SECURITIES AND EXCHANGE COMMISSION
450 FIFTH STREET, N.W.
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2004
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to _______________
Commission File Number 000-31957
ALPENA BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
UNITED STATES 38-3567362
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 S. SECOND AVENUE, ALPENA, MICHIGAN 49707
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (989) 356-9041
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceeding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
Common Stock, Par Value $1.00 Outstanding at May 13, 2004
(Title of Class) 1,658,780 shares
Transitional Small Business Disclosure Format: Yes [ ] No [X]
ALPENA BANCSHARES, INC.
FORM 10-QSB
QUARTER ENDED MARCH 31, 2004
INDEX
PART I - FINANCIAL INFORMATION
Interim Financial Information required by Rule 10-01 of Regulation S-X and Item
303 of Regulation S-K is included in this Form 10-QSB as referenced below:
PAGE
----
ITEM 1 - FINANCIAL STATEMENTS
Consolidated Balance Sheet at March 31, 2004 and December 31, 2003........................ 3
Consolidated Statements of Income for the Three Months
Ended March 31, 2004 and March 31, 2003................................................. 4
Consolidated Statement of Changes in Stockholders' Equity
for the Three Months Ended March 31, 2004............................................... 5
Consolidated Statements of Cash Flow for the Three Months Ended
March 31, 2004 and March 31, 2003....................................................... 6
Notes to Consolidated Financial Statements................................................ 7
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION........ 11
ITEM 3 - CONTROLS AND PROCEDURES..................................................................... 16
PART II - OTHER INFORMATION
OTHER INFORMATION.................................................................................... 17
SIGNATURES........................................................................................... 18
When used in this Form 10-QSB or future filings by Alpena Bancshares, Inc. (the
"Company") with the Securities and Exchange Commission ("SEC"), in the Company's
press releases or other public or stockholder communications, or in oral
statements made with the approval of an authorized executive officer, the words
or phrases "would be," "will allow," "intends to," "will likely result," "are
expected to," "will continue," "is anticipated," "estimate," "project," or
similar expressions are intended to identify "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995.
The Company wishes to caution readers not to place undue reliance on any such
forward-looking statements, which speak only as of the date made, and to advise
readers that various factors, including regional and national economic
conditions, changes in levels of market interest rates, credit and other risks
of lending and investment activities and competitive and regulatory factors,
could affect the Company's financial performance and could cause the Company's
actual results for future periods to differ materially from those anticipated or
projected.
The Company does not undertake, and specifically disclaims any obligation, to
update any forward-looking statements to reflect occurrences or unanticipated
events or circumstances after the date of such statements.
2
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
ALPENA BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
March 31, 2004 December 31, 2003
-------------- -----------------
(Unaudited)
ASSETS
Cash and cash equivalents:
Cash on hand and due from banks ................................................ $ 2,578,224 $ 3,379,500
Overnight deposits with FHLB ................................................... 2,355,801 3,325,625
-------------- --------------
Total cash and cash equivalents ................................................ 4,934,025 6,705,125
Securities available-for-sale .................................................. 37,893,774 34,669,982
Loans held for sale ............................................................ 1,298,000 930,525
Loans receivable, net of allowance for loan losses of $1,075,314 and
$1,035,726 as of March 31, 2004 and December 31, 2003 respectively ......... 164,953,985 163,460,594
Foreclosed real estate and other repossessed assets ............................ 67,529 198,672
Real estate held for investment ................................................ 483,647 438,976
Federal Home Loan Bank stock, at cost .......................................... 4,515,800 4,459,800
Premises and equipment ......................................................... 5,713,460 5,816,698
Accrued interest receivable .................................................... 1,130,368 1,065,924
Intangible Assets .............................................................. 3,773,770 3,851,133
Other assets ................................................................... 2,287,725 2,326,782
-------------- --------------
Total assets ................................................................... $ 227,052,083 $ 223,924,211
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits ....................................................................... $ 152,607,140 $ 151,702,446
Advances from borrowers for taxes and insurance ................................ 275,101 96,068
Federal Home Loan Bank advances & Note Payable ................................. 50,158,408 47,158,408
Accrued expenses and other liabilities ......................................... 1,817,922 2,783,987
Deferred income taxes .......................................................... 263,757 232,258
-------------- --------------
Total liabilities .............................................................. 205,122,328 201,973,167
-------------- --------------
Commitments and contingencies .................................................. - -
Stockholders' equity:
Common stock ($1.00 par value, 20,000,000 shares authorized, 1,658,780 and
1,657,480 shares issued and outstanding at
March 31, 2004 and December 31, 2003, respectively) ......................... 1,658,780 1,657,480
Additional paid-in capital ..................................................... 5,349,095 5,337,882
Retained earnings, restricted .................................................. 4,922,000 4,807,000
Retained earnings .............................................................. 9,631,911 9,853,663
Accumulated other comprehensive income ......................................... 367,969 295,019
-------------- --------------
Total stockholders' equity ..................................................... 21,929,755 21,951,044
-------------- --------------
Total liabilities and stockholders' equity ..................................... $ 227,052,083 $ 223,924,211
============== ==============
See accompanying notes to consolidated financial statements.
