UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2004
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 number 001-14910
GOUVERNEUR BANCORP, INC.
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
United States 04-3429966
-------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
42 Church Street, Gouverneur, New York 13642
--------------------------------------------
(Address of principal executive offices)
Issuer's telephone number (315) 287-2600
--------------
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
Outstanding at
Class June 30, 2004
---------------------------- --------------
Common Stock, par value $.01 2,283,109
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
GOUVERNEUR BANCORP, INC.
FORM 10-QSB
TABLE OF CONTENTS
PART 1 - FINANCIAL INFORMATION Page
------------------------------ ----
Item 1. Financial Statements - Unaudited
Consolidated Statements of Financial Condition at June 30,
2004 and at September 30, 2003 3
Consolidated Statements of Income for the three and nine
months ended June 30, 2004 and 2003 4
Consolidated Statements of Shareholders' Equity for nine
months ended June 30, 2004 and 2003 5
Consolidated Statements of Cash Flows for the nine months
ended June 30, 2004 and 2003 7
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 11
Item 3. Controls and Procedures 20
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings 21
Item 6. Exhibits and Reports on Form 8-K 21
2
PART I - FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements
GOUVERNEUR BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands, except share data) (Unaudited)
June 30, September 30,
2004 2003
----------- ------------
Assets:
Cash and due from banks $ 1,968 $ 1,762
Interest-bearing deposits in bank 861 2,526
----------- -----------
Total cash and cash equivalents 2,829 4,288
Securities available-for-sale 13,534 17,473
Securities held-to-maturity (fair value of
$338 at June 30, 2004 and $459 at
September 30, 2003) 336 456
Loans, net of deferred fees 75,138 65,393
Less: allowance for loan losses (712) (655)
----------- -----------
Loans, net 74,426 64,738
Federal Home Loan Bank stock, at cost 900 610
Premises and equipment, net 1,412 1,484
Bank owned life insurance 3,559 --
Accrued interest receivable and other assets 1,030 907
----------- -----------
Total assets $ 98,026 $ 89,956
=========== ===========
Liabilities:
Deposits: Non interest-bearing demand $ 1,191 $ 806
NOW and money market 9,888 9,409
Savings 20,217 19,157
Time 29,227 29,051
----------- -----------
Total deposits 60,523 58,423
Advances from the Federal Home Loan Bank 18,000 12,200
Other liabilities 1,650 1,776
----------- -----------
Total liabilities 80,173 72,399
----------- -----------
Shareholders' Equity:
Preferred stock, $.01 par value, 1,000,000 shares
authorized; none issued -- --
Common stock, $.01 par value, 9,000,000 shares
authorized; 2,384,040 shares issued 24 24
Additional paid-in capital 4,624 4,577
Retained earnings 13,738 13,365
Treasury Stock, at cost, 100,931 shares at June 30,
2004 and 106,156 shares at September 30, 2003 (511) (537)
Accumulated other comprehensive income 284 487
Unearned common stock held by Management Recognition Plan (64) (85)
Unallocated common stock held by Employee Stock Ownership Plan (242) (274)
----------- -----------
Total shareholders' equity 17,853 17,557
----------- -----------
Total liabilities and shareholders' equity $ 98,026 $ 89,956
=========== ===========
See accompanying notes to consolidated financial statements.
3
GOUVERNEUR BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data) (Unaudited)
Three Months Nine Months
Ended Ended
June 30, June 30,
--------------- ---------------
2004 2003 2004 2003
------ ------ ------ ------
Interest income:
---------------
Loans $1,203 $1,083 $3,571 $3,302
Securities 129 185 422 618
Other short-term investments 4 7 11 19
------ ------ ------ ------
Total interest income 1,336 1,275 4,004 3,939
Interest expense:
----------------
Deposits 251 309 753 1,008
Borrowings - short term 17 24 78 53
Borrowings - long term 137 116 382 406
------ ------ ------ ------
Total interest expense 405 449 1,213 1,467
------ ------ ------ ------
Net interest income 931 826 2,791 2,472
Provision for loan losses 35 25 85 75
------ ------ ------ ------
Net interest income after
provision for loan losses 896 801 2,706 2,397
Non-interest income:
-------------------
Service charges 47 38 130 100
Realized gains on sales of securities -- -- 80 97
Earnings on bank owned life insurance 31 -- 59 --
Other 26 29 86 84
------ ------ ------ ------
Total non-interest income 104 67 355 281
Non-interest expenses:
---------------------
Salaries and employee benefits 320 300 1,041 972
Directors fees 26 27 72 75
Occupancy and equipment 87 85 257 265
Data processing 34 31 99 94
Postage and supplies 22 19 67 90
Professional fees 34 38 115 124
Foreclosed assets, net 3 26 23 55
Other 90 84 309 310
------ ------ ------ ------
Total non-interest expenses 616 610 1,983 1,985
Income before income tax expense 384 258 1,078 693
Income tax expense 145 97 409 264
------ ------ ------ ------
Net income $ 239 $ 161 $ 669 $ 429
====== ====== ====== ======
Earnings per common share - basic $ 0.11 $ 0.07 $ 0.30 $ 0.19
Earnings per common share - diluted $ 0.11 $ 0.07 $ 0.30 $ 0.19
See accompanying notes to consolidated financial statements
4
GOUVERNEUR BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Nine months ended June 30, 2004
(In thousands, except share data) (Unaudited)
Accumulated Unearned Unallocated
Additional other common common
Common paid-in Retained comprehensive stock held stock held Treasury
stock capital earnings income by MRP by ESOP stock Total
-------- ---------- ---------- ------------- ---------- ----------- --------- --------
Balance at September 30, 2003 $ 24 $ 4,577 $ 13,365 $ 487 $ (85) $ (274) $ (537) $ 17,557
Comprehensive income:
Net income 669 669
Change in net unrealized
gain on securities
available for sale,
net of taxes (203)
(203)
--------
Total comprehensive income 466
--------
Allocation of ESOP (6,258
shares) 46 32 78
Amortization of MRP 21 21
Exercise of stock options
(5,225 shares) 1 26 27
Cash dividends declared
($0.13 per share) (296) (296)
-------- -------- -------- ---------- -------- --------- -------- --------
