U.S. Securities and Exchange Commission

Washington, D.C.  20549

 

Form 10-Q

 

ý

Quarterly Report Pursuant To Section 13 or 15 (d) of the Securities Exchange Act of 1934

 

For the Quarter Ended September 30, 2004

 

Or

 

o

Transition Report Pursuant To Section 13 or 15 (d) of the Securities Exchange Act of 1934

 

Commission file number  000-26601

 

Pelican Financial, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware

58-2298215

(State or Other Jurisdiction of
Incorporation or Organization)

(IRS Employer
Identification No.)

 

 

3767 Ranchero Drive
Ann Arbor, Michigan 48108

(Address of Principal Executive Offices)

 

 

734-662-9733

(Registrant’s Telephone Number, Including Area Code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  ý     No  o

 

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act) Yes  o     No  ý

 

Indicate the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:

 

Common Stock Outstanding as of October 31, 2004

 

Common stock, $0.01 Par value                                                      4,490,158 Shares

 

 



 

Index

 

Part I.  Financial Information

 

 

 

 

 

 

Item 1.

Financial Statements (unaudited)

 

 

 

 

 

 

 

Consolidated Balance Sheets as of September 30, 2004 and December 31, 2003

 

 

 

 

 

 

 

Consolidated Statements of Income and Comprehensive Income for the Three and
Nine Months Ended September 30, 2004 and 2003

 

 

 

 

 

 

 

Consolidated Statements of Cash Flows for the Nine Months Ended
September 30, 2004 and 2003

 

 

 

 

 

 

 

Notes to Consolidated Financial Statements

 

 

 

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

 

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

 

 

 

 

 

 

Item 4.

Controls and Procedures

 

 

 

 

Part II. 

  Other Information

 

 

 

 

 

 

Item 1.

Legal Proceedings

 

 

 

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

 

 

 

 

 

Item 3.

Defaults Upon Senior Securities

 

 

 

 

 

 

Item 4.

Submission of Matters to a Vote of Security Holders

 

 

 

 

 

 

Item 5.

Other Information

 

 

 

 

 

 

Item 6.

Exhibits and Reports on Form 8-K

 

 



 

PELICAN FINANCIAL, INC.
Consolidated Balance Sheets

 

 

 

September 30,
2004

 

December 31,
2003

 

 

 

(Unaudited)

 

 

 

ASSETS

 

 

 

 

 

Cash and cash equivalents

 

 

 

 

 

Cash and due from banks

 

$

7,814,919

 

$

6,354,416

 

Interest-bearing deposits

 

 

45,639,288

 

Federal funds sold

 

80,879,303

 

3,426,013

 

Total cash and cash equivalents

 

88,694,222

 

55,419,717

 

Securities available for sale

 

58,246,626

 

49,729,994

 

Federal Reserve & Federal Home Loan Bank Stock

 

1,192,200

 

949,000

 

Loans held for sale

 

 

141,200

 

Loans receivable, net

 

104,763,310

 

109,798,257

 

Other real estate owned

 

 

332,857

 

Premises and equipment, net

 

3,648,170

 

2,658,018

 

Other assets

 

2,339,341

 

2,486,592

 

 

 

 

 

 

 

 

 

$

258,883,869

 

$

221,515,635

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

Liabilities

 

 

 

 

 

Deposits

 

 

 

 

 

Noninterest-bearing

 

$

66,003,472

 

$

74,004,969

 

Interest-bearing

 

163,914,319

 

117,907,625

 

Total deposits

 

229,917,791

 

191,912,594

 

Note payable

 

 

291,665

 

Federal Home Loan Bank borrowings

 

12,000,000

 

12,000,000

 

Other liabilities

 

328,918

 

421,088

 

Total liabilities

 

242,246,709

 

204,625,347

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

Preferred stock, 200,000 shares authorized; none outstanding

 

 

 

Common stock, $.01 par value 10,000,000 shares authorized; 4,490,158 and 4,488,351 outstanding at September 30, 2004 and December 31, 2003

 

44,902

 

44,884

 

Additional paid in capital

 

15,574,809

 

15,568,593

 

Retained earnings

 

1,107,719

 

1,183,546

 

Accumulated other comprehensive income (loss), net of tax

 

(90,270

)

93,265

 

Total shareholders’ equity

 

16,637,160

 

16,890,288

 

 

 

 

 

 

 

 

 

$

258,883,869

 

$

221,515,635

 

 

See accompanying notes to the financial statements

 

3



 

PELICAN FINANCIAL, INC.
Consolidated Statements of Income and Comprehensive Income (Unaudited)

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

 

2004

 

2003

 

2004

 

2003

 

Interest income

 

 

 

 

 

 

 

 

 

Loans, including fees

 

$

1,810,314

 

$

2,192,205

 

$

5,712,140

 

$

7,077,306

 

Investment securities, taxable

 

853,184

 

80,333

 

2,124,366

 

284,594

 

Federal funds sold and overnight accounts

 

82,480

 

152,285

 

254,308

 

397,302

 

Total interest income

 

2,745,978

 

2,424,823

 

8,090,814

 

7,759,202

 

Interest expense

 

 

 

 

 

 

 

 

 

Deposits

 

1,016,584

 

574,782

 

2,883,814

 

1,707,516

 

Other borrowings

 

164,603

 

267,825

 

490,459

 

800,869

 

Total interest expense

 

1,181,187

 

842,607

 

3,374,273

 

2,508,385

 

Net interest income

 

1,564,791

 

1,582,216

 

4,716,541

 

5,250,817

 

Provision for loan losses

 

(300,000

)

518,000

 

(225,000

)

888,000

 

Net interest income after provision for loan losses

 

1,864,791

 

1,064,216

 

4,941,541

 

4,362,817

 

Noninterest income

 

 

 

 

 

 

 

 

 

Gain on sales of securities, net

 

310,456

 

 

313,315

 

129,360

 

Service charges on deposit accounts

 

52,303

 

40,950

 

118,793

 

141,159

 

