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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
- --- of 1934
For the quarterly period ended December 31, 2003
Transition report under Section 13 or 15(d) of the Securities Exchange
- ----- Act of 1934
For the transition period from to
--------- ---------
Commission file number 0-32139
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FLORIDAFIRST BANCORP, INC.
--------------------------
(Exact Name of Registrant as Specified in Its Charter)
Florida 59-3662010
------- ----------
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
205 East Orange Street
Lakeland, Florida 33801-4611
----------------------------
(Address of Principal Executive Offices)
(863) 688-6811
--------------
(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 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 Exchange Act) YES X NO
---- ----
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date:
Common stock, par value $.10 per share 5,388,276 shares
- -------------------------------------- -------------------------------------
(class) Outstanding at February 4, 2004
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FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements Page
----
Condensed Consolidated Balance Sheets -
At December 31, 2003 (unaudited) and At September 30, 2003..............2
Condensed Consolidated Statements of Earnings -
Three Months ended December 31, 2003 and 2002 (unaudited)...............3
Condensed Consolidated Statements of Stockholders' Equity -
Three Months Ended December 31, 2003 and 2002 (unaudited).............4-5
Condensed Consolidated Statements of Cash Flows -
Three Months Ended December 31, 2003 and 2002 (unaudited).............6-7
Notes to Condensed Consolidated Financial Statements (unaudited).......8-12
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.............................................13-21
Item 3. Quantitative and Qualitative Disclosure about Market Risk..........22
Item 4. Controls and Procedures...........................................22
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.................................................23
Item 2. Changes in Securities and Use of Proceeds.........................23
Item 3. Defaults Upon Senior Securities...................................23
Item 4. Submission of Matters to a Vote of Security Holders...............23
Item 5. Other Information.................................................23
Item 6. Exhibits and Reports on Form 8-K..................................24
SIGNATURES....................................................................25
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
($ in thousands, except per share amounts)
At
December 31, September 30,
2003 2003
--------- ---------
(uaudited)
Assets
Cash and due from banks ........................................ $ 18,760 13,403
Interest-earning deposits ...................................... 148 372
--------- ---------
Total cash and cash equivalents ....................... 18,908 13,775
Securities available for sale .................................. 241,028 252,897
Loans, net of allowance for loan losses of $4,483 and $4,479 ... 506,074 496,684
Premises and equipment, net .................................... 13,671 13,978
Federal Home Loan Bank stock, at cost .......................... 7,398 6,955
Cash surrender value of bank-owned life insurance .............. 17,324 17,082
Core deposit intangible, net ................................... 9,641 10,016
Other assets ................................................... 7,146 7,095
--------- ---------
Total assets ..................................... $ 821,190 818,482
========= =========
Liabilities and Stockholders' Equity
Liabilities:
Noninterest-bearing deposits ............................... $ 34,101 33,741
Interest-bearing deposits .................................. 516,026 519,168
--------- ---------
Total deposits ................................... 550,127 552,909
Federal Home Loan Bank advances ............................ 138,915 136,175
Other borrowings ........................................... 23,785 20,643
Other liabilities .......................................... 4,831 6,783
--------- ---------
Total liabilities ................................ 717,658 716,510
--------- ---------
Stockholders' equity:
Preferred stock, no par value, 20,000,000 shares authorized,
none issued or outstanding ............................ - -
Common stock, $.10 par value, 80,000,000 shares authorized,
5,552,049 and 5,541,643 issued ........................ 555 554
Additional paid-in capital ................................. 53,168 52,610
Retained earnings .............................................. 56,277 55,377
Treasury stock, at cost, 170,286 and 155,261 shares ........ (3,178) (2,806)
Unallocated shares held by the employee stock ownership plan (3,787) (4,328)
Unallocated shares held by the restricted stock plan ....... (1,065) (1,111)
Accumulated other comprehensive income ..................... 1,562 1,676
--------- ---------
Total stockholders' equity ....................... 103,532 101,972
--------- ---------
Total liabilities and stockholders' equity ....... $ 821,190 818,482
========= =========
See Accompanying Notes to Condensed Consolidated Financial Statements.
2
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Earnings (Unaudited)
(In thousands, except per share amounts)
Three Months Ended
December 31,
2003 2002
------- -------
Interest income:
Loans .............................................. $ 8,095 8,848
Securities ......................................... 2,720 3,314
Other .............................................. 72 125
------- -------
Total interest income ......................... 10,887 12,287
------- -------
Interest expense:
Deposits ........................................... 2,774 4,124
Federal Home Loan Bank advances and other borrowings 1,743 1,834
------- -------
Total interest expense ........................ 4,517 5,958
------- -------
Net interest income .................................... 6,370 6,329
Provision for loan losses .............................. 120 180
------- -------
Net interest income after provision for loan losses .... 6,250 6,149
------- -------
Noninterest income:
Fees and service charges ........................... 630 663
Net gain on sale of loans held for sale ............ 28 236
Net gain on sale of securities available for sale .. 70 194
Earnings on bank-owned life insurance .............. 242 250
Other .............................................. 186 184
------- -------
Total noninterest income ...................... 1,156 1,527
------- -------
Noninterest expense:
Salaries and employee benefits ..................... 2,867 2,733
Occupancy expense .................................. 791 852
Marketing and advertising .......................... 132 132
Data processing .................................... 177 165
Postage and office supplies ........................ 164 182
Amortization of core deposit intangible ............ 375 405
Other .............................................. 1,113 1,052
------- -------
Total noninterest expense ..................... 5,619 5,521
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Income before income taxes ............................. 1,787 2,155
Income taxes ........................................... 511 659
------- -------
Net income ............................................. $ 1,276 1,496
======= =======
Earnings per share:
Basic .............................................. $ .25 .30
======= =======
Diluted ............................................ $ .24 .28
======= =======
Weighted-average common and common equivalent
shares outstanding (in thousands):
Basic .............................................. 5,087 5,049
======= =======
Diluted ............................................ 5,398 5,317
======= =======
Cash dividends per share ............................... $ .07 .06
======= =======
See Accompanying Notes to Condensed Consolidated Financial Statements.
