UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended June 30, 1997
or
[ ] Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ____ to ____
Commission file number: 0-22663
BANDO McGLOCKLIN CAPITAL CORPORATION
(Exact name of registrant as specified in its charter)
Wisconsin 39-1364345
(State or other jurisdiction of (I.R.S. Employer
incorporation) Identification No.)
W239 N1700 Busse Road
P.O. Box 190 53072-0190
Pewaukee, Wisconsin (Zip Code)
(Address of principal executive
offices)
Registrant's telephone number, including area code: (414) 523-4300
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No ___
On August 12, 1997 there was 3,689,102 shares outstanding of the
Registrant's common stock, 6 2/3 cents par value.
<PAGE>
BANDO McGLOCKLIN CAPITAL CORPORATION
FORM 10-Q INDEX
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet as of June 30, 1997 and
December 31, 1996 . . . . . . . . . . . . . . . . . . . . . 3-4
Consolidated Statement of Operations - For the Three
and Six Months Ended June 30, 1997 and 1996 . . . . . . . . . 5
Consolidated Statement of Cash Flows - For the Six
Months Ended June 30, 1997 and 1996 . . . . . . . . . . . . 6-7
Notes to the Consolidated Financial Statements . . . . . . 8-9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . 10-14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . 15
Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . . 15
Item 3. Defaults Upon Senior Securities . . . . . . . . . . . . . . 15
Item 4. Submission of Matters to a Vote of Security Holders . . . . 15
Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . 15
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . 15
Signatures . . . . . . . . . . . . . . . . . . . . . . . . 16
Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . 17
<PAGE>
BANDO McGLOCKLIN CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
June 30, 1997 December 31, 1996
(Unaudited) (Unaudited)
ASSETS
Loans $128,495,986 $69,468,291
Loan-backed certificates - 1,988,056
Land 295,002 369,577
Less: reserve for loan losses (450,000) (450,000)
Less: retained loan discount (270,670) (1,482,657)
---------- ---------
Investments 128,070,318 69,893,267
Excess servicing asset 282,787 1,555,231
Short-term securities 2,450,000 -
Investment in swap contracts at
market value 227,025 444,257
Accounts receivable (net of
allowance of $5,367
and $16,245, respectively) 2,021,263 1,176,025
Inventory 2,377,412 1,827,170
Interest receivable 1,186,565 1,348,860
Cash 1,086,235 1,337,556
Fixed assets (net of accumulated
depreciation of $620,970 and
$541,791, respectively) 1,833,094 1,419,930
Other assets 1,224,727 727,001
----------- ----------
Total Assets $140,759,426 $79,729,297
=========== ==========
<PAGE>
BANDO McGLOCKLIN CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (Continued)
June 30, 1997 December 31, 1996
(Unaudited) (Unaudited)
LIABILITIES, MINORITY INTEREST,
PREFERRED STOCK AND SHAREHOLDERS'
EQUITY
Commercial Paper $24,809,703 $21,768,394
Notes payable to banks 7,500,000 9,700,000
---------- ----------
Short-term borrowings 32,309,703 31,468,394
State of Wisconsin Investment Board
note payable 6,333,333 6,666,667
Loan participations with repurchase
options 62,719,358 5,348,619
Accounts payable 908,115 565,803
Other notes payable 24,435 29,469
Other liabilities 3,446,443 2,286,050
----------- -----------
Total Liabilities 105,741,387 46,365,002
----------- ----------
Minority interest in subsidiaries 1,162,649 598,211
Preferred stock, 1 cent par value,
3,000,000 shares authorized,
674,791 shares issued and
outstanding after deducting 15,209
shares in treasury 16,908,025 16,908,025
Shareholders' Equity
Common Stock, 6 2/3 cents par
value, 15,000,000 shares
authorized, 3,990,100 and
3,955,744 shares issued and
outstanding, before deducting
shares in treasury,
respectively 266,006 263,716
Additional paid-in capital 19,741,189 19,498,326
Retained earnings/(deficit) 792,681 (641,370)
Treasury stock, at cost (312,438
and 266,650 shares,
respectively) (3,852,511) (3,262,613)
----------- -----------
Total Shareholders' Equity 16,947,365 15,858,059
----------- -----------
Total Liabilities, Minority
Interest, Preferred Stock and
Shareholders' Equity $140,759,426 $79,729,297
=========== ===========
<PAGE>
BANDO McGLOCKLIN CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1997 1996 1997 1996
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenues:
Interest on loans $2,740,923 $1,885,452 $5,173,510 $3,860,165
Net sales of manufacturing
subsidiaries 4,625,296 381,430 7,654,936 653,357
Interest on short-term
securities 16,613 16,529 29,889 32,379
Premium (expense) income 8,270 60,306 (60,457) 65,984
Other income 601,839 229,886 637,477 315,113
------------- ------------- -------------- ------------
Total Revenues 7,992,941 2,573,603 13,435,355 4,926,998
Expenses:
Interest expense 1,633,667 598,255 2,897,983 1,300,986
Cost of goods sold of
Manufacturing subsidiaries 2,421,389 213,146 4,058,523 430,415
Salaries and employee benefits 497,455 360,858 963,894 687,832
Change in appreciation on
investment swaps 84,176 333,388 217,232 358,455
Realized (gains) losses - (140) - 15,926
Other operating expenses 1,150,793 643,463 1,943,199 1,000,431
----------- ---------- ----------- -----------
Total Expenses 5,787,480 2,148,970 10,080,831 3,794,045
----------- ---------- ----------- -----------
Net operating income before
income taxes and minority
interest 2,205,461 424,633 3,354,524 1,132,953
----------- ---------- ----------- -----------
Provision for income taxes (461,983) - (694,056) -
Minority interest in earnings of
Subsidiaries (391,972) - (564,438) -
----------- ---------- ----------- -----------
Net Income $1,351,506 $424,633 $2,096,030 $1,132,953
=========== ========== =========== ===========
Net Income Per Common Share $0.37 $0.11 $0.57 $0.30
Weighted Average Shares
Outstanding 3,698,556 3,717,318 3,707,295 3,755,596
=========== ========== =========== ===========
</TABLE>
<PAGE>
BANDO McGLOCKLIN CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
Six Months Ended
June 30, 1997 June 30, 1996
(Unaudited) (Unaudited)
Cash Flows from Operating
Activities
Net income $2,096,030 $1,132,953
Loans made (24,973,379) (19,484,289)
Principal collected on loans 17,580,922 8,897,629
Loans sold - 13,024,035
Premium expense (income) - net 60,457 (65,984)
Loans purchased (49,647,182) -
Other adjustments to reconcile
net income to net cash (used)
provided by operating
activities:
Change in appreciation on
investment swaps 217,232 358,455
Amortization 48,944 25,196
Depreciation 79,179 1,595
Change in minority interest
in subsidiaries 564,438 -
Increase (decrease) in cash due
to changes in:
Accounts receivable (845,238) (117,861)
Inventory (550,242) 19,173
Interest receivable 162,295 (74,156)
Other assets (546,670) (31,392)
