6
Our subsidiary banks paid aggregate dividends of approximately $26.6 million in 2002 and approximately $25.5
million in 2001. Under the dividend restrictions discussed above, as of December 31, 2002, our subsidiary banks,
without obtaining governmental approvals, could have declared in the aggregate additional dividends of
approximately $20.7 million from retained net profits.
To pay dividends, we and our subsidiary banks must maintain adequate capital above regulatory guidelines. In
addition, if the applicable regulatory authority believes that a bank under its jurisdiction is engaged in or is about to
engage in an unsafe or unsound practice (which, depending on the financial condition of the bank, could include the
payment of dividends), the authority may require, after notice and hearing, that such bank cease and desist from the
unsafe practice. The Federal Reserve Board and the OCC have each indicated that paying dividends that deplete a
bank’s capital base to an inadequate level would be an unsafe and unsound banking practice. The Federal Reserve
Board, the OCC and the FDIC have issued policy statements that recommend that bank holding companies and
insured banks should generally only pay dividends to the extent that net income is sufficient to cover both cash
dividends and rate of earnings retention consistent with capital needs, asset quality and overall financial condition.
No undercapitalized institution may pay a dividend.
Affiliate Transactions
The Federal Reserve Act, the FDIA and the rules adopted under these statutes restrict the extent to which we
can borrow or otherwise obtain credit from, or engage in certain other transactions with, our depository subsidiaries.
These laws regulate “covered transactions” between insured depository institutions and their subsidiaries, on the one
hand, and their nondepository affiliates, on the other hand.  “Covered transactions” include a loan or extension of
credit to a nondepository affiliate, a purchase of securities issued by such an affiliate, a purchase of assets from such
an affiliate (unless otherwise exempted by the Federal Reserve Board), an acceptance of securities issued by such an
affiliate as collateral for a loan, and an issuance of a guarantee, acceptance, or letter of credit for the benefit of such
an affiliate.  The “covered transactions” that an insured depository institution and its subsidiaries are permitted to
engage in with their nondepository affiliates are limited to the following amounts: (1) in the case of any one such
affiliate, the aggregate amount of “covered transactions” cannot exceed ten percent of the capital stock and the
surplus of the insured depository institution; and (2) in the case of all affiliates, the aggregate amount of “covered
transactions” cannot exceed twenty percent of the capital stock and surplus of the insured depository institution. In
addition, extensions of credit that constitute “covered transactions” must be collateralized in prescribed amounts.
Further, a bank holding company and its subsidiaries are prohibited from engaging in certain tie-in arrangements in
connection with any extension of credit, lease or sale of property or furnishing of services.  Finally, when we and
our subsidiary banks conduct transactions internally among us, we are required to do so at arm’s length.
Loans to Directors, Executive Officers and Principal Shareholders
The authority of our subsidiary banks to extend credit to our directors, executive officers and principal
shareholders, including their immediate family members and corporations and other entities that they control, is
subject to substantial restrictions and requirements under Sections 22(g) and 22(h) of the Federal Reserve Act and
Regulation O promulgated thereunder.  These statutes and regulations impose specific limits on the amount of loans
our subsidiary banks may make to directors and other insiders, and specified approval procedures must be followed