UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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 December 31, 1993
[ ] 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: 1-8515
BANCFLORIDA FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 59-2265850
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5801 Pelican Bay Boulevard
Naples, Florida 33963
(Address of principal executive offices)
(Zip Code)
(813) 597-1611
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date, February 8, 1994.
$.01 par value of common stock 3,701,611 shares
(class) (outstanding)
BANCFLORIDA FINANCIAL CORPORATION AND SUBSIDIARIES
FORM 10-Q FOR QUARTER ENDED DECEMBER 31, 1993
INDEX
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS: PAGE NUMBERS
Condensed Consolidated Balance Sheets 2
Condensed Consolidated Statements of Income 3
Condensed Consolidated Statements of Cash Flows 4
Notes to Condensed Consolidated Financial Statements 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS 8
PART II - OTHER INFORMATION
ITEM 5. Other Information 19
ITEM 6. Exhibits and Reports on Form 8-K 19
SIGNATURES 20
1
PART I-FINANCIAL INFORMATION
BANCFLORIDA FINANCIAL CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
Assets December 31, September 30,
1993 1993
Cash (including interest bearing deposits of $32,237 and $8,007). $ 77,800 $ 47,056
Federal funds sold............................................... 279 -
Trading securities - FNMA mortgage-backed securities............. 8,255 17,297
Assets available for sale:
Securities..................................................... 246,480 296,589
Loans (aggregate fair values of $104,296 and $108,519)......... 103,638 106,412
Securities held to maturity (aggregate fair values of $217,818
and $220,312).................................................. 219,923 220,846
Loans receivable, (net of allowance for loan losses of $22,472
and $26,701)................................................... 720,647 718,313
Investments in real estate....................................... 64,023 58,952
Office properties and equipment.................................. 38,331 37,173
Accrued interest receivable, net................................. 7,760 8,728
Federal Home Loan Bank stock..................................... 15,432 15,250
Other assets (including costs in excess of fair value of net
assets acquired of $2,562 and $2,713).......................... 24,507 24,017
$ 1,527,075 $ 1,550,633
============ ============
Liabilities and Stockholders' Equity
Deposit accounts (including non-interest bearing deposits of
$96,882 and $83,096)........................................... $ 1,200,776 $ 1,142,197
Due to banks..................................................... - 3,894
Advances from Federal Home Loan Bank............................. 207,000 273,000
Other borrowings................................................. 23,417 23,334
Current income taxes payable..................................... 906 1,562
Deferred income.................................................. 907 893
Advance payments by borrowers for taxes and insurance............ 4,839 14,483
Other liabilities................................................ 11,987 14,940
Total liabilities.............................................. 1,449,832 1,474,303
Stockholders' equity:
Preferred stock $.01 par value; 2,000,000 authorized
shares: 1,138,000 shares issued and outstanding.............. 11 11
Common stock $.01 par value; 16,000,000 authorized shares:
shares issued and outstanding: 3,615,370 at December 31,
1993; 3,549,870 at September 30, 1993........................ 36 35
Additional paid-in capital..................................... 70,395 69,929
Retained earnings.............................................. 9,003 7,795
Unrealized loss on securities available for sale, net.......... (1,178) (431)
Employee stock ownership plan obligation....................... (1,024) (1,009)
Total stockholders' equity................................... 77,243 76,330
$ 1,527,075 $ 1,550,633
=========== ============
See accompanying notes to condensed consolidated financial statements.
2
BANCFLORIDA FINANCIAL CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Dollars in thousands, except per share data)
Three Months Ended
December 31,
Interest income: 1993 1992
Mortgage loans ............................................. $ 13,460 $ 14,173
Other loans................................................. 3,043 3,447
Mortgage-backed and related securities...................... 6,669 7,272
Investments and deposits.................................... 283 547
Total interest income..................................... 23,455 25,439
Interest expense:
Deposit accounts, net....................................... 11,843 13,652
Short-term borrowings....................................... 1,442 640
Long-term borrowings........................................ 2,102 2,887
Total interest expense.................................... 15,387 17,179
Net interest income....................................... 8,068 8,260
Provision for loan losses................................... 275 2,672
Net interest income after provision for loan losses....... 7,793 5,588
Other income:
Unrealized gain on trading securities....................... 233 -
Gain (loss) on sale of mortgage-backed securities........... 597 (167)
Gain on sale of loans....................................... - 105
Service charges on deposit accounts......................... 1,613 1,428
Loan servicing fees (expense)............................... (36) 139
Other....................................................... 469 481
Total other income........................................ 2,876 1,986
Other expenses:
Compensation and benefits.................................. 4,296 4,308
Real estate operations, net................................ (1,396) (3,289)
Occupancy.................................................. 1,745 2,532
Advertising and promotion.................................. 366 221
Federal insurance premium.................................. 978 766
Data processing............................................ 426 422
Other...................................................... 1,901 2,175
Total other expenses..................................... 8,316 7,135
Income before income tax expense and cumulative effect of
accounting change...................................... 2,353 439
Income tax expense......................................... 842 181
Income before cumulative effect of accounting change..... 1,511 258
Cumulative effect of accounting change..................... - 7,327
Net income............................................... $ 1,511 $ 7,585
=========== ===========
Primary earnings per share:
Income before cumulative effect of accounting change........ $ 0.32 $ 0.02
Cumulative effect of accounting change...................... - 1.98
Net income................................................ $ 0.32 $ 2.00
=========== ===========
Average common and common equivalent shares outstanding..... 3,793,270 3,639,057
=========== ===========
Fully diluted earnings per share:
Income before cumulative effect of accounting change........ $ 0.31 $ 0.07
Cumulative effect of accounting change...................... - 1.25
Net income................................................ $ 0.31 $ 1.32
=========== ===========
Average shares outstanding.................................. 5,643,477 5,904,012
=========== ===========
See accompanying notes to condensed consolidated financial statements.
