<PAGE>
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q
[ X ] Quarterly Report Pursuant To Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarter Ended September 30, 2000
Or
[ ] Transition Report Pursuant To Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission file number 000-26601
Pelican Financial, Inc.
(Exact name of registrant as specified in its charter)
Delaware 58-2298215
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
315 East Eisenhower Parkway
Ann Arbor, Michigan 48108
(Address of Principal Executive Offices)
734-662-9733
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
Common Stock Outstanding as of October 31, 2000
Common stock, $0.01 Par value ............................. 3,992,836 Shares
<PAGE>
Index
Part I. Financial Information
Item 1. Financial Statements (unaudited)
<TABLE>
<S> <C>
Consolidated Balance Sheets as of September 30, 2000 and December 31, 1999 3
Consolidated Statements of Income and Comprehensive Income for the Three
and Nine Months Ended September 30, 2000 and 1999 4
Consolidated Statements of Cash Flows for the Nine Months Ended
September 30, 2000 and 1999 5
Notes to Consolidated Financial Statements 6-8
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9-17
Item 3. Quantitative and Qualitative Disclosures about Market Risk 17
Part II. Other Information
Item 1. Legal Proceedings 17
Item 2. Changes in Securities and Use of Proceeds 17
Item 3. Defaults Upon Senior Securities 17
Item 4. Submission of Matters to a Vote of Shareholders 18
Item 5. Other Information 18
Item 6. Exhibits and Reports on Form 8-K 19
</TABLE>
2
<PAGE>
PELICAN FINANCIAL, INC.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
September 30, December31,
2000 1999
(Unaudited)
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 5,835,183 $ 1,883,472
Accounts receivable, net 6,382,099 2,289,682
Securities available for sale 5,739,179 5,877,013
Federal Reserve and Federal Home Loan Bank Stock 880,000 680,000
Loans held for sale 73,126,207 60,535,699
Loans receivable, net 85,505,986 68,582,378
Mortgage servicing rights, net 8,296,829 11,028,468
Mortgage loans in foreclosure and other real estate 134,439 539,869
Premises and equipment, net 921,219 863,815
Federal income taxes receivable 376,369 265,545
Other assets 2,887,408 3,307,011
------------- -------------
$ 190,084,918 $155,852,952
------------- -------------
------------- -------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits
Noninterest-bearing $ 12,571,453 $ 3,911,558
Interest-bearing 62,391,650 58,398,604
------------- -------------
Total deposits 74,963,103 62,310,162
Due to bank 11,046,670 12,095,538
Notes payable 34,023,146 25,333,610
Repurchase agreements 29,367,693 21,844,801
Federal Home Loan Bank borrowings 14,000,000 8,000,000
Other liabilities 5,445,850 5,277,485
------------- -------------
Total liabilities 168,846,462 134,861,596
Commitments and contingencies
Shareholders' equity
Preferred stock, 200,000 shares authorized; none outstanding Common stock,
10,000,000 shares authorized; 3,992,836
outstanding at June 30, 2000 and December 31, 1999 39,928 39,928
Additional paid in capital 13,631,156 13,631,156
Retained earnings 7,690,427 7,504,631
Accumulated other comprehensive loss, net of tax (123,055) (184,359)
------------- -------------
Total shareholders' equity 21,238,456 20,991,356
------------- -------------
$ 190,084,918 $ 155,852,952
------------- -------------
------------- -------------
</TABLE>
3
<PAGE>
PELICAN FINANCIAL, INC.
Consolidated Statements of Income and Comprehensive Income (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1999 2000 2000 1999
<S> <C> <C> <C> <C>
Interest income
Loans, including fees $ 3,931,253 $ 3,767,424 $ 11,419,844 $ 10,817,625
Investment securities, taxable 107,576 106,642 325,899 333,944
Federal funds sold and overnight accounts 66,224 33,804 265,642 106,641
------------ ------------ ------------ ------------
Total interest income 4,105,053 3,907,870 12,011,385 11,258,210
Interest expense
Deposits 883,052 478,853 2,486,498 1,215,289
Short-term borrowings 1,696,678 2,039,406 4,678,268 6,266,169
------------ ------------ ------------ ------------
Total interest expense 2,579,730 2,518,259 7,164,766 7,481,458
Net interest income 1,525,323 1,389,611 4,846,619 3,776,752
Provision for loan losses 60,000 132,000 187,000 145,145
------------ ------------ ------------ ------------
Net interest income after provision for loan losses 1,465,323 1,257,611 4,659,619 3,631,607
Noninterest income
Service charges on deposit accounts 30,083 10,158 56,131 32,520
Servicing income 544,430 968,753 2,040,200 2,997,403
Gain on sales of mortgage servicing rights and loans, net 1,699,993 2,548,324 5,129,035 14,482,287
Other income 194,350 309,401 612,930 1,160,039
------------ ------------ ------------ ------------
Total noninterest income 2,468,856 3,836,636 7,838,296 18,672,249
Noninterest expense
Compensation and employee benefits 2,060,851 2,707,329 6,418,193 10,672,065
Occupancy and equipment 368,626 369,197 1,121,785 1,118,203
Telephone 109,931 118,725 318,342 369,836
Postage 83,569 130,946 267,312 414,177
Amortization of mortgage servicing rights 457,929 693,703 1,563,653 2,176,705
Mortgage servicing rights valuation adjustment 23,034 (70,008) (61,874) (602,836)
Other noninterest expense 743,460 961,308 2,575,503 2,953,856
------------ ------------ ------------ ------------
Total noninterest expense 3,847,400 4,911,200 12,202,914 17,102,006
Income before income taxes and cumulative effect
of change in accounting principle 86,779 183,047 295,001 5,201,850
Provision for income taxes 25,319 66,233 109,205 1,776,149
------------ ------------ ------------ ------------
Income before cumulative effect of change in
accounting principle 61,460 116,814 185,796 3,425,701
Cumulative effect of change in accounting principle -- -- -- (97,119)
------------ ------------ ------------ ------------
Net income $ 61,460 $ 116,814 $ 185,796 $ 3,328,582
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Comprehensive income $ 119,795 $ 118,864 $ 247,100 $ 3,209,812
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Basic and diluted earnings per share before cumulative effect
of change in accounting principle $ 0.02 $ 0.04 $ 0.05 $ 1.13
Per share cumulative effect of change in accounting principle $ -- $ -- $ -- $ (0.03)
------------ ------------ ------------ ------------
Basic and diluted earnings per share $ 0.02 $ 0.04 $ 0.05 $ 1.10
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
4
<PAGE>
PELICAN FINANCIAL, INC.