Balance at June 30, 2004 $ 24 $ 4,624 $ 13,738 $ 284 $ (64) $ (242) $ (511) $ 17,853
======== ======== ======== ========== ======== ========= ======== ========
5
GOUVERNEUR BANCORP, INC AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Nine months ended June 30, 2003
(In thousands, except share data) (Unaudited)
Accumulated Unearned Unallocated
Additional other common common
Common paid-in Retained comprehensive stock held stock held Treasury
stock capital earnings income by MRP by ESOP stock Total
-------- ---------- ---------- ------------- ---------- ----------- --------- --------
Balance at September 30, 2002 $ 24 $ 4,570 $ 13,025 $ 537 $ (73) $ (312) $ (543) $ 17,228
Comprehensive income:
Net income 429 429
Change in net unrealized gain
on securities available for
sale, net of taxes 18 18
--------
Total comprehensive income 447
--------
Allocation of ESOP
(5,808 shares) 28 28 56
Purchase stock for MRP (6,600
shares) (33) (32) (65)
Amortization of MRP 15 15
Exercise of stock options (1,125
shares) 6 6
Cash dividends declared
($0.13 per share) (126) (126)
-------- -------- -------- --------- -------- -------- -------- --------
Balance at June 30, 2003 $ 24 $ 4,565 $ 13,328 $ 555 $ (90) $ (284) $ (537) $ 17,561
======== ======== ======== ========= ======== ======== ======== ========
See accompanying notes to consolidated financial statements
6
GOUVERNEUR BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Unaudited)
Nine Months Ended
June 30,
--------------------------
2004 2003
----------- -----------
Cash flows from operating activities:
Net Income $ 669 $ 429
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for loan losses 85 75
Depreciation 92 111
Net amortization of securities premiums and discounts 52 87
Net realized gains on sales of securities (80) (97)
Earnings on bank owned life insurance (59) --
Allocated and earned shares of ESOP and MRP 99 71
(Increase) decrease in accrued interest receivable and other assets 72 (8)
Increase in accrued interest payable and other liabilities 9 457
----------- -----------
Net cash provided by operating activities 939 1,125
----------- -----------
Cash flows from investing activities:
Net increase in loans (9,301) (4,588)
Purchase of loans (609) (947)
Proceeds from sales of securities AFS 7,080 599
Proceeds from maturities and principal reductions of securities AFS 4,452 3,782
Purchases of securities AFS (7,903) (4,755)
Proceeds from maturities and principal reductions of securities HTM 62 793
Additions to premises and equipment (23) (21)
Proceeds from sale of premises and equipment 3 250
(Purchase) redemption of Federal Home Loan Bank stock (290) 135
Purchase of bank owned life insurance (3,500) --
----------- -----------
Net cash used in investing activities (10,029) (4,752)
----------- -----------
Cash flows from financing activities:
Net increase in deposits 2,100 4,167
Proceeds of FHLB advances 7,500 --
Repayment of FHLB advances (1,700) (1,200)
Purchase of common stock for Management Recognition Plan -- (65)
Exercise of stock options 27 6
Cash dividends paid (296) (126)
----------- -----------
Net cash provided by financing activities 7,631 2,782
----------- -----------
Net decrease in cash and cash equivalents (1,459) (845)
Cash and cash equivalents at beginning of period 4,288 3,047
----------- -----------
Cash and cash equivalents at end of period $ 2,829 $ 2,202
=========== ===========
Non-cash investing activities:
Additions to foreclosed assets $ 137 $ 234
Cash paid during the period for:
Interest 1,215 1,477
Income taxes 329 178
See accompanying notes to consolidated financial statements.
7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Basis of Presentation
---------------------
The accompanying unaudited financial statements include the accounts of
Gouverneur Bancorp, Inc. (the "Company") and Gouverneur Savings and Loan
Association (the "Bank"), the wholly owned and only subsidiary of the
Company, as of June 30, 2004 and September 30, 2003 and for the three and
nine month periods ended June 30, 2004 and 2003. All material intercompany
accounts and transactions have been eliminated in this consolidation. These
statements were prepared in accordance with instructions for Form 10-QSB
and, therefore, do not include information or footnotes necessary for a
complete presentation of financial condition, results of operations, and
cash flows in conformity with generally accepted accounting principles in
the United States of America.
In the opinion of management, all adjustments, consisting of only normal
recurring adjustments or accruals, which are necessary for a fair
presentation of the consolidated financial statements have been made at and
for the three month and the nine month periods ended June 30, 2004 and
2003. The results of operations for the three month and nine month periods
ended June 30, 2004 are not necessarily indicative of the results which may
be expected for an entire fiscal year or other interim periods.
The data in the consolidated statements of condition for September 30, 2003
was derived from the Company's annual report on Form 10-KSB. That data,
along with the interim financial information presented in the consolidated
statements of financial condition, income, shareholders' equity and cash
flows should be read in conjunction with the 2003 consolidated financial
statements, including the notes thereto included in the Company's 2003
Annual Report on Form 10-KSB.
2. Earnings Per Common Share
-------------------------
Basic earnings per share is calculated by dividing net income available to
common shareholders by the weighted average number of shares outstanding
during the period. Unallocated shares held by the Company's Employee Stock
Ownership Plan ("ESOP") are not included in the weighted average number of
shares outstanding. Unearned shares held by the Company's Management
Recognition Plan ("MRP") are not included in the weighted average number of
outstanding shares. Diluted earnings per share reflects additional common
shares that would have been outstanding if dilutive potential common shares
had been issued (for example, through the exercise of common stock
options), as well as any adjustment to income that would result from the
assumed issuance.
