UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For quarter ended March 31, 1996
Commission file number 33-47248
WEETAMOE BANCORP
--------------------------------------------------------
(Exact name of registrant as specified in its charter)
Massachusetts 04-3061936
----------------------------------- ----------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
100 Slade's Ferry Avenue
Somerset, Massachusetts 02726
----------------------------------- ----------------------------------
(Address of principal executive offices) (Zip Code)
(508) 675-2121
--------------------------------------------------------
(Registrant's telephone number, including area code)
Check 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 past 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 [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date:
Common stock ($.01 par value) 2,754,912.280 shares as of March 31, 1996.
Traditional Small Business Disclosure Format:
Yes [X] No [ ]
PART I
ITEM 1
Financial Statements
- --------------------
WEETAMOE BANCORP
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
March 31, 1996 December 31, 1995
-------------- -----------------
ASSETS:
Cash and due from banks $ 7,242,998 $ 9,039,970
Federal funds sold 17,000,000 9,500,000
Investment securities 19,269,613 21,835,682
Securities available for sale 28,715,110 36,730,660
Federal Home Loan Bank Stock 495,400 290,700
Loans (net) 151,237,104 148,069,415
Premises and equipment 3,662,061 3,700,054
Other real estate owned 350,000 633,467
Accrued interest receivable 1,653,452 1,820,323
Other assets 1,805,460 1,801,383
------------ ------------
TOTAL ASSETS $231,431,198 $233,421,654
============ ============
LIABILITIES & STOCKHOLDERS' EQUITY:
Deposits $210,600,012 $214,220,689
Short term borrowings 1,392,782 741,773
Other liabilities 1,268,231 632,467
------------ ------------
TOTAL LIABILITIES $213,261,025 $215,594,929
STOCKHOLDERS' EQUITY:
Common stock 27,549 26,172
Paid in capital 14,323,953 13,136,923
Retained earnings 3,926,883 4,630,608
Net unrealized gain (loss) on investments
in available for sale securities (108,212) 33,022
------------ ------------
TOTAL STOCKHOLDERS' EQUITY $ 18,170,173 $ 17,826,725
------------ ------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $231,431,198 $233,421,654
============ ============
CONSOLIDATED STATEMENT OF INCOME AND EXPENSE
(UNAUDITED)
3 MONTHS ENDING MARCH 31,
1996 1995
----------- -----------
INTEREST AND DIVIDEND INCOME:
Interest and fees on loans $ 3,466,793 $ 3,007,984
Interest and dividends on investments 821,134 674,524
Other interest 161,537 39,149
--------------------------
Total interest and dividend income 4,449,464 3,721,657
--------------------------
INTEREST EXPENSE:
Interest on deposits 2,142,373 1,448,476
Interest on other borrowed funds 13,143 22,646
--------------------------
Total interest expense 2,155,516 1,471,122
--------------------------
Net interest and dividend income 2,293,948 2,250,535
--------------------------
PROVISION FOR LOAN LOSSES 150,000 150,000
Net interest and dividend income after
provision for loan losses 2,143,948 2,100,535
--------------------------
OTHER INCOME:
Service charges on deposit accounts 202,545 188,916
Security gains (losses) net 50,795 (29,403)
Other income 68,828 64,822
--------------------------
Total other income 322,168 224,335
--------------------------
OTHER EXPENSE:
Salaries and employee benefits 973,747 977,474
Occupancy expense 135,226 117,474
Equipment expense 104,693 103,196
Gain on sale of other real estate owned (657) 0
Write down of other real estate owned 30,000 14,578
Other expense 363,699 441,887
--------------------------
Total other expense 1,606,708 1,654,609
--------------------------
Income before income taxes 859,408 670,261
Income taxes 323,648 254,552
--------------------------
NET INCOME $ 535,760 $ 415,709
==========================
Earnings per share $ 0.19 $ 0.15
==========================
Average shares outstanding(1) 2,753,224 2,725,599
==========================
<FN>
- -------------------
<F1> Adjusted for 5% stock dividend issued in 1996.
