UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2005
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission File No. 0-25766
Community Bank Shares of Indiana, Inc.
(Exact name of registrant as specified in its charter)
Indiana 35-1938254
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
101 W. Spring Street, New Albany, Indiana 47150
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 812-944-2224
Not applicable
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. |X| Yes |_| 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
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: 2,621,883 shares of common stock were outstanding as of March
29, 2005.
1
COMMUNITY BANK SHARES OF INDIANA, INC.
INDEX
Page
----
Part I Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets............................................3
Consolidated Statements of Income......................................4
Consolidated Statements of Changes in Shareholders' Equity.............5
Consolidated Statements of Cash Flows..................................6
Notes to Consolidated Financial Statements..........................7-12
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations..........................................13-20
Item 3. Quantitative and Qualitative Disclosures About Market Risk.........21-23
Item 4. Controls and Procedures...............................................24
Part II Other Information
Item 5. Other Information.....................................................25
Item 6. Exhibits..............................................................25
Signatures............................................................................26
Exhibit Index........................................................................ 27
-2-
PART I - FINANCIAL INFORMATION
COMMUNITY BANK SHARES OF INDIANA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
2005 2004
----------- ------------
(In thousands, except share data)
ASSETS
Cash and due from financial institutions $ 12,014 $ 10,473
Interest bearing deposits in other financial institutions 3,172 1,859
Securities available for sale, at fair value 88,942 90,152
Loans held for sale 1,258 1,348
Loans, net of allowance for loan losses of $4,747 and $4,523 476,959 450,676
Federal Home Loan Bank stock, at cost 8,455 8,365
Accrued interest receivable 2,105 1,859
Premises and equipment, net 11,427 11,548
Cash surrender value life insurance 11,670 11,550
Other assets 3,227 2,236
-----------------------------
Total Assets $ 619,229 $ 590,066
=============================
LIABILITIES
Deposits
Non interest-bearing $ 48,932 $ 43,837
Interest-bearing 387,536 367,469
-----------------------------
Total deposits 436,468 411,306
Short-term borrowings 41,516 43,629
Federal Home Loan Bank advances 88,000 82,000
Subordinated debentures 7,000 7,000
Accrued interest payable 941 729
Other liabilities 3,649 2,621
-----------------------------
Total Liabilities 577,574 547,285
-----------------------------
SHAREHOLDERS' EQUITY
Preferred stock, without par value; 5,000,000 shares authorized; none issued -- --
Common stock, $.10 par value per share; 10,000,000 shares authorized; 3,001,067
shares issued; 2,621,883 and 2,629,654 shares outstanding 300 300
Additional paid-in capital 24,854 24,845
Retained earnings 24,499 24,098
Accumulated other comprehensive income (loss) (2,392) (1,024)
Unearned ESOP and performance share awards - 161 and 215 shares (2) (2)
Treasury stock, at cost - 379,023 and 371,198 shares (5,604) (5,436)
-----------------------------
Total Shareholders' Equity 41,655 42,781
-----------------------------
Total Liabilities and Shareholders' Equity $ 619,229 $ 590,066
=============================
See accompanying notes to consolidated financial statements.
-3-
PART I - FINANCIAL INFORMATION
COMMUNITY BANK SHARES OF INDIANA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
March 31,
------------------------------
2005 2004
------------ ------------
(In thousands, except share data)
INTEREST INCOME
Loans, including fees $ 6,972 $ 5,691
Taxable securities 790 587
Tax-exempt securities 74 136
Federal Home Loan Bank cash and stock dividends 79 98
Interest bearing deposits in other financial institutions 24 10
------------------------------
Total interest income 7,939 6,522
------------------------------
INTEREST EXPENSE
Deposits 2,250 1,729
Federal Home Loan Bank advances 1,116 1,265
Short-term borrowings 304 66
------------------------------
Total interest expense 3,670 3,060
------------------------------
Net interest income 4,269 3,462
Provision for loan losses 410 360
------------------------------
Net interest income after provision for loan losses 3,859 3,102
------------------------------
NON-INTEREST INCOME
Service charges on deposit accounts 566 416
Commission income 19 23
Net gain on sale of available for sale securities 23 88
Net gain on sale of mortgage loans 76 120
Loan servicing income, net of amortization 10 (8)
Increase in cash surrender value of life insurance 120 128
Other income 62 53
------------------------------
Total non-interest income 876 820
------------------------------
NON-INTEREST EXPENSE
Salaries and employee benefits 2,085 1,816
Occupancy 307 273
Equipment 283 277
Data processing 411 232
Marketing and advertising 84 79
Other 545 498
------------------------------
Total non-interest expense 3,715 3,175
------------------------------
Income before income taxes 1,020 747
Income tax expense 238 140
------------------------------
Net Income $ 782 $ 607
==============================
Earnings per share:
Basic $ 0.30 $ 0.23*
==============================
Diluted $ 0.29 $ 0.23*
==============================
See accompanying notes to consolidated financial statements.
*Restated to reflect 10% stock dividend paid on December 27, 2004.
