/2 H<     d 1$&%*''Consolidated Statement of Income''For year ended December 31, 19989'(In thousands, except for per share amounts)  "1998 "1997 "1996,'Interest income: Loans held for sale"$65,160"$34,691"$30,943'Loans and leases "52,329 "56,490 "52,203'Investment securities:'Taxable "3,867 "7,311 "6,876'Tax-exempt "299 "275 "333 'Federal funds sold  "731  "674  "1,290 "----------- "-------- "-------- 'Total interest income "122,386  "99,441  "91,645 "----------- "-------- "--------! 'Interest expense: Deposits  "23,340  "19,963  "17,732'Short-term borrowings "35,048 "23,788 "22,115'Long-term debt "814 "831 "1,778"-----------"--------"--------'Total interest expense "59,202 "44,582 "41,625"-----------"--------"--------'Net interest income "63,184 "54,859 "50,0208'Provision for loan and lease losses - Note 5  "5,995 "6,238 "4,553.'Net interest income after provision for'loan and lease losses "57,189 "48,621 "45,467"-----------"--------"--------0'Other income: Loan origination income "60,013 "41,370 "43,779'Gain on sale of loans "64,074 "38,610 "34,248'Loan servicing fees "57,284 "53,257 "46,877''Gain on sale of servicing assets "43,308 "32,631 "16,378'Trading gains (losses) "1,366"(1,961)"-''Gain from sale of leasing assets "5,241"-"- 'Other "12,443 "8,696 "8,699"-----------"--------"-------- "243,729 "172,603 "149,981!"-----------!"--------!"--------!"'Other expense: Salaries""120,780 ""86,533 ""79,017#'Employee benefits #"16,757 #"13,724 #"12,579$'Office expense $"12,868 $"10,583 $"10,387%'Premises and equipment %"20,216 %"16,621 %"13,903'&'Amortization of servicing assets &"24,267 &"15,755 &"14,331 ''Marketing and development '"11,789 '"7,697 '"7,365 ('Other ("38,759 ("23,660 ("20,578)"-----------)"--------)"--------*"245,436*"174,573*"158,160+"-----------+"--------+"--------!,'Income before income taxes ,"55,482 ,"46,651 ,"37,288-'Income taxes -"20,354 -"17,734 -"14,860."-----------."--------."-------- /"35,128 /"28,917 /"22,428(0'Distribution on company-obligated'1'mandatorily redeemable preferred/2'securities of subsidiary trust - Note 15 2"4,625 2"4,4732"-3"-----------3"--------3"--------24'Net income available to common shareholders4"$30,5034"$24,4444"$22,4285"-----------5"--------5"--------(6'Earnings per Basic - Note 17 6"$1.40 6"$1.10 6"$0.997'share of common7"===========7"========7"========*8'stock: Diluted - Note 17 8"$1.38 8"$1.08 8"$0.989"===========9"========9"========*:'Dividends per share of common stock :"$0.16 :"$0.14 :"$0.12;"===========;"========;"========F<'The accompanying notes are an integral part of the consolidated='financial statements.!?'Consolidated Balance Sheet=A'December 31, 1998 (In thousands, except for shares) A"1998 A"19973C'Assets: Cash and due from banksC"$68,942C"$56,524D'Federal funds sold D"8,580D"-E"-----------E"---------- F'Cash and cash equivalents F"77,522 F"56,524>G'Interest-bearing deposits with financial institutions  G"18,441 G"18,240H'Trading assets H"32,148 H"22,133%I'Investment securities - Note 3 I"48,055 I"55,208J'Loans held for saleJ"936,788J"528,7398K'Loans and leases, net of unearned income - Note 4K"556,991K"611,093#L'Less: Allowance for loan andM'lease losses - Note 5M"(9,888)M"(8,812)N"547,103N"602,281 O'Servicing assets - Note 6O"117,129 O"83,044P'Accounts receivable P"71,087 P"54,261"Q'Accrued interest receivable Q"13,071 Q"14,779&R'Premises