SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended
September 30, 1996
Commission File Number 34-0-18162
PEOPLE'S SAVINGS FINANCIAL CORP.
(Exact name of registrant as specified in its charter)
Connecticut 06-1259026
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
123 Broad Street, New Britain, CT 06053
(Address of principal executive offices) (ZIP Code)
(860) 224-7771
(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 X NO
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
2,541,574 shares issued and
outstanding, (including
636,961 shares in treasury)
as of September 30, 1996
Common Stock, par value $1.00 per share
PEOPLE'S SAVINGS FINANCIAL CORP.
Table of Contents
PART I - FINANCIAL INFORMATION PAGE NO.
Item 1. Financial Statements (Unaudited)
(a) Condensed Consolidated Balance Sheets -
September 30, 1996 and December 31, 1995 3
(b) Condensed Consolidated Statements of Income -
Three months ended September 30, 1996 and 1995;
Nine months ended September 30, 1996 and 1995; 4
(c) Condensed Consolidated Statements of Cash Flows -
Nine months ended September 30, 1996 and 1995; 5
(d) Notes to the Condensed Consolidated Financial
Statements - September 30, 1996 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 16
Item 2. Changes in Securities 16
Item 3. Defaults Upon Senior Securities 16
Item 4. Submission of Matters to a Vote of Security
Holders 16
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8-K 16
Part I. Financial Information
Item 1. Financial Statements
PEOPLE'S SAVINGS FINANCIAL CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands)
September 30, December 31,
1996 1995
(Unaudited)
Non-interest bearing deposits and cash $5,405 $6,816
Federal funds sold and FHLB overnight deposits 1,658 21,346
Cash and Cash Equivalents 7,063 28,162
Investment securities
Available for sale (at market) 154,040 91,128
Held to maturity (market value: $28,424 at
September 30, 1996 and $38,259 at
December 31, 1995) 29,326 38,461
Capital stock of the Federal Home Loan Bank 2,736 2,643
Loans held for sale 2,159 927
Loans, net (allowance for loan losses
1996-$1,560; 1995-$1,578) 251,912 236,792
Bank premises and equipment 2,239 2,370
Foreclosed real estate 311 178
Accrued income receivable 4,574 3,748
Goodwill 3,085 3,300
Other assets 2,521 2,455
Total Assets $459,966 $410,164
Liabilities and Shareholders' Equity
Liabilities
Non-interest bearing demand deposits $6,952 $5,606
Interest bearing deposits 348,315 333,759
Total deposits 355,267 339,365
Mortgagors' escrow accounts 1,060 2,490
Advances from Federal Home Loan Bank of Boston 40,155 18,950
Securities sold under repurchase agreements 14,500 -
Accrued expenses 1,421 1,239
Other liabilities 2,567 3,407
Total Liabilities 414,970 365,451
Shareholders' Equity
Common stock, ($1.00 par value), 10,000,000
shares authorized; 2,541,574, and 2,511,824
shares issued and outstanding at September 30,
1996 and December 31, 1995, respectively
(including shares in treasury of 636,961 and
559,461 at September 30, 1996 and December 31,
1995, respectively) 2,542 2,512
Additional paid in capital 22,119 21,834
Retained earnings 29,242 27,421
Unrealized gains (losses) on securities available
for sale, net of taxes (68) 196
Cost of treasury stock (8,839) (7,250)
Total Shareholders' Equity 44,996 44,713
Total Liabilities and Shareholders' Equity $459,966 $410,164
See notes to the condensed consolidated financial statements.
