1996
ANNUAL REPORT SUPPLEMENT

MIDAM, INC. LOGO

MID AM, INC.
1996 ANNUAL REPORT SUPPLEMENT

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Contents Page
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A Message to our Shareholders............................... S-1
Financial Highlights........................................ S-2
Shareholder Information..................................... S-3
Corporate Information....................................... S-4
Selected Quarterly Data..................................... S-5
Summary of Financial Data................................... S-6
Management's Discussion and Analysis and Statistical
Information............................................... S-7
Report of Independent Accountants........................... S-27
Consolidated Statement of Condition......................... S-28
Consolidated Statement of Earnings.......................... S-29
Consolidated Statement of Changes in Shareholders' Equity... S-30
Consolidated Statement of Cash Flows........................ S-31
Notes to Consolidated Financial Statements.................. S-32
Mid Am, Inc. Nine Year Performance Summary (Unaudited)...... S-52
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A MESSAGE TO OUR SHAREHOLDERS

This Annual Report Supplement to our Proxy Statement contains our audited
financial statements, management discussion and analysis and other information
previously presented in our annual report to shareholders. This Supplement
contains all of the information that regulations of the Securities and Exchange
Commission (the "SEC") requires to be presented in annual reports to
shareholders. For legal purposes, this Supplement is part of the Mid Am, Inc.
Annual Report to Shareholders. Although attached to our Proxy Statement, this
Supplement is not part of our Proxy Statement, is not deemed to be soliciting
material, and is not deemed to be filed with the SEC except to the extent that
it is expressly incorporated by reference in a document filed with the SEC.

Our 1996 Annual Report to Shareholders accompanies the Proxy Statement. That
report presents the financial results of our company in a format and level of
detail that we believe our shareholders will find useful and informative.
Shareholders who would like to receive more detail than provided in the
following Annual Report Supplement are invited to request our Annual Report on
Form 10-K.

Our Annual Report on Form 10-K, as filed with the SEC, will be provided without
charge to any shareholder upon written request to Mid Am, Inc., Shareholder
Relations Department, 221 South Church Street, Bowling Green, Ohio 43402.

S-1

FINANCIAL HIGHLIGHTS

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(Dollars in thousands, Percentage
except per share and ratio data) 1996 1995 Change

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FOR THE YEAR
Net income......................................... $25,992 $24,967 4.11%
Return on:
Average assets................................... 1.20% 1.17%
Average common shareholders' equity.............. 15.01% 14.51%

PER COMMON SHARE DATA
Primary net income................................. $1.12 $1.05 6.67%
Fully diluted net income........................... 1.07 1.01 5.94
Dividends.......................................... 0.60 0.57 5.26
Book value at year end............................. 7.83 7.64 2.49

AT YEAR END
Assets............................................. $2,180,974 $2,204,751 (1.08)%
Loans.............................................. 1,574,880 1,475,651 6.72
Deposits........................................... 1,832,909 1,860,142 (1.46)
Common shareholders' equity........................ 163,111 159,269 2.41
Total shareholders' equity......................... 193,204 194,838 (0.84)

AVERAGE FOR THE YEAR
Assets............................................. $2,162,122 $2,138,638 1.10%
Loans.............................................. 1,500,941 1,450,629 3.47
Deposits........................................... 1,813,889 1,788,386 1.43
Common shareholders' equity........................ 157,084 153,112 2.59
Total shareholders' equity......................... 190,598 191,072 (0.25)
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Fully
QUARTERLY FINANCIAL HIGHLIGHTS Net Provision Primary Diluted
(Dollars in thousands, Interest For Credit Net Earnings Earnings
except per share data) Income Losses Income Per Share Per Share

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1996
Fourth Quarter..................... $22,160 $1,597 $9,029 $0.40 $0.37
Third Quarter...................... 21,361 1,305 4,245 0.18 0.18
Second Quarter..................... 20,862 1,076 6,111 0.26 0.25
First Quarter...................... 20,531 559 6,607 0.28 0.27

1995
Fourth Quarter..................... $20,718 $994 $6,220 $0.26 $0.25
Third Quarter...................... 20,444 864 6,472 0.27 0.26
Second Quarter..................... 20,552 734 6,467 0.27 0.25
First Quarter...................... 20,513 410 5,808 0.25 0.24
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S-2

SHAREHOLDER INFORMATION

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QUARTERLY COMMON STOCK PRICES,
DIVIDENDS AND YIELDS Book Value Dividend Dividend
1996 High Low Per Share Per Share Yield

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Fourth Quarter................................ $18.25 $17.00 $7.83 $0.16 3.63%
Third Quarter................................. 18.25 16.70 7.51 0.15 3.43
Second Quarter................................ 17.05 16.59 7.41 0.145 3.46
First Quarter................................. 16.82 14.89 7.60 0.145 3.67
1995
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Fourth Quarter................................ $15.45 $14.77 $7.64 $0.145 3.85%
Third Quarter................................. 15.00 13.98 7.43 0.145 4.02
Second Quarter................................ 13.98 11.77 7.34 0.145 4.52
First Quarter................................. 12.60 11.57 7.12 0.14 4.51
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STOCK INFORMATION Common Preferred
At December 31, 1996 Stock Stock

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Shares authorized........................................... 35,000,000 2,000,000
Shares issued............................................... 20,887,675 1,203,725
Treasury shares............................................. 46,610
Number of shareholders of record............................ 8,244 243
Closing market price per share.............................. $17.125 $41.250
Book value per share........................................ 7.83 N/A
Stock exchange.............................................. NASDAQ NASDAQ
Stock symbol................................................ MIAM MIAMP
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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 4,536 participants, or 53 percent of our
common and preferred shareholders of record. Plan information may be obtained by
calling the Shareholder Relations Department at (419) 327-6300, or by writing:
Mid Am, Inc. Dividend Reinvestment Plan, P.O. Box 428, 221 South Church Street,
Bowling Green, Ohio 43402.

S-3

CORPORATE INFORMATION

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Annual Meeting
Place:............................ The Toledo Club Date: April 11, 1997
Toledo, Ohio Time: 10:00 a.m.
Headquarters
Write:............................ Mid Am, Inc. Telephone: (419) 327-6300
221 South Church Street
P.O. Box 428
Bowling Green, Ohio 43402
Form 10-K
Write:............................ Mid Am, Inc. Telephone: (419) 327-6300
Shareholder Relations Department
221 South Church Street
P.O. Box 428
Bowling Green, Ohio 43402
Investor Relations
Write:............................ Kelly Semer Telephone: (419) 327-6300
Mid Am, Inc.
221 South Church Street
P.O. Box 428
Bowling Green, Ohio 43402
Transfer Agent
Write:............................ Boston Equiserve Telephone: (800) 426-5523
P.O. Box 8200
Boston, Mass. 02266-8200

S-4

MID AM, INC. SELECTED QUARTERLY DATA

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Quarter Ended
(Dollars in thousands,
except per share and ratio data) December 31 September 30 June 30 March 31

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1996
Net interest income............................. $22,160 $21,361 $20,862 $20,531
Provision for credit losses..................... 1,597 1,305 1,076 559
Net income...................................... 9,029(3) 4,245(4) 6,111 6,607
Earnings per common share:
Primary....................................... 0.40 0.18 0.26 0.28
Fully diluted................................. 0.37 0.18 0.25 0.27
Return on average total assets (1).............. 1.65% 0.79% 1.14% 1.23%
Return on average common shareholders' equity
(1)........................................... 21.37 9.42 14.08 15.06
Net interest margin (1)(2)...................... 4.44 4.35 4.28 4.19
Net charge-offs to average loans (1)............ 0.30 0.20 0.29 0.20
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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....................................... 0.26 0.27 0.27 0.25
Fully diluted................................. 0.25 0.26 0.25 0.24
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
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(1) Calculated on an annualized basis.

(2) Net interest income as a percentage of interest-earning assets, on a tax
equivalent basis.

(3) Net income for the quarter ended December 31, 1996 includes a pre-tax gain
of $4,568,000 ($2,969,000 after tax) from the sale of credit card accounts.

(4) Net income for the quarter ended September 30, 1996 includes a pre-tax
charge of $3,563,000 ($2,316,000 after tax) for a special FDIC assessment
for Savings Association Insurance Fund (SAIF) deposits.

The following discussion and analysis represents a review of Mid Am, Inc.'s
consolidated financial condition and results of operations. Mid Am, Inc. (the
"Company"), a financial services holding company, has five bank subsidiaries:
Mid American National Bank and Trust Company ("Mid Am Bank"); First National
Bank Northwest Ohio ("First National"); American Community Bank, N.A.
("AmeriCom"); AmeriFirst Bank, N.A. ("AmeriFirst"); and Adrian State Bank
("Adrian"); a collection and credit services company, Mid Am Recovery Services,
Inc. ("MARSI"); a securities broker/dealer, MFI Investments Corp. ("MFI"); a
data processing company, Mid Am Information Services, Inc. ("MAISI"); a
commercial finance company, Mid Am Credit Corp. ("MACC"); and a mortgage
brokerage company, Simplicity Mortgage Consultants, Inc. ("Simplicity"). This
review should be read in conjunction with the consolidated financial statements
and other financial data presented elsewhere herein. All per share data for
prior periods have been restated to reflect the stock dividend declared and paid
in 1996. 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:

S-5

MID AM, INC. SUMMARY OF FINANCIAL DATA

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Year Ended December 31,
(Dollars in thousands, except shares,
per share and ratio data) 1996 1995 1994 1993 1992

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CONSOLIDATED STATEMENT OF EARNINGS DATA
Interest income........................... $ 164,983 $ 162,543 $ 140,571 $ 139,387 $ 129,735
Interest expense.......................... 80,069 80,316 59,564 61,057 64,379
---------- ---------- ---------- ---------- ----------
Net interest income....................... 84,914 82,227 81,007 78,330 65,356
Provision for credit losses............... 4,537 3,002 1,224 3,991 4,917
---------- ---------- ---------- ---------- ----------
Net interest income after provision for
credit losses........................... 80,377 79,225 79,783 74,339 60,439
Non-interest and other income............. 49,501 35,955 32,554 34,002 20,002
Non-interest and other expense............ 91,419 78,416 78,579 72,962 56,151
---------- ---------- ---------- ---------- ----------
Income before income taxes and change in
accounting principle.................... 38,459 36,764 33,758 35,379 24,290
Applicable income taxes................... 12,467 11,797 10,505 10,698 6,454
---------- ---------- ---------- ---------- ----------
Income before change in accounting
principle............................... 25,992 24,967 23,253 24,681 17,836
Cumulative effect of change in accounting
principle............................... 1,373
---------- ---------- ---------- ---------- ----------
Net income................................ $ 25,992 $ 24,967 $ 23,253 $ 24,681 $ 19,209
========== ========== ========== ========== ==========
Net income available to common
shareholders............................ $ 23,585 $ 22,216 $ 20,336 $ 21,763 $ 17,602
========== ========== ========== ========== ==========
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CONSOLIDATED STATEMENT OF CONDITION DATA
(YEAR END)
Total assets.............................. $2,180,974 $2,204,751 $2,078,789 $2,067,371 $1,871,849
Securities available for sale............. 432,791 461,997 212,437 238,125 63,800
Investment and mortgage-backed
securities.............................. 252,009 270,623 349,749
Loans held for sale....................... 7,927 12,642 12,963 88,131 68,968
Loans, net of unearned income............. 1,574,880 1,475,651 1,433,289 1,265,945 1,200,512
Allowance for credit losses............... 15,672 14,859 14,722 15,157 15,718
Total deposits............................ 1,832,909 1,860,142 1,736,492 1,769,083 1,630,141
Shareholders' equity...................... 193,204 194,838 185,252 183,425 164,792
Weighted average common shares outstanding
-- primary.............................. 20,986,000 21,126,000 20,951,000 20,610,000 18,768,000
Weighted average common shares outstanding
-- fully diluted........................ 24,274,000 24,851,000 24,890,000 24,541,000 20,929,000
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PER COMMON SHARE DATA
Cash dividends declared................... $ 0.60 $ 0.57 $ 0.54 $ 0.49 $ 0.45
Shareholders' equity...................... 7.83 7.64 6.92 7.05 6.63
Primary:
Income before change in accounting
principle............................... 1.12 1.05 0.97 1.05 0.86
Net income................................ 1.12 1.05 0.97 1.05 0.94
Fully diluted:
Income before change in accounting
principle............................... 1.07 1.01 0.94 1.01 0.85
Net income................................ 1.07 1.01 0.94 1.01 0.92
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SELECTED FINANCIAL RATIOS
Return on average total assets............ 1.20% 1.17% 1.14% 1.23% 1.18%
Return on average common shareholders'
equity.................................. 15.01 14.51 13.88 16.39 16.22
Net interest margin....................... 4.32 4.23 4.38 4.30 4.43
Average loans to average deposits......... 82.75 81.11 76.94 71.54 71.93
Leverage ratio............................ 8.44 8.37 8.66 8.19 8.40
Average total shareholders' equity to
average total assets.................... 8.82 8.93 9.16 8.65 8.04
Allowance for credit losses to period end
loans................................... 1.00 1.01 1.03 1.20 1.31
Allowance for credit losses to total
non-performing loans.................... 236.63 173.22 231.99 170.67 185.14
Non-performing loans to period end
loans................................... 0.42 0.58 0.44 0.70 0.71
Net charge-offs to average loans.......... 0.25 0.20 0.12 0.41 0.31
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S-6

MANAGEMENT'S DISCUSSION AND 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 1996 increased $1,025,000 or 4% to $25,992,000, as compared
to net income in 1995 of $24,967,000 and $23,253,000 in 1994. Fully diluted
earnings per share were $1.07, up from $1.01 in 1995 and $.94 in 1994. In 1996,
return on average common shareholders' equity was 15.01% and return on average
assets was 1.20% as compared to 14.51% and 1.17% in 1995, and 13.88% and 1.14%
in 1994. The increase in 1996 earnings was primarily due to a net pre-tax gain
on the sale of the Company's credit card portfolio of $4,568,000, an improved
net interest margin, an increase in mortgage banking revenues of $2,229,000
caused by increased volume in mortgage loan sales and an increase in other
fee-based revenue, offset partially by a one-time Savings Association Insurance
Fund ("SAIF") assessment of $3,563,000 and higher employee expenses caused by
various Florida collection agency acquisitions and the formation of a new
company, Mid Am Credit Corp. The increase in 1995 earnings compared to 1994 was
primarily attributable to an increase in net gains on sales of loans of
$1,572,000, expense control and a decrease in deposit Bank Insurance Fund
premium expense.

The provision for credit losses increased $1,535,000 or 51% in 1996 to
$4,537,000. The increase in the 1996 provision was due primarily to increased
loans and higher net charge-offs. The 1995 provision for credit losses compared
to 1994 was $1,778,000 higher, an increase of 145%. The 1994 provision was lower
than the provisions taken in 1995 because of the reversal of $1,600,000 in the
allowance for credit losses at First National in the third quarter.

