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First State Bancorporation 10-Q 2005 Table of ContentsUNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
FORM 10-Q
(Mark One)
For the quarterly period ended June 30, 2005.
or
For the transition period from to
Commission file number 001-12487
FIRST STATE BANCORPORATION (Exact name of registrant as specified in its charter)
(505) 241-7500 (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 by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes x No ¨
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 15,358,565 shares of common stock, no par value, outstanding as of August 2, 2005.
Table of ContentsFIRST STATE BANCORPORATION AND SUBSIDIARY
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Table of ContentsPART I - FINANCIAL INFORMATION
Item 1. Financial Statements. First State Bancorporation and Subsidiary Consolidated Condensed Balance Sheets (unaudited) (Dollars in thousands, except share and per share amounts)
See accompanying notes to unaudited consolidated condensed financial statements.
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Table of ContentsFirst State Bancorporation and Subsidiary Consolidated Condensed Statements of Operations For the three and six months ended June 30, 2005 and 2004 (unaudited) (Dollars in thousands, except per share amounts)
See accompanying notes to unaudited consolidated condensed financial statements.
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Table of ContentsFirst State Bancorporation and Subsidiary Consolidated Condensed Statements of Comprehensive Income For the three and six months ended June 30, 2005 and 2004 (unaudited) (Dollars in thousands)
See accompanying notes to unaudited consolidated condensed financial statements.
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Table of ContentsFirst State Bancorporation and Subsidiary Consolidated Condensed Statements of Cash Flows For the six months ended June 30, 2005 and 2004 (unaudited) (Dollars in thousands)
See accompanying notes to unaudited consolidated condensed financial statements.
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Table of ContentsFirst State Bancorporation and Subsidiary Notes to Consolidated Condensed Financial Statements (unaudited)
1. Consolidated Condensed Financial Statements
The accompanying consolidated condensed financial statements of First State Bancorporation and subsidiary (the “Company”) are unaudited and include our accounts and those of our wholly owned subsidiary, First State Bank N.M. (the “Bank”). All significant intercompany accounts and transactions have been eliminated. Information contained in our consolidated condensed financial statements and notes thereto should be read in conjunction with our consolidated financial statements and notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2004.
Our consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and instructions to Form 10-Q. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements. In our opinion, all adjustments (consisting only of normally recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six month periods ended June 30, 2005, are not necessarily indicative of the results that may be expected for the year ending December 31, 2005.
2. New Accounting Standards
On March 1, 2005, the Federal Reserve Board released a final rule (FR) incorporating two substantive changes in the capital treatment of trust preferred securities that would impact bank holding companies and a number of clarifications of existing policies and guidelines. The substantive changes included in the FR that affect bank holding companies provide that: (1) As of March 31, 2009, the amount of trust preferred securities that a bank holding company may include as Tier 1 capital will be limited to 25% of the sum of all core capital elements including trust preferred securities, net of goodwill less any associated deferred tax liability, and (2) After March 31, 2009, amounts of trust preferred securities in excess of the 25% limit will be included in Tier 2 capital, limited to 50% of Tier 1 capital. Based on our current amount of trust preferred securities, the FR will not impact our capital calculations.
In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” SFAS 150 establishes standards for how a business enterprise classifies, measures, and discloses in its financial statements certain financial instruments with characteristics of both liabilities and equity. SFAS 150 requires that a business enterprise classify financial instruments that are within its scope as liabilities (or as assets in some circumstances). SFAS 150 is effective for contracts entered into or modified after May 31, 2003, and is otherwise effective at the beginning of the first interim period beginning after June 15, 2003. The FASB has proposed to defer provisions related to mandatorily redeemable financial instruments to periods beginning after December 15, 2004. The adoption of SFAS 150 on July 1, 2003, did not have a material impact on our consolidated financial statements, and the adoption of the deferred provisions on January 1, 2005, did not have a material impact on our consolidated financial statements.