-4-
PART I - FINANCIAL INFORMATION
COMMUNITY BANK SHARES OF INDIANA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(Dollar amounts in thousands, except per share data)
(Unaudited)
Common Stock Additional
Shares Paid-In Retained
Outstanding Amount Capital Earnings
----------- ------ ------- --------
Balance at January 1, 2005 2,629,654 $ 300 $ 24,845 $ 24,098
Comprehensive income (loss):
Net income -- -- -- 782
Change in net unrealized gains (losses),
securities available for sale, net of
reclassification and tax effects -- -- -- --
Change in unrealized gains (losses),
interest rate swap net of reclassification
and tax effects -- -- -- --
Change in minimum pension liability,
net of tax effects -- -- -- --
Total comprehensive income (loss)
Cash dividends declared ($.145 per share) -- -- -- (381)
Purchase of treasury stock (8,200) -- -- --
Stock option expense -- -- 9 --
Stock options exercised 375 -- -- --
Commitment of shares to be released
under ESOP 54 -- -- --
---------- ------- ---------- ---------
Balance at March 31, 2005 2,621,883 $ 300 $ 24,854 $ 24,499
========== ======= ========== =========
Accumulated
Other Unearned
Comprehensive ESOP and Total
Income Performance Treasury Shareholders'
(Loss) Share Awards Stock Equity
------ ------------ ----- ------
Balance at January 1, 2005 $ (1,024) $ (2) $ (5,436) $ 42,781
Comprehensive income (loss):
Net income -- -- -- 782
Change in net unrealized gains (losses),
securities available for sale, net of
reclassification and tax effects (858) -- -- (858)
Change in unrealized gains (losses),
interest rate swap net of reclassification
and tax effects (505) -- -- (505)
Change in minimum pension liability,
net of tax effects (5) -- -- (5)
----------
Total comprehensive income (loss) (586)
Cash dividends declared ($.145 per share) -- -- -- (381)
Purchase of treasury stock -- -- (174) (174)
Stock option expense -- -- -- 9
Stock options exercised -- -- 6 6
Commitment of shares to be released
under ESOP -- -- -- --
---------- ---------- ---------- ----------
Balance at March 31, 2005 $ (2,392) $ (2) $ (5,604) $ 41,655
========== ========== ========== ==========
-5-
PART I - FINANCIAL INFORMATION
COMMUNITY BANK SHARES OF INDIANA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31,
-----------------------------
2005 2004
------------ ------------
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 782 $ 607
Adjustments to reconcile net income to net cash from operating
activities:
Provision for loan losses 410 360
Depreciation expense 320 302
Net amortization of securities 77 112
Gain on sale of available for sale securities (23) (88)
Mortgage loans originated for sale (3,691) (3,734)
Proceeds from mortgage loan sales 3,857 11,737
Net gain on sales of mortgage loans (76) (120)
Increase in cash surrender value of life insurance (120) (128)
Federal Home Loan Bank stock dividends (90) (98)
ESOP and performance share award expense 9 18
Net change in
Accrued interest receivable (246) 123
Accrued interest payable 212 143
Other assets (1,661) 768
Other liabilities 1,784 (916)
-----------------------------
Net cash from operating activities 1,544 9,086
-----------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Net change in interest bearing deposits with banks (1,313) (9,515)
Activity in available for sale securities:
Sales 5,128 4,941
Purchases (8,206) (9,141)
Maturities, prepayments and calls 2,935 2,649
Loan originations and payments, net (26,848) (13,714)
Purchase of premises and equipment, net (199) (378)
-----------------------------
Net cash from investing activities (28,503) (25,158)
-----------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in deposits 25,162 40,629
Net change in short-term borrowings (2,113) (17,911)
Proceeds from Federal Home Loan Bank advances 8,000 --
Repayment of advances from Federal Home Loan Bank (2,000) (5,200)
Purchase of treasury stock (174) --
Stock options exercised 6 31
Dividends paid (381) (345)
-----------------------------
Net cash from financing activities 28,500 17,204
-----------------------------
Net change in cash and due from banks 1,541 1,132
Cash and due from banks at beginning of period 10,473 10,164
-----------------------------
Cash and due from banks at end of period $ 12,014 $ 11,296
=============================
Non cash transfers:
Transfer from loans to loans held for sale $ -- $ 7,513
Transfer from loans to foreclosed real estate $ 155 $ --
See accompanying notes to consolidated financial statements.
-6-
COMMUNITY BANK SHARES OF INDIANA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Presentation of Interim Information
Community Bank Shares of Indiana, Inc. (the "Company") is a one bank holding
company headquartered in New Albany, Indiana. The Company's wholly-owned banking
subsidiary is Community Bank of Southern Indiana (the "Bank"). The Bank is a
state-chartered stock commercial bank headquartered in New Albany, Indiana and
is regulated by the Indiana Department of Financial Institutions and the Federal
Deposit Insurance Corporation.
The Bank has three wholly-owned subsidiaries to manage its investment portfolio.
CBSI Holdings, Inc. and CBSI Investments, Inc. are Nevada corporations which
jointly own CBSI Investment Portfolio Management, LLC, a Nevada limited
liability corporation which holds and manages investment securities previously
owned by the Bank.
The Bank also has a Community Development Entity (CDE) subsidiary named CBSI
Development Fund, Inc. The CDE enables the Bank to participate in the federal
New Markets Tax Credit (NMTC) Program. The NMTC Program is administered by the
Community Development Financial Institutions Fund of the United States Treasury
and is designed to promote investment in low-income communities by providing a
tax credit over seven years for equity investments in CDE's.
During June 2004, the Company completed a placement of floating rate
subordinated debentures through Community Bank Shares (IN) Statutory Trust I
(Trust), a trust formed by the Company. Because the Trust is not consolidated
with the Company, pursuant to FASB Interpretation No. 46, the financial
statements reflect the subordinated debt issued by the Company to the Trust.
In the opinion of management, the unaudited consolidated financial statements
include all normal adjustments considered necessary to present fairly the
financial position as of March 31, 2005, the results of operations for the three
months ended March 31, 2005 and 2004, and cash flows for the three months ended
March 31, 2005 and 2004. All of these adjustments are of a normal, recurring
nature. Interim results are not necessarily indicative of results for a full
year.
The accompanying unaudited consolidated financial statements have been prepared
in accordance with accounting principles generally accepted in the United States
of America for interim financial information and with the instructions for Form
10-Q. Accordingly, they do not include all of the information and footnotes
required by accounting principles generally accepted in the United States of
America for complete financial statements.
