Indiana
|
0-11487
|
35-1559596
|
(State or other jurisdiction
|
(Commission File Number)
|
(IRS Employer
|
Of incorporation)
|
Identification No.)
|
Page Number
|
||
Item 1.
|
1
|
|
Item 2.
|
||
21
|
||
Item 3.
|
38
|
|
Item 4.
|
38
|
Page Number
|
||
Item 1.
|
39
|
|
Item 1A.
|
39
|
|
Item 2.
|
39
|
|
Item 3.
|
39
|
|
Item 4.
|
40
|
|
Item 5.
|
40
|
|
Item 6.
|
40
|
|
Form 10-Q
|
41
|
September 30,
|
December 31,
|
|||||||
2009
|
2008
|
|||||||
(Unaudited)
|
||||||||
ASSETS
|
||||||||
Cash and due from banks
|
$ | 31,188 | $ | 57,149 | ||||
Short-term investments
|
8,072 | 6,858 | ||||||
Total cash and cash equivalents
|
39,260 | 64,007 | ||||||
Securities available for sale (carried at fair value)
|
407,331 | 387,030 | ||||||
Real estate mortgage loans held for sale
|
1,934 | 401 | ||||||
Loans, net of allowance for loan losses of $28,778 and $18,860
|
1,912,333 | 1,814,474 | ||||||
Land, premises and equipment, net
|
30,108 | 30,519 | ||||||
Bank owned life insurance
|
34,383 | 33,966 | ||||||
Accrued income receivable
|
8,990 | 8,599 | ||||||
Goodwill
|
4,970 | 4,970 | ||||||
Other intangible assets
|
259 | 413 | ||||||
Other assets
|
30,314 | 33,066 | ||||||
Total assets
|
$ | 2,469,882 | $ | 2,377,445 |
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
NET INTEREST INCOME
|
||||||||||||||||
Interest and fees on loans
|
||||||||||||||||
Taxable
|
$ | 24,561 | $ | 25,872 | $ | 71,101 | $ | 75,673 | ||||||||
Tax exempt
|
26 | 28 | 126 | 87 | ||||||||||||
Interest and dividends on securities
|
||||||||||||||||
Taxable
|
4,335 | 4,437 | 13,231 | 11,793 | ||||||||||||
Tax exempt
|
597 | 583 | 1,804 | 1,820 | ||||||||||||
Interest on short-term investments
|
11 | 46 | 39 | 197 | ||||||||||||
Total interest income
|
29,530 | 30,966 | 86,301 | 89,570 | ||||||||||||
Interest on deposits
|
7,431 | 10,854 | 25,464 | 33,592 | ||||||||||||
Interest on borrowings
|
||||||||||||||||
Short-term
|
268 | 1,435 | 841 | 5,164 | ||||||||||||
Long-term
|
569 | 1,405 | 2,181 | 3,538 | ||||||||||||
Total interest expense
|
8,268 | 13,694 | 28,486 | 42,294 | ||||||||||||
NET INTEREST INCOME
|
21,262 | 17,272 | 57,815 | 47,276 | ||||||||||||
Provision for loan losses
|
5,500 | 3,710 | 14,952 | 7,884 | ||||||||||||
NET INTEREST INCOME AFTER PROVISION FOR
|
||||||||||||||||
LOAN LOSSES
|
15,762 | 13,562 | 42,863 | 39,392 | ||||||||||||
NONINTEREST INCOME
|
||||||||||||||||
Wealth advisory fees
|
747 | 869 | 2,213 | 2,541 | ||||||||||||
Investment brokerage fees
|
410 | 582 | 1,300 | 1,479 | ||||||||||||
Service charges on deposit accounts
|
2,133 | 2,331 | 6,153 | 6,355 | ||||||||||||
Loan, insurance and service fees
|
711 | 729 | 1,941 | 2,122 | ||||||||||||
Merchant card fee income
|
536 | 949 | 2,179 | 2,646 | ||||||||||||
Other income
|
506 | 585 | 1,459 | 1,453 | ||||||||||||
Mortgage banking income
|
459 | 146 | 1,849 | 666 | ||||||||||||
Net securities gains
|
2 | 11 | 2 | 39 | ||||||||||||
Gain on redemption of Visa shares
|
0 | 0 | 0 | 642 | ||||||||||||
Impairment on available-for-sale securities (includes total losses of $2,831,
|
||||||||||||||||
net of $2,606 recognized in other comprehensive income, pre-tax)
|
(225 | ) | 0 | (225 | ) | 0 | ||||||||||
Total noninterest income
|
5,279 | 6,202 | 16,871 | 17,943 |
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
NONINTEREST EXPENSE
|
||||||||||||||||
Salaries and employee benefits
|
$ | 7,327 | $ | 6,411 | $ | 20,516 | $ | 19,113 | ||||||||
Occupancy expense
|
751 | 741 | 2,392 | 2,226 | ||||||||||||
Equipment costs
|
571 | 426 | 1,588 | 1,344 | ||||||||||||
Data processing fees and supplies
|
985 | 955 | 2,969 | 2,662 | ||||||||||||
Credit card interchange
|
302 | 651 | 1,353 | 1,765 | ||||||||||||
Other expense
|
3,161 | 2,758 | 11,119 | 7,827 | ||||||||||||
Total noninterest expense
|
13,097 | 11,942 | 39,937 | 34,937 | ||||||||||||
INCOME BEFORE INCOME TAX EXPENSE
