##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission file number: 000-21671
 THE NATIONAL BANK OF INDIANAPOLIS CORPORATION
  Indiana
    
    35-1887991(State or Other Jurisdiction of
    
    (I.R.S. Employer Identification No.)Incorporation or Organization)107 North Pennsylvania Street
    
    46204Indianapolis, Indiana
    
    (Zip Code)(Address of Principal Executive Offices)
 (317) 261-9000
 Securities registered pursuant to Section 12(b) of the Act: None
 Securities registered Pursuant to Section 12(g) of the Act: Common Stock
 Yes o No þ
 o þ
 þ o
 o o
 þ
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(do not check if a smaller reporting company)
 o þ




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##### 



Form 10-K Cross Reference Index
 PagePART IItem 1. Business
    
    
    1Item 1A. Risk Factors
    
    
    12Item 1B. Unresolved Staff Comments
    
    
    18Item 2. Properties
    
    
    18Item 3. Legal Proceedings
    
    
    18Item 4. (Removed and Reserved)
    
    
    19PART IIItem 5. Market for Registrants Common Equity,
Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    19Item 6. Selected Financial Data
    
    
    21Item 7. Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    22Item 7A. Quantitative and Qualitative Disclosures about Market Risk
    
    
    48Item 8. Financial Statements and Supplementary Data
    
    
    50Item 9. Changes In and Disagreements With Accountants on Accounting
and Financial Disclosure
    
    
    85Item 9A. Controls and Procedures
    
    
    85Item 9B. Other Information
    
    
    86PART IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    
    86Item 11. Executive Compensation
    
    
    86Item 12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters
    
    
    86Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    86Item 14. Principal Accounting Fees and Services
    
    
    86PART IVItem 15. Exhibits, Financial Statement Schedules
    
    
    87Signatures
    
    
    89EX-21.00EX-31.1EX-31.2EX-32.1EX-32.2




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PART I
 
 Item 1.
    
    Business
 The Corporation
  
    
    8451 Ditch Road, Indianapolis, in northwestern Marion County;
 
    
    6807 East 82nd Street, Indianapolis, in northeastern Marion County;
 
    
    Chamber of Commerce building at 320 North Meridian Street in downtown Indianapolis;
 
    
    4930 North Pennsylvania Street, Indianapolis, in northern Marion County;
 
    
    One America Office Complex in downtown Indianapolis;
 
    
    650 East Carmel Drive, Carmel, in Hamilton County;
 
    
    1689 West Smith Valley Road, Greenwood, in Johnson County;
 
    
    10590 North Michigan Road, Carmel, in Hamilton County;
 
    
    2714 East 146th Street, Carmel, in Hamilton County;
 
    
    2410 Harleston Street, Carmel, in Hamilton County; and
 
    
    11701 Olio Road, Fishers, in Hamilton County.
    Business Plan Overview
   1




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The Market
 Competition
 Employees
 Lending Activity
    2




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REGULATION AND SUPERVISION
  Recent Developments
 The Dodd-Frank Act
 
    
    Centralize responsibility for consumer financial protection by creating a new
agency, the Bureau of Consumer Financial Protection, responsible for implementing,
examining, and enforcing compliance with federal consumer financial laws.
 
    
    Create the Financial Stability Oversight Council that will recommend to the Federal
Reserve increasingly strict rules for capital, leverage, liquidity, risk management,
and other requirements as companies grow in size and complexity.
 
    
    Require the OCC to seek to make its capital requirements for national banks
countercyclical so that capital requirements increase in times of economic expansion
and decrease in times of economic contraction.
 
    
    Restrict the preemption of state law by federal law and disallow subsidiaries and
affiliates of national banks from availing themselves of such preemption.
 
    
    Provide mortgage reform provisions regarding a customers ability to repay,
restricting variable-rate lending by requiring that the ability to repay variable-rate
loans be determined by using the maximum rate that will apply during the first five
years of a variable-rate loan term, and making more loans subject to provisions for
higher cost loans and new disclosures. In addition, certain compensation for mortgage
brokers based on certain loan terms will be restricted.
  3




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
    
    Require financial institutions to make a reasonable and good faith determination
that borrowers have the ability to repay loans for which they apply. If a financial
institution fails to make such a determination, a borrower can assert this failure as a
defense to foreclosure.
 
    
    Require financial institutions to retain a specified percentage (5% or more) of
certain non-traditional mortgage loans and other assets in the event that they seek to
securitize such assets.
 
    
    Change the assessment base for federal deposit insurance from the amount of insured
deposits to consolidated assets less tangible capital, eliminate the ceiling on the
size of the Deposit Insurance Fund (DIF), and increase the floor on the size of the
DIF, which generally will require an increase in the level of assessments for
institutions with assets in excess of $10 billion.
 
    
    Make permanent the $250,000 limit for federal deposit insurance and provide
unlimited federal deposit insurance until January 1, 2013 for noninterest-bearing
demand transaction accounts at all insured depository institutions.
 
    
    Implement corporate governance revisions, including with regard to executive
compensation, say on pay votes, proxy access by shareholders, and clawback policies
which apply to all public companies, not just financial institutions.
 
    
    Repeal the federal prohibitions on the payment of interest on demand deposits,
thereby permitting depository institutions to pay interest on business transactions and
other accounts.
 
    
    Amend the Electronic Fund Transfer Act (EFTA) to, among other things, give the
Federal Reserve the authority to establish rules regarding interchange fees charged for
electronic debit transactions by payment card issuers having assets over $10 billion
and to enforce a new statutory requirement that such fees be reasonable and
proportional to the actual cost of a transaction to the issuer.
 
    
    Limit the hedging activities and private equity investments that may be made by
various financial institutions.
  S.A.F.E. Act Requirements
 The Corporation
 The Bank Holding Company Act
  4




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Investments, Control, and Activities
    Capital Adequacy Guidelines for Bank Holding Companies
  Tier 1 Capital to Risk-Weighted Assets
    
    
    9.7
    %Total Risk Based Capital to Risk-Weighted Asset
    
    
    11.4
    %Tier 1 Leverage Ratio
    
    
    6.7
    %
 Dividends
 Source of Strength
  5




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The Bank
 General Regulatory Supervision
  Lending Limits
 Deposit Insurance
     6




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7




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Transactions with Affiliates and Insiders
  
    
    be made on substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with third parties; and
 
    
    not involve more than the normal risk of repayment or present other unfavorable
features.
  Dividends
  Community Reinvestment Act
 Capital Regulations
   8




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Tier 1 Capital to Risk-Weighted Assets
    
    
    9.4
    %Total Risk-Based Capital to Risk-Weighted Assets
    
    
    11.2
    %Tier 1 Leverage Ratio
    
    
    6.5
    %
    USA Patriot Act
  9




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Sarbanes-Oxley Act of 2002
 Troubled Asset Relief Program Initiatives to Address Financial and Economic Crises
   Other Regulations
   
    
    Truth-In-Lending Act and state consumer protection laws governing disclosures of
credit terms and prohibiting certain practices with regard to consumer borrowers;
    
    Home Mortgage Disclosure Act of 1975, requiring financial institutions to provide
information to enable the public and public officials to determine whether a financial
institution is fulfilling its obligation to help meet the housing needs of the
community it serves;
  10




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
    
    Equal Credit Opportunity Act and other fair lending laws, prohibiting discrimination
on the basis of race, creed or other prohibited factors in extending credit;
 
    
    Fair Credit Reporting Act of 1978 and Fair and Accurate Credit Transactions Act of
2003, governing the use and provision of information to credit reporting agencies;
 
    
    Fair Debt Collection Practices Act, governing the manner in which consumer debts may
be collected by collection agencies; and rules and regulations of the various federal
agencies charged with the responsibility of implementing such federal laws.
  
    
    Customer Information Security Guidelines. The federal bank regulatory agencies have
adopted final guidelines (the Guidelines) for safeguarding confidential customer
information. The Guidelines require each financial institution, under the supervision
and ongoing oversight of its Board of Directors, to create a comprehensive written
information security program designed to ensure the security and confidentiality of
customer information, protect against any anticipated threats or hazards to the
security or integrity of such information; protect against unauthorized access to or
use of such information that could result in substantial harm or inconvenience to any
customer; and implement response programs for security breaches.
 
    
    Electronic Funds Transfer Act and Regulation E. The Electronic Funds Transfer Act,
which is implemented by Regulation E, governs automatic deposits to and withdrawals
from deposit accounts and customers rights and liabilities arising from the use of
automated teller machines and other electronic banking service.
 
    
    Gramm-Leach-Bliley Act, Fair and Accurate Credit Transactions Act. The
Gramm-Leach-Bliley Act, the Fair and Accurate Credit Transactions Act, and the
implementing regulations govern consumer financial privacy, provide disclosure
requirements and restrict the sharing of certain consumer financial information with
other parties.
   Enforcement Powers
   11




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Effect of Governmental Monetary Policies
 Available Information
  
 Item 1A.
    
    Risk Factors
 Difficult conditions in the capital markets and the economy generally may materially adversely
affect the Corporations business and results of operations
      12




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The soundness of other financial institutions could adversely affect us
  There can be no assurance that actions of the U.S. government, Federal Reserve and other
governmental and regulatory bodies for the purpose of stabilizing the financial markets will
achieve the intended effect
   Recently enacted and potential further financial regulatory reforms could have a significant
impact on our business, financial condition and results of operations
  
    
    a reduction in the ability to generate or originate revenue-producing assets as a
result of compliance with heightened capital standards;
 
    
    increased cost of operations due to greater regulatory oversight, supervision and
examination of banks and bank holding companies, and higher deposit insurance
premiums;·
 
    
    the limitation on the ability to raise new capital through the use of trust
preferred securities, as any new issuances of these securities will no longer be
included as Tier 1 capital going forward;
 
    
    a potential reduction in fee income due to limits on interchange fees applicable to
larger institutions which could effectively reduce the fees we can charge; and
 
    
    the limitation on the ability to expand consumer product and service offerings due
to anticipated stricter consumer protection laws and regulations.
  13




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The Corporation may be required to pay significantly higher Federal Deposit Insurance
Corporation (FDIC) premiums in the future
  The Corporation is subject to interest rate risk
  The Corporation is subject to lending risk
   14




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The Corporations allowance for loan losses may be insufficient
  The Corporation may foreclose on collateral property and would be subject to the increased
costs associated with ownership of real property, resulting in reduced revenues and earnings
  The Corporation operates in a highly competitive industry and market area
   15




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
    
    The ability to develop, maintain and build upon long-term customer relationships
based on top quality service, and safe, sound assets;
 
    
    The ability to expand the Corporations market position;
 
    
    The scope, relevance and pricing of products and services offered to meet customer
needs and demands;
 
    
    The rate at which the Corporation introduces new products and services relative to
its competitors;
 
    
    Customer satisfaction with the Corporations level of service; and
 
    
    Industry and general economic trends.
  The Corporation is subject to extensive government regulation and supervision
  The Corporations controls and procedures may fail or be circumvented
  The Corporation is dependent on certain key management and staff
  The Corporations information systems may experience an interruption or breach in security
   16




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The Corporation has opened new offices
  The geographic concentration of the Corporations markets makes the Corporations business
highly susceptible to local economic conditions
  
    
    an increase in loan delinquencies;
 
    
    an increase in problem assets and foreclosures;
 
    
    a decrease in the demand for the Corporations products and services; and
 
    
    a decrease in the value of collateral for loans, especially real estate, in
turn reducing customers borrowing power, the value of assets associated with problem
loans and collateral coverage.
 Future growth or operating results may require the Corporation to raise additional capital but
that capital may not be available or it may be dilutive
  The Corporation continually encounters technological change
   17




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##### Table of Contents



Item 1B.
    
    Unresolved Staff Comments
  
 Item 2.
    
    Property
  Location
    
    Year Opened
    
    
    Owned or LeasedBanking Centers:107 North Pennsylvania
    
    
    1993
    
    
    OwnedIndianapolis, IN 462048451 Ditch Road
    
    
    1995
    
    
    OwnedIndianapolis, IN 462606807 82nd Street
    
    
    1995
    
    
    OwnedIndianapolis, IN 46250320 North Meridian Street
    
    
    1996
    
    
    LeasedIndianapolis, IN 462044930 North Pennsylvania Street
    
    
    1998
    
    
    OwnedIndianapolis, IN 46205One America Square, Suite 100
    
    
    1999
    
    
    LeasedIndianapolis, IN 46282650 East Carmel Drive, Suite 100
    
    
    2000
    
    
    LeasedCarmel, IN 460321689 West Smith Valley Road
    
    
    2001
    
    
    OwnedGreenwood, IN 4614210590 North Michigan Road
    
    
    2005
    
    
    OwnedCarmel, IN 460322714 East 146th Street
    
    
    2008
    
    
    OwnedCarmel, IN 460332410 Harleston Street
    
    
    2008
    
    
    OwnedCarmel, IN 4603211701 Olio Road
    
    
    2009
    
    
    OwnedFishers, IN 46038
   
 Item 3.
    
    Legal Proceedings
   18




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Item 4.
    
    (Removed and Reserved)
 
 PART II
 
 Item 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
  Price Per ShareHigh
    
    
    Low2010First Quarter
    
    $
    50.00
    
    
    $
    35.91Second Quarter
    
    
    40.00
    
    
    
    35.52Third Quarter
    
    
    44.00
    
    
    
    35.84Fourth Quarter
    
    
    41.49
    
    
    
    39.362009First Quarter
    
    $
    50.00
    
    
    $
    35.65Second Quarter
    
    
    39.67
    
    
    
    35.97Third Quarter
    
    
    39.90
    
    
    
    38.97Fourth Quarter
    
    
    40.00
    
    
    
    36.74
       19




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MaximumNumber (orApproximateTotal
    
    
    Dollar Value)Number of
    
    
    of Shares thatShares
    
    
    May Yet BePurchased as
    
    
    PurchasedPart of
    
    
    Under theTotal
    
    
    
    
    
    
    Publicly
    
    
    Plans orNumber of
    
    
    Average
    
    
    Announced
    
    
    ProgramsShares
    
    
    Price Paid
    
    
    Plans or
    
    
    (Dollars inPeriod
    
    Purchased
    
    
    per Share
    
    
    Programs**
    
    
    thousands)October 1 
October 31, 2010
    
    
    1,217
    
    
    $
    39.87
    
    
    
    1,217
    
    
    $
    5,384November 1 
November 30, 2010
    
    
    1,600
    
    
    $
    40.99
    
    
    
    1,600
    
    
    $
    5,319December 1 
December 31, 2010
    
    
    500
    
    
    $
    41.49
    
    
    
    500
    
    
    $
    5,2983,317
    
    
    
    *
    
    
    
    3,317
 *
    
    The weighted average price per share for the period October 2010 through December 2010 was $40.65.**
    
    All shares repurchased by the Corporation during 2010 were completed pursuant to the new
repurchase program.  20




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Item 6.
    
    Selected Financial Data
  2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Consolidated Operating Data:Interest income
    
    $
    47,130
    
    
    $
    47,531
    
    
    $
    56,377
    
    
    $
    68,880
    
    
    $
    61,375Interest expense
    
    
    9,029
    
    
    
    11,313
    
    
    
    20,449
    
    
    
    35,263
    
    
    
    29,565Net interest income
    
    
    38,101
    
    
    
    36,218
    
    
    
    35,928
    
    
    
    33,617
    
    
    
    31,811Provision for loan losses
    
    
    4,279
    
    
    
    11,905
    
    
    
    7,400
    
    
    
    904
    
    
    
    1,086Net interest income
after provision for
loan losses
    
    
    33,822
    
    
    
    24,313
    
    
    
    28,528
    
    
    
    32,713
    
    
    
    30,725Other operating income
    
    
    14,248
    
    
    
    12,903
    
    
    
    11,204
    
    
    
    9,834
    
    
    
    8,356Other operating expenses
    
    
    43,522
    
    
    
    38,354
    
    
    
    34,706
    
    
    
    30,800
    
    
    
    28,595Income (loss) before taxes
    
    
    4,548
    
    
    
    (1,138
    )
    
    
    5,026
    
    
    
    11,747
    
    
    
    10,486Federal and state income tax (benefit)
    
    
    762
    
    
    
    (1,250
    )
    
    
    1,242
    
    
    
    3,856
    
    
    
    3,501Net income
    
    
    3,786
    
    
    
    112
    
    
    
    3,784
    
    
    
    7,891
    
    
    
    6,985Consolidated Balance Sheet Data (at end of period):Total assets
    
    $
    1,441,393
    
    
    $
    1,236,077
    
    
    $
    1,117,784
    
    
    $
    1,163,109
    
    
    $
    1,034,432Total investment securities (including stock in
Federal Banks)
    
    
    193,418
    
    
    
    165,368
    
    
    
    143,694
    
    
    
    137,174
    
    
    
    150,137Total loans
    
    
    901,756
    
    
    
    864,722
    
    
    
    904,207
    
    
    
    830,328
    
    
    
    744,538Allowance for loan losses
    
    
    (15,134
    )
    
    
    (13,716
    )
    
    
    (12,847
    )
    
    
    (9,453
    )
    
    
    (8,513
    )Deposits
    
    
    1,238,840
    
    
    
    1,052,065
    
    
    
    965,966
    
    
    
    1,004,762
    
    
    
    875,084Shareholders equity
    
    
    79,357
    
    
    
    73,031
    
    
    
    72,212
    
    
    
    68,938
    
    
    
    59,785Weighted basic average shares outstanding
    
    
    2,314
    
    
    
    2,302
    
    
    
    2,311
    
    
    
    2,328
    
    
    
    2,302Per Share Data:Diluted net income per common share (1)
    
    $
    1.59
    
    
    $
    0.05
    
    
    $
    1.58
    
    
    $
    3.27
    
    
    $
    2.90Cash dividends declared
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Book value (2)
    
    
    34.24
    
    
    
    31.65
    
    
    
    31.48
    
    
    
    29.63
    
    
    
    25.88Other Statistics and Operating Data:Return on average assets
    
    
    0.3
    %
    
    
    0.0
    %
    
    
    0.3
    %
    
    
    0.7
    %
    
    
    0.7
    %Return on average equity
    
    
    5.0
    %
    
    
    0.2
    %
    
    
    5.3
    %
    
    
    12.3
    %
    
    
    12.7
    %Net interest margin (3)
    
