SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant To Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended March 31, 2009
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from _______________ to _______________
Commission File No. 001-52751
FSB Community Bankshares, Inc.
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(Exact name of registrant as specified in its charter)
United States 74-3164710
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
45 South Main Street, Fairport, New York 14450
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(Address of Principal Executive Offices) Zip Code
(585) 223-9080
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(Registrant's telephone number)
N/A
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(Former name or former address, if changed since last report)
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 requirements
for the past 90 days.
YES [X] NO [ ]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T during the
preceding 12 months (or for such shorter period that the registrant was required
to submit and post such files).
YES [ ] NO [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check one)
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if smaller
reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). YES [ ] NO [X]
As of May 13, 2009 there were 1,785,000 shares of the Registrant's common
stock, par value $0.10 per share, outstanding, 946,050 of which were held by FSB
Community Bankshares, MHC, the Registrant's mutual holding company.
FSB Community Bankshares, Inc.
FORM 10-Q
Index
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Page
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Part I. Financial Information
Item 1. Consolidated Financial Statements (unaudited)
Consolidated Balance Sheets as of March 31, 2009 and
December 31, 2008 1
Consolidated Statements of Operations for the Three
Months Ended March 31, 2009 and 2008 2
Consolidated Statements of Stockholders' Equity for
the Three Months Ended March 31, 2009 and 2008 3
Consolidated Statements of Cash Flows for the Three
Months Ended March 31, 2009 and 2008 4
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Item 3. Quantitative and Qualitative Disclosures about
Market Risk 17
Item 4T. Controls and Procedures 17
Part II. Other Information
Item 1. Legal Proceedings 17
Item 1A. Risk Factors 17
Item 2. Unregistered Sales of Equity Securities and Use of
Proceeds 18
Item 3. Defaults upon Senior Securities 18
Item 4. Submission of Matters to a Vote of Security Holders 18
Item 5. Other Information 18
Item 6. Exhibits 18
Signature Page 19
Part I. Financial Information
Item 1. Consolidated Financial Statements
FSB COMMUNITY BANKSHARES, INC.
Consolidated Balance Sheets
March 31, 2009 and December 31, 2008 (unaudited)
(Dollars in thousands, except per share data)
March 31, December 31,
Assets 2009 2008
---------------- ----------------
Cash and due from banks $ 3,453 $ 2,154
Interest-earning demand deposits 3,151 1,019
---------------- ----------------
Cash and Cash Equivalents 6,604 3,173
Securities available for sale 51,114 43,925
Securities held to maturity (fair value 2009 - $7,074, 2008 - $7,091) 7,100 7,289
Investment in FHLB stock 1,990 2,312
Loans receivable, net of allowance for loan losses of: 2009 - $350,
2008 - $345 128,640 135,713
Accrued interest receivable 1,006 1,032
Premises and equipment, net 2,264 2,308
Other assets 649 383
---------------- ----------------
Total Assets $ 199,367 $ 196,135
================ ================
Liabilities & Stockholders' Equity
Deposits:
Non-interest-bearing $ 3,326 $ 3,487
Interest-bearing 135,069 124,035
---------------- ----------------
Total Deposits 138,395 127,522
Short-term borrowings - 3,850
Long-term borrowings 38,318 41,631
Advances from borrowers for taxes and insurance 1,437 2,152
Other liabilities 828 939
---------------- ----------------
Total Liabilities 178,978 176,094
---------------- ----------------
Stockholders' Equity
Preferred Stock- no par- 1,000,000 shares authorized;
no shares issued and outstanding - -
Common Stock- $0.10 par value - 10,000,000 shares authorized;
1,785,000 shares issued and outstanding 179 179
Additional paid-in-capital 7,283 7,286
Retained earnings 13,300 13,249
Accumulated other comprehensive income (loss) 248 (43)
---------------- ----------------
Unearned ESOP shares - at cost (621) (630)
---------------- ----------------
Total Stockholders' Equity 20,389 20,041
---------------- ----------------
Total Liabilities and Stockholders' Equity $ 199,367 $ 196,135
================ ================
See accompanying notes to consolidated financial statements
FSB COMMUNITY BANKSHARES, INC.
Consolidated Statements of Operations
Three Months Ended March 31, 2009 and 2008 (unaudited)
(Dollars in thousands, except per share data)
2009 2008
---------------- ----------------
Interest and Dividend Income
Loans $ 1,907 $ 1,817
Securities - taxable 267 313
Mortgage-backed securities 326 202
Other 1 74
---------------- ----------------
Total Interest and Dividend Income 2,501 2,406
---------------- ----------------
Interest expense
Deposits 879 1,142
Borrowings:
Short-term 1 -
Long-term 424 378
---------------- ----------------
Total Interest Expense 1,304 1,520
---------------- ----------------
Net Interest Income 1,197 886
Provision for Loan Losses 6 -
---------------- ----------------
Net Interest Income After Provision
for Loan Losses 1,191 886
---------------- ----------------
Other Income
Service fees 49 38
Fee income 11 15
Other 74 41
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Total Other Income 134 94
---------------- ----------------
Other Expenses
Salaries and employee benefits 693 637
Occupancy expense 125 114
Data processing costs 23 16
Advertising 32 61
Equipment expense 90 85
Electronic banking 20 18
Directors' fees 28 26
Mortgage fees and taxes 44 30
Other expense 191 157
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Total Other Expenses 1,246 1,144
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Income (Loss) Before Income Taxes 79 (164)
Provision (Benefit) for Income Taxes 28 (58)
---------------- ----------------
Net Income (Loss) $ 51 $ (106)
================ ================
Earnings (Loss) per common share $ 0.03 $ (0.06)
================ ================
See accompanying notes to consolidated financial statements
2
FSB COMMUNITY BANKSHARES, INC.
