UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark one)
X QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
.
TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from
to
Commission file number 0-13538
NATIONAL AFFILIATED CORPORATION
(Exact Name of small business issuer as specified in its charter)
Louisiana
72-0947819
(State or other jurisdiction of (I.R.S.
Employer Identification
incorporation or organization) Number)
1500 Lee Street, Suite A, P.O. Box 12190, Alexandria, LA 71315
(Address of principal executive offices)
(318) 473-4355
(Insurer's telephone number, including area code)
(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
APPLICABLE ONLY TO ISSUERS INVOLVED
IN BANKRUPTCY PROCEEDINGS DURING
THE PRECEDING FIVE YEARS:
Check whether the registrant filed all documents and reports
required to be filed by Sections 12, 13 or 15(d) of the Exchange
Act after the distribution of securities under a plan confirmed
by a court. Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Registrant had 3,279,489 Voting Common Shares
outstanding on September 30, 1995.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Financial Statements are attached beginning at page 4 .
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
Management's Discussion and Analysis of Financial
Condition and Results of Operations is attached
beginning at page 8 .
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
a) August 29, 1995 Annual meeting
b) See (c)
c) Election of Directors
Name of Nominee For Against
John Boxberger 1,815,465 90,958
Lynn Clayton 1,815,473 90,950
Robert F Meredith, III 1,815,396 91,027
Dan VanWormer 1,815,473 90,950
Benjamin P Wall 1,815,465 90,958
Vaughn Walton 1,815,396 91,027
Bobby Williams 1,815,473 90,950
Further, 1,848,035 votes were cast for the selection of
Deloitte & Touche as independent auditors of the Company.
No broker nonvotes received.
d) Not Applicable
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit Index
Description of Sequential Numberings
Exhibit Table Number Exhibit Location
11 Statement of Page 12
Computation of
Per Share Earnings
99 Letter to Stockholders Page 13
99.1 Press Release Page 14
(b) Reports on Form 8-K
None
<PAGE>
SIGNATURES
Pursuant to 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.
NATIONAL AFFILIATED CORPORATION
(Registrant)
Date November 13, 1995 By: Jerry L. Johnston
Jerry L. Johnston
Vice President and Chief Financial Officer
<PAGE>
NATIONAL AFFILIATED CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1995 AND DECEMBER 31, 1994
<TABLE>
1995 1994
<S> <C> <C>
ASSETS:
Cash $ 103,794 $ 361,430
Invested assets:
Fixed maturities available-for-sale at market 3,631,714 4,179,539
Equity securities at market ($33,398 cost) 1,250 2,504
Other long-term investments at equity 146,020 156,052
Other long-term investments at market 29,000 34,000
Certificates of deposit and time deposits 279,932 455,763
Restricted assets at market 1,138,363 1,132,200
Accrued investment income 68,592 97,821
Finance notes receivable - net 8,931 47,463
Policy loans 95,538 95,193
Reinsurance receivable 546,150 380,400
Other amounts receivable:
Premiums due 28,590 34,238
Agents' balances (net of allowance for uncollectible
accounts of $52,800 in 1995 and 1994) 268,267 234,387
Other 21,633 92,731
Property - net 132,168 141,054
Deferred policy acquisition costs 1,004,107 1,219,714
Other assets 279,902 63,714
TOTAL $ 7,783,951 $ 8,728,203
LIABILITIES AND STOCKHOLDERS' EQUITY:
Policy benefit reserves $ 3,448,999 $ 3,210,661
Policy claims 402,722 617,508
Unearned premiums 34,419 63,037
Dividends left on deposit 413,330 539,503
Advance premium deposits 181,684 193,684
Other policyholders' funds 23,914 26,431
Accounts payable and accruals 144,423 247,348
Total liabilities 4,649,491 4,898,172
Commitments and contingent liabilities
Stockholders' equity:
Voting common shares, no par;
14,000,000 shares authorized;
3,461,028 shares outstanding 5,846,901 5,846,901
Additional paid-in capital 154,500 154,500
Net unrealized investment losses 70,512 (284,084)
Accumulated deficit (2,204,953) (1,154,786)
Subtotal 3,866,960 4,562,531
Less treasury stock-at cost (181,539 shares) 732,500 732,500
Total stockholders' equity 3,134,460 3,830,031
TOTAL $ 7,783,951 $ 8,728,203
</TABLE>
<PAGE>
NATIONAL AFFILIATED CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
<TABLE>
Three Months Nine Months
1995 1994 1995 1994
REVENUES:
<S> <C> <C> <C> <C>