8
Basic and diluted earnings per share for the three-month and nine month
periods ending June 30, 2004 and 2003 were computed as follows: (In
thousands, except per share data)
Three Months Nine Months
Ended June 30, Ended June 30,
--------------- ---------------
2004 2003 2004 2003
------ ------ ------ ------
Basic earnings per share:
Net income $ 239 $ 161 $ 669 $ 429
Weighted average common shares outstanding 2,217 2,206 2,212 2,204
Basic earnings per share $ 0.11 $ 0.07 $ 0.30 $ 0.19
Three Months Nine Months
Ended June 30, Ended June 30,
--------------- ---------------
2004 2003 2004 2003
------ ------ ------ ------
Diluted earnings per share:
Net income $ 239 $ 161 $ 669 $ 429
Weighted average common shares outstanding 2,217 2,206 2,212 2,204
Additional potentially dilutive securities from common
stock options (equivalent in common stock) 32 31 32 30
------ ------ ------ ------
Diluted weighted average common shares outstanding 2,249 2,237 2,244 2,234
====== ====== ====== ======
Diluted earnings per share $ 0.11 $ 0.07 $ 0.30 $ 0.19
3. Comprehensive Income
--------------------
Comprehensive income, presented in the consolidated statements of
shareholders' equity, consists of net income and the net change for the
period in after-tax unrealized gains or losses on securities available for
sale. Accumulated other comprehensive income in the consolidated statements
of financial condition represents the net unrealized gains or losses on
securities available for sale as of the reporting dates, net of related tax
effect.
A summary of the unrealized gains (losses) and reclassification adjustments
of securities available for sale and the related tax effects for the three
and nine month periods ended June 30, 2004 and 2003 is as follows (in
thousands):
Three Months Nine Months
Ended June 30, Ended June 30,
--------------- ---------------
2004 2003 2004 2003
------ ------ ------ ------
Unrealized holding gains (losses) arising
during the period $ (382) $ 59 $ (258) $ 126
Reclassification adjustment for gains realized in
net income during period -- -- (80) (97)
------ ------ ------ ------
(382) 59 (338) 29
Tax effect 153 (24) 135 (11)
------ ------ ------ ------
Other comprehensive income (loss), net of tax $ (229) $ 35 $ (203) $ 18
====== ====== ====== ======
9
4. Stock Option and Management Recognition Plans
---------------------------------------------
The Company has a Stock Option Plan ("SOP") and the MRP for directors,
officers and key employees. The Company accounts for stock options granted
under the SOP and MRP in accordance with the provisions of Accounting
Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued to
Employees", and related interpretations. The Company provides pro forma net
income and pro forma earnings per share disclosures for employee stock
options grants as if the fair-value-based method defined in Statement of
Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based
Compensation", had been applied. The fair value of the shares awarded,
under the MRP, measured as of the grant date, is recognized as unearned
compensation (a component of shareholders' equity) and amortized to
compensation expense over the vesting period.
The following table illustrates the effect on net income and earnings per
share if the Company had applied the fair value recognition provisions of
SFAS No. 123 to stock-based compensation (in thousands, except per share
data):
Three Months Nine Months
Ended June 30, Ended June 30,
--------------- ---------------
2004 2003 2004 2003
------ ------ ------ ------
Net income, as reported $ 239 $ 161 $ 669 $ 429
Total stock-based compensation expense determined
under fair value method for all awards, net of taxes (18) (12) (30) (26)
Amounts included in determination of net income,
net of taxes 4 2 12 8
------ ------ ------ ------
Pro forma net income $ 225 $ 151 $ 651 $ 411
====== ====== ====== ======
Earnings per share:
Basic - as reported $ 0.11 $ 0.07 $ 0.30 $ 0.19
Basic - pro forma 0.10 0.07 0.29 0.19
Diluted - as reported $ 0.11 $ 0.07 $ 0.30 $ 0.19
Diluted - pro forma 0.10 0.07 0.29 0.18
5. Commitments and Contingencies
-----------------------------
Outstanding letters of credit written are conditional commitments issued by
the Company to guarantee the performance by a customer to a third party.
The Company's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for standby letters of credit is
represented by the contractual amount of those instruments. The Bank uses
the same credit policies in making conditional obligations as it does for
on-balance sheet instruments. The Company had no standby letters of credit
as of June 30, 2004.
The credit risk involved in issuing letters of credit is essentially the
same as that involved in extending other loan commitments. The Company
requires collateral and personal guarantees supporting these letters of
credit as deemed necessary. Management believes that the proceeds obtained
through a liquidation of such collateral in the event of a default, and the
enforcement of personal guarantees would be sufficient to cover the maximum
potential amount of future payments required under the corresponding
guarantees.
10
6. Dividend Restrictions
---------------------
Cambray Mutual Holding Company ("Cambray MHC"), the Company's parent mutual
holding company, held 1,311,222 shares, or 57.4%, of the Company's issued
and outstanding common stock, and shareholders other than Cambray MHC held
971,887 shares or 42.6% of such stock at June 30, 2004. Cambray MHC has not
filed a notice with the Office of Thrift Supervision ("OTS") to waive its
right to receive cash dividends during the 2004 calendar year and did
receive its portion of a cash dividend paid on March 31, 2004 to all
shareholders.
Cambray MHC waived receipt of several past dividends, paid by the Company.
The dividends waived are considered as a restriction on the retained
earnings of the Company. As of June 30, 2004 and September 30, 2003, the
aggregate retained earnings restricted for cash dividends waived was
$747,000.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Forward-Looking Statements
When we use words or phrases like "will probably result," "we expect,"
"will continue," "we anticipate," "estimate," "project," "should cause" or
similar expressions in this 10-QSB or in any press releases, public
announcements, filings with the Securities and Exchange Commission or other
disclosures, we are making "forward-looking statements" as described in the
Private Securities Litigation Reform Act of 1995. In addition, certain
information we will provide in the future on a regular basis, such as analysis
of the adequacy of our allowance for loan losses or an analysis of interest rate
sensitivity of our assets and liabilities, is always based on predictions of the
future. From time to time, we may also publish other forward-looking statements
addressing anticipated financial performance, business prospects, and similar
matters.
