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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarter ended June 30, 2001
OR
[ ] 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 000-29829
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PACIFIC FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Washington 91-1815009
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
300 East Market Street
Aberdeen, Washington 98520-5244
(360) 533-8870
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days:
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Title of Class Outstanding at July 31, 2001
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Common Stock, par value $1.00 per share 2,478,849 shares
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1
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION 3
ITEM 1. FINANCIAL STATEMENTS 3
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 2001 AND DECEMBER 31, 2000 3
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2001
AND 2000 4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTH PERIODS ENDED JUNE 30, 2001 AND 2000 5
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 2001 AND 2000 7
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 11
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK 14
PART II OTHER INFORMATION 15
ITEM 5. OTHER INFORMATION 15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 15
SIGNATURES 15
2
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets
(Dollars in Thousands)
Pacific Financial Corporation
June 30, 2001 and December 31, 2000
June 30, December 31,
2001 2000
Assets (Unaudited)
Cash and due from banks $9,752 $8,619
Interest bearing balances with banks 3,304 480
Federal funds sold 10,550 570
Investment securities available for sale 35,958 53,696
Investment securities held-to-maturity 1,305 1,376
Federal Home Loan Bank stock, at cost 3,682 3,562
Loans 169,684 177,168
Allowance for credit losses 1,875 2,026
-------- --------
Loans, net 167,809 175,142
Premises and equipment 4,099 4,122
Foreclosed real estate 780 -0-
Accrued interest receivable 1,763 2,302
Cash surrender value of life insurance 2,508 2,435
Other assets 856 1,009
------- --------
Total assets $242,366 $253,313
Liabilities and Stockholders' Equity
Deposits:
Non-interest bearing $32,054 $32,510
Interest bearing 180,102 181,001
------- --------
Total deposits 212,156 213,511
Accrued interest payable 649 779
Short-term borrowings 3,000 11,358
Other liabilities 1,514 4,922
-------- --------
Total liabilities 217,319 230,570
Stockholders' Equity
Common stock (par value $1); authorized: 2,499 2,503
25,000,000 shares; issued June 30, 2001
- 2,498,849 shares; December 31, 2000
- 2,503,130 shares
Surplus 9,773 9,859
Retained earnings 12,414 10,572
Accumulated other comprehensive
income (loss) 361 (191)
-------- ---------
Total stockholders' equity 25,047 22,743
Total liabilities and stockholders' equity $242,366 $253,313
See notes to condensed consolidated financial statements.
3
Condensed Consolidated Statements of Income
(Dollars in thousands, except per share)
(Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
2001 2000 2001 2000
Interest Income
Loans $3,884 $4,130 $8,027 $7,985
Securities held to maturity - tax exempt 22 25 45 50
Securities available for sale:
Taxable 488 766 1,116 1,543
Tax-exempt 140 144 276 300
Deposits with banks
and federal funds sold 137 34 192 70
------ ------ ------ ------
Total interest income 4,671 5,099 9,656 9,948
Interest Expense
Deposits 1,727 1,912 3,788 3,698
Other borrowings 39 184 129 313
------ ------ ------ ------
Total interest expense 1,766 2,096 3,917 4,011
Net Interest Income 2,905 3,003 5,739 5,937
Provision for credit losses 98 52 200 105
------ ------ ------ ------
Net interest income after provision
for credit losses 2,807 2,951 5,539 5,832
Non-interest Income
Service charges 205 197 379 376
Mortgage loan origination fees 10 0 14 1
Gain on sale of foreclosed real estate 0 0 0 31
Other operating income 131 108 267 253
------ ------ ------ ------
Total non-interest income 346 305 660 661
Non-interest Expense
Salaries and employee benefits 1,011 949 2,058 1,963
Occupancy and equipment 236 255 470 495
Other 512 534 1,039 1,026
------ ------ ----- -----
Total non-interest expense 1,759 1,738 3,567 3,484
Income before income taxes 1,394 1,518 2,632 3,009
Provision for income taxes 429 442 790 909
------ ------ ----- -----
Net Income $965 $1,076 $1,842 $2,100
Earnings per common share:
Basic $.39 $.43 (1) $.74 $.85 (1)
Diluted .38 .43 (1) .73 .84 (1)
Average shares outstanding:
Basic 2,499,013 2,483,850 (1) 2,500,509 2,483,850 (1)
Diluted 2,521,205 2,509,932 (1) 2,523,913 2,510,346 (1)
(1)Restated to reflect 5-for-1 stock-split effected July 2000.
