1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
--- SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001
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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 000-31821
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FINGER LAKES BANCORP, INC.
--------------------------
(Exact name of registrant as specified in its charter)
UNITED STATES 16-1594819
- ------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
(Incorporation or organization) Identification Number)
470 EXCHANGE STREET, GENEVA, NEW YORK 14456
- --------------------------------------- ----------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (315) 789-3838
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 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 __
Number of shares of common stock outstanding
as of March 31, 2001
COMMON STOCK, $.01 PAR VALUE 3,445,110
- ---------------------------- -----------
Class Outstanding
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FINGER LAKES BANCORP, INC.
Form 10-Q
INDEX
Page
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements (unaudited):
Consolidated Statements of Financial Condition
at March 31, 2001 and December 31, 2000 3
Consolidated Statements of Income
for the three month periods ended
March 31, 2001 and March 31, 2000 4
Consolidated Statements of Cash Flows
for the three month periods ended
March 31, 2001 and March 31, 2000 5, 6
Consolidated Statements of Changes in Stockholders' Equity
for the three month period ended March 31, 2001 7
Notes to Consolidated Financial Statements 8, 9
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 10 - 12
Item 3 - Quantitative & Qualitative Disclosure about
Market Risk 12, 13
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings 14
Item 2 - Changes in Securities and Use of Proceeds 14
Item 3 - Defaults Upon Senior Securities 14
Item 4 - Submission of Matters to a Vote of Security Holders 14
Item 5 - Other Information 14
Item 6 - Exhibits and Reports on Form 8-K 14
Signatures 15
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Item 1 - Financial Statements
FINGER LAKES BANCORP, INC.
--------------------------
Consolidated Statements of Financial Condition
(dollars in thousands, except per share data)
(unaudited)
March 31, December 31,
--------- ------------
2001 2000
---- ----
ASSETS
- ------
Cash and due from banks $ 3,936 4,496
Securities available for sale, at fair value 145,351 131,322
Securities held to maturity, fair value
of $1,563 at March 31, 2001 and
December 31, 2000 1,563 1,563
Loans 177,074 173,890
Less allowance for loan losses 1,510 1,468
--------- --------
Net loans 175,564 172,422
Accrued interest receivable 2,430 2,479
Federal Home Loan Bank Stock, at cost 3,620 3,523
Premises and equipment, net 4,656 4,814
Bank owned life insurance 8,080 5,003
Other assets 2,756 3,574
--------- --------
Total assets $ 347,956 329,196
========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Liabilities:
Deposits $ 235,642 228,462
Advances from Federal Home Loan Bank 71,102 60,243
Other liabilities 3,388 3,920
--------- --------
Total liabilities 310,132 292,625
--------- --------
Stockholders' Equity:
Preferred Stock; $.01 par value; authorized
1,000,000 shares; issued and outstanding-none -- --
Common Stock, $.01 par value; 5,000,000
shares authorized; 3,445,110 shares
issued and outstanding 35 35
Additional paid-in capital 20,068 20,068
Retained earnings 18,916 18,780
Accumulated other comprehensive income/(loss) 188 (898)
Unallocated shares of ESOP (1,383) (1,414)
--------- --------
Total stockholders' equity 37,824 36,571
--------- --------
Total liabilities and stockholders' equity $ 347,956 329,196
========= ========
See accompanying notes to consolidated financial statements.
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FINGER LAKES BANCORP, INC.
--------------------------
Consolidated Statements of Income
(in thousands, except per share data)
(unaudited)
Three Months
Ended March 31,
---------------
2001 2000
------ ----
Interest income:
Loans $3,543 3,214
Securities 2,367 2,113
Other 9 8
------ -----
5,919 5,335
------ -----
Interest expense:
Deposits 2,779 2,195
Borrowings 962 980
------ -----
3,741 3,175
------ -----
Net interest income 2,178 2,160
Provision for loan losses 60 60
------ -----
Net interest income after provision for loan losses 2,118 2,100
------ -----
Non interest income:
Service charges and other fee income 333 216
Net gain on sale of securities available for sale 118 --
Net gain on sale of loans 12 30
Other 80 4
------ -----
543 250
------ -----
Non interest expenses:
Salaries and employee benefits 1,042 952
Office occupancy and equipment 446 382
Professional fees 113 103
Marketing and advertising 69 55
Data processing 58 45
Provision for environmental remediation -- 150
Other 427 396
------ -----
2,155 2,083
------ -----
Income before income tax expense 506 267
Income tax expense 163 103
------ -----
Net income $ 343 164
====== =====
Net income per common share - basic $ 0.11 0.05
====== =====
Net income per common share-diluted $ 0.11 0.05
====== =====
See accompanying notes to consolidated financial statements.
