United States
Securities and Exchange Commission
WASHINGTON, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 0-28106
FirstBancorporation, Inc.
-------------------------
(Exact name of registrant as specified in its charter)
South Carolina 57-1033905
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1121 Boundary Street P.O. Box 2147, Beaufort, S.C. 29901-2147
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 803-521-5600
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 [ ]
The number of outstanding shares of the issuer's $.01 par value common stock
as of November 8, 1996 is 627,587.
1
INDEX FORM 10-QSB
Part I
Page
Item 1. Financial Statements and Related Notes---------- 3-6
Item 2. Management's Discussion and
Analysis of Financial Condition and
Results of Operations ---------------------------7-11
Part II
Item 1. Legal Proceedings ------------------------------ 12
Item 2. Changes in Securities -------------------------- 12
Item 3. Defaults upon Senior Securities ---------------- 12
Item 4. Submission of Matters to a Vote
of Security Holders --------------------------- 12
Item 5. Other Information ------------------------------ 12
Item 6. Exhibits and Reports on Form 8-K --------------- 12
Signatures ------------------------------------- 13
2
PART 1. FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS AND RELATED NOTES
BALANCE SHEETS (Unaudited)
(Dollars in thousands)
September 30, December 31,
1996 1995
-------- --------
ASSETS
Cash and due from overnight deposits $ 4,028 $ 4,197
Interest bearing overnight deposits 877 1,349
Other short-term investment 224 199
Mortgage backed securities 1,762 2,055
Loans 80,040 72,755
Less unearned income (70) (8)
Less allowance for loan losses (618) (470)
-------- --------
Net loans 79,353 72,277
Federal Home Loan bank and Federal Reserve Bank Stock 678 575
Premises and equipment 1,045 1,036
Accrued interest receivable
Loans 497 490
Investments 19 7
Real estate owned-acquired through foreclosure 17 443
Deferred organizational costs 106 109
Other assets 329 310
-------- --------
Total assets $88,934 $83,047
LIABILITIES AND STOCKHOLDERS EQUITY
Liabilities
Deposits $76,392 $74,905
Federal Home Loan Bank Advances 4,550 1,000
Amounts due depository institutions 287 238
Accrued interest payable 150 105
Advances from borrowers for taxes and insurance 187 84
Other liabilities 570 198
-------- --------
Total liabilities $82,136 $76,530
Stockholders Equity
Preferred stock-$.01 par value; shares authorized-
1,000,000, issued and outstanding - none
Common stock-$.01 par value; shares authorized-
3,000,000, issued and outstanding-627,587-9/30/96;
595,848-12/31/95. $ 6 6
Additional paid-in capital 5,380 5,037
Unrealized gain (loss) on securities available-for-
Sale, net of applicable deferred income taxes (21) (19)
Retained earnings 1,433 1,493
-------- --------
Total stockholders equity $ 6,798 $ 6,517
-------- --------
Total liabilities and stockholders' equity $88,934 $83,047
3
STATEMENTS OF INCOME FOR THE PERIODS ENDED
September 30, 1996 and 1995 (Unaudited)
(Dollars in thousands, except per share amounts)
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
9/30/96 9/30/95 9/30/96 9/30/95
------- ------- ------- -------
Interest income
Interest on mortgage loans $1,287 $1,281 $3,717 $3,628
Interest on other loans 416 284 1,160 819
Interest on investments 70 69 221 199
------- ------- ------- -------
Total interest income 1,773 1,634 5,098 4,646
Interest expense
Interest on deposits 777 784 2,324 2,153
Interest on FHLB advances 59 34 102 129
------- ------- ------- -------
Total interest expense 836 818 2,426 2,282
Net interest income 937 816 2,672 2,364
Provision for loan losses 30 51 132 170
------- ------- ------- -------
Net interest income after provision
for loan losses 907 765 2,540 2,194
Non interest income
Service charges on deposit accounts 122 105 327 311
Other non interest income 68 60 232 177
------- ------- ------- -------
Total non interest income 190 165 559 488
Non interest expense
Compensation and benefits 399 400 1,136 1,082
Occupancy 108 114 323 330
Data processing 39 34 116 100