Consolidated Statements of Stockholders' Equity
Three Months Ended March 31, 2009 and 2008 (unaudited)
(Dollars in thousands)
Accumulated
Additional Other Unearned
Common Paid in Retained Comprehensive ESOP
Stock Capital Earnings Income (Loss) Shares Total
------------- ------------- ------------- ------------- ------------- -------------
Balance - January 1, 2008 $ 179 $ 7,293 $ 13,224 $ 118 $ (665) $ 20,149
-------------
Comprehensive loss:
Net loss - - (106) - - (106)
Change in net unrealized gain
(loss) on securities
available for sale, net of
taxes - - - (4) - (4)
-------------
Total Comprehensive Loss
(110)
ESOP shares committed to be
released - (2) - - 9 7
------------- ------------- ------------- ------------- ------------- -------------
Balance - March 31, 2008 $ 179 $ 7,291 $ 13,118 $ 114 $ (656) $ 20,046
============= ============= ============= ============= ============= =============
Balance - January 1, 2009 $ 179 $ 7,286 $ 13,249 $ (43) $ (630) $ 20,041
-------------
Comprehensive income:
Net income - - 51 - - 51
Change in net unrealized gain
(loss) on securities
available for sale, net of
taxes - - - 291 - 291
-------------
Total Comprehensive Income
342
ESOP shares committed to be
released - (3) - - 9 6
------------- ------------- ------------- ------------- ------------- -------------
Balance - March 31, 2009 $ 179 $ 7,283 $ 13,300 $ 248 $ (621) $ 20,389
============= ============= ============= ============= ============= =============
See accompanying notes to consolidated financial statements
3
FSB COMMUNITY BANKSHARES, INC.
Consolidated Statements of Cash Flows
Three Months Ended March 31, 2009 and 2008 (unaudited)
(Dollars in thousands)
2009 2008
---------------- ----------------
Cash Flows From Operating Activities
Net Income (Loss) $ 51 $ (106)
Adjustments to reconcile net income (loss) to net cash provided (used) by
operating activities:
Net amortization of premiums and discounts on investments 59 69
Gain on sale of loans (29) -
Amortization of net deferred loan origination fees 6 3
Depreciation and amortization 67 68
Provision for loan losses 6 -
Expense related to stock-based compensation plans 6 7
Deferred income tax benefit (13) (28)
Decrease (increase) in accrued interest receivable 26 (84)
Increase in other assets (269) (5)
Decrease in other liabilities (253) (372)
---------------- ----------------
Net Cash Used By Operating Activities (343) (448)
---------------- ----------------
Cash Flows From Investing Activities
Purchase of securities held to maturity - (3,001)
Proceeds from maturities and calls of securities held to maturity - 15,487
Proceeds from principal paydowns of securities held to maturity 188 572
Purchase of securities available for sale (16,427) (38,565)
Proceeds from maturities and calls of securities available for sale 8,835 -
Proceeds from principal paydowns of securities available for sale 794 -
Net increase (decrease) in loans 2,302 (639)
Proceeds from sales of loans 4,788 1,364
(Purchase) redemption of Federal Home Loan Bank stock 322 (778)
Purchase of premises and equipment (23) (9)
---------------- ----------------
Net Cash Provided (Used) By Investing Activities 779 (25,569)
---------------- ----------------
Cash Flows From Financing Activities
Net increase in deposits 10,873 9,141
Net decrease in short-term borrowings (3,850) -
Proceeds from long-term borrowings - 17,500
Repayments on borrowings (3,313) (191)
Net decrease in advances from borrowers
for taxes and insurance (715) (550)
---------------- ----------------
Net Cash Provided By Financing Activities 2,995 25,900
---------------- ----------------
Net Increase (Decrease) in Cash
and Cash Equivalents 3,431 (117)
Cash and Cash Equivalents- Beginning 3,173 9,444
---------------- ----------------
Cash and Cash Equivalents- End $ 6,604 $ 9,327
================ ================
4
FSB COMMUNITY BANKSHARES, INC.
Consolidated Statements of Cash Flows, (Continued)
2009 2008
---------------- ----------------
Supplementary Cash Flows Information
Interest paid $ 1,294 $ 1,462
================ ================
Income taxes paid $ 85 $ -
================ ================
See accompanying notes to consolidated financial statements
5
Notes to Consolidated Financial Statements
Note 1-Basis of Presentation
The accompanying unaudited consolidated financial statements of FSB Community
Bankshares, Inc., and its wholly owned subsidiary (the "Company") have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information and the instructions
to Form 10-Q. Accordingly, they do not include all of the information and
footnotes necessary for a complete presentation of consolidated financial
position, results of operations, and cash flows in conformity with generally
accepted accounting principles. In the opinion of management, all adjustments,
consisting of normal recurring accruals, considered necessary for a fair
presentation have been included.
The unaudited consolidated financial statements and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" should be read in
conjunction with the Company's audited financial statements for the year ended
December 31, 2008, included in the Annual Report filed on Form 10-K with the
Securities and Exchange Commission ("SEC") on March 31, 2009.
Operating results for the three months ended March 31, 2009 are not necessarily
indicative of the results that may be expected for the year ending December 31,
2009.
The consolidated financial statements at March 31, 2009 and December 31, 2008
and for the three months ended March 31, 2009 and 2008 include the accounts of
the Company, Fairport Savings Bank (the "Bank") and the Bank's wholly-owned
subsidiary, Oakleaf Services Corporation ("Oakleaf"). All inter-company balances
and transactions have been eliminated in consolidation. Certain amounts from
prior periods may have been reclassified, when necessary, to conform to current
period presentation.
Note 2-Fair Value Accounting
Management uses its best judgment in estimating the fair value of the Company's
financial instruments; however, there are inherent weaknesses in any estimation
technique. Therefore, for substantially all financial instruments, the fair
value estimates herein are not necessarily indicative of the amounts the Company
could have realized in a sale transaction on the dates indicated. The estimated
fair value amounts have been measured as of their respective reporting dates and
have not been re-evaluated or updated for purposes of these consolidated
financial statements subsequent to those respective dates. As such, the
estimated fair values of these financial instruments subsequent to the
respective reporting dates may be different than the amounts reported at each
reporting date.
