-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TNesDqZCGLeE0aWQqYgqTn3iaOXBZekM78mQqqo2ySOzAm0Xl8WrINBaW7nY+azp zgTtB2PksT/AmoIlSVxIiw== 0000950124-00-003221.txt : 20000516 0000950124-00-003221.hdr.sgml : 20000516 ACCESSION NUMBER: 0000950124-00-003221 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENTERBANK HOLDINGS INC CENTRAL INDEX KEY: 0001025835 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 431706259 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-15373 FILM NUMBER: 632541 BUSINESS ADDRESS: STREET 1: 150 NORTH MERAMEC STREET 2: P O BOX 16020 CITY: CLAYTON STATE: MO ZIP: 63105 BUSINESS PHONE: 3147255500 MAIL ADDRESS: STREET 1: 150 NORTH MERAMEC STREET 2: P O BOX 16020 CITY: CLAYTON STATE: MO ZIP: 63105 10-Q 1 FORM 10-Q 1 ================================================================================ 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, 2000 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number ____________ ____________ ENTERBANK HOLDINGS, INC. (Exact Name of Registrant as Specified in its Charter) DELAWARE 43-1706259 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 150 NORTH MERAMEC, CLAYTON, MO 63105 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 314-725-5500 ____________ 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 of each of the registrant's classes of common stock as of May 10, 2000: Common Stock, $.01 par value 7,165,236 shares outstanding as of May 10, 2000 ================================================================================ 2 ENTERBANK HOLDINGS, INC. AND SUBSIDIARIES TABLE OF CONTENTS
Page ---- PART I - FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited): Consolidated Balance Sheets At March 31, 2000 and December 31, 1999.....................................................1 Consolidated Statements of Income Three Months Ended March 31, 2000 and 1999..................................................2 Consolidated Statements of Comprehensive Income Three Months Ended March 31, 2000 and 1999..................................................3 Consolidated Statements of Cash Flows Three Months Ended March 31, 2000 and 1999..................................................4 Notes to Consolidated Financial Statements..................................................5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations..............................................................7 Item 3. Quantitative and Qualitative Disclosures Regarding Market Risk- There have been no material changes from the information provided in the December 31, 1999 Annual Report on Form 10-K PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K......................................................15 Signatures.....................................................................................16
3 PART I - ITEM 1 ENTERBANK HOLDINGS, INC. AND SUBSIDIARIES Consolidated Balance Sheets (unaudited)
At March 31, At December 31, Assets 2000 1999 ------------ --------------- Cash and due from banks $ 18,371,993 $ 14,798,216 Federal funds sold 44,725,000 54,825,000 Interest-bearing deposits 8,025 469 Investments in debt and equity securities: Trading, at fair value - 910,000 Available for sale, at estimated fair value 33,047,600 23,807,572 Held to maturity, at amortized cost (estimated fair value of $523,384 at March 31, 2000, and $676,851 at December 31, 1999) 526,752 679,806 ------------ -------------- Total investments in debt and equity securities 33,574,352 25,397,378 ------------ -------------- Loans held for sale 2,641,578 1,438,335 Loans, less unearned loan fees 394,711,848 385,101,759 Less allowance for loan losses 4,382,000 4,235,000 ------------ -------------- Loans, net 390,329,848 380,866,759 ------------ -------------- Other real estate owned 396,072 396,072 Office equipment and leasehold improvements 3,463,699 3,228,256 Accrued interest receivable 2,822,335 2,473,781 Investment in Enterprise Merchant Banc, LLC 643,247 572,009 Investment in Enterprise Fund, L.P. 564,726 546,710 Prepaid expenses and other assets 2,814,075 3,458,459 ------------ -------------- Total assets $ 500,354,950 $ 488,001,444 ============ ============== Liabilities and Shareholders' Equity Deposits: Demand $ 64,099,423 $ 62,486,092 Interest-bearing transaction accounts 30,540,932 31,532,705 Money market accounts 212,248,708 197,935,760 Savings 1,958,529 2,736,638 Certificates of deposit: $100,000 and over 69,670,020 67,031,719 Other 68,399,362 74,074,916 ------------ -------------- Total deposits 446,916,974 435,797,830 Guaranteed preferred beneficial interests in EBH-subordinated debentures 11,000,000 11,000,000 Federal Home Loan Bank advances 6,910,028 6,920,386 Accrued interest payable 949,098 962,205 Accounts payable and accrued expenses 975,480 557,338 ------------ -------------- Total liabilities 466,751,580 455,237,759 ------------ -------------- Shareholders' equity: Common stock, $.01 par value; authorized 20,000,000 shares; issued and outstanding 7,163,952 shares at March 31, 2000 and 7,143,636 shares at December 31, 1999 71,630 71,436 Surplus 19,377,715 19,285,957 Retained earnings 14,234,161 13,476,400 ------------ -------------- Accumulated other comprehensive income (loss) (80,136) (70,108) ------------ -------------- Total shareholders' equity 33,603,370 32,763,685 ------------ -------------- Total liabilities and shareholders' equity $ 500,354,950 $ 488,001,444 ------------ --------------
- ----------------------------- See accompanying notes to consolidated financial statements. 1 4 ENTERBANK HOLDINGS, INC. AND SUBSIDIARIES Consolidated Statements of Income (unaudited)
Three months ended March 31, 2000 1999 ---------- ---------- Interest income: Interest and fees on loans $ 8,956,835 $ 6,335,238 Interest on debt securities: Taxable 418,801 321,851 Nontaxable 6,377 6,669 Interest on federal funds sold 684,570 277,920 Interest on interest earning deposits 152 177 ---------- ---------- Total interest income 10,066,735 6,941,855 ---------- ---------- Interest expense: Interest-bearing transaction accounts 121,252 111,931 Money market accounts 2,511,885 1,704,840 Savings 10,950 9,470 Certificates of deposit: $100,000 and over 1,008,936 652,083 Other 990,534 640,190 Federal funds purchased 1,667 -- Guaranteed preferred debenture expense 265,873 -- Federal Home Loan Bank advances 84,999 75,027 ---------- ---------- Total interest expense 4,996,096 3,193,541 ---------- ---------- Net interest income 5,070,639 3,748,314 Provision for loan losses 145,436 80,000 ---------- ---------- Net interest income after provision for loan losses 4,925,203 3,668,314 ---------- ---------- Noninterest income: Service charges on deposit accounts 173,149 130,655 Financial advisory income 97,308 -- Gain on sale of trading security 500 -- Other service charges and fee income 37,970 78,953 Gain on sale of mortgage loans 80,767 335,424 Income from investment in Enterprise Merchant Banc, LLC 30,112 -- Gain on investment in Enterprise Fund, L.P. 18,015 6,806 ---------- ---------- Total noninterest income 437,821 551,838 ---------- ---------- Noninterest expense: Salaries 1,936,401 1,558,556 Payroll taxes and employee benefits 411,999 325,986 Occupancy 277,486 228,410 Furniture and equipment 119,591 100,524 Data processing 125,137 109,930 Other 1,115,897 752,288 ---------- ---------- Total noninterest expense 3,986,511 3,075,694 ---------- ---------- Income before income tax expense 1,376,513 1,144,458 Income tax expense 529,350 406,675 ---------- ---------- Net income $ 847,163 $ 737,783 ========== ========== Per share amounts Basic earnings per share $ 0.12 $ 0.10 Basic weighted average common shares and common stock equivalents outstanding 7,152,241 7,122,312 Diluted earnings per share $ 0.11 $ 0.10 Diluted weighted average common shares and common stock equivalents 7,773,274 7,611,268
- ----------------------- See accompanying notes to consolidated financial statements. 2 5 ENTERBANK HOLDINGS, INC. AND SUBSIDIARIES Consolidated Statements of Comprehensive Income (unaudited)
Three months ended March 31, 2000 1999 ------------- ------------ Net income $ 847,163 $ 737,783 ------------- ------------ Other comprehensive income (loss), before tax: Unrealized losses on securities: Unrealized losses arising during period (15,194) (29,408) ------------- ------------ Other comprehensive income (loss), before tax (15,194) (29,408) Income tax benefit related to items of other comprehensive income 5,166 9,999 ------------- ------------ Other comprehensive income (loss), net of tax (10,028) (19,409) ------------- ------------ Comprehensive income $ 837,135 $ 718,374 ============= ============
- ----------------------- See accompanying notes to consolidated financial statements. 3 6 ENTERBANK HOLDINGS, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (unaudited)
Three months ended March 31, 2000 1999 -------------- -------------- Cash flows from operating activities: Net income $ 847,163 $ 737,783 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 174,616 148,726 Provision for loan losses 145,436 80,000 Gain on sale of trading security (500) -- Net accretion of debt and equity securities (29,526) (159,296) Gain on investment in Enterprise Fund, L.P. (18,015) (6,808) Mortgage loans originated (7,700,668) (20,888,068) Proceeds from mortgage loans sold 6,578,192 26,525,466 Gain on sale of mortgage loans (80,767) (335,424) Increase in accrued interest receivable (348,554) (272,518) (Decrease) increase in accrued interest payable (13,107) 317,246 Other, net 1,062,524 (379,322) ------------- ------------- Net cash provided by operating activities 616,794 5,767,785 ------------- ------------- Cash flows from investing activities: (Purchases of) proceeds from interest-bearing deposits (7,556) 2,347 Purchases of available-for-sale debt securities (8,885,276) (7,439,465) Purchases of available-for-sale equity securities (332,200) -- Proceeds from maturities of available-for-sale debt securities -- 34,000,000 Proceeds from maturities and principal paydown on held-to-maturity debt securities 150,000 103,000 Proceeds from sale of trading security 910,500 -- Net increase in loans (9,608,525) (24,918,712) Purchases of office equipment and leasehold improvements (410,059) (104,717) Investment in Enterprise Merchant Banc, LLC (71,238) -- ------------- ------------- Net cash (used in) provided by investing activities (18,254,354) 1,642,453 ------------- ------------- Cash flows from financing activities: Net increase in demand and savings accounts 14,156,397 16,019,086 Net decrease in certificates of deposit (3,037,253) (7,879,321) Proceeds from Federal Home Loan Bank advances - 500,000 Principal payments on Federal Home Loan Bank advances (10,358) (1,776) Cash dividends paid (89,401) (71,360) Proceeds from the exercise of common stock options 91,952 54,799 ------------- ------------- Net cash provided by financing activities 11,111,337 8,621,428 ------------- ------------- Net (decrease) increase in cash and due from banks (6,526,223) 16,031,666 Cash and cash equivalents, beginning of period 69,623,216 43,951,018 ------------- ------------- Cash and cash equivalents, end of period $ 63,096,993 $ 59,982,684 ============= ============= Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 5,009,203 $ 3,367,843 Income taxes 1,172,000 527,309 ============= =============