3
ALPENA BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
For the Three Months
Ended March 31,
----------------------------
2004 2003
------------ ------------
(Unaudited)
Interest income:
Interest and fees on loans ............................................... $ 2,674,279 $ 2,821,146
Interest and dividends on investments .................................... 356,667 501,411
Interest on mortgage-backed securities ................................... 60,224 77,724
------------ ------------
Total interest income .................................................... 3,091,170 3,400,281
------------ ------------
Interest expense:
Interest on deposits ..................................................... 813,407 1,029,892
Interest on borrowings ................................................... 631,206 672,237
------------ ------------
Total interest expense ................................................... 1,444,613 1,702,129
------------ ------------
Net interest income ...................................................... 1,646,557 1,698,149
Provision for loan losses ................................................ 81,000 162,500
------------ ------------
Net interest income after provision for loan losses ...................... 1,565,557 1,535,649
------------ ------------
Non Interest income:
Service charges and other fees ........................................... 243,062 160,368
Mortgage banking activities .............................................. 143,326 376,115
Gain on sale of available-for-sale investments ........................... - -
Net gain (loss) on sale of premises and equipment,
real estate owned and other repossessed assets ......................... (22,885) 2,865
Other .................................................................... 20,257 43,011
Insurance & Brokerage Commissions ........................................ 753,924 -
------------ ------------
Total other income ....................................................... 1,137,684 701,137
------------ ------------
Non interest expenses:
Compensation and employee benefits ....................................... 1,488,698 1,176,168
SAIF Insurance Premiums .................................................. 5,872 -
Advertising .............................................................. 56,168 43,735
Occupancy ................................................................ 326,143 270,519
Amortization of intangible assets ........................................ 77,363 51,252
Service Bureau Charges ................................................... 83,164 78,056
Insurance & Brokerage Commission Expense ................................. 315,561 -
Professional Services .................................................... 76,553 -
Other (See Note 5) ....................................................... 294,602 367,549
------------ ------------
Other expenses ........................................................... 2,724,124 1,993,961
------------ ------------
Income before income tax expense ......................................... (20,883) 124,047
Income tax expense ....................................................... (6,479) 38,470
------------ ------------
Net income ............................................................... $ (14,404) $ 85,577
============ ============
Per share data:
Basic earnings per share ................................................. $ (0.01) $ 0.05
Weighted average number of shares outstanding ............................ 1,658,554 1,646,347
Diluted earnings per share ............................................... $ (0.01) $ 0.05
Weighted average number of shares outstanding,
including dilutive stock options ....................................... 1,659,854 1,656,740
Dividends per common share ............................................... $ 0.125 $ 0.125
See accompanying notes to consolidated financial statements.
4
ALPENA BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2004
Accumulated
Additional Other
Common Paid-in Retained Comprehensive
Stock Capital Earnings Income Total
------------ ------------ ------------ ------------- ------------
Balance at December 31, 2003 ..................... $ 1,657,480 $ 5,337,882 $ 14,660,663 $ 295,019 21,951,044
Stock issued upon exercise of
stock options (1300 shares) .................... 1,300 11,213 - - 12,513
Tax Credit-Exercised Stock Options FAS123 ........ - - - - -
Net loss for the period .......................... - - (14,404) - (14,404)
Changes in unrealized gain
on available-for-sale securities ............... - - - 72,950 72,950
Total comprehensive income ....................... - - - - 58,546
Dividends declared ............................... - - (92,348) - (92,348)
------------ ------------ ------------ ------------ ------------
Balance at March 31, 2004 ........................ $ 1,658,780 $ 5,349,095 $ 14,553,911 $ 367,969 $ 21,929,755
============ ============ ============ ============ ============
See accompanying notes to consolidated financial statements.
5
ALPENA BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Three Months Ended
March 31,
----------------------------
2004 2003
------------ ------------
(Unaudited)
Net income ..................................................................... $ (14,404) $ 85,577
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and Amortization of Core Deposit Intangible .................... 138,179 114,451
Amortization Intangible Assets .............................................. 77,363 51,253
Provision for loan losses ................................................... 81,000 162,500
Accretion of discounts, amortization of premiums,
and other deferred yield items, net ....................................... 89,121 70,343
(Gain) loss on sale of investment securities available for sale ........... - -
Principal amount of loans sold .............................................. 5,309,970 16,435,816
Originations of loans held for sale ......................................... (5,677,445) (19,864,430)
(Gain) loss on sale of real estate held for investment .................... - -
(Gain) loss on sale of premises and equipment,
real estate owned and other repossessed assets ............................ - (2,866)
Net Changes: ................................................................... 2,666
(Increase) decrease in accrued interest receivable and other assets ....... (25,387) (128,259)
Increase (decrease) in accrued interest and other liabilities ............. (972,145) 685,870
------------ ------------
Net cash provided by (used in) operating activities ............................ (993,748) (2,387,079)
------------ ------------
Cash flows from investing activities:
(Increase) decrease in net loans receivable .................................... (1,574,391) 4,680,393
Proceeds from sales or maturity of:
Investment securities available-for-sale ..................................... 2,052,291 3,245,064
Real estate held for investment .............................................. - (94,764)
Real estate owned, other repossessed assets and premises & equipment ......... 131,143 51,155
Purchases of:
Investment securities available-for-sale ..................................... (5,254,675) (847,183)
Premises and equipment ....................................................... (34,941) (471,740)
InsuranCenter of Alpena ...................................................... -
FHLB Stock ................................................................... (56,000)
Real estate held for investment .............................................. (44,671) -
------------ ------------
Net cash provided by (used in) investing activities ............................ (4,781,244) 6,562,925
------------ ------------
Cash flows from financing activities:
Proceeds from Federal Home Loan Bank advances .................................. 3,000,000 -
Repayments of Federal Home Loan Bank advances .................................. - (1,000,000)
Increase (decrease) in deposits ................................................ 904,694 (2,420,226)
Advances from Borrowers ........................................................ 179,033 131,196
Dividend paid on common stock .................................................. (92,348) (90,820)
Issuance of common stock ....................................................... 12,513 10,588
------------ ------------
Net cash provided by (used in) financing activities ............................ 4,003,892 (3,369,262)
------------ ------------
Net increase (decrease) in cash and cash equivalents............................ (1,771,100) 806,584
Cash and cash equivalents at beginning of period................................ 6,705,125 15,098,861
============ ============
Cash and cash equivalents at end of period...................................... $ 4,934,025 $ 15,905,445
============ ============
Supplemental disclosure of cash flow information:
Cash paid during the period for income taxes.................................... $ - $ -
============ ============
Cash paid during the period for interest........................................ $ 1,372,416 $ 1,705,754
============ ============
6
ALPENA BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.
The accompanying consolidated financial statements have been prepared on an
accrual basis of accounting and include the accounts of Alpena Bancshares, Inc.
