UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
|X| QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2003
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0-20956
HFB FINANCIAL CORPORATION
A Tennessee Corporation I.R.S. Employer
Identification
No. 61-1228266
Address Telephone Number
1602 Cumberland Avenue (606) 248-1095
Middlesboro, Kentucky 40965
Indicate by check mark whether the registrant (1) has filed all reports required
by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the
preceding twelve 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 |_|.
The number of shares of the registrant's $1 par value common stock outstanding
at May 9, 2002 was 1,301,101.
There are a total of 16 pages filed in this document.
HFB FINANCIAL CORPORATION
I N D E X
PAGE NO
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statements of Income 4
Condensed Consolidated Statement of Stockholders' Equity 5
Condensed Consolidated Statements of Cash Flows 6
Notes to Condensed Consolidated Financial Statements 7-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-10
PART II - OTHER INFORMATION 11
SIGNATURES 12
CEO Certification under Section 302 of the Sarbanes-Oxley Act 13
CFO Certification under Section 302 of the Sarbanes-Oxley Act 14
Exhibit 99.1 15
Exhibit 99.2 16
2
HFB FINANCIAL CORPORATION AND SUBSIDIARY
Consolidated Balance Sheets
March 31, December 31,
2003 2002
(unaudited)
------------- -------------
Assets
Cash and cash equivalents $ 6,257,478 $ 4,967,188
Available-for-sale securities 66,365,987 70,418,282
Loans, net of allowance for loan losses of $1,291,268 and
$1,191,849 at March 31, 2003 and December 31, 2002, respectively 171,380,391 166,334,655
Premises and equipment 4,673,299 4,455,209
Federal Home Loan Bank stock 1,696,200 1,679,700
Interest Receivable 1,518,309 1,513,376
Assets held for sale 932,808 1,030,310
Other assets 581,226 330,038
Cash surrender value of life insurance 2,841,140 2,806,103
------------- -------------
Total assets $ 256,246,838 $ 253,534,861
============= =============
Liabilities
Deposits
Non-interest bearing demand $ 7,156,249 $ 6,398,430
Savings, NOW and money market 27,095,456 26,643,742
Certificate of deposits 169,218,123 166,243,106
------------- -------------
Total deposits 203,469,828 199,285,278
Short-term debt -- 1,375,000
Long-term debt 26,255,662 26,277,967
Interest payable 928,665 629,653
Other liabilities 1,997,209 2,386,636
------------- -------------
Total liabilities 232,651,364 229,954,534
------------- -------------
Stockholders' Equity
Issued and outstanding - 1,589,303 shares 1,589,303 1,589,303
Additional paid-in-capital 8,768,874 8,768,874
Less: Common stock acquired by Rabbi trusts for deferred
compensation plans (500,446) (500,446)
Retained earnings 15,192,670 14,867,147
Accumulated other comprehensive income 1,107,071 1,417,447
------------- -------------
26,157,472 26,142,325
------------- -------------
Treasury stock, at cost, 288,202 shares (2,561,998) (2,561,998)
------------- -------------
Total stockholders' equity 23,595,474 23,580,327
------------- -------------
Total liabilities and stockholders' equity $ 256,246,838 $ 253,534,861
============= =============
See notes to condensed consolidated financial statements.
3
HFB FINANCIAL CORPORATION AND SUBSIDIARY
Condensed Consolidated Statements of Income
(Unaudited)
Three-months ended
March 31,
2003 2002
---------- ----------
Interest Income
Loans receivable $3,179,718 $2,932,744
Investment securities 788,068 909,413
Other dividend income -- 37,546
Deposits with financial institutions 11,144 14,347
---------- ----------
Total interest income 3,978,930 3,894,050
---------- ----------
Interest Expense
Deposits 1,220,090 1,722,564
Short term borrowings -- --
Long term debt 302,384 226,490
---------- ----------
Total interest expense 1,522,474 1,949,054
---------- ----------
Net Interest Income 2,456,456 1,944,996
Provision for loan losses 105,000 76,808
---------- ----------
Net Interest Income After
Provision for Loan Losses 2,351,456 1,868,188
---------- ----------
Other Income
Service charges for deposit accounts 234,911 175,636
Other customer fees 34,228 33,495
Net gain on trading securities -- --
Net realized gain on sales of
available for sale securities 1,243 --
Other income 44,144 73,612
---------- ----------
Total other income 314,526 282,743
---------- ----------
Other Expenses
Salaries and employee benefits 887,867 652,898
Net occupancy expenses 98,192 95,100
Equipment expenses 128,477 132,534
Data processing fees 63,000 59,927
Deposit insurance expense 9,697 8,487
Legal and professional fees 113,956 128,699
Advertising 66,100 60,000
State franchise and deposit taxes 51,175 58,450
Other expenses 315,098 248,583
---------- ----------
Total other expenses 1,733,562 1,444,678
---------- ----------
Income Before Income Tax 932,420 706,253
Income tax expense 282,371 228,736
---------- ----------
Net Income $ 650,049 $ 477,517
========== ==========
Basic Earnings Per Share $ 0.52 $ 0.37
Diluted Earnings Per Share $ 0.51 $ 0.37
See notes to condensed consolidated financial statements.
