UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For quarterly period ended June 30, 1999
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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 executive offices) (Zip Code)
(502) 589-3351
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former fiscal year,
if changed since last report)
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 a 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
(continued)
MID-AMERICA BANCORP
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Section 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
July 31, 1999: 10,316,932 shares of common stock, no par value
MIDAMERICA BANCORP
PART I. FINANCIAL INFORMATION
The consolidated financial statements of MidAmerica Bancorp
and subsidiaries (Company) submitted herewith are unaudited.
However, in the opinion of management, all adjustments (consisting
only of adjustments of a normal recurring nature) necessary for a
fair presentation of the results for the interim periods have been
made.
ITEM 1. FINANCIAL STATEMENTS
The following unaudited consolidated financial statements of
the Company are submitted herewith:
Consolidated balance sheets - June 30, 1999 and December 31, 1998
Consolidated statements of income - three and six months ended
June 30, 1999 and 1998
Consolidated statements of changes in shareholders' equity -
six months ended June 30, 1999 and 1998
Consolidated statements of comprehensive income - three and
six months ended June 30, 1999 and 1998
Consolidated statements of cash flows - six months ended June
30, 1999 and 1998
Notes to consolidated financial statements
CONSOLIDATED BALANCE SHEETS
In thousands, except share and per share amounts
Unaudited
<TABLE>
<CAPTION>
June 30 December 31
----------- -----------
1999 1998
ASSETS ----------- -----------
<S> <C> <C>
Cash and due from banks $30,848 $39,644
Federal funds sold 15,000 --
Securities purchased under agreements to resell -- 35,000
Securities available for sale, amortized cost
of $435,052 (1999) and $382,580 (1998) 435,995 385,767
Securities held to maturity, market value
of $4,022 (1998) and $84,013 (1998) 4,035 83,998
Loans, net of unearned income 1,011,235 1,005,021
Allowance for loan losses (9,278) (9,010)
----------- -----------
Loans, net 1,001,957 996,011
Premises and equipment 21,777 21,854
Other assets 30,058 32,489
----------- -----------
TOTAL ASSETS $1,539,670 $1,594,763
=========== ===========
LIABILITIES
Deposits:
Non-interest bearing $169,893 $165,072
Interest bearing 809,850 788,852
----------- -----------
Total deposits 979,743 953,924
Securities sold under agreements to repurchase 244,827 276,454
Federal funds purchased 12,441 12,090
Advances from the Federal Home Loan Bank 72,211 74,862
Gift certificates outstanding 43,532 95,127
Accrued expenses and other liabilities 13,251 14,870
----------- -----------
TOTAL LIABILITIES 1,366,005 1,427,327
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 - 15,000,000 shares (1999); 12,000,000
shares (1998); issued and outstanding - 10,315,790
shares (1999); 10,246,157 shares (1998) 28,609 28,416
Additional paid-in capital 124,619 123,905
Retained earnings 19,824 13,043
Accumulated other comprehensive income 613 2,072
----------- -----------
TOTAL SHAREHOLDERS' EQUITY 173,665 167,436
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,539,670 $1,594,763
=========== ===========
See notes to unaudited consolidated financial statements.
</TABLE><PAGE>
CONSOLIDATED STATEMENTS OF INCOME
In thousands, except per share amounts
Unaudited
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30 June 30
------------------ ------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans $22,608 $21,228 $44,810 $42,020
Interest and dividends on:
Taxable securities 4,136 3,873 7,430 8,284
Tax-exempt securities 706 712 1,422 1,421
Interest on federal funds sold 70 202 109 346
Interest on securities purchased under
agreements to resell 1,435 1,526 3,425 3,486
-------- -------- -------- --------
Total interest income 28,955 27,541 57,196 55,557
-------- -------- -------- --------
INTEREST EXPENSE:
Interest on deposits 8,240 8,632 16,345 17,162
Interest on federal funds purchased
and securities sold under
agreements to repurchase 3,609 3,069 7,273 6,886
Interest on Federal Home
Loan Bank advances 1,080 1,097 2,198 2,043
-------- -------- -------- --------
Total interest expense 12,929 12,798 25,816 26,091
-------- -------- -------- --------
Net interest income before
provision for loan losses 16,026 14,743 31,380 29,466
Provision for loan losses 1,470 500 1,751 500
-------- -------- -------- --------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 14,556 14,243 29,629 28,966
-------- -------- -------- --------
NON-INTEREST INCOME:
Income from trust department 651 574 1,316 1,114
Service charges on deposit accounts 1,494 1,339 2,898 2,607
Gift certificate fees 388 71 716 121
Securities gains 2 -- 15 27
Other 2,974 5,382 5,309 7,833
-------- -------- -------- --------
Total non-interest income 5,509 7,366 10,254 11,702
-------- -------- -------- --------
OTHER OPERATING EXPENSES:
Salaries and employee benefits 7,068 7,191 14,037 13,898
Occupancy expense 826 735 1,619 1,471
Furniture and equipment expenses 1,129 1,134 2,293 2,177
Other 2,710 3,492 5,617 6,771
-------- -------- -------- --------
Total other operating expenses 11,733 12,552 23,566 24,317
-------- -------- -------- --------
Income before income taxes 8,332 9,057 16,317 16,351
Income tax expense 2,640 2,749 5,007 4,918
-------- -------- -------- --------
NET INCOME $5,692 $6,308 $11,310 $11,433
======== ======== ======== ========
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic 10,315 10,211 10,293 10,198
Diluted 10,449 10,443 10,441 10,434
NET INCOME PER COMMON SHARE
Basic $0.55 $0.62 $1.10 $1.12
Diluted 0.54 0.60 1.08 1.10
See notes to unaudited consolidated financial statements.
</TABLE><PAGE>
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
In thousands, except per share amounts
Unaudited
<TABLE>
<CAPTION>
Six months
ended June 30
----------------------
1999 1998
---------- ----------
<S> <C> <C>
Balance, January 1 $167,436 $155,709
Net income 11,310 11,433
Other comprehensive income
(loss), net of tax (1,459) (1,779)
Cash dividends declared - $.44 (1999)
and $.41 (1998) (4,528) (4,160)
Stock options exercised, including
related tax benefits 906 696
---------- ----------
Balance, June 30 $173,665 $161,899
========== ==========
See notes to unaudited consolidated financial statements.