In December 2004, the FASB issued SFAS No. 123R, “Share-Based Payment.” SFAS 123R is a revision of SFAS No. 123, “Accounting for Stock-Based Compensation”, and supersedes APB 25. Among other provisions, SFAS 123R eliminates the use of APB 25 and the intrinsic value method of accounting, and requires companies to recognize the cost of employee services received in exchange for awards of equity instruments, based on the grant date fair value of those awards, in the financial statements. The effective date of SFAS 123R is the first reporting period beginning after June 15, 2005, although early adoption is allowed. However, on April 14, 2005, the Securities and Exchange Commission announced that the compliance date of SFAS 123R will be suspended until January 1, 2006, for calendar year companies.
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Table of ContentsSFAS 123R permits companies to adopt its requirements using either a “modified prospective” method or a “modified retrospective” method. Under the “modified prospective” method, compensation cost is recognized in the financial statements beginning with the effective date, based on the requirements of SFAS 123R for all share-based payments granted after that date, and based on the requirements of SFAS 123 for all unvested awards granted prior to the effective date of SFAS 123R. Under the “modified retrospective” method, the requirements are the same as under the “modified prospective” method, but also permits entities to restate financial statements of previous periods based on proforma disclosures made in accordance with SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure.”
SFAS 123R also requires that the benefits associated with the tax deductions in excess of recognized compensation cost be reported as a financing cash flow, rather than as an operating cash flow as required under current literature. This requirement will reduce net operating cash flows and increase net financing cash flows in periods after the effective date. These future amounts cannot be estimated, because they depend on, among other things, when employees exercise stock options.
We currently expect to adopt SFAS 123R, effective January 1, 2006, based on the new compliance date announced by the Securities and Exchange Commission; however, we have not yet determined which of the aforementioned adoption methods we will use. Subject to a complete review of the requirements of SFAS 123R, based on stock options granted to date using our current pricing model (Black-Scholes), the adoption of SFAS 123R on January 1, 2006, is expected to reduce 2006 earnings by approximately $800,000.
In March 2004, the FASB’s Emerging Issues Task Force (“EITF”) reached a consensus on Issue No. 03-1, “The Meaning of Other-Than-Temporary Impairments and Its Application to Certain Investments” (EITF 03-1). EITF 03-1 provides accounting guidance regarding the determination of when an impairment (i.e., fair value is less than amortized cost) of debt and marketable equity securities and investments accounted for under the cost method should be considered other-than-temporary and recognized in earnings. EITF 03-1 also requires annual disclosures of certain quantitative and qualitative factors of debt and marketable equity securities classified as available-for-sale or held-to-maturity that are in an unrealized loss position at the balance sheet date, but for which an other-than-temporary impairment has not been recognized. The Financial Accounting Standards Board has decided to delay the effective date for the measurement and recognition guidance until new implementation guidance can be issued. The Proposed Staff Position EITF 03-1-a is expected to be issued in final form in 2005.
In December 2004, the AICPA issued Statement of Position (“SOP”) No. 03-3, “Accounting for Certain Loans or Debt Securities Acquired in a Transfer.” SOP 03-3 addresses accounting for differences between contractual cash flows and cash flows expected to be collected from an investor’s initial investment in loans or loans accounted for as debt securities acquired in a transfer if those differences are attributable, at least in part, to credit quality. SOP 03-3 requires that the excess of contractual cash flows over cash flows expected to be collected not be recognized as an adjustment of yield, loss accrual, or valuation allowance. It includes loans with evidence of deterioration of credit quality since origination, acquired by completion of a transfer, including such loans acquired in purchase business combinations. SOP 03-3 does not apply to loans originated by the entity or acquired loans that have not deteriorated in credit quality since origination. SOP 03-3 is effective for loans acquired in fiscal years beginning after December 15, 2004. The adoption of SOP 03-3 on January 1, 2005, did not have a material impact on our consolidated financial statements.
3. Stock Based Compensation
We apply the intrinsic value-based method of accounting prescribed by Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees” and related interpretations in accounting for our fixed plan stock options. As such, compensation expense is recorded on the date of grant only if the current market price of the underlying stock exceeds the exercise price. SFAS 123 established accounting and disclosure requirements using a fair value-based method of accounting for stock-based employee compensation plans. As allowed by SFAS 123, we have elected to continue to apply the intrinsic value-based method and have included the disclosure required by SFAS 148.
