SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended Commission File Number
December 31, 1995 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, Connecticut 06053
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (203)224-7771
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $1.00 per share
(Title of class)
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 twelve 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 ninety days.
X Yes No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Page 1 of 30 pages.
The Exhibit Index is found at page 25.
The aggregate market value of the voting stock held by non-affiliates of
the registrant based on the closing sale price of such stock on February 29,
1996 was $35,339,335.
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
Outstanding at
Class February 29, 1996
----- -----------------
Common Stock, par value $1.00 per share 1,924,363
=========
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated by reference in this
Annual Report on Form 10-K as indicated herein.
Part of Form 10-K
Document into which incorporated
-------- -----------------------
1995 Annual Report to Shareholders I and II
Proxy Statement for the 1996 Annual III
Meeting of Stockholders (to be filed
within 120 days of December 31, 1995)
(the "Proxy Statement")
2
TABLE OF CONTENTS
Page
----
PART I
Item 1 - Business.............................................. 1
Item 2 - Properties............................................ 20
Item 3 - Legal Proceedings..................................... 20
Item 4 - Submission of Matters to a Vote of Security
Holders............................................. 21
- Executive Officers of the Registrant.................. 21
PART II
Item 5 - Market for Registrant's Common Equity and
Related Stockholder Matters......................... 21
Item 6 - Selected Financial Data............................... 22
Item 7 - Management's Discussion and Analysis of
Financial Condition and Results of Operations....... 22
Item 8 - Financial Statements and Supplementary Data........... 22
Item 9 - Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure.............. 23
PART III
Item 10 - Directors and Executive Officers of the
Registrant.......................................... 23
Item 11 - Executive Compensation................................ 23
Item 12 - Security Ownership of Certain Beneficial Owner
and Management...................................... 23
Item 13 - Certain Relationships and Related Transactions........ 23
PART IV
Item 14 - Exhibits, Financial Statement Schedules and
Reports on Form 8-K................................. 24
PART I
Item 1 - Business
The principal executive offices of People's Savings Financial Corp. (the
"Company") and of The People's Savings Bank of New Britain (the "Bank") are
located at 123 Broad Street, New Britain, Connecticut 06053. The telephone
number of the Company and the Bank is (203)224-7771.
The Company was organized as a corporation under the laws of the State of
Connecticut on February 22, 1989, to operate principally as a bank holding
company for the Bank. The Bank's shareholders approved the acquisition by the
Company of all of the outstanding common stock of the Bank (the "Bank Common
Stock") in exchange for shares of common stock of the Company (the "Company
Common Stock"). The Bank is the sole subsidiary of the Company and its principal
asset. As of December 31, 1995, the Company had total consolidated assets of
$410.2 million, total consolidated deposits of $339.4 million, consolidated net
loans of $236.8 million and consolidated shareholders' equity of $44.7 million.
As of December 31, 1994, the Bank had total assets of $402.1 million, total
deposits of $321.7 million, net loans of $226.3 million and shareholders' equity
of $41.2 million.
The Bank was originally organized in 1907 as a Connecticut-chartered mutual
savings bank, and converted to a Connecticut-chartered capital stock savings
bank on August 27, 1986. The Bank currently offers general banking services,
including accepting deposits from the general public and lending or investing
those funds and also offers trust services. In addition to its main office, the
Bank operates seven banking branches located in New Britain, Southington,
Newington, Rocky Hill, and Plainville, Connecticut. The Bank will open its eight
branch in Meriden, CT in early spring 1996.
Principal Market Area
The Bank's principal market encompasses the City of New Britain and the
Towns of Berlin, Newington, Southington, Rocky Hill, Plainville and Meriden.
Although traditionally servicing the banking needs of New Britain's Polish
community, the Bank has expanded its customer base over the past several years.
The Bank intends to continue to focus its marketing efforts in the next several
years on other segments of the New Britain community and upon residents of other
towns in its market area.
The City of New Britain is evolving from a primarily industrial economy to
an industrial-commercial-service economy. The surrounding communities are
largely residential but also have significant industrial and commercial
activities. The transfer of several major manufacturing facilities to other
areas of the country continues to affect adversely the New Britain area labor
market.