</TABLE>
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
In Thousands
Unaudited
<TABLE>
<CAPTION>
Three months Six months
ended June 30 ended June 30
---------- ---------
1999 1998 1999 1998
---------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Net Income $5,692 $6,308 $11,310 $11,433
Other comprehensive loss, net of tax:
Unrealized losses on securities
available for sale:
Unrealized holding losses
arising during the period (1,545) (1,098) (1,449) (1,801)
Less reclassification adjustment for
gains included in net income (1) -- (10) (18)
---------- ---------- --------- ---------
(1,546) (1,098) (1,459) (1,819)
Pension liability adjustment -- -- -- 40
---------- ---------- --------- ---------
Other comprehensive loss (1,546) (1,098) (1,459) (1,779)
---------- ---------- --------- ---------
COMPREHENSIVE INCOME $4,146 $5,210 $9,851 $9,654
========== ========== ========= =========
See notes to unaudited consolidated financial statements.
</TABLE><PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
In Thousands
Unaudited
<TABLE>
<CAPTION> Six months
ended June 30
----------------------
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES: ---------- ----------
<S> <C> <C>
Net income $11,310 $11,433
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation, amortization and accretion, net 2,570 2,545
Provision for loan losses 1,751 500
Federal Home Loan Bank stock dividend (580) (560)
Gains on sales of securities (15) (27)
Gains on sales of other real estate (1,000) (814)
Gain on sale of subsidiary -- (4,213)
Deferred taxes 635 (1,031)
Decrease (increase) in interest receivable (1,575) 53
Decrease in other assets 2,227 83
Decrease in accrued expenses and other liabilities (1,878) (537)
---------- ----------
Net cash provided by operating activities 13,445 7,432
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of securities available for sale (545,147) (41,558)
Proceeds from maturities of
securities available for sale 486,460 145,192
Proceeds from sales of securities available for sale 6,245 7,103
Purchases of securities held to maturity -- (2,529)
Proceeds from maturities of securities held to maturity 80,000 76,000
Net cash proceeds from sale of subsidiary -- 8,134
Increase in customer loans (7,720) (23,647)
Proceeds from sales of other real estate 2,747 2,718
Payments for purchases of premises and equipment (1,400) (2,561)
---------- ----------
Net cash provided by investing activities 21,185 168,852
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits 25,819 43,466
Net decrease in securities sold
under agreements to repurchase (31,627) (78,476)
Net increase in federal funds purchased 351 1,050
Advances from the Federal Home Loan Bank 15,000 20,000
Repayment of advances from the Federal Home Loan Bank (17,651) (4,842)
Decrease in gift certificates outstanding (51,595) (39,900)
Stock options exercised 805 565
Dividends paid (4,528) (4,160)
---------- ----------
Net cash used in financing activities (63,426) (62,297)
---------- ----------
Net increase (decrease) in cash and cash equivalents (28,796) 113,987
Cash and cash equivalents at January 1 74,644 45,902
---------- ----------
Cash and cash equivalents at June 30 $45,848 $159,889
========== ==========
See notes to unaudited consolidated financial statements.
</TABLE><PAGE>
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1.The accounting and reporting policies of MidAmerica Bancorp and
its subsidiaries (the Company) conform with generally accepted
accounting principles and general practices within the banking
industry. The accompanying unaudited consolidated financial statements
should be read in conjunction with the Summary of Significant Accounting
Policies footnote which appears in the Company's 1998 Annual Report and
Form 10-K filed with the Securities and Exchange Commission. The
consolidated financial statements reflect all adjustments (consisting
only of adjustments of a normal recurring nature) which are, in the
opinion of management, necessary for a fair presentation of financial
condition and results of operations for the interim periods. Certain
prior year amounts have been reclassified to conform with current
classifications.
2.The following table presents the numerators (net income) and
denominators (average shares outstanding) for the basic and
diluted net income per share computations for the three and
six months ended June 30:
<TABLE>
<CAPTION>
In thousands, except per share amounts
Three months ended Six months ended
June 30 June 30
------------------------ ------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net income, basic and diluted $5,692 $6,308 $11,310 $11,433
=========== =========== =========== ===========
Average shares outstanding 10,315 10,211 10,293 10,198
Effect of dilutive securities 134 232 148 236
Average shares outstanding including ----------- ----------- ----------- -----------
dilutive securities 10,449 10,443 10,441 10,434
=========== =========== =========== ===========
Net income per share, basic $0.55 $0.62 $1.10 $1.12
=========== =========== =========== ===========
Net income per share, diluted $0.54 $0.60 $1.08 $1.10
=========== =========== =========== ===========
</TABLE>
Appropriate share and per share information in the consolidated
financial statements has been adjusted for the 3% stock
dividend of November 1998.
3.The amortized cost and market value of securities available for
sale are summarized as follows:
<TABLE>
<CAPTION>
June 30, 1999 December 31, 1998
------------------------ ------------------------
In thousands Amortized Market Amortized Market
Cost Value Cost Value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
U.S. Treasury and
U.S. government agencies $195,096 $195,151 $159,821 $160,415
Collateralized mortgage obligations 154,901 153,832 148,524 146,970
States and political subdivisions 50,523 52,473 50,609 54,738
Corporate obligations 15,247 15,254 4,634 4,652
Equity securities 19,285 19,285 18,992 18,992
----------- ----------- ----------- -----------
$435,052 $435,995 $382,580 $385,767
=========== =========== =========== ===========
</TABLE>
The amortized cost and market value of securities held to maturity are
summarized as follows:
<TABLE>
<CAPTION>
June 30, 1999 December 31, 1998
------------------------ ------------------------
In thousands Amortized Market Amortized Market
Cost Value Cost Value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
U.S. Treasury and
U.S. government agencies $4,035 $4,022 $83,998 $84,013
=========== =========== =========== ===========
</TABLE>
4.Activity in the allowance for loan losses for the six months
ended June 30, 1999 and year ended December 31, 1998 follows:
<TABLE>
<CAPTION>
June 30, December 31,
In thousands 1999 1998
----------- -----------
<S> <C> <C>
Balance, January 1 $9,010 $9,209
Loans charged-off (1,639) (1,355)
Recoveries 156 184
----------- -----------
Net loans charged-off ($1,483) ($1,171)
Provision for loan losses 1,751 972
----------- -----------
Balance, end of period $9,278 $9,010
=========== ===========
</TABLE>
5.Significant components of other non-interest income and other operating
expenses are set forth below:
<TABLE>
<CAPTION>
Three months ended Six months ended
In thousands June 30 June 30
------------------------ ------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Other non-interest income:
Settlement proceeds (1999)/ gain on sale
of money order subsidiary (1998) $1,800 $3,777 $1,800 $4,213
Gains on sales of other real estate 159 190 1,000 814
Money order processing fees 120 498 300 913
Other 895 917 2,209 1,893
----------- ----------- ----------- -----------
$2,974 $5,382 $5,309 $7,833
=========== =========== =========== ===========
</TABLE>
Other non-interest income includes non-recurring revenue related to
the Company's sale of its money order subsidiary. For the three
and six months ended June 30, 1998, gains on the sale of the
subsidiary were recognized in the amounts of $3,777,000 and
$4,213,000, respectively. Other non-interest income for the three
and six months ended June 30, 1999, includes a $1.8 million
settlement related to the discontinuance of a processing agreement
between the Company and the purchaser of the money order order
subsidiary.