|
7,944 | 7,822 | 19,797 | 22,398 | ||||||||||||
Income tax expense
|
2,677 | 2,597 | 6,200 | 7,136 | ||||||||||||
NET INCOME
|
$ | 5,267 | $ | 5,225 | $ | 13,597 | $ | 15,262 | ||||||||
Dividends and accretion of discount on preferred stock
|
801 | 0 | 1,891 | 0 | ||||||||||||
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS
|
$ | 4,466 | $ | 5,225 | $ | 11,706 | $ | 15,262 | ||||||||
Other comprehensive income/loss, net of tax:
|
||||||||||||||||
Amortization of net actuarial loss on pension and SERP plans
|
30 | 15 | 71 | 44 | ||||||||||||
Unrealized gain/(loss) on securities available for sale
|
4,492 | (1,243 | ) | 6,516 | (4,196 | ) | ||||||||||
TOTAL COMPREHENSIVE INCOME
|
$ | 9,789 | $ | 3,997 | $ | 20,184 | $ | 11,110 | ||||||||
BASIC WEIGHTED AVERAGE COMMON SHARES
|
12,432,135 | 12,290,055 | 12,416,894 | 12,256,389 | ||||||||||||
BASIC EARNINGS PER COMMON SHARE
|
$ | 0.36 | $ | 0.43 | $ | 0.94 | $ | 1.25 | ||||||||
DILUTED WEIGHTED AVERAGE COMMON SHARES
|
12,531,264 | 12,468,446 | 12,519,460 | 12,454,426 | ||||||||||||
DILUTED EARNINGS PER COMMON SHARE
|
$ | 0.36 | $ | 0.42 | $ | 0.94 | $ | 1.23 |
2009
|
2008
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income
|
$ | 13,598 | $ | 15,262 | ||||
Adjustments to reconcile net income to net cash from operating activities:
|
||||||||
Depreciation
|
1,681 | 1,356 | ||||||
Provision for loan losses
|
14,952 | 7,884 | ||||||
Write down of other real estate owned
|
0 | 285 | ||||||
Amortization of intangible assets
|
154 | 154 | ||||||
Amortization of loan servicing rights
|
438 | 298 | ||||||
Net change in loan servicing rights valuation allowance
|
170 | (25 | ) | |||||
Loans originated for sale
|
(108,386 | ) | (37,940 | ) | ||||
Net gain on sales of loans
|
(1,713 | ) | (666 | ) | ||||
Proceeds from sale of loans
|
107,798 | 36,227 | ||||||
Net gain on redemption of Visa shares
|
0 | (642 | ) | |||||
Net loss on sales of premises and equipment
|
(7 | ) | (12 | ) | ||||
Net loss on sales of other real estate
|
68 | 111 | ||||||
Net gain on sales of securities available for sale
|
(2 | ) | (39 | ) | ||||
Impairment on available for sale securities
|
225 | 0 | ||||||
Net securities amortization
|
303 | (30 | ) | |||||
Stock compensation expense
|
233 | 167 | ||||||
Earnings on life insurance
|
(317 | ) | (876 | ) | ||||
Tax benefit of stock option exercises
|
(172 | ) | (519 | ) | ||||
Net change:
|
||||||||
Accrued income receivable
|
(391 | ) | 529 | |||||
Accrued expenses payable
|
(557 | ) | (1,861 | ) | ||||
Other assets
|
(1,284 | ) | (4,303 | ) | ||||
Other liabilities
|
(172 | ) | 123 | |||||
Total adjustments
|
13,021 | 221 | ||||||
Net cash from operating activities
|
26,619 | 15,483 | ||||||
Cash flows from investing activities:
|
||||||||
Proceeds from sale of securities available for sale
|
0 | 39 | ||||||
Proceeds from maturities, calls and principal paydowns of
|
||||||||
securities available for sale
|
91,896 | 53,146 | ||||||
Purchases of securities available for sale
|
(102,018 | ) | (119,015 | ) | ||||
Purchase of life insurance
|
(100 | ) | (11,441 | ) | ||||
Net increase in total loans
|
(112,955 | ) | (199,722 | ) | ||||
Proceeds from sales of land, premises and equipment
|
15 | 114 | ||||||
Purchases of land, premises and equipment
|
(1,278 | ) | (1,431 | ) | ||||
Proceeds from sales of other real estate
|
255 | 1,843 | ||||||
Net cash from investing activities
|
(124,185 | ) | (276,467 | ) |
2009
|
2008
|
|||||||
Cash flows from financing activities:
|
||||||||
Net increase (decrease) in total deposits
|
$ | (64,268 | ) | $ | 229,012 | |||
Net increase (decrease) in short-term borrowings
|
137,626 | (58,874 | ) | |||||
Proceeds from long-term borrowings
|
0 | 90,000 | ||||||
Payments on long-term borrowings
|
(50,001 | ) | (1 | ) | ||||
Dividends paid
|
(7,091 | ) | (5,510 | ) | ||||
Proceeds from issuance of preferred stock
