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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended Commission file
March 31, 2005 000-20616
PEOPLES BANCORPORATION, INC.
(Exact name of registrant as specified in its charter)
South Carolina 57-09581843
----------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1818 East Main Street, Easley, South Carolina 29640
---------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (864) 859-2265
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 [ ] No [X]
The number of outstanding shares of the
issuer's $1.11 par value common stock
as of May 2, 2004 was 5,917,855.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Peoples Bancorporation, Inc. and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands except share data)
March 31, March 31, December 31,
2005 2004 2004
Unaudited Unaudited Audited
--------- --------- -------
ASSETS
CASH AND DUE FROM BANKS .......................................................... $ 10,775 $ 12,774 $ 8,630
INTEREST-BEARING DEPOSITS IN OTHER BANKS ......................................... 783 320 1,028
FEDERAL FUNDS SOLD ............................................................... 16,244 14,315 2,631
--------- --------- ---------
Total cash and cash equivalents ............................................. 27,802 27,409 12,289
SECURITIES
Available for sale .......................................................... 60,878 68,675 62,052
Held for investment (market value of $7,531, $7,393 and $7,451) ............. 7,579 7,180 7,386
Other investments, at cost .................................................. 1,725 1,814 1,809
LOANS-less allowance for loan losses of $3,774, $3,464 and $3,691 ................ 331,354 295,729 322,212
MORTGAGE LOANS HELD FOR SALE ..................................................... - 8,777 -
PREMISES AND EQUIPMENT, net of accumulated
depreciation and amortization ............................................... 10,884 10,984 11,075
ACCRUED INTEREST RECEIVABLE ...................................................... 1,798 1,616 1,830
CASH SURRENDER VALUE OF LIFE INSURANCE ........................................... 9,143 9,553 9,049
OTHER ASSETS ..................................................................... 2,645 1,686 2,094
--------- --------- ---------
TOTAL ASSETS ............................................................ $ 453,808 $ 433,423 $ 429,796
========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
DEPOSITS
Noninterest-bearing ......................................................... $ 44,804 $ 49,531 $ 51,507
Interest-bearing ............................................................ 331,237 308,084 294,638
--------- --------- ---------
Total deposits .......................................................... 376,041 357,615 346,145
SECURITIES SOLD UNDER REPURCHASE
AGREEMENTS .................................................................. 31,600 31,701 33,953
FEDERAL FUNDS PURCHASED .......................................................... - - 572
NOTES PAYABLE TO FEDERAL HOME LOAN BANK .......................................... 5,000 5,000 8,500
ACCRUED INTEREST PAYABLE ......................................................... 1,366 1,497 1,154
OTHER LIABILITIES ................................................................ 1,099 1,046 1,232
--------- --------- ---------
Total Liabilities ....................................................... 415,106 396,859 391,556
--------- --------- ---------
SHAREHOLDERS' EQUITY
Common Stock - 15,000,000 shares authorized, $1.11
Par value per share, 5,910,069 shares, 5,523,842 shares ..................... 6,560 6,150 6,463
and 5,822,608 shares outstanding, respectively ............................
Additional paid-in capital ....................................................... 32,373 29,505 32,237
Retained Earnings ................................................................ 616 727 -
Accumulated other comprehensive income ........................................... (847) 182 (460)
--------- --------- ---------
Total Shareholders' Equity .............................................. 38,702 36,564 38,240
--------- --------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ....................................... $ 453,808 $ 433,423 $ 429,796
========= ========= =========
1
Peoples Bancorporation, Inc. and Subsidiaries
Consolidated Statements of Income
(Dollars in thousands except per share and share data)
(Unaudited)
Three Months Ended
March 31,
---------
2005 2004
---- ----
INTEREST INCOME
Interest and fees on loans ...................................................... $ 5,248 $ 4,480
Interest on securities
Taxable ..................................................................... 446 517
Tax-exempt .................................................................. 59 52
Interest on federal funds ....................................................... 54 34
---------- ----------
Total interest income .............................................................. 5,807 5,083
---------- ----------
INTEREST EXPENSE
Interest on deposits ............................................................ 1,603 1,529
Interest on federal funds purchased and securities
sold under repurchase agreements ............................................ 146 60
Interest on notes payable Federal Home Loan Bank ................................... 96 61
---------- ----------
Total interest expense ............................................................. 1,845 1,650
---------- ----------
Net interest income ........................................................... 3,962 3,433
PROVISION FOR LOAN LOSSES .......................................................... 173 130
---------- ----------
Net interest income after provision for loan losses ................................ 3,789 3,303
NON-INTEREST INCOME
Service fees and other income ................................................... 885 738
Gain on sale of mortgage loans held for sale .................................... - 472
Gain on sale of available for sale securities ................................... 4 93
---------- ----------
889 1,303
NON-INTEREST EXPENSES
Salaries and benefits ........................................................... 1,968 2,155
Occupancy ....................................................................... 173 159
Equipment ....................................................................... 367 295
Marketing and advertising ....................................................... 85 79
Communications .................................................................. 57 61
Printing and supplies ........................................................... 36 43
Bank paid loan costs ............................................................ 53 61
Director fees ................................................................... 79 72
Other post employment benefits .................................................. 29 419
Other operating expenses ........................................................ 486 448
---------- ----------
Total noninterest expenses ............................................ 3,333 3,792
---------- ----------
Income before income taxes ...................................................... 1,345 814
PROVISION FOR INCOME TAXES ......................................................... 434 273
---------- ----------
Net income ...................................................................... $ 911 $ 541
========== ==========
INCOME PER COMMON SHARE:
BASIC ........................................................................... $ 0.15 $ 0.09
========== ==========
DILUTED ......................................................................... $ 0.15 $ 0.09
========== ==========
WEIGHTED AVERAGE COMMON SHARES:
BASIC ........................................................................... 5,883,322 5,800,338
========== ==========
DILUTED ......................................................................... 6,074,318 6,038,104
========== ==========
DIVIDENDS PAID PER COMMON SHARE .................................................... $ 0.05 $ 0.05