Gain on sale of loans, net

 

4,587

 

21,240

 

24,345

 

92,044

 

Net gain (loss) on foreclosed assets and other income

 

36,262

 

(43,968

)

105,657

 

16,554

 

Total noninterest income

 

403,608

 

18,222

 

562,110

 

379,117

 

Noninterest expense

 

 

 

 

 

 

 

 

 

Compensation and employee benefits

 

1,032,321

 

834,957

 

2,899,231

 

2,718,447

 

Occupancy and equipment

 

352,557

 

254,809

 

939,756

 

730,574

 

Legal

 

67,886

 

86,368

 

175,336

 

288,727

 

Accounting and auditing

 

52,620

 

51,234

 

143,770

 

116,178

 

Data processing

 

69,669

 

30,511

 

161,301

 

88,178

 

Marketing and advertising

 

22,652

 

27,266

 

80,257

 

118,123

 

Loan and other real estate owned

 

70,590

 

53,861

 

272,229

 

360,360

 

Other noninterest expense

 

363,442

 

303,885

 

944,801

 

705,770

 

Total noninterest expense

 

2,031,737

 

1,642,891

 

5,616,681

 

5,126,357

 

Income (loss) from continuing operations before income taxes

 

236,662

 

(560,453

)

(113,030

)

(384,423

)

Income tax expense (benefit)

 

80,848

 

(190,175

)

(37,203

)

(129,396

)

Income (loss) from continuing operations

 

$

155,814

 

$

(370,278

)

$

(75,827

)

$

(255,027

)

Discontinued operations:

 

 

 

 

 

 

 

 

 

Income from operations of discontinued mortgage subsidiary

 

 

5,660,786

 

 

14,900,192

 

Income tax

 

 

1,916,412

 

 

5,082,920

 

  Income from discontinued operations

 

 

3,744,374

 

 

9,817,272

 

Net income (loss)

 

$

155,814

 

$

3,374,096

 

$

(75,827

)

$

9,562,245

 

Basic earnings (loss) per share from continuing operations

 

$

0.03

 

$

(0.08

)

$

(0.02

)

$

(0.06

)

Basic earnings per share from discontinued operations

 

 

0.84

 

 

2.21

 

Basic earnings (loss) per share

 

$

0.03

 

$

0.76

 

$

(0.02

)

$

2.15

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings (loss) per share from continuing operations

 

$

0.03

 

$

(0.08

)

$

(0.02

)

$

(0.06

)

Diluted earnings per share from discontinued operations

 

 

0.83

 

 

2.19

 

Diluted earnings (loss) per share

 

$

0.03

 

$

0.75

 

$

(0.02

)

$

2.13

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income (loss)

 

$

685,552

 

$

3,203,071

 

$

(259,362

)

$

9,372,055

 

 

See accompanying notes to the financial statements

 

4



 

PELICAN FINANCIAL, INC.
Consolidated Statements of Cash Flows (Unaudited)

 

 

 

 

2004

 

2003

 

Cash flows from operating activities

 

 

 

 

 

Net cash provided by operating activities of continuing operations

 

$

260,248

 

$

19,206,253

 

Net cash by operating activities of discontinued operations

 

 

13,043,714

 

Net cash provided by operating activities

 

$

260,248

 

$

32,249,967

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

Loan originations, net

 

5,259,947

 

(5,953,240

)

Sale of real estate owned

 

321,396

 

122,475

 

Property and equipment expenditures, net

 

(1,217,456

)

(293,577

)

Purchase of securities available for sale

 

(86,897,656

)

(44,775,000

)

Proceeds from sales of securities available for sale

 

70,867,375

 

42,457,589

 

Proceeds from maturities and principal repayments of securities available for sale

 

7,204,085

 

14,795

 

Purchase and redemption of Federal Home Loan Bank Stock

 

(243,200

)

100,000

 

Investing activities of discontinued operations

 

 

22,130,000

 

Net cash provided (used) by investing activities

 

(4,705,509

)

13,803,042

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

Increase in deposits

 

38,005,197

 

16,013,841

 

Cash dividends

 

 

(1,334,454

)

Decrease in note payable due on demand

 

(291,665

)

(375,000

)

Proceeds from exercise of stock options

 

6,234

 

108,666

 

Financing activities of discontinued operations

 

 

(30,135,534

)

Net cash provided (used) by financing activities

 

37,719,766

 

(15,722,481

)

 

 

 

 

 

 

Net change in cash and cash equivalents

 

33,274,505

 

30,330,528

 

 

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

55,419,717

 

57,361,935

 

 

 

 

 

 

 

Cash and cash equivalents at end of period

 

$

88,694,222

 

$

87,692,463

 

 

 

 

 

 

 

Non-cash investing activities

 

 

 

 

 

Increase in real estate owned, net

 

 

1,116,347

 

 

See accompanying notes to the financial statements

 

5



 

PELICAN FINANCIAL, INC.
Notes to the Consolidated Financial Statements (Unaudited)

 

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES

 

Principles of Consolidation:

The unaudited consolidated financial statements as of and for the three and nine month periods ended September 30, 2004 and 2003, include the accounts of Pelican Financial Inc. (“Pelican Financial”) and its wholly owned subsidiary Pelican National Bank (“Pelican National”).  All references herein to Pelican Financial include the consolidated results of its subsidiaries.  All significant intercompany accounts and transactions have been eliminated in consolidation.  The Washtenaw Group, Inc.  (“Washtenaw”) is included in the 2003 financial statements as a discontinued operation (See Note 3).

 

Stock Compensation:

Compensation expense under stock options is reported using the intrinsic value method.  No stock-based compensation cost is reflected in net income, as all options granted had an exercise price equal to or greater than the market price of the underlying common stock at date of grant.  The following table illustrates the effect on net income and earnings per share if expense was measured using the fair value recognition provisions of FASB Statement No. 123, Accounting for Stock-Based Compensation.

