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EX-23 - EX-23 - DEARBORN BANCORP INC /MI/ | k50208exv23.htm |
EX-13 - EX-13 - DEARBORN BANCORP INC /MI/ | k50208exv13.htm |
EX-21 - EX-21 - DEARBORN BANCORP INC /MI/ | k50208exv21.htm |
EX-31.2 - EX-31.2 - DEARBORN BANCORP INC /MI/ | k50208exv31w2.htm |
EX-31.1 - EX-31.1 - DEARBORN BANCORP INC /MI/ | k50208exv31w1.htm |
EX-32.2 - EX-32.2 - DEARBORN BANCORP INC /MI/ | k50208exv32w2.htm |
EX-32.1 - EX-32.1 - DEARBORN BANCORP INC /MI/ | k50208exv32w1.htm |
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
þ | Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
for the fiscal year ended December 31, 2010
|
or
o | 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 000-24478. |
DEARBORN BANCORP, INC.
(Exact name of registrant as specified in its charter)
Michigan | 38-3073622 | |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. employer identification no.) |
1360 Porter Street, Dearborn, MI | 48124 | |
(Address of principal executive office) | (Zip code) |
(313) 565-5700
(Registrants telephone number, including area code)
Securities registered pursuant to section 12(b) of the Act:
Title of each class | Name of each exchange on which registered |
|
Common Stock | The Nasdaq Stock Market, LLC |
Securities registered pursuant to section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of
the Securities Act.
Yes o No þ
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or
15(d) of the Act.
Yes o No þ
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 þ No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is
not contained herein, and will not be contained, to the best of registrants knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this Form 10-K
or any amendment to the Form 10-K. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer or a small reporting company. See definition of accelerated filer and large
accelerated filer in Rule 12b-2 of the Exchange Act
Large accelerated filer o | Accelerated filer o | Non-accelerated filer o (Do not check if a smaller reporting company) | Small reporting company þ |
Indicate by check mark if the registrant is a shell company, as defined in Rule 12b-2 of the
Exchange Act.
Yes o No þ
The aggregate market value of the common equity held by non-affiliates of the registrant computed
by reference to the average bid and asked price of such common equity, as of the last business day
of the registrants most recently completed second quarter, was approximately $12,128,070.
As of March 18, 2011, 7,685,706 shares of common stock of the registrant were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the 2010 Annual Report to Stockholders of the Registrant are incorporated in Parts I,
II and IV of this report. Portions of the definitive Proxy Statement of the Registrant dated April
15, 2011, to be filed pursuant to Regulation 14A, are incorporated by reference in Part III of this
report.
TABLE OF CONTENTS
PART I |
3 | |||
Item 1. |
Business | 3 | ||
Item 1A. |
Risk Factors | 16 | ||
Item 1B. |
Unresolved Staff Comments | 20 | ||
Item 2. |
Properties | 21 | ||
Item 3. |
Legal Proceedings | 22 | ||
Item 4. |
Reserved | 22 | ||
PART II |
22 | |||
Item 5. |
Market for Registrants Common Equity, and Related Stockholder Matters | 22 | ||
Item 6. |
Selected Financial Data | 22 | ||
Item 7 |
Managements Discussion and Analysis of Financial Condition and Results of Operations. | 22 | ||
Item 7A. |
Quantitative and Qualitative Disclosure about Market Risk. | 22 | ||
Item 8. |
Financial Statements and Supplementary Data | 22 | ||
Items 9. |
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. | 22 | ||
Item 9A. |
Controls and Procedures | 22 | ||
Item 9B. |
Other Information | 23 | ||
PART III |
23 | |||
Item 10. |
Directors and Executive Officers of the Registrant | 23 | ||
Item 11. |
Executive Compensation | 23 | ||
Item 12. |
Security Ownership of Certain Beneficial Owners and Management | 23 | ||
Item 13. |
Certain Relationships and Related Transactions | 24 | ||
Item 14. |
Principal Accountant Fees and Services | 24 | ||
PART IV |
24 | |||
Item 15. |
Exhibits, Financial Statement Schedules and Reports on Form 8-K | 24 | ||
Form 10-K Signatures | 27 | |||
Exhibit Index | 28 | |||
2010 Annual Report to Stockholders | ||||
Subsidiaries of the Registrant | ||||
Consent of Independent Registered Public Accounting Firm | ||||
Rule 13a-14(a) CEO Certification | ||||
Rule 13a-14(a) CFO Certification | ||||
CEO Certification Pursuant to Section 906 | ||||
CFO Certification Pursuant to Section 906 |
2
DEARBORN BANCORP, INC.
FORM 10-K
FORM 10-K
PART I
Forward Looking Statements
The following discussion contains forward-looking statements that are based on managements
beliefs, assumptions, current expectations, estimates and projections about the financial services
industry, the economy, and about the Corporation and Bank. Words such as anticipates,
believes, estimates, expects, forecasts, intends, is likely, plans, projects,
variations of such words and similar expressions are intended to identify such forward- looking
statements. These statements are not guarantees of future performance and involve certain risks,
uncertainties and assumptions (Future Factors) that are difficult to predict with regard to
timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may
materially differ from what may be expressed or forecasted in such forward-looking statements. The
Corporation undertakes no obligation to update, amend or clarify forward-looking statements,
whether as a result of new information, future events (whether anticipated or unanticipated), or
otherwise.
Future Factors include changes in interest rates and interest rate relationships; demand for
products and services; the degree of competition by traditional and non-traditional competitors;
changes in banking regulation; changes in tax laws; changes in prices, levies and assessments; the
impact of technological advances; governmental and regulatory policy changes; the outcomes of
contingencies; trends in customer behavior as well as their ability to repay loans; and changes in
the national and local economy. These are representative of the Future Factors that could cause a
difference between an ultimate actual outcome and a preceding forward-looking statement.
Item 1. Business
Dearborn Bancorp, Inc. (the Corporation), a Michigan corporation, is a bank holding
corporation owning all the common stock of Fidelity Bank (the Bank) , a Michigan banking
corporation which commenced business on February 28, 1994. Fidelity Bank was previously known as
the Community Bank of Dearborn. The Bank is the only commercial bank headquartered in Dearborn,
Michigan and conducts business primarily in Wayne, Macomb, Oakland and Washtenaw Counties,
Michigan.
Background
The liberalization of Michigans branch banking laws, together with the expansion of
interstate banking, has led to substantial consolidation of the banking industry in Michigan,
including within the county in which the Bank has its executive offices. In the past, several of
the financial institutions within the primary market area of the Bank have either been acquired by
or merged with larger financial institutions or out-of-state financial institutions. In some
cases, when these consolidations occurred, local boards of directors were dissolved and local
management relocated or in some cases terminated and has, in some cases, resulted in policy and
credit decisions being centralized away from local management.
In the opinion of the Corporations management, this situation has created a favorable
opportunity for a local commercial bank with local management and directors. Management of the
Corporation believes that such a bank attracts those customers who wish to conduct business with a
locally managed institution that demonstrates an active interest in their business and personal
financial affairs. The Corporation believes that a locally managed institution, in many cases,
will be able to deliver more timely responses to customer requests, provide customized financial
products and services and offer customers the personal attention of the Banks senior banking
officers. The Bank seeks to take advantage of this opportunity by emphasizing in its marketing
plan the Banks local management and the Banks ties and commitment to its market area.
The Corporation was incorporated as a Michigan business corporation on September 30, 1992.
The Corporation was formed to acquire all of the Banks issued and outstanding stock and to engage
in the business of a bank holding corporation under the Bank Holding Company Act of 1956, as
amended (the Act).
3
The executive offices of the Corporation and the Bank are located at 1360 Porter Street,
Dearborn, Michigan 48124, telephone number (313) 565-5700. The Banks the website address is
www.fidbank.com. The investor relations page of the website can be directly accessed at
www.dearbornbancorp.com.
Business of the Corporation
The primary purpose of the Corporation is the ownership of the Bank. In the future, the
Corporation may form or acquire other subsidiaries as permitted under the Act and the regulations
of the Federal Reserve.
Business of the Bank
Principal operations of the Bank commenced on February 28, 1994 when the Bank opened for
business at its main office, located at 22290 Michigan Avenue, Dearborn, Michigan. The Bank,
through its main office, branch offices and regional lending centers, emphasizes and offers highly
personalized service to its customers. A listing of office locations is set forth under the
caption Fidelity Bank Locations in the 2010 Annual Report to Stockholders and is incorporated
herein by reference.
On January 4, 2007, the Corporation acquired Fidelity Financial Corporation of Michigan
(Fidelity), a commercial bank with seven offices in Oakland County, Michigan. The acquisition
significantly expands the Banks presence in Oakland County, Michigan. Management believes that
the acquisition has been beneficial to the Banks customers and the Corporations shareholders.
The customer service officers are well-trained, experienced bank officers who fill the needs
of the customers and handle the requests of their customers in a professional manner. The
management of the Corporation and the Bank believe that it is important to the success of the
Banks strategy to create long-term relationships between customers and Bank employees. The Banks
senior management holds regular staff information meetings so that all employees are given
information regarding the Banks plans and objectives, and employees are offered the opportunity to
make suggestions to improve the Banks performance. The management of the Bank believes that this
approach creates a commitment by all employees to the Banks success.
The Bank offers a wide range of financial products and services. These include checking
accounts, savings accounts, money market accounts, certificates of deposit, business checking,
direct deposit, loan services (commercial, consumer, real estate mortgages), travelers checks,
cashiers checks, wire transfers, safety deposit boxes, online banking, telephone banking,
collection services, and night depository services. The Bank offers check imaging options
including statements on CD ROM and online banking services to its customers.. The Bank does not
have a trust department.