Other non interest expense 659 177 1,078 518
------- ------- ------- -------
Total non interest expense 1,205 725 2,653 2,030
Net income (loss) before taxes (108) 205 446 652
Income tax expense (32) 81 181 248
------- ------- ------- -------
Net income (loss) $ (76) 124 265 404
Net income (loss) per primary share $ (.12) 0.19 0.40 0.62
Net income (loss) per fully
diluted share $ (.12) 0.19 0.40 0.62
4
STATEMENT OF CASH FLOWS FOR THE PERIODS ENDED
September 30, 1996 and 1995 (unaudited)
(Dollars in thousands)
Nine months Nine months
Ended Ended
9/30/96 9/30/95
------- -------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 265 $ 404
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 136 119
Provision for loan losses 132 170
Decrease(increase) in interest receivable (19) (73)
Decrease(increase) in prepaid expenses & other assets 38 483
Originations of loans sold to investors 5,493 3,549
Proceeds from sales of loans to investors (5,493) (3,549)
Increase (decrease) in accrued interest payable 46 21
Increase (decrease) in accounts payable and
accrued expenses payable 310 10
Increase (decrease) in other liabilities (968) 117
------- -------
Net cash provided by operating activities (60) 285
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of investment securities (24) 0
Maturities of investment securities 0 0
Principal repayments of mortgage-backed securities 282 172
Purchase of Federal Home Loan Bank/Federal Reserve
Bank stock and dividends received (70) (161)
Loans originated or acquired, net (7,316) (2,810)
Capital expenditures (130) (86)
Proceeds from sales of fixed assets 0 9
Proceeds from sales of real estate owned 443 0
------- -------
Net cash used for investing activities (6,815) (2,876)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in non interest bearing demand accounts 658 2,248
Increases (decrease) in Now, money market and
Savings accounts 822 (4,204)
(Increase) decrease in certificates of deposit, net 33 6,552
Proceeds from Federal Home Loan Bank Advances 10,500 9,750
Repayment of Federal Home Loan Bank Advances (5,950) (7,750)
Proceeds from other borrowed money 0 0
Repayment of other borrowed money 0 0
(Decrease) increase in amounts due to depositories 49 (689)
Increase in advances from borrowers for taxes
And insurance 104 146
Proceeds from stock options exercised 18 115
------- -------
Net cash provided by financing activities 6,234 6,168
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (641) 3,577
------- -------
CASH EQUIVALENTS, BEGINNING OF PERIOD 5,546 3,378
CASH EQUIVALENTS, END OF PERIOD $4,905 $ 6,955
5
NOTES TO FINANCIAL STATEMENTS
1. On October 31, 1995, FirstBank, N.A. ("Bank"), (formerly The Savings Bank
of Beaufort County, FSB) reorganized as a wholly-owned subsidiary of
FirstBancorporation, Inc. ("Company"). As a result of the reorganization, each
issued and outstanding share of common stock, $5.00 par value per share, of
the Bank was converted into one share of common stock, $.01 par value per
share, of the Company. The Company's principal business is its investment in
the Bank and, therefore, the assets and liabilities of the Company on a
consolidated basis are substantially those of the Bank. The unaudited interim
financial statements included in this Form 10-QSB are those of the Company for
the periods ended September 30, 1996 and December 31, 1995 and for the Bank
alone for the period ended September 30, 1995 because the reorganization was
effective as of the close of business on October 31, 1995.
2. The unaudited interim financial statements reflect all adjustments which
are, in the opinion of management, necessary to a fair presentation of the
results for the reported interim periods. Such adjustments are of a normal
recurring nature. The interim financial statements, including related notes,
should be read in conjunction with the financial statements for the year ended
December 31, 1995 appearing in the 1995 Annual Report of FirstBancorporation,
Inc. The results of operations for the periods ended September 30, 1996 are
not necessarily indicative of the results of operations for the full year.
