ITEM 1. BUSINESS OF MID-AMERICA BANCORP
Mid-America Bancorp (the "Company") is a Kentucky corporation registered as a bank holding company pursuant to the Bank Holding Company Act of 1956, as amended, and as a savings and loan holding company pursuant to the Home Owners' Loan Act. The Company is registered with, and subject to, the supervision of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board") and the Office of Thrift Supervision.
The Company's banking subsidiary, Mid-America Bank of Louisville and Trust Company (the "Bank") represents the Company's primary subsidiary. The Bank was established as a Kentucky banking corporation on October 14, 1925, under the name "Morris Plan Industrial Bank." On July 2, 1946 the Bank's name was changed to "Bank of Louisville." The Bank merged with "Royal Bank and Trust Company" in 1963 under the name Bank of Louisville-Royal Bank and Trust Co. The Bank's name was changed to Bank of Louisville and Trust Company on March 26, 1980. The present name of the Bank was adopted on March 25, 1983.
The Bank is engaged in a wide range of commercial, trust, and personal banking activities including the usual acceptance of deposits for checking, savings and time deposit accounts; making of real estate, construction, commercial, home improvement and consumer loans; issuance of letters of credit; rental of safe deposit boxes; providing financial counseling for institutions and individuals; serving as executor of estates and as trustee under trusts and under various pension and employee benefit plans; serving as escrow agent on bond issues; serving as stock transfer agent, exchange agent, dividend disbursing agent, and registrar with respect to corporate securities; and participation in small business loan and student loan programs.
The Company also operates a number of other subsidiaries, including Mid-America Bank, FSB, a federal savings bank (Savings Bank), which was organized and chartered during 1993. The Savings Bank is located in Pewee Valley, Kentucky in Oldham County, and competes on the local level with other commercial banks and financial institutions in Oldham County, Kentucky for all types of deposits and loans. Another subsidiary, Mid-America Money Order Company, is engaged in the issuance and sale throughout the United States of retail money orders and similar consumer-type payment instruments having a face value of not more than $1,000. As of December 31, 1993, Mid-America Money Order Company was licensed to issue money orders in 48 states and the District of Columbia.
Competition
Competition for banking and related financial services is active in Jefferson County, Kentucky and other geographic areas served by the Company's subsidiaries. The Company's subsidiaries compete with other financial institutions including savings and loan associations, finance companies, mortgage banking companies, credit unions, insurance companies, brokerage firms, mutual funds, and other commercial banks. In addition, large money center banks continue to increase competition in the Company's trade territories through the acquisition of local financial institutions, the establishment of loan production offices and the solicitation of customers for credit cards and related services. At present, both price and product range are critically important in maintaining and expanding financial relationships.
On December 31, 1993, the Bank ranked fourth among banks and trust companies in the City of Louisville and in Jefferson County, Kentucky, in terms of total assets and in terms of total deposits. On December 31, 1993 there were 8 commercial banks and trust companies in Jefferson County, including the Bank.
Employees
As of December 31, 1993, the Company and subsidiaries employed 583 persons on a full-time equivalent basis and 132 on a part-time basis.
Government Policies
As a financial institution, the earnings of the Company's various operating subsidiaries are affected by state and federal laws and by policies of various federal and state regulatory agencies. These policies include, for example, statutory maximum legal lending rates, domestic monetary policies of the Board of Governors of the Federal Reserve System, United States fiscal policy, and capital adequacy and liquidity constraints imposed by bank regulatory agencies.
Supervision And Regulation
The Company is a registered bank holding company under the Bank Holding Company Act of 1956, as amended ("BHC Act"), and is subject to supervision, regulation and examination by the Board of Governors of the Federal Reserve System. Under the BHC Act, a bank holding company is, with limited exceptions, prohibited from (i) acquiring direct or indirect ownership or control of any voting shares of any company which is not a bank or (ii) engaging in any activity other than managing or controlling banks. Notwithstanding this prohibition, a bank holding company may engage in or own shares of a company that engages solely in activities which the Federal Reserve Board has determined to be so closely related to banking, or managing or controlling banks, as to be a proper incident thereto.
As a registered bank holding company, the Company is required to file with the Federal Reserve Board annual reports and other information regarding its business operations and the business operations of its subsidiaries. It is also subject to examination by the Federal Reserve Board and is required to obtain Federal Reserve Board approval prior to acquiring, directly or indirectly, ownership or control of any voting shares of any bank, if, after such acquisition, it would own or control, directly or indirectly, more than five percent of the voting stock of such bank unless it already owns a majority of the voting stock of such bank.
