SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
Quarterly Report Pursuant to Section 13 or 15 (d) of
The Securities Exchange Act of 1934.
For the Quarter ended: September 30, 1996 Commission File No. 0-18096
MID-COAST BANCORP, INC.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 01-0454232
- ------------------------------------ -------------------------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1768 Atlantic Highway, PO Box 589
Waldoboro, Maine 04572
- ---------------------------------------- -----------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including are code: (207) 832-7521
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 [ ]
The number of shares outstanding of each of the registrant's classes of
common stock, as of September 30, 1996, is 230,086.
Page 1 of 16.
<PAGE> 1
MID-COAST BANCORP, INC.
Index
<TABLE>
<CAPTION>
Page
----
<S> <S> <C>
PART I FINANCIAL INFORMATION
Item 1: Consolidated Balance Sheets of Mid-Coast Bancorp, Inc. (Unaudited),
at September 30, 1996 and March 31, 1996..................................... 3
Consolidated Statements of Operations of Mid-Coast Bancorp, Inc.
(Unaudited), Three Months Ended September 30, 1996 and 1995 and
Six Months Ended September 30, 1996 and 1995................................. 5
Consolidated Statement of Changes in Stockholders' Equity of
Mid-Coast Bancorp, Inc. (Unaudited) for the period April 1, 1995
to September 30, 1996........................................................ 6
Consolidated Statements of Cash Flows of Mid-Coast Bancorp, Inc.
(Unaudited), for the Six Months Ended September 30, 1996 and 1995............ 7
Notes to the Consolidated Financial Statements (Unaudited)................... 8
Item 2: Management's Discussion and Analysis of Financial Condition and
Results of Operations........................................................ 9
PART II OTHER INFORMATION............................................................ 15
SIGNATURES............................................................................. 16
</TABLE>
<PAGE> 2
MID-COAST BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
ASSETS September 30, 1996 March 31,1996
------------------ -------------
<S> <C> <C>
Cash and due from banks $ 1,230,773 $ 297,198
Interest bearing deposits 70,046 805,853
Federal funds sold 875,000 1,625,000
--------------------------------
Cash and cash equivalents 2,175,819 2,728,051
Time deposits 596,000 1,780,101
Investments available for sale, at market 2,595,389 528,673
Held to maturity investment securities
(Market value of $2,314,583 at September 30, 1996
and $3,861,576 at March 31, 1996) 2,352,238 3,904,862
Held to maturity mortgage backed securities
(Market value of $189,990 at September 30, 1996
and $219,775 at March 31, 1996) 190,417 218,323
Loans held for sale 124,000 559,079
Loans 46,127,942 42,838,169
Less: Allowance for loan losses 276,663 221,356
Deferred loan fees 126,439 151,254
--------------------------------
45,724,840 42,465,559
Bank premises and equipment, net 1,466,965 1,386,589
Other Assets:
Accrued interest receivable:
Loans 250,747 244,963
Time deposits/investment 72,282 68,447
Mortgage backed securities 5,043 1,181
Income taxes receivable 38,761 60,220
Deferred income taxes 92,974 94,000
Prepaid expenses and other assets 126,031 97,881
Real estate owned 144,492 224,137
--------------------------------
Total other assets 730,330 790,829
--------------------------------
Total assets $ 55,955,998 $ 54,362,066
================================
</TABLE>
See accompanying notes.
<PAGE> 3
MID-COAST BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
September 30, 1996 March 31, 1996
------------------ --------------
<S> <C> <C>
Liabilities:
Deposits:
Demand deposits $ 2,480,284 $ 1,802,239
NOW accounts 3,684,284 3,111,931
Savings 4,901,593 4,645,035
Money market deposit accounts 5,004,779 4,740,543
Certificates of deposit 26,578,958 27,517,154
--------------------------------
Total deposits 42,649,898 41,816,902
Advances from the Federal Home Loan Bank 7,940,000 7,465,000
Accrued expenses and other liabilities 451,402 154,087
--------------------------------
Total liabilities 51,041,300 49,435,989
Stockholders' equity:
Preferred stock, $1 par value, 500,000 shares
authorized; none issued or outstanding
Common stock, $1 par value, 1,500,000 shares
authorized; 230,086 shares issued and outstanding, 230,086 229,031
(229,031 at March 31, 1996)
Paid-in capital 1,457,455 1,448,282
Unrealized gains on available for sale
securities, net of taxes 1,993 -
Retained earnings 3,225,164 3,248,764
--------------------------------
Total stockholders' equity 4,914,698 4,926,077
--------------------------------
Total liabilities and stockholders' equity $ 55,955,998 $ 54,362,066
================================
</TABLE>
See accompanying notes.
