UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2001
Commission File Number 0-25756
IBERIABANK Corporation
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(Exact name of registrant as specified in its charter)
Louisiana 72-1280718
- ------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1101 East Admiral Doyle Drive
New Iberia, Louisiana 70560
- --------------------------------------- ----------------------
(Address of principal executive office) (Zip Code)
(337) 267-4458
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(Registrant's telephone number, including area code)
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:
The Registrant had 6,070,018 shares of common stock, $1.00 par value, which were
issued and outstanding as of November 8, 2001.
IBERIABANK CORPORATION AND SUBSIDIARY
TABLE OF CONTENTS
Part I. Financial Information Page
----
Item 1. Financial Statements
Consolidated Balance Sheets 3
(As of September 30, 2001 and December 31, 2000)
Consolidated Statements of Income 4
(For the three and nine months ended September 30, 2001 and 2000)
Consolidated Statements of Shareholders' Equity 5
(For the nine months ended September 30, 2001 and 2000)
Consolidated Statements of Cash Flows 6
(For the nine months ended September 30, 2001 and 2000)
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 9
Item 3. Quantitative and Qualitative Disclosures About Market Risk 18
Part II. Other Information
Item 1. Legal Proceedings 19
Item 2. Changes in Securities and Use of Proceeds 19
Item 3. Defaults Upon Senior Securities 19
Item 4. Submission of Matters to a Vote of Security Holders 19
Item 5. Other Information 19
Item 6. Exhibits and Reports on Form 8-K 19
Signatures 20
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
IBERIABANK CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS (unaudited)
(Dollars in thousands)
September 30, December 31,
2001 2000
------------- ------------
Assets
Cash and due from banks $ 39,717 $ 32,000
Interest-bearing deposits in banks 75,219 2,541
----------- -----------
Total cash and cash equivalents 114,936 34,541
Investment securities:
Available for sale, at fair value 217,911 268,223
Held to maturity (fair value of $101,549 and $75,940, respectively) 100,010 76,322
Federal Home Loan Bank stock, at cost 5,558 7,997
Loans held for sale 11,416 3,347
Loans, net of unearned income 959,251 940,525
Allowance for loan losses (10,070) (10,239)
----------- -----------
Loans, net 949,181 930,286
Accrued interest receivable 7,243 9,142
Premises and equipment, net 20,497 21,465
Goodwill and acquisition intangibles 36,422 38,796
Other assets 18,333 6,043
----------- -----------
Total Assets $ 1,481,507 $ 1,396,162
=========== ===========
Liabilities and Shareholders' Equity
Liabilities:
Deposits:
Noninterest-bearing $ 145,048 $ 129,468
Interest-bearing 1,089,539 1,013,719
----------- -----------
Total deposits 1,234,587 1,143,187
Short-term borrowings -- 54,000
Securities sold under agreements to repurchase 13,091 --
Accrued interest payable 4,863 5,480
Long-term debt 46,684 60,843
Other liabilities 46,888 5,610
----------- -----------
Total Liabilities 1,346,113 1,269,120
----------- -----------
Shareholders' Equity:
Preferred stock of $1 par value; 5,000,000 shares authorized; -0- shares issued -- --
Common stock of $1 par value; 25,000,000 shares authorized; 7,380,671 shares issued 7,381 7,381
Additional paid-in capital 70,017 69,231
Retained earnings 85,581 77,963
Unearned common stock held by ESOP (1,654) (2,067)
Unearned common stock held by RRP trust (2,260) (2,587)
Accumulated other comprehensive income 1,499 (2,293)
Treasury stock, at cost, 1,260,053 and 1,121,934 shares (25,170) (20,586)
----------- -----------
Total Shareholders' Equity 135,394 127,042
----------- -----------
Total Liabilities and Shareholders' Equity $ 1,481,507 $ 1,396,162
=========== ===========
See Notes to Consolidated Financial Statements
3
IBERIABANK CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(Dollars in thousands, except per share data)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
-------------------- -------------------
2001 2000 2001 2000
------- -------- ------- --------
Interest and Dividend Income:
Loans, including fees $19,829 $ 20,831 $60,395 $ 58,730
Loans held for sale, including fees 224 28 485 95
Investment securities:
Taxable interest and dividends 4,239 5,877 13,707 18,235
Tax-exempt interest 119 21 234 64
Interest-bearing demand deposits 832 83 2,060 214
------- -------- ------- --------
Total interest and dividend income 25,243 26,840 76,881 77,338
------- -------- ------- --------
Interest Expense:
Deposits 10,722 11,314 33,902 32,795
Short-term borrowings 3 1,434 464 3,476
Securities sold under agreements to repurchase 95 -- 175 --
Long-term debt 806 947 2,429 2,591
------- -------- ------- --------
Total interest expense 11,626 13,695 36,970 38,862
------- -------- ------- --------
Net interest income 13,617 13,145 39,911 38,476
Provision for loan losses 1,088 811 2,698 1,896
------- -------- ------- --------
Net interest income after provision for loan losses 12,529 12,334 37,213 36,580
------- -------- ------- --------
Noninterest Income:
Service charges on deposit accounts 1,981 2,016 6,005 5,972
ATM fee income 371 329 1,094 959
Gain on sale of loans, net 530 97 1,421 155
Gain on sale of property 50 1,905 50 1,972
Gain (loss) on sale of investments, net 3 (1,759) 118 (1,759)
Other income 717 634 1,904 2,186
------- -------- ------- --------
Total noninterest income 3,652 3,222 10,592 9,485
------- -------- ------- --------
Noninterest Expense:
Salaries and employee benefits 5,371 4,859 15,627 14,759
Occupancy and equipment 1,341 1,390 4,118 4,139
Amortization of acquisition intangibles 784 813 2,374 2,461
Franchise and shares tax 366 358 1,012 1,112
Communication and delivery 641 601 1,882 1,932
Marketing and business development 121 196 625 861
Data processing 334 374 948 1,002
Printing, stationery and supplies 195 172 587 556
Other expenses 1,253 1,331 3,607 4,096
------- -------- ------- --------
Total noninterest expense 10,406 10,094 30,780 30,918
------- -------- ------- --------
Income before income tax expense 5,775 5,462 17,025 15,147
