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 quarterly period ended March 31, 2000
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 Identification 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
(continued)
MID-AMERICA BANCORP
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.
April 30, 2000: 10,678,195 shares of common stock, no par value
MIDAMERICA BANCORP
PART I. FINANCIAL INFORMATION
The consolidated financial statements of MidAmerica 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 unaudited consolidated financial statements of
the Company are submitted herewith:
Consolidated Balance Sheets - March 31, 2000 and December 31,
1999
Consolidated Statements of Income - three months ended March
31, 2000 and 1999
Consolidated Statements of Changes in Shareholders' Equity -
three months ended March 31, 2000 and 1999
Consolidated Statements of Comprehensive Income - three months
ended March 31, 2000 and 1999
Consolidated Statements of Cash Flows - three months ended
March 31, 2000 and 1999
Notes to Consolidated Financial Statements
CONSOLIDATED BALANCE SHEETS
In thousands, except share and per share amounts
Unaudited
<TABLE>
<CAPTION>
March 31 December 31
----------- -----------
2000 1999
ASSETS ----------- -----------
<S> <C> <C>
Cash and due from banks $37,219 $41,478
Federal funds sold 6,500 --
Securities purchased under agreements to resell 15,000 --
Securities available for sale, amortized cost
of $473,809 (2000) and $588,427 (1999) 471,915 586,523
Securities held to maturity, market value
of $2,613 (2000) and $4,001 (1999) 2,634 4,018
Loans, net of unearned income 1,054,841 1,063,949
Allowance for loan losses (9,876) (9,854)
----------- -----------
Loans, net 1,044,965 1,054,095
Premises and equipment 21,282 21,822
Other assets 37,919 36,770
----------- -----------
TOTAL ASSETS $1,637,434 $1,744,706
=========== ===========
LIABILITIES
Deposits:
Non-interest bearing $155,645 $156,720
Interest bearing 857,530 841,179
----------- -----------
Total deposits 1,013,175 997,899
Securities sold under agreements to repurchase 261,502 319,368
Federal funds purchased 38,660 42,390
Advances from the Federal Home Loan Bank 66,711 68,389
Gift certificates outstanding 62,022 123,354
Accrued expenses and other liabilities 12,484 14,758
----------- -----------
TOTAL LIABILITIES 1,454,554 1,566,158
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 - 15,000,000 shares; issued
and outstanding - 10,678,045 shares (2000);
10,642,873 shares (1999) 29,613 29,515
Additional paid-in capital 133,401 133,038
Retained earnings 21,183 17,233
Accumulated other comprehensive income (loss) (1,317) (1,238)
----------- -----------
TOTAL SHAREHOLDERS' EQUITY 182,880 178,548
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,637,434 $1,744,706
=========== ===========
See notes to unaudited consolidated financial statements.
</TABLE><PAGE>
CONSOLIDATED STATEMENTS OF INCOME
In thousands, except per share amounts
Unaudited
<TABLE>
<CAPTION>
Three months
ended March 31
------------------
2000 1999
-------- --------
<S> <C> <C>
INTEREST INCOME:
Interest and fees on loans $23,585 $22,202
Interest and dividends on:
Taxable securities 6,796 3,294
Tax-exempt securities 746 716
Interest on federal funds sold 47 39
Interest on securities purchased under
agreements to resell 385 1,990
-------- --------
Total interest income 31,559 28,241
-------- --------
INTEREST EXPENSE:
Interest on deposits 9,128 8,105
Interest on federal funds purchased
and securities sold under
agreements to repurchase 4,449 3,664
Interest on Federal Home
Loan Bank advances 1,008 1,118
-------- --------
Total interest expense 14,585 12,887
-------- --------
Net interest income before
provision for loan losses 16,974 15,354
Provision for loan losses 575 281
-------- --------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 16,399 15,073
-------- --------
NON-INTEREST INCOME:
Income from trust department 820 665
Service charges on deposit accounts 1,573 1,404
Gift certificate fees 556 328
Securities gains -- 13
Other 1,458 2,335
-------- --------
Total non-interest income 4,407 4,745
-------- --------
OTHER OPERATING EXPENSES:
Salaries and employee benefits 6,961 6,969
Occupancy expense 865 793
Furniture and equipment expenses 1,137 1,164
Other 2,814 2,907
-------- --------
Total other operating expenses 11,777 11,833
-------- --------
Income before income taxes 9,029 7,985
Income tax expense 2,611 2,367
-------- --------
NET INCOME $6,418 $5,618
======== ========
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic 10,670 10,578
Diluted 10,813 10,745
NET INCOME PER COMMON SHARE
Basic $0.60 $0.53
Diluted 0.59 0.52
See notes to unaudited consolidated financial statements.