3
BANCFLORIDA FINANCIAL CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
Three Months Ended
December 31,
1993 1992
Cash flows from operating activities:
Net income........................................ $ 1,511 $ 7,585
Adjustments to reconcile net income to net
cash provided by operating activities:
Cumulative effect of accounting change.......... - (7,327)
Provision for losses on loans and investments
in real estate................................ 363 4,713
(Gain) loss on sale of mortgage-backed
securities.................................... (597) 167
Gain on sale of loans........................... - (105)
Unrealized gain on trading securities........... (233) -
Net gain on sale of real estate, property and
equipment..................................... (325) (3,351)
Depreciation expense............................ 668 698
Amortization and accretion...................... 1,078 745
Decrease in accrued interest receivable........... 968 599
(Increase) decrease in other assets............... (331) 1,618
Increase in current income taxes payable.......... (466) (887)
Increase (decrease) in deferred income............ 31 (122)
Decrease in other liabilities..................... (12,163) (5,790)
Net cash used by operating activities......... (9,496) (1,457)
Cash flows from investing activities:
Proceeds from sales of loans and mortgage-backed
securities available for sale................... 85,809 298,046
Decrease in loans available for sale.............. 3,584 577
Net increase in loans receivable.................. (47,663) (45,695)
Purchase of mortgage-backed securities............ (30,375) (277,819)
Repayments of mortgage-backed securities.......... 41,714 29,788
Purchase of other securities...................... (22) -
Purchase of Federal Home Loan stock............... (182) (850)
Decrease in real estate........................... 502 1,661
Increase in property and equipment................ (1,755) (544)
Net cash provided by investing activities...... 51,612 5,164
Cash flows from financing activities:
Net increase in transaction deposit accounts...... $ 46,519 $ 39,749
Net increase(decrease) in certificates of deposit. 12,060 (5,322)
Repayments of Federal Home Loan Bank advances..... (202,000) (115,000)
Borrowings of Federal Home Loan Bank advances..... 136,000 105,000
Repayment of other borrowings..................... (5) (70)
Increase in short-term borrowings................. 79 174
Decrease in due to banks.......................... (3,894) -
Proceeds from stock options exercised............. 467 15
Cash dividends paid on cumulative convertible
preferred stock................................. (304) -
Increase in employee stock ownership plan
obligation...................................... (15) (34)
Net cash provided (used) by financing
activities.................................. (11,093) 24,512
Net increase in cash and cash equivalents... 31,023 28,219
Cash and cash equivalents at beginning
of period................................. 47,056 25,812
Cash and cash equivalents at end of period.. $ 78,079 $ 54,031
============ ============
See accompanying notes to condensed consolidated financial statements.
4
BANCFLORIDA FINANCIAL CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
Note A - Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with instructions on Form 10-Q and, therefore, do
not necessarily include information or footnotes necessary for a fair
presentation of financial position, results of operations and statement of
cash flows in conformity with generally accepted accounting principles.
However, in the opinion of management of BancFlorida Financial Corporation
(the "Company" or "BFL"), all adjustments which are necessary for a fair
presentation have been included and are of a normal, recurring nature. The
results of operations for the three months ended December 31, 1993 are not
necessarily indicative of the results which may be expected for the entire
fiscal year. The consolidated financial statements should be read in
conjunction with the audited consolidated financial statements and the notes
thereto included in the Company's Annual Report to Shareholders for the year
ended September 30, 1993.
Note B - Reclassification
Certain amounts in the December 31, 1992 condensed consolidated statement of
income have been reclassified to conform to the December 31, 1993 presentation.
Note C - Assets Available for Sale
Due to the implementation of Statement of Financial Accounting Standard ("FAS")
115 "Accounting for Certain Investments in Debt and Equity Securities",
securities available for sale are recorded at fair value; loans available for
sale are recorded at the lower of amortized cost or fair value. The Company's
assets available for sale portfolio is as follows:
(In thousands)
December 31, 1993 September 30, 1993
Gross Gross Gross Gross
Amortized Unrealized Unrealized Fair Amortized Unrealized Unrealized Fair
Cost Gains Losses Value Cost Gains Losses Value
Mutual funds........... $ 2,061 $ 3 $ (2) $ 2,062 $ 2,039 $ 8 $ - $ 2,047
Mortgage-backed
securities:
FHLMC.............. 102,363 66 (796) 101,633 128,217 68 (405) 127,880
FNMA............... 143,955 199 (1,369) 142,785 167,045 194 (577) 166,662
Total mortgage-backed
securities........... 246,318 265 (2,165) 244,418 295,262 262 (982) 294,542
Total securities....... 248,379 268 (2,167) 246,480 297,301 270 (982) 296,589
Loans receivable:
Residential 1-4
units.............. 77,398 395 - 77,793 82,073 1,864 - 83,937
Home equity loans.... 26,240 263 - 26,503 24,339 243 - 24,582
Total loans
receivable........... 103,638 658 104,296 106,412 2,107 - 108,519
$ 352,017 $ 926 $ (2,167) $ 350,776 $ 403,713 $ 2,377 $ (982) $ 405,108
========= ========= ========= ========= ========= ========= ========= =========
Note D - Securities Held to Maturity
The Company's securities held to maturity portfolio is as follows:
(In thousands)
December 31, 1993 September 30, 1993
Gross Gross Gross Gross
Amortized Unrealized Unrealized Fair Amortized Unrealized Unrealized Fair
Cost Gains Losses Value Cost Gains Losses Value
Municipal
securities........... $ 277 $ 2 $ - $ 279 $ 277 $ 4 $ - $ 281
Collateralized
mortgage
obligations......... 29,316 24 (113) 29,227 29,352 223 (27) 29,548
Mortgage-backed
securities:
FHLMC............. 73,095 - (871) 72,224 75,898 - (450) 75,448
FNMA.............. 117,235 27 (1,174) 116,088 115,319 62 (346) 115,035
Total
mortgage-
backed
securities........... 190,330 27 (2,045) 188,312 191,217 62 (796) 190,483
$ 219,923 $ 53 $ (2,158) $ 217,818 $ 220,846 $ 289 $ (823) $ 220,312
