U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1998. Commission File No. 1-14081
YADKIN VALLEY COMPANY
- --------------------------------------------------------------------------------
(Name of small business issurer in its charter)
North Carolina 56-1249566
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
Post Office Box 1729
Raleigh, North Carolina 27602 27602
- -------------------------------------------- -----------------------------
(Address of Principal Executive Offices) (Zip Code)
(919) 716-2266
(Registrant's Telephone Number including area code)
Securities registered under Section 12(g) of the Act : None
------------------------
Securities registered under Section 12(b) of the Act :
Common stock, $1.00 par value per share
- ---------------------------------------
(Title of Class)
Check whether the issued (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B not contained in this form, and no disclosure will be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.
Yes X No
Registrant's revenues for its most recent fiscal year were : $ 333,815.
--------
On March 19, 1999, the aggregate market value of the voting and non-voting
common equity held by nonaffiliates (computed by reference to the price at which
the common equity was sold, or the average bid and asked price of such common
equity) was $ 1,535,393.
On March 19, 1999, the number of outstanding shares of Registrant's common
stock was 183,692.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Registrant's Annual Report to Shareholders for the year ended
December 31, 1998 are incorporated herein in Part II.
Portions of Registrant's definitive Proxy Statement dated March 19,1999,
are incorporated herein in Part III.
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
Yadkin Valley Company (the "Registrant") was incorporated under the laws
of North Carolina during 1979. Its primary activity is the ownership of all the
outstanding capital stock, and serving as the parent holding company, of Yadkin
Valley Life Insurance Company ("Yadkin Valley Life") which is incorporated under
the laws of Arizona and is engaged in the business of reinsuring credit life
insurance policies.
Yadkin Valley Life's reinsurance activities currently are limited to
assuming risks associated with credit life insurance policies ("credit life
policies") up to a maximum risk of $25,000 on any one insured, issued only by
Triangle Life Insurance Company, Raleigh, North Carolina ("Triangle Life"), and
sold only in North Carolina by Southern Bank and Trust Company, Mount Olive,
North Carolina ("Southern"), The Fidelity Bank, Fuquay-Varina, North Carolina
("Fidelity") and The Heritage Bank, Lucama, North Carolina ("Heritage").
Triangle Life is a wholly-owned subsidiary of First-Citizens Bank & Trust
Company, Raleigh, North Carolina ("FCB"). Registrant is affiliated with
Southern, Fidelity, Heritage and FCB through certain common control
relationships. See "Item 12. Certain Relationships and Related Transactions." In
consideration of its assumption of risk, Yadkin Valley Life receives a portion
of the premium income on policies it reinsures, less the amount of claims paid.
Credit life policies are sold by Southern, Fidelity and Heritage
pursuant to insurance contracts between them and Triangle Life and pursuant to
which they each receive commissions from Triangle Life on policies sold. These
policies provide life insurance coverage, subject to the amount, age and other
limitations specified in the insurance contracts, and are written on the lives
of customers of Southern, Fidelity and Heritage in connection with various
extensions of credit to those customers, including consumer and commercial loans
(installment and term), overdraft and equity lines of credit, and credit card
accounts. Policies are reinsured by Yadkin Valley Life pursuant to a Reinsurance
Agreement between it and Triangle Life which provides that Triangle Life will
automatically cede to Yadkin Valley Life, and Yadkin Valley Life will accept
from Triangle Life, 100% of the rights, obligations, liabilities and risks on
credit life policies up to a maximum of $25,000 of insurance in force on any one
life. At December 31, 1998 and December 31, 1997, respectively, there were 4,808
and 4,217 policies in force which were reinsured by Yadkin Valley Life.
Yadkin Valley Life's revenues are derived primarily from premium income
received in connection with the reinsurance of credit life insurance and income
on its investments. On a monthly basis, Triangle Life pays to Yadkin Valley
Life, on a net basis, the amount of premiums on reinsured credit life policies
written, less the amount of "reinsurance commissions" owed by Yadkin Valley Life
pursuant to the Reinsurance Agreement. Reinsurance commissions are equal to 5%
of the gross premiums received on the reinsured policies, plus the amount of all
(I) premium taxes and regulatory charges which Triangle Life is required to pay
on such policies, (II) all commissions or service fees, including any contingent
compensation or other compensation, paid to creditors or agents with respect to
such policies, and (III) all guaranty association assessments or payments
attributable to such policies.
Claims on policies reinsured by Yadkin Valley Life are reported to
Triangle Life by Southern, Fidelity and Heritage as they arise and are
investigated and paid by the claims department of Triangle Life. Yadkin Valley
Life reimburses Triangle Life monthly for claims paid up to the limits of its
risk. Yadkin Valley Life maintains a reserve for claims, the amount of which is
set and changed from time to time by management. The reserve is reviewed
annually by a certified consulting actuary and adjusted based on standard
industry methodologies.
Neither Registrant nor Yadkin Valley Life employ any personnel. Subject
to the supervision and control of Registrant's Board of Directors, all
managerial, administrative and operational services necessary in carrying on
Registrant's insurance holding company business and Yadkin Valley Life's
reinsurance business are provided to Registrant and Yadkin Valley Life by
American Guaranty Insurance Company, Raleigh, North Carolina ("American
Guaranty"), another wholly-owned subsidiary of FCB, pursuant to Administration
Agreements (the "Agreements"). (See "Item 12. Certain Relationships and Related
Transactions.")
