QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2005
Commission File Number 0-10658
BWC FINANCIAL CORP.
Incorporated pursuant to the Laws of California
Internal Revenue Service - Employer Identification No. 94-2621001
1400 Civic Drive, Walnut Creek, California 94596
(925) 932-5353
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 preceding 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 by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes ____ NO _X__
Indicate the number of shares outstanding of each of the issuer’s classes of common stock as the latest practicable date. As of April 30, 2005, there were 4,224,705 shares of common stock, no par value outstanding.
| Item 1 | Legal Proceedings | 20 |
| Item 2 | Unregistered Sales of Equity Securities and | |
| Use of Proceeds | 20 | |
| Item 3 | Defaults Upon Senior Securities | 20 |
| Item 4 | Submission of Matters to a Vote of | |
| Security Holders | 20 | |
| Item 5 | Other Information | 20 |
| Item 6 | Exhibits and Reports on Form 8-K | 20 |
| Signatures | 21 | |
| Certifications, EX 31.1 and 31.2 | 22-23 | |
| EX-32.1 amd 32.2 Certification Pursuant to 18 U.S.C. Sec. 1350 | 24 | |
| Where you can find more information | 25 |
In thousands March 31, December 31, March 31,
Assets 2005 2004 2004
----------------------------------------------
(Unaudited) (Unaudited)
Cash and Due From Banks $ 15,613 $ 10,315 $ 11,987
Federal Funds Sold 36,500 8,500 33,331
Other Short-term Investments 155 173 50
----------------------------------------------
Total Cash and Cash Equivalents 52,268 18,988 45,368
Investment Securities:
Available-for-Sale 48,424 62,220 55,607
Held-to-Maturity (approximate fair value of
$17,752, $17,947, $19,228 respectively) 17,826 17,846 18,951
Loans 385,377 380,682 356,696
Allowance for Credit Losses (7,694) (7,670) (7,251)
Net Loans 377,683 373,012 349,445
BWC Mortgage Services Loans-Held-for-Sale 10,899 14,966 20,185
Bank Premises and Equipment, Net 3,987 4,051 4,026
Interest Receivable and Other Assets 10,628 10,275 9,219
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Total Assets $ 521,715 $ 501,358 $ 502,801
==============================================
Liabilities and Shareholders' Equity
Liabilities
Deposits:
Noninterest-bearing $ 142,196 $ 131,252 $ 112,334
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Interest-bearing:
Money Market Accounts 167,874 156,236 152,503
Savings and NOW Accounts 56,399 63,220 54,414
Time Deposits:
Under $100,000 22,339 22,473 36,252
$100,000 or more 20,118 19,758 45,599
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Total Interest-bearing 266,730 261,687 288,768
Total Deposits 408,926 392,939 401,102
Federal Home Loan Bank Borrowings 49,778 43,313 32,141
BWC Mortgage Services Borrowings 10,695 14,511 20,155
Interest Payable and Other Liabilities 4,114 3,314 3,665
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Total Liabilities 473,513 454,077 457,063
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Shareholders' Equity
Preferred Stock, no par value:
5,000,000 shares authorized, none outstanding - -- -
Common Stock, no par value:
25,000,000 shares authorized; issued and outstanding -
4,224,705, 4,228,459 and 3,909,132 respectively 46,940 47,054 39,019
Retained Earnings 1,778 436 6,144
Accumulated other comprehensive (loss)/income, Net (516) (209) 575
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Total Shareholders' Equity 48,202 47,281 45,738
----------------------------------------------
Total Liabilities and Shareholders' Equity $ 521,715 $ 501,358 $ 502,801
==============================================
The accompanying notes are an integral part of these consolidated statements.
In thousands except per-share amounts. For the Three Months Ended March 31,
2005 2004
---------------------------------------
Interest Income (Unaudited) (Unaudited)
Loans, Including Fees $ 7,373 $ 6,181
Investment Securities:
Taxable 450 470
Non-taxable 121 138
Federal Funds Sold 76 29
---------------------------------------
Total Interest Income 8,020 6,818
Interest Expense
Deposits 838 610
Federal Funds Purchased 4 4
FHLB Borrowings 524 393
Other Borrowed Funds 146 101
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Total Interest Expense 1,512 1,108
Net Interest Income 6,508 5,710
Provision For Credit Losses - 450
---------------------------------------
Net Interest Income After Provision For Credit Losses 6,508 5,260
Noninterest Income
BWC Mortgage Services - Commissions 2,014 2,040
BWC Mortgage Services - Fees & Other 821 751
Service Charges on Deposit Accounts 212 231
Gains (loss) on Security Transactions 3 14
Other 352 415
---------------------------------------
Total Noninterest Income 3,402 3,451
Noninterest Expense
Salaries and Related Benefits 3,047 3,017
BWC Mortgage Services - Commissions 1,789 1,493
BWC Mortgage Services - Fees & Other 98 210
Occupancy 552 548
Furniture and Equipment 197 197
Other 1,332 1,307
---------------------------------------
Total Noninterest Expense 7,015 6,772
---------------------------------------
BWC Mortgage Services - Minority Interest 104 187
Income Before Income Taxes 2,791 1,752
Provision For Income Taxes 1,111 678
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Net Income $ 1,680 $ 1,074
=======================================
Basic Earnings Per Share $ 0.40 $ 0.25
Diluted Earnings Per Share $ 0.39 $ 0.25
=======================================
Weighted Average Basic Shares 4,228,838 4,293,293
Weighted Average Diluted Share Equivalents Related to Options 55,308 35,943
---------------------------------------
Weighted Average Diluted Shares 4,284,146 4,329,236
=======================================
The accompanying notes are an integral part of these consolidated statements.