4
HFB FINANCIAL CORPORATION AND SUBSIDIARY
Condensed Consolidated Statement of Stockholders' Equity
Three-months ended March 31, 2003
Additional Compre-
Common Paid-in Rabbi Treasury hensive
Stock Capital Trusts Stock Income
--------------------------------------------------------------------------
Balances, December 31, 2002 $ 1,589,303 $ 8,768,874 ($500,446) ($2,561,998)
Net income $ 650,049
Other comprehensive income, net of tax
Unrealized gain on securities (310,376)
-----------
Comprehensive income $ 339,673
===========
Cash dividend declared ($.25 per share)
-----------------------------------------------------------
March 31, 2003 (unaudited) $ 1,589,303 $ 8,768,874 ($500,446) ($2,561,998)
===========================================================
Accumulated
Other Total
Retained Comprehensive Stockholders'
Earnings Income Equity
-----------------------------------------
Balances, December 31, 2002 $14,867,147 $ 1,417,447 $23,580,327
Net income 650,049 650,049
Other comprehensive income, net of tax
Unrealized gain on securities (310,376) (310,376)
Comprehensive income
Cash dividend declared ($.25 per share) (324,526) (324,526)
------------------------------------------
March 31, 2003 (unaudited) $15,192,670 $ 1,107,071 $23,595,474
==========================================
See notes to condensed consolidated financial statements.
5
HFB FINANCIAL CORPORATION AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows
(unaudited)
Three-months Ended
March 31,
2003 2002
Operating Activities
Net cash provided by operating activities $ 551,412 $ (1,872,620)
------------ ------------
Investing Activities
Purchases of securities available for sale (10,093,438) (19,102,171)
Proceeds from maturities of securities available for sale 8,616,289 9,434,920
Proceeds from sales of securities available for sale 4,955,255 --
Net change in loans (4,940,736) (8,860,908)
Proceeds from sales of assets held for sale 69,596 --
Proceeds from life insurance -- --
Purchases of premises and equipment (330,807) (40,632)
------------ ------------
Net cash used by investing activities (1,723,841) (18,568,791)
------------ ------------
Financing Activities
Net change in
Non interest-bearing, interest-bearing and
savings deposits -- --
Certificates of deposit 4,184,550 7,308,324
Short term borrowings (1,375,000) --
Proceeds of long term debt -- 7,500,000
Repayment of long term debt (22,305) (20,585)
Cash dividends (324,526) (260,358)
Proceeds from exercise of options on common stock -- 24,655
Purchase of treasury stock -- (77,731)
------------ ------------
Net cash provided by financing activities 2,462,719 14,474,305
------------ ------------
Net Change in Cash and Cash Equivalents 1,290,290 (5,967,106)
Cash and Cash Equivalents, Beginning of Period 4,967,188 13,594,073
------------ ------------
Cash and Cash Equivalents, End of Period $ 6,257,478 $ 7,626,967
============ ============
Additional Cash Flows Information
Interest paid $ 1,223,462 $ 1,325,377
Income tax paid 295,000 275,437
6
HFB FINANCIAL CORPORATION
Notes to Condensed Consolidated Financial Statements (Unaudited)
1. Basis of Presentation
The unaudited condensed consolidated financial information for the
three-month periods ended March 31, 2003 and 2002 includes the results of
operations of HFB Financial Corporation (the "Company") and its wholly
owned subsidiary Home Federal Bank Corporation ("Home Federal" or the
"Bank"). The accompanying unaudited financial statements have been
prepared in accordance with accounting principles generally accepted in
the United States of America for interim financial statements and with the
instructions to Form 10-QSB. Certain information and note disclosures
normally included in the company's annual financial statements prepared in
accordance with accounting principles generally accepted in the United
States of America have been condensed or omitted. It is suggested that
these statements and notes be read in conjunction with the financial
statements and notes thereto included in the Company's annual report for
the year ended December 31, 2002 on Form 10-KSB filed with the Securities
and Exchange Commission.