<TABLE>
<CAPTION>
Three months ended Six months ended
In thousands June 30 June 30
------------------------ ------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Other operating expenses:
Advertising and marketing $318 $757 $649 $1,267
Operating supplies 339 387 697 816
Legal and professional fees 350 907 738 1,563
Taxes, other than income taxes 387 297 745 676
Other 1,316 1,144 2,788 2,449
----------- ----------- ----------- -----------
$2,710 $3,492 $5,617 $6,771
=========== =========== =========== ===========
</TABLE>
6.Selected financial information by business segment for June 1999
and 1998 follows:
<TABLE>
<CAPTION>
In thousands
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net interest income
Banking $15,253 $13,932 $29,656 $27,672
Other 780 813 1,732 1,797
Eliminations (7) (2) (8) (3)
----------- ----------- ----------- -----------
Total $16,026 $14,743 $31,380 $29,466
=========== =========== =========== ===========
Non-interest income
Banking $3,169 $2,988 $7,367 $6,475
Other (a) (b) 4,420 5,975 7,009 8,173
Eliminations (a) (2,080) (1,597) (4,122) (2,946)
----------- ----------- ----------- -----------
Total $5,509 $7,366 $10,254 $11,702
=========== =========== =========== ===========
Net income
Banking $4,023 $3,743 $8,975 $8,443
Other 1,676 2,566 2,343 2,993
Eliminations (7) (1) (8) (3)
----------- ----------- ----------- -----------
Total $5,692 $6,308 $11,310 $11,433
=========== =========== =========== ===========
Assets as of June 30
Banking $1,533,907 $1,415,914
Other 66,652 64,603
Eliminations (60,889) (59,047)
----------- -----------
Total $1,539,670 $1,421,470
=========== ===========
</TABLE>
(a) Data processing revenues, for services provided to the banking segment
and certain other operating areas by the data processing subsidiary, are
eliminated in the consolidated statement of income.
(b) The primary external source of other non-interest income is fees
related to the gift certificate operation. In 1999, other
non-interest income also includes settlement proceeds related to the
discontinuance of a processing agreement between the Company and
the purchaser of the money order subsidiary. In 1998, other
non-interest income also includes a gain on the sale of the money
order subsidiary (See Note 5).
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This item discusses the results of operations for the Company
for the three and six months ended June 30, 1999, and compares
those periods with the same periods of the previous year. In
addition, the discussion describes the significant changes in the
financial condition of the Company at June 30, 1999 as compared to
December 31, 1998. This discussion should be read in conjunction
with the unaudited consolidated financial statements and
accompanying notes presented in Part I, Item 1 of this report.
RESULTS OF OPERATIONS
Net income for the three months ended June 30, 1999 was
$5.692 million compared to $6.308 million for the three months
ended June 30, 1998. Net income for the six months ended June
30, 1999 was $11.310 million compared to $11.433 million for the
six months ended June 30, 1998.
Net income for the three and six month periods ended June 30,
1999 and 1998 includes non-recurring revenue related to the sale of
the Company's money order subsidiary. As a result of this non-
recurring revenue, net income declined in 1999 and the resultant
diluted net income per share for the three month and six month
periods ended June 30, 1999 declined 10% and 1.8%, respectively,
compared to 1998. In 1998, a $4.2 million gain on the sale of the
subsidiary was recognized and in 1999, the Company recognized as
income, the settlement proceeds of $1.8 million related to the
discontinuance of a processing agreement between the Company and
the purchaser of the money order subsidiary.
The Company had improvement in operating net income for the
three and six months ended June 30, 1999, compared to the same
periods in 1998. Excluding the non-recurring revenue, operating
net income in 1999 increased 13.7% for the quarter and 15.0% for
the six month period.
The improved operating performance is attributed primarily
to the following factors:
*Increases in tax equivalent net interest income of 8.5% and 6.3%
for the quarter and six month periods, respectively.
*Increases in the core components of non-interest income of 4.4%
and 11.7% for the quarter and the six month periods, respectively.
*Decreases in other operating expenses of 6.5% and 3.1% for the
quarter and six month periods, respectively.
These positive factors were partially offset by an increase
in the provision for loan losses. In the second quarter of
1999, the provision for loan losses increased $.970 million from
$.500 million in 1998 to $1.470 in 1999. For the six months
ended June 30, 1999, the provision for loan losses increased
$1.251 million from $.500 million in 1998 to $1.751 in 1999.
The table below reflects operating results excluding the
previously discussed non-recurring revenue items.
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
---------------------------------- ----------------------------------
1999 1998 % Chg 1999 1998 % Chg
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net income (in 1000s) $5,692 $6,308 -9.8% $11,310 $11,433 -1.1%
Non-recurring revenue, net
of taxes (in 1000s) (1,051) (2,225) -52.8% (1,051) (2,515) -58.2%
---------- ---------- ---------- ----------
Net income excluding
non-recurring revenue (in 1000s) $4,641 $4,083 13.7% $10,259 $8,918 15.0%
========== ========== ========== ========== ========== ==========
Diluted net income per share $0.54 $0.60 -10.0% $1.08 $1.10 -1.8%
Non-recurring revenue, net of taxes
on a diluted per share basis (0.10) (0.21) -52.4% (0.10) (0.24) -58.3%
---------- ---------- ---------- ----------
Diluted net income per share
excluding non-recurring revenue $0.44 $0.39 12.8% $0.98 $0.86 14.0%
========== ========== ========== ========== ========== ==========
</TABLE>
Net Interest Income
Net interest income is the difference between interest earned
on earning assets and interest expensed on interest bearing
liabilities. The net interest spread is the difference between the
average rate of interest earned on earning assets and the average
rate of interest expensed on interest bearing liabilities. The net
yield on earning assets (interest margin) is net interest income
divided by average earning assets. The following table summarizes
the above for the three and six months ended June 30, 1999 and 1998.