- ----------------------------- See accompanying notes to consolidated financial statements. 4 7 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ENTERBANK HOLDINGS, INC. AND SUBSIDIARIES (1) BASIS OF PRESENTATION The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. They do not include all information and footnotes required by generally accepted accounting principles for complete consolidated financial statements. The accompanying consolidated financial statements of Enterbank Holdings, Inc. and subsidiaries (the "Company" or "Enterbank") are unaudited and should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the year ended December 31, 1999. In the opinion of management, all adjustments consisting of normal recurring accruals considered necessary for a fair presentation of the results of operations for the interim periods presented herein have been included. Operating results for the three month period ended March 31, 2000 are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2000. The consolidated financial statements include the accounts of Enterbank Holdings, Inc. and its subsidiaries. All significant intercompany accounts and transactions have been eliminated. Certain amounts in the consolidated financial statements for the year ended December 31, 1999 have been reclassified to conform to the 2000 presentation. Such reclassifications had no effect on previously reported consolidated net income or shareholders' equity. (2) MERGER AGREEMENT On January 5, 2000 the Company announced that it signed a Merger Agreement with Commercial Guaranty Bancshares, Inc. ("CGB"), the bank holding company for First Commercial Bank, N.A. headquartered in Overland Park, Kansas. On March 22, 2000 the Company formed Enterbank Acquisition Corp. I ("Acquisition Corp") as a wholly owned subsidiary of Enterbank Holdings, Inc. Acquisition Corp. was formed for the sole purpose of facilitating the pending merger transaction between the Company and Commercial Guaranty Bancshares, Inc. Acquisition Corp is a Kansas Corporation with 100 shares of common stock, par value $0.01, all of which are issued to Enterbank Holdings, Inc. In the merger, Acquisition Corp will be merged into CGB and CGB will become a wholly owned subsidiary of Enterbank. As a result of the merger, each share of CGB common stock outstanding at the effective time of the merger, other than shares with respect to which dissenters' rights are perfected, will be converted into 2.1429 shares of Enterbank common stock. The merger is intended to be a tax-free reorganization for federal income tax purposes and will be accounted for as a pooling of interests. The merger is subject to the approval of the shareholders of both companies and regulatory approval, and is expected to be completed sometime in the middle of 2000. More information is contained in the Merger Agreement on file with the Securities and Exchange Commission as an exhibit to Enterbank's Annual Report on Form 10-K for the year ended December 31, 1999. (3) DEFERRED COMPENSATION PLAN On December 20, 1999 the Company adopted the Enterbank Holdings, Inc. Deferred Compensation Plan I ("the Plan"). The Plan was established to provide deferred compensation benefits to selected executives of the Company, under the meaning of ERISA, in addition to other employee benefits programs offered by the Company. The Plan is intended to be a "top-hat", unfunded plan which will assist the participants in retirement planning and planning for their longer-term financial needs. The plan year began on January 1, 2000 and all deferral elections were made in advance. 5 8 (4) SEGMENT DISCLOSURE Management of the Company reviews the financial performance of its operation segments on an after-tax basis. The Company's four major operating segments in 2000 and 1999 include Enterbank Holdings, Inc., Enterprise Bank, Enterprise Financial Advisors and Enterprise Merchant Banc, Inc. Enterbank Holdings includes general corporate expenses not allocated to the operating segments as well as assets and income related to EBH Trust. Enterprise Bank provides a full range of commercial banking services. These services include but are not limited to loans, demand and interest earning accounts, safe deposit boxes, lock boxes and cash management services. Enterprise Financial Advisors, a division of Enterprise Bank, offers financial planning and trust services. Enterprise Merchant Banc offers merchant banking and venture capital services. The following are the financial results for the Company's operating segments for the three-month periods ended March 31, 2000 and 1999:
Enterprise Enterbank Financial Enterprise Holdings Enterprise Bank Advisors Merchant Banc Eliminations Consolidated ------------------------------------------------------------------------------------------- Three months ended March 31, 2000 Interest income $ 9,505 $ 10,066,735 $ - $ - $ (9,505) $ 10,066,735 Interest expense 275,378 4,730,223 - - (9,505) 4,996,096 Net interest margin (265,873) 5,336,512 - - - 5,070,639 Provision for loan losses - 145,436 - 145,436 Gross income prior to direct expense 18,515 241,461 171,143 36,708 - 467,827 Direct expense - - 30,006 - - 30,006 Noninterest income 18,515 241,461 141,137 36,708 - 437,821 Noninterest expense 360,124 3,243,935 382,445 7 - 3,986,511 ------------- ------------ ------------- ----------- ------------ ------------ Income (loss) before income tax expense (benefit) (607,482) 2,188,602 (241,308) 36,701 - 1,376,513 Income tax expense (benefit) (207,167) 826,828 (104,456) 14,145 - 529,350 ------------- ------------ ------------- ----------- ------------ ------------ Net income (loss) $ (400,315) $ 1,361,774 $ (136,852) $ 22,556 $ - $ 847,163 ============= ============ ============= =========== ============ ============ Total assets $ 6,068,784 $497,829,888 $ 65,521 $ 1,016,671 $ (4,625,914) $500,354,950 ------------- ------------ ------------- ----------- ------------ ------------
Three months ended March 31, 1999 Interest income $ - $ 6,941,855 $ - $ 10 $ (10) $ 6,941,855 Interest expense - 3,193,551 - - (10) 3,193,541 Net interest margin - 3,748,304 - 10 - 3,748,314 Provision for loan losses - 80,000 - - - 80,000 Gross income prior to direct 726 484,466 26,570 52,081 - 563,843 Direct expense - - 12,005 - - 12,005 Noninterest income 726 484,466 14,565 52,081 - 551,838 Noninterest expense 180,556 2,504,713 219,140 171,285 - 3,075,694 ------------- ------------ ------------ ----------- ------------ ------------ Income (loss) before income tax expense (benefit) (179,830) 1,648,057 (204,575) (119,194) - 1,144,458 Income tax expense (benefit) (47,739) 580,691 (78,184) (48,093) - 406,675 ------------- ------------ ------------ ----------- ------------ ------------ Net income (loss) $ (132,091) $ 1,067,366 $ (126,391) $ (71,101) $ - $ 737,783 ============= ============ ============ =========== ============ ============ Total assets $ 1,006,014 $383,475,768 $ 28,918 $ 548,778 $ (108,511) $384,950,967 ------------- ------------ ------------ ----------- ------------ ------------
As demonstrated in the table, Enterprise Bank ("the Bank") is the primary source of income and assets for the Company. The Bank contributed $114 million in assets at March 31, 2000 over assets at March 31, 1999. Most of the asset growth experienced by the Company is attributable to the Bank. The Bank also provides much of the income to the Company. The Bank experienced a 28% increase in net income during the three-month period ended March 31, 2000 compared to the same period in 1999. The Company experienced a 15% increase in net income for the same period. Enterprise Financial Advisors began operations during the second half of 1998 and is experiencing net losses primarily because it is currently in early stages of growth. During 1999 and 2000, Enterprise Merchant Banc raised capital for a second 6 9 equity fund and completed a restructuring, which resulted in a net operating profit for the first quarter of 2000. Enterbank Holdings has some assets in the form of small investments. Enterbank Holdings also has interest expense related to its Trust Preferred Securities and noninterest expenses related to consolidated items of the Company. ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 Readers should note that in addition to the historical information contained herein, this Form 10-Q contains forward looking statements which are inherently subject to risks and uncertainties that could cause actual results to differ materially from those contemplated by such statements. Factors that could cause or contribute to such differences include, but are not limited to, the effect that changes in interest rates and our cost of funds have on our earnings and assets, our level of loan defaults and delinquencies, our ability to successfully grow and realize profits from our commercial banking operations and our strategic non-banking lines of business, concentrations of our loans in one geographic area, our ability to retain key personnel, the degree and nature of our competition, and changes in government regulation of our business, as well as those discussed in the Company's Annual Report on Form 10-K for the year ended December 31, 1999. INTRODUCTION The discussion summarizes the significant factors affecting the consolidated financial condition, results of operations, liquidity and cash flows of the Company for the three months ended March 31, 2000 compared to the three months ended March 31, 1999 and the year ended December 31, 1999. This discussion should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the year ended December 31, 1999. FINANCIAL CONDITION Total assets at March 31, 2000 were $500 million, an increase of $12 million, or 3%, over total assets of $488 million at December 31, 1999. Loans less unearned loan fees, were $395 million, an increase of $10 million, or 3%, over total loans and leases of $385 million at December 31, 1999. Federal funds sold and investment securities were $78 million, a decrease of $2 million, or 2%, from total Federal funds sold and investment securities of $80 million at December 31, 1999. The decrease resulted from the shift in earnings assets from short-term investments into loans during the first three months of 2000. Total deposits at March 31, 2000 were $447 million, an increase of $11 million over total deposits of $436 million at December 31, 1999. Total shareholders' equity at March 31, 2000 was $33.6 million, an increase of $840,000 over total shareholders' equity of $32.8 million at December 31, 1999. The increase in equity is due to net income of $847,163 for the three months ended March 31, 2000, and the exercise of incentive stock options by employees, less dividends paid to shareholders. RESULTS OF OPERATIONS Net income was $847,163 for the three month period ended March 31, 2000, an increase of 15% over net income of $737,783 for the same period in fiscal 1999. Basic earnings per share for the three month periods ended March 31, 2000 and 1999 were $0.12 and $0.10, respectively. Diluted earnings per share for the three-month periods ended March 31, 2000 and 1999 were $0.11 and $0.10, respectively. 7 10 NET INTEREST INCOME Net interest income (presented on a tax equivalent basis) was $5.1 million, or 4.36% of average earnings assets, for the three months ended March 31, 2000, compared to $3.8 million, or 4.45% of average earning assets, for the same period in 1999. The $1.3 million, or 35% increase, in net interest income for the three months ended March 31, 2000 resulted primarily from a $125 million increase in average earnings assets to $470 million, from $345 million during the same period in 1999. The increase in earning assets is attributable to the continued calling efforts of the Company's relationship officers and sustained economic growth in the local market served by the Company. The yield on average earning assets increased to 8.63% for the three month period ended March 31, 2000 compared to 8.20% for the three month period ended March 31, 1999. The increase in asset yield was primarily due to five 0.25% increases, for a total of a 1.25% increase in the prime rate since July of 1999 and a general increase in average yield on loans. The increase in asset yield was also attributed to a change in the mix of assets from noninterest earning assets to interest earning assets. Interest earning assets increased to 95.51% of total assets for the three months ended March 31, 2000 from 92.48% for the same period in 1999. Most of the increase occurred in federal funds sold. The increase in net interest margin was offset by a $107 million increase in average interest-bearing liabilities to $397 million for the three months ended March 31, 2000 from $290 million during the same period in 1999. The yield on interest-bearing liabilities increased to 5.05% for the three months ended March 31, 2000 compared to 4.47% for the same period in 1999. This increase is attributed to the above mentioned increases in the prime rate and the addition of $11 million in guaranteed preferred beneficial interests in EBH-subordinated debentures. The increase in the interest paid on interest bearing liabilities was also attributed to a change in the mix of liabilities. Total interest-bearing liabilities increased to 80.72% of total average assets for the three months ended March 31, 2000 from 77.74% for the same period in 1999. This increase is attributed to the above mentioned guaranteed preferred beneficial interests in EBH-subordinated debentures and an increase in certificates of deposit. 8 11 The following table sets forth, on a tax-equivalent basis, certain information relating to the Company's average balance sheet and reflects the average yield earned on interest-earning assets, the average cost of interest-bearing liabilities and the resulting net interest income for the three month periods ended March 31, 2000 and 1999:
Three months ended March 31, -------------------------------------------------------------------------------------------- 2000 1999 -------------------------------------------------------------------------------------------- Percent Interest Average Percent Interest Average Average of Total Income/ Yield/ Average of Total Income/ Yield/ Balance Assets Expense Rate Balance Assets Expense Rate -------- --------- ---------- ------- --------- -------- -------- ------- ASSETS (Dollars in Thousands) Interest-earning assets: Loans (1) $391,379 79.57% $ 8,993 9.22% $ 295,261 79.25% $ 6,360 8.74% Taxable investments in debt securities 28,786 5.85 419 5.84 24,451 6.56 322 5.34 Non-taxable investments in debt securities (2) 604 0.12 10 6.64 632 0.18 10 6.42 Federal funds sold 49,072 9.97 685 5.60 24,184 6.49 278 4.66 Interest earning deposits 14 0.00 0 4.29 17 0.00 0 4.27 -------- -------- --------- --------- ------- -------- Total interest-earning assets 469,855 95.51 10,107 8.63 344,545 92.48 6,970 8.20 Non-interest-earning assets: Cash and due from banks 15,854 3.23 23,054 6.19 Office equipment and leasehold improvements 3,426 0.70 3,052 0.82 Investment in EMB, LLC 304 0.06 Prepaid expenses and other assets 6,714 1.37 5,150 1.38 Allowance for loan losses (4,285) (0.87) (3,238) (0.87) -------- -------- --------- ------- Total assets $491,868 100.00% $ 372,563 100.00% ======== ======== ========= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Interest-bearing liabilities: Interest-bearing transaction accounts $ 28,453 5.78% $ 121 1.71% $ 24,972 6.70% $ 112 1.82% Money market accounts 207,806 42.24 2,512 4.85 158,787 42.62 1,705 4.35 Savings 1,788 0.36 11 2.47 1,554 0.42 9 2.47 Certificates of deposit 140,896 28.65 1,999 5.69 97,994 26.30 1,292 5.35 Federal funds purchased 110 0.02 2 6.08 -- -- -- -- Federal Home Loan Bank advances 7,026 1.43 85 4.85 6,328 1.70 75 4.81 Guaranteed preferred beneficial interests in EBH-subordinated debentures 11,000 2.24 266 9.69 -- -- -- -- -------- -------- --------- --------- ------- -------- Total interest-bearing liabilities 397,079 80.72 4,996 5.05 289,635 77.74 3,193 4.47 Noninterest-bearing liabilities: Demand deposits 59,500 12.10 52,086 13.98 Other liabilities 1,950 0.40 1,166 0.31 -------- -------- --------- ------- Total liabilities 458,529 93.22 342,887 92.03 Shareholders' equity 33,339 6.78 29,676 7.97 -------- -------- --------- ------- Total liabilities and shareholders' equity $491,868 100.00% $ 372,563 100.00% ======== ======== ========= ======= Net interest income $ 5,111 $ 3,777 ========= ======== Net interest margin 4.36% 4.45%
(1) Average balances include non-accrual loans. The income on such loans is included in interest but is recognized only upon receipt. Loan fees included in interest income are approximately $272,000 and $250,000, for 2000 and 1999, respectively. (2) Non-taxable investment income is presented on a fully tax-equivalent basis assuming a tax rate of 34%. 9 12 PROVISION FOR LOAN LOSSES The provision for loan losses was $145,000 for the three months ended March 31, 2000, compared to $80,000 for the same period in 1999. The Company's asset quality remained strong with net recoveries of $2,000 for the three months ended March 31, 2000 compared to net recoveries of $1,000 for the same period in 1999. Loan growth remained strong during the first three months of 2000. The Company increased its allowance for loan losses by charging provision expense $145,000. The increase in provision expense in the first quarter of 2000 as compared to the same period in 1999 was made due to the continued increase in loans outstanding. The following table summarizes changes in the allowance for loan losses arising from loans charged off and recoveries on loans previously charged off by loan category and additions to the allowance that have been charged to expense.
Three months ended March 31, ------------------------------- 2000 1999 ---- ---- (Dollars in Thousands) Allowance at beginning of year $ 4,235 $ 3,200 ----------- ------------ Loans charged off: Commercial and industrial -- -- Real estate: Commercial -- -- Construction -- -- Residential -- -- Consumer and other -- -- ----------- ------------ Total loans charged off -- -- ----------- ------------ Recoveries of loans previously charged off: Commercial and industrial -- -- Real estate: Commercial -- -- Construction -- -- Residential -- 1 Consumer and other 2 -- ----------- ------------ Total recoveries of loans previously charged off 2 1 ----------- ------------ Net loans (recovered) charged off (2) (1) ----------- ------------ Provisions charged to operations 145 80 ----------- ------------ Allowance at end of period $ 4,382 $ 3,281 =========== ============ Average loans $ 391,379 $ 295,261 Total loans $ 394,712 $ 298,737 Nonperforming loans $ -- $ 29 Net charge-offs to average loans 0.00% 0.00% Allowance for loan losses to loans 1.11% 1.10%
10 13 The Company's credit management policy and procedures focus on identifying, measuring and controlling credit exposure. These procedures employ a lender-initiated system of rating credits, which is ratified in the loan approval process and subsequently tested in internal loan reviews, external audits and regulatory bank examinations. The system requires rating all loans at the time they are made. Adversely rated credits, including loans requiring close monitoring which would not normally be considered criticized credits by regulators, are included on a monthly loan watch list. Loans may be added to the watch list for reasons which are temporary and correctable, such as the absence of current financial statements of the borrower or a deficiency in loan documentation. Other loans are added whenever any adverse circumstance is detected which might affect the borrower's ability to meet the terms of the loan. This could be initiated by the delinquency of a scheduled loan payment, a deterioration in the borrower's financial condition identified in a review of periodic financial statements, a decrease in the value of the collateral securing the loan, or a change in the economic environment in which the borrower operates. Loans on the watch list require detailed loan status reports prepared by the responsible officer every four months, which are then discussed in formal meetings with the loan review and loan administration staffs. Downgrades of loan risk ratings may be initiated by the responsible loan officer at any time. However, upgrades of risk ratings may only be made with the concurrence of the loan review and credit administration staffs generally at the time of the formal watch list review meetings. Each month, loan administration provides management with a detailed list of loans on the watch list and summaries of the entire loan portfolio categorized by risk rating. These are coupled with an analysis of changes in the risk profiles of the portfolios, changes in past due and non-performing loans and changes in watch list and classified loans over time. In this manner, the overall increases or decreases in the levels of risk in the portfolios are monitored continually. Factors are applied to the loan portfolios for each category of loan risk to determine acceptable levels of allowance for loan losses. These factors are derived primarily from the actual loss experience and from published national surveys of norms in the industry. The calculated allowances required for the portfolios are then compared to the actual allowance balances to determine the provisions necessary to maintain the allowances at appropriate levels. In addition, management exercises judgment in its analysis of determining the overall level of the allowance for loan losses. In its analysis, management considers the change in the portfolio, including growth and composition, and the economic conditions of the region in which the Company operates. Based on this quantitative and qualitative analysis, the allowance for loan losses is adjusted. Such adjustments are reflected in the consolidated statements of income. The Company does not engage in foreign lending. Additionally, the Company does not have any concentrations of loans exceeding 10% of total loans which are not otherwise disclosed in the loan portfolio composition table. The Company does not have a material amount of interest-bearing assets which would have been included in non-accrual, past due or restructured loans if such assets were loans. Management believes the allowance for loan losses is adequate to absorb losses in the loan portfolio. While management uses available information to recognize loan losses, future additions to the allowance may be necessary based on changes in economic conditions. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the allowance for loan losses. Such agencies may require the Company to increase the allowance for loan losses based on their judgments and interpretations about information available to them at the time of their examinations. While the Company has benefited from very low historical net charge-offs during an extended period of rapid loan growth, management remains cognizant that historical loan loss and non-performing asset experience may not be indicative of future results. Were the experience to deteriorate, and additional provisions for loan losses were required, future operational results would be negatively impacted. Both management and the Board of Directors continually monitor changes in asset quality, market conditions, concentration of credit and other factors, all of which impact the credit risk associated with the Company's loan portfolio. 11 14 The following table sets forth information concerning the Company's non-performing assets as of the dates indicated:
March 31, December 31, 2000 1999 -------------- ---------------- (Dollars in Thousands) Non-accrual loans $ -- $ 294 Loans past due 90 days or more and still accruing interest -- -- Restructured loans -- -- -------------- ---------------- Total nonperforming loans 294 Foreclosed property 396 396 -------------- ---------------- Total non-performing assets $ 396 $ 690 ============== ================ Total assets $ 500,355 $ 488,001 Total loans $ 394,712 $ 385,102 Total loans plus foreclosed property $ 395,108 $ 385,498 Nonperforming loans to loans 0.00% 0.08% Nonperforming assets to loans plus foreclosed property 0.10% 0.18% Nonperforming assets to total assets 0.08% 0.14%