3
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Stockholders' Equity
For the Three Months Ended December 31, 2003 and 2002
(In thousands, except share amounts)
Unallocated Accumulated
Shares Unallocated Other
Additional Held Shares Compre- Total
Common Stock Paid-In Retained Treasury by the Held by hensive Stockholders'
-------------------------
Shares Amount Capital Earnings Stock ESOP the RSP Income Equity
------ ------ ------- -------- ----- ---- ------- ------ ------
Balance at September
30, 2003............... 5,541,643 $ 554 52,610 55,377 (2,806) (4,328) (1,111) 1,676 101,972
--------
Comprehensive income:
Net income (unaudited)- - - - 1,276 - - - - 1,276
Net change in
unrealized gain
on securities
available for sale,
net of tax benefit
of $67 (unaudited)... - - - - - - - (114) (114)
-------
Comprehensive income
(unaudited)............ 1,162
--------
12,460 shares acquired for
treasury, at cost
(unaudited)............ - - - - (330) - - - (330)
Proceeds from exercise
of stock options
(unaudited)............ 10,406 1 111 - - - - - 112
2,565 RSP shares forfeited
and placed in
treasury (unaudited)... - - - - (42) - 42 - -
Cash dividends
(unaudited)............ - - - (376) - - - - (376)
Fair value of ESOP and
RSP shares allocated
(unaudited)............ - - 447 - - 541 4 - 992
---------------------- ------- ---------- -------- ------- -------- -------- -----------
Balance at December 31,
2003 (unaudited)....... 5,552,049 $ 555 53,168 56,277 (3,178) (3,787) (1,065) 1,562 103,532
========= ===== ====== ====== ====== ====== ====== ===== =======
(continued)
4
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Stockholders' Equity, Continued
For the Three Months Ended December 31, 2003 and 2002
(In thousands, except share amounts)
Unallocated Accumulated
Shares Unallocated Other
Additional Held Shares Compre- Total
Common Stock Paid-In Retained Treasury by the Held by hensive Stockholders'
-------------------------
Shares Amount Capital Earnings Stock ESOP the RSP Income Equity
------ ------ ------- -------- ----- ---- ------- ------ ------
Balance at September
30, 2002............... 5,528,452 $ 553 52,044 50,809 (2,680) (4,869) (2,082) 5,203 98,978
-------
Comprehensive income:
Net income (unaudited)- - - - 1,496 - - - - 1,496
Net change in
unrealized gain
on securities
available for
sale, net of tax
of $149 (unaudited).. - - - - - - - 254 254
---------
Comprehensive income
(unaudited)............ 1,750
--------
5,048 shares acquired for
the RSP, at cost
(unaudited)............ - - - - - - (121) - (121)
Proceeds from exercise
of stock options
(unaudited)............ 505 - 7 - - - - - 7
Cash dividends ($.06
per share) (unaudited). - - - (323) - - - - (323)
Fair value of ESOP
shares allocated
(unaudited)............ - - 260 - - 541 - - 801
---------------------- ------- ---------- -------- ------ --------- -------- ----------
Balance at December 31,
2002 (unaudited)....... 5,528,957 $ 553 52,311 51,982 (2,680) (4,328) (2,203) 5,457 101,092
========= === ====== ====== ===== ===== ===== ===== ========
See Accompanying Notes to Condensed Consolidated Financial Statements.
5
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
Three Months Ended
December 31,
2003 2002
-------- --------
Cash flows from operating activities:
Net income ....................................................... $ 1,276 1,496
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Provision for loan losses ................................... 120 180
Depreciation ................................................ 327 393
Deferred income tax provision ............................... -- 46
Amortization of core deposit intangible ..................... 375 405
Net amortization of premiums and discounts on securities .... 266 344
Net gain on sale of securities available for sale ........... (70) (194)
Net gain on sale of loans held for sale ..................... (28) (236)
Proceeds from sales of loans held for sale .................. 1,379 9,282
Loans originated for sale ................................... (874) (13,960)
Earnings on bank-owned life insurance ....................... (242) (250)
Net decrease in other assets ................................ 132 237
Net decrease in other liabilities ........................... (960) (2,831)
-------- --------
Net cash provided by (used in) operating activities .... 1,701 (5,088)
-------- --------
Cash flows from investing activities:
Proceeds from calls, sales, maturities and repayment of securities
available for sale .......................................... 33,514 29,221
Purchase of securities available for sale ........................ (22,022) (15,740)
Net (increase) decrease in loans ................................. (10,340) 9,316
Net (purchase) redemption of FHLB stock .......................... (443) 241
Purchases of premises and equipment .............................. (20) (614)
Net proceeds from sales of foreclosed assets ..................... 237 225
-------- --------
Net cash provided by investing activities .............. 926 22,649
-------- --------
Cash flows from financing activities:
Net decrease in deposits ......................................... (2,782) (7,488)
Net increase in FHLB advances .................................... 2,740 -
Net increase (decrease) in other borrowings ...................... 3,142 (2,632)
Payments to acquire treasury stock ............................... (330) -
Payments to acquire shares held by the RSP ....................... -- (121)
Dividends paid ................................................... (376) (323)
Net proceeds received from issuance of common stock .............. 112 7
-------- --------
Net cash provided by (used in) financing activities .... 2,506 (10,557)
-------- --------
Net increase in cash and cash equivalents ............................ 5,133 7,004
Cash and cash equivalents at beginning of period ..................... 13,775 30,628
-------- --------
Cash and cash equivalents at end of period ........................... $ 18,908 37,632
======== ========
6
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows (Unaudited), Continued
(In thousands)
Three Months Ended
December 31,
2003 2002
------- -------
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest ........................................... $ 4,598 6,311
======= =======
Taxes .............................................. $ 487 -
======= =======
Supplemental disclosure of noncash information:
Transfer loans to foreclosed assets ..................... $ 330 270
======= =======
Net change in unrealized gain on securities available for
sale, net of tax ................................... $ (114) 254
======= =======
Fair value of restricted stock plan shares distributed .. $ 4 -
======= =======
Fair value of ESOP shares allocated ..................... $ 988 801
======= =======
See Accompanying Notes to Condensed Consolidated Financial Statements.