<PAGE> 4
MID-COAST BANCORP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30 September 30
--------------------------- ---------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Interest income:
Interest on loans $ 1,027,753 $ 1,006,151 $ 2,039,118 $ 1,967,128
Interest on investment securities 65,950 44,154 120,405 93,992
Interest on mortgage backed securities 12,627 4,068 20,329 8,338
Other 30,729 52,646 81,647 91,467
----------------------------------------------------------
Total interest income 1,137,059 1,107,019 2,261,499 2,160,925
Interest expense:
Interest on deposits 485,647 496,281 976,936 944,876
Interest on borrowed money 117,938 143,456 222,485 286,101
----------------------------------------------------------
Total interest expense 603,585 639,737 1,199,421 1,230,977
----------------------------------------------------------
Net interest income 533,474 467,282 1,062,078 929,948
Provision for losses on loans 21,000 5,000 51,000 20,000
----------------------------------------------------------
Net interest income after provision
for loan losses 512,474 462,282 1,011,078 909,948
Non interest income:
Loan service and other loan fees 9,408 10,028 21,915 17,805
Gain on loans sold and held for sale 8,258 7,208 16,826 11,733
Other 34,600 27,077 77,429 53,921
----------------------------------------------------------
Total non interest income 52,266 44,313 116,170 83,459
Non interest expenses:
Compensation of directors, officers and staff 155,762 167,702 322,528 311,407
Building occupancy 9,115 7,650 19,551 15,318
Repairs and maintenance 8,476 6,804 17,794 12,932
Depreciation and amortization 15,566 18,992 31,112 36,091
Advertising 10,288 9,614 19,275 19,996
Insurance and bonds (note 2) 276,441 34,847 311,680 68,591
Legal, audit and examinations 15,655 11,327 29,383 21,724
Taxes (other than income) 11,487 12,646 24,803 25,262
Employee benefits 23,389 19,163 44,931 34,817
Data processing 41,049 26,670 69,081 51,070
Other 80,823 72,878 157,221 139,107
Real Estate Owned 7,990 18,253 9,041 21,726
Loss on sale of real estate owned - - - 12,316
----------------------------------------------------------
Total non interest expenses 656,041 406,546 1,056,400 770,357
----------------------------------------------------------
Income (loss) before income taxes (91,301) 100,049 70,848 223,050
Income taxes (16,917) 35,494 37,083 72,494
----------------------------------------------------------
Net (loss) income $ (74,384) $ 64,555 $ 33,765 $ 150,556
==========================================================
Earnings (loss) per share $ (.32) $ .28 $ .15 $ .66
==========================================================
</TABLE>
See accompanying notes.
<PAGE> 5
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
For the Period April 1, 1995 to September 30, 1996
<TABLE>
<CAPTION>
Unrealized
gains/losses
on available for Total
Common Paid-in sale securities, Retained Stockholders'
Stock Capital net of taxes Earnings Equity
--------- ----------- ---------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Balance, April 1, 1995 $ 217,084 $ 1,258,178 - $ 3,247,334 $ 4,722,596
Issuance of 275 shares of common stock
upon exercise of options 275 1,862 - - 2,137
Net income - - - 150,556 150,556
Dividends declared ($.23 per share) - - - (49,929) (49,929)
---------------------------------------------------------------------------
Balance, September 30, 1995 217,359 1,260,040 - 3,347,961 4,825,360
Issuance of 897 shares of common stock
upon exercise of options 897 6,361 - - 7,258
Issuance of 10,775 shares of common
stock as a 5% dividend 10,775 181,881 - (194,893) (2,237)
Net Income - - - 152,891 152,891
Dividends declared ($.25 per share) - - - (57,195) (57,195)
---------------------------------------------------------------------------
Balance, March 31, 1996 229,031 1,448,282 - 3,248,764 4,926,077
Issuance of 1,055 shares of common stock
upon exercise of options 1,055 9,173 - - 10,228
Net Income - - - 33,765 33,765
Net change in market value of investments
available for sale, net of taxes - - 1,993 - 1,993
Cash dividends declared ($.25 per share) - - - (57,365) (57,365)
---------------------------------------------------------------------------
Balance, September 30, 1996 $ 230,086 $ 1,457,455 1,993 $ 3,225,164 $ 4,914,698
===========================================================================
</TABLE>
See accompanying notes.