For the periods ending December 31, 2004, and March 31, 2005
In thousands except share amounts Accumulated
Other
Number Common Retained Comprehensive Comprehensive
of Shares Stock Earnings Income/(Loss) Total Income
-------------------------------------------------------------------------------------
Balance, January 1, 2004 3,909,132 $ 39,019 $ 5,305 $ 499 $ 44,823
Net Income as of December 31, 2004 - - 5,713 - 5,713 5,713
Other Comprehensive Loss, net of tax
benefit of $133 - - - (708) (708) (708)
--------------
Comprehensive Income - - - - - $ 5,005
Stock options exercised 15,008 197 - - 197
Repurchase and retirement of shares by the
Corporation (79,842) (1,749) - - (1,749)
Cash Dividend Paid - - (1,011) - (1,011)
10% stock dividend including payment of
fractional shares 384,161 9,567 (9,571) - (4)
Tax benefit from the exercise of stock options - 20 - - 20
-----------------------------------------------------------------------
Balance, December 31, 2004 4,228,459 $ 47,054 $ 436 $ (209) $ 47,281
=======================================================================
Net Income as of March 31, 2005 - - 1,680 - 1,680 1,680
Other Comprehensive Loss, net of tax
benefit of $320 - - - (307) (307) (307)
--------------
Comprehensive Income - - - - - $ 1,373
Stock options exercised 2,746 42 - - 42
Repurchase and retirement of shares by the
Corporation (6,500) (162) - - (162)
Cash Dividend Paid - - (338) - (338)
Tax benefit from the exercise of stock options - 6 - - 6
-----------------------------------------------------------------------
Balance, March 31, 2005 (Unaudited) 4,224,705 $ 46,940 $ 1,778 $ (516) $ 48,202
=======================================================================
The accompanying notes are an integral part of these consolidated statements.
In thousands For the Three Months
Ended March 31,
----------------------------------
OPERATING ACTIVITIES: 2005 2004
----------------------------------
(Unaudited) (Unaudited)
Net Income $ 1,680 $ 1,074
Adjustments to reconcile net income to
net cash provided:
Provision for credit losses - 450
Depreciation on fixed assets 179 144
Amortization and accretion on securities (10) 206
Gain on sale of securities available-for-sale (3) (14)
Increase/(decrease) in BWC Mtg. Loans Held-for-Sale 4,067 (15,042)
Benefit from exercise of stock options 6 -
(Increase)/decrecrease in accrued interest receivable
and other assets (353) 321
Increase/(decrease) in accrued interest payable
and other liabilities 800 (80)
----------------------------------
Net Cash Provided by Operating Activities 6,366 (12,941)
----------------------------------
INVESTING ACTIVITIES:
Proceeds from maturities of investment securities 5,525 4,500
Proceeds from the sales and calls of available-for-sale
investment securities 7,998 15,334
Purchase of investment securities - (7,854)
Loans originated, net of collections (4,672) (19,469)
Purchase of bank premises and equipment (115) (278)
----------------------------------
Net Cash Provided(Used) by Investing Activities 8,736 (7,767)
----------------------------------
FINANCING ACTIVITIES:
Net increase in deposits 15,987 30,938
Increase/(decrease) in Federal Home Loan Bank borrowings 6,465 (1,211)
Increase/(decrease) in BWC Mortgage Services borrowings (3,816) 15,084
Cash dividends paid (338) (235)
Proceeds from the exercise of stock options 42 -
Cash paid for the repurchase of common stock (162) -
----------------------------------
Net Cash Provided(Used) by Financing Activities 18,178 44,576
----------------------------------
CASH AND CASH EQUIVALENTS:
Increase in cash and cash equivalents 33,280 23,868
Cash and cash equivalents at beginning of year 18,988 21,500
----------------------------------
Cash and Cash Equivalents at period end $ 52,268 $ 45,368
==================================
ADDITIONAL CASH FLOW INFORMATION:
Interest Paid $ 1,478 $ 915
==================================
Income Taxes Paid $ - $ -
==================================
The accompanying notes are an integral part of these consolidated statements.
In the opinion of management, the unaudited interim consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the financial position at March 31, 2005 and the results of operations for the three months ended March 31, 2005 and 2004 and cash flows for the three months ended March 31, 2005 and 2004.
Certain information and footnote disclosures presented in the Corporation’s annual consolidated financial statements are not included in these interim financial statements. Accordingly, the accompanying unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Corporation’s 2004 10-K. The results of operations for the three months ended March 31, 2005, and the results of interm periods presented, are not necessarily indicative of the operating results for the full year.
Diluted earnings per share are computed using the weighted average number of shares outstanding during the period, adjusted for the dilutive effect of stock options. All per-share amounts have been restated to reflect the 10% stock dividend declared in December 2004.
2: INVESTMENT SECURITIES
An analysis of the investment security portfolio at March 31, 2005 follows:
In thousands
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Available-for-sale Cost Gains Losses Value
---------------------------------------------------------------------
U.S. Treasury Securities $ 266 $ - $ 6 $ 260
Securities of U.S. Government Agencies 25,088 - 458 24,630
Taxable Securities of State and
Political Subdivisions 13,610 10 272 13,348
Corporate Debt Securities 10,296 7 117 10,186
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Total 49,260 17 853 48,424
Held-to-maturity
Obligations of State and Political Subdivisions 17,826 58 132 17,752
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Total Investment Securities $ 67,086 $ 75 $ 985 $ 66,176
=====================================================================
In 2005 the Corporation received proceeds from sale of available-for-sale investment securities of
$7,991,000. Gross realized gains/(losses) included in other noninterest income totaled $37,000 and
($34,000), respectively.
The maturities of the investment security portfolio at March 31, 2005 follow:
In thousands Held-to-maturity
-----------------------------------------------------
Amortized Estimated Fair Effective
Cost Value Yield
-----------------------------------------------------
Within one year $ 6,426 $ 6,427 3.38%
After one year through five years 10,508 10,419 3.86%
Over five years through ten years 892 906 5.13%
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Total $ 17,826 $ 17,752 3.81%
=====================================================
Available-for-Sale
-----------------------------------------------------
Amortized Estimated Fair Effective
Cost Value Yield
-----------------------------------------------------
Within one year $ 15,922 $ 15,880 3.37%
After one year through five years 33,338 32,544 3.08%
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Total $ 49,260 $ 48,424 3.17%
=====================================================
At March 31, 2005 securities with a book value of $15,958,000 were pledged to secure public deposits.