The Private Securities Litigation Reform Act of 1995 provides a safe
harbor for forward-looking statements. We want you to know that a variety of
future events could cause our actual results and experience to differ materially
from what was anticipated in our forward-looking statements. Some of the risks
and uncertainties that may affect our operations, performance, development and
results, the interest rate sensitivity of our assets and liabilities, and the
adequacy of our allowance for loan losses, include:
o Local, regional, national or global economic conditions which could cause
an increase in loan delinquencies, a decrease in property values, or a
change in the housing turnover rate;
o Changes in market interest rates or changes in the speed at which market
interest rates change;
o Changes in laws and regulations affecting us;
o Changes in competition; and
o Changes in consumer preferences.
Please do not rely unduly on any forward-looking statements, which are
valid only as of the date made. Many factors, including those described above,
could affect our financial performance and could cause our actual results or
circumstances for future periods to differ materially from what we anticipate or
project. We have no obligation to update any forward-looking statements to
reflect future events which occur after the statements are made.
11
Critical Accounting Policies
Note 2 to the consolidated financial statements of the Company
(included in Item 7 of the Annual Report on Form 10-KSB of the Company for the
year ended September 30, 2003) lists significant accounting policies used in
development and presentation of its financial statements. This discussion and
analysis, the significant accounting policies, and other financial statement
disclosures identify and address key variables and other qualitative and
quantitative factors that are necessary for an understanding and evaluation of
the Company's results of operations. The following accounting policy is the one
identified by management to be critical to the results of operations:
Allowance for Loan Losses. The allowance for loan losses is the
estimated amount considered adequate to cover credit losses inherent in the
outstanding loan portfolio at the balance sheet date. The allowance is
established through the provision of loan losses charged against income. In
determining the allowance for loan losses, management makes significant
estimates and, accordingly, has identified this policy as probably the most
critical for the Company.
Management performs a monthly evaluation of the adequacy of the
allowance for loan losses. Consideration is given to a variety of factors in
establishing this estimate, including, but not limited to, current economic
conditions, diversification of the loan portfolio, delinquency statistics,
results of internal loan reviews, borrowers' actual or perceived financial and
managerial strengths, the adequacy of the underlying collateral (if collateral
dependent), the present value of future cash flows and other relevant factors.
This evaluation is inherently subjective, as it requires material estimates that
may be susceptible to significant change, including the amounts and timing of
future cash flows expected to be received on impaired loans.
The analysis has two components, specific and general allocations.
Collateral values discounted for market conditions and selling costs are used to
establish specific allocations. The Bank's historical loan loss experience,
delinquency rates and general economic conditions are used to establish general
allocations for the remainder of the portfolio.
Management monitors the adequacy of the allowance for loan losses on an
ongoing basis and reports its adequacy assessment monthly to the Board of
Directors, and quarterly to the Audit Committee.
12
General
The Company conducts no income generating activities other than holding
the stock of the Bank and a loan to the ESOP used to purchase shares of Company
common stock for the participants. Consequently, the net income of the Company
is derived primarily from its investment in the Bank. The Bank's net income
depends, to a large extent, on its net interest income, which is the difference
between interest earned on its interest earning assets, such as loans and
investments, and the cost of funds, consisting of interest paid on interest
bearing liabilities, such as deposits and borrowings. The Bank's net income is
also affected by the provision for loan losses, as well as by the amount of
other income, including income from fees and service charges, net gains and
losses on sales of investments and operating expenses such as salaries and
employee benefits costs, net expenses on foreclosed real estate and various
categories of operational expenses. External factors, such as general economic
and competitive conditions, particularly changes in interest rates, government
policies and actions of regulatory authorities, can have a substantial effect on
profitability.
The Bank has been and continues to be a community oriented financial
institution offering a variety of financial services. The Bank attracts deposits
from the general public and uses those deposits together with funds borrowed
from the Federal Home Loan Bank of New York ("FHLB"), to make loans and other
investments. Most of the loans are one to four family residential mortgages made
to residents in the Bank's primary market area, southern St. Lawrence and
northern Jefferson and Lewis counties in New York State. The Bank's deposit
accounts are insured by the Savings Association Insurance Fund ("SAIF") of the
Federal Deposit Insurance Corporation ("FDIC"), and the Bank is subject to
regulation by the FDIC and the OTS.
Recent Developments
The Bank has made purchase offers on two separate parcels of land
adjacent to its headquarters at 42 Church Street in the Town and Village of
Gouverneur. Both offers have been accepted and we expect the transactions to
close by December 31, 2004. We intend to raze the structures on those properties
and build either an addition to the Bank building or a separate building joined
by a corridor. This will provide additional office space to merge the
administrative offices into the new structure and allow for future growth, as
well as expand and improve our drive up facilities. We are currently working
with an architectural firm on concept drawings. Once a design is selected,
building plans will be developed so we can begin construction in the spring of
2005.
Comparison of Financial Condition at June 30, 2004 and September 30, 2003.
During the nine months from September 30, 2003 through June 30, 2004,
total assets increased $8.0 million, or 8.89%, from $90.0 million to $98.0
million. Net loans increased by $9.7 million, or 14.99%, from $64.7 million to
$74.4 million during the same period. The increase in loans resulted from
increases of $8.8 million in residential real estate loans, of which $7.5
million are variable rate loans, $0.7 million in commercial real estate loans
and $0.5 million in other commercial loans, combined with a decrease of $0.3
million in other consumer loans, mainly automobile loans. Special low and no
rate financing arrangements offered by automobile manufacturers continue to
decrease demand for the Bank's automobile loans. The growth in other commercial
loans was from the purchase of two United States Department of Agriculture
("USDA") guaranteed loans totaling $0.6 million during this fiscal year. The
aggregate amount of USDA and SBA guaranteed loans totals $3.0 million.
Cash and cash equivalents decreased $1.5 million and investments in
securities decreased $4.1 million. Those balances, combined with additional FHLB
borrowings of $5.8 million, provided the funds for the additional growth in
loans and the purchase of $3.5 million in bank owned life insurance ("BOLI") and
the purchase of $0.3 million in FHLB stock required for the additional
borrowing. The securities portfolio was decreased by the sale of shares of a
mutual fund investment and repayments of principal from mortgage-backed
securities. The BOLI replaces current life insurance coverage and provides
additional coverage for certain employees, provides supplemental retirement
benefits for certain employees and provides a retirement plan for directors.
