FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED JUNE 30, 1996 COMMISSION FILE NO. 0-6764

MOBILE AMERICA CORPORATION
(Exact name of registrant as specified in its charter)

FLORIDA 59-1218935
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)

100 FORTUNE PARKWAY, JACKSONVILLE, FLORIDA 32256
(Address of principal executive offices) (Zip Code)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA (904) 363-6339
CODE

N/A
Former name, former address and former fiscal year, if changed since last report

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 . No. .
---- ----

(APPLICABLE ONLY TO CORPORATE ISSUERS)

There were 6,260,040 shares of common stock, par value $.025 per share,
outstanding as of the close of business on June 30, 1996.
2

PART I

MOBILE AMERICA CORPORATION

INDEX

PAGE
----

Financial Statements:
Part I
Consolidated Balance Sheets......................................................... 1
Consolidated Statements of Operations............................................... 2
Consolidated Statements of Cash Flows............................................... 3
Consolidated Statements of Changes in Stockholders' Equity.......................... 4
Notes to Financial Statements....................................................... 5-8
Management's Discussion and Analysis of the Consolidated Statements of Operations... 9
Exhibit 11 -- Computations of Earnings Per Share.................................... 10
Part II
Other Information, and Signatures................................................... 11

MOBILE AMERICA CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
JUNE 30, 1996 AND DECEMBER 31, 1995

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

ASSETS
Investments:
Securities held to maturity at amortized cost (fair value $61,555,036 and
$52,785,561)...................................................................... $ 62,119,752 $ 52,460,555
Securities available for sale (amortized cost $32,895,015 and $34,644,650).......... 33,223,418 35,690,835
Notes receivable less unearned discount of $74 and $74.............................. 1,174 2,650
Short-term investments.............................................................. 11,599,451 22,470,314
------------ ------------
Total investments............................................................. 106,943,795 110,624,354
------------ ------------
Cash.................................................................................. (2,691,223) 6,510,457
Receivables:
Insurance premiums.................................................................. 3,272,244 2,563,715
Accrued investment income and other................................................. 1,814,759 1,971,356
Reinsurance......................................................................... 29,637,917 33,822,126
------------ ------------
Total receivables............................................................. 34,724,920 38,357,197
------------ ------------
Income taxes:
Currently receivable................................................................ -- --
Deferred............................................................................ 1,819,146 760,025
------------ ------------
Total income taxes............................................................ 1819,146 760,025
------------ ------------
Prepaid reinsurance premiums.......................................................... 20,961,765 24,260,694
Inventory of mobile homes............................................................. 39,545 39,545
Deferred policy acquisition costs..................................................... (1,998,895) (4,209,840)
Property and Equipment:
Land, at cost....................................................................... 356,970 356,970
Modular office equipment, at cost less accumulated depreciation of $7,982 and
$7,982............................................................................ 3,000 3,000
Equipment and leasehold improvements at cost less accumulated depreciation and
amortization of $2,049,184 and $1,953,916......................................... 758,437 630,458
------------ ------------
Total property and equipment.................................................. 1,118,407 990,428
------------ ------------
Equity in Pools and Associations...................................................... 4,912,334 4,912,334
Other Assets.......................................................................... 462,891 525,968
------------ ------------
$166,292,685 $182,771,162
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Insurance loss reserves, including future policy benefits............................. $ 49,187,938 $ 54,645,686
Unearned premiums..................................................................... 37,801,378 39,535,149
Reinsurance funds withheld and balances payable....................................... 21,181,045 26,120,505
Accrued expenses and other liabilities................................................ 11,193,093 15,639,062
Deferred income tax on net unrealized gains on securities available for sale.......... 112,000 355,000
Unearned service fees................................................................. 1,923,775 2,610,902
Note payable.......................................................................... 12,000,000 12,000,000
Current income taxes payable.......................................................... 755,747 551,868
------------ ------------
Total liabilities............................................................. $134,154,976 $151,458,172
------------ ------------
Stockholders' equity:
Common stock, $.025 par value per share
Authorized -- 18,000,000 shares Issued -- 6,720,396 shares.......................... 168,010 168,010
Capital in excess of par value........................................................ 2,686,060 2,686,060
Net unrealized appreciation on securities available for sale net of deferred income
taxes............................................................................... 216,403 691,185
Treasury Stock at cost, 460,356 and 460,356 shares.................................... (420,944) (420,944)
Retained Earnings..................................................................... 29,488,180 28,188,679
------------ ------------
Total stockholders' equity.................................................... 32,137,709 31,312,990
------------ ------------
$166,292,685 $182,771,162
============ ============