(the "Company") and its wholly-owned subsidiary, First Federal of Northern
Michigan (the "Bank") and its wholly owned subsidiaries Financial Service and
Mortgage Corporation ("FSMC") and the InsuranCenter of Alpena ("ICA"). FSMC
invests in real estate that includes leasing, selling, developing, and
maintaining real estate properties. ICA is a licensed insurance agency engaged
in the business of property, casualty and health insurance. All significant
intercompany balances and transactions have been eliminated in the
consolidation.
These interim financial statements are prepared without audit and reflect all
adjustments, which, in the opinion of management, are necessary to present
fairly the consolidated financial position of the Company at March 31, 2004 and
2003, and its results of operations and statement of cash flows for the periods
presented. All such adjustments are normal and recurring in nature. The
accompanying consolidated financial statements do not purport to contain all the
necessary financial disclosures required by generally accepted accounting
principles that might otherwise be necessary and should be read in conjunction
with the consolidated financial statements and notes thereto of the Company
included in the Annual Report for the year ended December 31, 2003. Results for
the three months ended March 31, 2004 are not necessarily indicative of the
results that may be expected for the year ending December 31, 2004.
CRITICAL ACCOUNTING POLICIES - The Company's critical accounting policies relate
to the allowance for losses on loans, mortgage servicing rights and impairment
of goodwill.
Allowance for Loan and Lease Losses - The Company has established a
systematic method of periodically reviewing the credit quality of the loan
portfolio in order to establish an allowance for losses on loans. The allowance
for losses on loans is based on management's current judgments about the credit
quality of individual loans and segments of the loan portfolio. The allowance
for losses on loans is established through a provision for loan losses based on
management's evaluation of the risk inherent in the loan portfolio, and
considers all known internal and external factors that affect loan
collectability as of the reporting date. Such evaluation, which includes a
review of all loans on which full collectability may not be reasonably assured,
considers among other matters, the estimated net realizable value or the fair
value of the underlying collateral, economic conditions, historical loan loss
experience, management's knowledge of inherent risks in the portfolio that are
probable and reasonably estimable and other factors that warrant recognition in
providing an appropriate loan loss allowance. This evaluation involves a high
degree of complexity and requires management to make subjective judgments that
often require assumptions or estimates about uncertain matters.
Mortgage Servicing Rights - In 2000, the Bank began selling to investors a
portion of its originated residential mortgage loans. The mortgage loans
serviced for others are not included in the consolidated statements of financial
condition.
When the Bank acquires mortgage servicing rights through the origination
of mortgage loans and sells those loans with servicing rights retained, it
allocates the total cost of the mortgage loans to the mortgage servicing rights
based on their relative fair value. As of March 31, 2004, the Bank was servicing
loans sold to others totaling $139.7 million. Capitalized mortgage servicing
rights are amortized as a reduction of servicing fee income in proportion to,
and over the period of, estimated net servicing income by use of a method that
approximates the level-yield method. Capitalized mortgage servicing rights are
periodically evaluated for impairment using a model that takes into account
several variables. If impairment is identified, the amount of impairment is
charged to earnings with the establishment of a valuation allowance against the
capitalized mortgage servicing rights asset. In general, the value of mortgage
servicing rights increases as interest rates rise and decreases as interest
rates fall. This is because the estimated life and estimated income from a loan
7
increase as interest rates rise and decrease as interest rates fall. The last
evaluation was performed as of December 31, 2003. The key economic assumptions
made in determining the fair value of the mortgage servicing rights included the
following:
Annual Constant Prepayment Speed (CPR): 13.89%
Weighted Average Life Remaining (in months): 253.3
Discount Rate used: 7.36%
At the December 31, 2003 valuation, the mortgage servicing rights value was
calculated, based on the above factors, to be $1,421,175. The book value as of
December 31, 2003 was $993,108. Because the fair value exceeded the book value,
there was no adjustment required. Due to the significant cushion that existed on
December 31, 2003, management elected to not have the independent valuation
performed as of March 31, 2004. The book value of the Mortgage Servicing Rights
on March 31, 2004 is $944,920 which is $48,188 lower than the December 31, 2003
value.
Impairment of Goodwill - In connection with the purchase of the
InsuranCenter of Alpena (ICA), the Company allocated the excess of the purchase
price paid over the fair value of net assets acquired to intangible assets
including goodwill. These intangible assets included the customer list and the
Blue Cross Blue Shield Contract. The unallocated portion of the excess purchase
price became true goodwill. The Company is amortizing the value assigned to the
customer list and the Blue Cross contract over a 20 year period. Additionally,
the Company is testing each of those assets for impairment on an annual basis.
If, through testing, it was determined that there was significant runoff of the
customer list or material changes to the Blue Cross contract, then there might
be a need to further write down the value of those intangible assets. Writing
down the assets would create expense to the Company and negatively impact
earnings. In 2003, there was no impairment based upon the testing. The true
goodwill, which is not amortized, must also be tested for impairment on an
ongoing basis. Based upon managements' review on March 31, 2004, it was
determined that there was no impairment of the customer list, the Blue Cross
contract or to the true goodwill.
REAL ESTATE HELD FOR SALE - FSMC is engaged in the development and sale of real
estate. Land held for sale or development is carried at cost, including
development costs, not in excess of fair value less costs to sell determined on
an individual project basis.
OTHER COMPREHENSIVE INCOME - Accounting principles generally require that
recognized revenue, expenses, gains and losses be included in net income.
Certain changes in assets and liabilities, however, such as unrealized gains and
losses on available-for-sale securities, are reported as a separate component in
the equity section of the consolidated balance sheet. Such items along with net
income are components of comprehensive income.
INCOME TAXES - The provision for income taxes is based upon the effective tax
rate expected to be applicable for the entire year.