ACQUISITIONS AND BUSINESS FORMATIONS

During 1996, the Company completed its acquisition of Simplicity Mortgage
Consultants, Inc., an Indiana-based mortgage brokerage company with annual
revenues of approximately $900,000, and National Recovery Services, Professional
Adjustment of Ft. Myers, Florida, and Gulf Coast Collection Bureau, Inc.,
Florida-based collection agencies with annual revenues of approximately
$1,000,000. The aggregate purchase price of the four transactions was $1,500,000
and included $551,000 cash and the issuance of 55,380 shares of Mid Am, Inc.
common stock. The results of operations includes the results of the acquired
entities from the dates of their respective acquisitions.

In April 1996, Mid Am Credit Corp. commenced operations as a full-service
equipment leasing and financing unit. MACC's lending efforts are concentrated
primarily on medical equipment financing on a nationwide basis. MACC, as a
wholly-owned subsidiary of the Company, is headquartered in Columbus, Ohio, with
satellite offices in Los Angeles, California and Nashville, Tennessee.

On July 31, 1995, the Company completed its merger with MFI Investments
Corp. ("MFI") of Bryan, Ohio, a full-service, independent broker/dealer which
had approximately 250 financial consultants in over 19 states at the date of
acquisition. The transaction was accounted for as a pooling-of-interests and was
consummated by the issuance of 345,983 shares of Mid Am, Inc. common stock to
MFI shareholders, of which 169,701 shares were held in escrow at December 31,
1996 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 $128,000,000 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 1,701,328 shares of Mid Am, Inc. common
stock to ASB shareholders.

On November 30, 1994, the Company completed its mergers with International
Credit Services ("ICS") and CCB Services, Inc. ("CCBS"), collection and credit
service companies headquartered in Ohio and Florida, respectively, with
aggregate net collection fee revenues of $2,400,000 for the year ended December
31, 1993. The

S-7

transactions were accounted for as poolings-of-interests and were consummated by
the issuance of 532,397 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 $66,000,000 asset bank in Northwood, Ohio. The transaction was
accounted for as a pooling-of-interests and was consummated by the issuance of
756,892 shares of Mid Am, Inc. common stock to Farmers' shareholders.

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,
1996.

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Year ended December 31,
(Dollars in thousands) 1996 1995 1994

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Interest income (1)...................................... $166,954 $164,794 $142,714
Interest expense......................................... 80,069 80,316 59,564
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Net interest income (tax equivalent basis)............... $ 86,885 $ 84,478 $ 83,150
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1996 vs. 1995 1995 vs. 1994
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Change from prior year Amount Percent Amount Percent

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Interest income (1)............................... $2,160 1.31% $22,080 15.47%
Interest expense.................................. (247) (0.31) 20,752 34.84
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Net interest income (tax equivalent basis)........ $2,407 2.85 $ 1,328 1.60
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(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% for 1996, 1995 and 1994. Included in interest income are amortized loan
fees of $1,427,000 in 1996, $1,965,000 in 1995 and $2,725,000 in 1994.

1996 AVERAGE INTEREST-EARNING ASSET MIX

Average interest-earning assets in 1996 totaled $2,013,106,000 as compared
with $1,995,004,000 in 1995 and $1,897,079,000 in 1994. In 1996, average loans
(including loans held for sale) and securities available for sale (including
investment securities in 1994), the two largest components of interest-earning
assets, comprised 75% and 23%, respectively, of average interest-earning assets
as compared to 73% and 23% in 1995 and 72% and 26% in 1994.

1996 AVERAGE INTEREST-BEARING LIABILITY MIX

Average interest-bearing liabilities in 1996 totalled $1,764,738,000 as
compared with $1,756,602,000 in 1995 and $1,667,605,000 in 1994. In 1996,
average time deposits and savings deposits, the two largest components of
interest-bearing liabilities, comprised 59% and 25%, respectively, of average
interest-bearing liabilities as compared to 59% and 26% in 1995, and 57% and 31%
in 1994. There was virtually no change in the percentage of time deposits to
total interest-bearing liabilities from 1995 to 1996, and a slight decrease for
the same period for savings deposits. The increase in time deposits as a
percentage of total interest-bearing liabilities from 1994 to 1995 is primarily
the result of increased rates in the first half of 1995, the introduction of new
time deposit products, and various special rates on time deposits. Savings
deposits as a percentage of total interest-bearing deposits declined as a result
of rising rates and special rates on time deposits.

S-8

The following table reflects the components of the Company's net interest
income, for each of the three years ended December 31, 1996, 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.

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1996 1995 1994
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Interest Average Interest Average Interest
Year Ended December 31, Average Income/ Yields/ Average Income/ Yields/ Average Income/
(Dollars in thousands) Balance Revenue Rates Balance Revenue Rates Balance Revenue

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ASSETS
Interest-earning assets:
Securities available for
sale...................... $ 461,598 $ 29,760 6.45% $ 250,886 $ 15,023 5.99% $ 223,800 $ 13,028
Fair value adjustment....... (1,991) (4,754) (2,201)
Investment securities:
Taxable..................... 165,773 10,793 6.51 205,150 11,973
Tax exempt.................. 53,925 4,606 8.54 60,843 5,214
Federal funds sold.......... 39,387 2,093 5.31 62,095 3,610 5.81 32,835 1,228
Loans held for sale......... 10,455 1,049 10.03 12,641 1,170 9.26 46,018 3,388
Loans and leases
receivable................ 1,500,941 133,887 8.92 1,450,629 129,374 8.92 1,327,397 107,759
Time deposits in other
banks..................... 2,716 165 6.08 3,809 218 5.72 3,237 124
---------- -------- ---------- -------- ---------- --------
Total interest-earning
assets.................... 2,013,106 166,954 8.30 1,995,004 164,794 8.26 1,897,079 142,714
-------- -------- --------
Non-interest-earning assets:
Cash and due from banks..... 69,049 66,647 63,431
Premises and equipment...... 48,980 49,530 51,931
Other assets................ 45,847 42,496 41,446
Allowance for credit
losses.................... (14,860) (15,039) (15,250)
---------- ---------- ----------
Total noninterest-earning
assets.................... 149,016 143,634 141,558
---------- ---------- ----------
Total assets................ $2,162,122 $2,138,638 $2,038,637
========== ========== ==========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Interest-bearing liabilities:
Savings deposits............ $ 438,274 9,745 2.22% $ 455,149 10,981 2.41% $ 522,324 12,446
Money market accounts....... 151,887 5,286 3.48 121,459 4,230 3.48 91,834 2,331
Time deposits............... 1,037,331 58,097 5.60 1,037,277 57,316 5.53 942,156 39,912
---------- -------- ---------- -------- ---------- --------
Total interest-bearing
deposits.................. 1,627,492 73,128 4.49 1.613.885 72,527 4.49 1,556,314 54,689
Short-term borrowings and
other liabilities......... 97,370 4,239 4.35 90,368 4,169 4.61 74,508 2,743
Long-term liabilities....... 39,876 2,702 6.78 52,349 3,620 6.92 36,783 2,132
---------- -------- ---------- -------- ---------- --------
Total interest-bearing
liabilities............... 1,764,738 80,069 4.54 1,756,602 80,316 4.57 1,667,605 59,564
-------- -------- --------
Non-interest-bearing
liabilities:
Demand deposits............. 186,397 174,501 168,855
Other liabilities........... 20,389 16,463 15,467
---------- ---------- ----------
Total noninterest-bearing
liabilities............... 206,786 190,964 184,322
Shareholders' equity........ 190,598 191,072 186,710
---------- ---------- ----------
Total liabilities and
shareholders' equity...... $2,162,122 $2,138,638 $2,038,637
========== ========== ==========
Net interest income
(tax equivalent basis).... 86,885 84,478 83,150
Reversal of tax equivalent
adjustment................ (1,971) (2,251) (2,143)
-------- -------- --------
Net interest income......... $ 84,914 $ 82,227 $ 81,007
======== ======== ========
Net interest rate spread
(tax equivalent basis).... 3.76% 3.69%
===== ====
Net interest margin (net
interest income as a
percentage of
interest-earning assets,
tax equivalent basis)..... 4.32% 4.23%
===== ====
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1994
- -------------------------------------------
Average
Year Ended December 31, Yields/
(Dollars in thousands) Rates

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ASSETS
Interest-earning assets:
Securities available for
sale...................... 5.82%
Fair value adjustment.......
Investment securities:
Taxable..................... 5.84
Tax exempt.................. 8.57
Federal funds sold.......... 3.74
Loans held for sale......... 7.36
Loans and leases
receivable................ 8.12
Time deposits in other
banks..................... 3.83

Total interest-earning
assets.................... 7.52

Non-interest-earning assets:
Cash and due from banks.....
Premises and equipment......
Other assets................
Allowance for credit
losses....................

Total noninterest-earning
assets....................

Total assets................

LIABILITIES AND SHAREHOLDERS'
EQUITY
Interest-bearing liabilities:
Savings deposits............ 2.38%
Money market accounts....... 2.54
Time deposits............... 4.24

Total interest-bearing
deposits.................. 3.51
Short-term borrowings and
other liabilities......... 3.68
Long-term liabilities....... 5.80

Total interest-bearing
liabilities............... 3.57

Non-interest-bearing
liabilities:
Demand deposits.............
Other liabilities...........

Total noninterest-bearing
liabilities...............
Shareholders' equity........

Total liabilities and
shareholders' equity......

Net interest income
(tax equivalent basis)....
Reversal of tax equivalent
adjustment................

Net interest income.........

Net interest rate spread
(tax equivalent basis).... 3.95%
====
Net interest margin (net
interest income as a
percentage of
interest-earning assets,
tax equivalent basis)..... 4.38%
====
- ------------------------------

S-9

The net interest margin increased 9 basis points to 4.32% in 1996 and
decreased 15 basis points in 1995 to 4.23%. The increase in the Company's net
interest margin in 1996 is due primarily to the change in the Company's earning
asset mix. The Company lowered its levels of securities available for sale
through maturities and various sales to fund higher yielding loans, primarily
commercial and commercial real estate loans. Average total loans in 1996 were
$1,500,941,000, an increase of $50,312,000 or 3% over 1995 average total loans
of $1,450,629,000. 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 decrease in
interest rates during 1995 reduced the Company's net interest margin since the
Company was slightly asset sensitive throughout 1995, 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, 1996. 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.

- ----------------------------------------------------------------------------------------------------------------
1996 vs. 1995 1995 vs. 1994
------------------- --------------------
Increase (Decrease) Increase (Decrease)
Due to Change in Due to Change in
------------------- Total -------------------- Total
Average Average Increase Average Average Increase
(Dollars in thousands) Volume Rate (Decrease) Volume Rate (Decrease)

- ----------------------------------------------------------------------------------------------------------------
INTEREST INCOME:
Securities available for sale........ $ 12,617 $2,120 $ 14,737 $ 1,577 $ 418 $ 1,995
Investment securities:
Taxable.............................. (10,793) 0 (10,793) (2,298) 1,118 (1,180)
Tax exempt........................... (4,606) 0 (4,606) (593) (15) (608)
Federal funds sold................... (1,320) (197) (1,517) 1,094 1,288 2,382
Interest on loans held for sale...... (202) 81 (121) (2,457) 239 (2,218)
Interest and fees on loans (1)....... 4,487 26 4,513 10,004 11,611 21,615
Time deposits in other banks......... (63) 10 (53) 22 72 94
-------- ------ -------- ------- ------- -------
Total interest income................ 120 2,040 2,160 7,349 14,731 22,080
-------- ------ -------- ------- ------- -------
INTEREST EXPENSE:
Savings.............................. (407) (829) (1,236) (1,601) 136 (1,465)
Money market accounts................ 1,060 (4) 1,056 752 1,147 1,899
Time................................. 3 778 781 4,030 13,374 17,404
-------- ------ -------- ------- ------- -------
Total................................ 656 (55) 601 3,181 14,657 17,838
Short-term borrowings and other
liabilities........................ 323 (253) 70 584 842 1,426
Long-term borrowings................. (863) (55) (918) 902 586 1,488
-------- ------ -------- ------- ------- -------
Total interest expense............... 116 (363) (247) 4,667 16,085 20,752
-------- ------ -------- ------- ------- -------
Change in net interest income........ $ 4 $2,403 $ 2,407 $ 2,682 $(1,354) $ 1,328
======== ====== ======== ======= ======= =======
- ----------------------------------------------------------------------------------------------------------------

(1) Included in loan interest income are amortized loan fees of $1,427,000 in
1996, $1,965,000 in 1995 and $2,725,000 in 1994.

PROVISION FOR CREDIT LOSSES

The provision for credit losses increased $1,535,000 or 51% to $4,537,000
in 1996. The increase in 1996 was due primarily to additional provision in
response to increased loan levels and net charge-offs. The Company's allowance
for credit losses as a percentage of loans at December 31, 1996 was 1.00% as
compared to 1.01% and 1.03% at December 31, 1995 and 1994, respectively. At
December 31, 1996, the Company's allowance for credit

S-10

losses represented 237% of non-performing loans as compared to 173% and 232% at
December 31, 1995 and 1994, respectively. See "Summary of Credit Loss
Experience".

NON-INTEREST INCOME

The table below summarizes the sources of the Company's non-interest
income.

- ---------------------------------------------------------------------------------------------------------
Percentage Change
- ---------------------------------------------------------------------------------------------------------
1996 1995
Year ended December 31, compared to compared to
(Dollars in thousands) 1996 1995 1994 1995 1994

- ---------------------------------------------------------------------------------------------------------
NON-INTEREST INCOME:
Trust department........................ $ 1,590 $ 1,337 $ 1,195 19% 12%
Service charges on deposit accounts..... 6,878 6,200 6,036 11 3
Mortgage banking........................ 10,414 8,185 6,451 27 27
Brokerage commissions................... 9,156 9,540 7,137 (4) 34
Collection agency fees.................. 4,213 3,399 3,928 24 (13)
Net gains on sales of securities........ 1,574 350 1,231 350 (72)
Gain from sale of credit card
accounts............................. 4,568
Net gains on sales of other loans....... 3,367 352 43 857 719
Credit card fees........................ 1,961 1,696 1,274 16 33
International department fees........... 1,009 762 628 32 21
Banclub fees............................ 993 904 779 10 16
ATM card fees........................... 877 504 411 74 23
Credit life insurance................... 470 551 702 (15) (22)
Other................................... 2,431 2,175 2,739 12 (21)
------- ------- -------
$49,501 $35,955 $32,554 38 10
======= ======= =======
- ---------------------------------------------------------------------------------------------------------

As seen from the above table, non-interest income is an increasingly
important source of revenue to the Company as it continues to expand its
offerings of non-bank-related financial services. Non-interest income has
increased by $16,947,000 since 1994, of which $13,546,000 occurred between 1995
and 1996. Mortgage banking remains the largest component of non-interest income
and consists of net gains on sales of mortgage loans and mortgage loan servicing
fees. The increase in 1996 compared to 1995 is the result of an increase in the
volume of mortgages sold which increased from $298,035,000 to $413,929,000.
Revenue from mortgage servicing was virtually unchanged in 1996 compared to 1995
despite an increase in the outstanding balances of loans serviced for others of
$160,838,000. Mortgage service revenue has been impacted by the amortization of
mortgage servicing assets which resulted from the 1995 adoption of SFAS 122
"Accounting for Mortgage Servicing Rights". The increase in mortgage banking
revenue in 1995 compared to 1994 was attributable to the adoption of SFAS 122
which increased the gains on sales of mortgage loans by $1,794,000.

