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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2004
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 000-21671
THE NATIONAL BANK OF INDIANAPOLIS CORPORATION
(Exact name of Registrant as Specified in its Charter)
Indiana 35-1887991
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
107 North Pennsylvania Street 46204
Indianapolis, Indiana (Zip Code)
(Address of Principal Executive Offices)
(317) 261-9000
(Registrant's Telephone Number, Including Area Code)
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 by check mark whether registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act) Yes [ ] No [X]
The number of shares of the registrant's Common Stock outstanding May 12,
2004 was 2,345,217.
Table of Contents
The National Bank of Indianapolis Corporation
Report on Form 10-Q
for Quarter Ended
March 31, 2004
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (Unaudited)
Consolidated Balance Sheets - March 31, 2004
and December 31, 2003..............................................1
Consolidated Statements of Income - Three Months
ended March 31, 2004 and 2003......................................2
Consolidated Statements of Cash Flows - Three Months
ended March 31, 2004 and 2003......................................3
Consolidated Statements of Shareholders' Equity - Three Months
ended March 31, 2004 and 2003......................................4
Notes to Consolidated Financial Statements.......................5-8
Item 2. Management's Discussion and Analysis............................9-19
Item 3. Quantitative and Qualitative Disclosures about Market Risk........20
Item 4. Controls and Procedures...........................................21
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.................................................22
Item 2. Changes in Securities, Use of Proceeds, and Issuer Purchases
Equity Securities................................................22
Item 3. Defaults Upon Senior Securities...................................23
Item 4. Submission of Matters to a Vote of Security Holders...............23
Item 5. Other Information ................................................23
Item 6. Exhibits and Reports on Form 8-K..................................23
Signatures ..................................................................24
The National Bank of Indianapolis Corporation
Consolidated Balance Sheets
March 31, December 31,
2004 2003
(Unaudited) (Note)
--------------------------------
Assets
Cash and due from banks $ 99,184,031 $ 44,383,402
Reverse repurchase agreements 15,000,000 15,000,000
Federal funds sold 43,916,327 20,502,386
Investment securities
Available-for-sale securities 74,021,992 115,862,372
Held-to-maturity securities 46,996,867 5,826,468
--------------------------------
Total investment securities 121,018,859 121,688,840
Loans 588,025,573 597,062,744
Less: Allowance for loan losses (8,131,498) (8,029,596)
--------------------------------
Net loans 579,894,075 589,033,148
Premises and equipment 8,920,417 9,148,709
Accrued interest 3,253,866 3,503,401
Stock in federal banks 3,590,800 3,558,200
Other assets 6,004,828 5,780,728
--------------------------------
Total assets $ 880,783,203 $ 812,598,814
================================
Liabilities and shareholders' equity
Deposits:
Noninterest-bearing demand deposits $ 172,426,153 $ 138,087,276
Money market and savings deposits 396,182,225 382,574,081
Time deposits over $100,000 50,004,222 48,219,664
Other time deposits 69,037,546 68,656,059
--------------------------------
Total deposits 687,650,146 637,537,080
Security repurchase agreements 92,940,236 71,557,046
FHLB advances 37,000,000 42,000,000
Subordinated debt 2,000,000 2,000,000
Company obligated mandatorily redeemable preferred capital
securities of subsidiary trust holding solely the junior
subordinated debentures of the parent company -- 13,500,000
Junior subordinated debentures owed to unconsolidated subsidiary trust 13,918,000 --
Other liabilities 3,184,539 3,326,284
--------------------------------
Total liabilities 836,692,921 769,920,410
Shareholders' equity:
Common stock, no par value:
Authorized shares - 3,000,000 shares;
issued 2,522,231 in 2004 and 2,517,131 in 2003;
outstanding 2,346,329 in 2004 and 2,352,229 in 2003 22,550,250 22,858,900
Unearned compensation (804,256) (894,679)
Additional paid in capital 3,069,110 3,019,003
Retained earnings 18,733,392 17,684,102
Accumulated other comprehensive income 541,786 11,078
--------------------------------
Total shareholders' equity 44,090,282 42,678,404
--------------------------------
Total liabilities and shareholders' equity $ 880,783,203 $ 812,598,814
================================
Note: The balance sheet at December 31, 2003 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. See notes to consolidated financial statements.
1
The National Bank of Indianapolis Corporation
Consolidated Statements of Income
(Unaudited)
Three months ended
March 31
2004 2003
--------------------------------
Interest income:
Interest and fees on loans $ 7,672,473 $ 7,628,973
Interest on investment securities 950,418 839,153
Interest on federal funds sold 105,769 88,733
Interest on reverse repurchase agreements 30,267 13,797
--------------------------------
Total interest income 8,758,927 8,570,656
Interest expense:
Interest on deposits 1,997,736 1,883,867
Interest on repurchase agreements 78,114 122,157
Interest on FHLB advances 517,777 622,901
Interest on long term debt 386,468 360,875
--------------------------------
Total interest expense 2,980,095 2,989,800
--------------------------------
Net interest income 5,778,832 5,580,856
Provision for loan losses 300,000 300,000
--------------------------------
Net interest income after provision for loan losses 5,478,832 5,280,856
Other operating income:
Trust fees and commissions 573,104 565,093
Building rental income 132,732 138,124
Service charges and fees on deposit accounts 569,517 624,119
Net gain on sale of mortgage loans 90,907 362,856
Interchange income 131,983 133,035
Securities losses net (83,739) --
Other 318,413 276,815
--------------------------------
Total operating income 1,732,917 2,100,042
Other operating expenses:
Salaries, wages and employee benefits 3,217,917 3,023,236
Occupancy expense 368,606 371,273
Furniture and equipment expense 213,282 214,212
Professional services 302,709 223,969
Data processing 358,463 329,527
Business development 281,634 243,553
Mortgage servicing rights impairment (recoveries) charges (45,172) 126,389
Other expenses 779,392 706,015
--------------------------------
Total other operating expenses 5,476,831 5,238,174
--------------------------------
Net income before tax 1,734,918 2,142,724
Federal and state income tax 685,628 845,898
--------------------------------
Net income after tax $ 1,049,290 $ 1,296,826
================================
Basic earnings per share $ 0.46 $ 0.55
================================
Diluted earnings per share $ 0.43 $ 0.52
================================
See notes to consolidated financial statements.