<PAGE> 6
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
September 30,
----------------------------
1996 1995
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 33,765 $ 150,556
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation, amortization, and accretion 5,376 17,230
Provisions for losses on loans 51,000 35,000
Gain on sale of loans (16,826) (11,733)
Deferred fees 6,837 18,753
(Gain) loss on sale of real estate owned (629) 12,316
Loans originated for sale (681,790) (837,917)
Proceeds from sales of loans 1,133,695 779,850
Increase in other assets (41,631) 3,458
Change in income taxes receivable/payable 21,459 (20,609)
Increase (decrease) in other liabilities 297,315 (46,744)
----------------------------
Net cash provided by operating activities 808,571 100,160
Cash flows from investing activities:
Loan originations and repayments, net (3,286,744) (787,042)
Net increase (decrease) in time deposits 1,186,000 (602,710)
Investment and mortgage-backed securities:
Purchases (2,070,948) (612,500)
Proceeds from maturities and repayments 1,579,966 923,754
Purchases of property and equipment (111,488) (156,275)
Sale of real estate owned 81,525 11,575
----------------------------
Net cash used by investing activities (2,621,662) (1,223,198)
Cash flows from financing activities:
Net increase (decrease) in certificates of deposit (938,196) 541,627
Net increase in demand, NOW accounts, savings
and money market deposit accounts 1,771,192 2,864,142
FHLB advances 4,050,000 1,250,000
FHLB advances paid (3,575,000) (2,500,000)
Dividends paid in cash (57,365) (49,929)
Sale of common stock 10,228 2,137
----------------------------
Net cash provided by financing activities 1,260,859 2,107,977
----------------------------
Net increase (decrease) in cash and cash equivalents (552,232) 984,939
Cash and cash equivalents, at beginning of period 2,728,051 3,015,032
----------------------------
Cash and cash equivalents, at end of period $ 2,175,819 $ 3,999,971
============================
</TABLE>
See accompanying notes.
<PAGE> 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
September 30, 1996
1. Financial Statements
--------------------
The accompanying consolidated financial statements include the accounts
of Mid-Coast Bancorp, Inc. (the "Company") and its wholly-owned
subsidiary, The Waldoboro Bank, F.S.B. (the "Bank"). The accounts of
the Bank include its wholly-owned subsidiary, The First Waldoboro
Corporation. Such consolidated financial statements are unaudited.
However, in the opinion of management, all adjustments necessary for a
fair presentation of the consolidated financial statements have been
included, and all such adjustments are of a normal and recurring
nature.
Amounts presented in the consolidated financial statements as of March
31, 1996 were derived from audited consolidated financial statements.
2. Insurance Fund Resolution
-------------------------
The resolution of the Savings Insurance Fund (SAIF) and Bank Insurance
Fund (BIF) has been established by Congress. Effective September 30,
1996, Banks insured by the SAIF will pay a one time assessment to
recapitalize SAIF. The one-time charge of $241,299 is reflected in the
balance sheet and statement of operations as of and for the period
ended September 30, 1996.
3. Investments Available For Sale
------------------------------
If significant, unrealized gains and losses, net of tax, on securities
available for sale are reported as a net amount in a separate component
of stockholders' equity until realized. If a decline in market value is
considered other than temporary, the loss is charged to net securities
gains (losses).
4. Dividends Paid
--------------
On October 15, 1996, the Company declared a cash dividend of $0.26 per
share payable on December 31, 1996 to shareholders of record on
December 2, 1996.
<PAGE> 8
Management's Discussion and Analysis of
Financial Condition and Results of Operations
General
- -------
The financial condition and results of operations of Mid-Coast Bancorp,
Inc. (the "Holding Company") essentially reflect the operation of its subsidiary
The Waldoboro Bank, F.S.B. (the "Bank" or "Waldoboro"). The Holding Company's
results of operations in recent years reflect the Bank's efforts to restructure
its balance sheet in response to the fundamental changes that have occurred in
the regulatory, economic and competitive environment in which savings
institutions operate. Like most savings institutions, Waldoboro's earnings are
primarily dependent upon its net interest income, which is determined by (i) the
difference (known as the interest rate spread) between yields on
interest-earning assets and rates paid on interest-bearing liabilities and (ii)
the relative amounts of interest-earning assets and interest-bearing liabilities
outstanding.