For further information, refer to the consolidated financial statements and
footnotes included in the Company's annual report on Form 10-K for the year
ended December 31, 2004. The consolidated financial statements include the
accounts of the Company and the Bank. All material intercompany balances and
transactions have been eliminated in consolidation.
-7-
COMMUNITY BANK SHARES OF INDIANA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Stock Compensation: During the first quarter of fiscal 2005, the Company adopted
the fair value recognition provisions of FASB Statement 123, Share-Based
Payment, for stock-based employee compensation, effective as of the beginning of
the fiscal year. Under the modified prospective method of adoption selected by
the Company, stock-based employee compensation cost recognized in 2005 is the
same as that which would have been recognized had the fair value recognition
provisions of Statement 123 been applied to all awards granted after October 1,
1995. The following table illustrates the effect on net income and earnings per
share as if the fair value based method had been applied to all outstanding and
unvested awards in each period.
Three months ended
March 31,
In thousands, except per share amounts 2005 2004
- --------------------------------------------------------------------------------
Net income as reported $ 782 $ 607
Add: Stock-based compensation expense
included in reported net income, net
of related tax effects 9 --
Less: Stock-based compensation expense
determined under fair value based method (9) (11)
-------------------------
Pro forma net income $ 782 $ 596
=========================
Basic earnings per share as reported $ 0.30 $ 0.23
Pro forma basic earnings per share 0.30 0.23
Diluted earnings per share as reported 0.29 0.23
Pro forma diluted earnings per share 0.29 0.23
-8-
COMMUNITY BANK SHARES OF INDIANA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
2. Securities
The amortized cost and fair value of available for sale securities and the
related unrealized holding gains and losses were as follows:
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---- ----- ------ -----
(In thousands)
March 31, 2005
U. S. Government and federal agency $ 4,805 $ -- $ (147) $ 4,658
State and municipal 5,703 205 -- 5,908
Mortgaged-backed 65,116 40 (1,564) 63,592
Corporate bonds 14,618 83 (160) 14,541
Mutual funds 250 -- (7) 243
--------- --------- --------- ---------
Total $ 90,492 $ 328 $ (1,878) $ 88,942
========= ========= ========= =========
December 31, 2004
U. S. Government and federal agency $ 4,803 $ -- $ (64) $ 4,739
State and municipal 6,357 256 -- 6,613
Mortgaged-backed 64,348 256 (661) 63,943
Corporate bonds 14,645 57 (91) 14,611
Mutual funds 250 -- (4) 246
--------- --------- --------- ---------
Total $ 90,403 $ 569 $ (820) $ 90,152
========= ========= ========= =========
3. Loans
Loans at March 31, 2005 and December 31, 2004 consisted of the following:
2005 2004
---- ----
(In thousands)
Commercial $ 73,622 $ 73,374
Mortgage loans on real estate
Residential 105,753 100,553
Commercial 202,949 186,175
Construction 41,044 38,638
Home equity 51,595 49,677
Loans secured by deposit accounts 561 687
Consumer 6,182 6,095
----------- -----------
Subtotal 481,706 455,199
Less: Allowance for loan losses (4,747) (4,523)
----------- -----------
Loans, net $ 476,959 $ 450,676
=========== ===========
-9-
COMMUNITY BANK SHARES OF INDIANA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
4. Deposits
Deposits at March 31, 2005 and December 31, 2004 consisted of the following:
March 31, December 31,
(Dollars in thousands) 2005 2004
---- ----
Demand (NOW) $ 38,197 $ 38,243
Money market accounts 144,996 114,332
Savings 27,058 26,159
Individual retirement accounts-certificates of deposit 19,422 18,771
Certificates of deposit, $100,000 and over 54,932 65,705
Other certificates of deposit 102,931 104,259
---------- ----------
Total interest bearing deposits 387,536 367,469
Total non-interest bearing deposits 48,932 43,837
---------- ----------
Total $ 436,468 $ 411,306
========== ==========
5. Supplemental Disclosure for Earnings Per Share
Earnings per share were computed as follows:
Three months ended
March 31,
--------------------------
In thousands, except for share and per share amounts 2005 2004
---------- ----------
Basic:
Earnings:
Net income $ 782 $ 607
==========================
Shares:
Weighted average common shares outstanding 2,627,815 2,624,058
==========================
Net income per share, basic $ 0.30 $ 0.23
==========================
Diluted:
Earnings:
Net income $ 782 $ 607
==========================
Shares:
Weighted average common shares outstanding 2,627,815 2,624,058
Add: Dilutive effect of outstanding options 29,453 32,120
--------------------------
Weighted average common shares outstanding, as adjusted 2,657,268 2,656,178
==========================
Net income per share, diluted $ 0.29 $ 0.23
==========================
-10-
COMMUNITY BANK SHARES OF INDIANA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The Company had no antidilutive stock options for the three months ended March
31, 2005. Stock options for 21,700 shares of common stock were excluded from the
three months ended March 31, 2004 because their impact was antidilutive.
6. Derivative Financial Instruments and Hedging Activities
On August 30, 2002, the Company entered into a $25,000,000 interest rate swap
arrangement to exchange variable payments of interest tied to Prime for receipt
of fixed rate payments of 6.51%. An additional $25,000,000 interest rate swap
was entered into on September 19, 2003 to exchange variable payments of interest
tied to Prime for receipt of fixed rate payments of 5.22%. The variable rate of
the swaps resets daily, with net interest being settled monthly. The notional
amount of the swaps does not represent amounts exchanged by the parties. The
amount exchanged is determined by reference to the notional amount and other
terms of the swaps.