PEOPLE'S SAVINGS FINANCIAL CORP.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollar amounts in thousands, except per share data)
unaudited
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
Interest Income:
Loans, including fees $4,904 $4,773 $14,529 $13,601
Investment Securities 2,800 2,202 7,065 6,288
Trading Account - - - 46
Short-term Investments 77 83 441 401
Total Interest Income 7,781 7,058 22,035 20,336
Interest Expense:
Interest on deposits 3,649 3,457 10,751 9,654
Interest on borrowings 619 269 1,055 986
Total Interest Expense 4,268 3,726 11,806 10,640
Net Interest Income 3,513 3,332 10,229 9,696
Provision for Loan Losses 95 30 254 101
Net Interest Income after Provision
for Loan Losses 3,418 3,302 9,975 9,595
Other Income:
Service charges and fees 257 241 764 758
Trust fees 365 299 1,036 838
Net Investment Securities Losses - (1) (20) (70)
Trading Account Gains - - - 49
Gains (Losses) on Loans Sold 44 (7) (77) (2)
Other Operating Income 63 76 222 142
Total Other Income 729 608 1,925 1,715
Other Expenses:
Salaries and Benefits 1,263 1,150 3,736 3,297
Occupancy 253 225 788 701
Furniture and Equipment 252 224 725 671
FDIC Deposit Insurance - (17) 2 347
Other Real Estate Expenses 12 146 29 308
Other Operating Expenses 706 603 2,080 1,840
Total Other Expenses 2,486 2,331 7,360 7,164
Income Before Income Taxes 1,661 1,579 4,540 4,146
Income Taxes 640 618 1,422 1,642
Net Income $1,021 $961 $3,118 $2,504
Per Share Data:
Primary
Net Income $0.52 $0.48 $1.60 $1.26
Weighted Average Common Shares
Outstanding 1,954,819 1,989,542 1,948,621 1,985,702
Fully Diluted
Net Income $0.52 $0.48 $1.58 $1.26
Weighted Average Common Shares
Outstanding 1,967,826 1,989,542 1,978,060 1,985,702
Dividends Declared Per Share $0.23 $0.22 $0.68 $0.66
See notes to condensed consolidated financial statements.
PEOPLE'S SAVINGS FINANCIAL CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands)
(Unaudited) Nine months ended
September 30,
1996 1995
Operating activities
Net Income $3,118 $2,504
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for depreciation 384 354
Accretion and amortization of bond premiums
and discounts, net 110 35
Provision for loan losses 254 101
Amortization of net deferred loan fees (72) (157)
Decrease in trading account securities - 5,461
Loans sold 1,106 2,615
Realized investment securities losses 20 70
Writedowns on foreclosed real estate 20 253
Goodwill amortization 215 265
Increase (decrease) in accrued expenses 182 22
Other items, net (1,732) 27
Net cash provided by operating activities 3,605 11,550
Investing activities
Purchases of available-for-sale securities (93,416) (28,698)
Proceeds from sale of available-for-sale securities 14 8,370
Proceeds from maturities of available-for-sale
securities 30,046 11,854
Purchases of held-to-maturity securities - (1,265)
Proceeds from maturities of held-to-maturity securities 9,092 6,237
Net increase in loans (18,091) (12,954)
Purchases of premises and equipment, net (253) (301)
Foreclosed real estate sold 298 748
Net cash used by investing activities (72,310) (16,009)
Financing activities
Net increase (decrease) in demand deposits, NOW accounts,
savings accounts, and mortgagors' escrow accounts (601) (19,661)
Net increase in time deposits 15,073 31,682
Net increase (decrease) in borrowings from
the Federal Home Loan Bank of Boston 21,205 (14,348)
Net increase in repurchase agreements 14,500 -
Cash Dividends paid (1,297) (1,289)
Acquisition of treasury stock (1,589) (721)
Issuance of Common Stock 315 36
Net cash provided (used) by financing activities 47,606 (4,301)
Decrease in cash and cash equivalents (21,099) (8,760)
Cash and cash equivalents at January 1 28,162 19,414
Cash and cash equivalents at September 30 7,063 10,654
Non-cash investing and financing activities
Increase (decrease) in net unrealized holding gains
(losses) on securities carried at market 264 4,117
Transfer of loans to foreclosed real estate 520 988
See notes to condensed consolidated financial statements.
PEOPLE'S SAVINGS FINANCIAL CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1996
Note A - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for
the three and nine month periods ended September 30, 1996 are not necessarily
indicative of the results that may be expected for the year ending December
31, 1996. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Corporation's Annual Report
on Form 10-K for the year ended December 31, 1995.
