FORM 10-Q

 

(Mark One)
ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2004
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from           to          

 

Commission File Number 0-22193

 

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.

ý Yes            o No

 

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2) Yes o No ý

 

APPLICABLE ONLY TO CORPORATE ISSUERS:

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 5,258,738 shares of common stock par value $0.01 per share, were outstanding as of October 29, 2004.

 

 

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

FORM 10-Q

INDEX

FOR THE QUARTER ENDED SEPTEMBER 30, 2004

 

PART I      FINANCIAL INFORMATION
Item 1	Consolidated Statements of Financial Condition: September 30, 2004 (unaudited) and December 31, 2003
	Consolidated Statements of Income: For the Three and Nine months ended September 30, 2004 and 2003 (unaudited)
	Consolidated Statement of Stockholders’ Equity and Comprehensive Income: For the Nine months ended September 30, 2004 and 2003 (unaudited)
	Consolidated Statements of Cash Flows: For the Nine months ended September 30, 2004 and 2003 (unaudited)
	Notes to Consolidated Financial Statements (unaudited)
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3	Quantitative and Qualitative Disclosures About Market Risk
Item 4	Controls and Procedures
PART II      OTHER INFORMATION
Item 1	Legal Proceedings
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds
Item 3	Defaults Upon Senior Securities
Item 4	Submission of Matters to a Vote of Security Holders
Item 5	Other Information
Item 6	Exhibits

 

 

Item 1.  Financial Statements.

 

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Dollars in thousands)

 

		September 30, 2004			December 31, 2003
		(Unaudited)
ASSETS
Cash and due from banks		$	4,324		$	2,440
Federal funds sold		22,000			—
Cash and cash equivalents		26,324			2,440
Investment securities available for sale		36,587			39,845
Investment securities held to maturity:
FHLB Stock, at cost		6,745			2,430
Participation Contract		1,105			5,977
Loans:
Loans held for sale, net		615			804
Loans held for investment, net		405,238			246,796
Accrued interest receivable		1,662			1,122
Foreclosed real estate		282			979
Premises and equipment		5,172			5,330
Deferred income taxes		3,446			2,950
Other assets		969			695
Total Assets		$	488,145		$	309,368
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Deposit accounts:
Noninterest bearing		$	9,454		$	7,257
Interest bearing:
Transaction accounts		64,460			64,148
Certificates of deposit		204,621			150,042
Total Deposits		278,535			221,447
Borrowings		151,900			48,600
Subordinated debentures		10,310			—
Accrued expenses and other liabilities		4,622			1,989
Total Liabilities		$	445,367		$	272,036
STOCKHOLDERS’ EQUITY
Common stock, $.01 par value; 15,000,000 shares authorized; 5,258,738 shares issued and outstanding at September 30, 2004 and 5,255,072 shares issued and outstanding at December 31, 2003.		$	53		$	53
Additional paid-in capital; common stock and warrants		67,564			67,546
Accumulated deficit		(24,596		)	(30,021		)
Accumulated other comprehensive loss		(243		)	(246		)
Total Stockholders’ Equity		$	42,778		$	37,332
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	488,145		$	309,368

 

Accompanying notes are an integral part of these consolidated financial statements.

 

1

 

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per share data)

(UNAUDITED)

 

		For the Three Months Ended						For the Nine Months Ended
		September 30, 2004			September 30, 2003			September 30, 2004			September 30, 2003
INTEREST INCOME:
Loans		$	5,123		$	3,032		$	13,820		$	8,983
Other interest-earning assets		804			1,141			3,072			3,362
Total interest income		5,927			4,173			16,892			12,345
INTEREST EXPENSE:
Interest-bearing deposits		1,440			1,230			3,948			3,771
Other borrowings		530			119			1,116			373
Notes Payable		—			485			—			1,440
Subordinated debentures		112			52			218			158
Total interest expense		2,082			1,886			5,282			5,742
NET INTEREST INCOME		3,845			2,287			11,610			6,603
PROVISION (BENEFIT) FOR LOAN LOSSES		195			(1		)	460			680
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		3,650			2,288			11,150			5,923
NONINTEREST INCOME:
Loan servicing fee income		139			86			382			459
Bank and other fee income		154			124			447			332
Net gain from loan sales		47			122			105			329
Net gain on investment securities		358			—			1,931			143
Other income		63			243			379			683
Total noninterest income		761			575			3,244			1,946
NONINTEREST EXPENSE:
Compensation and benefits		1,842			1,321			5,106			3,661
Premises and occupancy		333			352			1,030			1,060
Data processing		80			99			233			296
Net (gain) loss on foreclosed real estate		(54		)	25			(13		)	76
Other expense		841			539			2,188			2,041
Total noninterest expense		3,042			2,336			8,544			7,134
INCOME BEFORE INCOME TAXES		1,369			527			5,850			735
PROVISION (BENEFIT) FOR INCOME TAXES		219			(197		)	425			(594		)
NET INCOME		$	1,150		$	724		$	5,425		$	1,329
INCOME PER SHARE:
Basic income per share		$	0.22		$	0.54		$	1.03		$	1.00
Diluted income per share		$	0.17		$	0.28		$	0.82		$	0.52
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic		5,256,427			1,333,572			5,255,527			1,333,572
Diluted		6,652,867			2,581,635			6,596,092			2,561,829