 

 

 

Three Months Ended September 30,

 

 

 

2004

 

2003

 

Net income as reported

 

$

155,814

 

$

3,374,096

 

Stock-based compensation expense, net of forfeitures, using fair value method

 

6,764

 

9,054

 

Pro forma net income

 

$

149,050

 

$

3,365,042

 

 

 

 

 

 

 

Basic earnings per share as reported

 

$

0.03

 

$

0.76

 

Pro forma basic earnings per share

 

0.03

 

0.75

 

 

 

 

 

 

 

Diluted earnings (loss) per share

 

$

0.03

 

$

0.75

 

Pro forma diluted earnings (loss) per share

 

0.03

 

0.75

 

 

 

 

Nine Months Ended September 30,

 

 

 

2004

 

2003

 

Net income (loss) as reported

 

$

(75,827

)

$

9,562,245

 

Stock-based compensation expense, net of forfeitures, using fair value method

 

14,032

 

8,330

 

Pro forma net income (loss)

 

$

(89,859

)

$

9,553,915

 

 

 

 

 

 

 

Basic earnings (loss) per share as reported

 

$

(0.02

)

$

2.15

 

Pro forma basic earnings (loss) per share

 

(0.02

)

2.15

 

 

 

 

 

 

 

Diluted earnings (loss) per share

 

$

(0.02

)

$

2.13

 

Pro forma diluted earnings (loss) per share

 

(0.02

)

2.13

 

 

Due to the spin-off (see Note 3), options outstanding at December 31, 2003 included 10,735 options that were held by employees of Washtenaw.  These options were cancelled during the first quarter of 2004 and replaced with options on stock of Washtenaw.  While employees and directors of Pelican Financial and Pelican National held the remaining options, the intrinsic value (market value per share, less option exercise price) of these options was significantly reduced by the effect of the spin-off.  As a result of the spin-off, the number and exercise price of these options was modified in January 2004 to restore the options to substantially the same intrinsic value as existed at the date of the spin-off.  Accordingly, the options outstanding at December 31, 2003 were replaced with 288,385 options at an exercise price of $3.45.  Since the options were modified to offset the effect of the spin-off on the stock price per share, no compensation expense has been recognized for the modification.

 

6



 

NOTE 2 – BASIS OF PRESENTATION

 

The accompanying unaudited consolidated financial statements were prepared in accordance with instructions for Form 10-Q and, therefore, do not include information or footnotes necessary for a complete presentation of consolidated financial condition, results of operations, and cash flows in conformity with U.S. generally accepted accounting principles.  However, all adjustments, consisting of normal recurring accruals, which, in the opinion of management, are necessary for fair presentation of the consolidated financial statements have been included.  The results of operations for the period ended September 30, 2004, are not necessarily indicative of the results which may be expected for the entire fiscal year or for any other period.  For further information, refer to the consolidated financial statements and footnotes thereto for the year ended December 31, 2003 included in Pelican Financial’s Form 10-K.

 

Certain prior year amounts have been reclassified to conform to the 2004 presentation.

 

NOTE 3 – SPIN-OFF

 

On December 31, 2003, Pelican Financial, the former parent company of Washtenaw, distributed all of the outstanding shares of Washtenaw to the holders of Pelican Financial common stock on a share for share basis (based on Pelican Financial shareholders of record on December 22, 2003).  Upon completion of the distribution on December 31, 2003, Washtenaw is no longer a subsidiary of Pelican Financial.  The consolidated statements of income and consolidated statements of cash flows, include the activity of Washtenaw as a discontinued operation during 2003.

 

During the periods presented in the financial statements, Pelican Financial did not incur any expenses on behalf of Washtenaw and no allocation of parent company expenses has been reflected in discontinued operations.

 

Following the distribution, certain individuals continue to serve as officers of both Washtenaw and Pelican Financial.  Washtenaw pays their salaries and all other compensation, and Pelican Financial reimburses Washtenaw, as part of the transitional services agreement, for time spent on Pelican Financial matters.  Prior to 2004, Pelican did not reimburse Washtenaw for these services.  Beginning in 2004, officers and other employees providing services to both companies will maintain records of their time spent on the affairs of each company as a basis for determining the reimbursements.

 

NOTE 4 – LOANS RECEIVABLE

 

Loans receivable consist of the following:

 

 

 

September 30,
2004

 

December 31,
2003

 

Commercial, financial and agricultural

 

$

1,655,845

 

$

1,619,450

 

Commercial real estate

 

40,853,417

 

43,850,625

 

Residential real estate

 

38,820,184

 

45,056,027

 

Consumer loans

 

24,371,749

 

20,602,267

 

 

 

105,701,195

 

111,128,369

 

Deduct allowance for loan losses

 

(937,885

)

(1,330,112

)

 

 

 

 

 

 

Loans receivable, net

 

$

104,763,310

 

$

109,798,257

 

 

7



 

Activity in the allowance for loan losses for the quarter ended September 30, are as follows:

 

 

 

2004

 

2003

 

 

 

 

 

 

 

Balance at beginning of period

 

$

1,228,053

 

$

1,128,137

 

Provision for loan losses

 

(300,000

)

518,000

 

Loans charged-off

 

(3,534

)

(468,919

)

Recoveries

 

13,366

 

26,489

 

 

 

 

 

 

 

Balance at end of period

 

$

937,885

 

$

1,203,707

 

 

Activity in the allowance for loan losses for the nine months ended September 30, are as follows:

 

 

 

2004

 

2003

 

 

 

 

 

 

 

Balance at beginning of period

 

$

1,330,112

 

$

1,062,109

 

Provision for loan losses

 

(225,000

)

888,000

 

Loans charged-off

 

(245,677

)

(783,029

)

Recoveries

 

78,450

 

36,627

 

 

 

 

 

 

 

Balance at end of period

 

$

937,885

 

$

1,203,707

 

 

8



 

NOTE 5 - EARNINGS PER SHARE

 

The following summarizes the computation of basic and diluted earnings per share.