|
56,044 | 0 | ||||||
Proceeds from stock option exercise
|
724 | 1,321 | ||||||
Purchase of treasury stock
|
(215 | ) | (194 | ) | ||||
Net cash from financing activities
|
72,819 | 255,754 | ||||||
Net change in cash and cash equivalents
|
(24,747 | ) | (5,230 | ) | ||||
Cash and cash equivalents at beginning of the period
|
64,007 | 67,691 | ||||||
Cash and cash equivalents at end of the period
|
$ | 39,260 | $ | 62,461 | ||||
Cash paid during the period for:
|
||||||||
Interest
|
$ | 28,778 | $ | 44,530 | ||||
Income taxes
|
7,705 | 7,245 | ||||||
Supplemental non-cash disclosures:
|
||||||||
Loans transferred to other real estate
|
144 | 536 |
September 30,
|
December 31,
|
|||||||
2009
|
2008
|
|||||||
Commercial and industrial loans
|
$ | 691,012 | $ | 652,107 | ||||
Commercial real estate – owner occupied
|
340,899 | 337,060 | ||||||
Commercial real estate – nonowner occupied
|
242,278 | 212,444 | ||||||
Commercial real estate - multifamily loans
|
25,651 | 25,428 | ||||||
Commercial real estate construction loans
|
153,426 | 116,970 | ||||||
Agri-business and agricultural loans
|
178,683 | 189,007 | ||||||
Residential real estate mortgage loans
|
95,095 | 117,230 | ||||||
Home equity loans
|
158,706 | 128,219 | ||||||
Installment loans and other consumer loans
|
57,504 | 55,102 | ||||||
Subtotal
|
1,943,254 | 1,833,567 | ||||||
Less: Allowance for loan losses
|
(28,778 | ) | (18,860 | ) | ||||
Net deferred loan fees
|
(2,143 | ) | (233 | ) | ||||
Loans, net
|
$ | 1,912,333 | $ | 1,814,474 | ||||
Impaired loans
|
$ | 28,236 | $ | 20,304 | ||||
Amount of the allowance for loan losses allocated
|
$ | 5,963 | $ | 3,228 | ||||
Non-performing loans
|
$ | 29,255 | $ | 21,288 | ||||
Allowance for loan losses to total loans
|
1.48 | % | 1.03 | % |
Nine Months Ended
|
||||||||
September 30,
|
||||||||
2009
|
2008
|
|||||||
Balance at beginning of period
|
$ | 18,860 | $ | 15,801 | ||||
Provision for loan losses
|
14,952 | 7,884 | ||||||
Charge-offs
|
(5,338 | ) | (5,954 | ) | ||||
Recoveries
|
304 | 393 | ||||||
Net loans charged-off
|
(5,034 | ) | (5,561 | ) | ||||
Balance at end of period
|
$ | 28,778 | $ | 18,124 |
Gross
|
Gross
|
|||||||||||||||
Fair
|
Unrealized
|
Unrealized
|
Amortized
|
|||||||||||||
Value
|
Gain
|
Losses
|
Cost
|
|||||||||||||
September 30, 2009
|
||||||||||||||||
U.S. Treasury securities
|
$ | 1,001 | $ | 1 | $ | 0 | $ | 1,000 | ||||||||
U.S. Government agencies
|
5,659 | 70 | 0 | 5,589 | ||||||||||||
Mortgage-backed securities
|
267,278 | 8,832 | (147 | ) | 258,593 | |||||||||||
Non-agency residential
|
||||||||||||||||
mortgage-backed securities
|
74,409 | 64 | (18,158 | ) | 92,503 | |||||||||||
State and municipal securities
|
58,984 | 2,867 | (11 | ) | 56,128 | |||||||||||
Total
|
$ | 407,331 | $ | 11,834 | $ | (18,316 | ) | $ | 413,813 | |||||||
December 31, 2008
|
||||||||||||||||
U.S. Treasury securities
|
$ | 1,025 | $ | 24 | $ | 0 | $ | 1,001 | ||||||||
U.S. Government agencies
|
15,685 | 232 | 0 | 15,453 | ||||||||||||
Mortgage-backed securities
|
229,571 | 3,907 | (228 | ) | 225,892 | |||||||||||
Non-agency residential
|
||||||||||||||||
mortgage-backed securities
|
85,098 | 0 | (21,692 | ) | 106,790 | |||||||||||
State and municipal securities
|
55,651 | 970 | (400 | ) | 55,081 | |||||||||||
Total
|
$ | 387,030 | $ | 5,133 | $ | (22,320 | ) | $ | 404,217 | |||||||
Fair
|
||||
Value
|
||||
Due in one year or less
|
$ | 6,876 | ||
Due after one year through five years
|
5,027 | |||
Due after five years through ten years
|
36,223 | |||
Due after ten years
|
17,518 | |||
65,644 | ||||
Mortgage-backed securities
|
341,687 | |||
Total debt securities
|
$ | 407,331 | ||
Nine months ended September 30,
|
||||||||
2009
|
2008
|
|||||||
Sales of securities available for sale
|
||||||||
Proceeds
|
$ | 0 | $ | 0 | ||||
Gross gains
|
0 | 0 | ||||||
Gross losses
|