In the opinion of management, the financial information reflects all
adjustments (consisting only of normal recurring adjustments), which are
necessary for a fair presentation of the financial position, results of
operations and cash flows of the Company but should not be considered as
indicative of results for a full year.
The condensed consolidated balance sheet of the Company as of December 31,
2002 has been derived from the audited consolidated balance sheet of the
Company as of that date.
2. Non-performing Loans and Problem Assets
The following sets forth the activity in the Company's allowance for loan
losses for the three-months ended March 31, 2003 and 2002:
(Dollars in thousands)
2003 2002
---- ----
Balance January 1 $ 1,192 $ 780
Charge offs (6) (2)
Recoveries -- --
Provision for loan losses 105 77
------- -------
Balance March 31 $ 1,291 $ 855
======= =======
Information on impaired loans is summarized below
At March 31 2003
----
Impaired loans with an allowance $ 657
Allowance for impaired loans (included in the Company's
allowance for loan losses) $ 139
7
Three-months ended March 31 2003
----
Average balance of impaired loans $605
Interest income recognized on impaired loans $ 0
Cash-basis interest received $ 0
3. Reclassifications
Reclassifications of certain amounts in the March 31, 2002 consolidated
statement have been made to conform to the March 31, 2003 presentation.
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations
Special Note Regarding Forward-Looking Statements
Certain matters discussed in this Quarterly Report on Form 10-QSB are
"forward-looking statements" intended to qualify for the safe harbors from
liability established by the Private Securities Litigation Reform Act of 1995.
These forward-looking statements can generally be identified as such because the
context of the statement will include words such as the Company "believes",
"anticipates", "expects", "estimates" or words of similar import. Similarly,
statements that describe the Company's future plans, objectives or goals are
also forward-looking statements. Such forward-looking statements are subject to
certain risks and uncertainties, which are described in, close proximity to such
statements and which could cause actual results to differ materially from those
anticipated as of the date of this report. Shareholders, potential investors and
other readers are urged to consider these factors in evaluating the
forward-looking statements and are cautioned not to place undue reliance on such
forward-looking statements. The forward-looking statements included herein are
only made as of the date of this report and the Company undertakes no obligation
to publicly update such forward-looking statements to reflect subsequent events
or circumstances.
General:
HFB Financial Corporation, a Tennessee Corporation, was formed in September 1992
at the direction of Home Federal Bank, Federal Savings Bank for the purpose of
becoming a holding company for the Bank as part of its conversion from mutual to
stock form. The Company's primary operation is its investment in the common
stock of the Bank.
The Bank is principally engaged in the business of accepting deposits from the
general public and originating permanent loans, which are secured by one-to-four
family residential properties located in its market area. The Bank also
originates consumer loans and commercial real estate loans, and maintains a
substantial investment portfolio of mortgage-backed and other investment
securities. During the quarter ended December 31, 2001, the Bank converted from
a federal thrift charter to a state chartered commercial bank as a means for
management to focus more on commercial lending and other activities permissible
for commercial banks.
The operations of Home Federal are significantly influenced by general economic
conditions and the monetary and fiscal policies of government regulatory
agencies. Deposit flows and costs of funds are influenced by interest rates on
competing investments and prevailing market rates of interest. Lending
activities are affected by the demand for financing real estate and other types
of loans, which in turn are influenced by the interest rates at which such
financing may be offered and other factors related to loan demand and the
availability of funds.
8
Financial Condition
The Corporation's assets increased by 1.07% to $256.2 million at March 31, 2003
compared to $253.5 million at December 31, 2002. The majority of this increase
is reflected in increases in loans. The increase was financed primarily by
increases deposits and long-term borrowings and decreases in investment
securities.
Cash and cash equivalents increased $1.3 million to $6.3 million at March 31,
2003 compared to $5.0 million at December 31, 2002. This increase was primarily
due to increased cash flow from the investment portfolio.