In September 2006, the Financial Accounting Standards Board ("FASB") issued
Statement No. 157, Fair Value Measurements ("SFAS 157"), which defines fair
value, establishes a framework for measuring fair value under GAAP, and expands
disclosures about fair value measurements. SFAS 157 applies to other accounting
pronouncements that require or permit fair value measurements.
6
Note 2-Fair Value Accounting (Continued)
SFAS 157 establishes a fair value hierarchy that prioritizes the inputs to
valuation methods used to measure fair value. The hierarchy gives the highest
priority to unadjusted quoted prices in active markets for identical assets or
liabilities (Level 1 measurements) and the lowest priority to unobservable
inputs (Level 3 measurements). The three levels of the fair value hierarchy
under SFAS 157 are as follows:
Level 1: Unadjusted quoted prices in active markets that are accessible at
the measurement date for identical unrestricted assets or liabilities.
Level 2: Quoted prices in markets that are not active, or inputs that are
observable either directly or indirectly, for substantially the full term
of the asset or liability.
Level 3: Prices or valuation techniques that require inputs that are both
significant to the fair value measurement and unobservable (i.e. supported
with little or no market activity).
An asset or liability's level within the fair value hierarchy is based on the
lowest level of input that is significant to the fair value measurement.
For assets measured at fair value on a recurring basis, the fair value
measurements by level within the fair value hierarchy used are as follows at
December 31, 2008 and at March 31, 2009:
(Dollars in Thousands)
Securities available for sale Total Level 1 Level 2 Level 3
---------- ---------- ---------- ----------
December 31, 2008 $ 43,925 $ 6 $ 43,919 $ -
========== ========== ========== ==========
March 31, 2009 $ 51,114 $ 6 $ 51,108 $ -
========== ========== ========== ==========
The fair value of securities available for sale are determined by obtaining
quoted market prices on nationally recognized securities exchanges (Level 1), or
matrix pricing (Level 2), which is a mathematical technique used widely in the
industry to value debt securities without relying exclusively on quoted market
prices for the specific securities but rather by relying on the securities'
relationship to other benchmark quoted prices. For certain securities which are
not traded in active markets or are subject to transfer restrictions, valuations
are adjusted to reflect illiquidity and/or non-transferability, and such
adjustments are generally based on available market evidence (Level 3). The
Company had no Level 3 investment securities at December 31, 2008 and March 31,
2009.
Securities are evaluated periodically to determine whether a decline in their
fair value is other than temporary. Management utilizes criteria such as the
magnitude and duration of the decline, in addition to the reasons underlying the
decline, to determine whether the loss in value is other than temporary. The
term "other than temporary" is not intended to indicate that the decline is
permanent, but indicates that the prospect for a near-term recovery of value is
not necessarily favorable. Once a decline in fair value is determined to be
other than temporary the cost basis of the security is reduced through a charge
to earnings in the consolidated statement of income.
7
Note 3-Recent Accounting Pronouncements
FSP FAS 157-4
In April 2009, the Financial Accounting Standards Board (FASB) issued FASB Staff
Position (FSP) No. FAS 157-4, Determining Fair Value When the Volume and Level
of Activity for the Asset or Liability Have Significantly Decreased and
Identifying Transactions That Are Not Orderly (FSP FAS 157-4). FASB Statement
157, Fair Value Measurements, defines fair value as the price that would be
received to sell the asset or transfer the liability in an orderly transaction
(that is, not a forced liquidation or distressed sale) between market
participants at the measurement date under current market conditions. FSP FAS
157-4 provides additional guidance on determining when the volume and level of
activity for the asset or liability has significantly decreased. The FSP also
includes guidance on identifying circumstances when a transaction may not be
considered orderly.
FSP FAS 157-4 provides a list of factors that a reporting entity should evaluate
to determine whether there has been a significant decrease in the volume and
level of activity for the asset or liability in relation to normal market
activity for the asset or liability. When the reporting entity concludes there
has been a significant decrease in the volume and level of activity for the
asset or liability, further analysis of the information from that market is
needed and significant adjustments to the related prices may be necessary to
estimate fair value in accordance with Statement 157.
This FSP clarifies that when there has been a significant decrease in the volume
and level of activity for the asset or liability, some transactions may not be
orderly. In those situations, the entity must evaluate the weight of the
evidence to determine whether the transaction is orderly. The FSP provides a
list of circumstances that may indicate that a transaction is not orderly. A
transaction price that is not associated with an orderly transaction is given
little, if any, weight when estimating fair value.
This FSP is effective for interim and annual reporting periods ending after June
15, 2009, with early adoption permitted for periods ending after March 15, 2009.
The Company is currently reviewing the effect this new pronouncement will have
on its consolidated financial statements.
FSP FAS 115-2 and FAS 124-2
In April 2009, the FASB issued FSP No. FAS 115-2 and FAS 124-2, Recognition and
Presentation of Other-Than-Temporary Impairments (FSP FAS 115-2 and FAS 124-2).
FSP FAS 115-2 and FAS 124-2 clarifies the interaction of the factors that should
be considered when determining whether a debt security is other-than-temporarily
impaired. For debt securities, management must assess whether (a) it has the
intent to sell the security and (b) it is more likely than not that it will be
required to sell the security prior to its anticipated recovery. These steps are
done before assessing whether the entity will recover the cost basis of the
investment. Previously, this assessment required management to assert it has
both the intent and the ability to hold a security for a period of time
sufficient to allow for an anticipated recovery in fair value to avoid
recognizing an other-than-temporary impairment. This change does not affect the
need to forecast recovery of the value of the security through either cash flows
or market price.
In instances when a determination is made that an other-than-temporary
impairment exists but the investor does not intend to sell the debt security and
it is not more likely than not that it will be required to sell the debt
security prior to its anticipated recovery, FSP FAS 115-2 and FAS 124-2 changes
the presentation and amount of the other-than-temporary impairment recognized in
the income statement. The other-than-temporary impairment is separated into (a)
the amount of the total other-than-temporary impairment related to a decrease in
cash flows expected to be collected from the debt security (the credit loss) and
(b) the amount of the total other-than-temporary impairment related to all other
factors. The amount of the total other-than-temporary impairment related to the
credit loss is recognized in earnings. The amount of the total
other-than-temporary impairment related to all other factors is recognized in
other comprehensive income.
