SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 For the Quarterly period ended September 30, 2003.
------------------
Commission file number 000-24478.
DEARBORN BANCORP, INC.
----------------------
(Exact name of registrant as specified in its charter)
Michigan 38-3073622
-------- ----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
22290 Michigan Avenue, Dearborn, MI 48123-2247
----------------------------------------------
(Address of principal executive office) (Zip Code)
(313) 274-1000
--------------
(Registrant's telephone number, including area code)
N/A
---
(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 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
----------- -----------
Indicate the number of shares outstanding for each of the issuer's classes of
common stock, as of October 31, 2003.
Class Shares Outstanding
----- -------------------
Common Stock 2,797,084
Indicate by check mark whether the registrant is an accelerated filer (as
defined in rule 12b-2 of the 1934 Securities and Exchange Act).
Yes No X
---------- ----------
DEARBORN BANCORP, INC.
INDEX
Part I. Financial Information:
Item 1. Financial Statements
The following consolidated financial statements of Dearborn
Bancorp, Inc. and its subsidiary included in this report are: Page
----
Independent Accountants' Report 3
Consolidated Balance Sheets -- September 30, 2003,
December 31, 2002 and September 30, 2002 4
Consolidated Statements of Income - For the Three
And Nine Months Ended September 30, 2003 and 2002 5
Consolidated Statements of Comprehensive Income - For
the Three and Nine Months Ended September 30, 2003 and 2002 6
Consolidated Statements of Cash Flows - For the
Nine Months Ended September 30, 2003 and 2002 7
Notes to Consolidated Financial Statements 8-11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations, Liquidity and Capital 12-25
Item 3. Quantitative and Qualitative Disclosures about Market Risk 26-27
Item 4. Controls and Procedures 28
Part II. Other Information:
Pursuant to SEC rules and regulations, the following item(s) are
included with the Form 10-Q Report:
Item 6. Exhibits and Reports on Form 8-K 29
Pursuant to SEC rules and regulations, the following items are omitted
from this Form 10-Q as inapplicable or to which the answer is negative:
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5 Other Information
SIGNATURES 30
2
INDEPENDENT ACCOUNTANTS' REPORT
Board of Directors and Shareholders
Dearborn Bancorp, Inc.
Dearborn, Michigan
We have reviewed the consolidated balance sheets of Dearborn Bancorp, Inc. as of
September 30, 2003 and 2002, the related consolidated statements of income and
comprehensive income for the three and nine month periods then ended, and the
related consolidated statements of cash flows for the nine month periods then
ended. These financial statements are the responsibility of the Corporation's
management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with auditing standards generally accepted in the United States of America, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the financial statements referred to above for them to be in
conformity with accounting principles generally accepted in the United States of
America.
/s/ Crowe Chizek and Company LLC
Grand Rapids, Michigan
October 24, 2003
3
DEARBORN BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars, in thousands)
09/30/03 12/31/02 09/30/02
---------- ---------- ----------
ASSETS
Cash and cash equivalents
Cash and due from banks $ 6,182 $ 5,903 $ 4,176
Federal funds sold 7,384 8,572 9,670
Interest bearing deposits with banks 128 4,975 6,751
--------- --------- ---------
Total cash and cash equivalents 13,694 19,450 20,597
Mortgage loans held for sale 2,727 9,852 380
Investment securities, available for sale 11,933 22,216 19,624
Federal Home Loan Bank stock 1,060 1,033 1,033
Loans
Loans 374,963 267,522 251,174
Allowance for loan losses (4,016) (2,875) (2,700)
--------- --------- ---------
Net loans 370,947 264,647 248,474
Premises and equipment, net 5,586 5,276 5,033
Accrued interest receivable 1,377 1,260 1,197
Other assets 1,963 1,366 600
--------- --------- ---------
Total assets $ 409,287 $ 325,100 $ 296,938
========= ========= =========
LIABILITIES
Deposits
Non-interest bearing deposits $ 36,032 $ 32,457 $ 36,038
Interest bearing deposits 307,793 229,629 209,534
--------- --------- ---------
Total deposits 343,825 262,086 245,572
Other liabilities
Federal Home Loan Bank advances 20,638 20,660 20,660
Trust preferred securities 10,000 10,000 ---
Accrued interest payable 651 609 609
Other liabilities 726 1,054 302
--------- --------- ---------
Total liabilities 375,840 294,409 267,143
STOCKHOLDERS' EQUITY
Common stock - 5,000,000 shares authorized,
2,797,084 shares at 09/30/03, 2,745,116 shares at
12/31/02; and 2,737,029 shares at 09/30/02 32,379 30,611 28,667
Accumulated earnings 1,037 --- 1,078
Accumulated other comprehensive income 31 80 50
--------- --------- ---------
Total stockholders' equity 33,447 30,691 29,795
--------- --------- ---------
Total liabilities and stockholders' equity $ 409,287 $ 325,100 $ 296,938
========= ========= =========
The accompanying notes are an integral part of these consolidated financial
statements
4
DEARBORN BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands, except share and per share data) Three Months Ended Nine Months Ended
09/30/03 09/30/02 09/30/03 09/30/02
---------- ---------- ---------- ----------
Interest income
Interest on loans $ 6,035 $ 4,443 $ 16,487 $ 12,123
Interest on investment securities, available for sale 62 296 450 870
Interest on deposits with banks 1 25 131 83
Interest on federal funds 18 37 97 167
---------- ---------- ---------- ----------
Total interest income 6,116 4,801 17,165 13,243
Interest expense
Interest on deposits 1,613 1,655 5,456 4,859
Interest on other borrowings 358 230 1,063 679
---------- ---------- ---------- ----------
Total interest expense 1,971 1,885 6,519 5,538
Net interest income 4,145 2,916 10,646 7,705
Provision for loan losses 671 400 1,410 888
========== ========== ========== ==========
Net interest income after provision for loan losses 3,474 2,516 9,236 6,817
---------- ---------- ---------- ----------
Non-interest income
Service charges on deposit accounts 117 97 330 261
Fees for other services to customers 7 7 22 23
Gain on the sale of loans 605 321 1,906 676
Gain on the sale of investment securities 10 138 89 138
Other income 33 16 82 32
---------- ---------- ---------- ----------
Total non-interest income 772 579 2,429 1,130
========== ========== ========== ==========