Income tax expense 2,111 2,036 6,283 5,646
------- -------- ------- --------
Net Income $ 3,664 $ 3,426 $10,742 $ 9,501
======= ======== ======= ========
Earnings per share - basic $ 0.62 $ 0.56 $ 1.82 $ 1.56
======= ======== ======= ========
Earnings per share - diluted $ 0.59 $ 0.56 $ 1.74 $ 1.55
======= ======== ======= ========
See Notes to Consolidated Financial Statements
4
IBERIABANK CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (unaudited)
(Dollars in thousands)
Unearned
Unearned Common Accumulated
Additional Common Stock Other Total
Common Paid In Retained Stock Held Held By Comprehensive Treasury Shareholders'
Stock Capital Earnings By ESOP RRP Trust Income Stock Equity
------ ------- -------- ---------- --------- -------- -------- -------------
Balance, December 31, 1999 $7,381 $ 68,749 $ 69,065 $ (2,649) $ (3,024) $ (7,124) $(15,209) $ 117,189
Comprehensive income:
Net income 9,501 9,501
Change in unrealized gain (loss)
on securities available for sale,
net of deferred taxes 321 321
---------
Total comprehensive income 9,822
Cash dividends declared (3,068) (3,068)
Common stock released by ESOP trust 215 440 655
Common stock earned by participants
of recognition and retention plan
trust, including tax benefit 39 417 456
Common stock purchased by RRP trust 128 (128) --
Compensation expense on stock
option plans 49 49
Treasury stock acquired at cost,
62,500 shares (879) (879)
------ -------- -------- -------- -------- -------- -------- ---------
Balance, September 30, 2000 $7,381 $ 69,180 $ 75,498 $ (2,209) $ (2,735) $ (6,803) $(16,088) $ 124,224
====== ======== ======== ======== ======== ======== ======== =========
Balance, December 31, 2000 $7,381 $ 69,231 $ 77,963 $ (2,067) $ (2,587) $ (2,293) $(20,586) $ 127,042
Comprehensive income:
Net income 10,742 10,742
Change in unrealized gain (loss)
on securities available for sale,
net of deferred taxes 3,792 3,792
---------
Total comprehensive income 14,534
Cash dividends declared (3,124) (3,124)
Common stock released by ESOP trust 675 413 1,088
Common stock earned by participants
of recognition and retention plan
trust, including tax benefit 36 327 363
Treasury stock acquired at cost,
185,473 shares (5,281) (5,281)
Stock options exercised 75 697 772
------ -------- -------- -------- -------- -------- -------- ---------
Balance, September 30, 2001 $7,381 $ 70,017 $ 85,581 $ (1,654) $ (2,260) $ 1,499 $(25,170) $ 135,394
====== ======== ======== ======== ======== ======== ======== =========
See Notes to Consolidated Financial Statements
5
IBERIABANK CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(Dollars in thousands)
For the Nine Months
Ended September 30,
---------------------
2001 2000
--------- ---------
Cash Flows from Operating Activities:
Net income $ 10,742 $ 9,501
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 4,860 5,025
Provision for loan losses 2,698 1,896
Noncash compensation expense 1,288 1,014
Loss (Gain) on sale of assets (15) (2,021)
Gain on sale of investments (118) --
Amortization of premium/discount on investments 302 467
Current provision for deferred income taxes 349 --
FHLB stock dividends (235) (453)
Net change in loans held for sale (8,069) 3,201
Purchase of bank owned life insurance (15,049) --
Other, net 4,872 1,362
--------- ---------
Net Cash Provided by Operating Activities 1,625 19,992
--------- ---------
Cash Flows From Investing Activities:
Activity in available for sale securities:
Sales 95,861 --
Maturities, prepayments and calls 44,677 75,119
Purchases (71,556) (43,744)
Activity in held to maturity securities:
Maturities, prepayments and calls 13,389 6,457
Purchases (12,022) --
Increase in loans receivable, net (23,146) (102,221)
Proceeds from sale of premises and equipment 54 4,778
Purchases of premises and equipment (1,007) (784)
Proceeds from FHLB stock redemption 2,674 --
Purchases of FHLB Stock -- (594)
Proceeds from disposition of real estate owned 996 1,065
--------- ---------
Net Cash (Used In) Provided By Investing Activities 49,920 (59,924)
--------- ---------
Cash Flows From Financing Activities:
Increase in deposits 91,400 31,254
Increase in repurchase agreements 13,091 --
Net change in short-term borrowings (54,000) (11,100)
Issuance of long term debt -- 15,000
Repayments of long-term debt (14,160) (6,162)
Dividends paid to shareholders (2,973) (2,857)
Proceeds from sale of treasury stock for stock options exercised 251 --
Payments to repurchase common stock (4,759) (879)
--------- ---------
Net Cash Provided by Financing Activities 28,850 25,256
--------- ---------
Net Increase (Decrease) In Cash and Cash Equivalents 80,395 (14,676)
Cash and Cash Equivalents at Beginning of Period 34,541 47,713
--------- ---------
Cash and Cash Equivalents at End of Period $ 114,936 $ 33,037
========= =========
Supplemental Schedule of Noncash Activities:
Acquisition of real estate in settlement of loans $ 1,553 $ 969
========= =========
Exercise of stock options with payment in company stock $ 383 $ --
========= =========
Supplemental Disclosures:
Cash paid (received) for:
Interest on deposits and borrowings $ 27,417 $ 40,871
========= =========
Income taxes $ 6,200 $ 4,810
========= =========
See Notes to Consolidated Financial Statements
6
IBERIABANK CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
(unaudited)
1. Summary of Significant Accounting Policies
Basis of Financial Statement Presentation
The accompanying consolidated financial statements were prepared in accordance
with the instructions to Form 10-Q, and therefore, do not include information or
footnotes necessary for a complete presentation of financial position, results
of operations and cash flows in conformity with generally accepted accounting
principles. All normal, recurring adjustments, which, in the opinion of
management, are necessary for a fair presentation of the financial statements,
have been included. These interim financial statements should be read in
conjunction with the audited financial statements and note disclosures for
IBERIABANK Corporation previously filed with the Securities and Exchange
Commission in the Company's Annual Report on Form 10-K for the year ended
December 31, 2000.
