DECATUR FIRST BANK GROUP INC - 10QSB - 20040514 - NOTES_TO_FINANCIAL_STATEMENT
Notes to Consolidated Financial Statements
(Unaudited)
(1) ORGANIZATION AND BASIS OF PRESENTATION
Decatur First Bank Group, Inc. (the Company), a bank holding company, owns
100% of the outstanding common stock of Decatur First Bank (the Bank),
which operates primarily in the Decatur, Georgia area. The consolidated
financial statements include the accounts of the Company and the Bank. All
intercompany accounts and transactions have been eliminated in
consolidation.
The accompanying financial statements have been prepared in accordance with
the requirements for interim financial statements and, accordingly, they
omit disclosures, which would substantially duplicate those contained in
the most recent annual report to shareholders on Form 10-KSB. The financial
statements as of March 31, 2004 and for the interim periods ended March 31,
2004 and 2003 are unaudited and, in the opinion of management, include all
adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation. The financial information as of December 31, 2003
has been derived from the audited financial statements as of that date. For
further information, refer to the financial statements and the notes
included in the Company's 2003 Form 10-KSB.
(2) CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The Company has adopted various accounting policies, which govern the
application of accounting principles generally accepted in the United
States of America in the preparation of our financial statements. The
Company's significant accounting policies are described in the footnotes to
the consolidated financial statements at December 31, 2003 as filed on our
annual report on Form 10-KSB.
Certain accounting policies involve significant estimates and assumptions
by the Company, which have a material impact on the carrying value of
certain assets and liabilities. The Company considers these accounting
policies to be critical accounting policies. The estimates and assumptions
used are based on historical experience and other factors, which are
believed to be reasonable under the circumstances. Because of the nature of
the estimates and assumptions made, actual results could differ from these
estimates and assumptions which could have a material impact on carrying
values of assets and liabilities and results of operations.
The Company believes that the allowance for loan losses is a critical
accounting policy that requires the most significant judgments and
estimates used in preparation of its consolidated financial statements.
Refer to the portion of management's discussion and analysis of financial
condition and results of operations that addresses the allowance for loan
losses for a description of the Company's processes and methodology for
determining the allowance for loan losses.
(3) EARNINGS PER SHARE
Net earnings per common share are based on the weighted average number of
common shares outstanding during each period. The calculation of basic and
diluted earnings per share is as follows:
Three Months
Ended March 31,
----------------------
2004 2003
------------ --------
Basic earnings per share:
Net earnings $ 143,664 204,243
Weighted average common shares outstanding 924,496 924,242
Per share amount $ .16 .22
============ ========
Diluted earnings per share:
Net earnings $ 143,664 204,243
Effect of dilutive securities - stock options 39,957 24,837
Diluted earnings per share $ .15 .22
============ ========
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DECATUR FIRST BANK GROUP, INC.
Notes to Consolidated Financial Statements, continued
(Unaudited)
(4) STOCK-BASED COMPENSATION
The Company sponsors a stock-based compensation plan. The Company accounts
for this plan under the recognition and measurement principles of APB
Opinion No. 25, "Accounting for Stock Issued to Employees", and related
Interpretations. No stock-based employee compensation cost is reflected in
net earnings, as all options granted under the plan had an exercise price
equal to the market value of the underlying common stock on the date of
grant. The effect on net earnings and earnings per share would not be
material if the Company had applied the fair value recognition provisions
of Statement of Financial Accounting Standards ("SFAS") No. 123,
"Accounting for Stock-Based Compensation", to stock-based employee
compensation.
-8-
Item 2.
DECATUR FIRST BANK GROUP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
For the Three Months Ended March 31, 2004 and 2003
The following is our discussion and analysis of certain significant factors that
have affected our financial position and operating results and those of our
subsidiary, Decatur First Bank, during the periods included in the accompanying
financial statements. This commentary should be read in conjunction with the
financial statements and the related notes and the other statistical information
included in this report.
