SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2002
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to ______________
Commission File No. 0-24330
Bedford Bancshares, Inc.
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(Exact name of registrant as specified in its charter)
Virginia 54-1709924
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
125 West Main Street, Bedford, Virginia 24523
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(Address of principal executive offices)
(540) 586-2590
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(Registrant's telephone number, including area code)
Check whether issuer (1) filed all reports required to be filed by Sections
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such report(s), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date.
Class: Common Stock, par value $.10 per share
Outstanding at January 30, 2003: 2,014,594
BEDFORD BANCSHARES, INC. AND SUBSIDIARY
INDEX TO FORM 10-QSB
PART I FINANCIAL INFORMATION PAGE
------ --------------------- ----
Item 1 Financial Statements
Consolidated Statements of Financial Condition at December 31,
(unaudited) and September 30, 2002 3
Consolidated Statements of Income for the three months ended December
31, 2002 and 2001 (unaudited) 4
Consolidated Statements of Comprehensive Income for the three months
ended December 31, 2002 and 2001 (unaudited) 5
Consolidated Statements of Cash Flows for the three months ended December
31, 2002 and 2001 (unaudited) 6
Notes to Unaudited Interim Consolidated Financial Statements
7
Item 2 Management's Discussion and Analysis of Financial Condition and Results
of Operations 8
PART II OTHER INFORMATION
------- -----------------
Item 1 Legal Proceedings 13
Item 2 Changes in Securities 13
Item 3 Defaults upon Senior Securities 13
Item 4 Submission of Matters to a Vote of Security Holders 13
Item 5 Other Information 13
Item 6 Exhibits and Reports on Form 8-K 13
SIGNATURES 14
2
BEDFORD BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Financial Condition
(Unaudited)
December 31 September 30
2002 2002
--------- ---------
(In Thousands)
Assets
- ------
Cash and cash equivalents ................................................... $ 7,475 $ 15,668
Interest-bearing deposits in other banks .................................... 2,994 --
Investment securities held to maturity (estimated market value of
$2 and $518) ................................................................ 2 502
Investment securities available for sale, at market value ................... 17,292 13,589
Investment in Federal Home Loan Bank stock, at cost ......................... 2,700 2,600
Loans receivable, net ....................................................... 223,558 219,634
Foreclosed real estate, net ................................................. 26 26
Property and equipment, net ................................................. 1,228 1,239
Accrued interest receivable ................................................. 1,144 1,328
Deferred income taxes ....................................................... 278 355
Other assets ................................................................ 1,057 673
--------- ---------
Total assets ............................................................ $ 257,754 $ 255,614
========= =========
Liabilities and Stockholders' Equity
- ------------------------------------
Liabilities
- -----------
Deposits .................................................................... $ 176,946 $ 177,214
Advances from the Federal Home Loan Bank .................................... 54,000 52,000
Advances from borrowers for taxes and insurance ............................. 453 815
Dividends payable ........................................................... 241 241
Other liabilities ........................................................... 854 782
--------- ---------
Total liabilities ....................................................... 232,494 231,052
--------- ---------
Commitments and contingent liabilities
Stockholders' equity
- --------------------
Preferred stock, par value $.10 per share, authorized 250,000; issued and ... -- --
outstanding, none
Common stock, par value, $.10 per share, authorized 2,750,000 shares; issued
and outstanding 2,011,952 at December 31, 2002 and 2,011,952 at September 30,
2002 ........................................................................ 201 201
Additional paid in capital .................................................. 10,132 10,089
Retained earnings, substantially restricted ................................. 15,083 14,570
Accumulated other comprehensive income (loss) ............................... 148 22
Less stock acquired by ESOP and RRP ......................................... (304) (320)
--------- ---------
Total stockholders' equity 25,260 24,562
--------- ---------
Total liabilities and stockholders' equity .............................. $ 257,754 $ 255,614
========= =========
See notes to consolidated financial statements
3
BEDFORD BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Income
(Unaudited)
Three Months Ended
December 31
2002 2001
------ ------
(Dollars in Thousands,
Except Per Share Data)
Interest Income:
Loans.............................................. $3,473 $3,580
U.S. Government Obligations including agencies..... 250 290
Other investments, including overnight deposits.... 63 48
------ ------
Total interest income........................... 3,786 3,918
------ ------
Interest Expense:
Deposits........................................... 1,181 1,424