Market value of these same securities on that date was $15,651,000.
3. ALLOWANCE FOR CREDIT LOSSES
In thousands
For the Three Months Ended
March 31,
2005 2004
-----------------------------------------
Total loans outstanding at end of
period, before deducting allowance
for credit losses (1) $ 385,377 $ 356,696
-----------------------------------------
Allowance for credit losses at
beginning of period 7,670 6,692
Charge-offs (10) (30)
Recoveries 34 139
-----------------------------------------
Net (charge-offs)/recoveries 24 109
Provisions - 450
Allowance for credit losses at
end of period $ 7,694 $ 7,251
=========================================
Ratio of allowance for credit
losses to loans 2.00% 2.03%
(1) Excludes BWC Mortgage Services Loans-Held-for-Sale. Due to the low credit risk on these loans,
no reserves are allocated for them.
The components of other comprehensive income for the three months ended March 31, 2005 and 2004
are as follows:
In thousands 2005 2004
Unrealized gain(loss) arising during the period,
net of tax $ (305) $ 95
----------------------------------
Reclassification adjustment for net realized
gains of securities available-for-sale included
in net income during the year, net of tax 2 19
Net unrealized gain(loss) included in other
comprehensive income $ (307) $ 76
----------------------------------
The Corporation is principally engaged in community banking activities through its seven Bank branches. In addition to its community banking activities, the Corporation provides mortgage brokerage services through its joint venture, BWC Mortgage Services. These activities are monitored and reported by Corporation management as a separate operating segment. The separate banking offices have been aggregated into a single reportable segment, Community Banking.
The Corporation’s community banking segment provides loans, leases and lines of credit to local businesses and individuals. This segment also derives revenue by investing funds that are not loaned to others in the form of loans, leases or lines of credit, into investment securities. The business purpose of BWC Mortgage Services is the origination and placement of long-term financing for real estate mortgages and mortgage banking services.
Summarized financial information for the periods ended March 31, 2005 and 2004 concerning the Corporation’s reportable segments is shown in the following table.
For the Three Months Ended 03/31/2005 Community Mortgage In thousands Banking Services Adjustments Total - ----------------------------------------------------------------------------------------------------------------------------- Total Interest Income $ 7,673 $ 353 $ (6) $ 8,020 Commissions Received - 2,014 - 2,014 Total Interest Expense 1,371 147 (6) 1,512 Salaries & Benefits 2,474 573 - 3,047 Commissions Paid - 1,789 - 1,789 Segment Profit before Tax 2,759 209 (177) 2,791 Total Assets $ 509,924 $ 13,200 $ (1,409) $ 521,715 - ----------------------------------------------------------------------------------------------------------------------------- For the Three Months Ended 03/31/2004 Community Mortgage In thousands Banking Services Adjustments Total - ----------------------------------------------------------------------------------------------------------------------------- Total Interest Income $ 6,523 $ 301 $ (6) $ 6,818 Commissions Received - 2,040 - 2,040 Total Interest Expense 1,013 101 (6) 1,108 Salaries & Benefits 2,457 560 - 3,017 Commissions Paid - 1,493 - 1,493 Segment Profit before Tax 1,662 374 (284) 1,752 Total Assets $ 481,704 $ 22,508 $ (1,411) $ 502,801 - -----------------------------------------------------------------------------------------------------------------------------
The Corporation uses the intrinsic value method to account for its stock option plans (in accordance with the provisions of Accounting Principles Board Opinion No. 25). Under this method, compensation expense is recognized for awards of options to purchase shares of common stock to employees under compensatory plans only if the fair market value of the stock at the option grant date (or other measurement date, if later) is greater than the amount the employee must pay to acquire the stock. Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation (SFAS 123) permits companies to continue using the intrinsic value method or to adopt a fair-value-based method to account for stock option plans. The fair-value-based method results in recognizing as expense over the vesting period the fair value of all stock-based awards on the date of grant. The Corporation has elected to continue to use the intrinsic value method. The pro forma disclosures illustrating the impact on net income of applying the fair-value method are reflected in the following table.
For the Three Months Ended
In thousands except per-share amounts March 31,
2005 2004
----------------- -----------------
Net income, as reported $ 1,680 $ 1,074
Deduct: Total stock-based compensation expense
determined under the fair-value-based method
for all awards, net of related taxes 39 38
----------------- -----------------
Pro forma net income $ 1,641 $ 1,036
Basic income per share, as reported $ 0.40 $ 0.25
Pro forma basic income per share $ 0.39 $ 0.24
Diluted income per share, as reported $ 0.39 $ 0.25
Pro forma diluted income per share $ 0.38 $ 0.24
Weighted Average Basic Shares 4,228,838 4,293,293
Weighted Average Diluted Shares 4,284,146 4,329,236
Adjusted for the 10% stock dividend declared December 2004.
Forward-Looking Statements
Except for historical financial information contained herein, certain matters discussed in the Annual Report of BWC Financial Corp. constitute “forward-looking statements” within the meaning of the Securities Exchange Act of 1934, as amended. Forward-looking statements are subject to risks and uncertainties that may cause actual future results to differ materially. Such risks and uncertainties with respect to BWC Financial Corp.(Corporation), Bank of Walnut Creek (Bank) and BWC Real Estate, (a 51% owner of BWC Mortgage Services, a joint venture) include, but are not limited to, those related to the economic environment, particularly in the areas in which the Company and the Banks operate, competitive products and pricing, loan delinquency rates, fiscal and monetary policies of the U.S. government, changes in governmental regulations affecting financial institutions, including regulatory fees and capital requirements, changes in prevailing interest rates, acquisitions and the integration of acquired businesses, credit risk management and asset/liability management, the financial and securities markets, and the availability of and costs associated with sources of liquidity.
Selected Financial Data - Summary:
The following table provides certain selected consolidated financial data as of and for the three
month periods ended March 31, 2005 and 2004.