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FINGER LAKES BANCORP, INC.
--------------------------
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months
Ended March 31,
---------------
2001 2000
-------- ------
Cash flows from operating activities:
Net income $ 343 164
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 210 170
Amortization of fees, discounts
and premiums 26 15
Provision for loan losses 60 60
Provision for environmental remediation -- 150
Net gain on sale of securities available for sale (118) --
Net gain on sale of loans (12) (30)
Net loss/(gain) from sale of real estate owned (6) 7
Allocation of ESOP 31 9
Increase in cash value of BOLI (77) --
Proceeds from sale of loans held for sale 634 1,615
Loans originated for sale (516) (1,143)
Decrease/(increase) in accrued interest receivable 49 (82)
Increase in other assets (46) (404)
Decrease in other liabilities (532) (512)
-------- ------
Net cash provided by operating activities 46 19
-------- ------
Cash flows from investing activities:
Proceeds from maturities of and principal collected on
securities available for sale 2,398 2,444
Proceeds from sales of securities available for sale 32,892 --
Purchases of securities available for sale (47,383) (1,774)
Loans originated and purchased (9,691) (8,225)
Principal collected on loans 6,439 3,445
Purchase of bank owned life insurance (3,000) --
Proceeds from sale of real estate owned 56 21
Purchases of FHLB stock (97) --
Purchases of premises and equipment, net (52) (428)
-------- ------
Net cash used in investing activities (18,438) (4,517)
-------- ------
(continued)
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FINGER LAKES BANCORP, INC.
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Consolidated Statements of Cash Flows, continued
(in thousands)
(unaudited)
Three Months
Ended March 31,
---------------
2001 2000
-------- -------
Cash flows from financing activities:
Net increase/(decrease) in savings, demand and
money market accounts $ 1,275 (746)
Net increase in time deposits 5,905 3,611
Net increase/(decrease) in short term advances from FHLB 6,000 (14,900)
Long term advances from FHLB 5,123 15,000
Repayments of long term advances from FHLB (264) (248)
Dividends on common stock (207) (71)
-------- -------
Net cash provided by financing activities 17,832 2,646
-------- -------
Net decrease in cash and cash equivalents (560) (1,852)
Cash and cash equivalents at beginning of period 4,496 6,095
-------- -------
Cash and cash equivalents at end of period $ 3,936 4,243
======== =======
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 3,700 3,276
Income taxes -- 40
Non-cash investing activities:
Transfer of loans to real estate owned $ -- 224
See accompanying notes to consolidated financial statements.
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FINGER LAKES BANCORP, INC.
Consolidated Statement of Changes in Stockholders' Equity
(dollars in thousands, except per share data)
(unaudited)
Additional Accumulated Other
Common Paid-in Retained Comprehensive Unallocated
Stock Capital Earnings Income/(Loss) Shares of ESOP Total
----- ------- -------- ------------- -------------- -----
Balance at December 31, 2000 $ 35 20,068 18,780 (898) (1,414) 36,571
Comprehensive income:
Net income -- -- 343 -- -- 343
Change in net unrealized gains/losses
on securities availabe for sale,
net of taxes -- -- -- 1,086 -- 1,086
-------
Total comprehensive income 1,429
-------
Allocation of shares under ESOP -- 7 -- -- 31 38
Stock issuance costs -- (7) -- -- -- (7)
Cash dividends declared, $.06 per share -- -- (207) -- -- (207)
------- ------- ------ ------ ------ -------
Balance at March 31, 2001 $ 35 20,068 18,916 188 (1,383) 37,824
======= ======= ====== ====== ====== =======
See accompanying notes to consolidated financial statements.