 

 

 

Three Months Ended September 30, 2004

 

Three Months Ended September 30, 2003

 

Basic earnings (loss) per share

 

 

 

 

 

Net income (loss) from continuing operations

 

$

155,814

 

$

(370,278

)

Income from discontinued operations

 

 

3,744,374

 

Net income applicable to common stock

 

155,814

 

3,374,096

 

 

 

 

 

 

 

Weighted average shares outstanding

 

4,488,994

 

4,459,284

 

 

 

 

 

 

 

Loss from continuing operations per share

 

$

0.03

 

$

(0.08

)

Income from discontinued operations per share

 

 

0.84

 

Basic earnings per share

 

$

0.03

 

$

0.76

 

 

 

 

 

 

 

Diluted earnings per share

 

 

 

 

 

Net income (loss) from continuing operations

 

$

155,814

 

$

(370,278

)

Income from discontinued operations

 

 

3,744,374

 

Net income applicable to common stock

 

155,814

 

3,374,096

 

 

 

 

 

 

 

Weighted average shares outstanding

 

4,488,994

 

4,459,284

 

Dilutive effect of assumed exercise of stock options

 

9,809

 

57,185

 

Diluted average shares outstanding

 

4,498,803

 

4,516,469

 

 

 

 

 

 

 

Income (loss) from continuing operations per share

 

$

0.03

 

$

(0.08

)

Income from discontinued operations per share

 

 

0.83

 

Diluted earnings per share

 

$

0.03

 

$

0.75

 

 

 

 

Nine Months Ended September 30, 2004

 

Nine Months Ended September 30, 2003

 

Basic earnings (loss) per share

 

 

 

 

 

Income (loss) from continuing operations

 

$

(75,827

)

$

(255,027

)

Income from discontinued operations

 

 

9,817,272

 

Net income (loss) applicable to common stock

 

75,827

 

9,562,245

 

 

 

 

 

 

 

Weighted average shares outstanding

 

4,488,567

 

4,446,870

 

 

 

 

 

 

 

Income (loss) from continuing operations per share

 

$

(0.02

)

$

(0.06

)

Income from discontinued operations per share

 

 

2.21

 

Basic earnings (loss) per share

 

$

(0.02

)

$

2.15

 

 

 

 

 

 

 

Diluted earnings (loss) per share

 

 

 

 

 

Income (loss) from continuing operations

 

$

(75,827

)

$

(255,027

)

Income from discontinued operations

 

 

9,817,272

 

Net income (loss) applicable to common stock

 

(75,827

)

9,562,245

 

 

 

 

 

 

 

Weighted average shares outstanding

 

4,488,567

 

4,446,870

 

Dilutive effect of assumed exercise of stock options

 

 

39,920

 

Diluted average shares outstanding

 

4,488,567

 

4,486,790

 

 

 

 

 

 

 

Income (loss) from continuing operations per share

 

$

(0.02

)

$

(0.06

)

Income from discontinued operations per share

 

 

2.19

 

Diluted earnings (loss) per share

 

$

(0.02

)

$

2.13

 

 

9



 

Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Forward Looking Statements

 

Certain information in this Form 10-Q may constitute forward-looking information that involves risks and uncertainties that could cause actual results to differ materially from those estimated.  Persons are cautioned that such forward-looking statements are not guarantees of future performance and are subject to various factors that could cause actual results to differ materially from those estimated.  These factors include, but are not limited to, changes in general economic and market conditions, legislative and regulatory changes, monetary and fiscal policies of the federal government, demand for loan and deposit products and the development of an interest rate environment that adversely affects the interest rate spread or other income from Pelican Financial’s investments and operations.

 

OVERVIEW

 

Pelican Financial currently serves as the holding company of Pelican National and until the spin-off on December 31, 2003, Washtenaw Mortgage Company.  Pelican National business activities involve attracting deposits from the general public and using these funds to originate consumer, commercial, commercial real estate, residential construction, and single-family residential mortgage loans, from its offices in Cape Coral, Naples, Fort Myers (two), Bonita Springs and San Carlos, Florida

 

Pelican Financial’s earnings are primarily dependent upon three sources: net interest income, which is the difference between interest earned on interest-earning assets and interest paid on interest-bearing liabilities; fee income from customers; and gains realized on sales of loans.  These revenues are in turn significantly affected by factors such as changes in prevailing interest rates and in the yield curve (that is, the difference between prevailing short-term and long-term interest rates).

 

The earnings performance of the continuing operations of Pelican Financial is a concern to management.  Management is attempting to improve this through a variety of factors including liquidity management, cross selling of products and managing operating expenses.  Pelican Financial achieved an operating profit during the quarter ended September 30, 2004 but continues to be in a net loss position for the year.

 

Management is also focusing on increasing core deposits to allow the opportunity to cross sell other products and services.  As part of this objective, Pelican National has aggressively marketed a money market deposit account in its local markets during the first nine months of the year.  Management has recently decided to reduce the interest rate being paid on the money market accounts in an effort to increase its interest margin.  It is anticipated that this will result in the withdrawal of some deposits.

 

Management anticipates that Washtenaw will transfer all of its’ custodial account balances out of Pelican National prior to December 31, 2004.  At September 30, 2004, this represented $51.6 million of non-interest bearing deposits.  It is anticipated that the reduction in interest rate paid on the money market accounts will partially offset the loss of these accounts and that the overall cost of funds will not increase significantly.

 

EARNINGS PERFORMANCE

 

Pelican Financial reported net income from operations of $156,000 for the quarter ended September 30, 2004 compared to a net loss of $370,000 for the quarter ended September 30, 2003.  Basic and diluted earnings per share from continuing operations was $0.03 for the three months ended September 30, 2004 and a loss of $0.08 per share for the same period in 2003.

 

For the nine months ended September 30, 2004 Pelican Financial reported a net loss from continuing operations of approximately $76,000 compared to a net loss of approximately $255,000 for the same period in 2003.  Basic and diluted earnings per share from continuing operations was a $0.02 and $0.06 loss per share for the nine months ended September 30, 2004 and 2003.