    
    3.1
    %
    
    
    3.2
    %
    
    
    3.4
    %
    
    
    3.3
    %
    
    
    3.4
    %Average loans to average deposits
    
    
    78.7
    %
    
    
    85.5
    %
    
    
    88.5
    %
    
    
    82.3
    %
    
    
    85.9
    %Allowance for loan losses to loans at end of period
    
    
    1.7
    %
    
    
    1.6
    %
    
    
    1.4
    %
    
    
    1.1
    %
    
    
    1.1
    %Allowance for loan losses to non-performing loans
    
    
    135.5
    %
    
    
    90.8
    %
    
    
    146.4
    %
    
    
    164.1
    %
    
    
    119.0
    %Non-performing loans to loans at end of period
    
    
    1.2
    %
    
    
    1.7
    %
    
    
    1.0
    %
    
    
    0.7
    %
    
    
    1.0
    %Net charge-offs/to average loans
    
    
    0.3
    %
    
    
    1.2
    %
    
    
    0.5
    %
    
    
    0.0
    %
    
    
    0.1
    %Number of offices
    
    
    12
    
    
    
    12
    
    
    
    11
    
    
    
    9
    
    
    
    9Number of full and part-time employees
    
    
    274
    
    
    
    270
    
    
    
    252
    
    
    
    228
    
    
    
    221Number of Shareholders of Record
    
    
    638
    
    
    
    679
    
    
    
    681
    
    
    
    676
    
    
    
    639Capital Ratios:Average shareholders equity to average assets
    
    
    5.8
    %
    
    
    6.1
    %
    
    
    6.3
    %
    
    
    5.9
    %
    
    
    5.7
    %Equity to assets
    
    
    5.5
    %
    
    
    5.9
    %
    
    
    6.5
    %
    
    
    5.9
    %
    
    
    5.8
    %Total risk-based capital ratio (Bank only)
    
    
    11.2
    %
    
    
    10.9
    %
    
    
    10.5
    %
    
    
    10.6
    %
    
    
    10.7
    %
 (1)
    
    Based upon weighted average shares outstanding during the period.(2)
    
    Based on Common Stock outstanding at the end of the period.(3)
    
    Net interest income as a percentage of average interest-earning assets.  21




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Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
 The following discussion and analysis of the Corporation relates to the years ended December 31,
2010, 2009, and 2008 and should be read in conjunction with the Corporations Consolidated
Financial Statements and Notes thereto included elsewhere herein.
 Overview
      22




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##### Table of Contents



Results of Operations
 Year Ended December 31, 2010, Compared to the Year Ended December 31, 2009, and the Year Ended
December 31, 2009, Compared to the Year Ended December 31, 2008.
  2010 compared with 2009
   2009 compared with 2008
   Net Interest Income
  2010
    
    
    2009
    
    
    Change
    
    
    ChangeInterest income:Interest and fees on loans
    
    $
    42,471
    
    
    $
    42,217
    
    
    $
    254
    
    
    
    0.6
    %Interest on investment securities taxable
    
    
    2,172
    
    
    
    3,011
    
    
    
    (839
    )
    
    
    -27.9
    %Interest on investment securities
nontaxable
    
    
    2,070
    
    
    
    2,068
    
    
    
    2
    
    
    
    0.1
    %Interest on federal funds sold
    
    
    25
    
    
    
    4
    
    
    
    21
    
    
    
    525.0
    %Interest on due from banks
    
    
    392
    
    
    
    231
    
    
    
    161
    
    
    
    69.7
    %Total interest income
    
    $
    47,130
    
    
    $
    47,531
    
    
    $
    (401
    )
    
    
    -0.8
    %Interest expense:Interest on deposits
    
    $
    7,002
    
    
    $
    9,427
    
    
    $
    (2,425
    )
    
    
    -25.7
    %Interest on other short term borrowings
    
    
    289
    
    
    
    182
    
    
    
    107
    
    
    
    58.8
    %Interest on short term debt
    
    
    183
    
    
    
    121
    
    
    
    62
    
    
    
    51.2
    %Interest on long term debt
    
    
    1,555
    
    
    
    1,583
    
    
    
    (28
    )
    
    
    -1.8
    %Total interest expense
    
    $
    9,029
    
    
    $
    11,313
    
    
    $
    (2,284
    )
    
    
    -20.2
    %Net interest income
    
    $
    38,101
    
    
    $
    36,218
    
    
    $
    1,883
    
    
    
    5.2
    %
  23




---



##### Table of Contents



2010 compared with 2009
     $
    
    
    %2009
    
    
    2008
    
    
    Change
    
    
    ChangeInterest income:Interest and fees on loans
    
    $
    42,217
    
    
    $
    48,988
    
    
    $
    (6,771
    )
    
    
    -13.8
    %Interest on investment securities taxable
    
    
    3,011
    
    
    
    3,979
    
    
    
    (968
    )
    
    
    -24.3
    %Interest on investment securities
nontaxable
    
    
    2,068
    
    
    
    2,047
    
    
    
    21
    
    
    
    1.0
    %Interest on federal funds sold
    
    
    4
    
    
    
    705
    
    
    
    (701
    )
    
    
    -99.4
    %Interest on due from banks
    
    
    231
    
    
    
    510
    
    
    
    (279
    )
    
    
    -54.7
    %Interest on reverse repurchase agreements
    
    
    
    
    
    
    148
    
    
    
    (148
    )
    
    
    -100.0
    %Total interest income
    
    $
    47,531
    
    
    $
    56,377
    
    
    $
    (8,846
    )
    
    
    -15.7
    %Interest expense:Interest on deposits
    
    $
    9,427
    
    
    
    17,979
    
    
    $
    (8,552
    )
    
    
    -47.6
    %Interest on other short term borrowings
    
    
    182
    
    
    
    544
    
    
    
    (362
    )
    
    
    -66.5
    %Interest on FHLB advances and overnight
borrowings
    
    
    
    
    
    
    193
    
    
    
    (193
    )
    
    
    -100.0
    %Interest on short term debt
    
    
    121
    
    
    
    16
    
    
    
    105
    
    
    
    656.3
    %Interest on long term debt
    
    
    1,583
    
    
    
    1,717
    
    
    
    (134
    )
    
    
    -7.8
    %Total interest expense
    
    $
    11,313
    
    
    $
    20,449
    
    
    $
    (9,136
    )
    
    
    -44.7
    %Net interest income
    
    $
    36,218
    
    
    $
    35,928
    
    
    $
    290
    
    
    
    0.8
    %
 2009 compared with 2008
    24




---



##### Table of Contents



2010
    
    
    2009
    
    
    2008Interest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    AverageAverage
    
    
    Income/
    
    
    Rate/
    
    
    Average
    
    
    Income/
    
    
    Rate/
    
    
    Average
    
    
    Income/
    
    
    Rate/Balance
    
    
    Expense
    
    
    Yield
    
    
    Balance
    
    
    Expense
    
    
    Yield
    
    
    Balance
    
    
    Expense
    
    
    YieldAssets:Interest bearing due from banks
    
    $
    155,472
    
    
    $
    392
    
    
    
    0.25
    %
    
    $
    91,295
    
    
    $
    231
    
    
    
    0.25
    %
    
    $
    20,645
    
    
    $
    509
    
    
    
    2.47
    %Reverse repurchase agreements
    
    
    1,000
    
    
    
    
    
    
    
    0.01
    %
    
    
    1,000
    
    
    
    
    
    
    
    0.01
    %
    
    
    4,197
    
    
    
    148
    
    
    
    3.53
    %Federal funds
    
    
    9,934
    
    
    
    25
    
    
    
    0.25
    %
    
    
    2,646
    
    
    
    4
    
    
    
    0.15
    %
    
    
    31,530
    
    
    
    705
    
    
    
    2.24
    %Non taxable investment
securities  FTE
    
    
    56,533
    
    
    
    3,200
    
    
    
    5.66
    %
    
    
    56,070
    
    
    
    3,140
    
    
    
    5.60
    %
    
    
    55,178
    
    
    
    3,046
    
    
    
    5.52
    %Taxable investment securities
    
    
    117,235
    
    
    
    2,172
    
    
    
    1.85
    %
    
    
    88,855
    
    
    
    3,011
    
    
    
    3.39
    %
    
    
    98,585
    
    
    
    3,980
    
    
    
    4.04
    %Loans (gross)  FTE
    
    
    886,933
    
    
    
    43,028
    
    
    
    4.85
    %
    
    
    883,721
    
    
    
    42,363
    
    
    
    4.79
    %
    
    
    855,313
    
    
    
    49,099
    
    
    
    5.74
    %Total earning assets
    
    $
    1,227,107
    
    
    $
    48,817
    
    
    
    3.98
    %
    
    $
    1,123,587
    
    
    $
    48,749
    
    
    
    4.34
    %
    
    $
    1,065,448
    
    
    $
    57,487
    
    
    
    5.40
    %Non-earning assets
    
    
    89,564
    
    
    
    
    
    
    
    
    
    
    
    83,573
    
    
    
    
    
    
    
    
    
    
    
    63,335Total assets
    
    $
    1,316,671
    
    
    
    
    
    
    
    
    
    
    $
    1,207,160
    
    
    
    
    
    
    
    
    
    
    $
    1,128,783Liabilities:Interest bearing DDA
    
    $
    205,541
    
    
    $
    474
    
    
    
    0.23
    %
    
    $
    160,233
    
    
    $
    600
    
    
    
    0.37
    %
    
    $
    116,999
    
    
    $
    1,206
    
    
    
    1.03
    %Savings
    
    
    514,703
    
    
    
    2,903
    
    
    
    0.56
    %
    
    
    472,181
    
    
    
    3,448
    
    
    
    0.73
    %
    
    
    495,956
    
    
    
    9,698
    
    
    
    1.96
    %CDs under $100
    
    
    66,974
    
    
    
    1,156
    
    
    
    1.73
    %
    
    
    63,609
    
    
    
    1,665
    
    
    
    2.62
    %
    
    
    66,256
    
    
    
    2,547
    
    
    
    3.84
    %CDs over $100
    
    
    114,953
    
    
    
    2,005
    
    
    
    1.74
    %
    
    
    129,325
    
    
    
    3,160
    
    
    
    2.44
    %
    
    
    101,008
    
    
    
    3,806
    
    
    
    3.77
    %Individual retirement accounts
    
    
    22,666
    
    
    
    464
    
    
    
    2.05
    %
    
    
    19,980
    
    
    
    554
    
    
    
    2.77
    %
    
    
    18,737
    
    
    
    722
    
    
    
    3.85
    %Repurchase agreements and other
secured short term borrowings
    
    
    84,048
    
    
    
    289
    
    
    
    0.34
    %
    
    
    68,742
    
    
    
    182
    
    
    
    0.26
    %
    
    
    57,125
    
    
    
    544
    
    
    
    0.95
    %FHLB advances
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,336
    
    
    
    193
    
    
    
    2.63
    %Short-term debt
    
    
    3,656
    
    
    
    183
    
    
    
    5.01
    %
    
    
    4,200
    
    
    
    121
    
    
    
    2.88
    %
    
    
    586
    
    
    
    16
    
    
    
    2.73
    %Subordinated debt
    
    
    5,000
    
    
    
    80
    
    
    
    1.60
    %
    
    
    5,000
    
    
    
    108
    
    
    
    2.16
    %
    
    
    5,000
    
    
    
    242
    
    
    
    4.84
    %Long term debt
    
    
    13,918
    
    
    
    1,475
    
    
    
    10.60
    %
    
    
    13,918
    
    
    
    1,475
    
    
    
    10.60
    %
    
    
    13,918
    
    
    
    1,475
    
    
    
    10.60
    %Total interest bearing liabilities
    
    $
    1,031,459
    
    
    $
    9,029
    
    
    
    0.88
    %
    
    $
    937,188
    
    
    $
    11,313
    
    
    
    1.21
    %
    
    $
    882,921
    
    
    $
    20,449
    
    
    
    2.32
    %Non-interest bearing liabilities
    
    
    202,808
    
    
    
    
    
    
    
    
    
    
    
    188,594
    
    
    
    
    
    
    
    
    
    
    
    167,121Other liabilities
    
    
    6,181
    
    
    
    
    
    
    
    
    
    
    
    8,034
    
    
    
    
    
    
    
    
    
    
    
    7,921Total liabilities
    
    $
    1,240,448
    
    
    
    
    
    
    
    
    
    
    $
    1,133,816
    
    
    
    
    
    
    
    
    
    
    $
    1,057,963Equity
    
    
    76,223
    
    
    
    
    
    
    
    
    
    
    
    73,344
    
    
    
    
    
    
    
    
    
    
    
    70,820Total liabilities & equity
    
    $
    1,316,671
    
    
    
    
    
    
    
    
    
    
    $
    1,207,160
    
    
    
    
    
    
    
    
    
    
    $
    1,128,783Recap:Interest income  FTE
    
    
    
    
    
    $
    48,817
    
    
    
    3.98
    %
    
    
    
    
    
    $
    48,749
    
    
    
    4.34
    %
    
    
    
    
    
    $
    57,487
    
    
    
    5.40
    %Interest expense
    
    
    
    
    
    
    9,029
    
    
    
    0.88
    %
    
    
    
    
    
    $
    11,313
    
    
    
    1.21
    %
    
    
    
    
    
    $
    20,449
    
    
    
    2.32
    %Net interest income/spread  FTE
    
    
    
    
    
    $
    39,788
    
    
    
    3.10
    %
    
    
    
    
    
    $
    37,436
    
    
    
    3.13
    %
    
    
    
    
    
    $
    37,038
    
    
    
    3.08
    %Contribution of non-interest
bearing funds
    
    
    
    
    
    
    
    
    
    
    0.14
    %
    
    
    
    
    
    
    
    
    
    
    0.20
    %
    
    
    
    
    
    
    
    
    
    
    0.40
    %Net interest margin  FTE
    
    
    
    
    
    
    
    
    
    
    3.24
    %
    
    
    
    
    
    
    
    
    
    
    3.33
    %
    
    
    
    
    
    
    
    
    
    
    3.48
    %
  
    
    Average balances are computed using daily actual balances.
 
    
    The average loan balance includes loans held for sale, non-accrual loans and the
interest recognized prior to becoming non-accrual is reflected in the interest income
for loans.
 
    
    Interest income on loans includes loan costs net of loan fees, of $(730) thousand,
$(645) thousand, and $(713) thousand, for the years ended December 31, 2010, 2009, and
2008, respectively.
  25




---



##### Table of Contents




    
    Net interest income on a fully taxable equivalent basis, the most significant component
of the Corporations earnings, is total interest income on a fully taxable equivalent
basis less total interest expense. The level of net interest income on a fully taxable
equivalent basis is determined by the mix and volume of interest earning assets,
interest bearing deposits and borrowed funds, and changes in interest rates.
 
    
    Net interest spread is the difference between the fully taxable equivalent rate
earned on interest earning assets less the rate expensed on interest bearing
liabilities.
 
    
    Net interest margin represents net interest income on a fully taxable equivalent
basis as a percentage of average interest earning assets. Net interest margin is
affected by both the interest rate spread and the level of non-interest bearing sources
of funds, primarily consisting of demand deposits and shareholders equity.
 
    
    Interest income on a fully taxable equivalent basis includes the additional amount
of interest income that would have been earned on tax exempt loans and if investments
in certain tax-exempt interest earning assets had been made in assets subject to
federal taxes yielding the same after-tax income. Interest income on tax exempt loans
and municipal securities has been calculated on a fully taxable equivalent basis using
a federal and state income tax blended rate of 40%. The appropriate tax equivalent
adjustments to interest income on loans was $557 thousand, $146 thousand, and $111
thousand for the years ended December 31, 2010; 2009, and 2008, respectively. The
appropriate tax equivalent adjustments to interest income on municipal securities was
$1.1 million, $1.1 million, and $999 thousand, for the years ended December 31, 2010,
2009, and 2008, respectively.
 
