FOR IMMEDIATE RELEASE
CONTACT: Dennis L. Nemec
Executive Vice President
Chief Financial Officer
(419) 373-6462
MID AM, INC. REPORTS
SECOND QUARTER EARNINGS PER SHARE UP 25%
July 13, 1998 (Bowling Green, Ohio, NASDAQ: MIAM) Mid Am, Inc. today
announced net income of $8.45 million for the second quarter of 1998, an
increase of $1.29 million or 18.0% from the $7.16 million earned the second
quarter of 1997. Earnings per share were $.36 ($.35 diluted), compared to
$.30 ($.28 diluted) for the same period in the prior year. Diluted earnings
per share for the second quarter of 1998 represent a 25% increase over diluted
earnings per share for the second quarter of 1997. Second quarter earnings
represent a return on total shareholders' equity of 20.92% and a return on
average assets of 1.50%. This compares to ratios of 15.57% and 1.33%,
respectively, in the second quarter of 1997.
The Company's earnings for the second quarter of 1998 reflect a favorable
legal settlement of $1.48 million (pre-tax). Excluding this one-time
settlement, the Company's second quarter 1998 core earnings were $7.03
million, which represents a return on total shareholders' equity of 17.47% and
a return on average assets of 1.25%.
Core earnings for the six months ended June 30, 1998 were $14.47 million
(excluding the favorable legal settlement), an 8.7% increase from the $13.31
million core earnings reported for the same period of the prior year
(excluding the net gain related to the sale of various branch offices and
related charges in February 1997). Return on total shareholders' equity
relating to core earnings was 17.67%, while return on average assets was 1.30%
for the six months ended June 30, 1998. This compares to ratios based on core
earnings of 14.39% and 1.24%, respectively, in the first half of 1997.
Including non-recurring items for all comparable periods, total net
income for the six months ended June 30, 1998 was $15.89 million, a decrease
of $841 thousand from the $16.73 million earned in the same period of 1997.
Earnings per share for the first half of 1998 were $.67 ($.66 diluted),
compared to $.69 ($.65 diluted) for the same period in the prior year.
Return on total shareholders' equity and return on average assets were 19.37%
and 1.43%, respectively, for the six months ended June 30, 1998, compared to
18.01% and 1.56%, respectively, for the same period of the prior year.
The Company's net interest margin averaged 4.37% for the three months
ended June 30, 1998, lower than the 4.55% net interest margin reported for the
second quarter of 1997. The decline in the net interest margin is primarily
due to the softening of commercial and commercial real estate loan demand
in several of the Company's market areas, causing the Company to invest more
of its funds into lower yielding short-term assets. A decline in the
Company's residential real estate loan portfolio also contributed to lowering
the margin. This decline was caused by a high level of refinancings of
residential real estate loans in the first six months of 1998 which were sold
in the secondary market. The net interest margin has stabilized, evidenced by
a slight increase in the margin for the month of June of 4.42%. An increase
in loan volume and a decline in portfolio residential refinancings contributed
to this increase.
The Company continues to focus its efforts to increase its fee-based
income. Non-interest income for the second quarter of 1998 was $20.7 million,
an increase of $6.7 million or 48% from the $14.0 million reported for the
same quarter of 1997. Non-interest income represented 32% of total revenues
during the second quarter of 1998, compared with 16% for the quarter beginning
the Company's 1995 fee income initiative.
The significant increase in non-interest income was primarily due to the
Company's mortgage banking activities, brokerage commission revenues, fees
from its medical and dental financing business, and the one-time legal
settlement. Mortgage banking generated revenues of $5.5 million in the second
quarter of 1998, compared to $3.1 million in the same period of 1997,
primarily due to increased sales volume. Mortgage loan sales exceeded $183
million in the second quarter of 1998, compared to $84 million for this second
quarter of 1997. The Company's second quarter brokerage commission revenues
increased 58% over the same period of the prior year from $1.7 million to $2.6
million. The increase in fees is primarily due to an increase in the number
of independent registered representatives since the second quarter of 1997,
and from increased production from those representatives recruited in 1996 and
1997. The Company's medical and dental financing business provides equipment
leasing and other forms of specialized lending to health care professionals on
a national basis. Net revenues from this business generated approximately
$4.7 million in the second quarter of 1998 compared to $2.5 million for the
same period in 1997 due to increased sales volume and improved profit margins.