The Bank and the entire savings institution industry are significantly
affected by prevailing economic conditions as well as government policies and
regulations concerning, among other things, monetary and fiscal affairs, housing
and financial institutions. Deposit flows are influenced by a number of factors
including interest rates on money market funds and other competing investments,
account maturities and levels of personal income and savings. Lending activities
are influenced by, among other things, the demand for and supply of housing,
conditions in the construction industry and the availability and cost of funds,
and loan rewrites resulting from declining interest rates. Sources of funds for
lending activities include deposits, loan payments, proceeds from sales of loans
and investments, investment returns and borrowings.
Due to the relative interest rate sensitivity of the Bank's assets and
liabilities, the cost of funds to the Bank (principally interest on deposits and
borrowings) does not reprice as fast as the yield on its assets (principally
interest received on loans and investments). Accordingly, sharp increases or
decreases in the general level of interest rates will have a significant impact
on the Bank's interest rate spreads in the short term.
Financial Condition
- -------------------
Total assets increased $1,593,932 or 2.93% between March 31, 1996 and
September 30, 1996. Of this amount cash and cash equivalents decreased $552,232
or 20.24%, investment securities and time deposits decreased $697,915 or 10.85%,
and loans increased $3,289,773 or 7.68%. As a result of the Bank's more active
role in the increased solicitation and origination of consumer and commercial
loans, the volume of cash equivalents, investment securities, and time deposits
have decreased in order to fund the increased loan volume.
Total liabilities increased $1,605,311 or 3.25% between March 31, 1996
and September 30, 1996. Increases occurred in all deposit areas except
Certificates of Deposit which decreased $938,196 or 3.41%. Advances from the
FHLB increased $475,000. The Bank's strategy continues to focus on attracting
lower cost deposits, while reducing its cost of funds through a more effective
pricing structure on Certificates of Deposit.
The allowance for loan losses amounted to $276,663 at September 30,
1996, compared to $221,356 at March 31, 1996. The increase in allowance for loan
losses is primarily due to the current periodic provision for loan losses. The
Bank's allowance for loan losses as a percentage of total loans and allowance
for loan losses as a percentage of non-performing loans was 0.60% and 191.47%,
respectively.
At September 30, 1996 and March 31, 1996, loans contractually past due
90 days or more amounted to $58,477 and $375,338 or 0.1% and 0.9% of loans
outstanding, respectively, at such dates. Non-accrual of interest on these loans
totalled $42,901 at March 31, 1996 as compared with $1,911 at September 30,
1996. Management does not believe these loans materially affect the overall
quality of the Bank's loan portfolio.
<PAGE> 9
RESULTS OF OPERATIONS
Three Months Ended September 30, 1996 and 1995
Net Income
- ----------
Mid-Coast recorded a net loss for the three months ended September 30,
1996 of $74,384 or $0.32 cents per share after recording a one-time special
assessment of $241,299 to recapitalize the Savings Association Insurance Fund
(see note 2). Without the assessment, net income would have been $94,851 or
$0.41 cents per share for the quarter ended September 30, 1996. This compares
with a net income of $64,555 or $0.30 cents per share for the same period in the
previous fiscal year.
Interest Income
- ---------------
Interest income increased $30,040 or 2.71% for the three months period
ended September 30, 1996, primarily due to increases in the average balances of
commercial and consumer loans which increased $2.2 million or 43.09% and
$574,000 or 13.08%, respectively. Consumer loans consist of home equity,
installment loans, share loans, and student loans. This increase is partially
offset by a decrease in mortgage balances of $1.4 million or 4.01% compared to
the same period in the previous fiscal year.
Interest Expense
- ----------------
Total interest expense for the three month period ended September 30,
1996, decreased $36,152 or 5.65%. This decrease is primarily the result of a
decrease in the average cost of funds from 5.13% at September 30, 1995 compared
to 4.81% at September 30, 1996. The lower average cost of funds primarily
resulted from the Bank's strategy to lower the cost of Certificates of Deposit.