</TABLE><PAGE>
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
In thousands, except per share amounts
Unaudited
<TABLE>
<CAPTION>
Three months
ended March 31
----------------------
2000 1999
---------- ----------
<S> <C> <C>
Balance, January 1 $178,548 $167,436
Net income 6,418 5,618
Other comprehensive income
(loss), net of tax (79) 87
Cash dividends - $.23 (2000)
and $.2135 (1999) (2,468) (2,259)
Stock options exercised, including
related tax benefits 461 894
---------- ----------
Balance, March 31 $182,880 $171,776
========== ==========
See notes to unaudited consolidated financial statements.
</TABLE>
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
In Thousands
Unaudited
<TABLE>
<CAPTION>
Three months
ended March 31
----------------------
2000 1999
---------- ----------
<S> <C> <C>
Net Income $6,418 $5,618
Other comprehensive income (loss), net of tax:
Unrealized gains on securities
available for sale:
Unrealized holding gains
arising during the period 7 96
Less reclassification adjustment for
gains included in net income -- (9)
---------- ----------
7 87
Pension liability adjustment (86) --
---------- ----------
Other comprehensive income (loss) (79) 87
---------- ----------
COMPREHENSIVE INCOME $6,339 $5,705
========== ==========
See notes to unaudited consolidated financial statements.
</TABLE><PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
In Thousands
Unaudited
<TABLE>
<CAPTION> Three months
ended March 31
----------------------
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES: ---------- ----------
<S> <C> <C>
Net income $6,418 $5,618
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation, amortization and accretion, net (362) 1,466
Provision for loan losses 575 281
Federal Home Loan Bank stock dividend (310) (286)
Gains on sales of securities 0 (13)
Gains on sales of real estate (285) (841)
Deferred taxes 922 372
Increase in interest receivable (462) (998)
Decrease (increase) in other assets (1,099) 800
Increase (decrease) in accrued expenses and other liabil (3,244) 1,002
---------- ----------
Net cash provided by operating activities 2,153 7,401
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of securities available for sale (834,532) (166,017)
Proceeds from maturities of
securities available for sale 950,616 221,648
Proceeds from sales of securities available for sale 0 5,013
Purchases of securities held to maturity (924) 0
Proceeds from maturities of securities held to maturity 2,300 80,000
Increase in loans 8,555 10,226
Proceeds from sales of other real estate 422 1,756
Payments for purchases of premises and equipment (388) (635)
Proceeds from sales of premises and equipment 418 29
---------- ----------
Net cash provided by investing activities 126,467 152,020
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposits 15,276 (29,143)
Net increase (decrease) in securities sold
under agreements to repurchase (57,866) 48,392
Net increase (decrease) in federal funds purchased (3,730) 5,150
Advances from the Federal Home Loan Bank 0 15,000
Repayment of advances from the Federal Home Loan Bank (1,678) (16,053)
Decrease in gift certificates outstanding (61,332) (48,781)
Stock options exercised 419 792
Dividends paid (2,468) (2,259)
---------- ----------
Net cash used in financing activities (111,379) (26,902)
---------- ----------
Net increase (decrease) in cash and cash equivalents 17,241 132,519
Cash and cash equivalents at January 1 41,478 74,644
---------- ----------
Cash and cash equivalents at March 31 $58,719 $207,163
========== ==========
See notes to unaudited consolidated financial statements.