7
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
Notes to Condensed Consolidated Financial Statements (unaudited)
(1) Basis of Presentation
General. FloridaFirst Bancorp, Inc. (the "Company") is the parent of and
conducts its business principally through FloridaFirst Bank (the "Bank").
The Bank, a federally-chartered savings bank headquartered in Lakeland,
Florida, is a community-oriented savings institution that delivers retail
and commercial banking services through nineteen full-service locations.
Principal sources of income are derived through interest earned on loans
and securities. The primary sources of funds are customer deposits and
Federal Home Loan Bank advances. The Bank is subject to various regulations
governing savings institutions and is subject to periodic examination by
its primary regulator, the Office of Thrift Supervision ("OTS").
The accompanying condensed consolidated financial statements were prepared
in accordance with instructions for Form 10-Q and, therefore, do not
include all information necessary for a complete presentation of financial
condition, results of operations, and cash flows in conformity with
accounting principles generally accepted in the United States of America.
However, all adjustments, consisting of normal recurring accruals, which,
in the opinion of management, are necessary for a fair presentation of the
condensed consolidated financial statements have been included. The results
of operations for the three-month periods ended December 31, 2003 and 2002
are not necessarily indicative of the results that may be expected for the
entire fiscal year or any other period. These statements should be read in
conjunction with the consolidated financial statements and related notes,
which are included in the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 2003.
(2) Loans
Loans consist of the following (in thousands):
At
December 31, September 30,
2003 2003
--------- -------
(unaudited)
Loans secured by mortgages on real estate:
Residential 1-4: (1)
Permanent .................................... $ 270,834 270,463
Construction ................................. 33,859 32,871
Commercial real estate .......................... 54,517 56,078
Land ............................................ 22,379 18,699
--------- -------
Total mortgage loans ............................. 381,589 378,111
Consumer loans ................................... 144,232 137,398
Commercial loans ................................. 12,235 11,600
--------- -------
Total loans ..................................... 538,056 527,109
Allowance for loan losses ........................ (4,483) (4,479)
Net deferred loan costs .......................... 128 23
Construction loans in process .................... (27,627) (25,969)
--------- -------
Loans, net........................................ 506,074 496,684
======= =======
(1) Loans held for sale, included in the totals above, were approximately
$193,000 and $670,000 at December 31, 2003 and September 30, 2003,
respectively.
8
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
The activity in the allowance for loan losses is as follows (in thousands):
Three Months Ended
December 31,
2003 2002
---- ----
Balance at beginning of period..... $ 4,479 4,519
Provision for loan losses.......... 120 180
Net loan charge-offs............... (116) (224)
------- -----
Balance at end of period........... $ 4,483 4,475
======= =====
No loans were identified as impaired at or during the three months ended
December 31, 2003 or 2002.
Nonaccrual and past due loans were as follows (in thousands):
At
December 31, September 30,
2003 2003
---- ----
Nonaccrual loans........................... $ 635 1,040
Accruing loans past due 90 days or more.... - -
----- -----
$ 635 1,040
===== =====
9
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
(3) Earnings Per Share of Common Stock
The Company follows the provisions of SFAS No. 128, "Earnings Per Share."
SFAS No. 128 provides accounting and reporting standards for calculating
earnings per share. Basic earnings per share of common stock has been
computed by dividing the net income for the period by the weighted-average
number of shares outstanding. Shares of common stock purchased by the
Employee Stock Ownership Plan ("ESOP") are only considered outstanding when
the shares are released or committed to be released for allocation to
participants. Diluted earnings per share is computed by dividing net income
by the weighted-average number of shares outstanding including the dilutive
effect of stock options and shares needed to satisfy the requirements of
the Restricted Stock Plan, if any, computed using the treasury stock method
prescribed by SFAS No. 128. The following table presents the calculation of
basic and diluted earnings per share of common stock (in thousands, except
per share amounts):
Three Months Ended
December 31,
2003 2002
------ ------
Weighted-average shares of common stock issued and
outstanding before adjustments for ESOP and stock options ....... 5,386 5,378
Adjustments to reflect the effect of unallocated ESOP
shares .......................................................... (299) (329)
------ ------
Weighted-average shares for basic earnings per share .................. 5,087 5,049
====== ======
Basic earnings per share .............................................. $ .25 .30
====== ======
Weighted-average shares for basic earnings per share .................. 5,087 5,049
Additional dilutive shares using the average market
value for the period utilizing the treasury
stock method regarding stock options and
outstanding restricted stock shares ............................. 311 268
------ ------
Weighted-average common shares and equivalents
outstanding for diluted earnings per share ...................... 5,398 5,317
====== ======
Diluted earnings per share ............................................ $ .24 .28
====== ======
10
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
(4) Stock Compensation Plans
SFAS No. 123, Accounting for Stock-Based Compensation, as amended by SFAS
No. 148, Accounting for Stock-Based Compensation Transition and Disclosure
(collectively, "SFAS No. 123") encourages all entities to adopt a fair
value based method of accounting for employee stock compensation plans,
whereby compensation cost is measured at the grant date based on the value
of the award and is recognized over the service period, which is usually
the vesting period. However, it also allows an entity to continue to
measure compensation cost for those plans using the intrinsic value based
method of accounting prescribed by Accounting Principles Board Opinion No.
