UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
< X > Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996
Commission File Number: 0-2616
CONSUMERS FINANCIAL CORPORATION
1200 CAMP HILL BY-PASS
CAMP HILL, PA 17011
PENNSYLVANIA 23-1666392
(State or other jurisdiction of (I.R.S.
Employer
incorporation or organization) Identification
No.)
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
filing such requirements for the past 90 days.
Yes XX No
Indicate the number of shares outstanding of each of the issuer s classes
of common stock, as of the latest practicable date.
Outstanding at
Class of Common Stock October 31, 1996
$.01 Stated Value 2,612,081 shares
CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
INDEX
Page
Part I. Financial Information Number
Item 1. Financial Statements:
Consolidated Balance Sheets - 3
September 30, 1996 and December 31, 1995
Consolidated Statements of Operations -
4 - 5
Nine and Three Months ended September 30, 1996 and 1995
Consolidated Statements of Cash Flows -
6
Nine Months Ended September 30, 1996 and 1995
Notes to Consolidated Financial Statements
7 - 11
Item 2. Management s Discussion and Analysis of Results of 12 - 16
Operations and Financial Condition
Part II. Other Information
Item 1. Legal Proceedings
17
Item 2. Changes in Securities 17
Item 3. Defaults upon Senior Securities 17
Item 4. Submission of Matters to a Vote of Security Holders 17
Item 5. Other Information
17
Item 6. Exhibits and Reports on Form 8-K 17
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION> September 30, 1996 December 31, 1995
(in thousands) (Unaudited)
<S> <C> <C>
Assets
Investments:
Fixed maturities $37,015 $35,048
Mortgage loans on real estate 3,493 7,041
Investment real estate 1,020
Policy loans 496 482
Other invested assets 2,363 2,512
Short-term investments 4,040 2,892
Total investments 47,407 48,995
Cash 659 451
Accrued investment income 702 653
Receivables 21,768 23,820
Prepaid reinsurance premiums 17,915 18,604
Deferred policy acquisition costs 21,499 21,926
Property and equipment 3,891 4,118
Other real estate 1,471 2,645
Other assets 2,374 2,110
$117,686 $123,322
Liabilities, Redeemable Preferred Stock and
Shareholders Equity <PAGE>
Liabilities:
Future policy benefits $35,200 $36,582
Unearned premiums 58,089 57,943
Other policy claims and benefits 2,807 2,851
Other liabilities 5,726 6,259
Income taxes:
Current (299) 299
Deferred 800 1,180
Notes payable 1,857 2,537
104,180 107,651
Redeemable preferred stock:
Series A, 8 1/2% cumulative
net of treasury stock 4,684 4,657
Shareholders equity:
Common Stock 30 30
Capital in excess of stated value 7,968 8,016
Net unrealized appreciation
of debt and equity securities (213) 705
Retained earnings 2,462 3,688
Treasury stock (1,425) (1,425)
8,822 11,014
$117,686 $123,322
</TABLE> CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION> Nine Months Ended Three Months Ended
(in thousands, except per share data) September 30, September 30,
1996 1995 1996 1995
(Restated (Restated
<S> <C> <C> <C> <C>
Revenues:
Premiums written and policy charges $27,273 $30,603 $8,769 $10,686
Increase in unearned premiums (146) (2,543) 261 (1,342)
Gross premium income and policy charges 27,127 28,060 9,030 9,344
Less reinsurance ceded (11,450) (11,590) (3,618) (3,656)
Net premium income and policy charges 15,677 16,470 5,412 5,688
Net investment income 1,916 2,194 608 728
Net realized investment losses (158) (36) (136) (13)
Fees and other income 1,123 1,240 321 389
18,558 19,868 6,205 6,792
Benefits and expenses:
Death and other benefits 6,807 5,179 2,548 459
Increase in future policy benefits 1,755 3,690 491 2,739
Amortization of deferred policy
acquisition costs 7,854 8,029 2,587 2,714
Operating expenses 3,768 4,410 1,262 1,476
20,184 21,308 6,888 7,388
Loss from continuing operations
before income tax benefit (1,626) (1,440) (683) (596)
Income tax benefit (385) (276) (375) (156)
Loss from continuing operations (1,241) (1,164) (308) (440)
Discontinued operations:
Income from operations of the Auto Auction
Division (net of income taxes) 349 465 83 227
Net loss ($892) ($699) ($225) ($213)
</TABLE>
CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (continued)
(Unaudited)
<TABLE>
<CAPTION> Nine Months Ended Three Months Ended
(in thousands, except per share data) September 30, September 30,
1996 1995 1996 1995
(Restated (Restated
<S> <C> <C> <C> <C>
Income (loss) per common and common equivalent
share:
Loss from continuing operations ($0.60) ($0.57) ($0.16) ($0.21)
Discontinued operations 0.13 0.18 0.03 0.09
Net loss ($0.47) ($0.39) ($0.13) ($0.12)
Loss per common share - assuming full dilution * * * *