13
Our borrowed funds from the FHLB, consisting of advances and securities
repurchase obligations, were $18.0 million on June 30, 2004 versus $12.2 million
on September 30, 2003. The increase of $5.8 million in borrowings is consistent
with management's strategy to fund loans when our deposit base is not sufficient
alone. Deposits increased $2.1 million, or 3.60%, from $58.4 million to $60.5
million during the past nine months. Balances for deposit categories increased
$0.4 million, $0.5 million, $1.0 million and $0.2 million in non-interest
checking, savings, NOW and money market accounts and time deposits respectively.
Growth in these accounts may be temporary as customers anticipate increased
rates on time deposits or until more confidence is restored in the stock market.
Shareholders' equity rose by $296,000 during the first nine months of
this fiscal year. Shareholders' equity grew as a result of the combination of
net income of $669,000, a net increase of $99,000 as a net result of the
amortization of ESOP shares and allocation of MRP shares and the issuance of
$27,000 in treasury stock. Treasury stock was used to supply the 5,225 shares
needed when two directors and one officer exercised some of their vested
options. Shareholders' equity was reduced by the payment of a cash dividend of
$296,000 to our shareholders and a decrease of $203,000 in other comprehensive
income as the fair value of "available for sale" securities decreased.
At June 30, 2004, non-performing assets were 0.86% of total assets,
down from 0.92% at September 30, 2003. Non-performing loans decreased from 1.08%
of total loans to 0.93% over the same period. A summary of the Company's
non-performing assets and related ratios follows (dollars in thousands):
June 30, September 30,
Non-performing assets 2004 2003
--------------------- -------- -------------
Non-accrual loans
-----------------
Residential mortgages
and home equity loans $ 205 $ 198
Commercial mortgages -- 83
Consumer other 3 85
Commercial other 46 112
-------- --------
254 478
Restructured commercial other 437 225
-------- --------
Total non-performing loans 691 703
Foreclosed real estate 130 92
Other repossessed assets 23 29
-------- --------
Total non-performing assets $ 844 $ 824
======== ========
Non-performing loans to
total loans 0.93% 1.08%
Non-performing assets to
total assets 0.86% 0.92%
The Company had no loans more than 90 days delinquent and accruing at June 30,
2004 or September 30, 2003.
14
One of the four residential mortgages totaling $205,000 in non-accrual
loans, is in foreclosure. Loans for two borrowers, including one borrower in
bankruptcy proceedings, are included in the restructured commercial other
category.
Management believes that these non-performing loans are adequately
secured by collateral. Further, management is not aware of any factors common to
these loans, which caused their non-performance or any developments that suggest
an upward trend in delinquencies. Accordingly, while we will continue to monitor
asset quality, management has determined that a $57,000 increase in the loan
loss allowance is appropriate for the increase in the size of the loan portfolio
for the nine months ended June 30, 2004. Since our growth is in residential
mortgages, which have a lower degree of risk than consumer and commercial loans,
and since the level of the Bank's commercial loans, not including purchased USDA
guaranteed loans, and consumer loans has decreased, we believe that the increase
in the allowance is justified.
Comparison of Results of Operations for the Three Months Ended June 30, 2004 and
2003.
General. Our net income for the three months ended June 30, 2004 was
$239,000, an increase of $78,000, or 48.4%, from last year's net income of
$161,000 for the same period. The increase in net income was the result of the
combination of the following factors:
1. net interest income increased by $105,000 as interest income
increased $61,000, mainly due to the growth in loans, and interest
expense decreased $44,000,
2. non-interest income grew by $37,000 over last year's period, as
BOLI income added $31,000,
3. the provision for loan losses increased by $10,000 for the third
quarter of this fiscal year versus last fiscal year,
4. non-interest expense increased $6,000 in the three month period
this year compared to last year's period and
5. income taxes increased $48,000 due to the higher level of pre-tax
income.
Basic and diluted earnings per share were $0.11 for this year's quarter
versus $0.07 for both measures in last year's quarter.
Interest Income. Interest income increased $61,000, or 4.78%, from
$1,275,000 for the three months ended June 30, 2003 to $1,336,000 for the three
months ended June 30, 2004. A decrease of 17 basis points (0.17%) in the average
interest rate earned on our interest-earning assets resulted in a decrease of
$133,000 in interest income, while a $6.4 million increase in the average
balance of interest-earning assets resulted in an increase of $194,000 in
interest income.
Interest income on loans increased by $120,000, or 11.08%. A decrease
in loan yields by 17 basis points, or 0.17%, from 6.17% in last year's quarter
to 6.00% in this year's quarter decreased interest income by $154,000 while an
increase of $15.8 million in the average balance of loans from $56.9 million to
$72.7 million resulted in an increase of $274,000 in interest income.
Interest income on securities and other short-term investments
decreased by $59,000, or 30.73% for the quarter ended June 30, 2004 versus the
quarter ended June 30, 2003. An increase in the yields on our securities
portfolio of 44 basis points, or 0.44% from 3.21% in last year's quarter to
3.65% in this year's quarter resulted in an increase of $23,000 increase in
interest income while a decrease of $8.9 million in the average balance of
securities over the same period reduced interest income by $79,000. A 32 basis
point, or 0.32% decrease in the average interest rate earned on other short-term
investments decreased interest income by $2,000, while a decrease of $0.5
million in the average balance of other short-term investments decreased
interest income by $1,000.
15
Interest Expense. Interest expense decreased $44,000, or 9.8%, in the
third quarter of fiscal 2004 versus fiscal 2003. A decrease of 54 basis points
(0.54%) in the average rate we paid on interest-bearing liabilities from 2.65%
last year to 2.11% this year resulted in a decrease of $107,000 in interest
expense, while an increase of $9.0 million from $68.0 million to $77.0 million
in the average balance of interest-bearing liabilities resulted in a $63,000
increase in interest expense.