25, Accounting for Stock Issued to Employees ("APB No. 25"), whereby
compensation cost is the excess, if any, of the quoted market price of the
stock at the grant date over the amount an employee must pay to acquire the
stock. Stock options issued under the Company's Stock Option Plans ("Option
Plans") have no intrinsic value at the grant date as the stock options had
an exercise price equal to the then current market value of the underlying
common stock, and under APB No. 25 no compensation cost is recognized for
them. The Company has elected to continue with the accounting methodology
in APB No. 25 and, as a result, has provided pro forma disclosures of net
income and earnings per share and other disclosures, as if the fair value
based method of accounting had been applied. Stock awards granted under the
Company's Restricted Stock Plan ("RSP Plan") are expensed into current
earnings over the vesting period based on the market value of the common
stock on the award date.
The following is a summary of stock option transactions for the three
months ended December 31, 2003 and 2002:
Range of Per Weighted-
Number of Share Option Average Per
Options Price Share Price
------- ----- -----------
Outstanding at September 30, 2002...... 578,772 $ 7.63 - 19.20 12.45
Exercised.............................. (505) 13.04 - 16.03 13.63
-------
Outstanding at December 31, 2002....... 578,267 $ 7.63 - 19.20 12.45
======= ============ =====
Outstanding at September 30, 2003...... 551,868 $ 7.63 - 16.03 12.42
Exercised.............................. (10,406) 7.63 - 16.03 10.75
Forfeited.............................. (150) 16.03 16.03
-------
Outstanding at December 31, 2003....... 541,312 $ 7.63 - 16.03 12.45
======= ============ =====
11
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
The proforma information and the related effects on net income and basic
and diluted earnings per share as if the Company had applied the fair value
recognition provision of SFAS No. 123 is as follows ($ in thousands, except
per share amounts):
Three Months Ended
December 31,
2003 2002
--------- --------
Net income, as reported ................................. $ 1,276 1,496
Deduct: Total stock-based employee compensation
determined under the fair value based method
for stock options awarded, net of related tax benefit (43) (95)
- --------------------------------------------------------- --------- --------
Proforma net income ..................................... $ 1,233 1,401
========= ========
Basic earnings per share:
As reported ......................................... $ .25 .30
========= ========
Proforma ............................................ $ .24 .28
========= ========
Diluted earnings per share:
As reported ......................................... $ .24 .28
========= ========
Proforma ............................................ $ .23 .26
========= ========
Both net income, as reported and proforma net income include approximately
$133,000 and $143,000, net of tax, in salaries and employee benefits
expense for the three-month periods ended December 31, 2003 and 2002,
respectively relating to shares awarded under the RSP Plan.
(5) Subsequent Event
On February 4, 2004, the Company entered into a definitive agreement with
SouthTrust of Alabama, Inc. and SouthTrust Corporation ("SouthTrust")
whereby SouthTrust would acquire 100% of the outstanding common stock of
the Company. The transaction is subject to stockholder and regulatory
approval and the Company anticipates the transaction to close during the
second quarter of 2004. The Company incurred approximately $685,000 in
costs related to the acquisition subsequent to December 31, 2003.
(6) Reclassifications
Certain amounts in the 2002 condensed consolidated financial statements
have been reclassified to conform to the presentation for 2003.
12
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
General
FloridaFirst Bancorp, Inc. (the "Company") is the parent of, and conducts its
business principally through, FloridaFirst Bank (the "Bank"). The Bank, a
federally-chartered savings bank headquartered in Lakeland, Florida, is a
community-oriented savings institution that delivers retail and commercial
banking services through nineteen full-service locations. Principal sources of
income are derived through interest earned on loans and securities. The primary
sources of funds are customer deposits and Federal Home Loan Bank ("FHLB")
advances. The Bank is subject to various regulations governing savings
institutions and is subject to periodic examination by its primary regulator,
the Office of Thrift Supervision ("OTS").
Subsequent Event
On February 4, 2004, the Company entered into a definitive agreement with
SouthTrust of Alabama, Inc. and SouthTrust Corporation ("SouthTrust") whereby
SouthTrust would acquire 100% of the outstanding common stock of the Company.
The transaction is subject to stockholder and regulatory approval and the
Company anticipates the transaction to close during the second quarter of 2004.
The Company incurred approximately $685,000 in costs related to the acquisition
subsequent to December 31, 2003.
Forward-Looking Statements
The Company may from time to time make written or oral forward-looking
statements, including statements contained in the Company's filings with the
Securities and Exchange Commission (the "Commission") and its reports to
stockholders. Statements made in such documents, other than those concerning
historical information, should be considered forward-looking and subject to
various risks and uncertainties. Such forward-looking statements are made based
upon management's belief as well as assumptions made by, and information
currently available to management, pursuant to "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995. The Company's actual results
may differ materially from the results anticipated in forward-looking statements
due to a variety of factors, including governmental monetary and fiscal
policies, deposit levels, loan demand, loan collateral values, securities
portfolio values, and interest rate risk management; the effects of competition
in the banking business from other commercial banks, savings and loan
associations, mortgage banking firms, consumer finance companies, credit unions,
securities brokerage firms, insurance companies, money market mutual funds and
other financial institutions operating in the Company's market area and
elsewhere, including institutions operating through the Internet; changes in
governmental regulation relating to the banking industry, including regulations
relating to branching and acquisitions; failure of assumptions underlying the
establishment of reserves for losses, including the value of collateral
underlying delinquent loans, and other factors. The Company cautions that such
factors are not exclusive.
