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 June 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 July 31, 1997.
Common Stock, without par value - 22,188,822 shares
<PAGE> 2
MID AM, INC.
INDEX
PART I - FINANCIAL INFORMATION Page Number
Item 1. Financial Statements
Consolidated Statement of Condition
(Unaudited)
June 30, 1997 and December 31, 1996 3
Consolidated Statement of Earnings
(Unaudited)
Three and six months ended
June 30, 1997 and 1996 4
Consolidated Statement of Cash Flows
(Unaudited)
Three and six months ended
June 30, 1997 and 1996 5
Notes to Consolidated Financial Statements 7
(Unaudited)
Item 2. Management's Discussion and Analysis and
Statistical Information 11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 27
Item 2. Changes in Securities 27
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
<PAGE> 3
PART I. - FINANCIAL INFORMATION
MID AM, INC. Consolidated Statement of Condition (Unaudited)
June 30, 1997 December 31, 1996
Assets (Dollars in thousands)
Cash and due from banks $ 76,660 $ 85,657
Int-bearing deposits in banks 1,202 1,631
Federal funds sold 22,377 4,476
Loans held for sale 6,590 7,927
Securities available for sale 389,239 432,791
Loans, net of unearned fees 1,615,579 1,574,880
Allowance for credit losses (16,754) (15,672)
Net loans 1,598,825 1,559,208
Bank premises and equipment 54,527 50,111
Int receivable/other assets 43,021 39,173
Total Assets $2,192,441 $2,180,974
Liabilities
Demand deposits(non-interest) $ 222,226 $ 205,306
Savings deposits 550,995 593,885
Other time deposits 994,715 1,033,718
Total Deposits 1,767,936 1,832,909
Federal funds purchased and
securities sold under
agreements to repurchase 145,942 92,805
Capitalized lease
obligations and debt 84,597 42,247
Int payable/other liabilities 19,439 19,809
Total Liabilities 2,017,914 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 - 22,611,165
and 20,887,675 shares 75,370 69,625
Surplus 91,646 89,299
Retained earnings 15,340 6,034
Treasury stock
422,343 and 46,610 shares (7,260) (834)
Unrealized losses on secur-
ities available for sale (569) (1,013)
Total Shareholders' Equity 174,527 193,204
Total Liabilities and
Shareholders' Equity $2,192,441 $2,180,974
<PAGE> 4
MID AM, INC. Consolidated Statement of Earnings (Unaudited)
Three Mths Ended Six Mths Ended
(Dollars in thousands) June 30, June 30,
1997 1996 1997 1996
Interest Income
Int and fees on loans $36,253 $32,365 $71,195 $65,606
Int on deposits in banks 45 41 130 64
Int on federal funds sold 221 795 575 1,708
Int on taxable investments 5,336 6,704 10,971 12,708
Int on tax exempt investment 543 726 1,071 1,484
Total Interest Income 42,398 40,631 83,942 81,570
Interest Expense
Int on deposits 16,996 18,045 34,413 36,615
Int on borrowed funds 3,066 1,724 5,248 3,562
Total Interest Expense 20,062 19,769 39,661 40,177
Net Interest Income 22,336 20,862 44,281 41,393
Provision for credit losses 874 1,076 2,759 1,635
Net Interest Income After
Provision Credit Losses 21,462 19,786 41,522 39,758
Non-interest Income
Trust department 499 349 880 717
Service charge deposit acct 2,136 1,684 4,030 3,312
Mortgage banking 2,897 2,571 5,224 5,413
Brokerage commissions 1,661 2,960 3,141 6,460
Collection agency fees 1,322 1,008 2,564 2,022
Net gains (losses) on
sales of securities 78 461 (648) 786
Net gains on sales of
other loans 2,857 519 5,188 584
Other income 2,516 1,839 13,505 3,651
Total Non-interest Income 13,966 11,391 33,884 22,945
Non-interest Expense
Salaries/employee benefits 12,879 10,146 26,675 20,188
Net occupancy expense 1,393 1,284 2,765 2,575
Equipment expense 2,255 2,005 4,263 3,908
Other expenses 8,311 8,710 16,336 17,235
Total Non-interest Expense 24,838 22,145 50,039 43,906
Income before income taxes 10,590 9,032 25,367 18,797
Applicable income taxes 3,427 2,921 8,637 6,079
Net Income $ 7,163 $ 6,111 $16,730 $12,718
Net Income Available to
Common Shareholders $ 6,974 $ 5,500 $16,125 $11,468
Earnings per Common Share:
Primary $ .32 $ .26 $ .75 $ .55
Fully diluted $ .31 $ .25 $ .71 $ .52
<PAGE> 5
MID AM, INC. Consolidated Statement of Cash Flows (Unaudited)
Six Months Ended June 30,
