FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
Commission File No. 0-10585
Mid Am, Inc.
(Exact Name of Registrant as Specified in its Charter)
Ohio 34-1580978
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification Number)
222 South Main Street, Bowling Green, Ohio 43402
(Address of Principal Executive Offices) (Zip Code)
(419)352-5271
(Registrant's Telephone Number)
Indicate by check number mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X
Indicate the number of shares outstanding of each of the
issuer's classes of common stock as of the close of business
on April 30, 1996.
Common Stock, without par value - 18,794,182 shares
MID AM, INC.
INDEX
PART I - FINANCIAL INFORMATION Page Number
Item 1. Financial Statements
Consolidated Statement of Condition
(Unaudited)
March 31, 1996 and December 31, 1995 3
Consolidated Statement of Earnings
(Unaudited)
Three months ended March 31, 1996 and 1995 4
Consolidated Statement of Cash Flows
(Unaudited)
Three months ended March 31, 1996 and 1995 5
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion/Analysis and
Statistical Information 9
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 18
Item 2. Changes in Securities 19
Item 3. Defaults Upon Senior Securities 19
Item 4. Submission of Matters to a Vote
of Security Holders 19
Item 5. Other Information 19
Item 6. Exhibits and Reports on Form 8-K 19
SIGNATURES 20
EXHIBIT INDEX 21
PART I. - FINANCIAL INFORMATION
MID AM, INC. Consolidated Statement of Condition-(Unaudited)
March 31, 1996 December 31, 1995
Assets (Dollars in thousands)
Cash and due from banks $ 76,138 $ 102,600
Int-bearing deposits in banks 2,380 3,372
Federal funds sold 63,815 72,558
Securities available for sale 479,181 461,997
Loans held for sale 14,865 12,642
Loans, net of unearned fees 1,455,229 1,475,651
Allowance for credit losses (14,689) (14,859)
Net loans 1,440,540 1,460,792
Bank premises and equipment 49,059 49,489
Int receivable/other assets 46,069 41,301
Total Assets $2,172,047 $2,204,751
Liabilities
Demand deposits(non-interest)$ 178,202 $ 223,945
Savings deposits 593,076 593,807
Other time deposits 1,042,014 1,042,390
Total Deposits 1,813,292 1,860,142
Federal funds purchased and
securities sold under
agreements to repurchase 100,872 87,548
Capitalized lease
obligations and debt 48,134 48,405
Int payable/other liabilities 17,602 13,818
Total Liabilities 1,979,900 2,009,913
Shareholders' Equity
Preferred stock - no par value
Authorized - 2,000,000
Issued - 1,387,926 and
1,422,744 shares 34,698 35,569
Common stock - stated value
of $3.33 per share
Authorized - 35,000,000
Issued - 19,569,961
and 19,492,726 shares 65,232 64,975
Surplus 92,336 91,723
Retained earnings 12,470 9,529
Treasury stock
736,681 and 522,361 shares (12,270) (8,424)
Unrealized (losses)/gains on
securities avail for sale (319) 1,466
Total Shareholders' Equity 192,147 194,838
Total Liabilities and
Shareholders' Equity $2,172,047 $2,204,751
Page 3
MID AM, INC. Consolidated Statement of Earnings-(Unaudited)
Three Mths Ended
March 31,
1996 1995
(Dollars in thousands)
Interest Income
Int and fees on loans $33,241 $31,257
Int on deposits in banks 23 31
Int on federal funds sold 913 224
Int on taxable investments 6,004 6,217
Int on tax exempt investment 758 850
Total Interest Income 40,939 38,579
Interest Expense
Int on deposits 18,570 15,975
Int on borrowed funds 1,838 2,091
Total Interest Expense 20,408 18,066
Net Interest Income 20,531 20,513
Provision for credit losses 559 410
Net Interest Income After
Provision Credit Losses 19,972 20,103
Non-interest Income
Service charge deposit accts 1,628 1,459
Mortgage banking 2,842 1,493
Brokerage commissions 3,500 1,753
Collection agency fees 1,014 884
Net gains on security sales 325 34
Other income 2,245 1,867
Total Non-interest Income 11,554 7,490
Non-interest Expense
Salaries / employee benefits 10,042 8,759
Net occupancy expense 1,291 1,271
Equipment expense 1,903 1,755
Other expenses 8,525 7,327
Total Non-interest Expense 21,761 19,112
