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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, 2008
 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
 (Exact name of Registrant as Specified in its Charter)
 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  (Registrants Telephone Number, Including Area Code)
 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
 þ
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer   o
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
 Yes o No 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
    
    
    19Item 4. Submission of Matters to a Vote of Security Holders
    
    
    19PART IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    20Item 6. Selected Financial Data
    
    
    24Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    25Item 7A. Quantitative and Qualitative Disclosures about Market Risk
    
    
    52Item 8. Financial Statements and Supplementary Data
    
    
    54Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure
    
    
    95Item 9A. Controls and Procedures
    
    
    95Item 9B. Other Information
    
    
    96PART IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    
    97Item 11. Executive Compensation
    
    
    97Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    97Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    97Item 14. Principal Accounting Fees and Services
    
    
    97PART IVItem 15. Exhibits, Financial Statement Schedules
    
    
    98Signatures
    
    
    101Exhibit 21.00Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2




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PART I
 
 Item 1. Business
 The Corporation
  
    
    84th Street and Ditch Road in northwestern Marion County;
    
    82nd Street and Bash Road in northeastern Marion County;
    
    Chamber of Commerce Building on North Meridian Street;
    
    One America Office Complex in downtown Indianapolis;
    
    49th Street and North Pennsylvania Street in northern Marion County;
    
    Keystone Avenue and East Carmel Drive in Hamilton County;
    
    106th Street and Michigan Road in Hamilton County;
    
    Smith Valley Road and S.R. 135 in Johnson County;
    
    2714 East 146th Street in Hamilton County; and
    
    2410 Harleston Street in Hamilton County.
     1




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Business Plan Overview
     The Market
 Competition
  2




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Employees
 Lending Activity
    REGULATION AND SUPERVISION
   3




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THE CORPORATION
 The Bank Holding Company Act
 Investments, Control, and Activities
    Capital Adequacy Guidelines for Bank Holding Companies
  4




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Tier 1 Capital to Risk-Weighted Assets
    
    
    8.8
    %Total Risk Based Capital to Risk-Weighted Assets
    
    
    10.6
    %Tier 1 Leverage Ratio
    
    
    7.5
    %
 Dividends
 Source of Strength
 THE BANK
 General Regulatory Supervision
  Lending Limits
 Deposit Insurance.
  5




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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
  Branching and Acquisitions
  6




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Community Reinvestment Act
 Capital Regulations
    Tier 1 Capital to Risk-Weighted Assets
    
    
    8.8
    %Total Risk-Based Capital to Risk-Weighted Assets
    
    
    10.5
    %Tier 1 Leverage Ratio
    
    
    7.5
    %
  7




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Check Clearing for the 21st Century Act
  8




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USA Patriot Act
 Sarbanes-Oxley Act of 2002
 Recent Legislative and Regulatory Initiatives to Address Financial and Economic
Crises
     9




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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;
    
    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.
 
  10




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
    
    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
  Effect of Governmental Monetary Policies
  11




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Available Information
  
 Item 1A. Risk Factors
 Difficult conditions in the capital markets and the economy generally may materially adversely
affect our business and results of operations
     12




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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
   We may be required to pay significantly higher Federal Deposit Insurance Corporation (FDIC)
premiums in the future
    13




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Recent negative developments in the financial industry and the credit markets may subject us to
additional regulation
  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 Operates In A Highly Competitive Industry And Market Area
   
    
    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.
    
    Industry and general economic trends.
   15




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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 our markets makes our 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 our 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
   17




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The Corporation Continually Encounters Technological Change
  
 Item 1B. Unresolved Staff Comments
  
 Item 2. Property
  th th th
   18




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Item 3. Legal Proceedings
  
 Item 4. Submission of Matters to a Vote of Security Holders
   19




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PART II
 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
  Price per ShareHigh
    
    
    LowQuarter
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007First Quarter
    
    $
    53.93
    
    
    $
    48.21
    
    
    $
    52.22
    
    
    $
    47.38Second Quarter
    
    $
    51.80
    
    
    $
    49.87
    
    
    $
    50.92
    
    
    $
    48.67Third Quarter
    
    $
    52.29
    
    
    $
    50.41
    
    
    $
    51.12
    
    
    $
    49.78Fourth Quarter
    
    $
    52.36
    
    
    $
    53.02
    
    
    $
    38.18
    
    
    $
    52.22
      20




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21




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Maximum Number(or ApproximateTotal Number of
    
    
    Dollar Value) ofTotal Number of
    
    
    
    
    
    
    Shares Purchased as
    
    
    Shares that May YetShares Purchased
    
    
    
    
    
    
    Part of Publicly
    
    
    Be Purchased Underduring 4th quarter
    
    
    Average Price Paid
    
    
    Announced Plans or
    
    
    the Plans orPeriod
    
    2008
    
    
    per Share
    
    
    Programs**
    
    
    Programs10/01/08 
10/31/08
    
    
    6,900
    
    
    $
    52.34
    
    
    
    6,900
    
    
    $
    16411/01/08 
11/30/08
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    12/01/08 
12/31/08
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    Total
    
    
    6,900
    
    
    
    *
    
    
    
    6,900
 *
    
    The weighted average price per share under Program One and Program Two for the period
October 2008 was $52.34.**
    
    All shares repurchased by the Corporation in October 2008 were completed pursuant to
Program One and Program Two.  22




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Maximum Number(or ApproximateTotal Number of
    
    
    Dollar Value) ofTotal Number of
    
    
    
    
    
    
    Shares Purchased as
    
    
    Shares that May YetShares Purchased
    
    
    
    
    
    
    Part of Publicly
    
    
    Be Purchased Underduring 4th quarter
    
    
    Average Price Paid
    
    
    Announced Plans or
    
    
    the Plans orPeriod
    
    2008
    
    
    per Share
    
    
    Programs**
    
    
    Programs10/01/08 
10/31/08
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    11/01/08 
11/30/08
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    12/01/08 
12/31/08
    
    
    6,041
    
    
    $
    38.18
    
    
    
    6,041
    
    
    $
    7,769,354Total
    
    
    6,041
    
    
    
    *
    
    
    
    6,041
 *
    
    The weighted average price per share under the new program for December 2008 was $38.18.**
    
    All shares repurchased by the Corporation in December 2008 were completed pursuant to the
new repurchase program.  23




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Item 6. Selected Financial Data
  Year Ended December 312008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004Consolidated Operating Data:Interest income
    
    $
    56,378
    
    
    $
    68,880
    
    
    $
    61,375
    
    
    $
    50,847
    
    
    $
    38,524Interest expense
    
    
    20,449
    
    
    
    35,263
    
    
    
    29,565
    
    
    
    20,906
    
    
    
    12,962Net interest income
    
    
    35,928
    
    
    
    33,617
    
    
    
    31,811
    
    
    
    29,941
    
    
    
    25,561Provision for loan losses
    
    
    7,400
    
    
    
    904
    
    
    
    1,086
    
    
    
    2,085
    
    
    
    1,320Net interest income after provision for loan losses
    
    
    28,528
    
    
    
    32,713
    
    
    
    30,725
    
    
    
    27,856
    
    
    
    24,241Losses on sale of securities, (net)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (84
    )Other operating income
    
    
    11,204
    
    
    
    9,834
    
    
    
    8,356
    
    
    
    7,461
    
    
    
    7,272Other operating expenses
    
    
    34,706
    
    
    
    30,800
    
    
    
    28,595
    
    
    
    25,176
    
    
    
    22,613Income before taxes
    
    
    5,026
    
    
    
    11,747
    
    
    
    10,486
    
    
    
    10,141
    
    
    
    8,816Federal and state income tax
    
    
    1,242
    
    
    
    3,856
    
    
    
    3,501
    
    
    
    3,911
    
    
    
    3,313Net income
    
    
    3,784
    
    
    
    7,891
    
    
    
    6,985
    
    
    
    6,230
    
    
    
    5,503Consolidated Balance Sheet Data (at end of period):Total assets
    
    $
    1,117,784
    
    
    $
    1,163,109
    
    
    $
    1,034,432
    
    
    $
    928,462
    
    
    $
    880,914Total investment securities (including stock in Federal Banks)
    
    
    143,694
    
    
    
    137,174
    
    
    
    150,137
    
    
    
    157,471
    
    
    
    151,799Total loans
    
    
    904,207
    
    
    
    830,328
    
    
    
    744,538
    
    
    
    684,488
    
    
    
    656,453Allowance for loan losses
    
    
    (12,847
    )
    
    
    (9,453
    )
    
    
    (8,513
    )
    
    
    (8,346
    )
    
    
    (7,796
    )Deposits
    
    
    965,965
    
    
    
    1,004,762
    
    
    
    875,084
    
    
    
    774,316
    
    
    
    693,431Shareholders equity
    
    
    72,213
    
    
    
    68,938
    
    
    
    59,785
    
    
    
    51,583
    
    
    
    46,544Weighted basic average shares outstanding
    
    
    2,311
    
    
    
    2,328
    
    
    
    2,302
    
    
    
    2,299
    
    
    
    2,303Per Share Data:Diluted net income per common share (1)
    
    $
    1.58
    
    
    $
    3.27
    
    
    $
    2.90
    
    
    $
    2.61
    
    
    $
    2.30Cash dividends declared
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Book value (2)
    
    
    31.48
    
    
    
    29.63
    
    
    
    25.88
    
    
    
    22.11
    
    
    
    19.81Other Statistics and Operating Data:Return on average assets
    
    
    0.3
    %
    
    
    0.7
    %
    
    
    0.7
    %
    
    
    0.7
    %
    
    
    0.7
    %Return on average equity
    
    
    5.3
    %
    
    
    12.3
    %
    
    
    12.7
    %
    
    
    12.8
    %
    
    
    12.8
    %Net interest margin (3)
    
    
    3.4
    %
    
    
    3.3
    %
    
    
    3.4
    %
    
    
    3.3
    %
    
    
    3.1
    %Average loans to average deposits
    
    
    88.5
    %
    
    
    82.3
    %
    
    
    85.9
    %
    
    
    85.5
    %
    
    
    89.0
    %Allowance for loan losses to loans at end of period
    
    
    1.4
    %
    
    
    1.1
    %
    
    
    1.1
    %
    
    
    1.2
    %
    
    
    1.2
    %Allowance for loan losses to non-performing loans
    
    
    146.4
    %
    
    
    164.1
    %
    
    
    119.0
    %
    
    
    228.8
    %
    
    
    255.1
    %Non-performing loans to loans at end of period
    
    
    1.0
    %
    
    
    0.7
    %
    
    
    1.0
    %
    
    
    0.5
    %
    
    
    0.5
    %Net charge-offs/(recoveries) to average loans
    
    
    0.5
    %
    
    
    0.0
    %
    
    
    0.1
    %
    
    
    0.2
    %
    
    
    0.3
    %Number of offices
    
    
    11
    
    
    
    9
    
    
    
    9
    
    
    
    9
    
    
    
    9Number of full and part-time employees
    
    
    252
    
    
    
    228
    
    
    
    221
    
    
    
    211
    
    
    
    196Number of Shareholders of Record
    
    
    681
    
    
    
    676
    
    
    
    639
    
    
    
    601
    
    
    
    632Capital Ratios:Average shareholders equity to average assets
    
    
    6.3
    %
    
    
    5.9
    %
    
    
    5.7
    %
    
    
    5.2
    %
    
    
    5.2
    %Equity to assets
    
    
    6.5
    %
    
    
    5.9
    %
    
    
    5.8
    %
    
    
    5.6
    %
    
    
    5.3
    %Total risk-based capital ratio (Bank only)
    
    
    10.5
    %
    
    
    10.6
    %
    
    
    10.7
    %
    
    
    10.9
    %
    
    
    10.5
    %
 (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.  24




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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,
2008, 2007, and 2006 and should be read in conjunction with the Corporations Consolidated
Financial Statements and Notes thereto included elsewhere herein.
 Overview
      25




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Results of Operations
 Year ended December 31, 2008, Compared to the Year Ended December 31, 2007, and the Year Ended
December 31, 2007, Compared to the Year Ended December 31, 2006.
  2008 compared with 2007
   2007 compared with 2006
     26




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Net Interest Income
  Year ended
    
    
    
    
    
    
    
    
    
    
    Year EndedDecember 31,
    
    
    
    
    
    
    
    
    
    
    December 31,2008
    
    
    2007
    
    
    $ Change
    
    
    % Change
    
    
    2007
    
    
    2006
    
    
    $ Change
    
    
    % ChangeInterest income:Interest and fees on loans
    
    $
    48,988
    
    
    $
    57,383
    
    
    $
    (8,395
    )
    
    
    -14.6
    %
    
    $
    57,383
    
    
    $
    52,724
    
    
    $
    4,659
    
    
    
    8.8
    %Interest on investment securities taxable
    
    
    4,489
    
    
    
    6,777
    
    
    
    (2,288
    )
    
    
    -33.8
    %
    
    
    6,777
    
    
    
    4,908
    
    
    
    1,869
    
    
    
    38.1
    %Interest on investment securities nontaxable
    
    
    2,047
    
    
    
    1,817
    
    
    
    230
    
    
    
    12.7
    %
    
    
    1,817
    
    
    
    1,782
    
    
    
    35
    
    
    
    2.0
    %Interest on federal funds sold
    
    
    706
    
    
    
    2,492
    
    
    
    (1,786
    )
    
    
    -71.7
    %
    
    
    2,492
    
    
    
    1,849
    
    
    
    643
    
    
    
    34.8
    %Interest on reverse repurchase agreements
    
    
    148
    
    
    
    411
    
    
    
    (263
    )
    
    
    -64.0
    %
    
    
    411
    
    
    
    112
    
    
    
    299
    
    
    
    267.0
    %Total interest income
    
    $
    56,378
    
    
    $
    68,880
    
    
    $
    (12,502
    )
    
    
    -18.2
    %
    
    $
    68,880
    
    
    $
    61,375
    
    
    $
    7,505
    
    
    
    12.2
    %Interest expense:Interest on deposits
    
    $
    17,979
    
    
    $
    30,847
    
    
    $
    (12,868
    )
    
    
    -41.7
    %
    
    $
    30,847
    
    
    $
    24,542
    
    
    $
    6,305
    
    
    
    25.7
    %Interest on repurchase agreements
    
    
    544
    
    
    
    2,078
    
    
    
    (1,534
    )
    
    
    -73.8
    %
    
    
    2,078
    
    
    
    2,128
    
    
    
    (50
    )
    
    
    -2.3
    %Interest on FHLB advances
    
    
    194
    
    
    
    463
    
    
    
    (269
    )
    
    
    -58.1
    %
    
    
    463
    
    
    
    1,028
    
    
    
    (565
    )
    
    
    -55.0
    %Interest on short term debt
    
    
    16
    
    
    
    
    
    
    
    16
    
    
    
    100.0
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.0
    %Interest on long term debt
    
    
    1,717
    
    
    
    1,875
    
    
    
    (158
    )
    
    
    -8.4
    %
    
    
    1,875
    
    
    
    1,866
    
    
    
    9
    
    
    
    0.5
    %Total interest expense
    
    $
    20,450
    
    
    $
    35,263
    
    
    $
    (14,813
    )
    
    
    -42.0
    %
    
    $
    35,263
    
    
    $
    29,564
    
    
    $
    5,699
    
    
    
    19.3
    %Net interest income
    
    $
    35,928
    
    
    $
    33,617
    
    
    $
    2,311
    
    
    
    6.9
    %
    
    $
    33,617
    
    
    $
    31,811
    
    
    $
    1,806
    
    
    
    5.7
    %
 2008 compared with 2007
    2007 compared with 2006
     27




---



##### Table of Contents



2008
    
    
    2007
    
    
    2006Interest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    AverageAverage
    
    
    Income/
    
    
    Rate/
    
    
    Average
    
    
    Income/
    
    
    Rate/
    
    
    Average
    
    
    Income/
    
    
    Rate/Balance
    
    
    Expense
    
    
    Yield
    
    
    Balance
    
    
    Expense
    
    
    Yield
    
    
    Balance
    
    
    Expense
    
    
    YieldAssets:Federal Funds
    
    $
    31,530
    
    
    $
    706
    
    
    