The gain on sale of credit cards which was realized in 1996 is the result
of management's decision to exit the credit card business as a stand alone card
issuer. In connection with this decision, substantially all of the Company's
credit card relationships and outstanding balances were sold to a national
credit card issuer.

The $3,015,000 increase in the sale of other loans in 1996 is the result of
activity by the Company's commercial finance unit (MACC), which commenced
operations in April 1996. Gains from sales of MACC originated loans aggregated
$2,992,000.

The slight decrease in brokerage commission fees in 1996 compared to 1995
was caused by a reduction in the number of independent registered
representatives (brokers) which occurred after a change in the clearinghouse
used by the Company's broker/dealer subsidiary. The Company expects to increase
the number of registered representatives in 1997 through advertising and
recruiting efforts. The $2,403,000 increase which occurred in brokerage
commissions in 1995 was attributable to growth in the number of registered
representatives affiliated with the

S-11

broker/dealer subsidiary compared to 1994 and generally higher volume in both
the stock markets and mutual funds business.

Collection agency fee income increased $814,000 in 1996 primarily from 1996
acquisitions. The decrease of $529,000 in 1995 was due primarily to the loss of
a large customer at the Florida collection operation.

NON-INTEREST EXPENSE

Non-interest expense includes costs, other than interest, that are incurred
in the operations of the Company. The table presented below summarizes the
components of the Company's non-interest expense for the three years ended
December 31, 1996.

- ---------------------------------------------------------------------------------------------------------
NON-INTEREST EXPENSE:
Salaries and employee benefits.......... $42,564 $34,674 $35,200 23% (1)%
Net occupancy expense................... 5,279 5,113 5,269 3 (3)
Equipment expense....................... 7,930 7,385 7,589 7 (3)
Brokerage commissions................... 5,604 6,608 4,983 (15) 33
FDIC expense............................ 4,667 2,754 3,868 69 (29)
Marketing............................... 2,301 2,247 1,976 2 14
Franchise taxes......................... 2,501 2,473 2,490 1 (1)
Telephone............................... 2,157 1,884 1,939 14 (3)
Printing and supplies................... 2,229 1,868 1,919 19 (3)
Legal and other professional fees....... 2,237 1,915 2,081 17 (8)
Credit card processing costs............ 1,761 1,431 1,006 23 42
Amortization of intangible assets....... 1,579 1,600 1,579 (1) 1
Postage................................. 1,626 1,442 1,460 13 (1)
Other................................... 8,984 7,022 7,220 28 (3)
------- ------- -------
$91,419 $78,416 $78,579 17 (0)
======= ======= =======
- ---------------------------------------------------------------------------------------------------------

Salaries and employee benefits comprise the largest component of
non-interest expense and was 47%, 44% and 45% in 1996, 1995, and 1994,
respectively. Salary costs increased in 1996 due to the formation of MACC, the
acquisition of three credit agencies in Florida, increased employee commission
expense related to higher mortgage loan originations and salary rate increases.
Full-time equivalent employees were 1,237, 1,172 and 1,101 at December 31, 1996,
1995 and 1994, respectively. Salaries and employee benefits remained level in
1995 compared to 1994 because of the effects of a cost control program
instituted by management in late 1994. Employee benefits and retirement benefit
expenses increased in 1996 because of improved earnings performance by the
Company. Certain portions of employees' incentive and retirement compensation
are tied to levels of the Company's financial performance. The Company does not
offer any post-employment benefits other than through its retirement plans. At
December 31, 1996, the Company had 664 employees who were receiving health care
benefits. In 1996, the Company's total health care expense was $1,510,000 as
compared to $1,325,000 in 1995 and $1,498,000 in 1994. The increase in health
care expense in 1996 is the result of a higher level of claims experienced by
the Company.

Net occupancy and equipment expenses increased in a manner correlating to
inflation from 1994 through 1996, except for a 7% increase in equipment expense
in 1996. The increase in 1996's equipment expense is principally depreciation
expense related to the purchase of state-of-the-art computer equipment and
software. The Company believes that technology plays an important role in
providing excellent service to its customers.

FDIC expense increased in 1996 due to the special assessment of $.67 per
$100 of deposits insured through the SAIF which aggregated $3,563,000. At
December 31, 1996, the Company has approximately $616,000,000 of

S-12

SAIF-based deposits which relate to prior mergers and acquisitions of thrift
institutions and branches. The decrease of FDIC expense in 1995 is the result of
a reduction in Bank Insurance Fund (BIF) premiums in 1995 as the BIF funding
levels reached mandated levels in 1995. Management believes that 1997 FDIC
expense will be significantly lower in 1997 based on premium rates expected to
be in effect to fund servicing of FICO bonds.

INCOME TAXES

The provision for income taxes increased to $12,467,000 in 1996 from
$11,797,000 in 1995 due to an increase in pre-tax income. The effective income
tax rates for 1996, 1995 and 1994 were 32.4%, 32.2% and 32.1%, respectively. The
higher effective rates in 1996 and 1995 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 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
December 31, 1996 were federal funds sold of $4,476,000, securities available
for sale of $432,791,000 and loans held for sale of $7,927,000. At December 31,
1995, the primary sources of liquidity were federal funds sold of $72,558,000,
loans held for sale of $12,642,000 and securities available for sale of
$461,997,000.

Since the Company is a holding company and does not conduct operations, its
primary source of liquidity is dividends paid to it by its subsidiaries. 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, 1994.
As a result of these restrictions, at December 31, 1996 dividends which can be
paid to the Company by its bank subsidiaries are limited to $13,538,000.

The Company's liquidity position decreased in 1996 due to the Company's
increased emphasis in loan originations primarily in commercial and commercial
real estate loans. The funding of loans caused a decrease in federal funds sold
and a decrease in securities available for sale. However, management believes
that the Company's liquidity is adequate because the Company's bank subsidiaries
have lines of credit with the Federal Home Loan Bank (FHLB) and can borrow up to
$159,943,000, of which $39,403,000 is currently outstanding. In December, 1996,
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.
Through December 31, 1996, no advances were drawn against the available credit
facility; however, $10,000,000 was borrowed subsequent to December 31, 1996.

As described in Note 2 of the consolidated financial statements, the
Company reached a definitive agreement to sell seven of its branches with
deposits of approximately $100,000,000 to another financial institution. The
sale is expected to close in the first quarter of 1997. The Company will need to
accumulate approximately $92,000,000 of cash to fund the sale of the branches.
The Company will utilize several sources of funds available to address the need.
Approximately $37,000,000 of cash will come from Federal Home Loan Bank advances
consisting of medium-term, fixed-rate and shorter-term variable-rate advances.
Approximately $25,000,000 of cash will be raised in medium-term fixed-rate
certificates of deposit. The remainder of the funding will be generated through
the sale of approximately $30,000,000 of securities available for sale,
primarily mortgage-backed securities.

As shown in the consolidated statement of cash flows presented elsewhere
herein, cash and due from banks decreased $16,943,000 during 1996 to $85,657,000
at December 31, 1996. The decrease in 1996 reflected $6,238,000 used for
investing activities, $53,281,000 used for financing activities, offset in part
by net cash provided by operating activities of $42,576,000.

S-13

Net cash provided by operating activities of $42,576,000 in 1996 resulted
primarily from $25,992,000 of net income, an increase in interest payables and
other liabilities of $5,991,000 and non-cash charges and credits of $13,581,000,
proceeds from sales of mortgage and other loans held for sale of $449,672,000,
offset by net gains on the sales of assets of $16,885,000, and mortgage and
other loans originated for sale of $437,680,000.

The increase of $19,016,000 in cash provided by operating activities for
1996 compared to 1995 is due primarily to the Company's mortgage banking
activities in 1996 which generated cash of $11,992,000 compared to cash
generated in 1995 of $1,256,000. Also, net cash generated from net gains on sale
of assets in 1996 increased $10,923,000 over 1995. The decrease of $74,684,000
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.

Net cash used for 1996 investing activities of $6,238,000 was largely
comprised of a net increase in loans of $207,138,000, which was funded in part
by a net decrease of securities available for sale of $99,478,000 and a decrease
in federal funds sold of $68,082,000. Cash of $38,021,000 was provided by the
sale of the Company's credit card portfolio, sale of student loans and various
other loans. The $91,199,000 decrease in cash used for investing activities in
1996 compared to 1995 is primarily attributable to the cash provided by the
changes from December 31, 1994 to December 31, 1996 in federal funds sold of
$132,480,000 and the cash provided by the net change in securities available for
sale of $105,665,000 over the same period offset in part by an increase in loan
demand which caused an increase in net loan fundings of $120,189,000 and a
decrease of net proceeds from activities of investment and mortgage backed
securities of $23,129,000. 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 from December 31, 1993 to December 31, 1995
offset in part by a decrease in loan demand, which caused a decrease in net loan
fundings of $98,297,000.

Net cash used for financing activities of $53,281,000 was primarily due to
an outflow of cash from a decrease in demand deposits and savings accounts of
$18,561,000, a decrease in other time deposits of $8,672,000, repayment of
capitalized lease obligations and debt of $19,058,000, cash dividends paid of
$14,851,000 and treasury stock acquisitions, fractional shares and other items
of $10,708,000, offset in part from proceeds from the issuance of long-term debt
of $12,900,000. Net cash used for financing activities in 1996 increased
$53,281,000 compared to net cash provided by financing activities in 1995 of
$91,000,000. This change of $144,281,000 is primarily due to a net increase of
bank deposits in 1995 of $123,650,000 compared to a decrease in bank deposits in
1996 of $27,233,000. The decrease in deposits in 1996 is primarily attributable
to the Company using alternative lower cost funds instead of high rate deposits,
primarily certificates of deposit. 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 during which
the Company's time deposits increased substantially.

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.

S-14

At December 31, 1996, 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, 1996 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
contractual 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 1997. The Company's Asset/Liability
Management Committee monitors the interest rate sensitivity position and
currently intends to maintain a slightly positive gap during 1997 primarily as a
result of the Company's view of the economy and the anticipated interest rate
scenario for 1997.

- -----------------------------------------------------------------------------------------------------------
After 3 After 6 After 1
Months Months Year
Within 3 But Within But Within But Within After
(Dollars in thousands) Months 6 Months 1 Year 5 Years 5 Years Total

- -----------------------------------------------------------------------------------------------------------
INTEREST-EARNING ASSETS:
Loans (net of unearned
income).................... $531,504 $147,847 $265,927 $533,464 $ 96,138 $1,574,880
Securities available for
sale....................... 49,868 41,778 64,100 192,594 84,451 432,791
Loans held for sale.......... 7,927 7,927
Federal funds sold........... 4,476 4,476
Interest-bearing deposits in
other banks................ 1,631 1,631
-------- -------- -------- -------- -------- ----------
Total........................ $595,406 $189,625 $330,027 $726,058 $180,589 $2,021,705
======== ======== ======== ======== ======== ==========
INTEREST-BEARING LIABILITIES:
Interest-bearing deposits.... $563,137 $170,896 $219,129 $669,158 $ 5,283 $1,627,603
Short-term borrowings and
other liabilities.......... 102,062 3,237 6,473 23,280 135,052
-------- -------- -------- -------- -------- ----------
Total........................ $665,199 $174,133 $225,602 $692,438 $ 5,283 $1,762,655
======== ======== ======== ======== ======== ==========

Interest rate sensitivity
gap........................ $(69,793) $ 15,492 $104,425 $ 33,620 $175,306 $ 259,050
Cumulative interest rate
sensitivity gap............ (69,793) (54,301) 50,124 83,744 259,050
Cumulative interest rate
sensitivity gap as a
percentage of total
interest-earning assets.... (3.45)% (2.69)% 2.48% 4.14% 12.81%
- -----------------------------------------------------------------------------------------------------------

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.

S-15

At December 31, 1996, a minimum Tier I capital ratio of 4.00% and a total
capital ratio of 8.00% are required. The Company's qualifying capital at
December 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 total
assets adjusted for certain items. The following table presents the various
capital and leverage ratios of the Company.

- ------------------------------------------------------------------------------------------------------
December 31,
(Dollars in thousands) 1996 1995 1994

- ------------------------------------------------------------------------------------------------------
Total adjusted average assets for leverage ratio........ $2,172,679 $2,165,421 $2,052,860
Risk-weighted assets and off-balance-sheet financial
instruments for capital ratio......................... 1,681,787 1,541,004 1,458,215
Tier 1 capital.......................................... 183,422 181,263 177,774
Total risk-based capital................................ 199,712 196,122 192,496
Leverage ratio.......................................... 8.44% 8.37% 8.66%
Tier 1 capital ratio.................................... 10.91 11.76 12.19
Total capital ratio..................................... 11.87 12.73 13.20
- ------------------------------------------------------------------------------------------------------

Capital ratios applicable to the Company's banking subsidiaries at December
31, 1996 are as follows.

- -------------------------------------------------------------------------------------------------
Total
Tier 1 Risk-based
Leverage Capital Capital

- -------------------------------------------------------------------------------------------------
Regulatory Capital Requirements
Minimum................................................... 4.00% 4.00% 8.00%
Well-capitalized.......................................... 5.00 6.00 10.00

Bank Subsidiaries
Mid Am Bank............................................... 7.61 9.21 10.30
First National............................................ 7.69 9.92 10.39
AmeriCom.................................................. 7.28 11.17 12.27
AmeriFirst................................................ 6.86 9.90 11.04
Adrian.................................................... 6.32 8.90 10.15
- -------------------------------------------------------------------------------------------------

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.

The following table sets forth the carrying value of the Company's
investment and mortgage-backed securities at December 31, 1994.

- -----------------------------------------------------------------------------
Carrying
Value at Cost
(Dollars in thousands) 1994

- -----------------------------------------------------------------------------
U.S. Treasury securities.................................... $ 3,623
Securities of other U.S. Government agencies and
corporations.............................................. 5,523
Mortgage-backed investment securities....................... 180,309
Obligations of states and political subdivisions............ 62,032
Other securities............................................ 522
--------
Total....................................................... $252,009
========
- -----------------------------------------------------------------------------

S-16

The following table sets forth the carrying value at market at the
respective year end for each of the last three years and the aggregate cost of
the Company's securities available for sale at December 31, 1996.

- --------------------------------------------------------------------------------------------------
Carrying Value at Market
- --------------------------------------------------------------------------------------------------
(Dollars in thousands) Cost 1996 1995 1994

- --------------------------------------------------------------------------------------------------
U.S. Treasury securities............................ $ 56,758 $ 56,591 $ 73,792 $ 79,353
Securities of other U.S. Government agencies and
corporations...................................... 47,291 46,765 67,526 61,401
Mortgage-backed securities.......................... 251,486 249,454 230,417 45,056
Obligations of states and political subdivisions.... 44,445 45,640 58,996 200
Other securities.................................... 34,369 34,341 31,266 26,427
-------- -------- -------- --------
Total............................................... $434,349 $432,791 $461,997 $212,437
======== ======== ======== ========
- --------------------------------------------------------------------------------------------------

The available for sale portfolio contains 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.

