In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 101, ‘‘Revenue Recognition in Financial Statements" (SAB No. 101). SAB No. 101, as amended, was implemented in the fourth quarter of 2000 and did not have a material effect on the Company’s consolidated financial position, results of operations or cash flows.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Management may use derivative contracts to manage its exposure to commitments to originate mortgage loans. All of the derivatives utilized by the Company are for purposes other than trading. The derivatives utilized consist of purchased options on FNMA or FHLMC guaranteed mortgage-backed securities. These financial instruments are used to reduce the Company’s exposure to the effects of fluctuations in interest rates on the Company’s lending and secondary marketing activities. The notional amount and fair value of such derivatives was immaterial at December 31, 2000 and 1999.

In addition, reference is made to ‘‘Item 7. Management’ Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Interest Rate Sensitivity and Liquidity" which is incorporated herein by reference.

Item 8. Financial Statements and Supplementary Data

Reference is made to the financial statements, the reports thereon, the notes thereto and supplementary data commencing at page F-1 of this Form 10-K, which financial statements, reports, notes and data are incorporated herein by reference.

Set forth below are certain unaudited financial results reflecting the combined operating results of the Company and Citizens for the thirty-one days ended January 31, 2001. These financial results are presented to satisfy the requirements for publication of combined results of operations with respect to affiliate trading restrictions as specified in pooling-of-interests accounting treatment. This information is presented only to satisfy such requirements and is not necessarily indicative of future operating results or financial condition.