-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, H3kEv26vA7K501+1L1d9shA8FfE5AHWGLxIHm5X5+cN4eajMklgROQTZcjkHJHWm oeM8u0PN3YJGb0LAyfjXNA== 0000711083-99-000006.txt : 19991109 0000711083-99-000006.hdr.sgml : 19991109 ACCESSION NUMBER: 0000711083-99-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991108 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MID AMERICA BANCORP/KY/ CENTRAL INDEX KEY: 0000711083 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 611012933 STATE OF INCORPORATION: KY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-10602 FILM NUMBER: 99743182 BUSINESS ADDRESS: STREET 1: 500 W BROADWAY CITY: LOUISVILLE STATE: KY ZIP: 40202 BUSINESS PHONE: 5025893351 MAIL ADDRESS: STREET 1: 500 WEST BROADWAY CITY: LOUISVILLE STATE: KY ZIP: 40202 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (X) QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For quarterly period ended September 30, 1999 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 1-10602 MID-AMERICA BANCORP (Exact name of registrant as specified in its charter) KENTUCKY 61-1012933 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 500 West Broadway, Louisville, Kentucky 40202 (Address of principal executive offices) (Zip Code) (502) 589-3351 (Registrant's telephone number, including area code) NONE (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for a shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No (continued) MID-AMERICA BANCORP APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes No APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. October 31, 1999: 10,318,357 shares of common stock, no par value MIDAMERICA BANCORP PART I. FINANCIAL INFORMATION The consolidated financial statements of MidAmerica Bancorp and subsidiaries (Company) submitted herewith are unaudited. However, in the opinion of management, all adjustments (consisting only of adjustments of a normal recurring nature) necessary for a fair presentation of the results for the interim periods have been made. ITEM 1. FINANCIAL STATEMENTS The following unaudited consolidated financial statements of the Company are submitted herewith: Consolidated balance sheets - September 30, 1999 and December 31, 1998 Consolidated statements of income three and nine months ended September 30, 1999 and 1998 Consolidated statements of changes in shareholders' equity nine months ended September 30, 1999 and 1998 Consolidated statements of comprehensive income three and nine months ended September 30, 1999 and 1998 Consolidated statements of cash flows - nine months ended September 30, 1999 and 1998 Notes to consolidated financial statements CONSOLIDATED BALANCE SHEETS In thousands, except share and per share amounts Unaudited
September 30 December 31 ----------- ----------- 1999 1998 ASSETS ----------- ----------- Cash and due from banks $26,444 $39,644 Federal funds sold 8,400 -- Securities purchased under agreements to resell -- 35,000 Securities available for sale, amortized cost of $389,922 (1999) and $382,580 (1998) 389,579 385,767 Securities held to maturity, market value of $4,019 (1998) and $84,013 (1998) 4,026 83,998 Loans, net of unearned income 1,037,066 1,005,021 Allowance for loan losses (9,300) (9,010) ----------- ----------- Loans, net 1,027,766 996,011 Premises and equipment 21,975 21,854 Other assets 36,031 32,489 ----------- ----------- TOTAL ASSETS $1,514,221 $1,594,763 =========== =========== LIABILITIES Deposits: Non-interest bearing $135,925 $165,072 Interest bearing 824,238 788,852 ----------- ----------- Total deposits 960,163 953,924 Securities sold under agreements to repurchase 219,540 276,454 Federal funds purchased 31,885 12,090 Advances from the Federal Home Loan Bank 70,588 74,862 Gift certificates outstanding 39,420 95,127 Accrued expenses and other liabilities 16,186 14,870 ----------- ----------- TOTAL LIABILITIES 1,337,782 1,427,327 SHAREHOLDERS' EQUITY Preferred stock, no par value; authorized - 750,000 shares; none issued -- -- Common stock, no par value, stated value $2.77 per share; authorized - 15,000,000 shares (1999); 12,000,000 shares (1998); issued and outstanding - 10,318,357 shares (1999); 10,246,157 shares (1998) 28,616 28,416 Additional paid-in capital 124,648 123,905 Retained earnings 23,398 13,043 Accumulated other comprehensive income (loss) (223) 2,072 ----------- ----------- TOTAL SHAREHOLDERS' EQUITY 176,439 167,436 ----------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,514,221 $1,594,763 =========== =========== See notes to unaudited consolidated financial statements.
CONSOLIDATED STATEMENTS OF INCOME In thousands, except per share amounts Unaudited
Three months ended Nine months ended September 30 September 30 ------------------ ------------------ 1999 1998 1999 1998 -------- -------- -------- -------- INTEREST INCOME: Interest and fees on loans $23,093 $22,190 $67,903 $64,210 Interest and dividends on: Taxable securities 5,071 3,836 12,501 12,120 Tax-exempt securities 718 709 2,140 2,130 Interest on federal funds sold 70 125 179 471 Interest on securities purchased under agreements to resell 413 1,161 3,838 4,647 -------- -------- -------- -------- Total interest income 29,365 28,021 86,561 83,578 -------- -------- -------- -------- INTEREST EXPENSE: Interest on deposits 8,407 8,792 24,752 25,954 Interest on federal funds purchased and securities sold under agreements to repurchase 3,326 2,947 10,599 9,833 Interest on Federal Home Loan Bank advances 1,059 1,169 3,257 3,212 -------- -------- -------- -------- Total interest expense 12,792 12,908 38,608 38,999 -------- -------- -------- -------- Net interest income before provision for loan losses 16,573 15,113 47,953 44,579 Provision for loan losses 590 -- 2,341 500 -------- -------- -------- -------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 15,983 15,113 45,612 44,079 -------- -------- -------- -------- NON-INTEREST INCOME: Income from trust department 690 643 2,006 1,757 Service charges on deposit accounts 1,561 1,434 4,459 4,041 Gift certificate fees 620 56 1,336 177 Securities gains 6 3 21 30 Other 1,316 1,372 6,625 9,205 -------- -------- -------- -------- Total non-interest income 4,193 3,508 14,447 15,210 -------- -------- -------- -------- OTHER OPERATING EXPENSES: Salaries and employee benefits 7,203 7,318 21,240 21,216 Occupancy expense 798 794 2,417 2,265 Furniture and equipment expenses 1,162 1,061 3,455 3,238 Other 2,995 3,246 8,612 10,017 -------- -------- -------- -------- Total other operating expenses 12,158 12,419 35,724 36,736 -------- -------- -------- -------- Income before income taxes 8,018 6,202 24,335 22,553 Income tax expense 2,175 1,792 7,182 6,710 -------- -------- -------- -------- NET INCOME $5,843 $4,410 $17,153 $15,843 ======== ======== ======== ======== WEIGHTED AVERAGE SHARES OUTSTANDING Basic 10,317 10,227 10,301 10,208 Diluted 10,448 10,418 10,443 10,429 NET INCOME PER COMMON SHARE Basic $0.57 $0.43 $1.67 $1.55 Diluted 0.56 0.42 1.64 1.52 See notes to unaudited consolidated financial statements.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY In thousands, except per share amounts Unaudited
Nine months ended September 30 ---------------------- 1999 1998 ---------- ---------- Balance, January 1 $167,436 $155,709 Net income 17,153 15,843 Other comprehensive income (loss), net of tax (2,295) (657) Cash dividends declared - $.44 (1999) and $.41 (1998) (6,798) (6,246) Stock options exercised, including related tax benefits 943 805 ---------- ---------- Balance, September 30 $176,439 $165,454 ========== ========== See notes to unaudited consolidated financial statements.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME In Thousands Unaudited
Three months Nine months ended September 30 ended September 30 ---------- --------- 1999 1998 1999 1998 ---------- ---------- --------- --------- Net Income $5,843 $4,410 $17,153 $15,843 Other comprehensive income (loss), net of tax: Unrealized gains (losses) on securities available for sale: Unrealized holding gains (losses) arising during the period (832) 1,124 (2,281) (677) Less reclassification adjustment for gains included in net income (4) (2) (14) (20) ---------- ---------- --------- --------- (836) 1,122 (2,295) (697) Pension liability adjustment -- -- -- 40 ---------- ---------- --------- --------- Other comprehensive income (loss) (836) 1,122 (2,295) (657) ---------- ---------- --------- --------- COMPREHENSIVE INCOME $5,007 $5,532 $14,858 $15,186 ========== ========== ========= ========= See notes to unaudited consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS In Thousands Unaudited
Nine months ended September 30 ---------------------- 1999 1998 CASH FLOWS FROM OPERATING ACTIVITIES: ---------- ---------- Net income $17,153 $15,843 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, amortization and accretion, net 3,293 4,031 Provision for loan losses 2,341 500 Federal Home Loan Bank stock dividend (893) (852) Gains on sales of securities (21) (30) Gains on sales of other real estate (1,371) (814) Gain on sale of subsidiary -- (4,213) Deferred taxes 456 (483) Increase in interest receivable (1,931) (1,864) Increase in other assets (3,842) (1,342) Increase in accrued expenses and other liabilities 752 1,665 ---------- ---------- Net cash provided by operating activities 15,937 12,441 ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of securities available for sale (823,491) (81,710) Proceeds from maturities of securities available for sale 802,541 170,923 Proceeds from sales of securities available for sale 14,949 7,206 Purchases of securities held to maturity (501) (2,529) Proceeds from maturities of securities held to maturity 80,500 76,000 Net cash proceeds from sale of subsidiary -- 8,134 Increase in customer loans (34,119) (63,641) Proceeds from sales of other real estate 3,570 3,535 Payments for purchases of premises and equipment (2,363) (3,171) ---------- ---------- Net cash provided by investing activities 41,086 114,747 ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Net increase in deposits 6,239 16,601 Net decrease in securities sold under agreements to repurchase (56,914) (72,272) Net increase in federal funds purchased 19,795 8,965 Advances from the Federal Home Loan Bank 15,000 26,216 Repayment of advances from the Federal Home Loan Bank (19,274) (12,473) Decrease in gift certificates outstanding (55,707) (43,000) Stock options exercised 836 635 Dividends paid (6,798) (6,246) ---------- ---------- Net cash used in financing activities (96,823) (81,574) ---------- ---------- Net increase (decrease) in cash and cash equivalents (39,800) 45,614 Cash and cash equivalents at January 1 74,644 45,902 ---------- ---------- Cash and cash equivalents at September 30 $34,844 $91,516 ========== ========== See notes to unaudited consolidated financial statements.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 1.The accounting and reporting policies of MidAmerica Bancorp and its subsidiaries (the Company) conform with generally accepted accounting principles and general practices within the banking industry. The accompanying unaudited consolidated financial statements should be read in conjunction with the Summary of Significant Accounting Policies footnote which appears in the Company's 1998 Annual Report and Form 10-K filed with the Securities and Exchange Commission. The consolidated financial statements reflect all adjustments (consisting only of adjustments of a normal recurring nature) which are, in the opinion of management, necessary for a fair presentation of financial condition and results of operations for the interim periods. Certain prior year amounts have been reclassified to conform with current classifications. 2.The following table presents the numerators (net income) and denominators (average shares outstanding) for the basic and diluted net income per share computations for the three and nine months ended September 30:
