FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
{X} QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
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 0-18542
MID-WISCONSIN FINANCIAL SERVICES, INC.
(Exact name of registrant as specified in its charter)
Wisconsin 06-1169935
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
132 West State Street, Medford, WI 54451
(Address of principal executive offices, including zip code)
(715) 748-4364
(Registrant's telephone number, including area code)
____________________________________________________________________
(Former name, former address & 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 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
As of September 30, 1996 there were 1,858,792 shares of $.10 par value
common stock outstanding.
<PAGE>
MID-WISCONSIN FINANCIAL SERVICES, INC.
INDEX
PART I. FINANCIAL INFORMATION
PAGE
Item 1. Financial Statements
Consolidated Balance Sheets
September 30, 1996 and December 31, 1995 3
Consolidated Statements of Income
Three Months Ended September 30, 1996
and September 30, 1995; and Nine Months
Ended September 30, 1996 and September 30, 1995 4
Consolidated Statements of Cash Flows
Nine months Ended September 30, 1996
and September 30, 1995 5
Notes to Consolidated Financial Statements 6-10
Item 2. Management's Discussion and Analysis of
Financial Conditions and Results of
Operations 11-13
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports of Form 8-K 14
Signatures 15
Exhibit Index 16
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
MID-WISCONSIN FINANCIAL SERVICES, INC.
and Subsidiary
CONSOLIDATED BALANCE SHEETS
<CAPTION>
September 30, 1996 December 31, 1995
ASSETS
<S> <C> <C>
Cash & cash equivalents $11,385,793 $10,683,544
Interest-bearing deposits in other
financial institutions 11,496 20,246
Investment securities available for sale
At fair value 57,401,267 55,280,506
Total loans 175,052,128 172,678,045
Less - Allowance for credit losses (1,948,295) (1,835,951)
Net loans 173,103,833 170,842,094
Premises and equipment 3,905,057 4,135,949
Accrued interest and other assets 3,924,144 3,643,833
TOTAL ASSETS $249,731,590 $244,606,172
LIABILITIES AND STOCKHOLDERS' EQUITY
Non-interest bearing deposits $22,718,028 $22,645,269
Interest-bearing deposits 169,917,899 169,499,137
Total Deposits 192,635,927 192,144,406
Short-term borrowings 24,934,083 21,386,623
Long term borrowings 3,400,000 4,000,000
Accrued interest and other liabilities 3,674,909 3,325,185
Total Liabilities 224,644,919 220,856,214
Stockholders' equity:
Common stock-Par value $.10 per share:
Authorized - 6,000,000 shares in 1996
- 6,000,000 shares in 1995
Issued & outstanding - 1,858,790 shares in 1996 185,879
- 1,857,290 shares in 1995 185,729
Additional paid-In capital 12,592,368 12,573,366
Retained earnings 12,402,034 10,685,070
Unrealized (loss) gain on securities available for sale (93,610) 305,793
Total Stockholders' Equity 25,086,671 23,749,958
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $249,731,590 $244,606,172
<FN>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
</TABLE>
<PAGE>
<TABLE>
MID-WISCONSIN FINANCIAL SERVICES, INC.