On August 19, 1997, the Bank purchased a shell insurance agency and renamed the agency
Community Bank Insurance Agency, Inc. Community Bank Insurance Agencys primary functions are to
act as the sales agent for the Corporations own insurance policies and to hold a minority interest
in MBT Title Services, LLC, a title insurance company, which allows the Bank to offer title
insurance to its customers.
On March 26, 2002, the Bank formed Community Bank Audit Services, Inc., a company that
provides internal audit and compliance consulting to other small community banks.
4
Business Strategy
Maintain High Quality Operations. Since commencing operations, excellent customer service and
strong underwriting of potential borrowers has been emphasized. We will continue to emphasize high
asset quality and offer superior customer service. We will focus on improving loan quality by
utilizing commercial lenders and loan workout professionals to manage our loan portfolio. We
believe that the demographics and growth characteristics within the communities we serve should
also provide significant opportunities for us to improve our loan and deposit relationships at our
existing offices.
Emphasize Relationship Banking. We strive to maintain a strong commitment to relationship
banking. Our goal is to attract small to medium-sized businesses, as well as individuals as
customers who wish to conduct business with a local commercial bank that demonstrates an active
interest in their business and personal affairs. We are becoming increasingly sophisticated in our
ability to analyze our customer relationships, which increases our ability to recognize the
opportunity to offer additional products and services that will expand each relationship. We
believe our ability to deliver products and services in a highly personalized manner helps
differentiate us from larger, regional banks operating in our market area.
Maintain Strong Level of Capital. A Banks level of capitalization is a primary factor in the
level of the regulatory pressures faced by financial institutions. We should maintain sufficient
levels of capital to be categorized as Well-Capitalized. When capital levels fall below this
level due to business conditions, management will take actions necessary to improve capital levels.
Maintenance of the level of capital required to be categorized as well-capitalized provides
management with the flexibility to take advantage of business opportunities, reduces the cost of
FDIC deposit insurance and limits regulatory restrictions.
Hire Experienced, Local Bankers. Our strategy has revolved around the hiring of experienced,
local banking professionals and relationship managers to run our offices, call on customers and
originate loans and deposits. We encourage our employees to be active in community affairs and
business, trade and service organizations. Our senior loan officers have an average of over 20
years of experience in the financial services industry and have operated in our market area through
a wide range of economic cycles and lending market conditions. We believe that the recruitment of
banking professionals with significant experience in, and knowledge of, our markets facilitates our
growth and partially mitigates the credit risk associated with our loan portfolio.
Capitalize on Consolidation in Our Market. Several of the financial institutions within our
market area have either been acquired by, or merged with, larger or out-of-state financial
institutions. These acquisitions have included: Royal Bank of Scotland Group, Plcs acquisition of
Charter One Financial, Inc., J.P. Morgan Chase & Co.s acquisition of Bank One Corporation, Fifth
Third Bancorps acquisition of Old Kent Financial Corporation and Bank of Americas acquisition of
Lasalle Bank. In some cases, when these consolidations occurred, the ensuing employee and customer
disruptions created opportunities for us to attract experienced personnel and establish
relationships with customers wishing to conduct business with a locally-managed institution with
strong ties to the community. We have positioned ourselves to capitalize on business opportunities
that may result from customer dislocation associated with these and future consolidations.
Control Our Operating Costs. Our practice of employing fewer, but highly qualified and
productive individuals at all levels of the organization is key to maintaining a decentralized
management structure. These individuals are able to manage large loan portfolios, which increases
interest income while controlling personnel costs. Additionally, we continue to enhance our
operating procedures and in 2004 we opened an operations center in Allen Park, Michigan that
consolidated many of our administrative and support functions. This facility houses our data
processing, accounting, auditing, compliance and customer support activities.
Focus on Commercial Real Estate Lending. While we offer a full range of consumer and
commercial loan products, our primary lending focus will continue to be providing local businesses
with loans secured by owner-occupied real estate. Typically, we seek commercial real estate lending
relationships with customers borrowing from $500,000 to $4 million. Although our legal lending
limit was approximately $9 million as of December 31, 2010, our Board of Directors has set our
current in-house lending limit at $6 million. Our in-house limit accommodates the vast majority of
lending opportunities we encounter. If local businesses have credit needs beyond the scope of our
in-house lending capacity, we may participate out a portion of the credit with other financial
institutions in order to accommodate our customers needs. As of December 31, 2010, commercial real
estate loans comprised 75% of our loan portfolio.
5
Market Area
Our current market area includes Wayne, Oakland, Macomb and Washtenaw Counties, which are all
located in southeastern Michigan. We currently have offices in the following communities: Ann
Arbor, Auburn Hills, Bingham Farms, Birmingham, Bloomfield Township, Canton Township, Clinton
Township, Dearborn, Dearborn Heights, Plymouth Township, Saline, Shelby Township, Southfield and
Southgate, Michigan. Our market area has a diverse economy based primarily on manufacturing,
retail and service businesses and contains the headquarters for twenty-three Fortune 500 companies.
According to 2000 U.S. Census Data, the populations of Wayne (excluding the City of Detroit),
Oakland, Macomb and Washtenaw Counties totaled 3,414,967, while median household incomes for such
counties were $50,848, $69,794, $58,598 and $59,069, respectively.
Our market area represents a significant banking market in the State of Michigan. According to
the FDIC, total deposits in Wayne (excluding the City of Detroit), Macomb, Washtenaw, and Oakland
Counties, including those of banks and thrifts, were approximately $72.7 billion as of June 30,
2010, which accounted for approximately 46.7% of the total deposit market share in the State of
Michigan and has increased approximately 44.0% from $50.5 billion in deposits as of June 30, 2000.
Marketing Plan
The Banks marketing plan emphasizes direct sales calls by Bank officers and branch managers
and specific telemarketing programs involving branch personnel. The marketing plan also focuses on
the concepts of corporate citizenship and personal interaction within the communities the Bank
serves through promotion of, and active participation in a number of civic organizations and
ongoing community activities. Management believes that these efforts establish the identity and
philosophy of the Bank within the communities it serves and allows bank officers and employees to
personally interact with local business leaders and members of the public.
The Bank has two primary target markets: personal banking services, with an emphasis on
individual deposit accounts and single-family residential lending; and business banking services,
with an emphasis on deposit and loan products designed for small- to medium-sized businesses.
Community Club. At inception, the Bank established a Community Club which has become an
important marketing initiative to increase the Banks total deposits. The Community Club is
targeted at individuals 50 years of age or older. As of December 31, 2010, the Community Club had
over 6,700 members who accounted for total deposits of $597.6 million, or 73% of the Banks total
deposits.
Among other things, membership in the Community Club entitles the customer to increased
personal attention and service by Bank staff. The Bank also hosts local community events and
educational seminars which have been well-received by the Community Club members. Management
believes that the success of the Community Club and the Banks continued efforts to expand the
benefits of the program will foster an increase in the number of Community Club members and deposit
accounts.
6
Business Financial Services. The Banks business marketing efforts are directed by senior
management, including Michael J. Ross, Warren R. Musson and Jeffrey J. Wolber. Lee Freeland as
Vice President of Sales Administration is responsible for administering and coordinating the retail
business development efforts of the Bank.
The Bank has developed a one-on-one marketing approach for existing and prospective customers
alike. Utilizing the Banks database, existing clients are identified to determine their current
banking products, services provided, and for additional cross selling opportunities to enhance the
account relationship. With the calling efforts of our branch managers, business development and
lending officers, bank personnel conduct on-site client interviews with the responsibility of
creating new business opportunities for the Bank.
In addition to its marketing program, the Banks officers maintain contact with existing
customers, local attorneys, accountants and other representatives in the local community that may
be in a position to refer business to the Bank. The Bank also encourages and supports its officers
and employees to join and participate in various community organizations and events.
Through their many years of business and community leadership, each of the Corporations
Directors has been, and will continue to be, a strong source of referrals for the Bank.
Consumer Financial Services. The Bank originates residential real estate loans primarily
through its retail branch facilities. Branch managers and mortgage loan originators develop new
residential mortgage applications from several sources including real estate brokers, insurance
agents, accountants, attorneys, existing residential mortgage customers and other customers of the
Bank. An extensive telemarketing effort generates potential customers as a result of these
contacts.
The Bank, as a result of its secondary market operations, is able to offer a variety of loan
products that serve the needs of its customers. The Bank also provides loans that it holds in its
own portfolio on those transactions that evidence satisfactory credit quality and income but are
unable to be sold in the secondary market for various reasons. The Bank does not originate
sub-prime mortgages for its portfolio.
Management believes that cross-selling of the Banks products and services to its existing
customers is vital to expanding account relationships, generating additional sales opportunities
and increasing fee income.
7
Loan Policy
As a routine part of the Banks business, the Bank makes loans to individuals and businesses
located within the Banks market area. The loan policy of the Bank states that the function of the
lending operation is two-fold: to provide a means for the investment of funds at a profitable rate
of return with an acceptable degree of risk, and to meet the credit needs of the responsible
businesses and individuals who are customers of the Bank. However, the Board of Directors of the
Bank recognizes that in the normal business of lending, some losses on loans will be inevitable and
should be considered a part of the normal cost of doing business. Under the loan policy,
individual lending authority for loans in excess of $100,000 is granted to a limited number of
officers, each of whom has over 25 years of banking experience. Currently this group includes
Michael J. Ross and Warren R. Musson. They are authorized to lend up to $100,000 unsecured and
$1,000,000 for collateralized loans. Historically, these authorities have been used sparingly.
