<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 and Exchange act of 1934
For the quarter ended March 31, 2000
[ ] Transition report pursuant to section 13 or 15(d) of the
Securities and Exchange act of 1934
For the transition period from ________ to ________
Commission file number
0-23881
COWLITZ BANCORPORATION
(Exact name of registrant as specified in its charter)
Washington 91-152984
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
927 Commerce Ave., Longview, Washington 98632
(Address of principal executive offices) (Zip Code)
(360) 423-9800
(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 stock, as of the latest practicable date.
Common Stock, no par value on April 30, 2000: 3,978,119
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Part I
Financial Statements
Consolidated Balance Sheets -
March 31, 2000 and December 31, 1999 3
Consolidated Statements of Income -
Three months ended March 31, 2000 and March 31, 1999 4
Consolidated Statements of Changes in Shareholders' Equity 5
Consolidated Statements of Cash Flows
Three months ended March 31, 2000 and March 31, 1999 6
Notes to Consolidated Financial Statements 7
Management's Discussion and Analysis of Financial Condition
And Results of Operations 11
Part II
Other
Submission of Matters to a Vote of Security Holders 19
Other information 19
Exhibits and Reports on Form 8-K 19
Signatures 20
</TABLE>
2
<PAGE>
COWLITZ BANCORPORATION
CONSOLIDATED STATEMENTS OF CONDITION
(in thousand of dollars, except number of shares)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
(unaudited)
<S> <C> <C>
ASSETS
Cash and due from banks........................................... $ 20,261 $ 19,054
Investment securities:
Investments available-for-sale (at fair value, cost of $4,490 and
$8,484 at March 31, 2000 and December 31, 1999,
respectively)................................................ 4,431 8,427
Investments held-to-maturity (at amortized cost, fair value of
$4,555 and $4,558 at March 31, 2000 and December 31, 1999,
respectively)................................................ 4,564 4,564
--------- ---------
Total investment securities.................................. 8,995 12,991
--------- ---------
Loans............................................................. 170,104 149,386
Allowance for loan losses......................................... (2,585) (2,281)
--------- ---------
Loans, net..................................................... 167,519 147,105
--------- ---------
Loans held for sale............................................... 5,283 2,255
Premises and equipment, net of accumulated depreciation of $2,657
and $2,49 1at March 31, 2000 and December 31, 1999,
respectively................................................... 5,802 5,930
Federal Home Loan Bank stock...................................... 3,147 3,090
Intangible assets, net of accumulated amortization of $1,008 and
$877 at March 31, 2000 and December 31, 1999, respectively..... 4,832 4,963
Other assets...................................................... 3,177 3,107
--------- ---------
Total assets................................................. $ 219,016 $ 198,495
========= =========
LIABILITIES
Deposits:
Demand......................................................... $ 31,156 $ 28,004
Savings and interest-bearing demand............................ 65,412 49,591
Certificates of deposit........................................ 57,890 60,012
--------- ---------
Total deposits............................................... 154,458 137,607
Short-term borrowings............................................. 2,025 3,825
Long-term borrowings.............................................. 29,736 24,281
Other liabilities................................................. 1,827 1,292
--------- ---------
Total liabilities............................................ $ 188,046 $167,005
--------- ---------
SHAREHOLDERS' EQUITY
Preferred stock, no par value; 5,000,000 and no shares authorized
as of March 31, 2000 and December 31, 1999, respectively; no
shares issued and outstanding at March 31, 2000 and
December 31, 1999, respectively................................ $ - $ -
Common stock, no par value; 25,000,000 authorized as of
March 31, 2000 and December 31, 1999, respectively; 3,975,450
and 4,022,052 shares issued and outstanding at March 31, 2000
and December 31, 1999, respectively............................ 18,292 18,530
Additional paid in capital........................................ 1,538 1,538
Retained earnings................................................. 11,178 11,460
Accumulated other comprehensive income(loss)...................... (38) (38)
--------- ---------
Total shareholders' equity................................... 30,970 31,490
--------- ---------
Total liabilities and shareholders' equity................... $ 219,016 $ 198,495
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
COWLITZ BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousand of dollars, except number of shares and per share amounts)
<TABLE>
<CAPTION>
Three months ended
March 31,
2000 1999
--------- ---------
(unaudited)
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans........................................ $ 4,840 $ 3,544
Interest on taxable investment securities......................... 217 215
Interest on non-taxable investment securities..................... 2 2
Interest from other banks......................................... 86 132
--------- ---------
Total interest income.......................................... 5,145 3,893
--------- ---------
INTEREST EXPENSE
Savings and interest-bearing demand............................... 449 358
Certificates of deposit........................................... 837 543
Short-term borrowings............................................. 37 31
Long-term borrowings.............................................. 348 367
--------- ---------
Total interest expense......................................... 1,671 1,299
--------- ---------
Net interest income before provision for loan losses........... 3,474 2,594
PROVISION FOR LOAN LOSSES......................................... (370) (634)
--------- ---------
Net interest income after provision for loan losses............ 3,104 1,960
--------- ---------
NONINTEREST INCOME
Service charges on deposit accounts............................ 171 157
Gains on loans sold............................................ 102 -
Fiduciary income............................................... 73 23
Other income................................................... 188 91
Net gains on sales of available-for-sale securities............ 6 -
--------- ---------
Total noninterest income..................................... 540 271
--------- ---------
NONINTEREST EXPENSE
Salaries and employee benefits................................. 2,581 1,166
Net occupancy and equipment expense............................ 461 252
Business tax expense........................................... 91 65
Amortization of intangibles.................................... 132 84
Other operating expense........................................ 669 509
--------- ---------