========= ========= ========= ========= ========= ========= ========= =========
5
BANCFLORIDA FINANCIAL CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
Note E - Earnings Per Share
The following table summarizes the calculation of primary and fully diluted
earnings per share for the periods indicated:
(Dollars in thousands, except per share data)
Three Months Ended
December 31,
Primary Earnings Per Share: 1993 1992
Income before cumulative effect of accounting change.. $ 1,511 $ 258
Cumulative effect of accounting change................ - 7,327
Dividends on cumulative convertible preferred stock... (303) -
Preferred dividends in arrears........................ - (303)
Net income available for primary shares............. $ 1,208 $ 7,282
========== ==========
Average number of common shares outstanding........... 3,567,125 3,534,961
Common stock equivalents of stock options............. 226,145 104,096
3,793,270 3,639,057
========== ==========
Income before cumulative effect of accounting change.. $ 0.40 $ 0.09
Cumulative effect of accounting change................ - 1.98
Dividends on cumulative convertible preferred stock... (0.08) -
Preferred dividends in arrears........................ - (0.07)
Net income.......................................... $ 0.32 $ 2.00
========== ==========
Fully Diluted Earnings Per Share:
Income before cumulative effect of accounting change.. $ 1,511 $ 258
Cumulative effect of accounting change................ - 7,327
Interest expense on convertible subordinated
debentures, net of taxes............................ 227 229
Net income available for fully diluted shares....... $ 1,738 $ 7,814
========== ==========
Average shares outstanding:
Average number of common shares outstanding......... 3,567,125 3,534,961
Common stock equivalents of stock options........... 227,431 112,986
Average shares assumed to be issued for:
Cumulative convertible preferred stock............ 1,138,000 1,138,000
Average preferred dividends in arrears............ - 407,144
Convertible subordinated debentures............... 710,921 710,921
5,643,477 5,904,012
========== ==========
Income before cumulative effect of accounting change.. $ 0.31 $ 0.07
Cumulative effect of accounting change................ - 1.25
Net income.......................................... $ 0.31 $ 1.32
========== ==========
Note F - Supplemental Cash Flow Information
Three Months Ended
December 31, 1993
1993 1992
Cash paid during the period for:
Interest (net of amount capitalized).................... $ 15,236 $ 17,185
Income taxes............................................ 1,347 1,080
Supplemental schedule of non-cash investing
and financing activities:
Exchange of loans for mortgage-backed securities........ $ 38,717 $ 57,441
Increase in assets available for sale................... 39,527 493,563
Assets acquired through foreclosure and repossession.... 8,552 7,492
Mortgage loans originated to finance the sale of
foreclosed real estate................................ 2,910 9,120
6
BANCFLORIDA FINANCIAL CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
Note G - Income Taxes
Included in other assets at December 31, 1993 is a net deferred tax asset of
$1.6 million. The tax effects of the material temporary differences that
comprise the net deferred tax asset are as follows:
(In thousands)
Deferred Tax Assets:
Allowance for losses on loans and investments in real estate.... $ 7,500
Employee benefit plans.......................................... 768
Other........................................................... 93
8,361
Deferred Tax Liabilities:
Depreciation expense............................................ (2,700)
Change in tax accounting method................................. (1,660)
Deferred loan fee income........................................ (1,173)
FHLB stock dividends............................................ (1,245)
(6,778)
Net Deferred Tax Asset............................................ $ 1,583
=======
The Company believes that it has paid sufficient taxes in prior carryback years
which will enable it to recover the net deferred tax asset and therefore no
valuation allowance as defined by FAS 109 "Accounting for Income Taxes" is
required at December 31, 1993.
Income tax expense of the Company differs from the amounts computed by
applying the United States federal income tax rate of 34 percent to income
before income taxes because of the following:
Three Months Ended
December 31,
1993 1992
Income tax expense at statutory federal rate................. 34.0% 34.0%
Increase (decrease) in income tax rate resulting from:
Tax exempt income.......................................... (2.7) (2.3)
Amortization of costs in excess of fair
value of net assets acquired............................. 2.2 1.8
State income taxes......................................... 0.9 0.3
Change in net deferred tax asset........................... 0.5 6.8
Other...................................................... 0.9 0.6
Effective tax rate........................................... 35.8% 41.2%
====== ======
7
BANCFLORIDA FINANCIAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
The Company had net income of $1.5 million or primary earnings per share of
$0.32 and fully diluted earnings per share of $0.31 for the three months ended
December 31, 1993. This compares to net income of $7.6 million or primary
earnings per share of $2.00 and fully diluted earnings per share of $1.32 for
the same three month period a year ago, which included income of $7.3 million
representing the cumulative effect of a change in the accounting for income
taxes pursuant to the Company's adoption of FAS 109. Excluding this
adjustment, net income for the first quarter of fiscal 1993 would have been
$258,000 or earnings per share of $0.02.
Total provisions for losses relating to loans and assets classified as
investments in real estate were $363,000 for the three months ended December
31, 1993 compared to $4.7 million for the same three month period a year ago.
Total other income was $2.9 million for the three months ended December
31, 1993 compared to $2.0 million for the comparable period a year ago.
Realized and unrealized gains related to mortgage-backed securities and loans
transactions were $830,000 for the three months ended December 31, 1993
compared to a loss of $62,000 for the same three month period a year ago.
Total other expenses, exclusive of real estate operations, net, were $9.7
million for the three months ended December 31, 1993 compared to $10.4 million
for the same three month period a year ago.
