FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
Commission File No. 0-10585
Mid Am, Inc.
(Exact Name of Registrant as Specified in its Charter)
Ohio 34-1580978
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification Number)
221 South Church Street, Bowling Green, Ohio 43402
(Address of Principal Executive Offices) (Zip Code)
(419)327-6300
(Registrant's Telephone Number)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X
Indicate the number of shares outstanding of each of the
issuer's classes of common stock as of the close of business
on October 31, 1997.
Common Stock, without par value - 24,354,783 shares
MID AM, INC.
INDEX
PART I - FINANCIAL INFORMATION Page Number
Item 1. Financial Statements
Consolidated Statement of Condition (Unaudited)
September 30, 1997 and December 31, 1996 3
Consolidated Statement of Earnings (Unaudited)
Three and nine months ended
September 30, 1997 and 1996 4
Consolidated Statement of Cash Flows (Unaudited)
Three and nine months ended
September 30, 1997 and 1996 5
Notes to Consolidated Financial Statements
(Unaudited) 7
Item 2. Management's Discussion and Analysis and
Statistical Information 11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 28
Item 2. Changes in Securities 28
Item 3. Defaults Upon Senior Securities 28
Item 4. Submission of Matters to a Vote
of Security Holders 28
Item 5. Other Information 28
Item 6. Exhibits and Reports on Form 8-K 28
SIGNATURES 29
EXHIBIT INDEX 30
PART I. - FINANCIAL INFORMATION
MID AM, INC. Consolidated Statement of Condition (Unaudited)
September 30, 1997 December 31, 1996
Assets (Dollars in thousands)
Cash and due from banks $ 75,771 $ 85,657
Int-bearing deposits in banks 1,546 1,631
Federal funds sold 84 4,476
Loans held for sale 6,544 7,927
Securities available for sale 392,774 432,791
Loans, net of unearned fees 1,632,183 1,574,880
Allowance for credit losses (16,850) (15,672)
Net loans 1,615,333 1,559,208
Bank premises and equipment 54,130 50,111
Int receivable/other assets 41,574 39,173
Total Assets $2,187,756 $2,180,974
Liabilities
Demand deposits(non-interest) $ 215,550 $ 205,306
Savings deposits 539,989 593,885
Other time deposits 987,157 1,033,718
Total Deposits 1,742,696 1,832,909
Federal funds purchased and
securities sold under
agreements to repurchase 156,336 92,805
Capitalized lease
obligations and debt 88,197 42,247
Int payable/other liabilities 21,691 19,809
Total Liabilities 2,008,920 1,987,770
Shareholders' Equity
Preferred stock - no par value
Authorized - 2,000,000
Issued - 1,203,725 shares
in 1996 30,093
Common stock - stated value
of $3.33 per share
Authorized - 35,000,000
Issued - 24,462,862
and 20,887,675 shares 81,542 69,625
Surplus 94,665 89,299
Retained earnings 3,149 6,034
Treasury stock
67,498 and 46,610 shares (1,102) (834)
Unrealized gains (losses) on
securities available for sale 582 (1,013)
Total Shareholders' Equity 178,836 193,204
Total Liabilities and
Shareholders' Equity $2,187,756 $2,180,974
MID AM, INC. Consolidated Statement of Earnings (Unaudited)
Three Mths Ended Nine Mths Ended
(Dollars in thousands) September 30, September 30,
1997 1996 1997 1996
Interest Income
Int and fees on loans $37,432 $33,807 $108,627 $ 99,413
Int on deposits in banks 42 31 172 95
Int on federal funds sold 159 245 734 1,953
Int on taxable investments 5,418 6,422 16,389 19,130
Int on tax exempt investment 534 638 1,605 2,122
Total Interest Income 43,585 41,143 127,527 122,713
Interest Expense
Int on deposits 17,384 18,181 51,797 54,796
Int on borrowed funds 3,610 1,601 8,858 5,163
Total Interest Expense 20,994 19,782 60,655 59,959
Net Interest Income 22,591 21,361 66,872 62,754
Provision for credit losses 1,190 1,305 3,949 2,940
Net Interest Income After
Provision Credit Losses 21,401 20,056 62,923 59,814
Non-interest Income
Trust department 590 373 1,470 1,090
Service charge deposit acct 2,316 1,773 6,346 5,085
Mortgage banking 3,868 2,166 9,092 7,579
Brokerage commissions 1,519 1,391 4,660 7,851
Collection agency fees 1,240 1,053 3,804 3,075
Net gains (losses) on
sales of securities 168 488 (480) 1,274
Net gains on sales of
other loans 4,126 1,296 9,314 1,880
Other income 2,173 1,931 15,678 5,582
Total Non-interest Income 16,000 10,471 49,884 33,416
Non-interest Expense
Salaries/employee benefits 13,717 10,227 40,392 30,415
Net occupancy expense 1,497 1,376 4,262 3,951
Equipment expense 2,423 1,979 6,686 5,887
Other expenses 8,979 10,805 25,315 28,040
Total Non-interest Expense 26,616 24,387 76,655 68,293
Income before income taxes 10,785 6,140 36,152 24,937
Applicable income taxes 3,664 1,895 12,301 7,974
Net Income $ 7,121 $ 4,245 $ 23,851 $ 16,963
Net Income Available to
Common Shareholders $ 7,121 $ 3,657 $ 23,246 $ 15,125
Earnings per Common Share:
Primary $ 0.29 $ 0.16 $ 0.97 $ 0.66
Fully diluted $ 0.29 $ 0.16 $ 0.93 $ 0.63
MID AM, INC. Consolidated Statement of Cash Flows (Unaudited)
Nine Months Ended September 30,
1997 1996
(Dollars in thousands)
Operating Activities
Net income $ 23,851 $ 16,963
Adjustments to reconcile net
income to net cash provided
by operating activities:
Provision for credit losses 3,949 2,940
Provision for depreciation
and amortization of assets 7,312 6,818
Proceeds from sales of mortgage
and other loans held for sale 373,672 353,071
Mortgage and other loans
originated for sale (364,113) (340,762)
Net gains on sales of offices,
deposits and other assets (24,783) (8,336)
Increase in interest receivable
and other assets (5,249) (6,476)
Increase in interest payable
and other liabilities 1,882 5,941
Net Cash Provided By
Operating Activities 16,521 30,159
Investing Activities
Net decrease in interest-bearing
deposits in other banks 85 2,256
Net decrease in
federal funds sold 4,392 70,370
Proceeds from sales of securities
available for sale 67,373 38,749
Proceeds from maturities and paydowns
of securities available for sale 65,411 72,798
Purchases of securities
available for sale (84,759) (37,525)
Proceeds from sales of loans 21,220 8,043
Net increase in loans (80,528) (144,687)
Proceeds from sales of
other real estate owned 1,451 504
Proceeds from sales of bank
premises and equipment 1,811 719
Purchases of bank premises
and equipment (11,068) (5,053)
Net Cash (Used For) Provided By
Investing Activities (14,612) 6,174
MID AM, INC. Consolidated Statement of Cash Flows (Unaudited)
Nine Months Ended September 30,
1997 1996
(Dollars in thousands)
Financing Activities
Cash transferred in connection
with the sale of branch deposits (84,927)
Net decrease in demand
deposits and savings accounts (11,207) (37,564)
