TOTAL NUMBER OF PAGES 17
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: 0-25750
-------
PENFED BANCORP, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 61-1275478
------------------------- --------------------
State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
215 W. Shelby Street, Falmouth, KY 41040
-------------------------------------- ----------------
(Address of principal executive offices) (Zip Code)
(606) 654-6961
-------------------------------------------------
Registrant's telephone number, including area code)
N/A
----------------------------------------------------------
Former name, former address and former fiscal year,
if changed since last report
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 share outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at November 14, 1996
------------------------ --------------------------------
Common Stock, $0.01 Par Value 304,881 Common Share
PENFED BANCORP, INC.
INDEX
Part I Financial Information Page
Item 1 Unaudited Consolidated Financial Statements
Consolidated Statements of Financial Condition,
September 30, 1996 and December 31, 1995 1
Consolidated Statements of Income, Three Months
Ended September 30, 1996 and 1995 2
Consolidated Statements of Income, Nine Months
Ended September 30, 1996 and 1995 3
Consolidated Statements of Cash Flows,
Nine Months Ended September 30, 1996 and 1995 4
Notes to Consolidated Financial Statements 5
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
Part II Other Information 14
Signatures 15
PENFED BANCORP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
ASSETS
September 30 December 31
1996 1995
(unaudited)
----------- -------------
Cash and balances with banks $ 290,672 $ 248,547
Interest-bearing deposits
in other depository institutions 282,104 347,413
Investment securities, held to maturity 369,657 250,000
Mortgage-backed securities, held to maturity 655,478 578,671
Federal Home Loan Bank capital stock 239,700 224,500
Loans receivable, net 26,257,068 24,339,783
Office property and equipment, at cost,
less accumulated depreciation 345,191 379,033
Real Estate Owned 0 59,948
Mortgage servicing rights 15,430 0
Other assets 160,368 122,455
---------- ----------
Total assets $ 28,615,668 $26,550,350
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Savings deposits $ 4,306,269 $ 3,630,984
Certificates of deposit 15,949,201 16,289,193
Advances from Federal Home Loan Bank 3,100,000 1,400,000
SAIF Assessment 114,183 0
Other liabilities 184,526 127,195
---------- ----------
Total liabilities 23,654,179 21,447,372
Stockholders' equity:
Preferred stock, 500,000 shares
authorized and unissued
Common stock, $.01 par value, 2,000,000
shares authorized; 345,000 shares issued;
304,881 shares outstanding at
September 30, 1996 and 320,474 shares
outstanding at December 31, 1995 3,450 3,450
Additional paid in capital 3,114,519 3,109,755
Retained income, substantially restricted 2,233,646 2,235,233
Employee Stock Ownership Plan (216,300) (244,260)
Treasury stock (173,826) (1,200)
----------- ----------
Total stockholders' equity 4,961,489 5,102,978
---------- ----------
Total liabilities and $ 28,615,668 $26,550,350
stockholders' equity ========== ===========
1
PENFED BANCORP,INC.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Three months ended
September 30
---------- ----------
1996 1995
---------- ----------
Interest on loans $ 553,991 $ 476,954
Interest on investment securities 17,640 19,255
Interest on
interest-bearing deposits
in other depository institutions 5,553 3,827
Other interest income 4,100 6,226
-------- --------
Total interest income 581,284 506,262
-------- --------
Interest on savings deposits and advances:
NOW accounts 4,783 2,324
Savings accounts 20,721 18,651
Certificates 236,683 234,247
Federal Home Loan Bank Advances 35,211 35,488
-------- --------
Total interest expense 297,398 290,710
-------- --------
Net interest income 283,886 215,552
-------- --------
Provision for loan losses 9,000 3,000
-------- --------
Net interest income after
provision of loan losses 274,886 212,552
-------- --------
Noninterest income 23,930 12,426