Lending and Investment Activities
The Bank provides personalized financial services to its existing customers
and intends to achieve growth by increasing its customer base in New Britain and
by increasing its services to, and expanding its customer base in, the
communities surrounding New Britain. The Bank's principal business consists of
attracting deposits from the public and using such deposits, with other funds,
to make various types of loans and investments. A substantial portion of the
loans and investments originated over the last five years has been on a
short-term or variable-rate basis, although origination of more traditional
fixed-rate mortgage loans increased during the low interest rate environment in
1993. The Bank has originated more adjustable rate loans with the rise in
interest rates during 1994 and 1995. During 1991 through 1995, maturities on
both mortgages and investments were extended to take advantage of higher yields
on longer maturities. Fixed rate mortgages and loans are originated with 8 to 30
year maturities, while maturities on some investments were extended to 5 to 7
years. The Bank sold the majority of the 30-year fixed rate mortgages which it
originated during 1994 and 1995 in order to reduce the Bank's interest rate risk
exposure. The Bank's activities in this regard will vary in degree from time to
time depending upon investment opportunities, economic and rate conditions,
liability strategy and the Bank's efforts to maintain an adequate net interest
spread.
Since the conversion to a capital stock savings bank, the Bank has
regulated its efforts to increase future deposit growth based on its assessment
of the profitability of the investment options then available for such funds.
The Bank also seeks to expand existing and develop additional fee-based
services. Current fee-based product lines include mortgage originations, selling
and servicing mortgages (the income from which is not considered a significant
part of the Bank's operations), checking accounts, and Savings Bank Life
Insurance.
During 1993, the Bank also added a Trust Department and an Investment
Services Department to increase fee income. In November 1994, the Bank purchased
the New Meriden Trust Co., a trust company with $179,000,000 in trust assets
from the FDIC. In May, 1995 the Bank opened a trust office in Middletown, CT.
Trust assets grew to $310 million at December 31, 1995.
Average Balance Sheets; Analysis of Net Interest Income; and Analysis of Changes
in Interest Income and Interest Expense
The supplementary information required by Item I of "Guide 3. Statistical
Disclosure by Bank Holding Companies" relating to average balance sheets; an
analysis of net interest income; and an analysis of increases and decreases in
interest income and expense in terms of changes in volume and interest rates
appears on pages 19 and 20 of the Company's 1995 Annual Report to Shareholders
under the caption "Management's Discussion and Analysis of Financial Condition
and Results of Operations", and is incorporated by reference herein. Such
information should be read in conjunction with the related financial statements
and notes thereto incorporated by reference herein under Item 8.
2
Lending Activities
The supplementary information required by Item III.A. of "Guide 3.
Statistical Disclosure by Bank Holding Companies" relating to the composition of
the loan portfolio appears on page 13 of the Company's 1995 Annual Report to
Shareholders under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations", and is incorporated by reference
herein. Such information should be read in conjunction with the related
financial statements and notes thereto incorporated by reference herein under
Item 8.
The Bank's net loan portfolio totaled $236.8 million, excluding loans held
for sale, as of December 31, 1995, representing 57.7% of total assets. The
Bank's principal lending activity consists of the origination of mortgage loans
on residential property.
The Bank's consumer loans continue to be an important aspect of its lending
activities, representing 13.6% of the Bank's total loan portfolio.
In order to diversify its loan products the Bank established a commercial
loan department to provide traditional commercial loans and Small Business
Administration loans. The void resulting from industry consolidation and
downsizing has created an opportunity for the Bank to respond to the credit
needs of small and medium size business in a timely manner with practical and
effective solutions. The Bank hired a team of experienced commercial lending
officers to build a conservative, high-quality commercial loan portfolio. As of
December 31, 1995, the commercial mortgage portfolio totaled approximately $5.9
million, representing 2.5% of the Bank's total loan portfolio.
The lending activities of the Bank are heavily influenced by economic
trends affecting the availability of funds and by general interest rate levels.
In originating loans, the Bank must compete with other savings banks, savings
and loan associations, commercial banks, mortgage companies, insurance companies
and other financial intermediaries.
Residential Mortgage Loans. The Bank actively solicits residential mortgage
loan applications from existing customers, builders and Realtors. Almost all of
the Bank's residential mortgage loans are made to borrowers who occupy the
properties securing their loans. While the Bank is authorized to make loans
secured by real estate located either within or outside the State of
Connecticut, its policy is to concentrate on loans secured by properties located
within Connecticut, particularly in its primary market area. The Bank originates
residential real estate loans through all eight of its offices. The Bank's
mortgage originations decreased by 25% from 1994 to 1995, primarily due to a
sluggish real estate market and increased competition. As of December 31, 1995
residential mortgage loans were 80.6% of the Bank's total loans.