Net increase (decrease) in
other time deposits 14,672 (12,194)
Net increase in short-term
borrowings 63,531 27,930
Repayment of capitalized lease
obligations and debt (7,063) (17,695)
Proceeds from issuance of
long-term debt 53,013
Preferred stock retired (21,801)
Proceeds from issuance of
common stock 450 339
Cash dividends paid (11,101) (10,950)
Treasury stock acquisitions,
fractional shares and other items (7,362) (10,507)
Net Cash Used For
Financing Activities (11,795) (60,641)
Net decrease in cash and
due from banks (9,886) (24,308)
Cash and due from banks at the
beginning of the period 85,657 102,600
Cash and due from banks at the
end of the period $ 75,771 $ 78,292
Supplemental Schedule of Noncash
Investing and Financing Activities
Securitization of loans held for
sale and transferred to
securities available for sale $ 6,344 $ 71,299
Transfers from loans to other
real estate owned $ 1,319 $ 708
Loans on other real estate
owned sold $ 208
Unrealized gains (losses) on
securities available for sale $ 2,452 $ (5,516)
Adjustment to deferred tax 857 (1,931)
Adjustment to shareholders' equity $ 1,595 $ (3,585)
MID AM, INC.
Notes to Consolidated Financial Information (Unaudited)
1. Accounting Principles
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. In the opinion of
management of the Company, all adjustments necessary to present
fairly the financial position, results of operations and cash
flows as of and for the periods presented have been made. Such
adjustments consisted only of normal recurring items.
Mid Am, Inc.'s business is primarily 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, in 1996, a commercial finance company was organized and
commenced operations and a mortgage brokerage business was
acquired, and in 1997, a private trust bank and personal finance
company were 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, finance companies and trust bank are not
material for separate disclosure and Mid Am, Inc.'s predominant
business continues to be banking. See Note 2. Recent Accounting
Pronouncements.
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 Private Trust, N.A. (MAPT), 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.
2. Recent Accounting Pronouncements
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No.128, "Earnings Per
Share," which supersedes existing standards for determining
earnings per share. The statement will be effective for the
Company for the year ending December 31, 1997. Primary earnings
per share will be replaced by "basic earnings per share," which
will be determined solely by the weighted average number of
shares outstanding for the period. Fully diluted earnings per
share will be replaced by "diluted earnings per share," which
will reflect the potential dilution that could occur if
securities or other contracts to issue common stock were
exercised or converted into common stock or resulted in the
issuance of common stock that then shared in the earnings of the
Company. The statement will also require a reconciliation of the
numerator and denominator of basic earnings per share with the
numerator and denominator of diluted earnings per share. Under
the new pronouncement, the Company will exclude common stock
equivalents, as defined by APB No.15 "Earnings Per Share," from
the computation of bank earnings per share which in prior years
and the nine months ended September 30, 1997 and 1996 were
composed of the net shares that would be issuable upon the
exercise of common stock options outstanding. Management does
not believe the new statement will result in a significant
difference in amounts per share determined for diluted earnings
per share. Under the new pronouncement, basic earnings per share
for the three months ended September 30, 1997 and 1996, would
have been $.29 and $.16, respectively, and diluted earnings per
share would have been $.29 and $.16, respectively. Under the new
pronouncement, basic earnings per share for the nine months ended
September 30, 1997 and 1996 would have been $.98 and $.67,
respectively, and diluted earnings per share would have been $.93
and $.63, respectively.
In June 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No.130 "Reporting
Comprehensive Income," which establishes standards for reporting
of comprehensive income and its components. This statement will
be effective for the Company for the year ending December 31,
1998, although the Statement permits earlier adoption. This
statement requires that entities classify items of other
comprehensive income by their nature in a financial statement and
display the accumulated balance of other comprehensive income
separately from retained earnings and surplus in the equity
section of a statement of financial condition. Comprehensive
income is composed of net income and "other comprehensive
income." Other comprehensive income includes charges or credits
to equity that are not the result of transactions with the
entities' shareholders. Currently, the only item of other
comprehensive income from activities of the Company relate to the
unrealized gains and losses of the Company's portfolio of
available for sale securities. The Company anticipates reporting
comprehensive income in the Statement of Changes in Stockholders'
Equity. Upon adoption, financial statements of earlier periods
will be restated for comparative purposes.
In June 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No.131 "Disclosures
about Segments of an Enterprise and Related Information," which
establishes standards for the way the Company reports information
about its operating segments in its annual report to shareholders
and certain selected information about its operating segments in
interim reports to shareholders. The Statement also establishes
standards for related disclosures about services, geographic
areas, and major customers. The statement generally takes a
"management approach" to reporting information about operating
segments, i.e. on the basis that it is used internally for
evaluating segment performance and deciding how to allocate
resources to segments. This statement will be effective for the
Company for the year ending December 31, 1998, although earlier
adoption is permitted. As discussed in Note 1, the Company's
predominate business is banking. Management is currently
evaluating the disclosure requirements of SFAS No.131. Certain
of the non-banking businesses which the Company has expanded into
may meet quantitative thresholds under the standard for separate
disclosure; however, no determination has been made at this time.