</FN>
WEETAMOE BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Quarters Ended March 31, 1996 and 1995
(Unaudited)
1996 1995
------------- ------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
Cash flows from operating activities:
Interest and dividends received $ 4,458,930 $ 3,795,801
Service charges and other income received 271,373 253,738
Interest paid (2,154,338) (1,435,860)
Cash paid to suppliers and employees (1,536,627) (1,576,412)
Income taxes paid (111,650) (224,083)
------------------------------
Net cash provided by operating activities $ 927,688 $ 813,184
------------------------------
Cash flows from investing activities:
Proceeds from sale of other real estate owned $ 254,124 $ 0
Proceeds from sales of securities available for sale 185,954 1,291,486
Purchases of securities available for sale (141,257) (312,022)
Proceeds from maturities of securities available for sale 7,904,129 0
Proceeds from maturities of investment securities 5,445,264 2,080,245
Purchases of investment securities (2,935,536) (1,195,253)
Purchases of Federal Home Loan Bank stock (204,700) 0
Net (increase) decrease in loans (3,229,132) (2,021,515)
Capital expenditures (62,585) (32,648)
Recoveries of previously charged-off loans 5,967 9,377
Increase (decrease) in other liabilities 488,810 58,832
(Increase) decrease in federal funds sold (7,500,000) (8,500,000)
(Increase) decrease in other assets 85,048 454,894
------------------------------
Net cash provided by (used in) investing activities $ 296,086 $ (8,166,604)
------------------------------
Cash flows from financing activities:
Proceeds from issuance of stock $ 62,460 $ 51,749
Net increase (decrease) in demand deposits, NOW, money
market and savings accounts (3,906,369) (5,416,966)
Net increase (decrease) in time deposits 285,692 14,487,155
Net (decrease) increase in short-term borrowings 651,009 (820,328)
Dividends paid (113,538) (94,086)
Decrease in notes payable 0 0
------------------------------
Net cash provided by (used in) financing activities $ (3,020,746) $ 8,207,524
------------------------------
Net increase in cash and cash equivalents (1,796,972) 854,104
Cash and cash equivalents at beginning of period 9,039,970 7,438,167
------------------------------
Cash and cash equivalents at end of period $ 7,242,998 $ 8,292,271
==============================
Non-cash investing activities:
Transfers to other real estate owned $ 0 $ 0
==============================
Origination of loans for the sale of other real estate owned $ 110,000 $ 0
==============================
WEETAMOE BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Quarters Ended March 31, 1996 and 1995
(Unaudited)
(Continued)
Reconciliation of net income to net cash used in operating activities:
1996 1995
------------ -------------
Net income $ 535,760 $ 415,709
------------------------------
Adjustments to reconcile net income to net cash used in
operating activities:
Amortization of organization cost 0 3,440
Depreciation and amortization 100,578 104,080
Provision for loan losses 150,000 150,000
Increase (decrease) in taxes payable 211,998 30,469
Decrease in interest receivable 166,871 69,683
Increase in interest payable 1,178 35,262
Increase (decrease) in accrued expenses (50,797) 51,406
Decrease in prepaid expenses (9,043) (95,307)
Accretion, net of amortization of investment securities (42,409) 2,713
Accretion, net of amortization of securities available
for sale (20,473) (8,613)
(Gain) Loss on sale of securities available for sale, net (50,795) 29,403
Change in unearned income (94,523) 10,361
Writedown of Other Real Estate Owned 30,000 14,578
Loss (Gain) on sales of other real estate owned (657) 0
------------------------------
Total adjustments $ 391,928 $ 397,475
------------------------------
Net cash used in operating activities $ 927,688 $ 813,184
==============================
WEETAMOE BANCORP AND SUBSIDIARY, SLADE'S FERRY TRUST COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 1996
Note A - Basis of Presentation
- ------------------------------
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and the instructions to Form 10QSB and, accordingly, do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of the
management of Weetamoe Bancorp, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three months ended March 31, 1996 are not necessarily
indicative of the results that may be expected for the year ending December 31,
1996.
Note B - Accounting Policies
- ----------------------------
The accounting principles followed by Weetamoe Bancorp and subsidiary and the
methods of applying these principles which materially affect the determination
of financial position, results of operations, or changes in financial position
are consistent with those used at year end 1995.