 

10



 

The earnings performance was improved for the three and nine month periods due to a $300,000 and $225,000 credit to the provision for loan losses.  This was primarily due to the improvement in loan quality.  For further discussion see “Provision and Allowance for Loan Losses.”

 

RESULTS OF OPERATIONS

 

Net Interest Income

 

Net interest income was $1.6 million for the three months ended September 30, 2004 and 2003, respectively.  For the nine months ended September 30, 2004 and 2003, net interest income was $4.7 million and $5.3 million respectively.  For the three months ended September 30, 2004, net interest income remained constant due to the rise in interest bearing assets being offset by the decrease in net interest margin.  For the nine months ended September 30, 2004, net interest income decreased primarily as a result of the decrease in the yield on interest-earning assets.  This was due to the payoff of high interest rate loans being replaced with lower yielding loans and investment securities.  This was partially offset by an increase in the total interest earning assets.  In addition, the custodial deposits from Washtenaw negatively impacted net interest margin.  While Pelican National was able to earn a positive spread, the volatility in the balance of the accounts results in Pelican National investing the Washtenaw deposits primarily in federal funds sold and investment securities.  The increase in the federal funds sold rate by the Federal Reserve Board is expected to improve the yield earned by Pelican National and improve net interest margin.

 

Average Balance Sheet

 

The following tables summarize the average yields earned on interest-earning assets and the average rates paid on interest-bearing liabilities for Pelican Financial.

 

 

 

 

Three months ended September 30,

 

 

 

2004

 

2003

 

 

 

Average
Volume

 

Interest

 

Yield/Cost

 

Average
Volume

 

Interest

 

Yield/Cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal funds sold

 

$

21,932

 

$

83

 

1.51

%

$

60,060

 

$

152

 

1.01

%

Securities

 

109,609

 

853

 

3.11

 

6,204

 

81

 

5.22

 

Loans held for sale

 

 

 

 

10,745

 

148

 

5.51

 

Loans receivable

 

105,596

 

1,810

 

6.85

 

110,182

 

2,044

 

7.42

 

Total interest-earning assets

 

237,137

 

2,746

 

4.63

 

187,191

 

2,425

 

5.18

 

Non-earning assets

 

12,472

 

 

 

 

 

15,055

 

 

 

 

 

Total assets

 

$

249,609

 

 

 

 

 

$

202,246

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

NOW accounts

 

$

1,865

 

3

 

0.64

 

$

1,549

 

3

 

0.77

 

Money market accounts

 

114,445

 

573

 

2.00

 

19,206

 

85

 

1.77

 

Savings deposits

 

9,462

 

32

 

1.35

 

12,263

 

43

 

1.40

 

Time deposits

 

36,040

 

409

 

4.54

 

41,531

 

444

 

4.28

 

Other borrowings

 

12,000

 

165

 

5.50

 

18,469

 

268

 

5.80

 

Total interest-bearing liabilities

 

173,812

 

1,182

 

2.72

 

93,018

 

843

 

3.63

 

Noninterest-bearing liabilities

 

59,757

 

 

 

 

 

91,578

 

 

 

 

 

Stockholders’ equity

 

16,040

 

 

 

 

 

17,650

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

249,609

 

 

 

 

 

$

202,246

 

 

 

 

 

Interest rate spread

 

 

 

 

 

1.91

%

 

 

 

 

1.56

%

Net interest income and net interest margin

 

 

 

$

1,564

 

2.64

%

 

 

$

1,582

 

3.38

%

 

11



 

 

 

Nine months ended September 30,

 

 

 

2004

 

2003

 

 

 

Average
Volume

 

Interest

 

Yield/Cost

 

Average
Volume

 

Interest

 

Yield/Cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal funds sold

 

$

30,318

 

$

254

 

1.12

%

$

46,066

 

$

397

 

1.15

%

Securities

 

92,774

 

2,125

 

3.05

 

7,366

 

285

 

5.16

 

Loans held for sale

 

59

 

2

 

4.52

 

12,902

 

530

 

5.48

 

Loans receivable

 

108,349

 

5,710

 

7.03

 

111,528

 

6,547

 

7.83

 

Total interest-earning assets

 

231,500

 

8,091

 

4.66

 

177,862

 

7,759

 

5.82

 

Non-earning assets

 

12,065

 

 

 

 

 

22,560

 

 

 

 

 

Total assets

 

$

243,565

 

 

 

 

 

$

200,422

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

NOW accounts

 

$

1,636

 

10

 

0.80

 

$

1,490

 

10

 

0.85

 

Money market accounts

 

99,468

 

1,556

 

2.09

 

13,488

 

166

 

1.64

 

Savings deposits

 

9,341

 

96

 

1.37

 

12,654

 

145

 

1.53

 

Time deposits

 

37,110

 

1,222

 

4.39

 

45,937

 

1,386

 

4.02

 

Other borrowings

 

12,000

 

490

 

5.44

 

18,594

 

801

 

5.74

 

Total interest-bearing liabilities

 

159,555

 

3,374

 

2.82

 

92,163

 

2,508

 

3.63

 

Noninterest-bearing liabilities

 

67,680

 

 

 

 

 

92,171

 

 

 

 

 

Stockholders’ equity

 

16,330

 

 

 

 

 

16,088

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

243,565

 

 

 

 

 

$

200,422

 

 

 

 

 

Interest rate spread

 

 

 

 

 

1.84

 

 

 

 

 

2.19

 

Net interest income and net interest Margin

 

 

 

$

4,717

 

2.72

%

 

 

$

5,251

 

3.94

%

 

Net interest income represents the excess of income on interest-earning assets over interest expense on interest bearing liabilities.  The principal interest-earning assets are federal funds sold, investment securities and loans receivable.  Interest-bearing liabilities primarily consist of FHLB borrowings, time deposits, interest-bearing checking accounts (NOW accounts), savings, deposits and money market accounts.  Funds attracted by these interest-bearing liabilities are invested in interest-earning assets.  Accordingly, net interest income depends upon the volume of average interest-earning assets and average interest bearing liabilities and the interest rates earned or paid on them.