* Anti-dilutive
Cash dividends declared per common share None None None None
</TABLE>
CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(Unaudited)
<TABLE>
<CAPTION>(in thousands) 1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net loss ($892) ($699)<PAGE>
Adjustments to reconcile net loss to net
cash provided by operating activities
Deferred policy acquisition costs (7,427) (8,644)
Amortization of deferred policy 7,854 8,029
Other amortization and depreciation 351 402
Change in future policy benefits (102) 3,357
Change in unearned premiums 146 2,543
Amounts due reinsurers (232) 441
Income taxes (426) (644)
Change in accounts receivable 2,695 (639)
Change in other liabilities (242) (51)
Other (608) 844
Total adjustments 2,009 5,638
Net cash provided by operating activities 1,117 4,939
Cash flows from investing activities:
Purchase of investments (7,038) (6,647)
Maturity of investments 4,929 5,557
Sale of investments 3,541 881
Purchase of property and equipment (27) (304)
Net cash provided by (used in) investing activities 1,405 (513)
Cash flows from financing activities:
Principal payments on debt (680) (687)
Receipts from universal life and investment 3,656 3,936
Withdrawals on universal life and investment (4,935) (7,162)
Purchase of treasury stock (48) (209)
Cash dividends to shareholders (307) (307)
Net cash used in financing activities (2,314) (4,429)
Net increase (decrease) in cash 208 (3)
Cash at beginning of period 451 1,254
Cash at end of period $659 $1,251
</TABLE>
CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(Unaudited)
1. General:
In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments (consisting only of normal
recurring items) necessary to present fairly the Company's consolidated
financial position as of September 30, 1996, the consolidated results ofits
operations for the nine months ended September 30, 1996 and 1995 and the
consolidated changes in its cash flows for the nine months ended September
30, 1996 and 1995. Certain prior year amounts have been reclassified to
conform with classifications used for 1996. Such reclassifications had no
impact on operating results.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. These financial statements
should be read in conjunction with the financial statements and notes
thereto included in the Company's 1995 Form 10-K.
The results of operations for the nine months ended September 30, 1996 are
not necessarily indicative of the results to be expected for the full year.
2. Income Taxes:
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes.
Significant components of the Company's deferred tax liabilities and assets
are as follows (in 000's):
<TABLE>
<CAPTION> September December
30, 31,
1996 1995
<S> <C> <C>
Deferred tax liabilities:
Fixed maturities $347
Deferred policy acquisition costs $7,244 7,426
Other 478 437
7,722 8,210
Deferred tax assets:
Fixed maturities 74
Future policy benefits and financial 6,087 5,827
Net operating loss carryforwards 1,873 2,143
Other 186 284
8,220 8,254
Valuation allowance for deferred tax (1,298) (1,224)
6,922 7,030
Net deferred tax liability $800 $1,180
</TABLE>
CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(Unaudited)
2. Income Taxes (continued):
Significant components of the provision for income taxes are as follows (in
000's):
<TABLE>
<CAPTION> Nine Months Three Months
1996 1995 1996 1995
<S> <C> <C> <C> <C> Current:
Federal ($357) ($194) ($25) ($86)
State 5 44 (38) 27
Total current (352) (150) (63) (59)
Deferred (33) (126) (312) (97)
Income tax benefit related to
continuing operations (385) (276) (375) (156)
Income taxes related to
discontinued operations 227 289 57 137
Total income taxes (benefit) ($158) $13 ($318) ($19)<PAGE>
</TABLE>
The reconciliation of the provision for income taxes and the amount which
would have been provided at statutory rates is as follows (in 000's):
<TABLE>
<CAPTION> 1996 1995
<S> <C> <C>
Loss before income taxes ($1,050) ($686)
Income tax benefit at 34% statutory rate on
Pre-tax loss ($357) ($233)
Special life insurance company deductions 31
Adjustments of prior years income tax expense 85
Dividends received deduction (114) (10)
Effect of rate difference on net
operating loss carryback 242
State income taxes 53 58
Items not includable for tax purposes 68 10
Other, net (50) 72
Actual income tax expense (benefit) ($158) $13
</TABLE>
CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(Unaudited)
3. Contingencies:
Reinsured risks would give rise to liability to the insurance subsidiaries
only in the event that the reinsuring company might be unable to meet its
obligations under the reinsurance agreements in force.
