SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM 10-QSB
(Mark One)
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2002.
OR
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
- --- SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File No. 33-31013-A
ISLANDS BANCORP
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
SOUTH CAROLINA 57-1082388
------------------------ ------------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
2348 Boundary Street, Beaufort, SC 29902
------------------------------------------------
(Address of Principal Executive Offices)
(843) 521-1968
------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
2348 Boundary Street, Beaufort, SC 29903-6240
----------------------------------------------------
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
Check whether the issuer (1) 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 issuer was required
to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common equity as of the latest
practicable date.
Common stock, no par value per share, 652,705 shares outstanding as of
November 13, 2002.
Transitional small business disclosure format (check one):
Yes No X
----- -----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
- ------- --------------------
ISLANDS BANCORP
BEAUFORT, SOUTH CAROLINA
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS September 30, December 31,
- ------ 2002 2001
------------- ------------
Cash and due from banks $ 436,339 $ 209,139
Federal funds sold, net 420,000 255,000
---------- ---------
Total cash and cash equivalents $ 856,339 $ 464,139
Securities:
Available-for-sale, at fair value 1,471,470 1,288,942
Loans, net 15,375,828 6,276,469
Property and equipment, net 2,531,384 1,533,326
Other assets 369,354 400,578
---------- ---------
Total Assets $20,604,375 $9,963,454
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Liabilities:
Deposits
Non-interest bearing deposits $ 1,896,420 $ 837,439
Interest bearing deposits 13,470,680 2,695,873
---------- ---------
Total deposits $15,367,100 $3,533,312
Federal funds purchased and borrowings - - 1,000,000
Other liabilities 68,562 66,168
---------- ---------
Total liabilities $15,435,662 $4,599,480
---------- ---------
Commitments and contingencies
Shareholders' Equity:
Common stock, zero par value,
10,000,000 shares authorized,
652,705 shares issued and
outstanding $ 6,213,061 $6,213,061
Retained deficit (1,042,929) (848,572)
Accumulated other comprehensive loss (1,419) (515)
---------- ---------
Total Shareholders' Equity $ 5,168,713 $5,363,974
---------- ---------
Total Liabilities and
Shareholders' Equity $20,604,375 $9,963,454
========== =========
Refer to notes to the consolidated financial statements.
ISLANDS BANCORP
BEAUFORT, SOUTH CAROLINA
CONSOLIDATED STATEMENTS OF OPERATION (UNAUDITED)
FOR THE THREE-MONTHS ENDED
September 30,
-------------------------
2002 2001
---------- ----------
Interest income $ 295,079 $ 318,053
Interest expense 101,019 11,889
--------- ---------
Net interest income 194,060 306,164
Provision for loan losses 35,680 30,486
--------- ---------
Net interest income
after provision for loan losses $ 158,380 $ 275,678
--------- ---------
Service charges on deposit accounts $ 22,793 $ 5,564
Other income 399 222
--------- ---------
Total other income $ 23,192 $ 5,786
--------- ---------
Salaries and benefits $ 148,908 $ 173,944
Depreciation expense 15,219 10,172
Data processing 22,304 12,475
Rent expense 12,825 12,825
ATM machine expense 2,871 - -
Advertising and public relations 7,673 22,343
Utilities and telephone 4,883 8,295
Legal and professional 11,114 10,422
Other operating expenses 32,526 51,773
--------- ---------
Total other expenses $ 258,323 $ 302,249
--------- ---------
Net (loss) before taxes $ (76,751) $ (20,785)
Income tax (benefit) (28,484 (101,899)
--------- ---------
Net income (loss) $ (48,267) $ 81,114
========= =========
Basic income (loss) per share $ (.07) $ .12
========= =========
Diluted income (loss) per share $ (.07) $ .12
========= =========
Refer to notes to the consolidated financial statements.
