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The Company’s policy requires measurement of the allowance for an impaired collateral dependent loan based
on the fair value of the collateral.  Other loan impairments are measured based on the present value of expected
future cash flows or the loan’s observable market price.
Results of Operations
Performance Summary.  Net earnings for 2002 were $34.0 million, an increase of $4.6 million, or 15.7%, over
net earnings for 2001 of $29.4 million.  Net earnings for 2000 were $28.3 million.  The increase in net earnings for
2002 over 2001 was primarily attributable to an increase in net interest income resulting primarily from growth in
average earning assets and an improved net interest margin. The increase in net earnings for 2001 over 2000 was
primarily attributable to an increase in net interest income resulting primarily from the growth in average earning
assets and an increase in noninterest income resulting primarily from increases in service fees on deposit accounts
and real estate mortgage fees.
On a basic net earnings per share basis, net earnings were $2.75 for 2002 as compared to $2.38 for 2001 and
$2.28 for 2000.   Return on average assets was 1.78% for 2002 as compared to 1.62% for 2001 and 1.67% for 2000.
Return on average equity was 15.13% for 2002 as compared to 14.35% for 2001 and 15.39% for 2000.
Affecting our 2002 net earnings and basic and diluted earnings per share is the implementation of Statement of
Financial Accounting Standards No. 141, "Business Combinations" ("SFAS No. 141") and Statement of Financial
Accounting Standards No. 142, "Goodwill and Other Intangible Assets" ("SFAS No. 142").  SFAS No. 141 requires
that all business combinations initiated after June 30, 2001 be accounted for under the purchase method and
addresses the initial recognition and measurement of goodwill and other intangible assets acquired in a business
combination.  SFAS No. 142 addresses the initial recognition and measurement of intangible assets acquired outside
of a business combination and the accounting for goodwill and other intangible assets subsequent to their
acquisition.  SFAS No. 142 provides that intangible assets with finite useful lives be amortized and that goodwill
and intangible assets with indefinite lives not be amortized, but rather be tested at least annually for impairment.
SFAS No. 142 was effective January 1, 2002 for calendar year companies; however, acquired goodwill and
intangible assets recorded in the acquisition of City Bancshares, Inc. closed subsequent to June 30, 2001 were
subject immediately to its provisions.
On January 1, 2002, goodwill amounting to $23,765,896 was not subject to further amortization as a result of
SFAS No. 142.  The Company conducted its initial impairment test in 2002, with no reduction of recorded goodwill
resulting from the test.  A reconciliation adjusting comparative net earnings and earnings per share for the years
ended December 31, 2001 and 2000, to show the effect of no longer amortizing the Company’s goodwill, follows:
     2001           2000      
Reported net earnings $ 29,354,505 $ 28,316,047
Add back: goodwill amortization
Goodwill amortization, before income tax     1,641,367 1,641,367
Income tax benefit       (420,000)       (420,000)
Adjusted net earnings  $ 30,575,872  $ 29,537,414
Basic earnings per share:
Reported net earnings $           2.38 $           2.28
Goodwill amortization, net of income tax benefit                .10                .10
Adjusted net earnings  $           2.48 $           2.38
Earnings per share, assuming dilution:
Reported net earnings $           2.37 $          2.27
Goodwill amortization, net of income tax benefit                .10               .10
Adjusted net earnings  $           2.47  $          2.37
Net Interest Income .  Net interest income is the difference between interest income on earning assets and
interest expense on liabilities incurred to fund those assets.  Our earning assets consist primarily of loans and