Income before income taxes 9,765 8,481
Applicable income taxes 3,158 2,673
Net Income $ 6,607 $ 5,808
Net Income Available to
Common Shareholders $ 5,968 $ 5,080
Earnings per Common Share:
Primary $ .31 $ .27
Fully diluted $ .30 $ .26
Page 4
MID AM, INC. Consolidated Statement of Cash Flows-(Unaudited)
Three Months Ended March 31,
1996 1995
Operating Activities (Dollars in thousands)
Net income $ 6,607 $ 5,808
Adjustments to reconcile net
income to net cash provided
by operating activities:
Provision for credit losses 559 410
Provision for depreciation
and amortization of assets 2,283 2,102
Proceeds from sales of mortgage
and other loans held for sale 169,036 33,487
Mortgage and other loans
originated for sale (169,247) (28,920)
Net gains on sales of assets (2,375) (517)
Increase in interest receivable
and other assets (4,092) (5,381)
Increase in interest payable
and other liabilities 3,784 959
Net Cash Provided By
Operating Activities 6,555 7,948
Investing Activities
Net decrease (increase) in interest-
bearing deposits in other banks 992 (1,677)
Net decrease (increase) in
federal funds sold 8,743 (45,371)
Proceeds from sales of securities
available for sale 8,129 4,651
Proceeds from maturities and paydowns
of securities available for sale 25,924 3,143
Purchases of securities
available for sale (53,984) (3,181)
Proceeds from maturities and paydowns
of investment securities 1,149
Purchases of investment securities (100)
Proceeds from maturities and paydowns
of mortgage-backed securities 4,362
Proceeds from sales of loans 911 25,595
Net decrease (increase) in loans 18,461 (41,828)
Proceeds from sales of other
real estate owned 247 219
Proceeds from sales of bank
premises and equipment 181 127
Purchases of bank premises
and equipment (1,313) (784)
Net Cash Provided By (Used For)
Investing Activities 8,291 (53,695)
Page 5
MID AM, INC. Consolidated Statement of Cash Flows-(Unaudited)
Three Months Ended March 31,
1996 1995
Financing Activities (Dollars in thousands)
Net decrease in demand
deposits and savings accounts (46,474) (38,400)
Net (decrease) increase in
other time deposits (376) 80,098
Net increase in federal
funds purchased and securities
sold under agreements repurchase 13,324 1,023
Repayment of capitalized lease
obligations and debt (271) (56,458)
Proceeds from issuance of debt 48,705
Cash dividends paid (3,666) (3,740)
Treasury stock
(net of reissuance, 234 and 36) (3,845) (169)
Preferred stock conversions,
fractional shares and other items (90)
Net Cash (Used For) Provided By
Financing Activities (41,308) 30,969
Net decrease in cash and
due from banks (26,462) (14,778)
Cash and due from banks at the
beginning of the period 102,600 85,553
Cash and due from banks at the
end of the period $ 76,138 $ 70,775
Supplemental Schedule of Noncash
Investing and Financing Activities
Securitization of loans
held for sale and transferred to
securities available for sale $ 27,463 $ 2,937
Transfers from loans to other
real estate owned $ 363 $ 154
Unrealized (losses) gains on
securities available for sale $ (2,747) $ 3,560
Adjustment to deferred tax 962 (1,245)
Adjustment to shareholders' equity $ (1,785) $ 2,315
Page 6
MID AM, INC.
Notes to Consolidated Financial Information - (unaudited)
1. Accounting Principles
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., Mid Am Information Services, Inc.
("MAISI"), Mid Am Credit Corp. ("MACC") (See Note 2) and Mid Am
of Michigan, Inc. All significant intercompany transactions and
accounts have been eliminated in consolidation.
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, in 1995, a
broker/dealer company was acquired and in 1996, a full service
equipment leasing and financing unit was formed which are
considered to be additional business segments; however, the
revenues, operating profit and assets of the collection business,
broker/dealer business and leasing and financing business are not
material for separate disclosure and the Company's predominant
business continues to be banking.