3. Stock Dividend
On August 22, 1997, the Board of Directors of the Company
declared a 10% stock dividend on its common stock to all
shareholders of record on September 2, 1997. The stock dividend
was paid on September 15, 1997 and fractional shares were paid in
cash. As a result of the stock dividend, the Company distributed
approximately 2,300,000 shares of common stock to approximately
8,400 shareholders of record. Per common share data for all
periods presented and the Statement of Condition at September 30,
1997 have been adjusted to reflect this 10% stock dividend.
4. Repurchase Program
On May 15, 1997, the Board of Directors of the Company
authorized management to undertake purchases of up to 1,650,000
shares of the Company's outstanding common stock over a twelve
month period in the open market or in privately negotiated
transactions. This new authorization follows the expiration of
the Company's 1996 authorization to repurchase up to 1,210,000
shares of common stock. The shares reacquired are held as
treasury stock and reserved for use in the Company's stock option
plan and for future stock dividend declarations. As of
September 30, 1997 the Company had repurchased approximately
247,000 shares of common stock pursuant to its 1997 repurchase
program. In connection with the payment of the 10% common stock
dividend paid on September 15, 1997, the Company issued
approximately 408,000 shares that were held as treasury stock of
which 220,000 shares were from the 1997 authorization and 188,000
shares were from the 1996 authorization. Subsequent to
September 30, 1997, the Company has repurchased an additional
70,000 shares of common stock pursuant to its 1997 repurchase
program.
5. Company's Obligated Mandatorily Redeemable Capital
Securities of Subsidiary Trust
In May, 1997, the Company, in a private placement, issued through
Mid Am Capital Trust I, a wholly owned subsidiary, $27,500,000 of
10.20% Capital Securities, Series A (Trust Preferred Securities).
The Trust Preferred Securities are subject to mandatory
redemption on June 1, 2027. The Company has the option of
redeeming the securities on or after June 1, 2007 at a redemption
price which equals 105.10% of the face value of the Trust
Preferred Securities at June 1, 2007, and the redemption premium
declines each year thereafter to 100% on or after June 1, 2017.
6. Contigencies
The Company has previously disclosed the pendancy of a securities
arbitration proceeding against MFI filed by customers of a money
manager not affiliated with the subsidiary prior to MFI's merger
with the Company. On August 26, 1997, the NASD Office of Dispute
Resolution denied with prejudice all claims and allegations
against MFI in their entirety.
Item 2. - Management's Discussion and Analysis and Statistical
Information
Three Months Ended September 30, 1997 and 1996
Results of Operations
For the three months ended September 30, 1997, net income
increased $2,876,000 or 68% to $7,121,000 compared to $4,245,000
for the same period in 1996. The increase is primarily due to a
non-recurring pre-tax charge of $3,560,000 assessed by the
Federal Deposit Insurance Corp. (FDIC) in the third quarter of
1996. Primary and fully diluted earnings per share for the
third quarter of 1997 were $.29 and $.29, respectively, compared
to $.16 and $.16 for the same period in the prior year. Return
on average common equity (ROE) for the third quarter of 1997 was
16.04% while return on average assets (ROA) was 1.29%, as
compared to ROE and ROA ratios of 9.42% and 0.79%, respectively,
for the third quarter of 1996. For the three months ended
September 30, 1996, net income and earnings per common share
excluding the non-recurring SAIF assessment would have been
$6,560,000 and $.26 ($.25 fully diluted), respectively.
Net Interest Income
Net interest income increased $1,230,000 to $22,591,000 in the
third quarter of 1997 as compared to $21,361,000 for the same
period in 1996. Net interest income is affected by changes in
the volumes and rates of interest-earning assets and
interest-bearing liabilities and the type and mix of
interest-earning assets and interest-bearing liabilities. The
Company's net interest margin for the three months ended
September 30, 1997 was 4.50% compared to 4.35% for the same
period in 1996. The Company's net interest margin improved
primarily due to higher-yielding earning assets caused by
increased average loan levels which rose $114,618,000 from
September 30, 1996 and to a decrease of $69,752,000 in lower-
yielding securities for the same period, which was partially
offset by an increase in the cost of funds due to the issuance of
Trust Preferred Securities.
Provision for Credit Losses
The provision for credit losses decreased $115,000 or 9% to
$1,190,000 in the third quarter of 1997 compared to $1,305,000 in
the third quarter of 1996. Net charge-offs were $1,094,000 or
0.27% (annualized) of average loans during the three months ended
September 30, 1997, compared to $773,000 or 0.20% (annualized)
for the same period in 1996. The increase in net charge-offs is
primarily due to the charge-off of a portion of a Bennett Funding
Group loan at one of the Company's bank subsidiaries. The
provision for credit losses reflects the amount necessary in
management's opinion to maintain an adequate allowance, based
upon its analysis of the loan portfolio (including the loan
growth rate and change in the mix of the loan portfolio) and
general economic conditions.
At September 30, 1997, the Company's allowance for credit losses
as a percentage of loans was 1.03% compared to 1.00% at
December 31, 1996 and 0.97% at September 30, 1996. At September
30, 1997, the Company's allowance for credit losses represented
335% of non-performing loans as compared to 237% and 187% at
December 31, 1996 and September 30,1996, respectively. The
increase in the Company's allowance for credit losses as a
percentage of loans is due to an increase in the provision for
credit losses made in the first quarter of 1997 in response to
loan growth. The increase in the Company's allowance for credit
losses as a percentage of non-performing loans is due to a
decrease of $1,587,000 in non-performing loans from $6,623,000 at
December 31, 1996 to $5,036,000 at September 30, 1997.
Management believes that the Company's allowance for credit
losses is adequate. (See "Asset Quality".)
Non-Interest Income
The table below summarizes the sources of the Company's non-
interest income.