<PAGE>
Registrant is not significantly affected by competition in that Yadkin
Valley Life does not seek to reinsure policies issued by any insurer other than
Triangle Life or sold by any other creditors. Also, premium rates for credit
life insurance sold in North Carolina are the prima facie rates promulgated by
the North Carolina Department of Insurance, and regulation of the terms of
credit life insurance policies results in the policies offered by various
issuers being substantially the same. The volume of Yadkin Valley Life's
business does vary from year to year based on the volume of loans originated by
the banks that are eligible for credit life insurance and the amount of those
loans on which the banks are able to write insurance, and, historically, Yadkin
Valley Life's reinsurance business has not demonstrated any seasonality nor
dependency on a few customers.
In addition to its investment in its subsidiary, Yadkin Valley Life, a
substantial amount of Registrant's assets are represented by investments it
holds in equity securities of (I) First Citizens BancShares, Inc. ("BancShares,"
a bank holding company headquartered in Raleigh, North Carolina); (II) First
Citizens Bancorporation of South Carolina, Inc. ("Bancorporation," a bank
holding company headquartered in Columbia, South Carolina); and (III) Heritage.
See "Item 12. Certain Relationships and Related Transactions." These investments
were made by Registrant beginning in 1986 and are deemed by Registrant's
management and directors to be prudent and sound investments for Registrant. The
following table lists the aggregate amounts of each of these investments, and
the percentages of Registrant's total consolidated assets represented by each
such amount, at the dates indicated.
AT 12/31/98 AT 12/31/97
----------- -----------
AMOUNT % AMOUNT %
------ - ------ -
BancShares $ 1,780,641 11.0% $ 2,117,858 14.6%
Bancorporation 13,392,473 82.8 11,467,473 78.9
Heritage 455,932 2.8 455,932 3.1
Registrant and Yadkin Valley Life have three officers, none of whom are
compensated for their services as such, and no other employees. See " Item 5.
Directors, Executive Officers, Promoters and Control Persons."
ITEM 2. DESCRIPTION OF PROPERTY.
Registrant and Yadkin Valley Life own no properties. Their offices are
located at the offices of American Guaranty Insurance Company, Raleigh, North
Carolina, which, like Triangle Life, is a wholly-owned subsidiary of FCB and
which provides Registrant with certain managerial, administrative and
operational services. See "Item 12. Certain Relationships and Related
Transactions" below.
ITEM 3. LEGAL PROCEEDINGS
At December 31, 1998, Registrant was not a party to any legal
proceeding that is expected to have a material effect on its financial
condition or results of operation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
2
<PAGE>
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND SHAREHOLDER MATTERS
Incorporated herein by reference from page 5 of Registrant's 1998 Annual
Report to Shareholders.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
Incorporated herein by reference to pages 2 through 4 of Registrant's
1998 Annual Report to Shareholders.
ITEM 7. FINANCIAL STATEMENTS.
Incorporated herein by reference to pages 6 through 18 of Registrant's
1998 Annual Report to Shareholders.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
Not applicable.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT.
Incorporated herein by reference from pages 3 and 4 (under the captions
"Proposal 1: Election of Directors" and "Management Compensation") of
Registrant's definitive Proxy Statement dated March 19, 1999.
ITEM 10. EXECUTIVE COMPENSATION
Incorporated herein by reference from page 4 (under the caption
"Management Compensation") of Registrant's definitive Proxy Statement dated
March 19, 1999.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Incorporated herein by reference to pages 2 and 3 (under the caption
"Beneficial Ownership of Securities") of Registrant's definitive Proxy Statement
dated March 19, 1999.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Incorporated herein by reference to page 4 and 5 (under the caption
"Certain Relationships and Transactions") of Registrant's definitive Proxy
Statement dated March 19, 1999.
3
<PAGE>
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
(A) EXHIBITS. The following exhibits are filed herewith or incorporated
herein by reference as part of this Report.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
<S> <C>
3.1 Registrant's Restated Articles of Incorporation (incorporated herein by
reference to Registrant's Registration Statement on Form 10-SB)
3.2 Registrant's Bylaws (incorporated herein by reference to
Registrant's Registration Statement on Form 10-SB)
10.1 Administration Agreement between Registrant and American
Guaranty Insurance Company (incorporated herein by
reference to Registrant's Registration Statement on Form
10-SB)
10.2 Administration Agreement between Yadkin Valley Life and
American Guaranty Insurance Company (incorporated herein
by reference to Amendment No. 1 to Registrant's
Registration Statement on Form 10-SB)
10.3 Reinsurance Agreement between Yadkin Valley Life and
Triangle Life Insurance Company (incorporated herein by
reference to Amendment No. 1 to Registrant's Registration
Statement on Form 10-SB)
13 Registrant's 1998 Annual Report to Shareholders (filed
herewith)
22 Subsidiaries of Registrant (incorporated herein by
reference to Registrant's Registration Statement on Form
10-SB)
27 Financial Data Schedule (filed herewith)
99 Registrant's definitive Proxy Statement dated March 19,
1999, as filed with the Securities and Exchange Commission
(not being refiled)
</TABLE>
(B) REPORTS ON FORM 8-K. No Reports on Form 8-K were filed by Registrant
during the last quarter of the period covered by this Report on Form 10-KSB.
