EXHIBIT 99.2
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FEDERAL DEPOSIT INSURANCE CORPORATION
WASHINGTON, D.C. 20429
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FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998 - FDIC CERTIFICATE NUMBER: 10538
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CAPE COD BANK AND TRUST COMPANY
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(Exact name of Registrant as specified in its charter)
MASSACHUSETTS 04-1465780
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(State of Incorporation) (I.R.S. Employer Identification No.)
307 MAIN STREET, HYANNIS, MASSACHUSETTS 02601
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(Address of principal executive office) (Zip Code)
(Registrant's telephone #, incl. area code): 508-394-1300
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
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NONE
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Securities registered pursuant to Section 12(g) of the Act:
Title of class Name of each exchange on which registered
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COMMON CAPITAL STOCK NASDAQ NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.
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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. |X| Yes |_| No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the issuer has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. [X] Yes [_] No
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date. THERE WERE 4,530,532
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SHARES OF COMMON STOCK AS OF MAY 11, 1998.
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1.
Cope Cod Bank and Trust Company
Form 10-Q
March 31, 1998
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TABLE OF CONTENTS
SECTION DESCRIPTION PAGE NO.
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PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Financial Condition
March 31, 1998 (Unaudited) and December 31, 1997 3
Consolidated Statements of Income
Three Months Ended March 31, 1998 and 1997 (Unaudited) 4
Consolidated Statements of Cash Flows
Three Months Ended March 31, 1998 and 1997 (Unaudited) 5
Item 2. Management's Discussion and Analysis of Financial Condition 6-8
and Results of Operations
PART II OTHER INFORMATION 9
SIGNATURES 10
2.
Cape Cod Bank and Trust Company
Form 10-Q
March 31, 1998
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CONSOLIDATED STATEMENTS OF CONDITION
MARCH 31, 1998 AND DECEMBER 31, 1997
CAPE COD BANK AND TRUST COMPANY AND SUBSIDIARIES
March 31, December 31,
1998 1997
(Dollar amounts in thousands)
ASSETS
Cash and due from banks $ 38,431 $ 34,213
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Total cash and cash equivalents 38,431 34,213
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Investment securities
U.S. Government agencies 31,325 75,528
State and municipal obligations 15,259 16,323
Other bonds, notes and debentures 283,680 282,841
Corporate stock 18,745 16,804
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Total investment securities 349,009 391,496
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Loans
Commercial loans 78,133 72,162
Construction mortgage loans 36,702 34,798
Commercial mortgage loans 201,406 198,944
Industrial revenue bonds 1,778 1,883
Residential mortgage loans 228,318 207,665
Consumer loans 15,038 16,391
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Total loans 561,375 531,843
Less: Reserve for possible loan losses (11,013) (10,962)
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Net loans 550,362 520,881
Bank premises and equipment 12,380 12,305
Other assets 14,283 15,000
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Total assets $ 964,465 $ 973,895
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LIABILITIES AND STOCKHOLDERS' EQUITY
Demand deposits $ 135,965 $ 147,495
NOW account deposits 103,706 103,755
Money market account deposits 145,967 149,097
Other savings deposits 160,804 158,197
Certificates of deposits of $100,000 or more 26,994 26,453
Other time deposits 124,958 124,263
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Total deposits 698,394 709,260
Borrowing from the Federal Home Loan Bank 171,355 171,295
Other short-term borrowings 11,075 11,662
Other liabilities 6,634 6,042
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Total liabilities 887,458 898,259
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Commitments
Stockholders' equity
Common stock, $2.50 par value
Authorized: 6,000,000 shares
Outstanding: 4,530,532 shares 11,326 11,326
Surplus 25,230 25,230
Undivided profits 39,990 38,677
Unrealized gain on securities available for sale 461 403
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Total stockholders' equity 77,007 75,636
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Total liabilities and stockholders' equity $ 964,465 $ 973,895
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3.