Three months ended September 30, Percentage
(Dollars in thousands) 1997 1996 Change
Non-Interest Income:
Trust department $ 590 $ 373 58%
Service charges on
deposit accounts 2,316 1,773 31
Mortgage banking 3,868 2,166 79
Brokerage commissions 1,519 1,391 9
Collection agency fees 1,240 1,053 18
Net gains on sales of
securities available for sale 168 488 (66)
Net gains on sales of
other loans 4,126 1,296 218
Credit card fees 532 510 4
International dept fees 219 299 (27)
ATM card fees 369 159 132
Other 1,053 963 9
Total non-interest income $16,000 $10,471 53
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 non-bank related financial services.
Non-interest income for the three months ended September 30,
1997, increased primarily from an increase of $2,830,000 in net
gains on sales of other loans which ocurred primarily at MACC,
the Company's commercial leasing and financing company, and to an
increase of $1,702,000 in mortgage banking. Mortgage banking
increased primarily due to an increase in net gains on sales of
loans due to the higher volume of loan sales in the third quarter
of 1997 compared to 1996 ($165,777,000 in 1997 compared to
$84,190,000 in 1996) and improved spreads attributable to lower
interest rates. Service charges on deposit accounts increased
due to higher fees and collection agency fees increased due to an
increase in commercial collection fees. The increase in
non-interest income was partially offset by a decrease in net
gains on sales of securities. Net gains on sales of securities
decreased due to a reduced volume in sales of securities from the
available for sale portfolio in the third quarter of 1997 as
compared to the same period in 1996.
Non-Interest Expense
Non-interest expense includes costs, other than interest, that
are incurred in the operations of the Company. The table below
summarizes the components of the Company's non-interest expense.
Three months ended September 30, Percentage
(Dollars in thousands) 1997 1996 Change
Non-Interest Expense:
Salaries and employee benefits $13,717 $10,227 34%
Net occupancy expense 1,497 1,376 9
Equipment expense 2,423 1,979 22
Non-recurring SAIF assessment 3,560
FDIC expense 106 369 (71)
Brokerage commissions 947 644 47
Marketing 893 569 57
Franchise taxes 614 640 (4)
Telephone 691 560 23
Printing and supplies 530 539 (2)
Legal and other
professional fees 822 496 66
Credit card processing costs 638 495 29
Amortization of intangible
assets 346 393 (12)
Postage 415 403 3
Other 2,977 2,137 39
Total non-interest expense $26,616 $24,387 9
Salaries and employee benefits comprise the largest component of
non-interest expense and were 52% and 42% of total non-interest
expense for the three months ended September 30, 1997 and 1996,
respectively. Salary costs increased in 1997 due to the growth
of MACC's business, the formation of MAFSI and MAPT in 1997, the
acquisition of Simplicity at the end of 1996, the acquisition of
three credit agencies in Florida subsequent to the third quarter
of 1996, additional employees at the bank subsidiaries to
handle increases in lending activity and salary rate increases.
In addition, certain benefit expenses determined under formulas
which take into account pre-tax income also increased in the
three months ended September 30, 1997 compared to the same period
in 1996 because of the increase in pre-tax income. Net occupancy
expense and equipment expense increased due to new offices for
Simplicity, MAFSI and MAPT, and new computer equipment at MAISI.
The decrease in other non-interest expenses is primarily due to
the non-recurring pre-tax charge of $3,560,000 assessed by the
FDIC in the third quarter of 1996 and a decrease in FDIC premiums
($263,000). The decreases were partially offset by increases in
brokerage commissions ($303,000), marketing ($324,000), legal and
other professional fees ($326,000), credit card merchant
processing fees which were previously offset by credit card fee
income from the portfolio sold in the fourth quarter of 1996
($143,000) and telephone expense ($131,000).
Income Taxes
The provision for income taxes for the third quarter of 1997
increased $1,769,000 or 93% to $3,664,000 compared to $1,895,000
for the same period in 1996. The increase was due primarily to
higher pre-tax income and a higher effective tax rate of 34.0%
for the third quarter of 1997 as compared to 30.9% for the same
period in 1996.
Nine Months Ended September 30, 1997 and 1996
Results of Operations
For the nine months ended September 30, 1997, net income
increased $6,888,000 or 41% to $23,851,000 compared to
$16,963,000 for the same period in 1996. Primary and fully
diluted earnings per share for the first nine months of 1997 were
$.97 and $.93, respectively, compared to $.66 and $.63 for the
same period in the prior year. Return on average common equity
(ROE) for the first nine months of 1997 was 18.30% while return
on average assets (ROA) was 1.47%, as compared to ROE and ROA
ratios of 12.87% and 1.05%, respectively, for the first nine
months of 1996.
The Company's results for the first nine months of 1997 reflect
the sale of seven branch offices and $95,000,000 of deposits of
AmeriFirst to another bank, resulting in a pre-tax gain of
$8,500,000. Substantially all of the loans were retained by
AmeriFirst in connection with the transaction. The pre-tax gain
was partially offset by certain costs and other charges related
to the branch sale, which in the aggregate were $2,000,000 on a
pre-tax basis. In addition, during the first quarter of 1997,
the Company increased its normal planned provision for credit
losses by approximately $1,000,000. The increase in the
Company's provision for credit losses was made in response to
continued loan growth.
The Company's first nine months of 1997 net income, excluding the
gain and charges related to the branch sale and the additional
provision for credit losses, was $20,403,000, which represents a
return on average common equity and return on average assets of
15.58% and 1.26%, respectively, and earnings per share of $.82
($.80 fully diluted). The Company's first nine months of 1996
net income, excluding the non-recurring SAIF assessment was
$19,278,000, which represents a ROE and ROA of 14.84% and 1.19%,
respectively, and earnings per share of $.76 ($.72 fully
diluted).
Net Interest Income
Net interest income increased $4,118,000 to $66,872,000 in the
first nine months of 1997 as compared to $62,754,000 for the same
period in 1996. Net interest income is affected by changes in
the volumes and rates of interest-earning assets and
interest-bearing liabilities and the type and mix of
interest-earning assets and interest-bearing liabilities. The
Company's net interest margin for the nine months ended September
30, 1997 was 4.51% compared to 4.27% for the same period in 1996.
