UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended December 31, 2003
-----------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For the transition period from __________ to ___________
Commission file number: 0-25251
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CENTRAL BANCORP, INC.
------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
MASSACHUSETTS 04-3447594
- ------------------------------- ------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
399 HIGHLAND AVENUE
SOMERVILLE, MASSACHUSETTS 02144
- ------------------------------- ------------------------------------
(Address of Principal (Zip Code)
Executive Offices)
(617) 628-4000
----------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
N/A
- --------------------------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
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 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 Exchange Act).
Yes No X
--------- ---------
Common Stock, $1.00 par value 1,664,957
----------------------------- --------------------------------
Class Outstanding at February 13, 2004
CENTRAL BANCORP, INC.
Table of Contents
Part I. Financial Information Page No.
--------
Item 1. Financial Statements (Unaudited)
Consolidated Statements of Financial Condition at December 31, 2003 and 1
March 31, 2003
Consolidated Statements of Income for the three and nine months ended 2
December 31, 2003 and 2002
Consolidated Statements of Changes in Stockholders' Equity for the nine 3
months ended December 31, 2003 and 2002
Consolidated Statements of Cash Flows for the nine months ended 4
December 31, 2003 and 2002
Notes to Unaudited Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition and Results 9
of Operations
Liquidity and Capital Resources 14
Item 3. Quantitative and Qualitative Disclosures about Market Risk 14
Item 4. Controls and Procedures 15
Part II. Other Information
Item 1. Legal Proceedings 16
Item 2. Changes in Securities and Use of Proceeds 16
Item 3. Defaults upon Senior Securities 16
Item 4. Submission of Matters to a Vote of Security Holders 16
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8-K 16
Signatures and Certifications
Part I. Financial Information
Item 1. Financial Statements
CENTRAL BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Financial Condition
(Unaudited)
December 31, March 31,
(Dollars in Thousands) 2003 2003
----------------------
ASSETS
Cash and due from banks $ 9,523 $ 5,996
Short-term investments 7,022 5,226
--------- ---------
Cash and cash equivalents 16,545 11,222
--------- ---------
Certificate of Deposit (Note 6) 1,200 --
Investment securities available for sale (amortized cost of $84,467
at December 31, 2003 and $59,500 at March 31, 2003) 87,719 61,111
Stock in Federal Home Loan Bank of Boston, at cost 8,300 8,300
The Co-operative Central Bank Reserve Fund 1,576 1,576
--------- ---------
Total investments 97,595 70,987
--------- ---------
Loans held for sale 306 647
Loans (Note 2) 358,684 389,817
Less allowance for loan losses 3,473 3,284
--------- ---------
Net loans 355,211 386,533
--------- ---------
Accrued interest receivable 2,277 2,380
Banking premises and equipment, net 2,032 1,869
Deferred tax asset, net 164 719
Goodwill 2,232 2,232
Other assets 615 619
--------- ---------
Total assets $ 478,177 $ 477,208
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits (Note 3) $ 287,095 $ 287,959
Federal Home Loan Bank advances 141,100 144,400
Other borrowings (Note 6) 3,962 176
Advance payments by borrowers for taxes and insurance 1,210 999
Accrued expenses and other liabilities (Note 5) 1,719 4,231
--------- ---------
Total liabilities 435,086 437,765
--------- ---------
Commitments and Contingencies (Note 5)
Stockholders' equity (Note 6):
Preferred stock $1.00 par value; authorized 5,000,000 shares;
none issued or outstanding -- --
Common stock $1.00 par value; authorized 15,000,000 shares;
2,030,251 shares issued at December 31, 2003 and
2,027,727 shares issued at March 31, 2003 2,030 2,028
Additional paid-in capital 12,895 12,751
Retained income 36,798 34,601
Treasury stock (365,294 shares at December 31, 2003 and
at March 31, 2003), at cost (7,305) (7,249)
Accumulated other comprehensive income 2,090 1,002
Unearned compensation - ESOP (3,417) (3,690)
--------- ---------
Total stockholders' equity 43,091 39,443
--------- ---------
Total liabilities and stockholders' equity $ 478,177 $ 477,208
========= =========
See accompanying notes to unaudited consolidated financial statements.
1
CENTRAL BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Income
(In Thousands, Except Per Share Data)
(Unaudited)
Three Months Ended Nine Months Ended
December 31, December 31,
------------------- --------------------
2003 2002 2003 2002
-------- -------- -------- --------
Interest and dividend income:
Mortgage loans $ 5,414 $ 6,220 $ 17,228 $ 18,512
Other loans 90 145 338 438
Short-term investments 75 23 168 118
Investments 997 1,212 2,681 3,540
-------- -------- -------- --------
Total interest and dividend income 6,576 7,600 20,415 22,608
-------- -------- -------- --------
Interest expense:
Deposits 1,075 1,385 3,332 4,366
Advances from Federal Home Loan Bank of Boston 1,768 1,863 5,299 5,494
Other borrowings 40 -- 41 --
-------- -------- -------- --------
Total interest expense 2,883 3,248 8,672 9,860
-------- -------- -------- --------
Net interest and dividend income 3,693 4,352 11,743 12,748
Provision for loan losses 50 -- 150 --
-------- -------- -------- --------
Net interest and dividend income after
provision for loan losses 3,643 4,352 11,593 12,748
-------- -------- -------- --------
Non-interest income:
Deposit service charges 147 151 465 413
Net gains (losses) from sales and write-downs
of investment securities -- 14 (135) (196)
Gain on sales of loans 54 27 263 28
Other income 106 114 291 342
-------- -------- -------- --------
Total non-interest income 307 306 884 587
-------- -------- -------- --------
Non-interest expenses:
Salaries and employee benefits 1,816 1,759 5,314 5,050
Occupancy and equipment 286 265 826 834
Data processing service fees 264 268 810 814
Professional fees (Note 5) 95 438 108 1,141
Advertising 157 94 404 276
Other expenses 399 376 1,314 1,108
-------- -------- -------- --------
Total non-interest expenses 3,017 3,200 8,776 9,223
-------- -------- -------- --------
Income before income taxes 933 1,458 3,701 4,112
Provision for income taxes (Note 5) 358 548 1,008 1,507
-------- -------- -------- --------
Net income $ 575 $ 910 $ 2,693 $ 2,605
======== ======== ======== ========
Earnings per common share - basic $ 0.37 $ 0.58 $ 1.74 $ 1.64
======== ======== ======== ========
Earnings per common share - diluted $ 0.37 $ 0.58 $ 1.72 $ 1.63
======== ======== ======== ========
Weighted average common shares outstanding - basic 1,553 1,569 1,549 1,584
Weighted average common and equivalent shares
outstanding - diluted 1,567 1,580 1,563 1,600
See accompanying notes to unaudited consolidated financial statements.
