##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2007
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
 Commission file number 001-32434
 
 MERCANTILE BANCORP, INC.
 (Exact name of registrant as specified in its charter)
 
 Delaware
(State or other jurisdiction of 
Incorporation or organization)
    
    37-1149138
(I.R.S. Employer
Identification No.)
 440 Maine Street
Quincy, ILLINOIS 62301
(Address of principal executive offices including zip code)
 (217) 223-7300
(Registrants telephone number, including area code)
 
 þ o
  o þ o
 o þ




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##### 



MERCANTILE BANCORP, INC.
 FORM 10-Q
  
 TABLE OF CONTENTS
 PART I            FINANCIAL INFORMATIONItem 1. Condensed Consolidated Financial StatementsConsolidated Balance Sheets
    
    
    3Consolidated Statements of Income
    
    
    4Consolidated Statements of Cash Flows
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6-10Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    11-28Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    28Item 4. Controls and Procedures
    
    
    29PART II            OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    30Item 1A. Risk Factors
    
    
    30Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    30Item 3. Defaults Upon Senior Securities
    
    
    30Item 4. Submission of Matters to a Vote of Security Holders
    
    
    30Item 5. Other Information
    
    
    31Item 6. Exhibits
    
    
    31Signatures
    
    
    32ExhibitsSection 302 CertificationsSection 906 CertificationsCertification of Chief Executive OfficerCertification of Chief Financial OfficerSection 1350 Certification of Chief Executive OfficerSection 1350 Certification of Chief Financial Officer
  2




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##### Table of Contents



PART I
 FINANCIAL INFORMATION
 
 Item 1. Condensed Consolidated Financial Statements .
 MERCANTILE BANCORP, INC.
 
 Consolidated Balance Sheets
 (In thousands, except par value and share data)
 June 30,2007
    
    
    December 31,(Unaudited)
    
    
 2006AssetsCash and due from banks
    
    $
    25,555
    
    
    $
    28,854Interest-bearing demand deposits
    
    
    15,471
    
    
    
    29,188Federal funds sold
    
    
    9,309
    
    
    
    41,105Cash and cash equivalents
    
    
    50,335
    
    
    
    99,147Available-for-sale securities
    
    
    184,168
    
    
    
    176,179Held-to-maturity securities
    
    
    10,766
    
    
    
    12,400Loans held for sale
    
    
    5,787
    
    
    
    1,660Loans, net of allowance for loan losses of $11,413 and $10,613
    
    
    1,025,140
    
    
    
    1,021,043Interest receivable
    
    
    9,682
    
    
    
    10,277Foreclosed assets held for sale, net
    
    
    512
    
    
    
    291Federal Home Loan Bank stock
    
    
    5,784
    
    
    
    5,699Equity method investments in common stock
    
    
    4,122
    
    
    
    4,119Cost method investments in common stock
    
    
    4,744
    
    
    
    3,190Deferred income taxes
    
    
    4,934
    
    
    
    3,071Mortgage servicing rights
    
    
    990
    
    
    
    994Cash surrender value of life insurance
    
    
    18,586
    
    
    
    18,143Premises and equipment
    
    
    28,956
    
    
    
    25,693Goodwill
    
    
    32,125
    
    
    
    32,120Core deposit and other intangibles
    
    
    1,988
    
    
    
    2,110Other
    
    
    6,670
    
    
    
    6,691Total assets
    
    $
    1,395,289
    
    
    $
    1,422,827Liabilities and Stockholders EquityDepositsDemand
    
    $
    107,189
    
    
    $
    111,131Savings, NOW and money market
    
    
    378,056
    
    
    
    349,250Time
    
    
    529,609
    
    
    
    551,688Brokered time
    
    
    106,115
    
    
    
    154,745Total deposits
    
    
    1,120,969
    
    
    
    1,166,814Short-term borrowings
    
    
    57,354
    
    
    
    26,338Long-term debt
    
    
    55,660
    
    
    
    66,010Junior subordinated debentures
    
    
    41,239
    
    
    
    41,239Interest payable
    
    
    5,436
    
    
    
    6,039Other
    
    
    4,084
    
    
    
    6,531Total liabilities
    
    
    1,284,742
    
    
    
    1,312,971Commitments and Contingent LiabilitiesMinority Interest
    
    
    9,514
    
    
    
    9,198Stockholders EquityCommon stock, $.42 par value; authorized 12,000,000 shares;Issued  5,924,790 shares at June 30, 2007 and December 31, 2006Outstanding  5,806,745 shares at June 30, 2007 and 5,831,745
shares at December 31, 2006
    
    
    2,469
    
    
    
    2,469Additional paid-in capital
    
    
    13,220
    
    
    
    13,142Retained earnings
    
    
    89,819
    
    
    
    86,648Accumulated other comprehensive income (loss)
    
    
    (2,288
    )
    
    
    23103,220
    
    
    
    102,282Treasury stock, at costCommon; 118,045 shares at June 30, 2007 and 93,045 shares at
December 31, 2006
    
    
    (2,187
    )
    
    
    (1,624
    )Total stockholders equity
    
    
    101,033
    
    
    
    100,658Total liabilities and stockholders equity
    
    $
    1,395,289
    
    
    $
    1,422,827
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MERCANTILE BANCORP, INC.
 
 Consolidated Statements of Income
 (In thousands, except per share data)
(Unaudited)
 Three months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Interest and Dividend IncomeLoansTaxable
    
    $
    19,923
    
    
    $
    15,818
    
    
    $
    39,460
    
    
    $
    30,347Tax exempt
    
    
    258
    
    
    
    208
    
    
    
    514
    
    
    
    413SecuritiesTaxable
    
    
    1,946
    
    
    
    1,288
    
    
    
    3,834
    
    
    
    2,508Tax exempt
    
    
    413
    
    
    
    446
    
    
    
    844
    
    
    
    889Federal funds sold
    
    
    264
    
    
    
    9
    
    
    
    735
    
    
    
    52Dividends on Federal Home Loan Bank Stock
    
    
    52
    
    
    
    28
    
    
    
    102
    
    
    
    79Deposits with financial institutions and other
    
    
    204
    
    
    
    87
    
    
    
    479
    
    
    
    270Total interest and dividend income
    
    
    23,060
    
    
    
    17,884
    
    
    
    45,968
    
    
    
    34,558Interest ExpenseDeposits
    
    
    10,708
    
    
    
    7,519
    
    
    
    21,287
    
    
    
