UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
I X I Quarterly Report Pursuant to Section 13 or 15(d)
of The Securities Exchange Act of 1934 for the Quarterly
Period Ended March 31, 1996
Or
I I Transition Report Pursuant to Section 13 or 15(d) of The Securities
Exchange Act of 1934 for the Transition Period From to
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Commission File Number 0-11244
German American Bancorp
(Exact name of registrant as specified in its charter)
INDIANA 35-1547518
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
711 Main Street, Jasper, Indiana 47546
(Address of Principal Executive Offices and Zip Code)
Registrant's telephone number, including area code:(812) 482-1314
Indicate by check 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
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at May 10, 1996
Common Stock, $10.00 par value 1,827,546
GERMAN AMERICAN BANCORP
INDEX
PART I. FINANCIAL INFORMATION
Item 1.
Consolidated Balance Sheets -- March 31, 1996 and
December 31, 1995
Consolidated Statements of Income -- Three Months Ended
March 31, 1996 and 1995
Consolidated Statements of Cash Flows -- Three Months
Ended March 31, 1996 and 1995
Notes to Consolidated Financial Statements --
March 31, 1996
Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Form of Incentive Stock Option Agreement
executed January 9, 1996 between the Registrant and
George W. Astrike (2,940) shares.
10.2 Schedule of Incentive Stock Option
Agreements between the Registrant and its executive
officers dated January 9, 1996.
27. Financial Data Schedule
(b) Reports on Form 8-K
The Registrant did not file any
reports on Form 8-K during the quarter ended
March 31, 1996.
SIGNATURES
PART 1.FINANCIAL INFORMATION
ITEM 1.FINANCIAL STATEMENTS
GERMAN AMERICAN BANCORP
CONSOLIDATED BALANCE SHEET
(dollar references in thousands except share data)
March 31, December 31,
1996 1995
ASSETS
Cash and Due from Banks $13,270 $15,421
Federal Funds Sold 12,600 12,550
Cash and Cash Equivalents 25,870 27,971
Interest-bearing Balances with Banks 899 897
Other Short-term Investments 3,979 5,929
Securities Available-for-Sale,
at Market (Note 3) 79,007 78,908
Securities Held-to-Maturity, at cost
(Market Value of $11,298 and $11,237
on March 31, 1996 and December 31,
1995, respectively) (Note 3) 10,794 10,607
Loans (Note 4) 235,730 231,127
Less: Unearned Income (459) (537)
Allowance for Loan Losses
(Note 5) (5,984) (5,933)
Loans, Net 229,287 224,657
Premises, Furniture and Equipment, Net 9,601 9,624
Other Real Estate 273 286
Intangible Assets 1,935 1,990
Accrued Interest Receivable and
Other Assets 7,057 6,894
TOTAL ASSETS $368,702 $367,763
LIABILITIES
Noninterest-bearing Deposits $37,046 $40,855
Interest-bearing Deposits 289,262 286,724
Total Deposits 326,308 327,579
Short-term Borrowings 1,546 ---
Accrued Interest Payable and
Other Liabilities 3,526 3,228
TOTAL LIABILITIES 331,380 330,807
SHAREHOLDERS' EQUITY
Common Stock, $10 par value; 5,000,000
shares authorized, and 1,827,460 and
1,825,040 issued and outstanding
in 1996 and 1995, respectively 18,275 18,250
Preferred Stock, $10 par value; 500,000
shares authorized, no shares issued --- ---
Additional Paid-in Capital 5,508 5,449
Retained Earnings 13,045 12,398
Unrealized Appreciation /
(Depreciation) on Securities
Available-for-Sale (Net of tax of $324
and $571 in 1996and 1995,
respectively) 494 859
TOTAL SHAREHOLDERS' EQUITY 37,322 36,956
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $368,702 $367,763
See accompanying notes to consolidated financial statements.
