The decrease in net gains on sales of loans in 1994
was primarily due to lower volume of loans sold, a decrease of
$324,345,000 and lower profit margins. In 1993, a low interest
rate environment resulted in a significant increase in the volume
of mortgage loan refinancings in the marketplace, and the Company
took advantage of this increase in volume by increasing its
efforts in the mortgage loan area. Consequently, the Company was
able to originate and sell in excess of $675,000,000 of mortgage
loans. The Company believes that the volume of 1996's mortgage
banking activities will be slightly better than 1995.
Loan servicing fees grew to $3,520,000 in 1995 from $3,264,000 in
1994, an 8 percent increase. The Company achieved a 53 percent
increase in loan servicing fees in 1994 compared to 1993. These
loan servicing fee increases are directly related to the mortgage
loan volume growth, where the Company has retained servicing on
substantially all loans it has sold. The Company expects loan
servicing fee income to increase in 1996, but not at the same
rate of increase as experienced in 1995, primarily due to the
amortization of mortgage servicing rights caused by the adoption
of SFAS No. 122.
Brokerage commission fees increased $2,403,000 or 34 percent in
1995 to $9,540,000 and increased $1,979,000 or 38 percent in 1994
to $7,137,000. The increase in brokerage commission fees since
1993 is primarily due to the growth in revenue from the Company's
brokerage business (MFI) acquired during the year. MFI has
increased the number of independent brokers to approximately 250
operating in over 19 states throughout the country.
Collection agency fee income decreased $529,000 or 13 percent to
$3,399,000 in 1995 and increased $1,538,000 or 64 percent in 1994
to $3,928,000. This decrease is due primarily to the loss of a
large customer at the Florida collection operation and the
softening of the collection market in 1995. The increase in 1994
collection fees was primarily due to the growth in the Florida
collection activities.
Other income increased $274,000 or 4 percent in 1995 to
$6,607,000 and increased $1,644,000 or 35 percent in 1994 to
$6,333,000. Other income includes credit card fees, credit life
insurance commission fees, ATM fees, international fees and other
charges and fees.
Non-Interest Expense
Non-interest expense includes costs, other than interest, that
are incurred in the operation of the Company. Total non-interest
expense decreased $163,000 or less than 1 percent in 1995 to
$78,416,000 and increased $5,617,000 or 8 percent in 1994 to
$78,579,000. The Company introduced a formal program during 1994
to control its non-interest expense by decreasing the number of
employees through attrition, reducing marketing expenses and
controlling various discretionary expenses. The primary
non-interest expense components are set forth below:
Salaries and employee benefits expense increased $1,099,000 or
3 percent in 1995 to $41,282,000 and increased $4,742,000 or 13
percent in 1994 to $40,183,000. Salary costs in 1995 increased
primarily due to the rate of inflation. Salary costs deferred in
1994 as part of loan origination costs were $2,281,000 lower than
1993, which caused a corresponding increase in the amount of
salary and employee benefit expense reported in 1994. This
decrease is related to lower levels of mortgage loan
originations.
Net occupancy expense was $5,113,000 during 1995, a decrease of
$156,000 or 3 percent from 1994. Net occupancy expense was
$5,070,000 during 1994, an increase of $199,000 or 4 percent over
1993. The Company has been able to keep net occupancy expense
level through its cost control program.
Page 17
Equipment expense decreased $204,000 or 3 percent in 1995 to
$7,385,000 and increased $849,000 or 13 percent in 1994 to
$7,589,000. The decrease in 1995 consisted principally of
decreases in equipment repairs and maintenance and service
agreements. The increase in 1994 was primarily due to increases
in depreciation, data processing expense and service agreements.
Other expenses decreased $902,000 or 4 percent in 1995 to
$24,636,000 and decreased $173,000 or 1 percent in 1994 to
$25,538,000. The major components of the decrease in 1995 include
legal epenses ($433,000), FDIC assessments ($1,114,000),
directors fees ($458,000), offset partially by increases in
credit card fees ($425,000) and other professional fees
($299,000). Effective June 1, 1995, the Federal Deposit Insurance
Corporation reduced the bank insurance fund assessments from $.23
per $100 of deposits to $.04 per $100 of deposits. The U. S.
Congress is currently considering legislation which may result in
a significant one-time assessment for the Savings Association
Insurance Fund (SAIF). At December 31, 1995, the Company has in
excess of $600,000,000 of its deposits which are insured through
SAIF. If the one-time assessment is enacted by Congress, the
Company will incur a material nonrecurring deposit insurance
expense in the period that the legislation is enacted.
Post-retirement, Post-employment and Other Employee Benefits
The Company provided certain health care benefits for retired
employees prior to December 31, 1992. During 1992, the Company
decided to terminate its health care benefits for retired
employees. The effective date of termination was March 1, 1993,
and all retired employees received a lump sum cash distribution
representing the present value of estimated future health
insurance premiums. The Company has no further liability for any
post-retirement benefits other than pensions. The Company does
not offer any post-employment benefits.
At December 31, 1995, the Company had 668 employees who were
currently receiving health care benefits. In 1995, the Company's
total health care expense was $1,325,000 as compared to
$1,498,000 in 1994 and $1,403,000 in 1993. The decrease in health
care expense in 1995 is the result of a lower level of claims
experienced by the Company compared to 1994.
Income Taxes
The provision for income taxes increased to $11,797,000 in 1995
from $10,505,000 in 1994 due to an increase in pre-tax income.
The effective income tax rates for 1995, 1994 and 1993 were
32.2 percent, 32.1 percent and 30.8 percent, respectively. The
higher effective rates in 1995 and 1994 are primarily due to a
lower amount of tax exempt income relative to taxable income.
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 rat 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 bank subsidiaries, the primary sources of
liquidity at December 31, 1995, were federal funds sold of
$72,558,000, securities available for sale of $461,997,000 and
loans held for sale of $12,642,000. At December 31, 1994, the
primary sources of liquidity were federal funds sold of
$8,160,000, loans held for sale of $12,963,000 and securities
available for sale of $212,437,000.
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. 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
since January 1, 1993. As a result of these restrictions, at
December 31, 1995, dividends which can be paid to the Company by
its subsidiaries are limited to $13,435,000.
The Company's liquidity position increased in 1995 primarily due
to increased deposits and an increase in securities available for
sale resulting from the reclassification of all of the Company's
marketable securities to available for sale in November 1995.
Also, in October 1995, the Company entered into an agreement with
an unrelated financial institution which enables the Company to
borrow up to $20,000,000 for a period of one year. At the end of
the one year period, the Company has the option to pay off any
outstanding principal or refinance the principal under terms
subject to future negotiations. Through December 31, 1995, no
advances have been drawn against the available credit facility.
As shown in the consolidated statement of cash flows presented
elsewhere herein, cash and due from banks increased $17,268,000
during 1995 to $102,600,000 at December 31, 1995. The increase in
1995 reflected $23,705,000 of net cash provided by operating
activities, $91,000,000 provided by financing activities, offset
in part by the use of $97,437,000 cash for investing activities.
Page 18
Net cash provided by operating activities of $23,705,000 in 1995
resulted primarily from $24,967,000 of net income, increase in
interest receivable and other assets of $10,751,000 and non-cash
charges and credits of $11,852,000, offset by net gains on the
sales of assets of $5,962,000.
The decrease of $74,539,000 in cash provided by operating
activities for 1995 compared to 1994 is due primarily to the
Company's mortgage banking activities in 1994 which generated
cash of $70,848,000 compared to cash generated in 1995 of
$1,256,000. The $76,651,000 increase in cash provided by
operating activities in 1994 compared to 1993 is also due to the
Company's mortgage banking activities which generated cash in
1994 during a period of lower acquisitions.
Net cash used for 1995 investing activities of $97,437,000 was
largely comprised of a net increase in loans of $86,949,000, a
net increase of securities available for sale of $6,187,000 and
an increase in federal funds sold of $64,398,000, offset in part
by proceeds from sales of loans of $41,580,000 and proceeds from
maturities and paydowns of mortgage-backed securities of
$19,998,000. The $17,116,000 increase in cash used for investing
activities in 1995 compared to 1994 is primarily attributable to
the increase in federal funds sold of $115,305,000, offset in
part by a decrease in loan demand which caused a decrease in net
loan fundings of $98,297,000. The $95,605,000 decrease in cash
used for investing activities in 1994 compared to 1993 is
primarily attributable to the deployment of cash received for
deposits assumed in 193 branch acquisitions that was not
available in 1994. Mortgage-backed securities purchases in 1993
totalled $155,469,000 compared to 1994 purchases totalling
$29,030,000, a decrease of $126,439,000. Also, federal funds sold
decreased by $55,609,000 compared to 1993. This was partially
offset by a net increase in loans of $107,126,000 compared to
1993.
Net cash provided by financing activities of $91,000,000 was
primarily due to cash received from increases in demand deposits
and savings accounts of $41,189,000 and by $49,021,000 in cash
proceeds from the issuance of long-term debt, offset by payments
on capitalized lease obligations and debt of $66,050,000. Net
cash provided by financing activities increased $90,259,000 for
1995 compared to 1994 due primarily to the change in deposit
balances. Demand deposit and savings accounts plus other time
deposits increased $123,650,000 in 1995 compared to a net
decrease in these same deposits of $32,590,000 in 1994. The
increase in deposits in 1995 is primarily attributable to the
high interest rates in the first half of 1995 of which the
Company's time deposits increased substantially. The deposit mix
continues to change and the Company believes that the change in
the deposit mix in 1995 from short-term deposits to long-term
deposits was primarily the result of rising interest rates, an
increase in proceeds from the issuance of long-term debt of
$59,644,000 in the first half of 1995. This change in deposit mix
is expected to level off in 1996. Net cash provided by financial
activities decreased by $155,703,000 in 1994 compared to 1993.
The decrease in cash provided by financing activities is
attributed primarily to a decrease in demand deposits and savings
accounts of $43,066,000 in 1994 compared to an increase in these
deposits of $99,768,000 in 1993, offset partially by an increase
in proceeds from the issuance of long-term debt of $59,644,000.
Asset/Liability Management
Closely related to liquidity management is the management of
interest-earning assets and interest-bearing liabilities. The
Company manages its rate sensitivity position to avoid wide
swings in net interest margins and to minimize risk due to
changes in interest rates.
The difference between a financial institution's interest rate
sensitive assets (i.e., assets which will mature or reprice
within a specific time period) and interest rate sensitive
liabilities (i.e., liabilities which will mature or reprice
within the same time period) is commonly referred to as its
"interest rate sensitivity gap" or "gap." An institution having
more interest rate sensitive assets than interest rate sensitive
liabilities within a given time period is said to have a
"positive gap," which generally means that if interest rates
increase, a company's net interest income will increase and if
interest rates decrease, its net interest income will decrease.
An institution having more interest rate sensitive liabilities
than interest rate sensitive assets within a given time period is
said to have a "negative gap," which generally means that if
interest rates increase, a company's net interest income will
decrease and if interest rates decrease, its net interest income
will increase.
At December 31, 1995, the Company had a manageable positive gap
and therefore does not expect to experience any significant
fluctuations in its net interest income as a consequence of
changes in interest rates.
The following table sets forth the cumulative maturity
distributions as of December 31, 1995, of the Company's
interest-earning assets and interest-bearing liabilities, its
interest rate sensitivity gap, cumulative interest rate
sensitivity gap for such assets and liabilities, and cumulative
interest rate sensitivity gap as a percentage of total
interest-earning assets. This table indicates the time periods in
which certain interest-earning assets and certain
interest-bearing liabilities will mature or may reprice in
accordance with their contractul terms. However, this table does
not necessarily indicate the impact of general interest rate
movements on the Company's net interest yield, because the
repricing of various categories of assets and liabilities is
discretionary and is subject to competition and other pressures.
As a result, various assets and liabilities indicated as
repricing within the same period may in fact reprice at different
times and at different rate levels. Subject to these
qualifications, the table reflects a cumulative positive gap for
assets and liabilities maturing or repricing in 1996. The
Company's Asset/Liability Management Committee monitors the
interest rate sensitivity position and currently intends to maintain a
slightly positive gap during 1996 primarily as a result of the Company's
view of the economy and the anticipated interest rate scenario for
1996.
Page 19
After 3 After 6 After 1
Months Months Year But
Within 3 But Within But Within Within After
(Dollars in thousands) Months 6 Months 1 Year 5 Years 5 Years Total
Interest-earning assets:
Loans (net of
unearned income) $568,501 $180,544 $244,562 $362,017 $120,027 $1,475,651
Securities
available for sale 47,768 9,610 48,096 101,287 255,236 461,997
Loans held for sale 12,642 12,642
Federal funds sold 72,558 72,558
Interest-bearing deposit
in other banks 3,372 3,372
Total $704,841 $190,154 $292,658 $463,304 $375,263 $2,026,220
Interest-bearing liabilities:
Interest-bearing
deposits $547,611 $188,874 $252,864 $443,575 $203,273 $1,636,197
Short-term borrowings
and other liabilities 93,377 13,769 7,969 20,752 86 135,953
Total $640,988 $202,643 $260,833 $464,327 $203,359 $1,772,150
Interest rate
sensitivity gap $ 63,853 $(12,489) $ 31,825 $ (1,023) $171,904 $ 254,070
Cumulative interest
rate sensitivity gap 63,853 51,364 83,189 82,166 254,070
Cumulative interest rate
sensitivity gap as a
percentage of total
interest-earning assets 3.15 2.53 4.11 4.06 12.54
Capital Resources
The Federal Reserve Board (FRB) has established risk-based
capital guidelines that must be observed by 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 December 31, 1995, a minimum Tier I capital ratio of 4 percent
and a total capital ratio of 8 percent are required. The
Company's qualifying capital at December 31, 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 percent for the highest
rated bank holding companies which are not undertaking
significant expansion programs. An additional 1 percent to 2
percent 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.
Page 20
The following table presents the various capital and leverage
ratios of the Company:
December 31, (Dollars in thousands)
1995 1994 1993
Total fourth quarter
average assets $2,176,413 $2,060,483 $2,077,304
Average unrealized losses
(gains) on securities
available for sale 1,626 6,852
Average unrealized
(losses) gains on
equity securities (393) (306) 304
Average goodwill and
other intangibles (12,225) (14,169) (13,707)
Total adjusted assets
for leverage ratio $2,165,421 $2,052,860 $2,063,901
Total assets $2,204,751 $2,078,789 $2,067,371
Effect of risk-weighted
assets and
off-balance-sheet
financial instruments (663,747) (620,574) (709,699)
Risk-weighted assets and
off-balance-sheet
financial instruments
for capital ratios $1,541,004 $1,458,215 $1,357,672
Total shareholders'
equity $ 194,838 $ 185,252 $ 183,425
Unrealized losses
(gains) on securities
available for sale (1,466) 6,186 (2,844)
Unrealized (losses) gain
on equity securities (85) (596) 198
Goodwill and
other intangibles (12,024) (13,068) (14,543)
Tier 1 capital 181,263 177,774 166,236
Allowance for credit losses
includable in capital
under 1991 rules 14,859 14,722 15,157
Total capital $ 196,122 $ 192,496 $ 181,393
Leverage ratio 8.44 8.36 8.19
Tier 1 capital ratio 11.76 12.19 12.24
Total capital ratio 12.73 13.20 13.36
Capital ratios applicable to the Company's banking subsidiaries
at December 31, 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 American 7.06 8.96 10.16
First National 7.22 9.88 10.30
AmeriCom 6.80 11.43 12.45
AmeriFirst 6.86 9.96 10.95
Adrian 6.91 10.40 11.65
Effects of Inflation
The effect of inflation on financial institutions differs from
the impact on non-financial institutions. Financial institutions,
as financial intermediaries, have assets and liabilities which
may move in concert with inflation. This is especially true for
financial institutions with a high percentage of rate-sensitive
interest-earning assets and interest-bearing liabilities. A
financial institution can reduce the impact of inflation by
managing its interest rate sensitivity gap. See "Asset/Liability
Management" above.