0 | 0 | ||||||
Three months ended September 30,
|
||||||||
2009 | 2008 | |||||||
Sales of securities available for sale
|
||||||||
Proceeds
|
$ | 0 | $ | 0 | ||||
Gross gains
|
0 | 0 | ||||||
Gross losses
|
0 | 0 | ||||||
Nine months ended September 30,
|
||||||||
2009
|
2008
|
|||||||
Unrealized holding gain/(loss) on securities available for sale
|
||||||||
arising during the period
|
$ | 10,482 | $ | (6,945 | ) | |||
Reclassification adjustment for (gains)/losses
|
||||||||
included in net income
|
(2 | ) | (39 | ) | ||||
Reclassification adjustment for
|
||||||||
other than temporary impairment
|
225 | 0 | ||||||
Net securities gain /(loss) activity during the period
|
10,705 | (6,984 | ) | |||||
Tax effect
|
(4,189 | ) | 2,788 | |||||
Net of tax amount
|
$ | 6,516 | $ | (4,196 | ) |
Three months ended September 30,
|
||||||||
2009
|
2008
|
|||||||
Unrealized holding gain/(loss) on securities available for sale
|
||||||||
arising during the period
|
$ | 7,099 | $ | (2,069 | ) | |||
Reclassification adjustment for (gains)/losses
|
||||||||
included in net income
|
(2 | ) | (11 | ) | ||||
Reclassification adjustment for
|
||||||||
other than temporary impairment
|
225 | 0 | ||||||
Net securities gain /(loss) activity during the period
|
7,322 | (2,080 | ) | |||||
Tax effect
|
(2,830 | ) | 837 | |||||
Net of tax amount
|
$ | 4,492 | $ | (1,243 | ) |
Less than 12 months
|
12 months or more
|
Total
|
||||||||||||||||||||||
Fair
|
Unrealized
|
Fair
|
Unrealized
|
Fair
|
Unrealized
|
|||||||||||||||||||
Value
|
Losses
|
Value
|
Losses
|
Value
|
Losses
|
|||||||||||||||||||
September 30, 2009
|
||||||||||||||||||||||||
U.S. Treasury securities
|
$ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||
U.S. Government agencies
|
0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Mortgage-backed securities
|
12,241 | 144 | 941 | 3 | 13,182 | 147 | ||||||||||||||||||
Non-agency mortgage-backed securities
|
0 | 0 | 70,796 | 18,158 | 70,796 | 18,158 | ||||||||||||||||||
State and municipal securities
|
1,674 | 4 | 475 | 7 | 2,149 | 11 | ||||||||||||||||||
Total temporarily impaired
|
$ | 13,915 | $ | 148 | $ | 72,212 | $ | 18,168 | $ | 86,127 | $ | 18,316 | ||||||||||||
December 31, 2008
|
||||||||||||||||||||||||
U.S. Treasury securities
|
$ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||
U.S. Government agencies
|
0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Mortgage-backed securities
|
28,415 | 92 | 9,667 | 136 | 38,082 | 228 | ||||||||||||||||||
Non-agency mortgage-backed securities
|
68,698 | 15,270 | 16,413 | 6,422 | 85,111 | 21,692 | ||||||||||||||||||
State and municipal securities
|
14,663 | 373 | 877 | 27 | 15,540 | 400 | ||||||||||||||||||
Total temporarily impaired
|
$ | 111,776 | $ | 15,735 | $ | 26,957 | $ | 6,585 | $ | 138,733 | $ | 22,320 |
Less than
|
12 months
|
||||
12 months
|
or more
|
Total
|
|||
September 30, 2009
|
|||||
U.S. Treasury securities
|
0
|
0
|
0
|
||
U.S. Government agencies
|
0
|
0
|
0
|
||
Mortgage-backed securities
|
4
|
4
|
8
|
||
Non-agency mortgage-backed securities
|
0
|
23
|
23
|
||
State and municipal securities
|
4
|
1
|
5
|
||
Total temporarily impaired
|
8
|
28
|
36
|
||
December 31, 2008
|
|||||
U.S. Treasury securities
|
0
|
0
|
0
|
||
U.S. Government agencies
|
0
|
0
|
0
|
||
Mortgage-backed securities
|
12
|
12
|
24
|
||
Non-agency mortgage-backed securities
|
19
|
5
|
24
|
||
State and municipal securities
|
37
|
2
|
39
|
||
Total temporarily impaired
|
68
|
19
|
87
|
Accumulated Credit Losses in 2009
|
||||
Balance January 1, 2009 and July 1, 2009
|
$ | 0 | ||
Additions related to other-than-temporary impairment losses not previously recognized
|
225 | |||
Balance September 30, 2009
|
$ | 225 |
9/30/2009
|
1-Month
|
3-Month
|
6-Month
|
||||||||
Other Than
|
September 30, 2009
|
Lowest
|
Constant
|
Constant
|
Constant
|
||||||
Temporary
|
Par
|
Book
