UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM lO-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________to ____________
Commission File Number 1-10602
______________________MID-AMERICA BANCORP____________________
(Exact name of registrant as specified in its charter)
Kentucky 61-1012933
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
500 West Broadway
Louisville, Kentucky 40202
(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code: (502) 589-3351
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock AMEX
Securities registered pursuant to Section 12(g) of the Act: None
(continued)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. YES X NO
Indicate by check mark if the disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [x]
The aggregate market value of the voting stock held by non-affiliates
(shareholders other than directors, executive officers
and principal shareholders) of the registrant as of February 16,
1996 was approximately $118,477,000.
The number of shares outstanding of the registrant's common stock
as of February 16, 1996 was 9,098,895.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Registrant's Annual Report to Shareholders for the year
ended December 31, 1995 are incorporated by reference into Parts I
and II.
Portions of Registrant's Proxy Statement for the Annual Meeting of
Shareholders to be held April 18, 1996 are incorporated by
reference into Part III.
<PAGE>
TABLE OF CONTENTS
PART I
Item No. Page
1. BUSINESS . . . . . . . . . . . . . . . . . . . 3
2. PROPERTIES . . . . . . . . . . . . . . . . . . 13
3. LEGAL PROCEEDINGS . . . . . . . . . . . . . . 13
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS . . . . . . . . . . . . . . . . . . . 13
EXECUTIVE OFFICERS OF REGISTRANT . . . . . . . 13
PART II
5. MARKET FOR REGISTRANT'S COMMON EQUITY AND
RELATED SECURITY HOLDER MATTERS . . . . . . . 17
6. SELECTED FINANCIAL DATA . . . . . . . . . . . 17
7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS. 17
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. . 17
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE . . . . 17
PART III
10. DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT . . . . . . . . . . . . . . . . . . 18
11. EXECUTIVE COMPENSATION . . . . . . . . . . . . 18
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT. . . . . . . . . . . . . 18
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 18
PART IV
14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K. . . . . . . . . . . . . . 19
SIGNATURES . . . . . . . . . . . . . . . . . . 20
<PAGE>
PART I
ITEM 1. BUSINESS OF MID-AMERICA BANCORP
Mid-America Bancorp (the "Company") is a Kentucky corporation
registered as a bank holding company pursuant to the Bank Holding
Company Act of 1956, as amended (the "BHC Act"), and as a savings
and loan holding company pursuant to the Home Owners' Loan Act.
The Company is registered with, and subject to, the supervision of
the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board") and the Office of Thrift Supervision ("OTS").
The Company's banking subsidiary, Mid-America Bank of Louisville
and Trust Company (the "Bank"), represents the Company's primary
subsidiary. The Bank was established as a Kentucky banking
corporation on October 14, 1925, under the name "Morris Plan
Industrial Bank." On July 2, 1946 the Bank's name was changed to
"Bank of Louisville." The Bank merged with "Royal Bank and Trust
Company" in 1963 under the name Bank of Louisville-Royal Bank and
Trust Co. The Bank's name was changed to Bank of Louisville and
Trust Company on March 26, 1980. The present name of the Bank was
adopted on March 25, 1983, when the Bank became a wholly-owned
subsidiary of the Company.
The Bank is engaged in a wide range of commercial, trust, and
personal banking activities including the usual acceptance of
deposits for checking, savings and time deposit accounts; making of
real estate, construction, commercial, home improvement and
consumer loans; issuance of letters of credit; rental of safe
deposit boxes; providing financial counseling for institutions and
individuals; serving as executor of estates and as trustee under
trusts and under various pension and employee benefit plans;
serving as escrow agent on bond issues; serving as stock transfer
agent, exchange agent, dividend disbursing agent, and registrar
with respect to corporate securities; and participation in small
business loan and student loan programs.
The Company also operates a number of other subsidiaries, including
Mid-America Bank, FSB, a federal savings bank ("Savings Bank"),
which was organized and chartered during 1993. The Savings Bank is
located in Pewee Valley and LaGrange, Kentucky in Oldham County,
and competes on the local level with other commercial banks and
financial institutions in Oldham County, Kentucky for all types of
deposits and loans. Another subsidiary, Mid-America Money Order
Company, is engaged in the issuance and sale throughout the United
States of retail money orders and similar consumer-type payment
instruments having a face value of not more than $2,000. As of
December 31, 1995, Mid-America Money Order Company was licensed to
issue money orders in all 50 states, the District of Columbia, the
U.S. Virgin Islands and Puerto Rico.
Competition
Competition for banking and related financial services is active in
Jefferson County, Kentucky and other geographic areas served by the
Company's subsidiaries. The Company's subsidiaries compete with
other financial institutions including savings and loan
associations, finance companies, mortgage banking companies, credit
unions, insurance companies, brokerage firms, mutual funds, and
other commercial banks. In addition, large regional banks continue
to increase competition in the Company's trade territories through
the acquisition of local financial institutions, the establishment
of loan production offices and the solicitation of customers for
credit cards and related services. At present, both price and
product range are critically important in maintaining and expanding
financial relationships.
On December 31, 1995, the Bank ranked fifth among banks and trust
companies in the City of Louisville and in Jefferson County,
Kentucky, in terms of total assets and in terms of total deposits.
On December 31, 1995 there were eleven commercial banks and trust
companies in Jefferson County, including the Bank.
Employees
As of December 31, 1995, the Company and subsidiaries employed 601
persons on a full-time basis and 111 on a part-time basis.
Government Policies
As a financial institution holding company, the earnings of the
Company are affected by state and federal laws and by policies of
various federal and state regulatory agencies. These policies
include, for example, statutory maximum legal lending rates,
domestic monetary policies of the Federal Reserve Board, United
States fiscal policy, and capital adequacy and liquidity
constraints imposed by bank regulatory agencies.
Supervision And Regulation
The Company is a registered bank holding company under the BHC Act,
and is subject to supervision, regulation and examination by the
Federal Reserve Board. Under the BHC Act, a bank holding company
is, with limited exceptions, prohibited from (i) acquiring direct
or indirect ownership or control of any voting shares of any
company which is not a bank or (ii) engaging in any activity other
than managing or controlling banks. Notwithstanding this
prohibition, a bank holding company may engage in or own shares of
a company that engages solely in activities which the Federal
Reserve Board has determined to be so closely related to banking,
or managing or controlling banks, as to be a proper incident
thereto.
As a registered bank holding company, the Company is required to
file with the Federal Reserve Board annual reports and other
information regarding its business operations and the business
operations of its subsidiaries. It is also subject to examination
by the Federal Reserve Board and is required to obtain Federal
Reserve Board approval prior to acquiring, directly or indirectly,
ownership or control of any voting shares of any bank, if, after
such acquisition, it would own or control, directly or indirectly,
more than five percent of the voting stock of such bank unless it
already owns a majority of the voting stock of such bank.
The Bank is subject to regulation and supervision, of which regular
bank examinations are a part, by the Kentucky Department of
Financial Institutions, Division of Banking. The Federal Deposit
Insurance Corporation ("FDIC") currently insures the deposits of
the Bank to a maximum of $100,000 per depositor. For this
protection, the Bank pays a semi-annual statutory assessment and is
subject to the rules and regulations of the FDIC pertaining to
deposit insurance. On July 13, 1989, the Bank became a member bank
in the Federal Reserve System. The Federal Reserve Board retains
direct supervision of state chartered member banks and their
affiliates through periodic examinations, the expense of which is
borne by the Bank.
The Savings Bank is subject to regulation and supervision, of which
regular examinations are a part, by the OTS. The FDIC currently
insures the deposits of the Savings Bank to a maximum of $100,000
per depositor.
Eton Life Insurance Company, a wholly-owned subsidiary of the
Company, is regulated by the Kentucky Department of Insurance and
is subject to Kentucky statutes and regulations governing domestic
underwriters of credit life, accident, and health insurance.
The enactment in August 1989 of the Financial Institutions Reform,
Recovery and Enforcement Act of 1989 ("FIRREA") placed the savings
and loan insurance fund under the control of the FDIC, created the
OTS in the U.S. Treasury Department and created the Resolution
Trust Corporation to act as receiver to liquidate failed thrift
institutions. FIRREA further expanded the power of bank holding
companies to allow for the acquisition of savings associations and
to operate them as separate thrift subsidiaries. FIRREA enhanced
the ability of bank holding companies to expand through thrift
acquisitions beyond their present geographic interstate banking
region. The tandem restrictions placed upon thrift subsidiaries of
bank holding companies have been removed allowing linkage of
deposit-taking activities and solicitation of deposits and loans on
behalf of affiliate companies. FIRREA led to many structural
changes in competition for loans, deposits and other services,
affected collateral valuation methods, and the acquisition of
financial institutions.
In addition to FIRREA, in December 1991 the Federal Deposit
Insurance Corporation Improvement Act of 1991 (the "FDIC
Improvement Act") was enacted. The FDIC Improvement Act dealt with
the recapitalization of the Bank Insurance Fund, deposit insurance
reform, including requiring the FDIC to establish a risk-based
premium assessment system, and a number of other regulatory and
supervisory matters.
In 1994 the Riegle-Neal Interstate Banking and Branching Efficiency
Act of 1994 (the "Act") was signed into law. When fully phased in,
the Act will remove state law barriers to interstate bank
acquisitions and will permit the consolidation of interstate
banking operations. Under the Act, effective September 29, 1995,
adequately capitalized and managed bank holding companies may
acquire banks in any state, subject to Community Reinvestment Act
compliance, compliance with federal and state antitrust laws and
deposit concentration limits, and subject to any state laws
restricting the acquisition of a bank that has not been in
existence for a minimum time period (up to five years). Effective
September 29, 1995, the Act also permits any bank that is
controlled by a bank holding company to act as agent for any
affiliated financial institution in deposit and loan transactions,
regardless of whether the institutions are located in the same or
different states. The Act's interstate branching provisions will
become operative on June 1, 1997, although any state can, prior to
that time, adopt legislation to accelerate interstate branching or
prohibit it completely. The Act's interstate branching provisions
will permit banks to merge across state lines and, if state laws
permit de novo branching, to establish a new branch as its initial
entry into a state.
<PAGE>
The following tables set forth selected statistical information with
respect to the Company and should be read in conjunction with the
Company's consolidated financial statements.
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY;
INTEREST RATES AND INTEREST DIFFERENTIAL
The schedule captioned "Average Balances and Yields/Rates Tax
Equivalent Basis" included on page 20 of the Company's annual report
to shareholders for the year ended December 31, 1995, which is
incorporated herein by reference, shows, for each major category of
interest earning asset and interest bearing liability, the average
amount outstanding, the interest earned or expensed on such amount and
the average rate earned or expensed for each of the years in the
three-year period ended December 31, 1995. The schedule also shows
the average rate earned on all interest earning assets and the average
rate expensed on all interest bearing liabilities, the net interest
spread and the net interest margin (net interest income divided by
total average interest earning assets) for each of the years in the
three-year period ended December 31, 1995. Nonaccrual loans
outstanding were included in calculating the rate earned on loans.
Total interest income includes the effects of taxable equivalent
adjustments using a tax rate of 35%.
The changes in interest income and interest expense resulting
from changes in volume and changes in rates for the years ended
December 31, 1995 and 1994 are shown in the schedule captioned
"Interest Income and Interest Expense Volume and Rate Changes for the
Years 1995 and 1994 Tax Equivalent Basis" included on page 21 of the
Company's annual report to shareholders for the year ended December
31, 1995, which is incorporated herein by reference.
<TABLE>
<CAPTION>
SECURITIES PORTFOLIO
BOOK VALUE December 31
(In Thousands)
1995 1994 1993
Securities Available for Sale
<S> <C> <C> <C>
U.S. Treasury and U.S. government agencies..$237,294 $107,039 $109,202
States and political subdivisions........... 11,301
Corporate obligations....................... 28,107 9,915
Equity securities .......................... 15,672 14,528
$292,374 $131,482 $109,202
<CAPTION>
December 31
1995 1994 1993
Securities Held to Maturity
<S> <C> <C> <C>
U.S. Treasury and U.S. government agencies.. $69,226 $189,223 $174,395
States and political subdivisions........... 7,877 2,956
Corporate obligations....................... 100 16,863 33,557
Equity securities and other................. 350 14,188
$69,326 $214,313 $225,096
</TABLE>
<PAGE>
SECURITIES
MATURITY DISTRIBUTION AND WEIGHTED AVERAGE YIELDS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
(Dollars In Thousands) Within After One But After Five But After
One Year Within Five Years Within Ten Years Ten Years
Securities Available for sale
Amount Yield Amount Yield Amount Yield Amount Yield
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury and U.S.
government agencies $38,857 5.71% $169,055 6.24% $20,580 6.57% $8,802 6.39%
States and political
subdivisions 258 11.54% 1,990 6.99% 1,120 7.98% 7,933 8.37%
Corporate obligations 6,919 5.60% 4,098 6.14% 7,020 5.95% 10,070 5.95%
Equity securities -- -- -- -- -- -- 15,672 6.87%
$46,034 5.72% $175,143 6.25% $28,720 6.47% $42,477 6.83%
<CAPTION>
Within After One But After Five But After
One Year Within Five Years Within Ten Years Ten Years
Securities Held to Maturity
Amount Yield Amount Yield Amount Yield Amount Yield
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury and U.S.
government agencies $56,188 6.04% $13,038 6.71% -- -- -- --
Corporate obligations 100 6.00% -- -- -- -- -- --
$56,288 6.04% $13,038 6.71% --- -- --- --
</TABLE>
The calculation of the weighted average yield is based on the average
tax equivalent yield, weighted by the respective costs of the
securities.
The weighted average yields on states and political subdivisions
securities are computed on a tax equivalent basis using a marginal
federal tax rate of 35%.
LOAN PORTFOLIO
(In Thousands)
<TABLE> December 31
<CAPTION>
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Commercial and financial $345,167 $299,375 $254,374 $223,426 $175,182
Real estate - construction and development 61,398 61,083 59,581 52,214 42,770
Real estate - mortgage 284,074 291,198 296,870 262,362 217,449
Consumer 57,926 47,740 46,743 45,265 57,972
$748,565 $699,396 $657,568 $583,267 $493,373
</TABLE>
The loan portfolio includes domestic loans only as the Company has no
foreign loans. The Company has no other category of loans whose
concentration exceeds 10% of total loans.
<PAGE>
<TABLE>
<CAPTION>
SELECTED LOAN MATURITIES AND
SENSITIVITY TO INTEREST RATES
DECEMBER 31, 1995
(In Thousands)
Loan Maturities
After One
Within But Within After
One Year Five Years Five Years Total
<S> <C> <C> <C> <C>
Commercial and financial $102,123 $91,338 $151,706 $345,167
Real estate - construction and development 32,966 20,993 7,439 61,398
Real estate - mortgage 106,310 48,917 128,847 284,074
Consumer 42,665 13,302 1,959 57,926
$284,064 $174,550 $289,951 $748,565
Predetermined rates $56,857 $110,601 $199,988 $367,446
Floating rates 227,207 63,949 89,963 381,119
$284,064 $174,550 $289,951 $748,565
</TABLE>
For amortizing loans, scheduled repayments are reported in the
maturity category in which the payment is due. Demand loans and
overdrafts are reported in the within one year category.
NON-PERFORMING LOANS
Information with respect to the Company's non-performing loans is
included in the section captioned "Non-Performing and Restructured
Assets" and footnote D to the consolidated financial statements
included on pages 14 and 34, respectively, of the Company's annual
report to shareholders for the year ended December 31, 1995, which is
incorporated herein by reference.
<PAGE>
<TABLE>
<CAPTION>
SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars In Thousands)
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Balance, beginning of year.................... $7,045 $6,578 $6,020 $5,523 $5,220
Charge-offs:
Commercial and financial.................... 569 115 48 88 107
Real estate - construction and development.. 2,888 28 639
Real estate - mortgage...................... 305 139 262 134 294
Consumer.................................... 283 211 266 282 347
Total charge-offs......................... 4,045 493 576 504 1,387
Recoveries:
Commercial and financial.................... 44 10 7 8 159
Real estate - construction and development.. 462 4
Real estate - mortgage...................... 61 125 99 197 608
Consumer.................................... 166 113 176 146 194
Total recoveries.......................... 271 248 744 351 965
Net charge-offs (recoveries).................. 3,774 245 (168) 153 422
Provision for loan losses..................... 6,047 712 390 650 725
Balance, end of year.......................... $9,318 $7,045 $6,578 $6,020 $5,523
Average loans, net of unearned income......... $707,898 $679,100 $615,070 $534,525 $479,667
Net charge-offs (recoveries)
to average loans, net of unearned income.... 0.53% 0.04% (0.03%) 0.03% 0.09%
</TABLE>
The allowance for loan losses is maintained at a level sufficient to
absorb estimated probable credit losses. Management determines the
adequacy of the allowance based upon reviews of individual credits,
evaluation of the risk characteristics of the loan portfolio,
including the impact of current economic conditions on the borrowers'
ability to repay, past collection and loss experience and such other
factors, which, in management's judgment, deserve current recognition.
The allowance for loan losses is increased by charges to operating
earnings and reduced by charge-offs, net of recoveries. See
"Provision for Loan Losses and Allowance for Loan Losses" included on
pages 9 and 10 of the Company's annual report to shareholders for the
year ended December 31, 1995, incorporated herein by reference, for a
discussion of factors affecting loan loss experience during 1995.
<PAGE>
<TABLE>
<CAPTION>
ALLOCATION OF ALLOWANCE FOR LOAN LOSSES
(Dollars In Thousands)
1995 1994 1993 1992 1991
% Of % Of % Of % Of % Of
Allocation Loans In Allocation Loans In Allocation Loans In Allocation Loans In Allocation Loans In
Of Each Of Each Of Each Of Each Of Each
Allowance Category Allowance Category Allowance Category Allowance Category Allowance Category
For Loan To Total For Loan To Total For Loan To Total For Loan To Total For Loan To Total
Losses Loans Losses Loans Losses Loans Losses Loans Losses Loans
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial and
financial.......... $5,022 46.11% $3,651 42.80% $3,614 38.68% $2,598 38.31% $2,680 35.51%
Real estate -
construction
and development.... 2,932 8.20% 1,773 8.73% 1,235 9.06% 424 8.95% 450 8.67%
Real estate -
mortgage........... 437 37.95% 445 41.64% 378 45.15% 1,515 44.98% 1,085 44.07%
Consumer............ 927 7.74% 1,176 6.83% 1,351 7.11% 1,483 7.76% 1,308 11.75%
$9,318 100.00% $7,045 100.00% $6,578 100.00% $6,020 100.00% $5,523 100.00%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MATURITY SCHEDULE OF TIME DEPOSITS OF $100,000 AND OVER
DECEMBER 31, 1995
(In Thousands)
Certificate
Of Deposits Other Total
<S> <C> <C> <C>
Three months or less...................... $9,293 $2,873 $12,166
Over three through six months............. 4,081 ---- 4,081
Over six through twelve months............ 13,756 ---- 13,756
Over twelve months........................ 37,323 ---- 37,323
$64,453 $2,873 $67,326
</TABLE>
RETURN ON EQUITY AND ASSETS
Selected ratios for the years 1995, 1994 and 1993 are included on page
2 of the Company's annual report to shareholders for the year ended
December 31, 1995 and are incorporated herein by reference.
FEDERAL FUNDS PURCHASED AND SECURITIES SOLD UNDER AGREEMENTS TO
REPURCHASE
(Dollars In Thousands)
Federal funds purchased and securities sold under agreements
to repurchase generally represent overnight borrowing
transactions. Included in repurchase agreements are balances
of several institutional customers which are subject to
substantial fluctuations, with reductions occurring in the
normal course of business after year end. The detail of these
short-term borrowings for the years 1995, 1994 and 1993 follows:
(Dollars In Thousands)
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Federal funds purchased:
Balance at year end..................... $3,050 $5,800 $12,500
Average during the year................. 3,730 5,574 7,962
Maximum amount outstanding at any month 5,100 11,325 13,100
Weighted average rate during the year... 5.93% 3.79% 2.95%
Weighted average rate on December 31.... 5.99% 5.99% 3.02%
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Securities sold under agreements to repurchase:
Balance at year end.....................$227,166 $213,101 $183,288
Average during the year................. 148,758 149,465 94,772
Maximum amount outstanding at any month 227,166 213,101 183,288
Weighted average rate during the year... 5.51% 3.97% 2.76%
Weighted average rate on December 31.... 5.40% 5.77% 3.20%
</TABLE>
ITEM 2. PROPERTIES
The Bank maintains a main office, warehouse, operations center and
28 branches in Jefferson County, Kentucky. The Bank owns 17 branch
offices, leases 9 branch offices, its operations center and the
main office, and owns the buildings but leases the land with regard
to 2 branches. The Bank also operates 40 automatic teller
machines, at various locations in its traditional customer base of
Jefferson County, Kentucky. The Savings Bank owns its main office
facility, leases the land for its branch location and operates one
automatic teller machine in Oldham County, Kentucky. See footnote
F to the consolidated financial statements on page 35 of the
Company's annual report to shareholders for the year ended December
31, 1995, which is incorporated herein by reference, for additional
information on premises, equipment and lease commitments.
ITEM 3. LEGAL PROCEEDINGS
The information contained in footnote N to the Company's
consolidated financial statements included on page 40 of the
Company's annual report to shareholders for the year ended December
31, 1995, is incorporated herein by reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
EXECUTIVE OFFICERS OF REGISTRANT.
Listed below are the names and ages as of December 31, 1995, of the
Company's executive officers, positions held, and the year from
which held. The Company's executive officers are elected annually
by the Board of Directors and each, except Bertram W. Klein, Paul
E. Henry, Donald R. LaMar, David C. Meece, Marlyn Y. Smith, and
Thomas L. Weber, is employed pursuant to an employment agreement.
Year From
Name Age Position Held Which Held
Bertram W. Klein 65 Chairman of the Board, 1985
and member of the Executive
Committee
R. K. Guillaume 52 Chief Executive Officer, 1995
Director and member of
Executive Committee
Orson Oliver 52 President, Director and 1985
member of the Executive
Committee
Paul E. Henry 60 Executive Vice President 1989
and member of the Executive
Committee
William J. Hornig 46 Executive Vice President 1995
and member of the Executive
Committee
David N. Klein 39 Executive Vice President 1991
and member of the Executive
Committee
Richard B. Klein 37 Executive Vice President 1991
and member of the Executive
Committee
Donald R. LaMar 45 Executive Vice President, 1995
member of Executive Committee
and President of Mid-America
Money Order Company
David C. Meece 42 Executive Vice President 1995
and member of Executive
Committee
Gail W. Pohn 57 Executive Vice President 1993
and member of the Executive
Committee
Robert H. Sachs 56 Executive Vice President, 1993
General Counsel, and member
of the Executive Committee
Steven A. Small 42 Executive Vice President, 1993
Chief Financial Officer
and member of the Executive
Committee
Marlyn Y. Smith 59 Executive Vice President 1995
and member of Executive
Committee
Thomas L. Weber 63 Executive Vice President 1984
and member of the Executive
Committee
Mr. Guillaume joined the Company and the Company's subsidiary bank
in October 1995. From 1993 to September 1995, Mr. Guillaume was a
Director and the President of Liberty National Bank and Trust
Company of Louisville and Liberty National Bancorp, Inc. (now Bank
One, Kentucky). Prior to 1993, he was Executive Vice President of
these entities.
Mr. Hornig joined the Company and the Company's subsidiary bank in
April 1995 as Executive Vice President - Human Resources. From
October 1992 to March 1995, Mr. Hornig was Senior Vice President -
Human Resources of First Colonial Bank Shares Corporation, a
non-affiliate of the Company. Prior to 1992, Mr. Hornig was Director
of Human Resources for Arthur J. Gallagher & Company.
David N. Klein joined the Company's subsidiary bank in 1978. He
was elected to his current position in 1991 and from 1987 to 1991
held the office of Senior Vice President - Retail Banking. He is
the son of Bertram W. Klein and the brother of Richard B. Klein.
Richard B. Klein joined the Company's subsidiary bank in 1980. He
was elected to his current position in 1991 and from 1987 to 1991
held the office of Senior Vice President-Consumer Loans and Credit.
He is the son of Bertram W. Klein and the brother of David N.
Klein.
Mr. Pohn joined the Company and the Company's subsidiary bank in
1993. Prior to joining the Company, from 1981 to 1993, he was
Senior Vice President, Chief Counsel and Secretary for National
City Bank, Kentucky (and its predecessor), a non-affiliate of the
Company.
Mr. Sachs joined the Company and the Company's subsidiary bank in
1993. From 1990 to 1993, Mr. Sachs was the President of Legal
Services Management, Inc., a consultant to corporations and law
firms regarding the effective management and delivery of legal
services. From 1989 to 1990 he was Vice President of Law and
Corporate Secretary to BATUS Inc., a $13 billion management and
holding company for the U.S. interests of BAT Industries, plc, a
large publicly held UK conglomerate. Prior to that, Mr. Sachs was
Vice President and General Counsel, Product Litigation, to Brown &
Williamson Tobacco Corporation.
Mr. Small, a CPA, joined the Company and the Company's subsidiary
bank in 1993. Prior to joining the Company, from 1986 to 1993, he
was a partner of KPMG Peat Marwick, Certified Public Accountants,
and worked primarily in serving financial institution clients of
that firm.
Mr. LaMar joined the Company's bank subsidiary in 1985. He was
elected to his current position in 1995. From 1987 to 1994 he was
Senior Vice President, Operations Support.
Mr. Meece joined the Company's subsidiary bank in 1985. He was
elected to his current position in 1995. From 1992 to 1994 he was
Senior Vice President, Advanced Systems Development. Prior to
1992, Mr. Meece was Vice President, Information System Support
Services.
Mrs. Smith joined the Company's subsidiary bank in 1965. She was
elected to her current position in 1995. From 1987 to 1994 she was
Senior Vice President, Loan Services.
All other executive officers have served the Company or the Bank in
the executive officer capacities identified above for more than
five years.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
SECURITY HOLDER MATTERS
The information captioned "Market for Mid-America Bancorp's Stock
and Related Security Holder Matters" included on page 24 of the
Company's annual report to shareholders for the year ended
December 31, 1995, is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
The information captioned "Summary of Financial Data" included on
page 22 of the Company's annual report to shareholders for the year
ended December 31, 1995 is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Management's Discussion and Analysis of Financial Condition and
Results of Operations included on pages 9 through 21 of the
Company's annual report to shareholders for the year ended December
31, 1995 is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements of the Company and
report of independent auditors included on pages 26 through 44 in
the Company's annual report to shareholders for the year ended
December 31, 1995 are incorporated herein by reference:
Independent Auditors' Report
Consolidated balance sheets - December 31, 1995 and 1994
Consolidated statements of income -
years ended December 31 1995, 1994, and 1993
Consolidated statements of changes in shareholders' equity -
years ended December 31, 1995, 1994 and 1993
Consolidated statements of cash flows -
years ended December 31, 1995, 1994 and 1993
Notes to consolidated financial statements
The information captioned "Quarterly Financial Data" included on
page 23 of the Company's annual report to shareholders for the year
ended December 31, 1995 is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III
Item 10. Directors and Executive Officers of Registrant.
The information appearing under the heading "EXECUTIVE
OFFICERS OF REGISTRANT" appearing in Part I of this Form 10-K and
the information appearing under the headings "ELECTION OF
DIRECTORS" and "COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES
EXCHANGE ACT OF 1934" in the Company's definitive Proxy Statement
filed pursuant to Regulation 14A under the Securities Exchange Act
of 1934 in connection with the Company's 1996 Annual Meeting of
Shareholders are incorporated herein by reference.
Item 11. Executive Compensation.
The information appearing under the heading "EXECUTIVE
COMPENSATION" in the Company's definitive Proxy Statement filed
pursuant to Regulation 14A under the Securities Exchange Act of
1934 in connection with the Company's 1996 Annual Meeting of
Shareholders is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
The information appearing under the headings "PRINCIPAL
SHAREHOLDERS" and "ELECTION OF DIRECTORS" in the Company's
definitive Proxy Statement filed pursuant to Regulation 14A under
the Securities Exchange Act of 1934 in connection with the
Company's 1996 Annual Meeting of Shareholders is incorporated
herein by reference.
Item 13. Certain Relationships and Related Transactions.
The information appearing under the headings "CERTAIN
TRANSACTIONS" and "COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION" in the Company's definitive Proxy Statement filed
pursuant to Regulation 14A under the Securities Exchange Act of
1934 in connection with the Company's 1996 Annual Meeting of
Shareholders is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K
a-l Financial Statements
See Part II, Item 8 for a listing of all financial
statements and report of independent auditors which
is incorporated herein by reference.
a-2 Financial Statement Schedules
All schedules normally required by Form lO-K are
omitted since they are either not applicable or the
required information is shown in the financial
statements or the notes thereto.
a-3 Exhibits
The exhibits filed as part of this report on Form
10-K are listed on the Exhibit Index appearing on
pages 23 and 24 of this annual report on Form 10-K,
which are incorporated herein by reference.
b Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Company has duly caused this
report to be signed on its behalf by the undersigned, thereunto
duly authorized.
MID-AMERICA BANCORP
March 18, 1996 BY: /s/ Bertram W. Klein
Bertram W. Klein
Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities indicated.
/s/ Bertram W. Klein Chairman of the Board March 18, 1996
Bertram W. Klein
/s/ Rick K. Guillaume Chief Executive Officer March 18, 1996
Rick K. Guillaume and Director
/s/ Orson Oliver President and Director March 18, 1996
Orson Oliver
/s/ Steven A. Small Executive Vice March 18, 1996
Steven A. Small President & Chief
Financial Officer
Director March 18, 1996
Leslie D. Aberson
/s/ Robert P. Adelberg Director March 18, 1996
Robert P. Adelberg
Director March 18, 1996
Stanley L. Atlas
/s/ William C. Ballard, Jr. Director March 18, 1996
William C. Ballard, Jr.
/s/ Martha Layne Collins Director March 18, 1996
Martha Layne Collins
/s/ Peggy Ann Markstein Director March 18, 1996
Peggy Ann Markstein
/s/ Donald G. McClinton Director March 18, 1996
Donald G. McClinton
/s/ Jerome J. Pakenham Director March 18, 1996
Jerome J. Pakenham
/s/ John S. Palmore Director March 18, 1996
John S. Palmore
/s/ Woodford R. Porter, Sr. Director March 18, 1996
Woodford R. Porter, Sr.
/s/ Benjamin K. Richmond Director March 18, 1996
Benjamin K. Richmond
/s/ Bruce J. Roth Director March 18, 1996
Bruce J. Roth
/s/ Raymond L. Sales Director March 18, 1996
Raymond L. Sales
/s/ Thomas E. Sandefur, Jr. Director March 18, 1996
Thomas E. Sandefur, Jr.
/s/ Henry C. Wagner Director March 18, 1996
Henry C. Wagner
INDEX TO EXHIBITS
3(a) Articles of Restatement of Articles of Incorporation
of Mid-America Bancorp filed with the Secretary
of State of Kentucky on May 4, 1989; as amended by
Articles of Amendment filed with the Secretary of
State of Kentucky on April 19, 1993 and March 13,
1995 are incorporated by reference to Exhibit 3
(a) to the Company's annual report on Form 10-K
for the year ended December 31, 1994.
(b) By-Laws of Mid-America Bancorp.
4. Amended and Restated Articles of Incorporation
and By-Laws. See Exhibits 3 (a) and 3 (b).
10. Material Contracts
10. (a) Mid-America Bancorp Non-Employee Directors
Deferred Compensation Plan. Exhibit 10(a)
to the Company's annual report on Form 10-K
for the year ended December 31, 1994 is
incorporated by reference herein.(*)
10. (b) Employment Agreement between the Company
and Orson Oliver dated, November 8, 1995. (*)
10. (c) Employment Agreement between the Company and
R. K. Guillaume dated October 2, 1995 is
incorporated by reference herein to Exhibit
10 (n) to the Company's quarterly report on
Form 10-Q for the quarter ended September 30,
1995. (*)
10. (d) Employment Agreement between the Company
and David N. Klein effective, November 8,1995.(*)
10. (e) Employment Agreement between the Company
and Richard B. Klein effective, November 8, 1995.(*)
10. (f) Employment Agreement between the Company
and Robert Sachs effective, March 1, 1996.(*)
10. (g) Employment Agreement between the Company
and Gail Pohn effective, March 1, 1996.(*)
10. (h) Employment Agreement between the Company
and Steven Small effective, March 1, 1996.(*)
10. (i) Agreement and General Release between the
Company and Stanley L. Atlas dated,
October 26, 1993. Exhibit 10 (h) to the
Company's annual report on Form 10-K for the
year ended December 31, 1993 is incorporated by reference
herein.(*)
10. (j) Amended and Restated Mid-America Bancorp
Incentive Stock Option Plan is incorporated
herein by reference to Post-Effective Amendment
Number 1 to Form S-8 Registration Statement No.
2-92270.(*)
10. (k) Mid-America Bancorp 1991 Incentive Stock Option
Plan. Exhibit 28 to Registration Statement No.
33-42989 is incorporated by reference herein.(*)
10. (l) Mid-America Bancorp Incentive Compensation Plan.
Exhibit 10(d) to the Company's annual report on
Form 10-K for the year ended December 31, 1990 is
incorporated by reference herein.(*)
10. (m) Employment Agreement between the Company and
William J. Hornig dated April 1, 1995, is incorporated by
reference herein to Exhibit 10 (l)to the
Company's quarterly report on
Form 10-Q for the quarter ended June 30, 1995. (*)
10. (n) 1995 Incentive Stock Option plan of Mid-America
Bancorp, is incorporated by reference herein to
Exhibit 10 (m) to the Company's quarterly report on
Form 10-Q for the quarter ended June 30, 1995. (*)
* Management contract or compensatory plan or
arrangement required to be filed as an exhibit
pursuant to Item 14 of this report.