4
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, Registrant caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
YADKIN VALLEY COMPANY
DATE: MARCH 23 , 1999 BY:
----------- ------------------------------
David S. Perry, President
In accordance with Section13 or 15(d) of the Securities and Exchange Act
of 1934, this Report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
______________________________ President, Treasurer and March 23, 1999
David S. Perry Director (chief executive
and chief financial officer)
______________________________ Vice President, Secretary March 23, 1999
E. Thomas Lucas and Director
______________________________ Director March 23, 1999
Hope Holding Connell
5
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------ -----------
3.1 Registrant's Restated Articles of Incorporation
(incorporated herein by reference to Registrant's
Registration Statement on Form 10-SB)
3.2 Registrant's Bylaws (incorporated herein by reference to
Registrant's Registration Statement on Form 10-SB)
10.1 Administration Agreement between Registrant and American
Guaranty Insurance Company (incorporated herein by
reference Registrant's Registration Statement on Form
10-SB)
10.2 Administration Agreement between Yadkin Valley Life and
American Guaranty Insurance Company (incorporated herein
by reference to Amendment No. 1 to Registrant's
Registration Statement on Form 10-SB)
10.3 Reinsurance Agreement between Yadkin Valley Life and
Triangle Life Insurance Company (incorporated herein by
reference to Amendment No. 1 to Registrant's Registration
Statement on Form 10-SB)
13 Registrant's 1998 Annual Report to Shareholders (filed
herewith)
22 Subsidiaries of Registrant (incorporated herein by
reference to Registrant's Registration Statement on Form
10-SB)
27 Financial Data Schedule (filed herewith)
99 Registrant's definitive Proxy Statement dated March 19,
1999, as filed with the Securities and Exchange Commission
(not being refiled)
6
Exhibit 13
1998 ANNUAL REPORT TO SHAREHOLDERS
BUSINESS
Yadkin Valley Company ("Yadkin") was incorporated under the laws of
North Carolina during 1979. Its primary activity is the ownership of all the
outstanding shares of the capital stock and serving as the parent holding
company of Yadkin Valley Life Insurance Company ("Yadkin Valley Life") which is
incorporated under the laws of Arizona and is engaged in the business of
reinsuring credit life insurance policies. Yadkin Valley Life's reinsurance
activities currently are limited to assuming risk associated with credit life
insurance policies ("credit life policies") up to a maximum risk of $25,000 on
any one insured, issued only by Triangle Life Insurance Company, Raleigh, North
Carolina, and sold only in North Carolina by The Fidelity Bank, Fuquay-Varina,
North Carolina, The Heritage Bank, Lucama, North Carolina, and Southern Bank and
Trust Company, Mount Olive, North Carolina. Triangle Life is a wholly-owned
subsidiary of First-Citizens Bank & Trust Company, Raleigh, North Carolina. In
consideration of its assumption of risk, Yadkin Valley Life receives a portion
of the premium income on policies it reinsures, less the amount of claims and
insurance taxes paid.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion is presented to assist shareholders in
understanding Yadkin's consolidated financial condition and results of
operations and should be read in conjunction with the audited consolidated
financial statements appearing elsewhere in this report.
RESULTS OF OPERATION. Yadkin's net loss for 1998 was $47,512, compared
to net income of $117,660 for 1997. The primary factors contributing to the
change in net income (loss) between 1997 and 1998 were (i) a decrease of $53,618
in revenue from life premiums; (ii) a decrease of $148,655 in gains on sale of
equity securities; and (iii) an increase in death benefit claims paid of
$37,060.
The decrease in life premiums between 1997 and 1998 was largely due to
a decrease in premium writings by producers for the company from whom Yadkin
Valley Life assumes business. Since Yadkin Valley Life does not directly solicit
business from customers, its revenue from life premiums is dependent on the
volume generated by the ceding insurance company. Accordingly, these decreases
may continue in future periods to the extent that the producers do not generate
additional volume. As set forth in Note 6 to the Consolidated Financial
Statements, the ceding insurance company is related through common ownership to
Yadkin.
The gains on sales of equity securities in 1997 were the result of sales
of equity securities, with a book value of $21,720, resulting in proceeds of
$183,966. During 1998 equity securities, with a book value of $41,893 were sold
for proceeds of $55,484. From time to time, Yadkin may sell equity securities in
response to changes in interest rates, liquidity needs, or other factors, as
management deems appropriate.
During the year ended December 31, 1998 and 1997, Yadkin's investments
in marketable equity securities that are accounted for in accordance with SFAS
No. 115 experienced growth in their fair values, resulting in an increase in
unrealized gains, net of taxes, of $993,589 in 1998 and $3,235,200 in 1997.
Substantially all of these unrealized gains arise from investments in marketable
equity securities issued by banking organizations. Contributing to these
increases was an increase throughout the financial services industry in the
market values of banking enterprises in general. There can be no assurance that
these increased values will be sustained in future periods. Decreases in the
fair values of these investments in future periods will result in reductions of
shareholders' equity. See further discussion of the salability of these
investments in "Liquidity" below.
Total death benefit claims paid in 1998 were $141,465, an increase of
$37,060 when compared to death benefit claims paid of $104,405 in 1997.
Management considers the increase in death benefit claims in 1998 to be
attributable to an abnormal level of policyholder mortality. Nevertheless, the
estimate of Yadkin Valley Life's life
2
<PAGE>
policy claim reserves may require adjustment in future periods in the event such
death benefit claims continue at higher levels in future periods.
Also impacting changes in net income (loss) in 1998 was an increase in
professional fees of $36,849 and an increase in general administrative and other
expenses of $17,573. Both of these changes are largely attributable to Yadkin's
cost to register its common stock with the Securities and Exchange Commission.
Income tax expense was $43,893 in 1997, compared to income tax benefit
of $28,258 in 1998. This change was primarily due to a decrease in income before
income taxes from income of $161,553 in 1997 to a loss of $75,770 in 1998.
FINANCIAL CONDITION. During 1998, total assets grew 11.4% from
$14,525,458 at December 31, 1997, to $16,174,256 at December 31, 1998, primarily
due to unrealized gains on marketable equity securities. There were no other
material changes in assets during 1998.