See notes to condensed consolidated financial statements.
4
Condensed Consolidated Statements of Cash Flows
Six months ended June 30, 2001 and 2000
(Dollars in thousands)
(Unaudited)
2001 2000
OPERATING ACTIVITIES
Net income $1,842 $2,100
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for credit losses 200 105
Depreciation and amortization 212 224
Stock dividends received (120) (99)
Loss on sale of premises and equipment 1 ----
Gain on sale of foreclosed real estate ---- (31)
(Increase) decrease in accrued interest receivable 539 (198)
Increase (decrease) in accrued interest payable (130) 30
Other (385) (480)
------- -------
Net cash provided by operating activities 2,159 1,651
INVESTING ACTIVITIES
Net increase in federal funds sold (9,980) ----
Decrease (increase) in interest bearing
deposits with banks (2,824) 954
Proceeds from maturities of investments held to maturity 71 137
Purchases of securities available for sale (9,256) (1,610)
Proceeds from maturities of securities available for sale 21,169 7,067
Proceeds from sales of securities available for sale 6,614 ----
Net decrease (increase) in loans 6,373 (16,015)
Additions to premises and equipment (202) (144)
Proceeds from sales of foreclosed real estate ---- 182
Proceeds from sales of premises and equipment 16 ----
------- -------
Net cash provided by (used in) investing activities 11,981 (9,429)
FINANCING ACTIVITIES
Net increase (decrease) in deposits (1,355) 6,388
Net decrease in short-term borrowings (8,358) (525)
Repurchase and retirement of common stock (90) ----
Payment of dividends (3,204) (3,105)
------- -------
Net cash provided by (used in) financing activities (13,007) 2,758
Net increase (decrease) in cash and due from banks 1,133 (5,020)
5
CASH AND DUE FROM BANKS
Beginning of period 8,619 13,080
End of period $9,752 $8,060
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for:
Interest $3,918 $3,981
Income Taxes 740 920
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITIES
Change in fair value of securities available
for sale, net of tax $552 $ 20
Foreclosed real estate acquired in settlement of loans (780) ----
See notes to condensed consolidated financial statements.
6
Condensed Consolidated Statements of Shareholders' Equity
Six months ended June 30, 2001 and 2000
(Dollars in thousands) (Unaudited)
ACCUMULATED
OTHER
COMPREHENSIVE
COMMON RETAINED INCOME
STOCK SURPLUS EARNINGS (LOSS) TOTAL
Balance December 31, 1999 $2,445 $11,420 $10,473 $(952) $21,438
Other comprehensive income:
Net income 2,100 2,100
Change in fair value of
securities available for sale, net 20 20
Comprehensive income 2,120
Five-for-one stock split 1,988 (1,988)
Issuance of common stock 16 397 413
----- ----- ------ ----- ------
Balance June 30, 2000 $2,501 $9,829 $12,573 $(932) $23,971
Balance December 31, 2000 $2,503 $9,859 $10,572 $(191) $22,743
Stock re-purchase (4) (86) (90)
Other comprehensive income:
Net income 1,842 1,842
Change in fair value of
securities available for sale, net 552 552
Comprehensive income 2,394
----- ----- ------ ----- ------
Balance June 30, 2001 $2,499 $9,773 $12,414 $361 $25,047
See notes to condensed consolidated financial statements.
7
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying unaudited financial statements have been prepared by Pacific
Financial Corporation ("Pacific" or "Company") in accordance with generally
accepted accounting principles for interim financial information and with
instructions to Form 10Q. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the six months ended June
30, 2001, are not necessarily indicative of the results anticipated for the year
ending December 31, 2001.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reported periods.
Actual results could differ from those estimates.
All dollar amounts in tables, except per share information, are stated in
thousands.
2. Investment Securities
Investment securities consist principally of short and intermediate term debt
instruments issued by the U.S. Treasury, other U.S. government agencies, State
and local government units, and other corporations.