Interest expense decreased on savings and club accounts, NOW and money
accounts and time deposits by $23,000, $2,000 and $33,000, respectively. This
was partially offset by an increase in the cost of borrowed funds of $14,000.
The decrease in interest expense resulted as follows:
1. the average rate we paid on savings and club accounts decreased by
60 basis points, or 0.60%, resulting in a $30,000 decrease in
interest expense, while an increase of $1.9 million in the average
balance of savings and club accounts resulted in an increase of
$7,000 in interest expense.
2. the average rate we paid on NOW and money market accounts decreased
by 20 basis points, or 0.20%, resulting in a $5,000 decrease in
interest expense, while an increase of $1.4 million in the average
balance of NOW and money market accounts resulted in a $3,000
increase in interest expense.
3. a decrease of 50 basis points, or 0.50%, in the average rate we
paid on time deposits decreased interest expense by $36,000, while
an increase in the average balance of time deposits of $0.4 million
resulted in an increase of $3,000 in interest expense.
4. the cost of our FHLB borrowed funds decreased by 103 basis points,
or 1.03%, resulting in a decrease of $36,000 in interest expense,
while an increase in the average balance of our FHLB borrowed funds
of $5.2 million resulted in an increase of $50,000 in interest
expense.
Net Interest Income. Our net interest income increased by $105,000 for
the three month period ending June 30, 2004 as compared to the three month
period ending June 30, 2003, as interest income increased by $61,000 and
interest expense decreased by $44,000, as described above.
Our interest rate spread (the difference between the average rate we
earn and the average rate we pay) increased by 37 basis points, or 0.37%, from
3.52% in last year's quarter to 3.89% in this year's quarter. Also, net interest
margin increased by 18 basis points to 4.18% in the third fiscal quarter of
2004, up from 4.00% for the fiscal third quarter of 2003.
Average capital represented 20.0% of average interest-earning assets
for the quarter ended June 30, 2004, while it represented 21.1% of average
interest-earning assets for the same quarter last year. The decrease in the
capital ratio, which reflects an increase in leverage, reflects that our growth
in interest-earning assets from the last fiscal year has been greater than our
equity growth for the same period. Our ratio of average interest-earning assets
to average interest-bearing liabilities decreased from 1.22 times in 2003 to
1.16 times in 2004.
Provision for Loan Losses. The provision for loan losses results from
our analysis of the adequacy of the allowance for loan losses. If we believe
that the allowance should be higher, then we increase it, with a charge to
provision for loan losses, which is an expense on our income statement. In
determining the appropriate provision for loan losses, management considers the
level of and trend in non-performing loans, the level of and trend in net loan
charge-offs, the dollar amount and mix of the loan portfolio, as well as general
economic conditions and real estate trends in the Company's market area, which
can impact the inherent risk of loss in the Company's portfolio. Furthermore,
the OTS may disagree with our judgments regarding the risks in our loan
portfolio and could require us to increase the allowance in the future.
16
For the three months ended June 30, 2004, we provided $35,000 for loan
losses, compared to $25,000 in the same quarter last year. At June 30, 2004, the
ratio of our loan loss allowance to total loans was 0.96% as compared to 1.12%
on June 30, 2003. On March 31, 2004, the allowance was $679,000, or 0.94% of
total loans, and we determined at the end of the third quarter that the
appropriate level for the allowance was $712,000. We had charge-offs during the
quarter of $23,000 and recoveries of $21,000, so a $35,000 provision was
necessary to reach the desired level for the allowance.
Our level of non-accruing loans, loans 90 days and still accruing and
restructured loans was $691,000, or 0.93% of total loans at June 30, 2004
compared to $630,000, or 0.88% of total loans at March 31, 2004. While
management feels that these loans are adequately secured, an increase in the
allowance for loan losses was deemed appropriate at June 30, 2004. The increase
of the ratio of the loan loss allowance to total loans from 0.94% at March 31,
2004 to 0.96% at June 30, 2004 is justified by the increase in restructured
commercial other loans by $212,000.
Non-interest Income. Our non-interest income was $37,000 higher in the
2004 quarter versus the 2003 quarter. The addition of bank owned life insurance
accounted for most of the increase, adding $31,000, while service charges and
other income increased by $6,000 in the third quarter of this year as compared
to last year's quarter.
Non-interest Expenses. Our non-interest expenses increased by $6,000
from the 2003 fiscal quarter to this year's quarter. This increase was primarily
due to increased costs of $20,000 for salaries and employee benefits, $2,000 in
building, occupancy and equipment, $3,000 for postage and supplies expense and
$6,000 in other operating expense. Decreases were provided by director fees,
professional fees and the cost of foreclosed assets in the amount of $1,000,
$4,000 and $23,000, respectively, in the third quarter of this fiscal year as
compared to last fiscal year's third quarter. The increase in salaries and
employee benefits expense resulted from performance increases to our employees.
At June 30, 2004 we had thirty-one full-time and three part-time employees
compared to June 30, 2003 when we had twenty-nine full-time and two part-time
employees. Staffing increases have been required due to the increased volume of
work reflected in the growth of loans and deposits.
Income tax expense. Our income tax expense increased by $48,000, or
49.4%, comparing the third quarter of fiscal 2004 to the same quarter of fiscal
2003. The increased expense was the result of higher income before income tax of
$126,000, or 48.8%, from last year's $258,000 to this year's $384,000.
Comparison of Results of Operations for the Nine Months Ended June 30, 2004 and
2003.
General. Our net income for the nine months ended June 30, 2004 was
$669,000, an increase of $240,000 from last year's $429,000, or 55.9%. The
following operating results combined to produce the increase:
1. net interest income increased by $319,000 as interest income
increased and interest expense decreased,
2. non-interest income improved by $74,000,
3. non-interest expenses decreased $2,000 and
4. income taxes increased by $145,000 as a result of the increase in
pre-tax income.
Basic earnings per common share and diluted earnings per common share
were each $0.30 for the first nine months of this fiscal year and $0.19 for the
first nine months of last fiscal year.
