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 September 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 Identification No.)
incorporation or organization)
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.
October 31, 1999: 10,318,357 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 - September 30, 1999 and December
31, 1998
Consolidated statements of income three and nine months
ended September 30, 1999 and 1998
Consolidated statements of changes in shareholders' equity
nine months ended September 30, 1999 and 1998
Consolidated statements of comprehensive income three and
nine months ended September 30, 1999 and 1998
Consolidated statements of cash flows - nine months ended
September 30, 1999 and 1998
Notes to consolidated financial statements
CONSOLIDATED BALANCE SHEETS
In thousands, except share and per share amounts
Unaudited
<TABLE>
<CAPTION>
September 30 December 31
----------- -----------
1999 1998
ASSETS ----------- -----------
<S> <C> <C>
Cash and due from banks $26,444 $39,644
Federal funds sold 8,400 --
Securities purchased under agreements to resell -- 35,000
Securities available for sale, amortized cost
of $389,922 (1999) and $382,580 (1998) 389,579 385,767
Securities held to maturity, market value
of $4,019 (1998) and $84,013 (1998) 4,026 83,998
Loans, net of unearned income 1,037,066 1,005,021
Allowance for loan losses (9,300) (9,010)
----------- -----------
Loans, net 1,027,766 996,011
Premises and equipment 21,975 21,854
Other assets 36,031 32,489
----------- -----------
TOTAL ASSETS $1,514,221 $1,594,763
=========== ===========
LIABILITIES
Deposits:
Non-interest bearing $135,925 $165,072
Interest bearing 824,238 788,852
----------- -----------
Total deposits 960,163 953,924
Securities sold under agreements to repurchase 219,540 276,454
Federal funds purchased 31,885 12,090
Advances from the Federal Home Loan Bank 70,588 74,862
Gift certificates outstanding 39,420 95,127
Accrued expenses and other liabilities 16,186 14,870
----------- -----------
TOTAL LIABILITIES 1,337,782 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 - 10,318,357
shares (1999); 10,246,157 shares (1998) 28,616 28,416
Additional paid-in capital 124,648 123,905
Retained earnings 23,398 13,043
Accumulated other comprehensive income (loss) (223) 2,072
----------- -----------
TOTAL SHAREHOLDERS' EQUITY 176,439 167,436
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,514,221 $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 Nine months ended
September 30 September 30
------------------ ------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans $23,093 $22,190 $67,903 $64,210
Interest and dividends on:
Taxable securities 5,071 3,836 12,501 12,120
Tax-exempt securities 718 709 2,140 2,130
Interest on federal funds sold 70 125 179 471
Interest on securities purchased under
agreements to resell 413 1,161 3,838 4,647
-------- -------- -------- --------
Total interest income 29,365 28,021 86,561 83,578
-------- -------- -------- --------
INTEREST EXPENSE:
Interest on deposits 8,407 8,792 24,752 25,954
Interest on federal funds purchased
and securities sold under
agreements to repurchase 3,326 2,947 10,599 9,833
Interest on Federal Home
Loan Bank advances 1,059 1,169 3,257 3,212
-------- -------- -------- --------
Total interest expense 12,792 12,908 38,608 38,999
-------- -------- -------- --------
Net interest income before
provision for loan losses 16,573 15,113 47,953 44,579
Provision for loan losses 590 -- 2,341 500
-------- -------- -------- --------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 15,983 15,113 45,612 44,079
-------- -------- -------- --------
NON-INTEREST INCOME:
Income from trust department 690 643 2,006 1,757
Service charges on deposit accounts 1,561 1,434 4,459 4,041
Gift certificate fees 620 56 1,336 177
Securities gains 6 3 21 30
Other 1,316 1,372 6,625 9,205
-------- -------- -------- --------
Total non-interest income 4,193 3,508 14,447 15,210
-------- -------- -------- --------
OTHER OPERATING EXPENSES:
Salaries and employee benefits 7,203 7,318 21,240 21,216
Occupancy expense 798 794 2,417 2,265
Furniture and equipment expenses 1,162 1,061 3,455 3,238
Other 2,995 3,246 8,612 10,017
-------- -------- -------- --------
Total other operating expenses 12,158 12,419 35,724 36,736
-------- -------- -------- --------
Income before income taxes 8,018 6,202 24,335 22,553
Income tax expense 2,175 1,792 7,182 6,710
-------- -------- -------- --------
NET INCOME $5,843 $4,410 $17,153 $15,843
======== ======== ======== ========
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic 10,317 10,227 10,301 10,208
Diluted 10,448 10,418 10,443 10,429
NET INCOME PER COMMON SHARE
Basic $0.57 $0.43 $1.67 $1.55
Diluted 0.56 0.42 1.64 1.52
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>
Nine months
ended September 30
----------------------
1999 1998
---------- ----------
<S> <C> <C>
Balance, January 1 $167,436 $155,709
Net income 17,153 15,843
Other comprehensive income
(loss), net of tax (2,295) (657)
Cash dividends declared - $.44 (1999)
and $.41 (1998) (6,798) (6,246)
Stock options exercised, including
related tax benefits 943 805
---------- ----------
Balance, September 30 $176,439 $165,454
========== ==========
See notes to unaudited consolidated financial statements.
</TABLE>
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
In Thousands
Unaudited
<TABLE>
<CAPTION>
Three months Nine months
ended September 30 ended September 30
---------- ---------
1999 1998 1999 1998
---------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Net Income $5,843 $4,410 $17,153 $15,843
Other comprehensive income (loss), net of tax:
Unrealized gains (losses) on securities
available for sale:
Unrealized holding gains (losses)
arising during the period (832) 1,124 (2,281) (677)
Less reclassification adjustment for
gains included in net income (4) (2) (14) (20)
---------- ---------- --------- ---------
(836) 1,122 (2,295) (697)
Pension liability adjustment -- -- -- 40
---------- ---------- --------- ---------
Other comprehensive income (loss) (836) 1,122 (2,295) (657)
---------- ---------- --------- ---------
COMPREHENSIVE INCOME $5,007 $5,532 $14,858 $15,186
========== ========== ========= =========
See notes to unaudited consolidated financial statements.