For its own portfolio, the Bank originates adjustable-rate and selected
fixed-rate first mortgage loans secured by residential properties. In 1993 and
1992 the Bank sold a significant number of its 30-year, 20-year and 15-year
fixed-rate mortgage loans and in 1994 and 1995 sold some of its 30-year and
20-year fixed rate loans generated in those years. Points are charged on all
residential mortgage loans unless the borrower elects to pay a higher interest
rate to offset points.
3
During 1994 the Bank started offering adjustable-rate loans that are fixed for
the first three, five or seven years and then adjust every year after the fixed
period. In 1995 the Bank started offering adjustable-rate loans that are fixed
for the first ten years and then adjust every year after the fixed period.
Adjustable-rate mortgages carry an interest rate cap which limits the Bank's
ability to vary the rate at the time of adjustment and over the life of the
loan. The annual interest rate cap is 2% and the lifetime cap is 6%, although
the Bank in the past had an adjustable rate mortgage loan program with an 8%
lifetime cap. Interest rate caps limit both increases and decreases in rate. The
Bank bases its adjustable-rate mortgages on indices that are best matched to the
repricing of its liabilities.
Fixed-rate first mortgage loans constituted approximately 37.3% of net
loans as of December 31, 1995, down from 40.8% as of December 31, 1994.
The volume of first mortgage loan originations since 1990 is shown in the
following table:
Year Ended Number of Total Loans
December 31, Loans Originated
------------ ----- ----------
1991 397 44,344,000
1992 795 81,485,000
1993 721 73,072,000
1994 432 47,237,000
1995 305 35,338,000
Despite the benefits of adjustable-rate mortgages to the Bank's
asset/liability management program, they do pose potential additional risks,
primarily because as interest rates rise, the underlying payments by the
borrower rise, thereby increasing the potential for default. At the same time,
the marketability of the underlying property may be adversely affected by higher
interest rates. It is difficult to quantify the risks resulting from increased
costs to the borrower as a result of periodic repricing of adjustable-rate
mortgages. The risk associated with holding fixed rate mortgages in the Bank's
loan portfolio is that during periods of rising interest rates, their value
decreases and the initial positive spread over the Bank's cost of funds may
become negative. The benefits of holding fixed rate mortgages include a larger
initial positive spread, increased cash flows and the average life of the loans
are usually shorter than the stated maturity.
In its residential real estate lending, the Bank follows the underwriting
requirements of Federal National Mortgage Association and Federal Home Loan
Mortgage Corporation. The Bank lends up to 95% of the appraised value of
owner-occupied property and up to 70% of the value of non-owner-occupied
property. Under a special program for first time home buyers the Bank has lent
up to 97% of the appraised value of the owner-occupied property. Residential
borrowers are required to obtain private mortgage insurance covering any excess
on loans with over 80% loan-to-value ratios. All conventional first mortgages
include "due-on-sale" clauses, which give the lender the right to declare a loan
immediately due and payable in the event the borrower sells or otherwise
disposes of the real property that secures the loan.
Loans Held for Sale. At December 31, 1995, loans held for sale totaled
$927,000, with a market value of $927,000.
4
Commercial Loans. As of December 31, 1995, commercial and commercial real
estate loans totaled $519,000, compared to $329,000 at December 31, 1994.
Commercial loans constituted 0.2% of the Bank's total loans as of December 31,
1995.
The Bank's commercial mortgage loans are directly originated and consist of
loans made on multifamily homes (more than four units) and loans collateralized
by non-residential properties. Commercial mortgage loans collateralized by
non-residential properties as of December 31, 1995 totaled $5.9 million,
compared to $4.2 million as of December 31, 1994. Commercial mortgage loans
collateralized by non-residential properties constituted 2.5% of total loans as
of December 31, 1995. Loans made on multifamily homes constituted 1.6% of total
loans, or $3.9 million, as of December 31, 1995, compared to $3.9 million at
December 31, 1994. The Bank lends up to 80% of the appraised value of commercial
property. Generally, the size of commercial mortgage loans is less than
$300,000, with the largest loan totaling $737,000.