</TABLE><PAGE>
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1.The accounting and reporting policies of MidAmerica 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 have been prepared in accordance with the instructions to
Form 10-Q and Article 10 of Regulation S-X and do not include all
information and footnotes required by generally accepted accounting
principles for complete financial statements. For more information,
refer to the Summary of Significant Accounting Policies footnote
which appears in the Company's 1999 Annual Report and Form 10-K
filed with the Securities and Exchange Commission. The consolidated
financial statements reflect all adjustments (consisting only of
adjustments of a normal recurring nature) which are, in the opinion
of management, necessary for a fair presentation of financial
condition and results of operations for the interim periods.
2.The following table presents the numerators (net income) and
denominators (average shares outstanding) for the basic and
diluted net income per share computations for the three months
ended March 31:
<TABLE>
<CAPTION>
In thousands, except per share amounts
Three months ended
March 31
------------------------
2000 1999
----------- -----------
<S> <C> <C>
Net income, basic and diluted $6,418 $5,618
=========== ===========
Average shares outstanding 10,670 10,578
Effect of dilutive securities 143 167
Average shares outstanding including ----------- -----------
dilutive securities 10,813 10,745
=========== ===========
Net income per share, basic $0.60 $0.53
=========== ===========
Net income per share, diluted $0.59 $0.52
=========== ===========
</TABLE>
Appropriate share and per share information in the consolidated
financial statements has been adjusted for the 3% stock
dividend of November 1999.
3.The amortized cost and market value of securities available for
sale are summarized as follows:
<TABLE>
<CAPTION>
March 31, 2000 December 31, 1999
------------------------ ------------------------
In thousands Amortized Market Amortized Market
Cost Value Cost Value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
U.S. Treasury and
U.S. government agencies $192,742 $192,355 $317,316 $317,106
Collateralized mortgage obligations 192,933 190,682 184,896 182,730
States and political subdivisions 52,687 53,431 52,448 52,918
Corporate obligations 14,480 14,480 13,110 13,112
Equity securities 20,967 20,967 20,657 20,657
----------- ----------- ----------- -----------
$473,809 $471,915 $588,427 $586,523
=========== =========== =========== ===========
</TABLE>
The amortized cost and market value of securities held to maturity are
summarized as follows:
<TABLE>
<CAPTION>
March 31, 2000 December 31, 1999
------------------------ ------------------------
In thousands Amortized Market Amortized Market
Cost Value Cost Value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
U.S. Treasury and
U.S. government agencies $2,634 $2,613 $4,018 $4,001
=========== =========== =========== ===========
</TABLE>
4.Activity in the allowance for loan losses for the three months
ended March 31, 2000 and year ended December 31, 1999 follows:
<TABLE>
<CAPTION>
March 31, December 31,
In thousands 2000 1999
----------- -----------
<S> <C> <C>
Balance, January 1 $9,854 $9,010
Loans charged-off (615) (3,030)
Recoveries 62 423
----------- -----------
Net loans charged-off ($553) ($2,607)
Provision for loan losses 575 3,451
----------- -----------
Balance, end of period $9,876 $9,854
=========== ===========
</TABLE>
5.Significant components of other non-interest income and other operating
expenses are set forth below:
<TABLE>
<CAPTION>
Three months ended
In thousands March 31
------------------------
2000 1999
----------- -----------
<S> <C> <C>
Other non-interest income:
Gains on sales of real estate $285 $841
Money order processing fees -- 180
Other 1,173 1,314
----------- -----------
$1,458 $2,335
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
Three months ended
In thousands March 31
------------------------
2000 1999
----------- -----------
<S> <C> <C>
Other operating expenses:
Advertising and marketing $288 $331
Operating supplies 318 358
Legal and professional fees 347 458
Taxes, other than income taxes 417 358
Other 1,444 1,402
----------- -----------
$2,814 $2,907
=========== ===========
</TABLE>
6.Selected financial information by business segment for
March 31, 2000 and 1999 follows:
<TABLE>
<CAPTION>
Three months ended
March 31
In thousands ------------------------
2000 1999
----------- -----------
<S> <C> <C>