In thousands, except per share amounts Three months ended Nine months ended September 30 September 30 ------------------------ ------------------------ 1999 1998 1999 1998 ----------- ----------- ----------- ----------- Net income, basic and diluted $5,843 $4,410 $17,153 $15,843 =========== =========== =========== =========== Average shares outstanding 10,317 10,227 10,301 10,208 Effect of dilutive securities 131 191 142 221 Average shares outstanding including ----------- ----------- ----------- ----------- dilutive securities 10,448 10,418 10,443 10,429 =========== =========== =========== =========== Net income per share, basic $0.57 $0.43 $1.67 $1.55 =========== =========== =========== =========== Net income per share, diluted $0.56 $0.42 $1.64 $1.52 =========== =========== =========== ===========
Appropriate share and per share information in the consolidated financial statements has been adjusted for the 3% stock dividend of November 1998. 3.The amortized cost and market value of securities available for sale are summarized as follows:
September 30, 1999 December 31, 1998 ------------------------ ------------------------ In thousands Amortized Market Amortized Market Cost Value Cost Value ----------- ----------- ----------- ----------- U.S. Treasury and U.S. government agencies $130,817 $130,805 $159,821 $160,415 Collateralized mortgage obligations 177,549 176,405 148,524 146,970 States and political subdivisions 50,966 51,776 50,609 54,738 Corporate obligations 10,241 10,244 4,634 4,652 Equity securities 20,349 20,349 18,992 18,992 ----------- ----------- ----------- ----------- $389,922 $389,579 $382,580 $385,767 =========== =========== =========== ===========
The amortized cost and market value of securities held to maturity are summarized as follows:
September 30, 1999 December 31, 1998 ------------------------ ------------------------ In thousands Amortized Market Amortized Market Cost Value Cost Value ----------- ----------- ----------- ----------- U.S. Treasury and U.S. government agencies $4,026 $4,019 $83,998 $84,013 =========== =========== =========== ===========
4.Activity in the allowance for loan losses for the nine months ended September 30, 1999 and year ended December 31, 1998 follows:
September 30, December 31, In thousands 1999 1998 ----------- ----------- Balance, January 1 $9,010 $9,209 Loans charged-off (2,284) (1,355) Recoveries 233 184 ----------- ----------- Net loans charged-off ($2,051) ($1,171) Provision for loan losses 2,341 972 ----------- ----------- Balance, end of period $9,300 $9,010 =========== ===========
5.Significant components of other non-interest income and other operating expenses are set forth below:
Three months ended Nine months ended In thousands September 30 September 30 ------------------------ ------------------------ 1999 1998 1999 1998 ----------- ----------- ----------- ----------- Other non-interest income: Settlement proceeds (1999)/ gain on sale of money order subsidiary (1 $0 $0 $1,800 $4,213 Gains on sales of other real estat 371 0 1,371 814 Money order processing fees 90 354 390 1,267 Other 855 1,018 3,064 2,911 ----------- ----------- ----------- ----------- $1,316 $1,372 $6,625 $9,205 =========== =========== =========== ===========
Other non-interest income includes non-recurring revenue related to the Company's sale of its money order subsidiary. For the nine months ended September 30, 1998, the gain on the sale of the subsidiary was recognized in the amount of $4,213,000. Other non-interest income for the nine months ended September 30, 1999, includes a $1.8 million settlement related to the discontinuance of a processing agreement between the Company and the purchaser of the money order order subsidiary.
Three months ended Nine months ended In thousands September 30 September 30 ------------------------ ------------------------ 1999 1998 1999 1998 ----------- ----------- ----------- ----------- Other operating expenses: Advertising and marketing $307 $416 $956 $1,683 Operating supplies 396 262 1,093 1,078 Legal and professional fees 633 739 1,371 2,302 Taxes, other than income taxes 412 341 1,157 1,017 Other 1,247 1,488 4,035 3,937 ----------- ----------- ----------- ----------- $2,995 $3,246 $8,612 $10,017 =========== =========== =========== ===========
6.Selected financial information by business segment for September 1999 and 1998 follows:
Three months ended Nine months ended September 30 September 30 In thousands ------------------------ ------------------------ 1999 1998 1999 1998 ----------- ----------- ----------- ----------- Net interest income Banking $15,777 $14,362 $45,433 $42,034 Other 788 753 2,520 2,550 Eliminations 8 (2) 0 (5) ----------- ----------- ----------- ----------- Total $16,573 $15,113 $47,953 $44,579 =========== =========== =========== =========== Non-interest income Banking $3,483 $3,093 $10,850 $9,568 Other (a) (b) 2,350 2,208 9,359 10,381 Eliminations (a) (1,640) (1,793) (5,762) (4,739) ----------- ----------- ----------- ----------- Total $4,193 $3,508 $14,447 $15,210 =========== =========== =========== =========== Net income Banking $5,509 $4,104 $14,484 $12,547 Other 325 307 2,668 3,300 Eliminations 9 (1) 1 (4) ----------- ----------- ----------- ----------- Total $5,843 $4,410 $17,153 $15,843 =========== =========== =========== =========== Assets as of June 30 Banking $1,463,441 $1,400,161 Other 64,275 60,082 Eliminations (13,495) (54,173) ----------- ----------- Total $1,514,221 $1,406,070 =========== ===========
(a) Data processing revenues, for services provided to the banking segment and certain other operating areas by the data processing subsidiary, are eliminated in the consolidated statement of income. (b) The primary external source of other non-interest income is fees related to the gift certificate operation. In 1999, other non-interest income also includes settlement proceeds related to the discontinuance of a processing agreement between the Company and the purchaser of the money order subsidiary. In 1998, other non-interest income also includes a gain on the sale of the money order subsidiary (See Note 5). ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This item discusses the results of operations for the Company for the three and nine months ended September 30, 1999, and compares those periods with the same periods of the previous year. In addition, the discussion describes the significant changes in the financial condition of the Company at September 30, 1999 as compared to December 31, 1998. This discussion should be read in conjunction with the unaudited consolidated financial statements and accompanying notes presented in Part I, Item 1 of this report. RESULTS OF OPERATIONS Net income for the three months ended September 30, 1999 was $5.843 million compared to $4.410 million for the three months ended September 30, 1998. Net income for the nine months ended September 30, 1999 was $17.153 million compared to $15.843 million for the nine months ended September 30, 1998. Net income for the three and nine month periods ended September 30, 1999 and 1998 includes non-recurring revenue related to the sale of the Companys money order subsidiary and gains on sales of other real estate. For the nine months ended September 30, 1998, a $4.2 million gain on the sale of the money order subsidiary and $814,000 of gains on sales of other real estate were recognized. For the nine month period ended September 30, 1999, the Company recognized as income $1.8 million of settlement proceeds related to the discontinuance of a processing agreement between the Company and the purchaser of the money order subsidiary, and $1.371 million of gains on sales of other real estate. In the third quarter of 1999, there were gains of $371,000 on sales of other real estate. The Company had substantial improvement in operating net income for the three and nine months ended September 30, 1999, compared to the same periods in 1998. Excluding the non-recurring revenue items for the three and nine month periods of 1999 and 1998 discussed above, diluted net income per share reflects an increase of 28.6% for the third quarter of 1999 compared with the third quarter of 1998, and an increase of 17.9% for the nine months ended September 30, 1999 compared with the same period in 1998. The improved operating performance is attributed primarily to the following: *Increases in tax equivalent net interest income of 9.5% and 7.4% for the quarter and nine month periods, respectively. *Increases in the core components of non-interest income of 8.9% and 10.8% for the quarter and the nine month periods, respectively. *Decreases in other operating expenses of 2.1% and 2.8% for the quarter and nine month periods, respectively. These positive factors, which are discussed in more detail in the following pages, were partially offset by an increase in the provision for loan losses. In the third quarter of 1999, the provision for loan losses was $.590 million, compared with no provision in the third quarter of 1998. For the nine months ended September 30, 1999, the provision for loan losses increased $1.841 million from $.500 million in 1998 to $2.341 in 1999. The table below reflects operating results excluding the previously discussed non-recurring revenue items.