The swaps have been designated by management as cash flow hedges of its
Prime-based commercial loans to in effect convert the loans from variable
interest to weighted average fixed interest rates of 6.76% on the initial swap
until the swap's maturity on August 30, 2007, and 5.58% on the subsequent swap
until its maturity on September 19, 2008. The hedge relationships were
determined to be highly effective. As such, changes in the fair value of the
swaps are reported in other comprehensive income and will be reclassified to
earnings over the lives of the hedges. During the three months ended March 31,
2005 and 2004, $54,000 and $237,000 was transferred out of other comprehensive
income as an increase to interest income on loans. The fair values of the swaps
as of March 31, 2005 and December 31, 2004 were liabilities of $1.8 million and
$1.0 million, respectively, and were included in other liabilities.
7. Benefit Plans
The Company sponsors a defined benefit pension plan. The benefits are based on
years of service and the employees' highest average of total compensation for
five consecutive years of employment. In 1997, the plan was amended such that
there can be no new participants or increases in benefits to the participants.
The components of pension expense for the three ended March 31, 2005 and 2004
were as follows:
March 31, 2005 March 31, 2004
----------------------------------
(In thousands)
Interest cost $ 12 $ 12
Expected return on plan assets (11) (11)
Amortization of unrecognized loss 10 9
----------------------------------
Pension expense $ 11 $ 10
==================================
The Company made no contributions to its pension plan during the first three
months of 2005, but expects to contribute $28,000 during the remainder of the
year.
-11-
COMMUNITY BANK SHARES OF INDIANA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
8. Other Comprehensive Income (Loss)
Other comprehensive income components and related taxes were as follows.
Three months ended
March 31,
------------------
2005 2004
---- ----
Unrealized holding gain (loss) on
available for sale securities $ (1,277) $ 790
Less reclassification adjustments for
gains recognized in income (23) (88)
--------- ---------
Net unrealized gain (loss) on securities
available for sale, net of reclassifications (1,300) 702
Unrealized holding gain (loss) on interest
rate swaps (774) 1,143
Amounts reclassified to interest income (54) (237)
--------- ---------
Net unrealized gain (loss) on interest rate
swaps, net of reclassifications (828) 906
Change in minimum pension liability (5) 7
--------- ---------
Other comprehensive income (loss)
before tax effects and cumulative
effect of change in accounting principle (2,136) 1,615
Tax effect 768 (595)
--------- ---------
Other comprehensive income (loss) $ (1,368) $ (1,020)
========= =========
-12-
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
COMMUNITY BANK SHARES OF INDIANA, INC. AND SUBSIDIARIES
Safe Harbor Statement for Forward-Looking Statements
This report may contain forward-looking statements within the meaning of the
federal securities laws. These statements are not historical facts, but rather
statements based on the Company's current expectations regarding its business
strategies and their intended results and its future performance.
Forward-looking statements are preceded by terms such as "expects," "believes,"
"anticipates," "intends" and similar expressions.
Forward-looking statements are not guarantees of future performance. Numerous
risks and uncertainties could cause or contribute to the Company's actual
results, performance, and achievements to be materially different from those
expressed or implied by the forward-looking statements. Factors that may cause
or contribute to these differences include, without limitation, general economic
conditions, including changes in market interest rates and changes in monetary
and fiscal policies of the federal government; legislative and regulatory
changes; competitive conditions in the banking markets served by the Bank; the
adequacy of the allowance for losses on loans and the level of future provisions
for losses on loans; and other factors disclosed periodically in the Company's
filings with the Securities and Exchange Commission.
Because of the risks and uncertainties inherent in forward-looking statements,
readers are cautioned not to place undue reliance on them, whether included in
this report or made elsewhere from time to time by the Company or on its behalf.
The Company assumes no obligation to update any forward-looking statements.
Financial Condition
Total assets increased 4.9% to $619.2 million at March 31, 2005 from $590.1
million at December 31, 2004, primarily as a result of an increase in net loans
of $26.3 million. The growth in total assets was funded primarily by increases
in total deposits and Federal Home Loan Bank advances.
Net loans increased 5.8% to $477.0 million at March 31, 2005 from $450.7 million
at December 31, 2004. Loan growth was primarily concentrated in commercial real
estate loans as the Company continues to see strong demand for this type of
loan. The Company currently retains ten year mortgage loans that it originates
and sells most fifteen and thirty-year fixed rate conforming mortgage loans into
the secondary market.
Securities available for sale decreased $1.2 million from December 31, 2004 to
$88.9 million at March 31, 2005 primarily because of a decline in the value of
the securities in response to generally rising interest rates. The securities
portfolio serves as a source of liquidity and earnings and plays a part in the
management of interest rate risk. The current strategy for the investment
portfolio is to maintain an overall average repricing term of between 3.0 and
3.5 years to limit exposure to rising interest rates.
Total deposits increased $25.2 million to $436.5 million at March 31, 2005 from
$411.3 million at December 31, 2004. The Company attributes its deposit growth
over the quarter primarily to growth in its money market accounts related to the
offering of a product with an above market rate. The Company's non-interest
deposits increased 11.6% to $48.9 million primarily as a
-13-
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
COMMUNITY BANK SHARES OF INDIANA, INC. AND SUBSIDIARIES
result of a focused commitment on attracting lower cost funding through various
customer service and business development initiatives.
Results of Operations
Net Income. Net income was $782,000 for the three months ended March 31, 2005 as
compared to $607,000 for the three months ended March 31, 2004, an increase of
28.8%. Basic net income per share was $0.30 for the first quarter of 2005, an
increase of 30.4% when compared to the $0.23 for the same period in 2004. Net
income per share on a diluted basis was $0.29 for the first quarter of 2005, an
increase of 26.1% when compared to the $0.23 for the same period in 2003.
Annualized returns on average assets and stockholders' equity were 0.53% and
7.51%, respectively, for the first quarter of 2005, compared to 0.46% and 5.66%,
respectively, for the same period in 2004. Management attributes the increase in
net income between the periods to the growth in net loans and total deposits and
an increase in net interest margin.