13
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
Liquidity and Capital Resources
The liquidity of a savings institution reflects its ability to provide funds to
meet loan requests, to accommodate possible outflows in deposits, and to take
advantage of interest rate market opportunities. Funding of loan requests,
providing for liability outflows, and management of interest rate fluctuations
require continuous analysis in order to match the maturities of specific
categories of short-term loans and investments with specific types of deposits
and borrowing. Savings institution liquidity is normally considered in terms of
the nature and mix of the savings institution's sources and uses of funds.
Asset liquidity is provided through loan repayments and the management of
maturity distributions for loans and securities. An important aspect of
liquidity lies in maintaining sufficient levels of loans and mortgage-backed
securities that generate monthly cash flows.
Cash and cash equivalents increased $5.1 million for the three months ended
December 31, 2003 to $18.9 million. Significant cash flows or uses (amounts
shown in parentheses) were as follows:
(In Millions)
-------------
Cash provided by operations....................................... $ 1.7
Net increase in FHLB advances..................................... 2.7
Net increase in other borrowings.................................. 3.1
Net decrease in deposits.......................................... (2.8)
Maturities, sales, calls and repayments on securities available
for sale........................................................ 33.5
Purchases of securities available for sale........................ (22.0)
Net increase in loans............................................. (10.3)
Other, net........................................................ (.9)
------
Net increase in cash and cash equivalents......................... $ 5.1
======
See "Comparison of Financial Condition at December 31, 2003 and September 30,
2003" for discussion of significant cash flows.
14
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
On December 31, 2003, the Bank was in compliance with its three minimum
regulatory capital requirements as follows:
Amount Percent
------ -------
(In thousands)
Tangible capital........................... $ 74,131 9.18%
Tangible capital requirement............... 12,111 1.50
Excess over requirement.................... 62,020 7.68
Core capital............................... 74,131 9.18
Core capital requirement................... 32,295 4.00
Excess over requirement.................... 41,836 5.68
Risk based capital......................... 78,614 14.84
Risk based capital requirement............. 42,382 8.00
Excess over requirement.................... 36,232 6.84
Management believes that under current regulations, the Bank will continue to
exceed its minimum capital requirements for the foreseeable future. Events
beyond the control of the Bank, such as increased interest rates or a downturn
in the economy in areas in which the Bank operates could adversely affect future
earnings and as a result, the ability of the Bank to meet its future minimum
capital requirements.
Off-Balance Sheet Arrangements and Aggregate Contractual Obligations
The Company is a party to financial instruments with off-balance-sheet risk in
the normal course of business to meet the financing needs of its customers.
These financial instruments include commitments to extend credit, unused lines
of credit and construction loans and standby letters of credit. These
instruments involve, to varying degrees, elements of credit and interest-rate
risk in excess of the amounts recognized in the consolidated balance sheet. The
contract or notional amounts of those instruments reflect the extent of the
Company's involvement in particular classes of financial instruments.
The Company's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend credit, unused
lines of credit and construction loans and standby letters of credit is
represented by the contractual amount of those instruments. The Company uses the
same credit policies in making commitments as it does for on-balance-sheet
instruments.
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract. Commitments
generally have fixed-expiration dates or other termination clauses and may
require payment of a fee. Since many of the commitments are expected to expire
without being drawn upon, the total committed amounts do not necessarily
represent future cash requirements. The Company evaluates each customer's credit
worthiness on a case-by-case basis. The amount of collateral obtained, if it is
deemed necessary by the Company upon extension of credit, is based on
management's credit evaluation of the counter party.
Standby letters of credit are conditional commitments issued by the Company to
guarantee the performance of a customer to a third party. The credit risk
involved in issuing letters of credit is essentially the same as that involved
in extending loans to customers.
15
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
The Company also has recourse obligations on loans sold in the secondary market.
These recourse obligations require the Company to repurchase the loans if the
borrower defaults within a certain time period after the loan is sold, usually
three to twelve months. The Company has not had to repurchase any loan sold in
the secondary market in relation to these recourse obligations.
A summary of the amounts of the Company's financial instruments, with
off-balance sheet risk at December 31, 2003, follows (in thousands):
Contractual
Amount
------
Loan commitments and standby letters of credit........ $ 3,413
=========
Undisbursed construction and line of credit loans..... $ 56,524
=========
Loans sold with recourse obligations ..................$ 27,290
=========
Management believes that the Company has adequate resources to fund all of its
commitments and that substantially all its existing commitments will be funded
in 2004.
The Company's contractual obligations include certain on-balance sheet
obligations, at December 31, 2003, these are deposits, FHLB advances, other
borrowings, operating leases and purchase obligations.
16
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
Comparison of Financial Condition at December 31, 2003 and September 30, 2003
Assets. Total assets increased $2.7 million, or .3%, to $821.2 million at
December 31, 2003 from $818.5 million at September 30, 2003. The increase in
total assets resulted primarily from:
> a $5.1 million increase in cash and cash equivalents, resulting from funds
received from securities sales and repayments,
> a $11.9 million decrease in securities available for sale. Strong mortgage
refinancing activities, resulting from the continued decline in longer-term
interest rates, caused an acceleration of repayments on many
mortgage-related securities during the quarter. The Company elected not to
reinvest certain funds to provide liquidity to fund the growth in the
consumer and commercial loan portfolios, as well as deposit outflows, and
> a $9.4 million net increase in the loan portfolio. The increase in loans
resulted from the Company's residential mortgage loan origination strategy
to originate and hold loans, rather than sell those loans on the secondary
market. In addition, management continues to focus on commercial and
consumer loan originations, which totaled $27.6 million for the three
months ended December 31, 2003.