Construction Loans. As of December 31, 1995, residential construction loans
totaled approximately $3.9 million, or 1.6% of the Bank's total loans, compared
to $3.1 million, or 1.4% of total loans as of December 31, 1994. The Bank's
limited construction loan investments are generally short-term (1-2 years) and
are presently limited to residential properties in Connecticut. Construction
loan applications are underwritten as if they were applications for permanent
financing, obviating the need for a commitment for permanent financing at the
close of the construction period.
Consumer Loans. Connecticut savings banks are authorized by statute to
invest their assets in secured and unsecured consumer loans without limitation.
Connecticut savings banks may also invest their assets, without restriction as
to a percentage of assets, in lines of credit, overdraft loans, and credit card
outstandings. The Bank's consumer loans include home improvement loans,
automobile and boat loans and loans to pay for medical or vacation expenses. In
October of 1994 the Bank started offering its own MasterCard and Visa credit
cards. The Bank originates both fixed and adjustable rate second mortgage loans
for its own portfolio and offers a variable rate pre-approved consumer line of
credit product secured by the equity in the consumer's home.
The Bank also is authorized to make educational loans under the Connecticut
Guaranteed Student Loan Program. The interest on loans in this program is
partially subsidized and is fully guaranteed by the federal government. At
December 31, 1995, the Bank had sold substantially all of its education loans to
the Student Loan Marketing Association (Sallie Mae) prior to conversion of such
loans to amortizing loans.
Total consumer loans (excluding credit card loans) increased from $29.0
million at December 31, 1994 to $30.8 million at December 31, 1995. Although not
classified as collateral loans, approximately 99% of the Bank's installment
loans are secured by mortgages on real property or security interests in
personal property. Collateral loans, secured by either regular savings accounts,
marketable securities, or certificates of deposit, amounted to approximately
$1.9 million at December 31, 1995 and December 31, 1994. Credit card loans
totaled $1.3 million at December 31, 1995 as compared to $.5 million at December
31, 1994.
Interest Rates. Interest rates charged by the Bank on its loans are
primarily determined by the cost of funds to the Bank, competitors' rates and
5
comparable investment alternatives available to the Bank. Federal law preempts
state usury limits on interest, origination fees and all related charges for
federally related mortgage loans secured by first liens on residential real
property, and no action has been taken by the Connecticut legislature (as
permitted by Federal law) to reimpose such state limits.
The supplementary information required by Item III.B. of "Guide 3.
Statistical Disclosure by Bank Holding Companies" relating to maturities and
sensitivities of loans to changes in interest rates appears on page 16 of the
Company's 1995 Annual Report to Shareholders under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations", and
is incorporated by reference herein. Such information should be read in
conjunction with the related financial statements and notes thereto incorporated
by reference herein under Item 8.
Loan Commitments. The Bank's commitments to make mortgage loans on existing
residential and commercial real property are made for periods of up to 120 days
from the date of commitment. Such commitments are generally made at the market
rate of interest prevailing at the time that the commitment is made to the
customer. The rate on the commitment is guaranteed for a period of 60 days.
Loan Origination Fees and Other Fees. In addition to interest earned on
loans, the Bank receives loan origination fees for originating residential and
commercial mortgage loans. These fees, commonly called "points", are paid by
borrowers from their own funds and are not netted from the face amount of a
mortgage loan. Loan origination fees and certain direct loan origination costs
are deferred and the net amount amortized as an adjustment of the loan's yield
over the life of the loan. Origination fees on loans sold by the Bank are taken
into income currently.
The Bank also receives other fees and charges relating to existing loans,
which include primarily late charges. In connection with its mortgage loan
origination activities, the Bank also receives application fees. These fees do
not constitute a material source of income to the Bank.
Risk Elements in the Loan Portfolio. The Bank's loans are regularly
reviewed by management. If contractually due principal and interest payments on
any loan are not received 15 days after the due date of the overdue payment, the
Bank institutes monitored efforts to restore such loan to current status. Loans
are classified as non-accrual and placed on a cash basis for purposes of income
recognition when the collectibility of interest and principal becomes uncertain.
All loans past due 90 days are treated as non-accrual loans. Generally, payments
received are recorded as principal only after the interest is brought current.