Net interest income. Net interest income increased $807,000, or 23.3%, for the
first quarter of 2005 compared to the first quarter of 2004 due to growth in the
Company's earning assets and a higher net interest margin. The net interest
margin for the first quarter of 2005 was 3.02% compared to 2.80% for the
equivalent period in 2004. Management attributes the margin expansion to an
increase in the yield on earning assets as a result of generally rising interest
rates. The yield on earning assets increased by 0.34% from the first quarter of
2004 to the same period in 2005, while over the same period the cost of
interest-bearing liabilities increased by 0.13%. Average earning assets
increased 15.4% to $573.1 million for the three months ended March 31, 2005 from
$496.8 million for the equivalent period in 2004, primarily due to growth in
total loans and leases. Management believes the Company is well positioned for
changing interest rates.
The cost of interest-bearing liabilities continues to be significantly affected
by the $88.0 million in funding provided by FHLB advances, which principally
consists of putable (or convertible) instruments that give the FHLB the option
at the conversion date (and quarterly thereafter) to put an advance back to the
Company. If an advance is put back to the Company by the FHLB, the Company can
choose to prepay the advance without penalty or allow the interest rate on the
advance to adjust to three-month LIBOR (London Interbank Offer Rate) at the
conversion date (and adjusted quarterly thereafter). The Company estimates that
the three-month LIBOR would have to rise in excess of 300 basis points before
the FHLB would exercise its option on any of the individual advances. The
Company uses FHLB advances for both short- and long-term funding. The balances
reported at both March 31, 2005 and December 31, 2004 are substantially
comprised of long-term advances.
-14-
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
COMMUNITY BANK SHARES OF INDIANA, INC. AND SUBSIDIARIES
Average Balance Sheets. The following tables set forth certain information
relating to the Company's average balance sheets and reflects the average yields
earned and rates paid. Such yields and costs are derived by dividing income or
expense by the average balance of assets or liabilities, respectively, for the
periods presented. Average balances are computed on daily average balances, when
available. Management does not believe that the use of month-end balances
instead of daily average balances has caused any material difference in the
information presented. Yields on tax-exempt securities have not been presented
on a tax equivalent basis. Loans held for sale and loans no longer accruing
interest are included in total loans.
Three Months Ended March 31,
----------------------------------------------------------------------------------
2005 2004
--------------------------------------- ---------------------------------------
Average Average Average Average
Balance Interest Yield/Cost Balance Interest Yield/Cost
------- -------- ---------- ------- -------- ----------
(in thousands) (in thousands)
ASSETS
Earning assets:
Interest-bearing deposits with banks $ 5,003 $ 24 1.95% $ 5,660 $ 10 0.71%
Taxable securities 83,332 790 3.84% 67,236 587 3.51%
Non-taxable securities 6,124 74 4.90% 14,787 136 3.70%
Total loans and fees(1)(2) 470,225 6,972 6.01% 401,052 5,691 5.71%
FHLB stock 8,418 79 3.81% 8,060 98 4.89%
-------- -------- ---- -------- -------- ----
Total earning assets 573,102 7,939 5.62% 496,795 6,522 5.28%
Less: Allowance for loan losses 4,514 4,162
Non-earning assets:
Cash and due from banks 10,941 9,907
Bank premises and equipment, net 11,504 11,400
Accrued interest receivable and other
assets 12,688 13,553
-------- --------
Total assets $603,721 $527,493
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
Savings and other $197,668 $ 810 1.66% $154,162 $ 365 0.95%
Time deposits 187,166 1,440 3.12% 171,831 1,364 3.19%
Federal funds purchased and repurchase
agreements 42,752 212 2.01% 34,328 66 0.77%
FHLB advances 81,089 1,116 5.58% 85,391 1,265 5.96%
Long term subordinated debenture 7,000 92 5.33% -- -- --
-------- -------- ---- -------- -------- ----
Total interest-bearing liabilities 515,675 3,670 2.89% 445,712 3,060 2.76%
Non-interest bearing liabilities:
Non-interest demand deposits 43,572 36,710
Accrued interest payable and other
liabilities 2,253 1,942
Stockholders' equity 42,221 43,129
-------- --------
Total liabilities and stockholders' equity $603,721 $527,493
======== ========
Net interest income $ 4,269 $ 3,462
======== ========
Net interest spread 2.73% 2.52%
Net interest margin 3.02% 2.80%
(1) The amount of fee income included in interest on loans was $170 and $101
for the three months ended March 31, 2005 and 2004.
(2) Calculations include non-accruing loans in the average loan amounts
outstanding.
-15-
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
COMMUNITY BANK SHARES OF INDIANA, INC. AND SUBSIDIARIES
Rate/Volume Analysis. The table below illustrates the extent to which changes in
interest rates and changes in the volume of interest-earning assets and
interest-bearing liabilities affected the Company's interest income and interest
expense during the periods indicated. Information is provided in each category
with respect to (i) changes attributable to changes in volume (changes in volume
multiplied by prior rate), (ii) changes attributable to changes in rate (changes
in rate multiplied by prior volume), and (iii) the net change. The changes
attributable to the combined impact of volume and rate have been allocated
proportionately to the changes due to volume and the changes due to rate.
-----------------------------------------
Three Months Ended March 31, 2005
compared to
Three Months Ended March 31, 2004
Increase/(Decrease) Due to
-----------------------------------------
Total Net
Change Volume Rate
-----------------------------------------
(in thousands)
Interest income:
Interest-bearing deposits with banks $ 14 $ (1) $ 15
Taxable securities 203 149 54
Tax-exempt securities (62) (96) 34
Total loans and fees 1,281 1,017 264
FHLB stock (19) 4 (23)
-----------------------------------------
Total increase in interest income 1,417 1,073 344
-----------------------------------------
Interest expense:
Savings and other 445 124 321
Time deposits 76 119 (43)
Federal funds purchased and repurchase agreements 146 20 126
FHLB advances (149) (62) (87)
Long term subordinated debenture 92 92
-----------------------------------------
Total increase in interest expense 610 293 317
-----------------------------------------
Increase in net interest income $ 807 $ 780 $ 27
=========================================
-16-
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
COMMUNITY BANK SHARES OF INDIANA, INC. AND SUBSIDIARIES
Allowance and Provision for Loan Losses. The Bank's financial performance
depends on the quality of the loans it originates and management's ability to
assess the degree of risk in existing loans when it determines the allowance for
loan losses. An increase in loan charge-offs or non-performing loans or an
inadequate allowance for loan losses could have an adverse effect on net income.