The Company's net interest margin improved primarily due to
higher-yielding earning assets caused by increased average
loan levels which rose $127,745,000 from September 30, 1996 and
to a decrease of $76,945,000 in lower-yielding securities for the
same period, which was partially offset by an increase in the
cost of funds due to the issuance of Trust Preferred Securities.
The improvement in the net interest margin is also the result of
the sale of certain low-yielding securities in the first quarter
of 1997 which, combined with higher-yielding earning assets, is
expected to sustain the Company's net interest margin at current
levels in the near term.
Provision for Credit Losses
The provision for credit losses increased $1,009,000 or 34% to
$3,949,000 in the first nine months of 1997 compared to
$2,940,000 in the first nine months of 1996. The increased
provision was necessary to maintain an adequate allowance for
credit losses on the Company's increasing loan portfolio size.
Net charge-offs were $2,771,000 or 0.23% (annualized) of average
loans during the nine months ended September 30, 1997, compared
to $2,549,000 or 0.23% (annualized) for the same period in 1996.
The provision for credit losses reflects the amount necessary in
management's opinion to maintain an adequate allowance, based
upon its analysis of the loan portfolio (including the loan
growth rate and change in the mix of the loan portfolio) and
general economic conditions.
At September 30, 1997, the Company's allowance for credit losses
as a percentage of loans was 1.03% compared to 1.00% at
December 31, 1996 and 0.97% at September 30, 1996. At September
30, 1997, the Company's allowance for credit losses represented
335% of non-performing loans as compared to 237% and 187% at
December 31, 1996 and September 30,1996, respectively. The
increase in the Company's allowance for credit losses as a
percentage of loans is due to an increase in the provision for
credit losses. Management believes that the Company's allowance
for credit losses is adequate. (See "Asset Quality.")
Non-Interest Income
The table below summarizes the sources of the Company's non-
interest income.
Nine months ended September 30, Percentage
(Dollars in thousands) 1997 1996 Change
Non-Interest Income:
Trust department $ 1,470 $ 1,090 35%
Service charges on
deposit accounts 6,346 5,085 25
Mortgage banking 9,092 7,579 20
Brokerage commissions 4,660 7,851 (41)
Collection agency fees 3,804 3,075 24
Net (losses) gains on sales of
securities available for sale (480) 1,274 (138)
Net gains on sales of
other loans 9,314 1,880 395
Credit card fees 1,523 1,473 3
International dept fees 750 750
ATM card fees 1,085 469 131
Gain on sale of branch offices 8,500
Other 3,820 2,890 32
Total non-interest income $49,884 $33,416 49
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 non-bank related financial services.
Non-interest income for the nine months ended September 30, 1997,
increased $16,468,000 compared to the same period in 1996. The
increase is due primarily to the gain of $8,500,000 resulting
from the sale of seven branch offices of AmeriFirst to another
bank. Other increases in non-interest income for the first nine
months of 1997 as compared to the same period in 1996 were an
increase of $1,513,000 in mortgage banking, an increase of
$7,434,000 in net gains on sales of loans from MACC, the
Company's commercial leasing and financing company, an increase
of $1,261,000 in service charges on deposit accounts from
the Company's banking subsidiaries and an increase of $729,000 in
collection agency fees. Mortgage banking increased primarily due
to an increase in net gains on sales of loans due to the higher
volume of loan sales in the first nine months of 1997 compared to
1996 ($359,152,000 in 1997 compared to $347,960,000 in 1996) and
improved spreads attributable to lower interest rates. Service
charges on deposit accounts increased due to higher fees and
collection agency fees increased due to an increase in commercial
collection fees. The increase in non-interest income was
partially offset by a decrease of $3,191,000 in brokerage
commissions and a decrease of $1,754,000 in net gains on sales of
securities. Brokerage commission income decreased primarily due
to a decrease in the number of registered representatives at MFI,
resulting in a lower volume of business. The net losses from the
sales of securities was primarily due to charges associated with
the branch sale which included the recognition of losses in the
sale of low-yielding securities at several of the Company's
affiliates, including AmeriCom, which enabled it to acquire loans
of AmeriFirst and thereby enhance AmeriCom's net interest margin
and future earnings potential.
Non-Interest Expense
Non-interest expense includes costs, other than interest, that
are incurred in the operations of the Company. The table below
summarizes the components of the Company's non-interest expense.
Nine months ended September 30, Percentage
(Dollars in thousands) 1997 1996 Change
Non-Interest Expense:
Salaries and employee benefits $40,392 $30,415 33%
Net occupancy expense 4,262 3,951 8
Equipment expense 6,686 5,887 14
Non-recurring SAIF assessmenet 3,560
FDIC expense 338 1,108 (69)
Borkerage commissions 2,803 4,903 (43)
Marketing 2,378 1,633 46
Franchise taxes 1,909 1,908
Telephone 2,011 1,574 28
Printing and supplies 1,667 1,629 2
Legal and other
professional fees 2,298 1,523 51
Credit card processing costs 1,736 1,260 38
Amortization of intangible
assets 1,522 1,190 28
Postage 1,257 1,226 3
Other 7,396 6,526 13
Total non-interest expense $76,655 $68,293 12
For the nine months ended September 30, 1997, non-interest
expense increased $8,362,000 compared with the same period in
1996. Of the increase in non-interest expense, approximately
$2,000,000 represented costs and charges related to the branch
office sale at AmeriFirst. Salaries and employee benefits
comprise the largest component of non-interest expense and were
53% and 45% of total non-interest expense for the nine months
ended September 30, 1997 and 1996, respectively. Salary costs
increased in 1997 due to the growth of MACC's business, the
formation of MAFSI and MAPT in 1997, the acquisition of
Simplicity at the end of 1996, the acquisition of three credit
agencies in Florida subsequent to the third quarter of 1996,
additional employees at the bank subsidiaries to handle increases
in lending activity and salary rate increases. In addition,
certain benefit expenses determined under formulas which take
into account pre-tax income also increased in the nine months
ended September 30, 1997 compared to the same period in 1996
because of the increase in pre-tax income. Net occupancy expense
and equipment expense increased due to new offices for
Simplicity, MAFSI and MAPT, and new computer equipment at MAISI.