 

Accompanying notes are an integral part of these consolidated financial statements.

 

2

 

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY AND COMPREHENSIVE INCOME

(Dollars in thousands)

(UNAUDITED)

 

		Common Stock Shares		Amount			Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Comprehensive Income (Loss)			Total Stockholders’ Equity
Balance at December 31, 2002		1,333,572		$	13		$	43,328		$	(32,086	)	$	368					$	11,623
Net income		—		—			—			1,329			—			$	1,329		1,329
Unrealized loss on investments, net of tax of $0		—		—			—			—			(647		)	(647		)	(647		)
Total comprehensive income		—		—			—			—			—			$	682		—
Balance at September30, 2003		1,333,572		$	13		$	43,328		$	(30,757	)	$	(279	)				$	12,305

 

		Common Stock Shares		Amount			Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Income(Loss)			Comprehensive Income			Total Stockholders’ Equity
Balance at December 31, 2003		5,255,072		$	53		$	67,546		$	(30,021	)	$	(246	)				$	37,332
Net income		—		—			—			5,425			—			$	5,425		5,425
Unrealized loss on investments, net of tax of ($170)		—		—			—			—			3			3			3
Total comprehensive income		—		—			—			—			—			$	5,428		—
Stock options exercised		3,666		—			18												18
Balance at September 30, 2004		5,258,738		$	53		$	67,564		$	(24,596	)	$	(243	)				$	42,778

 

Accompanying notes are an integral part of these consolidated financial statements.

 

3

 

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(UNAUDITED) 

 

		Nine Months Ended September 30,
		2004			2003
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income		$	5,425		$	1,329
Adjustments to Net Income:
Depreciation expense		350			385
Accretion of discount on notes payable		—			105
Provision for loan losses		460			680
(Gain) loss on sale, provision, and write-down of foreclosed real estate		(22		)	281
Net unrealized loss and amortization on investment securities		265			307
Gain on sale of loans held for sale		—			(2		)
Loss (gain) on sale of investment securities available for sale		42			(144		)
Gain on sale of loans held for investment		(105		)	(327		)
Net accretion on Participation Contract		(1,927		)	(2,402		)
Gain on sale and termination of residual assets of Participation Contract		(1,973		)	—
Proceeds from the sales of and principal payments from loans held for sale		63			799
Change in current and deferred income tax receivable		(502		)	(600		)
Increase (decrease) in accrued expenses and other liabilities		2,633			(434		)
Federal Home Loan Bank stock dividend		(90		)	(68		)
(Increase) decrease in other assets		(798		)	618
Net cash provided by operating activities		3,821			527
CASH FLOW FROM INVESTING ACTIVITIES:
Proceeds from sale and principal payments on loans held for investment		57,649			60,812
Purchase, origination and advances of loans held for investment		(216,717		)	(97,700		)
Principal payments on securities		840			4,890
Proceeds from sale of foreclosed real estate		1,116			2,417
Purchase of securities		(5,314		)	(24,991		)
Proceeds from sale or maturity of securities		7,436			32,284
Proceeds from Participation Contract		1,503			1,809
Proceeds from sale and termination of residual assets of Participation Contract		7,269			—
Increase in premises and equipment		(210		)	(347		)
(Purchase) redemption of FHLB stock		(4,225		)	368
Net cash used in investing activities		(150,653		)	(20,458		)
CASH FLOW FROM FINANCING ACTIVITIES
Net increase in deposit accounts		57,088			18,940
Proceeds from (repayment of) FHLB advances		94,900			(350		)
Proceeds from other borrowings		8,400			—
Issuance of Subordinated debentures		10,310			—
Proceeds from exercise of stock options		18			—
Net cash provided by financing activities		170,716			18,590
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		23,884			(1,341		)
CASH AND CASH EQUIVALENTS, beginning of period		2,440			3,590
CASH AND CASH EQUIVALENTS, end of period		$	26,324		$	2,249
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid		$	5,219		$	5,539
Income taxes paid		$	251		$	5
NONCASH INVESTING ACTIVITIES DURING THE PERIOD:
Transfers from loans to foreclosed real estate		$	398		$	1,552
Transfer loans from held for investment		$	—		$	563

 

Accompanying notes are an integral part of these consolidated financial statements.