Cape Cod Bank and Trust Company
Form 10-Q
March 31, 1998
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CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
CAPE COD BANK AND TRUST COMPANY AND SUBSIDIARIES
1998 1997
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INTEREST INCOME
Interest and fees on loans $ 11,593 $ 10,594
Interest and dividends on securities
U.S. Government agencies 3,012 3,367
State and municipal obligations 207 437
Other bonds, notes and debentures 1,702 967
Corporate stock 360 338
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Total interest income 16,874 15,703
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INTEREST EXPENSE
Interest on certificates of deposit of $100,000 or more 363 225
Interest on other deposits 4,845 4,678
Interest on short-term borrowings 2,841 2,140
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Total interest expense 8,049 7,043
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Net interest income 8,825 8,660
Provision for loan losses -- --
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Net interest income after provision for loan losses 8,825 8,660
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NON-INTEREST INCOME
Trust and Investment division fees 1,183 1,216
Credit card merchant fees 532 464
Service charges on deposit accounts 941 966
Gain (loss) on sale or writedown of investment securities 126 111
Other 662 2,391
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Total non-interest income 3,444 5,148
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NON-INTEREST EXPENSE
Salaries and wages 2,620 2,835
Employee benefits 1,193 1,329
Occupancy expense 558 487
Equipment rental and expense 504 511
Credit card processing expense 551 367
Other 2,877 2,071
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Total non-interest expense 8,303 7,600
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Income before income taxes 3,966 6,208
Provision for income taxes 1,566 2,400
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Net income $ 2,400 $ 3,808
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Average shares outstanding 4,530,532 4,530,532
Primary earnings (loss) per share $ .53 $ .84
4.
Cape Cod Bank and Trust Company
Form 10-Q
March 31, 1998
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CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
CAPE COD BANK AND TRUST COMPANY AND SUBSIDIARIES
1998 1997
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CASH PROVIDED (USED) BY OPERATING ACTIVITIES
Net income $ 2,400 $ 3,808
Adjustments ro reconcile net income to net cash:
Provision for loan losses -- --
Depreciation and amortization 509 494
Net (gain) loss on sale or writedown of securities (126) (111)
Net increase (decrease) in taxes payable 8 1,553
Other, net (3,545) (3,104)
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Net cash provided (used) by operating activities $ (754) $ 2,640
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CASH PROVIDED (USED) BY INVESTING ACTIVITIES
Net (increase) decrease in loans $ (41,159) (18,867)
Proceeds from sale of loans 11,762 3,448
Disposition of property from defaulted loans 59 80
Maturities of securities 117,123 46,897
Purchase of available for sale securities (112,875) (171,024)
Sale of available for sale securities 40,952 115,907
Purchase of premises and equipment (584) (268)
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Net cash provided (used) by investing activities $ 15,278 $ (23,827)
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CASH PROVIDED (USED) BY FINANCING ACTIVITIES
Net increase (decrease) in deposits $ (10,866) $ 11,176
Net increase in borrowings from the Federal Home Loan Bank 60 34,000
Net increase (decrease) in other short-term borrowings (587) 61
Cash dividends paid on common stock 1,087 951
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Net cash provided (used) by financing activities $ (10,306) $ 46,188
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Net increase in cash and cash equivalents $ 4,218 $ 25,001
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Cash and cash equivalents at beginning of year $ 34,213 $ 20,961
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Cash and cash equivalents at end of quarter $ 38,431 $ 45,962
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Cash equivalents include amounts due from banks and federal funds
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
Cash paid for:
Interest $8,096,114 $6,835,226
Income taxes $1,560,000 $1,559,000
5.
Cape Cod Bank and Trust Company
Form 10-Q
March 31, 1998
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Earnings for the quarter ending March 31, 1998 were $.53 compared to
$.84 a year ago. Last year's first quarter was an exceptionally good one and
included a $.24 non-recurring item. This year's quarter included non-recurring
expenses associated with the attempted acquisition of Sandwich Co-operative
Bank.
Deposits and loans grew 8.1 % and 18.7% respectively over a year ago.
Demand and NOW account balances improved 9.3% which aided our net interest
income. Residential mortgage loans increased nicely and total assets were
$959,636,238 or 11.1% greater than a year ago. There continues to be downward
pressure on interest margins due to the very competitive loan environment which
is affecting commercial loan volume.
Capital at quarter end was $77,006,983 and is currently 8.0% of total
assets. The loan loss reserve was $11,012,735 a very comfortable 2.0% of total
outstanding loans.
6.