2
CENTRAL BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Changes in Stockholders' Equity
(Unaudited)
- ----------------------------------------------------------------------------------------------------------
Additional
Common Paid-In Retained Treasury
(In Thousands) Stock Capital Income Stock
- ----------------------------------------------------------------------------------------------------------
Nine Months Ended December 31, 2003
- -----------------------------------
Balance at March 31, 2003 $ 2,028 $ 12,751 $ 34,601 $ (7,249)
Net income -- -- 2,693 --
Other comprehensive income, net of tax:
Unrealized gain on securities, net
of reclassification adjustment -- -- -- --
Comprehensive income (Note 4)
Proceeds from exercise of stock options 2 45 -- --
Tax benefit of stock options -- 4 -- --
Director deferred compensation
transactions -- 64 -- (67)
Dividends paid ($.36 per share) -- -- (496) --
Amortization of unearned compensation -
ESOP -- 31 -- --
Other equity transactions -- -- -- 11
--------- ----------- ----------- ----------
Balance at December 31, 2003 $ 2,030 $ 12,895 $ 36,798 $ (7,305)
========= ========== ========== ==========
Nine Months Ended December 31, 2002
- -----------------------------------
Balance at March 31, 2002 $ 2,000 $ 11,934 $ 33,141 $ (7,189)
Net income -- -- 2,605 --
Other comprehensive income, net of tax:
Unrealized gain on securities, net
of reclassification adjustment -- -- -- --
Comprehensive income (Note 4)
Proceeds from exercise of stock options 28 488 -- --
Tax benefit of stock options -- 66 -- --
Purchase of shares by ESOP -- -- -- --
Director deferred compensation
transactions -- 20 -- (15)
Dividends paid ($.32 per share) -- -- (528) --
Amortization of unearned compensation -
ESOP -- 189 -- --
--------- ----------- ----------- ----------
Balance at December 31, 2002 $ 2,028 $ 12,697 $ 35,218 $ (7,204)
========= =========== =========== ===========
- ---------------------------------------------------------------------------------------------
Accumulated
Other Unearned Total
Comprehensive Compensation Stockholders'
(In Thousands) Income (Loss) ESOP Equity
- ---------------------------------------------------------------------------------------------
Nine Months Ended December 31, 2003
- -----------------------------------
Balance at March 31, 2003 $ 1,002 $ (3,690) $ 39,443
Net income -- -- 2,693
Other comprehensive income, net of tax:
Unrealized gain on securities, net
of reclassification adjustment 1,088 -- 1,088
----------
Comprehensive income (Note 4) 3,781
----------
Proceeds from exercise of stock options -- -- 47
Tax benefit of stock options -- -- 4
Director deferred compensation
transactions -- -- (3)
Dividends paid ($.36 per share) -- -- (496)
Amortization of unearned compensation -
ESOP -- 273 304
Other equity transactions -- -- 11
----------- ---------- -----------
Balance at December 31, 2003 $ 2,090 $ (3,417) $ 43,091
=========== =========== ===========
Nine Months Ended December 31, 2002
- -----------------------------------
Balance at March 31, 2002 $ (626) $ (306) $ 38,954
Net income -- -- 2,605
Other comprehensive income, net of tax:
Unrealized gain on securities, net
of reclassification adjustment 1,512 -- 1,512
-----------
Comprehensive income (Note 4) 4,117
-----------
Proceeds from exercise of stock options -- -- 516
Tax benefit of stock options -- -- 66
Purchase of shares by ESOP -- (2,358) (2,358)
Director deferred compensation
transactions -- -- 5
Dividends paid ($.32 per share) -- -- (528)
Amortization of unearned compensation -
ESOP -- 129 318
----------- ---------- -----------
Balance at December 31, 2002 $ 886 $ (2,535) $ 41,090
=========== =========== ===========
See accompanying notes to unaudited consolidated financial statements.
3
CENTRAL BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended
December 31,
---------------------
(In thousands) 2003 2002
- ------------------------------------------------------------------------------------------
Cash flows from operating activities:
Net income $ 2,693 $ 2,605
Adjustments to reconcile net income to net cash provided
by (used in) operating activities
Depreciation and amortization 234 239
Amortization of premiums 115 189
Provision for loan losses 150 --
Stock-based compensation 233 318
Net losses from sales and write-downs of
investment securities 135 196
Gain on sale of loans held for sale (263) (28)
Originations of loans held for sale (30,081) (21,309)
Proceeds from sale of loans originated for sale 30,685 1,843
(Increase) decrease in accrued interest receivable 103 (44)
(Increase) decrease in other assets, net 4 (700)
Increase (decrease) in advance payments by borrowers for taxes
and insurance 211 (121)
Increase (decrease) in accrued expenses and other liabilities (2,386) 142
-------- --------
Net cash provided by (used in) operating activities 1,833 (16,670)
-------- --------
Cash flows from investing activities:
Net (increase) decrease in loans 31,133 (8,787)
Principal payments on mortgage-backed securities 4,187 5,293
Purchase of certificate of deposit (1,200) --
Purchases of investment securities (33,885) (5,210)
Maturities and calls of investment securities 4,000 4,000
Proceeds from sales of investment securities 482 8,126
Purchase of banking premises and equipment (397) (269)
-------- --------
Net cash provided by investing activities 4,320 3,153
-------- --------
Cash flows from financing activities:
Increase (decrease) in deposits (864) 24,814
Proceeds from advances from FHLB of Boston -- 39,000
Repayments on advances from FHLB of Boston (3,300) (47,600)
Proceeds from ESOP loan 3,506 --
Repayment of ESOP loan (98) --
Increase in short-term borrowings 378 457
Proceeds from exercise of stock options 47 516
Purchase of shares by ESOP -- (2,358)
Dividends paid (496) (528)
Net directors deferred compensation (3) 5
-------- --------
Net cash provided by (used in) financing activities (830) 14,306
-------- --------
Net increase in cash and cash equivalents 5,323 789
Cash and cash equivalents at beginning of period 11,222 7,564
-------- --------
Cash and cash equivalents at end of period $ 16,545 $ 8,353
======== ========
Supplemental disclosure of cash flow information: Cash paid during
the period for:
Interest $ 8,642 $ 9,834
Income taxes $ 1,911 $ 2,095
See accompanying notes to unaudited consolidated financial statements.