Interest Income. Interest income increased by $65,000, or 1.65%, from
$3,939,000 for the nine months ended June 30, 2003 to $4,004,000 for the nine
months ended June 30, 2004. As interest rates remained at historic lows, our
portfolios continue to re-price lower, reducing both interest income and
interest expense. Average interest-earning assets increased $6.0 million from
$81.8 million for the first nine months of fiscal year 2003 to $87.8 million for
17
the same period this year. The increase was composed of a $14.5 million increase
in the average balance of loans from $55.8 million in fiscal 2003 to $70.3
million in fiscal 2004, partially offset by decreases in securities and other
investments of $8.5 million from $26.0 million last year to $17.5 million this
year.
The average interest rate we earned on our loans and investments was 35
basis points (0.35%) lower in the first nine months this year than last year as
the rate fell from 6.44% last year to 6.09% this year. The average rate earned
on loans fell 112 basis points (1.12%) from 7.91% last year to 6.79% this year,
while the average rate earned on securities increased by 12 basis points, or
0.12% from 3.50% last year to 3.62% this year, and the average rate on other
short-term investments, primarily FHLB deposits, decreased by 28 basis points
(0.28%) from 1.06% to 0.78%.
The decrease in the average interest rate earned on loans resulted in a
decrease of $309,000 in interest income, while the increase in average loan
balance increased interest income by $578,000, resulting in a $269,000 increase
in interest income for the loan portfolio.
For securities and other short-term investments, an increase in
interest rates earned resulted in an increase in interest income of $4,000,
while a decrease in the average balances decreased interest income by $208,000
resulting in a net decrease of $204,000 in interest income.
Overall, the decrease in the average interest rates reduced interest
income by $305,000, while the increase in the volume of interest-earning assets
yielded a $370,000 increase in interest income, for a net increase of $65,000 in
interest income.
Interest Expense. Interest expense decreased by $254,000 from
$1,467,000 for the first nine months of 2003 to $1,213,000 for the first nine
months of 2004 as a result of decreases in interest rates paid on
interest-bearing liabilities. A $338,000 decrease in interest expense was due to
a decrease of 74 basis points (0.74%) in the average rate we paid on
interest-bearing liabilities from 2.92% in 2003 to 2.18% in 2004. Additional
interest costs of $84,000 resulted from an increase in the average balance of
interest-bearing liabilities by $7.3 million, from $67.1 million at June 30,
2003 to $74.4 million at June 30, 2004.
Interest expense decreased on savings and club accounts, NOW and money
market accounts and time deposits by $98,000, $12,000 and $145,000,
respectively, for the nine months ending June 30, 2004 versus the nine months
ending June 30, 2003. These decreases were comprised of the following
components:
1. the average rate we paid on savings and club accounts decreased by
91 basis points (0.91%) from 1.94% to 1.03%, resulting in a
decrease of $112,000 in interest expense, while an increase of $2.5
million in the average balance of these accounts, from $17.4
million to $19.9 million, increased interest expense by $14,000,
2. the average rate we paid on NOW and money market accounts decreased
by 34 basis points (0.34%) from 0.98% to 0.64%, resulting in a
decrease of $18,000 in interest expense, while an increase of $1.7
million, from $7.9 million to $9.6 million in the average balance
of these accounts increased interest expense by $6,000, and
3. the average interest rate on time deposits decreased 64 basis
points (0.64%) from 3.23% to 2.59%, resulting in a $137,000
decrease in interest expense, while a $0.4 million decrease in the
average balance of time deposits, from $28.9 million to $28.5
million, decreased interest expense by $8,000.
A decrease of 99 basis points (0.99%), from 4.74% to 3.75% on the
average rate we paid on borrowed funds from FHLB decreased interest expense by
$71,000, while an increase of $3.4 million in the average amount of those
18
borrowings, from $13.0 million to $16.4 million, increased interest expense by
$72,000 and resulted in a net increase of $1,000.
Net Interest Income. The net effect of the increase in interest income
and decrease in interest expense was a $319,000 increase in net interest income
from the first nine months of the 2003 fiscal year to the first nine months of
the 2004 fiscal year. Our interest rate spread (the difference between the
average rate we earn and the average rate we pay) increased by 39 basis points
(0.39%) from 3.52% last year to 3.91% this year. Net interest margin increased
by 21 basis points to 4.25%, in the first nine months of fiscal 2004, up from
4.04% for the first nine months of fiscal 2003.
Average capital represented 20.2% of average interest-earning assets
for the nine months ended June 30, 2004, while it represented 21.2% of average
interest-earning assets for the same period in 2003. Our ratio of average
interest-earning assets to average interest-bearing liabilities decreased from
1.22 times in 2003 to 1.18 times in 2004.
Provision for Loan Losses. We provided $85,000 for loan losses for the
first nine months this fiscal year as compared to $75,000 for the first nine
months of the past fiscal year. At June 30, 2004 and 2003 the ratio of our loan
loss allowance to total loans was 0.96% and 1.12%, respectively. As disclosed in
the comparison of financial condition section, our level of non-accruing loans,
loans 90 days and still accruing and restructured loans was $691,000, or 0.93%
of total loans at June 30, 2004 compared to $703,000, or 1.08% of total loans at
September 30, 2003. Management feels that these loans are adequately secured and
do not require any adjustment to the allowance for loan losses.
For the year, we had charge-offs of $60,000 and recoveries of $28,000.
The allowance for loan losses totals $712,000, or 0.96% of total loans, at June
30, 2004.
Non-interest Income. Our non-interest income was $74,000 higher for the
first nine months of this year versus the same period last year. The increase
was the result of the addition of bank owned life insurance income of $59,000, a
$30,000 increase in service charge income and a net increase of $2,000 in other
operating income categories, offset in part by a decrease of $17,000 in gains on
sales of securities.