Certain 1995 amounts have been reclassified to conform with the 1996
presentation. These reclassifications had no impact on net income.
Note B - CHANGES IN ACCOUNTING PRINCIPLES
On January 1, 1996, the Corporation adopted Statement of Financial Accounting
Standards No. 121 "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of." The adoption of this accounting
standard had no impact on the Corporation's financial condition or results of
operations because, in the opinion of management, it did not hold any long-
lived assets that were impaired.
On January 1, 1996, the Corporation adopted Statement of Financial Accounting
Standards No. 122 "Accounting for Mortgage Servicing Rights - an amendment of
FASB Statement No. 65." The adoption of this accounting standard had an
immaterial impact on the Corporation's financial condition and results of
operations because it only originated for sale $2.37 million of loans during
the nine month period ended September 30, 1996 resulting in capitalized
originated loan servicing rights of approximately $20,000.
Note C - SECURITIES
The amortized cost and estimated market values of investment securities for
September 30, 1996 and December 31, 1995 are as follows.
Net
Estimated Gross Gross Unrealized
(in thousands) Amortized Market Unrealized Unrealized Gains/
September 30, 1996 Cost Value Gains Losses (Losses)
Available for sale
United States Government
and agency obligations $57,522 $56,896 $49 $675 ($626)
Corporate securities 5,638 5,640 13 11 2
Mortgage-backed securities 75,783 75,735 379 427 (48)
Total debt securities 138,943 138,271 441 1,113 (672)
Marketable equity
securities 6,905 7,087 267 85 182
Mutual funds 8,308 8,682 374 - 374
$154,156 $154,040 $1,082 $1,198 ($116)
Held to maturity
United States Government
and agency obligations $3,998 $3,971 $10 $37 ($27)
Mortgage-backed securities 25,328 24,453 - 875 (875)
$29,326 $28,424 $10 $912 ($902)
Net
Estimated Gross Gross Unrealized
(in thousands), Amortized Market Unrealized Unrealized Gains/
December 31, 1995 Cost Value Gains Losses (Losses)
Available for sale
United States Government
and agency obligations $44,506 $44,553 $159 $112 $47
State of Connecticut
taxable obligations 1,250 1,251 1 - 1
Corporate securities 8,133 8,227 95 1 94
Mortgage-backed securities 21,480 21,523 163 120 43
Total debt securities 75,369 75,554 418 233 185
Marketable equity
securities 9,915 10,002 112 25 87
Mutual funds 5,615 5,572 - 43 (43)
$90,899 $91,128 $530 $301 $229
Held to maturity
United States Government
and agency obligations $9,994 $10,026 $55 $23 $32
Mortgage-backed securities 28,467 28,233 35 269 (234)
$38,461 $38,259 $90 $292 ($202)
Note D - LOANS
The following table shows the Corporation's loan distribution at the end of
the nine month period ended September 30, 1996 compared to December 31, 1995.
September 30, 1996 December 31, 1995
($ in thousands) Balance % of Total Balance % of Total
Real Estate Loans:
1 to 4 family residential 203,380 79% 193,087 80%
Multifamily (5 or more units) 3,878 2% 3,856 2%
Home equity credit lines 4,659 2% 4,873 2%
Construction and land
development 5,714 2% 3,933 2%
Second mortgages 23,772 9% 21,795 9%
Commercial mortgages 7,534 3% 5,937 2%
Total real estate loans 248,937 97% 233,481 97%
Consumer installment 4,996 2% 4,718 2%
Credit cards 1,234 1% 1,346 1%
Commercial 841 0% 239 0%
Total loans 256,008 100% 239,784 100%
Less: Loans held for sale 2,159 927
Allowance for loan losses 1,560 1,578
Deferred fees 377 487
Net loans 251,912 236,792
Note E - NON-PERFORMING ASSETS
The following table illustrates the composition of the non-performing assets
as of September 30, 1996 and December 31, 1995.