The lawsuit filed in an Alabama state court in 1994 against the Company
alleging breach of contract and fraud in the sale of credit life insurance
has been settled by the parties for a nominal amount.
4. Reinsurance:
The effect of reinsurance on premiums written and earned for the periods
ended September 30, 1996 and 1995 was as follows:
<TABLE>
<CAPTION> 1996 1995
(in 000's) Written Earned Written Earned
<S> <C> <C> <C> <C>
Direct $25,531 $25,340 $28,285 $25,706
Assumed 1,742 1,787 2,318 2,354
Ceded (10,761) (11,450) (11,759) (11,590)
Net $16,512 $15,677 $18,844 $16,470
/TABLE
<PAGE>
CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(Unaudited)
4. Reinsurance (continued):
Ceded benefits incurred through September 30, 1996 and 1995 are $7,622,896
and $9,116,516, respectively. These losses were deducted in arriving at
death and other benefits and the increase in future policy benefits in the
Consolidated Statements of Operations.
5. Discontinued Operations:
In late September 1996, the Company finalized a plan to dispose of the
operating assets and business of its Interstate Auto Auction subsidiary as
part of an overall plan to merge or otherwise combine its core insurance
operations with those of another insurance company. On November 1, 1996,
the
Company entered into an agreement to sell Interstate s business and all of
its property, plant and equipment and inventories to ADESA Pennsylvania,
Inc. for cash of $4,850,000. Closing on the sale took place on November 6,
1996. The sale resulted in a fourth quarter after-tax gain of
approximately
$1.9 million. Accordingly, in the accompanying financial statements,
Interstate s operating results have been reported as discontinued
operations
for all periods presented. Interstate s non-operating net assets,
principally cash, receivables, investments and trade payables will remain
with the Company.
A summary of the results of operations of the discontinued business is
presented below:
<TABLE>
<CAPTION> Nine Months Ended
(in thousands) September 30,
1996 1995
<S> <C> <C> <
Revenues $2,385 $2,482
Income before income taxes $576 $754
Income taxes 227 289
Net income $349 $465
</TABLE>
CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NINE MONTHS ENDED SEPTEMBER 30, 1996 and 1995
(Unaudited)
5. Discontinued Operations (continued):
The assets of the discontinued business which are included in the Company s
September 30, 1996 and December 31, 1995 consolidated balance sheets are as
follows (in 000's):
<TABLE> <CAPTION> September December
30, 31,
1996 1995
<S> <C> <C>
Inventories $64 $97
Property, plant and equipment 1,686 1,791
$1,750 $1,888
</TABLE>
6. Subsequent Events:
On October 30, 1996, the Company entered into an Agreement and Plan of
Merger with LaSalle Group, Inc. ( LaSalle ), a Delaware corporation, and
Consumers Acquisition Corp. ( CAC ), a Pennsylvania corporation, whereby
CAC
will be merged with and into the Company. As the surviving corporation in
the merger, the Company will become a wholly-owned subsidiary of LaSalle.
The merger is subject to, among other things, the approval of insurance
regulators in various states and the approval of the common shareholders of
the Company. As a result of the merger, the holders of the Company s
outstanding common stock will receive cash in the amount of $3.92 per
share,
subject to certain adjustments. The total consideration to be paid by
LaSalle to the common shareholders will be approximately $11.9 million.
On November 6, 1996, the Company sold the operating assets and business of
Interstate Auto Auction, Inc. Approximately one-half of the after-tax
proceeds from the sale were used to repay in full the Company s $1.7
million
bank debt. (see Note 5).
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
OVERVIEW
The Company's third quarter net loss of $225,000 was about level with the
$212,000 net loss reported in the same period of 1995. However, on a year-to-
date basis, the Company's net loss increased from $699,000 ($.39 per share) in
1995 to $892,000 ($.47 per share) in the current year, as a result of increased
losses in the Automotive Resource Division and reduced profits from the
Company's Auto Auction Division.