SECURITIES HELD TO MATURITY AMORTIZED UNREALIZED FAIR
COST GAINS VALUE
(LOSSES)
June 30, 2001
State and Municipal Securities $1,305 -0- $1,305
----- ----- -----
TOTAL $1,305 -0- $1,305
SECURITIES AVAILABLE FOR SALE AMORTIZED UNREALIZED FAIR
COST GAINS VALUE
(LOSSES)
June 30, 2001
U.S. Treasury Securities $ 501 $ 4 $ 505
U.S. Government Securities 10,559 167 10,726
State and Municipal Securities 12,334 269 12,603
Corporate Securities 12,018 106 12,124
------ ---- ------
TOTAL $35,412 $546 $35,958
8
3. Allowance for Credit Losses
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
2001 2000 2001 2000
Balance at beginning of period $1,805 $1,980 $2,026 $1,930
Provision for possible credit losses 98 52 200 105
Charge-offs (30) (2) (356) (10)
Recoveries 2 1 5 6
Net charge-offs (28) (1) (351) (4)
---- ---- ---- ----
Balance at end of period $1,875 $2,031 $1,875 $2,031
4. Computation of Basic Earnings per Share:
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
2001 2000 (1) 2001 2000 (1)
Net Income $965,000 $1,076,000 $1,842,000 $2,100,000
Shares Outstanding,
Beginning of Period 2,500,505 2,483,850 2,503,130 2,483,850
Shares Repurchased During Period Times
Average Time Outstanding (1,492) - (2,621) -
Average Shares Outstanding 2,499,013 2,483,850 2,500,509 2,483,850
Basic Earnings Per Share $.39 $.43 $.74 $.85
(1) Restated to reflect five-for-one stock split effected July 2000.
5. Computation of Diluted Earnings Per Share:
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
2001 2000 (1) 2001 2000 (1)
Net Income $965,000 $1,076,000 $1,842,000 $2,100,000
Options Outstanding 170,300 78,550 170,300 78,550
Proceeds Were Options Exercised $3,410,930 $1,424,500 $3,410,930 $1,424,500
Average Share Price During Period $23.03 $27.15 $23.22 $27.37
Proceeds Divided By Average Share Price 148,108 52,468 146,896 52,054
Incremental Shares 22,192 26,082 23,404 26,496
Average Shares Outstanding 2,499,013 2,483,850 2,500,509 2,483,850
9
Incremental Shares
Plus Outstanding Shares 2,521,205 2,509,932 2,523,913 2,510,346
Diluted Earnings Per Share $.38 $.43 $.73 $.84
(1) Restated to reflect five-for-one stock effected July 2000.
10
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
A WARNING ABOUT FORWARD-LOOKING INFORMATION
We have made forward-looking statements in this document that are subject
to risks and uncertainties. These statements are based on the beliefs and
assumptions of our management, and on information currently available to them.
Forward-looking statements include the information concerning our possible or
assumed future results of operations set forth under "Management's Discussion
and Analysis of Financial Condition And Results of Operations" and statements
preceded by, followed by or that include the words "believes," "expects,"
"anticipates," "intends," "plans," "estimates" or similar expressions. Any
forward-looking statements in this document are subject to risks relating to,
among other things, the following:
1. competitive pressures among depository and other financial
institutions may increase significantly;
2. changes in the interest rate environment may reduce margins;
3. general economic or business conditions, either nationally or in
the state or regions in which we do business, may be less favorable than
expected, resulting in, among other things, a deterioration in credit
quality, including as a result of lower prices in the real estate market,
or a reduced demand for credit;
4. legislative or regulatory changes may adversely affect the
businesses in which we are engaged; and
5. the securities markets may continue to experience a downturn.
Our management believes the forward-looking statements are reasonable;
however, you should not place undue reliance on them. Forward-looking statements
are not guarantees of performance. They involve risks, uncertainties and
assumptions. Many of the factors that will determine our future results and
share value are beyond our ability to control or predict.
NET INCOME. For the six months ended June 30, 2001, Pacific's net income was
$1,842,000 compared to $2,100,000 for the same period in 2000. The most
significant factor contributing to the decrease was the decrease in net interest
income. Net income for the three months ended June 30, 2001 was $965,000,
compared to $1,076,000 for the same period in 2000. The decrease was
attributable to the decrease in net interest income.
NET INTEREST INCOME. Net interest income for the three months ended June 30,
2001 decreased $98,000 compared to the same period in 2000. Net interest income
for the six months ended June 30, 2001 decreased $198,000 from the comparable
period in 2000.
