SIS Bancorp
Glastonbury Bank and Trust
Special Note Regarding Forward-Looking Information
This presentation contains forward-looking statements (within the meaning of the
Private Securities Litigation Reform Act of 1995), including estimates of future
operating results, financial condition and cost savings, which involve
significant risks and uncertainties. Actual results may differ materially from
the results discussed in these forward-looking statements. Factors that might
cause such differences include, but are not limited to, economic conditions and
real estate risks, interest rate risks, operational issues, competitive
conditions, changes in applicable law and regulations and other risks detailed
from time to time in the Company's SEC reports, including those discussed in the
Company's Current Report on Form 8-K dated August 18, 1997, as filed with the
Securities and Exchange Commission, to which report reference is hereby made.
Transaction Rationale
* Natural strategic extension into a contiguous market.
* Expands SISB community banking franchise into attractive Connecticut
banking market.
* Continued emphasis on community banking strategy.
* Financially compelling transaction.
* Accretive to EPS in first full year (1998) excluding revenue
enhancement opportunities.
* Pricing is consistent with other transactions in New England.
* Internal rate of return of approximately 15%.
* Diversifies revenue stream.
* GLBT is a commercial bank.
* Entry into new fee-based business lines: merchant processing and
insurance.
* Leverage SISB's existing infrastructure.
2
Transaction Summary
Terms: Purchase price to be paid in tax free exchange of stock.
Exchange rate fixed at 0.74, resulting in the issuance of
1,354,141 shares of SISB common stock. Walk away option if
SISB stock price falls below $25.00, subject to cure.
Accounting: Pooling of interests.
Pricing: Based on SISB Closing Stock Price as of August 15, 1997 of
$30.00:
Purchase price $40.6 million
Purchase price per share $22.20
Price/book value and tangible book value 2.26x
Price/annualized six months ended June 30, 1997 EPS 16.3x
Core deposit premium 11%
Structure: Glastonbury Bank & Trust to be wholly owned subsidiary of
SIS Bancorp.
Timing: Subject to normal regulatory and SISB and GLBT shareholder
approval. Targeted to close fourth quarter 1997.
Impact: Accretive to earnings in first full year, 1998, assuming 20%
cost savings.
Pro Forma Share SISB 5,576,842 (1) 80%
Ownership: GLBT 1,354,141 20%
--------- ---
6,930,983 100%
(1) Actual shares outstanding
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Entry Vehicle Into Connecticut Market
[GRAPHIC OMITTED]
The omitted graphic is a map showing the locations of certain SISB and
Glastonbury branches. SISB branches (12) are represented by black circles;
Glastonbury branches (6) are represented by grey squares.
* Hartford County, Connecticut is a natural contiguous extension to SISB's
core Massachusetts markets of Hampden and Hampshire counties.
* Establishes a Connecticut franchise with critical mass and opportunity to
expand market share:
* $216 million of deposits
* 8 full service offices
* 17,549 customer accounts
Deposits (1)
CT County Branches ($000)
--------- -------- --------
Hartford, CT 6 $178,910
Middlesex, CT 1 $ 15,271
New London, CT 1 $ 22,413
- --------
8 $216,594
(1) Deposit totals for GLBT as of June 30, 1997.
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Connecticut Market
* Branches are in demographically attractive and affluent banking markets:
Hartford County, CT
------------------------
Glastonbury Wethersfield East Hartford,
CT CT CT
Population 27,901 25,651 50,452
Households 10,553 10,470 20,343
1996 Average Household Income $62,845 $63,233 $46,422
Projected 2001 Avg. Household Income $69,375 $71,226 $51,222
Source: 1990 U.S. Census Data; SNL Securities, L.C.