4
CENTRAL BANCORP, INC. AND SUBSIDIARY
Notes to Unaudited Consolidated Financial Statements
December 31, 2003
(1) Basis of Presentation
The unaudited consolidated financial statements of Central Bancorp, Inc.
and its wholly-owned subsidiary Central Co-operative Bank (collectively referred
to as "the Company") presented herein should be read in conjunction with the
consolidated financial statements of the Company as of and for the year ended
March 31, 2003, included in the Company's Annual Report on Form 10-K filed with
the Securities and Exchange Commission. In the opinion of management, the
accompanying unaudited consolidated financial statements reflect all
adjustments, consisting of normal recurring adjustments, necessary for a fair
presentation. Interim results are not necessarily indicative of results to be
expected for the entire year.
The Company's significant accounting policies are described in Note 1 of
the Notes to Consolidated Financial Statements included in its Form 10-K for the
year ended March 31, 2003. For interim reporting purposes, the Company follows
the same significant accounting policies.
Certain reclassifications have been made to the prior year financial
statements to conform to the current year presentation. Such reclassifications
have no effect on previously reported net income.
(2) Loans
Loans as of December 31, 2003 and March 31, 2003 are summarized below (in
thousands):
December 31, March 31,
2003 2003
--------- ---------
Real estate loans:
Residential real estate $ 177,789 $ 236,649
Commercial real estate 142,948 107,140
Construction 24,003 30,294
Second mortgage and home equity lines of credit 9,221 9,128
--------- ---------
Total real estate loans 353,961 383,211
Commercial loans 3,712 5,319
Consumer loans 1,011 1,287
--------- ---------
Total loans 358,684 389,817
Less: allowance for loan losses (3,473) (3,284)
--------- ---------
Total loans, net $ 355,211 $ 386,533
========= =========
There were no non-accrual loans at December 31, 2003 and March 31, 2003.
5
CENTRAL BANCORP, INC. AND SUBSIDIARY
Notes to Unaudited Consolidated Financial Statements (continued)
December 31, 2003
(3) Deposits
Deposits at December 31, 2003 and March 31, 2003 are summarized as follows
(in thousands):
December 31, March 31,
2003 2003
-------- --------
Demand deposit accounts $ 30,162 $ 31,523
NOW accounts 35,988 38,047
Passbook and other savings accounts 73,387 71,629
Money market deposit accounts 46,751 42,687
-------- --------
Total non certificate accounts 186,288 183,886
-------- --------
Term deposit certificates
Certificates of $100 and above 26,478 26,259
Certificates less than $100 74,329 77,814
-------- --------
Total term deposit certificates 100,807 104,073
-------- --------
Total deposits $287,095 $287,959
======== ========
(4) Other Comprehensive Income
The Company has established standards for reporting and displaying
comprehensive income, which is defined as all changes to equity except
investments by, and distributions to, shareholders. Net income is a component of
comprehensive income, with all other components referred to, in the aggregate,
as other comprehensive income.
The Company's other comprehensive income and related tax effect is as
follows (in thousands):
For the Nine Months Ended
December 31, 2003
----------------------------------
Before-Tax Tax After-Tax
Amount Effect Amount
---------- ------- ---------
Unrealized gains on securities:
Unrealized holding gains arising during period $1,506 $ 507 $ 999
Less: reclassification adjustment for net
losses included in net income 135 46 89
------ ------ ------
Other comprehensive income $1,641 $ 553 $1,088
====== ====== ======
6
CENTRAL BANCORP, INC. AND SUBSIDIARY
Notes to Unaudited Consolidated Financial Statements (continued)
December 31, 2003
(4) Other Comprehensive Income (continued)
For the Nine Months Ended
December 31, 2002
------------------------------
Before-Tax Tax After-Tax
Amount Effect Amount
---------- ------- ---------
Unrealized gains on securities:
Unrealized net holding gains arising during period $2,236 $ 845 $1,391
Less: reclassification adjustment for net
losses included in net income 196 75 121
------ ------ ------
Other comprehensive income $2,432 $ 920 $1,512
====== ====== ======
(5) Contingencies
Legal Proceedings
The Company from time to time is involved as plaintiff or defendant in
various legal actions incident to its business. Except as described herein, none
of these actions are believed to be material, either individually or
collectively, to the results of operations and financial condition of the
Company.
Central Co-operative Bank (the Bank) had been named as defendant in a civil
suit filed March 28, 2002 in Middlesex Superior Court under the caption Yi v.
Central Bank in which it was alleged, inter alia, that the Bank committed an
unfair or deceptive trade practice by failing to pay surplus foreclosure
proceeds to a junior lien holder in 1994. Plaintiff sought damages of $165,000
plus interest of approximately $175,000 and applied for a multiple damage award
under Chapter 93A of the Massachusetts General Laws which provides for up to
treble damages if a violation is found to be willful or knowing. In January
2004, the parties reached a settlement, which will result in a payment by the
Bank, net of insurance, of $400,000. As of December 31, 2003, the Company had
fully reserved for its costs under the settlement.