    14,309Short-term borrowings
    
    
    475
    
    
    
    393
    
    
    
    843
    
    
    
    667Long-term debt and junior subordinated
debentures
    
    
    1,465
    
    
    
    610
    
    
    
    3,025
    
    
    
    1,268Total interest expense
    
    
    12,648
    
    
    
    8,522
    
    
    
    25,155
    
    
    
    16,244Net Interest Income
    
    
    10,412
    
    
    
    9,362
    
    
    
    20,813
    
    
    
    18,314Provision for Loan Losses
    
    
    426
    
    
    
    768
    
    
    
    1,181
    
    
    
    1,403Net Interest Income After Provision For Loan Losses
    
    
    9,986
    
    
    
    8,594
    
    
    
    19,632
    
    
    
    16,911Noninterest IncomeFiduciary activities
    
    
    572
    
    
    
    494
    
    
    
    1,145
    
    
    
    979Brokerage fees
    
    
    454
    
    
    
    302
    
    
    
    762
    
    
    
    621Customer service fees
    
    
    983
    
    
    
    917
    
    
    
    1,854
    
    
    
    1,739Other service charges and fees
    
    
    173
    
    
    
    164
    
    
    
    355
    
    
    
    334Net gain (loss) on sales of assets
    
    
    1
    
    
    
    (12
    )
    
    
    (1
    )
    
    
    (12
    )Net gains on loan sales
    
    
    177
    
    
    
    148
    
    
    
    285
    
    
    
    292Loan servicing fees
    
    
    99
    
    
    
    96
    
    
    
    201
    
    
    
    195Loss on sales of foreclosed assets
    
    
    
    
    
    
    
    
    
    
    (15
    )
    
    
    Net increase in cash surrender value of life
insurance
    
    
    276
    
    
    
    157
    
    
    
    443
    
    
    
    328Income (loss) on equity method investments in
common stock
    
    
    (5
    )
    
    
    88
    
    
    
    (8
    )
    
    
    183Other
    
    
    44
    
    
    
    83
    
    
    
    95
    
    
    
    113Total noninterest income
    
    
    2,774
    
    
    
    2,437
    
    
    
    5,116
    
    
    
    4,772Noninterest ExpenseSalaries and employee benefits
    
    
    5,562
    
    
    
    4,355
    
    
    
    11,190
    
    
    
    8,755Net occupancy expense
    
    
    642
    
    
    
    452
    
    
    
    1,277
    
    
    
    923Equipment expense
    
    
    641
    
    
    
    451
    
    
    
    1,253
    
    
    
    894Deposit insurance premium
    
    
    38
    
    
    
    29
    
    
    
    74
    
    
    
    62Professional fees
    
    
    579
    
    
    
    474
    
    
    
    1,074
    
    
    
    802Postage and supplies
    
    
    254
    
    
    
    183
    
    
    
    517
    
    
    
    428Amortization of mortgage servicing rights
    
    
    36
    
    
    
    107
    
    
    
    62
    
    
    
    157Other
    
    
    1,672
    
    
    
    1,470
    
    
    
    3,170
    
    
    
    3,285Total noninterest expense
    
    
    9,424
    
    
    
    7,521
    
    
    
    18,617
    
    
    
    15,306Minority Interest
    
    
    159
    
    
    
    161
    
    
    
    334
    
    
    
    386Income Before Income Taxes
    
    
    3,177
    
    
    
    3,349
    
    
    
    5,797
    
    
    
    5,991Provision For Income Taxes
    
    
    801
    
    
    
    1,100
    
    
    
    1,577
    
    
    
    1,818Net Income
    
    $
    2,376
    
    
    $
    2,249
    
    
    $
    4,220
    
    
    $
    4,173Basic Earnings Per Share
    
    $
    0.41
    
    
    $
    0.38
    
    
    $
    0.72
    
    
    $
    0.71Dividends Paid Per Share
    
    $
    .09
    
    
    $
    .08
    
    
    $
    .18
    
    
    $
    .16Weighted Average Shares Outstanding
    
    
    5,829,437
    
    
    
    5,848,245
    
    
    
    5,830,585
    
    
    
    5,848,245
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MERCANTILE BANCORP, INC.
 
 Consolidated Statements of Cash Flows
 (In thousands)
(Unaudited)
 Six Months Ended June 30
    
    2007
    
    
    2006Operating ActivitiesNet income
    
    $
    4,220
    
    
    $
    4,173Items not requiring (providing) cashDepreciation
    
    
    959
    
    
    
    746Provision for loan losses
    
    
    1,181
    
    
    
    1,403Amortization of premiums and discounts on securities
    
    
    (1
    )
    
    
    721Amortization of core deposit intangibles
    
    
    139
    
    
    
    138Deferred income taxes
    
    
    (295
    )
    
    
    (177
    )Net losses on loan sales
    
    
    (285
    )
    
    
    (292
    )Loss on sale of assets
    
    
    1
    
    
    
    12Net losses on sales of foreclosed assets
    
    
    15
    
    
    
    Amortization of mortgage servicing rights
    
    
    63
    
    
    
    157(Income) loss on equity method investments in common stock
    
    
    8
    
    
    
    (183
    )Federal Home Loan Bank stock dividends
    
    
    (24
    )
    
    
    (36
    )Net increase in cash surrender value of life insurance
    
    
    (443
    )
    
    
    (328
    )Minority interest in earnings of subsidiaries
    
    
    334
    
    
    
    386Changes inLoans originated for sale
    
    
    (21,485
    )
    
    
    (18,255
    )Proceeds from sales of loans
    
    
    17,584
    
    
    
    18,525Interest receivable
    
    
    595
    
    
    
    (92
    )Other assets
    
    
    21
    
    
    
    (362
    )Interest payable
    
    
    (603
    )
    
    
    711Other liabilities
    
    
    (2,447
    )
    
    
    593Net cash provided by (used in) operating activities
    
    
    (463
    )
    
    
    7,840Investing ActivitiesPurchases of available-for-sale securities
    
    
    (31,343
    )
    
    
    (16,437
    )Proceeds from maturities of available-for-sale securities
    
    
    19,511
    
    
    
    23,629Proceeds from maturities of held-to-maturity securities
    
    
    1,627
    
    
    
    1,755Net change in loans
    
    
    (5,629
    )
    
    
    (51,566
    )Purchases of premises and equipment
    
    
    (4,225
    )
    