2
The National Bank of Indianapolis Corporation
Consolidated Statements of Cash Flows
(Unaudited)
Three months ended
March 31,
2004 2003
-------------------------------
Operating Activities
Net Income $ 1,049,290 $ 1,296,826
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Provision for loan losses 300,000 300,000
Depreciation and amortization 326,467 267,864
Mortgage servicing rights impairment (recoveries) charges (45,172) 126,389
Income tax benefit from exercise of warrants & options 50,107 41,590
Net accretion of investments 71,179 455,783
Unearned compensation amortization 86,148 98,565
(Increase) decrease in:
Accrued interest receivable 249,535 (104,088)
Other assets (586,059) 71,670
(Increase) decrease in other liabilities 276,255 (1,110,139)
-------------------------------
Net cash provided by operating activities 1,777,750 1,444,460
-------------------------------
Investing Activities
Net change in federal funds sold (23,413,941) (10,401,227)
Net change in reverse repurchase agreements -- (10,000,000)
Proceeds from maturities of investment securities held
to maturity -- 9,251,892
Proceeds from maturities of investment securities available
for sale 23,159,417 1,463,675
Proceeds from sales of investment securities available for sale 20,036,239 --
Purchases of investment securities held to maturity (41,251,350) (60,000)
Purchases of investment securities available for sale (499,305) (1,010,625)
Net (increase) decrease in loans 8,839,073 (23,379,959)
Purchases of bank premises and equipment (39,135) (261,281)
-------------------------------
Net cash used by investing activities (13,169,002) (34,397,525)
-------------------------------
Financing Activities
Net increase in deposits 50,113,066 29,379,583
Net increase in security repurchase agreements 21,383,190 3,414,296
Net change in FHLB advances (5,000,000) --
Proceeds from issuance of stock 55,000 40,001
Repurchase of stock (359,375) (29,560)
-------------------------------
Net cash provided by financing activities 66,191,881 32,804,320
-------------------------------
Increase (decrease) in cash and cash equivalents 54,800,629 (148,745)
Cash and cash equivalents at beginning of year 44,383,402 45,889,548
-------------------------------
Cash and cash equivalents at end of period $ 99,184,031 $ 45,740,803
===============================
Interest paid $ 3,285,213 $ 3,508,567
===============================
Income taxes paid $ 128,386 $ 808,724
===============================
See notes to consolidated financial statements.
3
The National Bank of Indianapolis Corporation
Consolidated Statement of Shareholders' Equity
(Unaudited)
Accumulated
Additional and Other
Common Unearned Paid In Retained Comprehensive
Stock Compensation Capital Earnings Income TOTAL
---------------------------------------------------------------------------------------
Balance at December 31, 2002 $ 26,862,276 $ (1,218,746) $ 2,562,990 $ 12,519,902 $ 520,729 $ 41,247,151
Comprehensive income:
Net income 1,296,826 1,296,826
Other comprehensive income
Net unrealized loss on investments,
net of tax of $64,758 (98,731) (98,731)
---------------
Total comprehensive income 1,198,095
Income tax benefit from exercise of
warrants & options 41,590 41,590
Issuance of stock (5,700 shares) 90,151 (50,150) 40,001
Repurchase of stock (1,002 shares) (29,560) (29,560)
Compensation earned 98,565 98,565
---------------------------------------------------------------------------------------
Balance at March 31, 2003 $ 26,922,867 $ (1,170,331) $ 2,604,580 $ 13,816,728 $ 421,998 $ 42,595,842
=======================================================================================
Balance at December 31, 2003 $ 22,858,900 $ (894,679) $ 3,019,003 $ 17,684,102 $ 11,078 $ 42,678,404
Comprehensive income:
Net income 1,049,290 1,049,290
Other comprehensive income
Net unrealized gain on investments,
net of tax of $348,093 530,708 530,708
---------------
Total comprehensive income 1,579,998
Income tax benefit from exercise of
warrants & options 50,107 50,107
Issuance of stock (5,100 shares) 50,725 4,275 55,000
Repurchase of stock (11,000 shares) (359,375) (359,375)
Compensation earned 86,148 86,148
---------------------------------------------------------------------------------------
Balance at March 31, 2004 $ 22,550,250 $ (804,256) $ 3,069,110 $ 18,733,392 $ 541,786 $ 44,090,282
=======================================================================================
See notes to consolidated financial statements.
4
The National Bank of Indianapolis
Corporation
Notes to Consolidated Financial Statements
March 31, 2004
Note 1: Basis of Presentation
The accompanying unaudited condensed consolidated financial statements include
the accounts of The National Bank of Indianapolis Corporation ("Corporation")
and its wholly-owned subsidiary The National Bank of Indianapolis ("Bank"). The
presentation of the 2003 financial statement also includes the accounts of the
NBIN Statutory Trust I. All intercompany transactions between the Corporation
and its subsidiary have been properly eliminated. The consolidated financial
statements have been prepared in accordance with accounting principles generally
accepted in the United States for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by accounting
principles generally accepted in the United States for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the three month period ended March 31, 2004 are
not necessarily indicative of the results that may be expected for the year
ended December 31, 2004. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Corporation's Form
10-K for the year ended December 31, 2003.
Stock Based Compensation
For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over their vesting periods. The following table
illustrates the effect on net income and earnings per share if we had applied
the fair value recognition provisions of Statement No. 123 to stock-based
compensation.
Three months ended
March 31,
2004 2003
----------- -----------
Net income, as reported $ 1,049,290 $ 1,296,826
Add: stock-based compensation expense, net of 52,025 59,523
related taxes
Less: total stock-based compensation expense (106,170) (114,190)
determined under fair-value based method, net
of taxes
----------- -----------
Pro forma net income $ 995,145 $ 1,242,159
=========== ===========
Earnings per share:
Basic, as reported $ 0.46 $ 0.55
Basic, pro forma $ 0.43 $ 0.53
Diluted, as reported $ 0.43 $ 0.52
Diluted, pro forma $ 0.41 $ 0.49
5
Note 2: Trust Preferred Securities
In September 2000, NBIN Statutory Trust I ("the Trust"), a Connecticut statutory
business trust owned by the Corporation, issued $13,500,000 of company obligated
mandatorily redeemable capital securities. The proceeds from the issuance of the
capital securities and the proceeds from the issuance of the common securities
of $418,000 were used by the Trust to purchase from the Corporation $13,918,000
Fixed Rate Junior Subordinated Debentures. The capital securities mature
September 7, 2030, or upon earlier redemption as provided by the Indenture. The
Corporation has the right to redeem the capital securities, in whole or in part,
but in all cases in a principal amount with integral multiples of $1,000, on any
March 7 or September 7 on or after September 7, 2010 at a premium, declining
ratably to par on September 7, 2020. The capital securities have a fixed
interest rate of 10.60%, and are guaranteed by the Bank. The subordinated
debentures are the sole assets of the Trust and the Corporation owns all of the
common securities of the Trust. The net proceeds received by the Corporation
from the sale of capital securities were used for general corporate purposes.
