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 the quarterly period ended June 30, 1996
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to _____________
Commission File Number 0-11487
LAKELAND FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
INDIANA 35-1559596
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
202 East Center Street
P.O. Box 1387, Warsaw, Indiana 46581-1387
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (219)267-6144
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
NO [ ] YES [x]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the last practicable date.
Class Outstanding at June 30, 1996
Common Stock, $.50 Stated Value 2,896,992
<PAGE>
<TABLE>
Part I
Item 1 - Financial Statements
LAKELAND FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
As of June 30, 1996 and December 31, 1995
(in thousands)
(Unaudited)
(Page 1 of 2)
<CAPTION>
June 30, December 31,
1996 1995
----------- -----------
<S> <C> <C>
ASSETS
- ------
Cash and cash equivalents
Cash and due from banks $ 40,248 $ 26,185
Short-term investments 409 710
----------- -----------
Total cash and cash equivalents 40,657 26,895
Securities available-for-sale
U. S. Treasury securities 29,252 27,844
Mortgage-backed securities 49,122 51,034
State and municipal securities 2,115 2,176
Other debt securities 2,656 1,066
----------- -----------
Total securities available-for-sale
(carried at fair value) 83,145 82,120
Securities held-to-maturity
U. S. Treasury securities 17,543 13,611
Mortgage-backed securities 78,828 80,217
State and municipal securities 20,728 19,047
Other debt securities 3,266 1,013
----------- -----------
Total securities held-to-maturity
(fair value of $118,830,000 at
June 30, 1996, and $115,328,000
at December 31, 1995) 120,365 113,888
Real estate mortgages held-for-sale 424 145
Loans:
Total loans 349,516 327,617
Less: Allowance for loan losses 5,365 5,472
----------- -----------
Net loans 344,151 322,145
Land, premises and equipment, net 14,479 13,736
Accrued income receivable 4,161 4,003
Other assets 6,445 5,647
----------- -----------
Total assets $ 613,827 $ 568,579
=========== ===========
(Continued)
</TABLE>
<PAGE>
<TABLE>
Part I
Item 1 - Financial Statements
LAKELAND FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
As of June 30, 1996 and December 31, 1995
(in thousands)
(Unaudited)
(Page 2 of 2)
<CAPTION>
June 30, December 31,
1996 1995
----------- -----------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
LIABILITIES
- -----------
Deposits:
Noninterest bearing deposits $ 70,667 $ 67,856
Interest bearing deposits 397,616 364,078
----------- -----------
Total deposits 468,283 431,934
Short-term borrowings
Federal funds purchased 4,800 17,100
U.S. Treasury demand notes 3,535 1,880
Securities sold under agreements
to repurchase 73,579 58,151
----------- -----------
Total short-term borrowings 81,914 77,131
Accrued expenses payable 4,776 4,481
Other liabilities 413 847
Long-term debt 19,432 17,432
----------- -----------
Total liabilities 574,818 531,825
Commitments, off-balance sheet risks
and contingencies
STOCKHOLDERS' EQUITY
- --------------------
Common stock: $.50 stated value, 10,000,000 shares
authorized, 2,896,992 shares issued and outstanding
as of June 30, 1996; $1.00 stated value, 2,750,000
shares authorized, 1,438,496 shares issued and outstanding
as of December 31, 1995 1,448 1,438
Additional paid-in capital 8,232 7,827
Retained earnings 29,437 26,858
Unrealized net gain (loss) on securities available-for-sale (108) 631
----------- -----------
Total stockholders' equity 39,009 36,754
Total liabilities and stockholders' equity $ 613,827 $ 568,579
=========== ===========
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
LAKELAND FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
For the Three Months and Six Months Ended June 30, 1996, and 1995
(in thousands except for share data)
(Unaudited)
(Page 1 of 2)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------- -------------------------
1996 1995 1996 1995
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
INTEREST AND DIVIDEND INCOME
- ----------------------------
Interest and fees on loans: Taxable $ 8,033 $ 7,372 $ 15,821 $ 14,189
Tax exempt 60 56 121 121
----------- ----------- ----------- -----------
Total loan income 8,093 7,428 15,942 14,310
Short-term investments 27 25 60 90
Securities:
U.S. Treasury and Government agency securities 696 610 1,329 1,209
Mortgage-backed securities 2,026 1,869 4,014 3,654
Obligations of state and political subdivisions 346 227 686 453
Other debt securities 79 97 170 198
----------- ----------- ----------- -----------
Total interest and dividend income 11,267 10,256 22,201 19,914
INTEREST EXPENSE
- ----------------
Interest on deposits 4,485 4,088 9,033 7,820
Interest on short-term borrowings 992 894 1,867 1,726
Interest on long-term debt 277 250 549 495
----------- ----------- ----------- -----------
Total interest expense 5,754 5,232 11,449 10,041
----------- ----------- ----------- -----------
NET INTEREST INCOME 5,513 5,024 10,752 9,873
- -------------------
Provision for loan losses 30 30 60 60
----------- ----------- ----------- -----------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 5,483 4,994 10,692 9,813
- ------------------------- ----------- ----------- ----------- -----------
NONINTEREST INCOME
- ------------------
Trust fees 213 167 499 392
Service charges on deposit accounts 692 577 1,270 1,099
Other income (net) 455 316 847 618
Net gains on the sale of real estate mortgages held-for-sale 121 35 221 52
Net investment securities gains (losses) (4) (7) (6) (23)
----------- ----------- ----------- -----------
Total noninterest income 1,477 1,088 2,831 2,138
(Continued)
</TABLE>
<PAGE>
<TABLE>
LAKELAND FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
For the Three Months and Six Months Ended June 30, 1996, and 1995
(in thousands except for share data)
(Unaudited)
(Page 2 of 2)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------- -------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
NONINTEREST EXPENSE
- -------------------
Salaries and employee benefits 2,381 2,060 4,618 4,025
Occupancy and equipment expense 690 632 1,413 1,252
Other expense 1,202 1,395 2,466 2,636
----------- ----------- ----------- -----------
Total noninterest expense 4,273 4,087 8,497 7,913
INCOME BEFORE INCOME TAX EXPENSE 2,687 1,995 5,026 4,038
- --------------------------------
Income tax expense 973 648 1,808 1,385
----------- ----------- ----------- -----------
NET INCOME $ 1,714 $ 1,347 $ 3,218 $ 2,653
- ---------- =========== =========== =========== ===========
AVERAGE COMMON SHARES OUTSTANDING (Note 2) 2,896,992 2,896,992 2,896,992 2,896,992
EARNINGS PER COMMON SHARE
- -------------------------
Net Income (Note 2) $ 0.59 $ 0.47 $ 1.11 $ 0.92
=========== =========== =========== ===========
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
LAKELAND FINANCIAL CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Six Months Ended June 30, 1996 and 1995
(in thousands except for shares)
(Unaudited)
<CAPTION>
Unrealized
Net Gain (Loss)
Common Stock on Securities Total
------------------------ Paid-in Retained Available Stockholders'
Shares Amount Capital Earnings For Sale Equity
----------- ----------- ----------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balances, January 1, 1995 1,438,496 $ 1,438 $ 7,827 $ 22,279 $ (1,655) $ 29,889
Net income for six months
ended June 30, 1995 2,653 2,653
Net change in unrealized net gain (loss)
on securities available-for-sale 1,726 1,726
Cash dividends declared -
$.17 per share (490) (490)
----------- ----------- ----------- ----------- ------------- ------------
Balances, June 30, 1995 1,438,496 $ 1,438 $ 7,827 $ 24,442 $ 71 $ 33,778
=========== =========== =========== =========== ============= ============
Balances, January 1, 1996 1,438,496 $ 1,438 $ 7,827 $ 26,858 $ 631 $ 36,754
Net income for six months
ended June 30, 1996 3,218 3,218
Net change in unrealized net gain (loss)
on securities available-for-sale (739) (739)
Issued 10,000 shares of previously
authorized, unissued shares 10,000 10 405 415
Shares issued in 2-for-1 stock split 1,448,496
Cash dividends declared -
$.22 per share (639) (639)
----------- ----------- ----------- ----------- ------------- ------------
Balances, June 30, 1996 2,896,992 $ 1,448 $ 8,232 $ 29,437 $ (108) $ 39,009
=========== =========== =========== =========== ============= ============
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
Part I
LAKELAND FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 1996 and 1995
(in thousands)
(Unaudited)
(Page 1 of 2)
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Cash flows from operating activities
Net Income $ 3,218 $ 2,653
----------- -----------
Adjustments to reconcile net income to net cash
from operating activites
Depreciation 625 560
Provision for loan losses 60 60
Loans originated for sale (17,076) (8,921)
Net (gain) loss on sale of loans (221) (52)
Proceeds from sale of loans 17,019 8,588
Net (gain) loss on sale of premises and equipment 21 0
Net (gain) loss on sale of securities available-for-sale 0 13
Net (gain) loss on calls of securities held-to-maturity 6 10
Net investment amortization (accretion) 166 99
Increase (decrease) in taxes payable 536 169
(Increase) decrease in income receivable (159) (322)
Increase (decrease) in accrued expenses payable (291) (491)
(Increase) decrease in other assets (728) 404
Increase (decrease) in other liabilities 29 (196)
----------- -----------
Total adjustments (13) (79)
----------- -----------
Net cash from operating activities 3,205 2,574
----------- -----------
Cash flows from investing activities
Proceeds from maturities and calls of securities held-to-maturity 3,818 2,713
Proceeds from maturities and calls of securities available-for-sale 5,940 3,537
Purchases of securities available-for-sale (8,311) (7,493)
Purchases of securities held-to-maturity (10,343) (10,746)
Proceeds from sales of securities available-for-sale 0 336
Net (increase) decrease in total loans (22,066) (18,601)
Purchases of premises and equipment (1,389) (1,156)
----------- -----------
Net cash from investing activities (32,351) (31,410)
----------- -----------
(Continued)
</TABLE>
<PAGE>
<TABLE>
Part I
LAKELAND FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 1996 and 1995
(in thousands)
(Unaudited)
(Page 2 of 2)
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Cash flows from financing activities
Net increase (decrease) in total deposits $ 36,349 $ 13,393
Proceeds from short-term borrowings 389,963 243,765
Payments on short-term borrowings (385,180) (224,390)
Proceeds from long-term borrowings 2,000 0
Proceeds from issuance of common stock 415 0
Dividends paid (639) (490)
----------- -----------
Net cash from financing activities 42,908 32,278
----------- -----------
Net increase (decrease) in cash and cash equivalents 13,762 3,442
Cash and cash equivalents at beginning of the period 26,895 24,147
----------- -----------
Cash and cash equivalents at end of the period $ 40,657 $ 27,589
=========== ===========
Cash paid during the period for:
Interest $ 11,190 $ 9,625
=========== ===========
Income taxes $ 1,685 $ 1,690
=========== ===========
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</FN>
</TABLE>
<PAGE>
LAKELAND FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1996
(Unaudited)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This report is filed for Lakeland Financial Corporation (the
Corporation) and its wholly owned subsidiary, Lake City Bank (the Bank). All
significant intercompany balances and transactions have been eliminated in
consolidation.
The condensed consolidated financial statements included herein have
been prepared by the Corporation, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed
or omitted pursuant to such rules and regulations. The Corporation believes
that the disclosures are adequate and do not make the information presented
misleading. It is suggested that these condensed consolidated financial
statements be read in conjunction with the financial statements and notes
thereto included in the Corporation's latest annual report and Form 10-K. In
the opinion of management, all adjustments which are necessary for a fair
statement of the results for interim periods are reflected in the quarterly
statements included herein.
NOTE 2. EARNINGS PER SHARE
The average common shares outstanding and the net income per share
for the three months and six months ended June 30, 1996 and 1995, have been
restated to reflect a two-for-one stock split. The record date for the stock
split was April 30, 1996, and the new shares were issued May 15, 1996.
(Intentionally left blank)
<PAGE>
Part 1
LAKELAND FINANCIAL CORPORATION
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
and
RESULTS OF OPERATION
June 30, 1996
FINANCIAL CONDITION
The financial statements reflect the Corporation's continued growth
within the Bank's traditional markets and expansion into new market areas. The
Kendallville office of the Bank was opened on May 29, 1996, and a
free-standing ATM in the Linwood Plaza, Goshen, Indiana, was opened on July
16, 1996. Construction continues on the Hubbard Hill office and it is
anticipated this office will open during the third quarter of 1996. The Bank
has also purchased property at 1208 N. Nappanee Street, Elkhart, Indiana, with
the intent of establishing a full-service branch at that location.
Total assets of the Corporation were $613,827,000 as of June 30, 1996.
This is an increase of $45,248,000 or 8.0 percent from $568,579,000 reported
at December 31, 1995. Total loans were $349,516,000 at June 30, 1996. This is
an increase of $21,899,000 or 6.7 percent from the December 31, 1995, balance.
Total securities (including available-for-sale (AFS) and held-to-maturity
(HTM)) increased $7,502,000 or 3.8 percent to $203,510,000 as of June 30,
1996, from $196,008,000 at December 31, 1995. Earning assets increased to
$548,494,000 at June 30, 1996. This is an increase of $29,486,000 or 5.7
percent from the December 31, 1995, total of $519,008,000.
Total deposits and securities sold under agreements to repurchase
(repurchase agreements) consist primarily of funds generated within the Bank's
primary market area as defined by its Community Reinvestment Act (CRA)
statement. At June 30, 1996, these funds totaled $541,862,000. This
represented a $51,777,000 or 10.6 percent increase from December 31, 1995. The
growth has been primarily in certificates of deposit and repurchase
agreements. Certificates of deposit increased $37,460,000 or 14.1 percent from
the balance at December 31, 1995. The repurchase agreement balance increased
$15,428,000 or 26.5 percent from the balance at December 31, 1995. The
repurchase agreement balance is a combination of fixed rate contracts and a
variable rate repurchase agreement product. In addition to these local funding
sources, the Bank borrows modestly through the Treasury, Tax and Loan program,
occasionally through federal fund lines with correspondent banks and through
term advances from the Federal Home Loan Bank of Indianapolis (FHLB).
<PAGE>
Including these non-local sources, funding totaled $569,629,000 at June 30,
1996. This is a $43,132,000 or 8.2 percent increase from $526,497,000 reported
at December 31, 1995.
On an average daily basis, total earning assets increased 14.5 percent
and 14.5 percent for the three month period and the six month period ended
June 30, 1996, respectively, as compared to similar periods ended June 30,
1995. On an average daily basis, total deposits and purchased funds increased
14.5 percent and 14.0 percent for the three month period and six month period
ended June 30, 1996, as compared to the three month period and six month
period ended June 30, 1995.
The Bank's investment portfolio consists of U.S. Treasuries, agencies,
mortgage-backed securities, municipal bonds, and corporates. During 1996, new
investments have been primarily U.S. Treasuries, municipal bonds and
mortgage-backed securities. At June 30, 1996, and December 31, 1995, the
Bank's investment in mortgage-backed securities comprised approximately 62.9
and 67.0 percent, respectively, of the total securities and consisted mainly
of CMO's and mortgage pools issued by GNMA, FNMA and FHLMC. As such, these
securities are backed directly or indirectly by the Federal Government. All
mortgage-backed securities purchased conform to the FFIEC high risk standards
which prohibit the purchase of securities that have excessive price,
prepayment, extension and original life risk characteristics. The Bank uses
Bloomberg analytics to evaluate and monitor all purchases. At June 30, 1996,
the mortgage-backed securities in the HTM portfolio had a three year average
life, with approximately 9 percent price volatility should rates move up or
down 300 basis points. The mortgage-backed securities in the AFS portfolio had
a two year average life and a potential for approximately 6 percent price
depreciation should rates increase 300 basis points and approximately 4
percent price appreciation should rates move down 300 basis points. As of June
30, 1996, all mortgage-backed securities continue to be in compliance with
FFIEC guidelines and are performing in a manner consistent with management's
original expectations.