    
    (1,278
    )Proceeds from the sales of foreclosed assets
    
    
    115
    
    
    
    229Proceeds from sales of assets
    
    
    2
    
    
    
    42Purchase of Federal Home Loan Bank stock
    
    
    (61
    )
    
    
    (642
    )Proceeds from redemption of Federal Home Loan Bank stock
    
    
    
    
    
    
    377Purchase of cost method investment in common stock
    
    
    (1,554
    )
    
    
    (995
    )Goodwill acquired in connection with Royal Palm acquisition
    
    
    (5
    )
    
    
    Purchase of intangible assets
    
    
    (17
    )
    
    
    Net cash used in investing activities
    
    
    (21,579
    )
    
    
    (44,886
    )Financing ActivitiesNet increase in demand deposits, money market, NOW and savings accounts
    
    
    24,864
    
    
    
    7,895Net increase (decrease) in time and brokered time deposits
    
    
    (70,709
    )
    
    
    7,416Net increase in short-term borrowings
    
    
    31,016
    
    
    
    19,935Proceeds from long-term debt
    
    
    1,750
    
    
    
    6,700Payments on long-term debt
    
    
    (12,100
    )
    
    
    (8,000
    )Proceeds from issuance of stock to minority interest of Mid-America
    
    
    161
    
    
    
    1,187Purchase of stock from minority interest of Mid-America
    
    
    (67
    )
    
    
    Purchase of treasury stock
    
    
    (563
    )
    
    
    Dividends paid
    
    
    (1,049
    )
    
    
    (936
    )Dividends paid to minority interest of Mid-America
    
    
    (73
    )
    
    
    Net cash provided by (used in) financing activities
    
    
    (26,770
    )
    
    
    34,197Decrease In Cash and Cash Equivalents
    
    
    (48,812
    )
    
    
    (2,849
    )Cash and Cash Equivalents, Beginning of Period
    
    
    99,147
    
    
    
    44,154Cash and Cash Equivalents, End of Period
    
    $
    50,335
    
    
    $
    41,305Supplemental Cash Flows InformationInterest paid
    
    $
    25,758
    
    
    $
    15,533Income taxes paid
    
    $
    1,776
    
    
    $
    2,392Real estate acquired in settlement of loans
    
    $
    351
    
    
    $
    325Increase in additional paid-in-capital due to issuance of stock to
minority interest of Mid-America
    
    $
    40
    
    
    $
    185
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MERCANTILE BANCORP, INC.
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(table dollar amounts in thousands)
 1. BASIS OF PRESENTATION
    2. EARNINGS PER COMMON SHARE
  3. NEW ACCOUNTING PRONOUNCEMENTS
   4. OFF BALANCE SHEET CREDIT COMMITMENTS
  6




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5. CRITICAL ACCOUNTING POLICIES
     7




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6. ACQUISITION
  7. SALE OF EQUITY METHOD INVESTMENT
  8. LONG TERM DEBT
   9. SUBSEQUENT EVENTS
  8




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10. COMPREHENSIVE INCOME
  For the Three MonthsEnded June 30,2007
    
    
    2006Net income
    
    $
    2,376
    
    
    $
    2,249Other comprehensive loss:Unrealized depreciation on available-for-sale securities:Unrealized depreciation on available-for-sale
securities, net of tax benefit of $(1,066) for 2007
and $(391) for 2006
    
    
    (1,776
    )
    
    
    (687
    )Net change in unrealized depreciation on
available-for-sale securities, net of tax
benefit of $(1,066) for 2007 and $(391)for 2006
    
    
    (1,776
    )
    
    
    (687
    )Accumulated other comprehensive loss of equity method
investee
    
    
    (42
    )
    
    
    (29
    )Unrealized loss on interest rate swaps:Unrealized holding losses, net of tax benefit of $0
for 2007 and $(9) for 2006
    
    
    
    
    
    
    (9
    )Less reclassification adjustment to interest
income, net of tax (benefit) of $0 for 2007 and
$(31) for 2006
    
    
    
    
    
    
    (45
    )Net change in unrealized gain on interest rate
swaps, net of tax expense of $0 for 2007 and
$22 for 2006
    
    
    
    
    
    
    36Total other comprehensive loss, net of tax
    
    
    (1,818
    )
    
    
    (680
    )Comprehensive income
    
    $
    558
    
    
    $
    1,569
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For the Six MonthsEnded June 30,2007
    
    
    2006Net income
    
    $
    4,220
    
    
    $
    4,173Other comprehensive loss:Unrealized depreciation on available-for-sale securities:Unrealized depreciation on available-for-sale
securities, net of tax benefit of $(1,478) for 2007
and $(523) for 2006
    
    
    (2,282
    )
    
    
    (894
    )Net change in unrealized depreciation on
available-for-sale securities, net of tax
benefit of $(1,478) for 2007 and $(523) for
2006
    
    
    (2,282
    )
    
    
    (894
    )Accumulated other comprehensive loss of equity method
investee
    
    
    (29
    )
    
    
    (37
    )Unrealized loss on interest rate swaps:Unrealized holding losses, net of tax (benefit) of
$0 for 2007 and $(16) for 2006
    
    
    
    
    
    
    (21
    )Less reclassification adjustment to interest
expense, net of tax (benefit) of $0 for 2007 and
$(54) for 2006
    
    
    
    
    
    
    (81
    )Net change in unrealized loss on interest rate
swaps, net of tax benefit of $0 for 2007 and
$38 for 2006
    
    
    
    
    
    
    60Total other comprehensive loss, net of tax
    
    
    (2,311
    )
    
    
    (871
    )Comprehensive income
    
    $
    1,909
    
    
    $
    3,302
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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Special Cautionary Notice Regarding Forward-looking Statements
  
    
    general business and economic conditions in the markets
the Company serves change or are less favorable than it
expected;
    
    deposit attrition, operating costs, customer loss and
business disruption are greater than the Company
expected;
    
    competitive factors including product and pricing
pressures among financial services organizations may
increase;
    
    changes in the interest rate environment reduce the Companys interest margins;
    
    changes in market rates and prices may adversely impact
securities, loans, deposits, mortgage servicing rights,
and other financial instruments;
    
    legislative or regulatory developments including
changes in laws concerning taxes, banking, securities,
insurance and other aspects of the financial securities
industry may adversely affect the Companys business;
    
    personal or commercial bankruptcies increase;
    
    the Companys ability to expand and grow its business
and operations, including the establishment of
additional branches and acquisition of additional banks
or branches of banks may be more difficult or costly
than the Company expected;
    
    any future acquisitions may be more difficult to
integrate than expected and the Company may be unable
to realize any cost savings and revenue enhancements
the Company may have projected in connection with such
acquisitions;
    
    changes in accounting principles, policies or guidelines;
    
    changes occur in the securities markets; and
    
    technology-related changes may be harder to make or more expensive than the Company anticipated.
  11