1997 1996
(Dollars in thousands)
Operating Activities
Net income $ 16,730 $ 12,718
Adjustments to reconcile net
income to net cash provided
by operating activities:
Provision for credit losses 2,759 1,635
Provision for depreciation
and amortization of assets 5,053 4,599
Proceeds from sales of mortgage
and other loans held for sale 201,386 267,525
Mortgage and other loans
originated for sale (198,382) (257,251)
Net gains on sales of offices,
deposits and other assets (17,188) (5,186)
Increase in interest receivable
and other assets (4,697) (5,053)
(Decrease) increase in interest
payable and other liabilities (370) 810
Net Cash Provided By
Operating Activities 5,291 19,797
Investing Activities
Net decrease in interest-bearing
deposits in other banks 429 1,815
Net (increase) decrease in
federal funds sold (17,901) 55,643
Proceeds from sales of securities
available for sale 57,439 26,633
Proceeds from maturities and paydowns
of securities available for sale 38,966 44,461
Purchases of securities
available for sale (46,815) (34,812)
Proceeds from sales of loans 15,197 5,748
Net increase in loans (57,875) (57,081)
Proceeds from sales of
other real estate owned 558 413
Proceeds from sales of bank
premises and equipment 1,455 698
Purchases of bank premises
and equipment (9,155) (3,221)
Net Cash (Used For) Provided By
Investing Activities (17,702) 40,297
<PAGE> 6
MID AM, INC. Consolidated Statement of Cash Flows (Unaudited)
Six Months Ended June 30,
1997 1996
(Dollars in thousands)
Financing Activities
Cash transferred in connection
with the sale of branch deposits (84,927)
Net increase (decrease) in demand
deposits and savings accounts 6,474 (43,990)
Net increase (decrease) in
other time deposits 22,230 (12,982)
Net increase in short-term
borrowings 53,137 580
Repayment of capitalized lease
obligations and debt (6,650) (15,335)
Proceeds from issuance of
long-term debt 49,000
Preferred stock retired (21,801)
Proceeds from issuance of
common stock 388 303
Cash dividends paid (7,423) (7,279)
Treasury stock acquisitions,
fractional shares and other items (7,014) (9,184)
Net Cash Provided By (Used For)
Financing Activities 3,414 (87,887)
Net decrease in cash and
due from banks (8,997) (27,793)
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 $ 76,660 $ 74,807
Supplemental Schedule of Noncash
Investing and Financing Activities
Securitization of loans held for
sale and transferred to
securities available for sale $ 6,344 $ 53,198
Transfers from loans to other
real estate owned $ 1,112 $ 518
Loans on other real estate
owned sold $ 152
Unrealized gains (losses) on
securities available for sale $ 683 $ (8,498)
Adjustment to deferred tax 239 (2,975)
Adjustment to shareholders' equity $ 444 $ (5,523)
<PAGE> 7
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.
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.
<PAGE> 8
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 six months ended June 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.
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. 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
<PAGE> 9
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 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. Repurchase Program
On May 15, 1997, the Board of Directors of the Company
authorized management to undertake purchases of up to 1,500,000
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 1,100,000
shares of common stock. Under the 1996 authorization, the
Company reacquired approximately 426,000 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 June 30, 1997 the Company had
repurchased 199,526 shares of common stock pursuant to its 1997
repurchase program and repurchased 364,000 shares of preferred
stock also under the program which represented a common stock
equivalent 888,214 shares.
4. 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.
<PAGE> 10
5. Redemption of Preferred Stock
On May 1, 1997, the Company called for the redemption of all of
the outstanding shares of the $1.8125 Cumulative Convertible
Preferred Stock, Series A (Preferred Stock), as of June 26, 1997.