In January of 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities, an interpretation of Accounting Research Bulletin
No. 51" (the Interpretation). The Interpretation requires the consolidation of
entities in which an enterprise absorbs a majority of the entity's expected
losses, receives a majority of the entity's expected residual returns, or both,
as a result of ownership, contractual or other financial interests in the
entity. Prior to the adoption of the Interpretation, entities are generally
consolidated by an enterprise when it has a controlling interest through
ownership of a majority voting interest in the entity.
Under the provisions of the Interpretation, except in certain circumstances,
trust preferred capital securities by design are considered variable interest
entities with no variable interest holder being considered the primary
beneficiary, thus requiring the reporting enterprise to deconsolidate the trust
upon adoption of the Interpretation. However, in certain circumstances, the
Interpretation could have allowed the parent to continue consolidating the
trust.
However, a revised interpretation was issued in December of 2003 which has
effectively removed the ability for a reporting enterprise to continue
consolidating the trust. Therefore, a reporting enterprise must deconsolidate
its trust as soon as practicable, but no later than March 31, 2004. The
Corporation had previously applied the provision of the Interpretation to the
Trust, which allowed the Corporation to continue consolidating the Trust.
However, the Corporation is required to adopt the provisions of the revised
interpretation and to deconsolidate the Trust no later than March 31, 2004.
In the first quarter of 2004, as a result of applying the provisions of FIN 46,
which represents new accounting guidance governing when an equity interest
should be consolidated, the Corporation was required to deconsolidate the Trust
from its financial statements. The deconsolidation of the net assets and results
of operations of the Trust had virtually no impact on the Corporation's
financial statements or liquidity position since the Corporation continues to be
obligated to repay the debentures held by the Trust and guarantees repayment of
the capital securities issued by the Trust. The consolidated debt obligation
related to the Trust increased from $13,500,000 to $13,918,000 upon
deconsolidation with the difference representing the Corporation's common
ownership interest in the Trust.
6
The capital securities held by the Trust qualify as Tier 1 capital for the
Corporation under Federal Reserve Board guidelines. As a result of the issuance
of FIN 46, the Federal Reserve Board is currently evaluating whether
deconsolidation of the Trust will affect the qualifications of the capital
securities as Tier 1 capital.
Consolidated debt related to the Trust holding solely debentures of the
Corporation (in $000,s):
March December March
2004 2003 2003
-------------------------------
10.60% junior subordinated debentures owed to NBIN
Statutory Trust I due September 7, 2030 $13,918 $ -- $ --
- ------------------------------------------------------------------------------------
10.60% capital securities of NBIN Statutory Trust I
due September 7, 2030 $ -- $13,500 $13,500
- ------------------------------------------------------------------------------------
Total consolidated debt obligations related to
subsidiary trust $13,918 $13,500 $13,500
====================================================================================
Interest payments made on the capital securities or the junior subordinated
debentures are reported as a component of interest expense on long-term debt.
Note 3: Exercise of Options
During the first quarter of 2004, one director and one officer of the
Corporation exercised options to purchase 5,500 common shares in aggregate. The
weighted average exercise price was $10.00 and the weighted average fair market
value of the stock was $33.00.
Due to the exercise of these options for the three month period ending March 31,
2004, the Corporation will receive a deduction for tax purposes for the
difference between the fair value of the stock at the date of exercise and the
exercise price. In accordance with Accounting Principles Board Opinion No. 25,
"Accounting for Stock-Based Compensation," the Corporation has recorded the
income tax benefit of $50,107 as additional paid in capital for the three month
period ending March 31, 2004.
7
Note 4: Earnings per Share
The following table sets forth the computation of basic and diluted earnings per
share:
Three months ended
March 31,
2004 2003
---------- ----------
Basic average shares outstanding 2,298,353 2,361,346
========== ==========
Net income $1,049,290 $1,296,826
========== ==========
Basic net income per common share $ 0.46 $ 0.55
========== ==========
Diluted
Average shares outstanding 2,298,353 2,361,346
Nonvested restricted stock 29,580 49,200
Common stock equivalents
Net effect of the assumed exercise of stock options 93,552 84,263
Net effect of the assumed exercise of warrants 0 15,071
---------- ----------
Diluted average shares 2,421,485 2,509,880
========== ==========
Net income $1,049,290 $1,296,826
========== ==========
Diluted net income per common share $ 0.43 $ 0.52
========== ==========
Note 5: Comprehensive Income
The following table sets forth the computation of comprehensive income:
Three months ended
March 31,
2004 2003
----------- -----------
Net income $ 1,049,290 $ 1,296,826
Unrealized gains (losses) on securities, net of tax 530,708 (98,731)
----------- -----------
Comprehensive income $ 1,579,998 $ 1,198,095
=========== ===========
8
Management's Discussion and Analysis
of Financial Condition and Results of Operation
Executive Overview:
The primary source of The National Bank of Indianapolis Corporation's revenue is
net interest income from loans and deposits and fees from financial services
provided to customers. Business volumes tend to be influenced by overall
economic factors including market interest rates, business spending, and
consumer confidence, as well as competitive conditions within the marketplace.
The Corporation monitors the impact of changes in interest rates on its net
interest income. One of the primary goals of asset/liability management is to
maximize net interest income and the net value of future cash flows within
authorized risk limits. At March 31, 2004 the interest rate risk position of the
Corporation was asset sensitive, meaning net income should increase as rates
rise and decrease as rates fall. The Corporation maintains a slight asset
sensitive interest rate risk position due to management's expectation that rates
will rise.
Due to record low interest rates in 2003, there were many refinances and
increased mortgage loan sales by the Corporation. Management expects a decrease
in 2004 from 2003 in mortgage loan refinancing due to rising interest rates and
this will cause a decrease in other income.