3. Earnings Per Share - Primary earnings per share are based on the weighted
average number of shares outstanding, giving retroactive effect to stock
dividends and the assumed exercise of grants under stock option plans which
are exercisable within five years. The number of shares outstanding for prior
periods has been restated to give effect to prior stock dividends which should
have reduced the exercise price of the stock options. Fully diluted earnings
per share assume the exercise of all grants under the incentive stock option
plan. Primary and fully diluted earnings per share are based on 657,003 shares
and 658,343 shares outstanding respectively for the nine months ended
September 30, 1996.
4. Loan Commitments - At September 30, 1996, loan commitments consisted of
$2,633,000 in adjustable rate residential mortgage loans, $423,000 in fixed
rate residential mortgage loans, undisbursed amounts of loans in process of
$4,184,000 and unused lines of credit totaling $6,090,000. The Bank s general
practice is to obtain investor commitments for fixed rate loans at the time of
commitment. At September 30, 1996, all fixed rate residential loan
commitments were covered by commitments from investors for sale.
5. Statement of Cash Flows - For the purposes of reporting cash flows, cash
and cash equivalents include cash, interest-bearing overnight deposits and
other short-term investments with original maturities of 90 days or less.
6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
During the first nine months of the 1996 year, total assets grew by
$5,886,000 to $88,934,000. During this period, the Bank's deposits increased
by $1,513,000 and its Federal Home Loan Bank advances increased by $3,550,000.
These sources and current assets in the form of cash and short term
investments funded net loan growth of $7,077,000. Real estate owned-acquired
through foreclosure declined to $17,000 at September 30, 1996 from $443,000 at
the beginning of the year. During the year, the Bank liquidated all properties
held as of December 31, 1995 and recognized gains of $32,000 on the sales. In
the third quarter two unimproved lots were acquired through foreclosure
totaling $17,000.
The Company had a net loss for the three month period ended September 30,
1996 of $76,000, or $.12 per share, as compared to a net income of $124,000,
or $.19 per share, for the third quarter of 1995. The net loss for the
quarter resulted from the one-time, SAIF/FDIC assessment of $445,000 (pre-tax)
charged in the third quarter for 1996. Interest income for the current quarter
was $139,000 greater than that of the prior year's period and is attributable
to higher yields and volumes on interest earning assets during the current
quarter. Interest expense increased by $18,000 during the current quarter as
average interest bearing liabilities increased by $5,964,000. The higher
volume was partially offset by a lower rate paid on interest bearing
liabilities during the current quarter. Net interest income (interest income
less interest expense) for the current quarter was $121,000 greater than net
interest income for the quarter ended September 30, 1995. The Bank provided
$30,000 in provision for loan losses during the current quarter as compared to
$51,000 during the third quarter of 1995. At September 30, 1996 the Bank's
allowance for loan losses totaled $618,000 or .77% of total loans as compared
to $470,000 or .65% of total loans at December 31, 1995. The Bank reviews its
substandard and non accrual loans at least quarterly to estimate losses and
makes an assessment of losses based on historical experience and its
assessment of future economic conditions for the balance of the portfolio by
loan category. The Bank's loan portfolio is concentrated in lower risk
(relative to non-residential mortgage loans) 1-4 residential first mortgage
loans. Such loans comprise 74% of total loans outstanding at September 30,
1996. Consumer loans, including open ended home equity consumer loans, totaled
11% of total loans while other real estate loans totaled 12% and commercial
loans totaled 4% of loans at September 30, 1996.
Net income for the nine months ended September 30, 1996 was $265,000, or
$.40 per share, as compared to net income of $404,000 or $.62 per share for
the nine month period ending September 30, 1995. This decrease was primarily
attributable to the SAIF/FDIC one-time, pre-tax assessment of $445,000 which
was charged in the third quarter of 1996. This was offset by an increase in
net interest income of $308,000 during the current year, a decline in loan
loss provision of $38,000, an increase in non interest income of $71,000
and a decline in the tax provision of $67,000. These increases were offset by
an increase in non interest expense (excluding the SAIF/FDIC assessment) of
$178,000. The increase in net interest income resulted from a combination of
higher net interest rate spreads and increased outstanding loan volumes.