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FINGER LAKES BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(1) BASIS OF PRESENTATION
---------------------
The accompanying unaudited financial statements were prepared in accordance
with instructions for 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. However, in the opinion of management, all
adjustments consisting of only normal recurring adjustments or accruals
which are necessary for a fair presentation of the financial statements have
been made at and for the three months ended March 31, 2001 and 2000. The
results of operations for the three month period ended March 31, 2001 are
not necessarily indicative of the results which may be expected for an
entire fiscal year or other interim periods.
(2) REORGANIZATION AND SECOND STEP CONVERSION
-----------------------------------------
On January 31, 2000, Finger Lakes Financial Corporation, M.H.C. (the Mutual
Holding Company) adopted a Plan of Conversion and Reorganization to convert
from a federally chartered mutual holding company to a state chartered
capital stock holding company known as Finger Lakes Bancorp, Inc. (the
Company).
The conversion to a full stock holding company was completed on November 13,
2000. This resulted in the Company succeeding Finger Lakes Financial Corp.,
a federally chartered stock holding company formed in August 1998, as the
stock holding company of Savings Bank of the Finger Lakes (the Bank). The
Company sold 2,307,325 of common stock for $7.00 per share in a public stock
offering to the Bank's depositors. In addition, 1,180,052 minority shares of
Finger Lakes Financial Corp. were exchanged into new shares of the Company's
common stock at a ratio of .9643, resulting in total new shares outstanding
of 3,445,110.
The Reorganization was accounted for as a change in corporate form with no
resulting change in the historical basis of the Company's assets,
liabilities and equity. All references in the consolidated financial
statements and notes thereto to share data (including number of shares and
per-share amounts) have been restated giving retroactive recognition to the
exchange ratio.
(3) NET INCOME PER SHARE
--------------------
Basic net income per common share for the three-month periods ended March
31, 2001 and 2000 was computed by dividing net income by the weighted
average number of total common shares outstanding during the period,
excluding unallocated ESOP shares. Diluted net income per common share
reflects the effects of incremental common shares (computed using the
treasury stock method) that would be issuable upon exercise of dilutive
stock options.
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The following is a summary of the net income per share calculation (in
thousands, except net income per share):
For the three months
Ended March 31, 2001
--------------------
Basic Diluted
----- -------
Net income $ 343 343
------ -----
Weighted average shares 3,241 3,241
Stock options -- 4
------ -----
Total weighted average shares 3,241 3,245
====== =====
Net income per share $ 0.11 0.11
====== =====
For the three months
Ended March 31, 2000
--------------------
Basic Diluted
----- -------
Net income $ 164 164
------ -----
Weighted average shares 3,413 3,413
Stock options -- 1
------ -----
Total weighted average shares 3,413 3,414
====== =====
Net income per share $ 0.05 0.05
====== =====
(4) DIVIDENDS
---------
The Company declared a regular cash dividend of $.06 per share on January
16, 2001, payable February 14, 2001 to stockholders of record January 31,
2001.
(5) RECENT ACCOUNTING PRONOUNCEMENTS
--------------------------------
SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities,
as amended, requires that all derivative instruments (including certain
derivative instruments embedded in other contracts) be recognized as either
assets or liabilities in the statements of financial condition and that
those instruments be measured at fair value. The accounting for changes in
the fair value of a derivative (that is, gains and losses) depends on the
intended use of the derivative and the resulting designations. The Company
adopted SFAS No. 133 on January 1, 2001. As of that date and throughout the
first quarter of 2001, the Company did not have any derivative instruments
or derivative instruments embedded in other contracts. Therefore, the
adoption of SFAS No. 133 did not have a significant effect on the Company's
financial position or results of operations.
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Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations
COMPARISON OF FINANCIAL CONDITION AT MARCH 31, 2001 AND DECEMBER 31, 2000
- -------------------------------------------------------------------------
Total assets as of March 31, 2001 were $348.0 million, an increase of $18.8
million or 5.7% from December 31, 2000. The increase was due primarily to a $3.1
million or 1.8% increase in total loans, an increase of $14.0 million or 10.7%
in securities available for sale, and an increase in bank owned life insurance
of $3.1 million, partially offset by a decrease in other assets of $818,000.