    
    Management believes the disclosure of the fully taxable equivalent net interest
income information improves the clarity of financial analysis, and is particularly
useful to investors in understanding and evaluating the changes and trends in the
Corporations results of operations. This adjustment is considered helpful in the
comparison of a financial institutions net interest income to that of another
institution, as each will have a different proportion of tax-exempt interest from their
earning asset portfolios.
  26




---



##### Table of Contents



Net Interest Income Changes Due to Volume and Rates (dollars in thousands) :
 2010 Changes from 2009
    
    
    2009 Changes from 2008Net
    
    
    Due to
    
    
    Due to
    
    
    Net
    
    
    Due to
    
    
    Due toChange
    
    
    Rate
    
    
    Volume
    
    
    Change
    
    
    Rate
    
    
    VolumeInterest earning assets:Interest bearing due from
banks
    
    $
    161
    
    
    $
    (1
    )
    
    $
    162
    
    
    $
    (278
    )
    
    $
    (781
    )
    
    $
    503Reverse repurchase
agreements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (148
    )
    
    
    
    
    
    
    (148
    )Federal funds
    
    
    21
    
    
    
    4
    
    
    
    17
    
    
    
    (701
    )
    
    
    (354
    )
    
    
    (347
    )Non taxable investment
securities  FTE
    
    
    60
    
    
    
    34
    
    
    
    26
    
    
    
    94
    
    
    
    44
    
    
    
    50Taxable investment
securities
    
    
    (839
    )
    
    
    (1,621
    )
    
    
    782
    
    
    
    (969
    )
    
    
    (600
    )
    
    
    (369
    )Loans (gross)  FTE
    
    
    665
    
    
    
    511
    
    
    
    154
    
    
    
    (6,736
    )
    
    
    (8,322
    )
    
    
    1,586TOTAL
    
    $
    68
    
    
    $
    (1,073
    )
    
    $
    1,141
    
    
    $
    (8,738
    )
    
    $
    (10,013
    )
    
    $
    1,275Interest bearing liabilities:Interest bearing DDA
    
    $
    (126
    )
    
    $
    (268
    )
    
    $
    142
    
    
    $
    (606
    )
    
    $
    (947
    )
    
    $
    341Savings deposits
    
    
    (545
    )
    
    
    (835
    )
    
    
    290
    
    
    
    (6,250
    )
    
    
    (5,806
    )
    
    
    (444
    )CDs under $100
    
    
    (509
    )
    
    
    (593
    )
    
    
    84
    
    
    
    (882
    )
    
    
    (784
    )
    
    
    (98
    )CDs over $100
    
    
    (1,155
    )
    
    
    (832
    )
    
    
    (323
    )
    
    
    (646
    )
    
    
    (1,547
    )
    
    
    901Individual retirement
accounts
    
    
    (90
    )
    
    
    (158
    )
    
    
    68
    
    
    
    (168
    )
    
    
    (213
    )
    
    
    45Repurchase agreements and
other short-term secured
borrowings
    
    
    107
    
    
    
    61
    
    
    
    46
    
    
    
    (362
    )
    
    
    (455
    )
    
    
    93FHLB advances
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (193
    )
    
    
    
    
    
    
    (193
    )Short-term debt
    
    
    62
    
    
    
    79
    
    
    
    (17
    )
    
    
    105
    
    
    
    1
    
    
    
    104Subordinated debt
    
    
    (28
    )
    
    
    (28
    )
    
    
    
    
    
    
    (134
    )
    
    
    (134
    )
    
    
    TOTAL
    
    $
    (2,284
    )
    
    $
    (2,574
    )
    
    $
    290
    
    
    $
    (9,136
    )
    
    $
    (9,885
    )
    
    $
    749Net change in net interest income
    
    $
    2,352
    
    
    $
    1,501
    
    
    $
    851
    
    
    $
    398
    
    
    $
    (128
    )
    
    $
    526
 Note:
    
    Due to rate increase was calculated by taking the change in the rate times the prior year
balance. Due to volume increase was calculated by taking the change in average balance times the
prior year rate.  27




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##### Table of Contents



Provision for Loan Losses
   2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Beginning of Period
    
    $
    13,716
    
    
    $
    12,847
    
    
    $
    9,453
    
    
    $
    8,513
    
    
    $
    8,346Provision for loan losses
    
    
    4,279
    
    
    
    11,905
    
    
    
    7,400
    
    
    
    904
    
    
    
    1,086ChargeoffsCommercial & industrial
    
    
    1,437
    
    
    
    2,603
    
    
    
    1,697
    
    
    
    228
    
    
    
    1,094Commercial real estate
    
    
    1,363
    
    
    
    6,150
    
    
    
    1,126
    
    
    
    
    
    
    
    191Construction
    
    
    
    
    
    
    1,710
    
    
    
    49
    
    
    
    
    
    
    
    Residential
    
    
    252
    
    
    
    864
    
    
    
    1,360
    
    
    
    600
    
    
    
    121Consumer
    
    
    36
    
    
    
    21
    
    
    
    64
    
    
    
    50
    
    
    
    51Credit cards
    
    
    61
    
    
    
    84
    
    
    
    97
    
    
    
    4
    
    
    
    283,149
    
    
    
    11,432
    
    
    
    4,393
    
    
    
    882
    
    
    
    1,485RecoveriesCommercial & industrial
    
    
    119
    
    
    
    343
    
    
    
    187
    
    
    
    814
    
    
    
    412Commercial real estate
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Residential
    
    
    152
    
    
    
    20
    
    
    
    174
    
    
    
    67
    
    
    
    154Consumer
    
    
    2
    
    
    
    
    
    
    
    1
    
    
    
    6
    
    
    
    Credit cards
    
    
    10
    
    
    
    33
    
    
    
    25
    
    
    
    31
    
    
    
    288
    
    
    
    396
    
    
    
    387
    
    
    
    918
    
    
    
    566End of Period
    
    $
    15,134
    
    
    $
    13,716
    
    
    $
    12,847
    
    
    $
    9,453
    
    
    $
    8,513Allowance as a % of Loans
    
    
    1.68
    %
    
    
    1.59
    %
    
    
    1.42
    %
    
    
    1.14
    %
    
    
    1.14
    %
 2010 compared with 2009
  2009 compared with 2008
   28




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##### Table of Contents



Other Operating Income
  2010
    
    
    2009
    
    
    $ Change
    
    
    % ChangeWealth management fees
    
    $
    5,377
    
    
    $
    4,917
    
    
    $
    460
    
    
    
    9.4
    %Service charges and fees on
deposit accounts
    
    
    3,011
    
    
    
    3,113
    
    
    
    (102
    )
    
    
    -3.3
    %Rental income
    
    
    272
    
    
    
    321
    
    
    
    (49
    )
    
    
    -15.3
    %Mortgage banking income
    
    
    2,184
    
    
    
    1,576
    
    
    
    608
    
    
    
    38.6
    %Interchange income
    
    
    1,263
    
    
    
    1,007
    
    
    
    256
    
    
    
    25.4
    %Net loss on sale of securities
    
    
    (5
    )
    
    
    
    
    
    
    (5
    )
    
    
    100.0
    %Other
    
    
    2,146
    
    
    
    1,969
    
    
    
    177
    
    
    
    9.0
    %Total other operating income
    
    $
    14,248
    
    
    $
    12,903
    
    
    $
    1,345
    
    
    
    10.4
    %
 2010 compared with 2009
          29




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##### Table of Contents



2009
    
    
    2008
    
    
    $ Change
    
    
    % ChangeWealth management fees
    
    $
    4,917
    
    
    $
    5,048
    
    
    $
    (131
    )
    
    
    -2.6
    %Service charges and
fees on deposit
accounts
    
    
    3,113
    
    
    
    2,484
    
    
    
    629
    
    
    
    25.3
    %Rental income
    
    
    321
    
    
    
    575
    
    
    
    (254
    )
    
    
    -44.2
    %Mortgage banking income
    
    
    1,576
    
    
    
    62
    
    
    
    1,514
    
    
    
    2,441.9
    %Interchange income
    
    
    1,007
    
    
    
    877
    
    
    
    130
    
    
    
    14.8
    %Other
    
    
    1,969
    
    
    
    2,158
    
    
    
    (189
    )
    
    
    -8.8
    %Total other operating income
    
    $
    12,903
    
    
    $
    11,204
    
    
    $
    1,699
    
    
    
    15.2
    %
 2009 compared with 2008
         30




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##### Table of Contents



Other Operating Expenses
  2010
    
    
    2009
    
    
    $ Change
    
    
    % ChangeSalaries, wages and employee benefits
    
    $
    24,859
    
    
    $
    21,332
    
    
    $
    3,527
    
    
    
    16.5
    %Occupancy
    
    
    2,556
    
    
    
    2,441
    
    
    
    115
    
    
    
    4.7
    %Furniture and equipment
    
    
    1,220
    
    
    
    1,359
    
    
    
    (139
    )
    
    
    -10.2
    %Professional services
    
    
    2,148
    
    
    
    1,873
    
    
    
    275
    
    
    
    14.7
    %Data processing
    
    
    3,014
    
    
    
    2,752
    
    
    
    262
    
    
    
    9.5
    %Business development
    
    
    1,610
    
    
    
    1,531
    
    
    
    79
    
    
    
    5.2
    %FDIC Insurance
    
    
    2,101
    
    
    
    2,142
    
    
    
    (41
    )
    
    
    -1.9
    %Non performing assets
    
    
    2,100
    
    
    
    1,383
    
    
    
    717
    
    
    
    51.8
    %Other
    
    
    3,914
    
    
    
    3,541
    
    
    
    373
    
    
    
    10.5
    %Total other operating expenses
    
    $
    43,522
    
    
    $
    38,354
    
    
    $
    5,168
    
    
    
    13.5
    %
 2010 compared with 2009
          31




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##### Table of Contents



2009
    
    
    2008
    
    
    $ Change
    
    
    % ChangeSalaries, wages and employee benefits
    
    $
    21,332
    
    
    $
    19,172
    
    
    $
    2,160
    
    
    
    11.3
    %Occupancy
    
    
    2,441
    
    
    
    2,081
    
    
    
    360
    
    
    
    17.3
    %Furniture and equipment
    
    
    1,359
    
    
    
    1,428
    
    
    
    (69
    )
    
    
    -4.8
    %Professional services
    
    
    1,873
    
    
    
    1,971
    
    
    
    (98
    )
    
    
    -5.0
    %Data processing
    
    
    2,752
    
    
    
    2,514
    
    
    
    238
    
    
    
    9.5
    %Business development
    
    
    1,531
    
    
    
    1,526
    
    
    
    5
    
    
    
    0.3
    %FDIC Insurance
    
    
    2,142
    
    
    
    918
    
    
    
    1,224
    
    
    
    133.3
    %Non performing assets
    
    
    1,383
    
    
    
    149
    
    
    
    1,234
    
    
    
    828.2
    %Other
    
    
    3,541
    
    
    
    4,947
    
    
    
    (1,406
    )
    
    
    -28.4
    %Total other operating expenses
    
    $
    38,354
    
    
    $
    34,706
    
    
    $
    3,648
    
    
    
    10.5
    %
 2009 compared with 2008
        32




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##### Table of Contents



Tax (Benefit)/Expense
  2010
    
    
    2009
    
    
    2008Current tax expense
    
    $
    2,382
    
    
    $
    (405
    )
    
    $
    3,155Deferred tax benefit
    
    
    (1,620
    )
    
    
    (845
    )
    
    
    (1,913
    )$
    762
    
    
    $
    (1,250
    )
    
    $
    1,242
  2010
    
    
    2009
    
    
    2008Income (loss) before federal and state income tax
    
    $
    4,548
    
    
    $
    (1,138
    )
    
    $
    5,026Tax expense (benefit) at federal statutory rate
    
    $
    1,546
    
    
    $
    (387
    )
    
    $
    1,709Increase (decrease) in taxes resulting from:State income tax
    
    
    148
    
    
    
    (92
    )
    
    
    203Tax exempt interest
    
    
    (937
    )
    
    
    (716
    )
    
    
    (685
    )Bank owned life insurance
    
    
    (133
    )
    
    
    (139
    )
    
    
    (153
    )Customer entertainment
    
    
    95
    
    
    
    92
    
    
    
    86Other
    
    
    43
    
    
    
    (8
    )
    
    
    82Total income tax (benefit)
    
    $
    762
    
    
    $
    (1,250
    )
    
    $
    1,242
   33




---



##### Table of Contents



2010
    
    
    2009Deferred tax assets:Allowance for loan losses
    
    $
    5,919
    
    
    $
    5,364Equity based compensation
    
    
    2,594
    
    
    
    1,841Other real estate owned
    
    
    645
    
    
    
    228Accrued contingencies
    
    
    391
    
    
    
    391Other
    
    
    786
    
    
    
    465Total deferred tax assets
    
    
    10,335
    
    
    
    8,289Deferred tax liabilities:Mortgage servicing rights
    
    
    (635
    )
    
    
    (570
    )Net unrealized gain on securities
    
    
    (211
    )
    
    
    Other
    
    
    (949
    )
    
    
    (586
    )Total deferred tax liabilities
    
    
    (1,795
    )
    
    
    (1,156
    )Net deferred tax assets
    
    $
    8,540
    
    
    $
    7,133
 Effects of Inflation
   Liquidity and Interest Rate Sensitivity
     34




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35




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##### Table of Contents



2010
    
    
    2009
    
    
    2008U.S. Treasuries
    
    
    0.19
    %
    
    
    1.09
    %
    
    
    3.59
    %U.S. Government agencies
    
    
    1.47
    %
    
    
    3.42
    %
    
    
    4.32
    %Collateralized mortgage obligations
    
    
    2.63
    %
    
    
    3.28
    %
    
    
    3.46
    %Municipals
    
    
    5.66
    %
    
    
    5.60
    %
    
    
    5.52
    %Other securities
    
    
    0.31
    %
    
    
    0.39
    %
    
    
    2.78
    %
   36




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##### Table of Contents



Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair2010
    
    Cost
    
    
    Gain
    
    
    (Loss)
    
    
    ValueAvailable-for-saleU.S. Treasury securities
    
    $
    8,700
    
    
    $
    
    
    
    $
    
    
    
    $
    8,700U.S. Government agencies
    
    
    66,444
    
    
    
    535
    
    
    
    (2
    )
    
    
    66,977Total available-for-sale
    
    $
    75,144
    
    
    $
    535
    
    
    $
    (2
    )
    
    $
    75,677Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrecognized
    
    
    Unrecognized
    
    
    FairCost
    
    
    Gain
    
    
    (Loss)
    
    
    ValueHeld-to-maturityMunicipal securities
    
    
    55,429
    
    
    
    2,121
    
    
    
    (115
    )
    
    
    57,435Collateralized mortgage obligations,
residential
    
    
    57,569
    
    
    
    714
    
    
    
    (139
    )
    
    
    58,144Mortgage backed securities, residential
    
    
    1,528
    
    
    
    45
    
    
    
    
    
    
    
    1,573Other securities
    
    
    150
    
    
    
    
    
    
    
    
    
    
    
    150Total Held-to-maturity
    
    $
    114,676
    
    
    $
    2,880
    
    
    $
    (254
    )
    
    $
    117,302Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair2009
    
    Cost
    
    
    Gain
    
    
    (Loss)
    
    
    ValueAvailable-for-saleU.S. Treasury securities
    
    $
    506
    
    
    $
    
    
    
    $
    
    
    
    $
    506U.S. Government agencies
    
    
    66,795
    
    
    
    97
    
    
    
    (102
    )
    
    
    66,790Total available-for-sale
    
    $
    67,301
    
    
    $
    97
    
    
    $
    (102
    )
    
    $
    67,296Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrecognized
    
    
    Unrecognized
    
    
    FairCost
    
    
    Gain
    
    
    (Loss)
    
    
    ValueHeld-to-maturityMunicipal securities
    
    $
    54,913
    
    
    $
    1,805
    
    
    $
    (47
    )
    
    $
    56,671Collateralized mortgage obligations,
residential
    
    
    30,124
    
    
    
    29
    
    
    
    (232
    )
    
    
    29,921Mortgage backed securities, residential
    
    
    9,735
    
    
    
    111
    
    
    
    
    
    
    
    9,846Other securities
    
    
    150
    
    
    
    
    
    
    
    
    
    
    
    150Total Held-to-maturity
    
    $
    94,922
    
    
    $
    1,945
    
    
    $
    (279
    )
    
    $
    96,588Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair2008
    
    Cost
    
    
    Gain
    
    
    (Loss)
    
    
    ValueAvailable-for-saleU.S. Treasury securities
    
    $
    494
    
    
    $
    5
    
    
    $
    
    
    
    $
    499U.S. Government agencies
    
    
    55,109
    
    
    
    1,369
    
    
    
    
    
    
    
    56,478Total available-for-sale
    
    $
    55,603
    
    
    $
    1,374
    
    
    $
    
    
    
    $
    56,977Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrecognized
    
    
    Unrecognized
    
    
    FairCost
    
    
    Gain
    
    
    (Loss)
    
    
    ValueHeld-to-maturityMunicipal securities
    
    $
    56,874
    
    
    $
    213
    
    
    $
    (800
    )
    
    $
    56,287Collateralized mortgage obligations,
residential
    
    
    8,825
    
    
    
    12
    
    
    
    
    
    
    
    8,837Mortgage backed securities, residential
    
    
    17,693
    
    
    
    45
    
    
    
    (66
    )
    
    
    17,672Other securities
    
    
    175
    
    
    
    
    
    
    
    
    
    
    
    175Total Held-to-maturity
    
    $
    83,567
    
    
    $
    270
    
    
    $
    (866
    )
    
    $
    82,971
  37




---



##### Table of Contents



38




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##### Table of Contents



Available-for-Sale SecuritiesWeighted-Within
    
    
    1 to 5
    
    
    5 to 15
    
    
    
    
    
    
    Average1 Year
    
    
    Years
    
    
    Years
    
    
    Total
    
    
    YieldU.S. Treasury securities
    
    $
    8,700
    
    
    $
    
    
    
    $
    
    
    
    $
    8,700
    
    
    
    0.13
    %U.S. Government agencies
    
    
    18,101
    
    
    
    48,876
    
    
    
    
    
    
    
    66,977
    
    
    
    1.13
    %Fair value
    
    $
    26,801
    
    
    $
    48,876
    
    
    $
    
    
    
    $
    75,677Weighted-average yield
    
    
    0.79
    %
    
    
    1.14
    %
    
    
    
    
    
    
    1.02
    %
 Held-to-Maturity SecuritiesWeighted-Within
    
    
    1 to 5
    
    
    5 to 15
    
    
    
    
    
    
    Average1 Year
    
    
    Years
    
    
    Years
    
    
    Total
    
    
    YieldMunicipals  FTE
    
    $
    4,632
    
    
    $
    27,813
    
    
    $
    22,984
    
    
    $
    55,429
    
    
    
    5.71
    %Collateralized mortgage obligations,
residential
    
    
    15,116
    
    
    
    29,808
    
    
    
    12,645
    
    
    
    57,569
    
    
    
    3.99
    %Mortgage backed securities, residential
    
    
    475
    
    
    
    1,053
    
    
    
    
    
    
    
    1,528
    
    
    
    3.98
    %Other securities
    
    
    50
    
    
    
    100
    
    
    
    
    
    
    
    150
    
    
    
    3.70
    %Amortized cost
    
    $
    20,273
    
    
    $
    58,774
    
    
    $
    35,629
    
    
    $
    114,676Weighted-average yield  FTE
    
    
    4.26
    %
    
    
    4.88
    %
    
    
    5.04
    %
    
    
    4.82
    %
    2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % ofAmount
    
    
    Total
    
    
    Amount
    
    
    Total
    
    
    Amount
    
    
    Total
    
    
    Amount
    
    
    Total
    
    
    Amount
    
    
    TotalTYPES OF LOANSCommercial & industrial
    
    $
    287,543
    
    
    
    31.9
    %
    
    $
    294,884
    
    
    
    34.1
    %
    
    $
    307,409
    
    
    
    34.0
    %
    
    $
    279,109
    
    
    
    33.6
    %
    
    $
    253,745
    
    
    
    33.9
    %Commercial real estate
    
    
    289,013
    
    
    
    32.1
    %
    
    
    232,840
    
    
    
    27.0
    %
    
    
    217,445
    
    
    
    24.0
    %
    
    
    175,027
    
    
    
    21.1
    %
    
    
    164,256
    
    
    
    22.1
    %Construction
    
    
    44,615
    
    
    
    4.9
    %
    
    
    75,615
    
    
    
    8.8
    %
    
    
    83,822
    
    
    
    9.3
    %
    
    
    82,581
    
    
    
    9.9
    %
    
    
    57,083
    
    
    
    7.7
    %Residential
    
    
    258,963
    
    
    
    28.8
    %
    
    
    241,592
    
    
    