Quarter Ended
SUMMARY INCOME STATEMENT March 31,
(Unaudited in thousands except share data) 2005 2004
-----------------------------------
Interest Income (not taxable equivalent) $ 8,020 $ 6,818
Interest Expense 1,512 1,108
-----------------------------------
Net Interest Income 6,508 5,710
Allowance for Credit Losses - 450
-----------------------------------
Net Interest Income after allowance for credit losses 6,508 5,260
Non-interest Income 3,402 3,451
Non-interest Expenses 7,015 6,772
Minority Interest 104 187
-----------------------------------
Income before income taxes 2,791 1,752
Provision for income taxes 1,111 678
-----------------------------------
Net Income $ 1,680 $ 1,074
Per share:
(Share and share equivalents have been adjusted for the
stock dividend granted in December 2004)
Net Income - basic $ 0.40 $ 0.25
Net Income - diluted $ 0.39 $ 0.25
Weighted avg. shares used in Basic E.P.S calculation 4,228,838 4,293,293
Weighted avg. shares used in Diluted E.P.S calculation 4,284,146 4,329,236
Cash dividends $ 0.08 $ 0.06
Bookvalue at period-end $ 11.41 $ 10.82
Ending Shares 4,224,705 4,228,459
Selected Financial Data - Summary (cont.)
Financial Ratios: 2005 2004
-----------------------------------
Return on Average Assets 1.40% 0.94%
Return on Average Equity 14.33% 9.49%
Net Interest Margin (taxable equivalent yield) 5.59% 5.22%
Net loan losses (recoveries) to avg. loans (0.00) (0.03)
Efficiency Ratio (Bank only) 59.29% 65.02%
SUMMARY BALANCE SHEET
In thousands
Assets: 2005 2004
-----------------------------------
Cash and Equivalents $ 52,268 $ 45,368
Investments 66,250 74,558
Loans 385,377 356,696
Allowance for Credit Losses (7,694) (7,251)
BWC Mortgage Services
Loans-Held-for-Sale 10,899 20,185
Other Assets 14,615 13,245
-----------------------------------
Total Assets $ 521,715 $ 502,801
Deposits $ 408,926 $ 401,102
FHLB Borrowings 49,778 32,141
BWC Mortgage Services Borrowings 10,695 20,155
Other Liabilities 4,114 3,665
-----------------------------------
Total Liabilities 473,513 457,063
Equity 48,202 45,738
-----------------------------------
Total Liabilities and Equity $ 521,715 $ 502,801
General
Prime rate averaged 5.44% during the first quarter of 2005, compared to 4.00% for the first quarter of 2004, an increase of 1.44% between the comparable quarters. Due to the Corporation’s asset-sensitive position, the increase in interest rates has resulted in a broadening of the Corporation’s net interest margin which averaged 5.59% for the first quarter of 2005, as compared to 5.22% in 2004. Continued increases in interest rates will have a positive effect on net interest income in 2005.
Total assets of the Corporation at March 31, 2005 of $521,715,000 increased $18,914,000, or 4%, as compared to March 31, 2004. Total loans of the Bank of $385,377,000 at March 31, 2005 increased $28,681,000, or 8%, during the same period. BWC Mortgage Services began a Mortgage Banking service in April 2003 and their Loans Held-for-Sale as of March 31, 2005 were $10,899,000 as compared to $20,185,000 as of March 31, 2004. The rise in interest rates has had a negative impact on the home mortgage activity. Total deposits of $408,926,000 increased $7,824,000, or 2%, during the same period. Although this is only a modest increase in total deposits, it represents a 12% growth in core deposits, offsetting a 50% drop in short-term time deposits. During the first quarter of 2004 the Corporation had marketed a successful time deposit campaign, raising over $40,000,000 in new short-term time deposits. As of March 31, 2005 time deposits had decreased approximately 50%, or $39,000,000 from the prior year having been replaced by core deposits.
The Corporation’s loan-to-deposits-plus-FHLB borrowings ratio as of March 31, 2005 and 2004 was 84% and 82%, respectively. A significant portion of the Bank’s commercial real-estate lending is fixed-rate and funded, not by deposits, but by fixed-rate borrowings, of similar duration, from the Federal Home Loan Bank. A yield maintenance provision is incorporated in the Bank’s loan documents, to its borrowers, so that in the event of prepayment of the borrower’s loan, the borrower’s prepayment charges will be sufficient to cover the charges assessed by the FHLB when the Bank prepays the supporting loan from the FHLB.
Since the beginning of the year, total assets have increased $20,357,000, or approximately 4%. BWC Mortgage Services loans-held-for-sale decreased $4,067,000 during this period whereas the Bank’s loan portfolio grew by $4,695,000. The majority of the increase was in Fed Funds Sold, which increased $28,000,000. The Corporation has allowed its Fed Funds Sold position to grow because the increasing rate environment provides the opportunity to make longer-term investments at higher rates in the future.
Net Income
Net income for the first three months in 2005 of $1,680,000 reflects an increase of $606,000 from the first three months in 2004. This represented a return on average assets during the quarter of 1.40% as compared to 0.94% in 2004, and a return on average equity of 14.33% as compared to 9.49% in 2004. The increase in rates of return is the result of the increase in the prime and market rates from their historically low levels during 2004. Since most of the Corporation’s loans are indexed to the prime rate, increases in this index result in increases in the Corporation’s return on assets to a greater extent than increases in its interest-bearing deposits and borrowings.
Earning assets averaged $477,152,000 during the first quarter of 2005, an increase of $33,340,000 from the comparable period in 2004. During this same period, loans of the Bank averaged $381,233,000, an increase of $32,019,000 over 2004; and loans of BWC Mortgage Services averaged $10,941,000, an increase of $1,326,000 over the comparable period of 2004. Deposits averaged $398,080,000, an increase of $21,527,000 from 2004. FHLB fixed-rate borrowings and other borrowings averaged $44,441,000 during the first quarter of 2005, an increase of $10,250,000 over 2004. Borrowings of BWC Mortgage Services averaged $10,943,000 during the first quarter of 2005, an increase of $1,414,000 over the first quarter of 2004.