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Table of ContentsHad compensation costs been determined consistent with the fair value method of SFAS 123 at the grant dates for awards, net income and earnings per common share would have changed to the pro forma amounts indicated below.
See Note 2. New Accounting Standards for further discussion regarding the impact SFAS 123R is expected to have on our operations.
4. Earnings per Common Share
Basic earnings per share are computed by dividing net income (the numerator) by the weighted-average number of common shares outstanding during the period (the denominator). Diluted earnings per share are calculated by increasing the basic earnings per share denominator by the number of additional common shares that would have been outstanding if dilutive potential common shares for options had been issued.
The following is a reconciliation of the numerators and denominators of basic and diluted earnings per share for the three and six months ended June 30:
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Table of ContentsOn February 9, 2005, we effected a two-for-one split of our common stock. All references to number of shares and per share computations in the consolidated condensed financial statements and notes have been retroactively adjusted to reflect the increased number of shares due to the effect of the common stock split.
For the three and six months ended June 30, 2005 no options were excluded from the calculation as the exercise prices of the stock options were less than the average share price of the common shares. For the three months ended June 30, 2004 approximately 378,000 stock options outstanding and 305,000 for the six months ended June 30, 2004 were excluded from the calculation of diluted earnings per share because the exercise prices of the stock options were equal to or greater than the average share price of the common shares, and therefore their inclusion would have been anti-dilutive.
5. Treasury Stock
Our Board of Directors has authorized us to purchase up to 1,050,000 shares of our common stock in the open market. As of June 30, 2005, we have purchased 784,100 shares. We did not purchase any additional shares during the six months ended June 30, 2005. We may purchase additional shares, the amount of which will be determined by market conditions. We sponsor a deferred compensation plan, which is included in the consolidated financial statements. At June 30, 2005, the assets of the deferred compensation plan included 32,643 shares of Company common stock.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Forward-Looking Statements
Certain statements in this Form 10-Q are forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). The discussions regarding our growth strategy, expansion of operations in our markets, competition, loan and deposit growth, timing of new branch openings, expansion opportunities including expanding our mortgage division market share, and response to consolidation in the banking industry include forward-looking statements. Other forward-looking statements can be identified by the use of forward-looking words such as “believe,” “expect,” “may,” “will,” “should,” “seek,” “approximately,” “intend,” “plan,” “estimate,” or “anticipate” or the negative of those words or other comparable terminology. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those in the forward-looking statement. Some factors include changes in interest rates, local business conditions, government regulations, loss of key personnel or inability to hire suitable personnel, faster or slower than anticipated growth, economic conditions, our competitors’ responses to our marketing strategy or new competitive conditions, and competition in the geographic and business areas in which we conduct our operations. We are not undertaking any obligation to update these risks to reflect events or circumstances after the date of this report to reflect the occurrence of unanticipated events.
Consolidated Condensed Balance Sheets
Our total assets increased by $192.1 million from $1.816 billion as of December 31, 2004, to $2.008 billion as of June 30, 2005. The increase was primarily made up of a $43.1 million increase in cash and cash equivalents, a $7.4 million increase in investment securities, a $129.2 million increase in loans, and a $10.5 million increase in cash surrender value of bank owned life insurance.
The following table presents the amounts of our loans, by category, at the dates indicated.
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Table of ContentsWe utilize deposits and Federal Home Loan Bank advances as our main source of funding for loans and investments. Deposits increased by $64.4 million from $1.401 billion as of December 31, 2004, to $1.466 billion as of June 30, 2005. Securities sold under agreements to repurchase decreased $21.6 million from $69.7 million at December 31, 2004 to $48.2 million at June 30, 2005. Federal Home Loan Bank advances and other increased $132.0 million from $153.9 million at December 31, 2004 to $285.8 million at June 30, 2005.
The following table represents customer deposits, by category, at the dates indicated.