Interest income for the three months ended June 30, 2001 decreased $428,000 or
8.4% compared to the comparable period in 2000, and for the first six months of
2001 decreased $292,000 or 2.9% from the same period in 2000. Decreases in the
prime rate of interest were the primary reasons for the negative variance in
interest income from loans in the three months ended June 30, 2001 compared to
11
2000. Average loans outstanding for the six months ended June 30, 2001 and June
30, 2000 were $173,607,000 and $166,105,000, respectively, or 4.5% higher in
2001. Securities balances decreased during the three month and six month periods
ended June 30, 2001, as the result of call options being exercised by the issuer
of the securities. This was the primary reason for the decrease in taxable
securities interest income. Concurrently, interest bearing deposits with banks
and federal funds sold increased during the three and six month periods ended
June 30, 2001 resulting in increases of $103,000 and $122,000, respectively, in
interest income compared to the same periods in 2000.
Interest expense for the three months ended June 30, 2001 decreased $330,000 or
15.7% compared to the same period in 2000, and decreased $94,000 or 2.3% for the
six months ended June 30, 2001 over the comparable period in 2000. Average
interest-bearing deposit balances for the six months ended June 30, 2001 and
June 30, 2000 were $184,614,000 and $175,175,000, respectively, while average
short term borrowings and federal funds purchased for the periods were
$4,821,000 and $10,346,000, respectively, a decrease in 2001 of 53.4% over the
2000 period.
PROVISION AND ALLOWANCE FOR CREDIT LOSSES. During the three months ended June
30, 2001, $98,000 was provided for possible credit losses, compared to $52,000
for the same period in 2000. For the six months ended June 30, 2001, $200,000
was provided for possible credit losses compared to $105,000 for the comparable
period in 2000. The higher provision in 2001 resulted from increased net charge-
offs experienced in 2001. For the six months ended June 30, 2001, net
charge-offs were $351,000 compared to net charge-offs of $4,000 during the same
period in 2000.
At June 30, 2001, the allowance for credit losses stood at $1,875,000 compared
to $2,026,000 at December 31, 2000, and $2,031,000 at June 30, 2000. The ratio
of the allowance to total loans outstanding was 1.10%, 1.14% and 1.20% at June
30, 2001, December 31, 2000, and June 30, 2000, respectively. Management
considers the allowance for possible credit losses to be adequate for the
periods indicated.
NON-PERFORMING ASSETS AND FORECLOSED REAL ESTATE. Non-performing assets totaled
$2,799,000 at June 30, 2001. This represents 1.15% of total assets compared to
$3,420,000 or 1.35% at December 31, 2000, and $2,718,000 or 1.10% at June 30,
2000. Non-accrual loans at June 30, 2001 totaled $1,773,000 of which $983,000
are secured by real estate. Loans accruing which are past due 90 days or more
totaled $246,000 at June 30, 2001, of which $94,000 is fully guaranteed by the
U.S. Government. During the three month period ended June 30, 2001, a foreclosed
loan totaling $780,000 was transferred to foreclosed real estate. The balance
reflects the estimated market value of the property. The subject property is
commercial real estate which the Company is marketing for sale.
ANALYSIS OF
NONPERFORMING ASSETS JUNE 30 DECEMBER 31 JUNE 30
(Dollars in thousands) 2001 2000 2000
Accruing loans past due 90 days
or more $246 $292 $1,167
Non-accrual loans 1,773 3,128 1,525
12
Foreclosed loans 780 0 26
----- ----- -----
TOTAL $2,799 $3,420 $2,718
NON-INTEREST INCOME AND EXPENSE. Non-interest income for the three and six month
periods ended June 30, 2001 increased $41,000 and $1,000, respectively, compared
to the same periods in 2000. Service charges on deposit accounts increased
$8,000 and $3,000 compared to the same three and six month periods in 2000, due
primarily to increased overdraft charges. Mortgage origination fees increased
$10,000 and $13,000, respectively, compared to the same periods in 2000. Other
operating income for the three and six month periods ended June 30, 2001
increased $23,000 and $14,000, respectively, compared to the same periods in
2000.
Non-interest expense for the three and six month periods ended June 30, 2001
increased $21,000 and $83,000, respectively, compared to the same periods in
2000. For the 2001 three-month period, salaries and benefits increased $62,000,
occupancy expense decreased $19,000, and other expenses decreased $22,000
compared to the same period in 2000. The primary reason for the increase in
non-interest expense for the six months ended June 30, 2001 compared to the same
period in 2000 was an increase in salaries and benefits of $95,000 due to the
addition of two FTE's and normal salary increases for staff. Occupancy expense
decreased $25,000 and other expense increased $13,000 for the 2001 six-month
period.