<TABLE>
<CAPTION>
Dollars in thousands Three Months Ended Six Months Ended
June 30 June 30
---------------------- -----------------------
1999 1998 1999 1998
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Total interest income $28,955 $27,541 $57,196 $55,557
Tax equivalent adjustment 455 452 913 901
-------- -------- -------- --------
Tax equivalent interest income 29,410 27,993 58,109 56,458
Total interest expense 12,929 12,798 25,816 26,091
-------- -------- -------- --------
Tax equivalent net interest income $16,481 $15,195 $32,293 $30,367
======== ======== ======== ========
Average rate on earning assets 7.87% 8.40% 7.83% 8.37%
Average rate on interest
bearing liabilities 4.30% 4.77% 4.34% 4.81%
Net interest spread, annualized 3.57% 3.63% 3.49% 3.56%
Net interest margin, annualized 4.41% 4.56% 4.35% 4.50%
Average earning assets $1,499,971 $1,340,061 $1,497,685 $1,363,514
Average interest bearing liabilities $1,205,471 $1,077,273 $1,200,471 $1,093,319
</TABLE>
Net interest income on a tax equivalent basis increased
$1,286,000 or 8.5% for the quarter and $1,926,000 or 6.3% for the
six month period, as the Company benefited from higher earning
asset volume. During the quarter and six month periods of 1999,
average earning assets increased 11.9% and 9.8%, respectively,
compared to 1998. Average earning asset growth for the quarter
and six month periods included loan growth of $100.2 million and
$102.6 million, respectively. For both periods, approximately
55% of the growth is related to retail loans and is primarily
attributed to indirect automobile lending activities. The
remaining loan growth is associated with commercial lending
activities. Partially offsetting the benefit of volume increases
was the impact of lower interest rates in 1999 than in 1998, on
both new and repricing assets and liabilities. For the second
quarter of 1999, compared to the same period in 1998, the net
interest margin declined 15 basis points to 4.41% and for the six
months ended June 30, 1999, compared to the same period in 1998,
the net interest margin declined 15 basis points to 4.35%.
Allowance for Loan Losses and Provision for Loan Losses
The allowance for loan losses is maintained at a level which
Management believes is 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 each segment 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 was $9,278,000 and
0.92% of loans as of June 30, 1999 compared to $9,010,000 and 0.90%
of loans at December 31, 1998. The allowance for loan losses was
228% of non-performing loans at June 30, 1999. Non-performing
loans were $4.1 million and 0.40% of loans outstanding at June 30,
1999, compared to $4.5 million and 0.44% at December 31, 1998. Net
loans charged-off were $1.253 million in the second quarter of 1999
and $1.483 million for the six months ended June 30, 1999, compared
to $340,000 in the second quarter of 1998 and $374,000 for the six
months ended June 30, 1998. The second quarter provision for loan
losses in 1999 was $1,470,000 compared to $500,000 in 1998. For
the six months ended June 30, 1999, the provision for loan losses
was $1,751,000 compared to $500,000 for the same period in 1998.
The increase in the provision for loan losses related to the
increased level of charged-off loans. Net loans charged-off
related to indirect automobile lending activities were $410,000 for
the second quarter of 1999 and $624,000 for the six month period
ended June 30, 1999. There were no charge-offs related to indirect
automobile lending activities for the June 1998 period. The second
quarter of 1999 also includes a loan charge-off of $730,000 related
to a loss on the sale of a problem loan.
An analysis of the changes in the allowance for loan losses
and selected ratios follows:
Dollars in thousands Six Months Ended
June 30
----------------------
1999 1998
---------- ----------
Balance at January 1 $9,010 $9,209
Loans charged off ($1,639) ($459)
Recoveries $156 $85
-------- --------
Net loans charged off ($1,483) ($374)
Provision for loan losses $1,751 $500
-------- --------
Balance June 30 $9,278 $9,335
======== ========
Average loans, net of unearned income $1,002,604 $900,009
Provision for loan losses to average loans 0.17% 0.06%
Allowance for loan losses to average loans 0.93% 1.04%
Allowance for loan losses to period-end loans 0.92% 1.02%
Non-interest Income and Other Operating Expenses
The following table sets forth the major components of non-
interest income and other operating expenses for the three and six
months ended June 30, 1999 and 1998:
<TABLE>
<CAPTION>
In thousands Three Months Ended Six Months Ended
June 30 June 30
---------------------- ----------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Non-Interest Income:
Income from trust department $651 $574 $1,316 $1,114
Service charges on deposit accounts 1,494 1,339 2,898 2,607
Gift certificate fees 388 71 716 121
Securities gains 2 -- 15 27
Settlement proceeds (1999) / gain on sale
of money order subsidiary (1998) 1,800 3,777 1,800 4,213
Gains on sales of other real estate 159 190 1,000 814
Money order processing fees 120 498 300 913
Other 895 917 2,209 1,893
---------- ---------- ---------- ----------
Total non-interest income $5,509 $7,366 $10,254 $11,702
========== ========== ========== ==========
Other Operating Expenses:
Salaries and employee benefits $7,068 $7,191 $14,037 $13,898
Occupancy expenses 826 735 1,619 1,471
Furniture and equipment expenses 1,129 1,134 2,293 2,177
Advertising and marketing 318 757 649 1,267
Operating supplies 339 387 697 816
Legal and professional fees 350 907 738 1,563
Taxes, other than income taxes 387 297 745 676
Other 1,316 1,144 2,788 2,449
---------- ---------- ---------- ----------
Total other operating expenses $11,733 $12,552 $23,566 $24,317
========== ========== ========== ==========
</TABLE>
Excluding the non-recurring revenue related to the money
order subsidiary sale and gains on real estate sales (see "Non-
performing Loans and Assets"), non-interest income in the second
quarter of 1999 increased $150,000 or 4.4% over the second
quarter of 1998 and non-interest income for the six months ended
June 30, 1999, increased $779,000 or 11.7% over 1998. Trust
Department income increased $77,000 or 13.4% for the quarter and
$202,000 or 18.1% for the six month period as assets under
management continued to increase with continuing business
development activities. Deposit service charges increased
$155,000 or 11.6% for the quarter and $291,000 or 11.2% for the
six month period due to an expanding customer base and increased
service charge rates in effect since the third quarter of 1998.