    2.24
    %
    
    $
    52,466
    
    
    $
    2,492
    
    
    
    4.75
    %
    
    $
    46,721
    
    
    $
    1,849
    
    
    
    3.96
    %Reverse Repurchase Agreements
    
    
    4,197
    
    
    
    148
    
    
    
    3.53
    %
    
    
    8,701
    
    
    
    411
    
    
    
    4.72
    %
    
    
    2,488
    
    
    
    112
    
    
    
    4.50
    %Non Taxable Investment Securities
    
    
    55,178
    
    
    
    2,047
    
    
    
    3.71
    %
    
    
    46,252
    
    
    
    1,817
    
    
    
    3.93
    %
    
    
    45,357
    
    
    
    1,782
    
    
    
    3.93
    %Taxable Investments Securities and Overnight Time
    
    
    119,230
    
    
    
    4,489
    
    
    
    3.76
    %
    
    
    154,957
    
    
    
    6,777
    
    
    
    4.37
    %
    
    
    130,426
    
    
    
    4,908
    
    
    
    3.76
    %Loans (gross)
    
    
    855,313
    
    
    
    48,988
    
    
    
    5.73
    %
    
    
    768,271
    
    
    
    57,383
    
    
    
    7.47
    %
    
    
    702,160
    
    
    
    52,724
    
    
    
    7.51
    %Total earning assets
    
    $
    1,065,448
    
    
    $
    56,378
    
    
    
    5.29
    %
    
    $
    1,030,647
    
    
    $
    68,880
    
    
    
    6.68
    %
    
    $
    927,152
    
    
    $
    61,375
    
    
    
    6.62
    %Non-earning assets
    
    
    63,335
    
    
    
    
    
    
    
    
    
    
    
    57,065
    
    
    
    
    
    
    
    
    
    
    
    45,223Total assets
    
    $
    1,128,783
    
    
    
    
    
    
    
    
    
    
    $
    1,087,712
    
    
    
    
    
    
    
    
    
    
    $
    972,375Liabilities:Interest bearing DDA
    
    $
    116,999
    
    
    $
    1,206
    
    
    
    1.03
    %
    
    $
    97,908
    
    
    $
    1,632
    
    
    
    1.67
    %
    
    $
    96,306
    
    
    $
    1,522
    
    
    
    1.58
    %Savings
    
    
    495,956
    
    
    
    9,698
    
    
    
    1.96
    %
    
    
    481,295
    
    
    
    19,589
    
    
    
    4.07
    %
    
    
    400,975
    
    
    
    16,171
    
    
    
    4.03
    %CDs under $100,000
    
    
    66,256
    
    
    
    2,547
    
    
    
    3.84
    %
    
    
    71,087
    
    
    
    3,378
    
    
    
    4.75
    %
    
    
    62,924
    
    
    
    2,664
    
    
    
    4.23
    %CDs over $100,000
    
    
    101,008
    
    
    
    3,806
    
    
    
    3.77
    %
    
    
    107,030
    
    
    
    5,415
    
    
    
    5.06
    %
    
    
    78,900
    
    
    
    3,549
    
    
    
    4.50
    %Individual Retirement Accounts
    
    
    18,737
    
    
    
    722
    
    
    
    3.85
    %
    
    
    17,618
    
    
    
    833
    
    
    
    4.73
    %
    
    
    15,068
    
    
    
    636
    
    
    
    4.22
    %Repurchase Agreements
    
    
    57,114
    
    
    
    544
    
    
    
    0.95
    %
    
    
    54,326
    
    
    
    2,078
    
    
    
    3.83
    %
    
    
    53,683
    
    
    
    2,128
    
    
    
    3.96
    %FHLB Advances/Other
    
    
    7,347
    
    
    
    194
    
    
    
    2.64
    %
    
    
    9,318
    
    
    
    463
    
    
    
    4.97
    %
    
    
    20,458
    
    
    
    1,028
    
    
    
    5.02
    %Revolving Line of Credit
    
    
    586
    
    
    
    16
    
    
    
    2.73
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Subordinated Debt
    
    
    5,000
    
    
    
    242
    
    
    
    4.84
    %
    
    
    5,000
    
    
    
    393
    
    
    
    7.86
    %
    
    
    5,000
    
    
    
    378
    
    
    
    7.56
    %Long Term Debt
    
    
    13,918
    
    
    
    1,475
    
    
    
    10.60
    %
    
    
    13,918
    
    
    
    1,482
    
    
    
    10.65
    %
    
    
    13,918
    
    
    
    1,488
    
    
    
    10.69
    %Total Interest Bearing Liabilities
    
    $
    882,921
    
    
    $
    20,450
    
    
    
    2.32
    %
    
    $
    857,500
    
    
    $
    35,263
    
    
    
    4.11
    %
    
    $
    747,232
    
    
    $
    29,564
    
    
    
    3.96
    %Non-Interest Bearing Liabilities
    
    
    167,121
    
    
    
    
    
    
    
    
    
    
    
    158,882
    
    
    
    
    
    
    
    
    
    
    
    163,465Other Liabilities
    
    
    7,921
    
    
    
    
    
    
    
    
    
    
    
    7,141
    
    
    
    
    
    
    
    
    
    
    
    6,136Total Liabilities
    
    $
    1,057,963
    
    
    
    
    
    
    
    
    
    
    $
    1,023,523
    
    
    
    
    
    
    
    
    
    
    $
    916,833Equity
    
    
    70,820
    
    
    
    
    
    
    
    
    
    
    
    64,189
    
    
    
    
    
    
    
    
    
    
    
    55,542Total Liabilities & Equity
    
    $
    1,128,783
    
    
    
    
    
    
    
    
    
    
    $
    1,087,712
    
    
    
    
    
    
    
    
    
    
    $
    972,375Recap:Interest Income
    
    
    
    
    
    $
    56,378
    
    
    
    5.29
    %
    
    
    
    
    
    $
    68,880
    
    
    
    6.68
    %
    
    
    
    
    
    $
    61,375
    
    
    
    6.62
    %Interest Expense
    
    
    
    
    
    
    20,450
    
    
    
    2.32
    %
    
    
    
    
    
    
    35,263
    
    
    
    4.11
    %
    
    
    
    
    
    
    29,564
    
    
    
    3.96
    %Net Interest Income/Spread
    
    
    
    
    
    $
    35,928
    
    
    
    2.97
    %
    
    
    
    
    
    $
    33,617
    
    
    
    2.57
    %
    
    
    
    
    
    $
    31,811
    
    
    
    2.66
    %Contribution of Non-Interest Bearing Funds
    
    
    
    
    
    
    
    
    
    
    0.40
    %
    
    
    
    
    
    
    
    
    
    
    0.69
    %
    
    
    
    
    
    
    
    
    
    
    0.77
    %Net Interest Margin
    
    
    
    
    
    
    
    
    
    
    3.37
    %
    
    
    
    
    
    
    
    
    
    
    3.26
    %
    
    
    
    
    
    
    
    
    
    
    3.43
    %
   28




---



##### Table of Contents



Net Interest Income Changes Due to Volume and Rates (in 000s):
 2008 Changes from 2007
    
    
    2007 Changes from 2006
    
    
    2006 Changes from 2005Net
    
    
    Due to
    
    
    Due to
    
    
    Net
    
    
    Due to
    
    
    Due to
    
    
    Net
    
    
    Due to
    
    
    Due toChange
    
    
    Rate
    
    
    Volume
    
    
    Change
    
    
    Rate
    
    
    Volume
    
    
    Change
    
    
    Rate
    
    
    VolumeInterest earning assets:Federal funds sold
    
    $
    (1,786
    )
    
    $
    (1,317
    )
    
    $
    (469
    )
    
    $
    643
    
    
    $
    370
    
    
    $
    273
    
    
    $
    558
    
    
    $
    431
    
    
    $
    127Reverse repurchase agreements
    
    
    (263
    )
    
    $
    (104
    )
    
    $
    (159
    )
    
    
    299
    
    
    
    6
    
    
    
    293
    
    
    
    (34
    )
    
    
    79
    
    
    
    (113
    )Non Taxable Investment Securities
    
    
    230
    
    
    $
    (102
    )
    
    $
    332
    
    
    
    35
    
    
    
    (0
    )
    
    
    35
    
    
    
    1,354
    
    
    
    (44
    )
    
    
    1,398Taxable Investments Securities and Overnight Time
    
    
    (2,288
    )
    
    $
    (945
    )
    
    $
    (1,343
    )
    
    
    1,869
    
    
    
    796
    
    
    
    1,073
    
    
    
    (818
    )
    
    
    942
    
    
    
    (1,760
    )Loans
    
    
    (8,395
    )
    
    $
    (13,368
    )
    
    $
    4,973
    
    
    
    4,659
    
    
    
    (279
    )
    
    
    4,938
    
    
    
    9,468
    
    
    
    6,927
    
    
    
    2,541TOTAL
    
    
    (12,502
    )
    
    
    (15,836
    )
    
    
    3,334
    
    
    
    7,505
    
    
    
    893
    
    
    
    6,612
    
    
    
    10,528
    
    
    
    8,335
    
    
    
    2,193Interest bearing liabilities:Demand deposits
    
    $
    (426
    )
    
    $
    (627
    )
    
    $
    201
    
    
    $
    110
    
    
    $
    83
    
    
    $
    27
    
    
    $
    446
    
    
    $
    419
    
    
    $
    27Savings deposits
    
    
    (9,891
    )
    
    $
    (10,155
    )
    
    $
    264
    
    
    
    3,418
    
    
    
    149
    
    
    
    3,269
    
    
    
    5,280
    
    
    
    5,327
    
    
    
    (47
    )CDs under $100,000
    
    
    (831
    )
    
    $
    (647
    )
    
    $
    (184
    )
    
    
    714
    
    
    
    326
    
    
    
    388
    
    
    
    777
    
    
    
    521
    
    
    
    256CDs over $100,000
    
    
    (1,609
    )
    
    $
    (1,381
    )
    
    $
    (228
    )
    
    
    1,866
    
    
    
    443
    
    
    
    1,423
    
    
    
    1,744
    
    
    
    648
    
    
    
    1,096Individual retirement accounts
    
    
    (111
    )
    
    $
    (155
    )
    
    $
    44
    
    
    
    197
    
    
    
    76
    
    
    
    121
    
    
    
    185
    
    
    
    109
    
    
    
    76Repurchase agreements
    
    
    (1,534
    )
    
    $
    (1,565
    )
    
    $
    31
    
    
    
    (50
    )
    
    
    (75
    )
    
    
    25
    
    
    
    600
    
    
    
    936
    
    
    
    (336
    )FHLB Advances
    
    
    (269
    )
    
    $
    (217
    )
    
    $
    (52
    )
    
    
    (565
    )
    
    
    (11
    )
    
    
    (554
    )
    
    
    (469
    )
    
    
    (31
    )
    
    
    (438
    )Revolving line of credit
    
    
    16
    
    
    $
    
    
    
    $
    16
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Subordinated Debt
    
    
    (151
    )
    
    $
    (151
    )
    
    $
    
    
    
    
    15
    
    
    
    15
    
    
    
    
    
    
    
    95
    
    
    
    95
    
    
    
    Long term debt
    
    
    (7
    )
    
    $
    (7
    )
    
    $
    
    
    
    
    (6
    )
    
    
    (6
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    TOTAL
    
    $
    (14,813
    )
    
    $
    (14,905
    )
    
    $
    92
    
    
    $
    5,699
    
    
    $
    1,000
    
    
    $
    4,699
    
    
    $
    8,658
    
    
    $
    8,024
    
    
    $
    634Net change in Net Interest Income
    
    $
    2,311
    
    
    $
    (931
    )
    
    $
    3,242
    
    
    $
    1,806
    
    
    $
    (107
    )
    
    $
    1,913
    
    
    $
    1,870
    
    
    $
    311
    
    
    $
    1,559
   29




---



##### Table of Contents



Provision for Loan Losses
  Year EndedDecember 31,2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004Beginning of Period
    
    $
    9,452,715
    
    
    $
    8,513,098
    
    
    $
    8,346,390
    
    
    $
    7,795,803
    
    
    $
    8,029,596Provision for loan losses
    
    
    7,400,000
    
    
    
    904,000
    
    
    
    1,086,000
    
    
    
    2,085,000
    
    
    
    1,320,000Losses charged to the reserveCommercial
    
    
    1,697,408
    
    
    
    228,294
    
    
    
    1,093,579
    
    
    
    1,317,743
    
    
    
    1,133,994Construction
    
    
    668,648
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial Mortgage
    
    
    505,770
    
    
    
    
    
    
    
    191,292
    
    
    
    
    
    
    
    Residential Mortgage
    
    
    1,359,555
    
    
    
    600,423
    
    
    
    121,433
    
    
    
    447,182
    
    
    
    280,394Consumer
    
    
    63,947
    
    
    
    49,980
    
    
    
    50,474
    
    
    
    5,070
    
    
    
    132,993Credit Cards
    
    
    97,331
    
    
    
    3,968
    
    
    
    28,463
    
    
    
    50,125
    
    
    
    65,4214,392,659
    
    
    
    882,665
    
    
    
    1,485,241
    
    
    
    1,820,120
    
    
    
    1,612,802RecoveriesCommercial
    
    
    187,189
    
    
    
    814,250
    
    
    
    412,028
    
    
    
    258,920
    
    
    
    16,247Residential Mortgage
    
    
    174,021
    
    
    
    67,010
    
    
    
    153,888
    
    
    
    26,000
    
    
    
    26,836Consumer
    
    
    600
    
    
    
    6,465
    
    
    
    
    
    
    
    787
    
    
    
    12,354Credit Cards
    
    
    25,410
    
    
    
    30,557
    
    
    
    33
    
    
    
    
    
    
    
    3,572387,220
    
    
    
    918,282
    
    
    
    565,949
    
    
    
    285,707
    
    
    
    59,009End of Period
    
    $
    12,847,276
    
    
    $
    9,452,715
    
    
    $
    8,513,098
    
    
    $
    8,346,390
    
    
    $
    7,795,803Allowance as a % of Loans
    
    
    1.42
    %
    
    
    1.14
    %
    
    
    1.14
    %
    
    
    1.22
    %
    
    
    1.19
    %
 2008 compared with 2007
  2007 compared with 2006
   30




---



##### Table of Contents



Other Operating Income
  Year ended
    
    
    
    
    
    
    
    
    
    
    Year endedDecember 31
    
    
    $
    
    
    %
    
    
    December 31
    
    
    $
    
    
    %2008
    
    
    2007
    
    
    Change
    
    
    Change
    
    
    2007
    
    
    2006
    
    
    Change
    
    
    ChangeWealth management
    
    $
    5,048
    
    
    $
    4,547
    
    
    $
    501
    
    
    
    11.0
    %
    
    $
    4,547
    
    
    $
    3,716
    
    
    $
    831
    
    
    
    22.4
    %Service charges and fees on deposit accounts
    
    
    2,484
    
    
    
    1,818
    
    
    
    666
    
    
    
    36.6
    %
    
    
    1,818
    
    
    
    1,713
    
    
    $
    105
    
    
    
    6.1
    %Building rental income
    
    
    575
    
    
    
    597
    
    
    
    (22
    )
    
    
    -3.7
    %
    
    
    597
    
    
    
    451
    
    
    $
    146
    
    
    
    32.4
    %Mortgage banking income
    
    
    144
    
    
    
    392
    
    
    
    (248
    )
    
    
    -63.3
    %
    
    
    392
    
    
    
    332
    
    
    $
    60
    
    
    
    18.1
    %Interchange income
    
    
    877
    
    
    
    678
    
    
    
    199
    
    
    
    29.4
    %
    
    
    678
    
    
    
    789
    
    
    $
    (111
    )
    
    
    -14.1
    %Other
    
    
    2,076
    
    
    
    1,802
    
    
    
    274
    
    
    
    15.2
    %
    
    
    1,802
    
    
    