Borrowed funds..................................... 644 597
------ ------
Total interest expense.......................... 1,825 2,021
------ ------
Net interest income............................. 1,961 1,897
Provision for credit losses......................... 75 45
------ ------
Net interest income after provision for credit
losses............................................. 1,886 1,852
------ ------
Noninterest income:
Service charges and fees on loans.................. 374 249
Other customer service fees and
commissions........................................ 145 124
Other.............................................. 17 14
------ ------
Total noninterest income........................ 536 387
------ ------
Noninterest expense:
Personnel compensation and benefits................ 684 685
Occupancy and equipment............................ 120 104
Data processing.................................... 151 125
Federal insurance of accounts...................... 7 6
Advertising........................................ 38 31
Professional fees.................................. 68 80
Other.............................................. 143 116
------ ------
Total noninterest expense....................... 1,211 1,147
------ ------
Income before income taxes...................... 1,211 1,092
Provision for income taxes......................... 460 415
------ ------
Net income....................................... $ 751 $ 677
====== ======
Basic earnings per share............................ $ 0.38 $ 0.33
====== ======
Diluted earnings per share.......................... $ 0.36 $ 0.32
====== ======
See notes to consolidated financial statements
4
BEDFORD BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Comprehensive Income
(Unaudited)
Three Months Ended
December 31
2002 2001
---- ----
(Dollars in Thousands,
Except Per Share Data)
Net Income.............................................. $751 $677
Other comprehensive income, net of tax effect:
Unrealized gains (losses) on securities
available for sale.................................. 126 (108)
---- ----
Comprehensive income.................................... $877 $569
==== ====
5
BEDFORD BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended
------December 31------
2002 2001
-------- --------
(Dollars in Thousands)
Operating activities:
Net Income ........................................................... $ 751 $ 677
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for credit losses ........................................ 75 45
Provision for depreciation and amortization ........................ 49 42
Amortization of investment security premiums and accretion of
discounts, net ..................................................... -- (5)
(Gain) loss on sale of loans, investments and foreclosed real estate (9) (8)
(Increase) decrease in accrued interest receivable ................. 184 (178)
(Increase) decrease in other assets ................................ (388) 10
Increase (decrease) in other liabilities ........................... 72 (193)
-------- --------
Net cash provided by (used in) operating activities ............... 734 390
-------- --------
Investing activities:
Increase in interest-bearing deposits in other banks ............... (2,994) --
Proceeds from the maturity of held to maturity securities .......... 500 --
Proceeds from the maturities of investments available for sale ..... 9,000 1,014
Purchases of investment securities available for sale .............. (12,500) (9,000)
Purchase of Federal Home Loan Bank stock ........................... (100) (150)
Net increase in loans to customers ................................. (3,924) (7,926)
Principal collected on mortgage-backed securities .................. -- 1
Purchases of premises, equipment and leasehold improvements ........ (38) (25)
Net (increase) decrease in foreclosed real estate .................. -- 68
-------- --------
Net cash provided by (used in) investing activities ............... (10,056) (16,018)
-------- --------
Financing activities:
Dividends paid ..................................................... (241) (227)
Net increase (decrease) in customer deposits ....................... (268) 1,194
Proceeds from (repayments of) advances and other borrowed money .... 2,000 8,000
Repurchase of stock ................................................ -- (462)
Stock options exercised ............................................ -- 74
Net increase (decrease) in advance payments from borrowers for taxes
and insurance ...................................................... (362) (270)
-------- --------
Net cash provided by financing activities ......................... 1,129 8,309
-------- --------
Increase (decrease) in cash and cash equivalents .................. (8,193) (7,319)
Cash and cash equivalents at beginning of period ...................... 15,668 16,791
-------- --------
Cash and cash equivalents at end of period ............................ $ 7,475 $ 9,442
======== ========
See notes to consolidated financial statements
6
BEDFORD BANCSHARES, INC. AND SUBSIDIARY
Notes to Unaudited Interim Consolidated Financial Statements
December 31, 2002
NOTE 1: BASIS OF PRESENTATION
- ------- ---------------------
The accompanying unaudited interim consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
("GAAP") for interim financial information. Accordingly, they do not include all
of the information and footnotes required by generally accepted accounting
principles for complete financial statements.