Net income is affected by the provision for loan losses. Management performs an
evaluation as to the amounts required to maintain an allowance adequate to
provide for potential losses inherent in the loan portfolio. The level of this
allowance is dependent upon the total amount of past due and non-performing
loans, general economic conditions and management's assessment of potential
losses based upon internal credit evaluations of loan portfolios and particular
loans. Most sectors of the economy are showing signs of improvement over last
year. It has been our experience that improved economic strength generally will
translate into better credit quality in the banking industry. Management
believes that the quality of our loan portfolio continues to remain excellent
and our reserves for loan losses are adequate.
The risks and challenges that management feels will be important in 2004 are
continued spread compression if interest rates remain low, price competition for
loans and deposits by new market entrants, and lower mortgage loan volume
leading to lower gains on sales of mortgage loans.
Forward Looking Information
This section contains forward looking statements. Forward looking statements
give current expectations or forecasts of future events and are not guarantees
of future performance. The forward looking statements are based on management's
expectations and are subject to a number of risks and uncertainties. Although
management believes the expectations reflected in such forward looking
statements are reasonable, actual results may differ materially from those
expressed or implied in such statements. Risks and uncertainties that could
cause actual results to differ materially include, without limitation, the
Corporation's ability to execute its business plans; changes in general economic
and financial market conditions; changes in interest rates; changes in
competitive conditions; continuing consolidation in the financial services
industry; new litigation or changes in existing litigation; losses, customer
bankruptcy, claims and assessments; changes in banking regulations or other
regulatory or legislative requirements that impact the Corporation's business;
and changes in accounting policies and
9
procedures as may be required by the Financial Accounting Standards Board or
other regulatory agencies. Additional information concerning factors that could
cause actual results to differ materially from those expressed or implied in the
forward-looking statements is available in the Corporation's Annual Report on
Form 10-K for the year ended December 31, 2003.
Critical Accounting Policies
The Corporation's consolidated financial statements are prepared in accordance
with accounting principles generally accepted in the United States and follow
general practices within the industries in which it operates. Application of
these principles requires management to make estimates, assumptions, and
judgments that affect the amounts reported in the financial statements and
accompanying notes. These estimates, assumptions, and judgments are based on
information available as of the date of the financial statements; accordingly,
as this information changes, the financial statements could reflect different
estimates, assumptions, and judgments. Certain policies inherently have a
greater reliance on the use of estimates, assumptions, and judgments and as such
have a greater possibility of producing results that could be materially
different than originally reported. Estimates, assumptions, and judgments are
necessary when assets and liabilities are required to be recorded at fair value,
when a decline in the value of an asset not carried on the financial statements
at fair value warrants an impairment write-down or valuation reserve to be
established, or when an asset or liability needs to be recorded contingent upon
a future event. Carrying assets and liabilities at fair value inherently results
in more financial statement volatility. The fair values and the information used
to record valuation adjustments for certain assets are based either on quoted
market prices or are provided by other third-party sources, when available. When
third-party information is not available, valuation adjustments are estimated in
good faith by management primarily through the use of internal cash flow
modeling techniques.
Based on the valuation techniques used and the sensitivity of financial
statement amounts to the methods, assumptions, and estimates underlying those
amounts, management has identified the determination of the allowance for loan
losses and the valuation of the mortgage servicing asset, to be the accounting
areas that require the most subjective or complex judgments, and as such could
be most subject to revision as new information becomes available.
Allowance for Loan Losses
The allowance for loan losses is established through provisions for loan losses
charged against income. Loans deemed to be uncollectible are charged against the
allowance for loan losses, and subsequent recoveries, if any, are credited to
the allowance. The allowance for loan losses related to loans that are
identified as impaired is based on discounted cash flows using the loan's
initial effective interest rate, or the fair value of the collateral for certain
collateral dependent loans. The Corporation collectively evaluates consumer
loans and loans secured by real estate for impairment as homogeneous loan
groups.
The allowance for loan losses is maintained at a level believed adequate by
management to absorb inherent losses in the loan portfolio. The determination of
the allowance is based on factors which, in management's judgment, deserve
recognition under existing economic conditions in estimating possible loan
losses. This evaluation is inherently subjective as it requires material
estimates including the amounts and timing of future cash flows expected to be
received on impaired loans that may be susceptible to significant change. The
allowance is increased by provisions for loan losses charged against income and
reduced by net charge-offs.
10
The allowance for loan losses is allocated to each loan category based on the
Bank's peer median charge off percentages by loan category added to actual
reserves maintained for non-performing or specifically identified loans needing
a reserve. Any remaining allowance is then allocated back to each loan category
based on that category's percentage of the total loan portfolio. Although the
loan loss reserve is allocated by loan category, the entire allowance is
available to cover any loan loss that may occur.
Mortgage Servicing Assets
The mortgage servicing asset is established and accounted for based on
discounted cash flow modeling techniques which require management to make
estimates regarding the amount and timing of expected future cash flows,
including assumptions about loan repayment rates, credit loss experience, and
costs to service, as well as discount rates that consider the risk involved.
Because the values of these assets are sensitive to changes in assumptions, the
valuation of the mortgage servicing asset is considered a critical accounting
estimate.
Off Balance Sheet Arrangements
During the first quarter of 2004 The National Bank of Indianapolis adopted FIN
46, which governs when certain equity interests should be consolidated in the
financial statements of the Corporation. The Corporation was required to
deconsolidate the Trust which removed $13,500,000 of Mandatorily Redeemable
Capital Securities issued by the Trust while adding $13,918,000 of junior
subordinated debentures to the consolidated balance sheet. See Note 2 Trust
Preferred Securities in the Notes to the Consolidated Financial Statements under
Item 1 of this report for further information.
11
Results of Operations
Net Interest Income
- -------------------
This section should be reviewed in conjunction with the daily average earning
assets balances and interest bearing liabilities and funding tables found on
page 16.
Three months ended March 31, 2004 compared to the three months ended March 31,
2003:
The Corporation's results of operations depend primarily on the level of its net
interest income, its non-interest income and its operating expenses. Net
interest income depends on the volume of and rates associated with interest
earning assets and interest bearing liabilities which results in the net
interest spread. The Corporation had net interest income of $5,778,832 for the
three months ended March 31, 2004 compared to net interest income of $5,580,856
for the three months ended March 31, 2003. This growth in net interest income
during the first quarter of 2004 was the result of earning asset growth and
lower funding costs. Reduced asset yields and narrower spreads on deposits, a
reflection of the ongoing effect of low market interest rates, led to a lower
net interest margin during the first quarter of 2004 as compared to the first
quarter of 2003.