========== ==========
2
Peoples Bancorporation, Inc. and Subsidiaries
Consolidated Statements of Changes in Shareholders' Equity
for the three months ended March 31, 2004 and 2005
(Dollars in thousands except share data)
(Unaudited)
Accumulated
Common stock Additional other Total
------------ paid-in Retained comprehensive shareholders'
Shares Amount capital earnings income equity
------ ------ ------- -------- ------ ------
Balance, December 31, 2003 ........................ 5,523,842 $6,150 $29,505 $ 444 $ 62 $36,161
Net income ........................................ - - - 541 - 541
Other comprehensive income, net of tax:
Unrealized holding losses on
securities available for sale,
net of income taxes of $94 .................... - - - - 181 181
Less reclassification
adjustments for gains
included in net income, net of
income taxes of $32 ........................... - - - - (61) (61)
-------
Comprehensive income .............................. 661
Cash dividends .................................... - - - (258) - (258)
--------- ------ ------- ----- ----- -------
Balance, March 31, 2004 ........................... 5,523,842 $6,150 $29,505 $ 727 $ 182 $36,564
========= ====== ======= ===== ===== =======
Balance, December 31, 2004 ........................ 5,822,608 $6,463 $32,237 $ - $(460) $38,240
Net income ........................................ - - 911 - 911
Other comprehensive income, net of tax:
Unrealized holding losses on
securities available for sale,
net of income taxes of $204 ................... - - - - (384) (384)
Less reclassification
adjustments for gains
included in net income, net of
income taxes of $1 ............................ - - - - (3) (3)
-------
Comprehensive income .............................. 524
Proceeds from stock options
exercised .................................... 87,461 97 136 - - 233
Cash dividends .................................... - - - (295) - (295)
--------- ------ ------- ----- ----- -------
Balance, March 31, 2005 ........................... 5,910,069 $6,560 $32,373 $ 616 $(847) $38,702
========= ====== ======= ===== ===== =======
3
Peoples Bancorporation, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
Three months Ended
March 31,
---------
2005 2004
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net income ................................................................................ $ 911 $ 541
Adjustments to reconcile net income to net cash provided
by (used for) operating activities
Loss on sale of premises and equipment .................................................... 6 -
Gain on sale of mortgage loans held for sale .............................................. - (472)
Gain on sale of securities available for sale ............................................. (4) (93)
Provision for loan losses ................................................................. 173 130
Depreciation and amortization ............................................................. 329 247
Amortization and accretion (net) of premiums and
discounts on securities ................................................................. 28 69
Origination of mortgage loans held for sale ............................................... - (43,368)
Sale of mortgage loans held for sale ...................................................... - 40,164
Decrease in accrued interest receivable ................................................... 32 205
Decrease (increase) in other assets ....................................................... (347) 69
Increase (decrease) in accrued interest payable ........................................... 212 (107)
Increase in other liabilities ............................................................. (133) (226)
-------- --------
Net cash provided by (used for) operating activities .................................... 1,207 (2,841)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of securities held for investment ............................................... (614) (1,556)
Purchases of securities available for sale ................................................ (503) (15,708)
Sales (purchases) of other investments .................................................... 84 (139)
Proceeds from principal pay downs on securities available for sale ........................ 715 1,588
Proceeds from the sale of securities available for sale ................................... 358 4,456
Proceeds from the maturities and calls of securities available for sale ................... - 20,296
Proceeds from the maturity of securities held for investment .............................. 410 -
Investment in life insurance policies ..................................................... (94) (7,224)
Net increase in loans ..................................................................... (9,315) (3,046)
Proceeds from the sale of premises and equipment .......................................... 12 -
Purchase of premises and equipment ........................................................ (156) (999)
-------- --------
Net cash used in investing activities ................................................... (9,103) (2,332)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits .................................................................. 29,896 4,286
Net increase (decrease) in securities sold under repurchase agreements .................... (2,353) 7,311
Net increase in federal funds purchased ................................................... (572) -
Net decrease in advances from Federal Home Loan Bank ...................................... (3,500) -
Proceeds from the exercise of stock options ............................................... 233 -
Cash dividend ............................................................................. (295) (258)
-------- --------
Net cash provided by financing activities ............................................... 23,409 11,339
-------- --------
Net increase in cash and cash equivalents ............................................... 15,513 6,166
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR ................................................. 12,289 21,243
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD ..................................................... $ 27,802 $ 27,409
======== ========
CASH PAID FOR
Interest ................................................................................ $ 1,877 $ 1,757
======== ========
Income Taxes ............................................................................ $ 677 $ 462
======== ========
4
PEOPLES BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of these policies is included in the 2004 Annual Report on Form
10-K and incorporated herein by reference.
STATEMENT OF CASH FLOWS
Cash includes currency and coin, cash items in process of collection,
amounts due from banks and federal funds sold. All have maturities of three
months or less.
COMMON STOCK
The Board of Directors declared cash dividends of $0.05 per common share to
shareholders of record March 18, 2005, payable April 4, 2005.
Statement of Financial Account Standards ("SFAS") No. 128, "Earnings per
Share" requires that the Company present basic and diluted net income per common
share. The assumed conversion of stock options creates the difference between
basic and diluted net income per share. Income per share is calculated by
dividing net income by the weighted average number of common shares outstanding
for each period presented. The weighted average number of common shares
outstanding for basic net income per common share for the three months ended
March 31, 2005 and 2004 was 5,883,322 and 5,800,338, respectively. The weighted
average number of common shares outstanding for diluted net income per common
share was 6,074,318 and 6,038,104 for the three months ended March 31, 2005 and
2004.
The following table illustrates the effect on net income per share if the
Company had applied the fair value recognition provisions of Financial
Accounting Standards Board ("FASB") SFAS No. 123, "Accounting for Stock-Based
Compensation," to stock-based employee compensation.