Service charges on dormant gift certificates, recognized starting
in the fourth quarter of 1998, caused a $317,000 increase in the
second quarter and a $595,000 increase for the six month period
in the level of gift certificate income. Bank card and merchant
fees increased $79,000 or 25% for the quarter and $273,000 or 33%
for the six month period as the retail card base and the merchant
network continued to expand. Processing fees for services
provided to the purchaser of the money order subsidiary declined
$378,000 for the quarter and $613,000 for the six month period.
These services will be phased out by the fourth quarter of 1999.
Other operating expenses declined $819,000 or 6.5% for the
quarter and $751,000 or 3.1% for the six month period. Declines
in legal and advertising costs contributed to these overall
operating expense reductions. Legal costs declined $555,000 for
the quarter and $846,000 for the six month period as discovery
efforts in one ongoing litigation matter were concluded in early
1999. Advertising costs in 1999 moved back to historical levels,
while 1998 had the additional cost of a new image campaign.
Advertising expenses declined $439,000 for the quarter and
$618,000 for the six month period. Salaries and benefits
decreased $123,000 for the quarter and increased $139,000 or 1%
for the six month period. Normal salary increases effective in
April 1999 averaged 4.2%. However, lower personnel costs for the
Year 2000 project and controlled staffing levels minimized the
impact of salary increases. Staffing levels remained fairly
constant, with a year-to-date average FTE level of 622 in 1999
and 618 in 1998. Facilities maintenance expenses contributed to
the $149,000 year-to-date increase in occupancy expenses.
Variances in other expense categories were not significant.
Income Taxes
The Company had income tax expense of $2,640,000 for the
second quarter of 1999 compared to $2,749,000 for the same period
in 1998, which yielded effective tax rates of 31.7% for 1999 and
30.3% for 1998. The year-to-date tax expense and effective tax
rates were $5,007,000 and 30.7% for 1999, and $4,918,000 and 30.1%
for 1998, respectively.
FINANCIAL CONDITION
Total assets decreased approximately $55 million from December
31, 1998 to June 30, 1999, while average assets increased $108
million or 7.4% to $1.577 billion for the second quarter of 1999
compared to the last quarter of 1998. During the three and six
month periods ended June 30, 1999, average earning assets increased
approximately $160 million and $134 million respectively, compared
to the prior year periods. Average earning asset growth was funded
primarily from increases in average retail deposit products,
customer repurchase agreements and federal funds purchased during
the periods. For the six months ended June 30, 1999 compared to
the first six months of 1998 average asset growth included
increases in average commercial loans of $46 million, average
retail loans of $57 million, and average securities of $23 million.
For the second quarter of 1999 compared to 1998, average retail
loans increased $55 million, average commercial loans increased $45
million and the securities portfolios average increased $59
million.
Non-performing Loans and Assets
A summary of non-performing loans and assets follows:
Dollars in thousands June 30, 1999 December 31, 1998
------------- -----------------
Loans accounted for on a non-
accrual basis $2,111 $1,416
Restructured loans 822 --
Loans contractually past due
ninety days or more as to
interest or principal payments 1,132 3,050
-------- --------
Total non-performing loans 4,065 4,466
Other real estate held for sale 9,717 11,358
-------- --------
Total non-performing assets $13,782 $15,824
======== ========
Non-performing loans to total loans 0.40% 0.44%
Non-performing assets to total assets 0.90% 0.99%
Allowance for loan losses to non-
performing loans 228% 202%
Loans classified as impaired at June 30, 1999 aggregated $2.9
million and included all non-accrual and restructured loans. At
December 31, 1998, impaired loans aggregated $3.6 million. Loans
for which payments were current or less than 90 days past due,
where borrowers are currently experiencing financial difficulties,
were approximately $14 million at June 30, 1999 and $3.8 million at
December 31, 1998.
The Company considers the level of non-performing loans in its
evaluation of the adequacy of the allowance for loan losses.
Other real estate aggregated $9.7 million at June 30, 1999
and was principally comprised of properties acquired in
settlement of a related group of problem real estate development
loans in April 1996, and a completed condominium project acquired
in settlement of loans in November 1997.
The carrying value of real estate development property has
been substantially reduced through sales from an original value
of $15.2 million to $1.9 million at June 30, 1999. The Company
has contracts for additional property sales with closings
expected in the third quarter of 1999, which are expected to
further reduce carrying value by approximately $260,000. The
remaining portion of property is 15 acres of commercial property
with a carrying value of approximately $1.6 million. The
condominium project involves 31 (44 originally) completed and
readily marketable units and 7.5 acres of adjacent developed
land. This riverfront development has a carrying value of $7.2
million. Management has taken recent action to provide for
enhanced marketing of these properties.
Gains on sales of real estate held for sale were $159,000
and $190,000 for the second quarter of 1999 and 1998,
respectively, and $1 million and $814,000 for the six months
ended June 30, 1999 and 1998, respectively.
LIQUIDITY
Liquidity represents the Company's ability to generate cash or
otherwise obtain funds at a reasonable price to satisfy commitments
to borrowers as well as demands of depositors. The loan and
securities portfolios are managed to provide liquidity through
maturity or payments related to such assets.
The parent Company's liquidity depends primarily on the
dividends paid to it as the sole shareholder of Bank of Louisville.
CAPITAL RESOURCES
At June 30, 1999, shareholders' equity totaled $173,665,000,
an increase of $6.2 million since December 31, 1998. Net income of
$11.3 million after cash dividends of $4.5 million provided $6.8
million of the increase. Since December 31, 1998, the Company's
available for sale securities portfolio had net unrealized losses,
net of taxes, that decreased shareholders' equity $1.459 million.
Proceeds and tax benefits from stock options exercised added
$906,000 to shareholders' equity in 1999.
