SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 2000 Commission file number 0-12422
INDIANA UNITED BANCORP
(Exact name of registrant as specified in its charter)
Indiana 35-1562245
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
201 North Broadway
Greensburg, Indiana 47240
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (812) 663-0157
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act
Common shares, no-par value
(Title of Class)
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
The aggregate market value (not necessarily a reliable indication of the price
at which more than a limited number of shares would trade) of the voting stock
held by non-affiliates of the registrant was $101,370,852 as of March 20, 2001.
As of March 20, 2001, there were outstanding 6,167,048 common shares, without
par value, of the registrant.
DOCUMENTS INCORPORATED BY REFERENCE
Part of Form 10-K
Documents Into Which Incorporated
--------- -----------------------
2000 Annual Report to Shareholders Part II (Items 5 through 8)
Definitive Proxy Statement for Annual
Meeting of Shareholders to be held
May 23, 2001 Part III (Items 10
through 13)
EXHIBIT INDEX: Page 9
FORM 10-K TABLE OF CONTENTS
- ----------------------------------------------------------------------------
Part I Page
Item 1 Business 3
Item 2 Properties 9
Item 3 Legal Proceedings 9
Item 4 Submission of Matters to a Vote of Security Holders 9
Part II
Item 5 Market For the Registrant's Common Equity and Related
Stockholder Matters 9
Item 6 Selected Financial Data 9
Item 7 Management's Discussion and Analysis of Financial
Condition and Results Of Operations 9
Item 7A Quantitative and Qualitative Disclosures About Market Risk 9
Item 8 Financial Statements and Supplementary Data 9
Item 9 Disagreements on Accounting and Financial Disclosure 9
Part III
Item 10 Directors and Executive Officers of the Registrant See below
Item 11 Executive Compensation See below
Item 12 Security Ownership of Certain Beneficial Owners and
Management See below
Item 13 Certain Relationships and Related Transactions See below
Part IV
Item 14 Exhibits, Financial Statement Schedules, and Reports
on Form 8-K See below
Pursuant to General Instruction G, the information called for by Items 10-13 is
omitted by Indiana United Bancorp since Indiana United Bancorp will file with
the Commission a definitive proxy statement to shareholders pursuant to
regulation 14A not later than 120 days after the close of the fiscal year
containing the information required by Items 10-13.
2
PART I
ITEM 1. BUSINESS
- -----------------
(Dollars in thousands except per share data)
GENERAL
Indiana United Bancorp ("Company") was initially formed in Owensboro, Kentucky,
in 1982 as First Commonwealth Bancorp. The Company reincorporated under the laws
of the State of Indiana under its present name in 1983, and relocated to
Greensburg, Indiana, in anticipation of acquiring Union Bank and Trust Company
of Greensburg. In 1987, Peoples Bank in Portland, Indiana was acquired and as of
December 31, 1991, Regional Federal Savings Bank, New Albany, Indiana ("Regional
Bank") was acquired (which effective January 31, 2001 was converted to an
Indiana commercial bank). Effective July 1, 1994, the Company merged Union Bank
and Trust Company of Greensburg into Peoples Bank, Portland, and renamed the
combined bank, Union Bank and Trust Company of Indiana ("Union Bank").
On April 30, 1998, the Company completed a merger of equals with P.T.C. Bancorp,
Brookville, Indiana. People's Trust Company, ("People's Trust") the wholly owned
subsidiary of P.T.C. Bancorp, had more than $300,000 in assets. This transaction
was regarded by both companies as a merger of equals and was accounted for as a
"pooling of interests" for accounting and financial reporting purposes.
Effective April 1, 1999, the Company acquired the property and casualty
insurance business lines of Andy Anderson Insurance Agency, Inc. d/b/a The
Anderson Group, Owensboro, Kentucky ("The Anderson Group"). The results of
operations have been included in these financial statements since the
acquisition date under the purchase method of accounting. The acquisition was
effected by the purchase of net assets and expertise and The Anderson Group was
integrated into a newly formed subsidiary of the Company, The Insurance Group,
Inc. ("The Insurance Group"). The Company issued 84,959 shares of its common
stock to The Anderson Group shareholders, valued at $1,364. Assets totaled
$2,180 (including cash of $250) and liabilities assumed of $780. Assets acquired
include goodwill of $1,628, which is being amortized over 15 years under the
straight-line method. Under the agreement, the acquirees will obtain additional
shares of company stock as defined in the agreement if certain financial targets
are attained during the measurement period, which ends March 31, 2002.
Subsequently, the Company caused The Insurance Group to become a wholly owned
subsidiary of Union Bank by transferring its ownership in The Insurance Group to
that bank subsidiary. The general lines insurance business previously conducted
by Union Bank in Greensburg and Portland, Indiana is now conducted through The
Insurance Group subsidiary.