The Bank's AFS portfolio is managed with consideration given to factors
such as the Bank's capital levels, growth prospects, asset/liability structure
and liquidity needs. At June 30, 1996, the AFS portfolio constituted 40.9
percent of the total security portfolio. During the first six months of 1996
purchases for the HTM and AFS portfolios were $10,343,000 and $8,311,000,
respectively. At June 30, 1996, the net after-tax unrealized loss in the AFS
portfolio included in stockholders' equity was $108,000, a decrease of
$739,000 from the unrealized gain included in stockholders' equity at December
31, 1995. Since the securities portfolio is primarily fixed rate, a negative
equity adjustment is anticipated whenever interest rates increase. Future
<PAGE>
investment activity is difficult to predict, as it is dependent upon loan and
deposit trends.
As previously indicated, total loans increased $21,899,000 to
$349,516,000 as of June 30, 1996, from $327,617,000 at December 31, 1995. Loan
growth is net of loans reclassified to other real estate. The Bank continues
to experience good loan demand. Commercial loans at June 30, 1996, increased
7.2 percent from the level at December 31, 1995. Retail loans at June 30,
1996, increased 10.7 percent from December 31, 1995. Real estate loans
(excluding mortgages held-for-sale) decreased less than one percent from
December 31, 1995. The balances in the real estate loan portfolio are impacted
by the sale of real estate mortgages in the secondary market and the level of
refinance and new mortgage activity in the existing rate environment.
The Bank had 60.1 percent of its loans concentrated in commercial loans
at June 30, 1996, and 59.8 percent at December 31, 1995. Traditionally, this
type of lending may have more credit risk than other types of lending. This is
attributed to the fact that individual commercial loans are generally larger
than residential real estate and retail loans, and because the type of
borrower and purpose of commercial loans are not as homogeneous as with
residential and retail customers. The Bank manages this risk by pricing to the
perceived risk of each individual credit, and by diversifying the portfolio by
customer, product, industry and geography. Customer diversification is
accomplished through a relatively low administrative loan limit of $4,000,000.
Product diversification is accomplished by offering a wide variety of
financing options. Management reviews the loan portfolio to ensure loans are
diversified by industry. The loan portfolios are distributed throughout the
Bank's principal trade area, which encompasses eight counties in Indiana.
Other than loans disclosed elsewhere in this filing as past-due, nonaccrual or
restructured, the Bank is not aware of any loans classified for regulatory
purposes at June 30, 1996, that are expected to have a material impact on the
Bank's future operating results, liquidity or capital resources. The Bank is
not aware of any material credits in which there is serious doubt as to the
borrower's ability to comply with the loan repayment terms, other than those
disclosed as past due, nonaccrual or restructured.
The Bank continues to actively serve the mortgage needs of its CRA
defined market area by originating both conforming and nonconforming real
estate mortgages. During the first six months of 1996 the Bank originated
mortgages for sale totaling $11,784,000 as compared to $4,043,000 during the
first six months of 1995. This program of mortgage sales continues to produce
the liquidity needed to meet the mortgage needs of the markets served by the
Bank, and to generate a long-term servicing portfolio. As a part of the CRA
<PAGE>
commitment to making real estate financing available in all markets, the Bank
continues to originate non-conforming loans which are held to maturity or
prepayment. The Bank also meets the mortgage needs of low and moderate income
families by originating mortgages for sale to the FHLMC Affordable Gold
program.
Loans renegotiated as troubled debt restructuring are those loans for
which either the contractual interest rate has been reduced and/or other
concessions are granted to the borrower because of a deterioration in the
financial condition of the borrower which results in the inability of the
borrower to meet the terms of the loan. Loans renegotiated as troubled debt
restructuring totaled $1,404,000 at June 30, 1996, as compared to $1,432,000
at December 31, 1995. The loans classified as troubled debt restructuring at
June 30, 1996, are performing in accordance with the modified terms.
The Indiana State legislature has enacted laws relating to a state
chartered bank's legal lending limit, by adopting the basic regulations
applied by the Office of the Comptroller of the Currency (OCC) to national
banks. These guidelines set overall limits on lending activity, but actual
bank limits are subject to Board of Director approval. Based upon these new
regulations, the Bank's June 30, 1996 legal loan limit was approximately
$6,600,000. The legal loan limit will continue to increase as the Bank's
combined equity and allowance for loan losses continues to increase. At its
January 9, 1996 meeting, the Bank's Board of Directors modestly increased the
Bank's policy limit by $500,000, to $4,000,000 for any one borrower. With a
relatively low administrative loan limit of $4,000,000, the Bank's loan
portfolios consist primarily of loans to consumers and small businesses.
For the first six months of 1996, deposits have been increasing faster
than loans. However, the increase in loans is affected by the sale of mortgage
loans in the secondary market as discussed earlier. While demand accounts have
increased $2,811,000 during the first six months of 1996, other transaction
accounts have decreased $3,922,000 during the same period. During this period
there has been significant increases in time deposits and in repurchase
agreements which increased $37,460,000 or 14.1 percent and $15,428,000 or 26.5
percent respectively, reflecting consumer preferences and the current rate
environment. During this six month period, loans increased $21,899,000 or 6.7
percent. As a result of these loan and deposit trends, the Bank's average
daily loans/deposits ratio amounted to 75.8 percent at June 30, 1996, which is
unchanged from the ratio at year-end 1995. The Bank's average daily
loans/total deposits and repurchase agreements ratio amounted to 68.7 percent
at June 30, 1996. This is an increase from 67.8 percent at year-end 1995.
<PAGE>
The Bank, through its Asset/Liability Committee (ALCO), manages interest
rate risk by monitoring both its GAP position and the computer simulated
earnings impact of various rate scenarios. The Bank then modifies its
long-term risk parameters by attempting to generate the type of loans,
investments, and deposits that currently fit ALCO needs. The current long-term
guideline approved by the Board of Directors defines a neutral rate
sensitivity ratio (GAP/Total Assets) as plus or minus 20 percent. However, the
ALCO is authorized to manage this ratio outside these limits on a short-term
basis, as the committee's expectation of interest rates dictates. Management
has estimated that as of June 30, 1996, the Bank's GAP/Total Assets ratios
were (7.3) percent, (11.5) percent, and (13.5) percent for the three, six, and
twelve month time periods, respectively. For this analysis, savings accounts
have been assumed to be repriceable beyond twelve months, and therefore are
not included as repriceable liabilities in each of these ratios. The December
31, 1995, three, six, and twelve month GAP ratios were (5.2) percent, (11.7)
percent, and (12.8) percent respectively.
Management supplements the GAP analysis with a computer simulation
approach to manage the interest rate risk of the Bank. This computer
simulation analysis measures the net interest income impact of a 300 basis
point change in interest rates during the next 12 months. If the change in net
interest income is less than 3 percent of primary capital, the balance sheet
structure is considered to be within acceptable risk levels. At June 30, 1996,
the Bank's potential pretax exposure was within the Bank's policy limit. This
policy was last reviewed and approved by the Board of Directors in May, 1996.
The Bank is a member of the FHLB of Indianapolis. Membership has enabled
the Bank to participate in the housing programs sponsored by the FHLB, thereby
enhancing the Bank's ability to offer additional programs throughout its trade
area. At its meeting in March, 1996, the Board of Directors of the Bank passed
a resolution authorizing the Bank to borrow up to $50 million under the FHLB
program. As of June 30, 1996, the borrowings from the FHLB totaled $19,432,000
with $1,300,000 due June 24, 2003, $8,132,000 due January 14, 1997, and
$10,000,000 due December 18, 1998. All borrowings are collateralized by
residential real estate mortgages. Membership in the FHLB requires an equity
investment in FHLB stock. The amount required is computed annually, and is
based upon a formula which considers the Bank's total investment in
residential real estate loans, mortgage-backed securities and any FHLB
advances outstanding at year-end. The Bank's investment in FHLB stock at June
30, 1996, was $1,934,700.
The Federal Deposit Insurance Corporation's (FDIC) risk based capital
<PAGE>
regulations require that all banks maintain an 8.0 percent Tier II risk based
capital ratio. The FDIC has also established definitions of "well capitalized"
as a 5.0 percent Tier I leverage capital ratio, a 6.0 percent Tier I risk
based capital ratio and a 10.0 percent Tier II risk based capital ratio. As of
June 30, 1996, the Bank's ratios were 6.3 percent, 10.1 percent and 11.3
percent, respectively, excluding the SFAS No. 115 adjustment. These are
comparable to the ratios of 6.3 percent, 10.1 percent and 11.4 percent
reported at December 31, 1995, respectively, and ratios of 6.3 percent, 10.1
percent and 11.3 percent reported at June 30, 1995, respectively. All ratios
continue to be above "well capitalized" levels.
The Bank was examined by the Indiana Department of Financial Institutions
(DFI) as of March 31, 1995, in June, 1995. The Bank was also examined by the
FDIC as of March 31, 1996, in June, 1996. Management is not aware of any
regulatory recommendations that if implemented would have a material effect on
liquidity, capital or results of operations.
Total stockholders' equity increased $2,255,000 or 6.1 percent from
December 31, 1995, to $39,009,000 at June 30, 1996. Net income of $3,218,000,
less dividends of $639,000, and plus the change in the unrealized net gain
(loss) on securities available for sale of $(739,000), and $415,000 from the
issuance of common stock comprise this increase.
Total Bank assets have grown from $300,126,000 at June 30, 1991, to
$613,827,000 at June 30, 1996. This is an increase of $313,701,000 or 104.5
percent which equates to a 14.6 percent rate of growth per year. Stockholders'
equity has increased from $19,822,000 to $39,009,000 for the same time period.
That is an increase of $19,187,000 or 96.8 percent which equates to a 14.5
percent rate of growth per year. Net income for the six months ended June 30,
1991, compared to the net income for the same period of 1996, increased
$1,954,000 or 154.6 percent from $1,264,000 to $3,218,000. From June 30, 1991,
to June 30, 1996, the number of Lake City Bank offices increased from 18 to
31. This growth has been funded through results of operation and existing
capital. Management anticipates the Bank will continue to fund its growth from
current capital and results of operations. However, should the need arise, the
Corporation would have the ability to issue additional stock as a means of
pursuing growth.
RESULTS OF OPERATIONS
Net Interest Income
For the six month period ended June 30, 1996, total interest and dividend
income increased $2,287,000 or 11.5 percent to $22,201,000, from $19,914,000
during the same six months of 1995. Interest and dividend income increased
<PAGE>
$1,011,000 or 9.9 percent for the three month period ended June 30, 1996, as
compared to the three month period ended June 30, 1995. Daily average earning
assets for the first two quarters of 1996 increased to $542,199,000, a 14.5
percent increase over the same period in 1995. For the second quarter alone,
the daily average earning assets increased to $551,001,000 or 14.5 percent as
compared to the daily average earning assets of the second quarter of 1995.
The tax equivalent yields on average earning assets decreased by 23 basis
points for the six month period ended June 30, 1996, when compared to the same
respective period of 1995. For the three month period ended June 30, 1996,
this yield decreased 36 basis points over the yield for the three month period
ended June 30, 1995.
The decline in the yield on average earning assets was mainly due to
declining interest rates. The Bank's investment portfolio, which is primarily
fixed rate, experienced only a 1 basis point reduction in yield between the
first six months of 1996 and the first six months of 1995. However, the Bank's
home equity portfolio and most of the commercial portfolio are variable rate
and are tied to the Bank's base rate which is based upon the prime rate. The
average prime rate was 62 basis points lower during the first six months of
1996 when compared to the same period of 1995. This resulted in a 39 basis
point reduction in the overall tax equivalent yield on loans for the first two
quarters of 1996 as compared to the first two quarters of 1995. Offsetting
this yield reduction was good loan demand. Strong local economies, combined
with lower interest rates, produced growth in average daily loan balances of
15.4 percent between the first two quarters of 1996 and the same period of
1995. This growth in loan balances, coupled with the decline in average yield,
resulted in a 11.4 percent increase in total loan income to $15,942,000 during
the first six months of 1996, from $14,310,000 reported for the first six
months of 1995. For the three months ended June 30, 1996, as compared to the
same period for 1995, loan income increased $665,000 or 9.0 percent from
$7,428,000 to 8,093,000.
Total security income amounted to $6,199,000 for the six month period
ended June 30, 1996, and $3,147,000 for the three month period ended June 30,
1996. This compares to the $5,514,000 and $2,803,000 recorded for the same
periods in 1995. These increases in income reflect increases in average daily
balances of 14.5 percent and 14.5 percent, respectively. The security yields
remained relatively unchanged when comparing the yields for the six and three
months ending June 30, 1996, to the same periods for 1995. For both the six
and the three month comparisons the tax equivalent yield decreased only 1
basis point.
Income from short-term investments amounted to $60,000 for the six month
period ended June 30, 1996 and $27,000 for the three month period ended June
<PAGE>
30, 1996. This compares to $90,000 and $25,000 for the same respective periods
in 1995. The differences in the short-term investment income for the six
months ending June 30, 1996, compared to the six months ending June 30, 1995,
results from a lower average balance in short-term investments during the six
months of 1996, along with an 11 basis point reduction in the tax equivalent
yield. The slightly higher income for the three months ending June 30, 1996,
as compared to the three months ending June 30, 1995, is due to a $181,000
increase in the average daily balance partially offset by a 6 basis point
reduction in the tax equivalent yield.
Total interest expense increased $1,408,000 or 14.0 percent to
$11,449,000 for the six month period ended June 30, 1996, from $10,041,000 for
the six month period ended June 30, 1995, and it increased $522,000 or 10.0
percent for the three month period ended June 30, 1996, from the $5,232,000
for the three month period ended June 30, 1995. This is a result of the
overall growth of deposits and the change in the deposit mix. On an average
daily basis, total deposits (including demand deposits) increased 14.1 percent
and 13.6 percent for the six and three month periods ended June 30, 1996, as
compared to the similar periods ended June, 1995. When comparing these same
periods, the average daily balances of the demand deposit accounts rose
$8,115,000 and $9,419,000, respectively, while the average daily balances of
savings and transaction accounts combined declined $1,207,000 and $976,000,
respectively. The average daily balance of time deposits, which pay a higher
rate of interest as compared to demand deposit and transaction accounts,
increased $53,451,000 and $49,580,000 for the six and three months ended June
30, 1996, compared to the six and three months ended June 30, 1995. On an
average daily basis, total deposits (including demand deposits) and purchased
funds increased 14.0 percent and 14.5 for the six and three month periods
ended June 30, 1996, as compared to the six and three month periods ended June
30, 1995. The Corporation's daily cost of funds during the six month period
ended June 30, 1996, remained unchanged as compared to the same period of
1995, but decreased 17 basis points when comparing the three month periods
ended June 30, 1996, and June 30, 1995.
The net effect of all factors affecting total interest and dividend
income and total interest expense was to increase net interest income. For the
six month period ended June 30, 1996, net interest income totaled $10,752,000,
an increase of 8.9 percent or $879,000 over the first six months of 1995. For
the three month period ended June 30, 1996, net interest income totaled
$5,513,000, an increase of $489,000 or 9.7 percent over the three months ended
June 30, 1995.
