Allied Life Financial: 10-Q Form UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1997 Commission File Number 0-22404 ALLIED Life Financial Corporation (Exact name of registrant as specified in its charter) Iowa (State or other jurisdiction of incorporation or organization) 42-1406716 (I.R.S. Employer Identification No.) 701 Fifth Avenue, Des Moines, Iowa (Address of principal executive offices) 50391-2003 (Zip Code) 515-280-4211 (Registrant's telephone number, including area code) 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 [ ] Indicate the number of outstanding shares of each of the issuer's classes of common stock, as of May 1, 1997: 4,514,214 shares of Common Stock. This document contains 19 pages. PART I Item 1. Financial Statements ALLIED Life Financial Corporation and Subsidiaries Consolidated Balance Sheets March 31, December 31, 1997 1996 Assets Investments Fixed maturities Held to maturity at amortized cost (fair value $200,925,764 in 1997 and $205,347,823 in 1996) $198,622,393 $199,208,835 Available for sale, at fair value (amortized cost $502,841,568 in 1997 and $492,686,241 in 1996) 498,675,105 500,289,070 Equity securities at fair value 7,875,268 6,406,552 Mortgage loans on real estate 1,325,257 1,456,688 Policy loans 10,639,808 10,306,724 Other invested assets 3,569,635 3,751,415 Short-term investments, at cost 1,468,250 919,687 Total investments 722,175,716 722,338,971 Accrued investment income 11,173,472 9,738,060 Accounts receivable 899,881 607,737 Reinsurance ceded receivables 5,671,185 5,786,434 Deferred policy acquisition costs 99,994,216 92,417,588 Other assets 5,914,975 4,710,933 Total assets $845,829,445 $835,599,723 See accompanying Notes to Interim Consolidated Financial Statements. 1 ALLIED Life Financial Corporation Subsidiaries Consolidated Balance Sheets March 31, December 31, 1997 1996 Liabilities Policy liabilities Policyholder account balances Annuity contracts $474,727,449 $467,504,991 Universal life contracts 186,738,606 182,726,695 Other 7,900,855 8,846,156 Future policy benefits 34,391,261 33,473,558 Policy and contract claims 4,389,022 3,735,623 Other policyholder funds 2,073,593 1,575,995 710,220,786 697,863,018 Checks drawn in excess of bank balances 2,051,123 3,163,318 Current income taxes payable 189,439 940,576 Deferred income taxes 7,396,256 8,008,946 Indebtedness to affiliates 1,556,670 2,188,068 Note payable (note 2) 25,000,000 20,470,000 Other liabilities 1,993,151 3,024,175 Total liabilities 748,407,425 735,658,101 Stockholders' equity Preferred stock, no par value, issuable in series, authorized 7,500,000 shares 6.75% Series, authorized 2,440,000 shares, issued and outstanding of 2,179,865 in 1997 and 2,143,691 in 1996 23,651,535 23,259,047 ESOP Series, authorized 300,000 shares, issued and outstanding 108,014 in 1997 and 93,982 in 1996 1,581,853 1,327,186 Common stock, no par value, $1 stated value, authorized 25,000,000 shares, issued and outstanding 4,514,081 in 1997 and 4,497,238 in 1996 4,514,081 4,497,238 Additional paid-in capital 46,816,438 46,596,171 Retained earnings 23,188,182 21,751,088 Unrealized (depreciation) appreciation of investments, net (2,330,069) 2,510,892 Total stockholders' equity 97,422,020 99,941,622 Total liabilities and stockholders' equity $845,829,445 $835,599,723 See accompanying Notes to Interim Consolidated Financial Statements. 2 ALLIED Life Financial Corporation and Subsidiaries Consolidated Statements of Income Three Months Ended March 31, 1997 1996 Revenues Insurance revenues Policyholder assessments on universal life contracts $ 5,383,438 $ 5,167,300 Surrender charges 619,094 628,460 Life insurance premiums 3,246,170 2,832,887 Other insurance income 1,223,698 805,428 Reinsurance premiums ceded (2,297,819) (2,063,720) Total insurance revenues 8,174,581 7,370,355 Investment income 12,683,127 11,749,917 Realized investment losses (392,755) (84,184) Other income 323,141 287,986 20,788,094 19,324,074 Benefits and Expenses Policyholder benefits Interest credited to policyholder account balances Annuity contracts 6,420,843 5,800,453 Universal life contracts 2,456,203 2,375,262 Other 126,131 84,197 Death benefits 2,806,526 2,639,075 Other policyholder benefits 1,204,799 1,357,260 Reinsurance recoveries (288,072) (1,135,655) Total policyholder benefits 12,726,430 11,120,592 Amortization of deferred policy acquisition costs 2,155,931 1,732,594 Commissions 872,492 669,331 Affiliated operating expenses 143,416 323,156 Other insurance operating expenses 1,699,078 1,434,021 17,597,347 15,279,694 Income before income taxes 3,190,747 4,044,380 Income Taxes Current 753,814 1,069,061 Deferred 310,131 278,019 1,063,945 1,347,080 Net Income $ 2,126,802 $ 2,697,300 Net income applicable to common stock $ 1,707,305 $ 2,306,015 Earnings per Common Share $ 0.38 $ 0.50 Weighted average number of common shares outstanding 4,501,597 4,633,202 See accompanying Notes to Interim Consolidated Financial Statements. 