The Banks loan policy anticipates that priorities in extending loans will change from time to
time as interest rates, market conditions and competitive factors change. The policy sets forth
guidelines on a nondiscriminatory basis for lending in accordance with applicable laws and
regulations. The policy describes various criteria in granting loans, including the ability to
pay; the character of the customer; evidence of financial responsibility; purpose of the loan;
knowledge of collateral and its value; terms of repayment; source of repayment; payment history;
and economic conditions.
The loan policy specifies individual lending limits for certain officers up to a maximum of
$25,000 for unsecured loans and $100,000 for secured loans. When certain officers have the approval
of certain other officers, these limits may be increased to $100,000 for unsecured loans and
$500,000 for secured loans. Loans of greater than $500,000 normally require the approval of our
Loan Committee unless approved by Michael J. Ross or Warren R. Musson up to their authorized limits
and loans greater than $1,000,000 require the approval of our Executive Loan Committee, which
requires the attendance of at least three outside members of the Banks Board of Directors for a
quorum. Loans in excess of $6,000,000 up to the legal maximum authorized by law require the
approval of our Board of Directors.
The loan policy also limits the amount of funds that may be loaned against specified types of
collateral including: listed securities with a share price greater than $10 not greater than
80% loan to value; listed securities with a share price less that or equal to $10 not greater
than 50% loan to value; U.S. Government securities not greater than 90% loan to value; Municipal
securities not greater that 80% loan to value; and insured bank deposits not greater than
100% loan to value. As to loans secured principally by real estate, the policy complies with the
FIRREA Act of 1989 and subsequent interagency appraisal and evaluation guidelines regarding
appraisals of the property offered as collateral by licensed independent appraisers. The loan
policy also provides general guidelines as to collateral, provides for environmental reviews,
contains specific limitations with respect to loans to employees, executive officers and directors,
provides for problem loan identification, establishes a policy for the maintenance of a loan loss
reserve, provides for loan reviews and sets forth policies for mortgage lending and other matters
relating to the Banks lending business.
8
Lending Practices
Commercial Loans. Our commercial lending group originates commercial loans primarily in
Wayne, Oakland, Macomb and Washtenaw Counties in southeastern Michigan. Commercial loans are
originated by a group of lending officers with the assistance of Michael J. Ross and Warren R.
Musson. Loans are originated for general business purposes, including working capital, accounts
receivable financing, machinery and equipment acquisition, and commercial real estate financing
including new construction.
Working capital loans are often structured as a line of credit and are reviewed periodically
in connection with the borrowers year-end financial reporting. These loans generally are secured
by all of the assets of the borrower, a personal guaranty of the owners and have an interest rate
plus a margin tied to the Fidelity Bank prime rate. Loans for machinery and equipment purposes
typically have a maturity of five to seven years and are fully amortizing. Commercial real estate
loans are usually written with a five-year maturity and are amortized over a fifteen to twenty-year
period. Commercial real estate loans may have an interest rate that is fixed to maturity or float
with a margin over the prime rate or another index. All loans typically contain a pre-payment
premium and many floating rate loans contain interest rate floors to protect the Banks net
interest margin.
We evaluate all aspects of a commercial loan transaction in order to minimize credit and
interest rate risk. Underwriting includes an assessment of management, products, markets, cash
flow, capital, income and collateral. The analysis includes a review of historical and projected
financial results. Appraisals are normally obtained by licensed independent appraisers who are well
known to us on transactions involving real estate and, in some cases, equipment.
Commercial real estate lending has historically involved more risk than residential lending,
because loan balances are greater and repayment is dependent upon the borrowers operations. We
attempt to minimize risk associated with these transactions by limiting our exposure to existing
well-known customers and new customers with an established profitable history. Risk is further
reduced by limiting the concentration of credit to any one borrower as well as the type of
commercial real estate financed.
The Bank has established a Special Assets Group within the Lending Department. This group
consists of a Group Manager and five workout officers. Two of these workout officers are attorneys
licensed to practice law in the State of Michigan. These professionals are responsible for the
management of non-performing loans and the disposal of non-performing assets. Additionally, the
Bank has formed a Special Assets Committee that meets bi-weekly. This Committee consists of the
Head of Lending, Head of Credit and the Special Assets Manager and workout officers. This
Committee discusses the status of these non-performing assets and strategies and actions concerning
these assets that would further the Banks interests.
Residential Real Estate Loans. We originate residential real estate loans in our market area
according to secondary market underwriting standards. These loans provide borrowers with a fixed
interest rate with terms up to thirty years. Loans are sold on a servicing released basis in the
secondary market with all interest rate risk and credit risk passed to the purchaser. The Bank from
time to time may elect to underwrite certain residential real estate loans to be held in its own
loan portfolio. These loans are generally underwritten with the same standards that apply to the
secondary market. The majority of the portfolio loans have a fixed rate of interest for the first
five years, then the interest rate is indexed to the one-year treasury rate and adjusts annually.
Underwriting standards include verifying the income of potential borrowers and confirming their
ability to repay. It has not been our practice to make no document loans or other sub-prime
loans.
9
Consumer Loans. We originate consumer loans for a wide variety of personal financial
requirements. Consumer loans include home equity lines of credit, and loans secured by new and used
automobiles, boats, savings accounts as well as overdraft protection for checking account
customers. We also purchase retail installment loans from a select list of automobile dealerships
located primarily in our market.
Consumer loans, except for home equity lines of credit, generally have shorter terms and
higher interest rates than residential mortgage loans and usually involve more credit risk than
mortgage loans because of the type and nature of the collateral. While we do not utilize a formal
credit scoring system, we believe our loans are underwritten carefully, with a strong emphasis on
the amount of the down payment, credit quality, employment stability, and monthly income. These
loans are generally repaid on a monthly repayment schedule with the source of repayment tied to the
borrowers periodic income. In addition, consumer lending collections are dependent on the
borrowers continuing financial stability, and are thus likely to be adversely affected by job
loss, illness and personal bankruptcy. In many cases, repossessed collateral for a defaulted
consumer loan will not provide an adequate source of repayment of the outstanding loan balance
because of depreciation of the underlying collateral. We believe that the generally higher yields
earned on consumer loans compensate for the increased credit risk associated with such loans and
that consumer loans are important to our efforts to serve the credit needs of the communities and
customers that we serve.
Allowance for Loan Losses. An allowance for loan losses is maintained at a level that we
consider adequate to provide for losses in the loan portfolio. Allowances for loan losses are based
upon our experience and estimates of the net realizable value of collateral in each loan portfolio.
Our Board of Directors and senior management review the allowance quarterly. Our evaluation takes
into consideration experience, the level of classified assets, non-performing loans, the current
level of the allowance as it relates to the total loan portfolio, current economic conditions,
recent regulatory examinations and other factors.
In determining the allowance for loan losses, we consider three principal elements: (i)
specific allocations based on probable losses identified during the review of the loan portfolio,
(ii) allocations based principally on the likelihood that the status of performing loans will
decline to non-performing status, and (iii) additional allowances based on subjective factors,
including local and general economic business factors and trends and portfolio concentrations.
The first element reflects our estimate of probable losses based upon our systematic review of
specific loans. These estimates are based upon a number of objective factors, such as payment
history, financial condition of the borrower, and discounted collateral exposure.
As further discussed below, we have developed a risk rating system that is applied to our
commercial loan portfolio. Loans rated 5 or 6 are deemed Criticized, while loans rates 7 or
higher are deemed Classified. Classified loans with a balance of $500,000 or greater that are
classified as non-accrual are considered to be impaired, as defined by ASC 310-40 (formerly known
as SFAS 114). A collateral analysis is performed on these loans to determine if the collateral is
sufficient to secure these loans. If there is a collateral shortfall, the loan is charged down to
the level of the collateral value. If applicable, portions of our allowance are assigned to
individual loans based on this analysis.
Loans classified as Troubled Debt Restructuring (TDR loans) are also classified as impaired
loans. A TDR loan occurs when a borrower is granted a temporary concession to enable the borrower
to fulfill the debt service obligations with the Bank. Once the term of the TDR loan has concluded,
the loan will return to its previous contractual terms. These loans are analyzed on a cash flow or
collateral value basis to determine if an allocation in the allowance for loan losses is necessary.
If necessary, portions of our allowance are assigned to individual TDR loans based on this
analysis.
Commercial loans not classified as impaired, homogeneous mortgage and consumer loans are
provided for in the allowance for loan losses computation by allocations based upon loan grade and
type. These allocations include consideration of a variety of objective and subjective factors
including our historical loss experience, delinquent status, the purpose and size of the loan, its
collateral type, the current economic environment and other business factors and trends that we
believe impact the ability of our borrowers to repay their obligations.
10
Delinquent Loans, Non-performing Assets and Classified Assets. When a borrower fails to make
a required payment on a loan, our Bank attempts to cause the deficiency to be cured by contacting
the borrower. In many cases, deficiencies are cured as a result of these collection efforts.
When a borrower fails to make a timely payment, the borrower will receive a delinquency notice
within 5 days of the due date. When the payment reaches 15 days past due, a second notice will be
sent and a phone call will be made. This process is repeated if the account remains delinquent at
25 days. In many cases, delinquencies are paid promptly. Generally, if a real estate loan becomes
90 days delinquent, the borrower and collateral will be assessed to determine whether foreclosure
action is required. When deemed appropriate by management, a foreclosure action will be instituted
or a deed in lieu of foreclosure, short sale or loan modification will be pursued.
Loans that are 90 days past due and are not well secured and in the process of collection will
be placed on non-accrual status. Under-collateralized loans that are 90 days past due will be fully
or partially charged-off. The amount charged-off will be charged against the loan loss allowance.