In February 2000, the Company formed a subsidiary of the holding company called
IUB Reinsurance Company, Ltd. This subsidiary is incorporated in Turks and
Caicos and is a credit life insurance company.
On May 1, 2000 the Company consummated its acquisition of First Affiliated
Bancorp of Watseka, Illinois and its wholly owned banking subsidiary, Capstone
Bank N. A. The transaction was accounted for using the pooling-of-interests
method of accounting. The Company issued 1,069,277 shares of its common stock to
the shareholders of First Affiliated Bancorp (adjusted for the stock dividend).
This includes shares issued to redeem First Affiliated Bancorp stock options.
The conversion rate was 4.4167 shares of Company stock for each outstanding
share of First Affiliated at the effective date of the merger. Merger and
related costs were charged against net income during 2000. The financial
information contained herein includes First Affiliated Bancorp for all periods
presented.
In September 2000, the company purchased two branches in Marion County. These
two facilities were integrated into Union Bank and resulted in the purchase of
over $40,000 in deposits.
Also in September 2000, the Company formed two investment subsidiaries, People's
Investment Company, Ltd. and Union Investment Company, Ltd. Incorporated in
Bermuda, these
3
subsidiaries now hold a large portion of both Union Bank's and People's Trust's
investment portfolios.
The Company operates 47 offices in Indiana and Illinois. As of December 31,
2000, the Company had consolidated assets of $1,216,936, consolidated deposits
of $1,053,570 and shareholders' equity of $78,005.
Through its Banks, the Company offers a broad range of financial services,
including: accepting time and transaction deposits; making consumer, commercial,
agribusiness and real estate mortgage loans; issuing credit cards; renting safe
deposit facilities; providing general agency personal and business insurance
services; providing personal and corporate trust services; and providing other
corporate services such as letters of credit and repurchase agreements.
The lending activities of the Banks are separated into primarily the categories
of commercial/agricultural, real estate and consumer. Loans are originated by
the lending officers of the Banks subject to limitations set forth in lending
policies. The Board of Directors reviews and approves loans up to the Banks'
legal lending limit, monitors concentrations of credit, problem and past due
loans and charge-offs of uncollectible loans and formulates loan policy. The
Banks maintain conservative loan policies and underwriting practices in order to
address and manage loan risks. These policies and practices include granting
loans on a sound and collectible basis, serving the legitimate needs of the
community and the general market area while obtaining a balance between maximum
yield and minimum risk, ensuring that primary and secondary sources of repayment
are adequate in relation to the amount of the loan, developing and maintaining
adequate diversification of the loan portfolio as a whole and of the loans
within each category and developing and applying adequate collection policies.
Commercial loans include secured and unsecured loans, including real estate
loans, to individuals and companies and to governmental units within the market
area of the Banks for a myriad of business purposes.
Agricultural loans are generated in the Banks' markets. Most of the loans are
real estate loans on farm properties. Loans are also made for agricultural
production and such loans are generally reviewed annually.
Residential real estate lending has been the largest component of the loan
portfolio for many years. All affiliate banks have generated residential
mortgages for their own portfolios. In addition, People's Trust has been
originating residential mortgages for sale into the secondary market since 1990
and has extended its expertise to the other affiliates so that in 2000 all
affiliates originated for the secondary market as well as continued to grow
their internal portfolios. At December 31, 2000, the Company was servicing a
$201,056 portfolio, which increased from $181,150 and $150,523 at year-end 1999
and 1998. By originating loans for sale in the secondary market, the Company can
more fully satisfy customer demand for fixed rate residential mortgages and
increase fee income.
The principal source of revenues for the Company is interest and fees on loans,
which accounted for 70.2% of total revenues in 2000, 67.9% in 1999 and 71.8% in
1998.
The Company's investment securities portfolio is primarily comprised of U. S.
Treasuries, federal agencies, state and municipal bonds, mortgage-backed
securities and corporate securities. The Company has classified 95.7% of its
investment portfolio as available for sale, with market value changes reported
separately in shareholders' equity. Funds invested in the investment portfolio
generally represent funds not immediately required to meet loan demand. The
Company's investment portfolio accounted for 18.5% of total revenues in 2000,
21.1% in 1999 and 15.3% in 1998. As of December 31, 2000, the Company had not
identified any securities as being "high risk" as defined by the FFIEC
Supervisory Policy Statement on Securities Activities.
The primary sources of funds for the Banks are deposits generated in local
market areas. To attract and retain stable depositors, the Banks market various
programs for demand, savings and time deposit accounts. These programs include
interest and non-interest bearing demand and
4
individual retirement accounts. The Company also purchased four branch
facilities and their deposits in the first quarter of 1999 from a large regional
competitor. In all, more than $104,000 in deposits were acquired, together with
approximately $2,000 in consumer and small business loans. Union Bank purchased
two former branch facilities and opened them "de novo" in April 1999 to expand
its market.