and Subsidiary
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
Three months ended Nine Months Ended
September 30, 1996 September 30, 1995 September 30, 1996 September 30, 1995
<S> <C> <C> <C> <C>
Interest income
Interest and fees on loans $4,102,431 $4,031,861 $12,183,957 $11,540,456
Interest on investment securities:
Taxable 834,225 770,941 2,504,697 2,376,345
Tax-exempt 79,910 68,728 219,692 244,836
Other interest income 18,121 53,547 28,846 85,185
Total interest income 5,034,687 4,925,077 14,937,192 14,246,822
Interest expense
Deposits-NOW 100,612 124,179 312,715 422,389
MMD 329,690 191,493 817,272 529,361
Savings 125,343 136,564 363,192 450,009
CDs & IRAs 1,485,325 1,559,812 4,404,282 4,399,737
U.S. Repurchase agreements 253,506 242,518 784,077 778,366
Long-term borrowings 56,345 51,956 154,625 162,222
Total interest expense 2,350,821 2,306,522 6,836,163 6,742,084
Net Interest income 2,683,866 2,618,555 8,101,029 7,504,738
Provision for credit losses 50,000 30,000 170,000 120,000
Net interest income after provision
for credit losses 2,633,866 2,588,555 7,931,029 7,384,738
Other income:
Service fees 154,681 155,788 441,661 466,782
Insurance commissions 19,013 14,484 54,962 47,284
Trust Service fees 93,013 84,781 278,661 264,483
Other fee income 140,300 87,325 383,312 269,523
Net security (losses) gains (66,071) 48,868 (159,820) (21,659)
Other operating income 16,677 15,137 50,198 52,464
Total other income 357,613 406,383 1,048,974 1,078,877
Operating expenses:
Salaries 763,976 724,553 2,158,014 2,179,563
Employee Benefits 250,954 293,941 785,404 714,812
Net occupancy expense 431,369 467,575 995,686 971,171
FDIC expense 500 (10,432) 1,500 199,968
Other operating expense 302,234 276,565 1,258,468 1,186,678
Total operating expenses 1,749,033 1,752,202 5,199,072 5,252,192
Income before income taxes 1,242,446 1,242,736 3,780,931 3,211,423
Provision for income taxes 433,543 436,484 1,339,234 1,101,757
Net income $808,903 $806,252 $2,441,697 $2,109,666
Earnings per share $0.43 $0.43 $1.31 $1.13
<FN>
The accompanying notes to consolidated financial statements are an integral part of these statements.
</TABLE>
<PAGE>
<TABLE>
MID-WISCONSIN FINANCIAL SERVICES, INC.
and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended September 30, 1996 and 1995
<CAPTION>
1996 1995
<S> <C> <C>
Increase (decrease) in cash and cash equivalents:
Cash flows from operating activities:
Net income $2,441,697 $1,303,414
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for depreciation amort & accretion 586,754 379,463
Provision for loan losses 170,000 90,000
(Gain) Loss on sale of investment securities 159,821 70,527
(Gain) Loss on equipment disposals 441 5,317
(Gain) loss on sale of other real estate - 1,777
Changes in operating assets and liabilities:
Other assets (30,887) (152,503)
Other liabilities 353,562 (30,793)
Net cash provided by operating activities 3,681,388 1,667,202
Cash flows from investing activities:
Proceeds from sale:
Available for Sale Investment Securities 6,555,302 2,788,473
Proceeds from Maturities:
Held to maturity 385,000
Available for sale Investment Securities 13,369,293 3,169,712
Payment for purchases:
Held to maturity
Available for sale Investment Securities (22,887,058) (246,800)
Proceeds from sale of loans 3,859,800 384,600
Net (increase) decrease in loans (6,391,543) (1,544,016)
Net (increase) decrease in interest-bearing
deposits in other institutions 8,750 (2,582,815)
Capital expenditures (230,034) (144,091)
Proceeds from sale of equipment 2,950 200
Proceeds from sale of other real estate - 23,222
Net cash used in investing activities (5,712,540) 2,233,485
Cash flows from financing activities:
Net increase (decrease) in deposits 491,522 3,747,139
Net increase (decrease) in short-term borrowing 3,547,460 (6,325,414)
Proceeds from issuance of long term borrowing (600,000)
Proceeds from sale of stock options 19,152
Dividends paid (724,733) (425,467)
Net cash provided by financing activities 2,733,401 (3,003,742)
Net increase (decrease) in cash and cash equivalents 702,249 896,945
Cash and cash equivalents at beginning 10,683,544 9,245,910
Cash and cash equivalents at end $11,385,793 $10,142,855
Supplemental cash flow information: 1996 1995
Cash paid during the year for:
Interest $6,970,748 $6,262,109
Income taxes $1,395,025 $1,265,025
Supplemental schedule of non-cash investing
and financing activities:
Loans transferred to other real estate $100,000 $5,000
Loans charged off $153,503 $137,835
Loans made in connection with the
disposition of other real estate
<FN>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
</TABLE>
<PAGE>
MID-WISCONSIN FINANCIAL SERVICES, INC.