Provision for Loan Losses
- -------------------------
The amount charged to the provision for loan losses by the Bank is based on
management's evaluation as to the amounts required to maintain an allowance
adequate to provide for potential losses inherent in the loan portfolio. The
level of this allowance is dependent upon the total amount of past due and
non-performing loans, general economic conditions and management's assessment of
potential losses based upon internal credit evaluations of loan portfolios and
particular loans. Loans are principally to borrowers in central Indiana.
The provision for loan losses was $300,000 for the three months ended March 31,
2004 and March 31, 2003. Based on management's risk assessment and evaluation of
the potential losses of the loan portfolio, management believes that the current
allowance for loan losses is adequate to provide for potential losses in the
loan portfolio.
12
The following table sets forth the roll forward of the allowance for loan
losses:
Three months ended
March 31,
2004 2003
---------- ----------
Beginning of Period $8,029,596 $7,227,000
Provision for loan losses 300,000 300,000
Losses charged to the reserve
Commercial 32 285,000
Real Estate 164,426 --
Installment 32,366 2,185
Credit Cards 6,924 --
---------- ----------
203,748 287,185
Recoveries
Commercial 3,413 1,385
Real Estate -- 2,350
Installment 676 19
Credit Cards 1,561 --
---------- ----------
5,650 3,754
---------- ----------
End of Period $8,131,498 $7,243,569
========== ==========
Allowance as a % of Loans 1.38% 1.31%
Loans past due over 30 days totaled $4,622,473 or .79% of total loans at March
31, 2004 compared to $4,049,916 or .73% of total loans at March 31, 2003.
13
Other Operating Income
- ----------------------
The following table details the components of other operating income:
Three months ended
March 31 $ %
2004 2003 Change Change
-----------------------------------------------------
Trust fees and commissions $ 573,104 $ 565,093 $ 8,011 1.4%
Service charges and fees on deposit accounts 569,517 624,119 (54,602) -8.7%
Building rental income 132,732 138,124 (5,392) -3.9%
Net gain on sale of mortgage loans 90,907 362,856 (271,949) -74.9%
Interchange income 131,983 133,035 (1,052) -0.8%
Net loss on securities (83,739) -- (83,739)
Other 318,413 276,815 41,598 15.0%
--------------------------------------------------
Total operating income $ 1,732,917 $ 2,100,042 $ (367,125) -17.5%
--------------------------------------------------
Other operating income for the three months ended March 31, 2004 decreased as
compared to the three months ended March 31, 2003.
Trust fees and commissions increased for the three months ended March 31, 2004
as compared to the three months ended March 31, 2003. The net increase in trust
income is attributable to the overall price appreciation in the stock and
treasury markets, an increase in assets under management and a decrease due to a
change in accounting estimate related to the accrual of fees.
Service charges and fees on deposit accounts decreased for the three months
ended March 31, 2004 as compared to the three months ended March 31, 2003 and is
attributable to changes made in the float assigned to customer deposits in the
fourth quarter of 2003 as well as lower overdraft and NSF fees assessed.
Rental income from the other tenants in the Corporation's main office building
decreased for the three months ended March 31, 2004 as compared to the three
months ended March 31, 2003 due to fewer tenants in the building in 2004
compared to the same period the previous year.
Due to the sale of bulk mortgages that were generated during 2003 as a result of
lower interest rates, the net gain on the sale of mortgages decreased for the
three months ended March 31, 2004 as compared to the three months ended March
31, 2003.
During the first quarter of 2004, a net loss on the sale of two available for
sale securities was recorded. The securities were replaced with higher yielding
investments to place the portfolio in a better position during a period of
rising interest rates.
14
Other Operating Expenses
- ------------------------
The following table details the components of other operating expense:
Three months ended
March 31 $ %
2004 2003 Change Change
----------------------------------------------------------
Salaries, wages and employee benefits $ 3,217,917 $ 3,023,236 $ 194,681 6.4%
Occupancy expense 368,606 371,273 (2,667) -0.7%
Furniture and equipment expense 213,282 214,212 (930) -0.4%
Professional services 302,709 223,969 78,740 35.2%
Data processing 358,463 329,527 28,936 8.8%
Business development 281,634 243,553 38,081 15.6%
Mortgage servicing rights impairment (recoveries) charges (45,172) 126,389 (171,561) -135.7%
Other expenses 779,392 706,015 73,377 10.4%
----------------------------------------------------------
Total other operating expenses $ 5,476,831 $ 5,238,174 $ 238,657 4.6%
----------------------------------------------------------
Other operating expenses for the three months ended March 31, 2004 increased as
compared to the three months ended March 31, 2003.
Salaries, wages and employee benefits increased primarily due to the increase in
the number of employees from 167 full time equivalents at March 31, 2003 to 174
full time equivalents at March 31, 2004.
Professional services expense increased due to increased accounting fees related
to the implementation of the Sarbanes-Oxley Act of 2002, legal fees and courier
costs.
Data processing expenses increased primarily due to increased service bureau
fees relating to increased transaction activity by the Bank and trust
department.
Business development expenses increased due to increased advertising customer
entertainment and customer relations costs.
Due to the overall lower interest rates in 2002 and 2003, there were many
refinances and the Corporation had increased mortgage sales. As of December
2003, a valuation reserve of $606,276 was recognized for mortgage servicing
rights. The valuation of allowance for mortgage servicing rights decreased for
the three months ended March 31, 2004 as compared to the three months ended
March 31, 2003. The Corporation recorded a partial recovery of previous period
impairments of the mortgage servicing rights due to higher interest rates which
caused a significant slow down in mortgage refinances and prepayments of
existing mortgages.