The consolidated financial statements of Weetamoe Bancorp include its
wholly-owned subsidiary, Slade's Ferry Trust Company, and its subsidiaries, the
Slade's Ferry Realty Trust and the Slade's Ferry Securities Corporation. All
significant intercompany balances have been eliminated.
ITEM 2
Management's Discussion and Analysis
- ------------------------------------
Financial Condition
- -------------------
A slight decrease in assets occurred during the first quarter in 1996. This
decline was attributed to a reduction in deposits, which were at peak levels at
year end 1995. Under normal conditions, it has been the trend for deposits to
either stabilize or decline during the first three months of the new year. As a
result of the decrease in deposits, assets at March 31, 1996 were down by $2.0
Million to $231.4 Million, when compared to $233.4 Million reported on December
31, 1995.
On March 20, 1996 Weetamoe Bancorp ("the Company") entered into a letter of
intent with Fairbank, Inc., a Massachusetts corporation ("Fairbank"), for the
acquisition of Fairbank and its wholly owned subsidiary, the National Bank of
Fairhaven, by the Company's wholly owned subsidiary, Slade's Ferry Bank. On
April 5, the Company and Fairbank executed a definitive agreement and plan of
merger for the acquisition. The agreement provides for a purchase price of
$8,558,800 to be paid in cash without any issuance of Weetamoe Bancorp stock. As
a result of the proposed transaction, the National Bank of Fairhaven's two
banking offices would become branches of Slade's Ferry Bank which would be the
surviving bank.
The National Bank of Fairhaven had assets of approximately $65 Million at year
end 1995, while Slade's Ferry Bank ended the year at $233 Million. The combined
entity with assets of almost $300 Million would operate nine full time banking
offices serving Fairhaven, New Bedford, Fall River, Somerset, Swansea, Seekonk
and surrounding towns.
The acquisition is subject to approval by Fairbank's stockholders and approvals
by federal and state banking regulators.
Subject to receipt of all regulatory approvals, the acquisition is expected to
be completed on or before September 30, 1996.
In preparation for this cash outlay, management has increased its liquidity
level by utilizing proceeds from securities that have matured in the investment
portfolio. These funds have been reinvested primarily in the Federal Funds Sold
category or into short term treasuries. The combination of the increase in
loans, the decline in deposits, and providing for the anticipated cash
requirements for the merger resulted in a decrease in the investment portfolio.
Investment Securities and Securities Available for Sale combined were down by
$10.6 Million at the end of the first quarter to $48.0 Million, from $58.6
Million reported at year end 1995.
Federal Funds Sold was up by $7.5 Million to $17.0 Million from $9.5 Million at
year end. The current level of the Federal Funds Sold category provides for any
unusual decline in deposits, anticipated loan demand, and the cash necessary to
consummate the acquisition of the National Bank of Fairhaven.
An improved loan demand, combined with a business development program, has
resulted in an increase in loans. Loans at March 31, 1996 were up by $3.2
Million to $154.3 Million, when compared to $151.1 Million at December 31, 1995.
Other Real Estate Owned, which is real estate acquired through foreclosure, was
down by $283,467 from $633,467 at year end. At present, there is one remaining
parcel of foreclosed property representing a balance of $350,000.
Deposits at March 31, 1996 were down by $3.6 Million to $210.6 Million, when
compared to $214.2 Million at December 31, 1995. The decreases were noted
primarily in the demand, NOW account, and money market account segments, with a
combined decline of $4.6 Million, offset by combined increases in savings
accounts and time deposits of $1.0 Million.
Nonaccrual loans at March 31, 1996 were $2,751,460, up slightly by $56,347 from
$2,695,113 reported at December 31, 1995. Loans that have become nonaccrual
during the first quarter of 1996 amounted to $140,830. Offsetting the addition
to nonaccrual loans was $84,483 through receipt of payments. The Company does
not foresee this increase in nonaccrual loans as a trend. Economic conditions in
the area have improved slightly, and it is not anticipated that any increase in
the nonaccrual category will be of a material nature.
Loans past due 90 days or more but still accruing increased by $494,058 on March
31, 1996 to $517,186 from $23,128 reported on December 31, 1995. The Company
continues to accrue on these loans due to the assets that are collateralizing
such loans.