The Bank is subject to regulation and supervision, of which regular bank examinations are a part, by the Kentucky Department of Financial Institutions, Division of Banking. The Federal Deposit Insurance Corporation ("FDIC") currently insures the deposits of the Bank to a maximum of $100,000 per depositor. For this protection, the Bank pays a semi-annual statutory assessment and is subject to the rules and regulations of the FDIC pertaining to deposit insurance. On July 13, 1989, the Bank became a member bank in the Federal Reserve System. The Federal Reserve Board retains direct supervision of state chartered member banks and their affiliates through periodic examinations, the expense of which is borne by the Bank.
The Savings Bank is subject to regulation and supervision, of which regular examinations are a part, by the Office of Thrift Supervision (OTS). The FDIC currently insures the deposits of the Savings Bank to a maximum of $100,000 per depositor.
Eton Life Insurance Company, a wholly-owned subsidiary of the Company, is regulated by the Kentucky Department of Insurance and is subject to Kentucky statutes and regulations governing domestic underwriters of credit life, accident, and health insurance.
The enactment in August 1989 of the Financial Reform, Recovery and Enforcement Act of 1989 ("FIRREA") placed the savings and loan insurance fund under the control of the FDIC, created the OTS in the U.S. Treasury Department and created the Resolution Trust Corporation to act as receiver to liquidate failed thrift institutions. FIRREA further expanded the power of bank holding companies to allow for the acquisition of savings associations and to operate them as separate thrift subsidiaries. FIRREA enhanced the ability of bank holding companies to expand through thrift acquisitions beyond their present geographic interstate banking region. The tandem restrictions placed upon thrift subsidiaries of bank holding companies have been removed allowing linkage of deposit-taking activities and solicitation of deposits and loans on behalf of affiliate companies. FIRREA led to many structural changes in competition for loans, deposits and other services, affected collateral valuation methods, and the acquisition of financial institutions.
In addition to FIRREA, in December 1991 the Federal Deposit Insurance Corporation Improvement Act of 1991 (the "FDIC Improvement Act") was enacted. The FDIC Improvement Act deals with the recapitalization of the Bank Insurance Fund, deposit insurance reform, including requiring the FDIC to establish a risk-based premium assessment system, and a number of other regulatory and supervisory matters.
The following tables set forth selected statistical information with respect to the Company and its subsidiaries and should be read in conjunction with the Company's consolidated financial statements.
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY; INTEREST RATES AND INTEREST DIFFERENTIAL
The schedule captioned "Average Balances and Yields/Rates Tax Equivalent Basis" included on page 32 of the Company's annual report to shareholders for the year ended December 31, 1993, which is incorporated herein by reference, shows, for each major category of interest earning asset and interest bearing liability, the average amount outstanding, the interest earned or expensed on such amount and the average rate earned or expensed for each of the years in the three-year period ended December 31, 1993. The schedule also shows the average rate earned on all interest earning assets and the average rate expensed on all interest bearing liabilities and the net interest margin (net interest income divided by total average interest earning assets, where net interest income equals the difference between interest earned and interest expensed) for each of the years in the three-year period ended December 31, 1993. Nonaccrual loans outstanding were included in calculating the rate earned on loans. Total interest income includes the effects of taxable equivalent adjustments using a tax rate of 35% for 1993 and 34% for 1992 and 1991.
The changes in interest income and interest expense resulting from changes in volume and changes in rates for the years ended December 31, 1993 and 1992 are shown in the schedule captioned "Interest Income and Interest Expense Volume and Rate Changes for the Years 1993 and 1992 Tax Equivalent Basis" included on page 33 of the Company's annual report to shareholders for the year ended December 31, 1993, which is incorporated herein by reference. Total interest income includes the effects of taxable equivalent adjustments using a tax rate of 35% for 1993 and 34% for 1992 and 1991.
SECURITIES PORTFOLIO BOOK VALUE
SECURITIES MATURITY DISTRIBUTION AND WEIGHTED AVERAGE YIELDS DECEMBER 31, 1993
The calculation of the weighted average yield is based on the average tax exempt yield, weighted by the respective costs of the securities.
The weighted average yields on states and political subdivisions securities are computed on a tax equivalent basis using a marginal federal tax rate of 35%.
