ITEM 1. BUSINESS
Corus Bankshares, Inc. ("Corus"), incorporated in Minnesota in 1958, is a bank holding company registered under the Bank Holding Company Act of 1956. Corus provides consumer and corporate banking products and services through its wholly owned banking subsidiary, Corus Bank, N.A. (the "Bank"). Corus' other activities include investments in the common stocks of financial industry companies as well as participations in certain of the Bank's larger commercial real estate loans.
During 2000 and 2001, the Bank restructured its business, focusing on two main businesses and one smaller business. The two main business activities for Corus are commercial real estate lending and deposit gathering. The third, and smaller, business is servicing the check cashing industry.
Commercial real estate lending is focused primarily on loans secured by office, condominium, hotel, and residential apartment projects. Loan amounts often approach the Bank's legal lending limit and are secured by properties throughout the United States. As of December 31, 2002, 82% of outstanding loan balances plus unfunded commitments were secured by property outside of Illinois providing the geographic diversification that management believes is very important in the commercial real estate business.
With respect to retail banking, the Bank has 11 branches in the Chicago metropolitan area. Through these branches, Corus offers general banking services such as checking, savings, money market, and time deposit accounts as well as safe deposit boxes and a variety of additional services.
Finally, Corus provides clearing, depository, and credit services to more than 525 check cashing industry locations in the Chicago area and an additional 20 in Milwaukee, Wisconsin.
The restructuring referred to above included the sale in October 2000 of Corus' trust and investment management services business. In addition, Corus sold the majority of its student loans, over $460 million in loans, in a two-part transaction completed in April 2001. Corus also decided to cease originating any new residential first mortgage or home equity loans. The existing portfolio will continue to be serviced by Corus. Finally, Corus sold essentially all of its medical finance portfolio.
COMPETITION
All of Corus' principal business activities are highly competitive. Corus competes actively with other financial services providers offering a wide array of financial products and services. The competitors include other commercial banks, savings banks, credit unions, brokerage firms, finance companies, insurance companies, and mutual funds. Competition is generally in the form of interest rates and points charged on loans, interest rates paid on deposits, service charges, banking hours and locations including ATM access, and other service-related products.
EMPLOYEES
At December 31, 2002, Corus employed a total of 475 full-time equivalent persons, consisting of 108 executives, management and supervisory personnel and 367 clerical and secretarial employees.
SUPERVISION AND REGULATION
General
Corus is a bank holding company within the meaning of the Bank Holding Company Act of 1956, as amended ("the Act"), and is registered as such with the Board of Governors of the Federal Reserve System ("the Federal Reserve Board"). The Act requires every bank holding company to obtain prior approval of the Federal Reserve Board before acquiring, merging with or consolidating into another bank holding company, acquiring substantially all the assets of any bank, or acquiring direct or indirect ownership or control of 5% or more of the voting shares of any bank or bank holding company.
The Act also prohibits a bank holding company, with certain exceptions, from acquiring direct or indirect ownership or control of 5% or more of the voting shares of any company which is not a bank and from engaging in any business other than that of banking, managing and controlling banks, or furnishing services to banks and their subsidiaries. However, Corus may engage in and own shares of companies engaged in certain businesses determined by the Federal Reserve Board to be closely related to banking or managing or controlling banks.
The Illinois Bank Holding Company Act of 1957 ("the Illinois Act"), as amended, permits Corus to acquire banks located anywhere in Illinois. Other amendments of the Illinois Act authorize combinations between banks and bank holding companies located in Illinois and banks and bank holding companies located in another state if that other state has passed legislation granting similar privileges to Illinois banks and bank holding companies. Effective December 1, 1990, holding companies from any state were permitted to acquire Illinois banks and bank holding companies if the other state allows Illinois bank holding companies the same privilege. In June 1993, the Illinois Act was amended to eliminate all branch restrictions. Accordingly, banks located in Illinois are permitted to establish branches anywhere in the state.