The Company's capital ratios exceed minimum regulatory
requirements and are as follows:
Company Company
June 30, December 31, Minimum
1999 1998 Required
-------- -------- --------
Leverage Ratio 11.2% 11.5% 4.0%
Tier I risk based capital ratio 15.1% 14.2% 4.0%
Total risk based capital ratio 15.9% 15.0% 8.0%
YEAR 2000
During 1999, the Company continued with its organization-wide
program of preparing its systems for Year 2000 compliance and
developing detailed plans to address the possible business
exposures related to the Year 2000 issue. A detailed description
of the Company's Year 2000 program is set forth in the Company's
1998 Annual Report and Form 10-K.
As of June 30, 1999, the Company had completed all phases of
its Year 2000 program for mission critical mainframe and
distributed applications. The full implementation phase for one
mission critical PC application remains to be completed as of June
30, 1999. The table below indicates the extent to which mission
critical applications were compliant (remediated, tested and implemented)
at June 30, 1999 and the estimated status for September 30, 1999.
MISSION CRITICAL APPLICATION SUMMARY
Percent of Applications Year 2000 Compliant
Category 6-30-99 (Actual) 9-30-99 (Estimated)
---------------- -------------------
Mainframe applications 100% 100%
Distributed applications 100% 100%
PC applications 96% 100%
The Company has continued its review of Year 2000 issues with
its major business relationships, significant loan and deposit
customers, counterparties, intermediaries and vendors with whom it
has important financial and operational relationships to determine
the extent to which they are vulnerable to Year 2000 issues. Based
on this review (and assuming the accuracy of the responses and
representations), as of June 30, 1999, the Company does not expect
any material adverse impact from third-party Year 2000 non-
compliance. In addition, the Company has communicated with its
customer base and plans additional communications as necessary.
The Company has incurred internal staff costs as well as
consulting, new hardware and software expenses, and other expenses
related to this program. A portion of these costs are not
incremental costs to the Company, but rather represent the
redeployment of existing information technology and business unit
resources. A summary of costs incurred on the project through June
30, 1999 and estimated future costs is as follows:
In thousands Costs Incurred
Through Estimated
June 30, 1999 Future Costs Total
-------------- -------- -----------
IT Personnel Resources $1,788 $610 $2,398
Business Unit Personnel Resources 324 130 454
External Contractors / Consultants 120 60 180
Replacement Software 385 65 450
Replacement / Upgrade Hardware 1,034 139 1,173
Other Costs 43 109 152
----------- ----------- -----------
$3,694 $1,113 $4,807
=========== =========== ===========
Project costs increased $243,000 during the second quarter of
1999. Portions of the above costs relate to capital items that are
depreciated over useful lives. Accordingly, project costs are not
representative of amounts being presently expensed. For the three
months ended June 30, 1999, $394,000 of the Year 2000 project costs
were expensed, including $148,000 of depreciation and approximately
$63,000 of costs for time spent by existing personnel devoted to
this program. For the six months ended June 30, 1999, $787,000 of
the Year 2000 project costs were expensed, including $251,000 of
depreciation and $170,000 of costs for time spent by existing
personnel.
Although the Company does not presently anticipate a material
business interruption as a result of the Year 2000 issue, there are
many risks associated with the Year 2000 issue, including the
possibility of a failure of the Company's computer and non-
information technology systems. The Company's progress with respect
to internal systems shown on the previous page has significantly
mitigated these risks. The greatest risks at this point are
failures of third parties to remediate their own Year 2000 issues.
The failure of third parties with which the Company has financial
or operational relationships such as securities exchanges, clearing
organizations, depositories, regulatory agencies, banks, clients,
counterparties, vendors and utilities, to remediate their computer
and non-information technology systems issues in a timely manner
could result in a material financial risk to the Company. If the
above mentioned risks are not remedied, the Company may experience
business interruption, financial loss, regulatory actions, damage
to its franchise and legal liability. While it is difficult to
predict with reasonable accuracy what failures may occur, the
Company believes that the continuance of sufficient planning,
communication, coordination and testing will mitigate potential
material disruption. The Company has business continuity plans in
place that cover its current operations, and Year 2000 specific
contingency planning has been completed.
The above disclosure is designated as a Year 2000 Readiness
Disclosure as that term is used in the Year 2000 Information and
Readiness Disclosure Act.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's June 30, 1999 analysis of the impact of changes
in interest rates on net interest income over the next 12 months
indicates an increasing exposure to changing interest rates since
March 31, 1999 and December 31, 1998. The table below illustrates
the simulation analysis of the impact of a 50 or 100 basis point
upward or downward movement in interest rates. The impact of the
rate movement was simulated as if rates changed immediately from
June 30, 1999 levels, and remained constant at those levels
thereafter.
<TABLE>
<CAPTION>
Movement in interest
rates from June 30, 1999 rates
-----------------------------------------------
Increase Decrease
+50bp +100bp -50bp -100bp
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net interest income increase (decrease) (in 1000's) ($964) ($1,384) ($456) ($44)
Net income per share increase (decrease) ($0.06) ($0.09) ($0.03) $0.00
</TABLE>
Forward Looking Statements
The statements contained in this filing that are not purely
historical are forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, including statements regarding the
Company's expectations, hopes, beliefs, intentions or strategies
regarding the future. All forward-looking statements included in
this document are based on information available to the Company on
the date hereof, and the Company assumes no obligation to update
any such forward-looking statement. It is important to note that
the Company's actual results could differ materially from those in
such forward-looking statement. Factors that could cause actual
results to differ materially from those projected include, among
others, the effects of Year 2000 software failures; its customer
concentration; cyclicality; fluctuation of interest rates; risk of
business interruption; adequacy of the allowance for loan losses;
valuation of other real estate; dependence on key personnel; and
government regulation.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The regular annual meeting of shareholders of MidAmerica
Bancorp was held on April 22, 1999.
(b) Proxies for the meeting were solicited pursuant to
Section 14(a) of the Securities Exchange Act of 1934 and
there was no solicitation in opposition to management's
solicitations. All of management's nominees for
directors were elected.
(c) The following items were submitted to a vote of security
holders as follows:
(1) Election of 6 persons as Class II directors of
MidAmerica Bancorp for terms expiring at the 2002
annual meeting of shareholders and election of 1
person as a Class I director for a term expiring at
the 2001 annual meeting of shareholders.