Consolidated Statements of Cash Flows (Unaudited)
Nine Months Ended September 30,
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net cash provided by (used in) operating activities $(28,794,996) $ 67,095,492
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Loan originations, net (17,021,232) (22,309,775)
Proceeds from sales of mortgage servicing rights 15,868,784 40,606,078
Change in loans in foreclosure and other real estate, net 405,430 326,252
Property and equipment expenditures, net (373,257) (460,943)
Purchase of securities available for sale -- (2,016,777)
Proceeds from maturities and principal repayments
of securities available for sale 250,480 1,402,888
Purchase of Federal Reserve Stock (200,000) (163,000)
------------ ------------
Net cash (used in)provided by investing activities (1,069,795) 17,384,723
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in noninterest-bearing deposits 8,659,895 (14,013)
Increase in interest-bearing deposits 3,993,046 15,203,862
Decrease in due to bank (1,048,868) (19,897,365)
Increase (decrease) in notes payable due on demand 8,689,537 (17,345,022)
Advances on Federal Home Loan Bank borrowings 6,000,000 3,000,000
Increase (decrease) in repurchase agreements 7,522,892 (69,736,442)
------------ ------------
Net cash provided by (used in) financing activities 33,816,502 (88,788,980)
------------ ------------
Net change in cash and cash equivalents 3,951,711 (4,308,765)
Cash and cash equivalents at beginning of period 1,883,472 10,180,034
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 5,835,183 $ 5,871,269
------------ ------------
------------ ------------
Cash and equivalents is composed of:
Cash and demand deposits due from banks $ 2,474,183 $ 745,269
Interest-bearing deposits in banks 97,000 196,000
Federal funds sold 3,264,000 4,930,000
------------ ------------
Total cash and cash equivalents $ 5,835,183 $ 5,871,269
------------ ------------
------------ ------------
Supplemental cash disclosures
Interest paid $ 7,153,722 $ 8,218,674
Income taxes paid 72,000 987,000
</TABLE>
5
<PAGE>
PELICAN FINANCIAL, INC.
Notes to the Consolidated Financial Statements (Unaudited)
September 30, 2000
NOTE 1 - PRINCIPLES OF CONSOLIDATION
The unaudited consolidated financial statements as of and for the three and nine
months periods ended September 30, 2000 and 1999, include the accounts of
Pelican Financial Inc. ("Pelican Financial") and it's wholly owned subsidiaries
Pelican National Bank ("Pelican National") and Washtenaw Mortgage Company
("Washtenaw") for all periods. All references herein to Pelican Financial
include the consolidated results of its subsidiaries. All significant
intercompany accounts and transactions have been eliminated in consolidation.
Assets held in an agency or fiduciary capacity are not assets of Pelican
Financial and, accordingly, are not included in the accompanying consolidated
financial statements.
NOTE 2 - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements were prepared in
accordance with instructions for Form 10-Q and, therefore, do not include
information or footnotes necessary for a complete presentation of consolidated
financial condition, results of operations, and cash flows in conformity with
generally accepted accounting principles. However, all adjustments, consisting
of normal recurring accruals, which, in the opinion or management, are necessary
for fair presentation of the consolidated financial statements have been
included. The results of operations for the periods ended September 30, 2000,
are not necessarily indicative of the results which may be expected for the
entire fiscal year or for any other period. For further information, refer to
consolidated financial statements and footnotes thereto for the year ended
December 31, 1999 included in Pelican Financial's Form 10-K.
Reclassifications:
Certain prior year amounts have been reclassified to conform to the 2000
presentation.
NOTE 3 - LOANS RECEIVABLE
Loans receivable consist of the following
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
------------- --------------
<S> <C> <C>
Commercial, financial and agricultural 635,697 $ 664,277
Commercial real estate 21,115,043 10,832,047
Residential real estate 60,293,422 57,173,433
Installment loans 3,933,327 286,500
------------ ------------
85,977,489 68,956,257
Deduct allowance for loan losses (471,503) (373,879)
------------ ------------
Loans receivable, net $ 85,505,986 $ 68,582,378
------------ ------------
------------ ------------
</TABLE>
NOTE 4 - EARNINGS PER SHARE
At September 30, 2000, Pelican Financial had 10,000,000 shares of $.01 par value
common stock authorized with 3,992,836 shares issued and outstanding, and
200,000 shares of preferred stock authorized with none issued or outstanding. At
September 30, 1999, Pelican Financial had 5,000,000 shares of $.01 par value
common stock authorized with 3,032,836 shares issued and outstanding, and
200,000 shares of preferred stock authorized with none issued or outstanding.
6
<PAGE>
PELICAN FINANCIAL, INC.
Notes to the Consolidated Financial Statements (Unaudited)
NOTE 4 - EARNINGS PER SHARE (CONTINUED)
The following summarizes the computation of basic and diluted earnings (loss)
per share before cumulative effect of change in accounting principle.