Currently, national retailing and manufacturing subsidiaries, brokerage and
insurance firms and credit unions are fierce competitors within the financial
services industry. Mergers between financial institutions within Indiana and
neighboring states, which became permissible under the Interstate Banking and
Branching Efficiency Act of 1994, have added competitive pressure. The
permissibility of banks and bank holding companies to acquire thrift
institutions will undoubtedly further redefine the competitive marketplace.
The Company's Banks are located in predominantly non-metropolitan areas and
their business is centered in loans and deposits generated within markets
considered largely rural in nature. In addition to competing vigorously with
other banks, thrift institutions, credit unions and finance companies located
within their service areas, they also compete, directly and indirectly, with all
providers of financial services.
EMPLOYEES
As of December 31, 2000, the Company and its subsidiaries had approximately 481
full-time equivalent employees to whom it provides a variety of benefits and
with whom it enjoys excellent relations.
REGULATION AND SUPERVISION OF THE COMPANY
The Company is a bank holding company ("BHC") within the meaning of the Bank
Holding Company Act of 1956, as amended ("ACT"). This Act subjects BHCs to
regulations of the Federal Reserve Board ("FRB") and restricts the business of
BHCs to banking and related activities. In addition, the Company is a
non-diversified unitary savings and loan holding company subject to regulations,
examinations, supervision and reporting requirements of the Office of Thrift
Supervision ("OTS").
Under the ACT, a BHC is, with limited exceptions, prohibited from acquiring
direct or indirect ownership or control of voting stock of any company that is
not a bank or engaging in any activity other than managing or controlling banks.
A BHC may, however, own shares of a company engaged in activities which the FRB
has determined to be so closely related to banking or managing or controlling
banks as to be a proper incident thereto. These activities include: operating a
savings association, mortgage company, finance company, credit card or factoring
company; performing certain data processing operations; providing investment and
financial advice; and, acting as an insurance agent for certain types of
credit-related insurance.
Acquisitions by the Company of banks and savings associations are subject to
federal and state regulation. Any acquisition by the Company of more than five
percent of the voting stock of any bank requires prior approval of the FRB.
Acquisition of savings associations is also subject to the approval of the OTS.
Indiana law permits BHCs to acquire BHCs and banks out of state on a reciprocal
basis, subject to certain limitations. Under current law, the Company may
acquire banks, and may be acquired by BHCs, located in any state in the United
States that permits reciprocal entry by Indiana BHCs. Under the ACT, BHCs may
acquire savings associations without geographic restrictions.
A BHC and its subsidiaries are prohibited from engaging in certain tying
arrangements in connection with the extension of credit, lease or sale of
property, or the provision of any property or service.
The Company is under the jurisdiction of the Securities and Exchange Commission
("SEC") and state securities commission for matters relating to the offering and
sale of its securities. The
5
Company is subject to the SEC's rules and regulations relating to periodic
reporting, reporting to shareholders, proxy solicitation and insider trading.
The Company's income is principally derived from dividends paid on the common
stock of its subsidiaries. The payment of these dividends is subject to certain
regulatory restrictions.
Under FRB policy, the Company is expected to act as a source of financial
strength to, and commit resources to support, its affiliates. As a result of
such policy, the Company may be required to commit resources to its affiliate
banks in circumstances where it might not otherwise do so.
REGULATION AND SUPERVISION OF THE SUBSIDIARY BANKS
Union Bank and People's Trust are supervised, regulated and examined by the
Indiana Department of Financial Institutions ("DFI") and the Federal Deposit
Insurance Corporation ("FDIC"). Regional Bank was supervised, regulated and
examined by the OTS. Effective January 31, 2001, Regional Bank became an Indiana
commercial bank and is supervised, regulated and examined by the DFI and FDIC.
Capstone Bank is supervised, regulated and examined by the Office of the
Comptroller of the Currency. A cease-and-desist order may be issued against the
banks, if the respective agency finds that the activities of the bank represent
an unsafe and unsound banking practice or violation of law.
The deposits of Union Bank, People's Trust and Capstone are insured by the Bank
Insurance Fund ("BIF") of the FDIC. The deposits of Regional Bank are insured by
the Savings Association Insurance Fund ("SAIF") of the FDIC. The FDIC has the
authority to change premiums twice per year. In 2000, BIF and SAIF-insured
institutions paid the same assessment rate.
Branching by banks in Indiana is subject to the jurisdiction, and requires the
prior approval, of the bank's or savings bank's primary federal regulatory
authority and, if the branching bank is a state bank, of the DFI. Under Indiana
law, banks may branch anywhere in the state.