EARNINGS PER SHARE - Basic earnings per share is based on the weighted average
number of shares outstanding in each period. Fully diluted earnings per share is
based on weighted average shares outstanding assuming the exercise of the
dilutive stock options, which are the only potential stock of the Company as
defined in Statement of Financial Accounting Standard No. 128, Earnings per
Share. The Company uses the treasury stock method to compute fully diluted
earnings per share, which assumes proceeds from the assumed exercise of stock
options would be used to purchase common stock at the average market price
during the period.
NOTE 2--REORGANIZATION.
The Company was formed as the Bank's holding company on November 14, 2000
pursuant to a plan of reorganization adopted by the Bank and its stockholders.
Pursuant to the reorganization, each share of the Bank's stock held by existing
stockholders of the Bank was exchanged for a share of common stock of the
Company by operation of law. The reorganization had no financial statement
impact and is reflected for all prior periods presented. Approximately 56% of
the Company's capital stock is owned by Alpena Bancshares
8
M.H.C. ("the M.H.C."), a mutual holding company. The remaining 44% of the
Company's stock is owned by the general public. The activity of the M.H.C. is
not included in these financial statements.
NOTE 3--DIVIDENDS.
Payment of dividends on the common stock is subject to determination and
declaration by the Board of Directors and depends upon a number of factors,
including capital requirements, regulatory limitations on the payment of
dividends, the Company's results of operations and financial condition, tax
considerations and general economic conditions. The M.H.C. (the majority
shareholder of the Company) filed a notice with the Office of Thrift Supervision
(the "OTS") requesting approval to waive receipt of cash dividends from the
Company for each quarterly dividend to be paid for the year ending December 31,
2004. In a letter dated February 26, 2004, the OTS did not object to the
dividend waiver request for the four quarters ending December 31, 2004.
On March 16, 2004, the Company declared a cash dividend on its common stock,
payable on, or about April 23, 2004, to shareholders of record as of March 31,
2004, equal to $0.125 per share. The dividend on all shares outstanding totaled
$207,000, of which $92,000 was paid to shareholders. Because the OTS has agreed
to allow the M.H.C. to waive receipt of its dividend (amounting to $115,000),
this dividend was not paid.
NOTE 4--1996 STOCK OPTION PLAN AND 1996 RECOGNITION AND RETENTION PLAN
At March 31, 2004 the Company had outstanding stock options for 23,711 shares
with a weighted exercise price of $10.60 compared to outstanding options for
29,011 shares at a weighted exercise price of $10.37 at December 31, 2003.
During the three months ended March 31, 2004, the Board of Directors granted no
options. During this same period, options for 1,300 shares were exercised. At
March 31, 2004, options had exercise prices ranging between $9.625 - $13.75 per
share and a weighted average remaining contractual life of 3.97 years.
During the three months ended March 31, 2004 the Company did not award any
shares under the Recognition and Retention Plan ("RRP"). Shares issued under the
RRP and exercised pursuant to the exercise of the stock option plan may be
either authorized but unissued shares or reacquired shares held by the Company
as treasury stock.
For the quarter ended March 31, 2004, options for 1,000 shares were vested. The
expense associated with those vested options would have been $1,040 had the
Company elected to adopt FAS 148 (see below).
NOTE 5 - OTHER EXPENSES
At March 31, 2004 other expenses totaled $454,319. This is comprised of several
larger expenses for the quarter including printing and office supplies of
$41,000, service bureau charges for the bank operating system of $83,000, and
professional services including audit, legal, and regulatory fees of $76,500.
The balance of the total is comprised of expenses lower than $40,000.
RECENT ACCOUNTING PRONOUNCEMENTS - In July 2001, Statement of Financial
Accounting Standards No 142, Goodwill and Other Intangibles (FAS 142), was
issued. SFAS 142 changes the accounting treatment of goodwill effective
January 1, 2002. The intangible assets reported by the Company are attributable
to core deposit intangible plus the intangible assets acquired though the
purchase of the InsuranCenter of Alpena. Therefore, the adoption of FAS 142 had
no impact on the Company's financial statements.
In November 2002, FASB issued Interpretation No. 45, Guarantor's Accounting and
Disclosure Requirements for Guarantees Including Indirect Guarantees of
Indebtedness of Others (FIN 45). FIN 45 requires disclosures be made by a
guarantor in its interim and annual financial statements about its obligations
under certain guarantees that it has issued. It also requires the recognition of
a liability by a guarantor at the inception of certain guarantees that it has
issued and that a guarantor recognize, at the inception of a guarantee, a
liability for the fair value of the obligation undertaken in issuing the
guarantee. The initial recognition and initial
9
measurement provisions of this interpretation are applicable on a prospective
basis to guarantees issued or modified after December 31, 2002. The disclosure
requirements are effective for financial statements of interim or annual periods
ending after December 15, 2002. The adoption of FIN 45 did not have a material
effect on the Company's financial statements since the Company does not issue
such guarantees.
In December 2002, the FASB issued Statement No. 148, Accounting for Stock-based
Compensation-transition and Disclosure, which amends FASB 123, Accounting for
Stock-Based Compensation. Statement No.148 is effective for fiscal years ending
after December 15, 2002. Statement No. 148 provides alternative methods of
transition for a voluntary change to the fair value-based method of accounting
for stock-based employee compensation. In addition, Statement No. 148 amends the
disclosure requirements of Statement No. 123. The Company has not adopted the
fair value-based method of accounting for stock-based compensation as of March
31, 2004; therefore, there was no impact to the Company's financial statements.
In April 2003, the FASB issued Statement No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities. Statement No. 149 amends SFAS No.
133 for certain decisions made by the Financial Accounting Standards Board as
part of the Derivatives Implementation Group process and to clarify the
definition of a derivative. This statement is effective for contracts entered
into or modified after June 30, 2003, except for certain specific issues already
addressed by the Derivatives Implementation Group and declared effective that
are included in the statement. The adoption of the provisions of this statement
is not expected to have a material impact on the financial statements of the
Company.
In May 2003, the FASB issued Statement No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. Statement No.