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - GENERAL
The consolidated balance sheet as of September 30, 1996, and the
consolidated statements of income for the three month periods ended
September 30, 1996 and 1995, and the nine month periods ended September 30,
1996 and 1995, and the consolidated statements of cash flows for the nine
month periods ended September 30, 1996 and 1995, have been prepared by the
company without audit. In the opinion of management, all adjustments (which
include only normal recurring adjustments) necessary to present fairly the
financial position, results of operations and changes in financial position
for the unaudited interim periods have been made.
Mid-Wisconsin is not aware of any known trends, events, or
uncertainties that will have or that are reasonably likely to have a
material effect on the Company's liquidity, capital resources, or
operations.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. These condensed
consolidated financial statements should be read in conjunction with the
financial statements and notes included in the Company's December 31, 1995,
annual report to the Shareholders. The results of operations for the interim
periods are not necessarily indicative of the results to be expected for the
entire year.
<TABLE>
NOTE 2 - INVESTMENT SECURITIES
The book value and market value of investment securities are summarized
as follows:
<CAPTION>
BOOK VALUE
Sept 30, 1996 Dec. 31, 1995
<S> <C> <C>
U.S. Treasury securities and obligations
of other U.S. Govt agencies & corp $25,699,921 $22,475,820
Mortgage Backed Securities 19,224,753 $15,511,636
Oblig. to states & political subdivisions 6,333,532 4,900,426
Corporate Securities 4,893,616 5,813,709
Equity Securities 1,249,445 6,578,915
Totals $57,401,267 $55,280,506
</TABLE>
<TABLE>
<CAPTION>
MARKET VALUE
<S> <C> <C>
U.S. Treasury securities and obligations
of other U.S. Govt agencies & corp $25,699,921 $22,475,820
Mortgage Backed Securities 19,224,753 15,511,636
Oblig. to states & political subdivisions 6,333,532 4,900,426
Corporate Securities 4,893,616 5,813,709
Equity securities 1,249,445 6,578,915
Totals $57,401,267 $55,280,506
</TABLE>
<PAGE>
Included in the totals of Investment Securities at September 30, 1996,
are unrealized losses of $177,232 on debt securities classified as available
for sale. The net of tax unrealized holding loss of $93,610 on securities
classified as available-for-sale is reflected in stockholders' equity.
Securities with an approximate carrying value of $36,899,734 and
$30,389,165 at September 30, 1996 and December 31, 1995, respectively, were
pledged primarily to secure public deposits and for other purposes required
by law. Included in Corporate Securities are securities issued by Bankers
Trust, New York, with an aggregate book value of $2,200,756 and an aggregate
market value of $2,203,740.
Note 3 - LOANS
Loans outstanding increased 1.375% for the nine months ended September
30, 1996; increasing from $172,678,045 at December 31, 1995, to $175,052,128
at September 30, 1996.
<TABLE>
The composition of loans at September 30, 1996, and December 31, 1995,
follows:
<CAPTION>
Sept 30 % of Dec. 31 % of
(Dollars in Thousands) 1996 total 1995 total
<S> <C> <C> <C> <C>
Commercial and financial $27,419 15.66% $28,075 16.26%
Construction Loans 678 0.39% 1,272 0.74%
Agricultural 29,427 16.81% 27,963 16.19%
Real estate 104,953 59.96% 102,787 59.53%
Installment 11,963 6.83% 11,819 6.84%
Lease financing 612 0.35% 762 0.44%
Total loans $175,052 100.00% $172,678 100.00%
</TABLE>
The composition of loans in the loan portfolio shows a decrease in
commercial and financial and an increase in real estate, agricultural, and
installment loans at September 30, 1996. The bank is making increased
efforts to sell loans in the secondary market which will provide funds for
liquidity needs and continue to provide service to customers in its market
area.
Mid-Wisconsin's process for monitoring loan quality includes monthly
analysis of delinquencies, nonperforming assets, and potential problem
loans. Loans are placed on a nonaccrual status when they become
contractually past due 90 days or more as to interest or principal payments.