Class I For Withheld
Wendell H. Ford 8,075,884 364,774
Class II
James E. Cain 8,403,726 36,932
Donald G. McClinton 8,407,506 33,152
Jerome J. Pakenham 8,407,506 33,152
John S. Palmore 8,403,656 37,002
Woodford R. Porter, Sr. 8,407,302 33,356
Raymond L. Sales 8,407,302 33,356
(2) Amendment to Articles of Incorporation. To increase
the number of authorized shares of the Company's
Common Stock from 12 million to 15 million.
For 8,128,533
Against 87,433
Abstain 224,692
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10 Material Contracts
10(a) Employment Agreement between the Company and
Donald L. LaMar dated April 1, 1998.
10(b) Employment Agreement between the Company and
David C. Meece dated April 1, 1998.
10(c) Employment Agreement between the Company and
Marlyn Y. Smith dated November 1, 1998.
27 Financial Data Schedule
(b) Reports on Form 8-K
There were no reports filed on Form 8-K during the second
quarter of 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
Mid-America Bancorp
(Registrant)
Date: August 12, 1999 By:/s/ Steven Small
Steven Small
Treasurer
Date: August 12, 1999 By:/s/ Rick Guillaume
R.K. Guillaume
Chief Executive Officer
INDEX TO EXHIBITS
10(a) Employment Agreement between the Company and
Donald L. LaMar dated April 1, 1998.
10(b) Employment Agreement between the Company and
David C. Meece dated April 1, 1998.
10(c) Employment Agreement between the Company and
Marlyn Y. Smith dated November 1, 1998.
27 Financial Data Schedule
EXHIBIT 10(a)
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into as of the 1st day of
April, 1998 by and between MIDAMERICA BANCORP, INC., a Kentucky
corporation ("Bancorp"), and MIDAMERICA GIFT CERTIFICATE COMPANY,
a Kentucky corporation, ("GIFTCO" and together with their
successors and assigns permitted under this Agreement, the
"Companies"), and DONALD R. LAMAR (the "Executive").
W I T N E S S E T H:
WHEREAS, the Companies desire to continue the employment of
the Executive and to enter into an agreement embodying the terms of
such employment (this "Agreement"), and the Executive desires to
enter into this Agreement and accept such continued employment,
subject to the terms and provisions of 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 7 hereof, "Base
Salary" shall mean the salary provided for in Section 4
below or any increased salary granted to the Executive
pursuant to Section 4.
(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 Bancorp or GIFTCO,
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, after the date hereof 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 Bancorp;
(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) Bancorp 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 Bancorp 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) Bancorp 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(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 3 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 of Bancorp
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 the principal office of Bancorp,
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 2 below.
2. Term of Employment.
The employment of the Executive will continue for thirty-six
months from the date hereof or until the earlier termination of his
employment in accordance with the terms of this Agreement.
Thereafter, if not so terminated, employment shall be renewed for
successive thirty-six month periods or until the earlier
termination in accordance with the terms of this Agreement.
3. Position. Duties and Responsibilities.
(a) During the term of Employment, the Executive shall
continue to be employed as Executive Vice President of
Bancorp and President of GIFTCO 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
Executive Vice President of Bancorp or as President of
GIFTCOor any other office to which he may be elected or
appointed.
4. Base Salary.
The Executive shall be paid an annualized Base Salary, payable
in accordance with the regular payroll practices of the Companies,
of $123,300. 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.
5. 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.
6. 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.
7. 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 pension benefit that may become due pursuant to
Section 5 above, determined as of the date of such
termination;
(iii) 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 thirty-six months 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).
(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 5 above;
(vi) Continued accrual of credited service for the
purpose of the pension benefit provided under
Section 6 for thirty-six months;
(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 7(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
7(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 7(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 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 a sum equal to three times Base Salary. A
voluntary termination under this Section 7(c) shall be
effective upon 30 days prior notice to the Companies and
shall not be deemed a breach of this Agreement;
(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
7(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 7(b) above
following a Change in Control, 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 shall be adjusted pursuant to this Section 7(e)
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.
(f) Upon termination pursuant to Section 7(b), 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, if any, to the purchase of
the car.
(g) No Mitigation - No Offset. In the event of any
termination of employment under this Section 7, 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 7.
(h) Nature of Payments. Any amounts due under this Section 7
are in the nature of severance payments considered to be
reasonable by the Companies and are not in the nature of
a penalty.
8. 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 9(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.
9. Non-Competition. The Parties recognize that in the
course of Executive's employment with the Companies, Executive
has had and will continue to have access to a substantial amount
of confidential and proprietary information and trade secrets
relating to the business of GIFTCO, and that it would be
detrimental to the business of the Companies, and have a
substantial detrimental effect on the value to the Companies of
Executive's employment, if Executive were to compete with GIFTCO
upon termination of his employment. Executive therefore agrees,
in consideration of the Companies entering this Agreement and
establishing the additional provisions and protections outlined
above, that during the period of the term of his employment with
the Companies, whether pursuant to this Agreement or otherwise,
and for a period of three years thereafter, if and only if
Executive voluntarily terminates his employment or his employment
is terminated for cause, he shall not, without the prior written
consent of the Companies, directly as principal, partner,
director, or stockholder or through any corporation, partnership,
or other entity (including, without limitation, a sole
proprietorship), engage or participate in, or assist in any
manner or in any capacity, or have any interest in or make any
loan to, or otherwise be related with, any person, firm,
corporation, association, or other entity engaged in any business
competing in any material way with the business of GIFTCO as such
business exists as of the date of termination of employment. The
Parties recognize that the business of GIFTCO at the present time
is limited to specific geographical locations, but that the
intent and plans of GIFTCO are to market its products on a
nation-wide basis. The geographic limitation of this provision is
intended to be co-extensive with the actual scope of its
geographical operations at the time of termination of employment.
The Parties believe, in light of the facts known as of the date
of this Agreement, and after considering the nature and extent of
the Companies' business, the amount of compensation and other
benefits provided herein, and the damage that could be done to
the Companies' business by Executive's competing with the
Companies, that the foregoing covenant not to compete is
reasonable in time, scope, and geographical limitation. However,
if any court should construe the time, scope, or geographical
limitation of the covenant not to compete to be too broad or
extensive, it is the intention of the Parties that the contract
be automatically reformed, and as so reformed, enforced, to the
maximum limits which may be found to be reasonable by such court.
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: DONALD R. LAMAR
_______________________
_______________________
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first written above.
MIDAMERICA BANCORP, INC.