|
Market
|
Unrealized
|
Credit
|
Default
|
Default
|
Default
|
Credit
|
||
Description
|
CUSIP
|
Impairment
|
Value
|
Value
|
Value
|
Gain/(Loss)
|
Rating
|
Rate
|
Rate
|
Rate
|
Support
|
CWALT 2006-32CB A16
|
02147XAR8
|
No
|
2,268
|
2,162
|
1,316
|
(846)
|
CCC
|
5.41
|
3.58
|
3.23
|
10.88
|
CWHL 2006-18 2A7
|
12543WAJ7
|
No
|
5,000
|
4,903
|
4,263
|
(640)
|
CCC
|
0.00
|
1.30
|
0.63
|
4.89
|
CWALT 2005-J10 1A7
|
12667G4N0
|
No
|
5,011
|
4,961
|
4,039
|
(922)
|
B-
|
3.17
|
2.56
|
2.18
|
7.79
|
CWALT 2005-46CB A1
|
12667G6U2
|
No
|
4,833
|
4,607
|
3,325
|
(1,282)
|
CCC
|
1.01
|
1.36
|
1.35
|
5.15
|
CWALT 2005-J8 1A3
|
12667GJ20
|
No
|
6,734
|
6,456
|
4,731
|
(1,725)
|
B-
|
2.79
|
0.91
|
1.20
|
6.54
|
CHASE 2006-S3 1A5
|
16162XAE7
|
No
|
4,040
|
4,032
|
3,132
|
(900)
|
CCC
|
2.66
|
1.95
|
2.72
|
5.41
|
CHASE 2006-S2 2A5
|
16163BBA1
|
No
|
5,051
|
5,029
|
4,886
|
(143)
|
CCC
|
1.92
|
4.49
|
2.83
|
5.66
|
FHAMS 2006-FA1 1A3
|
32051GS63
|
No
|
4,082
|
3,972
|
3,364
|
(608)
|
CCC
|
N/A
|
N/A
|
N/A
|
5.00
|
GSR 2006-10F 1A1
|
36266WAC6
|
No
|
6,560
|
6,103
|
4,254
|
(1,849)
|
CCC
|
0.00
|
0.00
|
0.00
|
4.71
|
MANA 2007-F1 1A1
|
59023YAA2
|
No
|
3,736
|
3,663
|
3,022
|
(641)
|
CC
|
0.00
|
4.32
|
2.08
|
5.53
|
RALI 2006-QS4 A2
|
749228AB8
|
Yes
|
3,209
|
3,059
|
1,735
|
(1,324)
|
CC
|
22.89
|
13.96
|
11.28
|
3.67
|
RFMSI 2006-S5 A14
|
74957EAP2
|
No
|
4,949
|
4,865
|
2,743
|
(2,122)
|
CCC
|
3.97
|
5.30
|
4.18
|
4.42
|
RALI 2005-QS7 A5
|
761118AE8
|
No
|
5,327
|
5,064
|
3,833
|
(1,231)
|
CCC
|
13.64
|
6.29
|
5.54
|
11.71
|
RALI 2006-QS3 1A14
|
761118XS2
|
Yes
|
3,239
|
3,074
|
2,264
|
(810)
|
CC
|
8.15
|
11.23
|
11.29
|
8.27
|
RAST 2006-A14C 1A2
|
76114BAB4
|
Yes
|
1,629
|
1,541
|
1,068
|
(473)
|
C
|
N/A
|
N/A
|
N/A
|
3.16
|
TBW 2006-2 3A1
|
878048AG2
|
No
|
3,130
|
3,022
|
2,778
|
(244)
|
C
|
0.00
|
0.00
|
0.00
|
7.87
|
68,798
|
66,513
|
50,753
|
(15,760)
|
Nine Months Ended September 30,
|
||||||||||||||||
Pension Benefits
|
SERP Benefits
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Interest cost
|
$ | 102 | $ | 105 | $ | 50 | $ | 55 | ||||||||
Expected return on plan assets
|
(117 | ) | (145 | ) | (63 | ) | (75 | ) | ||||||||
Recognized net actuarial loss
|
76 | 36 | 43 | 38 | ||||||||||||
Net pension expense
|
$ | 61 | $ | (4 | ) | $ | 30 | $ | 18 |
Three Months Ended September 30,
|
||||||||||||||||
Pension Benefits
|
SERP Benefits
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Interest cost
|
$ | 32 | $ | 34 | $ | 13 | $ | 19 | ||||||||
Expected return on plan assets
|
(20 | ) | (50 | ) | (13 | ) | (25 | ) | ||||||||
Recognized net actuarial loss
|
29 | 12 | 20 | 12 | ||||||||||||
Net pension expense
|
$ | 41 | $ | (4 | ) | $ | 20 | $ | 6 |
Level 1
|
|
Quoted prices in active markets for identical assets or liabilities. Level 1 assets and liabilities include debt and equity securities that are traded in an active exchange market, as well as certain U.S. Treasury, other U.S. Government and agency mortgage-backed debt securities that are highly liquid and are actively traded in over-the-counter
markets.
|
Level 2
|
|
Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets and liabilities include debt securities
with quoted prices that are traded less frequently than exchange-traded instruments and securities whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data. This category generally includes certain U.S. Government and agency mortgage-backed debt securities, private mortgage-backed debt securities, corporate debt securities, municipal bonds and residential mortgage loans held-for-sale.
|
Level 3
|
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value can be determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for
which the determination of fair value requires significant management judgment or estimation. This category generally includes residential mortgage servicing rights.