Non-interest expenses
Salaries and employee benefits 1,787 1,156 5,393 3,260
Occupancy and equipment expense 369 240 1,040 683
Advertising and marketing 64 28 208 147
Stationery and supplies 82 43 267 156
Professional services 68 59 280 181
Data processing 86 72 241 209
Other operating expenses 265 182 684 478
---------- ---------- ---------- ----------
Total non-interest expenses 2,721 1,780 8,113 5,114
========== ========== ========== ==========
Income before income tax provision 1,525 1,315 3,552 2,833
Income tax provision 515 447 1,203 962
---------- ---------- ---------- ----------
Net income $ 1,010 $ 868 $ 2,349 $ 1,871
========== ========== ========== ==========
Per share data:
Net income - basic $ 0.36 $ 0.32 $ 0.85 $ 0.69
Net income - diluted $ 0.33 $ 0.30 $ 0.78 $ 0.65
Weighted average number of shares outstanding -- basic 2,788,968 2,726,869 2,770,525 2,726,297
Weighted average number of shares outstanding -- diluted 3,058,741 2,882,246 3,004,644 2,858,282
The accompanying notes are an integral part of these consolidated financial
statements
5
DEARBORN BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(In thousands) Three Months Ended Nine Months Ended
09/30/03 09/30/02 09/30/03 09/30/02
-------- -------- -------- --------
Net income $1,010 $ 868 $2,349 $1,871
Other comprehensive income (loss), net of tax
Unrealized gains (losses) on securities
Unrealized holding gains (losses) arising during
period (6) (6) 14 123
Less: reclassification adjustment for gains
included in net income (10) (138) (89) (138)
Tax effects 6 49 27 5
------ ----- ------ ------
Other comprehensive loss (10) (95) (49) (10)
------ ----- ------ ------
Comprehensive income $1,000 $ 773 $2,301 $1,861
====== ===== ====== ======
The accompanying notes are an integral part of the consolidated financial
statements.
6
DEARBORN BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
9/30/03 9/30/02
--------- ---------
Cash flows from operating activities
Interest and fees received $ 17,048 $ 13,131
Interest paid (6,477) (5,733)
Taxes paid (1,825) (709)
Proceeds from sale of mortgages held for sale 129,111 45,690
Origination of mortgages held for sale (120,080) (42,479)
Cash paid to suppliers and employees (7,446) (4,972)
--------- ---------
Net cash provided by operating activities 10,331 4,928
Cash flows from investing activities
Proceeds from maturities of securities available for sale 19,575 20,574
Proceeds from sales of securities available for sale 6,089 12,044
Proceeds from repayments of securities available for sale 882 454
Purchases of securities available for sale (16,412) (31,050)
Purchases of Federal Home Loan Bank stock (27) (33)
Increase in loans, net of payments received (107,709) (70,392)
Purchases of property and equipment (657) (584)
--------- ---------
Net cash used in investing activities (98,259) (68,987)
Cash flows from financing activities
Net increase in non-interest bearing deposits 3,575 14,597
Net increase in interest bearing deposits 78,164 53,494
Proceeds from Federal Home Loan Bank advances -- 660
Repayments of Federal Home Loan Bank advances (22) --
Stock option exercise 455 31
--------- ---------
Net cash provided by financing activities 82,172 68,782
Increase (decrease) in cash and cash equivalents (5,756) 4,723
Cash and cash equivalents at the beginning of the period 19,450 15,874
--------- ---------
Cash and cash equivalents at the end of the period $ 13,694 $ 20,597
========= =========
Reconciliation of net income to net cash provided by operating activities
Net income $ 2,349 $ 1,871
Adjustments to reconcile net income to net cash
Provided by operating activities
Provision for loan losses 1,410 888
Depreciation and amortization expense 347 297
Accretion of discount on investment securities (6) (7)
Amortization of premium on investment securities 169 136
Gain on the sale of investment securities (89) (138)
Decrease in mortgages held for sale 7,125 2,535
Increase in interest receivable (117) (112)
Increase (decrease) in interest payable 42 (195)
(Increase) decrease in other assets (571) 28
Decrease in other liabilities (328) (375)
--------- ---------
Net cash provided by operating activities $ 10,331 $ 4,928
========= =========
The accompanying notes are an integral part of these consolidated financial
statements.
7
DEARBORN BANCORP, INC.
FORM 10-Q (continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. Accounting and Reporting Policies
The consolidated financial statements of Dearborn Bancorp, Inc. (the
"Corporation") include the consolidation of its only subsidiary,
Community Bank of Dearborn (the "Bank"). The accounting and reporting
policies of the Corporation are in accordance with generally accepted
accounting principles and conform to practice within the banking
industry.
The consolidated financial statements of the Corporation as of
September 30, 2003 and 2002, and December 31, 2002 and for the three
and nine month periods ended September 30, 2003 and 2002 reflect all
adjustments, consisting of normal recurring items which are in the
opinion of management, necessary for a fair presentation of the results
for the interim period. The operating results for the quarter are not
necessarily indicative of results of operations for the entire year.
The consolidated financial statements as of September 30, 2003 and
2002, and for the three and nine months ended September 30, 2003 and
2002 included herein have been prepared by the Corporation, without an
audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures
normally included in interim financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. These
financial statements should be read in conjunction with the financial
statements and notes thereon included in the Corporation's 2002 Annual
Report to Stockholders on Form 10-K.
Certain of the Corporation's accounting policies are important to the
portrayal of the Corporation's financial condition, since they require
management to make difficult, complex or subjective judgments, some of
which may relate to matters that are inherently uncertain. Estimates
associated with these policies are susceptible to material changes as a
result of changes in facts and circumstances. Facts and circumstances
which could affect these material judgments include, but without
limitation, changes in interest rates, in the performance of the
economy or in the financial condition of borrowers. Management believes
that its critical accounting policies include determining the allowance
for loan losses and determining the fair value of securities and other
financial instruments.