Because of the recurring losses in its core credit insurance business, the
Company announced in March 1996 that it would evaluate various alternatives for
preserving shareholder value. After considering many initial offers and
several
post-due diligence offers, the Company signed a letter of intent on September
27, 1996 to merge with LaSalle Group, Inc., a private insurance and financial
management firm. On October 30, 1996, the Company entered into an Agreement
and
Plan of Merger whereby the Company would become a wholly-owned subsidiary of
LaSalle. This matter is also discussed below under Pending Merger and in the
Notes to Consolidated Financial Statements appearing elsewhere in this Form 10-
Q.
In connection with the planned merger with LaSalle, the Company also solicited
offers for the sale of its auto auction operations. After negotiating with a
number of potential purchasers, the Company entered into an Asset Purchase
Agreement with an affiliate of ADESA Corporation on November 1, 1996 to sell
the
operating assets and business of the auto auction. Closing on the sale took
place on November 6, 1996. The operating results of the auto auction have
consequently been presented in the accompanying financial statements as
discontinued operations. The gain from disposal of the auction business of
approximately $1.9 million will be included in the Company's fourth quarter
financial statements. This matter is discussed more fully in the Notes to
Consolidated Financial Statements appearing elsewhere in this Form 10-Q.
The table below compares revenues and operating results in 1996 with those in
1995.
<TABLE>
<CAPTION> Nine Months Third Quarter
(in thousands, except per share amounts) 1996 1995 1996 1995
<S> <C> <C> <C> <C>
Total revenues by source:
Premiums written and policy charges $27,273 $30,603 $8,769 $10,686
Net investment income 1,916 2,194 608 728
Realized investment losses (158) (36) (136) (13)
Fees and other income 1,123 1,240 321 389
$30,154 $34,001 $9,562 $11,790
Pre-tax income (loss):
Automotive Resource Division ($1,217) ($1,075) ($405) ($500)
Individual Life Insurance Division (41) (98) (98) (28)
Other (210) (231) (44) (55)
(1,468) (1,404) (547) (583)
Realized investment losses (158) (36) (136) (13)
Pre-tax loss from continuing operations (1,626) (1,440) (683) (596)
Income tax benefit (385) (276) (375) (156)
Loss from continuing operations (1,241) (1,164) (308) (440)
Discontinued operations, net of income 349 465 83 227
Net loss ($892) ($699) ($225) ($213)
Income (loss) per common share:
Loss from continuing operations ($0.60) ($0.57) ($0.16) ($0.21)
Discontinued operations 0.13 0.18 0.03 0.09
Net loss ($0.47) ($0.39) ($0.13) ($0.12)
</TABLE>
RESULTS OF OPERATIONS
A discussion of the most significant factors which affected the 1996 operating
results in each of the Company's three divisions, including the discontinued
auto auction division, is presented below. Information relating to 1995 is
also
presented for comparative purposes.
Automotive Resource Division
Credit Insurance premium revenues decreased by 17% in the third quarter of 1996
and, for the year, premiums have declined 9% from $26.3 million last year to
$24
million in the current year. However, a substantial portion of the decline is
a
result of the Company's cancellation, over the past 15 months, of all accounts
in two unprofitable states. Excluding these states, premium revenues have
declined by 2% for the year. The Division's credit insurance premium production
remains significantly below pre-1990 levels due to the declines which occurred
during the economic recession of the early 1990's. A consequence of the
reduction in written premiums has been a decline in earned premiums, which in
turn has resulted in a substantial increase in operating expense ratios since
1989. Higher expense ratios have been a key reason for the unprofitable
operating results the Division has experienced in recent years.<PAGE>
The 1996 pre-tax operating results from the Division s credit insurance
business
remained about level compared to the same period in 1995. Both periods produced
approximately $1.3 million in pre-tax losses. The majority of the Division s
increased loss in 1996 arises from reduced commission income and higher
expenses on extended service contracts and from higher claims on one block of
service contract business for which the Company assumes the underwriting risk.
As indicated in the preceding paragraph, the $1.3 million pre-tax loss the
Division s credit insurance operation has produced in both 1996 and 1995 is
largely due to high expense ratios, which are the result of the decline in
premium revenues over the past five years. Profit margins have also been
reduced
by increased claim ratios.