<TABLE>
<CAPTION>
Three Months Three Months
ended ended
September 30, September 30,
2000 1999
---------- ----------
<S> <C> <C>
Basic earnings per share
Net income $ 61,458 $ 116,814
---------- ----------
Weighted average shares outstanding 3,992,836 3,032,836
---------- ----------
Basic earnings per share $ 0.02 $ 0.04
---------- ----------
---------- ----------
Diluted earnings per share
Net income $ 61,458 $ 116,814
---------- ----------
Weighted average shares outstanding 3,992,836 3,032,836
---------- ----------
Dilutive effect of assumed exercise of stock options -- 6,775
---------- ----------
Diluted average shares outstanding 3,992,836 3,039,611
---------- ----------
Diluted earnings per share $ 0.02 $ 0.04
---------- ----------
---------- ----------
</TABLE>
<TABLE>
<CAPTION>
Nine Months Nine Months
ended ended
September 30, September 30,
2000 1999
---------- ----------
<S> <C> <C>
Basic earnings per share
Net income $ 185,794 $3,328,582
Weighted average shares outstanding 3,992,836 3,032,836
---------- ----------
Basic earnings per share $ 0.05 $ 1.10
---------- ----------
---------- ----------
Diluted earnings per share
Net income $ 185,794 $3,328,582
Weighted average shares outstanding 3,992,836 3,032,836
Dilutive effect of assumed exercise of stock options -- 6,775
---------- ----------
Diluted average shares outstanding 3,992,836 3,039,611
---------- ----------
Diluted earnings per share $ 0.05 $ 1.10
---------- ----------
---------- ----------
</TABLE>
NOTE 5 - SEGMENT INFORMATION
Pelican Financial's subsidiary operations include two primary segments: mortgage
banking and retail banking. The mortgage banking segment involves the
origination and purchase of single-family residential mortgage loans in
approximately 40 states; the sale of such loans in the secondary market,
generally on a pooled and securitized basis; and the servicing of mortgage loans
for investors. The retail-banking segment involves attracting deposits from the
general public and using such funds to originate and purchase existing consumer,
commercial, commercial real estate, residential construction, and single-family
residential mortgage loans, from its offices in Naples and Fort Myers, Florida.
Pelican Financial's reportable segments are its two subsidiaries. Washtenaw
comprises the mortgage banking segment, with gains on sales of mortgage
servicing rights (MSR) and loans, as well as loan servicing income accounting
for its primary revenues. Pelican National comprises the retail-banking segment,
with net interest income from loans, investments and deposits accounting for its
primary revenues.
The following segment financial information has been derived from the internal
financial statements of Washtenaw and Pelican National, which are used by
management to monitor and manage the financial performance of Pelican Financial.
The accounting policies of the two segments are the same as those of Pelican
Financial. The evaluation process for segments does not include holding company
income and expense. Holding company amounts are the
7
<PAGE>
PELICAN FINANCIAL, INC.
Notes to the Consolidated Financial Statements (Unaudited)
NOTE 5 - SEGMENT INFORMATION (CONTINUED)
primary difference between segment amounts and consolidated totals, and are
reflected in the "Other" column below, along with minor amounts to eliminate
transactions between segments.
<TABLE>
<CAPTION>
Dollars in thousands
Mortgage Retail Consolidated
Three months ended September 30, 2000 Banking Banking Other Totals
-------------------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net interest income $ 436 $ 1,135 $ (46) $ 1,525
Gain on sales of MSR and loans, net 1,670 30 -- 1,700
Servicing income 544 -- -- 544
Noncash items:
Provision for loan losses -- 60 -- 60
MSR amortization and valuation 479 2 -- 481
Provision for income taxes (103) 170 (42) 25
Segment profit /(loss) (186) 330 (82) 62
Segment assets 90,866 99,168 51 190,085
Three months ended September 30, 1999
--------------------------------------
Net interest income $ 721 $ 710 $ (41) $ 1,390
Gain on sales of MSR and loans, net 2,523 25 -- 2,548
Servicing income 968 1 -- 969
Noncash items:
Provision for loan losses -- 132 -- 132
MSR amortization and valuation 623 1 -- 624
Provision for income taxes 56 27 (17) 66
Segment profit/(loss) 98 53 (34) 117
Segment assets 105,676 58,844 (72) 164,448
</TABLE>
<TABLE>
<CAPTION>
Dollars in thousands
Mortgage Retail Consolidated
Three months ended September 30, 2000 Banking Banking Other Totals
-------------------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net interest income $ 1,498 $ 3,484 $ (135) $ 4,847
Gain on sales of MSR and loans, net 5,083 46 -- 5,129
Servicing income 2,035 5 -- 2,040
Noncash items:
Provision for loan losses -- 187 -- 187
MSR amortization and valuation 1,500 2 -- 1,502
Provision for income taxes (231) 493 (153) 109
Segment profit/(loss) (469) 952 (297) 186
Segment assets 90,866 99,168 51 190,085
Nine months ended September 30, 1999
--------------------------------------
Net interest income $ 2,042 $ 1,850 $ (115) $ 3,777
Gain on sales of MSR and loans, net 14,398 84 -- 14,482
Servicing income 2,993 4 -- 2,997
Noncash items:
Provision for loan losses -- 145 -- 145
MSR amortization and valuation 1,570 4 -- 1,574
Provision for income taxes 1,740 94 (58) 1,776
Segment profit/(loss) 3,258 183 (112) 3,329
Segment assets 105,676 58,844 (72) 164,448
</TABLE>
8
<PAGE>
Item 2: Management's Discussion and Analysis of Financial Condition and Results
of Operations Forward Looking Statements
Certain information in this Form 10-Q may constitute forward-looking information
that involves risks and uncertainties that could cause actual results to differ
materially from those estimated. Persons are cautioned that such forward-looking
statements are not guarantees of future performance and are subject to various
factors that could cause actual results to differ materially from those
estimated. These factors include, but are not limited to, changes in general
economic and market conditions, legislative and regulatory changes, monetary and
fiscal policies of the federal government, demand for loan and deposit products
and the development of an interest rate environment that adversely affects the
interest rate spread or other income from Pelican Financial's investments and
operations.
EARNINGS PERFORMANCE
Pelican Financial reported net income of $61,000 for the quarter ended September
30, 2000, a decrease of $55,000 when compared to net income of $116,000 for the
same period in 1999. Earning per share, basic and diluted, were $0.02 per share
compared to income of $0.04 per share for the three months ended September 30,
2000 and 1999, respectively.
For the nine months ended September 30, 2000 Pelican Financial reported net
income of $186,000 compared to $3.2 million for the same period in 1999.
Earnings per share, basic and diluted, were $ 0.05 per share compared to $1.10
for the nine months ended June 30, 2000 and 1999, respectively.