Management reduced its provision for loan losses during the first nine months
of 1996 primarily as a result of current year net recoveries to its allowance
for loan losses totaling $16,000 for the nine month period ending September
30, 1996. In management s opinion, allowances for loan losses are adequate to
cover current estimated losses as of September 30, 1996. Provision for taxes
declined as a result of the tax benefit associated with the SAIF/FDIC
assessment.
ASSET/LIABILITY MANAGEMENT AND LIQUIDITY
Asset/Liability management is the process by which the Bank monitors and
controls the pricing, mix and maturity of its assets and liabilities. An
essential purpose of asset/liability management is to ensure adequate
liquidity and to maintain an appropriate balance between interest sensitive
assets and liabilities. Liquidity management involves
7
managing this mix so that the Bank can meet its demands for cash in a timely
manner. The Bank uses a number of tools to manage its liquidity including
maintaining adequate current asset levels (particularly cash, cash equivalents
and overnight investments), pricing deposits appropriately and ensuring the
availability of sources for borrowed funds (primarily from the FHLB). Current
assets, including cash and due from accounts and overnight investments
decreased approximately $616,000 during the year to date. Deposit growth of
$1,513,000 along with increases in FHLB advances of $3,550,000 funded loan
growth. At September 30, 1996, the Bank had total credit lines of $11 million
at the FHLB-Atlanta to assist in meeting liquidity needs. The interest rates
paid on these borrowings are from time to time higher than the rates generally
paid to deposit customers. Management sees this capacity as a tool in its
overall asset/liability strategy of managing pricing and liquidity.
Commitments and anticipated cash outflows, not including undisbursed
portions of loans in process, totaled approximately $9,146,000 at September
30, 1996, as compared to $7,719,000 at September 30, 1995. See Note 4 for
additional information.
The Bank continues to monitor its interest rate risk through policies
designed to match the maturities of interest-earning assets and
interest-bearing liabilities. One measure of the Bank's interest sensitivity
is using a static gap analysis which compares repricing interest-earning
assets and interest-bearing liabilities for specific time intervals. A gap is
considered positive when the amount of interest sensitive assets exceeds the
amount of interest sensitive liabilities. A gap is considered negative when
the amount of interest sensitive liabilities exceeds the amount of interest
sensitive assets. During a period of rising rates, a negative gap would tend
to adversely affect net interest income while a positive gap would tend to
result in an increase in net interest income. During a period of falling
rates, a negative gap would tend to result in an increase in net interest
income while a positive gap would tend to adversely affect net interest
income. The following table shows the Bank s interest sensitivity position at
September 30, 1996.
Interest Sensitivity Position
September 30, 1996 Year 1 Year 2 Years 3 Year 5+ Total
and 4
------ ------ ------- ------- ------
Interest earning assets
Loans $47,158 $11,779 $11,263 $9,840 $80,040
GNMA MBSs 1,762 0 0 0 1,762
Overnight and other investments 1,648 0 0 130 1,778
------ ------ ------- ------- ------
Total interest earning assets 50,568 $11,779 $11,263 $9,970 $83,580
Interest Bearing Liabilities
Deposits 49,144 8,719 9,728 1,235 68,826
FHLB Borrowings 3,550 500 500 0 4,550
------ ------ ------- ------- ------
Total interest bearing liabilities 52,694 9,219 10,228 1,235 73,376
Asset (liability) Gap position ($2,126) $2,560 $1,035 $8,735 $10,204
Cumulative Gap Position ($2,126) $ 434 $1,469 $10,204
Cumulative Gap to Total Earning
Assets (2.54%) .52% 1.76% 12.21%
(1) Contractual terms regarding periodic repricing during the loan terms are
used to determine repricing periods. Loans are net of undisbursed portions of
loans in process.