In the opinion of management of the Company, all adjustments
necessary to present fairly the financial position, results of
operations and cash flows as of and for the periods presented
have been made. Such adjustments consisted only of normal
recurring items.
2. Formation of Leasing Unit
On March 19, 1996 the Company announced the formation of Mid Am
Credit Corp., a full service equipment leasing and financing
unit. MACC will concentrate primarily on medical equipment
financing on a nationwide basis. MACC, as a wholly owned
subsidiary of the Company, will be headquartered in Columbus,
Ohio and will maintain a satellite office in Los Angeles,
California.
Page 7
3. Repurchase Program
On April 20, 1995, the Board of Directors of the Company
authorized management to undertake purchases of up to
1,375,000 shares of the Company's outstanding common stock
over a twelve month period in the open market or in privately
negotiated transactions. The shares reacquired are held in
Treasury and reserved for use in the Company's stock option plan
and for future stock dividend declarations. The program
represents a maximum of 7.5 percent of the Company's outstanding
shares. As of March 31, 1996 the Company has repurchased
approximately 703,000 shares.
4. Subsequent Events
As of April 30, 1996, the Company has repurchased approximately
764,000 shares through its repurchase program.
Page 8
Item 2. - Management's Discussion/Analysis and Statistical
Information
Three Months Ended March 31, 1996 and 1995
Results of Operations
For the three months ended March 31, 1996, net income
increased $799,000 to $6,607,000 compared to $5,808,000 for the
same period in 1995. Earnings per common share for the three
months ended March 31, 1996 were $.31 ($.30 fully diluted)
and $.27 ($.26 fully diluted) for the same period in 1995. For
the three months ended March 31, 1996, the annualized return
on average common shareholders' equity was 15.06 percent and the
annualized return on average assets was 1.23 percent compared to
13.99 percent and 1.13 percent, respectively, for the same period
in 1995.
Net Interest Income
Net interest income remained level at $20,531,000 in the first
quarter of 1996, as compared to $20,513,000 for the same period
in 1995. 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 Company's net interest margin
for the three months ended March 31, 1996 was 4.19 percent
compared to 4.41 percent for the same period in 1995. The net
interest margin decreased primarily due to the narrowing of the
Company's interest rate spread caused by the cost of funds rising
faster than yields on interest-earning assets. The primary
reason for the cost of funds increase was due to higher interest
rates in the first quarter of 1996 as compared to the same period
in 1995.
Provision for Credit Losses
The provision for credit losses increased $149,000 or 36 percent
to $559,000 in the first quarter of 1996 compared to $410,000 in
the first quarter of 1995. Net charge-offs were $729,000 or
0.20 percent (annualized) of average loans during the three
months ended March 31, 1996, compared to $382,000 or 0.11 percent
(annualized) for the same period in 1995. The increase in net
charge-offs was primarily due to an increase in charge-offs of
installment loans at one banking subsidiary. The provision for
credit losses reflects the amount necessary in management's
opinion to maintain an adequate allowance, based upon its
analysis of the loan portfolio (including the loan growth rate
and change in the mix of the loan portfolio) and general economic
conditions.
Page 9
At March 31, 1996, the Company's allowance for credit losses as a
percentage of loans was 1.01 percent compared to 1.01 percent at
December 31, 1995 and 1.02 percent at March 31, 1995. At March
31, 1996, the Company's allowance for credit losses represented
159 percent of non-performing loans as compared to 151 percent
and 172 percent at December 31, 1995 and March 31, 1995,
respectively.
Non-Interest Income
For the three months ended March 31, 1996, non-interest income
increased $4,064,000 or 54 percent to $11,554,000 compared to
$7,490,000 for the same period in 1995. The increase is due
primarily to an increase of $1,349,000 or 90 percent in mortgage
banking, an increase of $1,747,000 or 100 percent in brokerage
commissions and an increase of $291,000 in net gains on sales of
securities in the first quarter of 1996 as compared to the same
period in 1995. Mortgage banking increased primarily due to an
increase in net gains on sales of loans and brokerage commissions
increased primarily due to an increase in transactions related to
the volatility in the stock market.