A total of 576,152 shares of the Preferred Stock were converted
into 1,405,829 shares of the Company's common stock prior to the
redemption date. The remaining shares were redeemed in
accordance with the terms of the Preferred Stock. As of June
30, 1997, no shares of Preferred Stock were outstanding.
<PAGE> 11
Item 2. - Management's Discussion and Analysis and Statistical
Information
Three Months Ended June 30, 1997 and 1996
Results of Operations
For the three months ended June 30, 1997, net income increased
$1,052,000 or 17% to $7,163,000 compared to $6,111,000 for the
same period in 1996. Primary and fully diluted earnings per
share for the second quarter of 1997 were $.32 and $.31,
respectively, compared to $.26 and $.25 for the same period in
the prior year. Return on average common equity (ROE) for the
second quarter of 1997 was 16.60% while return on average assets
(ROA) was 1.33%, as compared to ROE and ROA ratios of 14.08% and
1.14%, respectively, for the second quarter of 1996.
Net Interest Income
Net interest income increased $1,474,000 to $22,336,000 in the
second quarter of 1997 as compared to $20,862,000 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
June 30, 1997 was 4.55% compared to 4.28% 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 $160,910,000 or 11% from June 30, 1996.
The improvement in the net interest margin is also the result of
the sale of certain low-yielding securities 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 decreased $202,000 or 19% to
$874,000 in the second quarter of 1997 compared to $1,076,000 in
the second quarter of 1996. Net charge-offs were $872,000 or
0.22% (annualized) of average loans during the three months ended
June 30, 1997, compared to $1,047,000 or 0.29% (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.
<PAGE> 12
At June 30, 1997, the Company's allowance for credit losses
as a percentage of loans was 1.04% compared to 1.00% at
December 31, 1996 and 1.00% at June 30, 1996. At June 30,
1997, the Company's allowance for credit losses represented 261%
of non-performing loans as compared to 237% and 163% at December
31, 1996 and June 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. 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 June 30, Percentage
(Dollars in thousands) 1997 1996 Change
Non-Interest Income:
Trust department $ 499 $ 349 43%
Service charges on
deposit accounts 2,136 1,684 27
Mortgage banking 2,897 2,571 12
Brokerage commissions 1,661 2,960 (44)
Collection agency fees 1,322 1,008 31
Net gains on sales of
securities available for sale 78 461 (83)
Net gains on sales of
other loans 2,857 519 451
Credit card fees 500 486 3
International dept fees 296 240 23
ATM card fees 371 156 138
Other 1,349 957 41
Total non-interest income $13,966 $11,391 23
As seen from the above table, non-interest income is an
increasingly important source of revenue to the Company as it
continues to expand its offerings of non-bank-related financial
services. Non-interest income for the three months ended June
30, 1997, increased $2,575,000 or 23% to $13,966,000 compared to
$11,391,000 for the same period in 1996. The increase is due
primarily to an increase of $2,338,000 in net gains on sales of
other loans which ocurred primarily at Mid Am Credit Corp, the
Company's leasing and financing company. Other increases in
non-interest income for the second quarter of 1997 as compared to
the same period in 1996 was an increase of $452,000 or 27% in
service charges on deposits accounts from the Company's banking
<PAGE> 13
subsidiaries, an increase of $326,000 or 12% in mortgage banking,
an increase of $314,000 or 31% in collection agency fees and an
increase of $150,000 or 43% in trust department fee income.
Service charges on deposit accounts increased due to higher fees
and collection agency fees increased due to an increase in
commercial collection fees. Mortgage banking increased primarily
due to an increase in net gains on sales of loans due to the
higher volume of loans sales in the second quarter of 1997
compared to 1996 ($106,359,000 in 1997 compared to $98,489,000 in
1996) and improved spreads attributable to lower interest rates.
The increases in non-interest income was partially offset by a
decrease of $1,299,000 or 44% in brokerage commissions and a
decrease of $383,000 or 83% in net gains on sales of securities.
