UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For quarter ended June 30, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-10602
MID-AMERICA BANCORP
(Exact name of registrant as specified in its charter)
KENTUCKY 61-1012933
(State or other jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
500 West Broadway, Louisville, Kentucky 40202
(Address of principal executive offices) (Zip Code)
(502) 589-3351
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for a shorter period that
the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under
a plan confirmed by a court.
Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
August 1, 1997: 9,514,345 shares of common stock, no par value
MID-AMERICA BANCORP
PART I. FINANCIAL INFORMATION
The consolidated financial statements of Mid-America Bancorp and
subsidiaries (Company) submitted herewith are unaudited. However, in the
opinion of management, all adjustments (consisting only of adjustments
of a normal recurring nature) necessary for a fair presentation of the
results for the interim periods have been made.
ITEM 1. FINANCIAL STATEMENTS
The following consolidated financial statements of the Company are
submitted herewith:
Consolidated balance sheets - June 30, 1997 and December 31, 1996
Consolidated statements of income - three and six months ended
June 30, 1997 and 1996
Consolidated statements of changes in shareholders' equity -
six months ended June 30, 1997 and 1996
Consolidated statements of cash flows - six months ended June
30, 1997 and 1996
Notes to consolidated financial statements
MID-AMERICA BANCORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share data) (Unaudited)
<TABLE>
<CAPTION>
June 30 December 31
----------- -----------
1997 1996
ASSETS ----------- -----------
<S> <C> <C>
Cash and due from banks $32,277 $30,884
Federal funds sold 36,700 20,200
Securities purchased under agreements to resell 140,000 110,000
Securities available for sale, amortized cost
of $345,726 (1997) and $333,681 (1996) (Note 3) 348,613 336,118
Securities held to maturity, market value
of $20,754 (1997) and $75,751 (1996) (Note 3) 20,633 75,555
Loans, net of unearned income of $13,555 (1997)
and $15,916 (1996) 808,281 804,182
Allowance for loan losses (Note 4) (9,057) (9,167)
----------- -----------
Loans, net 799,224 795,015
Premises and equipment 20,610 21,451
Other assets 38,584 31,710
----------- -----------
TOTAL ASSETS $1,436,641 $1,420,933
=========== ===========
LIABILITIES
Deposits:
Non-interest bearing $204,673 $127,703
Interest bearing 701,520 697,554
----------- -----------
Total deposits 906,193 825,257
Securities sold under agreements to repurchase 231,502 285,948
Federal funds purchased 1,000 4,000
Advances from the Federal Home Loan Bank 66,601 69,042
Money orders and similar payment
instruments outstanding 54,348 76,533
Accrued expenses and other liabilities 29,134 19,515
----------- -----------
TOTAL LIABILITIES 1,288,778 1,280,295
SHAREHOLDERS' EQUITY
Preferred stock, no par value;
authorized - 750,000 shares; none issued -- --
Common stock, no par value, stated value $2.77 per
share; authorized - 12,000,000 shares; issued
and outstanding - 9,510,176 shares (1997)
and 9,425,803 shares (1996) 26,378 26,144
Additional paid-in capital 106,035 104,932
Retained earnings 13,613 8,093
Unrealized appreciation on securities
available for sale, net of taxes 1,876 1,585
Pension liability adjustment, net of taxes (39) (116)
----------- -----------
TOTAL SHAREHOLDERS' EQUITY 147,863 140,638
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,436,641 $1,420,933
=========== ===========
See notes to consolidated financial statements.