Corus' subsidiary bank is a national bank and, as such, is supervised, examined and regulated by the Office of the Comptroller of the Currency under the National Bank Act. Since a national bank is also a member of the Federal Reserve System and its deposits are insured by the Federal Deposit Insurance Corporation ("FDIC"), the subsidiary bank is also subject to the applicable provisions of the Federal Reserve Act, the Federal Deposit Insurance Act, and, in certain respects, to state laws applicable to financial institutions.
The subsidiary bank is subject to FDIC deposit insurance assessments. Under the FDIC's risk-based assessment system, the assessment rate is based on classification of a depository institution in one of nine risk assessment categories. Such classification is based upon the institution's capital level and upon certain supervisory evaluations of the institution by its primary regulator. The subsidiary bank's FDIC deposit insurance cost for 2003 will be approximately 0.02% of deposits.
The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA") initiated new intense regulation for the financial services industry. FDICIA made significant changes in the legal environment for insured banks, including reductions in insurance coverage for certain types of deposits, increases in consumer-oriented requirements, and substantial revisions in the supervision, examination, and audit processes. FDICIA also required new reporting by banks and mandated adoption of new regulations concerning capital, liquidity, internal controls, safety and soundness, and prompt corrective action.
Capital Adequacy
The Federal Reserve Board established risk-based capital guidelines that require bank holding companies to maintain minimum capital ratios. The main objective of the risk-based capital requirements is to provide a fair and consistent framework for comparing capital positions of all banking institutions. Under these guidelines, capital consists of two components, core capital elements (Tier 1 capital) and supplementary capital elements (Tier 2 capital). Assets and off-balance-sheet items are assigned broad risk categories. The aggregate dollar value of each category is multiplied by a risk weight associated with that category.
In 1992, the FDIC adopted new regulations that defined five capital categories for purposes of implementing the requirements under FDICIA. The five capital categories, which range from "well-capitalized" to "critically under-capitalized", are based on the level of risk-based capital measures. The minimum risk-based capital ratios for Tier 1 capital to risk-weighted assets and total risk-based capital to risk-weighted assets to be classified as well-capitalized are 6.0% and 10.0%, respectively. At December 31, 2002, Corus' Tier 1 capital and total risk-based capital ratios were 16.8% and 18.9%, respectively.
In addition, bank regulatory agencies established a leverage ratio to supplement the risk-based capital guidelines. The leverage ratio is intended to ensure that adequate capital is maintained against risks other than credit risk. A minimum required ratio of Tier 1 capital to total assets of 3.0% is required for the highest quality bank holding companies that are not anticipating or experiencing significant growth. All other banking institutions must maintain a leverage ratio of 4.0% to 5.0% depending upon an institution's particular risk profile. At December 31, 2002, Corus' leverage ratio was 17.3%.
Interstate Banking
The Riegle-Neal Interstate Bank and Branching Efficiency Act of 1994 ("IBBA") permits bank holding companies that are adequately capitalized and managed to acquire banks located in any other state after September 29, 1995, subject to certain statewide and nationwide deposit concentration limits. States may prohibit acquisition of banks that have not been in existence for at least five years.
The interstate branching by merger provisions were effective on June 1, 1997, unless a state took legislative action prior to that date. The long-term effects on Corus of such changes in interstate banking and branching laws cannot be predicted. However, it is likely that there will be increased competition from national and regional banking firms headquartered outside of Illinois.
Graham-Leach-Bliley Act of 1999
The enactment of the Graham-Leach-Bliley Act of 1999 ("the GLB act") repeals sections 20 and 32 of the Banking Act of 1933 ("the Act"), allowing new opportunities for banks, other depository institutions, insurance companies, and securities firms to enter into combinations that permit a single financial services organization to offer customers a more complete array of financial products and services. To further this goal, the GLB Act amended section 4 of the Act providing a new regulatory framework for regulation through the financial holding company ("FHC"), which has as its umbrella regulator the Federal Reserve Board. Functional regulation of the FHC's separately regulated subsidiaries will be conducted by their primary functional regulator. Pursuant to the GLB Act, bank holding companies, subsidiary depository institutions thereof, and foreign banks electing to qualify as a FHC must be "well managed," "well capitalized," and at least rated satisfactory under the Community
Reinvestment Act in order for them to engage in new financial activities. The GLB Act also provides a federal right to privacy of non-public personal information of individual customers.