The Company and certain present and former directors had been named in
related federal and state court lawsuits brought by PL Capital, LLC and
affiliates ("PL Capital") and also by Lawrence B. Seidman and affiliates
("Seidman"), respectively, current and former stockholders, in which PL Capital
and Seidman had challenged the directors' determination that PL Capital and
Seidman secretly acted in concert in violation of the Company's Shareholder
Rights Agreement ("Rights Plan"). On August 4, 2003, the Company and the
directors, former directors and affiliated entities that were parties to the
litigation entered into an Agreement (the "Agreement") with PL Capital, LLC and
its affiliated persons and entities, pursuant to which all the parties settled
all of the pending litigation between them and filed with the appropriate courts
the filings necessary for the litigation to be dismissed. As part of the
Agreement, a payment of $400,000, which was reimbursed by insurance, was made to
PL Capital.
The Company had been working with its insurance carrier to recover its
legal defense costs, including the settlement payment noted in the preceding
paragraph, incurred in connection with the PL Capital and Seidman litigation. In
connection therewith, the Company recognized insurance recoveries of $80,000 and
$3,093,000 during the three and nine month periods ended December 31, 2003,
respectively. These recoveries have been classified with professional fees in
the accompanying consolidated statements of income.
State Income Taxes
During 2003, the Massachusetts Department of Revenue ("DOR") issued notices
of intent to assess additional state excise taxes to numerous financial
institutions in Massachusetts that have formed a real estate investment trust
(REIT) subsidiary. The DOR contended that dividends received by the banks from
such subsidiaries were fully taxable in Massachusetts.
7
CENTRAL BANCORP, INC. AND SUBSIDIARY
Notes to Unaudited Consolidated Financial Statements (continued)
December 31, 2003
(5) Contingencies (continued)
The Governor of Massachusetts signed legislation on March 5, 2003, which
expressly disallows deductions for dividends received from a REIT, resulting in
such dividends being subject to state taxation. In addition, this law applies
retroactively to tax years ending on or after December 31, 1999. In the fourth
quarter of fiscal 2003, the Company provided additional state taxes, including
interest, net of the related federal tax benefit, of $835,000.
In June 2003, a settlement of this matter was reached between the DOR and
the majority of affected financial institutions including the Company. The
settlement provides that 50% of all dividends received from REIT subsidiaries
from 1999 through 2002 are subject to state taxation. Interest on such
additional taxes was also assessed. Payment of such taxes and interest totaling
$431,000 was made in June 2003. As a result of this settlement, the Bank
recognized a recovery of $374,000 in income taxes, which increased net income by
the same amount in the quarter ended June 30, 2003. In December 2003, the Bank
liquidated its REIT subsidiary in a tax-free transaction.
(6) ESOP Loan
On October 16, 2003, the Central Co-operative Bank Employee Stock Ownership
Plan Trust (the "ESOP") refinanced the loan it had from the Company with a third
party lender. The Company received proceeds of $3,505,629, of which $2,250,000
was contributed to the Bank's capital. The loan bears interest at the prevailing
prime rate plus 1/2% and matures in March 2012. Principal payments of $97,400
are scheduled to be made each quarter. The loan is collateralized by the ESOP's
unallocated shares of Company stock, a certificate of deposit of $1,200,000 and
a pledge of the Company's stock in the Bank. In addition, the Company guarantees
repayment of the loan.
In connection with this transaction, the Bank incurred costs of $109,000
which have been capitalized and are being amortized over the term of the loan.
(7) Subsequent Event
On January 8, 2004, the Board of Directors voted the payment of a quarterly
cash dividend of $.12 per share. The dividend is payable on February 13, 2004 to
stockholders of record on January 30, 2004.
(8) Recent Accounting Pronouncement
In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation -- Transition and Disclosure." SFAS No. 148 amends SFAS Statement
No. 123, to provide alternative methods of transition for a voluntary change to
the fair value based method of accounting for stock-based employee compensation.
Companies are able to eliminate a "ramp-up" effect that the SFAS No. 123
transition rule creates in the year of adoption. Companies can choose to elect a
method that will provide for comparability amongst years reported. In addition,
this Statement amends the disclosure requirement of Statement 123 to require
prominent disclosures in both annual compensation and the effect of the method
used on reported results. The amendments to SFAS No. 123 are effective for
financial statements for fiscal years ending after December 15, 2002. The
Company is not currently considering the adoption of fair value based
compensation of stock options.
8
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Forward-Looking Statements
When used in this discussion and elsewhere in this Quarterly Report on Form
10-Q, the words or phrases "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 cautions 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
changes in regional and national economic conditions, unfavorable judicial
decisions, substantial 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 occurrence of anticipated or
unanticipated events or circumstances after the date of such statements.
Critical Accounting Policies
Accounting policies involving significant judgments and assumptions by
management, which have, or could have, a material impact on the carrying value
of certain assets and impact income, are considered critical accounting
policies. The Company considers the allowance for loan losses to be its critical
accounting policy. There have been no significant changes in the methods or
assumptions used in the accounting policies that require material estimates and
assumptions.
Arriving at an appropriate level of allowance for loan losses necessarily
involves a high degree of judgment. The ongoing evaluation process includes a
formal analysis of the allowance each quarter, which considers, among other
factors, the character and size of the loan portfolio, business and economic
conditions, loan growth, delinquency trends, nonperforming loans trends,
charge-off experience and other asset quality factors. The Company evaluates
specific loan status reports on certain commercial and commercial real estate
loans rated "substandard" or worse in excess of a specified dollar amount.