8
Note 3-Recent Accounting Pronouncements (Continued)
This FSP is effective for interim and annual reporting periods ending after June
15, 2009, with early adoption permitted for periods ending after March 15, 2009.
The Company is currently reviewing the effect this new pronouncement will have
on its consolidated financial statements.
FSP FAS 107-1 and APB 28-1
In April 2009, the FASB issued FSP No. FAS 107-1 and APB 28-1, Interim
Disclosures about Fair Value of Financial Instruments (FSP FAS 107-1 and APB
28-1). FSP FAS 107-1 and APB 28-1 amends FASB Statement No. 107, Disclosures
about Fair Value of Financial Instruments, to require disclosures about fair
value of financial instruments for interim reporting periods of publicly traded
companies as well as in annual financial statements. This FSP also amends APB
Opinion No. 28, Interim Financial Reporting, to require those disclosures in
summarized financial information at interim reporting periods.
This FSP is effective for interim and annual reporting periods ending after June
15, 2009, with early adoption permitted for periods ending after March 15, 2009.
The Company is currently reviewing the effect this new pronouncement will have
on its consolidated financial statements.
Note 4-Comprehensive Income (Loss)
Accounting principles generally require that recognized revenue, expenses,
gains, and losses be included in net income. Although certain changes in assets
and liabilities, such as unrealized gains and losses on available for sale
securities, are reported as a separate component of the stockholders' equity
section of the consolidated balance sheets, such items, along with net income,
are components of comprehensive income (loss).
The components of other comprehensive income (loss) and related tax effects for
the three months ended March 31, 2009 and 2008 are as follows:
For the Three Months Ended
March 31,
2009 2008
---------- ----------
Unrealized holding gain (loss) on securities
available for sale $ 449 $ (6)
Tax effect 158 (2)
---------- ----------
Net of tax amount $ 291 $ (4)
========== ==========
Note 5- Earnings (Loss) Per Common Share
Earnings (loss) per common share are calculated by dividing the net income
(loss) by the weighted-average number of common shares outstanding during the
period. The Company has not granted any restricted stock awards or stock options
and, during the three months ended March 31, 2009 and 2008, had no potentially
dilutive common stock equivalents. Unallocated common shares held by the ESOP
are not included in the weighted-average number of common shares outstanding for
purposes of calculating earnings (loss) per common share until they are
released. The average common shares outstanding were 1,722,900 for the three
months ended March 31, 2009 and 1,718,526 for the three months ended March 31,
2008.
9
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
General
Throughout the Management's Discussion and Analysis ("MD&A"), the term "the
Company" refers to the consolidated entity of FSB Community Bankshares, Inc.,
Fairport Savings Bank, and Oakleaf Services Corporation, a wholly owned
subsidiary of Fairport Savings Bank. At March 31, 2009, FSB Community
Bankshares, MHC the Company's mutual holding company parent, held 946,050
shares, or 53.0%, of the Company's common stock, engaged in no significant
activities, and was not included in the MD&A.
Forward Looking Statements
This Quarterly Report contains forward-looking statements, within the meaning of
the Private Securities Litigation Reform Act of 1995. Such statements are
subject to certain risks and uncertainties, including, among other things,
changes in economic conditions including real estate values in the Company's
market area, changes in policies by regulatory agencies, fluctuations in
interest rates, demand for loans in the Company's market areas and competition,
that could cause actual results to differ materially from historical earnings
and those presently anticipated or projected. The Company wishes to caution
readers not to place undue reliance on any such forward-looking statements,
which speak only as of the date made. The Company wishes to advise readers that
the factors listed above could affect the Company's financial performance and
could cause the Company's actual results for future periods to differ materially
from any opinions or statements expressed with respect to future periods in any
current statements.
The Company does not undertake, and specifically declines any obligation, to
publicly release the results of any revisions that may be made to any
forward-looking statements to reflect events or circumstances after the date of
such statements or to reflect the occurrence of anticipated or unanticipated
events.
Critical Accounting Policies
The most significant accounting policies followed by the Company are presented
in Note 1 to the consolidated financial statements ("the Consolidated Financial
Statements") included in the Company's Annual Report filed on Form 10-K with the
Securities and Exchange Commission on March 31, 2009. These policies, along with
the disclosures presented in the other financial statement notes and in this
discussion, provide information on how significant assets and liabilities are
valued in the consolidated financial statements and how those values are
determined. Based on the valuation techniques used and the sensitivity of
financial statement amounts to the methods, assumptions and estimates underlying
those amounts, management has identified the determination of the allowance for
loan losses and the evaluation of investment securities for other that temporary
impairment to be the accounting areas that require the most subjective and
complex judgments, and as such could be the most subject to revision as new
information becomes available.
Allowance for Loan Losses. The allowance for loan losses is established as
losses are estimated to have occurred in the loan portfolio. The allowance for
loan losses is recorded through a provision for loan losses charged to earnings.
Loan losses are charged against the allowance when management believes the
un-collectability of a loan balance is confirmed. Subsequent recoveries, if any,
are credited to the allowance.
The allowance for loan losses is evaluated on a regular basis by management and
is based upon management's periodic review of the collectability of the loans in
light of historical experience, the nature and volume of the loan portfolio,
adverse situations that may affect the borrower's ability to repay, the
estimated value of any underlying collateral and prevailing economic conditions.
This evaluation is inherently subjective as it requires estimates that are
susceptible to significant revision as more information becomes available.
10
Critical Accounting Policies (Continued)
The allowance consists of specific, general, and unallocated components. The
specific component relates to loans that are classified as doubtful, substandard
or special mention. For such loans that are also classified as impaired, an
allowance is generally established when the collateral value of the impaired
loan is lower than the carrying value of that loan. The general component covers
non-classified loans and is based on historical loss experience adjusted for
qualitative factors. An unallocated component is maintained to cover
uncertainties that could affect management's estimate of probable losses. The
unallocated component of the allowance reflects the margin of imprecision
inherent in the underlying assumptions used in the methodologies for estimating
specific and general losses in the portfolio.