3 ALLIED Life Financial Corporation and Subsidiaries Consolidated Statements of Cash Flows Three Months Ended March 31, 1997 1996 Cash flow from operating activities Net income $ 2,126,802 $ 2,697,300 Adjustments to reconcile net income to net cash provided by operating activities Policyholder assessments on universal life contracts (5,383,438) (5,167,300) Surrender charges (619,094) (628,460) Interest credited to policyholder account balances 9,003,177 8,259,912 Realized investment losses 392,755 84,184 Change in Accrued investment income (1,435,412) (1,482,512) Reinsurance ceded receivables 115,249 1,964,516 Deferred policy acquisition costs (1,942,100) (2,201,719) Liabilities for future policy benefits 917,703 773,656 Policy and contract claims and other policyholder funds 1,150,997 43,541 Income taxes Current (751,137) 1,068,944 Deferred 739,329 278,019 Other, net (3,017,736) (673,378) Net cash provided by operating activities 1,297,095 5,016,703 Cash Flows from Investing Activities Purchase of fixed maturities held to maturity (5,393,891) (6,500,000) Maturities, calls, and principal reductions of fixed maturities held to maturity 3,312,178 15,534,368 Purchase of fixed maturities available for sale (39,755,141) (50,627,478) Proceeds from sale of fixed maturities available for sale 28,222,959 30,617,977 Maturities, calls, and principal reductions of fixed maturities available for sale 3,610,417 2,489,422 Purchase of equity securities (2,452,512) (505,922) Proceeds from sale of common stock 1,022,687 --- Proceeds from repayment of mortgage loans 131,542 78,365 Change in policy loans, net (333,084) (523,637) Net cash used in investing activities (11,634,845) (9,436,905) Cash Flows from Financing Activities Change in checks drawn in excess of bank balances (1,112,196) (786,375) Deposits to policyholder account balances 25,031,575 20,238,719 Withdrawals from policyholder account balances (17,622,707) (11,572,961) Change in note payable, net 4,530,000 (3,280,000) Change in note payable from affiliate, net (134,915) --- Proceeds from issuance of stock, net 491,768 291,494 Dividends paid to stockholders (297,212) (231,723) Net cash provided by financing activities 10,886,313 4,659,154 Net Increase in Cash and Short-term Investments 548,563 238,952 Cash and short-term investments at beginning of year 919,687 721,612 Cash and short-term investments at end of quarter $ 1,468,250 $ 960,564 See accompanying Notes to Interim Consolidated Financial Statements. 4 ALLIED Life Financial Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements (1) Summary of Significant Accounting Policies The accompanying consolidated financial statements include the accounts of ALLIED Life Financial Corporation (the Company) and its subsidiaries on a consolidated basis. At March 31, 1997, ALLIED Mutual Insurance Company (ALLIED Mutual), an affiliated property-casualty insurance company, controlled 54% of the voting stock of the Company and the ALLIED Life Financial Corporation Employee Stock Ownership Trust owned 2%. The remainder was owned by public stockholders. The accompanying interim consolidated financial statements should be read in conjunction with the following notes and with the Notes to Consolidated Financial Statements included in the ALLIED Life Financial Corporation's Annual Report on 10K for the year ended December 31, 1996. The interim consolidated financial statements have been prepared in conformity with generally accepted accounting principles (GAAP) and include all adjustments which are in the opinion of management necessary for a fair presentation of the results for the interim periods. In the opinion of management, all such adjustments are of a normal and recurring nature. All significant intercompany balances and transactions have been eliminated. (2) Transactions with Affiliates The Company and its affiliates pool their excess cash pursuant to the Intercompany Cash Concentration Fund Agreement. The fund, administered by AID Finance Services, Inc. (an affiliate of the Company), also issues short-term loans (30 days or less) to affiliated companies in