Estimated reserves for each of these credits is determined by reviewing current
collateral value, financial information, cash flow, payment history and trends
and other relevant facts surrounding the particular credit. Provisions for
losses on the remaining commercial and commercial real estate loans are based on
pools of similar loans using a combination of historical loss experience and
qualitative adjustments. For the residential real estate and consumer loan
portfolios, the range of reserves is calculated by applying historical
charge-off and recovery experience to the current outstanding balance in each
loan category. Although management uses available information to establish the
appropriate level of the allowance for loan losses, future additions to the
allowance may be necessary based on estimates that are susceptible to change as
a result of changes in economic conditions and other factors. In addition,
various regulatory agencies, as an integral part of their examination process,
periodically review the Company's allowance for loan losses. Such agencies may
require the Company to recognize adjustments to the allowance based on their
judgments about information available to them at the time of their examination.
Comparison of Financial Condition at December 31, 2003 and March 31, 2003
Total assets increased by $1.0 million from $477.2 million at March 31,
2003 to $478.2 million at December 31, 2003. During the nine months ended
December 31, 2003, loans (excluding loans held for sale) decreased by $31.1
million consisting primarily of a $58.9 million decrease in residential mortgage
loans, partially offset by an $35.8 million increase in commercial real estate
loans. During the first half of the current year, interest rates for residential
mortgages reached a 45-year low resulting in significant refinancing activity.
Management regularly assesses the desirability of holding newly originated
long-term, fixed-rate residential mortgage loans in portfolio or selling such
loans in the secondary market. A number of factors are evaluated to determine
whether or not to hold such loans in portfolio including, current and projected
liquidity, current and projected interest rates, projected growth in other
interest-earning assets and the current and projected interest rate
9
risk profile. Based on its consideration of these factors, management determined
that most fixed-rate residential mortgage loans originated during the period
should be sold in the secondary market. This decision resulted in the
aforementioned decrease in residential mortgage loans and an $11.9 million
increase in the average balance of short-term investments during the nine months
ended December 31, 2003.
In October 2003, the Company commenced a program to reinvest approximately
$40 million of funds which were invested on an overnight basis at September 30,
2003. In connection with this program, the Company purchased $33 million in a
combination of callable government agency securities having final maturities in
approximately five years and mortgage-backed securities collateralized by either
10-year fixed-rate residential mortgages or hybrid adjustable-rate mortgages
(hybrid ARMs). The interest rate on the hybrid ARMs will initially be adjusted
in five years and annually thereafter subject to certain limitations. The
remaining $7 million in this reinvestment program was used to fund a portion of
the growth in the commercial real estate loan portfolio.
The Company experienced a modest increase of $2.4 million in core deposits
in the first nine months of the year and a $3.3 million decrease in term
deposits resulting in a net decrease in total deposits of $864,000. While
deposits flows can vary significantly on a daily basis, the Company has
experienced a generally flat level of total deposits during the past year with a
declining level of term deposits. Management sets its term deposit rates to be
competitive in its market area, however, the desirability to customers of term
deposits has been adversely affected during this period of low interest rates.
Advances from the Federal Home Loan Bank of Boston (FHLB) were reduced by
$3.3 million during the first nine months of the year. A FHLB advance totaling
$2.0 million and having a rate of 3.46% matured in January 2004 and was repaid
with the proceeds of a 3-year FHLB advance having a rate of 2.53%. No additional
FHLB advances are scheduled to mature in fiscal 2004.
The increase in stockholders' equity of $3.6 million to $43.1 million at
December 31, 2003 resulted primarily from net income of $2.7 million and other
comprehensive income of $1.1 million.
Comparison of Operating Results for the Quarters Ended December 31, 2003 and
2002
Net income decreased to $575,000, or $0.37 per diluted share, for the
quarter ended December 31, 2003, from $910,000, or $0.58 per diluted share for
the corresponding quarter in the prior year. The current quarter's results
reflect an insurance recovery of $53,000, net of taxes, attributable to the
dispute with certain shareholders, which was settled during the previous
quarter. The results for the quarter ended December 31, 2002, included legal
fees attributable to shareholder litigation which reduced net income by
$165,000.
Earnings during the quarter ended December 31, 2003 were adversely affected
by a decrease in net interest income of $659,000, as compared to the same
quarter in the prior year. The gradual reduction in interest rates in recent
years had a greater relative impact on the Company's yield on earning assets in
the current quarter than on the cost of funds due to limited opportunity to
reduce deposit rates as well as the fixed cost of FHLB advances. As previously
noted, the Company sold most of its current production of fixed-rate residential
mortgages due to the historically low rates prevailing during the period and
invested the related proceeds on an overnight basis through September and in a
combination of short and intermediate-term investments thereafter. These factors
lead to a reduction in the net interest margin from 3.73% in the quarter ended
December 31, 2002, to 3.15% in the current quarter.
Interest Income. Interest income for the quarter ended December 31, 2003 was
$6.6 million, a decrease of $1.0 million, or 13.5%, compared to the same quarter
in the prior year. This decrease was due primarily to a decline in the yield on
interest-earning assets from 6.51% in the third quarter of the prior year to
5.60% in the current quarter. Average interest-earning assets increased by $2.7
million to $469.7 million during the quarter ended December 31, 2003 from $467.0
million for the quarter ended December 30, 2002.
While the balance of average interest-earning assets increased only $2.7
million during the quarter ended December 31, 2003, as compared to the same
quarter in the prior year, the Company experienced a significant shift in the
composition of its earning assets. Overall, the average balance of loans, which
generally earn interest at a
10
higher rate and have a longer term to maturity or repricing, declined $28.9
million, while investments and short-term investments, which generally earn
interest at a lower rate and have a shorter term to maturity or repricing,
increased $31.5 million between periods. This shift reflected the Company's
previously disclosed intent to allow its portfolio of fixed-rate residential
loans to decline during the period of historically low rates which has prevailed
throughout most of the past nine months.
Interest Expense. Interest expense for the quarter ended December 31, 2003 was
$2.9 million compared to $3.2 million for the quarter ended December 31, 2002, a
decrease of $365,000, or 11.2%. This decrease resulted from a 33 basis points
decrease in the cost of funds from 3.21% in the quarter ended December 30, 2002
to 2.88% in the quarter ended December 31, 2003. Average interest-bearing
liabilities decreased $4.5 million between periods.