INCOME TAXES. The federal income tax provision for the six months ended June 30,
2001 was $790,000, a decrease of $119,000 compared to the same period in 2000.
The effective tax rate for the 2001 period is 30% compared to 30.2% in 2000.
FINANCIAL CONDITION. Total assets were $242,366,000 at June 30, 2001, a decrease
of $10,947,000 or 4.3% over year-end 2000. Loans totaled $169,684,000 at June
30, 2001, a decrease of $7,484,000 over year-end 2000. Total deposits were
$212,156,000 at June 30, 2001, a decrease of $1,355,000 compared to the balance
at December 31, 2000.
LOANS. Loan detail by category at June 30, 2001 and December 31, 2000 was as
follows:
(Dollars in thousands)
June 30, December 31,
2001 2000
Commercial and industrial $61,536 $60,617
Agricultural 8,401 8,115
Real estate mortgage 89,548 97,380
Real estate construction 5,139 6,118
Installment 4,052 3,661
Credit cards and other 1,008 1,277
-------- --------
Total Loans 169,684 177,168
Allowance for credit losses (1,875) (2,026)
-------- --------
Net Loans $167,809 $175,142
13
LIQUIDITY. Adequate liquidity is available to accommodate fluctuations in
deposit levels, fund operations, and provide for customer credit needs and meet
obligations and commitments on a timely basis. The Company has no brokered
deposits. The Company has credit availability from the Federal Home Loan Bank of
Seattle of $50 million, of which $3,000,000 was used at June 30, 2001.
SHAREHOLDERS' EQUITY. Total shareholders' equity was $25,047,000 at June 30,
2001, an increase of $2,304,000 or 10.1% compared to December 31, 2000. Book
value per share increased to $10.02 at June 30, 2001 compared to $9.09 at
December 31, 2000. Book value is calculated by dividing total equity capital by
total shares outstanding.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest rate, credit, and operations risks are the most significant market
risks which affect the Company's performance. The Company relies on loan review,
prudent loan underwriting standards and an adequate allowance for credit losses
to mitigate credit risk.
An asset/liability management simulation model is used to measure interest rate
risk. The model produces regulatory oriented measurements of interest rate risk
exposure. The model quantifies interest rate risk through simulating forecasted
net interest income over a 12 month time period under various interest rate
scenarios, as well as monitoring the change in the present value of equity under
the same rate scenarios. The present value of equity is defined as the
difference between the market value of assets less current liabilities. By
measuring the change in the present value of equity under various rate
scenarios, management is able to identify interest rate risk that may not be
evident in changes in forecasted net interest income.
The Company is currently slightly asset sensitive, in a one year horizon,
meaning that interest earning assets mature or reprice more quickly than
interest-bearing liabilities in a given period. Therefore, a significant
increase in market rates of interest could improve net interest income.
Conversely, a decreasing rate environment, as occurred in the first half of
2001, may adversely affect net interest income.
It should be noted that the simulation model does not take into account future
management actions that could be undertaken should actual market rates change
during the year. An important point should be kept in mind; the model simulation
results are not exact measures of the Company's actual interest rate risk. They
are rather only indicators of rate risk exposure, based on assumptions produced
in a simplified modeling environment designed to heighten sensitivity to changes
in interest rates. The rate risk exposure results of the simulation model
typically are greater than the Company's actual rate risk. That is due to the
conservative modeling environment, which generally depicts a worst-case
situation. Management has assessed the results of the simulation reports as of
June 30, 2001, and believes that there has been no material change since
December 31, 2000.
14
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
As planned at the time of the Company's December 1999 merger, effective May 31,
2001, Robert J. Worrell, Chief Executive Officer, officially retired from the
Company. Mr. Worrell continues as a Director of the Company. Dennis E. Long was
elected Chief Executive Officer by the Board of Directors at a meeting held May
18, 2001, and now serves as President and Chief Executive Officer of the
Company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
No exhibits are filed with this report.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter ended June 30, 2001.
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.
PACIFIC FINANCIAL CORPORATION
DATED: August 10, 2001 By: /s/ Dennis A. Long
--------------------------------
Dennis A. Long
President
By: /s/ John Van Dijk
--------------------------------
John Van Dijk
Secretary/Treasurer
(Principal Financial Officer)
15