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New Accounting Standards Adopted During 2007
  General
   §
    
    Mercantile Trust & Savings Bank (MTSB), located in Quincy, Illinois;§
    
    Marine Bank & Trust (Marine Bank), located in Carthage, Illinois;§
    
    Perry State Bank (Perry), located in Perry, Missouri;§
    
    Brown County State Bank (Brown County), located in Mt. Sterling, Illinois;§
    
    Farmers State Bank of Northern Missouri (Farmers), located in Savannah, Missouri; and§
    
    Royal Palm Bancorp, Inc. (Royal Palm), the sole shareholder of Royal
Palm Bank of Florida (Royal Palm Bank), located in Naples, Florida.
   §
    
    36.4% of New Frontier Bancshares, Inc. (New Frontier), the sole
shareholder of New Frontier Bank, located in St. Charles, Missouri;§
    
    5.0% of Integrity Bank (Integrity), located in Jupiter, Florida;§
    
    1.5% of Premier Bancshares, Inc. (Premier), the sole shareholder of
Premier Bank, located in Jefferson City, Missouri;§
    
    5.0% of Premier Community Bank of the Emerald Coast (Premier Community),
located in Crestview, Florida;§
    
    4.1% of Paragon National Bank (Paragon), located in Memphis, Tennessee;§
    
    0.1% of Integrity Bancshares, Inc. (Integrity Bancshares), the sole
shareholder of Integrity Bank, located in Alpharetta, Georgia;§
    
    1.3% of Enterprise Financial Services Corp. (Enterprise), the sole
shareholder of Enterprise Bank & Trust, located in Clayton, Missouri;§
    
    0.5% of First Charter Corporation (First Charter), located in Charlotte,
North Carolina; and§
    
    4.4% of Solera National Bancorp, Inc. (Solera), the sole shareholder of
Solera National Bank, located in Lakewood, Colorado.
 12




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13




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##### Table of Contents



Results of Operations  Comparison of Operating Results for the Three months Ended June 30, 2007 and 2006
 Overview.
   Net Interest Income.
    14




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For the three months ended June 302007
    
    
    
    
    
    
    
    
    
    
    2006Average
    
    
    Income/
    
    
    
    
    
    
    
    
    
    
    Income/Balance
    
    
    Expense
    
    
    Yield/Rate
    
    
    Average Balance
    
    
    Expense
    
    
    Yield/Rate(dollars in thousands)AssetsInterest-bearing demand
deposits
    
    $
    14,712
    
    
    $
    204
    
    
    
    5.55
    %
    
    $
    13,822
    
    
    $
    87
    
    
    
    2.52
    %Federal funds sold
    
    
    17,998
    
    
    
    264
    
    
    
    5.87
    %
    
    
    685
    
    
    
    9
    
    
    
    5.26
    %Securities:TaxableU.S. treasuries
and government
agencies
    
    
    22,941
    
    
    
    299
    
    
    
    5.21
    %
    
    
    7,617
    
    
    
    82
    
    
    
    4.31
    %Mortgage-backed
securities
    
    
    43,854
    
    
    
    563
    
    
    
    5.14
    %
    
    
    43,579
    
    
    
    528
    
    
    
    4.85
    %Other securities
    
    
    82,084
    
    
    
    1,084
    
    
    
    5.28
    %
    
    
    55,843
    
    
    
    678
    
    
    
    4.86
    %Total taxable
    
    
    148,879
    
    
    
    1,946
    
    
    
    5.23
    %
    
    
    107,039
    
    
    
    1,288
    
    
    
    4.81
    %Non-taxable  State and
political subdivision (3)
    
    
    45,404
    
    
    
    413
    
    
    
    3.64
    %
    
    
    48,645
    
    
    
    446
    
    
    
    3.67
    %Loans (net of unearned
discount) (1)(2)
    
    
    1,031,215
    
    
    
    20,181
    
    
    
    7.83
    %
    
    
    883,940
    
    
    
    16,026
    
    
    
    7.25
    %Federal Home Loan Bank stock
    
    
    5,605
    
    
    
    52
    
    
    
    3.71
    %
    
    
    5,433
    
    
    
    28
    
    
    
    2.06
    %Total
interest-earning
assets (1)
    
    
    1,263,813
    
    
    $
    23,060
    
    
    
    7.30
    %
    
    
    1,059,564
    
    
    $
    17,884
    
    
    
    6.75
    %Cash and due from banks
    
    
    23,283
    
    
    
    
    
    
    
    
    
    
    
    23,566Premises and equipment
    
    
    27,285
    
    
    
    
    
    
    
    
    
    
    
    18,552Foreclosed assets held for
sale, net
    
    
    328
    
    
    
    
    
    
    
    
    
    
    
    412Equity method investments
in common stock
    
    
    4,142
    
    
    
    
    
    
    
    
    
    
    
    7,226Cost method investments in
common stock
    
    
    4,044
    
    
    
    
    
    
    
    
    
    
    
    3,640Interest receivable
    
    
    9,332
    
    
    
    
    
    
    
    
    
    
    
    7,775Cash surrender value of
life insurance
    
    
    18,453
    
    
    
    
    
    
    
    
    
    
    
    16,176Allowance for loan loss
    
    
    (11,306
    )
    
    
    
    
    
    
    
    
    
    
    (8,305
    )Goodwill
    
    
    29,043
    
    
    
    
    
    
    
    
    
    
    
    1,985Intangible assets
    
    
    6,088
    
    
    
    
    
    
    
    
    
    
    
    6,417Other
    
    
    11,153
    
    
    
    
    
    
    
    
    
    
    
    9,618Total assets
    
    $
    1,385,658
    
    
    
    
    
    
    
    
    
    
    $
    1,146,626Liabilities and Stockholders EquityInterest-bearing
transaction deposits
    
    $
    115,628
    
    
    $
    531
    
    
    $
    1.84
    %
    
    $
    107,962
    
    
    $
    377
    
    
    $
    1.40
    %Savings deposits
    
    
    72,171
    
    
    
    467
    
    
    