11. Statement re Computation of per share earnings.
13. Selected portions of the annual report to
shareholders for the year ended December 31, 1995.
21. Subsidiaries of the Company.
23. Consent of independent auditors.
27. Financial Data Schedule.
99. Additional Exhibits
Form 11-K
<PAGE>
Exhibit 3(b)
BY-LAWS
OF
MID-AMERICA BANCORP
ARTICLE I
Offices
1.1 Principal Office. The principal office of the
Corporation in the Commonwealth of Kentucky shall be located in
the City of Louisville. The Corporation may have such other
offices, either within or without the Commonwealth of Kentucky,
as the business of the Corporation may require from time to time.
1.2 Registered Office. The registered office of the
Corporation may be, but need not be, identical with its principal
office in the Commonwealth of Kentucky. The address of the
registered office may be changed from time to time by the Board
of Directors.
ARTICLE II
Shareholders
2.1 Annual Meetings. The annual meeting of the shareholders
shall be held at such time, place and on such date as the
Chairman of the Board may designate, said date to be no later
than six months following the end of the Corporation's fiscal
year. The purpose of such meetings shall be the election of
directors and the transaction of such other business as may
properly come before it. If the election of directors shall not
be held on the day designated for an annual meeting, or at any
adjournment thereof, the Board of Directors shall cause the
election to be held at a special meeting of the shareholders to
be held as soon thereafter as may be practicable.
2.2 Special Meetings. Special meetings of the shareholders
may be called by the Chairman of the Board or by a majority of
the members of the Board of Directors, or by the holders of not
less than one-fifth of all the outstanding shares of the
Corporation entitled to vote at such meeting.
2.3 Place of Special Meetings. The Board of Directors may
designate any place within or without the Commonwealth of
Kentucky as the place for any special meeting of shareholders
called by the Board of Directors. A waiver of notice signed by
all shareholders may include a designation of any place, either
within or without the Commonwealth of Kentucky, as the place for
the holding of such meeting. If no designation is properly made,
or if a special meeting be otherwise called, the place of meeting
shall be at the registered office of the Corporation in the
Commonwealth of Kentucky.
2.4 Notice of Annual or Special Meeting . Written notice
stating the place, day and hour of the meeting and, in case of a
special meeting, the purpose or purposes for which the meeting is
called, shall be delivered not less than 10 days nor more than 50
days before the date of the meeting, either personally or by
mail, by or at the direction of the Chairman of the Board or the
Secretary, or the person calling the meeting, to each shareholder
of record entitled to vote at such meeting. If mailed, such
notice shall be deemed to be delivered when deposited in the
United States mail in a sealed envelope addressed to the
shareholder at his address as it appears on the stock transfer
books of the Corporation, with postage prepaid.
2.5 Meetings by Consent of All Shareholders. If all the
shareholders shall meet at any time and place and consent in
writing to the holding of a meeting, such meeting shall be valid
without call or notice, and at such meeting, any corporate action
may be taken.
2.6 Waiver and Consent to Meetings of Less Than All
Shareholders. If a shareholder meeting shall occur without all
shareholders in attendance, a prior or subsequent written waiver
of notice or consent to the holding of such meeting by the absent
shareholders shall be equivalent to the call and giving of any
requisite notice, and such meeting shall be valid without call or
notice, and any corporate action may be taken at such meeting.
2.7 Closing Transfer Books and Fixing of a Record Date. The
Board of Directors of the Corporation may close its stock
transfer books for a period not exceeding 70 days nor less than
10 days, immediately prior to the date of any meeting of
shareholders, or the date for the payment of any dividend or for
the allotment of rights, or the date when any exchange or
reclassification of shares shall be effective; or in lieu
thereof, may fix in advance a date, not exceeding 70 days and not
Less than 10 days prior to the date of any meeting of
shareholders, or to the date for the payment of any dividend or
for the allotment of rights, or to the date when any exchange or
reclassification of shares shall be effective, as the record date
for the determination of shareholders entitled to notice of, or
to vote at, such meeting, or shareholders entitled to receive
payment of any such dividend or to receive any such allotment of
rights, or to exercise rights in respect of any exchange or
reclassification of shares. The shareholders of record on such
record date shall be the shareholders entitled to notice of, and
to vote at, such meeting, or to receive payment of such dividend
or to receive such allotment of rights, or to exercise such
rights, in the event of an exchange or reclassification of
shares, as the case may be. If the transfer books are not closed
and no record date is fixed by the Board of Directors, the date
on which notice of the meeting is mailed, or the date on which
the resolution of the Board of Directors declaring such dividend
is adopted or such other action is taken, as the case may be,
shall be deemed to be the record date for the determination of
the shareholders of the Corporation and the number of shares
owned by them for all of the purposes set forth in the
immediately preceding sentence. When a determination of
shareholders has been made as provided herein, such determination
shall apply to any adjournment of the meeting for which such
determination was made.
2.8 Voting Record. The officer or agent having charge of
the Corporation's stock transfer books shall make a complete list
of the shareholders entitled to vote at each meeting, arranged in
alphabetical order, with the address of, and the number of shares
held by, each shareholder. Such list shall be produced and kept
open at the time and place of the meeting and shall be subject to
the inspection of any shareholder during the whole course of the
meeting.
2.9 Quorum. A majority of the outstanding shares of the
Corporation entitled to vote, represented in person or by proxy,
shall constitute a quorum at any meeting of shareholders. If a
quorum of shareholders is present, the affirmative vote of a
majority of the shares represented at the meeting and entitled to
vote on the subject matter shall be the act of the shareholders,
unless the vote of a greater number or voting by classes is
required by the Kentucky Business Corporation Act or by the
Articles of Incorporation or these By-Laws. The shareholders
present at a duly organized meeting can continue to do business
until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
2.10 Proxies. At all meetings of shareholders, a shareholder
may vote by proxy executed in writing by the shareholder or by
his duly authorized attorney-in-fact. Such proxy shall be filed
with the Secretary of the Corporation before or at the time of
the meeting. No proxy shall be valid after 11 months from the
date of its execution, unless otherwise provide in the proxy, but
in no event shall a proxy, unless coupled with an interest, be
voted on after three years from the date of its execution. A
proxy, unless coupled with an interest, may be revoked in writing
at any time. The effective time of such revocation shall be the
time the Secretary of the Corporation receives the written notice
of revocation.
2.11 Voting of Shares. Subject to the provisions of Section
2.13 and any provisions of the Articles of Incorporation to the
contrary, each outstanding share of common stock authorized by
the Corporation's Articles of Incorporation to have voting power
shall be entitled to one vote upon each matter submitted to a
vote at a meeting of shareholders. The voting rights, if any, of
classes of shares other than voting common stock shall be as set
forth in the Corporation's Articles of Incorporation or by
appropriate legal action of the Board of Directors.
2.12 Voting of Shares by Certain Holders.
(a) Shares standing in the name of another corporation may be
voted by that corporation's President or by proxy appointed by
him or by such other officer, agent or proxy as the by-laws of
such corporation may prescribe or, in the absence of such
provision, as the Board of Directors of such other corporation
may determine.
(b) Shares held by an administrator, executor, guardian or
conservator may be voted by him, either in person or by proxy,
without a transfer of such shares into his name. Shares standing
in the name of a trustee may be voted by him, either in person or
by proxy, but no trustee shall be entitled to vote shares held by
him without a transfer of such shares into his name.
(c) Shares standing in the name of a receiver may be voted by
such receiver, and shares held by or under the control of a
receiver may be voted by such receiver without the transfer
thereof into his name if authority so to do be contained in an
appropriate order of the court by which such receiver was
appointed.
(d) Where shares are held jointly by two or more fiduciaries,
unless the Secretary of the Corporation is given written notice
to the contrary by any of such fiduciaries, the vote of one or
more of such fiduciaries shall be presumed to be the vote of all
such fiduciaries. Where shares are held jointly by two or more
fiduciaries, the will of the majority (or both in the case of two
fiduciaries) of such fiduciaries shall control the manner of
voting or the giving of a proxy unless the instrument or order
appointing the fiduciaries otherwise directs. Where, in any case,
fiduciaries are equally divided upon the manner of voting shares
jointly held by them, any court of competent jurisdiction may,
upon petition filed by any of the fiduciaries, or by any
beneficiary, appoint an additional person to act with the
fiduciaries in determining the manner in which the shares shall
be voted upon the particular questions as to which the
fiduciaries are divided.
(e) A shareholder whose shares are pledged shall be entitled to
vote such shares until the shares have been transferred into the
name of the pledgee, and thereafter, the pledgee shall be
entitled to vote the shares so transferred.
(f) Neither treasury shares of its own stock held by the
Corporation, nor shares held by another corporation if a majority
of the shares entitled to vote for the election of directors of
such other corporation is held by the Corporation, shall be voted
at any meeting or counted in determining the total number of
outstanding shares at any given time.
(g) The Secretary or any shareholder may demand written proof
that the person asserting the right to vote shares pursuant to
this Section 2.12 holds the position he claims to hold and has
been properly authorized to vote the shares he represents. Such
proof, if demanded, shall be presented prior to the voting of
such shares by such person.
2.13 Cumulative Voting. At each election for directors, each
shareholder entitled to vote at such election shall have the
right to cast, in person or by proxy, as many votes in the
aggregate as he shall be entitled to vote under the Corporation's
Articles of Incorporation, multiplied by the number of directors
to be elected at such election; and each shareholder may cast the
whole number of votes for one candidate or distribute such votes
in whole numbers among two or more candidates. Directors shall
not be elected in any other manner.
2.14 Action by Consent of Shareholders. Any action required
to be taken, or which may be taken, at a meeting of the
shareholders may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by
all of the shareholders entitled to vote with respect to the
subject matter thereof.
ARTICLE III
Directors
3.1 General Powers. The business affairs of the Corporation
shall be managed by its Board of Directors.
3.2 Number and Tenure. The Board of Directors shall consist
of not fewer than 10 nor more than 21 individuals, with the exact
number of individuals within such range to be determined by
resolution of the Board of Directors from time to time. Each
director shall hold office until the next annual meeting or
shareholders or until removed. Despite the expiration of a
director's term, such director shall continue to serve until (a)
the director's successor is elected and qualifies, (b) there is a
decrease in the number of directors, or (c) the director is
removed. A decrease in the number of directors shall not shorten
an incumbent director's term.
3.3 Removal and Resignations. At a meeting of shareholders
called expressly for that purpose, any director or the entire
Board of Directors may be removed, with or with- out cause, by a
vote of the holders of a majority of the shares then entitled to
vote at an election of directors. If less than the entire Board
is to be removed, no one of the directors may be removed if the
votes cast against his removal be sufficient to elect him if then
cumulatively voted at an election of the entire Board of
Directors or, if there be classes of directors, at an election of
the class of directors of which he is a part. Whenever the
holders of the shares of any class are entitled to elect one or
more directors by the provisions of the Articles of
Incorporation, the provisions of this Section shall apply, in
respect to the removal of a director or directors so elected, to
the vote of the holders of the outstanding shares of that class
and not to the vote of the outstanding shares as a whole. Any
member of the Board of Directors may resign from the Board of
Directors at any time by giving written notice to the President
or Secretary of the Corporation, and unless otherwise specified
therein, the acceptance of such resignation shall not be
necessary to make it effective.
3.4 Annual and Regular Meetings. An annual meeting of the
Board of Directors shall be held without other notice than this
By-Law immediately after, and at the same place as, the annual
meeting of shareholders. The Board of Directors may provide by
resolution the time and place, either within or without the
Commonwealth of Kentucky, for the holding of regular meetings
without other notice than such resolution.
3.5 Special Meetings. Special meetings of the Board of
Directors may be called by, or at the request of, the Chairman of
the Board or, if the Corporation has more than one director, any
two directors. All special meetings of the Board of Directors
shall be held at the principal office of the Corporation or such
other place as may be specified in the notice of the meeting.
3.6 Notice. Notice of any special meeting shall be given at
least two days prior thereto by written notice delivered
personally or mailed to each director at his business address, or
by telegram. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail in a sealed
envelope so addressed, with postage prepaid. If notice be given
by telegram, such notice shall be deemed to be delivered when the
telegram is delivered to the telegraph company. Any director may
waive notice of any meeting. The attendance of a director at any
meeting shall constitute a waiver of notice of such meeting,
except where a director attends a meeting for the express purpose
of objecting to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business
to be transacted at, nor the purpose of, any regular or special
meeting of the Board of Directors need be specified in the notice
or waiver of notice of such meeting.
3.7 Quorum. A majority of the number of directors fixed by,
or determined in accordance with, the Articles of Incorporation
shall constitute a quorum for the transaction of business at any
meeting of the Board of Directors, provided, if less than a
majority of the directors are present at said meeting, a majority
of the directors present may adjourn the meeting from time to
time without further notice.
3.8 Manner of Acting. The act of the majority of the
directors present at a meeting at which a quorum is present shall
be the act of the Board of Directors, unless otherwise required
by the Articles of Incorporation.
3.9 Vacancies. Any vacancy occurring in the Board of
Directors may be filled by the affirmative vote of a majority of
the remaining directors though less than a quorum of the Board of
Directors. A director elected to fill a vacancy shall be elected
for the unexpired term of his predecessor in office. Any
directorship to be filled by reason of an increase in the number
of directors may be filled by the Board of Directors for a term
of office continuing only until the next election of directors by
the shareholders.
3.10 Compensation. By resolution of the Board of Directors
each director may be paid his expenses, if any, of attendance at
each meeting of the Board of Directors, and may be paid a stated
annual stipend as director or a fixed sum for attendance at each
meeting of the Board of Directors. No such payment shall preclude
any director from serving the Corporation in any other capacity
and receiving compensation therefor.
3.11 Action by Written Consent. Any action required to be
taken by the Board of Directors at a meeting may be taken without
a meeting if a consent in writing, setting forth the action so
taken, shall be signed by all of the directors.
3.12 Chairman and Vice-Chairman of the Board. The Board of
Directors may appoint one of its members Chairman of the Board of
Directors. The Board of Directors may also appoint one of its
members as Vice-Chairman of the Board of Directors, and such
individual shall serve in the absence of the Chairman and perform
such additional duties as may be assigned to him by the Board of
Directors.
ARTICLE IV
OFFICERS
4.1 Classes. The officers of the Corporation shall be a
Chairman of the Board of Directors, a Chief Executive Officer, a
President, a Secretary and a Treasurer, each of whom shall be
elected by the Board of Directors. Such other officers and
assistant officers as may be deemed necessary may be elected or
appointed by the Board of Directors. Any two or more offices may
be held by the same person, except the offices of Chairman of the
Board of Directors, Chief Executive Officer, President and
Secretary may not be held by the same person if the Corporation
has more than one stockholder.
4.2 Election and Term of Office. The officers of the
Corporation shall be elected by the Board of Directors at the
first, and thereafter at each annual, meeting of the Board of
Directors. If the election of officers shall not be held at any
such meeting, such election shall be held as soon there after as
is practicable. Vacancies may be filled or new offices created
and filled at any meeting of the Board of Directors. Each officer
shall hold office until his successor shall be duly elected or
until his death or until he shall resign or shall have been
removed in the manner hereinafter provided.
4.3 Removal and Resignations. Any officer or agent elected
or appointed by the Board of Directors may be removed by the
Board of Directors whenever, in its judgment, the best interests
of the Corporation would be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the
person so removed. Election or appointment of an officer or agent
shall not of itself create contract rights. Any officer of the
Corporation may resign at any time by giving written notice to
the President or Secretary of the Corporation, and unless
otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.
4.4 Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise may be filled
by the Board of Directors for the unexpired portion of the term.
4.5 Chairman of the Board of Directors. The Chairman of the
Board of Directors, if that office be created and filled, will be
an officer of the Corporation and may, at the discretion of the
Board of Directors, be the Chief Executive Officer of the
Corporation and, if such, shall, in general, supervise and
control the affairs and business of the Corporation, subject to
control by the Board of Directors. The Chairman of the Board
shall preside at all meetings of the shareholders and Board of
Directors. If the Board of Directors appoints as Chief Executive
Officer someone other than the Chairman of the Board, that person
shall, in general, supervise and control the affairs and business
of the Corporation, subject to control by the Chairman of the
Board and the Board of Directors.
4.6 Chief Executive Officer. If no Chairman has been
appointed or, in the absence of the Chairman, the Chief Executive
Officer of the Corporation shall preside at all meetings of the
shareholders and of the Board of Directors. He may sign
certificates for shares of the Corporation, any deeds, mortgages,
bonds, contracts or other instruments which the Board of
Directors has authorized to be executed, except in cases where
the signing and execution thereof shall be expressly delegated by
the Board of Directors or by these By-Laws to some other officer
or agent of the Corporation, or shall be required by law to be
otherwise signed or executed. The Chief Executive Officer shall,
in general, perform all duties incident to the office and such
other duties as may be prescribed by the Board of Directors from
time to time. Unless otherwise ordered by the Board of Directors,
the Chief Executive Officer shall have full power and authority
on behalf of the Corporation to attend, act and vote at any
meetings of shareholders of any corporation in which the
Corporation may hold stock, and at any such meeting shall hold
and may exercise all rights incident to the ownership of such
stock which the Corporation, as owner, would have had and
exercised if present. The Board of Directors may confer like
powers on any other person or persons.
4.7 President. In the absence of the Chairman of the Board
and the Chief Executive Officer, the President shall be the Chief
Executive Officer of the Corporation. In that capacity, the
President shall preside at meetings of the Board of Directors.
The President may sign certificates for shares of the
Corporation, any deeds, mortgages, bonds, contracts or other
instruments which the Board of Directors has authorized to be
executed, except in cases where the signing and execution thereof
shall be expressly delegated by the Board of Directors or by
these By-Laws to some other officer or agent of the Corporation,
or shall be required by law to be otherwise signed or executed.
The President shall, in general, perform all duties incident to
the office of President and such other duties as may be
prescribed by the Board of Directors from time to time. Unless
otherwise ordered by the Board of Directors, the President shall
have full power and authority on behalf of the Corporation to
attend, act and vote at any meetings of shareholders of any
corporation in which the Corporation may hold stock, and at any
such meeting shall hold and may exercise all rights incident to
the ownership of such stock which the Corporation, as owner,
would have had and exercised if present. The Board of Directors
may confer like powers on any other person or persons.
4.8 Vice-President. In the absence of the President, or in
the event of his inability or refusal to act, a Vice-President
chosen in advance by the Chairman, the Chief Executive Officer or
the President, or in the absence of such choice, by the Board,
shall perform the duties of the President and when so acting
shall have all the powers of and be subject to all the
restrictions upon the President. Any Vice-President may sign,
with the Secretary or an assistant secretary, certificates for
shares of the Corporation; and shall perform such other duties as
from time to time may be assigned to him or her by the President
or by the Board of Directors. As used herein, the term
"Vice-President" includes the offices of Executive Vice-President,
Senior Vice-President and Vice-President.
4.9 Treasurer. The Treasurer shall have charge and custody
of and be responsible for all funds and securities of the
Corporation; receive and give receipts for monies due and payable
to the Corporation from any source whatsoever, and deposit all
such monies in the name of the Corporation in such banks, trust
companies and other depositories as shall be selected in
accordance with the provisions of Section 5.4; and, in general,
perform all the duties incident to the office of Treasurer and
such other duties as from time to time may be assigned to him by
the Chairman of the Board, the Chief Executive Officer, the
President or the Board of Directors. If required by the Board of
Directors, the Treasurer shall give a bond for the faithful
discharge of his duties in such sum and with such surety or
sureties as the Board of Directors shall determine.
4.10 Secretary. The Secretary shall (a) keep the minutes of
the shareholders' meetings and of the Board of Directors'
meetings in one or more books provided for that purpose; (b) see
that all notices are duly given in accordance with the provisions
of these By-Laws or as required by law; (c) be custodian of the
corporate records and of the seal, if any, of the Corporation;
(d) keep a register of the mailing address of each shareholder;
(e) sign with the President or Vice-President certificates for
shares of stock of the Corporation; (f) have general charge of
the stock transfer books of the Corporation; and, in general,
perform all duties incident to the office of Secretary and such
other duties as from time to time may be assigned to him by the
Chairman of the Board, the Chief Executive Officer, the President
or by the Board of Directors.
4.11 Assistant Treasurers and Assistant Secretaries.
(a) The Assistant Treasurer, if that office be created and
filled, shall, if required by the Board of Directors, give bond
for the faithful discharge of his duty in such sum and with such
surety as the Board of Directors shall determine.
(b) The Assistant Secretary, if that office be created and
filled, and if authorized by the Board of Directors, may sign,
with the President or Vice-President, certificates for shares of
the Corporation.
(c) The Assistant Treasurers and Assistant Secretaries, in
general, shall perform such additional duties as shall be
assigned to them by the Treasurer or the Secretary, respectively,
or by the Chairman of the Board, the Chief Executive Officer, the
President or the Board of Directors.
4.12 Compensation. The compensation of the officers of the
Corporation shall be fixed from time to time by the Board of
Directors, and no officer shall be prevented from receiving such
compensation by reason of the fact that he is also a director of
the Corporation.
ARTICLE V
Contracts, Loans, Checks and Deposits
5.1 Contracts. The Board of Directors may authorize any
officer or officers, agent or agents, to enter into any contract
and execute and deliver any instruments in the name of and on
behalf of the Corporation. Such authority may be general or
confined to specific instances.
5.2 Loans. No loans shall be contracted on behalf of the
Corporation, and no evidences of indebtedness shall be issued in
its name, unless authorized by a resolution of the Board of
Directors. Such authority may be general or confined to specific
instances.
5.3 Checks, Drafts, Etc. All checks, drafts or other orders
for the payment of money, notes or other evidences of
indebtedness issued in the name of the Corporation shall be
signed by such officer or officers, or agent or agents, of the
Corporation and in such manner as shall, from time to time, be
determined by resolution of the Board of Directors.
5.4 Deposits. All funds of the Corporation not otherwise
employed shall be deposited, from time to time, to the credit of
the Corporation in such banks, trust companies and other
depositories as the Board of Directors may select.
ARTICLE VI
Certificates for Shares and Their Transfer
6.1 Certificates for Shares. Certificates representing
shares of the Corporation shall be in such form as may be
determined by the Board of Directors and by the laws of the
Commonwealth of Kentucky. Such certificates shall be signed by
the President or a Vice-President and by the Secretary or an
Assistant Secretary, and, if a seal has been adopted, shall be
sealed with such seal. The signature of such officers upon such
certificates may be facsimiles if the certificate is manually
signed on behalf of a transfer agent or registrar for the
Corporation. All certificates for shares shall be consecutively
numbered. The name of the person owning the shares represented
thereby, with the number of shares and date of issue, shall be
entered on the books of the Corporation. All certificates
surrendered to the Corporation for transfer shall be canceled and
no new certificates shall be issued until the former certificates
for a like number of shares shall have been surrendered and
canceled, except that, in case of a lost, destroyed or mutilated
certificate, a new one may be issued therefor upon such terms and
indemnity to the Corporation as the Board of Directors may
prescribe.
6.2 Transfer of Shares. Transfer of shares of the
Corporation shall be made only on the books of the Corporation by
the registered holder thereof, or by his legal representative who
shall furnish proper evidence of authority to transfer, or by his
attorney-in-fact thereunto authorized by the power of attorney
duly executed and filed with the Secretary of the Corporation,
and on surrender for cancellation of the certificate for such
shares. The person in whose name shares stand on the books of the
Corporation shall be deemed the owner thereof for all purposes as
regards the Corporation.
ARTICLE VII
Executive and Other Committees
7.1 Executive Committee. The Board of Directors, by
resolution adopted by a majority of the full Board, may designate
from among its members an Executive Committee.
(a) Authority. When the Board of Directors is not in session,
the Executive Committee shall have and may exercise all of the
authority of the Board of Directors, except to the extent, if
any, that such authority shall be limited by the resolution
appointing the Executive Committee, and except also that the
Executive Committee shall not have the authority of the Board of
Directors in reference to amending the Articles of Incorporation,
adopting a plan of merger or consolidation, recommending to the
shareholders the sale, lease or other disposition of all or
substantially all of the property and assets of the Corporation
otherwise than in the usual and regular course of its business,
recommending to the shareholders a voluntary dissolution of the
Corporation or a revocation thereof, or amending these By-Laws.
(b) Tenure and Qualifications. Each member of the Executive
Committee shall hold office until the next regular meeting of the
Board of Directors following his designation and until his
successor shall be duly designated and qualified.
(c) Meetings. Regular meetings of the Executive Committee may be
held without notice at such times and places as the Executive
Committee may fix from time to time by resolution. Special
meetings of the Executive Committee may be called by any member
thereof upon not less than one days notice stating the place,
date and hour of the meeting, which notice may be written or
oral, and if mailed, shall be deemed to be delivered when
deposited in the United States mail, postage prepaid, and
addressed to the member at his business address. Any member of
the Executive Committee may waive notice of any meeting and no
notice of any meeting need be given to any member thereof who
attends in person. The notice of a meeting of the Executive
Committee need not state the business proposed to be transacted
at the meeting.
(d) Quorum. A majority of the members of the Executive Committee
shall constitute a quorum for the transaction of business at any
meeting thereof. Action of the Executive Committee must be
authorized by an affirmative vote of a majority of the members
present at a meeting at which a quorum is present.
(e) Action Without a Meeting. Any action required or permitted
to be taken by the Executive Committee at a meeting may be taken
without a meeting if a consent in writing, setting forth the
action so taken, shall be signed by all of the members of the
Executive Committee.
(f) Vacancies. Any vacancy in the Executive Committee may be
filled by a resolution adopted by a majority of the full Board of
Directors.
(g) Resignations and Removal. Any member of the Executive
Committee may be removed at any time, with or without cause, by
resolution adopted by a majority of the full Board of Directors.
Any member of the Executive Committee may resign from the
Executive Committee at any time by giving written notice to the
President or Secretary of the Corporation, and unless otherwise
specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
7.2 Other Committees. The Board of Directors, by resolution
adopted by a majority of the full Board, may designate from among
its members such other committees as from time to time it may
consider necessary or appropriate to conduct the affairs of the
Corporation. Each such committee shall have such power and
authority as the Board of Directors may, from time to time,
legally establish for it. The tenure and qualifications of the
members of each committee; the time, place and organization of
such committee's meetings; the notice required to call any such
meeting; the number of members of each such committee that shall
constitute a quorum; the affirmative vote of the committee
members required effectively to take action at any meeting at
which a quorum is present; the action that any such committee can
take without a meeting; the method in which a vacancy among the
members of such committee can be filled and the procedures by
which resignations and removals of members of such committee
shall be acted upon or accomplished shall be fixed by the
resolution adopted by the Board of Directors relative to such
matters.
ARTICLE VIII
Emergency By-Laws
8.1 Adoption of Emergency By-Laws. The provisions of
Section 8.2 shall be operative during any emergency in the
conduct of the business of the Corporation resulting from an
attack on the United States or on a locality in which the
Corporation conducts its business or customarily holds meetings
of its Board of Directors or its stockholders, or during any
nuclear or atomic disaster, or during the existence of any
catastrophe, or other similar emergency condition, as a result of
which a quorum of the Board of Directors, or a standing committee
thereof, cannot readily be convened for action, notwithstanding
any different provision of these By-Laws or in the Articles of
Incorporation or Kentucky Business Corporation Act. To the extent
not inconsistent with the provisions of this Article, the By-Laws
provided in the other Articles hereof shall remain in effect
during such emergency and upon its termination, the Emergency
By-Laws shall cease to be operative.
8.2 Provisions of Emergency By-Laws.
(a) A meeting of the Board of Directors may be called by any
officer or director of the Corporation. Notice of the time and
place of the meeting shall be given by the person calling the
meeting to such of the directors as it may be feasible to reach
by any available means of communication. Such notice shall be
given at such time in advance of the meeting as circumstances
permit in the judgment of the person calling the meeting.
(b) The director or directors in attendance at the meeting shall
constitute a quorum.
(c) The Board of Directors, either before or during any such
emergency, may provide, and from time to time modify, lines of
succession in the event that during such an emergency, any or all
officers or agents of the Corporation shall, for any reason, be
rendered incapable of discharging their duties.
(d) The Board of Directors, either before or during any such
emergency, may, effective in the emergency, change the head
office or designate several alternative head offices or regional
offices, or authorize the officers to do so .
(e) No officer, director or employee acting in accordance with
these Emergency By-Laws shall be liable for such action, except
for willful misconduct. No officer director or employee shall be
liable for any action taken by him in good faith in such an
emergency in furtherance of the ordinary business affairs of the
Corporation, even though not authorized by the By-Laws then in
effect.
8.3 Changes in Emergency By-Laws. These Emergency By-Laws
shall be subject to repeal or change by further action of the
Board of Directors or by action of the shareholders, but no such
repeal or change shall modify the provisions of Section 8.2 with
regard to action taken prior to the time of such repeal or
change. Any amendment of these Emergency By-Laws may make any
further or different provision that may be practical and
necessary for the circumstances of the emergency.
ARTICLE IX
Miscellaneous
9.1 Amendments. The Board of Directors shall have the power
and authority to alter, amend or repeal these By-Laws by the vote
of a majority of the entire Board of Directors, subject always to
the power of the shareholders to change or repeal such By-Laws.
9.2 Fiscal Year. The Board of Directors shall have the
power to fix, and from time to time change, the fiscal year of
the Corporation.
9.3 Dividends. The Board of Directors may from time to time
declare, and the Corporation shall pay, dividends on its
outstanding shares in the manner and upon the terms and
conditions provided by law and its Articles of Incorporation.
9.4 Seal. The Board of Directors may adopt a corporate seal
which shall be circular in form and shall have inscribed thereon
the name of the Corporation, the state of incorporation, and the
word "SEAL."
9.5 Waiver of Notice. Whenever any notice is required to be
given under the provisions of these By-Laws the Articles of
incorporation, or the Kentucky Business Corporation Act, a waiver
thereof in writing, signed by the person or persons entitled to
such notice, whether before or after the time stated therein,
shall be equivalent to the giving of such notice.
9.6 Inspection of Books. Any person who has been a holder
of record of shares of the Corporation for at least six months
prior to the date of his demand, or who shall hold of record at
least five percent of all outstanding shares of the Corporation,
upon 10 business days prior written demand stating the purpose
thereof, may examine, in person or through his agent, at any
reasonable time and for any proper purpose, the relevant books
and records of the Corporation and may make copies thereof. Such
inspection may be denied to any shareholder or his agent if he
refuses to furnish to the Corporation an affidavit that his
inspection is for a proper purpose, that he has not, within a
period of five years prior to the date thereof, sold or offered
to sell any list of shareholders or holders of voting trust
certificates for any corporation, that he has not aided any
person in procuring any such list for such purpose, and that he
has not improperly used any information secured through any prior
examination of the books and records of any corporation.
9.7 Construction. Unless the context specifically requires
otherwise, any reference in these By-Laws to any gender shall
include all other genders; any reference to the singular shall
include the plural; and any reference to the plural shall include
the singular.
Exhibit 10 (b)
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into as of the 8th day of
November , 1995 by and between MID AMERICA BANCORP, INC., a
Kentucky corporation and MID AMERICA BANK OF LOUISVILLE & TRUST
COMPANY, a Kentucky Combined Bank and Trust Company, (together with
their successors and assigns permitted under this Agreement, the
"Companies), and ORSON OLIVER (the "Executive").
W I T N E S S E T H:
WHEREAS, the Companies and the Executive are parties to an
Amended and Restated Agreement dated as of April 5, 1993, covering
the employment relationship of Executive with Companies, and
WHEREAS, the Parties desire to cancel that Agreement and
replace it in its entirety with this Employment Agreement (this
"Agreement").
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein and for other good and valuable
consideration, the receipt of which is mutually acknowledged, the
Companies and the Executive (individually a "Party" and together
the "Parties") agree as follows:
1. Definitions.
(a) "Affiliate" of a person or other entity shall mean a
person or other entity that directly or indirectly
controls, is controlled by, or is under common control
with the person or other entity specified.
(b) "Base Salary" shall mean the salary provided for in
Section 5 below or any increased salary granted to the
Executive pursuant to Section 5.
(c) "Board" shall mean the Boards of Directors of the
Companies.
(d) "Cause" shall mean:
(i) The Executive is convicted of a felony; or
(ii) The Executive is guilty of willful gross neglect or
willful gross misconduct in carrying out his duties
under this Agreement, resulting, in either case, in
material economic harm to a Company, unless the
Executive believed in good faith that such act or
nonact was in the best interests of such Company.
(e) A "Change" shall mean the occurrence of any one of the
following events:
(i) Any "person," as such term is used in Sections
3(a)(9) and 13(d)of the Securities Exchange Act of
1923, becomes a "beneficial owner,"as such term is
used in Rule 13d-3 promulgated under that Act, of
20% or more of the Voting Stock of a Company;
(ii) The majority of either Board consists of
individuals other than Incumbent Directors, which
term means the members of the Board on the date of
this Agreement; provided that any person becoming a
director subsequent to such date whose election or
nomination for election was supported by two-thirds
of the directors who then comprised the Incumbent
Directors shall be considered to be an Incumbent
Director;
(iii) A Company adopts any plan of liquidation
providing for the distribution of all or
substantially all of its assets;
(iv) All or substantially all of the assets or business
of a Company is disposed of pursuant to a merger,
consolidation or other transaction (unless the
shareholders of such Company immediately prior to
such merger, consolidation or other transaction
beneficially own, directly or indirectly, in
substantially the same proportion as they owned the
Voting Stock of such Company, all of the Voting
Stock or other ownership interests of the entity
or entities, if any, that succeed to the business
of such Company); or
(v) A Company combines with another company and is the
surviving corporation but, immediately after the
combination, the shareholders of such Company
immediately prior to the combination hold, directly
or indirectly, 50% or less of the Voting Stock of
the combined company (there being excluded from the
number of shares held by such shareholders, but not
from the Voting Stock of the combined company, any
shares received by Affiliates of such other company
in exchange for stock of such other company).