The Company 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, including 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 increase. 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% of shareholders'
equity, except those of U.S. Treasury, U.S. Government agencies and
substantially all mortgage-backed securities issued by Federal Home Loan
Mortgage Corporation, Federal National Mortgage Association and Government
National Mortgage Association.

S-17

The following table shows the contractual maturities and weighted average
yields of the Company's securities available for sale as of December 31, 1996.
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. Mortgage-backed securities are presented in the table based on
current assumptions as to prepayments. The weighted average yields on income
from tax exempt obligations of state and political subdivisions have been
adjusted to a tax equivalent basis.

- ----------------------------------------------------------------------------------------------------------------------
After 1 Year But After 5 Years But
Within 1 Year Within 5 Years Within 10 Years After 10 Years
--------------- ---------------- ------------------ --------------------
(Dollars in thousands) Amount Yield Amount Yield Amount Yield Amount Yield

- ----------------------------------------------------------------------------------------------------------------------
U.S. Treasury securities..... $15,041 5.42% $ 36,358 5.61% $ 3,031 6.39% $ 2,161 6.80%
Securities of other U.S.
Government agencies and
corporations............... 5,511 5.71 27,407 5.82 10,159 6.35 3,688 6.80
Mortgage-backed securities... 3,353 6.29 54,676 6.00 35,095 6.24 156,330 6.74
Obligations of states and
political subdivisions..... 3,696 7.26 25,972 7.13 12,880 7.82 3,092 8.25
Other securities............. 7,838 8.16 203 11.45 26,300 3.23
------- -------- ------- --------
Total...................... $35,439 6.35% $144,616 6.08% $61,165 6.60% $191,571 6.28%
======= ======== ======= ========
- ----------------------------------------------------------------------------------------------------------------------

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 thousands) 1996 1995 1994 1993 1992

- ----------------------------------------------------------------------------------------------------------------------------------
Real estate loans
Construction........ $72,416 4.6% $63,086 4.3% $69,942 4.9% $39,150 3.1% $35,760 3.0%
Residential
mortgage.......... 524,704 33.3 580,004 39.3 598,989 41.7 534,229 42.1 565,090 47.0
Non-residential
mortgage.......... 418,781 26.6 305,710 20.7 272,715 19.0 249,406 19.7 185,316 15.4
Commercial, financial
and agricultural
loans............... 379,268 24.1 357,290 24.2 327,871 22.8 294,297 23.2 282,263 23.5
Installment and credit
card loans.......... 175,742 11.1 164,055 11.1 155,380 10.8 138,534 10.9 118,849 9.9
Other loans........... 5,384 0.3 6,335 0.4 10,040 0.8 11,690 1.0 15,440 1.2
---------- ----- ---------- ----- ---------- ----- ---------- ----- ---------- -----
Total loans......... 1,576,295 100.0% 1,476,480 100.0% 1,434,937 100.0% 1,267,306 100.0% 1,202,718 100.0%
===== ===== ===== ===== =====
Less:
Unearned interest..... (14) (22) (38) (50) (107)
Unamortized loan
fees................ (1,401) (807) (1,610) (1,311) (2,099)
Allowance for credit
losses.............. (15,672) (14,859) (14,722) (15,157) (15,718)
---------- ---------- ---------- ---------- ----------
Total net loans..... $1,559,208 $1,460,792 $1,418,567 $1,250,788 $1,184,794
========== ========== ========== ========== ==========
- ----------------------------------------------------------------------------------------------------------------------------------

Real estate loans, including construction and mortgage loans, approximated
65% of total loans at December 31, 1996. 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% or
private mortgage insurance for loan-to-value ratios in excess of 80%.

S-18

A significant portion (24%) 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% to 80%. 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 (11%) 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% to 90% 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, 1996 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 Year After 5 Years
Within But Within But Within
(Dollars in thousands) 1 Year 5 Years 10 Years Total

- ------------------------------------------------------------------------------------------------------------
Commercial, financial and agricultural.... $136,991 $140,542 $101,735 $379,268
Real estate -- construction............... 36,527 14,107 21,782 72,416
-------- -------- -------- --------
Total..................................... $173,518 $154,649 $123,517 $451,684
======== ======== ======== ========
- ------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------
Fixed Variable
(Dollars in thousands) Rate Rate

- --------------------------------------------------------------------------------------
Due after one but within five years......................... $45,088 $109,561
Due after five years........................................ 34,108 89,409
------- --------
Total....................................................... $79,196 $198,970
======= ========
- --------------------------------------------------------------------------------------

Actual maturities of loans will differ from the contractual maturities
presented in the table above because of prepayments, rollovers and renegotiation
of payment terms among other factors.

S-19

The following table presents the aggregate amounts of non-performing assets
and respective ratios on the dates indicated.

- -----------------------------------------------------------------------------------------------------------
December 31,
(Dollars in thousands) 1996 1995 1994 1993 1992

- -----------------------------------------------------------------------------------------------------------
Non-accrual............................ $6,550 $8,499 $6,017 $ 8,660 $ 7,786
Restructured........................... 73 79 329 221 704
------ ------ ------ ------- -------
Total non-performing loans............. 6,623 8,578 6,346 8,881 8,490
Other real estate owned................ 1,143 763 1,102 1,836 6,109
------ ------ ------ ------- -------
Total non-performing assets............ $7,766 $9,341 $7,448 $10,717 $14,599
====== ====== ====== ======= =======
Loans 90 days or more past due and not
on non-accrual....................... $5,934 $1,253 $1,140 $ 813 $ 1,233
====== ====== ====== ======= =======
Non-performing loans to total loans.... 0.42% 0.58% 0.44% 0.70% 0.71%
Non-performing assets to total loans
plus other real estate owned......... 0.49 0.63 0.52 0.85 1.21
Allowance for credit losses to total
non-performing loans................. 236.63 173.22 231.99 170.67 185.14
Allowance for credit losses to total
non-performing assets................ 201.80 159.07 197.66 141.43 107.66
Loans 90 days or more past due and not
on non-accrual to total loans........ 0.38 0.08 0.08 0.06 0.10
- -----------------------------------------------------------------------------------------------------------

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.

At December 31, 1996, the recorded investment on impaired loans measured in
accordance with SFAS 114 amounted to $7,241,000, of which $5,915,000 or 82%
impaired loans have a specific allowance of $2,206,000 and the remaining
$1,326,000 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,
1996 was $8,447,000. Interest income recognized in 1996 related to impaired
loans was $694,000, most of which was recognized on the cash basis. 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. At December 31, 1996 and 1995, loans
with outstanding balances of $691,000 and $746,000 have been considered impaired
under the Company's method of determining impaired loans (see Note 4 to the
Consolidated Financial Statements); however, the loans are still on accrual as
borrowers are continuing to make payments in accordance with the terms of the
applicable loan agreement and the measurement of the loans' fair value indicates
that the loans do not require a specific allowance.

S-20

The following table reflects impaired loans by type of loan.

- -----------------------------------------------------------------------------------
December 31,
(Dollars in thousands) 1996 1995

- -----------------------------------------------------------------------------------
Commercial real estate...................................... $3,165 $4,752
Commercial.................................................. 3,576 4,493
Financial................................................... 500
------ ------
Total impaired loans........................................ $7,241 $9,245
====== ======
- -----------------------------------------------------------------------------------

The total amount of impaired loans using (1) the present value of expected
future cash flows was $6,414,000, (2) the fair value of the loans' collateral
was $510,000, and (3) the observable market price of the loans was $317,000.

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 and not yet paid on non-accrual loans is reversed or charged against the
allowance for credit losses during the period in which the loan is placed in a
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.

Three of the Company's bank subsidiaries have purchased certain lease
receivables or loans from The Bennett Funding Group (Bennett) which have an
aggregate outstanding balance of $6,100,000 at December 31, 1996. Bennett was
placed into bankruptcy proceedings in March of 1996. Payments by lessees and
borrowers have been paid into an interest-bearing escrow account with the
bankruptcy court pending resolution of certain issues. Issues which may affect
the Company's ability to ultimately collect interest and principal on the leases
include a determination of ownership of the receivables and whether the banks
have perfected their security interests in the receivables. Certain lease pools
purchased by the Company (or portions thereof) are the subject of these issues,
while other pools are not. All of the lease pools, or portions thereof, which
are subject to challenge by the Trustee or other parties which aggregate
$1,614,000 at December 31, 1996, have been placed on non-accrual and are
considered impaired under SFAS 114. Those pools or portions which aggregate
$4,486,000 at December 31, 1996 where management believes it will collect
principal and interest from escrow are classified as loans 90 days past due and
not on non-accrual. The classification of those lease pools or loans as 90 days
or more past due and still accruing is primarily responsible for the ratio of
this category to total loans increasing from .08 at December 31, 1995 to .38 at
December 31, 1996.

Loans 30 to 89 days past due, excluding non-accrual and restructured loans
amounted to $8,944,000 or .57% of total loans at December 31, 1996 as compared
to $8,035,000 or .54% at December 31, 1995. 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 $31,503,000 and
$32,715,000 at December 31, 1996 and 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. At December 31, 1996 and 1995
specific allocations of the allowance for credit losses related to these loans
aggregated $3,219,000 and $3,359,000, 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 $1,143,000 and $763,000 at December 31,
1996 and 1995, respectively. The Company has been able to maintain other real
estate owned balances at a low level since 1992, through improved asset quality,
improved controls, and timely sales of foreclosed properties.

As of December 31, 1996, the Company did not have any loan concentrations
which exceeded 10% of total loans.

S-21

The following table presents asset quality information for each of the
Company's bank subsidiaries.

- -----------------------------------------------------------------------------------------------------------
December 31, 1996 Mid Am First
(Dollars in thousands) Bank National AmeriCom AmeriFirst Adrian

- -----------------------------------------------------------------------------------------------------------
Non-accrual.......................... $2,021 $1,359 $1,167 $1,776 $227
Restructured......................... 73
------ ------ ------ ------ ------
Total non-performing loans........... 2,021 1,359 1,240 1,776 227
Other real estate owned (1).......... 152 206 95
------ ------ ------ ------ ------
Total non-performing assets.......... $2,173 $1,359 $1,446 $1,871 $227
====== ====== ====== ====== ======
Loans 90 days or more past due and
not on non-accrual................. $ 146 $1,991 $2,326 $1,340 $131
====== ====== ====== ====== ======
Non-performing loans to total
loans.............................. 0.33% 0.35% 0.50% 0.88% 0.19%
Non-performing assets to total loans
plus other real estate owned....... 0.35 0.35 0.58 0.93 0.19
Allowance for credit losses to total
non-performing loans............... 375.66 141.39 222.06 117.96 577.09
Allowance for credit losses to total
non-performing assets.............. 349.38 141.39 190.42 111.97 577.09
Net charge-offs to average loans
outstanding........................ 0.37 0.05 0.07 0.56 0.03
Allowance for credit losses to total
loans.............................. 1.22 0.50 1.11 1.04 1.12
Loans 90 days or more past due and
not on non-accrual to total
loans.............................. 0.02 0.51 0.94 0.67 0.11
- -----------------------------------------------------------------------------------------------------------

(1) The parent company has $690,000 of other real estate owned at December 31,
1996.

S-22

SUMMARY OF CREDIT LOSS EXPERIENCE

The following table presents a summary of credit loss experience for the
periods indicated.

- ---------------------------------------------------------------------------------------------------------
December 31,
(Dollars in thousands) 1996 1995 1994 1993 1992

- ---------------------------------------------------------------------------------------------------------
Balance of allowance at beginning of
year................................ $14,859 $14,722 $15,157 $15,718 $12,938
Loans actually charged-off
Real estate........................... 742 167 455 558 656
Commercial, financial and
agricultural........................ 2,048 2,783 2,122 4,767 3,047
Installment and credit card........... 2,694 1,429 815 1,768 2,301
Industrial development bonds.......... 67
Other................................. 14 14 15 18
------- ------- ------- ------- -------
5,498 4,379 3,406 7,175 6,022
------- ------- ------- ------- -------
Recoveries of loans previously
charged-off.........................
Real estate........................... 312 305 127 221 106
Commercial, financial and
agricultural........................ 757 727 1,059 1,082 1,880
Installment and credit card........... 648 446 561 816 773
Other................................. 57 4
------- ------- ------- ------- -------
1,774 1,478 1,747 2,119 2,763
------- ------- ------- ------- -------
Net charge-offs....................... 3,724 2,901 1,659 5,056 3,259
Addition to allowance charged to
expense............................. 4,537 3,002 2,864 3,991 4,917
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... $15,672 $14,859 $14,722 $15,157 $15,718
======= ======= ======= ======= =======
Net charge-offs to average loans
outstanding......................... 0.25% 0.20% 0.12% 0.41% 0.31%
Allowance for credit losses to total
loans............................... 1.00 1.01 1.03 1.20 1.31
Allowance for credit losses to total
non-performing loans................ 236.63 173.22 231.99 170.67 185.14
- ---------------------------------------------------------------------------------------------------------

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 the necessity 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 evaluation 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

S-23

specific reserves assigned to individual loans. Residential mortgage and
consumer portfolios are collectively evaluated giving consideration to trend of
delinquencies and charge-offs 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) 1996 1995 1994 1993 1992

- ---------------------------------------------------------------------------------------------------------
Specific allowance
Real estate........................... $ 372 $ 320 $ 1,178 $ 708 $ 823
Commercial............................ 2,974 3,989 2,384 2,334 4,763
Installment........................... 250 560 50 76 53
------- ------- ------- ------- -------
3,596 4,869 3,612 3,118 5,639
------- ------- ------- ------- -------
Allocated allowance
Real estate........................... 233 206 729 1,186 915
Commercial............................ 3,229 2,270 3,609 3,394 2,415
Installment........................... 1,369 659 1,364 1,640 1,785
Other................................. 1,106 474 422 579 553
------- ------- ------- ------- -------
5,937 3,609 6,124 6,799 5,668
------- ------- ------- ------- -------
Unallocated allowance................. 6,139 6,381 4,986 5,240 4,411
------- ------- ------- ------- -------
Allowance for credit losses........... $15,672 $14,859 $14,722 $15,157 $15,718
======= ======= ======= ======= =======
- ---------------------------------------------------------------------------------------------------------

Increased loan balances in 1996 required additional provision to maintain
an adequate level of the Company's allowance for credit losses to total loans.
Prior to 1996, provisions for credit losses have decreased each year since 1992,
with the exception of a small increase in 1995, reflecting improved asset
quality. In 1993, the Company's asset quality began to improve as non-performing
assets to total loans and OREO decreased to .85% from 1.21%, and the
non-performing loan ratio improved to .70% from .71%. Since 1993, the Company's
asset quality has continued to remain strong. Non-performing loans to total
loans were .42%, .58%, and .44% at December 31, 1996, 1995, and 1994,
respectively. The Company's provision for credit losses increased $1,535,000 to
$4,537,000 in 1996 compared to $3,002,000 in 1995.