</TABLE><PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
In Thousands
Unaudited
<TABLE>
<CAPTION> Nine months
ended September 30
----------------------
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES: ---------- ----------
<S> <C> <C>
Net income $17,153 $15,843
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation, amortization and accretion, net 3,293 4,031
Provision for loan losses 2,341 500
Federal Home Loan Bank stock dividend (893) (852)
Gains on sales of securities (21) (30)
Gains on sales of other real estate (1,371) (814)
Gain on sale of subsidiary -- (4,213)
Deferred taxes 456 (483)
Increase in interest receivable (1,931) (1,864)
Increase in other assets (3,842) (1,342)
Increase in accrued expenses and other liabilities 752 1,665
---------- ----------
Net cash provided by operating activities 15,937 12,441
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of securities available for sale (823,491) (81,710)
Proceeds from maturities of
securities available for sale 802,541 170,923
Proceeds from sales of securities available for sale 14,949 7,206
Purchases of securities held to maturity (501) (2,529)
Proceeds from maturities of securities held to maturity 80,500 76,000
Net cash proceeds from sale of subsidiary -- 8,134
Increase in customer loans (34,119) (63,641)
Proceeds from sales of other real estate 3,570 3,535
Payments for purchases of premises and equipment (2,363) (3,171)
---------- ----------
Net cash provided by investing activities 41,086 114,747
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits 6,239 16,601
Net decrease in securities sold
under agreements to repurchase (56,914) (72,272)
Net increase in federal funds purchased 19,795 8,965
Advances from the Federal Home Loan Bank 15,000 26,216
Repayment of advances from the Federal Home Loan Bank (19,274) (12,473)
Decrease in gift certificates outstanding (55,707) (43,000)
Stock options exercised 836 635
Dividends paid (6,798) (6,246)
---------- ----------
Net cash used in financing activities (96,823) (81,574)
---------- ----------
Net increase (decrease) in cash and cash equivalents (39,800) 45,614
Cash and cash equivalents at January 1 74,644 45,902
---------- ----------
Cash and cash equivalents at September 30 $34,844 $91,516
========== ==========
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
nine months ended September 30:
<TABLE>
<CAPTION>
In thousands, except per share amounts
Three months ended Nine months ended
September 30 September 30
------------------------ ------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net income, basic and diluted $5,843 $4,410 $17,153 $15,843
=========== =========== =========== ===========
Average shares outstanding 10,317 10,227 10,301 10,208
Effect of dilutive securities 131 191 142 221
Average shares outstanding including ----------- ----------- ----------- -----------
dilutive securities 10,448 10,418 10,443 10,429
=========== =========== =========== ===========
Net income per share, basic $0.57 $0.43 $1.67 $1.55
=========== =========== =========== ===========
Net income per share, diluted $0.56 $0.42 $1.64 $1.52
=========== =========== =========== ===========
</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>
September 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 $130,817 $130,805 $159,821 $160,415
Collateralized mortgage obligations 177,549 176,405 148,524 146,970
States and political subdivisions 50,966 51,776 50,609 54,738
Corporate obligations 10,241 10,244 4,634 4,652
Equity securities 20,349 20,349 18,992 18,992
----------- ----------- ----------- -----------
$389,922 $389,579 $382,580 $385,767
=========== =========== =========== ===========
</TABLE>
The amortized cost and market value of securities held to maturity are
summarized as follows:
<TABLE>
<CAPTION>
September 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 $4,026 $4,019 $83,998 $84,013
=========== =========== =========== ===========
</TABLE>
4.Activity in the allowance for loan losses for the nine months
ended September 30, 1999 and year ended December 31, 1998 follows:
<TABLE>
<CAPTION>
September 30, December 31,
In thousands 1999 1998
----------- -----------
<S> <C> <C>
Balance, January 1 $9,010 $9,209
Loans charged-off (2,284) (1,355)
Recoveries 233 184
----------- -----------
Net loans charged-off ($2,051) ($1,171)
Provision for loan losses 2,341 972
----------- -----------
Balance, end of period $9,300 $9,010
=========== ===========
</TABLE>
5.Significant components of other non-interest income and other operating
expenses are set forth below:
<TABLE>
<CAPTION>
Three months ended Nine months ended
In thousands September 30 September 30
------------------------ ------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Other non-interest income:
Settlement proceeds (1999)/ gain on
sale of money order subsidiary (1 $0 $0 $1,800 $4,213
Gains on sales of other real estat 371 0 1,371 814
Money order processing fees 90 354 390 1,267
Other 855 1,018 3,064 2,911
----------- ----------- ----------- -----------
$1,316 $1,372 $6,625 $9,205
=========== =========== =========== ===========
</TABLE>
Other non-interest income includes non-recurring revenue related to
the Company's sale of its money order subsidiary. For the nine
months ended September 30, 1998, the gain on the sale of the
subsidiary was recognized in the amount of $4,213,000. Other
non-interest income for the nine months ended September 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 Nine months ended
In thousands September 30 September 30
------------------------ ------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Other operating expenses:
Advertising and marketing $307 $416 $956 $1,683
Operating supplies 396 262 1,093 1,078
Legal and professional fees 633 739 1,371 2,302
Taxes, other than income taxes 412 341 1,157 1,017
Other 1,247 1,488 4,035 3,937
----------- ----------- ----------- -----------
$2,995 $3,246 $8,612 $10,017
=========== =========== =========== ===========
</TABLE>
6.Selected financial information by business segment for September 1999
and 1998 follows:
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30 September 30
In thousands ------------------------ ------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net interest income
Banking $15,777 $14,362 $45,433 $42,034
Other 788 753 2,520 2,550
Eliminations 8 (2) 0 (5)
----------- ----------- ----------- -----------
Total $16,573 $15,113 $47,953 $44,579
=========== =========== =========== ===========
Non-interest income
Banking $3,483 $3,093 $10,850 $9,568
Other (a) (b) 2,350 2,208 9,359 10,381
Eliminations (a) (1,640) (1,793) (5,762) (4,739)
----------- ----------- ----------- -----------
Total $4,193 $3,508 $14,447 $15,210
=========== =========== =========== ===========
Net income
Banking $5,509 $4,104 $14,484 $12,547
Other 325 307 2,668 3,300
Eliminations 9 (1) 1 (4)
----------- ----------- ----------- -----------
Total $5,843 $4,410 $17,153 $15,843
=========== =========== =========== ===========
Assets as of June 30
Banking $1,463,441 $1,400,161
Other 64,275 60,082
Eliminations (13,495) (54,173)
----------- -----------
Total $1,514,221 $1,406,070
=========== ===========
</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).
<PAGE>
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 nine months ended September 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 September 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 September 30, 1999 was
$5.843 million compared to $4.410 million for the three months
ended September 30, 1998. Net income for the nine months ended
September 30, 1999 was $17.153 million compared to $15.843
million for the nine months ended September 30, 1998.
Net income for the three and nine month periods ended
September 30, 1999 and 1998 includes non-recurring revenue related
to the sale of the Companys money order subsidiary and gains on
sales of other real estate. For the nine months ended September
30, 1998, a $4.2 million gain on the sale of the money order
subsidiary and $814,000 of gains on sales of other real estate were
recognized. For the nine month period ended September 30, 1999,
the Company recognized as income $1.8 million of settlement
proceeds related to the discontinuance of a processing agreement
between the Company and the purchaser of the money order
subsidiary, and $1.371 million of gains on sales of other real
estate. In the third quarter of 1999, there were gains of $371,000
on sales of other real estate.