Business
The principal business of IBERIABANK Corporation (the "Company") is conducted
through its wholly owned subsidiary, IBERIABANK (the "Bank"), headquartered in
New Iberia, Louisiana. The Bank operates 42 offices in its market areas located
in south central Louisiana, northeast Louisiana and the greater New Orleans
area. The Bank provides a variety of financial services to individuals and
businesses throughout its service area. Primary deposit products are checking,
savings and certificate of deposit accounts and primary lending products are
consumer, commercial and mortgage loans. The Bank offers discount brokerage
services through its wholly owned subsidiary, Iberia Financial Services, LLC.
The Bank also provides insurance services to its clients through IBERIABANK
Insurance Services, LLC, a joint venture between the Bank and Burch, Marcus,
Pool, Krupp, Daniel & Babineaux, Inc.
The Bank is subject to examination and regulation by the Office of Financial
Institutions of the State of Louisiana, which is the Bank's chartering authority
and primary regulator. The Bank is also subject to regulation by the Federal
Deposit Insurance Corporation ("FDIC") and to certain reserve requirements
established by the Federal Reserve Board ("FRB"). As a Louisiana chartered
commercial bank, deposits are insured by the FDIC to the maximum extent
permitted by law. The Bank is a member of the Federal Home Loan Bank of Dallas
("FHLB").
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiary, IBERIABANK, as well as all of the Bank's
subsidiaries. All significant intercompany balances and transactions have been
eliminated in consolidation.
2. Recent Accounting Pronouncements
In June 2001, The Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standard ("SFAS") No. 141, Business Combinations. SFAS
141 requires that all business combinations be accounted for under the purchase
method. The use of the pooling of interests method of accounting is no longer
permissible. SFAS 141 also establishes criteria for the identification of
acquired intangibles separate from goodwill and adds additional disclosure
requirements.
7
In June 2001, the FASB also issued SFAS 142 Goodwill and Other Intangibles. SFAS
142 addresses the initial recognition and measurement of intangible assets
acquired outside of a business combination and the accounting for goodwill and
other intangible assets subsequent to their acquisition. SFAS 142 provides that
intangible assets with definite lives will be amortized and that intangible
assets with indefinite lives and goodwill will not be amortized, but rather will
be tested at least annually for impairment.
The Company will adopt SFAS 142 for its fiscal year beginning January 1, 2002.
Upon the adoption of SFAS 142, the company will no longer amortize the goodwill
that resulted from business combinations initiated prior to SFAS 141, Business
Combinations. The Company currently has $37.2 million in acquisition
intangibles, principally goodwill, which arose from three prior business
combinations. Amortization of goodwill for the year 2002 was projected to be
$2.8 million before tax and $2.1 million after tax. The increase on diluted
earnings per share for 2002 as a result of the discontinuance of the
amortization of goodwill is estimated at $0.32 per share. The Company will
evaluate goodwill under the SFAS 142 transitional impairment test and determine
whether or not there will be an impairment loss. Any transitional impairment
loss will be recognized as a change in accounting principle.
In August 2001, the FASB issued Statement No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets. The Statement supersedes FASB No. 121 and
certain provisions of APB 30. The statement requires that one accounting model
be used for long-lived assets to be disposed of, whether previously held and
used or newly acquired, and applies to discontinued operations. Statement 144 is
effective for fiscal years beginning after December 15, 2001. The provisions of
the Statement generally are to be applied prospectively.
3. Loans Receivable
Loans receivable at September 30, 2001 and December 31, 2000 consisted of the
following:
September 30, December 31,
($000) 2000 2001
- --------------------------------------------------------------------------------
Residential mortgage loans:
Residential 1-4 family $223,248 $279,193
Construction 7,659 7,482
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Total residential mortgage loans 230,907 286,675
-------- --------
Commercial loans:
Real estate 218,340 196,479
Business 96,522 78,986
-------- --------
Total commercial loans 314,862 275,465
-------- --------
Consumer loans:
Indirect automobile 228,755 205,143
Home equity 115,416 108,070
Automobile 28,245 25,297
Credit card loans 10,198 9,559
Other 30,868 30,316
-------- --------
Total consumer loans 413,482 378,385
-------- --------
Total loans receivable $959,251 $940,525
======== ========
8
4. Earnings Per Share
For the three months ended September 30, 2001, basic earnings per share were
based on 5,884,906 weighted average shares outstanding and diluted earnings per
share were based on 6,229,525 weighted average shares outstanding. For the same
period, the calculations for both basic and diluted shares outstanding exclude:
(a) the weighted average unreleased shares owned by the Employee Stock Ownership
Plan ("ESOP") of 172,216; (b) the weighted average shares owned by the
Management Recognition Plan and Trust ("MRP") of 164,668; and (c) the weighted
average shares purchased in Treasury Stock of 1,158,882.
For the nine months ended September 30, 2001, basic earnings per share were
based on 5,886,366 weighted average shares outstanding and diluted earnings per
share were based on 6,184,454 weighted average shares outstanding. For the same
period, the calculations for both basic and diluted shares outstanding exclude:
(a) the weighted average unreleased shares owned by the ESOP of 185,823; (b) the
weighted average shares owned by the MRP of 176,067; and (c) the weighted
average shares purchased in Treasury Stock of 1,132,373.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This Form 10-Q may contain certain forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Examples of
forward-looking statements include, but are not limited to, estimates with
respect to the financial condition, results of operations and business of the
Company that are subject to various factors which would cause actual results to
differ materially from the estimates. These factors include, but are not limited
to, general economic conditions, changes in interest rates, deposit flows, loan
demand, real estate values, and competition; changes in accounting principles,
policies, or guidelines; changes in legislation or regulation; and other
economic, competitive, governmental, regulatory, and technological factors
affecting the Company's operations, pricing, products and services.