INFORMATION WITH RESPECT TO NONACCRUAL AND PAST DUE LOANS
AT MARCH 31, 1996 AND 1995 AND DECEMBER 31, 1995 AND 1994
(Dollars in Thousands)
At March 31 At December 31
---------------- ---------------
1996 1995 1995 1994
------ ------ ------ ------
Nonaccrual Loans $2,751 $3,974 $2,695 $3,238
Loans 90 days or more past due and still accruing 517 718 23 204
Real estate acquired by foreclosure
or substantively repossessed 350 540 633 888
Percentage of nonaccrual loans to total loans 1.78% 2.87% 1.78% 2.38%
Percentage of nonaccrual loans and real estate
acquired by foreclosure or substantively
repossessed to total assets 1.34% 2.57% 1.42% 2.13%
Percentage of allowance for possible loan losses .96% .62% .93% .71%
to nonaccrual loans
The $2.7 Million nonaccrual loans consist of $2.1 Million of real estate
mortgages, $.5 Million attributed to commercial loans, and $.1 Million
attributed to consumer loans. Of the total nonaccrual loans outstanding,
$281,588 are restructured at March 31, 1996.
INFORMATION WITH RESPECT TO NONACCRUAL AND RESTRUCTURED LOANS
AT MARCH 31, 1996 AND 1995 AND DECEMBER 31, 1995 AND 1994
(Dollars in Thousands)
At March 31 At December 31
---------------- --------------
1996 1995 1995 1994
------ ------ ------ ----
Nonaccrual Loans $2,751 $3,974 $2,695 $3,238
Interest income that would have been recorded
under original terms 62 78 243 242
Interest income recorded during the period 3 0 21 19
The Company stops accruing interest on a loan once it becomes past due 90 days
or more unless there is adequate collateral and the financial condition of the
borrower is sufficient. When a loan is placed on a nonaccrual status, all
previously accrued but unpaid interest is reversed and charged against current
income. Interest is thereafter recognized only when payments are received and
the loan becomes current.
Loans in the nonaccrual category will remain until the possibility of collection
no longer exists, the loan is paid off or becomes current. When a loan is
determined to be uncollectible, it is then charged off against the Allowance for
Possible Loan Losses.
Statement of Financial Accounting Standards No. 114 "Accounting by Creditors for
Impairment of a Loan" was adopted by the Company as of January 1, 1995.
Statement 114 applies to all loans except large groups of smaller-balance
homogenous loans that are collectively evaluated for impairment, loans measured
at fair value or at a lower of cost or fair value, leases, and debt securities
as defined in Statement 115. Statement 114 requires that impaired loans be
valued at the present value of expected future cash flows discounted at the
loan's effective interest rate or as a practical expedient, at the loan's
observable market value of the collateral if the loan is collateral dependent.
Included in the $2,751,460 nonaccrual loans are $2,296,377 which the Company has
determined to be impaired, for which $1,970,822 have a related allowance for
credit losses of $513,762 and $325,555 have no related allowance for credit
losses.
The Company has $800,000 of potential problem loans for which payments are
presently current. However, the borrowers are experiencing financial difficulty.
These loans are subject to management's attention and their classification is
reviewed quarterly.
ANALYSIS OF THE ALLOWANCE FOR POSSIBLE LOAN LOSSES
(Dollars in Thousands)
Three Months Years Ended
At March 31 At December 31
---------------- ----------------
1996 1995 1995 1994
------ ------ ------ ------
Balance at January 1 $2,498 $2,306 $1,954 $1,954
Charge Offs:
Commercial --- --- 184 22
Real Estate - Construction --- --- --- ---
Real Estate - Mortgage --- --- 79 246
Installment/Consumer 2 2 134 93
------------------------------------
2 2 397 361
Recoveries:
Commercial 1 --- 1 51
Real Estate - Construction --- --- --- ---
Real Estate - Mortgage --- 5 16 2
Installment/Consumer 5 4 22 15
------------------------------------
6 9 39 68
------------------------------------
Net Charge Offs (4) 7 358 293
------------------------------------
Additions Charged to Operations 150 150 550 645
Balance at End of Period $2,651 $2,463 $2,498 $2,306
====================================
Ratio of Net Charge Offs to Average
Loans Outstanding (0.003%) 0.05% 0.25% 0.23%
The Allowance for Possible Loan Losses at March 31, 1996 was $2,651,500,
compared to $2,497,774 at year end 1995. The Allowance for Possible Loan Losses
as a percent of outstanding loans was 1.72% at March 31, 1996, and 1.65% at
December 31, 1995.