With continued emphasis on complementing our traditional mortgage lending with
increased commercial business lending, commercial business loans increased by
$690,000, residential and commercial mortgage loans increased by $1.8 million,
home equity loans increased by $190,000, and other consumer loans increased by
$507,000. The increase in securities available for sale is a result of purchases
of $47.4 million, partially offset by amortizations and prepayments of $2.4
million and sales of $32.9 million. Unrealized gains on securities available for
sale amounted to $188,000, net of deferred taxes, representing an after-tax net
increase of $1.1 million in the market value of securities available for sale.
Bank owned life insurance increased $3.1 million, due to a policy purchase in
March 2001. The decrease of $818,000 in other assets is primarily due to a
reduction in our deferred tax position at the end of the quarter.
The growth in assets during the first three months of 2001 was funded in part by
a $7.2 million or 3.1% increase in total deposits. Savings deposits increased by
$2.0 million and certificates of deposit increased $5.9 million or 3.8%, while
demand deposits decreased $694,000. Advances from the Federal Home Loan Bank of
New York ("FHLB") increased by $10.9 million or 18.0% during the first three
months of 2001, as funding needs exceeded deposit growth.
Stockholders' equity totaled $37.8 million as of March 31, 2001, as compared to
$36.6 million as of December 31, 2000. Changes in stockholders' equity resulted
from net income of $343,000, and an increase of $1.1 million in unrealized gains
on securities available for sale, net of related deferred income taxes,
partially offset by dividend distributions of $207,000.
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND
2000
GENERAL
Net income for the quarter ended March 31, 2001 amounted to $343,000 or $0.11
per diluted share, compared to net income of $164,000, or $0.05 per diluted
share for the quarter ended March 31, 2000. The increase in net income is
primarily attributable to an increase of $293,000 in noninterest income,
partially offset by an increase of $72,000 in noninterest expenses, and an
increase of $60,000 in income tax expense. Net interest income increased by
$18,000 during the comparative periods.
NET INTEREST INCOME
Our net interest income is determined by our interest rate spread (i.e., the
difference between yields earned on our interest-earning assets and rates paid
on our interest-bearing liabilities) and the relative amounts of our
interest-earning assets and interest-bearing liabilities. Net interest income
amounted to $2.2 million for the three month period ended March 31, 2001, an
increase of $18,000 from the same period last year. The average interest rate
spread for the three-month period ended March 31, 2001 was 2.38% versus 2.73%
during the same period in 2000. Based on the maturity and repricing
characteristics of the Company's balance sheet, during the year 2000 when
interest rates were rising, liabilities repriced at a faster rate than assets.
The average yield on interest-earning assets increased 19 basis points from
7.34% to 7.53%, while the average cost of interest-bearing liabilities increased
54 basis points from 4.60% to 5.14%.
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INTEREST INCOME
Total interest income for the three-month period ended March 31, 2001 amounted
to $5.9 million, an increase of $584,000 from the same period in 2000. The
average yield on earning assets increased to 7.53% during the three months ended
March 31, 2001 compared to 7.34% in the same period of 2000. Interest income on
loans for the three months ended March 31, 2001 amounted to $3.5 million, an
increase of $329,000 from the same period in 2000. The improvement was
attributable to both loan growth, as the average total outstanding loan balance
increased by $12.7 million to $174.6 million and an increase in the average
yield to 8.23% from 7.98% during the same period last year. Interest income on
securities for the three months ended March 31, 2001 amounted to $2.4 million,
an increase of $254,000 from the same period last year. This increase was
attributed to both an increase in the yield on the portfolio, as the average
yield increased 14 basis points to 6.68%, and the average outstanding securities
balance (at amortized cost), which increased by $13.7 million to $143.6 million.
INTEREST EXPENSE
Total interest expense for the three months ended March 31, 2001 was $3.7
million, an increase of $566,000 from the same period in 2000. For the first
quarter of 2001, interest expense on deposits amounted to $2.8 million while
interest expense on borrowed funds amounted to $962,000. Interest expense on
deposits increased $584,000 as average deposits increased $21.3 million to
$230.7 million and the average cost of deposits increased 67 basis points to
4.89%. Interest expense on borrowings decreased $18,000, from $980,000 to
$962,000 from the same quarter last year, due primarily to a decrease in the
average outstanding borrowings of $3.8 million to $64.3 million. However, the
average cost of borrowings increased 28 basis points to 6.07% from 5.79% a year
ago.