Brokerage commission income decreased primarily due to a decrease
in the number of registered representatives causing a lower
volume of business. Net gains on sales of securities decreased
due to a reduced volume in sales of securities from the available
for sale portfolio in the second quarter of 1997 compared to 1996
because of actions taken in the first quarter of 1997 to
reposition the Company's asset and liability mix at the time of
the sale of seven of its branches.
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 June 30, Percentage
(Dollars in thousands) 1997 1996 Change
Non-Interest Expense:
Salaries and employee benefits $12,879 $10,146 27%
Net occupancy expense 1,393 1,284 9
Equipment expense 2,255 2,005 13
Brokerage commissions 1,051 2,014 (48)
FDIC expense 110 315 (65)
Marketing 831 621 34
Franchise taxes 648 638 2
Telephone 674 520 30
Printing and supplies 602 596 1
Legal and other
professional fees 752 494 52
Credit card processing costs 579 391 48
Amortization of intangible
assets 333 400 (17)
Postage 406 401 1
Other 2,325 2,320
Total non-interest expense $24,838 $22,145 12
<PAGE> 14
For the three months ended June 30, 1997, non-interest expense
increased $2,693,000 or 12% to $24,838,000 compared with
$22,145,000 for the same period in 1996. Salaries and employee
benefits comprise the largest component of non-interest expense
and were 52% and 46% of total non-interest expense for the three
months ended June 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 second quarter of 1996, new
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 June 30,
1997 compared to the same period in 1996 because of the increase
in pre-tax income. Net occupancy expense and equipment expense
increased approximately 9% and 13%, respectively, 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 decreases in ticket charges from the
Company's brokerage clearing firms ($963,000) and FDIC premiums
($205,000). The decreases were partially offset by increases in
marketing ($210,000), legal and other professional fees
($258,000), credit card merchant processing fees which were
previously offset by credit card fee income from the portfolio
sold in the fourth quarter of 1996 ($188,000) and telephone
expense ($154,000).
Income Taxes
The provision for income taxes for the second quarter of 1997
increased $506,000 or 17% to $3,427,000 compared to $2,921,000
for the same period in 1996. The increase was due primarily to
higher pre-tax income and a slightly higher effective tax rate of
32.4% for the second quarter of 1997 as compared to 32.3% for the
same period in 1996.
Six Months Ended June 30, 1997 and 1996
Results of Operations
For the six months ended June 30, 1997, net income increased
$4,012,000 or 32% to $16,730,000 compared to $12,718,000 for the
same period in 1996. Primary and fully diluted earnings per
share for the first six months of 1997 were $.75 and $.71,
respectively, compared to $.55 and $.52 for the same period in
the prior year. Return on average common equity (ROE) for the
first six months of 1997 was 19.51% while return on average
assets (ROA) was 1.56%, as compared to ROE and ROA ratios of
14.57% and 1.18%, respectively, for the first six months of 1996.
<PAGE> 15
The Company's results for the first six 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 six months of 1997 net income, excluding the
gain and charges related to the branch sale and the additional
provision for credit losses, was $13,263,000, which represents a
return on average common equity and return on average assets of
15.31% and 1.24%, respectively.
Net Interest Income
Net interest income increased $2,888,000 to $44,281,000 in the
first six months of 1997 as compared to $41,393,000 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 six months ended June 30,
1997 was 4.52% compared to 4.23% 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 $134,324,000 or 9% from June 30, 1996.
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 $1,124,000 or 69% to
$2,759,000 in the first six months of 1997 compared to $1,635,000
in the first six 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 $1,677,000 or 0.21% (annualized) of average loans during the
six months ended June 30, 1997, compared to $1,776,000 or 0.24%
(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
<PAGE> 16
analysis of the loan portfolio (including the loan growth rate
and change in the mix of the loan portfolio) and general economic
conditions.
At June 30, 1997, the Company's allowance for credit losses
as a percentage of loans was 1.04% compared to 1.00% at
December 31, 1996 and 1.00% at June 30, 1996. At June 30,
1997, the Company's allowance for credit losses represented 261%
of non-performing loans as compared to 237% and 163% at December
31, 1996 and June 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.