Diluted earnings per average common share and common equivalent shares for the first three months of 2005 were $0.39 as compared to $0.25 for 2004.
Net Interest Income
Interest income represents the interest earned by the Corporation on its portfolio of loans, investment securities, and other short-term investments. Interest expense represents interest paid to the Corporation’s depositors, as well as to others from whom the Corporation borrows funds on a temporary basis.
Net interest income is the difference between interest income on earning assets and interest expense on deposits and other borrowed funds. The volume of loans, deposits, and interest rate fluctuations caused by economic conditions greatly affect net interest income.
The following table delineates the impacts of changes in the volume of earning assets, changes in the volume of interest-bearing liabilities, and changes in interest rates on net interest income for the three-month period ended March 31, 2005 and 2004.
Quarter Quarter
Ended March 31, Ended March 31,
2005 2004
--------------------------------------------------- ---------------------------------------------------
Interest Average Interest Average
Average Income/ Yield/ Average Income/ Yield/
EARNING ASSETS: Balance Expense Rate (1) Balance Expense Rate (1)
--------------------------------------------------- ---------------------------------------------------
Loans (3,4,5) $ 381,233 $ 7,024 7.47% $ 349,214 $ 5,884 6.76%
Investment Securities, Fed Funds, Other (2) 84,978 647 3.38% 84,983 637 3.34%
BWC Mtg Banking - Loans 10,941 349 12.94% 9,615 297 12.39%
--------------------------------------------------- ---------------------------------------------------
TOTAL EARNING ASSETS $ 477,152 $ 8,020 6.87% $ 443,812 $ 6,818 6.23%
INTEREST BEARING LIABILITIES: Avg.Volume YTD Int. Rate Avg.Volume YTD Int. Rate
--------------------------------------------------- ---------------------------------------------------
Interest-bearing Deposits $ 263,256 $ 838 1.29% $ 262,696 $ 610 0.93%
FHLB & Other Borrowings - Bank 44,441 528 4.82% 34,191 399 4.68%
BWC Mortgage Services - Borrowings 10,943 145 5.37% 9,529 99 4.17%
--------------------------------------------------- ---------------------------------------------------
TOTAL INTEREST-BEARING LIABILITIES $ 318,640 $ 1,511 1.92% $ 306,416 $ 1,108 1.45%
NET EARNING ASSETS, NET INTEREST
INCOME AND NET INTEREST MARGIN $ 158,512 $ 6,509 5.59% $ 137,396 $ 5,710 5.22%
1. Minor rate differences from a straight division of interest by average assets are due to the rounding of average balances.
2. Amounts calculated on a fully tax-equivalent basis where appropriate (2005 and 2004 Federal Statutory Rate was 34%).
3. Nonaccrual loans of $0 and $111,000, respectively, as of March 31, 2005 and 2004 have been included in the average loan
balance. Interest income is included on nonaccrual loans only to the extent to which cash payments have been received.
4. Average loans are net of average deferred loan origination fees of $1,220,000 and $1,485,000 in 2005 and 2004, respectively.
5. Loan interest income includes loan origination fees of $786,000 and $776,000 in 2005 and 2004, respectively.
Net interest income during the first three months of 2005 was $6,509,000, or $799,000 greater than the comparable period in 2004. This increase is the result of increase in both volume and rate of earning assets. An analysis of the changes indicates that net interest income increased $439,000 due to volume and $360,000 due to increases in rates.
Provision for Credit Losses
An allowance for credit losses is maintained at a level considered adequate to provide for losses that can be reasonably estimated and is in accordance with SFAS 5. The allowance is increased by provisions charged to expense and reduced by net charge-offs. Management continually evaluates the economic climate, the performance of borrowers, and other conditions to determine the adequacy of the allowance.
The ratios of the allowance for credit losses to total loans as of March 31, 2005 was 2.00%, as compared to 2.03% for the period ending March 31, 2004. The Corporation’s ratios for both periods are considered adequate to provide for losses inherent in the loan portfolio.
The Corporation performs a quarterly analysis of the adequacy of its allowance for credit losses. As of March 31, 2005 the Corporation had $6,768,000 in allocated reserves and $926,000 in unallocated reserves. The Corporation’s management believes that the amount of unallocated reserves is reasonable, due to the growth of the Bank’s loan portfolio and the type of credit products that comprise the portfolio.
The Corporation had net credit recoveries of $24,000 during the first quarter of 2005, as compared to net credit recoveries of $109,000 during the comparable period in 2004.
The following table provides information on past-due and nonaccrual loans:
For the Three Months Ended March 31,
-------------------------------------
2005 2004
---- ----
Loans Past Due 90 Days or More $ 27,000 $ 0
Nonaccrual Loans 0 111,000
----------- -------
Total $ 27,000 $ 111,000
As of March 31, 2005 and 2004, no loans were outstanding that had been restructured. No interest earned on nonaccrual loans that was recorded in income during 2005 remains uncollected. Interest foregone on nonaccrual loans was approximately $0 as of March 31, 2005 and $89,000 as of March 31, 2004.
The Allowance for Loan and Lease Loss Reserve Methodology requires that certain loans be reviewed under the directives of the Federal Financial Institutions Examination Council’s (FFIEC) policy statement dated July 6, 2001 and FASB 114, to determine whether or not the loan is impaired and necessitates a Specific Reserve. By Bank policy all loans and leases that are classified Substandard (Risk Rating 6) or Doubtful (Risk Rating 7) are reviewed to determine if they are impaired. An impaired loan, defined by FASB 114, is one which “based on current information and events, it is probable that a creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement”. All amounts due according to the contractual terms means “that both the contractual interest payments and contractual principal payments will be collected as scheduled in the loan agreement”.
When a loan is determined to be impaired, the extent of impairment is based on the expected future cash flows discounted at the loan’s effective interest rate. However, as a practical expedient, FASB 114 permits a creditor to measure impairment based on the fair value of the collateral. It is this latter form of measurement that the Bank has elected to use, as personal or real property assets collateralize a large percentage of the Bank’s loans.