For explanation of the earnings performance, please see the discussion on the
retail and mortgage banking segments to follow.
RESULTS OF OPERATIONS
RETAIL BANKING
The following discussion provides information that relates specifically to
Pelican Financial's retail banking line of business.
For the three months ended September 30, 2000, Pelican Financial's net income
from retail banking activities primarily conducted by Pelican National totaled
$330,000. For the three months ended September 30, 1999 Pelican National's
comparable net income was $53,000. For the nine months ended September 30, 2000,
Pelican Financial's net income from retail banking activities primarily
conducted by Pelican National totaled $952,000. For the nine months ended
September 30, 1999 Pelican National's comparable net income was $183,000.
The increase in net income for both the three months and nine months periods was
primarily attributable to an increase in net interest income which was partially
offset by an increase in total noninterest expense.
Net Interest Income
Net interest income represents the excess of income on interest-earning assets
over interest expense on interest bearing liabilities. The principal
interest-earning assets are federal funds sold, investment securities and loans
receivable. Interest-bearing liabilities primarily consist of notes payable,
repurchase agreements, time deposits, interest-bearing checking accounts (NOW
accounts), savings, deposits and money market accounts. Funds attracted by these
interest-bearing liabilities are invested in interest-earning assets.
Accordingly, net interest income depends upon the volume of average
interest-earning assets and average interest bearing liabilities and the
interest rates earned or paid on them.
Net Interest Income was $1.1 million and $710,000 for the three months ended
September 30, 2000 and 1999, respectively. For the nine months ended September
30, 2000 and 1999 net interest income was $3.5 million and $1.9 million
respectively. The increase in net interest income is primarily attributable to
the growth of Pelican National's loan portfolio. The average balance in loans
receivable increased $31.2 million or 63% for the three months ended September
30, 2000 as compared September 30, 1999. For the nine months ended September 30,
2000 compared to September 30, 1999 the average balance in loans receivable
increased $38.0 million or 106%.
9
<PAGE>
Average Balance Sheet
The following tables summarizes the average yields earned on interest-earning
assets and the average rates paid on interest-bearing liabilities:
<TABLE>
<CAPTION>
Three Months Ended September 30,
dollars in thousands
2000 1999
-------------------------------------- -------------------------------------
Summary of average rates/interest Average Average
earning assets: Balance Interest Yield/Cost Balance Interest Yield/Cost
------- -------- ---------- ------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Federal funds sold $ 3,906 $ 66 6.76% $ 2,212 $ 34 6.15%
Investment securities 6,550 108 6.60% 6,848 107 6.25%
Loans receivable, net 80,884 2,029 10.03% 49,661 1,082 9.69%
------- -------- ---------- ------- -------- ----------
Total interest-earning assets 91,340 2,203 9.65% 53,721 1,223 9.11%
-------- ---------- -------- ----------
Non-earning assets 3,288 1,451
------- -------
Total average assets $94,628 $55,172
Interest bearing liabilities:
NOW accounts $ 903 5 2.21% $ 680 4 2.35%
Money market accounts 2,487 28 4.50% 3,697 36 3.90%
Savings deposits 19,997 189 3.78% 12,856 91 2.83%
Time deposits 41,925 661 6.31% 26,421 348 5.27%
Short-term borrowings 11,254 184 6.54% 1,553 34 8.76%
------- -------- ------- --------
Total interest bearing liabilities 76,566 1,067 5.57% 44,595 513 4.60%
-------- ---------- -------- ----------
Non-interest bearing liabilities . 8,656 5,273
Stockholders' equity . 9,406 5,304
Total liabilities and stockholders' equity $94,628 $55,172
Net interest income & net interest spread $ 1,136 4.07% $ 710 4.50%
-------- ---------- -------- ----------
-------- ---------- -------- ----------
Net interest margin 4.97% 5.29%
---------- ----------
---------- ----------
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended September 30,
dollars in thousands
2000 1999
-------------------------------------- -------------------------------------
Summary of average rates/interest Average Average
earning assets: Balance Interest Yield/Cost Balance Interest Yield/Cost
------- -------- ---------- ------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Federal funds sold . $ 6,011 $ 265 5.88% $ 2,798 $ 107 5.10%
Investment securities 6,578 326 6.61% 7,207 334 6.18%
Loans receivable, net 73,852 5,873 10.60% 35,848 2,660 9.89%
------- -------- ------- --------
Total interest-earning assets 86,441 6,464 9.97% 45,853 3,100 9.01%
-------- ---------- -------- ----------
Non-earning assets 2,659 1,459
------- -------
Total average assets $89,100 $47,312
------- -------
------- -------
Interest bearing liabilities:
NOW accounts $ 932 16 2.29% $ 792 13 2.19%
Money market accounts 2,584 80 4.13% 3,742 109 3.88%
Savings deposits 15,574 462 3.96% 11,667 227 2.59%
Time deposits 42,722 1,929 6.02% 21,813 866 5.29%
Short-term borrowings 10,428 494 6.32% 941 35 4.88%
------- -------- ------- --------
Total interest bearing liabilities 72,240 2,981 5.50% 38,955 1,250 4.28%
-------- ---------- -------- ----------
Non-interest bearing liabilities 7,803 3,107
Stockholders' equity 9,057 5,250
------- -------
Total liabilities and stockholders' equity $89,100 $47,312
Net interest income & net interest spread $ 3,483 4.47% $ 1,850 4.74%
------- ---------- ------- ----------
------- ---------- ------- ----------
Net interest margin 5.37% 5.38%
---------- ----------
---------- ----------
</TABLE>
10
<PAGE>
Noninterest Income
Noninterest income for the three months ended September 30, 2000 was $62,000
compared to $38,000 for the same period in 1999, an increase of $24,000 or 63%.
This increase was primarily due to the increased amounts for service charges on
deposit accounts. The aggregate increase in service charges is primarily
attributable to the increase in the number of checking accounts at Pelican
National. The number of accounts has grown due to the Pelican National's focus
on expanding market share and with the second branch being opened during 2000.