-------- --------
Other expenses:
Salaries and benefits 74,505 118,967
Occupancy expense 15,152 13,283
Equipment and data processing 12,228 10,264
Professional services 15,852 22,729
Federal insurance premium 11,875 9,993
State ad valorem taxes 7,058 5,189
SAIF Assessment 114,183 0
Other 52,506 22,408
-------- --------
Total other expenses 303,359 202,833
-------- --------
Income before income taxes (4,543) 22,145
Income tax expense 215 5,149
-------- --------
Net income $ (4,758) $ 16,996
======== ========
Net income per share $ (0.02) $ 0.05
======== ========
Weighted average common share
outstanding 317,585 317,934
2
PENFED BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Nine months ended
September 30
------------
1996 1995
----------- ----------
Interest on loans $ 1,597,127 $1,347,841
Interest on investment securities 48,564 42,229
Interest on interest-bearing deposits
in other depository institutions 15,782 10,782
Other interest income 12,000 27,944
---------- ----------
Total interest income 1,673,473 1,428,796
---------- ----------
Interest on savings
deposits and advances:
NOW accounts 11,774 5,548
Savings accounts 60,039 57,998
Certificates 732,657 666,475
Federal Home Loan Bank Advances 74,085 105,328
---------- ----------
Total interest expense 878,555 835,349
---------- ----------
Net interest income 794,918 593,447
---------- ----------
Provision for loan losses 15,000 9,000
---------- ----------
Net interest income after
provision of loan losses 779,918 584,447
---------- ----------
Noninterest income 85,055 31,982
---------- ----------
Other expenses:
Salaries and benefits 234,901 245,367
Occupancy expense 50,209 51,336
Equipment and data processing 39,781 30,103
Professional services 73,129 45,927
Federal insurance premium 33,861 30,632
State ad valorem taxes 19,076 15,566
SAIF Assessment 114,183 0
Other 99,777 59,694
---------- ----------
Total other expenses 664,917 478,625
---------- ----------
Income before income taxes 201,097 137,804
Income tax expense 68,180 46,412
---------- ----------
Net income $ 131,876 $ 91,392
========== ==========
Net income per share $0.42 $0.29
========== ==========
Weighted average common
share outstanding 321,287 318,113
3
PENFED BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Nine months ended
September 30,
---------- ----------
1996 1995
---------- ----------
Cash flows from
operating activities: $ 59,048 $ 163,955
---------- ----------
Cash flows from investing activities:
Securities (196,464) (625,049)
Loans receivable (2,003,778) (3,295,058)
Purchases equipment 0 (156,520)
---------- ----------
Net cash used investing activities: (2,200,242) (4,076,627)
Cash flows from financing activities:
Deposits 418,010 898,781
Advances from FHLB 1,700,000 500,000
Net proceeds from stock conversion 0 2,153,327
---------- ----------
Net cash used in financing activities 2,118,010 3,552,108
Net cash and cash equivalents (23,184) (360,564)
Cash and cash equivalents
at beginning of period 595,960 901,500
---------- ----------
Cash and cash equivalents
at end of period $ 572,776 $ 540,936
========== ==========
4
PENFED BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
GENERAL
The accompanying consolidated financial statements of Penfed Bancorp, Inc. (the
"Corporation") and Pendleton Federal Savings Bank (the subsidiary, "Savings
Bank") have been prepared in accordance with the instructions for Form 10-QSB
and therefore do not include certain information or footnotes necessary for the
presentation of financial position in accordance with generally accepted
accounting principles. However, in the opinion of management, the consolidated
financial statements reflect all adjustments (which consist of normal recurring
accruals) necessary for a fair presentation of the results for the unaudited
periods. The results of operations for the nine months ended September 30, 1996
are not necessarily indicative of the results which may be expected for the
entire year. The consolidated financial statements should be read in
conjunction with the audited financial statements and the notes thereto for the
year ended December 31, 1995.