The Company had substantial improvement in operating net
income for the three and nine months ended September 30, 1999,
compared to the same periods in 1998. Excluding the non-recurring
revenue items for the three and nine month periods of 1999 and 1998
discussed above, diluted net income per share reflects an increase
of 28.6% for the third quarter of 1999 compared with the third
quarter of 1998, and an increase of 17.9% for the nine months ended
September 30, 1999 compared with the same period in 1998.
The improved operating performance is attributed primarily to
the following:
*Increases in tax equivalent net interest income of 9.5%
and 7.4% for the quarter and nine month periods,
respectively.
*Increases in the core components of non-interest income
of 8.9% and 10.8% for the quarter and the nine month
periods, respectively.
*Decreases in other operating expenses of 2.1% and 2.8%
for the quarter and nine month periods, respectively.
These positive factors, which are discussed in more detail in
the following pages, were partially offset by an increase
in the provision for loan losses. In the third quarter of 1999,
the provision for loan losses was $.590 million, compared with
no provision in the third quarter of 1998. For the nine months
ended September 30, 1999, the provision for loan losses increased
$1.841 million from $.500 million in 1998 to $2.341 in 1999.
The table below reflects operating results excluding the
previously discussed non-recurring revenue items.
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30 Ended September 30
---------------------------------- ----------------------------------
1999 1998 % Chg 1999 1998 % Chg
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net income (in 1000s) $5,843 $4,410 32.5% $17,153 $15,843 8.3%
Non-recurring revenue, net
of taxes (in 1000s) (241) -- -- (1,943) (3,044) -36.2%
---------- ---------- ---------- ----------
Net income excluding
non-recurring revenue (in 1000s) $5,602 $4,410 27.0% $15,210 $12,799 18.8%
========== ========== ========== ========== ========== ==========
Diluted net income per share $0.56 $0.42 33.3% $1.64 $1.52 7.9%
Non-recurring revenue, net of taxes
on a diluted per share basis (0.02) -- -- (0.19) (0.29) -34.5%
---------- ---------- ---------- ----------
Diluted net income per share
excluding non-recurring revenue $0.54 $0.42 28.6% $1.45 $1.23 17.9%
========== ========== ========== ========== ========== ==========
</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 nine months ended September 30, 1999
and 1998.
<TABLE>
<CAPTION>
Dollars in thousands Three Months Ended Nine Months Ended
September 30 September 30
---------------------- -----------------------
1999 1998 1999 1998
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Total interest income $29,365 $28,021 $86,561 $83,578
Tax equivalent adjustment 459 440 1,372 1,340
-------- -------- -------- --------
Tax equivalent interest income 29,824 28,461 87,933 84,918
Total interest expense 12,792 12,908 38,608 38,999
-------- -------- -------- --------
Tax equivalent net interest income $17,032 $15,553 $49,325 $45,919
======== ======== ======== ========
Average rate on earning assets 8.07% 8.45% 7.91% 8.40%
Average rate on interest
bearing liabilities 4.34% 4.74% 4.34% 4.79%
Net interest spread, annualized 3.73% 3.71% 3.57% 3.61%
Net interest margin, annualized 4.61% 4.62% 4.44% 4.54%
Average earning assets $1,464,752 $1,338,601 $1,486,587 $1,355,118
Average interest bearing liabilities $1,170,361 $1,080,778 $1,190,324 $1,089,093
</TABLE>
Net interest income on tax equivalent basis increased
$1,479,000 or 9.5% for the quarter and $3,406,000 or 7.4% for the
nine month period, as the Company benefited from higher earning
asset volume. During the quarter and nine month periods of 1999,
average earning assets increased 9.4% and 9.7%, respectively,
compared with 1998. Average earning asset growth for the
quarter and nine month periods included average loan growth of
$90 million and $98 million, respectively. For both periods,
approximately half 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 third
quarter of 1999, compared with the same period in 1998, the net
interest margin declined one basis point to 4.61%; for the nine
months ended September 30, 1999, compared to the same period in
1998, the net interest margin declined 10 basis points to 4.44%.
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 $9,300,000 and 0.90% of
loans as of September 30, 1999 compared with $9,010,000 and 0.90%
of loans at December 31, 1998. The allowance for loan losses was
219% of non-performing loans at September 30, 1999, compared to
202% at December 31, 1998. Non-performing loans were $4.3
million and 0.41% of loans outstanding at September 30, 1999,
compared with $4.5 million and 0.44% on December 31, 1998. Net
loans charged-off were $.568 million in the third quarter of 1999
and $2.051 million for the nine months ended September 30, 1999,
compared with $119,000 in the third quarter of 1998 and $493,000
for the nine months ended September 30, 1999. The third quarter
provision for loan losses in 1999 was $590,000 compared with no
provision in the third quarter of 1998. For the nine months
ended September 30, 1999, the provision for loan losses was
$2,341,000, compared with $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 $360,000
for the third quarter of 1999, and $984,000 for the nine month
period ended September 30, 1999. The nine month period 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 Nine Months Ended
September 30
----------------------
1999 1998
---------- ----------
Balance at January 1 $9,010 $9,209
Loans charged off (2,284) (617)
Recoveries 233 124
-------- --------
Net loans charged off (2,051) (493)
Provision for loan losses 2,341 500
-------- --------
Balance September 30 $9,300 $9,216
======== ========
Average loans, net of unearned income $1,009,219 $910,889
Provision for loan losses to average loans 0.23% 0.05%
Allowance for loan losses to average loans 0.92% 1.01%
Allowance for loan losses to period-end loans 0.90% 0.97%
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 nine
months ended September 30, 1999 and 1998:
<TABLE>
<CAPTION>
In thousands Three Months Ended Nine Months Ended
September 30 September 30
---------------------- ----------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Non-Interest Income:
Income from trust department $690 $643 $2,006 $1,757
Service charges on deposit accounts 1,561 1,434 4,459 4,041
Gift certificate fees 620 56 1,336 177
Securities gains 6 3 21 30
Settlement proceeds (1999) / gain on sale
of money order subsidiary (1998) -- -- 1,800 4,213
Gains on sales of other real estate 371 -- 1,371 814
Money order processing fees 90 354 390 1,267
Other 855 1,018 3,064 2,911
---------- ---------- ---------- ----------
Total non-interest income $4,193 $3,508 $14,447 $15,210
========== ========== ========== ==========
Other Operating Expenses:
Salaries and employee benefits $7,203 $7,318 $21,240 $21,216
Occupancy expenses 798 794 2,417 2,265
Furniture and equipment expenses 1,162 1,061 3,455 3,238
Advertising and marketing 307 416 956 1,683
Operating supplies 396 262 1,093 1,078
Legal and professional fees 633 739 1,371 2,302
Taxes, other than income taxes 412 341 1,157 1,017
Other 1,247 1,488 4,035 3,937
---------- ---------- ---------- ----------
Total other operating expenses $12,158 $12,419 $35,724 $36,736
========== ========== ========== ==========
</TABLE>
Excluding the non-recurring revenue related to the money
order subsidiary sale and gains on real estate sales, non-
interest income in the third quarter of 1999 increased $311,000
or 8.9% over the third quarter of 1998; non-interest income for
the nine months ended September 30, 1999, increased $1,102,000 or
10.8% over 1998. Trust Department income increased $47,000 or
7.3% for the quarter and $249,000 or 14.2% for the nine month
period as assets under management continued to increase with
continuing business development activities. Deposit service
charges increased $127,000 or 8.9% for the quarter and $418,000
or 10.3% for the nine 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
$564,000 increase in the third quarter and a $1,160,000 increase
for the nine month period in the level of gift certificate
income. Processing fees for services provided to the purchaser
of the money order subsidiary declined $264,000 for the quarter
and $877,000 for the nine month period. These services were
phased out by September 30, 1999. Bank card and merchant fees,
included in other non-interest income, increased $25,000 or 7.1%
for the quarter and $297,000 or 25.6% for the nine month period
as the retail card base and the merchant network continued to
expand.