See notes to consolidated financial statements

1
4

MOBILE AMERICA CORPORATION AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
QUARTERS ENDED JUNE 30, 1996 AND 1995, SIX MONTHS ENDED JUNE 30, 1996 AND 1995

QUARTERS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
------------------------- -------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------

Revenues:
Insurance premiums earned (net of premiums
ceded of $13,372,205, $14,906,650,
$27,064,138 and $28,077,173)........... $ 9,491,528 $ 6,986,398 $19,102,365 $14,196,275
Investment income......................... 1,672,300 1,340,321 3,309,685 2,564,956
Equipment rentals......................... -- 18,179 -- 39,538
Service fees earned....................... 3,553,546 2,397,195 6,068,112 4,132,062
Other..................................... (3,907) 26,817 7,592 26,817
Sales of modular office equipment......... -- 4,000 -- 8,600
Net realized gains on investments......... 81,255 69,299 222,494 104,553
----------- ----------- ----------- -----------
Total revenues.................... 14,794,722 10,842,209 28,710,248 21,072,801
----------- ----------- ----------- -----------
Expenses:
Losses and loss adjustment expenses (net
of reinsurance recoveries of
$14,963,801, $10,236,917, $24,829,162
and $19,909,174)....................... 7,357,383 6,374,375 14,074,895 12,226,792
Policy acquisition costs.................. 750,116 (1,095,173) 2,438,610 (757,869)
Salaries and wages........................ 1,498,768 1,228,736 3,273,845 2,587,856
General and administrative................ 1,915,684 1,490,392 3,476,237 2,651,913
Cost of sales of modular office
equipment.............................. -- -- -- 44
Interest on note.......................... 251,766 -- 507,266 --
----------- ----------- ----------- -----------
Total expenses.................... 11,773,717 7,998,330 23,770,853 16,708,736
----------- ----------- ----------- -----------
Income before provision for income taxes.... 3,021,005 2,843,879 4,939,395 4,364,065
Provision for income taxes:
Current................................... 1,513,704 879,444 2,023,704 1,480,103
Deferred.................................. (530,046) 175,000 (555,046) (34,000)
----------- ----------- ----------- -----------
Total provision for income
taxes........................... 983,658 1,054,444 1,468,658 1,446,103
----------- ----------- ----------- -----------
Net income.................................. $ 2,037,347 $ 1,789,435 $ 3,470,737 $ 2,917,962
=========== =========== =========== ===========
Earnings per share:
Net income................................ $ .32 $ .29 $ .55 $ .47
=========== =========== =========== ===========
Weighted average number of common stock and
common stock equivalents.................. 6,260,040 6,264,040 6,260,040 6,264,040
=========== =========== =========== ===========

See accompanying notes to financial statements.