The variation in net interest income reflects both local and national
market conditions as well as the ALCO's efforts to manage the margin and asset
<PAGE>
growth.
Provision for Loan Losses
It is the policy of the Bank to maintain the allowance for loan losses at
a level that is deemed appropriate based upon loan loss experience, the nature
of the portfolio, the growth expected for the portfolio and the evaluation of
the economic outlook for the current year and subsequent years. Special
consideration is given to nonperforming and nonaccrual loans as well as
factors that management feels deserve recognition during the entire life of
the portfolio. For several years, the Bank has maintained a quarterly loan
review program designed to provide reasonable assurance that the allowance is
maintained at an appropriate level and that changes in the status of loans are
reflected in the financial statements in a timely manner. The adherence to
this policy may result in fluctuations in the provision for loan losses.
Consequently, the increase in net interest income before provision for loan
losses, discussed above, may not necessarily flow through to the net interest
income after provision for loan losses.
The process of identifying credit losses that may occur based upon
current circumstances is subjective. Therefore, management maintains a general
allowance to cover all credit losses within the entire portfolio. The
methodology management uses to determine the adequacy of the loan loss reserve
is as follows:
1. Management reviews the larger individual loans for unfavorable
collectibility factors and assesses the requirement for specific reserves on
such credits. For those loans not subject to specific reviews, management
reviews previous loan loss experience to establish historical ratios and
trends in charge-offs by loan category. The ratios of net charge-offs to
particular types of loans enables management to establish charge-offs in
future periods by loan category and thereby establish appropriate reserves for
loans not specifically reviewed.
2. Management reviews the current and anticipated economic conditions of
its lending market to determine the effects on future loan charge-offs by loan
category, in addition to the effects on the loan portfolio as a whole.
3. Management reviews delinquent loan reports to determine risk of future
loan charge-offs. High delinquencies are generally indicative of an increase
in future loan charge-offs.
Given this methodology for determining the adequacy of the loan loss
<PAGE>
reserve, the provision for loan losses was the same in 1996, as compared to
1995. The provision amounted to $60,000 for each of the six month periods
ended June 30, 1996 and 1995. These provisions reflect the levels of past due
accruing loans (90 days or more). They also reflect the immaterial levels of
nonaccrual loans over the same periods. These levels of non-performing loans
reflect both the general economic conditions that have promoted growth and
expansion in the Bank's trade area during the last several years, and a credit
risk management strategy that promotes diversification.
At June 30, 1996, 73.3 percent of the Bank's allowance for loan losses
was classified as unallocated as compared to 74.2 percent classified as
unallocated at December 31, 1995. To a large extent, this reflects the growth
in total loans with the concentration of growth in the commercial loan
portfolio. With the commercial loan growth and the expansion into new markets,
management believes that it is prudent to continue to provide for loan losses,
due to the inherent credit risk involved with the commercial loan portfolio.
As of June 30, 1996, loans delinquent 30 days or more that were included
in the accompanying financial statements as accrual loans totaled
approximately $2,245,000. At June 30, 1996, there were loans totaling $160,000
on nonaccrual. At December 31, 1995, there was $1,435,000 in loans delinquent
30 days or more included as accruing loans in the financial statements and
$532,000 in nonaccrual loans. During the second quarter of 1996, loans
totaling $272,000 and included in nonaccrual loans at December 31, 1995, were
transferred into other real estate owned.
Following is a summary of the loan loss experience for the six months
ending June 30, 1996, and the year ending December 31, 1995.
June 30, December 31,
1996 1995
------------- -------------
(in thousands)
Amount of loans outstanding $ 349,516 $ 327,617
------------- -------------
Average daily loans outstanding for the
period $ 339,254 $ 309,241
------------- -------------
<PAGE>
Allowance for loan losses at the
beginning of the period $ 5,472 $ 4,866
Charge-offs
Commercial 123 137
Real estate 0 48
Installment 56 112
Credit card and personal lines of credit 19 58
------------- -------------
Total charge-offs 198 355
Recoveries
Commercial 3 26
Real estate 0 0
Installment 26 63
Credit card and personal lines of credit 2 6
------------- -------------
Total recoveries 31 95
------------- -------------
Net charge-offs (recoveries) 167 260
Purchase loan adjustment 0 746
Provision charged to expense 60 120
------------- -------------
Allowance for loan losses at the end of
the period $ 5,365 $ 5,472
============= =============
Ratio of net charge-offs during the period
to average daily loans during the period
Commercial 0.04% 0.03%
Real estate 0.00% 0.01%
Installment 0.01% 0.02%
Credit card and personal credit lines 0.00% 0.02%
------------- -------------
Total 0.05% 0.08%
============= =============
The purchase loan adjustment was the result of the acquisition of Gateway
Bank in July, 1995.
Net interest income after provision for loan losses totaled $10,692,000
and $5,483,000 for the six and three month periods ended June 30, 1996. This
represents increases of 9.0 percent and 9.8 percent over the same respective
<PAGE>
periods ended June 30, 1995.
Noninterest Income
Total noninterest income increased $693,000 or 32.4 percent to $2,831,000
for the six month period ended June 30, 1996, from $2,138,000 recorded for the
six month period ended June 30, 1995. Total noninterest income for the three
month period ended June 30, 1996, was $1,477,000 which was $389,000 or 35.8
percent higher than the noninterest income for the three months ended June 30,
1995.
Trust fees, which represent basic recurring service fee income, increased
$107,000 or 27.3 percent to $499,000 for the six month period ended June 30,
1996, as compared to $392,000 for the first six months of 1995. For the three
month period ended June 30, 1996, trust fees were $213,000, an increase of
$46,000 over the fees for the same period in 1995. The major fee increases
were in testamentary trust fees, employee benefit plan fees and stock transfer
service fees.
Service charges on deposit accounts increased 15.6 percent or $171,000
during the six month period ended June 30, 1996, totaling $1,270,000, as
compared to the same period in 1995. These service charges increased $115,000
for the three month period ended June 30, 1996, over the amount recorded for
the three month period ended June 30, 1995. Fees on the LCB Club account (the
Bank's low cost checking account service) and overdraft fees were the primary
sources for the increase. Adjustments to the schedule of deposit account fees
also contributed to this increase.
Other income (net) consists of normal recurring fee income, as well as
other income that management classifies as nonrecurring. Other income (net)
increased 37.1 percent or $229,000 to $847,000 for the six month period ended
June 30, 1996, as compared to the same period in 1995. It increased $139,000
or 44.0 percent for the three months ended June 30, 1996, as compared to the
same months in 1995. Recurring components of other income increased 31.6
percent during the first six months of 1996, as compared to the first six
months of 1995, and increased 53.7 percent for the three months of the second
quarter of 1996, as compared to the three months of the second quarter of
1995. The major increase for the first six months was in mortgage service
fees. The nonrecurring components of other income increased $68,000 or 66.0
percent for the first six months of 1996, as compared to the same period in
1995. The majority of this increase was from other real estate owned income.
The profits from the sale of mortgages during the six month period ended
June 30, 1996, totaled $221,000, as compared to $52,000 during the same period
<PAGE>
in 1995. For the second quarter of 1996 only, these profits were $121,000 as
compared to $35,000 for the same period in 1995. These increases from the
prior periods are a reflection of a lower rate environment which has increased
the volume of mortgages originated and the adoption of SFAS No. 122. The
impact of adopting SFAS No. 122 was to increase the profits on the sale of
mortgage loans during the first six months of 1996 by approximately $126,000.
Net investment security gains (losses) amounted to $(6,000) and $(4,000)
for the six and three month periods ended June 30, 1996, as compared to
$(23,000) and $(7,000) for the six and three month periods ended June 30,
1995. In the first six months of 1996 and 1995, special calls of zero coupon
bonds were responsible for these small losses. Additional calls are expected
in future periods.
Noninterest Expense
Noninterest expense increased $584,000 or 7.4 percent to $8,497,000 for
the six month period ended June 30, 1996, as compared to the first six months
of 1995. Noninterest expense increased $186,000 or 4.6 percent when comparing
the three months ended June 30, 1996, to the three months ended June 30, 1995.
For the six months ended June 30, 1996, salaries and employee benefits
increased to $4,618,000, a $593,000 increase or 14.7 percent as compared to
the first six months of 1995. When comparing the three months ended June 30,
1996, to the same period in 1995, the increase was $321,000 or 15.6 percent.
These increases reflect the staffing of the Middlebury, LaGrange, Elkhart
Concord, Rochester and Kendallville locations, as well as normal salary
increases. Full-time equivalent employees increased to 310 at June 30, 1996,
from 284 at June 30, 1995.
For the six and three month periods ended June 30, 1996, occupancy and
equipment expenses were $1,413,000 and $690,000 respectively, a $161,000
increase or 12.9 percent and $58,000 or 9.2 percent from the same periods one
year ago. This performance reflects the ordinary timing differences incurred
with these types of expenses, as well as additional occupancy expense related
to the new locations added in 1996 and 1995. These expenses are expected to
continue to increase in 1996 with the Bank's continued growth and expansion.
For the six month period ended June 30, 1996, other expenses totaled
$2,466,000 as compared to $2,636,000 during the same period in 1995. This is a
decrease of 6.5 percent or $170,000. For the second quarter of 1996 as
compared to the second quarter of 1995 the decrease was $193,000 or 13.8
<PAGE>
percent. Increases in business development, data processing, supplies,
telephone, postage and other miscellaneous expenses were offset by a decline
in professional and regulatory fees. When comparing the six months ended June
30, 1996, to the six months ended June 30, 1995, other expenses, excluding
professional and regulatory fees, increased $286,000. This was offset by a
$456,000 decrease in professional and regulatory fees resulting from the
reduction in FDIC insurance fees. When comparing the three months ended June
30, 1996, to the three months ended June 30, 1995, other expense, excluding
professional and regulatory fees, increased $44,000. This was offset by a
$237,000 decrease in professional and regulatory fees resulting from the
reduction in FDIC insurance fees.
Income Before Income Tax Expense
As a result of the above factors, income before income tax expense
increased to $5,026,000 for the first six months of 1996, as compared to
$4,038,000 for the same period in 1995. This is an increase of $988,000 or
24.5 percent. For the three months ended June 30, 1996, as compared to the
three months ended June 30, 1995, the increase in income before income tax
expense was $692,000 or 34.7 percent.
Income Tax Expense
Income tax expense increased to $1,808,000 for the first six months of
1996, as compared to $1,385,000 for the same period in 1995. This is a
$423,000 or 30.5 percent increase. Income tax expense for the second quarter
of 1996 increased $325,000 or 50.2 percent as compared to the second quarter
of 1995.
The combined State franchise tax expense and the Federal income tax
expense as a percent of income before income tax expense increased to 36.0
percent during the first six months of 1996, as compared to 34.3 percent
during the same period in 1995. It increased to 36.2 percent for the three
months ended June 30, 1996, as compared to 32.5 percent for the same three
months in 1995. Currently the State franchise tax rate is 8.5 percent and is a
deductible expense for computing Federal income tax.
Net Income
As a result of all factors indicated above, net income increased to
$3,218,000 for the first six months of 1996, an increase of $565,000 or 21.3
percent from the $2,653,000 recorded over the same period in 1995. Earnings
per share for the first six months of 1996 were $1.11 per share as compared to
$.92 per share for the first six months of 1995. The 1996 and 1995 earnings
per share have been restated to reflect a two-for-one stock split on April 30,
<PAGE>
1996. For the three months ended June 30, 1996, net income was $1,714,000 as
compared to $1,347,000 for the three months ended June 30, 1995, an increase
of $367,000 or 27.2 percent.
<PAGE>
LAKELAND FINANCIAL CORPORATION
FORM 10-Q
June 30, 1996
Part II - Other Information
Item 4 - Submission of Matters to a Vote of Security Holders
At the annual meeting of shareholders held on April 9, 1996, the
shareholders voted on a proposal to increase the capital stock of the
Corporation from 2,750,000 shares to 10,000,000 shares. The Articles of
Incorporation of Lakeland Financial Corporation require an affirmative vote of
two-thirds of the issued and outstanding shares of the Corporation in order to
increase the capital stock. At the annual meeting there were 1,138,676 votes
for the increase and 56,411 against. All abstentions and non-votes were
treated as no vote. In order for the proposal to pass there needed to be
965,664 shares voted for the proposal. There being more than the required
two-thirds vote for the proposal to increase the capital stock, the proposal
passed.
There were no other submissions of matters to a vote by security holders
during the quarter ended June 30, 1996.
<PAGE>
LAKELAND FINANCIAL CORPORATION
FORM 10-Q
June 30, 1996
Part II - Other Information
Item 5 - Other Information
Subsequent to the shareholder approval to increase the common stock of
the Corporation, the Board of Directors of the Corporation declared a
two-for-one stock split at their regularly scheduled meeting. The record date
for the split was April 30, 1996, with new certificates issued on May 15,
1996.
At their regularly scheduled meeting on May 14, 1996, the Board of
Directors of Lakeland Financial Corporation approved the restated Articles of
Incorporation and the restated By-Laws of Lakeland Financial Corporation.
At their regularly scheduled meeting on June 11, 1996, the Board of
Directors of Lake City Bank approved the restated Articles of Incorporation
and the restated By-Laws of Lake City Bank.
<PAGE>
LAKELAND FINANCIAL CORPORATION
FORM 10-Q
June 30, 1996
Part II - Other Information
Item 6 - Exhibits and Reports on Form 8-K
(a) The following exhibits are filed as part of this report:
Exhibit 3(i) Restated Articles of Incorporation of Lakeland
Financial Corporation
Exhibit 3(i) Restated Articles of Incorporation of Lake City Bank
Exhibit 3(ii) Restated By-Laws of Lakeland Financial Corporation
Exhibit 3(ii) Restated By-Laws of Lake City Bank
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed by the Registrant during the last
32 weeks ending August 9, 1996.
<PAGE>
LAKELAND FINANCIAL CORPORATION
FORM 10-Q
June 30, 1996
Part II - Other Information
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.
LAKELAND FINANCIAL CORPORATION
(Registrant)
Date: August 9, 1996 R. Douglas Grant
R. Douglas Grant - President
Date: August 9, 1996 Terry M. White
Terry M. White - Secretary/Treasurer
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description Page
------- ------------------------------------------- -------
3(i) Restated Articles of Incorporation of
Lakeland Financial Corporation
3(i) Restated Articles of Incorporation of
Lake City Bank
3(ii) Restated By-Laws of Lakeland Financial
Corporation
3(ii) Restated By-Laws of Lake City Bank
27 Financial Data Schedule (EDGAR filing only)
<PAGE>
Exhibit 3(i)
RESTATED
ARTICLES OF INCORPORATION
OF
LAKELAND FINANCIAL CORPORATION
ARTICLE I
--------
NAME
The name of the Corporation is Lakeland Financial Corporation.
ARTICLE II
----------
PURPOSES
The purposes for which the Corporation is formed are:
SECTION 1. To acquire control of the Lake City Bank, of Warsaw, Indiana
and to operate as a bank holding company.
SECTION 2. GENERAL POWERS. To possess, exercise, and enjoy all rights,
powers and privileges conferred upon bank holding companies by the Bank
Holding Company Act of 1956 as amended and as hereafter amended or
supplemented, and all other rights and powers authorized by the laws of the
State of Indiana, and the laws of the United States of America applicable to
bank holding companies and the regulations of the Board of Governors of the
Federal Reserve System.