PROVISION FOR LOAN LOSSES
The provision for loan losses amounted to $60,000 for the three months ended
March 31, 2001, the same as the prior year's quarter. Management reviews the
adequacy of the allowance for loan losses quarterly through an asset
classification and review process and an analysis of the level of loan
delinquencies and general market and economic conditions. The allowance for loan
losses amounted to $1.5 million as of March 31, 2001 or 0.86% of total loans
outstanding and 279% of non-performing loans. Non-performing loans increased
from $229,000 as of December 31, 2000 to $541,000 as of March 31, 2001. This
increase is primarily the result of the performance issues of one commercial
relationship. The ratio of non-performing assets (which include non-performing
loans, real estate owned, and troubled debt restructurings) to total loans was
0.49% at March 31, 2001, as compared to 0.35% at December 31, 2000. The ratio of
non-performing assets to total assets was 0.25% at March 31, 2001 as compared to
0.18% at December 31, 2000. Net charge-offs during the first quarter of 2001
were $18,000, as compared to $20,000 for the same period last year.
NONINTEREST INCOME
Noninterest income, consisting primarily of service charges on deposit accounts,
loan servicing fees, income from the sale of annuities and mutual funds,
increases in the value of BOLI, and gains and losses on loans and securities
sold, was $543,000 for the three months ended March 31, 2001, an increase of
$293,000 or 117.2% compared to the first quarter of 2000. Service charges and
other fee income was $333,000 for the three months ended March 31, 2001, an
increase of $117,000 over the same period in 2000. This improvement is primarily
attributable to an increase of $22,000 in credit insurance income, and an
overall increase in service charges on deposit accounts of $52,000. The increase
of $118,000 in net gains from the sale of securities resulted primarily from
restructuring a portion of the securities portfolio in a lower interest rate
environment. The decrease of $18,000 in net gains from the sale of loans
reflects lower levels of loan sales. Other noninterest income was $80,000 for
the three months ended March 31, 2001 as compared to $4,000 during the same
period last year. This increase is attributable to an increase of $76,000 in
value of bank owned life insurance.
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NONINTEREST EXPENSE
Noninterest expense amounted to $2.2 million for the three months ended March
31, 2001, an increase of $72,000 or 3.5% from the same period last year. An
increase of $90,000 in salaries and employee benefits expense was primarily the
result of annual salary increases and the hiring of staff for our newest branch
office in Auburn, which opened in April, 2000. An increase of $64,000 in office
occupancy and equipment expense was primarily the result of occupancy costs
relating to the new branch office in Auburn, as well as expansion into a new
operations center to meet the growing needs of our company. Deposit insurance
premiums remained flat at $11,000. Professional fees increased $10,000 or 9.7%
from the same period last year, primarily due to a decision to outsource our
internal audit function, beginning in January 2001. Marketing expenses increased
$14,000 during the first quarter of 2001 to $69,000, primarily due to the
creation and implementation of strategic marketing campaigns utilizing our new
marketing research system. In the first quarter last year, we provided $150,000
for environmental remediation, relating to a foreclosed dry cleaning and laundry
facility. We have determined that the recorded liability is currently adequate
to cover reasonably anticipated costs; therefore, no additional provision was
recorded during the current quarter. Real estate owned expense decreased $23,000
from the same quarter last year, due to a lower number of foreclosures and a
gain from the sale of one property. Other noninterest expense, which in part
includes postage, office supplies, telephone charges, director's fees,
insurance, and third party check processing, increased $54,000 or 14.7% from the
same period last year. This is primarily due to increased costs on life
insurance policies, expenses relating to new checking products introduced in
April 2000, Delaware franchise taxes owed in conjuction with our newly formed
Delaware corporation, and increased NASDAQ fees.
INCOME TAXES
Income tax expense for the three months ended March 31, 2001 was $163,000 on
income before tax of $506,000, reflecting an effective tax rate of 32.2%. For
the same period in 2000, the effective rate was 38.6%. The decrease in our
effective tax rate is the result of our purchase of bank owned life insurance,
which is a tax advantaged means of financing employee benefits, as well as our
investment in municipal bonds.