GERMAN AMERICAN BANCORP
CONSOLIDATED STATEMENTS OF INCOME
(dollar references in thousands except per share data)
Three Months Ended
March 31,
1996 1995
INTEREST INCOME
Interest and Fees on Loans $5,411 $4,953
Interest on Federal Funds Sold 180 163
Interest on Short-term Investments 85 231
Interest and Dividends on Securities 1,285 1,060
TOTAL INTEREST INCOME 6,961 6,407
INTEREST EXPENSE
Interest on Deposits 3,296 2,755
Interest on Short-term Borrowings 11 74
TOTAL INTEREST EXPENSE 3,307 2,829
NET INTEREST INCOME 3,654 3,578
Provision for Loan Losses 10 114
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 3,644 3,464
NONINTEREST INCOME
Income from Fiduciary Activities 50 60
Service Charges on Deposit Accounts 163 147
Investment Services Income 102 48
Other Charges, Commissions, and Fees 77 129
Gain on Sales of Loans and Other
Real Estate 2 16
Gain on Sales of Securities --- ---
TOTAL NONINTEREST INCOME 394 400
NONINTEREST EXPENSE
Salaries and Employee Benefits 1,402 1,274
Occupancy Expense 202 202
Furniture and Equipment Expense 185 177
FDIC Premiums 16 174
Computer Processing Fees 106 95
Professional Fees 57 40
Other Operating Expenses 483 474
TOTAL NONINTEREST EXPENSE 2,451 2,436
Income before Income Taxes 1,587 1,428
Income Tax Expense 496 470
Net Income $1,091 $958
Earnings Per Share (Note 2) $0.60 $0.52
Dividends Paid Per Share $0.20 $0.19
See accompanying notes to consolidated financial statements.
GERMAN AMERICAN BANCORP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollar references in thousands)
Three Months Ended
March 31,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $1,091 $958
Adjustments to Reconcile Net Income to
Net Cash from Operating Activities:
Amortization and Accretion of Investments (49) (224)
Depreciation and Amortization 232 248
Provision for Loan Losses 10 114
Gain on Sales of Securities --- ---
Gain on Sales of Loans and Other
Real Estate (2) (16)
Change in Assets and Liabilities:
Unearned Income (78) (77)
Interest Receivable 257 206
Other Assets (281) 50
Interest Payable 93 108
Deferred Loan Fees (1) 11
Deferred Taxes 109 (219)
Other Liabilities 205 502
Total Adjustments 495 703
Net Cash from Operating Activities 1,586 1,661
CASH FLOWS FROM INVESTING ACTIVITIES
Change in Interest-bearing Balances
with Banks (2) 99
Proceeds from Maturities of Other
Short-term Investments 3,000 22,499
Purchase of Other Short-term Investments (979) (22,677)
Proceeds from Maturities of Securities
Available-for-Sale 7,893 515
Proceeds from Sales of Securities
Available-for-Sale --- ---
Purchase of Securities Available-
for-Sale (8,626) (3,000)
Proceeds from Maturities of Securities
Held-to-Maturity 154 3,948
Proceeds from Sales of Securities
Held-to-Maturity --- ---
Purchase of Securities Held-to-Maturity (342) (808)
Purchase of Loans (24) ---
Loans Made to Customers net of
Payments Received (4,537) 1,415
Property and Equipment Expenditures (154) (433)
Proceeds from Sales of Other
Real Estate 15 84
Net Cash from Investing Activities (3,602) 1,642
CASH FLOWS FROM FINANCING ACTIVITIES
Change in Deposits (1,271) (3,622)
Change in Short-term Borrowings 1,546 3,380
Dividends Paid (366) (347)
Exercise of Stock Option 6 ---
Net Cash from Financing Activities (85) (589)
Net Change in Cash and Cash Equivalents (2,101) 2,714
Cash and Cash Equivalents at
Beginning of Year 27,971 22,286
Cash and Cash Equivalents at
End of Year $25,870 $25,000
Cash Paid During the Year for:
Interest $3,214 $2,721
Income Taxes 160 120
See accompanying notes to consolidated financial statements.