SECTION 3. TO DEAL IN REAL PROPERTY. Subject to the limitations of
Section 2 above, to acquire by purchase, exchange, lease or otherwise, and to
hold, own, use, construct, improve, equip, manage, occupy, mortgage, sell,
lease, convey, exchange or otherwise dispose of, alone or in conjunction with
others, real estate and leaseholds of every kind, character and description
whatsoever and wheresoever situated, and any other interests therein,
including, but without limiting the generality thereof, buildings, factories,
warehouses, offices and structures of all kinds.
SECTION 4. CAPACITY TO ACT. Subject to the limitations of Section 2
above, to have the capacity to act possessed by natural persons and to perform
such acts as are necessary and advisable to accomplish the purposes,
activities and business of the Corporation.
1
<PAGE>
SECTION 5. TO ACT AS AGENT. Subject to the limitations of Section 2
above, to act as agent or representative for any firm, association,
corporation, partnership, government or person, public or private, with
respect to any activity or business of the Corporation.
SECTION 6. TO MAKE CONTRACTS AND GUARANTEES. Subject to the limitations
of Section 2 above, to make, execute and perform, or cancel and rescind,
contracts of every kind and description, including guarantees and contracts of
suretyship, with any firm, association, corporation, partnership, government
or person, public or private.
SECTION 7. TO BORROW FUNDS. Subject to the limitations of Section 2
above, to borrow moneys for any activity or business of the Corporation and,
from time to time, without limit as to amount, to draw, make, accept, endorse,
execute and issue promissory notes, drafts, bills of exchange, warrants,
bonds, debentures, notes, trust receipts, and other negotiable or
non-negotiable instruments and evidences of indebtedness, and to secure the
payment thereof, and the interest thereon, by mortgage, pledge, conveyance, or
assignment in trust of all or any part of the assets of the Corporation, real,
personal or mixed, including contract rights, whether at the time owned or
thereafter acquired, and to sell, exchange, or otherwise dispose of such
securities or other obligations of the Corporation.
SECTION 8. TO DEAL IN ITS OWN SECURITIES. Subject to the limitations of
Section 2 above, to purchase, take, receive or otherwise acquire, and to hold,
own, pledge, transfer or otherwise dispose of shares of its own capital stock
and other securities. Purchases of the Corporation's own shares, whether
direct or indirect, may be made without shareholder approval only to the
extent of unreserved and unrestricted earned surplus available therefor.
ARTICLE III
-----------
PERIOD OF EXISTENCE
The period during which the Corporation shall continue is perpetual.
ARTICLE IV
----------
RESIDENT AGENT AND PRINCIPAL OFFICE
SECTION 1. RESIDENT AGENT. The name and address of the Corporation's
Resident Agent for service of process is R. Douglas Grant, 202 East Center
Street, P.O. Box 1387, Warsaw, Indiana 46580.
2
<PAGE>
SECTION 2. PRINCIPAL OFFICE. The post office address of the principal
office of the Corporation is 202 East Center Street, P.O. Box 1387, Warsaw,
Indiana 46580.
ARTICLE V
---------
AUTHORIZED SHARES
SECTION 1. NUMBER OF SHARES. The total number of shares which the
Corporation is to have authority to issue is 10,000,000, all of which are
without par value.
SECTION 2. GENERAL TERMS. All of the authorized shares shall be
designated as "Common Stock", and each share of Common Stock shall be equal to
every other share of Common Stock and shall participate equally in all
earnings and profits of the Corporation and on distribution of assets, either
on dissolution, liquidation or otherwise.
SECTION 3. VOTING RIGHTS. Each holder of the Common Stock shall have the
right to vote on all matters presented to shareholders and shall be entitled
on all matters including elections of directors to one vote for each share of
Common Stock registered in his name on the books of the Corporation.
ARTICLE VI
----------
REQUIREMENTS PRIOR TO DOING BUSINESS
The stated capital of the Corporation as of the date of filing of these
Restated Articles of Incorporation is at least One Thousand Dollars
($1,000.00).
ARTICLE VII
-----------
DIRECTOR(S)
SECTION 1. NUMBER OF DIRECTORS. The Board of Directors shall be composed
of such number of directors ranging from nine (9) to eighteen (18), inclusive,
as shall be established from time to time by the By-laws of the Corporation.
In the absence of the establishment of such a number, the number of directors
shall be ten (10).
SECTION 2. NAMES AND POST OFFICE ADDRESSES OF THE DIRECTORS. The names
and post office addresses of the Board of Directors of the Corporation at the
date of adoption of these Restated Articles of Incorporation are:
3
<PAGE>
NUMBER AND
NAME STREET OR BUILDING CITY STATE ZIP
- -------------------- -------------------------- --------- ----- -----
Eddie Creighton P.O. Box 1058 Warsaw IN 46580
Anna K. Duffin 2300 S. Main Goshen IN 46526
L. Craig Fulmer 120 W. Lexington, Ste. 310 Elkhart IN 46516
R. Douglas Grant P.O. Box 1387 Warsaw IN 46580
Jerry L. Helvey 2808 E. Turnberry Rd. Warsaw IN 46580
Homer A. Kent 305 Sixth Street Winona Lake IN 46590
J. Alan Morgan 114 EMS T36 Lane Leesburg IN 46538
Richard L. Pletcher 1600 W. Market St. Nappanee IN 46550
Joseph P. Prout P.O. Box 877 Warsaw IN 46580
Philip G. Spear 111 S. High St. Warsaw IN 46580
Terry L. Tucker P.O. Box 308 Milford IN 46542
George L. White 1727 Betsy Ct. Warsaw IN 46580
SECTION 3. QUALIFICATIONS OF DIRECTORS.
(a) Directors need not be shareholders of the Corporation.
(b) For the period of at least six (6) months prior to his election to
the Board of Directors of the Corporation and during his tenure thereon, each
director shall be a resident of the market area of the Corporation as
determined annually by the Board of Directors as required by the Community
Reinvestment Act of 1977, as now in effect or as hereafter amended.
(c) No director shall be a director, officer, employee, or the holder of
5% or more of the outstanding shares of any class of voting securities or
securities convertible into voting securities of any financial institution,
including but not limited to banks, trust companies, savings and loan
associations, whether stock or mutual, credit unions, bank holding companies,
savings and loan holding companies, or any other entity controlling,
controlled by or in common control with a financial institution, other than
(a) the Corporation, (b) any subsidiary of or other entity controlled by the
Corporation, or (c) serving in any capacity at the request of the Corporation.
(d) Those directors holding office as of the date of these amended
Articles, who would otherwise be precluded from serving as directors of this
4
<PAGE>
Corporation because of the restrictions imposed by this Section 3 of the
Article VII, shall be permitted to continue to serve as directors of the
Corporation for such continuous period of time as they are elected or
reelected by the shareholders.
SECTION 4. TERMS OF DIRECTORS.
(a) The terms of the Directors shall be staggered as set forth herein.
For purposes of this section, the Board of Directors shall be divided into
three classes consisting, to the extent possible, of equal numbers. The
classes shall be designated Class A, Class B and Class C, respectively. To the
extent that the number of directors is not divisible by three (3), the first
additional director shall be placed in Class A and the second additional
director, if there is one, shall be placed in Class B.
(b) At the annual meeting of shareholders to be held in 1984, the
shareholders shall vote for the total number of directors as shall be set by
the Board of Directors pursuant to Section 1 of this Article VII. Class A
shall be elected for a term of three (3) years. Class B shall be elected for
an initial term of two (2) years and for terms thereafter of three (3) years.
Class C shall be elected for an initial term of one (1) year and for terms
thereafter of three (3) years. Each person elected shall serve for the term of
the class to which he has been designated and until his successor is duly
elected and qualified or until his earlier death, resignation,
disqualification, or removal from office.
(c) At the annual meeting of shareholders to be held in 1985, the
shareholders shall vote for the number of directors comprising Class B to hold
office for a term of three (3) years. At the annual meeting of shareholders to
be held in 1986, the shareholders shall vote for the number of directors
comprising Class C to hold office for a term of three years. At subsequent
annual meetings, the shareholders shall vote for the number of directors
comprising the class whose term is expiring, which class shall be elected for
a term of three (3) years.
SECTION 5. REMOVAL OF DIRECTORS. Except as provided below, a director may
not be removed or suspended from the Board of Directors except with cause as
determined by procedures established from time to time by the By-laws of the
Corporation. Any or all members of the Board of Directors may be removed, with
or without cause, at a meeting of the shareholders called expressly for that
purpose, by a vote of the holders of not less than two-thirds of the
outstanding shares of common stock of the Corporation entitled to vote at that
meeting. Any director shall immediately cease being a director when he no
longer satisfies the standards for qualification established by Section 3 of
this Article VII.
5
<PAGE>
ARTICLE VIII
------------
OFFICERS
The name and post office address of the President and Secretary of the
Corporation at the date of adoption of these Restated Articles of
Incorporation are, respectively:
NUMBER AND
NAME STREET OR BUILDING CITY STATE ZIP
- --------------------------- ------------------ ------ ----- -----
R. Douglas Grant, President P.O. Box 1387 Warsaw IN 46580
Terry M. White, Secretary P.O. Box 1387 Warsaw IN 46580
ARTICLE IX
----------
PROVISIONS FOR REGULATION OF BUSINESS
AND CONDUCT OF AFFAIRS OF CORPORATION
SECTION 1. MEETINGS OF SHAREHOLDERS. Meetings of shareholders of the
Corporation shall be held at such place, within or without the State of
Indiana, as may be specified in the notices or waivers of notice of such
meetings.
SECTION 2. MEETINGS OF DIRECTORS. Meetings of Directors of the
Corporation shall be held at such place, within or without the State of
Indiana, as may be specified in the notices or waivers of notice of such
meetings.
SECTION 3. CONSIDERATION FOR SHARES. Shares of stock of the Corporation
shall be issued or sold in such manner and for such amount of consideration as
may be fixed from time to time by the Board of Directors.
SECTION 4. BY-LAWS OF THE CORPORATION. The Board of Directors by a
majority vote of the actual number of directors elected and qualified from
time to time shall have the power, without the assent or vote of the
shareholders, to make, alter, amend or repeal the By-Laws of the Corporation.
SECTION 5. COMMITTEES. If the By-Laws so provide, the Board of Directors
may, by resolution adopted by a majority of the actual number of directors
elected and qualified from time to time, designate from among its members an
executive committee and one or more other committees, each of which to the
extent provided in such resolution, the Articles of Incorporation or the
6
<PAGE>
By-Laws, may exercise all of the authority and powers of the Board of
Directors of the Corporation, and shall have the power to authorize the
execution of all documents and the affixing of the Seal of the Corporation to
all papers which may require it; but no such committee shall have the
authority of the Board of Directors in reference to amending the Articles of
Incorporation, adopting an agreement or plan of merger or consolidation,
proposing a special corporate transaction, recommending to the shareholders a
voluntary dissolution of the Corporation or a revocation thereof, electing or
removing officers, or amending the By-Laws of the Corporation. The designation
of any such committee and the delegation thereto of authority shall not
operate to relieve the Board of Directors, or any member thereof, of any
responsibility imposed by law. No member of any such committee shall continue
to be a member thereof after he ceases to be a Director of the Corporation.
SECTION 6. CONSENT ACTION BY SHAREHOLDERS. Any action required by statute
to be taken at a meeting of the shareholders, or any action which may be taken
at a meeting of the shareholders, may be taken without a meeting if, prior to
such action, a consent in writing, setting forth the action so taken, shall be
signed by all of the shareholders entitled to vote with respect to the subject
matter thereof, and such written consent is filed with the minutes of the
proceedings of the shareholders.
SECTION 7. CONSENT ACTION BY DIRECTORS. Any action required or permitted
to be taken at any meeting of the Board of Directors or any committee thereof
may be taken without a meeting, if prior to such action a written consent to
such action is signed by all members of the Board of Directors or such
committee, as the case may be, and such written consent is filed with the
minutes of proceedings of the Board of Directors or committee.
SECTION 8. INTEREST OF DIRECTORS IN CONTRACTS. Any contract or other
transaction between the Corporation and any corporation in which this
Corporation owns a majority of the capital stock shall be valid and binding,
notwithstanding that the directors or officers of this Corporation are
identical or that some or all of the directors of officers, or both, are also
directors or officers of such other corporation.
Any contract or other transaction between the Corporation and one or more
of its directors or members or employees, or between the Corporation and any
firm of which one or more of its directors are members or employees or in
which they are interested, or between the Corporation and any corporation or
association of which one or more of its directors are stockholders, members,
directors, officers, or employees or in which they are interested, shall be
valid for all purposes notwithstanding the presence of such director or
directors at the meeting of the Board of Directors of the Corporation which
acts upon, or in reference to, such contract or transaction and
notwithstanding his or their participation in such action, if the fact of such
interest shall be disclosed or known to the Board of Directors and the Board
of Directors shall authorize, approve and ratify such contract or transaction
by a vote of a majority of the directors present, such interested director or
7
<PAGE>
directors to be counted in determining whether a quorum is present, but not to
be counted in calculating the majority of such quorum necessary to carry such
vote. This Section shall not be construed to invalidate any contract or other
transaction which would otherwise be valid under the common statutory law
applicable thereto.
SECTION 9. INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES. Every
person who is or was a director, officer or employee of this Corporation or of
any other corporation for which he is or was serving in any capacity at the
request of this Corporation shall be indemnified by this Corporation against
any and all liability and expense that may be incurred by him in connection
with or resulting from or arising out of any claim, action, suit or
proceeding, provided that such person is wholly successful with respect
thereto or acted in good faith in what he reasonably believed to be in or not
opposed to the best interests of this Corporation or such other corporation,
as the case may be, and, in addition, in any criminal action or proceeding in
which he had no reasonable cause to believe that his conduct was unlawful. As
used herein, "claim, action, suit or proceeding" shall include any claim,
action, suit or proceeding (whether brought by or in the right of this
Corporation or such other corporation or otherwise), civil, criminal,
administrative or investigative, whether actual or threatened or in connection
with an appeal relating thereto, in which a director, officer or employee of
this Corporation may become involved, as a party or otherwise,
(i) by reason of his being or having been a director, officer or employee
of this Corporation or such other corporation or arising out of his status as
such or
(ii)by reason of any past or future action taken or not taken by him in
any such capacity, whether or not he continues to be such at the time such
liability or expense is incurred.
The terms "liability" and "expense" shall include, but shall not be
limited to, attorneys' fees and disbursements, amounts of judgments, fines or
penalties, and amounts paid in settlement by or on behalf of a director,
officer or employee, but shall not in any event include any liability or
expenses on account of profits realized by him in the purchase or sale of
securities of the Corporation in violation of the law. The termination of any
claim, action, suit or proceeding, by judgment, settlement (whether with or
without court approval) or conviction or upon a plea of guilty or of nolo
contendere, or its equivalent, shall not create a presumption that a director,
officer or employee did not meet the standards of conduct as forth in this
paragraph.
Any such director, officer or employee who has been wholly successful
with respect to any such claim, action, suit or proceeding shall be entitled
to indemnification as a matter of right. Except as provided in the preceding
sentence, any indemnification hereunder shall be made only if (i) the Board of
Directors acting by a quorum consisting of Directors who are not parties to or
8
<PAGE>
who have been wholly successful with respect to such claim, action, suit or
proceeding shall find that the director, officer or employee has met the
standards of conduct set forth in the preceding paragraph; or (ii) independent
legal counsel shall deliver to the Corporation their written opinion that such
director, officer or employee has met such standards of conduct.