As a substantial percentage of our loan portfolio is collateralized by real
estate, appraisals of the underlying value of property securing loans are
critical in determining the amount of the allowance required for specific loans.
Assumptions are instrumental in determining the value of properties. Overly
optimistic assumptions or negative changes to assumptions could significantly
affect the valuation of a property securing a loan and the related allowance
determined. Management carefully reviews the assumptions supporting such
appraisals to determine that the resulting values reasonably reflect amounts
realizable on the related loans.
Management performs a quarterly evaluation of the adequacy of the allowance for
loan losses. We consider a variety of factors in establishing this estimate
including, but not limited to: current economic conditions, delinquency
statistics, geographic concentrations, the adequacy of the underlying
collateral, the financial strength of the borrower, results of internal loan
reviews, and other relevant factors. This evaluation is inherently subjective as
it requires material estimates by management that may be susceptible to
significant change based on changes in economic and real estate market
conditions.
Actual loan losses may be significantly more than the allowance we have
established which could have a material negative effect on our financial
results.
Other than temporary impairment. Declines in fair value of securities held
to maturity and available for sale below their cost that are deemed to be other
than temporary are reflected in earnings as realized losses. In estimating
other-than-temporary impairment losses, management considers (1) the length of
time and the extent to which the fair value has been less than cost, (2) the
financial condition and near-term prospects of the issuer, and (3) the intent
and ability of the Bank to retain its investment in the issuer for a period of
time sufficient to allow for any anticipated recovery in fair value. Realized
gains or losses, determined on the basis of the cost of the specific securities
sold, are included in earnings.
Comparison of Financial Condition at March 31, 2009 and December 31, 2008
Total Assets. Total assets increased by $3.3 million, or 1.6%, to $199.4
million at March 31, 2009 from $196.1 million at December 31, 2008. The increase
in total assets primarily reflects increases in securities classified as
available for sale and cash and cash equivalents, partially offset by decreases
in net loans receivable.
Cash and cash equivalents increased by $3.4 million, or 108.1% to $6.6 million
at March 31, 2009 from $3.2 million at December 31, 2008.
Total securities increased by $7.0 million, or 13.7%, to $58.2 million at March
31, 2009 from $51.2 million at December 31, 2008. The securities classified as
available for sale increased $7.2 million to $51.1 million at March 31, 2009
from $43.9 million at December 31, 2008. The increase was attributable to the
purchase of $15.0 million of United States government agency securities,
purchases of $1.4 million of mortgage-backed securities, and a $449,000 increase
in the fair value of securities available for sale,
11
Comparison of Financial Condition at March 31, 2009 and December 31, 2008
(Continued)
partially offset by maturities of $8.8 million of United States Government
agency securities classified as available for sale, and $851,000 in principal
payments received. Securities classified as held to maturity decreased $189,000
to $7.1 million at March 31, 2009 from $7.3 million at December 31, 2008 as a
result of $189,000 in principal payments received from mortgage-backed
securities. All securities purchased in 2009 have been classified as securities
available for sale. Management made the decision to classify all newly purchased
securities as available for sale providing a portfolio of marketable securities
for liquidity as an alternative to borrowings.
Investment in FHLB of New York stock decreased by $322,000 through redemption,
or 13.9% to $2.0 million at March 31, 2009, from $2.3 million at December 31,
2008. The FHLB of New York requires members to purchase and redeem stock based
on the level of borrowings.
Net loans receivable decreased by $7.1 million, or 5.2%, to $128.6 million at
March 31, 2009 from $135.7 million at December 31, 2008. The decrease in loans
receivable was primarily the result of sales of fixed rate residential mortgages
totaling $4.8 million in the first quarter of 2009. Total loans sold and
serviced as of March 31, 2009 totaled $9.3 million compared to $5.4 million as
of December 31, 2008. Management made the decision to sell long term, fixed rate
loans in this historically low interest rate environment. The Bank sold these
loans at gains which are recorded in other income, and will realize servicing
income on these loans as long as these loans are outstanding. Management
believes that selling these loans was a prudent interest rate decision in order
to position the consolidated balance sheet for higher interest rates in the
future. The Company continues to execute its business plan of making high
quality loans to existing customers and new customers in our market area with
$5.9 million of residential mortgage loan originations in the first quarter of
2009. Loans are not originated with the intention of being sold. We may
experience further declines in our total residential mortgages loan portfolio
with additional mortgage loan sales based on the current economic conditions and
our desired interest rate sensitivity position. As the interest rate market
changes throughout the remainder of 2009, we intend to continue to sell a
portion of our fixed-rate residential mortgage loans on a servicing retained
basis, recording gain on sales and additional loan servicing income.
The Company has never been involved with, and has no direct exposure to,
sub-prime lending activities. Credit quality continues to be the highest
priority when underwriting loans. Subjective judgments about a borrower's
ability to repay and the value of any underlying collateral are made prior to
approving a loan. We believe our stringent underwriting standards have directly
resulted in our low level of non-accruing loans.
Deposits and Borrowings. Total deposits increased by $10.9 million, or
8.5%, to $138.4 million at March 31, 2009 from $127.5 million at December 31,
2008. Certificates of deposit, including IRAs, increased by $6.3 million.
Transaction accounts, including checking, NOW, money market and savings
accounts, increased by $4.6 million. The net deposit growth was attributable to
the Irondequoit branch growth of $4.7 million, Penfield branch growth of $5.1
million and Fairport branch growth of $1.1 million. We continue to promote core
customer relationship banking, with bonus rates and incentive offerings.
Combined short and long term borrowings decreased by $7.2 million, or 15.7%, to
$38.3 million at March 31, 2009 from $45.5 million on December 31, 2008. The
decrease in borrowings included $3.9 million in short term borrowings and $3.3
million in long term borrowings. We were able to pay off these borrowings in the
first quarter of 2009 through deposit growth within the same time period.