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.The reduction in First National's allowance
was the 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 after the issuance of the OCC report of examination, a report of
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.

S-24

DEPOSITS

The following table sets forth the average balances of and average rates
paid on deposits for the periods indicated.

- -----------------------------------------------------------------------------------------------------------
December 31,
(Dollars in thousands) 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------
Average Average Average Average Average Average
Balance Rate Balance Rate Balance Rate

- -----------------------------------------------------------------------------------------------------------
Demand
Non-interest-bearing.......... $ 186,397 $ 174,501 $ 168,855
Interest-bearing.............. 195,089 1.90% 185,841 2.09% 194,850 2.06%
Savings......................... 243,185 2.49 269,308 2.63 327,474 2.57
Money market.................... 151,887 3.48 121,459 3.48 91,834 2.54
Time............................ 1,037,331 5.60 1,037,277 5.53 942,156 4.24
---------- ---------- ----------
Total........................... $1,813,889 $1,788,386 $1,725,169
========== ========== ==========
- -----------------------------------------------------------------------------------------------------------

The following table sets forth the maturity distribution of time
certificates of deposit issued in amounts of $100,000 or more.

- ------------------------------------------------------------------------
December 31, 1996
(Dollars in thousands)

- ------------------------------------------------------------------------
Three months or less........................................ $ 96,186
Over three months to six months............................. 36,787
Over six months to twelve months............................ 32,699
Over twelve months.......................................... 47,824
--------
Total....................................................... $213,496
========
- ------------------------------------------------------------------------

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) 1996 1995 1994

- -----------------------------------------------------------------------------------------------------
Average for the year:
Amount outstanding........................................ $ 97,370 $87,128 $ 73,843
Weighted average interest rate............................ 4.35% 4.55% 3.59%
At year end:
Amount outstanding........................................ $ 92,805 $87,548 $ 80,136
Weighted average interest rate............................ 4.37% 4.43% 4.03%
Maximum amount outstanding at any month end during the
year.................................................... $115,478 $93,579 $101,823
- -----------------------------------------------------------------------------------------------------

FORWARD-LOOKING STATEMENTS

From time to time, the Company may publish forward-looking statements
relating to such matters as anticipated operating results, prospects for new
lines of business, technological developments, economic trends (including
interest rates), reorganization transactions and similar matters. The Private
Securities Litigation Reform Act of 1995 provides a safe harbor for
forward-looking statements, and the purpose of this paragraph is to secure the
use of the safe harbor

S-25

provisions. While the Company believes that the assumptions underlying the
forward-looking statements contained herein and in other public documents are
reasonable, any of the assumptions could prove to be inaccurate, and
accordingly, actual results and experience could differ materially from the
anticipated results or other expectations expressed by the Company in its
forward-looking statements. Factors that could cause actual results or
experience to differ from results discussed in the forward-looking statements
include, but are not limited to: economic conditions; volatility and direction
of market interest rates; capital investment in and operating results of recent
non-banking business ventures of the Company; governmental legislation and
regulation; material unforeseen changes in the financial condition or results of
operations of the Company's customers; customer reaction to and unforeseen
complications with respect to the Company's product redesign initiative; and
other risks identified, from time-to-time in the Company's other public
documents on file with the Securities and Exchange Commission.

S-26

REPORT OF INDEPENDENT ACCOUNTANTS

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, 1996 and 1995, and
the results of their operations and their cash flows for each of the three years
in the period ended December 31, 1996, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Company's management; our 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 consolidated financial statements, the Company
changed its method of accounting for mortgage servicing rights and for impaired
loans in 1995.

Price Waterhouse LLP
PRICE WATERHOUSE LLP

January 17, 1997
Toledo, Ohio

S-27

MID AM, INC.
CONSOLIDATED STATEMENT OF CONDITION

- ----------------------------------------------------------------------------------------------
December 31,
(Dollars in thousands) 1996 1995

- ----------------------------------------------------------------------------------------------
ASSETS
Cash and due from banks..................................... $ 85,657 $ 102,600
Interest-bearing deposits in other banks.................... 1,631 3,372
Federal funds sold.......................................... 4,476 72,558
Loans held for sale......................................... 7,927 12,642
Securities available for sale............................... 432,791 461,997
Loans, net of unearned fees and income of $1,415 and $829... 1,574,880 1,475,651
Allowance for credit losses................................. (15,672) (14,859)
---------- ----------
Net loans................................................. 1,559,208 1,460,792
Bank premises and equipment................................. 50,111 49,489
Interest receivable and other assets........................ 39,173 41,301
---------- ----------
TOTAL ASSETS.............................................. $2,180,974 $2,204,751
========== ==========
LIABILITIES
Demand deposits (non-interest-bearing)...................... $ 205,306 $ 223,945
Savings deposits............................................ 593,885 593,807
Other time deposits......................................... 1,033,718 1,042,390
---------- ----------
Total deposits............................................ 1,832,909 1,860,142
Federal funds purchased and securities sold under agreements
to repurchase............................................. 92,805 87,548
Debt and capitalized lease obligations...................... 42,247 48,405
Interest payable and other liabilities...................... 19,809 13,818
---------- ----------
TOTAL LIABILITIES......................................... 1,987,770 2,009,913
---------- ----------
Commitments and contingencies (Notes 13 and 14)............. -- --
SHAREHOLDERS' EQUITY
Preferred stock -- no par value
Authorized -- 2,000,000 shares
Issued and outstanding -- 1,203,725 and 1,422,744 shares
in 1996 and 1995, respectively......................... 30,093 35,569
Common stock -- stated value of $3.33 per share
Authorized -- 35,000,000 shares
Issued -- 20,887,675 and 19,492,726 shares in 1996 and
1995, respectively..................................... 69,625 64,975
Surplus..................................................... 89,299 91,723
Retained earnings........................................... 6,034 9,529
Treasury stock -- 46,610 and 522,361 common shares in 1996
and 1995, respectively.................................... (834) (8,424)
Unrealized (losses) gains on securities available for
sale...................................................... (1,013) 1,466
---------- ----------
TOTAL SHAREHOLDERS' EQUITY................................ 193,204 194,838
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY................ $2,180,974 $2,204,751
========== ==========
- ----------------------------------------------------------------------------------------------

The accompanying notes are an integral part of the financial statements.

S-28

MID AM, INC.
CONSOLIDATED STATEMENT OF EARNINGS

- ----------------------------------------------------------------------------------------------------
Year Ended December 31,
(Dollars in thousands, except per share data) 1996 1995 1994

- ----------------------------------------------------------------------------------------------------
INTEREST INCOME
Interest and fees on loans............................. $134,721 $130,300 $110,917
Interest on deposits in other banks.................... 165 218 146
Interest on federal funds sold......................... 2,093 3,610 1,206
Interest on taxable investments........................ 25,311 25,209 24,750
Interest on tax exempt investments..................... 2,693 3,206 3,552
-------- -------- --------
164,983 162,543 140,571
-------- -------- --------
INTEREST EXPENSE
Interest on deposits................................... 73,128 72,527 54,689
Interest on borrowed funds............................. 6,941 7,789 4,875
-------- -------- --------
80,069 80,316 59,564
-------- -------- --------
Net interest income.................................. 84,914 82,227 81,007
Provision for credit losses............................ 4,537 3,002 1,224
-------- -------- --------
Net interest income after provision for credit
losses............................................ 80,377 79,225 79,783
-------- -------- --------
NON-INTEREST INCOME
Trust department....................................... 1,590 1,337 1,195
Service charges on deposit accounts.................... 6,878 6,200 6,036
Mortgage banking....................................... 10,414 8,185 6,451
Brokerage commissions.................................. 9,156 9,540 7,137
Collection agency fees................................. 4,213 3,399 3,928
Net gains on sales of securities....................... 1,574 350 1,231
Other income........................................... 15,676 6,944 6,576
-------- -------- --------
49,501 35,955 32,554
-------- -------- --------
NON-INTEREST EXPENSE
Salaries and employee benefits......................... 42,564 34,674 35,200
Net occupancy expense.................................. 5,279 5,113 5,269
Equipment expense...................................... 7,930 7,385 7,589
Other expenses......................................... 35,646 31,244 30,521
-------- -------- --------
91,419 78,416 78,579
-------- -------- --------
Income before income taxes........................... 38,459 36,764 33,758
-------- -------- --------
APPLICABLE INCOME TAXES
Current................................................ 13,488 9,587 9,732
Deferred............................................... (1,021) 2,210 773
-------- -------- --------
12,467 11,797 10,505
-------- -------- --------
Net income........................................... $ 25,992 $ 24,967 $ 23,253
======== ======== ========
Net income available to common shareholders.......... $ 23,585 $ 22,216 $ 20,336
======== ======== ========
EARNINGS PER COMMON SHARE
Primary................................................ $ 1.12 $ 1.05 $ 0.97
======== ======== ========
Fully diluted.......................................... $ 1.07 $ 1.01 $ 0.94
======== ======== ========
- ----------------------------------------------------------------------------------------------------

The accompanying notes are an integral part of the financial statements.

S-29

MID AM, INC.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
- --------------------------------------------------------------------------------

Unrealized
Gains
(Losses)
on Securities Total
(Dollars in thousands, Preferred Common Retained Treasury Available Shareholders'
except per share data) Stock Stock Surplus Earnings Stock For Sale Equity

- -----------------------------------------------------------------------------------------------------------------------
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 $.54
per share.................... (10,721) (10,721)
10% common stock dividend
(1,387,730 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 $.57
per share.................... (12,111) (12,111)
10% 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
Net income for the year........... 25,992 25,992
Treasury shares acquired.......... (10,697) (10,697)
Treasury shares issued............ 412 412
Dividends declared:
Preferred cash dividends........ (2,407) (2,407)
Common cash dividends of $.60
per share.................... (12,444) (12,444)
10% common stock dividend
(1,975,509 shares including
1,134,995 shares issued from
treasury).................... 2,802 (6,073) (14,604) 17,875
Unrealized losses on securities
available for sale.............. (2,479) (2,479)
Preferred stock conversions....... (5,476) 1,696 3,780
Fractional shares and other
items........................... 152 (131) (32) (11)
------- ------- ------- -------- -------- ------- --------
Balances at December 31, 1996..... $30,093 $69,625 $89,299 $ 6,034 $ (834) $(1,013) $193,204
======= ======= ======= ======== ======== ======= ========
- -----------------------------------------------------------------------------------------------------------------------

The accompanying notes are an integral part of the financial statements.

S-30

MID AM, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS

- -------------------------------------------------------------------------------------------------------
Year Ended December 31,
(Dollars in thousands) 1996 1995 1994

- -------------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES
Net income.................................................. $ 25,992 $ 24,967 $ 23,253
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for credit losses................................. 4,537 3,002 1,224
Provision for depreciation and amortization of assets....... 9,044 8,850 9,341
Proceeds from sales of mortgage and other loans held for
sale...................................................... 449,672 302,655 351,597
Mortgage and other loans originated for sale................ (437,680) (301,399) (280,749)
Net gains on sales of assets................................ (16,885) (5,962) (4,631)
Decrease (increase) in interest receivable and other
assets.................................................... 1,905 (10,872) 1,315
Increase (decrease) in interest payable and other
liabilities............................................... 5,991 2,319 (3,106)
--------- --------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES................. 42,576 23,560 98,244
--------- --------- ---------
INVESTING ACTIVITIES
Net decrease (increase) in interest-bearing deposits in
other banks............................................... 1,741 (1,140) 3,206
Net decrease (increase) in federal funds sold............... 68,082 (64,398) 50,907
Proceeds from sales of securities available for sale........ 47,503 27,771 91,398
Proceeds from maturities and paydowns of securities
available for sale........................................ 95,365 49,105 33,251
Purchases of securities available for sale.................. (43,390) (83,063) (82,727)
Proceeds from maturities and paydowns of investment
securities................................................ 7,213 12,347
Purchases of investment securities.......................... (1,579) (19,601)
Proceeds from maturities and paydowns of mortgage-backed
securities................................................ 19,998 33,082
Purchases of mortgage-backed securities..................... (2,503) (29,030)
Proceeds from sales of loans................................ 38,021 41,580 13,989
Net increase in loans....................................... (207,138) (86,949) (185,246)
Proceeds from sales of other real estate owned.............. 481 1,712 1,686
Proceeds from sales of bank premises and equipment.......... 782 848 568
Purchases of bank premises and equipment.................... (7,765) (6,063) (4,151)
Cash acquired through acquisitions.......................... 80 31
--------- --------- ---------
NET CASH USED FOR INVESTING ACTIVITIES.................... (6,238) (97,437) (80,321)
--------- --------- ---------
FINANCING ACTIVITIES
Net (decrease) increase in demand deposits and savings
accounts.................................................. (18,561) 41,189 (43,066)
Net (decrease) increase in other time deposits.............. (8,672) 82,461 10,476
Net increase in short-term borrowings....................... 5,257 7,412 8,363
Repayment of capitalized lease obligations and debt......... (19,058) (66,050) (41,638)
Proceeds from issuance of long-term debt.................... 12,900 49,021 79,002
Proceeds from issuance of common stock...................... 412 793 1,893
Cash dividends paid......................................... (14,851) (14,862) (13,638)
Treasury stock acquisitions, fractional shares and other
items..................................................... (10,708) (8,964) (651)
--------- --------- ---------
NET CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES...... (53,281) 91,000 741
--------- --------- ---------
Net (decrease) increase in cash and due from banks........ (16,943) 17,123 18,664
Effect on cash of conforming the year ends of pooled
entities.................................................. 145
Cash and due from banks at the beginning of the year........ 102,600 85,332 66,668
--------- --------- ---------
Cash and due from banks at the end of the year............ $ 85,657 $ 102,600 $ 85,332
========= ========= =========
Supplemental Schedule of Noncash Investing and Financing
Activities:
Securitization of loans held for sale..................... $ 73,527 $ 3,685 $ 9,067
Investment securities..................................... 66,096
Mortgage-backed investment securities transfer............ 162,477 2,642
--------- --------- ---------
Transfers to securities available for sale.............. $ 73,527 $ 232,258 $ 11,709
========= ========= =========
Transfers from loans to other real estate owned........... $ 780 $ 893 $ 989
========= ========= =========
Loans on other real estate owned sold..................... $ 208 $ 16 $ 462
========= ========= =========
Noncash portion of acquisitions (Note 2)
Fair value of assets acquired (excluding cash) including
intangible assets of $278 and $246...................... $ 863 $ 263
Fair value of liabilities assumed......................... (371) (44)
--------- ---------
Noncash cost of acquisitions............................ $ 492 $ 219
========= =========
Unrealized (losses) gains on securities available for
sale.................................................... $ (3,813) $ 11,748 $ (13,893)
Adjustment to deferred tax asset.......................... (1,334) 4,096 (4,863)
--------- --------- ---------
Adjustment to shareholders' equity...................... $ (2,479) $ 7,652 $ (9,030)
========= ========= =========
Treasury shares issued in merger.......................... $ 635
=========
- -------------------------------------------------------------------------------------------------------

The accompanying notes are an integral part of the financial statements.