If several claims, issues or matters of action are involved, any such
person may be entitled to indemnification as to some matters even though he is
not entitled as to other matters.
The Corporation may advance expenses to or, where appropriate, may at its
expense undertake the defense of any such director, officer or employee upon
receipt of an undertaking, in form and substance satisfactory to the Board of
Directors, by or on behalf of such person to repay such expenses if it should
ultimately be determined that he is not entitled to indemnification hereunder.
The provisions of this Section shall be applicable to claims, actions,
suits or proceedings made or commenced after the adoption hereof, whether
arising from acts or omissions to act during, before or after the adoption
hereof.
The rights of indemnification provided hereunder shall be in addition to
any rights to which any person concerned may otherwise be entitled by contract
or as a matter of law and shall inure to the benefit of the heirs, executors
and administrators of any such person.
The Corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the Corporation
or is or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation against any liability asserted
against him and incurred by him in any capacity or arising out of his status
as such, whether or not the Corporation would have the power to indemnify him
against such liability under the provisions of this Section or otherwise.
SECTION 10. DISTRIBUTIONS OUT OF CAPITAL SURPLUS. The Board of Directors
of the Corporation may from time to time distribute to its shareholders out of
the capital surplus of the Corporation a portion of its assets, in cash or
property, without the assets or vote of the shareholders, provided that with
respect to such a distribution the requirements of The Indiana General
Corporation Act other than shareholder approval are satisfied.
SECTION 11. POWERS OF DIRECTORS. In addition to the powers and the
authority granted by these Articles or by statute expressly conferred, the
Board of Directors of the Corporation is hereby authorized to exercise all
powers and to do all acts and things as may be exercised or done under the
laws of the State of Indiana by a corporation organized and existing under the
9
<PAGE>
provisions of The Indiana General Corporation Act and not specifically
prohibited or limited by these Articles.
SECTION 12. VOTE REQUIRED ON CERTAIN MATTERS.
(a) The affirmative vote of the holders of not less than two-thirds of
the outstanding shares of common stock of the Corporation shall be required
for the authorization or adoption of the following transactions:
(1) any merger or consolidation of the Corporation or any subsidiary
thereof with or into any control person, whether or not the
Corporation or any such subsidiary is the surviving corporation of
any such merger or consolidation;
(2) any sale, lease, exchange, transfer or other disposition
(including, without limitation, the granting of a mortgage or other
security interest), to a control person by the Corporation or any
subsidiary thereof, of any material part of the assets of the
Corporation or of any subsidiary thereof;
(3) a liquidation or dissolution of the Corporation or any material
subsidiary thereof or adoption of any plan with respect thereto; or
(4) any amendment of the Articles of Incorporation of the
Corporation.
(b) Prior to the approval of any of the transactions referred to in
subsection (a) of this Section, the Board of Directors shall make an
evaluation of all relevant factors and issues arising out of or in connection
with any such transaction and shall report to the shareholders the conclusions
which the Board of Directors reaches from such evaluation. Relevant factors
and issues shall include consideration of the impact which any such
transaction would have on the community in which the Corporation or its
subsidiaries conduct business, the employees of the Corporation or any of its
subsidiaries, and the suppliers and customers of the Corporation and its
subsidiaries, and shall also include any and all other factors which the Board
of Directors in its discretion deems relevant.
(c) The following definitions shall apply when used in this Section:
(1) "Control person" shall include any person, whether an
individual, a corporation, a partnership, a group, or otherwise, who
separately or in association with one or more other persons (i)
owns, or controls the vote of, in the aggregate, directly or
indirectly, ten percent (10%) or more of the outstanding voting
securities of the Corporation, or (ii) during the twelve month
period preceding any such vote, has acquired or obtained control of
10
<PAGE>
the vote of five percent (5%) or more of the voting securities of
the Corporation.
(2) "Controls the vote" and "control of the vote" shall mean the
ability, directly or indirectly, to direct or cause the direction of
the vote, whether by reason of agreement, an exercisable option or
otherwise.
(3) "Voting securities of the Corporation" includes (i) any
securities of the Corporation which are entitled to vote on any
matter referred to in this Section; (ii) any securities, including
but not limited to, preferred stock, bonds, debentures, or options,
which can be converted into voting securities at the time of the
vote referred to in this Section; and (iii) security agreements of
any nature for which voting securities are pledged as collateral.
11
Exhibit 3(i)
RESTATED
ARTICLES OF INCORPORATION
of
LAKE CITY BANK
==============================================================================
ARTICLE 1. The name of this corporation shall be Lake City Bank.
ARTICLE 2. The purpose or purposes for which this corporation is formed
are as follows:
To have, hold, exercise and enjoy the rights, powers and privileges of
commercial banks as set forth in the Indiana Financial Institutions Act as now
in effect and as may be hereafter amended.
ARTICLE 3. The period during which the corporation shall continue is
perpetual.
ARTICLE 4. The post office address of the principal office of the
corporation is 202 East Center Street, Post Office Box 1387, Warsaw, Indiana
46581-1387.
ARTICLE 5. There shall be one (1) class of stock, and the amount of the
capital stock and the number and par value of the shares into which the
capital stock of this corporation is to be divided is:
Total capital stock $2,182,240
---------------------------------------------------------
(For capital stock requirements see Section 83 of the
Indiana Financial Institutions Acts of 1933)
Par value of shares $10.00 per share.
Number of shares 218,224.
ARTICLE 6. The amount of paid in capital with which this corporation will
begin business is $100,000.
ARTICLE 7. The Board of Directors shall be composed of such number of
directors ranging from nine (9) to eighteen (18), inclusive, as shall be
established from time to time by the Bylaws of the Corporation. In the absence
of the establishment of such a number, the number of directors shall be ten
(10).
ARTICLE 8. The names and post office addresses of the original
incorporators were as follows:
<PAGE>
NAME POST OFFICE ADDRESS
- ---------------- -------------------
Richard G. Adams P.O. Box 1387
Warsaw, IN 46580
Donald E. Frantz 612 No. Harrison
Warsaw, IN 46580
R. Douglas Grant P.O. Box 1387
Warsaw, IN 46580
Jerry L. Helvey R.R. 1, Box 533
Leesburg, IN 46538
Richard D. Mackey P.O. Box 1387
Warsaw, IN 46580
Charles A. Ker P.O. Box 407
Warsaw, IN 46580
J. Alan Morgan R.R. 2
Leesburg, IN 46538
Joseph P. Prout P.O. Box 877
Warsaw, IN 46580
Robert L. Rasor P.O. Box 188
Warsaw, IN 46580
Philip G. Spear P.O. Box 316
Warsaw, IN 46580
EXHIBIT 3(ii)
RESTATED
BY-LAWS
of
LAKELAND FINANCIAL CORPORATION
==============================================================================
ARTICLE I
---------
SECTION 1. NAME. The name of the corporation is Lakeland Financial
Corporation ("Corporation").
SECTION 2. PRINCIPAL OFFICE OF THE RESIDENT AGENT. The post-office
address of the principal office of the Corporation is 202 East Center Street,
Warsaw, Indiana 46580, and the name and post-office address of its Resident
Agent in charge of such office is R. Douglas Grant, 202 East Center Street,
Warsaw, Indiana 46580.
SECTION 3. SEAL. The seal of the Corporation shall be circular in form
and mounted upon a metal die, suitable for impressing the same upon paper.
About the upper periphery of the seal shall appear the words "Lakeland
Financial Corporation" and about the lower periphery thereof the word
"Indiana". In the center of the seal shall appear the word "Seal".
ARTICLE II
----------
The fiscal year of the Corporation shall begin each year on the first day
of January and end on the last day of December of the same year.
ARTICLE III
-----------
CAPITAL STOCK
SECTION 1. NUMBER OF SHARES AND CLASSES OF CAPITAL STOCK. The total
number of shares of capital stock which the Corporation shall have authority
to issue shall be as stated in the Articles of Incorporation.
SECTION 2. CONSIDERATION FOR NO PAR VALUE SHARES. The shares of stock of
the Corporation without par value shall be issued or sold in such manner and
1
<PAGE>
RESTATED
BY-LAWS
of
LAKELAND FINANCIAL CORPORATION
==============================================================================
for such amount of consideration as may be fixed from time to time by the
Board of Directors. Upon payment of the consideration fixed by the Board of
Directors, such shares of stock shall be fully paid and nonassessable.
SECTION 3. CONSIDERATION FOR TREASURY SHARES. Treasury shares may be
disposed of by the Corporation for such consideration as may be determined
from time to time by the Board of Directors.
SECTION 4. PAYMENT FOR SHARES. The consideration for the issuance of
shares of capital stock of the Corporation may be paid, in whole or in part,
in money, in other property, tangible or intangible, or in labor actually
performed for, or services actually rendered to the Corporation; provided,
however, that the part of the surplus of the Corporation which is transferred
to stated capital upon the issuance of share as a share dividend shall be
deemed to be the consideration for the issuance of such shares. When payment
of the consideration for which a share was authorized to be issued shall have
been received by the Corporation, or when surplus shall have been transferred
to stated capital upon the issuance of a share dividend, such share shall be
declared and taken to be fully paid and not liable to any further call or
assessment, and the holder thereof shall not be liable for any further
payments thereon. In the absence of actual fraud in the transaction, the
judgment of the Board of Directors as to the value of such property, labor or
services received as consideration, or the value placed by the Board of
Directors upon the corporate assets in the event of a share dividend, shall be
conclusive. Promissory notes, uncertified checks, or future services shall not
be accepted in payment or part payment of the capital stock of the
Corporation, except as permitted by The Indiana Business Corporation Law.
SECTION 5. CERTIFICATE FOR SHARES. Each holder of capital stock of the
Corporation shall be entitled to a stock certificate, signed by the President
or a Vice President and the Secretary or any Assistant Secretary of the
Corporation, stating the name of the registered holder, the number of shares
represented by such certificate, the par value of each share of stock or that
such shares of stock are without par value, and that such shares are fully
paid and nonassessable. If such shares are not fully paid, the certificates
shall be legibly stamped to indicate the percent which has been paid, and as
further payments are made, the certificate shall be stamped accordingly.
2
<PAGE>
RESTATED
BY-LAWS
of
LAKELAND FINANCIAL CORPORATION
==============================================================================
If the Corporation is authorized to issue shares of more than one class,
every certificate shall state the kind and class of shares represented
thereby, and the relative rights, interests, preferences and restrictions of
such class, or a summary thereof; provided, that such statement may be omitted
from the certificate if it shall be set forth upon the face or back of the
certificate that such statement, in full, will be furnished by the Corporation
to any shareholder upon written request and without charge.
SECTION 6. FACSIMILE SIGNATURES. If a certificate is countersigned by the
written signature of a transfer agent other than the Corporation or its
employee, the signatures of the officers of the Corporation may be facsimiles.
If a certificate is countersigned by the written signature of a registrar
other than the Corporation or its employee, the signatures of the transfer
agent and the officers of the Corporation may be facsimiles. In case any
officer, transfer agent, or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent, or registrar before such certificate is issued, it
may be issued by the Corporation with the same effect as if he were such
officer, transfer agent, or registrar at the date of its issue.
SECTION 7. TRANSFER OF SHARES. The shares of capital stock of the
Corporation shall be transferable only on the books of the Corporation upon
surrender of the certificate or certificates representing the same, properly
endorsed by the registered holder or by his duly authorized attorney or
accompanied by proper evidence of succession, assignment or authority to
transfer.
SECTION 8. CANCELLATION. Every certificate surrendered to the Corporation
for exchange or transfer shall be canceled, and no new certificate or
certificates shall be issued in exchange for any existing certificate until
such existing certificate shall have been so canceled, except in cases
provided for in Section 10 of this Article III.
SECTION 9. TRANSFER AGENT AND REGISTRAR. The Board of Directors may
appoint a transfer agent and a registrar for each class of capital stock of
the Corporation and may require all certificates representing such shares to
bear the signature of such transfer agent and registrar. Shareholders shall be
responsible for notifying the transfer agent and registrar for the class of
stock held by such shareholder in writing of any changes in their addresses
from time to time, and failure so to do shall relieve the Corporation, its
shareholders, directors, officers, transfer agent and registrar of liability
3
<PAGE>
RESTATED
BY-LAWS
of
LAKELAND FINANCIAL CORPORATION
==============================================================================
for failure to direct notices, dividends, or other documents or property to an
address other than the one appearing upon the records of the transfer agent
and registrar of the Corporation.
SECTION 10. LOST, STOLEN OR DESTROYED CERTIFICATES. The Corporation may
cause a new certificate or certificates to be issued in place of any
certificate or certificates therefore issued by the Corporation alleged to
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming the certificate of stock to be lost, stolen or
destroyed. When authorizing such issue of a new certificate or certificates,
the Corporation may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate or certificates, or his legal representative, to give the
Corporation a bond in such sum and in such form as it may direct to indemnify
against any claim that may be made against the Corporation with respect to the
certificate alleged to have been lost, stolen or destroyed or the issuance of
such new certificate. The Corporation, in its discretion, may authorize the
issuance of such new certificates without any bond when in its judgment it is
proper to do so.
SECTION 11. REGISTERED SHAREHOLDERS. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of such shares to receive dividends, to vote as such owner, to hold liable for
calls and assessments, and to treat as owner in all other respects, and shall
not be bound to recognize any equitable or other claims to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Indiana.
SECTION 12. OPTIONS TO OFFICERS AND EMPLOYEES. The issuance, including
the consideration, of rights or options to directors, officers or employees of
the Corporation, and not to the shareholders generally, to purchase from the
Corporation shares of its capital stock shall be approved by the affirmative
vote of the holders of a majority of the shares entitled to vote thereon or
shall be authorized by and consistent with a plan approved by such a vote of
the shareholders. The price to be received for any shares having a par value,
other than treasury shares to be issued upon the exercise of such rights or
options, shall not be less than the par value thereof.
4
<PAGE>
RESTATED
BY-LAWS
of
LAKELAND FINANCIAL CORPORATION
==============================================================================
ARTICLE IV
----------
MEETINGS OF SHAREHOLDERS
SECTION 1. PLACE OF MEETING. Meetings of shareholders of the Corporation
shall be held at such place, within or without the State of Indiana, as may
from time to time be designated by the Board of Directors, or as may be
specified in the notices or waivers of notice of such meetings.
SECTION 2. ANNUAL MEETING. The annual meeting of shareholders for the
election of Directors, and for the transaction of such other business as may
properly come before the meeting, shall be held on the second Tuesday of April
of each year, if such day is not a holiday, and if a holiday, then on the
first following day that is not a holiday, or in lieu of such day may be held
on such other day as the Board of Directors may set by resolution, but not
later than the end of the fifth month following the close of the fiscal year
of the Corporation. Failure to hold the annual meeting at the designated time
shall not work any forfeiture or a dissolution of the Corporation, and shall
not affect otherwise valid corporate acts.
SECTION 3. SPECIAL MEETINGS. Special meetings of the shareholders, for
any purpose or purposes, unless otherwise prescribed by statute or by the
Articles of Incorporation, may be called by the Board of Directors or the
President and shall be called by the President or Secretary at the request in
writing of a majority of the Board of Directors, or at the request in writing
of shareholders holding of record not less than one-fourth of all the shares
outstanding and entitled by the Articles of Incorporation to vote on the
business for which the meeting is being called.