Stockholders' Equity. Total stockholders' equity increased by $348,000 or
1.7%, to $20.4 million at March 31, 2009 from $20.0 million at December 31,
2008. The increase resulted principally from net income of $51,000 for the three
months ended March 31, 2009, and a $291,000 increase in accumulated other
comprehensive income.
12
Non-Performing Assets. At March 31, 2009, the Company had $133,000 in loans
classified as non-performing assets compared to $146,000 in loans classified as
non-performing at December 31, 2008.
At March 31, 2009, there were no loans or other assets that are not disclosed or
disclosed as classified or special mention, where known information about
possible credit problems of borrowers caused us to have serious doubts as to the
ability of the borrowers to comply with the present loan repayment terms and
which may result in disclosure of such loans in the future.
Average balances and yields. The following tables set forth average balance
sheets, average yields and costs, and certain other information at and for the
periods indicated. All average balances are daily average balances. Non-accrual
loans were included in the computation of average balances, where applicable,
but have been reflected in the table as loans carrying a zero yield. The yields
set forth below include the effect of deferred fees, discounts and premiums that
are amortized or accreted to interest income. Yields have been annualized.
For the Three Months Ended March 31,
----------------------------------------------------------------------------------------
2009 2008
------------------------------------------- -------------------------------------------
Interest Interest
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Cost Balance Expense Cost
------------- ------------- ------------- ------------- ------------- -------------
(Dollars in thousands)
Interest-earning assets:
Loans............................. $ 133,281 $ 1,907 5.72% $ 122,96 $ 1,817 5.91%
Securities........................ 24,528 267 4.35 26,466 313 4.73
Mortgage-backed securities........ 28,905 326 4.51 17,668 202 4.57
Other............................. 2,232 1 0.18 8,915 74 3.32
------------- ------------- ------------- -------------
Total interest-earning assets... 188,946 2,501 5.29 176,011 2,406 5.47
------------- ------------- ------------- -------------
Non-interest-earning assets....... 6,407 4,987
------------- -------------
Total assets................... $ 195,353 $ 180,998
============= =============
Interest-bearing liabilities:
NOW accounts...................... $ 7,517 $ 15 0.80% $ 5,669 $ 12 0.85
Passbook savings.................. 13,467 26 0.77 13,461 38 1.13
Money market savings.............. 17,363 94 2.17 10,851 67 2.47
Individual retirement accounts.... 16,989 166 3.91 16,122 181 4.49
Certificates of deposit........... 73,059 578 3.16 74,082 844 4.56
Borrowings........................ 40,782 425 4.17 35,363 378 4.28
------------- ------------- ------------- -------------
Total interest-bearing
liabilities.................. 169,177 1,304 3.08 155,548 1,520 3.91
------------- ------------- ------------- ------------- ------------- -------------
Non-interest-bearing liabilities:
Demand deposits................... 3,422 3,083
Other............................. 2,531 2,255
------------- -------------
Total liabilities............... 175,130 160,886
Stockholders' equity.............. 20,223 20,112
------------- -------------
Total liabilities and
stockholders' equity......... $ 195,353 $ 180,998
============= =============
Net interest income............... $ 1,197 $ 886
============= =============
Interest rate spread (1).......... 2.21% 1.56%
============= =============
Net interest-earning assets (2)... $ 19,769 $ 20,463
============= =============
Net interest margin (3)........... 2.53% 2.01%
============= =============
Average interest-earning assets
to average interest-bearing
liabilities..................... 112% 113%
============= =============
------------------------
(1) Interest rate spread represents the difference between the yield on average
interest-earning assets and the cost of average interest-bearing
liabilities.
(2) Net interest-earning assets represent total interest-earning assets less
total interest-bearing liabilities.
(3) Net interest margin represents net interest income divided by total
interest-earning assets.
13
Comparison of Operating Results for the Three Months Ended March 31, 2009 and
March 31, 2008
General. We had net income of $51,000 for the three months ended March 31,
2009 compared to a net loss of $106,000 for the three months ended March 31,
2008. The increase of $157,000 in net income (loss) for the first quarter of
2009 compared to the first quarter of 2008 resulted primarily from an increase
in net interest income of $311,000, an increase in other income of $40,000,
partially offset by an increase in provision for loan losses of $6,000, an
increase in other expenses of $102,000, and an increase in income taxes of
$86,000. The increase in net interest income was the result of an increase in
higher yielding interest earning assets and the Company's ability to reduce the
deposit costs in a low interest rate environment, all of which positively
impacted the net interest margin, increasing the margin to 2.53% in the first
quarter of 2009 compared to a 2.01% net interest margin in the first quarter of
2008. The Federal Reserve Bank has lowered its target Federal Funds Rate from
2.25% at March 31, 2008 to 0.25% at March 31, 2009. Decreased short term
interest rates have lowered our costs on deposits and borrowings at a faster
rate than our loans and investments, providing positive results in our net
interest margin and profitability year over year. The decrease in both prime
rate and treasury rates will continue to have a downward effect on yields in
both interest-earning assets and interest bearing liabilities in the second
quarter of 2009.
Interest and Dividend Income. Interest and dividend income increased by
$95,000 or 3.9%, to $2.5 million for the three months ended March 31, 2009 from
$2.4 million for the three months ended March 31, 2008. The increase in interest
and dividend income resulted from a $90,000 or 5.0%, increase in interest income
from loans, a $124,000 or 61.4% increase in interest income from mortgage-backed
securities, offset by a $46,000 or 14.7%, decrease in interest income from
securities, and a $73,000 or 98.6% decrease in other interest income, primarily
interest earning demand accounts. Average interest-earning assets increased by
$12.9 million, or 7.3%, to $188.9 million for the three months ended March 31,
2009 from $176.0 million for the three months ended March 31, 2008. The yield on
interest-earning assets decreased by 18 basis points to 5.29% for the three
months ended March 31, 2009 compared to 5.47% for the three months ended March
31, 2008, reflecting the effect of the 200 basis point drop in interest rates by
the Federal Reserve since March 31, 2008.