Continued unsuccessful collection efforts lead to initiation of foreclosure or
other legal proceedings.
Properties carried as foreclosed real estate have either been acquired
through foreclosure or by deed in lieu of foreclosure, and is carried at the
lower of (1) carrying value of loan, including costs of foreclosure, or (2)
estimated fair value of the real estate acquired less estimated cost to sell. At
the time of foreclosure, the excess, if any, of the loan value over the
estimated fair value of the property acquired is charged to the allowance for
loan losses. Subsequent to the time of foreclosure, reductions in the carrying
value of foreclosed properties due to further declines in fair value or losses
on their sale are recognized through charges to foreclosed real estate expense.
Costs relating to the subsequent development or improvement
6
of the property are capitalized; and holding costs are charged to foreclosed
real estate expense in the period in which they are incurred.
In May 1993, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 114, "Accounting by Creditors
for Impairment of a Loan" ("SFAS 114") which was later amended in October of
1994 by SFAS 118, "Accounting by Creditors for Impairment of a Loan-Income
Recognition and Disclosures." SFAS 114 and SFAS 118, which the Bank adopted in
1995, requires creditors to evaluate the collectibility of both contractual
interest and contractual principal of all loans when assessing the need for a
loss accrual. When a loan is impaired, a creditor shall measure impairment based
on the present value of the expected future cash flows discounted at the loan's
effective interest rate, or the fair value of the collateral, less estimated
selling costs, if the loan is collateral-dependent and foreclosure is probable.
The creditor shall recognize an impairment by creating a valuation allowance.
The adoption of these pronouncements did not have a material impact on the
Bank's financial condition or results of operations.
The supplementary information required by Item III.C. of "Guide 3.
Statistical Disclosure by Bank Holding Companies" relating to the discussion and
statistical disclosure of non-accrual, past due and restructured loans appears
on pages 14 and 15 of the Company's 1995 Annual Report to Shareholders under the
caption "Management's Discussion and Analysis of Financial Condition and Results
of Operations", and is incorporated by reference herein. Such information should
be read in conjunction with the related financial statements and notes thereto
incorporated by reference herein under Item 8.
The Company has not made loans to borrowers outside the United States. At
December 31, 1995, there were no concentrations of loans exceeding 10% of total
loans. A concentration of loans is defined as an amount loaned to multiple
borrowers engaged in similar activities which would cause them to be similarly
affected by economic or other conditions.
Potential problem loans are not disclosed as non-accrual, 90 days past due,
or restructured, but are loans which are monitored because of known information
about possible credit problems of borrowers or because they are more than 30
days but less than 90 days past due. Management assesses the potential for loss
on these loans when evaluating the adequacy of the allowance for loan losses on
a regular basis. As of December 31, 1995, monitored loans not disclosed as
non-accrual, 90 days past due, or restructured that were current totaled
$168,000 ($57,000 residential real estate loans, and $110,000 commercial real
estate loans); monitored loans 30 days delinquent totaled $3,117,000 ($2,673,000
residential real estate loans, $224,000 second mortgage loans, $171,000
commercial real estate loans, and $49,000 installment loans); and monitored
loans 60 day's delinquent totaled $791,000 ($404,000 residential real estate
loans, $369,000 second mortgage loans, and $18,000 installment loans).
7
Summary of Loan Loss Experience
Management's determination as to the adequacy of the allowance for loan
losses takes into account a variety of factors, including (a) management's
analysis of individual loans and the overall risk characteristics of the loan
portfolio, (b) past loan loss experience, (c) the results of the statutorily
mandated examination of the loan portfolio by regulatory agencies and
independent reviews and evaluations of loans by the Loan Committee of the Bank's
Board of Directors, (d) current and expected economic conditions, and (e) other
relevant factors.
The supplementary information required by Items IV.A. and IV.B. of "Guide
3. Statistical Disclosure by Bank Holding Companies" relating to an analysis of
the allowance for loan losses and an allocation for loan losses by loan category
appears on pages 14 and 15 of the Company's 1995 Annual Report to Shareholders
under the caption "Management's Discussion and Analysis of Financial Condition
and Results of Operations", and is incorporated by reference herein. Such
information should be read in conjunction with the related financial statements
and notes thereto incorporated by reference herein under Item 8.