For the nine months ended September 30, 2000, noninterest income was $119,000
compared to $126,000 for the same period in 1999. The decrease of $7,000, or 6%,
was the result of a decrease in gain on sale of mortgage servicing rights and
loans of $37,000. The decrease in the gain on sale of mortgage servicing right
and loans is due to Pelican National focusing on the origination of loans which
will be held in the portfolio as opposed to being sold to the secondary market.
The decrease was offset by an increase in service charges on deposit accounts of
approximately $23,000 and other income by approximately $6,000 for the nine
months ended September 30, 2000.
Noninterest Expense
Total noninterest expense for the three months ended September 30, 2000 was
$637,000, compared to $536,000 for the same period in 1999, an increase of
$101,000 or 19%. This increase was primarily due to an increase in occupancy and
equipment expense of $61,000 or 84% and an increase in other operating expenses
of $55,000 or 35%. These increases were the result of the growth of Pelican
National and the opening of the second branch located in Fort Myers, Florida.
For the nine months ended June 30 2000, noninterest expense was $2.0 million
compared to $1.5 million for the same period in 1999. The increase of $500,000
or 33% was also attributable to the expenses incurred as a result of the overall
growth of Pelican National and the opening of the Fort Myers, Florida branch.
MORTGAGE BANKING
The following discussion provides information that relates specifically to
Pelican Financial's mortgage banking line of business.
For the three months ended September 30, 2000, Pelican Financial's net loss from
mortgage banking activities primarily conducted by Washtenaw totaled $186,000.
For the three months ended September 30, 1999 Washtenaw's comparable net income
was $98,000. For the nine months ended September 30, 2000, the net loss from
mortgage banking activities totaled $469,000 compared to net income of $3.3
million for the same period in 1999. The decrease in the net income for both
periods was primarily attributable to a decrease in mortgage loan production as
a result of the increase in mortgage interest rates.
The volume of loans produced for the three months ended September 30, 2000
totaled $249.4 million as compared to $446.4 million for the three months ended
September 30, 1999, a decrease of $197.0 million or 44%. For the nine months
ended September 30, 2000 and 1999, loan volume totaled $814.5 million and $1.9
billion, respectively. This represents a decrease of $1.1 billion or 57%. The
increase in mortgage interest rates in 2000 attributed to the reduced amount of
loan refinances that occurred in the first nine months of 2000. This is the
primary factor for the decrease in loan volume.
Noninterest Income
Total noninterest income for the three months ended September 30, 2000 was $2.4
million, compared to $3.8 million for the three months ended September 30, 1999,
a decrease of $1.4 million or 37%. This decrease was primarily due to a 34%
decrease in the gain on sales of mortgage servicing rights and loans of $853,000
and a 44% decrease in servicing income of $423,000. For the nine months ended
September 30, 1999 noninterest income was $18.6 million, compared to $7.7
million for the nine months ended September 30, 2000, a decrease of $10.9
million or 59%. This decrease was primarily due to a 65% decrease in the gain on
sales of mortgage servicing rights and loans of $9.3 million and a 32% decrease
in servicing income of $958,000.
The decrease in gain on sale of mortgage servicing rights and loans and the
decrease in other income was primarily due to a decrease in the overall new loan
origination volume in the first nine months of 2000. In addition, the gains on
sale of mortgage servicing rights and loans was effected by a reduction of the
profit margins on each new loan origination as a result of the increased
competition for the existing loan origination volume. The decrease in new loan
11
<PAGE>
originations and the reduced profit margins are the result of the increase in
mortgage interest rates and pricing concessions being made by Washtenaw in the
California market in order to attract new accounts from that region.
Loan Servicing
At September 30, 2000, Washtenaw serviced $1.1 billion of loans compared to $1.5
billion at June 30, 1999, a 27% decrease. The decrease in the servicing
portfolio reflects the normal portfolio runoff and management's decision to sell
the majority of new production in monthly concurrent transfers. In addition,
Washtenaw sold $174.0 million of servicing in a bulk sale during the quarter.
This reduced the size of the servicing portfolio and thereby reduced servicing
revenue. At September 30, 2000 and 1999, with the exception of servicing related
to loans held for sale in Washtenaw's loan portfolio and servicing sold but not
yet delivered, all loan servicing was serviced for others.
Service fee income, net of amortization and impairment was $65,000 and $345,000
for the three months ended September 30, 2000 and 1999 respectively. For the
nine months ended September 30, 2000 and 1999, service fee income net of
amortization and impairment was $536,000 and $1.4 million respectively. The
decrease was the result of the reduction in the size of the servicing portfolio
as previously discussed.
Noninterest Expense
Total noninterest expense for the three months ended September 30, 2000 was $3.1
million, compared to $4.4 million for the same period in 1999, a decrease of
$1.3 million or 30%. This decrease was primarily due to the decrease in employee
compensation and benefits expenses of approximately $630,000, a decrease in
amortization of mortgage servicing rights of $237,000 and a decrease in other
expenses of $341,000. For the nine months ended September 30, 2000 and 1999,
noninterest expense was $9.9 million and $15.6 million, a difference of $5.7
million between the comparable periods. The decrease was primarily the result of
a reduction in personnel and a reduction in total commissions paid to the
existing sales force as a result of the decrease in new loan originations.
Washtenaw's sales force is comprised primarily of commission based business
consultants who are paid a percentage of the loan production from their
customers. These factors were partially offset by the provisions for employee
severance.
BALANCE SHEET ANALYSIS
The following is a discussion of the consolidated balance sheet of Pelican
Financial.
ASSETS
At September 30, 2000, total assets of Pelican Financial equaled $190.0 million
as compared to $155.9 million at December 31, 1999, an increase of $34.1 million
or 22%. This increase is primarily due to increases in cash and cash
equivalents, accounts receivable, loans held for sale and loans receivable.
Cash and Cash Equivalents
Cash and cash equivalents were $5.8 million at September 30, 2000 compared to
$1.9 million at December 31, 1999. The increase of $3.9 million or 205% was
primarily the result of an increase in federal funds sold of $2.5. Pelican
National had excess liquidity resulting from increased deposits that will be
used to fund loan originations in the future.