Six months ended June 30, Percentage
(Dollars in thousands) 1997 1996 Change
Non-Interest Income:
Trust department $ 880 $ 717 23%
Service charges on
deposit accounts 4,030 3,312 22
Mortgage banking 5,224 5,413 (4)
Brokerage commissions 3,141 6,460 (51)
Collection agency fees 2,564 2,022 27
Net (losses) gains on sales of
securities available for sale (648) 786 (182)
Net gains on sales of
other loans 5,188 584 788
Credit card fees 988 963 3
International dept fees 531 451 18
ATM card fees 716 310 131
Gain on sale of branch offices 8,500
Other 2,770 1,927 44
Total non-interest income $33,884 $22,945 48
As seen from the above table, non-interest income is an
increasingly important source of revenue to the Company as it
continues to expand its offerings of non-bank-related financial
services. Non-interest income for the six months ended June 30,
1997, non-interest income increased $10,939,000 or 48% to
$33,884,000 compared to $22,945,000 for 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
<PAGE> 17
bank. Other increases in non-interest income for the first six
months of 1997 as compared to the same period in 1996 was an
increase of $4,604,000 in net gains on sales of loans from MACC,
the Company's leasing and financing company, an increase of
$718,000 or 22% in service charges on deposits accounts from the
Company's banking subsidiaries and an increase of $542,000 or 27%
in collection agency fees. Service charges on deposit accounts
increased due to higher fees and collection agency fees increased
due to an increase in commercial collection fees. The increases
in non-interest income was partially offset by a decrease of
$3,319,000 or 51% in brokerage commissions and a decrease of
$1,434,000 or 182% in net gains on sales of securities.
Brokerage commission income decreased primarily due to a decrease
in the number of registered representatives causing 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 enable 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.
Six months ended June 30, Percentage
(Dollars in thousands) 1997 1996 Change
Non-Interest Expense:
Salaries and employee benefits $26,675 $20,188 32%
Net occupancy expense 2,765 2,575 7
Equipment expense 4,263 3,908 9
Brokerage commissions 1,856 4,259 (56)
FDIC expense 232 739 (69)
Marketing 1,485 1,064 40
Franchise taxes 1,294 1,267 2
Telephone 1,320 1,014 30
Printing and supplies 1,137 1,090 4
Legal and other
professional fees 1,475 985 50
Credit card processing costs 1,098 765 44
Amortization of intangible
assets 1,177 797 48
Postage 842 823 2
Other 4,420 4,432
Total non-interest expense $50,039 $43,906 14
<PAGE> 18
For the six months ended June 30, 1997, non-interest expense
increased $6,133,000 or 14% to $50,039,000 compared with
$43,906,000 for 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 46% of total non-interest
expense for the six months ended June 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 second quarter
of 1996, new 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 six
months ended June 30, 1997 compared to the same period in 1996
because of the increase in pre-tax income. Net occupancy expense
and equipment expense increased approximately 7% and 9%,
respectively, 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 decreases in ticket
charges from the Company's brokerage clearing firms ($2,403,000)
and FDIC premiums ($507,000). The decreases were partially
offset by increases in marketing ($421,000), legal and other
professional fees ($490,000), credit card merchant processing
fees which were previously offset by credit card fee income from
the portfolio sold in the fourth quarter of 1996 ($333,000) and
telephone expense ($306,000).
Income Taxes
The provision for income taxes for the first six months of 1997
increased $2,558,000 or 42% to $8,637,000 compared to $6,079,000
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 six months of 1997 as compared to 32.3% 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. No significant incremental costs are
expected to be incurred in connection with this process. In
addition, management is also involved in a program to ensure that
<PAGE> 19
non-mainframe applications operating on local and wide area
networks and on personal computers will function properly in the
year 2000. The expected cost of this portion of the program is
not expected to be material and will represent primarily the
redeployment of existing information technology resources.
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 June 30, 1997 were federal funds sold of
$22,377,000, securities available for sale of $389,239,000 and
loans held for sale of $6,590,000. 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 June 30,
1997 dividends which can be paid to the Company by its bank
subsidiaries are limited to $10,024,000.
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
<PAGE> 20
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 $145,679,000, of which $94,405,000 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 June
30, 1997, the Company has borrowed $9,000,000 against the
available credit facility.