(2) NOW, money market and savings accounts are considered interest-sensitive.
(3) Repricing considerations for regular savings accounts are based on
estimated decay rates for the Bank.
8
As of September 30, 1996, the Bank's interest-earning assets that reprice
within one year totaled $50,568,000 while interest-bearing liabilities
repricing within one year totaled $52,694,000 This resulted in a negative gap
position of $2,126,000 or (2.54%) of total interest-earning assets.
YIELDS EARNED AND RATES PAID
The following table is a comparison of the three months ended September
30, 1996 and 1995. Third quarter 1995 figures are for the Bank only.
Average balances and yields earned versus rates paid
Quarter ended September 30, 1996 compared to 1995
(Dollars in thousands)
Average Interest Earned Annualized
Balance or Paid Yield/Rate
For the quarter ended September 30,
1996 1995 1996 1995 1996 1995
------ ------ ------ ------ ------ ------
Assets
Interest-earning assets
Loans $79,765 $72,625 $1,703 $1,565 8.54% 8.62%
Investments 4,116 4,455 70 69 6.80% 6.20%
------ ------ ------ ------ ------ ------
Total earning assets/
Income earned 83,881 77,080 1,773 1,634 8.45% 8.48%
Non-earning assets 5,384 4,818
------ ------
Total assets $89,265 $81,898
Liabilities
Total Deposits $77,340 $73,201 777 784 4.02% 4.28%
Borrowings 4,012 2,187 59 34 5.88% 6.22%
Total Deposits and ------ ------ ------ ------ ------ ------
Borrowings/expense 81,352 75,388 836 818 4.11% 4.34%
Non-interest-bearing
Liabilities 1,089 398
Stockholders Equity 6,824 6,112
Total Liabilities and ------ ------
Stockholders Equity $89,265 $81,898
Net interest income $937 $816
Interest Rate Spread (1) 4.34% 4.14%
Net yield on average
interest earning assets (1) 4.47% 4.23%
(1) Net interest income is the difference between interest income and interest
expense. Interest rate spread is the difference between the average rate on
earning assets and the average rate on interest bearing liabilities. Net
yield on average interest earning assets is net interest income divided by
total interest earning assets.
Net interest income increased by $121,000 during the current year's
quarter as a result of the combined effects of a greater net interest rate
spread and a higher volume of interest earning assets. Yield on interest
earning assets declined by .03% during the current year s quarter and
interest bearing liabilities decreased by .23% resulting in an increase in the
net interest rate spread of .20% over the same period last year. Total
interest earning assets increased by $7,367,000 while interest bearing
liabilities
9
increased by $5,964,000 from third quarter 1995.
NON INTEREST INCOME
During the three month period ended September 30, 1996, total non interest
income was $190,000 as compared to $165,000 during the same 1995 period. Non
interest income in the current quarter consisted primarily of service charges
on deposit accounts of $122,000 as compared to $105,000 in the third quarter
of 1995. Third quarter rental income from the Bluffton branch was $11,000 in
both 1996 and 1995. Gains on the sale of loans to investors (servicing
released premiums and fees allowed as income when a loan is sold to an
investor) were $32,000 in the third quarter of 1996 versus $29,000 in the
third quarter of 1995. For the year to date, total non interest income totaled
$559,000 while the prior year to date total was $488,000. Deposit account
service charges increased by $16,000 from $311,000 to $327,000 as a result of
increased outstandings. Other non interest income was
higher by $55,000 primarily because of gains on the sales of foreclosed
properties which totaled $32,0000 during the first nine months of 1996 versus
$0 for the same period of 1995; and Gains on the sale of loans to investors
which increased by $10,000 in the first nine months of 1996 from $81,000 to
$91,000.
NON INTEREST EXPENSES
Other non interest expenses for the periods ended September 30, 1996 and
September 30, 1995 are compared and detailed in the table below.