Real estate operations, net, produced income of $1.4 million and $3.3 million,
respectively, for the three months ended December 31, 1993 and 1992,
respectively.
Results of Operations - Net Interest Income
The principal source of recurring income for BancFlorida, a Federal Savings
Bank ("BancFlorida" or the "Bank") is the difference between interest earned on
loans and investments and interest paid on deposits and borrowings. Net
interest income is affected by both interest rates and the volume of interest
earning assets and interest bearing liabilities.
Net interest income was $8.1 million for the three months ended December 31,
1993 compared to $8.3 million for the same three month period a year ago.
Total interest income decreased to $23.5 million for the three months ended
December 31, 1993 from $25.4 million for the same period a year ago. During
the current three month period, the Company has experienced a high volume of
prepayments and refinancings of higher yielding loans in the loan and
mortgage-backed securities portfolios due to the decline in interest rates.
Total interest expense decreased to $15.4 million for the three months ended
December 31, 1993 from $17.2 million a year ago. The decrease is attributable
to a significant decline in the rates paid on interest bearing liabilities due
to a lower interest rate environment and the Company's further concentration
on obtaining lower cost transaction accounts instead of higher cost
certificates of deposit. The level of transaction accounts has increased $48
million between December 31, 1992 and December 31, 1993 from $429 million at
December 31, 1992 to $477 million at December 31, 1993.
8
BANCFLORIDA FINANCIAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The table below indicates the impact that changes in interest rates have had
on the Company's interest rate spread and net interest income for the periods
indicated.
Net Interest Spread/Income Analysis
(Dollars in thousands)
Yield on Cost Net Spread Net
Earning of During the Interest
Quarter Ended Assets Funds Period Income
December 31, 1992......... 7.44% 4.87% 2.57% $ 8,260
March 31, 1993............ 7.53 4.68 2.85 9,638
June 30, 1993............. 6.89 4.53 2.36 7,826
September 30, 1993........ 6.90 4.46 2.44 8,450
December 31, 1993......... 6.76 4.29 2.47 8,068
The following tables presents net interest income of the Company by its major
components:
For the Three Months Ended December 31,
1993 1992
Income Income
Average Average or Average Average or
Balance Rate Expense Balance Rate Expense
(Dollars in thousands)
Interest earning assets:
Loans and mortgage-
backed securities (a).... $1,332,964 6.83% $ 22,744 $1,308,756 7.61% $ 24,892
Investments................. 49,715 5.72 711 59,048 3.68 547
Total interest-earning assets.$1,382,679 6.76% $ 23,455 $1,367,804 7.44% $ 25,439
========== ======= ======== ========== ======= ========
Interest-bearing liabilities:
Deposits....................$1,176,356 3.99% $ 11,843 $1,164,152 4.65% $ 13,652
Borrowings.................. 247,414 5.68 3,544 234,324 5.97 3,527
Total interest-bearing
liabilities.................$1,423,770 4.29% $ 15,387 $1,398,476 4.87% $ 17,179
========== ======= ======== ========== ======= ========
Interest rate spread.......... 2.47% 2.57%
======= =======
Net yield on interest
earnings assets (b)......... 2.33% 2.42%
======= =======
(a) Includes non-performing loans.
(b) Net interest income divided by average interest earning assets.
9
BANCFLORIDA FINANCIAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The effect on net interest income due to changes in interest rates, interest
earning assets, and interest bearing liabilities is shown below. The change
due to volume is computed by multiplying the change in the average balance of
funds employed while holding interest rates steady. The change due to rate is
computed by multiplying the change in interest rates while holding the volume
of funds steady. For purposes of this table, changes attributable to both
rate and volume which cannot be segregated have been allocated proportionately
to volume and to rate.
RATE/VOLUME ANALYSIS
Three Months Ended December 31,
1993 vs. 1992
Increase (Decrease) Due To
(In thousands)
RATE VOLUME TOTAL
INTEREST EARNING ASSETS:
Mortgage loans (a)........... $ (2,750) $ 1,434 $ (1,316)
Other loans.................. 130 (534) (404)
Total loans................ (2,620) 900 (1,720)
Investments.................. 193 (457) (264)
Total.................... (2,427) 443 (1,984)
INTEREST-BEARING LIABILITIES:
Transaction accounts........ (630) 249 (381)
Certificates................ (814) (614) (1,428)
Total deposits............ (1,444) (365) (1,809)
FHLB advances.............. (157) 174 17
Other borrowings............ (9) 9 -
Total borrowings.......... (166) 183 17
Total................... (1,610) (182) (1,792)
NET CHANGE IN NET
INTEREST INCOME......... $ (817) $ 625 $ (192)
======== ======== ========
(a) Includes non-performing loans and all mortgage-backed and related
securities.
Results of Operations - Other
Total other income was $2.9 million for the three months ended December 31,
1993 compared to $2.0 million for the comparable period a year ago.
Included in total other income during the current quarter were realized and
unrealized net gains of $830,000 on the sales of $85 million of mortgage-backed
securities available for sale and carrying value adjustments on trading
securities. This compares to net losses of $62,000 on the sales of $298
million of loans and mortgage-backed securities in the first quarter of fiscal
1993.
Loan servicing was an expense of $36,000 for the three months ended December
31, 1993 compared to income of $139,000 for the same period a year ago.
Included in loan servicing fees (expense) are the amortizations of excess
servicing fees ("ESF") relating to loans serviced for others and of purchased
mortgage servicing rights ("PMSR") relating to the fees paid to acquire a
mortgage loan servicing portfolio. These amortizations reduced loan servicing
fee income by $435,000 and $297,000 during the three months ended December
31, 1993 and 1992, respectively. Also reducing loan servicing income during
the three months ended December 31, 1993 and 1992 were writedowns of $500,000
in each period on the Bank's ESF and PMSR portfolios. These writedowns were
necessitated by the accelerated prepayments on the underlying mortgage loans
that comprise these portfolios. At December 31, 1993 the estimated values of
the Banks ESF and PMSR portfolios which are reported in other assets, were
$1.4 million and $2.6 million, respectively.