This report contains "forward-looking statements" relating to, without
limitation, future economic performance, plans and objectives of management for
future operations, and projections of revenues and other financial items that
are based on the beliefs of management, as well as assumptions made by and
information currently available to management. The words "may," "will,"
"anticipate," "should," "would," "believe," "contemplate," "expect," "estimate,"
"continue," and "intend," as well as other similar words and expressions of the
future, are intended to identify forward-looking statements. Our actual results
may differ materially from the results discussed in the forward-looking
statements, and our operating performance each quarter is subject to various
risks and uncertainties that are discussed in detail in our filings with the
Securities and Exchange Commission, including, without limitation:
- significant increases in competitive pressure in the banking and
financial services industries;
- changes in the interest rate environment which could reduce
anticipated or actual margins;
- changes in political conditions or the legislative or regulatory
environment;
- general economic conditions, either nationally or regionally and
especially in primary service area, becoming less favorable than
expected resulting in, among other things, a deterioration in credit
quality;
- changes occurring in business conditions and inflation;
- changes in technology;
- the level of allowance for loan loss;
- the rate of delinquencies and amounts of charge-offs;
- the rates of loan growth; - adverse changes in asset quality and
resulting credit risk-related losses and expenses;
- changes in monetary and tax policies;
- changes in the securities markets; and
- other risks and uncertainties detailed from time to time in our
filings with the Securities and Exchange Commission.
RESULTS OF OPERATIONS
NET INTEREST INCOME
For the three months ended March 31, 2004, net interest income totaled $975,450
as compared to $880,424 for the same period in 2003. Interest income from
loans, including fees increased $118,018 or 11% to $1,186,048 for the three
months ended March 31, 2004 while income from investment securities decreased by
$41,629 or 22% to $150,513. Interest expense totaled $379,666 for the three
months ended March 31, 2004 compared to $399,460 in 2003. The increase in net
interest income is due to the bank having a higher percentage of its earning
assets in loans and a lesser percentage of its earning assets in investment
securities resulting in an overall increase in net interest income. The net
interest margin realized on earning assets and the interest rate spread were
4.09% and 3.58%, respectively, for the three months ended March 31, 2004. For
the three months ended March 31, 2003, the net interest margin was 4.01% and
the interest rate spread was 3.51%.
INTEREST RATE SENSITIVITY AND ASSET LIABILITY MANAGEMENT
Interest rate sensitivity measures the timing and magnitude of the repricing of
assets compared with the repricing of liabilities and is an important part of
asset/liability management of a financial institution. The objective of
interest rate sensitivity management is to generate stable growth in net
interest income, and to control the risks associated with interest rate
movements. Management constantly reviews interest rate risk exposure and the
expected interest rate environment so that adjustments in interest rate
sensitivity can be timely made. Since the assets and liabilities of a bank are
primarily monetary in nature (payable in fixed, determinable amounts), the
performance of a bank is affected more by changes in
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DECATUR FIRST BANK GROUP, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS -- continued
INTEREST RATE SENSITIVITY AND ASSET LIABILITY MANAGEMENT, CONTINUED
interest rates than by inflation. Interest rates generally increase as the rate
of inflation increases, but the magnitude of the change in rates may not be the
same.
Net interest income is the primary component of net income for financial
institutions. Net interest income is affected by the timing and magnitude of
repricing of as well as the mix of interest sensitive and noninterest sensitive
assets and liabilities. "Gap" is a static measurement of the difference between
the contractual maturities or repricing dates of interest sensitive assets and
interest sensitive liabilities within the following twelve months. Gap is an
attempt to predict the behavior of the bank's net interest income in general
terms during periods of movement in interest rates. In general, if the bank is
asset sensitive, more of its interest sensitive assets are expected to reprice
within twelve months than its interest sensitive liabilities over the same
period. In a rising interest rate environment, assets repricing more quickly is
expected to enhance net interest income. Alternatively, decreasing interest
rates would be expected to have the opposite effect on net interest income since
assets would theoretically be repricing at lower interest rates more quickly
than interest sensitive liabilities. Although it can be used as a general
predictor, Gap as a predictor of movements in net interest income has
limitations due to the static nature of its definition and due to its inherent
assumption that all assets will reprice immediately and fully at the
contractually designated time. At March 31, 2004, the bank, as measured by Gap,
is in an asset sensitive position. Management has several tools available to it
to evaluate and affect interest rate risk, including deposit pricing policies
and changes in the mix of various types of assets and liabilities. For more
information on asset-liability management, see the annual report of Form 10-KSB
filed with the Securities and Exchange Commission.