15
AVERAGE EARNING ASSETS
The following table is a summary of the daily average of earning assets:
Three months ended
March 31 $ %
2004 2003 Change Change
-----------------------------------------------------------
Loans
Commercial $ 310,000,000 $ 273,000,000 $ 37,000,000 13.6%
Real Estate - Commercial 119,000,000 123,000,000 (4,000,000) -3.3%
Real Estate - Residential 142,000,000 122,000,000 20,000,000 16.4%
Other 13,000,000 15,000,000 (2,000,000) -13.3%
-----------------------------------------------------------
Total loans 584,000,000 533,000,000 51,000,000 9.6%
Investments 153,000,000 124,000,000 29,000,000 23.4%
Federal Funds Sold 44,000,000 30,000,000 14,000,000 46.7%
Reverse Repurchase Agreements 15,000,000 5,000,000 10,000,000 200.0%
-----------------------------------------------------------
Total Earning Assets $ 796,000,000 $ 692,000,000 $ 104,000,000 15.0%
===========================================================
AVERAGE INTEREST BEARING LIABILITIES AND FUNDING
The following table is a summary of the daily average of interest bearing
liabilities and funding:
Three months ended
March 31 $ %
2004 2003 Change Change
-----------------------------------------------------------
Noninterest bearing deposits $ 141,000,000 $ 128,000,000 $ 13,000,000 10.2%
Interest bearing deposits 522,000,000 427,000,000 95,000,000 22.2%
-----------------------------------------------------------
Total core deposits 663,000,000 555,000,000 108,000,000 19.5%
Security repurchase agreements 75,000,000 73,000,000 2,000,000 2.7%
FHLB advances 40,000,000 48,000,000 (8,000,000) -16.7%
Subordinated debt 2,000,000 -- 2,000,000
Long-term debt 14,000,000 14,000,000 -- 0.0%
Shareholders' equity 44,000,000 42,000,000 2,000,000 4.8%
-----------------------------------------------------------
Total funding $ 838,000,000 $ 732,000,000 $ 106,000,000 14.5%
===========================================================
-----------------------------------------------------------
Total interest bearing liabilities $ 653,000,000 $ 562,000,000 $ 91,000,000 16.2%
-----------------------------------------------------------
Total interest bearing
liabilities / total interest
expense 1.8% 2.1%
16
Liquidity and Interest Rate Sensitivity
The Corporation must maintain an adequate liquidity position in order to respond
to the short-term demand for funds caused by withdrawals from deposit accounts,
extensions of credit and for the payment of operating expenses. Maintaining this
position of adequate liquidity is accomplished through the management of a
combination of liquid assets - those which can be converted into cash -and
access to additional sources of funds. The Corporation must monitor its
liquidity ratios as established in the Asset/Liability ("ALCO") Committee
Policy. In addition, the Corporation has established a contingency funding plan
to address liquidity needs in the event of depressed economic conditions. The
liquidity position is continually monitored and reviewed by ALCO.
The Corporation has many sources of funds available, they include: overnight
federal funds sold, investments available for sale, maturity of investments held
for sale, deposits, Federal Home Loan Bank ("FHLB") advances, and issuance of
debt. Funding sources did not change significantly during the first three months
of 2004. Deposits are the most significant funding source and loans are the most
significant use of funds for the three months ended March 31, 2004 and 2003. The
Corporation maintains a $5,000,000 revolving credit agreement with Harris Trust
and Savings Bank to provide additional liquidity support to the Bank, if needed.
There were no borrowings under this agreement at March 31, 2004 or 2003.
Primary liquid assets of the Corporation are cash and due from banks, federal
funds sold, investments held as available for sale, and maturing loans. Federal
funds sold represented the Corporation's primary source of immediate liquidity
and were maintained at a level adequate to meet immediate needs. Federal funds
sold averaged approximately $44,000,000 for the three months ended March 31,
2004, an increase of approximately $14,000,000 from $30,000,000 for the three
months ended March 31, 2003. Reverse repurchase agreements may serve as a source
of liquidity, but are primarily used as collateral for customer balances in
overnight repurchase agreements. Maturities in the Corporation's loan and
investment portfolios are monitored regularly to manage the maturity dates of
deposits to coincide with long-term loans and investments. Other assets and
liabilities are also monitored to provide the proper balance between liquidity,
safety, and profitability. This monitoring process must be continuous due to the
constant flow of cash which is inherent in a financial institution.
The Corporation's management believes its liquidity sources are adequate to meet
its operating needs and does not know of any trends, events or uncertainties
that may result in a significant adverse effect on the Corporation's liquidity
position.
The Corporation actively manages its interest rate sensitive assets and
liabilities to reduce the impact of interest rate fluctuations. At March 31,
2004, the Corporation's rate sensitive assets exceeded rate sensitive
liabilities due within one year by $9,667,000.
As part of managing liquidity, the Corporation monitors its loan to deposit
ratio on a daily basis. At March 31, 2004 the ratio was 85.5 percent. The level
of loans to deposits is below the Corporation's internal limit for this ratio.
The Corporation experienced an increase in cash and cash equivalents, another
primary source of liquidity, of $54,800,629 during the first three months of
2004. The primary financing activity of deposit growth provided net cash of
$50,113,066. Lending provided $8,839,073, investments provided $1,445,001 and
increasing federal funds sold and reverse repurchase agreements used
$23,413,941.
17
The purpose of the Bank's Investment Committee is to manage and balance interest
rate risk, to provide a readily available source of liquidity to cover deposit
runoff and loan growth, and to provide a portfolio of safe, secure assets of
high quality that generate a supplemental source of income in concert with the
overall asset/liability policies and strategies of the Bank.
Capital Resources
The Corporation's only sources of capital since commencing operations have been
from issuance of common stock, results of operations, issuance of long-term debt
to a non-affiliated third party, and the issuance of company obligated
mandatorily redeemable preferred capital securities.
The Corporation maintains a Revolving Credit Agreement with Harris Trust and
Savings Bank in the amount of $5,000,000 that will mature September 28, 2004.
In September 2000, the Trust, which is wholly owned by the Corporation, issued
$13,500,000 of company obligated mandatorily redeemable capital securities. The
proceeds from the issuance of the capital securities and the proceeds from the
issuance of the common securities of $418,000 were used by the Trust to purchase
from the Corporation $13,918,000 Fixed Rate Junior Subordinated Debentures. The
capital securities mature September 7, 2030, or upon earlier redemption as
provided by the Indenture. The Corporation has the right to redeem the capital
securities, in whole or in part, but in all cases in a principal amount with
integral multiples of $1,000, on any March 7 or September 7 on or after
September 7, 2010 at a premium, declining ratably to par on September 7, 2020.
The capital securities have a fixed interest rate of 10.60%, and are guaranteed
by the Bank. The net proceeds received by the Corporation from the sale of
capital securities were used for general corporate purposes.