Quarter ended March 31,
-----------------------
2005 2004
---- ----
Net income, as reported .............................. $ 911 $ 541
Deduct: total stock-based employee compensation
expense determined under fair value based method
for all awards, Net of related tax effects ......... (24) (27)
----- -----
Pro forma net income ................................. $ 887 $ 514
===== =====
Net income per common share
Basic - as reported ................................ $0.15 $0.09
===== =====
Basic - pro forma .................................. $0.15 $0.09
===== =====
Diluted - as reported .............................. $0.15 $0.09
===== =====
Diluted - pro forma ................................ $0.15 $0.09
===== =====
Per share data in 2004 has been restated to reflect the 3-for-2 stock split
effected in October 2004 and the 5% stock dividend declared in December 2004.
5
MANAGEMENT'S OPINION
The accompanying unaudited financial statements of Peoples Bancorporation,
Inc. have been prepared in accordance with accounting principles generally
accepted in the United States of America for interim financial information and
with the instructions to Form 10-Q according to guidelines set forth by the
Securities and Exchange Commission. Accordingly, they do not include all
information and notes required by accounting principles generally accepted in
the United States of America for complete financial statements. However, in the
opinion of management, all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation have been included.
The results of operations for any interim period are not necessarily indicative
of the results to be expected for an entire year.
Forward-Looking Statements
From time to time, including in this report, the Company may publish
forward-looking statements relating to such matters as anticipated financial
performance, business prospects, technological developments, new products and
similar matters. All statements that are not historical facts are
"forward-looking statements." Words such as "estimate," "project," "intend,"
"expect," "believe," "anticipate," "plan," and similar expressions identify
forward-looking statements. The Private Securities Litigation Reform Act of 1995
provides a safe harbor for forward-looking statements. In order to comply with
terms of the safe harbor, the Company notes that a variety of factors could
cause the Company's actual results and experience to differ materially from the
anticipated results or other expectations expressed in the Company's
forward-looking statements. The risks and uncertainties that may affect the
operations, performances, development and results of the Company's business
include, but are not limited to, the following: risks from changes in economic
and industry conditions; changes in interest rates; risks inherent in making
loans including repayment risks and value of collateral; adequacy of the
allowance for loan losses; dependence on senior management; and recently-enacted
or proposed legislation. Statements contained in this report regarding the
demand for Peoples Bancorporation's products and services, changing economic
conditions, interest rates, consumer spending and numerous other factors may be
forward-looking statements and are subject to uncertainties and risks.
6
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the consolidated financial statements and related notes and with the statistical
information and financial data appearing in this report as well as the 2004
Annual Report on Form 10-K of Peoples Bancorporation, Inc. Results of operations
for the three-month period ending March 31, 2005 are not necessarily indicative
of the results to be attained for any other period.
Critical Accounting Policies
Peoples Bancorporation, Inc. (the "Company") has adopted various
accounting policies that govern the application of accounting principles
generally accepted in the United States in the preparation of the Company's
financial statements. The significant accounting policies of the Company are
described in Item 8, Note 1 to the Consolidated Financial Statements in the 2004
Annual Report on Form 10-K of Peoples Bancorporation, Inc.
Certain accounting policies involve significant judgments and
assumptions by management that have a material impact on the carrying value of
certain assets and liabilities; management considers such accounting policies to
be critical accounting policies. The judgments and assumptions used by
management are based on historical experience and other factors, which are
believed to be reasonable under the circumstances. Because of the nature of the
judgments and assumptions made by management, actual results could differ from
these judgments and estimates and such differences could have a material impact
on the carrying values of assets and liabilities and the results of operations
of the Company.
Of these significant accounting policies, the Company considers its
policies regarding the allowance for loan losses (the "Allowance") to be its
most critical accounting policy due to the significant degree of management
judgment involved in determining the amount of the Allowance. The Company has
developed policies and procedures for assessing the adequacy of the Allowance,
recognizing that this process requires a number of assumptions and estimates
with respect to its loan portfolio. The Company's assessments may be impacted in
future periods by changes in economic conditions, the impact of regulatory
examinations, and the discovery of information with respect to borrowers, which
is not known to management at the time of the issuance of the consolidated
financial statements. Refer to the discussion under Provision and Allowance for
Loan Losses, Loan Loss Experience section of the Company's 2004 Annual Report on
Form 10-K and the Allowance for Loan Losses and Provision for Loan Losses
sections of this report on Form 10-Q for a detailed description of the Company's
estimation process and methodology related to the Allowance.
7
Overview
The Company is a bank holding company with three wholly-owned
subsidiaries: The Peoples National Bank, Easley, South Carolina, a national bank
which commenced business operations in August 1986; Bank of Anderson, National
Association, Anderson, South Carolina, a national bank which commenced business
operations in September 1998; and, Seneca National Bank, Seneca, South Carolina,
a national bank which commenced business operations in February 1999 (sometimes
referred to herein as the "Banks").
Currently, the Company engages in no significant operations other than the
ownership of its three subsidiaries and the support thereof. The Company
conducts its business from seven banking offices and one retail mortgage
origination office located in the Upstate Area of South Carolina.
8
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
EARNINGS PERFORMANCE
Overview
The consolidated Company's net income for the first quarter of 2005 was
$911,000 or $0.15 per diluted share compared to $541,000 or $0.09 per diluted
share for the first quarter of 2004, an increase of 68.4%. Return on average
equity for the three months ended March 31, 2005 was 9.43% compared to 5.97% for
the three months ended March 31, 2004. Return on average assets for the three
months ended March 31, 2005 was 0.83% compared to 0.51% for the three months
ended March 31, 2004. The increases in the Company's net income, diluted
earnings per share, return on average equity, and return on average assets in
the first quarter of 2005 are largely attributable to the negative impact of a
one-time expense in 2004 related to salary continuation and death benefit plans
for executives.
Interest Income, Interest Expense and Net Interest Income
The largest component of the Company's income is interest income. Net
interest income, which is the difference between the interest earned on assets
and the interest paid for the liabilities used to fund those assets, measures
the gross profit from lending and investing activities and is the primary
contributor to the Company's earnings. Net interest income before provision for
loan losses increased $529,000 or 15.4% to $3,962,000 for the quarter ended
March 31, 2005 compared to $3,433,000 for the quarter ended March 31, 2004. The
Company's net interest margin was 3.90% for the quarter ended March 31, 2005
compared to 3.45% for the quarter ended March 31, 2004.