LOAN PORTFOLIO (In Thousands)
Includes domestic loans only as the Company has no foreign loans. The Company has no other category of loans whose concentration exceeds 10% of total loans.
SELECTED LOAN MATURITIES AND SENSITIVITY TO INTEREST RATES DECEMBER 31, 1993 (In Thousands)
NON-PERFORMING LOANS
Information with respect to the Company's non-performing loans is included in the schedule captioned "Non-Performing and Restructured Assets" and footnote C to the consolidated financial statements included on pages 26 and 44, respectively, of the Company's annual report to shareholders for the year ended December 31, 1993, which is incorporated herein by reference.
SUMMARY OF LOAN LOSS EXPERIENCE (Dollars In Thousands)
The allowance for loan losses is maintained at a level adequate to absorb probable losses. Management determines the adequacy of the allowance based upon reviews of individual credits, evaluation of the risk characteristics of the loan portfolio, including the impact of current economic conditions on the borrowers' ability to repay, past collection and loss experience and such other factors, which, in Management's judgement, deserve current recognition. The allowance for loan losses is increased by charges to operating earnings and reduced by charge-offs, net of recoveries.
ALLOCATION OF ALLOWANCE FOR LOAN LOSSES (Dollars In Thousands)
MATURITY SCHEDULE OF TIME DEPOSITS OF $100,000 AND OVER DECEMBER 31, 1993 (In Thousands) Certificate Of Deposits Other Total ----------- ---------- --------- Three months or less...................... $5,973 $5,135 $11,108 Over three through six months............. 2,555 -- 2,555 Over six through twelve months............ 5,568 -- 5,568 Over twelve months........................ 12,360 -- 12,360 ---------- ---------- --------- $26,456 $5,135 $31,591 ========== ========== =========
RETURN ON EQUITY AND ASSETS
Incorporated by reference herein to page 4 of the Company's annual report to shareholders.
FEDERAL FUNDS PURCHASED AND SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE (Dollars In Thousands)
Federal funds purchased and securities sold under agreements to repurchase generally represent overnight borrowing transactions. Included in repurchase agreements are balances of several institutional customers which are subject to substantial fluctuations, with reductions occurring in the normal course of business after year end. The detail of these short-term borrowings for the years 1993, 1992 and 1991 follows:
ITEM 2.
ITEM 2. PROPERTIES
The Bank maintains a main office, warehouse and 30 branches. The Bank owns 18 branch offices, leases 11 branch offices and the main office, and owns the buildings but leases the land with regard to 1 branch. The Bank also operates 43 automatic teller machines, at various locations in its traditional customer base of Jefferson County, Kentucky. See footnote E to the consolidated financial statements on page 45 of the Company's annual report to shareholders for the year ended December 31, 1993, which is incorporated herein by reference, for additional information on premises, equipment and lease commitments.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
The information contained in footnote N to the Company's consolidated financial statements included on page 50 of the Company's annual report to shareholders for the year ended December 31, 1993, is incorporated herein by reference.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
EXECUTIVE OFFICERS OF REGISTRANT.
Listed below are the names and ages of the Company's executive officers, positions held, and the year from which held. The Company's executive officers are elected annually by the Board of Directors: Year From Name Age Position Held Which Held
Bertram W. Klein 63 Chairman of the Board, 1985 Chief Executive Officer & member of the Executive Committee
Orson Oliver 50 President, Director & 1985 member of the Executive Committee
Thomas L. Weber 61 Executive Vice President 1984 & member of the Executive Committee
Wallace A. Fudold 49 Executive Vice President 1985 & member of the Executive Committee
Paul E. Henry 58 Executive Vice President 1989 & member of the Executive Committee
David N. Klein 38 Executive Vice President 1991 & member of the Executive Committee
Richard B. Klein 35 Executive Vice President 1991 & member of the Executive Committee
Gail W. Pohn 58 Executive Vice President 1993 & member of the Executive Committee
Robert H. Sachs 54 Executive Vice President, 1993 General Counsel, & member of the Executive Committee
Steven A. Small 40 Executive Vice President, 1993 Chief Financial Officer & member of the Executive Committee
Mr. Henry joined the Company's subsidiary bank in 1964. He was elected to his current position in 1989, and last held the office of Senior Vice President - Commercial Lending.
David N. Klein joined the Company's subsidiary bank in 1978. He was elected to his current position in 1991 and from 1987 to 1991 held the office of Senior Vice President - Retail Banking. He is the son of Bertram W. Klein and the brother of Richard B. Klein.
