are
charged off when deemed uncollectible.
Increases or decreases in the carrying value of impaired loans are reported
as reductions or increases to the provision of loan losses.
| .. |
| Office Buildings and
Equipment: |
Asset cost |
|
| is reported net of
accumulated depreciation. Depreciation expense is calculated on the straight-line method
over asset useful lives. |
| .. |
| Other Real Estate: |
Real estate acquired in |
|
| settlement of loans
is initially reported at estimated fair value at acquisition. After acquisition, a
valuation allowance reduces the reported amount to the lower of the initial amount or fair
value less costs to sell. Expenses, gains and losses on disposition, and changes in the
valuation allowance are reported in net loss on other real estate. |
| .. |
| Servicing Rights: |
The Company has not |
|
| purchased rights to
service loans for others. Servicing rights represent the allocated value of servicing
rights retained on loans sold. Servicing rights are expensed in proportion to, and over
the period of, estimated net servicing revenues. Impairment is evaluated based on the fair
value of the rights, using groupings of the underlying loans as to interest rates. Any
impairment of a grouping is reported as a valuation allowance. |
| .. |
| Goodwill: |
Goodwill is the excess
of purchase |
|
| price over
identified net assets in business acquisitions. Goodwill is expensed on the straight-line
method over 25 years. Goodwill is assessed for impairment based on estimated undiscounted
cash flows, and written down if necessary. |
| .. |
| Long-term Assets: |
These assets are
reviewed |
|
| for impairment when
events indicate their carrying amount may not be recoverable from future undiscounted cash
flows. If impaired, the assets are recorded at discounted amounts. |
| .. |
| Repurchase
Agreements: |
Substantially all |
|
| repurchase
agreement liabilities represent amounts advanced by various customers. Securities are
pledged to cover these liabilities, which are not covered by federal deposit insurance. |
| .. |
| Employee Benefits: |
A profit sharing plan |
|
| covers
substantially all employees. Contributions are expensed annually and are made at the
discretion of the Board of Directors. Contributions totaled $259,000, $260,000 and
$255,000 in 1998, 1997 and l996. The plan allows employees to make voluntary
contributions, although such contributions are not matched by the Company. |
| .. |
| Stock Compensation: |
Expense for employee |
|
| compensation under
stock option plans is based on Accounting Principles Board Opinion 25, with expense
reported only if options are granted below the common stock market price at grant date.
Pro forma disclosures of net income and earnings per share are provided as if the fair
value method of SFAS No. 123 were used |
|
.. |
for
stock-based compensation instruments awarded after January 1, l995.
| ... |
| Income Taxes: |
Income tax expense is
the sum of |
|
| the current year
income tax due or refundable and the change in deferred tax assets and liabilities.
Deferred tax assets and liabilities are the expected future tax consequences of temporary
differences between the carrying amounts and tax bases of assets and liabilities, computed
using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to
the amount expected to be realized. |
| .. |
| Fair Values of
Financial Instruments: |
Fair |
|
values of financial instruments are
estimated using relevant market information and other
assumptions, as more fully disclosed separately. Fair value estimates involve
uncertainties and matters of significant judgment regarding interest rates, credit risk,
prepayments, and other factors, especially in the absence of broad markets for particular
items. Changes in assumptions or in market conditions could significantly affect the
estimates. The fair value estimates of existing on- and off-balance sheet financial
instruments does not include the value of anticipated future business or the values of
assets and liabilities not considered financial instruments. |
| ... |
| Earnings Per
Share: |
Basic earnings per share |
|
| is based on
weighted-average common shares outstanding . Diluted earnings per share further assumes
the issuance of any dilutive potential
common shares related to outstanding stock options. |
| .. |
| Comprehensive
Income: |
Comprehensive income |
|
| consists of net income and other comprehensive income. Other
comprehensive income consists of unrealized gains and losses on securities available for
sale, net of tax, which are also recognized as separate components of equity. The
accounting standard that requires reporting comprehensive income first applies for 1998, with prior information restated to
be comparable. |
| .. |
| Future
Accounting Changes: |
Beginning January |
|
| 1, 2000, a new accounting standard will require all derivatives to
be recorded at fair value. Unless designated as hedges, changes in these fair values will
be recorded in the income statement. Fair value changes involving hedges will generally be
recorded by offsetting gains and losses on the hedge and on the hedged item, even if the
fair value of the hedged item is not otherwise recorded. This is not expected to have a
material effect on the Company but the effect will depend on derivative holdings when this
standard applies. |
| ... |
| Operating
Segments: |
Internal financial |
|
| information is
primarily reported and aggregated in three lines of business, banking, trust and mortgage
banking. |
|
|