Liabilities. Total liabilities increased $1.1 million, or .2%, to $717.7 million
at December 31, 2003 from $716.5 million at September 30, 2003. The increase in
total liabilities resulted from:
> a $2.8 million decrease in deposits. The decrease in deposits was primarily
attributable to a $9.7 million decrease in certificates of deposit,
partially offset by a $6.9 million increase in transaction accounts. The
decrease in deposits appears to have been caused by retail customers moving
maturing certificates to alternative investments outside of the Bank, as
well as into more liquid checking and money-market accounts due to the low
interest-rate environment,
> a $2.7 million increase in FHLB advances, due to an increase in daily rate
credit advances,
> a $3.1 million increase in other borrowings, primarily due to an increase
in funds invested with the Company under the Treasury Investment Program,
and
> a $2.0 decrease in other liabilities. This decrease is primarily
attributable to payment of mortgage customers annual real estate taxes held
in escrow, as well as the allocation of the vested accrued contribution to
the employee stock ownership plan for the plan year ended December 31,
2003.
Stockholders' Equity. The increase of $1.6 million in the Company's
stockholders' equity reflects:
> net income for the three months ended December 31, 2003 of $1.3 million;
> repurchase of Company treasury stock totaling $330,000;
> repayment of $541,000 on the Employee Stock Ownership Plan ("ESOP") loan
and allocation of the released shares;
> additional paid-in-capital of $558,000 resulting from exercise of stock
options and capital adjustments related to stock plans;
> decrease in accumulated other comprehensive income of $114,000; and -
> dividends totaling $376,000.
The decreased value in accumulated other comprehensive income resulted from the
fluctuation in market value of the Company's securities available for sale.
Because of continued interest rate volatility, accumulated other comprehensive
income and stockholders' equity could materially fluctuate for each interim and
year-end period.
17
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
Results of Operations
The following tables set forth, for the periods indicated, information regarding
(i) the total dollar amount of interest income of the Company from
interest-earning assets and the resultant average yields based on various
interest methods; (ii) the total dollar amount of interest expense on
interest-bearing liabilities and the resultant average cost; (iii) net interest
income; (iv) interest-rate spread; and (v) net interest margin.
Three Months Ended December 31,
--------------------------------------------------------------------
2003 2002
------------------------------- -------------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
------- -------- ---- ------- -------- ----
($ in thousands)
Interest-earning assets (IEA):
Mortgage loans.......................... $ 277,184 4,327 6.24% $ 307,765 5,338 6.94%
Consumer loans.......................... 140,661 2,465 6.95 107,957 2,127 7.82
Commercial loans........................ 85,862 1,303 5.94 81,231 1,383 6.66
-------- ------- -------- -------
Total loans......................... 503,707 8,095 6.39 496,953 8,848 7.08
Securities and other (1)................ 257,206 2,914 4.53 274,340 3,560 5.19
--------- ------- -------- -------
Total IEA (1)....................... 760,913 11,009 5.76 771,293 12,408 6.41
------- -------
Other assets............................... 61,354 68,436
--------- --------
Total assets........................ $ 822,267 $ 839,729
======= =======
Interest-bearing liabilities (IBL):
Interest checking....................... $ 88,223 131 .59 $ 74,987 223 1.18
Savings accounts........................ 54,012 81 .59 54,814 195 1.41
Money-market accounts................... 79,346 201 1.00 69,404 337 1.93
Certificate accounts.................... 293,238 2,361 3.19 350,984 3,369 3.81
--------- ------ ------- ------
Total interest-bearing deposits..... 514,819 2,774 2.14 550,189 4,124 3.04
FHLB advances and other borrowings...... 165,261 1,743 4.13 153,561 1,834 4.67
------- ------ ------- ------
Total IBL........................... 680,080 4,517 2.62 703,750 5,958 3.40
------ ------
Other liabilities (2)...................... 39,751 36,334
--------- ---------
Total liabilities................... 719,831 740,084
Stockholders' equity....................... 102,436 99,645
--------- ---------
Total liabilities and
stockholders' equity............ $ 822,267 $ 839,729
========= =======
Net interest income (1).................... $ 6,492 $ 6,450
======== ========
Average IEA to IBL......................... 112% 110%
=== ===
Interest-rate spread....................... 3.14% 3.01%
==== ====
Net interest margin........................ 3.41% 3.35%
==== ====
(1) Interest income and net interest income do not agree to the condensed
consolidated statements of earnings because the tax equivalent income on
municipal bonds is included in this schedule.
(2) Includes noninterest-bearing checking accounts.
18
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
Comparison of Operating Results for the Three Months Ended December 31, 2003 and
2002
Net Income. Net income for the three months ended December 31, 2003 decreased
14.7% to $1.3 million, compared to $1.5 million for the same period in 2002, as
a result of a decrease in noninterest income and increase in noninterest
expenses, partially offset by an increase in net interest income and a decrease
in the provision for loan losses. Net interest income increased $41,000, or .6%,
for the three months ended December 31, 2003 compared to the same period in
2002, as interest income and interest expense decreased by comparable amounts.
See the following discussions for these items as well as discussions of
noninterest income and noninterest expenses.
Interest Income. The following discussion highlights the major factors that
impacted the changes in interest income during the quarter compared to the prior
year. Details are contained in the Average Balance Sheet table at page 18.
> While the average amount of residential loans outstanding decreased $30.6
million, consumer loans grew $32.7 million and commercial loans grew $4.6
million. The Company continues its increased emphasis on commercial and
consumer loan growth in an effort to restructure its loan portfolio to
shorten the loan maturities. Average consumer loan balances outstanding
increased 30% and average commercial loan balances outstanding increased by
approximately 6% during the quarter from the same quarter in the preceding
year. Average commercial and consumer loans represent approximately 45% of
the loan portfolio, compared to 38% last year.