The Company's total interest income for the first quarter of 2005 was
$5,807,000 compared to $5,083,000 for the first quarter of 2004, an increase of
$724,000 or 14.2%. Interest and fees on loans, the largest component of total
interest income, increased $768,000 in the first quarter of 2005 to $5,248,000
compared to $4,480,000 for the first quarter of 2004, an increase of 17.1%. The
increase in interest and fees on loans for the three-month period was primarily
due to higher average balances in outstanding loans. Interest on taxable
securities, the second largest component of total interest income, decreased
$71,000 in the first quarter of 2005 to $446,000 compared to $517,000 for the
first quarter of 2004, a decrease of 13.7%. The decrease in interest on taxable
securities for the three-month period was primarily due to lower average
balances in these types of earning assets.
The Company's total interest expense for the first quarter of 2005 was
$1,845,000 compared to $1,650,000 for the first quarter of 2004, an increase of
$195,000 or 11.8%. Interest expense on deposits, the largest component of total
interest expense, increased $74,000 in the first quarter of 2005 to $1,603,000
compared to $1,529,000 for the first quarter of 2004, an increase of 4.8%. The
increase in interest expense on deposits for the three-month period ending March
31, 2005 compared to the same period in 2004 is largely attributable to higher
9
average balances in these accounts. Interest on federal funds purchased and
securities sold under repurchase agreements, the second largest component of
total interest expense, increased $86,000 or 143.3% to $146,000 in the first
quarter of 2005 compared to $60,000 for the first quarter of 2004. This increase
is largely attributable to higher market interest rates experienced at the
Company's bank subsidiaries as well as higher average balances in these
accounts. Interest on notes payable to the Federal Home Loan Bank, the third
largest component of total interest expense, increased $35,000 or 57.4% to
$96,000 for the three months ended March 31, 2005 compared to $61,000 for the
three months ended March 31, 2004, largely attributable to higher market
interest rates and higher average balances in these accounts.
Provision for Loan Losses
The provision for loan losses charged to operations during the three months
ended March 31, 2005 was $173,000 compared to $130,000 for the three months
March 31, 2004, an increase of $43,000 or 33.1%. The changes in the Company's
provision for loan losses for the first quarter of 2005 are based on
management's evaluation of the Company's overall credit quality and its estimate
of loan losses inherent in the loan portfolio. During the first three months of
2005, The Peoples National Bank made a provision of $75,000 compared to $50,000
for the same period in 2004. Bank of Anderson, N.A. made a provision of $80,000
for the first three months of 2005 compared to $60,000 for the same period of
2004. Seneca National Bank made a provision of $18,000 during the first three
months of 2005 compared to $20,000 for the same period of 2004.
Non-interest Income
Non-interest income decreased $414,000 or 31.8% to $889,000 for the first
quarter of 2005 compared to $1,303,000 for the first quarter of 2004. Service
fees and other income, the largest component of non-interest income, increased
$147,000 or 19.9% to $885,000 for the first quarter of 2005 compared to $738,000
for the first quarter of 2004. The increase in service fees and other income is
largely attributable to increased earnings on bank-owned life insurance policies
at each of the subsidiary banks from additional policies purchased in the first
quarter of 2004, and increased income from customers' deposit accounts.
Mortgage banking income increased from zero in the first quarter of 2004 to
$65,000 in the first quarter of 2005. This is due to the fact that all mortgage
banking income was formerly reported as gains on mortgage loans held for sale
because these pre-sold loans were closed and funded by The Peoples National Bank
prior to their actual sale. Gain on mortgage loans held for sale, the second
largest component of non-interest income in 2004, decreased 100% from $472,000
during the first quarter of 2004 to zero during the first quarter of 2005.
During 2004 management made the decision to completely exit the wholesale
mortgage business due to the significant decrease in demand for residential
mortgage loans and refinancings. At December 31, 2004 the Company no longer had
any mortgage loans held for sale.
10
Gains of $4,000 and $93,000 were realized on the sale of securities
available for sale during the three months ended March 31, 2005 and 2004,
respectively.
Non-interest Expense
Total non-interest expense decreased $459,000 or 12.1% to $3,333,000 for
the first quarter of 2005 from $3,792,000 for the first quarter of 2004.
Salaries and benefits, the largest component of non-interest expense, decreased
$187,000 or 8.7% to $1,968,000 for the first quarter of 2005 from $2,155,000 for
the first quarter of 2004. The decrease in salaries and benefits is primarily
due to a reduction in commissions paid and changes in personnel due to the exit
from wholesale mortgage loan originations, and partially offset by normal salary
increases and other changes in personnel throughout the Company. Occupancy and
furniture and equipment expenses increased $86,000 or 18.9% to $540,000 in the
first quarter of 2005 compared to $454,000 in the first quarter of 2004. The
increase is primarily attributable to the completion of an expansion and
renovation to the main office of Bank of Anderson, N.A. in the third quarter of
2004.
Other post employment benefits decreased $390,000 or 93.1% to $29,000 for
the first quarter of 2005 from $419,000 for the first quarter of 2004. This
decrease is attributable to a one-time, non-recurring charge incurred in the
first quarter of 2004 of $376,000 to increase the liability for death benefits
payable to the beneficiary of the Company's former Chairman, President and CEO
who died shortly after March 31, 2004. This charge was required by SFAS No. 112
in accordance with generally accepted accounting principles.
Miscellaneous other non-interest expenses increased $32,000 or 4.2% to
$796,000 for the first three months of 2005 from $764,000 for the first three
months of 2004. This increase in attributable to normal recurring operating
expenses.
11
BALANCE SHEET REVIEW
Loans
Outstanding loans (which excludes mortgage loans held for sale) represent
the largest component of earning assets at 79.4% of total earning assets. As of
March 31, 2005, the Company held total gross loans outstanding of $335,128,000.
Gross loans increased $9,225,000 or 2.8% from $325,903,000 in total gross
outstanding loans at December 31, 2004 and increased $35,935,000 or 12.0% from
$299,193,000 in total gross loans outstanding at March 31, 2004. The increase
resulted from new loans generated by the Company's three banking subsidiaries.