CHANGES IN FINANCIAL CONDITION
General -- At September 30, 2001, the consolidated assets of the Company totaled
$1.5 billion, an increase of $85.3 million, or 6.1%, from December 31, 2000. The
following discussion describes the major changes in the Company's financial
condition during the first nine months of the year.
Cash and Cash Equivalents -- Interest-bearing deposits at other institutions
increased $72.7 million to $75.2 million at September 30, 2001, compared to $2.5
million at December 31, 2000. Increased liquidity was the result of several
factors including deposit growth, the impact of mortgage loan refinancings,
increased investment security prepayments and the sale of investment securities.
Investment Securities Available for Sale -- The Company's investment securities
available for sale decreased $50.3 million, or 18.8%, to $217.9 million at
September 30, 2001, compared to $268.2 million at December 31, 2000. The
decrease was due primarily to sales of investment securities of $95.7 million
and prepayments and maturities totaling $44.7 million, which was partially
offset by an increase of $5.8 million in the market value of the portfolio and
purchases of investment securities of $84.1 million. A favorable rate
environment provided the opportunity to reduce market risk by selling securities
from the Company's portfolio during the first quarter of this year. Funds
generated as a result of sales and prepayments were used to reduce borrowings
and purchase other securities. Excess funds are invested overnight and will be
used to fund future loan growth and additional purchases of securities. The
Company will continue to monitor market conditions for additional opportunities.
Investment Securities Held to Maturity -- The Company's investment securities
held to maturity increased $23.7 million, or 31.0%, to $100.0 million at
September 30, 2001, compared to $76.3 million at December 31, 2000. This
increase was due primarily to purchases of investment securities of $37.3
million, which was partially offset by prepayments and maturities of $13.4
million.
9
Loans Held for Sale -- Loans held for sale increased $8.1 million, or 241.1%, to
$11.4 million at September 30, 2001 compared to $3.3 million at December 31,
2000. This group of loans has primarily been fixed rate single-family
residential mortgage loans under contract to be sold in the secondary market.
The increase was largely attributable to increased demand by consumers for fixed
rate loans in the current low rate environment. In most cases, loans in this
category are sold within thirty days. It is currently the Company's posture that
it is preferable to sell these loans and recognize the attendant up front income
rather than assume the rate risk associated with a longer term asset at the
current rates.
Loans Receivable -- Loans, net of unearned income, increased $18.7 million, or
2.0%, to $959.2 million at September 30, 2001, compared to $940.5 million at
December 31, 2000. This increase was primarily due to growth in commercial loans
of $39.4 million, or 14.3%, and growth in consumer loans of $35.1 million, or
9.3%, which was offset by a reduction in mortgage loans of $55.8 million, or
19.5%. The Company's loan to deposit ratio at September 30, 2001 was 77.7%
compared to 82.3% at December 31, 2000.
The New Orleans and South Central Louisiana markets continue to generate the
majority of the commercial loans. The growth was the result of the addition of
several customers, with no one customer representing a disproportionate
percentage of the increase. Consumer loan increases were due largely to indirect
automobile loan growth of $23.6 million, with a continued focus on prime paper.
Additional increases in other consumer loans came from across the state.
Mortgage loan decreases are mainly the result of the sale of fixed rate loans
and normal mortgage paydowns. There continues to be greater demand by customers
for fixed rates on both new and refinanced mortgage loans in the current rate
environment. Additionally, as a result of pricing opportunities available in the
secondary market and the high likelihood of refinancing in the fixed rate
portfolio, a select group of mortgage loans totaling $15.4 million, which were
originated as construction loans and previously held in the portfolio, were sold
during the second quarter of 2001.
Deposits -- Deposits increased $91.4 million, or 8.0%, to $1.2 billion at
September 30, 2001, compared to $1.1 billion at December 31, 2000. The increase
in deposits continues to reflect relatively balanced growth across all markets
and deposit categories. The Company believes it to be the result of several
factors including the development of customer relationships, continued calling
efforts, opportunities in the public fund arena and clients shifting out of
equity markets. All deposit categories increased during the first nine months of
the year. Deposit growth consisted of the following: a $14.4 million increase in
noninterest-bearing checking accounts, a $37.3 million increase in
interest-bearing checking accounts, a $36.3 million increase in savings and
money market accounts, a $2.2 million increase in time deposits, and an increase
of $1.2 million in other deposit accounts.
Short-term Borrowings -- Increased liquidity, as discussed previously, allowed
the Company to pay off the $54.0 million balance in short-term borrowings
outstanding as of December 31, 2000. This category was previously composed of
FHLB short-term advances with a duration of one year or less.
Securities Sold Under Agreements to Repurchase (REPO) -- This instrument is a
commercial cash management product first offered by the Bank at the beginning of
this year and provides an additional source of liquidity for the Company. Funds
in this category are swept daily from deposit accounts and collateralized by
specific securities owned by the Bank. At September 30, 2001, the REPO balance
was $13.1 million.
Long-term Borrowings -- Long-term debt decreased $14.2 million, or 23.3%, to
$46.7 million at September 30, 2001, compared to $60.8 million at December 31,
2000. The Union Planters Bank line of credit debt, which amounted to $9.2
million at the end of the year 2000, was paid off during the first quarter of
the year. The remaining debt is composed of FHLB long-term advances which cannot
be paid off without incurring substantial prepayment penalties. Normal
amortization payments on this debt accounted for the remaining decrease.
Other Liabilities -- The increase in other liabilities of $41.3 million at the
end of September 2001 as compared to the end of last year is due primarily to
the purchase of investment securities at the end of the quarter totaling $37.8
million with a cash settlement date subsequent to quarter-end.
10
Shareholders' Equity -- Total shareholders' equity increased $8.4 million, or
6.6%, to $135.4 million at September 30, 2001, compared to $127.0 million at
December 31, 2000. The increase was the result of the Company's net income of
$10.7 million, a $3.8 million increase in accumulated other comprehensive income
after taxes, $1.1 million of common stock released by the ESOP trust, $363,000
of common stock earned by participants in the MRP, and $772,000 from the sale of
treasury stock for stock options exercised. Such increases were partially offset
by cash dividends of $3.1 million declared on common stock and by purchases of
treasury stock of $5.3 million.