    1,355
    
    
    $
    447
    
    
    
    33.0
    %Total operating income
    
    $
    11,204
    
    
    $
    9,834
    
    
    $
    1,370
    
    
    
    13.9
    %
    
    $
    9,834
    
    
    $
    8,356
    
    
    $
    1,478
    
    
    
    17.7
    %
 2008 compared with 2007
        31




---



##### Table of Contents



2007 compared with 2006
      Accounting for Servicing of Financial Assets
    32




---



##### Table of Contents



Other Operating Expenses
  Year Ended
    
    
    
    
    
    
    
    
    
    
    Year EndedDecember 31,
    
    
    $
    
    
    %
    
    
    December 31,
    
    
    $
    
    
    %2008
    
    
    2007
    
    
    Change
    
    
    Change
    
    
    2007
    
    
    2006
    
    
    Change
    
    
    ChangeSalaries, wages and employee benefits
    
    $
    19,172
    
    
    $
    19,098
    
    
    $
    74
    
    
    
    0.4
    %
    
    $
    19,098
    
    
    $
    18,011
    
    
    $
    1,087
    
    
    
    6.0
    %Occupancy
    
    
    2,081
    
    
    
    1,791
    
    
    
    290
    
    
    
    16.2
    %
    
    
    1,791
    
    
    
    1,735
    
    
    $
    56
    
    
    
    3.2
    %Furniture and equipment
    
    
    1,428
    
    
    
    1,241
    
    
    
    187
    
    
    
    15.1
    %
    
    
    1,241
    
    
    
    1,182
    
    
    $
    59
    
    
    
    5.0
    %Professional services
    
    
    1,971
    
    
    
    1,800
    
    
    
    171
    
    
    
    9.5
    %
    
    
    1,800
    
    
    
    1,447
    
    
    $
    353
    
    
    
    24.4
    %Data processing
    
    
    2,024
    
    
    
    1,775
    
    
    
    249
    
    
    
    14.0
    %
    
    
    1,775
    
    
    
    1,678
    
    
    $
    97
    
    
    
    5.8
    %Business development
    
    
    1,527
    
    
    
    1,292
    
    
    
    235
    
    
    
    18.2
    %
    
    
    1,292
    
    
    
    1,176
    
    
    $
    116
    
    
    
    9.8
    %FDIC insurance
    
    
    918
    
    
    
    99
    
    
    
    819
    
    
    
    827.3
    %
    
    
    99
    
    
    
    97
    
    
    $
    2
    
    
    
    2.1
    %Other
    
    
    5,585
    
    
    
    3,704
    
    
    
    1,881
    
    
    
    50.8
    %
    
    
    3,704
    
    
    
    3,269
    
    
    $
    435
    
    
    
    13.3
    %Total other operating expenses
    
    $
    34,706
    
    
    $
    30,800
    
    
    $
    3,906
    
    
    
    12.7
    %
    
    $
    30,800
    
    
    $
    28,595
    
    
    $
    2,205
    
    
    
    7.7
    %
 2008 compared with 2007
  Accounting for Nonrefundable Fees and Costs Associated with Originating or Acquiring Loans and
Initial Direct Costs of Leases
     33




---



##### Table of Contents



2007 compared with 2006
   th
    34




---



##### Table of Contents



Tax (Benefit)/Expense
  2008
    
    
    2007
    
    
    2006Current tax expense
    
    $
    3,154,546
    
    
    $
    4,181,281
    
    
    $
    3,826,638Deferred tax benefit
    
    
    (1,912,957
    )
    
    
    (325,232
    )
    
    
    (325,702
    )$
    1,241,589
    
    
    $
    3,856,049
    
    
    $
    3,500,936Effective tax rate
    
    
    24.71
    %
    
    
    32.83
    %
    
    
    33.39
    %
    35




---



##### Table of Contents



2008
    
    
    2007Deferred tax assets:Allowance for loan losses
    
    $
    5,024,733
    
    
    $
    3,744,220Equity based compensation
    
    
    1,193,410
    
    
    
    685,365Accrued contingencies
    
    
    391,113
    
    
    
    Other
    
    
    508,038
    
    
    
    477,572Total deferred tax assets
    
    
    7,117,294
    
    
    
    4,907,157Deferred tax liabilities:Mortgage servicing rights
    
    
    (418,414
    )
    
    
    (533,937
    )Net unrealized gain or securities
    
    
    (537,310
    )
    
    
    (297,832
    )Other
    
    
    (412,703
    )
    
    
    (3,798
    )Total deferred tax liabilities
    
    
    (1,368,427
    )
    
    
    (835,567
    )Net deferred tax assets
    
    $
    5,748,867
    
    
    $
    4,071,590
 Effects of Inflation
   Liquidity and Interest Rate Sensitivity
  th th th
  36




---



##### Table of Contents



37




---



##### Table of Contents



2008
    
    
    2007
    
    
    2006U.S. Treasuries
    
    
    3.59
    %
    
    
    4.81
    %
    
    
    4.33
    %U.S. Government agencies
    
    
    4.32
    %
    
    
    4.25
    %
    
    
    3.50
    %Collateralized mortgage obligations
    
    
    3.46
    %
    
    
    3.50
    %
    
    
    3.44
    %Municipals
    
    
    5.61
    %
    
    
    5.79
    %
    
    
    5.82
    %Other securities
    
    
    2.78
    %
    
    
    4.91
    %
    
    
    5.03
    %
   38




---



##### Table of Contents



Available-for-Sale SecuritiesGross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gain
    
    
    Loss
    
    
    ValueDecember 31, 2008U.S. Treasury securities
    
    $
    493,997
    
    
    $
    5,203
    
    
    $
    
    
    
    $
    499,200U.S. Government-sponsored entities
    
    
    55,109,406
    
    
    
    1,368,595
    
    
    
    
    
    
    
    56,478,001$
    55,603,403
    
    
    $
    1,373,798
    
    
    $
    
    
    
    $
    56,977,201December 31, 2007U.S. Treasury securities
    
    $
    1,503,530
    
    
    $
    10,100
    
    
    $
    
    
    
    $
    1,513,630U.S. Government-sponsored entities
    
    
    60,000,000
    
    
    
    889,799
    
    
    
    138,400
    
    
    
    60,751,399Collateralized mortgage obligations
    
    
    2,881
    
    
    
    
    
    
    
    
    
    
    
    2,881$
    61,506,411
    
    
    $
    899,899
    
    
    $
    138,400
    
    
    $
    62,267,910December 31, 2006U.S. Treasury securities
    
    $
    1,495,336
    
    
    $
    
    
    
    $
    981
    
    
    $
    1,494,355U.S. Government-sponsored entities
    
    
    60,000,000
    
    
    
    
    
    
    
    720,799
    
    
    
    59,279,201Collateralized mortgage obligations
    
    
    16,659
    
    
    
    7
    
    
    
    
    
    
    
    16,666$
    61,511,995
    
    
    $
    7
    
    
    $
    721,780
    
    
    $
    60,790,222
 Held-to-Maturity SecuritiesGross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrecognized
    
    
    Unrecognized
    
    
    FairCost
    
    
    Gain
    
    
    Loss
    
    
    ValueDecember 31, 2008Municipals
    
    $
    56,873,446
    
    
    $
    213,348
    
    
    $
    799,408
    
    
    $
    56,287,386Collateralized mortgage obligations
    
    
    8,825,025
    
    
    
    11,364
    
    
    
    146
    
    
    
    8,836,243Mortgage backed securities
    
    
    17,693,370
    
    
    
    45,330
    
    
    
    66,325
    
    
    
    17,672,375Other securities
    
    
    175,000
    
    
    
    
    
    
    
    1
    
    
    
    174,999$
    83,566,841
    
    
    $
    270,042
    
    
    $
    865,880
    
    
    $
    82,971,003December 31, 2007Municipals
    
    $
    46,256,605
    
    
    $
    553,799
    
    
    $
    11,623
    
    
    $
    46,798,781Collateralized mortgage obligations
    
    
    20,534,718
    
    
    
    
    
    
    
    209,170
    
    
    
    20,325,548Mortgage backed securities
    
    
    4,764,589
    
    
    
    
    
    
    
    53,400
    
    
    
    4,711,189Other securities
    
    
    200,000
    
    
    
    
    
    
    
    596
    
    
    
    199,404$
    71,755,912
    
    
    $
    553,799
    
    
    $
    274,789
    
    
    $
    72,034,922December 31, 2006Municipals
    
    $
    46,247,490
    
    
    $
    247,212
    
    
    $
    211,345
    
    
    $
    46,283,357Collateralized mortgage obligations
    
    
    33,718,838
    
    
    
    
    
    
    
    727,254
    
    
    
    32,991,584Mortgage backed securities
    
    
    6,005,905
    
    
    
    
    
    
    
    225,112
    
    
    
    5,780,793Other securities
    
    
    225,000
    
    
    
    1,182
    
    
    
    2,325
    
    
    
    223,857$
    86,197,233
    
    
    $
    248,394
    
    
    $
    1,166,036
    
    
    $
    85,279,591
    39




---



##### Table of Contents



Available-for-Sale SecuritiesWeighted-Within
    
    
    1 to 5
    
    
    5 to 15
    
    
    
    
    
    
    Average1 Year
    
    
    Years
    
    
    Years
    
    
    Total
    
    
    YieldU.S. Treasury securities
    
    $
    499,200
    
    
    $
    
    
    
    $
    
    
    
    $
    499,200
    
    
    
    2.10
    %U.S.
Government-sponsored
entities
    
    $
    51,240,501
    
    
    $
    5,237,500
    
    
    $
    
    
    
    $
    56,478,001
    
    
    
    4.47
    %Fair value
    
    $
    51,739,701
    
    
    $
    5,237,500
    
    
    $
    
    
    
    $
    56,977,201Weighted-average yield
    
    
    4.60
    %
    
    
    2.95
    %
    
    
    
    
    
    
    4.45
    %
 Held-to-Maturity SecuritiesWeighted-Within
    
    
    1 to 5
    
    
    5 to 15
    
    
    
    
    
    
    Average1 Year
    
    
    Years
    
    
    Years
    
    
    Total
    
    
    YieldMunicipals
    
    $
    2,563,864
    
    
    $
    14,829,103
    
    
    $
    39,480,479
    
    
    $
    56,873,446
    
    
    
    3.61
    %Collateralized mortgage
obligations
    
    $
    8,825,025
    
    
    $
    
    
    
    $
    
    
    
    $
    8,825,025
    
    
    
    4.34
    %Mortgage backed securities
    
    $
    10,737,665
    
    
    $
    6,890,699
    
    
    $
    65,006
    
    
    $
    17,693,370
    
    
    
    3.54
    %Other securities
    
    $
    50,000
    
    
    $
    125,000
    
    
    
    
    
    
    $
    175,000
    
    
    
    4.33
    %Amortized cost
    
    $
    22,176,554
    
    
    $
    21,844,802
    
    
    $
    39,545,485
    
    
    $
    83,566,841Weighted-average yield
    
    
    3.65
    %
    
    
    3.52
    %
    
    
    3.82
    %
    
    
    3.70
    %
   40




---



##### Table of Contents



December 31,2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % ofAmount
    
    
    Total
    
    
    Amount
    
    
    Total
    
    
    Amount
    
    
    Total
    
    
    Amount
    
    
    Total
    
    
    Amount
    
    
    TotalTYPES OF LOANSCommercial
    
    $
    307,409
    
    
    
    34.0
    %
    
    $
    279,109
    
    
    
    33.6
    %
    
    $
    253,745
    
    
    
    33.9
    %
    
    $
    234,216
    
    
    
    34.3
    %
    
    $
    221,882
    
    
    
    33.6
    %Construction
    
    
    83,904
    
    
    
    9.3
    %
    
    
    82,581
    
    
    
    9.9
    %
    
    
    57,083
    
    
    
    7.7
    %
    
    
    50,173
    
    
    
    7.3
    %
    
    
    37,119
    
    
    
    5.7
    %Commercial Mortgage
    
    
    217,445
    
    
    
    24.0
    %
    
    
    175,027
    
    
    
    21.1
    %
    
    
    164,256
    
    
    
    22.1
    %
    
    
    156,108
    
    
    
    22.8
    %
    
    
    141,596
    
    
    
    21.6
    %Residential Mortgage
    
    
    260,272
    
    
    
    28.8
    %
    
    
    243,015
    
    
    
    29.3
    %
    
    
    217,170
    
    
    
    29.2
    %
    
    
    196,045
    
    
    
    28.6
    %
    
    
    206,599
    
    
    
    31.5
    %Consumer
    
    
    31,833
    
    
    
    3.5
    %
    
    
    47,550
    
    
    
    5.7
    %
    
    
    49,575
    
    
    
    6.7
    %
    
    
    45,188
    
    
    
    6.6
    %
    
    
    40,534
    
    
    
    6.2
    %Credit Cards
    
    
    3,344
    
    
    
    0.4
    %
    
    
    3,046
    
    
    
    0.4
    %
    
    
    2,709
    
    
    
    0.4
    %
    
    
    2,737
    
    
    
    0.4
    %
    
    
    2,480
    
    
    
    0.4
    %Other
    
    
    
    
    
    
    0.0
    %
    
    
    
    
    
    
    0.0
    %
    
    
    
    
    
    
    0.0
    %
    
    
    20
    
    
    
    0.0
    %
    
    
    6,243
    
    
    
    1.0
    %Total  Gross
    
    $
    904,207
    
    
    
    100.0
    %
    
    $
    830,328
    
    
    
    100.0
    %
    
    $
    744,538
    
    
    
    100.0
    %
    
    $
    684,487
    
    
    
    100.0
    %
    
    $
    656,453
    
    
    
    100.0
    %Allowance
    
    
    (12,847
    )
    
    
    
    
    
    
    (9,453
    )
    
    
    
    
    
    
    (8,513
    )
    
    
    
    
    
    
    (8,346
    )
    
    
    
    
    
    
    (7,796
    )Total  Net
    
    $
    891,360
    
    
    
    
    
    
    $
    820,875
    
    
    
    
    
    
    $
    736,025
    
    
    
    
    
    
    $
    676,141
    
    
    
    
    
    
    $
    648,657
  December 31,2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004Type
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %Agriculture, Foresty & Fishing
    
    $
    369
    
    
    
    0.1
    %
    
    $
    307
    
    
    
    0.1
    %
    
    $
    355
    
    
    
    0.1
    %
    
    $
    1,136
    
    
    
    0.5
    %
    
    $
    258
    
    
    
    0.1
    %Mining
    
    
    6,947
    
    
    
    2.3
    %
    
    
    5,136
    
    
    
    1.8
    %
    
    
    5,123
    
    
    
    2.0
    %
    
    
    2,574
    
    
    
    1.1
    %
    
    
    2,615
    
    
    
    1.2
    %Utilities
    
    
    31
    
    
    
    0.0
    %
    
    
    28
    
    
    
    0.0
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Construction
    
    
    14,417
    
    
    
    4.7
    %
    
    
    10,885
    
    
    
    3.9
    %
    
    
    9,367
    
    
    
    3.7
    %
    
    
    9,527
    
    
    
    4.1
    %
    
    
    13,417
    
    
    
    6.1
    %Manufacturing
    
    
    38,979
    
    
    
    12.7
    %
    
    
    43,067
    
    
    
    15.4
    %
    
    
    46,982
    
    
    
    18.5
    %
    
    
    37,988
    
    
    
    16.2
    %
    
    
    30,371
    
    
    
    13.7
    %Wholesale Trade
    
    
    37,627
    
    
    
    12.2
    %
    
    
    40,889
    
    
    
    14.6
    %
    
    
    30,421
    
    
    
    12.0
    %
    
    
    30,850
    
    
    
    13.2
    %
    
    
    28,380
    
    
    
    12.8
    %Retail Trade
    
    
    6,025
    
    
    
    2.0
    %
    
    
    7,257
    
    
    
    2.6
    %
    
    
    7,090
    
    
    
    2.8
    %
    
    
    4,330
    
    
    
    1.9
    %
    
    
    2,599
    
    
    
