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 March 31, 2003.
OR
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
- ----- SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------- -------------
Commission File No. 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 May
14, 2003.
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 March 31, December 31,
- ------ 2003 2002
----------- ----------
Cash and due from banks $ 471,130 $ 394,484
Federal funds sold, net 556,000 - -
----------- -----------
Total cash and cash equivalents $ 1,027,130 $ 394,484
Securities:
Available-for-sale, at fair value 2,505,943 1,334,763
Loans, net 20,799,356 18,872,582
Property and equipment, net 2,824,571 2,858,610
Other assets 1,223,935 559,591
----------- -----------
Total Assets $28,380,935 $24,020,030
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Liabilities:
Deposits
Non-interest bearing deposits $ 2,223,726 $ 1,563,515
Interest bearing deposits 20,954,291 16,926,102
----------- -----------
Total deposits $23,178,017 $18,489,617
Federal funds purchased and borrowings - - 308,000
Other liabilities 93,807 88,529
----------- -----------
Total liabilities $23,271,824 $18,886,146
----------- -----------
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 (1,112,320) (1,086,429)
Accumulated other comprehensive loss 8,370 7,252
----------- -----------
Total Shareholders' Equity $ 5,109,111 $ 5,133,884
----------- -----------
Total Liabilities and
Shareholders' Equity $28,380,935 $24,020,030
=========== ===========
Refer to notes to the financial statements.
ISLANDS BANCORP
BEAUFORT, SOUTH CAROLINA
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three months ended
March 31,
------------------------
2003 2002
---- ----
Interest income $ 381,769 $ 168,918
Interest expense 140,135 36,700
--------- ---------
Net interest income $ 241,634 $ 132,218
Provision for loan losses 20,382 28,640
--------- ---------
Net interest income after
provision for loan losses $ 221,252 $ 103,578
--------- ---------
Other income:
Service fees on deposit accounts $ 38,060 $ 15,187
Miscellaneous, other 1,441 215
--------- ---------
Total other income $ 39,501 $ 15,402
--------- ---------
Other expenses:
Salaries and benefits $ 168,617 $ 133,968
Depreciation expense 34,499 14,992
Data processing 27,924 20,893
Rent expense - - 12,825
ATM machine expense 6,700 9,585
Advertising and public relations 2,286 6,338
Utilities and telephone 6,269 4,337
Legal & professional 11,385 9,549
Other operating expenses 44,250 31,280
--------- ---------
Total operating expenses $ 301,930 $ 243,767
--------- ---------
Loss before income tax $ (41,177) $(124,787)
Income tax (benefit) (15,286) (46,900)
--------- ---------
Net (loss) $ (25,891) $ (77,887)
========= =========
Basic (loss) per share $ (.04) $ (.12)
========= =========
Diluted (loss) per share $ (.04) $ (.12)
========= =========
Refer to notes to the financial statements.
ISLANDS BANCORP
BEAUFORT, SOUTH CAROLINA
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the three-month
period ended March 31,
------------------------------
2003 2002
---- ----
Net cash used by operating activities $ (628,958) $ 41,050
------------ ------------
Cash flows from investing activities:
Purchase of securities $ (1,239,678) $ ----
Securities paydowns, calls, maturities 68,498 101,132
Increase in loans (1,947,156) (2,481,517)
Purchase of fixed assets (460) (71,597)
------------ ------------
Net cash used in investing activities $ (3,118,796) $ (2,451,982)
------------ ------------
Cash flows from financing activities:
Increase in deposits $ 4,688,400 $ 4,522,623
Decrease in federal funds purchased (308,000) (1,000,000)
------------ ------------
Net cash provided
from financing activities $ 4,380,400 $ 3,522,623
------------ ------------
Net increase in cash
and cash equivalents $ 632,646 $ 1,111,691
Cash and cash equivalents,
beginning of period 394,484 464,139
------------ ------------
Cash and cash equivalents,
end of period $ 1,027,130 $ 1,575,830
============ ============
Refer to notes to the financial statements.
ISLANDS BANCORP
BEAUFORT, SOUTH CAROLINA
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2002 AND 2003
(UNAUDITED)
Common Stock Accumulated
------------------ Other
No. of Retained Comprehensive
Shares Amount Earnings Income Total
------ ------ -------- ------ -----
Balance,
December 31,
2001 652,705 $ 6,213,061 $ (848,572) $ 515 $ 5,363,974
--------- ---------- ---------- -------- ----------
Comprehensive Income:
- --------------------
Net income,
three-month
period ended
March 31, 2002 - - - - (77,887) - - (77,887)
Net unrealized
gains on
securities,
three-month
period ended
March 31, 2002 - - - - - - 749 749
--------- ---------- ---------- -------- ----------
Total comprehensive
income - - - - (77,887) 749 (77,138)
--------- ---------- ---------- -------- ----------
Balance,
March 31,
2002 652,705 $ 6,213,061 $ (926,459) $ 234 $ 5,286,836
========= ========== ========== ======== ==========
- -------------------------------------------------------------------------------
Balance,
December 31,
2002 652,705 $ 6,213,061 $(1,086,429) $ 7,252 $ 5,133,884
--------- ---------- ---------- -------- ----------
Comprehensive Income:
- ---------------------
Net income,
three-month
period ended
March 31,
2003 - - - - (25,891) - - (25,891)
Net unrealized
gains on
securities,
three-month
period ended
March 31, 2003 - - - - - - 1,118 1,118
--------- ---------- ---------- -------- ----------
Total comprehensive
income - - - - (25,891) - - (24,773)
--------- ---------- ---------- -------- ----------
Balance,
March 31,
2003 652,705 $ 6,213,061 $(1,112,320) $ 8,370 $ 5,109,111
========= ========== ========== ======== ==========
Refer to notes to the consolidated financial statements.