|
September 30, 2009
|
||||||||||||||||
Fair Value Measurements Using
|
Assets
|
|||||||||||||||
Assets
|
Level 1
|
Level 2
|
Level 3
|
at Fair Value
|
||||||||||||
U.S. Treasury securities
|
$ | 1,001 | $ | 0 | $ | 0 | $ | 1,001 | ||||||||
U.S. Government agencies
|
0 | 5,659 | 0 | 5,659 | ||||||||||||
Mortgage-backed securities
|
0 | 267,278 | 0 | 267,278 | ||||||||||||
Non-agency residential mortgage-backed securities
|
0 | 74,409 | 0 | 74,409 | ||||||||||||
State and municipal securities
|
0 | 58,984 | 0 | 58,984 | ||||||||||||
Total assets
|
$ | 1,001 | $ | 406,330 | $ | 0 | $ | 407,331 |
December 31, 2008
|
||||||||||||||||
Fair Value Measurements Using
|
Assets
|
|||||||||||||||
Assets
|
Level 1
|
Level 2
|
Level 3
|
at Fair Value
|
||||||||||||
U.S. Treasury securities
|
$ | 1,025 | $ | 0 | $ | 0 | $ | 1,025 | ||||||||
U.S. Government agencies
|
0 | 15,685 | 0 | 15,685 | ||||||||||||
Mortgage-backed securities
|
0 | 229,571 | 0 | 229,571 | ||||||||||||
Non-agency residential mortgage-backed securities
|
0 | 85,098 | 0 | 85,098 | ||||||||||||
State and municipal securities
|
0 | 55,651 | 0 | 55,651 | ||||||||||||
Total assets
|
$ | 1,025 | $ | 386,005 | $ | 0 | $ | 387,030 |
September 30, 2009
|
||||||||||||||||
Fair Value Measurements Using
|
Assets
|
|||||||||||||||
Assets
|
Level 1
|
Level 2
|
Level 3
|
at Fair Value
|
||||||||||||
Impaired loans
|
$ | 0 | $ | 0 | $ | 22,273 | $ | 22,273 | ||||||||
Mortgage servicing rights
|
0 | 0 | 1,069 | 1,069 | ||||||||||||
Other real estate owned
|
0 | 0 | 129 | 129 | ||||||||||||
Total assets
|
$ | 0 | $ | 0 | $ | 23,471 | $ | 23,471 |
December 31, 2008
|
||||||||||||||||
Fair Value Measurements Using
|
Assets
|
|||||||||||||||
Assets
|
Level 1
|
Level 2
|
Level 3
|
at Fair Value
|
||||||||||||
Impaired Loans
|
$ | 0 | $ | 0 | $ | 17,076 | $ | 17,076 | ||||||||
Mortgage servicing rights
|
0 | 0 | 121 | 121 | ||||||||||||
Total assets
|
$ | 0 | $ | 0 | $ | 17,197 | $ | 17,197 |
September 30, 2009
|
December 31, 2008
|
|||||||||||||||
Carrying
|
Estimated
|
Carrying
|
Estimated
|
|||||||||||||
Value
|
Fair Value
|
Value
|
Fair Value
|
|||||||||||||
Financial Assets:
|
||||||||||||||||
Cash and cash equivalents
|
$ | 39,260 | $ | 39,260 | $ | 64,007 | $ | 64,007 | ||||||||
Securities available for sale
|
407,331 | 407,331 | 387,030 | 387,030 | ||||||||||||
Real estate mortgages held for sale
|
1,934 | 1,967 | 401 | 405 | ||||||||||||
Loans, net
|
1,912,333 | 1,922,002 | 1,814,474 | 1,827,967 | ||||||||||||
Federal Home Loan Bank stock
|
9,849 | N/A | 9,849 | N/A | ||||||||||||
Federal Reserve Bank stock
|
1,738 | N/A | 1,738 | N/A | ||||||||||||
Accrued interest receivable
|
8,980 | 8,980 | 8,588 | 8,588 | ||||||||||||
Financial Liabilities:
|
||||||||||||||||
Certificates of deposit
|
(977,052 | ) | (983,445 | ) | (998,344 | ) | (1,013,798 | ) | ||||||||
All other deposits
|
(843,979 | ) | (843,978 | ) | (886,955 | ) | (886,955 | ) | ||||||||
Securities sold under agreements to repurchase
|
(122,672 | ) | (122,672 | ) | (137,769 | ) | (137,769 | ) | ||||||||
Other short-term borrowings
|
(217,563 | ) | (217,637 | ) | (64,840 | ) | (64,840 | ) | ||||||||
Long-term borrowings
|
(40,042 | ) | (41,431 | ) | (90,043 | ) | (94,002 | ) | ||||||||
Subordinated debentures
|
(30,928 | ) | (30,851 | ) | (30,928 | ) | (30,917 | ) | ||||||||
Standby letters of credit
|
(339 | ) | (339 | ) | (213 | ) | (213 | ) | ||||||||
Accrued interest payable
|
(9,520 | ) | (9,520 | ) | (9,812 | ) | (9,812 | ) |
DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY;
|
||||||||||||||||||||||||
INTEREST RATES AND INTEREST DIFFERENTIAL
|
||||||||||||||||||||||||
(in thousands of dollars)
|
||||||||||||||||||||||||
Nine Months Ended September 30,
|
||||||||||||||||||||||||
2009
|
2008
|
|||||||||||||||||||||||
Average
|
Interest
|
Average
|
Interest
|
|||||||||||||||||||||
Balance
|
Income
|
Yield (1)
|
Balance
|
Income
|
Yield (1)
|
|||||||||||||||||||
ASSETS
|
||||||||||||||||||||||||
Earning assets:
|
||||||||||||||||||||||||
Loans:
|
||||||||||||||||||||||||
Taxable (2)(3)
|
$ | 1,876,344 | $ | 71,101 | 5.07 | % | $ | 1,627,984 | $ | 75,673 | 6.21 | % | ||||||||||||
Tax exempt (1)
|
4,813 | 166 | 4.61 | 2,525 | 115 | 6.06 | ||||||||||||||||||
Investments: (1)
|
||||||||||||||||||||||||
Available for sale
|
395,424 | 15,912 | 5.38 | 363,367 | 14,445 | 5.31 | ||||||||||||||||||
Short-term investments
|
16,176 | 19 | 0.16 | 9,293 | 157 | 2.26 | ||||||||||||||||||
Interest bearing deposits
|
1,654 | 20 | 1.62 | 1,858 | 40 | 2.88 | ||||||||||||||||||
Total earning assets
|
2,294,411 | 87,218 | 5.08 | % | 2,005,027 | 90,430 | 6.02 | % | ||||||||||||||||
Nonearning assets:
|
||||||||||||||||||||||||
Cash and due from banks
|
39,309 | 0 | 41,111 | 0 | ||||||||||||||||||||
Premises and equipment
|
30,305 | 0 | 27,402 | 0 | ||||||||||||||||||||
Other nonearning assets
|
76,135 | 0 | 69,022 | 0 | ||||||||||||||||||||
Less allowance for loan losses
|
(22,738 | ) | 0 | (17,257 | ) | 0 | ||||||||||||||||||
Total assets
|
$ | 2,417,422 | $ | 87,218 | $ | 2,125,305 | $ | 90,430 | ||||||||||||||||
(1)
|
Tax exempt income was converted to a fully taxable equivalent basis at a 35 percent tax rate for 2009 and 2008. The tax equivalent rate for tax exempt loans and tax exempt securities included the TEFRA adjustment applicable to nondeductible interest expenses.