NONINTEREST INCOME Noninterest income was $437,821 for the three months ended March 31, 2000, compared to $551,838 for the same period in 1999. The decrease is primarily attributed to a $254,657 decrease in the gain on the sale of mortgage loans. The decrease in the gain on sale of mortgage loans was due to an increase in interest rates since July 1999. Over half of the gain on sale of mortgage loans prior to March 1999 was due to refinancing. The demand for refinanced mortgage loans dramatically decreased with the rise in interest rates. Most of the mortgage loans originated during late 1999 and 2000 were for the purchase of new or existing homes. The above mentioned decreases were offset slightly by increases in financial advisory income, service charges on deposit accounts and income from investments in Enterprise Merchant Banc, LLC. Financial advisory income was $97,308 for the three month ended March 31, 2000 as compared to $0 for the same period in 1999. The Company began offering financial advisory and trust services in October 1998 and started generating fees in the second quarter of 1999. Service charges on deposit accounts were $173,149 for the three months ended March 31, 2000, compared to $130,655 for the same period in 1999. The increase in service charges is due to a concerted effort by the Company's management to alter service charges and other fees to stay competitive in the marketplace and an increase in the number of deposit accounts. The increase from Enterprise Merchant Banc, LLC is a result of increased activity and a recent restructuring of that business unit. NONINTEREST EXPENSE Noninterest expense was $4.0 million for the three months ended March 31, 2000, compared to $3.1 million for the same period in 1999. Increases in noninterest expenses are primarily due to: 1) increased activity and growth in the trust and financial planning operations started during 1998; 2) an increase in the FDIC insurance expense primarily due to a reclassification of the risk category for the banking subsidiary; and 3) normal increases associated with continued growth. Other noninterest expenses were $1,012,635 for the three months ended March 31, 2000, an increase of $269,972, or 36%, over $742,663 for the three months ended March 31, 1999. This increase is attributed to normal operating expenses associated with growth. 12 15 LIQUIDITY AND INTEREST RATE SENSITIVITY Liquidity is provided by the Company's earning assets, including short-term investments in federal funds sold, maturities in the loan portfolio, maturities in the investment portfolio, amortization of term loans, deposit inflows, proceeds from borrowings, and retained earnings. Since inception, the Company has experienced rapid loan and deposit growth primarily due to the aggressive direct calling efforts of the Company's relationship officers and sustained economic growth in the local market served by the Company. Management has pursued privately held businesses who desire a close working relationship with a locally managed, full service bank. Due to the relationship developed with these customers, management views deposits from this source as a stable deposit base. Additionally, the Company belongs to a national network of time depositors (primarily credit unions) who place time deposits with the Company, typically in increments of $99,000. The Company has used this source of deposits for over four years and considers it to be a stable source of deposits enabling the Company to acquire funds at a cost below its alternative cost of funds. There were $41 million and $45 million of deposits from the national network with the Company at March 31, 2000 and December 31, 1999, respectively. The following table sets forth the amount and maturity of certificates of deposit that had balances of more than $100,000 at March 31, 2000:
Remaining Maturity Amount - ------------------------------------------ ------------- (Dollars in Thousands) Three months or less $ 22,768 Over three through six months 40,201 Over six through twelve months 6,394 Over twelve months 307 ------------- $ 69,670 =============
The asset/liability management process, which involves management of the components of the balance sheet to allow assets and liabilities to reprice at approximately the same time, is an ever-changing process essential to minimizing the effect of interest rate fluctuations on net interest income. In March 2000, the Company renewed a $2,500,000 unsecured line of credit from Jefferson Bank and Trust. The line of credit matures on March 31, 2001 and is an interest only note accruing interest at a variable rate of Prime minus 0.50%. There were no amounts outstanding under the line of credit at March 31, 2000. CAPITAL ADEQUACY Risk-based capital guidelines for financial institutions were adopted by regulatory authorities effective January 1, 1991. These guidelines were designed to relate regulatory capital requirements to the risk profile of the specific institution and to provide for uniform requirements among the various regulators. Currently, the risk-based capital guidelines require the Company to meet a minimum total capital ratio of 8.0% of which at least 4.0% must consist of Tier 1 capital. Tier 1 capital generally consists of (a) common shareholders' equity (excluding the unrealized market value adjustments on the available-for-sale securities), (b) qualifying perpetual preferred stock and related surplus subject to certain limitations specified by the FDIC, (c) minority interests in the equity accounts of consolidated subsidiaries less (d) goodwill, (e) mortgage servicing rights within certain limits, and (f) any other intangible assets and investments in subsidiaries that the FDIC determines should be deducted from Tier 1 capital. The FDIC also requires a minimum leverage ratio of 3.0%, defined as the ratio of Tier 1 capital less purchased mortgage servicing rights to total assets, for banking organizations deemed the strongest and most highly rated by banking regulators. A higher minimum leverage ratio is required of less highly rated banking organizations. Total capital, a measure of capital adequacy, includes Tier 1 capital, allowance for possible loan losses, and debt considered equity for regulatory capital purposes. 13 16 The following table summarizes the Company's risk-based capital and leverage ratios at the dates indicated:
To Be Well Capitalized Under For Capital Prompt Corrective Actual Adequacy Purposes Action Provisions ------------------- ------------------- ------------------- Amount Ratio Amount Ratio Amount Ratio ------ ----- ------ ----- ------ ----- At March 31, 2000: Total Capital (to Risk Weighted Assets) Enterbank Holdings, Inc. $ 49,065,506 11.69% $ 33,568,529 8.00% $ 41,666,712 10.00% Enterprise Bank $ 42,587,576 10.21% $ 33,371,765 8.00% $ 41,420,758 10.00% Tier I Capital (to Risk Weighted Assets) Enterbank Holdings, Inc. $ 44,683,506 10.65% $ 16,784,264 4.00% $ 25,000,027 6.00% Enterprise Bank $ 38,205,576 9.16% $ 16,685,883 4.00% $ 24,852,455 6.00% Tier I Capital (to Average Assets) Enterbank Holdings, Inc. $ 44,068,793 9.08% $ 14,756,041 3.00% $ 24,610,401 5.00% Enterprise Bank $ 38,205,576 7.80% $ 14,687,468 3.00% $ 24,479,113 5.00% At December 31, 1999: Total Capital (to Risk Weighted Assets) Enterbank Holdings, Inc. $ 48,068,793 11.82% $ 32,538,625 8.00% $ 40,673,282 10.00% Enterprise Bank $ 41,215,654 10.22% $ 32,253,615 8.00% $ 40,317,018 10.00% Tier I Capital (to Risk Weighted Assets) Enterbank Holdings, Inc. $ 43,833,793 10.78% $ 16,269,313 4.00% $ 24,403,969 6.00% Enterprise Bank $ 36,980,654 9.17% $ 16,126,807 4.00% $ 24,190,211 6.00% Tier I Capital (to Average Assets) Enterbank Holdings, Inc. $ 43,833,793 10.74% $ 12,248,031 3.00% $ 20,413,385 5.00% Enterprise Bank $ 36,980,654 9.09% $ 12,201,701 3.00% $ 20,336,168 5.00%
EFFECT OF INFLATION Changes in interest rates may have a significant impact on a commercial bank's performance because virtually all assets and liabilities of commercial banks are monetary in nature. Interest rates do not necessarily move in the same direction or in the same magnitude as the prices of goods and services. Inflation does have an impact on the growth of total assets in the banking industry, often resulting in a need to increase equity capital at higher than normal rates to maintain an appropriate equity-to-assets ratio. 14 17 PART II - OTHER INFORMATION ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K (a). Exhibits. Exhibit Number Description -------- ----------- 10.1 (1) Enterbank Holdings, Inc. Deferred Compensation Plan I 10.2 Agreement and Plan of Merger dated January 5, 2000 between Enterbank Holdings, Inc. and Commercial Guaranty Bancshares, Inc. (incorporated herein by reference to Exhibit 10.4 of the Registrant's Annual Report on Form 10-K for the period ending December 31, 1999 (File No. 000-24131)) 11.1 (1) Statement regarding computation of per share earnings 27.1 (1) Financial Data Schedule (EDGAR only) (b). During the three months ended March 31, 2000, the Registrant filed one current report on form 8-K, dated January 5, 2000, in which the Registrant announced the signing of the Agreement and Plan of Merger (see Exhibit 10.4 above) between Enterbank Holdings, Inc. and Commercial Guaranty Bancshares, Inc. - ---------------------- (1) Filed herewith. 15 18 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned; thereunto duly authorized, in the City of Clayton, State of Missouri on the 15th day of May, 2000. ENTERBANK HOLDINGS, INC. By: /s/ Fred H. Eller ------------------------------ Fred H. Eller Chief Executive Officer By: /s/ James C. Wagner ------------------------------ James C. Wagner Chief Financial Officer 16 EX-10.1 2 DEFERRED COMPENSATION PLAN I - ENTERBANK HOLDINGS 1 EXHIBIT 10.1 ENTERBANK HOLDINGS, INC. DEFERRED COMPENSATION PLAN I Article I Establishment of Plan 1.1 Purpose. The Enterbank Holdings, Inc. Deferred Compensation Plan I is hereby established by the Board of Directors of Enterbank Holdings, Inc. (the "Corporation" or "Enterbank Holdings"), a Delaware corporation, to provide deferred compensation benefits to selected executives of the Corporation as more fully provided herein. The benefits provided under the Plan are intended to be in addition to other employee benefits programs offered by the Corporation, including but not limited to tax-qualified employee benefit plans. 1.2 Effective Date and Term. Enterbank Holdings, Inc. adopts this unfunded eferred compensation plan effective as of December 20, 1999, to be known as the Enterbank Holdings, Inc. Deferred Compensation Plan I, hereinafter referred to as the "Plan." 1.3 Applicability of ERISA. This Plan is intended to be a "top-hat" plan. This Plan is an unfunded plan maintained primarily for the purpose of providing deferred compensation to a select group of management or highly compensated employees within the meaning of ERISA. Article II Definitions As used within this document, the following words and phrases have the meanings described in this Article II unless a different meaning is required by the context. Some of the words and phrases used in the Plan are not defined in this Article II, but for convenience, are defined as they are introduced into the text. Words in the masculine gender shall be deemed to include the feminine gender. Any headings used are included for ease of reference only, and are not to be construed so as to alter any of the terms of the Plan. 2.1 Annual Deferral. The amount of Basic Salary and/or Bonuses which the Participant elects to defer in each Deferral Period pursuant to Article 4.1 of the Plan Document. 2.2 Basic Salary. A Participant's base annual salary for the applicable Plan Year. 2.3 Beneficiary. Individual(s) or entit(ies) designated by a Participant in accordance with Section 14.6. 2.4 Board or Board of Directors. The Board of Directors of the Corporation. 2.5 Bonus. Earnings and incentive compensation awarded to a Participant at the option of the Corporation which may or may not occur during each Plan Year. 2.6 Code. The Internal Revenue Code of 1986. Reference to a section of the Code shall include that section and any comparable section or sections of any future legislation that amends, supplements or supersedes such section. 2.7 Committee. A committee of one or more individuals appointed by the Board of Directors to administer the Plan. II-1 2 2.8 Corporation. Enterbank Holdings, Inc. 2.9 Deferral Account. The account established for a Participant pursuant to Section 5.1 of the Plan Document. 2.10 Deferral Election. The election made by the Participant pursuant to Section 4.1 of the Plan Document. 2.11 Deferral Period. The Plan Year, or in the case of a newly hired or promoted employee who becomes an Eligible Employee during a Plan Year, the remaining portion of the Plan Year. In the case of the first Plan Year, the Deferral Period for Bonus commences December 20, 1999, and ends December 31, 1999. The first Deferral Period for Basic Salary commences January 1, 2000, and ends December 31, 2000. 