Net interest income
Banking $15,587 $14,403
Gift certificate subsidiary 1,216 750
Other 172 202
Eliminations (1) (1)
----------- -----------
Total $16,974 $15,354
=========== ===========
Non-interest income
Banking $3,844 $4,198
Gift certificate subsidiary 549 338
Other (a) 1,872 2,251
Eliminations (a) (1,858) (2,042)
----------- -----------
Total $4,407 $4,745
=========== ===========
Net income
Banking $5,455 $4,952
Gift certificate subsidiary 821 412
Other 143 255
Eliminations (1) (1)
----------- -----------
Total $6,418 $5,618
=========== ===========
Assets as of March 31
Banking $1,561,558 $1,567,942
Gift certificate subsidiary 70,735 53,011
Other 12,542 22,498
Eliminations (7,401) (68,463)
----------- -----------
Total $1,637,434 $1,574,988
=========== ===========
</TABLE>
(a) Data processing revenues, for services provided to the banking segment
and certain other operating areas by the data processing subsidiary, are
eliminated in the consolidated statement of income.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This item discusses the results of operations for the Company
for the three months ended March 31, 2000, and compares this period
with the same period of the previous year. In addition, the
discussion describes the significant changes in the financial
condition of the Company at March 31, 2000 as compared to December
31, 1999. This discussion should be read in conjunction with the
unaudited consolidated financial statements and accompanying notes
presented in Part I, Item 1 of this report.
RESULTS OF OPERATIONS
Net income for the quarter ended March 31, 2000 was $6.418
million or $0.59 per share on a diluted basis compared to $5.618
million or $0.52 per share on a diluted basis for the same period
last year. Net income for the quarter ended March 31, 2000, when
compared to the same period in 1999, increased 14.2% and diluted
net income per share increased 13.5%. Excluding real estate sales
gains in each quarter, net income in the first quarter of 2000
increased 23.1% over the first quarter of 1999.
The increased operating performance is attributed primarily to
the combination of the following factors:
*An increase in net interest income on a tax equivalent
basis of 10%
*An increase in the core components of non-interest
income of 5.6%
*A decrease in other operating expenses of 0.5%
These factors are discussed in more detail below.
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 rate of interest earned on earning assets and the average
rate of interest expensed on interest bearing liabilities. The
interest margin is tax equivalent net interest income divided by
average earning assets. The following table summarizes the above
for the three months ended March 31, 2000 and 1999.
Dollars in thousands Three Months Ended
March 31
------------------------
2000 1999
---------- -----------
Total interest income $31,559 $28,241
Tax equivalent adjustment 413 458
-------- --------
Tax equivalent interest income 31,972 28,699
Total interest expense 14,585 12,887
-------- --------
Tax equivalent net interest income $17,387 $15,812
======== ========
Average rate on earning assets 8.13% 7.79%
Average rate on interest bearing liabilities 4.69% 4.37%
Net interest spread, annualized 3.44% 3.42%
Net interest margin, annualized 4.42% 4.29%
Average earning assets $1,576,397 $1,495,373
Average interest bearing liabilities $1,249,991 $1,195,416
Tax equivalent net interest income increased $1.575 million or
approximately 10% for the three months ended March 31, 2000,
compared to the first quarter in 1999. The increased net interest
income is attributed primarily to increased earning asset volume
between these periods. Increased interest rates did not have a
significant impact on the change in net interest income between
these quarters. Average earning assets increased $81 million or
5.4% in the first quarter of 2000 compared to the first quarter of
1999, with 32% of this increase supported by increases in non-
interest bearing sources of funds. The net interest margin
increased 13 basis points during the first quarter of 2000 compared
to the first quarter in 1999, and was favorably impacted by the
increase in non-interest bearing sources of funds. The net
interest spread increased 2 basis points as the average rate on
earning assets increased 34 basis points while the costs of
interest bearing liabilities increased 32 basis points. The
average prime rate in the first quarter of 2000 was 8.68%, an
increase of 93 basis points from the first quarter of 1999.