During 1998, total liabilities increased from $5,349,799 at December 31,
1997, to $6,062,372 at December 31, 1998. The increase in deferred federal
income taxes on the unrealized gains on investments increased $636,087 while
total liabilities increased $712,573.
LIQUIDITY. Management views liquidity as a key financial objective.
Management relies on the operations of Yadkin Valley Life as the principal
source of liquidity. Further, borrowings from a commercial bank have allowed
Yadkin to fund asset growth and maintain liquidity.
Management believes the liquidity of Yadkin to be adequate as evidenced
by a ratio of assets to liabilities of 2.67 at December 31, 1998 and 2.71
December 31, 1997. Additionally, investments in equity securities had a carrying
value at December 31, 1998 and December 31, 1997 of $15,629,046 and $14,041,263
respectively, substantially all of which are classified as available for sale
and portions of which could be sold as a source of cash. A factor which could
impact Yadkin's financial position and liquidity are significant increases or
decreases in the market values of these equity securities. While management
considers these securities to be readily marketable, Yadkin's ability to sell a
substantial portion of these investments may be inhibited by the limited trading
in most of these issuances, and, as a result, Yadkin could realize substantial
losses on any such sales. In the event the need for additional liquidity arises,
management believes that, as an alternative to selling investment securities,
Yadkin has the ability to borrow additional funds from outside sources, using
its investment securities as collateral if necessary.
CAPITAL RESOURCES. There are no material commitments for capital
expenditures and none are anticipated. At December 31, 1998, Registrant had
outstanding borrowings of $839,205 secured by 10,000 shares of common stock in
First Citizens Bancorporation of South Carolina, Inc. and 19,864 shares of First
Citizens BancShares, Inc. with a fair market value of approximately $5,461,326.
Any funds needed to satisfy loan repayments will be derived from dividends from
Yadkin Valley Life and the sale of or repositioning of investments.
UPDATE ON YEAR 2000. As has been widely reported in the media, many of
the world's existing computer programs use only two digits to identify the year
in the date field of a program. These programs were designed and developed
without considering the impact of the upcoming change in the century and could
experience serious malfunctions when the last two digits of the year change to
"00" (Year 2000 Issue). The Company has evaluated the potential impact of the
Year 2000 Issue on operations. Management notes that the Company is not heavily
dependent on computer programs in the course of performing day-to-day
operations, as a result of the size of the Company and the fact that Yadkin
Valley Life acts a reinsurer and not a primary insurer. As a reinsurer, Yadkin
Valley Life is not required to maintain extensive policyholder information on
record. All such policyholder information is maintained by the ceding company.
Management has also monitored the Year 2000 remediation efforts of the ceding
company and has concluded that in the event of failure of the ceding company's
computer systems, the ceding company could operate in manual environment without
significantly disrupting the production of new policies to cede to Yadkin Valley
Life.
3
<PAGE>
Yadkin has identified The Fidelity Bank, The Heritage Bank, and Southern
Bank & Trust Company as the most significant vendors with whom they interact
(through the ceding company) in the course of daily operations. These banks are
responsible for calculating and paying premiums to the ceding company. Yadkin
believes that the Year 2000 readiness of these banking entities is critical to
the generation of new business and the maintenance of existing business. The
ceding company is therefore reliant on the Year 2000 readiness of the banks, and
has been informed that the banks are believed to be Year 2000 compliant with
respect to the loan processing system. Additional testing of the loan processing
system is scheduled to be conducted from May 3, 1999 to August 6, 1999 to
confirm readiness for Year 2000. The banks' loan system provides all information
necessary to provide and maintain the credit life insurance written by the
ceding company.
Management notes that Yadkin could continue to operate for a prolonged
period without any premium revenue in the event that these banks are not able to
calculate premiums, by liquidating some or all of its significant investment
portfolio to pay for operational expenses; however, the valuation of the
investment portfolio could be impacted by a lack of Year 2000 readiness by the
aforementioned banks or any of the other banks whose equity securities are owned
by Yadkin. See "Liquidity".
To date, Yadkin has not identified any processes that will require
significant expenditures to address the Year 2000 issue. Yadkin estimates that
the total cost to address the Year 2000 issue will not be material. There was no
cost to Yadkin for the Year 2000 project during the year 1998.
ACCOUNTING MATTERS. During 1998, Yadkin adopted the provisions of
the Financial Accounting Standards Board's ("FASB'S") Statements of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income". This Statement
establishes standards for the reporting and display of comprehensive income and
its components in a full set of general purpose financial statements.
Comprehensive income includes all non-owner changes in equity during a period
and is divided into two broad classifications: (i) net income and (ii) other
comprehensive income. For Yadkin, other comprehensive income consists solely of
unrealized gains on securities available for sale, net of taxes.
Management monitors the activities of the FASB and assesses the
impact that new and proposed accounting standards could have on Yadkin's
consolidated financial statements. Management is currently unaware of any new or
proposed accounting standards that could have a material affect on Yadkin's
consolidated financial statements.
FORWARD-LOOKING STATEMENTS. The foregoing discussion may contain
statements that could be deemed forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934 and the Private Securities
Litigation Reform Act, which statements are inherently subject to risks and
uncertainties. Forward-looking statements are statements that include
projections, predictions, expectations, or beliefs about future events or
results or otherwise are not statements of historical fact. Such statements are
often characterized by the use of qualifying words (and their derivatives) such
as "expect," "believe," "estimate," "plan," "project," or other statements
concerning opinions or judgment of the Company and its management about future
events. Factors that could influence the accuracy of such forward looking
statements include, but are not limited to, the financial success or changing
strategies of the Company's customers, actions of government regulators, the
level of market interest rates, and general economic conditions.