Asset quality ratios continue to demonstrate strong credit quality, with
the ratio of non-accrual loans to total loans of .37% and the ratio of non-
performing loans to total loans of .39%, as compared with .40% and .42%,
respectively, at June 30, 1997. At the end of the second quarter, the
Company's allowance for credit losses was 292% of total non-performing loans
and annualized net charge-offs were .15% of total average loans, compared with
250% at June 30, 1997 and .21% annualized for 1997, respectively.
"We are very pleased with the second quarter's financial performance. In
light of the current interest rate environment and the intense competition in
the banking sector, the Company's strategy to diversify its business lines and
to increase non-interest income is having positive effects," stated Edward J.
Reiter, Chairman and Chief Executive Officer of Mid Am, Inc. "We look to
continue to enhance the value of the Company through growth in our existing
fee-based financial services, as well as exploring new opportunities."
At June 30, 1998, the Company had total assets of $2.3 billion, total
deposits of $1.8 billion, total loans of $1.6 billion, and total shareholders'
equity of $163 million. The Company's total risk-based capital ratio and
leverage ratio were 12.63% and 7.96%, respectively, at June 30, 1998. The
Company's market capitalization at June 30, 1998 was $590 million.
On May 21, 1998, Mid Am, Inc. announced a merger of equals transaction
with Citizens Bancshares, Inc., which will result in a high performance
super-community banking organization with over $4 billion in assets and 144
branches throughout Ohio, Michigan, West Virginia, and Pennsylvania. The
transaction, which is to be accounted for as a pooling-of-interests, is
expected to close in October, 1998.
Mid Am, Inc. is a diversified financial services holding company
headquartered in Bowling Green, Ohio. The Company's banking affiliates
include Mid American National Bank and Trust Company, Toledo, Ohio; First
National Bank Northwest Ohio, Bryan, Ohio; American Community Bank, N.A.,
Lima, Ohio; AmeriFirst Bank, N.A., Xenia, Ohio; and Adrian State Bank,
Adrian, Michigan. The Company's financial service affiliates include
Mid Am Recovery Services, Inc., Clearwater, Florida; MFI Investment Corp,
Bryan, Ohio; Mid Am Credit Corp., Columbus, Ohio; Mid Am Private Trust, N.A.,
Cincinnati, Ohio; Mid Am Financial Services, Inc., Carmel, Indiana; Simplicity
Mortgage Consultants, Marion, Indiana; Mid Am Title Insurance Agency, Inc.,
Adrian, Michigan; and Mid Am Information Services, Inc., Bowling Green, Ohio.
*****
The information contained in this press release contains forward-looking
statements regarding expected future financial performance which are not
historical facts and which involve risks and uncertainties. Actual results
and performance could differ materially from those contemplated by these
forward-looking statements.
*****
MID AM, INC.
STATEMENT OF EARNINGS (unaudited)
For Three Months Ended
June 30, Percent
(Dollars in thousands) 1998 1997 Change
Interest income $44,130 $42,398 4.1
Interest expense 21,624 20,062 7.8
Net interest income 22,506 22,336 0.8
Provision for credit losses 1,433 874 64.0
Net interest income after
provision for credit losses 21,073 21,462 (1.8)
Non-interest income
Trust fees 695 499 39.3
Service charges on
deposit accounts 2,091 2,136 (2.1)
Mortgage banking 5,518 3,142 75.6
Brokerage commissions 2,618 1,661 57.6
Collection agency fees 1,184 1,322 (10.4)
Net gains on sales
of securities 7 78 (91.0)
Net gains on sales of loans at
commercial financing affiliate 4,715 2,527 86.6
Other income 3,854 2,601 48.2
Total non-interest income 20,682 13,966 48.1
Non-interest expense
Salaries and employee benefits 15,454 12,879 20.0
Net occupancy expense 1,454 1,393 4.4
Equipment expense 2,432 2,255 7.8
Other expenses 10,430 8,311 25.5
Total non-interest expense 29,770 24,838 19.9
Income before income taxes 11,985 10,590 13.2
Applicable income taxes 3,539 3,427 3.3
Net income $ 8,446 $ 7,163 17.9
Net income available to
common shareholders $ 8,446 $ 6,974 21.1
MID AM, INC.
