-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CK/jdA/iCzmLkGXLvlD+E/dVRDLIXLVlOlLoDNz6Pjhh96gOZ5adpFUxpNfxzdSr FGlJ05KgGMcOMR8gV4m2kA== 0000914317-03-002382.txt : 20030813 0000914317-03-002382.hdr.sgml : 20030813 20030813153214 ACCESSION NUMBER: 0000914317-03-002382 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20030630 FILED AS OF DATE: 20030813 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRSTFED BANCORP INC CENTRAL INDEX KEY: 0000876947 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 631048648 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-19609 FILM NUMBER: 03841035 BUSINESS ADDRESS: STREET 1: 1630 4TH AVE N CITY: BESSEMER STATE: AL ZIP: 35020 BUSINESS PHONE: 2054288472 MAIL ADDRESS: STREET 1: 1630 4TH AVENUE N CITY: BESSEMER STATE: AL ZIP: 35020 10-Q 1 form10q-53512_firstfed.txt 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 JUNE 30, 2003 |_| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____________ TO _____________ Commission File Number: 0-19609 FirstFed Bancorp, Inc. (Exact name of Small Business Issuer as specified in its charter) Delaware 63-1048648 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1630 Fourth Avenue North Bessemer, Alabama 35020 (Address of principal executive offices) (Zip Code) Issuer's telephone number, including area code: (205) 428-8472 Check whether the issuer (1) 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 |_| State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date. Class Outstanding at August 8, 2003 Common Stock, $.01 par value 2,353,714 shares Transitional Small Business Disclosure Format (Check one): YES |_| NO |X] FIRSTFED BANCORP, INC. Page PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS: UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION AS OF JUNE 30, 2003, AND DECEMBER 31, 2002 ................................ 2 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2003 AND 2002 ............................... 3 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2002 ........................... 4 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2002 ................................... 5 UNAUDITED NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ................................................................ 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION .............................................................. 10 ITEM 3. CONTROLS AND PROCEDURES ........................................... 14 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS ................................................. 14 ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS ......................... 14 ITEM 3. DEFAULTS UPON SENIOR SECURITIES ................................... 14 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ............... 15 ITEM 5. OTHER INFORMATION ................................................. 15 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K .................................. 15 SIGNATURES ................................................................ 16 THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FURNISHED HAVE NOT BEEN AUDITED BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS, BUT REFLECT, IN THE OPINION OF MANAGEMENT, ALL ADJUSTMENTS NECESSARY FOR A FAIR PRESENTATION OF FINANCIAL CONDITION AND THE RESULTS OF OPERATIONS FOR THE PERIODS PRESENTED. i. PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS FIRSTFED BANCORP, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION As of June 30, 2003 and December 31, 2002 (Dollar amounts in thousands)
June 30, December 31, ASSETS 2003 2002 --------- --------- Cash and Cash Equivalents: Cash on hand and in banks $ 2,967 $ 2,919 Interest-bearing deposits in other banks 16,320 21,739 Federal funds sold 4,268 774 --------- --------- 23,555 25,432 Securities available-for-sale, at fair value 28,329 30,632 Loans held for sale 2,066 2,229 Loans receivable, net 120,959 104,310 Land, buildings and equipment, net 4,169 4,265 Bank owned life insurance 5,826 5,641 Goodwill 983 983 Real estate owned 1,021 1,898 Accrued interest receivable 1,210 1,342 Other assets 1,180 838 --------- --------- $ 189,298 $ 177,570 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Deposits $ 151,455 $ 139,931 Borrowings 17,680 18,005 Accrued interest payable 223 232 Dividends payable 164 163 Other liabilities 809 431 --------- --------- 170,331 158,762 --------- --------- Stockholders' Equity: Preferred stock, $.01 par value, 1,000,000 shares authorized, none outstanding -- -- Common stock, $.01 par value, 10,000,000 shares authorized, 3,180,305 shares issued and 2,350,357 shares outstanding at June 30, 2003 and 3,159,140 shares issued and 2,329,192 shares outstanding at December 31, 2002 32 32 Paid-in capital 8,269 8,159 Retained earnings 16,337 16,467 Deferred compensation obligation 1,903 1,876 Deferred compensation treasury stock (213,341 shares at June 30, 2003 and 209,812 December 31, 2002) (1,903) (1,876) Treasury stock, at cost (829,948 shares at June 30, 2003 and December 31, 2002) (6,088) (6,088) Unearned compensation (441) (518) Accumulated other comprehensive income, net 858 756 --------- --------- 18,967 18,808 --------- --------- $ 189,298 $ 177,570 ========= =========
See accompanying notes to unaudited condensed consolidated financial statements. 2 FIRSTFED BANCORP, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME For the Three and Six Months Ended June 30, 2003 and 2002 (Dollar amounts in thousands, except per share amounts)