The following table summarizes outstanding loans by type:
Loan Portfolio Composition March 31, December 31,
- -------------------------- --------- ------------
(Dollars in Thousands) 2005 2004 2004
---- ---- ----
(Unaudited) (Audited)
Commercial and Industrial - not secured by real estate .................... $ 39,410 $ 41,146 $ 39,723
Commercial and Industrial - secured by real estate ........................ 105,680 88,046 95,965
Residential real estate - mortgage ........................................ 103,347 92,618 105,580
Residential real estate - construction .................................... 65,286 55,937 63,380
Consumer loans ............................................................ 21,405 21,446 21,255
-------- -------- --------
Gross Loans .......................................................... $335,128 $299,193 $325,903
======== ======== ========
The interest rates charged on loans vary with the degree of risk, maturity,
and amount of the loan. Competitive pressures, money market rates, availability
of funds, and government regulation also influence interest rates. The average
yield on the Company's loans for the three months ended March 31, 2005 was 6.33%
compared to 5.90% for the three months ended March 31, 2004. Between the end of
first quarter of 2004 and the end of the first quarter of 2005, the Federal
Reserve increased the federal funds target rate seven times for a total of 175
basis points. A large portion of the Company's adjustable rate loans, which
constitute 47.9% of the loan portfolio, reprice almost immediately following an
interest rate change by the Federal Reserve.
The Company's loan portfolio consists principally of residential mortgage
loans, commercial loans, and consumer loans. Substantially all of these loans
are to borrowers located in South Carolina and are concentrated in the Company's
market areas.
The Company's real estate loans are primarily construction loans and other
loans secured by real estate, both commercial and residential, located within
the Company's trade areas. The Company does not actively pursue long-term,
fixed-rate mortgage loans for retention in its loan portfolio. The Banks employ
mortgage loan originators who originate loans that are pre-sold at origination
to third parties. The Company also formerly purchased mortgage loans through a
wholesale mortgage loan division of The Peoples National Bank, which were
pre-sold at origination to third parties. These loans are classified as loans
held for sale for reporting purposes. In the first quarter of 2004, the Company
originated $43,368,000 and sold $40,164,000 in mortgage loans held for sale. Due
to the fact that management made the decision to completely exit the wholesale
mortgage business by the end of 2004, there were no mortgage loans held for sale
12
at March 31, 2005 or at December 31, 2004, a decrease of 100% from the
$8,777,000 in mortgage loans held for sale at March 31, 2004.
The Company's commercial lending activity is directed principally towards
businesses whose demand for funds falls within each Bank's legal lending limits
and which are potential deposit customers of the Banks. This category of loans
includes loans made to individuals, partnerships, and corporate borrowers, which
are obtained for a variety of business purposes. Particular emphasis is placed
on loans to small and medium-sized businesses. The Company's commercial loans
are spread throughout a variety of industries, with no industry or group of
related industries accounting for a significant portion of the commercial loan
portfolio. Commercial loans are made on either a secured or an unsecured basis.
When taken, security usually consists of liens on inventories, receivables,
equipment, furniture and fixtures. Unsecured commercial loans are generally
short-term with emphasis on repayment strengths and low debt-to-worth ratios. At
March 31, 2005 approximately $12,265,000 or 5.2% of commercial loans were
unsecured.
The Company's direct consumer loans consist primarily of secured
installment loans to individuals for personal, family, and household purposes,
including automobile loans to individuals and pre-approved lines of credit.
Management believes that the loan portfolio is adequately diversified. The
Company has no foreign loans or loans for highly leveraged transactions. The
Company has few agricultural loans.
Allowance for Loan Losses
The allowance for loan losses at March 31, 2005 was $3,774,000 or 1.13% of
loans outstanding (which excludes mortgage loans held for sale) compared to
$3,691,000 or 1.13% of loans outstanding at December 31, 2004, and to $3,464,000
or 1.16% of loans outstanding at March 31, 2004. The allowance for loan losses
is based upon management's continuing evaluation of the collectibility of past
due loans based on the historical loan loss experience of the Company, current
economic conditions affecting the ability of borrowers to repay, the volume of
loans, the quality of collateral securing non-performing and problem loans, and
other factors deserving recognition.
At March 31, 2005 the Company had $2,004,000 in non-accruing loans,
$504,000 in restructured loans, $181,000 in loans more than ninety days past due
and still accruing interest, and $1,104,000 in Other Real Estate Owned. This
compares to $670,000 in non-accruing loans, $512,000 in restructured loans,
$838,000 in loans more than ninety days past due on which interest was still
being accrued, and $756,000 in other real estate owned at December 31, 2004. At
March 31, 2004 the Company had $677,000 in non-accruing loans, no restructured
loans, $1,000 in loans more than ninety days past due and still accruing
interest, and $728,000 in Other Real Estate Owned. Non-performing loans at March
31, 2005 consisted of $1,899,000 in mortgage loans and $105,000 in consumer
loans. Non-performing assets as a percentage of loans and other real estate
13
owned were 1.13%, 0.69%, and 0.46% at March 31, 2005, December 31, 2004 and
March 31, 2004, respectively.
Net charge-offs during the three months ended March 31, 2005 were $90,000
compared to net charge-offs of $104,000 for the three months ended March 31,
2004 and net charge-offs of $336,000 for the year ended December 31, 2004. The
allowance for loan losses as a percentage of non-performing loans was 140%,
245%, and 511% as of March 31, 2005, December 31, 2004, and March 31, 2004,
respectively.
The Company accounts for impaired loans in accordance with the provisions
of SFAS No. 114, Accounting by Creditors for Impairment of a Loan. SFAS No. 114,
as amended by SFAS No. 118, requires that impaired loans be measured based on
the present value of expected future cash flows or the underlying collateral
values as defined in the pronouncement. When the ultimate collectibility of an
impaired loan's principal is in doubt, wholly or partially, all cash receipts
are then applied to principal. At each of March 31, 2005, December 31, 2004, and
March 31, 2004, the Company had no impaired loans.