 

4

 

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2004

(UNAUDITED)

Note 1 - Basis of Presentation

 

The consolidated financial statements include the accounts of Pacific Premier Bancorp, Inc. (the “Corporation”) and its wholly owned subsidiary, Pacific Premier Bank, F.S.B. (the “Bank”) (collectively, the “Company”).  All significant intercompany accounts and transactions have been eliminated in consolidation.

 

In the opinion of management, the unaudited consolidated financial statements contain all adjustments (consisting of normal recurring accruals) necessary to present fairly the Company’s financial position as of September 30, 2004 and the results of its operations and its cash flows for the three and nine months ended September 30, 2004 and 2003.  Operating results for the three and nine months ended September 30, 2004 are not necessarily indicative of the results that may be expected for any other interim period or the full year ending December 31, 2004.

 

Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).  The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2003.

 

The Company accounts for its investments in its wholly owned special purpose entity, PPBI Trust I, using the equity method under which the subsidiary’s net earnings are recognized in the Company’s statement of income.

 

Certain amounts reflected in the 2003 consolidated financial statements have been reclassified where practicable, to conform to the presentation for 2004.  These classifications are of a normal recurring nature.  The following table reflects the reclassification of workers compensation expense from other expense to compensation and benefits.

 

		With reclassifications						Originally presented
		Three months Ended September 30, 2003			Nine months Ended September 30, 2003			Three months Ended September 30, 2003			Nine months Ended September 30, 2003
		(dollars in thousands, unaudited)
Compensation and benefits		$	1,321		$	3,661		$	1,275		$	3,553
Other expense		539			2,041			585			2,149
		$	1,860		$	5,702		$	1,860		$	5,702

 

The following table reflects the reclassification on the statement of cash flows of gain on sale of loans held for investment and net accretion on Participation Contract from net cash used in investing activities to net cash provided by operating activities.

 

5

 

		With reclassifications			Originally presented
		Nine months Ended September 30, 2003			Nine months Ended September 30, 2003			Net Change
Gain on sale of loans held for investment		(327		)	—			(327		)
Net accretion on Participation Contract		(2,402		)	—			(2,402		)
All Other Operating Activities		3,256			3,256			—
Net cash provided by operating activities		$	527		$	3,256		$	(2,729	)
Gain on sale of loans held for investment		—			(327		)	327
Net accretion on Participation Contract		—			(2,402		)	2,402
All Other Investing Activities		(20,458		)	(20,458		)	—
Net cash used in investing activities		$	(20,458	)	$	(23,187	)	$	2,729

 

In December 2002, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure,” an amendment of FASB Statement No. 123, “Accounting for Stock-Based Compensation,” to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. SFAS No. 148 also amends the disclosure provisions of SFAS No. 123 and Accounting Principles Board (“APB”) Opinion No. 28, “Interim Financial Reporting,” to require disclosure in the summary of significant accounting policies of the effects of an entity’s accounting policy with respect to stock-based employee compensation on reported net income and earnings per share in annual and interim financial statements.  While SFAS No. 148 does not amend SFAS No. 123 to require companies to account for employee stock options using the fair value method, the disclosure provisions of SFAS No. 148 are applicable to all companies with stock-based employee compensation, regardless of whether they account for that compensation using the fair value method of SFAS No. 123 or the intrinsic value method of APB Opinion No. 25. The provisions of SFAS No. 148 are effective for annual financial statements for years ending after December 15, 2002, and for financial reports containing condensed financial statements for interim periods beginning after December 15, 2002. The Company accounts for the compensation cost associated with its stock option plans under the intrinsic value method, the alternative methods of transition will not apply to the Company. The additional disclosure requirements of the statement are included in these financial statements. In management’s opinion, the adoption of this Statement did not have a material impact on the Company’s consolidated financial position or results of operations.  The pro forma effects of applying SFAS No. 123 are disclosed below (dollars in thousands, except per share data):

 