10
BANCFLORIDA FINANCIAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Service charges on deposit accounts totaled $1.6 million and $1.4 million for
the three months ended December 31, 1993 and 1992, respectively. The
increase in the deposit account fee income is due to the continued emphasis on
obtaining transaction accounts rather than higher cost certificate accounts.
The following table summarizes the major components of other income for the
periods indicated:
Three Months Ended
December 31,
(In thousands) 1993 1992
Mortgage loan application fees........ $ 96 $ 68
Income from investment subsidiary
agency relationship................ 229 223
Late payment fees..................... 120 189
Real estate owned subsidiaries only... 32 53
Other, net............................ (8) (52)
Other income....................... $ 469 $ 481
======== ========
Total other expenses, including real estate operations, net, were $8.3 million
for the three months ended December 31, 1993 compared to $7.1 million for the
same period a year ago. Excluding real estate operations, net, total other
expenses were $9.7 million for the three months ended December 31, 1993
compared to $10.4 million for the same three month period a year ago. The
decrease in total other expenses excluding real estate operations, net, during
the current three month period is primarily attributable to occupancy and
miscellaneous other expenses relating to the operations of five properties
in real estate owned subsidiaries that had been sold prior to the current
period.
Real estate operations, net, produced income of $1.4 million for the three
months ended December 31, 1993 compared to $3.3 million for the same three
month period a year ago. For the three months ended December 31, 1992, real
estate operations, net, included a $2.7 million gain recognized from the sale
of a motel owned by a subsidiary of the Bank. In addition provisions charged
to real estate operations were $88,000 in the first quarter of fiscal 1994
compared to $2.0 million for the same three month period a year ago. Net
income from real estate owned properties decreased $1.4 million during the
first quarter of fiscal 1994 due to the sale of five properties in real estate
owned subsidiaries that had been sold prior to the current period.
11
BANCFLORIDA FINANCIAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following table summarizes the major components of total other expenses:
Three Months Ended
December 31,
(In thousands) 1993 1992
Compensation and benefits.......................... $ 4,635 $ 4,417
Direct loan origination costs...................... (523) (548)
Real estate owned subsidiaries only................ 184 439
Total compensation and benefits................... 4,296 4,308
Real estate operations, net........................ (816) (242)
Provision charged to real estate operations........ 88 2,041
Gain on sale of real estate owned.................. (323) (3,343)
Real estate owned subsidiaries only................ (345) (1,745)
Total real estate operations, net................. (1,396) (3,289)
Occupancy.......................................... 1,462 1,354
Real estate owned subsidiaries only................ 283 1,178
Total occupancy................................... 1,745 2,532
Advertising and promotion.......................... 320 197
Real estate owned subsidiaries only................ 46 24
Total advertising and promotion................... 366 221
Federal insurance premium.......................... 978 766
Data processing.................................... 426 422
Other expenses..................................... 1,800 1,628
Real estate owned subsidiaries only................ 212 651
Direct loan origination costs...................... (111) (104)
Other expenses..................................... 1,901 2,175
Total other expenses............................... $ 8,316 $ 7,135
======= =======
Classified Assets
BancFlorida regularly reviews problem assets to determine the adequacy of the
loss reserves based on information such as collectibility, collateral values
and economic conditions. In addition, the classification of assets,
delinquency experience and status of non-performing assets are monitored
through an on-going management process.
The Bank's internal asset review system is designed to provide for early
detection of problem assets. The Bank's policy provides for the
classification of assets as satisfactory, special mention, substandard,
doubtful and loss. Substandard assets consist of performing and non-performing
loans, loans to facilitate, real estate acquired through foreclosure ("REO"),
and other repossessed assets. The allowances are reviewed and updated quarterly
based on historical loss experience and current economic conditions. Although
this system will not eliminate future losses due to unanticipated declines in
the real estate market or economic downturns, it is designed to provide for
timely identification of those losses.
12
BANCFLORIDA FINANCIAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following table sets forth the Company's classified assets at December 31,
1993 and September 30, 1993 pursuant to federal regulations as follows:
(In thousands)
December 31, September 30,
1993 1993
Substandard Loans
Performing
Commercial real estate................... $ 11,369 $ 16,932
Construction............................. 3,852 3,829
Commercial............................... 2,061 2,567
Agricultural............................. 5,822 3,138
Total performing........................ 23,104 26,466
Non-performing
Residential.............................. 3,310 3,311
Commercial real estate................... 14,503 16,522
Construction............................. 7,642 7,928
Commercial............................... 3,429 2,979
Agricultural............................. 5,029 17,057
Consumer................................. 355 399
Total non-performing.................... 34,268 48,196
Substandard loans......................... 57,372 74,662
Other Substandard Assets
Loans to facilitate........................ 9,637 9,677
Real estate acquired through foreclosure... 49,169 44,370
Other repossessed assets................... 232 449
Other substandard assets, net................ 59,038 54,496
Total substandard assets, net................ 116,410 129,158
Loss
Construction............................... 1,825 1,825
Commercial................................. 1,100 1,384
Agricultural............................... 1,800 4,500
Less specific reserves..................... (4,725) (7,709)
Assets classified loss, net.................. - -
Total classified assets, net................. $ 116,410 $ 129,158
============ ============
Percent of total assets...................... 7.62% 8.33%
============ ============
13
BANCFLORIDA FINANCIAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Substandard assets decreased $12.7 million during the first quarter of
fiscal 1994 to $116.4 million at December 31, 1993. Total non-performing
loans and other substandard assets, net, declined by $9.4 million during the
current quarter to $93.3 million, net, at December 31, 1993. The following
table summarizes the change in non-performing loans and other substandard
assets for the three months ended December 31, 1993.
