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## MANAGEMENT’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 

Although the Corporation’ s primary source of funds remains traditional deposits from within the communities served by its banking subsidiaries, future sources of deposits utilized 

could include the use of brokered time deposits offered outside the Corporation’ s traditional market area. Time deposits of $100 thousand or more at December 31, 2001, 2000 and 1999 had remaining maturities as follows: 

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Net loans increased $76.6 million during 2001 as commercial loans increased by $134.1 million and loans to individuals increased by $23.4 million compared to year-end 2000. The 2001 period reflected decreases of $83.1 million in residential real estate loans, due in part to the sale of $12.9 

million of 30 year residential mortgage loans with significant prepayment exposure during falling interest rates. 

Below is a schedule of loans by classification for the five years ended December 31, 2001: 

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An additional source of liquidity is marketable securities that the Corporation holds in its investment portfolio. These securities are classified as “ securities available for sale” . While the Corporation does not have specific intentions to sell these securities, they have been designated as “ available for sale”  because they may be sold for the purpose of obtaining future liquidity, for management of interest rate risk or as part of the implementation of tax management strategies. As of December 31, 2001, securities available for sale had an amortized cost of $1,456 million and an approximate fair 

value of $1,469 million. Gross unrealized gains were $19.6 million and gross unrealized losses were $6.2 million. Based upon the Corporation’ s historical ability to fund liquidity needs from other sources, the current available for sale portfolio is deemed to be more than adequate, as the Corporation does not anticipate a need to liquidate the investments until maturity. Below is a schedule of the contractual maturity distribution of securities held to maturity and securities available for sale at December 31, 2001. 