(Dollars in thousands)
3 Months 3 Months 9 Months 9 Months
Ended Ended Ended Ended
9/30/96 9/30/95 9/30/96 9/30/95
------- ------- ------- -------
Other Expenses
Compensation and Benefits $ 399 400 1,136 1,082
Occupancy 108 114 323 330
Marketing 18 14 47 37
Data Processing 39 34 116 100
FDIC Insurance 489 39 573 117
Professional Fees 20 14 83 50
Supplies and Printing 19 30 51 67
Telephone and Postage 28 26 77 78
Loan costs deferred (31) (48) (113) (118)
Other Misc. Expenses 116 102 360 287
------- ------- ------- -------
Total Other Expenses 1,205 725 2,653 2,030
======= ======= ======= =======
Other non interest expenses increased by 65% during the quarter ended
September 30, 1996 as compared to the quarter ended September 30, 1995. During
the current period the Bank charged to expense a one-time FDIC/SAIF special
assessment of $445,000. Excluding this assessment, other non interest expenses
increased by $31,000 or 4.3% over the same third quarter of 1995. Professional
fees were higher during the quarter because of increases in audit and
compliance fees. Data processing fees were higher because of increases in
transaction account activity. Occupancy expense was lower due to lower
furniture, fixtures and equipment depreciation expense and lower utilities
expense. For the year to date, other non interest expenses increased by
$623,000 including the third quarter FDIC/SAIF assessment. Excluding the
FDIC/SAIF assessment, other non interest expenses increased $178,000.
Compensation expense accounted for $54,000 as a result of
10
general salary increases and new staff additions. Data processing expenses
increased by $16,000 because of the increased number of accounts serviced.
Professional fees increased by $33,000 as a result of increased legal and
consultant fees. Consultant fee expense resulted from outsourcing quality
control and compliance related functions.
CAPITAL RESOURCES
For regulatory purposes, the Bank is required to maintain a minimum of level
of capital based upon the risk related composition of its loan portfolio. This
risk-based capital requirement requires that the Bank maintain capital at a
minimum 8% level of its regulatory defined risk weighted assets. The Bank may
not declare or pay a cash dividend or repurchase any of its capital stock, if
the effect would cause the stockholders' equity of the Bank to be reduced
below its capital requirements. As of September 30, 1996, the Bank met all of
its risk-based capital requirements and met the definition of a well
capitalized institution under the OCC s regulation entitled Prompt and
Corrective Action. Total Tier 1 risk-based capital was 11.31% and total
risk-based capital was 12.36%.
The table below outlines the capital ratios of the Bank under the capital
regulations of the Office of the Comptroller of the Currency and the dollar
amounts of capital maintained by the Bank at September 30, 1996.
At 9/30/96
-----------
Total Risk-Based Capital $ 7,267,000
Risk-Based Capital/Risk Weighted Assets 12.36%
Tier 1 Risk-Based Capital $ 6,649,000
Tier 1 Risk-Based Capital/Risk Weighted
Assets 11.31%
Tangible Equity Capital $ 6,649,000
Tangible Equity Capital/Total Assets 7.48%
Total equity for the Company at September 30, 1996 was $6,798,000 or 7.64% of
total assets outstanding.
11
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There were no material legal proceedings pending or settled during the quarter
in which the Company or the Bank was a party.
ITEM 2. CHANGES IN SECURITIES
There were no changes made in the rights of security holders or in the
securities of the Company during the quarter.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
The Company has not issued any instruments of indebtedness which constitute
securities.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote by security holders during the
quarter.
ITEM 5. OTHER INFORMATION
There were no matters of the registrant which required reporting.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
No exhibits are applicable.
No reports on Form 8-K were filed during the quarter under report.
12
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.
FirstBancorporation, Inc.
DATED: November 11, 1996 /s/James A. Shuford, III
-------------------------
James A. Shuford, III
Chief Executive Officer
DATED: November 11, 1996 /s/James L. Pate, III
----------------------
James L. Pate, III
Chief Financial Officer
13