Three Months Nine Months Ended September 30 Ended September 30 ---------------------------------- ---------------------------------- 1999 1998 % Chg 1999 1998 % Chg ---------- ---------- ---------- ---------- ---------- ---------- Net income (in 1000s) $5,843 $4,410 32.5% $17,153 $15,843 8.3% Non-recurring revenue, net of taxes (in 1000s) (241) -- -- (1,943) (3,044) -36.2% ---------- ---------- ---------- ---------- Net income excluding non-recurring revenue (in 1000s) $5,602 $4,410 27.0% $15,210 $12,799 18.8% ========== ========== ========== ========== ========== ========== Diluted net income per share $0.56 $0.42 33.3% $1.64 $1.52 7.9% Non-recurring revenue, net of taxes on a diluted per share basis (0.02) -- -- (0.19) (0.29) -34.5% ---------- ---------- ---------- ---------- Diluted net income per share excluding non-recurring revenue $0.54 $0.42 28.6% $1.45 $1.23 17.9% ========== ========== ========== ========== ========== ==========
Net Interest Income Net interest income is the difference between interest earned on earning assets and interest expensed on interest bearing liabilities. The net interest spread is the difference between the average rate of interest earned on earning assets and the average rate of interest expensed on interest bearing liabilities. The net yield on earning assets (interest margin) is net interest income divided by average earning assets. The following table summarizes the above for the three and nine months ended September 30, 1999 and 1998.
Dollars in thousands Three Months Ended Nine Months Ended September 30 September 30 ---------------------- ----------------------- 1999 1998 1999 1998 ---------- ---------- ---------- ----------- Total interest income $29,365 $28,021 $86,561 $83,578 Tax equivalent adjustment 459 440 1,372 1,340 -------- -------- -------- -------- Tax equivalent interest income 29,824 28,461 87,933 84,918 Total interest expense 12,792 12,908 38,608 38,999 -------- -------- -------- -------- Tax equivalent net interest income $17,032 $15,553 $49,325 $45,919 ======== ======== ======== ======== Average rate on earning assets 8.07% 8.45% 7.91% 8.40% Average rate on interest bearing liabilities 4.34% 4.74% 4.34% 4.79% Net interest spread, annualized 3.73% 3.71% 3.57% 3.61% Net interest margin, annualized 4.61% 4.62% 4.44% 4.54% Average earning assets $1,464,752 $1,338,601 $1,486,587 $1,355,118 Average interest bearing liabilities $1,170,361 $1,080,778 $1,190,324 $1,089,093
Net interest income on tax equivalent basis increased $1,479,000 or 9.5% for the quarter and $3,406,000 or 7.4% for the nine month period, as the Company benefited from higher earning asset volume. During the quarter and nine month periods of 1999, average earning assets increased 9.4% and 9.7%, respectively, compared with 1998. Average earning asset growth for the quarter and nine month periods included average loan growth of $90 million and $98 million, respectively. For both periods, approximately half of the growth is related to retail loans and is primarily attributed to indirect automobile lending activities. The remaining loan growth is associated with commercial lending activities. Partially offsetting the benefit of volume increases was the impact of lower interest rates in 1999 than in 1998, on both new and repricing assets and liabilities. For the third quarter of 1999, compared with the same period in 1998, the net interest margin declined one basis point to 4.61%; for the nine months ended September 30, 1999, compared to the same period in 1998, the net interest margin declined 10 basis points to 4.44%. Allowance for Loan Losses and Provision for Loan Losses The allowance for loan losses is maintained at a level which management believes is adequate to absorb estimated probable credit losses. Management determines the adequacy of the allowance based upon reviews of individual credits, evaluation of the risk characteristics of each segment of the loan portfolio, including the impact of current economic conditions on the borrowers' ability to repay, past collection and loss experience and such other factors, which, in management's judgment, deserve current recognition. The allowance for loan losses was $9,300,000 and 0.90% of loans as of September 30, 1999 compared with $9,010,000 and 0.90% of loans at December 31, 1998. The allowance for loan losses was 219% of non-performing loans at September 30, 1999, compared to 202% at December 31, 1998. Non-performing loans were $4.3 million and 0.41% of loans outstanding at September 30, 1999, compared with $4.5 million and 0.44% on December 31, 1998. Net loans charged-off were $.568 million in the third quarter of 1999 and $2.051 million for the nine months ended September 30, 1999, compared with $119,000 in the third quarter of 1998 and $493,000 for the nine months ended September 30, 1999. The third quarter provision for loan losses in 1999 was $590,000 compared with no provision in the third quarter of 1998. For the nine months ended September 30, 1999, the provision for loan losses was $2,341,000, compared with $500,000 for the same period in 1998. The increase in the provision for loan losses related to the increased level of charged-off loans. Net loans charged-off related to indirect automobile lending activities were $360,000 for the third quarter of 1999, and $984,000 for the nine month period ended September 30, 1999. The nine month period of 1999 also includes a loan charge-off of $730,000 related to a loss on the sale of a problem loan. An analysis of the changes in the allowance for loan losses and selected ratios follows: Dollars in thousands Nine Months Ended September 30 ---------------------- 1999 1998 ---------- ---------- Balance at January 1 $9,010 $9,209 Loans charged off (2,284) (617) Recoveries 233 124 -------- -------- Net loans charged off (2,051) (493) Provision for loan losses 2,341 500 -------- -------- Balance September 30 $9,300 $9,216 ======== ======== Average loans, net of unearned income $1,009,219 $910,889 Provision for loan losses to average loans 0.23% 0.05% Allowance for loan losses to average loans 0.92% 1.01% Allowance for loan losses to period-end loans 0.90% 0.97% Non-interest Income and Other Operating Expenses The following table sets forth the major components of non- interest income and other operating expenses for the three and nine months ended September 30, 1999 and 1998:
In thousands Three Months Ended Nine Months Ended September 30 September 30 ---------------------- ---------------------- 1999 1998 1999 1998 ---------- ---------- ---------- ---------- Non-Interest Income: Income from trust department $690 $643 $2,006 $1,757 Service charges on deposit accounts 1,561 1,434 4,459 4,041 Gift certificate fees 620 56 1,336 177 Securities gains 6 3 21 30 Settlement proceeds (1999) / gain on sale of money order subsidiary (1998) -- -- 1,800 4,213 Gains on sales of other real estate 371 -- 1,371 814 Money order processing fees 90 354 390 1,267 Other 855 1,018 3,064 2,911 ---------- ---------- ---------- ---------- Total non-interest income $4,193 $3,508 $14,447 $15,210 ========== ========== ========== ========== Other Operating Expenses: Salaries and employee benefits $7,203 $7,318 $21,240 $21,216 Occupancy expenses 798 794 2,417 2,265 Furniture and equipment expenses 1,162 1,061 3,455 3,238 Advertising and marketing 307 416 956 1,683 Operating supplies 396 262 1,093 1,078 Legal and professional fees 633 739 1,371 2,302 Taxes, other than income taxes 412 341 1,157 1,017 Other 1,247 1,488 4,035 3,937 ---------- ---------- ---------- ---------- Total other operating expenses $12,158 $12,419 $35,724 $36,736 ========== ========== ========== ==========
Excluding the non-recurring revenue related to the money order subsidiary sale and gains on real estate sales, non- interest income in the third quarter of 1999 increased $311,000 or 8.9% over the third quarter of 1998; non-interest income for the nine months ended September 30, 1999, increased $1,102,000 or 10.8% over 1998. Trust Department income increased $47,000 or 7.3% for the quarter and $249,000 or 14.2% for the nine month period as assets under management continued to increase with continuing business development activities. Deposit service charges increased $127,000 or 8.9% for the quarter and $418,000 or 10.3% for the nine month period due to an expanding customer base and increased service charge rates in effect since the third quarter of 1998. Service charges on dormant gift certificates, recognized starting in the fourth quarter of 1998, caused a $564,000 increase in the third quarter and a $1,160,000 increase for the nine month period in the level of gift certificate income. Processing fees for services provided to the purchaser of the money order subsidiary declined $264,000 for the quarter and $877,000 for the nine month period. These services were phased out by September 30, 1999. Bank card and merchant fees, included in other non-interest income, increased $25,000 or 7.1% for the quarter and $297,000 or 25.6% for the nine month period as the retail card base and the merchant network continued to expand. Other operating expenses declined $261,000 or 2.1% for the quarter and $1,012,000 or 2.8% for the nine month period. Declines in legal and advertising costs contributed to these overall operating expense reductions. Legal costs declined $154,000 for the quarter and $1,000,000 for the nine month period as discovery efforts in one ongoing litigation matter were concluded in early 1999. Advertising costs in 1999 moved back to historical level, while 1998 had the additional cost of a new image campaign. Advertising expenses declined $108,000 for the quarter and $727,000 for the nine month period. Salaries and benefits decreased $115,000 for the quarter and increased $24,000 or 0.1% for the nine month periods. Normal salary increases effective in April 1999 averaged 4.2%. However, lower personnel costs for the Year 2000 project and controlled staffing levels minimized the impact of salary increases. Staffing levels remained fairly constant, with a year-to-date average FTE level of 620 in 1999 and 621 in 1998. Depreciation on new computers and other equipment caused equipment expenses to increase $101,000 and $217,000 for the quarter and year-to-date