accordance with the current intercompany borrowing policy. At March 31, 1997, the Company had an investment balance in the intercompany fund of $1,265,733. Pursuant to the Agreement, AID Finance Services, Inc. receives a management fee of 5 basis points which the fund participants pay in the form of an additional 0.05% in the interest rate for borrowings and a 0.05% reduction in the interest rate on invested funds. The Company has a note payable with ALLIED Mutual. Interest is paid quarterly at an annual rate of 7% and final payment shall be on August 15, 1999. At March 31, 1997 the outstanding balance of the note payable was $1,482,433. (3) Note Payable to Nonaffiliates ALLIED Life Insurance Company, a wholly owned subsidiary, has a line of credit agreement with the Federal Home Loan Bank (FHLB) to make available borrowings of $25,000,000. Interest is payable at either an adjustable interest rate with the interest rate set and charged daily on the outstanding advance amount or at a fixed rate with the interest rate set at issuance. As of March 31, 1997, borrowings on this line of credit agreement were $25,000,000 at an interest rate of 5.66% per annum. All borrowings with the FHLB are secured by securities with a carrying value of $29,398,567. (4) New Accounting Standard In February 1997, the Financial Accounting Statndards Board (FASB) Issued Statement of Financial Accounting Standards (SFAS) 128, "Earnings Per Share". SFAS 128 supersedes Opinion 15, "Earnings Per Share" and specifies the computation, presentation, and disclosure requirements for earnings per share (EPS). 5 ALLIED Life Financial Corporation and Subsidiaries Notes to Interim Consolidated Financial Statements (continued) It replaces the presentation of primary EPS and fully diluted EPS with basic EPS and diluted EPS. Basic EPS includes weighted common shares outstanding and excludes all dilutive securities. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stocks were exercised or converted into common stock. Diluted EPS is computed similarly to fully diluted EPS under APB 15. Statement 128 is effective for financial statements for both interim and annual periods ending after December 15, 1997. Management has determined that the implementation will not have a material effect on its financial condition, results of operations, or liquidity. (5) Subsequent Event Effective May 13, 1997, the Board of Directors approved a stock repurchase program to acquire up to 150,000 shares of the Company common stock on the open market pursuant to rule 10b-18 under the Securities Exchange Act of 1934. Completion of this program, expected within 24 months, is dependent upon market conditions. The repurchase program may be terminated at any time at the Company's discretion. The Company has no present intention to cause its shares to be delisted or deregistered as a result of this repurchase program. 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Overview The following analysis of the consolidated results of operations and financial condition of the Company should be read in conjunction with the interim consolidated financial statements and related footnotes included elsewhere herein, and with the Company's Annual Report on Form 10-K for the year ended December 31, 1996. ALLIED Life Financial Corporation is an insurance holding company formed by ALLIED Mutual Insurance Company (ALLIED Mutual) in 1993. The financial statements include the accounts of ALLIED Life Insurance Company (ALLIED Life), ALLIED Life Brokerage Agency, Inc. (ALBA), and ALLIED Group Merchant Banking Corporation (AGMB). ALLIED Life accounts for substantially all of the Company's operations and sells primarily universal life insurance, term life insurance, and annuity products. The following table reflects ALLIED Life's production information and pretax operating results excluding realized investment losses and related amortization of deferred policy acquisition costs for the periods indicated. Life Insurance Operations Three Months Ended March 31, 1997 1996 (Dollars in thousands) Production information Life insurance Life insurance face amount in force Directly produced by agents Universal Life $4,419,829 $4,228,392 Term life 4,287,625 3,555,948 Whole life 49,198 49,688 8,756,652 7,834,028 Other 383,770 382,440 $9,140,422 $8,216,468 Face amount of new life insurance sold Directly produced by agents Universal Life $ 157,639 $ 98,326 Term life 272,187 293,833 Whole life 1,756 977 431,582 393,136 Other 1,774 4,347 $ 433,356 $ 397,483 Life insurance