SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
NOVEMBER 30, 1994
MERCHANTS BANCSHARES, INC.
(Exact name of Registrant
as specified in charter)
VERMONT 0-11595 03-0287342
(State or other (Commission (IRS Employer
jurisdiction File Number) Identification
of incorporation) Number)
123 CHURCH STREET, BURLINGTON, VERMONT 05402
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(802) 658-3400
NOT APPLICABLE
(Former name or former address
if changed since last report)
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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.
MERCHANTS BANCSHARES, INC.
(Registrant)
DATE: November 30, 1994 BY: /S/ Edward W. Haase
----------------- -------------------
Edward W. Haase
Chief Financial Officer
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ITEM 5. OTHER EVENTS
November 30, 1994 - Merchants Bancshares, Inc. (NASDAQ;MBVT)
announced today that it is taking a charge to earnings in the
amount of $9 million to protect its trust customers against
losses incurred due to investments in the Piper Jaffray
Institutional Government Income Fund. After taxes, the reduction
in earnings will be approximately $6.1 million. Merchants is
assessing its right to reimbursement from third parties and is
engaged in negotiations with its insurers. A copy of the press
release dated November 30, 1994 is attached as an exhibit to this
Form 8-K.
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INDEX TO EXHIBITS
ITEM PAGE NUMBER
Press release related to
Company's announcement to protect
trust customers against losses
incurred due to investments in the
Piper Jaffray Institutional Government
Income Fund 5 - 7
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PRESS RELEASE
Date for Release: Contact:
November 30, 1994 Joseph L. Boutin
(802)865-1894
Burlington, VT - November 30, 1994 -
Joseph L. Boutin, President and Chief Executive Officer of
Merchants Bancshares, Inc. (NASDAQ:MBVT), and Chairman of its
subsidiary, The Merchants Trust Company, announced today the
intention of The Merchants Trust Company to protect its trust
customers against losses incurred due to investments in the Piper
Jaffray Institutional Government Income Fund. On November 23,
1994, The Merchants Trust Company sold substantially all its
trust account holdings of that Fund.
"Total returns on long-term fixed income securities for the last
fourteen months have been negative due to the dramatic decline in
the bond market," said Mr. Boutin. "That is the bad news. The
good news is that the Trust Company will absorb the loss
attributable to the Piper Jaffray Institutional Government Income
Fund used as an investment vehicle in our trust accounts. Those
accounts will not lose a single dollar as a result of the Piper
Jaffray investment."
In a letter mailed today to Trust Company clients, Mr. Boutin
reported that The Merchants Trust Company will pay to each
account that was invested in the Piper Jaffray Institutional
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Government Income Fund the difference between the total return it
earned from the Piper Jaffray Institutional Government Income
Fund and the total return it would have earned during the period
of its Piper Jaffray investment if the investment had been in the
Federated GNMA Fund instead. The Trust Company previously used
the Federated GNMA Fund. Total return, Mr. Boutin's letter
explained, includes the income earned over time plus or minus any
change in the market value of the underlying investment.
The payments will be made by the Trust Company during the month
of December. The total return on the Federated GNMA Fund for the
period from October 6, 1993 through November 23, 1994 was
approximately -3%. The precise payment for any particular
account will depend on the specific Piper Jaffray Institutional
Government Income Fund transactions in that account.
Mr. Boutin further stated that the exact amount to be paid to
customers was in the process of being calculated, but he
estimated that in the aggregate it would be in the range of $9
million.
Mr. Boutin further stated that funds for these payments will be
supplied by The Merchants Bank, the parent of The Merchants Trust
Company, from available working capital. Mr. Boutin said that
such payments will not reduce the capital of The Merchants Bank
below the amounts required by its regulators. Mr. Boutin also
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reported that the ultimate financial effect of these events
cannot yet be determined as The Merchants Trust Company is
assessing its right to reimbursement from third parties and is
engaged in negotiations with its insurers. There is also pending
litigation relating to customers of The Merchants Trust Company.
Boutin said that "The Merchants Trust Company has been privileged
to serve Vermont and Vermonters for more than a century. With
this action, we reaffirm our commitment to put the interests of
our clients and our customers first."
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