Allowance for Loan Losses and 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 each
segment 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 judgment, deserve current recognition. Based on this
process, the allowance for loan losses was considered adequate at
March 31, 2000.
The allowance for loan losses was $9,876,000 on March 31,
2000, and was 0.94% of loans outstanding and 230% of non-performing
loans. At December 31, 1999, the allowance for loan losses was
$9,854,000 and was 0.93% of loans and 212% of non-performing loans.
Net loans charged-off in the first quarter of 2000 were $553,000,
compared to $230,000 in the first quarter of 1999. Loan charge-
offs related to the Company's indirect automobile lending
activities aggregated $516,000 in the first quarter of 2000,
compared to $191,000 in the first quarter of 1999. The provision
for loan losses in the first quarter of 2000 was $575,000, compared
to $281,000 in the first quarter of 1999. The increase in the
provision for loan losses related to the increased level of
charged-offs loans. See Non-Performing Loans and Assets on page 15.
An analysis of the changes in the allowance for loan losses
and selected ratios follows:
Dollars in thousands Three Months Ended
March 31
-------------------
2000 1999
------- -------
Balance at January 1 $9,854 $9,010
Loans charged off ($615) ($275)
Recoveries $62 $45
-------- --------
Net loans charged off ($553) ($230)
Provision for loan losses $575 $281
-------- --------
Balance March 31 $9,876 $9,061
======== ========
Average loans, net of unearned income $1,053,898 $997,027
Provision for loan losses to average loans 0.05% 0.03%
Allowance for loan losses to average loans 0.94% 0.91%
Allowance for loan losses to period-end loans 0.94% 0.91%
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 months
ended March 31, 2000 and 1999:
In thousands Three Months Ended
March 31
------------------
2000 1999
------- -------
Non-Interest Income:
Income from trust department $820 $665
Service charges on deposit accounts 1,573 1,404
Gift certificate fees 556 328
Securities gains -- 13
Gains on sales of real estate 285 841
Money order processing fees -- 180
Other 1,173 1,314
------- -------
Total non-interest income $4,407 $4,745
======= =======
Other Operating Expenses:
Salaries and employee benefits $6,961 $6,969
Occupancy expenses 865 793
Furniture and equipment expenses 1,137 1,164
Advertising and marketing 288 331
Operating supplies 318 358
Legal and professional fees 347 458
Taxes-Bank, property and other 417 358
Other 1,444 1,402
------- -------
Total other operating expenses $11,777 $11,833
======= =======
Non-interest income in the first quarter of 2000 includes
$285,000 of gains on real estate sales, primarily a gain on the
sale of a former branch, while non-interest income in the first
quarter of 1999 includes $841,000 of gains on other real estate
sales. Excluding these gains, non-interest income in the first
quarter of 2000 increased $218,000, or 5.6%, over the first quarter
of 1999. Income from the Trust Department increased $155,000, or
23%, as a result of the increased level of assets under management
since the first quarter of 1999. Deposit service charges increased
$169,000, or 12%, primarily as a result of increased service charge
rates and other changes in deposit account parameters implemented
in the third quarter of 1999. Service charges on dormant gift
certificates caused a $228,000 increase in gift certificate income
over the first quarter of 1999. Processing fees for services
provided to the purchaser of the former money order subsidiary,
which were phased out in the third quarter of 1999, declined
$180,000.