RESULTS OF OPERATIONS
General -- The Company reported net income of $3.7 million for the three months
ended September 30, 2001, compared to $3.4 million earned during the three
months ended September 30, 2000, an increase of $238,000, or 6.9%. The Company's
net interest income increased $472,000 and noninterest income increased $430,000
for the same period. The provision for loan losses increased by $277,000,
noninterest expense increased $312,000 and income tax expense increased $75,000
during the three months ended September 30, 2001 compared to the third quarter
of 2000.
For the nine months ended September 30, 2001, the Company earned net income of
$10.7 million compared to $9.5 million earned for the same period of 2000, an
increase of $1.2 million, or 13.1%. The Company's net interest income increased
$1.4 million and noninterest income increased $1.1 million for the same period.
The provision for loan losses increased by $802,000, noninterest expense
decreased $138,000 and income tax expense increased $637,000 when comparing the
nine months of 2001 to the same period of 2000.
Net Interest Income -- Net interest income increased $472,000, or 3.6%, to $13.6
million for the three months ended September 30, 2001, compared to $13.1 million
for the three months ended September 30, 2000. The increase was due to a $2.1
million, or 15.1% decrease in interest expense, which was partially offset by a
decrease of $1.6 million in interest income. The decrease in interest income was
the result of a 70 basis point decrease in the yield earned on earning assets,
which was partially offset by a $36.6 million, or 2.8% increase in the average
balance of earning assets. The decrease in interest expense was the result of a
75 basis point decrease in the cost of interest-bearing liabilities, which was
partially offset by a $9.0 million, or 0.8%, increase in the average balance of
interest-bearing liabilities. The Company's interest rate spread and net
interest margin amounted to 3.41% and 4.00%, respectively, during the three
months ended September 30, 2001, compared to 3.36% and 3.97%, respectively, for
the comparable period in 2000.
For the nine months ended September 30, 2001, net interest income increased $1.4
million, or 3.7%, to $39.9 million, compared to $38.5 million for the first nine
months of 2000. The increase was due to a $1.9 million, or 4.9% decrease in
interest expense, which was offset by a $457,000, or 0.6% decrease in interest
income. The decrease in interest income was the result of a 21 basis point
decrease in the yield earned on earning assets, which was partially offset by a
$28.4 million, or 2.2%, increase in the average balance of earning assets. The
decrease in interest expense was the result of a 21 basis point decrease in the
cost of interest-bearing liabilities, together with a $32,000 decrease in the
average balance of interest-bearing liabilities. The Company's interest rate
spread and net interest margin amounted to 3.38% and 4.01%, respectively, during
the nine months ended September 30, 2001, compared to 3.38% and 3.95%,
respectively, for the comparable period in 2000.
The Federal Reserve has reduced overnight rates by 350 basis points over the
first nine months of the year. The Company is not significantly affected by
changes in interest rates over an extended period of time. However, the Company
is moderately asset sensitive in the 30-day period. As a result, continued rate
reductions by the Federal Reserve may exert downward pressure on net interest
income in the near term. Over time, the Company expects that loan volume and
redeployment of a portion of these funds into investment securities will improve
this sensitivity. The Company will continue to monitor investment opportunities
and weigh the associated risk/return. Additionally, a significant portion of the
certificates of deposit portfolio was scheduled to mature over the last two
quarters of this year. Downward repricing of the
11
maturing portfolio in the current low rate environment has allowed the Company
to significantly reduce funding costs offsetting the negative impact of Federal
Reserve rate reductions. It is believed that any potential run off in this
category as a result of lowering rates will not adversely impact funding needs
of the Company.
Table 1 presents average balance sheets, net interest income and average
interest rates for the quarterly and nine-month periods ended September 30, 2001
and 2000.
12
TABLE 1:
Average Balances, Net Interest Income and Interest Yields / Rates
The following table sets forth, for the periods indicated, information regarding
(i) the total dollar amount of interest income of the Company from earning
assets and the resultant average yields; (ii) the total dollar amount of
interest expense on interest-bearing liabilities and the resultant average rate,
(iii) net interest income; (iv) net interest spread; and (v) net interest
margin. Information is based on average daily balances during the indicated
periods.