Consolidated Results of Operations For the Three Months Ended June 30, 2005
Our net income for the three months ended June 30, 2005, was $4.9 million, an increase of $1.6 million or 48% from $3.3 million for the same period of 2004. The increase in net income resulted from an increase in net interest income of $4.0 million and an increase in non-interest income of $665,000, partially offset by an increase in non-interest expenses of $1.4 million, an increase in the provision for loan losses of $895,000, and an increase in income taxes of $806,000. Our annualized return on average assets was 1.01% for the three months ended June 30, 2005, compared to 0.80% for the same period of 2004.
Our net interest income increased $4.0 million to $20.5 million for the second quarter of 2005 compared to $16.5 million for the second quarter of 2004. This increase was composed primarily of a $7.3 million increase in total interest income offset by a $3.2 million increase in total interest expense. The increase in interest income was composed of an increase of $4.1 million due to increased average interest earning assets of $275.9 million, aided by a $3.2 million increase due to a 0.71% increase in the yield on average interest earning assets. The increase in average interest-earning assets primarily occurred in loans and investment securities. The increase in loans of $221.3 million was made possible by our successful efforts to attract new customers and the increase in our investment securities of $51.8 million was driven primarily by purchases of securities to satisfy collateral pledging requirements. The increase in total interest expense was composed of an increase of $846,000 due to increased average interest-bearing liabilities of $198.2 million, and an increase of $2.4 million due to a 0.64% increase in the cost of interest-bearing liabilities. The increase in average interest-bearing liabilities was due to an increase in average interest-bearing deposits of $100.1 million and an increase in average borrowings including FHLB advances and junior subordinated debentures of $104.3 million. The increase in interest-bearing deposits is a result of our success in increasing market share in New Mexico.
The increase in yield on interest earning assets of 0.71% reflects the impact of the Federal Reserve Bank’s increases in the discount rate beginning in the third quarter of 2004 and into 2005. The increase in the discount rate contributes to a corresponding increase in the prime rate. A substantial portion of our loan portfolio consists of adjustable rate loans whose rates are adjusted based upon the then prevailing prime rate. The increase in the prime rate has led to a corresponding increase in the yield on our loan portfolio. We expect that the Federal Reserve Bank rate increases in the first six months of 2005 will cause the yield on our loan portfolio to continue to increase slightly in the coming months as existing loans reprice.
The increase in our cost of interest bearing liabilities is a result of higher interest payments made to our deposit and repurchase agreement customers as well as higher interest rates paid on our borrowings. The interest rate that we pay to our deposit and repurchase agreement customers is influenced by the level of the discount rate and competitive market
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Table of Contentsconditions. As a result of the increases in the discount rate made by the Federal Reserve Bank since the third quarter of 2004, we increased the interest rates that we pay on our customers’ deposits and repurchase agreements and increased the corresponding interest payments to these customers. In addition, the increase in the discount rate has corresponded to an increase in interest expense related to our borrowings as the majority of our borrowings mature within one year and are being replaced with borrowings at the higher current rates. We continue to use a laddering approach to our borrowings with maturities of approximately one year or less.
We believe that the competitive environment for deposits will significantly determine the impact on the net interest margin of changes in interest rates. During the quarter ended June 30, 2005, the net interest margin increased by 0.22% over the quarter ended June 30, 2004, due primarily to Federal Reserve Bank rate increases. The extent of future increases in our net interest margin will depend on the amount and timing of any further Federal Reserve Bank increases, the level of borrowings required to fund loan growth, and our ability to manage the cost of interest-bearing liabilities and stay competitive in the markets we serve.
Our provision for loan losses was $1.7 million for the second quarter of 2005, compared to $830,000 for the second quarter of 2004. Net charge-offs for the second quarter of 2005 were $658,000 compared to $398,000 for the second quarter of 2004. The allowance for loan losses to total loans held for investment was 1.15% and the ratio of allowance for loan losses to non-performing loans was 337% at June 30, 2005, compared to the allowance for loan losses to total loans held for investment of 1.15% and the ratio of allowance for loan losses to non-performing loans of 171% at June 30, 2004. Total non-performing assets to total assets were 0.30% at June 30, 2005, compared to 0.58% at June 30, 2004. We provide for loan losses based upon our judgments concerning the adequacy of the allowance for loan losses considering such factors as loan growth, delinquency trends, previous charge-off experience, and local and national economic conditions.