4
<PAGE>
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS
There is not an active market for Yadkin's common stock. However, the
stock is traded over the counter and quotations for the stock are published in
the National Quotation Bureau, LLC's "pink sheets" which lists three brokers as
market makers for the stock.
The following table lists the high and low closing bid prices for
Yadkin's common stock in the over the counter market for the periods indicated.
This information was supplied by a broker-dealer that handles transaction in
Yadkin's common stock and should not be taken as an indication of the existence
of any established trading market.
YEAR QUARTERLY PERIOD HIGH BID LOW BID
- ---- ---------------- -------- -------
1998 Fourth Quarter $18.00 $17.00
Third Quarter 18.00 17.50
Second Quarter 18.00 18.00
First Quarter 18.00 18.00
1997 Fourth Quarter 17.50 17.00
Third Quarter 17.00 16.50
Second Quarter 16.50 16.50
First Quarter 16.50 16.50
1996 Fourth Quarter 16.50 13.00
Third Quarter 16.50 16.00
Second Quarter 16.50 16.00
First Quarter 16.00 13.00
The above quotations represent prices between dealers and do not include
retail markup, markdown or commissions, and they do not represent actual
transactions.
Yadkin has never paid cash dividends on its common stock and does not
anticipate any change in its existing dividend policy or practice. Cash
dividends may be authorized as and when declared by its Board of Directors,
provided that no such distribution results in its insolvency on a going concern
or balance sheet basis.
Historically, Yadkin has been funded primarily by dividends paid by
Yadkin Valley Life. The amount of dividend payments by Yadkin Valley Life during
any 12-month period, without prior approval by the Arizona Department of
Insurance (the "Department"), is limited by statute to the lesser of 10% of its
statutory capital and surplus or its statutory gain from operations for the
previous fiscal year.
As of December 31, 1998, Yadkin's outstanding common stock was held by
an aggregate of approximately 929 shareholders of record.
5
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Yadkin Valley Company:
We have audited the accompanying consolidated balance sheets of Yadkin Valley
Company and subsidiary as of December 31, 1998 and 1997, and the related
consolidated statements of income (loss), changes in shareholders' equity, and
cash flows for the years then ended. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Yadkin Valley
Company and subsidiary as of December 31, 1998 and 1997, and the results of
their operations and their cash flows for the years then ended in conformity
with generally accepted accounting principles.
KPMG LLP
Raleigh, North Carolina
February 12, 1999
6
<PAGE>
YADKIN VALLEY COMPANY AND SUBSIDIARY
Consolidated Balance Sheets
December 31, 1998 and 1997
<TABLE>
<CAPTION>
ASSETS 1998 1997
------------ ------------
<S> <C> <C>
Cash $ 51,980 45,061
Investments in equity securities (note 2) 15,629,046 14,041,263
Certificates of deposit (notes 2, 4 and 6) 439,502 425,854
------------ ------------
16,120,528 14,512,178
Accrued investment income 3,885 3,148
Federal income taxes recoverable 46,153 6,029
State income taxes recoverable 3,590 4,003
Other assets 100 100
------------ ------------
Total assets $16,174,256 14,525,458
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Life policy claims reserve (note 6) 13,373 30,121
Deferred income taxes (note 5) 5,205,114 4,569,027
Notes payable (note 3) 839,205 745,069
Other 4,680 5,582
liabilities
------------ ------------
Total liabilities 6,062,372 5,349,799
------------ ------------
Shareholders' equity (note 4):
Common stock, par value $1 per share; authorized 500,000
shares, issued and outstanding 183,692 shares in 1998
and 184,180 shares in 1997 183,692 184,180
Retained earnings 1,781,008 1,837,884
Accumulated other comprehensive income (note 1) 8,147,184 7,153,595
------------ ------------
Total shareholders' equity 10,111,884 9,175,659
------------ ------------
Total liabilities and shareholders' equity $ 16,174,256 14,525,458
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
7
<PAGE>
YADKIN VALLEY COMPANY AND SUBSIDIARY
Consolidated Statements of Income (Loss)
Years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
----------- ------------
<S> <C> <C>
Premiums and other revenue:
Life premiums (note 6) $ 272,436 326,054
Dividend income 24,775 23,715
Interest income 21,218 25,323
Gain on sale of equity securities 13,591 162,246
Miscellaneous income 1,795 --
----------- ------------
333,815 537,338
----------- ------------
Benefits and expenses:
Death benefits (note 6) 141,465 104,405
Increase (decrease) in liability for life policy claims 14,240
(note 6) (16,748)
Operating expenses:
Commissions (note 6) 122,777 146,865
Interest 61,203 62,867
Professional fees 54,127 17,278
Management fees (note 6) 15,165 16,107
General, administrative and other 31,596 14,023
----------- ------------
409,585 375,785
----------- ------------
Income (loss) before income taxes (75,770) 161,553
Income tax expense (benefit) (note 5) (28,258) 43,893
----------- ------------
Net income (loss) $ (47,512) 117,660
=========== ============
Net income (loss) per share (note 1) $ (0.26) 0.64
=========== ============
Weighted average shares outstanding 183,936 184,288
=========== ============
</TABLE>
See accompanying notes to consolidated financial statements.