Richard B. Klein joined the Company's subsidiary bank in 1980. He was elected to his current position in 1991 and from 1987 to 1991 held the office of Senior Vice President -Consumer Loans and Credit. He is the son of Bertram W. Klein and the brother of David N. Klein.
Mr. Pohn joined the Company and the Company's subsidiary bank in 1993. Prior to joining the Company, from 1981 to 1993, he was Senior Vice President, Chief Counsel and Secretary for National City Bank, Kentucky (and its predecessor), a non-affiliate of the Company.
Mr. Sachs joined the Company and the Company's subsidiary bank in 1993. From 1990 to 1993, Mr. Sachs was the President of Legal Services Management, Inc., a consultant to corporations and law firms regarding the effective management and delivery of legal services. From 1989 to 1990 he was Vice President of Law and Corporate Secretary to BATUS Inc., a $13 billion management and holding company for the U.S. interests of BAT Industries, plc, a large publicly held UK conglomerate. Prior to that, Mr. Sachs was Vice President and General Counsel, Product Litigation, to Brown & Williamson Tobacco Corporation.
Mr. Small, a CPA, joined the Company and the Company's subsidiary bank in 1993. Prior to joining the Company, from 1986 to 1993, he was a partner of KPMG Peat Marwick, Certified Public Accountants, and worked primarily in serving financial institution clients of that firm.
All other executive officers have served the Company or the Bank in executive officer capacities for more than five years.
PART II
ITEM 5.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SECURITY HOLDER MATTERS
The information captioned "Market for Mid-America Bancorp's Stock and Related Security Holder Matters" included on page 36 of the Company's annual report to shareholders for the year ended December 31, 1993, is incorporated herein by reference.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
The information captioned "Summary of Financial Data" included on page 34 of the Company's annual report to shareholders for the year ended December 31, 1993 is incorporated herein by reference.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Management's Discussion and Analysis of Financial Condition and Results of Operations included on pages 21 through 33 of the Company's annual report to shareholders for the year ended December 31, 1993 is incorporated herein by reference.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements of the Company and report of independent auditors included on pages 37 through 53 in the Company's annual report to shareholders for the year ended December 31, 1993 are incorporated herein by reference:
Independent Auditors' Report Consolidated balance sheets - December 31, 1993 and 1992 Consolidated statements of income - years ended December 31 1993, 1992, and 1991 Consolidated statements of changes in shareholders' equity - years ended December 31, 1993, 1992 and 1991 Consolidated statements of cash flows - years ended December 31, 1993, 1992 and 1991 Notes to consolidated financial statements
The information captioned "Quarterly Financial Data" included on page 35 of the Company's annual report to shareholders for the year ended December 31, 1993 is incorporated herein by reference.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III
ITEMS 10, 11, 12 AND 13. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT; EXECUTIVE COMPENSATION; SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT; AND CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by these items, other than the information set forth above under Item I, "Executive Officers of Registrant," is omitted because the Company is filing a definitive proxy statement pursuant to Regulation 14A not later than 120 days after the end of the fiscal year covered by this report which includes the required information. The required information contained in the Company's proxy statement is incorporated herein by reference.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
a-l Financial Statements See Part II, Item 8 for a listing of all financial statements and report of independent auditors.
a-2 Financial Statement Schedules All schedules normally required by Form lO-K are omitted since they are either not applicable or the required information is shown in the financial statements or the notes thereto.
a-3 Exhibits 3(a) Amended and Restated Articles of Incorporation of Mid-America Bancorp filed with the Secretary of State of Kentucky on May 4, 1989. Exhibit 3(e) to the Company's annual report on Form 10-K for the year ended December 31, 1989 is incorporated by reference herein.
(b) By-Laws of Mid-America Bancorp. Exhibit 3 (c) to Registration Statement No. 2-80835 is incorporated by reference herein.