The following table presents average balances and average rates earned/paid
by the Company for the quarter ended December 31, 2003 compared to the quarter
ended December 31, 2002:
Three Months Ended December 31,
--------------------------------------------------------------------------
2003 2002
-------------------------------- -----------------------------------
Average Average Average Average
Balance Interest Rate Balance Interest Rate
-------- --------- ---- -------- -------- ----
(Dollars in thousands)
Interest-earning assets:
Mortgage loans $349,042 $5,414 6.20% $374,910 $6,220 6.64%
Other loans 4,796 90 7.51 7,807 145 7.43
Investment securities 85,809 997 4.65 77,957 1,212 6.22
Short-term investments 30,012 75 1.00 6,366 23 1.45
-------- ------ -------- ------
Total interest-earning assets $469,659 6,576 5.60 $467,040 7,600 6.51
----- -----
Allowance for loan losses (3,435) (3,284)
Noninterest-earning assets 12,944 15,209
-------- --------
Total assets $479,168 $478,965
======== ========
Interest-bearing liabilities:
Deposits $254,189 $1,075 1.69 $252,557 $1,385 2.19
Advances from FHLB of Boston 143,611 1,768 4.92 152,577 1,863 4.88
Other borrowings 2,945 40 5.43 107 -- 1.50
-------- ------ -------- ------
Total interest-bearing liabilities $400,745 2,883 2.88 $405,241 3,248 3.21
------ ------
Noninterest-bearing liabilities 37,487 36,265
-------- --------
Total liabilities $438,232 $441,506
-------- --------
Stockholders' equity 40,936 37,459
-------- --------
Total liabilities and stockholders' equity $479,168 $478,965
======== ========
Net interest and dividend income $3,693 $4,352
====== ======
Net interest spread 2.72% 3.30%
===== =====
Net interest margin 3.15% 3.73%
===== =====
Provisions for Loan Losses. The Company provides for loan losses in order to
maintain the allowance for loan losses at a level that management estimates is
adequate to absorb probable losses based on an evaluation of known and inherent
risks in the portfolio. In determining the appropriate level of the allowance
for loan losses, management considers past and anticipated loss experience,
evaluations of underlying collateral, prevailing economic conditions, the nature
and volume of the loan portfolio and the levels of non-performing and other
classified loans. The amount of the allowance is based on estimates and ultimate
losses may vary from such estimates. Management assesses the allowance for loan
losses on a quarterly basis and provides for loan losses monthly in order to
maintain the adequacy of the allowance.
11
During the current quarter, the Company provided $50,000 for loan losses.
While the Company's asset quality, as measured principally by delinquency rates,
charge-offs and loan classifications, continues to be outstanding, the shifting
of the mix of the loan portfolio to a greater portion of commercial real estate
loans indicated the need for an increase in the reserve for loan losses in the
current quarter. No provision was recorded in the corresponding quarter of the
prior year.
Non-interest Income. Non-interest income was $307,000 for the quarter ended
December 31, 2003 virtually unchanged from $306,000 in the same period of 2002.
The Company experienced a decline in residential mortgage loan origination
activity during each of the last two quarters and, as a result, has sold fewer
loans. Loan sale gains have decreased in each of the past three quarters and are
not expected to increase in the upcoming quarter.
Non-interest Expenses. Non-interest expenses decreased $183,000 during the
quarter ended December 31, 2003 as compared to the quarter ended December 31,
2002. Exclusive of the net impact of legal fees incurred in connection with
shareholder litigation in fiscal 2003 and a related insurance recovery in fiscal
2004, non-interest expenses increased $147,000, or 5.0%, due principally to
increases in salaries and employee benefits of $57,000 and additional
advertising expense of $63,000.
The increase in salaries and employee benefits of $57,000, or 3.2%, during
the quarter ended December 31, 2003, was due to overall salary increases
averaging 4.0% and increases in staffing to support higher mortgage loan
originations, partially offset by a reduction in incentive compensation. The
increase in advertising expense of $63,000, or 67.0%, resulted from additional
promotion of residential and commercial loan products as well as a deposit
promotion program.
Income Taxes. The effective tax rates for the quarters ended December 31, 2003
and 2002 were 38.4% and 37.6%, respectively. These rates vary from the statutory
income tax rate for banks of approximately 40.9% due to the Company's use of
both a securities corporation and a REIT subsidiary (in fiscal 2003) for state
tax purposes.
Comparison of Operating Results for the Nine Months Ended December 31, 2003 and
2002
For the nine months ended December 31, 2003, net income increased 3.4% to
$2.7 million, or $1.72 per diluted share, compared to $2.6 million, or $1.63 per
diluted share, in the year earlier period. Exclusive of the favorable impact of
$374,000, after taxes, resulting from the settlement of the Company's
REIT-related tax liability with the Massachusetts Department of Revenue and the
favorable impact of a net insurance recovery associated with certain shareholder
litigation, which increased net income by $329,000 in the first nine months of
the current year, net income declined $780,000 compared to the year earlier
period. This change was largely the result of a $1.0 million decrease in net
interest income between periods attributable to the factors previously disclosed
herein.
Interest Income. Interest income for the nine months ended December 31, 2003 was
$20.4 million, or $2.2 million less than the amount earned in the same period in
the prior year due to a decrease in the yield on interest-earning assets from
6.53% in the first nine months of the prior year to 5.84% in the same period of
the current year. Average interest-earning assets increased by $3.8 million to
$465.7 million during the nine months ended December 31, 2003, from $461.9
million for the nine months ended December 31, 2002.
Interest Expense. Interest expense for the nine months ended December 31, 2003
was $8.7 million compared to $9.9 million for the nine months ended December 30,
2002, a decrease of $1.2 million, or 12.0%. This decrease resulted from a 39
basis points decrease in the cost of funds from 3.28% in the nine months ended
December 31, 2002 to 2.89% in the nine months ended December 31, 2003. Average
interest-bearing liabilities decreased $1.2 million between periods.