Three Months Ended September 30,
----------------------------------------------------------------
2001 2000
-------------------------------- ------------------------------
Average Average
Average Yield/ Average Yield/
(Dollars in thousands) Balance Interest Rate(1) Balance Interest Rate(1)
- -------------------------------------------------------------------------------------- ------------------------------
Earning assets:
Loans receivable:
Mortgage loans $ 238,739 $ 4,625 7.75% $ 297,362 $ 5,843 7.86%
Commercial loans 304,562 6,030 7.75 272,949 6,640 9.52
Consumer and other loans 407,493 9,174 8.93 370,035 8,348 8.97
----------- -------- ----------- -------
Total Loans 950,794 19,829 8.26 940,346 20,831 8.78
----------- -------- ----------- -------
Loans held for sale 11,117 224 8.06 1,360 28 8.24
Investment securities 295,359 4,358 5.90 368,720 5,898 6.40
Other earning assets 94,958 832 3.48 5,242 83 6.30
----------- -------- ----------- -------
Total earning assets 1,352,228 25,243 7.40 1,315,668 26,840 8.10
-------- -------
Allowance for loan losses (9,798) (9,286)
Nonearning assets 102,271 95,206
----------- -----------
Total assets $ 1,444,701 $ 1,401,588
=========== ===========
Interest-bearing liabilities:
Deposits:
Demand deposits $ 304,132 1,503 1.96 $ 245,764 1,442 2.33
Savings deposits 211,693 1,307 2.45 178,682 1,581 3.52
Certificates of deposits 581,365 7,912 5.40 582,350 8,291 5.66
----------- -------- ----------- -------
Total deposits 1,097,190 10,722 3.88 1,006,796 11,314 4.47
Borrowings 46,769 809 6.77 138,311 2,381 6.74
Securities sold under agreements to repurchase 10,166 95 3.66 0 0 0.00
----------- -------- ----------- -------
Total interest-bearing liabilities 1,154,125 11,626 3.99 1,145,107 13,695 4.74
-------- -------
Noninterest-bearing demand deposits 142,164 121,898
Noninterest-bearing liabilities 12,326 11,594
----------- -----------
Total liabilities 1,308,615 1,278,599
Shareholders' Equity 136,086 122,989
----------- -----------
Total liabilities and shareholders' equity $ 1,444,701 $ 1,401,588
=========== ===========
Net earning assets $ 198,103 $ 170,561
=========== ===========
Net interest spread $ 13,617 3.41% $13,145 3.36%
======== ==== ======= ====
Net interest margin 4.00% 3.97%
==== ====
Ratio of average earning assets to
average interest-bearing liabilities 117.16% 114.89%
=========== ===========
Nine Months Ended September 30,
---------------------------------------------------------------
2001 2000
------------------------------- -------------------------------
Average Average
Average Yield/ Average Yield/
(Dollars in thousands) Balance Interest Rate(1) Balance Interest Rate(1)
- ------------------------------------------------------------------------------------- -------------------------------
Earning assets:
Loans receivable:
Mortgage loans $ 262,818 $15,504 7.87% $ 286,331 $16,849 7.85%
Commercial loans 288,175 18,298 8.37 258,057 18,448 9.39
Consumer and other loans 392,437 26,593 9.06 356,438 23,433 8.78
----------- ------- ----------- -------
Total Loans 943,430 60,395 8.52 900,826 58,730 8.66
----------- ------- ----------- -------
Loans held for sale 8,186 485 7.90 1,578 95 8.03
Investment securities 299,662 13,941 6.20 383,902 18,299 6.36
Other earning assets 68,480 2,060 4.02 5,050 214 5.66
----------- ------- ----------- -------
Total earning assets 1,319,758 76,881 7.75 1,291,356 77,338 7.96
------- -------
Allowance for loan losses (10,074) (9,022)
Nonearning assets 100,381 97,377
----------- -----------
Total assets $ 1,410,065 $ 1,379,711
=========== ===========
Interest-bearing liabilities:
Deposits:
Demand deposits $ 283,473 4,659 2.20 $ 249,347 4,324 2.32
Savings deposits 203,336 4,495 2.96 181,882 4,886 3.59
Certificates of deposits 580,746 24,748 5.70 575,958 23,585 5.47
----------- ------- ----------- -------
Total deposits 1,067,555 33,902 4.25 1,007,187 32,795 4.35
Borrowings 56,417 2,893 6.76 122,488 6,067 6.51
Securities sold under agreements to repurchase 5,671 175 4.07 0 0 0.00
----------- ------- ----------- -------
Total interest-bearing liabilities 1,129,643 36,970 4.37 1,129,675 38,862 4.58
------- -------
Noninterest-bearing demand deposits 136,076 120,149
Noninterest-bearing liabilities 11,020 11,001
----------- -----------
Total liabilities 1,276,739 1,260,825
Shareholders' Equity 133,326 118,886
----------- -----------
Total liabilities and shareholders' equity $ 1,410,065 $ 1,379,711
=========== ===========
Net earning assets $ 190,115 $ 161,681
=========== ===========
Net interest spread $39,911 3.38% $38,476 3.38%
======= ==== ======= ====
Net interest margin 4.01% 3.95%
==== ====
Ratio of average earning assets to
average interest-bearing liabilities 116.83% 114.31%
=========== ===========
- ----------
(1) Annualized.
13
Interest Income -- The Company's total interest income was $25.2 million for the
three months ended September 30, 2001, compared to $26.8 million for the three
months ended September 30, 2000. The reason for the $1.6 million decrease in
interest income was a $1.0 million, or 4.8%, decrease in interest income from
loans and a $1.5 million, or 26.1%, decrease in interest and dividends on
investment securities, which was partially offset by a $749,000, or 902.4%,
increase in interest on deposits held at other institutions and a $196,000, or
700.0%, increase in interest income on loans held for sale. The decrease in
interest income from loans was the result of a 52 basis point decrease in the
loan yield earned thereon, which was partially offset by a $10.4 million, or
1.1%, increase in the average balance of loans. The decrease in interest income
from investment securities was the result of a $73.4 million, or 19.9%, decrease
in the average balance of investment securities, together with a 50 basis point
decrease in the yield earned thereon. The increase in interest from deposits at
other institutions was the result of a $89.7 million, or 1,711.5%, increase in
the average balance of deposits at other institutions, which was partially
offset by a 282 basis point decrease in the yield earned thereon. The increase
in interest income from loans held for sale was the result of a $9.8 million, or
717.4%, increase in the average balance of loans held for sale, which was
partially offset by a 18 basis point decrease in the yield earned thereon.
For the nine months ended September 30, 2001, the Company's total interest
income was $76.9 million, compared to $77.3 million for the same period in 2000.
The reason for the $457,000, or 0.6%, decrease in interest income was a $4.4
million, or 23.8%, decrease in interest and dividends on investment securities,
which was partially offset by a $1.7 million, or 2.8%, increase in interest
income from loans, a $1.8 million, or 862.6%, increase in interest on deposits
held at other institutions, and a $390,000, or 410.5%, increase in interest
income on loans held for sale. The decrease in interest income from investment
securities was the result of a $84.2 million, or 21.9%, decrease in the average
balance of investment securities, together which a 16 basis point decrease in
the yield earned thereon. The increase in interest income from loans was the
result of a $42.6 million, or 4.7%, increase in the average balance of loans,
which was partially offset by a 14 basis point decrease in the yield earned
thereon. The increase in interest from deposits at other institutions was the
result of a $63.4 million, or 1,256.0%, increase in the average balance of
deposits at other institutions, which was partially offset by a 164 basis point
decrease in the yield earned thereon. The increase in interest income from loans
held for sale was the result of a $6.6 million, or 418.8%, increase in the
average balance of loans held for sale, which was partially offset by a 13 basis
point decrease in the yield earned thereon.