Investment Activities
Savings banks chartered in the State of Connecticut have authority to make
a wide range of investments deemed to be prudent by their boards of directors.
Subject to various restrictions, they may own commercial paper, bonds of
government agencies (including states and municipalities), corporate bonds,
mutual fund shares, debt and equity obligations issued by creditworthy entities
(whether traded on public securities exchanges or placed privately for
investment purposes) and interests in real estate located within or outside
Connecticut without limitations as to use.
It has been the Bank's practice to utilize a variety of investment vehicles
to better match deposit maturities. In addition to providing for liquidity
requirements, the Bank maintains investment portfolios to employ funds not
currently required for its various lending activities. Having a portion of
assets in short-term securities has proved beneficial to the Bank during periods
of rapidly rising interest rates. During such periods, as short-term securities
mature, the proceeds can be reinvested in securities at market rates. In a
declining rate environment, loans are likely to have higher yields than debt
securities. Management considers the overall rate-sensitivity of the Bank's
earning assets when investing in securities.
Because of the shortened maturity of its deposit base and increasing
sensitivity to the interest rate cycle, the Bank has invested a substantial
amount of its cash flow in short-term or interest-sensitive money market assets,
including the use of federal funds, debt obligations with maturities no longer
than 5 years of companies rated "A" or better, US Treasury obligations, and
similar instruments. In addition to providing a match of rates on the interest
rate cycle, such a shift of funds into money market instruments provides the
Bank with the liquidity it deems necessary for normal operations.
A majority of the Bank's investments in 1995, excluding mortgage-backed
securities, were purchased with three to five year maturities, although some of
the Bank's investments purchased in 1995 were purchased with maturities
8
greater than five years in order to obtain higher yields. Mortgage-based
securities were purchased with fifteen and thirty year maturities. Mortgage-
backed securities pay monthly principal and interest payments providing for a
return of principal earlier than that of a regular bond with the same maturity.
The supplementary information required by Item II.A. of "Guide 3.
Statistical Disclosure by Bank Holding Companies" relating to the maturity and
composition of the Bank's investment portfolio appears on pages 10 through 12 of
the Company's 1995 Annual Report to Shareholders under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations", and
is incorporated by reference herein. Such information should be read in
conjunction with the related financial statements and notes thereto incorporated
by reference herein under Item 8.
At December 31, 1995, the Bank had invested approximately $15.6 million, or
3.8% of its assets, in marketable preferred and common stocks and mutual funds.
This portion of the Bank's portfolio generates dividend income and also may
produce capital gains and losses. Dividends received by the Bank are entitled to
the 70% dividends-received deduction on federal income taxes.
The Bank sold no equity securities during 1995. The Bank had net gains from
the sale of equity securities of $779,000 in 1994. In the event of a decline in
the market for equity securities, the value of the Bank's equity portfolio, and
hence its capital, may be reduced. During the past five years, the largest
amount that the Bank had invested at any one time in the equity securities of a
single company was $730,000. The investment in this company was sold in 1994.
See "Federal Reserve System Regulation" below for further discussion relating to
this investment.
In 1991, the Bank revised its investment strategy, hired new outside
investment advisors and transferred $4.2 million in equity securities and
$835,000 in cash to the trading account in order to create a balanced investment
portfolio managed by professional investment advisors with investment objectives
to match or outperform several investment indices. In February of 1995 the Bank
liquidated it's trading account because of volatility in the investment markets
and the uncertainty of earnings generated from this account. Net gains in this
account in 1995 amounted to $49,000.
The Federal Deposit Insurance Corporation Improvement Act of 1991, which is
discussed in detail below under the caption "Regulation and Supervision",
generally limits the equity investments of state non-member banks to investments
which are permissible for a national bank. An insured state bank is also
prohibited from engaging as principal in any type of activity that is not
permissible for a national bank, unless the Federal Deposit Insurance
Corporation (the "FDIC") determines that the activity would not pose a
significant risk to the insurance fund and the bank is in compliance with
applicable capital standards. As of December 19, 1992, a subsidiary of a state
bank may not engage as principal in an activity which is not permissible for a
subsidiary of a national bank, unless the same conditions are met. See "FDIC
Regulation" below for further discussion relating to these investment and
activities limitations.