Accounts payable 342,312 208,444
Other liabilities 1,160,393 (839,932)
----------- -----------
Net Cash (Used) Provided by
Operations (54,250,509) 3,053,866
----------- -----------
Cash Flows from Investing
Activities:
Purchase of fixed assets (492,343) (198,221)
Real Estate sold 74,575 777,213
Purchase of short-term
securities (2,625,000) (1,060,255)
Proceeds from maturity of
securities 175,000 1,063,778
Acquisition of Middleton Doll - 400,325
----------- ------------
Net Cash (Used) Provided by
Investing Activities (2,867,768) 982,840
----------- ------------
<PAGE>
BANDO McGLOCKLIN CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)
Six Months Ended
June 30, 1997 June 30, 1996
(Unaudited) (Unaudited)
Cash Flows from Financing Activities:
Increase in short-term borrowings $841,309 $1,628,675
Proceeds from loan participations
with repurchase options - net 57,370,739 3,983,990
Repayment of SWIB note (333,334) (6,666,667)
Decrease in other notes payable (5,034) -
Dividends paid (661,979) (1,802,302)
Proceeds from exercise of stock
options 245,153 -
Repurchase of common stock (589,898) (1,462,318)
---------- ----------
Net Cash Provided (Used) in Financing
Activities 56,866,956 (4,318,622)
----------- -----------
Net decrease in cash (251,321) (281,916)
Cash, beginning of period 1,337,556 1,008,847
---------- ----------
Cash, end of period $1,086,235 $726,931
========== ===========
<PAGE>
BANDO McGLOCKLIN CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 NATURE OF BUSINESS
Bando McGlocklin Capital Corporation (the "Company"), was incorporated in
February 1980 and provides long-term secured loans to finance the growth,
expansion and modernization of small businesses.
On March 26, 1993, the Company completed the formation of a holding
company structure by transferring substantially all of its assets and
liabilities to Bando McGlocklin Small Business Lending Corporation
("BMSBLC"), a wholly owned subsidiary of the Company. At the close of the
day on December 31, 1996, BMSLBC surrendered its Small Business
Administration ("SBA") license. BMSBLC continues to provide secured loans
to small business concerns. Prior to January 1, 1997, BMSBLC was known as
Bando McGlocklin Small Business Investment Corporation.
On May 5, 1993, the Company formed Bando McGlocklin Investment Company
("BMIC"), a subsidiary of the Company. In May 1993, a partially developed
real estate parcel was transferred to BMIC. In December 1996 one percent
of the economic interest in BMIC was sold to an unrelated third party. In
January 1997, this one percent interest was sold to an officer of the
Company, and he was given 100% of the voting stock of BMIC by the Company.
In 1997, BMSBLC contributed it's ownership interest in Lee Middleton
Original Dolls, Inc. ("Middleton Doll") and License Products, Inc.
("License Products"), both 51% owned subsidiaries engaged in the
manufacturing business to BMIC. The consolidated accounts of the Company
reflect the consolidated financial position and results of operations of
BMIC, Middleton Doll and License Products.
Prior to January 2, 1997, the Company and BMSBLC were registered as
investment companies under the Investment Company Act of 1940 ("1940
Act"). Effective January 2, 1997, the Company and BMSBLC deregistered as
investment companies under the 1940 Act. The Company continues to operate
as a registrant under the Securities Act of 1933, but now reports under
the Securities Exchange Act of 1934 ("1934 Act"). The financial position
as of December 31, 1996 and the results of operations for the three months
and six months ended June 30, 1996 and cash flows for the six months ended
June 30, 1996 have been restated as if the Company had always reported
under the 1934 Act. Under the 1940 Act, the investments in BMIC,
Middleton Doll and License Products were accounted for as common stock
investments and stated at "fair value" as determined in good faith by the
Board of Directors. Under the 1934 Act, these three subsidiaries are
consolidated. Since 1993, the Company only owned 49% of Middleton Doll.
The acquisition of the additional 2% of Middleton Doll was completed at
the end of June 1996. Prior to this acquisition, Middleton Doll was
accounted for on the equity method.
During 1996 the Company changed its year-end from June 30 to December 31.
In 1997, the Company intends to capitalize a bank holding company and then
spin-off the bank holding company in a common share distribution to
Company shareholders. After the Company distributes its shares in the
bank holding company to shareholders, the principal business of the
Company will be to manage its loan portfolio and to participate in loans
with third party loan originators.
NOTE 2 - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Bando
McGlocklin Capital Corporation (the "Company") and its majority-owned
subsidiaries have been prepared in accordance with the instructions to
Form 10-Q and do not include all of the other information and disclosures
required by generally accepted accounting principles. These statements
should be read in conjunction with the unaudited consolidated financial
statements and notes thereto for the quarter ended March 31, 1997 included
in the Company's Quarterly Report on Form 10-Q for that period.
The accompanying consolidated financial statements have not been audited
by independent accountants in accordance with generally accepted auditing
standards, but in the opinion of management such financial statements
include all adjustments, consisting only of normal recurring accruals,
necessary to summarize fairly the Company's financial position and results
of operations. The results of operations for the six months ended June
30, 1997 may not be indicative of the results that may be expected for the
year ending December 31, 1997.
NOTE 3 SFAS 128
In February 1997 the Financial Accounting Standards Board issued Statement
of Accounting Standards No. 128, Earnings Per Share ("SFAS 128"), which
will be effective for financial statements issued after December 15, 1997.
The current primary/fully diluted earnings per share ("EPS") under APB No.
15 will be replaced with a new basic/diluted EPS calculation that is
intended to provide greater consistency and comparability. It is not
anticipated that the effects of SFAS 128 on the Company will be material.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
General
Amounts presented for the 1997 reporting period and at December
31, 1996 include the consolidation of the operations of the
following companies: Bando McGlocklin Capital Corporation (the
"Company"); Bando McGlocklin Small Business Lending Corporation
("BMSBLC"), a 100% owned subsidiary of the Company; Bando
McGlocklin Investment Corporation ("BMIC"), a 99%-owned
subsidiary of the Company; Lee Middleton Original Dolls, Inc.