> The average yield on loans decreased 69 basis points to 6.39%, for the
three months ended December 31, 2003 compared to 7.08% for the same period
in 2002. The decrease in loan yields is directly attributable to the
continued decline in market rates of interest for loans that we retain in
our portfolio. The high level of refinancing experienced in 2003 not only
impacted residential mortgage loan yields, but also created pricing
pressure on new and existing loans in the commercial area. Consumer loans
have relatively short average lives historically, therefore, the lower
interest rate environment caused the yield on the consumer loan portfolio
to decline from last year as new loans are generated in this lower interest
environment to replace the loans being paid off.
> The average balances in the securities and other portfolio decreased 6% due
to increased principal prepayments on mortgage-related securities.
> The lower yield in the securities portfolio resulted from a shift to
shorter duration and adjustable rate investments in fiscal year 2002 and
2003 to manage the interest-rate risk profile of the Company, as well as
the overall reduction in interest rates as previously discussed.
Interest Expense. The following discussion highlights the major factors that
impacted the changes in Interest Expense during the quarter when compared to the
prior year. Detailed changes are contained in the Average Balance Sheet table at
page 18.
> The decrease in average deposits is mainly attributable to maturing
certificates moving to alternative investment options. However the
increased sales effort to attract and retain new deposits, as well as
customer concerns about equity investments, provided additional lower-cost
deposit growth. The growth in average balances in interest checking and
money-market accounts, together with certificates of deposit maturing and
renewing at lower rates in the current interest rate environment, helped to
reduce the overall cost of interest-bearing deposits by 90 basis points.
19
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
> Average FHLB advances and other borrowings outstanding increased 7.6% this
quarter compared to the same quarter last year. Certain FHLB fixed-rate
advances were repaid at maturity, while the Company utilized lower cost
overnight borrowings as well as funds invested with the Company through the
Treasury Investment Program to manage short-term liquidity needs.
> Actions by the Federal Reserve to decrease short-term interest rates over
the past two years has provided an immediate reduction in the cost of
deposits, as well as advances and other borrowings.
Provision for Loan Losses. The provision for loan losses is charged to earnings
to bring the total allowance for loan losses to an amount that represents
management's best estimate of the losses inherent in the loan portfolio, based
on historical experience, volume and type of lending conducted by the Company,
industry standards, the level and status of past due and nonperforming loans,
the general economic conditions in the Company's lending area and other factors
affecting the ability to collect on the loans in its portfolio. The allowance
for loan losses is maintained at a level that represents management's best
estimates of losses in the loan portfolio at the balance sheet date. However,
there can be no assurance that the allowance for losses will be adequate to
cover losses, which may be realized in the future, and that additional
provisions for losses will not be required.
The provision for loan losses was $120,000 for the three months ended December
31, 2003 compared to $180,000 for the three months ended December 31, 2002. The
provision for loan losses decreased for the current three-month period primarily
due to lower than expected net charge-offs during 2003. The allowance for loan
losses remained at $4.5 million at December 31, 2003 and December 31, 2002,
respectively. The current allowance represents .89% of loans outstanding at
December 31, 2003. The Company had net charge-offs of $116,000 for the three
months ended December 31, 2003 compared to net charge-offs of $224,000 for the
same period in 2002. The Company intends to maintain its allowance for loan
losses commensurate with its loan portfolio, especially its commercial real
estate and consumer loan portfolios.
Noninterest Income. Noninterest income decreased $371,000 to $1.2 million for
the three months ended December 31, 2003 from $1.5 million for the three months
ended December 31, 2002. The major changes were:
> a decrease of $33,000 in service charges on loans and deposit accounts
compared to the prior period.
> a decrease of $208,000 in net gain on sale of loans held for sale, as the
majority of the residential mortgage loan production during the current
period was retained in the Bank's portfolio; and
>> a decrease of $124,000 in net gains on the sale of securities available for
sale.
20
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
Noninterest Expense. Noninterest expense increased $98,000 to $5.6 million for
the three months ended December 31, 2003 from $5.5 million for the three months
ended December 31, 2002.
> Salaries and employee benefits increased $134,000 primarily due to:
o a decrease of $200,000 in compensation related to an overall reduction
in staff,
o 4% average salary increases due to merit and cost of living
adjustments,
o a $146,000 decrease in estimated direct costs of loans,
o a $90,000 increase in ESOP costs due to the increased price of Company
stock, and
o an increase of $100,000 for health insurance costs due to increased
claims experience.
> Occupancy expense decreased $61,000, primarily due to a significant number
fixed assets, primarily data processing-related, becoming fully depreciated
during 2003.
> Core deposit intangible amortization expense decreased $30,000 due to the
annual adjustment of periodic amortization.
> Other noninterest expenses increased $55,000, primarily due to:
o a $75,000 robbery loss,
o a $26,000 increase in insurance expense related to higher premiums
that prevailed in the commercial insurance market place for 2003
renewals,
o a $17,000 increase in debit card expense related to increased
transaction volumes,
o a $20,000 increase in consumer loan expenses related to the "no
closing costs" consumer loan program during the quarter,
o a $56,000 decrease in security guard expense, as a series of robberies
during the early part of fiscal 2003 caused management action to
increase security protection for customers and employees, and
o a $32,000 decrease in directors' compensation and expenses, due to one
less board meeting and reduced costs related to attendance at an
annual bank directors conference.
21
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Qualitative Analysis. There have been no material changes from the Qualitative
Analysis information regarding market risk disclosed under the heading
"Management of Interest Rate Risk and Market Risk" in the Company's Management's
Discussion and Analysis of Financial Condition and Results of Operations
included in the annual report on Form 10-K for the year ended September 30,
2003.