Our Bank has developed a risk-rating system to quantify loan quality. The system assigns a
risk rating from 1 to 9 for each loan. Loans graded 1 to 4 are rated Pass, while loans graded 5
and 6 are rated Criticized. Classified loans are those with a risk rating of 7 or higher. Each
loan rating is determined by analyzing the borrowers management, financial ability, sales trends,
operating results, financial conditions, asset protection, contingencies, payment history,
financial flexibility, credit enhancements and other relevant factors. Loans that fall into the
classified categories are monitored on a regular basis and proper action is taken to minimize our
Banks exposure. Losses or partial losses will be taken when they are recognized.
The Banks risk rating system is similar to that used by regulatory agencies. Problem assets
are classified as substandard (risk rating 7), doubtful (risk rating 8) or loss (risk rating
9). Substandard assets have one or more defined weaknesses and are characterized by the distinct
possibility that the Bank will sustain some loss if the deficiencies are not corrected. Doubtful
assets have the same weaknesses as substandard assets, with the additional characteristics that
(i) the weaknesses make collection or liquidation in full on the basis of currently existing facts,
conditions and values questionable and (ii) there is a high possibility of loss. An asset
classified loss is considered uncollectible and of such little value that its continuance as an
asset of the institution is not warranted. The regulations also contain special mention (risk
rating 6) and watch credit (risk rating 5) categories, consisting of assets which do not
currently expose an institution to a sufficient degree of risk to warrant classification but which
possess credit deficiencies or potential weaknesses deserving managements close attention.
Generally, our Bank classifies as substandard all loans that are delinquent more than 90
days and non-accruing, unless management believes the delinquency status is short-term due to
unusual circumstances. Loans delinquent fewer than 90 days may also be classified if the loans have
the characteristics described above rendering classification appropriate.
The aggregate amounts of our Banks criticized and classified assets at December 31, 2010, and
December 31, 2009 were as follows (dollars in thousands):
December 31, | December 31, | |||||||||||
Rating | 2010 | 2009 | ||||||||||
Watch Credit |
5 | $ | 77,119 | $ | 74,560 | |||||||
Special Mention |
6 | 77,025 | 64,987 | |||||||||
Substandard |
7 | 171,378 | 134,839 | |||||||||
Doubtful |
8 | 85 | 6,381 | |||||||||
Loss |
9 | | | |||||||||
Total classified assets |
$ | 325,607 | $ | 280,767 | ||||||||
Criticized and classified assets increased $14.6 million and $30.2 million, respectively,
during the year ended December 31, 2010. The economic slowdown in our market area has resulted in
an increase in the number and dollar amount of classified loans. At December 31, 2010, criticized
and classified assets had a specific allocation of the allowance to loan losses of $10.8 million.
11
The following table reflects the amount of loans in delinquent status as of December 31, 2010
and 2009 (dollars in thousands):
December 31, | December 31, | |||||||
2010 | 2009 | |||||||
Loans delinquent |
||||||||
30 89 days |
18,302 | 9,713 | ||||||
90 or more days and still accruing |
| | ||||||
Non-accruing |
66,563 | 49,341 | ||||||
Total delinquent loans |
84,865 | 59,054 | ||||||
Ratio of total delinquent loans to total loans |
11.53 | % | 7.09 | % | ||||
The increase in non-accruing loans during the year ended December 31, 2010 is primarily due to
downgrading 110 loans with a balance of $48,140,000 to non-accrual status. The primary cause of the
increase in non-accruing loans is primarily related to the Banks commercial and commercial real
estate loans as well as loans financing the development and construction of residential property.
The downturn in economic activity experienced during 2008 2010 continues to impact the
residential real estate market during 2011 as well as to significantly impact the Banks commercial
and commercial real estate mortgage portfolios. This downturn has also led to a significant decline
in collateral values of all types of real property. However, the local economy has begun to shows
signs of improvement during 2010. We have seen modest improvements in the quality of our loan
portfolio as the level of delinquencies and non-performing loans have stabilized during the last
half of 2010. These positive trends have not yet materialized into an improvement in the level of
valuations of real estate in the Banks market area.
The distribution of loans downgraded to non-accrual status during 2010 (dollars, in thousands) is
as follows:
Number of | ||||||||
Loans | Balance | |||||||
Consumer loans |
15 | $ | 1,497 | |||||
Commercial, financial, & other |
30 | 8,912 | ||||||
Commercial real estate construction residential property |
10 | 9,613 | ||||||
Commercial real estate construction non residential property |
| | ||||||
Land development loans residential property |
4 | 5,391 | ||||||
Land development loans non residential property |
1 | 317 | ||||||
Commercial real estate mortgages |
41 | 21,721 | ||||||
Residential real estate mortgages |
9 | 689 | ||||||
Total loans downgraded to non-accrual status |
110 | $ | 48,140 | |||||
12
Deposits and Other Services
Deposits. We offer a broad range of deposit services, including checking, savings, and money
market accounts, certificates of deposit and direct deposit services. Transaction accounts and
certificates of deposit are tailored to our primary market area at rates competitive with those
offered in our area. All deposit accounts are insured by the FDIC up to the maximum amount
permitted by law. We acquire deposit accounts from individuals, businesses, associations, financial
institutions and government entities.
Other Services. We offer a courier service for the deposit convenience of our business
customers. We also offer online banking and a voice response, automated telephone banking service,
available 24 hours a day and check imaging options including statements on CD ROM.
Investments
Our principal investments are our investment in the common stock of our Bank and the common
securities of the trust. Our funds may be invested from time to time in various debt instruments,
including obligations of or guaranteed by the United States, general obligations of a state or
political subdivision or an agency of a state or political subdivision, bankers acceptances or
certificates of deposit of United States commercial banks, or commercial paper of United States
issuers rated in the highest category by a nationally-recognized investment rating service. We are
permitted to make unlimited portfolio investments in equity securities and to make equity
investments in subsidiary corporations engaged in certain non-banking activities, including real
estate-related activities such as mortgage banking, community development, real estate appraisals,
arranging equity financing for commercial real estate, and owning and operating real estate used
substantially by our Bank or acquired for its future use. However, we have no present plans to make
any of these equity investments.
Our Bank may invest its funds in a wide variety of debt instruments and may participate in the
federal funds market with other depository institutions. Subject to certain exceptions, our Bank is
prohibited from investing in equity securities. Under one exception, in certain circumstances and
with the prior approval of the FDIC, our Bank could invest up to 10% of its total assets in the
equity securities of a subsidiary corporation engaged in the acquisition and development of real
property for sale, or the improvement of real property by construction or rehabilitation of
residential or commercial units for sale or lease. Our Bank has no present plans to make such an
investment. Real estate acquired by our Bank in satisfaction of or foreclosure upon loans may be
held by our Bank. Our Bank is also permitted to invest in such real estate as is necessary for the
convenient transaction of its business. Our Banks Board of Directors may alter the investment
policy without stockholder approval at any time.
Employees
As of December 31, 2010, the Bank had 191 employees, including 71 officers and 120 customer
service, operations and other support persons. Management believes that the Banks relations with
its employees are excellent.
Competition
The Bank faces strong competition for deposits, loans and other financial services from
numerous banks, savings banks, thrifts, credit unions and other financial institutions as well as
other entities which provide financial services, including consumer finance companies, securities
brokerage firms, mortgage brokers, insurance companies, mutual funds, and other lending sources and
investment alternatives. Some of the financial institutions and financial services organizations
with which the Bank competes are not subject to the same degree of regulation as the Bank. Many of
the financial institutions and financial services organizations aggressively compete for business
in the Banks market area. Most of these competitors have been in business for many years, have
established customer bases, are larger, have substantially higher lending limits than the Bank, and
are able to offer certain services that the Bank does not currently provide, including more
extensive branch networks, trust services, and international banking services. In addition, most
of these entities have greater capital resources than the Bank, which, among other things, may
allow them to price their services at levels more favorable to the customer and to provide larger
credit facilities than could the Bank. Additionally, legislation regarding interstate branching
and banking may increase competition in the future from out-of-state banks.
13
Supervision and Regulation
The Corporation is a registered bank holding company and subject to the supervision of the
Federal Reserve System (Federal Reserve). The Corporation is required to file with the Federal
Reserve annual reports and such other information as the Federal Reserve may require under the Bank
Holding Company Act of 1956, as amended (the Act). The Corporation and the Bank are each subject
to examination by the Federal Reserve.
The Act requires every bank holding company to obtain prior approval of the Federal Reserve
before it may merge with or consolidate into another bank holding company, acquire substantially
all assets of any bank, or acquire ownership or control of any voting shares of any bank, if after
such acquisition, it would own or control, directly or indirectly, more than 5% of the voting
shares of such bank holding company or bank. The Federal Reserve may in its discretion approve the
acquisition by the Corporation of the voting shares or substantially all assets of a bank located
in Michigan and, subject to certain restrictions, located in any other state.
The Act also prohibits a bank holding company, with certain exceptions, from acquiring direct
or indirect ownership or control of more than 5% of the voting shares of any company that is not a
bank, and from engaging in any business other than that of banking, managing and controlling banks
and their subsidiaries. Holding companies may engage in, and may own shares of companies engaged
in, certain businesses found by the Federal Reserve to be closely related to banking or the
management or control of banks. Under current regulations of the Federal Reserve, a holding
company and its non-bank subsidiaries are permitted to engage in investment management, sales and
consumer finance, equipment leasing, data processing, discount securities brokerage, mortgage
banking and brokerage, and other activities. These activities are subject to certain limitation
imposed by the regulations.
Transactions between the Corporation and the Bank are subject to various restrictions imposed
by state and federal law. Such transactions include loans and other extensions of credit,
purchases of securities, any payments of fees and other distributions. Federal law places
restrictions on the amount and nature of loans to executive officers, directors and controlling
persons of banks insured by the Federal Deposit Insurance Corporation and holding companies
controlling such banks.