Cape Cod Bank and Trust Company
Form 10-Q
March 31, 1998
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CAPE CODE BANK & TRUST COMPANY
COMPARATIVE BALANCE SHEET, RATES AND SPREAD
MARCH 31, 1997
----------------ACTUAL----------------- ----------------BUDGET-----------------
AVERAGE AVERAGE AVERAGE AVERAGE
Y-T-D Y-T-D Y-T-D Y-T-D Y-T-D Y-T-D
BALANCE INTEREST YIELD BALANCE INTEREST YIELD
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EARNING ASSETS
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Securities
U.S. Government-CMO 120,532,943 1,857,688 6.19% 60,000,000 900,000 6.00%
U.S. Government Agencies 49,386,271 781,711 6.43% 75,000,000 1,035,616 5.60%
Other CMO's 54,937,983 888,477 6.49% 25,000,000 375,000 6.00%
State & Municipal Agencies 19,498,833 185,323 5.10% 20,000,000 202,192 5.42%
CCB&T Securities 50,387,746 756,839 6.06% 49,965,750 749,487 6.00%
Other Securities 55,025,572 639,775 4.82% 99,211,000 1,441,577 5.81%
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Total Investments 349,769,348 5,109,813 5.98% 329,176,750 4,703,872 5.82%
Residential R.E. Loans 136,256,198 2,931,587 8.52% 130,666,667 2,720,600 8.33%
Commercial R.E. Loans 194,967,592 4,569,553 9.49% 191,366,667 4,482,554 9.50%
Commercial Loans 75,189,092 1,788,353 9.84% 68,550,000 1,606,229 9.50%
Commercial R.E. Mtg. - Construction 9,257,051 234,813 10.29% 6,020,833 133,814 9.01%
Residential Mortgages - Construction 8,787,634 169,695 7.84% 6,020,833 133,814 9.01%
Non-Rated IRB 2,759,140 37,639 7.88% 3,073,333 60,612 11.40%
Commercial Paper 0 0 0.00% 2,500,000 34,716 5.45%
Consumer Loans 19,347,357 510,339 10.43% 18,923,798 431,797 9.25%
MasterCard 11,199,903 351,470 12.45% 11,888,425 366,278 12.50%
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Total Loans 457,764,167 10,593,649 9.32% 439,010,556 9,970,414 9.20%
Total Earning Assets 807,533,515 15,703,462 7.87% 768,187,306 14,674,286 7.75%
Total Non-Earning Assets 45,555,354 36,764,976
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TOTAL ASSETS 853,088,869 15,703,462 7.44% 804,952,282 14,674,286 7.40%
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INTEREST BEARING LIABILITIES
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NOW Accounts 93,294,694 434,486 1.89% 89,666,667 446,683 2.02%
Regular Savings 62,793,506 482,426 3.12% 59,300,000 475,212 3.25%
The Cape Codder Account 89,819,664 939,994 4.24% 99,500,000 1,091,774 4.45%
Money Market Account 144,735,539 1,373,408 3.85% 151,500,000 1,494,247 4.00%
Other Time Deposits 125,022,890 1,672,846 5.43% 121,626,644 1,675,866 5.59%
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Total Interest-bearing Deposits 515,666,273 4,903,160 3.86% 521,593,311 5,183,782 4.03%
Borrowings
FHLB Borrowing 142,346,386 2,044,187 5.82% 91,500,000 1,299,575 5.76%
Other Borrowings 7,971,105 96,082 4.91% 11,000,000 123,041 4.54%
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Total Borrowings 150,317,491 2,140,269 5.78% 102,500,000 1,422,616 5.63%
Total Deposits and Borrowings 665,983,764 7,043,429 3.54% 624,093,311 6,606,398 3.49%
DDA Balances 116,212,788 110,333,333
Other Liabilities 3,165,989 4,510,871
Shareholder's Equity 67,726,328 66,014,767
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TOTAL LIABILITIES AND
SHAREHOLDER'S EQUITY 853,088,869 7,043,429 3.35% 804,952,282 6,606,398 3.33%
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Net Interest Income:
As a % of Total Earning Assets 8,660,033 8,067,888
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4.33% 4.26%
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As a % of Total Assets 4.09% 4.07%
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Average Equity to Average Assets 7.94% 8.20%
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Average Loans/Average Deposit 72.44% 69.47%
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7
Cape Cod Bank and Trust Company
Form 10-Q
March 31, 1998
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CAPE COD & TRUST COMPANY
COMPARATIVE BALANCE SHEET, RATES AND SPREAD
FOR THE PERIOD ENDING MARCH 31, 1998
------------1998 ACTUAL---------- ----------1998 BUDGET--------- 1997
($000 Thousands) Ave. Ave. Ave. Ave. Ave.
Y-T-D Y-T-D Y-T-D Y-T-D Y-T-D Y-T-D Y-T-D
Balance Interest Yield Balance Interest Yield Balance
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EARNINGS ASSETS
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Securities
Mortgage-Backed Securities $ 4,454 $ 73 6.60% $ 0 $ 0 0.00% $ 0
U.S. Government-CMO 94,640 1,545 6.55% 66,667 1,042 6.25% 120,533
U.S. Government Agencies 57,989 761 5.25% 75,000 1,082 5.85% 49,366
Other CMO's 45,511 619 5.45% 27,500 429 6.25% 54,938
State & Municipal Agencies 18,100 207 6.13% 19,667 199 5.42% 19,499
CCB&T Securities 56,405 900 6.43% 49,966 781 6.25% 50,388
Other Securities 98,128 1,178 4.80% 117,345 1,784 6.08% 55,026
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Total Investments 375,227 5,281 5.72% 356,145 5,317 6.06% 349,770
Residential R.E. Loans 218,157 4,014 7.36% 216,750 4,281 7.90% 136,258
Commercial R.E. Loans 196,670 4,716 9.63% 201,226 4,650 9.37% 194,968
Commercial Loans 74,706 1,847 10.01% 70,972 1,706 9.75% 73,7??
