<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended MARCH 31, 2000
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from ________ to ______________.
COMMISSION FILE NO. 000 - 26505
COMMUNITY BANCORP INC.(1)
(Exact name of registrant as specified in its charter)
DELAWARE 33-0859334
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
130 WEST FALLBROOK STREET, FALLBROOK, CA 92028
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (760) 723-8811
-------------------
None
----
(Former name, former address and former fiscal year, if changed
since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the 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 [ ]
Number of shares of common stock outstanding as of March 31, 2000:
2,536,981
Transitional Small Business Disclosure Format (check one):
Yes [ ] No[x]
- ----------------------------
(1) The Company is the successor registrant to Fallbrook National Bank which
previously filed reports pursuant to the Securities Exchange Act of 1934 with
the Comptroller of the Currency.
<PAGE>
PART 1: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
COMMUNITY BANCORP INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS) MARCH 31, DECEMBER 31,
(UNAUDITED) 2000 1999
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 29,330 $ 15,376
Interest bearing deposits in financial institutions 800 800
Federal Reserve Bank stock 253 253
Investment securities held-to-maturity, at amortized cost 6,710 6,710
Loans held for investment 161,612 142,667
Less allowance for loan losses (1,528) (1,327)
---------- ----------
Net loans held for investment 160,084 141,340
Loans held for sale 9,144 2,854
Premises and equipment, net 2,404 2,392
Accrued interest and other assets 3,516 2,957
Deferred tax asset 744 744
Servicing asset, net 1,728 1,796
Interest-only strip, at fair value 587 551
---------- ----------
Total Assets $ 215,300 $ 175,773
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Interest bearing $ 162,485 $ 129,795
Non-interest bearing 28,656 28,337
---------- ----------
Total deposits 191,141 158,132
Other borrowings 10,745 3,971
Accrued expenses and other liabilities 1,987 2,333
---------- ----------
Total liabilities 203,873 164,436
SHAREHOLDERS' EQUITY
Common stock, $0.625 par value; authorized 10,000,000 shares, issued and
outstanding, 2,537,000 at March 31, 2000 and
December 31, 1999 1,585 1,585
Additional paid-in capital 4,713 4,713
Unearned ESOP contribution (745) (796)
Retained earnings 5,879 5,835
Treasury stock, at cost - 883 shares (5) -
---------- ----------
Total shareholders' equity 11,427 11,337
---------- ----------
Total Liabilities and Shareholders' Equity $ 215,300 $ 175,773
========== ==========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
2
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<TABLE>
<CAPTION>
COMMUNITY BANCORP INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31,
(UNAUDITED) 2000 1999
- ----------------------------------------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
<S> <C> <C>
Interest income:
Interest and fees on loans $ 3,725 $ 2,838
Interest on cash equivalents 103 63
Interest on interest bearing deposits in financial institutions 9 10
Interest on investment securities 98 42
--------- ---------
TOTAL INTEREST INCOME 3,935 2,953
--------- ---------
Interest expense on deposits 1,588 869
Interest expense on other borrowed money 114 22
--------- ---------
TOTAL INTEREST EXPENSE 1,702 891
--------- ---------
Net interest income before provision for loan losses 2,233 2,062
--------- ---------
Provision for loan losses 160 150
--------- ---------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 2,073 1,912
Other operating income:
Customer service charges 108 82
Other fee income 295 303
Net gain on sale of loans 47 864
Loan servicing fees, net 160 163
--------- ---------
TOTAL OTHER OPERATING INCOME 610 1,412
--------- ---------
Other operating expenses:
Salaries and employee benefits 1,369 1,571
Occupancy 197 216
Telephone 68 55
Premises and equipment 145 124
Marketing and promotions 49 59
Data processing 214 181
Professional services 192 107
Director, officer and employee expenses 110 110
Office expenses 81 97
ESOP loan expense 51 51
Other non-recurring expense - 20
Other expenses 132 131
--------- ---------
TOTAL OTHER OPERATING EXPENSES 2,608 2,722
--------- ---------
Income before income taxes 75 602
Income taxes 31 249
--------- ---------
NET INCOME $ 44 $ 353
========= =========
COMPREHENSIVE INCOME $ 44 $ 353
========= =========
Basic earnings per share $ 0.02 $ 0.15
Diluted earnings per share $ 0.02 $ 0.14
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
3
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<TABLE>
<CAPTION>
COMMUNITY BANCORP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31,
(DOLLARS IN THOUSANDS)
(UNAUDITED) 2000 1999
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 44 $ 353
Adjustments to reconcile net income to net cash (used in) provided
Depreciation and amortization 141 144
Provision for loan losses 160 150
Net gain on sale of loans (47) (864)
Loans originated for sale (5,517) (21,577)
Unrealized gain on interest only-strips (57) -
Capitalization of interest-only strips - (1)
Amortization of interest only strip 21 55
Capitalization of servicing asset - (138)
Amortization of servicing asset 68 29
Proceeds from sale of loans 4,195 26,863
Decrease (increase) in accrued interest and other assets (559) 89
Decrease in accrued expenses and other liabilities (346) (142)
-------- ---------
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES (1,897) 4,961
CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase in loans (23,474) (11,678)
Net additions to premises and equipment (153) (199)
-------- ---------
NET CASH USED IN INVESTING ACTIVITIES (23,627) (11,877)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits:
Interest bearing 32,690 4,846
Non-interest bearing 319 2,822
Purchase of treasury stock (5) -
Repayment of line of credit (3,226) (51)
Proceeds from other borrowings 9,700 -
-------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 39,478 7,617
-------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS 13,954 701
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD $ 15,376 $ 16,314
-------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 29,330 $ 17,015
======== =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 1,416 $ 900
======== ========
Income Taxes $ 400 $ 237
======== ========
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING ACTIVITIES:
Loans held for investment transferred to held for sale $ 4,921 $ 5,120
======== ========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
4
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COMMUNITY BANCORP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
(UNAUDITED)
NOTE 1 BASIS OF PRESENTATION:
The interim financial statements included herein have been prepared by Community
Bancorp Inc. without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission (the "SEC"). The interim financial statements
include Community Bancorp Inc. and its wholly owned subsidiaries Fallbrook
National Bank (the "Bank") and Community (CA) Capital Trust I (the "Trust"),
(collectively, the "Company") as consolidated with the elimination of all
intercompany transactions. Certain information and footnote disclosures,
normally included in financial statements prepared in accordance with accounting
principles generally accepted in the United States of America, have been
condensed or omitted pursuant to such SEC rules and regulations. Nevertheless,
the Company believes that the disclosures are adequate to make the information
presented not misleading. These financial statements should be read in
conjunction with the audited financial statements and notes thereto included in
the Company's latest Annual Report as found on Form 10KSB. In the opinion of
management, all adjustments, including normal recurring adjustments necessary to
present fairly the financial position of the Company with respect to the interim
financial statements and the results of its operations for the interim period
ended March 31, 2000, have been included. Certain reclassifications may have
been made to prior year amounts to conform to the 2000 presentation. The results
of operations for interim periods are not necessarily indicative of results for
the full year.