Interest Expense -- The Company's total interest expense was $11.6 million for
the three months ended September 30, 2001, compared to $13.7 million for the
three months ended September 30, 2000. The reason for the $2.1 million, or
15.1%, decrease in total interest expense was due to a $1.6 million, or 66.0%,
decrease in interest expense on borrowings as a result of a $91.5 million, or
66.2%, decrease in the average balance on borrowings, which was partially offset
by a 3 basis point increase in the cost of such borrowings. There was also a
decrease of $592,000, or 5.2%, in interest expense on deposits as a result of a
59 basis point decrease in the cost of such deposits, which was partially offset
by a $90.4 million, or 9.0%, increase in the average balance of interest-bearing
deposits. Such decreases were partially offset by $95,000 in total interest
expense in securities sold under agreements to repurchase.
For the nine months ended September 30, 2001, the Company's total interest
expense was $37.0 million, compared to $38.9 million for the same period in
2000. The reason for the $1.9 million, or 4.9%, decrease in total interest
expense was due to a $3.2 million, or 52.3%, decrease in interest expense on
borrowings as a result of a $66.1 million, or 53.9%, decrease in the average
balance of borrowings, which was partially offset by a 25 basis point increase
in the cost of such borrowings. This decrease was partially offset by a $1.1
million, or 3.4%, increase in interest expense on deposits as a result of a
$60.4 million, or 6.0%, increase in the average balance of interest-bearing
deposits, which was partially offset by a 10 basis point decrease in the cost of
such deposits. There was also $175,000 in total interest expense in securities
sold under agreements to repurchase.
14
Provision For Loan Losses -- The provision for loan losses represents a charge
to current earnings necessary to maintain the allowance for loan losses at an
appropriate level based on management's analysis of the potential risk in the
loan portfolio. The amount of the provision is a function of various factors,
including historical experience, the volume and type of lending conducted by the
Company, the amount of the Company's classified assets, seasoning of the loan
portfolio, the status of past due principal and interest payments, general
economic conditions, particularly as they relate to the Company's market area
and other factors related to the collectibility of the Company's loan portfolio.
For the three months ended September 30, 2001, the provision for loan losses was
$1.1 million as compared to $811,000 for the same period in 2000. For the nine
months ended September 30, 2001, the provision for loan losses was $2.7 million
as compared to $1.9 million for the first nine months of 2000. The higher
provision is primarily attributable to loan growth and changes in the mix of
loans from period to period. Additionally, during the second quarter of 2001,
the Company implemented a loan policy that is in line with Federal Financial
Institutions Examination Council ("FFIEC") guidelines. This policy is more
conservative from a charge-off recognition perspective and resulted in an
initial acceleration of charge-offs, which partially attributed to the increased
provision requirements for 2001. The allowance for loan losses as a percentage
of outstanding loans, net of unearned income, was 1.05% at September 30, 2001,
compared to 1.02% at September 30, 2000.
Nonperforming assets, consisting of nonaccruing loans, accruing loans more than
90 days past due and foreclosed property, amounted to $11.6 million, or 0.79% of
total assets at September 30, 2001, compared to $8.0 million, or 0.57% of total
assets at December 31, 2000. The increase in nonperforming assets is partly
mitigated by the expectation that two of the larger loans included in this
category are scheduled for sheriff sale and foreclosure during the fourth
quarter of this year and the property values, which are in-line with the loan
amounts, are supported by recent appraisals. This includes both the motel loan
and French Quarter properties mentioned in previous filings. The next largest
credit in this category, an oil field service company loan, was downgraded to
substandard during the third quarter and a meaningful reserve was placed against
it. Based on the Company's normal loan loss reserve analysis, the Company is
adequately reserved for the risk of loss in the loan portfolio at this time. As
of September 30, 2001, the ratio of the Company's allowance for loan losses to
nonperforming loans was 94.1%, compared to 135.8% at December 31, 2000.
At this time the Company has not been materially affected by the events of
September 11, 2001. Several industries have received a lot of attention since
the terrorists' attacks including aviation, hospitality and energy. The
Company's exposure is limited to hospitality and energy. The hospitality
industry represents only 3% of the loan portfolio and is related to properties
in and around New Orleans. The New Orleans hospitality market has performed well
over the past few years, developing a strong reputation as a tourist and
convention destination. The Company's energy exposure is primarily in the
oilfield service sector, which amounts to 3% of the overall loan portfolio. From
an energy perspective, the events of September 11th have reduced expectations
for oil and gas demand. In response to these lowered expectations, prices have
declined and associated activity has started to slow. Both the energy services
and hospitality industries are areas of increased attention for our Company and
we will continue to monitor them closely in light of ongoing events.
Noninterest Income -- The Company's total noninterest income was $3.7 million
for the three months ended September 30, 2001, compared to $3.2 million for the
same period in 2000. Noninterest income increased $430,000, or 13.3%, for the
three months ended September 30, 2001, compared to the same period in 2000. The
increase was due primarily to a $433,000 increase in gains on the sale of
mortgage loans in the secondary market and a $42,000 increase in ATM fee income
due to increased up time. All other noninterest income increased $83,000. All of
these increases were partially offset by a decrease in service charges on
deposit accounts of $35,000. Additionally, the third quarter of 2000 included a
$1.9 million gain on the sale of property and a $1.8 million loss on the sale of
investment securities.
For the nine months ended September 30, 2001, noninterest income was $10.6
million compared to $9.5 million for the same period of 2000, an increase of
$1.1 million, or 11.7%. The increase was due primarily to a $1.3 million
increase in gains on the sale of mortgage loans in the secondary market, a
$135,000 increase in ATM fee income due to increased up time, and a $33,000
increase in services charges on deposit
15
accounts. All of these increases were partially offset by decreases in brokerage
fees of $225,000 due to equity market conditions and $57,000 for all other
noninterest income. Additionally, the first nine months of 2000 included $2.0
million in gains on the sale of property, which was partially offset by losses
on the sale of investment securities of $1.8 million.