8
A. Accounting and Reporting Policies (continued)
Employee compensation expense under stock option plans is reported
using the intrinsic value method. No stock-based compensation cost is
reflected in net income, as all options granted had an exercise price
equal to or greater than the market price of the underlying common
stock at date of grant. The following table illustrates the effect on
net income and earnings per share if expense was measured using the
fair value recognition provisions of FASB Statement No. 123, Accounting
for Stock-based Compensation (in thousands, except share and per share
data).
Three Months ended Nine Months Ended
2003 2002 2003 2002
------ ------ ------ ------
Net income
As reported $1,010 $ 868 $2,349 $1,871
Less: stock-based compensation expense
determined under fair value based method 59 66 801 619
------ ----- ------ ------
Pro forma $ 951 $ 802 $1,548 $1,252
====== ===== ====== ======
Basic income per share
As reported $ 0.36 $0.32 $ 0.85 $ 0.69
Pro forma 0.34 0.29 0.56 0.46
Diluted income per share
As reported $ 0.33 $0.30 $ 0.78 $ 0.65
Pro forma 0.31 0.28 0.52 0.44
9
B. Securities Available For Sale
The amortized cost and estimated market value of securities available
for sale are as follows (in thousands):
September 30, 2003
---------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
--------- ---------- ---------- ---------
US Treasury securities $ 2,022 $ 4 $ -- $ 2,026
Mortgage backed securities 1,355 41 -- 1,396
Corporate debt securities 4,510 1 -- 4,511
FHLMC preferred stock 4,000 -- -- 4,000
------- ---- ---- -------
Totals $11,887 $ 46 $ -- $11,933
======= ==== ==== =======
December 31, 2002
---------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
--------- ---------- ---------- ---------
US Treasury securities $ 2,005 $ 2 $ -- $ 2,007
Mortgage backed securities 2,202 90 -- 2,292
Corporate debt securities 2,500 -- -- 2,500
Municipal securities 11,388 39 (10) 11,417
FHLMC preferred stock 4,000 -- -- 4,000
------- ---- ---- -------
Totals $22,095 $131 $(10) $22,216
======= ==== ==== =======
The amortized cost and estimated market value of securities available
for sale at September 30, 2003 by contractual maturity are shown below
(in thousands):
Estimated
Amortized Market
Cost Value
--------- ---------
Due in three months through one year $ 4,022 $ 4,027
Due in over ten years 2,510 2,510
Mortgage backed securities 1,355 1,396
FHLMC preferred stock 4,000 4,000
------- -------
Totals $11,887 $11,933
======= =======
10
C. Stock Option Plan
Options to buy common stock are granted to officers and employees under
a Stock Option Plan which provides for issue of up to 638,142 shares.
Exercise price is the market price at date of grant. The maximum option
term is ten years, and options vest fully after six months from the
date of grant. If an option expires or terminates without having been
exercised, such option becomes available for future grant under the
Plan.
A summary of the option activity for the nine months ended September
30, 2003 is as follows:
Weighted
Weighted Average Fair
Available Average Value of
For Options Exercise Options
Grant Outstanding Price Granted
--------- ----------- -------- ------------
Outstanding at January 1, 2003 108,755 484,746 $ 8.52
Granted (112,955) 112,955 17.63 $6.27
Exercised -- (51,950) 7.58
Forfeited 4,200 (4,200) 17.52
-------- ------- ------
Outstanding at September 30, 2003 -- 541,551 $10.44
======== ======= ======
For the options outstanding at September 30, 2003, the range of
exercise prices was $5.34 to $20.61 per share with a weighted-average
remaining contractual term of 7.3 years. At September 30, 2003, 432,796
options were exercisable at weighted average exercise price of $8.63
per share. Stock options for 4,200 shares of common stock were not
considered in computing diluted earnings per share for the nine months
ended September 30, 2003 because they were antidilutive.
11
PART I - FINANCIAL INFORMATION
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis are intended to address significant
factors affecting the financial condition and results of operations of the
Corporation. The discussion provides a more comprehensive review of the
financial position and operating results than can be obtained from a reading of
the financial statements and footnotes presented elsewhere in this report.
Management's Discussion and Analysis of Financial Condition and Results of
Operations contains forward-looking statements that are based on management's
beliefs, assumptions, current expectations, estimates and projections about the
financial services industry, the economy, and about the Corporation and Bank.
Words such as "anticipates", "believes", "estimates", "expects", "forecasts",
"intends", "is likely", "plans", "projects", variations of such words and
similar expressions are intended to identify such forward- looking statements.
These statements are not guarantees of future performance and involve certain
risks, uncertainties and assumptions ("Future Factors") that are difficult to
predict with regard to timing, extent, likelihood and degree of occurrence.
Therefore, actual results and outcomes may materially differ from what may be
expressed or forecasted in such forward-looking statements. The Corporation
undertakes no obligation to update, amend or clarify forward-looking statements,
whether as a result of new information, future events (whether anticipated or
unanticipated), or otherwise.
Future Factors include changes in interest rates and interest rate
relationships; demand for products and services; the degree of competition by
traditional and non-traditional competitors; changes in banking regulation;
changes in tax laws; changes in prices, levies and assessments; the impact of
technological advances; governmental and regulatory policy changes; the outcomes
of contingencies; trends in customer behavior as well as their ability to repay
loans; and changes in the national and local economy. These are representative
of the Future Factors that could cause a difference between an ultimate actual
outcome and a preceding forward-looking statement.
12
GENERAL
The Corporation was formed in 1992 and the Bank was formed in 1993. Principal
operations of the Bank commenced on February 28, 1994 when the Bank opened for
business at its main office. Subsequently, branch offices were opened in
Dearborn Heights and Plymouth Township. During 2001, the Bank opened its fourth
and fifth offices in Canton Township, Michigan and Clinton Township, Michigan,
respectively. Additionally, Community Bank Mortgage, Inc., a mortgage company,
was formed and began operations in 2001. The Bank formed Community Bank Audit
Services, Inc., a subsidiary that offers internal audit and compliance services
during 2002. The Bank also moved the Clinton Township retail branch operations
to 19100 Hall Road during the fourth quarter of 2002. The branch office is
adjacent to the office at 45000 River Ridge, which will continue to serve as a
regional lending center.