Cash and due from banks decreased by $8,997,000 during the six
months ended June 30, 1997 to $76,660,000 from $85,657,000 at
December 31, 1996. Cash and due from banks decreased primarily
due to decreases of approximately $7,900,000 in currency and
$3,900,000 in balances due from other banks, partially offset by
an increase of approximately $2,800,000 in checks in the process
of collection. Operating activities provided $5,291,000 of cash
in the six months ended June 30, 1997 as compared to cash
provided by operating activities of $19,797,000 for the same
period in 1996. For the six months ended June 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 $198,382,000 of mortgage and other loans in the six
months ended June 30, 1997, as compared to $257,251,000 for the
same period in 1996. The decrease in mortgage and other loan
originations was primarily due to a increase in market rates
during the first quarter of 1997 which led to a decrease in
refinancing and new mortgage activity. The lower mortgage
banking and financing activity in 1997 compared to 1996 resulted
in a decrease in the amount of cash required to fund mortgage and
other loans. The lower activity also resulted in a decrease in
volume of sales of mortgage and other loans providing cash (from
$267,525,000 in 1996 to $201,386,000 in 1997).
Cash of $17,702,000 was used for investing activities during the
six months ended June 30, 1997 compared to cash provided by
investing activities of $40,297,000 during the six months ended
June 30, 1996, a decrease in cash flows from investing
activities of $57,999,000. The primary reason for the decrease
in cash flows used for investing activities was the net increase
in federal funds sold in 1997 of $17,901,000 compared to a net
decrease of $55,643,000 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
<PAGE> 21
securities available for sale in 1997 of $96,405,000 compared to
$71,094,000 for the same period in 1996 was partially offset by
the increase of $12,003,000 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 six months
of 1997 was partially offset by the increase in proceeds from
sales of loans.
Cash provided by financing activities was $3,414,000 during the
six months ended June 30, 1997 as compared to $87,887,000 of cash
used for financing activities for the same period in 1996, an
increase in cash flows of $91,301,000. The primary reason for
the increase in cash flows provided by financing activities was
the increase in deposits of $85,676,000, the increase in short-
term borrowings of $52,557,000 and the proceeds of $49,000,000
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
$56,972,000 and by repayment of $15,335,000 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 June 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
<PAGE> 22
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 June 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 June 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 June 30,
1997, the Company's leverage ratio, Tier I, and combined Tier I
and Tier II (total capital) ratios were 9.00%, 10.87% and 11.91%,
respectively.
Capital ratios applicable to the Company's banking subsidiaries
at June 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 7.60 9.17 10.21
First National 8.08 10.39 10.97
AmeriCom 7.78 10.18 11.33
AmeriFirst 7.22 10.41 11.66
Adrian 6.72 9.47 10.66
The capital to asset ratios of the Company's non-bank
subsidiaries are significantly different than the bank
subsidiaries.
Asset Quality
At June 30, 1997, the Company's percentage of non-performing
loans (non-accrual loans and restructured loans) to total loans
was 0.40%, as compared to 0.42% at December 31, 1996 and 0.61% at
June 30, 1996. Non-performing loans at June 30, 1997 aggregated
$6,423,000, a decrease of $200,000 or 3% from December 31, 1996.
Accruing loans past due 90 days or more at June 30, 1997
aggregated $5,513,000, a decrease of $421,000 or 7% from December
<PAGE> 23
31, 1996. The Company's percentage of net charge-offs for the
six months ended June 30, 1997 and June 30, 1996 to average loans
outstanding were 0.21% (annualized) and 0.24% (annualized),
respectively. At June 30, 1997, the Company's allowance for
credit losses was 1.04% of total loans, as compared to 1.00% and
1.00% at December 31, 1996 and June 30, 1996, respectively. The
allowance for credit losses as a percentage of non-performing
loans at June 30, 1997 was 261% compared to 237% at December 31,
1996 and 163% at June 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 0.50% at June 30, 1997, compared to 0.49% and 0.66% at
December 31, 1996 and June 30, 1996, respectively. As of June
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 $6,191,000 or 0.38% of total loans
at June 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 $31,409,000
and $31,503,000 at June 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 June 30,
1997 and December 31, 1996, specific allocations of the
allowance for credit losses related to these loans aggregated
$1,881,000 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
<PAGE> 24
resolution of certain issues. One of the Banks has agreed to
settle its claim with the bankruptcy trustee. The settlement
agreement calls for payment to the settling bank of 78.5% of cash
collections of lease receivables up to a maximum of 78.5% of the
$1,100,000 current outstanding principal balance. Upon
consummation of the settlement, the Bank will make an appropriate
charge to its loan loss reserve, which is more than adequate to
absorb such charge. 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 June 30, 1997.