periods, respectively. Facilities maintenance expenses contributed to a $152,000 year-to-date increase in occupancy expenses. Variances in other expense categories were not significant. Income Taxes The Company had income tax expense of $2,175,000 for the third quarter of 1999 compared to $1,792,000 for the same period in 1998, which yielded effective tax rates of 27.1% for 1999 and 28.9% for 1998. The tax expense in the third quarter of 1999 was reduced $168,000 as a result of a refund on a prior year tax return. The year-to-date tax expense and effective tax rates were $7,182,000 and 29.5% for 1999, and $6,710,000 and 29.7% for 1998, respectively. FINANCIAL CONDITION Total assets decreased approximately $81 million from December 31, 1998 to September 30, 1999, while average assets increased $71 million or 4.9% to $1.540 billion for the third quarter of 1999 compared to the last quarter of 1998. During the three and nine month periods ended September 30, 1999, average earning assets increased approximately $126 million and $131 million respectively, compared to the prior year periods. Average earning asset growth was funded primarily from increases in average retail deposit products, customer repurchase agreements and federal funds purchased during the periods. For the nine months ended September 30, 1999 compared to the first nine months of 1998 average asset growth included increases in average commercial loans of $46 million, average retail loans of $52 million, and average securities of $45 million. For the third quarter of 1999 compared to 1998, average retail loans increased $43 million, average commercial loans increased $47 million and the average securities portfolio increased $90 million. Non-performing Loans and Assets A summary of non-performing loans and assets follows: Dollars in thousands September 30, 1999 December 31, 1998 ------------- ----------------- Loans accounted for on a non- accrual basis $1,981 $1,416 Restructured loans 818 -- Loans contractually past due ninety days or more as to interest or principal payments 1,452 3,050 -------- -------- Total non-performing loans 4,251 4,466 Other real estate held for sale 9,099 11,358 -------- -------- Total non-performing assets $13,350 $15,824 ======== ======== Non-performing loans to total loans 0.41% 0.44% Non-performing assets to total assets 0.88% 0.99% Allowance for loan losses to non- performing loans 219% 202% Loans classified as impaired at September 30, 1999 aggregated $3.0 million and included all non-accrual and restructured loans. At December 31, 1998, impaired loans aggregated $3.6 million. Loans for which payments were current or less than 90 days past due, where borrowers are currently experiencing financial difficulties, were approximately $14 million at September 30, 1999 and $3.8 million at December 31, 1998. The Company considers the level of non-performing and impaired loans in its evaluation of the adequacy of the allowance for loan losses. Other real estate aggregated $9.1 million at September 30, 1999 and was principally comprised of properties acquired in settlement of a related group of problem real estate development loans in April 1996, and a completed condominium project acquired in settlement of loans in November 1997. The carrying value of real estate development property has been substantially reduced through sales from an original value of $15.2 million to $1.7 million at September 30, 1999. The remaining portion of property is 15 acres of commercial property. The condominium project involves 30 (44 originally) completed and readily marketable units and 7.5 acres of adjacent developed land. This riverfront development has a carrying value of $7.0 million. Management has taken recent action to provide for enhanced marketing of these properties. Gains on sales of real estate held for sale were $371,000 and $-0- for the third quarter of 1999 and 1998, respectively, and $1,371,000 and $814,000 for the nine months ended September 30, 1999 and 1998, respectively. LIQUIDITY Liquidity represents the Company's ability to generate cash or otherwise obtain funds at a reasonable price to satisfy commitments to borrowers as well as demands of depositors. The loan and securities portfolios are managed to provide liquidity through maturity or payments related to such assets. The parent Company's liquidity depends primarily on the dividends paid to it as the sole shareholder of Bank of Louisville. CAPITAL RESOURCES At September 30, 1999, shareholders' equity totaled $176,439,000, an increase of $9.0 million since December 31, 1998. Net income of $17.2 million after cash dividends of $6.8 million provided $10.4 million of the increase. Since December 31, 1998, the Companys available for sale securities portfolio had net unrealized losses, net of tax benefits, that decreased shareholders equity $2.3 million. Proceeds and tax benefits from stock options exercised added $943,000 to shareholders equity in 1999. The Company's capital ratios exceed minimum regulatory requirements and are as follows: Company Company September 30December 31, Minimum 1999 1998 Required ---------- ---------- ---------- Leverage Ratio 11.7% 11.5% 4.0% Tier I risk based capital ratio 15.3% 14.2% 4.0% Total risk based capital ratio 16.1% 15.0% 8.0% YEAR 2000 Throughout 1999, the Company has continued with its organization-wide program of preparing its systems for Year 2000 compliance and developing detailed plans to address the possible business exposures related to the Year 2000 issue. A detailed description of the Companys Year 2000 program is set forth in the Companys 1998 Annual Report and Form 10-K. As of September 30, 1999, the Company had completed all phases of its Year 2000 program for mission critical applications. The table below indicates the extent to which mission critical applications were compliant (remediated, tested and implemented) at September 30, 1999. MISSION CRITICAL APPLICATION SUMMARY Percent of Applications Year 2000 Compliant Category 9-30-99 ------- Mainframe applications 100% Distributed applications 100% PC applications 100% The Company has continued its review of Year 2000 issues with its major business relationships, significant loan and deposit customers, counterparties, intermediaries and vendors with whom it has important financial and operational relationships to determine the extent to which they are vulnerable to Year 2000 issues. Based on this review (and assuming the accuracy of the responses and representations), as of September 30, 1999, the Company does not expect any material adverse impact from third-party Year 2000 non- compliance. In addition, the Company has communicated with its customer base and plans additional communications as necessary. The Company has incurred internal staff costs as well as consulting, new hardware and software expenses, and other expenses related to this program. A portion of these costs are not incremental costs to the Company, but rather represent the redeployment of existing information technology and business unit resources. A summary of costs incurred on the project through September 30, 1999 and estimated future costs is as follows: In thousands Costs Incurred Through September Estimated 30, 1999 Future Costs Total ---------- ---------- ---------- IT Personnel Resources $1,884 $396 $2,280 Business Unit Personnel Resources 336 119 455 External Contractors / Consultants 120 60 180 Replacement Software 408 65 473 Replacement / Upgrade Hardware 1,034 139 1,173 Other Costs 83 68 151 ---------- ---------- ---------- $3,865 $847 $4,712 ========== ========== ========== Project costs increased $171,000 during the third quarter of 1999. Portions of the above costs relate to capital items that are depreciated over useful lives. Accordingly, project costs are not representative of amounts being presently expensed. For the three months ended September 30, 1999, $192,000 of the Year 2000 project costs were expensed, including $83,000 of depreciation. For the nine months ended September 30, 1999, $979,000 of the Year 2000 project costs were expensed, including $334,000 of depreciation. Although the Company does not presently anticipate a material business interruption as a result of the Year 2000 issue, there are many risks associated with the Year 2000 issue, including the possibility of a failure of the Companys computer and non- information technology systems. The Companys progress with respect to internal systems shown on the previous page has significantly mitigated these risks. The greatest risks at this point are failures of third parties to remediate their own Year 2000 issues. The failure of third parties with which the Company has financial or operational relationships such as securities exchanges, clearing organizations, depositories, regulatory agencies, banks, clients, counterparties, vendors and utilities, to remediate their computer and non-information technology systems issues in a timely manner could result in a material financial risk to the Company. If the above mentioned risks are not remedied, the Company may experience business interruption, financial loss, regulatory actions, damage to its franchise and legal liability. While it is difficult to predict with reasonable accuracy what failures may occur, the Company believes that the continuance of sufficient planning, communication, coordination and testing will mitigate potential material disruption. The Company has business continuity plans in place that cover its current operations, and Year 2000 specific contingency planning has been completed. The above disclosure is designated as a Year 2000 Readiness Disclosure as that term is used in the Year 2000 Information and Readiness Disclosure Act. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Companys September 30, 1999 analysis of the impact of changes in interest rates on net interest income over the next 12 months indicates a stable exposure level to changing interest rates since June 30, 1999. The table below illustrates the simulation analysis of the impact of a 50 or 100 basis point upward or downward movement in interest rates. The impact of the rate movement was simulated as if rates changed immediately from September 30, 1999 levels, and remained constant at those levels thereafter.