Non-Interest Expense
For the three months ended March 31, 1996, non-interest expense
increased $2,649,000 or 14 percent to $21,761,000 compared with
$19,112,000 for the same period in 1995. For the three months
ended March 31, 1996, salaries and employee benefits expense
increased $1,283,000 or 15 percent to $10,042,000 compared to
$8,759,000 for the same period in 1995. The increase was
primarily due to an increase in the number of employees.
Equipment expense increased $148,000 or 8 percent to $1,903,000
for the first quarter of 1996 as compared to $1,755,000 for the
same period in 1995. The increase in equipment expense was
primarily due to an increases in depreciation expense ($142,000).
Other expenses increased $1,198,000 or 16 percent to $8,525,000
for the three months ended March 31, 1996 as compared to the same
period for 1995. The increase was primarily due to increases in
brokerage commissions expense ($946,000), credit card processing
expense ($96,000) and miscellaneous expense ($311,000), offset by
a decrease in FDIC premiums ($561,000). Effective January 1,
1996, the Federal Deposit Insurance Corporation eliminated the
bank insurance fund assessments which were $.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.
Page 10
Income Taxes
The provision for income taxes for the first quarter of 1996
increased $485,000 or 18 percent to $3,158,000 compared to
$2,673,000 for the same period in 1995. The increase was due
primarily to higher pretax income and a higher effective tax rate
of 32.3 percent for the first quarter of 1996 as compared to 31.5
percent for the same period in 1995.
Liquidity
The liquidity of a financial institution reflects its ability
to provide funds to meet loan requests, to accommodate
possible outflows in deposits and to take advantage of
interest rate market opportunities. Funding of loan requests,
providing for liability outflows, and management of interest
rate fluctuations require continuous analysis in order to
match the maturities of specific categories of short-term
loans and investments with specific types of deposits and
borrowings. Financial institution liquidity is thus normally
considered in terms of the nature and mix of the institution's
sources and uses of funds.
For the Company's bank subsidiaries, the primary sources of
liquidity at March 31, 1996 were federal funds sold of
$63,815,000, securities available for sale of $479,181,000 and
loans held for sale of $14,865,000. At December 31, 1995, the
primary sources of liquidity 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.
Since the Company is a holding company and does not conduct
operations, its primary source of liquidity is dividends paid
to it by its subsidiary financial institutions. However, certain
restrictions exist regarding the ability of its bank subsidiaries
to transfer funds to the Company in the form of cash dividends,
loans or advances. For national banks, the approval of the
Office of the Comptroller of the Currency is required in order to
pay dividends in excess of the subsidiaries' earnings retained
for the current year plus retained net profits for the preceding
two years. Adrian State Bank can pay dividends up to the total
amount of retained earnings as long as certain minimum capital
ratios are maintained. As of March 31, 1996, $10,969,000 was
available for distribution to the Company as dividends without
prior regulatory approval.
Page 11
Cash and due from banks decreased by $26,462,000 during the
three months ended March 31, 1996 to $76,138,000 from
$102,600,000 at December 31, 1995. Operating activities provided
$6,555,000 of cash in the three months ended March 31, 1996
as compared to cash provided of $7,948,000 for the same period
in 1995. For the three months ended March 31, 1996, cash
provided by operating activities was primarily attributable to
net income. For the same period in 1995, the cash provided by
operating activities was primarily due to net income as well as
proceeds from sales of mortgage and other loans held for sale.
The Company originated approximately $169,247,000 of mortgage
loans in the three months ended March 31, 1996, as compared to
$28,920,000 for the same period in 1995. The increase in
mortgage originations was primarily due to a decrease in market
rates which led to an increase in refinancing and new mortgage
activity. The higher mortgage banking activity in 1996 compared
to 1995 resulted in an increase in the amount of cash required to
fund mortgage loans. The higher activity also resulted in an
increase in volume of sales of mortgage loans providing cash
(from $169,247,000 to $33,487,000) which more than offset the
cash used for higher originations.
Cash of $8,291,000 was provided by investing activities during
the three months ended March 31, 1996 compared to cash used
for investing activities of $53,695,000 during the three months
ended March 31, 1995, an increase in cash flows from investing
activities of $61,986,000. The primary reason for the increase in
cash flows used for investing activities was the net decrease in
loans in 1996 of $18,461,000 compared to a net increase of
$41,828,000 for the same period in 1995 and the net decrease in
federal funds sold in 1996 of $8,743,000 compared to a net
increase of $45,371,000 for the same period in 1995. The net
decrease in loans and federal funds sold for the first three
months of 1996 was partially offset by the $53,984,000 of
purchases of securities available for sale.