		For the Three Months Ended						For the Nine Months Ended
		September 30, 2004			September 30, 2003			September 30, 2004			September 30, 2003
		(Unaudited)						(Unaudited)
Net income to common stockholders:
As reported		$	1,150		$	724		$	5,425		$	1,329
Stock-based compensation that would have been reported using the fair value method of SFAS 123		(123		)	(126		)	(271		)	(151		)
Pro forma		$	1,027		$	598		$	5,154		$	1,178
Basic earnings per share:
As reported		$	0.22		$	0.54		$	1.03		$	1.00
Pro forma		$	0.20		$	0.45		$	0.98		$	0.88
Diluted earnings per share:
As reported		$	0.17		$	0.28		$	0.82		$	0.52
Pro forma		$	0.15		$	0.23		$	0.78		$	0.46

 

6

 

In January 2003, FASB issued FASB Interpretation No. 46, “Consolidation of Variable Interest Entities, an Interpretation of ARB NO. 51” (“FIN 46”) and in December 2003, FASB issued a revision (“FIN 46R”).  FIN 46 and FIN 46R address the requirements for consolidation by business enterprises of variable interest entities.  Subsidiary business trusts formed by bank holding companies to issue trust preferred securities and lend the proceeds to the parent holding company have been determined to not meet the definition of a variable interest entity and therefore must be deconsolidated for financial reporting purposes.  Bank holding companies have previously consolidated these entities and reported the trust preferred securities as liabilities in the consolidated financial statements.  The Company adopted this statement at the time of the issuance of the junior subordinated debentures in March 2004, which did not have a material impact on the Company’s financial statements as subordinated debentures are reported as a component of liabilities.  See Note 4 – Subordinated Debentures.

 

Note 2 – Regulatory Matters

 

The Bank’s capital amounts and ratios are presented in the following table:

 

		Actual					To be adequately capitalized					To be well capitalized
		Amount			Ratio		Amount			Ratio		Amount			Ratio
		(dollars in thousands)
At September 30, 2004 (Unaudited)
Total Capital (to risk-weighted assets)		$	45,984		13.64	%	$	26,961		8.00	%	$	33,701		10.00	%
Tier 1 Capital (to adjusted tangible assets)		44,016			9.09	%	19,362			4.00	%	24,202			5.00	%
Tier 1 Risk-Based Capital (to risk-weighted assets)		45,984			13.06	%	13,480			4.00	%	20,221			6.00	%
At December 31, 2003
Total Capital (to risk-weighted assets)		$	28,437		13.22	%	$	17,214		8.00	%	$	21,518		10.00	%
Tier 1 Capital (to adjusted tangible assets)		26,883			8.94	%	12,034			4.00	%	15,042			5.00	%
Tier 1 Risk-Based Capital (to risk-weighted assets)		28,437			12.49	%	8,607			4.00	%	12,911			6.00	%

 

Note 3 – Borrowings

 

At September 30, 2004, the Bank had one advance on its $100 million credit facility with Salomon Brothers due March 2005, at a rate of 1.42%, in the amount of $8.4 million, which is secured by $9.3 million in mortgage-backed securities.  Additionally, the Company had $143.5 million in Federal Home Loan Bank (FHLB) advances with a weighted average interest rate of 2.00% and a weighted average maturity of 0.63 years, as of September 30, 2004.  Advances from the FHLB are collateralized by pledges of certain real estate loans with an aggregate principal balance of $239.6 million.  As of September 30, 2004, the Bank was able to borrow up to 35% of its prior quarter’s reported total assets under the line, which amounted to $146.7 million, an increase of $54.6 million from the prior quarter.  FHLB advances consisted of the following as of September 30, 2004:

 

7

 

		Amount			% of Total		Weighted Average Interest Rate
		(dollars in thousands)
FHLB Advances Maturing in:
One month or less		$	47,000		32.75	%	1.80	%
Over one month to three months		7,500			5.23	%	1.44	%
Over three months to six months		10,000			6.97	%	2.03	%
Over six months to one year		34,000			23.69	%	1.97	%
Over one year		45,000			31.36	%	2.30	%
Total FHLB Advances		$	143,500		100.00	%	2.00	%

 

Note 4 – Subordinated Debentures

 

In March 2004, the Corporation issued $10.3 million of Floating Rate Junior Subordinated Deferrable Interest Debentures (the “Subordinated Debentures”) to PPBI Trust I, which fund the payment of $10.0 million of Floating Rate Trust Preferred Securities which were issued by PPBI Trust I in March 2004. The net proceeds from the offering of Trust Preferred Securities were contributed as Capital to the Bank to support further growth.  Interest is payable quarterly on the Subordinated Debentures at three-month LIBOR plus 2.75% for an effective rate of 4.35% as of September 30, 2004.

