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 September 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.
October 31, 1997: 9,570,807 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 - September 30, 1997 and December 31,
1996
Consolidated statements of income - three and nine months ended
September 30, 1997 and 1996
Consolidated statements of changes in shareholders' equity -
nine months ended September 30, 1997 and 1996
Consolidated statements of cash flows - nine months ended
September 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>
September 30 December 31
----------- -----------
1997 1996
ASSETS ----------- -----------
<S> <C> <C>
Cash and due from banks $29,943 $30,884
Federal funds sold 21,300 20,200
Securities purchased under agreements to resell 43,000 110,000
Securities available for sale, amortized cost
of $352,099 (1997) and $333,681 (1996) (Note 3) 357,616 336,118
Securities held to maturity, market value
of $15,785 (1997) and $75,751 (1996) (Note 3) 15,626 75,555
Loans, net of unearned income of $12,560 (1997)
and $15,916 (1996) 829,491 804,182
Allowance for loan losses (Note 4) (8,833) (9,167)
----------- -----------
Loans, net 820,658 795,015
Premises and equipment 21,004 21,451
Other assets 34,275 31,710
----------- -----------
TOTAL ASSETS $1,343,422 $1,420,933
=========== ===========
LIABILITIES
Deposits:
Non-interest bearing $113,219 $127,703
Interest bearing 715,810 697,554
----------- -----------
Total deposits 829,029 825,257
Securities sold under agreements to repurchase 218,532 285,948
Federal funds purchased -- 4,000
Advances from the Federal Home Loan Bank 65,108 69,042
Money orders and similar payment
instruments outstanding 52,225 76,533
Accrued expenses and other liabilities 25,527 19,515
----------- -----------
TOTAL LIABILITIES 1,190,421 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) 26,531 26,144
Additional paid-in capital 106,795 104,932
Retained earnings 16,128 8,093
Unrealized appreciation on securities
available for sale, net of taxes 3,586 1,585
Pension liability adjustment, net of taxes (39) (116)
----------- -----------
TOTAL SHAREHOLDERS' EQUITY 153,001 140,638
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,343,422 $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 Nine months ended
September 30 September 30
------------------ ------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans $19,497 $18,438 $57,375 $54,472
Interest and dividends on:
Taxable securities 5,068 4,744 14,859 13,566
Tax-exempt securities 691 356 1,956 823
Interest on federal funds sold 230 484 898 1,415
Interest on securities purchased under
agreements to resell 1,120 1,285 4,529 4,613
-------- -------- -------- --------
Total interest income 26,606 25,307 79,617 74,889
-------- -------- -------- --------
INTEREST EXPENSE:
Interest on deposits 8,110 7,766 23,945 22,702
Interest on federal funds purchased
and securities sold under
agreements to repurchase 3,043 3,045 10,005 9,520
Interest on Federal Home
Loan Bank advances 1,009 1,097 3,093 3,356
-------- -------- -------- --------
Total interest expense 12,162 11,908 37,043 35,578
-------- -------- -------- --------
Net interest income before
provision for loan losses 14,444 13,399 42,574 39,311
Provision for loan losses (Note 4) -- 303 -- 407
-------- -------- -------- --------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 14,444 13,096 42,574 38,904
-------- -------- -------- --------
NON-INTEREST INCOME:
Income from trust department 376 258 901 757
Service charges on deposit accounts 1,328 1,160 3,743 3,346
Money order fees 572 938 1,882 2,897
Securities gains (losses) (9) (1,036) 59 140
Other 969 2,651 3,019 4,083
-------- -------- -------- --------
Total non-interest income 3,236 3,971 9,604 11,223
-------- -------- -------- --------
OTHER OPERATING EXPENSES:
Salaries and employee benefits 6,865 6,779 19,437 19,277
Occupancy expense 818 774 2,309 2,243
Furniture and equipment expenses 1,209 1,125 3,427 3,555
Other (Note 5) 2,456 3,111 7,453 7,831
-------- -------- -------- --------
Total other operating expenses 11,348 11,789 32,626 32,906
-------- -------- -------- --------
Income before income taxes 6,332 5,278 19,552 17,221
Income tax expense 2,007 1,800 6,105 5,719
-------- -------- -------- --------
NET INCOME $4,325 $3,478 $13,447 $11,502
======== ======== ======== ========
PRIMARY NET INCOME PER
COMMON SHARE (Note 2) $0.44 $0.37 $1.38 $1.21
======== ======== ======== ========
FULLY DILUTED NET INCOME
PER COMMON SHARE (Note 2) $0.44 $0.37 $1.36 $1.21
======== ======== ======== ========
Weighted Average Equivalent
Shares Outstanding (Note 2) 9,906 9,481 9,869 9,488
======== ======== ======== ========
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>
Nine months ended
September 30
----------------------
1997 1996
---------- ----------
<S> <C> <C>
Balance, January 1 $140,638 $132,950
Net income 13,447 11,502
Cash dividends declared - $.57 (1997)
and $.475 (1996) per share (5,412) (4,469)
Stock options exercised, including related tax benefits 2,250 584
Unrealized appreciation (depreciation) on securities
available for sale, net of taxes 2,001 (3,008)
Pension liability adjustment, net of taxes 77 --
---------- ----------
Balance, September 30 $153,001 $137,559
========== ==========
See notes to consolidated financial statements.