In selecting this approach to determining the necessity of Specific Reserves, the Bank documents:
| * | How the fair value of the collateral was determined, e.g. current appraisal (real property, equipment or inventory), method for valuation of collectable accounts or notes receivable, method for valuation of other assets. |
|
| * | Supporting rationale for adjustments to appraisals or loan-to-value discount applied to determine the collateral value. |
|
| * | The determination of the cost to sell or liquidate the collateral. |
|
| * | The qualifications, expertise and independence of the appraiser. |
For purposes of the Bank’s Credit Policy regarding this section of the ALLL methodology the following practices and definitions apply.
| * | An appraisal will be considered ”current” for the initial assessment of a loan under FASB 114, if it is less than six months old. In subsequent annual assessments the appraisal may not be older than twelve months. Where we are assessing accounts or notes receivable we should order a receivables audit to assist in the initial assessment and refresh it every six months. | |
| * | In developing the rationale to support appraisal adjustments or the loan-to-value discount on personal property, external comps and collateral audits should be used as much as possible. | |
| * | All costs to sell or liquidate the collateral, except legal expenses, are to be included. An estimate may be used where definitive amounts are not available. |
The calculation of the Specific Reserve follows:
Gross Collateral Value | |
Less: Cost to Sell | |
Less: Loan-To-Value Discount (1) | |
Equals: Net Collateral Value | |
Less: Current Principal Outstanding |
If the calculation produces a collateral excess, it is not appropriate to assign a Specific Reserve. If the calculation results in a collateral shortfall, the Specific Reserve should equal the amount of the shortfall.
(1) The loan-to-value discount does not have to follow the Bank standard if the rationale for an adjustment warrants a greater or lesser amount.
Noninterest Income
Noninterest income during the first quarter of 2005 of $3,402,000, was $49,000 less than during the comparable quarter of 2004. The Corporation reflected a decrease in service charges of $19,000 from the prior year, related to its free checking program. There was also a reduction in income related to the sale of SBA loans which occurred during the first quarter in 2004 but not in 2005.
Noninterest Expense
Noninterest expense during the first quarter of 2005 was $7,015,000, which was $243,000 greater than during the comparable quarter of 2004. The increase in 2005 was primarily related to increases in BWC Mortgage Services commissions paid which were up $296,000.
Salaries, bonuses and benefits expense of $3,047,000 increased $30,000 from the prior year. This increase is related to the continued growth and increased activity of BWC Mortgage Services and the Bank and on merit and cost-of-living increases. The Bank averaged 113 FTE during the first quarter of 2005 as compared to 120 during the same period in 2004.
Occupancy expense of $552,000 increased $4,000 during the first quarter of the current year, as compared to the prior year.
Furniture and equipment expense of $197,000 was unchanged from the prior year.
Other expenses of $1,332,000 was up only $25,000 from the prior year.
Other Real Estate Owned
As of March 31, 2005, the Corporation had no “other real-estate-owned” assets (assets acquired as the result of foreclosure on real estate collateral) on its books.
Capital Adequacy
In 1989, the Federal Deposit Insurance Corporation (FDIC) established risk-based capital guidelines requiring banks to maintain certain ratios of “qualifying capital” to “risk-weighted assets”. Under the guidelines, qualifying capital is classified into two tiers, referred to as Tier 1 (core) and Tier 2 (supplementary) capital. Currently, the bank’s Tier 1 capital consists of shareholders’ equity, while Tier 2 capital also includes the eligible allowance for loan losses. The Bank has no subordinated notes or debentures included in its capital. Risk-weighted assets are calculated by applying risk percentages specified by the FDIC to categories of both balance-sheet assets and off-balance-sheet assets.
The Bank’s Tier 1 and Total (which included Tier 1 and Tier 2) risk-based capital ratios surpassed the regulatory minimum of 4% and 8% at March 31 for both 2005 and 2004. The FDIC also adopted a leverage ratio requirement. This ratio supplements the risk-based capital ratios and is defined as Tier 1 capital divided by the quarterly average assets during the reporting period. The requirement established a minimum leverage ratio of 3% for the highest-rated banks.
During the first quarter of 2005 the Corporation authorized the spending of up to $2,000,000 for the repurchase and retirement of Corporation stock, during the year, should opportunities to do so present themselves.
The following table shows the Corporation’s risk-based capital ratios and leverage ratio as of March 31, 2005, December 31, 2004, and March 31, 2004.
Risk-based capital ratios: Capital Ratios
--------------------------------------------------------------------
Minimum
Current guidelines March 31, December 31, March 31, Regulatory
2005 2003 2004 Requirements
------ ------ ------- ------------
Tier 1 capital 10.73% 11.18% 10.45% 4.00%
Total capital 11.97% 12.42% 11.68% 8.00%
Leverage ratio 9.98% 9.63% 9.89% 3.00%
Liquidity
The objective of liquidity management is to ensure that the cash flow requirements of depositors and borrowers, as well as the operating cash needs of the Corporation, are met, taking into account all on- and off-balance-sheet funding demands. Liquidity management also includes ensuring cash flow needs are met at a reasonable cost. Liquidity risk arises from the possibility the Corporation may not be able to satisfy current or future financial commitments, or the Corporation may become unduly reliant on alternative funding sources. The Corporation maintains a liquidity risk management policy to address and manage this risk. The policy identifies the primary sources of liquidity, establishes procedures for monitoring and measuring liquidity, and establishes minimum liquidity requirements which comply with regulatory guidance. The policy also includes a contingency funding plan to address liquidity needs in the event of an institution-specific or a systemic financial market crisis. The liquidity position is continually monitored and reported on monthly to the Asset/Liability Management Committee.
Funds are available from a number of sources, including the securities portfolio, the core deposit base, the capital markets, the Federal Home Loan Bank, the Federal Reserve Bank, and through the sale and securitization of various types of assets including the sale of BWC Mortgage Services Loans-Held-for-Sale.