(In thousands)
Total
Non- REO & Other Non-
Performing Loans to Repossessed Performing
Loan Facilitate Assets Assets
At September 30, 1993.... $ 48,196 $ 54,047 $ 449 $ 102,692
Additions.............. 1,919 980 235 3,134
Loans transferred
to REO.............. (7,337) 7,337 - -
Writedowns............. (300) (235) (121) (656)
Loans brought current
or paid in full..... (7,638) - - (7,638)
Sold................... - (3,183) (331) (3,514)
Other increase
(decrease)........... (572) (140) - (712)
At December 31, 1993..... $ 34,268 $ 58,806 $ 232 $ 93,306
========== ========== =========== ==========
Special mention loans are those which are current under the terms of their
respective loan agreements. However, due to potential credit weaknesses, the
loans merit management's close attention. At December 31, 1993, such loans
totaled $63.0 million compared to $55.5 million at September 30, 1993. The
increase in the current period is primarily due to the upgrades from
substandard performing loans of $8.0 million of commercial real estate loans.
Management believes it has identified all potential problem loans at
December 31, 1993. However, included in loans classified substandard and
special mention are a total of $86.1 million of performing loans where known
information about possible credit problems of borrowers has caused management
to have doubts as to the ability of such borrowers to comply with the
present loan repayment terms and which may result in these loans becoming
non-performing in subsequent periods. These same loans totaled $81.9 million
at September 30, 1993. The ultimate resolution of the Bank's substandard and
non-performing assets will be highly dependent upon economic conditions in the
Bank's primary market area.
Allowance and Provision for Losses on Assets
The Company has a policy regarding the allowances for loan losses and valuation
of investments in real estate which, in management's judgment, provides the
level of allowances and write-downs appropriate to absorb potential losses in
these portfolios. The policy is based on a review of both individual loans and
real estate properties and various factors affecting the portfolios generally,
including historical loss experience, economic conditions and trends. The
following is a summary of activity in the allowance for loan losses for the
periods indicated.
Three Months Ended
(In thousands) December 31,
1993 1992
Balance, beginning of period........ $ 26,701 $ 28,981
Provisions charged to operations.. 275 2,672
Recoveries........................ 55 57
Charge-offs ...................... (4,559) (2,188)
Balance, end of period.............. $ 22,472 $ 29,522
======== ========
14
BANCFLORIDA FINANCIAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
For the quarter ended December 31, 1993, provisions for loan losses
totaled $275,000 compared to $2.7 million for the same period a year ago.
Provisions for assets classified as investment in real estate totaled $88,000
in the first quarter of fiscal 1994 compared to $2.0 million for the
same period a year ago. The decrease in total provisions during the current
quarter reflects the overall improvement in the Bank's level of classified
assets which have decreased 34% from $176.2 million at December 31, 1992 to
$116.4 million at December 31, 1993.
Charge offs during the current period include $2.7 million relating to specific
reserves on a loan transferred to REO during the period. In addition,
$398,000 of specific and general reserves that were transferred to REO
related to loans foreclosed during the current period and $359,000 related to
losses on unsecured consumer loans and repossessed assets. During the same
period a year ago charge-offs included $1.2 million in specific reserves on
five loans transferred to REO during the period and $675,000 related to
losses on unsecured consumer loans and repossessed assets.
Based on its assessment of the Bank's loan and real estate owned portfolios,
management believes that the level of allowances and write-downs are adequate
to cover potential losses. However, management will continue to monitor the
economic environment and assess future stability of the loan and real
estate owned portfolios in order to determine the need for additional reserves.
Total allowance for loan losses as a percent of classified assets are shown
below for the periods indicated.
Quarter Ended Percent
December 31, 1992.............. 16.75%
September 30, 1993............. 20.67%
December 31, 1993.............. 19.30%
Included in the Company's loan portfolio are various loans identified as non-
performing loans (loans that have ceased to accrue interest income) and
restructured loans (loans in which concessions, including reduction of
interest rates or deferral of interest or principal payments, have been
granted to borrowers due to their financial condition). A summary of these
types of loans is as follows:
(In thousands) December 31,
1993 1992
Non-performing loans............... $ 34,268 $ 68,319
========= =========
Restructured loans................. $ 7,642 $ 10,398
========= =========
The following table summarizes the interest income which would have been
recorded under the original terms of non-performing and restructured loans at
December 31, 1993 and 1992 and the interest income actually recognized for the
periods indicated:
Three Months Ended
(In thousands) December 31,
1993 1992
Interest income which would
have been recorded............... $ 1,128 $ 2,257
Interest income recognized......... (234) (318)
Interest income foregone........... $ 894 $ 1,939
========= =========
At December 31, 1993 there were no outstanding commitments to lend additional
funds to borrowers with non-performing or restructured loans.
15
BANCFLORIDA FINANCIAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Asset/Liability Management
The table below sets forth the major balance sheet categories and the dollar
amounts which are rate sensitive and are estimated to reprice within the
periods specified. The approximate contractual repayment data, adjusted for
amortization and anticipated prepayments or, for adjustable rate and floating-
rate instruments, repricing date, at December 31, 1993 are reflected below for
BancFlorida. The table does not address the degree to which repricing
mechanisms are subject to limitations and thus may not reflect completely the
ability of the assets to adjust to changes in market interest rates. The
interest rate sensitivity of the Bank's assets and liabilities illustrated in
the table would vary if significantly different assumptions were used or
if actual experience differs from the prepayment assumptions used.