("Middleton Doll") and License Products, Inc. ("License
Products"), 51%-owned subsidiaries of BMIC. The June 30, 1996
reporting period includes the consolidation of the operations of
the following companies: the Company; BMSBLC and BMIC, 100%-
owned subsidiaries of the Company; Middleton Doll and License
Products, 51%-owned subsidiaries of the Company. Since 1993 the
Company only owned 49% of Middleton Doll. The acquisition of an
additional two percent of Middleton Doll was completed at the end
of June 1996. Prior to this acquisition, Middleton Doll was
accounted for on the equity method.
The 1996 reporting period reflects the Company's financial
statements on a restated basis. Prior to January 2, 1997 the
Company and BMSBLC were registered investment companies therefore
they did not consolidate BMIC, Middleton Doll and License
Products, which were not registered investment companies. The
1997 and 1996 consolidated financial position and results of
operations and cash flows include the accounts of the Company and
its 51% or greater owned subsidiaries and are offset by the
minority interest in BMIC's, Middleton Doll's and License
Products's ownership.
FOR THE THREE MONTHS ENDED JUNE 30, 1997 AND 1996
The Company's net income after income taxes and minority interest
increased 218% to $1.4 million for the quarter ended June 30,
1997 compared to $0.4 million for the same period of last year.
Total revenues for the quarter ended June 30, 1997 increased 211%
to $8.0 million from $2.5 over the corresponding prior year
period. This increase is primarily due to the consolidation of
Middleton Doll's sales of $4.3 million for the quarter ended June
30, 1997. The acquisition of an additional two percent of
Middleton Doll was completed at the end of June 1996; previously
it was accounted for on the equity method and was not
consolidated in the financial statements. Interest on loans
increased $0.9 million as a result of the Company repurchasing
loans that were previously sold to a third party. This increase
in interest income is offset by increased interest expense. The
average loans under management increased $1.0 million to $134.4
million for the quarter ended June 30, 1997 from $133.4 million
for the quarter ended June 30, 1996. The increase in interest
income as a result of the increase in prime of .25% during March
1997 was completely offset by the decreasing yield on the
portfolio of loans due to the market's competitive pricing. The
remaining $0.3 million increase in total revenues was a result of
receiving $0.5 million from an executive's life insurance policy
where BMCC was the beneficiary in the second quarter of 1997
offset by a decrease of $0.1 million in commitment fees and $0.1
million in management fees that were recorded for the quarter
ended June 30, 1996. Both the commitment fees and the management
fees were non-recurring income for 1996.
Total operating expenses for the quarter ended June 30, 1997
increased 169% to $5.8 million from $2.1 million over the
corresponding prior period. $2.9 million of the increase is the
result of consolidating Middleton Doll's operations. Interest
expense increased 173% to $1.6 million from $0.6 million for
the quarters ended June 30, 1997 and 1996, respectively.
Interest expense increased by $0.9 million as a result of the
repurchase of loans by BMSBLC that had been previously sold.
Those repurchased loans were funded with new debt. This
repurchase had no impact on net operating income as both interest
income and interest expense increased by the same amount.
Interest expense, which is offset by swap income, increased by
$0.1 million because of a decline in swap income due to LIBOR
rates increasing as a result of prime rate increasing. Lastly,
the expense resulting from the decline in unrealized appreciation
on investment swaps, which are marked-to-market, decreased $0.2
million for the quarter ending June 30, 1997.
The Company's consolidated net income has been reduced by the
minority interest ownership in the net earnings of BMIC and
Middleton Doll, which have been consolidated by the Company. The
minority interest in earnings of subsidiaries equaled $0.4
million for the quarter ended June 30, 1997. Also the Company's
June 30, 1997 consolidated net income for the quarter has been
reduced by $0.4 million as a provision of income taxes for
Middleton Doll.
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
The Company's net income after income taxes and minority interest
increased 85% to $2.1 million for the six months ended June 30,
1997 compared to $1.1 million for the same period of last year.
Total revenues for the six months ended June 30, 1997 increased
173% to $13.4 million from $4.9 over the corresponding prior year
period. This increase is primarily due to the consolidation of
Middleton Doll's sales of $7.0 million for the six months ended
June 30, 1997. The acquisition of an additional two percent of
Middleton Doll was completed at the end of June 1996; previously
it was accounted for on the equity method and was not
consolidated in the financial statements. Interest on loans
increased $1.3 million as a result of the Company repurchasing
loans that were previously sold to a third party. This increase
in interest income is offset by increased interest expense. The
average loans under management increased $4.2 million to $135.5
million for the six months ended June 30, 1997 from $131.3
million for the six months ended June 30, 1996. The increase in
interest income as a result of the new loan growth and the
increase in prime as of the end of March 1997 was completely
offset by the decreasing yield on the portfolio of loans due to
the market's competitive pricing. The remaining $0.2 million
increase in total revenues was a result of receiving $0.5 million
from an executive's life insurance policy where BMCC was the
beneficiary during the second quarter of 1997 offset by a
decrease of $0.1 million in commitment fees, $0.1 million in
management fees and $0.1 million in premium income that were
recorded for the six months ended June 30, 1996. Both the
commitment fees and the management fees were non-recurring income
for 1996.
.
Total operating expenses for the six months ended June 30, 1997
increased 166% to $10.1 million from $3.8 million over the
corresponding prior period. $5.1 million of the increase is the
result of consolidating Middleton Doll's operations. License
Products' operating expenses decreased by $0.3 million.
Interest expense increased 123% to $2.9 million from $1.3 million
for the six months ended June 30, 1997 and 1996, respectively.
Interest expense increased by $1.3 million as a result of the
repurchase of loans by BMSBLC that had been previously sold.
Those repurchased loans were funded with new debt. This
repurchase had no impact on net operating income as both interest
income and interest expense increased by the same amount.
Interest expense, which is offset by swap income, increased by
$0.3 million because of a decline in swap income due to LIBOR
rates increasing as a result of the prime rate increasing and the
Company continues to grow its investments in mortgage loans by
utilizing leverage. Average loans increased $4.2 million in the
current six month period over the corresponding prior period.
Lastly, the expense resulting from the decline in unrealized
appreciation on investment swaps, which are marked-to-market,
decreased $0.1 million for the six months ending June 30, 1997.
The Company's consolidated net income has been reduced by the
minority interest ownership in the net earnings of BMIC and
Middleton Doll, which have been consolidated by the Company.