(f) "Constructive Termination Without Cause" shall mean a
termination of the Executive's employment at his
initiative as provided in Section 7(c) below following
the occurrence, without the Executive's prior written
consent, of one or more of the following events (except
in consequence of a prior termination):
(i) A reduction in the Executive's then current Base
Salary or the termination or material reduction of
any employee benefit or perquisite enjoyed by him
(other than as part of an across-the-board
reduction applicable to all executive officers of
the Companies);
(ii) The failure to elect or reelect the Executive to
any of the positions described in Section 4 below
or removal of him from any such position;
(iii) A material diminution in the Executive's
duties or the assignment to the Executive of
duties which are materially inconsistent with
his duties or which materially impair the
Executive's ability to function as the
President and as a Director of the Companies
or any other office to which he may be elected
or appointed:
(iv) The failure to continue the Executive's
participation in any incentive compensation plan
unless a plan providing a substantially similar
opportunity is substituted;
(v) The relocation of a Companies' principal office, or
the Executive's own office location as assigned to
him by a Company, to a location outside of the
metropolitan area of Louisville, Kentucky; or
(vi) The failure of a Company to obtain the assumption
in writing of its obligation to perform this
Agreement by any successor to all or substantially
all of the assets of such Company within 45 days
after a merger, consolidation, sale or similar
transaction.
(g) "Disability" shall mean the Executive's inability to
substantially perform his duties and responsibilities
under this Agreement for a period of 180 consecutive
days.
(h) "Subsidiary" of a Company shall mean any corporation of
which such Company owns, directly or indirectly, more
than 50% of the Voting Stock.
(i) "Term of Employment" shall mean the period specified in
Section 3 below.
(j) "Voting Stock" shall mean capital stock of any class or
classes having general voting power under ordinary
circumstances, in the absence of contingencies, to elect
the directors of a corporation.
2. Cancellation of Old Agreement.
The Amended and Restated Agreement between the Parties entered
into as of April 5, 1993, is hereby revoked and canceled in its
entirety.
3. Term of Employment.
The Companies hereby employ the Executive, and the Executive
hereby accepts such employment, for a five (5) year period
commencing November 8, 1995 and continuing until the termination of
his employment in accordance with the terms of this Agreement.
4. Position. Duties and Responsibilities.
(a) During the term of Employment, the Executive shall
continue to be employed as the President of the Companies
with duties commensurate with that position. The
Executive shall continue to serve as a member of the
Boards. The Executive, in carrying out his duties under
this Agreement, shall report to the Chief Executive
Officer.
(b) Anything herein to the contrary notwithstanding, nothing
shall preclude the Executive from (i) serving on the
boards of directors of a reasonable number of other
corporations (except Executive will not serve on the
board of any other financial institution) or the boards
of a reasonable number of trade associations and/or
charitable organizations, (ii) engaging in charitable
activities and community affairs, and (iii) managing his
personal investments and affairs, provided that such
activities do not materially interfere with the proper
performance of his duties and responsibilities as the
Companies' President or any other office to which he may
be elected or appointed.
(c) Anything herein to the contrary notwithstanding, nothing
shall preclude the Executive from serving on the board of
the Bankers Bank of Kentucky.
(d) Executive agrees that he will, consistent with Bank
policy, refrain during the term of his employment and
while receiving benefits hereunder from investing in any
company that is a customer of the Companies.
5. Base Salary.
The Executive shall be paid an annualized base Salary, payable
in accordance with the regular payroll practices of the Companies,
of $315,000.00. The Base Salary shall be reviewed no less
frequently than annually for increase at the sole discretion of the
Board and its Nominating and Executive Compensation Committee.
In addition, the Companies shall pay or cause to be paid to
Executive the sum of $200,000 as follows:
(i) $125,000 on the first working day of the year following
completion of five (5) years of service beginning with
the effective date of this Agreement, provided that: if
Executive fails to complete five (5) full years of
service as aforesaid, then he shall not receive the
$125,000 payment, and
(ii) if Executive completes the five years of service as
aforesaid, $25,000 per year for each full year of service
thereafter for the following three years,
except that if the Executive's employment is terminated pursuant to
Section 8(a), 8(c) or 8(d) hereof prior to the completion of five
(5) full years of service as aforesaid or prior to completion of
any of the following three years, then the Companies will pay or
cause to be paid to Executive the difference between $200,000 and
the amount previously paid hereunder upon the effective date of
such termination.
6. Employee Benefit Programs.
During the Term of Employment, the Executive shall be entitled
to participate in all employee incentive, pension and welfare
benefit plans and programs made available to the Companies' senior
level executives or to its employees generally, as such plans or
programs may be in effect from time to time, including without
limitation, annual stock option grant, ESOP, bonus, pension, profit
sharing, savings and other retirement plans or programs, medical,
dental, hospitalization, short-term and long-term disability and
life insurance plans, accidental death and dismemberment
protection, travel accident insurance, and any other pension or
retirement plans or programs and any other employee incentive
compensation plan, employee welfare benefit plans or programs that
may be sponsored by the Companies from time to time, including any
plans that supplement the above-listed types of plans or programs,
whether funded or unfunded.
7. Reimbursement of Business and Other Expenses.
The Executive is authorized to incur reasonable expenses in
carrying out his duties and responsibilities under this agreement
and the Companies shall promptly reimburse him for all business
expenses incurred in connection with carrying out the business of
the Companies, subject to documentation in accordance with the
Companies' policy.
8. Termination of Employment.
(a) Termination Due to Disability. In the event the
Executive's employment is terminated due to his
Disability, he shall be entitled in each case to the
greater of the benefits under the then current Companies
disability benefits plan or the following:
(i) An amount equal to the sum of 50% of Base Salary,
at the annual rate in effect at termination of his
employment, for a period ending with the end of the
month in which he becomes 65, less the amount of
any disability benefits provided to the Executive
by the Companies under any disability plan and
social security disability benefits;
(ii) The balance of any incentive awards earned (but not
yet paid);
(iii) The continued right to exercise any stock
option for the remainder of its term, such
option to continue to become exercisable in
accordance with the schedule set forth in the
option;
(iv) Any pension benefit that may become due pursuant to
Section 6 above;
(v) Continued accrual of credited service for the
purpose of the pension benefit provided under
Section 6 above during the period of the
Executive's Disability or, if sooner, until the
earlier of the Executive's election to commence
receiving his pension under Section 6 above or his
attainment of age 65;
(vi) Continued participation in medical, dental,
hospitalization and life insurance coverage and in
all other employee plans and programs in which he
was participating on the date of termination of his
employment due to Disability until he attains age
65; and
(vii) Other or additional benefits in accordance
with applicable plans and programs of the
Companies.
If the Executive is precluded from continuing his
participation in any employee benefit plan or program as provided
in clause (vi) above, he shall be provided the after-tax economic
equivalent of the benefits provided under the plan or program in
which he is unable to participate. The economic equivalent of any
benefit foregone shall be deemed to be the lowest cost that would
be incurred by the Executive in obtaining such benefit himself on
an individual basis.
In no event shall a termination of the Executive's employment
for Disability occur unless the Party terminating his employment
gives written notice to the other Party in accordance with Section
16 below.
(b) Termination by the Company for Cause.
(i) A termination for Cause shall not take effect
unless the provisions of this paragraph (i) are
complied with. The Executive shall be given written
notice by the Board of the intention to terminate
him for Cause, such notice (A) to state in detail
the particular act or acts or failure or failures
to act that constitute the grounds on which the
proposed termination for Cause is based and (B) to
be given within six months of the Board learning of
such act or acts or failure to act. The Executive
shall have 10 days after the date that such written
notice has been given to the Executive in which to
request a hearing before the Board. Such hearing
shall be held within 15 days of such notice to the
Executive, provided he requests such hearing.
(ii) In the event the Companies terminate the
Executive's employment for Cause, he shall be
entitled to:
(A) The Base Salary through the date of the
termination of his employment for Cause;
(B) Any incentive awards earned (but not yet
paid);
(C) Any pension benefit that may become due
pursuant to Section 6 above, determined as of
the date of such termination;
(D) Other or additional benefits in accordance
with applicable plans or programs of the
Companies to the date of termination.
(c) Termination Without Cause or Constructive Termination
Without Cause. In the event the Executive's employment is
terminated without Cause, other than due to Disability or
death, or in the event there is a Constructive
Termination Without Cause, the Executive shall be
entitled to:
(i) The Base Salary through the date of
termination of the Executive's employment;
(ii) The Base Salary, at the annualized rate in
effect on the date of termination of the
Executive's employment (or in the event a
reduction in Base Salary is the basis for a
Constructive Termination Without Cause, then
the Base Salary in effect immediately prior to
such reduction), for a period of 36 months
following such termination; provided that at
the Executive's option the Companies shall pay
him the present value of such salary
continuation payments in a lump sum (using as
the discount rate the Applicable Federal Rate
for short term Treasury obligations as
published by the Internal Revenue Service for
the month in which such termination occurs);
(iii) The balance of any incentive awards
earned (but not yet paid);
(iv) The right to exercise any stock option in
full, whether or not such right is exercisable
pursuant to the terms of the grant.
(v) Any pension benefit that may become due
pursuant to Section 6 above;
(vi) Continued accrual of credited service for the
purpose of the pension benefit provided under
Section 6 above for the period of 36 months or
his attainment of age 65, whichever shall
first occur;
(vii) Continued participation in all medical,
dental, hospitalization and life
insurance coverage and in other employee
benefit plans or programs in which he was
participating on the date of the
termination of his employment until the
earlier of:
(A) The end of the period during which he is
receiving salary continuation payments
(or in respect of which a lump-sum
severance payment is made);
(B) The date, or dates, he receives
equivalent coverage and benefits under
the plans and programs of a subsequent
employer (such coverages and benefits to
be determined on a coverage-by-coverage,
or benefit-by-benefit, basis); provided
that (x) if the Executive is precluded
from continuing his participation in any
employee benefit plan or program as
provided in this clause (vii) of this
Section 8(c), he shall be provided with
the after-tax economic equivalent of the
benefit provided under the plan or
program in which he is unable to
participate for the period specified in
this clause (vii) of this Section 8(c),
(y) the economic equivalent of any
benefit foregone shall be deemed to be
the lowest cost that would be incurred by
the Executive in obtaining such benefit
himself on an individual basis, and (z)
payment of such after-tax economic
equivalent shall be made quarterly in
advance; and
(viii) Other or additional benefits in
accordance with applicable plans and
programs of the Companies to the date of
termination.
(d) Termination of Employment Following a Change in
Control. If following a change in Control, the
Executive's employment is terminated without Cause
or there is a Constructive Termination Without
Cause, the Executive shall be entitled to the
payments and benefits provided in Section 8(c),
provided that the salary continuation payments
shall be paid in a lump sum without any discount.
Also, immediately following a Change in Control,
all amounts, entitlements or benefits in which he
is not yet vested shall become fully vested except
to the extent such vesting would be inconsistent
with the terms of the relevant plan.
(e) Voluntary Termination. In the event of a
termination of employment by the Executive on his
own initiative other than a termination due to
death or Disability or a Constructive Termination
without Cause, the Executive shall have the same
entitlements as provided in Section 8(b)(ii) for a
Termination for Cause. A voluntary termination
under this Section 8(e) shall be effective upon 30
days prior notice to a Company and shall not be
deemed a breach of this Agreement.
(f) Limitation Following a Change in Control. In the
event that the termination of the Executive's
employment is for one of the reasons set forth in
Section 8(e) above and the aggregate of all
payments or benefits made or provided to the
Executive under Section 8(d) above and under all
other plans and programs of the Companies (the
"Aggregate Payment") is determined to constitute a
Parachute Payment, as such term is defined in
Section 280G(b)(2) of the Internal Revenue Code of
1986, as amended, notwithstanding any other
provision of this Agreement to the contrary the
aggregate amount of payments or benefits paid by
the Companies to the Executive pursuant to this
Agreement, the amount to be paid to the Executive
and the time of payment pursuant to this Section
8(f) shall be adjusted so as to make such payments
fully deductible by a Company. If the parties are
unable to agree upon an Auditor to calculate such
an adjustment, then the Executive and Companies
shall each select one accounting firm and those two
firms shall jointly select the accounting firm to
serve as the Auditor.
(g) No Mitigation - No Offset. In the event of any
termination of employment under this Section 8, the
Executive shall be under no obligation to seek
other employment and there shall be no offset
against amounts due the Executive under this
Agreement on account of any remuneration
attributable to any subsequent employment that he
may obtain except as specifically provided in this
Section 8.
(h) Nature of Payments. Any amounts due under this
Section 8 are in the nature of severance payments
considered to be reasonable by the Companies and
are not in the nature of a penalty.
9. Indemnification.
(a) The Companies agree that if the Executive is made a
party, or is threatened to be made a party, to any
action, suit or proceeding, whether civil, criminal,
administrative or investigative (a "Proceeding"), by
reason of the fact that he is or was a director, officer
or employee of the Companies or is or was serving at the
request of the Companies as a director, officer, member,
employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, including
service with respect to employee benefit plans, whether
or not the basis of such Proceeding is the Executive's
alleged action in an official capacity while serving as
a director, officer, member, employee or agent, the
Executive shall be indemnified and held harmless by the
Companies to the fullest extent permitted or authorized
by the Companies' certificates of incorporation or bylaws
or, if greater, by the laws of the State of Kentucky,
against all cost, expense, liability and loss (including,
without limitation, reasonable attorney's fees,
judgments, fines, ERISA fines, excise taxes or penalties
and amounts paid or to be paid in settlement) reasonably
incurred or suffered by the Executive in connection
therewith, and such indemnification shall continue as to
the Executive even if he has ceased to be a director,
member, employee or agent of the Companies or other
entity and shall inure to the benefit of the Executive's
heirs, executors and administrators. The Companies shall
advance to the Executive all reasonable costs and
expenses incurred by him in connection with a Proceeding
within 20 days after receipt by a Company of a written
request for such advance. Such request shall include an
undertaking by the Executive to repay the amount of such
advance if it shall ultimately be determined that he is
not entitled to be indemnified against such costs and
expenses.
(b) Neither the failure of a Company (including its board of
directors, independent legal counsel or stockholders) to
have made a determination prior to the commencement of
any proceeding concerning payment of amounts claimed by
the Executive under Section 10(a) that indemnification of
the Executive is proper because he has met the applicable
standard of conduct, nor a determination by a Company
(including its board of directors, independent legal
counsel or stockholders) that the Executive has not met
such applicable standard of conduct, shall create a
presumption that the Executive has not met the applicable
standard of conduct.
(c) The Companies agree to continue and maintain a directors'
and officers' liability insurance policy covering the
Executive to the extent either Company provides such
coverage for its other executive officers.
10. Representation.
The Companies represent and warrant that they are fully
authorized and empowered to enter into this Agreement and that the
performance of their obligations under this Agreement will not
violate any agreement between it and any other person, form or
organization.
11. Entire Agreement.
This Agreement contains the entire understanding and agreement
between the Parties concerning the subject matter hereof and
supersedes all prior agreements, understandings, discussions,
negotiations and undertakings, whether written or oral, between the
Parties with respect thereto.
12. Amendment or Waiver.
No provision in this Agreement may be amended unless such
amendment is agreed to in writing and signed by the Executive and
an authorized officer of the Companies. No waiver by either Party
of any breach by the other Party of any condition or provision
contained in this Agreement to be performed by such other Party
shall be deemed a waiver of a similar or dissimilar condition or
provision at the same or any prior or subsequent time. Any waiver
must be in writing and signed by the Executive or an authorized
officer of the Companies, as the case may be.
13. Severability.
In the event that any provision or portion of this Agreement
shall be determined to be invalid or unenforceable for any reason,
in whole or in part, the remaining provisions of this Agreement
shall be unaffected thereby and shall remain in full force and
effect to the fullest extent permitted by law.
14. Survivorship.
The respective rights and obligations of the Parties hereunder
shall survive any termination of the Executive's employment to the
extent necessary to the intended preservation of such rights and
obligations.
15. Resolution of Disputes.
Any disputes arising under or in connection with this
Agreement shall, at the election of the Executive or the Companies,
be resolved by binding arbitration, to be held in Kentucky in
accordance with the rules and procedures of the American
Arbitration Association. Judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction
thereof. Costs of the arbitration or litigation, including, without
limitation, attorneys' fees of both Parties, shall be borne by the
Companies, provided that if the arbitrator(s) determine that the
claims or defenses of the Executive were without any reasonable
basis, each Party shall bear his or its own costs.
16. Notices.
Any notice given to a party shall be in writing and shall be
deemed to have been given when delivered personally or sent by
certified or registered mail, postage prepaid, return receipt
requested, duly addressed to the Party concerned at the address
indicated below or to such changed address as such Party may
subsequently give such notice of:
If to the Companies: Mid-America Bancorp, Inc.
P.O. Box 1101
Louisville, KY 40201-1101
Attention: Bertram W. Klein
If to the Executive: ORSON OLIVER
#12 Nuirfield Place
Louisville. KY 40222
17. Headings.
The headings of the sections contained in this Agreement are
for convenience only and shall not be deemed to control or affect
the meaning or construction of any provision of this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first written above.
MID-AMERICA BANCORP, INC.
By: /s/Bertram W. Klein
Bertram W. Klein
Title: Chairman of the Board
MID-AMERICA BANK OF LOUISVILLE &
TRUST COMPANY
By: /s/Bertram W. Klein
Bertram W. Klein
Title: Chairman of the Board
/s/ Orson Oliver
Orson Oliver
<PAGE>
Exhibit 10 (d)
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into as of the 8th day of
November , 1995 by and between MID AMERICA BANCORP, INC., a
Kentucky corporation and MID AMERICA BANK OF LOUISVILLE & TRUST
COMPANY, a Kentucky Combined Bank and Trust Company, (together with
their successors and assigns permitted under this Agreement, the
"Companies), and DAVID KLEIN (the "Executive").
W I T N E S S E T H:
WHEREAS, the Companies and the Executive are parties to an
Amended and Restated Agreement dated as of April 5, 1993, covering
the employment relationship of Executive with Companies, and
WHEREAS, the Parties desire to cancel that Agreement and
replace it in its entirety with this Employment Agreement (this
"Agreement").
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein and for other good and valuable
consideration, the receipt of which is mutually acknowledged, the
Companies and the Executive (individually a "Party" and together
the "Parties") agree as follows:
1. Definitions.
(a) "Affiliate" of a person or other entity shall mean a
person or other entity that directly or indirectly
controls, is controlled by, or is under common control
with the person or other entity specified.
(b) "Base Salary" shall mean the salary provided for in
Section 5 below or any increased salary granted to the
Executive pursuant to Section 5.
(c) "Board" shall mean the Boards of Directors of the
Companies.
(d) "Cause" shall mean:
(i) The Executive is convicted of a felony; or
(ii) The Executive is guilty of willful gross neglect or
willful gross misconduct in carrying out his duties
under this Agreement, resulting, in either case, in
material economic harm to a Company, unless the
Executive believed in good faith that such act or
nonact was in the best interests of such Company.
(e) A "Change" shall mean the occurrence of any one of the
following events:
(i) Any "person," as such term is used in Sections
3(a)(9) and 13(d)of the Securities Exchange Act of
1923, becomes a "beneficial owner,"as such term is
used in Rule 13d-3 promulgated under that Act, of
20% or more of the Voting Stock of a Company;
(ii) The majority of either Board consists of
individuals other than Incumbent Directors, which
term means the members of the Board on the date of
this Agreement; provided that any person becoming a
director subsequent to such date whose election or
nomination for election was supported by two-thirds
of the directors who then comprised the Incumbent
Directors shall be considered to be an Incumbent
Director;
(iii) A Company adopts any plan of liquidation
providing for the distribution of all or
substantially all of its assets;
(iv) All or substantially all of the assets or business
of a Company is disposed of pursuant to a merger,
consolidation or other transaction (unless the
shareholders of such Company immediately prior to
such merger, consolidation or other transaction
beneficially own, directly or indirectly, in
substantially the same proportion as they owned the
Voting Stock of such Company, all of the Voting
Stock or other ownership interests of the entity
or entities, if any, that succeed to the business
of such Company); or
(v) A Company combines with another company and is the
surviving corporation but, immediately after the
combination, the shareholders of such Company
immediately prior to the combination hold, directly
or indirectly, 50% or less of the Voting Stock of
the combined company (there being excluded from the
number of shares held by such shareholders, but not
from the Voting Stock of the combined company, any
shares received by Affiliates of such other company
in exchange for stock of such other company).
(f) "Constructive Termination Without Cause" shall mean a
termination of the Executive's employment at his
initiative as provided in Section 7(c) below following
the occurrence, without the Executive's prior written
consent, of one or more of the following events (except
in consequence of a prior termination):
(i) A reduction in the Executive's then current Base
Salary or the termination or material reduction of
any employee benefit or perquisite enjoyed by him
(other than as part of an across-the-board
reduction applicable to all executive officers of
the Companies);
(ii) The failure to elect or reelect the Executive to
any of the positions described in Section 4 below
or removal of him from any such position;
(iii) A material diminution in the Executive's
duties or the assignment to the Executive of
duties which are materially inconsistent with
his duties or which materially impair the
Executive's ability to function as Executive
Vice President or any other office to which he
may be elected or appointed:
(iv) The failure to continue the Executive's
participation in any incentive compensation plan
unless a plan providing a substantially similar
opportunity is substituted;
(v) The relocation of a Companies' principal office, or
the Executive's own office location as assigned to
him by a Company, to a location outside of the
metropolitan area of Louisville, Kentucky; or
(vi) The failure of a Company to obtain the assumption
in writing of its obligation to perform this
Agreement by any successor to all or substantially
all of the assets of such Company within 45 days
after a merger, consolidation, sale or similar
transaction.
(g) "Disability" shall mean the Executive's inability to
substantially perform his duties and responsibilities
under this Agreement for a period of 180 consecutive
days.
(h) "Subsidiary" of a Company shall mean any corporation of
which such Company owns, directly or indirectly, more
than 50% of the Voting Stock.
(i) "Term of Employment" shall mean the period specified in
Section 3 below.
(j) "Voting Stock" shall mean capital stock of any class or
classes having general voting power under ordinary
circumstances, in the absence of contingencies, to elect
the directors of a corporation.
2. Cancellation of Old Agreement.
The Amended and Restated Agreement between the Parties entered
into as of April 5, 1993, is hereby revoked and canceled in its
entirety.
3. Term of Employment.
The Companies hereby employ the Executive, and the Executive
hereby accepts such employment, for a five (5) year period
commencing November 8, 1995 and continuing until the termination of
his employment in accordance with the terms of this Agreement.
4. Position. Duties and Responsibilities.
(a) During the term of Employment, the Executive shall
continue to be employed as Executive Vice President of
the Companies with duties commensurate with that
position. The Executive, in carrying out his duties under
this Agreement, shall report to the Chief Executive
Officer.
(b) Anything herein to the contrary notwithstanding, nothing
shall preclude the Executive from (i) serving on the
boards of directors of a reasonable number of other
corporations (except Executive will not serve on the
board of any other financial institution) or the boards
of a reasonable number of trade associations and/or
charitable organizations, (ii) engaging in charitable
activities and community affairs, and (iii) managing his
personal investments and affairs, provided that such
activities do not materially interfere with the proper
performance of his duties and responsibilities as the
Companies' Executive Vice President or any other office
to which he may be elected or appointed.
(c) Executive agrees that he will, consistent with Bank
policy, refrain during the term of his employment and
while receiving benefits hereunder from investing in any
company that is a customer of the Companies.
5. Base Salary.
The Executive shall be paid an annualized base Salary, payable
in accordance with the regular payroll practices of the Companies,
of $132,000.00. The Base Salary shall be reviewed no less
frequently than annually for increase at the sole discretion of the
Board and its Nominating and Executive Compensation Committee.
6. Employee Benefit Programs.
During the Term of Employment, the Executive shall be entitled
to participate in all employee incentive, pension and welfare
benefit plans and programs made available to the Companies' senior
level executives or to its employees generally, as such plans or
programs may be in effect from time to time, including without
limitation, annual stock option grant, ESOP, bonus, pension, profit
sharing, savings and other retirement plans or programs, medical,
dental, hospitalization, short-term and long-term disability and
life insurance plans, accidental death and dismemberment
protection, travel accident insurance, and any other pension or
retirement plans or programs and any other employee incentive
compensation plan, employee welfare benefit plans or programs that
may be sponsored by the Companies from time to time, including any
plans that supplement the above-listed types of plans or programs,
whether funded or unfunded.
7. Reimbursement of Business and Other Expenses.
The Executive is authorized to incur reasonable expenses in
carrying out his duties and responsibilities under this agreement
and the Companies shall promptly reimburse him for all business
expenses incurred in connection with carrying out the business of
the Companies, subject to documentation in accordance with the
Companies' policy.
8. Termination of Employment.
(a) Termination by the Company for Cause.
(i) A termination for Cause shall not take effect
unless the provisions of this paragraph (i) are
complied with. The Executive shall be given written
notice by the Board of the intention to terminate
him for Cause, such notice (A) to state in detail
the particular act or acts or failure or failures
to act that constitute the grounds on which the
proposed termination for Cause is based and (B) to
be given within six months of the Board learning of
such act or acts or failure to act. The Executive
shall have 10 days after the date that such written
notice has been given to the Executive in which to
request a hearing before the Board. Such hearing
shall be held within 15 days of such notice to the
Executive, provided he requests such hearing.
(ii) In the event the Companies terminate the
Executive's employment for Cause, he shall be
entitled to:
(A) The Base Salary through the date of the
termination of his employment for Cause;
(B) Any incentive awards earned (but not yet
paid);
(C) Any pension benefit that may become due
pursuant to Section 6 above, determined as of
the date of such termination;
(D) Other or additional benefits in accordance
with applicable plans or programs of the
Companies to the date of termination.
(b) Termination Without Cause or Constructive Termination
Without Cause. In the event the Executive's employment is
terminated without Cause, other than due to Disability or
death, or in the event there is a Constructive
Termination Without Cause, the Executive shall be
entitled to:
(i) The Base Salary through the date of
termination of the Executive's employment;
(ii) The Base Salary, at the annualized rate in
effect on the date of termination of the
Executive's employment (or in the event a
reduction in Base Salary is the basis for a
Constructive Termination Without Cause, then
the Base Salary in effect immediately prior to
such reduction), for a period of 36 months
following such termination; provided that at
the Executive's option the Companies shall pay
him the present value of such salary
continuation payments in a lump sum (using as
the discount rate the Applicable Federal Rate
for short term Treasury obligations as
published by the Internal Revenue Service for
the month in which such termination occurs);
(iii) The balance of any incentive awards
earned (but not yet paid);
(iv) The right to exercise any stock option in
full, whether or not such right is exercisable
pursuant to the terms of the grant.
(v) Any pension benefit that may become due
pursuant to Section 6 above;
(vi) Continued accrual of credited service for the
purpose of the pension benefit provided under
Section 6 above for the period of 36 months or
his attainment of age 65, whichever shall
first occur;
(vii) Continued participation in all medical,
dental, hospitalization and life
insurance coverage and in other employee
benefit plans or programs in which he was
participating on the date of the
termination of his employment until the
earlier of:
(A) The end of the period during which he is
receiving salary continuation payments
(or in respect of which a lump-sum
severance payment is made);
(B) The date, or dates, he receives
equivalent coverage and benefits under
the plans and programs of a subsequent
employer (such coverages and benefits to
be determined on a coverage-by-coverage,
or benefit-by-benefit, basis); provided
that (x) if the Executive is precluded
from continuing his participation in any
employee benefit plan or program as
provided in this clause (vii) of this
Section 8(c), he shall be provided with
the after-tax economic equivalent of the
benefit provided under the plan or
program in which he is unable to
participate for the period specified in
this clause (vii) of this Section 8(c),
(y) the economic equivalent of any
benefit foregone shall be deemed to be
the lowest cost that would be incurred by
the Executive in obtaining such benefit
himself on an individual basis, and (z)
payment of such after-tax economic
equivalent shall be made quarterly in
advance; and
(viii) Other or additional benefits in
accordance with applicable plans and
programs of the Companies to the date of
termination.
(c) Termination of Employment Following a Change in
Control. If following a change in Control, the
Executive's employment is terminated without Cause
or there is a Constructive Termination Without
Cause, the Executive shall be entitled to the
payments and benefits provided in Section 8(c),
provided that the salary continuation payments
shall be paid in a lump sum without any discount.
Also, immediately following a Change in Control,
all amounts, entitlements or benefits in which he
is not yet vested shall become fully vested except
to the extent such vesting would be inconsistent
with the terms of the relevant plan.
(d) Voluntary Termination. In the event of a
termination of employment by the Executive on his
own initiative other than a termination due to
death or Disability or a Constructive Termination
without Cause, the Executive shall have the same
entitlements as provided in Section 8(b)(ii) for a
Termination for Cause. A voluntary termination
under this Section 8(d) shall be effective upon 30
days prior notice to a Company and shall not be
deemed a breach of this Agreement.
(e) Limitation Following a Change in Control. In the
event that the termination of the Executive's
employment is for one of the reasons set forth in
Section 8(d) above and the aggregate of all
payments or benefits made or provided to the
Executive under Section 8(c) above and under all
other plans and programs of the Companies (the
"Aggregate Payment") is determined to constitute a
Parachute Payment, as such term is defined in
Section 280G(b)(2) of the Internal Revenue Code of
1986, as amended, notwithstanding any other
provision of this Agreement to the contrary the
aggregate amount of payments or benefits paid by
the Companies to the Executive pursuant to this
Agreement, the amount to be paid to the Executive
and the time of payment pursuant to this Section
8(e) shall be adjusted so as to make such payments
fully deductible by a Company. If the parties are
unable to agree upon an Auditor to calculate such
an adjustment, then the Executive and Companies
shall each select one accounting firm and those two
firms shall jointly select the accounting firm to
serve as the Auditor.
(f) No Mitigation - No Offset. In the event of any
termination of employment under this Section 8, the
Executive shall be under no obligation to seek
other employment and there shall be no offset
against amounts due the Executive under this
Agreement on account of any remuneration
attributable to any subsequent employment that he
may obtain except as specifically provided in this
Section 8.
(h) Nature of Payments. Any amounts due under this
Section 8 are in the nature of severance payments
considered to be reasonable by the Companies and
are not in the nature of a penalty.
9. Indemnification.
(a) The Companies agree that if the Executive is made a
party, or is threatened to be made a party, to any
action, suit or proceeding, whether civil, criminal,
administrative or investigative (a "Proceeding"), by
reason of the fact that he is or was a director, officer
or employee of the Companies or is or was serving at the
request of the Companies as a director, officer, member,
employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, including
service with respect to employee benefit plans, whether
or not the basis of such Proceeding is the Executive's
alleged action in an official capacity while serving as
a director, officer, member, employee or agent, the
Executive shall be indemnified and held harmless by the
Companies to the fullest extent permitted or authorized
by the Companies' certificates of incorporation or bylaws
or, if greater, by the laws of the State of Kentucky,
against all cost, expense, liability and loss (including,
without limitation, reasonable attorney's fees,
judgments, fines, ERISA fines, excise taxes or penalties
and amounts paid or to be paid in settlement) reasonably
incurred or suffered by the Executive in connection
therewith, and such indemnification shall continue as to
the Executive even if he has ceased to be a director,
member, employee or agent of the Companies or other
entity and shall inure to the benefit of the Executive's
heirs, executors and administrators. The Companies shall
advance to the Executive all reasonable costs and
expenses incurred by him in connection with a Proceeding
within 20 days after receipt by a Company of a written
request for such advance. Such request shall include an
undertaking by the Executive to repay the amount of such
advance if it shall ultimately be determined that he is
not entitled to be indemnified against such costs and
expenses.
(b) Neither the failure of a Company (including its board of
directors, independent legal counsel or stockholders) to
have made a determination prior to the commencement of
any proceeding concerning payment of amounts claimed by
the Executive under Section 9(a) that indemnification of
the Executive is proper because he has met the applicable
standard of conduct, nor a determination by a Company
(including its board of directors, independent legal
counsel or stockholders) that the Executive has not met
such applicable standard of conduct, shall create a
presumption that the Executive has not met the applicable
standard of conduct.
(c) The Companies agree to continue and maintain a directors'
and officers' liability insurance policy covering the
Executive to the extent either Company provides such
coverage for its other executive officers.
10. Representation.
The Companies represent and warrant that they are fully
authorized and empowered to enter into this Agreement and that the
performance of their obligations under this Agreement will not
violate any agreement between it and any other person, form or
organization.
11. Entire Agreement.
This Agreement contains the entire understanding and agreement
between the Parties concerning the subject matter hereof and
supersedes all prior agreements, understandings, discussions,
negotiations and undertakings, whether written or oral, between the
Parties with respect thereto.
12. Amendment or Waiver.
No provision in this Agreement may be amended unless such
amendment is agreed to in writing and signed by the Executive and
an authorized officer of the Companies. No waiver by either Party
of any breach by the other Party of any condition or provision
contained in this Agreement to be performed by such other Party
shall be deemed a waiver of a similar or dissimilar condition or
provision at the same or any prior or subsequent time. Any waiver
must be in writing and signed by the Executive or an authorized
officer of the Companies, as the case may be.
13. Severability.
In the event that any provision or portion of this Agreement
shall be determined to be invalid or unenforceable for any reason,
in whole or in part, the remaining provisions of this Agreement
shall be unaffected thereby and shall remain in full force and
effect to the fullest extent permitted by law.
14. Survivorship.
The respective rights and obligations of the Parties hereunder
shall survive any termination of the Executive's employment to the
extent necessary to the intended preservation of such rights and
obligations.
