RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2012

Related Party Transactions [Abstract]

Related Party Transactions Disclosure [Text Block]

NOTE 16 - RELATED PARTY TRANSACTIONS

Loans to principal officers, directors, and their affiliates as of December 31, 2012 and 2011 were as follows:

	2012			2011
	(in thousands)
Beginning balance	$	98,853		$	36,013
New loans and advances		88,072			77,856
Effect of changes in related parties		6,874			49,315
Repayments and renewals		(105,991	)		(64,331	)
Ending balance	$	87,808		$	98,853

Deposits from principal officers, directors, and their affiliates at year-end 2012 were $6.5 million plus an additional $8.3 million included in securities sold under agreements to repurchase. Deposits from principal officers, directors, and their affiliates at year-end 2011 were $3.7 million plus an additional $8.1 million included in securities sold under agreements to repurchase. In addition, the amount owed directors for fees under the deferred directors’ fee plan as of December 31, 2012 and 2011 was $1.8 million and $1.4 million. The related expense for the deferred directors’ plan as of December 31, 2012, 2011 and 2010 was $480,000, $394,000 and $263,000.

The Bank entered into a Lease Agreement with Michigan Street, LLC for retail branch and office space in South Bend, Indiana in June 2011. In October 2011, Bradley Toothaker, a one-third owner of Michigan Street, LLC, joined the Board of Directors of both of the Company and the Bank. The initial term of the lease is for a period of 20 years, with two consecutive five year renewal terms. Under the original lease, the monthly rent for the leased space of approximately 4,450 square feet is $6,304.16 for the first five years, and will increase by 7.5% every five years. In addition, the Bank is required to pay its proportionate share of common area maintenance fees for the building, presently expected to be approximately $2,600 per month.

The Lease Agreement was negotiated by the Bank’s management on an arms-length basis since Mr. Toothaker had not yet become a director at the time of the lease signing. Management believes that the terms of the lease are reasonable and consistent with the customary terms of the local market.

Effective January 1, 2012, the parties amended the terms of the lease to reflect additional square footage to be used by the Bank in the building. Based on the addition of approximately 550 square feet, the monthly rent for the leased space increased to $7,002. This amendment was ratified by the Bank’s board of directors in February 2012.