    28.0
    %
    
    
    260,354
    
    
    
    28.8
    %
    
    
    243,015
    
    
    
    29.3
    %
    
    
    217,170
    
    
    
    29.2
    %Consumer
    
    
    15,769
    
    
    
    1.8
    %
    
    
    14,968
    
    
    
    1.7
    %
    
    
    31,833
    
    
    
    3.5
    %
    
    
    47,550
    
    
    
    5.7
    %
    
    
    49,575
    
    
    
    6.7
    %Credit cards
    
    
    4,429
    
    
    
    0.5
    %
    
    
    3,939
    
    
    
    0.4
    %
    
    
    3,344
    
    
    
    0.4
    %
    
    
    3,046
    
    
    
    0.4
    %
    
    
    2,709
    
    
    
    0.4
    %Total  Gross
    
    $
    900,332
    
    
    
    100.0
    %
    
    $
    863,838
    
    
    
    100.0
    %
    
    $
    904,207
    
    
    
    100.0
    %
    
    $
    830,328
    
    
    
    100.0
    %
    
    $
    744,538
    
    
    
    100.0
    %Allowance
    
    
    (15,134
    )
    
    
    
    
    
    
    (13,716
    )
    
    
    
    
    
    
    (12,847
    )
    
    
    
    
    
    
    (9,453
    )
    
    
    
    
    
    
    (8,513
    )Total  Net
    
    $
    885,198
    
    
    
    
    
    
    $
    850,122
    
    
    
    
    
    
    $
    891,360
    
    
    
    
    
    
    $
    820,875
    
    
    
    
    
    
    $
    736,025
  39




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##### Table of Contents



2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Type
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %Agriculture, Forestry & Fishing
    
    $
    565
    
    
    
    0.2
    %
    
    $
    358
    
    
    
    0.1
    %
    
    $
    369
    
    
    
    0.1
    %
    
    $
    307
    
    
    
    0.1
    %
    
    $
    355
    
    
    
    0.1
    %Mining
    
    
    5,259
    
    
    
    1.8
    %
    
    
    5,169
    
    
    
    1.8
    %
    
    
    6,947
    
    
    
    2.3
    %
    
    
    5,136
    
    
    
    1.8
    %
    
    
    5,123
    
    
    
    2.0
    %Utilities
    
    
    
    
    
    
    0.0
    %
    
    
    25
    
    
    
    0.0
    %
    
    
    31
    
    
    
    0.0
    %
    
    
    28
    
    
    
    0.0
    %
    
    
    
    
    
    
    0.0
    %Construction
    
    
    10,338
    
    
    
    3.6
    %
    
    
    7,594
    
    
    
    2.6
    %
    
    
    14,417
    
    
    
    4.7
    %
    
    
    10,885
    
    
    
    3.9
    %
    
    
    9,367
    
    
    
    3.7
    %Manufacturing
    
    
    33,750
    
    
    
    11.7
    %
    
    
    41,799
    
    
    
    14.2
    %
    
    
    38,979
    
    
    
    12.7
    %
    
    
    43,067
    
    
    
    15.4
    %
    
    
    46,982
    
    
    
    18.5
    %Wholesale Trade
    
    
    38,352
    
    
    
    13.3
    %
    
    
    38,603
    
    
    
    13.1
    %
    
    
    37,627
    
    
    
    12.2
    %
    
    
    40,889
    
    
    
    14.6
    %
    
    
    30,421
    
    
    
    12.0
    %Retail Trade
    
    
    10,664
    
    
    
    3.7
    %
    
    
    6,892
    
    
    
    2.3
    %
    
    
    6,025
    
    
    
    2.0
    %
    
    
    7,257
    
    
    
    2.6
    %
    
    
    7,090
    
    
    
    2.8
    %Transportation
    
    
    16,302
    
    
    
    5.7
    %
    
    
    17,482
    
    
    
    5.9
    %
    
    
    18,045
    
    
    
    5.9
    %
    
    
    16,635
    
    
    
    6.0
    %
    
    
    9,617
    
    
    
    3.8
    %Information
    
    
    797
    
    
    
    0.3
    %
    
    
    733
    
    
    
    0.3
    %
    
    
    123
    
    
    
    0.0
    %
    
    
    140
    
    
    
    0.0
    %
    
    
    606
    
    
    
    0.2
    %Finance & Insurance
    
    
    6,099
    
    
    
    2.1
    %
    
    
    10,957
    
    
    
    3.7
    %
    
    
    10,667
    
    
    
    3.5
    %
    
    
    6,866
    
    
    
    2.5
    %
    
    
    5,050
    
    
    
    2.0
    %Real Estate and Rental &
Leasing
    
    
    47,173
    
    
    
    16.4
    %
    
    
    53,477
    
    
    
    18.1
    %
    
    
    58,624
    
    
    
    18.9
    %
    
    
    44,657
    
    
    
    16.0
    %
    
    
    52,833
    
    
    
    20.8
    %Professional, Scientific &
Technical Services
    
    
    31,837
    
    
    
    11.1
    %
    
    
    31,544
    
    
    
    10.7
    %
    
    
    39,809
    
    
    
    13.0
    %
    
    
    37,345
    
    
    
    13.4
    %
    
    
    30,146
    
    
    
    11.9
    %Management of Companies &
Enterprises
    
    
    388
    
    
    
    0.1
    %
    
    
    1,792
    
    
    
    0.6
    %
    
    
    2,521
    
    
    
    0.8
    %
    
    
    2,652
    
    
    
    1.0
    %
    
    
    3,928
    
    
    
    1.6
    %Administrative and Support,
Waste Management & Remediation
Services
    
    
    5,028
    
    
    
    1.8
    %
    
    
    1,848
    
    
    
    0.6
    %
    
    
    2,367
    
    
    
    0.8
    %
    
    
    2,428
    
    
    
    0.9
    %
    
    
    2,453
    
    
    
    1.0
    %Educational Services
    
    
    3,867
    
    
    
    1.3
    %
    
    
    3,355
    
    
    
    1.1
    %
    
    
    4,919
    
    
    
    1.6
    %
    
    
    4,270
    
    
    
    1.5
    %
    
    
    5,160
    
    
    
    2.0
    %Health Care & Social Assistance
    
    
    21,268
    
    
    
    7.4
    %
    
    
    30,030
    
    
    
    10.2
    %
    
    
    32,063
    
    
    
    10.4
    %
    
    
    26,264
    
    
    
    9.4
    %
    
    
    25,160
    
    
    
    9.9
    %Arts, Entertainment &
Recreation
    
    
    2,145
    
    
    
    0.8
    %
    
    
    2,705
    
    
    
    0.9
    %
    
    
    3,013
    
    
    
    1.0
    %
    
    
    2,093
    
    
    
    0.8
    %
    
    
    1,678
    
    
    
    0.7
    %Accommodation & Food Services
    
    
    3,556
    
    
    
    1.2
    %
    
    
    3,112
    
    
    
    1.1
    %
    
    
    3,627
    
    
    
    1.2
    %
    
    
    3,908
    
    
    
    1.4
    %
    
    
    6,777
    
    
    
    2.7
    %Other Services
    
    
    40,158
    
    
    
    14.0
    %
    
    
    37,409
    
    
    
    12.7
    %
    
    
    27,236
    
    
    
    8.9
    %
    
    
    24,282
    
    
    
    8.7
    %
    
    
    10,999
    
    
    
    4.3
    %Public Administration
    
    
    9,997
    
    
    
    3.5
    %
    
    
    
    
    
    
    0.0
    %
    
    
    
    
    
    
    0.0
    %
    
    
    
    
    
    
    0.0
    %
    
    
    
    
    
    
    0.0
    %$
    287,543
    
    
    
    100.0
    %
    
    $
    294,884
    
    
    
    100.0
    %
    
    $
    307,409
    
    
    
    100.0
    %
    
    $
    279,109
    
    
    
    100.0
    %
    
    $
    253,745
    
    
    
    100.0
    %
  2010
    
    
    2009
    
    
    2008% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % ofAmount
    
    
    Total
    
    
    Amount
    
    
    Total
    
    
    Amount
    
    
    TotalTYPES OF DEPOSITSDemand
    
    $
    221,129
    
    
    
    21.2
    %
    
    $
    192,705
    
    
    
    22.9
    %
    
    $
    178,656
    
    
    
    23.7
    %MMDA/Savings
    
    
    821,345
    
    
    
    78.8
    %
    
    
    650,353
    
    
    
    77.1
    %
    
    
    573,679
    
    
    
    76.3
    %Total Demand Deposits
    
    
    1,042,474
    
    
    
    100.0
    %
    
    
    843,058
    
    
    
    100.0
    %
    
    
    752,335
    
    
    
    100.0
    %CDs < $100,000
    
    
    72,665
    
    
    
    37.0
    %
    
    
    62,769
    
    
    
    30.0
    %
    
    
    63,590
    
    
    
    29.8
    %CDs > $100,000
    
    
    101,564
    
    
    
    51.7
    %
    
    
    124,085
    
    
    
    59.4
    %
    
    
    131,426
    
    
    
    61.5
    %Individual Retirement
Accounts
    
    
    22,137
    
    
    
    11.3
    %
    
    
    22,153
    
    
    
    10.6
    %
    
    
    18,615
    
    
    
    8.7
    %Total Certificates of Deposit
    
    
    196,366
    
    
    
    100.0
    %
    
    
    209,007
    
    
    
    100.0
    %
    
    
    213,631
    
    
    
    100.0
    %Total Deposits
    
    $
    1,238,840
    
    
    
    
    
    
    $
    1,052,065
    
    
    
    
    
    
    $
    965,966
  40




---



##### Table of Contents



Non-0 - 180
    
    
    181 - 365
    
    
    1 - 2
    
    
    2 - 3
    
    
    3 -5
    
    
    5 +
    
    
    interestdays
    
    
    days
    
    
    years
    
    
    years
    
    
    years
    
    
    years
    
    
    Earning
    
    
    TotalInterest Earning Assets:Interest bearing due from banks
    
    $
    252,266
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    252,266Reverse repurchase agreements
    
    
    1,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000Federal funds sold
    
    
    16,109
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,109Investments
    
    
    33,075
    
    
    
    13,999
    
    
    
    58,981
    
    
    
    9,476
    
    
    
    39,193
    
    
    
    35,629
    
    
    
    
    
    
    
    190,353Loans held for sale
    
    
    1,424
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,424LoansCommercial & IndustrialFixed
    
    
    18,815
    
    
    
    10,244
    
    
    
    10,904
    
    
    
    4,999
    
    
    
    6,044
    
    
    
    12,829
    
    
    
    745
    
    
    
    64,580Variable
    
    
    211,641
    
    
    
    8,598
    
    
    
    40
    
    
    
    25
    
    
    
    
    
    
    
    
    
    
    
    2,822
    
    
    
    223,126Construction
    
    
    41,795
    
    
    
    36
    
    
    
    43
    
    
    
    347
    
    
    
    999
    
    
    
    168
    
    
    
    1,251
    
    
    
    44,639Commercial Loans Secured by Real EstateFixed
    
    
    14,614
    
    
    
    5,947
    
    
    
    13,753
    
    
    
    18,546
    
    
    
    34,836
    
    
    
    31,606
    
    
    
    1,093
    
    
    
    120,395Variable
    
    
    161,059
    
    
    
    251
    
    
    
    653
    
    
    
    1,105
    
    
    
    4,840
    
    
    
    
    
    
    
    983
    
    
    
    168,891Residential Loans Secured by Real EstateFixed
    
    
    23,787
    
    
    
    10,601
    
    
    
    14,974
    
    
    
    27,357
    
    
    
    10,832
    
    
    
    2,065
    
    
    
    2,588
    
    
    
    92,204Variable
    
    
    124,576
    
    
    
    11,198
    
    
    
    9,040
    
    
    
    9,476
    
    
    
    9,298
    
    
    
    1,114
    
    
    
    1,577
    
    
    
    166,279OtherFixed
    
    
    519
    
    
    
    304
    
    
    
    371
    
    
    
    130
    
    
    
    79
    
    
    
    
    
    
    
    
    
    
    
    1,403Variable
    
    
    18,663
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    106
    
    
    
    18,769Federal reserve and FHLB stock
    
    
    2,103
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    962
    
    
    
    
    
    
    
    3,065Total Interest Earning Assets
    
    $
    921,446
    
    
    $
    61,178
    
    
    $
    108,759
    
    
    $
    71,461
    
    
    $
    106,121
    
    
    $
    84,373
    
    
    $
    11,165
    
    
    $
    1,364,503Non-Interest Earning Assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    76,890
    
    
    
    76,890Total Assets
    
    $
    921,446
    
    
    $
    61,178
    
    
    $
    108,759
    
    
    $
    71,461
    
    
    $
    106,121
    
    
    $
    84,373
    
    
    $
    88,055
    
    
    $
    1,441,393Interest Bearing Liabilities:Interest Bearing Demand
    
    
    266,339
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    266,339Savings Deposits
    
    
    17,966
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,966Money Market Accounts
    
    
    537,040
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    537,040Certificate of Deposits
    
    
    29,541
    
    
    
    36,826
    
    
    
    10,009
    
    
    
    4,245
    
    
    
    3,303
    
    
    
    3,602
    
    
    
    
    
    
    
    87,526Jumbo CDs
    
    
    46,124
    
    
    
    28,849
    
    
    
    11,681
    
    
    
    6,878
    
    
    
    3,207
    
    
    
    12,101
    
    
    
    
    
    
    
    108,840Repurchase agreements and other short-term secured borrowings
    
    
    91,356
    
    
    
    2,167
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    93,523Short-term debt
    
    
    126
    
    
    
    2,562
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,688Subordinated Debt
    
    
    5,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,000Company obligated mandatorily redeemable preferred capital securities of
subsidiary trust holding solely the junior subordinated debentures of the
parent company
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,918
    
    
    
    
    
    
    
    13,918Total Interest Bearing Liabilities
    
    $
    1,005,677
    
    
    $
    82,631
    
    
    $
    44,040
    
    
    $
    30,934
    
    
    $
    39,635
    
    
    $
    151,052
    
    
    $
    
    
    
    
    1,353,969Demand Deposits
    
    $
    12,185
    
    
    $
    12,227
    
    
    $
    22,350
    
    
    $
    19,811
    
    
    $
    33,125
    
    
    $
    121,431
    
    
    $
    
    
    
    $
    221,129Non-Interest Bearing Liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,067
    
    
    
    8,067Equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    79,357
    
    
    
    79,357Total Liabilities & Shareholders Equity
    
    $
    1,005,677
    
    
    $
    82,631
    
    
    $
    44,040
    
    
    $
    30,934
    
    
    $
    39,635
    
    
    $
    151,052
    
    
    $
    87,424
    
    
    $
    1,441,393Interest Sensitivity Gap per Period
    
    $
    (84,231
    )
    
    $
    (21,453
    )
    
    $
    64,719
    
    
    $
    40,527
    
    
    $
    66,486
    
    
    $
    (66,679
    )
    
    $
    631Cumulative Interest Sensitivity Gap
    
    $
    (84,231
    )
    
    $
    (105,684
    )
    
    $
    (40,965
    )
    
    $
    (438
    )
    
    $
    66,048
    
    
    $
    (631
    )
    
    $
    Interest Sensitivity Gap as a Percentage of Earning Assets
    
    
    -6.22
    %
    
    
    -1.59
    %
    
    
    4.78
    %
    
    
    2.99
    %
    
    
    4.91
    %
    
    
    -4.93
    %
    
    
    0.05
    %Cumulative Sensitivity Gap as a percentage of Earning Assets
    
    
    -6.22
    %
    
    
    -7.81
    %
    
    
    -3.03
    %
    
    
    -0.03
    %
    
    
    4.88
    %
    
    
    -0.05
    %
    
    
    0.00
    %
  41




---



##### Table of Contents



Contractual Obligations
  Note
    
    
    Less than
    
    
    One to
    
    
    Three to
    
    
    Over FiveReference
    
    
    One Year
    
    
    Two Years
    
    
    Five Years
    
    
    Years
    
    
    TotalDeposits without a stated
maturity(a)
    
    
    
    
    
    $
    1,042,474
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,042,474Consumer certificates of
deposits(a)
    
    
    9
    
    
    
    141,341
    
    
    
    32,813
    
    
    
    6,510
    
    
    
    15,702
    
    
    
    196,366Short term debt(a)
    
    
    10
    
    
    
    2,688
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,688Repurchase agreements and other
secured short-term
borrowings(a)
    
    
    10
    
    
    
    93,523
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    93,523Long-term debt(a)
    
    
    10, 11
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,918
    
    
    
    18,918Operating leases (b)
    
    
    7
    
    
    
    411
    
    
    
    832
    
    
    
    668
    
    
    
    774
    
    
    
    2,685
 (a)
    
    Excludes Interest(b)
    
    The Corporations operating lease obligations represent rental payments for banking center offices. Critical Accounting Policies
   Mortgage Servicing Assets
   42




---



##### Table of Contents



Investment Securities Valuation
   Foreclosed Assets
   Allowance for Loan Losses
   43




---



##### Table of Contents



44




---



##### Table of Contents



2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Commercial &
industrial
    
    $
    3,870
    
    
    $
    4,155
    
    
    $
    5,113
    
    
    $
    3,422
    
    
    $
    3,870Commercial real estate
    
    
    5,257
    
    
    
    3,836
    
    
    
    2,378
    
    
    
    1,724
    
    
    
    1,529Construction
    
    
    2,588
    
    
    
    2,443
    
    
    
    1,650
    
    
    
    1,381
    
    
    
    448Residential
    
    
    2,400
    
    
    
    3,003
    
    
    
    3,332
    
    
    
    2,445
    
    
    
    2,165Consumer
    
    
    110
    
    
    
    90
    
    
    
    313
    
    
    
    407
    
    
    
    428Credit cards
    
    
    90
    
    
    
    189
    
    
    
    61
    
    
    
    74
    
    
    
    73Unallocated reserve
    
    
    819
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    15,134
    
    
    $
    13,716
    
    
    $
    12,847
    
    
    $
    9,453
    
    
    $
    8,513
     2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % ofAmount
    
    
    Total
    
    
    Amount
    
    
    Total
    
    
    Amount
    
    
    Total
    
    
    Amount
    
    
    Total
    
    
    Amount
    
    
    TotalCommercial & industrial
    
    $
    3,567
    
    
    