/TABLE
<PAGE>
MID-AMERICA BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share data) (Unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30 June 30
------------------ ------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans $19,040 $18,119 $37,878 $36,034
Interest and dividends on:
Taxable securities 4,974 4,432 9,791 8,822
Tax-exempt securities 670 259 1,265 467
Interest on federal funds sold 378 485 668 931
Interest on securities purchased under
agreements to resell 1,558 1,728 3,409 3,328
-------- -------- -------- --------
Total interest income 26,620 25,023 53,011 49,582
-------- -------- -------- --------
INTEREST EXPENSE:
Interest on deposits 7,935 7,461 15,835 14,936
Interest on federal funds purchased
and securities sold under
agreements to repurchase 3,418 3,363 6,962 6,475
Interest on Federal Home
Loan Bank advances 1,031 1,118 2,084 2,259
-------- -------- -------- --------
Total interest expense 12,384 11,942 24,881 23,670
-------- -------- -------- --------
Net interest income before
provision for loan losses 14,236 13,081 28,130 25,912
Provision for loan losses (Note 4) -- 104 -- 104
-------- -------- -------- --------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 14,236 12,977 28,130 25,808
-------- -------- -------- --------
NON-INTEREST INCOME:
Income from trust department 240 231 525 499
Service charges on deposit accounts 1,206 1,110 2,415 2,186
Money order fees 636 1,003 1,310 1,959
Securities gains (losses) (8) 8 68 1,176
Other 946 679 2,050 1,432
-------- -------- -------- --------
Total non-interest income 3,020 3,031 6,368 7,252
-------- -------- -------- --------
OTHER OPERATING EXPENSES:
Salaries and employee benefits 6,416 6,279 12,572 12,498
Occupancy expense 721 713 1,491 1,469
Furniture and equipment expenses 1,042 1,210 2,218 2,430
Other (Note 5) 2,407 2,231 4,997 4,720
-------- -------- -------- --------
Total other operating expenses 10,586 10,433 21,278 21,117
-------- -------- -------- --------
Income before income taxes 6,670 5,575 13,220 11,943
Income tax expense 2,065 1,868 4,098 3,919
-------- -------- -------- --------
NET INCOME $4,605 $3,707 $9,122 $8,024
======== ======== ======== ========
PRIMARY NET INCOME PER
COMMON SHARE (Note 2) $0.47 $0.39 $0.94 $0.84
======== ======== ======== ========
FULLY DILUTED NET INCOME
PER COMMON SHARE (Note 2) $0.47 $0.39 $0.94 $0.84
======== ======== ======== ========
Weighted Average Equivalent
Shares Outstanding (Note 2) 9,779 9,494 9,754 9,493
======== ======== ======== ========
See notes to consolidated financial statements.
/TABLE
<PAGE>
MID-AMERICA BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Unaudited)
<TABLE>
<CAPTION> Six months
ended June 30
----------------------
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES: ---------- ----------
<S> <C> <C>
Net income $9,122 $8,024
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation, amortization and accretion, net 2,007 1,716
Provision for loan losses -- 104
Federal Home Loan Bank stock dividend (512) (470)
Gain on sales of securities (68) (1,176)
Gain on sales of other real estate
and provision for real estate losses, net (55) (38)
Deferred taxes (434) (1,690)
Increase in interest receivable (470) (453)
Increase in other assets (7,033) (5,980)
Decrease in money orders and similar
payment instruments outstanding (22,185) (21,708)
Increase in other liabilities 1,996 2,179
---------- ----------
Net cash used in operating activities (17,632) (19,492)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of securities available for sale (72,217) (88,526)
Proceeds from maturities of
securities available for sale 49,767 35,081
Proceeds from sales of securities available for sale 22,710 32,793
Purchases of securities held to maturity (9,386) (2,012)
Proceeds from maturities of securities held to maturity 60,000 54,725
Proceeds from sales of other real estate 745 3,650
Increase in customer loans (4,218) (30,306)
Proceeds from sales of premises and equipment 152 87
Payments for purchases of premises and equipment (661) (2,496)
---------- ----------
Net cash provided by investing activities 46,892 2,996
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits 80,936 125,411
Net decrease in securities sold
under agreements to repurchase (54,446) (29,013)
Net increase (decrease) in federal funds purchased (3,000) 1,250
Repayment of advances from the Federal Home Loan Bank (2,441) (2,524)
Stock options exercised 1,185 490
Dividends paid (3,601) (2,916)
---------- ----------
Net cash provided by financing activities 18,633 92,698
---------- ----------
Net increase in cash and cash equivalents 47,893 76,202
Cash and cash equivalents at January 1 161,084 164,162
---------- ----------
Cash and cash equivalents at June 30 $208,977 $240,364
========== ==========
See notes to consolidated financial statements.