The minority interest in earnings of subsidiaries equaled $0.6
million for the six months ended June 30, 1997. Also the
Company's June 30, 1997 consolidated net income for the six
months has been reduced by $0.6 million as a provision of income
taxes for Middleton Doll.
LIQUIDITY AND CAPITAL RESOURCES
Total investment in loans and loan-backed certificates on the
balance sheet increased by $57.0 million, or 80% to $128.5 million
at June 30, 1997 from $71.5 million at December 31, 1996. During
the first and second quarter of 1997 the Company repurchased $49.6
million of loans previously sold to a third party and made new
loans of $25.0 million. The Company also collected $17.6 million
of principal payments on loans on the balance sheet and collected
$9.2 million of principal payments on loans that were sold to
third parties. The Company's loans under management decreased to
$136.6 million as of June 30, 1997 from $138.4 million as of
December 31, 1996. The increase in loans on the balance sheet
was primarily financed through secured borrowings.
Cash and short-term securities increased to $3.5 million at June
30, 1997 from $1.3 million at December 31, 1996.
The Company's total consolidated indebtedness at June 30, 1997
increased 133% to $101.4 million from $43.5 million as of
December 31, 1996. The Company, as of June 30, 1997, had $69.1
million outstanding in long-term debt and $32.3 million
outstanding in short-term borrowings and as of December 31, 1996,
had $12.0 million outstanding in long-term debt and $31.5 million
outstanding in short-term borrowings. The increase of $57.9
million is primarily the result of repurchasing loans previously
sold to third parties.
To the extent Middleton Doll has ongoing capital expenditure
needs, management believes those expenditures can be funded
through cash generated from operations.
The Company's board of directors has approved capitalizing
InvestorsBancorp, Inc., a bank holding company with approximately
$6.2 million and distributing to the Company's shareholders all
of its outstanding shares of InvestorsBancorp. InvestorsBancorp
is a proposed bank holding company organized to own all of the
capital stock of InvestorsBank (the "Bank"), a Wisconsin-
chartered bank. It is management's belief that the Company has
enough capital to invest approximately $6.2 million in
InvestorsBancorp and continue to operate the Company.
The Company began exploring the idea of opening a bank in 1994
when management noticed that banks and other traditional
financial institutions were beginning to enter the Company's
markets, by providing commercial real estate loans to small
businesses. This competition for commercial real estate loans
has had an adverse effect on the Company's margins. It was
decided a bank could compete more effectively based upon its
lower cost of funds.
After the Company distributes its shares in InvestorsBancorp to
shareholders, the principal business of the Company will be to
manage its loan portfolio and participate in new loans with third
party loan originators, including the Bank and possibly other
banks. The Company is also exploring the expansion of its real
estate lending business into ownership of real property including
related buildings and improvements for lease to small businesses.
The Company anticipates that adequate cash will be available to
fund loans and new investments.
All employees of the Company will terminate their employment with
the Company to become employees of the Bank, except for certain
executive officers who will be employees of both the Company and
the Bank. The Company and the Bank will enter into a Management
Services and Allocation of Operating Expenses Agreement (the
"Agreement"). The effect of such agreement will be to reduce the
level of operating expenses in the Company. The investment of
approximately $6.2 million in capital is expected to lower the
Company's operating income. Management is unable to measure the
net impact of the Agreement and the capitalization of
InvestorsBancorp on net operating income.
Statements included in this filing concerning the Company's
future prospects are "forward looking statements" under the
Federal securities laws. There can be no assurance that future
results will be achieved and actual results could differ
materially from forecasts and estimates.
<PAGE>
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The Company is not a defendant in any material pending legal
proceeding and no such material proceedings are known to be
contemplated.
Item 2. CHANGES IN SECURITIES
No material changes have occurred in the securities of the
Registrant.
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
Item 5. OTHER INFORMATION
None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) List of Exhibits
The Exhibits to this Quarterly Report on Form 10-Q are
identified on the Exhibit Index hereto.
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during
the quarter ended June 30, 1997.
<PAGE>
SIGNATURE
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 thereunder duly authorized.
BANDO McGLOCKLIN CAPITAL
CORPORATION
(Registrant)
/s/ George R. Schonath
Date: August 14, 1997 George R. Schonath
Chairman of the Board, Chief
Executive Officer and Chief
Financial Officer
<PAGE>
BANDO McGLOCKLIN CAPITAL CORPORATION
QUARTERLY REPORT ON FORM 10-Q
EXHIBIT INDEX
Exhibit
Number Exhibit
4 Second Amendment to Amended and Restated Loan Agreement
dated May 14, 1997 by and among Firstar Bank Milwaukee,
N.A.
10 Loan Participation Certificate and Agreement dated May 1,
1997, by and between Bando McGlocklin Small Business
Lending Corporation and Security Bank, SSB
11 Statement Regarding Computation of Per Share Earnings
27 Financial Data Schedule (EDGAR version only)
SECOND AMENDMENT TO
AMENDED AND RESTATED
LOAN AGREEMENT
THIS SECOND AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT,
dated as of May 14, 1997, amends the Amended and Restated Loan Agreement
dated as of June 28, 1996, as amended to date (as so amended, the "Loan
Agreement"), by and between FIRSTAR BANK MILWAUKEE, N.A. ("Bank") and
BANDO McGLOCKLIN SMALL BUSINESS LENDING CORPORATION formerly known as
Bando McGlocklin Small Business Investment Corporation ("Borrower").
RECITAL
Bank and Borrower desire to amend the Loan Agreement as provided
below.
AGREEMENTS
In consideration of the Recital and the agreements contained
herein and in the Loan Agreement, Bank and Borrower agree as follows:
1. Definitions and References. Capitalized terms used herein
shall have the meanings set forth in the Loan Agreement. All references
to the Loan Agreement contained in the Note or Loan Documents shall mean
the Loan Agreement as amended by this Second Amendment.
2. Amendments. The Loan Agreement is amended as follows:
(a) The first paragraph of Section 2 thereof is amended by
deleting the date "$12,500,000" contained therein and substituting the
date "$15,000,000" in its place.
(b) Bank and Borrower agree that any provisions of the
Loan Agreement requiring Borrower to maintain its status as a "small
business investment corporation" or to comply with regulations of the
Small Business Administration relating thereto shall no longer be in
effect.
(c) Exhibit A attached hereto shall be deemed to be an
exhibit to the Loan Agreement and shall replace its predecessor attached
thereto.