    31.9
    %
    
    $
    3,422
    
    
    
    22.7
    %
    
    $
    3,429
    
    
    
    39.1
    %
    
    $
    316
    
    
    
    5.5
    %
    
    $
    4,754
    
    
    
    66.5
    %Commercial real estate
    
    
    2,076
    
    
    
    18.6
    %
    
    
    8,040
    
    
    
    53.2
    %
    
    
    3,085
    
    
    
    35.2
    %
    
    
    2,025
    
    
    
    35.2
    %
    
    
    1,220
    
    
    
    17.1
    %Construction
    
    
    1,251
    
    
    
    11.2
    %
    
    
    2,305
    
    
    
    15.3
    %
    
    
    
    
    
    
    0.0
    %
    
    
    1,466
    
    
    
    25.4
    %
    
    
    
    
    
    
    0.0
    %Residential
    
    
    4,165
    
    
    
    37.3
    %
    
    
    1,332
    
    
    
    8.8
    %
    
    
    2,243
    
    
    
    25.5
    %
    
    
    1,851
    
    
    
    32.1
    %
    
    
    1,039
    
    
    
    14.5
    %Consumer
    
    
    106
    
    
    
    1.0
    %
    
    
    
    
    
    
    0.0
    %
    
    
    17
    
    
    
    0.2
    %
    
    
    104
    
    
    
    1.8
    %
    
    
    139
    
    
    
    1.9
    %Total
    
    $
    11,165
    
    
    
    100.0
    %
    
    $
    15,099
    
    
    
    100.0
    %
    
    $
    8,774
    
    
    
    100.0
    %
    
    $
    5,762
    
    
    
    100.0
    %
    
    $
    7,152
    
    
    
    100.0
    %Loans 90 Days Past Due
 Still Accruing
    
    $
    5
    
    
    
    
    
    
    $
    7
    
    
    
    
    
    
    $
    4
    
    
    
    
    
    
    $
    27
    
    
    
    
    
    
    $
    33Restructured due to
troubled conditions of the
borrower
    
    $
    61
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
  45




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##### Table of Contents



2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Loan TypeCommercial and industrial# of loans
    
    
    26
    
    
    
    11
    
    
    
    25
    
    
    
    4
    
    
    
    9Interest income recognized
    
    $
    82
    
    
    $
    37
    
    
    $
    140
    
    
    $
    34
    
    
    $
    188Additional interest
income if loan had been
accruing
    
    $
    201
    
    
    $
    180
    
    
    $
    148
    
    
    $
    62
    
    
    $
    138Commercial real estate# of loans
    
    
    6
    
    
    
    8
    
    
    
    5
    
    
    
    3
    
    
    
    1Interest income recognized
    
    $
    22
    
    
    $
    354
    
    
    $
    110
    
    
    $
    51
    
    
    $
    18Additional interest
income if loan had been
accruing
    
    $
    147
    
    
    $
    146
    
    
    $
    122
    
    
    $
    127
    
    
    $
    10Construction# of loans
    
    
    1
    
    
    
    3
    
    
    
    
    
    
    
    1
    
    
    
    Interest income recognized
    
    $
    
    
    
    $
    178
    
    
    $
    
    
    
    $
    105
    
    
    $
    Additional interest
income if loan had been
accruing
    
    $
    151
    
    
    $
    13
    
    
    $
    
    
    
    $
    10
    
    
    $
    Residential# of loans
    
    
    27
    
    
    
    27
    
    
    
    17
    
    
    
    15
    
    
    
    23Interest income recognized
    
    $
    78
    
    
    $
    48
    
    
    $
    73
    
    
    $
    47
    
    
    $
    12Additional interest
income if loan had been
accruing
    
    $
    170
    
    
    $
    65
    
    
    $
    72
    
    
    $
    72
    
    
    $
    80Consumer# of loans
    
    
    1
    
    
    
    2
    
    
    
    5
    
    
    
    4
    
    
    
    2Interest income recognized
    
    $
    46
    
    
    $
    
    
    
    $
    1
    
    
    $
    1
    
    
    $
    Additional interest
income if loan had been
accruing
    
    $
    1
    
    
    $
    
    
    
    $
    1
    
    
    $
    20
    
    
    $
    21Credit cards# of loans
    
    
    1
    
    
    
    2
    
    
    
    3
    
    
    
    6
    
    
    
    Interest income recognized
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    3
    
    
    $
    Additional interest
income if loan had been
accruing
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1
    
    
    $
    Restructured loans
    
    $
    61
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
 Capital Resources
     46




---



##### Table of Contents



Well
    
    
    AdequatelyActual
    
    
    Capitalized
    
    
    CapitalizedTier 1 risk-based capital ratio
    
    
    9.4
    %
    
    
    6.0
    %
    
    
    4.0
    %Total risk-based capital ratio
    
    
    11.2
    %
    
    
    10.0
    %
    
    
    8.0
    %Leverage ratio
    
    
    6.5
    %
    
    
    5.0
    %
    
    
    4.0
    %
    Recent Accounting Pronouncements and Developments
   47




---



##### Table of Contents



CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
    
 Item 7A.
    
    Quantitative and Qualitative Disclosures about Market Risk
    48




---



##### Table of Contents



49




---



##### Table of Contents



Item 8.
    
    Financial Statements and Supplementary Data
 
       /s/ Morris L. Maurer

Morris L. Maurer
    
    
    
    /s/ Debra L. Ross

Debra L. RossPresident and Chief Executive Officer
    
    
    
    Senior Vice President and Chief Financial Officer
  50




---



##### Table of Contents



Crowe Horwath LLPIndependent Member Crowe Horwath International
 
  
 Internal Control 
Integrated Framework
    Internal Control 
Integrated Framework
  
  51




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##### Table of Contents



2010
    
    
    2009AssetsCash and cash equivalentsCash and due from banks
    
    $
    24,143
    
    
    $
    44,114Interest bearing due from banks
    
    
    252,266
    
    
    
    105,261Reverse repurchase agreements
    
    
    1,000
    
    
    
    1,000Federal funds sold
    
    
    16,109
    
    
    
    1,242Total cash and cash equivalents
    
    
    293,518
    
    
    
    151,617Investment securitiesAvailable-for-sale securities
    
    
    75,677
    
    
    
    67,296Held-to-maturity securities (Fair value of
$117,302 at December 31, 2010 and $96,588 at
December 31, 2009)
    
    
    114,676
    
    
    
    94,922Total investment securities
    
    
    190,353
    
    
    
    162,218Loans held for sale
    
    
    1,424
    
    
    
    884Loans
    
    
    900,332
    
    
    
    863,838Less: Allowance for loan losses
    
    
    (15,134
    )
    
    
    (13,716
    )Net loans
    
    
    885,198
    
    
    
    850,122Bank owned life insurance
    
    
    11,938
    
    
    
    11,547Other real estate owned
    
    
    9,574
    
    
    
    8,432Premises and equipment
    
    
    24,852
    
    
    
    24,532Deferred tax asset
    
    
    8,540
    
    
    
    7,133Federal Reserve and FHLB stock at cost
    
    
    3,065
    
    
    
    3,150Other assets and accrued interest
    
    
    12,931
    
    
    
    16,442Total assets
    
    $
    1,441,393
    
    
    $
    1,236,077Liabilities and shareholders equityDeposits:Noninterest-bearing demand deposits
    
    $
    221,129
    
    
    $
    192,705Money market and savings deposits
    
    
    821,345
    
    
    
    650,353Time deposits over $100,000
    
    
    108,840
    
    
    
    131,938Other time deposits
    
    
    87,526
    
    
    
    77,069Total deposits
    
    
    1,238,840
    
    
    
    1,052,065Repurchase agreements and other secured short term borrowings
    
    
    93,523
    
    
    
    81,314Short term debt
    
    
    2,688
    
    
    
    4,138Subordinated debt
    
    
    5,000
    
    
    
    5,000Junior subordinated debentures owed to unconsolidated subsidiary trust
    
    
    13,918
    
    
    
    13,918Other liabilities
    
    
    8,067
    
    
    
    6,611Total liabilities
    
    
    1,362,036
    
    
    
    1,163,046Shareholders equity:Preferred stock, no par value  authorized
5,000,000 shares
    
    $
    
    
    
    $
    Common stock, no par value  authorized
15,000,000 shares issued 2,866,641 shares at
December 31, 2010 and 2,840,382 shares at
December 31, 2009
    
    
    35,269
    
    
    
    34,440Treasury stock, at cost; 548,891 shares at
December 31, 2010 and 533,204 shares at
December 31, 2009
    
    
    (20,953
    )
    
    
    (20,346
    )Additional paid in capital
    
    
    12,866
    
    
    
    10,873Retained earnings
    
    
    51,853
    
    
    
    48,067Accumulated other comprehensive income (loss)
    
    
    322
    
    
    
    (3
    )Total shareholders equity
    
    
    79,357
    
    
    
    73,031Total liabilities and shareholders equity
    
    $
    1,441,393
    
    
    $
    1,236,077
   52




---



##### Table of Contents



2010
    
    
    2009
    
    
    2008Interest income:Interest and fees on loans
    
    $
    42,471
    
    
    $
    42,217
    
    
    $
    48,988Interest on investment securities taxable
    
    
    2,172
    
    
    
    3,011
    
    
    
    3,979Interest on investment securities nontaxable
    
    
    2,070
    
    
    
    2,068
    
    
    
    2,047Interest on federal funds sold
    
    
    25
    
    
    
    4
    
    
    
    705Interest on due from banks
    
    
    392
    
    
    
    231
    
    
    
    510Interest on reverse repurchase agreements
    
    
    
    
    
    
    
    
    
    
    148Total interest income
    
    
    47,130
    
    
    
    47,531
    
    
    
    56,377Interest expense:Interest on deposits
    
    
    7,002
    
    
    
    9,427
    
    
    
    17,979Interest on other short term borrowings
    
    
    289
    
    
    
    182
    
    
    
    544Interest on FHLB advances and overnight
borrowings
    
    
    
    
    
    
    
    
    
    
    193Interest on short term debt
    
    
    183
    
    
    
    121
    
    
    
    16Interest on long term debt
    
    
    1,555
    
    
    
    1,583
    
    
    
    1,717Total interest expense
    
    
    9,029
    
    
    
    11,313
    
    
    
    20,449Net interest income
    
    
    38,101
    
    
    
    36,218
    
    
    
    35,928Provision for loan losses
    
    
    4,279
    
    
    
    11,905
    
    
    
    7,400Net interest income after provision for loan losses
    
    
    33,822
    
    
    
    24,313
    
    
    
    28,528Other operating income:Wealth management fees
    
    
    5,377
    
    
    
    4,917
    
    
    
    5,048Service charges and fees on deposit accounts
    
    
    3,011
    
    
    
    3,113
    
    
    
    2,484Rental income
    
    
    272
    
    
    
    321
    
    
    
    575Mortgage banking income
    
    
    2,184
    
    
    
    1,576
    
    
    
    62Interchange income
    
    
    1,263
    
    
    
    1,007
    
    
    
    877Net loss on sale of securities
    
    
    (5
    )
    
    
    
    
    
    
    Other
    
    
    2,146
    
    
    
    1,969
    
    
    
    2,158Total other operating income
    
    
    14,248
    
    
    
    12,903
    
    
    
    11,204Other operating expenses:Salaries, wages and employee benefits
    
    
    24,859
    
    
    
    21,332
    
    
    
    19,172Occupancy
    
    
    2,556
    
    
    
    2,441
    
    
    
    2,081Furniture and equipment
    
    
    1,220
    
    
    
    1,359
    
    
    
    1,428Professional services
    
    
    2,148
    
    
    
    1,873
    
    
    
    1,971Data processing
    
    
    3,014
    
    
    
    2,752
    
    
    
    2,514Business development
    
    
    1,610
    
    
    
    1,531
    
    
    
    1,526FDIC Insurance
    
    
    2,101
    
    
    
    2,142
    
    
    
    918Non performing assets
    
    
    2,100
    
    
    
    1,383
    
    
    
    149Other
    
    
    3,914
    
    
    
    3,541
    
    
    
    4,947Total other operating expenses
    
    
    43,522
    
    
    
    38,354
    
    
    
    34,706Income (loss) before tax
    
    
    4,548
    
    
    
    (1,138
    )
    
    
    5,026Federal and state income tax (benefit)
    
    
    762
    
    
    
    (1,250
    )
    
    
    1,242Net income
    
    $
    3,786
    
    
    $
    112
    
    
    $
    3,784Basic earnings per share
    
    $
    1.64
    
    
    $
    0.05
    
    
    $
    1.64Diluted earnings per share
    
    $
    1.59
    
    
    $
    0.05
    
    
    $
    1.58
   53




---



##### Table of Contents



AccumulatedAdditional
    
    
    
    
    
    
    OtherCommon
    
    
    Treasury
    
    
    Paid In
    
    
    Retained
    
    
    ComprehensiveStock
    
    
    Stock
    
    
    Capital
    
    
    Earnings
    
    
    Income
    
    
    TOTALBalance at December 31, 2007
    
    $
    32,105
    
    
    $
    (14,979
    )
    
    $
    7,181
    
    
    $
    44,171
    
    
    $
    460
    
    
    $
    68,938Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,784
    
    
    
    
    
    
    
    3,784Other comprehensive incomeNet unrealized gain
on investments, net
of tax of $236
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    376
    
    
    
    376Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,160Income tax benefit from deferred stock compensation
    
    
    
    
    
    
    
    
    
    
    321
    
    
    
    
    
    
    
    
    
    
    
    321Issuance of stock 36,873 shares of common stock under
stock-based compensation plans
    
    
    1,031
    
    
    
    
    
    
    
    (98
    )
    
    
    
    
    
    
    
    
    
    
    933Repurchase of stock 69,027 shares of common stock
    
    
    
    
    
    
    (3,502
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,502
    )Stock based compensation earned
    
    
    
    
    
    
    
    
    
    
    1,362
    
    
    
    
    
    
    
    
    
    
    
    1,362Balance at December 31, 2008
    
    
    33,136
    
    
    
    (18,481
    )
    
    
    8,766
    
    
    
    47,955
    
    
    
    836
    
    
    
    72,212Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    112
    
    
    
    
    
    
    
    112Other comprehensive incomeNet unrealized loss
on investments, net
of tax of $540
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (839
    )
    
    
    (839
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (727
    )Income tax benefit from deferred stock compensation
    
    
    
    
    
    
    
    
    
    
    414
    
    
    
    
    
    
    
    
    
    
    
    414Issuance of stock 62,071 shares of common stock under
stock-based compensation plans
    
    
    1,304
    
    
    
    
    
    
    
    (60
    )
    
    
    
    
    
    
    
    
    
    
    1,244Repurchase of stock 49,074 shares of common stock
    
    
    
    
    
    
    (1,865
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,865
    )Stock based compensation earned
    
    
    
    
    
    
    
    
    
    
    1,753
    
    
    
    
    
    
    
    
    
    
    
    1,753Balance at December 31, 2009
    
    
    34,440
    
    
    
    (20,346
    )
    
    
    10,873
    
    
    
    48,067
    
    
    
    (3
    )
    
    
    73,031Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,786
    
    
    
    
    
    
    
    3,786Other comprehensive incomeNet unrealized gain
on investments, net
of tax of $213
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    325
    
    
    
    325Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,111Income tax benefit from deferred stock compensation
    
    
    
    
    
    
    
    
    
    
    68
    
    
    
    
    
    
    
    
    
    
    
    68Issuance of 26,259 shares of common stock under
stock-based compensation plans
    
    
    829
    
    
    
    
    
    
    
    (101
    )
    
    
    
    
    
    
    
    
    
    
    728Repurchase of 15,686 shares of common stock
    
    
    
    
    
    
    (607
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (607
    )Stock based compensation earned
    
    
    
    
    
    
    
    
    
    
    2,026
    
    
    
    
    
    
    
    
    
    
    
    2,026Balance at December 31, 2010
    
    $
    35,269
    
    
    $
    (20,953
    )
    
    $
    12,866
    
    
    $
    51,853
    
    
    $
    322
    
    
    $
    79,357
   54




---



##### Table of Contents



2010
    
    
    2009
    
    
    2008Operating ActivitiesNet Income
    
    $
    3,786
    
    
    $
    112
    
    
    $
    3,784Adjustments to reconcile net income to net cash provided (used) by operating activities:Provision for loan losses
    
    
    4,279
    
    
    
    11,905
    
    
    
    7,400Proceeds from sale of loans
    
    
    98,415
    
    
    
    70,930
    
    
    
    40,594Origination of loans held for sale
    
    
    (88,801
    )
    
    
    (69,691
    )
    
    
    (38,524
    )Depreciation and amortization
    
    
    1,511
    
    
    
    1,533
    
    
    
    1,545Fair value adjustment on mortgage servicing rights
    
    
    527
    
    
    
    334
    
    
    
    715Loss on sales of investment securities
    
    
    5
    
    
    
    
    
    
    
    Gain on sale of loans
    
    
    (2,289
    )
    
    
    (1,561
    )
    
    
    (499
    )Net loss on sales and writedowns of other real estate and
repossessions
    
    
    1,010
    
    
    
    845
    
    
    
    28Net increase in deferred income taxes
    
    
    (1,620
    )
    
    
    (845
    )
    
    
    (1,913
    )Net increase in bank owned life insurance
    
    
    (391
    )
    
    
    (410
    )
    
    
    (450
    )Excess tax benefit from deferred stock compensation
    
    
    (68
    )
    
    
    (414
    )
    
    
    (321
    )Board stock compensation
    
    
    120
    
    
    
    100
    
    
    
    100Net accretion of discounts and amortization of premiums on
investments
    
    
    1,310
    
    
    
    480
    
    
    
    309Compensation expense related to restricted stock and options
    
    
    2,026
    
    
    
    1,753
    
    
    
    1,362Changes in assets and liabilities:Accrued interest receivable
    
    
    (17
    )
    
    
    656
    
    
    
    610Other assets
    
    
    3,001
    
    
    
    (6,797
    )
    
    
    686Other liabilities
    
    
    1,524
    
    
    
    (764
    )
    
    
    (3,352
    )Net cash provided by operating activities
    
    
    24,328
    
    
    
    8,166
    
    
    
    12,074Investing ActivitiesProceeds from maturities of investment securities held to maturity
    
    
    26,501
    
    
    
    19,904
    
    
    