Non-interest Expense. Non-interest expenses decreased by $2,000 for the
first nine months of fiscal 2004 compared to fiscal 2003. The decrease resulted
from increases of $69,000 in salaries & benefits and $5,000 in data processing
costs being more than offset by the reductions in foreclosed assets expense of
$32,000, postage and supplies of $23,000, professional fees of $9,000, building,
occupancy and equipment cost of $8,000 and $4,000 in all other categories.
Income tax expense. Our income tax expense year-to-date increased by
$145,000, or 54.9%, from $264,000 last year to $409,000 this year. The increased
expense was the result of higher income before income tax of $385,000, or 55.6%,
from $693,000 for the first nine months last fiscal year to $1,078,000 for the
first nine months of this fiscal year. Our effective tax rate was 37.9% for the
nine months ended June 30, 2004 compared to 37.8% for the same period in 2003.
Liquidity and Capital Resources
Our primary sources of funds are deposits, borrowings from the Federal
Home Loan Bank, and proceeds from the principal and interest payments on loans
and securities. Scheduled maturities and principal payments on loans and
securities are predictable sources of funds. We can also control the funds
available from borrowings. However, general economic conditions and interest
rate conditions can cause increases or decreases in deposit outflows and loan
pre-payments, which can also affect the level of funds we have available for
investment.
19
In general, we manage our liquidity by maintaining a sufficient level
of short-term investments so funds are readily available for investment in loans
when needed. During the nine months ended June 30, 2004, we decreased our cash
and cash equivalents by $1,459,000. We have originated $22.0 million of new
loans and purchased $0.6 million during the nine months ended June 30, 2004.
However, loans, net, after payments, charge-offs and transfers to foreclosed
real estate, increased by $9.9 million over this period.
Deposits increased by $2.1 million during the nine months ended June
30, 2004. In addition to factors within our control, such as our deposit pricing
strategies and our marketing efforts, deposit flows are affected by the level of
general market interest rates, the availability of alternate investment
opportunities, general economic conditions, and other factors outside our
control. We increased our borrowings by $5.8 million during this same period.
We monitor our liquidity regularly. Excess liquidity is invested in
overnight federal funds sold and other short-term investments. If we need
additional funds, we can borrow those funds, although the cost of borrowing
money is normally higher than the average cost of deposits. As a member of the
Federal Home Loan Bank of New York, the Bank can arrange to borrow an additional
$19.3 million against our one to four family first mortgage portfolio. We have
used borrowed funds to help us leverage capital we received from our stock sale,
but have not needed borrowings to cover liquidity shortfalls. In addition to
borrowings, we believe that, if we need to do so, we can attract additional
deposits by increasing the rates we offer.
We measure liquidity on a monthly basis and want to maintain a
liquidity ratio of between 5% and 15%. At June 30, 2004, the ratio was 8.15% as
compared to 30.0% on June 30, 2003.
Off Balance Sheet Arrangements
The Company's financial statements do not reflect off-balance sheet
arrangements that are made in the normal course of business. These off-balance
sheet arrangements consist of unfunded loans.
We had $4.7 million in outstanding commitments to make loans at June
30, 2004, along with $2.7 million of unused home equity, commercial and
overdraft lines of credit. We anticipate that we will have enough liquid funds
to meet our current loan commitments, purchase commitments and to fund draws on
the lines of credit through the normal turnover of our loan and securities
portfolios. At June 30, 2004, we had $16.1 million of time certificates
scheduled to mature within one year. We anticipate that we can retain
substantially all of those deposits if we need to do so to fund loans and other
investments as part of our efforts to grow and leverage our capital.
Capital Resources
The OTS has minimum capital ratio requirements applying to the Bank,
but there are no comparable minimum capital requirements that apply to the
Company as a savings and loan holding company. At June 30, 2004, the Bank
exceeded all regulatory capital requirements of the OTS applicable to it, with
Tier I capital of $17.3 million, or 17.7% of average assets and with total
risk-based capital of $18.0 million, or 32.1% of risk-weighted assets. The Bank
also had tangible capital of $17.3 million, or 17.7% of average tangible assets.
The Bank was classified as "well capitalized" at June 30, 2004 under OTS
regulations.
Item 3. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures. The term "disclosure
controls and procedures" is defined in Rule 13a-14(c) of the Securities
Exchange Act of 1934, or (the "Exchange Act"). This term refers to the
controls and procedures of a company that are designed to ensure that
information required to be disclosed by a company in the reports that it
files under the Exchange Act is recorded, processed, summarized and
reported within required time periods. Our Chief Executive Officer and our
Chief Financial Officer have evaluated the effectiveness of our disclosure
20
controls and procedures as of June 30, 2004, and they have concluded as of
that date, our disclosure controls and procedures were effective at
ensuring that required information will be disclosed on a timely basis in
our reports filed under the Exchange Act.
(b) Changes in Internal Controls. There were no significant changes to our
internal controls or in the other factors that could significantly affect
our internal controls during the quarter ended June 30, 2004, including any
corrective actions with regard to significant deficiencies and material
weakness.
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings
In the ordinary course of business, the Company and the Bank are
subject to legal actions, which involve claims for monetary relief. Management,
based on the advice of counsel, does not believe that any currently known legal
actions, individually or in the aggregate, will have a material effect on its
consolidated financial condition or results of operations.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
31.1 Certification of Principal Executive Officer pursuant to Rule 13a -
14(a)/15d - 14(a)
31.2 Certification of Principal Financial Officer pursuant to Rule 13a -
14(a)/15d - 14(a)
32.1 Certification of Principal Executive Officer pursuant to Section
1350
32.2 Certification of Principal Financial Officer pursuant to Section
1350
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter for which this
report is filed.
21
SIGNATURES
----------
In accordance with 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.
Gouverneur Bancorp, Inc.
Date: August 11, 2004 By: /s/ RICHARD F. BENNETT
----------------------------
Richard F. Bennett
President and Chief Executive Officer
(principal executive officer and officer
duly authorized to sign on behalf of the
registrant)
By: /s/ ROBERT J. TWYMAN
----------------------------------------
Robert J. Twyman
Vice President and Chief Financial
Officer (principal financial officer
duly authorized to sign on behalf of the
registrant)
22