2.12 Disability. A total and permanent disability, which qualifies the Participant for early payout of benefits, as described in Section 7.2. The existence of a Disability shall be determined by the Committee on the advice of a physician chosen by the Committee. 2.13 Effective Date. December 20, 1999. 2.14 Eligible Employee. An employee of the Corporation or a subsidiary of the Corporation who is designated by the Board of Directors. 2.15 ERISA. The Employee Retirement Income Security Act of 1974, as amended. 2.16 IRS. The Internal Revenue Service. 2.17 Participant. Any individual approved by the Board of Directors who becomes eligible to participate in the Plan pursuant to - Article III of the Plan Document. 2.18 Participant Agreement and Deferral Election Form. The written agreement to defer Basic Salary and/or Bonuses made by the Participant. Such written agreement shall be in a format designated by the Corporation. In order to revoke these documents, the Participant should notify the committee and the Plan Administrator. 2.19 Plan. The Enterbank Holdings, Inc. Deferred Compensation Plan I. 2.20 Plan Administrator. The Corporation unless the Corporation designates another individual or entity to hold the position of the Plan Administrator. 2.21 Plan Year. For the initial Plan Year, the period beginning December 20, 1999, and ending on December 31, 1999. Thereafter, "Plan Year" means the 12-month period beginning each January 1 and ending on the following December 31. 2.22 Rabbi Trust. The Rabbi Trust, which the Corporation may, in its sole discretion, establish for the Enterbank Holdings, Inc. Deferred Compensation Plan I, as amended from time to time. 2.23 Retirement Date. The first day of the first month coincident with or next following the date on which a Participant reaches age 65 and employment ceases with Corporation. If Participant continues employment with Corporation beyond age 65, the Retirement Date shall be the first day of the first month coincident with or next following the date on which Participant's employment ceases with the Corporation. If Participant is employed by Corporation at the time the Participant reaches age 68, the Participant's Retirement Date shall be the first day of the II-2 3 first month coincident with or next following the date on which the Participant reaches age 68 regardless of whether Participant is still employed by the Corporation. 2.23 Valuation Date. Each business day of the Plan Year. 2.24 Years of Service. Each consecutive twelve (12) month period during which a Participant is continuously employed by the Corporation. Article III Eligibility and Participation 3.1 Participation - Eligibility and Initial Period. Participation in the Plan is open only to Eligible Employees of the Corporation (as defined in Section 2.14). Each Eligible Employee of the Corporation, as of the Effective Date, may become a Participant for the Deferral Period from December 20, 1999, through December 31, 1999, if he submits a properly completed Participation Agreement and Deferral Election Form to the Committee prior to December 23, 1999. Such Form shall apply to any Bonus paid after the execution of the Form and to Basic Salary paid January 1, 2000, through December 31, 2000. Any employee becoming an Eligible Employee after the Effective Date, e.g., new hires or promoted employees, may become a Participant for the Deferral Period commencing on or after he becomes an Eligible Employee if he submits a properly completed Participation Agreement and Deferral Election Form within thirty (30) days after becoming an eligible employee. 3.2 Participation - Subsequent Entry into Plan. An Eligible Employee who does not elect to participate at the time of initial eligibility as set forth in Section 3.1 shall remain eligible to become a Participant in subsequent Plan Years as long as he continues his status as an Eligible Employee. In such event, the Eligible Employee may become a Participant by submitting a properly executed Participation Agreement and Deferral Election Form prior to January 1 of the Plan Year for which it is effective. Article IV Contributions 4.1 Deferral Election. Before the first day of each Plan Year, a Participant shall file with the Committee, a Participation Agreement and Deferral Election Form indicating the amount of Basic Salary and/or Bonus deferrals for that Plan Year. After a Plan Year commences, such Deferral Election shall continue for the entire Plan Year except that it shall terminate upon termination of employment. 4.2 Maximum Deferral Election. A Participant may elect to defer up to up to one hundred percent (100%) of Bonus earned during the first Plan Year dated December 20, 1999 through December 31, 1999. Thereafter, a Participant may elect to defer up to twenty-five percent (25%) of Basic Salary and/or up to one hundred (100%) of Bonuses earned during the corresponding Deferral Period. A Deferral Election may be automatically reduced if the Committee determines that such action is necessary to meet Federal or State tax withholding obligations. 4.3 Minimum Deferral Election. For the initial Deferral Period commencing December 20, 1999 and ending December 31, 1999, there shall be no minimum deferral; thereafter, a Participant must elect to defer at least $2,400 during the Deferral Period from Basic Salary, Bonuses, or a combination of Basic Salary and Bonuses or no deferral during such Deferral Period. 4.4 Employer Contributions. The Corporation may, in its sole discretion, make a contribution to the Participant's Deferral Account. II-3 4 Article V Accounts 5.1 Deferral Accounts. Solely for recordkeeping purposes, the Plan Administrator shall establish a Deferral Account for each Participant. A Participant's Deferral Account shall be credited with the contributions made by him or on his behalf by the Corporation under Section 4.4 and shall be credited (or charged, as the case may be) with the hypothetical or deemed investment earnings and losses determined pursuant to Section 5.3, and charged with distributions made to or with respect to him. 5.2 Crediting of Deferral Accounts. Basic salary contributions under Section 4.1 shall be credited to a Participant's Deferral Account as of the date on which such contributions were withheld from his Basic Salary. Bonus contributions under Section 4.1 shall be credited to a Participant's Deferral Account as of the date on which the contribution would have otherwise been paid in cash. Contributions under Section 4.4 shall be credited to the Participant's Deferral Account as of the date declared by the Corporation. Any distribution with respect to a Deferral Account shall be charged to that Account as of the date such payment is made by the Corporation or the trustee of any Rabbi Trust established for the Plan. 5.3 Earning Credits or Losses. Amounts credited to a Deferral Account shall be credited with deemed net income, gain and loss, including the deemed net unrealized gain and loss based on hypothetical investment directions made by the Participant with respect to this Deferral Account on a form designated by the Corporation, in accordance with investment options and procedures adopted by the Corporation in its sole discretion, from time to time. Such earnings will continue to accrue during any period in which installments are paid pursuant to Article VII. 5.4 Hypothetical Nature of Accounts. The Plan constitutes a mere promise by the Corporation to make the benefit payments in the future. Any Deferral Account established for a Participant under this Article V shall be hypothetical in nature and shall be maintained for the Corporation's recordkeeping purposes only, so that any contributions can be credited and so that deemed investment earnings and losses on such amounts can be credited (or charged, as the case may be). Neither the Plan nor any of the Accounts (or subaccounts) shall hold any actual funds or assets. The right of any individual or entity to receive one or more payments under the Plan shall be an unsecured claim against the general assets of the Corporation. Any liability of the Corporation to any Participant, former Participant, or Beneficiary with respect to a right to payment shall be based solely upon contractual obligations created by the Plan. The Corporation, the Board of Directors, the Committee and any individual or entity shall not be deemed to be a trustee of any amounts to be paid under the Plan. Nothing contained in the Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship, between the Corporation and a Participant, former Participant, Beneficiary, or any other individual or entity. The Corporation may, in its sole discretion, establish a Rabbi Trust as a vehicle in which to place funds with respect to this Plan. The Corporation does not in any way guarantee any Participant's Deferral Account against loss or depreciation, whether caused by poor investment performance, insolvency of a deemed investment or by any other event or occurrence. In no event shall the employee, officer, director, or stockholder of the Corporation be liable to any individual or entity on account of any claim arising by reason of the Plan provisions or any instrument or instruments implementing its provisions, or for the failure of any Participant, Beneficiary or other individual or entity to be entitled to any particular tax consequences with respect to the Plan or any credit or payment thereunder. 5.5 Statement of Deferral Accounts. The Plan Administrator shall provide to each Participant quarterly statements setting forth the value of the Deferral Account maintained for such Participant. II-4 5 Article VI Vesting 6.1 Vesting. The Corporation's contributions credited to a Participant's Deferral Account under Section 4.4 and any deemed investment earnings attributable to these contributions shall be one hundred percent (100%) vested or nonforfeitable when the Participant has five Years of Service with the Corporation. Prior to the time a Participant has five Years of Service with the Corporation, the Corporation's contributions to his account shall be zero percent (0%) vested. In addition, a Participant shall be one hundred percent (100%) vested in the Corporation's contributions, including any deemed investment earnings attributable to these contributions, upon his death or Disability while he is actively employed by the Corporation. All other amounts credited to a Participant's Deferral Account shall be one hundred percent (100%) vested at all times. Article VII Benefits 7.1 Retirement Date. Unless benefits have already commenced pursuant to another section in this Article VII, a Participant shall be entitled to begin receipt of the vested amount credited to his Deferral Account as of the Valuation Date coinciding with his Retirement Date. Payment of any amount under this Section shall commence within thirty (30) days of the Participant's Retirement Date and in accordance with the payment method elected by the Participant on his Participation Agreement and Deferral Election Form. 7.2 Disability. If a Participant suffers a Disability while employed with the Corporation and before he is entitled to benefits under this Article, he shall receive the amount credited to his Deferral Account as of the Valuation Date coinciding with the Date on which the Participant is determined by the Committee to have suffered a Disability. Payment of any amount under this Section shall commence within thirty (30) days of when the Committee determines the existence of the Participant's Disability and in accordance with the payment method elected by the Participant on his Participation Agreement and Deferral Election Form. 7.3 Pre-Retirement Survivor Benefit. If a Participant dies before becoming entitled to benefits under this Article, the Beneficiary or Beneficiaries designated under Section 14.6, shall receive in a single lump sum, a Pre-Retirement Survivor Benefit equal to the vested amount credited to the Participant's Deferral Account as of the Valuation Date coinciding with the date of the Participant's death. Payment of any amount under this Section shall be made within thirty (30) days of the Participant's death, or if later, within thirty (30) days of when the Committee receives notification of or otherwise confirms the Participant's death. 