ISLANDS BANCORP
BEAUFORT, SOUTH CAROLINA
CONSOLIDATED STATEMENTS OF OPERATION (UNAUDITED)
FOR THE NINE-MONTHS ENDED
September 30,
-------------------------
2002 2001
---------- ----------
Interest income $ 709,799 $ 318,053
Interest expense 205,429 107,291
--------- ---------
Net interest income 504,370 210,762
Provision for loan losses 104,996 30,486
--------- ---------
Net interest income after
provision for loan losses $ 399,374 $ 180,276
--------- ---------
Service charges on deposit accounts $ 54,774 $ 5,564
Other income 1,286 222
--------- ---------
Total other income $ 56,060 $ 5,786
--------- ---------
Salaries and benefits $ 429,339 $ 320,753
Depreciation expense 46,764 13,634
Data processing 65,699 12,475
Rent expense 38,475 37,435
ATM machine expense 22,914 1,545
Advertising and public relations 18,847 23,266
Utilities and telephone 13,165 11,347
Legal and professional 33,450 19,532
Other operating expenses 99,887 67,030
--------- ---------
Total other expenses $ 768,540 $ 507,017
--------- ---------
Net (loss) before taxes $ (313,106) $(320,955)
Income tax (benefit) (118,749) (101,899)
--------- ---------
Net (loss) $ (194,357) $(219,056)
========= =========
Basic (loss) per share $ (.30) $ (1.07)
========= =========
Diluted (loss) per share $ (.30) $ (1.07)
========= =========
Refer to notes to the consolidated financial statements.
ISLANDS BANCORP
BEAUFORT, SOUTH CAROLINA
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the nine-month
period ended September 30,
----------------------------
2002 2001
------------ ------------
Cash flows used in
operating activities $ (7,934) $ (84,048)
----------- -----------
Cash flows from investing activities:
Purchase of securities $ (600,000) $ (180,000)
Maturities, calls, paydowns, securities 415,523 - -
Increase in loans (9,204,355) (2,539,806)
Purchase of fixed assets (1,044,822) (924,211)
----------- -----------
Net cash used in investing activities $(10,433,654) $ (3,644,017)
----------- -----------
Cash flows from financing activities:
Sale of common stock, net $ - - $ 6,207,561
Increase in deposits 11,833,788 2,313,333
Advances from organizers - - (100,000)
Decrease in notes payable
and in federal funds purchased (1,000,000) (1,271,856)
----------- -----------
Net cash provided
from financing activities $ 10,833,788 $ 7,149,038
----------- -----------
Net increase in cash
and cash equivalents $ 392,200 $ 3,420,973
Cash and cash equivalents,
beginning of period 464,139 40,232
----------- -----------
Cash and cash equivalents,
end of period $ 856,339 $ 3,461,205
=========== ==========
Refer to notes to the consolidated financial statements.
ISLANDS BANCORP
BEAUFORT, SOUTH CAROLINA
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2001 AND 2002
Accumulated
Common Stock Other
------------------ Compre-
No. of Common Retained hensive
Shares Stock (Deficit) (Loss) Total
------ --------- -------- ------ -----
Balance,
January 1, 2001 550 $ 5,500 $ (487,120) $ -- $ (481,620)
--------- --------- ---------- -------- ----------
Comprehensive income:
- ---------------------
Net (loss),
nine-month
period ended
September 30, 2001 -- -- (219,056) -- (219,056)
--------- --------- ---------- --------- ----------
Total
comprehensive
(loss) -- -- (219,056) -- (219,056)
--------- --------- ---------- --------- ----------
Sale of common
stock 652,155 6,207,561 -- -- 6,207,561
--------- --------- ---------- --------- ----------
Balance,
September 30, 2001 652,705 $6,213,061 $ (706,176) $ -- $ 5,506,885
========= ========= ========== ========= ==========
- -------------------------------------------
Balance,
January 1, 2002 652,705 $6,213,061 $ (848,572) $ (515)$ 5,363,974
--------- --------- ---------- --------- ----------
Comprehensive income:
- ---------------------
Net (loss),
nine-month
period ended
Sept 30, 2002 -- -- (194,357) -- (194,357)
Net unrealized
loss on securities,
nine-month
period ended
Sept 30, 2002 -- -- -- (904) (904)
--------- --------- ---------- --------- ----------
Total
comprehensive
(loss) -- -- (194,357) (904) (195,261)
--------- --------- ---------- --------- ----------
Balance,
September 30, 2002 652,705 $6,213,061 $(1,042,929) $ (1,419)$ 5,168,713
========= ========= ========== ========= ==========
Refer to notes to the consolidated financial statements.
ISLANDS BANCORP
BEAUFORT, SOUTH CAROLINA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 2002
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-QSB and
Item 310 of Regulation S-B promulgated by the Securities and Exchange
Commission. Accordingly, they do not include all the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting only of those of a normal recurring nature) considered necessary
for a fair presentation have been included. Operating results for the three-
month and nine-month periods ended September 30, 2002 are not necessarily
indicative of the results that may be expected for the year ending December
31, 2002. These statements should be read in conjunction with the
consolidated financial statements and footnotes thereto included in the
annual report for the year ended December 31, 2001.