NOTE 2 LOANS AND RELATED ALLOWANCE FOR LOAN LOSSES:
A summary of loans as of March 31, 2000 and December 31, 1999 is as follows:
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
----------------- ------------------
(dollars in thousands)
<S> <C> <C>
Construction loans $ 30,299 $ 27,661
Real estate one to four family 24,791 21,601
Real estate commercial and multi family 77,070 61,263
Consumer home equity lines of credit 2,593 2,649
Consumer other 9,701 9,302
Aircraft 18,272 17,113
Commercial 8,269 6,064
----------------- ------------------
Total gross loans 170,995 145,693
Deferred loan fees 601 688
Discount on unguaranteed portion of loans retained (840) (860)
Allowance for loan losses (1,528) (1,327)
----------------- ------------------
Net loans $ 169,228 $ 144,194
================= ==================
</TABLE>
The Company's lending activities are concentrated primarily in Southern
California. Although the Company seeks to avoid undue concentrations of loans to
a single industry based upon a single class of collateral, real estate and real
estate associated business areas are among the principal industries in the
Company's market area. As a result, the Company's loan and collateral portfolios
are, to some degree, concentrated in those industries. The Company evaluates
each credit on an individual basis
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and determines collateral requirements accordingly. When real estate is taken as
collateral, advances are generally limited to a certain percentage of the
appraised value of the collateral at the time the loan is made, depending on the
type of loan, the underlying property and other factors.
NOTE 3 SALES AND SERVICING OF SBA LOANS:
Starting in the first quarter of 2000, the Company changed its policy to hold to
maturity the guaranteed portion of SBA 7a loans. In the past, the Company
generated revenues from the origination of loans guaranteed by the SBA and the
sale of guaranteed and unguaranteed portions of those loans in the secondary
market. The Company retained the servicing on the sale of SBA loans that creates
loan servicing income. The Company measures the servicing asset by discounting
the respective cash flow for the estimated expected life of the loans. The
Company uses industry prepayment statistics in estimating the expected life.
Servicing assets are initially measured at market rates.
If the fair value of the servicing assets is less than the amortized carrying
value, the asset is considered impaired. A valuation allowance must be
established for the impaired asset by a charge against income for the difference
between the amortized carrying value and the fair value. As of March 31, 2000,
there was no material difference between the Company's amortized carrying value
for the servicing assets and the fair value and the Company had no valuation
allowance established for these assets.
NOTE 4 CONTINGENCIES:
Because of the nature of its activities, the Company is at all times subject to
pending and threatened legal actions which arise out of the normal course of its
business. In the opinion of management, the ultimate disposition of these
matters will not have a material adverse effect on the Company's financial
position, results of operations or liquidity.
NOTE 5 FORMATION OF HOLDING COMPANY:
The Company was formed through a holding company reorganization of Fallbrook
National Bank, wherein Fallbrook National Bank became the wholly owned
subsidiary of Community Bancorp Inc. as of June 25, 1999. The transaction was
based on a one for one exchange of shares of Fallbrook National Bank stock for
shares of common stock of Community Bancorp Inc., and was not considered a
taxable event for IRS purposes. Such business combination was accounted for at
historical cost, similar to a pooling of interest. All references to periods
prior to June 30, 1999 are references to financial statements of the Bank.
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NOTE 6 EARNINGS PER SHARE
The following table is a reconciliation of the numerators and denominators of
the basic and diluted EPS computations for the net earnings for the Company
(dollars in thousands, except share data):
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 30,
---------------------------------------------------------------------------------------------
2000 1999
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Earnings Shares Per Share Earnings Shares Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
--------------- -------------- ------------ --------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Net Earnings $ 44 $ 353
===== =====
Basic EPS Earnings available
to common shareholders $ 44 2,404,067 $ 0.02 $ 353 2,395,828 $ 0.15
Effect of Dilutive Securities
Options - 28,370 - - 60,229 -
----- --------- ------ ----- --------- ------
Diluted EPS Earnings
Available to common
shareholders plus assumed
conversions $ 44 2,432,437 $ 0.02 $ 353 2,456,057 $ 0.14
===== ========= ====== ===== ========= ======
</TABLE>
NOTE 7 SEGMENT INFORMATION
The following disclosure about segments of the Company is made in accordance
with the requirements of Statement of Financial Accounting Standards ("SFAS")
No. 131, "Disclosures about Segments of an Enterprise and Related Information."