    16,377Proceeds from maturities of investment securities available for sale
    
    
    51,977
    
    
    
    51,000
    
    
    
    23,003Proceeds from sales of investment securities held to maturity
    
    
    477
    
    
    
    
    
    
    
    Purchases of investment securities held to maturity
    
    
    (47,225
    )
    
    
    (31,451
    )
    
    
    (28,417
    )Purchases of investment securities available for sale
    
    
    (60,557
    )
    
    
    (62,986
    )
    
    
    (17,180
    )Net (increase) decrease in loans
    
    
    (52,502
    )
    
    
    21,158
    
    
    
    (82,845
    )Proceeds from sales of other real estate and repossessions
    
    
    3,130
    
    
    
    1,755
    
    
    
    306Purchases of bank premises and equipment
    
    
    (1,831
    )
    
    
    (3,247
    )
    
    
    (6,947
    )Net cash used by investing activities
    
    
    (80,030
    )
    
    
    (3,867
    )
    
    
    (95,703
    )Financing ActivitiesNet increase (decrease) in deposits
    
    
    186,775
    
    
    
    86,099
    
    
    
    (38,796
    )Net increase (decrease) in short term borrowings
    
    
    12,209
    
    
    
    30,168
    
    
    
    (7,330
    )Net change in FHLB borrowings
    
    
    
    
    
    
    
    
    
    
    (3,000
    )Net change in revolving line of credit
    
    
    (1,450
    )
    
    
    (62
    )
    
    
    4,200Income tax benefit from deferred stock compensation
    
    
    68
    
    
    
    414
    
    
    
    321Proceeds from issuance of stock
    
    
    608
    
    
    
    1,144
    
    
    
    833Repurchase of stock
    
    
    (607
    )
    
    
    (1,865
    )
    
    
    (3,502
    )Net cash provided (used) by financing activities
    
    
    197,603
    
    
    
    115,898
    
    
    
    (47,274
    )Increase (decrease) in cash and cash equivalents
    
    
    141,901
    
    
    
    120,197
    
    
    
    (130,903
    )Cash and cash equivalents at beginning of year
    
    
    151,617
    
    
    
    31,420
    
    
    
    162,323Cash and cash equivalents at end of year
    
    $
    293,518
    
    
    $
    151,617
    
    
    $
    31,420Supplemental cash flow informationInterest paid
    
    $
    9,689
    
    
    $
    11,377
    
    
    $
    21,050Income taxes paid
    
    
    194
    
    
    
    1,612
    
    
    
    3,755Supplemental non cash disclosureLoan balances transferred to foreclosed real estate
    
    $
    5,282
    
    
    $
    7,614
    
    
    $
    3,389Loan balances transferred to loans held for sale
    
    
    9,614
    
    
    
    969
    
    
    
    2,488
   55




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##### Table of Contents



NOTE 1  ORGANIZATION AND SIGNIFICANT ACCOUTING POLICIES
 Nature of Operations and Principles of Consolidation
    Cash Flows
 Investment Securities
     Loans Held for Sale
  56




---



##### Table of Contents



Loans
  Loan Commitments and Related Financial Instruments
 Allowance for Loan Losses
    57




---



##### Table of Contents



Bank-Owned Life Insurance
  Foreclosed Assets
 Premises and Equipment
 Long-Term Assets
 Income Taxes
   58




---



##### Table of Contents



Federal Home Loan Bank (FHLB) and Federal Reserve Bank (FRB) Stock:
 Mortgage Servicing Rights
   Fair Values of Financial Instruments
 Transfer of Financial Assets
 Securities Purchased Under Resale Agreements and Securities Sold Under Repurchase
Agreements
  59




---



##### Table of Contents



Comprehensive Income
 Earnings Per Share
 Loss Contingencies
 Stock-Based Compensation
   Retirement Plans
 Reportable Segments
 Reclassifications
 Use of Estimates
  60




---



##### Table of Contents



NOTE 2  NEW ACCOUNTING PRONOUNCEMENTS
   NOTE 3  RESTRICTIONS ON CASH AND DUE FROM BANK ACCOUNTS
   61




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##### Table of Contents



NOTE 4  INVESTMENT SECURITIES
  Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair2010
    
    Cost
    
    
    Gain
    
    
    (Loss)
    
    
    ValueAvailable-for-saleU.S. Treasury securities
    
    $
    8,700
    
    
    $
    
    
    
    $
    
    
    
    $
    8,700U.S. Government agencies
    
    
    66,444
    
    
    
    535
    
    
    
    (2
    )
    
    
    66,977Total available-for-sale
    
    $
    75,144
    
    
    $
    535
    
    
    $
    (2
    )
    
    $
    75,677
 Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrecognized
    
    
    Unrecognized
    
    
    FairCost
    
    
    Gain
    
    
    (Loss)
    
    
    ValueHeld-to-maturityMunicipal securities
    
    $
    55,429
    
    
    $
    2,121
    
    
    $
    (115
    )
    
    $
    57,435Collateralized mortgage obligations,
residential
    
    
    57,569
    
    
    
    714
    
    
    
    (139
    )
    
    
    58,144Mortgage backed securities, residential
    
    
    1,528
    
    
    
    45
    
    
    
    
    
    
    
    1,573Other securities
    
    
    150
    
    
    
    
    
    
    
    
    
    
    
    150Total Held-to-maturity
    
    $
    114,676
    
    
    $
    2,880
    
    
    $
    (254
    )
    
    $
    117,302
 Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair2009
    
    Cost
    
    
    Gain
    
    
    (Loss)
    
    
    ValueAvailable-for-saleU.S. Treasury securities
    
    $
    506
    
    
    $
    
    
    
    $
    
    
    
    $
    506U.S. Government agencies
    
    
    66,795
    
    
    
    97
    
    
    
    (102
    )
    
    
    66,790Total available-for-sale
    
    $
    67,301
    
    
    $
    97
    
    
    $
    (102
    )
    
    $
    67,296
 Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrecognized
    
    
    Unrecognized
    
    
    FairCost
    
    
    Gain
    
    
    (Loss)
    
    
    ValueHeld-to-maturityMunicipal securities
    
    $
    54,913
    
    
    $
    1,805
    
    
    $
    (47
    )
    
    $
    56,671Collateralized mortgage obligations,
residential
    
    
    30,124
    
    
    
    29
    
    
    
    (232
    )
    
    
    29,921Mortgage backed securities, residential
    
    
    9,735
    
    
    
    111
    
    
    
    
    
    
    
    9,846Other securities
    
    
    150
    
    
    
    
    
    
    
    
    
    
    
    150Total Held-to-maturity
    
    $
    94,922
    
    
    $
    1,945
    
    
    $
    (279
    )
    
    $
    96,588
   62




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##### Table of Contents



Amortized
    
    
    FairCost
    
    
    ValueAvailable-for-saleDue in one year or less
    
    $
    16,756
    
    
    $
    16,755Due from one to five years
    
    
    58,388
    
    
    
    58,922Total
    
    $
    75,144
    
    
    $
    75,677Held-to-maturityDue in one year or less
    
    $
    4,682
    
    
    $
    4,688Due from one to five years
    
    
    5,330
    
    
    
    5,662Due from five to ten years
    
    
    38,234
    
    
    
    39,979Due after ten years
    
    
    7,333
    
    
    
    7,256CMO/Mortgage-backed, residential
    
    
    59,097
    
    
    
    59,717Total
    
    $
    114,676
    
    
    $
    117,302
    Less Than 12 Months
    
    
    12 Months or Longer
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    (Loss)
    
    
    Value
    
    
    (Loss)
    
    
    Value
    
    
    (Loss)2010Available-for-saleU.S. Government agencies
    
    $
    16,070
    
    
    $
    (2
    )
    
    $
    
    
    
    $
    
    
    
    $
    16,070
    
    
    $
    (2
    )Total available-for-sale
    
    $
    16,070
    
    
    $
    (2
    )
    
    $
    
    
    
    $
    
    
    
    $
    16,070
    
    
    $
    (2
    )Held-to-maturityCollateralized mortgage
obligations,
residential
    
    $
    12,744
    
    
    $
    (139
    )
    
    $
    
    
    
    $
    
    
    
    $
    12,744
    
    
    $
    (139
    )Municipal securities
    
    
    8,358
    
    
    
    (115
    )
    
    
    
    
    
    
    
    
    
    
    8,358
    
    
    
    (115
    )Total Held-to-maturity
    
    $
    21,102
    
    
    $
    (254
    )
    
    $
    
    
    
    $
    
    
    
    $
    21,102
    
    
    $
    (254
    )2009Available-for-saleU.S. Government agencies
    
    $
    36,515
    
    
    $
    (102
    )
    
    $
    
    
    
    $
    
    
    
    $
    36,515
    
    
    $
    (102
    )Total available-for-sale
    
    $
    36,515
    
    
    $
    (102
    )
    
    $
    
    
    
    $
    
    
    
    $
    36,515
    
    
    $
    (102
    )Held-to-maturityCollateralized mortgage
obligations,
residential
    
    $
    24,851
    
    
    $
    (232
    )
    
    $
    
    
    
    $
    
    
    
    $
    24,851
    
    
    $
    (232
    )Municipal securities
    
    
    1,796
    
    
    
    (10
    )
    
    
    1,424
    
    
    
    (37
    )
    
    
    3,220
    
    
    
    (47
    )Total Held-to-maturity
    
    $
    26,647
    
    
    $
    (242
    )
    
    $
    1,424
    
    
    $
    (37
    )
    
    $
    28,071
    
    
    $
    (279
    )
  63




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##### Table of Contents



64




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##### Table of Contents



NOTE 5  LOANS AND ALLOWANCE FOR LOAN LOSSES
  2010
    
    
    2009Residential loans secured by real estate
    
    $
    258,483
    
    
    $
    241,318Commercial loans secured by real estate
    
    
    289,286
    
    
    
    232,840Construction loans
    
    
    44,639
    
    
    
    75,615Other commercial and industrial loans
    
    
    287,706
    
    
    
    295,009Consumer loans
    
    
    20,172
    
    
    
    18,899Total loans
    
    
    900,286
    
    
    
    863,681Net deferred loan costs
    
    
    46
    
    
    
    157Allowance for loan losses
    
    
    (15,134
    )
    
    
    (13,716
    )Total loans, net
    
    $
    885,198
    
    
    $
    850,122
    2010
    
    
    2009
    
    
    2008Beginning balance
    
    $
    13,716
    
    
    $
    12,847
    
    
    $
    9,453Loan charge offs
    
    
    (3,149
    )
    
    
    (11,432
    )
    
    
    (4,393
    )Recoveries
    
    
    288
    
    
    
    396
    
    
    
    387Provision for loan losses
    
    
    4,279
    
    
    
    11,905
    
    
    
    7,400Ending balance
    
    $
    15,134
    
    
    $
    13,716
    
    
    $
    12,847
  Commercial
    
    
    Residential
    
    
    Consumer
    
    
    Unallocated
    
    
    TotalAllowance for loan lossesEnding allowance balance attributable to loans:Individually evaluated for impairment
    
    $
    781
    
    
    $
    801
    
    
    $
    5
    
    
    $
    
    
    
    $
    1,587Collectively evaluated for impairment
    
    
    10,934
    
    
    
    1,599
    
    
    
    195
    
    
    
    819
    
    
    
    13,547Total ending allowance balance
    
    $
    11,715
    
    
    $
    2,400
    
    
    $
    200
    
    
    $
    819
    
    
    $
    15,134Loans:Loans individually evaluated for impairment
    
    $
    6,894
    
    
    $
    4,165
    
    
    $
    111
    
    
    $
    
    
    
    $
    11,170Loans collectively evaluated for impairment
    
    
    614,277
    
    
    
    254,798
    
    
    
    20,087
    
    
    
    
    
    
    
    889,162Total ending loans balance
    
    $
    621,171
    
    
    $
    258,963
    
    
    $
    20,198
    
    
    $
    
    
    
    $
    900,332Accrued interest receivable
    
    $
    1,884
    
    
    $
    1,188
    
    
    $
    43
    
    
    $
    
    
    
    $
    3,115
   65




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##### Table of Contents



Unpaid
    
    
    
    
    
    
    Allowance forPrincipal
    
    
    Recorded
    
    
    Loan LossesBalance
    
    
    Investment
    
    
    AllocatedWith no related allowance recorded:CommercialCommercial & industrial
    
    $
    3,467
    
    
    $
    2,524
    
    
    $
    Commercial real estate
    
    
    2,150
    
    
    
    2,076
    
    
    
    Construction
    
    
    1,490
    
    
    
    1,251
    
    
    
    Residential1-4 family
    
    
    1,080
    
    
    
    710
    
    
    
    Home equity
    
    
    729
    
    
    
    630
    
    
    
    ConsumerPersonal
    
    
    106
    
    
    
    106
    
    
    
    Installment
    
    
    
    
    
    
    
    
    
    
    Overdraft
    
    
    
    
    
    
    
    
    
    
    Credit cards
    
    
    
    
    
    
    
    
    
    
    With an allowance recorded:CommercialCommercial & industrial
    
    
    1,043
    
    
    
    1,043
    
    
    
    781Commercial real estate
    
    
    
    
    
    
    
    
    
    
    Construction
    
    
    
    
    
    
    
    
    
    
    Residential1-4 family
    
    
    56
    
    
    
    56
    
    
    
    20Home equity
    
    
    2,769
    
    
    
    2,769
    
    
    
    781ConsumerPersonal
    
    
    
    
    
    
    
    
    
    
    Installment
    
    
    
    
    
    
    
    
    
    
    Overdraft
    
    
    
    
    
    
    
    
    
    
    Credit cards
    
    
    5
    
    
    
    5
    
    
    
    5Total
    
    $
    12,895
    
    
    $
    11,170
    
    
    $
    1,587
  2010
    
    
    2009
    
    
    2008Balance of impaired loans
    
    $
    11,170
    
    
    $
    15,106
    
    
    $
    8,777Related allowance on impaired loans
    
    
    1,587
    
    
    
    1,724
    
    
    
    1,689Impaired loans with related allowance
    
    
    3,873
    
    
    
    7,844
    
    
    
    6,210Impaired loans without an allowance
    
    
    7,297
    
    
    
    7,262
    
    
    
    2,567Average balance of impaired loans
    
    
    13,957
    
    
    
    11,961
    
    
    
    7,708Accrued interest recorded during impairment
    
    
    
    
    
    
    
    
    
    
    1Cash basis interest income recognized
    
    
    
    
    
    
    
    
    
    
    
  66




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##### Table of Contents



Loans Past DueOver 90 DaysStillNonaccrual
    
    
    AccruingCommercialCommercial & industrial
    
    $
    3,567
    
    
    $
    Commercial real estate
    
    
    2,076
    
    
    
    Construction
    
    
    1,251
    
    
    
    Residential1-4 family
    
    
    766
    
    
    
    Home equity
    
    
    3,399
    
    
    
    ConsumerPersonal
    
    
    106
    
    
    
    Installment
    
    
    
    
    
    
    Overdraft
    
    
    
    
    
    
    Credit cards
    
    
    
    
    
    
    5Total
    
    $
    11,165
    
    
    $
    5
   30 - 89
    
    
    Greater thanDays
    
    
    90 Days
    
    
    TotalPast Due
    
    
    Past Due
    
    
    Past DueCommercialCommercial & industrial
    
    $
    667
    
    
    $
    1,501
    
    
    $
    2,168Commercial real estate
    
    
    1,644
    
    
    
    1,815
    
    
    
    3,459Construction
    
    
    205
    
    
    
    1,251
    
    
    
    1,456Residential1-4 family
    
    
    1,785
    
    
    
    289
    
    
    
    2,074Home equity
    
    
    1,024
    
    
    
    430
    
    
    
    1,454ConsumerPersonal
    
    
    850
    
    
    
    106
    
    
    
    956Installment
    
    
    14
    
    
    
    
    
    
    
    14Overdraft
    
    
    
    
    
    
    
    
    
    
    Credit cards
    
    
    39
    
    
    
    5
    
    
    
    44Total
    
    $
    6,228
    
    
    $
    5,397
    
    
    $
    11,625
 Troubled Debt Restructurings:
   67




---



##### Table of Contents



Credit Quality Indicators:
  Special Mention. Loans classified as special mention have a potential weakness that
deserves managements close attention. If left uncorrected, these potential weaknesses may
result in deterioration of the repayment prospects for the loan or of the Corporations
credit position at some future date.
 Substandard. Loans classified as substandard are inadequately protected by the current net
worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so
classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the
debt. They are characterized by the distinct possibility that the institution will sustain
some loss if the deficiencies are not corrected.
 Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified
as substandard, with the added characteristic that the weaknesses make collection or
liquidation in full, on the basis of currently existing facts, conditions, and values,
highly questionable and improbable.
  Not
    
    
    
    
    
    
    SpecialRated
    
    
    Pass
    
    
    Mention
    
    
    Substandard
    
    
    DoubtfulCommercialCommercial & industrial
    
    $
    
    
    
    $
    265,528
    
    
    $
    7,893
    
    
    $
    14,122
    
    
    $
    Commercial real estate
    
    
    
    
    
    
    256,866
    
    
    
    24,745
    
    
    
    7,402
    
    
    
    Construction
    
    
    
    
    
    
    31,458
    
    
    
    6,499
    
    
    
    6,658
    
    
    
    Total
    
    $
    
    
    
    $
    553,852
    
    
    $
    39,137
    
    
    $
    28,182
    
    
    $
    
  Consumer
    
    
    ResidentialPersonal
    
    
    Installment
    
    
    Overdraft
    
    
    Credit cards
    
    
    1-4 family
    
    
    Home equityPerforming
    
    $
    14,158
    
    
    $
    885
    
    
    $
    620
    
    
    $
    4,424
    
    
    $
    109,360
    
    
    $
    145,438Nonperforming
    
    
    106
    
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    766
    
    
    
    3,399Total
    
    $
    14,264
    
    
    $
    885
    
    
    $
    620
    
    
    $
    4,429
    
    
    $
    110,126
    
    
    $
    148,837
  68




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##### Table of Contents



NOTE 6  REAL ESTATE OWNED
  2010
    
    
    2009
    
    
    2008Balance at beginning of period
    
    $
    8,432
    
    
    $
    3,418
    
    
    $
    363Additions
    
    
    5,282
    
    
    
    7,614
    
    
    
    3,389Write downs
    
    
    (1,142
    )
    