Securities
The Company invests primarily in obligations of the United States or
obligations guaranteed as to principal and interest by the United States, other
taxable securities, and in certain obligations of states and municipalities. The
Company does not invest in corporate bonds, nor does it hold any trading
securities. The Company uses its investment portfolio to provide liquidity for
unexpected deposit liquidation or loan generation, to meet the Company's
interest rate sensitivity goals, to secure public deposits, and to generate
income. At March 31, 2005 securities totaled $70,182,000, which represents 16.6%
of total earning assets. Securities decreased $1,065,000 or 1.5% from
$71,247,000 invested as of December 31, 2004, and decreased $7,487,000 or 9.6%
from $77,669,000 invested as of March 31, 2004. The size of the Company's
investment portfolio is managed and fluctuates from time to time based on the
amount of public deposits held, loan demand, liquidity needs, investment
strategy, and other pertinent factors.
At March 31, 2005 the Company's total investments classified as available
for sale had an amortized cost of $62,161,000 and a market value of $60,878,000
for an unrealized loss of $1,283,000. This compares to an amortized cost of
$62,749,000 and a market value of $62,052,000 for an unrealized loss of $697,000
on the Company's investments classified as available for sale at December 31,
2004. At March 31, 2004 the Company's total investments classified as available
for sale had an amortized cost of $70,213,000 and a market value of $70,489,000
for an unrealized gain of $276,000. The change from an unrealized gain to an
unrealized loss is the result of the continued decline in the market value of
the Company's investments classified as available for sale. This decline in
market value is largely due to an increase in market interest rates between
March 31, 2004 and March 31, 2005.
14
Cash Surrender Value of Life Insurance
The Company's cash surrender value of life insurance was $9,143,000 at
March 31, 2005, an increase of $94,000 or 1.0% from the $9,049,000 held at
December 31, 2004 and a decrease of $410,000 or 4.3% from the $9,553,000 held at
March 31, 2004. The decrease since March 31, 2004 is due to the conversion of
certain life insurance policies into cash subsequent to the death of an officer
of the Company.
Cash and Cash Equivalents
The Company's cash and cash equivalents increased $15,513,000 or 126.2% to
$27,802,000 at March 31, 2005 from $12,289,000 at December 31, 2004 and
increased $393,000 or 1.4% from $27,409,000 at March 31, 2004. The substantial
swings in the level of cash and cash equivalents are due to fluctuations in the
Banks' need for immediate liquidity.
Deposits
The Banks' primary source of funds for loans and investments is their
deposits. Total deposits grew $29,896,000 or 8.6% to $376,041,000 at March 31,
2005 from $346,145,000 at December 31, 2004 and $18,426,000 or 5.2% from
$357,615,000 at March 31, 2004. Competition for deposit accounts is primarily
based on the interest rates paid, location convenience and services offered.
During the three months ended March 31, 2005, interest-bearing deposits
averaged $358,187,000 compared to $309,017,000 for the same period of 2004. From
time to time the Banks solicit certificates of deposit from various sources
through brokers and through a program designed to gather deposits via the
Internet. This is done to reduce the need for funding from other short-term
sources such as federal funds purchased and short-term borrowings from the
Federal Home Loan Bank of Atlanta. On March 31, 2005 there were no outstanding
certificates garnered through the Internet, and brokered deposits totaled
$7,290,000. On December 31, 2004 and March 31, 2004 there were no outstanding
certificates garnered through the Internet, and no brokered deposits.
The average interest rate paid on interest-bearing deposits was 1.79%
during the three months ended March 31, 2005 compared to 1.99% for the same
period of 2004. In pricing deposits, the Company considers its liquidity needs,
the direction and levels of interest rates, and local market conditions. At
March 31, 2005 interest-bearing deposits comprised 88.1% of total deposits
compared to 86.1% at March 31, 2004.
The Company's core deposit base consists largely of consumer time deposits,
savings accounts, NOW accounts, money market accounts, and checking accounts.
Although such core deposits are becoming increasingly interest-sensitive for
both the Company and the industry as a whole, these core deposits continue to
provide the Company with a large source of relatively stable funds. Core
deposits as a percentage of total deposits averaged approximately 77.0% and
76.7% for the three months ended March 31, 2005 and 2004, respectively. Time
15
deposits of $100,000 or more represented 23.0% of total deposits at March 31,
2005 and 23.3% at March 31, 2004. The Company's larger denomination time
deposits are generally garnered from customers within the local market areas of
its banks, and therefore may have a greater degree of stability than is
typically associated with this source of funds at other financial institutions.
Borrowings
The Company's borrowings are comprised of federal funds purchased,
securities sold under repurchase agreements, and both short-term and long-term
advances from the Federal Home Loan Bank of Atlanta. At March 31, 2005 and March
31, 2004 short-term borrowings totaled $31,600,000 and $31,701,000,
respectively, and were comprised entirely of securities sold under repurchase
agreements. At December 31, 2004 short-term borrowings totaled $38,025,000 and
were comprised of $572,000 in federal funds purchased, $3,500,000 in short-term
advances from the Federal Home Loan Bank of Atlanta and $33,953,000 in
securities sold under repurchase agreements. Short-term borrowings are used
primarily for the immediate cash needs of the Company. The Company also had
$5,000,000 of long-term advances from the Federal Home Loan Bank of Atlanta at
each of March 31, 2005, December 31, 2004, and March 31, 2004.
LIQUIDITY
Liquidity management involves meeting the cash flow requirements of the
Company. The Company's liquidity position is primarily dependent upon its need
to respond to short-term demand for funds caused by increased loan demand and
withdrawals from deposit accounts. The Company's primary liquidity sources
include cash and due from banks, federal funds sold, and securities available
for sale. In addition, the Company (through the Banks) has the ability to borrow
funds on a short-term basis from the Federal Reserve System and to purchase
federal funds from other financial institutions. The Banks are also members of
the Federal Home Loan Bank System and have the ability to borrow both short-term
and long-term funds on a secured basis. At March 31, 2005, The Peoples National
Bank had total borrowing capacity from the Federal Home Loan Bank of Atlanta
equal to $40,312,000, and the unused portion of this line of credit was
$35,312,000. The Company's other two bank subsidiaries, Bank of Anderson and
Seneca National Bank, each had established secured lines of credit with the
Federal Home Loan Bank at March 31, 2005 of $17,381,000 and $7,188,000,
respectively, all of which were unused. At March 31, 2005, the Banks had unused
federal funds lines of credit with various correspondent banks totaling
$30,750,000.