The Company is a legal entity separate and distinct from its subsidiary Banks.
There are various legal limitations on the extent to which the Banks can supply
funds to the Company. The principal source of the Company's funds consists of
dividends from its subsidiary Banks. State and Federal law restrict the amount
of dividends which may be paid by banks and savings banks. In addition, the
Banks are subject to certain restrictions on extensions of credit to the
Company, on investments in the stock or other securities of the Company and in
taking such stock or securities as collateral for loans.
LEGISLATION
The Federal Deposit Insurance Corporation Act of 1991 ("FDICIA") represented a
comprehensive and fundamental change to banking supervision and mandates the
development of additional regulations governing almost every aspect of the
operations, management and supervision of banks and BHCs.
FDICIA also included several supervisory reforms related to the frequency of
regulatory examinations and audit requirements. FDICIA also required the
adoption of safety and soundness standards on matters such as loan underwriting
and documentation, and compensation and other employee benefits; mandated
consumer protection disclosures with respect to deposit accounts; and the
establishment of a risk-based deposit insurance system. The federal banking
agencies have issued guidelines establishing standards for safety and soundness,
for operational and managerial standards and compensation standards. The federal
banking agencies have issued guidelines for asset quality and earnings.
FDICIA requires banking regulators to take prompt corrective actions with
respect to depository institutions that fall below certain capital levels and
prohibit any depository institution from making a capital distribution that
would cause it to be considered undercapitalized. Banking regulators were also
required to revise their capital standards to take into account interest rate
risk. A policy statement has been proposed providing a supervisory framework to
measure and monitor interest
6
rate risk at individual banks. Banks may use an internal model that provides a
measure of the change in a bank's economic value.
The results of the supervisory and internal models would be one factor
regulators would consider in their assessment of capital adequacy. Other factors
will also be considered.
Certain regulations define relevant capital measures for five capital
categories. A "well capitalized" institution is one that has a total risk-based
capital ratio of at least 10%, a Tier 1 risk-based capital ratio of at least 8%,
a leverage ratio of at least 5% and is not subject to regulatory direction to
maintain a specific level for any capital measure. An "adequately capitalized"
institution is one that has ratios greater than 8%, 4% and 4%. An institution is
"undercapitalized" if its respective ratios are less than 8%, 4% and 4%.
"Significantly undercapitalized" institutions have ratios of less than 6%, 3%
and 3%. An institution is deemed to be "critically undercapitalized" if it has a
ratio of tangible equity to total assets that is 2% or less. Institutions with
capital ratios at levels of "undercapitalized" or lower are subject to various
limitations that, in most situations, will reduce the competitiveness of the
institution.
The Riegle Community Development and Regulatory Improvement Act of 1994 ("1994
Act") made several changes in existing law affecting bank holding companies.
These include a reduction in the minimum post-approval antitrust review waiting
period for depository institution mergers and acquisitions, and the substitution
of a notice for an application when a bank holding company proposes to engage
in, or acquire a company to engage in, non-bank activities. The 1994 Act also
contains seven titles pertaining to community development and home ownership
protection, small business capital formation, paperwork reduction and regulatory
improvement, money laundering and flood insurance. No regulations have yet been
approved. The Riegle-Neal interstate Banking and Branching Efficiency Act of
1994 ("Branching Act") substantially changed the geographic constraints
applicable to the banking industry. In general, the Branching Act permits BHCs
that are adequately capitalized and adequately managed to acquire banks located
in any other state, subject to certain total deposit limitations. Effective June
1, 1997, the Branching Act also allows banks to establish interstate branch
networks through acquisitions of other banks. Establishment of de novo
interstate branches or the acquisition of individual branches of a bank in
another state is also allowed if authorized by state law. Institutions must
maintain a loan activity-to-deposit ratio within a state at least equal to
one-half of the average percentage for all banks in the state or the
institution's federal regulator may close the branch and restrict the
institution from opening new branches in the state. The Branching Act allowed
individual states to "opt out" of certain provisions by enacting appropriate
legislation prior to June 1, 1997.
The monetary policies of regulatory authorities have a significant effect on the
operating results of banks and BHCs. The nature of future monetary policies and
the effect of such policies on the future business and earnings of the Company
and its subsidiaries cannot be predicted.
The Deposit Insurance Funds Act was enacted in 1996 and contained several major
provisions. The new law recapitalized the SAIF by a one-time assessment on all
SAIF-insured deposits. For 1997 through 1999 the banking industry helped pay for
the Financing Corp. ("FICO") bond interest payments at an assessment rate that
was one-fifth the rate paid by thrifts. Beginning January 1, 2000, the FICO
interest payments were paid pro-rata by banks and thrifts. Deposit shifting is
prohibited for three years and the $2,000 annual minimum assessment was
repealed.