BancFlorida, a Federal Savings Bank
GAP Position
December 31, 1993
(Dollars in thousands)
6 Months 7 - 12 1 - 3 3 - 5 5 Years
or Less Months Years Years or More Total
Loans (a)....... $ 625,912 $ 180,242 $ 294,439 $ 94,675 $ 78,520 $ 1,273,788
Investments..... 36,006 1,029 76 45 15,588 52,744
Total....... 661,918 181,271 294,515 94,720 94,108 1,326,532
Deposits (b).... 482,525 261,200 335,590 85,235 44,829 1,209,379
Borrowings...... 61,288 65,010 85,017 29 3,336 214,680
Total...... 543,813 326,210 420,607 85,264 48,165 1,424,059
Non-cumulative
gap position.. $ 118,105 $(144,939) $(126,092) $ 9,456 $ 45,943 $ (97,527)
========= ========= ========= ========= ========= ===========
Cumulative
gap position.. $ 118,105 $ (26,834) $(152,926) $(143,470) $ (97,527) $ (97,527)
========= ========= ========= ========= ========= ===========
Cumulative % to
total assets.. 7.74% (1.79%) (10.02%) (9.4%) (6.39%) (6.39%)
========= ========= ========= ========= ========= ===========
(a) Includes all mortgage-backed and related securities. The amounts shown reflect prepayment assumptions.
(b) For presentation purposes, 10% of regular savings accounts are assumed to reprice in each of the six months or
less and seven to twelve months categories, and 20% of interest bearing transaction deposit accounts are assumed to
reprice in each of such categories. Money market deposit accounts are assumed to reprice within six months or less.
Historically, regular savings and interest bearing transaction deposit accounts are considered long term and non-rate
sensitive.
The Bank's cumulative six-month gap as a percent of total assets was a
positive 7.74% at December 31, 1993 compared to a negative 13.35% at September
30, 1993, and the cumulative one year gap was negative 1.79% at December 31,
1993 compared to a negative 14.99% at September 30, 1993. The movement to a
positive six month gap position and the decrease in the negative one year gap
position are attributable to a change in the current quarter in the reporting
methodology to include mortgage-backed securities designated for trading or
available for sale in the first maturity period.
For a savings bank with a negative gap for a given period, the amount of its
interest bearing liabilities maturing or otherwise repricing within such period
exceeds the amount of the interest earning assets repricing within the same
period. Accordingly, in a declining interest rate environment, institutions
with a negative gap will experience a greater decline in their cost of funds
than in the yield on their assets. Conversely, in a rising interest rate
environment, savings institutions with a negative gap will generally experience
a greater increase in the cost of their liabilities than in the yield on
their assets. A rising interest rate environment imposes risks on institutions
with a negative gap because the cost of liabilities will accelerate at a
greater rate than the income earned on assets during the relevant period.
Changes in interest rates will generally have the opposite effect on savings
banks with a positive gap.
16
BANCFLORIDA FINANCIAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity
Liquidity management encompasses the maintenance of cash or liquid assets
(such as assets held for sale and interest bearing deposits) sufficient to
fund the normal volume of deposit withdrawals and loan commitments. The
maintaining of an appropriate level of liquid resources to meet not only
regulatory requirements but also to provide the funding necessary to meet the
Bank's business activities and obligations is an integral element in the
successful management of the Bank's assets.
Federal regulations currently require that Savings Association Insurance Fund
insured savings banks, such as the Bank, maintain an average daily balance
for each calendar month of cash and certain marketable securities which are
not committed (as determined by the Office of Thrift Supervision ("OTS")
Director) of no less than 5% of net withdrawable accounts and borrowings with
maturities of one year or less. The liquidity requirement may be changed from
time to time by the OTS to any percentage within the range of 4% to 10%.
During December 1993, the Bank's liquidity ratio was 6.2%. For the three
months ended December 31, 1993, cash increased $30.1 million due to proceeds
from sales of mortgage-backed securities during the quarter which were
reinvested in January coupled with the Bank's need for liquid funds for loan
demand.
The primary sources of funds for BancFlorida have been repayments of loans and
mortgage-backed securities, sales of loans and securities, customer deposits,
and borrowings from the FHLB of Atlanta. The principal uses of funds are the
origination of loans and the purchase of mortgage-backed securities. Deposits
are priced as a function of funding needs with respect to liquidity, market
conditions, alternative borrowings and borrowing rates. For the three months
ended December 31, 1993, FHLB advances decreased $66 million while total
customer deposits increased $59 million. The mix of deposit accounts, FHLB
advances and other borrowings at any given time reflects management's view of
the least costly source of funds available to the Bank at that time.
For the three months ended December 31, 1993, proceeds from the sales of loans
and mortgage-backed securities totaled $85.8 million compared to $298.0
million for the same three month period a year ago. Proceeds from the sales
during the first quarter of fiscal 1994 were used primarily to pay down FHLB
advances while proceeds during the first quarter of fiscal 1993 were primarily
reinvested in mortgage-backed securities totaling $277.8 million of which
$59.5 million qualified for regulatory liquidity at December 31, 1992. As part
of the Bank's interest rate risk management program, mortgage-backed securities
are now purchased with shorter average lives than those mortgage-backed
securities previously held by the Bank. In addition these securities have
relatively higher anticipated prepayment rates. While there has been some
decrease in yield on these securities, the cash flows received from the
securities provide a significant funding source for lending opportunities as
well as protecting against the potential risk of rising rates by shortening the
overall average life of the portfolio.
Loan originations and mortgage-backed securities purchases totaled $130.0
million for the three months ended December 31, 1993 compared to $362.0
million for the same three month period a year ago.
17
BANCFLORIDA FINANCIAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Capital Resources
The Bank is required to satisfy three separate capital standards under
currently applicable OTS regulations. The following table shows the capital
amounts and ratios of BancFlorida as compared to OTS requirements at
December 31, 1993.