 

Noninterest Income

 

Noninterest income for the three months ended September 30, 2004 was $404,000 compared to $18,000 for the same period in 2003, an increase of $386,000.  This increase was primarily due to the increase in the gain on sale of securities of approximately $310,000 and the increase in the net gain on foreclosed assets and other income of $80,000.  The increase in the gain on sale of securities resulted from the increase in the sale of securities for liquidity purposes.  The increase in net gain on foreclosed assets and other income resulted from gains recognized on the disposition of repossessed and foreclosed property as opposed to a loss reported in the prior period.

 

For the nine months ended September 30, 2004, noninterest income was $562,000 compared to $379,000 for the same period in 2003.  The increase of $183,000, or 48%, was primarily the result of fluctuations in operations as described above.

 

12



 

Noninterest Expense

 

Total noninterest expense for the three months ended September 30, 2004 was $2.0 million, compared to $1.6 million for the same period in 2003, an increase of approximately $400,000 or 25%. The increase is primarily related to the cost of employee compensation and benefits that increased $197,000; occupancy expenses that increased $98,000; data processing expenses that increased $39,000 and other non-interest expenses that increased $60,000.   The increases were due primarily to the increase in number of employees from 60 at September 30, 2003 to 75 at September 30, 2004 and the additional branches opened.

 

For the nine months ended September 30, 2004, noninterest expense was $5.6 million compared to $5.1 million for the same period in 2003.  The increase of $500,000 or 10% was also attributable to the aforementioned expenses.

 

BALANCE SHEET ANALYSIS

 

The following is a discussion of the consolidated balance sheet of Pelican Financial.

 

ASSETS

 

At September 30, 2004, total assets of Pelican Financial equaled $258.9 million compared to $221.5 million at December 31, 2003, an increase of $37.4 million or 17%. The increase is primarily due to the increase in cash and cash equivalents and securities available for sale.

 

Investment Securities

 

Pelican National primarily utilizes investments in securities for liquidity management and as a method of deploying excess funding not utilized for investment in loans.   Pelican National has invested primarily in U. S. government and agency securities and U. S. government sponsored agency issued mortgage-backed securities.  As required by SFAS No. 115, Pelican National classifies securities as held-to-maturity, available-for-sale, or trading.  At September 30, 2004 and at December 31, 2003, all of the investment securities held in Pelican National’s investment portfolio were classified as available for sale.

 

The following table contains information on the carrying value of Pelican National’s investment portfolio at the dates indicated.  At September 30, 2004, the market value of Pelican National’s investment portfolio totaled $58.2 million. During the periods indicated and except as otherwise noted, Pelican National had no securities of a single issuer that exceeded 10% of stockholders’ equity.

 

 

 

(dollars in thousands)

 

 

 

At September 30, 2004

 

At December 31, 2003

 

U. S. Government agency

 

$

39,444

 

$

25,403

 

Mortgage-backed securities

 

18,803

 

24,327

 

Federal Reserve Bank and Federal Home Loan Bank Stock

 

1,192

 

949

 

Total investment securities

 

$

59,439

 

$

50,679

 

 

The increase in securities available for sale is the result of managements’ attempt to maximize the yield earned on the additional deposits at Pelican National.  Management is using the investment portfolio as an alternative to investing in loans receivable due to new loan originations trailing deposit growth.

 

Cash and Cash Equivalents

 

Cash and cash equivalents were $88.7 million at September 30, 2004 compared to $55.4 million at December 31, 2003.  The increase of $33.3 million or 60% was primarily the result of an increase of $51.8 million in core deposits, primarily money market accounts, resulting from a program Pelican National began offering in August, 2003 that has raised the amount of core deposits at Pelican National.  During the quarter ended September 30, 2004, Pelican National began reducing the interest rates it pays for the deposits.  This policy will continue in the quarter ending

 

13



 

December 31, 2004.  As a result, it is expected that certain rate sensitive customers may choose to transfer their money to a different financial institution.  The potential outflow of deposits was a partial factor in management’s decision to maintain a higher liquidity position.  The other factor is that management anticipates that Washtenaw will transfer all of its’ custodial account balances out of Pelican National prior to December 31, 2004.

 

The deposits attributed to Washtenaw maintaining all of the investor accounts related to its servicing portfolio at Pelican National decreased $11.9 million at September 30, 2004 compared to December 31, 2004.  The balances at December 31, 2003 increased as loan payoffs from Washtenaw’s servicing portfolio decreased.  Due to the fluctuation in balances of these accounts, Pelican National typically invested a substantial portion of the deposits in interest-bearing deposits and federal funds sold

 

Loans Receivable

 

Total loans receivable were $104.8 million at September 30, 2004 compared to $109.8 million at December 31, 2003.  The slight decrease in balance is the result of new loan production being offset by loan payoffs and principal reductions.  New loan production for the three and nine months ended September 30, 2004 was $11.0 million and $39.3 million, respectively.

 

The following table contains selected data relating to the composition of Pelican Financial’s loan portfolio by type of loan at the dates indicated.  This table includes mortgage loans held for sale and mortgage loans held for investment.  Pelican Financial had no concentration of loans exceeding 10% of total loans that are not otherwise disclosed below.