Insurance premiums $ 476,480 $ 926,715 $1,786,333 $2,859,706
Net investment income 72,323 112,458 277,373 298,482
Finance company int/fees 293 18,206 1,259 58,767
Other income 14,600 12,637 54,628 69,196
Total revenues 563,696 1,070,016 2,119,593 3,286,151
EXPENSES:
Decrease in policy
benefit reserves (28,172) (115,305) ( 31,052) (375,900)
Claims and other benefits 254,921 496,610 812,960 1,602,503
Policyholders' dividends 3,643 7,239 11,257 21,759
Commission expense 140,880 339,416 622,584 951,646
Depreciation and amortiz 3,915 20,315 12,672 63,108
Interest expense 16,182 28,189 48,117 65,864
Salaries, wages, taxes 197,051 239,752 588,038 682,952
Other operating expenses 283,877 320,707 889,577 1,076,267
Decrease in deferred policy
acquisition costs 91,966 19,566 215,607 153,984
Total expenses 964,263 1,356,489 3,169,760 4,242,183
LOSS BEFORE INCOME TAXES (400,567) (286,473) (1,050,167) (956,032)
PROVISION FOR INCOME TAXES -- -- -- --
NET (LOSS) INCOME $ (400,567) $ (286,473) $(1,050,167) $ (956,032)
EARNINGS PER COMMON SHARE$ (.12) $ (.09) $ (.32) $ (.29)
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 3,279,489 3,279,489 3,279,489 3,279,489
</TABLE>
See notes to consolidated financial statements.
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
1995 1994
<TABLE>
Cash flows from operating activities:
<S> <C> <C>
Net loss $(1,050,167) $ (956,032)
Non-cash and non-operating items:
Loss (gain) on sale of invested assets 6,824 ( 25,125)
Depreciation and amortization 12,672 63,108
Undistributed losses of investee 1,254 32,382
Change in assets and liabilities:
Deferred policy acquisition costs 215,607 153,984
Policy benefit reserves/unearned premiums 43,970 (296,752)
Policy claims (214,786) 137,848
Equity writedown-other long-term invest 10,032 31,643
Accounts payable and accruals (102,925) (100,965)
Other (112,730) 7,719
Net cash used in operating activities (1,190,249) ( 952,190)
Cash flows from investing activities:
Acquisitions of:
Invested assets
Fixed maturities available-for-sale (1,043,649) (576,295)
Finance notes receivable --- (319,737)
Property ( 3,786) (6,009)
Proceeds from:
Invested assets
Fixed maturities available-for-sale 1,938,083 878,855
Certificates of deposit/time deposits 175,831 453,761
Finance notes receivable 38,532 508,770
Policy loans ( 345) (14,765)
Agents' balances - net (33,880) (182,471)
Net cash provided from investing activities 1,070,786 742,109
Cash flows from financing activities:
Withdrawals of dividends/advance prem-net (138,173) (192,141)
Payments of debt --- ( 62,157)
Net cash used in financing activities (138,173) (254,298)
Net decrease in cash (257,636) (464,379)
Cash at beginning of year 361,430 470,312
Cash at end of period $ 103,794 $ 5,933
</TABLE>
Supplemental cash flows disclosures:
Interest paid $ 35,72 $ 46,533
Income taxes paid $ --- $ ---
See notes to consolidated financial statements.
<PAGE>
NATIONAL AFFILIATED CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
NOTE 1 - REPRESENTATION BY MANAGEMENT
The unaudited consolidated financial statements included herein
reflect all normal, recurring adjustments which are necessary to
a fair presentation of the consolidated financial position,
results of operations and cash flows for the interim periods
presented.
The results of operations for the nine month period ended
September 30,1995 are not necessarily indicative of the results
to be expected for the entire year of 1995.
NOTE 2 - ACCOUNTING CHANGE
Effective January 1, 1994 the Company adopted Statement of
Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." This standard
requires classification of investment securities into three
categories: held-to-maturity, trading, and available for sale.
The Company has classified all of its investment securities as
available for sale. As a result, these securities are now
required to be reported in the balance sheet at their fair value,
with unrealized gains and losses reported in a separate component
of stockholders' equity.
Prior to 1994, the debt securities included in the Company's
investment portfolio were reported at their amortized cost. The
cumulative effect of this accounting change as of January 1,
1994, representing the net unrealized gains on the Company's debt
securities as of that date, resulted in a $446,290 increase in
the fair value of the Company's debt securities will now be
included in the net unrealized investment gains.