Movement in interest rates from September 30, 1999 rates ----------------------------------------------- Increase Decrease +50bp +100bp -50bp -100bp ---------- ---------- ---------- ---------- Net interest income increase (decrease) (in 1000' ($848) ($1,483) ($347) $205 Net income per share increase (decrease) ($0.05) ($0.09) ($0.02) $0.01
Forward Looking Statements The statements contained in this filing that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The use of words such as "believes", "estimates", "plans", "expects" and similar expressions are intended to identify forward-looking statements. All forward-looking statements included in this document are based on information available to the Company on the date hereof, and the Company assumes no obligation to update any such forward-looking statement. It is important to note that the Companys actual results could differ materially from those in such forward-looking statements. Factors that could cause actual results to differ materially from those projected include, among others, the effects of Year 2000 software failures; customer concentration; cyclicality; fluctuation of interest rates; risk of business interruption; adequacy of the allowance for loan losses; valuation of other real estate; dependence on key personnel; and government regulation. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 10 Material Contracts 10(a) Employment Agreement between the Company and John T. Rippy dated August 16, 1999. 10(b) Employment Agreement between the Company and Steven A. Small dated August 15, 1999. 27 Financial Data Schedule (b) Reports on Form 8-K There were no reports filed on Form 8-K during the third quarter. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Mid-America Bancorp (Registrant) Date: November 8, 1999 By:/s/ Steven Small Steven Small Treasurer Date: November 8, 1999 By:/s/ R.K. Guillaume R.K. Guillaume Chief Executive Officer INDEX TO EXHIBITS 10(a) Employment Agreement between the Company and John T. Rippy dated August 16, 1999. 10(b) Employment Agreement between the Company and Steven A. Small dated August 15, 1998. 27 Financial Data Schedule EX-10 2 Exhibit 10(a) EMPLOYMENT AGREEMENT THIS AGREEMENT, made and entered into as of the 16 day of August, 1999 by and between MIDAMERICA BANCORP, INC., a Kentucky corporation and BANK OF LOUISVILLE, a Kentucky Combined Bank and Trust Company, (individually a "Company"; together with their successors and assigns permitted under this Agreement, the "Companies"), and JOHN T. RIPPY (the "Executive"). W I T N E S S E T H: WHEREAS, the Companies desire to continue the employment of the Executive and to enter into an agreement embodying the terms of such employment (this "Agreement"), and the Executive desires to enter into this Agreement and accept such continued employment, subject to the terms and provisions of this Agreement, NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and for other good and valuable consideration, the receipt of which is mutually acknowledged, the Companies and the Executive (individually a "Party" and together the "Parties") agree as follows: 1. Definitions. (a) "Affiliate" of a person or other entity shall mean a person or other entity that directly or indirectly controls, is controlled by, or is under common control with the person or other entity specified. (b) Except as provided otherwise in Section 7 hereof, "Base Salary" shall mean the salary provided for in Section 4 below or any increased salary granted to the Executive pursuant to Section 4. (c) "Board" shall mean the Boards of Directors of the Companies. (d) "Cause" shall mean: (i) The Executive is convicted of a felony; or (ii) The Executive is guilty of willful gross neglect or willful gross misconduct in carrying out his duties under this Agreement, resulting, in either case, in material economic harm to a Company, unless the Executive believed in good faith that such act or nonact was in the best interests of such Company. (e) A "Change of Control" shall mean the occurrence of any one of the following events: (i) Any "person," as such term is used in Sections 3(a)(9) and 13(d)of the Securities Exchange Act of 1933, after the date hereof becomes a "beneficial owner," as such term is used in Rule 13d-3 promulgated under that Act, of 20% or more of the Voting Stock of a Company; (ii) The majority of either Board consists of individuals other than Incumbent Directors, which term means the members of the Board on the date of this Agreement; provided that any person becoming a director subsequent to such date whose election or nomination for election was supported by two-thirds of the directors who then comprised the Incumbent Directors shall be considered to be an Incumbent Director; (iii) A Company adopts any plan of liquidation providing for the distribution of all or substantially all of its assets; (iv) All or substantially all of the assets or business of a Company is disposed of pursuant to a merger, consolidation or other transaction (unless the shareholders of such Company immediately prior to such merger, consolidation or other transaction beneficially own, directly or indirectly, in substantially the same proportion as they owned the Voting Stock of such Company, all of the Voting Stock or other ownership interests of the entity or entities, if any, that succeed to the business of such Company); or (v) A Company combines with another company and is the surviving corporation but, immediately after the combination, the shareholders of such Company immediately prior to the combination hold, directly or indirectly, 50% or less of the Voting Stock of the combined company (there being excluded from the number of shares held by such shareholders, but not from the Voting Stock of the combined company, any shares received by Affiliates of such other company in exchange for stock of such other company). (f) "Constructive Termination Without Cause" shall mean a termination of the Executive's employment at his initiative as provided in Section 7(d) below following the occurrence, without the Executive's prior written consent, of one or more of the following events (except in consequence of a prior termination): (i) A reduction in the Executive's then current Base Salary or the termination or material reduction of any employee benefit or perquisite enjoyed by him (other than as part of an across-the-board reduction applicable to all executive officers of the Companies); (ii) The failure to elect or reelect the Executive to any of the positions described in Section 3 below or removal of him from any such position; (iii) A material diminution in the Executive's duties or the assignment to the Executive of duties which are materially inconsistent with his duties or which materially impair the Executive's ability to function as the Executive Vice President or any other office to which he may be elected or appointed: (iv) The failure to continue the Executive's participation in any incentive compensation plan unless a plan providing a substantially similar opportunity is substituted; (v) The relocation of a Company's principal office, or the Executive's own office location as assigned to him by a Company, to a location outside of the metropolitan area of Louisville, Kentucky; or (vi) The failure of a Company to obtain the assumption in writing of its obligation to perform this Agreement by any successor to all or substantially all of the assets of such Company within 45 days after a merger, consolidation, sale or similar transaction. (g) "Disability" shall mean the Executive's inability to substantially perform his duties and responsibilities under this Agreement for a period of 180 consecutive days. (h) "Term of Employment" shall mean the period specified in Section 2 below. (i) "Voting Stock" shall mean capital stock of any class or classes having general voting power under ordinary circumstances in the absence of contingencies, to elect the directors of a corporation. 2. Term of Employment. The employment of the Executive will continue for thirty-six months from the date hereof or until the earlier termination of his employment in accordance with the terms of this Agreement. Thereafter, if not terminated by written notice delivered by either party to the other prior to expiration of the original or any successive 36-month term, this Agreement's term shall be renewed for successive thirty-six month periods. A termination of this Agreement for any reason at the end of the original or renewal term shall not constitute a termination of Executive's employment or trigger required payments pursuant to Section 7 hereof, and continued employment thereafter shall be "at will" and either party may terminate the employment at any time thereafter, with or without cause. 3. Position. Duties and Responsibilities. (a) During the term of Employment, the Executive shall continue to be employed as Executive Vice President and General Counsel of the Companies with duties commensurate with that position. The Executive, in carrying out his duties under this Agreement, shall report to the Chief Executive Officer. (b) Anything herein to the contrary notwithstanding, nothing shall preclude the Executive from (i) serving on the boards of directors of a reasonable number of other corporations (except Executive will not serve on the board of any other financial institution) or the boards of a reasonable number of trade associations and/or charitable organizations, (ii) engaging in charitable activities and community affairs, and (iii) managing his personal investments and affairs, provided that such activities do not materially interfere with the proper performance of his duties and responsibilities as the Companies' Executive Vice President or any other office to which he may be elected or appointed. 4. Base Salary. The Executive shall be paid an annualized Base Salary, payable in accordance with the regular payroll practices of the Companies, of $120,000. The Base Salary shall be reviewed no less frequently than annually for increase at the sole discretion of the Board and its Nominating and Executive Compensation Committee. 5. Employee Benefit Programs. During the Term of Employment, the Executive shall be entitled to participate in all employee incentive, pension and welfare benefit plans and programs made available to the Companies' senior level executives or to their employees generally, as such plans or programs may be in effect from time to time, including without limitation, annual stock option grant, ESOP, bonus, pension, profit sharing, savings and other retirement plans or programs, medical, dental, hospitalization, short-term and long-term disability and life insurance plans, accidental death and dismemberment protection, travel accident insurance, and any other pension or retirement plans or programs and any other employee incentive compensation plan, employee welfare benefit plans or programs that may be sponsored by the Companies from time to time, including any plans that supplement the above-listed types of plans or programs, whether funded or unfunded. 6. Reimbursement of Business and Other Expenses. The Executive is authorized to incur reasonable expenses in carrying out his duties and responsibilities under this Agreement and the Companies shall promptly reimburse him for all business expenses incurred in connection with carrying out the business of the Companies, subject to documentation in accordance with the Companies' policy. 