The Company changed its internal reporting in 1999, and now segregates its
operations into two primary segments: Banking Division and SBA Lending Division.
The Company determines operating results of each segment based on an internal
management system that allocates certain expenses to each.
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 31,
-----------------------------------------------------------------------------
2000 1999
-----------------------------------------------------------------------------
BANKING SMALL TOTAL BANKING SMALL TOTAL
DIVISION BUSINESS COMPANY DIVISION BUSINESS COMPANY
ADMINISTRATION ADMINISTRATION
LENDING LENDING
DIVISION DIVISION
("SBA") ("SBA")
------------ -------------- -------- ---------- -------------- --------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest income $ 3,041 $ 894 $ 3,935 $ 1,884 $ 1,069 $ 2,953
Interest expense 1,060 642 1,702 331 560 891
------------ -------------- -------- ---------- ----------- --------
Net interest income before provision 1,981 252 2,233 1,553 509 2,062
Provision for loan losses 121 39 160 150 - 150
Other operating income 281 329 610 431 981 1,412
Other operating expense 1,889 719 2,608 1,968 754 2,722
------------ -------------- -------- ---------- ----------- --------
Income before income taxes 252 (177) 75 (134) 736 602
------------ -------------- -------- ---------- ----------- --------
Income taxes 104 (73) 31 (55) 304 249
------------ -------------- -------- ---------- ----------- --------
Net income $ 148 $ (104) $ 44 $ (79) $ 432 $ 353
============ ============== ======== ========== =========== ========
Asset employed at quarter end $ 171,620 $ 43,680 $215,300 $ 102,546 $ 41,556 $144,102
============ ============== ======== ========== =========== ========
</TABLE>
NOTE 8 RECENT ACCOUNTING DEVELOPMENTS
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities,"
was issued in June 1998 and establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts, (collectively referred to as derivatives) and for
7
<PAGE>
hedging activities. SFAS No. 133 was effective for all fiscal quarters beginning
after June 15, 1999. In July 1999, SFAS No. 137, "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of FASB
Statement No. 133," was issued which delays the effective date of SFAS No. 133
to fiscal years beginning after June 15, 2000. Earlier application is
encouraged, but it is permitted only as of the beginning of any fiscal quarter
that begins after June 1998. The adoption of the provisions of SFAS No. 133, as
amended by SFAS No. 137, is not expected to have a material impact on the
results of operations, the financial position, or cash flow of the Company.
8
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following is management's discussion and analysis of the major factors that
influenced the financial performance of the Company for the quarter ended March
31, 2000. This analysis should be read in conjunction with the Company's 1999
Annual Report as filed on form 10KSB and with the unaudited financial statements
and notes as set forth in this report.
Statements concerning future performance, developments or events concerning
expectation for growth and market forecasts, and any other guidance on future
periods, constitute forward-looking statements which are subject to a number of
risks and uncertainties which might cause actual results to differ materially
from stated expectations.
RESULTS OF OPERATIONS
NET INCOME
Net income decreased 87.5% to $44,000 for the three months ended March 31, 2000
compared to $353,000 for the three months ended March 31, 1999. Basic earnings
per share was $0.02 and $0.15 for the three months ended March 31, 2000 and
1999, respectively. Diluted earnings per share was $0.02 and $0.14 for the three
months ended March 31, 2000 and 1999, respectively. Earnings per share for the
three months ended March 31, 1999 were adjusted for the effects of a stock
dividend paid in November 1999. The decrease in net income was mainly due to the
decrease in other operating income, partially offset by an increase in net
interest income after provision for loan losses and a decrease in other
operating expenses. Interest income increased due to an increase in average
interest earning assets, and other operating income decreased during the three
months ended March 31, 2000 due to the Company's change in policy from selling
the guaranteed and unguaranteed portions of SBA 7a loans to retention of the SBA
7a loans. This change in policy became effective January 1, 2000. Although
management anticipates that earnings will improve throughout each of the
remaining quarters of 2000, the net income for the year will be significantly
reduced when compared to 1999. Management expects that earnings will improve
significantly in 2001 as the increased net interest income will more than offset
the revenue from gain on sale of loans.
Return on average assets for the three months ended March 31, 2000 was 0.09%
compared to 1.04% for the three months ended March 31, 1999. The decrease in the
return on average assets from 1999 to 2000 was due to the reduction in net
income noted above, combined with the 49.6% growth in total assets, which was
part of the Company's strategic plan. The return on average equity was 1.5% for
the three months ended March 31, 2000 compared to 14.4% for the three months
ended March 31, 1999.
INTEREST INCOME
Net interest income is the most significant component of the Company's income
from operations. Net interest income is the difference (the "interest rate
spread") between the gross interest and fees earned on the loan and investment
portfolios and the interest paid on deposits and other borrowings. Net interest
income depends on the volume of and interest rate earned on interest earning
assets and the volume of and interest rate paid on interest bearing liabilities.
The following table sets forth a summary of average balances with corresponding
interest income and interest expense as well as average yield and cost
information for the periods presented. Average
9
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balances are derived from daily balances, and nonaccrual loans are included as
interest earning assets for purposes of this table.