NOTE 2 - SUMMARY OF ORGANIZATION
Islands Bancorp (the "Company") is a one-bank holding company with
respect to Islands Community Bank, N.A., Beaufort, South Carolina (the
"Bank"). The Company was incorporated July 23, 1999, ant its principal
operations commenced when the Bank opened for business on July 9, 2001. The
Bank is engaged in the business of gathering and obtaining customers'
deposits and providing commercial, consumer and real estate loans to the
general public.
NOTE 3 - RECENT ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards No. 145, "Rescission of
FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13 and
Technical Corrections" ("FASB 145") updates and clarifies certain existing
accounting pronouncements. FASB Statements No. 4 and 64 require all gains
and losses arising from the extinguishment of debt to be aggregated and
classified as extraordinary items, net of tax effect. FASB No. 145 provides
additional guidance in classifying gains and losses arising from the
extinguishment of debt. FASB Statement No. 44 establishes accounting
requirements for the effects of transition to the provisions of the Motor
Carrier Act of 1980. Because the transition has been completed, FASB
Statement No. 44 is no longer necessary. FASB Statement No. 145 amends FASB
Statement No. 13 and requires that certain lease modifications that have
economic effects similar to those of sale-leaseback transactions be accounted
for in the same manner as sale-leaseback transactions. FASB 145 also makes a
few technical corrections to existing pronouncements. FASB 145 is effective
for transactions occurring after May 15, 2002. The adoption of FASB 145 by
the Company did not have a material impact on the Company's financial
position or results of operations.
Statement of Financial Accounting Standards No. 146, "Accounting for
Costs Associated with Exit or Disposal Activities" ("FASB 146") addresses
financial accounting and reporting for costs associated with exit or disposal
activities. FASB 146 nullifies Emerging Issues Task Force Issue No. 94-3
because FASB 146 requires that liabilities assumed for costs associated with
an exit or disposal activity be recognized when such liabilities are incurred
rather than when the entity commits to an exit plan. FASB 146 is effective
for transactions initiated after December 31, 2002. The adoption of FASB 146
by the Company is not expected to have a material impact on the Company's
financial position or results of operations.
Statement of Financial Accounting Standards No. 147, "Acquisition of
Certain Financial Institutions" (FASB "147") provides guidance on accounting
for the acquisition of certain financial institutions. FASB 147 addresses
and resolves inconsistencies between FASB Statements No. 72 and 142. The
provisions of FASB 147 are effective after September 30, 2002. The adoption
of FASB 147 by the Company is not expected to have a material impact on the
Company's financial position or results of operations.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- ------- ---------------------------------------------------------------
RESULTS OF OPERATIONS.
----------------------
As discussed earlier under Note 2, our banking operations commenced
July 9, 2001. The Company cautions against comparing results obtained in
periods prior to the commencement of banking operations with results obtained
after commencement of our banking operations; in fact, such comparisons may
not be meaningful and may possibly be misleading.
Total assets increased by $10.6 million, from $10.0 million at December
31, 2001 to $20.6 million at September 30, 2002. More specifically, cash and
cash equivalents increased by $.4 million, from $.5 million at December 31,
2001 to $.9 million at September 30, 2002; securities increased by $.2
million, from $1.3 million at December 31, 2001 to $1.5 million at September
30, 2002; loans increased by $9.1 million, from $6.3 million at December 31,
2001 to $15.4 million at September 30, 2002; property and equipment increased
by $1.0 million, from $1.5 million at December 31, 2001 to $2.5 million at
September 30, 2002; and all other remaining assets decreased by $.1 million,
from $.4 million at December 31, 2001 to $.3 million at September 30, 2002.
To fund the growth in assets, deposits increased by $11.8 million, from $3.5
million at December 31, 2001 to $15.3 million at September 30, 2002; federal
funds purchased decreased by $1.0 million, from $1.0 million at December 31,
2001 to no federal funds purchased at September 30, 2002; and the capital
accounts decreased by $.2 million, from $5.4 million at December 31, 2001 to
$5.2 million at September 30, 2002.