15. Resolution of Disputes.
Any disputes arising under or in connection with this
Agreement shall, at the election of the Executive or the Companies,
be resolved by binding arbitration, to be held in Kentucky in
accordance with the rules and procedures of the American
Arbitration Association. Judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction
thereof. Costs of the arbitration or litigation, including, without
limitation, attorneys' fees of both Parties, shall be borne by the
Companies, provided that if the arbitrator(s) determine that the
claims or defenses of the Executive were without any reasonable
basis, each Party shall bear his or its own costs.
16. Notices.
Any notice given to a party shall be in writing and shall be
deemed to have been given when delivered personally or sent by
certified or registered mail, postage prepaid, return receipt
requested, duly addressed to the Party concerned at the address
indicated below or to such changed address as such Party may
subsequently give such notice of:
If to the Companies: Mid-America Bancorp, Inc.
P.O. Box 1101
Louisville, KY 40201-1101
Attention: Bertram W. Klein
If to the Executive: David Klein
5846 Brittany Woods Circle
Louisville. KY 40222
17. Headings.
The headings of the sections contained in this Agreement are
for convenience only and shall not be deemed to control or affect
the meaning or construction of any provision of this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first written above.
MID-AMERICA BANCORP, INC.
By: /s/Bertram W. Klein
Bertram W. Klein
Title: Chairman of the Board
MID-AMERICA BANK OF LOUISVILLE &
TRUST COMPANY
By: /s/Bertram W. Klein
Bertram W. Klein
Title: Chairman of the Board
/s/ David Klein
DAVID KLEIN
<PAGE>
Exhibit 10 (e)
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into as of the 8th day of
November , 1995 by and between MID AMERICA BANCORP, INC., a
Kentucky corporation and MID AMERICA BANK OF LOUISVILLE & TRUST
COMPANY, a Kentucky Combined Bank and Trust Company, (together with
their successors and assigns permitted under this Agreement, the
"Companies), and RICHARD KLEIN (the "Executive").
W I T N E S S E T H:
WHEREAS, the Companies and the Executive are parties to an
Amended and Restated Agreement dated as of April 5, 1993, covering
the employment relationship of Executive with Companies, and
WHEREAS, the Parties desire to cancel that Agreement and
replace it in its entirety with this Employment Agreement (this
"Agreement").
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein and for other good and valuable
consideration, the receipt of which is mutually acknowledged, the
Companies and the Executive (individually a "Party" and together
the "Parties") agree as follows:
1. Definitions.
(a) "Affiliate" of a person or other entity shall mean a
person or other entity that directly or indirectly
controls, is controlled by, or is under common control
with the person or other entity specified.
(b) "Base Salary" shall mean the salary provided for in
Section 5 below or any increased salary granted to the
Executive pursuant to Section 5.
(c) "Board" shall mean the Boards of Directors of the
Companies.
(d) "Cause" shall mean:
(i) The Executive is convicted of a felony; or
(ii) The Executive is guilty of willful gross neglect or
willful gross misconduct in carrying out his duties
under this Agreement, resulting, in either case, in
material economic harm to a Company, unless the
Executive believed in good faith that such act or
nonact was in the best interests of such Company.
(e) A "Change" shall mean the occurrence of any one of the
following events:
(i) Any "person," as such term is used in Sections
3(a)(9) and 13(d)of the Securities Exchange Act of
1923, becomes a "beneficial owner,"as such term is
used in Rule 13d-3 promulgated under that Act, of
20% or more of the Voting Stock of a Company;
(ii) The majority of either Board consists of
individuals other than Incumbent Directors, which
term means the members of the Board on the date of
this Agreement; provided that any person becoming a
director subsequent to such date whose election or
nomination for election was supported by two-thirds
of the directors who then comprised the Incumbent
Directors shall be considered to be an Incumbent
Director;
(iii) A Company adopts any plan of liquidation
providing for the distribution of all or
substantially all of its assets;
(iv) All or substantially all of the assets or business
of a Company is disposed of pursuant to a merger,
consolidation or other transaction (unless the
shareholders of such Company immediately prior to
such merger, consolidation or other transaction
beneficially own, directly or indirectly, in
substantially the same proportion as they owned the
Voting Stock of such Company, all of the Voting
Stock or other ownership interests of the entity
or entities, if any, that succeed to the business
of such Company); or
(v) A Company combines with another company and is the
surviving corporation but, immediately after the
combination, the shareholders of such Company
immediately prior to the combination hold, directly
or indirectly, 50% or less of the Voting Stock of
the combined company (there being excluded from the
number of shares held by such shareholders, but not
from the Voting Stock of the combined company, any
shares received by Affiliates of such other company
in exchange for stock of such other company).
(f) "Constructive Termination Without Cause" shall mean a
termination of the Executive's employment at his
initiative as provided in Section 7(c) below following
the occurrence, without the Executive's prior written
consent, of one or more of the following events (except
in consequence of a prior termination):
(i) A reduction in the Executive's then current Base
Salary or the termination or material reduction of
any employee benefit or perquisite enjoyed by him
(other than as part of an across-the-board
reduction applicable to all executive officers of
the Companies);
(ii) The failure to elect or reelect the Executive to
any of the positions described in Section 4 below
or removal of him from any such position;
(iii) A material diminution in the Executive's
duties or the assignment to the Executive of
duties which are materially inconsistent with
his duties or which materially impair the
Executive's ability to function as Executive
Vice President or any other office to which he
may be elected or appointed:
(iv) The failure to continue the Executive's
participation in any incentive compensation plan
unless a plan providing a substantially similar
opportunity is substituted;
(v) The relocation of a Companies' principal office, or
the Executive's own office location as assigned to
him by a Company, to a location outside of the
metropolitan area of Louisville, Kentucky; or
(vi) The failure of a Company to obtain the assumption
in writing of its obligation to perform this
Agreement by any successor to all or substantially
all of the assets of such Company within 45 days
after a merger, consolidation, sale or similar
transaction.
(g) "Disability" shall mean the Executive's inability to
substantially perform his duties and responsibilities
under this Agreement for a period of 180 consecutive
days.
(h) "Subsidiary" of a Company shall mean any corporation of
which such Company owns, directly or indirectly, more
than 50% of the Voting Stock.
(i) "Term of Employment" shall mean the period specified in
Section 3 below.
(j) "Voting Stock" shall mean capital stock of any class or
classes having general voting power under ordinary
circumstances, in the absence of contingencies, to elect
the directors of a corporation.
2. Cancellation of Old Agreement.
The Amended and Restated Agreement between the Parties entered
into as of April 5, 1993, is hereby revoked and canceled in its
entirety.
3. Term of Employment.
The Companies hereby employ the Executive, and the Executive
hereby accepts such employment, for a five (5) year period
commencing November 8, 1995 and continuing until the termination of
his employment in accordance with the terms of this Agreement.
4. Position. Duties and Responsibilities.
(a) During the term of Employment, the Executive shall
continue to be employed as Executive Vice President of
the Companies with duties commensurate with that
position. The Executive, in carrying out his duties under
this Agreement, shall report to the Chief Executive
Officer.
(b) Anything herein to the contrary notwithstanding, nothing
shall preclude the Executive from (i) serving on the
boards of directors of a reasonable number of other
corporations (except Executive will not serve on the
board of any other financial institution) or the boards
of a reasonable number of trade associations and/or
charitable organizations, (ii) engaging in charitable
activities and community affairs, and (iii) managing his
personal investments and affairs, provided that such
activities do not materially interfere with the proper
performance of his duties and responsibilities as the
Companies' Executive Vice President or any other office
to which he may be elected or appointed.
(c) Executive agrees that he will, consistent with Bank
policy, refrain during the term of his employment and
while receiving benefits hereunder from investing in any
company that is a customer of the Companies.
5. Base Salary.
The Executive shall be paid an annualized base Salary, payable
in accordance with the regular payroll practices of the Companies,
of $115,500.00. The Base Salary shall be reviewed no less
frequently than annually for increase at the sole discretion of the
Board and its Nominating and Executive Compensation Committee.
6. Employee Benefit Programs.
During the Term of Employment, the Executive shall be entitled
to participate in all employee incentive, pension and welfare
benefit plans and programs made available to the Companies' senior
level executives or to its employees generally, as such plans or
programs may be in effect from time to time, including without
limitation, annual stock option grant, ESOP, bonus, pension, profit
sharing, savings and other retirement plans or programs, medical,
dental, hospitalization, short-term and long-term disability and
life insurance plans, accidental death and dismemberment
protection, travel accident insurance, and any other pension or
retirement plans or programs and any other employee incentive
compensation plan, employee welfare benefit plans or programs that
may be sponsored by the Companies from time to time, including any
plans that supplement the above-listed types of plans or programs,
whether funded or unfunded.
7. Reimbursement of Business and Other Expenses.
The Executive is authorized to incur reasonable expenses in
carrying out his duties and responsibilities under this agreement
and the Companies shall promptly reimburse him for all business
expenses incurred in connection with carrying out the business of
the Companies, subject to documentation in accordance with the
Companies' policy.
8. Termination of Employment.
(a) Termination by the Company for Cause.
(i) A termination for Cause shall not take effect
unless the provisions of this paragraph (i) are
complied with. The Executive shall be given written
notice by the Board of the intention to terminate
him for Cause, such notice (A) to state in detail
the particular act or acts or failure or failures
to act that constitute the grounds on which the
proposed termination for Cause is based and (B) to
be given within six months of the Board learning of
such act or acts or failure to act. The Executive
shall have 10 days after the date that such written
notice has been given to the Executive in which to
request a hearing before the Board. Such hearing
shall be held within 15 days of such notice to the
Executive, provided he requests such hearing.
(ii) In the event the Companies terminate the
Executive's employment for Cause, he shall be
entitled to:
(A) The Base Salary through the date of the
termination of his employment for Cause;
(B) Any incentive awards earned (but not yet
paid);
(C) Any pension benefit that may become due
pursuant to Section 6 above, determined as of
the date of such termination;
(D) Other or additional benefits in accordance
with applicable plans or programs of the
Companies to the date of termination.
(b) Termination Without Cause or Constructive Termination
Without Cause. In the event the Executive's employment is
terminated without Cause, other than due to Disability or
death, or in the event there is a Constructive
Termination Without Cause, the Executive shall be
entitled to:
(i) The Base Salary through the date of
termination of the Executive's employment;
(ii) The Base Salary, at the annualized rate in
effect on the date of termination of the
Executive's employment (or in the event a
reduction in Base Salary is the basis for a
Constructive Termination Without Cause, then
the Base Salary in effect immediately prior to
such reduction), for a period of 36 months
following such termination; provided that at
the Executive's option the Companies shall pay
him the present value of such salary
continuation payments in a lump sum (using as
the discount rate the Applicable Federal Rate
for short term Treasury obligations as
published by the Internal Revenue Service for
the month in which such termination occurs);
(iii) The balance of any incentive awards
earned (but not yet paid);
(iv) The right to exercise any stock option in
full, whether or not such right is exercisable
pursuant to the terms of the grant.
(v) Any pension benefit that may become due
pursuant to Section 6 above;
(vi) Continued accrual of credited service for the
purpose of the pension benefit provided under
Section 6 above for the period of 36 months or
his attainment of age 65, whichever shall
first occur;
(vii) Continued participation in all medical,
dental, hospitalization and life
insurance coverage and in other employee
benefit plans or programs in which he was
participating on the date of the
termination of his employment until the
earlier of:
(A) The end of the period during which he is
receiving salary continuation payments
(or in respect of which a lump-sum
severance payment is made);
(B) The date, or dates, he receives
equivalent coverage and benefits under
the plans and programs of a subsequent
employer (such coverages and benefits to
be determined on a coverage-by-coverage,
or benefit-by-benefit, basis); provided
that (x) if the Executive is precluded
from continuing his participation in any
employee benefit plan or program as
provided in this clause (vii) of this
Section 8(c), he shall be provided with
the after-tax economic equivalent of the
benefit provided under the plan or
program in which he is unable to
participate for the period specified in
this clause (vii) of this Section 8(c),
(y) the economic equivalent of any
benefit foregone shall be deemed to be
the lowest cost that would be incurred by
the Executive in obtaining such benefit
himself on an individual basis, and (z)
payment of such after-tax economic
equivalent shall be made quarterly in
advance; and
(viii) Other or additional benefits in
accordance with applicable plans and
programs of the Companies to the date of
termination.
(c) Termination of Employment Following a Change in
Control. If following a change in Control, the
Executive's employment is terminated without Cause
or there is a Constructive Termination Without
Cause, the Executive shall be entitled to the
payments and benefits provided in Section 8(c),
provided that the salary continuation payments
shall be paid in a lump sum without any discount.
Also, immediately following a Change in Control,
all amounts, entitlements or benefits in which he
is not yet vested shall become fully vested except
to the extent such vesting would be inconsistent
with the terms of the relevant plan.
(d) Voluntary Termination. In the event of a
termination of employment by the Executive on his
own initiative other than a termination due to
death or Disability or a Constructive Termination
without Cause, the Executive shall have the same
entitlements as provided in Section 8(b)(ii) for a
Termination for Cause. A voluntary termination
under this Section 8(d) shall be effective upon 30
days prior notice to a Company and shall not be
deemed a breach of this Agreement.
(e) Limitation Following a Change in Control. In the
event that the termination of the Executive's
employment is for one of the reasons set forth in
Section 8(d) above and the aggregate of all
payments or benefits made or provided to the
Executive under Section 8(c) above and under all
other plans and programs of the Companies (the
"Aggregate Payment") is determined to constitute a
Parachute Payment, as such term is defined in
Section 280G(b)(2) of the Internal Revenue Code of
1986, as amended, notwithstanding any other
provision of this Agreement to the contrary the
aggregate amount of payments or benefits paid by
the Companies to the Executive pursuant to this
Agreement, the amount to be paid to the Executive
and the time of payment pursuant to this Section
8(e) shall be adjusted so as to make such payments
fully deductible by a Company. If the parties are
unable to agree upon an Auditor to calculate such
an adjustment, then the Executive and Companies
shall each select one accounting firm and those two
firms shall jointly select the accounting firm to
serve as the Auditor.
(f) No Mitigation - No Offset. In the event of any
termination of employment under this Section 8, the
Executive shall be under no obligation to seek
other employment and there shall be no offset
against amounts due the Executive under this
Agreement on account of any remuneration
attributable to any subsequent employment that he
may obtain except as specifically provided in this
Section 8.
(h) Nature of Payments. Any amounts due under this
Section 8 are in the nature of severance payments
considered to be reasonable by the Companies and
are not in the nature of a penalty.
9. Indemnification.
(a) The Companies agree that if the Executive is made a
party, or is threatened to be made a party, to any
action, suit or proceeding, whether civil, criminal,
administrative or investigative (a "Proceeding"), by
reason of the fact that he is or was a director, officer
or employee of the Companies or is or was serving at the
request of the Companies as a director, officer, member,
employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, including
service with respect to employee benefit plans, whether
or not the basis of such Proceeding is the Executive's
alleged action in an official capacity while serving as
a director, officer, member, employee or agent, the
Executive shall be indemnified and held harmless by the
Companies to the fullest extent permitted or authorized
by the Companies' certificates of incorporation or bylaws
or, if greater, by the laws of the State of Kentucky,
against all cost, expense, liability and loss (including,
without limitation, reasonable attorney's fees,
judgments, fines, ERISA fines, excise taxes or penalties
and amounts paid or to be paid in settlement) reasonably
incurred or suffered by the Executive in connection
therewith, and such indemnification shall continue as to
the Executive even if he has ceased to be a director,
member, employee or agent of the Companies or other
entity and shall inure to the benefit of the Executive's
heirs, executors and administrators. The Companies shall
advance to the Executive all reasonable costs and
expenses incurred by him in connection with a Proceeding
within 20 days after receipt by a Company of a written
request for such advance. Such request shall include an
undertaking by the Executive to repay the amount of such
advance if it shall ultimately be determined that he is
not entitled to be indemnified against such costs and
expenses.
(b) Neither the failure of a Company (including its board of
directors, independent legal counsel or stockholders) to
have made a determination prior to the commencement of
any proceeding concerning payment of amounts claimed by
the Executive under Section 9(a) that indemnification of
the Executive is proper because he has met the applicable
standard of conduct, nor a determination by a Company
(including its board of directors, independent legal
counsel or stockholders) that the Executive has not met
such applicable standard of conduct, shall create a
presumption that the Executive has not met the applicable
standard of conduct.
(c) The Companies agree to continue and maintain a directors'
and officers' liability insurance policy covering the
Executive to the extent either Company provides such
coverage for its other executive officers.
10. Representation.
The Companies represent and warrant that they are fully
authorized and empowered to enter into this Agreement and that the
performance of their obligations under this Agreement will not
violate any agreement between it and any other person, form or
organization.
11. Entire Agreement.
This Agreement contains the entire understanding and agreement
between the Parties concerning the subject matter hereof and
supersedes all prior agreements, understandings, discussions,
negotiations and undertakings, whether written or oral, between the
Parties with respect thereto.
12. Amendment or Waiver.
No provision in this Agreement may be amended unless such
amendment is agreed to in writing and signed by the Executive and
an authorized officer of the Companies. No waiver by either Party
of any breach by the other Party of any condition or provision
contained in this Agreement to be performed by such other Party
shall be deemed a waiver of a similar or dissimilar condition or
provision at the same or any prior or subsequent time. Any waiver
must be in writing and signed by the Executive or an authorized
officer of the Companies, as the case may be.
13. Severability.
In the event that any provision or portion of this Agreement
shall be determined to be invalid or unenforceable for any reason,
in whole or in part, the remaining provisions of this Agreement
shall be unaffected thereby and shall remain in full force and
effect to the fullest extent permitted by law.
14. Survivorship.
The respective rights and obligations of the Parties hereunder
shall survive any termination of the Executive's employment to the
extent necessary to the intended preservation of such rights and
obligations.
15. Resolution of Disputes.
Any disputes arising under or in connection with this
Agreement shall, at the election of the Executive or the Companies,
be resolved by binding arbitration, to be held in Kentucky in
accordance with the rules and procedures of the American
Arbitration Association. Judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction
thereof. Costs of the arbitration or litigation, including, without
limitation, attorneys' fees of both Parties, shall be borne by the
Companies, provided that if the arbitrator(s) determine that the
claims or defenses of the Executive were without any reasonable
basis, each Party shall bear his or its own costs.
16. Notices.
Any notice given to a party shall be in writing and shall be
deemed to have been given when delivered personally or sent by
certified or registered mail, postage prepaid, return receipt
requested, duly addressed to the Party concerned at the address
indicated below or to such changed address as such Party may
subsequently give such notice of:
If to the Companies: Mid-America Bancorp, Inc.
P.O. Box 1101
Louisville, KY 40201-1101
Attention: Bertram W. Klein
If to the Executive: Richard Klein
9803 Melissa Drive
Louisville. KY 40223
17. Headings.
The headings of the sections contained in this Agreement are
for convenience only and shall not be deemed to control or affect
the meaning or construction of any provision of this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first written above.
MID-AMERICA BANCORP, INC.
By: /s/Bertram W. Klein
Bertram W. Klein
Title: Chairman of the Board
MID-AMERICA BANK OF LOUISVILLE &
TRUST COMPANY
By: /s/Bertram W. Klein
Bertram W. Klein
Title: Chairman of the Board
/s/ Richard Klein
RICHARD KLEIN
<PAGE>
Exhibit 10 (f)
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into as of the 1st day of March
, 1996 by and between MID AMERICA BANCORP, INC., a Kentucky
corporation and MID AMERICA BANK OF LOUISVILLE & TRUST COMPANY, a
Kentucky Combined Bank and Trust Company, (together with their
successors and assigns permitted under this Agreement, the
"Companies), and ROBERT H. SACHS (the "Executive").
W I T N E S S E T H:
WHEREAS, the Companies and the Executive are parties to an
Amended and Restated Agreement dated as of April 5, 1993, covering
the employment relationship of Executive with Companies, and
WHEREAS, the Parties desire to cancel that Agreement and replace
it in its entirety with this Employment Agreement (this "Agreement").
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein and for other good and valuable
consideration, the receipt of which is mutually acknowledged, the
Companies and the Executive (individually a "Party" and together the
"Parties") agree as follows:
1. Definitions.
(a) "Affiliate" of a person or other entity shall mean a person
or other entity that directly or indirectly controls, is
controlled by, or is under common control with the person
or other entity specified.
(b) Except as provided in Section 8 hereof, "Base Salary" shall
mean the salary provided for in Section 5 below or any
increased salary granted to the Executive pursuant to
Section 5.
(c) "Board" shall mean the Boards of Directors of the
Companies.
(d) "Cause" shall mean:
(i) The Executive is convicted of a felony; or
(ii) The Executive is guilty of willful gross neglect or
willful gross misconduct in carrying out his duties
under this Agreement, resulting, in either case, in
material economic harm to a Company, unless the
Executive believed in good faith that such act or
nonact was in the best interests of such Company.
(e) A "Change of Control" shall mean the occurrence of any one
of the following events:
(i) Bertram W. Klein ceases to be Chairman of the
Companies at any time prior to January 1, 1999;
(ii) Any "person," as such term is used in Sections
3(a)(9) and 13(d)of the Securities Exchange Act of
1923, becomes a "beneficial owner,"as such term is
used in Rule 13d-3 promulgated under that Act, of 20%
or more of the Voting Stock of a Company;
(iii) The majority of either Board consists of
individuals other than Incumbent Directors,
which term means the members of the Board on the
date of this Agreement; provided that any person
becoming a director subsequent to such date
whose election or nomination for election was
supported by two-thirds of the directors who
then comprised the Incumbent Directors shall be
considered to be an Incumbent Director;
(iv) A Company adopts any plan of liquidation providing
for the distribution of all or substantially all of
its assets;
(v) All or substantially all of the assets or business of
a Company is disposed of pursuant to a merger,
consolidation or other transaction (unless the
shareholders of such Company immediately prior to
such merger, consolidation or other transaction
beneficially own, directly or indirectly, in
substantially the same proportion as they owned the
Voting Stock of such Company, all of the Voting Stock
or other ownership interests of the entity or
entities, if any, that succeed to the business of
such Company); or
(vi) A Company combines with another company and is the
surviving corporation but, immediately after the
combination, the shareholders of such Company
immediately prior to the combination hold, directly
or indirectly, 50% or less of the Voting Stock of the
combined company (there being excluded from the
number of shares held by such shareholders, but not
from the Voting Stock of the combined company, any
shares received by Affiliates of such other company
in exchange for stock of such other company).
(f) "Constructive Termination Without Cause" shall mean a
termination of the Executive's employment at his initiative
as provided in Section 8(d) below following the occurrence,
without the Executive's prior written consent, of one or
more of the following events (except in consequence of a
prior termination):
(i) A reduction in the Executive's then current Base
Salary or the termination or material reduction of
any employee benefit or perquisite enjoyed by him
(other than as part of an across-the-board reduction
applicable to all executive officers of the
Companies);
(ii) The failure to elect or reelect the Executive to any
of the positions described in Section 4 below or
removal of him from any such position;
(iii) A material diminution in the Executive's duties
or the assignment to the Executive of duties
which are materially inconsistent with his
duties or which materially impair the
Executive's ability to function as the President
and as a Director of the Companies or any other
office to which he may be elected or appointed:
(iv) The failure to continue the Executive's participation
in any incentive compensation plan unless a plan
providing a substantially similar opportunity is
substituted;
(v) The relocation of a Companies' principal office, or
the Executive's own office location as assigned to
him by a Company, to a location outside of the
metropolitan area of Louisville, Kentucky; or
(vi) The failure of a Company to obtain the assumption in
writing of its obligation to perform this Agreement
by any successor to all or substantially all of the
assets of such Company within 45 days after a merger,
consolidation, sale or similar transaction.
(g) "Disability" shall mean the Executive's inability to
substantially perform his duties and responsibilities under
this Agreement for a period of 180 consecutive days.
(h) "Term of Employment" shall mean the period specified in
Section 3 below.
2. Cancellation of Old Agreement. The Agreement between the Parties
entered into as of April 5, 1993, is hereby revoked and canceled in
its entirety.
3. Term of Employment. The employment of the Executive will
continue through December 31, 1998, or until the earlier termination
of his employment in accordance with the terms of this Agreement.
4. Position. Duties and Responsibilities.
(a) During the term of Employment, the Executive shall continue
to be employed as Executive Vice President of the Companies
with duties commensurate with that position. The Executive,
in carrying out his duties under this Agreement, shall
report to the Chief Executive Officer.
(b) Anything herein to the contrary notwithstanding, nothing
shall preclude the Executive from (i) serving on the boards
of directors of a reasonable number of other corporations
(except Executive will not serve on the board of any other
financial institution) or the boards of a reasonable number
of trade associations and/or charitable organizations, (ii)
engaging in charitable activities and community affairs,
and (iii) managing his personal investments and affairs,
provided that such activities do not materially interfere
with the proper performance of his duties and
responsibilities as the Companies' Executive Vice President
or any other office to which he may be elected or
appointed.
(d) Executive agrees that he will, consistent with Bank policy,
refrain during the term of his employment and while
receiving benefits hereunder from investing in any company
that is a customer of the Companies.
5. Base Salary. The Executive shall be paid an annualized Base
Salary, payable in accordance with the regular payroll practices of
the Companies, of $156,000.00. The Base Salary shall be reviewed no
less frequently than annually for increase at the sole discretion of
the Board and its Nominating and Executive Compensation Committee.
In addition, upon completion of his service through December 31,
1998, or on that date if Executive is prevented from completing such
service by virtue of Disability, death or a Termination pursuant to
subparagraphs (a) through (d) of Paragraph 8 hereof, the Companies
will pay the Executive a sum equal to Base Salary times two. This sum
is in addition to, and not in place of, any amounts due to Executive
pursuant to any other provision of this Employment Agreement. For
purposes of this paragraph 5, "Base Salary" shall include an annual
bonus calculated by taking the highest bonus of the three years
preceding the year of termination.
6. Employee Benefit Programs. During the Term of Employment, the
Executive shall be entitled to participate in all employee incentive,
pension and welfare benefit plans and programs made available to the
Companies' senior level executives or to its employees generally, as
such plans or programs may be in effect from time to time, including
without limitation, annual stock option grant, ESOP, bonus, pension,
profit sharing, savings and other retirement plans or programs,
medical, dental, hospitalization, short-term and long-term disability
and life insurance plans, accidental death and dismemberment
protection, travel accident insurance, and any other pension or
retirement plans or programs and any other employee incentive
compensation plan, employee welfare benefit plans or programs that
may be sponsored by the Companies from time to time, including any
plans that supplement the above-listed types of plans or programs,
whether funded or unfunded.
7. Reimbursement of Business and Other Expenses. The Executive is
authorized to incur reasonable expenses in carrying out his duties
and responsibilities under this agreement and the Companies shall
promptly reimburse him for all business expenses incurred in
connection with carrying out the business of the Companies, subject
to documentation in accordance with the Companies' policy.
8. Termination of Employment.
(a) Termination by the Company for Cause. In the event the
Companies terminate the Executive's employment for Cause,
he shall be entitled to:
(i) The Base Salary through the date of the termination
of his employment for Cause;
(ii) Any incentive awards earned (but not yet paid);
(iii) Any pension benefit that may become due pursuant
to Section 6 above, determined as of the date of
such termination;
(iv) Other or additional benefits in accordance with
applicable plans or programs of the Companies to the
date of termination.
(b) Termination or Constructive Termination Without Cause. In
the event the Executive's employment is terminated without
Cause or there is a Construction Termination Without
Cause, other than due to Disability or death, the Executive
shall be entitled to:
(i) The Base Salary through the date of termination of
the Executive's employment;
(ii) The Base Salary, at the annualized rate in effect on
the date of termination of the Executive's employment
for the unexpired term of this Employment Agreement
following such termination; provided that at the
Executive's option the Companies shall pay him the
present value of such salary continuation payments in
a lump sum (using as the discount rate the Applicable
Federal Rate for short term Treasury obligations as
published by the Internal Revenue Service for the
month in which such termination occurs). For purposes
of this subsection (ii) "Base Salary" shall include
an annual bonus calculated by taking the highest
bonus of the three years preceding the year of
termination;
(iii) The balance of any incentive awards earned (but
not yet paid);
(iv) The right to exercise any stock option in full,
whether or not such right is exercisable pursuant to
the terms of the grant.
(v) Any pension benefit that may become due pursuant to
Section 6 above;
(vi) Continued accrual of credited service for the purpose
of the pension benefit provided under Section 6 above
through December 31, 1998;
(vii) Continued participation in all medical, dental,
hospitalization and life insurance coverage and
in other employee benefit plans or programs in
which he was participating on the date of the
termination of his employment until the earlier
of:
(A) The end of the period during which he is
receiving salary continuation payments (or in
respect of which a lump-sum severance payment is
made);
(B) The date, or dates, he receives equivalent
coverage and benefits under the plans and
programs of a subsequent employer (such
coverages and benefits to be determined on a
coverage-by-coverage, or benefit-by-benefit,
basis); provided that (x) if the Executive is
precluded from continuing his participation in
any employee benefit plan or program as provided
in this clause (vii) of this Section 8(c), he
shall be provided with the after-tax economic
equivalent of the benefit provided under the
plan or program in which he is unable to
participate for the period specified in this
clause (vii) of this Section 8(c), (y) the
economic equivalent of any benefit foregone
shall be deemed to be the lowest cost that would
be incurred by the Executive in obtaining such
benefit himself on an individual basis, and (z)
payment of such after-tax economic equivalent
shall be made quarterly in advance; and
(viii) Immediate vesting of the Companies' contribution
to his Employee Stock Option Plan
(ix) Other or additional benefits in accordance with
applicable plans and programs of the Companies to the
date of termination.
(c) Termination of Employment Following a Change in Control.
If following a change in Control, the Executive's
employment is terminated without Cause or there is a
Constructive Termination Without Cause, the Executive shall
be entitled to the payments and benefits provided in
Section 8(b), provided that the salary continuation
payments shall be paid in a lump sum without any discount.
Also, immediately following a Change in Control, all
amounts, entitlements or benefits in which he is not yet
vested shall become fully vested except to the extent such
vesting would be inconsistent with the terms of the
relevant plan. In addition, if the Executive has completed
less than fifteen (15) years of service at the time of such
termination, the Executive will be entitled to a
supplemental pension benefit paid directly by the Companies
(and not as a part of the Pension Plan of the Companies)
equal to the benefit otherwise payable under said Pension
Plan based upon the completion of fifteen (15) years of
service, minus any amounts payable pursuant to the said
Pension Plan. This supplemental pension benefit is an
unfunded liability of the Companies, its successors and
assigns, and not part of any established Plan of the
Companies.
(d) Voluntary Termination. In the event of a termination of
employment by the Executive on his own initiative other
than a termination due to death or Disability or a
Constructive Termination without Cause, the Executive shall
have the same entitlements as provided in Section 8(a) for
a Termination for Cause.
(e) Limitation Following a Change in Control. In the event that
the termination of the Executive's employment is for one
of the reasons set forth in Section 8(c) above and the
aggregate of all payments or benefits made or provided to
the Executive under Section 8(b) above and under all other
plans and programs of the Companies (the "Aggregate
Payment") is determined to constitute a Parachute Payment,
as such term is defined in Section 280G(b)(2) of the
Internal Revenue Code of 1986, as amended, notwithstanding
any other provision of this Agreement to the contrary the
aggregate amount of payments or benefits paid by the
Companies to the Executive pursuant to this Agreement, the
amount to be paid to the Executive and the time of payment
pursuant to this Section 8(e) shall be adjusted so as to
make such payments fully deductible by a Company. If the
parties are unable to agree upon an Auditor to calculate
such an adjustment, then the Executive and Companies shall
each select one accounting firm and those two firms shall
jointly select the accounting firm to serve as the Auditor.
(g) No Mitigation - No Offset. In the event of any termination
of employment under this Section 8, the Executive shall be
under no obligation to seek other employment and there
shall be no offset against amounts due the Executive under
this Agreement on account of any remuneration attributable
to any subsequent employment that he may obtain except as
specifically provided in this Section 8.
(h) Nature of Payments. Any amounts due under this Section 8
are in the nature of severance payments considered to be
reasonable by the Companies and are not in the nature of
a penalty.
9. Indemnification.
(a) The Companies agree that if the Executive is made a party,
or is threatened to be made a party, to any action, suit
or proceeding, whether civil, criminal, administrative or
investigative (a "Proceeding"), by reason of the fact that
he is or was a director, officer or employee of the
Companies or is or was serving at the request of the
Companies as a director, officer, member, employee or agent
of another corporation, partnership, joint venture, trust
or other enterprise, including service with respect to
employee benefit plans, whether or not the basis of such
Proceeding is the Executive's alleged action in an official
capacity while serving as a director, officer, member,
employee or agent, the Executive shall be indemnified and
held harmless by the Companies to the fullest extent
permitted or authorized by the Companies' certificates of
incorporation or bylaws or, if greater, by the laws of the
State of Kentucky, against all cost, expense, liability and
loss (including, without limitation, reasonable attorney's
fees, judgments, fines, ERISA fines, excise taxes or
penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by the Executive in
connection therewith, and such indemnification shall
continue as to the Executive even if he has ceased to be
a director, member, employee or agent of the Companies or
other entity and shall inure to the benefit of the
Executive's heirs, executors and administrators. The
Companies shall advance to the Executive all reasonable
costs and expenses incurred by him in connection with a
Proceeding within 20 days after receipt by a Company of a
written request for such advance. Such request shall
include an undertaking by the Executive to repay the amount
of such advance if it shall ultimately be determined that
he is not entitled to be indemnified against such costs and
expenses.