Interest Expense. Interest expense decreased $216,000 or 14.2%, to $1.3
million for the three months ended March 31, 2009 from $1.5 million for the
three months ended March 31, 2008. The decrease in interest expense resulted
from an increase in the average balances in interest-bearing liabilities which
was mitigated by the lower rates paid on these liabilities. The average balance
of interest-bearing liabilities increased $13.7 million, or 8.8%, to $169.2
million for the three months ended March 31, 2009 compared to $155.5 million for
the three months ended March 31, 2008. The average cost of interest-bearing
liabilities decreased by 83 basis points to 3.08% for the three months ended
March 31, 2009 from 3.91% for the three months ended March 31, 2008. The average
cost of deposit accounts decreased by 106 basis points to 2.74% for the three
months ended March 31, 2009 compared to 3.80% for the three months ended March
31, 2008. The average cost of borrowings decreased by 11 basis points to 4.17%
for the three months ended March 31, 2009 compared to 4.28% for the three months
ended March 31, 2008. The decrease in interest expense reflects a lower cost of
funds on deposits and borrowings in a lower interest rate environment.
At March 31, 2009, we had $16.5 million of certificates of deposit, including
IRAs that will mature during the second quarter of 2009 with a weighted average
cost of 2.87%. Based on current market rates, if these funds remain with
Fairport Savings Bank with similar maturities, the rates paid on these deposits
will decrease.
Net Interest Income. Net interest income increased $311,000 or 35.1%, to
$1.2 million for the three months ended March 31, 2009 from $886,000 for the
three months ended March 31, 2008. The increase in net interest income was due
primarily to an increase in higher yielding interest earning assets and
decreasing deposit and borrowing costs at a faster rate than loan and investment
securities. The Company's net interest margin increased 52 basis points to 2.53%
for the three months ended March 31,
14
2009 from 2.01% for the three months ended March 31, 2008. The increase in net
interest margin was also attributable to the effect of a decrease of 200 basis
points in short term rates by the Federal Reserve from March 31, 2008 to March
31, 2009.
Provision for Loan Losses. Based on management's evaluation of the factors
that determine the level of the allowance for loan losses, we recorded $6,000 in
provision for loan losses for the three month period ended March 31, 2009
compared to no provision for loan losses for the three months ended March 31,
2008. The allowance for loan losses as of March 31, 2009 was $350,000 or 0.27%
of total loans, compared to $321,000 or 0.26% of total loans as of March 31,
2008. We ended the quarter with $133,000 in non-accrual loans as of March 31,
2009 compared to no non-accrual loans as of March 31, 2008. We had no foreclosed
real estate at the end of the first quarter of 2009 or 2008.
Other Income. Total other income increased $40,000 or 42.6%, to $134,000
for the three months ended March 31, 2009 compared to $94,000 for the three
months ended March 31, 2008. In the three months ended March 31, 2009, there was
an increase of $33,000 in other income primarily due to mortgage fees and gain
on sale of mortgage loans to Freddie Mac. There was also an $11,000 increase in
service fee income in checking account service charge fees associated with the
courtesy overdraft protection at point of sale and ATM's, partially offset by a
decrease of $4,000 in commissions from Oakleaf Services insurance/annuity and
security sales.
Other Expense. Other expense increased $102,000, or 8.9%, to $1.2 million
for the three months ended March 31, 2009 compared to $1.1 million for the three
months ended March 31, 2008. The increase was primarily the result of an
increase of $56,000 in salaries and benefits expense mainly due to annual raises
effective January 1 of each year, and $34,000 in other expenses primarily due to
an increase of $19,000 in our FDIC insurance premiums and $11,000 in additional
costs associated with operating as a public company. The FDIC insurance expenses
increased partly due to the FDIC finalizing a rule in December 2008 that raised
the current assessment rate by 7 basis points for the first quarter of 2009
assessment. The increase in deposit insurance expense during the first quarter
of 2009 compared to the first quarter of 2008 was also partly related to the
Company's utilization of available credits to offset assessments during the
first quarter of 2008. These actions will continue to increase the Company's
non-interest expenses for the remainder of 2009 and in future years as long as
the increased premiums are in place.
Income Tax Expense/Benefit. We had pre-tax income of $79,000 for the three
months ended March 31, 2009 versus a pre-tax loss of $164,000 for the three
months ended March 31, 2008, which resulted in a $28,000 tax expense for the
three months ended March 31, 2009, versus a $58,000 tax benefit for the three
months ended March 31, 2008, a change of $86,000. The effective tax rate was
35.4% for the three months ended March 31, 2009 compared to (35.4)% for the
three months ended March 31, 2008.
Liquidity and Capital Resources
Liquidity is the ability to meet current and future financial obligations of a
short-term nature. Our primary sources of funds consist of deposit inflows, loan
repayments, advances from the Federal Home Loan Bank of New York, maturities and
principal repayments of securities, and recently, but to a lesser extent, loan
sales. While maturities and scheduled amortization of loans and securities are
predictable sources of funds, deposit flows and mortgage prepayments are greatly
influenced by general interest rates, economic conditions and competition. Our
asset/liability management committee is responsible for establishing and
monitoring our liquidity targets and strategies in order to ensure that
sufficient liquidity exists for meeting the borrowing needs and deposit
withdrawals of our customers as well as unanticipated contingencies. We seek to
maintain a liquidity ratio of 10.0% or greater. For the quarter ended March 31,
2009, our liquidity ratio averaged 18.4%. We believe that we have enough sources
of liquidity to satisfy our short and long-term liquidity needs as of March 31,
2009.
15
Liquidity and Capital Resources (Continued)
We regularly adjust our investments in liquid assets based upon our assessment
of:
(i) expected loan demand;
(ii) expected deposit flows;
(iii) yields available on interest-earning deposits and securities; and
(iv) the objectives of our asset/liability management program.
Excess liquid assets are invested generally in interest-earning deposits,
short-term and intermediate-term securities and federal funds sold.
Our most liquid assets are cash and cash equivalents. The levels of these assets
are dependent on our operating, financing, lending and investing activities
during any given period. At March 31, 2009, cash and cash equivalents totaled
$6.6 million.