Three Months Ended Six Months Ended June 30, June 30, ------------------------- ------------------------- 2003 2002 2003 2002 ----------- ----------- ----------- ----------- INTEREST INCOME: Interest and fees on loans $ 1,896 $ 2,195 $ 3,674 $ 4,444 Interest and dividends on securities 353 493 741 993 Other interest income 48 71 111 151 ----------- ----------- ----------- ----------- Total interest income 2,297 2,759 4,526 5,588 ----------- ----------- ----------- ----------- INTEREST EXPENSE: Interest on deposits 786 1,030 1,602 2,165 Interest on other borrowings 228 223 446 444 ----------- ----------- ----------- ----------- Total interest expense 1,014 1,253 2,048 2,609 ----------- ----------- ----------- ----------- Net interest income 1,283 1,506 2,478 2,979 Provision for loan losses 315 285 426 681 ----------- ----------- ----------- ----------- Net interest income after provision for loan losses 968 1,221 2,052 2,298 ----------- ----------- ----------- ----------- NONINTEREST INCOME: Fees and other noninterest income 395 403 783 704 Gain on sale of investments 299 -- 299 -- Bank owned life insurance 94 81 186 162 ----------- ----------- ----------- ----------- Total noninterest income 788 484 1,268 866 ----------- ----------- ----------- ----------- NONINTEREST EXPENSE: Salaries and employee benefits 765 733 1,565 1,531 Unusual pension expense -- 238 -- 238 Office building and equipment expenses 208 180 401 317 Other operating expenses 480 540 899 963 ----------- ----------- ----------- ----------- Total noninterest expense 1,453 1,691 2,865 3,049 ----------- ----------- ----------- ----------- Income before income taxes 303 14 455 115 Provision (credit) for income taxes 74 (24) 93 (21) ----------- ----------- ----------- ----------- NET INCOME $ 229 $ 38 $ 362 $ 136 =========== =========== =========== =========== AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC 2,299,275 2,269,076 2,295,417 2,265,932 =========== =========== =========== =========== BASIC EARNINGS PER SHARE $ .10 $ .02 $ .16 $ .06 =========== =========== =========== =========== AVERAGE NUMBER OF SHARES OUTSTANDING - DILUTED 2,324,073 2,299,083 2,318,229 2,279,199 =========== =========== =========== =========== DILUTED EARNINGS PER SHARE $ .10 $ .02 $ .16 $ .06 =========== =========== =========== =========== DIVIDENDS DECLARED PER SHARE $ .07 $ .07 $ .21 $ .21 =========== =========== =========== ===========
See accompanying notes to unaudited condensed consolidated financial statements. 3 FIRSTFED BANCORP, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY For the Six Months Ended June 30, 2003 and 2002 (Dollar amounts in thousands, except per share amounts)
Deferred Accumulated Deferred Compen- Other Compre- Compen- sation Unearned Compre- hensive Common Paid-In Retained sation Treasury Treasury Compen- hensive Income Stock Capital Earnings Obligation Stock Stock sation Income (Note 1) ------ ------- -------- -------- ------- ------- -------- -------- -------- BALANCE, December 31, 2001 $ 31 $ 8,081 $ 17,079 $ 1,766 $(1,792) $(6,088) $ (666) $ 55 Net income -- -- 136 -- -- -- -- -- $ 136 Change in unrealized gain (loss) on securities available for sale, net of tax of $24 -- -- -- -- -- -- -- 66 66 ------- Comprehensive income -- -- -- -- -- -- -- -- $ 202 ======= Amortization of unearned compensation -- -- -- -- -- -- 75 -- Dividends declared ($.24 per share) -- -- (488) -- -- -- -- -- Amortization of Deferred Compensation -- -- -- 26 -- -- -- -- Distribution of Deferred Compensation Treasury, net of purchases -- -- -- (12) 12 -- -- -- Stock issued under Dividend Reinvestment Plan -- 67 -- -- -- -- -- -- Change in stock value of Employee Stock Ownership Plan -- (18) -- -- -- -- -- -- ------ ------- -------- -------- -------- -------- -------- -------- BALANCE, June 30, 2002 $ 31 $ 8,130 $ 16,727 $ 1,780 $(1,780) $(6,088) $ (591) $ 121 ====== ======= ======== ======== ======= ======= ======== ======== BALANCE, December 31, 2002 $ 32 $ 8,159 $ 16,467 $ 1,876 $(1,876) $(6,088) $ (518) $ 756 Net income -- -- 362 -- -- -- -- -- $ 362 Change in unrealized gain (loss) on securities available for sale, net of tax of $57 -- -- -- -- -- -- -- 102 102 ------- Comprehensive income -- -- -- -- -- -- -- -- $ 464 ======= Amortization of unearned compensation -- -- -- -- -- -- 77 -- Dividends declared ($.21 per share) -- -- (492) -- -- -- -- -- Exercise of stock options -- 67 -- -- -- -- -- -- Distribution of Deferred Compensation Treasury, net of purchases -- -- -- 27 (27) -- -- -- Stock issued under Dividend Reinvestment Plan -- 60 -- -- -- -- -- -- Change in stock value of Employee Stock Ownership Plan -- (17) -- -- -- -- -- -- ------ ------- -------- -------- -------- -------- -------- -------- BALANCE, June 30, 2003 $ 32 $ 8,269 $ 16,337 $ 1,903 $(1,903) $(6,088) $ (441) $ 858 ====== ======= ======== ======== ======= ======= ======== ========
See accompanying notes to unaudited condensed consolidated financial statements. 4 FIRSTFED BANCORP, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, 2003 and 2002 (Dollar amounts in thousands)
Six Months Ended June 30, -------------------- CASH FLOWS FROM OPERATING ACTIVITIES: 2003 2002 -------- -------- Net income $ 362 $ 136 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation, amortization and accretion 299 121 Loan fees deferred, net 176 1 Provision for loan losses 426 681 Gain on sale of investments (299) -- Loss on sale of real estate, net 11 15 Origination of loans held for sale (11,431) (5,745) Proceeds from loans held for sale 11,594 7,655 Provision for deferred compensation 27 18 Gain on sale of fixed assets -- (91) Increase in cash surrender value of Bank Owned Life Insurance (186) (162) Decrease (increase) in assets: Accrued interest receivable 132 120 Other assets (399) (503) Increase (decrease) in liabilities: Accrued interest payable (9) (47) Other liabilities 378 326 -------- -------- Net cash provided by (used in) operating activities 1,081 2,525 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from maturities, calls and repayments on