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 31,
--------------------------------------------------------------------------
2000 1999
------------------------------------ -------------------------------------
AVERAGE INTEREST AVERAGE AVERAGE INTEREST AVERAGE
BALANCE EARNED/PAID RATE/YIELD BALANCE EARNED/PAID RATE/YIELD
--------- ------------- ------------ --------- ------------- ------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Average Assets:
Securities and time deposits at other
Banks........................................ $ 7,763 $ 107 5.54% $ 2,607 $ 52 8.09%
Cash equivalents................................ 7,726 103 5.36 5,560 63 4.60
Loans:
Commercial................................... 67,194 1,467 8.78 54,150 1,328 9.95
Real estate.................................. 85,380 2,100 9.89 55,881 1,389 10.08
Consumer..................................... 7,232 158 8.79 5,274 121 9.30
--------- ------------- --------- -------------
Total loans..................................... 159,806 3,725 9.38 115,305 2,838 9.98
--------- ------------- --------- -------------
Total earning assets............................ 175,295 3,935 9.03 123,472 2,953 9.70
Non earning assets.............................. 16,874 12,884
--------- ---------
Total average assets............................ $ 192,169 $136,356
========= =========
Average liabilities and shareholders' Equity:
Interest bearing deposits:
Savings and interest bearing
Accounts................................... $ 58,147 $ 343 2.37 $ 60,580 $ 368 2.46
Time deposits ............................... 88,042 1,245 5.69 42,249 501 4.81
--------- ------------- --------- -------------
Total interest bearing deposits................. 146,189 1,588 4.37 102,829 869 3.43
Demand deposits................................. 27,674 - - 21,529 - -
Other borrowings................................ 4,572 114 10.03 976 22 9.14
--------- ------------- --------- -------------
Total interest bearing liabilities............. 178,435 1,702 3.84 125,334 891 2.88
Accrued expenses and other liabilities.......... 2,338 1,216
Net shareholders' equity........................ 11,396 9,806
--------- ---------
Total average liabilities and shareholders'
equity......................................... $ 192,169 $ 136,356
========= =========
Net interest rate spread........................ 5.19% 6.82%
====
Net interest income............................. $ 2,233 $ 2,062
=========== ===========
Net yield on interest-earning assets............ 5.12% 6.77%
====
</TABLE>
Interest income for the three months ended March 31, 2000 increased to $3.9
million, compared to $3.0 million for the three months ended March 31, 1999.
This increase was due to an increase in the average balance of interest earning
assets, partially offset by a decrease in the yield on those assets. Average
interest earning assets increased to $175.3 million for the quarter ended March
31, 2000 compared to $123.5 million for the three months ended March 31, 1999.
The yield on interest earning assets decreased to 9.03% for the three months
ended March 31, 2000 compared to 9.70% for the three months ended March 31,
1999. During the fourth quarter of 1999, the Company changed its estimates as to
the costs of originating a loan, which resulted in a higher monthly amortization
cost being charged against interest income. This in turn reduced the yield on
the loans originated. In addition, increased competition by other financial
intermediaries has resulted in tighter margins than had previously been
experienced by the Company. The largest single component of interest earning
assets was loans receivable, which had an average balance of $159.8 million with
a yield of 9.38% for the three months ended March 31, 2000 compared to $115.3
million with a yield of 9.98% for the three months ended March 31, 1999. The
increase in the average balance of loans receivable was attributable to the
expansion of the Company as part of the Company's strategic plan, including the
retention of SBA 7a loans.
Interest expense for the three months ended March 31, 2000 increased to $1.7
million compared to $891,000 for the three months ended March 31, 1999. This
increase was due to an increase in average deposits and other borrowings,
combined with a change in the composition of those liabilities, and by an
increase in the cost of those liabilities. Average interest-bearing liabilities
10
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increased to $178.4 million for the three months ended March 31, 2000 compared
to $125.3 million for the three months ended March 31, 1999. Average time
deposits increased to $88.0 million with a cost of 5.69% for the three months
ended March 31, 2000 compared to $42.2 million with a cost of 4.81% for the
three months ended March 31, 1999. Beginning on January 1, 2000, the Company
changed its policy regarding the sale of SBA 7a loans from one of selling the
guaranteed and unguaranteed portions to retaining the guaranteed and
unguaranteed portions. The resulting increase in total loans is being funded by
both retail and wholesale certificates of deposit, with the wholesale deposits
having a higher interest rate than the retail deposits. Although the wholesale
deposits have a higher interest rate, there is limited operating costs
associated with acquiring and managing these liabilities. In addition, interest
rates in general have risen considerably from the first quarter of 1999 to the
first quarter of 2000.
Other average borrowings increased to $4.6 million with a cost of 10.03% for the
three months ended March 31, 2000, compared to $1.0 million with a cost of 9.14%
for the three months ended March 31, 1999.The Company borrowed $3.2 million in
June, 1999, of which $3.0 million was used to increase capital at its Bank
subsidiary. The Company's affiliate, Community (CA) Capital Trust I, issued $10
million of 11.0% Fixed Rate Capital Trust Pass-through Securities
("TRUPS-Registered Trademark-"), with a liquidation value of $1,000 per share.
The Company used the proceeds to pay off the $3.2 million in borrowed funds, and
invest an additional $6.0 million in the Bank.
NET INTEREST INCOME BEFORE PROVISION FOR ESTIMATED LOAN LOSSES
Net interest income before provision for estimated loan losses for the three
months ended March 31, 2000 was $2.2 million, compared to $2.1 million for the
three months ended March 31, 1999. This increase was primarily due to the
increase in average interest earning assets and partially offset by a decrease
in the net interest margin. Average interest earning assets were $175.3 million
for the three months ended March 31, 2000 with a net interest margin of 5.12%
compared to $123.5 million with a net interest margin of 6.77% for the three
months ended March 31, 1999. The decline in the net interest margin was
primarily due to the rising interest rate environment, combined with the
increased use of certificates of deposits as well as other borrowed funds in
order to support its expanding loan portfolio. In addition, the decline in yield
on interest earning assets due to the change of estimates regarding the cost of
originating a loan and the increased competition in the market place contributed
to the decreased margin. Management believes that the rising interest rate
environment will positively effect the yield on interest earning assets in the
future, while the increased cost of liabilities through the additional use of
wholesale deposits and borrowed funds will offset this improvement, resulting in
a slightly reduced margin for the subsequent quarters in 2000. However,
management believes that the increased volume of interest earning assets due to
the retention of SBA 7a loans will result in a significantly higher net interest
income in the future.