150 establishes standards for how to classify and measure certain financial
instruments with characteristics of both liabilities and equity. This statement
is effective for financial instruments entered into or modified after May 31,
2003, and otherwise is effective at the beginning of the first interim period
beginning after June 15, 2003. The adoption of the provisions of this statement
did not have a material impact on the financial statements of the Company.
In January 2003, FASB issued Interpretation No. 46, Consolidation of Variable
Interest Entities an Interpretation of ARB No. 51 (FIN 46). FIN 46 addresses
consolidation by business enterprises of variable interest entities. The Company
does not have any variable interest entities as defined by this Interpretation
and therefore, the adoption of the provisions of this FASB Interpretation did
not have a significant effect on the financial position or results of operations
of the Company.
In March 2004, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 105, Application of Accounting Principles to loan Commitments. This
Staff Accounting Bulletin summarizes the views of the staff regarding the
application of accounting principles generally accepted in the United States of
America to loan commitments accounted for as derivative instruments. The
provisions of this Staff Accounting Bulletin are effective after March 31, 2004.
The Company does not expect that the adoption of this Staff Accounting Bulletin
will have a material impact on the consolidated financial statements of the
Company.
Subsequent Event - On April 1, 2004 the Bank sold the branch building in
Cheboygan Michigan for $295,000 and is currently leasing the building back from
the buyer. At the same time, the Bank purchased a vacant lot for $295,000 just
down the street for the construction of a new branch. The Bank is leasing the
existing branch back on a short term basis during the construction phase. The
new branch construction is expected to be completed this calendar year.
Subsequent Event - On April 26 2004, the Company was given final approval by the
Office of Thrift Supervision (OTS) for the assumption of the branches from North
Country Bank and Trust located in Mancelona and Alanson Michigan. It is expected
that the transaction will occur on or about May 22, 2004. Please refer to the
Company's Annual Report filed on form 10KSB in March of 2004 for further details
on pricing.
10
ALPENA BANCSHARES, INC. AND SUBSIDIARIES
PART E - FINANCIAL INFORMATION
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion compares the financial condition of the Company
consolidated with its wholly owned direct and indirect subsidiaries at March 31,
2004 and December 31, 2003, and the results of operations for the three month
periods ended March 31, 2004 and 2003. This discussion should be read in
conjunction with the interim financial statements and footnotes included herein.
OVERVIEW
For the quarter ended March 31, 2004, the Company's earnings (loss) were
($14.4) thousand compared to income of $85.6 thousand one year earlier, a
decline of $100,000 for the quarter. The Bank's Return on Average Assets (ROA)
for the twelve months ended March 31, 2004 was 51 basis points compared to 35
basis points for the same period one year earlier. Management uses ROA as a tool
to measure the performance of the Bank. ROA is reviewed on a trailing
twelve-month basis each month by management and the Board of Directors. The
earnings deterioration can be broken down into a couple of key areas: the
decline in Net Interest Margin (NIM) and the slow down in mortgage banking
activities.
NET INTEREST MARGIN - The Company's Net Interest Margin (NIM), which
represents net interest income divided by average interest earning assets,
declined from 3.23% for the quarter ended March 31, 2003 to 3.06% for the
quarter ended March 31, 2004. This represents a 17 basis point decline. The
decline can be explained by the interest rate environment that existed in 2003
during which many financial institutions experienced significant net interest
margin compression. Many loans that were in portfolio in 2003 were refinanced
and subsequently sold into the secondary market in 2003 and early 2004 thereby
reducing the overall yield of the Bank's loan portfolio. The Bank saw the yield
on interest earning assets decline from 6.46% at March 31, 2003 to 5.81% at
March 31, 2004. This represents a 65 basis point decline in the overall yield to
the Bank. This decline can be attributed to the yield on the mortgage portfolio
which fell 104 basis points from 7.67% at March 31, 2003 to 6.63% on March 31,
2004. Compared to the quarter ended March 31, 2003, the Bank saw a decline of
the average interest earning assets of $1.4 million. Through the first quarter
of 2004, the Bank was able to reduce the overall cost of funds from 3.48% as of
March 31, 2003 to 2.96% as of March 31, 2004. This represents a reduction in the
cost of funds of 52 basis points. Since the reduction in yield exceeded the
reduction in the cost of funds, the NIM declined when compared to the same
period one year earlier. The conversion of cash, a lower yielding asset, into
commercial and consumer loans, which carry much higher yields when compared to
the overnight rates earned by the cash, is expected to help to offset some to
the pressure on the NIM.
MORTGAGE BANKING - The Company generated lower income from mortgage
banking activity in the first quarter in 2004 when compared to the same quarter
in 2003. In the first quarter of 2003, interest rates began their descent toward
45 year lows which caused a significant wave of refinance activity early in
2003. This heavy activity in the first quarter of 2003 produced income from loan
fees and gain once these loans were sold into the secondary market. Management
expects to see a return to more normal levels of mortgage originations in 2004.
FINANCIAL CONDITION
ASSETS: Total assets increased $3.1 million, or 1.4%, to $227.1 million at March
31, 2004 from $223.9 million at December 31, 2003. Cash and cash equivalents
decreased by $1.8 million, or 36.7%, to $4.9 million at March 31, 2004 from $6.7
million at December 31, 2003. Investment securities available for sale increased
$3.2 million, or 8.4% in the first three months. The increase in bonds was the
result of purchases made to make good use of excess liquidity. Net loans
receivable increased $1.5 million, or .9%, to $165.0 million at March 31, 2004
from $163.5 million at December 31, 2003. The growth of Net loans was
attributable to growth in each of the commercial and consumer loan portfolios.
The mortgage portfolio saw a decline primarily as a
11
result of borrower refinancing of existing mortgage loans into 15 and 30 year
fixed rate loans, most of which were subsequently sold by the Company in the
secondary market. Such sales totaled $6.1 million for the three months ended
March 31, 2004.