2
5

MOBILE AMERICA CORPORATION AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1996 AND 1995

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

Cash Flows from Operating Activities:
Net Income...................................................... $ 3,470,737 $ 2,917,962
Adjustments to reconcile net income to net cash provided by
operating activities:
Provisions for depreciation................................ 95,267 109,814
Gain on sale of investments................................ (222,494) (104,553)
Increase in insurance premiums receivable.................. (708,529) (3,069,100)
(Increase) decrease in accrued investment income and
other..................................................... 156,597 (1,091,913)
(Increase) decrease in deferred policy acquisition costs... (2,210,945) 70,670
Decrease in prepaid expenses and other assets.............. 63,077 100,693
Decrease in insurance loss reserves........................ (5,457,748) (2,131,569)
(Decrease) increase in unearned premiums................... (1,733,771) 1,668,348
Decrease in reinsurance funds held and balances payable.... (4,939,460) (1,215,227)
Increase (decrease) in accrued expenses and other
liabilities............................................... (4,445,969) 5,795,064
Increase in current income taxes........................... 203,879 1,639,044
Increase in deferred income taxes receivable............... (1,059,121) (34,000)
Decrease (increase) in reinsurance premiums receivable..... 4,184,209 (9,630)
Decrease in prepaid reinsurance premiums................... 3,298,929 696,596
Increase (decrease) in unearned service fees............... (687,127) 595,115
------------ ------------
Net cash (used) provided by operating activities........ (9,992,469) 5,937,314
------------ ------------
Cash Flows from Investing Activities:
Net change in short term investments............................ 10,870,863 (2,107,535)
Purchase of equity securities................................... (1,522,280) (1,442,591)
Sale of equity securities....................................... 984,780 1,145,845
Purchase of modular offices, equipment and leasehold
improvements................................................. (227,846) 158,326
Purchase of fixed maturities.................................... (22,187,048) (10,982,527)
Sales of fixed maturities....................................... 15,037,480 6,781,287
Notes receivable................................................ 1,476 1,328
Sale of modular offices, equipment and leasehold improvements... 4,600 --
------------ ------------
Net cash provided in investing activities............... 2,962,025 (6,445,867)
------------ ------------
Cash Flows from Financing Activities:
Dividends paid to shareholders.................................. (2,171,236) (946,223)
------------ ------------
Net cash used in financing activities................... (2,171,236) (946,223)
------------ ------------
Net decrease in cash.............................................. (9,201,680) (1,454,776)
Cash, beginning year.............................................. 6,510,457 5,479,899
------------ ------------
Cash, end of period............................................... $ (2,691,223) $ 4,025,123
=========== ===========

See notes to consolidated financial statements.

3
6

MOBILE AMERICA CORPORATION AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
SIX MONTHS ENDED JUNE 30, 1996 AND 1995

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

Common Stock:
No change during period........................................... $ 168,010 $ 168,010
----------- -----------
Capital in excess of par value:
No change during period........................................... 2,686,060 2,686,060
----------- -----------
Net unrealized appreciation on securities available for sale:
Balance at beginning of period.................................... 691,185 --
Increase.......................................................... (717,782) --
Deferred taxes on unrealized gains.................................. 243,000 --
----------- -----------
Balance at end of period.......................................... 216,403 --
Net unrealized investment gains (losses) on equity securities:
Balance at beginning of period.................................... -- (158,099)
Increase (decrease)............................................... -- 227,479
Deferred taxes on unrealized gains................................ -- --
----------- -----------
Balance at end of period.......................................... -- 69,380
----------- -----------
Treasury Stock:
No change during period........................................... (420,944) (388,441)
----------- -----------
Retained earnings:
Balance at beginning of period.................................... 28,188,679 23,306,761
Net income........................................................ 3,470,737 2,917,962
Cash dividends $.35 and $.18 per share............................ (2,171,236) (946,223)
----------- -----------
Balance at end of period.......................................... 29,488,180 25,278,500
----------- -----------
Total stockholders' equity at end of period......................... $32,137,709 $27,813,509
========== ==========

See notes to consolidated financial statements.