(b) Neither the failure of a Company (including its board of
directors, independent legal counsel or stockholders) to
have made a determination prior to the commencement of any
proceeding concerning payment of amounts claimed by the
Executive under Section 10(a) that indemnification of the
Executive is proper because he has met the applicable
standard of conduct, nor a determination by a Company
(including its board of directors, independent legal
counsel or stockholders) that the Executive has not met
such applicable standard of conduct, shall create a
presumption that the Executive has not met the applicable
standard of conduct.
(c) The Companies agree to continue and maintain a directors'
and officers' liability insurance policy covering the
Executive to the extent either Company provides such
coverage for its other executive officers.
10. Representation. The Companies represent and warrant that they
are fully authorized and empowered to enter into this Agreement and
that the performance of their obligations under this Agreement will
not violate any agreement between it and any other person, form or
organization.
11. Entire Agreement. This Agreement contains the entire
understanding and agreement between the Parties concerning the
subject matter hereof and supersedes all prior agreements,
understandings, discussions, negotiations and undertakings, whether
written or oral, between the Parties with respect thereto.
12. Amendment or Waiver. No provision in this Agreement may be
amended unless such amendment is agreed to in writing and signed by
the Executive and an authorized officer of the Companies. No waiver
by either Party of any breach by the other Party of any condition or
provision contained in this Agreement to be performed by such other
Party shall be deemed a waiver of a similar or dissimilar condition
or provision at the same or any prior or subsequent time. Any waiver
must be in writing and signed by the Executive or an authorized
officer of the Companies, as the case may be.
13. Severability. In the event that any provision or portion of
this Agreement shall be determined to be invalid or unenforceable for
any reason, in whole or in part, the remaining provisions of this
Agreement shall be unaffected thereby and shall remain in full force
and effect to the fullest extent permitted by law.
14. Survivorship. The respective rights and obligations of the
Parties hereunder shall survive any termination of the Executive's
employment to the extent necessary to the intended preservation of
such rights and obligations.
15. Resolution of Disputes. Any disputes arising under or in
connection with this Agreement shall, at the election of the
Executive or the Companies, be resolved by binding arbitration, to be
held in Kentucky in accordance with the rules and procedures of the
American Arbitration Association. Judgment upon the award rendered by
the arbitrator(s) may be entered in any court having jurisdiction
thereof. Costs of the arbitration or litigation, including, without
limitation, attorneys' fees of both Parties, shall be borne by the
Companies, provided that if the arbitrator(s) determine that the
claims or defenses of the Executive were without any reasonable
basis, each Party shall bear his or its own costs.
16. Notices. Any notice given to a Party shall be in writing and
shall be deemed to have been given when delivered personally or sent
by certified or registered mail, postage prepaid, return receipt
requested, duly addressed to the Party concerned at the address
indicated below or to such changed address as such Party may
subsequently give such notice of:
If to the Companies: Mid-America Bancorp, Inc.
P.O. Box 1101
Louisville, KY 40201-1101
Attention: Bertram W. Klein
If to the Executive: ROBERT H. SACHS
2344 Page Avenue
Louisville. KY 40205
17. Additional Compensation in Event of Change of Control. Pursuant
to the Agreement between the Parties dated as of April 5, 1993,
Executive was granted certain Stock Appreciation Rights contingent
upon a Change in Control on or before December 31, 1998.
Notwithstanding anything else in this Agreement to the contrary, that
grant will continue under the same terms and conditions.
IN WITNESS WHEREOF, the undersigned have executed this Agreement
as of the date first written above.
MID-AMERICA BANCORP, INC.
By: /s/Bertram W. Klein
Bertram W. Klein
Title: Chairman of the Board
MID-AMERICA BANK OF LOUISVILLE &
TRUST COMPANY
By: /s/Bertram W. Klein
Bertram W. Klein
Title: Chairman of the Board
/s/ Robert H. Sachs
ROBERT H. SACHS
<PAGE>
Exhibit 10 (g)
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into as of the 1st day of March
, 1996 by and between MID AMERICA BANCORP, INC., a Kentucky
corporation and MID AMERICA BANK OF LOUISVILLE & TRUST COMPANY, a
Kentucky Combined Bank and Trust Company, (together with their
successors and assigns permitted under this Agreement, the
"Companies), and GAIL POHN (the "Executive").
W I T N E S S E T H:
WHEREAS, the Companies and the Executive are parties to an
Agreement dated as of April 5, 1993, covering the employment
relationship of Executive with Companies, and
WHEREAS, the Parties desire to cancel that Agreement and replace
it in its entirety with this Employment Agreement (this "Agreement").
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein and for other good and valuable
consideration, the receipt of which is mutually acknowledged, the
Companies and the Executive (individually a "Party" and together the
"Parties") agree as follows:
1. Definitions.
(a) "Affiliate" of a person or other entity shall mean a person
or other entity that directly or indirectly controls, is
controlled by, or is under common control with the person
or other entity specified.
(b) Except as provided otherwise in Section 8 hereof, "Base
Salary" shall mean the salary provided for in Section 5
below or any increased salary granted to the Executive
pursuant to Section 5.
(c) "Board" shall mean the Boards of Directors of the
Companies.
(d) "Cause" shall mean:
(i) The Executive is convicted of a felony; or
(ii) The Executive is guilty of willful gross neglect or
willful gross misconduct in carrying out his duties
under this Agreement, resulting, in either case, in
material economic harm to the Companies, unless the
Executive believed in good faith that such act or
nonact was in the best interests of such Company.
(e) A "Change of Control" shall mean the occurrence of any one
of the following events:
(i) Any "person," as such term is used in Sections
3(a)(9) and 13(d)of the Securities Exchange Act of
1923, becomes a "beneficial owner,"as such term is
used in Rule 13d-3 promulgated under that Act, of 20%
or more of the Voting Stock of the Companies;
(ii) The majority of either Board consists of individuals
other than Incumbent Directors, which term means the
members of the Board on the date of this Agreement;
provided that any person becoming a director
subsequent to such date whose election or nomination
for election was supported by two-thirds of the
directors who then comprised the Incumbent Directors
shall be considered to be an Incumbent Director;
(iii) The Companies adopt any plan of liquidation
providing for the distribution of all or
substantially all of its assets;
(iv) All or substantially all of the assets or business of
the Companies is disposed of pursuant to a merger,
consolidation or other transaction (unless the
shareholders of such Company immediately prior to
such merger, consolidation or other transaction
beneficially own, directly or indirectly, in
substantially the same proportion as they owned the
Voting Stock of such Company, all of the Voting Stock
or other ownership interests of the entity or
entities, if any, that succeed to the business of
such Company); or
(v) The Companies combine with another company and is the
surviving corporation but, immediately after the
combination, the shareholders of such Company
immediately prior to the combination hold, directly
or indirectly, 50% or less of the Voting Stock of the
combined company (there being excluded from the
number of shares held by such shareholders, but not
from the Voting Stock of the combined company, any
shares received by Affiliates of such other company
in exchange for stock of such other company).
(f) "Constructive Termination Without Cause" shall mean a
termination of the Executive's employment at his initiative
as provided in Section 8(e) below following the occurrence,
without the Executive's prior written consent, of one or
more of the following events (except in consequence of a
prior termination):
(i) A reduction in the Executive's then current Base
Salary or the termination or material reduction of
any employee benefit or perquisite enjoyed by him;
(ii) The failure to elect or reelect the Executive to any
of the positions described in Section 4 below or
removal of him from any such position;
(iii) A material diminution in the Executive's duties
or the assignment to the Executive of duties
which are materially inconsistent with his
duties or which materially impair the
Executive's ability to function as the Executive
Vice President and Chief Executive Officer or
any other office to which he may be elected or
appointed:
(iv) The failure to continue the Executive's participation
in any incentive compensation plan unless a plan
providing a substantially similar opportunity is
substituted;
(v) The relocation of a Companies' principal office, or
the Executive's own office location as assigned to
him by the Companies, to a location outside of the
metropolitan area of Louisville, Kentucky; or
(vi) The failure of the Companies to obtain the assumption
in writing of its obligation to perform this
Agreement by any successor to all or substantially
all of the assets of such Company within 45 days
after a merger, consolidation, sale or similar
transaction.
(g) "Disability" shall mean the Executive's inability to
substantially perform his duties and responsibilities under
this Agreement for a period of 180 consecutive days.
(h) "Term of Employment" shall mean the period specified in
Section 3 below.
2. Cancellation of Old Agreement.
The Agreement between the Parties entered into as of May 3,
1993, is hereby revoked and canceled in its entirety.
3. Term of Employment.
The employment of the Executive will continue to the last day of
the month in which the Executive turns 65 years of age or until the
earlier termination of his employment in accordance with the terms of
this Agreement.
4. Position. Duties and Responsibilities.
(a) During the term of Employment, the Executive shall continue
to be employed as Executive Vice President of the Companies
with duties commensurate with that position. The Executive,
in carrying out his duties under this Agreement, shall
report to the Chief Executive Officer.
(b) Anything herein to the contrary notwithstanding, nothing
shall preclude the Executive from (i) serving on the boards
of directors of a reasonable number of other corporations
(except Executive will not serve on the board of any other
financial institution) or the boards of a reasonable number
of trade associations and/or charitable organizations, (ii)
engaging in charitable activities and community affairs,
and (iii) managing his personal investments and affairs,
provided that such activities do not materially interfere
with the proper performance of his duties and
responsibilities as the Companies' Executive Vice President
or any other office to which he may be elected or
appointed.
5. Base Salary.
The Executive shall be paid an annualized Base Salary, payable
in accordance with the regular payroll practices of the Companies, of
$156,000.00. The Base Salary shall be reviewed no less frequently
than annually for increase at the sole discretion of the Board and
its Nominating and Executive Compensation Committee.
6. Employee Benefit Programs.
During the Term of Employment, the Executive shall be entitled
to participate in all employee incentive, pension and welfare benefit
plans and programs made available to the Companies' senior level
executives or to its employees generally, as such plans or programs
may be in effect from time to time, including without limitation,
annual stock option grant, ESOP, bonus, pension, profit sharing,
savings and other retirement plans or programs, medical, dental,
hospitalization, short-term and long-term disability and life
insurance plans, accidental death and dismemberment protection,
travel accident insurance, and any other pension or retirement plans
or programs and any other employee incentive compensation plan,
employee welfare benefit plans or programs that may be sponsored by
the Companies from time to time, including any plans that supplement
the above-listed types of plans or programs, whether funded or
unfunded.
7. Reimbursement of Business and Other Expenses.
The Executive is authorized to incur reasonable expenses in
carrying out his duties and responsibilities under this agreement and
the Companies shall promptly reimburse him for all business expenses
incurred in connection with carrying out the business of the
Companies, subject to documentation in accordance with the Companies'
policy.
8. Termination of Employment.
(a) Termination for Cause. In the event the Companies terminate
the Executive's employment for Cause, he shall be entitled
to:
(i) The Base Salary through the date of the termination
of his employment for Cause;
(ii) Any incentive awards earned (but not yet paid);
(iii) Any pension benefit that may become due pursuant
to Section 6 above, determined as of the date of
such termination;
(iv) Other or additional benefits in accordance with
applicable plans or programs of the Companies to the
date of termination.
(b) Termination Without Cause. If the Executive's employment
is terminated without Cause other than due to Disability
or death, or there is a Constructive Termination without
Cause, the Executive shall be entitled to:
(i) The Base Salary through the date of termination of
the Executive's employment;
(ii) The Base Salary, at the annualized rate in effect on
the date of termination of the Executive's employment
for the unexpired term of this Employment Agreement
following such termination; provided that at the
Executive's option the Companies shall pay him the
present value of such salary continuation payments in
a lump sum (using as the discount rate the Applicable
Federal Rate for short term Treasury obligations as
published by the Internal Revenue Service for the
month in which such termination occurs). For purposes
of this subsection (ii) "Base Salary" shall include
an annual bonus calculated by taking the highest
bonus of the three years preceding the year of
termination;
(iii) The balance of any incentive awards earned (but
not yet paid);
(iv) The right to exercise any stock option in full,
whether or not such right is exercisable pursuant to
the terms of the grant.
(v) Any pension benefit that may become due pursuant to
Section 6 above;
(vi) Continued accrual of credited service for the purpose
of the pension benefit provided under Section 6 above
until his attainment of age 65;
(vii) Continued participation in all medical, dental,
hospitalization and life insurance coverage and
in other employee benefit plans or programs in
which he was participating on the date of the
termination of his employment until the earlier
of:
(A) The end of the period during which he is
receiving salary continuation payments (or in
respect of which a lump-sum severance payment is
made);
(B) The date, or dates, he receives equivalent
coverage and benefits under the plans and
programs of a subsequent employer (such
coverages and benefits to be determined on a
coverage-by-coverage, or benefit-by-benefit,
basis); provided that (x) if the Executive is
precluded from continuing his participation in
any employee benefit plan or program as provided
in this clause (vii) of this Section 8(b), he
shall be provided with the after-tax economic
equivalent of the benefit provided under the
plan or program in which he is unable to
participate for the period specified in this
clause (vii) of this Section 8(b), (y) the
economic equivalent of any benefit foregone
shall be deemed to be the lowest cost that would
be incurred by the Executive in obtaining such
benefit himself on an individual basis, and (z)
payment of such after-tax economic equivalent
shall be made quarterly in advance; and
(viii) Immediate vesting of the Companies' contribution
to his Employee Stock Option Plan:
(ix) Other or additional benefits in accordance with
applicable plans and programs of the Companies to the
date of termination.
(c) Termination of Employment Following a Change in Control.
If following a Change in Control, the Executive's
employment is terminated without Cause or there is a
Constructive Termination Without Cause, the Executive shall
be entitled to the payments and benefits provided in
Section 8(b), provided that the salary continuation
payments shall be paid in a lump sum without any discount.
Also, immediately following a Change in Control, all
amounts, entitlements or benefits in which he is not yet
vested shall become fully vested. In addition, if the
Executive has completed less than fifteen (15) years of
service at the time of such termination, the Executive will
be entitled to a supplemental pension benefit paid directly
by the Companies (and not as a part of the Pension Plan of
the Companies) equal to the benefit otherwise payable under
said Pension Plan based upon the completion of fifteen (15)
years of service, minus any amounts payable pursuant to the
said Pension Plan. This supplemental pension benefit is an
unfunded liability of the Companies, the successors and
assigns, and not part of any established Plan of the
Companies. In addition, if Executive continues in the
employ of the Companies for a period of two years following
the effective date of the Change of Control, he may then
voluntarily terminate his employment and in such a case
would receive, in addition to the benefits provided for
elsewhere herein, a sum equal to three times Base Salary.
A voluntary termination under this Section 8(c) shall be
effective upon 30 days prior notice to the Companies and
shall not be deemed a breach of this Agreement. For
purposes of this Section 8(c) "Base Salary" shall include
an annual bonus calculated by taking the highest bonus of
the three years preceding the year of termination;
(d) Voluntary Termination. In the event of a termination of
employment by the Executive on his own initiative other
than a termination due to death or Disability or a
Constructive Termination without Cause, the Executive shall
have the same entitlements as provided in Section 8(a) for
a Termination for Cause.
(e) Limitation Following a Change in Control. In the event
that the termination of the Executive's employment is for
one of the reasons set forth in Section 8(c) above and the
aggregate of all payments or benefits made or provided to
the Executive under such Section above and under all other
plans and programs of the Companies (the "Aggregate
Payment") is determined to constitute a Parachute Payment,
as such term is defined in Section 280G(b)(2) of the
Internal Revenue Code of 1986, as amended, notwithstanding
any other provision of this Agreement to the contrary the
aggregate amount of payments or benefits paid by the
Companies to the Executive pursuant to this Agreement, the
amount to be paid to the Executive and the time of payment
pursuant to this Section 8(e) shall be adjusted so as to
make such payments fully deductible by the Companies. If
the parties are unable to agree upon an Auditor to
calculate such an adjustment, then the Executive and
Companies shall each select one accounting firm and those
two firms shall jointly select the accounting firm to serve
as the Auditor.
(g) Company Car. Upon termination pursuant to Section 8(b) or
(c), the Executive will have the option of purchasing his
Company car for the value of such car on the books of the
Company at the time of termination.
(h) No Mitigation - No Offset. In the event of any termination
of employment under this Section 8, the Executive shall be
under no obligation to seek other employment and there
shall be no offset against amounts due the Executive under
this Agreement on account of any remuneration attributable
to any subsequent employment that he may obtain except as
specifically provided in this Section 8.
(i) Nature of Payments. Any amounts due under this Section 8
are in the nature of severance payments considered to be
reasonable by the Companies and are not in the nature of
a penalty.
9. Indemnification.
(a) The Companies agree that if the Executive is made a party,
or is threatened to be made a party, to any action, suit
or proceeding, whether civil, criminal, administrative or
investigative (a "Proceeding"), by reason of the fact that
he is or was a director, officer or employee of the
Companies or is or was serving at the request of the
Companies as a director, officer, member, employee or agent
of another corporation, partnership, joint venture, trust
or other enterprise, including service with respect to
employee benefit plans, whether or not the basis of such
Proceeding is the Executive's alleged action in an official
capacity while serving as a director, officer, member,
employee or agent, the Executive shall be indemnified and
held harmless by the Companies to the fullest extent
permitted or authorized by the Companies' certificates of
incorporation or bylaws or, if greater, by the laws of the
State of Kentucky, against all cost, expense, liability and
loss (including, without limitation, reasonable attorney's
fees, judgments, fines, ERISA fines, excise taxes or
penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by the Executive in
connection therewith, and such indemnification shall
continue as to the Executive even if he has ceased to be
a director, member, employee or agent of the Companies or
other entity and shall inure to the benefit of the
Executive's heirs, executors and administrators. The
Companies shall advance to the Executive all reasonable
costs and expenses incurred by him in connection with a
Proceeding within 20 days after receipt by the Companies
of a written request for such advance. Such request shall
include an undertaking by the Executive to repay the amount
of such advance if it shall ultimately be determined that
he is not entitled to be indemnified against such costs and
expenses.
(b) Neither the failure of the Companies (including its board
of directors, independent legal counsel or stockholders)
to have made a determination prior to the commencement of
any proceeding concerning payment of amounts claimed by the
Executive under Section 10(a) that indemnification of the
Executive is proper because he has met the applicable
standard of conduct, nor a determination by the Companies
(including its board of directors, independent legal
counsel or stockholders) that the Executive has not met
such applicable standard of conduct, shall create a
presumption that the Executive has not met the applicable
standard of conduct.
(c) The Companies agree to continue and maintain a directors'
and officers' liability insurance policy covering the
Executive to the extent either Company provides such
coverage for its other executive officers.
10. Representation.
The Companies represent and warrant that they are fully
authorized and empowered to enter into this Agreement and that the
performance of their obligations under this Agreement will not
violate any agreement between it and any other person, form or
organization.
11. Entire Agreement.
This Agreement contains the entire understanding and agreement
between the Parties concerning the subject matter hereof and
supersedes all prior agreements, understandings, discussions,
negotiations and undertakings, whether written or oral, between the
Parties with respect thereto.
12. Amendment or Waiver.
No provision in this Agreement may be amended unless such
amendment is agreed to in writing and signed by the Executive and an
authorized officer of the Companies. No waiver by either Party of any
breach by the other Party of any condition or provision contained in
this Agreement to be performed by such other Party shall be deemed a
waiver of a similar or dissimilar condition or provision at the same
or any prior or subsequent time. Any waiver must be in writing and
signed by the Executive or an authorized officer of the Companies, as
the case may be.
13. Severability.
In the event that any provision or portion of this Agreement
shall be determined to be invalid or unenforceable for any reason, in
whole or in part, the remaining provisions of this Agreement shall be
unaffected thereby and shall remain in full force and effect to the
fullest extent permitted by law.
14. Survivorship.
The respective rights and obligations of the Parties hereunder
shall survive any termination of the Executive's employment to the
extent necessary to the intended preservation of such rights and
obligations.
15. Resolution of Disputes.
Any disputes arising under or in connection with this Agreement
shall, at the election of the Executive or the Companies, be resolved
by binding arbitration, to be held in Kentucky in accordance with the
rules and procedures of the American Arbitration Association.
Judgment upon the award rendered by the arbitrator(s) may be entered
in any court having jurisdiction thereof. Costs of the arbitration or
litigation, including, without limitation, attorneys' fees of both
Parties, shall be borne by the Companies, provided that if the
arbitrator(s) determine that the claims or defenses of the Executive
were without any reasonable basis, each Party shall bear his or its
own costs.
16. Notices.
Any notice given to a party shall be in writing and shall be
deemed to have been given when delivered personally or sent by
certified or registered mail, postage prepaid, return receipt
requested, duly addressed to the Party concerned at the address
indicated below or to such changed address as such Party may
subsequently give such notice of:
If to the Companies: Mid-America Bancorp, Inc.
P.O. Box 1101
Louisville, KY 40201-1101
Attention: Bertram W. Klein
If to the Executive: GAIL POHN
5401 Pueblo Road
Louisville, KY 40207
IN WITNESS WHEREOF, the undersigned have executed this Agreement
as of the date first written above.
MID-AMERICA BANCORP, INC.
By: /s/Bertram W. Klein
Bertram W. Klein
Title: Chairman of the Board
MID-AMERICA BANK OF LOUISVILLE &
TRUST COMPANY
By: /s/Bertram W. Klein
Bertram W. Klein
Title: Chairman of the Board
/s/ Gail Pohn
GAIL POHN
<PAGE>
Exhibit 10 (h)
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into as of the 1st day of March
, 1996 by and between MID AMERICA BANCORP, INC., a Kentucky
corporation and MID AMERICA BANK OF LOUISVILLE & TRUST COMPANY, a
Kentucky Combined Bank and Trust Company, (together with their
successors and assigns permitted under this Agreement, the
"Companies), and STEVEN A. SMALL (the "Executive").
W I T N E S S E T H:
WHEREAS, the Companies and the Executive are parties to an
Agreement dated as of May 3, 1993, covering the employment
relationship of Executive with Companies, and
WHEREAS, the Parties desire to cancel that Agreement and replace
it in its entirety with this Employment Agreement (this "Agreement").
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein and for other good and valuable
consideration, the receipt of which is mutually acknowledged, the
Companies and the Executive (individually a "Party" and together the
"Parties") agree as follows:
1. Definitions.
(a) "Affiliate" of a person or other entity shall mean a person or
other entity that directly or indirectly controls, is
controlled by, or is under common control with the person or
other entity specified.
(b) Except as provided otherwise in Section 8 hereof,"Base Salary"
shall mean the salary provided for in Section 5 below or any
increased salary granted to the Executive pursuant to Section
5.
(c) "Board" shall mean the Boards of Directors of the Companies.
(d) "Cause" shall mean:
(i) The Executive is convicted of a felony; or
(ii) The Executive is guilty of willful gross neglect or
willful gross misconduct in carrying out his duties under
this Agreement, resulting, in either case, in material
economic harm to the Companies, unless the Executive
believed in good faith that such act or nonact was in the
best interests of such Company.
(e) A "Change of Control" shall mean the occurrence of any one of
the following events:
(i) Any "person," as such term is used in Sections 3(a)(9)
and 13(d)of the Securities Exchange Act of 1923, becomes
a "beneficial owner,"as such term is used in Rule 13d-3
promulgated under that Act, of 20% or more of the Voting
Stock of the Companies;
(ii) The majority of either Board consists of individuals
other than Incumbent Directors, which term means the
members of the Board on the date of this Agreement;
provided that any person becoming a director subsequent
to such date whose election or nomination for election
was supported by two-thirds of the directors who then
comprised the Incumbent Directors shall be considered to
be an Incumbent Director;
(iii) The Companies adopt any plan of liquidation
providing for the distribution of all or
substantially all of its assets;
(iv) All or substantially all of the assets or business of the
Companies is disposed of pursuant to a merger,
consolidation or other transaction (unless the
shareholders of such Company immediately prior to such
merger, consolidation or other transaction beneficially
own, directly or indirectly, in substantially the same
proportion as they owned the Voting Stock of such
Company, all of the Voting Stock or other ownership
interests of the entity or entities, if any, that
succeed to the business of such Company); or
(v) The Companies combine with another company and is the
surviving corporation but, immediately after the
combination, the shareholders of such Company immediately
prior to the combination hold, directly or indirectly,
50% or less of the Voting Stock of the combined company
(there being excluded from the number of shares held by
such shareholders, but not from the Voting Stock of the
combined company, any shares received by Affiliates of
such other company in exchange for stock of such other
company).
(f) "Constructive Termination Without Cause" shall mean a
termination of the Executive's employment at his initiative as
provided in Section 8(d) below following the occurrence,
without the Executive's prior written consent, of one or more
of the following events (except in consequence of a prior
termination):
(i) A reduction in the Executive's then current Base Salary
or the termination or material reduction of any employee
benefit or perquisite enjoyed by him;
(ii) The failure to elect or reelect the Executive to any of
the positions described in Section 4 below or removal of
him from any such position;
(iii) A material diminution in the Executive's duties or
the assignment to the Executive of duties which are
materially inconsistent with his duties or which
materially impair the Executive's ability to
function as the Executive Vice President and Chief
Executive Officer or any other office to which he
may be elected or appointed:
(iv) The failure to continue the Executive's participation in
any incentive compensation plan unless a plan providing
a substantially similar opportunity is substituted;
(v) The relocation of a Companies' principal office, or the
Executive's own office location as assigned to him by the
Companies, to a location outside of the metropolitan area
of Louisville, Kentucky; or
(vi) The failure of the Companies to obtain the assumption in
writing of its obligation to perform this Agreement by
any successor to all or substantially all of the assets
of such Company within 45 days after a merger,
consolidation, sale or similar transaction.
(g) "Disability" shall mean the Executive's inability to
substantially perform his duties and responsibilities under
this Agreement for a period of 180 consecutive days.
(h) "Term of Employment" shall mean the period specified in
Section 3 below.
2. Cancellation of Old Agreement.
The Agreement between the Parties entered into as of May 3, 1993,
is hereby revoked and canceled in its entirety.
3. Term of Employment.
The employment of the Executive will continue to the last day of
the month in which the Executive turns 55 years of age or until the
earlier termination of his employment in accordance with the terms of
this Agreement.
4. Position. Duties and Responsibilities.
(a) During the term of Employment, the Executive shall continue to
be employed as Executive Vice President and Chief Financial
Officer of the Companies with duties commensurate with that
position. The Executive, in carrying out his duties under this
Agreement, shall report to the Chairman of the Board.
(b) Anything herein to the contrary notwithstanding, nothing shall
preclude the Executive from (i) serving on the boards of
directors of a reasonable number of other corporations (except
Executive will not serve on the board of any other financial
institution) or the boards of a reasonable number of trade
associations and/or charitable organizations, (ii) engaging in
charitable activities and community affairs, and (iii) managing
his personal investments and affairs, provided that such
activities do not materially interfere with the proper
performance of his duties and responsibilities as the
Companies' Executive Vice President and Chief Financial Officer
or any other office to which he may be elected or appointed.
5. Base Salary.
The Executive shall be paid an annualized Base Salary, payable in
accordance with the regular payroll practices of the Companies, of
$159,500.00. The Base Salary shall be reviewed no less frequently than
annually for increase at the sole discretion of the Board and its
Nominating and Executive Compensation Committee.
6. Employee Benefit Programs.
During the Term of Employment, the Executive shall be entitled to
participate in all employee incentive, pension and welfare benefit
plans and programs made available to the Companies' senior level
executives or to its employees generally, as such plans or programs
may be in effect from time to time, including without limitation,
annual stock option grant, ESOP, bonus, pension, profit sharing,
savings and other retirement plans or programs, medical, dental,
hospitalization, short-term and long-term disability and life
insurance plans, accidental death and dismemberment protection, travel
accident insurance, and any other pension or retirement plans or
programs and any other employee incentive compensation plan, employee
welfare benefit plans or programs that may be sponsored by the
Companies from time to time, including any plans that supplement the
above-listed types of plans or programs, whether funded or unfunded.
7. Reimbursement of Business and Other Expenses.
The Executive is authorized to incur reasonable expenses in
carrying out his duties and responsibilities under this agreement and
the Companies shall promptly reimburse him for all business expenses
incurred in connection with carrying out the business of the
Companies, subject to documentation in accordance with the Companies'
policy.
8. Termination of Employment.
(a) Termination for Cause. In the event the Companies terminate
the Executive's employment for Cause, he shall be entitled to:
(i) The Base Salary through the date of the termination of
his employment for Cause;
(ii) Any incentive awards earned (but not yet paid);
(iii) Any pension benefit that may become due pursuant to
Section 6 above, determined as of the date of such
termination;
(iv) Other or additional benefits in accordance with
applicable plans or programs of the Companies to the date
of termination.
(b) Termination Without Cause on or before December 31, 2000.
If, on or before December 31, 2000, the Executive's
employment is terminated without Cause other than due to
Disability or death, or there is a Constructive Termination
without Cause, the Executive shall be entitled to:
(i) The Base Salary through the date of termination of the
Executive's employment;
(ii) The Base Salary, at the annualized rate in effect on the
date of termination of the Executive's employment for the
unexpired term of this Employment Agreement following
such termination, paid in installments in accordance with
the regular pay practices of the Companies; provided that
at the Executive's option the Companies shall pay him the
present value of such salary continuation payments in a
lump sum (using as the discount rate the Applicable
Federal Rate for short term Treasury obligations as
published by the Internal Revenue Service for the month
in which such termination occurs). For purposes of this
subsection (ii) "Base Salary" shall include an annual
bonus calculated by taking the highest bonus of the three
years preceding the year of termination;
(iii) The balance of any incentive awards earned (but not
yet paid);
(iv) The right to exercise any stock option in full, whether
or not such right is exercisable pursuant to the terms of
the grant.
(v) Any pension benefit that may become due pursuant to
Section 6 above;
(vi) Continued accrual of credited service for the purpose of
the pension benefit provided under Section 6 above until
his attainment of age 55;
(vii) Continued participation in all medical, dental,
hospitalization and life insurance coverage and in
other employee benefit plans or programs in which
he was participating on the date of the termination
of his employment until the earlier of:
(A) The end of the period during which he is receiving
salary continuation payments (or in respect of
which a lump-sum severance payment is made);
(B) The date, or dates, he receives equivalent coverage
and benefits under the plans and programs of a
subsequent employer (such coverages and benefits to
be determined on a coverage-by-coverage, or
benefit-by-benefit, basis); provided that (x) if
the Executive is precluded from continuing his
participation in any employee benefit plan or
program as provided in this clause (vii) of this
Section 8(b), he shall be provided with the
after-tax economic equivalent of the benefit
provided under the plan or program in which he is
unable to participate for the period specified in
this clause (vii) of this Section 8(b), (y) the
economic equivalent of any benefit foregone shall
be deemed to be the lowest cost that would be
incurred by the Executive in obtaining such benefit
himself on an individual basis, and (z) payment of
such after-tax economic equivalent shall be made
quarterly in advance; and
(viii) Immediate vesting of the Companies' contribution to
his Employee Stock Option Plan
(ix) Other or additional benefits in accordance with
applicable plans and programs of the Companies to the
date of termination.
(c) Termination Without Cause after December 31, 2000. If, after
December 31, 2000, the Executive's employment is terminated
without Cause other than due to Disability or death, or there
is a Constructive Termination without Cause, the Executive
shall be entitled to:
(i) The Base Salary through the date of termination of the
Executive's employment;
(ii) The Base Salary, at the annualized rate in effect on the
date of termination of the Executive's employment for the
unexpired term of this Employment Agreement following
such termination, paid in installments in accordance with
the regular pay practices of the Companies; provided that
at the Executive's option the Companies shall pay him the
present value of such salary continuation payments in a
lump sum (using as the discount rate the Applicable
Federal Rate for short term Treasury obligations as
published by the Internal Revenue Service for the month
in which such termination occurs). For purposes of this
subsection (ii) "Base Salary" shall include an annual
bonus calculated by taking the highest bonus of the three
years preceding the year of termination;
(iii) The balance of any incentive awards earned (but not
yet paid);
(iv) The right to exercise any stock option in full, whether
or not such right is exercisable pursuant to the terms of
the grant.
(v) Any pension benefit that may become due pursuant to
Section 6 above;
(vi) Continued participation in all medical, dental,
hospitalization and life insurance coverage and in other
employee benefit plans or programs in which he was
participating on the date of the termination of his
employment until the earlier of:
(A) The end of the period during which he is receiving
salary continuation payments (or in respect of
which a lump-sum severance payment is made);
(B) The date, or dates, he receives equivalent coverage
and benefits under the plans and programs of a
subsequent employer (such coverages and benefits to
be determined on a coverage-by-coverage, or
benefit-by-benefit, basis); provided that (x) if
the Executive is precluded from continuing his
participation in any employee benefit plan or
program as provided in this clause (vii) of this
Section 8(c), he shall be provided with the
after-tax economic equivalent of the benefit
provided under the plan or program in which he is
unable to participate for the period specified in
this clause (vii) of this Section 8(c), (y) the
economic equivalent of any benefit foregone shall
be deemed to be the lowest cost that would be
incurred by the Executive in obtaining such benefit
himself on an individual basis, and (z) payment of
such after-tax economic equivalent shall be made
quarterly in advance; and
(vii) Immediate vesting of the Companies' contribution to
his Employee Stock Option Plan
(viii) Other or additional benefits in accordance with
applicable plans and programs of the Companies to
the date of termination.
(d) Termination of Employment Following a Change in Control. If
following a Change in Control, the Executive's employment is
terminated without Cause or there is a Constructive Termination
Without Cause, the Executive shall be entitled to the payments
and benefits provided in Section 8(b) or 8(c) as appropriate,
provided that the salary continuation payments shall be paid in
a lump sum without any discount. Also, immediately following a
Change in Control, all amounts, entitlements or benefits in
which he is not yet vested shall become fully vested. In
addition, if the Executive has completed less than fifteen (15)
years of service at the time of such termination, the Executive
will be entitled to a supplemental pension benefit paid
directly by the Companies (and not as a part of the Pension
Plan of the Companies) equal to the benefit otherwise payable
under said Pension Plan based upon the completion of fifteen
(15) years of service, minus any amounts payable pursuant to
the said Pension Plan. This supplemental pension benefit is an
unfunded liability of the Companies, the successors and
assigns, and not part of any established Plan of the Companies.