S-31

MID AM, INC.
NOTES TO 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. Since 1994, six collection companies were acquired, in
1995, a broker-dealer company was acquired, and, in 1996 a commercial finance
company was organized and commenced operations which are considered to be
additional business segments; however, the revenues, operating profit and assets
of the collection business, broker-dealer business and finance company 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), Mid Am Recovery Services, Inc. (MARSI), MFI Investments
Corp. (MFI), Mid Am Credit Corp. (MACC), Mid Am Financial Services, Inc.
(MAFSI), Simplicity Mortgage Consultants, Inc. (Simplicity), 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
maintained at December 31, 1996 and 1995 approximated $27,125,000 and
$25,184,000, 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
statement of condition. 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.

Held to Maturity Securities -- The Company holds from time-to-time 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. At December 31, 1996 and 1995 the Company had no securities
classified as held to maturity.

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, 1996, the Company has not
used any derivative financial instruments for hedging purposes, 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 $268,543,000 and $220,070,000
at December 31, 1996 and 1995, respectively.

Mortgage Servicing Rights -- The Company adopted Statement of Financial
Accounting Standards No. 122 "Accounting for Mortgage Servicing Rights" (SFAS
122) effective January 1, 1995. The cost of mortgage loans which

S-32

NOTE 1. ACCOUNTING POLICIES -- CONTINUED
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 then 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 by discounting the expected future cash
flows, taking into consideration the estimated level of prepayments based upon
current industry expectations.

The adoption of SFAS 122 increased 1995 pre-tax income 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.

Residential mortgage loans and other loans and leases 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 respective
secondary market for the type of loan or lease held for sale. The Company
generally sells its residential mortgage loans and MACC originated loans and
leases at a premium or discount from the carrying amount of the loans or leases.
Such premium or discount is recognized at the date of sale.

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 other consumer 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 of 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, unless the loan is well secured and
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 their original
contractual rates.

Allowance for Credit Losses -- The allowance for 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 loan and lease
sales agreements or servicing agreements are classified with other liabilities.

S-33

NOTE 1. ACCOUNTING POLICIES -- CONTINUED
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 and 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 periods ranging from 15 to 25 years. Core deposit intangible assets
acquired before 1992 are amortized using the straight-line method over 10 years.
Core deposit intangible assets acquired on or after January 1, 1992 are
amortized using an accelerated method over 10 years. Goodwill and core deposit
intangible assets at December 31, 1996 and 1995 aggregated $18,671,000 and
$20,715,000 respectively, and the accumulated amortization aggregated $7,893,000
and $8,691,000, 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
(other 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 -- Primary 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, 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 exercised.

The weighted average number of common shares outstanding for primary and
fully diluted earnings per share computations were as follows:

- -----------------------------------------------------------------------------------------------------
Year ended December 31, 1996 1995 1994

- -----------------------------------------------------------------------------------------------------
Weighted average common shares outstanding --
primary.............................................. 20,986,000 21,126,000 20,951,000
Weighted average common shares outstanding -- fully
diluted.............................................. 24,274,000 24,851,000 24,890,000
- -----------------------------------------------------------------------------------------------------

Recent Accounting Pronouncements -- The Financial Accounting Standards
Board issued Statement of Financial Accounting Standards No. 125 "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities"
(SFAS 125) in June, 1996. SFAS 125 establishes new accounting and reporting
standards for transfers and servicing of financial assets and extinguishment of
liabilities. SFAS 125 focuses on the concept of control. Under this approach,
after a transfer of financial assets, the Company will recognize the financial
and servicing assets it controls and the liabilities it has incurred, and will
derecognize financial assets when control has been surrendered, and derecognize
liabilities when extinguished.

The Company currently transfers certain residential mortgage loans
originated by its bank subsidiaries and loans and leases originated by one of
its non-bank subsidiaries. The Company has accounted for these transfers as
sales; accordingly, the loans and leases transferred have been derecognized.
Management believes that these transfers will continue to be treated as sales
under SFAS 125 and there will be no material impact on its results of operations
from adoption of this statement. The Company will prospectively adopt SFAS 125
effective January 1, 1997.

S-34

NOTE 1. ACCOUNTING POLICIES -- CONTINUED
Preferred Stock -- The nonvoting $1.8125 cumulative convertible Series A
preferred shares may be redeemed, at the option of the Company, after June 12,
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, 1996, each share of Series A
preferred stock is convertible into the Company's common stock at a conversion
price of $10.25. 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 -- The Company accounts for stock-based
compensation arrangements under the intrinsic value method in accordance with
ABP 25. Pro forma disclosures of compensation cost of stock-based awards
required by Statement of Financial Accounting Standards No. 123 have been
determined using the fair value method which considers the time value of the
option considering the volatility of the Company's stock and the risk-free
interest rate over the expected life of the option using a Black-Scholes
valuation model.

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, ACQUISITIONS, AND DIVESTITURES

Completed Transactions

During 1996, the Company completed its acquisitions of Simplicity Mortgage
Consultants, Inc., an Indiana-based mortgage brokerage company with annual
revenues of approximately $.9 million, and National Recovery Systems,
Professional Adjustment of Ft. Myers, and Gulf Coast Collection Bureau, Inc.,
Florida-based collection agencies with annual revenues of approximately $1.0
million. The aggregate purchase price of the four transactions was $1.5 million
and included $551,000 cash and the issuance of 55,380 shares of Mid Am, Inc.
common stock. The results of operations include the results of the acquired
entities from the date of their respective acquisition. These transactions have
been accounted for as purchases.

On December 12, 1996, the Company completed the sale of substantially all
of its credit card business to a national credit card issuer. The Company
received $24.4 million cash in connection with this sale and recognized a
pre-tax gain of $4.6 million (after tax $3.0 million).

On July 31, 1995, the Company completed its merger with MFI Investments
Corp., an introducing broker-dealer. MFI shareholders received 345,983 shares of
Mid Am, Inc. common stock (after adjustment for the 10% common stock dividend
paid in 1996), of which 169,701 shares are held in escrow at December 31, 1996
pending resolution of litigation filed against MFI prior to the merger. Under
the escrow agreement, 3,289 shares of Mid Am, Inc. stock were returned to the
Company through 1996 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 was 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 1,701,328 shares of Mid Am, Inc. common stock (after
adjustment for the 10% common stock dividends paid in 1996 and 1995). The
transaction was accounted for as a pooling-of-interests.

Pending Sale of Branches

On November 21, 1996, the Company reached a definitive agreement to sell
seven of its southern Ohio branches, with deposits of approximately $100 million
at December 31, 1996, to another financial institution. The transaction received
regulatory approval on January 15, 1997. All loans originated through the
branches will be retained. The Company expects to recognize a pre-tax gain of
approximately $8.5 million. The ultimate gain will be dependent on the level of
deposits on the date of closing and appraisals of branch property. The sale is
expected to close in the first quarter of 1997.

S-35

NOTE 3. SECURITIES AVAILABLE FOR SALE

The aggregate cost and carrying value at market of securities available for
sale at December 31, 1996 and 1995 are as follows:

- -----------------------------------------------------------------------------------------------------------
Gross Gross Carrying
1996 Unrealized Unrealized Value at
(Dollars in thousands) Cost Gains Losses Market

- -----------------------------------------------------------------------------------------------------------
U.S. Treasury securities................... $ 56,758 $ 192 $ (359) $ 56,591
Securities of other U.S. Government
agencies and corporations................ 47,291 65 (591) 46,765
Obligations of states and political
subdivisions............................. 44,445 1,310 (115) 45,640
Equity securities.......................... 34,369 357 (385) 34,341
Mortgage-backed securities................. 251,486 1,265 (3,297) 249,454
-------- ------ ------- --------
Total...................................... $434,349 $3,189 $(4,747) $432,791
======== ====== ======= ========
- -----------------------------------------------------------------------------------------------------------

- -----------------------------------------------------------------------------------------------------------
Gross Gross Carrying
1995 Unrealized Unrealized Value at
(Dollars in thousands) 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 (525) 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
======== ====== ======= ========
- -----------------------------------------------------------------------------------------------------------

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 amortized cost of $66,096,000 and $162,477,000, respectively,
were transferred from held-to-maturity to securities available for sale in
November 1995. 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, 1996, by contractual maturity, are shown below. 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) Cost at Market

- ------------------------------------------------------------------------------------------------
Due in one year or less..................................... $ 32,149 $ 32,086
Due after one year through five years....................... 89,891 89,940
Due after five years through ten years...................... 25,795 26,070
Due after ten years......................................... 35,028 35,241
-------- --------
182,863 183,337
Mortgage-backed securities.................................. 251,486 249,454
-------- --------
$434,349 $432,791
======== ========
- ------------------------------------------------------------------------------------------------

Proceeds from sales of securities available for sale were $47,503,000,
$27,771,000 and $91,398,000 for 1996, 1995 and 1994, respectively.

S-36

NOTE 3. SECURITIES AVAILABLE FOR SALE -- CONTINUED

Gains of $1,795,000, $429,000 and $1,343,000 and losses of $221,000,
$79,000 and $112,000 were realized on sales of available for sale securities in
1996, 1995 and 1994, respectively.

NOTE 4. LOANS AND ALLOWANCE FOR CREDIT LOSSES

Loans outstanding are as follows:

- ----------------------------------------------------------------------------------------------
December 31,
(Dollars in thousands) 1996 1995

- ----------------------------------------------------------------------------------------------
Real estate loans
Construction.............................................. $ 72,416 $ 63,086
Residential mortgage...................................... 524,704 580,004
Non-residential mortgage.................................. 418,781 305,710
Commercial, financial and agricultural loans................ 379,268 357,290
Installment and credit card loans........................... 175,742 164,055
Other loans................................................. 5,384 6,335
---------- ----------
Total..................................................... 1,576,295 1,476,480
Less:
Unearned income........................................... (14) (22)
Unamortized loan fees..................................... (1,401) (807)
Allowance for credit losses............................... (15,672) (14,859)
---------- ----------
Total net.............................................. $1,559,208 $1,460,792
========== ==========
- -----------------------------------------------------------------------------------------------

Most of the Company's business activity is with customers located within
the respective local business areas of its banks which encompasses Western Ohio
and Southeastern Michigan. However, MACC retains a portion of the credit risk of
loans and leases it sells through stipulated recourse provisions. MACC's loan
and lease activities are with customers in medical related fields located within
the continental United States. Substantially all loans and leases originated by
MACC are sold in the secondary market. In connection with sales of the loans and
leases, MACC retains limited servicing and limited recourse liability. The
servicing is limited to responsibility to collect delinquent accounts based on
information provided by the purchaser of the loans and leases. A liability is
established at the time each loan or lease is sold based on the fair value of
the servicing liability. In addition, MACC records a liability for the estimated
recourse for credit losses which is limited to an aggregate of 10% of the
purchase price of the loans and leases sold. The fair value of the servicing
liability and the estimated recourse liability reduce the amount of gain or
increase the loss of the loans and leases sold. MACC sold loans and leases for
total proceeds of $28,466,000 in 1996. At December 31, 1996, the outstanding
balance of loans and leases sold was $27,121,000. A portion of the purchase
price is deferred and paid to MACC on a delayed basis. At December 31, 1996,
MACC recorded a receivable of $825,000 for deferred sales proceeds. During 1996,
MACC recorded provisions of $618,000 for ultimate recourse losses on loans sold,
and through December 31, 1996 no charges against the liability have been made.

The Company's retained loan 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.

S-37

NOTE 4. LOANS AND ALLOWANCE FOR CREDIT LOSSES -- CONTINUED

Changes in the allowance for credit losses are as follows:

- ---------------------------------------------------------------------------------------------------
Year ended December 31,
(Dollars in thousands) 1996 1995 1994

- ---------------------------------------------------------------------------------------------------
Balance at beginning of period........................... $14,859 $14,722 $15,157
Additions (reductions):
Provision for credit losses............................ 4,537 3,002 1,224
Charge-offs............................................ (5,498) (4,379) (3,406)
Recoveries on loans charged off........................ 1,774 1,478 1,747
Transfer of other real estate owned allowance relating
to in-substance foreclosure loans................... 36
------- ------- -------
Balance at end of period................................. $15,672 $14,859 $14,722
======= ======= =======
- ---------------------------------------------------------------------------------------------------

Information relating to loans determined to be impaired is as follows:

- --------------------------------------------------------------------------------------
As of and for year ended December 31,
(Dollars in thousands) 1996 1995

- --------------------------------------------------------------------------------------
Investment in impaired loans................................ $7,241 $9,245
Amount of impaired loans with specific allowance............ 5,915 7,868
Amount of impaired loans with no specific allowance......... 1,326 1,377
Average investment in impaired loans........................ 8,447 9,939
Cash basis interest income recognized on impaired loans..... 532 686
- --------------------------------------------------------------------------------------

Other non-performing assets at December 31, 1996 and 1995 include other
real estate owned of $1,143,000, and $763,000, respectively, which have been
recorded at estimated fair value less estimated selling costs.

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 1996 and 1995 is as follows:

- -------------------------------------------------------------------------------------------------------------------
Balances at New Balances
Beginning Originations/ Loan at End
(Dollars in thousands) of Period Advances Repayments Other of Period

- -------------------------------------------------------------------------------------------------------------------
Year ended December 31,
1996....................... $19,375 $23,193 $17,055 $(3,746) $21,767
======= ======= ======= ======= =======
Year ended December 31,
1995....................... $21,787 $11,558 $ 9,736 $(4,234) $19,375
======= ======= ======= ======= =======
- -------------------------------------------------------------------------------------------------------------------

S-38

NOTE 5. BANK PREMISES AND EQUIPMENT

Bank premises and equipment consist of the following:

- ------------------------------------------------------------------------------------------
December 31,
(Dollars in thousands) 1996 1995

- ------------------------------------------------------------------------------------------
Land and land improvements.................................. $ 8,906 $ 8,833
Buildings................................................... 43,247 42,614
Furniture and fixtures...................................... 37,646 35,023
Leasehold improvements...................................... 1,024 905
Construction-in-progress.................................... 2,737 674
-------- --------
93,560 88,049
Less:
Accumulated depreciation and amortization................. (43,449) (38,560)
-------- --------
$ 50,111 $ 49,489
======== ========
- ------------------------------------------------------------------------------------------

Included in the above are buildings, land and land improvements which
secure a capitalized lease with a cost of $5,720,000, less accumulated
amortization and depreciation of $3,288,000 and $2,979,000 at December 31, 1996
and 1995, respectively. Substantially all of the 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 thirteen 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 to Bancsites, Inc.
under capital leases amounted to $537,000 in 1996, $551,000 in 1995 and $561,000
in 1994. Rental payments for land are treated as operating lease expense. Rent
expense amounted to $1,516,000 in 1996, $1,365,000 in 1995, and $1,394,000 in
1994.