PROVISION AND ALLOWANCE FOR LOAN LOSSES
The provision for loan losses is the charge to operating earnings that
management believes is necessary to maintain the allowance for possible loan
losses at an adequate level. The provision charged to expense was $65,000 for
the three months ended March 31, 2004 as compared to $125,000 for the three
months ended March 31, 2003. The decrease in the provision was due to a decrease
in loan volume throughout the first quarter of 2004 as compared to the first
quarter of 2003. The allowance for loan losses was 1.28% of gross loans at March
31, 2004. There are risks inherent in making all loans, including risks with
respect to the period of time over which loans may be repaid, risks resulting
from changes in economic and industry conditions, risks inherent in dealing with
individual borrowers, and, in the case of a collateralized loan, risks resulting
from uncertainties about the future value of the collateral. We anticipate
maintaining an allowance for loan losses based on, among other things,
historical experience, an evaluation of economic conditions, and regular reviews
of delinquencies and loan portfolio quality. Our judgment about the adequacy of
the allowance is based upon a number of assumptions about future events, which
we believe to be reasonable, but which may not prove to be accurate. Thus, there
is a risk that charge-offs in future periods could exceed the allowance for loan
losses or that substantial additional increases in the allowance for loan losses
could be required. Additions to the allowance for loan losses would result in a
decrease of our net income and our capital.
NONINTEREST INCOME
Noninterest income for the three months ended March 31, 2004 totaled $182,900 as
compared to $218,203 for the three months ended March 31, 2003. The decrease in
noninterest income is due to a decrease in income earned from mortgage
origination and a decrease in the gain on sale of investment securities
available-for-sale, partially offset by an increase in service charges on
deposit accounts, during the quarter ended March 31, 2004 as compared to the
same period in 2003.
NONINTEREST EXPENSE
Total noninterest expense for the three months ended March 31, 2004 was $896,331
as compared to $693,656 for the same period in 2003. Salaries and benefits, the
largest component of noninterest expense, totaled $502,620 for the three months
ended March 31, 2004, compared to $366,995 for the same period a year ago.
These increases were due to the addition of staff to operate the loan production
office ("LPO") in Greene County, Georgia which opened in the third quarter of
2003 as well as normal salary increases for existing bank staff. Other
operating expenses were $316,144 for the three months ended March 31, 2004 as
compared to $269,301 for the three months ended March 31, 2003. These increases
in noninterest expenses are due to the continued growth of the bank as well as
expenses associated with the Greene County LPO.
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DECATUR FIRST BANK GROUP, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS -- continued
INCOME TAXES
Income tax expense for the three months ended March 31, 2004 was $53,355 as
compared to $75,728 for the same period in 2003. The effective tax rate was
approximately 27% during 2004 and 27% during 2003. The bank has been able to
keep its tax rate consistent at 27% due to the effect of income earned on tax
exempt investment securities.
NET EARNINGS
The combination of the above factors resulted in net earnings of $143,664 for
the three months ended March 31, 2004 compared to net earnings for the three
months ended March 31, 2003 of $204,243. Basic earnings per share was $.16 for
the three months ended March 31, 2004 compared to basic earnings per share of
$.22 for the same period in 2003. The decrease in earnings during the first
quarter of 2004 as compared to the same period in 2003 is primarly due to the
effects of the new LPO as well as the decrease in mortgage origination income
and securities gains.
ASSETS AND LIABILITIES
During the first three months of 2004, total assets increased $3,215,349, or 3%,
when compared to December 31, 2003. The primary sources of growth in assets were
loans, which increased $4,270,198, or 6%, during the first three months of 2004.
Investment securities available-for-sale decreased $882,666 from December 31,
2003 to $16,135,875 at March 31, 2004. Total deposits increased $2,928,507, or
3%, from the December 31, 2003 amount of $83,747,992.
INVESTMENT SECURITIES
Investment securities available-for-sale decreased $882,666 from $17,018,541 at
December 31, 2003 to $16,135,875 at March 31, 2004. This decrease was the result
of funds being invested in loans. All of the Bank's marketable investment
securities were designated as available-for-sale at March 31, 2004.
PREMISES AND EQUIPMENT
Premises and equipment, net of depreciation, totaled $2,436,298 at March 31,
2004. The increase of $68,034 from the December 31, 2003 amount of $2,368,264
was due to the addition of fixed assets to support the LPO and other scheduled
purchases.
LOANS
Gross loans totaled $76,256,787 at March 31, 2004, an increase of $4,346,112 or
6% since December 31, 2003. The largest increase in loans was in Real estate -
mortgage, which increased $2,715,491 or 6% to $49,119,562 at March 31, 2004.
