31 On March 1, 2003, the Corporation acquired 100 percent of the outstanding stock of CNBC Bancorp, the holding company of Commerce National, CRS, Inc. and CNBC Trust I. Commerce National is a national chartered bank located in Columbus, Ohio. CNBC Bancorp was merged into the Corporation, and Commerce National maintained its national charter as a wholly-owned subsidiary of the Corporation. CRS, Inc. and the CNBC Trust I are also maintained as wholly- owned subsidiaries of the Corporation. The Corporation issued approximately 1,225,242 shares of its common stock and approximately $24,562,000 in cash to complete the transaction. As a result of the acquisition, the Corporation will have an opportunity to increase its customer base and continue to increase its market share. The purchase had a recorded acquisition price of $55,729,000, including goodwill of $30,291,000 none of which is deductible for tax purposes. Additionally, core deposit intangibles totaling $8,171,000 were recognized and are being amortized over 10 years using the 150 percent declining balance method. EARNINGS PER SHARE have been computed based upon the weighted average common and common equivalent shares outstanding during each year and have been restated to give effect to a five percent (5%) stock dividend on its shares of outstanding common stock distributed to stockholders on September 12, 2003. The following table illustrates the effect on net income and earnings per share if the Corporation had applied the fair value provisions of FASB Statement No. 123, Accounting for Stock-Based Compensation , to stock-based employee compensation. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (table dollar amounts in thousands, except share data) NOTE 1 NOTE 2 BUSINESS COMBINATIONS Year Ended December 31 2003 2002 2001 ----------------------------- Net income, as reported ...................... $27,571 $27,836 $22,209 Add: Total stock-based employee compensation cost included in reported net income, net of income taxes ........................... 12 23 23 Less: Total stock-based employee compensation cost determined under the fair value based method, net of income taxes ............... (1,034) (1,029) (521) ------- ------- ------- Pro forma net income $26,549 $26,830 $21,711 ======= ======= ======= Earnings per share: Basic – as reported ....................... $ 1.51 $ 1.70 $ 1.63 Basic – pro forma ......................... $ 1.46 $ 1.64 $ 1.59 Diluted – as reported ..................... $ 1.50 $ 1.69 $ 1.61 Diluted – pro forma ....................... $ 1.45 $ 1.63 $ 1.58