    
    (905
    )
    
    
    (80
    )Sales
    
    
    (2,998
    )
    
    
    (1,695
    )
    
    
    (254
    )Balance at end of period
    
    $
    9,574
    
    
    $
    8,432
    
    
    $
    3,418
  2010
    
    
    2009
    
    
    2008Net gain on sales
    
    $
    (132
    )
    
    $
    (60
    )
    
    $
    (52
    )Write downs
    
    
    1,142
    
    
    
    905
    
    
    
    80Operating expenses, net of rental income
    
    
    466
    
    
    
    417
    
    
    
    125$
    1,476
    
    
    $
    1,262
    
    
    $
    153
  NOTE 7  PREMISES AND EQUIPMENT
  2010
    
    
    2009Land and improvements
    
    $
    8,893
    
    
    $
    8,893Building and improvements
    
    
    15,196
    
    
    
    14,507Leasehold improvements
    
    
    2,259
    
    
    
    2,259Furniture and equipment
    
    
    14,764
    
    
    
    13,62441,112
    
    
    
    39,283Less accumulated depreciation and amortization
    
    
    (16,260
    )
    
    
    (14,751
    )Net premises and equipment
    
    $
    24,852
    
    
    $
    24,532
   2011
    
    $
    4112012
    
    
    4132013
    
    
    4192014
    
    
    3842015
    
    
    284Thereafter
    
    
    774$
    2,685
  69




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##### Table of Contents



NOTE 8  MORTGAGES BANKING ACTIVITIES
    2010
    
    
    2009
    
    
    2008Balance at January 1
    
    $
    1,459
    
    
    $
    1,070
    
    
    $
    1,348Plus additions
    
    
    692
    
    
    
    723
    
    
    
    437Fair value adjustments
    
    
    (527
    )
    
    
    (334
    )
    
    
    (715
    )Net ending balance
    
    $
    1,624
    
    
    $
    1,459
    
    
    $
    1,070
  NOTE 9  DEPOSITS
  2011
    
    $
    141,3412012
    
    
    21,6902013
    
    
    11,1232014
    
    
    4,0262015
    
    
    2,484Thereafter
    
    
    15,702$
    196,366
 NOTE 10  OTHER BORROWINGS
  2010
    
    
    2009
    
    
    2008Average daily balance during the year
    
    $
    84,048
    
    
    $
    68,740
    
    
    $
    57,114Average interest rate during the year
    
    
    0.34
    %
    
    
    0.25
    %
    
    
    0.88
    %Maximum month-end balance during the year
    
    $
    100,988
    
    
    $
    85,248
    
    
    $
    66,000Weighted average interest rate at year-end
    
    
    0.33
    %
    
    
    0.27
    %
    
    
    0.15
    %
  70




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NOTE 11  JUNIOR SUBORDINATED DEBENTURES
     71




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NOTE 12  EQUITY-BASED COMPENSATION
   WeightedWeighted
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateExercise
    
    
    Contractual
    
    
    IntrinsicShares
    
    
    Price
    
    
    Term
    
    
    ValueOutstanding at beginning of year
    
    
    96,063
    
    
    $
    27.53Exercised
    
    
    (15,200
    )
    
    
    25.11Outstanding at end of year
    
    
    80,863
    
    
    
    27.98
    
    
    
    1.6
    
    
    $
    1,092Exercisable at end of year
    
    
    80,863
    
    
    $
    27.98
    
    
    
    1.6
    
    
    $
    1,092
  2010
    
    
    2009
    
    
    2008Intrinsic value of options exercised
    
    $
    208
    
    
    $
    1,069
    
    
    $
    806Cash received from option exercises
    
    $
    382
    
    
    $
    1,145
    
    
    $
    667Tax benefit realized from option exercises
    
    $
    70
    
    
    $
    413
    
    
    $
    302
  1993 Restricted Stock Plan
  2010
    
    
    2009
    
    
    2008Intrinsic value of shares vested
    
    $
    
    
    
    $
    51
    
    
    $
    111Tax benefit realized from shares vested
    
    $
    
    
    
    $
    1
    
    
    $
    19
   72




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##### Table of Contents



2005 Equity Incentive Plan
  WeightedWeighted
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateExercise
    
    
    Contractual
    
    
    IntrinsicShares
    
    
    Price
    
    
    Term
    
    
    ValueOutstanding at beginning of year
    
    
    192,200
    
    
    $
    43.71Forfeited
    
    
    (8,400
    )
    
    $
    40.91Outstanding at end of year
    
    
    183,800
    
    
    $
    43.84
    
    
    
    5.5
    
    
    $
    15Exercisable at end of year
    
    
    2,800
    
    
    $
    43.38
    
    
    
    5.4
    
    
    $
    15
  2010
    
    
    2009
    
    
    2008Intrinsic value of options exercised
    
    $
    
    
    
    $
    
    
    
    $
    Cash received from options exercised
    
    
    
    
    
    
    
    
    
    
    Tax benefit realized from option exercises
    
    
    
    
    
    
    
    
    
    
    Weighted average fair value of options granted
    
    $
    
    
    
    $
    11.91
    
    
    $
    18.56
    Year
    
    Dividend Yield
    
    
    Volatility Factor
    
    
    Risk-Free Rate2010
    
    
    
    
    
    
    
    
    
    
    2009
    
    
    
    
    
    
    13.42
    %
    
    
    3.41
    %2008
    
    
    
    
    
    
    7.65
    %
    
    
    4.37
    %
   73




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##### Table of Contents



Restricted Stock Issued
 Weighted AverageRestricted Stock
    
    
    Grant Date Fair ValueNonvested restricted stock at beginning of year
    
    
    134,775
    
    
    $
    43.25Granted
    
    
    108,300
    
    
    $
    40.72Vested
    
    
    (1,700
    )
    
    $
    43.28Forfeited or expired
    
    
    (1,700
    )
    
    $
    43.28Nonvested restricted stock at end of year
    
    
    239,675
    
    
    $
    42.11
   2010
    
    
    2009
    
    
    2008Intrinsic value of shares vested
    
    $
    71
    
    
    $
    
    
    
    $
    Tax expense realized from shares vested
    
    $
    (2
    )
    
    $
    
    
    
    $
    
  NOTE 13  EMPLOYEE BENEFIT PROGRAM
      74




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NOTE 14  REGULATORY CAPITAL MATTERS
      75




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##### Table of Contents



To Be Well CapitalizedRequired For
    
    
    Under PromptCapital
    
    
    CorrectiveActual
    
    
    Adequacy Purposes
    
    
    Action RegulationsAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio2010Total Capital to risk weighted assetsConsolidated
    
    $
    109,534
    
    
    
    11.4
    %
    
    $
    76,607
    
    
    
    8.0
    %
    
    
    
    
    
    
    N/ABank
    
    
    106,660
    
    
    
    11.2
    %
    
    
    76,326
    
    
    
    8.0
    %
    
    
    95,407
    
    
    
    10.0
    %Tier 1 (Core) Capital to risk weighted assetsConsolidated
    
    
    92,525
    
    
    
    9.7
    %
    
    
    38,304
    
    
    
    4.0
    %
    
    
    
    
    
    
    N/ABank
    
    
    89,694
    
    
    
    9.4
    %
    
    
    38,163
    
    
    
    4.0
    %
    
    
    57,244
    
    
    
    6.0
    %Tier 1 (Core) Capital to average assetsConsolidated
    
    
    92,525
    
    
    
    6.7
    %
    
    
    55,407
    
    
    
    4.0
    %
    
    
    
    
    
    
    N/ABank
    
    
    89,694
    
    
    
    6.5
    %
    
    
    55,415
    
    
    
    4.0
    %
    
    
    69,269
    
    
    
    5.0
    %2009Total Capital to risk weighted assetsConsolidated
    
    $
    103,202
    
    
    
    11.1
    %
    
    $
    74,552
    
    
    
    8.0
    %
    
    
    
    
    
    
    N/ABank
    
    
    101,635
    
    
    
    10.9
    %
    
    
    74,335
    
    
    
    8.0
    %
    
    
    92,919
    
    
    
    10.0
    %Tier 1 (Core) Capital to risk weighted assetsConsolidated
    
    
    86,528
    
    
    
    9.3
    %
    
    
    37,276
    
    
    
    4.0
    %
    
    
    
    
    
    
    N/ABank
    
    
    84,994
    
    
    
    9.2
    %
    
    
    37,168
    
    
    
    4.0
    %
    
    
    55,752
    
    
    
    6.0
    %Tier 1 (Core) Capital to average assetsConsolidated
    
    
    86,528
    
    
    
    6.8
    %
    
    
    50,658
    
    
    
    4.0
    %
    
    
    
    
    
    
    N/ABank
    
    
    84,994
    
    
    
    6.7
    %
    
    
    50,715
    
    
    
    4.0
    %
    
    
    63,394
    
    
    
    5.0
    %
 NOTE 15  RELATED PARTIES
    76




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NOTE 16  INCOME TAXES
  2010
    
    
    2009
    
    
    2008Current tax expense
    
    $
    2,382
    
    
    $
    (405
    )
    
    $
    3,155Deferred tax benefit
    
    
    (1,620
    )
    
    
    (845
    )
    
    
    (1,913
    )$
    762
    
    
    $
    (1,250
    )
    
    $
    1,242
  2010
    
    
    2009
    
    
    2008Income (loss) before federal and state income tax
    
    $
    4,548
    
    
    $
    (1,138
    )
    
    $
    5,026Tax expense (benefit) at federal statutory rate
    
    $
    1,546
    
    
    $
    (387
    )
    
    $
    1,709Increase (decrease) in taxes resulting from:State income tax
    
    
    148
    
    
    
    (92
    )
    
    
    203Tax exempt interest
    
    
    (937
    )
    
    
    (716
    )
    
    
    (685
    )Bank owned life insurance
    
    
    (133
    )
    
    
    (139
    )
    
    
    (153
    )Customer entertainment
    
    
    95
    
    
    
    92
    
    
    
    86Other
    
    
    43
    
    
    
    (8
    )
    
    
    82Total income tax (benefit)
    
    $
    762
    
    
    $
    (1,250
    )
    
    $
    1,242
  2010
    
    
    2009Deferred tax assets:Allowance for loan losses
    
    $
    5,919
    
    
    $
    5,364Equity based compensation
    
    
    2,594
    
    
    
    1,841Other real estate owned
    
    
    645
    
    
    
    228Accrued contingencies
    
    
    391
    
    
    
    391Other
    
    
    786
    
    
    
    465Total deferred tax assets
    
    
    10,335
    
    
    
    8,289Deferred tax liabilities:Mortgage servicing rights
    
    
    (635
    )
    
    
    (570
    )Net unrealized gain on securities
    
    
    (211
    )
    
    
    Other
    
    
    (949
    )
    
    
    (586
    )Total deferred tax liabilities
    
    
    (1,795
    )
    
    
    (1,156
    )Net deferred tax assets
    
    $
    8,540
    
    
    $
    7,133
 Unrecognized Tax Benefits
  77




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##### Table of Contents



Valuation Allowance on Deferred Tax Assets
 NOTE 17  COMMITMENTS AND CONTINGENCIES
   2010
    
    
    2009Unused commercial credit lines
    
    $
    222,387
    
    
    $
    198,815Unused revolving home equity and credit card lines
    
    
    107,712
    
    
    
    99,629Standby letters of credit
    
    
    7,712
    
    
    
    24,338Demand deposit account lines of credit
    
    
    2,596
    
    
    
    2,499$
    340,407
    
    
    $
    325,281
     NOTE 18  FAIR VALUE
  Level 1: Quoted prices (unadjusted) of identical assets or liabilities in active markets
that the entity has the ability to access as of the measurement date.
 Level 2: Significant other 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.
 Level 3: Significant unobservable inputs that reflect a reporting entitys own assumptions
about the assumptions that market participants would use in pricing and asset or liability.
  78




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##### Table of Contents



Assets and Liabilities Measured on a Recurring Basis
  Fair Value Measurements Using:Quoted Pricesin Active Markets
    
    
    Significant Other
    
    
    Significantfor Identical Assets
    
    
    Observable Inputs
    
    
    Unobservable InputsCarrying Value
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)2010Assets:Available-for-sale securities:U.S. Treasury securities
    
    $
    8,700
    
    
    $
    
    
    
    $
    8,700
    
    
    $
    U.S. Government agencies
    
    
    66,977
    
    
    
    
    
    
    
    66,977
    
    
    
    Mortgage servicing
rights
    
    
    1,624
    
    
    
    
    
    
    
    1,624
    
    
    
    2009Assets:Available-for-sale securities:U.S. Treasury securities
    
    $
    506
    
    
    $
    
    
    
    $
    506
    
    
    $
    U.S. Government agencies
    
    
    66,790
    
    
    
    
    
    
    
    66,790
    
    
    
    Mortgage servicing
rights
    
    
    1,459
    
    
    
    
    
    
    
    1,459
    
    
    
    
    79




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##### Table of Contents



Assets and Liabilities Measured on a Non-Recurring Basis
  Fair Value Measurements Using:Quoted Pricesin Active Markets
    
    
    Significant Other
    
    
    Significantfor Identical Assets
    
    
    Observable Inputs
    
    
    Unobservable InputsCarrying Value
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)2010Assets:Impaired loansCommercialCommercial &
industrial
    
    $
    262
    
    
    $
    
    
    
    $
    
    
    
    $
    262Commercial real
estate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Residential1-4 family
    
    
    36
    
    
    
    
    
    
    
    
    
    
    
    36Home equity
    
    
    1,988
    
    
    
    
    
    
    
    
    
    
    
    1,988ConsumerPersonal
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Installment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Overdraft
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Credit cards
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other real estateCommercialCommercial &
industrial
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial real
estate
    
    
    4,826
    
    
    
    
    
    
    
    
    
    
    
    4,826Construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Residential1-4 family
    
    
    97
    
    
    
    
    
    
    
    
    
    
    
    97Home equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    ConsumerPersonal
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Installment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Overdraft
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Credit cards
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2009Assets:Impaired loans
    
    $
    6,120
    
    
    $
    
    
    
    $
    
    
    
    $
    6,120Other real estate
    
    
    2,017
    
    
    
    
    
    
    
    
    
    
    
    2,017
     80




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##### Table of Contents



2010
    
    
    2009Carrying
    
    
    Fair
    
    
    Carrying
    
    
    FairAmount
    
    
    Value
    
    
    Amount
    
    
    ValueAssetsCash and due from banks
    
    $
    276,409
    
    
    $
    276,409
    
    
    $
    149,375
    
    
    $
    149,375Federal funds sold
    
    
    16,109
    
    
    
    16,109
    
    
    
    1,242
    
    
    
    1,242Reverse repurchase agreements
    
    
    1,000
    
    
    
    1,000
    
    
    
    1,000
    
    
    
    1,000Investment securities
available-for-sale
    
    
    75,677
    
    
    
    75,677
    
    
    
    67,296
    
    
    
    67,296Investment securities
held-to-maturity
    
    
    114,676
    
    
    
    117,302
    
    
    
    94,922
    
    
    
    96,588Loans held for sale
    
    
    1,424
    
    
    
    1,424
    
    
    
    884
    
    
    
    879Net loans
    
    
    885,198
    
    
    
    893,665
    
    
    
    850,122
    
    
    
    849,998Federal Reserve and FHLB stock
    
    
    3,065
    
    
    
    N/A
    
    
    
    3,150
    
    
    
    N/AAccrued interest receivable
    
    
    4,216
    
    
    
    4,216
    
    
    
    4,199
    
    
    
    4,199LiabilitiesDeposits
    
    
    1,238,840
    
    
    
    1,238,175
    
    
    
    1,052,065
    
    
    
    1,053,849Repurchase agreements and other
secured short-term borrowings
    
    
    93,523
    
    
    
    93,554
    
    
    
    81,314
    
    
    
    81,415Short-term debt
    
    
    2,688
    
    
    
    2,688
    
    
    
    4,138
    
    
    
    4,138Subordinated debt
    
    
    5,000
    
    
    
    5,000
    
    
    
    5,000
    
    
    
    5,000Junior subordinated debt
    
    
    13,918
    
    
    
    10,245
    
    
    
    13,918
    
    
    
    10,102Accrued interest payable
    
    
    1,498
    
    
    
    1,498
    
    
    
    2,158
    
    
    
    2,158
   NOTE 19  OTHER COMPREHENSIVE INCOME (LOSS)
  2010
    
    
    2009
    
    
    2008Net income
    
    $
    3,786
    
    
    $
    112
    
    
    $
    3,784Other comprehensive income (loss)Change in securities available for sale:Net unrealized gain (loss) for period
    
    
    538
    
    
    
    (1,379
    )
    
    
    612Tax benefit (expense)
    
    
    (213
    )
    
    
    540
    
    
    
    (236
    )Total other comprehensive income (loss)
    
    
    325
    
    
    
    (839
    )
    
    
    376Comprehensive income (loss)
    
    $
    4,111
    
    
    $
    (727
    )
    
    $
    4,160
  81




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##### Table of Contents



NOTE 20  EARNINGS PER SHARE
  2010
    
    
    2009
    
    
    2008Basic average shares outstanding
    
    
    2,313,570
    
    
    
    2,301,502
    
    
    
    2,311,022Net income
    
    $
    3,786
    
    
    $
    112
    
    
    $
    3,784Basic net income per common share
    
    $
    1.64
    
    
    $
    0.05
    
    
    $
    1.64DilutedAverage shares outstanding
    
    
    2,313,570
    
    
    
    2,301,502
    
    
    
    2,311,022Nonvested restricted stock
    
    
    47,959
    
    
    
    19,289
    
    
    
    15,239Net effect of the assumed
exercise of stock options
    
    
    20,662
    
    
    
    28,313
    
    
    
    65,046Diluted average shares
    
    
    2,382,191
    
    
    
    2,349,104
    
    
    
    2,391,307Net income
    
    $
    3,786
    
    
    $
    112
    
    
    $
    3,784Diluted net income per common share
    
    $
    1.59
    
    
    $
    0.05
    
    
    $
    1.58
  NOTE 21  PARENT COMPANY FINANCIAL STATEMENTS
  Balance Sheets
 December 31,2010
    
    
    2009AssetsCash
    
    $
    2,996
    
    
    $
    3,974Investment in subsidiary
    
    
    90,178
    
    
    