8
<PAGE>
YADKIN VALLEY COMPANY AND SUBSIDIARY
Consolidated Statements of Changes in Shareholders' Equity
Years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
ACCUMULATED
OTHER TOTAL
COMMON RETAINED COMPREHENSIVE SHAREHOLDERS'
STOCK EARNINGS INCOME EQUITY
-------------- ------------ -------------- -------------
<S> <C> <C> <C> <C>
Balance at December 31, 1996 $ 184,396 1,724,326 3,918,395 5,827,117
Comprehensive income:
Net income 117,660 117,660
- - 117,660
Net unrealized gains on equity
securities
net of income taxes of 3,235,200 3,235,200
$2,066,821 - -
-------------
Comprehensive income 3,352,860
Redemption of 216 shares of
common stock (216) (4,102) - (4,318)
-------------- ------------ -------------- -------------
Balance at December 31, 1997 184,180 1,837,884 7,153,595 9,175,659
Comprehensive income:
Net loss - (47,512) - (47,512)
Net unrealized gains on equity
securities net of income taxes of
$636,087 - - 993,589 993,589
-------------
Comprehensive income 946,077
Redemption of 488 shares of
common stock (488) (9,364) - (9,852)
-------------- ------------ -------------- -------------
Balance at December 31,1998 $ 183,692 1,781,008 8,147,184 10,111,884
============== ============ ============== =============
</TABLE>
See accompanying notes to consolidated financial statements.
9
<PAGE>
YADKIN VALLEY COMPANY AND SUBSIDIARY
Consolidated Statements of Cash Flows
Years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
------------- ------------
<S> <C> <C>
Operating activities:
Net income (loss) $ (47,512) 117,660
Adjustments to reconcile net income to net
cash used by operating activities:
Gain on sale of equity securities (13,591) (162,246)
Decrease (increase) in reserve for policy and contract claims (16,748) 14,240
Increase in federal income taxes recoverable (40,124) (6,029)
Decrease (increase) in state income taxes recoverable 413 (4,003)
Decrease in federal income taxes payable -- (225,982)
Decrease in state income taxes payable -- (55,127)
Increase in accrued investment income (737) (2,451)
Decrease in other liabilities (902) (1,890)
------------- --------------
Net cash used by operating activities (119,201) (325,828)
------------- --------------
Investing activities:
Proceeds from sale of equity securities 55,484 183,966
Purchases of certificates of deposit (1,549,935) (87,614)
Maturities of certificates of deposit 1,536,287 211,760
------------- --------------
Net cash provided by investing activities 41,836 308,112
------------- --------------
Financing activities:
Principal payments on notes payable (805,067) (2,403)
Proceeds from issuance of note payable 899,203 --
Purchases and retirement of common stock (9,852) (4,318)
------------- --------------
Net cash provided (used) by financing activities 84,284 (6,721)
------------- --------------
Net increase (decrease) in cash 6,919 (24,437)
Cash at beginning of year 45,061 69,498
------------- --------------
Cash at end of year $ 51,980 45,061
============= ==============
Cash payments for:
Interest $ 62,105 62,757
============= ==============
Income taxes $ 14,630 335,034
============= ==============
Non-cash investing and financing activities:
Increase in unrealized gain on equity securities,
net of applicable income taxes of $636,087 and
$2,066,821, respectively $ 993,589 3,235,200
============= ==============
</TABLE>
See accompanying notes to consolidated financial statements.
10
<PAGE>
YADKIN VALLEY COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
(1) SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation: The consolidated financial statements include the
accounts and operations of Yadkin Valley Company (the "Parent") and its
wholly-owned subsidiary, Yadkin Valley Life Insurance Company, hereinafter
collectively referred to as the Company. Intercompany accounts and
transactions have been eliminated. The consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles which, as to the insurance subsidiary, may vary in some
respects from the statutory accounting practices which are prescribed or
permitted by the Insurance Department of the State of Arizona. The
variations between generally accepted accounting principles and statutory
accounting practices are not significant to the accompanying consolidated
financial statements.
Line of Business: The Parent, which was organized as a North Carolina
holding company, manages the operations of Yadkin Valley Life Insurance
Company, which is in the business of assuming credit life insurance. All
reinsurance is assumed from Triangle Life Insurance Company ("TLIC"),
which is an affiliate through common ownership. TLIC issues credit life
insurance policies on loans made by three banks located in North Carolina:
Southern Bank and Trust, The Heritage Bank ("Heritage") and The Fidelity
Bank. The Company and the three aforementioned banks are related through
certain common ownership.
Yadkin Valley Life Insurance Company's assumption limit, which has been
determined by management, is $25,000 per policy.
Recognition of Premium Revenues: Revenue is recognized based on premiums
collected from ceding companies. The premiums are received monthly and are
based on the reinsurance coverage provided for the month. Since
reinsurance coverage is provided prior to the receipt of premiums, there
is no deferral of revenue to future periods.
Liabilities for Policy and Contract Claims: The reserve for life policy
claims includes estimates of losses on reported claims and claims incurred
but not reported, based on information provided by the ceding company and
on the Company's historical experience. Although management believes that
the liability for life policy claims is adequate, the ultimate amount of
such claims may vary, perhaps significantly, from the estimated amounts in
the financial statements.
Investments: Investments in equity securities with readily determinable
fair values are classified as available-for-sale and are carried at fair
value. The unrealized holding gains and losses are reported net of
deferred income taxes as a component of accumulated other comprehensive
income. An equity security's fair value is considered readily determinable
if its price is quoted on a registered securities exchange or in the
over-the-counter market.
11
<PAGE>
YADKIN VALLEY COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
Equity securities which do not have readily determinable fair values are
carried at the lower of cost or market value. A decline in the fair value
of securities which is deemed to be other than temporary is recognized in
earnings.
Realized gains and losses on equity securities are recognized in net
income using the specific identification method.
Income Taxes: Income tax provisions are based on income reported for
financial statement purposes. Deferred federal income taxes are recorded
based on temporary differences between the financial reporting basis and
the tax basis of assets and liabilities at enacted tax rates expected to
be in effect when such amounts are realized or settled.
Comprehensive Income: On January 1, 1998, the Company adopted SFAS No.