The decrease in other non-interest expenses is primarily due to
the non-recurring pre-tax charge of $3,560,000 assessed by the
FDIC in the third quarter of 1996, decreases in FDIC premiums due
to lower premium rates on SAIF related deposits and reduced
ticket charges from the Company's brokerage clearing firm. The
decreases were partially offset by increases in marketing, legal
and other professional fees, credit card merchant processing fees
which were previously offset by credit card fee income from the
portfolio sold in the fourth quarter of 1996 and telephone
expense.
Income Taxes
The provision for income taxes for the first nine months of 1997
increased $4,327,000 or 54% to $12,301,000 compared to $7,974,000
for the same period in 1996. The increase was due primarily to
higher pre-tax income and a higher effective tax rate of 34.0%
for the first nine months of 1997 as compared to 32.0% for the
same period in 1996.
Year 2000 Software Initiatives
Management has initiated a company-wide program to ensure
continuity of the Company's information systems and application
software for the year 2000. A substantial majority of the
significant application software utilized by the Company is
outsourced to a third-party vendor. Management is working with
the vendor to ensure that all of these systems will operate
properly in the year 2000. The program is also intended to
ensure that non-mainframe applications operating on local and
wide area networks and on personal computers will function
properly in the year 2000. At this time, the expected cost of
the Company's year 2000 compliance initiative is not expected to
be material.
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 September 30, 1997 were federal funds sold of
$84,000, securities available for sale of $392,774,000 and
loans held for sale of $6,544,000. At December 31, 1996, the
primary sources of liquidity 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.
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, 1995. As a result of these restrictions, at September
30, 1997 dividends which can be paid to the Company by its bank
subsidiaries are limited to $14,070,000.
The Company's liquidity position decreased in 1997 due to the
Company's sale of seven branch offices at AmeriFirst with
deposits of approximately $94,000,000 at the date of sale and
increased loan activity. The sale of the branch offices caused a
decrease in deposits, which was offset by a decrease in
securities available for sale and an increase in Federal Home
Loan Bank (FHLB) borrowings. In the second quarter of 1997, the
Company also called all of the outstanding shares of its
cumulative convertible preferred stock for redemption. Of the
outstanding shares at the date of call, 576,152 shares were
converted into common shares, 364,000 shares were repurchased
under the Company's 1997 repurchase program and 4,221 shares were
redeemed for cash. 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
and can borrow up to $148,338,000, of which $98,074,000 is
currently outstanding. In addition, the Company issued
$27,500,000 of Company - Obligated Mandatorily Redeemable Capital
Securities of Subsidiary Trust in the quarter ended June 30,
1997. 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. As of
September 30, 1997, the Company has borrowed $9,000,000 against
the available credit facility.
Cash and due from banks decreased by $9,886,000 during the nine
months ended September 30, 1997 to $75,771,000 from $85,657,000
at December 31, 1996. Cash and due from banks decreased
primarily due to decreases of approximately $6,900,000 in
currency and $3,400,000 in checks in the process of collection,
partially offset by an increase of approximately $400,000 in
balances due from other banks of collection. Operating
activities provided $16,521,000 of cash in the nine months ended
September 30, 1997 as compared to cash provided by operating
activities of $6,174,000 for the same period in 1996. For the
nine months ended September 30, 1997 and 1996, cash provided by
operating activities was primarily attributable to net income and
proceeds from sales of mortgage and other loans held for sale,
partially offset by cash used to originate such loans and net
gains on sales of branch offices, deposits and other assets
during the period. The Company originated approximately
$364,113,000 of mortgage and other loans in the nine months ended
September 30, 1997, as compared to $340,762,000 for the same
period in 1996. The increase in mortgage and other loan
originations was primarily due to a decrease in market rates
during the third quarter of 1997 which led to an increase in
refinancing and new mortgage activity. The mortgage banking and
financing activity in 1997 compared to 1996 resulted in an
increase in the amount of cash required to fund mortgage and
other loans. The higher activity also resulted in a increase in
volume of sales of mortgage and other loans providing cash (from
$353,071,000 in 1996 to $373,672,000 in 1997).
Cash of $14,612,000 was used for investing activities during the
nine months ended September 30, 1997 compared to cash provided by
investing activities of $6,174,000 during the nine months ended
September 30, 1996, a decrease in cash flows from investing
activities of $20,786,000. The primary reason for the decrease
in cash flows used for investing activities was the net decrease
in federal funds sold in 1997 of $4,392,000 compared to a net
decrease of $70,370,000 for the same period in 1996 and the
increase of purchases of bank premises and equipment. Also, the
increase in proceeds from sales, maturities and paydowns of
securities available for sale in 1997 of $132,784,000 compared to
$111,547,000 for the same period in 1996 was partially offset by
the increase of $47,234,000 in purchases of securities available
for sale. The increase in federal funds sold and increase in
purchases of bank premises and equipment for the first nine
months of 1997 was partially offset by the increase in proceeds
from sales of loans ($13,177,000).
Cash used for financing activities was $11,795,000 during the
nine months ended September 30, 1997 as compared to $60,641,000
of cash used for financing activities for the same period in
1996, an increase in cash flows of $48,846,000. The primary
reason for the increase in cash flows provided by financing
activities was the increase in deposits of $53,223,000, the
increase in short- term borrowings of $35,601,000 and the
proceeds of $53,013,000 from the issuance of long-term debt,
partially offset by $84,927,000 of cash transferred in connection
with the sale of seven branch offices and $21,801,000 for the
retirement of preferred stock. The cash used for financing
activities in 1996 was primarily due to a net decrease in total
deposits of $49,758,000 and by repayment of $17,695,000 of
capitalized lease obligations and debt.
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. At September 30, 1997, the Company
had a manageable positive gap position and therefore does not
expect to experience any significant fluctuations in its net
interest income as a consequence of changes in interest rates.