Other operating expenses declined $261,000 or 2.1% for the
quarter and $1,012,000 or 2.8% for the nine month period.
Declines in legal and advertising costs contributed to these
overall operating expense reductions. Legal costs declined
$154,000 for the quarter and $1,000,000 for the nine month period
as discovery efforts in one ongoing litigation matter were
concluded in early 1999. Advertising costs in 1999 moved back to
historical level, while 1998 had the additional cost of a new
image campaign. Advertising expenses declined $108,000 for the
quarter and $727,000 for the nine month period. Salaries and
benefits decreased $115,000 for the quarter and increased $24,000
or 0.1% for the nine month periods. 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 620 in 1999 and 621 in 1998. Depreciation on new computers
and other equipment caused equipment expenses to increase
$101,000 and $217,000 for the quarter and year-to-date periods,
respectively. Facilities maintenance expenses contributed to a
$152,000 year-to-date increase in occupancy expenses. Variances
in other expense categories were not significant.
Income Taxes
The Company had income tax expense of $2,175,000 for the third
quarter of 1999 compared to $1,792,000 for the same period in 1998,
which yielded effective tax rates of 27.1% for 1999 and 28.9% for
1998. The tax expense in the third quarter of 1999 was reduced
$168,000 as a result of a refund on a prior year tax return. The
year-to-date tax expense and effective tax rates were $7,182,000
and 29.5% for 1999, and $6,710,000 and 29.7% for 1998,
respectively.
FINANCIAL CONDITION
Total assets decreased approximately $81 million from December
31, 1998 to September 30, 1999, while average assets increased $71
million or 4.9% to $1.540 billion for the third quarter of 1999
compared to the last quarter of 1998. During the three and nine
month periods ended September 30, 1999, average earning assets
increased approximately $126 million and $131 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 nine months ended September
30, 1999 compared to the first nine months of 1998 average asset
growth included increases in average commercial loans of $46
million, average retail loans of $52 million, and average
securities of $45 million. For the third quarter of 1999 compared
to 1998, average retail loans increased $43 million, average
commercial loans increased $47 million and the average securities
portfolio increased $90 million.
Non-performing Loans and Assets
A summary of non-performing loans and assets follows:
Dollars in thousands September 30, 1999 December 31, 1998
------------- -----------------
Loans accounted for on a non-
accrual basis $1,981 $1,416
Restructured loans 818 --
Loans contractually past due
ninety days or more as to
interest or principal payments 1,452 3,050
-------- --------
Total non-performing loans 4,251 4,466
Other real estate held for sale 9,099 11,358
-------- --------
Total non-performing assets $13,350 $15,824
======== ========
Non-performing loans to total loans 0.41% 0.44%
Non-performing assets to total assets 0.88% 0.99%
Allowance for loan losses to non-
performing loans 219% 202%
Loans classified as impaired at September 30, 1999 aggregated
$3.0 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 September 30, 1999
and $3.8 million at December 31, 1998.
The Company considers the level of non-performing and impaired loans
in its evaluation of the adequacy of the allowance for loan losses.
Other real estate aggregated $9.1 million at September 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 $1.7 million at September 30, 1999. The
remaining portion of property is 15 acres of commercial property.
The condominium project involves 30 (44 originally) completed
and readily marketable units and 7.5 acres of adjacent developed
land. This riverfront development has a carrying value of $7.0
million. Management has taken recent action to provide for
enhanced marketing of these properties.
Gains on sales of real estate held for sale were $371,000
and $-0- for the third quarter of 1999 and 1998, respectively,
and $1,371,000 and $814,000 for the nine months ended September
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 September 30, 1999, shareholders' equity totaled
$176,439,000, an increase of $9.0 million since December 31, 1998.
Net income of $17.2 million after cash dividends of $6.8 million
provided $10.4 million of the increase. Since December 31, 1998,
the Companys available for sale securities portfolio had net
unrealized losses, net of tax benefits, that decreased shareholders
equity $2.3 million. Proceeds and tax benefits from stock options
exercised added $943,000 to shareholders equity in 1999.
The Company's capital ratios exceed minimum regulatory
requirements and are as follows:
Company Company
September 30December 31, Minimum
1999 1998 Required
---------- ---------- ----------
Leverage Ratio 11.7% 11.5% 4.0%
Tier I risk based capital ratio 15.3% 14.2% 4.0%
Total risk based capital ratio 16.1% 15.0% 8.0%
YEAR 2000
Throughout 1999, the Company has 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 Companys Year 2000 program is set forth in the
Companys 1998 Annual Report and Form 10-K.
As of September 30, 1999, the Company had completed all phases
of its Year 2000 program for mission critical applications. The
table below indicates the extent to which mission critical
applications were compliant (remediated, tested and implemented) at
September 30, 1999.
MISSION CRITICAL APPLICATION SUMMARY
Percent of Applications Year 2000 Compliant
Category 9-30-99
-------
Mainframe applications 100%
Distributed applications 100%
PC applications 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 September 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
September 30, 1999 and estimated future costs is as follows:
In thousands Costs Incurred
Through
September Estimated
30, 1999 Future Costs Total
---------- ---------- ----------
IT Personnel Resources $1,884 $396 $2,280
Business Unit Personnel Resources 336 119 455
External Contractors / Consultants 120 60 180
Replacement Software 408 65 473
Replacement / Upgrade Hardware 1,034 139 1,173
Other Costs 83 68 151
---------- ---------- ----------
$3,865 $847 $4,712
========== ========== ==========
Project costs increased $171,000 during the third 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 September 30, 1999, $192,000 of the Year 2000 project
costs were expensed, including $83,000 of depreciation. For the
nine months ended September 30, 1999, $979,000 of the Year 2000
project costs were expensed, including $334,000 of depreciation.