The Bank is a state chartered bank and subject to regulation and examination by the Michigan
Office of Financial and Insurance Services. The Bank also is subject to certain provisions of the
Federal Deposit Insurance Act and regulations issued under that act. The regulations affect many
activities of the Bank, including the permissible types and amounts of loans, investments, capital
adequacy, branching, interest rates payable on deposits, required reserves, and the safety and
soundness of the Banks practices. The Bank is not a member bank of the Federal Reserve System and
is regulated and examined by the Federal Deposit Insurance Corporation.
A summary of consolidated net interest income, consolidated net interest income volume / rate
analysis, rate sensitivity analysis / gap analysis and capital ratios is set forth under the
caption Managements Discussion and Analysis of Financial Condition and Results of Operations in
the 2010 Annual Report to Stockholders and is incorporated herein by reference.
Consent Order
Due to our financial condition, the Federal Deposit Insurance Corporation (FDIC) and the
Office of Financial and Insurance Regulation for the State of Michigan (OFIR) required that our
board of directors sign a formal enforcement action (Consent Order) with the FDIC and OFIR which
conveys specific actions needed to address certain findings from their examination and to address
our current financial condition. While management disagreed with a number of conclusions of the
exam and was disappointed with the management of the exam, the Banks Management Team and Board of
Directors agreed to the stipulations of the Consent Order. On February 12, 2010, the Bank
received this an executed copy of this Consent Order, which became effective February 22, 2010. The
stipulations of this Consent Order include the following:
| Completion of a senior management study by an independent consultant |
| Plans for the reduction of delinquencies and classified assets |
| Plans for lending and collection policies |
| Plans for the reduction of loan concentrations |
| The revision and implementation of a comprehensive strategic plan |
| The revision of its Liquidity Plan and the submission of weekly liquidity reports to the FDIC and OFIR |
14
The Consent Order also includes a capital directive, which requires us to achieve and maintain
tier 1 capital as a percentage of total assets of 9% or higher and total capital as a percentage of
risk-weighted assets of 12% or higher within 120 days from the effective date of the order. These
ratios are in excess of the statutory minimums to be well-capitalized. The Bank submitted a Capital
Restoration Plan (CRP) to the FDIC and OFIR on December 15, 2009, due to our undercapitalized
status based on our September 30, 2009 regulatory report of condition and income. The CRP
addresses, among other things, the steps management will take to cause our capital levels to return
to the minimum level to be adequately capitalized.
This CRP was rejected because capital has not been successfully raised within the 120 days of
the issuance of the consent order. An amended CRP was submitted on May 24, 2010. This CRP was
also rejected because capital has not been successfully raised.
Our bank is currently undercapitalized. Failure to meet the minimum ratios set forth in the
Consent Order could result in regulators taking additional enforcement action against us. With the
exception of raising additional capital, management believes that it has met all of the provisions
of the consent order.
Executive Officers of the Corporation and Bank
Set forth below are the names and ages of the executive officers of the Corporation and the Bank, positions held and the years from which held. There are no family relationships among such persons. |
John E. Demmer, 87 |
Chairman of the Board, Dearborn Bancorp, Inc. and Fidelity Bank |
Chairman of the Board and Director of the Corporation since 1992. Chairman of the Board and Director of the Bank since 1993. Chairman of the Board and Chief Executive Officer of Jack Demmer Ford, Inc. since 1994. Chairman of the Board and Chief Executive Officer of Jack Demmer Lincoln Mercury, Inc since 1999. |
Michael J. Ross, 60 |
President and Chief Executive Officer, Dearborn Bancorp, Inc. |
President and Chief Executive Officer, Fidelity Bank |
President and Chief Executive Officer of the Corporation since 2003. President and Director of the Corporation since 1998. Vice President and Director of the Corporation from 1993 to 1997. President, Chief Executive Officer, and Director of the Bank since 1993. |
Jeffrey L. Karafa, 46 |
Vice President, Treasurer and Secretary, Dearborn Bancorp, Inc. |
Senior Vice President, CFO and Secretary, Fidelity Bank |
Vice President and Treasurer of the Corporation since 1998. Secretary of the Corporation since 1999. Senior Vice President and CFO of the Bank since 2000. Secretary of the Bank since 1999. Vice President of the Bank from 1996 to 1999. Assistant Vice President of the Bank from 1994 to 1996. |
Warren R. Musson, 53 |
Senior Vice President, Head of Lending, Fidelity Bank |
Senior Vice President of the Bank since 2000. Vice President of the Bank during 1999. Senior Vice President and Senior Loan Officer of Peoples State Bank from 1993 to 1999. |
Jeffrey J. Wolber, 54 |
Senior Vice President, Branch Operations, Fidelity Bank |
Senior Vice President of the Bank since 2000. Vice President of the Bank from 1994 to 1999. |
15
Item 1A. Risk Factors
The following risk factors could affect our business, financial conditions or results of
operations. These risk factors should be considered in connection with evaluating the
forward-looking statements contained in this Annual Report because they could cause the actual
results and conditions to differ materially from those projected in forward-looking statements.
The risks that are highlighted are not the only ones we face. If the adverse matters referred to
in any of the risks actually occur, our business, financial condition or operations could be
adversely affected.
The Corporation may not be able to meet federal regulatory requirements regarding the restoration
of capital of the Bank.
As of December 31, 2010, the Bank is undercapitalized by regulatory capital standards. As a
result, the Bank has submitted a detailed, written Capital Restoration Plan, specifying the steps
the Bank and the Corporation will take to bring the Banks capital ratios back into compliance with
minimum applicable capital ratios. The plan must also include a statutorily-required guarantee of
the Banks performance of the plan by its sole shareholder, the Corporation, which guarantee may
require assurances, such as a pledge of the Corporations assets. The Capital Restoration Plan
(CRP) has been be submitted to the Banks federal bank regulator, the FDIC, for approval. This
CRP was rejected because capital has not been successfully raised within the 120 days of the
issuance of the consent order. An amended CRP was submitted on May 24, 2010. This CRP was also
rejected because capital has not been successfully raised.
The Banks ability to comply with the requirements of the Capital Restoration Plan that was
submitted, are uncertain. Although the Corporation is actively considering alternatives for
raising capital, no adequate and satisfactory source of additional capital has been found. The
Corporations ability to raise additional capital is significantly restricted by several factors,
and there is a meaningful possibility the Corporation will not be successful in raising additional
capital and meeting the regulatory requirements.
We are currently under a Consent Order which includes a capital directive that requires the
Bank to have and maintain its level of tier 1 capital as a percentage of total assets (capital
ratio) at a minimum of 9% and its level of qualifying total capital as a percentage of
risk-weighted assets (total risk-based capital ratio) at a minimum of 12%. These ratios are in
excess of the statutory minimums to be well-capitalized. At December 31, 2010, the Banks capital
ratio was 3.95% and the Banks total risk-based capital ratio was 6.17%. Additionally, the Bank is
prohibited from declaring or paying any cash dividends without prior consent of the FDIC.
The Banks capital may not be sufficient to support the risk inherent in its loan portfolio.
The Bank maintains capital as a means of absorbing losses resulting from the Banks
operations. The recent losses incurred by the Bank have significantly depleted the Banks capital,
resulting in the Bank being considered undercapitalized pursuant to regulatory capital standards.
Among other things, a continuing decline in the collectability of the Banks loans, a continuing
decline in the value of the collateral supporting those loans, or both, would require the Bank to
increase its allowance for loan and lease losses, which would further deplete existing capital.
Because of the difficult economic conditions in the areas where the Bank operates, it is reasonable
to assume the Bank will continue to incur operating losses. The Banks current capital may be
insufficient to absorb future operating losses and, unless the Bank is successful in raising
additional capital or taking other steps meaningfully to reduce the risk in its loan portfolio,
this lack of capital is likely to have a material adverse effect on the Corporations business,
results of operations, and financial condition and, in extreme circumstances, could result in the
closure or liquidation of the Bank.
Further deterioration of the real estate market and the economy would further materially adversely
affect the Corporations business, liquidity and financial results.
The Banks loan portfolio is concentrated in loans secured by commercial real estate. As a
result, the significant downturn in the real estate market has had a substantial negative effect on
the Banks business and has contributed to increased levels of delinquent and non-accruing assets,
charge-offs and loss reserves. These events, if
they continue or worsen, will have a further material adverse effect on the business,
financial condition and results of operation of the Bank and the Corporation.
16
The Bank will be subject to higher deposit insurance premiums as a result of its capital position.
As a member of the FDIC, the Bank pays assessments to the FDIC quarterly for insurance of the
deposits of its customers to the extent and in the manner set forth in the Federal Deposit
Insurance Act, as amended, and regulations of the FDIC. The amount of the deposit insurance
assessment is determined by multiplying an assessment rate, established for each institution by the
FDIC on a risk-adjusted basis, times the institutions assessment base, as determined from its
quarterly report of condition. The risk-adjustment to the assessment rate involves the assignment
by the FDIC of each insured institution to one of four risk categories, which reflect the
institutions capital position and supervisory evaluations. An initial assessment rate is
determined on the basis of the assigned risk category, and then adjusted further (either up or
down) for other characteristics of the institution, including outstanding unsecured and secured
debt, and for some institutions, reliance on brokered deposits. The resulting total assessment
rates currently may range from 7-24 basis points for well-capitalized banks having the best
supervisory evaluations, to 40-77.5 basis points for banks presenting the greatest risk to the
Deposit Insurance Fund (DIF) of the FDIC. The assessment rate range possible for an
undercapitalized institution such as the Bank currently is 40-77.5 basis points.
A segment of the Banks loans are construction loans which involve the additional risk that a
project may not be completed, increasing the risk of loss.