/TABLE
<PAGE>
MID-AMERICA BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(In thousands except per share data) (Unaudited)
<TABLE>
<CAPTION>
Six months ended
June 30
----------------------
1997 1996
---------- ----------
<S> <C> <C>
Balance, January 1 $140,638 $132,950
Net income 9,122 8,024
Cash dividends declared - $.38 (1997)
and $.31 (1996) per share (3,601) (2,916)
Stock options exercised, including related tax benefits 1,336 508
Unrealized appreciation (depreciation) on securities
available for sale, net of taxes 291 (4,554)
Pension liability adjustment, net of taxes 77 --
---------- ----------
Balance, June 30 $147,863 $134,012
========== ==========
See notes to consolidated financial statements.
/TABLE
<PAGE>
MID-AMERICA BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1.The accounting and reporting policies of Mid-America Bancorp and
its subsidiaries (the Company) conform with generally accepted
accounting principles and general practices within the banking
industry. The accompanying unaudited consolidated financial statements
should be read in conjunction with the Summary of Significant Accounting
Policies footnote which appears in the Company's 1996 Annual Report and
Form 10-K filed with the Securities and Exchange Commission.
2.Appropriate share information in the consolidated financial statements
has been adjusted for the 3% stock dividend of November 1996.
3.The amortized cost and market value of securities available for
sale are summarized as follows:
<TABLE>
<CAPTION>
June 30, 1997 December 31, 1996
-------------------- --------------------
In thousands Amortized Market Amortized Market
Cost Value Cost Value
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
U.S. Treasury and
U.S. government agencies $109,096 $109,641 $147,230 $148,300
Collateralized mortgage obligations 151,985 153,037 100,308 100,754
States and political subdivisions 49,795 51,092 40,697 41,604
Corporate obligations 17,842 17,835 28,811 28,825
Equity securities 17,008 17,008 16,635 16,635
--------- --------- --------- ---------
$345,726 $348,613 $333,681 $336,118
========= ========= ========= =========
</TABLE>
The amortized cost and market value of securities held to maturity are
summarized as follows:
<TABLE>
<CAPTION>
June 30, 1997 December 31, 1996
-------------------- --------------------
In thousands Book Market Book Market
Value Value Value Value
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
U.S. Treasury and
U.S. government agencies $20,533 $20,654 $75,455 $75,651
Corporate obligations 100 100 100 100
--------- --------- --------- ---------
$20,633 $20,754 $75,555 $75,751
========= ========= ========= =========
</TABLE>
4.Allowance for Loan Losses - Changes in the allowance for loan losses
are as follows:
<TABLE>
<CAPTION>
June 30, December 31,
In thousands 1997 1996
--------- ---------
<S> <C> <C>
Balance, January 1 $9,167 $9,318
Provision for loan losses -- 414
Recoveries 109 460
Loans charged-off (219) (1,025)
--------- ---------
Balance, end of period $9,057 $9,167
========= =========
</TABLE>
5.Other operating expenses consists of the following:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
In thousands June 30 June 30
-------------------- --------------------
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Advertising and marketing $521 $289 $882 $513
Operating supplies 372 385 1,027 744
Professional fees 279 378 503 617
Taxes - Bank, property and other 409 407 836 771
Other 827 772 1,749 2,075
--------- --------- --------- ---------
$2,408 $2,231 $4,997 $4,720
========= ========= ========= =========
</TABLE>
6.On January 1, 1997, the Company implemented Statement of Financial
Accounting Standard ("SFAS") No. 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of Liabilities."
Under this standard, accounting for transfers and servicing of
financial assets and extinguishments of liabilities is based on
control. After a transfer of financial assets, an entity recognizes
the financial and servicing assets it controls and the liabilities it
has incurred, derecognizes financial assets when control has been
surrendered and derecognizes liabilities when extinguished. The
implementation of SFAS No. 125 did not have a material effect on the
Company's financial statements.
ITEM II. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This item discusses the results of operations for Mid-America
Bancorp and its subsidiaries for the three and six months ended June 30,
1997 and compares those periods with the same periods of the previous
year. In addition, the discussion describes the significant changes in
the financial condition of the Company that have occurred between
December 31, 1996 and June 30, 1997. This discussion should be read in
conjunction with the consolidated financial statements and accompanying
notes presented in Part I, Item 1 of this report.