Quantitative Analysis. Exposure to interest rate risk is actively monitored by
management. The Company's objective is to maintain a consistent level of
profitability within acceptable risk tolerances across a broad range of
potential interest rate environments. The Company uses the OTS Net Portfolio
Value ("NPV") Model to monitor its exposure to interest rate risk, which
calculates changes in net portfolio value. Reports generated from assumptions
provided and modified by management are reviewed by the Asset/Liability
Management Committee and reported to the Board of Directors quarterly. The
Interest Rate Sensitivity of Net Portfolio Value Report shows the degree to
which balance sheet line items and net portfolio value are potentially affected
by a 100 to 300 basis point (1 basis point equals 1/100th of a percentage point)
upward and downward parallel shift (shock) in the Treasury yield curve.
Since the OTS Net Portfolio Value ("NPV") Model measures exposure to interest
rate risk of the Bank to assure capital adequacy for the protection of the
depositors, only the Bank's financial information is used for the model.
However, the Bank is the only subsidiary and significant asset of the Company,
therefore the OTS NPV model provides a reliable basis upon which to perform the
quantitative analysis. The following table presents the Company's NPV as of
September 30, 2003. Although the results of the NPV model are not yet available
for December 31, 2003, it is anticipated that the NPV Ratio for all rate
scenarios will not be materially different than those below. The NPV was
calculated by the OTS, based on information provided by the Company ($ in
thousands).
NPV as % of
Net Portfolio Value ("NPV") Present Value of Assets
--------------------------- -----------------------
Change Basis Point
In Rates $ Amount $ Change % Change NPV Ratio Change
-------- -------- -------- -------- --------- ------
+300 bp $ 54,570 (42,988) (44)% 6.92% (453)
+200 bp 70,099 (27,469) (28)% 8.65% (280)
+100 bp 85,358 (12,210) (13)% 10.25% (120)
0 bp 97,568 - - % 11.45% -
-100 bp 101,945 4,376 4% 11.78% 33
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures. The Company's management
evaluated, with the participation of the Company's Chief Executive Officer and
Chief Financial Officer, the effectiveness of the Company's disclosure controls
and procedures, as of the end of the period covered by this report. Based on
that evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that the Company's disclosure controls and procedures are effective to
ensure that information required to be disclosed by the Company in the reports
that it files or submits under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission's rules and forms.
Changes in Internal Controls. There were no changes in the Company's internal
control over financial reporting that occurred during the Company's last fiscal
quarter that have materially affected, or are reasonably likely to materially
affect, the Company's internal control over financial reporting.
22
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On February 9, 2004, a complaint was filed by an alleged shareholder seeking
class action status against the Company and its Directors in the Circuit Court
for the 10th Judicial Circuit in and for Polk County, Florida under the caption
Meisels vs. FloridaFirst Bancorp, Inc. alleging breach of fiduciary duty and
seeking to enjoin the proposed merger between the Company and SouthTrust
Corporation or in the alternative, unspecified money damages. The Company
believes that the suit is without merit and intends to vigorously defend.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Not Applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
ITEM 5. OTHER INFORMATION
Not Applicable.
23
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
PART II. OTHER INFORMATION, CONTINUED
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit Number
--------------
2.1 Agreement and Plan of Merger dated as of February 4, 2004, between the Company, SouthTrust of
Alabama, Inc. and SouthTrust Corporation ****
3(i) Articles of Incorporation for FloridaFirst Bancorp, Inc.*
3(ii) Bylaws of FloridaFirst Bancorp, Inc.*
4 Specimen Stock Certificate of FloridaFirst Bancorp, Inc.*
10.1 Form of Employment Agreements entered into with the named Executive Officers of FloridaFirst Bank*
10.2 1999 Stock Option Plan **
10.3 1999 Restricted Stock Plan **
10.4 Supplemental Executive Retirement Plan for the benefit of Certain Senior Officers *
10.5 2002 Stock Option Plan ***
10.6 2002 Restricted Stock Plan ***
31.1 Certification of Chief Executive Officer required by Rule 13a-14(a)/15d-14(a) under the Exchange
Act
31.2 Certification of Chief Financial Officer required by Rule 13a-14(a)/15d-14(a) under the Exchange
Act
32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of Sarbanes-Oxley Act of 2002
32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of Sarbanes-Oxley Act of 2002
99 Report on Review by Independent Accountants.
* Incorporated by reference to the Registrant's Registration Statement on
Form S-1 initially filed with the Commission on September 5, 2000 (File No.
333-45150).
** Incorporated by reference to the identically numbered exhibits to the Form
10-K filed by FloridaFirst Bancorp on December 29, 1999 (File No. 0-25693).
*** Incorporated by reference to the Proxy Statement filed by the Registrant
on December 21, 2001.
****Incorporated by reference to the current report on Form 8-K filed by the
Registrant on February 5, 2004.
(b) Reports on Form 8-K:
(i) A report on Form 8-K was filed on February 5, 2004 as
notification under Item 12 that the Company issued a press
release announcing the Company's first quarter earnings.
(ii) A report on Form 8-K was filed on February 5, 2004 under items
5 and 7 announcing that the Registrant entered into a
definitive Agreement and Plan of Merger with SouthTrust of
Alabama, Inc. and SouthTrust Corporation.
24
FLORIDAFIRST BANCORP, INC. AND SUBSIDIARY
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.
FLORIDAFIRST BANCORP, INC.
(Registrant)
Date: February 17, 2004 By: /s/Gregory C. Wilkes
---------------------------- ------------------------------------------------
Gregory C. Wilkes, President and Chief Executive
Officer (Principal Executive Officer)
Date: February 17, 2004 By: /s/Kerry P. Charlet
---------------------------- ------------------------------------------------
Kerry P. Charlet, Chief Financial Officer
(Principal Accounting Officer)
25