All interest accrued but not collected for loans (including applicable
impaired loans) that are placed on nonaccrual or charged off is reversed to
interest income. The interest on these loans is accounted for on the cash
basis until qualifying for return to accrual status. Loans are returned to
accrual status when all the principal and interest amounts contractually due
have been collected and there is reasonable assurance that repayment will
continue within a reasonable time frame.
A loan is considered impaired when, based on current information, it is
probable that the bank will not collect all amounts due in accordance with
the contractual terms of the loan agreement. Impairment is based on
discounted cash flows of expected future payments using the loan's initial
effective interest rate or the fair value of the collateral if the loan is
collateral dependent. Smaller balance homogeneous loans that are
collectively evaluated for impairment include certain smaller balance
commercial and agricultural loans, residential real estate loans, and credit
card loans.
<PAGE>
<TABLE>
The following table shows the amount of non-performing assets and other
real estate owned as of the dates indicated.
<CAPTION>
Non-performing loans Sept 30 % of total Dec. 31 % of total
(Dollars in Thousands) 1996 loans 1995 loans
<S> <C> <C> <C> <C>
Non-accrual loans $682 0.39% $1,132 0.66%
Loans past due 90 days 42 0.02% 3 0.00%
or more
Restructured loans 116 0.07% 17 0.01%
Total Non-performing
loans $840 0.48% $1,152 0.67%
Other real estate owned 105 0.06% 5 0.00%
Total non-performing
assets $945 0.54% $1,157 0.67%
</TABLE>
Included above are $154,197 of impaired loans (.088%) in non-accrual
status at September 30, 1996. In addition, there are impaired loans of
$277,108 (.158%) which management has considered in the allowance for credit
losses. The average balance of impaired loans during the first nine months
of 1996 was $408,830. The impaired loans with an aggregate outstanding
balance of $431,305 are based on fair value of the collateral of the loans
as these loans are collateral dependent.
Total nonperforming assets (loans and other real estate) decreased
during the nine months ended September 30, 1996. As a percentage of total
outstanding loans, the non-performing assets decreased .16% to .54% at
September 30, 1996, from .67% at December 31, 1995.
The aggregate amount of non-performing assets was approximately
$945,000 and $1,157,000 at September 30, 1996, and December 31, 1995,
respectively. Non-performing assets are those which are either
contractually past due 90 days or more as to interest or principal payments,
on a nonaccrual status, or the terms of which have been renegotiated to
provide a reduction or deferral of interest or principal. If nonaccrual and
renegotiated loans had been current or not troubled, $87,707 of interest
income would have been recorded for the nine months ended September 30,
1996. Interest income actually collected and recorded was $157,474.
Management is not aware of any additional loans that represent material
credits or of any information which causes management to have serious doubts
as to the ability of such borrowers to comply with the loan repayment terms.
On January 1, 1996, Mid-Wisconsin adopted Statement of Financial
Accounting Standards No. 122 (SFAS122), "Accounting for Mortgage Servicing
Rights". The adoption of SFAS No. 122 did not have a significant impact on
the Company's financial condition or results of operations.
<PAGE>
<TABLE>
An analysis of the allowance for credit losses for the periods ended
September 30, 1996, and December 31, 1995 follows:
<CAPTION>
(Dollars in Thousands)
Sept 30, 1996 Dec. 31, 1995
<S> <C> <C>
Allowance for credit losses at
beginning of period $1,836 $1,859
Provision Charged to Operating Expense 170 100
Recoveries on Loans 96 67
Loans Charged off (154) (190)
Allowance for losses at end of period $1,948 $1,836
</TABLE>
NOTE 4 - EARNINGS PER SHARE
Earnings per common share are based upon the weighted average number of
common shares outstanding which includes the common stock equivalents
applicable to shares issuable under the stock options granted. The weighted
number of shares outstanding were 1,868,730 for the three months ended
September 30, 1996, and 1,860,926 for the three months ended September 30,
1995.
<PAGE>
SELECTED FINANCIAL DATA
<TABLE>
The following table presents consolidated financial data of Mid-
Wisconsin Financial Services, Inc. and subsidiary. This information and the
following discussion and analysis should be read in conjunction with other
financial information presented elsewhere in this report.