The Bank provided $550,000 in 1995, $645,000 in 1994, and $150,000 as of March
31, 1996 to the Allowance for Possible Loan Losses. Loans charged off were
$396,639 in 1995, $361,811 in 1994, and $2,240 as of March 31, 1996. Recoveries
on loans previously charged off were $39,553 in 1995, $68,808 in 1994, and
$5,966 as of March 31, 1996. Management believes that the Allowance for Loan
Losses of $2,651,500 is adequate to absorb any losses in the foreseeable future,
due to the Bank's strong collateral position and the current asset quality.
The percentages of the Allowance for Possible Loan Losses to nonaccrual loans
improved to .96% at March 31, 1996 from .93% and .71% reported at years ending
1995 and 1994, respectively. The average ratio of peer group banks with assets
of $100-$300 Million for years 1995 and 1994 were 3.59% and 3.45% respectively.
Ratio of peer groups for March 31, 1996 were not available.
The level of the Allowance for Possible Loan Losses is evaluated by management
and encompasses several factors, which include but are not limited to, recent
trends in the nonperforming loans, the adequacy of the assets which
collateralize the nonperforming loans, current economic conditions in the market
area, and various other external and internal factors.
This table shows an allocation of the allowance for loan losses as of the end of
each of the periods indicated.
March 31, 1996 December 31, 1995 December 31, 1994
----------------------- ----------------------- -----------------------
Percent of Percent of Percent of
Loans in Loans in Loans in
Each Each Each
Category Category Category
to Total to Total to Total
Amount Loans Amount Loans Amount Loans
---------- ---------- ---------- ---------- ---------- ----------
(Dollars in Thousands)
Domestic:
Commercial $ 756(1) 11.11% $ 597(1) 11.35% $ 588 12.82%
Real estate - Construction 56 6.33% 40 4.55% 14 1.68%
Real estate - mortgage 1,524(2) 78.87% 1,581(2) 80.04% 1,374 81.03%
Consumer 315(3) 3.69% 280 4.06% 330 4.47%
----------------------------------------------------------------------
$2,651 100.00% $2,498 100.00% $2,306 100.00%
======================================================================
<FN>
- --------------------
<F1> Includes specifically reserved for impaired loans of $269,762 as of March
31, 1996 and $214,542 as of December 31, 1995 as required by Financial
Accounting Standard No. 114, Accounting for Impairment of Loans.
<F2> Includes specifically reserved for impaired loans of $184,000 as of March
31, 1996 and $240,500 as of December 31, 1995 as required by Financial
Accounting Standard No. 114, Accounting for Impairment of Loans.
<F3> Includes specifically reserved for impaired loans of $60,000 as of March
31, 1996 as required by Financial Accounting Standard No. 114, Accounting
for Impairment of Loans.
</FN>
The loan portfolio's largest segment of loans is commercial real estate loans,
which represent 47.55% of gross loans. Residential real estate, which is the
second largest segment of the loan portfolio, represents 31.32% of gross loans.
The Company requires a loan to value ratio of 80% in both commercial and
residential mortgages. These mortgages are secured by real properties which have
a readily ascertainable value.
Generally, commercial real estate loans have a higher degree of credit risk than
residential real estate loans because they depend primarily on the success of
the business. When granting these loans, the Company evaluates the financial
statements of the borrower(s), the location of the real estate, the quality of
management, and general economic and competitive conditions. When granting a
residential mortgage, the Company reviews the borrower(s) repayment history on
past debts, and assesses the borrower(s) ability to meet existing obligations
and payments on the proposed loans.
Commercial loans consist of loans predominantly collateralized by inventory,
furniture and fixtures, and accounts receivable. In assessing the collateral for
this type of loan, management applies a 40% liquidation value to inventories,
25% to furniture, fixtures and equipment; and 60% to accounts receivable.