The allowance is determined based on the application of loss estimates to graded
loans by categories.
Summary of Loan Loss Experience:
Three Months Ended
March 31,
---------------------------
Activity for the period ended: 2005 2004
---------- ----------
(in thousands)
Beginning balance $ 4,523 $ 4,034
Charge-offs:
Residential real estate (23) --
Commercial real estate -- --
Construction -- --
Commercial business (29) (15)
Home equity (125) (1)
Consumer (18) --
---------------------------
Total (195) (16)
Recoveries:
Residential real estate -- --
Commercial real estate 2 3
Construction -- --
Commercial business 3 5
Home equity 3 --
Consumer 1 3
---------------------------
Total 9 11
---------------------------
Net loan charge-offs (186) (5)
Provision 410 360
---------------------------
Ending balance $ 4,747 $ 4,389
===========================
Growth in net loans led to a 13.9% increase in the provision for loan losses for
the first quarter of 2005 when compared to the same period in 2004. Management
believes, based on information presently available, that it has appropriately
provided for loan losses at March 31, 2005.
Federal regulations require insured institutions to classify their assets on a
regular basis. The regulations provide for three categories of classified loans:
substandard, doubtful and loss. The regulations also contain a special mention
and a specific allowance category. Special mention is defined as loans that do
not currently expose an insured institution to a sufficient degree of risk to
warrant classification but do possess credit deficiencies or potential
weaknesses deserving management's close attention. Assets classified as
substandard or doubtful require the institution to establish general allowances
for loan losses. If an asset or portion thereof is
-17-
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
COMMUNITY BANK SHARES OF INDIANA, INC. AND SUBSIDIARIES
classified as loss, the insured institution must either establish specified
allowances for loan losses in the amount of 100% of the portion of the asset
classified loss, or charge off such amount.
Non-performing assets. Loans (including impaired loans under the Financial
Accounting Standard Board's Statement of Financial Accounting Standards 114 and
118) are placed on non-accrual status when they become past due ninety days or
more as to principal or interest, unless they are adequately secured and in the
process of collection. When these loans are placed on non-accrual status, all
unpaid accrued interest is reversed and the loans remain on non-accrual status
until the loan becomes current or the loan is deemed uncollectible and is
charged off. The Company defines impaired loans to be those commercial loans
that management has classified as doubtful (collection of total amount due is
highly questionable or improbable) or loss (all or a portion of the loan has
been written off or a specific allowance for loss has been provided). Impaired
loans were steady at $1.1 million at December 31, 2004 and March 31, 2005.
Classified loans decreased from $12.5 million at December 31, 2004 to $12.3
million at March 31, 2005.
March 31, 2005 December 31, 2004
---------------------------------------
(In thousands)
Loans on non-accrual status $ 1,919 $ 1,588
Loans past due 90 days or more and still accruing 34 --
---------------------------------
Total non-performing loans 1,953 1,588
Other real estate owned 247 106
---------------------------------
Total non-performing assets $ 2,200 $ 1,694
=================================
0.40% 0.35%
Non-performing loans to total loans
Non-performing assets to total loans 0.46% 0.37%
Allowance as a percent of non-performing loans 243.06% 276.39%
Allowance as a percent of total loans 0.98% 0.96%
-18-
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
COMMUNITY BANK SHARES OF INDIANA, INC. AND SUBSIDIARIES
Non-interest income. Non-interest income increased 6.8% to $876,000 for the
first quarter of 2005 compared to the same period in 2004 primarily as a result
of an increase in service charges on deposit accounts, which management
attributes to an increase in non-interest checking accounts. Gain on sale of
mortgage loans declined due to a general rise in mortgage interest rates.
Non-interest expense. Non-interest expense increased 17.0% for the first quarter
of 2005 compared to the same period in 2004, primarily because of increases in
salaries and benefits and data processing expenses. Salaries and employee
benefits increased because of a new branch in Floyd County, Indiana in the
second quarter of 2004, the addition of loan operations personnel to support the
Company's loan growth over the last year, and an increase in mortgage sales and
operations personnel as the Company is currently reconfiguring its mortgage loan
operations to improve its competitive position within the metropolitan
Louisville market. Data processing expense increased primarily because of
incremental core data processing services.
Income tax expense. Income tax expense for the three month period ended March
31, 2005 was $238,000 compared to $140,000 for the same period in 2004. Income
before income taxes increased from $747,000 for the first quarter of 2004 to
$1,020,000 for the same period in 2005, while tax-exempt income, such as
interest income on tax-exempt securities and loans and earnings on cash
surrender value of life insurance, and tax credits declined slightly when
comparing the same periods. Consequently, the effective tax rate for the three
months ended March 31, 2005 increased to 23.3% from 18.7% for the same period in
2004.