The decrease in the cost of funds during the nine months of the current
year was entirely due to a reduction in the cost of deposits from 2.37% during
the prior year period to 1.74% during the nine months ended December 31, 2003.
The cost of FHLB advances, the Company's other primary interest-bearing
liability, increased during the first nine months of the current year to 4.90%
from 4.70% in the comparable prior year period. As FHLB advances can not be
prepaid without a substantial penalty, these longer-term, fixed-rate borrowings
have been a
12
significant factor in the compression of the Company's net interest margin
during the most recent period of declining rates.
The following table presents average balances and average rates earned/paid
by the Company for the nine months ended December 31, 2003 compared to the nine
months ended December 31, 2002:
Nine Months Ended December 31,
----------------------------------------------------------------------------
2003 2002
------------------------------------ ------------------------------------
Average Average Average Average
Balance Interest Rate Balance Interest Rate
------- -------- ---- ------- -------- ----
(Dollars in thousands)
Interest-earning assets:
Mortgage loans $363,416 $17,228 6.32% $363,574 $18,512 6.79%
Other loans 6,100 338 7.39 7,776 438 7.51
Investment securities 74,590 2,681 4.79 80,862 3,540 5.84
Short-term investments 21,610 168 1.04 9,665 118 1.63
-------- ------- -------- -------
Total interest-earning assets 465,716 20,415 5.84 461,877 22,608 6.53
------- -------
Allowance for loan losses (3,369) (3,290)
Noninterest-earning assets 13,826 14,641
-------- --------
Total assets $476,173 $473,228
======== ========
Interest-bearing liabilities:
Deposits $254,620 $3,332 1.74 $245,294 $4,366 2.37
Advances from FHLB of Boston 144,136 5,299 4.90 155,741 5,494 4.70
Other borrowings 1,140 41 4.80 73 -- 0.73
-------- ------- -------- -------
Interest-bearing liabilities 399,896 8,672 2.89 401,108 9,860 3.28
------- -------
Non-interest bearing liabilities 37,537 34,923
-------- --------
Total liabilities 437,433 436,031
-------- --------
Stockholders' equity 38,740 37,197
-------- --------
Total liabilities and stockholders'
equity $476,173 $473,228
======== ========
Net interest and dividend income $11,743 $12,748
======= =======
Net interest spread 2.95% 3.25%
===== =====
Interest margin 3.36% 3.68%
===== =====
Provision for Loan Losses. During the first nine months of the current year, the
Company provided $150,000 for loan losses. While the Company's asset quality, as
measured principally by delinquency rates, charge-offs and loan classifications,
continues to be outstanding, the shifting of the mix of the loan portfolio to a
greater portion of commercial real estate loans indicated the need for an
increase in the reserve for loan losses in the current quarter. No provision was
recorded in the corresponding period of the prior year.
Non-interest Income. Exclusive of securities transactions, non-interest income
was $1.0 million for the nine months ended December 31, 2003 compared to
$783,000 in the prior year period. The primary reason for the $236,000 increase
in the current year was gains on the sale of loans as the Company commenced its
mortgage banking activities in the second half of fiscal 2003.
Net losses from sales and write-downs of investment securities were
$135,000 for the nine months ended December 31, 2003 compared to $196,000 in the
comparable prior year period. During the nine months ended December 31, 2003 and
2002, the Company recorded write-downs of $130,000 and $688,000, respectively,
in certain equity securities which had experienced a decline in fair value
judged to be other than temporary. At December 31, 2003, the market value of the
Company's portfolio of equity securities exceeded its adjusted cost basis by
$305,000.
13
Non-interest Expenses. Non-interest expenses decreased $447,000 during the nine
months ended December 31, 2003, as compared to the corresponding period in the
prior year. Exclusive of the impact of litigation and legal fees, net of the
related insurance recovery, and additional professional fees incurred in
connection with the contested election of directors at the 2002 Annual Meeting
of Stockholders, non-interest expenses increased $646,000, or 7.5%, due
principally to increases in salaries and employee benefits of $264,000,
increased advertising costs of $128,000 and an increase in other non-interest
expenses of $156,000.
The increase in salaries and employee benefits of $264,000, or 5.2%, during
the nine months ended December 31, 2003, was due to overall salary increases
averaging 4.0%, increases in staffing to support higher mortgage loan
originations, as well as increases in health insurance and pension expense.
These increases were partially offset by a reduction in incentive compensation.
The increase in advertising expense of $128,000, or 46.4%, during the first
nine months of the current year resulted from additional promotion of both
residential and commercial loan products as well as a deposit promotion program
during the most recent quarter. The increase in other non-interest expenses of
$156,000, or 14.1%, is primarily attributable to increases in insurance and
training related costs.
Income Taxes. The effective tax rates for the nine months ended December 31,
2003 and 2002 were 27.2% and 36.6%, respectively. As previously noted, the
Company recovered $374,000 in taxes in the current year as a result of the
settlement of the REIT tax dispute with the Massachusetts Department of Revenue.
Exclusive of this item, the effective tax rate for the nine months ended
December 31, 2003 was 37.3%. This increase from the prior year is entirely due
to the change in state tax law eliminating the use of the dividends received
deduction on dividends received by a bank from its REIT subsidiary.
Liquidity and Capital Resources
The Company's principal sources of liquidity are loan amortization, loan
prepayments, increases in deposits, advances from the Federal Home Loan Bank
(FHLB) of Boston and funds from operations. The Bank is a voluntary member of
the FHLB of Boston and as such is entitled to borrow up to the value of its
qualified collateral that has not been pledged to others. Qualified collateral
generally consists of residential first mortgage loans, U. S. Government and
agencies securities, mortgage-backed securities and funds on deposit at the FHLB
of Boston. At December 31, 2003, the Bank had approximately $35.6 million in
unused borrowing capacity at the FHLB of Boston.
At December 31, 2003, the Company had commitments to originate loans,
unused outstanding lines of credit and undisbursed proceeds of loans totaling
$47.0 million. Since many of the commitments may expire without being drawn
upon, the total commitment amounts do not necessarily represent future cash
requirements. The Company anticipates that it will have sufficient funds
available to meet its current loan commitments.