    1.2
    %Transportation
    
    
    18,045
    
    
    
    5.9
    %
    
    
    16,635
    
    
    
    6.0
    %
    
    
    9,617
    
    
    
    3.8
    %
    
    
    7,793
    
    
    
    3.3
    %
    
    
    9,280
    
    
    
    4.2
    %Information
    
    
    123
    
    
    
    0.0
    %
    
    
    140
    
    
    
    0.0
    %
    
    
    606
    
    
    
    0.2
    %
    
    
    945
    
    
    
    0.4
    %
    
    
    1,141
    
    
    
    0.5
    %Finance & Insurance
    
    
    10,667
    
    
    
    3.5
    %
    
    
    6,866
    
    
    
    2.5
    %
    
    
    5,050
    
    
    
    2.0
    %
    
    
    3,845
    
    
    
    1.6
    %
    
    
    3,934
    
    
    
    1.8
    %Real Estate and Rental & Leasing
    
    
    58,624
    
    
    
    18.9
    %
    
    
    44,657
    
    
    
    16.0
    %
    
    
    52,833
    
    
    
    20.8
    %
    
    
    47,627
    
    
    
    20.2
    %
    
    
    41,241
    
    
    
    18.4
    %Professional, Scientific & Technical Services
    
    
    39,809
    
    
    
    13.0
    %
    
    
    37,345
    
    
    
    13.4
    %
    
    
    30,146
    
    
    
    11.9
    %
    
    
    31,565
    
    
    
    13.5
    %
    
    
    30,726
    
    
    
    13.9
    %Management of Companies & Enterprises
    
    
    2,521
    
    
    
    0.8
    %
    
    
    2,652
    
    
    
    1.0
    %
    
    
    3,928
    
    
    
    1.6
    %
    
    
    1,576
    
    
    
    0.7
    %
    
    
    2,199
    
    
    
    1.0
    %Administrative and Support, Waste Management &
Remediation Services
    
    
    2,367
    
    
    
    0.8
    %
    
    
    2,428
    
    
    
    0.9
    %
    
    
    2,453
    
    
    
    1.0
    %
    
    
    1,476
    
    
    
    0.6
    %
    
    
    
    
    
    
    Educational Services
    
    
    4,919
    
    
    
    1.6
    %
    
    
    4,270
    
    
    
    1.5
    %
    
    
    5,160
    
    
    
    2.0
    %
    
    
    4,384
    
    
    
    1.9
    %
    
    
    4,158
    
    
    
    1.9
    %Health Care & Social Assistance
    
    
    32,063
    
    
    
    10.4
    %
    
    
    26,264
    
    
    
    9.4
    %
    
    
    25,160
    
    
    
    9.9
    %
    
    
    19,494
    
    
    
    8.3
    %
    
    
    20,548
    
    
    
    9.3
    %Arts, Entertainment & Recreation
    
    
    3,013
    
    
    
    1.0
    %
    
    
    2,093
    
    
    
    0.8
    %
    
    
    1,678
    
    
    
    0.7
    %
    
    
    1,759
    
    
    
    0.8
    %
    
    
    5,333
    
    
    
    2.4
    %Accommodation & Food Services
    
    
    3,627
    
    
    
    1.2
    %
    
    
    3,908
    
    
    
    1.4
    %
    
    
    6,777
    
    
    
    2.7
    %
    
    
    6,842
    
    
    
    2.9
    %
    
    
    6,956
    
    
    
    3.1
    %Other Services
    
    
    27,236
    
    
    
    8.9
    %
    
    
    24,282
    
    
    
    8.7
    %
    
    
    10,999
    
    
    
    4.3
    %
    
    
    20,505
    
    
    
    8.8
    %
    
    
    18,726
    
    
    
    8.4
    %$
    307,409
    
    
    
    100.0
    %
    
    $
    279,109
    
    
    
    100.0
    %
    
    $
    253,745
    
    
    
    100.0
    %
    
    $
    234,216
    
    
    
    100.0
    %
    
    $
    221,882
    
    
    
    100.0
    %
  41




---



##### Table of Contents



December 31,2008
    
    
    2007
    
    
    2006% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % ofAmount
    
    
    Total
    
    
    Amount
    
    
    Total
    
    
    Amount
    
    
    TotalTYPES OF DEPOSITSDemand
    
    $
    178,656
    
    
    
    23.75
    %
    
    $
    180,590
    
    
    
    22.30
    %
    
    $
    181,954
    
    
    
    26.47
    %MMDA/Savings
    
    
    573,679
    
    
    
    76.25
    %
    
    
    629,342
    
    
    
    77.70
    %
    
    
    505,314
    
    
    
    73.53
    %Total Demand Deposits
    
    
    752,335
    
    
    
    100.00
    %
    
    
    809,932
    
    
    
    100.00
    %
    
    
    687,268
    
    
    
    100.00
    %CDs < $100,000
    
    
    63,590
    
    
    
    29.77
    %
    
    
    71,503
    
    
    
    36.70
    %
    
    
    67,582
    
    
    
    35.98
    %CDs > $100,000
    
    
    131,425
    
    
    
    61.52
    %
    
    
    104,238
    
    
    
    53.50
    %
    
    
    103,782
    
    
    
    55.26
    %Individual Retirement Accounts
    
    
    18,615
    
    
    
    8.71
    %
    
    
    19,089
    
    
    
    9.80
    %
    
    
    16,452
    
    
    
    8.76
    %Total Certificates of Deposit
    
    
    213,630
    
    
    
    100.00
    %
    
    
    194,830
    
    
    
    100.00
    %
    
    
    187,816
    
    
    
    100.00
    %Total Deposits
    
    $
    965,965
    
    
    
    
    
    
    $
    1,004,762
    
    
    
    
    
    
    $
    875,084
  42




---



##### Table of Contents



Gap Repricing Schedule
 0  180
    
    
    181  365
    
    
    1  2
    
    
    2  3
    
    
    3  5
    
    
    5 +
    
    
    Non-interestdays
    
    
    days
    
    
    years
    
    
    years
    
    
    years
    
    
    years
    
    
    Earning
    
    
    TotalInterest Earning Assets:Fed Funds/ Overnight Time
    
    $
    671,050
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    671,050Reverse repurchase agreements
    
    
    1,000,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000,000Investments
    
    
    23,546,362
    
    
    
    50,369,893
    
    
    
    19,038,332
    
    
    
    5,419,120
    
    
    
    2,624,850
    
    
    
    39,545,485
    
    
    
    
    
    
    
    140,544,042Federal reserve and FHLB stock
    
    
    2,188,400
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    961,500
    
    
    
    
    
    
    
    3,149,900LoansCommercial & IndustrialFixed
    
    
    22,317,250
    
    
    
    6,832,025
    
    
    
    11,349,090
    
    
    
    14,996,406
    
    
    
    21,187,980
    
    
    
    6,518,320
    
    
    
    67,890
    
    
    
    83,268,961Variable
    
    
    218,655,113
    
    
    
    156,649
    
    
    
    217,475
    
    
    
    1,685,449
    
    
    
    64,605
    
    
    
    
    
    
    
    3,361,188
    
    
    
    224,140,479Construction
    
    
    61,777,690
    
    
    
    3,536
    
    
    
    7,445
    
    
    
    200,062
    
    
    
    
    
    
    
    775,523
    
    
    
    
    
    
    
    62,764,256Commercial Loans Secured by Real EstateFixed
    
    
    15,775,555
    
    
    
    7,322,099
    
    
    
    25,997,916
    
    
    
    22,818,097
    
    
    
    34,494,964
    
    
    
    23,440,450
    
    
    
    1,260,363
    
    
    
    131,109,444Variable
    
    
    72,524,514
    
    
    
    237,999
    
    
    
    4,754,639
    
    
    
    5,260,024
    
    
    
    1,733,661
    
    
    
    
    
    
    
    1,824,347
    
    
    
    86,335,184Residential Loans Secured by Real EstateFixed
    
    
    53,193,189
    
    
    
    27,320,306
    
    
    
    24,845,257
    
    
    
    8,307,230
    
    
    
    4,528,813
    
    
    
    321,695
    
    
    
    1,216,471
    
    
    
    119,732,961Variable
    
    
    130,837,923
    
    
    
    9,821,329
    
    
    
    6,442,621
    
    
    
    6,108,819
    
    
    
    7,037,704
    
    
    
    908,040
    
    
    
    522,229
    
    
    
    161,678,665OtherFixed
    
    
    1,633,693
    
    
    
    915,843
    
    
    
    1,668,231
    
    
    
    1,430,537
    
    
    
    2,509,905
    
    
    
    3,546
    
    
    
    17,010
    
    
    
    8,178,765Variable
    
    
    26,494,480
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    503,869
    
    
    
    26,998,349Total Interest Earning Assets
    
    $
    630,615,219
    
    
    $
    102,979,679
    
    
    $
    94,321,006
    
    
    $
    66,225,744
    
    
    $
    74,182,482
    
    
    $
    72,474,559
    
    
    $
    8,773,367
    
    
    $
    1,049,572,056Non-Interest Earning Assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    68,212,386
    
    
    
    68,212,386Total Assets
    
    $
    630,615,219
    
    
    $
    102,979,679
    
    
    $
    94,321,006
    
    
    $
    66,225,744
    
    
    $
    74,182,482
    
    
    $
    72,474,559
    
    
    $
    76,985,753
    
    
    $
    1,117,784,442Interest Bearing Liabilities:Demand Deposits
    
    $
    10,633,739
    
    
    $
    10,042,034
    
    
    $
    18,355,482
    
    
    $
    16,270,022
    
    
    $
    27,204,502
    
    
    $
    95,951,602
    
    
    $
    198,681
    
    
    $
    178,656,062Interest Bearing Demand
    
    
    129,129,106
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    129,129,106Savings Deposits
    
    
    15,437,759
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,437,759Money Market Accounts
    
    
    429,111,782
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    429,111,782Certificate of Deposits
    
    
    38,714,681
    
    
    
    23,353,147
    
    
    
    7,086,813
    
    
    
    2,713,008
    
    
    
    3,478,433
    
    
    
    1,471,112
    
    
    
    
    
    
    
    76,817,194Jumbo CDs
    
    
    81,405,201
    
    
    
    39,078,178
    
    
    
    10,045,980
    
    
    
    3,018,805
    
    
    
    2,465,232
    
    
    
    800,170
    
    
    
    
    
    
    
    136,813,566Repurchase Agreements
    
    
    51,146,454
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    51,146,454Revolving line of credit
    
    
    4,200,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,200,000Subordinated Debt
    
    
    5,000,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,000,000Company obligated mandatorily redeemable
preferred capital securities of subsidiary
trust holding solely the junior subordinated
debentures of the parent company
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,918,000
    
    
    
    
    
    
    
    13,918,000Total Interest Bearing Liabilities
    
    $
    764,778,722
    
    
    $
    72,473,359
    
    
    $
    35,488,275
    
    
    $
    22,001,835
    
    
    $
    33,148,167
    
    
    $
    112,140,884
    
    
    $
    198,681
    
    
    $
    1,040,229,923Non-Interest Bearing Liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,341,867
    
    
    
    5,341,867Equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    72,212,652
    
    
    
    72,212,652Total Liabilities & Shareholders Equity
    
    $
    764,778,722
    
    
    $
    72,473,359
    
    
    $
    35,488,275
    
    
    $
    22,001,835
    
    
    $
    33,148,167
    
    
    $
    112,140,884
    
    
    $
    77,753,200
    
    
    $
    1,117,784,442Interest Sensitivy Gap per Period
    
    $
    (134,163,503
    )
    
    $
    30,506,320
    
    
    $
    58,832,731
    
    
    $
    44,223,909
    
    
    $
    41,034,315
    
    
    $
    (39,666,325
    )
    
    $
    (767,447
    )Cumulative Interest Sensitivity Gap
    
    $
    (134,163,503
    )
    
    $
    (103,657,183
    )
    
    $
    (44,824,452
    )
    
    $
    (600,543
    )
    
    $
    40,433,772
    
    
    $
    767,447
    
    
    $
    0Interest Sensitivity Gap as a Percentage
of Earning Assets
    
    
    -12.78
    %
    
    
    2.91
    %
    
    
    5.61
    %
    
    
    4.21
    %
    
    
    3.91
    %
    
    
    -3.78
    %
    
    
    -0.07
    %Cumulative Sensitivity Gap as a
Percentage of Earning Assets
    
    
    -12.78
    %
    
    
    -9.88
    %
    
    
    -4.27
    %
    
    
    -0.06
    %
    
    
    3.85
    %
    
    
    0.07
    %
    
    
    0.00
    %
   43




---



##### Table of Contents



Contractual Obligations
  Payments Due InNote
    
    
    Less than One
    
    
    One to Two
    
    
    Three to(In Thousands)
    
    Reference
    
    
    Year
    
    
    Years
    
    
    Five Years
    
    
    Over FiveYears
    
    
    TotalDeposits without a stated maturity(a)
    
    
    
    
    
    $
    752,335
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    752,335Consumer certificates of deposits (a)
    
    
    10
    
    
    
    182,551
    
    
    
    22,865
    
    
    
    5,944
    
    
    
    2,271
    
    
    
    213,631Revolving line of credit(a)
    
    
    11
    
    
    
    4,200
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,200Security repurchase agreements(a)
    
    
    11
    
    
    
    51,146
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    51,146Long-term debt (a)
    
    
    5,11
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,918
    
    
    
    18,918Operating leases
    
    
    8
    
    
    
    391
    
    
    
    598
    
    
    
    548
    
    
    
    1,230
    
    
    
    2,767
 (a)
    
    Excludes Interest  Critical Accounting Policies
    44




---



##### Table of Contents



Mortgage Servicing Assets
  Accounting for Servicing
of Financial Assets
 Investment Securities Valuation
    45




---



##### Table of Contents



Allowance for Loan Losses
  Accounting for Contingencies Accounting by Creditors for Impairment of a Loan Accounting by Creditors
for Impairment of a Loan  Income Recognition and Disclosures.
     2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004Commercial
    
    $
    5,113
    
    
    $
    3,422
    
    
    $
    3,870
    
    
    $
    4,204
    
    
    $
    5,094Construction
    
    
    1,650
    
    
    
    1,381
    
    
    
    448
    
    
    
    404
    
    
    
    155Commercial Mortgage
    
    
    2,378
    
    
    
    1,724
    
    
    
    1,529
    
    
    
    1,319
    
    
    
    618Residential Mortgage
    
    
    3,332
    
    
    
    2,445
    
    
    
    2,165
    
    
    
    1,758
    
    
    
    1,108Consumer
    
    
    262
    
    
    
    400
    
    
    
    410
    
    
    
    586
    
    
    
    745Credit Card
    
    
    61
    
    
    
    74
    
    
    
    73
    
    
    
    74
    
    
    
    11Other
    
    
    51
    
    
    
    7
    
    
    
    18
    
    
    
    1
    
    
    
    65Total
    
    $
    12,847
    
    
    $
    9,453
    
    
    $
    8,513
    
    
    $
    8,346
    
    
    $
    7,796
  46




---



##### Table of Contents



2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % ofNon-Accrual Loans
    
    Amount
    
    
    Total
    
    
    Amount
    
    
    Total
    
    
    Amount
    
    
    Total
    
    
    Amount
    
    
    Total
    
    
    Amount
    
    
    TotalCommercial
    
    $
    3,429
    
    
    
    39.1
    %
    
    $
    316
    
    
    
    5.5
    %
    
    $
    4,754
    
    
    
    66.5
    %
    
    $
    1,055
    
    
    
    28.9
    %
    
    $
    1,800
    
    
    
    57.7
    %Construction
    
    
    
    
    
    
    0.0
    %
    
    
    1,466
    
    
    
    25.4
    %
    
    
    
    
    
    
    0.0
    %
    
    
    
    
    
    
    0.0
    %
    
    
    
    
    
    
    0.0
    %Commercial Mortgage
    
    
    3,085
    
    
    
    35.2
    %
    
    
    2,025
    
    
    
    35.2
    %
    
    
    1,220
    
    
    