4
7

MOBILE AMERICA CORPORATION

NOTES TO FINANCIAL STATEMENTS
QUARTERS ENDED JUNE 30, 1996 AND 1995

NOTE 1

In the opinion of the Registrant, the accompanying unaudited, consolidated,
condensed financial statements contain all adjustments (consisting of only
normal occurring accruals) necessary to present fairly its financial position as
of June 30, 1996, and the results of its operations and statement of cash flow
for the six months ended June 30, 1996.

NOTE 2

The results of operations for the six months ended June 30, 1996 are not
necessarily indicative of the results to be expected for the full year.

NOTE 3 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Financial Statement Presentation

The consolidated financial statements have been prepared on the basis of
generally accepted accounting principles which vary from statutory reporting
practices prescribed or permitted for insurance companies by regulatory
authorities.

(b) Principles of Consolidation

The accompanying consolidated financial statements include Mobile America
Corporation (the Company) and its subsidiaries, all of which are wholly-owned.
All significant intercompany transactions have been eliminated in consolidation.

Inventories are valued at the lower of cost or market, with cost being
determined primarily under the specific identification method.

(d) Method for Valuing Investments

The Company implemented Statement of Financial Accounting Standards (SFAS)
No. 115, "Accounting for Certain Investments in Debt and Equity Securities" as
of January 1, 1994. The Company classified its entire fixed maturity investment
portfolio as "held to maturity". Accordingly, these investments are reported at
amortized cost, adjusted for amortization of premiums or discounts and other
than temporary declines in fair value. At December 29, 1995, the Company
reassessed the appropriateness of the classifications of all securities held at
that time and reclassified from the held to maturity category a portion of the
Company's fixed maturity portfolio to the available for sale category.
Classifying these securities as available for sale did not impact net income.
Common Stock, redeemable preferred stock, bonds and notes not classified as held
to maturity are reported at fair value, with unrealized gains and losses
reported as a separate component of stockholders' equity. Fair values are based
on quoted market prices or dealer quotes, if available. If a quoted market price
is not available, fair value is estimated using quoted market prices for similar
securities.

(e) Realized Investment Gains and Losses

The cost of securities sold is based upon the specific identification
method and any gains or losses are reflected in the accompanying statements of
operations.

5
8

MOBILE AMERICA CORPORATION

NOTES TO FINANCIAL STATEMENTS
QUARTERS ENDED JUNE 30, 1996 AND 1995 -- (CONTINUED)

(f) Deferred Policy Acquisition Costs

The costs associated with acquiring new insurance contracts have been
deferred. Such costs are being amortized over the premium paying period or in
proportion to premiums earned on those contracts.

(g) Depreciation and Amortization

Depreciation and amortization of properties, equipment and leasehold
improvements are calculated principally under the straight-line method based on
the estimated useful life of the asset for financial reporting purposes.

Maintenance and repairs are charged to expenses as incurred; additions and
major betterments are capitalized and depreciated. At the time of retirement or
other disposition of property, equipment or leasehold improvements, the accounts
are relieved of the cost and the related accumulated depreciation and any gains
or losses are reflected in income.

(h) Insurance Contracts

The insurance contracts accounted for in these financial statements include
both short-duration contracts and long-duration contracts. Short-duration
contracts provide insurance protection for a fixed period of short duration and
enable the insurer to cancel the contract or to adjust the provisions at the end
of any contract period. Most property-liability insurance contracts and certain
term life insurance contracts, such as credit life insurance, are short-duration
contracts. Long-duration contracts generally are not subject to unilateral
changes in their provisions and require the performance of various functions and
services, including insurance protection, for an extended period. Long-duration
contracts include whole-life contracts and guaranteed renewable term life
contracts. Accident and health insurance contracts may be short-duration or
long-duration depending on whether the contracts are expected to remain in force
for an extended period. The Company has not issued any participating policies.