termination rate Universal life 6.8% 7.0% Term life 17.6% 17.8% Annuities Account balance $ 474,727 $ 420,067 First-year annuity premiums $ 14,024 $ 9,268 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) Life Insurance Operations (Continued) Three Months Ended March 31, 1997 1996 (Dollars in thousands) Profitability Investment income $12,672 $11,739 Interest credited on Annuities 6,421 5,801 Universal Life 2,456 2,375 Other 126 84 9,003 8,260 Total interest expense Investment spread 3,669 3,479 Fee income Universal life charges 5,838 5,685 Annuity surrender charges 165 111 Total fee income 6,003 5,796 Other insurance income 2,172 1,575 Adjusted insurance revenues 11,844 10,850 Other expenses Amortization of deferred policy acquisition costs (1) 2,436 1,762 Renewal commissions 688 568 Other operating expenses 1,591 1,505 Administrative fees 121 92 Total acquisition and operating expenses 4,836 3,927 Death benefits, net 2,326 1,503 Other policyholder benefits 1,398 1,358 Total other expenses 8,560 6,788 Income before income taxes and realized investment losses from insurance operations $ 3,284 $ 4,062 (1)Amounts exclude excess amortization of deferred policy acquisition costs resulting from net realized investment losses. RESULTS OF OPERATIONS Consolidated revenues for the three months ended March 31, 1997 were $20.8 million, a 7.6% increase over the $19.3 million reported for the first quarter of 1996. The increase was primarily attributable to higher insurance revenues, which rose 10.9% to $8.2 million from $7.4 million. This can be attributed to higher term life insurance premiums. Higher investment income, which grew 7.9% to $12.7 million from $11.7 million, also contributed to the increase in revenues. Operating income decreased 19.4% to $3.3 million through March 31, 1997 from $4.1 million through March 31, 1996. Net income totaled $2.1 million, down 21.2% from $2.7 million through March 31, 1996. Operating earnings per common share dropped to $0.40 through March 31, 1997 from $0.51 through March 31, 1996; net income per common share was $0.38 compared with $0.50 for the same periods. The decreases can be attributed to higher death benefits and amortization of deferred policy acquisition costs. 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) Life Insurance Operations Total life insurance in force grew 11.2% to $9.1 billion at March 31, 1997 from $8.2 billion at March 31, 1996. The increase was due to policy retention and insurance sales. The face amount of new life insurance sold directly by agents through March 31, 1997 increased 9.8% to $431.6 million from $393.1 million through March 31, 1996. The primary factor was a 60.3% increase in the face amount of new universal life insurance sold to $157.6 million from $98.3 million. Universal life policyholder account balances were up 8.4%, and related fee income increased 2.7% to $5.8 million from $5.7 million. The face amount of new term life insurance sold directly by agents decreased 7.4% to $272.2 million through March 31, 1997 from $293.8 million through March 31, 1996. Sales of ALLIED Life's ten- and twenty-year term products have remained consistent. First-year annuity premiums increased 51.3% to $14 million through March 31, 1997 from $9.3 million through March 31, 1996. The total annuity account balance increased 13% to $474.7 million at March 31, 1997 from $420.1 million at March 31, 1996. Adjusted insurance revenues increased 9.2% to $11.8 million for the first three months of 1997 from $10.8 million for the first three months of 1996. The increase was primarily attributable to higher term life insurance premiums. The growth in life insurance in force and policyholder account balances permitted invested assets at cost to increase 11.1% to $725.2 million at March 31, 1997 from $652.8 million at March 31, 1996. Investment income increased by 7.9%. ALLIED Life's return on invested assets through March 31, 1997 decreased to 7.27% from 7.46% through March 31, 1996. The decrease was due to the fact that ALLIED Life was reinvesting maturing investments at lower interest rates. Investment spread through the first quarter of 1997 and 1996 grew to $3.7 million from $3.5 million. Annual average interest-credited rates on universal life contracts decreased to 5.3% from 5.6% and on annuities decreased to 5.5% from 5.6%. The ratio of investment spread to investment income for the quarter was 29%. The 1996 total for the year was 28.2%. This increase, despite the volatile interest rate environment, is evidence of ALLIED Life's ability to adjust interest credited to policyholder accounts to reflect trends in investment earnings. Amortization of deferred policy acquisition costs through the first quarter of 1997 and 1996 increased 38.2% to $2.4 million from $1.8 million. Other insurance operating expenses increased 7.2% to $1.7 million from $1.6 million. Death benefits net of reinsurance through the first quarter of 1997 and 1996 increased 54.7% to $2.3 million from $1.5 million. Net death benefits per share were $0.25 compared to $0.17 per share in the first quarter of 1996. Other policyholder benefits remained stable at $1.4 million. 