7. Termination of Employment. (a) Termination for Cause. In the event the Companies terminate the Executive's employment for Cause, he shall be entitled to: (i) The Base Salary through the date of the termination of his employment for Cause; (ii) Any pension benefit that may become due pursuant to Section 5 above, determined as of the date of such termination; (iii) Other or additional benefits in accordance with applicable plans or programs of the Companies to the date of termination; (iv) Any incentive awards earned (but not yet paid). (b) Termination Without Cause. If the Executive's employment is terminated by the Companies without Cause other than due to Disability or death, or there is a Constructive Termination without Cause, the Executive shall be entitled to: (i) The Base Salary through the date of termination of the Executive's employment; (ii) The Base Salary, at the annualized rate in effect on the date of termination of the Executive's employment, for thirty-six months following such termination, paid in installments in accordance with the regular pay practices of the Companies; provided that at the Executive's option the Companies shall pay him the present value of such salary continuation payments in a lump sum (using as the discount rate the Applicable Federal Rate for short term Treasury obligations as published by the Internal Revenue Service for the month in which such termination occurs). (iii) The balance of any incentive awards earned (but not yet paid); (iv) The right to exercise any stock option in full, whether or not such right is exercisable pursuant to the terms of the grant. (v) Any pension benefit that may become due pursuant to Section 5 above; (vi) Continued accrual of credited service for the purpose of the pension benefit provided under Section 5 for thirty-six months, with such amount payable on a non-tax-qualified basis; (vii) Continued participation in all medical, dental, hospitalization and life insurance coverage and in other employee benefit plans or programs in which he was participating on the date of the termination of his employment until the earlier of: (A) The end of the period during which he is receiving salary continuation payments (or in respect of which a lump-sum severance payment is made); (B) The date, or dates, he receives equivalent coverage and benefits under the plans and programs of a subsequent employer (such coverages and benefits to be determined on a coverage-by-coverage, or benefit-by-benefit, basis); provided that (x) if the Executive is precluded from continuing his participation in any employee benefit plan or program as provided in this clause (vii) of this Section 7(b), he shall be provided with the after-tax economic equivalent of the benefit provided under the plan or program in which he is unable to participate for the period specified in this clause (vii) of this Section 7(b), (y) the economic equivalent of any benefit foregone shall be deemed to be the lowest cost that would be incurred by the Executive in obtaining such benefit himself on an individual basis, and (z) payment of such after-tax economic equivalent shall be made quarterly in advance; and (viii) Immediate vesting of the Companies' contribution to his Employee Stock Ownership Plan with any unvested amounts paid on a non-tax- qualified basis (ix) Other or additional benefits in accordance with applicable plans and programs of the Companies to the date of termination. (c) Termination of Employment Following a Change in Control. If following a Change in Control, the Executive's employment is terminated without Cause other than due to Disability or death or there is a Constructive Termination Without Cause, the Executive shall be entitled to the payments and benefits provided in Section 7(b), provided that the salary continuation payments shall be paid in a lump sum without any discount. Also, immediately following a Change in Control, all amounts, entitlements or benefits in which he is not yet vested shall become fully vested. In addition, if this Agreement is in effect at the date of the Change in Control (even if subsequently not renewed) and Executive continues in the employ of the Companies for a period of two years following the effective date of the Change of Control, he may then voluntarily terminate his employment and in such a case would receive a lump sum equal to three times Base Salary. A voluntary termination under the previous sentence of this Section 7(c) shall be effective upon 30 days prior notice to the Companies and shall not be deemed a breach of this Agreement; (d) Voluntary Termination. In the event of a termination of employment by the Executive on his own initiative other than a termination due to death or Disability or a Constructive Termination without Cause, the Executive shall have the same entitlements as provided in Section 7(a) for a Termination for Cause. (e) Limitation Following a Change in Control. In the event that the termination of the Executive's employment is for one of the reasons set forth in Section 7(b) above following a Change in Control, and the aggregate of all payments or benefits made or provided to the Executive under any Section above and under all other plans and programs of the Companies (the "Aggregate Payment") is determined to constitute a Parachute Payment, as such term is defined in Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended, notwithstanding any other provision of this Agreement to the contrary, the aggregate amount of payments or benefits paid by the Companies to the Executive pursuant to this Agreement, the amount to be paid to the Executive and the time of payment shall be adjusted pursuant to this Section 7(e) so as to make such payments fully deductible by the Companies. If the Parties are unable to agree upon an Auditor to calculate such an adjustment, then the Executive and Companies shall each select one accounting firm and those two firms shall jointly select the accounting firm to serve as the Auditor. (f) Upon termination pursuant to Section 7(b), the Executive will have the option of purchasing his Company car for the value of such car on the books of the Company at the time of termination, adjusted for value of the Executive's cash contribution, if any, to the purchase of the car. (g) No Mitigation - No Offset. In the event of any termination of employment under this Section 7, the Executive shall be under no obligation to seek other employment and there shall be no offset against amounts due the Executive under this Agreement on account of any remuneration attributable to any subsequent employment that he may obtain except as specifically provided in this Section 7. (h) Nature of Payments. Any amounts due under this Section 7 are in the nature of severance payments considered to be reasonable by the Companies and are not in the nature of a penalty. 8. Indemnification. (a) The Companies agree that if the Executive is made a party, or is threatened to be made a party, to any action, suit or proceeding, whether civil, criminal, administrative or investigative (a "Proceeding"), by reason of the fact that he is or was a director, officer or employee of the Companies or is or was serving at the request of the Companies as a director, officer, member, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether or not the basis of such Proceeding is the Executive's alleged action in an official capacity while serving as a director, officer, member, employee or agent, the Executive shall be indemnified and held harmless by the Companies to the fullest extent permitted or authorized by the Companies' certificates of incorporation or bylaws or, if greater, by the laws of the State of Kentucky, against all cost, expense, liability and loss (including, without limitation, reasonable attorney's fees, judgments, fines, ERISA fines, excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by the Executive in connection therewith, and such indemnification shall continue as to the Executive even if he has ceased to be a director, member, employee or agent of the Companies or other entity and shall inure to the benefit of the Executive's heirs, executors and administrators. The Companies shall advance to the Executive all reasonable costs and expenses incurred by him in connection with a Proceeding within 20 days after receipt by the Companies of a written request for such advance. Such request shall include an undertaking by the Executive to repay the amount of such advance if it shall ultimately be determined that he is not entitled to be indemnified against such costs and expenses. (b) Neither the failure of the Companies (including its board of directors, independent legal counsel or stockholders) to have made a determination prior to the commencement of any proceeding concerning payment of amounts claimed by the Executive under Section 8(a) that indemnification of the Executive is proper because he has met the applicable standard of conduct, nor a determination by the Companies (including its board of directors, independent legal counsel or stockholders) that the Executive has not met such applicable standard of conduct, shall create a presumption that the Executive has not met the applicable standard of conduct. (c) The Companies agree to continue and maintain a directors' and officers' liability insurance policy covering the Executive to the extent either Company provides such coverage for its other executive officers. 9. Representation. The Companies represent and warrant that they are fully authorized and empowered to enter into this Agreement and that the performance of their obligations under this Agreement will not violate any agreement between it and any other person, form or organization. 10. Entire Agreement. This Agreement contains the entire understanding and agreement between the Parties concerning the subject matter hereof and supersedes all prior agreements, understandings, discussions, negotiations and undertakings, whether written or oral, between the Parties with respect thereto. 11. Amendment or Waiver. No provision in this Agreement may be amended unless such amendment is agreed to in writing and signed by the Executive and an authorized officer of the Companies. No waiver by either Party of any breach by the other Party of any condition or provision contained in this Agreement to be performed by such other Party shall be deemed a waiver of a similar or dissimilar condition or provision at the same or any prior or subsequent time. Any waiver must be in writing and signed by the Executive or an authorized officer of the Companies, as the case may be. 12. Severability. In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, in whole or in part, the remaining provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law. 13. Survivorship. The respective rights and obligations of the Parties hereunder shall survive any termination of the Executive's employment to the extent necessary to the intended preservation of such rights and obligations. 14. Resolution of Disputes. Any disputes arising under or in connection with this Agreement shall, at the election of the Executive or the Companies, be resolved by binding arbitration, to be held in Kentucky in accordance with the rules and procedures of the American Arbitration Association. Judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. Costs of the arbitration or litigation, including, without limitation, attorneys' fees of both Parties, shall be borne by the Companies, provided that if the arbitrator(s) determine that the claims or defenses of the Executive were without any reasonable basis, each Party shall bear his or its own costs. 