Effective July 31, 1996, the Company and its joint venture partner cancelled an
agreement whereby the companies shared in the profits from the credit insurance
business written by the Company in Pennsylvania, the Company s most profitable
credit insurance state. As a result, on credit premiums produced in
Pennsylvania
after July 31, the Company will now retain the profits which were previously
shared with the joint venture partner, and has agreed to pay the partner
$500,000 as consideration for terminating the venture. The payment will be made
at the time the merger with LaSalle is consummated.
If the proposed merger with LaSalle is completed, LaSalle's strategy to return
the Company's credit insurance operation to profitability will include
acquisitions of other credit insurance companies and other blocks of credit
insurance business, expansion of the Company's marketing territory and growth
in
existing markets. LaSalle intends to provide additional capital not only to
finance growth but also to build the insurance subsidiaries' capital base in
order to improve the ratings of those companies by insurance rating agencies.
Individual Life Insurance Division
Since the end of 1994, the operations of the Division have been limited to one
closed block of assumed universal life business. In 1995, the Division's
results included income which was related to the excess claim liability carried
on the direct universal life business sold at the end of 1994. Because the
Company retained the claim liability on this business, it was responsible for
all claims incurred on or before December 31, 1994. Actual claims were
ultimately $113,000 lower than the liability carried, and this excess claim
liability was eliminated through a credit to claims expense in 1995. Higher
than normal death claims on the assumed block of business in 1995 resulted in a
$254,000 loss on this block of business in the first nine months of last year,
which more than offset the non-recurring gain.
A significant decrease in claims in 1996 has reduced the pre-tax loss of the
assumed block to $40,000, an improvement of $214,000. The Company has had
ongoing discussions during the past year with the direct writer of the UL
business concerning the recapture of this block.
Auto Auction Division
As indicated above, the operating assets and business of Interstate Auto
Auction
were sold in November of 1996, and, as a result, the auction operations have
been reported in the September 30, 1996 financial statements as discontinued
operations for all periods presented. The auction business was sold in
conjunction with the Company's plan to divest its non-credit insurance
businesses and combine its credit insurance operations with a larger
organization.
FINANCIAL CONDITION<PAGE>
<TABLE>
<CAPTION>(in thousands, except per share September 30, December 31,
amounts) 1996 1995
<S> <C> <C>
Invested assets $47,407 $48,995
Total assets $117,686 $123,322
Total debt $1,857 $2,537
Total shareholders' equity and redeemable
preferred stock $13,506 $15,671
Debt as a percent of total capital 12.1% 13.9%
Shareholders' equity per common share $3.38 $4.20
</TABLE>
Invested Assets
Invested assets at September 30, 1996 declined by about $1.6 million in the
first nine months of the year to $47.4 million. A portion of the decrease is
attributable to the reclassification of $1 million of investment real estate
which is now being held for sale. The asset decline is also due to a $1.2
million reduction in the carrying value of the Company's bond portfolio as a
result of higher interest rates since the end of 1995. The invested asset base
increased as a result of the sale during the third quarter of $1.2 million in
non-investment real estate for cash, which was reinvested in bonds.
During the first nine months of the year, the Company's mortgage loan portfolio
has decreased from $7 million to $3.5 million primarily as a result of the
early
payoff of a $1.4 million loan and the sale to a local bank of seven mortgages
with loan balances totalling $2 million. The proceeds from these transactions
were also reinvested in bonds. In addition, during October, two mortgage loans
with balances at September 30 of about $1.2 million were repaid in cash.
Liquidity
The Company s operating subsidiaries have historically met most of their cash
requirements from funds generated from operations, although reduced credit
insurance revenues over the past several years have had an adverse impact on
the
insurance companies operating cash flows. The Company has generally relied on
its operating subsidiaries to provide it with sufficient cash funds to maintain
an adequate liquidity position. In that regard, the life insurance subsidiaries
are also subject to restrictions imposed by law on their ability to transfer
cash to the Company in the form of dividends, loans or advances. Consumers Car
Care Corporation and Interstate Auto Auction, Inc. have provided the Company
with sources of cash which are not subject to insurance regulations that
restrict their ability to transfer cash. The sale of Interstate s business in
November 1996 resulted in the repayment
of the Company s $1.7 million bank debt and also provided the Company with an
additional $1.8 million in after-tax cash flow. The net cash provided by or
used
in operating activities for the nine months ended September 30, 1996 and 1995
is
presented in the Consolidated Statements of Cash Flows.