Investment Portfolio and Securities Available for Sale
In November 1995, all investment and mortgage-backed securities
classified as held to maturity were transferred to securities
available for sale. The decision to transfer the securities was
based on management's assessment of the Company's held to
maturity securities portfolio and guidance by the interpretations
contained in the Financial Accounting Standards Board Guide to
Implementation of Statement 115 on Accounting for Certain
Investments in Debt and Equity Securities which was issued in
November 1995.
Page 21
The following table sets forth the carrying value of the
Company's investment and mortgage-backed securities at December
31, 1994 and 1993:
(Dollars in thousands) 1994 1993
U.S. Treasury securities $ 3,623 $ 9,351
Securities of other
U.S. Government agencies
and corporations 5,523 14,991
Mortgage-backed
investment securities 180,309 187,661
Obligations of states and
political subdivisions 62,032 57,667
Other securities 522 953
Total $252,009 $270,623
The following table sets forth the carrying value at market at
the respective year end for each of the last three years and
aggregate cost of the Company's securities available for sale at
December 31, 1995:
(Dollars in thousands) Cost 1995 1994 1993
U.S. Treasury securities $ 73,219 $ 73,792 $ 79,353 $ 91,781
Securities of other
U.S. Government agencies
and corporations 67,415 67,526 61,401 89,855
Mortgage-backed
securities 230,398 230,417 45,056 26,922
Obligations of states and
political subdivisions 57,313 58,996 200 3,596
Equity securities 31,397 31,266 26,427 25,971
Total $459,742 $461,997 $212,437 $238,125
Both the investment and available for sale portfolios contain
mortgage-backed securities and, to a limited extent, other
securities which have unknown cash flow characteristics. The
variable cash flows present additional risk to the bondholders in
the form of prepayment or extension risk primarily caused by
market interest rate changes. This additional risk is generally
rewarded in the form of higher yields to the investor.
Mid Am, Inc. utilizes tools to minimize and monitor this risk,
requiring the security to pass a stress test at the time of
purchase. This testing measures prepayment and extension risk
under severe changes in interest rates. Additionally, the
corporate investment policy defines certain types of high risk
securities as ineligible for purchase, icluding securities which
may not return full principal to the Company. It is also the
practice of the Company to minimize premiums paid on mortgage
securities to avoid yield reduction if prepayments speed up.
These policies help insure that there will be no material impact
from these investments to the financial statements due to
changing interest rates.
The internal accounting systems and controls are in place to
account for amortization and accretion of premiums and discounts.
As prepayments of principal are received, the system
automatically adjusts premiums and discounts to reflect the
proper book values.
There are no securities available for sale of any single issuer
where the aggregate carrying value of such securities exceeded
10 percent of shareholders' equity, except those of U.S. Treasury
and U.S. Government agencies.
The following table shows the maturities and weighted average
yields of the Company's securities available for sale as of
December 31, 1995. The weighted average yields on income from tax
exempt obligations of state and political subdivisions have been
adjusted to a tax equivalent basis:
Securities Available for Sale
After 1 Year But After 5 Years After
Within 1 Year Within 5 Years Within 10 Years 10 Years
(Dollars in thousands) Amount Yield Amount Yield Amount Yield Amount Yield
U.S. Treasury securities $19,384 5.17 $ 49,166 5.74 $ 2,998 6.39 $ 2,244 6.80
Securities of other
U.S. Government agency
and corporations 17,162 5.91 33,772 6.06 12,654 6.70 3,938 6.82
Mortgage-backed
securities 2,373 6.70 66,953 5.97 44,828 6.30 116,263 6.52
Obligations of states and
political subdivisions 7,048 7.45 25,027 7.48 20,623 7.85 6,298 8.58
Equity securities 5,719 8.20 25,547 6.49
Total $45,967 5.88 $180,637 6.21 $81,103 6.76 $154,290 6.61
Page 22
Loan Portfolio
The amount of loans outstanding and the percent of the total
represented by each type on the dates indicated were as follows:
December 31,
(Dollars in 1995 1994 1993 1992 1991
thousands) Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent
Real estate loans
Construction $ 63,086 4.3 $ 69,942 4.9 $ 39,150 3.1 $ 35,760 3.0 $ 20,612 2.0
Mortgage 885,714 60.0 871,704 60.7 783,635 61.8 750,406 62.4 568,194 55.1
Commercial,
financial and
agricultural
loans 357,290 24.2 327,871 22.8 294,297 23.2 282,263 23.5 288,750 28.0
Installment and
credit card
loans 164,055 11.1 155,380 10.8 138,534 10.9 118,849 9.9 137,456 13.3
Other loans 6,335 0.4 10,040 0.8 11,690 1.0 15,440 1.2 15,353 1.6
Total loans 1,476,480 100.0 1,434,937 100.0 1,267,306 100.0 1,202,718 100.0 1,030,365 100.0
Less:
Unearned interest (22) (38) (50) (107) (258)
Unamortized
loan fees (807) (1,610) (1,311) (2,099) (1,253)
Allowance for
credit losses (14,859) (14,722) (15,157) (15,718) (12,938)
Total net loans $1,460,792 $1,418,567 $1,250,788 $1,184,794 $1,015,916
Real estate loans, including construction and mortgage loans,
approximated 64 percent of total loans at December 31, 1995.
Collateral evaluations and the historical data of the Company's
mortgage loan losses are used to determine the amount necessary
for the allowance for credit losses. The Company's general
collateral policy for residential real estate mortgages is to
follow FNMA and FHLMC guidelines, which generally require a
loan-to-value ratio of 80 percent or private mortgage insurance
for loan-to-value ratios in excess of 80 percent.
A significant portion (24 percent) of the loan portfolio is
composed of commercial loans. Personal and business financial
status, credit standing, and available collateral of commercial
borrowers, plus management's judgment as to prevailing and
anticipated economic conditions and the historical data of the
Company's commercial loan losses, are taken into consideration
when determining the amount of the allowance for credit losses
needed for commercial loans. The amount of collateral required on
commercial loans is generally determined based on a loan-by-loan
assessment. Average loan-to-value ratios for commercial loans
typically range from 50 percent to 80 percent. Factors which are
considered include, among other things, the purpose of the loan,
the current financial status of the borrower and the borrower's
prior credit history.
The remaining portion (12 percent) of the Company's loan
portfolio are installment, credit card loans and other loans and
leases. A thorough credit examination is done at the time of the
extension of credit. The Company makes consumer loans on both a
secured and unsecured basis depending, in part, on the nature,
purpose and term of the loan. Loan-to-value ratios for secured
consumer loans range from 70 percent to 90 percent as a general
rule. The historical data of the Company's consumer loan losses
and the Company's credit evaluations are used to determine the
necessary amount for its allowance for credit losses.
The following table shows the amount of commercial, financial and
agricultural loans and real estate construction loans outstanding
as of December 31, 1995, which, based on remaining scheduled
repayments of principal, are due in the periods indicated. Also,
the amounts due after one year are classified according to their
sensitivity to changes in interest rates:
After 1 After 5
Year But Years But
Within Within Within
(Dollars in thousands) 1 Year 5 Years 10 Years Total
Commercial, financial
and agricultural $131,748 $126,564 $ 98,978 $357,290
Real estate -
construction 39,081 8,109 15,896 63,086
Total $170,829 $134,673 $114,874 $420,376
Interest Sensitivity
Fixed Variable
(Dollars in thousands) Rate Rate
Due after one but within five years $35,418 $ 99,255
Due after five years 20,940 93,934
Total $56,358 $193,189
Page 23
Actual maturities of loans will differ from the contractual
maturities presented in the previous table because of
prepayments, rollovers and renegotiation of payment terms, among
other factors.
The following table presents the aggregate amounts of
non-performing assets and respective ratios on the dates
indicated:
December 31,
(Dollars in thousands)
1995 1994 1993 1992 1991
Non-accrual $ 8,499 $6,017 $ 8,660 $ 7,786 $ 7,122
Contractually past
due 90 days or
more as to
principal or
interest 1,253 1,140 813 1,233 2,164
Restructured 79 329 221 704 1,044
Total non-performing
loans 9,831 7,486 9,694 9,723 10,330
Other real estate
owned 763 1,102 1,836 6,109 9,986
Total non-performing
assets $10,594 $8,588 $11,530 $15,832 $20,316
Non-performing loans
to total loans 0.67 0.52 0.77 0.81 1.00
Non-performing
assets to total
loans plus other
real estate owned 0.72 0.60 0.91 1.31 1.96
Allowance for credit
losses to total
non-performing
loans 151.14 196.66 156.35 161.66 125.25
Allowance for credit
losses to total
non-performing
assets 140.26 171.43 131.46 99.28 63.68
SFAS 114, "Accounting by Creditors for Impairment of a Loan", and
SFAS 118, "Accounting by Creditors for Impairment of a
Loan-Income Recognition and Disclosures" were adopted effective
January 1, 1995. Residential mortgage, installment and credit
card loans are collectively evaluated for impairment. Individual
commercial loans exceeding size thresholds established by
management are evaluated for impairment. Impaired loans are
recorded at the loan's fair value by the establishment of a
specific allowance where necessary. The fair value of the
underlying collateral-dependent loans is determined by the fair
value of the underlying collateral. The fair value of
noncollateralized-dependent loans is determined by discounting
expected future interest and principal payments at the loan's
effective interest rate.
Non-accrual loans are comprised principally of loans 90 days past
due, as well as certain loans which are current but where serious
doubts exist as to the ability of the borrower to comply with the
repayment terms. Interest previously accrued on non-accrual loans
and not yet paid is reversed or charged against the allowance for
credit losses during the period in which the loan is placed on
non-accrual status, except where the Company has determined that
such loans are adequately secured as to principal and interest.
Interest earned thereafter is included in income only to the
extent that it is received in cash. In certain cases, interest
received may be credited against principal outstanding under the
cost recovery method. The amount of interest income that would
have been recorded had all non-accrual loans been current in
accordance with their terms approximated $1,237,000 in 1995.
Actual interest included in income which was collected
approximated $345,000 in 1995. The amount of interest collected
and the amount of interest income that would have been recorded
during 1995 on restructured loans based on their original terms
was insignificant.
Loans 30 to 89 days past due,excluding non-accrual and
restructured loans included in the previous table, amounted to
$8,035,000 or .54 percent of total loans at December 31, 1995, as
compared to $3,558,000 or .25 percent at December 31, 1994. 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 $32,715,000 and
$39,379,000 at December 31, 1995 and 1994, respectively, and are
being closely 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 December 31, 1995 and 1994
specific allocations of the allowance for credit losses related
to these loans aggregated $3,359,000 and $3,408,000,
respectively. The decrease in loans where some concern exists is
primarily attributable to the Company's continuous process of
loan review which has identified various improvements in the
financial condition of certain of the individual borrowers. In
the opinion of management, these loans require close monitoring
despite the fact that they are performing according to their
terms. Such classifications relate to specific concerns relating
to each individual borrower and do not relate to any concentrated
risk elements common to all loans in this group.
Other real estate owned amounted to $763,000 and $1,102,000 at
December 31, 1995 and 1994, respectively. The decrease in other
real estate owned is due primarily to 1995 sales of foreclosed
commercial properties and residential property which was held at
December 31, 1994.
As of December 31, 1995, the Company did not have any loan
concentrations which exceeded 10 percent of total loans.
Page 24
The following table presents asset quality information for each
of the Company's bank subsidiaries at December 31, 1995:
December 31, 1995
(Dollars in Mid Am First
thousands) Bank National AmeriCom AmeriFirst Adrian
Non-accrual $5,623 $ 431 $1,241 $ 983 $ 221
Contractually past
due 90 days or
more as to
principal or
interest 115 374 444 238 82
Restructured 79
Total non-performing
loans 5,738 805 1,764 1,221 303
Other real estate
owned 54 337 22
Total non-performing
assets $5,738 $ 859 $2,101 $1,243 $ 316
Non-performing loans
to total loans 1.04 0.23 0.72 0.54 0.30
Non-performing
assets to total
loans plus other
real estate owned 1.04 0.24 0.86 0.55 0.30
Allowance for credit
losses to total
non-performing
loans 133.41 192.42 138.66 164.54 396.04
Allowance for credit
losses to total
non-performing
assets 133.41 180.33 116.42 161.63 396.04
Net charge-offs to
average loans
outstanding 0.38 0.07 0.09 0.15 0.00
Allowance for credit
losses to total
loans 1.39 0.44 1.00 0.89 1.19
At December 31, 1995, the recorded investment in impaired loans
measured in accordance with SFAS 114 amounted to $9,245,000, of
which $7,868,000 of impaired loans have a specific allowance of
$2,307,000 and the remaining $1,377,000 of impaired loans have no
specific allowance because the fair value of the collateral
securing the loan exceeded the investment in the loan. The
average recorded investment in impaired loans for the year ended
December 31, 1995, was $9,939,000. Interest income recognized in
1995 related to impaired loans was $686,000, most of which was
recognized on the cash basis.
The following table reflects impaired loans by type of loan at
December 31, 1995:
Impaired Amount
Commercial real estate $4,752,000
Commercial 4,493,000
Total $9,245,000
The total amount of impaired loans using (1) the present value of
expected future cash flows was $5,744,000, (2) the fair value of
the loans' collateral was $2,771,000, and (3) the observable
market price of the loans was $730,000.
Summary of Credit Loss Experience
December 31,
(Dollars in thousands)
1995 1994 1993 1992 1991
Balance of allowance
at beginning
of year $14,722 $15,157 $15,718 $12,938 $10,307
Loans actually
charged-off:
Real estate 167 455 558 656 1,428
Commercial,
financial and
agricultural 2,783 2,122 4,767 3,047 9,297
Installment and
credit card 1,429 815 1,768 2,301 2,782
Industrial
development bonds 67
Other 14 15 18 77
Total loans actually
charged-off 4,379 3,406 7,175 6,022 13,584
Recoveries of
loans previously
charged-off:
Real estate 305 127 221 106 270
Commercial,
financial and
agricultural 727 1,059 1,082 1,880 222
Installment and
credit card 446 561 816 773 571
Other 4 10
Total recoveries of
loans previously
charged-off 1,478 1,747 2,119 2,763 1,073
Net charge-offs 2,901 1,659 5,056 3,259 12,511
Addition to
allowance charged
to expense 3,002 2,864 3,991 4,917 15,142
Reversal of
allowance credited
to expense (1,640)
Effect of conforming
year ends of
pooled entities 504
Transfer of other
real estate owned
allowance
relating to
in-substance
foreclosure loans 36
Addition to
allowance from
purchase of
financial
institutions 1,122
Balance of
allowance at
end of year $14,859 $14,722 $15,157 $15,718 $12,938
Net charge-offs
to average loans
outstanding 0.20 0.12 0.41 0.31 1.21
Allowance for
credit losses
to total loans 1.01 1.03 1.20 1.31 1.26
Allowance for
credit losses
to total
non-performing
loans 151.14 196.66 156.35 161.66 125.25
Page 25
The provision for credit losses reflects the amount necessary in
management's opinion to maintain an adequate reserve, 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 and that necessary to state certain
individual loans at their estimated fair value.
The Company's banking subsidiaries monitor the adequacy of their
allowances for credit losses on a monthly basis. The banking
subsidiaries formally document their evaluations of the adequacy
of their allowances for credit losses on a quarterly basis, and
the evaluations are reviewed and discussed with each bank's
respective Board of Directors. The Company's Asset Quality
Department presents a quarterly consolidated evalution of the
adequacy of the allowance for credit losses to the Company's
Board of Directors. These evaluations of potential losses include
a review of the current financial status and credit standing of
commercial borrowers and their prior history, an evaluation of
available collateral, a review of loss experience in relation to
outstanding loans, and management's judgment as to prevailing and
anticipated economic conditions, among other relevant factors.