The Bank entered into an agreement in the amount of $5,000,000 pursuant to a
Subordinated Term Loan Agreement with Harris Trust and Savings Bank dated June
6, 2003. The Bank can make up to two advances against the term loan prior to
June 6, 2004. The first advance was made in the amount of $2,000,000 on June 6,
2003. The final maturity date of the loan is June 6, 2010. The outstanding
principal balance is due at maturity, but prepayment of the principal balance is
permitted prior to maturity with prior consent from the Federal Reserve.
There are many different interest rate options available. Each floating rate
option is available for a fixed term of 1-3 months. The Bank is currently paying
Adjusted 3-month LIBOR plus 2.0% which equates to 3.13%. Interest payments are
due at the expiration of the fixed term option. During June 2003, the Bank made
a $1,000,000 dividend to the Corporation from the loan proceeds to accommodate
the stock repurchase program as discussed on page 19 and in Item 2 (e) on page
22.
18
The Bank has incurred indebtedness pursuant to FHLB advances as follows:
Amount Rate Maturity
------ ---- --------
$ 5,000,000 5.15% 04/23/2004
5,000,000 5.14% 08/01/2005
3,000,000 5.39% 10/03/2005
5,000,000 5.43% 03/16/2006
5,000,000 5.32% 05/08/2006
8,000,000 4.19% 07/24/2007
3,000,000 5.57% 08/13/2007
3,000,000 5.55% 10/02/2008
-------------
$37,000,000
The Bank may add indebtedness of this nature in the future if determined to be
in the best interest of the Bank.
Capital for the Bank is at or above the well-capitalized regulatory requirements
at March 31, 2004. Pertinent capital ratios for the Bank as of March 31, 2004
are as follows:
Well Adequately
Actual Capitalized Capitalized
------ ----------- -----------
Tier 1 risk-based capital ratio 8.63% 6.0% 4.0%
Total risk-based capital ratio 10.21% 10.0% 8.0%
Leverage ratio 6.41% 5.0% 4.0%
Dividends from the Bank to the Corporation may not exceed the undivided profits
of the Bank (included in consolidated retained earnings) without prior approval
of a federal regulatory agency. In addition, Federal banking laws limit the
amount of loans the Bank may make to the Corporation, subject to certain
collateral requirements. No loans were made or dividends declared or made by the
Bank to the Corporation during the three month period ended March 31, 2004 or
2003.
In January 2003, the Board of Directors of the Corporation authorized a
repurchase program entitled "Program One" which covers employees and directors
and is effective through December 2005 unless terminated earlier by the Board.
Under Program One, the Corporation may spend up to $5,500,000 in individually
negotiated transactions to repurchase its shares from employees and directors
who wish to sell. The repurchase program may be suspended or discontinued at any
time if management determines that additional purchases are not warranted or if
the cost of the repurchase program reaches $5,500,000.
In January 2003, the Board of the Corporation authorized a separate repurchase
program entitled "Program Two" which covers all other shareholders and is
effective through December 2004 unless terminated earlier by the Board. Under
Program Two, the Corporation may spend up to $7,600,000 in individually
negotiated transactions to repurchase its shares from shareholders who wish to
sell. The repurchase program may be suspended or discontinued at any time if
management determines that additional purchases are not warranted or if the cost
of the repurchase program reaches $7,600,000.
The amount and timing of shares repurchased under the repurchase program, as
well as the specific price, will be determined by management after considering
market conditions, company performance and other factors.
19
Quantitative and Qualitative Disclosures about Market Risk
Market risk is the risk of loss due to adverse changes in market prices and
rates. The Corporation's market risk arises primarily from interest rate risk
inherent in its lending and deposit taking activities. Management actively
monitors and manages its interest rate exposure and makes monthly reports to the
Asset/Liability ("ALCO") Committee. The ALCO Committee is responsible for
reviewing the interest rate sensitivity position and establishing policies to
monitor and limit exposure to interest rate risk. The guidelines established by
ALCO are reviewed by the ALCO/Investment Committee of the Corporation's Board of
Directors.
The Corporation's profitability is affected by fluctuations in interest rates. A
sudden and substantial increase in interest rates may adversely impact the
Corporation's earnings to the extent that the interest rates earned by assets
and paid on liabilities do not change at the same speed, to the same extent, or
on the same basis. The Corporation monitors the impact of changes in interest
rates on its net interest income. The Corporation attempts to maintain a
relatively neutral gap between earning assets and liabilities at various time
intervals to minimize the effects of interest rate risk. One of the primary
goals of asset/liability management is to maximize net interest income and the
net value of future cash flows within authorized risk limits. Net interest
income is affected by changes in the absolute level of interest rates. Net
interest income is also subject to changes in the shape of the yield curve. In
general, a flattening of the yield curve would result in a decline in earnings
due to the compression of earning asset yields and funding rates, while a
steepening would result in increased earnings as investment margins widen.
Earnings are also affected by changes in spread relationships between certain
rate indices, such as prime rate.
At March 31, 2004, the interest rate risk position of the Corporation was asset
sensitive, meaning net income should increase as rates rise and decrease as
rates fall. The Corporation maintains an asset sensitive interest rate risk
position due to management's expectation that rates will rise.
See further discussion liquidity and interest rate sensitivity on pages 17-18 of
this report.
There have been no material changes in the quantitative analysis used by the
Corporation since filing the 2003 10-K, for further discussion of the
quantitative analysis used by the Corporation refer to page 38 of the 2003 10K
filed on March 26, 2004.
20
Controls and Procedures
Evaluation of Disclosure Controls and Procedures. The Corporation's principal
executive officer and principal financial officer have concluded that the
Corporation's disclosure controls and procedures (as defined under Rules
13a-15(e) or Rules 15d-15(e) under the Securities Exchange Act of 1934, as
amended), based on their evaluation of these controls and procedures as of the
end of the period covered by this Form 10-Q, are effective.
Changes in Internal Controls. There have been no significant changes in the
Corporation's internal controls or in other factors that could significantly
affect these controls subsequent to the date of the evaluation thereof,
including any corrective actions with regard to significant deficiencies and
material weaknesses.
Limitations on the Effectiveness of Controls. The Corporation's management,
including its principal executive officer and principal financial officer, does
not expect that the Corporation's disclosure controls and procedures and other
internal controls will prevent all error and all fraud. A control system, no
matter how well conceived and operated, can provide only reasonable, not
absolute, assurance that the objectives of the control system are met. Further,
the design of a control system must reflect the fact that there are resource
constraints, and the benefits of controls must be considered relative to their
costs. Because of the inherent limitations in all control systems, no evaluation
of controls can provide absolute assurance that all control issues and instances
of fraud, if any, within the Corporation have been detected. These inherent
limitations include the realities that judgments in decision-making can be
faulty, and that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some
persons, by collusion of two or more people, or by management override of the
control.