Noninterest Expense -- Noninterest expense increased $312,000, or 3.1%, for the
three months ended September 30, 2001, to $10.4 million, compared to $10.1
million for the three months ended September 30, 2000. Such increase was due in
part to a $456,000 increase in salaries and employee benefits and a $150,000
increase in the ESOP retirement contribution expense caused by the increase in
the average fair market value of the Company's common stock. Other increases
included $40,000 in communication and delivery, $8,000 in the franchise and
share tax assessment, and $23,000 in printing, stationery and supplies. Such
increases were partially offset by an increase of $94,000 in deferred expense
associated with loan origination costs. Other expense decreases included $49,000
in occupancy and equipment expense, $29,000 in the amortization of goodwill and
acquisition intangibles, and $40,000 in data processing. Additional decreases of
$75,000 in marketing and business development and $78,000 in all other
miscellaneous noninterest expenses reflects management's continued emphasis on
controlling discretionary expenses.
For the nine months ended September 30, 2001, noninterest expense decreased
$138,000, or 0.4%, to $30.8 million, compared to $30.9 million for the same
period in 2000. A $338,000 increase in deferred expense associated with loan
origination costs contributed to the expense decrease. The reduced level of
expenses was also due to decreases of $21,000 in occupancy and equipment
expense, $87,000 in the amortization of goodwill and acquisition intangibles,
$100,000 in the franchise and share tax assessment, $50,000 in communication and
delivery, and $54,000 in data processing expense. Additional decreases of
$236,000 in marketing and business development and $489,000 in all other
miscellaneous noninterest expenses reflects the ongoing monitoring by management
of expenses considered discretionary. Such decreases were partially offset by
increases of $787,000 in salaries and employee benefits, $419,000 in the ESOP
retirement contribution expense caused by the increase in the average fair
market value of the Company's common stock, and $31,000 in printing, stationery
and supplies.
Income Tax Expense -- Income tax expense increased $75,000, or 3.7%, for the
three months ended September 30, 2001 to $2.1 million, compared to $2.0 million
for the three months ended September 30, 2000. The increase in income tax
expense was due primarily to the increase in income before income taxes. The
effective tax rate for the three months ended September 30, 2001 and 2000 was
36.6% and 37.3%, respectively.
For the nine months ended September 30, 2001, income tax expense increased
$637,000, or 11.3%, to $6.3 million, compared to $5.6 million for the same
period in 2000. The increase in income tax expense was due primarily to the
increase in income before income taxes. The effective tax rate for the nine
months ended September 30, 2001 and 2000 was 36.9% and 37.3%, respectively.
16
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity, represented by cash and cash equivalents, is a product
of its operating, investing and financing activities. The Company's primary
sources of funds are deposits, amortization, prepayments and maturities of
outstanding loans, investment securities and other short-term investments and
funds provided from operations. While scheduled payments from the amortization
of loans, maturing investment securities, and short-term investments are
relatively predictable sources of funds, deposit flows and loan and investment
security prepayments are greatly influenced by general interest rates, economic
conditions and competition. In addition, the Company obtains additional funds
through borrowings, which provide liquidity to meet lending requirements. The
Bank has been able to generate sufficient cash through its deposits as well as
borrowings. At September 30, 2001, the Company had $46.7 million in outstanding
advances from the Federal Home Loan Bank of Dallas.
Liquidity management is both a daily and long-term function of business
management. Excess liquidity is generally invested in short-term investments
such as overnight deposits. On a longer-term basis, the Company maintains a
strategy of investing in various lending products. The Company uses its sources
of funds primarily to meet its ongoing commitments and fund loan commitments. At
September 30, 2001, the total approved loan commitments outstanding amounted to
$28.1 million. At the same time, commitments under unused lines of credit,
including credit card lines, amounted to $153.1 million. Certificates of deposit
scheduled to mature in twelve months or less at September 30, 2001 totaled
$436.7 million. Based on past experience management believes that a significant
portion of maturing deposits will remain with the Company. The Company
anticipates it will continue to have sufficient funds to meet its liquidity
requirements.
At September 30, 2001, the Company and the Bank had regulatory capital which was
in excess of regulatory requirements. The Company's actual levels and current
requirements as of September 30, 2001 are detailed below (dollars in thousands):
Actual Capital Required Capital
-------------- ----------------
Amount Percent Amount Percent
------ ------- ------ -------
Tier 1 Leverage $ 97,466 6.92% $56,331 4.00%
Tier 1 Risk-Based $ 97,466 9.83% $39,644 4.00%
Total Risk-Based $107,536 10.85% $79,288 8.00%
17
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Quantitative and qualitative disclosures about market risk are presented at
December 31, 2000 in Item 7A of the Company's Annual Report on Form 10-K, filed
with the Securities and Exchange Commission on March 31, 2001. Management
believes there have been no material changes in the Company's market risk since
December 31, 2000.
18
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Not Applicable
Item 2. Changes in Securities and Use of Proceeds
Not Applicable
Item 3. Defaults Upon Senior Securities
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable
Item 5. Other Information
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Not Applicable
(b) Reports on Form 8-K
Current Report on Form 8-K dated July 10, 2001, reporting (i)
under Item 5, both the issuance of a press release dated July
10, 2001, announcing earnings for the second quarter ended
June 30, 2001 (the "Press Release") and the adoption by the
Financial Accounting Standards Board of Statement No. 142,
Goodwill and Other Intangible Assets ("Statement 142"); (ii)
under Item 7, a copy of the Press Release; and (iii) under
Item 9, confirmation of comfort with the Company's previously
stated range of $2.36 to $2.41 per share for 2001 fully
diluted EPS and $2.60 to $2.70 per share for 2002 fully
diluted EPS, excluding the effect of Statement 142.
19
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.
IBERIABANK Corporation
Date: November 14, 2001 By: /s/ Daryl G. Byrd
-------------------------------------
Daryl G. Byrd
President and Chief Executive Officer
Date: November 14, 2001 By: /s/ Marilyn W. Burch
-------------------------------------
Marilyn W. Burch
Executive Vice President and Chief
Financial Officer
20