Such factors include, among others, changes in the credit grade
assigned to the loan by either the assigned officer or by the
Company's Asset Quality Department from its periodic reviews of
segments of the loan portfolios, and increases or decreases in
specific reserves assigned to individual loans. Residential
mortgage and consumer portfolios are collectively evaluated,
giving consideration to delinquency, charge-off trends and
current and anticipated economic conditions.
The following table sets forth the allocation of the allowance
for credit losses for the periods indicated:
December 31,
(Dollars in thousands)
1995 1994 1993 1992 1991
Specific allowance
Real estate $ 320 $ 1,178 $ 708 $ 823 $ 502
Commercial 3,989 2,384 2,334 4,763 2,918
Installment 560 50 76 53 4
Other
Total 4,869 3,612 3,118 5,639 3,424
General allowance
Real estate 594 729 1,186 915 1,004
Commercial 1,266 3,609 3,394 2,415 3,420
Installment 659 1,364 1,640 1,785 1,641
Other 474 422 579 553 659
Total 2,993 6,124 6,799 5,668 6,724
Unallocated
allowance 6,997 4,986 5,240 4,411 2,790
Allowance for
credit losses $14,859 $14,722 $15,157 $15,718 $12,938
Provisions for credit losses have decreased each year since 1991,
with the exception of a small increase in 1995, reflecting
improved asset quality. The provision for credit losses in 1991
aggregated $15,142,000, which included a special provision of $10
million in the third quarter to provide for certain losses,
specifically identified by management and to increase the
allowance for credit losses to a level commensurate with
management's evaluation of potential losses, given increases in
non-performing assets and uncertain economic conditions in the
Northwest Ohio market area. The 1992 provision for credit losses
decreased to $4,917,000. In 1992, the Company's asset quality
began to improve as non-performing assets to total loans and OREO
decreased to 1.31 percent from 1.96 percent, and the
non-performing loan ratio improved to .81 percent from 1.00
percent. Since 1992, the Company's asset quality has continued to
remain strong. Non-performing loans to total loans were .67
percent, .52 percent, and .77 percent at December 31, 1995, 1994,
and 1993, respectively. The Company's provision for credit losses
continued to remain steady at $3,002,000 in 1995 and $2,864,000
($1,224,000 net of reversal of a portion of allowance) in 1994
and net charge-off ratios have remained favorable.
The 1994 provision for credit losses was favorably impacted by a
$1,600,000 reduction in the allowance for credit losses at the
Company's First National subsidiary during the third quarter. As
a result, the 1994 third quarter provision for credit losses was
a net credit provision of $910,000. The reduction in First
National's allowance wasthe culmination of a number of events and
factors. Asset quality and charge-off experience at First
National improved rapidly in 1992. In recognition of the
favorable loss experience and asset quality, management suspended
provisions to First National's allowance for credit losses in
September 1992. No credit loss provisions were charged to First
National's operations in 1993 as First National experienced net
charge-offs in 1993 of only $40,000. During the second quarter of
1994, the Company's Asset Quality Department performed a detailed
review of First National's loan portfolio. The review confirmed
First National's management's conclusions that a reduction in the
allowance for credit losses was appropriate. During the second
quarter, the Office of the Comptroller of the Currency (OCC)
commenced an examination at First National which included an
assessment of First National's asset quality. The OCC's
examination was concluded and the results were communicated
during the third quarter of 1994. The OCC examination also
confirmed management's assessment of the allowance. Shortly afer
the issuance of the OCC report of examination, economic
conditions in First National's market area became available. It
indicated, among other things, a sharp drop in unemployment rates
between the months of July and August of 1994. Based on all of
the information available to management, the decision was made to
reduce First National's allowance by $1,600,000. At December 31,
1995, First National's ratio of allowance for credit losses to
total loans was .44 percent compared to Mid Am Bank, which was
1.39 percent. Because of First National's favorable
non-performing loans to total loans ratio of .23 percent at
December 31, 1995, its allowance at First National is considered
adequate. At December 31, 1995, the allowance for credit losses
for First National is 180 percent of non-performing loans and
other real estate owned.
Page 26
Allowance for Credit Losses to Non-Performing Loans
At December 31,
1991 125.25 percent
1992 161.66 percent
1993 156.35 percent
1994 196.66 percent
1995 151.14 percent
Deposits
The following table sets forth the average balances of and
average rates paid on deposits for the periods indicated:
December 31,
(Dollars in 1995 1994 1993
thousands) Average Average Average Average Average Average
Balance Rate Balance Rate Balance Rate
Demand
Noninterest-
bearing $ 174,501 $ 168,855 $ 158,351
Interest-
bearing 185,841 2.09 194,850 2.06 183,478 2.30
Savings 269,308 2.63 327,474 2.57 332,068 2.82
Money market 121,459 3.48 91,834 2.54 102,603 2.84
Time 1,037,277 5.53 942,156 4.24 951,403 4.35
Total $1,788,386 $1,725,169 $1,727,903
The maturity distribution of time certificates of deposit issued
in amounts of $100,000 or more as of December 31, 1995 was:
(Dollars in thousands)
Three months or less $ 70,331
Over three months to six months 29,726
Over six months to twelve months 20,251
Over twelve months 45,199
Total $165,507
Deposit Mix - 1995 Average Balances
Savings Deposits 15.1 percent
Money Market Accounts 6.8 percent
Demand Noninterest-bearing 9.7 percent
Demand Interest-bearing 10.4 percent
Time Deposits 58.0 percent
Deposit Mix - 1994 Average Balances
Savings Deposits 19.0 percent
Money Market Accounts 5.3 percent
Demand Noninterest-bearing 9.8 percent
Demand Interest-bearing 11.3 percent
Time Deposits 54.6 percent
Page 27
Short-Term Borrowings
A summary of certain information regarding federal funds
purchased and securities sold under agreements to repurchase is
presented below. The latter represent securities sold to
customers subject to an obligation of the Company to repurchase
such securities at a specified time, usually 30 to 60 days after
the date of the sale. Such agreements provide customers with the
opportunity to make short-term investments of substantial sums,
usually in excess of $100,000, secured by obligations of the
United States Treasury or United States government agencies.
Year Ended December 31,
(Dollars in thousands)
1995 1994 1993
Average for the year:
Amount outstanding $87,128 $73,843 $67,512
Weighted average
interest rate 4.55 3.59 2.85
At year end:
Amount outstanding $87,548 $80,136 $71,772
Weighted average
interest rate 4.43 4.03 2.63
Maximum amount outstanding
at any month end
during the year $93,579 $101,823 $71,513
Return on Equity and Assets
(Dollars in thousands) 1995 1994 1993
Return on average total assets 1.17 1.14 1.23
Return on average common
shareholders' equity 14.51 13.88 16.39
Cash dividend payout ratio 54.51 52.72 40.32
Average total shareholders'
equity as a percentage
of average total assets 8.93 9.16 8.65
Page 28
Report of Independent Accounts
Price Waterhouse LLP
To the Board of Directors and Shareholders of Mid Am, Inc.
In our opinion, the accompanying consolidated statement of
condition and the related consolidated statements of earnings, of
changes in shareholders equity and of cash flows present fairly,
in all material respects, the financial position of Mid Am, Inc.
and its subsidiaries at December 31, 1995 and 1994 and the
results of their operations and their cash flows for each of the
three years in the period ended December 31, 1995, in conformity
with generally accepted accounting principles. These financial
statements are the responsibility of the Company s management; or
responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the
opinion expressed above.
As discussed in Note 1 to the financial statements, the Company
changed its method of accounting for mortgage servicing rights
and for impaired loans in 1995 and its method of accounting for
certain investments in debt and equity securities effective
December 31, 1993.
Price Waterhouse LLP
Price Waterhouse LLP
January 22, 1996
Toledo, Ohio
Page 29
CONSOLIDATED STATEMENT OF CONDITION
December 31, (Dollars in thousands) 1995 1994
Assets
Cash and due from banks $ 102,600 $ 85,332
Int-bearing deposits in other banks 3,372 2,232
Federal funds sold 72,558 8,160
Securities available for sale 461,997 212,437
Investment securities 71,700
Mortgage-backed investment securities 180,309
Loans held for sale 12,642 12,963
Loans, net of unearned fees and
income of $829 and $1,648 1,475,651 1,433,289
Allowance for credit losses (14,859) (14,722)
Net loans 1,460,792 1,418,567
Bank premises and equipment 49,489 50,171
Interest receivable and other assets 41,301 36,918
TOTAL ASSETS $2,204,751 $2,078,789
Liabilities
Demand deposits(non-interest-bearing) $ 223,945 $ 190,423
Savings deposits 593,807 586,140
Other time deposits 1,042,390 959,929
Total deposits 1,860,142 1,736,492
Federal funds purchased and securities
sold under agreements to repurchase 87,548 80,136
Capitalized lease obligations and debt 48,405 65,434
Interest payable and other liablities 13,818 11,475
Total Liabilities 2,009,913 1,893,537
Shareholders' Equity
Preferred stock - no par value
Authorized - 2,000,000 shares
Issued and outstanding - 1,422,744
and 1,608,000 shares in 1995 and
1994, respectively 35,569 40,200
Common stock - stated value of
$3.33 per share
Authorized - 35,000,000 shares
Issued - 19,492,726 and 17,359,629
shares in 1995 and 1994,
respectively 64,975 57,865
Surplus 91,723 75,624
Retained earnings 9,529 17,769
Treasury stock - 522,361 and 1,400
common shares in 1995 and 1994,
respectively (8,424) (20)
Unrealized gains (losses) on
securities available for sale 1,466 (6,186)
Commitments and contingencies
(Notes 13 and 14)
Total Shareholders' Equity 194,838 185,252
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $2,204,751 $2,078,789
The accompanying notes are an integral part of the financial
statements.
Page 30
CONSOLIDATED STATEMENT OF EARNINGS
Year Ended December 31, (Dollars in
thousands, except per share data) 1995 1994 1993
Interest Income
Interest and fees on loans $130,300 $110,917 $107,688
Interest on deposits in other banks 218 146 218
Interest on federal funds sold 3,610 1,206 1,606
Interest on taxable investments 25,209 24,750 26,683
Interest on tax exempt investments 3,206 3,552 3,192
Total interest income 162,543 140,571 139,387
Interest Expense
Interest on deposits 72,527 54,689 57,907
Interest on borrowed funds 7,789 4,875 3,150
Total interest expense 80,316 59,564 61,057
Net interest income 82,227 81,007 78,330
Provision for credit losses 3,002 1,224 3,991
Net interest income after
provision for credit losses 79,225 79,783 74,339
Non-interest Income
Trust department 1,337 1,195 910
Service charges on deposit accounts 6,200 6,036 5,819
Mortgage banking 8,522 6,694 12,317
Brokerage commissions 9,540 7,137 5,158
Collection agency fees 3,399 3,928 2,390
Net gains on sales of securities 350 1,231 2,719
Other income 6,607 6,333 4,689
Total non-interest income 35,955 32,554 34,002
Non-interest Expense
Salaries and employee benefits 41,282 40,183 35,441
Net occupancy expense 5,113 5,269 5,070
Equipment expense 7,385 7,589 6,740
Other expenses 24,636 25,538 25,711
Total non-interest expense 78,416 78,579 72,962
Income before income taxes 36,764 33,758 35,379
Applicable Income Taxes
Currently payable 9,587 9,732 9,392
Deferred 2,210 773 1,306
Total applicable income taxes 11,797 10,505 10,698
Net income $ 24,967 $ 23,253 $ 24,681
Net income available to
common shareholders $ 22,216 $ 20,336 $ 21,763
Earnings Per Common Share
Primary $ 1.16 $ 1.07 $ 1.16
Fully diluted $ 1.11 $ 1.03 $ 1.11
The accompanying notes are an integral part of the financial
statements.
Page 31
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(Dollars in thousands, except for per share data)
Unrealized
Gain (Loss) Total
On Security Share-
Preferred Common Retained Treasury Available holders'
Stock Stock Surplus Earnings Stock For Sale Equity
Balances at
December 31, 1992 $40,250 $50,696 $53,221 $20,625 $164,792
Net income for the year 24,681 24,681
Dividends declared:
Preferred cash
dividends (2,918) (2,918)
Common cash dividends
of $.54 per share (8,774) (8,774)
Issuance of
common stock 1,449 3,300 4,749
Unrealized gains on
securities available
for sale $2,844 2,844
Cash paid to Colonial
shareholders (814) (814)
Effect of conforming
the year ends of
pooled entities 220 503 (1,861) (1,138)
Fractional shares
and other items 13 (10) 3
Balances at
December 31, 1993 40,250 52,365 57,037 30,929 2,844 183,425
Net income for the year 23,253 23,253
Dividends declared:
Preferred cash
dividends (2,917) (2,917)
Common cash dividends
of $.59 per share (10,721) (10,721)
10 percent common
stock dividend
(1,515,613 shares) 5,052 17,693 (22,745)
Issuance of common stock 428 1,465 1,893
Unrealized losses on
securities available
for sale (9,030) (9,030)
Treasury shares acquired $ (655) (655)
Treasury shares issued (635) 635
Preferred stock
conversions,
fractional shares
and other items (50) 20 64 (30) 4
Balances at
December 31, 1994 40,200 57,865 75,624 17,769 (20) (6,186) 185,252
Net income for the year 24,967 24,967
Dividends declared:
Preferred cash
dividends (2,751) (2,751)
Common cash dividends
of $.63 per share (12,111) (12,111)
10 percent common
stock dividend
(1,705,761 shares) 5,686 12,314 (18,000)
Unrealized gains on
securities available
for sale 7,652 7,652
Treasury shares acquired (9,197) (9,197)
Treasury shares issued 793 793
Preferred stock
conversions (4,631) 1,358 3,273
Fractional shares
and other items 66 512 (345) 233
Balances at
December 31, 1995 $35,569 $64,975 $91,723 $9,529 $(8,424) $1,466 $194,838
The accompanying notes are an integral part of the financial
statements.