September 30, 1996 December 31, 1995
($ dollars in thousands) # of loans Amount # of loans Amount
Loans past due 90 days or more:
Residential 24 $1,842 10 $711
Installment 2 15 3 10
Total non-performing loans 26 1,857 13 721
Foreclosed real estate:
Residential 4 311 4 98
Commercial real estate - - 2 80
Total foreclosures 4 311 6 178
Repossessed assets - - - -
Total non-performing assets $2,168 $899
Non-performing assets to total
loans and OREO 0.85% 0.38%
Allowance for loans losses to
non-performing loans 84.00% 218.86%
As a percent of total loans:
Loans past due 90 days or more 0.73% 0.30%
Allowance for loan losses 0.61% 0.66%
Note F - LOAN LOSS RESERVE
The following table summarizes the Corporation's loan loss reserve as of the
nine months ended September 30, 1996 and 1995.
(in thousands) Nine months ended September 30, 1996 1995
Beginning balance 1,578 1,791
Provision charged to expense 254 101
Net charge-offs 272 181
Ending balance $1,560 $1,711
The allowance for loan losses is maintained at a level believed adequate by
management to absorb potential losses in the loan portfolio. The adequacy
of the allowance is determined by management's evaluation of known and
inherent risks in the loan portfolio and prevailing economic conditions and
the Bank's loss experience. The allowance is increased by provisions for
loan losses charged against income.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
General
This section presents management's discussion and analysis of the
consolidated results of operations for People's Savings Financial Corp.
(the "Corporation") and The People's Savings Bank of New Britain (the
"Bank") for the three and nine month periods ended September 30, 1996 and
1995, and its financial condition as of September 30, 1996. In order to
understand this section in context, it should be read in conjunction with
the consolidated financial statements and notes thereto.
Financial Condition
At September 30, 1996 total assets were $459.97 million, an increase of
$49.81 million (or 12.1%) from total assets of $410.16 million at December
31, 1995. The increase in assets was primarily due to an increase in
investment securities available for sale and an increase in loans,
partially offset by a decrease in cash and cash equivalents and investment
securities held to maturity. The increase in total assets was funded by
borrowings from the Federal Home Loan Bank, and increases in repurchase
agreements and total deposits. The increase in total deposits was primarily
due to growth in the Bank's newer branches. During the nine month period
ended September 30, 1996, 77,500 shares of treasury stock were purchased at
a cost of $1.59 million. The Corporation had unrealized losses on
securities available for sale, net of taxes, of $.07 million at September
30, 1996, a decrease of $.26 million from a gain of $.19 million at
December 31, 1995.
CAPITAL
The Corporation's and the Bank's Tier 1 leverage capital ratios at
September 30, 1996 were 10.05% and 9.73% respectively. The Corporation's
and the Bank's total risk-based capital ratios at September 30, 1996 were
19.58% and 18.98% respectively. The Corporation's and the Bank's Tier 1
risk-based capital ratios at September 30, 1996 were 18.88% and 18.28%,
respectively. All of the Corporation's and the Bank's ratios as of
September 30, 1996 were well above applicable minimums. As of September
30, 1996, the Corporation and the Bank fall within the highest capital
category of "well capitalized" under the rules of the Federal Reserve Board
and the Federal Deposit Insurance Corporation.
RESULTS OF OPERATIONS
Net income for the three month period ended September 30, 1996 was
$1,021,000, an increase of $60,000 as compared to $961,000 for the
comparable period in 1995. Net interest income for the three month period
ended September 30, 1996 increased by $181,000 primarily due to interest
income increasing greater on loans and investments than the increase in
interest expense on deposits and borrowings. The increase in net income
for the three month period ended September 30, 1996 was also due to
increased trust fees, a decrease in other real estate expense, and gains on
loans held for sale, offset by increases in the provision for loan losses,
salaries and employee benefits, and other operating expenses. The increase
in salaries and benefit expense relate to our recent expansion efforts.