LIABILITIES: Deposits increased $905,000 or .6% to $152.6 million at March 31,
2004 from $151.7 million at December 31, 2003. This increase was primarily
attributable to higher interest rates offered on certain certificate of deposit
accounts which resulted in some of the maturing funds remaining with the Bank as
well as the collection of new funds. Borrowings in the form of Federal Home Loan
Bank advances increased $3.0 million, or 6.1%, to $48.8 million at March 31,
2004 from $45.8 million at December 31, 2003 reflecting attractive rates
available from the Federal Home Loan Bank.
EQUITY: Stockholders' equity decreased by $21,000, or .1%, to $21.9 million at
March 31, 2004 from $22.0 million at December 31, 2003. The slight decrease in
stockholders' equity was due to a loss for the quarter of $14,000 plus dividend
declaration of $92,000 that was partially offset by a gain in value of available
for sale securities of $73,000.
RESULTS OF OPERATIONS
GENERAL: Net income decreased by $100,000 to a loss of $14,000 for the three
months ended March 31, 2004 from $85,600 of income for the same period ended
March 31, 2003. The loss for the three month period was primarily due to the
significant decrease in mortgage lending activity. While net interest income was
slightly better than the same quarter one year earlier, non-interest income was
off substantially as the volume of mortgage refinance deals slowed
significantly. Mortgage refinancing provides income to the Bank in the form of
fees and if the loan is sold, gain on sale income. At these historically low
rates, most mortgage loans were sold into the secondary market. Compared to the
first quarter of 2003, the volume of mortgage originations has significantly
declined from $32.0 million for the first quarter 2003, of which $22.9 million
were sold, to $11.7 million for the first quarter 2004, of which $5.7 million
were sold.
INTEREST INCOME: Interest income was $3.1 million for the three months ended
March 31, 2004, compared to $3.4 million for the comparable period in 2003. The
decrease in interest income for the three month period from the prior year was
primarily due to the sale of longer term fixed rate mortgage loans and the
subsequent reinvestment of these proceeds into lower yielding assets (investment
securities and shorter duration non-mortgage loans). The sale of these mortgage
loans resulted in a decline in the average balance of residential mortgage loans
of $2.5 million, or 2.5%, for the three month period ended March 31, 2004 from
the prior year period. This decrease was coupled with the increase in the
average balance of non-mortgage loans of $16.7 million, or 25.6%, and the
decrease in the average balance of other investments of $15.6 million, or 27.3%,
for the three month period ended March 31, 2004, compared to the same period in
the prior year. This decline in other assets relates to cash and investments
which were redeployed to fund the increases in non-mortgage loans. The overall
affect of these changes was a reduction of interest income when compared to the
quarter ended March 31, 2003.
INTEREST EXPENSE: Interest expense was $1.4 million for the three month period
ended March 31, 2004 compared to $1.7 million for the same period in 2003. The
17.6% decline in interest expense was primarily attributable to lower interest
rates paid on interest-bearing liabilities and to slightly lower average
balances on these liabilities for the period ended March 31, 2004 compared to
March 31, 2003. The average balance of deposits and FHLB borrowings decreased in
total from $194.9 million from the period ended March 31, 2003 to 194.3 million
for the period ended March 31, 2004. The $600,000 decrease related to interest
bearing deposits which declined by $2.6 million or 1.8% when compared to March
31, 2003. This decrease partially offset by FHLB borrowings which increased from
a $47.5 million average balance for the period ended March 31, 2003 to $49.5
million average balance for the period ended March 31, 2004.
NET INTEREST INCOME: Net interest income decreased to $1.65 million for the
three month period ended March 31, 2004 compared to $1.7 million for the same
period in 2003. For the three months ended March 31, 2004, average
interest-earning assets declined $1.4 million, or .6% when compared to the same
period in 2003.
12
ALPENA BANCSHARES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS (continued)
Average interest-bearing liabilities decreased $600,000, or .3% for the same
period. The yield on average interest-earning assets declined to 5.81% for the
three month period ended March 31, 2004 from 6.50% for the same period ended in
2003. The cost of average interest-bearing liabilities declined to 2.96% from
3.48% for the three month period ended March 31, 2004 and March 31, 2003,
respectively. Since the decrease in asset yields was greater than the decrease
in the cost of funds, net interest rate margin decreased to 3.06% for the three
month period ended March 31, 2004, from 3.23% for same period in 2003.
DELINQUENT LOANS AND NONPERFORMING ASSETS. The following table sets forth
information regarding loans delinquent 90 days or more and REO/ORA by the Bank
at the dates indicated. As of the dates indicated, the Bank did not have any
material restructured loans within the meaning of SFAS 15.
MARCH 31, DECEMBER 31,
2004 2003 2002 2001 2000
------------ ------------ ------------ ------------ ------------
Total non-accrual loans (3) $ 1,082 $ 1,291 $ 662 $ - $ -
------------ ------------ ------------ ------------ ------------
Accrual loans delinquent 90 days or more:
One- to four-family residential .................... 1,464 617 566 475 498
Other real estate loans ............................ - 77 - - 39
Consumer/Commercial ................................ 239 134 241 201 168
------------ ------------ ------------ ------------ ------------
Total accrual loans delinquent 90 days or more ... $ 1,703 $ 828 $ 807 $ 676 $ 705
------------ ------------ ------------ ------------ ------------
Total nonperforming loans (1) ........................ 2,785 2,119 1,469 676 705
Total real estate owned (2) .......................... 68 199 128 197 150
============ ============ ============ ============ ============
Total nonperforming assets ........................... $ 2,853 $ 2,318 $ 1,597 $ 873 $ 855
============ ============ ============ ============ ============
Total nonperforming loans to net loans receivable .... 1.69% 1.30% 0.97% 0.38% 0.32%
Total nonperforming loans to total assets ............ 1.23% 0.95% 0.64% 0.28% 0.26%
Total nonperforming assets to total assets ........... 1.26% 1.04% 0.70% 0.36% 0.32%
(1) All the Bank's loans delinquent 90 days or more are classified as
nonperforming.