The accompanying unaudited interim consolidated financial statements
include the accounts of Bedford Bancshares, Inc., Bedford Federal Savings Bank
and CVFS its wholly-owned subsidiaries. All significant intercompany balances
and transactions have been eliminated in consolidation.
In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for the fair presentation have been
included. The results of operations for the interim period ended December 31,
2002 is not necessarily indicative of the results which may be expected for any
future period. For further information, refer to consolidated financial
statements and footnotes thereto included in the Corporation's Annual Report on
Form 10-KSB for the year ended September 30, 2002.
NOTE 2: EARNINGS PER SHARE
- ------- ------------------
Earnings per share is calculated as follows:
Three Months Ended
December 31
2002 2001
---- ----
Basic Earnings Per Share:
- -------------------------
Net Income ........................................ $ 751,000 $ 677,000
========== ==========
Average Shares Outstanding, Net of
unallocated ESOP Shares (29,334 and 45,334 at
December 31, 2002 and 2001, respectively) ......... 1,982,619 2,028,059
========== ==========
Basic Earnings Per Share .......................... $ 0.38 $ 0.33
========== ==========
Diluted Earnings Per Share:
- ---------------------------
Net Income ........................................ $ 751,000 $ 677,000
========== ==========
Average Shares Outstanding, Net of
unallocated ESOP Shares (29,334 and 45,334
At December 31, 2002 and 2001, respectively) ...... 1,982,619 2,028,059
Dilutive effect of RRP Plan shares .............. -- 370
Dilutive effect of Stock Options ................ 75,844 86,810
---------- ----------
Average Shares Outstanding ........................ 2,058,463 2,115,239
========== ==========
Diluted Earnings Per Share ........................ $ 0.36 $ 0.32
========== ==========
7
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
- --------------------------
The Private Securities Litigation Reform Act of 1995 contains safe
harbor provisions regarding forward-looking statements. When used in this
discussion, the words, "believes", "anticipates", "contemplates", "expects", and
similar expressions are intended to identify forward-looking statements. Such
statements are subject to certain risks and uncertainties which could cause
actual results to differ materially from those projected. Those risks and
uncertainties include changes in interest rates, the ability to control costs
and expenses, and general economic conditions. We undertake no obligation to
publicly release the results of any revision to those forward-looking statements
which may be made to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events.
FINANCIAL CONDITION
- -------------------
At December 31, 2002, consolidated assets totaled $257.8 million, an
increase of $2.1 million from September 30, 2002. The asset expansion was
reflected in growth of the loan portfolio, which increased $3.9 million, a $3.7
million increase in the investment securities available for sale portfolio.
Funding for the growth in the loan and securities portfolios was provided
primarily by a $2.0 million increase in FHLB advances and an $8.2 million
decrease in cash and cash equivalents.
RESULTS OF OPERATIONS
- ---------------------
General. Net income for the three months ended December 31, 2002
increased $74,000 to $751,000 from $677,000 for the comparable quarter of fiscal
2002. A $64,000 increase in net interest income and an increase of $149,000 in
noninterest revenues, partially offset by a $64,000 rise in noninterest expenses
and a $30,000 increase in the provision for loan losses, resulted in the higher
level of earnings.
Interest Income. Interest income totaled $3.8 million for the three
months ended December 31, 2002, compared to $3.9 million earned in the three
months ended December 31, 2001. Interest income on loans decreased $107,000 due
to a 129 basis point decline in the loan portfolio yield, reflecting lower
market rates.
Interest Expense. Interest expense totaled $1.8 million for the three
months ended December 31, 2002, down $196,000 from the interest expense for the
three months ended December 31, 2001. A decrease of $243,000 in interest on
deposits due a 125 basis point decline in the cost of average interest-bearing
deposits was partially offset by a rise of $47,000 in interest expense on FHLB
advances due to a higher average balance of advances.
Net Interest Income. For the three months ended December 31, 2002, net
interest income was $2.0 million, up $64,000 from the net interest income earned
in the same three months of
8
2001. For the three months ended December 31, 2002, the net interest rate spread
and net interest margin were 2.66% and 3.15%, respectively, compared to 2.94%
and 3.61%, respectively for the same period of 2001.