Approximately 7.5% of our real estate loan portfolio as of December 31, 2010 was comprised of
construction and land development loans. Repayment of such loans is dependent upon the successful
completion of the construction project, on time and within budget, and the successful sale of the
completed project. If a borrower is unable to complete a construction project or if the
marketability of the completed development is impaired, proceeds from the sale of the subject
property may be insufficient to repay the loan. Further deterioration in any of the real estate
markets the Bank serves is likely to further damage the marketability of these projects; as a
result, the Bank may incur further loan losses which will adversely affect its results of
operations.
The Bank may not pay any capital distribution or management fees to the Corporation.
Without the prior approval of the FDIC, the Bank is prohibited from paying any dividend, or
making any other capital distribution to, the Corporation. The Bank is also forbidden to pay any
management fee to the Corporation. These restrictions may materially adversely affect the cash
flow of the Corporation.
Because the Bank is less than well-capitalized, its ability to accept certain types of deposits is
limited, which may adversely affect its business, liquidity and financial results.
The Bank is prohibited from accepting funds obtained, directly or indirectly, by or through
any deposit broker. The Bank currently has substantial amounts of such deposits. There can be no
assurance that the Bank will be able to replace such brokered deposits from other sources.
Further, the Bank may not accept employee benefit plan deposits. These restrictions may adversely
affect the Banks ability to continue to fund its assets at current levels.
The Banks ability to grow, to offer new products, or to engage in new lines of business, is
subject to regulatory restrictions.
Unless consistent with an approved capital restoration plan and accompanied by a proportionate
improvement in its capital ratios, the Bank may not permit any increase, from quarter to quarter,
in its average total assets. Further, unless the FDIC finds the proposed action is consistent with
the capital restoration plan, the Bank may not, directly or indirectly, acquire any company,
depository institution or additional branch office, or engage in any new line of business.
17
Adverse economic conditions in the automobile manufacturing and related service industries may
impact our banking business.
The automobile manufacturing industry has experienced significant economic difficulties over
the past several years, which, in turn, has adversely impacted a number of related industries that
serve the automobile manufacturing industry, including automobile parts suppliers. The conditions
have improved during the past year and conditions in this industry are expected to continue to
improve. However, we cannot assure you that the economic conditions in the automobile
manufacturing and related service industries will continue to improve at any time or when this
improvement in the economic conditions in these industries will impact our Bank.
Adverse changes in economic conditions or interest rates may negatively affect our earnings,
capital and liquidity.
The results of operations for financial institutions, including our bank, may be materially
and adversely affected by changes in prevailing local and national economic conditions, including
declines in real estate market values and the related declines in value of our real estate
collateral, rapid increases or decreases in interest rates and changes in the monetary and fiscal
policies of the federal government. Our profitability is heavily influenced by the spread between
the interest rates we earn on investments and loans and the interest rates we pay on deposits and
other interest-bearing liabilities. Substantially all our loans are to businesses and individuals
in southeastern Michigan, and any decline in the economy of this area could adversely affect our
customers ability to repay such loans and our ability to make new loans to credit worthy
borrowers. Like most banking institutions, our net interest spread and margin will be affected by
general economic conditions and other factors that influence market interest rates and our ability
to respond to changes in these rates. At any given time, our assets and liabilities will be such
that they will be affected differently by a given change in interest rates.
Difficult market conditions will continue to adversely affect the financial services industry.
Dramatic declines in the housing market during 2008 and 2009, with falling home prices and
increasing foreclosures, unemployment and under-employment, have negatively impacted the credit
performance of real estate related loans and resulted in significant write-downs of asset values by
financial institutions. While market conditions have improved in 2010, the real estate market
values have not yet recovered. The write-downs, initially of asset-backed securities but spreading
to other securities and loans, have caused many financial institutions to seek additional capital,
to merge with larger and stronger institutions and, in some cases to fail. Reflecting concern
about the stability of the financial markets generally and the strength of counterparties, many
lenders and institutional investors have reduced or ceased providing funding to borrowers,
including to other financial institutions. This market turmoil and tightening of credit have led
to an increased level of commercial and consumer delinquencies, declines in asset values, lack of
consumer confidence, increased market volatility and widespread reduction of business activity
generally. The resulting economic pressure on consumers and lack of confidence in the financial
markets has adversely affected our business, financial condition and results of operations. Market
developments may affect levels of consumer confidence and may cause changes in payment patterns,
causing increases in delinquencies and default rates, which may impact out charge-offs and
provision for loan loss. A worsening of these conditions would likely exacerbate the adverse
effects of these difficult market conditions for us and others in the financial institutions
industry.
Our credit losses could increase and our allowance for loan losses may not be adequate to cover
actual loan losses resulting in a decrease in our net income and earnings per share and a possible
decline in our stock price.
The risk of non-payment of loans is inherent in all lending activities, and non-payment, if it
occurs, may have a materially adverse effect on our earnings and overall financial condition as
well as the value of our common stock. Our focus on commercial lending may result in an increased
concentration of loans to small businesses. As a result, we may assume greater lending risks than
other banks. We make various assumptions and judgments about the collectibility of our loan
portfolio and provide an allowance for losses based on several factors. If our assumptions are
wrong, our allowance for loan losses may not be sufficient to cover our losses, which would have an
adverse effect on our operating results. Due to the significant increase in loans originated since
we began operations we cannot assure you that we will not experience an increase in delinquencies
and losses as these loans continue to mature. The actual amount of future provisions for loan
losses cannot be determined at this time and may exceed the
amount of past provisions. Additions to our allowance for loan losses decrease our net income
and earnings per share and may have an adverse effect on our stock price.
18
Our commercial real estate loans involve higher principal amounts than other loans, and repayment
of these loans may be dependent on factors outside our control or the control of our borrowers.
Commercial real estate lending typically involves higher loan principal amounts, and the
repayment of these loans generally is dependent, in large part, on sufficient income from the
properties securing the loans to cover operating expenses and debt service. Because payments on
loans secured by commercial real estate often depend upon the successful operating and management
of the properties, repayment of these loans may be affected by factors outside the borrowers
control, including adverse conditions in the real estate market or the economy. If the cash flow
from the property is reduced, the borrowers ability to repay the loan and the value of the
security for the loan may be impaired. At December 31, 2010, commercial real estate loans totaled
$551 million, or 75% of our total loan portfolio. Because our loan portfolio contains a number of
commercial real estate loans with relatively large balances, the deterioration of one or a few of
these loans could cause a significant increase in our percentage of non-performing loans. An
increase in non-performing loans could result in a loss of earnings from these loans, an increase
in the provision for loan losses and an increase in charge-offs, all of which could have a material
adverse effect on our financial condition and results of operations.
We rely heavily on our management and other key personnel, and the loss of any of them may
adversely affect our operations.
We are and will continue to be dependent upon the services of our management team, including
our President and Chief Executive Officer and our other senior managers. Losing one or more key
members of the management team could adversely affect our operations.
In addition, we will continue to depend on our key commercial loan officers. We have several
commercial loan officers who are responsible, or share responsibility, for generating and managing
a significant portion of our commercial loan portfolio. Our success can be attributed in large part
to the relationships these officers as well as members of our management team have developed and
are able to maintain with our customers as we continue to implement our community banking
philosophy. The loss of any of these commercial loan officers could adversely affect our loan
portfolio and performance, and our ability to generate new loans.
Some of the other financial institutions in our market require their key employees to sign
agreements that preclude or limit their ability to leave their employment and compete with them or
solicit their customers. These agreements make it more difficult for us to hire loan officers with
experience in our market who can immediately solicit their former or new customers on our behalf.
Our future success is dependent on our ability to compete effectively in the highly competitive
banking industry.
We face substantial competition in all phases of our operations from a variety of different
competitors. Our future growth and success will depend on our ability to compete effectively in
this highly competitive environment. We compete for deposits, loans and other financial services
with numerous Michigan-based and out-of-state banks, thrifts, credit unions and other financial
institutions as well as other entities that provide financial services. Some of the financial
institutions and financial service organizations with which we compete are not subject to the same
degree of regulation as we are. Most of our competitors have been in business for many years, have
established customer bases, are larger, have substantially higher lending limits than we do and
offer other services which we do not, including trust services, brokerage, mutual funds and
international banking services. The primary competitors in our market area are JPMorganChase,
Charter One Bank, N.A., Comerica Incorporated, Fifth Third Bancorp, National City Corporation and
Bank of America. Under the Gramm-Leach-Bliley Act of 1999, effective March 11, 2000, securities
firms and insurance companies that elect to become financial holding companies may acquire banks
and other financial institutions. The financial services industry is also likely to become more
competitive as further technological advances enable more companies to provide financial services.
These technological advances may diminish the importance of depository institutions and other
financial intermediaries in the transfer of funds between parties.
19
Growth and stockholder returns may be adversely affected if sources of capital are not available to
help us meet them.
Since inception, we have sought to maximize stockholder returns by leveraging our capital.
While we believe that earnings from our operations will enable us to continue to grow, if earnings
do not meet our current estimates, if we incur unanticipated losses or expenses, or if we grow
faster than expected, we may need to obtain additional capital through borrowing, additional
issuances of debt or equity securities, or otherwise. If we do not have continued access to
sufficient capital, we may be required to reduce our level of assets or reduce our rate of growth
in order to maintain regulatory compliance. Under those circumstances our net income and the rate
of growth of our net income may be adversely affected.
We are subject to significant government regulation, and any regulatory changes may adversely
affect us.