PROVISION FOR LOAN LOSSES
Net charge offs totaled $(41,000) for the three months ended March 31, 2000
compared to none during the three months ended March 31, 1999. Due to the growth
in loans and the historical loss experience associated with the various loan
types, the provision for loan losses totaled $160,000 for the three months ended
March 31, 2000 compared to $150,000 for the three months ended March 31, 1999.
As a result of the increase in total loans outstanding, management increased the
allowance for loan losses to $1.5 million as of March 31, 2000 compared to $1.1
million as of March 31, 1999. As of March 31, 2000, the allowance was 0.89% of
total gross loans compared to 0.98% as of March 31, 1999. When excluding the
guaranteed portions of loans, the allowance was 0.98% as a percentage of total
gross loans as of March 31, 2000 and March 31, 1999. The allowance for loan
losses as a percentage of nonaccrual loans was 87.5% as of March 31, 2000
compared to 116.4% as of March 31, 1999. When excluding the guaranteed portion
of
11
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nonaccrual loans, the allowance for loan losses as a percentage of nonaccrual
loans was 384.89% and 154.53%, as of March 31, 2000 and March 31, 1999,
respectively.
In determining the adequacy of the allowance for loan losses, management
initially considers the allowances specifically allocated to individual impaired
loans, and next considers the level of general loss allowances deemed
appropriate for the balance of the portfolio based on factors including the
levels of classified assets, general portfolio trends relative to asset and
portfolio size, asset categories, potential credit concentrations, nonaccrual
loan levels, historical loss experience, risks associated with changes in
economic and business conditions, and other factors. In addition, various
regulatory agencies, as an integral part of their examination process,
periodically review the Company's allowance for loan losses. Such agencies may
require the Company to make additional provisions for loan losses based upon
judgments which differ from those of management.
OTHER OPERATING INCOME
Other operating income represents non-interest types of revenue and is comprised
primarily of gains from the sale of loans, other fee income, loan servicing fees
and service charges on deposit accounts. Other operating income was $610,000 for
thee three months ended March 31, 2000 compared to $1.4 million months ended
March 31, 1999. This represents a decrease of $802,000, or 56.7%, when comparing
the three month period ended March 31, 2000 to the three month period ended
March 31, 1999. The decrease was mainly due to a decrease in the gain on sale of
loans, which totaled $47,000 for the three month period ended March 31, 2000
compared to $864,000 for the three month period ended March 31, 1999. The
decrease in gain on sale of loans was due to a change in the Company's policy to
retain SBA 7a loans versus selling such loans in the secondary market. The
Company sold $3.1 million in mortgage loans and $1.0 million in SBA 504 loans
during the three months ended March 31, 2000 compared to $11.6 million in
mortgage loans and $14.7 million in SBA 504 and 7a loans during the three month
period ended March 31, 1999.
Prior to January 1, 2000, a major portion of other operating income was
generated through the sale of loans consisting of SBA loans and mortgage loans.
During the three months ended March 31, 2000, the Company originated $10.5
million in SBA government guaranteed loans compared to $11.5 million during the
three months ended March 31, 1999. The Company originated $3.6 million in
mortgage loans during the three months ended March 31, 2000 compared to $10.0
million for the three months ended March 31, 1999. The Company sold
approximately $1.0 million in SBA 504 loans and $3.1 million in mortgage loans
during the three month period ended March 31, 2000. This decrease reflects the
change in the Company's strategy when compared to sales of $14.7 million in SBA
loans and $11.6 million in mortgage loans sold during the three month period
ended March 31, 1999. The sales for the three month period ended March 31, 2000
resulted in a gain of $47,000, compared to $864,000 for the three month period
ended March 31, 1999. Prior to 1999, the Company had not sold any unguaranteed
portions of SBA loans. In the future, the Company may, from time to time, sell
unguaranteed portions of SBA loans in order to manage its asset growth, capital
and liquidity.
Other fee income totaled $295,000 for the three months ended March 31, 2000
compared to $303,000 for the three months ended March 31, 1999.
Servicing fees, net, remained approximately the same at $160,000.
Customer service charges increased to $108,000 for the three months ended March
31, 2000 compared to $82,000 for the three months ended March 31, 1999. This
increase was due to the expansion of the branch operations as part of the
Company's strategic plan.
OTHER OPERATING EXPENSES
12
<PAGE>
Other operating expenses are non-interest types of expenses and are incurred by
the Company in its normal course of business. Salaries and employee benefits,
occupancy, telephone, premises and equipment, marketing and promotions, data
processing, professional services, director, officer and employee expenses,
office, ESOP loan and other expenses are the major categories of other operating
expenses. Other operating expenses decreased to $2.6 million for the three
months ended March 31, 2000 compared to $2.7 million for the three months ended
March 31, 1999.
The Company's efficiency ratio, which is the ratio of recurring operating
expenses to net interest income before provision for loan losses plus
non-interest income, increased to 91.7% for the three months ended March 31,
2000 compared to 78.4% for the three months ended March 31, 1999. The increase
in efficiency ratio was due to the decrease in other operating income, and was
partially offset by the increase in net interest income and decrease in
operating expenses. Management anticipates the efficiency ratio will decline
(improve) as the net interest income increases due to the retention of SBA 7a
loans and growth in other loans. The majority of the cost decrease can be
attributed to the change of estimates of the deferred cost associated with loan
production. The effect of change of estimates was to decrease salary and benefit
expense. Salary and benefit expenses decreased to $1.4 million for the three
months ended March 31, 2000 compared to $1.6 million for the three months ended
March 31, 1999. The decrease in salaries and benefit expenses was partially
offset by an increase in professional services, including legal, accounting and
regulatory expenses, which increased to $192,000 for the three months ended
March 31, 2000, compared to $107,000 for the three months ended March 31, 1999.