Investment securities, available for sale, decreased $4.0 million to $66.4
million at March 31, 2003 from $70.4 million at December 31, 2002 primarily as
the result of increased prepayments on mortgage backed securities "MBSs".
Loans, net, increased by $5.1 million to $171.4 million at March 31, 2003 from
$166.3 million at December 31, 2002 as the result of continued 1-4 family
mortgage loan demand and an increase in commercial real estate loans. Since the
Banks conversion to a commercial bank, Management has focused on originating
commercial real estate loans.
At March 31, 2003, the allowance for loan losses was $1.3 million or .75% of
loans receivable compared to $1.2 million or .71% of loans receivable at
December 31, 2002.
Total deposits increased by $4.2 million to $203.5 million at March 31, 2003
from $199.3 million at December 31, 2002. During the three months ended March
31, 2003, certificates of deposit increased $3.0 million and NOW accounts and
savings deposits increased $1.2 million.
At March 31, 2003, the Bank met all regulatory requirements. Tier I capital to
averaged assets was 8.5%. Tier I capital to risk-weighted assets was 14.4% and
total capital to risk-weighted assets was 15.3% at March 31, 2003 compared to
8.4%, 14.5% and 15.3%, respectively, at December 31, 2002.
Results of Operations for the Three-months Ended March 31, 2003 and 2001
Net income increased by $172,000 to $650,000 for the three-month period ended
March 31, 2003 from $478,000 for the three-month period ended March 31, 2002.
The primary reasons for the increase were a $511,000 increase in net interest
income and a $32,000 increase in other income offset by a $289,000 increase in
other expense, a $28,000 increase in the provision for loan losses and a $54,000
increase in income tax expense.
Interest income increased by $85,000 for the three-month period ended March 31,
2003 as compared to the three-month period ended March 31, 2002, primarily a
result of a higher volume of average earning assets during the three months
ended March 31, 2003.
Interest on loans increased by $247,000 to $3.180 million for the three-month
period ended March 31, 2003 as compared to $2.933 million for the three-month
period ended March 31, 2002. This increase is mainly attributable to a higher
average balance of loans during the three months ended March 31, 2003 even
though the weighted-average yield was lower than that of the quarter ended March
31, 2002.
Interest on investment securities, other dividend income and interest on
deposits with financial institutions decreased by $162,000 to $799,000 for the
three-month period ended March 31, 2003 from $961,000 for the three-month period
ended March 31, 2002. This decrease is primarily the result of a lower average
balance of investments during the three months ended March 31, 2003. The
weighted average yield on investments during the same period was also lower than
that of the three months ended March 31, 2002.
Interest expense on deposits decreased by $503,000 to $1.220 million for the
three-month period ended March 31, 2003 from $1.723 million for the three-month
period ended March 31, 2002 as a result of a significant drop in rates paid on
deposit accounts. For the three months ended March 31, 2003, the
weighted-average cost of deposits was
9
2.43% on an average deposit balance of $200.6 million compared to 3.65% on
average deposits of $188.7 million for the three months ended March 31, 2002.
Interest expense on long-term debt increased by $76,000 to $302,000 for the
three-month period ended March 31, 2003 from $226,000 for the three-month period
ended March 31, 2002, primarily due to a higher level of long-term debt
outstanding during the three months ended March 31, 2003.
The provision for loan losses increased by $28,000 for the three-month period
ended March 31, 2003 as compared to the same period in 2002. The provision was
the result of management's evaluation of the adequacy of the allowance for loan
losses including consideration of recoveries of loans previously charged off,
the perceived risk exposure among loan types, actual loss experience,
delinquency rates, and current economic conditions. The Bank's allowance for
loan losses as a percent of total loans at March 31, 2003 was 0.75%.
Non-interest income increased by $32,000 to $315,000 for the three-month period
ended March 31, 2003 as compared to $283,000 for the same period in 2002. The
increase was primarily attributable to an increase of $59,000 in service charges
on deposits offset by a $29,000 decrease in other income. The decrease in other
income was primarily due to a decrease in gain on the sale of real estate and
equipment.
Non-interest expense increased by $289,000 to $1.734 million for the three-month
period ended March 31, 2003 as compared to $1.445 million for the same period in
2002.
