UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
AMENDMENT NO. 1 TO 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 June 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ________________ to ________________
Commission file number 0-7515
MICHIGAN FINANCIAL CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Michigan 38-2011532
- ------------------------------- --------------------------
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification Number)
101 West Washington Street, Marquette, Michigan 49855
- ----------------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (906) 228-6940
Not applicable
- --------------------------------------------------------------------------------
(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 Sections 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 ___
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
CLASS Outstanding as of August 10, 1998
- ---------------------------------- ----------------------------------
Common Stock, no par value 6,170,968
- ---------------------------------- ----------------------------------
<PAGE>
MICHIGAN FINANCIAL CORPORATION
INDEX
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Statements of Income
Three and six months ended June 30, 1998 and 1997
The number (10) appearing in three months ended June 30, 1997 column
should appear in the six months ended June 30, 1998 column for Net investment
securities gains (losses). It had inadvertently been included in the three
months ended June 30, 1997 column.
Consolidated Statements of Cash Flows
Six months ended June 30, 1998 and 1997
The number (16,015) appearing in the six months ended 1998 column
should appear in the six months ended June 30, 1997 column for Decrease in
federal funds purchased. It had inadvertently been included in the six months
ended June 30, 1998 column.
Signatures
The signature page is attached.
<PAGE>
PART I. FINANCIAL INFORMATION
MICHIGAN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31, June 30,
1998 1997 1997
---------- ----------- ----------
(dollars in thousands)
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 35,041 $ 33,208 $ 35,169
Short-term investments:
Federal funds sold 49,200 14,300 2,800
Money market investments 2,474 1,791 356
Investment securities:
Available for sale 79,918 76,981 93,511
Held to maturity 6,672 10,952 13,530
Loans 615,022 635,492 622,655
Allowance for loan losses (9,502) (9,533) (8,698)
---------- ---------- ----------
NET LOANS 605,520 625,959 613,957
Premises and equipment 25,812 25,397 25,540
Accrued interest receivable 5,047 5,326 5,527
Other assets 12,541 10,482 9,678
---------- ---------- ----------
$ 822,225 $ 804,396 $ 800,068
========== ========== ==========
LIABILITIES
Noninterest bearing deposits $ 69,424 $ 69,687 $ 72,807
Interest bearing deposits 640,922 625,116 623,764
---------- ---------- ----------
TOTAL DEPOSITS 710,346 694,803 696,571
Federal Home Loan Bank advances 3,000 5,000 2,000
Accrued interest payable 3,222 3,309 3,018
Other liabilities 10,156 8,593 9,057
---------- ---------- ----------
TOTAL LIABILITIES 726,724 711,705 710,646
STOCKHOLDERS' EQUITY
Common stock, no par value:
Authorized shares - 10,000,000
Shares issued and outstanding - 6,170,968 in 1998
and 5,877,601 in 1997 35,684 25,050 25,050
Retained earnings 59,803 67,693 64,554
Accumulated other comprehensive income 14 (52) (182)
---------- ---------- ----------
TOTAL STOCKHOLDERS' EQUITY 95,501 92,691 89,422
---------- ---------- ----------
$ 822,225 $ 804,396 $ 800,068
========== ========== ==========
</TABLE>
See notes to consolidated financial statements.