GERMAN AMERICAN BANCORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1996
Note 1 -- Basis of Presentation
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with Generally Accepted Accounting Principles
have been condensed or omitted. All adjustments made by management to these
unaudited statements were of a normal recurring nature. It is suggested that
these consolidated financial statements and notes be read in conjunction with
the financial statements and notes thereto in the German American Bancorp's
December 31, 1995 Annual Report to Shareholders.
German American Bancorp (the ``Company'') is a multi-bank holding company
based in Jasper, Indiana. Its four affiliate banks conduct business in fourteen
offices in Dubois, Martin, Pike, Perry and Spencer Counties, Indiana.
Note 2 -- Per Share Data
The weighted average number of shares used in calculating earnings and
dividends per share amounts were $1,827,247 and $1,826,171 at March 31, 1996 and
1995, respectively. The March 31, 1995 weighted average amount has been
retroactively restated for the effect of a 5% stock declared in December 1995.
Note 3 -- Securities
At March 31, 1996 and December 31, 1995, U.S. Government Agency structured
notes with an amortized cost of $6,800 and $9,250, respectively and fair value
of $6,718 and $9,201, respectively, are included in securities available-for-
sale, consisting primarily of step-up and single-index bonds.
Information regarding collateralized mortgage obligations (CMO's) and real
estate mortgage investment conduits (REMIC's) is as follows:
March 31, December 31,
1996 1995
Amortized Cost $31,661 $29,429
Fair Value 31,650 29,474
Fixed Rate 30,220 28,041
Variable Rate 1,429 1,433
Note 4 -- Loans
Loans, as presented on the balance sheet, are comprised of the following
classifications:
March 31, December 31,
1996 1995
(dollar references in thousands)
Real Estate Loans Secured by 1-4
Family Residential Properties $68,358 $68,826
Loans to Finance Poultry Production
and other Related Operations 21,287 23,784
Loans to Finance Agricultural
Production and Other Loans
to Farmers 27,930 27,310
Commercial and Industrial Loans 81,498 74,612
Loans to Individuals for Household,
Family and Other Personal
Expenditures 34,981 34,685
Economic Development Commission Bonds 600 608
Lease Financing 1,076 1,302
Total Loans $235,730 $231,127
Information regarding impaired loans is as follows at March 31, 1996 and
December 31, 1995:
March 31, December 31,
1996 1995
Balance of impaired loans $4,506 $6,244
Less: Portion for which no
allowance for loan loss is
allocated 198 215
Portion of impaired loan balance for
which an allowance
for credit losses is allocated $4,308 $6,029
Portion of allowance for loan losses
allocated to the impaired loan balance $662 $898
Note 5 -- Allowance for Loan Losses
A summary of the activity in the Allowance for Loan Losses is as follows:
1996 1995
(dollar references in thousands)
Balance at January 1 $5,933 $5,669
Provision for Loan Losses 10 114
Recoveries of Prior Loan Losses 101 36
Loan Losses Charged to the Allowance (60) (125)
Balance at March 31 $5,984 $5,694
Note 6 -- Stock Options
As of January 1, 1996 Statement of Financial Accounting Standards No. 123
(FAS123), `Accounting for Stock-Based Compensation'' is applicable to the
Company. FAS123 encourages, but does not require, the use of a `fair value
based method''to account for stock-based compensation plans. The Company has
elected not to change its accounting for stock options to a fair value based
method, and no compensation expense was recorded for stock options granted
during the three months ended March 31, 1996.
ITEM 2.
GERMAN AMERICAN BANCORP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
German American Bancorp (``the Company'') is a multi-bank holding company
based in Jasper, Indiana. Its four affiliate banks conduct business in fourteen
offices in Dubois, Martin, Pike, Perry and Spencer Counties, Indiana. The banks
provide a wide range of financial services, including accepting deposits; making
commercial, mortgage and consumer loans; issuing credit life, accident and
health insurance; providing trust services for personal and corporate customers;
providing safe deposit facilities; and providing investment advisory and
brokerage services.