securities available-for-sale 4,770 2,250 Proceeds from the sale of securities available-for-sale 6,048 1,472 Purchase of securities available-for-sale (8,120) (1,500) Proceeds from maturities, calls and repayments received on securities held-to-maturity -- 3,753 Purchase of securities held-to-maturity -- (4,000) Purchase of Bank Owned Life Insurance -- (750) Proceeds from sale of real estate and repossessed assets 1,256 1,448 Net loan repayments (originations) (17,659) (4,681) Proceeds from sale of fixed assets -- 116 Capital expenditures (60) (868) -------- -------- Net cash provided by (used in) investing activities (13,765) (2,760) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Increase (decrease) in deposits, net 11,524 (156) Repayment of borrowings (750) -- Proceeds from borrowings 425 605 Proceeds from exercise of stock options 67 -- Dividends paid (492) (488) Proceeds from dividend reinvestment 60 67 Purchase of treasury stock for Deferred Compensation Plan (27) (18) -------- -------- Net cash provided by (used in) financing activities 10,807 10 -------- -------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1,877) (225) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 25,432 22,605 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 23,555 $ 22,380 ======== ======== SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid during the period for - Income taxes $ 88 $ 122 Interest 2,057 2,656 Non-cash transactions - Transfer of loans receivable to real estate owned 548 1,212 Reclass of securities from held-to-maturity to available-for-sale -- 11,018
See accompanying notes to unaudited condensed consolidated financial statements. 5 FIRSTFED BANCORP, INC. UNAUDITED NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION: FirstFed Bancorp, Inc. (the "Company") is the holding company and sole shareholder of First State Corp. ("FSC"), which in turn is the sole shareholder of First Financial Bank ("First Financial" or "Bank"). The accompanying unaudited condensed consolidated financial statements as of June 30, 2003, and December 31, 2002, and for the three and six months ended June 30, 2003 and 2002, include the accounts of the Company, FSC and the Bank. All significant intercompany transactions and accounts have been eliminated in consolidation. In the opinion of management, all adjustments (none of which are other than normal recurring accruals) necessary for a fair presentation of the results of such interim periods have been included. The results of operations for the six months ended June 30, 2003, are not necessarily indicative of the results of operations which may be expected for the entire year. These unaudited condensed financial statements should be read in conjunction with the Consolidated Financial Statements and the notes thereto incorporated in the Company's Annual Report on Form 10-KSB for the year ended December 31, 2002. The accounting policies followed by the Company are set forth in the Summary of Significant Accounting Policies in the Company's December 31, 2002, Consolidated Financial Statements. 2. SIGNIFICANT ACCOUNTING POLICIES Securities The Company classifies securities as either available-for-sale or held-to-maturity based on management's intent at the time of purchase and the Company's ability to hold such securities to maturity. Securities designated as available-for-sale are carried at fair value. The unrealized difference between amortized cost and fair value of securities available-for-sale is excluded from earnings and is reported net of deferred taxes as a component of stockholders' equity in accumulated other comprehensive income. This caption includes securities that management intends to use as part of its asset/liability management strategy or that may be sold in response to changes in interest rates, changes in prepayment risk, liquidity needs, or for other purposes. Gains and losses on the sale of available-for-sale securities are determined using the specific identification method. Premiums and discounts are recognized in interest income using a method that approximates the effective interest method. Loans Held for Sale Loans held for sale are recorded at the lower of amortized cost or fair value, as such loans are not intended to be held to maturity. As of June 30, 2003, and December 31, 2002, loans held for sale consisted of mortgage loans that have been committed for sale to third-party investors. Loans Receivable Loans receivable are stated at unpaid principal balances, net of the allowance for loan losses and deferred loan origination fees and costs. Interest is credited to income based upon the recorded investment. The accrual of interest on loans is discontinued and an allowance established when a loan becomes 90 days past due and, in the opinion of managements, there is an indication that the borrower may be unable to meet payments as they become due. Upon such discontinuance, all unpaid accrued interest is reversed against current 6 income unless the collateral for the loan is sufficient to cover the accrued interest. Interest received on nonaccrual loans generally is either applied against principal or reported as interest income, according to management's judgment as to the collectibility of principal. Generally, loans are restored to accrual status when the obligation is brought current and the ultimate collectibility of the total contractural principal and interest is no longer in doubt. Allowance for Loan Losses The allowance for loan losses is maintained at levels which management considers adequate to absorb losses currently in the loan portfolio at each reporting date. Management's estimation of this amount includes a review of all loans for which full collectibility is not reasonably assured and considers, among other factors, prior years' loss experience, economic conditions, distribution of portfolio loans by risk class, the estimated value of underlying collateral, and the balance of any impaired loans (generally considered to be nonperforming loans, excluding residential mortgages and other homogeneous loans). Though management believes the allowance for loan losses to be adequate, ultimate losses may vary from estimations; however, the allowance is reviewed periodically and as adjustments become necessary they are reported in earnings in the periods in which they become known. Specific allowances for impaired loans are based on comparisons of the carrying values of the loans to the present value of the loans' estimated cash flows at each loan's original effective interest rate, the fair value of the collateral, or the loans' observable market prices. 