Provision for Loan Losses. The provision for loan losses was $75,000
for the three months ended December 31, 2002, up $30,000 from the provision
recorded in the comparable quarter of fiscal 2002. An 8.7% increase in the
commercial loan portfolio in the first quarter of fiscal 2003 precipitated the
increase in the provision for loan losses for the three months ended December
31, 2002. Based upon the quality of the Bank's loan portfolio, the relatively
stable local economy and the level of nonperforming assets, management believes
the allowance for loan losses is adequate to absorb any anticipated credit
losses at December 31, 2002. However, assessment of the adequacy of the
allowance for loan losses involves subjective judgments and thus there can be no
assurance that additional provisions for loan losses will not be required.
Noninterest income. For the three months ended December 31, 2002,
noninterest income was $536,000, up 38.5% from the $387,000 for the comparable
2001 period. Service charges and fees on loans were up $125,000 to $374,000 for
the first quarter of fiscal 2003 from $249,000 for the comparable period of
fiscal 2002 due primarily to the increased level of commercial loans and a 6.2%
increase in the amount of mortgage loans closed. Other fees and commissions were
up 16.8% to $145,000 for the three months ended December 31, 2002 from $124,000
for the comparable period of 2001 due primarily to increases of $13,000 in
income from checking and $6,000 in fees associated with debit cards.
Noninterest expense. Noninterest expense was $1,211,000 for the three
months December 31, 2002, up 5.6% from $1,147,000 for the comparable 2001
period. Occupancy and equipment expense was up $16,000 due primarily due to
higher equipment expenses. Data processing expense was $151,000, up 20.8% from
the $125,000 for the comparable 2001 period, due primarily to an increased
number of transaction accounts.
Provision for Income Taxes. The provision for income taxes was $460,000
for the three months ended December 31, 2002, up 10.81% from the $415,000
provision recorded in the same three months of fiscal 2002. The primary reason
for the increase was the increased level of taxable income. It is anticipated
that the effective tax rate for fiscal 2003 will be relatively unchanged from
the effective tax rate experienced in fiscal 2002.
9
CAPITAL COMPLIANCE
- ------------------
The following table presents the Bank's compliance with its regulatory capital
requirements of December 31, 2002. (Dollar amounts in thousands).
December 31, 2002
-----------------
Percentage
of assets
---------
GAAP Capital...................................... $22,547 8.75%
======= ====
Tangible capital.................................. $22,399 8.71%
Tangible capital requirement...................... 3,858 1.50%
------- ----
Excess............................................ $18,541 7.21%
======= ====
Core capital...................................... $22,399 8.71%
Core capital requirement.......................... 10,288 4.00%
------- ----
Excess............................................ $12,111 4.71%
======= ====
Total risk-based capital (1)...................... $23,650 14.43%
Total risk-based capital requirement (1).......... 13,109 8.00%
------- ----
Excess............................................ $10,541 6.43%
======= ====
_____________________________
(1) Based on risk-weighted assets of $163,867
Management believes that under current regulations, we will continue to
meet our minimum capital requirements in the foreseeable future. Events beyond
our control, such as increased interest rates or a downturn in the economy in
areas in which we operate could adversely affect future earnings and as a
result, our ability to meet our future minimum capital requirements.
LIQUIDITY
- ---------
Our liquidity is a measure of our ability to fund loans, pay deposit
withdrawals and other cash outflows in an efficient, cost effective manner. Our
primary sources of funds are deposits, and scheduled amortization and prepayment
of loans. In addition, we supplement our funding needs by borrowing funds from
the Federal Home Loan Bank ("FHLB") of Atlanta. As of December 31, 2002, such
borrowed funds totaled $54 million. Loan payments and prepayments, deposits and
borrowings are greatly influenced by general interest rates, economic conditions
and competition.
The amount of certificate accounts, which are scheduled to mature
during the next twelve months ending December 31, 2003, is approximately $57
million. To the extent that these deposits do not remain with us upon maturity,
we believe that we can replace these funds with other deposits, FHLB advances or
other borrowings. It has been our experience that a substantial portion of such
maturing deposits remains with us.