SECTION 4. NOTICE OF MEETINGS. A written or printed notice, stating the
place, day and hour of the meeting, and in case of a special meeting, or when
required by any other provision of The Indiana Business Corporation Law, or of
the Articles of Incorporation, as now or hereafter amended, or these By-Laws,
the purpose or purposes for which the meeting is called, shall be delivered or
mailed by the Secretary, or by the officers or persons calling the meeting, to
each shareholder of record entitled by the Articles of Incorporation, as now
or hereafter amended, and by The Indiana Business Corporation Law to vote at
such meeting, at such address as appears upon the records of the Corporation,
at least ten (10) days before the date of the meeting. Notice of any such
5
<PAGE>
RESTATED
BY-LAWS
of
LAKELAND FINANCIAL CORPORATION
==============================================================================
meeting may be waived in writing by any shareholder, if the waiver sets forth
in reasonable detail the purpose or purposes for which the meeting is called,
and the time and place thereof. Attendance at any meeting in person, or by
proxy, shall constitute a waiver of notice of such meeting. Each shareholder,
who has in the manner above provided waived notice of a shareholders' meeting,
or who personally attends a shareholders' meeting, or is presented thereat by
a proxy authorized to appear by an instrument of proxy, shall be conclusively
presumed to have been given due notice of such meeting. Notice of any
adjourned meeting of stockholders shall not be required to be given if the
time and place thereof are announced at the meeting at which the adjournment
is taken, except as may be expressly required by law.
SECTION 5. ADDRESSES OF SHAREHOLDERS. The address of any shareholder
appearing upon the records of the Corporation shall be deemed to be the latest
address of such shareholder appearing on the records maintained by the
Transfer Agent for the class of stock held by such shareholder.
SECTION 6. VOTING AT MEETINGS.
(a) QUORUM. The holders of record of a majority of the issued and
outstanding stock of the Corporation entitled to vote at such meeting, present
in person or by proxy, shall constitute a quorum at all meetings of
stockholders for the transaction of business, except where otherwise provided
by law, the Articles of Incorporation or these By-Laws. In the absence of a
quorum, any officer entitled to preside at, or act as secretary of, such
meeting shall have the power to adjourn the meeting from time to time until a
quorum shall be constituted. At any such adjourned meeting at which a quorum
shall be present, any business may be transacted which might have been
transacted at the original meeting, but only those stockholders entitled to
vote at the original meeting shall be entitled to vote at any adjournment or
adjournments thereof unless a new record date is fixed by the Board of
Directors for the adjourned meeting.
(b) VOTING RIGHTS. Except as otherwise provided by law or by the
provisions of the Articles of Incorporation, every shareholder shall have the
right at every shareholders' meeting to one vote for each share of stock
having voting power, registered in his name on the books of the Corporation on
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the date for the determination of shareholders entitled to vote, on all
matters coming before the meeting including the election of directors. At any
meeting of the shareholders, every shareholder having the right to vote shall
be entitled to vote in person, or by proxy executed in writing by the
shareholder or a duly authorized attorney in fact and bearing a date not more
than eleven months prior to its execution, unless a longer time is expressly
provided therein.
(c) REQUIRED VOTE. When a quorum is present at any meeting, the vote of
the holders of a majority of the stock having voting power present in person
or represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which, by express provision of The Indiana
Business Corporation Law or of the Articles of Incorporation or by these
By-Laws, a greater vote is required, in which case such express provision
shall govern and control the decision of such question.
SECTION 7. VOTING LIST. The Transfer Agent of the Corporation shall make,
at least five days before each election of directors, a complete list of the
shareholders entitled by the Articles of Incorporation, as now or hereafter
amended, to vote at such election, arranged in alphabetical order, with the
address and number of shares so entitled to vote held by each, which list
shall be on file at the principal office of the Corporation and subject to
inspection by any shareholder. Such list shall be produced and kept open at
the time and place of election and subject to the inspection by any
shareholder. The original stock register or transfer book, or a duplicate
thereof kept in the State of Indiana, shall be the only evidence as to who are
the shareholders entitled to examine such list or the stock ledger or transfer
book or to vote at any meeting of the shareholders.
SECTION 8. FIXING OF RECORD DATE TO DETERMINE SHAREHOLDERS ENTITLED TO
VOTE. The Board of Directors may prescribe a period not exceeding 50 days
prior to meetings of the shareholders, during which no transfer of stock on
the books of the Corporation may be made; or, in lieu of prohibiting the
transfer for stock may fix a day and hour not more than 50 days prior to the
holding of any meeting of shareholders as the time as of which shareholders
entitled to notice of, and to vote at, such meeting shall be determined, and
all persons who are holders of record of voting stock at such time, and no
others, shall be entitled to notice of, and to vote at, such meeting. In the
absence of such a determination, such date shall be 10 days prior to the date
of such meeting.
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SECTION 9. NOMINATIONS FOR DIRECTOR. Nominations for election to the
Board of Directors may be made by the Board of Directors or by any shareholder
of any outstanding class of capital stock of the Corporation entitled to vote
for the election of directors. Nominations, other than those made by or on
behalf of the Corporation entitled to vote for the election of directors.
Nominations, other than those made by or on behalf of the existing management
of the Corporation, shall be made in writing and shall be delivered or mailed
to the president of the Corporation not less than 10 days nor more than 50
days prior to any meeting of shareholders called for the election of
directors. Such notification shall contain the following information to the
extent known to the notifying shareholder: (a) the name and address of each
proposed nominee; (b) the principal occupation of each proposed nominee; (c)
the total number of shares of capital stock of the Corporation that will be
voted for each proposed nominee; (d) the name and residence address of the
notifying shareholder; and (e) the number of shares of capital stock of the
Corporation owned by the notifying shareholder. Nominations not made in
accordance herewith may, in his discretion, be disregarded by the chairman of
the meeting, and upon his instructions, the vote tellers may disregard all
votes cast for each such nominee.
SECTION 10. MEETINGS. The Chairman of the Board of Directors shall
preside at each meeting of shareholders. In the absence of the Chairman, the
meeting shall be chaired by an officer of the corporation in accordance with
the following order: President, Executive Vice President, Senior Vice
President and Vice President. In the absence of all such officers, the meeting
shall be chaired by a person chosen by the vote of a majority in interest of
the shareholders present in person or represented by proxy and entitled to
vote thereat, shall act as chairman. The Secretary or in his or her absence an
Assistant Secretary or in the absence of the Secretary and all Assistant
Secretaries a person whom the chairman of the meeting shall appoint shall act
as secretary of the meeting and keep a record of the proceedings thereof. The
Board of Directors of the Company shall be entitled to make such rules or
regulations for the conduct of meetings of shareholders as it shall deem
necessary, appropriate or convenient. Subject to such rules and regulations of
the Board of Directors, if any, the chairman of the meeting shall have the
right and authority to prescribe such rules, regulations and procedures and to
do all such acts as, in the judgment of such chairman, are necessary,
appropriate or convenient for the proper conduct of the meeting, including
without limitation, establishing an agenda or order of business for the
meeting, rules and procedures for maintaining order at the meeting and the
safety of those present, limitations or participation in such meeting to
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shareholders of record of the Company and their duly authorized and
constituted proxies, and such other persons as the Chairman shall permit
restrictions on entry to the meeting after the time fixed for the commencement
thereof, limitations on the time allotted to questions or comment by
participants and regulation of the opening and closing of the polls for
balloting on matters which are to be voted on by ballot. Unless determined
otherwise by the Board of Directors or the chairman of the meeting, meetings
of shareholders shall not be required to be held in accordance with rules of
parliamentary procedure.
ARTICLE V
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BOARD OF DIRECTORS
SECTION 1. ELECTION, NUMBER AND TERM OF OFFICE. Directors shall be
elected at the annual meeting of shareholders, or, if not so elected, at a
special meeting of shareholders called for that purpose, by the holders of the
shares of stock entitled by the Articles of Incorporation to elect Directors.
The number of Directors of the Corporation to be elected by the holders
of the shares of stock entitled by the Articles of Incorporation to elect
directors, shall be established by the affirmative vote at least 75% in number
of the directors holding office at the time of such determination. Absent such
determination, the number of directors shall be ten (10).
SECTION 2. VACANCIES.
(a) Any vacancies occurring in the Board of Directors caused by death,
resignation, disqualification, removal from office, or otherwise (other than
as provided in subsection (b) of this Section 2), shall be filled by a
majority vote of the remaining directors. Any director so appointed shall hold
office for the unexpired term of the director who is being replaced and until
his successor is elected and has qualified, or until his earlier death,
resignation, disqualification or removal from office.
(b) In the event of an increase in the number of directors pursuant to
the provisions in Section 1 of this Article V, a new directorship shall be
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assigned to the classes in such a manner as to maintain, to the extent
possible, in equal number in each of the classes. These directorships shall
then be filled by a majority vote of the members of the Board of Directors
prior to the filling of any such vacancies, to hold office for the remainder
of the term of the class to which these new directorships have been
designated.
(c) At the discretion of the Board of Directors, any vacancy referred to
in subsection (a) or (b) hereof may be filled by the vote of the shareholders
entitled to vote thereon at a special meeting called for that purpose.
(d) No decrease in the number of directors shall have the effect of
shortening the term of any incumbent director.
SECTION 3. ANNUAL MEETING OF DIRECTORS. The Board of Directors shall meet
each year immediately after the annual meeting of the shareholders, at the
place where such meeting of the shareholders has been held either within or
without the State of Indiana, for the purpose of organization, election of
officers, and consideration of any other business that may properly come
before the meeting. No notice of any kind to either old or new members of the
Board of Directors for such annual meeting shall be necessary.
SECTION 4. REGULAR MEETINGS. Regular meetings of the Board of Directors
shall be held at such times and places, either within or without the State of
Indiana, as may be fixed by the Directors. Such regular meetings of the Board
of Directors may be held without notice or upon such notice as may be fixed by
the Directors.
SECTION 5. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by the Chairman of the Board, the President, or by not less than
a majority of the members of the Board of Directors. Notice of the time and
place, either within or without the State of Indiana, of a special meeting
shall be served upon or telephoned to each Director at least twenty-four
hours, or mailed, telegraphed or cabled to each Director at his usual place of
business or residence at least forty-eight hours, prior to the time of the
meeting. Directors, in lieu of such notice, may sign a written waiver of
notice either before the time of the meeting, at the meeting or after the
meeting. Attendance by a director in person at any such special meeting shall
constitute a waiver of notice.
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SECTION 6. QUORUM. A majority of the actual number of Directors elected
and qualified, from time to time, shall be necessary to constitute a quorum
for the transaction of any business except the filling of vacancies, and the
act of a majority of the Directors present at the meeting, at which a quorum
is present, shall be the act of the Board of Directors, unless the act of a
greater number is required by The Indiana Business Corporation Law, by the
Articles of Incorporation, or by these By-Laws. A Director, who is present at
a meeting of the Board of Directors, at which action on any corporate matter
is taken, shall be conclusively presumed to have assented to the action taken,
unless (a) his dissent shall be affirmatively stated by him at and before the
adjournment of such meeting (in which event the fact of such dissent shall be
entered by the secretary of the meeting in the minutes of the meeting), or (b)
he shall forward such dissent by registered mail to the Secretary of the
Corporation immediately after the adjournment of the meeting. The right of
dissent provided for by either clause (a) or clause (b) of the immediately
preceding sentence shall not be available, in respect of any matter acted upon
at any meeting, to a Director who voted at the meeting in favor of such matter
and did not change his vote prior to the time that the result of the vote on
such matter was announced by the chairman of such meeting.
SECTION 7. CONSENT ACTION BY DIRECTORS. Any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee
thereof may be taken without a meeting, if prior to such action a written
consent to such action is signed by all members of the Board of Directors or
such committee, as the case may be, and such written consent is filed with the
minutes of proceedings of the Board of Directors or committee.
SECTION 8. REMOVAL OF DIRECTORS.
(a) Except as otherwise provided for herein, a director may be removed or
suspended from the Board of Directors only with cause as determined by the
procedures established herein.
(b) Cause for removal or suspension shall include action or failure to
act on the part of the director in question which results in (i) a violation
of law, rule, regulation or order, or a breach of the director's fiduciary
duty, or with respect to the Corporation's banking subsidiary, involves an
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unsafe or unsound banking practice, and (ii) the Corporation or any of its
subsidiaries has suffered substantial damage or the director has received
financial gain from such action or omission.
(c) A determination that a director should be removed or suspended for
cause shall be made only upon the affirmative vote of at least a majority in
number of the members of the Board of Directors entitled to vote thereon. Any
director whose removal is being considered and any other director who
knowingly was involved in the action or omission giving rise to the removal or
suspension proceeding, shall not be entitled to vote on the question of
removal or suspension.
(d) The director whose removal or suspension is being considered shall be
given written notice from the Board of Directors of the basis alleged to give
rise to the cause for removal or suspension and of the day, time, and place
where a hearing will be held at which the director will have the opportunity
to respond. The hearing shall be held not less than ten (10) days and not more
than thirty (30) days after notice has been sent to the director; provided,
that, upon the written request of the director, the date of the hearing may be
extended beyond the thirty (30) day period, in which case the director shall
be suspended from serving on the Board of Directors for the period from the
original date of the hearing to the rescheduled date.
(e) At the hearing, a representative designated by the Board of Directors
shall present the basis for the removal or suspension as well as any other
evidence in support thereof, whether documentary, testimonial or otherwise.
This representative may be a member of the Board of Directors (in which case
he shall not be entitled to vote upon the removal of the director), an officer
of the Corporation or any other third party, who in any case shall have no
interest in the actions or omissions to act giving rise to the proceeding.
After the representative has made his presentation, the director shall have
the opportunity to present evidence, whether documentary, testimonial or
otherwise, refuting the basis for the removal or suspension proceeding. The
representative and the director shall have the opportunity to cross-examine
any witnesses for the other side, to present rebuttal testimony, and to
present summary statements.
(f) After the presentation of all evidence, the Board of Directors shall
vote on the issue and shall notify the director of the results in writing. If
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the vote is to remove the director, the Board of Directors, upon written
request from the director, shall, within ten (10) days, present a written
report setting forth the Board of Directors' findings of fact and conclusions.
(g) The director shall be entitled to be represented by counsel.
(h) Notwithstanding anything herein to the contrary, (i) any and all
members of the Board of Directors may be removed, with or without cause, at a
meeting of shareholders called expressly for that purpose by a vote of the
holders of not less than two-thirds of the outstanding shares of stock
entitled to votes at that meeting, excluding any shares held by holders of 10%
or more of the outstanding common stock, and (ii) any director shall
immediately cease being a director when he no longer satisfies the
qualifications set by Article VII, Section 3 of the Corporation's Articles of
Incorporation.
SECTION 9. DIVIDENDS. The Board of Directors shall have power, subject to
any restrictions contained in The Indiana Business Corporation Law or in the
Articles of Incorporation and out of funds legally available therefor, to
declare and pay dividends upon the outstanding capital stock of the
Corporation as and when they deem expedient. Before declaring any dividend,
there may be set aside out of any funds of the Corporation available for
dividends such sum or sums as the Board of Directors from time to time in
their absolute discretion deem proper for working capital, or as a reserve or
reserves to meet contingencies or for such other purposes as the Board of
Directors shall deem conductive to the interests of the Corporation and the
Board of Directors may modify or abolish any such reserve in the manner in
which it was created.