An additional liquidity source began during the second quarter of 2003 with the creation of mortgage banking services provided through BWC Mortgage Services. This activity, supported by borrowings under lines-of-credit, created a pre-sold pool of mortgages reflected on the balance sheet as “Loans Held-for-Sale”. The average duration of these loans is three weeks before they are converted to cash and, therefore, it represents a source of liquidity for the Corporation. Loans Held-for-Sale represented 2%, 3% and 4% of total assets as of March 31, 2005, December 31, 2004 and March 31, 2004. Cash, investment securities, Loans Held-for-Sale, and other temporary investments represent 25%, 23% and 28% of total assets at March 31, 2005, December 31, 2004 and March 31, 2004.
Core deposits, the most significant source of funding, comprised approximately 75%, 74% and 71% as of March 31, 2005, December 31, 2004 and March 31, 2004.
The Corporation’s management has an effective asset and liability management program, and carefully monitors its liquidity on a continuing basis. Additionally, the Corporation has available from correspondent banks, Federal Fund lines of credit totaling $30,000,000. In addition, the Corporation has approximately $33,750,000 in secured borrowing capacity with the Federal Home Loan Bank and a $1,000,000 secured borrowing line with the Federal Reserve Bank. The Corporation can also raise funds through the sale of SBA and Commercial Real Estate loans into the secondary market.
At the holding company level, the Corporation uses cash to repurchase common stock and pay for professional services and miscellaneous expenses. The main sources of funding for the holding company include dividends and returns of investment from its subsidiaries.
During the past two years, the primary source of funding for the holding company has been receipts from dividends, stock options exercised, and returns of investment from its subsidiaries. No dividends were declared from the subsidiaries of the Corporation to the holding company in the first quarter of 2005 and 2004, however, a $2,000,000 dividend was declared by the Bank to the Holding Company during the fourth quarter of 2004. The subsidiaries also provided liquidity to the Corporation in the form of returns of capital during the first quarter of 2005 and 2004 of $1,752,000 and $1,171,000, respectively. As of January 1, 2005, the amount of dividends the bank subsidiary can pay to the parent company without prior regulatory approval was $13,410,000, versus $13,318,000 at January 1, 2004. The subsidiary bank is subject to regulation and, among other things, may be limited in their ability to pay dividends or transfer funds to the holding company. Accordingly, consolidated cash flows as presented in the consolidated statements of cash flows may not represent cash immediately available to the holding company.
Refer to the Statement of Cash Flows for additional information on sources and uses of cash.
Quantitative and Qualitative Disclosures about Market Risk:
Interest-Rate Risk Management
Movement in interest rates can create fluctuations in the Corporation’s income and economic value due to an imbalance in the re-pricing or maturity of assets or liabilities. The components of interest-rate risk which are actively measured and managed include re-pricing risk and the risk of non-parallel shifts in the yield curve. Interest-rate risk exposure is actively managed with the goal of minimizing the impact of interest-rate volatility on current earnings and on the market value of equity.
In general, the assets and liabilities generated through ordinary business activities do not naturally create offsetting positions with respect to re-pricing or maturity characteristics. Therefore, the Corporation uses a variety of measurement tools to monitor and control the overall interest-rate risk exposure of the on-balance-sheet positions. For each measurement tool, the level of interest-rate risk created by the assets and liabilities is a function primarily of their contractual interest-rate re-pricing dates and contractual maturity (including principal amortization) dates. The Corporation employs a variety of modeling tools to monitor interest-rate risks. One of the earlier and more basic models is GAP reporting. The net difference between the amount of assets and liabilities within a cumulative calendar period is typically referred to as the “rate sensitivity position.”
As part of the GAP analysis to help manage interest-rate risk, the Corporation also performs an earnings simulation analysis to identify the interest-rate risk exposures resulting from the Corporation’s asset and liability positions, such as its loans, investment securities and customer deposits. The Corporation’s policy is to maintain a risk of a 2% rate shock to net interest income at risk to a level of not more than 15%. The earnings simulation analysis as of March 31, 2005 estimated that a 2% interest-rate shock (decrease) could lower net interest income by $1,867,000, which was 32.7% of 2005 annualized net interest income.
This earnings simulation does not account for the potential impact of loan prepayments, deposit drifts, or other balance sheet movements in response to modeled changes in interest rates, and the resulting effect, if any, on the Corporation’s simulated earnings analysis.
Interest Rate Sensitivity
Proper management of the rate sensitivity and maturities of assets and liabilities is required to provide an optimum and stable net interest margin. Interest rate sensitivity spread management is an important tool for achieving this objective and for developing strategies and means to improve profitability. The schedules shown below reflect the interest-rate sensitivity position of the Corporation as of March 31, 2005. In a rising interest-rate environment, the Corporation’s net interest margin and net interest income will improve. A falling interest-rate environment will have the opposite effect. Management believes that the sensitivity ratios reflected in these schedules fall within acceptable ranges, and represent no undue interest-rate risk to the future earnings prospects of the Corporation.