15. Notices. Any notice given to a party shall be in writing and shall be deemed to have been given when delivered personally or sent by certified or registered mail, postage prepaid, return receipt requested, duly addressed to the Party concerned at the address indicated below or to such changed address as such Party may subsequently give such notice of: If to the Companies: MID-AMERICA BANCORP, INC. P.O. Box 1101 Louisville, KY 40201-1101 Attention: Bertram W. Klein If to the Executive: JOHN T. RIPPY 4905 Crofton Road Louisville, KY 40207 IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first written above. SIGNATURES ON FOLLOWING PAGE MIDAMERICA BANCORP, INC. By: /S/ R. K. Guillaume Title: Vice Chairman and CEO BANK OF LOUISVILLE By: /S/ R. K. Guillaume Title: Vice Chairman and CEO /S/ John T. Rippy JOHN T. RIPPY Exhibit 10(b) EMPLOYMENT AGREEMENT THIS AGREEMENT, made and entered into as of the 15th day of August, 1999 by and between MID-AMERICA BANCORP, a Kentucky corporation and BANK OF LOUISVILLE, a Kentucky Combined Bank and Trust Company (together with their successors and assigns permitted under this Agreement, the "Companies"), and STEVEN A. SMALL (the "Executive"). W I T N E S S E T H: WHEREAS, the Companies and the Executive are parties to an Agreement dated as of May 3, 1993, covering the employment relationship of Executive with Companies, which agreement was superceded by an agreement dated March 1, 1996; and WHEREAS, a subsequent agreement was executed by the Parties dated June 1, 1998; and WHEREAS, the parties have discovered that they disagree about the enforceability and construction of the agreement dated June 1, 1998 in various circumstances;; and WHEREAS, the parties desire to maintain the relationship of the Companies with a valued long-term employee in the face of conflicting claims about the June 1, 1998 agreement's enforceability, and therefore agreed orally on August 15, 1999 and now wish to document that agreement, to cancel the June 1, 1998 agreement and replace it in its entirety with the agreement dated March 1, 1996, with clarifying changes, all as set forth in this Employment Agreement (the "Agreement"). NOW, THEREFORE, in consideration of the promises and mutual covenants contained herein and for other good and valuable consideration, the receipt of which is mutually acknowledged, the Companies and the Executive (individually a "Party" and together the "Parties") agree as follows: 1. Definitions. (a) "Affiliate" of a person or other entity shall mean a person or other entity that directly or indirectly controls, is controlled by, or is under common control with the person or other entity specified. (b) Except as provided otherwise in Section 8 hereof, "Base Salary" shall mean the salary provided for in Section 5 below or any increased salary granted to the Executive pursuant to Section 5. (c) "Board" shall mean the Boards of Directors of the Companies. (d) "Cause" shall mean: (i) The Executive is convicted of a felony; or (ii) The Executive is guilty of willful gross neglect or willful gross misconduct in carrying out his duties under this Agreement, resulting, in either case, in material economic harm to the Companies, unless the Executive believed in good faith that such act or nonact was in the best interests of such Company (e) A "Change of Control" shall mean the occurrence of any one of the following events: (i) Any "person," as such term is used in Sections 3(a)(9) and 13(d)of the Securities Exchange Act of 1923, becomes a "beneficial owner," as such term is used in Rule 13d-3 promulgated under that Act, of 20% or more of the Voting Stock of the Companies; (ii) The majority of either Board consists of individuals other than Incumbent Directors, which term means the members of the Board on the date of this Agreement; provided that any person becoming a director subsequent to such date whose election or nomination for election was supported by two-thirds of the directors who then comprised the Incumbent Directors shall be considered to be an Incumbent Director, (iii) The Companies adopt any plan of liquidation providing for the distribution of all or substantially all of its assets; (iv) All or substantially all of the assets or business of the Companies is disposed of pursuant to a merger, consolidation or other transaction (unless the shareholders of such Company immediately prior to such merger, consolidation or other transaction beneficially own, directly or indirectly, in substantially the same proportion as they owned the Voting Stock of such Company, all of the Voting Stock or other ownership interests of the entity or entities, if any, that succeed to the business of such Company); or (v) The Companies combine with another company and is the surviving corporation but, immediately after the combination, the shareholders of such Company immediately prior to the combination hold, directly or indirectly, 50% or less of the Voting Stock of the combined company (there being excluded from the number. of shares held by such shareholders, but not from the Voting Stock of the combined company, any shares received by Affiliates of such other company in exchange for stock of such other company). (f) "Constructive Termination Without Cause" shall mean a termination of the Executive's employment at his initiative other than pursuant to death or Disability (whether such termination is covered by Section 8(b) or 8(c) below), following the occurrence, without the Executive's prior written consent, of one or more of the following events (except in consequence of a prior termination): (i) A reduction in the Executive's then current Base Salary or the termination or material reduction of any employee benefit or perquisite enjoyed by him; (ii) The failure to elect or reelect the Executive to any of the positions described in Section 4 below or removal of him from any such position; (iii) A material diminution in the Executive's duties or the assignment to the Executive of duties which are materially inconsistent with his duties or which materially impair the Executive's ability to function as the Executive Vice President and Chief Financial Officer or any other office to which he may be elected or appointed: (iv) The failure to continue the Executive's participation in any incentive compensation plan unless a plan providing a substantially similar opportunity is substituted; (v) The relocation of a Companies' principal office, or the Executive's own office location as assigned to him by the Companies, to a location outside of the metropolitan area of Louisville, Kentucky; or (vi) The failure of the Companies to obtain the assumption in writing of its obligation to perform this Agreement by any successor to all or substantially all of the assets of such Company within 45 days after a merger, consolidation, sale or similar transaction. (g) "Disability" shall mean the Executive's inability to substantially perform his duties and responsibilities under this Agreement for a period of 180 consecutive days. (h) "Term of Employment" shall mean the period specified in Section 3 below. (i) "Voting Stock" shall mean capital stock of any class or classes having general voting power under ordinary circumstances in the absence of contingencies, to elect the directors of a corporation. 2. Cancellation of Old Agreement. The Agreement between the Parties entered into as of June 1, 1998, is hereby revoked and canceled in its entirety. 3. Term of Employment. The employment of the Executive will continue to the last day of the month in which the Executive turns 55 years of age or until the earlier termination of his employment in accordance with the terms of this Agreement. 4. Position, Duties and Responsibilities. (a) During the term of Employment, the Executive shall continue to be employed as Executive Vice President and Chief Financial Officer of the Companies with duties commensurate with that position, including S.E.C. reporting, internal financial reporting, financial reporting to the Board of Directors, interest rate risk management, deposit pricing, loan review, internal audit, investment management, budgeting and forecasting, and various operations functions. The Executive, in carrying out his duties under this Agreement, shall report to the Chairman of the Board, (b) Anything herein to the contrary notwithstanding, nothing shall preclude the Executive from (i) serving on the boards of directors of a reasonable number of other corporations (except Executive will not serve on the board of any other financial institution) or the boards of a reasonable number of trade associations and/or charitable organizations, (ii) engaging in charitable activities and community affairs, and (iii) managing his personal investments and affairs, provided that such activities do not materially interfere with the proper performance of his duties and responsibilities as the Companies' Executive Vice President and Chief Financial Officer or any other office to which he may be elected or appointed. 5. Signing Bonus; Base Salary. (a) The Executive shall be paid a non-contingent bonus of $600,000, payable $300,000 upon execution of this Agreement, and the remainder by October 10, 1999 (regardless whether Executive remains employed at that date), each installment to be paid less any taxes or other withholdings required by law, in consideration of his agreement to cancel his prior employment agreement, and agreement to forego other employment opportunities in favor of continued service for the Companies. (b) In addition, the Executive shall be paid an annualized base salary, payable in accordance with the regular payroll practices of the Companies, of $200,000 ("Base Salary"). The Base Salary shall be reviewed no less frequently than annually for increase at the sole discretion of the Board and its Nominating and Executive Compensation Committee. 6. Employee Benefit Programs. During the Term of Employment, the Executive shall be entitled to participate in all employee incentive, pension and welfare benefit plans and programs made available to the Companies' senior level executives or to its employees generally, as such plans or programs may be in effect from time to time, including without limitation, annual stock option grant, ESOP, bonus, pension, profit sharing, savings and other retirement plans or programs, medical, dental, hospitalization, short-term and long-term disability and life insurance plans, accidental death and dismemberment protection, travel accident insurance, and any other pension or retirement plans or programs and any other employee incentive compensation plan, employee welfare benefit plans or programs that may be sponsored by the Companies from time to time, including any plans that supplement the above-listed types of plans or programs, whether funded or unfunded. 7. Reimbursement of Business and Other Expenses. The Executive is authorized to incur reasonable expenses in carrying out his duties and responsibilities under this agreement and the Companies shall promptly reimburse him for all business expenses incurred in connection with carrying out the business of the Companies, subject to documentation in accordance with the Companies' policy. 8. Termination of Employment. (a) Termination for Cause. In the event the Companies terminate the Executive's employment for Cause, he shall be entitled to: (i) The Base Salary through the date of the termination of his employment for Cause; (ii) Any incentive awards earned (but not yet paid); (iii) Any pension benefit that may become due pursuant to Section 6 above, determined as of the date of such termination; (iv) Other or additional benefits in accordance with applicable plans or programs of the Companies to the date of termination. (b) Termination Without Cause. If the Executive's employment is terminated without Cause other than due to Disability or death, or there is a Constructive Termination without Cause, the Executive shall be entitled to: (i) The Base Salary through the date of termination of the Executive's employment; (ii) The Base Salary, at the annualized rate in effect on the date of termination of the Executive's employment for the unexpired term of this Employment Agreement following such termination, paid in installments in accordance with the regular pay practices of the Companies; provided that, at the Executive's option, the Companies shall pay him the present value of such salary continuation payments in a lump sum (using as the discount rate the Applicable Federal Rate for short term Treasury obligations as published by the Internal Revenue Service for the month in which such termination occurs). For purposes of this subsection (ii) "Base Salary" shall include an annual bonus calculated by taking the highest Management Incentive Compensation Plan bonus of the three years preceding the year of termination; (iii) The balance of any incentive awards earned (but not yet paid); (iv) The right to exercise any stock option in full, whether or not such right is exercisable pursuant to the terms of the grant. (v) Any pension benefit that may become due pursuant to Section 