    2.59
    %
    
    
    52,335
    
    
    
    169
    
    
    
    1.29
    %Money-market deposits
    
    
    179,467
    
    
    
    1,765
    
    
    
    3.93
    %
    
    
    117,944
    
    
    
    922
    
    
    
    3.13
    %Time and brokered time
deposits
    
    
    655,583
    
    
    
    7,945
    
    
    
    4.85
    %
    
    
    581,271
    
    
    
    6,051
    
    
    
    4.16
    %Short-term borrowings
    
    
    36,593
    
    
    
    475
    
    
    
    5.19
    %
    
    
    33,271
    
    
    
    393
    
    
    
    4.72
    %Long-term debt
    
    
    56,381
    
    
    
    761
    
    
    
    5.40
    %
    
    
    34,028
    
    
    
    453
    
    
    
    5.33
    %Subordinated debenture bonds
    
    
    41,239
    
    
    
    704
    
    
    
    6.83
    %
    
    
    10,310
    
    
    
    157
    
    
    
    6.09
    %Total
interest-bearing
liabilities
    
    
    1,157,062
    
    
    $
    12,648
    
    
    $
    4.37
    %
    
    
    937,121
    
    
    $
    8,522
    
    
    $
    3.64
    %Demand deposits
    
    
    106,157
    
    
    
    
    
    
    
    
    
    
    
    97,601Interest payable
    
    
    6,109
    
    
    
    
    
    
    
    
    
    
    
    4,146Other liabilities
    
    
    5,207
    
    
    
    
    
    
    
    
    
    
    
    5,923Minority interest
    
    
    9,492
    
    
    
    
    
    
    
    
    
    
    
    8,075Stockholders equity
    
    
    101,631
    
    
    
    
    
    
    
    
    
    
    
    93,760Total
liabilities and
stockholders
equity
    
    $
    1,385,658
    
    
    
    
    
    
    
    
    
    
    $
    1,146,626Interest spread
    
    
    
    
    
    
    
    
    
    
    2.93
    %
    
    
    
    
    
    
    
    
    
    
    3.11
    %Net interest income
    
    
    
    
    
    $
    10,412
    
    
    
    
    
    
    
    
    
    
    $
    9,362Net interest margin
    
    
    
    
    
    
    
    
    
    
    3.30
    %
    
    
    
    
    
    
    
    
    
    
    3.53
    %Interest-earning assets to
interest-bearing
liabilities
    
    
    109.23
    %
    
    
    
    
    
    
    
    
    
    
    113.07
    %
 
 (1)
    
    Non-accrual loans have been included in average loans, net of unearned discount(2)
    
    Includes loans held for sale(3)
    
    The tax exempt income for state and political subdivisions in not recorded on a tax equivalent basis. 15




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##### Table of Contents



For the three months ended June 30,2007 vs. 2006Increase (Decrease) Due toChange inVolume
    
    
    Rate
    
    
    TotalIncrease (decrease) in interest income:Interest-bearing bank deposits
    
    $
    6
    
    
    $
    111
    
    
    $
    117Federal funds sold
    
    
    254
    
    
    
    1
    
    
    
    255Investment securities:U.S. Treasuries and Agencies
    
    
    196
    
    
    
    21
    
    
    
    217Mortgage-backed securities
    
    
    3
    
    
    
    32
    
    
    
    35States and political subdivision (1)
    
    
    (30
    )
    
    
    (3
    )
    
    
    (33
    )Other securities
    
    
    342
    
    
    
    64
    
    
    
    406Loans (net of unearned discounts)
    
    
    2,814
    
    
    
    1,341
    
    
    
    4,155Federal Home Loan Bank stock
    
    
    1
    
    
    
    23
    
    
    
    24Change in interest income (1)
    
    
    3,586
    
    
    
    1,590
    
    
    
    5,176Increase (decrease) in interest expense:Interest-bearing transaction deposits
    
    
    28
    
    
    
    126
    
    
    
    154Savings deposits
    
    
    82
    
    
    
    216
    
    
    
    298Money-market deposits
    
    
    564
    
    
    
    279
    
    
    
    843Time and brokered time deposits
    
    
    829
    
    
    
    1,065
    
    
    
    1,894Short-term borrowings
    
    
    41
    
    
    
    41
    
    
    
    82Long-term debt
    
    
    795
    
    
    
    60
    
    
    
    855Change in interest expense
    
    
    2,339
    
    
    
    1,787
    
    
    
    4,126Increase (decrease) in net interest income (1)
    
    $
    1,247
    
    
    $
    (197
    )
    
    $
    1,050
 
 (1)
    
    The tax exempt income for state and political subdivisions is not recorded on a tax equivalent basis. Provision for Loan Losses.
 Noninterest Income.
 16




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##### Table of Contents



For the Three Months EndedJune 30:2007
    
    
    2006Fiduciary activities
    
    $
    572
    
    
    $
    494Brokerage fees
    
    
    454
    
    
    
    302Customer service fees
    
    
    983
    
    
    
    917Other service charges and fees
    
    
    173
    
    
    
    164Net gains on loan sales
    
    
    177
    
    
    
    148Net gains (losses) on sales of assets
    
    
    1
    
    
    
    (12
    )Loan servicing fees
    
    
    99
    
    
    
    96Net increase in cash surrender value of life insurance
    
    
    276
    
    
    
    157Income (loss) on equity method investments in common stock
    
    
    (5
    )
    
    
    88Other
    
    
    44
    
    
    
    83Total noninterest income
    
    $
    2,774
    
    
    $
    2,437
      Noninterest Expense.
 17




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##### Table of Contents



For the Three Months EndedJune 302007
    
    
    2006Salaries and employee benefits
    
    $
    5,562
    
    
    $
    4,355Net occupancy expense
    
    
    642
    
    
    
    452Equipment expense
    
    
    641
    
    
    
    451Deposit insurance premium
    
    
    38
    
    
    
    29Professional fees
    
    
    579
    
    
    
    474Postage and supplies
    
    
    254
    
    
    
    183Amortization of mortgage servicing rights
    
    
    36
    
    
    
    107Other
    
    
    1,672
    
    
    
    1,470Total noninterest expense
    
    $
    9,424
    
    
    $
    7,521
      Provision for Income Taxes.
  18




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##### Table of Contents



Results of Operations  Comparison of Operating Results for the Six months Ended June 30, 2007 and 2006
 Overview.
  Net Interest Income.
   19