Page 32
CONSOLIDATED STATEMENT OF CASH FLOWS
Year Ended December 31,
(Dollars in thousands) 1995 1994 1993
Operating Activities
Net income $ 24,967 $ 23,253 $ 24,681
Adjustments to reconcile net
income to net cash provided
by operating activities:
Provision for credit losses 3,002 1,224 3,991
Provision for depreciation
and amortization of assets 8,850 9,341 9,056
Proceeds from sales of
securities available for sale 138,215
Proceeds from maturities and
paydowns of securities
available for sale 29,801
Purchases of securities
available for sale (155,508)
Proceeds from sales of mortgage
and other loans held for sale 302,655 351,597 675,942
Mortgage and other loans
originated for sale (301,399) (280,749) (692,919)
Net gains on sales of assets (5,962) (4,631) (13,387)
(Increase) decrease in interest
receivable and other assets (10,872) 1,315 3,405
Increase (decrease) in interest
payable and other liabilities 2,319 (3,106) (1,684)
NET CASH PROVIDED BY
OPERATING ACTIVITIES 23,560 98,244 21,593
Investing Activities
Net (increase) decrease in
interest-bearing deposits
in other banks (1,140) 3,206 5,741
Net (increase) decrease in
federal funds sold (64,398) 50,907 (4,702)
Proceeds from sales of
securities available for sale 27,771 91,398
Proceeds from maturities and
paydowns of securities
available for sale 49,105 33,251
Purchases of securities
available for sale (83,063) (82,727)
Proceeds from sales of
investment securities 4,066
Proceeds from maturities and
paydowns of investment securities 7,213 12,347 54,883
Purchases of investment securities (1,579) (19,601) (60,536)
Proceeds from maturities and
paydowns of mortgage-backed
securities 19,998 33,082 60,446
Purchases of mortgage-backed
securities (2,503) (29,030) (155,469)
Proceeds from sales of loans 41,580 13,989 5,044
Net increase in loans (86,949) (185,246) (78,120)
Proceeds from sales of
other real estate owned 1,712 1,686 3,920
Proceeds from sales of
bank premises and equipment 848 568 1,478
Purchases of bank premises
and equipment (6,063) (4,151) (14,185)
Cash acquired through acquisitions 31 1,508
NET CASH USED FOR
INVESTING ACTIVITIES (97,437) (80,321) (175,926)
Page 33
CONSOLIDATED STATEMENT OF CASH FLOWS
Year Ended December 31,
(Dollars in thousands) 1995 1994 1993
Financing Activities
Net increase (decrease) in demand
deposits and savings accounts 41,189 (43,066) 99,768
Net increase in other time deposits 82,461 10,476 29,586
Net increase in federal funds
purchased andsecurities sold
under agreements to repurchase 7,412 8,363 17,729
Repayment of capitalized lease
obligations and debt (66,050) (41,638) (2,319)
Proceeds from issuance of
long-term debt 49,021 79,002 19,358
Proceeds from issuance of
common stock 1,893 4,749
Cash dividends paid (14,862) (13,638) (11,692)
Cash paid to Colonial shareholders (814)
Preferred stock conversions,
fractional shares and oher items 233 4 79
Treasury stock
(net of reissuance of 793) (8,404) (655)
NET CASH PROVIDED BY
FINANCING ACTIVITIES 91,000 741 156,444
Net increase in cash and
due from banks 17,123 18,664 2,111
Effect on cash of conforming the
year ends of pooled entities 145 923
Cash and due from banks at the
beginning of the year 85,332 66,668 63,634
Cash and due from banks at
the end of the year $102,600 $ 85,332 $ 66,668
Supplemental Schedule of Noncash
Investing and Financing Activities:
Securitization of loans
held for sale $ 3,685 $ 9,067
Investment securities transfer 66,096 $117,369
Mortgage-backed investment
securities transfer 162,477 2,642 37,378
Transfer to securities
available for sale $232,258 $ 11,709 $154,747
Transfers from loans to
other real estate owned $ 893 $ 989 $ 3,114
Loans on other real
estate owned sold $ 16 $ 462 $ 3,238
Noncash portion of acquisitions
(Note 2)
Fair value of assets acquired
(excluding cash) $ 17 $ 4,290
Intangible assets 246 5,238
Fair value of liabilities assumed (44)
Noncash cost of acquisitions $ 219 $ 9,528
Unrealized gains (losses) on
securities available for sale $ 11,748 $(13,893) $ 4,376
Adjustment to deferred tax 4,096 (4,863) 1,532
Adjustments to shareholders' equity $ 7,652 $ (9,030) $ 2,844
Treasury shares issued in merger $ 635
The accompanying notes are an integral part of the financial
statements.
Page 34
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Accounting Policies
The accounting and reporting policies followed by Mid Am, Inc.
conform to generally accepted accounting principles and to
general practices within the financial services industry. The
preparation of financial statements in conformity with generally
accepted accounting principles requires management to make
estimates and assumptions that affect the reported amount of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements. Actual
results could differ from those estimates.
Prior to 1994, Mid Am, Inc.'s business related solely to
commercial banking and related services which for financial
reporting purposes was considered a single business segment. In
1994, two collection companies were acquired, and in 1995, a
broker/dealer company was acquired (see Note 2) which are
considered to be additional business sgments; however, the
revenues, operating profit and assets of the collection business
and broker/dealer business are not material for separate
disclosure and Mid Am s predominant business continues to be
banking. A summary of the significant accounting policies
follows.
Consolidation
The consolidated financial statements of Mid Am, Inc. (the
Company) include the accounts of 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),
International Credit Service, Inc. (ICS), CCB Services, Inc.
(CCBS), MFI Investments Corp. (MFI), MFI Insurance Agency, Inc.,
and Mid Am Information Services, Inc. (MAISI). All significant
intercompany transactions and accounts have been eliminated in
consolidation.
Cash and Due from Banks
The Company is required to maintain average reserve balances with
the Federal Reserve Bank. The average reserve balance at December
31, 1995 and 1994 approximated $25,184,000 and $23,951,000,
respectively.
Securities Available for Sale
Securities classified as available for sale are carried at
market. The unrealized appreciation or depreciation from the
securities acquisition cost is recorded in a valuation account,
net of applicable income tax effect, in the shareholders equity
section of the balance sheet. The amount of unrealized
appreciation or depreciation relating to a security which is
available for sale is recognized in the income statement upon
sale of the security using the specific identification method to
determine the security's cost.
The adoption of Statement of Financial Accounting Standards
No.115, Accounting for Certain Investments in Debt and Equity
Securities (SFAS 115) as of December 31, 1993, did not have a
material effect on net income or earnings per share. Prior to the
adoption of SFAS 115, purchases and sales or maturities of
securities classified as available for sale were presented in
operating activities for purposes of reporting cash flows. Such
transactions have been presented as investing activities since
adoption of the statement.
Held to Maturity Securities
The Company holds certain of its securities for investment
purposes (held to maturity) where it has both the ability and
intent to hold the securities to maturity. Such securities are
stated at cost, adjusted for amortization of premiums and
accretion of discounts computed under the level yield method.
Such premium amortization and discount accretion are recognized
as adjustments to interest income. The rate of prepayment
activity on mortgages underlying mortgage-backed securities is
monitored and compared to expected prepayments. Prepayment
activity is affected primarily by movements in interest rates.
Yields on mortgage-backed securities are adjusted as prepayments
occur through charges to premium amortization or discount
accretion.
Derivative Financial Instruments
The Company's hedging policies permit the use of interest rate
swaps, caps and floors to manage interest rate risk or to hedge
specified assets and liabilities. Derivative financial
instruments are not used for trading purposes. Through December
31, 1995, the Company has not invested in any derivative
financial instruments, but may do so in the future.
Pledged Securities
The carrying value of securities pledged to secure public and
trust deposits, securities sold under agreements to repurchase
and for other purposes as required by law amounted to
$220,070,000 and $188,722,000 at December 31, 1995 and 1994,
respectively.
Mortgage Servicing Rights
The Company adopted SFAS 122, Accounting for Mortgage Servicing
Rights effective January 1, 1995. The cost of mortgage loans
which the Company originates or purchases under a definitive plan
to sell or securitize is allocated between the mortgage servicing
rights and the cost of the mortgage based on the relative fair
values at date of origination or purchase. The fair value of the
mortgage servicing rights is determined by discounting expected
servicing income cash flows, net of certain servicing costs, by a
rate which is comparable to the current interest-only strip rate.
The cost of those mortgage loans which are originated or
purchased without a definitive plan to sell or securitize is not
allocated between mortgage servicing rights and the cost of the
mortgage until the date of sale or securitization.
Mortgage servicing rights assets are amortized in proportion to
and over the period of estimated net servicing income.
Management periodically evaluates mortgage servicing assets for
impairment for established strata, (considering type of
mortgages, interest rates of the underlying mortgages and year of
origination) by discounting the expected future cash flows of
each strata, taking into consideration the estimated level of
prepayments based upon current industry expectations.
The adoption of SFAS 122 increased 1995 gains on sales of loans
and net income by $1,560,000 and $1,020,000, respectively, or
$.05 per share.
Loans
Interest income on loans is calculated using the simple-interest
method on the outstanding principal amounts.
All non-refundable fees and costs associated with the Company's
lending activities are recognized over the life of the related
loan or lease as an adjustment of yield.
Page 35
Residential mortgage loans held for sale are stated at the lower
of the cost to originate or purchase the loan (net of deferred
loan fees and costs and amounts assigned to mortgage servicing
rights), or market. Market is determined on the basis of rates
quoted in the secondary mortgage market. The Company generally
sells its residential mortgage loans at a premium or discountfrom
the carrying amount of the loans. Such premium or discount is
recognized at the date of sale. The Company also sells certain
mortgage and other loans or participations in such loans for cash
equal to the principal amount of loans sold, but with yield rates
which reflect the current market interest rate rather than the
contractual interest rate of the loans. A gain or loss is
recognized at the date of sale in an amount reflecting the
discounted present value of this yield differential, less a
provision for a normal servicing fee, over the estimated life of
the underlying loans.
The Company prospectively adopted SFAS 114, Accounting by
Creditors for Impairment of a Loan and SFAS 118, Accounting by
Creditors for Impairment of a Loan-Income Recognition and
Disclosures on January 1, 1995. Residential mortgage,
installment and credit card loans are collectively evaluated for
impairment. Individual commercial loans exceeding size
thresholds established by management are evaluated for
impairment. Impaired loans are recorded at the loan s fair value
by the establishment of a specific allowance where necessary.
The fair value of collateral-dependent loans is determined by the
fair value of the underlying collateral. The fair value of
noncollateral-dependent loans is determined by discounting
expected future interest and principal payments at the loan's
effective interest rate. The adoption f SFAS 114 and SFAS 118
did not have a material impact on 1995 results of operations.
Accrual of interest on loans is discontinued when principal or
interest remains due and unpaid for 90 days or more, dependent
upon collateral and whether the loan is in the process of
collection. Income on such loans is then recognized only to the
extent that cash is received and when the future collection of
principal is probable. Interest accruals are resumed on such
loans only when they are brought fully current with respect to
interest and principal and when, in the judgment of management,
the loans are estimated to be fully collectible as to both
principal and interest. Restructured loans are those loans on
which concessions in terms have been granted because of a
borrower's financial difficulty. Interest is generally accrued on
such loans in accordance with the new terms.
Allowance for Credit Losses
The allowance fo credit losses is established through a provision
for credit losses charged to expense. Loans and leases are
charged against the allowance for credit losses when management
believes the full collectibility of the loan is unlikely. The
allowance is an amount that management believes will be adequate
to absorb losses inherent in existing loans and commitments to
extend credit. The allowance and provision take into
consideration such factors as changes in the nature and volume of
the portfolio, overall portfolio quality, loan concentrations,
specific problem loans, leases and commitments, and current and
anticipated economic conditions that may affect the borrowers
ability to pay. Specific allowances are established for certain
individual impaired loans based on the evaluation of the fair
value of the impaired loan. Allowances established to provide
for losses under commitments to extend credit, or recourse
provisions under servicing agreements are classified with other
liabilities, if material.
Other Real Estate Owned
Real estate acquired by foreclosure is carried in other assets at
the lower of the recorded investment in the property or its fair
value. Prior to foreclosure, the value of the underlying loan is
written down to the fair value of the real estate to be acquired
by a charge to the allowance for credit losses, if necessary. At
the time of foreclosure, an allowance is established for
estimated selling costs. Any subsequent writedowns required by
changes in estimated fair value or disposal expenses are provided
through this allowance and the provision is charged to operating
expense. Carrying costs of such properties, net of related
income, and gains and losses on their disposition are charged or
credited to operating expense as incurred.
Bank Premises and Equipment
Bank premises an equipment are stated at cost, less accumulated
depreciation which is computed using the straight-line method.
Intangible Assets
Goodwill is amortized using the straight-line method over 15
years. Core deposit intangible assets acquired before 1992 are
amortized using the straight-line method over 10 years. Core
deposit intangible assets recorded after January 1, 1992, are
amortized using an accelerated method over 10 years. The
difference between the straight-line method and interest method
for amortization of the pre-1992 core deposit intangible assets
is not material. Goodwill and core deposit intangible assets at
December 31, 1995 and 1994 aggregated $20,715,000 and $18,726,000
respectively, net of accumulated amortization of $8,691,000 and
$5,658,000, respectively.
Income Taxes
The Company utilizes an asset and liability approach for
financial accounting and reporting of income taxes. The provision
for income taxes is based on pre-tax income which differs in some
respects from taxable income. Deferred income taxes/benefits are
provided on cumulative differences between pre-tax income for
income tax and financial reporting purposes using the current tax
rate.
Trust Department
Trust Department income has been recognized on the accrual basis.
Assets held by the Company in fiduciary or agency capacities
(oher than cash on deposit at the Company's bank subsidiaries)
for its customers are not included in the consolidated statement
of condition as such items are not assets of the Company.
Earnings Per Share
Earnings per share is computed using the weighted average number
of shares outstanding during the period, as restated for shares
issued in business combinations accounted for as
poolings-of-interests, stock dividends (10 percent stock
dividends were declared and paid in 1995 and 1994), and stock
splits (a three-for-two split was declared and effected in 1993),
and all common stock equivalents, applied to net income. Fully
diluted earnings per share is computed using the weighted average
number of shares determined for the primary computation plus the
number of shares of common stock that would be issued assuming
all preferred shares were converted and certain outstanding stock
options not included in the primary computation were exercise.
Page 36
The weighted average number of common shares outstanding for
primary and fully diluted earnings per share computations were as
follows:
Year Ended December 31,
1995 1994 1993
Weighted average
common shares
outstanding -
primary 19,205,000 19,046,000 18,736,000
Weighted average
common shares
outstanding -
fully diluted 22,592,000 22,627,000 22,310,000
Preferred Stock
The nonvoting $1.8125 cumulative convertible Series A preferred
shares may be redeemed, at the option of the Company, after June
1997 at $25.00 plus accrued and unpaid dividends. Dividends on
common stock are not permitted to be declared unless all
cumulative dividends on preferred stock have been declared and
paid. At December 31, 1995, each share of Series A preferred
stock is convertible into the Company's common stock at a
conversion price of $11.27. The Series A preferred stock is not
considered to be a common stock equivalent for purposes of
primary earnings per share. The amount of common shares that
would be issuable assuming conversion of all preferred shares
outstanding is used for purposes of determining fully diluted
earnings per share.
Treasury Stock
Shares of the Company's stock are acquired for purposes of
issuance in connection with the stock option plan and for future
stock dividend declarations. The treasury shares acquired are
recorded at cost.
Stock-Based Compensation
During 1995, the FASB issued Statement of Financial Accounting
Standards No. 123, Accounting for Stock-Based Compensation
(SFAS 123). SFAS 123 introduces a fair value based method of
accounting for stock compensation arrangements. The statement
also permits entities to retain the intrinsic value based method
of accounting for stock compensation arrangements. The Company
accounts for stock-based compensation arrangements under the
intrinsic value method which, at present, it plans to continue to
use in the future. Entities which retain the intrinsic value
method for accounting for stock compensation will be required
under the new standard to provide certain pro forma disclosures
of the difference between compensation cost, if any, under the
intrinsic value and that which would result had the entity used
the fair value method.
SFAS 123 is effective for 1996, accordingly, the Company will be
required to make the pro forma disclosures for stock awards
granted in 1995 and afterwards in its 1996 financial statements.
SFAS 123 will have no effect on the reported results of
operations.
Statement of Cash Flows
The Company considers cash on hand, deposits maintained with the
Federal Reserve Bank and cash due from other banks, all of which
are included in the caption Cash and Due from Banks, as cash for
purposes of the Statement of Cash Flows.
Note 2. Mergers and Acquisitions
Completed Acquisitions On July 31, 1995, the Company completed
its merger with MFI Investments Corp., a broker/dealer with 1994
revenue of $6,300,000. MFI shareholders received 314,530 shares
of Mid Am, Inc. common stock, of which 156,097 shares are held in
escrow at December 31, 1995, pending resolution of litigation
filed against MFI prior to the merger. Under the escrow
agreement, 1,167 shares of Mid Am, Inc. stock were returned to
the Company during 1995 for costs incurred in defending the
action. Shares returned under the escrow agreement are treated
as retired shares. Dividends declared and paid on the shares are
not returned. The transaction has been accounted for as a
pooling-of-interests.