3. EARNINGS AND DIVIDENDS PER SHARE: Earnings per share ("EPS") for the three and six months ended June 30, 2003 and 2002, respectively, were as follows:
Three Months Three Months Ended June 30, 2003 Ended June 30, 2002 ------------------------------------ ------------------------------------ Dilutive Dilutive Effect of Effect of Options Options Basic Issued Diluted Basic Issued Diluted ---------- ---------- ---------- ---------- ---------- ---------- Net income $ 229,000 -- $ 229,000 $ 38,000 -- $ 38,000 Shares available to common shareholders 2,299,275 24,798 2,324,073 2,269,076 30,007 2,299,083 ---------- ---------- ---------- ---------- ---------- ---------- Earnings per share $ 0.10 -- $ 0.10 $ 0.02 -- $ 0.02 ========== ========== ========== ========== ========== ========== Six Months Six Months Ended June 30, 2003 Ended June 30, 2002 ------------------------------------ ------------------------------------ Dilutive Dilutive Effect of Effect of Options Options Basic Issued Diluted Basic Issued Diluted ---------- ---------- ---------- ---------- ---------- ---------- Net income $ 362,000 -- $ 362,000 $ 136,000 -- $ 136,000 Shares available to common shareholders 2,295,417 22,812 2,318,229 2,265,932 13,266 2,279,198 ---------- ---------- ---------- ---------- ---------- ---------- Earnings per share $ 0.16 -- $ 0.16 $ 0.06 -- $ 0.06 ========== ========== ========== ========== ========== ==========
Options to purchase 59,304 and 66,574 shares of common stock at prices ranging from $7.00 to $12.50 and $7.75 to $12.50 were outstanding during the quarters ended June 30, 2003 and 2002, respectively, and options to purchase 61,304 and 66,574 shares of common stock at prices ranging from $7.00 to $12.50 and $7.75 to $12.50 were outstanding during the six month ended June 30, 2003 and 2002, respectively, but were not included in the computation of diluted EPS because the options' exercise price was greater than the average market price of the common stock. The options will expire at various times over the next nine years. 7 There were 43,931 and 52,717 shares of common stock held by the Employee Stock Ownership Plan and unallocated at June 30, 2003 and 2002, respectively. These shares are outstanding but not included in the computation of earnings per share. Dividends declared for the quarter ended June 30, 2003, consisted of a $.07 per share quarterly dividend. 4. SEGMENT DISCLOSURE: The holding company is considered a separate reportable segment from the banking operations since it does not offer products or services or interact with customers, but does meet the quantitative threshold as outlined in the accounting standards. The Company's segment disclosure is as follows for the three months ended June 30, 2003 and 2002. Three Months Ended June 30, 2003 ------------------------------------------------- Banking Holding Total Operations Company Eliminations Company ---------- ---------- ------------ ---------- (In thousands) Net interest income $ 1,277 $ 6 $ -- $ 1,283 Provision for loan losses 315 -- -- 315 Noninterest income 762 26 -- 788 Noninterest expense 1,299 154 -- 1,453 ---------- ---------- ------------ ---------- Income before income taxes 425 (122) -- 303 Income tax expense (benefit) 127 (53) -- 74 ---------- ---------- ------------ ---------- Net income $ 298 $ (69) $ -- $ 229 ========== ========== ============ ========== Total assets $ 187,256 $ 19,936 $ (17,894) $ 189,298 ========== ========== ============ ========== Capital Expenditures $ 46 $ -- $ -- $ 46 ========== ========== ============ ========== Three Months Ended June 30, 2002 ------------------------------------------------- Banking Holding Total Operations Company Eliminations Company ---------- ---------- ------------ ---------- (In thousands) Net interest income $ 1,497 $ 9 $ -- $ 1,506 Provision for loan losses 285 -- -- 285 Noninterest income 459 25 -- 484 Noninterest expense 1,593 98 -- 1,691 ---------- ---------- ------------ ---------- Income before income taxes 78 (64) -- 14 Income tax expense (benefit) 8 (32) -- (24) ---------- ---------- ------------ ---------- Net income $ 70 $ (32) $ -- $ 38 ========== ========== ============ ========== Total assets $ 181,468 $ 19,327 $ (17,976) $ 182,819 ========== ========== ============ ========== Capital Expenditures $ 330 $ -- $ -- $ 330 ========== ========== ============ ========== Six Months Ended June 30, 2003 ------------------------------------------------- Banking Holding Total Operations Company Eliminations Company ---------- ---------- ------------ ---------- (In thousands) Net interest income $ 2,465 $ 13 $ -- $ 2,478 Provision for loan losses 426 -- -- 426 Noninterest income 1,217 51 -- 1,268 Noninterest expense 2,592 273 -- 2,865 ---------- ---------- ------------ ---------- Income before income taxes 664 (209) -- 455 Income tax expense (benefit) 187 (94) -- 93 ---------- ---------- ------------ ---------- Net income $ 477 $ (115) $ -- $ 362 ========== ========== ============ ========== Total assets $ 187,256 $ 19,936 $ (17,894) $ 189,298 ========== ========== ============ ========== Capital Expenditures $ 60 $ -- $ -- $ 60 ========== ========== ============ ========== 8 Six Months Ended June 30, 2002 ------------------------------------------------- Banking Holding Total Operations Company Eliminations Company ---------- ---------- ------------ ---------- (In thousands) Net interest income $ 2,962 $ 17 $ -- $ 2,979 Provision for loan losses 681 -- -- 681 Noninterest income 816 50 -- 866 Noninterest expense 2,821 228 -- 3,049 ---------- ---------- ------------ ---------- Income before income taxes 276 (161) -- 115 Income tax expense (benefit) 55 (76) -- (21) ---------- ---------- ------------ ---------- Net income $ 221 $ (85) $ -- $ 136 ========== ========== ============ ========== Total assets $ 181,468 $ 19,327 $ (17,976) $ 182,819 ========== ========== ============ ========== Capital Expenditures $ 868 $ -- $ -- $ 868 ========== ========== ============ ========== 5. STOCK-BASED COMPENSATION In accordance with provisions of Statement of Financial Accounting Standard ("SFAS") 123, the Company has elected to continue to apply, APB Opinion 25 and related Interpretations. In December 2002, SFAS 148, Accounting for Stock-Based Compensation - Transition and Disclosure, was issued which provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based compensation. This Statement amends the disclosure requirements of SFAS 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. Under the Company's stock option plan, all options granted are exercisable. During the quarter and six months ended June 30, 2002, the Company did not issue any stock options. Therefore, no pro forma disclosure is required for the quarter and six months ended June 30, 2002, related to stock-based compensation. If the Company had elected to recognize compensation cost for options granted during the quarter and six months ended June 30, 2003, based on the fair value of the options as required by SFAS 123, net income and earnings per share would have been reduced to the pro forma amounts indicate below: Three Months Six Months Ended Ended June 30, 2003 June 30, 2003 ------------- ------------- (In thousands, except per share amounts) Net income - as reported $ 229 $ 362 Stock-based compensation expense 7 7 ------- ------- Net income - proforma 222 355 ======= ======= Earnings per share - as reported Basic $ .10 $ .16 Diluted $ .10 $ .16 Earnings per share - pro forma Basic $ .10 $ .15 Diluted $ .10 $ .15 The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model using the following assumptions: Expected dividend yield 5.26% Expected stock price volatility 38% Risk-free interest rate 2.27% Expected life of options 5 Years 9 6. RECENT ACCOUNTING PRONOUNCEMENTS: In April 2003, the Financial Accounting Standards Board ("FASB") issued SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities. ("SFAS No. 149") amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under SFAS No. 133. The new guidance amends SFAS No. 133 for decisions made as part of the Derivatives Implementation Group process that effectively required amendments to SFAS No. 133, and decisions made in connection with other FASB projects dealing with financial instruments and in connection with implementation issues raised in relation to the application of the definition of a derivative and characteristics of a derivative that contains financing components. In addition, it clarifies when a derivative contains a financing component that warrants special reporting in the statement of cash flows. SFAS No. 149 is effective for contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003. The Company is currently assessing the impact of SFAS No. 149 on the consolidated financial position and results of operations. In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liability and Equity, which establishes standards for classification and measurement of financial instruments with characteristics of both liabilities and equity. Many of these instruments were previously classified as equity. The Company does not anticipate that the statement will have a material impact on the Condensed Consolidated Financial Statements. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION Management's discussion and analysis includes certain forward-looking statements addressing, among other things, the Company's prospects for earnings, asset growth and net interest margin. Forward-looking statements are accompanied by, and identified with, such terms as "anticipates," "believes," "expects," "intends," and similar phrases. Management's expectations for the Company's future necessarily involve a number of assumptions and estimates. Factors that could cause actual results to differ from the expectations expressed herein are: substantial changes in interest rates, changes in the general economy, and changes in the Company's strategies for credit-risk management, interest-rate risk management and investment activities. Accordingly, any forward-looking statements included herein do not purport to be predictions of future events or circumstances and may not be realized. Comparison of Financial Condition as of June 30, 2003, and December 31, 2002 All dollar amounts, except per share amounts, included hereafter in Management's Discussion and Analysis are in thousands. Interest-bearing deposits and federal funds sold decreased $1,925, or 8.5%, to $20,588 at June 30, 2003. The decrease is substantially the result of the funds being invested in new loan originations. Securities available-for-sale decreased $2,303, or 7.5%, to $28,329 at June 30, 2003. During the six months ended June 30, 2003, investments totaling $4,770 were called or matured, $8,120 were purchased and $5,749 were