Accounts Receivable
Accounts receivable were $6.4 million at September 30, 2000 compared to $2.3
million at December 31, 1999. The increase of $4.1 million or 178% was primarily
the result of an increase in receivables related to the sale of servicing by
Washtenaw. Due to the terms of the contract related to the bulk sale of serving
during the quarter, Washtenaw had received a portion of the gross proceeds
during the three months ended September 30, 2000. The remainder will be received
during the fourth quarter.
Investment Securities
Pelican National primarily utilizes investments in securities for liquidity
management and as a method of deploying excess funding not utilized for
investment in loans. Pelican National has invested primarily in U. S. government
and agency securities, federal funds, and U. S. government sponsored agency
issued mortgage-backed securities. As required by SFAS No. 115, Pelican National
classifies securities as held-to-maturity, available-for-sale, or trading. At
September 30, 2000 and at December 31, 1999, all of the investment securities
held in Pelican National's investment portfolio were classified as available for
sale.
12
<PAGE>
The following table contains information on the carrying value of Pelican
National's investment portfolio at the dates indicated.
<TABLE>
<CAPTION>
At At
September 30, December 31,
2000 1999
(Dollars in thousands)
<S> <C> <C>
U. S. Government agency (1) $3,911 $3,820
Mortgage-backed securities 1,828 2,057
Federal Reserve Bank and Federal Home
Loan Bank Stock 880 680
------ ------
Total investment securities $6,619 $6,557
------ ------
------ ------
</TABLE>
(1) At September 30, 2000 and December 31, 1999, includes a $2.0 million
investment in a Federal Home Loan Bank bond with a carrying value of $1.9
million.
Loans Held for Sale
Loans held for sale were $73.1 million at September 30, 2000 compared to $60.5
million at December 31, 1999. This increase of $12.6 million or 21% was caused
by an increase in loan production that will be sold to private investors. The
length of time required to prepare and sell loans to these investors is
typically longer than the length of time it takes to sell loans to Federal
National Mortgage Association or Federal Home Loan Mortgage Corporation. In
addition, Washtenaw introduced a new product during the second quarter. This
loan product is for borrowers with credit scores that fail to meet the
conforming loan investor criteria. At September 30, 2000 Washtenaw had $5.0
million of these loans that will be sold in the fourth quarter.
Portfolio Loans
Total portfolio loans were $85.5 million at September 30, 2000, an increase of
$16.9 million or 25% from $68.6 at December 31, 1999. This increase resulted
primarily from increases in commercial, residential real estate and boat lending
production at Pelican National.
The following table contains selected data relating to the composition of
Pelican Financial's loan portfolio by type of loan at the dates indicated. This
table includes mortgage loans available for sale and mortgage loans held for
investment. Pelican Financial had no concentration of loans exceeding 10% of
total loans that are not otherwise disclosed below.
<TABLE>
<CAPTION>
September 30, 2000 December 31, 1999
% of % of
Amount Total Amount Total
(Dollars In thousands)
<S> <C> <C> <C> <C>
Real estate loans:
Residential, one to four units $ 122,636 76.70% $ 111,646 84.49%
Commercial and industrial real estate 26,674 16.68% 16,987 12.86%
Construction 3,716 2.32% 1,706 1.29%
--------- ------ --------- ------
Total real estate loans 153,026 95.70% 130,339 98.64%
Other loans:
Business, commercial 706 0.44% 679 0.51%
Automobile 186 0.12% 106 0.08%
Boat 3,666 2.29% -- --
Other consumer 2,323 1.45% 1,015 0.77%
--------- ------ --------- ------
6,881 4.30% 1,800 1.36%
--------- ------ --------- ------
159,907 100.00% 132,139 100.00%
------ --------- ------
------ --------- ------
Unearned fees, premiums and discounts, net (833) (2,647)
Allowance for loan losses (442) (374)
--------- ---------
Total Loans net (1) . $ 158,632 $ 129,118
--------- ---------
--------- ---------
</TABLE>
(1) Includes loans held for sale and loans receivable, net
13
<PAGE>
Asset Quality
Pelican Financial is exposed to certain credit risks related to the value of the
collateral that secures loans held in its portfolio and the ability of borrowers
to repay their loans during the term thereof. Pelican Financial's senior
officers closely monitor the loan and real estate owned portfolios for potential
problems on a continuing basis and report to the Board of Directors of Pelican
Financial at regularly scheduled meetings. These officers regularly review the
classification of loans and the allowance for losses. Pelican Financial also has
a quality control department, the function of which is to provide the Board of
Directors with an independent ongoing review and evaluation of the quality of
the process by which lending assets are generated.
The following table sets forth certain information on nonperforming loans and
other real estate owned, the ratio of such loans and other real estate owned
to total loans and total assets as of the dates indicated.
<TABLE>
<CAPTION>
At September 30, At December 31,
2000 1999 1999
(Dollars in thousands)
<S> <C> <C> <C>
Nonaccrual loans $ 627 $ 246 $ --
Loans past due 90 days or more but not on nonaccrual 123 451 1,084
Restructured loans -- -- --
------ ------ -------
Total nonperforming loans 750 697 1,084
Other real estate owned 134 255 538
------ ------ -------
Total nonperforming assets $ 884 $ 952 $1,622
------ ------ -------
------ ------ -------
Total nonperforming assets to total assets 0.47% 0.58% 1.04%
Allowance for loan losses to
nonperforming loans 58.93% 39.17% 34.50%
Nonperforming loans to total assets 0.39% 0.42% 0.69%
</TABLE>
Provision and Allowance for Loan Losses
Pelican National establishes an allowance for loan losses based upon a quarterly
or more frequent evaluation by management of various factors inherent in the
loan portfolio. These factors include the estimated market value of the
underlying collateral, the growth and composition of the portfolio, current
delinquency trends and prevailing and prospective economic conditions, including
property values, employment and occupancy rates, interest rates, and other
conditions that may affect the borrowers' ability to comply with repayment
terms. If actual losses exceed the amount of the allowance for loan losses,
earnings could be adversely affected. As Pelican National's provision for loan
losses is based on management's assessment of the general risk inherent in the
loan portfolio based on all relevant factors and conditions, the allowance for
loan losses represents both general and specific reserves. The provision for
loan losses for the three months ended September 30, 2000 was $60,000. The
provision for loan losses for the three months ended September 30, 1999 was
$132,000. The decrease is due to the reduction in total nonperforming assets
which reduces the amount of the allowance that is required to be specifically
allocated. In addition, the allowance for loan loss as a percentage of
nonperforming loans has increased from 39% at September 30, 1999 to 79% at
September 30, 2000.