During the first quarter of 2003, the Bank opened its sixth branch office,
located at 12820 Fort Street in Southgate, Michigan. During the second quarter
of 2003, the Bank opened a regional lending center at 3201 University Drive in
Auburn Hills, Michigan.
RESULTS OF OPERATIONS
The Corporation reported net income of $1,010,000 and $2,349,000 for the three
and nine month periods ended September 30, 2003, compared to net income of
$868,000 and $1,871,000 for the three and nine month periods ended September 30,
2002. The increase in net income was primarily due to the improvements in net
interest income and the increase in gain on the sale of loans. The improvement
in net interest income was primarily due to the increase in the commercial real
estate loan and other commercial loan portfolios and the decreasing cost of
deposits during the period. The increase in loans was partially funded with
short term investments such as interest bearing deposits with banks and floating
rate securities, which carry a lower yield than loans. Management expects net
interest income to continue to increase during 2003 due to the repricing of time
deposits. The gain on sale of loans, which is based on the level of residential
real estate mortgage originations are expected to decline during the fourth
quarter of 2003.
13
NET INTEREST INCOME
2003 Compared to 2002. As noted on the two charts on the following pages, net
interest income for the three and nine month periods ended September 30, 2003,
was $4,145,000 and $10,646,000, compared to $2,916,000 and $7,705,000 for the
same periods ended September 30, 2002, an increase of $1,229,000 or 42% and
$2,941,000 or 38%, respectively. This increase was caused primarily by an
increase in the volume of interest earning assets and interest bearing
liabilities. The Corporation's interest rate spread was 4.17% and 3.61%,
respectively, for the three and nine month periods ended September 30, 2003,
compared to 3.50% and 3.29% for the same periods in 2002. The Corporation's
interest rate margin was 4.47% and 3.96%, respectively, for the three and nine
month periods ended September 30, 2003, compared to 4.12% and 3.88% for the same
periods in 2002.
The Corporation's increase in interest rate spread and net interest margin
during the nine months ended September 30, 2003 was primarily the result of the
relatively large amount of the Bank's funds that were temporarily invested in
interest bearing deposits with banks and federal funds sold. As these funds were
deployed into loans, the Bank's interest rate spread and net interest rate
margin improved during the third quarter of 2003. Management expects that both
the net interest margin on earning assets and the net interest rate spread will
increase at a slower rate during the fourth quarter of 2003 as the Bank
continues to convert funds that were held in federal funds and interest bearing
deposits with banks into loans and the cost of deposits continue to decrease.
Planned deposit growth for the fourth quarter of 2003 is expected to slow
considerably in comparison to the first nine months of 2003.
Average Balances, Interest Rates and Yields. Net interest income is affected by
the difference ("interest rate spread") between rates of interest earned on
interest-earning assets and rates of interest paid on interest-bearing
liabilities and the relative amounts of interest-bearing liabilities and
interest-earning assets. When the total of interest-earning assets approximates
or exceeds the total of interest-bearing liabilities, any positive interest rate
spread will generate net interest income. Financial institutions have
traditionally used interest rate spreads as a measure of net interest income.
Another indication of an institution's net interest income is its "net yield on
interest-earning assets" or "net interest margin," which is net interest income
divided by average interest-earning assets.
14
The following table sets forth certain information relating to the Corporation's
consolidated average interest-earning assets and interest-bearing liabilities
and reflects the average yield on assets and average cost of liabilities for the
periods indicated. Such yields and costs are derived by dividing income or
expense by the average daily balance of assets or liabilities, respectively, for
the periods presented. During the periods indicated, non-accruing loans, if any,
are included in the loan category.
Three months ended Three months ended
September 30, 2003 September 30, 2002
--------------------------------- ----------------------------------
Average Average Average Average
(In thousands) Balance Interest Rate Balance Interest Rate
------- -------- ------- ------- -------- -------
Assets
Interest-bearing deposits with banks $ 434 $ 1 0.92% $ 6,124 $ 25 1.62%
Federal funds sold 8,359 18 0.86% $ 8,488 37 1.73%
Investment securities, available for sale 14,806 62 1.67% 30,127 296 3.91%
Loans 345,053 6,035 6.96% 236,991 4,443 7.46%
-------- -------- ---- -------- -------- ----
Sub-total earning assets 368,652 6,116 6.60% 281,730 4,801 6.78%
Other assets 24,089 8,980
-------- --------
Total assets $392,741 $290,710
======== ========
Liabilities and stockholders' equity
Interest bearing deposits $291,597 $ 1,613 2.20% $208,687 $ 1,655 3.15%
Other borrowings 30,657 358 4.65% 20,229 230 4.52%
-------- -------- ---- -------- -------- ----
Sub-total interest bearing 322,254 1,971 2.43% 228,916 1,885 3.28%
liabilities
Non-interest bearing deposits 35,598 31,071
Other liabilities 1,701 1,362
Stockholders' equity 33,188 29,361
-------- --------
Total liabilities and stockholders'
equity $392,741 $290,710
======== ========
Net interest income $ 4,145 $ 2,916
======== ========
Net interest rate spread 4.17% 3.50%
==== ====
Net interest margin on earning assets 4.47% 4.12%
==== ====
15
Nine Months Ended Nine Months Ended
September 30, 2003 September 30, 2002
---------------------------------- ----------------------------------
Average Average Average Average
(In thousands) Balance Interest Rate Balance Interest Rate
-------- -------- ------- -------- -------- -------
Assets
Interest-bearing deposits with banks $ 14,707 $ 131 1.19% $ 7,322 $ 83 1.52%
Federal funds sold 11,841 97 1.10% 12,694 167 1.76%
Investment securities, available for sale 23,085 450 2.61% 30,907 870 3.77%
Loans 311,112 16,487 7.10% 215,454 12,123 7.54%
-------- -------- ---- -------- -------- ----
Sub-total earning assets 360,745 17,165 6.38% 266,377 13,243 6.67%
Other assets 23,206 9,320
-------- --------
Total assets $383,951 $275,697
======== ========
Liabilities and stockholders' equity
Interest bearing deposits $284,667 $ 5,456 2.57% $199,336 $ 4,859 3.27%
Other borrowings 30,659 1,063 4.65% 20,077 679 4.53%
-------- -------- ---- -------- -------- ----
Sub-total interest bearing liabilities 315,326 6,519 2.77% 219,413 5,538 3.38%
Non-interest bearing deposits 34,978 26,223
Other liabilities 1,523 1,264
Stockholders' equity 32,124 28,797
-------- --------
Total liabilities and stockholders' equity $383,951 $275,697
======== ========
Net interest income $ 10,646 $ 7,705
======== ========
Net interest rate spread 3.61% 3.29%
==== ====
Net interest margin on earning assets 3.96% 3.88%
==== ====
16
Rate/Volume Analysis. The following table analyzes net interest income in terms
of changes in the volume of interest-earning assets and interest-bearing
liabilities and changes in yields and rates. The table reflects the extent to
which changes in the interest income and interest expense are attributable to
changes in volume (changes in volume multiplied by prior year rate) and changes
in rate (changes in rate multiplied by prior year volume). Changes attributable
to the combined impact of volume and rate have been allocated proportionately to
changes due to volume and changes due to rate.