sold. Loans receivable, net, at June 30, 2003, were $120,959, an increase of $16,649 or 16.0%, from $104,310 at December 31, 2002. The increase was primarily the result of increased portfolio originations in connection with a new treasury based adjustable rate commercial mortgage program. The Company's consolidated allowance for loan losses increased to $1,154 at June 30, 2003, from $1,059 at December 31, 2002. This increase was partially due to a provision to the allowance for loan losses of $426, net of charge-offs over recoveries of $331. Nonperforming loans at June 30, 2003, increased to $1,711, or 1.4% of loans receivable, from $655, or 0.63% of loans receivable, at December 31, 2002. Nonperforming loans included one large loan in excess of $600 which was paid off in July 2003. At June 30, 2003, there were no material loans not included in nonperforming loans which represented material credits about which management 10 was aware of any information which caused management to have serious doubts as to the ability of such borrowers to comply with the loan repayment terms. Land, buildings and equipment, net, decreased $96, or 2.3%, to $4,169 at June 30, 2003. The decrease was substantially the result of increases in accumulated depreciation. Real estate owned was $1,021 at June 30, 2003, a decrease of $877 from December 31, 2002. The decrease is substantially the result of the disposition of fifteen properties, net of seven foreclosures, during the six months ended June 30, 2002. Deposits increased $11,524, or 8.2%, to $151,455 at June 30, 2003, from $139,931 at December 31, 2002. The increase was primarily the result of increases in commercial checking accounts. Borrowings decreased by $325, or 1.8%, to $17,680 at June 30, 2003, as a result of a $750 repayment net of a $425 draw on a line of credit by the Company. The Company had stockholders' equity of $18,967 as of June 30, 2003, an increase of $159, or 0.8%, from $18,808 as of December 31, 2002. Net income for the six months ended June 30, 2003, was $362. Equity was decreased by dividends of $.21 per share. Included in such dividends was a special dividend of $.07 per share, which was declared during the first quarter. Liquidity and Capital Resources Traditionally, the Bank's principal sources of funds have been deposits, principal and interest payments on loans and mortgage-backed securities, and proceeds from interest on and maturities of investments. In addition, the Bank has borrowing ability from the Federal Home Loan Bank of Atlanta if the need for additional funds arises. At June 30, 2003, the Bank had commitments to originate and fund loans of $14.1 million. The Bank anticipates that it will have sufficient funds available to meet its current commitments. First Financial is required by regulation to maintain minimum levels of liquid assets. The liquidity ratio of First Financial at June 30, 2003, was 15.0%, which exceeded the applicable regulatory requirement. Under applicable regulations, First Financial and the Company are each required to maintain minimum capital ratios. Set forth below are actual capital ratios and the minimum regulatory capital requirements as of June 30, 2003. First Financial The Company ----------------- ----------------- Tier 1 Risk-Based Capital Stockholders' Equity less goodwill $15,458 11.10% $17,037 12.11% Minimum Required 5,566 4.00% 5,628 4.00% ------- ----- ------- ----- Excess $ 9,892 7.10% $11,409 8.11% ======= ===== ======= ===== Total Risk-Based Capital Tier 1 Capital plus allowances for loan losses $16,612 11.93% $18,191 12.93% Minimum Required 11,133 8.00% 11,256 8.00% ------- ----- ------- ----- Excess $ 5,479 3.93% $ 6,935 4.93% ======= ===== ======= ===== Tier 1 Leverage $15,458 8.55% $17,037 9.31% Minimum Leverage Requirement 7,236 4.00% 7,316 4.00% ------- ----- ------- ----- Excess $ 8,222 4.55% $ 9,721 5.31% ======= ===== ======= ===== As of June 30, 2003, management was not aware of any trends, events or uncertainties that will have or are reasonably likely to have a material effect on the Company's or the Bank's liquidity, capital resources or operations. 11 Results of Operations - Comparison of the Three Months Ended June 30, 2003 and 2002 Net income for the three months ended June 30, 2003, was $229, an increase of $191, or 502.6%, from net income of $38 for the three months ended June 30, 2002. The increase was primarily attributable to a $299 gain recorded on the sale of investments and a decrease in noninterest expense offset by a decrease in net interest income. Interest Income Total interest income decreased $462, or 16.7%, to $2,297 for the six months ended June 30, 2003. This decrease was primarily due to a decrease in the average yield on interest-earning assets to 5.4% for the three months ended June 30, 2003, from 6.7% for the same quarter a year ago. Interest Expense Interest expense for the quarter ended June 30, 2003, was $1,014, a decrease of $239, or 19.1%, from $1,253 for the quarter ended June 30, 2002. The decrease was substantially the result of a decrease in the average rate paid on interest-bearing liabilities to 2.5% for the three months ended June 30, 2003, compared to 3.1% for the corresponding quarter of the previous year. Net Interest Income Net interest income for the quarter ended June 30, 2003, decreased $223, or 14.8%, to $1,283 from the quarter ended June 30, 2002, level of $1,506. The decrease was primarily the result of a decrease in the average net interest spread to 3.0% for the quarter ended June 30, 2003 compared to 3.6% for the same period a year ago. The net interest margin decreased to 3.0% in the quarter ended June 30, 2003 compared to 3.7% for the same quarter a year ago. Provision for Loan Losses Management increased the Company's total allowance for loan losses