<CAPTION>
SELECTED FINALCIAL DATA
Quarters
(Dollars in thousands, except per share amounts) 1996 1995
Third Second First Fourth Third Second First
<S> <C> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS:
Earnings and Dividends:
Net interest revenue $2,684 $2,740 $2,677 $2,677 $2,619 $2,492 $2,394
Provision for credit losses 50 60 60 (20) 30 30 60
Other operating revenue 358 333 359 318 406 455 217
Other operating expense 1,749 1,714 1,737 1,812 1,752 1,774 1,726
Net income 809 827 806 771 806 759 545
Per common share: (1)
Net income 0.43 0.44 0.43 0.41 0.43 0.41 0.59
Dividends declared 0.13 0.13 0.13 - 0.24 0.11 0.11
Stockholders' equity 13.50 13.15 12.99 12.79 12.28 12.06 11.42
Average common shares (000's) 1,869 1,868 1,861 1,861 1,861 1,860 1,859
Dividend payout ratio 29.87% 29.22% 29.97% 55.29% 29.28% 37.35%
Balance Sheet Summary:
At quarter end:
Loans net of unearned income $175,052 $171,067 $167,088 $172,678 $169,459 $166,554 $164,336
Assets 249,732 242,302 241,778 244,606 235,707 237,260 234,628
Deposits 192,636 186,124 189,312 192,144 187,532 189,898 187,267
Shareholders equity 25,087 24,442 24,126 23,750 22,729 22,313 21,122
Average balances:
Loans net of unearned income 172,682 169,624 169,277 170,562 167,800 165,204 164,184
Assets 246,663 242,561 241,591 238,778 237,912 234,873 234,884
Deposits 197,447 188,347 189,713 189,650 189,549 187,440 187,678
Shareholders equity 24,658 24,183 23,970 23,101 22,477 21,536 20,529
Performance Ratios:
Return on average assets 1.31% 1.36% 1.34% 1.29% 1.36% 1.29% 0.93%
Return on average common equity 13.12% 13.68% 13.45% 13.35% 14.35% 14.09% 11.10%
Equity to assets 9.77% 9.80% 9.68% 9.67% 10.13% 9.67% 9.47%
Total risk-based capital 15.28% 14.83% 14.52% 13.92% 13.58% 13.52% 13.09%
Net loan charge-offs as a percentage
of average loans -0.01% 0.02% 0.03% 0.07% 0.05% 0.02% 0.00%
Nonperforming assets as a percentage
of loans and other real estate 0.45% 0.51% 0.61% 0.67% 0.62% 0.56% 0.75%
Net interest margin 4.74% 4.89% 4.81% 4.66% 4.77% 4.60% 4.46%
Efficiency ratio 56.77% 55.06% 56.49% 59.73% 57.19% 59.45% 65.26%
Fee revenue as a percentage of
average assets 0.11% 0.11% 0.11% 0.11% 0.11% 0.12% 0.11%
Stock Price Information:
High $23.00 $22.63 $22.50 $21.00 $19.00 $18.00 $16.00
Low 22.63 22.50 19.50 18.00 17.00 16.00 15.00
Market value at quarter end (2) 23.00 22.63 21.50 19.50 18.50 17.00 15.50
<FN>
(1) All per share amounts (income and dividends) have been restated to reflect the stock split in the form of a 100 percent
stock dividend issued May 8, 1995.
(2) Market value at quarter end represents the average of bid and asked prices.
</TABLE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITIONS AND RESULTS OF OPERATIONS
Management is not aware of any known trends, events, or uncertainties
that will have or that are reasonably likely to have a material effect on
the Company's liquidity, capital resources, or operations.
Deposits increased $491,521 during the nine month period ended
September 30, 1996. Non-interest bearing deposits increased $72,759 and
interest bearing deposits increased $418,762. The increase in interest
bearing deposits occurred primarily in Now accounts and shorter term
certificates of deposit.
Loans increased $2,374,083 during the nine month period ended September
30, 1996. The company did not aggressively market new loans, due to the need
for liquidity and high funding cost. Investments increased $2,120,761
during the nine month period ended September 30, 1996. The increase in
investments was used primarily to satisfy pledging requirements for
municipal deposits.