On March 1, 1995, the Company completed its merger with ASB
Bankcorp, Inc., parent company of $128 million asset Adrian State
Bank. ASB Bankcorp, Inc. shareholders received 1,546,662 shares
of Mid Am, Inc. common stock (after adjustment for the 10 percent
common stock dividend paid in May 1995). The transaction was
accounted for as a pooling-of-interests.
The 1995 results of operations of the Company include the
pre-merger results of operations for Adrian for the period
January 1, 1995, through February 28, 1995, and for MFI for the
period January 1, 1995, through July 31, 1995. Summarized
operating activity for Adrian and MFI for the 1995 periods prior
to their respective mergers with the Company are as follows:
(Dollars in thousands) Adrian MFI
Net interest income $809 $ 16
Brokerage commissions 3,957
Net income 203 86
Other changes in
shareholders' equity (121)
On November 30, 1994, the Company completed its mergers with ICS
and CCBS, collection and credit service companies headquartered
in Ohio and Florida, respectively, with aggregate net collection
fee revenues of $2.4 million for the year ended December 31,
1993. The transactions were accounted for as
poolings-of-interests and were consummated by the issuance of
483,998 shares of Mid Am, Inc. common stock (after adjustment for
the 10 percent stock dividend in 1995) to ICS and CCBS
shareholders.
On June 4, 1994, the Company completed its merger with Farmers
Savings Bank (Farmers), a $66 million asset bank in Northwood,
Ohio. The transaction was accounted for as a pooling-of-interests
by the issuance of 688,084 shares of Mid Am, Inc. common stock
(after adjustment for the 10 percent common stock dividends in
1994 and 1995) to Farmers shareholders.
Page 37
The following table reconciles amounts previously reported by the
Company to the restated amounts for the years ended December 31,
1994 and 1993:
1994 (Dollars in thousands,
except per share data) Primary
Net Earnings
Interest Non-interest Net Per
Income Income Income Share
Mid Am, Inc. -- as
previously reported $75,741 $25,352 $22,873 $1.16
Effect of Adrian and
MFI poolings 5,266 7,202 380
$81,007 $32,554 $23,253 $1.07
1993 (Dollars in thousands,
except per share data) Primary
Net Earnings
Interest Non-interest Net Per
Income Income Income Share
Mid Am, Inc. -- as
previously reported $73,239 $28,060 $23,337 $1.21
Effect of Adrian and
MFI poolings 5,091 5,942 1,344
$78,330 $34,002 $24,681 $1.16
Note 3. Securities and Securities Available for Sale
The aggregate cost and carrying value at market of securities
available for sale at December 31, 1995 and 1994 are as follows:
1995 (Dollars in thousands)
Gross Gross Carrying
Unrea- Unrea- Value
lized lized at
Cost Gains Losses Market
U.S. Treasury securities $ 73,219 $ 715 $ (142) $ 73,792
Securities of other
U.S. Government agencies
and corporations 67,415 571 (460) 67,526
Obligations of states and
political subdivisions 57,313 2,208 (55) 58,996
Equity securities 31,397 299 (430) 31,266
Mortgage-backed securities 230,398 1,628 (1,609) 230,417
Total $459,742 $5,421 $(3,166) $461,997
1994 (Dollars in thousands)
Gross Gross Carrying
Unrea- Unrea- Value
lized lized at
Cost Gains Losses Market
U.S. Treasury securities $ 82,502 $ 71 $ (3,220) $ 79,353
Securities of other
U.S. Government agencies
and corporations 64,241 75 (2,915) 61,401
Obligations of states and
political subdivisions 200 200
Equity securities 27,344 64 (981) 26,427
Mortgage-backed securities 47,628 360 (2,932) 45,056
Total $221,915 $ 570 $(10,048) $212,437
The aggregate carrying value (at amortized cost) and approximate
market value of investment and mortgage-backed investment
securities classified as held to maturity at December 31, 1994,
are as follows:
(Dollars in thousands)
Gross Gross
Unrea- Unrea-
Carrying lized lized Market
Value Gains Losses Value
U.S. Treasury securities $ 3,623 $ (202) $ 3,421
Securities of other
U.S. Government agencies
and corporations 5,523 $ 23 (203) 5,343
Obligations of states and
political subdivisions 62,032 1,535 (2,512) 61,055
Other securities 522 (3) 519
Total $ 71,700 $1,558 $ (2,920) $ 70,338
Mortgage-backed securities $180,309 $ 254 $(11,561) $169,002
Page 38
Following the issuance of the Financial Accounting Standards
Board's Guide to Implementation of Statement 115 on Accounting
for Certain Investments in Debt and Equity Securities in November
1995, management assessed the held to maturity portfolio. As a
result, investment and mortgage-backed securities with an
mortized cost of $66,096,000 and $162,477,000, respectively,
were transferred from held to maturity to securities available
for sale. The net unrealized gain (loss) of the investment and
mortgage-backed securities transferred was $1,120,000 and
$(1,553,000), respectively.
The carrying value and market value of securities available for
sale at December 31, 1995, by contractual maturity, are shown to
the right. Expected maturities will differ from contractual
maturities because issuers may have the right to call or
prepay obligations with or without call or prepayment penalties.
Carrying Value
(Dollars in thousands) at Market Cost
Due in one year or less $ 40,388 $ 40,308
Due after one year through
five years 118,035 116,809
Due after five years through
ten years 31,718 31,214
Due after ten years 41,439 41,013
231,580 229,344
Mortgage-backed securities
available for sale 230,417 230,398
$461,997 $459,742
Proceeds from sales of securities available for sale were
$27,771,000, $91,398,000 and $142,281,000 for 1995, 1994 and
1993, respectively.
Gains of $429,000, $1,343,000 and $3,006,000 and losses of
$79,000, $112,000 and $287,000 were realized on sales of
available for sale securities in 1995, 1994 and 1993,
respectively.
Note 4. Loans and Allowance for Credit Losses
Loans outstanding are as follows:
December 31,
(Dollars in thousands) 1995 1994
Real estate loans
Construction $ 63,086 $ 69,942
Mortgage 885,714 871,704
Commercial, financial and
agricultural loans 357,290 327,871
Installment and credit card loans 164,055 155,380
Other loans 6,335 10,040
Total 1,476,480 1,434,937
Less:
Unearned income (22) (38)
Unamortized loan fees (807) (1,610)
Allowance for credit losses (14,859) (14,722)
Total net $1,460,792 $1,418,567
Most of the Company's business activity is with customers located
within the respective local business area of its banks which
encompasses Western Ohio and Southeastern Michigan. The portfolio
is well diversified, consisting of commercial, residential,
agri-business, consumer and small business loans. There are no
significant concentrations in any one industry and the amounts
related to highly leveraged transactions are not significant.
The Company evaluates each customer's creditworthiness on a
case-by-case basis. The amount of collateral obtained is based on
management s evaluation of the customer. Collateral held relating
to commercial, financial, agricultural and commercial mortgages
varies but may include accounts receivable, inventory, property,
plant and equipment and income-producing commercial properties.
Changes in the allowance for credit losses are as follows:
Year Ended December 31,
(Dollars in thousands) 1995 1994 1993
Balance at beginning of period $14,722 $15,157 $15,718
Additions (reductions):
Provision for credit losses 3,002 1,224 3,991
Charge-offs (4,379) (3,406) (7,175)
Recoveries on loans charged off 1,478 1,747 2,119
Transfer of other real estate
owned allowance relating to
in-substance foreclosure loans 36
Effect of conforming year ends
of pooled entities 504
Balance at end of period $14,859 $14,722 $15,157
At December 31, 1995, the recorded investment in impaired loans
amounted to $9,245,000, of which $7,868,000 of impaired loans
have a specific allowance of $2,307,000 and the remaining
$1,377,000 of impaired loans have n specific allowance as the
fair value of the collateral securing the loans exceeded the
investment in the loan. The average recorded investment in
impaired loans for the year ended December 31, 1995, was
$9,939,000. Interest income recognized on the cash basis in 1995
related to impaired loans was $686,000.
At December 31, 1994, the outstanding principal balance of loans
placed on non-accrual status amounted to $6,017,000.
Other non-performing assets at December 31, 1995 and 1994 include
other real estate owned of $763,000 and $1,102,000, respectively,
which have been recorded at estimated fair value less estimated
selling costs.
Page 39
In the normal course of business, the Company has made loans to
certain directors, executive officers and their associates under
terms consistent with the Company s general lending policies.
Loan activity relating to these individuals for the three years
ended December 31, 1995, is as follows:
(Dollars in thousands)
Balances New
at Origi- Loan Balances
Beginning nations/ Repay- at End
of Period Advances ments Other of Period
Year ended
December 31, 1995 $21,787 $11,558 $ 9,736 $(4,234) $19,375
Year ended
December 31, 1994 $20,406 $14,120 $10,774 $(1,965) $21,787
Year ended
December 31, 1993 $19,466 $ 9,369 $ 7,135 $(1,294) $20,406
Note 5. Bank Premises and Equipment
Bank premises and equipment consist of the following:
December 31,
(Dollars in thousands) 1995 1994
Land and land improvements $ 8,833 $ 8,008
Buildings 42,614 42,049
Furniture and fixtures 35,023 30,970
Leasehold improvements 905 660
Construction-in-progress 674 287
88,049 81,974
Less
accumulated depreciation
and amortization (38,560) (31,803)
$ 49,489 $ 50,171
Included in the above are buildings, land and land improvements
which secure capitalized leases with a cost of $5,720,000, less
accumulated amortization and depreciation of $2,979,000 and
$2,759,000 at December 31, 1995 and 1994, respectively.
Substantially all of property recorded under capital leases
relates to transactions with Bancsites, Inc., a former
subsidiary, which the Company continues to significantly
influence through common shareholders and management. The
capital lease premises represent 13 branch bank facilities owned
by Bancsites and leased to the Company under long-term lease
agreements entered into in the normal course of business and
under terms no more favorable than those prevailing in the
marketplace. Lease payments amounted to $551,000 in 1995,
$561,000 in 1994 and $543,000 in 1993. Rental payments for land
are treated as operating lease expense.
All of the future minimum payments under capital lease agreements
at December 31, 1995, presented below relate to the Bancsites
agreements, and substantially all future minimum lease payments
under operating lease agreements are with unrelated parties:
(Dollars in thousands) Bancsites Bancsites Other
Capital Operating Operating
Leases Leases Leases
1996 $ 569 $ 29 $ 777
1997 525 29 309
1998 472 26 215
1999 386 143
2000 390 121
Thereafter 2,032 1,268
Total minimum lease payments 4,374 $ 84 $2,833
Amounts representing interest (1,212)
Present value of minimum
lease payments $ 3,162
Note 6. Deposits
Included in other time deposits are certificates of deposit of
$100,000 or more totalling $165,507,000 and $136,594,000 at
December 31, 1995 and 1994, respectively.
Included in savings deposits are negotiable order of withdrawal
(NOW) accounts totalling approximately $198,333,000 and
$194,080,000 at December 31, 1995 and 1994, respectively.
The Company paid $77,786,000, $61,049,000 and $64,746,000 in
interest on deposits and other borrowings in 1995, 1994 and 1993,
respectively.
Note 7. Federal Home Loan Bank Borrowings and Advances and
Other Borrowings
All of the Company s banking subsidiaries, except for Adrian, are
members of the Federal Home Loan Bank (FHLB) and have lines of
credit with the FHLB which enables the Company, through its bank
subsidiaries, to borrow up to $104,618,000 at December 31, 1995.
Amounts outstanding at December 31, 1995 and 1994 aggregated
$12,952,000 and $15,623,000, respectively. Outstanding borrowings
under these lines of credit are secured by FHLB stock totalling
$2,661,000 and $5,131,000 at December 31, 1995 and 1994,
respectively, and mortgages owned by the institutions totalling
150 percent of the outstanding borrowings. The weighted average
interest rate on outstanding floating rate borrowings at December
31, 1995 and 1994 was 6.65 percent and 6.66 percent,
respectively.
Page 40
The Company may also borrow from the FHLB on a fixed-rate basis.
At December 31, 1995 and 1994, FHLB fixed-rate advances amounted
to $32,231,000 and $46,121,000, respectively, and are
collateralized by FHLB stock with a book value of $7,002,000 and
a pledge of loans having a book value equal to 150 percent of the
advances. The interest rate on the amounts owed at December 31,
1995 and 1994 was 6.98 percent and 6.79 percent, respectively,
and is paid monthly.
The Company entered into an agreement with an unrelated financial
institution in October 1995 which enables the Company to borrow
up to $20,000,000 through October 29, 1996. Interest on advances
taken on the facility is accrued at either a floating rate based
on the financial institution s corporate base rate or a
Eurodollar rate formula. The Company may elect the interest rate
method to be applied against each advance. The agreement
provides for an annual commitment fee of .25 percent to be
applied against the unused portion of the line of credit. The
fee is payable on a quarterly basis. The agreement also contains
covenants which require the Company, among other things, to
maintain specified ratios such as debt to total equity and
non-performing assets to total equity. Through December 31,
1995, no advances have been drawn against the available credit
facility.
The contractual maturities of the outstanding borrowings for the
five years subsequent to December 31, 1995, are:
1996, $19,951,000; 1997, $8,355,000; 1998, $2,497,000;
1999, $2,649,000; and 2000, $1,569,000. See Note 5 for
information relating to capital lease obligations.
Note 8. Fair Value of Financial Instruments
The following presents the estimated fair value of the Company's
financial instruments at December 31, 1995 and 1994:
December 31, 1995 1994
(Dollars in Carrying Fair Carrying Fair
thousands) Amount Value Amount Value
Assets
Cash and due from
banks, interest-
bearing deposits
in other banks
and federal
funds sold $ 178,530 $ 178,530 $ 95,724 $ 95,724
Securities
available for
sale, investment
securities and
mortgage-backed
investment
securities 461,997 461,997 464,446 451,169
Loans held for
sale and loans 1,488,293 1,446,252
Less
Allowance for
credit losses (14,859) (14,722)
Loan held for sale
and loans, net 1,473,434 1,440,882 1,431,530 1,384,603
Liabilities
Deposits 1,860,142 1,868,834 1,736,492 1,738,438
Federal funds
purchased and
securities sold
under agreements
to repurchase 87,548 87,548 80,136 80,136
Debt 45,243 45,334 61,996 59,740
Off-balance-sheet
Commitments:
Commitments to extend
credit ($421,673
and $247,266 at
December 31, 1995
and 1994,
respectively) 420,983 245,549
Basis of Fair Value Determination:
The table above has presented fair value disclosures in
accordance with SFAS 107, Disclosure about Fair Value of
Financial Instruments whether or not the financial instruments
are recognized in the balance sheet. In cases where quoted
market prices are not available, fair values are based on
estimates using present value or other valuation techniques.
These techniques are materially affected by the assumptions used
(estimates of future cash flows and discount rates, among
others). Because of the judgment and subjective considerations
required in determining appropriate and reasonable assumptions,
the derived fair value estimates cannot be substantiated by
comparison to independent markets. Furher, the amounts which
could be realized in immediate settlement of te instrument could
vary significantly from the fair value estimate depending upon
bulk versus individual settlements or sales as well as other
factors. SFAS 107 excludes certain financial instruments and all
nonfinancial instruments from its disclosure requirements.
Accordingly, the aggregate net fair value amounts presented do
not represent the underlying value of the Company.
Page 41
Cash and due from banks, interest-bearing deposits in other banks
and federal funds sold:
Due to the frequency of repricing of these items, the fair value
is assumed to equal the carrying amount.
Securities available for sale, investment securities and
mortgage-backed investment securities:
The fair value of securities is based on quoted market prices or
dealer quotes. For purposes of determining the fair market value
of Federal Reserve Bank and Federal Home Loan Bank stock, for
which quoted market prices are not available, the carrying amount
of the stock has been considered the fair value.