This section presents an analysis of the consolidated financial condition of
the Company as of March 31, 1996 and December 31, 1995 and the consolidated
results of operations for the quarters ended March 31, 1996 and 1995. This
review should be read in conjunction with the consolidated financial statements
and other financial data presented elsewhere herein and with the financial
statements and other financial data and the Management's Discussion and Analysis
of Financial Condition and Results of Operations included in the Company's
December 31, 1995 Annual Report to Shareholders.
RESULTS OF OPERATIONS
Net Income for the first quarter of 1996 was $1,091,000 or $0.60 per share,
an increase of 13.9 percent over the $958,000 or $0.52 per share reported in
1995. The increase in 1996 earnings relative to those of the same quarter of
the prior year was impacted by an increase in net interest income, a decline in
the level of provision for loan losses, an increase in Investment Services
Income and a significant decline in FDIC Premiums. Partially offsetting these
earnings improvements were an increase in Salaries and Benefits and a decline in
Other Charges, Commissions and Fees.
Net Interest Income:
Net Interest Income is the Company's largest component of income and
represents the difference between interest and fees earned on loans and
investments and the interest paid on interest-bearing liabilities. In this
discussion net interest income is presented on a `tax-equivalent'' basis
whereby tax exempt income, such as interest on securities of state and political
subdivisions, has been increased to the amount that would have been earned on a
comparable taxable basis. This adjustment places taxable and non-taxable income
on a common basis and allows and accurate comparison of rates and yields.
The following table summarizes German American Bancorp's net interest income
(on a tax-equivalent basis) for each of the periods presented herein. An
effective tax rate of 34 percent is used on each period presented.
Three Months Change from
Ended March 31, Prior Period
1996 1995 Amount Percent
(dollar references in thousands)
Interest Income $7,178 $6,599 $579 8.8%
Interest Expense 3,307 2,829 478 16.9%
Net Interest Income $3,871 $3,770 $101 2.7%
For the first three months of 1996, tax equivalent net interest income of
$3,871,000 increased by $101,000 or 2.7% from the 1995 level. The net interest
margin was 4.55% for 1996 versus 4.65% for 1995. The increase in the level of
higher yielding assets, such as loans, which occurred during the period in 1996
resulted in a corresponding increase in net interest income. The decrease in
net interest margin reflects the effect of the decline in general interest rates
which occurred during the last half of 1995. This decrease occurred as a result
of the impact on the average yields on loans and short-term investments which
react more quickly to changes in general short-term interest rates than the
average yields on investment securities and the average rates paid on interest-
bearing deposits.
Provision For Loan Losses:
The Company provides for loan losses through regular provisions to the
allowance for loan losses. These provisions are made at a level which is
considered necessary by management to absorb estimated losses in the loan
portfolio. A detailed evaluation of the adequacy of this loan loss reserve is
completed quarterly by management.
The consolidated provision for loan losses was $10,000 in 1996 and $114,000
in 1995. The $104,000 decline in provision during 1996 resulted from a $57,000
negative provision for loan losses at Union Bank and a significant decline in
first quarter 1996 charge-offs. The negative provision at Union Bank was due to
collections of previous years' charged-off loans combined with management's
determination that an adequate level of loan loss reserve existed prior to the
loan recoveries. Because of the adequacy of the existing reserve, the
recoveries resulted in the recording of a negative provision.
The amount of future years' provision for loan loss will be subject to
adjustment based on the findings of future evaluations of the adequacy of the
loan loss reserve.
Net recoveries were $41,000 or 0.02 percent of average loans for the first
three months of 1996. For the same period of 1995, net charge-offs were
$89,000. Underperforming loans, as a percentage of total loans were 1.27 and
1.51 percent on March 31, 1996 and December 31, 1995, respectively. See
discussion headed `Financial Condition'' for more information regarding
underperforming assets.
Noninterest Income:
Operating noninterest income, exclusive of gains realized on the sales of
Loans and Other Real Estate, for the first three months of 1996 was $392,000.
This was $8,000 or 2.1 percent greater than the $384,000 posted for the same
quarter of 1995. Investment Services Income for 1996 rebounded upward after a
period of decline while Other Charges and Fees for 1996 declined sharply
primarily in the area of insurance commissions.