Compensation and benefits increased by $235,000 to $888,000 for the three-month
period ended March 31, 2003 as compared to $653,000 for the three-months ended
March 31, 2002 primarily as the result of annual increases in salaries, wages
and commissions and a $36,000 increase in the cost of funding the Banks
retirement plan. In addition, the Banks staffing was increased due to growth and
the opening of a branch office in Jacksboro, Tennessee in January 2003. At March
31, 2003, the Bank had 72 full time equivalent employees compared to 59 at March
31, 2002.
Legal and professional fees decreased by $15,000 to $114,000 for the three-month
period ended March 31, 2003 from $129,000 for the three-month period ended March
31, 2002 primarily due to a decrease in legal expenses for the three-months
ended March 31, 2003.
Advertising expense increased by $6,000 to $66,000 for the quarter ended March
31, 2003 compared to $60,000 for the quarter ended March 31, 2002 primarily due
to a higher level of advertising activity in the current period.
State deposit and franchise taxes decreased by $7,000 to $51,000 for the quarter
ended March 31, 2003 compared to $58,000 for the quarter ended March 31, 2002.
As a result of the Banks recent conversion from a thrift to a commercial bank
and determining the differences in the method of taxation between banks and
thrifts, deposit and franchise taxes were over accrued during the quarter ended
March 31, 2002.
Other expenses increased by $66,000 to $315,000 for the three-month period ended
March 31, 2003 from $249,000 for the three-month period ended March 31, 2002,
primarily due to a $20,000 increase in expenses associated with the acquisition
and sale of other real estate owned, a $13,000 increase in printing supplies
resulting from a systems conversion and a $10,000 increase in telephone expense
duplicate service used during the conversion to a new system.
Income tax expense increased by $53,000 to $282,000 for the three-month period
ended March 31, 2003 compared to $229,000 for the three-months ended March 31,
2002 due a higher level of taxable income.
10
HFB FINANCIAL CORPORATION
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of Security Holders during the quarter
ended March 31, 2003.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
99.1 CEO Certification under Section 906 of the Sarbanes-Oxley Act
99.2 CFO Certification under Section 906 of the Sarbanes-Oxley Act
b. Reports on Form 8-K
On April 28, 2003, the Company filed a form 8-K announcing that
earnings for the quarter ended March 31, 2003 were released on
April 22, 2003.
Item 7. Controls and Procedures
A review and evaluation was performed by the Company's management, including the
Company's Chief Executive Officer (the "CEO") and Chief Financial Officer (the
"CFO"), of the effectiveness of the design and operation of the Company's
disclosure controls and procedures as of a date within 90 days prior to the
filing of this quarterly report pursuant to Rule 13a-14 of the Securities Act of
1934. Based on that review and evaluation, the CEO and CFO have concluded that
the Company's current disclosure controls and procedures, as designed and
implemented, were effective. There have been no significant changes in the
Company's internal controls or in other factors that could significantly affect
the Company's internal controls subsequent to the date of their evaluation.
There were no significant material weaknesses identified in the course of such
review and evaluation and, therefore, no corrective measures were taken by the
Company.
11
HFB FINANCIAL CORPORATION
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed in its behalf by the
undersigned, thereunto duly authorized.
HFB FINANCIAL CORPORATION
By: /s/ David B. Cook
-----------------------------
David B. Cook
President and
Chief Executive Officer
By: /s/ Stanley Alexander, Jr.
-----------------------------
Stanley Alexander, Jr.
Chief Financial Officer
Dated May 9, 2003
12
CERTIFICATIONS
I, David B. Cook, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of HFB Financial
Corporation;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
(a) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report is
being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing
date of this quarterly report (the "Evaluation Date"); and
(c) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date.
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified
for the registrant's auditors any material weaknesses in internal
controls; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date May 9, 2003
By /s/ David B. Cook
------------------------
Chief Executive Officer
13
CERTIFICATIONS
I, Stanley Alexander, Jr., certify that:
1. I have reviewed this quarterly report on Form 10-QSB of HFB Financial
Corporation;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
(a) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report is
being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing
date of this quarterly report (the "Evaluation Date"); and
(c) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date.
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified
for the registrant's auditors any material weaknesses in internal
controls; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date May 9, 2003
By /s/ Stanley Alexander, Jr.
----------------------------
Chief Financial Officer
14