During the three month period, the average rate paid on Certificates of Deposit
decreased 30 basis points from the same period in the previous fiscal year.
Net Interest Income
- -------------------
Net interest income, before provisions for loan losses, increased
$66,192 or 14.17% for the quarter ended September 30, 1996 as compared to the
same quarter in the previous fiscal year. This increase is primarily the result
of average balance increases in commercial and consumer loan and a decrease in
the average cost of funds on deposits and borrowings.
Provisions for Losses on Loans
- ------------------------------
The allowance for loan losses is established through a provision for
loan losses based on management's evaluation of the risk inherent in its loan
portfolio and the general economy. Such evaluation considers numerous factors
including general economic conditions, loan portfolio compositions, prior loss
experience, the estimated fair value of the underlying collateral and other
factors that warrant recognition in providing for an adequate loan loss
allowance. The Bank's provision for losses on loans during the three month
period ended September 30, 1996, increased to $21,000 as compared to $5,000 in
the comparable period in the previous fiscal year. The increased provision is
primarily due to the relative increases is consumer and commercial loans.
Non-Interest Income
- -------------------
Total non-interest income for the three month period ended September
30, 1996, increased $7,953 or 17.95%, primarily as a result of increased fees
and charges particularly related to NOW accounts and overdraft fees.
<PAGE> 10
Other Expenses
- --------------
Total other expenses increased $249,495 or 61.37% for the three month
period ended September 30, 1996, as compared to the same period in the previous
fiscal year. The increase is primarily due to the one-time assessment legislated
by Congress to recapitalize the SAIF totally $241,299 and a $14,379 increase in
data processing relating to the Bank's computer conversion planned for January
1997.
<PAGE> 11
Six Months Ended September 30, 1996 and 1995
Net Income
- ----------
Mid-Coast reported net income of $33,765 for the six months ended
September 30, 1996, compared to $150,556 for the six months ended September 30,
1995, which represents a decrease of $116,791. The decrease is primarily the
result of the one-time assessment of $241,299, which is the Bank's portion,
legislated by Congress to recapitalize the SAIF. Net income without the payment
of the assessment would have been $203,000 or $0.88 cents per share for the
quarter ended September 30, 1996. This compares with net income of $150,556 or
$0.66 per share for the same period in the previous fiscal year. Included in net
income for the period ended September 30, 1996 is a $100,574 or 4.65% increase
in total interest income, a $31,556 or 2.56% decrease in total interest expense,
resulting in an increase in net interest income of $101,130 or 11.11% after
provisions for loan losses. During the period, the Bank recorded an increase of
$32,711 or 39.19% in total other non-interest income as compared to the same
period in the previous fiscal year. Total other expenses increased $286,043 or
37.13%, primarily as a result of the one-time assessment to recapitalize the
SAIF, without the assessment other expenses would have increased $44,744 or
5.81%.
Interest Income
- ---------------
Total interest income for the six months ended September 30, 1996,
increased $100,574 or 4.65% as compared to the same period in the previous
fiscal year. Interest on loans increased $71,990 or 3.66%, primarily due to
increases in the average balance of commercial and consumer loans. Interest on
investment securities and mortgage backed securities increased $26,413 or 28.10%
and $11,991 or 143.81% respectively, primarily due to general increases in
prevailing market rates. These increases are partially offset by a decrease of
$9,820 or 10.74% in miscellaneous interest income primarily due to decreases in
federal funds and other interest earning deposits.
Interest Expense
- ----------------
Total interest expense for the six month period ended September 30,
1996 decreased $31,556 or 2.56% from the comparable period in the previous
fiscal year. Interest expense on deposits increased $32,060 or 3.39% and
interest on borrowed money decreased $63,616 or 22.24%. The increase in deposits
is primarily affected by increases in deposits, particularly in transaction
account which has reduced the average cost of funds 26 basis points as compared
to the same period in the previous fiscal year.
Net Interest Income
- -------------------
Total net interest income for the six months ended September 30, 1996
increased $132,130 or 14.21%. This increase is primarily the result of increases
in the average balances of commercial and consumer loans and a decrease in the
average cost of funds on deposits and borrowings.
Provisions for Losses on Loans
- ------------------------------
The Bank's provision for losses on loans for the six months period
ended September 30, 1996 increased to $51,000 as compared to $20,000 in the
previous fiscal year. The provision is deemed appropriate given the risks
associated with the Bank's increased volume in consumer and commercial loans.