Noninterest Expense:
Total noninterest expense for the first three months of 1996 was $2,451,000
which translates to a $15,000 or less than one percent increase over the
$2,436,000 posted for the same period in 1995.
The largest single component of noninterest expense, Salaries and Employee
Benefits, represents 57.2% of total noninterest expenses for 1996. This expense
category was $1,402,000 during the first quarter of 1996, an increase of
$128,000 or ten percent from the 1995 level of $1,274,000. A significant
portion of this increase is attributable to effects of changes in the Company's
organizational structure which occurred in mid 1995. Prior to July 1995, the
Company's executive officers and support functions served both the Company and
its lead affiliate bank, German American Bank. In recognition of the increased
management and administrative demands existing under a multi-bank holding
company environment, the management and administrative support functions of
German American Bank and the Company were segmented into distinct groups with
additional staffing implemented as deemed appropriate. Although this
organizational change did result in an increased level of Salaries & Benefits,
Company management believes the increased management focus at both the Bank and
Bancorp level will result in increased operating efficiency.
During 1995, the FDIC reduced the commercial bank deposit insurance premium
rates as a result of the Bank Insurance Fund (`BIF'') reaching full
capitalization of its congressionally mandated level. The full impact of this
rate reduction became evident in 1996. Additional assessments or premiums may
arise in 1996 from proposals before Congress which would result in the
recapitalization of the Savings Association Insurance Fund (`SAIF''). Under
this proposal, institutions holding deposits insured by SAIF would be subject to
a one-time assessment followed by a reduction in ongoing FDIC premiums similar
to that currently in place for BIF insured deposits. All of the deposits of
First State Bank, a newly-formed affiliate are insured under SAIF. Therefore,
the implementation of this proposal would increase 1996 total FDIC premiums by
approximately $150,000 to an estimated $210,000 for 1996. Subsequent years
premiums following any such SAIF assessment are anticipated to be $2,000 per
affiliate bank or a total of $8,000. The statements in this paragraph relating
to FDIC premiums and assessments for 1996 and future years are forward-looking
statements which may or may not be accurate due to the impossibility of
predicting future Congressional or regulatory actions or the future
capitalization levels of BIF and SAIF.
FINANCIAL CONDITION
As of March 31, 1996, total assets increased to $368,702,000 compared to
$367,763,000 at December 31, 1995. Deposits fell $1,271,000 in 1996 reflecting
normal seasonal fluctuations in the Company's deposit base and the customers
continued utilization of other investment alternatives. Total loans rose by
$4,681,000 or roughly two percent from the year-end mark of $230,590,000.
The following analyzes German American Bancorp's underperforming assets at
March 31, 1996 and December 31, 1995.
March 31, 1996 December 31, 1995
(dollar references in thousands)
Loans which are contractually
past due 90 days or more $2,470 $803
Nonaccrual Loans 535 2,683
Renegotiated Loans --- ---
Total Underperforming Loans 3,005 3,486
Other Real Estate 273 286
Total Underperforming Assets $3,278 $3,772
Allowance for Loan Loss to
Underperforming Loans 199.13% 170.20%
Underperforming Loans to
Total Loans 1.27% 1.51%
Underperforming loans at March 31, 1996 were 13.8% less than the $3,486,000
of underperforming loans at December 31, 1995. This decline is attributable to
the overall improvement of the loan portfolio and to the reduction in the
balance of an individual credit in the nonaccrual category. Stated as a
percentage of total loans, underperforming loans were 1.27% and 1.51% for March
31, 1996 and December 31, 1995, respectively. The allowance for loan loss
stated as a percentage of underperforming loans equaled 199.13% and 170.20% for
the same two dates respectively.
Underperforming loans include $2,454 and $2,646 of impaired loans at March
31, 1996 and December 31, 1995 (See Note 4 to the consolidated financial
statements).