Capital Resources
The Company's total equity, which includes redeemable preferred stock,
decreased
by about $2.2 million during the first nine months of 1996. The decrease is
primarily attributable to (1) the decline in the carrying value of the bond
portfolio ($1.2 million less $347,000 in applicable deferred income taxes), (2)
the current year net loss of $892,000 and (3) $307,000 in dividends to
preferred
shareholders.
The Company reduced its outstanding bank debt by $680,000 in the first nine
months of the year. The balance at September 30, 1996 was $1.9 million. The
sale of the Company's auto auction business in November of 1996 resulted in the
payoff of all of the remaining bank debt. It also resulted in a $1.9 million
after-tax gain and a corresponding increase in the Company's equity.
Pending Merger
For information regarding the pending merger of the Company with LaSalle, see
Overview above and the Notes to Consolidated Financial Statements appearing
elsewhere in this Form 10-Q.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Except for the matters discussed in Note 3 of the Notes to
Consolidated
Financial Statements included elsewhere in this Form 10-Q, neither the
registrant nor its subsidiaries are involved in any pending legal
proceedings other than routine litigation incidental to the normal
conduct of its business nor have any such proceedings been terminated
during the nine months ended September 30, 1996.
Item 2. Changes in Securities
During the nine months ended September 30, 1996, there have been no
limitations or qualifications, through charter documents, loan
agreements or otherwise, placed upon the holders of the registrant's
common or preferred stock to receive dividends.
Item 3. Defaults upon Senior Securities
The registrant has not defaulted in the payment of principal, interest
or in any other manner on any indebtedness and is current with all its
accounts. There is no arrearage in the payment of dividends on the
registrant's preferred stock.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of the stockholders of the
registrant during the three months ended September 30, 1996.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits required to be filed by Item 601 of Regulation S-K:
(11) Computation of Earnings per Common Share.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the three months ended
September 30, 1996. On November 13, 1996, the Company filed a Form
8-K with respect to (1) an Agreement and Plan of Merger entered
into
between the Company, LaSalle Group, Inc . and a subsidiary of
LaSalle, pursuant to which the Company would become a wholly-owned
subsidiary of LaSalle, and (2) the sale of the operating assets and
business of Interstate Auto Auction, Inc..
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 thereunto duly authorized.
CONSUMERS FINANCIAL CORPORATION
Registrant
Date November 19, 1996 By /S/ James C. Robertson
James C. Robertson, President
(Chief Executive Officer)
Date November 19, 1996 By /S/ R. Fredric Zullinger
R. Fredric Zullinger
Senior Vice President, Chief Financial Officer
and
Treasurer
EXHIBIT 11
CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION> Nine Months Ended September Three Months Ended September
30, 30,
(in thousands, except per share amounts) 1996 1995 1996 1995
<S> <C> <C> <C> <C>
Primary Earnings Per Share
Reconciliation of net income (loss) per Statements
of Operations to amount used in primary
per share computation:
Loss from continuing operations ($1,241) ($1,164) ($308) ($440)
Preferred dividend requirement (307) (307) (102) (102)
Accretion in carrying value of preferred (27) (27) (9) (9)
Loss from continuing operations, as (1,575) (1,498) (419) (551)
Income from discontinued operations 349 465 83 227