/TABLE
<PAGE>
MID-AMERICA BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Unaudited)
<TABLE>
<CAPTION> Nine months
ended September 30
----------------------
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES: ---------- ----------
<S> <C> <C>
Net income $13,447 $11,502
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation, amortization and accretion, net 3,288 2,715
Provision for loan losses -- 407
Federal Home Loan Bank stock dividend (784) (714)
Gain on sales of securities (59) (140)
Gain on sales of other real estate
and provision for real estate losses, net (58) (127)
Deferred taxes 426 (1,282)
Increase in interest receivable (837) (112)
Increase in other assets (2,734) (6,514)
Decrease in money orders and similar
payment instruments outstanding (24,308) (24,899)
Increase in other liabilities 3,030 5,699
---------- ----------
Net cash used in operating activities (8,589) (13,465)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of securities available for sale (124,643) (151,213)
Proceeds from maturities of
securities available for sale 70,126 47,584
Proceeds from sales of securities available for sale 42,023 69,937
Purchases of securities held to maturity (9,386) (2,012)
Proceeds from maturities of securities held to maturity 65,000 54,725
Increase in customer loans (25,880) (47,079)
Proceeds from sales of other real estate 1,216 6,371
Proceeds from sales of premises and equipment 311 900
Payments for purchases of premises and equipment (1,969) (3,558)
---------- ----------
Net cash provided by (used in) investing activities 16,798 (24,345)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits 3,772 10,449
Net increase (decrease) in securities sold
under agreements to repurchase (67,416) 10,633
Net increase (decrease) in federal funds purchased (4,000) 950
Repayment of advances from the Federal Home Loan Bank (3,934) (4,066)
Stock options exercised 1,940 554
Dividends paid (5,412) (4,469)
---------- ----------
Net cash provided by (used in) financing activities (75,050) 14,051
---------- ----------
Net decrease in cash and cash equivalents (66,841) (23,759)
Cash and cash equivalents at January 1 161,084 164,162
---------- ----------
Cash and cash equivalents at September 30 $94,243 $140,403
========== ==========
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>
September 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 $92,900 $93,714 $147,230 $148,300
Collateralized mortgage obligations 180,619 183,020 100,308 100,754
States and political subdivisions 49,867 52,153 40,697 41,604
Corporate obligations 11,433 11,449 28,811 28,825
Equity securities 17,280 17,280 16,635 16,635
--------- --------- --------- ---------
$352,099 $357,616 $333,681 $336,118
========= ========= ========= =========
</TABLE>
The amortized cost and market value of securities held to maturity are
summarized as follows:
<TABLE>
<CAPTION>
September 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 $15,526 $15,685 $75,455 $75,651
Corporate obligations 100 100 100 100
--------- --------- --------- ---------
$15,626 $15,785 $75,555 $75,751
========= ========= ========= =========
</TABLE>
4.Allowance for Loan Losses - Changes in the allowance for loan losses
are as follows:
<TABLE>
<CAPTION>
September 30, December 31,
In thousands 1997 1996
--------- ---------
<S> <C> <C>
Balance, January 1 $9,167 $9,318
Provision for loan losses -- 414
Recoveries 133 460
Loans charged-off (467) (1,025)
--------- ---------
Balance, end of period $8,833 $9,167
========= =========
</TABLE>
5.Other operating expenses consists of the following:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
In thousands September 30 September 30
-------------------- --------------------
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Advertising and marketing $362 $377 $1,243 $890
Operating supplies 553 398 1,580 1,142
Professional fees 335 644 838 1,261
Taxes - Bank, property and other 407 476 1,243 1,246
Other 799 1,216 2,549 3,292
--------- --------- --------- ---------
$2,456 $3,111 $7,453 $7,831
========= ========= ========= =========
</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 consolidated financial statements.