Liquidity and Capital Resources
Liquidity levels are adjusted in order to meet funding needs for deposit
outflows, repayment of borrowings, and loan commitments and to meet
asset/liability objectives. The Company's primary sources of funds are customer
deposits, customer repurchase agreements, proceeds from loan repayments,
maturing securities and FHLB advances. While loan repayments and maturities are
a predictable source of funds, deposit flows and mortgage prepayments are
greatly influenced by market interest rates, general economic conditions and
competition. At March 31, 2005, the Company had cash and interest-bearing
deposits with banks of $15.2 million and securities available-for-sale with a
fair value of $88.9 million. If the Company requires funds beyond the funds it
is able to generate internally, it has $33.5 million in additional aggregate
borrowing capacity with the Federal Home Loan Bank of Indianapolis and unused
federal funds lines of credit with various nonaffiliated financial institutions
of $30.0 million.
The Bank is required to maintain specific amounts of capital pursuant to
regulatory requirements. At March 31, 2005, the Bank was in compliance with all
regulatory capital requirements that were effective as of such date. Regulatory
capital ratios as of March 31, 2005 and December 31, 2004 were as follows:
-19-
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
COMMUNITY BANK SHARES OF INDIANA, INC. AND SUBSIDIARIES
March 31, 2005:
Total Tier 1 Tier 1
Capital To Capital To Capital To
Risk-weighted Risk-weighted Average
Assets Assets Assets
--------------------------------------------------------
Consolidated 10.9% 10.0% 8.4%
Community Bank 10.9% 10.0% 8.4%
Minimum to be well capitalized under regulatory
capital requirements: 10.0% 6.0% 5.0%
December 31, 2004:
Total Tier 1 Tier 1
Capital To Capital To Capital To
Risk-weighted Risk-weighted Average
Assets Assets Assets
--------------------------------------------------------
Consolidated 11.3% 10.4% 8.7%
Community Bank 11.2% 10.3% 8.6%
Minimum to be well capitalized under regulatory
capital requirements: 10.0% 6.0% 5.0%
The Company has been repurchasing shares of its common stock since May 21, 1999.
A net total of 379,023 shares at an aggregate cost of $5.6 million have been
repurchased since that time under both the current and prior repurchase plans.
The Company's Board of Directors authorized a share repurchase plan in October
2004 under which a maximum of $5.0 million of the Company's common stock may be
purchased. Through March 31, 2005, a total of $266,000 had been expended to
purchase 12,802 shares under the repurchase plan.
During June 2004, the Company completed a placement of $7.0 million floating
rate subordinated debentures through Community Bank Shares (IN) Statutory Trust
I, a trust formed by the Company. These securities are reported as liabilities
for financial reporting, but Tier 1 Capital for regulatory purposes. The Company
intends to utilize the proceeds for general business purposes and to support the
Bank's future opportunities for growth.
Off Balance Sheet Arrangements and Contractual Obligations
The amount and nature of the Company's off balance sheet arrangements and
contractual obligations at March 31, 2005 were not significantly different from
the information that was reported in the Company's annual report on Form 10-K
for the year ended December 31, 2004.
-20-
PART I - ITEM 3
QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
Asset/liability management is the process of balance sheet control designed to
ensure safety and soundness and to maintain liquidity and regulatory capital
standards while maintaining acceptable net interest income. Interest rate risk
is the exposure to adverse changes in net interest income as a result of market
fluctuations in interest rates. Management continually monitors interest rate
and liquidity risk so that it can implement appropriate funding, investment, and
other balance sheet strategies. Management considers market interest rate risk
to be the Company's most significant ongoing business risk consideration.
The Company currently contracts with an independent third party consulting firm
to measure its interest rate risk position. The consulting firm utilizes an
earnings simulation model to analyze net interest income sensitivity. Current
balance sheet amounts, current yields and costs, corresponding maturity and
repricing amounts and rates, other relevant information, and certain assumptions
made by management are combined with gradual movements in interest rates of 200
basis points up and 100 basis points down within the model to estimate their
combined effects on net interest income over a one-year horizon. Interest rate
movements are spread equally over the forecast period of one year. The Company
feels that using gradual interest rate movements within the model is more
representative of future rate changes than instantaneous interest rate shocks.
The Company does not project growth in amounts for any balance sheet category
when constructing the model because of the belief that projected growth can mask
current interest rate risk imbalances over the projected horizon.
Assumptions based on the historical behavior of the Company's deposit rates and
balances in relation to changes in interest rates are incorporated into the
model. These assumptions are inherently uncertain and, as a result, the model
cannot precisely measure future net interest income or precisely predict the
impact of fluctuations in market interest rates on net interest income. The
Company continually monitors and updates the assumptions as new information
becomes available. Actual results will differ from the model's simulated results
due to timing, magnitude and frequency of interest rate changes, and actual
variations from the managerial assumptions utilized under the model, as well as
changes in market conditions and the application and timing of various
management strategies.
The base scenario represents projected net interest income over a one year
forecast horizon exclusive of interest rate changes to the simulation model.
Given a gradual 200 basis point increase in the projected yield curve used in
the simulation model (Up 200 Scenario), it is estimated that as of March 31,
2005 the Company's net interest income would decrease by an estimated 2.1%, or
$357,000, over the one year forecast horizon. However, considering reasonable
growth assumptions, the Company expects that net interest income should increase
over the forecast horizon. As of December 31, 2004, in the Up 200 Scenario the
Company estimated that net interest income would decrease 1.0%, or $170,000,
over a one year forecast horizon ending December 31, 2004. Given a gradual 100
basis point decrease in the projected yield curve used in the simulation model
(Down 100 Scenario), it is estimated that as of March 31, 2005 the Company's net
interest income would decrease by an estimated 0.4%, or $62,000, over the one
year forecast horizon. As of December 31, 2004, in the Down 100 Scenario the
Company estimated that net interest income would increase 0.8%, or $123,000,
over a one year forecast horizon ending December 31, 2004.