Total noninterest expense.................................... 3,934 2,076
--------- ---------
Income(loss) before income tax expense(benefit).............. (290) 155
INCOME TAX EXPENSE(BENEFIT)....................................... (80) 53
--------- ---------
Net income(loss)............................................. $ (210) $ 102
========= =========
BASIC EARNINGS (LOSS) PER SHARE................................... $ (0.05) $ 0.03
DILUTED EARNINGS (LOSS) PER SHARE................................. $ (0.05) $ 0.02
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
COWLITZ BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(in thousands of dollars, except number of shares)
<TABLE>
<CAPTION>
Accumulated
Additional Other Total
Common Stock Paid-in Retained Comprehensive Shareholders' Comprehensive
Shares Amount Capital Earnings Income(loss) Equity Income(loss)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1998 4,001,999 18,251 1,538 11,085 46 30,920
Comprehensive Income:
Net income........................... - - - 656 - 656 $ 656
Net change in unrealized gains (losses) on
investments available-for-sale, net
of deferred taxes of $43.......... - - - - (84) (84) (84)
--------
Other comprehensive income (loss), net
of tax............................ - - - - - - (84)
--------
Comprehensive Income................. - - - - - - $ 572
Issuance of common stock for cash.... 5,743 34 - - - 34
Purchase of treasury stock........... (134,500) (732) - - - (732)
Issuance of common stock for acquisition 148,810 977 - - - 977
Cash dividends paid ($.07 per share). - - - (281) - (281)
---------- -------- -------- -------- ------ ---------
BALANCE AT DECEMBER 31, 1999 4,022,052 $18,530 $1,538 $11,460 $(38) $31,490
Comprehensive Income:
Net income(loss)..................... - - - (210) - (210) $(210)
Net change in unrealized gains (losses) on
investments available-for-sale, net
of deferred taxes of $0........... - - - - - - -
--------
Other comprehensive income (loss), net
of tax............................ - - - - - - -
--------
Comprehensive Income(Loss)........... - - - - - - $(210)
Issuance of common stock for cash.... 4,680 18 - - - 18
Purchase of treasury stock........... (51,282) (256) - - - (256)
Cash dividends paid ($.018 per share) - - - (72) - (72)
---------- -------- -------- -------- ------ ---------
BALANCE AT MARCH 31, 2000 3,975,450 $18,292 $1,538 $11,178 $(38) $30,970
========== ======== ======== ======== ====== =========
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE>
COWLITZ BANCORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of dollars)
<TABLE>
<CAPTION>
Three months ended
March 31,
2000 1999
--------- ---------
(unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)................................................. $ (210) $ 102
Adjustments to reconcile net income (loss) to net cash provided by
Operating activities:
Depreciation and amortization................................... 297 227
Provision for loan losses....................................... 370 634
Net losses (gains) on sales of investments available-for-sale... (6) -
Net amortization of investment security premiums and accretion
of discounts.................................................. - (1)
(Gains) on loans sold........................................... (102) -
Origination of loans held for sale.............................. (20,464) -
Proceeds of loans sales......................................... 17,538 -
(Increase) in other assets...................................... (68) (95)
Increase (decrease) in other liabilities........................ 535 (114)
Federal Home Loan Bank stock dividends.......................... (57) (56)
--------- ---------
Net cash provided by (used in) operating activities......... (2,167) 697
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities of investment securities
held-to-maturity................................................ - 991
Proceeds from sales and maturities of investment securities
available-for-sale.............................................. 4,000 1,000
Purchases of investment securities:
Held-to-maturity................................................ - (990)
Available-for-sale.............................................. - -
Net (increase) decrease in loans.................................. (20,784) 3,288
Purchases of premises and equipment............................... (38) (210)
--------- ---------
Net cash (used in) provided by investment activities.......... (16,822) 4,079
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in demand, savings, and interest bearing
demand deposits................................................. 18,973 450
Net increase (decrease) in certificates of deposit................ (2,122) (3,190)
Dividends paid.................................................... (72) (60)
Net increase (decrease) in short-term borrowings.................. (1,800) 200
Proceeds of long-term borrowings.................................. 11,000 -
Repayment of long-term borrowings................................. (5,545) (196)
Repurchase of common stock........................................ (256) -
Issuance of common stock for cash, net of amount paid for ........
fractional shares............................................. 18 3
--------- ---------
Net cash provided by shares financing activities.............. 20,196 (2,793)
--------- ---------
Net increase (decrease) in cash and due from banks............ 1,207 1,983
CASH AND DUE FROM BANKS AT BEGINNING OF YEAR......................... 19,054 22,705
--------- ---------
CASH AND DUE FROM BANKS AT END OF PERIOD............................. $ 20,261 $ 24,688
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE>
COWLITZ BANCORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except number of shares and per share amounts)
1. Nature of Operations
Cowlitz Bancorporation (the Company) is a holding company located in
southwest Washington. The Company's principal subsidiary, Cowlitz Bank (the
Bank), a Washington state-chartered commercial bank, is the largest community
bank headquartered in Cowlitz County and offers commercial banking services
primarily to small and medium-sized businesses, professionals, and retail
customers. The Company acquired Business Finance Corporation (BFC) of Bellevue,
Washington during the third quarter of 1998. Business Finance Corporation
provides asset based financing to companies throughout the western United
States. During the third quarter of 1999, the Company acquired Bay Mortgage of
Bellevue, Washington and Bay Mortgage of Seattle, Washington. Bay Mortgage of
Seattle and Bay Mortgage of Bellevue have joined together as a division of
Cowlitz Bank and serve customers throughout the greater Bellevue/Seattle market
area. Also during the third quarter of 1999, the Company open a DE NOVO branch
in Bellevue, Washington, doing business as Bay Bank and acquired Bay Escrow of
Seattle, Washington. Bay Escrow will operate as a division of Cowlitz Bank and
will complete escrow transactions for Bay Mortgage.
2. Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
the Company and its subsidiaries. All significant intercompany transactions and
balances have been eliminated.