The allowance for loan losses is established through a provision for loan losses
based on management's evaluation of the risks inherent in its loan portfolio and
the general economy. The allowance for loan losses is maintained at an amount
management considers adequate to cover estimated losses in loans receivable
which are deemed probable and estimable based on information currently known to
management. The allowance is based upon a number of factors, including current
economic conditions, actual loss experience and industry trends. In addition,
the Comptroller of the Currency, as an integral part of their examination
process, periodically reviews Pelican National's allowance for loan losses.
These agencies may require Pelican National to make additional provisions for
estimated loan losses based upon their judgments about information available to
them at the time of their examination. Pelican National will continue to monitor
and modify its allowance for loan losses as conditions dictate. While management
believes the allowance for loan losses is sufficient to cover losses inherent in
it portfolio at this time, no assurances can be given
14
<PAGE>
that Pelican National's level of allowance for loan losses will be sufficient to
cover loan losses incurred by Pelican National or that adjustments to the
allowance for loan losses will not be necessary if economic and other conditions
differ substantially from the economic and other conditions used by management
to determine the current amount of the allowance for loan losses.
The allowance for loan losses represented .51% of the loans receivable
outstanding as of September 30, 2000 compared with .54% of the loans receivable
outstanding as of December 31, 1999. The amount of the provision for loan losses
charged to expense in each of these periods represents management's best
estimate during those periods of the addition necessary to establish appropriate
allowances for estimated credit losses. Such estimates were based on
management's assessment of the current economic conditions in Pelican National's
market areas, the risk levels associated with the particular composition of the
loan portfolio during such periods, and Pelican National's past collection
experience.
LIABIILITIES
At September 30, 2000, the total liabilities of Pelican Financial were $168.8
million as compared to $134.9 million at December 31, 1999, an increase of $33.9
million or 25%. This increase was primarily due to increases in deposits, notes
payable and repurchase agreements.
Deposits
Total deposits were $75.0 million at September 30, 2000 compared to $62.3
million at December 31, 1999 which represents an increase of $12.7 million or
20%. The increase was due to several factors. Washtenaw transferred
approximately $9.0 million of principal and interest deposits related to its
servicing portfolio during the second quarter to Pelican National. These
deposits were previously at a non-affiliated bank. The transfer was done to
provide Pelican National with additional liquidity to generate new loans and to
allow Pelican National to earn the interest spread on the additional deposits.
Also, Pelican National was able to develop a new relationship that has generated
approximately $3.0 million in new deposits. The remaining increase is the result
of an increased focus on generating new deposits.
Notes Payable
Notes payable was $34.0 million at September 30, 2000 compared to $25.3 million
at December 31, 1999. This increase of $8.7 million or 34% was primarily caused
by an increase of loans held for sale balance. Since the notes payable represent
the warehouse line of credit that Washtenaw uses to fund its loan production
until such time that the loans are sold to the secondary market, the balance
will generally move in direct correlation with the loans held for sale balance.
Repurchase Agreements
Repurchase agreements were $29.4 million at September 30, 2000 compared to $21.8
million at December 31, 1999. This increase of $7.6 million or 35% in the
repurchase agreements was primarily the result of an increase in the balance of
loans held for sale. Washtenaw uses repurchase agreements, in addition to its
warehouse line of credit, as a means to fund the loans that it purchases.
Therefore, much like the notes payable balance, the repurchase agreements
balance will move in direct correlation to the loans held for sale balance.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity Management
The objective of liquidity management is to ensure the availability of
sufficient resources to meet all financial commitments and to capitalize on
opportunities for business expansion. Liquidity management addresses the ability
to meet deposit withdrawals either on demand or by contractual maturity, to
repay other borrowings as they mature and to make new loans and investments as
opportunities arise.
To date Pelican Financial has conducted no business other
than managing its investments in Pelican National and Washtenaw. Pelican
Financial's source of funds is dividends paid by Washtenaw and Pelican National.
Washtenaw's sources of funds include cash from gains on sales of mortgage loans
and servicing, net interest income, servicing fees and borrowings. Washtenaw
sells its mortgage loans generally on a monthly basis to generate cash for
operations.
15
<PAGE>
Washtenaw's uses of cash in the short-term include the funding of mortgage loan
purchases and origination's and purchases of mortgage servicing rights, payment
of interest, repayment of amounts borrowed pursuant to warehouse lines of
credit, operating and administrative expenses, income taxes and capital
expenditures. Long term uses of cash may also include the funding of
securitization activities or portfolios of loan or servicing assets.
Washtenaw funds its business through the use of a warehouse line of credit and
the use of agreements to repurchase. The warehouse line of credit has a limit of
$70 million, of which $12.6 million represents a sublimit for servicing under
contract for sale, and $6 million represents a working capital sublimit.
Borrowing pursuant to the warehouse line of credit totaled $32.1 million at
September 30, 2000 and $23.3 million at December 31, 1999. The interest rate on
the warehouse line of credit is the Federal Funds Rate plus 1.50% resulting in
an effective rate of 7.99% at September 30, 2000 and 6.25% at December 31, 1999.
Washtenaw also enters into sales of mortgage loans pursuant to agreements to
repurchase. These agreements typically have terms of less than 90 days and are
treated as a source of financing. The effective interest rate on these
agreements to repurchase was 7.39% at September 30, 2000 and 5.65% at December
31, 1999.