LIQUIDITY AND SOURCES OF CAPITAL
- --------------------------------
From its inception until July 6, 2001, the Company's operations were
funded primarily through loans and other borrowings. On July 6, 2001, the
Company received approximately $6.2 million from the sale of its common stock
to the public. Soon thereafter, the Company injected $6.0 million into the
Bank's capital accounts and used the majority of the remaining funds to pay-
off debt it had incurred during the development stage. The Bank, in turn,
also paid-off debts associated with its organizational costs, the purchase of
its facilities, and the purchase of its furniture and equipment.
Liquidity is the Company's ability to meet all deposit withdrawals
immediately, while also providing for the credit needs of customers. The
September 30, 2002 financial statements evidence a satisfactory liquidity
position as total cash and cash equivalents amounted to $.9 million,
representing 4.2% of total assets. Investment securities, which amounted to
$1.5 million, or 7.1% of total assets, provide a secondary source of
liquidity because they can be converted into cash in a timely manner. The
Bank is a member of the Federal Reserve System and maintains relationships
with several correspondent banks and, thus, could obtain funds from these
banks on short notice. The Company's management closely monitors and
maintains appropriate levels of interest earning assets and interest bearing
liabilities, so that maturities of assets can provide adequate funds to meet
customer withdrawals and loan demand. The Company knows of no trends,
demands, commitments, events or uncertainties that will result in or are
reasonably likely to result in its liquidity increasing or decreasing in any
material way. The Bank maintains an adequate level of capitalization as
measured by the following capital ratios and the respective minimum capital
requirements by the Bank's primary regulator, the OCC.
Bank's Minimum required
September 30, 2002 by the OCC
------------------ ----------------
Leverage ratio 25.5% 4.0%
Risk weighted ratio 32.1% 8.0%
RESULTS OF OPERATIONS
- ---------------------
For the three-month period ended September 30, 2002, net (loss)
amounted to $(48,267), or $(.07) per both basic and diluted share. For the
three-month period ended September 30, 2001, net income amounted to $81,114.
Recall that banking operations commenced July 9, 2001. Prior to July 9,
2001, management was engaged in the offering of the sale of the Company's
stock. Proceeds from the offering funded the capital accounts of the
organization. Until commencement of operations, proceeds from the offering
were invested by the escrow agent on behalf of the Company. The interest
earned from those investments could not be recognized by the Company until
both the minimum number of shares were sold and the OCC gave permission to
break escrow. In early July, 2001, after the minimum number of shares had
been sold, the OCC gave the Company permission to break escrow, at which time
all interest that had been earned from various investments in the escrow
account was recognized at once. The income recognition resulted in higher
revenues than would normally be expected in a typical three-month period and,
therefore, the Company was able to report a profit during the three-month
period ended September 30, 2001.
Note that the quarterly loss for the three-month period ended September
30, 2002 was significantly lower than the losses experienced during the three
previous calendar quarters. This trend in income is positive as the Company
is improving its economies of scale and is able to narrow its quarterly
losses.
Below are specific details concerning results of operations for the
three-month periods ended September 30, 2002 and 2001:
(a) Net interest income decreased from $306,164 for the three-month period
ended September 30, 2001 to $194,060 for the three-month period ended
September 30, 2002. As discussed earlier, interest income for the
three-month period ended September 30, 2001 included interest earned
in previous periods that the Company had not been allowed to recognize.
This situation was not present during the three-month period ended
September 30, 2002.
(b) Non-interest income for the three-month period ended September 30,
2002 amounted to $23,192, while during the three-month period ended
September 30, 2001 non-interest income was only $5,786. The increase
in non-interest income is primarily due to a higher volume in
transactional items.
(c) During the September 30, 2001 calendar quarter, the Company booked
$101,899 in income tax benefits, while only $28,484 in income tax
benefits were booked during the September 30, 2002 calendar quarter.
A larger amount of tax benefit was booked in the three-month period
ended September 30, 2001 when compared to the three-month period ended
September 30, 2002 because planned principal operations commenced
during the three-month period ended September 30, 2001, during which
time realization of tax benefits became likely to occur.
For the nine-month period ended September 30, 2002, net (loss) amounted
to $(194,357), or $(.30) per both basic and diluted share. For the nine-month
period ended September 30, 2001, net (loss) amounted to $(219,056). Below
are specific details concerning results of operations for the nine-month periods
ended September 30, 2002 and 2001:
a. Net interest income increased by approximately $293,608, from $210,762
for the nine-month period ended September 30, 2001 to $504,370 for the
nine month period ended September 30, 2002. For the nine-month period
ended September 30, 2002, average earning assets amounted to $12.7
million, average yield on earning assets amounted to 7.46%, the average
cost of funds was 3.19%, and the net yield on average earning assets
was 5.30%.
b. The Company booked $118,749 and $101,899 in income tax benefits during
the nine-month periods ended September 30, 2002 and 2001, respectively.