<PAGE>
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 nine months ended
September 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 September 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 third quarter of 1997 was $4,325,000 or $0.44
per share compared to $3,478,000 or $0.37 per share for the third
quarter of 1996, an increase on a fully diluted per share basis of
18.9%. Net income for the nine months ended September 30, 1997 was
$13,447,000 or $1.36 per share, compared to $11,502,000 or $1.21 per
share for the nine months ended September 30, 1996, a fully diluted
per share increase of 12.4%. On the basis of net income excluding
security gains or losses, and the gain from the sale of a portion of
the money order subsidiary agent base in 1996, net income increased
41.9% and 30.0% for the third quarter and nine months ended September
30, 1997, respectively.
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 nine months ended September 30,
1997 and 1996.
In thousands except percentages
Three Months Ended Nine Months Ended
September 30 September 30
-------------------- --------------------
1997 1996 1997 1996
-------- -------- -------- --------
Total interest income $26,606 $25,307 $79,617 $74,889
Tax equivalent adjustment 454 404 1,327 1,093
------- ------- ------- -------
Tax equivalent interest income 27,060 25,711 80,944 75,982
Total interest expense 12,162 11,908 37,043 35,578
------- ------- ------- -------
Tax equivalent net interest income $14,898 $13,803 $43,901 $40,404
======= ======= ======= =======
Average rate on earning assets 8.39% 8.25% 8.32% 8.25%
Average rate on
interest bearing liabilities 4.78% 4.77% 4.79% 4.79%
Net interest spread, annualized 3.61% 3.48% 3.53% 3.46%
Net interest margin, annualized 4.62% 4.43% 4.51% 4.39%
Average earning assets $1,283,091 $1,235,270 $1,302,325 $1,226,791
Average interest
bearing liabilities $1,009,760 $991,454 $1,034,803 $989,414
Net interest income on a tax equivalent basis increased
$1,095,000 or 7.9% for the quarter and $3,497,000 or 8.7% for the
year-to-date, resulting primarily from volume increases. During the
three and nine month periods of 1997, average earning assets increased
3.9% and 6.2%, 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 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 Nine Months Ended
September 30
------------------
1997 1996
------- -------
Balance at January 1 $9,167 $9,318
Provision for loan losses -- 407
Loan charge-offs, net (334) (540)
------- -------
Balance September 30 $8,833 $9,185
======= =======
Average loans, net of unearned income $802,393 $759,511
Provision for loan losses to average loans -- 0.05%
Allowance for loan losses to average loans 1.10% 1.21%
Allowance for loan losses to period-end loans 1.06% 1.17%
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 nine months ended
September 30, 1997 and 1996:
Three months ended Nine months ended
Dollars in thousands September 30 September 30
---------------------- ----------------------
1997 1996 Incr 1997 1996 Incr
(Decr) (Decr)
------ ------ ------ ------ ------ ------
Non-Interest Income:
Income from trust department $376 $258 $118 $901 $757 $144
Service charges on
deposit accounts 1,328 1,160 168 3,743 3,346 397
Money order fees 572 938 (366) 1,882 2,897 (1,015)
Securities gains (losses) (9) (1,036) 1,027 59 140 (81)
Gain on sale of
program agent base of
money order
subsidiary --- 1,797 (1,797) --- 1,797 (1,797)
Other 969 854 115 3,019 2,286 733
------ ------ ------ ------ ------ ------
Total non-interest income $3,236 $3,971 ($735) $9,604 $11,223 ($1,619)
====== ====== ====== ====== ====== ======
Other Operating Expenses:
Salaries and
employee benefits $6,865 $6,779 $86 $19,437 $19,277 $160
Occupancy expenses 818 774 44 2,309 2,243 66
Furniture and
equipment expenses 1,209 1,125 84 3,427 3,555 (128)
Advertising and marketing 362 377 (15) 1,243 890 353
Operating supplies 553 398 155 1,580 1,142 438
Professional fees 335 644 (309) 838 1,261 (423)
Taxes-Bank, property
and other 407 475 (68) 1,243 1,246 (3)
Other 799 1,217 (418) 2,549 3,292 (743)
------ ------ ------ ------ ------ ------
Total other operating expenses $11,348 $11,789 ($441)$32,626 $32,906 ($280)
====== ====== ====== ====== ====== ======
The level of non-interest income for the quarter and nine 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, the money order agent base sale gain in 1996, and
securities gains and losses, non-interest income for the three and
nine month periods in 1997 reflect increases of 18% and 20%,
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 experienced and locally
recognized trust officers. As of September 30, 1997 this new trust
group had increased trust assets under management by $82 million with
one month of fees of approximately $38,000 included in income from the
trust department.