3. Effectiveness of this Amendment. This Second Amendment
shall become effective upon execution and delivery hereof by Borrower and
Bank and satisfaction of the following conditions:
(a) Revolving Note. Bank shall have received a Revolving
Note in the form of Exhibit A attached hereto, duly executed by Borrower
(the "Note").
(b) Closing Certificate. Bank shall have received copies,
certified by the Secretary or Assistant Secretary of Borrower to be true
and correct and in full force and effect on the date of this Second
Amendment of (i) resolutions of the Board of Directors of Borrower
authorizing the execution and delivery of this Second Amendment and the
Note; (ii) the Articles of Incorporation and By-Laws of Borrower; and
(iii) a statement containing the names and titles of the officer or
officers of Borrower authorized to sign this Second Amendment and the
Note, together with true signatures of such officers.
(c) Amendment to Intercreditor Agreement. Bank shall have
entered into an amendment to the Intercreditor Agreement, in form and
content satisfactory to Bank, with First Bank (N.A.), LaSalle National
Bank, Borrower and Firstar Trust Company, pursuant to which Exhibit A to
the Intercreditor Agreement is amended to reflect Bank's increased credit
facility with Borrower.
4. Representations and Warranties. Borrower represents and
warrants to Bank that:
(a) The execution and delivery of this Second Amendment
and the Note are within its corporate power, have been duly authorized by
all proper corporate action on the part of Borrower, are not in violation
of any existing law, rule or regulation of any governmental agency or
authority, and order or decision of any Court, the Articles of
Incorporation or By-Laws of Borrower or the terms of any agreement,
restriction of undertaking to which Borrower is a party or by which it is
bound, and do not require the approval or consent of the shareholders of
Borrower, any governmental body, agency or authority or any other person
or entity.
(b) The representations and warranties contained in the
Loan Agreement are correct and complete as of the date of this Second
Amendment and no condition or event exists or act has occurred that, with
or without the giving of notice or the passage of time, would constitute
an Event of Default under the Loan Agreement.
5. Expenses and Fees. Borrower shall reimburse Bank for all
out-of-pocket expenses incurred by Bank and all reasonable legal fees and
expenses incurred by Bank in connection with the preparation, negotiation,
execution and administration of this Second Amendment. Bank may debit any
account of Borrower maintained at Bank for the full amount of all such
fees and expenses.
6. Full Force and Effect. Except as amended hereby, the Loan
Agreement shall remain in full force and effect.
7. Counterparts. This Second Amendment may be executed in any
number of counterparts, all of which taken together shall constitute one
agreement, and any of parties hereto may execute this Second Amendment by
signing any such counterpart.
FIRSTAR BANK MILWAUKEE, N.A.
BY /s/ Jon B. Beggs
Jon B. Beggs, Vice President
BANDO McGLOCKLIN SMALL BUSINESS LENDING
CORPORATION (formerly known as Bando
McGlocklin Small Business Investment
Corporation)
BY /s/
Its Chairman
BY /s/
Its____________________________
LOAN PARTICIPATION CERTIFICATE AND AGREEMENT
THIS PARTICIPATION AGREEMENT is entered into as of this 1st day of
May, 1997 (the "Agreement") by and between BANDO McGLOCKLIN SMALL BUSINESS
LENDING CORPORATION (the "Company") and SECURITY BANK, SSB (the "Bank").
R E C I T A L S:
WHEREAS, the Company has entered into Commitment and Loan Agreements
(each a "Loan Agreement" and collectively the "Loan Agreements") with
those persons listed on Exhibit A (each a "Borrower" and collectively the
"Borrowers"), pursuant to which, among other things, the Company made
loans to Borrowers evidenced by each Borrower's Note in the principal
amount, at the interest rate, dated and maturing on the date all as listed
on Exhibit A (each a "Note" and collectively the "Notes"); and
WHEREAS, the Bank desires to purchase from the Company, and the
Company desires to sell, a participation in the Loan Agreements, the Notes
and all other legal documents and instruments creating or evidencing the
Company's loan (each a "Loan" and collectively the "Loans") to the
Borrower and all other legal documents and instruments securing or
guarantying the same (collectively, the "Loan Documents"), subject to the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the above premises and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. Definitions. As used in this Agreement, the following
capitalized terms shall have the following meanings:
(a) "Participant" means the Company and the Bank.
(b) "Participation" of a Participant means the undivided
interest of such Participant in the Note and Loan.
2. Sale, etc. The Company hereby sells, transfers and assigns and
the Bank hereby agrees to purchase from the Company, an undivided
Participation in the Notes and Loan Documents (in the amounts which are
listed on Exhibit A) for the aggregate amount of $21,811,236.88, the
receipt of which is hereby acknowledged by the Company. The Company
retains a Participation in the Note and Loan, which is and shall remain
subordinate to the Bank's rights and interest in the Loan and Loan
Documents and to Bank's full recovery of its participation, including any
interest or other amounts due in connection therewith. The Company will
deliver to Firstar Trust company, Milwaukee, Wisconsin ("Document
Custodian") the original Loan Documents, as agent for the Participants,
subject to the rights and duties herein described retained by the Company.
The Bank shall be entitled to interest on the aggregate amount of its
Participation at the rate of 7.90% per annum, payable in arrears on the
10th day of each calendar month commencing on the 10th day of the first
calendar month following the date hereof and continuing on the 10th day of
each calendar month until June 30, 1997. Subsequent to an event of
default in the payment of any funds due on any Note, the Bank shall be
entitled to interest on the aggregate amount of its Participation at the
rate of 2.0% above the rate otherwise in effect for the period that the
default is left uncured. Interest shall be determined on a daily basis
using the exact amount invested or remaining invested in the
Participation, including amounts due to be paid the Bank under Section 3
hereof, but not yet received by the Bank. All computation of interest
shall be made on the basis of a year of 360 days, composed of 12 months of
30 days in each month, using the actual number of days occurring for any
partial month for which such interest is payable. For the month beginning
July 1, 1997 and for each successive month thereafter, the interest rate
shall be equal to the one month London Interbank Offered Rate plus 1.5%.
The one month London Interbank Offered Rate means the rate published in
The Wall Street Journal on the first business day of each month.
The Company shall furnish the Bank a written computation of interest
with each payment of interest, provided, however, that the Bank shall make
the final determination of interest, which determination shall be
conclusive and binding, absent manifest error.
The Company shall pay a late payment fee equal to 5% of the amount of
any payment of interest, principal or other amounts due the Bank that is
not paid when due on any such late payments accepted by the Bank.