2
<PAGE>
MICHIGAN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30 June 30
1998 1997 1998 1997
---------- ---------- ---------- ----------
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Interest income:
Loans, including fees $ 14,874 $ 14,833 $ 29,812 $ 29,042
Investment securities:
Taxable 1,192 1,433 2,337 2,895
Tax-exempt 95 168 222 370
Short-term investments 764 121 1,332 187
---------- ---------- ---------- ----------
TOTAL INTEREST INCOME 16,925 16,555 33,703 32,494
Interest expense:
Deposits 6,862 6,458 13,604 12,568
Borrowings 48 28 119 119
---------- ---------- ---------- ----------
TOTAL INTEREST EXPENSE 6,910 6,486 13,723 12,687
---------- ---------- ---------- ----------
NET INTEREST INCOME 10,015 10,069 19,980 19,807
Provision for loan losses 218 454 600 658
---------- ---------- ---------- ----------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 9,797 9,615 19,380 19,149
Noninterest income:
Trust department income 1,198 1,092 2,384 2,177
Fees for other customer services 998 941 1,928 1,771
Net gains on sale of loans 671 183 1,117 330
Net investment securities gains (losses) 30 (10)
Other 609 455 1,340 872
---------- ---------- ---------- ----------
3,506 2,671 6,759 5,150
---------- ---------- ---------- ----------
13,303 12,286 26,139 24,299
Noninterest expenses:
Salaries and employee benefits 4,966 4,645 9,871 9,339
Net occupancy 677 643 1,362 1,357
Furniture and equipment 521 488 1,031 970
Data processing 469 441 861 858
Advertising 328 345 662 637
Other 2,108 2,033 4,318 3,973
---------- ---------- ---------- ----------
9,069 8,595 18,105 17,134
---------- ---------- ---------- ----------
Income before income tax expense 4,234 3,691 8,034 7,165
Income tax expense 1,376 1,155 2,568 2,206
---------- ---------- ---------- ----------
NET INCOME $ 2,858 $ 2,536 $ 5,466 $ 4,959
========== ========== ========== ==========
Per share data:
Basic earnings $ .46 $ .41 $ .89 $ .80
Diluted earnings .46 .41 .88 .80
Dividends paid .22 .18 .44 .36
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
MICHIGAN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30 June 30
1998 1997 1998 1997
--------- --------- --------- ---------
(in thousands)
<S> <C> <C> <C> <C>
Net income $ 2,858 $ 2,536 $ 5,466 $ 4,959
Other comprehensive income (expense):
Unrealized gains (losses) on securities -
Unrealized holding gains (losses) arising
during period (14) 867 92 158
Reclassification adjustment for (gains)
losses included in net income (30) 10
--------- --------- --------- ---------
Other comprehensive income (expense)
before income tax (44) 867 102 158
Income tax expense (credit) related to items
of other comprehensive income (15) 303 36 55
--------- --------- --------- ---------
COMPREHENSIVE INCOME $ 2,829 $ 3,100 $ 5,532 $ 5,062
========= ========= ========= =========
</TABLE>
4
<PAGE>
MICHIGAN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six months ended
June 30
1998 1997
---------- ----------
<S> <C> <C>
OPERATING ACTIVITIES (in thousands)
Net income $ 5,466 $ 4,959
Adjustments to reconcile net income to net
cash provided by operating activities:
Origination of mortgage loans held for sale (50,668) (10,800)
Proceeds from sale of mortgage loans held for sale 47,922 12,134
Realized gain on sale of loans (1,117) (330)
Depreciation and amortization 1,108 1,027
Provision for loan losses 600 658
Other (595) 1,092
(Increase) decrease in interest receivable 279 (319)
Increase (decrease) in interest payable (87) 248
Net (accretion) amortization of investment securities (20) 41
Realized investment securities losses 10
---------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 2,898 8,710
INVESTING ACTIVITIES
Net increase in short-term investments (35,583) (2,871)
Purchases of available for sale securities (30,987) (3,988)
Proceeds from calls and maturities of available for sale securities 27,342 12,553
Net (increase) decrease in loans 23,702 (25,384)
Proceeds from calls and maturities of held to maturity securities 4,269 5,132
Purchases of premises and equipment (1,472) (1,851)
Proceeds from sale of available for sale securities 831
Proceeds from sale of premises and equipment 12 11
---------- ----------
NET CASH USED BY INVESTING ACTIVITIES (11,886) (16,398)
FINANCING ACTIVITIES
Net increase in deposits 15,543 20,463
Cash dividends (2,722) (2,253)
Federal Home Loan Bank advances (2,000) 2,000
Decrease in federal funds purchased (16,015)
---------- ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 10,821 4,195
INCREASE (DECREASE) IN CASH AND DUE FROM BANKS 1,833 (3,493)
---------- ----------
Cash and due from banks at beginning of year 33,208 38,662
---------- ----------
CASH AND DUE FROM BANKS AT END OF PERIOD $ 35,041 $ 35,169
========== ==========
</TABLE>
See notes to consolidated financial statements.