The interim financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information.
Accordingly, they do not include all the information and footnotes required by
generally accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments, including normal recurring accruals
necessary for fair presentation of results of operations for the interim periods
included herein have been made. The results of operations for the three months
ended March 31, 2000 are not necessarily indicative of results to be anticipated
for the year ending December 31, 2000.
3. Supplemental Cash Flow Information
For purposes of presentation in the statements of cash flows, cash and cash
equivalents are defined as those amounts in the balance sheet caption "Cash and
due from banks" and include cash on hand, amounts due from banks and federal
funds sold. Federal funds sold generally mature the day following purchase.
4. Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
7
<PAGE>
COWLITZ BANCORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except number of shares and per share amounts)
5. Earnings Per Share
The following table reconciles the numerator and denominator of the basic and
diluted earnings per share computations:
<TABLE>
<CAPTION>
Weighted Per Share
Net Income(Loss) Avg. Shares Amount
For the quarter ended March 31, 2000
<S> <C> <C> <C>
Basic earnings (loss) per share $ (210) 4,008,851 $(.05)
Stock Options -
Diluted earnings (loss) per share $ (210) 4,008,851 $(.05)
For the quarter ended March 31, 1999
Basic earnings per share $ 102 4,002,343 $ .03
Stock Options 93,828
Diluted earnings per share $ 102 4,096,171 $ .02
</TABLE>
For the periods reported the Company had no reconciling items between net
income(loss) and income(loss) available to common shareholders.
At March 31, 2000 there were no dilutive stock options due to the Company's
net loss.
Options to purchase 61,000 shares of common stock at a price of $7.94 were
outstanding at March 31, 1999 but were not included in the computation of
diluted earnings per share because the options' exercise price was greater than
the average market price of the common shares. These options expire in 2008.
6. Recently Issued Accounting Standards
SFAS No. 133 and SFAS No. 137
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." The Statement
establishes accounting and reporting standards requiring that derivative
instruments (including certain derivative instruments embedded in other
contracts) be recorded in the statement of condition as either an asset or a
liability measured at its fair value. The Statement requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. Special accounting for qualifying hedges
allows a derivative's gain and losses to offset related results on the hedged
item in the income statement, and requires that a company must formally
document, designate, and assess the effectiveness of transactions that receive
hedge accounting.
SFAS No. 133 was to have been effective for fiscal years beginning after June
15, 1999. A company may also implement the Statement as of the beginning of any
fiscal quarter after issuance (that is, fiscal quarters beginning June 16, 1998
and thereafter). SFAS No. 133 cannot be applied retroactively. SFAS No. 133 must
be applied to (a) derivative instruments and (b) certain derivative instruments
embedded in hybrid contracts that were issued, acquired, or substantively
modified after December 31, 1997 (and, at the company's election, before January
1, 1998).
8
<PAGE>
COWLITZ BANCORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except number of shares and per share amounts)
In May 1999, the Financial Accounting Standards Board issued SFAS No. 137,
"Accounting for Derivative Instruments and Hedging Activities - Deferral of the
Effective Date of SFAS No. 133", that amends SFAS No. 133 and defers the
effective date to fiscal years beginning after June 15, 2000.
The implementation of this Statement is not expected to have a material
impact on the Company's financial position or results of operation.
7. Comprehensive Income
For the Company, comprehensive income includes net income reported on the
statements of income and changes in the fair value of its available-for-sale
investments reported as a component of shareholders' equity.
The components of comprehensive income(loss) for the periods ended March 31,
2000 and 1999 are as follows:
<TABLE>
<CAPTION>
Three months ended
March 31
2000 1999
<S> <C> <C>
Unrealized gain (loss) arising during
the period, net of tax $ 6 $(22)
Reclassification adjustment for net
realized gains (losses) on
securities available-for-sale
included in net income during the
year, net of tax of $2 and $0 6 -
---- ----
Comprehensive income(loss) $ - $(22)
==== ====
</TABLE>
8. Segments of an Enterprise and Related Information:
The Company is principally engaged in community banking activities through
its branches and corporate offices. The community banking activities include
accepting deposits, providing loans and lines of credit to local individuals,
businesses and governmental entities, investing in investment securities and
money market instruments, and holding or managing assets in a fiduciary agency
capacity on behalf of its customers and their beneficiaries. Beginning in 1998
with the acquisition of Business Finance Corporation, the Company provides asset
based financing to companies throughout the western United States. In the third
quarter of 1999, the Company acquired Bay Mortgage of Bellevue, Washington, Bay
Mortgage of Seattle, Washington, and Bay Escrow of Seattle, Washington. These
companies specialize in all facets of residential lending including FHA and VA
loans, construction loans and bridge loans.
The community banking, asset based financing activity, and mortgage-banking
activities are monitored and reported by Company management as separate
operating segments. The six separate banking offices have been aggregated into a
single reportable segment, Community Banking and the Mortgage Banking is
included as a segment. The asset based financing segment does not meet the
prescribed aggregation or materiality criteria and therefore is reported as
Other in the following table below.
The accounting policies for the Company's segment information provided below
are the same as those described for the Company in the summary of significant
accounting policies footnote included in the Company's 1999 annual report,
except that some operating expenses are not allocated to segments.
9
<PAGE>
COWLITZ BANCORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except number of shares and per share amounts)
Summarized financial information for the period ended March 31, 2000 and 1999
concerning the Company's reportable segments is shown in the following tables.