In the event that (i) the Company offers to repurchase, and the Bank
agrees to resell, any Note or Notes to the Company for the full amount of
the Bank's Participation, (ii) there is a payment in full prior to
maturity of any Note, or (iii) there is a payment in full of any Note upon
its stated maturity which occurs on or before July 1, 2000, then the Bank
agrees that, subject to the Bank's approval of the Loan, it will purchase
and the Company agrees that it will sell, an additional Note or Notes for
an amount not to exceed in the aggregate the amount of the Bank's
Participation that is repurchased by the Company or that has been repaid
by the Borrower to the Company.
In the event that there is a payment in full of any Note at or prior
to its stated maturity as provided in the preceding paragraph, the Bank
agrees that, subject to the Bank's approval of the Loan, it will purchase
and the Company agrees that it will sell an eightyfive percent (85%)
undivided Participation in an additional Note or Notes for an amount not
to exceed in the aggregate the amount of the Bank's Participation that is
paid at maturity within five (5) years from the date hereof or is prepaid
by the Borrower to the Company, provided that:
The Company shall provide to the Bank not less than five (5)
Business Days prior to the Company's receipt of the prepayment from
the Borrower:
a) an Officer's Certificate setting forth the original
principal amount of the Note being paid or prepaid, the stated
maturity of the Note being prepaid, the amount being paid, and
the interest rate for said Note as of the date of payment; and
b) an Officer's Certificate setting forth the original
principal balance of the Note (or Notes) to be purchased by the
Bank, the stated maturity of the Note (or Notes) to be purchased
by the Bank, the then-current principal balance of the Note (or
Notes) to be purchased by the Bank, and the then-current
interest rate for said Note (or Notes).
The Company may, at any time, repurchase any Note or Notes for the
full amount of the Bank's Participation in such Note or Notes, together
with any interest accrued thereon pursuant to Section 2 hereof. In the
event that the Company exercises its option to repurchase any Note or
Notes pursuant to this agreement, then: a) the Company shall pay to the
Bank on the date of the repurchase, a repurchase premium equal to 1.5% of
the Bank's Participation in such Note or Notes; and (ii) the Bank shall be
under no obligation to purchase an additional Note or Notes in
substitution therefor.
3. Collection and Allocation of Payments.
(a) All payments on account of principal, together with any
release fees, condemnation awards, renewal or extension fees, insurance
proceeds, payments received from guarantors or sureties, proceeds of
setoff and all proceeds of collection or from the sale or liquidation of
collateral for any Note (together, "Collections") and all payments of
interest received by the Company shall be allocated to, and paid by the
Company to the Bank as hereinafter set forth. On the tenth (10th) day of
each month, the Company agrees to remit to the Bank:
(i) Interest in the amount determined under Section 2 hereof for
the preceding month just ended, including interest on any amount of
interest not paid when due;
(ii) Eightyfive percent (85%) of any prepayment penalties or
fees on the Notes;
(iii) Eightyfive percent (85%) of Collections prior to maturity
of the Notes received during the preceding month just ended; and
(iv) One hundred percent (100%) of Collections after maturity of
the Notes (whether by acceleration or otherwise) received during the
preceding month just ended, up to a maximum of the Bank's
Participation therein.
In the event that all payments of principal received by the Company on any
Note, including all Collections, are not sufficient to repay the balance
of the Bank's Participation in any such Note, the Company agrees to
repurchase the unpaid principal balance of the Bank's Participation, plus
interest and other fees or charges due the Bank thereon, upon demand by
the Bank.
(b) All payments of principal and interest due under this
Agreement shall be made by wire transfer of immediately available funds by
the Company to the Bank no later than 12 p.m. on the dates when due. No
later than the preceding Business Day, the Company shall notify the Bank
of the anticipated amount or each remittance, together with sufficient
text to identify the Loan Participation Certificate and Agreement to which
such remittance relates, and the amount being remitted as interest, fees
or principal, as the case may be.
4. Loan Servicing. Until such time as the Bank has fully recovered
the amount invested in this Participation plus interest on the amount of
this Participation, the Company shall service and manage the Notes and
Loan Documents in accordance with its usual practices with respect to
loans of that type and shall exercise the same degree of care and shall
adhere to the same standards of conduct as would be the case if there were
no participation in such Loan, without cost or charge to the Bank. The
Company shall provide to the Bank a copy of all paid real estate tax bills
and all certificates of fire and hazard insurance provided by the
Borrowers to the Company. The Company shall pay all expenses incurred in
performance by the Company of its servicing obligations hereunder,
including expenses incurred in administering, collecting, enforcing or
protecting the Notes and Loan Documents. The Company shall not be liable
to the Bank for any action of, or failure to act or mistake on the part of
any of the Company's agents, officers, employees or attorneys with respect
to any transaction relating to the Loan, provided the Company has acted in
good faith and has not been guilty of any willful misconduct.
5. Covenants. Except as provided in Section 9 hereof, neither the
Company not the Bank shall, without the prior written consent of the other
Participant:
(a) Amend the Note or any of the Loan Documents if the effect of
any such amendment is to extend the term of any Note, change the
amount, frequency or time for any payment due under the Note or
change the interest rate or other fees or charges due or payable
under the Note or any of the Loan Documents;
(b) Consent to any waiver of default or forbearance in
connection with any Note or Loan document; and
(c) Release or waive any security or any claim against the
Borrower or any guarantor or surety of the Borrower's obligations
under the Note and the Loan Documents.
6. Financial Information. The Company shall furnish to the Document
Custodian copies of all annual financial statements of each Borrower. The
Company will furnish to the Bank, upon request, copies of interim
financial statements of any Borrower, appraisals, title reports,
environmental reports or any other information relating to a Borrower and
a Borrower's Loan. The Company shall not be responsible for the accuracy
of any information given to the Company by the Borrowers. The Company
shall promptly notify the Bank of any material inaccuracy or omission in
information of which the Company has knowledge, provided, however, that
the Company has no duty to investigate the accuracy of the information.
7. Indemnification. The Company agrees to indemnify and hold the
Bank harmless from any and all claims, losses, penalties, fines,
forfeitures, legal fees and related costs, judgments and any other costs
that the Bank may sustain as a result of the Company's obligations under
the Note and other Loan Documents, or this Agreement.
8. Borrower Default and Remedies. Upon a default in the payment of
any funds due on any Note, or in the performance of any term in any of the
Loan Documents, the Company shall promptly notify the Bank of the default.