---



##### Table of Contents



For the six months ended June 302007
    
    
    2006Average
    
    
    Income/
    
    
    
    
    
    
    Average
    
    
    Income/Balance
    
    
    Expense
    
    
    Yield/Rate
    
    
    Balance
    
    
    Expense
    
    
    Yield/Rate(dollars in thousands)AssetsInterest-bearing demand
deposits
    
    $
    17,031
    
    
    $
    479
    
    
    
    5.63
    %
    
    $
    18,293
    
    
    $
    270
    
    
    
    2.95
    %Federal funds sold
    
    
    26,581
    
    
    
    735
    
    
    
    5.53
    %
    
    
    2,321
    
    
    
    52
    
    
    
    4.48
    %Securities:TaxableU.S. treasuries
and government
agencies
    
    
    22,645
    
    
    
    583
    
    
    
    5.15
    %
    
    
    8,846
    
    
    
    171
    
    
    
    3.87
    %Mortgage-backed
securities
    
    
    41,995
    
    
    
    1,073
    
    
    
    5.11
    %
    
    
    45,658
    
    
    
    1,063
    
    
    
    4.66
    %Other securities
    
    
    81,372
    
    
    
    2,178
    
    
    
    5.35
    %
    
    
    54,821
    
    
    
    1,274
    
    
    
    4.65
    %Total taxable
    
    
    146,012
    
    
    
    3,834
    
    
    
    5.25
    %
    
    
    109,325
    
    
    
    2,508
    
    
    
    4.59
    %Non-taxable  State and
political subdivision (3)
    
    
    46,470
    
    
    
    844
    
    
    
    3.63
    %
    
    
    48,703
    
    
    
    889
    
    
    
    3.65
    %Loans (net of unearned
discount ) (1)(2)
    
    
    1,030,181
    
    
    
    39,974
    
    
    
    7.76
    %
    
    
    872,169
    
    
    
    30,760
    
    
    
    7.05
    %Federal Home Loan Bank stock
    
    
    5,690
    
    
    
    102
    
    
    
    3.59
    %
    
    
    5,434
    
    
    
    79
    
    
    
    2.91
    %Total
interest-earning
assets (1)
    
    
    1,271,965
    
    
    $
    45,968
    
    
    
    7.23
    %
    
    
    1,056,245
    
    
    $
    34,558
    
    
    
    6.54
    %Cash and due from banks
    
    
    25,907
    
    
    
    
    
    
    
    
    
    
    
    23,799Premises and equipment
    
    
    26,312
    
    
    
    
    
    
    
    
    
    
    
    18,514Foreclosed assets held for
sale, net
    
    
    291
    
    
    
    
    
    
    
    
    
    
    
    407Equity method investments
in common stock
    
    
    4,142
    
    
    
    
    
    
    
    
    
    
    
    7,190Cost method investments in
common stock
    
    
    3,869
    
    
    
    
    
    
    
    
    
    
    
    3,504Interest receivable
    
    
    9,417
    
    
    
    
    
    
    
    
    
    
    
    7,763Cash surrender value of
life insurance
    
    
    18,338
    
    
    
    
    
    
    
    
    
    
    
    16,095Allowance for loan loss
    
    
    (11,035
    )
    
    
    
    
    
    
    
    
    
    
    (8,219
    )Goodwill
    
    
    29,148
    
    
    
    
    
    
    
    
    
    
    
    1,985Intangible assets
    
    
    6,152
    
    
    
    
    
    
    
    
    
    
    
    6,417Other
    
    
    10,813
    
    
    
    
    
    
    
    
    
    
    
    9,328Total assets
    
    $
    1,395,319
    
    
    
    
    
    
    
    
    
    
    $
    1,143,028Liabilities and Stockholders EquityInterest-bearing
transaction deposits
    
    $
    117,060
    
    
    $
    1,059
    
    
    
    1.81
    %
    
    $
    109,449
    
    
    $
    742
    
    
    
    1.36
    %Savings deposits
    
    
    69,760
    
    
    
    861
    
    
    
    2.47
    %
    
    
    51,374
    
    
    
    298
    
    
    
    1.16
    %Money-market deposits
    
    
    173,793
    
    
    
    3,398
    
    
    
    3.91
    %
    
    
    110,173
    
    
    
    1,610
    
    
    
    2.92
    %Time and brokered time
deposits
    
    
    670,331
    
    
    
    15,969
    
    
    
    4.76
    %
    
    
    584,379
    
    
    
    11,659
    
    
    
    3.99
    %Short-term borrowings
    
    
    33,157
    
    
    
    843
    
    
    
    5.08
    %
    
    
    30,127
    
    
    
    667
    
    
    
    4.43
    %Long term debt
    
    
    60,686
    
    
    
    1,615
    
    
    
    5.32
    %
    
    
    37,119
    
    
    
    954
    
    
    
    5.14
    %Subordinated debenture bonds
    
    
    41,239
    
    
    
    1,410
    
    
    
    6.84
    %
    
    
    10,310
    
    
    
    314
    
    
    
    6.09
    %Total
interest-bearing
liabilities
    
    
    1,166,026
    
    
    $
    25,155
    
    
    
    4.31
    %
    
    
    932,931
    
    
    $
    16,244
    
    
    
    3.48
    %Demand deposits
    
    
    107,088
    
    
    
    
    
    
    
    
    
    
    
    99,513Interest payable
    
    
    6,221
    
    
    
    
    
    
    
    
    
    
    
    3,875Other liabilities
    
    
    5,010
    
    
    
    
    
    
    
    
    
    
    
    5,484Minority interest
    
    
    9,439
    
    
    
    
    
    
    
    
    
    
    
    7,857Stockholders equity
    
    
    101,535
    
    
    
    
    
    
    
    
    
    
    
    93,368Total
liabilities and
stockholders
equity
    
    $
    1,395,319
    
    
    
    
    
    
    
    
    
    
    $
    1,143,028Interest spread
    
    
    
    
    
    
    
    
    
    
    2.91
    %
    
    
    
    
    
    
    
    
    
    
    3.06
    %Net interest income
    
    
    
    
    
    $
    20,813
    
    
    
    
    
    
    
    
    
    
    $
    18,314Net interest margin
    
    
    
    
    
    
    
    
    
    
    3.27
    %
    
    
    
    
    
    
    
    
    
    
    3.47
    %Interest-earning assets to
interest-bearing
liabilities
    
    
    109.09
    %
    
    
    