The banking industry is heavily regulated under both federal and state law. These regulations
are primarily intended to protect customers, not our creditors or stockholders. As a bank holding
company, we are also subject to extensive regulation by the Federal Reserve Board, in addition to
other regulatory and self- regulatory organizations. Our ability to establish new facilities or
make acquisitions is conditioned upon the receipt of the required regulatory approvals from these
organizations. Regulations affecting banks and financial services companies undergo continuous
change, and we cannot predict the ultimate effect of these changes, which could have a material
adverse effect on our profitability or financial condition.
We continually encounter technological change, and we may have fewer resources than our competitors
to continue to invest in technological improvements.
The banking industry is undergoing technological changes with frequent introductions of new
technology-driven products and services. In addition to better serving customers, the effective use
of technology increases efficiency and enables financial institutions to reduce costs. Our future
success will depend, in part, on our ability to address the needs of our customers by using
technology to provide products and services that will satisfy customer demands for convenience as
well as creating additional efficiencies in our operations. Many of our competitors have
substantially greater resources to invest in technological improvements. There can be no assurance
that we will be able to effectively acquire and implement new technology-driven products and
services or be successful in marketing these products and services to our customers.
Our Articles of Incorporation and Bylaws and the laws of Michigan contain provisions that may
discourage or prevent a takeover of the Corporation and reduce any takeover premium.
Our Articles of Incorporation and Bylaws, and the corporate laws of the State of Michigan,
include provisions which are designed to provide our board of directors with time to consider
whether a hostile takeover offer is in our and our stockholders best interest. These provisions,
however, could discourage potential acquisition proposals and could delay or prevent a change in
control. The provisions also could diminish the opportunities for a holder of our common stock to
participate in tender offers, including tender offers at a price above the then-current market
price for our common stock. These provisions could also prevent transactions in which our
stockholders might otherwise receive a premium for their shares over then-current market prices,
and may limit the ability of our stockholders to approve transactions that they may deem to be in
their best interests.
The Michigan Business Corporation Act contains provisions intended to protect stockholders and
prohibit or discourage various types of hostile takeover activities. In addition to these
provisions and the provisions of our Articles of Incorporation and Bylaws, federal law requires the
Federal Reserve Boards approval prior to acquiring control of a bank holding company. All of
these provisions may delay or prevent a change in control without action by our stockholders, and
could adversely affect the price of our common stock.
There is a limited trading market for our common stock.
The price of our common stock has been, and will continue to be, subject to fluctuations based
on, among other things, economic and market conditions for bank holding companies and the stock
market in general, as well as changes in investor perceptions of the Corporation. This issuance of
new shares of our common stock also may adversely affect the market for our common stock.
Our common stock is traded on the Nasdaq Global Market under the symbol DEAR. The
development and maintenance of an active public trading market depends upon the existence of
willing buyers and sellers, the
presence of which is beyond our control. While we are a publicly-traded company, the volume of
trading activity in our stock is still relatively limited.
20
Item 1B. Unresolved Staff Comments
We have received no written comments regarding our periodic or current reports from the staff of
the Securities and Exchange Commission that were issued 180 days or more before the end of our 2010
fiscal year and that remain unresolved.
Item 2. Properties
The Banks main office is located in a single story building containing 11,400 square feet at
22290 Michigan Avenue, Dearborn, Michigan, which is owned by the Corporation and leased to the
Bank.
The Banks Dearborn Heights, Michigan branch office is located in a 3,240 square foot, single
story commercial/retail office building at 24935 W. Warren Avenue at the corner of Silvery Lane,
which is also owned by the Corporation. On March 15, 2005, the Bank acquired adjacent property at
24901 W. Warren Avenue in order to expand parking.
The Banks Plymouth Township, Michigan branch office is located at 44623 Five Mile at the
corner of Sheldon Road and contains 1,595 square feet of leased space in a retail shopping center
anchored by a regional grocery store.
The Banks Canton Township, Michigan branch office is located in a 6,056 square foot single
story commercial/retail office building at 1325 N. Canton Center near the corner of Saltz Road and
is owned by the Bank.
The Banks Clinton Township, Michigan regional lending center is located at 45000 River Ridge
Drive, Suite 110, along Hall Road (M-59) near the corner of Romeo Plank Road. The Bank leases
7,426 of space in the River Ridge Corporate Office Center Building. This lease expires in 2011 and
will not be renewed.
The Banks Clinton Township, Michigan branch office is located at 19100 Hall Road near Romeo
Plank Road. The Bank leases a 3,750 square foot single story commercial/retail office building.
The Banks Southgate, Michigan branch office is located in a 2,035 square foot single story
building, which is located at 12820 Fort Street and is owned by the Bank.
The Banks Auburn Hills, Michigan branch office is located at 3201 University Drive, Suite
180. The Bank currently leases 2,037 square feet of this commercial office building.
The Banks Saline, Michigan branch office is located at 450 East Michigan Avenue. The Bank
currently leases 2,575 square feet of this single story office building.
The Banks Ann Arbor, Michigan regional lending center and branch office is located at 250
West Eisenhower. The Bank currently leases 4,523 square feet of this commercial office building.
The Banks Administrative and Wayne Regional Lending Center is located at 1360 Porter Street
in Dearborn, Michigan and is owned by the Bank. This office is the executive headquarters of the
Corporation. The Banks administrative, human resources and commercial lending departments
currently occupy this 10,000 square foot, two story building.
The Banks Operations Center is located in a 56,820 square foot three story building, which is
located at 4000 Allen Road in Allen Park, Michigan and is owned by the Bank.
The Banks Birmingham, Michigan branch office and regional lending center is located in a
12,616 square foot two story building at 1040 E. Maple and is owned by the Bank.
The Banks Bloomfield Township, Michigan branch office is located at 3681 W. Maple. The Bank
leases this 4,320 square foot single story office building.
The Banks Bingham Farms, Michigan branch office is located at 30700 Telegraph Road. The Bank
leases 1,106 square feet in the Bingham Office Center Complex.
The Banks Southfield/Twelve Mile branch office is located at 20000 Twelve Mile Road in
Southfield, Michigan and is owned by the Bank.
21
The Banks Galleria branch office is located at 200 Galleria in Southfield, Michigan. The
Bank currently leases 1,120 square feet in the Galleria Officenter.
The Banks Shelby Township, Michigan branch office is located in a 3,108 square foot single
story building, which is located at 7755 23 Mile Road and is owned by the Bank.
The Banks Troy Operations center is located in 9,900 square foot office building at 2681
Industrial Row in Troy, Michigan and is owned by the Bank. This office building is no longer being
utilized and is 100% leased to a non-affiliated third party tenant.
Item 3. Legal Proceedings
From time to time, the Corporation and its subsidiaries are parties to legal proceedings
incidental to their business. At December 31, 2010, there were no legal proceedings which
management anticipates would have a material adverse effect on the results of operations or
financial position of the Corporation.
Item 4. Reserved
No matters were submitted to a vote of security holders during the fourth quarter of 2010.
PART II
Item 5. Market for Registrants Common Equity, and Related Stockholder Matters
The information required by this item appears in the Corporations 2010 Annual Report to
Stockholders under the caption Quarterly Common Stock Price Information and is incorporated by
reference herein.
At March 1, 2011, there were 336 record holders of the common stock. In addition, it is
estimated that there were approximately 3,500 beneficial owners of common stock who own their
shares through brokers or banks.
Item 6. Selected Financial Data
The information required by this item appears in the Corporations 2010 Annual Report to
Stockholders under the caption Summary of Selected Financial Data and is incorporated by
reference herein.
Item 7. Managements Discussion and Analysis of Financial Condition and Results of
Operations
The information required by this item appears in the Corporations 2010 Annual Report to
Stockholders under the caption Managements Discussion and Analysis of Financial Condition and
Results of Operations and is incorporated by reference herein.
Item 7A. Quantitative and Qualitative Disclosure About Market Risk
The information required by this item appears in the Corporations 2010 Annual Report to
Stockholders under the caption Managements Discussion and Analysis of Financial Condition and
Results of Operations and is incorporated by reference herein.
Item 8. Financial Statements and Supplementary Data
The financial statements included in the Corporations 2010 Annual Report to Stockholders are
incorporated by reference herein.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
The information set forth under the caption, Independent Public Accountants, in the
definitive Proxy Statement of the Corporation dated April 15, 2011 is incorporated by reference
herein.
22
Item 9A. Controls and Procedures
The Report by Dearborn Bancorp, Inc. and Subsidiary on Internal Controls over Financial
Reporting in the Corporations 2010 Annual Report to Stockholders is incorporated by reference
herein.
Item 9B. Other Information
There was no other information to disclose.
PART III
Item 10. Directors and Executive Officers of the Registrant
The information set forth under the caption Information about Directors and Nominees for
Directors in the definitive Proxy Statement of the Corporation dated April 15, 2011 is
incorporated by reference herein.
Reference is made to Part I of this report for information as to executive officers of the
Corporation and Bank.
The Corporation has a separately-designated standing audit committee established in accordance
with Section 3(a)(58)(A) of the Securities Exchange Act of 1934. The members of the Audit
Committee consist of Margaret I. Campbell, William J. Demmer, Michael J. Dorian, Jr., Donald G.
Karcher and Bradley F. Keller.
The Board of Directors has determined that Bradley F. Keller and Donald G. Karcher, members of
the Audit Committee, are qualified as audit committee financial experts, as that term is defined in
the rules of the Securities and Exchange Commission. Bradley F. Keller and Donald G. Karcher are
independent, as independence for audit committee members is defined in the listing standards of the
Nasdaq Stock Market and the rules of the Securities and Exchange Commission.
We have adopted a Code of Ethics that applies to all of our directors, officers and employees,
including our principal executive officer, principal financial officer, principal accounting
officer or controller, and persons performing similar functions. The Code of Ethics and any
amendments to or waivers from the Code of Ethics, to the extent applicable to our principal
executive officer, principal financial officer, principal accounting officer or controller, and
persons performing similar functions, are available upon request at no charge. Such requests
should be made by writing or calling: Carolyn Wilkins, Corporate Services Officer, 4000 Allen Road,
Allen Park, Michigan 48101; (313) 381-3200 or by E-mail at Carolyn.Wilkins @fidbank.com.