Three months ended March 31, 2000
<TABLE>
<CAPTION>
Mortgage Holding
Banking Banking Company Other Intersegment Consolidated
<S> <C> <C> <C> <C> <C> <C>
Interest income....... $ 4,203 $ 592 $ 134 $ 382 $ (166) $ 5,145
Interest expense...... 1,739 - - 98 (166) 1,671
---------- --------- ---------- --------- ------------ -------------
Net interest income 2,464 592 134 284 - 3,474
Provision for loan loss 348 - - 22 - 370
Noninterest income.... 349 191 - - - 540
Noninterest expense... 2,432 1,087 201 214 - 3,934
---------- --------- ---------- --------- ------------ -------------
Income(loss) before
tax................ 33 (304) (67) 48 - (290)
Provision(benefit) for
income taxes...... 11 (103) (20) 32 - (80)
---------- --------- ---------- ---------- ------------ -------------
Net income(loss)...... $ 22 $ (201) $ (47) $ 16 $ - $ (210)
========== ========= =========== ========= ============ =============
</TABLE>
Three months ended March 31, 1999
<TABLE>
<CAPTION>
Mortgage Holding
Banking Banking Company Other Intersegment Consolidated
<S> <C> <C> <C> <C> <C> <C>
Interest income....... $ 3,617 $ - $ 138 $ 298 $ (160) $ 3,893
Interest expense...... 1,418 - - 41 (160) 1,299
---------- --------- ---------- --------- ------------ -------------
Net interest income 2,199 - 138 257 - 2,594
Provision for loan loss 286 - - 348 - 634
Noninterest income.... 271 - - - - 271
Noninterest expense... 1,651 - 216 209 - 2,076
---------- --------- ---------- --------- ------------ -------------
Income(loss) before
tax................ 533 - (78) (300) - 155
Provision(benefit) for
income taxes....... 181 - (26) (102) - 53
---------- --------- ---------- ---------- ------------ -------------
Net income(loss)...... $ 352 $ - $ (52) $ (198) $ - $ 102
========== ========= ========== ========= ============ =============
</TABLE>
9. Subsequent Events
On April 25, 2000, the Company announced a definitive agreement to acquire
Northern Bank of Commerce "NBOC". The company will account for the all cash
transaction using the purchase method. Under the terms of the definitive
agreement, the shareholders of NBOC will receive up to $3.35 in cash for each
share of NBOC stock, subject to adjustment based on NBOC's equity at closing. $1
million of the merger consideration will be deposited in an escrow account, on
behalf of NBOC's shareholders, to indemnify the Company for losses it incurs on
certain specified NBOC loans in excess of established thresholds during a one
year period following the merger. The transaction is expected to close during
the third quarter of 2000.
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITIONS AND RESULT OF OPERATIONS
The following Management's discussion and Analysis of Financial Conditions and
Results of Operations includes a discussion of certain significant business
trends and uncertainties as well as certain forward-looking statements and is
intended to be read in conjunction with and is qualified in its entirety by
reference to the consolidated financial statements of the Company and
accompanying notes include elsewhere herein.
Results of Operations
During the first quarter of 2000 the Company had a net loss of $210,000
compared to net income of $102,000 in the first quarter of 1999. The primary
reason for the loss for the three month period ending March 31,2000 was an
increase in noninterest expense. Non interest expense increased from $2.1
million in the first quarter of 1999 compared to $3.9 million during the
comparable period in 2000. One factor contributing to this increase was a
severance charge of $540,000 after the resignation of the Company's Chief
Operating Officer and Cowlitz Bank's President and Chief Executive Officer,
Charles W. Jarrett. Also contributing to the increase in noninterest expense was
the Company's recent business expansion activities.
The Company's revenues (net interest income before provision for loan losses
and non interest income) have increased 40% in the first quarter of 2000
compared to the like period in 1999 and assets have grown 10% in the first
quarter of 2000. Cowlitz Bank's Bellevue, Washington branch, doing business as
Bay Bank, has made a significant contribution to the Company's growth, adding
$17.5 million in loans and $10.9 million in deposits in the first quarter of
2000. Bay Mortgage and Bay Escrow, acquired in the third quarter of 1999, have
also contributed to income through interest and fees on loans held for sale.
Net Interest Income
For financial institutions, the primary component of earnings is net interest
income. Net interest income is the difference between interest income,
principally from loans and investment securities portfolios, and interest
expense, principally on customer deposits. Changes in net interest income result
from changes in "volume," "spread," and "margin." Volume refers to the dollar
level of interest-earning assets and interest-bearing liabilities. Spread refers
to the difference between the yield on interest-earning assets and the cost of
interest-bearing liabilities. Net interest margin is the ratio of net interest
income to total interest-earning assets and is influenced by the level and
relative mix of interest-earning assets and interest-bearing liabilities.
Net interest income for the quarter ended March 31, 2000 was $3.5 million,
which was an increase of 33.9% from $2.6 million at March 31, 1999. The overall
tax-equivalent earning asset yield was 11.22% at March 31, 2000 compared to
10.00% at March 31, 1999. Average earning assets increased to $183.4 million at
March 31, 2000 compared to $155.7 million at March 31, 1999. The increase in
interest income was a result of the increase in interest earning assets and
investing funds in higher yielding loans at BFC, the Bank's mortgage division
and the new branch in Bellevue, Washington. The yield has also increased on
existing loans as the prime rate has increased.
The average cost of interest bearing liabilities increased slightly to 4.75%
at March 31, 2000 compared to 4.60% at March 31, 1999. Average interest bearing
liabilities increased $27.7 million from March 31, 1999 to March 31, 2000.
Certificates of deposit increased to $57.9 million at March 31, 2000 compared to
$38.7 million at March 31, 1999 primarily due to a local marketing campaign.
Savings deposits and money market accounts also increased primarily through the
opening of the new branch in Bellevue, Washington. The increase in the average
cost of interest bearing liabilities is primarily a result of higher interest
paid for certificates of deposit due to pricing conditions in the Company's
market area.
11
<PAGE>
Analysis of Net Interest Income
The following table presents information regarding yields and interest
earning assets, expense on interest bearing liabilities, and net yields on
interest earning assets for periods indicated on a tax equivalent basis.