    
    
    
    
    
    
    
    113.22
    %
 
 (1)
    
    Non-accrual loans have been included in average loans, net of unearned discount(2)
    
    Includes loans held for sale(3)
    
    The tax exempt income for state and political subdivisions in not recorded on a tax equivalent basis. 20




---



##### Table of Contents



For the six months ended June 30,2007 vs. 2006Increase (Decrease) Due toChange inVolume
    
    
    Rate
    
    
    TotalIncrease (decrease) in interest income:Interest-bearing bank deposits
    
    $
    (20
    )
    
    $
    229
    
    
    $
    209Federal funds sold
    
    
    668
    
    
    
    15
    
    
    
    683Investment securities:U.S. Treasuries and Agencies
    
    
    340
    
    
    
    72
    
    
    
    412Mortgage-backed securities
    
    
    (89
    )
    
    
    99
    
    
    
    10States and political subdivision (1)
    
    
    (41
    )
    
    
    (4
    )
    
    
    (45
    )Other securities
    
    
    688
    
    
    
    216
    
    
    
    904Loans (net of unearned discounts)
    
    
    5,932
    
    
    
    3,282
    
    
    
    9,214Federal Home Loan Bank stock
    
    
    4
    
    
    
    19
    
    
    
    23Change in interest income (1)
    
    
    7,482
    
    
    
    3,928
    
    
    
    11,410Increase in interest expense:Interest-bearing transaction deposits
    
    
    55
    
    
    
    262
    
    
    
    317Savings deposits
    
    
    136
    
    
    
    427
    
    
    
    563Money-market deposits
    
    
    1,128
    
    
    
    660
    
    
    
    1,788Time and brokered time deposits
    
    
    1,858
    
    
    
    2,452
    
    
    
    4,310Short-term borrowings
    
    
    71
    
    
    
    105
    
    
    
    176Long-term debt
    
    
    1,603
    
    
    
    154
    
    
    
    1,757Change in interest expense
    
    
    4,851
    
    
    
    4,060
    
    
    
    8,911Increase in net interest income (1)
    
    $
    2,631
    
    
    $
    (132
    )
    
    $
    2,499
 
 (1)
    
    The tax exempt income for state and political subdivisions is not recorded on a tax equivalent basis. Provision for Loan Losses.
 Noninterest Income.
 21




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##### Table of Contents



For the Six Months EndedJune 302007
    
    
    2006Fiduciary activities
    
    $
    1,145
    
    
    $
    979Brokerage fees
    
    
    762
    
    
    
    621Customer service fees
    
    
    1,854
    
    
    
    1,739Other service charges and fees
    
    
    355
    
    
    
    334Net gain on sales of assets
    
    
    285
    
    
    
    292Net losses on loan sales
    
    
    (1
    )
    
    
    (12
    )Net losses on sales of foreclosed assets
    
    
    (15
    )
    
    
    Loan servicing fees
    
    
    201
    
    
    
    195Net increase in cash surrender value of life insurance
    
    
    443
    
    
    
    328Income (loss) on equity method investments in common stock
    
    
    (8
    )
    
    
    183Other
    
    
    95
    
    
    
    113Total noninterest income
    
    $
    5,116
    
    
    $
    4,772
     Noninterest Expense.
  For the Six Months EndedJune 302007
    
    
    2006Salaries and employee benefits
    
    $
    11,190
    
    
    $
    8,755Net occupancy expense
    
    
    1,277
    
    
    
    923Equipment expense
    
    
    1,253
    
    
    
    894Deposit insurance premium
    
    
    74
    
    
    
    62Professional fees
    
    
    1,074
    
    
    
    802Postage and supplies
    
    
    517
    
    
    
    428Amortization of mortgage servicing rights
    
    
    62
    
    
    
    157Other
    
    
    3,170
    
    
    
    3,285Total noninterest expense
    
    $
    18,617
    
    
    $
    15,306
 22




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##### Table of Contents



Provision for Income Taxes.
  Financial Condition
June 30, 2007 Compared to December 31, 2006
 Loan Portfolio.
 23




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##### Table of Contents



June 30, 2007
    December 31, 2006Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent(dollars in thousands)Commercial and financial
    
    $
    157,302
    
    
    
    15.09
    %
    
    $
    167,687
    
    
    
    16.23
    %Agricultural
    
    
    55,569
    
    
    
    5.33
    %
    
    
    57,393
    
    
    
    5.55
    %Real estate  farmland
    
    
    76,156
    
    
    
    7.31
    %
    
    
    72,999
    
    
    
    7.06
    %Real estate  construction
    
    
    174,825
    
    
    
    16.77
    %
    
    
    152,553
    
    
    
    14.76
    %Real estate  commercial
    
    
    176,834
    
    
    
    16.97
    %
    
    
    190,724
    
    
    
    18.46
    %Real estate  residential (1)
    
    
    272,751
    
    
    
    26.16
    %
    
    
    267,237
    
    
    
    25.86
    %Installment loans to individuals
    
    
    128,903
    
    
    
    12.37
    %
    
    
    124,723
    
    
    
    12.08
    %Total loans
    
    
    1,042,340
    
    
    
    100.00
    %
    
    
    1,033,316
    
    
    
    100.00
    %Allowance for loan losses
    
    
    11,413
    
    
    
    
    
    
    
    10,613Total loans, including loans
held for sale, net of allowance
for loan losses
    
    $
    1,030,927
    
    
    
    
    
    
    $
    1,022,703
 
 (1)
    
    Includes loans held for sale Nonperforming Assets
  24




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##### Table of Contents



June 30,
    
    
    December 31,2007
    
    
    2006Nonaccrual loansCommercial and financial
    
    $
    998
    
    
    $
    429Agricultural
    
    
    446
    
    
    
    473Real estate  farmland
    
    
    348
    
    
    
    12Real estate  construction
    
    
    1,426
    
    
    
    1,147Real estate  commercial
    
    
    2,149
    
    
    
    2,083Real estate  residential
    
    
    1,978
    
    
    
    1,040Installment loans to individuals
    
    
    204
    
    
    
    213Total nonaccrual loans
    
    
    7,549
    
    
    
    5,397Loans 90 days past due and still accruing
    
    
    3,631
    
    
    
    993Restructured loans
    
    
    
    
    
    
    4Total nonperforming loans
    
    
    11,180
    
    
    
    6,394Repossessed assets
    
    
    578
    
    
    