Item 11. Executive Compensation
The information set forth under the caption Executive Compensation and Officer Agreements
in the definitive Proxy Statement of the Corporation dated April 15, 2011 is incorporated by
reference herein.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information set forth under the captions Security Ownership in the definitive Proxy
Statement of the Corporation dated April 15, 2011 is incorporated by reference herein.
The following table summarizes information, as of December 31, 2010, relating to the
Corporations compensation plans under which its equity securities are authorized for issuance.
23
Number of Securities to | Weighted average | Number of securities | ||||||||||
be issued upon exercise | exercise price of | remaining available for | ||||||||||
of outstanding options, | outstanding options, | future issuance under | ||||||||||
warrants and rights | warrants and rights | equity compensation plans | ||||||||||
Plan Category | ( a ) | ( b ) | ( c ) | |||||||||
Equity Compensation
Plans approved by
security holders ( 1 ) |
541,621 | $ | 6.59 | 89,570 | ||||||||
Equity Compensation
Plans not approved by
security holders |
| | | |||||||||
Total |
541,621 | $ | 6.59 | 89,570 |
(1) | Column ( a ) includes 242,991 shares from the 1994 Stock Option Plan and 298,630 shares from the 2005 Long-Term Incentive Plan. Shares in column ( c ) represent the shares that are available for grant under the 2005 Long-Term Incentive Plan. |
Item 13. Certain Relationships and Related Transactions
The information set forth under the caption Related Transactions in the definitive Proxy
Statement of the Corporation dated April 15, 2011 is incorporated by reference herein.
Item 14. Principal Accountant Fees and Services
The information presented under the caption Fees Paid to Independent Public Accountants in
the definitive Proxy Statement of the Corporation dated April 15, 2011 is incorporated by reference
herein.
PART IV
Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a)(1) Financial Statements
The following financial statements of the Corporation appear in the Corporations
2008 Annual Report to Stockholders and are incorporated by reference in item 8.
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2010 and 2009
Consolidated Statements of Income for the years ended December 31, 2010 and 2009
Consolidated Statements of Changes in Stockholders Equity for the years ended
December 31, 2010 and 2009
Consolidated Statements of Cash Flows for the years ended December 31, 2010 and 2009
Notes to Consolidated Financial Statements
(2) Financial Statement Schedules
No schedules are required under this item.
24
(3) Exhibits
The Exhibit numbers in brackets being those in such Registration Statements, Form
10-K, Form 10-Q or Form 8-K Reports.
(3)(a)
|
Articles of Incorporation of Registrant, As Amended. [3(a)] was filed as an Exhibit to the Form 10-Q Report of the Registrant for the quarter ended December 9, 2008 and is incorporated herein by reference. | |
(3)(b)
|
By-Laws of the Registrant, As Amended. [3(b)] was filed as an Exhibit to the Form 10-K Report of the Registrant for the fiscal year ended December 31, 1995 and is incorporated herein by reference. | |
(3)(d)
|
Amendment to the Bylaws of the Registrant was filed as an exhibit to report on Form 8-K filed on December 18, 2007 and is incorporated herein by reference. | |
(10)(a)
|
1994 Stock Option Plan, As Amended. [10(a)] was filed as an Exhibit to the Form 10-Q Report of the Registrant for the quarter ended June 30, 1997 and is incorporated herein by reference. (X) | |
(10)(a)
|
2005 Long-Term Incentive Plan [10(a)] was filed as an Exhibit to the Form 10-Q Report of the Registrant for the quarter ended June 30, 2005 and is hereby incorporated by reference. (X) | |
(10)(b)
|
Employment Agreement between the Registrant and Michael J. Ross. [10(b)] was filed as an Exhibit to Form 10-Q of the Registrant for the quarter ended June 30, 2003 and is incorporated herein by reference. | |
(10)(c)
|
Change in Control Agreement between the Registrant and five officers. [10(c)] was filed as an Exhibit to Form 10-Q of the Registrant for the quarter ended June 30, 2003 and is incorporated herein by reference. | |
(10.1)
|
Form of Stock Option Agreement granted to various executive officers. (10.1) was filed as an exhibit to Form 8-K of the Registrant, dated December 6, 2005 and is incorporated herein by reference. | |
(10.2)
|
Form of Restricted Stock Agreement granted to various officers. (10.2) was filed as an exhibit to Form 8-K of the Registrant, dated December 6, 2005 and is incorporated herein by reference. | |
(14)
|
Code of Ethics of the Registrant (14) was filed as an Exhibit to Form 10-K of the Registrant for the year ended December 31, 2003 and is incorporated herein by reference. | |
(21)
|
Subsidiaries of the Registrant (21) was filed as an Exhibit to Form 10-K of the Registrant for the year ended December 31, 2003 and is incorporated herein by reference. | |
Exhibit (13)
|
2010 Annual Report to Stockholders. | |
Exhibit (21)
|
Subsidiaries of the Registrant | |
Exhibit (23)
|
Consent of Independent Registered Public Accounting Firm | |
Exhibit (31.1)
|
Rule 13a-14(a) CEO Certification. | |
Exhibit (31.2)
|
Rule 13a-14(a) CFO Certification. | |
Exhibit (32.1)
|
CEO Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
Exhibit (32.2)
|
CFO Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
25
Exhibit (99)
|
Consent Order with Federal Deposit Insurance Corporation and Office of Financial and Insurance Regulation with the State of Michigan dated February 12, 2010 was filed as an exhibit to Form 10-K of the Registrant for the year ended December 31, 2009 and is incorporated herein by reference. |
(X) A compensatory plan required to be filed as an exhibit.
(b) Reports on Form 8-K
The Corporation filed one report on Form 8-K during the quarter ended December 31,
2010.
Form 8-K dated October 19, 2010, filing a press release announcing Dearborn
Bancorp Inc.s 2010 third quarter earnings.
26
Form 10-K Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized, on March 21, 2011.
Dearborn Bancorp, Inc. |
||||
By | /s / John E. Demmer | |||
(John E. Demmer, Chairman of the Board and Director) | ||||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the capacities
indicated on March 21, 2011.
/s/ Michael J. Ross
|
President, Chief Executive Officer and Director (Principal Executive Officer) |
|||||
/s/ Jeffrey L. Karafa
|
Vice President, Treasurer and Secretary (Principal Financial and Accounting Officer) |
|||||
/s/ Margaret I. Campbell
|
Director | /s/ William J. Demmer
|
Director | |||
/s/ Michael V. Dorian, Jr.
|
Director | /s/ Bradley F. Keller
|
Director | |||
/s/ David Himick
|
Director | /s/ Jeffrey G. Longstreth
|
Director | |||
/s/ Donald G. Karcher
|
Director | /s/ Dr. Robert C. Schwyn
|
Director |
27
Exhibit Index
Exhibit No. | Description | |
(3)(a)
|
Articles of Incorporation of Registrant, As Amended. [3(a)] was filed as an Exhibit to the Form 10-Q Report of the Registrant for the quarter ended December 31, 2008 and is incorporated herein by reference. | |
(3)(b)
|
By-Laws of the Registrant, As Amended. [3(b)] was filed as an Exhibit to the Form 10-K Report of the Registrant for the fiscal year ended December 31, 1995 and is incorporated herein by reference. | |
(3)(d)
|
Amendment to the Bylaws of the Registrant was filed as an exhibit to report on Form 8-K filed on December 18, 2007 and is incorporated herein by reference. | |
(10)(a)
|
1994 Stock Option Plan, As Amended. [10(a)] was filed as an Exhibit to the Form 10-Q Report of the Registrant for the quarter ended June 30, 1997 and is incorporated herein by reference. (X) | |
(10)(a)
|
2005 Long-Term Incentive Plan [10(a)] was filed as an Exhibit to the Form 10-Q Report of the Registrant for the quarter ended June 30, 2005 and is hereby incorporated by reference. (X) | |
(10)(b)
|
Employment Agreement between the Registrant and Michael J. Ross. [10(b)] was filed as an Exhibit to Form 10-Q of the Registrant for the quarter ended June 30, 2003 and is incorporated herein by reference. | |
(10)(c)
|
Change in Control Agreement between the Registrant and five officers. [10(c)] was filed as an Exhibit to Form 10-Q of the Registrant for the quarter ended June 30, 2003 and is incorporated herein by reference. | |
(10.1)
|
Form of Stock Option Agreement granted to various executive officers. (10.1) was filed as an exhibit to Form 8-K of the Registrant, dated December 6, 2005 and is incorporated herein by reference. | |
(10.2)
|
Form of Restricted Stock Agreement granted to various officers. (10.2) was filed as an exhibit to Form 8-K of the Registrant, dated December 6, 2005 and is incorporated herein by reference. | |
(14)
|
Code of Ethics of the Registrant (14) was filed as an Exhibit to Form 10-K of the Registrant for the year ended December 31, 2003 and is incorporated herein by reference. | |
Exhibit (13)
|
2010 Annual Report to Stockholders. | |
Exhibit (21)
|
Subsidiaries of the Registrant | |
Exhibit (23)
|
Consent of Independent Registered Public Accounting Firm | |
Exhibit (31.1)
|
Rule 13a-14(a) CEO Certification. | |
Exhibit (31.2)
|
Rule 13a-14(a) CFO Certification. | |
Exhibit (32.1)
|
CEO Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
Exhibit (32.2)
|
CFO Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
(X) A compensatory plan required to be filed as an exhibit.
28