The Federal Reserve Board approved interim procedures, effective March 11, 2000
for bank holding companies and foreign banks with U.S. offices to be treated as
financial holding companies. Financial holding companies may engage in a broad
range of securities, insurance and other financial activities under the
Gramm-Leach-Bliley Act. Bank holding companies and foreign banks that meet the
relevant qualifications may file elections to become financial holding companies
at any time. IUB has chosen not to become a financial holding company and
remains a bank holding company.
7
CAPITAL REQUIREMENTS
The Company and its subsidiary Banks must meet certain minimum capital
requirements mandated by the FRB, FDIC and DFI. These regulatory agencies
require BHCs and banks to maintain certain minimum ratios of primary capital to
total assets and total capital to total assets. The FRB requires BHCs to
maintain a minimum Tier 1 leverage ratio of 3 percent capital to total assets;
however, for all but the most highly rated institutions which do not anticipate
significant growth, the minimum Tier 1 leverage ratio is 3 percent plus an
additional cushion of 100 to 200 basis points. As of December 31, 2000, the
Company's leverage ratio of capital to total assets was 6.5%. The FRB, OTS and
FDIC each have approved the imposition of "risk-adjusted" capital ratios on BHCs
and financial institutions. The Company's Tier 1 Capital to Risk-Weighted Assets
Ratio was 9.7% and its Total Capital to Risk-Weighted Assets Ratio was 10.8% at
December 31, 2000. The Company's Banks had capital to asset ratios and
risk-adjusted capital ratios at December 31, 2000, in excess of the applicable
regulatory minimum requirements.
An assessment of a bank's exposure to declines in the economic value of its
capital due to changes in interest rates is included in evaluations of capital
adequacy by federal regulators. A joint policy statement has been issued by
federal regulators to provide guidance on sound practices for managing interest
rate risk. The policy statement contains the various factors to be considered
and describes the board of directors' responsibilities in implementing a risk
management process. The requirements of a bank's senior management in ensuring
the effective management of interest rate risk is described and the elements to
be contained in a risk management process are specified.
Federal regulators have issued final regulations revising risk-based capital
standards and the regulatory framework for measuring market risk. Any BHC or
bank with significant exposure to market risk must measure such risk internally
and maintain adequate capital to support that exposure.
STATISTICAL DISCLOSURES
The following statistical data should be read in conjunction with Management's
Discussion and Analysis (Item 7), Selected Financial Data (Item 6) and the
Financial Statements and Supplementary Data (Item 8)
VOLUME/RATE ANALYSIS OF CHANGES IN NET INTEREST INCOME
The table on page 8a analyzes the change in net interest income due to rate and
volume. Changes due to both rate and volume have been allocated in proportion to
the absolute dollar value of rate and volume changes. Volume of loans,
securities and deposits primarily account for the increase in net interest
income of 2000 over 1999 and 1999 over 1998.
AVERAGE DEPOSITS
The table on page 8b discloses the average deposits for the Company for 2000,
1999 and 1998 and the maturity schedule of the over $100,000 certificates of
deposit at December 31,2000.
MATURITIES AND SENSITIVITY TO CHANGES IN INTEREST RATES OF COMMERCIAL
AND CONSTRUCTION LOANS AT DECEMBER 31, 2000
Maturities and sensitivity to changes in interest rates of commercial and
construction loans at December 31, 2000 are disclosed in the table on page 8c.
ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
The table on page 8d discloses the allocation of the allowance for loan losses
to the major loan categories.