<TABLE>
<CAPTION>
Three Months Ended
(unaudited) March 31, Increase
(in thousands of dollars) 2000 1999 (Decrease) Change
-------- --------- --------- ------
<S> <C> <C> <C> <C>
Interest income (1)................ $ 5,146 $ 3,894 $ 1,252 32.2%
Interest expense................... 1,671 1,299 372 28.6%
-------- --------- ----------
Net interest income................ $ 3,475 $ 2,595 $ 880 33.9%
======== ========= ==========
Average interest earning assets.... $183,447 $ 155,737 27,710 17.8%
Average interest bearing liabilities $140,769 $ 113,034 27,735 24.5%
Average yields earned (2).......... 11.22% 10.00% 1.22
Average rates paid (2)............. 4.75% 4.60% .15
Net interest spread (2)............ 6.47% 5.40% 1.07
Net interest margin (2)............ 7.58% 6.67% .91
</TABLE>
(1) Interest earned on nontaxable securities has been computed on a 34% tax
equivalent basis.
(2) Ratios for the three months ended March 31, 2000 and 1999 have been
annualized.
Market Risk
Interest rate risk and credit risks are the most significant market risks
impacting the Company's performance. The Company relies on loan reviews, prudent
loan underwriting standards and an adequate allowance for loan losses to
mitigate credit risk. Interest rate risk is managed through the monitoring of
the Company's gap position and sensitivity to interest rate risk by subjecting
the Company's balance sheet to hypothetical interest rate shocks. The Company's
primary objective in managing interest rate risk is to minimize the adverse
impact of changes in interest rates on the Company's net interest income and
capital, while structuring the Company's asset/liability position to obtain the
maximum yield-cost spread on that structure. Management has assessed these risks
and feels that there has been no material change since December 31, 1999.
Non-Interest Income
Non-interest income consists of the following components:
<TABLE>
<CAPTION>
MARCH 31,
2000 1999
<S> <C> <C>
Service charge on deposit accounts............ $171 $157
Gains on loans sold........................... 102 -
Fiduciary income.............................. 73 23
Escrow fees................................... 57 -
Credit Card income............................ 41 30
Loan underwriting fees........................ 33 -
ATM income.................................... 16 11
Safe deposit box fees......................... 28 29
Other miscellaneous fees and income........... 19 21
---- ----
Total non-interest income..................... $540 $271
==== ====
</TABLE>
12
<PAGE>
Non-interest income increased to $540,000 at March 31, 2000 from $271,000 in
the corresponding period in 1999, largely as a result of the increase in
noninterest income generated by the mortgage lending activities including gain
on loans sold, escrow fees and loan underwriting fees. These fees were related
to the Company's third quarter 1999 acquisitions of Bay Mortgage and Bay Escrow.
Also contributing to the increase was the growth in fiduciary income. The
Company's trust services opened in April 1997 and this service continues to
expand.
Non-Interest Expense
Non-interest expense consists principally of employees' salaries and
benefits, occupancy costs, data processing and communication expenses, FDIC
(Federal Deposit Insurance Corporation) insurance premiums, professional fees,
and other non-interest expenses. Non-interest expenses increased 89.5% to $3.9
million for the quarter ended March 31, 2000 compared to $2.1 million for the
quarter ended March 31, 1999, primarily due to increased staffing costs. Also
contributing was an increase in occupancy expense and amortization of goodwill
from the acquisitions in the third quarter of 1999.
Salaries and benefits expense of $2.6 million at March 31, 2000 represents an
increase of $1.4 million from $1.2 million at March 31, 1999. Contributing to
this increase was a severance charge of $540,000 related to the resignation of
the Company's President and Chief Operating Officer. This increase is also a
result of the addition of employees after the recent acquisitions as well as
ordinary salary increases for existing employees generally ranging from three to
six percent a year. At March 31, 2000, the Company had 166 full-time equivalent
employees compared to 110 at March 31, 1999.
Net occupancy expenses consist of depreciation on premises, lease costs,
equipment, maintenance and repair expenses, utilities and related expenses. The
Company's net occupancy expense at March 31, 2000 was $461,000 or 82.9% higher
than $252,000 at March 31, 1999. The increase in occupancy expense in 1999 was
due primarily to the increase of $137,000 in lease payments after the
acquisition of Bay Mortgage and the start up of Bay Bank in Bellevue, Washington
and additional depreciation and service costs on equipment at these locations.
Other operating expense such as insurance, legal and accounting expenses,
service charges, postage and other business expenses were $669,000 at March 31,
2000 and $509,000 at March 31, 1999. The increase from quarter to quarter was
due to the Company's continued growth and expansion.
Income Taxes
The provision (benefit) for income taxes amounts to $(80,000) and $53,000 at
March 31, 2000 and 1999, respectively. The provision resulted in an effective
tax rate of (27.6)% and 34.2% for March 31, 2000 and 1999, respectively.
Provision for Loan Losses
The amount of the allowance for loan losses is analyzed by management
on a regular basis to ensure that it is adequate to absorb losses inherent in
the loan portfolio as of the reporting date. When a provision for loan losses is
recorded, the amount is based on past charge-off experience, a careful analysis
of the current loan portfolio, the level of nonperforming and impaired loans,
evaluation of future economic trends in the Company's market area, and other
factors relevant to the loan portfolio. See Allowance for Loan Losses disclosure
for a more detailed discussion.
The Company's provision for loan losses was $370,000 and $634,000 for the
quarters ended March 31, 2000 and 1999, respectively. The provision declined in
the first quarter of 2000 primarily due to the provision made in the first
quarter of 1999 at the Company's subsidiary Business Finance Corporation (BFC).