and equipment - Note 7 R"21,382 R"21,040S'Other assets S"63,453 S"40,545T"-----------T"----------U"$1,946,179U"$1,496,794V"===========V"==========W'Liabilities andX'Shareholders' Equity:Y'DepositsZ'Noninterest-bearingZ"$477,724Z"$287,556['Interest-bearing["389,516["346,012(\'Certificates of deposit over $100\"141,971 \"86,028]"-----------]"----------^"1,009,211^"719,596%_'Short-term borrowings - Note 9_"644,861_"512,275`'Long-term debt - Note 10 `"2,839 `"7,096a'Other liabilities a"96,036 a"81,917b"-----------b"----------c'Total liabilitiesc"1,752,947c"1,320,884d"===========d"==========9e'Company-obligated mandatorily redeemable preferred/f'securities of subsidiary trust - Note 15 f"47,999 f"47,927g'Shareholders' equity&h'Preferred stock, no par value -,i'authorized 50,000 shares; none issuedi"-i"-#j'Common stock; no par value -+k'authorized 40,000,000 shares; issued4l'23,402,080 shares in 1998 and 1997; including4m'1,729,324 and 1,401,280 shares in treasury in"n'1998 and 1997, respectively n"29,965 n"29,965!o'Additional paid-in capital o"2,595 o"7803p'Net unrealized gain on investment securities2q'net of deferred income taxes of $57 in 1998r'and $31 in 1997. r"85 r"55s'Retained earningss"142,232s"115,414t"-----------t"----------u"174,877u"146,214#v'Less treasury stock, at costv"(29,644)v"(18,231)!w'Total shareholders' equityw"145,233w"127,983x"-----------x"----------y"$1,946,179y"$1,496,794z"===========z"==========P{'The accompanying notes are an integral part of the consolidated financial|'statements.@~'Consolidated Statement of Changes in Shareholders' Equity"Net Unrealized"Gain (Loss)"Additiona"l"'(In thousands, except share"Retained"on Investment "Common"Paid-In"Treasury'and per share amounts) "Total"Earnings"Securities "Stock"Capital "Stock!'Balance at January 1, 1996"$99,216"$74,648 "$(10)"$29,965 "$-"$(5,387)"--------"--------"-------"--------- "------"--------#'Comprehensive Income: Note 1'Net income "22,428"-"-"-"-"-!'Other Comprehensive Income"- "66"-"-"-"- 'Total "22,494"-"-"-"-"-('Cash dividends - $.012 per share*"(2,726)"(2,726)"-"-"-"-!'Tax benefit on exercise of'stock options "516 "516$'Purchase of 178,875 shares of'treasury stock*"(1,931)"-"-"-"-"(1,931) 'Sale of 256,736 shares of'treasury stock* "1,333 "(266)"-"- "(516) "2,115"--------"--------"-------"--------- "------"--------#'Balance at December 31, 1996"118,902 "94,084 "56 "29,965"-"(5,203)"========"========"======="========= "======"========#'Comprehensive Income: Note 1'Net income "24,444"-"-"-"-!'Other Comprehensive Income"- "(1)"-"-"- 'Total "24,443"-"-"-"-"-('Cash dividends - $.014 per share*"(3,114)"(3,114)"-"-"-"-!'Tax benefit on exercise of'stock options "576 "576$'Purchase of 940,082 shares of'treasury stock*"(14,412)"-"-"-"-"(14,412) 'Sale of 204,238 shares of'treasury stock* "1,588"-"-"- "204 "1,384"--------"--------"-------"--------- "------"--------#'Balance at December 31, 1997"127,983"115,414 "55 "29,965 "780"(18,231)"========"========"======="========= "======"========#'Comprehensive Income: Note 1'Net income "30,503"-"-"-"-!'Other Comprehensive Income"- "30"-"- 'Total "30,533"-"-"-"-"-('Cash dividends - $.016 per share*"(3,473)"(3,473)"-"-"-"-!'Tax benefit on exercise of'stock options "1,027 "1,027$'Purchase of 496,455 shares of'treasury stock*"(12,593)"-"-"-"-"(12,593) 'Sale of 168,411 shares of'treasury stock* "1,756 "(212)"-"- "788 "1,180"--------"--------"-------"--------- "------"--------#'Balance at December 31, 1998"$145,233"$142,232 "$85"$29,965 "$2,595"$(29,644)"========"========"======="========= "======"========T'*Adjusted for the two-for-one stock splits December 30,1996 and May 27 ,1998.P'The accompanying notes are an integral part of the consolidated financial'statements.