(2) Represents the net book value of property acquired by the Bank through
foreclosure or deed in lieu of foreclosure. Upon acquisition, this
property is recorded at the lower of its fair market value or the
principal balance of the related loan.
(3) For the three months ended March 31, 2004 and the twelve months ended
December 31, 2003, the interest that would have been reported was $ 27,000
and $181,450 respectively were these loans not in non-accrual status.
PROVISION FOR LOAN LOSSES: The allowance for loan losses is established through
a provision for loan losses charged to earnings. Loan losses are charged against
the allowance when management believes the uncollectibility of a loan balance is
confirmed. Subsequent recoveries, if any, are credited to the allowance.
The allowance for loan losses is evaluated on a regular basis by management and
is based upon management's periodic review of the collectibility of the loans in
light of historical experience, the nature and volume of the loan portfolio,
adverse situations that may affect the borrower's ability to repay, estimated
value of any underlying collateral and prevailing economic conditions. This
evaluation is inherently subjective, as it requires estimates that are
susceptible to significant revision as more information becomes available. The
provision for loan losses amounted to $81,000 for the three month period ended
March 31, 2004 and $162,500 for the comparable period in 2003. The decrease in
the reserve allowance related to the adjustment recorded at March 31, 2003 to
bring the allowance more in line with the portfolio balances. At March 31, 2004,
the percent of nonperforming loans increased to 169 basis points from 130 basis
points at December 31, 2003. As
13
a percent of total assets, nonperforming loans increased to 123 basis points at
March 31, 2004 from 95 basis points at December 31, 2003.
NONINTEREST INCOME: Other income was $1.1 million for the three month period
ended March 31, 2004, compared to $700,000 for the same period in 2003. This
represented an increase of $400,000 or 63.6%. The primary reason for the
increase related to the inclusion of the InsuranCenter of Alpena which was not
included in the first quarter results of 2003. ICA provided $753,924 of revenue
generated by insurance and brokerage fee revenues for the quarter ended March
31, 2004. Service charges and other fees were $83,000 higher which primarily
related to the Bounce Protection service which generated $83,500 of additional
income for the first three months of 2004 compared to the same period in 2003.
Compared to the first quarter 2003, mortgage banking activities income was lower
by $233,000. This represented a decrease of 62% over the quarter ended March 31
2003. This decrease related to the reduction in gain on sale activity for
mortgages sold in the secondary market. This was a function of the decreased
volume of refinance activity when compared to the same period one year earlier.
NONINTEREST EXPENSE: Other expenses were $2.7 million for the three month period
ended March 31, 2004, compared to $2.0 million for the same period in 2003. The
36.6% increase for the three month period was primarily due to inclusion of the
ICA expenses that were not included in the financial results one year earlier.
ICA expenses totaled $637,834 for the quarter ended March 31, 2004. Insurance
and brokerage commission expense associated with the InsuranCenter totaled
$315,600 for the quarter ended March 31, 2004. Compensation and employee
benefits expenses rose by $312,500 for the quarter. ICA employee compensation
expenses totaled $245,500 for the quarter. Most of the rest of the increase in
employee compensation and benefits related to increases in costs of the pension
plan and medical insurance. There were small increases for the first quarter of
2004 related to the compensation and benefits associated with the additional
mortgage and commercial lenders that have been hired since March 2003.
INCOME TAXES: Federal income taxes decreased to ($6,500) for the three month
period ended March 31, 2004 compared to $38,000 for the same period in 2003. The
decrease for the three month period was attributable to the lower pre-tax
income.
LIQUIDITY
The Company's primary sources of funds are deposits, FHLB advances, and proceeds
from principal and interest payments and prepayments on loans and
mortgage-backed and investment securities. While maturities and scheduled
amortization of loans and mortgage-backed securities are a predictable source of
funds, deposit flows and mortgage prepayments are greatly influenced by general
interest rates, economic conditions and competition.
Liquidity represents the amount of an institution's assets that can be quickly
and easily converted into cash without significant loss. The most liquid assets
are cash, short-term U.S. Government securities, U.S. Government agency
securities and certificates of deposit. The Company is required to maintain
sufficient levels of liquidity as defined by the OTS regulations. This
requirement may be varied at the direction of the OTS. Regulations currently in
effect require that the Company must maintain sufficient liquidity to ensure its
safe and sound operation. The Company's objective for liquidity is to be above
20%. Liquidity as of March 31, 2004 was $84.8 million, or 52.3%, compared to
$85.4 million, or 54.4% at December 31, 2003. The levels of these assets are
dependent on the Company's operating, financing, lending and investing
activities during any given period. The liquidity calculated by the Company
includes additional borrowing capacity available with the Federal Home Loan Bank
(FHLB). This borrowing capacity is based on the FHLB stock owned by the Bank
along with pledged collateral. As of March 31, 2004, the Bank had unused
borrowing capacity totaling $41.0 million at the FHLB based on the FHLB stock
ownership.
The Company intends to retain for the portfolio certain originated residential
mortgage loans (primarily adjustable rate, balloon and shorter term fixed rate
mortgage loans) and to generally sell the remainder in the secondary market. The
Company will from time to time participate in or originate commercial real
estate loans, including real estate development loans. During the three month
period ended March 31, 2004 the Company originated $11.2 million in residential
mortgage loans, of which $5.5 million were retained in
14
portfolio while the remainder were sold in the secondary market or are being
held for sale. This compares to $32 million in originations during the first
three months of 2003 of which $9.1 million were retained in portfolio. The
Company also originated $4.6 million of commercial loans and $3.6 million of
consumer loans in the first three months of 2004 compared to $4.8 million of
commercial loans and $3.1 million of consumer loans for the same period in 2003.