 

 

 

September 30, 2004

 

December 31, 2003

 

 

 

Amount

 

Percent

 

Amount

 

Percent

 

Real estate loans:

 

 

 

 

 

 

 

 

 

Residential, one to four units

 

$

38,554

 

36.59

%

$

44,094

 

39.83

%

Commercial and industrial real estate

 

39,679

 

37.66

 

43,151

 

38.98

 

Construction

 

1,108

 

1.05

 

1,327

 

1.19

 

Total real estate loans

 

79,341

 

75.30

 

88,572

 

80.00

 

Other loans:

 

 

 

 

 

 

 

 

 

Business, commercial

 

1,656

 

1.57

 

1,534

 

1.39

 

Automobile

 

376

 

0.35

 

478

 

0.43

 

Boat

 

17,771

 

16.86

 

14,578

 

13.17

 

Other consumer

 

6,224

 

5.92

 

5,546

 

5.01

 

Total other loans

 

26,027

 

24.70

 

22,136

 

20.00

 

 

 

 

 

 

 

 

 

 

 

Total gross loans

 

105,368

 

100.00

%

110,708

 

100.00

%

 

 

 

 

 

 

 

 

 

 

Unearned fees, premiums and discounts, net

 

333

 

 

 

420

 

 

 

Allowance for loan losses

 

(938

)

 

 

(1,330

)

 

 

 

 

 

 

 

 

 

 

 

 

Total Loans net

 

$

104,763

 

 

 

$

109,798

 

 

 

 

Asset Quality

 

Pelican Financial is exposed to certain credit risks related to the value of the collateral that secures loans held in its portfolio and the ability of borrowers to repay their loans during the term thereof.  Pelican Financial’s senior officers closely monitor the loan and real estate owned portfolios for potential problems on a continuing basis and report to the Board of Directors of Pelican Financial at regularly scheduled meetings.  These officers regularly review the classification of loans and the allowance for losses.   Pelican Financial also has a quality control department, the function of which is to provide the Board of Directors with an independent ongoing review and evaluation of the quality of the process by which lending assets are generated.

 

14



 

The following table sets forth certain information on nonperforming loans and other real estate owned, the ratio of such loans and other real estate owned to total loans and total assets as of the dates indicated.

 

 

 

At September 30,

 

At December 31,

 

 

 

2004

 

2003

 

2003

 

 

 

(Dollars in thousands)

 

Nonaccrual loans

 

$

232

 

$

506

 

$

455

 

Loans past due 90 days or more but not on  nonaccrual

 

59

 

48

 

 

Total nonperforming loans

 

291

 

554

 

455

 

 

 

 

 

 

 

 

 

Other real estate owned

 

 

863

 

333

 

Total nonperforming assets

 

$

291

 

$

1,417

 

$

788

 

 

 

 

 

 

 

 

 

Total nonperforming assets to total assets

 

0.11

%

1.54

%

0.36

%

Allowance for loan losses to nonperforming loans

 

322.34

%

217.33

%

292.31

%

Nonperforming loans to total assets

 

0.11

%

0.27

%

0.21

%

 

Provision and Allowance for Loan Losses

 

The allowance for loan losses as of September 30, 2004 was $938,000, or 0.89%, of total portfolio loans, compared to $1.3 million, or 1.20%, of total loans at December 31, 2003. Our allowance for loan losses is maintained at a level management considers appropriate based upon our regular, quarterly assessments of the probable estimated losses inherent in the loan portfolio. Our methodology for measuring the appropriate level of allowance relies on several key elements, which include specific allowances for identified problem loans, general allocations for graded loans, and general allocations based on historical trends for pools of similar un-graded loans.

 

Specific allowances are established in cases where senior credit management has identified significant conditions or circumstances related to an individual credit that we believe indicates the loan is impaired. The specific allowance is determined by methods prescribed by SFAS No. 114, “Accounting by Creditors for Impairment of a Loan”.

 

A general allocation on commercial and commercial real estate loans not considered impaired is calculated by applying loss factors to outstanding loans based on the internal risk grade of such loans.  Loans are assigned a loss allocation factor for each loan classification category. The lower the grading assigned to a loan category, the greater the allocation percentage that is applied. Changes in risk grade of both performing and nonperforming loans affect the amount of the allocation. Loss factors are based on our loss experience and may be adjusted for significant factors that, in management’s judgment, affect the collectibility of the portfolio as of the analysis date.

 

Groups of homogeneous loans, such as residential real estate and consumer loans, receive an allowance allocation based on loss trends.  We use historical loss trends based on our experience in determining an adequate allowance for these pools of loans. General economic and business conditions, credit quality trends, seasoning of the portfolios and recent loss experience are conditions considered in connection with allocation factors for these similar pools of loans.

 

During the three and nine months ended September 30, 2004 the allowance for loan losses decreased by $290,000 and $392,000, respectively.  The decrease for the three months ended was largely due to a $214,000 reduction in the specific allowance on impaired loans reviewed by the bank , a $31,000  reduction due to a decrease in special mention and substandard loans of $369,000, and a $41,000 reduction  due to improvement of historical loss percentages.

 

For the nine months ended, the $290,000 decrease was primarily attributable to the factors described above, offset by loans charged off exceeding the provision..  Furthermore, criticized assets decreased from $10.6 million at December 31, 2003 to $7.0 million at September 30, 2004.  These loans represent loans with one or more underwriting deficiencies as identified by bank management or the bank’s regulatory agency.  Management is in the process of corrective actions on the criticized loans in an effort to improve the rating on the criticized assets.  Criticized assets may or may not be delinquent.

 

15



 

LIABILITIES

 

At September 30, 2004, the total liabilities of Pelican Financial were $242.2 million as compared to $204.6 million at December 31, 2003, an increase of $37.6 million, or 18%. This increase was primarily due to an increase in deposits.

 

Deposits

 

Total deposits were $229.9 million at September 30, 2004 compared to $191.9 million at December 31, 2003, representing an increase of $38.0 million or 20%.  The increase was the result of a focus on developing new deposit relationships with customers.  This was achieved by maintaining the yield paid on its money market account, until recently, to one of the highest in the local market area.  This resulted in an increase in core deposits of  $51.8 million.  This was offset by a decrease in Washtenaw’s deposits attributable to its servicing portfolio by $11.9 million, from $63.5 million at December 31, 2003 to $51.6 million at September 30, 2004, due to decreased loan payoffs.  The loan payoffs are remitted to Washtenaw’s investors within five business days in the subsequent month.  This was further offset by a reduction of approximately $3.8 million in certificate of deposits obtained from brokers and the Internet.  Pelican National is attempting to reduce the reliance on this source of funds in the future and currently is allowing all certificates of deposits obtained in this manner to mature without replacing the funds.  At September 30, 2004, there were $6.6 million in deposits obtained from brokers and the Internet.