All of the future minimum payments under capital lease agreements at
December 31, 1996 presented below relate to the Bancsites agreements, and
substantially all future minimum lease payments under operating lease agreements
are with unrelated parties:

- ---------------------------------------------------------------------------------------------------------
Bancsites Bancsites Other
Capital Operating Operating
(Dollars in thousands) Leases Leases Leases

- ---------------------------------------------------------------------------------------------------------
1997..................................................... $ 492 $29 $ 778
1998..................................................... 442 26 592
1999..................................................... 359 509
2000..................................................... 366 324
2001..................................................... 362 66
Thereafter............................................... 1,635 1,225
------ --- ------
Total minimum lease payments........................ 3,656 $55 $3,494
=== ======
Amounts representing interest............................ (842)
------
Present value of minimum lease payments.................. $2,814
======
- ---------------------------------------------------------------------------------------------------------

NOTE 6. DEPOSITS

Included in other time deposits are certificates of deposit of $100,000 or
more totalling $213,496,000 and $165,507,000 at December 31, 1996 and 1995,
respectively. Included in savings deposits are negotiable order of withdrawal
(NOW) accounts totalling approximately $202,061,000 and $198,333,000 at December
31, 1996 and

S-39

NOTE 6. DEPOSITS -- CONTINUED

1995, respectively. The Company paid $81,347,000, $77,786,000 and $61,049,000 in
interest on deposits and other borrowings in 1996, 1995 and 1994, respectively.

NOTE 7. FEDERAL HOME LOAN BANK BORROWINGS AND ADVANCES AND OTHER BORROWINGS

All of the Company's banking subsidiaries 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 $159,943,000 at December
31, 1996. Borrowings under the FHLB lines of credit are secured by FHLB stock
totalling $11,153,000 and $9,663,000 at December 31, 1996 and 1995,
respectively, and by residential mortgages totalling 150% of outstanding
borrowings. Aggregate borrowings outstanding under the available lines of credit
were $39,403,000 and $45,183,000 at weighted average interest rates of 6.35% and
6.89% at December 31, 1996 and 1995, respectively.

The contractual maturities of the FHLB outstanding borrowings for the five
years subsequent to December 31, 1996 are: 1997, $8,707,000; 1988, $2,871,000;
1999, $3,045,000; 2000, $3,425,000; and 2001, $18,127,000.

The Company entered into an agreement with an unrelated financial
institution in October 1995 which enabled the Company to borrow up to
$20,000,000 through December 28, 1996; however, the Company did not borrow
against the credit facility. On December 31, 1996, the Company entered into an
agreement with a different financial institution which enables the Company to
borrow up to $20,000,000 through December 31, 1997. Interest on advances taken
on the facility is accrued at either the financial institution's prime rate, a
formula based on the London Interbank Offering Rate, or a formula based on the
Federal Funds Rate. The Company may elect the interest rate method to be applied
to amounts outstanding in $100,000 increments. The agreement provides for an
annual fee of .1875% on the average unused portion of the credit facility. The
agreement also contains covenants which require the Company, among other things,
to maintain minimum tangible net worth, as defined, of $165,000,000, maintain
specified minimum capital ratios, and not permit non-performing assets to total
loans and non-performing assets to total capital ratios to exceed specified
maximums. Subsequent to December 31, 1996, the Company borrowed $10 million
against the credit facility.

NOTE 8. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following presents the estimated fair value of the Company's financial
instruments at December 31, 1996 and 1995:

- --------------------------------------------------------------------------------------------------------
1996 1995
- --------------------------------------------------------------------------------------------------------
Carrying Fair Carrying Fair
(Dollars in thousands) Amount Value Amount Value

- --------------------------------------------------------------------------------------------------------
Assets
Cash and due from banks,
interest-bearing deposits and
federal funds sold............. $ 91,764 $ 91,764 $ 178,530 $ 178,530
Securities available for sale..... 432,791 432,791 461,997 461,997
Loans held for sale and loans..... 1,582,807 1,488,293
Less: allowance for credit
losses......................... (15,672) (14,859)
---------- ----------
Loans held for sale and loans,
net.......................... 1,567,135 1,528,930 1,473,434 1,440,882
Liabilities
Deposits.......................... 1,832,909 1,837,381 1,860,142 1,868,834
Federal funds purchased and
securities sold under
agreements to repurchase....... 92,805 92,805 87,548 87,548
Debt.............................. 39,433 38,891 45,243 45,334
Off-balance-sheet commitments:
Commitments to extend credit
($418,330 and $421,673 at
December 31, 1996 and 1995,
respectively).................. 416,953 420,983
- --------------------------------------------------------------------------------------------------------

S-40

NOTE 8. FAIR VALUE OF FINANCIAL INSTRUMENTS -- CONTINUED
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.
Further, the amounts which could be realized in immediate settlement of the
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.

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.

Debt and capitalized lease obligations -- 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.

S-41

NOTE 9. FEDERAL INCOME TAXES

The deferred tax assets/liabilities consist of the following:

- ---------------------------------------------------------------------------------------
December 31,
(Dollars in thousands) 1996 1995

- ---------------------------------------------------------------------------------------
Gross deferred tax assets:
Loan loss reserve......................................... $2,753 $ 2,493
Unrealized losses on securities available for sale........ 576
Deferred compensation..................................... 1,007 1,008
Deferred loan fees........................................ 463 281
Deferred interest......................................... 175 219
Other..................................................... 573 300
------ -------
5,547 4,301
------ -------
Gross deferred tax liabilities:
Bank premises and equipment............................... 1,882 1,888
Unrealized gains on securities available for sale......... 789
Federal Home Loan Bank dividends.......................... 1,312 1,063
Mortgage servicing rights................................. 1,270 515
Prepaid deposit interest.................................. 337 1,136
Prepaid FDIC premium...................................... 88 240
Prepaid expenses.......................................... 443 799
Loan and deposit purchase accounting adjustments -- net... 227 312
Other..................................................... 218 253
------ -------
5,777 6,995
------ -------
Net deferred tax liability at end of year................... $ (230) $(2,694)
====== =======
- ---------------------------------------------------------------------------------------

At December 31, 1996 and 1995 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, 1996 1995 1994

- -------------------------------------------------------------------------------------------------
Statutory federal income tax rate........................... 35.0% 35.0% 35.0%
Effect of interest income which is not subject to
taxation.................................................. (2.8) (3.5) (4.1)
Nondeductible interest expense.............................. 0.4 0.4 0.4
Other items, net............................................ (0.2) 0.2 (0.2)
---- ---- ----
32.4% 32.1% 31.1%
==== ==== ====
- -------------------------------------------------------------------------------------------------

S-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) 1996 1995 1994

- ----------------------------------------------------------------------------------------------------
Other non-interest income:
Gain from sale of credit card accounts.................. $ 4,568
Gain from sale of other loans........................... 3,367 $ 352 $ 43
Credit card fees........................................ 1,961 1,696 1,274
International department fees........................... 1,009 762 628
Banclub fees............................................ 993 904 779
ATM card fees........................................... 877 504 411
Credit life insurance................................... 470 551 702
Other................................................... 2,431 2,175 2,739
------- ------- -------
$15,676 $ 6,944 $ 6,576
======= ======= =======
- ----------------------------------------------------------------------------------------------------

- ----------------------------------------------------------------------------------------------------
Year ended December 31,
(Dollars in thousands) 1996 1995 1994

- ----------------------------------------------------------------------------------------------------
Other non-interest expense:
Brokerage commissions................................... $ 5,604 $ 6,608 $ 4,983
FDIC expense............................................ 4,667 2,754 3,868
Marketing............................................... 2,301 2,247 1,976
Franchise taxes......................................... 2,501 2,473 2,490
Telephone............................................... 2,157 1,884 1,939
Printing and supplies................................... 2,229 1,868 1,919
Legal and other professional fees....................... 2,237 1,915 2,081
Credit card processing costs............................ 1,761 1,431 1,006
Amortization of intangible assets....................... 1,579 1,600 1,579
Postage................................................. 1,626 1,442 1,460
Other................................................... 8,984 7,022 7,220
------- ------- -------
$35,646 $31,244 $30,521
======= ======= =======
- ----------------------------------------------------------------------------------------------------

The FDIC expense for the year ended December 31, 1996 includes $3,563,000
of a special Savings Association Insurance Fund (SAIF) assessment on deposits of
the Company's subsidiaries which were acquired from thrifts.

NOTE 11. RETIREMENT 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. Employees may contribute to the plan upon
employment; Company matching provisions commence after the employees have
completed twelve 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 three percent. The Company also sponsors an Employee Stock Ownership
Pension Plan which provides for an annual contribution by the Company equal to
six 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 of its common stock to a trust established to hold
the shares on behalf of

S-43

NOTE 11.RETIREMENT PLANS -- CONTINUED

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 (12%, 9% and 9% in 1996, 1995 and 1994,
respectively). At December 31, 1996, 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 $2,762,000, $2,017,000 and
$2,330,000 in 1996, 1995 and 1994, respectively.

NOTE 12. STOCK OPTIONS

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%
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. Options granted
to officers and other key employees are exercisable in annual 20% increments,
except for options received in lieu of salary, which are immediately
exercisable.

Compensation cost determined using the fair value method consistent with
the methodology prescribed by SFAS 123 for the Company's stock option plan would
have the following pro forma effect on net income and earnings per share:

- -------------------------------------------------------------------------------
(Dollars in thousands, except per share data) 1996 1995

- -------------------------------------------------------------------------------
Net income, as reported..................................... $25,992 $24,967
Net income, pro forma....................................... 25,810 24,572
Earnings per share, as reported............................. 1.12 1.05
Earnings per share, pro forma............................... 1.12 1.03
Fully diluted earnings per share, as reported............... 1.07 1.01
Fully diluted earnings per share, pro forma................. 1.06 0.99
- -------------------------------------------------------------------------------

The weighted average fair value of the options granted in 1996 and 1995 was
estimated at $370,000 and $645,000 on the date of grant. The weighted average
assumptions utilized to determine the estimated fair value were:

- -----------------------------------------------------------------------------------
1996 1995

- -----------------------------------------------------------------------------------
Dividend yield.............................................. 4.00% 4.00%
Volatility.................................................. 0.24 0.21
Risk-free interest rate..................................... 6.05 5.85
Expected life............................................... 6.34 5.49
- ----------------------------------------------------------------------------------

S-44

NOTE 12. STOCK OPTIONS -- CONTINUED

The following table presents a summary of activity with respect to the
Company's stock option plan:

- ----------------------------------------------------------------------------------------------------
Weighted Average
Shares Exercise Price
Under Plan of Shares

- ----------------------------------------------------------------------------------------------------
Balance at December 31, 1993................................ 255,987 $10.07
Granted................................................... 653,004 11.73
Exercised................................................. (3,207) 9.02
Forfeited................................................. (14,275)
---------
Balance at December 31, 1994................................ 891,509 11.27
Granted................................................... 427,910 13.52
Exercised................................................. (89,974) 8.81
Forfeited................................................. (16,178)
---------
Balance at December 31, 1995................................ 1,213,267 12.25
Granted................................................... 149,842 17.86
Exercised................................................. (39,517) 10.43
Forfeited................................................. (11,814)
---------
Balance at December 31, 1996................................ 1,311,778 12.95
=========
- ----------------------------------------------------------------------------------------------------

Shares exercisable at December 31, 1996, 1995 and 1994 were 1,057,326,
1,005,799, and 529,478, respectively. Shares authorized under the plan at
December 31, 1996, 1995 and 1994 were 1,462,000, 1,501,000 and 1,468,000,
respectively.

The following table summarizes information concerning outstanding and
exercisable options:

- -----------------------------------------------------------------------------------------------------------------------
Weighted Average Weighted Average
Number Remaining Weighted Average Number Weighted Average
Range of Exercise Prices Outstanding Contractual Life Exercise Price Exercisable Exercise Price

- -----------------------------------------------------------------------------------------------------------------------
$ 4 - $ 8............... 7,848 82 months $6.55 7,848 $6.55
8 - 12............... 527,259 87 months 10.84 455,707 10.84
12 - 15............... 626,829 102 months 13.60 544,332 13.41
15 - 19............... 149,842 119 months 17.86 49,439 17.84
--------- ---------
1,311,778 1,057,326
========= =========
- -----------------------------------------------------------------------------------------------------------------------

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. These suits were filed prior to the
subsidiary's merger with the Company. The suits seek recovery of losses of
approximately $2,700,000 plus punitive damages, attorneys' fees and costs of
litigation. The litigation in the matters has been stayed and the parties have
entered into arbitration. The Company denies liability to the plaintiffs in each
of the actions and is vigorously contesting the claims. Discovery has been
partially completed in these actions, and arbitration proceedings have
commenced. However, due to the complexity of the issues management and the
Company's legal counsel have been unable to form an opinion as to the likely
outcome of the arbitration; 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 169,701 of Mid Am, Inc. common
shares (after adjustment for 10% common stock dividend paid in 1996) are being
held in escrow pending resolution of the arbitration. 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, Acquisitions, and
Divestitures".

S-45

NOTE 13. COMMITMENTS AND CONTINGENCIES -- CONTINUED
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) 1996 1995

- ------------------------------------------------------------------------------------------
Commitments to extend credit................................ $418,330 $421,673
Standby letters of credit................................... 42,916 26,920
Letters of credit........................................... 5,026 1,609
- ------------------------------------------------------------------------------------------

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 not 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
thirty days to eighteen 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 deposits,
real estate, inventory and equipment as collateral supporting those commitments
for which collateral is deemed necessary.

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.

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 Western Ohio and Southeastern Michigan market areas; however,
the Company also has employees and agents in Kentucky, Indiana, and Colorado who
also originate loans for sale in the secondary market.

S-46

NOTE 15. MORTGAGE BANKING ACTIVITIES -- CONTINUED

The following table summarizes information relating to the Company's
mortgage banking activity:

- ----------------------------------------------------------------------------------------
December 31,
(Dollars in thousands) 1996 1995

- ----------------------------------------------------------------------------------------
Amounts held in agency accounts............................. $ 7,241 $ 7,463
Amounts held in escrow accounts............................. 7,170 6,925
Mortgage banking receivables for advanced funds............. 497 256
Unpaid mortgage loan principle for loans serviced for
investors................................................. 1,447,428 1,286,590
Unpaid mortgage loan principle for loans serviced for
affiliated investors...................................... 2,747 3,673
Excess servicing asset...................................... -- 70
Mortgage servicing rights, net of accumulated
amortization.............................................. 3,704 1,544
Allowance for impairment of capitalized mortgage servicing
rights.................................................... 76 63
- ----------------------------------------------------------------------------------------

In 1996, 1995 and 1994, the Company sold certain servicing rights on
mortgages which had an outstanding principal balance of $41,038,000, $31,471,000
and $17,664,000, respectively, and realized gains of $351,000, $245,000 and
$175,000, respectively. At December 31, 1996 the Company had firm commitments
for the sale of approximately $8,133,000 of loans held for sale. No provision
for loss on the carrying amount on loans held for sale is considered necessary
at December 31, 1996.