130, "Reporting Comprehensive Income" ("SFAS No. 130") which establishes
standards for the reporting and display of comprehensive income and its
components in a full set of financial statements. The adoption of this
statement has been reflected in both periods presented in the accompanying
consolidated financial statements as required by the standard.
Comprehensive income is defined as the change in equity during a period
for non-owner transactions and is divided into net income and other
comprehensive income. Other comprehensive income includes revenues,
expenses, gains, and losses that are excluded from earnings under current
accounting standards. For the Company, other comprehensive income consists
of unrealized gains on marketable equity securities. This statement does
not change or modify the reporting or display in the income statement.
Segment Reporting: On January 1, 1998, the Company adopted SFAS No. 131,
"Disclosures About Segments of an Enterprise and Related Information"
which establishes standards for the way that public business enterprises
report information about operating segments in annual financial
statements. The Company has only one operating segment, therefore the
adoption of this statement does not change or modify the Company's
financial statements.
Net Income Per Share: The Company adopted Statement of Financial
Accounting Standards 128 in 1997, which requires net income per share to
be calculated on both a basic and diluted basis. Net income per share is
computed based on the weighted average number of common shares outstanding
during the year and represents basic and diluted net income per share for
1998 and 1997, since the Company has no potentially dilutive common stock.
12
<PAGE>
YADKIN VALLEY COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
Use of Estimates: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the dates of the consolidated balance sheets and the
reported amounts of income and expense included in the consolidated
statements of income. Actual results could differ from those estimates.
The most significant estimate the Company makes in preparing its
consolidated financial statements relates to the determination of the life
policy claims reserve.
(2) INVESTMENTS
Investments at December 31, 1998 and 1997, consisted of certificates of
deposit and equity securities. Certificates of deposit of $439,502 and
$425,854 at December 31, 1998 and 1997, respectively, are carried at cost.
These certificates of deposit have maturities of less than one year. The
cost of these securities approximates fair value.
Set forth in the consolidated statements of cash flows are gross gains and
proceeds from sales of equity securities.
Investments in equity securities at December 31, 1998 and 1997 are
classified as follows:
1998 1997
----------- ------------
Available-for-sale, carried at fair value $ 14,821,050 13,233,267
Other, carried at cost 807,996 807,996
----------- ------------
$ 15,629,046 14,041,263
----------- ------------
At December 31, 1998 and 1997, the estimated fair value of investments in
equity securities carried at cost were $2,272,789 and $2,030,162,
respectively.
13
<PAGE>
YADKIN VALLEY COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
Equity securities classified as available-for-sale at December 31, 1998
consist of the following securities:
<TABLE>
<CAPTION>
NUMBER UNREALIZED FAIR
DESCRIPTION OF SHARES COST GAIN VALUE
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
First Citizens Bancorporation
Of South Carolina, Inc. -
Voting common stock -
Par value $5 per share 35,000 $ 455,000 12,670,000 13,125,000
First Citizens BancShares,
Inc. - Class A common stock -
Par value $1 per share 18,845 1,013,751 676,528 1,696,050
----------- ------------ -----------
Total $ 1,468,751 13,346,528 14,821,050
----------- ------------ -----------
</TABLE>
Equity securities classified as "other" and carried at cost at December
31, 1998 consist of the following securities:
<TABLE>
<CAPTION>
NUMBER
DESCRIPTION OF SHARES COST
----------- -------------
<S> <C> <C>
First Citizens Bancorporation of South Carolina,
Inc. - non-voting common stock - par value $5
per share 5,631 $ 267,473
First Citizens BancShares, Inc. - Class B common
stock - par value $1 per share 1,900 84,591
The Heritage Bank - common stock - par value
$ 1 per share 7,401 455,932
-------------
Total $ 807,996
=============
</TABLE>
14
<PAGE>
YADKIN VALLEY COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
Equity securities classified as available-for-sale at December 31, 1997
consist of the following securities:
<TABLE>
<CAPTION>
NUMBER UNREALIZED FAIR
DESCRIPTION OF SHARES COST GAIN VALUE
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
First Citizens
Bancorporation
of South Carolina, Inc. -
voting common stock -
par value $5 per share 35,000 $ 455,000 10,745,000 11,200,000
First Citizens BancShares,
Inc. - Class A common stock
- par value $1 per share 19,545 1,055,644 977,623 2,033,267
----------- ------------ ------------
Total $ 1,510,644 11,722,623 13,233,267
----------- ------------ ------------
</TABLE>
Equity securities classified as "other" and carried at cost at December
31, 1997 consist of the following securities:
<TABLE>
<CAPTION>
NUMBER
DESCRIPTION OF SHARES COST
----------- -------------
<S> <C> <C>
First Citizens Bancorporation of South Carolina,
Inc. - non-voting common stock - par value $5 per share 5,631 $ 267,473
First Citizens BancShares, Inc. - Class B common
stock - par value $1 per share 1,900 84,591
The Heritage Bank - common stock - par value
$ 1 per share 7,401 455,932
-------------
Total $ 807,996
-------------
</TABLE>
15
<PAGE>
YADKIN VALLEY COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
(3) NOTES PAYABLE
Notes payable at December 31, 1998 and 1997 consist of the following:
<TABLE>
<CAPTION>
1998 1997
----------- ----------
<S> <C> <C>
Advances under line of credit expiring June 5,
1999, interest payable quarterly at LIBOR plus 1.25% $ 839,205 --
Note payable on demand, interest payable
quarterly at prime rate -- 297,169
Note payable on demand, interest payable
quarterly at prime rate -- 72,900
Note payable due March 11, 1998, renewable
annually, interest at prime rate less .5% -- 375,000
----------- ------------
$ 839,205 745,069
----------- ------------
</TABLE>
The line of credit, which is with an unrelated bank, is secured by 10,000
voting common shares of First Citizens Bancorporation of South Carolina,
Inc. ("FCB-SC") which have a carrying value of $3,750,000; 18,139 shares
of First Citizens BancShares, Inc. of North Carolina ("FCB") Class A
Common Class, which have a carrying value of $1,632,510; and 1,725 shares
of First Citizens BancShares, Inc. of North Carolina Class B Common Class,
which have a carrying value of $78,816.