+'Consolidated Statement of Cash Flows+'For the year ended December 31, 1998 "1998 "1997 "1996'Net Income"$30,503"$24,444"$22,4289'Adjustments to Depreciation and amortization "5,802 "3,910 "5,398:'reconcile net Amortization and impairment of,'income to cash servicing assets "36,498 "16,355 "14,969?'provided by Provision for loan and lease losses "5,995 "6,238 "4,553D'operating Amortization of premiums, less accretion+'activities: of discounts "3,210 "1,716 "1,589&'Increase in loans held for sale"(408,049)"(81,841)"(66,442))'Gain on sale of mortgage servicing"(43,308)"(32,631)"(16,378)%'Net increase in trading assets"(10,015)"(9,472)"(12,661)'Other, net"(24,773)"(21,823)"(9,064)"----------"---------"----------!'Net cash used by operating'activities"(404,137)"(93,104)"(55,608)"----------"---------"----------4'Lending and Proceeds from maturities/calls of5'investing activities: investment securities:'Held-to-maturity "10,645 "6,542 "5,045'Available-for-sale "280 "7,534 "29,7410'Proceeds from sales of available-for-sale'securities "6,000 "26,309 "2,028)'Purchase of investment securities:'Held-to-maturity"(8,932)"(3,868)"(14,286)'Available-for-sale"(4,051)"(20,315)"(36,371)''Net increase in interest-bearing+'deposits with financial institutions "(201)"(6,897)"(3,406)-'Net increase in loans, excluding sales"(131,632)"(414,205)"(258,412)'Sale of loans"175,574"331,861"139,410%'Gain on sale of leasing assets "5,241"-"-$'Additions to servicing assets"(165,910)"(84,781)"(81,045)-'Proceeds from sale of servicing assets"138,635 "90,734 "65,163'Other, net"(4,148)"(5,930)"(5,651)"----------"---------"----------*'Net cash provided (used) by lending'and investing activities "21,501"(73,016)"(157,784)"----------"---------"----------4'Financing activities:Net increase in deposits"289,615 "79,443 "76,154,'Net increase in short-term borrowings"132,586 "50,409"151,604"'Repayment of long-term debt"(11,871)"(10,563)"(12,772)#'Proceeds from long-term debt "7,614"- "8,840,'Sale of company-obligated manditorily)'redeemable preferred securities of,'` subsidiary trust"-"-47,927"-!'Purchase of treasury stock"(12,593)"(14,412)"(1,931)/'Proceeds from sale of stock for employee'benefit plans "1,756 "1,588 "1,332'Dividends paid"(3,473)"(3,114)"(2,726)"----------"---------"----------'Net cash provided by'financing activities"403,634"151,278"220,501"----------"---------"----------*'Net increase (decrease) in cash and'cash equivalents "20,998"(14,842) "7,109-'Cash and cash equivalents at beginning'of year"$56,524 "71,366 "64,257"----------"---------"----------/'Cash and cash equivalents at end of year"$77,522"$56,524"$71,366"=========="========="==========8'Supplemental Cash paid during the period:$'disclosures of cash Interest"$58,689"$45,554"$41,248"=========="========="==========('flow information: Income taxes"$18,947 "$9,912 "$6,230"=========="========="==========P'The accompanying notes are an integral part of the consolidated financial'statements.