NOTE 16. REGULATORY MATTERS

Capital Maintenance Requirements

The Company and its bank subsidiaries must observe capital guidelines
established by Federal and state regulatory authorities. Failure to meet
specified minimum capital requirements can result in certain mandatory actions
by the Company's and banks' primary regulators that could have a material effect
on the Company's financial condition or results of operations. Under capital
adequacy guidelines, the Company and its bank subsidiaries must meet specific
quantitative measures of their assets, liabilities and certain off balance sheet
items as determined under regulatory accounting practices. The Company's and
banks' capital amounts and classification are also subject to qualitative
judgments by the regulators about components, risk weightings and other factors.
Management believes, as of December 31, 1996, that the Company and its banks
meet all capital adequacy requirements to which they are subject.

As of December 31, 1996, the Company and its banks have been notified by
their respective regulators that, based on the most recent regulatory
examinations, each is regarded as well capitalized under the regulatory
framework for prompt corrective action. Such determinations have been made
evaluating the Company and its banks under Tier I, total capital, and leverage
ratios. There are no conditions or events since these notifications that
management believes have changed any of the Company's or banks' well capitalized
categorizations.

S-47

NOTE 16. REGULATORY MATTERS -- CONTINUED

The Company's and its banks' capital ratios are presented in the following
table:

- ------------------------------------------------------------------------------------------------------------
Under Prompt Corrective Action Provisions
-----------------------------------------
Well Capitalized Adequately Capitalized
----------------------------------------------
Actual Minimum Minimum Minimum Minimum
---------------------------------------------------------------------
Amount Ratio Amount Ratio Amount Ratio
- ------------------------------------------------------------------------------------------------------------

AS OF DECEMBER 31, 1996:
Total Capital to Risk-Weighted
Assets
Mid Am, Inc.................... $199,712 11.87% $168,179 10.00% $134,543 8.00%
Mid Am Bank.................... 72,029 10.30 69,928 10.00 55,942 8.00
First National................. 41,884 10.39 40,296 10.00 32,237 8.00
AmeriCom....................... 30,629 12.27 24,956 10.00 19,964 8.00
AmeriFirst..................... 20,279 11.04 18,371 10.00 14,697 8.00
Adrian......................... 10,253 10.15 10,098 10.00 8,078 8.00
Tier I Capital to Risk-Weighted
Assets
Mid Am, Inc.................... 183,422 10.91 100,907 6.00 67,271 4.00
Mid Am Bank.................... 64,437 9.21 41,957 6.00 27,971 4.00
First National................. 39,962 9.92 24,177 6.00 16,118 4.00
AmeriCom....................... 27,875 11.17 14,973 6.00 9,982 4.00
AmeriFirst..................... 18,184 9.90 11,023 6.00 7,349 4.00
Adrian......................... 8,991 8.90 6,059 6.00 4,039 4.00
Tier I Capital to Average Assets
Mid Am, Inc.................... 183,422 8.44 108,634 5.00 86,907 4.00
Mid Am Bank.................... 64,437 7.61 42,336 5.00 33,869 4.00
First National................. 39,962 7.69 25,990 5.00 20,792 4.00
AmeriCom....................... 27,875 7.28 19,155 5.00 15,324 4.00
AmeriFirst..................... 18,184 6.86 13,256 5.00 10,604 4.00
Adrian......................... 8,991 6.32 7,111 5.00 5,689 4.00
AS OF DECEMBER 31, 1995:
Total Capital to Risk-Weighted
Assets
Mid Am, Inc.................... $196,122 12.73% $154,100 10.00% $123,280 8.00%
Mid Am Bank.................... 64,427 10.16 63,389 10.00 50,711 8.00
First National................. 37,934 10.30 36,845 10.00 29,476 8.00
AmeriCom....................... 29,925 12.45 24,041 10.00 19,233 8.00
AmeriFirst..................... 22,250 10.95 20,314 10.00 16,251 8.00
Adrian......................... 9,971 11.65 8,563 10.00 6,850 8.00
Tier I Capital to Risk-Weighted
Assets
Mid Am, Inc.................... 181,263 11.76 92,460 6.00 61,640 4.00
Mid Am Bank.................... 56,772 8.96 38,033 6.00 25,356 4.00
First National................. 36,385 9.88 22,107 6.00 14,738 4.00
AmeriCom....................... 27,479 11.43 14,425 6.00 9,616 4.00
AmeriFirst..................... 20,241 9.96 12,188 6.00 8,126 4.00
Adrian......................... 8,901 10.40 5,138 6.00 3,425 4.00
Tier I Capital to Average Assets
Mid Am, Inc.................... 181,263 8.37 108,271 5.00 86,617 4.00
Mid Am Bank.................... 56,772 6.93 40,956 5.00 32,765 4.00
First National................. 36,385 7.12 25,563 5.00 20,450 4.00
AmeriCom....................... 27,479 6.90 19,919 5.00 15,935 4.00
AmeriFirst..................... 20,241 6.90 14,671 5.00 11,737 4.00
Adrian......................... 8,901 6.57 6,777 5.00 5,421 4.00
- ------------------------------------------------------------------------------------------------------------

S-48

NOTE 16. REGULATORY MATTERS -- CONTINUED

Restrictions on Subsidiary Dividends

Dividends paid by the Company are mainly provided by dividends from its
subsidiaries. However, certain restrictions exist regarding the ability of its
banking 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, 1994. As of December 31, 1996, $13,538,000 was
available for distribution to the Company as dividends without prior regulatory
approval.

NOTE 17. CONDENSED PARENT COMPANY FINANCIAL INFORMATION

A summary of condensed financial information of the parent company is as
follows:

Statement of Condition

- ------------------------------------------------------------------------------------------
December 31,
(Dollars in thousands) 1996 1995

- ------------------------------------------------------------------------------------------
Assets:
Cash and due from banks..................................... $ 1,848 $ 14,996
Securities available for sale............................... 684 441
Investment in bank subsidiaries............................. 167,610 161,305
Investment in non-bank subsidiaries......................... 19,463 17,728
Bank premises and equipment................................. 3,321 975
Other assets................................................ 3,821 2,229
-------- --------
Total assets.............................................. $196,747 $197,674
======== ========
Liabilities and Shareholders' Equity:
Other liabilities........................................... $ 3,543 $ 2,836
Shareholders' equity
Preferred stock........................................... 30,093 35,569
Common stock.............................................. 69,625 64,975
Surplus................................................... 89,299 91,723
Retained earnings......................................... 6,034 9,529
Treasury stock............................................ (834) (8,424)
Unrealized (losses) gains on securities available for
sale................................................... (1,013) 1,466
-------- --------
Total liabilities and shareholders' equity................ $196,747 $197,674
======== ========
- ------------------------------------------------------------------------------------------

S-49

NOTE 17. CONDENSED PARENT COMPANY FINANCIAL INFORMATION -- CONTINUED

Statement of Earnings

- ---------------------------------------------------------------------------------------------------
Year Ended December 31,
(Dollars in thousands) 1996 1995 1994

- ---------------------------------------------------------------------------------------------------
Income:
Interest income.......................................... $ 202 $ 104 $ 595
Dividends from bank subsidiaries......................... 18,500 38,021 20,854
Dividends from non-bank subsidiaries..................... 2,419
Management fees.......................................... 7,190 5,996 4,226
Other income............................................. 49 351 236
------- ------- -------
25,941 44,472 28,330
------- ------- -------
Expenses:
Interest expense......................................... 14
Salaries and employee benefits........................... 5,854 4,648 3,064
Net occupancy expense.................................... 172 195 165
Equipment expense........................................ 511 415 304
Other expenses........................................... 2,276 2,162 2,453
------- ------- -------
8,827 7,420 5,986
------- ------- -------
Income before equity in undistributed net income of
subsidiaries........................................ 17,114 37,052 22,344
Equity in undistributed net income of bank
subsidiaries........................................... 8,994 (12,308) 3,167
Equity in undistributed net income of non-bank
subsidiaries........................................... (116) 223 (2,258)
------- ------- -------
Net income............................................. $25,992 $24,967 $23,253
------- ------- -------
Net income available to common shareholders............ $23,585 $22,216 $20,336
======= ======= =======
- -------------------------------------------------------------------------------------------------------

S-50

NOTE 17. CONDENSED PARENT COMPANY FINANCIAL INFORMATION -- CONTINUED

Statement of Cash Flows

- --------------------------------------------------------------------------------------------------------
Year Ended December 31,
(Dollars in thousands) 1996 1995 1994

- --------------------------------------------------------------------------------------------------------
Operating Activities
Net income............................................. $ 25,992 $ 24,967 $ 23,253
Adjustments to reconcile net income to net cash
provided by operating activities:
Equity in undistributed net income of bank
subsidiaries......................................... (8,994) 12,308 (3,167)
Equity in undistributed net income of non-bank
subsidiaries......................................... 116 (223) 2,258
Provision for depreciation and amortization of
assets............................................... 213 155 120
Net gains on sales of assets........................... (8) 1 (6)
Increase in other assets............................... (1,627) (213) (157)
Increase (decrease) in other liabilities............... 707 1,327 (255)
-------- -------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES............ 16,399 38,322 22,046
-------- -------- --------
Investing Activities
Capital contributions to bank subsidiaries............. (13,446)
Capital contributions to non-bank subsidiaries......... (1,707) (1,896) (3,054)
Proceeds from maturities and paydowns of securities
available for sale................................... 8,351
Purchases of securities available for sale............. (142) (64) (1,687)
Proceeds from sales of bank premises and equipment..... 30 50 30
Purchases of bank premises and equipment............... (2,581) (732) (143)
-------- -------- --------
NET CASH USED FOR INVESTING ACTIVITIES............... (4,400) (2,642) (9,949)
-------- -------- --------
Financing Activities
Cash dividends paid.................................... (14,851) (14,862) (13,638)
Proceeds from issuance of common stock................. 412 793 1,893
Treasury stock acquisitions, fractional shares and
other items.......................................... (10,708) (8,964) (651)
-------- -------- --------
NET CASH USED FOR FINANCING ACTIVITIES............... (25,147) (23,033) (12,396)
-------- -------- --------
Net (decrease) increase in cash...................... (13,148) 12,647 (299)
Cash at the beginning of the year...................... 14,996 2,349 2,648
-------- -------- --------
Cash at the end of the year.......................... $ 1,848 $ 14,996 $ 2,349
======== ======== ========
Supplemental Schedule of Noncash Investing and
Financing Activities:
Treasury shares issued in merger..................... $ 635
========
Unrealized gains (losses) on securities available for
sale.............................................. $ 101 $ 46 $ (64)
Adjustment to deferred tax asset....................... 35 16 (22)
-------- -------- --------
Adjustment to shareholders' equity................ $ 66 $ 30 $ (42)
======== ======== ========
Affiliates unrealized (losses) gains on securities
available for sale................................... $ (2,545) $ 7,622 $ (8,988)
======== ======== ========
- ----------------------------------------------------------------------------------------------------

S-51

MID AM, INC. NINE YEAR PERFORMANCE SUMMARY (UNAUDITED)

- ---------------------------------------------------------------------------------------------------------------
Yearly Average Balances Year End Balances
(Dollars in thousands, ---------------------------------- ----------------------------------------
except per share and Total Common Earning Loans & Total
ratio data) Year Assets Equity Assets Leases Deposits Assets

- ---------------------------------------------------------------------------------------------------------------
Balance Sheet 1996 $2,162,122 $157,084 $2,013,106 $1,574,880 $1,832,909 $2,180,974
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 1996/95 1.10% 2.59% 0.91% 6.72% (1.46)% (1.08)%
- ---------------------------------------------------------------------------------------------------------------
Average Growth 1996/88 9.24% 12.44% 9.16% 9.09% 7.90% 8.89%
- ---------------------------------------------------------------------------------------------------------------

Net Income
----------------- Cash Book Stock Total Market
Year Pooled Historic Dividends Value Price Equity $(000)

- ----------------------------------------------------------------------------------------------------
Data per 1996 $1.12 $1.12 $0.60 $7.83 $17.13 $356,903
Common Share 1995 1.05 1.16 0.57 7.64 14.92 311,233
1994 0.97 1.28 0.54 6.92 12.29 232,631
1993 1.05 1.39 0.49 7.05 11.27 197,212
1992 0.94 1.30 0.45 6.63 9.77 166,126
1991 0.40 0.50 0.44 5.83 8.88 137,674
1990 0.67 1.01 0.43 5.47 7.29 103,111
1989 0.73 0.98 0.40 4.57 9.21 104,668
1988 0.77 0.82 0.35 4.43 6.68 75,909
- ----------------------------------------------------------------------------------------------------
Annual Growth 1996/95 6.67% 5.26% 2.49% 14.79% 14.67%
- ----------------------------------------------------------------------------------------------------
Average Growth 1996/88 12.49% 7.21% 7.58% 13.68% 21.97%
- ----------------------------------------------------------------------------------------------------

Average Common
Shares Shares Year-End
Outstanding Traded Common Stock Cash Dividend Price/Earnings
Year (000) (000) Shareholders Dividends Payout Ratio Ratio

- -----------------------------------------------------------------------------------------------------------------
Common Stock Data 1996 20,986 4,189 8,244 10% 52.76% 15.22%
(as originally reported) 1995 19,205 4,377 8,208 10 54.51 14.36
1994 15,623 3,500 7,899 10 52.23 11.62
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
- -----------------------------------------------------------------------------------------------------------------

S-52

MID AM, INC. NINE YEAR PERFORMANCE SUMMARY (UNAUDITED)

- -----------------------------------------------------------------------------------------------
(Dollars in thousands,
except per share Total Net Interest Other Other Net
and ratio data) Year Revenue Income (1) Income Expenses Income

- -----------------------------------------------------------------------------------------------
Income and Expense 1996 $214,484 $86,885 $49,501 $91,419 $25,992
1995 198,498 84,478 35,955 78,416 24,967
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 1996/95 8.05% 2.85% 37.67% 16.58% 4.11%
- -----------------------------------------------------------------------------------------------
Average Growth 1996/88 8.75% 9.63% 22.97% 13.66% 20.48%
- -----------------------------------------------------------------------------------------------

FTE (4)
Other Income Employees Net Income
Return on Net Interest to Other Overhead Per $ Millions Per FTE (4)
Year Average Assets Margin (2) Expenses Ratio (3) of Assets Employees

- -----------------------------------------------------------------------------------------------------------------------
Operating Ratios 1996 1.20% 4.32% 54.15% 67.03% 0.57 $21
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 1996/88 1.01% 4.30% 38.21% 65.06% 0.56 17
- -----------------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------------
Average
Return on Common Market Value
Common Equity to to Total Return
Year Equity Average Assets Book Value to Investors (5)

- --------------------------------------------------------------------------------------------
Equity Ratios 1996 15.01% 7.27% 218.71% 18.76%
1995 14.51 7.16 195.26 26.50
1994 13.88 7.18 177.66 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 1996/88 14.06% 6.69% 170.76% 17.88%
- --------------------------------------------------------------------------------------------

(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.

S-53

MID AM, INC.

221 South Church Street
Bowling Green, Ohio 43402