Three Months Ended Nine Months Ended
September 30, 2003/2002 September 30, 2003/2002
Change in Interest Due to: Change in Interest Due to:
------------------------------ -----------------------------
Average Average Net Average Average Net
(In thousands) Balance Rate Change Balance Rate Change
------- ---- ------ ------- ---- ------
Assets
Interest bearing deposits with banks $ (13) $ (11) $ (24) $ 60 $ (12) $ 48
Federal funds sold --- (19) (19) (28) (42) (70)
Investment securities, available for sale (65) (169) (234) (244) (176) (420)
Loans 1,888 (296) 1,592 4,836 (472) 4,364
------ ----- ------ ------ ----- ------
Total earning assets $1,810 $(495) $1,315 $4,624 $(702) $3,922
====== ===== ====== ====== ===== ======
Liabilities
Interest bearing deposits $ 456 $(498) $ (42) $1,293 $(696) $ 597
Other borrowings 122 6 128 373 11 384
------ ----- ------ ------ ----- ------
Total interest bearing liabilities $ 578 $(492) $ 86 $1,666 $(685) $ 981
====== ===== ====== ====== ===== ======
Net interest income $1,229 $2,941
====== ======
Net interest rate spread 0.67% 0.32%
====== ======
Net interest margin on earning assets 0.35% 0.08%
====== ======
PROVISION FOR LOAN LOSSES
2003 Compared to 2002. The provision for loan losses was $671,000 and $1,410,000
for the three and nine month periods ended September 30, 2003, compared to
$400,000 and $888,000 for the same periods in 2002, an increase of $271,000 or
68% for the three month period and $522,000 or 59% for the nine month period.
The provision for loan losses for the three and nine month periods ended
September 30, 2003 is based on the internal analysis of the adequacy of the
allowance for loan losses and the increase was driven primarily by loan growth
and higher net charge-offs during 2003. The provision for loan losses was based
upon management's assessment of relevant factors, including types and amounts of
non-performing loans, historical and anticipated loss experience on such types
of loans, and current and projected economic conditions.
17
NON-INTEREST INCOME
2003 Compared to 2002. Non-interest income was $772,000 and $2,429,000 for the
three and nine month periods ended September 30, 2003, compared to $579,000 and
$1,130,000 for the same periods in 2002, an increase of $193,000 or 33% for the
three month period and $1,299,000 or 115% for the nine month period. The
increase was primarily due to the increase in the gain on the sale of loans
during the period. The volume of mortgage loans sold increased during the period
as loan refinancing activity increased in response to continued low interest
rates. In addition, the Bank's capacity to process the sale of mortgage loans
has increased due to the addition of four mortgage loan originators during 2002
and one mortgage loan originator during 2003. Management expects the gain on
sale of loans to decline during the fourth quarter of 2003.
NON-INTEREST EXPENSE
2003 Compared to 2002. Non-interest expense was $2,721,000 and $8,113,000 for
the three and nine month periods ended September 30, 2003, compared to
$1,780,000 and $5,114,000 for the same periods in 2002, an increase of $941,000
or 53% for the three month period and $2,999,000 or 59% for the nine month
period. The largest component of non-interest expense was salaries and employee
benefits which amounted to $1,787,000 and $5,393,000 for the three and nine
month periods ended September 30, 2003, compared to $1,156,000 and $3,260,000
for the same period in 2002, an increase of $631,000 or 55% for the three month
period and $2,133,000 or 65% for the nine month period. The primary factors for
the increase in salaries and benefits expense were the addition of two branch
offices during the fourth quarter of 2002 and the expansion of the commercial
lending, residential lending and operations departments. As of September 30,
2003, the number of full time equivalent employees was 112 compared to 81 as of
September 30, 2002. Salaries and employee benefits will continue to increase as
a result of general staff increases.
INCOME TAX PROVISION
2003 Compared to 2002. The income tax expense was $515,000 and $1,203,000 for
the three and nine month periods ended September 30, 2003, compared to $447,000
and $962,000 for the same period in 2002, an increase of $68,000 or 15% for the
three month period and $241,000 or 25% for the nine month period. The increase
was primarily a result of increased pre-tax income.
18
COMPARISON OF FINANCIAL CONDITION AT SEPTEMBER 30, 2003 AND DECEMBER 31, 2002
Assets. Total assets at September 30, 2003 were $409,287,000 compared to
$325,100,000 at December 31, 2002, an increase of $84,187,000 or 26%. The
increase was primarily due to the increase in loans during the period.
Federal Funds Sold. Total federal funds sold at September 30, 2003 were
$7,384,000 compared to $8,572,000 at December 31, 2002, a decrease of $1,188,000
or 14%. The decrease was primarily due to the utilization of federal funds sold
to fund loans. Available funds are deployed into federal funds sold until they
can be utilized to fund loan volume.