Allowance for Loan Losses:
An analysis of the changes in the loan loss allowance for the nine months ended
September 30, 1996 follows:
Three Months Ended Nine Months Ended
1996 1995 1996 1995
Beginning balance $ 112,063 $ 100,063 $106,063 $94,063
Provision 9,000 3,000 15,000 9,000
------- ------- -------- --------
Ending balance $ 121,063 $ 103,063 121,063 103,063
======= ======= ======= =======
Mortgage Servicing Rights
In May 1995, the Financial Accounting Standards Board issued SFAS 122,
Accounting for Mortgage Servicing Rights, an amendment to SFAS 65. The Company
elected to adopt SFAS 122 for its financial statement reporting in the first
quarter of 1996. SFAS 122 prohibits retroactive application. Accordingly, the
Company's financial statement reporting for the year of 1995 was accounted for
under the original SFAS 65. As a consequence, the Company's 1996 results are not
directly comparable to the results of 1995. Net income for 1996 was increased by
approximately $15,000 as a result of the adoption.
5
Mortgage Servicing Rights continued
FAS 122 eliminates the accounting distinction between servicing rights acquired
through purchase transactions and those acquired through origination activities.
Recognition of mortgage servicing rights related to loan origination activities
was not permitted for periods prior to the adoption of FAS 122. When a mortgage
banking enterprise purchases or originates a mortgage loan with a definitive
plan to sell the loan and retain the mortgage servicing rights, FAS 122 requires
that a portion of the loan be allocated to the mortgage servicing rights based
on its fair value relative to the fair value of the loan including the mortgage
servicing rights. To determine the fair value of the servicing rights created
during 1995, the Company used the market prices of comparable servicing sale
contracts when available, or alternatively, a valuation model that calculates
the present value of estimated future cash flows. The estimates of future cash
flows are based on assumptions that market participants would use in estimating
future net servicing income. These assumptions included estimates of the cost of
servicing per loan, the discount rate, float rate, and inflation rate, ancillary
income per loan, prepayment speeds and default rates.
Mortgage servicing rights are amortized over the estimated life of the related
loans in proportion to estimated net servicing income.
To evaluate potential impairment at the end of each quarter, the
postimplementation mortgage servicing portfolio is disaggregated based on its
predominant risk characteristics. The Company has determined those risk
characteristics to be loan type and interest rate. The resulting segments of
the portfolio are then valued using the same model as was originally used to
determine the fair value at origination using current assumptions. The
calculated value is then compared with the book value of each segment to
determine if a reserve for impairment is required.
6
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
The primary business of Pendleton Federal Savings Bank is the origination of
residential real estate loans and funding such loans through deposits and other
borrowings. The largest component of the Bank's net income is net interest
income, which is the difference between interest income and interest expense.
Consequently, the Bank's earnings are primarily dependent on its interest
income, which is determined by (1) the difference ("interest rate spread")
between rates of interest earned on interest-earning assets and rates paid on
interest-bearing liabilities, and (2) the relative amounts of interest-earning
assets and interest-bearing liabilities.
Because most deposit accounts react more quickly to market interest rate
movements than do traditional mortgage loans, sharp increases in rates can
adversely affect the Bank's earnings over time.
Financial Condition
Total assets increased by 7.8% during the quarter ended September 30, 1996.
Loans receivable and investment securities increased 7.9% and 47.9%,
respectively. Mortgage-backed securities increased 13.3%. Deposits increased
1.7% and Federal Home Loan Bank advances increased 121.5%.
Due to the continuing marketing efforts of the Bank to take advantage of
opportunities for lending growth in its market areas, the Bank's loans
receivable balance increased during the third quarter. Fixed rate loans are
generally sold in the secondary market; therefore their origination does not
result in increases to the Bank's loan portfolio. During the quarter, the Bank
was able to increase its loans receivable balance by originating adjustable rate
mortgage loans that are retained in the Bank's loan portfolio. Future increases
in the Bank's loans receivable balances will be funded through increased
deposits or Federal Home Loan Bank advances, if required. Investment securities
increased due to a purchase of a SBA pool, a FHLMC pool, and a municipal bond.