|
(2)
|
Loan fees, which are immaterial in relation to total taxable loan interest income for the nine months ended September 30, 2009 and 2008, are included as taxable loan interest income.
|
(3)
|
Nonaccrual loans are included in the average balance of taxable loans.
|
DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY;
|
||||||||||||||||||||||||
INTEREST RATES AND INTEREST DIFFERENTIAL
|
||||||||||||||||||||||||
(in thousands of dollars)
|
||||||||||||||||||||||||
Three Months Ended September 30,
|
||||||||||||||||||||||||
2009
|
2008
|
|||||||||||||||||||||||
Average
|
Interest
|
Average
|
Interest
|
|||||||||||||||||||||
Balance
|
Income
|
Yield (1)
|
Balance
|
Income
|
Yield (1)
|
|||||||||||||||||||
ASSETS
|
||||||||||||||||||||||||
Earning assets:
|
||||||||||||||||||||||||
Loans:
|
||||||||||||||||||||||||
Taxable (2)(3)
|
$ | 1,903,864 | $ | 24,561 | 5.12 | % | $ | 1,683,423 | $ | 25,872 | 6.11 | % | ||||||||||||
Tax exempt (1)
|
2,632 | 35 | 5.26 | 2,540 | 36 | 5.66 | ||||||||||||||||||
Investments: (1)
|
||||||||||||||||||||||||
Available for sale
|
401,192 | 5,228 | 5.17 | 389,817 | 5,291 | 5.40 | ||||||||||||||||||
Short-term investments
|
13,104 | 5 | 0.15 | 6,949 | 31 | 1.77 | ||||||||||||||||||
Interest bearing deposits
|
1,342 | 6 | 1.77 | 2,313 | 15 | 2.58 | ||||||||||||||||||
Total earning assets
|
2,322,134 | 29,835 | 5.10 | % | 2,085,042 | 31,245 | 5.96 | % | ||||||||||||||||
Nonearning assets:
|
||||||||||||||||||||||||
Cash and due from banks
|
38,705 | 0 | 40,839 | 0 | ||||||||||||||||||||
Premises and equipment
|
30,293 | 0 | 27,418 | 0 | ||||||||||||||||||||
Other nonearning assets
|
75,173 | 0 | 73,100 | 0 | ||||||||||||||||||||
Less allowance for loan losses
|
(26,458 | ) | 0 | (18,332 | ) | 0 | ||||||||||||||||||
Total assets
|
$ | 2,439,847 | $ | 29,835 | $ | 2,208,067 | $ | 31,245 |
(1)
|
Tax exempt income was converted to a fully taxable equivalent basis at a 35 percent tax rate for 2009 and 2008. The tax equivalent rate for tax exempt loans and tax exempt securities included the TEFRA adjustment applicable to nondeductible interest expenses.
|
(2)
|
Loan fees, which are immaterial in relation to total taxable loan interest income for the three months ended September 30, 2009 and 2008, are included as taxable loan interest income.
|
(3)
|
Nonaccrual loans are included in the average balance of taxable loans.
|
Nine Months Ended
|
||||||||||||
September 30,
|
||||||||||||
Percent
|
||||||||||||
2009
|
2008
|
Change
|
||||||||||
Wealth advisory fees
|
$ | 2,213 | $ | 2,541 | (12.9 | )% | ||||||
Investment brokerage fees
|
1,300 | 1,479 | (12.1 | ) | ||||||||
Service charges on deposit accounts
|
6,153 | 6,355 | (3.2 | ) | ||||||||
Loan, insurance and service fees
|
1,941 | 2,122 | (8.5 | ) | ||||||||
Merchant card fee income
|
2,179 | 2,646 | (17.6 | ) | ||||||||
Other income
|
1,459 | 1,453 | 0.4 | |||||||||
Mortgage banking income
|
1,849 | 666 | 177.6 | |||||||||
Net securities gains
|
2 | 39 | (94.9 | ) | ||||||||
Gain on redemption of Visa shares
|
0 | 642 | (100.0 | ) | ||||||||
Impairment on available-for-sale securities (includes total losses of $2,831,
|
||||||||||||
net of $2,606 recognized in other comprehensive income, pre-tax)
|
(225 | ) | 0 | (100.0 | ) | |||||||
Total noninterest income
|
$ | 16,871 | $ | 17,943 | (6.0 | )% |
Three Months Ended
|
||||||||||||
September 30,
|
||||||||||||
Percent
|
||||||||||||
2009
|
2008
|
Change
|
||||||||||
Wealth advisory fees
|
$ | 747 | $ | 869 | (14.0 | )% | ||||||
Investment brokerage fees
|
410 | 582 | (29.6 | ) | ||||||||
Service charges on deposit accounts
|
2,133 | 2,331 | (8.5 | ) | ||||||||
Loan, insurance and service fees
|
711 | 729 | (2.5 | ) | ||||||||
Merchant card fee income
|
536 | 949 | (43.5 | ) | ||||||||
Other income
|
506 | 585 | (13.5 | ) | ||||||||
Mortgage banking income
|
459 | 146 | 214.4 | |||||||||
Net securities gains
|
2 | 11 | (81.8 | ) | ||||||||
Impairment on available-for-sale securities (includes total losses of $2,831,
|
||||||||||||
net of $2,606 recognized in other comprehensive income, pre-tax)
|
(225 | ) | 0 | (100.0 | ) | |||||||
Total noninterest income
|
$ | 5,279 | $ | 6,202 | (14.9 | )% |
Nine Months Ended
|
||||||||||||
September 30,
|
||||||||||||
Percent
|
||||||||||||
2009
|
2008
|
Change
|
||||||||||
Salaries and employee benefits
|
$ | 20,516 | $ | 19,113 | 7.3 | % | ||||||
Occupancy expense
|
2,392 | 2,226 | 7.5 | |||||||||
Equipment costs
|
1,588 | 1,344 | 18.2 | |||||||||
Data processing fees and supplies
|
2,969 | 2,662 | 11.5 | |||||||||
Credit card interchange
|
1,353 | 1,765 | (23.3 | ) | ||||||||
Other expense
|
11,119 | 7,827 | 42.1 | |||||||||
Total noninterest expense
|
$ | 39,937 | $ | 34,937 | 14.3 | % |