7.4 Post-Retirement Survivor Benefit. If a Participant dies after benefits have commenced, but prior to receiving complete payment of benefits under this Article, the Beneficiary or Beneficiaries designated under Section 14.6, shall receive in a single lump sum the vested amount credited to the Participant's Deferral Account as of the Valuation Date coinciding with the date of the Participant's death. Payment of any amount under this Section shall be made within thirty (30) days of the Participant's death, or if later, within thirty (30) days of when the Committee receives notification of or otherwise confirms the Participant's death. 7.5 Termination. If a Participant's employment terminates with the Corporation before he becomes entitled to receive benefits by reason of any of the above Sections, he shall receive in a single lump sum the vested amount credited to his Deferral Account as of the Valuation Date coinciding with the date on which the Participant's employment terminates. Payment of any amount under this Section shall be made within thirty (30) days of when the Participant terminates his employment with the Corporation. 7.6 Change in Control. If a Change in Control occurs before a Participant becomes entitled to receive benefits by reason of any of the above Sections or before the Participant has received complete payment of his benefits under this Article, he shall receive a lump sum payment of the amount credited to his Account as of the Valuation Date immediately preceding the date on which the Change in Control occurs. Payment of any amount II-5 6 under this section shall commence within thirty (30) days of when the Change in Control is deemed to have occurred and is recognized by the Corporation's Board of Directors. For the purposes of this Plan, a Change in Control shall mean a change in control of the Corporation of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), whether or not the Corporation is in fact required to comply therewith; provided, that, without limitation, such a change in control for purposes of this Plan shall be deemed to have occurred if: (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than the Corporation, any trustee or other fiduciary holding securities under an employee benefit plan of the Corporation or a corporation owned, directly or indirectly, by the stockholders of the Corporation in substantially the same proportions as their ownership of stock of the Corporation is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Corporation representing thirty percent (30%) or more of the combined voting power of the Corporation's then outstanding securities; or (ii) during any period of twenty-four (24) consecutive months (not including any period prior to the effective date of this Plan), individuals who at the beginning of such period constitute the Corporation's Board of Directors and any new director (other than a director designated by a person who has entered into an agreement with the Corporation to effect a transaction described in paragraphs (i), (ii) or (iii) of this Section whose election by the Board or nomination for election by the stockholders of the Corporation was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or (iii) the stockholders of the Corporation approve a merger or consolidation of the Corporation with any other corporation, other than (A) a merger or consolidation which would result in the voting securities of the Corporation outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least fifty percent (50%) of the combined voting securities of the Corporation or such surviving entity outstanding immediately after such merger or consolidation or (B) a merger or consolidation effected to implement a recapitalization of the Corporation (or similar transaction) in which no "person" (as hereinabove defined) acquires thirty percent (30%) or more of the combined voting power of the Corporation's then outstanding securities; or (iv) the stockholders of the Corporation approve a plan of complete liquidation of the Corporation or an agreement for the sale or disposition by the Corporation of all or substantially all of the Corporation's assets. 7.7 Payment Methods. Unless otherwise provided in this Article VII, a Participant may elect to receive payment of the vested amount credited to his Deferral Account in a single lump sum or in five (5), or ten (10) annual installments. This election must be made on the Participation Agreement and Deferral Election Form for the corresponding Plan Year. Any installment payments shall be paid annually on the first practicable day after the distributions are scheduled to commence. Each installment payment shall be determined by multiplying the Deferral Account Balance by a fraction, the numerator of which is one and the denominator of which is the number of remaining installment payments. Article VIII In-Service Distributions 8.1 Election of In-Service Distributions. A Participant may irrevocably elect in each Deferral Period, for that particular Deferral Election, to receive in the future an In-Service Distribution from his Deferral Account. Such Deferral Election shall state the percentage and date on which such In-Service distribution is to be paid. Each II-6 7 election shall state the date on which such In-Service Distribution is to be paid; provided that such date is not earlier than five (5) years from January 1st of the Plan Year following the year of said election. For example: The earliest distribution date for the initial Plan Year ending December 31, 1999 would be January 1, 2005. This is calculated using January 1, 2000 as the "January 1st of the Plan Year following" plus five (5). 8.2 Payment of In-Service Distributions. All In-Service Distributions shall be made within thirty (30) days of the date stated on the Participation Agreement and Deferral Election Form. Distributions shall be in the form of a single lump sum payment. 8.3 Termination Prior to In-Service Distribution Date. Notwithstanding a Participant's election of an In-Service Distribution, in the event a Participant's employment terminates for any reason pursuant to Article VII of the Plan Document and prior to such Participant receiving any In-Service Distribution, the Participant shall receive his Deferral Account according to the payment method designated in Article VII or as elected on his Participation Agreement and Deferral Election Form. Article IX Hardship Withdrawals 9.1 Hardship Withdrawals. If a Participant incurs an unforeseeable emergency, the Participant may make a written request to the Committee for a hardship withdrawal from his account. An unforeseeable emergency is a severe financial hardship to the Participant resulting from a sudden and unexpected illness or accident of the Participant or the Participant's dependent (as defined in Section 152(e) of the Code), loss of the Participant's property due to casualty or other similar extraordinary and unforeseen circumstances beyond the control of the Participant. Withdrawals of amounts because of unforeseeable emergencies are only permitted to the extent reasonably necessary to satisfy the emergency need. The Committee will have sole discretion in dealing with and determining hardship cases. This section shall be interpreted in a manner consistent with Sections 1.457-2(h)(4) and 1.457-2(h)(5) of the Treasury Regulations. In the event of a Hardship Withdrawal, the Participant's deferrals for the remainder of the Plan Year shall be suspended. Deferrals may commence with the next following Plan Year provided the Participant completes the appropriate Participation Agreement and Deferral Election form prior to January 1 of the corresponding Plan Year. Article X Establishment of Trust 10.1 Establishment of Trust. The Corporation may establish a Rabbi Trust for the Plan. If established, all benefits payable under this Plan to a Participant shall be paid directly by the Corporation from the Rabbi Trust. To the extent that such benefits are not paid from the Rabbi Trust, the benefits shall be paid from the general assets of the Corporation. Any Rabbi Trust shall be an irrevocable grantor trust which conforms to the terms of the model trust as described in IRS Revenue Procedure 92-64, I.R.B. 1992-33. The assets of the Rabbi Trust are subject to the claims of the Corporation's creditors in the event of its insolvency. Except as to any amounts paid or payable to a Rabbi Trust, the Corporation shall not be obligated to set aside, earmark or escrow any funds or other assets to satisfy its obligations under this Plan, and the Participant and/or his designated Beneficiaries shall not have any property interest in any specific assets of the Corporation other than the unsecured right to receive payments from the Corporation, as provided in this Plan. Article XI Plan Administration 11.1 Plan Administration. The Plan shall be administered by the Committee, and such Committee may designate an agent to perform the recordkeeping duties. The Committee shall construe and interpret the Plan, II-7 8 including disputed and doubtful terms and provisions and, in its sole discretion, decide all questions of eligibility and determine the amount, manner and time of payment of benefits under the Plan. The determinations and interpretations of the Committee shall be consistently and uniformly applied to all Participants and Beneficiaries, including but not limited to interpretations and determinations of amounts due under this Plan, and shall be final and binding on all parties. The Plan at all times shall be interpreted and administered as an unfunded deferred compensation plan, and no provision of the Plan shall be interpreted so as to give any Participant or Beneficiary any right in any asset of the Corporation which is a right greater than the right of a general unsecured creditor of the Corporation. Article XII Nonalienation of Benefits 12.1 Nonalienation of Benefits. The interests of Participants and their Beneficiaries under this Plan are not subject to the claims of their creditors and may not be voluntarily or involuntarily sold, transferred, alienated, assigned, pledged, anticipated, or encumbered, attached or garnished. Any attempt by a Participant, his Beneficiary, or any other individual or entity to sell, transfer, alienate, assign, pledge, anticipate, encumber, attach, garnish, charge or otherwise dispose of any right to benefits payable shall be void. The Corporation may cancel and refuse to pay any portion of a benefit which is sold, transferred, alienated, assigned, pledged, anticipated, encumbered, attached or garnished. The benefits which a Participant may accrue under this Plan are not subject to the terms of any Qualified Domestic Relations Order (as that term is defined in Section 414(p) of the Code) with respect to any Participant, and the Plan Administrator, Board of Directors, employees, Committee and Corporation shall not be required to comply with the terms of such order in connection with this Plan. The withholding of taxes from Plan payments, the recovery of Plan overpayments of benefits made to a Participant or Beneficiary, the transfer of Plan benefit rights from the Plan to another plan, or the direct deposit of Plan Payments to an account in a financial institution (if not actually a part of an arrangement constituting an assignment or alienation) shall not be construed as assignment or alienation under this Article XII. Article XIII Amendment and Termination 13.1 Amendment and Termination. The Corporation reserves the right to amend, alter or discontinue this Plan at any time. Such action may be taken in writing by any officer of the Corporation who has been duly authorized by the Corporation to perform acts of such kind. However, no such amendment shall deprive any Participant or Beneficiary of any portion of any benefit which would have been payable had the Participant's employment with the Corporation terminated on the effective date of such amendment or termination. Notwithstanding the provisions of this Article XIII to the contrary, the Corporation may amend the Plan at any time, in any manner, if the Corporation determines any such amendment is required to ensure that the Plan is characterized as providing deferred compensation for a select group of management or highly compensated employees and as described in ERISA Sections 201(2), 301(a)(3) and 401(a)(1) or to otherwise conform the Plan to the provisions of any applicable law including, but not limited to, ERISA and the Code. Article XIV General Provisions 14.1 Good Faith Payment. Any payment made in good faith in accordance with provisions of the Plan shall be a complete discharge of any liability for the making of such payment under the provisions of this Plan. 14.2 No Right to Employment. This Plan does not constitute a contract of employment, and participation in II-8 9 the Plan shall not give any Participant the right to be retained in the employment of the Corporation. 