Other operating expenses of $11.8 million decreased $56,000,
or 0.5%. Salaries and benefits in the first quarter of 2000 were
relatively unchanged from the first quarter of 1999. The impact of
normal salary increases since the first quarter of 1999 was offset
by lower staffing levels. Staffing levels averaged 578 full-time
equivalent (FTE) employees in the first quarter of 2000, compared
with 621 in the first quarter of 1999. The decrease in personnel
levels is attributed to normal attrition and the Company expects
staffing levels to return to approximately 600 FTE during next two
quarters. A significant portion of the open positions are in the
very competitive market for clerical and teller personnel.
Equipment expenses declined $27,000, or 2%, in the first quarter of
2000 compared to the first quarter of 1999. Equipment expenses are
expected to increase later in the year as several new initiatives,
including internet banking, ATM upgrades and check imaging, are
implemented. These projects are projected to increase 2000
equipment expenses by approximately $200,000. Occupancy expenses
increased $72,000, or 9%, in the first quarter of 2000 compared to
the first quarter of 1999. Other operating expenses reflect
reductions in legal and professional fees, advertising and
marketing, and other real estate expenses of $111,000, $43,000 and
$125,000, respectively.
Income Taxes
The Company had income tax expense of $2,611,000 for the first
quarter of 2000 compared to $2,367,000 for the same period in 1999,
which yielded effective tax rates of 28.9% for 2000 and 29.6% for
1999.
FINANCIAL CONDITION
Average assets were $1.655 billion for the first quarter of
2000, an increase of $77 million or 4.9% compared to the last
quarter of 1999. Actual total assets decreased approximately $107
million from December 31, 1999 to March 31, 2000. The decline in
actual assets from December 31, 1999, is not unusual considering
the seasonally high gift certificates outstanding and securities
sold under agreements to repurchase at year-end. Included in the
increase in average earning assets are increases in average loans
of $5 million , and increases in average securities of $73 million.
The average earning asset growth was funded by an $16 million
increase in average deposit balances, a $17 million increase in
average gift certificates outstanding and a $47 million increase in
average customer repurchase agreements and federal funds purchased.
Nonperforming Loans and Assets
A summary of non-performing loans and assets follows:
Dollars in thousands March 31, 2000 December 31, 1999
Loans accounted for on a non-
accrual basis $1,602 $1,551
Restructured loans 773 811
Loans contractually past due
ninety days or more as to
interest or principal payments 1,915 2,290
------- -------
Total non-performing loans 4,290 4,652
Other real estate held for sale 9,482 9,782
------- -------
Total non-performing assets $13,772 $14,434
======= =======
Non-performing loans to total loans 0.41% 0.44%
Non-performing assets to total assets 0.84% 0.83%
Allowance for loan losses to non-
performing loans 230% 212%
Loans classified as impaired at March 31, 2000, aggregated
$4.4 million and included $2.1 million of indirect automobile loans
past due 45 days or more and all non-accrual and restructured
loans. At December 31, 1999, impaired loans aggregated $5.0
million and included $2.6 million of past due indirect automobile
loans.
As of March 31, 2000 and December 31, 1999, the Company had
$12.0 million and $16.7 million, respectively, of loans which were
not included in the past due, non-accrual or restructured
categories, but for which known information about possible credit
problems caused management to have doubts as to the ability of the
borrowers to comply with the present loan repayment terms. Based
on management's evaluation, including current market conditions,
cash flow generated and appraisals, no significant losses are
anticipated in connection with these loans. These loans are
subject to continuing management attention and are considered in
determining the level of the allowance for loan losses.
Management continually monitors lending and underwriting
activity and adjusts lending policies to respond to changes in
market conditions and risks. Recent policy revisions related to
indirect automobile lending, combined with changes in market
conditions, resulted in reduced indirect origination activity
during the first quarter of 2000. Since December 31, 1999,
indirect automobile loans have declined from $103 million to $99
million.