Of total loans receivable, excluding loans held for sale, mortgage loans
comprised 60% and 64.2%, commercial loans 26.9% and 26.7% and consumer loans
13.1 % and 12.7% at March 31, 2004 and December 31, 2003, respectively. At March
31, 2004, the Company had outstanding loan commitments of $40 million. These
commitments included $13.5 million for permanent one-to-four family dwellings,
$10.9 million for non-residential loans, $2.1 million of undisbursed loan
proceeds for construction of one-to-four family dwellings, $7.0 million of
undisbursed lines of credit on home equity loans, $901,000 of unused credit card
lines and $4.8 million of unused commercial lines of credit, $819,000 of
undisbursed, Commercial construction and $35,000 of unused Letters of credit.
Deposits are a primary source of funds for use in lending and for other
general business purposes. At March 31, 2004 deposits funded 67.4% of the
Company's total assets compared to 67.7% at December 31, 2003. Certificates of
deposit scheduled to mature in less than one year at March 31, 2004 totaled $30
million. Management believes that a significant portion of such deposits will
remain with the Company. The Bank monitors the deposit rates offered by
competition in the area and sets rates that take into account the prevailing
market conditions along with the Bank's liquidity position. Moreover, management
believes that the growth in assets is not expected to require significant
in-flows of liquidity. As such, the Bank does not expect to be a market leader
in rates paid for liabilities. Borrowings may be used to compensate for seasonal
or other reductions in normal sources of funds or for deposit outflows at more
than projected levels. Borrowings may also be used on a longer-term basis to
support increased lending or investment activities. At March 31, 2004 the
Company had $48.8 million in FHLB advances. Total borrowings as a percentage of
total assets were 21.4% at March 31, 2004 as compared to 20.4% at December 31,
2003. The Company has sufficient available collateral to obtain additional
advances of $20.6 million. When this is combined with current FHLB stock
ownership the Company could obtain up to an additional $61.6 million in advances
from the FHLB.
CAPITAL RESOURCES
Stockholders' equity at March 31, 2004 was $21.9 million, or 9.66% of total
assets, compared to $22 million, or 9.80% of total assets, at December 31, 2003
(See "Consolidated Statement of Changes in Stockholders' Equity"). The Bank is
subject to certain capital-to-assets levels in accordance with the OTS
regulations. The Bank exceeded all regulatory capital requirements at March 31,
2004. The following table summarizes the Bank's actual capital with the
regulatory capital requirements and with requirements to be "Well Capitalized"
under prompt corrective action provisions, as of March 31, 2004:
Minimum
Regulatory To Be Well
Actual Minimum Capitalized
------------------ ----------------- ------------------
Amount Ratio Amount Ratio Amount Ratio
---------- ----- ---------- ----- ---------- -----
(Dollars in Thousands)
Capital Requirements:
Tangible equity capital ...... $ 16,973 7.65% $ 3,329 1.50% $ 4,438 2.00%
Tier 1 (Core) capital ........ $ 16,973 7.65% $ 8,876 4.00% $ 11,095 5.00%
Total risk-based capital ..... $ 18,113 11.68% $ 12,405 8.00% $ 15,506 10.00%
Tier 1 risk-based capital .... $ 16,973 10.95% $ 6,202 4.00% $ 9,303 6.00%
15
ALPENA BANCSHARES, INC.
FORM 10-QSB
QUARTER ENDED MARCH 31, 2004
PART E - FINANCIAL INFORMATION
ITEM 3 - CONTROLS AND PROCEDURES
Under the supervision and with the participation of our management, including
the Company's Chief Executive Officer and Chief Financial Officer, the Company
evaluated the effectiveness of the design and operation of its disclosure
controls and procedures (as defined in Rule 13a-15(e) and 15d - 15(e) under the
Securities Exchange Act of 1934) as of the end of the period covered by this
report. Based upon that evaluation, the Chief Executive Officer and Chief
Financial Officer concluded that, as of the end of the period covered by this
report, the Company's disclosure controls and procedures were effective to
ensure that information required to be disclosed in the reports the Company
files or submits under the Securities Exchange Act of 1934, is recorded,
processed, summarized and reported, within the time periods specified by the
SEC's rules and forms AND in timely alerting them to material information
relating to the Company (or its consolidated subsidiaries) required to be
included in its periodic SEC filings.
There has been no change in the Company's internal control over the financial
reporting during the Company's first quarter of fiscal year 2004 that has
materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.
16
ALPENA BANCSHARES, INC.
FORM 10-QSB
QUARTER ENDED MARCH 31, 2004
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings:
Not applicable.
Item 2 - Changes in Securities:
Not applicable.
Item 3 - Defaults upon Senior Securities:
Not applicable.
Item 4 - Submission of Matters to a Vote of Security Holders:
Not applicable
Item 5 - Other Information:
Not applicable
Item 6 - Exhibits and Reports on Form 8-K:
(a) Exhibits:
Exhibit 31.1 Certification by Chief Executive Officer pursuant
to section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 31.2 Certification by Chief Financial Officer pursuant
to section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 32.1 Statement of Chief Executive Officer furnished
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 32.2 Statement of Chief Financial Officer furnished
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K: February 17, 2004, The Bank
announced that it entered into a Purchase and Assumption
Agreement with North Country bank and Trust to acquire
two branches located in Mancelona and Alanson Michigan.
17
ALPENA BANCSHARES, INC.
FORM 10-QSB
QUARTER ENDED MARCH 31, 2004
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ALPENA BANCSHARES, INC.
By: /a/Martin A. Thomson
-------------------------------------
Martin A. Thomson
President and Chief Executive Officer
Date: May 14, 2004
By: /s/Michael W. Mahler
-------------------------------------
Michael W. Mahler, Treasurer and
Chief Financial Officer
(Principal Financial and Accounting Officer)
Date: May 14, 2004
18
EXHIBIT NO. DESCRIPTION
----------- -----------
Exhibit 31.1 Certification by Chief Executive Officer pursuant to section
302 of the Sarbanes-Oxley Act of 2002
Exhibit 31.2 Certification by Chief Financial Officer pursuant to section
302 of the Sarbanes-Oxley Act of 2002
Exhibit 32.1 Statement of Chief Executive Officer furnished pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 32.2 Statement of Chief Financial Officer furnished pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002