Cash used for financing activities was $41,308,000 during
the three months ended March 31, 1996 as compared to
$30,969,000 of cash provided by financing activities for the same
period in 1995. The cash used for financing activities in 1996
was primarily due to a decrease in demand deposits and savings
accounts of $46,474,000, partially offset by a net increase in
federal funds purchased and securities sold under agreements
to repurchase of $13,324,000. The cash provided by financing
activities in 1995 was primarily due to a net increase in other
time deposits of $80,098,000, partially offset by a net decrease
of $38,400,000 in demand deposits and savings accounts. The
increase in other time deposits during the first three months of
1995 was primarily due to the Company marketing time deposits
with prepaid interest and time deposits at current market rates
outside the Company's market area. Common stock repurchases
aggregating $4,079,000 were made for the three months ending
March 31, 1996 in connection with the Company's repurchase
program authorized by the Board of Directors on April 20, 1995.
Page 12
Liquidity is within the Company's internal guidelines and
adequate to provide funds to meet loan requests and deposit
withdrawals.
Capital Resources
The Federal Reserve Board ("FRB") has established risk-based
capital guidelines that 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 March 31, 1996, a minimum Tier I capital ratio of 4.00 percent
and a total capital ratio of 8.00 percent are required. The
Company's qualifying capital at March 31, 1996 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
quarterly average 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. At
March 31, 1996, the Company's leverage ratio, Tier I, and
combined Tier I and Tier II (total capital) ratios were 8.37
percent, 11.57 percent and 12.51 percent, respectively.
Page 13
Capital ratios applicable to the Company's banking subsidiaries
at March 31, 1996 are as follows:
Total
Tier I Risk-based
Leverage Capital Capital
Regulatory Capital Requirements
Minimum 3.00 4.00 8.00
Well-capitalized 6.00 8.00 10.00
Bank Subsidiaries
Mid Am Bank 7.30 9.17 10.36
First National 7.33 10.13 10.57
AmeriCom 6.92 11.58 12.59
AmeriFirst 7.08 10.31 11.17
Adrian 6.70 9.58 10.83
Asset/Liability Management
As of March 31, 1996, the Company is maintaining a manageable
positive gap position for asset and liability repricing within
a twelve-month period, and therefore does not expect to
experience any significant fluctuations in its net interest
income as a consequence of changes in interest rates.
Asset Quality
At March 31, 1996, the Company's percentage of non-performing
loans (non-accrual loans, loans past due 90 days or more and
restructured loans) to total loans was 0.64 percent, as compared
to 0.67 percent at December 31, 1995 and 0.59 percent at March
31, 1995. Non-performing loans at March 31, 1996 aggregated
$9,250,000, a decrease of $581,000 or 6 percent from December 31,
1995. The Company's percentage of net charge-offs for the three
months ended March 31, 1996 and March 31, 1995 to average loans
outstanding were 0.20 percent (annualized) and 0.11 percent
(annualized), respectively. At March 31, 1996, the Company's
allowance for credit losses was 1.01 percent of total loans, as
compared to 1.01 percent and 1.02 percent at December 31, 1995
and March 31, 1995, respectively. The allowance for credit
losses as a percentage of non-performing loans at March 31, 1996
was 159 percent compared to 151 percent at December 31, 1995 and
172 percent at March 31, 1995. The ratio of non-performing
assets (constituting the sum of non-performing loans and other
real estate owned) to total loans plus other real estate owned
was 0.69 percent at March 31, 1996, compared to 0.72 percent and
0.67 percent at December 31, 1995 and March 31, 1995,
respectively. As of March 31, 1996, based upon a review of the
loan portfolio (including the loan growth rate and change in the
mix of the loan portfolio), management believes the allowance for
credit losses is adequate.
Page 14
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 $27,614,000 and
$32,715,000 at March 31, 1996 and December 31, 1995,
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. 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. At March 31, 1996
and December 31, 1995, specific allocations of the allowance for
credit losses related to these loans aggregated $3,231,000 and
$3,359,000, respectively. The provision for these loans is based
on the Company's assessment of the adequacy of the current level
of the allowance for credit losses, recent charge-off experience,
the level of recoveries and other factors delineated in the
Company's reserve policy.