LIQUIDITY
Mid-Wisconsin manages its liquidity to provide adequate funds to
support borrowing requirements and deposit flow of its customers.
Management views liquidity as the ability to raise cash at a reasonable cost
or with a minimum of loss and as a measure of balance sheet flexibility to
react to marketplace, regulatory and competitive changes. The primary
sources of Mid-Wisconsin's liquidity are marketable assets maturing within
one year. At September 30, 1996, the carrying value of debt securities
maturing within one year amounted to $9,164,400 or 16.32% of the total debt
securities portfolio. Mid-Wisconsin also holds $1,250,000 in marketable
equity securities. Mid-Wisconsin attempts, when possible, to match relative
maturities of assets and liabilities, while maintaining the desired net
interest margin.
CAPITAL RESOURCES
As of September 30, 1996, shareholders' equity increased $1,336,713 to
$25,086,671 from $23,749,958 at December 31, 1995. This net increase is due
to retention of current year earnings and adjustments for unrealized gains
or losses. Net unrealized gains were $305,793 at December 31, 1995, and
net unrealized losses were $93,610 at September 30, 1996.
The primary capital to asset ratio was 9.77% as of September 30, 1996,
compared to 9.41% at December 31, 1995. The company's risk-based capital
ratio for Tier 1 (core) amounted to 14.15% and total risk-based capital
amounted to 15.28%. This compares to Tier 1 (core) capital of 12.87% and
total risk-based capital of 13.92% at December 31, 1995. The company
expects to increase its total capital through retention of earnings.
<PAGE>
RESULTS OF OPERATIONS
The company's consolidated net income for the three months ended
September 30, 1996, increased $2,641 or .328% to $808,903 from $806,262 for
the three months ended September 30, 1995. Net interest income increased
$65,311 during the three months ended September 30, 1996, over the three
months ended September 30, 1995. Pricing of loans and deposits remains
competitive in the market area.
Return on average common stockholders' equity amounted to 13.12% for
the three months ended September 30, 1996; compared to 14.35% for the three
months ended September 30, 1995.
Return on average assets for the three months ended September 30, 1996,
amounted to 1.31%; compared to 1.36% for the three months ended September
30, 1995.
Net earnings per share of $ .43 per share for the three months ended
September 30, 1996, was consistent with the $ .43 for the three months
ended September 30, 1995. Cash dividends paid were .13 per share in
September 1996 and .11 per share in September 1995.
PROVISION FOR CREDIT LOSSES
Management determines the adequacy of the allowance for credit losses
based on past loan experience, current economic conditions, composition of
the loan portfolio, and the potential for future loss. Accordingly, the
amount charged to expense is based on management's evaluation of the loan
portfolio. It is the Company's policy that when available information
confirms that specific loans and leases, or portions thereof, including
impaired loans, are uncollectible, these amounts are promptly charged off
against the allowance. The provision for credit losses was $50,000 for the
three months ended September 30, 1996, and $30,000 for the three months
ended September 30, 1995. The allowance for credit losses as a percentage
of gross loans outstanding was $1,948,295 or 1.11% of total loans on
September 30, 1996, compared to $1,835,951 or 1.06% of total loans on
December 31, 1995. Net charge-offs as a percentage of average loans
outstanding were -.01% during the three months ended September 30, 1996
compared to .07% for the three months ended December 31, 1995.
Non-performing loans are reviewed to determine exposure for potential
loss within each loan category. The adequacy of the allowance for credit
losses is assessed based on credit quality and other pertinent loan
portfolio information. The reserve for credit losses provided strong
nonperforming loan coverage, increasing to 248% at September 30, 1996 from
158% at December 31, 1995. The adequacy of the reserve and the provision
for credit losses is consistent with the composition of the loan portfolio
and recent credit quality history.
NET INTEREST INCOME
Net interest income is the most significant component in earnings. For
analysis purposes, interest earned on tax exempt assets is adjusted to a
fully taxable equivalent basis.