(Dollars in thousands)
Mid Am First
Bank National AmeriCom AmeriFirst Adrian
Loans:
Non-accrual $1,177 $1,446 $ 566 $2,563 $460
Restructured 0 141 70 0 0
Total
non-performing
loans 1,177 1,587 636 2,563 460
Other real
estate owned(1) 170 0 391 459 0
Total
non-performing
assets $1,347 $1,587 $1,027 $3,022 $460
Loans 90 days
or more past
due and not
on non-accrual $ 0 $1,910 $2,749 $ 647 $207
Non-performing
loans to
total loans 0.18 0.41 0.22 1.60 0.35
Non-performing
assets to total
loans plus
OREO 0.21 0.41 0.36 1.88 0.35
<PAGE> 25
Allowance for
credit losses
to total
non-performing
loans 651.66 147.13 504.87 84.71 297.17
Allowance for
credit losses
to total
non-performing
assets 569.41 147.13 312.66 71.84 297.17
Net charge-offs
to average loans
outstanding 0.37 0.04 0.08 0.33 0.03
Allowance for
credit losses
to total loans 1.19 0.60 1.12 1.36 1.04
Loans 90 days
or more past
due and not
on non-accrual
to total loans 0.00 0.49 0.96 0.40 0.16
(1) The parent company has $690,000 of other real estate owned at
June 30, 1997.
The following table sets forth the Company's allocation of the
allowance for credit losses as of June 30, 1997 and December 31,
1996.
(Dollars in thousands) June 30, 1997 December 31, 1996
Specific allowance
Real estate $ 253 $ 372
Commercial 2,818 2,974
Installment 176 250
Total specific allowance 3,247 3,596
General allowance
Real estate 336 233
Commercial 2,548 3,229
Installment 2,401 1,369
Other 506 1,106
Total general allowance 5,791 5,937
Unallocated allowance 7,716 6,139
Allowance for credit losses $16,754 $15,672
As of June 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
<PAGE> 26
determined that the allowance for credit losses is adequate to
absorb any future losses from the Bennett Funding Group leases.
The following table presents a summary of the Company's credit
loss experience for the six months ended June 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 225 290
Commercial, financial
and agricultural 1,312 1,114
Installment and credit card 755 1,461
Other 54 0
Total loans charged-off 2,346 2,865
Recoveries of loans previously
charged-off:
Real estate 59 204
Commercial, financial
and agricultural 254 476
Installment and credit card 336 388
Other 20 21
Total recoveries of loans 669 1,089
Net charge-offs 1,677 1,776
Addition to allowance
charged to expense 2,759 1,582
Balance of allowance at
end of period $16,754 $14,665
Net charge-offs to
average loans outstanding .21 .24
Allowance for credit losses
to total loans 1.04 1.00
Allowance for credit losses
to total non-performing
loans 260.84 162.98
Addition to allowance
charged to expense 1,582
Addition charged to expense
for loans sold with recourse 53
Total provision for
credit losses 1,635
<PAGE> 27
For the six months ended June 30, 1997, installment loans
charged-off decreased $706,000 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
One of the Company's non-bank subsidiaries, MFI Investments
Corp., is a co-defendant in several actions filed by customers of
a money manager not affiliated with the subsidiary who directed
business to that subsidiary. These suits were filed prior to the
subsidiary's merger with the Company. The suits seek recovery of
losses of approximately $2,700,000 plus punitive damages,
attorneys' fees and costs of litigation. In 1996, the litigation
was stayed and the parties entered into binding arbitration. The
arbitration proceedings were completed in July, 1997, and the
Company is awaiting the findings and decision to be rendered by
the arbitration panel. Due to the complexity of the issues,
management and the Company's legal counsel have been unable to
form an opinion as to the likely outcome of the arbitration;
accordingly, no provision for any liability that may result from
the resolution of these matters has been recorded. In the event
of an unfavorable outcome, the effect on the Company's results of
operations could be material. However, in connection with the
Company's acquisition of the subsidiary and this action, 169,701
of the Company's common shares are being held in escrow pending
resolution of the arbitration. Such shares will be returned to
the Company for any liability which may result from or for costs
incurred in defending the action.