Peoples Bancorporation, Inc., the parent holding company, has limited
liquidity needs, and requires liquidity to pay limited operating expenses and
dividends only.
During the latter part of 2004 and the first three months of 2005, the
Company made capital expenditures of approximately $140,000 associated with the
renovation of portions of the corporate headquarters building in Easley, SC.
Additional expenditures in the amount of approximately $150,000 are expected for
the completion of this project. The Company may additionally make other lesser
capital expenditures through the normal course of business.
16
Company management believes its liquidity sources are adequate to meet its
operating needs and does not know of any trends that may result in the Company's
liquidity materially increasing or decreasing.
OFF-BALANCE SHEET RISK AND DERIVATIVE FINANCIAL INSTRUMENTS
The Company, through the operations of the Banks, makes contractual
commitments to extend credit in the ordinary course of its business activities.
These commitments are legally binding agreements to lend money to customers of
the Banks at predetermined interest rates for a specified period of time. At
March 31, 2005, the Banks had issued commitments to extend credit (excluding
commitments for residential mortgage loans designated for sale) of $104,421,000
through various types of arrangements. The commitments generally expire in one
year. Past experience indicates that many of these commitments to extend credit
will expire not fully used. As described under "Liquidity," the Company believes
that it has adequate sources of liquidity to fund commitments that are drawn
upon by the borrowers.
In addition to commitments to extend credit, the Banks also issue standby
letters of credit, which are assurances to a third party that it will not suffer
a loss if the Bank's customer fails to meet its contractual obligation to the
third party. Standby letters of credit totaled $5,996,000 at March 31, 2005.
Past experience indicates that many of these standby letters of credit will
expire unused. However, through its various sources of liquidity, the Company
believes that it will have the necessary resources to meet these obligations
should the need arise. Various types of collateral secure most of the standby
letters of credit. The Company believes that the risk of loss associated with
standby letters of credit is comparable to the risk of loss associated with its
loan portfolio. Moreover, the fair value associated with any standby letters of
credit issued by the Company is immaterial to the Company.
According to SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities," loan commitments that relate to the origination or purchase
of mortgage loans that will be held for sale must be accounted for as derivative
instruments. Therefore, such commitments are recorded at fair value in
derivative assets or liabilities, with changes in fair value recorded in the net
gain or loss on sale of mortgage loans. In 2004 the Company engaged in the
origination and sale of residential mortgage loans and entered into commitments
on an individual loan basis to both originate and sell residential mortgage
loans whereby the interest rate on the loan to the borrower and to the
end-purchaser of the loan is determined prior to funding (rate lock
commitments). At March 31, 2004 the Company had commitments outstanding to
originate residential mortgage loans under rate lock commitments from borrowers
totaling $27,109,000. Simultaneously, the Company had commitments to sell these
loans to third parties under rate lock commitments. The Company did not collect
any upfront fees when issuing a mortgage loan commitment to a potential
borrower, and mortgages are sold to third parties at par value. The cumulative
effect under SFAS No. 133 for rate lock commitments as of March 31, 2004 for the
Company was immaterial.
17
Neither the Company nor the subsidiaries are involved in any other
off-balance sheet contractual relationships or transactions that could result in
liquidity needs or other commitments or significantly impact earnings. The
Company did not have any obligations under non-cancelable operating lease
agreements at March 31, 2005.
CAPITAL ADEQUACY AND RESOURCES
The capital needs of the Company have been met through the retention of
earnings and from the proceeds of prior public stock offerings.
The Company and the Banks are required to maintain certain capital ratios
by federal banking regulators. The following table sets forth the capital ratios
for the Company and the Banks as of March 31, 2005:
CAPITAL RATIOS
(Amounts in Thousands)
Well Adequately
Capitalized Capitalized
Actual Requirement Requirement
------ ----------- -----------
Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ ----- ------ -----
Company:
Total Risk-based Capital ................................. $43,323 12.26% $35,337 10.00% $28,269 8.00%
Tier 1 Risk-based Capital ................................ 39,549 11.20 21,187 6.00 14,125 4.00
Leverage Ratio ........................................... 39,549 8.91 22,194 5.00 17,755 4.00
Peoples National Bank:
Total Risk-based Capital ................................. $24,884 12.58% $19,781 10.00% $15,824 8.00%
Tier 1 Risk-based Capital ................................ 22,857 11.55 11,874 6.00 7,916 4.00
Leverage Ratio ........................................... 22,857 9.24 12,369 5.00 9,895 4.00
Bank of Anderson, N. A.:
Total Risk-based Capital ................................. $11,627 10.19% $11,410 10.00% $ 9,128 8.00%
Tier 1 Risk-based Capital ................................ 10,383 9.10 6,846 6.00 4,564 4.00
Leverage Ratio ........................................... 10,383 7.13 7,281 5.00 5,825 4.00
Seneca National Bank:
Total Risk-based Capital ................................. $ 4,893 11.88% $ 4,119 10.00% $ 3,295 8.00%
Tier 1 Risk-based Capital ................................ 4,390 10.66 2,471 6.00 1,647 4.00
Leverage Ratio ........................................... 4,390 8.14 2,697 5.00 2,157 4.00
18
RECENTLY ISSUED ACCOUNTING STANDARDS
The following is a summary of recent authoritative pronouncements that
affect accounting, reporting, and disclosure of financial information by the
Company:
In December 2004, the FASB issued SFAS No. 123 (revised 2004),
"Share-Based Payment" ("SFAS No. 123(R)"). SFAS No.123(R) covers a wide range of
share-based compensation arrangements including share options, restricted share
plans, performance-based awards, share appreciation rights, and employee share
purchase plans. SFAS No. 123(R) will require companies to measure all employee
stock-based compensation awards using a fair value method and record such
expense in its financial statements. In addition, the adoption of SFAS No.