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 Companys computer and non-
information technology systems. The Companys 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 Companys September 30, 1999 analysis of the impact of
changes in interest rates on net interest income over the next 12
months indicates a stable exposure level to changing interest rates
since June 30, 1999. 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
September 30, 1999 levels, and remained constant at those levels
thereafter.
<TABLE>
<CAPTION>
Movement in interest
rates from September 30, 1999 rates
-----------------------------------------------
Increase Decrease
+50bp +100bp -50bp -100bp
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net interest income increase (decrease) (in 1000' ($848) ($1,483) ($347) $205
Net income per share increase (decrease) ($0.05) ($0.09) ($0.02) $0.01
</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. The use of words such as "believes",
"estimates", "plans", "expects" and similar expressions are intended
to identify forward-looking statements. 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 Companys actual results could differ materially from those
in such forward-looking statements. Factors that could cause actual
results to differ materially from those projected include, among
others, the effects of Year 2000 software failures; 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.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10 Material Contracts
10(a) Employment Agreement between the Company and
John T. Rippy dated August 16, 1999.
10(b) Employment Agreement between the Company and
Steven A. Small dated August 15, 1999.
27 Financial Data Schedule
(b) Reports on Form 8-K
There were no reports filed on Form 8-K during the third quarter.
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: November 8, 1999 By:/s/ Steven Small
Steven Small
Treasurer
Date: November 8, 1999 By:/s/ R.K. Guillaume
R.K. Guillaume
Chief Executive Officer
INDEX TO EXHIBITS
10(a) Employment Agreement between the Company and
John T. Rippy dated August 16, 1999.
10(b) Employment Agreement between the Company and
Steven A. Small dated August 15, 1998.
27 Financial Data Schedule
Exhibit 10(a)
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into as of the 16 day of
August, 1999 by and between MIDAMERICA BANCORP, INC., a Kentucky
corporation and BANK OF LOUISVILLE, a Kentucky Combined Bank and
Trust Company, (individually a "Company"; together with their
successors and assigns permitted under this Agreement, the
"Companies"), and JOHN T. RIPPY (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 a Company, unless the
Executive believed in good faith that such act or
nonact was in the best interests of such Company.
(e) A "Change of Control" shall mean the occurrence of any
one of the following events:
(i) Any "person," as such term is used in Sections
3(a)(9) and 13(d)of the Securities Exchange Act of
1933, 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 a Company;
(ii) The majority of either Board consists of individuals
other than Incumbent Directors, which term means
the members of the Board on the date of this
Agreement; provided that any person becoming a
director subsequent to such date whose election or
nomination for election was supported by two-thirds
of the directors who then comprised the Incumbent
Directors shall be considered to be an Incumbent
Director;
(iii) A Company adopts any plan of liquidation
providing for the distribution of all or
substantially all of its assets;
(iv) All or substantially all of the assets or business
of a Company is disposed of pursuant to a merger,
consolidation or other transaction (unless the
shareholders of such Company immediately prior to
such merger, consolidation or other transaction
beneficially own, directly or indirectly, in
substantially the same proportion as they owned the
Voting Stock of such Company, all of the Voting
Stock or other ownership interests of the entity
or entities, if any, that succeed to the business
of such Company); or
(v) A Company combines with another company and is the
surviving corporation but, immediately after the
combination, the shareholders of such Company
immediately prior to the combination hold, directly
or indirectly, 50% or less of the Voting Stock of
the combined company (there being excluded from the
number of shares held by such shareholders, but not
from the Voting Stock of the combined company, any
shares received by Affiliates of such other company
in exchange for stock of such other company).
(f) "Constructive Termination Without Cause" shall mean a
termination of the Executive's employment at his
initiative as provided in Section 7(d) below following
the occurrence, without the Executive's prior written
consent, of one or more of the following events (except
in consequence of a prior termination):
(i) A reduction in the Executive's then current Base
Salary or the termination or material reduction of
any employee benefit or perquisite enjoyed by him
(other than as part of an across-the-board
reduction applicable to all executive officers of
the Companies);
(ii) The failure to elect or reelect the Executive to any
of the positions described in Section 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 Company's principal office, or
the Executive's own office location as assigned to
him by a Company, to a location outside of the
metropolitan area of Louisville, Kentucky; or
(vi) The failure of a Company to obtain the assumption in
writing of its obligation to perform this Agreement
by any successor to all or substantially all of the
assets of such Company within 45 days after a
merger, consolidation, sale or similar transaction.
(g) "Disability" shall mean the Executive's inability to
substantially perform his duties and responsibilities
under this Agreement for a period of 180 consecutive
days.
(h) "Term of Employment" shall mean the period specified in
Section 2 below.
(i) "Voting Stock" shall mean capital stock of any class or
classes having general voting power under ordinary
circumstances in the absence of contingencies, to elect
the directors of a corporation.
2. 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 terminated by written notice delivered by either
party to the other prior to expiration of the original or any
successive 36-month term, this Agreement's term shall be renewed
for successive thirty-six month periods. A termination of this
Agreement for any reason at the end of the original or renewal term
shall not constitute a termination of Executive's employment or
trigger required payments pursuant to Section 7 hereof, and
continued employment thereafter shall be "at will" and either party
may terminate the employment at any time thereafter, with or
without cause.
3. Position. Duties and Responsibilities.
(a) During the term of Employment, the Executive shall
continue to be employed as Executive Vice President and
General Counsel 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 $120,000. 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 their 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;
(iv) Any incentive awards earned (but not yet paid).
(b) Termination Without Cause. If the Executive's employment
is terminated by the Companies 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 5 for thirty-six months, with such amount
payable on a non-tax-qualified basis;
(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 Ownership Plan
with any unvested amounts paid on a non-tax-
qualified basis
(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 other than due to
Disability or death 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 this Agreement
is in effect at the date of the Change in Control (even
if subsequently not renewed) and 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 lump sum equal to three times Base
Salary. A voluntary termination under the previous
sentence of 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 any 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 8(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. 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.
10. 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.
11. 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.
12. 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.
13. 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.
14. 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.
15. 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: JOHN T. RIPPY
4905 Crofton Road
Louisville, KY 40207
IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the date first written above.
SIGNATURES ON FOLLOWING PAGE
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/ John T. Rippy
JOHN T. RIPPY
Exhibit 10(b)
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into as of the 15th day of
August, 1999 by and between MID-AMERICA BANCORP, 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 STEVEN A.
SMALL (the "Executive").