Interest bearing deposits with banks. Total interest bearing deposits with banks
at September 30, 2003 were $128,000 compared to $4,975,000 at December 31, 2002,
a decrease of $4,847,000 or 97%. These funds are deployed into interest bearing
deposits with banks until they can be utilized to fund loan volume. This
investment was established to provide the Corporation with an alternate short
term investment option. This short term investment is a variable-rate
certificate of deposit with the Federal Home Loan Bank of Indianapolis that
carries a similar rate of return to federal funds sold.
Mortgage Loans Held for Sale. Total mortgage loans held for sale at September
30, 2003 were $2,727,000 compared to $9,852,000 at December 31, 2002, a decrease
of $7,125,000 or 72%. This increase was a result of the decrease in the level of
residential real estate mortgage loans waiting to be purchased by mortgage
correspondents.
Securities - Available for Sale. Total securities, available for sale, at
September 30, 2003 were $11,933,000 compared to $22,216,000 at December 31,
2002, a decrease of $10,283,000 or 46%. The decrease was due to the sale of
securities, available for sale during the period. The funds from the sale of
these securities were utilized to fund loan volume.
The entire portfolio has a unrealized gain of $46,000 at September 30, 2003. The
Corporation does not hold any securities in the "Held to Maturity" category nor
does the Corporation hold or utilize derivatives.
Please refer to Note B of the Notes to Consolidated Financial Statements for the
amortized cost and estimated market value of securities, available for sale.
Federal Home Loan Bank Stock. Federal Home Loan Bank stock was valued at
$1,060,000 at September 30, 2003, compared to $1,033,000 at December 31, 2002,
an increase of $27,000 or 3%.
19
Loans. Total loans at September 30, 2003 were $374,963,000 compared to
$267,522,000 at December 31, 2002, an increase of $107,441,000 or 40%. The
increase was primarily due to the continued expansion of the commercial lending
department during 2003. This expansion included the addition of six experienced
loan officers during the last twelve months. Three of these loan officers are
located at our regional lending center in Auburn Hills, Michigan and will
continue to focus their efforts on developing commercial lending relationships
in Oakland County. Major categories of loans included in the loan portfolio are
as follows (in thousands):
09/30/03 12/31/02 09/30/02
-------- -------- --------
Consumer loans $ 23,476 $ 22,170 $ 22,326
Commercial, financial, & other 64,969 46,187 44,109
Commercial real estate construction 46,872 30,083 23,514
Commercial real estate mortgages 196,798 139,243 129,141
Residential real estate mortgages 42,848 29,839 32,084
-------- -------- --------
374,963 267,522 251,174
Allowance for loan losses (4,016) (2,875) (2,700)
-------- -------- --------
$370,947 $264,647 $248,474
======== ======== ========
The following is a summary of non-performing assets and problems loans (in
thousands):
09/30/03 12/31/02 09/30/02
-------- -------- --------
Over 90 days past due and still accruing $ 241 $ 32 $ 2
Non-accrual loans 2,103 2,641 2,743
-------- -------- --------
$ 2,344 $ 2,673 $ 2,745
======== ======== ========
Non-accrual loans at September 30, 2003 were $2,103,000, of which, $1,752,000
was related to one commercial loan relationship that is well secured. The
remaining non-accrual loans consisted of three slow paying commercial loans with
balances of $176,000, $120,000 and $55,000.
Allowance for Loan Losses. The allowance for loan losses was $4,016,000 at
September 30, 2003 compared to $2,875,000 at December 31, 2002, an increase of
$1,141,000 or 40%. The increase was primarily due to growth in the loan
portfolio during the nine months ended September 30, 2003. The allowance for
loan losses was based upon management's assessment of relevant factors,
including loan growth, types and amounts of non-performing loans, historical and
anticipated loss experience on such types of loans, and current economic
conditions.
20
The following is an analysis of the allowance for loan losses (in thousands):
Nine months ended Year Ended Nine months ended
09/30/03 12/31/02 09/30/02
----------------- ---------- -----------------
Balance, beginning of year $2,875 $1,922 $1,922
Charge-offs:
Consumer loans (38) (32) (20)
Commercial, financial & other (139) (141) (133)
Commercial real estate construction (50) -- --
Commercial real estate mortgages (70) -- --
Residential real estate mortgages -- -- --
Recoveries:
Consumer loans 11 9 4
Commercial, financial & other 17 65 39
Commercial real estate construction -- -- --
Commercial real estate mortgages -- -- --
Residential real estate mortgages -- -- --
----------------- ---------- -----------------
Net charge-offs (269) (99) (110)
Additions charged to operations 1,410 1,052 888
----------------- ---------- -----------------
Balance, end of period $4,016 $2,875 $2,700
----------------- ---------- -----------------
Allowance to total loans 1.07% 1.07% 1.07%
----------------- ---------- -----------------
Allowance to nonperforming assets 171.33% 107.56% 98.36%
----------------- ---------- -----------------
Net charge-offs to average loans 0.10% 0.17% 0.05%
----------------- ---------- -----------------
Premises and Equipment. Bank premises and equipment at September 30, 2003 was
$5,586,000 compared to $5,276,000 at December 31, 2002, an increase of $310,000
or 6 %. The increase in premises and equipment was primarily due to the cost of
the renovation of the Bank's branch office in Southgate, Michigan.
Accrued Interest Receivable. Accrued interest receivable at September 30, 2003
was $1,377,000 compared to $1,260,000 at December 31, 2002, an increase of
$117,000 or 9%. The increase was primarily due to the increase in the Bank's
loan portfolio.
Other Assets. Other assets at September 30, 2003 were $1,963,000 compared to
$1,366,000 at December 31, 2002, an increase of $597,000 or 44%. The increase
was primarily due to changes in deferred tax assets.