A. RESULTS OF OPERATIONS
Net income for the six months ended June 30, 1997 was $9,122,000 or
$0.94 per share, compared to $8,024,000 or $0.84 per share for the six
months ended June 30, 1996. Net income for the second quarter of 1997
was $4,605,000 or $0.47 per share. Net income for the second quarter of
1996 was $3,707,000 or $0.39 per share.
Net income for the six months ended June 30, 1997, when compared to
the same period in 1996, increased 13.7% and net income per share
increased 11.9%. For the second quarter of 1997 compared to the second
quarter of 1996, net income increased 24.2% and net income per share
increased 20.5%. Excluding the effects of securities transactions in
each period, the six month increase in net income was 25% and the second
quarter increase was 24.3%. The Company's results for the quarter and
year-to-date periods ended June 30, 1997, compared to the same periods
in 1996, reflect a strong increase in the level of core earnings and
include the following:
*Increased net interest income resulting primarily from increases
in average earning assets.
*Year-to-date securities gains of $68,000 in 1997, and $1,176,000
in 1996.
*Increases in non-interest income, excluding the decline in money
order fees and securities transactions, of 18% and 21% for the
quarter and year-to-date, respectively.
*Insignificant proportional increases in other operating expenses.
Net Interest Income
Net interest income is the difference between interest earned on
earning assets and interest expensed on interest bearing liabilities.
The net interest spread is the difference between the average yield on
earning assets and the average rate on interest bearing liabilities. The
net yield on earning assets (interest margin) is net interest income
divided by average earning assets. The following table summarizes the
above for the three and six months ended June 30, 1997 and 1996.
In thousands except percentages
Three Months Ended Six Months Ended
June 30 June 30
-------------------- --------------------
1997 1996 1997 1996
-------- -------- -------- --------
Total interest income $26,620 $25,023 $53,011 $49,582
Tax equivalent adjustment 446 354 872 689
------- ------- ------- -------
Tax equivalent interest income 27,066 25,377 53,883 50,271
Total interest expense 12,384 11,942 24,881 23,670
------- ------- ------- -------
Tax equivalent net interest income $14,682 $13,435 $29,002 $26,601
======= ======= ======= =======
Average rate on earning assets 8.35% 8.25% 8.29% 8.26%
Average rate on
interest bearing liabilities 4.78% 4.77% 4.79% 4.80%
Net interest spread, annualized 3.57% 3.48% 3.50% 3.46%
Net interest margin, annualized 4.53% 4.37% 4.46% 4.37%
Average earning assets $1,300,442 $1,232,663 $1,312,102 $1,222,505
Average interest
bearing liabilities $1,038,485 $1,004,132 $1,047,533 $988,383
Net interest income on a tax equivalent basis increased $1,247,000
or 9.3% for the quarter and $2,401,000 or 9.0% for the year-to-date,
resulting primarily from volume increases. During the three and six
month periods of 1997, average earning assets increased 5.5% and 7.3%,
respectively, compared to the prior year's periods. The net interest
spread and margin both improved for the three month and year-to-date
periods as asset yields increased slightly while liability costs were
relatively stable.
Provision for Loan Losses
The allowance for loan losses is maintained at a level adequate to
absorb estimated probable credit losses. Management determines the
adequacy of the allowance based upon reviews of individual credits,
evaluation of the risk characteristics of the loan portfolio, including
the impact of current economic conditions on the borrowers' ability to
repay, past collection and loss experience and such other factors, which,
in management's judgement, deserve current recognition. Based on this
process, the allowance for loan losses was considered adequate and no
provision for loan losses was considered necessary in 1997. See "Non-
Performing Loans and Assets". The allowance for loan losses is
established by charges to operating earnings.