Our total non-interest income increased by $665,000 to $4.2 million for the three months ended June 30, 2005, compared to $3.5 million for the same period of 2004. The increase was primarily composed of a $650,000 increase in gain on sale of mortgage loans, and a $438,000 increase in service charges on deposit accounts resulting from increased customer activity related to implementation of an overdraft privilege product in April 2005. These increases were partially offset by a $648,000 decrease in credit and debit card transaction fees due to the sale of the merchant card portfolio in the third quarter of 2004.
Our total non-interest expenses increased by $1.4 million to $15.3 million for the second quarter of 2005, compared to $13.9 million for the same period of 2004. This increase was due partially to a $2.1 million increase in salaries and employee benefits, offset by a $522,000 decrease in credit and debit card interchange expense due to the sale of the merchant card portfolio, and a $249,000 decrease in other non-interest expenses. Other non-interest expenses in the second quarter 2004 included a loss of $215,000 from a robbery, $98,000 from restructuring the bank’s mortgage operation, and $47,000 from the write off of abandoned lockbox software.
Consolidated Results of Operations For the Six Months Ended June 30, 2005
Our net income for the six months ended June 30, 2005, was $9.2 million, an increase of $2.3 million or 34% from $6.9 million for the same period of 2004. The increase in net income resulted from an increase in net interest income of $6.7 million, an increase in non-interest income of $423,000, partially offset by an increase in non-interest expenses of $3.1 million, an increase in the provision for loan losses of $530,000, and an increase in income taxes of $1.2 million. Our annualized return on average assets was 0.98% for the six months ended June 30, 2005, compared to 0.84% for the same period of 2004.
Our net interest income increased $6.7 million to $39.9 million for the six months ended June 30, 2005 compared to $33.2 million for the same period of 2004. This increase was composed of an $11.7 million increase in total interest income offset by a $5.0 million increase in total interest expense. The increase in interest income was composed of an increase of $6.7 million due to increased average interest earning assets of $239.9 million aided by a $5.0 million increase due to a 0.55% increase in the yield on average interest earning assets. The increase in average interest-earning assets primarily occurred in loans and investment securities. The increase in total interest expense was composed of an increase of $1.4 million due to increased average interest-bearing liabilities of $171.7 million, and an increase of $3.6 million due to a 0.49% increase in the cost of interest-bearing liabilities. The increase in average interest-bearing liabilities was due to an increase in average interest-bearing deposits of $117.2 million and an increase in average borrowings of $60.3 million. The increase in interest-bearing deposits is a result of our success in increasing market share.
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Table of ContentsOur provision for loan losses was $2.8 million for the first six months of 2005, compared to $2.3 million for the first six months of 2004. Net charge-offs for the six months ended June 30, 2005 were $1.0 million compared to $1.8 million for the six months ended June 30, 2004.
Our total non-interest income increased by $423,000 to $7.4 million for the six months ended June 30, 2005, compared to $7.0 million for the same period of 2004. For the first six months of 2005 compared to the first six months of 2004, service charges on deposit accounts increased $452,000 to $2.6 million compared to $2.2 million in 2004. Additionally, the gains on sales of mortgage loans increased $1.0 million reflecting a higher level of loan origination and sales activity. Credit and debit card transaction fees decreased $1.1 million directly related to the sale of the merchant card portfolio in the third quarter of 2004, offset by other non-interest income that increased $405,000. In addition, non-interest income for the first six months of 2005 includes the loss on sale of securities of $87,000 during the first six months of 2005 compared to a gain of $236,000 for the same period in 2004.
Our total non-interest expenses increased by $3.1 million to $30.1 million for the six months ended June 30, 2005, compared to $27.0 million for the same period of 2004. This increase was due partially to a $4.1 million increase in salaries and employee benefits, a $144,000 increase in occupancy expense, a $221,000 increase in data processing expense, and a $169,000 increase in legal, accounting, and consulting. The increases in salary, occupancy, and data processing expense are due primarily to overall expansion of our infrastructure to better serve the needs of our customers. Credit and debit card interchange expenses decreased by $928,000 from the first six months of 2004 due to the sale of the merchant card portfolio.