Other operating expenses during the quarter and nine month
periods declined slightly in the aggregate as a result of Company-wide
expense control efforts. Salaries and benefits increased
approximately 1% for both the three and nine month periods, despite
normal salary increases in April 1997, as the reduction in full time
equivalent employees from 661 in September 1996 to 636 in September
1997 substantially offset those salary increases. Pension expense for
the third quarter of 1997 included a settlement expense of
approximately $300,000. Occupancy expense increased 6% and 3% for the
three and nine month periods, respectively, primarily as a result of
two new branch locations that opened in the fourth quarter of 1996.
Furniture and equipment expenses declined 3.6% for the year-to-date as
a result of lower depreciation and maintenance associated with the
money order operation subsequent to the agent base sale in 1996. For
the most recent quarter, furniture and equipment expenses increased
7.5% primarily as a result of depreciation of new teller automation
hardware and software. Advertising, marketing and supply costs
increased in connection with the Company's efforts to increase market
share in the retail loan and deposit areas. Professional fees were
lower in 1997 as 1996 included consulting fees related to a company-
wide revenue enhancement and cost reduction project by a bank
consulting firm. The other category of other operating expenses was
favorably impacted by the decline in uncollectible money order fees
and money order rebates of $150,000 and $444,000 for the quarter and
nine months, respectively.
Year 2000
The Company, like most other companies, is in the process of
assessing and, as necessary, changing computer applications to ensure
their functionality is "Year 2000" compliant. A task force has been
assembled and is on course to meet this goal by the end of 1998. At
present, the Company does not anticipate that material incremental
costs will be incurred in any single future year.
Income Taxes
The Company had income tax expense of $2,007,000 for the third
quarter of 1997 compared to $1,800,000 for the same period in 1996.
The year-to-date tax expense and effective tax rates were $6,105,000
and 31.2% for 1997, respectively and $5,719,000 and 33.2% 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
Earning Assets
During the three and nine month periods of 1997, average earning
assets increased $48 million and $75 million, respectively, compared
to the prior year's periods. Average earning asset growth was funded
primarily from increases in average retail deposit products during the
periods. For the nine months ended September 30, 1997, compared to
the first nine months of 1996, average asset growth included increases
in average commercial loans of $12 million, increases in average
retail loans of $31 million, and increases in the average securities
portfolio of $50 million. For the third quarter of 1997, compared to
1996, average retail loans increased $35 million, average commercial
loans increased $8 million and the securities portfolio's average was
up $41 million. The average commercial loan increase for the 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:
September 30 December 31
Dollars in thousands 1997 1996
Loans accounted for on a non-
accrual basis $2,125 $3,424
Loans contractually past due
ninety days or more as to
interest or principal
payments 3,004 925
-------- --------
Total non-performing loans 5,129 4,349
Other real estate held for sale 8,429 9,577
-------- --------
Total non-performing assets $13,558 $13,926
======== ========
Non-performing loans to total
loans .62% .54%
Non-performing assets to total
assets 1.01% .98%
Allowance for loan losses to
non-performing loans 172% 211%
Loans classified as impaired at September 30, 1997 aggregated
$2,125,000 and included all non-accrual loans. At December 31, 1996,
impaired loans aggregated $3,424,000.
Other real estate aggregated $8.4 million at September 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 $8.3 million at September 30, 1997. The Company has
sales contracts, expected to close in 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 (7.40%) at September 30, 1997 compared to (.24%) at December
31, 1996. The cumulative interest sensitivity gap through 90 days was
(4.12%) at September 30, 1997 compared to 3.41% at December 31, 1996.