In the event any default as described above is left uncured for a period
of ninety (90) days, the Company shall accelerate the maturity of the
entire indebtedness of such Note and commence foreclosure or other
appropriate proceedings to collect the Note and to enforce its rights
against any collateral securing the Note.
9. Lender Default and Remedies. In the event that Company shall
become the subject of liquidation, reorganization, receivership or similar
proceedings or a Default occurs, the Bank will have the right to
administer and service, or to collect and enforce, as the case may be, the
Note and the Loan Documents in its own name and for its own account and in
so doing, may, without limitation, notice or consent (notice and consent
being hereby waived by the Company) (a) amend the Note or any of the Loan
Documents; (b) change the nature or time of payment of the obligations
referred to therein; (c) consent to any waiver, modification, forbearance
or revision of the Note or any of the Loan Documents; and (d) release or
waive any security or any claim against the Borrower or any guarantor or
surety of the Borrower's obligations under the Note and the Loan
Documents.
10. General.
(a) This Agreement may only be changed, waived, discharged or
terminated by written agreement signed by the Company and the Bank.
The Company may not repurchase the unpaid principal balance of the
Bank's Participation without the Bank's consent.
(b) Neither the execution of this Agreement nor the purchase of
the Participation by the Bank is intended to be, nor shall it be,
construed to be, the formation of a partnership or joint venture
between the Company and the Bank.
(c) The delivery of the Note and the Loan Documents to the
Document Custodian shall constitute a sale and assignment of a
Participation in the Note and the Loan Documents to the extent of the
amounts stated herein. No payment by the Bank to the Company on
account of any such Participation shall evidence a loan by the Bank
to the Company.
(d) The Agreement embodies the entire agreement and
understanding between the Company and the Bank and supersedes all
prior agreements and understandings between the Company and the Bank
relating to the subject matter thereof.
(e) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof or affecting the
validity or enforceability of such provision in any other
jurisdiction.
(f) All of the terms, covenants and conditions herein contained
inure to the benefit of and are binding upon the Participants, their
successors and assigns.
(g) This Agreement is governed by the laws of the State of
Wisconsin.
(h) The Company acknowledges that it is acting as and will
fulfill its duties and obligations hereunder as a fiduciary to the
Bank.
(i) None of the terms, covenants, conditions, agreements or
provisions contained in this Agreement confer any rights upon, or are
enforceable by the Borrower, or its successors, legal representatives
or assigns.
Dated as of the date first above written.
BANDO MCGLOCKLIN SMALL BUSINESS
LENDING CORPORATION
By: /s/ George R. Schonath
George R. Schonath
Chairman of the Board and
Chief Executive Officer
SECURITY BANK SSB
By: /s/ Douglas S. Gordon
Douglas S. Gordon
Executive Vice President
<PAGE>
<TABLE>
<CAPTION>
BMSBLC/SECURITY PARTICIPATION Original Current Participation BMSBLC
Date of Loan Balance Loan Balance Loan Balance
Small Business Concern Note Balance 05/01/97 05/01/97 05/01/97
<S> <C> <C> <C> <C> <C>
Acme Machell 12/20/95 862,786 827,233.26 703,148.27 124,084.99
Carriage House of Brookfield (Bachman) 04/30/93 800,000 756,457.09 642,988.53 113,468.56
Columbia Grinding, Inc./LUSSIER 01/23/95 675,000 629,894.35 535,410.20 94,484.15
Dash Medical (Market Investment) 09/23/91 560,000 400,829.24 340,704.85 60,124.39
Dawes Transport (JD Invest) 03/31/92 858,000 629,450.90 535,033.27 94,417.64
Flexcraft, Inc. 11/17/88 1,230,000 800,021.61 680,018.37 120,003.24
Getzen Company 04/15/97 278,000 257,361.88 218,757.60 38,604.28
Ghidorzi/ C A Company 02/15/94 1,773,000 1,256,318.11 1,067,870.39 188,447.72
Hydro Thermal/Zaiser 03/23/90 800,000 635,793.59 540,424.55 95,369.04
Jansen Group Co Inc 07/01/96 640,000 630,442.53 535,876.15 94,566.38
Lakeland Supply (Lawrence Schmidt) 04/13/94 432,500 402,766.01 342,351.11 60,414.90
Lang Companies 9012/00004 06/23/94 1,760,000 1,602,972.22 1,160,632.67 442,339.55
Lang Companies - BMREIC 606 Genese 04/28/94 180,000 176,241.43 149,805.22 26,436.21
Lang Companies - BMREIC 711 Wells 03/07/94 409,000 396,822.72 337,299.31 59,523.41
Lang Companies - BMREIC 803 Genesee 04/12/94 800,000 764,993.53 650,244.50 114,749.03
LA-Z Boy /F AND E, Inc. (Grainer, Frank) 03/03/93 1,350,000 1,112,114.73 945,297.52 166,817.21
Mainline Industrial Distr. Inc. 09/09/88 900,000 403,790.57 343,221.98 60,568.59
Manutronics, Inc. (Roger Mayer) 07/09/93 1,538,000 1,457,222.53 1,238,639.15 218,583.38
Manutronics, Inc. (Roger Mayer) 06/27/94 675,000 621,217.79 528,035.12 93,182.67
MEE Enterprises, Inc. 06/30/92 742,500 226,884.09 192,851.48 34,032.61
Meyer Retaining Ring Co., Inc. 01/12/96 488,000 483,019.17 410,566.29 72,452.88
National Technologies, Inc. 08/03/95 1,770,000 1,703,992.99 1,400,000.00 303,992.99
Oconomowoc Mfg Company 03/19/92 454,400 38,052.55 32,344.67 5,707.88