The increase in professional expenses was due to additional costs of operating a
holding company, along with increased litigation expenses due to the appeal of a
lawsuit.
The following table compares each of the components of other operating expenses
for the three months ended March 31, 2000 and 1999, respectively:
<TABLE>
<CAPTION>
2000 1999 Change $
----------- ------------- -------------
<S> <C> <C> <C>
Other operating expenses:
Salaries and employee benefits $1,369 $1,571 $(202)
Occupancy 197 216 (19)
Telephone 68 55 13
Premises and equipment 145 124 21
Marketing and promotions 49 59 (10)
Data processing 214 181 33
Professional services 192 107 85
Director, officer and employee expenses 110 110 -
Office expenses 81 97 (16)
ESOP loan expense 51 51 -
Other non-recurring expense - 20 (20)
Other expenses 132 131 1
----------- ------------- -------------
TOTAL OTHER OPERATING EXPENSES $2,608 $2,722 $(114)
=========== ============= =============
</TABLE>
PROVISION FOR INCOME TAXES
The effective income tax rate was 41.3% for the three months ended March 31,
2000 compared to 41.4% for the three months ended March 31, 1999. Provisions for
income taxes totaled $31,000 and $249,000 for the three months ended March 31,
2000 and 1999, respectively.
FINANCIAL CONDITION
13
<PAGE>
SUMMARY OF CHANGES IN CONSOLIDATED BALANCE SHEETS
MARCH 31, 2000 COMPARED TO DECEMBER 31, 1999
Total assets of the Company increased to $215.6 million as of March 31, 2000
compared to $175.8 million as of December 31, 1999 and $144.1 million as of
March 31, 1999. This increase was due to the growth in net loans to $169.2
million as of March 31, 2000, compared to $144.2 million as of December 31,
1999, and were $115.9 million as of March 31, 1999.
Deposits grew to $191.1 million as of March 31, 2000 compared to $158.1 million
as of December 31, 1999 and were $131.8 million as of March 31, 1999. The
Company opened a third branch in Vista, California in August 1998, and the
Bank's main office in Fallbrook, California obtained the largest market share in
deposits as of June 30, 1999 for its geographic territory. Cash and cash
equivalents increased to $29.3 million as of March 31, 2000 compared to $15.4
million as of December 31, 1999 and $17.0 million as of March 31, 1999. The
increase in cash and cash equivalents was due to the proceeds received from the
Trust Preferred offering. See "Capital."
Shareholders' equity increased to $11.4 million as of March 31, 2000 compared to
$11.3 million as of December 31, 1999 and $10.0 million as of March 31, 1999.
Please refer to the capital section of this discussion for further information.
INVESTMENTS
The Company's investment portfolio consists primarily of certificates of deposit
with other financial institutions, agency securities and overnight investments
in the Federal Funds market. As of March 31, 2000, December 31, 1999 and March
31, 1999, certificates of deposit with other financial institutions were
$800,000, of which $500,000 are securing the Employee Stock Ownership Plan
("ESOP") loan from another California bank which is funding the Company's ESOP.
As of March 31, 2000, US Government and other securities totaled $6.7 million
compared to $6.7 million as of December 31, 1999 and $1.7 million as of March
31, 1999. These securities are held as collateral for public funds and treasury,
tax and loan deposits. Average Federal Funds sold for the three months ended
March 31, 2000 was $7.7 million compared to $5.6 million for the three months
ended March 31, 1999.
LOANS
Loan balances, net of the allowance for loan losses, increased to $169.2 million
as of March 31, 1999 compared to $144.2 million as of December 31, 1999 and
$80.8 million as of March 31, 1999. A healthy loan demand resulted in a 69.5%
annualized growth rate in total gross loans for the three months ended March 31,
2000, led by a 103.2% annualized increase in real estate commercial and
multi-family loans. This rapid increase is due to the retention of the SBA 7a
loans, as part of the Company's change in strategy, which became effective
January 1, 2000. The servicing portfolio, which consists primarily of SBA loans
sold to other investors, being serviced by the Company was $88.7 million as of
March 31, 2000 compared to $92.2 million as of December 31, 1999 and $86.2
million as of March 31, 1999.
14
<PAGE>
LOAN ORIGINATION AND SALE. The following table sets forth the Company's loan
originations by category and purchases, sales and principal repayments of loans
for the periods indicated:
<TABLE>
<CAPTION>
AT OR FOR THETHREE MONTHS
ENDED MARCH 31,
-------------------------------
2000 1999
-------------------------------
(dollars in thousands)
<S> <C> <C>
Beginning balance $144,194 $108,709
Loans originated:
Commercial loans..................................................... 3,257 4,210
Real estate:
Construction loans................................................. 13,104 8,534
One- to four-family................................................ 13,069 10,973
Commercial......................................................... 17,507 19,517
Consumer............................................................. 2,158 1,257
-------------------------------
Total loans originated............................................. 49,095 44,491
Loans sold..............................................................
Real estate:
One- to four-family........................................... 3,109 11,613
Commercial.................................................... 1,039 14,744
-------------------------------
Total loans sold.................................................. 4,148 26,357
Less:
Principal repayments................................................. 20,181 10,638
Other net changes(1)................................................. (268) 402
-------------------------------
Total loans:....................................................... $169,228 $115,803
===============================
</TABLE>
- --------------
(1) Other net changes include changes in allowance for loan losses,
deferred loan fees, loans in process and unamortized premiums and
discounts.