Pelican National's sources of funds include net increases in deposits, principal
and interest payments on loans, proceeds from sales of loans held for sale,
proceeds from maturities and sales and calls of available for sale securities.
The liquidity reserve may consist of cash on hand, cash on demand deposits with
other correspondent banks, and other investments and short-term marketable
securities as determined by the rules of the Office of the Comptroller of the
Currency("OCC"), such as federal funds sold and United States securities and
securities guaranteed by the United States. At September 30, 2000, Pelican
Financial had a liquidity ratio of 6.78%. Liquidity, as measured in the form of
cash and cash equivalents totaled $5.8 million at September 30, 2000, an
increase of $4.0 million from December 31, 1999 to September 30, 2000. The
increase is primarily the result of an $2.5 million increase in the outstanding
federal funds sold at September 30, 2000.
Pelican Financial's ability to continue to purchase loans and mortgage servicing
rights and to originate new loans is dependent in large part upon its ability to
sell the mortgage loans at par or for a premium or to sell the mortgage
servicing rights in the secondary market in order to generate cash proceeds to
repay borrowings pursuant to the warehouse facility, thereby creating borrowing
capacity to fund new purchases and origination's. The value of and market for
Pelican Financial's loans and mortgage servicing rights are dependent upon a
number of factors, including the borrower credit risk classification,
loan-to-value ratios and interest rates, general economic conditions, warehouse
facility interest rates and governmental regulations
Washtenaw generally grants commitments to fund mortgage loans for up to 30 days
at a specified term and interest rate. The commitments are commonly known as
rate-lock commitments. At September 30, 2000, Washtenaw had outstanding
rate-lock commitments to lend $36.3 million for mortgage loans. Because these
commitments may expire without being drawn upon, they do not necessarily
represent future cash commitments. Also, as of September 30, 2000, Washtenaw had
outstanding commitments to sell $85.4 million of mortgage loans. These
commitments usually are funded within 90 days.
Capital Resources
The Board of Governors of the Federal Reserve System's (FRB) capital adequacy
guidelines mandate that minimum ratios be maintained by bank holding companies
such as Pelican Financial. Pelican National is governed by capital adequacy
guidelines mandated by the OCC.
Based upon their respective regulatory capital ratios at September 30, 2000
Pelican Financial and Pelican National are both well capitalized, based upon the
definitions in the regulations issued by the FRB and the OCC setting forth the
general capital requirements mandated by the Federal Deposit Insurance
Corporation Improvement Act of 1991.
The table below indicates the regulatory capital ratios of Pelican Financial and
Pelican National and the regulatory categories for a well capitalized and
adequately capitalized bank under the regulatory framework for prompt corrective
action (all three capital ratios) at June 30, 2000 and December 31, 1999,
respectively:
16
<PAGE>
<TABLE>
<CAPTION>
Actual
September 30, December 31,
2000 1999
Required to be
Pelican Pelican Pelican Pelican Adequately Well
National Financial National Financial Capitalized Capitalized
<S> <C> <C> <C> <C> <C> <C>
Total Tier 1 Capital to risk-weighted assets 14.51% 17.10% 17.77% 21.23% 8.00% 10.00%
Total Equity Capital to risk-weighted assets 15.21% 17.49% 18.52% 21.63% 4.00% 6.00%
Tier 1 Capital to adjusted total assets 10.36% 10.78% 11.32% 11.52% 4.00% 5.00%
</TABLE>
Adoption of FAS 133
Pelican Financial maintains an overall risk-management strategy that
incorporates the use of derivative instruments to minimize significant unplanned
fluctuations in earnings that are caused by interest rate volatility. While
Pelican National is subject to interest rate risk, it does not currently use any
derivative instruments to hedge such risk. However, Washtenaw, through the
forward sales of mortgage-backed securities and purchases of mortgage-backed
securities and US treasury options, does make use of derivative instruments.
Pelican Financial believes this strategy is an appropriate management of the
risks associated with interest rate volatility.
The secondary marketing department at Washtenaw assesses the interest rate risk
associated with the outstanding commitments it has to fund loans ("pipeline")
and loans classified as held for sale ("inventory"). Currently, the governing
bodies responsible for the interpretation of FAS 133 do not consider the
pipeline a firm commitment and therefore it does not qualify for hedge
accounting treatment. Washtenaw's inventory, and the related forward sales of
mortgage backed securities and purchases of mortgage-backed securities put
options will be accounted for in accordance with FAS 133. The market value of
the inventory typically moves contrary to the market value of the forward sales
of mortgage backed securities and purchases of mortgage-backed securities and US
treasury options. As a result, management believes that the required entries
would approximately offset each other. Therefore, as FAS 133 is currently being
interpreted, management believes it will not have a material effect on the
financial statements.
Item 3: Quantitative and Qualitative Disclosure About Market Risk
For a discussion of Pelican Financial's asset/liability management policies as
well as the potential impact of interest rate changes upon the market value of
Pelican Financial's portfolio, see Pelican Financial's Annual Report to
Shareholders and Form 10-K. Management believes that there has been no material
change in Pelican Financial's asset/liability position or the market value of
Pelican Financial's portfolio since December 31, 1999.
Part II. Other Information
Item 1. Legal Proceedings
There has been no material changes to the pending legal proceedings to which
Pelican Financial is a party since the filing of the registrants Form 10-K.
Item 2. Changes in Securities and Use of Proceeds
(a) Not Applicable
(b) Not Applicable
(c) Not Applicable
(d) Not Applicable
Item 3. Defaults Upon Senior Securities
Not Applicable.
17
<PAGE>
Item 4. Submission of Matters to a Vote of Shareholders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(27) Financial Data Schedule
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the three month period
September 30, 2000.
Pelican Financial, Inc. and Subsidiaries
Signatures
Under 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.
Date: November 10, 2000 /s/ Charles C. Huffman
----------------------
Charles C. Huffman
President and Chief Executive Officer
Date: November 10, 2000 /s/ Howard M. Nathan
--------------------
Howard M. Nathan
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
-------------------------------------------------------------------------------
EXHIBIT INDEX
Exhibit Number Exhibit
-------------- -------
27 Financial Data Schedule
18