Net income for the nine month period ended September 30, 1996 was
$3,118,000, an increase of $614,000 or 24.5%, from net income of $2,504,000
for the nine month period ended September 30, 1995. The increase in net
income for the nine month period ended September 30, 1996 was due primarily
to the Bank's settlement of a tax claim against the State of Connecticut
which added approximately $304,000 or $.16 per share to net income. The
increase in net income was also due to increased net interest income, trust
fees, and lower expenses related to FDIC deposit insurance and other real
estate expenses. These increases were partially offset by an increase in
the provision for loan losses, increases in salaries and benefits, and
other operating expenses relating to our expansion efforts.
AVERAGE BALANCES, INTEREST, YIELDS AND RATES
The following table presents condensed daily average statements of
condition, which include non-accrual loans, the components of net interest
income and selected statistical data.
Three months ended
September 30,
(dollars in
thousands)
Annualized Variance
Average Balance Average rate Interest Inc. due to
1996 1995 1996 1995 1996 1995 (dec) Vol. Rate
Loans $252,144 $234,518 7.78% 8.14% $4,904 $4,773 $131 $320 ($189)
Investment
secur-
ities(a) 178,819 151,534 6.52% 6.13% 2,877 2,285 592 432 160
Total(a) 430,963 386,052 7.26% 7.35% 7,781 7,058 723 752 (29)
Other assets 14,403 15,482
Total
assets $445,366 $401,534
Deposits $349,029 $329,520 4.18% 4.20% 3,649 3,457 192 204 (12)
Borrowings 40,511 18,968 6.11% 5.67% 619 269 350 328 22
Total 389,540 348,488 4.38% 4.27% 4,268 3,726 542 532 10
Demand
deposits 6,908 4,961
Other
liabilities 4,297 4,123
Stockholders'
equity 44,621 43,962
Total
liabilities
and
stock-
holders'
equity $445,366 $401,534
Net interest income $3,513 $3,332 $181 $220 ($39)
Net interest rate spread(a) 2.88% 3.08%
Net interest rate margin(a) 3.29% 3.49%
(a) tax adjusted yield
Nine months ended
September 30,
(dollars in
thousands)
Annualized Variance
Average Balance Average rate Interest Inc. due to
1996 1995 1996 1995 1996 1995 (dec) Vol. Rate
Loans $246,976 $231,878 7.84% 7.82% $14,529 $13,601 $928 $888 $40
Investment
secur-
ities(a) 158,968 153,958 6.41% 5.90% 7,506 6,735 771 224 547
Total(a) 405,944 385,836 7.28% 7.05% 22,035 20,336 1,699 1,112 587
Other assets 14,994 15,120
Total
assets $420,938 $400,956
Deposits $342,698 $326,586 4.18% 3.94% 10,751 9,654 1,097 489 608
Borrowings 23,494 23,140 5.99% 5.68% 1,055 986 69 15 54
Total 366,192 349,726 4.30% 4.06% 11,806 10,640 1,166 504 662
Demand
deposits 6,214 4,977
Other
liabilities 4,042 3,539
Stockholders'
equity 44,490 42,714
Total
liabilities
and
stock-
holders'
equity $420,938 $400,956
Net interest income $10,229 $9,696 $533 $608 ($75)
Net interest rate spread(a) 2.98% 2.99%
Net interest rate margin(a) 3.40% 3.38%
(a) tax adjusted yield
The average balances, interest, yields and rates table shows that for the
three month period ended September 30, 1996 compared to the same period in
1995 there was an increase in interest income caused primarily by increased
volume of investments and loans and increased yield on investments offset
by lower yields on loans. Interest income for the nine month period ended
September 30, 1996 increased when compared to the same period last year
primarily due to increased volume on loans, increased yield on investments,
and to a lesser extent increased volume of investments and increased yield
on loans. The comparison of interest expense for the three month period
ended September 30, 1996 compared to the same period in 1995 shows that
interest expense increased primarily due to increased volume of borrowings
and increased volume of deposits, and to a lesser extent increased rates on
borrowings, partially offset by a slight decrease in the rate on deposits.