ITEM 3 - QUANTITATIVE & QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Market risk is the risk of loss from adverse changes in market prices and
interest rates. The Company's market risk arises primarily from interest rate
risk inherent in its lending and deposit taking activities. Although the Company
manages other risks, as in credit and liquidity risk, in the normal course of
its business, management considers interest rate risk to be its most significant
market risk and could potentially have the largest material effect on the
Company's financial condition and results of operations. The Company does not
currently have a trading portfolio nor does it use derivatives to manage market
and interest rate risk.
The Company's interest rate risk management is the responsibility of the
Asset/Liability Management Committee (ALCO), which reports to the Board of
Directors. The committee, comprised of senior management, has developed policies
to measure, manage, and monitor interest rate risk. Interest rate risk arises
from a variety of factors, including differences in the timing between the
contractual maturity or repricing of the Company's assets and liabilities. For
example, the Company's net interest income is affected by changes in the level
of market interest rates as the repricing characteristics of its loans and other
assets do not necessarily match those of its deposits, borrowings and capital.
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The OTS requires the Company to measure interest rate risk by computing
estimated changes in the net portfolio value ("NPV") of cash flows from assets,
liabilities and off-balance sheet items in the event of a range of assumed
changes in market interest rates. These computations estimate the effect on NPV
of sudden and sustained 100 to 300 basis point increases and decreases in market
interest rates. The Company's board of directors has adopted an interest rate
risk policy which establishes minimum NPV ratios (i.e. the ratio of NPV to the
present value of assets) in the event of 100, 200 and 300 basis point increases
and decreases in market interest rates. The following table sets forth those
policy guidelines and certain calculations, based on information provided to the
Company by the OTS, with respect to the sensitivity of NPV to changes in market
interest rates at December 31, 2000 (date of latest available data):
BASIS POINT ESTIMATED NET PORTFOLIO VALUE NPV AS % OF PV OF ASSETS
CHANGE ----------------------------- ------------------------
IN RATES
--------
BASIS POINTS
$ AMOUNT $ CHANGE % CHANGE NPV RATIO CHANGE
-------- -------- -------- --------- ------
(Dollars in Thousands)
+300 $ 25,243 (9,894) (28)% 8.06% (246) bp
+200 28,904 (6,233) (18) 9.03 (149) bp
+100 32,298 (2,839) (8) 9.87 (65) bp
- 35,137 - - 10.52 -
-100 34,361 (776) (2) 10.19 (33) bp
-200 32,380 (2,757) (8) 9.54 (98) bp
-300 31,154 (3,983) (11) 9.09 (143) bp
As shown by the table, increases in interest rates will significantly decrease
our NPV, while decreases in interest rates will result in much smaller net
decreases in our NPV. The table suggests that in the event of a 200 basis point
change in interest rates, we would experience a decrease in NPV as a percentage
of assets to 9.03% from 10.52% in a rising interest rate environment and a
decrease in NPV as a percentage of assets to 9.54% from 10.52% in a decreasing
interest rate environment.
The Board of Directors is responsible for reviewing asset liability management
policies. On at least a quarterly basis, the Board reviews interest rate risk
and trends, as well as liquidity and capital ratios and requirements. Management
is responsible for administering the policies and determinations of the Board of
Directors with respect to our asset and liability goals and strategies.
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PART II: OTHER INFORMATION
Item 1 Legal Proceedings
-----------------
None
Item 2 Changes in Securities and Use of Proceeds
-----------------------------------------
None
Item 3 Defaults Upon Senior Securities
-------------------------------
None
Item 4 Submission of Matters to a Vote of Security Holders
---------------------------------------------------
None
Item 5 Other Information
-----------------
None
Item 6 Exhibits and Reports on Form 8-K
--------------------------------
(a) All required exhibits are included in Part I under
Consolidated Financial Statements pages 3 through 7, Notes
to Consolidated Financial Statements pages 8 through 9 and
Management's Discussion and Analysis of Financial Condition
and Results of Operations pages 10 through 13 and are
incorporated herein by reference.
(b) Reports on Form 8-K
None
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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.
Date: May 10, 2001 By: /s/ G. Thomas Bowers
--------------------
G. Thomas Bowers
Chairman, President and Chief
Executive Officer
Date: May 10, 2001 By: /s/ Terry L. Hammond
--------------------
Terry L. Hammond
Executive Vice President and
Chief Financial Officer
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