W I T N E S S E T H:
WHEREAS, the Companies and the Executive are parties to an
Agreement dated as of May 3, 1993, covering the employment
relationship of Executive with Companies, which agreement was
superceded by an agreement dated March 1, 1996; and
WHEREAS, a subsequent agreement was executed by the Parties
dated June 1, 1998; and
WHEREAS, the parties have discovered that they disagree
about the enforceability and construction of the agreement dated
June 1, 1998 in various circumstances;; and
WHEREAS, the parties desire to maintain the relationship of
the Companies with a valued long-term employee in the face of
conflicting claims about the June 1, 1998 agreement's
enforceability, and therefore agreed orally on August 15, 1999
and now wish to document that agreement, to cancel the June 1,
1998 agreement and replace it in its entirety with the agreement
dated March 1, 1996, with clarifying changes, all as set forth
in this Employment Agreement (the "Agreement").
NOW, THEREFORE, in consideration of the promises and mutual
covenants contained herein and for other good and valuable
consideration, the receipt of which is mutually acknowledged,
the Companies and the Executive (individually a "Party" and
together the "Parties") agree as follows:
1. Definitions.
(a) "Affiliate" of a person or other entity shall mean a
person or other entity that directly or indirectly
controls, is controlled by, or is under common control
with the person or other entity specified.
(b) Except as provided otherwise in Section 8 hereof,
"Base Salary" shall mean the salary provided for in
Section 5 below or any increased salary granted to the
Executive pursuant to Section 5.
(c) "Board" shall mean the Boards of Directors of the
Companies.
(d) "Cause" shall mean:
(i) The Executive is convicted of a felony; or
(ii) The Executive is guilty of willful gross neglect
or willful gross misconduct in carrying out his
duties under this Agreement, resulting, in either
case, in material economic harm to the Companies,
unless the Executive believed in good faith that
such act or nonact was in the best interests of
such Company
(e) A "Change of Control" shall mean the occurrence of any
one of the following events:
(i) Any "person," as such term is used in Sections
3(a)(9) and 13(d)of the Securities Exchange Act
of 1923, becomes a "beneficial owner," as such
term is used in Rule 13d-3 promulgated under that
Act, of 20% or more of the Voting Stock of the
Companies;
(ii) The majority of either Board consists of
individuals other than Incumbent Directors, which
term means the members of the Board on the date
of this Agreement; provided that any person
becoming a director subsequent to such date whose
election or nomination for election was supported
by two-thirds of the directors who then comprised
the Incumbent Directors shall be considered to be
an Incumbent Director,
(iii) The Companies adopt any plan of liquidation
providing for the distribution of all or
substantially all of its assets;
(iv) All or substantially all of the assets or
business of the Companies is disposed of pursuant
to a merger, consolidation or other transaction
(unless the shareholders of such Company
immediately prior to such merger, consolidation
or other transaction beneficially own, directly
or indirectly, in substantially the same
proportion as they owned the Voting Stock of such
Company, all of the Voting Stock or other
ownership interests of the entity or entities, if
any, that succeed to the business of such
Company); or
(v) The Companies combine with another company and is
the surviving corporation but, immediately after
the combination, the shareholders of such Company
immediately prior to the combination hold,
directly or indirectly, 50% or less of the Voting
Stock of the combined company (there being
excluded from the number. of shares held by such
shareholders, but not from the Voting Stock of
the combined company, any shares received by
Affiliates of such other company in exchange for
stock of such other company).
(f) "Constructive Termination Without Cause" shall mean a
termination of the Executive's employment at his
initiative other than pursuant to death or Disability
(whether such termination is covered by Section 8(b)
or 8(c) below), following the occurrence, without the
Executive's prior written consent, of one or more of
the following events (except in consequence of a prior
termination):
(i) A reduction in the Executive's then current Base
Salary or the termination or material reduction
of any employee benefit or perquisite enjoyed by
him;
(ii) The failure to elect or reelect the Executive to
any of the positions described in Section 4 below
or removal of him from any such position;
(iii) A material diminution in the Executive's
duties or the assignment to the Executive of
duties which are materially inconsistent with his
duties or which materially impair the Executive's
ability to function as the Executive Vice
President and Chief Financial Officer or any
other office to which he may be elected or
appointed:
(iv) The failure to continue the Executive's
participation in any incentive compensation plan
unless a plan providing a substantially similar
opportunity is substituted;
(v) The relocation of a Companies' principal office,
or the Executive's own office location as
assigned to him by the Companies, to a location
outside of the metropolitan area of Louisville,
Kentucky; or
(vi) The failure of the Companies to obtain the
assumption in writing of its obligation to
perform this Agreement by any successor to all or
substantially all of the assets of such Company
within 45 days after a merger, consolidation,
sale or similar transaction.
(g) "Disability" shall mean the Executive's inability to
substantially perform his duties and responsibilities
under this Agreement for a period of 180 consecutive
days.
(h) "Term of Employment" shall mean the period specified
in Section 3 below.
(i) "Voting Stock" shall mean capital stock of any class
or classes having general voting power under ordinary
circumstances in the absence of contingencies, to
elect the directors of a corporation.
2. Cancellation of Old Agreement.
The Agreement between the Parties entered into as of June
1, 1998, is hereby revoked and canceled in its entirety.
3. Term of Employment.
The employment of the Executive will continue to the last
day of the month in which the Executive turns 55 years of age or
until the earlier termination of his employment in accordance
with the terms of this Agreement.
4. Position, Duties and Responsibilities.
(a) During the term of Employment, the Executive shall
continue to be employed as Executive Vice President
and Chief Financial Officer of the Companies with
duties commensurate with that position, including
S.E.C. reporting, internal financial reporting,
financial reporting to the Board of Directors,
interest rate risk management, deposit pricing, loan
review, internal audit, investment management,
budgeting and forecasting, and various operations
functions. The Executive, in carrying out his duties
under this Agreement, shall report to the Chairman of
the Board,
(b) Anything herein to the contrary notwithstanding,
nothing shall preclude the Executive from (i) serving
on the boards of directors of a reasonable number of
other corporations (except Executive will not serve on
the board of any other financial institution) or the
boards of a reasonable number of trade associations
and/or charitable organizations, (ii) engaging in
charitable activities and community affairs, and (iii)
managing his personal investments and affairs,
provided that such activities do not materially
interfere with the proper performance of his duties
and responsibilities as the Companies' Executive Vice
President and Chief Financial Officer or any other
office to which he may be elected or appointed.
5. Signing Bonus; Base Salary.
(a) The Executive shall be paid a non-contingent bonus of
$600,000, payable $300,000 upon execution of this
Agreement, and the remainder by October 10, 1999
(regardless whether Executive remains employed at that
date), each installment to be paid less any taxes or
other withholdings required by law, in consideration
of his agreement to cancel his prior employment
agreement, and agreement to forego other employment
opportunities in favor of continued service for the
Companies.
(b) In addition, the Executive shall be paid an annualized
base salary, payable in accordance with the regular
payroll practices of the Companies, of $200,000 ("Base
Salary"). The Base Salary shall be reviewed no less
frequently than annually for increase at the sole
discretion of the Board and its Nominating and
Executive Compensation Committee.