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Pro Forma Balance Sheet and Asset Quality
(Dollars in Millions) At June 30, 1997
Pro Forma
SISB GLBT Combined
---- ---- ---------
Assets
Cash and Investment Securities $ 733 $ 95 $ 828
Net Loans 646 153 799
Other Assets 56 13 69
------ ------ ------
Total Assets $1,435 $ 261 $1,696
Liabilities and Equity
Total Deposits $1,015 $ 217 $1,232
Other Liabilities 316 26 343
Total Equity 103 18 121
------ ------ ------
Total Liabilities and Equity $1,435 $ 261 $1,696
Asset Quality
NPA/Total Assets 0.47% 1.04% 0.56%
LLR/NPLs 272% 197% 255%
LLR/Total Loans 2.48% 2.20% 2.43%
Capital Ratios
Equity/Assets 7.20% 6.87% 7.15%
Fully Diluted Shares Outstanding 5,640,349 1,829,920 6,994,490
Book Value Per Share $18.31 $9.82 $17.33
Book Value Dilution (1) (7.00%)
(1) Book value dilution including after-tax merger expenses of $1.8 million.
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Pro Forma Loan Portfolio and Deposit Base
(Dollars in Millions) At June 30, 1997
Pro Forma % of
Loan Portfolio SISB GLBT Combined Total
- -------------- ---- ---- -------- -----
Residential Mortgage Loans $238.4 $ 53.6 $292.0 36%
Commercial & Construction Mortgage Loans 120.2 56.3 176.5 22%
Commercial Loans 173.6 25.1 198.7 24%
Home Equity and Consumer Loans 128.2 21.2 149.4 18%
Other -- 0.2 0.2 0%
------ ------ ------ ---
Total Loan Portfolio $660.4 $156.4 $816.8 100%
Loan Loss Reserve (16.3) (3.5) (19.8)
Deferred Fees, Gains/Unearned Premium 1.8 0.0 1.8
------ ------ ------
Net Loans $645.9 $152.9 $798.8
Deposits
Demand $120.6 $ 39.8 $160.4 13%
NOW 60.3 22.4 82.7 7%
Savings and Money Market 411.4 59.7 471.2 38%
CDs under $100,000 364.5 83.8 447.9 36%
CDs over $100,000 58.5 11.3 69.8 6%
-------- ------ -------- ---
Total Deposits $1,015.4 $216.6 $1,232.0 100%
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Comparative Earnings Data
(Dollars in Millions) Six Months Ended
June 30, 1997
SISB GLBT
--------------- ---------------
Net Interest Income $ 25.0 $ 5.0
Provision for Possible Loan Losses (0.8) (0.1)
Non-interest Income 5.6 1.6
Non-interest Expense (20.2) (4.5)
------ ------
Net Income Before Taxes 9.6 2.0
Tax (Expense)/Benefit (3.8) (0.8)
------ ------
Net Income $ 5.8 $ 1.2
====== ======
Fully Diluted Earnings Per Share $ 1.02 $ 0.68
NIM 3.84% 4.25%
ROAA 0.83% 0.97%
ROAE 11.45% 14.18%
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Reasonable Expense Reductions
1998
----
Administrative & Back Office Expenses:
Pre-Tax $1.8 million
After-Tax (1) $1.1 million
As a % of GLBT Pre-Tax Expense Base 20%
As a % of SISB Pre-Tax Expense Base 4%
(1) 40% tax rate.
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Estimated Pro Forma Earnings
(Dollars in Millions, Except Per Share Amounts)
Total Per Share Total Per Share
----- --------- ----- ---------
Net Income on a Stand Alone Basis:
SIS (1) $11.9 $ 2.12 $13.5 $ 2.39
GLBT (1 $ 2.5 $ 1.36 $ 2.7 $ 1.46
----- -----
$14.4 $16.1
After-tax Adjustments:
Expense Reductions $ 0.0 $ 1.1
Merger Expenses ($1.8) $ 0.0
----- -----
Total Net Income $12.9 $ 1.81 $17.2 $ 2.46
Total Net Income Excluding Merger Expenses $14.4 $ 2.07
Accretion/(Dilution)
Total Net Income 3%
Net Income Excluding Merger Expenses (2%)
Pro Forma Fully Diluted Shares 6,994,490 6,994,490
<FN>
(1) SISB 1997/1998 earnings are based on consensus "Wall Street" estimates of $2.12 and $2.39, per share, respectively. GLBT
1997/1998 earnings are presented for illustrative purposes only. GLBT 1997 earnings reflect six months ended June 30, 1997 net
income of $1.2 million annualized. GLBT 1998 earnings grow approximately 8% from 1997 earnings. This information constitutes
"forward-looking information". See special note on cover page.