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. The
$27,500,000 of the Company's obligated mandatorily redeemable
capital securities of its subsidiary trust, which was issued in
the second quarter of 1997, is considered Tier I capital. Tier I
capital was negatively affected by the repurchase of 364,000
shares and the cash redemption of 4,221 shares of the Company's
cumulative convertible preferred stock in the second quarter of
1997. Subject to limitations, Tier II capital includes certain
other preferred stock and debentures, and a portion of the
reserve for credit losses. These ratios are expressed as a
percentage of risk-adjusted assets, which include various
risk-weighted percentages of off-balance sheet exposures, as well
as assets on the balance sheet. The FRB regulations governing
the various capital ratios do not recognize the effects of SFAS
115, "Accounting for Certain Investments in Debt and Equity
Securities" on capital relating to changes in market value of
securities available for sale.
At September 30, 1997, a minimum Tier I capital ratio of 4.00%
and a total capital ratio of 8.00% are required. The Company's
qualifying capital at September 30, 1997 exceeds both the Tier I
and Tier II risk-based capital guidelines. In addition, a
capital leverage ratio is used in connection with the risk-based
capital standards which is defined as Tier I capital divided by
quarterly average total assets adjusted for certain items. At
September 30, 1997, the Company's leverage ratio, Tier I, and
combined Tier I and Tier II (total capital) ratios were 9.09%,
10.92% and 11.98%, respectively.
Capital ratios applicable to the Company's banking subsidiaries
at September 30, 1997 are as follows:
Total
Tier I 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 7.84 9.36 10.41
First National 8.13 10.57 11.20
AmeriCom 7.87 10.33 11.48
AmeriFirst 7.56 11.10 12.34
Adrian 6.84 9.92 11.15
The capital to asset ratios of the Company's non-bank
subsidiaries are significantly different than the bank
subsidiaries.
Asset Quality
At September 30, 1997, the Company's percentage of non-performing
loans (non-accrual loans and restructured loans) to total loans
was 0.31%, as compared to 0.42% at December 31, 1996 and 0.52% at
September 30, 1996. Non-performing loans at September 30, 1997
aggregated $5,036,000, a decrease of $1,587,000 or 24% from
December 31, 1996. Accruing loans past due 90 days or more at
September 30, 1997 aggregated $5,621,000, a decrease of $313,000
or 5% from December 31, 1996. The Company's percentage of net
charge-offs for the nine months ended September 30, 1997 and
September 30, 1996 to average loans outstanding were 0.23%
(annualized) and 0.23% (annualized), respectively. At September
30, 1997, the Company's allowance for credit losses was 1.03% of
total loans, as compared to 1.00% and 0.97% at December 31, 1996
and September 30, 1996, respectively. The allowance for credit
losses as a percentage of non-performing loans at September 30,
1997 was 335% compared to 237% at December 31, 1996 and 187% at
September 30, 1996. The ratio of non-performing assets
(constituting the sum of non-performing loans and other real
estate owned) to total loans plus other real estate owned was
0.35% at September 30, 1997, compared to 0.49% and 0.57% at
December 31, 1996 and September 30, 1996, respectively. As of
September 30, 1997, based upon a review of the loan portfolio
(including the loan growth rate and change in the mix of the loan
portfolio), management believes the allowance for credit losses
is adequate.
Loans 30 to 89 days past due, excluding non-accrual and
restructured loans amounted to $7,035,000 or 0.43% of total loans
at September 30, 1997 as compared to $8,944,000 or 0.57% at
December 31, 1996. 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 $30,043,000 and $31,503,000 at September 30, 1997
and December 31, 1996, 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 September 30, 1997 and December 31,
1996, specific allocations of the allowance for credit losses
related to these loans aggregated $1,982,000 and $3,219,000,
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.
Three of the Company's bank subsidiaries (Banks) have purchased
certain lease receivables and extended loans to The Bennett
Funding Group, Inc. and related entities (Bennett), which have an
aggregate outstanding balance of $6,100,000 at June 30, 1997.
Bennett filed for bankruptcy in March, 1996 and payments by
lessees and by the borrowers have been deposited into an
interest-bearing escrow account with the bankruptcy court pending
resolution of certain issues. One of the Banks has settled its
claim with the bankruptcy trustee. The agreement calls for an
initial payment to the bank, net of servicing fees, of $556,000,
which represents 78.5% of the cash payments received by the
trustee in bankruptcy from the underlying leases. Under the
agreement, additional cash payments will be received by the bank
monthly as cash is collected by the trustee, up to a maximum
total recovery to the bank of $868,000. In conjunction with the
receipt of the $556,000 initial payment, the Company has charged-
off $325,000 and used the balance of the payment to reduce the
carrying value of the loan from $1,105,000 to $224,000. Issues
which may affect the other two Banks' ability to ultimately
collect interest and principal on the leases and loans include a
determination of whether the Banks have perfected their security
interests in the leases and loan collateral. No decision has
been rendered in these cases and due to the complexity of the
issues, management and the Company's legal counsel are currently
unable to form an opinion as to the likely outcome of the Banks'
position in the Bennett bankruptcy proceeding or whether the
Company will be subject to a material loss.
The following table presents asset quality information for each
of the Company's banking subsidiaries at September 30, 1997.
(Dollars in thousands)
Mid Am First
Bank National AmeriCom AmeriFirst Adrian
Loans:
Non-accrual $1,179 $1,453 $ 713 $1,316 $109
Restructured 0 138 68 0 60
Total
non-performing
loans 1,179 1,591 781 1,316 169
Other real
estate owned(1) 0 35 0 250 0
Total
non-performing
assets $1,179 $1,626 $ 781 $1,566 $169
Loans 90 days
or more past
due and not
on non-accrual $ 11 $1,999 $2,592 $ 516 $503
Non-performing
loans to
total loans 0.18 0.40 0.27 0.85 0.13
Non-performing
assets to total
loans plus
OREO 0.18 0.41 0.27 1.01 0.13
Allowance for
credit losses
to total
non-performing
loans 666.67 161.53 414.60 134.73 833.73
Allowance for
credit losses
to total
non-performing
assets 666.67 158.06 414.60 113.22 833.73
Net charge-offs
to average loans
outstanding 0.35 0.04 0.09 0.57 0.05
Allowance for
credit losses
to total loans 1.19 0.65 1.13 1.15 1.08
Loans 90 days
or more past
due and not
on non-accrual
to total loans 0.00 0.50 0.90 0.33 0.39
(1) The parent company has $331,000 of other real estate owned at
September 30, 1997.