In addition, if Executive continues in the employ of the
Companies for a period of two years following the effective
date of the Change of Control, he may then voluntarily
terminate his employment and in such a case would receive, in
addition to the benefits provided for elsewhere herein, a sum
equal to three times Base Salary. A voluntary termination
under this Section 8(d) shall be effective upon 30 days prior
notice to the Companies and shall not be deemed a breach of
this Agreement. For purposes of this Section 8(d) "Base Salary"
shall include an annual bonus calculated by taking the highest
bonus of the three years preceding the year of termination;
(e) Voluntary Termination. In the event of a termination of
employment by the Executive on his own initiative other than a
termination due to death or Disability or a Constructive
Termination without Cause, the Executive shall have the same
entitlements as provided in Section 8(a) for a Termination for
Cause.
(f) Limitation Following a Change in Control. In the event that
the termination of the Executive's employment is for one of the
reasons set forth in Section 8(b) or 8(c) above and the
aggregate of all payments or benefits made or provided to the
Executive under such Section above and under all other plans
and programs of the Companies (the "Aggregate Payment") is
determined to constitute a Parachute Payment, as such term is
defined in Section 280G(b)(2) of the Internal Revenue Code of
1986, as amended, notwithstanding any other provision of this
Agreement to the contrary the aggregate amount of payments or
benefits paid by the Companies to the Executive pursuant to
this Agreement, the amount to be paid to the Executive and the
time of payment pursuant to this Section 8(f) shall be adjusted
so as to make such payments fully deductible by the Companies.
If the Parties are unable to agree upon an Auditor to calculate
such an adjustment, then the Executive and Companies shall each
select one accounting firm and those two firms shall jointly
select the accounting firm to serve as the Auditor.
(g) Upon termination pursuant to Section 8(b), (c) or (d), the
Executive will have the option of purchasing his Company car
for the value of such car on the books of the Company at the
time of termination, adjusted for value of the Executive's cash
contribution to the purchase of the car.
(h) No Mitigation - No Offset. In the event of any termination of
employment under this Section 8, the Executive shall be under
no obligation to seek other employment and there shall be no
offset against amounts due the Executive under this Agreement
on account of any remuneration attributable to any subsequent
employment that he may obtain except as specifically provided
in this Section 8.
(i) Nature of Payments. Any amounts due under this Section 8 are in
the nature of severance payments considered to be reasonable by
the Companies and are not in the nature of a penalty.
9. Indemnification.
(a) The Companies agree that if the Executive is made a party, or
is threatened to be made a party, to any action, suit or
proceeding, whether civil, criminal, administrative or
investigative (a "Proceeding"), by reason of the fact that he
is or was a director, officer or employee of the Companies or
is or was serving at the request of the Companies as a
director, officer, member, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit
plans, whether or not the basis of such Proceeding is the
Executive's alleged action in an official capacity while
serving as a director, officer, member, employee or agent, the
Executive shall be indemnified and held harmless by the
Companies to the fullest extent permitted or authorized by the
Companies' certificates of incorporation or bylaws or, if
greater, by the laws of the State of Kentucky, against all
cost, expense, liability and loss (including, without
limitation, reasonable attorney's fees, judgments, fines, ERISA
fines, excise taxes or penalties and amounts paid or to be paid
in settlement) reasonably incurred or suffered by the Executive
in connection therewith, and such indemnification shall
continue as to the Executive even if he has ceased to be a
director, member, employee or agent of the Companies or other
entity and shall inure to the benefit of the Executive's heirs,
executors and administrators. The Companies shall advance to
the Executive all reasonable costs and expenses incurred by him
in connection with a Proceeding within 20 days after receipt by
the Companies of a written request for such advance. Such
request shall include an undertaking by the Executive to repay
the amount of such advance if it shall ultimately be determined
that he is not entitled to be indemnified against such costs
and expenses.
(b) Neither the failure of the Companies (including its board of
directors, independent legal counsel or stockholders) to have
made a determination prior to the commencement of any
proceeding concerning payment of amounts claimed by the
Executive under Section 10(a) that indemnification of the
Executive is proper because he has met the applicable standard
of conduct, nor a determination by the Companies (including its
board of directors, independent legal counsel or stockholders)
that the Executive has not met such applicable standard of
conduct, shall create a presumption that the Executive has not
met the applicable standard of conduct.
(c) The Companies agree to continue and maintain a directors' and
officers' liability insurance policy covering the Executive to
the extent either Company provides such coverage for its other
executive officers.
10. Representation.
The Companies represent and warrant that they are fully authorized
and empowered to enter into this Agreement and that the performance of
their obligations under this Agreement will not violate any agreement
between it and any other person, form or organization.
11. Entire Agreement.
This Agreement contains the entire understanding and agreement
between the Parties concerning the subject matter hereof and
supersedes all prior agreements, understandings, discussions,
negotiations and undertakings, whether written or oral, between the
Parties with respect thereto.
12. Amendment or Waiver.
No provision in this Agreement may be amended unless such amendment
is agreed to in writing and signed by the Executive and an authorized
officer of the Companies. No waiver by either Party of any breach by the
other Party of any condition or provision contained in this Agreement to
be performed by such other Party shall be deemed a waiver of a similar or
dissimilar condition or provision at the same or any prior or subsequent
time. Any waiver must be in writing and signed by the Executive or an
authorized officer of the Companies, as the case may be.
13. Severability.
In the event that any provision or portion of this Agreement shall
be determined to be invalid or unenforceable for any reason, in whole or
in part, the remaining provisions of this Agreement shall be unaffected
thereby and shall remain in full force and effect to the fullest extent
permitted by law.
14. Survivorship.
The respective rights and obligations of the Parties hereunder
shall survive any termination of the Executive's employment to the
extent necessary to the intended preservation of such rights and
obligations.
15. Resolution of Disputes.
Any disputes arising under or in connection with this Agreement
shall, at the election of the Executive or the Companies, be resolved by
binding arbitration, to be held in Kentucky in accordance with the rules
and procedures of the American Arbitration Association. Judgment upon
the award rendered by the arbitrator(s) may be entered in any court
having jurisdiction thereof. Costs of the arbitration or litigation,
including, without limitation, attorneys' fees of both Parties, shall
be borne by the Companies, provided that if the arbitrator(s)
determine that the claims or defenses of the Executive were without
any reasonable basis, each Party shall bear his or its own costs.
16. Notices.
Any notice given to a party shall be in writing and shall be
deemed to have been given when delivered personally or sent by
certified or registered mail, postage prepaid, return receipt
requested, duly addressed to the Party concerned at the address
indicated below or to such changed address as such Party may
subsequently give such notice of:
If to the Companies: Mid-America Bancorp, Inc.
P.O. Box 1101
Louisville, KY 40201-1101
Attention: Bertram W. Klein
If to the Executive: STEVEN A. SMALL
7210 Leafland Place
Prospect, KY 40059
IN WITNESS WHEREOF, the undersigned have executed this Agreement
as of the date first written above.
MID-AMERICA BANCORP, INC.
By: /s/Bertram W. Klein
Bertram W. Klein
Title: Chairman of the Board
MID-AMERICA BANK OF LOUISVILLE &
TRUST COMPANY
By: /s/Bertram W. Klein
Bertram W. Klein
Title: Chairman of the Board
/s/ Steven A. Small
STEVEN A. SMALL
<TABLE>
<CAPTION>
Statements re computation of per share earnings Exhibit 11
(In Thousands Except for Per Share Data)
Year ended December 31
1995 1994 1993
<S> <C> <C> <C>
Weighted average common stock outstanding........ 9,083 9,058 8,977
Common equivalent shares for stock option plan using
the treasury stock method.................... 128 110 101
Weighted average shares outstanding.............. 9,211 9,168 9,078
Net income....................................... $8,066 $12,612 $11,573
Net income per share............................. $0.88 $1.38 $1.27
</TABLE>
All share and per share information has been adjusted for the 3% stock
dividend issued in December 1995.
<PAGE>
Comparative Summary
<TABLE>
<CAPTION>
Dollars In Thousands, Except Per Share Amounts 1995 1994 1993
-----------------------------------
<S> <C> <C> <C>
AT YEAR END
Total assets $1,313,987 $1,213,990 $1,169,023
Total deposits 784,957 732,620 729,449
Loans, net of unearned income 748,565 699,396 657,568
Total shareholders' equity 132,950 125,052 119,590
FOR THE YEAR
Net income $8,066 $12,612 $11,573
Cash dividends declared $5,741 $5,559 $5,356
Weighted average shares outstanding 9,211 9,168 9,078
PER SHARE DATA
Book value $14.62 $13.79 $13.24
Market value 18.00 16.50 16.75
Cash dividends declared 0.65 0.65 0.65
Net income 0.88 1.38 1.27
SELECTED RATIOS
Return on average total assets 0.69% 1.11% 1.11%
Return on average shareholders' equity 6.26 10.36 10.00
Cash dividend payout ratio 71.71 44.44 46.75
Average shareholders' equity to average total assets 10.99 10.71 11.09
Allowance for loan losses to loans, net of unearned income 1.25 1.01 1.00
</TABLE>
MANAGEMENT'S DISCUSSION and ANALYSIS
OF
FINANCIAL CONDITION and RESULTS OF OPERATIONS
This discussion analyzes the results of operations and
financial condition for Mid-America Bancorp and subsidiaries (the
Company), including its primary subsidiary, Mid-America Bank of
Louisville and Trust Company (the Bank). It should be read in
conjunction with the consolidated financial statements and related
notes presented on pages 27 to 44.
1995 COMPARED TO 1994
Net income for 1995 was $8,066,000 or $.88 per share compared
with $12,612,000 or $1.38 per share for 1994. The decrease in 1995
was attributed primarily to an increase in the provision for loan
losses from $712,000 in 1994 to $6,047,000 in 1995. This increased
provision for loan losses related primarily to non-performing loans
to a Louisville-based real estate development firm. For 1995,
return on average total assets (ROA) was .69% and return on average
equity (ROE) was 6.26%, compared with 1994 when the ROA was 1.11%
and ROE was 10.36%. The discussion that follows explains in more
detail the factors affecting 1995 operating results and changes in
financial condition.
NET INTEREST INCOME
Net interest income is the difference between interest income
on earning assets and the interest expense incurred for funding
sources used to support earning assets. Earning assets include
primarily loans and securities. The primary sources used to fund
these assets include deposits, purchased and borrowed funds, and
capital. The net interest spread is the difference between the
average rate of interest earned on earning assets on a tax
equivalent basis and the average rate of interest expensed on
interest bearing liabilities. The net yield on earning assets is
net interest income on a tax equivalent basis as a percent of the
average balance of earning assets. Detailed information on the
average balances of earning assets and funding sources, interest
rates, and the net yield on earning assets is shown in the table on
page 20.
In 1995, net interest income on a tax equivalent basis
increased $3,358,000 to $49,413,000. Net interest income was
favorably impacted by increases in average earning assets and
higher average interest rates. The average yield on earning
assets increased from 7.60% in 1994 to 8.45% in 1995, with a
similar increase in the average rate on interest bearing
liabilities from 3.94% in 1994 to 4.84% in 1995. The shift to
higher interest rates, interacting with the timing of repricing and
the shift in composition of earning assets and interest bearing
liabilities during the year, resulted in a net interest spread of
3.61% in 1995 compared to 3.66% in 1994. The net yield on earning
assets increased in 1995 to 4.54% compared to 4.34% in 1994. The
average prime rate in 1995 was 8.83% compared to 7.14% in 1994.
Average earning assets increased approximately $28 million or
2.7% in 1995 to $1,087,347,000. The increase was centered in
loans, which increased approximately $29 million or 4.2% to
$707,898,000. Also there was a slight increase in the average
securities portfolio of approximately $6 million. Changes in the
composition and amounts of earning assets arose in part from
management's response to the interest rate environment in 1995,
where such changes were necessary to maintain a proper match among
assets and liabilities, while increasing the yield on investable
funds.
The growth in average earning assets was supported by a $6.6
million increase in average interest bearing deposits and increases
in non-interest bearing sources of funds, primarily money orders
and similar payment instruments outstanding and demand deposits, of
$27.9 million. Average advances from the Federal Home Loan Bank
decreased approximately $4 million as no new advances were taken in
1995. Securities sold under agreements to repurchase, a short-term
higher yielding collateralized instrument used by customers with
large amounts of investable funds, decreased 2% in 1995, while
continuing to be a significant funding source. Non-interest
bearing deposits, other liabilities and capital were 27% of earning
assets in 1995 compared to 24.5% in 1994.
The changes in interest income attributable to volume and rate
changes are summarized in the table on page 21.
PROVISION FOR LOAN LOSSES AND ALLOWANCE FOR LOAN LOSSES
The provision for loan losses was $6,047,000 in 1995 compared
to $712,000 for 1994. During 1995, the Company had net charge-offs
of $3,774,000, compared to $245,000 in 1994, and an increase in the
level of non-performing loans. During the third quarter of 1995,
the Company recorded a provision for loan losses of $5.7 million
attributed primarily to losses associated with loans totaling
approximately $14.8 million to a Louisville-based real estate
development firm. These loans were classified by management as
impaired and non-accrual and adjusted to fair value based on
appraisals of the underlying real estate collateral. During 1995,
charge-offs related to these loans aggregated $2.9 million, and the
allowance for loan losses related to the remaining carrying value
of these impaired loans of $11.9 million, was approximately $1.4
million at December 31, 1995.
The allowance for loan losses is maintained at a level
sufficient to absorb estimated probable credit losses in the loan
portfolio, considering non-performing loans and overall economic
conditions. In evaluating the allowance for loan losses,
management considers its evaluation of the risk characteristics of
the loan portfolio, including the impact of current economic
conditions on the borrowers' ability to repay, past collection
experience and such other factors which, in management's judgement,
deserve current recognition. At December 31, 1995, the allowance
for loan losses was 1.25% of loans outstanding compared to 1.01% at
the end of 1994.
<TABLE>
<CAPTION>
ALLOWANCE FOR LOAN LOSSES
Dollars In Thousands 1995 1994 1993
---------------------------
<S> <C> <C> <C>
Balance, January 1 $7,045 $6,578 $6,020
Provision for loan losses 6,047 712 390
Net loan (charge-offs) recoveries (3,774) (245) 168
---------------------------
Balance, December 31 9,318 7,045 6,578
===========================
Average loans $707,898 $679,100 $615,070
Loans at year-end 748,565 699,396 657,568
Non-performing and restructured loans at year-end 15,143 3,511 3,872
Impaired loans at year end (1) 14,328 -
Provision for loan losses to average loans 0.85% 0.10% 0.06%
Net charge-offs (recoveries) to average loans 0.53 0.04 (0.03)
Allowance for loan losses to average loans 1.32 1.04 1.07
Allowance for loan losses to year-end loans 1.25 1.01 1.00
(1) Impaired loan designation not required prior to 1995. 0.00
</TABLE>
Excluding the problem real estate development loans and their
related allowance for loan losses mentioned above, non-performing
loans were $3.2 million and the allowance for loan losses was 1.08%
of loans at December 31, 1995, with such remaining amounts
reflective of the Company's historically favorable asset quality.
During 1995, the growth in the loan portfolio was primarily in
the commercial and financial loan category. While these loans are
generally larger, the Company limits its risk exposure for these,
as well as other categories of loans, by following conservative
underwriting practices. The Company's aggregate net losses for
these types of loans over the last 5 years have been less than
$700,000. Real estate construction and development loans have
remained near the same level as last year, while the underlying
loan composition in this category has become more diversified
between residential and commercial properties.
On January 1, 1995, the Company adopted FASB Statement No.
114, "Accounting By Creditors for Impairment of a Loan," as amended
by FASB Statement No. 118, "Accounting By Creditors for Impairment
of a Loan - Income Recognition and Disclosures." Under these
standards, a loan is impaired when it is probable that the creditor
will be unable to collect contractual interest and principal
according to the terms of the loan agreement. FASB Statement No.
114 requires that the value of impaired loans be measured at the
present value of expected future cash flows discounted at the
loan's effective interest rate, or at the loan's observable market
price or the fair value of the collateral, if the loan is
collateral dependent. When adopted, applying provisions of these
new accounting standards did not require an increase in the
allowance for loan losses and was otherwise not significant. The
table on page 10 is a summary of the Company's loan loss experience
for each of the last three years.
NON-INTEREST INCOME
Non-interest income decreased $408,000 or 3.5% in 1995 compared
to 1994. Non-interest income includes the Company's fee related
revenues, which are the primary source of sustainable non-interest
income. Also included are securities losses which are not recurring
in nature.
Money order fees were $3.9 million, an increase of $524,000 or
15.7% compared to 1994. During 1995, the agent base of Mid-America
Money Order Company (MOC), a wholly-owned subsidiary, located
throughout the United States and Puerto Rico, increased 16% to 3306
agent sites, which contributed to the 27% increase in items issued.
MOC provides the Company with a unique source of non-interest
income, as well as a non-interest bearing source of funds, which
averaged approximately $55 million for 1995. MOC had net income of
$826,000 in 1995, compared to $562,000 in 1994, with such increase
attributed to increased fee revenue and increased interest income.
In December 1995, MOC was notified that Western Union Financial
Services, Inc., would exercise its contractual option to purchase
from MOC that part of the money order business under a Program
Agreement entered into between the parties in 1992. Under that
Agreement, many Western Union outlets signed up with MOC as
"Program Agents" to sell MOC money orders under the Western Union
label. The purchase of this business by Western Union involves
approximately one-third of MOC's agent base and volume. However,
the Company does not expect the profit level of MOC to decline in
the same proportion as the lost volume because this portion of the
agent base accounts for the lowest margin business in the MOC
portfolio and the sale will result in some cost reductions. The
purchase price for this business is based on a contractual formula
for the average items sold during the 12 month period preceding the
closing of the sale, plus the remaining book value of the equipment
used by the Program Agents. The sale is expected to close in the
first half of 1996, at which time the Company expects to realize a
pre-tax gain of between $1.4 million and $1.6 million.
Service charges on deposits, the largest component of
non-interest income, were $4.5 million in 1995, down 1.4% from 1994.
During 1995, the Company had an increase in the number of transaction
and savings accounts, however most of the increase related to packaged
and fixed fee accounts which generally generate lower fees per account.
Trust income in total declined 14.5% in 1995 when compared to
1994. Personal and corporate trust revenues increased 7.8% in 1995
as business development activities have started to yield new
customers. The stock transfer portion of trust income declined 43%
to $281,000 in 1995 due to a declining customer base and the
absence of non-recurring special project fees that were realized in
1994.
In December 1995, the Company realized a loss of $636,000 on
the sale of approximately $90 million of its available for sale
securities. The proceeds from these sales were reinvested in
securities that extended the overall life and rate of return of the
securities portfolio. Other sales during the year added net losses
of $29,000. There are no other individually significant components
of other non-interest income and such components did not fluctuate
significantly between 1995 and 1994.
OTHER OPERATING EXPENSES
Other operating expenses increased $4,252,000 or 11.3% to
$41,844,000 from $37,592,000 in 1994. This increase was primarily
associated with increases in personnel costs, expenses related to
technology improvements and maintenance, expenses related to
facilities remodeling and expansion, and expenses related to the
non-performing real estate development loans discussed previously.
Salaries and benefits increased $1,751,000 or 8.5% to
$22,289,000. This increase was attributed to several factors,
including annual salary adjustments that were effective at the
beginning of the year, an increase in average full-time equivalent
employees from 639 in 1994 to 648 in 1995, and the addition of
several senior commercial and real estate lending officers and a
new chief executive officer in the fourth quarter of 1995. A
decline in a portion of salaries and benefits in 1995 of
approximately $350,000 related to management bonuses in 1994 and
the absence of such bonuses in 1995. Another factor influencing
salaries and benefits was an increase in health insurance costs of
approximately $405,000 due to higher claim levels.
Occupancy and furniture and equipment expenses both increased
in 1995 compared to 1994. Occupancy expense, up $349,000 or 13.3%
in 1995, was impacted primarily by increased rent expense related
to expanded space at the Company's main office facility, and at the
money order company subsidiary's office location, and increased
amortization and maintenance expenses associated with leasehold
improvements at these locations. Furniture and equipment expenses
increased $633,000 or 15% in 1995 compared to 1994. The increased
furniture and equipment expenses reflect increased depreciation and
routine maintenance associated with technology equipment
additions/upgrades and additional money order equipment.
The other expenses category of other operating expenses
includes printing and supplies, professional fees, taxes other than
income taxes, deposit insurance and other expenses. Other
operating expenses increased $1.5 million or 14.9% in 1995 compared
to 1994. Printing and supplies expenses increased $431,000 in 1995
compared to 1994, with approximately $300,000 of the increase
related to the money order company subsidiary forms and other
supplies usage that accompanied the sales volume increase.
Professional fees increased $654,000 in 1995 compared to 1994, with
$500,000 of the increase attributed to legal fees associated with
the non-performing real estate development loan situation
previously discussed. Deposit insurance costs declined $794,000 in
1995 compared to 1994 as the FDIC decreased the rate of deposit
insurance during 1995. Other expenses, which increased
approximately $1.3 million in 1995 compared to 1994, included
increased advertising and marketing expenses ($108,000), increased
donations ($336,000), money order company subsidiary collection
losses ($215,000) and expenses related to certain legal matters
($500,000).
INCOME TAXES
The effective tax rates were 29.5%, 31.3% and 31.2%, for
1995, 1994, and 1993, respectively. The difference between the
statutory and the effective tax rates was principally attributable
to the tax-exempt status of interest income on obligations of
states and political subdivisions and certain loans. In 1995,
these tax free sources of income were a larger proportion of the
reduced level of income before tax and caused the lower effective
tax rate.
The Company adopted FASB Statement No. 109, "Accounting for
Income Taxes", prospectively in the first quarter of 1993. The
implementation of this accounting standard was not significant to
the Company's financial condition or results of operations for 1993.
BALANCE SHEET
Total assets were $1,313,987,000 at December 31, 1995,
compared with $1,213,990,000 one year ago. Total assets averaged
$1,171,729,000 during 1995, an increase of approximately $35
million, or 3.1%. Average earning assets increased approximately
$28 million or 2.7% to $1,087,347,000 in 1995. Increased loan
volume accounted for a substantial portion of the increase in
earning assets.
SECURITIES
The Company's securities portfolio includes obligations of the
U.S. Government and its agencies, obligations of various states and
political subdivisions, corporate debt securities, collateralized
mortgage obligations (CMOs), and equity securities which are
comprised of Federal Reserve Bank and Federal Home Loan Bank stock.
At December 31, 1995, securities available for sale totaled
$292,374,000. These securities had unrealized holding gains during
1995 of approximately $8.1 million that resulted in an increase in
shareholders' equity of approximately $5.3 million on a net of tax
basis. The CMOs in the portfolio, primarily Planned Amortization
Class CMOs, aggregate approximately $14 million and have an
estimated weighted average life of 3.4 years. The cash flow for
these CMOs is relatively predictable.
Securities classified as held to maturity were $69,326,000 at
December 31, 1995 and had net unrealized gains of $440,000. These
securities, with a weighted average life of 0.46 years, were
purchased with the intent to hold to maturity.
FASB Statement No. 115, "Accounting for Certain Investments in
Debt and Equity Securities", was adopted by the Company on January
1, 1994. The principal effect of adoption of FASB Statement No.
115 was that debt securities classified as available for sale are
reported at fair value, with unrealized net gains or losses
excluded from earnings and reported as a separate component of
shareholders' equity, on a net of tax basis. Securities held to
maturity are reported at amortized cost. In December 1995, a one-time
reassessment of the Company's classification of securities
was undertaken, as permitted by the Financial Accounting Standards
Board's special report related to implementation of FASB Statement
No. 115. In connection with that reassessment, the Company
transferred securities held to maturity with an amortized cost of
$146,022,000 to securities available for sale in order to permit
more responsiveness to changes in interest rates and other balance
sheet management factors. At the date of transfer, December 1,
1995, the securities held to maturity had net unrealized gains of
$2,422,000. See Note C of the consolidated financial statements on
page 33 for gross unrealized gain and loss information.
The securities portfolio is utilized for pledging requirements
on certain borrowing and public and fiduciary deposits, and
provides liquidity from scheduled maturities.
The Company's securities portfolio is considered to be high
grade. U.S. Treasury and agency obligations were 84.7% of the
securities portfolio at December 31, 1995. Direct obligations of
the U.S. Government are full faith and credit obligations of the
federal government. Issues of federal agencies are also directly
guaranteed or sponsored by the United States. Risks associated
with obligations of states and political subdivisions and corporate
securities in the portfolio are minimized through the purchase of
high quality securities and the avoidance of concentrations with
any single issuer. At December 31, 1995, the largest percentage of
tax exempt securities held were issued by Kentucky municipalities.
Rated state and political obligations are rated "A-" or better and
corporate investments have a "A-" rating or better.
LOANS
Total loans and leases, net of unearned income, were
$748,565,000 at December 31, 1995, an increase of approximately $49
million or 7% compared to December 31, 1994. Average loans
increased approximately $29 million or 4.2%, to $707,898,000 in
1995 from $679,100,000 in 1994.
The loan portfolio continues to be concentrated in residential
real estate mortgage loans and commercial and financial loans.
Real estate mortgage loans were $284,074,000 at December 31, 1995,
down approximately 2.5% from a year ago. The Company has been a
market leader in home equity financing which contributes to this
concentration in the loan portfolio. Real estate mortgages are
principally in the metropolitan Louisville, Kentucky area. Unlike
other regions of the United States, this market has not experienced
significant inflation or deflation in real estate prices.
Commercial and financial loans increased $46 million to
$345,167,000, as the Company continued to emphasize lending to
businesses in the community. The significant categories of
commercial and financial borrowers are health services, religious
organizations and bank holding companies.
During 1995, construction and development loans increased less
than 1% to $61,398,000. These loans are principally for the
development of residential housing tracts, office buildings and
shopping centers.
The Company has no foreign loans and lends principally within
its metropolitan area.
NON-PERFORMING and RESTRUCTURED ASSETS
<TABLE>
<CAPTION>
NON-PERFORMING AND RESTRUCTURED ASSETS
Dollars In Thousands December 31
---------------------------------------------
1995 1994 1993 1992 1991
------ ------ ------ ------ --------
<S> <C> <C> <C> <C> <C>
Loans accounted for on a non-accrual basis $14,301 $2,705 $2,695 $4,453 $2,006
Loans restructured as to principal or interest --- --- --- --- 1,931
Loans contractually past due ninety days or more
as to interest or principal payments 842 806 1,177 1,376 1,119
------ ------ ------ ------ --------
Total non-performing and restructured loans 15,143 3,511 3,872 5,829 5,056
Other real estate held for sale 1,085 2,385 2,970 3,561 3,292
------ ------ ------ ------ --------
Total non-performing and restructured assets $16,228 $5,896 $6,842 $9,390 $8,348
====== ====== ====== ====== ======
Non-performing and restructured loans to total loans 2.02% 0.50% 0.59% 1.00% 1.02%
Non-performing and restructured assets to total assets 1.24 0.49 0.59 0.90 0.85
Allowance for loan losses to non-performing and
restructured loans 61.53 200.66 169.89 103.28 109.24
</TABLE>
In 1995, loans classified as impaired aggregated $14,328,000 and
included non-accrual loans of $14,301,000 and other loans of $27,000.
Non-performing assets include non-accrual and restructured
loans, loans 90 days or more past due and other real estate held
for sale. At December 31, 1995, non-performing assets totaled
$16,228,000 compared with $5,896,000 at December 31, 1994.
Information with respect to non-performing loans and assets is
presented in the table above.
The accrual of interest on loans is discontinued when it is
determined that the collection of interest or principal is
doubtful, or generally when a default of interest or principal has
existed for 90 days or more, unless the loan is fully secured and
in the process of collection. At December 31, 1995, there were
loans for which payments were current or less than 90 days past due
where borrowers are currently experiencing financial difficulties.
These potential problem loans amounting to approximately $12.7
million are subject to management review and are considered in
determining the adequacy of the allowance for loan losses.
In 1995, the level of non-performing and restructured loans
increased to approximately $15.1 million and at the end of 1995
these loans were 2.02% of total loans. Of these non-performing
loans, $14.3 million are classified as impaired. Problem loans to
the previously mentioned Louisville-based real estate development
firm of $11.9 million are included in non-accrual and impaired
loans. The carrying value of these loans has been adjusted based
on recent (third quarter 1995) appraisals of the underlying
collateral for these loans. The borrower is in the process of
reorganizing pursuant to Chapter 11 of the Bankruptcy Code and the
Company is pursuing its right to obtain title to the properties
collateralizing these loans. These properties are in desirable
locations and in various stages of development. Management intends
to provide for the orderly development and marketing of these
properties in a manner designed to maximize the value thereof to
the Company.
Management has carefully evaluated its risk, including
consideration of underlying collateral values based on current
market conditions, with respect to non-accrual loans, loans past
due 90 days or more, and potential problem loans.
Other real estate held for sale decreased $1,300,000 to $1.1
million at December 31, 1995. During 1995, other real estate
acquired in settlement of loans aggregated $158,000 and sales of
other real estate aggregated $1.6 million.
DEPOSITS
Total deposits increased approximately $52 million to
$784,957,000 on December 31, 1995, compared to $732,620,000 at
December 31, 1994. Deposits also increased in the aggregate on an
average basis during the year, increasing approximately $10 million
compared to 1994, to $745,387,000. Average interest bearing
deposits for the year increased slightly from $639,573,000 to
$646,180,000. During 1995, there was a continued shift of interest
bearing demand deposits and savings deposits to higher rate time
deposits. Average non-interest bearing deposits increased 3.8% to
$99,207,000. Large certificates of deposit on an average basis
increased approximately $31 million to $61,970,000 at December 31,
1995, from $31,272,000 at December 31, 1994. Included in large
certificates of deposit at December 31, 1995 and 1994 are retail
brokered certificates of deposit of approximately $10 million
issued in June 1994.
ADVANCES FROM THE FEDERAL HOME LOAN BANK
Federal Home Loan Bank advances decreased during 1995 from
$81,504,000 to $75,109,000 as no new advances were used during
1995. The Company has historically used this source of fixed rate
funds to match its fixed rate mortgage loan products.
MONEY ORDERS AND SIMILAR PAYMENT INSTRUMENTS OUTSTANDING
Money orders and similar payment instruments outstanding at
December 31, 1995 increased approximately $32 million compared to
1994. MOC's agent base and wider acceptance of its gift
certificate program contributed to the increase in this source of
non-interest bearing funds. On an average basis, these items
increased approximately $22 million to $55 million in 1995 compared
to 1994. Refer to discussion of MOC under "Non-interest Income" on
page 11.
INTEREST SENSITIVITY MANAGEMENT
Interest rate risk at any time interval may be measured in
absolute dollars by examining the gap position, or difference
between interest-sensitive assets and interest-sensitive
liabilities. A positive gap, which arises when interest-sensitive
assets exceed interest-sensitive liabilities in designated time
frames, will result in a greater proportion of assets than
liabilities repricing with changes in market interest rates. A
positive gap is normally advantageous when market rates are rising.
A negative gap is the converse, where interest-sensitive
liabilities exceed interest-sensitive assets, and is normally
advantageous when market interest rates are declining. Asset/
liability management strategies attempt to control exposure to
these interest rate risks.
The Company began using interest rate swap contracts as part
of its overall asset/liability management process during 1995.
Interest rate swaps are agreements with a counterparty to exchange
periodic interest payments that are calculated on a notional
principal amount. At December 31, 1995, the Company had interest
rate swap contracts with notional amounts totaling $100 million,
with a weighted average maturity of 3.81 years. Under these
contracts the Company pays the floating prime rate, 8.50% at
December 31, 1995, and receives a weighted average fixed rate of
8.728%.
The interest sensitivity of the Company's earning assets and
interest bearing liabilities at December 31, 1995 is shown on the
table on page 19. This gap table reflects the rate sensitive
position at the end of the year and is not necessarily reflective
of positions throughout the year. The carrying amount of interest
sensitive assets and liabilities and the notional amounts of
interest rate swaps are presented in the periods in which they next
reprice to market rates or mature. Variable rate assets and
liabilities are distributed based on the repricing frequency of the
instrument. In managing interest sensitivity, the Company measures
non-maturity deposits based on historical deposit relationships to
changes in market interest rates. Accordingly, the gap table
presents 30% of interest bearing demand and 20% of savings deposits
in the 0 to 90 Days category with the remainder in the over 5 Years
category. The cumulative positive gap position in the less than
one year category of 6.76% at December 31, 1995 has been reduced
from 15.92% at the end of last year as management has used on and
off-balance-sheet management methods to reduce the Company's
exposure to interest rate changes.
Gap alone does not accurately measure the magnitude of change
in net interest income, since changes in interest rates do not
occur simultaneously or equally to all assets or liabilities in a
category. Management supplements traditional gap analyses with
computer simulation modeling to estimate the financial impact of
rate changes.
SHAREHOLDERS' EQUITY
Shareholders' equity increased $7,898,000 to $132,950,000 at
December 31, 1995. Average shareholders' equity increased
$7,083,000 to $128,788,000 and was 10.99% of average total assets
for 1995, which compares favorably to the Company's peer group.
The Company's primary source of capital is net income, net of
dividends paid. The Company also benefitted from the appreciation
of its available for sale securities, which contributed $5,250,000
to the increase in shareholders' equity during 1995.
Regulators monitor capital adequacy under risk based capital
guidelines which place assets and certain off-balance-sheet
activities in various categories of risk with varying weights.