8
Volume/Rate Analysis of Changes in Net Interest Income
(Tax Equivalent Basis)
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2000 OVER 1999 1999 OVER 1998
- ---------------------------------------------------------------------------------------------------------------------------
Volume Rate Total Volume Rate Total
- ---------------------------------------------------------------------------------------------------------------------------
Interest income
Loans $ 9,625 $ 1,906 $ 11,531 $ 7,075 $ (1,722) $ 5,353
Securities (178) (117) (295) 7,282 (479) 6,803
Federal funds sold and money market funds (687) 445 (242) (635) (362) (997)
Short-term investments (2) (44) (46) 41 (2) 39
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Total interest income 8,758 2,190 10,948 13,763 (2,565) 11,198
- ---------------------------------------------------------------------------------------------------------------------------
Interest expense
Interest-bearing demand $ (546) $ 1,737 1,191 $ 1,757 $ (185) $ 1,572
Savings 874 (135) 739 947 (180) 767
Certificates of deposit 3,203 2,075 5,278 3,773 (1,717) 2,056
Borrowings 870 299 1,169 884 (8) 876
Trust preferred securities - 19 19 - (20) (20)
- ---------------------------------------------------------------------------------------------------------------------------
Total interest expense 4,401 3,995 8,396 7,361 (2,110) 5,251
- ---------------------------------------------------------------------------------------------------------------------------
Change in net interest income $ 4,357 $ (1,805) 2,552 $ 6,402 $ (455) 5,947
-------------------- ---------------------
Change in tax equivalent adjustment (720) 197
- ---------------------------------------------------------------------------------------------------------------------------
Change in net interest income before
tax equivalent adjustment $ 3,272 $ 5,750
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8A
Average Deposits
- ------------------------------------------------------------------------------------------------------------------
2000 1999 1998
- ------------------------------------------------------------------------------------------------------------------
Amount Rate Amount Rate Amount Rate
- ------------------------------------------------------------------------------------------------------------------
Demand $93,987 $88,752 $71,242
Interest Bearing Demand 216,303 3.52% 231,633 2.77% 168,123 2.88%
Savings 146,102 2.64 112,839 2.76 78,333 2.99
Certificates of Deposit 540,353 5.56 482,500 5.13 408,850 5.55
- ------------------------------------------------------------------------------------------------------------------
Totals $996,745 4.16% $915,724 3.74% $726,548 4.11%
============ =========== ===========
As of December 31, 2000, certificates of deposit and other time deposits of $100
or more mature as follows:
3 months or less 4-6 months 6-12 months over 12 months Total
---------------- ---------- ----------- -------------- -----
Amount $54,211 $18,761 $24,101 $16,214 $113,287
Percent 48% 17% 21% 14%
8B
Maturities and Sensitivity to Changes in Interest Rates of Commercial and Construction Loans at December 31, 2000
- ----------------------------------------------------------------------------------------------------------------------------
Due: Within 1 Year 1 - 5 Years Over 5 years Total
- ----------------------------------------------------------------------------------------------------------------------------
Loan Type
Commercial and industrial $60,215 $17,774 $6,177 84,166
Agricultural production financing and other loans to farmers 15,063 5,247 434 20,744
Construction and development 41,058 6,332 740 48,130
- ----------------------------------------------------------------------------------------------------------------------------
Totals $116,336 $29,353 $7,351 $153,040
- ----------------------------------------------------------------------------------------------------------------------------
Percent 76% 19% 5% 100%
- ----------------------------------------------------------------------------------------------------------------------------
Rate Sensitivity
Fixed Rate $25,026 $21,290 $7,351 $53,667
Variable Rate 91,310 8,063 0 99,373
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Totals $116,336 $29,353 $7,351 $153,040
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8C
Allocation of the Allowance for Loan Losses
2000 1999 1998 1997 1996
- ---------------------------------------------------------------------------------------------------------------------------
Percent Percent Percent Percent Percent
of loans of loans of loans of loans of loans
to total to total to total to total to total
December 31 Amount loans Amount loans Amount loans Amount loans Amount loans
- ---------------------------------------------------------------------------------------------------------------------------
Real estate
Residential $ 1,076 47% $ 598 46% $ 445 45% $ 331 44% $ 323 45%
Farm real estate 442 6 397 6 325 7 20 8 71 8
Commercial 1,004 16 829 15 765 18 327 18 461 15
Construction and
development 909 6 965 7 830 6 66 3 289 5
- ---------------------------------------------------------------------------------------------------------------------------
Total real estate 3,431 75 2,789 74 2,365 76 744 73 1,144 74
- ---------------------------------------------------------------------------------------------------------------------------
Commercial
Agribusiness 965 3 1,011 3 962 3 407 3 424 4
Other commercial 1,204 12 812 11 516 8 591 9 677 9
- ---------------------------------------------------------------------------------------------------------------------------
Total Commercial 2,169 15 1,823 14 1,478 11 998 13 1,101 13
- ---------------------------------------------------------------------------------------------------------------------------
Consumer 1,349 10 1,413 12 1,155 13 611 14 514 13
Unallocated 1,767 1,693 1,602 3,619 2,360
- ---------------------------------------------------------------------------------------------------------------------------
Total $8,716 100% $7,718 100% $6,600 100% $5,972 100% $5,119 100%
- ---------------------------------------------------------------------------------------------------------------------------
8D
Investment Securities
(Carrying Values at December 31)
Beyond
Within 10 Total
1 Year 2-5 Yrs 6-10 Yrs Years 2000
- -------------------------------------------------------------------------------------------------
Available for sale
Federal agencies $38,456 $114,344 $ 14,118 $ 969 $ 167,887
State and municipal 3,334 8,998 9,036 10,879 32,247
Mortgage-backed securities 3,708 37,399 6,888 1,013 49,008
Corporate obligations 5,008 5,588 5,590 8,017 24,203
Equity and other securities - 543 - 7,828 8,371
- -------------------------------------------------------------------------------------------------
Total available for sale $50,506 $166,872 $ 35,632 $28,706 $ 281,716
=================================================================================================
Weighted average yield* 5.86% 6.25% 7.02% 7.51% 6.40%
Held to Maturity
- -------------------------------------------------------------------------------------------------
State and municipal $ 4,422 $ 4,610 $ 1,823 $ 732 $ 11,587
Corporate obligations - 498 - - 498
Other securities - - 594 594
- -------------------------------------------------------------------------------------------------
Total held to maturity $ 4,422 $ 5,108 $ 2,417 $ 732 $ 12,679
=================================================================================================
Weighted average yield* 6.28% 6.36% 6.39% 6.21% 6.33%
Amounts in the table above are based on scheduled maturity dates. Variable
interest rates are subject to change not less than annually based upon certain
interest rate indexes. Expected maturities will differ from contractual
maturities because issuers may have the right to call or prepay obligations with
or without call or prepayment penalties.