(4) SHAREHOLDERS' EQUITY AND RESTRICTIONS
Prior approval by state regulators is required for insurance companies to
pay dividends to their shareholders in excess of certain limitations. In
addition, shareholders' equity and minimum capital requirements, as
defined by statute are restricted and cannot be distributed by insurance
subsidiaries without approval of the state insurance department. The
amount which the insurance subsidiary can pay in dividends during any
twelve month period without prior approval is limited by statute to the
lesser of 10% of statutory surplus, or statutory gain from operations of
the previous fiscal year. At December 31, 1998, the maximum dividend which
could be paid by the subsidiary without prior approval was $19,988. In
1997, the subsidiary paid dividends to the parent of $148,000, with
approval of the Arizona Department of Insurance.
Statutory surplus at December 31, 1998, and net income for the year then
ended of the insurance subsidiary, as computed in accordance with
statutory accounting practices, were $480,526 and $19,988, respectively.
Statutory surplus at December 31, 1997 and net income for the year then
ended were $465,059 and $54,498, respectively.
16
<PAGE>
YADKIN VALLEY COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
Included in certificates of deposit on the consolidated balance sheets are
$100,000 in certificates of deposit owned by Yadkin Valley Life Insurance
Company which are held on deposit with the Arizona Department of
Insurance.
(5) INCOME TAXES
The Company has elected to file a consolidated federal income tax return.
Current income tax expense (benefit) for the years ended December 31, 1998
and 1997 is comprised of the following:
1998 1997
----------- --------------
Federal $ (28,258) 36,713
State -- 7,180
----------- --------------
$ (28,258) 43,893
----------- --------------
At December 31, 1998 and 1997, deferred income taxes represent the tax
effect of the excess of the financial statement carrying value over the
income tax basis for marketable equity securities with readily
determinable fair values.
The reasons for the difference between total income tax expense (benefit)
and the amount computed by applying the statutory federal income tax rate
of 34% to income before income taxes are as follows:
<TABLE>
<CAPTION>
1998 1997
----------- --------------
<S> <C> <C>
Income tax expense (benefit) at federal statutory $ (25,762) 54,927
rates
Deduct:
State income taxes, net of federal tax benefit -- 4,739
Effect of graduate tax rates -- (9,896)
Effect of dividends received deduction and other (2,496) (5,877)
----------- --------------
$ (28,258) 43,893
----------- --------------
</TABLE>
17
<PAGE>
YADKIN VALLEY COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
(6) RELATED PARTIES
A director and certain significant shareholders of the Company are also
significant shareholders and in some cases directors of FCB, FCB-SC,
Heritage, TLIC, and American Guaranty Insurance Company ("AGI"). All of
these entities are related through common ownership. AGI is a subsidiary
of First-Citizens Bank & Trust Company ("FCB&T"), which is a subsidiary of
FCB.
AGI provides management services to the Company. Management fees were
$15,165 in 1998 and $16,107 in 1997.
As described in note 1, Yadkin Valley Life Insurance Company provides
reinsurance to TLIC, a company affiliated through certain common
ownership. Amounts related to business assumed from TLIC for 1998 and 1997
are as follows:
1998 1997
----------- --------------
Premiums assumed $ 272,436 326,054
Death benefits assumed 141,465 104,405
Life policy claims reserve assumed 13,373 30,121
Commissions assumed 122,777 146,865
As part of reinsurance commissions assumed, the Company paid approximately
$17,019 and $19,526 in commissions to Heritage in 1998 and 1997,
respectively.
As described in note 2, the Company holds stock in FCB, FCB-SC and
Heritage. At December 31, 1998 and 1997, the Company also had $339,502 and
$325,854, respectively, invested in FCB&T certificates of deposits. The
interest rates on these certificates of deposit ranged from 4.2% to 4.8%.
18
<TABLE> <S> <C>
<ARTICLE> 7
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-END> Dec-31-1998
<DEBT-HELD-FOR-SALE> 0
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 15,629,046
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 15,629,046
<CASH> 491,482
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 0
<TOTAL-ASSETS> 16,174,256
<POLICY-LOSSES> 13,373
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 839,205
0
0
<COMMON> 183,692
<OTHER-SE> 9,928,192
<TOTAL-LIABILITY-AND-EQUITY> 16,174,256
272,436
<INVESTMENT-INCOME> 45,993
<INVESTMENT-GAINS> 13,591
<OTHER-INCOME> 1,795
<BENEFITS> 124,717
<UNDERWRITING-AMORTIZATION> 0
<UNDERWRITING-OTHER> 122,777
<INCOME-PRETAX> (75,770)
<INCOME-TAX> (28,258)
<INCOME-CONTINUING> (47,512)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (47,512)
<EPS-PRIMARY> (.26)
<EPS-DILUTED> (.26)
<RESERVE-OPEN> 30,121
<PROVISION-CURRENT> 124,717
<PROVISION-PRIOR> 23,494
<PAYMENTS-CURRENT> 117,771
<PAYMENTS-PRIOR> 23,494
<RESERVE-CLOSE> 13,373
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