6. Employee Benefit Programs.
During the Term of Employment, the Executive shall be
entitled to participate in all employee incentive, pension and
welfare benefit plans and programs made available to the
Companies' senior level executives or to its employees
generally, as such plans or programs may be in effect from time
to time, including without limitation, annual stock option
grant, ESOP, bonus, pension, profit sharing, savings and other
retirement plans or programs, medical, dental, hospitalization,
short-term and long-term disability and life insurance plans,
accidental death and dismemberment protection, travel accident
insurance, and any other pension or retirement plans or programs
and any other employee incentive compensation plan, employee
welfare benefit plans or programs that may be sponsored by the
Companies from time to time, including any plans that supplement
the above-listed types of plans or programs, whether funded or
unfunded.
7. Reimbursement of Business and Other Expenses.
The Executive is authorized to incur reasonable expenses in
carrying out his duties and responsibilities under this
agreement and the Companies shall promptly reimburse him for all
business expenses incurred in connection with carrying out the
business of the Companies, subject to documentation in
accordance with the Companies' policy.
8. Termination of Employment.
(a) Termination for Cause. In the event the Companies
terminate the Executive's employment for Cause, he
shall be entitled to:
(i) The Base Salary through the date of the
termination of his employment for Cause;
(ii) Any incentive awards earned (but not yet paid);
(iii) Any pension benefit that may become due
pursuant to Section 6 above, determined as of the
date of such termination;
(iv) Other or additional benefits in accordance with
applicable plans or programs of the Companies to
the date of termination.
(b) Termination Without Cause. If the Executive's
employment is terminated without Cause other than due
to Disability or death, or there is a Constructive
Termination without Cause, the Executive shall be
entitled to:
(i) The Base Salary through the date of termination
of the Executive's employment;
(ii) The Base Salary, at the annualized rate in effect
on the date of termination of the Executive's
employment for the unexpired term of this
Employment Agreement following such termination,
paid in installments in accordance with the
regular pay practices of the Companies; provided
that, at the Executive's option, the Companies
shall pay him the present value of such salary
continuation payments in a lump sum (using as the
discount rate the Applicable Federal Rate for
short term Treasury obligations as published by
the Internal Revenue Service for the month in
which such termination occurs). For purposes of
this subsection (ii) "Base Salary" shall include
an annual bonus calculated by taking the highest
Management Incentive Compensation Plan bonus of
the three years preceding the year of
termination;
(iii) The balance of any incentive awards earned
(but not yet paid);
(iv) The right to exercise any stock option in full,
whether or not such right is exercisable pursuant
to the terms of the grant.
(v) Any pension benefit that may become due pursuant
to Section 6 above;
(vi) Continued accrual of credited service for the
purpose of the pension benefit provided under
Section 6 above until his attainment of age 55;
(vii) Continued participation in all medical,
dental, hospitalization and life insurance
coverage and in other employee benefit plans or
programs in which he was participating on the
date of the termination of his employment until
the earlier of:
(A) The end of the period during which he is
receiving salary continuation payments. (or
in respect of which a lump-sum severance
payment is made);
(B) The date, or dates, he receives equivalent
coverage and benefits under the plans and
programs of a subsequent employer (such
coverages and benefits to be determined on a
coverage-by-coverage, or benefit-by-benefit,
basis); provided that (x) if the Executive
is precluded from continuing his
participation in any employee benefit plan
or program as provided in this clause (vii)
of this Section 8(b), he shall be provided
with the after-tax economic equivalent of
the benefit provided under the plan or
program in which he is unable to participate
for the period specified in this clause
(vii) of this Section 8(b), (y) the economic
equivalent of any benefit foregone shall be
deemed to be the lowest cost that would be
incurred by the Executive in obtaining such
benefit himself on an individual basis, and
(z) payment of such after-tax economic
equivalent shall be made quarterly in
advance; and
(viii) Immediate vesting of the Companies'
contribution to his Employee Stock Option Plan
(ix) Other or additional benefits in accordance with
applicable plans and programs of the Companies to
the date of termination.
(c) Termination of Employment Following a Change in
Control. If following a Change in Control, the
Executive's employment is terminated without Cause or
there is a Constructive Termination Without Cause, the
Executive shall be entitled to the payments and
benefits provided in Section 8(b), provided that the
salary continuation payments shall be paid in a lump
sum without any discount. Also, immediately following
a Change in Control, all amounts, entitlements or
benefits in which he is not yet vested shall become
fully vested. In addition, if the Executive has
completed less than fifteen (15) years of service at
the time of such termination, the Executive will be
entitled to a supplemental pension benefit paid
directly by the Companies (and not as a part of the
Pension Plan of the Companies) equal to the benefit
otherwise payable under said Pension Plan based upon
the completion of fifteen (15) years of service, minus
any amounts payable pursuant to the said Pension Plan.
This supplemental pension benefit is an unfunded
liability of the Companies, the successors and
assigns, and not part of any established Plan of the
Companies. In addition, if Executive continues in the
employ of the Companies for a period of two years
following the effective date of the Change of Control,
he may then voluntarily terminate his employment and
in such a case would receive, in addition to the
benefits provided for elsewhere herein, a sum equal to
three times Base Salary. A voluntary termination under
this Section 8(c) shall be effective upon 30 days
prior notice to the Companies and shall not be deemed
a breach of this Agreement. For purposes of this
Section 8(c) "Base Salary" shall include an annual
bonus calculated by taking the highest Management
Incentive Compensation Plan bonus of the three years
preceding the year of termination;
(d) Voluntary Termination. In the event of a termination
of employment by the Executive on his own initiative
other than a termination due to death or Disability or
a Constructive Termination without Cause, the
Executive shall have the same entitlements as provided
in Section 8(a) for a Termination for Cause.
(e) Limitation Following a Change in Control. If the
Companies in good faith determine that amounts payable
or value of benefits provided under Section 8(c) (and
Section 8(b), to the extent incorporated in Section
8(c) by reference) of this Agreement are covered by
Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code"), 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 Section 8(c) of
this Agreement shall be adjusted to no less than $1.00
below the maximum amount that is deductible by the
Companies; provided, however that, in making this
determination, (i) the amounts payable pursuant to
Section 5 of this Agreement for calendar years prior
to the Change in Control shall be included in the
"base amount" calculated pursuant to Code Sections
280G(b)(3) and 280G(d)(2); and (ii) the amount payable
pursuant to Section 5(a) of this Agreement, as a non-
contingent payment, shall not be considered a
"parachute payment" as defined in Code Section
280G(b)(2)(A). 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.
The determination made under this paragraph shall be
final and binding on both Parties.
(f) Purchase of Car. Upon termination pursuant to
Section 8(b), (c) or (d), the Executive will have the
option of purchasing his Company car for the value of
such car on the books of the Company at the time of
termination, adjusted for value of the Executive's
cash contribution to the purchase of the car.