An analysis of the changes in the allowance for loan losses and
selected ratios follows:
Dollars in thousands Six Months Ended
June 30
------------------
1997 1996
------- -------
Balance at January 1 $9,167 $9,318
Provision for loan losses -- 104
Loan charge-offs, net (110) (26)
------- -------
Balance June 30 $9,057 $9,396
======= =======
Average loans, net of unearned income $797,150 $754,324
Provision for loan losses to average loans -- 0.01%
Allowance for loan losses to average loans 1.14% 1.25%
Allowance for loan losses to period-end loans 1.12% 1.23%
Non-interest Income and Other Operating Expenses
The following table sets forth the major components of non-interest income
and other operating expenses for the three and six months ended June 30, 1997
and 1996:
Three months ended Six months ended
Dollars in thousands June 30 June 30
---------------------- ----------------------
1997 1996 Incr 1997 1996 Incr
(Decr) (Decr)
------ ------ ------ ------ ------ ------
Non-Interest Income:
Income from trust department $240 $231 $9 $525 $499 $26
Service charges on
deposit accounts 1,206 1,110 96 2,415 2,186 229
Money order fees 636 1,003 (367) 1,310 1,959 (649)
Securities gains (losses) (8) 8 (16) 68 1,176 (1,108)
Other 946 679 267 2,050 1,432 618
------ ------ ------ ------ ------ ------
Total non-interest income $3,020 $3,031 ($11) $6,368 $7,252 ($884)
====== ====== ====== ====== ====== ======
Other Operating Expenses:
Salaries and
employee benefits $6,416 $6,279 $137 $12,572 $12,498 $74
Occupancy expenses 720 713 7 1,491 1,469 22
Furniture and
equipment expenses 1,042 1,210 (168) 2,218 2,430 (212)
Advertising and marketing 521 289 232 882 513 369
Operating supplies 372 385 (13) 1,027 744 283
Professional fees 279 378 (99) 503 617 (114)
Taxes-Bank, property
and other 409 407 2 836 771 65
Other 827 772 55 1,749 2,075 (326)
------ ------ ------ ------ ------ ------
Total other operating expenses $10,586 $10,433 $153 $21,278 $21,117 $161
====== ====== ====== ====== ====== ======
The level of non-interest income for the quarter and six month
periods reflect a decline in money order fees as a result of the reduced
agent base subsequent to the Western Union program agent base sale in the
third quarter of 1996. Excluding the decline in money order fees and
securities gains and losses, non-interest income for the three and six
month periods in 1997 reflect increases of 18% and 21%, respectively,
over comparable periods in 1996. These increases were achieved from
increased fees and other revenue from the expanding retail customer base,
and fees from new products and services. The level of non-interest
income should be further enhanced in subsequent periods as a result of
the expansion of the Personal Trust Department in May 1997 with the
addition of six seasoned and locally recognized Trust officers.
Other operating expenses during the quarter and six month periods
increased by insignificant proportions as a result of Company-wide
expense control efforts. The level of other operating expenses was
favorably impacted by the reduction in full time equivalent employees
from 674 in June 1996 to 627 in June 1997. Also, furniture and equipment
expenses in both periods declined as a result of lower depreciation and
maintenance associated with the money order operation subsequent to the
agent base sale in 1996. Individually significant increases in other
operating expenses related to advertising, marketing and supply costs
attributed to the Company's efforts to increase market share. The other
category of other operating expenses was favorably impacted by the
$44,000 and $199,000 decline in uncollectible money order fees for the
second quarter and the first six months of 1997, respectively.
Income Taxes
The Company had income tax expense of $2,065,000 for the second
quarter of 1997 compared to $1,868,000 for the same period in 1996. The
year-to-date tax expense and effective tax rate were $4,098,000 and 31.0%
for 1997, respectively and $3,919,000 and 32.8% for 1996, respectively.
The decrease in the effective rate is attributable to the increased level
of tax free income resulting from the increase in tax free securities.
B. FINANCIAL CONDITION
Total Assets
Total assets increased approximately $16 million from December 31,
1996 to June 30, 1997, while average assets increased $21 million or 1.5%
to $1,365,189,000 for the second quarter of 1997 compared to the last
quarter of 1996. During the three and six month periods ended June 30,
1997 average earning assets increased approximately $68 million and $90
million respectively, compared to the prior year periods. Average
earning asset growth was funded primarily from increases in average
retail deposit products during the periods. For the six months ended
June 30, 1997 compared to the first six months of 1996 average asset
growth included increases in average commercial loans of $13 million,
increases in average retail loans of $30 million, and increases in the
average securities portfolio of $55 million. For the second quarter of
1997 compared to 1996, average retail loans increased $32 million,
average commercial loans increased $6 million and the securities
portfolio's average was up $56 million. The average commercial loan
increase for the second quarter was impacted by over $25 million of pay-
offs in March 1997.