The Company considers the level of nonperforming loans in its
evaluation of the adequacy of the allowance for loan losses. See
Allowance for Loan Losses and Provision for Loan Losses on page 12.
Other real estate aggregated $9.5 million at March 31, 2000
and was principally comprised of properties acquired in settlement
of real estate development loans in 1996, and a completed
condominium project acquired in settlement of loans in November
1997. The carrying value of real estate development property has
been substantially reduced through sales from an original carrying
value of $15.2 million in 1996 to $1.7 million at March 31, 2000.
The Company has 15 acres of commercial property remaining. The
Company has contracts for additional property sales that are
expected to further reduce carrying value in the second quarter of
2000 by approximately $200,000. The condominium project, which had
35 unsold units at the time of acquisition, now involves 30
completed and readily marketable units and 7.5 acres of adjacent
developed land. This riverfront development had a carrying value
of $7.4 million on March 31, 2000. Sales efforts, under a new
listing agreement entered into during the first quarter of 2000,
are expected to intensify during the second and third quarter of
2000.
LIQUIDITY
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.
The parent Company's liquidity depends primarily on the
dividends paid to it as the sole shareholder of Bank of Louisville.
There were no dividends paid by the Bank to the Company during
that first quarter of 2000.
CAPITAL RESOURCES
At March 31, 2000, shareholders' equity totaled $182.9
million, an increase of $4.3 million since December 31, 1999. Net
income of $6.4 million after cash dividends of $2.5 million
provided $3.9 million of the increase. Proceeds and tax benefits
from stock options exercised added $461,000 to shareholders' equity
in the first quarter of 2000.
The Company's capital ratios exceed minimum regulatory
requirements and are as follows:
Company Company
March 31, December 31, Minimum
2000 1999 Required
-------- -------- --------
Leverage Ratio 11.3% 11.5% 4.00%
Tier I risk based capital ratio 15.1% 14.4% 4.00%
Total risk based capital ratio 15.9% 15.2% 8.00%
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's March 31, 2000 analysis of the impact of changes
in interest rates on net interest income over the next 12 months
indicates an increasing exposure to lower interest rates since
December 31, 1999, which, in part, is attributed to matured or
maturing interest rate swap contracts. The table below illustrates
the simulation analysis of the impact of a 50 or 100 basis point
upward or downward movement in interest rates. The impact of the
rate movement was simulated as if rates changed immediately from
March 31, 2000 levels, and remained constant at those levels
thereafter. Management continually evaluates this data and could
make adjustments to the asset and liability structure and/or
pricing policies in the future to minimize the actual impact of
rate changes.
Movement in interest
rates from March 31, 2000 rates
Increase Decrease
+50bp +100bp -50bp -100bp
Net interest income decrease (in1000's) $(1,101) $(1,016) $(1,821) $(2,126)
Net income per share decrease $( 0.07) $( 0.06) $( 0.11) $( 0.13)
Forward Looking Statements
The statements contained in this report that are not purely
historical are forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. The use of words such as
"believes", "estimates", "plans", "expects" and similar expressions
is intended to identify forward-looking statements. All forward-
looking statements included in this document are based on
information available to the Company on the date hereof, and the
Company assumes no obligation to update any such forward-looking
statement. It is important to note that the Company's actual
results could differ materially from those in such forward-looking
statements. Factors that could cause results to differ materially
from those projected include, among others, customer concentration;
cyclicality; fluctuation of interest rates; risk of business
interruption; adequacy of the allowance for loan losses; valuation
of other real estate; dependence on key personnel; and government
regulation.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
A report on Form 8-K was filed March 28, 2000 to report the
Company's newly authorized stock repurchase program.
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: May 11, 2000 By:/s/ Steven Small
Steven Small
Treasurer
Date: May 11, 2000 By:/s/ Rick Guillaume
R.K. Guillaume
Chief Executive Officer
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<MULTIPLIER> 1000
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<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
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