Repricing within: 3 3-6 12 1-5 Over 5
In thousands Months Months Months Years Years Totals
- --------------------------------------------------------------------------------------------------------------------
Assets:
Federal Funds Sold & Short-term
Investments $ 36,555 $ 100 $ - $ - $ - $ 36,655
Investment securities 7,712 5,903 8,691 43,052 892 66,250
Construction & Real Estate Loans 158,563 6,061 5,883 10,514 37,300 218,321
Commercial Loans 95,125 2,110 619 2,919 666 101,439
Installment Loans 46,298 4 7 29 - 46,338
Leases 1,939 2,087 3,789 11,464 - 19,279
BWC Mortgage Loans Held-for-Sale 10,899 - - - - 10,899
------------------------------------------------------------------------------
Interest-bearing assets $ 357,091 $ 16,265 $ 18,989 $ 67,978 $ 38,858 $ 499,181
------------------------------------------------------------------------------
Liabilities:
Money market accounts $ 83,937 $ 83,937 $ - $ - $ - $ 167,874
Time deposits <$100,000 8,640 5,809 4,592 3,298 - 22,339
Time deposits >$100,000 6,544 5,700 3,418 4,456 - 20,118
Federal Funds Borrowed - - - - -
Federal Home Loan Bank Borrowings 322 5,213 583 6,125 37,535 49,778
BWC Mortgage Services Borrowings 10,695 - - - - 10,695
------------------------------------------------------------------------------
Interest-bearing liabilities $ 110,138 $ 100,659 $ 8,593 $ 13,879 $ 37,535 $ 270,804
------------------------------------------------------------------------------
Rate-sensitive gap $ 246,953 $ (84,394) $ 10,396 $ 54,099 $ 1,323 $ 228,377
Cumulative rate-sensitive gap $ 246,953 $ 162,559 $ 172,955 $ 227,054 $ 228,377
=================================================================
Cumulative rate-sensitive ratio 3.24 1.77 1.79 1.97 1.84
(a) Evaluation of Disclosure Controls and Procedures: An evaluation of the Registrant's disclosure controls and procedures (as defined in Section 13(a)-14(c) of the Securities Exchange Act of 1934 (the "Act")) was carried out under the supervision and with the participation of the Registrant's Chief Executive Officer, Chief Financial Officer and several other members of the Registrant's senior management as of the filing date of this quarterly report. The Registrant's Chief Executive Officer and Chief Financial Officer concluded that the Registrant's disclosure controls and procedures as currently in effect are effective in ensuring that the information required to be disclosed by the Registrant in the reports it files or submits under the Act is (i) accumulated and communicated to the Registrant's management (including the Chief Executive Officer and Chief Financial Officer) in a timely manner, and (ii) recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms.
(b) Changes in Internal Controls: In the quarter ended March 31, 2005, the Registrant did not make any significant changes in, nor take any corrective actions regarding, its internal controls or other factors that could significantly affect these controls.
Neither the Corporation, nor the Bank, is a defendant in any legal actions at this time. BWC Mortgage Services, a joint venture in which 51% is owned by BWC Real Estate, which in turn is a wholly owned subsidiary of the Corporation, is a defendant in one legal action arising from normal business activities. Management believes that these actions are without merit or that the ultimate liability, if any, resulting from them will not materially affect the Corporation’s financial position.
None
None
None
An $0.08 per share cash dividend was declared by the Board of Directors on January 25, 2005 to Shareholders of Record as of February 7, 2005 and again on April 19, 2005 to Shareholders of Record as of April 29, 2005.
Item 6 - Exhibits and Reports on Form 8-K
(a) Index to Exhibits
The following exhibits are attached hereto and filed herewith:
| Exhibit | ||
| Number | Description of Exhibit | |
| 31.1 | Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 31.2 | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 32.1 | Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 32.2 | Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
(b) Reports on Form 8-K
| The registrant furnished a report on form 8-K dated January 24, 2005 which contains a press release announcing financial results for the quarter and year-to-date ended December 31, 2004. | ||
| An 8-K report was filed on January 25, 2005 and again on April 19, 2005, which contained press releases announcing $0.08 per share cash dividends declared by the Board of Directors to Shareholders of Record as of February 7, 2005 and April 29, 2005 respectively. |
Pursuant to the requirements 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.
BWC FINANCIAL CORP.
------------------
(Registrant)
May 13, 2005 James L. Ryan
___________________________ _________________________________
Date James L. Ryan
Chairman and Chief Executive Officer
May 13, 2005 Leland E. Wines
______________________ ________________________________
Date Leland E. Wines
CFO and Corp. Secretary
Exhibit 31.1
I, Leland E. Wines, EVP/CFO, certify that:
1. I have reviewed this quarterly report on Form 10-Q of BWC Financial Corp;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13(a)-13(e) and 15(d)-15(e) and internal controls over financial reporting (as defined in Exchange Act Rules 13(a)-13(f) and 15(d)-15(f) for the registrant and we have:
| a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervisions, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b) | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| c) | disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. | |
5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the Audit Committee of registrant's board of directors (or persons performing the equivalent function):
| a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and | |
| b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. | |
Date: May 13, 2005
LELAND E. WINES
EVP/CFO
Exhibit 31.2
I, James L. Ryan, Chairman and CEO, certify that:
1. I have reviewed this quarterly report on Form 10-Q of BWC Financial Corp;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13(a)-13(e) and 15(d)-15(e) and internal controls over financial reporting (as defined in Exchange Act Rules 13(a)-13(f) and 15(d)-15(f) for the registrant and we have:
| a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervisions, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b) | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| c) | disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. | |
5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the Audit Committee of registrant's board of directors (or persons performing the equivalent function):
| a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and | |
| b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. | |
Date: May 13, 2005
JAMES L. RYAN
Chairman and CEO
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of BWC Financial Corp. (the “Corporation”) on Form 10-Q for the period ending March 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Leland E. Wines, Chief Financial Officer of the Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| 1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Corporation. |
DATE: May 13, 2005
LELAND E. WINES
EVP/CFO & Corp. Secretary
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of BWC Financial Corp. (the “Corporation”) on Form 10-Q for the period ending March 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, James L.Ryan, Chief Executive Officer of the Corporation, certify, pursuant to 18 U.S.C.Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| 1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Corporation. |
DATE: May 13, 2005
JAMES L. RYAN
Chairman and CEO
Where You Can Find More Information
Under the Securities Exchange Act of 1934 Sections 13 and 15(d), periodic and current reports must be filed with the SEC. The Corporation electronically files the following reports with the SEC: Forms 10-K (Annual Report), Forms 10-Q (Quarterly Report), Forms 8-K (Report of Unscheduled Material Events), and Form DEF 14A (Proxy Statement). The Corporation may file additional forms. The SEC maintains an Internet site, www.sec.gov, in which all forms filed electronically may be accessed. Additionally, 10-K and 10-Q forms filed with the SEC and additional shareholder information is available free of charge on the Corporation’s website: www.bowc.com. The Corporation posts these reports to its website as soon as reasonably practicable after filing them with the SEC. None of the information on or hyperlinked from the Corporation’s website is incorporated into this Quarterly Report on Form 10-Q.