4. Amended and Restated Articles of Incorporation and By-Laws. See Exhibits 3(a) and 3(b).
10. Material Contracts
(a) Employment Agreement between the Company and Orson Oliver dated, April 5, 1993
(b) Employment Agreement between the Company and Wallace A. Fudold dated, April 5, 1993
(c) Employment Agreement between the Company and David N. Klein dated, April 5, 1993
(d) Employment Agreement between the Company and Richard B. Klein dated, April 5, 1993
(e) Employment Agreement between the Company and Robert Sachs dated, April 5, 1993
(f) Employment Agreement between the Company and Gail Pohn dated, April 5, 1993
(g) Employment Agreement between the Company and Steven Small. May 3, 1993
(h) Agreement and General Release between the Company and Stanley L. Atlas dated, October 26, 1993
(i) Amended and Restated Mid-America Bancorp Incentive Stock Option Plan is incorporated herein by reference to Post-Effective Amendment Number 1 to Form S-8 Registration Statement No. 2-92270.
(j) Mid-America Bancorp 1991 Incentive Stock Option Plan. Exhibit 28 to Registration Statement No. 33-42989 is incorporated by reference herein.
(k) Mid-America Bancorp Incentive Compensation Plan. Exhibit 10(d) to the Company's annual report on Form 10-K for the year ended December 31, 1990 is incorporated by reference herein.
11. Statement re Computation of per share earnings.
13. Selected portions of the annual report to shareholders for the year ended December 31, 1993.
21. Subsidiaries of the Company.
23. Consent of independent auditors.
27. Financial Data Schedule.
99. Additional Exhibits
Form 11-K
b Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
MID-AMERICA BANCORP
March 21, 1994 BY: /s/ Bertram W. Klein Bertram W. Klein Chairman of the Board and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated.
/s/ Bertram W. Klein Chairman of the Board & Mar. 21, 1994 Bertram W. Klein Chief Executive Officer
/s/ Orson Oliver President & Director Mar. 21, 1994 Orson Oliver
/s/ Steven A. Small Executive Vice President Mar. 21, 1994 Steven A. Small & Chief Financial Officer
/s/ Stanley L. Atlas Director Mar. 21, 1994 Stanley L. Atlas
/s/ Leslie D. Aberson Director Mar. 21, 1994 Leslie D. Aberson
/s/ Robert P. Adelberg Director Mar. 21, 1994 Robert P. Adelberg
/s/ William C. Ballard, Jr. Director Mar. 21, 1994 William C. Ballard, Jr.
/s/ Henry D. Burns Director Mar. 21, 1994 Henry D. Burns
/s/ Martha Layne Collins Director Mar. 21, 1994 Martha Layne Collins
/s/ Harry S. Frazier, Jr. Director Mar. 21, 1994 Harry S. Frazier, Jr.
/s/ Peggy Ann Markstein Director Mar. 21, 1994 Peggy Ann Markstein
/s/ Donald G. McClinton Director Mar. 21, 1994 Donald G.McClinton
/s/ John D. Palmore Director Mar. 21, 1994 John D. Palmore
/s/ Katherine G. Peden Director Mar. 21, 1994 Katherine G. Peden
Director Mar. 21, 1994 Woodford R. Porter, Sr.
/s/ Benjamin Richmond Director Mar. 21, 1994 Benjamin Richmond
/s/ Raymond L. Sales Director Mar. 21, 1994 Raymond L. Sales
/s/ Thomas E. Sandefur, Jr. Director Mar. 21, 1994 Thomas E. Sandefur, Jr.
Director Mar. 21, 1994 Al J. Schneider
/s/ Henry C. Wagner Director Mar. 21, 1994 Henry C. Wagner
SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549
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EXHIBITS
filed with
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1993
Commission file number 1-10602
__________________________
MID-AMERICA BANCORP
INDEX TO EXHIBITS
Exhibit Number Page
10. Material Contracts
(a) Employment Agreement between the Company and Orson Oliver dated, April 5, 1993 1
(b) Employment Agreement between the Company and Wallace A. Fudold dated, April 5, 1993 9
(c) Employment Agreement between the Company and David N. Klein dated, April 5, 1993 17
(d) Employment Agreement between the Company and Richard B. Klein dated, April 5, 1993 25
(e) Employment Agreement between the Company and Robert Sachs dated, April 5, 1993 33
(f) Employment Agreement between the Company and Gail Pohn dated, April 5, 1993 42
(g) Employment Agreement between the Company and Steven Small dated, May 3, 1993 50
(h) Agreement and General Release between the Company and Stanley L. Atlas dated, October 26, 1993 58
11. Statement re: Computation of per share earnings 62
13. Selected portions of the annual report to shareholders for the year ended December 31, 1993. 63
21. Subsidiaries of the Registrant. 106
23. Consent of independent auditors. 107
27. Financial Data Schedule 108
99. Additional Exhibits
Form 11-K 109