The Company's and the Bank's capital ratios at December 31, 2003 were as
follows:
Company Bank
------- ----
Total Capital (to risk-weighted assets) 12.76% 12.39%
Tier 1 Capital (to risk-weighted assets) 11.68 11.25
Tier 1 Capital (to average assets) 8.13 7.81
These ratios placed the Company in excess of regulatory standards and the
Bank in the "well capitalized" category as set forth by the FDIC.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company's earnings are largely dependent on its net interest income,
which is the difference between the yield on interest-earning assets and the
cost of interest-bearing liabilities. The Company seeks to reduce its
14
exposure to changes in interest rate, or market risk, through active monitoring
and management of its interest-rate risk exposure. The policies and procedures
for managing both on- and off-balance sheet activities are established by the
Bank's asset/liability management committee ("ALCO"). The Board of Directors
reviews and approves the ALCO policy annually and monitors related activities on
an ongoing basis.
Market risk is the risk of loss from adverse changes in market prices and
rates. The Company's market risk arises primarily from interest rate risk
inherent in its lending, borrowing and deposit taking activities.
The main objective in managing interest rate risk is to minimize the
adverse impact of changes in interest rates on net interest income and preserve
capital, while adjusting the asset/liability structure to control interest-rate
risk. However, a sudden and substantial increase or decrease in interest rates
may adversely impact earnings to the extent that the interest rates borne by
assets and liabilities do not change at the same speed, to the same extent, or
on the same basis.
The Company quantifies its interest-rate risk exposure using a
sophisticated simulation model. Simulation analysis is used to measure the
exposure of net interest income to changes in interest rates over a specific
time horizon. Simulation analysis involves projecting future interest income and
expense under various rate scenarios. The simulation is based on both actual and
forecasted cash flows and assumptions of management about the future changes in
interest rates and levels of activity (loan originations, loan prepayments,
deposit flows, etc). The assumptions are inherently uncertain and, therefore,
actual results will differ from simulated results due to timing, magnitude and
frequency of interest rate changes as well as changes in market conditions and
strategies. The net interest income projection resulting from use of actual and
forecasted cash flows and management's assumptions is compared to net interest
income projections based on an immediate shift of 300 basis points upward and
50/100 basis points downward. Internal guidelines on interest rate risk state
that for every 100 basis points immediate shift in interest rates, estimated net
interest income over the next twelve months should decline by no more than 5%.
The following table indicates the estimated exposure, as a percentage of
estimated net interest income, for the twelve-month period following the date
indicated assuming an immediate shift in interest rates as set forth below:
December 31, March 31,
2003 2003
---------- ---------
300 basis point increase in rates......... (9.6)% (7.6)%
50 basis point decrease in rates
(December 31 only)........................ (1.1)%
100 basis point decrease in rates
(March 31 only).......................... (2.0)%
For each one percentage point change in net interest income in the December
2003 projections, the effect on net income would be $95,000 assuming a 38% tax
rate.
Item 4. Controls and Procedures
As of the end of the period covered by this report, management of the
Company carried out an evaluation, under the supervision and with the
participation of the Company's principal executive officer and principal
financial officer, of the effectiveness of the Company's disclosure controls and
procedures. Based on this evaluation, the Company's principal executive officer
and principal financial officer concluded that the Company's disclosure controls
and procedures are effective in ensuring that information required to be
disclosed by the Company in reports that it files or submits under the
Securities Exchange Act of 1934, as amended, is recorded, processed, summarized
and reported, within the time periods specified in the Securities and Exchange
Commission's rules and forms.
15
In addition, there have been no changes in the Company's internal control
over financial reporting (to the extent that elements of internal control over
financial reporting are subsumed within disclosure controls and procedures)
identified in connection with the evaluation described in the above paragraph
that occurred during the Company's last fiscal quarter, that has materially
affected, or is reasonably likely to materially affect, the Company's internal
control over financial reporting.
Part II. Other Information
Item 1. Legal Proceedings
The Company from time to time is involved as plaintiff or defendant in
various legal actions incidental to its business. Except as described herein,
none of these actions are believed to be material, either individually or
collectively, to the results of operations and financial condition of the
Company.
The Bank had been named as defendant in a civil suit filed March 28, 2002
in Middlesex Superior Court under the caption Yi v. Central Bank in which it was
alleged, inter alia, that the Bank committed an unfair or deceptive trade
practice by failing to pay surplus foreclosure proceeds to a junior lien holder
in 1994. Plaintiff sought damages of $165,000 plus interest of approximately
$175,000 and applied for a multiple damage award under Chapter 93A of the
Massachusetts General Laws which provides for up to treble damages if a
violation is found to be willful or knowing. In January 2004, the parties
reached a settlement, which will result in a payment by the Bank, net of
insurance, of $400,000.
Item 2. Changes in Securities Use of Proceeds and Issuer Purchases of Equity
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
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
--------
31.1 Rule 13a-14(a) Certification of Chief Executive Officer
31.2 Rule 13a-14(a) Certification of Chief Financial Officer
32 Section 1350 Certification
(b) Reports on Form 8-K
-------------------
The Registrant filed the following Current Reports on Form 8-K during the
quarter ended December 31, 2003:
Date of Report Item(s) Reported Financial Statements Filed
-------------- ---------------- --------------------------
October 30, 2003 7, 12 N/A
November 21, 2003(1) 4, 7 N/A
- ----------
(1) The Registrant filed a Form 8-K/A on December 1, 2003 to correct the
submission header of this Form 8-K.
16
SIGNATURES
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.
CENTRAL BANCORP, INC.
---------------------
Registrant
February 17, 2004 /s/ John D. Doherty
- ----------------- ------------------------------------------------
Date John D. Doherty
Chairman, President and Chief Executive Officer
February 17, 2004 /s/ Michael K. Devlin
- ----------------- ------------------------------------------------
Date Michael K. Devlin
Senior Vice President, Treasurer and
Chief Financial Officer
17