Nonperforming Loans and Assets
A summary of non-performing loans and assets follows:
Dollars in thousands June 30, 1997 December 31, 1996
------------- -----------------
Loans accounted for on a non-
accrual basis $2,123 $3,424
Loans contractually past due
ninety days or more as to
interest or principal
payments 822 925
-------- --------
Total non-performing loans 2,945 4,349
Other real estate held for sale 8,879 9,577
-------- --------
Total non-performing assets $11,824 $13,926
======== ========
Non-performing loans to total
loans .36% .54%
Non-performing assets to total
assets .82% .98%
Allowance for loan losses to
non-performing loans 308% 211%
Loans classified as impaired at June 30, 1997 aggregated $2,123,000
and included all non-accrual loans. At December 31, 1996, impaired loans
aggregated $3,424,000.
Other real estate aggregated $8.9 million at June 30, 1997 and was
principally comprised of properties acquired in settlement of problem
real estate development loans in April 1996. The real estate associated
with the above mentioned problem situation which aggregated $15.2 million
originally, has been reduced by property sales and has a carrying value
of $8.8 million at June 30, 1997. The Company has sales contracts,
expected to close late 1997 or early 1998, for a portion of these
properties with a carrying value of approximately $1.8 million. These
properties had previously been adjusted to fair value in late 1995 and
subsequent sales and current contracts support carrying values.
The Company considers the level of non-performing loans in its
evaluation of the adequacy of the allowance for loan losses.
C. LIQUIDITY AND INTEREST SENSITIVITY
Liquidity represents the Company's ability to generate cash or
otherwise obtain funds at a reasonable price to satisfy commitments to
borrowers as well as demands of depositors. The loan and securities
portfolios are managed to provide liquidity through maturity or payments
related to such assets.
Interest rate sensitivity management is managing the difference or
gap between rate sensitive assets and rate sensitive liabilities to
minimize the impact of changing interest rates on profitability and allow
for adequate liquidity.
The Company's adjusted one year cumulative interest sensitivity gap
was (1.00%) at June 30, 1997 compared to (.24%) at December 31, 1996.
The cumulative interest sensitivity gap through 90 days was 4.86% at June
30, 1997 compared to 3.41% at December 31, 1996. Interest rate swap
contracts with notional amounts aggregating $150 million, that pay the
floating prime rate for the right to receive a weighted average fixed
rate of 8.56%, have been utilized to supplement on-balance sheet
strategies to reduce the Company's sensitivity to interest rate changes.
At June 30, 1997 and December 31, 1996, the aggregate fair value of
interest rate swap contracts was approximately ($1,685,000) and
($1,019,000), respectively. Operating results in the second half of 1997
should not be significantly impacted by changes in market interest rates.
The parent Company's liquidity depends primarily on the dividends
paid to it as the sole shareholder of the Mid-America Bank of Louisville
and Trust Company.
D. CAPITAL RESOURCES
At June 30, 1997 shareholders' equity totaled $147,863,000, an
increase of $7.2 million since December 31, 1996. Since December 31,
1996, the Company's available for sale securities portfolio had
unrealized gains, net of taxes, that increased shareholders' equity
$291,000.
The Company's capital ratios exceed minimum regulatory requirements
and are as follows:
Company Company
June 30, December Minimum
1997 31, 1996 Required
Leverage Ratio 10.2% 10.6% 4.00%
Tier 1 risk based capital ratio 15.0% 14.6% 4.00%
Total risk based capital ratio 15.9% 15.6% 8.00%
E. RECENTLY ISSUED ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board
("FASB") issued SFAS No. 128 "Earnings Per Share" and SFAS No. 129
"Disclosure of Information About Capital Structure." SFAS No. 128
simplifies the computation of earnings per share ("EPS") by replacing
the presentation of primary EPS with a presentation of basic EPS. The
Statement requires dual presentation of basic and diluted EPS by
entities with complex capital structures. Basic EPS includes no
dilution and is computed by dividing income available to common
shareholders by the weighted average number of common shares
outstanding for the period. Diluted EPS reflects the potential
dilution of securities that could share in the earnings of an entity,
similar to fully diluted EPS.