<PAGE>
Management's Discussion and Analysis of Financial Condition and
Results of Operations
The Company issues life and accident and health insurance
policies to customers in targeted niche markets in exurban and
rural areas. The Company's principal life insurance products
include universal life, interest sensitive whole life, adjustable
premium whole life and term insurance policies which target
middle income ($25,000-$75,000) families, senior citizens and
government employees. The Company's principal accident and
health insurance policies include short term major medical (which
was discontinued March 31, 1995), an association and group
hospital and surgical policy and a supplemental alternative
benefit option policy, which target middle income consumers who
do not participate in other full coverage major medical policies,
as well as participants in group plans who desire supplemental
coverages.
As of January 1, 1995 the Company established NAMC as its
marketing subsidiary and is currently engaged in transferring
agent relationship and management responsibilities from NAIL to
NAMC. This action is expected to reduce the business acquisition
costs incurred by NAIL and to facilitate the Company's entry into
marketing relationships with other insurers, which will allow the
Company to efficiently offer its agents additional products and
to realize additional commission income on sales of third party
products. Effective March 31, 1995, NAMC commenced a marketing
arrangement with Continental General Life Insurance Company which
provides the Company s agents with short-term major medical and
other health policies issued by Continental to replace sales of
the Company s short-term policies and provides NAMC with
additional commission income.
Results of Operations
1995 Compared to 1994
The Company had a net loss for the first nine months of 1995 of
$1,050,167 compared to a loss of $956,032 for the nine months
ended September 30, 1994. The loss per common share was $.32 for
1995 and $.29 for 1994. Total revenues decreased to $2,119,593
in 1995 from $3,286,151 in 1994. Premium revenues decreased to
$1,786,333 in 1995 from $2,859,706 in 1994.
Three Months ended Nine Months ended
September 30,
<TABLE>
1995 1994 1995 1994
Life premiums
<S> <C> <C> <C> <C>
FLA-100 $ 144,914 $ 185,859 $ 440,351 $ 593,614
All other life 119,486 118,311 383,651 308,524
Total 264,400 304,170 824,002 902,138
Accident and health premiums
Group hospital/surgical 54,528 81,873 215,255 279,016
Alternative benefit 34,616 98,950 216,357 233,065
Short term major medical 28,498 281,740 187,447 859,332
Other 94,438 159,982 343,272 586,155
Total 212,080 622,545 962,331 1,957,568
Total premium revenues $ 476,480 $ 926,715 $1,786,333 $2,859,706
</TABLE>
Life premium on the FLA-100 policies continues to decrease due to
the continuing lapses of FLA-100 policies. The FLA-100
participating life policies were the primary policies sold from
1984 to 1988. The Company ceased paying projected dividends on
these policies in 1992, which the Board of Directors had
determined to be excessive. This action caused the lapse rate of
these policies to increase substantially. Of the 1,116 premium
paying FLA-100 policies in force at December 31, 1994, 307 lapsed
in the first nine months of 1995 for a lapse rate of 27.5%,
compared to a lapse rate of 25.6% for the first nine months of
1994. The Company expects the FLA-100 policies to continue to
lapse at a similar rate in future years. Sales of other life
products showed a 24% increase during the first nine months of
1995 as the Company focused on expanding its force of life
agents. From July 1989 until December 1994 the Company had a
marketing partnership with Commonwealth Life, a subsidiary of
Providian Corporation (formerly Capital Holding), for marketing
interest sensitive life products. Under the partnership, the
Company coinsured 80% of life premiums with Commonwealth Life
Insurance Co. This partnership terminated effective December 31,
1994 for new business. Commonwealth Life will continue to
maintain existing business until the Company completes its
recapitalization, at which time the Company expects to assume
these policies.
Accident and health premium decreased during 1995 as compared to
1994 due to decreased sales of the short term major medical
policy. The Alternative Benefit Option policy, which was
introduced in 1994 did not produce the sales expected in the
first nine months of 1995. The Company also purchased a block of
association group business during the first quarter of 1994 which
increased the premium for that quarter.
Net investment income decreased to $277,373 as of September 30,
1995 as compared to $298,482 at September 30, 1994. This is the
result of the lower level of invested assets caused by the
Company's losses and payment of cash values to holders of lapsed
FLA-100 policies.
Finance company interest and fees decreased to $1,259 for the
first nine months of 1995 compared to $58,767 for the first nine
months of 1994, as the result of the Company's decision to
discontinue the finance company's operations.
The Company's claims and other benefits decreased to $812,960 for
the first nine months of 1995 from $1,602,503 for the first nine
months of 1994. This decrease in accident and health claims is
the result of a decrease in short term major medical business
inforce. The Company made significant changes in its short term
major medical in September 1994 and these changes substantially
reduced the volume of new business. The Company also discontinued
sales of short term major medical policies as of March 31, 1995.