    17.1
    %
    
    
    629
    
    
    
    17.2
    %
    
    
    
    
    
    
    0.0
    %Residential Mortgage
    
    
    2,243
    
    
    
    25.5
    %
    
    
    1,851
    
    
    
    32.1
    %
    
    
    1,039
    
    
    
    14.5
    %
    
    
    1,777
    
    
    
    48.8
    %
    
    
    815
    
    
    
    26.1
    %Consumer
    
    
    17
    
    
    
    0.2
    %
    
    
    104
    
    
    
    1.8
    %
    
    
    139
    
    
    
    1.9
    %
    
    
    187
    
    
    
    5.1
    %
    
    
    
    
    
    
    0.0
    %Other
    
    
    
    
    
    
    0.0
    %
    
    
    
    
    
    
    0.0
    %
    
    
    
    
    
    
    0.0
    %
    
    
    
    
    
    
    0.0
    %
    
    
    504
    
    
    
    16.2
    %Total
    
    $
    8,774
    
    
    
    100.0
    %
    
    $
    5,762
    
    
    
    100.0
    %
    
    $
    7,152
    
    
    
    100.0
    %
    
    $
    3,648
    
    
    
    100.0
    %
    
    $
    3,119
    
    
    
    100.0
    %Loans 90 Days Past Due 
Still Accruing
    
    $
    4
    
    
    
    
    
    
    $
    27
    
    
    
    
    
    
    $
    33
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    73Restructured due to troubled
conditions of the borrower
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
  47




---



##### Table of Contents



Loan Type
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004Commercial# of loans
    
    
    30
    
    
    
    7
    
    
    
    10
    
    
    
    15
    
    
    
    14Interest income recognized
    
    $
    250,067
    
    
    $
    85,210
    
    
    $
    206,131
    
    
    $
    57,110
    
    
    $
    73,795Additional interest income if loan had been accruing
    
    $
    269,563
    
    
    $
    189,405
    
    
    $
    147,995
    
    
    $
    165,475
    
    
    $
    101,190Commerical Construction# of loans
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    Interest income recognized
    
    $
    
    
    
    $
    105,230
    
    
    $
    
    
    
    $
    
    
    
    $
    Additional interest income if loan had been accruing
    
    $
    
    
    
    $
    10,389
    
    
    $
    
    
    
    $
    
    
    
    $
    Consumer# of loans
    
    
    5
    
    
    
    4
    
    
    
    2
    
    
    
    3
    
    
    
    3Interest income recognized
    
    $
    914
    
    
    $
    1,076
    
    
    $
    
    
    
    $
    382
    
    
    $
    20,155Additional interest income if loan had been accruing
    
    $
    1,216
    
    
    $
    19,670
    
    
    $
    21,276
    
    
    $
    22,461
    
    
    $
    36,531Residential mortgage loans# of loans
    
    
    17
    
    
    
    15
    
    
    
    23
    
    
    
    20
    
    
    
    15Interest income recognized
    
    $
    73,342
    
    
    $
    46,531
    
    
    $
    12,059
    
    
    $
    52,430
    
    
    $
    8,737Additional interest income if loan had been accruing
    
    $
    72,441
    
    
    $
    71,882
    
    
    $
    80,425
    
    
    $
    73,499
    
    
    $
    68,942Credit cards# of loans
    
    
    3
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    Interest income recognized
    
    $
    218
    
    
    $
    2,680
    
    
    $
    
    
    
    $
    
    
    
    $
    Additional interest income if loan had been accruing
    
    $
    24
    
    
    $
    1,311
    
    
    $
    
    
    
    $
    
    
    
    $
    Restructured loans
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
 Capital Resources
     48




---



##### Table of Contents



2008
    
    
    2007
    
    
    2006Amount
    
    
    Rate
    
    
    
    
    Maturity
    
    
    Amount
    
    
    Rate
    
    
    Maturity
    
    
    Amount
    
    
    Rate
    
    
    Maturity$
    3,000,000
    
    
    
    5.55
    %
    
    
    10/02/2008
    
    
    $
    8,000,000
    
    
    
    4.19
    %
    
    
    07/24/20073,000,000
    
    
    
    5.57
    %
    
    
    08/13/20073,000,000
    
    
    
    5.55
    %
    
    
    10/02/2008$
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    3,000,000
    
    
    
    
    
    
    
    
    
    
    $
    14,000,000
    Well
    
    
    AdequatelyActual
    
    
    Capitalized
    
    
    CapitalizedTier 1 risk-based capital ratio
    
    
    8.8
    %
    
    
    6.0
    %
    
    
    4.0
    %Total risk-based capital ratio
    
    
    10.5
    %
    
    
    10.0
    %
    
    
    8.0
    %Leverage ratio
    
    
    7.5
    %
    
    
    5.0
    %
    
    
    4.0
    %
  49




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##### Table of Contents



50




---



##### Table of Contents



Recent Accounting Pronouncements and Developments
  CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
    51




---



##### Table of Contents



Item 7A. Quantitative and Qualitative Disclosures about Market Risk
     52




---



##### Table of Contents



53




---



##### Table of Contents



Item 8. Financial Statements and Supplementary Data
 
     /s/ Morris L. Maurer
    
    /s/ Debra L. RossMorris L. Maurer
    
    Debra L. RossPresident and Chief Executive Officer
    
    Senior Vice President and Chief Financial Officer
  54




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##### Table of Contents



Internal Control  Integrated Framework
    Internal Control  Integrated Framework
  
  55




---



##### Table of Contents



Share-Based Payment
  
  56




---



##### Table of Contents



2008
    
    
    2007ASSETSCash and due from banks
    
    $
    29,819,411
    
    
    $
    41,966,169Reverse repurchase agreements
    
    
    1,000,000
    
    
    
    81,000,000Federal funds sold
    
    
    600,669
    
    
    
    39,356,700Cash and cash equivalents
    
    
    31,420,080
    
    
    
    162,322,869Available-for-sale securities
    
    
    56,977,201
    
    
    
    62,267,910Held-to-maturity securities (fair value of $82,971,003 and
$72,034,922 at December 31, 2008, and 2007)
    
    
    83,566,841
    
    
    
    71,755,912Total investment securities
    
    
    140,544,042
    
    
    
    134,023,822Loans
    
    
    904,207,064
    
    
    
    830,328,325Less allowance for loan losses
    
    
    (12,847,276
    )
    
    
    (9,452,715
    )Net loans
    
    
    891,359,788
    
    
    
    820,875,610Premises and equipment
    
    
    22,818,339
    
    
    
    17,416,132Accrued interest receivable
    
    
    4,855,561
    
    
    
    5,465,584Federal Reserve and FHLB stock
    
    
    3,149,900
    
    
    
    3,149,900Other assets
    
    
    23,636,732
    
    
    
    19,855,140Total assets
    
    $
    1,117,784,442
    
    
    $
    1,163,109,057LIABILITIES AND SHAREHOLDERS EQUITYDeposits:Non-interest-bearing demand deposits
    
    $
    178,656,062
    
    
    $
    180,590,295Interest bearing deposits
    
    
    573,678,647
    
    
    
    629,341,940Time deposits over $100,000
    
    
    136,813,566
    
    
    
    109,901,689Other time deposits
    
    
    76,817,194
    
    
    
    84,928,105Total deposits
    
    
    965,965,469
    
    
    
    1,004,762,029Security repurchase agreements
    
    
    51,146,454
    
    
    
    58,475,789FHLB advances
    
    
    
    
    
    
    3,000,000Revolving line of credit
    
    
    4,200,000
    
    
    
    Subordinated debt
    
    
    5,000,000
    
    
    
    5,000,000Junior subordinated debentures owed to unconsolidated
subsidiary trust
    
    
    13,918,000
    
    
    
    13,918,000Other liabilities
    
    
    5,341,867
    
    
    
    9,015,233Total liabilites
    
    
    1,045,571,790
    
    
    
    1,094,171,051Shareholders equity:Common stock, no par value:Authorized shares; 2008 and 2007 - 15,000,000 shares;
Issued 2,778,311 in 2008 and 2,741,438 in 2007,
including 484,130 and 415,103 shares of treasury stock
    
    $
    14,655,303
    
    
    $
    17,126,383Additional paid-in capital
    
    
    8,766,045
    
    
    
    7,180,886Retained earnings
    
    
    47,954,815
    
    
    
    44,170,868Accumulated other comprehensive income
    
    
    836,489
    
    
    
    459,869Total shareholders equity
    
    
    72,212,652
    
    
    
    68,938,006Total liabilities and shareholders equity
    
    $
    1,117,784,442
    
    
    $
    1,163,109,057
 See accompanying notes.
  57




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##### Table of Contents



2008
    
    
    2007
    
    
    2006Interest income:Interest and fees on loans
    
    $
    48,987,577
    
    
    $
    57,383,476
    
    
    $
    52,723,884Interest on investment securities taxable
    
    
    4,488,666
    
    
    
    6,777,040
    
    
    
    4,908,529Interest on investment securities nontaxable
    
    
    2,047,549
    
    
    
    1,816,759
    
    
    
    1,781,552Interest on federal funds sold
    
    
    705,591
    
    
    
    2,491,651
    
    
    
    1,848,871Interest on reverse repurchase agreements
    
    
    148,383
    
    
    
    410,757
    
    
    
    112,37556,377,766
    
    
    
    68,879,683
    
    
    
    61,375,211Interest expense:Interest on deposits
    
    
    17,979,023
    
    
    
    30,847,099
    
    
    
    24,542,555Interest on security repurchase agreements
    
    
    543,599
    
    
    
    2,078,009
    
    
    
    2,128,130Interest on FHLB advances and overnight
borrowings
    
    
    193,473
    
    
    
    463,016
    
    
    
    1,027,733Interest on other short-term debt
    
    
    16,431
    
    
    
    
    
    
    
    Interest on long-term debt
    
    
    1,716,863
    
    
    
    1,874,507
    
    
    
    1,866,10020,449,389
    
    
    
    35,262,631
    
    
    
    29,564,518Net Interest Income
    
    
    35,928,377
    
    
    
    33,617,052
    
    
    
    31,810,693Provision for loan losses
    
    
    7,400,000
    
    
    
    904,000
    
    
    
    1,086,000Net interest income after provision for loan losses
    
    
    28,528,377
    
    
    
    32,713,052
    
    
    
    30,724,693Other operating income:Wealth management fees
    
    
    5,047,569
    
    
    
    4,546,795
    
    
    
    3,715,964Service charges and fees on deposit accounts
    
    
    2,484,539
    
    
    
    1,818,505
    
    
    
    1,712,924Rental income
    
    
    574,960
    
    
    
    596,753
    
    
    
    451,473Mortgage banking income
    
    
    143,686
    
    
    
    392,314
    
    
    
    331,866Interchange income
    
    
    877,002
    
    
    
    677,288
    
    
    
    789,430Other income
    
    
    2,075,803
    
    
    
    1,802,067
    
    
    
    1,354,46011,203,559
    
    
    
    9,833,722
    
    
    
    8,356,117Other operating expenses:Salaries, wages and employee benefits
    
    
    19,172,223
    
    
    
    19,098,118
    
    
    
    18,010,560Occupancy
    
    
    2,081,112
    
    
    
    1,790,671
    
    
    
    1,735,164Furniture and equipment
    
    
    1,428,235
    
    
    
    1,240,816
    
    
    
    1,181,583Professional services
    
    
    1,971,082
    
    
    
    1,800,019
    
    
    
    1,447,479Data processing
    
    
    2,024,210
    
    
    
    1,775,273
    
    
    
    1,678,083Business development
    
    
    1,526,467
    
    
    
    1,292,463
    
    
    
    1,176,403FDIC insurance
    
    
    918,051
    
    
    
    98,632
    
    
    
    96,500Other
    
    
    5,585,020
    
    
    
    3,704,184
    
    
    
    3,269,31334,706,400
    
    
    
    30,800,176
    
    
    
    28,595,085Income before tax
    
    
    5,025,536
    
    
    
    11,746,598
    
    
    
    10,485,725Federal and state income tax
    
    
    1,241,589
    
    
    
    3,856,049
    
    
    
    3,500,936Net income
    
    $
    3,783,947
    
    
    $
    7,890,549
    
    
    $
    6,984,789Basic earnings per share
    
    $
    1.64
    
    
    $
    3.39
    
    
    $
    3.03Diluted earnings per share
    
    $
    1.58
    
    
    $
    3.27
    
    
    $
    2.90
 See accompanying notes.
  58




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AccumulatedAdditional
    
    
    
    
    
    
    OtherCommon
    
    
    Unearned
    
    
    Paid-In
    
    
    Retained
    
    
    ComprehensiveStock
    
    
    Compensation
    
    
    Capital
    
    
    Earnings
    
    
    Income (Loss)
    
    
    TotalBalance at January 1, 2006
    
    $
    19,549,673
    
    
    $
    (357,507
    )
    
    $
    4,341,410
    
    
    $
    29,295,530
    
    
    $
    (1,246,584
    )
    
    $
    51,582,522Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,984,789
    
    
    
    
    
    
    
    6,984,789Other comprehensive income:Net unrealized gain on investments, net of tax of $319,077
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    486,470
    
    
    
    486,470Net unrealized gain on swap, net of tax of $148,976
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    227,131
    
    
    
    227,131Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,698,390Income tax benefit from deferred stock compensation
    
    
    
    
    
    
    
    
    
    
    559,260
    
    
    
    
    
    
    
    
    
    
    
    559,260Issuance of 61,768 shares of common stock under stock-based
compensation plans
    
    
    1,360,600
    
    
    
    
    
    
    
    (250,750
    )
    
    
    
    
    
    
    
    
    
    
    1,109,850Repurchase of 42,989 shares of common stock
    
    
    (1,936,368
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,936,368
    )Stock based compensation earned
    
    
    
    
    
    
    
    
    
    
    771,177
    
    
    
    
    
    
    
    
    
    
    
    771,177Adoption of FASB 123(R) reversal of (41,700) shares of unvested
restricted common stock
    
    
    (1,172,525
    )
    
    
    357,507
    
    
    
    815,018
    
    
    
    
    
    
    
    
    
    
    
    Balance at December 31, 2006
    
    
    17,801,380
    
    
    
    
    
    
    
    6,236,115
    
    
    
    36,280,319
    
    
    
    (532,983
    )
    
    
    59,784,831Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,890,549
    
    
    
    
    
    
    
    7,890,549Other comprehensive incomeNet unrealized gain on investments, net of tax of $587,524
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    895,748
    
    
    
    895,748Net unrealized gain on swap, net of tax of $63,691
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    97,104
    
    
    
    97,104Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,883,401
  59




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AccumulatedAdditional
    
    
    
    
    
    
    OtherCommon
    
    
    Unearned
    
    
    Paid-In
    
    
    Retained
    
    
    ComprehensiveStock
    
    
    Compensation
    
    
    Capital
    
    
    Earnings
    
    
    Income (Loss)
    
    
    TotalIncome tax benefit from deferred stock compensation
    
    $
    
    
    
    $
    
    
    
    $
    551,616
    
    
    $
    
    
    
    $
    
    
    
    $
    551,616Issuance of 63,567 shares of common stock under stock-based
compensation plans
    
    
    1,719,406
    
    
    
    
    
    
    
    (815,792
    )
    
    
    
    
    
    
    
    
    
    
    903,614Repurchase of 47,718 shares of common stock
    
    
    (2,394,403
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,394,403
    )Stock based compensation earned
    
    
    
    
    
    
    
    
    
    
    1,208,947
    
    
    
    
    
    
    
    
    
    
    
    1,208,947Balance at December 31, 2007
    
    
    17,126,383
    
    
    
    
    
    
    
    7,180,886
    
    
    
    44,170,868
    
    
    
    459,869
    
    
    
    68,938,006Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,783,947
    
    
    
    
    
    
    
    3,783,947Other comprehensive income:Net unrealized gain on investments, net of tax of $235,679
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    376,620
    
    
    
    376,620Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,160,567Income tax benefit from deferred stock compensation
    
    
    
    
    
    
    
    
    
    
    320,631
    
    
    