Three Months Ended
|
||||||||||||
September 30,
|
||||||||||||
Percent
|
||||||||||||
2009
|
2008
|
Change
|
||||||||||
Salaries and employee benefits
|
$ | 7,327 | $ | 6,411 | 14.3 | % | ||||||
Occupancy expense
|
751 | 741 | 1.3 | |||||||||
Equipment costs
|
571 | 426 | 34.0 | |||||||||
Data processing fees and supplies
|
985 | 955 | 3.1 | |||||||||
Credit card interchange
|
302 | 651 | (53.6 | ) | ||||||||
Other expense
|
3,161 | 2,758 | 14.6 | |||||||||
Total noninterest expense
|
$ | 13,097 | $ | 11,942 | 9.7 | % |
September 30,
|
December 31,
|
|||||||
2009
|
2008
|
|||||||
(in thousands)
|
||||||||
NONPERFORMING ASSETS:
|
||||||||
Nonaccrual loans
|
$ | 23,708 | $ | 20,810 | ||||
Loans past due over 90 days and still accruing
|
5,547 | 478 | ||||||
Total nonperforming loans
|
29,255 | 21,288 | ||||||
Other real estate
|
723 | 953 | ||||||
Repossessions
|
36 | 150 | ||||||
Total nonperforming assets
|
$ | 30,014 | $ | 22,391 | ||||
Total impaired loans
|
$ | 28,236 | $ | 20,304 | ||||
Nonperforming loans to total loans
|
1.51 | % | 1.16 | % | ||||
Nonperforming assets to total assets
|
1.22 | % | 0.94 | % | ||||
·
|
The economic impact of past and any future terrorist attacks, acts of war or threats thereof and the response of the United States to any such threats and attacks.
|
·
|
The costs, effects and outcomes of existing or future litigation.
|
·
|
Changes in accounting policies and practices, as may be adopted by state and federal regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission and the Public Company Accounting Oversight Board.
|
·
|
The ability of the Company to manage risks associated with the foregoing as well as anticipated.
|
Maximum Number (or
|
||||||||||||||||
Total Number of
|
Appropriate Dollar
|
|||||||||||||||
Shares Purchased as
|
Value) of Shares that
|
|||||||||||||||
Part of Publicly
|
May Yet Be Purchased
|
|||||||||||||||
Total Number of
|
Average Price
|
Announced Plans or
|
Under the Plans or
|
|||||||||||||
Period
|
Shares Purchased
|
Paid per Share
|
Programs
|
Programs
|
||||||||||||
July 1-31
|
4,209 | $ | 18.33 | 0 | $ | 0 | ||||||||||
August 1-31
|
775 | 19.91 | 0 | 0 | ||||||||||||
September 1-30
|
0 | 0 | 0 | 0 | ||||||||||||
Total
|
4,984 | $ | 18.58 | 0 | $ | 0 |
(a)
|
The shares purchased during the periods were credited to the deferred share accounts of
|
non-employee directors under the Company’s directors’ deferred compensation plan. These
shares were purchased in the ordinary course of business and consistent with past practice.
|
10.1
|
Lakeland Financial Corporation 2008 Equity Incentive Plan
|
31.1
|
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a)
|
31.2
|
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a)
|
32.1
|
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
32.2
|
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
Date: October 26, 2009
|
/s/ Michael L. Kubacki
|
Michael L. Kubacki – President and Chief
|
|
Executive Officer
|
Date: October 26, 2009
|
/s/ David M. Findlay
|
David M. Findlay – Executive Vice President
|
|
and Chief Financial Officer
|
Date: October 26, 2009
|
/s/ Teresa A. Bartman
|
Teresa A. Bartman – Vice President
|
|
and Controller
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purpose in accordance with generally accepted accounting principles;
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c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
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d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting, and;
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):
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a)
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All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date: October 26, 2009
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/s/Michael L. Kubacki
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Michael L. Kubacki
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President and Chief Executive Officer
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purpose in accordance with generally accepted accounting principles;
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c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
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d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting, and;
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date: October 26, 2009
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/s/ David M. Findlay
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David M. Findlay
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Chief Financial Officer
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