 

LIQUIDITY AND CAPITAL RESOURCES

 

Liquidity Management

 

The objective of liquidity management is to ensure the availability of sufficient resources to meet all financial commitments and to capitalize on opportunities for business expansion.  Liquidity management addresses the ability to meet deposit withdrawals either on demand or by contractual maturity, to repay other borrowings as they mature and to make new loans and investments as opportunities arise.

 

Pelican Financial’s source of funds is dividends paid by Pelican National.  Pelican National’s sources of funds include net increases in deposits, principal and interest payments on loans, proceeds from sales of loans held for sale, proceeds from maturities and sales of securities, calls of available for sale securities and Federal Home Loan Bank borrowings.

 

The liquidity reserve may consist of cash on hand, cash on demand deposits with other correspondent banks, and other investments and short-term marketable securities as determined by the rules of the Office of the Comptroller of the Currency (“OCC”), such as federal funds sold and United States securities and securities guaranteed by the United States.  At September 30, 2004, Pelican National had a liquidity ratio of 59%.  This is calculated by adding all of Pelican National’s cash, unpledged securities and federal funds sold and dividing by its’ total liabilities.  Pelican National has available to it several contingent sources of funding.  These include the ability to raise funds through brokered deposits, lines of credit and the sale of loans or participations.  It is anticipated that the liquidity ratio will decrease when Washtenaw withdrawals its deposits prior to December 31, 2004.

 

Capital Resources

 

The Board of Governors of the Federal Reserve System’s (‘FRB’) capital adequacy guidelines mandate that minimum ratios be maintained by bank holding companies such as Pelican Financial. Pelican National is governed by capital adequacy guidelines mandated by the OCC.

 

Based upon their respective regulatory capital ratios at September 30, 2004 Pelican Financial and Pelican National are both well capitalized, based upon the definitions in the regulations issued by the FRB and the OCC setting forth the general capital requirements mandated by the Federal Deposit Insurance Corporation Improvement Act of 1991.

 

16



 

The table below indicates the regulatory capital ratios of Pelican Financial and Pelican National and the regulatory categories for a well capitalized and adequately capitalized bank under the regulatory framework for prompt corrective action (all three capital ratios) at September 30, 2004 and December 31, 2003, respectively:

 

 

 

September 30, 2004

 

December 31, 2003

 

Required to be

 

 

 

Pelican
National

 

Pelican
Financial

 

Pelican
National

 

Pelican
Financial

 

Adequately
Capitalized

 

Well
Capitalized

 

Total Equity Capital to risk-weighted assets

 

14.29

%

15.08

%

13.66

%

15.50

%

8.00

%

10.00

%

Tier 1 Capital to risk-weighted assets

 

13.48

%

14.28

%

12.51

%

14.36

%

4.00

%

6.00

%

Tier 1 Capital to adjusted total assets

 

6.33

%

6.70

%

7.20

%

7.96

%

4.00

%

5.00

%

 

Item 3:  Quantitative and Qualitative Disclosure About Market Risk

 

For a discussion of Pelican Financial’s asset/liability management policies as well as the potential impact of interest rate changes upon the market value of Pelican Financial’s portfolio, see Pelican Financial’s Annual Report to Shareholders and Form 10-K.  Management believes that there has been no material change in Pelican Financial’s asset/liability position or the market value of Pelican Financial’s portfolio since December 31, 2003.

 

Item 4:  Controls and Procedures

 

Pelican Financial, under the supervision and with the participation of its management, including its principal executive officer and principal financial officer, evaluated the effectiveness of the design and operation of its disclosure controls and procedures as of the end of the period covered by this report.  Based on this evaluation, the principal executive officer and principal financial officer concluded that Pelican Financial’s disclosure controls and procedures are effective in reaching a reasonable level of assurance that information required to be disclosed by Pelican Financial in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time period specified in the Securities and Exchange Commission’s rules and forms.

 

The principal executive officer and principal financial officer also conducted an evaluation of internal control over financial reporting (“Internal Control”) to determine whether any changes in Internal Control occurred during the fiscal quarter that have materially affected or which are reasonably likely to materially affect Internal Control.  Based on that evaluation, the only change identified was the president’s retirement effective in September 2004.  In August 2004, Pelican National appointed a new president.

 

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.  Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.  Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within Pelican Financial have been detected.  Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.  Pelican Financial conducts periodic evaluations to enhance, where necessary its procedures and controls.

 

Part II. Other Information

 

Item 1.   Legal Proceedings

 

There have been no material changes to the pending legal proceedings to which Pelican Financial is a party since the filing of the registrant’s Form 10-K.

 

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

 

Not Applicable.

 

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Item 3.    Defaults Upon Senior Securities

 

Not Applicable.

 

Item 4.    Submission of Matters to a Vote of Security Holders

 

None

 

Item 5.    Other Information

 

None

 

Item 6.    Exhibits and Reports on Form 8-K

 

(a)  Exhibits

 

31.1

Certification of Principal Executive Officer

 

 

31.2

Certification of Principal Financial Officer

 

 

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Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

(b) Reports on Form 8-K

 

August 2, 2004 to announce the retirement of Michael Clemens as President of Pelican National Bank and the hiring of Howard Montgomery.

 

August 5, 2004 to announce financial results of quarter ended June 30, 2004.

 

September 10, 2004 to announce that Pelican National Bank entered into an employment agreement with Howard Montgomery.

 

September 28, 2004 to announce that Pelican Financial, Inc. entered into an employment agreement with Howard Nathan.

 

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Pelican Financial, Inc. and Subsidiaries
Signatures

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

Date: November 12, 2004

/s/ Charles C. Huffman

 

 

Charles C. Huffman

 

President and Chief Executive Officer

 

 

Date:  November 12, 2004

/s/ Howard M. Nathan

 

 

Howard M. Nathan

 

Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)

 

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