    
    
    
    
    
    
    
    
    320,631Issuance of 36,873 shares of common stock under stock-based
compensation plans
    
    
    1,031,087
    
    
    
    
    
    
    
    (97,621
    )
    
    
    
    
    
    
    
    
    
    
    933,466Repurchase of 69,027 shares of common stock
    
    
    (3,502,167
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,502,167
    )Stock based compensation earned
    
    
    
    
    
    
    
    
    
    
    1,362,149
    
    
    
    
    
    
    
    
    
    
    
    1,362,149Balance at December 31, 2008
    
    $
    14,655,303
    
    
    $
    
    
    
    $
    8,766,045
    
    
    $
    47,954,815
    
    
    $
    836,489
    
    
    $
    72,212,652
 See accompanying notes.
  60




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##### Table of Contents



2008
    
    
    2007
    
    
    2006Cash flows from operating activitiesNet income
    
    $
    3,783,947
    
    
    $
    7,890,549
    
    
    $
    6,984,789Adjustments to reconcile net income to net cash provided by operating activitiesProvision for loan losses
    
    
    7,400,000
    
    
    
    904,000
    
    
    
    1,086,000Proceeds from sale of loans held for sale
    
    
    40,594,396
    
    
    
    15,188,351
    
    
    
    16,233,576Origination of loans held for sale
    
    
    (38,523,700
    )
    
    
    (15,003,351
    )
    
    
    (13,734,219
    )Depreciation and amortization
    
    
    1,545,123
    
    
    
    1,408,010
    
    
    
    1,645,031Market adjustment on mortgage servicing rights
    
    
    715,087
    
    
    
    144,650
    
    
    
    (123,090
    )Gain on sale of loans
    
    
    (498,934
    )
    
    
    (205,425
    )
    
    
    (156,583
    )Gain on disposal of premises and equipment
    
    
    
    
    
    
    (1,260
    )
    
    
    Net change in deferred income taxes
    
    
    (1,912,957
    )
    
    
    (325,232
    )
    
    
    (325,702
    )Net increase bank owned life insurance
    
    
    (449,778
    )
    
    
    (476,196
    )
    
    
    (10,211,303
    )Excess tax benefit from deferred stock compensation
    
    
    (320,631
    )
    
    
    (551,616
    )
    
    
    (559,260
    )Board stock compensation
    
    
    99,799
    
    
    
    99,709
    
    
    
    99,786Net accretion/amortization of discounts and
premiums on investments
    
    
    308,675
    
    
    
    175,081
    
    
    
    271,763Compensation expense related to restricted stock
and options
    
    
    1,362,149
    
    
    
    1,208,947
    
    
    
    771,177(Increase)/decrease in:Accrued interest receivable
    
    
    610,023
    
    
    
    12,105
    
    
    
    (875,644
    )Other assets
    
    
    (2,369,623
    )
    
    
    (839,940
    )
    
    
    (609,736
    )Increase/(decrease) in Other liabilities
    
    
    (3,352,735
    )
    
    
    2,054,806
    
    
    
    1,982,088Net cash from operating activities
    
    
    8,990,841
    
    
    
    11,683,188
    
    
    
    2,478,673Cash flows from investing activitiesProceeds from maturities of investment securities
held-to-maturity
    
    
    16,376,886
    
    
    
    14,284,373
    
    
    
    8,375,465Proceeds from maturities of investment securities
available-for-sale
    
    
    23,002,881
    
    
    
    36,513,792
    
    
    
    11,518,393Purchases of investment securities held-to-maturity
    
    
    (28,416,602
    )
    
    
    (25,000
    )
    
    
    (10,548,243
    )Purchases of investment securities available-for-sale
    
    
    (17,179,761
    )
    
    
    (36,501,327
    )
    
    
    (1,478,594
    )Net increase in loans
    
    
    (79,455,940
    )
    
    
    (85,734,349
    )
    
    
    (63,312,198
    )Purchases of premises and equipment
    
    
    (6,947,330
    )
    
    
    (6,755,994
    )
    
    
    (1,573,196
    )Net cash from investing activities
    
    
    (92,619,866
    )
    
    
    (78,218,505
    )
    
    
    (57,018,373
    )Cash flows from financing activitiesNet change in deposits
    
    
    (38,796,560
    )
    
    
    129,678,396
    
    
    
    100,767,918Net change in security repurchase agreements
    
    
    (7,329,335
    )
    
    
    (657,539
    )
    
    
    5,576,926Net change in FHLB advances
    
    
    (3,000,000
    )
    
    
    (11,000,000
    )
    
    
    (10,000,000
    )Net change in revolving line of credit
    
    
    4,200,000
    
    
    
    
    
    
    
    Proceeds from issuance of long-term debt
    
    
    
    
    
    
    5,000,000
    
    
    
    Repayment from issuance of long-term debt
    
    
    
    
    
    
    (5,000,000
    )
    
    
    Repurchase of stock
    
    
    (3,502,167
    )
    
    
    (2,394,403
    )
    
    
    (1,936,368
    )Income tax benefit from exercise of options
    
    
    320,631
    
    
    
    551,616
    
    
    
    559,260Proceeds from issuance of stock
    
    
    833,667
    
    
    
    803,905
    
    
    
    1,010,064Net cash from financing activities
    
    
    (47,273,764
    )
    
    
    116,981,975
    
    
    
    95,977,800Increase in cash and cash equivalents
    
    
    (130,902,789
    )
    
    
    50,446,658
    
    
    
    41,438,100Cash and cash equivalents at beginning of year
    
    
    162,322,869
    
    
    
    111,876,211
    
    
    
    70,438,111Cash and cash equivalents at end of year
    
    $
    31,420,080
    
    
    $
    162,322,869
    
    
    $
    111,876,211Interest paid
    
    $
    21,050,459
    
    
    $
    35,052,326
    
    
    $
    28,639,659Income taxes paid
    
    $
    3,754,608
    
    
    $
    2,668,571
    
    
    $
    4,137,770
 See accompanying notes.
  61




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##### Table of Contents



NOTE 1  ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
 Nature of Operations and Principles of Consolidation
   Consolidation
of Variable Interest Entities, an Interpretation of Accounting Research Bulletin No. 51
 Cash Flows
 Investment Securities
      62




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##### Table of Contents



NOTE 1  ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
 Federal Home Loan Bank (FHLB) and Federal Reserve Bank (FRB) Stock:
 Loans Held for Sale
 Loans
  Allowance for Loan Losses
 Accounting for Contingencies Accounting by Creditors for Impairment of a Loan Accounting by Creditors
for Impairment of a Loan  Income Recognition and Disclosures
    63




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##### Table of Contents



NOTE 1  ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
  Mortgage Servicing Rights
 Accounting for Servicing of
Financial Assets
  Transfer of Financial Assets
 Loan Commitments and Related Financial Instruments
 Derivative Instruments and Hedging Activities Accounting
for Derivative Instruments and Hedging Activities )
  64




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##### Table of Contents



NOTE 1  ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
  Premises and Equipment
 Foreclosed Assets
 Bank-Owned Life Insurance
 Accounting for
Purchases of Life Insurance  Determining the Amount That Could Be Realized in Accordance with FASB
Technical Bulletin No. 85-4 (Accounting for Purchases of Life Insurance){Issue}.
  Long-Term Assets
 Securities Purchased Under Resale Agreements and Securities Sold Under Repurchase
Agreements
  65




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##### Table of Contents



NOTE 1  ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
 Comprehensive Income
 Earnings Per Share
 Loss Contingencies
 Fair Values of Financial Instruments
 Stock-Based Compensation Share-Based Payment Accounting for Stock-Based Compensation
   Retirement Plans
 Reportable Segments
 Income Taxes
  66




---



##### Table of Contents



NOTE 1  ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
  Accounting for Uncertainty in Income Taxes
  Use of Estimates
  67




---



##### Table of Contents



NOTE 2  NEW ACCOUNTING PRONOUNCEMENTS
 Fair Value Measurements
 Determining the Fair Value of a Financial Asset When
the Market for That Asset is Not Active
 The Fair
Value Option for Financial Assets and Financial Liabilities  Including an Amendment of FASB
Statement No. 115
 Written Loan Commitments
Recorded at Fair Value through Earnings Application of Accounting
Principles to Loan Commitments
  Effect of Newly Issued But Not Yet Effective Accounting Standards:
   68




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##### Table of Contents



NOTE 2  NEW ACCOUNTING PRONOUNCEMENTS
 Noncontrolling Interest in Consolidated Financial
Statements, an amendment of ARB No. 51
  NOTE 3  RESTRICTIONS ON CASH AND DUE FROM BANK ACCOUNTS
  NOTE 4  JUNIOR SUBORDINATED DEBENTURES
    69




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##### Table of Contents



NOTE 5  INVESTMENT SECURITIES
  Available-for-Sale SecuritiesGross
    
    
    GrossFair
    
    
    Unrealized
    
    
    UnrealizedValue
    
    
    Gains
    
    
    Losses2008U.S. Treasury securities
    
    $
    499,200
    
    
    $
    5,203
    
    
    $
    U.S. Government-sponsored entities
    
    
    56,478,001
    
    
    
    1,368,595
    
    
    
    Total
    
    $
    56,977,201
    
    
    $
    1,373,798
    
    
    $
    
 Available-for-Sale SecuritiesGross
    
    
    GrossFair
    
    
    Unrealized
    
    
    UnrealizedValue
    
    
    Gains
    
    
    Losses2007U.S. Treasury securities
    
    $
    1,513,630
    
    
    $
    10,100
    
    
    $
    U.S. Government-sponsored entities
    
    
    60,751,399
    
    
    
    889,799
    
    
    
    138,400Collateralized mortgage obligations
    
    
    2,881
    
    
    
    
    
    
    
    Total
    
    $
    62,267,910
    
    
    $
    899,899
    
    
    $
    138,400
 Held-to-Maturity SecuritiesGross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrecognized
    
    
    Unrecognized
    
    
    FairCost
    
    
    Gain
    
    
    Loss
    
    
    Value2008Municipals
    
    $
    56,873,446
    
    
    $
    213,348
    
    
    $
    799,408
    
    
    $
    56,287,386Collateralized mortgage obligations
    
    
    8,825,025
    
    
    
    11,364
    
    
    
    146
    
    
    
    8,836,243Mortgage backed securities
    
    
    17,693,370
    
    
    
    45,330
    
    
    
    66,325
    
    
    
    17,672,375Other securities
    
    
    175,000
    
    
    
    
    
    
    
    1
    
    
    
    174,999$
    83,566,841
    
    
    $
    270,042
    
    
    $
    865,880
    
    
    $
    82,971,0032007Municipals
    
    $
    46,256,605
    
    
    $
    553,799
    
    
    $
    11,623
    
    
    $
    46,798,781Collateralized mortgage obligations
    
    
    20,534,718
    
    
    
    
    
    
    
    209,170
    
    
    
    20,325,548Mortgage backed securities
    
    
    4,764,589
    
    
    
    
    
    
    
    53,400
    
    
    
    4,711,189Other securities
    
    
    200,000
    
    
    
    
    
    
    
    596
    
    
    
    199,404$
    71,755,912
    
    
    $
    553,799
    
    
    $
    274,789
    
    
    $
    72,034,922
  70




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##### Table of Contents



NOTE 5  INVESTMENT SECURITIES
  Held-to-Maturity
    
    
    Available-for-SaleCarrying
    
    
    Fair
    
    
    FairAmount
    
    
    Value
    
    
    ValueDue in one year or less
    
    $
    475,000
    
    
    $
    475,541
    
    
    $
    21,099,000Due from one to five years
    
    
    14,829,325
    
    
    
    14,964,828
    
    
    
    35,878,201Due from five to ten years
    
    
    41,744,121
    
    
    
    41,022,016
    
    
    
    Due after ten years
    
    
    
    
    
    
    
    
    
    
    Mortgage-backed
    
    
    26,518,395
    
    
    
    26,508,618
    
    
    
    Total
    
    $
    83,566,841
    
    
    $
    82,971,003
    
    
    $
    56,977,201
  Less Than 12 Months
    
    
    12 Months or More
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    Loss
    
    
    Value
    
    
    Loss
    
    
    Value
    
    
    Loss2008Collateralized mortgage
obligations
    
    $
    
    
    
    $
    
    
    
    $
    2,782,996
    
    
    $
    146
    
    
    $
    2,782,996
    
    
    $
    146Mortgage backed
securities
    
    
    14,034,717
    
    
    
    66,325
    
    
    
    
    
    
    
    
    
    
    
    14,034,717
    
    
    
    66,325Municipal bonds
    
    
    7,980,836
    
    
    
    21,137
    
    
    
    33,280,640
    
    
    
    778,271
    
    
    
    41,261,476
    
    
    
    799,408Other securities
    
    
    
    
    
    
    
    
    
    
    24,999
    
    
    
    1
    
    
    
    24,999
    
    
    
    1Total temporarily
Impaired
    
    $
    22,015,553
    
    
    $
    87,462
    
    
    $
    36,088,635
    
    
    $
    778,418
    
    
    $
    58,104,188
    
    
    $
    865,880
 Less Than 12 Months
    
    
    12 Months or More
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    Loss
    
    
    Value
    
    
    Loss
    
    
    Value
    
    
    Loss2007U.S. government-
sponsored entities
    
    $
    
    
    
    $
    
    
    
    $
    19,861,600
    
    
    $
    138,400
    
    
    
    19,861,600
    
    
    $
    138,400Collateralized mortgage
obligations
    
    
    
    
    
    
    
    
    
    
    25,036,737
    
    
    
    262,570
    
    
    
    25,036,737
    
    
    
    262,570Municipal bonds
    
    
    
    
    
    
    
    
    
    
    2,812,330
    
    
    
    11,623
    
    
    
    2,812,330
    
    
    
    11,623Other securities
    
    
    
    
    
    
    
    
    
    
    99,404
    
    
    
    596
    
    
    
    99,404
    
    
    
    596Total temporarily
impaired
    
    $
    
    
    
    $
    
    
    
    $
    47,810,071
    
    
    $
    413,189
    
    
    $
    47,810,071
    
    
    $
    413,189
  71




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##### Table of Contents



NOTE 5  INVESTMENT SECURITIES
       72




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##### Table of Contents



NOTE 6  LOANS AND ALLOWANCE FOR LOAN LOSSES
  2008
    
    
    2007Residential loans secured by real estate
    
    $
    344,175,882
    
    
    $
    325,596,434Commercial loans secured by real estate
    
    
    217,444,628
    
    
    
    175,027,267Other commercial and industrial loans
    
    
    307,409,440
    
    
    
    279,109,370Consumer loans
    
    
    35,177,114
    
    
    
    50,595,254Total loans
    
    
    904,207,064
    
    
    
    830,328,325Less allowance for loan losses
    
    
    (12,847,276
    )
    
    
    (9,452,715
    )Total loans, net
    
    $
    891,359,788
    
    
    $
    820,875,610
    2008
    
    
    2007
    
    
    2006Beginning balance
    
    $
    9,452,715
    
    
    $
    8,513,098
    
    
    $
    8,346,390Loan charge offs
    
    
    (4,392,659
    )
    
    
    (882,665
    )
    
    
    (1,485,241
    )Recoveries
    
    
    387,220
    
    
    
    918,282
    
    
    
    565,949Provision for loan losses
    
    
    7,400,000
    
    
    
    904,000
    
    
    
    1,086,000Ending balance
    
    $
    12,847,276
    
    
    $
    9,452,715
    
    
    $
    8,513,098
  2008
    
    
    2007
    
    
    2006Year-end balance of impaired loans
    
    $
    8,777,123
    
    
    $
    5,789,182
    
    
    $
    7,185,421Related allowance on impaired loans
    
    $
    1,688,670
    
    
    $
    1,066,158
    
    
    $
    450,320Impaired loans with related allowance
    
    $
    3,440,340
    
    
    $
    3,358,431
    
    
    $
    1,986,437Impaired loans without an allowance
    
    $
    5,336,783
    
    
    $
    2,430,751
    
    
    $
    5,198,984Average balance of impaired loans
    
    $
    7,708,000
    
    
    $
    5,386,000
    
    
    $
    3,723,000Accrued interest recorded
during impairment
    
    $
    529
    
    
    $
    
    
    