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) ALLIED Life's operating income before taxes through March 31, 1997 and 1996 was down 19.1% to $3.3 million from $4.1 million. The decrease occurred because of higher death benefits and amortization of deferred policy acquisition costs. LIQUIDITY AND CAPITAL RESOURCES Consolidated Life insurance companies generally produce a positive cash flow from operations. Its adequacy is measured by the companies' liquidity. There should be sufficient cash to meet benefit obligations to policyholders and normal operating expenses as they are incurred and sufficient excess to help meet future policy benefit payments and to write new business. ALLIED Life's liquidity position continued to be favorable for the first quarter 1997. Cash inflows were at levels sufficient to provide the grounds necessary to meet its obligations. The Company's cash inflows consist primarily of deposits to policyholder account balances, income from sales, maturities and calls of investments, and repayments of investment principal. The Company's cash outflows primarily are related to policyholder account withdrawals, investment purchases, policy acquisition costs, policyholder benefits, and current operating expenses. These outflows typically are met from normal annual premium and net investment cash inflows. In the first quarter of 1997, the Company operations provided cash inflows of $1.3 million and financing activities provided cash inflows of $10.9 million. In the first quarter of 1996 it was $5 million and $4.7 million, respectively. These inflows were used primarily to increase the Company's fixed maturity investment portfolio. Matching the investment portfolio maturities to the cash flow demands of the insurance coverages being provided is an important consideration. The Company continually monitors benefit and claims statistics to project future cash requirements. As part of this monitoring process, the Company performs cash-flow testing of its assets and liabilities under various scenarios to evaluate the adequacy of reserves. In developing its investment strategy, the Company establishes a level of cash and securities that when combined with expected net cash inflows from operations, maturities of fixed-maturity investments, principal payments on mortgage-backed securities, and its insurance products is believed to be adequate to meet anticipated short-term and long-term benefit and expense payment obligations. A source of cash flows for the holding company is dividend payments from ALLIED Life. During the first quarter of 1997, the Company paid cash dividends on common stock of $270,000. ALLIED Life paid to the Company dividends of $437,500 to fund the Company's dividend requirements and its note payment on the indebtedness to affiliates. The Company has a line of credit agreement that provides additional liquidity. The agreement makes $25 million available through March 13, 1998. Interest is payable at a current rate upon issuance. From time to time, the Company has also borrowed funds from its affiliates on an arms-length basis. At March 31, 1997, the Company had outstanding borrowings of $25 million under the line of credit agreements and borrowings of $1.5 million from affiliates. Management anticipates that funds to meet the Company's short-term and long-term capital expenditures, cash dividends, and operating cash needs will come from existing capital and internally generated funds and believes the total is adequate to meet expected cash obligations. 