The following table sets forth the Company's allocation of the
allowance for credit losses as of September 30, 1997 and December
31, 1996.
September 30, 1997 December 31, 1996
(Dollars in thousands)
Specific allowance
Real estate $ 225 $ 372
Commercial 2,559 2,974
Installment 101 250
Total specific allowance 2,885 3,596
General allowance
Real estate 327 233
Commercial 2,000 3,229
Installment 2,230 1,369
Other 1,346 1,106
Total general allowance 5,903 5,937
Unallocated allowance 8,062 6,139
Allowance for credit losses $16,850 $15,672
As of September 30, 1997, no specific allowance has been
determined for the leases from Bennett Funding Group due to the
uncertainty as to whether a loss will occur. However, management
has determined that the allowance for credit losses is adequate
to absorb any potential future losses from the Bennett Funding
Group leases.
The following table presents a summary of the Company's credit
loss experience for the nine months ended September 30, 1997 and
1996.
(Dollars in thousands)
1997 1996
Balance of allowance at
beginning of year $15,672 $14,859
Loans actually charged-off:
Real estate 456 520
Commercial, financial
and agricultural 1,944 1,483
Installment and credit card 1,291 1,965
Other 68 14
Total loans charged-off 3,759 3,982
Recoveries of loans previously
charged-off:
Real estate 88 278
Commercial, financial
and agricultural 411 592
Installment and credit card 459 531
Other 30 32
Total recoveries of loans 988 1,433
Net charge-offs 2,771 2,549
Addition to allowance
charged to expense 3,949 2,662
Balance of allowance at
end of period $16,850 $14,972
Net charge-offs to
average loans outstanding 0.23 0.23
Allowance for credit losses
to total loans 1.03 0.97
Allowance for credit losses
to total non-performing
loans 334.59 186.87
Addition to allowance
charged to expense 2,662
Addition charged to expense
for loans sold with recourse 278
Total provision for
credit losses 2,940
For the nine months ended September 30, 1997, commercial loans
charged-off increased $461,000 as compared to the same period in
1996. The increase in commercial loans charged-off is primarily
due to $325,000 of a Bennett Funding Group loan being charged-off
at one bank subsidiary during the third quarter of 1997. For the
nine months ended September 30, 1997, installment loans
charged-off decreased $674,000 as compared to the same period in
1996. The decrease in installment loans charged-off is primarily
due to a decrease in auto loans charged-off at one bank
subsidiary for 1996 as compared to 1997.
PART II. - OTHER INFORMATION
Item 1. - Legal Proceedings
The Company has previously disclosed the pendancy of a securities
arbitration proceeding against MFI filed by customers of a money
manager not affiliated with the subsidiary prior to MFI's merger
with the Company. On August 26, 1997, the NASD Office of Dispute
Resolution denied with prejudice all claims and allegations
against MFI in their entirety.
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.
Item 2. - Changes in Securities
Not applicable.
Item 3. - Defaults Upon Senior Securities
Not applicable.
Item 4 - Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5 - Other Information
Not applicable.
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
1. Statement Re Computation of Earnings Per
Common Share
(b) Reports on Form 8-K
The Company filed a report on Form 8-K with the Commission as of
August 27, 1997, describing the dismissal with prejudice of a
previously disclosed securities arbitration case.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly
authorized.
MID AM, INC.
/s/ Dennis L. Nemec
Dennis L. Nemec
Executive Vice President / Chief Financial Officer
DATE: November 13, 1997
MID AM, INC.
EXHIBIT INDEX
Exhibit No. Description Page Number
(1) Statement Re Computation of
Earnings Per Common Share 31
(2) Form 8-K describing the dismissal
with prejudice of a previously
disclosed securities arbitration
case.
The information required by this exhibit
is incorporated herein by reference
from the Company's Form 8-K dated
August 27, 1997, filed with the
Securities and Exchange Commission on
September 3, 1997.
EXHIBIT 1
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
Mid Am, Inc.
Computation of Primary Earnings per Share
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
(Dollars and shares in thousands, except per share data)
Reconciliation of net
earnings to amounts
used for primary
earnings per share:
Net earnings $7,121 $4,245 $23,851 $16,963
Less:
Preferred stock
dividends Series A 0 588 605 1,838
Net earnings applicable
to primary earnings
per share $7,121 $3,657 $23,246 $15,125
Reconciliation of
weighted average
number of shares to
amount used in
primary earnings per
share computation:
Average shares
outstanding 24,406 22,609 23,674 22,733
Average common
equivalent shares:
Assumed exercise
of options 396 372 368 340
Primary average
shares outstanding 24,802 22,981 24,042 23,073
Primary
earnings per share $0.29 $0.16 $0.97 $0.66
Mid Am, Inc.
Computation of Fully Diluted Earnings per Share
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
(Dollars and shares in thousands, except per share data)
Reconciliation of net
earnings to amounts
used for fully diluted
earnings per share:
Net earnings $7,121 $4,245 $23,851 $16,963
Less:
Preferred stock
dividends Series A -- -- -- --
Net earnings applicable
to fully diluted
earnings per share $7,121 $4,245 $23,851 $16,963
Reconciliation of
weighted average
number of shares to
amount used in fully
diluted earnings per
share computation:
Average shares
outstanding 24,406 22,609 23,674 22,733
Average common
equivalent shares:
Assumed exercise
of options 529 388 428 364
Assumed conversion
of preferred stock 0 3,547 1,483 3,665
Fully diluted average
shares outstanding 24,935 26,544 25,585 26,762
Fully diluted
earnings per share $0.29 $0.16 $0.93 $0.63