    $
    Cash basis interest income recognized
    
    $
    
    
    
    $
    
    
    
    $
    
   73




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##### Table of Contents



NOTE 7  PREMISES AND EQUIPMENT
  2008
    
    
    2007Land and improvements
    
    $
    8,892,761
    
    
    $
    5,886,875Building and improvements
    
    
    12,480,059
    
    
    
    9,477,149Construction-in-progress
    
    
    68,476
    
    
    
    1,544,149Leasehold improvements
    
    
    2,257,619
    
    
    
    1,680,353Furniture and equipment
    
    
    12,338,790
    
    
    
    10,535,79636,037,705
    
    
    
    29,124,322Less accumulated depreciation and amortization
    
    
    (13,219,366
    )
    
    
    (11,708,190
    )Net premises and equipment
    
    $
    22,818,339
    
    
    $
    17,416,132
    2009
    
    $
    390,9052010
    
    
    326,7612011
    
    
    271,8512012
    
    
    271,9732013
    
    
    275,778Thereafter
    
    
    1,229,953$
    2,767,221
  74




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##### Table of Contents



NOTE 8  MORTGAGE BANKING ACTIVITIES
    2008
    
    
    2007
    
    
    2006Balance at January 1
    
    $
    1,347,987
    
    
    $
    1,326,603
    
    
    $
    1,482,554Plus additions
    
    
    436,904
    
    
    
    166,034
    
    
    
    169,504Less amortization
    
    
    
    
    
    
    
    
    
    
    (266,327
    )Market adjustments
    
    
    (715,087
    )
    
    
    (144,650
    )
    
    
    Balance at December 31
    
    
    1,069,804
    
    
    
    1,347,987
    
    
    
    1,385,731Less valuation allowance
    
    
    
    
    
    
    
    
    
    
    (59,128
    )Balance, net
    
    $
    1,069,804
    
    
    $
    1,347,987
    
    
    $
    1,326,603
  NOTE 9  DEPOSITS
  2009
    
    $
    182,551,2072010
    
    
    17,132,7932011
    
    
    5,731,8132012
    
    
    2,125,0772013
    
    
    3,818,588
  75




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##### Table of Contents



NOTE 10  OTHER BORROWINGS
  2008
    
    
    2007
    
    
    2006Average daily balance during the year
    
    $
    57,113,798
    
    
    $
    54,326,359
    
    
    $
    53,683,409Average interest rate during the year
    
    
    0.88
    %
    
    
    3.83
    %
    
    
    3.96
    %Maximum month-end balance during the year
    
    $
    66,000,155
    
    
    $
    65,969,393
    
    
    $
    75,951,957Weighted average interest rate at year-end
    
    
    0.15
    %
    
    
    3.04
    %
    
    
    4.08
    %
  December 31, 2007Amount
    
    
    
    
    Rate
    
    
    Maturity$
    3,000,000
    
    
    
    
    
    5.55
    %
    
    
    10/2/2008$
    3,000,000
     76




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##### Table of Contents



NOTE 10  OTHER BORROWINGS
    NOTE 11  EQUITY-BASED COMPENSATION
   WeightedWeighted
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateExercise
    
    
    Contractual
    
    
    IntrinsicShares
    
    
    Price
    
    
    Term
    
    
    ValueOutstanding at beginning of year
    
    
    183,663
    
    
    $
    24.26Exercised
    
    
    29,500
    
    
    $
    22.61Outstanding at end of year
    
    
    154,163
    
    
    $
    24.58
    
    
    
    
    
    
    $
    2,096,570Exercisable at end of year
    
    
    150,900
    
    
    $
    24.37
    
    
    
    2.3
    
    
    $
    2,084,562
  77




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##### Table of Contents



NOTE 11  EQUITY-BASED COMPENSATION
  2008
    
    
    2007
    
    
    2006Intrinsic value of options exercised
    
    $
    805,937
    
    
    $
    801,122
    
    
    $
    1,233,560Cash received from option exercises
    
    $
    667,100
    
    
    $
    497,713
    
    
    $
    729,890Tax benefit realized from option exercises
    
    $
    301,740
    
    
    $
    304,393
    
    
    $
    481,824
  Weighted AverageGrant Date Fair2008
    
    Options
    
    
    ValueNonvested options at beginning of year
    
    
    8,063
    
    
    $
    11.15Vested
    
    
    4,800
    
    
    $
    10.45Nonvested options at end of year
    
    
    3,263
    
    
    $
    12.19
  1993 Restricted Stock Plan
  78




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##### Table of Contents



NOTE 11  EQUITY-BASED COMPENSATION
  Weighted AverageRestricted
    
    
    Grant Date Fair2008
    
    Stock
    
    
    ValueNonvested awards at beginning of year
    
    
    3,500
    
    
    $
    31.85Vested
    
    
    2,100
    
    
    $
    30.08Nonvested awards at end of year
    
    
    1,400
    
    
    $
    34.50
  2008
    
    
    2007
    
    
    2006Intrinsic value of shares vested
    
    $
    111,475
    
    
    $
    1,421,295
    
    
    $
    475,100Tax benefit realized from shares vested
    
    $
    18,891
    
    
    $
    247,223
    
    
    $
    77,436
  2005 Equity Incentive Plan
 Stock Options Issued
    79




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##### Table of Contents



NOTE 11  EQUITY-BASED COMPENSATION
  WeightedWeighted
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateExercise
    
    
    Contractual
    
    
    IntrinsicShares
    
    
    Price
    
    
    Term
    
    
    ValueOutstanding at beginning of year
    
    
    188,500
    
    
    $
    43.80Granted
    
    
    4,900
    
    
    $
    52.01Exercised
    
    
    
    
    
    
    Forfeited or expired
    
    
    4,000
    
    
    $
    43.38Outstanding at end of year
    
    
    189,400
    
    
    $
    44.03
    
    
    
    7.5
    
    
    $
    Exercisable at end of year
    
    
    2,800
    
    
    $
    43.38
    
    
    
    7.4
    
    
    $
    
  2008
    
    
    2007
    
    
    2006Intrinsic value of options exercised
    
    $
    
    
    
    $
    
    
    
    $
    Cash received from option exercises
    
    
    
    
    
    
    
    
    
    
    Tax benefit realized from option exercises
    
    
    
    
    
    
    
    
    
    
    Weighted average fair value of options granted
    
    $
    18.56
    
    
    $
    20.12
    
    
    $
    17.89
  Weighted AverageGrant Date Fair2008
    
    Options
    
    
    ValueNonvested options at beginning of year
    
    
    185,700
    
    
    $
    18.04Granted
    
    
    4,900
    
    
    $
    18.56Cancelled
    
    
    (4,000
    )
    
    $
    17.89Nonvested options at end of year
    
    
    186,600
    
    
    $
    18.05
  80




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##### Table of Contents



NOTE 11  EQUITY-BASED COMPENSATION
    Year
    
    Dividend Yield
    
    
    Volatility Factor
    
    
    Risk-Free Rate2008
    
    
    
    
    
    
    7.6484
    %
    
    
    4.37
    %2007
    
    
    
    
    
    
    3.9242
    %
    
    
    5.18
    %2006
    
    
    
    
    
    
    4.9623
    %
    
    
    5.32
    %
  Restricted Stock Issued
  Weighted AverageRestricted
    
    
    Grant Date Fair2008
    
    Stock
    
    
    ValueNonvested restricted stock at beginning of year
    
    
    65,725
    
    
    $
    49.78Granted
    
    
    6,275
    
    
    $
    52.77Forfeited or expired
    
    
    (900
    )
    
    $
    49.78Nonvested restricted stock at end of year
    
    
    71,100
    
    
    $
    50.04
    81




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##### Table of Contents



NOTE 12  EMPLOYEE BENEFIT PROGRAM
    NOTE 13  REGULATORY CAPITAL MATTERS
     82




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##### Table of Contents



NOTE 13  REGULATORY CAPITAL MATTERS
   To Be WellRequired
    
    
    Capitalized UnderFor Capital
    
    
    Prompt CorrectiveActual
    
    
    Adequacy Purposes
    
    
    Action RegulationsAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio2008Total Capital to risk
weighted assetsConsolidated
    
    $
    101,925,882
    
    
    
    10.6
    %
    
    $
    76,934,391
    
    
    
    8.0
    %
    
    
    N/ABank
    
    
    101,116,506
    
    
    
    10.5
    %
    
    
    76,773,867
    
    
    
    8.0
    %
    
    
    95,967,333
    
    
    
    10.0
    %Tier 1 (Core) Capital to risk
weighted assetsConsolidated
    
    
    84,894,682
    
    
    
    8.8
    %
    
    
    38,467,196
    
    
    
    4.0
    %
    
    
    N/ABank
    
    
    84,110,079
    
    
    
    8.8
    %
    
    
    38,386,933
    
    
    
    4.0
    %
    
    
    57,580,400
    
    
    
    6.0
    %Tier 1 (Core) Capital to
average assetsConsolidated
    
    
    84,894,682
    
    
    
    7.5
    %
    
    
    45,068,870
    
    
    
    4.0
    %
    
    
    N/ABank
    
    
    84,110,079
    
    
    
    7.5
    %
    
    
    45,073,183
    
    
    
    4.0
    %
    
    
    56,341,479
    
    
    
    5.0
    %
 To Be WellRequired
    
    
    Capitalized UnderFor Capital
    
    
    Prompt CorrectiveActual
    
    
    Adequacy Purposes
    
    
    Action RegulationsAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio2007Total Capital to risk
weighted assetsConsolidated
    
    $
    96,408,053
    
    
    
    10.8
    %
    
    $
    71,365,445
    
    
    
    8.0
    %
    
    
    N/ABank
    
    
    94,155,153
    
    
    
    10.6
    %
    
    
    71,250,392
    
    
    
    8.0
    %
    
    
    89,062,990
    
    
    
    10.0
    %Tier 1 (Core) Capital to risk
weighted assetsConsolidated
    
    
    81,955,338
    
    
    
    9.2
    %
    
    
    35,682,723
    
    
    
    4.0
    %
    
    
    N/ABank
    
    
    79,702,438
    
    
    
    9.0
    %
    
    
    35,625,196
    
    
    
    4.0
    %
    
    
    53,437,794
    
    
    
    6.0
    %Tier 1 (Core) Capital to
average assetsConsolidated
    
    
    81,955,338
    
    
    
    7.2
    %
    
    
    45,859,425
    
    
    
    4.0
    %
    
    
    N/ABank
    
    
    79,702,438
    
    
    
    7.0
    %
    
    
    45,865,062
    
    
    
    4.0
    %
    
    
    57,331,327
    
    
    
    5.0
    %
  83




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NOTE 14  RELATED PARTIES
  NOTE 15  INCOME TAXES
  2008
    
    
    2007
    
    
    2006Current tax expense
    
    $
    3,154,546
    
    
    $
    4,181,281
    
    
    $
    3,826,638Deferred tax (benefit) expense
    
    
    (1,912,957
    )
    
    
    (325,232
    )
    
    
    (325,702
    )$
    1,241,589
    
    
    $
    3,856,049
    
    
    $
    3,500,936
  2008
    
    
    2007
    
    
    2006Income before provision for income
tax
    
    $
    5,025,536
    
    
    $
    11,746,598
    
    
    $
    10,485,725Tax expense at federal statutory rate
    
    $
    1,708,682
    
    
    $
    3,993,843
    
    
    $
    3,565,147Increase (decrease) in taxes resulting from:State income taxes
    
    
    203,249
    
    
    
    603,148
    
    
    
    531,825Tax-exempt interest
    
    
    (684,975
    )
    
    
    (558,033
    )
    
    
    (522,521
    )Other
    
    
    14,633
    
    
    
    (182,909
    )
    
    
    (73,515
    )$
    1,241,589
    
    
    $
    3,856,049
    
    
    $
    3,500,936Effective tax rate
    
    
    24.71
    %
    
    
    32.83
    %
    
    
    33.39
    %
  84




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NOTE 15  INCOME TAXES
  2008
    
    
    2007Deferred tax assets:Allowance for loan losses
    
    $
    5,024,733
    
    
    $
    3,744,220Equity based compensation
    
    
    1,193,410
    
    
    
    685,365Accrued contingencies
    
    
    391,113
    
    
    
    Other
    
    
    508,038
    
    
    
    477,572Total deferred tax assets
    
    
    7,117,294
    
    
    
    4,907,157Deferred tax liability:Mortgage servicing rights
    
    
    (418,414
    )
    
    
    (533,937
    )Net unrealized gain on securities
    
    
    (537,310
    )
    
    
    (297,832
    )Other
    
    
    (412,703
    )
    
    
    (3,798
    )Total deferred tax liabilities
    
    
    (1,368,427
    )
    
    
    (835,567
    )Net deferred tax assets
    
    $
    5,748,867
    
    
    $
    4,071,590
 Unrecognized Tax Benefits
   85




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NOTE 16  COMMITMENTS AND CONTINGENCIES
   2008
    
    
    2007Unused commercial credit lines
    
    $
    231,794,720
    
    
    $
    225,519,668Unused revolving home equity and credit card lines
    
    
    98,924,604
    
    
    
    93,315,941Standby letters of credit
    
    
    24,224,588
    
    
    
    17,039,672Demand deposit account lines of credit
    
    
    2,917,254
    
    
    
    2,394,328$
    357,861,166
    
    
    $
    338,269,609
     86




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##### Table of Contents



NOTE 17  FAIR VALUE
      Accounting for Servicing of Financial Assets
 Assets and Liabilities Measured on a Recurring Basis
  Fair Value Measurements at December 31, 2008 Using:SignificantQuoted Prices in
    
    
    Other
    
    
    SignificantActive Markets for
    
    
    Observable
    
    
    UnobservableIdentical Assets
    
    
    Inputs
    
    
    InputsDecember 31, 2008
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Assets:Available for sale
securities
    
    $
    56,977,201
    
    
    $
    
    
    
    $
    56,977,201
    
    
    $
    Mortgage servicing rights
    
    
    1,069,804
    
    
    
    
    
    
    
    1,069,804
    
    
    
    
  87




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##### Table of Contents



NOTE 17  FAIR VALUE
 Assets and Liabilities Measured on a Non-Recurring Basis
  Fair Value Measurements at December 31, 2008 Using:SignificantQuoted Prices in
    
    
    Other
    
    
    SignificantActive Markets for
    
    
    Observable
    
    
    UnobservableIdentical Assets
    
    
    Inputs
    
    
    InputsDecember 31, 2008
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Assets:Impaired loans
    
    $
    4,521,782
    
    
    $
    
    
    
    $
    
    
    
    $
    4,521,782
    88




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##### Table of Contents



NOTE 17  FAIR VALUE
 Disclosures about Fair Value of Financial Instruments
  2008
    
    
    2007Carrying
    
    
    Fair
    
    
    Carrying
    
    
    FairAmount
    
    
    Value
    
    
    Amount
    
    
    ValueAssetsCash and due from banks
    
    $
    29,819,411
    
    
    $
    29,819,411
    
    
    $
    41,966,169
    
    
    $
    41,966,169Federal funds sold
    
    
    600,669
    
    
    
    600,669
    
    
    
    39,356,700
    
    
    
    39,356,700Reverse repurchase agreements
    
    
    1,000,000
    
    
    
    1,000,000
    
    
    
    81,000,000
    
    
    
    81,000,000Investment securities available-for-sale
    
    
    56,977,201
    
    
    
    56,997,201
    
    
    
    62,267,910
    
    
    
    62,267,910Investment securities held-to-maturity
    
    
    83,566,841
    
    
    
    82,971,003
    
    
    
    71,755,912
    
    
    
    72,034,922Net loans
    
    
    891,359,788
    
    
    
    904,042,575
    
    
    
    820,875,610
    
    
    
    828,271,948Federal Reserve and FHLB stock
    
    
    3,149,900
    
    
    
    N/A
    
    
    