Commercial loans represent 11.11% of the loan portfolio.
Consumer loans are generally unsecured credits and represent 3.69% of the total
loan portfolio. These loans have a higher degree of risk then residential
mortgage loans. The underlying collateral of a secured consumer loan tends to
depreciate in value. Consumer loans are typically made based on the borrower's
ability to repay the loan through continued financial stability. The Company
endeavors to minimize risk by reviewing the borrower's repayment history on past
debts, and assessing the borrower's ability to meet existing obligations on the
proposed loans.
The allocation of the Allowance for Loan Losses is based on management's
judgement of potential losses in the respective portfolios. While management has
allocated reserves to various portfolio segments, the Allowance is general in
nature and is available for the portfolio in its entirety.
Results of Operations
- ---------------------
Net interest income increased by $43,413 to $2,293,948 on March 31, 1996 when
compared to $2,250,535 earned during the same period in the previous year.
Interest earned was up by $727,807 during the three month period primarily due
to a larger loan and investment portfolio, when compared to the prior year. This
increase was offset by an increase in interest expense which is attributable to
a larger deposit base in the current quarter compared to the same period in the
previous year.
The provision for loan losses is a charge against earnings, which in turn funds
the Allowance for Possible Loan Losses. The Company's provision for the three
months ending March 31, 1996 was $150,000. During the same period in the prior
year, the provision was also $150,000.
Other income was up by $97,833 to $322,168 on March 31, 1996 when compared to
$224,335 earned in the same period of the previous year. Service charges on
deposit accounts increased by $13,629, which is attributed to a larger customer
base. Gains realized on sale of securities for the three months amounted to
$50,795 compared to a loss of $29,403 realized in the three months of the prior
year. Other miscellaneous income reflected an increase of $4,006 due to normal
business operations.
Total Other Expense decreased by $47,901 to $1,606,708 reported during the first
quarter of 1996, compared to $1,654,609 reported for the same period in 1995.
The largest decrease occurred in Other Expense which declined by $78,188 due to
the significant reduction of F.D.I.C. deposit insurance premiums that occurred
in late 1995. This reduction in assessment fees was offset by expense attributed
to collection and repossession.
Income before income taxes for the first quarter in 1996 was $859,408, up by
$189,147 from $670,261 reported during the same period in 1995. Applicable taxes
for the current period was $323,648 and $254,552 for the same period in the
previous year. This resulted in net income for the three months ending March 31,
1996 of $535,760, up by $120,051. Earnings per share were up by $.04 per share
to $.19 per share from $.15 earned per share during the same quarter in 1995.
Liquidity
- ---------
The Company's principal sources of funds are customer deposits, loan
amortization, loan payoffs, and the maturities of investment securities. Through
these sources, funds are provided for customer withdrawals from their deposit
accounts, loan originations, draw-downs on loan commitments, acquisition of
investment securities and other normal business activities. Investors' capital
also provides a source of funding.
The largest source of funds is provided by depositors. The largest component of
the Company's deposit base is reflected in the Time Deposit category. The
Company does not participate in brokered deposits. Deposits are obtained from
consumers and commercial customers within the Bank's community reinvestment
area, being Bristol County, Massachusetts and several abutting towns in Rhode
Island.
The Company also has the ability to borrow funds from correspondent banks, the
Federal Home Loan Bank, as well as the Federal Reserve Bank of Boston by
pledging various investment securities as collateral. The Company did not borrow
during the first quarter of the current year. During the first quarter of 1995,
the Company borrowed for 25 days with an average borrowing of $2.0 Million.
There were no other borrowings during 1995. However, tax payments made by our
customers which are owed to the Federal Reserve Bank Treasury Tax and Loan
account are classified as borrowed funds.
Excess available funds are invested on a daily basis as Federal Funds Sold and
can be withdrawn daily. The Bank attempts through its cash management strategies
to maintain a minimum level of Federal Funds Sold to further enhance its
liquidity.
Liquidity represents the ability of the Bank to meet its funding requirements.