NONPERFORMING ASSETS. Nonperforming assets consists of nonperforming loans and
other real estate owned ("OREO"). Nonperforming loans are those loans which have
(i) been placed on nonaccrual status, (ii) been subject to troubled debt
restructurings, or (iii) become contractually past due 90 days or more with
respect to principal or interest and have not been restructured or placed on
nonaccrual status.
15
<PAGE>
The following table sets forth the Company's non-performing assets at
the dates indicated:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31, MARCH 31,
2000 1999 1999
---------------------------------------
(dollars in thousands)
<S> <C> <C> <C>
Total loans .................................................... $ 170,756 $ 145,521 $116,945
Government guaranteed portion of total loans ................... 14,427 10,653 4,702
Non-accrual loans .............................................. $ 1,747 $ 1,809 $ 981
Troubled debt restructurings ................................... -- -- 716
Loans contractually past due 90 days or more with respect
to either principal or interest and still accruing
interest .................................................. -- -- 203
----------- ----------- --------
Total non-performing loans ................................ 1,747 1,809 1,900
Other real estate owned ........................................ -- -- --
----------- ----------- --------
Total non-performing assets .................................... $ 1,747 $ 1,809 $ 1,900
=========== =========== ========
Non-performing loans net of government guarantees .............. $ 397 $ 414 $ 1,658
Allowance for loan losses to total gross loans ................. 0.89% 0.91% 0.98%
Allowance for loan losses to total loans, net of gov't
guarantees ..................................................... 0.98% 0.98% 1.02%
Allowance for loan losses to nonaccrual loans .................. 87.46% 73.36% 116.41%
Allowance for loan losses to non-performing loans .............. 87.46% 73.36% 60.11%
Allowance for loan losses to non-performing loans, net of gov't
Guarantees ............................................ 384.89% 320.53% 68.88%
Allowance for loan losses to non-performing assets ............. 87.46% 73.36% 60.11%
Total non-performing assets to total assets .................... 0.81% 1.03% 1.32%
Total non-performing loans to total assets, net of gov't
Guarantees ........................................... 0.18% 0.24% 1.15%
Total non-performing loans to total gross loans ................ 1.02% 1.24% 1.62%
Total non-performing loans to total gross loans, net of gov't
Guarantees .......................................... 0.23% 0.28% 1.42%
</TABLE>
NONACCRUAL LOANS. Nonaccrual loans are impaired loans where the original
contractual amount may not be fully collectible. The Company measures its
impaired loans by using the fair value of the collateral if the loan is
collateral-dependent and the present value of the expected future cash flows
discounted at the loan's effective interest rate if the loan is not
collateral-dependent. As of March 31, 2000, December 31, 1999 and March 31,
1999, all impaired or nonaccrual loans were collateral-dependent. The Company
places loans on nonaccrual status that are delinquent 90 days or more or when a
reasonable doubt exists as to the collectibility of interest and principal. The
Company had eight loans on nonaccrual status as of March 31, 2000, totaling $1.7
million. Of this total $1.4 million is guaranteed by the SBA. As of December 31,
1999, the Company had eight loans on nonaccrual status, totaling $1.8 million,
with $1.4 million guaranteed by the SBA. As of March 31, 1999 the Company had
four loans on nonaccrual status, totaling $981,000 with $242,000 guaranteed by
the SBA.
ALLOWANCE FOR LOAN LOSSES. 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 is
increased by provisions charged against earnings and reduced by net loan
chargeoffs. Loans are charged off when they are deemed to be uncollectible, or
partially charged off when portions of a loan are deemed to be uncollectible.
Recoveries are generally recorded only when cash payments are received.
In determining the adequacy of the allowance for loan losses, management
initially considers the allowances specifically allocated to individual impaired
loans, and next considers the level of general loss allowances deemed
appropriate for the balance of the portfolio based on factors including the
levels of classified assets, general portfolio trends relative to asset and
portfolio size, asset categories, potential credit concentrations, nonaccrual
loan levels, historical loss experience, risks associated with changes in
economic and business conditions, and other factors. In addition, various
regulatory agencies, as an integral part of their examination process,
periodically review the Company's
16
<PAGE>
allowance for loan losses. Such agencies may require the Company to make
additional provisions for loan losses based upon judgments which differ from
those of management.
The following table sets forth information regarding the Company's allowance for
loan losses at the dates and for the periods indicated:
<TABLE>
<CAPTION>
AT OR FOR THE THREE MONTHS
ENDED MARCH 31,
----------------------------------------
2000 1999
----------------------------------------
(dollars in thousands)
<S> <C> <C>
Balance at beginning of period................... $ 1,327 $ 992
Chargeoffs:
Real estate loans:
One- to four- family.................... - -
Commercial.............................. - -
Consumer.................................... 3 1
------- -------
Total chargeoffs........................ 3 1
Recoveries:
Real estate loans:
One- to four-family..................... - -
Commercial.............................. 43 -
Consumer.................................... 1 1
------- -------
Total recoveries................. 44 1
------- -------
Net chargeoffs................................... (41) -
Provision for loan losses........................ 160 150
------- -------
Balance at end of period......................... $ 1,528 $ 1,142
======= =======
Net charge offs to average loans................. (0.10%) 0.00%
</TABLE>
As of March 31, 2000 the balance in the allowance for loan losses was $1.5
million compared to $1.1 million as of March 31, 1999. As a percentage of total
gross loans the allowance was 0..89% as of March 31, 2000 compared to 0.98% as
of March 31, 1999. Management believes the allowance at March 31, 2000 is
adequate based upon its ongoing analysis of the loan portfolio, historical loss
trends and other factors.