The Sarbanes-Oxley Act of 2002
On July 30, 2002, the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act") was passed into law. The Sarbanes-Oxley Act applies to all companies required to file periodic reports with the United States Securities and Exchange Commission (the "SEC") and contains a number of significant changes relating to the responsibilities of directors, officers and auditors as well as reporting and governance obligations. While some provisions became effective immediately, most require the SEC to issue official guidance, generally no later than April 26, 2003.
ACCESS TO REPORTS
The Company's Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports are made available free of charge through the Company's website at www.corusbank.com as soon as reasonably practicable after such material is electronically filed with, or furnished to, the Securities and Exchange Commission. Copies will be available upon written request to the Chief Financial Officer of the Company. A charge will be made for exhibits requested.
ITEM 2.
ITEM 2. PROPERTIES
Corus utilizes the building facilities of its Irving Park branch, which is located at 3959 N. Lincoln Avenue, Chicago, Illinois, for its executive offices. Corus owns the property and buildings on which nine of the eleven bank branches are located. The other two branch facilities are leased from unrelated parties.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
Corus is involved in various legal and regulatory proceedings involving matters that arose in the ordinary course of business. The consequences of these proceedings are not presently determinable but, in the opinion of management, these proceedings will not have a material effect on the results of operations, financial position, liquidity or capital resources.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
PRICE RANGE OF COMMON STOCK
Corus' common stock trades on the NASDAQ National Market tier of The NASDAQ Stock Market under the symbol: CORS. The high and low prices for the common stock for the calendar quarters indicated, as reported by NASDAQ, are listed on page 38 of the 2002 Annual Report to Shareholders ("2002 Annual Report"), incorporated herein by reference in response to Item 8 hereof.
APPROXIMATE NUMBER OF EQUITY SECURITY HOLDERS
The Company had approximately 2,500 shareholders as of February 21, 2003.
DIVIDENDS ON COMMON STOCK
Quarterly cash dividends per common share for the last two years are included on page 38 of the 2002 Annual Report, incorporated herein by reference in response to Item 8 hereof. Dividends were declared and paid on a quarterly basis. The declaration of dividends is at the discretion of Corus' Board of Directors and depends upon, among other factors, earnings, capital requirements and the operating and financial condition of Corus.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
Refer to pages 66 and 67 of the 2002 Annual Report, incorporated herein by reference for additional selected financial data.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information contained under the caption "Management's Discussion and Analysis of Financial Statements" on pages 41 through 65 of the 2002 Annual Report is incorporated herein by reference.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information contained under the caption "Market Risk Management" on page 64 of the 2002 Annual Report is incorporated herein by reference.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is incorporated herein by reference to the Consolidated Financial Statements, Notes to Consolidated Financial Statements, and Reports of Independent Public Accountants on pages 10 through 40 of the Company's 2002 Annual Report.
SUPPLEMENTARY STATISTICAL DATA
Pages 7 through 14 contain supplementary statistical data. This data should be read in conjunction with Corus' Management's Discussion and Analysis of Financial Statements and the Consolidated Financial Statements and notes thereto of the 2002 Annual Report, incorporated herein by reference in response to Items 7 and 8 hereof.
SECURITIES PORTFOLIO
Carrying Value of Securities by Category
The carrying value of securities held by Corus were as follows:
Common Stock Portfolio
At December 31, 2002, Corus had investments in the common stocks of 33 financial industry companies totaling $147.8 million, including net unrealized gains of $46.4 million. These investments are included in the available-for-sale classification. Following is a list of Corus' top 25 holdings, by market value, as of December 31, 2002:
Maturities of Securities
The scheduled maturities by security type as of December 31, 2002 were as follows:
The weighted-average yields for each range of maturities of securities at December 31, 2002 were as follows:
Actual maturities may differ from those scheduled due to prepayments from issuers. Common stock yields, which reflect a tax equivalent adjustment for the 70% dividend received deduction, include the impact of dividend payments only. Yields on tax-advantaged securities reflect a tax equivalent adjustment based on a marginal corporate tax rate of 35%.