This Statement is effective for financial statements issued for
periods ending after December 15, 1997, including interim periods, and
requires restatement of all prior period EPS data presented. Basic
EPS under the new Statement was $.49 and $.96 for the three and six
months ended June 30, 1997, respectively. Diluted EPS under the new
Statement was $.48 and $.94 for the three and six months ended June
30, 1997, respectively.
SFAS No. 129 establishes standards for disclosing information
about an entity's capital structure. This Statement contains no
change in disclosure requirements for companies that were subject to
previously existing requirements. This Statement was issued to
eliminate the exemption of nonpublic entities from certain previously
issued disclosure requirements.
This Statement is effective for financial statements for periods
ending after December 15, 1997. The implementation of this Statement
will not have a material effect on the Company's consolidated
financial statements.
F. SUBSEQUENT EVENT
The Company has entered into an agreement to sell its money order
subsidiary, Mid-America Money Order Company (MAMOC), to MoneyGram
Payment Systems, Inc., for approximately $15 million in cash. The
Company, through a new subsidiary, will retain the gift certificate
business of MAMOC. The transaction, which is not significant to the
financial condition or financial results of the Company, is subject to
regulatory approval and is expected to close in the fourth quarter of
1997.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The regular annual meeting of shareholders of Mid-America
Bancorp was held on April 17, 1997.
(b) Proxies for the meeting were solicited pursuant to Section
14(a) of the Securities Exchange Act of 1934 and there was
no solicitation in opposition to management's solicitations.
All of management's nominees for directors were elected.
(c) The following item was submitted to a vote of security
holders as follows:
(1) The shareholders approved the election of the
following persons as directors of Mid-America
Bancorp.
For Withheld
Leslie D. Aberson 8,383,502 24,405
William C. Ballard Jr. 8,378,751 29,156
James E. Cain 8,379,079 28,828
Peggy Ann Markstein 8,375,283 32,624
Orson Oliver 8,382,436 25,471
Benjamin K. Richmond 8,379,396 28,511
Henry C. Wagner 8,365,218 42,689
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
None
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.
Mid-America Bancorp
(Registrant)
Date: August 12,1997 By:/s/Steven Small
Steven Small
Executive Vice President and
Chief Financial Officer
Date: August 12,1997 By:/s/R.K. Guillaume
R.K. Guillaume
Chief Executive Officer
INDEX TO EXHIBITS
27 Financial Data Schedule
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<PERIOD-TYPE> 3-MOS
<CASH> 32,277
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 176,700
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 348,613
<INVESTMENTS-CARRYING> 20,633
<INVESTMENTS-MARKET> 20,754
<LOANS> 808,281
<ALLOWANCE> (9,057)
<TOTAL-ASSETS> 1,436,641
<DEPOSITS> 906,193
<SHORT-TERM> 232,502
<LIABILITIES-OTHER> 83,482
<LONG-TERM> 66,601
0
0
<COMMON> 26,378
<OTHER-SE> 121,485
<TOTAL-LIABILITIES-AND-EQUITY> 1,436,641
<INTEREST-LOAN> 19,040
<INTEREST-INVEST> 5,644
<INTEREST-OTHER> 1,936
<INTEREST-TOTAL> 26,620
<INTEREST-DEPOSIT> 7,935
<INTEREST-EXPENSE> 12,384
<INTEREST-INCOME-NET> 14,236
<LOAN-LOSSES> 0
<SECURITIES-GAINS> (8)
<EXPENSE-OTHER> 10,586
<INCOME-PRETAX> 6,670
<INCOME-PRE-EXTRAORDINARY> 6,670
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,605
<EPS-PRIMARY> 0.47
<EPS-DILUTED> 0.47
<YIELD-ACTUAL> 4.53
<LOANS-NON> 2,123
<LOANS-PAST> 822
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 12,808
<ALLOWANCE-OPEN> 9,167
<CHARGE-OFFS> 219
<RECOVERIES> 109
<ALLOWANCE-CLOSE> 9,057
<ALLOWANCE-DOMESTIC> 9,057
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