Current Minimum
(In thousands) Actual Capital Requirement
As a % of As a % of
Applicable Applicable Excess
Amount Assets Amount Assets Capital
Capital per BancFlorida
financial statements.......... $ 89,092
Adjustments for tangible and
core capital:
Goodwill...................... (2,562)
Investments in and advances
to non-permissible
subsidiaries................... (926)
Non-qualifying purchased
mortgage servicing rights...... (262)
Total tangible capital.......... 85,342 5.60% $22,854 1.50% $62,488
Supervisory goodwill (a)...... 2,322
Total core capital.............. 87,664 5.75% $45,707 3.00% $41,957
Adjustments for risk-based
capital:
Allowance for general loan
losses......................... 11,216
Subordinated debt............. 2,361
Equity risk investments
required to be deducted........ (859)
Total risk-based capital........ $100,382 11.27% $71,257 8.00% $29,125
========
(a) Qualifying supervisory goodwill is being phased out over the five year
period ending December 31, 1994.
Pursuant to the Federal Deposit Insurance Corporation Improvement Act of
1991 ("FDICIA"), the federal banking agencies established, by regulation for
each capital measure, the levels at which an insured institution is well
capitalized, adequately capitalized, undercapitalized, significantly
undercapitalized and critically undercapitalized, and requires insured
institutions which fall below minimum capital standards to take prompt
corrective action.
Under the prompt corrective action regulation adopted by the OTS, an
institution is considered (i) "well capitalized" if the institution has a
total risk-based capital ratio of 10% or greater, a Tier 1 or core capital to
risk-weighted assets ratio of 6% or greater, and a leverage ratio of 5% or
greater (provided that the institution is not subject to an order, written
agreement, capital directive or prompt corrective action directive to meet and
maintain a specific capital level for any capital measure); (ii) "adequately
capitalized" if the institution has a total risk-based capital ratio of 8% or
greater, a Tier 1 or core capital to risk-weighted assets ratio of 4% or
greater, and a leverage ratio of 4% or greater (3% or greater if the
institution is rated composite 1 in its most recent report of examination);
(iii) "undercapitalized" if the institution has a total risk-based capital
ratio that is less than 8%, a Tier 1 or core capital to risk-weighted assets
ratio of less than 4%, or a leverage ratio that is less than 4% (3% if the
institution is rated composite 1 in its most recent report of examination);
(iv) "significantly undercapitalized" if the institution has a total risk-
based capital ratio that is less than 6%, a Tier 1 or core capital to risk-
weighted assets ratio that is less than 3%, or a leverage ratio that is less
than 3%; and (v) "critically undercapitalized" if the institution
has a ratio of tangible equity to total
assets that is less than or equal to 2%. The regulation also permits the OTS
to determine that a savings institution should be classified in a lower
category based on other information, such as the institution's examination
report, after written notice. In December 1993, the Bank received
notification from the OTS that it is currently classified as well capitalized
based on its capital ratios at September 30, 1993. At December 31, 1993, the
Bank's total risk-based capital, Tier 1 risk-based capital, and leverage
ratios were 11.27%, 9.84%, and 5.75%, respectively, which
18
BANCFLORIDA FINANCIAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
continued to
exceeded the well capitalized criteria; however, a Written Agreement,
dated April 19, 1991, between the Bank and the OTS remains in effect.
FDICIA requires that the federal banking agencies amend their risk-based
capital requirements to include components for interest rate risk,
concentration of credit risk and the risk of non-traditional activities by June
19, 1993. In August 1993, the OTS issued a final rule which adds an interest
rate component to the OTS risk-based capital requirement effective January 1,
1994. The first time savings institutions will be required to incorporate
interest
rate risk ("IRR") into their risk-based capital calculation will be July 1,
1994. Under the rule, IRR is measured as the ratio of the greater of the
increase or decline in net portfolio value resulting from a 200 basis point
increase or decrease in market interest rates to the estimated economic value
of assets, as calculated by an OTS model. A savings institution whose
measured IRR exceeds 2% must deduct from total capital an IRR component equal
to one-half of the difference between its measured IRR and 2%, multiplied by
the estimated economic value of its total assets. Based upon financial data
as of December 31, 1993, management believes that compliance with the new IRR
measure will not have a material impact on the Bank's risk-based capital
position.
FDICIA amended the threshold ratio for the qualified thrift lender ("QTL")
test from 70% to 65% as measured on a monthly average basis in nine out of
every 12 months. In order to maintain its QTL status the Bank expects to
hold in portfolio existing qualifying loans and mortgage-backed securities,
except those designated as held for sale. The Bank expects to rely on loan
repayments as well as deposits for any loan funding needs.
PART II - OTHER INFORMATION
Item 5.
Other Information
Reference is made to the Company's Current Report on Form 8-K dated January 17,
1994, for a description of the Agreement and Plan of Mergers, dated as of
January 17, 1994, among the Company, the Bank, First Union Corporation, First
Union Corporation of Florida and First Union National Bank of Florida and of
the transactions contemplated thereby.
Item 6.
Exhibits and Reports on Form 8-K
a) Exhibits - None.
b) During the quarter ended December 31, 1993, the Company filed two current
reports on Form 8-K. The first Form 8-K dated November 1, 1993 announced, in
response to Item 5 of Form 8-K, that the Company's 1994 Annual Meeting of
Stockholders will be held on Friday, January 7, 1994 at 9:00 a.m. at the
Company's headquarters, 5801 Pelican Bay Boulevard, Naples, Florida.
The second Form 8-K dated December 3, 1993 announced, in response to Item 5 of
Form 8-K, that the Company had re-scheduled its 1994 Annual Meeting of
Stockholders to February 18, 1994, at 9:00 a.m. at the Company's headquarters,
5801 Pelican Bay Boulevard, Naples, Florida. The record date for such meeting
is December 23, 1993.
19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BANCFLORIDA FINANCIAL CORPORATION
Registrant
DATE: February 11, 1994 By: /s/ Rudolf P. Guenzel
Rudolf P. Guenzel,
President and Chief Executive Officer
DATE: February 11, 1994 By: /s/ J. Michael Holmes
J. Michael Holmes,
Secretary and Treasurer
20