OTHER REAL ESTATE OWNED. There was no other real estate owned during the three
months ended March 31, 2000 and 1999.
CAPITAL
The Company's capital increased $90,000 to $11.4 million as of March 31, 1999
compared to $11.3 million as of December 31, 1999. In 1997 the Company adopted
an Employee Stock Ownership Plan ("ESOP") which was funded with a $1.2 million
line of credit. As of March 31, 2000 the indebtedness of the ESOP in the amount
of $745,000 is shown as a deduction from shareholders' equity. In future years
capital will be increased as the unearned ESOP contributions are made by the
Company. During the three month period ended March 31, 2000, the Company repaid
principal totaling $51,000, and is planning to contribute approximately $204,000
annually to this program.
As part of the Company's strategic plan, during the third quarter of 1998 the
Board elected to eliminate cash dividends in favor of retaining earnings to
support future growth. A 5% stock dividend was declared and paid to shareholders
of record as of November 30, 1999.
The Company's strategic plan addresses the future capital needs of the Company.
During March, 2000, the Company's wholly owned subsidiary, Community (CA)
Capital Trust I (the "Trust"), a Delaware business trust, issued $10 million of
11.0% Fixed Rate Capital Trust Pass-through Securities ("TRUPS-Registered
Trademark-"), with a liquidation value of $1,000 per share. The
17
<PAGE>
securities have semi-annual interest payments, with principal due at maturity in
2030. The Trust used the proceeds from the sale of the trust preferred
securities to purchase junior subordinated debentures of the Company. The
Company received $9.7 million from the Trust upon issuance of the junior
subordinated debentures, of which $3.2 million was used to pay off borrowings of
the Company, and $6.0 million was contributed to the Bank to increase its
capital. The $10 million is shown as other borrowings on the books of the
Company, while the net $6.5 million is in cash and cash equivalents.
At March 31, 2000 and December 31, 1999, all capital ratios were above all
current Federal capital guidelines for a "well capitalized" bank. As of March
31, 2000, the Bank's regulatory total capital to risk-weighted assets ratio was
12.82% compared to 10.87% as of December 31, 1999. The Bank's regulatory tier 1
capital to risk-weighted assets ratio was 11.91% as of March 31, 2000 compared
to 9.94% as of December 31, 1999. The Bank's regulatory tier 1 capital to
average assets ratio was 10.40% as of March 31, 2000 compared to 8.5% as of
December 31, 1999.
As of March 31, 2000, the Company's regulatory total capital to risk-weighted
assets ratio was 13.47% compared to 8.71% as of December 31, 1999. The Company's
regulatory tier 1 capital to risk-weighted assets ratio was 8.93% as of March
31, 2000, compared to 7.78% as of December 31, 1999. The Company's regulatory
tier 1 capital to average assets ratio was 7.90% as of March 31, 2000, compared
to 6.67% as of December 31, 1999.
LIQUIDITY
The Bank closely monitors its liquidity so that the cash requirements for loans
and deposit withdrawals are met in an economical manner. Management monitors
liquidity in relation to trends of loans and deposits for short term and long
term requirements. Liquidity sources are cash, deposits with other banks,
overnight Federal Funds investments, unpledged interest bearing deposits at
other banks, investment securities and the ability to sell loans. As of March
31, 2000 liquid assets as a percentage of deposits were 17.3% compared to 12.1%
as of December 31, 1999.
PART II OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
None to report.
ITEM 2 CHANGES IN SECURITIES
None to report
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
None to report
ITEM 4 SUBMISSION OF MATTERS TO SECURITY HOLDERS
None to report
ITEM 5 OTHER INFORMATION
None to report
18
<PAGE>
ITEM 6 EXHIBITS AND REPORTS FROM 8-K
(a) Financial Data Schedule
(b) On April 4, 2000, the Company filed an 8-K Report, pursuant to Item 5
thereof, discussing the trust preferred securities referred to in
"Management's Discussion and Analysis of Financial Condition and
Results of Operations - Capital."
19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Exchange Act, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
COMMUNITY BANCORP INC.
(Registrant)
Date ___________ ______________________________
Thomas E. Swanson
President and Chief Executive Officer
Date ___________ ______________________________
L. Bruce Mills, Jr.
Sr. Vice President, Chief Financial Officer
20
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1
<CASH> 9,724
<INT-BEARING-DEPOSITS> 800
<FED-FUNDS-SOLD> 19,606
<TRADING-ASSETS> 587
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 6,963
<INVESTMENTS-MARKET> 6,810
<LOANS> 170,756
<ALLOWANCE> (1,528)
<TOTAL-ASSETS> 215,300
<DEPOSITS> 191,141
<SHORT-TERM> 0
<LIABILITIES-OTHER> 745
<LONG-TERM> 10,000
0
0
<COMMON> 11,427
<OTHER-SE> 0
<TOTAL-LIABILITIES-AND-EQUITY> 215,300
<INTEREST-LOAN> 3,725
<INTEREST-INVEST> 210
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 3,935
<INTEREST-DEPOSIT> 1,588
<INTEREST-EXPENSE> 1,702
<INTEREST-INCOME-NET> 2,233
<LOAN-LOSSES> 160
<SECURITIES-GAINS> 57
<EXPENSE-OTHER> 2,608
<INCOME-PRETAX> 75
<INCOME-PRE-EXTRAORDINARY> 75
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 44
<EPS-BASIC> 0.02
<EPS-DILUTED> 0.02
<YIELD-ACTUAL> 9.03
<LOANS-NON> 1,747
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,327
<CHARGE-OFFS> 3
<RECOVERIES> 44
<ALLOWANCE-CLOSE> 1,528
<ALLOWANCE-DOMESTIC> 1,528
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