FINANCIAL SUMMARY (unaudited)
For Three Months Ended
(Dollars in thousands, June 30, Percent
except per share data) 1998 1997 Change
Earnings per common share:
Basic $0.36 $0.30 20.0
Diluted 0.35 0.28 25.0
Cash dividend paid per
common share $0.16 $0.145 10.3
Shares outstanding:
Average basic 23,377,000 23,536,000 ---
Average diluted 23,918,000 25,475,000 ---
PERFORMANCE RATIOS
Net interest spread (FTE) 3.78 3.96 ---
Net interest margin (FTE) 4.37 4.55 ---
Return on average common
shareholders' equity 20.92 16.60 ---
Return on average total
shareholders' equity 20.92 15.57 ---
Return on average total assets 1.50 1.33 ---
Average Balances for Three
Months Ended June 30
Total assets $2,260,231 $2,159,032 4.7
Loans, net of unearned income 1,629,863 1,606,781 1.4
Loans held for sale 14,815 7,696 92.5
Total deposits 1,791,449 1,735,948 3.2
Common shareholders' equity 161,972 168,473 (3.9)
Total shareholders' equity 161,972 184,535 (12.2)
MID AM, INC.
STATEMENT OF EARNINGS (unaudited)
For Six Months Ended
June 30, Percent
(Dollars in thousands) 1998 1997 Change
Interest income $ 87,538 $ 83,942 4.3
Interest expense 42,508 39,661 7.2
Net interest income 45,030 44,281 1.7
Provision for credit losses 2,450 2,759 (11.2)
Net interest income after
provision for credit losses 42,580 41,522 2.5
Non-interest income
Trust fees 1,283 880 45.8
Service charges on
deposit accounts 4,197 4,030 4.1
Mortgage banking 11,346 5,712 98.6
Brokerage commissions 4,841 3,141 54.1
Collection agency fees 2,581 2,564 0.7
Net gains (losses) on
sales of securities 105 (648) N/A
Net gains on sales of loans at
commercial financing affiliate 8,865 4,716 88.0
Other income 6,098 13,489 (54.8)
Total non-interest income 39,316 33,884 16.0
Non-interest expense
Salaries and employee benefits 31,166 26,675 16.8
Net occupancy expense 2,883 2,765 4.3
Equipment expense 4,776 4,263 12.0
Other expenses 19,869 16,336 21.6
Total non-interest expense 58,694 50,039 17.3
Income before income taxes 23,202 25,367 (8.5)
Applicable income taxes 7,313 8,637 (15.3)
Net income $15,889 $16,730 (5.0)
Net income available to
common shareholders $15,889 $16,125 (1.5)
MID AM, INC.
FINANCIAL SUMMARY (unaudited)
For Six Months Ended
(Dollars in thousands, June 30, Percent
except per share data) 1998 1997 Change
Earnings per common share:
Basic $0.67 $0.69 (2.9)
Diluted 0.66 0.65 1.5
Cash dividend paid per
common share $0.32 $0.29 10.3
Shares outstanding:
Average basic 23,567,000 23,309,000 ---
Average diluted 24,128,000 25,728,000 ---
PERFORMANCE RATIOS
Net interest spread (FTE) 3.84 3.95 ---
Net interest margin (FTE) 4.44 4.52 ---
Return on average common
shareholders' equity 19.37 19.51 ---
Return on average total
shareholders' equity 19.37 18.01 ---
Return on average total assets 1.43 1.56 ---
Average Balances for Six
Months Ended June 30
Total assets $2,237,636 $2,162,499 3.5
Loans, net of unearned income 1,626,995 1,595,645 2.0
Loans held for sale 17,021 6,276 171.2
Total deposits 1,777,012 1,756,490 1.2
Common shareholders' equity 165,437 166,679 (0.7)
Total shareholders' equity 165,437 187,376 (11.7)
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