14.3 Binding Effect. The provisions of this Plan shall be binding upon the Corporation and its successors and assigns and upon every Participant and his/her heirs, Beneficiaries, estates and legal representatives. 14.4 Participant Change of Address. Each Participant entitled to benefits shall file with the Plan Administrator, in writing, any change of post office address. Any check representing payment and any communication addressed to a Participant or a former Participant at this last address filed with the Plan Administrator, or if no such address has been filed, then at his last address as indicated on the Corporation's records, shall be binding on such Participant for all purposes of the Plan, and neither the Plan Administrator, the Corporation nor any other payer shall be obliged to search for or ascertain the location of any such Participant. If the Plan Administrator is in doubt as to the address of any Participant entitled to benefits or as to whether benefit payments are being received by a Participant, it shall, by registered mail addressed to such Participant at his last known address, notify such Participant that: (i) All unmailed and future Plan payments shall be withheld until Participant provides the Plan Administrator with evidence of such Participant's continued life and proper mailing address; and (ii) Participant's right to any Plan payment shall, at the option of the Committee, be canceled forever, if, at the expiration of five (5) years from the date of such mailing, such Participant or his Beneficiary shall not have provided the Committee with evidence of his continued life and proper mailing address. 14.5 Notices. Each Participant shall furnish to the Plan Administrator any information the Plan Administrator deems necessary for purposes of administering the Plan, and the payment provisions of the Plan are conditional upon the Participant furnishing promptly such true and complete information as the Plan Administrator may request. Each Participant shall submit proof of his age when required by the Plan Administrator. The Plan Administrator shall, if such proof of age is not submitted as required, use such information as is deemed by it to be reliable, regardless of the lack of proof, or the misstatement of the age of individuals entitled to benefits. Any notice or information which, according to the terms of the Plan or requirements of the Plan Administrator, must be filed with the Plan Administrator, shall be deemed so filed if addressed and either delivered in person or mailed to and received by the Plan Administrator, in care of the Corporation currently located at: Enterbank Holdings, Inc. Attn: Chief Financial Officer 150 North Meramec Clayton, MO 63105 14.6 Designation of Beneficiary. Each Participant shall designate, by name, on Beneficiary designation forms provided by the Plan Administrator, the Beneficiary(ies) who shall receive any benefits which might be payable after such Participant's death. A Beneficiary designation may be changed or revoked without such Beneficiary's consent at any time or from time to time in the manner as provided by the Plan Administrator, and the Plan Administrator shall have no duty to notify any individual or entity designated as a Beneficiary of any change in such designation which might affect such individual or entity's present or future rights. If the designated Beneficiary does not survive the Participant, all amounts which would have been paid to such deceased Beneficiary shall be paid to any remaining Beneficiary in that class of beneficiaries, unless the Participant has designated that such amounts go to the lineal descendants of the deceased Beneficiary. If none of the designated primary Beneficiaries survive the Participant, and the Participant did not designate that payments would be payable to such Beneficiary's lineal descendants, amounts otherwise payable to such Beneficiaries shall be paid to any successor Beneficiaries designated by the Participant, or if none, to the Participant's spouse, or, if the Participant was not married at the time of death, the Participant's estate. II-9 10 No Participant shall designate more than five (5) simultaneous Beneficiaries, and if more than one (1) Beneficiary is named, Participant shall designate the share to be received by each Beneficiary. Despite the limitation on five (5) Beneficiaries, a Participant may designate more than five (5) Beneficiaries provided such beneficiaries are the surviving spouse and children of the Participant. If a Participant designates alternative, successor, or contingent Beneficiaries, such Participant shall specify the shares, terms and conditions upon which amounts shall be paid to such multiple, alternative, successor or contingent beneficiaries. Any payment made under this Plan after the death of a Participant shall be made only to the Beneficiary or Beneficiaries designated pursuant to this Section. 14.7 Claims. Any claim for benefits must initially be submitted in writing to the Plan Administrator. If such claim is denied (in whole or in part), the claimant shall receive notice from the Plan Administrator, in writing, setting forth the specific reasons for denial, with specific reference to applicable provisions of this Plan. Such notice shall be provided within ninety (90) days of the date the claim for benefits is received by the Plan Administrator, unless special circumstances require an extension of time for processing the claim, in which event notification of the extension shall be provided to the claimant prior to the expiration of the initial 90 day period. The extension notification shall indicate the special circumstances requiring the extension of time and the date by which the Plan Administrator expects to render its decision. Any such extension shall not exceed 90 days. Any disagreements about such interpretations and construction may be appealed in writing by the claimant within sixty (60) days to the Plan Administrator. The Plan Administrator shall respond to such appeal within sixty (60) days, with a notice in writing fully disclosing its decision and its reasons, unless special circumstances require an extension of time for reviewing the claim, in which event notification of the extension shall be provided to the claimant prior to the expiration of the initial sixty (60) day period. Any such extension shall be provided to the claimant prior to the commencement of the extension. Any such extension shall not exceed 60 days. No member of the Board of Directors, or any committee thereof, shall be liable to any individual or entity for any action taken hereunder, except those actions undertaken with lack of good faith. 14.8 Action by Board of Directors. Any action required to be taken by the Board of Directors of the Corporation pursuant to the Plan provisions may be performed by a committee of the Board, to which the Board of Directors of the Corporation delegates the authority to take actions of that kind. 14.9 Governing Law. To the extent not superseded by the laws of the United States, the laws of the State of Missouri shall be controlling in all matters relating to this Plan. 14.10 Severability. In the event any provision of this Plan shall be held illegal or invalid for any reason, such illegality or invalidity shall not affect the remaining provisions of the Plan, and the Plan shall be interpreted and enforced as if such illegal and invalid provisions had never been set forth. IT WITNESS WHEREOF, ENTERBANK HOLDINGS, INC. has adopted the foregoing instrument effective as of December 20, 1999. ENTERBANK HOLDINGS, INC. By: Title: ATTEST: II-10 11 ENTERBANK HOLDINGS, INC. DEFERRED COMPENSATION PLAN I PARTICIPATION AGREEMENT AND DEFERRAL ELECTION FORM Participant Name: _____________________________________________________________ Participant Address: __________________________________________________________ Social Security Number: ___________________ Date of Birth: __________________ ________________________________________________________________________________ PART I - PARTICIPATION AGREEMENT Enterbank Holdings, Inc. (the "Company") has established the Enterbank Holdings, Inc. Deferred Compensation Plan I (the "Plan") effective, December 20, 1999. You have been selected for Plan participation. Your consent to participate in the Plan and your election to defer your compensation under the Plan is evidenced by your signature on the last page of this Form. Unless otherwise defined in this Form, a capitalized term has the same meaning as that provided in the Plan. A copy of the Plan is attached to this Form. Please read the Plan and keep it for your future reference. If you have questions about the Plan, please contact Jim Wagner at (314) 725-5500. For the Plan Year beginning January 1, 2000 and ending December 31, 2000, your completed Form must be received by the Company prior to December 23, 1999. In future years, your completed Form must be received by the Company prior to December 15 of the preceding year. Your compensation deferral election will apply to your annual compensation for services rendered for the Company after execution of the Deferral Election Form. After any Plan Year has begun, your deferral election for that year cannot be modified. Nonetheless, you may prospectively terminate your deferral election at any time during the Plan Year; however, you may not begin deferring again until the following Plan Year. In order to participate, your total deferral of salary and bonus combined must be no less than $2,400 in a calendar year. Your deferral contributions are not subject to federal or state income tax until distributed from the Plan; however, they are subject to Social Security taxes at the time services are rendered. Such amounts will not again be subject to Social Security taxes at the time of distribution. The Company will deduct from your remaining compensation, which is not deferred into the Plan, your Social Security tax liability for your deferral contributions. ________________________________________________________________________________ PART II - DEFERRAL ELECTION (complete before the beginning of the plan year) A. 2000 SALARY Please note the percentage/dollar amount indicated will be deducted from each paycheck during the Plan Year. (Please select one) [ ] I elect to defer ____________% (up to 25%) from my salary or $________ from each bimonthly paycheck. [ ] I elect NO deferral of salary. Note: You cannot change the deferral level during the plan year for which your election applies. II-11 12 PART III - DEFERRAL ELECTION A. 1999 BONUS (Please select one) [ ] I elect to defer _______________ dollars ($_______________) of my bonus. [ ] I elect to defer _______________ percent (_______________%) of my bonus. [ ] I elect to defer the first _______________ dollars ($_______________) of my bonus and _______________ percent (_______________%) of my remaining bonus, if any. [ ] I elect to defer _______________ percent (_______________%) of the first _______________ dollars ($_______________) of my bonus. [ ] I elect to defer _______________ percent (_______________%) of any bonus in excess of _______________ dollars ($)_____________. [ ] I elect NO deferral of bonus.