(i) Insurance Loss Reserves

The liability for future policy benefits of long-duration contracts has
been provided for on a net level premium method based on estimated investment
yields, withdrawals, mortality, terminations, morbidity, and other assumptions
which were appropriate at the time the contracts were issued. Such estimates
were based on past experience as adjusted to provide for possible adverse
deviation from the estimates. Interest assumptions are based on historical
assumptions and experience, and range from 3% to 4.5% at June 30, 1996.

The liabilities for unpaid claims of short-duration contracts and related
adjustment expenses are determined using case basis evaluations and statistical
analysis and represent estimates of the ultimate net cost of all reported and
unreported claims relating to insured events which are unpaid at the balance
sheet date. The liabilities include estimates of future trends in claims
severity and frequency and other factors which could vary as the claims are
ultimately settled. Although such estimates may vary, management believes that
the liabilities for unpaid claims and related adjustment expenses are adequate.
The estimates are continually reviewed, and as adjustments to these liabilities
become necessary, they are reflected in current operations.

(j) Recognition of Premium Revenues and Costs

Premiums for long-duration contracts are recognized as revenues when due
from the policyholders. A liability for the expected costs relating to such
long-duration contracts is accrued over the current and expected renewal
periods.

Premiums for short-duration contracts are recognized as revenues over the
period of the contract in proportion to the amount and duration of insurance
protection provided.

6
9

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.

Total consolidated revenues increased by 36% from $21,072,801 for the first
six months of 1995 to $28,710,248 for the first six months of 1996.

Insurance premiums earned increased 35% from $14,196,275 in the first six
months of 1995 to $19,102,365 for the first six months of 1996, principally due
to a 14% decrease in the reinsurance cession rate effective January 1, 1996 and
a fourth quarter 1995 premium rate increase in the core personal injury
protection and property damage liability business of the Registrant's principal
property and casualty insurance subsidiary. Investment income increased from
$2,564,956 for the first six months of 1995 to $3,309,685 during the first six
months of 1996, an increase of 29%. This increase is attributable to an increase
in invested assets, a shift from lower-yielding short-term investments to
higher-yielding investments with average maturities of three to four years, and
an overall increase in investment yields. Net realized gains from the sale of
investments increased from $104,553 during the first six months of 1995 to
$222,494 during the comparable period of 1996. Service fees earned increased 47%
from $4,132,062 in the first six months of 1995 to $6,068,112 during the same
period in 1996 due to an increase in policies administered on a fee-for-service
basis for the State of Florida's Joint Underwriting Associations.

Consolidated expenses increased by 42% from $16,708,736 during the first
six months of 1995 to $23,770,853 during the first six months of 1996. This
increase is due to the reduction in the reinsurance cession rate and a reduction
in the reinsurance ceding commission rate. These changes result in the Company
retaining higher exposure to losses and loss adjustment expenses, which is
offset by higher earned premiums as noted previously, and receiving lower ceding
commission margins which offset policy acquisition costs. The increase in
salaries and wages and general and administrative expenses results from
additional costs associated with administrating the growth in the Florida Joint
Underwriting Association business and the increase in business within the
Registrant's core insurance business. Interest on Note relates to a $12,000,000
loan consummated during the fourth quarter of 1995. The note accrues interest at
the 30 day LIBOR rate plus 275 basis points and is paid monthly.

The Registrant maintains sufficient liquidity to meet operational needs.
Cash dividends and capital expenditure requirements are provided by funds
generated from operations and investing activities. The Registrant's investment
policy continues to emphasize higher quality securities matched closely with the
Registrant's short liability duration.

7
10

PART II

OTHER INFORMATION

ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits:

11. Unaudited computations of earnings per share.
27. Financial Data Schedule (for SEC use only).

(b) Reports on Form 8K

No reports on form 8K were filed for the quarter ended June 30, 1996.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.

MOBILE AMERICA CORPORATION
Registrant

By: /s/
--------------------------------------

By: /s/ THOMAS L. STINSON
--------------------------------------
Thomas L. Stinson
Vice President Financial Reporting

August 14, 1996
Date