</FN>
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Sources of Potential Revenue Enhancements
* SISB's strategy of convenience and value introduced to a broader base of
consumer households.
* Cross-selling opportunities of GLBT's merchant processing and insurance
lines of business.
* More consumer cross-selling opportunities - Average GLBT customer has 1.65
products vs. 3.81 average for SISB customers.
* Increased commercial lending capacity and product array, including cash
management.
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Summary
* Provides meaningful entry into an attractive Connecticut banking market.
* Earnings accretion in first full year without factoring in revenue
enhancement.
* Significant franchise enhancement.
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Appendix - Glastonbury Bank & Trust Co.
Historical Financial Data
Balance Sheet and Asset Quality Data
(Dollars in Millions)
At June 30, At December 31,
1997 1996 1995 1994 1993 1992
----- ---- ---- ---- ----- ----
Balance Sheet
Assets $261.3 $248.6 $229.8 $218.3 $229.0 $238.5
Total Loans, Net of Unearned 156.4 148.7 142.0 130.8 147.7 164.7
Loan Loss Reserve (3.4) (3.4) (3.0) (4.5) (4.7) (4.6)
Loans, Net of Unearned & LLR $152.9 $145.4 $138.9 $126.3 $137.8 $156.5
REO 1.0 1.2 0.3 1.8 4.2 6.5
Deposits 216.6 208.4 190.3 194.4 202.4 218.4
Equity 18.0 16.9 15.0 8.0 11.1 13.8
Equity/Assets 6.87% 6.79% 6.52% 3.68% 4.83% 5.78%
Asset Quality
Non-Performing Loans $1.7 $1.5 $0.7 $3.9 $5.5 $3.4
NPLs/Total Loans 1.12% 0.98% 0.52% 3.01% 3.75% 2.03%
NPA/(Loans & REO) 1.73% 1.75% 0.74% 4.30% 6.41% 7.89%
LLR/NPLs 197.37% 228.96% 413.23% 114.56% 85.58% 68.59%
LLR/Total Loans 2.20% 2.25% 2.13% 3.45% 3.21% 2.86%
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Appendix - Glastonbury Bank & Trust Co.
Historical Financial Data
(Dollars in Millions) Income Statement and Profitability Data
Six Months Ended Year Ended December 31,
June 30, 1997 1996 1995 1994 1993 1992
Income Statement
Net Interest Income $ 5.0 $ 9.7 $ 9.6 $ 9.5 $ 9.7 $ 10.1
Provision for Possible Loan Losses (0.1) (0.7) 0.2 (1.9) (3.8) (3.6)
Non-interest Income 1.6 3.2 3.1 4.0 4.0 3.7
Non-interest Expense (4.5) (10.5) (10.2) (11.2) (12.6) (10.9)
------ ------ ------ ------- ------- -------
Net Income Before Taxes 2.0 1.8 2.7 0.4 (2.6) (0.7)
Tax (Provision)/Benefit (0.8) 0.7 0.5 -- 0.1 0.1
------ ------ ------ ------- ------- -------
Net Income before Nonrecurring Exp. 1.2 2.5 3.2 (0.4) (2.7) (0.8)
Nonrecurring Expense 0.0 (0.0) (1.6) (1.4) 0.0 0.0
------ ------ ------ ------- ------- -------
Net Income $ 1.2 $ 2.5 $ 1.6 ($ 0.9) ($ 2.7) ($ 0.8)
Profitability (1)
ROAA 0.97% 1.08% 0.75% (0.39%) (1.15%) (0.35%)
ROAE 14.18% 16.29% 16.29% (8.05%) (18.68%) (5.10%)
Efficiency Ratio 68.18% 81.40% 80.31% 82.96% 91.97% 78.99%
Net Interest Margin 4.25% 4.46% 4.74% 4.69% 4.66% 5.00%
<FN>
(1) Six months ended June 30, 1997 annualized.
</FN>
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