10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) As of March 31, 1997, the Company had no material commitments for capital expenditures. As additional capital needs arise, the Company will consider taking an additional debt or issuing equity. Specific methods for meeting such needs will depend upon financial market conditions at the time. 11 PART II Item 6. Exhibits and Reports on Form 8-K (a) Exhibit 10.12 - Federal Home Loan Bank Open Line of Credit Application and Terms Agreement dated March 5, 1997 with ALLIED Life Insurance Company. Exhibit 11 - Statement re Computation of Per Share Earnings. Exhibit 27 - Financial Data Schedule (b) There were no reports filed on Form 8-K during the first quarter of 1997. 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. ALLIED Life Financial Corporation (Registrant) Date: May 14, 1997 By: /s/ Wendell P. Crosser ----------------------- Wendell P. Crosser, Vice President and Treasurer (Principal Financial Officer and Principal Accounting Officer) 12 OPEN LINE OF CREDIT APPLICATION AND TERMS AGREEMENT APPLICATION ALLIED Life Insurance Company- ("Member") hereby applies to the Federal Home Loan Bank of Des Moines ("Bank") for an Open Line of Credit commitment beginning on the date of approval and ending one year from the date of approval, ("Ending Date") in the amount of 25, 000, 000 TERMS 1. Member, through its authorized representative may request filnds by telephone advice up to the approved Open Line of Credit limit. Funds will be available upon advice. 2. The interest rate on advances funded under the Open Line of Credit will be set and charged daily on the outstanding advance amount. The interest amount will be deducted daily by the Bank from the member's demand account. 3. Advances funded under the Open Line of Credit will be available aier the approval date and will mature on the Ending Date. 4. Member represents and warrants that the Open Line of Credit amount requested does not exceed 15% of assets. 5. The Bank shall have no obligation to make any advance under the Open Line of Credit unless the Bank is satisfied as to Member's continued creditworthiness and compliance with the terms of the Agreement for Advances, Pledge and Security Agreement ("AAPSA"). If adverse facts develop which make the member ineligible for Bank advances, the member must provide the Bank with immediate written notification of its ineligibility and the Bank may cancel this commitment. 6. The fee for this Open Line of Credit commitment equals .05% times the amount of the comrnitment. This fee will be charged to the member's demand account on the date this application is approved by the Bank. 13 7. This Application and Terms Agreement, if approved by the Bank will constitute the Agreement between Member and Bank as to the Open Line of Credit and will be wholly incorporated into and become a part of the AAPSA. By signing this agreement, member hereby accepts the terms hereof. ALLIED Life Insurance Company Date March 5,1997 Member By:/s/ Wendell P. Crosser By:/s/ Tim J. Callahan Wendell P. Crosser Tim J. Callahan Typed Name of Signer Typed Name of Signer Vice President & Treasurer Investment Accounting Supervisor Title Title FOR FELB USE Date Approved: 03-13-97 FEDERAL HOME LOAN BANK OF DES MOINES Expiration Date 03-13-98 By: /s/ Jerry R. Ferguson Amount Approved: $25,000,000 By:/s/ David J. Waldrin Commitment Number 970313A Cornmitment Fee $12, 500 14 CERTIFICATION I, Sally J. Malloy, Assistant Secretary of ALLIED Life Insurance Company, 701 Fifth Avenue, Des Moines, Iowa certify the attached to be at true and correct copy of the resolution currently in effect adopted by the Executive Committee of the Board of Directors on May 1, 1996. /s/ Sally Malloy Assistant Secretary 15 ALLIED LIFE INSURANCE COMPANY FEDERAL HOME LOAN BANK Open Lines of Credit RESOLVED, that any of the following persons: Samuel J. Wells, President Wendell P. Crosser, Vice President & Treasurer John S. Duffy, Vice President - Administration Timothy J. Callahan, Investment Accounting Supervisor Michael Rieks Karen K. Gillispie are hereby authorized to borrow up to $25,000,000 from the account at the Federal Home Loan Bank of Des Moines on behalf of the Corporation. 16 Exhibit 11 ALLIED Life Financial Corporation and Subsidiaries Computation of Per Share Earnings For the three months ended March 31, 1997 and 1996 1997 1996 Primary Net income $2,126,802 $2,697,300 Preferred stock dividends (419,497) (391,285) Adjusted net income 1,707,305 2,306,015 Earnings per share $ 0.38 $ 0.50 Total 4,501,597 4,633,202 Fully Diluted Net income $2,126,802 $2,697,300 Preferred stock dividends (419,497) (391,285) Adjusted net income $1,707,305 $2,306,015 Earnings per share $ 0.38 $ 0.50 Total 4,501,597 4,633,202 The common stock equivalents are not entered into earnings per share computations because they would not have a dilutive effect. End