As of December 31, 2000, there are no corporate bonds and other securities which
represent more than 10% of shareholders' equity.
*Adjusted to reflect income related to securities exempt from Federal income
taxes
8E
INVESTMENT SECURITIES
The composition and maturity of the investment portfolio is depicted in the
table on page 8e.
ITEM 2. PROPERTIES
- -------------------
(Dollars in Thousands)
Indiana United Bancorp owns no physical properties and has no need for space
other than what is available at the offices of its subsidiaries. Its
subsidiaries own, or lease, all of the facilities from which they conduct
business. The Company has 47 locations of which People's Trust has 20, Union
Bank has 16, Regional Bank has 6, and Capstone has 5. At December 31, 2000, the
Company had $17,558 invested in premises and equipment.
ITEM 3. LEGAL PROCEEDINGS
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The subsidiaries may be parties (both plaintiff and defendant) to ordinary
litigation incidental to the conduct of business. Management is presently not
aware of any material claims.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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No matters were submitted during the fourth quarter of 2000 to a vote of
security holders, through the solicitation of proxies or otherwise.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
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The information required under this item is incorporated by reference to the
information provided in the "Shareholder Information" section on the inside back
cover page of the Company's Annual Report to Shareholders filed with this report
as Exhibit 13.
ITEM 6. SELECTED FINANCIAL DATA
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The information required under this item is incorporated by reference to the
information provided on page 11 of the Company's Annual Report to Shareholders
filed with this report as Exhibit 13.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
- -----------------------------------------------------------------------
The information required under this item is incorporated by reference to the
information provided on pages 10 through 21 of the Company's Annual Report to
Shareholders filed with this report as Exhibit 13.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
- --------------------------------------------------------------------
The information required under this item is incorporated by reference to the
information provided on pages 19 and 20 of the Company's Annual Report to
Shareholders filed with this report as Exhibit 13.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
- ---------------------------------------------------
The financial statements and supplementary data required under this item are
incorporated herein by reference to the information provided on pages 22 through
39 of the Company's Annual Report to Shareholders filed with this report as
Exhibit 13.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
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In connection with its audits for the two most recent fiscal years ended
December 31, 2000, there have been no disagreements (as defined in Item 4(b) of
Form 8-K) with the Company's independent certified public accountants on any
matter of accounting principles or practices, financial statement disclosure or
auditing scope or procedure.
9
PART IV
ITEM 14--EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
Included in
(a)1.Financial statements Annual Report
Indiana United Bancorp and Subsidiary
Independent auditor's report 22
Consolidated balance sheets at December 31, 2000 and 1999 23
Consolidated statements of income, years ended December 31,
2000, 1999 and 1998. 24
Consolidated statements of shareholders' equity, years ended
December 31, 2000, 1999 and 1998 25
Consolidated statements of cash flows, years ended December 31,
2000, 1999 and 1998 26
Notes to consolidated financial statements 27-39
(a) 2. Financial statement schedules
All schedules are omitted because they are not applicable or not
required, or because the required information is included in the consolidated
financial statements or related notes.
(a) 3. Exhibits:
3.1 Articles of Incorporation (incorporated by reference to Exhibit 3.1
to the Registration Statement on Form S-1 of the Registrant filed June 16,1986
with the Commission (Registration Statement No. 33-06334), as amended by
Articles of Amendment to Articles of Incorporation incorporated by reference to
Exhibit 3 (c) to the Annual Report on Form 10-K of the Registrant for the fiscal
year ended December 31, 1987 filed on or about March 30, 1988 with the
Commission (Commission File No. 0-12422)), and as amended by Articles of
Amendment to Articles of Incorporation effective August 6, 1998 (incorporated by
reference to Exhibit 3.1 to the Annual Report on Form 10-K for the fiscal year
ended December 31, 1998 filed March 29, 1999 with the Commission (Commission
File No. 0-12422)).