ISLANDS BANCORP
BEAUFORT, SOUTH CAROLINA
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2003
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited 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 period ended March 31, 2003 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2003. These statements should be read in conjunction with the
financial statements and footnotes thereto included in the annual report for
the year ended December 31, 2002.
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, and 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
In December 2001, the American Institute of Certified Public Accountants
issued Statement of Position ("SOP") 01-6, "Accounting by Certain Entities
(Including Entities With Trade Receivables) That Lend to or Finance the
Activities of Others." SOP 01-6 reconciles the specialized accounting and
financial reporting guidance in the existing Banks and Savings Institutions
Guide, Audits of Credit Unions Guide, and Audits of Finance Companies Guide.
The SOP eliminates differences in accounting and disclosure established by the
respective guides and carries forward accounting guidance for transactions
determined to be unique to certain financial institutions. Adoption of this
pronouncement has not had a material impact on the Company's results of
operations or financial position.
In October 2002, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 147, "Acquisitions of Certain Financial Institutions," which addresses
accounting for the acquisition of certain financial institutions. The
provisions of SFAS No. 147 rescind the specialized accounting guidance in
paragraph 5 of SFAS No. 72 and would require unidentifiable intangible assets to
be reclassified to goodwill if certain criteria are met. Financial institutions
meeting the conditions outlined in SFAS No. 147 will be required to restate
previously issued financial statements after September 30, 2002. The adoption
of SFAS No. 147 has had no material impact on the Company's results of
operations or financial position.
In December 2002, FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure," which amended SFAS No. 123,
"Accounting for Stock-Based Compensation" to provide alternative methods of
transition for a voluntary change to the fair value based method of accounting
for stock-based compensation. In addition, this statement amended the
disclosure requirements of SFAS No. 123 to require prominent disclosures in both
annual and interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the chosen method on
reporting results. The provisions of SFAS No. 148 are effective for annual
periods ending December 15, 2002, and for interim periods beginning after
December 15, 2002.
In November 2002, FASB issued Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others." It addresses the accounting for the
stand-ready obligation under guarantees. A guarantor is required to recognize a
liability with respect to its stand-ready obligation under the guarantee even if
the probability of future payments under the guarantee is remote. The initial
liability will be measured as the fair value of the stand-ready obligation.
Additionally, the Interpretation addresses the disclosure requirements for
guarantees including the nature and terms of the guarantees, maximum potential
for future amounts and the carrying amount of the liabilities. The disclosure
requirements are effective for interim and annual financial statements ending
after December 15, 2002. The initial recognition and measurement provisions are
effective for all guarantees within the scope of Interpretation 45 issued or
modified after December 31, 2002. Commercial letters of credit and other loan
commitments, which are commonly thought of as guarantees of funds were not
included in the scope of interpretation. The Company has made relevant
disclosures in the current year financial statements. The Company does not
expect the adoption of Interpretation No. 45 to have a material impact on its
financials.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
- ------ -----------------------------------------------------------------------
OF OPERATIONS.
--------------
Total assets increased by $4.4 million, from $24.0 million at December 31,
2002 to $28.4 million at March 31, 2003. More specifically, cash and cash
equivalents increased by $.6 million, from $.4 million at December 31, 2002 to
$1.0 million at March 31, 2003; securities increased by $1.2 million, from $1.3
million at December 31, 2002 to $2.5 million at March 31, 2003; loans increased
by $1.9 million, from $18.9 million at December 31, 2002 to $20.8 million at
March 31, 2003; property and equipment decreased slightly for depreciation; and
all other remaining assets increased by $.6 million, from $.6 million at
December 31, 2002 to $1.2 million at March 31, 2003. To fund the growth in
assets, deposits increased by $4.7 million, from $18.5 million at December 31,
2002 to $23.2 million at March 31, 2003; federal funds purchased decreased by
$.3 million, from $.3 million at December 31, 2002 to no federal funds purchased
at March 31, 2003; and the capital accounts decreased by less than $.1 million.