During the first quarter of 1999, the Company determined that approximately
$348,000 in receivables purchased by BFC may not be collectible. These
receivables were charged off during the first quarter of 1999. Net charge-offs
declined to $66,000 at March 31, 2000 compared to net charge-offs of $460,000 at
March 31, 1999. Total charge-offs were
13
<PAGE>
$87,000 at March 31, 2000 and $496,000 at March 31, 1999. Management continues
to closely monitor the loan quality and existing relationships.
Nonaccrual loans were $1.8 million at March 31, 2000 and $3.0 million at
March 31, 1999. From year to year, nonaccrual loans declined primarily in
commercial loans secured by real estate. These loans were either paid off or
moved to OREO and has subsequently been sold. BFC accounted for approximately
$308,000 and $300,000 of these nonaccrual loans at March 31, 2000 and 1999,
respectively, reflecting the more aggressive lending mix of its portfolio. It is
not unusual in the normal course of business for BFC to have loans that become
more than 90 days past due and are therefore placed on nonaccrual status,
although management does not necessarily believe that losses are probable on
these loans. Approximately $983,000 and $2.0 million of the non-accrual loans
reflect loans primarily secured by real estate and the remainder consists of
commercial and consumer loans with various collateral. Any losses on nonaccrual
loans which are considered probable, have been estimated by management in its
regular quarterly assessment of the allowance for loan losses as discussed in
the Allowance for Loan Losses disclosure. The decrease in the provision for loan
losses is largely reflective of the lower level of charge-offs and the decline
in nonaccrual loans discussed previously. For a more detailed discussion see
Allowance for Loan Losses disclosure.
The following table shows the Company's loan loss performance for the periods
indicated:
<TABLE>
<CAPTION>
Quarter Ended Year Ended
(unaudited) March 31, December 31,
(in thousands of dollars) 2000 1999
--------- ---------
<S> <C> <C>
Loans outstanding at end of period................................ $ 170,104 $ 149,386
Average loans outstanding during the period....................... $ 160,207 $ 132,002
Allowance for loan losses, beginning of period.................... $ 2,281 $ 1,814
Loans charged off:
Commercial..................................................... 77 838
Real Estate.................................................... - 41
Consumer....................................................... - 50
Credit Cards................................................... 10 96
--------- ---------
Total loans charged-off...................................... 87 1,025
--------- ---------
Recoveries:
Commercial..................................................... 14 104
Real Estate.................................................... - 15
Consumer....................................................... - 1
Credit Cards................................................... 7 23
--------- ---------
Total recoveries............................................. 21 143
--------- ---------
Provision for loan losses......................................... 370 1,349
Adjustment incident to acquisition................................ - -
--------- ---------
Allowance for loan losses, end of period.......................... $ 2,585 $ 2,281
========= =========
Ratio of net loans charged-off to average loans outstanding....... .04% .67%
Ratio of allowance for loan losses to loans at end of period...... 1.52% 1.53%
</TABLE>
14
<PAGE>
Loans
Total loans outstanding were $170.1 million and $149.4 million at March 31,
2000 and December 31, 1999, respectively. Loan commitments were $30.2 million at
March 31, 2000 and $27.6 million at December 31, 1999.
The following table presents the composition of the Company's loan portfolio
at the dates indicated:
<TABLE>
<CAPTION>
(unaudited) March 31, 2000 December 31, 1999
(in thousands of dollars) Amount Percentage Amount Percentage
------------------------- ----------------------
<S> <C> <C> <C> <C>
Commercial ................................. $ 140,966 82.53% $ 123,701 82.47%
Real estate construction.................... 2,518 1.48 3,104 2.07
Real estate commercial...................... 11,124 6.51 9,859 6.58
Real estate mortgage........................ 10,812 6.33 8,194 5.46
Consumer and other.......................... 5,381 3.15 5,134 3.42
---------- ------------ --------- ------------
170,801 100.00% 149,992 100.00%
============ ============
Deferred loan fees.......................... (697) (606)
---------- ---------
Total loans............................ 170,104 149,386
Allowance for loan losses................... (2,585) (2,281)
---------- ---------
Total loans, net....................... $167,519 $ 147,105
========== =========
</TABLE>
Allowance for Loan Losses
The allowance for loan losses represents management's estimate of probable
losses, which exist as of the date of the financial statements. The loan
portfolio is regularly reviewed to evaluate the adequacy of the allowance for
loan losses. In determining the level of the allowance, the Company evaluates
the allowance necessary for specific non-performing loans and estimates losses
inherent in other loan exposures. An important element in determining the
adequacy of an allowance for loan losses is an analysis of loans by loan rating
categories. The risk of a credit is evaluated by the Company's management at
inception of the loan using an established grading system. This grading system
currently includes ten levels of risk. Risk gradings range from "1" for the
strongest credits to "10" for the weakest; a "10" rated loan would normally
represent a loss. These gradings are reviewed periodically or when indicators
show that a credit may have weakened, such as operating losses, collateral
impairment or delinquency problems.
The result is an allowance with two components:
Specific Reserves: The amount of specific reserves are established when there
are significant conditions or circumstances related to a loan that would
indicate that a loss would be incurred. Management considers in its analysis
expected future cash flows, the value of collateral and other factors that may
impact the borrower's ability to pay.