7
The Bank experienced an increase in deposits due to new depositors opening
accounts. Management will continue to monitor deposit levels in light of
prevailing interest rates and other factors and may choose to increase deposit
rates in the future to preserve market share or obtain required levels of cash
flows. To the extent that the Bank elects to increase deposit rates in order to
attract and/or maintain deposits and to fund future loan growth and other
operating needs, interest income may be adversely affected. Currently, however,
management does not anticipate the necessity of offering above-market interest
rates on deposits.
Stockholders' equity decreased from 19.2% of assets at December 31, 1995 to
17.4% of assets at September 30, 1996. This is due primarily to the increase in
loans and treasury stock purchases.
Although the level of nonperforming loans increased for the third quarter as
compared to the same quarter of the prior year, (see table below) overall the
Bank continued to experience low loan losses. The following table sets forth
information with respect to the Bank's nonperforming assets for the periods
indicated. During the periods shown, the Bank had no restructured loans with
the meaning of Statement of Financial Accounting Standards No. 15.
At September 30,
------------------------
1996 1995
----------- -----------
(Dollars in thousands)
Loans accounted for on a
non-accrual basis $ 671 $ 564
Accruing loans which are
contractually past due 90 days
or more 0 24
----- -----
Total of non-accrual and 90 days
past due loans $ 671 $ 588
===== =====
Other real estate owned 0 59
----- -----
Total nonperforming assets $ 671 $ 647
===== =====
Ratio of nonperforming loans
to total loans 2.6% 2.7%
===== =====
Ratio of nonperforming assets
to total assets 2.4% 2.4%
===== =====
Ratio of allowance for loan losses
to total loans 0.5% 0.4%
===== =====
Ratio of allowance for loan losses
to nonperforming loans 18.0% 15.9%
===== =====
8
The Bank's total nonperforming loans and total nonperforming assets at September
30, 1996 increased 14.1% and 3.7%, respectively, as compared to September 30,
1995. Nonperforming loans at September 30, 1996 increased due to a general
increase in delinquencies, however all nonperforming loans are collateralized by
residential property. Based on management's review of the value of the
underlined collateral and other factors, no losses are expected.
The Bank's allowance for loan losses increased $18,000 from September 30, 1995
to September 30, 1996. An additional $6,000 was deposited into the provision
for loan losses during the third quarter in order to increase the ratio of
allowance for loan losses to nonperforming loans. (See "Allowance for Loan
Losses" of the Notes to the Consolidated Financial Statements).
Results of Operations
Three Months Ended September 30, 1996, Compared to September 30, 1995.
The Corporation's net income for the quarter ended September 30, 1996 decreased
128.0% as compared to the same quarter of 1995 due to a increase in interest
expense of 2.4%, an increase in other expenses of 49.6%, offset by an increase
in interest income of 14.9% and an in increase in noninterest income of 92.6%,
and an decreased in income tax expense of 95.9%.
Net interest income before provision for loan losses increased by 31.8%. Total
interest income increased 14.9%, due to an increase in the volume of outstanding
loans. Total interest expense increased 2.4% as a result of an increase in the
effective rate paid on interest-bearing liabilities, and also due to the
increase in the balance of interest-bearing deposits.
Noninterest income increased 92.6% for the three months ended September 30, 1996
as compared to the same quarter of 1995. The primary reason for this increase
is Freddie Mac service income, which increased 130.8%.
Other expenses increased by 49.6% for the three months ended September 30, 1996
as compared to the same quarter of 1995 primarily as a result of a special
asessment levied by the Federal Deposit Insurance Corporation pursuant to
recently enacted legislation designed to recapitalize the Savings Association
Insurance Fund ("SAIF"). The asessment, which was levied on all institutions
with deposits insured by the SAIF, was set by the FDIC at 0.65% of SAIF-insured
deposits as of March 31, 1995 and will be paid November 27, 1996. The effect of
this assessment was to reduce the Company's net income for the quarter ended
September 30, 1996 by $114,183, or $.36 per share. As a result of this
legislation, the Company's deposit insurance premiums will decline significantly
commencing on January 1, 1997.