Loans held for sale and loans:
For certain categories of loans (including loans held for sale),
such as residential mortgages and certain guaranteed loans, fair
value is estimated using the quoted market prices for securities
backed by similar loans, adjusted for differences in loan
characteristics. The fair value of commercial and other types of
loans is estimated by discounting the expected future cash flows
based on current rates being offered, the credit risk involved
and the time to maturity. Due to the frequency of repricing of
credit card receivables, the fair value is assumed to equal the
carrying amount.
Deposits:
The fair value of demand deposits, savings accounts and NOW
accounts is assumed to be the carrying amount. The fair value of
certificate of deposit accounts is estimated using the rates
currently offered for deposits of similar remaining maturities.
Federal funds purchased and securities sold under agreements to
repurchase:
Due to the frequency of repricing of these items, the fair market
value is assumed to equal the carrying amount.
Capitalized lease obligations and debt:
The fair value of debt is estimated based on the rates currently
available to the Company for debt with similar terms and
maturities. The capital lease obligations are not included in the
fair value disclosures.
Commitments to extend credit:
For commitments to extend credit, the fair value is estimated
based on the discounted future cash flows based on current market
interest rates, assuming that the entire commitment will be drawn
upon.
Note 9. Federal Income Taxes
The deferred tax provisions for the years ended December 31,
1995, 1994 and 1993 have been determined based on the cumulative
temporary differences and tax rates in effect at each respective
year end and consist of the following:
December 31,
(Dollars in thousands) 1995 1994 1993
Gross deferred tax assets:
Loan loss reserve $ 2,493 $2,410 $2,522
Unrealized losses on
securities available for sale 3,316
Deferred compensation 1,008 981 1,119
Deferred loan fees 281 554 51
Deferred interest 219 263 333
Other 300 370 214
4,301 7,894 4,639
Gross deferred tax liabilities:
Bank premises and equipment 1,888 1,675 1,482
Unrealized gains on securities
available for sale 789 1,484
Federal Home Loan Bank
dividends 1,063 816 644
Mortgage servcing rights 515
Prepaid deposit interest 1,136
Prepaid FDIC premium 240 627
Prepaid expenses 799 384 419
Loan and deposit purchase
accounting adjustments, net 312 419 354
Other 253 284 591
6,995 4,205 4,974
Net deferred tax (liability)
asset at end of year $(2,694) $3,689 $ (335)
At December 31, 1995, 1994 and 1993 there were no valuation
reserves recorded against the deferred tax assets as realization
of the entire deferred tax asset was considered more likely than
not.
The following schedule reconciles the statutory federal income
tax rate to the Company s effective tax rate:
Year Ended December 31, 1995 1994 1993
Statutory federal income tax rate 35.0 35.0 35.0
Effect of interest income which
is not subject to taxation (3.5) (4.1) (3.8)
Nondeductible interest expense 0.4 0.4 0.2
Other items, net 0.2 (0.5) (1.2)
32.1 30.8 30.2
Page 42
Note 10. Other Non-interest Income and Other Non-interest Expense
Other non-interest income and other non-interest expense consist
of the following:
Year Ended December 31,
(Dollars in thousands) 1995 1994 1993
Other non-interest income:
Credit card fees $1,696 $1,274 $1,132
Banclub fees 904 779 617
International department fees 762 628 499
Credit life insurance 551 702 228
Other 2,694 2,950 2,213
Total $6,607 $6,333 $4,689
Year Ended December 31,
(Dollars in thousands) 1995 1994 1993
Other non-interest expense:
FDIC expense $ 2,754 $ 3,868 $ 3,947
Marketing 2,247 1,976 2,614
Franchise taxes 2,473 2,490 2,184
Telephone 1,884 1,939 1,998
Printing and supplies 1,868 1,919 1,849
Legal and other
professional fees 1,915 2,081 1,516
Credit card processing costs 1,431 1,006 844
Amortization of
intangible assets 1,600 1,579 1,391
Postage 1,442 1,460 1,391
Other 7,022 7,220 7,977
Total $24,636 $25,538 $25,711
Note 11. Retirement and Deferred Compensation Plans
The Company and its subsidiaries provide retirement benefits for
substantially all of their employees under several retirement
plans. The Company does not provide post-retirement benefits
other than through its retirement plans and does not provide
post-employment benefits.
The Company has an Employee Stock Ownership and Savings Plan for
the benefit of all eligible employees who have completed 12
months of service with the Company. The plan provides for annual
contributions by the Company based upon income (as defined by the
plan) after providing for a specified return on shareholders
equity, and under the 401(k) portion of the Plan employees may
contribute a percentage of their eligible compensation with a
company-match of such contributions up to a maximum match of
3 percent. The Company also sponsors an Employee Stock Ownership
Pension Plan which provides for an annual contribution by the
Company equal to 6 percent of eligible employees annual
compensation.
The Company has a supplemental employee retirement plan. This
plan replaces retirement benefits eliminated under the Company's
qualified retirement plans because of eligible compensation
limitations under current tax law. The Company contributes
authorized shares o its common stock to a trust establishd to
hold the shares on behalf of participating employees. The
Company's contribution under the plan is determined by
multiplying the excess of employees compensation over the
established limitation by the contribution level established by
the Board of Directors for the Company's qualified plans
(9 percent, 9 percent and 12 percent in 1995, 1994 and 1993,
respectively). At December 31, 1995, the liability recorded for
the participants in the plan was not material. The funding of
shares occurs in January of the succeeding year.
Expenses relating to these plans amounted to $2,017,000,
$2,330,000 and $2,336,000 in 1995, 1994 and 1993, respectively.
Note 12. Stock Options
In 1988, the Board of Directors of the Company approved the
continuation of an Incentive Stock Option Plan adopted by one of
the bank holding companies it acquired. All of the 74,072 options
outstanding at December 31, 1992, were exercised during 1993 at
an option price of $3.60 per share.
In 1992, the Board of Directors of the Company approved an
Incentive Stock Option Plan which covers certain key employees
and all Directors of the Company and its subsidiary companies. In
1994, the Plan was amended to include additional employees and to
allow certain individuals, including directors, the ability to
elect to receive options, determined under a formula, in lieu of
a portion of their salary, or director fees, as applicable. Under
the terms of the plan, the maximum number of option shares which
can be granted is limited to 7 percent (subject to shareholder
approval) of the Company's issued and outstanding common shares.
Options granted under the plan expire 10 years after the date of
grant and are issued at an option price that is not less than the
market price of the Company s stock on the date of grant.
Options granted to Directors are immediately exercisable, except
for those granted in lieu of director fees which are exercisable
as they are earned. Options granted to officers and other key
employees are exercisable in annual 20 percent increments, except
for options received in lieu of salary, which are immediately
exercisable.
Page 43
The following table presents a summary of pertinent information
with respect to the Company's stock options:
1995 1994
Option Option
Shares Price Shares Price
Outstanding
at beginning
of year 853,760 $ 5.47-13.52 268,355 $5.47-12.81
Granted 346,350 13.18-16.41 613,379 8.22-13.52
Exercised (81,796) 5.47-13.52 (3,252) 9.92
Cancelled (14,708) (24,722)
Outstanding
at end
of year 1,103,606 5.47-16.41 853,760 5.47-13.52
Exercisable
at end
of year 914,363 5.47-16.41 481,344 5.47-13.52
1993
Option
Shares Price
Outstanding
at beginning
of year 139,619 $5.47-12.81
Granted 131,264 6.74-11.98
Exercised (1,842) 6.01- 9.92
Cancelled (686)
Outstanding
at end
of year 268,355 5.47-12.81
Exercisable
at end
of year 164,600 5.47-12.81
Note 13. Commitments and Contingencies
One of the Company s non-bank subsidiaries is a co-defendant in
several actions filed by customers of a money manager not
affiliated with the subsidiary who directed business to that
subsidiary. The suits seek recovery of losses of approximately
$2,700,000 plus punitve damages, attorneys fees and costs of
litigation. The litigation in the matters has been stayed and
the parties have agreed to enter into arbitration. The Company
denies liability to the plaintiffs in each of the actions and is
vigorously contesting the claims. No formal discovery has been
made in these actions, and management and the Company s legal
counsel have been unable to form an opinion as to the likely
outcome of the litigation; accordingly, no provision for any
liability that may result from the resolution of these matters
has been recorded. In the event of an unfavorable outcome, the
effect on the Company s results of operations could be material.
In connection with this action, 156,097 of Mid Am, Inc. common
shares are being held in escrow pending resolution of the
litigation. Such shares will be returned to the Company for any
liability which may result from or for costs incurred in
defending the action. See Note 2 Mergers and Acquisitions.
There are also various other lawsuits and claims pending against
the Company, which arise in the normal course of business. In the
opinion of management, any liabilities that may result from these
lawsuits and claims will not materially affect the financial
position or results of operations of the Company.
Note 14. Financial Instruments With Off-Balance-Sheet Risk
The Company is a party to financial instruments with
off-balance-sheet risk in the normal course of business to meet
the financing needs of its customers located primarily within the
local business area. These instruments include commitments to
extend credit, standby letters of credit and international
commercial letters of credit.
The Company's exposure to credit loss in the event of
non-performance by the other party to the financial instrument
for commitments to extend credit, standby letters of credit and
letters of credit is represented by the contractual amount of
those instruments. The Company uses the same credit policies in
making commitments and conditional obligations as it does for
on-balance-sheet instruments.
Financial instruments whose contract amounts represent credit
risk are presented below:
December 31,
(Dollars in thousands) 1995 1994
Commitments to extend credit $421,673 $247,266
Standby letters of credit 26,920 26,455
Letters of credit 1,609 1,941
Commitments to extend credit are agreements to lend to a customer
as long as there is no violation of any condition established in
the contract. Commitments generally have fixed expiration dates
ranging from one to five years, variable interest rates tied to
the prime rate and Treasury bill rates and may require payment of
a fee. Since many of the commitments are expected to expire
without being drawn upon, the total commitment amounts do no
necessarily represent future cash requirements.
Standby letters of credit are conditional commitments issued by
the Company to guarantee the performance of a customer to a third
party. Those guarantees are primarily issued to support public
and private borrowing arrangements, including bond financing and
similar transactions. The expiration date of substantially all
standby letters of credit extend for a period ranging from 30
days to 18 years. The credit risk involved in issuing letters of
credit is essentially the same as that involved in extending loan
facilities to customers. The Company holds marketable securities,
certificates of deposit, real estate, inventory and equipment as
collateral supporting those commitments for which collateral is
deemed necessary.
Page 44
Letters of credit are instruments used to facilitate trade, most
commonly international trade, by substituting the Company's
credit for that of a commercial importing company. The terms are
generally one to three months. The letters of credit are
primarily unsecured.
The Company services residential mortgage loan portfolios with
recourse provisions with outstanding principal amounts of
$6,031,000 and $9,207,000 at December 31, 1995 and 1994,
respectively. Under recourse provisions contained in the service
agreements, the Company is obligated to bear any credit losses on
residential mortgages in the portfolios. The Company assesses the
potential for losses under the recourse provisions as a part of
its allowance for credit losses. The amount of the allowance for
credit losses specifically allocated to these portfolios at
December 31, 1995 and 1994 was not material.
Note 15. Mortgage Banking Activities
The Company conducts mortgage banking operations through its
banking subsidiaries. The primary activity relates to the
origination and sale of fixed and variable rate residential
mortgages in the secondary market. The Company usually retains
the servicing of the loans it sells. Loans are primarily
originated in the Northwest Ohio market area; however, the
Company also has employees and agents in Nevada, Illinois,
Colorado and New Jersey who also originate loans for sale in the
secondary market.
The following table summarizes information relating to the
Company's mortgage banking activity as of December 31, 1995 and
1994:
December 31,
(Dollars in thousands) 1995 1994
Amounts held in agency accounts $ 7,463 $ 4,535
Amounts held in escrow accounts 6,925 6,960
Mortgage banking receivables for
advanced funds 256 4,385
Unpaid mortgage loan principle for
loans serviced for investors 1,286,590 1,221,232
Unpaid mortgage loan principle
for loans serviced for
affiliated investors 3,673 5,088
Excess servicing asset 70 141
At December 31, 1995, capitalized mortgage servicing rights and
accumulated amortization aggregated $1,794,000 and $250,000,
respectively. An allowance for impairment of capitalized mortgage
servicing rights was established in 1995 in connection with the
adoption of SFAS 122. The provision charged to operations in
1995 aggregated $63,000. There was no other activity relating to
the allowance in 1995. The fair value of capitalized mortgage
servicing assets at December 31, 1995, approximates carrying
value, net of the impairment allowances.
In 1995 and 1994, the Company sold certain servicing rights on
mortgages which had an outstanding principal balance of
$31,471,000 and $17,664,000, respectively, and realized gains of
$245,000 and $175,000, respectively. There were no sales of
servicing rights in 1993. At December 31, 1995, the Company had
firm commitments for the sale of approximately $10,534,000 of
loans held for sale. No provision for loss on the carrying amount
on loans held for sale is considered necessary at December 31,
1995.
Note 16. Restrictions on Subsidiary Dividends, Loans or Advances
Dividends paid by the Company are mainly provided by dividends
from its subsidiaries. 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 since January 1, 1993. As of December 31,
1995, $13,435,000 was available for distribution to the Company
as dividends without prior regulatory approval.