Non-Interest Income
- -------------------
Non-interest income for the six months ended September 30, 1996
increased $32,711 or 39.19% compared to the comparable period in 1995. Increases
occurred in all categories of other income, with miscellaneous income increasing
$23,508 or 43.60%. Miscellaneous income is the result of increased fees and
charges particularly related to NOW accounts and overdraft fees.
<PAGE> 12
Non-interest Expenses
- ---------------------
Non-interest expenses for the six month period ended September 30, 1996
increased $286,043 or 37.13% as compared to the same period in the last fiscal
year. The increase in other expenses is primarily due to the one-time assessment
of $241,299 required to recapitalize the SAIF. Additionally, increases occurred
in data processing relating to the Bank's computer conversion and miscellaneous
expenses primarily consisting of shareholder services. Without the one-time
assessment, other expenses would have increased $44,744 or 5.81%.
Insurance of Deposits
- ---------------------
The Bank is a member of the SAIF of the FDIC, and the Bank pays most of
its deposit insurance assessments to the SAIF of the FDIC. The FDIC also
maintains another insurance fund, the Bank Insurance Fund ("BIF"), which
primarily insures the deposits of commercial banks and savings and loan
associations. The SAIF also insures the deposits acquired by a BIF-insured
institution from a SAIF-insured institution.
Applicable law requires that both the SAIF and the BIF be recapitalized
to a ratio of 1.25% of reserves to deposits. The BIF achieved the 1.25% reserve
ratio in May 1995, but the SAIF was not then expected to be recapitalized until
after 2001. In recognition of the BIF's achievement of the 1.25% reserve ratio,
the FDIC reduced the deposit insurance assessment rates for BIF-assessable
deposits. Effective January 1, 1996, the FDIC reduced the annual assessments for
BIF-insured institutions to the legal minimum of $2,000, except for institutions
that were not well capitalized or that were assigned to the higher supervisory
risk categories. The FDIC estimated that 92% of the BIF-insured institutions
would pay only the minimum annual assessment.
In contrast, SAIF reserves had not grown as quickly as BIF reserves due
to a number of factors, including the fact that a significant portion of SAIF
premiums had been and are currently being used to make payments on bonds ("FICO
bonds") issued in the late 1980's by the Financing Corporation to recapitalize
the now defunct Federal Savings and Loan Insurance Corporation. Given the
undercapitalized status of the SAIF, the FDIC had continued the range of
assessment rates of $0.23 to $0.31 per $100 of SAIF-assessable deposits.
On September 30, 1996, the Deposit Funds Insurance Act of 1996 (the
"1996 Act") was enacted into law, and it amended the Federal Deposit Insurance
Act in several ways to recapitalize the SAIF and reduce the disparity in the
assessment rates for the BIF and the SAIF. The 1996 Act authorized the FDIC to
impose a special assessment on all institutions with SAIF-assessable deposits in
the amount necessary to recapitalize the SAIF. As implemented by the FDIC, the
special assessment has been fixed, subject to adjustment, at 65.7 basis points
of an institution's SAIF-assessable deposits, and the special assessment will be
paid on November 27, 1996. The special assessment is based on the amount of
SAIF-assessable deposits held on March 31, 1995. Based on the foregoing, the
special SAIF assessment to be paid by the Bank on November 27, 1996 will be
$241,299, and such amount has been accrued in the financial statements as of and
for the period ended September 30, 1996.
<PAGE> 13
Liquidity and Capital Resources
- -------------------------------
On September 30, 1996, the Holding Company's stockholders' equity was
$4,914,698 or 8.78% of total assets compared to $4,926,077 or 9.06% at March 31,
1996.
The Office of Thrift Supervision ("OTS") requires savings institutions
such as Waldoboro to maintain a specified ratio of cash and short-term
investment securities to new withdrawable deposits and borrowings with
maturities of one year or less. This minimum liquidity ratio, currently 5%, may
vary from time to time, depending upon general economic conditions and deposit
flows. As a part of its asset/liability management program, Waldoboro has
historically maintained liquidity in excess of regulatory requirements to better
match its short-term liabilities. At September 30, 1996, Waldoboro's liquidity
ratio was approximately 14.67% compared to 14.45% at September 30, 1995.