Also, a minimum leverage ratio, based on shareholders' equity as a
percentage of total assets, is required. As of December 31, 1995
and 1994, the Company's capital ratios and the required minimums
are as follows:
<TABLE>
<CAPTION>
--------------------------------------
December 31 Minimum
1995 1994 Requirement
--------------------------------------
<S> <C> <C> <C>
Total risk-based capital ratio 15.97% 17.37% 8.00%
Tier I risk-based capital ratio 14.90% 16.45% 4.00%
Leverage ratio 9.86% 10.45% 3.00%
- ----------------------------------------------------------------------
</TABLE>
LIQUIDITY MANAGEMENT
Liquidity management represents the Company's ability to
generate cash or otherwise obtain funds at a reasonable price to
satisfy commitments to borrowers as well as the demands of
depositors. Funds are available from a number of sources,
including the securities portfolio, the core deposit base and the
ability to attract large deposits and repurchase agreements. The
Company's temporary investments, which include federal funds sold,
securities purchased under agreements to resell and securities
maturing within one year, are approximately 18% of total assets.
Temporary investments are approximately 82% of volatile
liabilities, which consist of federal funds purchased, securities
sold under agreements to repurchase and large certificates of
deposit. The Company's volatile liability dependence ratio, a
measure of volatile liabilities, net of temporary investments,
supporting loans and the securities portfolio has averaged
approximately 2.5% during 1995. In the opinion of management,
incremental funding sources are sufficient to meet known or
reasonably anticipated funding requirements.
During 1995, financing and operating activities adequately
supported the investing activities of the Company. Investing
activities, primarily loans to customers and securities
transactions have been funded by increased deposits and securities
sold under agreements to repurchase and operating activities,
including net income and increases in money orders and similar
payment instruments outstanding.
The liquidity of the holding company is impacted primarily by
the ability of its principal subsidiary, the Bank, to pay
dividends. During 1995, the Bank paid $6.0 million in dividends to
the parent holding company. Certain regulatory restrictions limit
the amount of dividends the Bank may pay. Additional information
about these restrictions is in Note L to the consolidated financial
statements on page 39.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
During 1995, the Financial Accounting Standards Board issued
FASB Statement No. 123, "Accounting for Stock-Based Compensation,"
which is effective for the Company in 1996. The Statement
introduces the use of a new fair value based method of accounting
for stock-based compensation arrangements, but permits companies to
retain the current intrinsic value based method prescribed by
Accounting Principles Board (APB) Opinion No. 25, "Accounting for
Stock Issued to Employees." Under the fair value based method of
accounting, compensation expense would be recognized for stock
options and other equity instruments granted to employees based
upon fair value at the grant date. The intrinsic value based
method prescribed by APB Opinion No. 25 recognizes compensation
cost for stock options when the option price is less than the
market value of the underlying stock on the grant date. Companies
that do not follow the new fair value method will be required to
provide expanded disclosures of net income and earnings per share
as if they had adopted the fair value accounting method. The
Company intends to continue using the intrinsic value based method
and will provide expanded disclosure related to the fair value
method of accounting for stock-based compensation in the future
years.
During 1995, the Financial Accounting Standards Board issued FASB
Statement No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of," which is effective in
1996. The Statement requires that long-lived assets to be held and
used by the Company be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset
may not be recoverable, and recognize an impairment loss if the sum of
the expected future cash flows is less than the carrying value of the
asset. The loss to be recognized is based upon the fair value of the
asset. Assets to be disposed will be reported at the lower of the
carrying amount or fair value less cost to sell. Management does not
expect the adoption of FASB Statement No. 121 to have a significant
effect on the Company's financial position or results of operations.
1994 COMPARED TO 1993
Net income for 1994 was $12,612,000 or $1.38 per share
compared to $11,573,000 or $1.27 per share for 1993. This increase
was primarily due to an increase in net interest income. For 1994,
ROA was 1.11% and ROE was 10.36%, compared to 1993 when the ROA was
1.11% and ROE was 10.00%.
NET INTEREST INCOME
In 1994, net interest income on a tax equivalent basis
increased $4,629,000 to $46,055,000. Net interest income was
favorably impacted by increases in average earning assets and
rising interest rates. The average yield on earning assets
increased from 7.45% in 1993 to 7.60% in 1994, with a similar
increase in the average rate on interest bearing liabilities from
3.82% in 1993 to 3.94% in 1994. The shift to higher interest
rates, interacting with the timing of repricing and shift in
composition of earning assets and interest bearing liabilities
during the year, resulted in a net interest spread of 3.66% in 1994
compared to 3.63% in 1993. The net yield on earning assets also
increased in 1994 to 4.34% compared to 4.27% in 1993. The average
prime rate in 1994 was 7.14% compared to 6.00% in 1993.
Average earning assets increased approximately $90 million or
9.3% in 1994 to $1,059,202,000. The increase was centered in
loans, which increased approximately $64 million or 10.4% to
$679,100,000, and in the securities portfolio, which increased
approximately $55 million. These increases were partially offset
by a $29 million decrease in short-term lower yielding assets
(federal funds sold and securities purchased under agreements to
resell). Changes in the composition and amounts of earning assets
arose in part from management's response to the increasing interest
rate environment in 1994, where such changes were necessary to
maintain a proper match among assets and liabilities, while
increasing the yield on investable funds.
The growth in average earning assets was achieved despite a
minor increase in average deposits. Average advances from the
Federal Home Loan Bank increased $24 million. Securities sold
under agreements to repurchase increased $52 million. Non-interest
bearing liabilities, which include outstanding money orders and
similar payment instruments, continued to increase in 1994 and
provided support for earning asset growth. Non-interest bearing
deposits and capital were 20.5% of earning assets in 1994 compared
to 21.1% in 1993.
The changes in interest income attributable to volume and rate
changes are summarized in the table on page 21.
PROVISION FOR LOAN LOSSES
The provision for loan losses was $712,000 in 1994 compared to
$390,000 for 1993. During 1994, the Company had net charge-offs of
$245,000, compared to net recoveries of $168,000 in 1993, a decline
in the level of non-performing loans, and no appreciable increase
in the risk characteristics of its loan portfolio. These and other
factors were considered in determining the provision for loan
losses in 1994.
At December 31, 1994, the allowance for loan losses was 1.01%
of loans outstanding compared to 1.00% at the end of 1993.
NON-INTEREST INCOME
Non-interest income increased $657,000 or 6% in 1994 compared
to 1993. Trust Department income was relatively flat in 1994
compared to 1993, despite increased fees for special services in
the stock transfer area during 1993. The year 1994 was favorably
impacted by the fee revenues associated with a 4% increase in
trust assets under management. Service charges on deposit accounts
decreased 3.3% in 1994 compared to 1993. This decline, related
primarily to checking account service charges, results from new and
more competitively priced retail deposit products which have
attracted new depositors as well as conversions of existing
accounts from higher priced deposit products. Money order fees
increased from $2,553,000 in 1993 to $3,333,000 in 1994, an
increase of 30.6%. This increase was due to the increased sales
volume of the money order subsidiary. By year end 1994, the money
order subsidiary operated in all 50 states, through a network of
approximately 2,800 agents. There was a continuing increase in the
monthly volume of money order sales throughout 1994. Securities
and trading account activity resulted in a net loss of $4,000 in
1994 compared to a net loss of $101,000 in 1993. There were no
significant fluctuations between 1994 and 1993 in the several
components of other non-interest income.
OTHER OPERATING EXPENSES
Other operating expenses increased $3,316,000 or 9.7% to
$37,592,000 from $34,276,000 in 1993. This increase was primarily
associated with increases in personnel costs, expenses related to
technology improvements and maintenance, and expenses related to
facilities remodeling and expansion.
Salaries and benefits increased $2,112,000 or 11.5% to
$20,538,000. The increase in salaries and benefits was attributed
to several factors, including annual salary adjustments which
averaged approximately 7.5%, a full year's cost for the management
and staffing additions and upgrades that occurred throughout the
latter half of 1993, and an increase in average full-time employees
from 626 to 639. The increase in the employee base was related to
support of operations, technology enhancements, credit analysis,
customer service and business development activities.
Occupancy and furniture and equipment expenses both increased
in 1994 compared to 1993. Occupancy expense, up 8.7% in 1994, was
impacted primarily by increased rent expense related to additional
space at the main office facility, additional depreciation related
to the subsidiary Savings Bank's facility, opened in December 1993,
and improvements at several branches. Furniture and equipment
expenses increased 6.9% in 1994 compared to 1993. The increased
furniture and equipment expenses reflect increased depreciation for
technology equipment additions/upgrades in 1993 and 1994 and
depreciation on additional money order equipment. Equipment
maintenance expenses were similarly impacted by new technology
equipment and additional money order equipment.
The other expenses category of other operating expenses
includes operating supplies, professional fees, taxes other than
income taxes, deposit insurance and other expenses. Generally, the
expanded level of activity throughout the Bank and at the money
order subsidiary caused the 7.6% increase in these expenses in 1994
compared to 1993. There were no significant unusual items in these
expense categories in 1994.
<PAGE>
<TABLE>
<CAPTION>
INTEREST RATE SENSITIVITY ANALYSIS
Dollars In Thousands Non-interest
December 31, 1995 0-90 91-180 181-365 1-5 Over 5 Bearing
Days Days Days Years Years Funds Total
-------- -------- -------- -------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets
Loans, net of unearned income $400,169 $25,411 $23,643 $148,566 $136,475 $14,301 $748,565
Securities 88,668 17,544 15,420 216,377 23,691 361,700
Federal funds sold 38,200 38,200
Securities purchased under
agreements to resell 75,000 75,000
Other assets 90,522 90,522
-------- -------- -------- -------- -------- -------- -----------
Total assets 602,037 42,955 39,063 364,943 160,166 104,823 1,313,987
-------- -------- -------- -------- -------- -------- -----------
Sources of Funds
Deposits:
Demand deposits 61,085 142,527 132,931 336,543
Savings deposits 14,864 614 59,733 0 75,211
Time deposits 50,231 44,674 87,436 177,979 12,883 0 373,203
Securities sold under
agreements to repurchase 227,166 227,166
Federal funds purchased 3,050 3,050
Advances from the Federal Home
Loan Bank 1,507 1,528 3,032 26,618 42,424 75,109
Other liabilities 90,755 90,755
Shareholders' equity 132,950 132,950
-------- -------- -------- -------- -------- -------- -----------
Total sources of funds 357,903 46,202 91,082 204,597 257,567 356,636 1,313,987
-------- -------- -------- -------- -------- -------- -----------
Asset / liability gap 244,134 (3,247) (52,019) 160,346 (97,401)(251,813)
-------- -------- -------- -------- -------- -----------
Interest rate swap contracts affecting
interest rate sensitivity (100,000)
-------- -------- -------- -------- -------- -----------
Interest sensitivity gap 144,134 (3,247) (52,019) 160,346 (97,401)(251,813)
-------- -------- -------- -------- -------- -----------
Cumulative interest sensitivity gap $144,134 $140,887 $88,868 $249,214 $151,813
======== ======== ======== ======== ========
Cumulative interest sensitivity gap
as a percent of total assets 10.97% 10.72% 6.76% 18.97% 11.55%
Rate-sensitive assets to rate-
sensitive liabilities 1.40x 0.93x 0.43x 1.78x 0.62x
</TABLE>
<PAGE>
AVERAGE BALANCES AND YIELDS/RATES TAX EQUIVALENT BASIS
<TABLE>
<CAPTION>
Dollars In Thousands 1995 1994 1993
----------------------------- ----------------------------- ------------------------------
Average Yields/ Average Yields/ Average Yields/
Balance Interest Rates Balance Interest Rates Balance Interest Rates
----------- -------- -------- ----------- -------- -------- ----------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
EARNING ASSETS:
Securities:
U.S. Treasury and
government agencies $259,137 $13,903 5.36% $260,077 $11,301 4.32% $191,492 $8,131 4.25%
States and political
subdivisions 11,742 958 8.16 6,390 525 8.22 3,790 436 11.50
Corporate and other 49,653 3,076 6.19 47,713 2,808 5.87 52,828 3,338 6.32
Federal funds sold 40,177 2,389 5.95 32,155 1,409 4.38 22,479 692 3.08
Securities purchased under
agreements to resell 18,740 1,105 5.90 33,767 1,345 3.98 72,657 2,299 3.16
Trading account securities - - - - - - 10,786 626 5.80
Loans, net of unearned income 707,898 70,433 9.95 679,100 63,260 9.32 615,070 56,656 9.21
----------- -------- -------- ----------- -------- -------- ----------- --------- --------
Total earning assets 1,087,347 91,864 8.45 1,059,202 80,648 7.60% 969,102 72,178 7.45%
NON-EARNING ASSETS:
Allowance for loan losses (7,564) (6,649) (6,023)
Cash and due from banks 44,494 47,814 48,159
Other 47,452 36,198 32,468
----------- ----------- -----------
Total assets $1,171,729 $1,136,565 $1,043,706
=========== =========== ===========
INTEREST BEARING LIABILITIES:
Deposits:
Demand deposits $204,927 6,356 3.10% $240,828 6,166 2.56% $250,387 6,502 2.60%
Savings deposits 79,282 2,077 2.62 85,852 2,161 2.52 81,060 2,107 2.60
Certificates of deposit
$100,000 and over 61,970 4,002 6.46 31,272 1,654 5.29 23,486 1,056 4.50
Other time deposits 300,001 16,810 5.60 281,621 13,515 4.80 289,534 14,720 5.08
----------- -------- -------- ----------- -------- -------- ----------- --------- --------
Total interest bearing deposits 646,180 29,245 4.53 639,573 23,496 3.67 644,467 24,385 3.78
Federal funds purchased and
securities sold under
agreements to repurchase 152,488 8,420 5.52 155,039 6,147 3.96 102,734 2,851 2.78
Advances from the Federal Home
Loan Bank 78,526 4,786 6.09 82,373 4,950 6.01 58,336 3,516 6.03
----------- -------- -------- ----------- -------- -------- ----------- --------- --------
Total interest bearing liabilities 877,194 42,451 4.84% 876,985 34,593 3.94% 805,537 30,752 3.82%
NON-INTEREST BEARING LIABILITIES:
Demand deposits 99,207 95,575 88,853
Other 66,540 42,300 33,600
----------- ----------- -----------
Total liabilities 1,042,941 1,014,860 927,990
SHAREHOLDERS' EQUITY 128,788 121,705 115,716
Total liabilities and ----------- ----------- -----------
shareholders' equity $1,171,729 $1,136,565 $1,043,706
=========== =========== ===========
NET INTEREST INCOME $49,413 $46,055 $41,426
======== ======== =========
NET INTEREST SPREAD 3.61% 3.66% 3.63%
NET YIELD ON EARNING ASSETS 4.54% 4.34% 4.27%
======== ======== ========
</TABLE>
Tax exempt income is calculated on a tax equivalent basis using a
tax rate of 35%. The yields on securities are based on amortized
historical cost, excluding FASB Statement No.115 adjustments to fair
value. Non-accrual loans and loan fees are included in the
computation of loan yields. The Company has no deposits from foreign
depositors.
<PAGE>
<TABLE>
<CAPTION>
INTEREST INCOME AND INTEREST EXPENSE
VOLUME AND RATE CHANGES FOR THE YEARS 1995 AND 1994 TAX EQUIVALENT BASIS
In Thousands Net Change Due to Due to Net Change Due to Due to
1995/1994 Volume Rate 1994/1993 Volume Rate
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE)
Interest Income:
Securities $3,303 $513 $2,790 $2,729 $2,952 ($223)
Federal funds sold 980 403 577 717 362 355
Securities purchased under
agreements to resell (240) (737) 497 (954) (1,445) 491
Trading account securities - - - (626) (626) -
Loans, net of unearned income 7,173 2,753 4,420 6,604 5,958 646
-----------------------------------------------------------
Total interest income 11,216 2,932 8,284 8,470 7,201 1,269
Interest Expense:
Deposits:
Demand deposits 190 (1,000) 1,190 (336) (246) (90)
Savings deposits (84) (170) 86 54 122 (68)
Certificates of deposit
$100,000 and over 2,348 1,916 432 598 390 208
Other time deposits 3,295 923 2,372 (1,205) (395) (810)
Federal funds purchased and
securities sold under
agreements to repurchase 2,273 (103) 2,376 3,296 1,790 1,506
Advances from the Federal Home
Loan Bank (164) (233) 69 1,434 1,444 (10)
-----------------------------------------------------------
Total interest expense 7,858 1,333 6,525 3,841 3,105 736
-----------------------------------------------------------
CHANGE IN NET INTEREST INCOME $3,358 $1,599 $1,759 $4,629 $4,096 $533
===========================================================
</TABLE>
The volume/rate variance is allocated to the volume and
rate categories based upon the absolute value of volume
and rate variances before the allocation.
<PAGE>
Summary of Financial Data
<TABLE>
<CAPTION>
In Thousands, Except Per Share Amounts Years Ended December 31
-------------------------------------------------------
1995 1994 1993 1992 1991
-------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total interest income $90,595 $79,652 $71,302 $70,487 $78,347
Total interest expense 42,451 34,593 30,752 35,299 44,854
-------------------------------------------------------
Net interest income 48,144 45,059 40,550 35,188 33,493
Provision for loan losses 6,047 712 390 650 725
-------------------------------------------------------
Net interest income after
provision for loan losses 42,097 44,347 40,160 34,538 32,768
Non-interest income 11,191 11,599 10,942 11,357 10,638
Other operating expenses 41,844 37,592 34,276 32,252 30,430
-------------------------------------------------------
Income before income taxes 11,444 18,354 16,826 13,643 12,976
Income tax expense 3,378 5,742 5,253 4,122 3,951
-------------------------------------------------------
Net income $8,066 $12,612 $11,573 $9,521 $9,025
=======================================================
Per common share:
Net income $0.88 $1.38 $1.27 $1.07 $1.01
Cash dividends declared 0.65 0.65 0.65 0.60 0.60
<CAPTION>
December 31
-------------------------------------------------------
1995 1994 1993 1992 1991
-------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Loans, net of unearned income $748,565 $699,396 $657,568 $583,267 $493,373
Total assets 1,313,987 1,213,990 1,169,023 1,041,649 981,703
Total deposits 784,957 732,620 729,449 689,377 672,926
Total shareholders' equity 132,950 125,052 119,590 112,629 107,444
</TABLE>
<PAGE>
QUARTERLY FINANCIAL DATA
<TABLE>
<CAPTION>
In Thousands, Except 1995 1994 1993
Per Share Amounts --------------------------------------------------------------------------------------------------
First Second Third Fourth First Second Third Fourth First Second Third Fourth
-------------------------------- -------------------------------- --------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total interest
income $22,104 $22,787 $22,103 $23,601 $18,310 $19,507 $20,325 $21,510 $17,421 $17,576 $17,656 $18,649
Total interest
expense 10,458 10,676 10,484 10,833 7,881 8,351 8,931 9,430 7,859 7,614 7,634 7,645
Provision for
loan losses 102 127 5,718 100 100 102 150 360 100 100 100 90
Net interest income ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
after provision for
loan losses 11,544 11,984 5,901 12,668 10,329 11,054 11,244 11,720 9,462 9,862 9,922 10,914
Non-interest income 2,762 2,854 2,936 2,639 2,691 2,707 2,829 3,372 2,544 2,698 2,862 2,838
Other operating
expenses 10,208 10,187 11,260 10,189 9,284 9,594 9,624 9,090 8,272 8,353 8,524 9,127
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Income (loss) before
income taxes 4,098 4,651 (2,423) 5,118 3,736 4,167 4,449 6,002 3,734 4,207 4,260 4,625
Income taxes (benefit) 1,278 1,440 (947) 1,607 1,089 1,279 1,371 2,003 1,156 1,281 1,393 1,423
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net income (loss) $2,820 $3,211 ($1,476) $3,511 $2,647 $2,888 $3,078 $3,999 $2,578 $2,926 $2,867 $3,202
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Per common share
Net income (loss) $0.31 $0.35 ($0.16) $0.38 $0.29 $0.31 $0.34 $0.44 $0.28 $0.32 $0.31 $0.36
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
<PAGE>
MARKET FOR MID-AMERICA BANCORP'S STOCK AND
RELATED SECURITY HOLDER MATTERS
Mid-America Bancorp's common stock is traded on the American Stock
Exchange (AMEX) under the symbol MAB. As of December 31, 1995, the
total number of holders of Mid-America Bancorp's common stock was
1,049 and the market price of the Company's common stock was $ 18.00.
Mid-America Bank of Louisville and Trust Company is the stock transfer
agent, dividend disbursing agent, and registrar for the common stock of
Mid-America Bancorp.
The tables below represent the high and low market prices reported for
Mid-America Bancorp's common stock and the cash dividends declared on
common stock, in each quarter of the last two years. Market prices
have been adjusted to reflect the effect of stock dividends during the
periods presented.
<TABLE>
<CAPTION>
- --------------------------------------------------
Market Price
------------------
1995 Cash Dividends Declared High Low
- ----------------------------------------------------
<S> <C> <C> <C>
1st Quarter $ .15 $16.50 $15.25
2nd Quarter .15 16.88 15.13
3rd Quarter .15 18.50 15.38
4th Quarter .20 18.50 16.50
- --------------------------------------------------
<CAPTION>
- --------------------------------------------------
Market Price
------------------
1994 Cash Dividends Declared High Low
- --------------------------------------------------
<S> <C> <C> <C>
1st Quarter $ .15 $19.50 $16.50
2nd Quarter .15 18.38 17.00
3rd Quarter .15 17.50 16.63
4th Quarter .20 17.25 15.88
- --------------------------------------------------
</TABLE>
Management's Statement on Financial Reporting
The Management of the Company is responsible for the integrity and
objectivity of the financial information presented in this Annual
Report. Management has prepared the financial statements according to
generally accepted accounting principles, which involve the use of
estimates and judgements where appropriate.
To meet its responsibility, Management maintains a comprehensive
system of internal control to assure proper authorization of
transactions, safeguarding of assets and reliability of financial
records. This system can provide only reasonable, not absolute,
assurance that errors and irregularities can be prevented or detected.
The concept of reasonable assurance is based on the recognition that
the cost of a system of internal control must be related to the
benefits derived.
The Audit Committee of the Board of Directors reviews the systems of
internal control and financial reporting. The Committee meets and
consults regularly with Management, the internal auditors, and the
independent auditors to review the scope and results of their work.
The accounting firm of KPMG Peat Marwick LLP has performed an
independent audit of the Company's consolidated financial statements.
The firm's report appears on the following page.
/s/Bertram W. Klein /s/Steven A. Small
Bertram W. Klein Steven A. Small
Chairman of the Board Chief Financial Officer and
Executive Vice President
Independent Auditors' Report
The Board of Directors and Shareholders
Mid-America Bancorp:
We have audited the accompanying consolidated balance sheets of
Mid-America Bancorp and subsidiaries as of December 31, 1995 and 1994,
and the related consolidated statements of income, changes in
shareholders' equity, and cash flows for each of the years in the
three-year period ended December 31, 1995. These consolidated
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position
of Mid-America Bancorp and subsidiaries as of December 31, 1995 and
1994, and the results of their operations and their cash flows for
each of the years in the three-year period ended December 31, 1995, in
conformity with generally accepted accounting principles.
As discussed in Note A to the consolidated financial statements, the
Company adopted the provisions of the Financial Accounting Standards
Board's Statement of Financial Accounting Standards No. 115,
"Accounting For Certain Investments in Debt and Equity Securities", in
1994.
/s/KPMG Peat Marwick LLP
Louisville, Kentucky
January 22, 1996
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
In Thousands, Except Share and Per Share Amounts December 31
-------------------------
1995 1994
--------- ---------
<S> <C> <C>
ASSETS
Cash and due from banks $50,962 $64,215
Federal funds sold 38,200 5,300
Securities purchased under agreements to resell 75,000 65,000
Securities available for sale, amortized cost
of $287,470 (1995) and $134,656 (1994) 292,374 131,482
Securities held to maturity, market value of $69,766 (1995) and $209,374 (1994) 69,326 214,313
Loans, net of unearned income of $23,304 (1995) and $29,642 (1994) 748,565 699,396
Allowance for loan losses (9,318) (7,045)
--------- ---------
Loans, net 739,247 692,351
Premises and equipment 20,265 19,098
Other assets 28,613 22,231
--------- ---------
Total assets $1,313,987 $1,213,990
========= =========
LIABILITIES
Deposits:
Non-interest bearing $132,931 $96,590
Interest bearing 652,026 636,030
--------- ---------
Total deposits 784,957 732,620
Securities sold under agreements to repurchase 227,166 213,101
Federal funds purchased 3,050 5,800
Advances from the Federal Home Loan Bank 75,109 81,504
Money orders and similar payment instruments outstanding 79,409 47,818
Accrued expenses and other liabilities 11,346 8,095
--------- ---------
Total liabilities 1,181,037 1,088,938
SHAREHOLDERS' EQUITY
Preferred stock, no par value; authorized-750,000 shares; none issued ---- ----
Common stock, no par value; stated value $2.77 per share;
authorized-12,000,000 shares; issued and outstanding -
9,091,642 shares (1995); 8,803,759 shares (1994) 25,218 24,421
Additional paid-in capital 99,991 95,608
Retained earnings 4,554 7,086
Net unrealized securities gains (losses) 3,187 (2,063)
--------- ---------
Total shareholders' equity 132,950 125,052
--------- ---------
Total liabilities and shareholders' equity $1,313,987 $1,213,990
========= =========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME
In Thousands, Except Per Share Amounts Years Ended December 31
------------------------------
1995 1994 1993
------- ------- ----------
<S> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $69,499 $62,448 $55,928
Interest on securities:
U.S. Treasury and agencies 13,903 11,301 8,131
States and political subdivisions 623 341 288
Corporate and other 3,076 2,808 3,338
Interest on federal funds sold 2,389 1,409 692
Interest on securities purchased under agreements to resell 1,105 1,345 2,299
Interest on trading account securities - - 626
------- ------- ----------
Total interest income 90,595 79,652 71,302
INTEREST EXPENSE
Interest on deposits 29,245 23,496 24,385
Interest on federal funds purchased and
securities sold under agreements to repurchase 8,420 6,147 2,851
Interest on Federal Home Loan Bank advances 4,786 4,950 3,516
------- ------- ----------
Total interest expense 42,451 34,593 30,752
------- ------- ----------
NET INTEREST INCOME 48,144 45,059 40,550
PROVISION FOR LOAN LOSSES 6,047 712 390
------- ------- ----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 42,097 44,347 40,160
NON-INTEREST INCOME
Income from trust department 969 1,133 1,158
Service charges on deposit accounts 4,509 4,572 4,728
Money order fees 3,857 3,333 2,553
Securities gains (losses), net (665) (4) 106
Trading account losses - - (207)
Other 2,521 2,565 2,604
------- ------- ----------
Total non-interest income 11,191 11,599 10,942
OTHER OPERATING EXPENSES
Salaries and employee benefits 22,289 20,538 18,426
Occupancy expense 2,971 2,622 2,413
Furniture and equipment expenses 4,859 4,226 3,955
Other 11,725 10,206 9,482
------- ------- ----------
Total other operating expenses 41,844 37,592 34,276
------- ------- ----------
INCOME BEFORE INCOME TAXES 11,444 18,354 16,826
INCOME TAX EXPENSE 3,378 5,742 5,253
------- ------- ----------
NET INCOME $8,066 $12,612 $11,573
======= ======= ==========
Weighted average shares outstanding 9,211 9,168 9,078
======= ======= ==========
NET INCOME PER COMMON SHARE $0.88 $1.38 $1.27
======= ======= ==========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Years Ended December 31, 1995, 1994 and 1993
---------------------------------------------------------------------------
Common Stock Additional Net Unrealized Total
------------------------ Paid-in Retained Securities Shareholders'
In Thousands, Except Share and Per Share Amounts Shares Amount Capital Earnings Gains (Losses) Equity
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1993 8,194,756 $22,734 $86,561 $3,334 $ $112,629
Net income 11,573 11,573
Cash dividends declared,
($0.65 per share) (5,356) (5,356)
Stock dividend declared 247,415 685 4,418 (5,103) ---
Stock options exercised,
including related tax benefits 67,954 188 556 744
---------------------------------------------------------------------------
Balance, December 31, 1993 8,510,125 23,607 91,535 4,448 119,590
Net income 12,612 12,612
Cash dividends declared,
($0.65 per share) (5,559) (5,559)
Stock dividend declared 255,960 709 3,706 (4,415) ---
Stock options exercised,
including related tax benefits 37,674 105 367 472
Net unrealized securities losses (2,063) (2,063)
---------------------------------------------------------------------------
Balance, December 31, 1994 8,803,759 24,421 95,608 7,086 (2,063) 125,052
Net income 8,066 8,066
Cash dividends declared,
($0.65 per share) (5,741) (5,741)
Stock dividend declared 264,330 732 4,125 (4,857) ---
Stock options exercised,
including related tax benefits 23,553 65 258 323
Net unrealized securities gains 5,250 5,250
---------------------------------------------------------------------------
Balance, December 31, 1995 9,091,642 $25,218 $99,991 $4,554 $3,187 $132,950
===========================================================================
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
In Thousands Years Ended December 31
-----------------------------
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $8,066 $12,612 $11,573
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation, amortization and accretion, net 4,341 5,357 4,413
Provision for loan losses 6,047 712 390
FHLB stock dividend (874) (690) (438)
Loss (gain) on sales of securities 665 4 (106)
Loss on trading account securities - - 207
Deferred taxes (957) 485 (162)
Net increase in trading account securities - - (91,585)
Increase in interest receivable (874) (2,193) (1,288)
Increase in other assets (5,381) (446) (2,713)
Increase in money orders and similar payment
instruments outstanding 31,591 11,841 10,553
Increase in accrued expenses and other liabilities 1,394 643 1,838
--------- --------- ---------
Net cash provided by (used in) operating activities 44,018 28,325 (67,318)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of securities available for sale (153,272) (30,977) (68,897)
Proceeds from maturities of securities available for sale 40,739 15,806 103,000
Proceeds from sales of securities available for sale 105,003 3,000 9,957
Purchases of securities held to maturity (145,837) (72,621) (245,022)
Proceeds from maturities of securities held to maturity 144,048 67,935 111,068
Proceeds from sales of securities held to maturity - - 12,089
Net increase in customer loans (52,802) (42,721) (75,340)
Proceeds from sales of premises and equipment 195 136 106
Payments for purchases of premises and equipment (4,271) (3,864) (2,472)
--------- --------- ---------
Net cash used in investing activities (66,197) (63,306) (155,511)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits 52,337 3,171 40,072
Net increase in securities sold
under agreements to repurchase 14,065 29,813 21,211
Net increase (decrease) in federal funds purchased (2,750) (6,700) 1,525
Advances from the Federal Home Loan Bank - 11,646 51,687
Repayment of advances from the Federal Home Loan Bank (6,395) (10,248) (6,217)
Stock options exercised 310 436 650
Dividends paid (5,741) (5,559) (5,356)
--------- --------- ---------
Net cash provided by financing activities 51,826 22,559 103,572
--------- --------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 29,647 (12,422) (119,257)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 134,515 146,937 266,194
--------- --------- ---------
CASH AND CASH EQUIVALENTS AT END OF YEAR $164,162 $134,515 $146,937
========= ========= =========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Mid-America Bancorp is a bank and savings and loan holding company
whose primary subsidiary is Mid-America Bank of Louisville and Trust
Company (the Bank). Other subsidiaries include Mid-America Bank, FSB,
and Mid-America Money Order Company. Mid-America Bancorp is primarily
engaged in commercial and personal banking activities and trust
services. Although much less significant to operations and financial
condition, Mid-America Bancorp, through its money order subsidiary, is
engaged in the issuance and sale of retail money orders and similar
payment instruments throughout the United States. Banking activities
are conducted predominantly in Jefferson County, Kentucky and
surrounding communities.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Principles of Consolidation -- The consolidated financial statements
include the accounts of Mid-America Bancorp and its wholly-owned
subsidiaries (the Company). Significant intercompany accounts have
been eliminated in consolidation. Certain prior year amounts have
been reclassified to conform with current classifications.
Securities Purchased Under Agreements to Resell -- The Company obtains
possession and/or control through third parties of underlying
securities held as collateral for securities purchased under
agreements to resell. Collateral for securities purchased under
agreements to resell is priced with accrued interest based on the bid
price at the end of the day and must exceed the face amount of the
security purchased under agreements to resell by a stated margin
amount. The Company monitors the prices and margins on a daily basis.
Securities -- Effective January 1, 1994, the Company adopted Statement
of Financial Accounting Standards (FASB Statement) No. 115,
"Accounting for Certain Investments in Debt and Equity Securities."
Debt securities are classified as securities held to maturity and
carried at amortized cost if management has the positive intent and
ability to hold the securities to maturity. Securities purchased with
the intention of recognizing short-term profits are placed in a
trading account and are carried at market value with unrealized gains
or losses reported in income. Securities not classified as securities
held to maturity or trading and which may be sold in response to or in
anticipation of changes in interest rates or based on other factors
are designated as securities available for sale and are carried at
fair value with unrealized gains or losses, net of tax effects,
reflected in shareholders' equity. Amortization of premiums and
accretion of discounts are recorded on the interest method. The
specific identification method is used in determining gains and losses
on the sale of securities.
Loans and Allowance for loan losses -- Loans are reported at the
principal balance outstanding, net of unearned income and deferred
loan fees. Interest on loans and amortization of unearned income and
deferred loan fees, are computed by methods which generally result in
level rates of return. Generally, the accrual of interest on loans,
including loans impaired under FASB Statement No. 114, is discontinued
when it is determined that the collection of interest or principal is
doubtful, or when a default of interest or principal has existed for
90 days or more, unless such loan is well secured and in the process
of collection. Interest received on nonaccrual loans generally is
either applied against principal or reported as interest income,
according to management's judgement as to the collectibility of
principal.