SECTION 10. FIXING OF RECORD DATE TO DETERMINE SHAREHOLDERS ENTITLED TO
RECEIVE CORPORATE BENEFITS. The Board of Directors may fix a day and hour not
exceeding 50 days preceding the date fixed for payment of any dividend or for
the delivery of evidence of rights, or for the distribution of other corporate
benefits, or for a determination of shareholders for any other purpose, as a
record time for the determination of the shareholders entitled to receive any
such dividend, rights or distribution, and in such case only shareholders of
record at the time so fixed shall be entitled to receive such dividend, rights
or distribution. If no record date is fixed for the determination of
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shareholders entitled to receive payment of a dividend, the end of the day on
which the resolution of the Board of Directors declaring such dividend is
adopted shall be the record date for such determination.
SECTION 11. INTEREST OF DIRECTORS IN CONTRACTS. Any contract or other
transaction between the Corporation or any corporation in which this
Corporation owns a majority of the capital stock shall be valid and binding,
notwithstanding the directors or officers of this Corporation are identical or
that some or all of the directors or officers, or both, are also directors or
officers of such other corporation.
Any contract or other transaction between the Corporation and one or more
of its directors or members or employees, or between the Corporation and any
firm of which one or more of its directors are members or employees or in
which they are interested, or between the Corporation and any corporation or
association of which one or more of its directors are stockholders, members,
directors, officers, or employees or in which they are interested, shall be
valid for all purposes, notwithstanding the presence of such director of
directors at the meeting of the Board of Directors of the Corporation which
acts upon, or in reference to, such contract or transaction and
notwithstanding his or their participation in such action, if the fact of such
interest shall be disclosed or known to the Board of Directors and the Board
of Directors shall authorize, approve and ratify such contract or transaction
by a vote of a majority of the directors present, such interested director or
directors to be counted in determining whether a quorum is present, but not to
be counted in calculating the majority of such quorum necessary to carry such
vote. This Section shall not be construed to invalidate any contact or other
transaction which would otherwise be valid under the common and statutory law
applicable thereto.
SECTION 12. COMMITTEES. The Board of Directors may, by resolution adopted
by a majority of the actual number of Directors elected and qualified, from
time to time, designate from among its members an executive committee and one
or more other committees, each of which, to the extent provided in the
resolution, the Articles of Incorporation, or these By-Laws, may exercise all
of the authority of the Board of Directors of the Corporation, including, but
not limited to, the authority to issue and sell or approve any contract to
issue and sell, securities or shares of the Corporation or designate the terms
of a series of a class of securities or shares of the Corporation. The terms
which may be affixed by each such committee include, but are not limited to,
the price, dividend rate, and provisions of redemption, a sinking fund,
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conversion, voting, or preferential rights or other features of securities or
class or series of a class of shares. Each such committee may have full power
to adopt a final resolution which sets forth those terms and to authorize a
statement of such terms to be filed with the Secretary of State. However, no
such committee has the authority to declare dividends or distributions, amend
the Articles of Incorporation or the By-Laws, approve a plan of merger or
consolidation even if such plan does not require shareholder approval, reduce
earned or capital surplus, authorize or approve the reacquisition of shares
unless pursuant to a general formula or method specified by the Board of
Directors, or recommend to the shareholders voluntary dissolution of the
Corporation or a revocation thereof. No member of any such committee shall
continue to be a member thereof after he ceases to be a Director of the
Corporation. The calling and holding of meetings of any such committee and its
method of procedure shall be determined by the Board of Directors. A member of
the Board of Directors shall not be liable for any action taken by any such
committee if he is not a member of that committee and has acted in good faith
and in a manner he reasonably believes is in the best interest of the
Corporation.
ARTICLE VI
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OFFICERS
SECTION 1. PRINCIPAL OFFICERS. The principal officers of the Corporation
shall be a Chairman of the Board, a President, one or more Vice Presidents, a
Treasurer and a Secretary. The Corporation may also have, at the discretion of
the Board of Directors, such other subordinate officers as may be appointed in
accordance with the provisions of these By-Laws. Any two or more offices may
be held by the same person, except the duties of President and Secretary shall
not be performed by the same person. No person shall be eligible for the
office of Chairman of the Board or President who is not a director of the
Corporation.
SECTION 2. ELECTION AND TERM OF OFFICE. The principal officers of the
Corporation shall be chosen annually by the Board of Directors at the annual
meeting thereof. Each such officer shall hold office until his successor shall
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have been duly chosen and qualified, or until his death, or until he shall
resign, or shall have been removed in the manner hereinafter provided.
SECTION 3. REMOVAL. Any principal officer may be removed, either with or
without cause, at any time, by resolution adopted at any meeting of the Board
of Directors by a majority of the actual number of Directors elected and
qualified from time to time.
SECTION 4. SUBORDINATE OFFICERS. In addition to the principal officers
enumerated in Section 1 of this Article VI, the Corporation may have one or
more Assistant Treasurers, one or more Assistant Secretaries and such other
officers, agents and employees as the Board of Directors may deem necessary,
each of whom shall hold office for such period, may be removed with or without
cause, have such authority, and perform such duties as the President, or the
Board of Directors may from time to time determine. The Board of Directors may
delegate to any principal officer the power to appoint and to remove any such
subordinate officers, agents or employees.
SECTION 5. RESIGNATIONS. Any officer may resign at any time by giving
written notice to the Chairman of the Board of Directors or to the President
or to the Secretary. Any such resignation shall take effect upon receipt of
such notice or at any later time specified therein, and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary
to make it effective.
SECTION 6. VACANCIES. Any vacancy in any office for any cause may be
filled for the unexpired portion of the term in the manner prescribed in these
By-Laws for election or appointment to such office for such term.
SECTION 7. CHAIRMAN OF THE BOARD. The Chairman of the Board, who shall be
chosen from among the Directors, shall preside at all meetings of shareholders
and at all meetings of the Board of Directors. He shall perform such other
duties and have such other powers as, from time to time, may be assigned to
him by the Board of Directors.
SECTION 8. PRESIDENT. The President, who shall be chosen from among the
Directors, shall be the chief executive officer of the Corporation and as such
shall have general supervision of the affairs of the Corporation, subject to
the control of the Board of Directors. He shall be an ex officio member of all
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standing committees. In the absence or disability of the Chairman of the
Board, the President shall preside at all meetings of shareholders and at all
meetings of the Board of Directors. Subject to the control and direction of
the Board of Directors, the President may enter into any contract or execute
and deliver any instrument in the name and on behalf of the Corporation. In
general, he shall perform all duties and have all the powers incident to the
office of President, as herein defined, and all such other duties and powers
as, from time to time, may be assigned to him by the Board of Directors.
SECTION 9. VICE PRESIDENTS. The Vice Presidents in the order of their
seniority, unless otherwise determined by the Board of Directors, shall, in
the absence or disability of the President and Executive Vice President,
perform the duties and exercise the powers of the President. They shall
perform such other duties and have such other powers as the President or the
Board of Directors may from time to time assign.
SECTION 10. TREASURER. The Treasurer shall have charge and custody of,
and be responsible for, all funds and securities of the Corporation and shall
deposit all such funds in the name of the Corporation in such banks or other
depositories as shall be selected by the Board of Directors. He shall upon
request exhibit at all reasonable times his books of account and records to
any of the directors of the Corporation during business hours at the office of
the Corporation where such books and records shall be kept; shall render upon
request by the Board of Directors a statement of the condition of the finances
of the Corporation at any meeting of the Board of Directors or at the annual
meeting of the shareholders; shall receive, and give receipt for, moneys due
and payable to the Corporation from any source whatsoever; and in general,
shall perform all duties incident to the office of Treasurer and such other
duties as from time to time may be assigned to him by the President or the
Board of Directors. The Treasurer shall give such bond, if any, for the
faithful discharge of his duties as the Board of Directors may require.
SECTION 11. SECRETARY. The Secretary shall keep or cause to be kept in
the books provided for that purpose the minutes of the meetings of the
shareholders and of the Board of Directors shall duly give and serve all
notices required to be given in accordance with the provisions of these
By-Laws and by The Indiana General Corporation Act; shall be custodian of the
records and of the seal of the Corporation and see that the seal is affixed to
all documents, the execution of which on behalf of the Corporation under its
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seal is duly authorized in accordance with the provisions of these By-Laws;
and, in general, shall perform all duties incident to the office of Secretary
and such other duties as may, from time to time, be assigned to him by the
President or the Board of Directors.
SECTION 12. SALARIES. The salaries of the principal officers shall be
fixed from time to time by the Board of Directors, and the salaries of any
subordinate officers may be fixed by the President.
SECTION 13. VOTING CORPORATION'S SECURITIES. Unless otherwise ordered by
the Board of Directors, the Chairman of the Board, the President and
Secretary, and each of them, are appointed attorneys and agents of the
Corporation, and shall have full power and authority in the name and on behalf
of the Corporation, to attend, to act, and to vote all stock or other
securities entitled to be voted at any meetings of security holders of
corporations, or associations in which the Corporation may hold securities, in
person or by proxy, as a stockholder or otherwise, and at such meetings shall
possess and may exercise any and all rights and powers incident to the
ownership of such securities, and which as the owner thereof the Corporation
might have possessed and exercised, if present, or to consent in writing to
any action by any such other corporation or association. The Board of
Directors by resolution from time to time may confer like powers upon any
other person or persons.
ARTICLE VII
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INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES
Every person who is or was a director, officer or employee of this
Corporation or of any other corporation for which he is or was serving in any
capacity at the request of this Corporation shall be indemnified by this
Corporation against any and all liability and expense that may be incurred by
him in connection with or resulting from or arising out of any claim, action,
suit or proceeding, provided that such person is wholly successful with
respect thereto or acted in good faith in what he reasonably believed to be in
or not opposed to the best interests of this Corporation or such other
corporation, as the case may be, and, in addition, in any criminal action or
proceeding in which he had no reasonable cause to believe that his conduct was
unlawful. As used herein, "claim, action, suit or proceeding" shall include
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any claim, action, suit or proceeding (whether brought by or in the right of
this Corporation or such other corporation or otherwise), civil, criminal,
administrative or investigative, whether actual or threatened or in connection
with an appeal relating thereto, in which a director, officer or employee of
this Corporation may become involved, as a party or otherwise,
(i) by reason of his being or having been a director, officer or employee
of this Corporation or such other corporation or arising out of his status as
such or
(ii) by reason of any past or future action taken or not taken by him in
any such capacity, whether or not he continues to be such at the time such
liability or expense is incurred.
The terms "liability" and "expense" shall include, but shall not be
limited to, attorneys' fees and disbursements, amounts of judgments, fines or
penalties, and amounts paid in settlement by or on behalf of a director,
officer or employee, but shall not in any event include any liability or
expenses on account of profits realized by him in the purchase or sale of
securities of the Corporation in violation of the law. The termination of any
claim, action, suit or proceeding, by judgment, settlement (whether with or
without court approval) or conviction or upon a plea of guilty or of nolo
contendere, or its equivalent, shall not create a presumption that a director,
officer or employee did not meet the standards of conduct set forth in this
paragraph.
Any such director, officer or employee who has been wholly successful
with respect to any such claim, action, suit or proceeding shall be entitled
to indemnification as a matter of right. Except as provided in the preceding
sentence, any indemnification hereunder shall be made only if (i) the Board of
Directors acting by a quorum consisting of Directors who are not parties to or
who have been wholly successful with respect to such claim, action, suit or
proceeding shall find that the director, officer or employee has met the
standards of conduct set forth in the preceding paragraph; or (ii) independent
legal counsel shall deliver to the Corporation their written opinion that such
director, officer or employee has met such standards of conduct.
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If several claims, issues or matters of action are involved, any such
person may be entitled to indemnification as to some matters even though he is
not entitled as to other matters.
The Corporation may advance expenses to or, where appropriate, may at its
expense undertake the defense of any such director, officer or employee upon
receipt of an undertaking by or on behalf of such person to repay such
expenses if it should ultimately be determined that he is not entitled to
indemnification hereunder.
The provisions of this Section shall be applicable to claims, actions,
suits or proceedings made or commenced after the adoption hereof, whether
arising from acts or omissions to act during, before or after the adoption
hereof.
The rights of indemnification provided hereunder shall be in addition to
any rights to which any person concerned may otherwise be entitled by contract
or as a matter of law and shall inure to the benefit of the heirs, executors
and administrators of any such person.
The Corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the Corporation
as a director, officer, employee or agent of another corporation against any
liability asserted against him and incurred by him in any capacity or arising
out of his status as such, whether or not the Corporation would have the power
to indemnify him against such liability under the provisions of this Section
or otherwise.
ARTICLE VIII
------------
AMENDMENTS
The power to make, alter, amend, or repeal these By-Laws is vested in the
Board of Directors, but the affirmative vote of a majority of the actual
number of directors elected and qualified, from time to time, shall be
necessary to effect any alteration, amendment or repeal of these By-Laws.
20
Exhibit 3(ii)
RESTATED
BY-LAWS
for
LAKE CITY BANK, WARSAW, INDIANA
==============================================================================
ARTICLE I
---------
SHAREHOLDERS
SECTION 1.1. PLACE OF MEETING. All meetings of the shareholders, whether
annual or special, shall be held at the principal office of the corporation in
the State of Indiana or at such other place in Kosciusko County, Indiana, as
may be determined by the Board of Directors, if notice of the place of meeting
is given as provided for hereafter.
SECTION 1.2. ANNUAL MEETING. The annual meeting of the shareholders shall
be held on the second Tuesday in April in each year at the hour of 2:00 p.m.,
or such other day or hour as shall be specified by the Board of Directors. If
for any reason the annual meeting is not held on the date for said meeting,
the directors shall fix another date for such meeting and the President or
such other officer as he may designate shall send out notices for the same as
hereinafter provided specifying that such later meeting shall be the annual
meeting of the corporation.
SECTION 1.3. SPECIAL MEETINGS. Special meetings of the shareholders may
be held at any time, (1) pursuant to a resolution of the Board of Directors,
(2) upon a written request signed by shareholders of record holding more than
25% of the issued and outstanding common stock of the corporation filed with
the President or Board of Directors stating the objects of the meeting, or (3)
by order of the President.
SECTION 1.4. NOTICE OF MEETINGS. The President or such other officer
designated by the President or by the Board of Directors shall mail a written
or printed notice of each meeting of the shareholders, postage prepaid, to
each shareholder of record at his address as the same appears upon the stock
records of the corporation at least ten (10) days before the date of such
meeting. All notices of meetings shall specify the time and place of the
meeting. Notices of special meetings shall also specify the object or objects
of such special meeting. No business other than that specified in the Notice
of a special meeting shall be considered at such special meeting unless all
shareholders be present in person or by proxy.
SECTION 1.5. QUORUM. A majority of the common stock issued and
outstanding represented by the owners of record thereof in person or by proxy
1
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LAKE CITY BANK, WARSAW, INDIANA
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shall constitute a quorum for the transaction of business. If a quorum is not
present at any duly called meeting, the majority in interest of the
shareholders present in person or by proxy may adjourn from time to time
without notice other than announcement at the meeting until a quorum is
secured. At any such adjourned meeting at which a quorum is present only
business that could have been transacted at the meeting originally called can
be transacted.
SECTION 1.6. VOTING. At each meeting of the shareholders every
shareholder shall have one (1) vote for each share of common stock standing in
his name on the books of the corporation on the tenth day preceding the day of
the meeting. No shares shall be voted at any meeting which shall have been
transferred on the books of the corporation within ten days next preceding the
date of such meeting. At any meeting of the shareholders any question before
the meeting shall be settled by written ballot if so demanded by any
shareholder entitled to vote. The right to vote share shall not be cumulative.