Balances within the major loans receivable categories as of March 31, 2004 and
December 31, 2003 are as follows:
March 31, 2004 December 31, 2003
--------------- ------------------
Commercial, financial and agricultural $ 10,835,167 $ 10,957,599
Real estate - construction 13,357,811 11,905,865
Real estate - mortgage 49,119,562 46,404,071
Consumer 2,944,247 2,643,140
--------------- ------------------
76,256,787 71,910,675
Less: Allowance for loan losses 975,065 899,151
--------------- ------------------
$ 75,281,722 $ 71,011,524
=============== ==================
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DECATUR FIRST BANK GROUP, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS - continued
ALLOWANCE FOR LOAN LOSSES
Activity in the Allowance for Loan Losses is as follows:
March 31,
------------------------------
2004 2003
-------------- --------------
Balance, January 1, $ 899,151 $ 812,507
Provision for loan losses for the period 65,000 125,000
Net loans (charged off) recovered for the period 10,914 (4,466)
-------------- --------------
Balance, end of period $ 975,065 $ 933,041
============== ==============
Gross loans outstanding, end of period $ 76,256,787 $ 66,360,786
============== ==============
Allowance for loan losses to gross loans outstanding 1.28% 1.41%
============== ==============
DEPOSITS
At March 31, 2004, total deposits increased by $2,928,507 or 3% from December
31, 2003. Noninterest-bearing demand deposits decreased $260,972 or 1% and
interest-bearing deposits increased $3,189,479 or 5%.
Balances within the major deposit categories as of March 31, 2004 and December
31, 2003 as follows:
March 31, 2004 December 31, 2003
--------------- ------------------
Noninterest-bearing demand deposits $ 19,827,822 $ 20,088,794
Interest-bearing demand deposits 23,733,708 25,941,961
Savings deposits 3,026,141 2,962,890
Certificates of deposit $100,000 and over 17,629,971 14,538,706
Other time deposits 22,458,857 20,215,641
--------------- ------------------
$ 86,676,499 $ 83,747,992
=============== ==================
LIQUIDITY
Our liquidity needs include the funding of loans and purchases of operating
assets. Liquidity needs are met by us through scheduled maturities of loans and
investments on the asset side and through pricing policies on the liability side
for interest-bearing deposit accounts.
We are a party to financial instruments with off-balance-sheet risk in the
normal course of business to meet the financing needs of our customers. These
financial instruments consist of commitments to extend credit and standby
letters of credit. 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. Standby letters of credit are written commitments issued by the Bank
to guarantee the performance of a customer to a third party. Commitments
generally have fixed expiration dates or other termination clauses and may
require payment of a fee. A commitment involves, to varying degrees, elements
of credit and interest rate risk in excess of the amount recognized in the
balance sheets. Our exposure to credit loss in the event of non-performance by
the other party to the instrument is represented by the contractual notional
amount of the instrument.
Since certain commitments are expected to expire without being drawn upon, the
total commitment amounts do not necessarily represent future cash requirements.
We use the same credit policies in making commitments to extend credit as it
does for on-balance-sheet instruments.
Collateral held for commitments to extend credit varies but may include
certificates of deposit, accounts receivable, inventory, property, plant,
equipment, and income-producing commercial properties.
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DECATUR FIRST BANK GROUP, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS - continued
The following table summarizes our off-balance-sheet financial instruments whose
contract amounts represent credit risk as of March 31, 2004:
Commitments to extend credit $ 17,863,000
Standby letters of credit $ 288,000
Management is not aware of any significant concentrations of loans to classes of
borrowers or industries that would be affected similarly by economic conditions.
Although the bank's loan portfolio is diversified, a substantial portion of its
borrowers' ability to honor the terms of their loans is dependent on the
economic conditions in DeKalb County and surrounding areas.
We also have obtained lines of credit available with correspondent banks to
purchase federal funds for periods from one to fourteen days.
CAPITAL RESOURCES
Total shareholders' equity increased from $10,690,294 at December 31, 2003 to
$10,932,817 at March 31, 2004. This increase was attributable to net earnings
for the period complemented by a increase in accumulated other comprehensive
income.
Bank holding companies, such as us, and their banking subsidiaries are required
by banking regulators to meet certain minimum levels of capital adequacy, which
are expressed in the form of certain ratios. Capital is separated into Tier 1
capital (essentially common shareholders' equity less intangible assets) and
Tier 2 capital (essentially the allowance for loan losses limited to 1.25% of
risk-weighted assets). The first two ratios, which are based on the degree of
credit risk in our assets, provide the weighting of assets based on assigned
risk factors and include off-balance sheet items such as loan commitments and
stand-by letters of credit. The ratio of Tier 1 capital to risk-weighted assets
must be at least 4.0% and the ratio of total capital (Tier 1 capital plus Tier 2
capital) to risk-weighted assets must be at least 8.0%. The capital leverage
ratio supplements the risk-based capital guidelines.