Ortho-Kinetics, Inc. 03/30/95 1,319,143 1,263,101.59 1,073,636.35 189,465.24
Professional Systems (Pearson) 12/07/93 400,000 233,830.59 198,756.00 35,074.59
Python Products - BMREIC 01/19/94 457,000 344,883.41 293,150.90 51,732.51
Quality Stamping & Tube 02/16/96 1,351,000 1,299,941.68 1,104,950.43 194,991.25
Reich Tool & Design Inc. 05/13/96 425,000 420,633.95 357,538.86 63,095.09
Rock Transfer & Storage, Inc. 03/31/92 1,300,000 557,810.43 474,138.87 83,671.56
Sharp Packaging (Hawk III) 10/29/93 1,260,000 858,103.18 729,387.70 128,715.48
Sports Specialists/Ducrest 01/13/94 450,000 378,515.42 321,738.11 56,777.31
Supa Machine (Ackerman) 10/30/92 935,000 722,893.57 614,459.53 108,434.04
Valvax Corp. (TDJ Assoc) 08/08/91 267,000 172,826.42 146,902.46 25,923.96
Visual Impressions (V Productions) 05/29/96 1,084,000 832,001.50 640,000.00 192,001.50
Williams Steel (WSS Acquisition) 03/05/96 1,350,000 1,295,907.12 1,101,521.05 194,386.07
Zuelzke Tool & Engineering, Inc. 06/26/92 1,900,000 1,439,453.44 1,223,535.42 215,918.02
------------- ------------- ------------
26,033,795.19 21,811,236.88 4,222,558.31
============= ============= ============
<CAPTION>
BMSBLC/SECURITY PARTICIPATION EXHIBIT A
Market BMSBLC SECURITY Maturity Date PRIME+
Small Business Concern Value LTV LTV Mo Day YR Rate
<S> <C> <C> <C> <C> <C> <C> <C>
Acme Machell $1,459,000 56.7% 48.2% 1 1 6 Fixed 8.2% -1/1/1
Carriage House of Brookfield (Bachman) $1,100,000 68.8% 58.5% 5 31 0 1.25%
Columbia Grinding, Inc./LUSSIER $810,000 77.8% 66.1% 12 1 1 0.25%
Dash Medical (Market Investment) $765,000 52.4% 44.5% 11 1 98 1.00%
Dawes Transport (JD Invest) $1,000,000 62.9% 53.5% 2 1 0 1.00%
Flexcraft, Inc. $1,431,000 55.9% 47.5% 7 1 98 1.50%
Getzen Company $1,000,000 25.7% 21.9% 7 1 0 0.25%
Ghidorzi/ C A Company $3,127,400 40.2% 34.1% 4 1 1 Fixed 8.25% (04/01)
Hydro Thermal/Zaiser $875,000 72.7% 61.8% 4 1 0 0.00%
Jansen Group Co Inc $800,000 78.8% 67.0% 8 1 6 0.00%
Lakeland Supply (Lawrence Schmidt) $1,060,000 38.0% 32.3% 5 1 4 1.00%
Lang Companies 9012/00004 $1,800,000 89.1% 64.5% 7 1 0 1.00%
Lang Companies - BMREIC 606 Genese $225,000 78.3% 66.6% 6 1 99 1.00%
Lang Companies - BMREIC 711 Wells $509,000 78.0% 66.3% 4 1 99 1.00%
Lang Companies - BMREIC 803 Genesee $900,000 85.0% 72.2% 5 1 99 1.00%
LA-Z Boy /F AND E, Inc. (Grainer, Frank $2,050,000 54.2% 46.1% 4 1 98 1.00%
Mainline Industrial Distr. Inc. $1,050,000 38.5% 32.7% 5 1 99 Fixed 8%(5/99)
Manutronics, Inc. (Roger Mayer) $2,725,000 53.5% 45.5% 8 1 98 0.00%
Manutronics, Inc. (Roger Mayer) $2,725,000 22.8% 19.4% 8 1 99 0.00%
MEE Enterprises, Inc. $1,500,000 15.1% 12.9% 7 1 97 1.00%
Meyer Retaining Ring Co., Inc. $675,000 71.6% 60.8% 1 1 1 Fixed 8.20%
National Technologies, Inc. $2,350,000 72.5% 59.6% 1 1 1 1.00%
Oconomowoc Mfg Company $655,000 5.8% 4.9% 4 1 99 1.50%
Ortho-Kinetics, Inc. $2,800,000 45.1% 38.3% 3 1 0 0.25%
Professional Systems (Pearson) $800,000 29.2% 24.8% 1 1 4 0.00%
Python Products - BMREIC $515,000 67.0% 56.9% 7 1 99 1.00%
Quality Stamping & Tube $2,100,000 61.9% 52.6% 3 1 1 Fixed 8.25 (3/1)
Reich Tool & Design Inc. $600,000 70.1% 59.6% 6 1 6 Fixed 8.25%(-05/99)
Rock Transfer & Storage, Inc. $1,825,000 30.6% 26.0% 5 1 99 1.00%
Sharp Packaging (Hawk III) $1,350,000 63.6% 54.0% 12 1 0 Fixed 8.5%(12/01/97)
Sports Specialists/Ducrest $485,000 78.0% 66.3% 2 1 4 Fixed 7.9%(- 2/99)
Supa Machine (Ackerman) $1,150,000 62.9% 53.4% 6 1 98 1.00%
Valvax Corp. (TDJ Assoc) $325,000 53.2% 45.2% 2 1 99 1.25%
Visual Impressions (V Productions) $1,200,000 69.3% 53.3% 1 1 7 0.25%
Williams Steel (WSS Acquisition) $1,675,000 77.4% 65.8% 4 1 3 Fixed 8.00%(04/1/99)
Zuelzke Tool & Engineering, Inc. $2,400,000 60.0% 51.0% 8 1 97 Fixed 8.5%(8/97)
---------- ---- ----
$47,816,400 54.4% 45.6%
========== ==== ====
</TABLE>
Exhibit 11
<TABLE>
<CAPTION>
BANDO McGLOCKLIN CAPITAL CORPORATION AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER COMMON SHARE
Quarter Ended Year To Date
June 30 June 30
1997 1996 1997 1996
<S> <C> <C> <C> <C>
PRIMARY:
Average number of common shares
outstanding 3,675,739 3,695,561 3,685,699 3,730,844
Incremental shares calculated using the
treasury stock method 22,817 21,757 21,596 24,752
--------- --------- --------- ---------
Weighted average shares outstanding 3,698,556 3,717,318 3,707,295 3,755,596
========= ========= ========= =========
Net Income $1,351,506 $424,633 $2,096,030 $1,132,953
========= ========= ========= =========
Primary net income per common share $0.37 $0.11 $0.57 $0.30
========= ========= ========= =========
FULLY DILUTED:
Average number of common shares
outstanding 3,675,739 3,695,561 3,685,699 3,730,844
Incremental shares calculated using the
treasury stock method 30,155 22,847 31,009 24,752
---------- ---------- ---------- ----------
Weighted average shares outstanding 3,705,894 3,718,408 3,716,708 3,755,596
========== ========== ========== ==========
Net Income $1,351,506 $424,633 $2,096,030 $1,132,953
========== ========== ========== ==========
Fully diluted net income per common
share $0.36 $0.11 $.56 $0.30
===== ===== ====== ======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> APR-01-1997
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266,006
16,908,025
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