All short term major medical business expired September 30, 1995.
A number of changes were also implemented in the association
group hospital and surgical business which was purchased in 1994.
These changes effectively have terminated new sales in this
product. The composition of benefits and claims and policyholder
dividends for the nine months ending September 30 are as follows:
<TABLE>
Nine months ended September 30,
1995 1994
<S> <C> <C> <C>
Life benefits $ 351,463 $ 288,995
Policyholder dividends 11,257 21,759
A & H benefits 461,497 1,313,508
Total benefits $ 824,217 $1,624,262
</TABLE>
Commission expense decreased to $622,584 for the first nine
months of 1995 from $951,646 for the first nine months of 1994,
primarily as a result of decreased sales of A&H policies. The
composition of commission expense was as follows:
<TABLE>
Nine months ended September 30,
1995 1994
<S> <C> <C>
Life commissions $ 272,648 $ 170,396
Accident & health commissions 349,936 776,530
Other --- 4,720
Total $ 622,584 $ 951,646
</TABLE>
Other operating expenses decreased to $889,577 for the first nine
months in 1995 from $1,076,267 for the first nine months in 1994.
This resulted primarily from a decrease in marketing costs in
1995 compared to 1994, when NAIL incurred increased printing and
actuarial fees in connection with the introduction of new health
products.
Deferred policy acquisition costs increased to $215,607 for the
first nine months of 1995 as compared to $153,984 for the first
nine months of 1994. The lapse of FLA-100 policies is
contributing to a decrease in deferred acquisition costs, but the
increase in new business has resulted in the decrease being less
than in previous years. The decrease (increase) in deferred
acquisition costs is allocated between life and health as
follows:
<TABLE>
Nine months ended September 30,
1995 1994
<S> <C> <C>
Life $ 138,262 $ 296,280
Accident and health 77,345 ( 142,296)
Total $ 215,607 $ 153,984
</TABLE>
Liquidity and Capital Resources
The liquidity requirements for the Company's operations generally
arise from the insurance operations of NAIL and the
administrative activities of NAC, and include payment of claims
to policyholders, payment of commissions and other costs of
acquiring new business, payment of operating costs, and payment
of cash values upon termination of policies. These demands have
generally been met by NAIL with funds generated by its
operations, from its reserves and liquid assets, and from capital
contributions by NAC. NAC has funded its operations primarily
through management fees charged to its subsidiaries, including
NAIL. NAIL is prohibited by Louisiana law from paying any
dividends to NAC other than from statutory profits.
NAIL has incurred statutory losses in each of 1993 and 1994 and
is expected to continue to incur statutory losses in 1995 as a
consequence of its limited revenues and high business acquisition
costs. The Company incurred negative cash flows from operations
of $1,190,249 and $952,190 in the first nine months of 1995 and
1994, respectively.
Statutory losses by NAIL have had a substantial negative impact
on the amount of its surplus, which is required to be maintained
at a level of at least $2 million by a number of states where it
does business. The Company was able to maintain NAIL's capital
at acceptable levels during 1994 through contributions of capital
by NAC to NAIL of $1,919,000, which was obtained by liquidating
various assets held by NAC. The statutory capital and surplus of
NAIL has decreased to $1,768,324 at September 30, 1995.
On November 14, 1995, the Company entered into a letter of
understanding with The Southern Group, a Bethesda, Maryland based
financial holding company, whereby The Southern Group would
purchase approximately six million shares of authorized but
unissued common stock of the Company. It is the intent of the
Company and The Southern Group that $5 to $6 million of capital
will be infused into National Affiliated Investors Life upon the
closing of this transaction. The closing will take place the
first month following regulatory approvals. It is estimated that
regulatory approvals will be obtained in the first quarter of
1996.
Prior to closing of this stock transaction and capital infusion,
National Affiliated Investors Life and Maryland Southern Life
intend to enter into an 80/20 Coinsurance Agreement. Maryland
Southern, a wholly-owned subsidiary of The Southern Group, will
reinsure 80% of all National Affiliated Investors Life's life
insurance in force as of September 30, 1995 upon approval of the
Maryland Insurance Department . Funds received by Maryland
Southern Life will be held in trust to allow for reserve credit
and Maryland Southern Life will secure enhanced credit by
providing a guaranty from an A+ rated reinsurer if deemed
necessary by the Lousiana Insurance Department. This reinsurance
transaction will allow National Affiliated Investors Life to
maintain its surplus at acceptable levels until the additional
capital is infused at the closing of the stock purchase
transaction. This capital contribution to NAIL will allow NAIL
to implement an agressive growth plan and increase its premium
volume either through increased sales or the acquisition of
blocks of life insurance.