The overall loan portfolio is diversified among a variety of individual
borrowers, with a substantial portion of debtors' ability to honor their
contracts dependent on the agricultural, poultry and wood manufacturing
industries. Although wood manufacturers employ a significant number of people
in the Company's market area, the Company does not have a concentration of
credit to companies engaged in that industry.
Capital Resources:
Industry regulations provide guidelines for determining the capital adequacy
of bank holding companies and banks. These guidelines provide for a more narrow
definition of core capital and assign a measure of risk to the various
categories of assets. Minimum levels of capital are required to be maintained
in proportion to total risk-weighted assets and off-balance sheet exposures such
as loan commitments and standby letters of credit.
Tier 1, or core capital, consists of shareholders' equity less goodwill, core
deposit intangibles, and certain tax receivables defined by bank regulations.
Tier 2 capital is defined as the amount of the allowance for loan losses which
does not exceed 1.25% of gross risk adjusted assets. Total capital is the sum
of Tier 1 and Tier 2 capital.
The minimum requirements under these standards are a 3.0% leverage ratio,
which is Tier 1 capital divided by defined `total assets'', 4.0% Tier 1
capital to risk-adjusted assets and 8.0% total capital to risk-adjusted assets
ratios. Under these guidelines, the Company, on a consolidated basis, and each
of its affiliate banks individually, have capital ratios that substantially
exceed the regulatory minimums. The table below presents the Company's
consolidated capital ratios under the regulatory guidelines.
At March 31, 1996, management is not aware of any current recommendations by
banking regulatory authorities which, if they were to be implemented, would
have, or are reasonably likely to have, a material effect on the Company's
liquidity, capital resources or operations.
RISK BASED CAPITAL STRUCTURE ($ in thousands)
March 31, December 31,
1996 1995
Tier 1 Capital:
Shareholders' Equity as presented
on Balance Sheet $37,322 $36,956
Add / (Subtract): Unrealized
Depreciation / Appreciation on
Securities Available-for-Sale (494) (859)
Less: Intangible Assets and
Ineligible Deferred Tax Assets (2,129) (2,140)
Total 34,699 33,957
Tier 2 Capital:
Qualifying Allowance for Loan Loss 2,998 2,943
Total Capital $37,697 $36,900
Risk-adjusted Assets $236,871 $232,272
Tier 1 Capital to Total Assets
(leverage ratio) 9.49% 9.29%
Tier 1 Capital to Risk-adjusted Assets 14.65% 14.62%
Total Capital to Risk-adjusted Assets 15.91% 15.89%
LIQUIDITY
The Consolidated Statement of Cash Flows presented in another section of this
report details the elements of change in the Company's cash and cash
equivalents. During the first quarter of 1996, the net cash from operating
activities, including net income of $1,091,000 provided $1,586,000 of available
cash. The proceeds from the maturities of securities and short-term investments
(net of purchases) provided more cash of $1,098,000. An increase in short-term
borrowings made available $1,546,000 for a total cash inflow of $4,230,000.
Major cash outflows experienced during the first quarter of 1996 include
dividends of $366,000, property and equipment purchases of $154,000 and the net
funding outlay of loans and deposits in the amount of $5,832,000. Total cash
outflows for the period exceeded inflows by $2,101,000 leaving a cash and cash
equivalent balance of $25,870,000 at March 31, 1996.
PART II.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Description
10.1 Incentive Stock Option Agreement executed January 9,
1996 between the Registrant and George W. Astrike (2,940 shares).
10.2 Schedule of Incentive Stock Option Agreements between
the Registrant and its executive officers dated January 9, 1996.
27 Financial Data Schedule for the period ended March 31,
1996.
(b) Reports on Form 8-K
The Registrant did not file any reports on Form 8-K during the quarter
ended March 31, 1996.
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.
GERMAN AMERICAN BANCORP
Date May 14, 1996 By/s/George W. Astrike
---------------------- ------------------------
George W. Astrike
Chairman
Date May 14, 1996 By/s/John M. Gutgsell
---------------------- -------------------------
John M. Gutgsell
Controller and Principal
Accounting Officer