123(R) requires additional accounting and disclosure related to the income tax
and cash flow effects resulting from share-based payment arrangements. SFAS No.
123 (R) is effective beginning with the first interim or annual reporting period
of a company's first fiscal year beginning on or after June 15, 2005.
In April 2005, the Securities and Exchange Commission's Office of the
Chief Accountant and its Division of Corporation Finance released Staff
Accounting Bulletin ("SAB") No. 107. SAB No. 107 provides interpretive guidance
related to the interaction between SFAS No. 123(R) and certain SEC rules and
regulations, as well as the staff's views regarding the valuation of share-based
payment arrangements for public companies. SAB No. 107 also reminds public
companies of the importance of including disclosures within filings made with
the SEC relating to the accounting for share-based payment transactions,
particularly during the transition to SFAS No.123(R). The Company is currently
evaluating the impact that the adoption of SFAS No. 123(R) will have on its
financial position, results of operations and cash flows. The cumulative effect
of adoption, if any, will be measured and recognized in the statement of income
on the date of adoption.
In November 2003, the Emerging Issues Task Force ("EITF") reached a
consensus that certain quantitative and qualitative disclosures should be
required for debt and marketable equity securities classified as available for
sale or held to maturity under SFAS No. 115 and SFAS No. 124 that are impaired
at the balance sheet date but for which other-than-temporary impairment has not
been recognized. Accordingly the EITF issued EITF No. 03-1, "The Meaning of
Other-Than-Temporary Impairment and Its Application to Certain Investments."
This issue addresses the meaning of other-than-temporary impairment and its
application to investments classified as either available for sale or held to
maturity under SFAS No. 115 and provides guidance on quantitative and
qualitative disclosures. The disclosure requirements of EITF No. 03-1 are
effective for annual financial statements for fiscal years ending after June 15,
2004. The effective date for the measurement and recognition guidance of EITF
No. 03-1 has been delayed. The FASB staff has issued a proposed Board-directed
FASB Staff Position ("FSP"), FSP EITF 03-1-a, "Implementation Guidance for the
Application of Paragraph 16 of Issue No. 03-1." The proposed FSP would provide
implementation guidance with respect to debt securities that are impaired solely
due to interest rates and/or sector spreads and analyzed for
other-than-temporary impairment under the measurement and recognition
requirements of EITF No. 03-1. The delay of the effective date for the
measurement and recognition requirements of EITF No. 03-1 will be superseded
19
concurrent with the final issuance of FSP EITF 03-1-a. Adopting the disclosure
provisions of EITF No. 03-1 did not have any impact on the Company's financial
position or results of operations.
Other accounting standards that have been issued or proposed by the FASB or
other standards-setting bodies that do not require adoption until a future date
are not expected to have a material impact on the consolidated financial
statements upon adoption.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk is the risk of loss from adverse changes in market prices and
interest rates. The Company's market risk arises principally from interest rate
risk inherent in its lending, deposit, and borrowing activities. Management
actively monitors and manages its interest rate risk exposure. Although the
Company manages certain other risks, such as credit quality and liquidity risk,
in the normal course of business, management considers interest rate risk to be
its most significant market risk and the risk that could potentially have the
largest material effect on the Company's financial condition and results of
operations. Other types of market risks, such as foreign currency risk and
commodity price risk do not arise in the normal course of the Company's business
activities, although they may affect a few of the Company's customers.
The primary objective of Asset and Liability Management at the Company is
to manage interest rate risk and achieve reasonable stability in net interest
income throughout interest rate cycles. This is achieved by maintaining the
proper balance of rate-sensitive earning assets and rate-sensitive
interest-bearing liabilities. The relationship of rate-sensitive earning assets
to rate-sensitive interest-bearing liabilities is the principal factor in
projecting the effect that fluctuating interest rates will have on future net
interest income. Rate-sensitive assets and liabilities are those that can be
repriced to current market rates within a relatively short time period.
Management monitors the rate sensitivity of earning assets and interest-bearing
liabilities over the entire life of these instruments, but places particular
emphasis on the next twelve months. At March 31, 2005, on a cumulative basis
through 12 months, rate-sensitive liabilities exceeded rate-sensitive assets by
$36,983,000. This liability-sensitive position is largely attributable to the
Company's short-term Certificates of Deposit, Money Market accounts and NOW
accounts, which totaled $121,151,000, $46,588,000 and $50,039,000, respectively,
at March 31, 2005.
20
Item 4. CONTROLS AND PROCEDURES
Based on the evaluation required by 17 C.F.R. Section 240.13a-15(b) or
240.15d-15(b) of the Company's disclosure controls and procedures (as defined in
17 C.F.R. Sections 240.13a-15(e) and 240.15d-15(e)), the Company's chief
executive officer and chief financial officer concluded that such controls and
procedures, as of the end of the period covered by this quarterly report, were
effective.
There has been no change in the Company's internal control over financial
reporting during the most recent fiscal quarter that has materially affected, or
is reasonably likely to materially affect, the Company's internal control over
financial reporting.
21
PART II. OTHER INFORMATION
Item 6. Exhibits
Exhibits.
31.1 Rule 13a-14(a)/15d-14(a) Certifications
31.2 Rule 13a-14(a)/15d-14(a) Certifications
32 Section 1350 Certifications
22
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.
PEOPLES BANCORPORATION, INC.
Dated: May 11, 2005 By: /s/ R. Riggie Ridgeway
------------------------
R. Riggie Ridgeway
President and CEO
Dated: May 11, 2005 By: /s/ Robert E. Dye, Jr.
------------------------
Robert E. Dye, Jr.
Senior Vice President and CFO
(principal financial officer)
23
Exhibit Index
Exhibit No. Description of Exhibit
31.1 Rule 13a-14(a)/15d-14(a) Certifications
31.2 Rule 13a-14(a)/15d-14(a) Certifications
32 Section 1350 Certifications
24