By: /s/ R. K. Guillaume
Title: Vice Chairman and CEO
MIDAMERICA GIFT CERTIFICATE COMPANY
By: /s/John Rippy
Title: Secretary
/s/ Donald R. LaMar
DONALD R. LAMAR
EXHIBIT 10(b)
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into as of the 1st day of
April, 1998 by and between MIDAMERICA BANCORP, INC., a Kentucky
corporation and BANK OF LOUISVILLE, a Kentucky Combined Bank and
Trust Company, (together with their successors and assigns
permitted under this Agreement, the "Companies"), and DAVID C.
MEECE (the "Executive").
W I T N E S S E T H:
WHEREAS, the Companies desire to continue the employment of
the Executive and to enter into an agreement embodying the terms of
such employment (this "Agreement"), and the Executive desires to
enter into this Agreement and accept such continued employment,
subject to the terms and provisions of 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 7 hereof, "Base
Salary" shall mean the salary provided for in Section 4
below or any increased salary granted to the Executive
pursuant to Section 4.
(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, after the date hereof 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 7(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 3 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 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 2 below.
2. Term of Employment.
The employment of the Executive will continue for thirty-six
months from the date hereof or until the earlier termination of his
employment in accordance with the terms of this Agreement.
Thereafter, if not so terminated, employment shall be renewed for
successive thirty-six month periods or until the earlier
termination in accordance with the terms of this Agreement.
3. 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.
4. Base Salary.
The Executive shall be paid an annualized Base Salary, payable
in accordance with the regular payroll practices of the Companies,
of $115,000. 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.
5. 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.
6. 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.
7. 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 pension benefit that may become due pursuant to
Section 5 above, determined as of the date of such
termination;
(iii) 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 thirty-six months 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).
(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 for thirty-six months;
(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);
(C) 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 7(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
7(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 7(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 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 a sum equal to three times Base Salary. A
voluntary termination under this Section 7(c) shall be
effective upon 30 days prior notice to the Companies and
shall not be deemed a breach of this Agreement;
(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
7(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 7(b) above
following a Change in Control, 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 shall be adjusted pursuant to this Section 7(e)
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.
(f) Upon termination pursuant to Section 7(b), 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, if any, to the purchase of
the car.
(g) No Mitigation - No Offset. In the event of any
termination of employment under this Section 7, 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 7.
(i) Nature of Payments. Any amounts due under this Section 7
are in the nature of severance payments considered to be
reasonable by the Companies and are not in the nature of
a penalty.
8. 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 9(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.
9. Non-Competition. The Parties recognize that in the
course of Executive's employment with the Bank, Executive has had
and will continue to have access to a substantial amount of
confidential and proprietary information and trade secrets
relating to the business of the Bank, and that it would be
detrimental to the business of the Bank, and have a substantial
detrimental effect on the value to the Bank of Executive's
employment if Executive were to compete with the Bank upon
termination of his employment. Executive therefore agrees, in
consideration of the Bank entering this Agreement and
establishing the additional provisions and protections outlined
above, that during the period of the term of his employment with
the Bank, whether pursuant to this Agreement or otherwise, and
for a period of three years thereafter, if and only if Executive
voluntarily terminates his employment or his employment is
terminated for cause, he shall not, without the prior written
consent of the Bank, directly as principal, partner, director, or
stockholder or through any corporation, partnership, or other
entity (including, without limitation, a sole proprietorship),
engage or participate in, or assist in any manner or in any
capacity, or have any interest in or make any loan to, or
otherwise be related with, any person, firm, corporation,
association, or other entity engaged in any business in the
Commonwealth of Kentucky competing in any material way with the
business of the Bank as such business exists as of the date of
termination of employment.
The Parties believe, in light of the facts known as of the date
of this Agreement, and after considering the nature and extent of
the Bank's business, the amount of compensation and other
benefits provided herein, and the damage that could be done to
the Bank's business by Executive's competing with the Bank, that
the foregoing covenant not to compete is reasonable in time,
scope, and geographical limitation. However, if any court should
construe the time, scope, or geographical limitation of the
covenant not to compete to be too broad or extensive, it is the
intention of the Parties that the contract be automatically
reformed, and as so reformed, enforced, to the maximum limits
which may be found to be reasonable by such court.
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 C. MEECE
_______________________
_______________________
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first written above.
MIDAMERICA BANCORP, INC.
By: /s/ R. K. Guillaume
Title: Vice Chairman and CEO
BANK OF LOUISVILLE
By: /s/ R. K. Guillaume
Title: Vice Chairman and CEO
/s/ David C. Meece
DAVID C. MEECE
EXHIBIT 10(c)
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into as of the 1st day of
November, 1998, by and between MIDAMERICA BANCORP, INC., a Kentucky
corporation and BANK OF LOUISVILLE, a Kentucky Combined Bank and
Trust Company, (together with their successors and assigns, the
"Companies"), and MARLYN Y. SMITH (the "Executive").
1. Term of Employment.
The employment of the Executive will continue for twelve
months from the date hereof or until the earlier termination of her
employment in accordance with the terms of this Agreement.
Thereafter, if not so terminated, employment shall be renewed for
successive twelve month periods or until the earlier termination in
accordance with the terms of this Agreement.
2. Salary.
The Executive shall be paid an annualized Base Salary, payable
in accordance with the regular payroll practices of the Companies,
of $106,000. The Base Salary shall be reviewed no less frequently
than annually for increase at the sole discretion of the Board and
its Executive Compensation Committee. Executive will continue to
participate in the benefit and bonus programs of the Companies.
3. 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 a lump sum equal
to three times Base Salary. Also, immediately following a Change in
Control, all amounts, entitlements or benefits in which she is not
yet vested shall become fully vested. In addition, if Executive
continues in the employ of the Companies for a period of two years
following the effective date of the Change in Control, she may then
voluntarily terminate her employment and in such a case would
receive a sum equal to three times Base Salary. A voluntary
termination under this Section 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, "Change in Control"
means that Bertram W. Klein (including his spouse, children,
grandchildren, or any trusts established for the benefit of any of
them) cease to hold ten percent (10%) or more of all outstanding
voting shares of Bancorp.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first written above.
MIDAMERICA BANCORP, INC.
By: /s/ Bertram W. Klein
Title: Chairman of the Board
BANK OF LOUISVILLE
By: /s/ Bertram W. Klein
Title: Chairman of the Board
/s/ Marlyn Y. Smith
MARLYN Y. SMITH
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