The design of any system of controls also is based in part upon certain
assumptions about the likelihood of future events, and there can only be
reasonable assurance that any design will succeed in achieving its stated goals
under all potential future conditions; over time, control may become inadequate
because of changes in conditions, or the degree of compliance with the policies
or procedures may deteriorate. Because of the inherent limitations in a
cost-effective control system, misstatements due to error or fraud may occur and
not be detected.
CEO and CFO Certifications. Appearing as an exhibit to this report there are
Certifications of the Corporation's principal executive officer and principal
financial officer. The Certifications are required in accord with Section 302 of
the Sarbanes-Oxley Act of 2002 (the "Section 302 Certifications"). This Item of
this report which you are currently reading is the information concerning the
evaluation referred to in the Section 302 Certifications and this information
should be read in conjunction with the Section 302 Certifications for a more
complete understanding of the topics presented.
21
Part II - Other Information.
Item 1. Legal Proceedings
Neither The National Bank of Indianapolis Corporation nor its
subsidiaries are involved in any pending legal proceedings at this
time, other than routine litigation incidental to its business.
Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of
Equity Securites
(a) Not applicable.
(b) Not applicable.
(c) On February 12, 2004, the Corporation sold a total of 3,000
shares of common stock for an aggregate amount of $30,000 to one
officer of the Corporation pursuant to the exercise of stock
options by the officer.
On February 18, 2004, the Corporation sold a total of 2,500
shares of common stock for an aggregate amount of $25,000 to one
director of the Corporation pursuant to the exercise of stock
options by the director.
All of these shares were sold in private placements pursuant to
Section 4(2) of the Securities Act of 1933.
(d) Not applicable.
(e) The following table sets forth the issuer repurchases of equity
securities that are registered by the corporation pursuant to
Section 12 of the 1934 Act during the first three months of 2004:
-------------------------------------------------------------------------------
Maximum Number
Total Number of (or Approximate
Shares (or Units) Dollar Value) of
Purchased as Shares that May
Total Number Part of Publicly Yet Be Purchased
of Shares Average Price Announced Plans Under the Plans
Period Purchased Paid per Share or Programs or Programs
-------------------------------------------------------------------------------
01/01/04 -
01/31/04 4,500 $32.32 163,500 $7,929,576
-------------------------------------------------------------------------------
02/01/04 -
02/29/04 6,500 $32.91 170,000 $7,715,638
-------------------------------------------------------------------------------
03/01/04 -
03/31/04 -- -- 170,000 $7,715,638
-------------------------------------------------------------------------------
In January 2003 the Board of Directors of the Corporation authorized a
repurchase program entitled "Program One" and "Program Two". Program
One covers employees and directors and is effective through December
2005 unless terminated earlier by the Board. Under Program One, the
Corporation may spend up to $5,500,000 in individually negotiated
transactions to repurchase its shares from employees and directors who
wish to sell. Under Program Two, which covers all other shareholders,
is effective through December 2004 unless terminated earlier by the
Board. Under Program Two, the Corporation may spend up to $7,600,000
in individually negotiated transactions to repurchase its shares from
shareholders who wish to sell. Neither plan expired or terminated
during the first three months of 2004.
22
Item 3. Defaults Upon Senior Securities - Not applicable
Item 4. Submission of Matters to a Vote of Security Holders - Not applicable
Item 5. Other Information - Not applicable
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
--------
3(i) Articles of Incorporation of the Corporation, filed as
Exhibit 3(i) to the Corporation's Form 10-QSB filed as of
September 30, 1995 and Articles of Amendment filed as
Exhibit 3(i) to the Corporation's Form 10-K as of December
31, 2001 are incorporated by reference.
3(ii) Bylaws of the Corporation, filed as Exhibit 3(ii) to the
Corporation's Form 10-Q as of September 30, 1996 are
incorporated by reference.
10(a) 1993 Key Employees' Stock Option Plan of the Corporation,
as amended, filed as Exhibit 10(a) to the Corporation's
Form 10-Q as of June 30, 2002 are incorporated by
reference.
10(b) 1993 Directors' Stock Option Plan of the Corporation, as
amended, filed as Exhibit 10(b) to the Corporation's Form
10-Q as of June 30, 2001 are incorporated by reference.
10(c) 1993 Restricted Stock Plan of the Corporation, as amended,
filed as Exhibit 10(c) to the Corporation's Form 10-Q as of
June 30, 2002 are incorporated by reference.
31.1 Certificate of Chief Executive Officer pursuant to Rule
15d-14(a) of the Securities Exchange Act of 1934, as
amended
31.2 Certificate of Chief Financial Officer pursuant to Rule
15d-14(a) of the Securities Exchange Act of 1934, as
amended
32.1 Chief Executive Officer Certification pursuant to 18 U.S.C.
Section 1350
32.2 Chief Financial Officer Certification pursuant to 18 U.S.C.
Section 1350
(b) The registrant filed the following Current Reports on Form 8-K
during the quarter ended March 31, 2004.
Date Item Reported
---- -------------
February 23, 2004 Letter to Shareholders of the Registrant,
dated February 23, 2004
23
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.
Date: May 12, 2004
THE NATIONAL BANK OF INDIANAPOLIS CORPORATION
/s/ Debra L. Ross
--------------------------------------------
Debra L. Ross
Chief Financial Officer
24
EXHIBIT INDEX
- -------------
3(i) Articles of Incorporation of The National Bank of Indianapolis Corporation
and Articles of Amendment*
3(ii) By-laws of The National Bank of Indianapolis Corporation*
10(a) 1993 Key Employee's Stock Option Plan*
10(b) 1993 Directors' Stock Option Plan*
10(c) 1993 Restricted Stock Plan*
31.1 Chief Executive Officer Certification pursuant to Rule 15d-14(a)
31.2 Chief Financial Officer Certification pursuant to Rule 15d-14(a)
32.1 Chief Executive Officer Certification pursuant to 18 U.S.C. Section 1350
32.2 Chief Financial Officer Certification pursuant to 18 U.S.C. Section 1350
*previously filed