(g) No Mitigation - No Offset. In the event of any
termination of employment under this Section 8, the
Executive shall be under no obligation to seek other
employment and there shall be no offset against
amounts due the Executive under this Agreement on
account of any remuneration attributable to any
subsequent employment that he may obtain except as
specifically provided in this Section 8.
(h) Nature of Payments. Any amounts due under this Section
8 are in the nature of severance payments considered
to be reasonable by the Companies and are not in the
nature of a penalty.
9. Indemnification.
(a) The Companies agree that if the Executive is made a
party, or is threatened to be made a party, to any
action, suit or proceeding, whether civil, criminal,
administrative or investigative (a "Proceeding"), by
reason of the fact that he is or was a director,
officer or employee of the Companies or is or was
serving at the request of the Companies as a director,
officer, member, employee or agent of another
corporation, partnership, joint venture, trust or
other enterprise, including service with respect to
employee benefit plans, whether or not the basis of
such Proceeding is the Executive's alleged action in
an official capacity while serving as a director,
officer, member, employee or agent, the Executive
shall be indemnified and held harmless by the
Companies to the fullest extent permitted or
authorized by the Companies' certificates of
incorporation or bylaws or, if greater, by the laws of
the State of Kentucky, against all cost, expense,
liability and loss (including, without limitation,
reasonable attorneys fees, judgments, fines, ERISA
fines, excise taxes or penalties and amounts paid or
to be paid in settlement) reasonably incurred or
suffered by the Executive in connection therewith, and
such indemnification shall continue as to the
Executive even if he has ceased to be a director,
member, employee or agent of the Companies or other
entity and shall inure to the benefit of the
Executive's heirs, executors and administrators. The
Companies shall advance to the Executive all
reasonable costs and expenses incurred by him in
connection with a Proceeding within 20 days after
receipt by the Companies of a written request for such
advance. Such request shall include an undertaking by
the Executive to repay the amount of such advance if
it shall ultimately be determined that he is not
entitled to be indemnified against such costs and
expenses.
(b) Neither the failure of the Companies (including its
board of directors, independent legal counsel or
stockholders) to have made a determination prior to
the commencement of any proceeding concerning payment
of amounts claimed by the Executive under Section
10(a) that indemnification of the Executive is proper
because he has met the applicable standard of conduct,
nor a determination by the Companies (including its
board of directors, independent legal counsel or
stockholders) that the Executive has not met such
applicable standard of conduct, shall create a
presumption that the Executive has not met the
applicable standard of conduct.
(c) The Companies agree to continue and maintain a
directors' and officers' liability insurance policy
covering the Executive to the extent either Company
provides such coverage for its other executive
officers.
10. Representation.
The Companies represent and warrant that they are fully
authorized and empowered to enter into this Agreement and that
the performance of their obligations under this Agreement will
not violate any agreement between it and any other person, form
or organization.
11. Entire Agreement.
This Agreement contains the entire understanding and
agreement between the Parties concerning the subject matter
hereof and supersedes all prior agreements, understandings,
discussions, negotiations and undertakings, whether written or
oral, between the Parties with respect thereto.
12. Amendment or Waiver.
No provision in this Agreement may be amended unless such
amendment is agreed to in writing and signed by the Executive
and an authorized officer of the Companies. No waiver by either
Party of any breach by the other Party of any condition or
provision contained in this Agreement to be performed by such
other Party shall be deemed a waiver of a similar or dissimilar
condition or provision at the same or any prior or subsequent
time. Any waiver must be in writing and signed by the Executive
or an authorized officer of the Companies, as the case may be.
13. Severability.
In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for
any reason, in whole, or in part, the remaining provisions of
this Agreement shall be unaffected thereby and shall remain in
full force and effect to the fullest extent permitted by law.
14. Survivorship.
The respective rights and obligations of the Parties
hereunder shall survive any termination of the Executive's
employment to the extent necessary to the intended preservation
of such rights and obligations.
15. Resolution of Disputes.
Any disputes arising under or in connection with this
Agreement shall, at the election of the Executive or the
Companies, be resolved by binding arbitration, to be held in
Kentucky in accordance with the rules and procedures of the
American Arbitration Association. Judgment upon the award
rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof. Costs of the arbitration or litigation,
including, without limitation, attorneys' fees of both Parties,
shall be borne by the Companies, provided that if the
arbitrator(s) determine that the claims or defenses of the
Executive were without any reasonable basis, each Party shall
bear his or its own costs.
16. Notices.
Any notice given to a party shall be in writing and shall
be deemed to have been given when delivered personally or sent
by certified or registered mail, postage prepaid, return receipt
requested, duly addressed to the Party concerned at the address
indicated below or to such changed address as such Party may
subsequently give such notice of
If to the Companies: MID-AMERICA BANCORP
P.O. Box 1101
Louisville, KY 40201-1101
Attention: Bertram W. Klein
If to the Executive: STEVEN A. SMALL
7210 Leafland Place
Prospect, KY 40059
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first written above.
MID-AMERICA BANCORP
By: /s/ R.K. Guillaume
Title: Chief Executive Officer
BANK OF LOUISVILLE
By: /s/ R.K. Guillaume
Title: Chief Executive Officer
STEVEN A. SMALL
/s/ Steven A. Small
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<PERIOD-TYPE> 9-MOS
<CASH> 26,444
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 8,400
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 389,579
<INVESTMENTS-CARRYING> 4,026
<INVESTMENTS-MARKET> 4,019
<LOANS> 1,037,066
<ALLOWANCE> (9,300)
<TOTAL-ASSETS> 1,514,221
<DEPOSITS> 960,163
<SHORT-TERM> 251,425
<LIABILITIES-OTHER> 55,606
<LONG-TERM> 70,588
0
0
<COMMON> 28,616
<OTHER-SE> 147,823
<TOTAL-LIABILITIES-AND-EQUITY> 1,514,221
<INTEREST-LOAN> 67,903
<INTEREST-INVEST> 14,641
<INTEREST-OTHER> 4,017
<INTEREST-TOTAL> 86,561
<INTEREST-DEPOSIT> 24,752
<INTEREST-EXPENSE> 38,608
<INTEREST-INCOME-NET> 47,953
<LOAN-LOSSES> 2,341
<SECURITIES-GAINS> 21
<EXPENSE-OTHER> 35,724
<INCOME-PRETAX> 24,335
<INCOME-PRE-EXTRAORDINARY> 24,335
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,153
<EPS-BASIC> 1.67
<EPS-DILUTED> 1.64
<YIELD-ACTUAL> 4.44
<LOANS-NON> 1,981
<LOANS-PAST> 1,452
<LOANS-TROUBLED> 818
<LOANS-PROBLEM> 14,434
<ALLOWANCE-OPEN> 9,010
<CHARGE-OFFS> 2,284
<RECOVERIES> 233
<ALLOWANCE-CLOSE> 9,300
<ALLOWANCE-DOMESTIC> 9,300
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