The tax benefits were about the same during those two periods because
year-to-date losses for both periods were almost identical.
c. For the nine-month period ended September 30, 2002, non-interest income
amounted to $56,060. As a percent of average assets, non-interest
income was .49%.
d. Operating expenses were approximately $261,523 higher during the nine-
month period ended September 30, 2002 when compared to the nine-month
period ended September 30, 2001. However, as a percent of average
assets, operating expenses declined from 15.4% for the nine-month
period ended September 30, 2001 to 6.70% for the nine-month period
ended September 30, 2002.
As of September 30, 2002, the allowance for loan losses amounted to
$181,846. As a percent of gross loans, the allowance for loan losses
amounted to 1.17%. Management considers the allowance for loan losses to
be adequate and sufficient to absorb possible future losses; however, there
can be no assurance that charge-offs in future periods will not exceed the
allowance for loan losses or that additional provisions to the allowance
will not be required.
The Company is not aware of any current recommendation by the
regulatory authorities which, if they were to be implemented, would
have a material effect on the Company's liquidity, capital resources,
or results of operations.
The Company cautions readers of this report that such forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of the
Company to be materially different from those expressed or implied by
such forward-looking statements. Although the Company's management believes
that their expectations of future performance are based on reasonable
assumptions within the bounds of their knowledge of their business and
operations, there can be no assurance that actual results will not differ
materially from their expectations.
The Company's operating performance each quarter is subject to various
risks and uncertainties that are discussed in detail in the Company's filings
with the SEC, including the "Risk Factors" section of the Company's
Registration Statement (Registration No. 333-92653) as filed with the SEC
and declared effective on March 13, 2000.
ITEM 3. CONTROLS AND PROCEDURES
- ------- -----------------------
The Company's Chief Executive Officer has evaluated the Company's
disclosure controls and procedures as of a date within 90 days prior to
the date of this filing, and concluded that these controls and procedures are
effective. There have been no significant changes in internal controls or in
other factors that could significantly affect these controls subsequent to
the date of this evaluation.
Disclosure controls and procedures are the Company's controls and other
procedures that are designed to ensure that information it is required to
disclose in the reports it files under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the
Securities and Exchange Commission's rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed to
ensure that information the Company is required to disclose in the reports
that if files under the Exchange Act is accumulated and communicated to
management, including the principal executive and financial officers, as
appropriate, to allow timely decisions regarding required disclosure.
CERTIFICATION
I, William B. Gossett, President and Chief Executive Officer of the
registrant, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Islands Bancorp;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the
period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. I am responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and I have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to me by others employed
by the registrant, particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this quarter report (the "Evaluation Date"); and
c) presented in this quarterly report in conclusions about the
effectiveness of the disclosure controls and procedures based on my
evaluation as of the Evaluation Date;
5. I have disclosed, based on my most recent evaluation, to the registrant's
auditors and the audit committee of registrant's board of directors (or
persons performing the equivalent function);
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. I have indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the Evaluation Date,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
Date: November 13, 2002 BY: /s/ William B. Gossett
------------------ ----------------------------------
William B. Gossett
President and Chief Executive Officer
(principal executive and financial officer)
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ------- --------------------------------
(a) Exhibits: There are no exhibits filed with this report.
(b) Reports on Form 8-K. There were no reports on Form 8-K filed during
the quarter ended September 30, 2002.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
ISLANDS BANCORP
------------------------------------------
(Registrant)
Date: November 13, 2002 BY: /s/ William B. Gossett
------------------- --------------------------------
William B. Gossett
President and Chief Executive Officer
(principal executive and financial officer)
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Islands Bancorp, Inc. (the
"Company") on Form 10-QSB for the quarterly period ended September 30, 2002
(the "Report"), the undersigned, William B. Gossett, President and Chief
Executive Officer of the Company, does hereby certify, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that to the best of my knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Company.
By: /s/ William B. Gossett
------------------------------------
William B. Gossett
President and Chief Executive Officer
(principal executive and financial officer)
November 13, 2002