At December 31, 2002, we had loan commitments outstanding of $40.5
million. These commitments will be funded from deposit inflows, loan repayments
and borrowings.
10
CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures. Based on their
evaluation as of a date within 90 days of the filing date of this Quarterly
Report on Form 10-QSB, the Registrant's principal executive officer and
principal financial officer have concluded that the Registrant's disclosure
controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the
Securities Exchange Act of 1934 (the "Exchange Act")) are effective to ensure
that information required to be disclosed by the Company in reports that it
files or submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in Securities and Exchange Commission
rules and forms.
(b) Changes in internal controls. There were no significant changes in
the Registrant's internal controls or in other factors that could significantly
affect these controls subsequent to the date of their evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
11
BEDFORD BANCSHARES, INC. AND SUBSIDIARY
Key Operating Ratios
Three Months Ended
December 31
-----------
2002(1) 2001(1)
------- -------
(Unaudited)
Basic earnings per share........................ $0.38 $0.33
Diluted earnings per share...................... $0.36 $0.32
Return on average assets........................ 1.17% 1.25%
Return on average equity........................ 12.05% 11.57%
Interest rate spread............................ 2.66% 2.94%
Net interest margin............................. 3.15% 3.61%
Noninterest expense to average assets........... 1.88% 2.12%
Net charge-offs to average outstanding loans.... .03% .02%
December 31 September 30
2002 2002
----------- ------------
(DOLLARS IN THOUSANDS)
(Unaudited)
Nonaccrual loans....................................... $742 $630
Repossessed real estate................................ 26 26
---- ----
Total nonperforming assets............................. $768 $656
==== ====
Allowance for credit losses to nonperforming assets.... 162.83% 182.01%
Nonperforming loans to total loans..................... 0.33% 0.29%
Nonperforming assets to total assets................... 0.30% 0.26%
Book value per share................................... $12.56 $12.21
====== ======
________________________
(1) The ratios for the three month periods are annualized
12
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings
-----------------
Neither the Corporation nor the Bank was engaged in any
legal proceedings of a material nature at December 31, 2002.
From time to time, the Corporation is a party to legal
proceedings in the ordinary course of business wherein it
enforces its security interest in loans.
Item 2. Changes in Securities
---------------------
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) List of Exhibits:
3(i) Restated Articles of Incorporation of Bedford Bancshares, Inc.*
3(ii) Bylaws of Bedford Bancshares, Inc.*
4 Specimen of Stock Certificate*
10.1 1994 Stock Option Plan*
10.2 Recognition and Retention Plan and Trust Agreement*
10.3 Employment Agreement between the Registrant and Harold K. Neal*
99.0 Certification pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K
Not applicable.
_______________________
* Incorporated by reference to the Registrant's Form 10-KSB filed with the
SEC on December 9, 1994 (File No. 000-24330).
13
BEDFORD BANCSHARES, INC. AND SUBSIDIARY
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.
BEDFORD BANCSHARES, INC.
Date: February 4, 2003 By: /s/Harold K. Neal
--------------------------------
Harold K. Neal
President and
Chief Executive Officer
(Principal Executive Officer)
Date: February 4, 2003 By: /s/James W. Smith
--------------------------------
James W. Smith
Vice President and Treasurer
(Principal Accounting and
Financial Officer)
14
SECTION 302 CERTIFICATION
I, Harold K. Neal, President and Chief Executive Officer of Bedford
Bancshares, Inc., certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Bedford Bancshares,
Inc.;
2. Based on my knowledge, this quarterly 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 quarterly 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 officer 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 officer and I have indicated in this
quarterly 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: February 4, 2003 /s/Harold K. Neal
-------------------------------------
Harold K. Neal
President and Chief Executive Officer
SECTION 302 CERTIFICATION
I, James W. Smith, Vice President, Treasurer and Chief Financial
Officer, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Bedford Bancshares,
Inc.;
2. Based on my knowledge, this quarterly 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 quarterly 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 officer 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 officer and I have indicated in this
quarterly 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: February 4, 2003 /s/James W. Smith
-----------------------------
James W. Smith
Vice President, Treasurer and
Chief Financial Officer