21
Deposits. Total deposits at September 30, 2003 were $343,825,000 compared to
$262,086,000 at December 31, 2002, an increase of $81,739,000 or 31%. The
following is a summary of the distribution of deposits (in thousands):
September 30, 2003 December 31, 2002 September 30, 2002
Balance Percent Balance Percent Balance Percent
--------------------- -------------------- --------------------
Non-interest bearing:
Demand $36,032 10.48% $32,457 12.38% $36,038 14.68%
-------- ------ -------- ------- -------- ------
Interest bearing:
Checking $ 22,107 6.43% $ 25,083 9.57% $ 12,419 5.06%
Money market 11,958 3.48% 13,490 5.15% 15,744 6.41%
Savings 116,862 33.99% 63,677 24.30% 56,499 23.01%
Time, under $100,000 65,402 19.02% 61,331 23.40% 63,703 25.94%
Time, $100,000 and over 91,464 26.60% 66,048 25.20% 61,169 24.91%
-------- ------ -------- ------- -------- ------
307,793 89.52% 229,629 87.62% 209,534 85.32%
-------- ------ -------- ------- -------- ------
Total deposits $343,825 100.00% $262,086 100.00% $245,572 100.00%
======== ====== ======== ====== ======== ======
Management continues to implement a strategy during 2003 to change the mix of
the deposit portfolio by focusing more heavily on savings and institutional
deposits. The increase in deposits was primarily due to normal business
development, marketing, telemarketing, referral programs and growth strategies
which included a grand opening promotion for the Bank's retail branch office in
Clinton Township, Michigan during February 2003, which targeted time deposit
growth and an annual birthday celebration and marketing campaign in March 2003.
Management expects deposits to grow at a more moderate rate during the remainder
of 2003.
Institutional deposits consist of interest checking and time deposits of local
governmental units. They are the result of strong relationships between the Bank
and the communities in the Bank's marketing area and are considered by the Bank
to be core deposits. The following is a summary of the distribution of municipal
deposits:
09/30/03 12/31/02 09/30/02
-------- -------- --------
Interest bearing checking $12,642 $14,690 $ ---
Time, $100,000 and over 29,935 13,471 12,332
-------- -------- --------
Total municipal deposits $42,577 $28,161 $12,332
======== ======== ========
22
Federal Home Loan Bank Advances. Federal Home Loan Bank advances were
$20,638,000 at September 30, 2003, compared to $20,660,000 at December 31, 2002,
a decrease of $22,000. The decrease was due to a scheduled principal repayment
of $22,000 in September 2003.
Trust Preferred Securities. Trust preferred securities were $10,000,000 at
September 30, 2003 and December 31, 2002. The Corporation issued $10,000,000 of
floating rate obligated mandatory redeemable securities through Dearborn Bancorp
Trust I, a special purpose entity as part of a pooled offering on December 19,
2002. The interest rate is the three month LIBOR plus 3.35% and was 4.51% at
September 30, 2003. The securities have a term of thirty years. The Corporation
may redeem the securities after five years, with regulatory approval, at face
value. They are presented in the liability section of the balance sheet, but are
included as Tier 1 capital for regulatory capital purposes. Debt issue costs of
$300,000 have been capitalized and are being amortized over the term of the
securities. Unamortized debt issuance costs were $292,000 at September 30, 2003.
Accrued Interest Payable. Accrued interest payable at September 30, 2003 was
$651,000 compared to $609,000 at December 31, 2002, an increase of $42,000 or
7%. The increase was primarily due to the increasing amount of interest bearing
deposits during the period.
Other Liabilities. Other liabilities at September 30, 2003 were $726,000
compared to $1,054,000 at December 31, 2002, a decrease of $328,000 or 31%. The
decrease was primarily due to the decrease in expenses payable during the
period.
23
CAPITAL
Stockholders' equity at September 30, 2003 was $33,447,000 compared to
$30,691,000 as of December 31, 2002, an increase of $2,756,000 or 9%.
The following is a presentation of the Corporation's and Bank's regulatory
capital ratios (in thousands):
Minimum
To Be Well Capitalized
Minimum for Capital Under Prompt Corrective
Actual Adequacy Purposes Action Provisions
------------------ ------------------- ------------------------
Amount Ratio Amount Ratio Amount Ratio
------------------ ------------------- ------------------------
As of September 30, 2003
Total capital
(to risk weighted assets)
Consolidated $47,433 12.2% $31,185 8.0% $38,982 10.0%
Bank 38,169 10.0% 30,614 8.0% 38,267 10.0%
Tier 1 capital
(to risk weighted assets)
Consolidated 43,417 11.1% 15,593 4.0% 23,389 6.0%
Bank 34,153 8.9% 15,307 4.0% 22,960 6.0%
Tier 1 capital
(to average assets)
Consolidated 43,417 11.1% 15,710 4.0% 19,637 5.0%
Bank 34,153 8.9% 15,341 4.0% 19,177 5.0%
As of December 31, 2002
Total capital
(to risk weighted assets)
Consolidated $43,486 14.2% $23,075 8.0% $28,844 10.0%
Bank 29,819 10.1% 22,249 8.0% 27,811 10.0%
Tier 1 capital
(to risk weighted assets)
Consolidated 40,611 13.3% 11,538 4.0% 17,306 6.0%
Bank 26,944 9.1% 11,124 4.0% 16,687 6.0%
Tier 1 capital
(to average assets)
Consolidated 40,611 12.9% 12,318 4.0% 15,398 5.0%
Bank 26,944 8.9% 12,066 4.0% 15,082 5.0%
Based on the respective regulatory capital ratios at September 30, 2003 and
December 31, 2002, the Corporation is considered well capitalized.
24
LIQUIDITY AND ASSET AND LIABILITY MANAGEMENT
Liquidity refers to readily available funds to meet the needs of borrowers and
depositors. Levels of liquidity are closely monitored in conjunction with loan
funding requirements and deposit outflows. Adequate liquidity protects
institutions from raising funds under duress at excessive expense and provides a
necessary cushion for occasional unpredictable aberrations in demand. While
adequate liquidity is imperative, excessive liquidity in lower yielding cash
investments or other easily marketable assets reduces potential interest income.
Thus, an appropriate balance must be maintained to protect the institution and
at the same time, prudently maximize income opportunities. Sources of liquidity
from both assets and liabilities include federal funds sold, securities
available for sale, loan repayments, core deposits and a federal funds purchase
credit facility.