Our cash flows are derived from operating activities, investing activities and
financing activities as reported in our Consolidated Statements of Cash Flows
included in our Consolidated Financial Statements.
At March 31, 2009, we had $4.5 million in loan commitments outstanding. In
addition to commitments to originate loans, we had $7.5 million in unused lines
of credit to borrowers. Certificates of deposit, including individual retirement
accounts comprised solely of certificates of deposits, due within one year of
March 31, 2009 totaled $59.8 million, or 63.9% of our certificates of deposit
and 43.2% of total deposits. If these deposits do not remain with us, we will be
required to seek other sources of funds including loan sales, other deposit
products, including certificates of deposit, and Federal Home Loan Bank
advances. Depending on market conditions, we may be required to pay higher rates
on such deposits or other borrowings than we currently pay on the certificates
of deposit due on or before March 31, 2010. We believe, however, based on past
experience that a significant portion of such deposits will remain with us. We
have the ability to attract and retain deposits by adjusting the interest rates
offered.
Our primary investing activity is and will continue to be originating loans.
During the three months ended March 31, 2009, we originated $5.9 million of
loans.
Financing activities consist primarily of activity in deposit accounts and
Federal Home Loan Bank borrowings. We experienced a net increase in total
deposits of $10.9 million for the quarter ended March 31, 2009. Deposit flows
are affected by the overall level of interest rates, the interest rates and
products offered by us and our local competitors, and by other factors.
Liquidity management is both a daily and long-term function of business
management. If we require funds beyond our ability to generate them internally,
borrowing agreements exist with the Federal Home Loan Bank of New York, which
provides an additional source of funds. Federal Home Loan Bank borrowings
decreased by $7.2 million to $38.3 million for the three months ended March 31,
2009, compared to a net increase of $17.3 million to $42.9 million for the three
months ended March 31, 2008. Federal Home Loan Bank borrowings have primarily
been used to fund loan demand and expanding the investment portfolio. At March
31, 2009, we had the ability to borrow approximately $100.5 million from the
Federal Home Loan Bank of New York, of which $38.3 million had been advanced.
Fairport Savings Bank is subject to various regulatory capital requirements,
including a risk-based capital measure. The risk-based capital guidelines
include both a definition of capital and a framework for calculating
risk-weighted assets by assigning balance sheet assets and off-balance sheet
items to broad
16
Liquidity and Capital Resources (Continued)
risk categories. At March 31, 2009, Fairport Savings Bank exceeded all
regulatory capital requirements, and was considered "well capitalized" under
regulatory guidelines.
Off-Balance Sheet Arrangements
In the ordinary course of business, the Company is a party to credit-related
financial instruments with off-balance sheet risk to meet the financing needs of
our customers. These financial instruments include commitments to extend credit.
We follow the same credit policies in making commitments as we do for on-balance
sheet instruments.
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract. Commitments
generally have fixed expiration dates or other termination clauses and may
require payment of a fee. The commitments for equity lines of credit may expire
without being drawn upon. Therefore, the total commitment amounts do not
necessarily represent future cash requirements. The amount of collateral
obtained, if it is deemed necessary by us, is based on our credit evaluation of
the customer.
At March 31, 2009 and 2008, we had $4.5 million and $4.6 million, respectively,
of commitments to grant loans, and $7.5 million and $7.6 million, respectively,
of unfunded commitments under lines of credit.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable since the Company is a smaller reporting company.
Item 4T. Controls and Procedures
Under the supervision and with the participation of our management, including
our Chief Executive Officer and Chief Financial Officer, we evaluated the
effectiveness of the design and operation of our disclosure controls and
procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act)
as of the end of the period covered by this report. Based upon that evaluation,
the Chief Executive Officer and Chief Financial Officer concluded that, as of
the end of the period covered by this report, our disclosure controls and
procedures were effective to ensure that information required to be disclosed in
the reports that the Company files or submits under the Securities Exchange Act
of 1934 is recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission's rules and forms.
There were no significant changes made in the Company's internal control over
financial reporting or in other factors that could significantly affect the
Company's internal control over financial reporting during the period covered by
this report that has materially affected, or is reasonably likely to materially
affect, the Company's internal control over financial reporting.
Part II - Other Information
Item 1. Legal Proceedings
The Company and its subsidiaries are subject to various legal actions
arising in the normal course of business. In the opinion of management, the
resolution of these legal actions is not expected to have a material adverse
effect on the Company's financial condition or results of operations.
Item 1A. Risk Factors
Not applicable since the Company is a smaller reporting company.
17
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(a) There were no sales of unregistered securities during the period
covered by this Report.
(b) Not applicable.
(c) There were no issuer repurchases of securities during the period
covered by this Report.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable
Item 5. Other Information
Not applicable
Item 6. Exhibits
The following exhibits are either filed as part of this report or are
incorporated herein by reference:
3.1 Charter of FSB Community Bankshares, Inc.*
3.2 Bylaws of FSB Community Bankshares, Inc.*
4 Form of Common Stock Certificate of FSB Community Bankshares, Inc.*
10.1 Amended and Restated Employment Agreement between FSB Community
Bankshares, Inc. and Dana C. Gavenda**
10.2 Supplemental Executive Retirement Plan*
10.3 Form of Employee Stock Ownership Plan*
31.1 Certification of Chief Executive Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
31.2 Certification of Chief Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
32 Certification of Chief Executive Officer and Chief Financial Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
-------------------------
* Filed as exhibits to the Company's Registration Statement on Form
SB-2, and any amendments thereto, with the Securities and Exchange
Commission (Registration No. 333-141380) on March 16, 2007.
** Filed as an exhibit to the Company's Current Report on form 8-K filed
with the Securities and Exchange Commission on April 7, 2009.
18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
FSB COMMUNITY BANKSHARES, INC.
Date: May 13, 2009 /s/ Dana C. Gavenda
-------------------------------------
Dana C. Gavenda
President and Chief Executive Officer
Date: May 13, 2009 /s/ Kevin D. Maroney
-------------------------------------
Kevin D. Maroney
Executive Vice President and
Chief Financial Officer