    361Other assets acquired in satisfaction of debt previously
contracted
    
    
    
    
    
    
    Total nonperforming other assets
    
    
    578
    
    
    
    361Total nonperforming loans and nonperforming other assets
    
    $
    11,758
    
    
    $
    6,755Nonperforming loans to loans, before allowance for loan losses
    
    
    1.07
    %
    
    
    0.62
    %Nonperforming loans and nonperforming other assets to loans,
before allowance for loan losses
    
    
    1.13
    %
    
    
    0.65
    %
 Allowance for Loan Losses
   25




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##### Table of Contents



As of and for
    
    
    As of and forthe Six Months
    
    
    the Year EndedEnded June 30,
    
    
    December 31,2007
    
    
    2006Average loans outstanding during year
    
    $
    1,030,181
    
    
    $
    907,671Allowance for loan losses:Balance at beginning of year
    
    $
    10,613
    
    
    $
    8,082Loans charged-off:Commercial and financial
    
    
    58
    
    
    
    1,833Agricultural
    
    
    53
    
    
    
    85Real estate  farmland
    
    
    
    
    
    
    Real estate  construction
    
    
    
    
    
    
    Real estate  commercial
    
    
    
    
    
    
    139Real estate  residential
    
    
    19
    
    
    
    139Installment loans to individuals
    
    
    388
    
    
    
    1,129Total charge-offs
    
    
    518
    
    
    
    3,325Recoveries:Commercial and financial
    
    
    37
    
    
    
    47Agricultural
    
    
    6
    
    
    
    20Real estate  farmland
    
    
    
    
    
    
    Real estate  construction
    
    
    1
    
    
    
    1Real estate  commercial
    
    
    
    
    
    
    1Real estate  residential
    
    
    10
    
    
    
    12Installment loans to individuals
    
    
    83
    
    
    
    136Total recoveries
    
    
    137
    
    
    
    217Net charge-offs
    
    
    381
    
    
    
    3,108Provision for loan losses
    
    
    1,181
    
    
    
    3,914Purchased allowance
    
    
    
    
    
    
    1,725Balance at end of year
    
    $
    11,413
    
    
    $
    10,613Allowance for loan losses as a percent of
total loans outstanding at year end
    
    
    1.09
    %
    
    
    1.03
    %Allowance for loan losses as a percent of
total nonperforming loans
    
    
    102.08
    %
    
    
    165.98
    %Ratio of net charge-offs to average total loans
    
    
    0.04
    %
    
    
    0.34
    %
 Securities
 26




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##### Table of Contents



Deposits
 Borrowings
   Liquidity and Capital Resources
 Liquidity
  27




---



##### Table of Contents



Capital Resources
  Effect of Inflation and Changing Prices.
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk .
  28




---



##### Table of Contents



Item 4. Controls and Procedures .
 Evaluation of disclosure controls and procedures.
 Changes in internal controls over financial reporting
 29




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##### Table of Contents



PART II
 OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
   Total Number of Shares
    
    Maximum ApproximateSecond Quarter
    
    
    
    
    
    
    
    
    
    Purchased as Part of
    
    Dollar Value of Shares that2007 Calendar
    
    Total Number of
    
    Average Price
    
    Publicly Announced
    
    May Yet Be Purchased UnderMonth
    
    Shares Purchased (1)
    
    Paid per Share (1)
    
    Plans or Programs (2)
    
    the Plans or Programs (3)April
    
    
    0
    
    
    
    n/a
    
    
    
    0
    
    
    $
    8,797,343May
    
    
    0
    
    
    
    n/a
    
    
    
    0
    
    
    $
    8,797,343June
    
    
    25,000
    
    
    $
    22.48
    
    
    
    25,000
    
    
    $
    8,235,443Total
    
    
    25,000
    
    
    $
    22.48
    
    
    
    25,000
 
 (1)
    
    The total number of shares purchased and the average price paid per share include, in addition
to other purchases, shares purchased in the open market and through privately negotiated
transactions by the Companys 401(k) Profit Sharing Plan. For the months indicated, there were no
shares purchased by the Plan.(2)
    
    Includes only shares subject to publicly announced stock repurchase program, i.e. the $10
million stock repurchase program approved by the Board on August 15, 2005 and announced on August
17, 2005 (the 2005 Repurchase Program). Does not include shares purchased by the Companys
401(k) Profit Sharing Plan.(3)
    
    Dollar amount of repurchase authority remaining at month-end under the 2005 Repurchase
Program, the Companys only publicly announced repurchase program in effect at such dates. The
2005 Repurchase Program is limited to 589,104 shares (10% of the number of outstanding shares on
the date the Board approved the program, adjusted for the three-for-one stock split in June of
2006) but not to exceed $10 million in repurchases. 
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  30




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##### Table of Contents



For
    
    WithheldMichael J. Foster
    
    
    5,041,305
    
    
    
    71,237William G. Keller, Jr.
    
    
    5,011,305
    
    
    
    101,237Dennis M. Prock
    
    
    5,041,305
    
    
    
    71,237Frank H. Musholt
    
    
    5,011,305
    
    
    
    101,237Walter D. Stevenson, III
    
    
    5,011,305
    
    
    
    101,237James W. Tracy
    
    
    5,041,305
    
    
    
    71,237Dan S. Dugan
    
    
    5,026,080
    
    
    
    86,462Ted T. Awerkamp
    
    
    5,041,305
    
    
    
    71,237
  
 Item 5. Other Information
  
 Item 6. Exhibits
 ExhibitNumber
    
    Identification of Exhibit31.1
    
    Certification of the Chief Executive
Officer pursuant to Rule 13a-14(a) of the
Securities Exchange Act of 1934, as amended.31.2
    
    Certification of the Chief Financial
Officer pursuant to Rule 13a-14(a) of the
Securities Exchange Act of 1934, as amended.32.1
    
    Certification of the Chief Executive
Officer pursuant to 18 U.S.C. Section 1350,
adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.32.2
    
    Certification of the Chief Financial
Officer pursuant to 18 U.S.C. Section 1350,
adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
 31




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##### Table of Contents



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.
 Date: August 9, 2007
    By:
    /s/  Ted T. AwerkampTed T. AwerkampPresident and Chief Executive Officer
(principal executive officer)Date: August 9, 2007
    By:
    /s/  Michael P. McGrathMichael P. McGrathExecutive Vice President, Treasurer, Secretary and
Chief Financial Officer
(principal financial officer/
principal accounting officer) 32