The projected results are within the Company's asset/liability management policy
limits which states that the negative impact to net interest income should not
exceed 5% and 7% in a 100 basis point decrease and 200 basis point increase in
the projected yield curve over a one year
-21-
PART I - ITEM 3
QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
forecast horizon. The forecast results are heavily dependent on the assumptions
regarding changes in deposit rates; the Company can minimize the reduction in
net interest income in a period of rising interest rates to the extent that it
can curtail raising deposit rates during this period. The Company continues to
explore transactions and strategies to both increase its net interest income and
minimize its interest rate risk.
The interest sensitivity profile of the Company at any point in time will be
affected by a number of factors. These factors include the mix of interest
sensitive assets and liabilities as well as their relative repricing schedules.
It is also influenced by market interest rates, deposit growth, loan growth, and
other factors. The tables below illustrate the Company's estimated annualized
earnings sensitivity profile based on the above referenced asset/liability model
as of March 31, 2005 and December 31, 2004, respectively. The tables below are
representative only and are not precise measurements of the effect of changing
interest rates on the Company's net interest income in the future.
The following table illustrates the Company's estimated one year net interest
income sensitivity profile based on the asset/liability model as of March 31,
2005:
Interest Rate Sensitivity as of March 31, 2005
--------------------------------------------------------
Gradual Decrease in Gradual Increase in
Rates of 100 Rates of 200
Basis Points Base Basis Points
--------------------------------------------------------
(In thousands)
Projected interest income:
Loans $ 28,290 $ 29,120 $ 30,779
Investments 3,708 3,767 3,903
FHLB stock 360 360 360
Interest-bearing bank deposits 69 96 122
-----------------------------------------------------
Total interest Income 32,427 33,343 35,164
Projected interest expense:
Deposits 9,175 9,711 11,271
Federal funds purchased
and repurchase agreements 739 968 1,423
FHLB advances 4,887 4,944 5,050
Subordinated debentures 381 413 470
-----------------------------------------------------
Total interest expense 15,182 16,036 18,214
-----------------------------------------------------
Net interest income $ 17,245 $ 17,307 $ 16,950
=====================================================
Change from base $ (62) $ (357)
Percent change from base (0.4)% (2.1)%
-22-
PART I - ITEM 3
QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
The following table illustrates the Company's estimated one year net interest
income sensitivity profile based on the asset/liability model as of December 31,
2004:
Interest Rate Sensitivity as of December 31, 2004
--------------------------------------------------------------
Gradual Decrease in Gradual Increase in
Interest Rates of 100 Interest Rates of 200
Basis Points Base Basis Points
--------------------------------------------------------------
(In thousands)
Projected interest income:
Loans $ 25,845 $ 26,660 $ 28,361
Investments 3,606 3,681 3,837
FHLB stock 355 355 355
Interest-bearing bank deposits 32 42 62
-----------------------------------------------------------
Total interest income 29,838 30,738 32,615
Projected interest expense:
Deposits 7,990 8,457 9,887
Federal funds purchased
and repurchase agreements 570 811 1,292
FHLB advances 4,598 4,637 4,713
Subordinated debentures 344 374 434
-----------------------------------------------------------
Total interest expense 13,502 14,279 16,326
-----------------------------------------------------------
Net interest income $ 16,336 $ 16,459 $ 16,289
===========================================================
Change from base $ (123) $ (170)
Percent change from base (0.8)% (1.0)%
-23-
PART I - ITEM 4
CONTROLS AND PROCEDURES
Company management, including the Chief Executive Officer (serving as the
principal executive officer) and Chief Financial Officer (serving as the
principal financial officer), have conducted an evaluation of the effectiveness
of disclosure controls and procedures pursuant to Securities Exchange Act of
1934 Rule 13a-14. Based on that evaluation, the Chief Executive Officer and the
Chief Financial Officer concluded that the disclosure controls and procedures
are effective in ensuring that all material information required to be filed in
this quarterly report has been made known to them in a timely fashion. There
have been no significant changes in internal controls, or in other factors that
could significantly affect internal controls, subsequent to the date the Chief
Executive Officer and the Chief Financial Officer completed their evaluation.
-24-
PART II
OTHER INFORMATION
Item 5. Other Information
On April 27th 2004, the Board of Directors of the Company adopted a Charter of
the Nominating Process and Nominations Review Committee (the "Charter"). The
Nominations Review Committee formed by the Company's Board of Directors is to be
comprised of independent directors and is charged with the duty of identifying
and recommending director candidates to the Company Board of Directors. The
Charter provides that any Company shareholder may submit candidates for
membership on the Company Board of Directors by delivering a request to the
Company's Secretary that any such candidate be considered for said position and
setting forth information regarding said candidate's qualifications to serve as
a Company director.
Item 6. Exhibits
(a) Exhibits
The exhibits required by Item 601 of Regulation S-K are listed in the
Exhibit Index of this Form 10-Q and are filed as a part of this report.
-25-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed by the undersigned thereunto
duly authorized.
COMMUNITY BANK SHARES OF INDIANA, INC.
(Registrant)
Dated: May 12, 2005 BY: /s/ James D. Rickard
- ------------------- ------------------------------------
James D. Rickard
President and
Chief Executive Officer
(Principal Executive Officer)
Dated: May 12, 2005 BY: /s/ Paul A. Chrisco
- ------------------- ------------------------------------
Paul A. Chrisco
Senior Vice-President and
Chief Financial Officer
(Principal Financial Officer)
-26-
EXHIBIT INDEX
COMMUNITY BANK SHARES OF INDIANA, INC.
EXHIBIT INDEX
Exhibit No. Description
- ----------- --------------------------------------------------------------
11 Statement Regarding Computation of Per Share Earnings
31.1 Certification of Principal Executive Officer Pursuant to
Section 302 of Sarbanes-Oxley Act
31.2 Certification of Principal Financial Officer Pursuant to
Section 302 of Sarbanes-Oxley Act
32.1 Certification of Principal Executive Officer Pursuant to 18
U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
32.2 Certification of Principal Financial Officer Pursuant to 18
U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
-27-