The Company, through its bank subsidiaries, owns approximately
$6,200,000 of lease receivables representing approximately 1,000
leases which were purchased from and are being serviced by The
Bennett Funding Group, Inc., a Syracuse-based company which
recently filed for bankruptcy protection. The Company has taken
steps to remove its leases from the bankruptcy estate and is
pursuing all other remedies available to it. While the
timeliness of future payments and the ultimate collectibility of
the leases remains uncertain, the Company does not currently
believe it will be subject to a material loss.
Page 15
The following table presents asset quality information for each
of the Company's banking subsidiaries at March 31, 1996.
(Dollars in thousands)
Mid Am First
Bank National AmeriCom AmeriFirst Adrian
Loans:
Non-accrual $3,980 $323 $1,648 $1,983 $194
Contractually
past due 90
days or more 62 354 428 147 53
Restructured 0 0 78 0 0
Total
non-performing
loans 4,042 677 2,154 2,130 247
Other real
estate owned 152 0 315 23 0
Total
non-performing
assets $4,194 $677 $2,469 $2,153 $247
Non-performing
loans to
total loans .74 .20 .90 .98 .23
Non-performing
assets to total
loans plus
other real
estate owned .76 .20 1.03 1.00 .23
Allowance for
credit losses
to total
non-performing
loans 189.31 243.72 113.14 80.23 502.43
Allowance for
credit losses
to total
non-performing
assets 182.45 243.72 98.70 79.38 502.43
Ratio of net
charge-offs to
average loans
outstanding .30 .01 .08 1.22 (.24)
Ratio of
allowance for
credit losses
to total loans 1.39 .48 1.02 .79 1.16
Page 16
The following table sets forth the Company's allocation of
the allowance for credit losses as of March 31, 1996 and
December 31, 1995.
(Dollars in thousands)
March 31, 1996 December 31, 1995
Specific allowance
Real estate $ 286 $ 320
Commercial 3,558 3,989
Installment 339 560
Total specific allowance 4,183 4,869
General allowance
Real estate 729 1,190
Commercial 392 670
Installment 573 659
Other 455 474
Total general allowance 2,149 2,993
Unallocated allowance 8,357 6,997
Allowance for credit losses $14,689 $14,859
The following table presents a summary of the Company's
credit loss experience for the three months ended March 31, 1996
and 1995.
(Dollars in thousands)
1996 1995
Balance of allowance at
beginning of year $14,859 $14,722
Loans actually charged-off:
Real estate 74 25
Commercial, financial
and agricultural 608 488
Installment and credit card 797 213
Total loans charged-off 1,479 726
Recoveries of loans previously
charged-off:
Real estate 162 90
Commercial, financial
and agricultural 407 126
Installment and credit card 181 128
Total recoveries of loans 750 344
Net charge-offs 729 382
Page 17
Addition to allowance
charged to expense 559 410
Transfer of other real
estate owned allowance
relating to in-substance
foreclosure loans 36
Allowance for credit losses $14,689 $14,786
Ratio of net charge-offs to
average loans outstanding .20 .11
Ratio of allowance for credit
losses to total loans 1.01 1.02
Ratio of allowance for credit
losses to total
non-performing loans 158.80 172.47
PART II. - OTHER INFORMATION
Item 1. - Legal Proceedings
The Company's broker/dealer subsidiary, MFI, is a co-defendant
in a consolidated NASD Arbitration (NASD Case No. 95-05733). The
matter revolves around an investment advisor unaffiliated with
MFI or the Company who is not a party to the arbitration as he is
believed to be insolvent. The four Claimants allege that certain
trades directed by the unaffiliated investment advisor caused an
economic loss of approximately $3,000,000 to the Claimants. As
the trades were executed by brokers of MFI, MFI and the
individual brokers were made parties to the action. The causes
of action are brought under theories of negligence, breach
of contract, negligent hiring and failure to supervise. The
Claimants demand relief of actual damages, attorneys' fees,
interest and costs. Management of the Company intends to oppose
the action vigorously and is currently unable to make an
assessment as to the likely outcome of the arbitration.