by a charge to the provision of $315 during the quarter ended June 30, 2003. The allowance for loan losses is based on management's evaluation of losses inherent in the loan portfolio and considers, among other factors, prior years' loss experience, economic conditions, distribution of portfolio loans by risk class and the estimated value of the underlying collateral. Although management believes that it uses the best information available to make such determinations, future adjustments to allowances may be necessary, and net earnings could be significantly affected if circumstances differ substantially from the assumptions used in making the initial determination. Noninterest Income Noninterest income during the quarter ended June 30, 2003, increased $304, to $788, from the June 30, 2003, level of $484. The increase in noninterest income is primarily the result of a gain on the sale of investments totaling $299. Noninterest Expenses Noninterest expenses during the quarter ended June 30, 2003, decreased $238, or 14.1%, to $1,453, from the June 30, 2002, quarter of $1,691. The decrease was primarily attributable to an unusual pension expense of $238 recorded in the prior year. The decrease in other operating expense is attributable to a $30 reduction in data processing cost as a result of the merger of the subsidiary banks in March of the prior year and merger related expenses of $45 recorded in the prior year. Income Taxes The provision for income taxes increased $98, to $74 for the quarter ended June 30, 2003, as compared to the corresponding quarter in the previous year. The increased tax expense was due primarily to an increase in pretax income. 12 Results of Operations - Comparison of the Six Months Ended June 30, 2003 and 2002 Net income for the six months ended June 30, 2003, was $362, an increase of $226, or 166.2%, from net income of $136 for the six months ended June 30, 2002. The increase was the result of reduced provisions for loan losses, a $299 gain on the sale of investments and decreased noninterest expense, somewhat offset by a decline in net interest income. Interest Income Total interest income decreased $1,062, or 19.0%, to $4,526 for the six months ended June 30, 2003. This decrease was substantially the result of a decrease in the average yield on the interest-earning assets to 5.5% during the six months ended June 30, 2003, from 6.7% during the six months ended June 30, 2002. Interest Expense Interest expense for the six months ended June 30, 2003, decreased $561, or 21.5%, to $2,048, from $2,609 during the six months ended June 30, 2002. This decrease was primarily attributable to a decrease in the average rate paid on interest-bearing liabilities to 2.5% for the six month period ended June 30, 2003, compared to 3.1% for the same period a year ago. Net Interest Income Net interest income for the six months ended June 30, 2003, decreased $501, or 16.8%, to $2,478, from $2,979 for the six months ended June 30, 2002. This decrease was due primarily to a decrease in the average net interest spread to 3.0% for the six months ended June 30, 2003, from 3.6% for the six months ended June 30, 2002. The net interest margin decreased to 3.0% in the six months ended June 30, 2003, from 3.6% in the six months ended June 30, 2002. Provision for Loan Losses Management increased the Company's total allowance for loan losses by a charge to the provision of $426 during the quarter ended June 30, 2003. The allowance for loan losses is based on management's evaluation of losses inherent in the loan portfolio and considers, among other factors, prior years' loss experience, economic conditions, distribution of portfolio loans by risk class and the estimated value of the underlying collateral. Noninterest Income Noninterest income for the six months ended June 30, 2003, totaled $1,268 as compared to $866 for the six months ended June 30, 2002. The increase in noninterest income was substantially the result of a $299 gain on the sale of investments. Noninterest Expenses Noninterest expenses during the six months ended June 30, 2003, decreased $184 to $2,865 from the 2002 level of $3,049. The decrease in noninterest expense from a year ago is primarily attributable to an unusual pension expense of $238 recorded in the prior year. The decrease in other operating expense is attributable to a $30 reduction in data processing cost as a result of the merger of the subsidiary banks in the prior year and merger related expense of $45 recorded in the prior year. Income Taxes The provision (credit) for income taxes increased $114, to $93 for the six months ended June 30, 2003, as compared to a credit of $21 for the corresponding period of the prior year. The increased tax expense was due to the increase in pretax income and an increase in tax-exempt income when compared to the same period a year ago. 13 Recent Events The Bank signed an agreement to purchase certain assets and assume the deposits of the Centreville, Alabama branch of First Federal of the South. Total deposits, which approximate $8.0 million, will be added to the Bank's current Centreville location. A deposit premium of 3% will be paid. Proposed Tax Plan On September 9, 2003, Alabama voters will vote on a proposed amendment to the state constitution which, if approved, is expected to increase significantly state income taxes paid by the Company and the Bank. ITEM 3. CONTROLS AND PROCEDURES The Company carried out an evaluation under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and the Company's Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures as of June 30, 2003, pursuant to Exchange Act Rule 13a-15(b). Based upon that evaluation, the Company's Chief Executive Officer and the Company's Chief Financial Officer concluded that the Company's disclosure controls and procedures, as designed and implemented, are effective in alerting them in a timely manner to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company's periodic SEC filings. In addition, the Company reviewed its internal controls. There have been no significant changes in the Company's internal controls or in other factors that could significantly affect these controls subsequent to the date the Company conducted its evaluation. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed by the Company under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to the Company's management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Disclosure controls include internal controls that are designed to provide reasonable assurance that transactions are properly authorized, assets are safeguarded against unauthorized or improper use and transactions are properly recorded and reported. Any control system, no matter how well conceived and operated, can provide only reasonable assurance that its objectives are achieved. The design of a control system inherently has limitations, including the controls' cost relative to their benefits. Additionally, controls can be circumvented. No cost-effective control system can provide absolute assurance that all control issues and instances of fraud, will be detected. PART II-OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS From time to time, the Company and Bank are parties to routine legal proceedings occurring in the ordinary course of business. At June 30, 2003, there were no legal proceedings to which the Company and/or the Bank were a party or parties, or to which any of their property was subject, which were expected by management to result in a material loss. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS Not applicable. ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not applicable. 14 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On April 22, 2003, the Company held the 2003 Annual Meeting of Stockholders. The election of Fred T. Blair and G. Larry Russell as directors, each for a three-year term, was submitted to a vote of the stockholders. The following is the result of the vote: For Withheld --------- -------- Fred T. Blair 1,969,346 12,600 G. Larry Russell 1,981,946 -- There were no abstentions or broker non-votes. Also, the stockholders voted on the ratification of the appointment of KPMG LLP as independent auditors for the Company for the fiscal year ending December 31, 2003. The following is the result of the vote. For Against Abstain --------- --------- --------- 1,979,642 -- 2,304 There were no broker non-votes. ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits. Exhibit 31.1 - Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Exhibit 31.2 - Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Exhibit 32.1 - Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (b) Reports on Form 8-K. A Current Report on Form 8-K dated April 30, 2003, furnishing under Item 9 (pursuant to Item 12) announcement of the Company's results of operations for the quarter ended June 30, 2003. 15 SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. FIRSTFED BANCORP, INC. Date: August 13, 2003 \s\ B. K. Goodwin , III --------------- --------------------------- B. K. Goodwin, III, Chairman of the Board, Chief Executive Officer, and President Date: August 13, 2003 \s\ Lynn J. Joyce --------------- --------------------------- Lynn J. Joyce Chief Financial Officer, Executive Vice President, Secretary and Treasurer 16 EX-31.1 3 exhibit31-1.txt EXHIBIT 31.1 CERTIFICATIONS I, B. K. Goodwin, III, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of FirstFed Bancorp, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; 4. The Small Business Issuer's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and 5. The small business issuer's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial control which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal controls over financial reporting. Date: August 13, 2003 By: \s\ B. K. Goodwin, III -------------------- ---------------------------- Chairman of the Board, Chief Executive Officer and President EX-31.2 4 exhibit31-2.txt EXHIBIT 31.2 CERTIFICATIONS I, Lynn J. Joyce, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of FirstFed Bancorp, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; 4. The Small Business Issuer's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and 5. The small business issuer's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial control which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal controls over financial reporting. Date: August 13, 2003 By: \s\ Lynn J. Joyce -------------------- ---------------------------- Chief Financial Officer, Executive Vice President, Secretary and Treasurer EX-32.1 5 exhibit32-1.txt EXHIBIT 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report on Form 10-QSB for the period ended June 30, 2003 (the "Report") of FirstFed Bancorp, Inc. (the "Company"), as filed with the Securities and Exchange Commission on the date hereof, the undersigned, Chief Executive Officer and Chief Financial Officer of the Company, hereby each certify that to the best of our knowledge: (1) the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the periods covered in the Report. \s\ B. K. Goodwin, III August 13, 2003 - ------------------------------------------- --------------- B. K. Goodwin, III, Chief Executive Officer Date \s\ Lynn J. Joyce August 13, 2003 - ------------------------------------------- --------------- Lynn J. Joyce, Chief Financial Officer Date A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. The information furnished herein shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933. -----END PRIVACY-ENHANCED MESSAGE-----