3.2 Amended and Restated Bylaws dated April 28, 1998 (incorporated by
reference to Exhibit 3.2 to the Annual Report on Form 10-K of the registrant for
the fiscal year ended December 31,1998 filed March 29, 1999 with the Commission
(Commission File No. 0-12422)).
4.1 Form of Indenture dated as of December 12, 1997 between Registrant
and State Street Bank and Trust Company, as Trustee, with respect to 8.75%
Subordinated Debentures due 2027 (incorporated by reference to Exhibit 4.1 to
the Registration Statement on Form S-2 of the Registrant filed November 19, 1997
with the Commission (Registration No. 333-40579)).
4.2 Form of Subordinated Debenture Certificate (incorporated by reference
to such Certificate included as an exhibit to Exhibit 4.1 to the Registration
Statement on Form S-2 of the Registrant filed November 19, 1997 with the
Commission (Registration No. 333-40579)).
4.3 Form of IUB Capital Trust Amended and Restated Trust Agreement dated
as of December 12, 1997 among the Registrant, as Depositor, State Street Bank
and Trust Company, as Property Trustee, Wilmington Trust Company, as Delaware
Trustee and the Administrative Trustees named therein (incorporated by reference
to Exhibit 4.5 to the Registration Statement on Form S-2 of the Registrant filed
November 19, 1997 with the Commission (Registration No. 333-40579)).
4.4 Form of Preferred Securities Guarantee Agreement dated as of December
12, 1997 between the Registrant and State Street Bank and Trust Company
(incorporated by reference to Exhibit 4.7 to the Registration Statement on Form
S-2 of the Registrant filed November 19, 1997 with the Commission (Registration
No. 333-40579)).
4.5 Form of Agreement as to Expenses and Liabilities dated as of December
12, 1997 between Registrant and IUB Capital Trust (incorporated by reference to
to such Agreement included as an exhibit to Exhibit 4.5 to the Registration
Statement on Form S-2 of the Registrant filed November 19, 1997 with the
Commission (Registration No. 333-40579)).
10
10.1 Form of Employment Agreement between the Registrant and James L.
Saner, Sr. (incorporated by reference to Annex A to the Proxy
Statement/Prospectus that is part of the Registration Statement on Form S-4
filed March 18, 1998 with the Commission (Registration No. 333-48057)).
10.2 Form of Executive Severance Agreement dated January 16, 2001 between
the Registrant and James L. Saner, Sr.
10.3 Form of Executive Severance Agreement dated January 16, 2001 between
the Registrant and the following Named Executive Officers: Michael K. Bauer,
Lynn T. Gordon, John R. Rodda and Daryl R. Tressler.
13 2000 Annual Report to Shareholders (Except for the pages and
information thereof expressly incorporated by reference in this Form 10-K, the
Annual Report to Shareholders is provided solely for the information of the
Securities and Exchange Commission and is not deemed "filed" as part of this
Form 10-K).
16 Letter re: change in certifying accountant (incorporated by reference
to Exhibit 16 to the Current Report on Form 8-K of Indiana United Bancorp filed
April 7, 1999 with the Commission (Commission File No.0-12422)).
21 List of subsidiaries of the Registrant.
23.1 Consent of Crowe, Chizek and Company LLP
23.2 Consent of Olive LLP.
99 Opinion of Olive LLP
(b) Reports on Form 8-K
None
11
SIGNATURE PAGE
Pursuant to the requirements of Section 13 or 15(d) 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, on the 20th day of March,
2001.
INDIANA UNITED BANCORP
/s/ James L. Saner, Sr.
----------------------------------
James L. Saner, Sr., President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
on Form 10-K has been signed by the following persons on behalf of the
registrant and in the capacities with the Company and on the dates indicated.
Signature Capacity Date
--------- -------- ----
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Eric E. Anderson Director March 20, 2001
- ----------------------------
John E. Back Director March 20, 2001
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William G. Barron Director March 20, 2001
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Dale J. Deffner Director March 20, 2001
- ----------------------------
Don Dunevant Director March 20, 2001
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Philip A. Frantz Director March 20, 2001
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Robert E. Hoptry Director March 20, 2001
Chairman of the Board
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James L. Saner Sr. Director March 20, 2001
President &
Chief Executive Officer
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Donald A. Benziger Senior Vice President, March 20, 2001
Chief Financial Officer and
Principal Accounting Officer
- ----------------------------
Edward J. Zoeller Director March 20, 2001
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Rick S. Hartman Director March 20, 2001