LOAN PORTFOLIO
Classification of Loans
Corus' loans were as follows:
Maturities of Loans and Sensitivity to Changes in Interest
The following table classifies the scheduled maturities for the following loan portfolio categories at December 31, 2002:
Of the loans maturing after one year, $128.9 million have fixed rates and $920.8 million have floating or adjustable rates. To manage interest rate exposure, Corus has entered into interest rate swap agreements on certain fixed-rate commercial real estate loans. For additional information on such financial instruments, see Notes 1 and 10 to the Consolidated Financial Statements on pages 14 through 18 and 27 of the 2002 Annual Report, incorporated herein by reference in response to Item 8 hereof.
Risk Elements in the Loan Portfolio
Past Due, Nonaccrual, and Restructured Loans were as follows:
Guaranteed student loans that are greater than 90 days past due are classified as performing due to the principal and accrued interest on such loans being guaranteed by individual state or private non-profit agencies.
The interest income forgone on nonaccrual loans totaled $1.1 million for the year ended December 31, 2002.
Potential Problem Loans
In addition to those loans disclosed under the preceding "Nonaccrual, Past Due, and Restructured Loans" section, management identified, through their problem loan identification system, certain other loans in the portfolio where known information about possible credit problems of borrowers causes management to have serious doubts as to the ability of such borrowers to comply with the present loan repayment terms and which may result in future disclosure of such loans as nonaccrual, past due, or restructured. As of December 31, 2002, the principal amount of these loans was $98.4 million. This amount generally includes commercial real estate loans that were classified as either Special Mention or Substandard for regulatory purposes and residential real estate loans that are either in bankruptcy or in process of foreclosure.
Analysis of the Allowance for Loan Losses
The activity in the allowance for loan losses was as follows:
Allocation of the Allowance for Loan Losses
The allocation of the allowance for loan losses was as follows:
The unallocated balance is based on management's review of overall factors affecting the determination of probable losses inherent in the portfolio, which may not be captured, or captured completely, by the mechanical application of historical loss ratios and other factors used in determining the allocated inherent reserve. This portion of the reserve analysis involves the exercise of judgment and reflects all appropriate considerations, including management's view that the reserve should have a margin that recognizes the imprecision inherent in the process of estimating expected credit losses.
Loan Portfolio Composition
The composition of the loan portfolio was as follows:
For further review of the loan loss provision and the allowance for loan losses, reference is made to page 15 of Notes to Consolidated Financial Statements and pages 59 through 60 of Management's Discussion and Analysis of Financial Statements of the 2002 Annual Report, incorporated herein by reference in response to Items 7 and 8 hereof.
Loan Participations
While Corus generally prefers to initiate and fund its own loans without participations either bought or sold, there are limited instances where Corus has either purchased or sold interests in certain loans. The following table details various loan participations in which Corus has purchased an interest:
DEPOSITS
The scheduled maturities of time deposits in denominations of $100,000 or greater were as follows at December 31, 2002:
RETURN ON EQUITY AND ASSETS
The following table presents certain ratios relating to Corus' equity and assets:
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
As previously disclosed, on June 4, 2002, the Audit Committee of Corus Bankshares, Inc. ("Corus") recommended and Corus' Board of Directors approved the appointment of Ernst & Young LLP as independent accountants of Corus for fiscal 2002. This action caused the dismissal of Arthur Andersen LLP ("Andersen") as the independent accountants of Corus.
For the two years ended December 31, 2001, Andersen's reports on the financial statements did not contain an adverse opinion or a disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles.
For the two years ended December 31, 2001 and from December 31, 2001 through the effective date of the dismissal, there were no disagreements between Andersen and Corus on any matters of accounting principle or practice, financial statement disclosure, or auditing scope or procedure.
Corus requested that Andersen furnish a letter addressed to the United States Securities and Exchange Commission stating whether Andersen agrees with the preceding statements. Andersen's letter dated June 4, 2002, is attached as Exhibit 16 to the Form 8-K filing dated June 6, 2002.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding directors and executive officers of Corus is incorporated herein by reference to the descriptions under "Election of Directors" on pages 2 through 5 of the 2003 Proxy Statement. For both those executive officers listed in the Proxy as well as the other executive officers of the Company (Senior Vice President title and greater) not listed in the Proxy, the following is a table providing the executive officer's name, age, position(s) held with the Company and Subsidiary and the date the officer assumed their present office(s).
EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding compliance with Section 16(a) of the Exchange Act is incorporated herein by reference to page 18 of the 2003 Proxy Statement.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
Information regarding executive compensation is incorporated herein by reference to the material under the caption "Executive Compensation" on pages 8 through 16 of the 2003 Proxy Statement.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Information regarding security ownership of certain beneficial owners and management is incorporated herein by reference to the material under the headings "Outstanding Voting Securities and Principal Shareholders" and "Proposal One: Election of Directors" on pages 1 through 5 of the 2003 Proxy Statement.
Following is information regarding Corus' equity compensation plan as of December 31, 2002. Additional information regarding Corus' equity compensation plan is incorporated herein by reference to material under the heading "Stock Option Plan" on page 31 of Notes to Consolidated Financial Statements of the 2002 Annual Report.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information regarding certain relationships and related transactions is incorporated herein by reference to the material under the heading "Transactions with Management and Others" on page 18 of the 2003 Proxy Statement.
ITEM 14.
ITEM 14. CONTROLS AND PROCEDURES
Within 90 days prior to the date of filing this report, an evaluation was performed under the supervision and with the participation of the Company's management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on and as of the time of such evaluation, the Company's management, including the Chief Executive Officer and Chief Financial Officer, concluded that the Company's disclosure controls and procedures were effective in timely alerting them to material information relating to the Company (including its consolidated subsidiary) required to be included in the Company's periodic filing with the Securities and Exchange Commission. There have been no significant changes in the Company's internal controls or in other factors that could significantly affect internal controls subsequent to the time of such evaluation.
PART IV
ITEM 15.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following Consolidated Financial Statements, Notes to Consolidated Financial Statements, and the Reports of Independent Public Accountants are incorporated herein by reference to the following pages of the registrant's 2002 Annual Report:
(b) Reports on Form 8-K:
None
(c) Exhibits: See exhibits filed herewith
(3a) Amended and Restated Articles of Incorporation is incorporated herein by reference to Exhibit 4.1 to the Form S-8 filing dated May 22, 1998
(3b) By-Laws are incorporated herein by reference to Exhibit 4.2 to the Form S-8 filing dated May 22, 1998
(10.1) Commission Program for the Commercial Loan Officers is incorporated herein by reference to Form S-8 filing dated May 22, 1998
(10.2) The 1999 Stock Option Plan is incorporated herein by reference to Form S-8 filing dated April 30, 1999
(11) Computation of Net Income Per Share is incorporated herein by reference to page 32 of the registrant's 2002 Annual Report
(13) The registrant's 2002 Annual Report is incorporated herein by reference
(16) Letter re Change in Certifying Accountant is incorporated herein by reference to the Form 8-K filing dated June 6, 2002
(23) Consent of Independent Auditors
(99) Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
/s/ TIM H. TAYLOR ----------------------------- Tim H. Taylor Executive Vice President & Chief Financial Officer March 21, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
CERTIFICATIONS
I, Robert J. Glickman, certify that:
1. I have reviewed this annual report on Form 10-K of Corus Bankshares, Inc;
2. Based on my knowledge, this annual 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 annual report;
3. Based on my knowledge, the financial statements, and other financial information included in this annual 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 annual report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; 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; and
6. The registrant's other certifying officer and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Date: March 21, 2003 /s/ ROBERT J. GLICKMAN --------------------------- Robert J. Glickman Chief Executive Officer
CERTIFICATIONS
I, Tim H. Taylor, certify that:
1. I have reviewed this annual report on Form 10-K of Corus Bankshares, Inc;
2. Based on my knowledge, this annual 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 annual report;
3. Based on my knowledge, the financial statements, and other financial information included in this annual 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 annual report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; 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; and
6. The registrant's other certifying officer and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Date: March 21, 2003 /s/ TIM H. TAYLOR ---------------------- Tim. H. Taylor Chief Financial Officer