    3,149,900
    
    
    
    N/AAccrued interest receivable
    
    
    4,855,561
    
    
    
    4,855,561
    
    
    
    5,465,584
    
    
    
    5,465,584LiabilitiesDeposits
    
    
    965,965,469
    
    
    
    967,071,375
    
    
    
    1,004,762,029
    
    
    
    1,003,773,371Security repurchase agreements
    
    
    51,146,454
    
    
    
    51,146,454
    
    
    
    58,475,789
    
    
    
    58,475,789FHLB advances
    
    
    
    
    
    
    
    
    
    
    3,000,000
    
    
    
    3,029,585Revolving line of credit
    
    
    
    
    
    
    4,200,000
    
    
    
    4,200,000
    
    
    
    Subordinated debt
    
    
    5,000,000
    
    
    
    4,997,279
    
    
    
    5,000,000
    
    
    
    5,416,762Junior subordinated debentures
    
    
    13,918,000
    
    
    
    9,962,014
    
    
    
    13,918,000
    
    
    
    16,156,710Accrued interest payable
    
    
    2,222,051
    
    
    
    2,222,051
    
    
    
    2,823,121
    
    
    
    2,823,121
    89




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NOTE 18  ACCUMULATED OTHER COMPREHENSIVE INCOME
  2008
    
    
    2007
    
    
    2006Accumulated unrealized gain (loss)
on securities available-for-sale at
January 1, net of tax
    
    $
    459,869
    
    
    $
    (435,879
    )
    
    $
    (922,349
    )Net unrealized gain for period
    
    
    612,299
    
    
    
    1,483,272
    
    
    
    805,547Tax expense
    
    
    (235,679
    )
    
    
    (587,524
    )
    
    
    (319,077
    )Ending other comprehensive gain
(loss) at December 31, net of tax
    
    $
    836,489
    
    
    $
    459,869
    
    
    $
    (435,879
    )Accumulated unrealized loss on
swap at January 1, net of tax
    
    $
    
    
    
    $
    (97,104
    )
    
    $
    (324,235
    )Net unrealized gain for period
    
    
    
    
    
    
    160,795
    
    
    
    376,107Tax expense
    
    
    
    
    
    
    (63,691
    )
    
    
    (148,976
    )Ending other comprehensive loss at
December 31, net of tax
    
    $
    
    
    
    $
    
    
    
    $
    (97,104
    )Accumulated other comprehensive
income (loss) at January 1, net of tax
    
    $
    459,869
    
    
    $
    (532,983
    )
    
    $
    (1,246,584
    )Other comprehensive gain, net of tax
    
    
    376,620
    
    
    
    992,852
    
    
    
    713,601Accumulated other comprehensive
income (loss) at December 31,
net of tax
    
    $
    836,489
    
    
    $
    459,869
    
    
    $
    (532,983
    )
  90




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NOTE 19  EARNINGS PER SHARE
  2008
    
    
    2007
    
    
    2006Basic EPS CalculationBasic average shares outstanding
    
    
    2,311,022
    
    
    
    2,327,878
    
    
    
    2,301,983Net income
    
    $
    3,783,947
    
    
    $
    7,890,549
    
    
    $
    6,984,789Basic earnings per common share
    
    $
    1.64
    
    
    $
    3.39
    
    
    $
    3.03Diluted EPS CalculationAverage shares outstanding
    
    
    2,311,022
    
    
    
    2,327,878
    
    
    
    2,301,983Nonvested restricted stock
    
    
    15,239
    
    
    
    12,574
    
    
    
    25,903Net effect of the assumed exercise of
stock options
    
    
    65,046
    
    
    
    69,833
    
    
    
    78,098Diluted average shares
    
    
    2,391,307
    
    
    
    2,410,285
    
    
    
    2,405,984Net income
    
    $
    3,783,947
    
    
    $
    7,890,549
    
    
    $
    6,984,789Diluted earnings per common share
    
    $
    1.58
    
    
    $
    3.27
    
    
    $
    2.90
 NOTE 20  PARENT COMPANY FINANCIAL STATEMENTS
  Balance Sheets
 December 312008
    
    
    2007AssetsCash
    
    $
    3,801,149
    
    
    $
    1,524,928Investment in subsidiary
    
    
    85,053,548
    
    
    
    80,297,106Other assets
    
    
    2,274,283
    
    
    
    1,744,169Total assets
    
    $
    91,128,980
    
    
    $
    83,566,203Liabilities and shareholders equityOther liabilities
    
    $
    798,328
    
    
    $
    710,197Revolving line of credit
    
    
    4,200,000
    
    
    
    Junior subordinated debentures owed to
unconsolidated subsidiary trust
    
    
    13,918,000
    
    
    
    13,918,000Total liabilities
    
    
    18,916,328
    
    
    
    14,628,197Shareholders equity
    
    
    72,212,652
    
    
    
    68,938,006Total liabilities and shareholders equity
    
    $
    91,128,980
    
    
    $
    83,566,203
  91




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##### Table of Contents



NOTE 20  PARENT COMPANY FINANCIAL STATEMENTS
 Statements of Income
 Year Ended December 312008
    
    
    2007
    
    
    2006Interest income
    
    $
    6,640
    
    
    $
    34,691
    
    
    $
    42,953Interest expense
    
    
    1,491,739
    
    
    
    1,481,523
    
    
    
    1,487,982Net interest income
    
    
    (1,485,099
    )
    
    
    (1,446,832
    )
    
    
    (1,445,029
    )Other income
    
    
    44,308
    
    
    
    44,308
    
    
    
    44,308Dividend income from subsidiary
    
    
    1,315,000
    
    
    
    1,300,000
    
    
    
    1,300,000Other operating expenses:Compensation expense related to
restricted stock and options
    
    
    1,362,150
    
    
    
    1,208,947
    
    
    
    771,177Other expenses
    
    
    321,012
    
    
    
    345,906
    
    
    
    317,559Total other operating expenses
    
    
    1,683,162
    
    
    
    1,554,853
    
    
    
    1,088,736Net loss before tax benefit and equity
in undistributed net income of
subsidiary
    
    
    (1,808,953
    )
    
    
    (1,657,377
    )
    
    
    (1,189,457
    )Tax benefit
    
    
    1,213,078
    
    
    
    1,161,227
    
    
    
    974,934Net loss before equity in undistributed
net income of subsidiary
    
    
    (595,875
    )
    
    
    (496,150
    )
    
    
    (214,523
    )Equity in undistributed net income of
subsidiary
    
    
    4,379,822
    
    
    
    8,386,699
    
    
    
    7,199,312Net income
    
    $
    3,783,947
    
    
    $
    7,890,549
    
    
    $
    6,984,789
  92




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##### Table of Contents



NOTE 20  PARENT COMPANY FINANCIAL STATEMENTS
 Statements of Cash Flows
 Year Ended December 312008
    
    
    2007
    
    
    2006Operating activitiesNet income
    
    $
    3,783,947
    
    
    $
    7,890,549
    
    
    $
    6,984,789Adjustments to reconcile net income to net cash
provided by (used in) operating activities:Undistributed net income of subsidiary
    
    
    (4,379,822
    )
    
    
    (8,386,699
    )
    
    
    (7,199,312
    )Board Stock compensation
    
    
    99,799
    
    
    
    99,709
    
    
    
    99,786Excess tax benefit from deferred compensation
    
    
    (320,631
    )
    
    
    (551,616
    )
    
    
    (559,260
    )Compensation expense related to restricted
stock and options
    
    
    1,362,149
    
    
    
    1,208,947
    
    
    
    771,177Net increase in deferred income tax asset
    
    
    (499,306
    )
    
    
    (147,971
    )
    
    
    (184,276
    )Decrease in other assets
    
    
    (30,808
    )
    
    
    (30,809
    )
    
    
    (30,808
    )Increase in other liabilities
    
    
    408,762
    
    
    
    773,121
    
    
    
    322,139Net cash provided (used) by operating activities
    
    
    424,090
    
    
    
    855,231
    
    
    
    204,235Investing activitiesNet cash provided by investing activities
    
    
    
    
    
    
    
    
    
    
    Financing activitiesProceeds from issuance of stock
    
    
    833,667
    
    
    
    803,905
    
    
    
    1,010,064Repurchase of stock
    
    
    (3,502,167
    )
    
    
    (2,394,403
    )
    
    
    (1,936,368
    )Net change in revolving line of credit
    
    
    4,200,000
    
    
    
    
    
    
    
    Income tax benefit from exercise of options
(FASB No. 123 (R))
    
    
    320,631
    
    
    
    551,616
    
    
    
    559,260Net cash provided in financing activities
    
    
    1,852,131
    
    
    
    (1,038,882
    )
    
    
    (367,044
    )Increase (decrease) in cash and cash equivalents
    
    
    2,276,221
    
    
    
    (183,651
    )
    
    
    (162,809
    )Cash and cash equivalents at beginning of year
    
    
    1,524,928
    
    
    
    1,708,579
    
    
    
    1,871,388Cash and cash equivalents at end of year
    
    $
    3,801,149
    
    
    $
    1,524,928
    
    
    $
    1,708,579
  93




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NOTE 21  QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
  March 31
    
    
    June 30
    
    
    September 30
    
    
    December 312008Interest income
    
    $
    15,688,736
    
    
    $
    13,913,246
    
    
    $
    13,788,177
    
    
    $
    12,987,607Interest expense
    
    
    6,699,677
    
    
    
    4,793,681
    
    
    
    4,555,885
    
    
    
    4,400,146Net interest income
    
    
    8,989,059
    
    
    
    9,119,565
    
    
    
    9,232,292
    
    
    
    8,587,461Provision for loan losses
    
    
    1,075,000
    
    
    
    2,100,000
    
    
    
    1,800,000
    
    
    
    2,425,000Other operating income
    
    
    2,413,245
    
    
    
    3,047,865
    
    
    
    2,926,458
    
    
    
    2,815,991Other operating expense
    
    
    9,747,423
    
    
    
    8,353,327
    
    
    
    7,917,577
    
    
    
    8,688,073Net income before tax
    
    
    579,881
    
    
    
    1,714,103
    
    
    
    2,441,173
    
    
    
    290,379Federal and state income tax
    
    
    33,455
    
    
    
    504,574
    
    
    
    798,203
    
    
    
    (94,643
    )Net income after tax
    
    $
    546,426
    
    
    $
    1,209,529
    
    
    $
    1,642,970
    
    
    $
    385,022Basic earnings per share
    
    $
    0.24
    
    
    $
    0.52
    
    
    $
    0.71
    
    
    $
    0.17Diluted earnings per share
    
    $
    0.23
    
    
    $
    0.50
    
    
    $
    0.69
    
    
    $
    0.16
 March 31
    
    
    June 30
    
    
    September 30
    
    
    December 312007Interest income
    
    $
    16,352,337
    
    
    $
    17,427,517
    
    
    $
    17,597,131
    
    
    $
    17,502,698Interest expense
    
    
    8,380,403
    
    
    
    9,137,701
    
    
    
    9,075,944
    
    
    
    8,668,583Net interest income
    
    
    7,971,934
    
    
    
    8,289,816
    
    
    
    8,521,187
    
    
    
    8,834,115Provision for loan losses
    
    
    225,000
    
    
    
    225,000
    
    
    
    79,000
    
    
    
    375,000Other operating income
    
    
    2,180,974
    
    
    
    2,628,106
    
    
    
    2,473,580
    
    
    
    2,742,665Other operating expense
    
    
    7,317,051
    
    
    
    7,408,397
    
    
    
    8,098,670
    
    
    
    8,167,661Net income before tax
    
    
    2,610,857
    
    
    
    3,284,525
    
    
    
    2,817,097
    
    
    
    3,034,119Federal and state income tax
    
    
    842,097
    
    
    
    1,070,309
    
    
    
    941,143
    
    
    
    1,002,500Net income after tax
    
    $
    1,768,760
    
    
    $
    2,214,216
    
    
    $
    1,875,954
    
    
    $
    2,031,619Basic earnings per share
    
    $
    0.76
    
    
    $
    0.95
    
    
    $
    0.80
    
    
    $
    0.88Diluted earnings per share
    
    $
    0.73
    
    
    $
    0.92
    
    
    $
    0.78
    
    
    $
    0.84
  94




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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
   95




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Item 9B. Other Information
   96




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PART III
 
 Items 10. 11, 12, 13 and 14
   97




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Part IV
 
 Item 15. Exhibits, Financial Statement Schedules
  Page Number in10-KReport on Managements Assessment of Internal Control over
Financial Reporting
    
    
    54Report of Independent Registered Public Accounting Firm
on Consolidated Financial Statements
    
    
    55Consolidated Balance Sheets December 31, 2008 and 2007
    
    
    57Consolidated Statements of Income

For the years ended December 31, 2008, 2007 and 2006
    
    
    58Consolidated Statements of Shareholders Equity 

For the years ended December 31, 2008, 2007 and 2006
    
    
    59Consolidated Statements of Cash Flows

For the years ended December 31, 2008, 2007, and 2006
    
    
    61Notes to consolidated Financial Statements
    
    
    62
 (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
  98




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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 10-Q as of
September 30, 1996 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 Exhibit 10(f) to the Form 10-K for
the fiscal year ended December 31, 2004 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 9, 200910.08*
    
    The National Bank of Indianapolis Corporation 2005 Equity Incentive Plan, filed as Exhibit
10.01 to the Corporations Form 8-K dated June 22, 2005 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
reference10.12*
    
    Employment Agreement dated December 15, 2005 between Philip B. Roby and the Corporation,
filed as Exhibit 10.07 to the Corporations Form 8-K dated December 21, 2005, and as amended
by Exhibit 10.07 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
reference
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##### Table of Contents



10.14*
    
    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
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##### Table of Contents



SIGNATURES
  (Registrant)
    
    The National Bank of Indianapolis Corporation
 By (Signature and Title)
    
    /s/ Morris L. Maurer
    
    March 13, 2009Morris L. Maurer, President (Principal Executive Officer)
    
    Date
  By (Signature and Title)
    
    /s/ Morris L. Maurer
    
    March 13, 2009Morris L. Maurer, President (Principal Executive Officer)
    
    DateBy (Signature and Title)
    
    /s/ Philip B. Roby
    
    March 13, 2009Philip B. Roby, Executive Vice President
    
    DateBy (Signature and Title)
    
    /s/ Debra L. Ross
    
    March 13, 2009Debra L. Ross, Senior Vice President (Principal
Financial andAccounting Officer)
    
    DateBy (Signature and Title)
    
    /s/ Michael S. Maurer
    
    March 13, 2009Michael S. Maurer, Chairman of the Board
    
    DateBy (Signature and Title)
    
    /s/ Kathryn G. Betley
    
    March 13, 2009Kathryn G. Betley, Director
    
    DateBy (Signature and Title)
    
    /s/ David R. Frick
    
    March 13, 2009David R. Frick, Director
    
    DateBy (Signature and Title)
    
    /s/ Andre B. Lacy
    
    March 13, 2009Andre B. Lacy, Director
    
    DateBy (Signature and Title)
    
    /s/ William S. Oesterle
    
    March 13, 2009William S. Oesterle, Director
    
    DateBy (Signature and Title)
    
    /s/ Todd H. Stuart
    
    March 13, 2009Todd H. Stuart, Director
    
    DateBy (Signature and Title)
    
    /s/ John T. Thompson
    
    March 13, 2009John T. Thompson, Director
    
    Date
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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 10-Q as of
September 30, 1996 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 Exhibit 10(f) to the Form 10-K for
the fiscal year ended December 31, 2004 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 9, 200910.08*
    
    The National Bank of Indianapolis Corporation 2005 Equity Incentive Plan, filed as Exhibit
10.01 to the Corporations Form 8-K dated June 22, 2005 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
reference10.12*
    
    Employment Agreement dated December 15, 2005 between Philip B. Roby and the Corporation,
filed as Exhibit 10.07 to the Corporations Form 8-K dated December 21, 2005, and as amended
by Exhibit 10.07 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
reference
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##### Table of Contents



10.14*
    
    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
 
  103