The increased liability sensitivity is attributed to the increase in
the level of fixed rate commercial and retail loans. 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 manage the Company's sensitivity to
interest rate changes. At September 30, 1997 and December 31, 1996,
the aggregate fair value of interest rate swap contracts was
approximately ($696,000) and ($1,019,000), respectively. Operating
results for the remainder of 1997 should not be significantly impacted
by changes in market interest rates. Interest income is recognized on
the accrual basis for the difference between the prime rate and fixed
rates of the swap contracts.
The parent company's liquidity depends primarily on the dividends
paid to it as the sole shareholder of Mid-America Bank of Louisville
and Trust Company.
D. CAPITAL RESOURCES
At September 30, 1997 shareholders' equity totaled $153,001,000,
an increase of $12.3 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
$2,001,000.
The Company's capital ratios exceed minimum regulatory
requirements and are as follows:
Company Company
September December Minimum
30,1997 31, 1996 Required
Leverage Ratio 11.1% 10.6% 4.00%
Tier 1 risk based capital ratio 15.4% 14.6% 4.00%
Total risk based capital ratio 16.3% 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.
SFAS No. 128 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 $0.45 and $1.42 for the three and nine
months ended September 30, 1997, respectively. Diluted EPS under the
new statement was $0.44 and $1.39 for the three and nine months ended
September 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.
SFAS No. 129 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.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11 Statements re: Computation of Per Share Earnings
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: November 12,1997 By:/s/Steven Small
Steven Small
Executive Vice President and
Chief Financial Officer
Date: November 12,1997 By:/s/R.K. Guillaume
R.K. Guillaume
Chief Executive Officer
INDEX TO EXHIBITS
11 Statements re: Computation of Per Share Earnings
27 Financial Data Schedule
<TABLE>
<CAPTION>
Statements re computation of per share earnings Exhibit 11
(In Thousands Except for Per Share Data)
Nine months ended
September 30,
---------------------
1997 1996
--------- ---------
<S> <C> <C>
PRIMARY NET INCOME PER SHARE
Weighted average common stock outstanding 9,491 9,392
Common equivalent shares for stock options using
the treasury stock method 225 93
--------- ---------
Weighted average shares outstanding 9,716 9,484
========= =========
Net income $13,447 $11,502
========= =========
Primary net income per share $1.38 $1.21
========= =========
FULLY DILUTED NET INCOME PER SHARE
Weighted average common stock outstanding 9,491 9,392
Common equivalent shares for stock options using
the treasury stock method 378 97
--------- ---------
Weighted average shares outstanding 9,869 9,488
========= =========
Net income $13,447 $11,502
========= =========
Fully diluted net income per share $1.36 $1.21
========= =========
</TABLE>
All share and per share information has been adjusted for the 3% stock
dividend declared in November 1996.
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<PERIOD-TYPE> 3-MOS
<CASH> 29,943
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 64,300
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 357,616
<INVESTMENTS-CARRYING> 15,626
<INVESTMENTS-MARKET> 15,785
<LOANS> 829,491
<ALLOWANCE> (8,833)
<TOTAL-ASSETS> 1,343,422
<DEPOSITS> 829,029
<SHORT-TERM> 218,532
<LIABILITIES-OTHER> 77,752
<LONG-TERM> 65,108
0
0
<COMMON> 26,531
<OTHER-SE> 126,470
<TOTAL-LIABILITIES-AND-EQUITY> 1,343,422
<INTEREST-LOAN> 19,497
<INTEREST-INVEST> 5,759
<INTEREST-OTHER> 1,350
<INTEREST-TOTAL> 26,606
<INTEREST-DEPOSIT> 8,110
<INTEREST-EXPENSE> 12,162
<INTEREST-INCOME-NET> 14,444
<LOAN-LOSSES> 0
<SECURITIES-GAINS> (9)
<EXPENSE-OTHER> 11,348
<INCOME-PRETAX> 6,332
<INCOME-PRE-EXTRAORDINARY> 6,332
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,325
<EPS-PRIMARY> 0.44
<EPS-DILUTED> 0.44
<YIELD-ACTUAL> 4.62
<LOANS-NON> 2,125
<LOANS-PAST> 3,004
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 13,619
<ALLOWANCE-OPEN> 9,167
<CHARGE-OFFS> 467
<RECOVERIES> 133
<ALLOWANCE-CLOSE> 8,833
<ALLOWANCE-DOMESTIC> 8,833
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