________________________________________________________________________________ B. 2000 BONUS (complete before the beginning of the plan year) (Please select one) [ ] I elect to defer _______________ dollars ($_______________) of my bonus. [ ] I elect to defer _______________ percent (_______________%) of my bonus. [ ] I elect to defer the first _______________ dollars ($_______________) of my bonus and _______________ percent (_______________%) of my remaining bonus, if any. [ ] I elect to defer _______________ percent (_______________%) of the first _______________ dollars ($_______________) of my bonus. [ ] I elect to defer _______________ percent (_______________%) of any bonus in excess of _______________ dollars ($)______________. [ ] I elect NO deferral of bonus.
________________________________________________________________________________ PART IV - SELECTION OF INVESTMENTS MUST BE IN MULTIPLES OF 5%, AND THE TOTAL MUST EQUAL 100%. I hereby request to have my Deferral Account valued as though invested as follows: _____ Money Market _____ International _____ S&P Index _____ Growth & Income _____ Bond _____ Small Cap 100% II-12 13 ________________________________________________________________________________ PART V - SELECTION OF RETIREMENT OR DISABILITY PAYMENT METHOD I elect to receive my account balance upon Retirement or Disability in the following method: [ ] Lump sum payment* [ ] Five annual payments* [ ] Ten annual payments
* If your state has enacted a Source Tax law, your distribution could be subject to double state income taxation if a distribution payout of less than ten years is selected. Please consult your tax advisor if you require additional information. ________________________________________________________________________________ PART VI - IN-SERVICE DISTRIBUTION A. ELECTION (Please select one) [ ] I elect to receive an In-Service Distribution of _________ % of my 1999 Bonus Deferral Account. I request that the In-Service Distribution be paid to me ___________________________ (insert a month, day and year.) Your In-Service Distribution is payable in a Lump Sum and may not occur prior to January 1, 2005. B. ELECTION (Please select one) [ ] I elect to receive an In-Service Distribution of _________ % of my 2000 Salary Deferral Account. I request that the In-Service Distribution be paid to me ___________________________ (insert a month, day and year.) [ ] I elect to receive an In-Service Distribution of _________ % of my 2000 Bonus Deferral Account. I request that the In-Service Distribution be paid to me ___________________________ (insert a month, day and year.) Your In-Service Distribution is payable in a Lump Sum and may not occur prior to January 1, 2006. ________________________________________________________________________________ PART VII - PRIMARY BENEFICIARY DESIGNATION(S) [ ] In equal shares (do not complete percentages) [ ] In unequal shares (indicate percentages)
Beneficiary Name: ________________________________________________ Address: _____________________________________________________________ Social Security Number:_______________________ Percentage: _______________ Relationship to Participant:_____________________________ (e.g., spouse) II-13 14 Beneficiary Name: ________________________________________________ Address: _____________________________________________________________ Social Security Number:_______________________ Percentage: _______________ Relationship to Participant:_____________________________ (e.g., spouse) Beneficiary Name: ________________________________________________ Address: _____________________________________________________________ Social Security Number:_______________________ Percentage: _______________ Relationship to Participant:_____________________________ (e.g., spouse) ________________________________________________________________________________ PART VIII - CONTINGENT BENEFICIARY [ ] In equal shares (do not complete percentages) [ ] In unequal shares (indicate percentages)
Beneficiary Name: ________________________________________________ Address: _____________________________________________________________ Social Security Number:_______________________ Percentage: _______________ Relationship to Participant:_____________________________ (e.g., spouse) Beneficiary Name: ________________________________________________ Address: _____________________________________________________________ Social Security Number:_______________________ Percentage: _______________ Relationship to Participant:_____________________________ (e.g., spouse) Beneficiary Name: ________________________________________________ Address: _____________________________________________________________ Social Security Number:_______________________ Percentage: ______________ Relationship to Participant:_____________________________ (e.g., spouse) [ ] I want my designated beneficiaries to receive survivor benefits in a lump sum [ ] I want my beneficiaries to receive survivor benefits in the payment stream as I have elected NOTE: If one of your designated Primary Beneficiaries does not survive you, his/her share of your benefits will be distributed proportionately to the remaining Primary Beneficiaries unless you designate that you want that person's share distributed to his/her lineal descendants (i.e., children, grandchildren). You may do this by putting LDPS (Lineal Descendants Per Stirpes) after the name of the Beneficiary. Contingent Beneficiaries may be treated in the same manner. I have read and understand the terms of the attached Plan. I understand that I have the opportunity for my legal counsel to review this Plan before my execution. Finally, I understand that this Plan is not subject to ERISA. ________________________________ ____________________________________ SIGNATURE OF PARTICIPANT SIGNATURE OF OFFICER OF COMPANY ____________________________________ TITLE II-14 EX-11.1 3 STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS 1 EXHIBIT 11.1 STATEMENT REGARDING CALCULATION OF EARNINGS PER SHARE(1)
Basic Diluted EPS number EPS number Net Basic Diluted of shares of shares Income EPS EPS --------------------------------------------------------------- THREE MONTHS ENDED MARCH 31, 1999 7,122,312 7,611,268 $ 737,783 $ 0.10 $ 0.10 THREE MONTHS ENDED MARCH 31, 2000 7,152,241 7,773,274 $ 847,163 $ 0.12 $ 0.11 THREE MONTHS ENDED MARCH 31, 1999 Basic Diluted --------- --------- Average Shares Outstanding 7,122,312 7,122,312 Options - Plan 1 45,057 Average Option Price $ 2.26 Total Exercise Cost $ 101,979 Shares Repurchased 9,246 Net Shares from Option - Plan 1 35,811 Options - Plan 2 219,000 Average Option Price $ 2.55 Total Exercise Cost $ 557,720 Shares Repurchased 50,564 Net Shares from Option - Plan 2 168,436 Options - Plan 3 552,951 Average Option Price $ 5.57 Total Exercise Cost $3,079,937 Shares Repurchased 279,233 Net Shares from Option - Plan 3 273,718 Options - EFA Non-qualified 83,832 Average Option Price $ 10.06 Total Exercise Cost $ 843,350 Shares Repurchased 76,460 Net Shares from Option - EFA Non-qualified 7,372 Options - Moneta(2) 38,745 Average Option Price $ 10.00 Total Exercise Cost $ 387,450 Shares Repurchased 35,127 Net Shares from Option - Moneta(2) 3,618 --------- --------- Gross Shares 7,122,312 7,611,268 Price $ 11.03 THREE MONTHS ENDED MARCH 31, 2000 Basic Diluted --------- --------- Average Shares Outstanding 7,152,241 7,152,241 Options - Plan 1 30,000 Average Option Price $ 2.33 Total Exercise Cost $ 69,900 Shares Repurchased 3,879 Net Shares from Option - Plan 1 26,121 Options - Plan 2 211,035 Average Option Price $ 2.55 Total Exercise Cost $ 538,139 Shares Repurchased 29,863 Net Shares from Option - Plan 2 181,172 Options - Plan 3 552,685 Average Option Price $ 5.74 Total Exercise Cost $3,172,412 Shares Repurchased 176,049 Net Shares from Option - Plan 3 376,636 Options - EFA Non-qualified 84,000 Average Option Price $ 10.06 Total Exercise Cost $ 845,040 Shares Repurchased 46,895 Net Shares from Option - EFA Non-qualified 37,105 --------- --------- Gross Shares 7,152,241 7,773,274 Price $ 18.02
- --------------------------- (1) Adjusted to give retroactive effect to a 3-for-1 stock split effective September 29, 1999. (2) As of March 31, 1999 Moneta options were dilutive for the earnings per share calculation. As of March 31, 2000 Moneta options were considered to be anti-dilutive for the earnings per share calculation, therefore these shares have been excluded from the calculation. II-15 EX-27.1 4 FINANCIAL DATA SCHEDULE
9 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 18,371,993 8,025 44,725,000 0 33,047,600 526,752 523,384 394,711,848 4,382,000 500,354,950 446,916,974 0 1,924,578 17,910,028 0 0 71,630 33,531,740 500,354,950 8,956,835 425,178 684,722 10,066,735 4,643,557 4,996,096 5,070,639 145,436 500 3,986,511 1,376,513 1,376,513 0 0 847,163 0.12 0.11 8.63 0 0 0 1,874,894 4,235,000 0 2,000 4,382,000 4,176,000 0 206,000
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