In assessing the appropriate level of liquidity, the Bank considers deposit
levels, lending requirements, and investment maturities in light of prevailing
economic conditions. Through this assessment, the Bank manages its liquidity
level to optimize earnings and respond to fluctuations in customer borrowing
needs.
At March 31, 1996, the Bank's liquidity ratio stood at 34.3% as compared to
36.0% at December 31, 1995. The liquidity ratio is determined by dividing the
Bank's short term assets (cash and due from banks, interest bearing deposits due
from other banks, securities, and federal funds sold) by the Bank's total
deposits. Management believes the Bank's liquidity to be adequate to meet the
current and presently foreseeable needs of the Bank.
The comparison of cash flows for three months ending March 31, 1996 and 1995
indicates that cash flows, as a result of operating activities, increased by
$114,504 during the current period compared to the same period in the previous
year. There was an increase in interest and dividends received of $663,129, an
increase in service charges of $17,635, and decreases in cash paid to suppliers
and employees of $39,785, and income taxes paid of $112,433. These were offset
by an increase in interest paid of $718,478.
Cash provided by investing activities during the three month period ending March
31, 1996 was $.3 Million which was comprised of an increase in Federal Funds
Sold of $7.5 Million, an increase in loans of $3.2 Million and purchase of
securities of $3.3 Million. This was offset by proceeds from securities that had
matured or were sold of $13.5 Million.
During the same period in the prior year, net cash used for investing activities
was $8.2 Million which was comprised of an increase in Federal Funds Sold of
$8.5 Million, an increase in loans of $2.0 Million and purchase of securities of
$1.5 Million. This was offset by sale of securities of $1.3 Million and proceeds
from securities that matured of $2.1 million.
Cash used in financing activities during the period ending March 31, 1996 was
$3.0 Million, primarily due to the decrease in the balance of demand, NOW, money
market and savings accounts of $3.9 Million. This was partially offset by an
increase in short term borrowings of $.7 Million and an increase in time
deposits of $.3 Million.
During the three month period ending March 31, 1995, cash provided by financing
activities was $8.2 Million, primarily due to an influx of funds in the time
deposit category of $14.5 Million offset by a decrease in demand, NOW, money
market accounts and savings accounts of $5.4 Million.
Capital
- -------
As of March 31, 1996, the Company had total capital of $18,170,173. This
represents an increase of $343,448 from $17,826,725 reported on December 31,
1995. The increase in capital was a combination of several factors. Additions
consisted of three months earnings of $535,760, transactions originating through
the Dividend Reinvestment Program whereby 1,492.674 shares were issued for cash
contributions of $12,700 and 5,765.920 shares were issued for $49,760 in lieu of
cash dividend payments. These additions were offset by dividends paid of
$110,178 and cash dividends paid in lieu of fractional shares of $3,360 as a
result of the 5% stock dividend issued in January of 1996.
Also, affecting capital is the adjustment that reflects net unrealized gains or
losses, net of taxes, on securities classified as Available-for-Sale. On
December 31, 1995 the Available-for-Sale portfolio had unrealized gains, net of
taxes, of $33,022, and on March 31, 1996, as a result of current market values,
the portfolio reflects unrealized losses, net of taxes, of $141,234 which is an
adjustment from capital.
Paid in Capital increased by $1,187,030 of which $1,124,643 was a transfer from
retained earnings representing a 5.0% stock dividend paid on January 1, 1996 and
$62,387 attributed to transactions resulting from cash contributions and
reinvestment of cash dividends associated with the Dividend Reinvestment
Program.
Federal Banking regulators have adopted Risk Based and Leverage Capital
requirements, which were phased in and fully implemented on December 31, 1992.
Under the requirements, a minimum level of capital will vary among banks based
on safety and soundness of operations.
Risk Based Capital ratios are calculated with reference to risk-weighted assets,
which include both on and off balance sheet exposure. At December 31, 1993, the
minimum regulatory capital level for Risk Based Capital was 4.0% for Tier 1
capital, 8.0% for total capital, and 4.0% for Leverage Capital (Tier 1 as a
percentage of total assets).
At March 31, 1996 the actual Risk Based Capital of the Bank was $18,196,991 for
Tier 1 Capital, exceeding the minimum requirements of $6,339,414 by $11,857,577.