<PAGE>
EXHIBIT 11
NATIONAL AFFILIATED CORPORATION AND SUBSIDIARIES
STATEMENT OF COMPUTATION OF PER SHARE EARNINGS
The weighted average number of shares outstanding for the nine
months ended September 30, 1995 was computed as follows:
Shares outstanding, beginning of period 3,279,489
Shares issued, first quarter, 1995 0
Shares issued, second quarter, 1995 0
Shares issued, third quarter, 1995 0
Shares outstanding, end of period 3,279,489
<PAGE>
EXHIBIT 99
November 14, 1995
To All National Affiliated Corporation Stockholders:
National Affiliated Corporation entered into a letter of understanding today
with The Southern Group, a Bethesda, Maryland financial holding company, which
will result in The Southern Group purchasing up to 6,000,000 shares of
authorized but previously not issued stock.
With this purchase, The Southern Group will own approximately 63% of the
outstanding stock in National Affiliated. The monies received from the stock
sale will be used to assist in the growth of National Affiliated Investors Life
Insurance Company. The following are a few of the strategies intended to
accelerate the growth of the life company:
Increase Marketing Activities. National Affiliated Investors Life has a
pent-up demand for product in its targeted rural areas, special target
markets and Associations. The infusion of capital will allow the company
to accelerate its agent recruiting and policy sales in those areas.
Increase Assets Through Acquisition. A three-year plan has been
developed this includes a previously identified acquisition for National
Affiliated Corporation.
Expand the Marketing Territory. The acquisition previously mentioned
would provide additional states to the life company's marketing territory
further assisting in the acceleration of growth.
Closing of the transaction is subject, among other things, to completion of
definitive agreements, approval of insurance regulatory authorities and
completion of a due diligence review by the company.
These are exciting times for the company. With The Southern Group becoming a
major partner, the company will be better able to reach its goals of growth
and profit.
Should you have any questions, please call me.
Very truly yours,
Edward A. Carroll, LLIF
President
EAC/mb
EXHIBIT 99.1
November 14, 1995
Alexandria, Louisiana
National Affiliated Corporation, an Alexandria, Louisiana based insurance
holding company, announced today they had entered into a letter of understanding
with The Southern Group, a Bethesda, Maryland based financial holding company,
pursuant to which The Southern Group would purchase approximately 6,000,000
shares of National Affiliated Corporation common stock based on the book value
as of December 31, 1995. These shares would represent approximately 63% of the
issued and outstanding shares of the company.
National Affiliated Corporation operates National Affiliated Investors Life,
a Louisiana domiciled life insurance company, which operates in seventeen states
and the District of Columbia.
Closing is subject to the completion, of definitive agreements among other
things, and due diligence review by The Southern Group. The transaction is
expected to close in the first quarter of 1996. The State of Louisiana
Department of Insurance and the Maryland Insurance Administration must approve
the transaction prior to closing.
<TABLE> <S> <C>
<ARTICLE> 7
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<DEBT-HELD-FOR-SALE> 3,631,714
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 1,250
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 5,226,279
<CASH> 103,794
<RECOVER-REINSURE> 325
<DEFERRED-ACQUISITION> 1,004,107
<TOTAL-ASSETS> 7,783,951
<POLICY-LOSSES> 3,851,721
<UNEARNED-PREMIUMS> 34,419
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 618,928
<NOTES-PAYABLE> 0
<COMMON> 5,114,401
0
0
<OTHER-SE> (1,979,941)
<TOTAL-LIABILITY-AND-EQUITY> 7,783,951
1,786,333
<INVESTMENT-INCOME> 284,197
<INVESTMENT-GAINS> (6,824)
<OTHER-INCOME> 55,887
<BENEFITS> 793,165
<UNDERWRITING-AMORTIZATION> 215,607
<UNDERWRITING-OTHER> 2,160,988
<INCOME-PRETAX> (1,050,167)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,050,167)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,050,167)
<EPS-PRIMARY> (.32)
<EPS-DILUTED> 0
<RESERVE-OPEN> 617,508
<PROVISION-CURRENT> 290,147
<PROVISION-PRIOR> 32,145
<PAYMENTS-CURRENT> 350,713
<PAYMENTS-PRIOR> 406,907
<RESERVE-CLOSE> 402,722
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