25
PART I - FINANCIAL INFORMATION
ITEM 3. - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
Interest Rate Sensitivity Analysis. The Corporation has sought to manage its
exposure to changes in interest rates by matching the effective maturities or
repricing characteristics of the Corporation's interest-earning assets and
interest-bearing liabilities. The matching of the assets and liabilities may be
analyzed by examining the extent to which the assets and liabilities are
interest rate sensitive and by monitoring the expected effects of interest rate
changes on net interest income.
An asset or liability is interest rate sensitive within a specific time period
if it will mature or reprice within that time period. If the Corporation's
assets mature or reprice more quickly or to a greater extent that its
liabilities, the Corporation's net portfolio value and net interest income would
tend to increase during periods of rising interest rates but decrease during
periods of falling interest rates. If the Corporation's assets mature or reprice
more slowly or to a lesser extent than its liabilities, its net portfolio value
and net interest income would tend to decrease during periods of rising interest
rates but increase during periods of falling interest rates.
The matching of assets and liabilities may be analyzed by examining the extent
to which such assets and liabilities are "interest rate sensitive" and by
monitoring an institution's interest rate sensitivity "gap." An asset or
liability is said to be interest rate sensitive within a specific period if it
will mature or reprice within that period. The interest rate sensitivity "gap"
is the difference between the amount of interest-earning assets maturing or
repricing within a specific time period and the amount of interest-bearing
liabilities maturing or repricing within that time period. A gap is considered
positive when the amount of interest rate sensitive assets exceeds the amount of
interest rate sensitive liabilities, and is considered negative when the amount
of interest rate sensitive liabilities exceed the amount of interest rate
sensitive assets. During a period of rising interest rates, a negative gap would
be expected to adversely affect net interest income while a positive gap would
be expected to result in an increase in net interest income, while conversely
during a period of declining interest rates, a negative gap would be expected to
result in an increase in net interest income and a positive gap would be
expected to adversely affect net interest income.
26
Different types of assets and liabilities with the same or similar maturities
may react differently to changes in overall market rates or conditions, and thus
changes in interest rates may affect net interest income positively or
negatively even if an institution were perfectly matched in each maturity
category. Additionally, the gap analysis does not consider the many factors as
banking interest rates move. While the interest rate sensitivity gap is a useful
measurement and contributes toward effective asset and liability management, it
is difficult to predict the effect of changing interest rates solely on that
measure, without accounting for alterations in the maturity or repricing
characteristics of the balance sheet that occur during changes in market
interest rates. During periods of rising interest rates, the Corporation's
assets tend to have prepayments that are slower than those in an interest rate
sensitivity gap and would increase the negative gap position. Conversely, during
a period of declining interest rates, the Corporation's assets would tend to
prepay faster than originally expected thus decreasing the negative gap
position. In addition, some of the Corporation's assets, such as adjustable rate
mortgages, have caps on the amount by which their interest rates can change in
any single period, and therefore may not reprice as quickly as liabilities in
the same maturity category.
The following table sets forth the amounts of interest earning assets and
interest bearing liabilities outstanding at September 30, 2003, which are
expected to mature or reprice in each of the time periods shown below.
Interest Rate Sensitivity Period
--------------------------------------------------------
(In thousands) 1-90 91-365 1-5 Over
Days Days Years 5 Years Total
-------- -------- -------- ------- --------
Earning assets
Federal funds sold $ 7,384 $ -- $ -- $ -- $ 7,384
Interest bearing deposits with banks 128 -- -- -- 128
Mortgage loans held for sale 2,727 -- -- -- 2,727
Securities available for sale 4,510 6,026 135 1,262 11,933
Federal Home Loan Bank stock 1,060 -- -- -- 1,060
Total loans, net of non-accrual 145,833 20,339 191,866 14,822 372,860
-------- -------- -------- ------- --------
Total earning assets 161,642 26,365 192,001 16,084 396,092
Interest bearing liabilities
Total interest bearing deposits 181,291 87,193 39,309 -- 307,793
Federal Home Loan Bank advances -- -- 15,638 5,000 20,638
Trust preferred securities 10,000 -- -- -- 10,000
-------- -------- -------- ------- --------
Total interest bearing liabilities 191,291 87,193 54,947 5,000 338,431
Net asset (liability) funding gap (29,649) (60,828) 137,054 11,084 $ 57,661
-------- -------- -------- ------- ========
Cumulative net asset (liability) funding gap $(29,649) $(90,477) $ 46,577 $57,661
======== ======== ======== =======
27
DEARBORN BANCORP, INC. AND SUBSIDIARY
FORM 10-Q (continued)
Item 4. Controls and Procedures
As of September 30, 2003, an evaluation was performed under the
supervision of and with the participation of the registrant's management,
including the President and Chief Executive Officer and the Chief Financial
Officer, of the effectiveness of the design and operation of the registrant's
disclosure controls and procedures. Based on that evaluation, the registrant's
management, including the President and Chief Executive Officer and the Chief
Financial Officer, concluded that the registrant's disclosure controls and
procedures were effective as of September 30, 2003. There have been no
significant changes in the registrant's internal controls or in other factors
that could significantly affect internal controls subsequent to September 30,
2003.
28
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS IN FORM 8-K.
(a) Exhibits
Exhibit 31.1 CEO Certification. pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
Exhibit 31.2 CFO Certification. pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
Exhibit 32.1 CEO Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
Exhibit 32.2 CFO Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
(b) A Form 8-K Report, dated July 17, 2003 was filed during the quarter
ended September 30, 2003.
29
DEARBORN BANCORP, INC.
FORM 10-Q (continued)
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.
Dearborn Bancorp, Inc.
(Registrant)
/s/ John E. Demmer
--------------------------------------
John E. Demmer
Chairman
/s/ Michael J. Ross
-------------------------------------
Michael J. Ross
President and Chief Executive Officer
/s/ Jeffrey L. Karafa
-------------------------------------
Jeffrey L. Karafa
Treasurer and Chief Financial Officer
Date: November 10, 2003
30
10-Q EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
Exhibit 31.1 CEO Certification. pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
Exhibit 31.2 CFO Certification. pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
Exhibit 32.1 CEO Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
Exhibit 32.2 CFO Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.