6 above; (vi) Continued accrual of credited service for the purpose of the pension benefit provided under Section 6 above until his attainment of age 55; (vii) Continued participation in all medical, dental, hospitalization and life insurance coverage and in other employee benefit plans or programs in which he was participating on the date of the termination of his employment until the earlier of: (A) The end of the period during which he is receiving salary continuation payments. (or in respect of which a lump-sum severance payment is made); (B) The date, or dates, he receives equivalent coverage and benefits under the plans and programs of a subsequent employer (such coverages and benefits to be determined on a coverage-by-coverage, or benefit-by-benefit, basis); provided that (x) if the Executive is precluded from continuing his participation in any employee benefit plan or program as provided in this clause (vii) of this Section 8(b), he shall be provided with the after-tax economic equivalent of the benefit provided under the plan or program in which he is unable to participate for the period specified in this clause (vii) of this Section 8(b), (y) the economic equivalent of any benefit foregone shall be deemed to be the lowest cost that would be incurred by the Executive in obtaining such benefit himself on an individual basis, and (z) payment of such after-tax economic equivalent shall be made quarterly in advance; and (viii) Immediate vesting of the Companies' contribution to his Employee Stock Option Plan (ix) Other or additional benefits in accordance with applicable plans and programs of the Companies to the date of termination. (c) Termination of Employment Following a Change in Control. If following a Change in Control, the Executive's employment is terminated without Cause or there is a Constructive Termination Without Cause, the Executive shall be entitled to the payments and benefits provided in Section 8(b), provided that the salary continuation payments shall be paid in a lump sum without any discount. Also, immediately following a Change in Control, all amounts, entitlements or benefits in which he is not yet vested shall become fully vested. In addition, if the Executive has completed less than fifteen (15) years of service at the time of such termination, the Executive will be entitled to a supplemental pension benefit paid directly by the Companies (and not as a part of the Pension Plan of the Companies) equal to the benefit otherwise payable under said Pension Plan based upon the completion of fifteen (15) years of service, minus any amounts payable pursuant to the said Pension Plan. This supplemental pension benefit is an unfunded liability of the Companies, the successors and assigns, and not part of any established Plan of the Companies. In addition, if Executive continues in the employ of the Companies for a period of two years following the effective date of the Change of Control, he may then voluntarily terminate his employment and in such a case would receive, in addition to the benefits provided for elsewhere herein, a sum equal to three times Base Salary. A voluntary termination under this Section 8(c) shall be effective upon 30 days prior notice to the Companies and shall not be deemed a breach of this Agreement. For purposes of this Section 8(c) "Base Salary" shall include an annual bonus calculated by taking the highest Management Incentive Compensation Plan bonus of the three years preceding the year of termination; (d) Voluntary Termination. In the event of a termination of employment by the Executive on his own initiative other than a termination due to death or Disability or a Constructive Termination without Cause, the Executive shall have the same entitlements as provided in Section 8(a) for a Termination for Cause. (e) Limitation Following a Change in Control. If the Companies in good faith determine that amounts payable or value of benefits provided under Section 8(c) (and Section 8(b), to the extent incorporated in Section 8(c) by reference) of this Agreement are covered by Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), notwithstanding any other provision of this Agreement to the contrary, the aggregate amount of payments or benefits paid by the Companies to the Executive pursuant to Section 8(c) of this Agreement shall be adjusted to no less than $1.00 below the maximum amount that is deductible by the Companies; provided, however that, in making this determination, (i) the amounts payable pursuant to Section 5 of this Agreement for calendar years prior to the Change in Control shall be included in the "base amount" calculated pursuant to Code Sections 280G(b)(3) and 280G(d)(2); and (ii) the amount payable pursuant to Section 5(a) of this Agreement, as a non- contingent payment, shall not be considered a "parachute payment" as defined in Code Section 280G(b)(2)(A). If the Parties are unable to agree upon an Auditor to calculate such an adjustment, then the Executive and Companies shall each select one accounting firm and those two firms shall jointly select the accounting firm to serve as the Auditor. The determination made under this paragraph shall be final and binding on both Parties. (f) Purchase of Car. Upon termination pursuant to Section 8(b), (c) or (d), the Executive will have the option of purchasing his Company car for the value of such car on the books of the Company at the time of termination, adjusted for value of the Executive's cash contribution to the purchase of the car. (g) No Mitigation - No Offset. In the event of any termination of employment under this Section 8, the Executive shall be under no obligation to seek other employment and there shall be no offset against amounts due the Executive under this Agreement on account of any remuneration attributable to any subsequent employment that he may obtain except as specifically provided in this Section 8. (h) Nature of Payments. Any amounts due under this Section 8 are in the nature of severance payments considered to be reasonable by the Companies and are not in the nature of a penalty. 9. Indemnification. (a) The Companies agree that if the Executive is made a party, or is threatened to be made a party, to any action, suit or proceeding, whether civil, criminal, administrative or investigative (a "Proceeding"), by reason of the fact that he is or was a director, officer or employee of the Companies or is or was serving at the request of the Companies as a director, officer, member, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether or not the basis of such Proceeding is the Executive's alleged action in an official capacity while serving as a director, officer, member, employee or agent, the Executive shall be indemnified and held harmless by the Companies to the fullest extent permitted or authorized by the Companies' certificates of incorporation or bylaws or, if greater, by the laws of the State of Kentucky, against all cost, expense, liability and loss (including, without limitation, reasonable attorneys fees, judgments, fines, ERISA fines, excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by the Executive in connection therewith, and such indemnification shall continue as to the Executive even if he has ceased to be a director, member, employee or agent of the Companies or other entity and shall inure to the benefit of the Executive's heirs, executors and administrators. The Companies shall advance to the Executive all reasonable costs and expenses incurred by him in connection with a Proceeding within 20 days after receipt by the Companies of a written request for such advance. Such request shall include an undertaking by the Executive to repay the amount of such advance if it shall ultimately be determined that he is not entitled to be indemnified against such costs and expenses. (b) Neither the failure of the Companies (including its board of directors, independent legal counsel or stockholders) to have made a determination prior to the commencement of any proceeding concerning payment of amounts claimed by the Executive under Section 10(a) that indemnification of the Executive is proper because he has met the applicable standard of conduct, nor a determination by the Companies (including its board of directors, independent legal counsel or stockholders) that the Executive has not met such applicable standard of conduct, shall create a presumption that the Executive has not met the applicable standard of conduct. (c) The Companies agree to continue and maintain a directors' and officers' liability insurance policy covering the Executive to the extent either Company provides such coverage for its other executive officers. 10. Representation. The Companies represent and warrant that they are fully authorized and empowered to enter into this Agreement and that the performance of their obligations under this Agreement will not violate any agreement between it and any other person, form or organization. 11. Entire Agreement. This Agreement contains the entire understanding and agreement between the Parties concerning the subject matter hereof and supersedes all prior agreements, understandings, discussions, negotiations and undertakings, whether written or oral, between the Parties with respect thereto. 12. Amendment or Waiver. No provision in this Agreement may be amended unless such amendment is agreed to in writing and signed by the Executive and an authorized officer of the Companies. No waiver by either Party of any breach by the other Party of any condition or provision contained in this Agreement to be performed by such other Party shall be deemed a waiver of a similar or dissimilar condition or provision at the same or any prior or subsequent time. Any waiver must be in writing and signed by the Executive or an authorized officer of the Companies, as the case may be. 13. Severability. In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, in whole, or in part, the remaining provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law. 14. Survivorship. The respective rights and obligations of the Parties hereunder shall survive any termination of the Executive's employment to the extent necessary to the intended preservation of such rights and obligations. 15. Resolution of Disputes. Any disputes arising under or in connection with this Agreement shall, at the election of the Executive or the Companies, be resolved by binding arbitration, to be held in Kentucky in accordance with the rules and procedures of the American Arbitration Association. Judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. Costs of the arbitration or litigation, including, without limitation, attorneys' fees of both Parties, shall be borne by the Companies, provided that if the arbitrator(s) determine that the claims or defenses of the Executive were without any reasonable basis, each Party shall bear his or its own costs. 16. Notices. Any notice given to a party shall be in writing and shall be deemed to have been given when delivered personally or sent by certified or registered mail, postage prepaid, return receipt requested, duly addressed to the Party concerned at the address indicated below or to such changed address as such Party may subsequently give such notice of If to the Companies: MID-AMERICA BANCORP P.O. Box 1101 Louisville, KY 40201-1101 Attention: Bertram W. Klein If to the Executive: STEVEN A. SMALL 7210 Leafland Place Prospect, KY 40059 IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first written above. MID-AMERICA BANCORP By: /s/ R.K. Guillaume Title: Chief Executive Officer BANK OF LOUISVILLE By: /s/ R.K. Guillaume Title: Chief Executive Officer STEVEN A. SMALL /s/ Steven A. Small EX-27 3
9 1000 DEC-31-1999 JAN-01-1999 SEP-30-1999 9-MOS 26,444 0 8,400 0 389,579 4,026 4,019 1,037,066 (9,300) 1,514,221 960,163 251,425 55,606 70,588 0 0 28,616 147,823 1,514,221 67,903 14,641 4,017 86,561 24,752 38,608 47,953 2,341 21 35,724 24,335 24,335 0 0 17,153 1.67 1.64 4.44 1,981 1,452 818 14,434 9,010 2,284 233 9,300 9,300 0 0
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