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 March
31, 2003 financial statements evidence a satisfactory liquidity position as
total cash and cash equivalents amounted to $1.0 million, representing 3.6%
of total assets. Investment securities, which amounted to $2.5 million, or
8.8% of total assets, provide a secondary source of liquidity because securities
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
March 31, 2003 by the OCC
-------------- ----------------
Leverage ratio 19.2% 4.0%
Risk weighted ratio 23.4% 8.0%
Results of Operations
- ---------------------
For the three-month period ended March 31, 2003, net (loss) amounted to
$(25,891), or $(.04) per both basic and diluted share. For the three-month
period ended March 31, 2002, net (loss) amounted to $(77,887) or $(.12) per both
basic and diluted share. The primary reasons for the improvement in income for
the three-month period ended March 31, 2003 when compared with the three-month
period ended March 31, 2002 are as follows:
a. Interest income, which represents interest received on interest earning
assets, increased from $168,918 for the three-month period ended March 31,
2002 to $381,769 for the three-month period ended March 31, 2003, an
increase of $212,851. The cost of funds, which represents interest paid
on deposits and borrowings, increased as well, from $36,700 for the three-
month period ended March 31, 2002 to $140,135 for the three-month period
ended March 31, 2003, an increase of $103,435. Because the growth in
interest income during the three-month period ended March 31, 2003 out-
paced the increase in cost of funds, net interest income grew from $132,218
for the three-month period ended March 31, 2002 to $241,634 for the three-
month period ended March 31, 2003.
Net interest yield, defined as net interest income divided by average
interest earnings assets, decreased from 5.56% during the three-month
period ended March 31, 2002 to 4.31% during the three-month period ended
March 31, 2003. The decline is due to two factors: (i) Rates in general
have declined in the past year in response to monetary actions undertaken
by the Federal Reserve Board, and (ii) capital, a "free" source of funds
for the Bank represented 39.5% of the total sources of funds for the March
31, 2002 calendar quarter, while it represented only 18.0% for the March
31, 2003 calendar quarter. Below is pertinent information concerning the
yield on earning assets and the cost of funds for the three-month period
ended March 31, 2003.
(Dollars in '000s)
Avg. Assets/ Interest Yield/
Description Liabilities Income/Expense Cost
----------- ----------- -------------- ------
Federal funds $ 1,231 $ 3 1.14%
Securities 1,393 15 4.30%
Loans 19,858 364 7.32%
------ --- ----
Total $22,482 $382 6.80%
====== --- ----
Federal funds $ 43 $ -- 1.44%
Transactional
accounts 3,370 15 1.73%
Savings 260 1 .92%
CD's 15,624 124 3.17%
------ --- ----
Total $19,297 $140 2.90%
====== --- ----
Net interest income $242
===
Net yield on earnings assets 4.31%
====
b. For the three-month period ended March 31, 2003, non-interest income
amounted to $39,501, or .60% of average assets. By comparison, non-
interest income for the three-month period ended March 31, 2002 amounted to
$15,402, or .51% of average assets. The majority of the increase was
caused by the increase in transactional account volume.
c. For the three-month period ended March 31, 2003, non-interest expense
amounted to $301,930, or 4.57% of average assets. By comparison, for the
three-month period ended March 31, 2002, non-interest expense amounted to
$243,767, or 8.12% of average assets. On a percentage basis, the decrease
from 8.12% for the three-month period ended March 31, 2002 to 4.57% for
the three-month period ended March 31, 2003 is significant. This decrease
is primarily due to the improvement of operational efficiencies.
d. Provision for loan losses for three-month periods ended March 31, 2003 and
2002 amounted to $20,382 and $28,640, respectively. Had the provision been
raised during the March 31, 2003 quarter to equalize with the March 31,
2002 quarter, net loss for the March 31, 2003 quarter would have increased,
net of tax effect, from $(25,891) to $(31,341). On a per share basis, this
increase in net loss represents $.01.
During the three-month period ended March 31, 2003, the allowance for loan
losses increased by $20,382, to $241,606. The allowance for loan losses as a
percentage of gross loans declined from 1.16% at December 31, 2002 to 1.15% at
March 31, 2003. 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 it was 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: May 14, 2003 BY: /s/ William B. Gossett
--------------- ----------------------------------
William B. Gossett
President and Chief Executive Officer
(principal executive and financial officer)
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
- ------- ------------------
The Company is not a party to any pending litigation.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
- ------- -----------------------------------------
This item is not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
- ------- --------------------------------
This item is not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
- ------- ----------------------------------------------------
No matters were submitted to a vote of the shareholders of the Company
during the three-month period ended March 31, 2003.
ITEM 5. OTHER INFORMATION.
- ------- ------------------
A member of the Board of Directors, Mr. Avery Cleland, resigned from
the Company's and the Bank's Board effective February 10, 2003.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
- ------- ---------------------------------
(a) The certification pursuant to Section 906 of the Sarbanes-Oxley Act is
filed as Exhibit 99.1 hereto.
(b) Reports on Form 8-K. There were no reports on Form 8-K filed during
the quarter ended March 31, 2003.
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: May 14, 2003 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)
May 14, 2003