Other than as described above, the Company is subject to various
pending and threatened lawsuits in which claims for monetary
damages are asserted in the ordinary course of business. While
any litigation involves an element of uncertainty, in the opinion
of management, liabilities, if any, arising from such litigation
will not have a material adverse effect on the financial
condition or results of operations of the Company.
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Item 2. - Changes in Securities
Not applicable.
Item 3. - Defaults Upon Senior Securities
Not applicable.
Item 4 - Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5 - Other Information
Not applicable.
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
1. Statement Re Computation of Earnings Per
Common Share
2. Press Release Announcing Formation of Leasing Unit
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the first quarter of
1996.
Page 19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly
authorized.
MID AM, INC.
s/ Donald P. Hileman
Donald P. Hileman
Senior Vice President / Finance
DATE: May 14, 1996
Page 20
MID AM, INC.
EXHIBIT INDEX
Exhibit No. Description Page Number
(1) Statement Re Computation of
Earnings Per Common Share 22
(2) Press Release Announcing
Formation of Leasing Unit 23-24
Page 21
EXHIBIT 1
Statement Re Computation of Earnings Per Common Share
Attached to and made part of Part II of Form 10-Q for the
three months ended March 31, 1996 and 1995.
Three Months Ended March 31,
1996 1995
Primary weighted average
number of common shares
for computation of
earnings per common share 19,126,000 19,131,000
Fully diluted weighted
average number of common
shares for computation of
earnings per common share 22,305,000 22,684,000
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EXHIBIT 2
Press Release Announcing Formation of Leasing Unit
David R. Francisco
President and Chief Operating Officer
(419) 327-6305
W. Granger Souder
Executive Vice President / General Counsel
(419) 327-6304
MID AM, INC. ANNOUNCES FORMATION OF LEASING UNIT
March 19, 1996 (Bowling Green, Ohio, NASDAQ: MIAM and MIAMP)
Mid Am, Inc. today announced the formation of Mid Am Credit
Corp., a full service equipment leasing and financing unit. The
Company's latest business initiative will concentrate primarily
on medical equipment financing on a nationwide basis. Mid Am
Credit Corp., as a wholly owned subsidiary of Mid Am, Inc., will
be headquartered in Columbus, Ohio and will maintain a satellite
office in Los Angeles, California. The Company anticipates
receiving regulatory approval in early April.
David R. Francisco, President and Chief Operating Officer of Mid
Am, Inc. stated that "the health care equipment financing market
represents a significant opportunity for our Company, and we have
assembled an exceptionally talented team of individuals to lead
this effort." Robert E. Dorr of Columbus, Ohio, will serve as
President and CEO of Mid Am Credit Corp., and Paul T. Appel will
serve as its Executive Vice President. The two bring to Mid Am
over 30 years of experience in the equipment leasing and
financing business. "We have concluded that the health care
financing market is particularly attractive in view of the low
levels of business failures, high average incomes and the rapid
changes in the health care field," says Mr. Dorr. "New practice
and practice acquisition financing markets are currently
underserved, which provides a remarkable opportunity for us to
serve health care professionals nationwide."
Since mid-1995, Mid Am, Inc. has devoted significant resources
toward the development of existing and additional fee-based
businesses, and has stated its objective of increasing its gross
fee-based income by $20 million over three years. "This exciting
new business venture represents a significant step toward our
corporate fee income goals," said Mr. Francisco. "And as Mid Am
Credit Corp. develops financing relationships with health care
professionals in its markets, we intend to offer them additional
products and services made available by other affiliates of Mid
Am, Inc."
Page 23
Mid Am, Inc. is the ninth largest bank holding company in Ohio
and is headquartered in Bowling Green, Ohio. The Company's
affiliates include Mid American National Bank and Trust Company,
Toledo; First National Bank Northwest Ohio, Bryan; American
Community Bank, N.A., Lima; AmeriFirst Bank, N.A., Xenia and
Cincinnati; Adrian State Bank, Adrian, Michigan; International
Credit Service, Toledo and CCB Services, Clearwater, Florida;
MFI Investments Corp., Bryan; and Mid Am Information Services,
Inc., Bowling Green, the Company's technology and operations
affiliate.
- -end-
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