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.
<PAGE> 28
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
Not applicable.
<PAGE> 29
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/ W. Granger Souder
W. Granger Souder
Executive Vice President / General Counsel
DATE: August 14, 1997
<PAGE> 30
MID AM, INC.
EXHIBIT INDEX
Exhibit No. Description Page Number
(1) Statement Re Computation of
Earnings Per Common Share 31
<PAGE> 31
EXHIBIT 1
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
Mid Am, Inc.
Computation of Primary Earnings per Share
Three Months Ended Six Months Ended
June 30, June 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 $7,163 $6,111 $16,730 $12,718
Less:
Preferred stock
dividends Series A 189 611 605 1,250
Net earnings applicable
to primary earnings
per share $6,974 $5,500 $16,125 $11,468
Reconciliation of
weighted average
number of shares to
amount used in
primary earnings per
share computation:
Average shares
outstanding 21,396 20,675 21,189 20,723
Average common
equivalent shares:
Assumed exercise
of options 336 320 322 294
Primary average
shares outstanding 21,732 20,995 21,511 21,017
Primary
earnings per share $0.32 $0.26 $0.75 $0.55
<PAGE> 32
Mid Am, Inc.
Computation of Fully Diluted Earnings per Share
Three Months Ended Six Months Ended
June 30, June 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 $7,163 $6,111 $16,730 $12,718
Less:
Preferred stock
dividends Series A -- -- -- --
Net earnings applicable
to fully diluted
earnings per share $7,163 $6,111 $16,730 $12,718
Reconciliation of
weighted average
number of shares to
amount used in fully
diluted earnings per
share computation:
Average shares
outstanding 21,396 20,675 21,189 20,723
Average common
equivalent shares:
Assumed exercise
of options 378 320 343 320
Assumed conversion
of preferred stock 1,568 3,328 2,023 3,387
Fully diluted average
shares outstanding 23,342 24,323 23,555 24,430
Fully diluted
earnings per share $0.31 $0.25 $0.71 $0.52
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Statement of Condition, the Consolidated Statement of Earnings and
Management's Discussion and Analysis and Statistical Information and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1997
<CASH> 76,660
<INT-BEARING-DEPOSITS> 1,202
<FED-FUNDS-SOLD> 22,377
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 395,829
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 1,615,579
<ALLOWANCE> 16,754
<TOTAL-ASSETS> 2,192,441
<DEPOSITS> 1,767,936
<SHORT-TERM> 145,942
<LIABILITIES-OTHER> 19,439
<LONG-TERM> 84,597
0
0
<COMMON> 75,370
<OTHER-SE> 99,157
<TOTAL-LIABILITIES-AND-EQUITY> 2,192,441
<INTEREST-LOAN> 71,195
<INTEREST-INVEST> 12,747
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 83,942
<INTEREST-DEPOSIT> 34,413
<INTEREST-EXPENSE> 5,248
<INTEREST-INCOME-NET> 44,281
<LOAN-LOSSES> 2,759
<SECURITIES-GAINS> (648)
<EXPENSE-OTHER> 50,039
<INCOME-PRETAX> 25,367
<INCOME-PRE-EXTRAORDINARY> 25,367
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,730
<EPS-PRIMARY> 0.75
<EPS-DILUTED> 0.71
<YIELD-ACTUAL> 4.52
<LOANS-NON> 6,212
<LOANS-PAST> 5,513
<LOANS-TROUBLED> 211
<LOANS-PROBLEM> 31,409
<ALLOWANCE-OPEN> 15,672
<CHARGE-OFFS> 2,346
<RECOVERIES> 669
<ALLOWANCE-CLOSE> 16,754
<ALLOWANCE-DOMESTIC> 9,038
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 7,716
</TABLE>