Page 45
Note 17. Condensed Parent Company Financial Information
A summary of condensed financial information of the parent
company at December 31, 1995 and 1994 and for three years then
ended is as follows:
Statement of Condition
December 31, (Dollars in thousands) 1995 1994
Assets:
Cash and due from banks $ 14,996 $ 2,349
Securities available for sale 441 331
Investment in bank subsidiaries 170,424 174,669
Investment in nonbank subsidiaries 8,609 6,906
Other assets 3,204 2,506
Total assets $197,674 $186,761
Liabilities and Shareholders' Equity:
Other liabilities $ 2,836 $ 1,509
Shareholders' equity
Preferred stock 35,569 40,200
Common stock 64,975 57,865
Surplus 91,723 75,624
Retained earnings 9,529 17,769
Treasury stock (8,424) (20)
Unrealized (losses) gains on
securities available for sale 1,466 (6,186)
Total liabilities and
shareholders' equity $197,674 $186,761
Statement of Earnings
Year Ended December 31,
(Dollars in thousands) 1995 1994 1993
Income:
Interest income $ 104 $ 595 $ 633
Net investment securities gains 303
Dividends from bank
subsidiaries 38,021 20,854 7,791
Dividends from nonbank
subsidiaries 2,419 176
Management fees 5,996 4,226 4,472
Other income 351 236 27
44,472 28,330 13,402
Expenses:
Salaries and employee benefits 4,648 3,064 3,164
Net occupancy expense 195 165 88
Equipment expense 415 304 236
Other expenses 2,162 2,453 1,947
7,420 5,986 5,435
Income before equity in
undistributed net income
of subsidiaries 37,052 22,344 7,967
Equity in undistributed net
income of bank subsidiaries (11,781) 2,875 16,700
Equity in undistributed net
income of nonbank subsidiaries (304) (1,966) 14
Net income $24,967 $23,253 $24,681
Net income available to
common shareholders $22,216 $20,336 $21,763
Statement of Cash Flows
Year Ended December 31,
(Dollars in thousands) 1995 1994 1993
Operating Activities:
Net income $24,967 $23,253 $24,681
Adjustments to Reconcile Net
Income to Net Cash Provided
By Operating Activities:
Equity in undistributed net
income of bank subsidiaries 11,781 (2,289) (16,693)
Equity in undistributed net
income of nonbank subsidiaries 304 1,966 (14)
Provision for depreciation
and amortization of assets 155 120 111
Net gains on sales of assets 1 (6) (306)
Proceeds from sales of
securities available for sale 19,595
Proceeds from maturities and
paydowns of securities
available for sale 57
Purchases of securities
available for sale (1,246)
Increase in other assets (895) (856) (575)
(Decrease) increase in
other liabilities 1,327 (255) (389)
Net cash provided by
operating activities 37,640 21,933 25,221
Investing Activities:
Capital contributions to
bank subsidiaries (13,446) (14,428)
Capital contributions to
nonbank subsidiaries (1,896) (3,054) (3,000)
Proceeds from maturities and
paydowns of securities
available for sale 8,351
Purchases of securities
available for sale (64) (1,687)
Effects of conforming the
year ends of pooled entities (1,710)
Net cash used for
investing activities (1,960) (9,836) (19,138)
Financing Activities:
Cash dividends paid (14,862) (13,638) (11,692)
Proceeds from issuance of
common stock 1,893 4,749
Cash in lieu of fractional
shares and other items 233 4 79
Treasury stock (8,404) (655)
Net cash used for
financing activities (23,033) (12,396) (6,864)
Net (decrease) increase in cash 12,647 (299) (781)
Effect of conforming year ends
of pooled entities 923
Cash at the beginning of the year 2,349 2,648 2,506
Cash at the end of the year $14,996 $ 2,349 $ 2,648
Supplemental Schedule of Noncash
Investing and Financing Activities:
Treasury shares issued in merger $ 635
Transfers from investments to
securities available for sale $ 171
Unrealized (losses) gains on
investments from the adoption
of SFAS 115 $ 46 $ (64) $ 119
Deferred tax liability 16 (22) 42
Adjustment to shareholders' equity $ 30 $ (42) $ 77
Affiliates unrealized (losses)
gains on investments from the
adoption of SFAS 115 $ 7,622 $(8,988) $ 2,767
Page 46
Mid Am, Inc. Eight Year Performance Summary (Unaudited)
(Dollars in thousands, except per share and ratio data)
Yearly Average Balances Year-End Balances
Total Common Earning Loans/ Total
Year Assets Equity Assets Leases Deposits Assets
Balance Sheet 1995 $2,138,638 $153,112 $1,995,004 $1,475,651 $1,860,142 $2,204,751
1994 2,038,637 146,473 1,897,079 1,433,289 1,736,492 2,078,789
1993 2,001,335 132,822 1,867,140 1,265,945 1,769,083 2,067,371
1992 1,623,070 108,546 1,521,663 1,200,512 1,630,141 1,871,849
1991 1,532,940 101,190 1,440,082 1,028,854 1,447,192 1,573,067
1990 1,286,919 86,140 1,214,041 1,022,765 1,369,486 1,496,026
1989 1,151,287 71,357 1,081,509 840,407 1,096,868 1,207,602
1988 1,086,073 62,450 1,017,116 797,502 1,018,526 1,127,675
Annual Growth 1995/94 4.91 4.53 5.16 2.96 7.12 6.06
Average Growth 1995/88 10.41 13.84 10.33 9.43 9.24 10.31
Net Income Cash Book Stock Total Market
Year Pooled Historic Dividends Value Price Equity $(000)
Data per 1995 $1.16 $1.16 $0.63 $8.40 $16.41 $311,233
Common Share 1994 1.07 1.28 0.59 7.61 13.52 232,631
1993 1.16 1.39 0.54 7.76 12.40 197,212
1992 1.03 1.30 0.50 7.29 10.74 166,126
1991 0.44 0.50 0.48 6.41 9.77 137,674
1990 0.73 1.01 0.48 6.01 8.01 103,111
1989 0.81 0.98 0.44 5.03 10.13 104,668
1988 0.85 0.82 0.38 4.87 7.35 75,909
Annual Growth 1995/94 8.41 6.78 10.38 21.38 33.79
Average Growth 1995/88 13.39 7.56 8.29 13.53 23.01
Mid Am, Inc. Eight Year Performance Summary (Unaudited)
(Dollars in thousands, except per share and ratio data)
Average Common Year-End
Shares Shares Stock Cash Price/
Outstanding Traded Common Dividends Dividend Earnings
Year (000) (000) Shareholders (Percent) Payout Ratio Ratio
Common Stock Data 1995 19,205 4,377 8,208 10 54.51 14.36x
(as originally 1994 15,623 3,500 7,899 10 52.23 11.62
reported) 1993 12,976 3,097 6,360 41.21 9.80
1992 9,968 1,903 5,543 10 39.92 9.70
1991 9,801 1,580 4,339 88.89 20.38
1990 8,745 1,491 4,379 10 46.76 8.51
1989 6,710 604 3,701 10 42.14 11.14
1988 5,533 264 3,301 5 36.12 9.77
Page 47
Total Net Interest Other Other Net
Year Revenue Income (1) Income Expenses Income
Income and 1995 $198,498 $84,478 $35,955 $78,416 $24,967
Expense 1994 173,125 83,150 32,554 78,579 23,253
1993 173,389 80,321 34,002 72,962 24,681
1992 149,737 67,453 20,002 56,151 19,209
1991 156,856 59,387 15,566 48,790 7,446
1990 140,158 53,014 10,923 41,995 10,371
1989 126,140 47,368 10,875 37,128 10,343
1988 111,471 42,126 11,048 33,480 10,380
Annual Growth 1995/94 14.66 1.60 10.45 (0.21) 7.37
Average Growth 1995/88 8.85 10.59 20.87 13.24 22.82
Mid Am, Inc. Eight Year Performance Summary (Unaudited)
(Dollars in thousands, except per share and ratio data)
Other Net
Return on Net Income Employees Income/
Average Interest To Other Overhead Per Million FTE(4)
Year Assets Margin(2) Expenses Ratio(3) of Assets Employee
Operating Ratios 1995 1.17 4.23 45.85 65.11 0.53 $21
1994 1.14 4.38 41.43 67.91 0.53 21
1993 1.23 4.30 46.60 63.82 0.60 20
1992 1.18 4.43 35.62 64.21 0.56 18
1991 0.49 4.12 31.90 65.09 0.54 9
1990 0.81 4.37 26.01 65.68 0.51 14
1989 0.90 4.38 29.29 63.75 0.59 15
1988 0.96 4.14 33.00 62.96 0.59 15
Average 1995/88 0.99 4.29 36.21 64.82 0.56 17
Average Market
Return Common Value to Total
On Common Equity to Book Return to
Year Equity Average Assets Value Investors(5)
Equity Ratios 1995 14.51 7.16 195.36 26.50
1994 13.88 7.18 177.70 13.94
1993 16.39 6.64 159.75 20.51
1992 16.22 6.69 147.38 15.52
1991 7.36 6.60 152.37 28.72
1990 12.04 6.69 133.28 (16.38)
1989 14.49 6.20 201.57 45.15
1988 16.62 5.75 150.87 12.08
Average 1995/88 13.94 6.61 164.78 18.26
(1) Net interest income on a tax equivalent basis.
(2) Net interest income as a percentage of interest-earning
assets, on a tax equivalent basis.
(3) Other expense divided by net interest income on a tax
equivalent basis plus other income.
(4) Full time equivalent.
(5) Market change year to year plus dividends.
Page 48
Executive Officers, Boards of Directors, Directors Emeriti
Mid Am, Inc. Executive Officers
Edward J. Reiter Chairman and CEO
David R. Francisco President and COO
Dennis L. Nemec Executive Vice President and CFO
W. Granger Souder Executive Vice President/General Counsel
Jerry R. Biederman Senior Vice President/Audit
Donald P. Hileman Senior Vice President/Finance
Christine Koster Senior Vice President/Training and
Development
David L. Mead Senior Vice President/Finance
Cynthia A. Rossman Senior Vice President/Corporate
Administration
Jeffrey S. Schatz Senior Vice President/Funds Management
Robin Wooddall Senior Vice Pesident/Human Resources
Mid Am, Inc. Directors Emeriti
Ralph O. Benington Jr.
Dr. Edwin C. Bomeli
Ashel G. Bryan
Dr. Marjorie Conrad
Charles W. Daley
Kenneth H. Harger
Charles F. Kurfess
William S. Pepple Sr.
Adrian State Bank Executive Officers
Bernard A. Sikorski President and CEO
Ronald A. Wilson Executive Vice President
Adrian State Bank Board of Directors
Steven C. Benz M.D.
Frank Dick
Robert E. Doyle
O. Herbert Farver
Thomas Fenstemacher
David R. Francisco
Richard L. Germond
Stephen L. Hickman
Daryl P. McDonald
Dane Nelson
Jack C. Patterson
Douglas J. Shierson
Bernard A. Sikorski
John D. Thurman
James E. Toncre
Adrian State Bank Director Emeritus
Carl A. Benz M.D.
American Community Bank, N.A. Executive Officers
Cathleen F. Oxner President and CEO
Mark A. Klein Executive Vice President
C. Bruce Wells Senior Vice President
Ivy Conklin Senior Vice President
American Community Bank, N.A. Board of Directors
Richard Axline
Eugene Cornwell
Anita Donnelly
David R. Francisco
Thomas Heydinger
D. James Hilliker
Jack Markel
Violet Meek
James Moore
Cathleen Oxner
Donald Spath
American Community Bank, N.A. Directors Emeriti
Wilson Anderson
Dr. Douglas W. Beach
Charles W. Daley
Dr. W. Robert Dodge
J. Roderick Gray
Rob Heil
Fred Krouskop
Harold D. Marker
Melvin Niece
Thomas L. Notestine
Walter Potts
Mick Reed
Jerome W. Ritter
Richard L. Snapp
Freda Taylor
Q. Craig Tone
Myron Van Horn
AmeriFirst Bank, N.A. Executive Officers
Donald P. Southwick President and CEO
David J. McMacken Senior Vice President
Gerald C. Craig Senior Vice President
AmeriFirst Bank, N.A. Board of Directors
Carl J. Fletcher
David R. Francisco
John L. Henderson
James E. Laughlin
Richard H. LeSourd, Jr.
Herman N. Menapace
J. Robert Routt
Frank W. Ruggerie
Clara M. Smith
Donald P. Southwick
Richard G. Tessendorf Jr.
AmeriFirst Bank, N.A. Directors Emeriti
Richard T. Adair
Howard W. Coy
Robert J. Imbus
Francis W. Ruggerie
Burton B. Pease
CCB Services Executive Officers
Mark S. Mandula President and CEO
Michael Buccina Senior Vice President and COO
First National Bank Northwest Ohio Executive Officers
James F. Burwell President and CEO
Michael R. Klein Executive Vice President
Marvin D. Miller Executive Vice President
Michael L. Williams Executive Vice President
First National Bank Northwest Ohio Board of Directors
James F. Burwell
Wayne E. Carlin
David R. Francisco
Ralph W. Gallagher
James A. Meier
Gene K. Metz
Marvin D. Miller
Thomas S. Noneman
William G. Rupp
Thomas J. Short
C. Gregory Spangler
D. Jane Zeller
First National Bank Northwest Ohio Directors Emeriti
O. Jay Beck
D. Keith Humbert
Richard B. Lutterbein
Roy E. Nofziger
Kenneth E. Oberlin
William S. Pepple Sr.
International Credit Service Executive Officers
Mark S. Mandula President and CEO
Bill Guntsch Executive Vice President and COO
International Credit Service/CCB Services Board of Directors
David R. Francisco
Mark S. Mandula
Bill Guntsch
James E. Laughlin
Richard G. Tessendorf Jr.
Donald D. Thomas
MFI Investments Corp. Executive Officers
E. Clifford Oberlin, III Chairman and CEO
Robert M. Gioia President and COO
MFI Investments Corp. Board of Directors
Robert M. Gioia
David R Francisco
Thomas S. Noneman
E. Clifford Oberlin, III
Earl C. Oberlin
Douglas J. Shierson
Jerry Staley
Mid American National Bank and Trust Company Executive Officers
Edward J. Reiter Chairman
Patrick A. Kennedy President and CEO
John H. McDermott Executive Vice President
Kenneth R. Nagel Executive Vice President
Michael J. Rose Executive Vice President
Phillip C. Clinard Senior Vice President
Darlene M. Minnick Senior Vice President
Sharon S. Speyer Senior Vice President
Mid American National Bank & Trust Company Board of Directors
Gerald D. Aller
Joel S. Beren
Paul C. Betz
James F. Bostdorff
David A. Bryan
Levi Cook Jr.
Floyd D. Craft
David R. Francisco
Candy Graham
Kathleen S. Hanley
T. L. Sam Irmen
Patrick J. Johnson
Patrick A. Kennedy
Harry W. Kessler
Marilyn O. McAlear
Richard H. Metzger
Blair D. Miller
Paul J. Olscamp
Edward J. Reiter
Emerson J. Ross Jr.
Jerry L. Staley
Dr. Robert E. Stearns
Mid American National Bank and Trust Company Directors Emeriti
Jack Dale
Albert Nietz
Robert Manor
Wilfred Williams
Mid Am Information Services, Inc. Executive Officers
James C. Burkhart President and CEO
Caren L. Cantrell Senior Vice President
Ronald R. Earl Senior Vice President
Judi Leck Senior Vice President
Mid Am Information Services, Inc. Board of Directors
James C. Burkhart
James F. Burwell
David R. Francisco
Patrick A. Kennedy
Mark S. Mandula
Dennis L. Nemec
E. Clifford Oberlin III
Cathleen F. Oxner
Jeffrey S. Schatz
Bernard A. Sikorski
W. Granger Souder
Donald P. Southwick
Page 49
Affiliate Banking Center Boards
Adrian State Bank Banking Centers
Main Office
Plaza Office
Mall Office
Beecher Office
Tecumseh Downtown Office
Tecumseh West Office
First National Bank Northwest Ohio Banking Centers
ARCHBOLD, SOUTHSIDE, PETTISVILLE, and RIDGEVILLE CORNERS Banking Centers
Norris E. Allan
John F. Arnos
Stephen H. Brannan
Jack D. Gooding
Richard L. Grieser
Dencel W. Miller
Gene Roth
Lowell E. Rupp
J. Joseph Rychener
Jodi L. Stuckey
EDGERTON Banking Centers
Edgerton Drive-up
Marvin D. Dietsch
Dr. John W. Granger
J. Michael Krill
Roger D. Strup
Wayne M. Wilson
DEFIANCE Banking Center
Randall L. Buchman
William W. Goller
William M. Hughes
Thomas L. Kime
Ted T. Pohlmann
Dr. Robert Southworth
BRYAN and WEST Banking Centers
Henry W. Falk
Thomas M. Herman
William S. Pepple, Jr.
Connie L. Zimmerman
CONTINENTAL Banking Center
Marjorie Frankart
Daniel J. Heitzman
James R. Miles
Dwight Niese
Blaine Okuley
Leonard Verhoff
Lois eller
FAYETTE Banking Centers
Fayette Drive-up
Curtis D. Cooley
Elaine Eagle
L. Dolores Ferguson
James Fruchey
Wayne R. Williams
LIBERTY CENTER Banking Center
Daniel D. Hefflinger
Jack M. Krueger
James A. Leatherman
Norma M. Miller
MONTPELIER Banking Center
Dr. Clarence Bell, Jr.