The net yield on interest earning assets shows the yield for the three
months ended September 30, 1996, to be 4.74%; compared to 4.77% for the
three months ended September 30, 1995. Decreases in the average rate on
earning assets contributed to the decrease in net interest margin. Net
interest margins are expected to remain stable during the remainder of 1996.
<PAGE>
The average rate on earning assets decreased .09% and the average rate
on interest bearing liabilities decreased .02%. Interest spread decreased
.07%.
NON-INTEREST INCOME
Non-interest income other than net security transactions increased
16.28% to $423,684 during the three months ended September 30, 1996, from
$357,515 during the three months ended September 30, 1995. Net security
losses were $66,071 during the three months ended September 30, 1996;
compared to net security gains of $48,868 during the three months ended
September 30, 1995. Fee income on deposit accounts has decreased $1,107 to
$154,681 during the three months ended September 30, 1996, from $155,788
during the three months ended September 30, 1995. Other fee income
increased $52,975, trust service fees increased $8,232, insurance
commissions increased $4,529, and other operating income increased $1,540.
NON-INTEREST EXPENSE
Non-interest expenses decreased .18% to $1,749,033 for the three months
ended September 30, 1996, from $1,752,202 for the three months ended
September 30, 1995. There are no expenses included in other expenses that
exceed 1% of total interest and other income for either 1996 or 1995. Mid-
Wisconsin is expanding the use of technology throughout its banks in order
to provide increased customer service and allow for more efficient
consolidation of its operational areas. Mid-Wisconsin has placed emphasis
on increased productivity and standardization of programs and procedures
throughout all of its locations.
RETIREMENT PLANS
The Company has recently decided to terminate the defined benefit
pension plan effective December 31, 1996 and establish a new defined
contribution pension plan on January 1, 1997.
<PAGE>
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(27) Financial Data Schedule
(b) No reports on Form 8-k have been filed during the quarter for which
this Form 10-Q is filed.
<PAGE>
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-WISCONSIN FINANCIAL SERVICES, INC.
Date November 7, 1996 GENE C. KNOLL
Gene C. Knoll, President
(Principal Executive Officer)
Date November 7, 1996 LUCILLE BRANDNER
Lucille Brandner, Controller
(Principal Accounting Officer)
<PAGE>
EXHIBIT INDEX
PURSUANT TO SECTION 232.102(D), REGULATION S-T
EXHIBIT 27. Financial Data Schedule
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-END> Sep-30-1996
<CASH> 11,386
<INT-BEARING-DEPOSITS> 169,918
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 57,401
<INVESTMENTS-CARRYING> 57,401
<INVESTMENTS-MARKET> 57,401
<LOANS> 175,052
<ALLOWANCE> (1,948)
<TOTAL-ASSETS> 249,732
<DEPOSITS> 192,636
<SHORT-TERM> 24,934
<LIABILITIES-OTHER> 3,675
<LONG-TERM> 3,400
0
0
<COMMON> 186
<OTHER-SE> 24,900
<TOTAL-LIABILITIES-AND-EQUITY> 249,732
<INTEREST-LOAN> 4,103
<INTEREST-INVEST> 914
<INTEREST-OTHER> 18
<INTEREST-TOTAL> 5,035
<INTEREST-DEPOSIT> 2,041
<INTEREST-EXPENSE> 2,351
<INTEREST-INCOME-NET> 2,684
<LOAN-LOSSES> 50
<SECURITIES-GAINS> (66)
<EXPENSE-OTHER> 1,749
<INCOME-PRETAX> 1,242
<INCOME-PRE-EXTRAORDINARY> 1,242
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 809
<EPS-PRIMARY> 0.43
<EPS-DILUTED> 0.43
<YIELD-ACTUAL> 8.72
<LOANS-NON> 682
<LOANS-PAST> 42
<LOANS-TROUBLED> 116
<LOANS-PROBLEM> 154
<ALLOWANCE-OPEN> 1,836
<CHARGE-OFFS> 154
<RECOVERIES> 96
<ALLOWANCE-CLOSE> 1,948
<ALLOWANCE-DOMESTIC> 170
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 58
</TABLE>