15
<PAGE>
General Allowance: The amount of the general allowance is based on loss factors
assigned to the Company's loan exposures based on internal credit ratings. These
loss factors are determined on the basis of historical charge-off experience and
suggested regulatory guidelines. The general allowance is composed of two
categories. The first component is calculated based upon the loan balances
classified in the five higher risk loan categories of "management attention",
"special mention", "substandard", "doubtful" and "loss" in the Company's Watch
List. Suggested regulatory loss reserve factors are then applied to each of
these categories of classified loan balances. The second component is calculated
by applying historical loss factors to the outstanding loan balance less any
loans that are included in the Company's specific or higher risk allowances
discussed above. Three levels of charge off history are considered by management
in arriving at this component of the general allowance. They are average
five-year net charge-offs, the highest years' actual net charge-offs within the
past 5 years and an estimated maximum charge-off factor. Each of these amounts
is combined with the first component of the general allowance yielding a range
for the total general allowance. Management selects a general allowance
somewhere within this calculated range. Factors considered by management in
making this decision include the volume and mix of the existing loan portfolio,
including the volume and severity of nonperforming loans and adversely
classified credits; analysis of net charge-offs experienced on previously
classified loans; the nature and value of collateral securing the loans; the
trend in loan growth, including any rapid increase in loan volume within a
relatively short period of time; management's subjective evaluation of general
and local economic and business conditions affecting the collectibility of the
Company's loans; the relationship and trend over the past several years of
recoveries in relation to charge-offs; and available outside information of a
comparable nature regarding the loan portfolios of other banks, including peer
group banks. This decision also reflects management's attempt to ensure that the
overall allowance appropriately reflects a margin for the imprecision
necessarily inherent in estimates of expected loan losses.
The quarterly analysis of specific and general loss components of the
allowance is the principal method relied upon by management to ensure that
changes in estimated loan loss levels are adjusted on a timely basis. The
inclusion of historical loss factors in the process of determining the general
component of the allowance also acts as a self-correcting mechanism of
management's estimation process, as loss experience more remote in time is
replaced by more recent experience. In its analysis of the specific and the
general components of the allowance, management also considers the experience of
peer institutions and regulatory guidance in addition to the Company's own
experience.
Loans and other extensions of credit deemed uncollectable are charged to
the allowance. Subsequent recoveries, if any, are credited to the allowance.
Actual losses may vary from current estimates and the amount of the provision
may be either greater than or less than actual net charge-offs. The related
provision for loan losses that is charged to income is the amount necessary to
adjust the allowance to the level determined through the above process. In
accordance with the Company's methodology for assessing the appropriate
allowance for loan losses, the general portion of the allowance increased to
$2.5 million at March 31, 2000 compared to $1.7 million at December 31, 1999.
Management believes this increase is prudent given the recent growth in
commercial loans and level of net charge-offs through 1999.
At March 31, 2000, approximately $80,000 of the allowance for loan losses
was allocated based on an estimate of the amount that was necessary to provide
for inherent losses related to specific loans, compared to $551,000 at December
31, 1999. Specific reserves declined as those loans requiring specific reserves
have been reduced by either principal payments or have been charged off.
Management's evaluation of the factors above resulted in allowances for
loan losses of $2.6 million and $2.3 million at March 31, 2000 and December 31,
1999, respectively. The allowance as a percentage of total loans was 1.52% at
March 31, 2000 and 1.53% at December 31, 1999.
The allowance for loan losses is based upon estimates of probable losses
inherent in the loan portfolio. The amount actually observed for these losses
can vary significantly from the estimated amounts.
16
<PAGE>
During its normal loan review procedures, the Company considers a loan to be
impaired when it is probable that the Company will be unable to collect all
amounts due according to the contractual terms of the loan agreement. A loan is
not considered to be impaired during a period of minimal delay (less than 90
days). The Company measures impaired loans based on the present value of
expected future cash flows discounted at the loan's effective interest rate, or
as a practical expedient, at the loan's observable market price or the fair
market value of the collateral if the loan is collateral dependent. Impaired
loans are charged to the allowance for loan losses when management believes
after considering economic and business conditions, collection efforts, and
collateral position, that the borrowers' financial condition is such that
collection of the principal is not probable.
Generally, no interest is accrued on loans when factors indicate collection
of the interest is doubtful or when the principal or interest payment becomes 90
days past due, unless collection of the principal and interest are anticipated
within a reasonable period of time and the loans are well secured. For such
loans, previously accrued but uncollected interest is charged against current
earnings, and income is only recognized to the extent payments are subsequently
received and the collection of the remaining recorded principal balance is
considered probable.
The Company manages the general risks inherent in the loan portfolio by
following loan policies and underwriting practices designed to result in prudent
lending activities. The following table presents information with respect to
nonperforming assets:
<TABLE>
<CAPTION>
(unaudited) March 31, December 31,
(in thousands of dollars) 2000 1999
--------- ---------
<S> <C> <C>
Loans on nonaccrual status 1,788 2,387
Loans past due greater than 90 days but not on nonaccrual status 17 -
Other real estate owned 225 580
Troubled debt restructuring - -
--------- ---------
Total nonperforming assets 2,030 2,967
========= =========
Percentage of nonperforming assets to total assets 0.93% 1.49%
</TABLE>
At March 31,2000 nonperforming assets were $2.0 million or .93% of total
assets compared to $3.0 million or 1.49% of total assets at December 31, 1999.
Nonaccrual loans declined primarily in commercial loans secured by real estate.
These loans were either paid off or moved to OREO and subsequently sold. BFC
accounted for approximately $308,000 of nonaccrual loans at March 31, 2000,
reflecting the more aggressive lending mix of its portfolio. It is not unusual
in the normal course of business for BFC to have loans that become more than 90
days past due and are therefore placed on nonaccrual status, although management
does not necessarily believe that losses are probable on these loans.
Approximately $983,000 of the non-accrual loans reflect loans primarily secured
by real estate and the remainder consist of commercial and consumer loans with
various collateral.
Other real estate owned declined from $580,000 at December 31, 1999 to
$235,000 at March 31, 2000 as properties classified as other real estate have
been sold.
Liquidity
Liquidity represents the ability to meet deposit withdrawals and fund loan
demand, while retaining the flexibility to take advantage of business
opportunities. The Company's primary sources of funds are customers deposits,
loan payments, sales of assets, advances from the FHLB (Federal Home Loan Bank)
and the use of the federal funds market. As of March 31, 2000, approximately
$3.0 million of the securities portfolio matures within one year.