 

Under FIN No. 46, “Consolidation of Variable Interest Entities, an interpretation of ARB No. 51,” the Corporation is not allowed to consolidate PPBI Trust I into the Company’s financial statements.  The resulting effect on the Company’s consolidated financial statements is to report the Subordinated Debentures as a component of liabilities.  Prior to the issuance of FIN No. 46, bank holding companies typically consolidated these entities and reported the Trust Preferred Securities as a component of liabilities.

 

Note 5 – Earnings Per Share

 

The tables below set forth the Company’s unaudited earnings per share calculations for the three and nine months ended September 30, 2004 and 2003.

 

Basic earnings per share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period.  Diluted earnings per share is computed by dividing income available to common stockholders including common stock equivalents, such as outstanding stock options and warrants by the weighted average number of common shares and common stock equivalents outstanding for the period.

 

The earnings per share reconciliation is as follows (dollars in thousands, except per share data):

 

		For the Three Months Ended September 30,
		2004								2003
		Net Earnings			Shares		Per Share Amount			Net Earnings			Shares		Per Share Amount
		(Unaudited)
Net Earnings		$	1,150							$	724
Basic EPS Earnings Available to common stockholders		$	1,150		5,256,427		$	0.22		$	724		1,333,572		$	0.54
Effect of Warrants and Dilutive Stock Options		—			1,396,440					—			1,248,063
Diluted EPS Earnings Available to common stockholders plus assumed conversions		$	1,150		6,652,867		$	0.17		$	724		2,581,635		$	0.28

 

		For the Nine Months Ended September 30,
		2004								2003
		Net Earnings			Shares		Per Share Amount			Net Earnings			Shares		Per Share Amount
		(Unaudited)
Net Earnings		$	5,425							$	1,329
Basic EPS Earnings Available to common stockholders		$	5,425		5,255,527		$	1.03		$	1,329		1,333,572		$	1.00
Effect of Warrants and Dilutive Stock Options		—			1,340,565					—			1,228,257
Diluted EPS Earnings Available to common stockholders plus assumed conversions		$	5,425		6,596,092		$	0.82		$	1,329		2,561,829		$	0.52

 

8

 

Note 6 – Sale of portions of the Participation Contract

 

In March 2004, the Company sold its share of the residual interest in the 1998-1 component of the Participation Contract for $6.3 million.  The gain on sale was $1.6 million.  In August 2004, the 1997-2 component of the Participation Contract was terminated early and the performing assets sold. The gain on the sale was $387,000. The remaining balance of the Participation Contract on the Company’s balance sheet is $1.1 million as of September 30, 2004 and the final residual is expected to be terminated by the end of the fourth quarter of 2004.  See “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Participation Contract” for a description of the Participation Contract.

 

Note 7 – Valuation Allowance for Deferred Income Taxes

 

The Company benefited from a reduction in its valuation allowance for deferred taxes in the three and nine months ended September 30, 2004 and for the three and nine months ended September 30, 2003 of $61,000, $1.7 million, $200,000 and $600,000, respectively.  The Company’s valuation allowance for deferred taxes was $3.7 million at September 30, 2004. The decrease in the deferred tax valuation allowance is due to management’s forecast of taxable earnings, based on assumptions regarding the Company’s growth, in the near future. As the Company achieves continuous taxable income and if the earning projections show that the Company will have the ability to use its net operating loss carry-forwards, then all or part of the remaining valuation allowance for deferred taxes of $3.7 million will be eliminated.

 

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

FORWARD-LOOKING STATEMENTS

 

The following presents management’s discussion and analysis of the consolidated financial condition and operating results of the Company for the three and nine months ended September 30, 2004 and 2003.  The discussion should be read in conjunction with the Company’s Management Discussion and Analysis included in the 2003 Annual Report on Form 10-K, plus the unaudited consolidated financial statements and the notes thereto appearing elsewhere in this report.  The results for the three and nine months ended September 30, 2004 are not necessarily indicative of the results expected for the year ending December 31, 2004.

 

The statements contained herein that are not historical facts are forward-looking statements based on management’s current expectations and beliefs concerning future developments and their potential effects on the Company.  There can be no assurance that future developments affecting the Company will be the same as those anticipated by management.  Actual results may differ from those projected in the forward-looking statements.  These forward-looking statements involve risks and uncertainties.  These include, but are not limited to, the following risks:   (1) changes in the performance of the financial markets,  (2) changes in the demand for and market acceptance of the Company’s products and services,  (3) changes in general economic conditions including interest rates, presence of competitors with greater financial resources, and the impact of competitive projects and pricing,  (4)  the effect of the Company’s policies,  (5)  the continued availability of adequate funding sources,  and (6)  various legal, regulatory and litigation risks.

 

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