Commercial R.E. Mtg. - Constr. 12,199 261 8.66% 10,433 244 9.50% 9,257
Residential Mortgages - Constr. 24,465 362 6.01% 19,567 326 6.75% 8,788
Non-Rated IRB 1,833 38 11.85% 1,878 38 11.76% 2,759
Commercial Paper 0 0 0.00% 0 0 0.00% 0
Consumer Loans 14,754 355 9.48% 15,000 370 10.00% 19,347
Master Card 0 0 0.00% 0 0 0.00% 11,200
Overdrafts 1,184 0 0.00% 0 0 0.00% 1,393
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Total Loans 545,948 11,593 8.57% 535,824 11,615 8.76% 457,764
Total Earning Assets 921,175 16,874 7.41% 891,969 16,932 7.68% 807,534
Total Non-Earning Assets 43,296 41,368 45,555
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TOTAL ASSETS $964,471 $16,874 7.07% $933,337 $ 16,932 7.34% $ 853,089
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INVESTMENTS BEARING LIABILITIES
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NOW Accounts $101,790 $ 413 1.65% $103,000 $ 513 2.02% $ 93,295
Regular Savings 66,995 442 2.68% 70,167 519 3.00% 62,793
The Cape Codder Account 91,939 960 4.23% 91,667 1,006 4.45% 89,820
Money Market Account 146,364 1,345 3.73% 145,667 1,437 4.00% 144,735
Other Time Deposits 152,074 2,049 5.46% 151,167 2,080 5.58% 125,023
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Total Interest-bearing Deposits 559,162 5,209 3.78% 561,668 5,555 4.01% 515,666
Borrowings
FHLB Borrowing 183,362 2,722 6.02% 151,311 2,224 5.99% 142,346
Other Borrowings 9,740 118 4.93% 12,333 143 4.70% 7,971
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Total Borrowings 193,102 2,840 5.97% 183,644 2,367 5.89% 150,317
Total Deposits and Borrowings 752,264 8,049 3.55% 725,312 7,922 3.61% 6?5,983
DDA Balances 131,736 126,000 116,213
Other Liabilities 4,184 5,999 3,167
Shareholder's Equity 76,287 76,026 67,726
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TOTAL LIABILITIES AND
SHAREHOLDER'S EQUITY $964,471 8,049 3.33% $933,337 7,922 3.45% $ 853,089
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Net Interest Income: $ 8,825 $ 9,010
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As a % of Total Earnings Assets 3.86% 4.07% 4.33%
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As a % of Total Assets 3.69% 3.89% 4.00%
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Average Equity to Average Assets 7.91% 8.15% 7.94%
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Average Loans/Average Deposit 79.02% 77.92% 72.44%
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Book Value $ 17.02 $ 17.02 $ 15.15
Market Price $ 44.00 $ 0.00 $ 27.00
Annual Dividend Rate $ 0.96 $ 1.00 $ 0.84
Dividend Yield 2.18% 0.00% 3.11%
8.
Cape Cod Bank and Trust Company
Form 10-Q
March 31, 1998
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PART II . OTHER INFORMATION
Item 1. Legal Proceedings.
The Bank is not involved in any material pending legal
proceedings.
Item 2. Changes in Securities.
There have been no changes in securities of the Bank during the
period covered by this report.
Item 3. Defaults upon Senior Securities.
There have been no defaults upon senior securities.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to security holders during the period
covered by this report.
Item 5. Other Information.
There is nothing to report under this item.
Item 6. Exhibits and Reports on form 8-K.
(A) Exhibits
None.
(B) Reports on Form 8-K.
None for this period.
9.
Cape Cod Bank and Trust Company
Form 10-Q
March 31, 1998
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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.
(Registrant) Cape Cod Bank and Trust Company
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By (Signature and Title)* /s/ Noal D. Reid
_______________________________________________________
Noal D. Reid, Chief Financial Officer and Treasurer
Date May 15, 1998
____________________________________________________________________________
By (Signature and Title)* /s/ Daniel G. Barrie
_______________________________________________________
Daniel G. Barrie, Controller and Assistant Treasurer
Date May 15, 1998
____________________________________________________________________________
10.