Net loss, as adjusted ($1,226) ($1,033) ($336) ($324)
Reconciliation of weighted average number of shares
outstanding to amount used in primary earnings
share computation:
Weighted average number of common shares
outstanding 2,614 2,648 2,612 2,620
Add weighted average number of shares
from assumed exercise of stock 0 0 0 0
Weighted average number of shares of
stock and equivalents outstanding 2,614 2,648 2,612 2,620
Loss from continuing operations ($0.60) ($0.57) ($0.16) ($0.21)
Income from discontinued operations 0.13 0.18 0.03 0.09
Net loss per common and common equivalent share ($0.47) ($0.39) ($0.13) ($0.12)
</TABLE>
EXHIBIT 11
CONSUMERS FINANCIAL CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION> Nine Months Ended September Three Months Ended September
30, 30,
(in thousands, except per share amounts) 1996 1995 1996 1995
<S> <C> <C> <C> <C>
Fully Diluted Earnings Per Share
Reconciliation of net income (loss) per Statements
of Operations to amount used in fully diluted
earnings per share computation:
Loss from continuing operations ($1,241) ($1,164) ($308) ($440)
Income from discontinued operations 349 465 83 227
Net loss ($892) ($699) ($225) ($213)
Reconciliation of weighted average number of shares
outstanding, as adjusted, per primary
on preceding page, to amount used in fully
earnings per share computation:
Weighted average number of shares
as adjusted per primary computation
Preceding page 2,614 2,648 2,612 2,620
Add shares issuable from assumed
8 1/2 % cumulative convertible 713 713 713 713
Weighted average number of shares of
stock and equivalents outstanding 3,327 3,361 3,325 3,333
Fully Diluted Earnings Per Share * * * *
* Anti-dilutive
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 7
<S> <C> <C> <C> <C>
<C>
<PERIOD-TYPE> 3-MOS 3-MOS 9-MOS 9-MOS
YEAR
<FISCAL-YEAR-END> SEP-30-1996 SEP-30-1995 SEP-30-1996 SEP-30-1995
DEC-31-1995
<PERIOD-END> SEP-30-1996 SEP-30-1995 SEP-30-1996 SEP-30-1995
DEC-31-1995
<DEBT-HELD-FOR-SALE> 0 0 37,014,700 0
35,048,212
<DEBT-CARRYING-VALUE> 0 0 0 0
0
<DEBT-MARKET-VALUE> 0 0 0 0
0
<EQUITIES> 0 0 0 0
0
<MORTGAGE> 0 0 3,492,635 0
7,041,033
<REAL-ESTATE> 0 0 496,218 0
481,975
<TOTAL-INVEST> 0 0 47,407,199 0
48,994,969
<CASH> 0 0 659,269 0
450,861
<RECOVER-REINSURE> 0 0 17,914,613 0
18,603,688
<DEFERRED-ACQUISITION> 0 0 21,498,921 0
21,925,999
<TOTAL-ASSETS> 0 0 117,685,790 0
123,321,640
<POLICY-LOSSES> 0 0 35,200,567 0
36,581,642
<UNEARNED-PREMIUMS> 0 0 58,088,639 0
57,942,946
<POLICY-OTHER> 0 0 2,806,851 0
2,850,660
<POLICY-HOLDER-FUNDS> 0 0 0 0
0
<NOTES-PAYABLE> 0 0 1,856,884 0
2,850,660
0 0 0 0
0
0 0 4,683,618 0
4,656,642
<COMMON> 0 0 30,221 0
30,310
<OTHER-SE> 0 0 8,791,566 0
10,984,112
<TOTAL-LIABILITY-AND-EQUITY> 0 0 117,685,781 0
123,321,640
5,411,899 5,688,105 15,677,132 16,470,179
38,909
<INVESTMENT-INCOME> 608,201 727,723 1,916,549 2,193,972
2,779
<INVESTMENT-GAINS> (135,880) (12,653) (158,147) (35,809)
(119)
<OTHER-INCOME> 320,487 388,857 1,123,062 1,239,369
4,863
<BENEFITS> 3,038,593 3,198,610 8,562,431 8,868,861
0
<UNDERWRITING-AMORTIZATION> 2,586,611 2,714,476 7,854,067 8,028,933
0
<UNDERWRITING-OTHER> 1,262,120 7,387,616 3,767,390 4,410,050
0
<INCOME-PRETAX> (682,617) (595,584) (1,625,292) (1,440,133)
0
<INCOME-TAX> (375,318) (156,461) (348,699) (275,766)
0
<INCOME-CONTINUING> 0 0 0 0
0
<DISCONTINUED> 0 0 0 0
0
<EXTRAORDINARY> 82,555 226,628 348,684 465,690
0
<CHANGES> 0 0 0 0
0
<NET-INCOME> (224,744) (212,495) (891,909) (698,677)
0
<EPS-PRIMARY> (.13) (.12) (.47) (.39)
0
<EPS-DILUTED> 0 0 0 0
0
<RESERVE-OPEN> 0 0 0 0
0
<PROVISION-CURRENT> 0 0 0 0
0
<PROVISION-PRIOR> 0 0 0 0
0
<PAYMENTS-CURRENT> 0 0 0 0
0
<PAYMENTS-PRIOR> 0 0 0 0
0
<RESERVE-CLOSE> 0 0 0 0
0
<CUMULATIVE-DEFICIENCY> 0 0 0 0
0
</TABLE>