Total Capital of $20,178,058 exceeded the minimum requirements of $12,678,828 by
$7,499,230 and Leverage Capital of $18,196,991 exceeded the minimum requirements
of $9,258,000 by $8,938,991.
ITEM 4
Submission of Matters to a Vote of Security Holders
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The Annual Meeting of the stockholders of the Weetamoe Bancorp was held on March
11, 1996.
Proposal One - Election of Clerk/Secretary
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The following individual, was reelected by the stockholders to serve as
Clerk/Secretary until the next annual meeting of the stockholders, and until his
successor is elected and qualified.
Votes
--------------------------------------------------------------------
Nominee For Against
--------------------------------------------------------------------
Attorney Peter G. Collias 1,688,651.385 7,257.894
Proposal Two - Election of Class One Directors
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The following four individuals were re-elected to serve as directors of the
Company until the 1999 Annual Meeting of stockholders and until their successors
are elected or qualified.
Votes
---------------------------------------------------------------------
Nominee For Against
---------------------------------------------------------------------
Donald T. Corrigan 1,691,135.003 4,774.276
Peter Paskowski 1,691,135.003 4,774.276
Kenneth R. Rezendes 1,691,135.003 4,774.276
Charles Veloza 1,680,311.426 15,597.853
The following additional directors continued their terms in office after the
meeting:
Thomas B. Almy Francis A. Macomber
James D. Carey Majed Mouded, MD
Peter G. Collias Bernard T. Shuman
Edward S. Machado William J. Sullivan
Proposal Three - Amendment of Articles of Organization to Increase Authorized
Shares.
- --------------------------------------------------------------------------------
To amend the Corporation's Articles of Organization to increase the number of
authorized shares of Common Stock of the Corporation, par value $.01 per share,
from 3,000,000 to 5,000,000 shares.
For Against
---------------------------------------------
1,663,512.447 32,396.832
Proposal Four - Approval of 1996 Stock Option Plan
- --------------------------------------------------
To submit for stockholder approval a 1996 Stock Option Plan (the "Plan"). The
purpose of the Plan is to encourage ownership of the Corporation's Common Stock
by key employees and non-employee directors and to provide additional incentive
for them to promote the success of the business.
For Against
---------------------------------------------
1,642,370.919 53,538.360
Proposal Five - Amendment of Bylaws to change Annual Stockholders Meeting date.
- -------------------------------------------------------------------------------
To amend the bylaws of the Corporation to change the Stockholders Annual Meeting
date from the second Monday in March to the second Monday in April commencing in
1997.
For Against
---------------------------------------------
1,686,205.295 9,703.984
ITEM 5
Other Matters
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The Board of Directors declared a five percent stock dividend on the Company's
common stock to stockholders of record on January 8, 1996, paid on January 31,
1996. The stock dividend resulted in the distribution of 130,469 shares. The par
value of the common stock remained at $.01. Accordingly, $1,304.69 and
$1,124,642.78 were transferred from Retained Earnings to Common Stock and
Paid-In-Capital respectively.
ITEM 6
Exhibits and Reports on Form 8-K
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(a) Exhibits: See exhibit index.
(b) Reports on Form 8-K: A report on Form 8-K was filed, reporting on Item 5.
No financial statements were filed. The date of the report was March 20,
1996.
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 duly authorized.
WEETAMOE BANCORP
(Registrant)
May 10, 1996 /s/ Kenneth R. Rezendes
- ----------------------------- ------------------------------------
(Date) (Signature) Kenneth R. Rezendes
President
May 10, 1996 /s/ James D. Carey
- ----------------------------- ------------------------------------
(Date) (Signature) James D. Carey
Executive Vice President
EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ------------------------------------------------------------------
3.1 Articles of Incorporation of Weetamoe Bancorp as amended *
3.2 Bylaws of Weetamoe Bancorp as amended *
10.1 Agreement and Plan of Merger by and between Weetamoe
Bancorp and Fairbank, Inc.
10.2 Weetamoe Bancorp 1996 Stock Option Plan
<FN>
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<F1> * Incorporated by reference to the Registrant's Form 10K-SB for the fiscal
year ended December 31, 1995.
</FN>