The minimum capital standards set by the OTS have three components: (1)
tangible capital; (2) leverage ratio or "core" capital; and (3) risk-based
capital. The tangible capital requirement is 1.5% and the leverage ratio or
"core" capital requirement is 3% of an institution's adjusted total assets. The
risk-based capital requirement is 8% of risk-weighted assets. The amount of an
institution's risk-weighted assets is determined by assigning a "risk-weighted"
value to each of the institution's assets. Under the regulations, the
"risk-weighted" of a particular type of assets depends upon the degree of credit
risk which is deemed to be associated with that type of asset.
At September 30, 1996, Waldoboro had tangible capital of $4,805,000 or
8.61% of adjusted total assets, which exceeds the minimum required tangible
capital and leverage ratio or "core" capital requirements. Waldoboro had
risk-based capital of $5,082,000 or 15.46% of risk-weighted assets at September
30, 1996.
<PAGE> 14
PART II OTHER INFORMATION
Item 1. Legal Proceedings.
------------------
There was no material litigation pending to which the
Registrant was a party or to which the property of the Registrant was subject
during the quarter ended September 30, 1996.
Item 2. Changes in Securities.
----------------------
None.
Item 3. Defaults Upon Senior Securities.
--------------------------------
None.
Item 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
On July 18, 1996 at the Annual Meeting of Shareholders of
Mid-Coast, Samuel Cohen, Ronald E. Dolloff, and Lincoln O. Orff were elected
Directors each for a term of three years and until their respective successors
are appointed. The vote for each of the directors was as follows:
<TABLE>
<CAPTION>
FOR WITHHELD
------- --------
<S> <C> <C>
Samuel Cohen 171,967 6,882
------- -----
Ronald E. Dolloff 175,451 3,398
------- -----
Lincoln O. Orff 175,451 3,398
------- -----
</TABLE>
Waite W. Weston, Sharon Crowe, Lincoln Davis III, Maynard Prock, Wesley
Richardson, and Robert W. Spear, are continuing as Directors following said
meeting.
In addition, the shareholders also voted to ratify at the Annual
Meeting the appointment of Baker Newman & Noyes as the Company's independent
auditors for the 1997 fiscal year. The vote ratifying the appointment of the
independent auditors was:
178,096 FOR
-------
540 AGAINST
-------
213 ABSTAIN
-------
Item 5. Other Information.
------------------
None.
Item 6. Exhibits and Reports on Form 8-K.
---------------------------------
(a) Exhibits required by Item 601 of Regulation S-K.
None.
(b) Reports on Form 8-K.
None.
<PAGE> 15
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-COAST BANCORP, INC.
/s/ Wesley E. Richardson
---------------------------------------
(Registrant)
Date November 8, 1996 /s/ Wesley E. Richardson
- --------------------------------------------------------------------------------
(Signature)
Wesley E. Richardson
President and Treasurer
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> SEP-30-1996
<CASH> 1,230,773
<INT-BEARING-DEPOSITS> 70,046
<FED-FUNDS-SOLD> 875,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 2,596,389
<INVESTMENTS-CARRYING> 2,542,655
<INVESTMENTS-MARKET> 2,504,573
<LOANS> 46,127,942
<ALLOWANCE> 276,663
<TOTAL-ASSETS> 55,955,998
<DEPOSITS> 42,649,898
<SHORT-TERM> 0
<LIABILITIES-OTHER> 451,402
<LONG-TERM> 7,940,000
0
0
<COMMON> 230,086
<OTHER-SE> 4,684,612
<TOTAL-LIABILITIES-AND-EQUITY> 55,955,998
<INTEREST-LOAN> 1,207,753
<INTEREST-INVEST> 78,577
<INTEREST-OTHER> 30,729
<INTEREST-TOTAL> 1,137,059
<INTEREST-DEPOSIT> 485,647
<INTEREST-EXPENSE> 604,585
<INTEREST-INCOME-NET> 533,474
<LOAN-LOSSES> 21,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 656,041
<INCOME-PRETAX> (91,301)
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (74,384)
<EPS-PRIMARY> (.32)
<EPS-DILUTED> (.32)
<YIELD-ACTUAL> 4.06
<LOANS-NON> 58,477
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 254,249
<CHARGE-OFFS> 8,223
<RECOVERIES> 1,637
<ALLOWANCE-CLOSE> 276,663
<ALLOWANCE-DOMESTIC> 276,663
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