5
<PAGE>
MICHIGAN FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions to Form 10-Q, and therefore do not include
all of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting only of normal recurring accruals) considered necessary
for a fair presentation have been reflected in the financial statements.
However, the results of operations for the three and six month periods ended
June 30, 1998 and 1997 are not necessarily indicative of the results to be
expected for the full year.
For further information, refer to the consolidated financial statements and
foot-notes included in the Company's annual report on Form 10-K for the year
ended December 31, 1997.
NOTE B - INVESTMENT SECURITIES
A comparison of the carrying amount and approximate market value follows:
June 30, 1998 December 31, 1997
----------------------- -----------------------
Amortized Approximate Amortized Approximate
Cost Market Value Cost Market Value
--------- ------------ --------- ------------
(in thousands)
Available for Sale
U.S. Treasury and
government agencies $65,905 $65,885 $58,922 $58,883
Mortgage-backed securities 10,031 10,059 14,293 14,246
Other securities 3,961 3,974 3,847 3,852
------- ------- ------- -------
TOTAL $79,897 $79,918 $77,062 $76,981
======= ======= ======= =======
Held to Maturity
State and political
subdivisions $ 6,672 $ 6,745 $10,952 $11,054
======= ======= ======= =======
6
<PAGE>
NOTE C - EARNINGS PER SHARE
A reconciliation of the numerators and denominators of the earnings per share
computations is presented below. Weighted-average share amounts are presented in
thousands.
Three months ended Six months ended
June 30 June 30
1998 1997 1998 1997
---- ---- ---- ----
Basic Earnings Per Share
Net income $2,858 $2,536 $5,466 $4,959
====== ====== ====== ======
Weighted-average common shares
outstanding 6,171 6,171 6,171 6,171
===== ===== ===== =====
Basic Earnings Per Share $.46 $.41 $.89 $.80
==== ==== ==== ====
Diluted Earnings Per Share
Net income $2,858 $2,536 $5,466 $4,959
====== ====== ====== ======
Weighted-average common shares
outstanding 6,171 6,171 6,171 6,171
Add dilutive effects of assumed
exercises under stock options 55 8 40 9
----- ----- ------ ------
Weighted-average common and dilutive
potential common shares outstanding 6,226 6,179 6,211 6,180
===== ===== ===== =====
Diluted Earnings Per Share $.46 $.41 $.88 $.80
==== ==== ==== ====
NOTE D - COMPREHENSIVE INCOME
Under a new accounting standard, comprehensive income is now reported for all
periods. Comprehensive income includes both net income and other comprehensive
income. Other comprehensive income consists of the change in unrealized gains
and losses on investment securities available for sale.
NOTE E - STOCK DIVIDEND
On June 20, 1998, the Company issued 293,367 shares of common stock as a 5%
stock dividend. These shares had a value of $10,634,000 at the date of issuance.
References to the number of shares of common stock in the financial statements
and all per share data have been adjusted for the stock dividend.
7
<PAGE>
NOTE F - RECLASSIFICATIONS
Certain amounts in 1997 have been reclassified to conform with the
classifications in 1998.
8
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit (27) Financial Data Schedule - The required financial data schedule
is filed as Exhibit 27 at page 16 of this report.
(b) Reports on Form 8-K - There were no reports on Form 8-K filed for the three
months ended June 30, 1998
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.
Michigan Financial Corporation
---------------------------------------
(Registrant)
Dated: August 24, 1998 /s/ HOWARD L. COHODAS
--------------------- ---------------------------------------
Howard L. Cohodas, Chairman
& President
(Chief Executive Officer)
Dated: August 24, 1998 /s/ KENNETH F. BECK
--------------------- ---------------------------------------
Kenneth F. Beck, Senior Vice President,
Treasurer & Secretary
(Chief Financial Officer and
Chief Accounting Officer)
15