Banks and bank holding companies are required to maintain a minimum ratio of
Tier 1 capital to adjusted quarterly average total assets of 3.0%.
The following table summarizes our consolidated capital ratios at March 31,
2004:
Tier 1 capital (to risk-weighted assets) 13.54%
Total capital (to risk-weighted assets) 12.41%
Tier 1 capital (to total average assets) 10.53%
REGULATORY MATTERS
From time to time, various bills are introduced in the United States Congress
with respect to the regulation of financial institutions. Certain of these
proposals, if adopted, could significantly change the regulation of banks and
the financial services industry. We cannot predict whether any of these
proposals will be adopted or, if adopted, how these proposals would affect us.
RECENT ACCOUNTING PRONOUNCEMENTS
Accounting standards that have been issued or proposed by the Financial
Accounting Standards Board that do not require adoption until a future date are
not expected to have a material impact on the consolidated financial statements
upon adoption.
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ITEM 3. CONTROLS AND PROCEDURES
At the end of the period covered by this report, the Company carried out an
evaluation, under the supervision and with the participation of the Company's
management, including the Company's Chief Executive Officer and Principal
Financial and Accounting Officer, of the effectiveness of the design and
operation of the Company's disclosure controls and procedures pursuant to
Exchange Act Rule 13a-14. Based upon that evaluation, the Company's Chief
Executive Officer and Principal Financial and Accounting Officer concluded that
the Company's disclosure controls and procedures are effective in timely
alerting her to material information relating to the Company (including its
consolidated subsidiaries) that is required to be included in the Company's
periodic filings with the Securities and Exchange Commission. There have been no
changes in the Company's internal controls over financial reporting during the
quarter ended March 31, 2004 that have materially affected, or are reasonably
likely to materially affect, the Company's internal control over financial
reporting.
-14-
PART II. OTHER INFORMATION
DECATUR FIRST BANK GROUP, INC.
Item 1. Legal Proceedings
None
Item 2. Changes in Securities and Purchases of Equity Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
(a) The 2004 Annual Meeting of Shareholders was held on April 26,
2004.
(b) Election of Directors
The following directors will serve until the 2005 Annual Meeting
of Shareholders: John L. Adams, Jr., Mary Bobbie Bailey, Lynn
Pasqualetti and Kirby A. Thompson. The following directors will
serve until the 2006 Annual Meeting of Shareholders: Merriell
Autrey, Jr., John Walter Drake, William F. Floyd, Robert E.
Lanier and Roger K Quillen.
The following are the results of the votes cast by shareholders
present at the 2004 Annual Meeting of Shareholders, by proxy or
in person, for the proposal to elect the following directors to
serve until the 2007 Annual Meeting of Shareholders:
For Against
--- -------
James A. Baskett 669,110 2,250
Carol G. Nickola 669,110 -
James T. Smith, III 669,010 2,350
Judy B. Turner 666,460 4,900
Item 5. Other Information
-----------------
None
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits:
31 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32 Certification of the Chief Executive Officer and Principal
Financial and Accounting Officer pursuant to 18 U.S.C. Section
350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
(b) Reports on Form 8-K:
None.
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DECATUR FIRST BANK GROUP, INC.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934,
the registrant has caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
DECATUR FIRST BANK GROUP, INC.
By: /s/ JUDY B. TURNER
-----------------------------
Judy B. Turner
President, Chief Executive Officer and
Principal Financial and Accounting Officer
Date: May 14, 2004
-16-
Exhibit 31
CERTIFICATION
I, Judy B. Turner, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Decatur First
Bank Group, Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. I am responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under my
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made
known to me by others within those entities, particularly during
the period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report my
conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this
report based on such evaluation; and
c) disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth
fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial
reporting; and
5. I have disclosed, based on my most recent evaluation of internal
control over financial reporting, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):
a) all significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant's
ability to record, process, summarize and report financial
information; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls over financial reporting.
Date: May 14, 2004
/s/ Judy B. Turner
---------------------
President, Chief Executive Officer and Principal Financial and Accounting
Officer
Exhibit 32
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION
905 OF THE SARBANES-OXLEY ACT OF 2002
The undersigned hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that this Quarterly
Report on Form 10-QSB for the quarter ended March 31, 2004 fully complies with
the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of
1934, as amended, and the information contained in such report fairly presents,
in all material respects, the financial condition and results of operations of
the Company.
This 14th day of May, 2004.
/s/ JUDY B. TURNER
---------------------
Judy B. Turner
President, Chief Executive Officer and Principal Financial and Accounting
Officer
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