    85,137Other assets
    
    
    3,751
    
    
    
    3,002Total assets
    
    $
    96,925
    
    
    $
    92,113Liabilities and shareholders equityOther liabilities
    
    $
    962
    
    
    $
    1,026Short term debt
    
    
    2,688
    
    
    
    4,138Junior subordinated debentures owed to unconsolidated
subsidiary trust
    
    
    13,918
    
    
    
    13,918Total liabilities
    
    
    17,568
    
    
    
    19,082Shareholders equity
    
    
    79,357
    
    
    
    73,031Total liabilities and shareholders equity
    
    $
    96,925
    
    
    $
    92,113
  82




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##### Table of Contents



Statements of Income
 Years ended December 31,2010
    
    
    2009
    
    
    2008Interest income
    
    $
    14
    
    
    $
    7
    
    
    $
    7Interest expense
    
    
    1,658
    
    
    
    1,596
    
    
    
    1,492Net interest income (expense)
    
    
    (1,644
    )
    
    
    (1,589
    )
    
    
    (1,485
    )Other income
    
    
    44
    
    
    
    44
    
    
    
    44Dividend income from subsidiary
    
    
    1,483
    
    
    
    1,385
    
    
    
    1,315Other operating expenses:Deferred compensation
    
    
    2,026
    
    
    
    1,753
    
    
    
    1,362Other expenses
    
    
    338
    
    
    
    304
    
    
    
    321Total other operating expenses
    
    
    2,364
    
    
    
    2,057
    
    
    
    1,683Net loss before tax benefit and equity in
undistributed net income of subsidiary
    
    
    (2,481
    )
    
    
    (2,217
    )
    
    
    (1,809
    )Tax benefit
    
    
    1,551
    
    
    
    1,406
    
    
    
    1,213Net loss before equity in undistributed net income of
subsidiary
    
    
    (930
    )
    
    
    (811
    )
    
    
    (596
    )Equity in undistributed net income of subsidiary
    
    
    4,716
    
    
    
    923
    
    
    
    4,380Net income
    
    $
    3,786
    
    
    $
    112
    
    
    $
    3,784
 Statements of Cash Flows
 Year ended December 31,2010
    
    
    2009
    
    
    2008Operating activitiesNet income
    
    $
    3,786
    
    
    $
    112
    
    
    $
    3,784Adjustments to reconcile net income to net cash provided by operating
activities:Undistributed income of subsidiary
    
    
    (4,716
    )
    
    
    (923
    )
    
    
    (4,380
    )Stock compensation
    
    
    120
    
    
    
    100
    
    
    
    100Excess tax benefit from deferred compensation
    
    
    (68
    )
    
    
    (414
    )
    
    
    (321
    )Compensation expense related to restricted stock
and options
    
    
    2,026
    
    
    
    1,753
    
    
    
    1,362Increase in deferred income taxes
    
    
    (753
    )
    
    
    (648
    )
    
    
    (499
    )(Increase) decrease in other assets
    
    
    4
    
    
    
    (79
    )
    
    
    (31
    )Increase (decrease) in other liabilities
    
    
    4
    
    
    
    641
    
    
    
    409Net cash provided by operating activities
    
    
    403
    
    
    
    542
    
    
    
    424Investing activitiesNet cash used by investing activities
    
    
    
    
    
    
    
    
    
    
    Financing activitiesProceeds from issuance of stock
    
    
    608
    
    
    
    1,144
    
    
    
    833Repurchase of stock
    
    
    (607
    )
    
    
    (1,865
    )
    
    
    (3,502
    )Net change in short term debt
    
    
    (1,450
    )
    
    
    (62
    )
    
    
    4,200Income tax benefit from deferred compensation
    
    
    68
    
    
    
    414
    
    
    
    321Net cash provided (used) by financing activities
    
    
    (1,381
    )
    
    
    (369
    )
    
    
    1,852Increase (decrease) in cash and cash equivalents
    
    
    (978
    )
    
    
    173
    
    
    
    2,276Cash and cash equivalents at beginning of year
    
    
    3,974
    
    
    
    3,801
    
    
    
    1,525Cash and cash equivalents at end of year
    
    $
    2,996
    
    
    $
    3,974
    
    
    $
    3,801
  83




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##### Table of Contents



NOTE 22  QUARTERLY RESULTS OF OPERATIONS

(UNAUDITED)
  2010
    
    March 31
    
    
    June 30
    
    
    September 30
    
    
    December 31Interest income
    
    $
    11,615
    
    
    $
    11,686
    
    
    $
    11,898
    
    
    $
    11,931Interest expense
    
    
    2,394
    
    
    
    2,316
    
    
    
    2,252
    
    
    
    2,067Net interest income
    
    
    9,221
    
    
    
    9,370
    
    
    
    9,646
    
    
    
    9,864Provision for loan losses
    
    
    1,235
    
    
    
    1,234
    
    
    
    1,875
    
    
    
    (65
    )Other operating income
    
    
    2,933
    
    
    
    3,307
    
    
    
    4,208
    
    
    
    3,800Other operating expense
    
    
    10,222
    
    
    
    10,464
    
    
    
    11,137
    
    
    
    11,699Net income before tax
    
    
    697
    
    
    
    979
    
    
    
    842
    
    
    
    2,030Federal and state income tax
    
    
    75
    
    
    
    143
    
    
    
    86
    
    
    
    458Net income after tax
    
    $
    622
    
    
    $
    836
    
    
    $
    756
    
    
    $
    1,572Basic earnings per share
    
    $
    0.27
    
    
    $
    0.36
    
    
    $
    0.33
    
    
    $
    0.68Diluted earnings per share
    
    $
    0.26
    
    
    $
    0.35
    
    
    $
    0.32
    
    
    $
    0.66
 2009
    
    March 31
    
    
    June 30
    
    
    September 30
    
    
    December 31Interest income
    
    $
    11,665
    
    
    $
    11,795
    
    
    $
    12,185
    
    
    $
    11,886Interest expense
    
    
    3,157
    
    
    
    2,834
    
    
    
    2,763
    
    
    
    2,559Net interest income
    
    
    8,508
    
    
    
    8,961
    
    
    
    9,422
    
    
    
    9,327Provision for loan losses
    
    
    1,250
    
    
    
    2,650
    
    
    
    3,955
    
    
    
    4,050Other operating income
    
    
    3,003
    
    
    
    3,569
    
    
    
    2,991
    
    
    
    3,340Other operating expense
    
    
    9,210
    
    
    
    10,060
    
    
    
    9,128
    
    
    
    9,956Net income (loss) before tax
    
    
    1,051
    
    
    
    (180
    )
    
    
    (670
    )
    
    
    (1,339
    )Federal and state income tax (benefit)
    
    
    206
    
    
    
    (259
    )
    
    
    (462
    )
    
    
    (735
    )Net income (loss) after tax
    
    $
    845
    
    
    $
    79
    
    
    $
    (208
    )
    
    $
    (604
    )Basic earnings (loss) per share
    
    $
    0.37
    
    
    $
    0.03
    
    
    $
    (0.09
    )
    
    $
    (0.26
    )Diluted earnings (loss) per share
    
    $
    0.36
    
    
    $
    0.03
    
    
    $
    (0.09
    )
    
    $
    (0.26
    )
  84




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##### Table of Contents



Item 9.
    
    Changes in and Disagreements With Accountants on Accounting and Financial
Disclosure.
  
 Item 9A.
    
    Controls and Procedures
 Disclosure Controls and Procedures
 Managements Report on Internal Control Over Financial Reporting.
  Attestation Report of the Independent Registered Public Accounting Firm.
  Changes in Internal Controls Over Financial Reporting
     85




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##### Table of Contents



Item 9B.
    
    Other Information
  
 PART III
 
 Items 10. 11, 12, 13 and 14
   86




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##### Table of Contents



Part IV
 
 Item 15.
    
    Exhibits, Financial Statement Schedules
  Page Numberin 10-KManagements Report on Internal Control over Financial Reporting
    
    
    50Reports of Independent Registered Public Accounting Firms
    
    
    51Consolidated Balance Sheets as of December 31, 2010 and 2009
    
    
    52Consolidated Statements of Income
For the years ended December 31, 2010, 2009 and 2008
    
    
    53Consolidated Statements of Shareholders Equity 
For the years ended December 31, 2010, 2009 and 2008
    
    
    54Consolidated Statements of Cash Flows 
For the years ended December 31, 2010, 2009, and 2008
    
    
    55Notes to consolidated Financial Statements
    
    
    56
 (2)
    
    See response to Item 15 (a) (1). All other financial statement schedules
have been
omitted because they are not applicable, or the required information is shown
in the
consolidated financial statements or notes thereto.(3)
    
    List of Exhibits
  87




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##### Table of Contents



EXHIBIT INDEX
 3.01
    
    
    Articles of Incorporation of the Corporation, filed as Exhibit 3(i) to the Corporations Form
10-QSB as of September 30, 1995 are incorporated by reference and Articles of Amendment filed
as Exhibit 3(i) to the Form 10-K for the fiscal year ended December 31, 20013.02
    
    
    Bylaws of the Corporation, filed as Exhibit 3(ii) to the Corporations Form 8-K filed July
30, 2010, are incorporated by reference10.01
    *
    
    1993 Key Employees Stock Option Plan of the Corporation, as amended, filed as Exhibit 10(a)
to the Form 10-K for the fiscal year ended December 31, 2004 is incorporated by reference10.02
    *
    
    1993 Directors Stock Option Plan of the Corporation, as amended, filed as Exhibit 10(b) to
the Corporations Form 10-Q as of June 30, 2001 is incorporated by reference10.03
    *
    
    1993 Restricted Stock Plan of the Corporation, as amended, filed as Exhibit 10(c) to the
Form 10-K for the fiscal year ended December 31, 2004 is incorporated by reference10.04
    *
    
    Form of agreement under the 1993 Key Employees Stock Option Plan, filed as Exhibit 10(d) to
the Form 10-K for the fiscal year ended December 31, 2004 is incorporated by reference10.05
    *
    
    Form of agreement under the 1993 Restricted Stock Plan, filed as Exhibit 10(e) to the Form
10-K for the fiscal year ended December 31, 2004 is incorporated by reference10.06
    *
    
    Schedule of Directors Compensation Arrangements, filed as a part of the Corporations Form
8-K filed March 18, 2010, is incorporated by reference10.07
    *
    
    Schedule of Named Executive Officers Compensation Arrangements, filed as Exhibit 10.07 to
the Corporations Form 8-K dated May 18, 2006 is incorporated by reference, as amended by the
Corporations Form 8-K filed January 6, 201110.08
    *
    
    The Amended and Restated National Bank of Indianapolis Corporation 2005 Equity Incentive
Plan, filed as Exhibit 10.01 to the Corporations Form 8-K filed June 23, 2010 is incorporated
by reference10.09
    *
    
    Form of Restricted Stock Award Agreement for The National Bank of Indianapolis Corporation
2005 Equity Incentive Plan, filed as Exhibit 10.02 to the Corporations Form 8-K dated June
22, 2005 is incorporated by reference10.10
    *
    
    Form of Stock Option Award Agreement for The National Bank of Indianapolis Corporation 2005
Equity Incentive Plan, filed as Exhibit 10.03 to the Corporations Form 8-K dated June 22,
2005, is incorporated by reference10.11
    *
    
    Employment Agreement dated December 15, 2005 between Morris L. Maurer and the Corporation,
filed as Exhibit 10.06 to the Corporations Form 8-K dated December 21, 2005, and as amended
by Exhibit 10.06 to the Corporations Form 8-K dated November 26, 2008, is incorporated by
reference10.13
    *
    
    The National Bank of Indianapolis Corporation Executives Deferred Compensation Plan, filed
as Exhibit 10.08 to the Corporations Form 8-K dated December 21, 2005, and as amended by
Exhibit 10.08 to the Corporations Form 8-K dated November 26, 2008, is incorporated by
reference10.14
    *
    
    The National Bank of Indianapolis Corporation 401(K) Savings Plan (as amended and restated
generally effective January 1, 2006), filed as Exhibit 10.14 to the Corporations Form 10-K
dated December 31, 2005 is incorporated by reference21.00
    
    
    Subsidiaries of The National Bank of Indianapolis Corporation31.1
    
    
    Certificate of Chief Executive Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) of the
Securities Exchange Act of 1934, as amended31.2
    
    
    Certificate of Chief Financial Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) of the
Securities Exchange Act of 1934, as amended32.1
    
    
    Chief Executive Officer Certification pursuant to 18 U.S.C. Section 135032.2
    
    
    Chief Financial Officer Certification pursuant to 18 U.S.C. Section 1350*
Indicates management contract or compensatory plan or arrangement
required to be filed as an exhibit to this report.
  88




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##### Table of Contents



SIGNATURES
  (Registrant)
    
    The National Bank of Indianapolis CorporationBy (Signature and Title)
    
    /S/ Morris L. Maurer

Morris L. Maurer, President (Principal Executive Officer)
    
    March 11, 2011
Date
  By (Signature and Title)
    
    /S/ Morris L. Maurer

Morris L. Maurer, President (Principal Executive Officer)
    
    March 11, 2011
DateBy (Signature and Title)
    
    /S/ Philip B. Roby

Philip B. Roby, Executive Vice President
    
    March 11, 2011
DateBy (Signature and Title)
    
    /S/ Debra L. Ross

Debra L. Ross, Senior Vice President (Principal
Financial and Accounting Officer)
    
    March 11, 2011 DateBy (Signature and Title)
    
    /S/ Michael S. Maurer
    
    March 11, 2011Michael S. Maurer, Chairman of the Board
    
    DateBy (Signature and Title)
    
    /S/ Kathryn G. Betley
    
    March 11, 2011Kathryn G. Betley, Director
    
    DateBy (Signature and Title)
    
    /S/ David R. Frick
    
    March 11, 2011David R. Frick, Director
    
    DateBy (Signature and Title)
    
    /S/ Andre B. Lacy
    
    March 11, 2011Andre B. Lacy, Director
    
    DateBy (Signature and Title)
    
    /S/ William S. Oesterle
    
    March 11, 2011William S. Oesterle, Director
    
    DateBy (Signature and Title)
    
    /S/ Todd H. Stuart
    
    March 11, 2011Todd H. Stuart, Director
    
    DateBy (Signature and Title)
    
    /S/ John T. Thompson
    
    March 11, 2011John T. Thompson, Director
    
    Date
  89




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##### Table of Contents



EXHIBIT INDEX
 3.01
    
    
    Articles of Incorporation of the Corporation, filed as Exhibit 3(i) to the Corporations Form
10-QSB as of September 30, 1995 are incorporated by reference and Articles of Amendment filed
as Exhibit 3(i) to the Form 10-K for the fiscal year ended December 31, 20013.02
    
    
    Bylaws of the Corporation, filed as Exhibit 3(ii) to the Corporations Form 8-K filed July
30, 2010, are incorporated by reference10.01
    *
    
    1993 Key Employees Stock Option Plan of the Corporation, as amended, filed as Exhibit 10(a)
to the Form 10-K for the fiscal year ended December 31, 2004 is incorporated by reference10.02
    *
    
    1993 Directors Stock Option Plan of the Corporation, as amended, filed as Exhibit 10(b) to
the Corporations Form 10-Q as of June 30, 2001 is incorporated by reference10.03
    *
    
    1993 Restricted Stock Plan of the Corporation, as amended, filed as Exhibit 10(c) to the
Form 10-K for the fiscal year ended December 31, 2004 is incorporated by reference10.04
    *
    
    Form of agreement under the 1993 Key Employees Stock Option Plan, filed as Exhibit 10(d) to
the Form 10-K for the fiscal year ended December 31, 2004 is incorporated by reference10.05
    *
    
    Form of agreement under the 1993 Restricted Stock Plan, filed as Exhibit 10(e) to the Form
10-K for the fiscal year ended December 31, 2004 is incorporated by reference10.06
    *
    
    Schedule of Directors Compensation Arrangements, filed as a part of the Corporations Form
8-K filed March 18, 2010, is incorporated by reference10.07
    *
    
    Schedule of Named Executive Officers Compensation Arrangements, filed as Exhibit 10.07 to
the Corporations Form 8-K dated May 18, 2006 is incorporated by reference, as amended by the
Corporations Form 8-K filed January 6, 201110.08
    *
    
    The Amended and Restated National Bank of Indianapolis Corporation 2005 Equity Incentive
Plan, filed as Exhibit 10.01 to the Corporations Form 8-K filed June 23, 2010 is incorporated
by reference10.09
    *
    
    Form of Restricted Stock Award Agreement for The National Bank of Indianapolis Corporation
2005 Equity Incentive Plan, filed as Exhibit 10.02 to the Corporations Form 8-K dated June
22, 2005 is incorporated by reference10.10
    *
    
    Form of Stock Option Award Agreement for The National Bank of Indianapolis Corporation 2005
Equity Incentive Plan, filed as Exhibit 10.03 to the Corporations Form 8-K dated June 22,
2005, is incorporated by reference10.11
    *
    
    Employment Agreement dated December 15, 2005 between Morris L. Maurer and the Corporation,
filed as Exhibit 10.06 to the Corporations Form 8-K dated December 21, 2005, and as amended
by Exhibit 10.06 to the Corporations Form 8-K dated November 26, 2008, is incorporated by
reference10.13
    *
    
    The National Bank of Indianapolis Corporation Executives Deferred Compensation Plan, filed
as Exhibit 10.08 to the Corporations Form 8-K dated December 21, 2005, and as amended by
Exhibit 10.08 to the Corporations Form 8-K dated November 26, 2008, is incorporated by
reference10.14
    *
    
    The National Bank of Indianapolis Corporation 401(K) Savings Plan (as amended and restated
generally effective January 1, 2006), filed as Exhibit 10.14 to the Corporations Form 10-K
dated December 31, 2005 is incorporated by reference21.00
    
    
    Subsidiaries of The National Bank of Indianapolis Corporation31.1
    
    
    Certificate of Chief Executive Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) of the
Securities Exchange Act of 1934, as amended31.2
    
    
    Certificate of Chief Financial Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) of the
Securities Exchange Act of 1934, as amended32.1
    
    
    Chief Executive Officer Certification pursuant to 18 U.S.C. Section 135032.2
    
    
    Chief Financial Officer Certification pursuant to 18 U.S.C. Section 1350*
Indicates management contract or compensatory plan or arrangement
required to be filed as an exhibit to this report.
  90