9
The increase in other expenses, offset by the increase in net interest income
along with the increase in noninterest income, combined to result in a decrease
in income before income taxes of 115.8%. Income taxes increased by 120.6% as
result of lower profits, due to the SAIF assessment.
Nine Months Ended September 30, 1996, Compared to September 30, 1995.
The Corporation's net income for the nine months ended September 30, 1996
increased 44.3% as compared to the same quarter of 1995 due to an increase in
net interest income of 33.9% and an increase in noninterest income of 166.0%,
offset by an increase in other expenses of 38.9% and an increase in income tax
expense of 47.0%.
Net interest income before provision for loan losses increase by 34.0%. Total
interest income increased 17.2%, due to an increase in the volume of outstanding
loans. Total interest expense increased 5.6% as a result of an increase in the
effective rate paid on interest-bearing liabilities, and also due to the
increase in the balance of interest-bearing deposits.
Noninterest income increased 166.0% for the nine months ended September 30, 1996
as compared to the same quarter of 1995. The primary reason for the increase is
Freddie Mac service income, which increased 174.2%.
Other expenses increased by 38.9% for the nine months ended September 30, 1996
as compared to the same period of 1995. Professional services, principally legal
and accounting fees, increased 59.2% due to increased reporting requirements
associated with being a public company. The effect of the special assessment
levied by the FDIC reduced the Company's net income for the nine months ended
September 30, 1996 by $114,183, or $.35 per share.
The increase in net interest income along with the increase in noninterest
income, offset by the increase in other expenses, combined to result in an
increase in income before income taxes of 45.9%. Income taxes increased by
47.0% as a result of higher profits.
10
Liquidity and Capital Resources
Liquidity
Pendleton Federal is required by federal regulations to maintain specified
levels of "liquid" assets consisting of cash and other eligible investments. The
current level of liquidity required by the OTS is 5% of the sum of net
withdrawable savings and borrowings due within one year. The Bank's regulatory
liquidity at September 30, 1996 and December 31, 1995 was 5.96% and 6.24%,
respectively. Management believes that the Bank has an adequate level of
liquidity to meet anticipated cash flow needs.
Capital Resources
The Office of Thrift Supervision ("OTS") imposes regulations which provide that
savings associations must maintain certain levels of capital. The regulations
include a leverage limit, a tangible capital requirement and a risk-based
capital requirement. Specifically, the regulations provide that savings
associations must maintain tangible capital equal to 1.5% of adjusted total
assets, core capital equal to 3% of adjusted total assets and a combination of
core and supplementary capital equal to 8% of risk weighted assets. Pendleton
Federal is in compliance with these capital regulations.
The OTS capital regulations also require savings associations to maintain
capital based on the amount of their exposure to losses from changes in market
interest rates ("interest rate risk"). The calculation performed by the OTS
indicates that the Bank has no additional capital requirement resulting from
excessive exposure to interest rate risk. The OTS has also proposed an
amendment to its core capital requirement to conform to the leverage capital
requirements applicable to national banks. The Bank does not expect such
amendment, if adopted, to cause the Bank to fall below its capital requirements.
The following table summarizes the Bank's capital requirements and position at
September 30, 1996 and December 31, 1995 in accordance with the capital
standards imposed by the OTS. Amounts are in thousands.