Interest expense for the nine month period ended September 30, 1996
increased when compared to the same period last year primarily due to
increased rate and volume of deposits and to a lesser extent increased
volume and rate on borrowings. This activity is consistent with the
changes in the Corporation's balance sheet and changes in interest rates
from one year ago. During the year the Bank has taken advantage of two
arbitrage opportunities. In the first the Bank borrowed approximately $20
million, at a rate of 6.31% and purchased approximately $20 million in
mortgage-backed securities with coupon rates of 8%. In the second the Bank
borrowed approximately $20 million, at a rate of 5.69%, and purchased
approximately $20 million in mortgage-backed securities with coupon rates
of 7.10%.
Net interest rate spreads decreased during the three and nine month periods
ended September 30, 1996 when compared to the same periods last year. The
decrease during the three month period was due to a decrease in the yield
on earning assets and an increase in the Bank's cost of funds. The
decrease during the nine month period was due to the yield on earning
assets increasing less than the increase in the Bank's cost of funds. The
decrease in the yield on earning assets for the three month period was due
primarily to decreased yield on loans partially offset by an increase in
yield on investments. The increase in the yield on earning assets for the
nine month period was due to increases in the yields on both loans and
investments. The rate the Bank pays on its interest bearing liabilities
increased in the three and nine month periods ended September 30, 1996 when
compared to the same periods last year primarily due to higher interest
rates on the Bank's borrowings, and increased deposit rates during the nine
month period, but slightly offset by lower rates on deposits during the
three month period. The net interest rate margin decreased for the three
month period ended September 30, 1996 when compared to the same period in
1995, primarily due to interest income increasing less than the increase in
average earning assets. The net interest rate margin increased slightly
for the nine month period ended September 30, 1996 when compared to the
same period in 1995, primarily due to interest income increasing more than
the increase in average earning assets. Net interest income for the three
and six month periods ended September 30, 1996 increased primarily due to
the increased volume of earning assets.
OTHER INCOME, OTHER EXPENSE, AND TAXES
The following table details the significant increases and decreases in
other income for the three and nine month periods ended September 30.
Three Months ended
Other income September 30,
(dollars in thousands) 1996 1995 Inc(dec) %
Service charges and fees $257 $241 $ 16 6.6%
Trust fees 365 299 66 22.1
Net investment securities gains (losses) - (1) 1 (100.0)
Gains losses on loans sold 44 (7) 51 (728.6)
Other operating income 63 76 (13) (17.1)
Total other income $729 $ 608 $ 121 19.9%
Nine months ended
Other income September 30,
(dollars in thousands) 1996 1995 Inc(dec) %
Service charges and fees $764 $758 $6 .8%
Trust fees 1,036 838 198 23.6
Net investment securities gains (losses) (20) (70) 50 (71.4)
Trading account gains (losses) - 49 (49) (100.0)
Gains losses on loans sold (77) (2) (75) N/M
Other operating income 222 142 80 56.3
Total other income $1,925 $1,715 $ 210 12.2%
Other income for the three month period ended September 30, 1996 increased
by $121,000 as compared to the same period in 1995. The increase was
primarily due to increased trust income and unrealized gains on loans held
for sale. Trust assets under management at September 30, 1996 totaled $365
million compared to $273 million at September 30, 1995.
Other income for the nine month period ended September 30, 1996 increased
by $210,000 as compared to the same period in 1995. The increase was
primarily due to increased trust fees, increased other operating income,
and a decrease in losses on investment securities. The increases were
partially offset by a decrease in trading account gains and unrealized
losses on loans held for sale caused by an increase in interest rates from
the third quarter of 1995. The trading account was liquidated during the
first quarter of 1995.
The following table details the significant increases and decreases in
other expenses for the three and nine month periods ended September 30.