The allowance for loan losses is maintained at a level adequate to
absorb estimated probable credit losses. Management determines the
adequacy of the allowance based upon reviews of individual credits,
evaluation of the risk characteristics of the loan portfolio,
including the impact of current economic conditions on the borrowers'
ability to repay, past collection and loss experience and such other
factors, which, in management's judgment, deserve current recognition.
The allowance for loan losses is increased by charges to operating
earnings and reduced by charge-offs, net of recoveries.
0
Effective January 1, 1995, the Company adopted FASB Statement No. 114,
"Accounting by Creditors for Impairment of a Loan", as amended by FASB
Statement No. 118, "Accounting by Creditors for Impairment of a Loan -
Income Recognition and Disclosures". Under these standards, a loan is
impaired when it is probable that the creditor will be unable to
collect contractual interest and principal according to the terms of
the loan agreement. The allowance for loan losses related to impaired
loans is based on discounted cash flows at the loan's initial
effective interest rate or the fair value of collateral for collateral
dependent loans.
Premises and Equipment -- Premises and equipment are stated at cost
less accumulated depreciation and amortization. Depreciation is
computed over the estimated useful lives of the assets or lease term,
if shorter, on the straight line method.
Other Assets -- Included in other assets is real estate acquired in
settlement of loans which is carried at the lower of cost or fair
value minus estimated disposition costs. Any write-downs at the date
of acquisition are charged to the allowance for loan losses. Expenses
incurred in maintaining assets, subsequent write-downs to reflect
declines in value, and realized gains or losses are reflected in
income.
Income Taxes -- The Company accounts for income taxes in accordance
with FASB Statement No. 109, "Accounting for Income Taxes", which
requires the use of the asset and liability method of accounting for
income taxes. The amounts provided for income taxes are based upon
the amounts of current and deferred taxes payable or refundable at the
date of the financial statements as measured by the provisions of
enacted laws and tax rates. The Company previously followed FASB
Statement No. 96, " Accounting for Income Taxes", and adopted FASB
Statement No. 109 on a prospective basis in the first quarter of 1993.
The implementation of this new accounting standard was not
significant to financial condition or results of operations.
Net Income Per Common Share -- Net income per common share is
determined by dividing net income by the weighted average number of
shares of common stock outstanding, adjusted for the number of shares
that would be issued assuming the exercise of stock options.
<PAGE>
B. CASH FLOWS
For purposes of the consolidated statements of cash flows, cash and
cash equivalents include cash on hand, amounts due from banks, federal
funds sold, and securities purchased under agreements to resell.
Certain activities of the Company, such as the acquisition of property
in exchange for release of indebtedness, do not result in cash
receipts or payments and, therefore, are not presented in the
consolidated statements of cash flows.
During 1995, 1994 and 1993, cash paid for income taxes
amounted to $5,046,000, $3,769,000 and $5,577,000,
respectively, and cash paid for interest was $41,183,000,
$34,253,000 and $31,002,000, respectively. Loans transferred
to other assets were $158,000 in 1995, $648,000 in 1994,
and $1,207,000 in 1993. Securities held to maturity transferred to
securities available for sale amounted to $146,022,000 and $39,468,000
in 1995 and 1993, respectively. In 1993, trading account securities
of $91,378,000 were transferred to securities available for
sale.
<PAGE>
<TABLE>
<CAPTION>
C. SECURITIES
The amortized cost and market value of securities available for sale
follows:
In Thousands December 31, 1995 December 31, 1994
-------------------------------------------------------------------------------
Amortized Unrealized Market Amortized Unrealized Market
Cost Gains Losses Value Cost Gains Losses Value
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury and
U.S. government agencies $232,934 $4,384 $24 $237,294 $110,213 $16 $3,190 $107,039
States and political subdivisions 10,841 465 5 11,301 -- -- -- --
Corporate obligations 28,023 102 18 28,107 9,915 -- -- 9,915
Equity securities 15,672 -- -- 15,672 14,528 -- -- 14,528
-------------------------------------------------------------------------------
$287,470 $4,951 $47 $292,374 $134,656 $16 $3,190 $131,482
===============================================================================
</TABLE>
The amortized cost and market value of securities held to maturity
follows:
<TABLE>
<CAPTION>
In Thousands December 31, 1995 December 31, 1994
-------------------------------------------------------------------------------
Amortized Unrealized Market Amortized Unrealized Market
Cost Gains Losses Value Cost Gains Losses Value
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury and
U.S. government agencies $69,226 $464 $25 $69,665 $189,223 $19 $4,377 $184,865
States and political subdivisions -- -- -- -- 7,877 26 238 7,665
Corporate obligations 100 1 -- 101 16,863 50 418 16,495
Equity securities and other -- -- -- -- 350 -- 1 349
-------------------------------------------------------------------------------
$69,326 $465 $25 $69,766 $214,313 $95 $5,034 $209,374
===============================================================================
</TABLE>
In December 1995, a one-time reassessment of the Company's securities
held to maturity was undertaken, as permitted by the Financial
Accounting Standards Board's special report related to implementation
of FASB Statement No. 115. In connection with that reassessment, the
Company transferred securities held to maturity with an amortized cost
of $146,022,000 to securities available for sale in order to permit more
responsiveness to changes in interest rates and other balance sheet
management factors. At the date of transfer, December 1,1995, the
securities held to maturity had net unrealized gains of $2,422,000.
A summary of debt securities at December 31, 1995 based on contractual
maturities is shown in the table below. Actual maturities may differ
from contractual maturities because issuers may have the right to call
or prepay obligations with or without prepayment penalties. The
weighted average expected maturity of collateralized mortgage
obligations was 3 years and 5 months.
<TABLE>
<CAPTION>
In Thousands Securities Available for Sale Securities Held to Maturity
----------------------------- -----------------------------
Amortized Market Amortized Market
Cost Value Cost Value
----------------------------- -----------------------------
<S> <C> <C> <C> <C>
Due within one year $45,954 $46,034 $56,288 $56,293
Due after one year through five years 171,138 175,143 13,038 13,473
Due after five years through ten years 22,828 23,110 -- --
Due after ten years 17,611 18,003 -- --
Collateralized mortgage obligations 14,267 14,412 -- --
----------------------------- -----------------------------
$271,798 $276,702 $69,326 $69,766
============================= =============================
</TABLE>
Gross realized gains and losses on the sales of securities were $25,000
and $690,000, respectively, in 1995, $9,000 and $13,000, respectively,
in 1994, and $107,000 and $1,000, respectively in 1993. Securities with
a book value of $228,046,000 and $254,993,000 at December 31,1995 and
1994, respectively, were pledged to secure public and trust deposits,
repurchase agreements and for other purposes.
<PAGE>
D. LOANS
The composition of loans follows:
<TABLE>
<CAPTION>
In Thousands December 31
---------------------
1995 1994
---------------------
<S> <C> <C>
Commercial and financial $345,167 $299,375
Real estate - construction and development 61,398 61,083
Real estate - mortgage 284,074 291,198
Consumer 57,926 47,740
---------------------
$748,565 $699,396
=====================
</TABLE>
Loans outstanding and unfunded commitments are primarily concentrated
in the Company's market area which encompasses Jefferson County,
Kentucky and surrounding communities. The Company's credit exposure
is diversified, with secured and unsecured loans to consumers, small
businesses and large corporations. Although the Company has a
diversified loan portfolio, the ability of customers to honor loan
commitments is based, in part, on the economic stability of the
geographic region and/or industry in which they do business.
At December 31, 1995, the recorded investment in loans considered
impaired under FASB Statement No. 114 was $14.328 million, of which
$14.301 million were on a nonaccrual basis. Included in impaired
loans is $11.460 million of impaired loans for which the related
allowance for loan losses is $1.930 million and $2.868 million of
impaired loans, that as a result of charge-offs, do not have an
allowance for loan losses. The average recorded investment in
impaired loans during 1995 was approximately $6.989 million. For the
year ended December 31, 1995, the Company recognized interest income
on impaired loans of $89,000 using the cash basis method of income
recognition.
At December 31, 1994 and 1993, the Company had nonaccrual loans of
approximately $2.7 million. The Company recorded $47,000 of interest
income on these loans in 1994 and would have recorded $208,000 of
interest income if these loans were performing under original terms.
In 1993, the Company recorded $166,000 of interest income on
nonaccrual loans and would have recorded $259,000 of interest income
if these loans were performing under original terms.
<PAGE>
E. ALLOWANCE FOR LOAN LOSSES
Activity in the allowance for loan losses follows:
<TABLE>
<CAPTION>
In Thousands 1995 1994 1993
---------------------------
<S> <C> <C> <C>
Balance, January 1 $7,045 $6,578 $6,020
Loans charged-off (4,045) (493) (576)
Recoveries 271 248 744
---------------------------
Net (charge-offs) recoveries (3,774) (245) 168
Provision for loan losses 6,047 712 390
---------------------------
Balance, December 31 $9,318 $7,045 $6,578
===========================
</TABLE>
<PAGE>
F. PREMISES AND EQUIPMENT AND LEASE COMMITMENTS
A summary of premises and equipment follows:
<TABLE>
<CAPTION>
In Thousands December 31
---------------------------
1995 1994
---------------------------
<S> <C> <C>
Land $4,658 $4,352
Buildings and leasehold improvements 12,088 11,744
Furniture and equipment 20,213 18,715
---------------------------
36,959 34,811
Less accumulated depreciation and amortization 16,694 15,713
---------------------------
$20,265 $19,098
===========================
</TABLE>
At December 31, 1995, the Company was obligated under long-term
noncancelable operating leases covering various premises and
equipment. The Company's main office and most branch office lease
agreements contain renewal options. Computer equipment leases are
cancelable generally within a short period of time and without
substantial penalties.
Rental expense, net of insignificant amounts of sublease rental
income, was $1,183,000, $1,195,000 and $1,042,000 for 1995, 1994 and
1993, respectively.
Minimum rental commitments under noncancelable leases in future years
are as follows:
<TABLE>
<CAPTION>
Year Ended December 31
In Thousands
<S> <C>
1996 $1,027
1997 1,018
1998 965
1999 926
2000 923
Thereafter 5,240
===============================================================
</TABLE>
<PAGE>
G. INCOME TAXES
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
In Thousands 1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Income taxes applicable to operations:
Current:
Federal $4,280 $5,243 $5,373
State 55 14 42
--------- --------- ---------
4,335 5,257 5,415
Deferred (957) 485 (162)
--------- --------- ---------
Total applicable to operations 3,378 5,742 5,253
Charged (credited) to components of stockholders' equity:
Net unrealized securities gains (losses) 2,827 (1,110) --
Stock options exercised (13) (36) (94)
--------- --------- ---------
Total income taxes $6,192 $4,596 $5,159
========= ========= =========
</TABLE>
The provisions for income taxes in the consolidated statements of
income are reconciled to the federal statutory rate as follows:
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Tax at federal statutory rate 35.0% 35.0% 35.0%
Tax exempt interest income (7.3) (3.6) (3.8)
Non-deductible expenses 2.7 1.4 1.1
Other, net (0.9) (1.5) (1.1)
--------- --------- ---------
29.5% 31.3% 31.2%
========= ========= =========
</TABLE>
Other liabilities include deferred income taxes of $ 703,000 and
$486,000 at December 31, 1995 and 1994, respectively. The principal
types of basis differences between assets and liabilities for
financial reporting and tax return purposes which give rise to
deferred taxes relate to the following:
<TABLE>
<CAPTION>
In Thousands 1995 1994
--------- ---------
<S> <C> <C>
Deferred tax liabilities:
Lease accounting $1,267 $1,033
Depreciation 1,705 1,725
Mark-to-market adjustments related to securities 1,123 --
Other 1,031 861
--------- ---------
Total deferred tax liabilities 5,126 3,619
--------- ---------
Deferred tax assets:
Allowance for loan losses 3,334 2,567
Mark-to-market adjustments related to securities -- 103
Deferred compensation 263 201
Other 826 262
--------- ---------
Total deferred tax assets 4,423 3,133
--------- ---------
Net deferred tax liabilities $703 $486
========= =========
</TABLE>
Based upon historical and projected levels of taxable income,
management believes it is more likely than not that the Company will
realize the income tax benefits of its deductible temporary
differences. Accordingly, no valuation allowance for deferred tax
assets was recorded at December 31, 1995 and 1994.
H. DEPOSITS
Included in deposits are certificates of deposit and other time
deposits in denominations of $100,000 or more in the amounts of
$67,326,000 and $52,956,000 at December 31, 1995 and 1994,
respectively, including retail brokered certificates of deposit
aggregating approximately $10 million at December 31, 1995
and 1994.
<PAGE>
I. SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
The Company enters into sales of securities under agreements to
repurchase which are treated as financings. The obligation to
repurchase securities sold is reflected as a liability and the
assets underlying the agreements remain in the respective
securities account.
<TABLE>
<CAPTION>
December 31, 1995
Dollars In Thousands ---------------------------------------
Asset Sold Repurchase Liability
------------------- -------------------
Weighted
Average
Carrying Market Interest
Maturity/Type of Asset Amount Value Amount Rate
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Overnight to 30 Days
U.S. Treasury and
government agencies $211,094 $213,857 $212,666 5.41%
31 to 90 Days
U.S. Treasury and
government agencies 14,517 14,556 14,500 5.28
--------- --------- --------- ---------
$225,611 $228,413 $227,166 5.40%
========= ========= ========= =========
</TABLE>
<PAGE>
J. ADVANCES FROM THE FEDERAL HOME LOAN BANK
The Bank is a member of the Federal Home Loan Bank of Cincinnati
(FHLB) and, accordingly, is eligible to borrow from the FHLB. The
Bank pledges certain first mortgage loans as collateral for these
advances. The aggregate balance in these mortgages must equal 150% of
the advances outstanding. Certain information with respect to
outstanding advances from the FHLB is summarized below:
<TABLE>
<CAPTION>
Dollars In Thousands
------------------------------------------------------
December 31, 1995
------------------------------------
Weighted
Average
Interest
Year of Maturity Amount Rate
------------------------------------
<S> <C> <C>
1996 $447 4.55 %
1997 868 4.80
1998 2,827 5.96
2000 292 5.77
2001 - 2005 21,709 5.70
2006 - 2010 42,680 6.24
2011 - 2014 6,286 7.04
--------- ---------
$75,109 6.11 %
========= =========
</TABLE>
Scheduled principal repayments on advances from the FHLB are
$6,067,000, $5,877,000, $8,178,000, $5,997,000, and $6,566,000 for
1996 through 2000, respectively, and $42,424,000 thereafter.
<PAGE>
K. EMPLOYEE BENEFIT PLANS
The Company has a defined benefit pension plan covering substantially
all of its employees. The benefits are based on years of service and
employee compensation during the ten years of employment prior to
retirement. The Company's funding policy is to contribute annually
the amount greater than or equal to the funding requirements of ERISA,
but not in excess of the maximum deductible limit. Employer
contributions are intended to provide not only for benefits attributed
to service to date, but also for those expected to be earned in the
future.
The following table sets forth the plan's funded status and amounts
recognized in the Company's consolidated balance sheet:
<TABLE>
<CAPTION>
In Thousands December 31
---------------------
1995 1994
---------------------
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including vested benefits of
$6,773 (1995) and $6,284 (1994) $7,146 $6,512
=====================
Plan assets at market value, primarily debt and equity mutual funds $10,884 $10,584
Projected benefit obligation for service rendered to date 10,432 8,548
---------------------
Plan assets in excess of projected benefit obligation 452 2,036
Unrecognized net (gain) loss from past experience different from that assumed 998 (231)
Unrecognized prior service cost (55) (60)
Unrecognized net asset at January 1, 1986 being recognized over
approximately 16 years (1,018) (1,199)
---------------------
Prepaid pension cost included in other assets $377 $546
=====================
</TABLE>
Net pension expense for 1995, 1994 and 1993 included the following
components:
<TABLE>
<CAPTION>
In Thousands Years ended December 31
---------------------------------
1995 1994 1993
---------------------------------
<S> <C> <C> <C>
Service cost-benefits earned during the period ($472) ($506) ($464)
Interest cost on projected benefit obligation (715) (655) (653)
Actual return on plan assets 1,622 (297) 1,018
Amortization and deferral - net (604) 1,366 18
---------------------------------
Net pension expense ($169) ($92) ($81)
=================================
</TABLE>
Discount rates of 7.25 % in 1995 and 8.25 % in 1994 and a rate of
increase in future compensation levels of 5.00 % were used in
determining the actuarial present value of the projected benefit
obligation. The expected long-term rate of return on assets was 8.00 %.
The Company does not have a significant commitment to pay
post-retirement or post-employment benefits other than pension
benefits.
The Company also sponsors an unfunded non-qualified excess benefit
plan covering certain executive officers. The plan has an accrued
unfunded accumulated benefit obligation of $833,000 at December 31,
1995. Expenses of the plan were approximately $186,000 in 1995,
$176,000 in 1994 and $135,000 in 1993.
The Company also offers a defined contribution employee stock
ownership plan. The Company's contribution to this plan was $476,000,
$441,000, and $375,000 for 1995, 1994 and 1993, respectively.
The Company has incentive stock option plans under which shares of
common stock have been reserved for the granting of stock options to
certain key employees of the Company. The plans provide that the
option price shall not be less than the fair market value of the stock
at the effective date the options are granted, and that the term of
the options shall not be more than ten years from the date of the
grant. Options granted under the plans are exercisable one year after
date of the grant. Shares available for future grants were 1,019,700
at December 31, 1995.
<TABLE>
<CAPTION>
Shares
Under
Option Price Range
---------------------------------
<S> <C> <C>
Balance at January 1, 1993 528,159 $10.00 to $15.99
Granted 216,530 $14.53 to $18.80
Canceled (4,917)
Exercised (94,563) $10.00 to $14.53
--------
Balance at December 31, 1993 645,209 $10.00 to $18.80
Granted ----
Canceled (2,182)
Exercised (48,489) $10.00 to $14.53
--------
Balance at December 31, 1994 594,538 $10.00 to $18.80
Granted 212,180 $15.42 to $15.78
Canceled (58,516)
Exercised (24,260) $10.00 to $17.09
--------
Balance at December 31, 1995 723,942 $10.00 to $18.80
========
</TABLE>
Common stock received through the exercise of incentive stock options
which are sold by the optionee within two years of grant or one year
of exercise result in a tax deduction for the Company equivalent to
the taxable gain recognized by the optionee. For financial reporting
purposes, the tax effect of this deduction is accounted for as an
increase in additional paid-in capital rather than as a reduction of
income tax expense.
L. REGULATORY RESTRICTIONS ON DIVIDENDS AND CASH
Under the Federal Reserve Act, prior approval of the Federal banking
authorities is required if dividends declared by the Company's banking
subsidiary in any year exceed its net profits for that year, as
defined, combined with retained net profits, as defined, for the two
preceding years. As of January 1, 1996, the aggregate amount of
retained earnings available for distribution to the Company by all
subsidiaries without prior approval was approximately $9,935,000. In
addition to restrictions on the payment of dividends, the Federal
Reserve and the Commonwealth of Kentucky place certain cash reserve
requirements on deposits. The reserve requirements, which were
$25,432,000 at December 31, 1995, are met by holding a percentage of
deposits in vault cash or maintaining a balance directly with the
Federal Reserve. The Company was in compliance with all cash reserve
requirements at December 31, 1995.
<PAGE>
M. Common Stock Dividends
The following table sets forth the Company's stock dividends to common
shareholders:
<TABLE>
<CAPTION>
Declaration Record Payable Stock Dividend
Date Date Date Percentage
- ---------- ---------- ---------- ----------
<S> <C> <C> <C>
November 20, 1995 December 4, 1995 December 15, 1995 3.0 %
November 21, 1994 December 12, 1994 December 29, 1994 3.0
November 15, 1993 December 15, 1993 December 31, 1993 3.0
</TABLE>
Appropriate share and per share information in the consolidated
financial statements reflects the adjusted number of shares.
N. COMMITMENTS AND CONTINGENCIES
In the normal course of business, in order to meet the financing needs
of customers, the Company has outstanding commitments and contingent
liabilities. At December 31, 1995, the Company had $261,784,000 of
commitments to extend credit (of which $102,990,000 relates to home
equity lines of credit), substantially all of which are at variable
rates, including standby letters of credit of $12,743,000, which are
not reflected in the consolidated financial statements. The
Company's exposure to credit loss in the event of nonperformance by
the other party to these commitments is represented by the contractual
amount of those instruments.
Commitments to extend credit are agreements to lend to a customer as
long as there is no violation of any condition established in the
contract. Commitments generally have fixed expiration dates or other
termination clauses and may require payment of a fee. Since many of
the commitments are expected to expire without being drawn upon, the
total commitment amounts do not necessarily represent future cash
requirements. The Company evaluates each customers' creditworthiness
on a case-by-case basis. The amount of collateral obtained if deemed
necessary by the Company upon extension of credit is based on
management's credit evaluation of the counterparty. Collateral held
varies but may include accounts receivable, inventory, property, plant
and equipment, real estate and income-producing commercial properties.
Standby letters of credit and financial guarantees written are
conditional commitments issued by the Company to guarantee the
performance of a customer to a third party. Those guarantees are
primarily issued to support public and private borrowing arrangements,
including commercial paper, bond financing and similar transactions.
At December 31, 1995, there were various pending legal actions and
proceedings in which claims for damages were asserted. In one such
matter, the Bank is one of 13 defendants named in a lawsuit filed on
December 10, 1993, by Kentucky Central Life Insurance Company (in
Rehabilitation) involving certain real estate loans. Management,
after discussion with legal counsel concerning the adequacy of the
Company's defenses, believes that this and other legal actions will
not have a material adverse effect upon the financial condition of the
Bank or the Company.
<PAGE>
O. OTHER OPERATING EXPENSES
<TABLE>
<CAPTION>
In Thousands 1995 1994 1993
-----------------------------
<S> <C> <C> <C>
Operating supplies $2,080 $1,649 $1,319
Professional fees 1,553 899 1,048
Taxes-Bank shares, property and other 1,386 1,436 1,349
Deposit insurance 848 1,642 1,579
Other 5,858 4,580 4,187
-----------------------------
$11,725 $10,206 $9,482
=============================
</TABLE>
<PAGE>
P. RELATED PARTY TRANSACTIONS
Loans to directors, executive officers and principal holders of the
Company's common stock and associates of such persons are presented
below:
<TABLE>
<CAPTION>
--------------------------------------------------------
In Thousands
<S> <C>
Balance, January 1, 1995 $7,853
New loans 2,368
Repayments (5,788)
Additions for changes in related party group 151
Reductions for changes in related party group (10)
---------
Balance, December 31, 1995 $4,574
=========
--------------------------------------------------------
</TABLE>
The above transactions were made on substantially the same terms,
including interest rates and collateral, as those prevailing at the
time for other customers in the ordinary course of business.
The Company purchases services from companies controlled by certain
members of the Board of Directors and in prior years leased certain
office space from a retired director. Amounts paid were approximately
$15,000, $629,000 and $936,000 for 1995, 1994 and 1993, respectively.
<PAGE>
Q. FINANCIAL INSTRUMENTS - INTEREST RATE SWAP CONTRACTS
The Company manages its exposure to market risk, in part, by
using interest rate swap contracts to modify the existing interest
rate characteristics of its floating rate loan portfolio.
The notional amount of the interest rate swap contracts
represents only an agreed-upon amount on which calculations of
interest payments to be exchanged are based, and is significantly
greater than the amount at risk. Credit risk is measured as the
cost of replacing, at current market rates, contracts in an
unrealized gain position. Although the Company is exposed to
credit-related losses in the event of nonperformance by the
counterparty, based on management's assessment, as of
December 31, 1995, the counterparty was expected to meet its
obligations. In addition, the Company deals exclusively with
counterparties with high credit ratings, enters into bilateral
collateral arrangements and arranges master netting
agreements. These agreements include legal rights of setoff that
provide for the net settlement of the subject contracts with the
same counterparty in the event of default.
At December 31, 1995, the Company had entered into interest
rate swap contracts with notional amounts totaling $100 million
with a weighted average maturity of 3.81 years. Under these
contracts the Company receives or pays the difference between
the floating prime rate and fixed rates stated in the contracts.
At December 31, 1995, the floating prime rate to be paid by the
Company was 8.50% and the weighted average fixed rate to be
received by the Company was 8.728%. Net receipts or payments
under the contracts are recognized as adjustments to interest
income. Interest rate swap contracts increased net interest
income in 1995 by $21,000. At December 31, 1995, the aggregate
positive fair value of interest rate swap contracts, determined
through market quotes, was approximately $2,444,000.
<PAGE>
R. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair values of the Company's financial instruments are
as follows:
<TABLE>
<CAPTION>
In Thousands December 31, 1995 December 31, 1994
----------------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
----------------------------------------
<S> <C> <C> <C> <C>
Financial assets:
Cash and short-term investments $164,162 $164,162 $134,515 $134,515
Securities 361,700 362,140 345,795 340,856
Loans, net of allowance for loan losses 739,247 744,835 692,351 686,720
Financial liabilities:
Deposits 784,957 791,720 732,620 728,942
Short-term borrowings 230,216 230,216 218,901 218,901
Advances from the Federal Home Loan Bank 75,109 74,131 81,504 72,517
Money orders and similar payment
instruments outstanding 79,409 79,409 47,818 47,818
Off-balance sheet financial instruments
Interest rate swaps --- 2,444 --- ---
</TABLE>
The following methods and assumptions were used to estimate
the fair value of each class of financial instruments:
Cash, Short-Term Investments, and Short-Term Borrowings--For
those short-term instruments, the carrying amount is a
reasonable estimate of fair value.
Securities--For securities, fair value equals quoted market
price, if available. If a quoted market price is not
available, fair value is estimated using quoted market prices
for similar securities or dealer quotes.
Loans--The fair value of loans is estimated by discounting the
future cash flows using the current rates at which similar
loans would be made to borrowers with similar credit ratings
and for the same remaining maturities, reduced by the
allowance for loan losses which represents the estimated
credit risk in the loan portfolio.
Deposits--The fair value of demand deposits, savings accounts,
and money market deposits is the amount payable on demand at
the reporting date. The fair value of fixed-maturity
certificates of deposit is estimated using the rates currently
offered for deposits of similar remaining maturities.
Advances from the Federal Home Loan Bank--Rates currently
available to the Company for debt with similar terms and
remaining maturities are used to estimate fair value of
existing debt.
Money Orders and Similar Payment Instruments Outstanding -
The fair value of these instruments, payable upon demand, is
carrying value.
Interest Rate Swaps - The fair value of interest rate swaps is
the estimated amount, based on market quotes, that the Company
would receive to terminate the agreement at the reporting
date, taking into account current interest rates and the
remaining term of the agreements.
Commitments--The fair value of commitments to extend credit is
estimated using the fees currently charged to enter into
similar agreements, taking into account the remaining terms of
the agreements and the present creditworthiness of the
counterparties. For fixed rate loan commitments, fair value
also considers the difference between current levels of
interest rates and the committed rates. There are no
significant fair value adjustments for commitments.
Limitations--The fair value estimates are made at a discrete
point in time based on relevant market information about the
financial instruments. Because no market exists for a
significant portion of the Company's financial instruments,
fair value estimates are based on judgements regarding future
expected loss experience, current economic conditions, risk
characteristics of various financial instruments, and other
factors. These estimates are subjective in nature and involve
uncertainties and matters of significant judgement and
therefore cannot be determined with precision. Changes in
assumptions could significantly affect the estimates.
<PAGE>
S. Condensed Financial Information - Parent Company Only
Condensed Balance Sheets
<TABLE>
<CAPTION>
In Thousands December 31
-----------------------
1995 1994
-----------------------
<S> <C> <C>
Assets:
Cash on deposit with bank subsidiary $1,867 $2,501
Investment in bank and thrift subsidiaries 116,899 110,093
Investment in other subsidiaries 13,785 13,131
Other assets 410 69
--------- ---------
Total assets $132,961 $125,794
========= =========
Liabilities and shareholders' equity:
Other liabilities $11 $742
Shareholders' equity 132,950 125,052
--------- ---------
Total liabilities and shareholders' equity $132,961 $125,794
========= =========
</TABLE>
Condensed Statements of Income
<TABLE>
<CAPTION>
In Thousands Years Ended December 31
-------------------------------------
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Cash dividends from bank subsidiary $6,000 $5,800 $4,800
Other income 2 1 2
Other expenses (210) (217) (219)
--------- --------- ---------
Income before income taxes and equity
in undistributed earnings of subsidiaries 5,792 5,584 4,583
Applicable income tax benefit 64 56 72
--------- --------- ---------
Income before equity in undistributed earnings of
subsidiaries 5,856 5,640 4,655
Equity in undistributed earnings of subsidiaries 2,210 6,972 6,918
--------- --------- ---------
Net income $8,066 $12,612 $11,573
========= ========= =========
</TABLE>
<PAGE>
S. Condensed Financial Information - Parent Company Only (Continued)
Condensed Statements of Cash Flows
<TABLE>
<CAPTION>
In Thousands Years Ended December 31
---------------------------------------------
1995 1994 1993
---------------------------------------------
<C> <C> <C>
<S>
Cash flows from operating activities:
Net income $8,066 $12,612 $11,573
Adjustment to reconcile net income to net cash
provided by operating activities:
Equity in undistributed earnings of subsidiaries (2,210) (6,972) (6,918)
(Increase) decrease in other assets (328) 113 279
Increase (decrease) in other liabilities (731) 731 (740)
--------- --------- ---------
Net cash provided by operating activities 4,797 6,484 4,194
--------- --------- ---------
Cash flows from investing activities:
Investment in subsidiaries -- -- (3,750)
--------- --------- ---------
Cash flows used in financing activities:
Dividends paid (5,741) (5,559) (5,356)
Stock options exercised 310 436 650
---------- ---------- ---------
Net cash used in financing activities (5,431) (5,123) (4,706)
---------- --------- ---------
Net increase (decrease) in cash and cash equivalents (634) 1,361 (4,262)
Cash and cash equivalents at beginning of year 2,501 1,140 5,402
---------- --------- ---------
Cash and cash equivalents at end of year $1,867 $2,501 $1,140
========== ========= =========
</TABLE>
<PAGE>
SUBSIDIARIES OF REGISTRANT
Exhibit 21
The subsidiaries of Mid-America Bancorp are listed below. Each
of the companies with the exception of Mid-America Bank, F.S.B.,
which is a Federal Savings Bank organized under laws of the
United States, is incorporated in the state of Kentucky.
Mid-America Bank of Louisville and Trust Co.
Mid-America Money Order Company
Eton Life Insurance Company
Mid-America Data Processing Inc.
Mid-America Property Management Company
MABC Leasing Company
Mid-America Bank, F.S.B.
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Mid-America Bancorp:
We consent to incorporation by reference in the Registration
Statements No. 2-92270, No. 2-99495, and No. 33-42989 on Forms S-8
of Mid-America Bancorp of our report dated January 22, 1996,
relating to the consolidated balance sheets of Mid-America Bancorp
and subsidiaries as of December 31, 1995 and 1994, and the related
consolidated statements of income, changes in shareholders' equity,
and cash flows for each of the years in the three-year period ended
December 31, 1995, which report appears in the 1995 annual report
to shareholders, which is incorporated by reference in the December
31, 1995 Form 10-K of Mid-America Bancorp.
Our report refers to a change in the method of accounting for
certain debt and equity securities in 1994.
Louisville, Kentucky /s/ KPMG Peat Marwick LLP
March 27, 1996
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<PERIOD-TYPE> YEAR
<CASH> 50,962
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 113,200
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 292,374
<INVESTMENTS-CARRYING> 69,326
<INVESTMENTS-MARKET> 69,766
<LOANS> 748,565
<ALLOWANCE> (9,318)
<TOTAL-ASSETS> 1,313,987
<DEPOSITS> 784,957
<SHORT-TERM> 230,216
<LIABILITIES-OTHER> 90,755
<LONG-TERM> 75,109
0
0
<COMMON> 25,218
<OTHER-SE> 107,732
<TOTAL-LIABILITIES-AND-EQUITY> 1,313,987
<INTEREST-LOAN> 69,499
<INTEREST-INVEST> 17,602
<INTEREST-OTHER> 3,494
<INTEREST-TOTAL> 90,595
<INTEREST-DEPOSIT> 29,245
<INTEREST-EXPENSE> 42,451
<INTEREST-INCOME-NET> 48,144
<LOAN-LOSSES> 6,047
<SECURITIES-GAINS> (665)
<EXPENSE-OTHER> 41,844
<INCOME-PRETAX> 11,444
<INCOME-PRE-EXTRAORDINARY> 11,444
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,066
<EPS-PRIMARY> 0.88
<EPS-DILUTED> 0.88
<YIELD-ACTUAL> 4.54
<LOANS-NON> 14,301
<LOANS-PAST> 842
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 12,700
<ALLOWANCE-OPEN> 7,045
<CHARGE-OFFS> 4,045
<RECOVERIES> 271
<ALLOWANCE-CLOSE> 9,318
<ALLOWANCE-DOMESTIC> 9,318
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
ADDITIONAL EXHIBITS Exhibit 99
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
X ANNUAL REPORT PURSUANT TO SECTION 15(d)
____________ OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995
OR
____________ TRANSITION REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from________to _______
Commission File Number 1-10602
A. Full title of the plan and the address of the plan,
if different from that of the issuer named below.
The Bank of Louisville Employee Stock Ownership
Plan
B. Name of the issuer of the securities held pursuant
to the plan and the address of its principal
executive office.
Mid-America Bancorp
500 West Broadway
Louisville, Kentucky 40202
REQUIRED INFORMATION
Financial statements and schedules prepared in accordance with the
financial reporting requirements of ERISA will be filed under cover of
Form SE within 180 days of the Plan's year-end (December 31, 1995).