11
September 30, December 31,
1996 1995
------------ -----------
Amount % Amount %
------ ---- ------ ----
Tangible capital $4,961 17.3 $5,103 19.2
Tangible capital
requirement 430 1.5 398 1.5
------ ---- ------ ----
Excess $4,531 15.8 $4,705 17.7
====== ==== ====== ====
Core capital $4,961 17.3 $5,103 19.2
Core capital
requirement 861 3.0 797 3.0
------ ---- ------ ----
Excess $4,100 15.2 $4,307 16.2
====== ==== ====== ====
Tangible capital $4,961 $5,103
Allowance for loan loss 121 106
------ ------
Total capital
(core and supplemental) 5,082 30.7 5,209 33.9
Risk-based requirement 1,323 8.0 1,228 8.0
------ ---- ------ ----
Excess $3,759 22.7 $3,981 25.9
====== ==== ====== ====
Impact of Inflation and Changing Prices
The Consolidated Financial Statements and Notes presented herein have been
prepared in accordance with generally accepted accounting principles, which
require the measurement of financial position and operating results in terms of
historical dollars without considering the change in the relative purchasing
power of money over time due to inflation. The impact of inflation is reflected
in the increased cost of the Company's operations. Unlike most industrial
companies, nearly all the assets and liabilities of the Company are monetary in
nature. As a result, interest rates have a greater impact on the Company's
performance than do the effects of general levels of inflation. Interest rates
do not necessarily move in the same direction or to the same extent as the price
of goods and services.
Effect of Implementing New Accounting Standards
See "Notes to the Consolidated Financial Statements for discussion of new
accounting standards.
12
BIF-SAIF Premium Disparity
On September 30, 1996, Federal legislation was enacted and signed into law which
provides a resolution to the disparity in the Bank Insurance Fund and SAIF
premiums. In particular, the SAIF-issued institutions, such as the Bank, will
pay a one-time assessment of 65.7 cents on every $100 of deposits held at
March 31, 1995. Such payment is due no later than November 27, 1996. As a result
of the new law the Company will be required to pay approximately $114,000.
Assuming the special assessment is tax deductible, the cost, net of income tax
benefits, will approximately $75,000. The Company recorded the one-time charge
to earnings during the quarter ended September 30, 1996. Also, beginning January
1, 1997 the current annual minimum SAIF premium of 23 basis points will be
reduced to approximately 6.5 basis points.
Asset/Liability Management
Pendleton Federal's future financial performance depends to a large extent on
how successful the Bank is in limiting the sensitivity of the Bank's earnings
and net asset value to changes in interest rates. Such sensitivity may be
analyzed by examining the amount by which the market value of the Bank's
portfolio equity changes given an immediate and sustained change in interest
rates. At June 30, 1996, (the most recent report available) the Bank's market
value of portfolio equity would decrease by $713,000 or 13.0% and increase by
$650,000 or 12.0% given a 200 basis point immediate and sustained increase or
decrease, respectively, in interest rates. Based on this analysis, management
believes that the Bank has an acceptable level of interest rate risk and is
adequately protected from the effects of interest rate fluctuations.
Management believes that interest rate risk is one of the most significant
factors affecting the Bank's future ability to generate earnings consistently.
Accordingly, management has focused on strategies to reduce the Bank's interest
risk in recent years. These strategies include the origination of its portfolio
of adjustable rate mortgage loans with greater interest rate sensitivity than
long term fixed rate mortgage loans, the sale of long term fixed rate loans in
the secondary market and increasing the balance of transaction accounts.
Sources of non-interest income such as loan servicing fees and service charges
on deposits are also emphasized.
13
PENFED BANCORP, INC.
PART II
OTHER INFORMATION
ITEM 1 Legal Proceedings
None
ITEM 2 Changes in Securities
None
ITEM 3 Defaults Upon Senior Securities
None
ITEM 4 Submission of Matters to a Vote of Security Holders
None
ITEM 5 Other Information
On October 31, 1996 the Board of Directors of the Registrant
authorized the repurchase of up to 17,125 shares of the Registrant's common
stock, $0.01 par value, which may become available for repurchase from time to
time. Such repurchases are to be effected through open market purchases,
megotiated transactions or in such other manner as will comply with applicable
law.
ITEM 6 Exhibits and Reports on Form 8-K
None
14
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.
PENFED BANCORP, INC.
November 21, 1996 /s/ David C. Wills
- ------------- --------------------
Date David C. Wills
President and Chief Executive Officer
(Duly Authorized Officer)
November 21, 1996 /s/ Leann Banta
- ------------- --------------------
Date Leann Banta
Secretary and Controller
(Principal Financial Officer)
15