Three Months ended
Other expenses September 30,
(dollars in thousands) 1996 1995 Inc(dec) %
Salaries and benefits $1,263 $1,150 $113 9.8%
Occupancy 253 225 28 12.4
Furniture and equipment 252 224 28 12.5
FDIC deposit insurance - (17) 17 (100.0)
Other real estate expenses 12 146 (134) (91.8)
Other operating expenses 706 603 103 17.1
Total other expenses $2,486 $2,331 $ 155 6.7%
Nine Months ended
Other expenses September 30,
(dollars in thousands) 1996 1995 Inc(dec) %
Salaries and benefits $3,736 $3,297 $439 13.3%
Occupancy 788 701 87 12.4
Furniture and equipment 725 671 54 8.1
FDIC deposit insurance 2 347 (345) (99.4)
Other real estate expenses 29 308 (279) (90.6)
Other operating expenses 2,080 1,840 240 13.0
Total other expenses $7,360 $7,164 $ 196 2.7%
Non-interest expense increased for the three month period ended September
30, 1996, from the comparable period of 1995. The increase was primarily
due to increased salaries and benefit expenses and increased other
operating expenses, caused primarily by the continued growth of our trust
department, our new commercial loan department, and branch expansion. This
increase was partially offset by a reduction in other real estate expenses,
due to gains on sales of foreclosed real estate recorded during the second
quarter of 1996 and a reduced number of foreclosed properties from
September 30, 1995.
Non-interest expense increased for the nine months ended September 30, 1996
as compared to the same period last year. The increase was primarily due
to increased salaries and benefits, and increased other operating expenses,
partially offset by a decrease in FDIC deposit insurance premiums and other
real estate expenses. During the third quarter of 1995 the Bank received a
retro active reduction in FDIC deposit insurance premiums. The reasons for
the changes in the nine month period are consistent with the changes in the
three month period explained above.
The effective tax rate for the three month period ended September 30, 1996
decreased to 38.5% from 39.1% for the same period in 1995. The effective
tax rate for the nine month period ended September 30, 1996 decreased to
31.3% from 39.6% for the same period in 1995. The decrease was primarily
due to the Bank's settlement of a tax claim against the State of
Connecticut, an increase in dividend income which qualifies for the Federal
dividend received deduction and a decrease in the State of Connecticut tax
rate to 10.75% from 11.25%.
PEOPLE'S SAVINGS FINANCIAL CORP.
Part II Other Information
Item 1. Legal Proceedings
There are no material pending legal proceedings to which the Corporation or
its subsidiary is a party, or of which any of their property is the
subject, other than ordinary routine litigation in the normal course of
business.
Item 2. Changes in Securities
During the third quarter of 1996, there were no changes which would
materially modify the rights of the holders of the Corporation's registered
securities.
Item 3. Defaults Upon Senior Securities
The Corporation and its subsidiary are not in default with respect to the
payment of principal or interest related to any outstanding borrowing.
Item 4. Submission of Matters to a Vote of Securities Holders
None.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits
11.1 Computation of net income per common share.
27 Financial data schedule.
(B) Reports on Form 8-K:
None.
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.
PEOPLE'S SAVINGS FINANCIAL CORP.
Date: November 12, 1996 By: /s/ Richard S. Mansfield
Richard S. Mansfield
President and Chief Executive
Officer
Date: November 12, 1996 By: /s/ John G. Medvec
John G. Medvec
Executive Vice President and
Treasurer
Exhibit 11.1
PEOPLE'S SAVINGS FINANCIAL CORP.
COMPUTATION OF NET INCOME PER COMMON SHARE
(in thousands except per share amounts)
Three months ended Nine months ended
September 30, September 30,
1996 1995 1996 1995
Net income -
primary and fully diluted $1,021 $961 $3,118 $2,504
Weighted Average Common Stock
and Common Equivalent Stock
Weighted average common stock
outstanding 1,902 1,952 1,912 1,955
Assumed conversion (as of the
beginning of each period or
upon issuance during a period)
of stock options outstanding at
the end of each period 53 38 37 31
Weighted average common stock
outstanding - primary 1,955 1,990 1,949 1,986
Weighted average common stock
outstanding 1,902 1,952 1,912 1,955
Assumed conversion (as of the
beginning of each period or
upon issuance during a period)
of stock options outstanding
at the end of each period 66 38 66 31
Weighted average common stock
outstanding - fully diluted 1,968 1,990 1,978 1,986
Earnings Per Common and Common
Equivalent Share
Primary $0.52 $0.48 $1.60 $1.26
Fully diluted $0.52 $0.48 $1.58 $1.26