The Company has utilized borrowings from the FHLB as an important source of
funding for its growth. The Company has an established borrowing line with the
FHLB that permits it to borrow up to 25% of assets. Advances from the FHLB have
terms ranging from 1 through 15 years and at March 31, 2000 bear interest at
rates from 6.02% to 8.80%. At March 31, 2000, $29.7 million in advances were
outstanding from the FHLB and the Company had additional borrowing capacity for
cash advances of $23.5 million. The Company may increase its percentage of
borrowings from the FHLB in the future if circumstances warrant.
17
<PAGE>
Capital
The Company is required to maintain minimum amounts of capital to "risk
weighted" assets, as defined by banking regulators. The Company is required to
have Tier 1 and Total Capital ratios of 4.0% and 8.0%, respectively. At March
31, 2000, the Company's ratios were 14.62% and 15.87%, respectively. At December
31, 1999, the company's ratios were 17.51% and 18.76%, respectively. The ratio
of average shareholders' equity to average assets was 15.39% and 17.73% at March
31, 2000 and December 31, 1999, respectively.
Year 2000
The Company has not incurred any systems or other problems related to the
millennium issue. All systems have been tested and all primary vendors have been
contacted. As part of the Company's preparations for the year 2000, all systems
that were not in compliance with Year 2000 were either replaced or upgraded. The
Company approved a budget of $268,000 that included these system upgrades,
staffing, and other cost associated with the Year 2000. As of March 31, 2000 the
Company had incurred cost of $242,000. The Company does not anticipate any
material business changes in the future as a result of the Year 2000 issue.
18
<PAGE>
Part II. Other Information
Item 3
Quantitative and Qualitative Disclosure about Market Risk.
We believe there has been no material change in quantitative and
qualitative matters since December 31, 1999.
Item 4
Submission of Matters to a Vote of Security Holders
(a) Cowlitz Bancorporation Special Shareholders' Meeting was held on
February 17, 2000.
(b) Not Applicable
(c) A brief description of each matter voted upon at the Special
Shareholders meeting held on February 17, 2000 and number of votes
cast for, against or withheld.
(1) Proposal to approve the issuance of shares of common stock in
connection with a proposed merger of Northern Bank of Commerce
into the Company's wholly-owned subsidiary, Cowlitz Bank.
Votes cast for: 2,689,354
Votes cast against: 298,416
Votes withheld 13,417
(d) none
Item 5
Other Information
On April 25, 2000, the Company announced a definitive agreement to
acquire Northern Bank of Commerce "NBOC". The company will account for the
all cash transaction using the purchase method. Under the terms of the
definitive agreement, the shareholders of NBOC will receive up to $3.35 in
cash for each share of NBOC stock, subject to adjustment based on NBOC's
equity at closing. $1 million of the merger consideration will be deposited
in an escrow account, on behalf of NBOC's shareholders, to indemnify the
Company for losses it incurs on certain specified NBOC loans in excess of
established thresholds during a one year period following the merger. The
transaction is expected to close during the third quarter of 2000. The
Company had previously entered into a definitive agreement with NBOC in a
combination stock/cash transaction. The NBOC shareholders declined to approve
the merger in March 2000 and the agreement was terminated.
Item 6
(a) Exhibits. The list of exhibits is set forth on the Exhibit Index attached
hereto.
(b) On March 24, 1999, the Company filed form 8-K containing items 5 & 7
(Exhibits).
19
<PAGE>
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Cowlitz Bancorporation
(Registrant)
Dated: /s/ Benjamin Namatinia
__________________________
Benjamin Namatinia
President and Chief Executive Officer
Dated: /s/ Donna P. Gardner
__________________________
Donna P. Gardner
Vice-President/Secretary-Treasurer
20
<PAGE>
Exhibit Index
Exhibit No.
3.1* Restated and Amended Articles of Incorporation of the Company
3.2* Bylaws of the Company
27 Financial Data Schedule
*Incorporated by reference to the Company's Registration Statement on
Form S-1, File No. 333-44355
21
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
BALANCE SHEETS OF COWLITZ BANCORPORATION AND SUBSIDIARY AS OF MARCH 31, 2000 AND
DECEMBER 31, 1999 AND RELATED CONSOLIDATED STATEMENTS OF INCOME, CHANGES IN
SHAREHOLDERS' EQUITY AND CASH FLOWS FOR EACH OF THE PERIOD ENDED MARCH 31, 2000
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-2000
<CASH> 20,261
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 4,431
<INVESTMENTS-CARRYING> 4,564
<INVESTMENTS-MARKET> 4,555
<LOANS> 170,104
<ALLOWANCE> 2,585
<TOTAL-ASSETS> 167,519
<DEPOSITS> 154,548
<SHORT-TERM> 2,025
<LIABILITIES-OTHER> 1,827
<LONG-TERM> 29,736
0
0
<COMMON> 18,292
<OTHER-SE> 12,678
<TOTAL-LIABILITIES-AND-EQUITY> 219,016
<INTEREST-LOAN> 4,840
<INTEREST-INVEST> 219
<INTEREST-OTHER> 86
<INTEREST-TOTAL> 5,145
<INTEREST-DEPOSIT> 1,286
<INTEREST-EXPENSE> 385
<INTEREST-INCOME-NET> 3,474
<LOAN-LOSSES> 370
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 3,934
<INCOME-PRETAX> (290)
<INCOME-PRE-EXTRAORDINARY> (290)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (210)
<EPS-BASIC> (.05)
<EPS-DILUTED> (.05)
<YIELD-ACTUAL> 11.22
<LOANS-NON> 1,788
<LOANS-PAST> 17
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,281
<CHARGE-OFFS> 87
<RECOVERIES> 21
<ALLOWANCE-CLOSE> 2,585
<ALLOWANCE-DOMESTIC> 2,585
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