SECTION 1.7. PROXIES. Any shareholder entitled to vote at any meeting of
shareholders may be represented and vote by proxy duly appointed by an
instrument in writing signed by such shareholder or by his duly authorized
attorney-in-fact and delivered to the Secretary of the meeting at or before
the time of such meeting.
ARTICLE II
----------
DIRECTORS
SECTION 2.1. ELECTION. The Board of Directors shall be elected each year
by a plurality vote at the annual meeting of shareholders for such year and,
subject to the provisions of this Article, shall hold office for one year or
until their respective successors are elected and shall have qualified.
SECTION 2.2. NUMBER AND QUALIFICATION. The Board of Directors shall
consist of twelve (12) members and each of said directors shall own, in his or
her own right, or jointly with their spouse, not less than 1 share of the
capital stock of the corporation, or if all of the issued and outstanding
capital stock of this corporation is held of record by another domestic or
foreign corporation, each director may own, in his or her own right, or
jointly with their spouse, not less than 100 shares of the capital stock of
the other corporation in lieu of being a shareholder of this corporation.
SECTION 2.3. PLACE OF MEETING. Every meeting of the Board of Directors
shall be held at the principal office of the corporation in the State of
Indiana unless the Board of Directors by resolution shall fix another place in
the City of Warsaw, Indiana, or unless the notice or waivers of notice for
such a meeting shall specifically designate another place.
2
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LAKE CITY BANK, WARSAW, INDIANA
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SECTION 2.4. ANNUAL MEETING. The annual meeting of the Board of Directors
shall be held immediately following the annual meeting of the shareholders
each year. No notice of the annual meeting of the Board of Directors shall be
necessary.
SECTION 2.5. REGULAR MEETINGS. Regular meetings of the Board of Directors
shall be held on the second Tuesday of each month, or upon such other day of
each month as the Board of Directors may determine by resolution from time to
time. No notice of a regular meeting shall be necessary.
SECTION 2.6. SPECIAL MEETING. Special meetings of the Board of Directors
may be held upon a call by the Chairman of the Board or the President or
either of them must call a special meeting of the Board of Directors upon the
written request of any five (5) directors. At least three (3) days' notice by
telephone or telegraph shall be given to each director not less than 3 days
before the meeting. Such notice shall specify by whom the meeting is called,
the time, place and object thereof. No other business than that specified in
the notice of such meeting shall be transacted thereat unless all members of
the Board be present and consent thereto. Notice of any meeting may be waived
by any director. When all of the directors shall be present at any meeting,
however called or notified, or shall sign a written consent thereto, the acts
of such meetings shall be as valid as if the same had been legally called
pursuant to proper notice.
SECTION 2.7. QUORUM. A majority of the Board of Directors shall
constitute a quorum for the transaction of business at any meeting of the
Board. If at any meeting of the Board there be less than a quorum present, a
majority of those present may adjourn the meeting from time to time. A record
shall be kept of all meetings showing the names of those directors present at
each meeting.
SECTION 2.8. REMOVAL. Any director may be removed for good cause at any
time at a special meeting of the shareholders called for such purpose by the
affirmative vote of the holders of a majority of the common stock issued and
outstanding.
SECTION 2.9. VACANCIES. A vacancy shall exist in the Board of Directors
upon the death, legal incompetency, resignation, removal for cause or failure
of a director to continue to own in his own right, free of any lien or
3
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LAKE CITY BANK, WARSAW, INDIANA
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encumbrance, capital stock as required by Section 2.2 of this Article II. The
remaining directors, by affirmative vote of a majority of the Board, may elect
successor to hold office for the unexpired term of any director whose place be
vacant.
Should the membership of the Board at any time fall below the number
necessary to constitute a quorum then a special meeting of the shareholders
shall be called by the President, or if there be no President, by the Chairman
of the Board, or if there be neither a President or a Chairman of the Board,
then by a Vice President and such number of directors shall be elected at such
special meeting as may be necessary to restore the Board to its full
membership.
SECTION 2.10. POWERS. The Board of Directors shall have entire charge of
the property, business interests and general operation of the corporation with
full authority to manage and conduct the same.
SECTION 2.11. RETIREMENT. Any person elected to the office of director
shall resign such office at the end of the calendar month during which he
attains his 70th birthday.
SECTION 2.12. DIRECTORS EMERITUS. The Board of Directors may from time to
time elect one or more directors emeritus to serve as such at the pleasure of
the Board. The term of office of each director emeritus shall expire at the
annual meeting of the Board of Directors next succeeding his election. A
director emeritus may be re-elected as such. Each director emeritus may attend
any meeting of the Board of Directors, but shall not be entitled to a vote on
any question before the Board.
SECTION 2.13. ACTION WITHOUT A MEETING. Any action required or permitted
to be taken at any meeting of the Board of Directors may be taken without a
meeting if prior to such action, written consent thereto is signed by all
members of the Board of Directors and such written consent or consents are
filed with the minutes of the proceedings of the Board of Directors.
SECTION 2.14. DIRECTORS FEES. Each outside director (one who is not a
full-time employee of the Bank) shall receive a fee for each meeting of the
4
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Board of Directors which he or she attends. Each outside director shall also
receive a fee for each meeting he or she attends of any standing committee of
which he or she is a member. The amount of such fees shall be fixed from time
to time by the Board of Directors. Such fees shall be paid as of June 30 and
December 31 each year.
Inside directors (those who are full-time employees of the Bank) shall
receive no fee for attendance at meetings of the Board of Directors or any
committee thereof.
ARTICLE III
-----------
OFFICERS
SECTION 3.1. ELECTION. The officers of this corporation shall be a
Chairman of the Board, a President, one or more Vice-Presidents in one or more
levels, a Secretary, a Trust Officer, an Auditor and such other officers or
assistant officers as may be determined from time to time by the Board of
Directors. The officers of the corporation shall be elected by the Board of
Directors at the annual meeting of the Board for a term of one (1) year and
until their respective successors are elected and qualified, or such other
term as the Board may provide. The Board may elect additional officers from
time to time during the year as such Board deems necessary.
SECTION 3.2. REMOVAL. Any officer may be removed at any time with or
without cause by a majority vote of the Board of Directors at any meeting.
SECTION 3.3. SUSPENSION. Any officer may be suspended by the President
until the next meeting of the Board of Directors.
SECTION 3.4. VACANCIES. If a vacancy occurs in any office by reason of
death, legal incompetency, resignation or removal, the Board of Directors may
elect a successor to hold the office for any unexpired term.
SECTION 3.5. DUTIES. The officers of this corporation shall have such
duties and responsibilities as the Board of Directors may determine by rule or
regulation from time to time.
5
<PAGE>
RESTATED
BY-LAWS
for
LAKE CITY BANK, WARSAW, INDIANA
==============================================================================
ARTICLE IV
----------
COMMITTEES
SECTION 4.1. STANDING COMMITTEES. The standing committees of the Board
shall be an Audit Committee, a Loan and Investment Committee and a Trust
Committee.
SECTION 4.2. APPOINTMENT. The members of the standing committees shall be
appointed at the annual meeting of the Board of Directors each year by the
Chairman of the Board with the advice and consent of the Board. The Chairman
of the Board may fill any vacancy that may exist in the membership of any
standing committee.
SECTION 4.3. AUDIT COMMITTEE. The Audit Committee shall consist of three
members of the Board of Directors, not active officers of the corporation. The
Audit Committee shall cause the record books and accounts of the corporation
to be examined at least once each year by a certified public accountant or
accounting firm designated by the Board of Directors and approved by the
shareholders and shall submit a complete written statement of the condition of
the corporation to the Board of Directors and the Department of Financial
Institutions promptly after such examination.
The Audit Committee shall meet with the President and Auditor of the
corporation and determine the policies and procedures of internal audits to be
conducted under the direction of the Auditor and shall institute or recommend
such other security measures as it may deem necessary from time to time.
SECTION 4.4. LOAN AND INVESTMENT COMMITTEE. The Loan and Investment
Committee shall consist of the President, a loan officer, and four other
members of the Board. This committee by a majority vote may without prior
approval of the Board authorize the officers to make any loan or investment
permitted by law. This committee shall meet with the loan officers from time
to time and review loans, investments and credit policies.
SECTION 4.5. TRUST COMMITTEE. The Trust Committee shall consist of the
Trust Officer, the President, and four other directors. The Trust Committee
6
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shall exercise all fiduciary powers and discretionary fiduciary authority
granted to this corporation whether by will, trust instrument or statute.
SECTION 4.6. SPECIAL COMMITTEES. The Board of Directors may establish by
resolution such temporary or special committees as it deems proper and provide
in the resolution establishing the committee, its membership and duties.
SECTION 4.7. ACTION BY COMMITTEE WITHOUT A MEETING. Any action required
or permitted to be taken at any meeting of any committee may be taken without
a meeting if prior to such action, a written consent thereto is signed by all
members of the committee and such written consent or consents are filed with
the minutes of the proceedings of the committee.
SECTION 4.8. EX-OFFICIO MEMBERSHIP. All directors shall be considered
ex-officio members of all committees and shall be welcome to attend meetings
of any committee. No director shall receive a fee, however, for attendance at
the meeting of any committee to which he has not been specifically appointed.
SECTION 4.9. RULES, REGULATIONS AND POLICY. Each committee may adopt such
rules, regulations and policy statements for the conduct of its proceedings,
carry out its duties or exercising the authority granted to it as it may deem
proper provided (a) such rules, regulations and policies are not in conflict
with any law, rules or regulations of any governmental agency having the power
to regulate this corporation, the Articles of Incorporation of this
corporation and these By-Laws, and (b) no committee may delegate its
discretionary powers to an individual.
ARTICLE V
---------
STOCK CERTIFICATE AND SEAL
SECTION 5.1. CERTIFICATES. Each shareholder shall be entitled to a
certificate or certificates showing the number of shares of capital stock
standing in his name on the books of this corporation. Each certificate shall
7
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LAKE CITY BANK, WARSAW, INDIANA
==============================================================================
be numbered consecutively and shall bear the signatures of the President or a
Vice President and the secretary or an assistant secretary or the Auditor, and
the corporate seal shall be affixed thereto. A full record of each certificate
of stock as issued shall be maintained and such record shall be the sole and
exclusive evidence of the persons who are entitled to receive dividends
thereon and vote at meetings of shareholders.
SECTION 5.2. FORM OF CERTIFICATE. The stock certificates evidencing the
shares of common stock of this corporation shall be in the form determined by
the Board of Directors from time to time.
SECTION 5.3. TRANSFER OF SHARES. Title to a certificate and the shares
represented thereby shall be transferable on the records of this corporation
in person, or by attorney only upon surrender of the certificate representing
the stock to be transferred properly endorsed or accompanied by a separate
document containing a proper written assignment or power of attorney.
Surrendered certificates shall be canceled and a record thereof maintained by
this corporation.
SECTION 5.4. LOST CERTIFICATES. In case of loss or destruction of a stock
certificate, the owner shall not be entitled to receive a new certificate in
lieu thereof until: (a) a written notice of such loss or destruction has been
received by this corporation together with satisfactory proof by affidavit of
such loss or destruction and (b) ample indemnity by bond or otherwise is given
to this corporation. The Board of Directors at its election may refuse the
issue of any certificates in lieu of a lost or destroyed certificate until an
order of a Court of competent jurisdiction providing therefor has been secured
by the owner.
SECTION 5.5. CORPORATION SEAL. The corporation seal shall be a circular
disk with the name of this corporation and the words "Corporate Seal"
inscribed thereon.
8
<PAGE>
RESTATED
BY-LAWS
for
LAKE CITY BANK, WARSAW, INDIANA
==============================================================================
ARTICLE VI
----------
MISCELLANEOUS
SECTION 6.1. FISCAL YEAR. The fiscal year of this corporation shall being
on January 1 and end on December 31.
SECTION 6.2. BOOKS AND RECORDS. All official books and records of the
corporation shall be kept in the principal office of the corporation and shall
be open during business hours to the inspection of any of the shareholders
subject to such regulations as the Board of Directors may prescribe from time
to time, except nothing herein contained shall be construed to permit
inspection or examination of individual depositors' or borrowers' accounts.
SECTION 6.3. NOTICES AND WAIVERS. Any written notice provided for in
these By-Laws may be given by ordinary mail addressed to the person to be
notified at such address as appears on the books of the corporation and such
notice shall be deemed to be given on the date the same is deposited in a
United States Post Office, postage prepaid, properly addressed.
Any shareholder, director or officer may waive in writing any notice
required to be given under these By-Laws, whether before or after the time
stated therein. Attendance and participation in a meeting without objection to
a failure to give notice shall be deemed a waiver of any notice required.
SECTION 6.4. RULES AND REGULATIONS. The Board of Directors may prescribe,
establish and amend from time to time such rules, regulations and policies as
it may deem proper for the conduct of the business affairs of this corporation
as are consistent with law, regulations of supervisory authorities, the
Articles of Incorporation and these ByLaws.
SECTION 6.5. AMENDMENTS. After adoption, these By-Laws may be amended or
repealed in whole or in part only by the affirmative vote of a majority of all
the members of the Board of Directors at a meeting held five days after notice
is given to all directors of the proposed amendment or repeal.
9
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS FINANCIAL INFORMATION EXTRACTED FROM THE SECOND QUARTER
10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 40,248
<INT-BEARING-DEPOSITS> 200
<FED-FUNDS-SOLD> 209
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 83,145
<INVESTMENTS-CARRYING> 120,365
<INVESTMENTS-MARKET> 118,830
<LOANS> 349,940
<ALLOWANCE> 5,365
<TOTAL-ASSETS> 613,827
<DEPOSITS> 468,283
<SHORT-TERM> 81,914
<LIABILITIES-OTHER> 5,189
<LONG-TERM> 19,432
0
0
<COMMON> 1,448
<OTHER-SE> 37,561
<TOTAL-LIABILITIES-AND-EQUITY> 613,827
<INTEREST-LOAN> 15,942
<INTEREST-INVEST> 6,199
<INTEREST-OTHER> 60
<INTEREST-TOTAL> 22,201
<INTEREST-DEPOSIT> 9,033
<INTEREST-EXPENSE> 11,449
<INTEREST-INCOME-NET> 10,752
<LOAN-LOSSES> 60
<SECURITIES-GAINS> (6)
<EXPENSE-OTHER> 8,497
<INCOME-PRETAX> 5,026
<INCOME-PRE-EXTRAORDINARY> 3,218
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,218
<EPS-PRIMARY> 1.11<F1>
<EPS-DILUTED> 1.11<F1>
<YIELD-ACTUAL> 3.97
<LOANS-NON> 160
<LOANS-PAST> 351
<LOANS-TROUBLED> 1,404
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 5,472
<CHARGE-OFFS> 198
<RECOVERIES> 31
<ALLOWANCE-CLOSE> 5,365
<ALLOWANCE-DOMESTIC> 1,432
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 3,933
<FN>
<F1>EARNINGS PER SHARE REFLECT A TWO-FOR-ONE STOCK SPLIT EFFECTIVE APRIL 30, 1996.
FINANCIAL DATA SCHEDULES PRIOR TO THE FIRST QUARTER OF 1996 HAVE NOT BEEN
RESTATED FOR THIS STOCK SPLIT.
</FN>
</TABLE>