Allowance for Loan Losses
We use a systematic methodology, which is applied monthly to determine the amount of allowance for loan losses and the resultant provisions for loan losses we consider adequate to provide for anticipated loan losses. The allowance is increased by provisions charged to operations, and reduced by loan charge-offs, net of recoveries. The following table sets forth information regarding changes in our allowance for loan losses for the periods indicated. The principal factors affecting the amount of the provision in each of the periods presented was growth in the loan portfolio and net charge-offs.
ALLOWANCE FOR LOAN LOSSES:
Potential problem loans are loans not included in non-performing loans that we have doubts as to the ability of the borrowers to comply with present loan repayment terms.
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Table of ContentsLiquidity and Capital Expenditures
Our primary sources of funds are customer deposits, loan repayments, and maturities of investment securities. We have additional sources of liquidity in the form of borrowings. Borrowings include federal funds purchased, securities sold under repurchase agreements, and borrowings from the Federal Home Loan Bank.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
The following tables set forth, for the periods indicated, information with respect to average balances of assets and liabilities, as well as the total dollar amounts of interest income from interest-earning assets and interest expense from interest-bearing liabilities, resultant yields or costs, net interest income, net interest spread, net interest margin, and our ratio of average interest-earning assets to average interest-bearing liabilities. No tax equivalent adjustments were made and all average balances are daily average balance. Non-accruing loans have been included in the table as loans carrying a zero yield.
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To effectively measure and manage interest rate risk, we use gap analysis and simulation analysis to determine the impact on net interest income under various interest rate scenarios, balance sheet trends, and strategies. From these analyses, we quantify interest rate risk and we develop and implement appropriate strategies. Additionally, we utilize duration and market value sensitivity measures when these measures provide added value to the overall interest rate risk management process. The overall interest rate risk position and strategies are reviewed by management and the Board of Directors of First State Bank N.M. on an ongoing basis.
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Table of ContentsRising and falling interest rate environments can have various impacts on a bank’s net interest income, depending on the short-term interest rate gap that the bank maintains, the relative changes in interest rates that occur when the bank’s various assets and liabilities reprice, unscheduled repayments of loans, early withdrawals of deposits and other factors. As of June 30, 2005, our cumulative interest rate gap for the period up to three months was a positive $419.9 million and for the period up to one year was a positive $127.3 million. Based solely on our interest rate gap of twelve months or less, our net income could be unfavorably impacted by decreases in interest rates or favorably impacted by increases in interest rates.
The following table sets forth our estimate of maturity or repricing, and the resulting interest rate gap of our interest-earning assets and interest-bearing liabilities at June 30, 2005. The amounts are based upon regulatory reporting formats and, therefore, may not be consistent with financial information appearing elsewhere in this report that has been prepared in accordance with accounting principles generally accepted in the United States of America. The amounts could be significantly affected by external factors such as changes in prepayment assumptions, early withdrawals of deposits, and competition.
Item 4. Controls and Procedures.
As of the end of the period covered by this report, an evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of June 30, 2005, pursuant to Exchange Act Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934. Based on their evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures and internal control over financial reporting are, to the best of their knowledge, effective to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.
Our Chief Executive Officer and Chief Financial Officer have also concluded that there were no changes in our internal control over financial reporting or in other factors that occurred during the registrant’s most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting or any corrective actions with regard to significant deficiencies and material weaknesses in internal control over financial reporting.
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Item 4. Submission of Matters to a Vote of Security Holders.
On June 2, 2005 we held our annual meeting of shareholders. At that meeting the following items were submitted to a vote of security holders:
As a result of the election of the above listed directors, our Board of Directors will consist of those directors and the following directors: Michael R. Stanford, H. Patrick Dee, Leonard J. DeLayo, Bradford M. Johnson, A.J. Wells, Lowell A. Hare, and Nedra Matteucci.
Item 6. Exhibits.
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Table of ContentsSIGNATURES
In accordance with 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.
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Table of ContentsEXHIBIT INDEX
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