John T. Ressler
Roger Saneholtz
Ned D. Snyder
James E. Thompson
Shirley Young
NAPOLEON Banking Centers
E.A. Andy Anderson
Robert Cole
Judy Heilman
Lou Ann Limbird
Charlotte Zgela
PAULDING Banking Center
Michael L. Arend
Lauren Brown
Terry Buehler
John Manz
Gregory Stoller
STRYKER Banking Center
Ray E. Brown
Gene K. Carlin
Darrell J. Goebel
William D. Woolace
WAUSEON Banking Center
Timothy W. Hallett
Sally Boyers Lutz
Douglas Shaw
American Community Bank, N.A. Banking Centers
BELLEFONTAINE SOUTH and DOWNTOWN Banking Centers
Gary E. Contner
Michael J. Hall
Dean H. Horn
Luan F. Lamb
Mark O. McIntyre
Dottie L. Tuttle
HUNTSVILLE, RUSSELLS POINT, and LAKEVIEW Banking Centers
Robert C. Beck
Richard W. Campbell
Pat Kemper
Max L. Wallace
Russell D. Williams
LIMA Banking Centers
John Albanese
Phyllis Henderson
Oscar Marshall
Ellen Nelson
Lynn Metzger
Paul Woehlke
Tom Yazel
Chris Yetman
MARION Banking Center
Karen Bame
Dr. Wayne Butterworth
Shirley Carozza
Barbara Greetham
Gary Iams
Dr. Assad Sabag
Roger Vanover
MARYSVILLE Banking Center
Ronald Chapman
Barry Cordell
Dale Corbin
Charlotte Coleman Eufinger
David Laslow
David Shull
Dr. Susan McGinnis Truitt
Jeffrey Wilson
AmeriFirst Bank, N.A. Banking Centers
BEAVERCREEK and FAIRFIELD COMMONS Banking Centers
Norma Delebar
Tom Koogler
Susan Phillips
Dr. Surinder Saini
Dr. David Stewart
CENTRAL XENIA and NORTH XENIA Banking Centers
Marsha Bayless
Mike Dennis
Sherri Mash
Roger McColaugh
Thomas Zajbel
GOLF MANOR Banking Center
Chris Dolle
Thomas Fruth
Wayne Miller
Ethel Mitzman
Dr. George Willis Reid
HYDE PARK Banking Center
Marlene Beale
James Burke
Elva Kelly
Dr. Terrence Poole
KETTERING Banking Center
Richard Coy
Bob Potter
Katrina Seiter-Farmer
LEBANON Banking Center
William Duning
Laurie Kanta
Dale Peach
Ryan Richardson
MONTGOMERY Banking Center
Beth Stratman
Lawrence Hawkins
Patrick Sheeran
SPRINGBORO Banking Center
Dr. Stephan Lucht
Paul Music
Bryce Skinn
WESTWOOD Banking Center
Beverly Bepler
Earl Brown
Leo Rolfes
Thomas Smith
Michael Schmidt
Page 50
Mid American National Bank and Trust Company Banking Centers
AIRPORT HIGHWAY Banking Center
Dwayne Clark, Sr.
Robert Floyd
David Miller
Harold Steinberg
George Oravecz
Marilyn Yoder
ARLINGTON Banking Center
Mervin Alexander, Sr.
William Alge, Jr.
Robert Federspill
Jack Jolliff
Betty Knight
Joseph Metzger
Jessica Jane Rossman
James Smith
Dr. Emily Walton
ARROWHEAD Banking Center
Thomas Brell
Clifford Dussel
William Horst
Richard Krieger
Martha Marsh
Ron Mickel
Michael Osterman
Ardenia Terry
Donald Tillman
Nick Wagener
Joseph Zigray
BOWLING GREEN, NORTHSIDE, SOUTHSIDE, and UNIVERSITY Banking Centers
Charles Codding
Joan Gordon
Drew Hanna
Robert Holley
Dr. Melvin Hyman
Ruth Ann Kramer
Jerry Lahey
Dr. Reginald Noble
Jeffrey Snook
Dr. Winifred Stone
CORPORATE, ONE SEAGATE, and TOLEDO Banking Centers
Dr. Gilbert Bucholz
Andrew Fisher
Jack Jones
Sharon Lange
Larry Ulrich
Susan Utterback
John White
ELMORE Banking Center
Janice Bench
John Bock
Bruce Card
Dennis Dolph
Jerry Haar
Jay Hovis
Linda Millhime
Daryl Sherman
Kenton Weis
FINDLAY Banking Center
Flint Heidlebaugh
Paul Kramer
L. Don Manley
Becky Noack
John Urbanski
Michael Whalen
Kathy Williams
FRANKLIN PARK Banking Center
Carol Fuelling
Dana Johnson
James Loss
James McGowan
James Ostrowski
FRANKLIN PARK IN THE MALL Banking Center
Gloria Granata
Truman Irving
Rochelle Pfaff
Michael Podracky
Rosemary Talmadge
Peter Winegarden
GENOA Office
Ernest Cottrell, Jr.
Larry Detzel
Lowell Hartman
Gregory Schafer
Rosemary Schlievert
Robert Waidmann
GLENGATE Banking Center
Thomas Balyeat
James Holzemer
John Kahle
Betty Lazzaro
William Smith III
Garth Tebay
GRAND RAPIDS Banking Center
Rick Ellis
Audrey Entenman
David LaRoe
Michael Marsh
Judy Peper
Erle Radel
Chuck Thomas
Raymond Wright
JERMAIN PARK Banking Center
Rev. Raymond Bishop, Jr.
Nabelah Ghareeb
Jacqueline Martin
Charles Thayer
McCLURE Banking Center
Linda Armstrong
Dennis Ehlers
John Harding, Jr.
Bert Richard
Paul Richard
Sarah Rowland
MIRACLE MILE Banking Center
Robert Good
Oscar Hernandez
Jack Knauer
Thomas Manders
Thomas Moore
Kenneth Myer
Gary Walker
NORTH BALTIMORE Banking Center
Janis Dukes
Douglas Hanna
Donald Miller
James Rider
Ingrid Roberts
Douglas Troutner
Mona Wittlinger
NORTHWOOD and WOODVILLE MALL Banking Centers
Dennis Ebel
Mary Jane Finch
Anthony Judson
Donald Kowalka
Elvio Pescara
Clyde Sharlow
Ruston Simon
Virginia Whiteman
OREGON Banking Center
Joseph Christen
Dr. Nevin Esenler
Dennis Galayda
Donald Granger
John Hatfield
Donn Meinert
Robert McDonald
Leonard Wasserman
OTTAWA Banking Center
Donald Kimmet
Philomena Kistler
Robert Kruse
Delbert Westrick
PERRYSBURG and VILLAGE SQUARE Banking Centers
Harold Hanna
Donald LaHote
Ted Reiter
Robert Reitze
Robert Richard
Ronald Sattler
Laurie Seibold
Dr. Richard Weaver
ROSSFORD Banking Center
Richard Goeke
E. Lee Ison
Dale Kohl
Kenneth Lay, Jr.
James Rossler, Sr.
Thomas Warns
Mark Wasylyshyn
Norma Woods
SAXON SQUARE Banking Center
Paul Arndt
Robert Falk
R. Jeffre Lydy
Boyd Montgomery
Michael Powder
James Schwerkoske
Candyce Sturtz
STONY RIDGE Banking Center
Willard Brinker
Beverly Jacobs
Helyn Kurfess
Maxine Haas
Robert Sibbersen
SYLVANIA Banking Center
Sandra Brown
Joseph Giovannucci
Alix Greenblatt
Thomas Lindsley
Thomas A. Ramsdell
Dr. Bahu S. Shaikh
Mike Sofo
UPPER SANDUSKY Banking Center
James Barnes
Dr. Claude Beitler
Maria Browne
Jeffrey Roth
Dr. Matthew Thiel
Darrell Walton
WESTGATE Banking Center
David Hanson
C. Allen McConnell
James Scheib
Gerald Smolen, Ph.D.
James Weber
Don Weiher
Richard Zerner
WESTON Banking Center
Ray Chapman
Leroy David
Mary Ann Hillier
Robert Nicholson
Danny Roe
Hugh Sheline
795 Banking Center
Gary Akenberger
Janeen Barrett
Steve Delventhal
Richard Heidebrink
Michael McAlear
Kathleen Steingraber
Affiliate Presidents
Patrick A. Kennedy
President and CEO
Mid American National Bank and Trust Company
Mark S. Mandula
President and CEO
International Credit Service/CCB Services
Donald P. Southwick
President and CEO
AmeriFirst Bank, N.A.
E. Clifford Oberlin III
Chairman and CEO
MFI Investments Corp.
James C. Burkhart
President and CEO
Mid Am Information Services,Inc.
James F. Burwell
President and CEO
First National Bank Northwest Ohio
Bernard A. Sikorski
President and CEO
Adrian State Bank
Cathleen F. Oxner
President and CEO
American Community Bank, N.A.
Robert M. Gioia
President and COO
MFI Investments Corp.
Page 51
Mid Am, Inc. Board of Directors
Gerald D. Aller
President
Aller s Pharmacy, Inc.
Director Since: 1988
Chair of the Special Projects Committee
James F. Bostdorff
Farmer - Self Employed
Director Since: 1988
Member of the Special Projects Committee
David A. Bryan
Partner
Wasserman, Bryan, Landry & Honold
Director Since: 1991
Member of the Compliance and Special Projects Committees
Wayne E. Carlin
President
Carlin Farms, Inc.
Director Since: 1988
Chair of the Examination Committee
David R. Francisco
President and Chief Operating Officer
Mid Am, Inc.
Director Since: 1988
Charles G. Hilbert
Retired
Former Senior Vice President, Mid Am Bank
Director Since: 1988
Member of the Examination Committee
D. James Hilliker
Vice President/Treasurer
Better Food Systems, Inc.
Director Since: 1995
Member of the Compliance and Examination Committees
Harry W. Kessler
Retired
Former Mayor of Toledo, Ohio
Director Since: 1988
Member o the Examination Committee
Walter L. Lamb, Jr.
Chairman
Mid States Container Corp.
Director Since: 1991
Member of the Special Projects Committee
James E. Laughlin
Retired
Former Chairman and Chief Executive Officer of
AmeriFirst Bank, N.A.
Director Since: 1993
Member of the Compliance and Examination Committees
Marilyn O. McAlear
Vice President and Treasurer
Service Spring Corp.
Director Since: 1988
Member of the Retirement Plan and Special Projects Committees
Blair D. Miller
Development Director
Ohio District, Lutheran Church Missouri Synod (LCMS)
Director Since: 1988
Member of the Examination Committee
Thomas S. Noneman
President
Tomco Plastic, Inc.
Director Since: 1988
Member of the Special Projects Committee
Edward J. Reiter
Chairman and Chief Executive Officer
Mid Am, Inc.
Director Since: 1988
Emerson J. Ross, Jr.
Manager, Corporate Community Relations
Owens Corning
Director Since: 1988
Chair of the Retirement Plan Committeeand Member of the
Examination Committee
Douglas J. Shierson
Private Investor
Director Since: 1995
Member of the Compliance and Examination Committees
C. Gregory Spangler
President and Chief Executive Officer
Spangler Candy Company
Director Since: 1993
Member of the Compliance and Special Projects Committees
Jerry L. Staley
Retired
Former Senior Vice President, Mid Am Bank
Director Since: 1988
Member of the Special Projects and Retirement Plan Committees
Dr. Robert E. Stearns
President
Dr. Stearns - Dr. Zouhary, D.D.S. Inc.
Director Since: 1988
Member of the Special Projects Committee
Richard G. Tessendorf, Jr.
Owner and Chief Executive Officer
R.I.C. Security Consultants& Services, Inc.
Director Since: 1993
Member of the Examination Committee
Pete Thomas
President
Thomas Farms, Inc.
Director Since: 1988
Chair of the Compliance Committee and Member of the Examination
Committee
Page 52
Inside back
Shareholder Information
Selected Quarterly Data (Unaudited)
Common Stock Prices, Dividends and Yields
Book Value Dividend Dividend
High Low Per Share Per Share Yield
1995
Fourth Quarter $17.00 $16.25 $8.40 $0.16 3.85
Third Quarter 16.50 15.38 8.17 0.16 4.02
Second Quarter 15.38 12.95 8.07 0.16 4.52
First Quarter 13.86 12.73 7.83 0.15 4.51
1994
Fourth Quarter $13.52 $11.82 $7.61 $0.15 4.74
Third Quarter 13.53 11.98 7.66 0.15 4.70
Second Quarter 12.19 11.16 7.57 0.15 5.14
First Quarter 13.02 11.78 7.60 0.14 4.52
Stock Information
At December 31, 1995 Common Stock Preferred Stock
Shares authorized 35,000,000 2,000,000
Shares issued 19,492,726 1,422,744
Treasury shares 522,361
Number of shareholders of record 8,208 299
Closing market price per share $16.406 $36.375
Book value per share 8.40 N/A
Stock exchange NASDAQ NASDAQ
Stock symbol MIAM MIAMP
Stock Performance
Value
January 1989 100 Shares $1,775
Without dividends reinvested
December 1995 242 Shares $3,963 (1)
With dividends reinvested
December 1995 302 Shares $4,954 (2)
(1) Cash dividends of $576
(2) Reinvested dividends of $675
Dividend Reinvestment Plan
The Company offers a Dividend Reinvestment Plan which allows
shareholders to reinvest their Mid Am, Inc. dividends in
additional Company common stock at the prevailing market price.
The plan has 4,362 participants, or 51 percent of our common
shareholders. Plan information may be obtained by calling the
Shareholder Relations Department at (419) 352-5271, or by
writing: Mid Am, Inc. Dividend Reinvestment Plan, P.O.
Box 428, 222 South Main Street, Bowling Green, Ohio 43402.
Other Information
Annual Meeting
Toledo Club Date: April 17, 1996
Toledo, Ohio Time: 10:00 a.m.
Headquarters
Write: Mid Am, Inc. Telephone: (419) 352-5271
222 South Main Street
Bowling Green, Ohio 43402
Form 10-K
Write: Mid Am, Inc. Telephone: Shareholder
P.O. Box 428 Relations
222 South Main Street Department
Bowling Green, Ohio 43402 (419) 352-5271
Investor Relations
Kelly Semer Telephone: (419) 352-5271
Mid Am, Inc.
222 South Main Street
Bowling Green, Ohio 43402
Transfer Agent
Boston EquiServe Telephone: (800) 426-5523
P.O. Box 8200
Boston, Mass. 02266-8200
1995 Mid Am, Inc. Corporate Awards
The following employees and board members were recognized this
year for their service to their communities and to our Company:
Chairman's Award
For Service in Education
R. Sue Kotts (Adrian State Bank)
President's Award
For Cultural Diversity Initiatives
Raquel Ribe (Mid Am Bank)
Golden Eagle Award
For Community Service
Michael Figgins (First National Bank)
Business Development Award
To an Outstanding Banking Center Board Member
Elvio Pescara (Mid Am Bank, Northwood)
CEO's Award of Excellence
For Outstanding Service Quality
This award is a rotating, quarterly award for Mid Am, Inc.
employees. This year, however, the first-ever permanent Award of
Excellence was given to David R. Francisco, in recognition of 25
years of exemplary service with the Company and its predecessors.
Notice of Appreciation
With great appreciation for his service, the Company accepted the
retirement of Diretor Charles W. Daley, Partner in the firm of
Daley, Balyeat, Balyeat & Leahy. Mr. Daley was a Director since
1991, and also served as a Director of AmeriCom Bank. He was
Chairman and Director of AmeriCom Bank and its predecessor from
1965 until his retirement. His contributions and expertise will
be sorely missed. The Company wishes him abundant success in his
future endeavors.
These customers and shareholders are responsible for this year's
annual report:
Industrial Printing Printing, electronic imaging
NovaVision Hologram design
Patricia A. Wise Copy and oversight
Corey Gray Coin photography
A special thanks to those employees who assisted in producing the
report:
Julianne Bejarano
Jenean Barrett
Kim Casado
Diane Critchet
John Cuckler
Vicky Dielman
Tim Dirrim
Miguel Every
Tom Funk
Don Hileman
Dennis Nemec
Linda Rathge
Jeff Schatz
Kelly Semer
Terry Sobczak
Dave Walter
Nicole Woodard
Design, illustration, and typesetting by the Marketing
Communications Department, Mid Am Bank