9
Deposits and Other Sources of Funds
Deposits. Deposits have traditionally been the Bank's major source of
funds, and will continue to be a major source of funds in the foreseeable
future. However, the Bank may rely on borrowings from the Federal Home Loan Bank
in the future (if available) as long as interest rates are favorable. See
"Borrowing" below. The Bank also derives funds from loan amortizations, loan
prepayments, interest and dividend income and sales of assets deemed appropriate
by Bank management.
The Bank offers a wide variety of retail deposit accounts designed to
attract both short- and long-term funds. Time deposits were the primary source
of new funds for the Bank during 1995 due to customer preference, and represent
the largest component of deposits (representing 61.6% of total deposits at
December 31, 1995). Certificates of deposit currently offered by the Bank have
maturities that range from 91 days to five years. The Bank also offers
tax-deferred retirement savings programs (IRA accounts and Simplified Employee
Pension Plans) and other types of plans for its customers. In determining the
rate of interest to pay on deposits, the Bank considers its cash flow
requirements, rates paid by competitors and the Bank's income and growth
objectives.
Management expects competition for deposits in the Bank's market area to
continue for the foreseeable future. As of December 31, 1995, the aggregate
amount of savings accounts at the Bank was $109.2 million and the interest rate
paid on such accounts was 2.0%.
The Bank's deposit marketing strategy includes continually monitoring rates
to insure competitiveness while providing a high level of service at all of the
branch offices. Branch employees participate in sales training programs. The
Bank has been able to attract reasonable deposit growth without having to match
the most competitive rates being offered in its market area.
Substantially all of the Bank's depositors are residents of New Britain and
the contiguous communities. The Bank plans to continue its marketing and service
efforts in the other communities within its market area. Until recently, such
efforts had been hampered by the lack of any Bank branches outside New Britain.
The Bank does not solicit deposits outside Connecticut, nor does it solicit
deposits through deposit brokers.
The supplementary information required by Item V.A. of "Guide 3.
Statistical Disclosure by Bank Holding Companies" relating to average amounts
of, and average rates paid on, deposits appears on page 15 of the Company's 1995
Annual Report to Shareholders under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations", and is incorporated
by reference herein. Such information should be read in conjunction with the
related financial statements and notes thereto incorporated by reference herein
under Item 8.
The decrease in average savings deposits from 1994 to 1995 was due to
customer preference and the rate structure of deposit products. The Bank
believes that its high capital ratios and financial strength have attracted new
deposit customers. The increase in average time deposits from 1994 to 1995 was
the result of customer preference and the rate structure of deposit products.
The overall increase in average rates paid on deposits from 1994 to 1995 is
consistent with rising interest rates through 1994 and the beginning of 1995,
even though rates decreased in the second half of 1995, because of
10
the normal time lag for the Bank's balance sheet to react to market interest
rates.
The supplementary information required by Item V.D. of "Guide 3.
Statistical Disclosure by Bank Holding Companies" relating to the maturity
distributions of time certificates of deposit issued in amounts of $100,000 or
more appears on page 16 of the Company's 1995 Annual Report to Shareholders
under the caption "Management's Discussion and Analysis of Financial Condition
and Results of Operations", and is incorporated by reference herein. Such
information should be read in conjunction with the related financial statements
and notes thereto incorporated by reference herein under Item 8.
Borrowing. The Bank has been a member of the Federal Home Loan Bank
("FHLB") of Boston since 1980, and as a member may borrow from the FHLB to
secure additional funds. At December 31, 1995, the Bank had outstanding $19.0
million in loans from the FHLB of Boston, a decrease of $14.5 million from $33.5
million outstanding at December 31, 1994. The primary reason for the decrease
was maturities of borrowings. Borrowing from the FHLB of Boston may be at
interest rates and under terms and conditions which vary from time to time.
The Bank also has access to a pre-approved line of credit with the FHLB of
Boston of $8,042,000, and has sufficient qualified collateral to borrow up to an
additional $222 million. This arrangement allows the Bank to obtain advances
from the FHLB of Boston rather than relying on commercial bank lines of credit.
The Bank's interest expense on advances was $1,253,000, $1,455,176, and
$471,767, for the years ended December 31, 1995, 1994 and 1993, respectively.
Competition
The Bank's most direct competition for deposits has historically come from
other thrift institutions and commercial banks located in its principal market
area, many of which have greater resources than the Bank. There are numerous
other banks, credit unions and financial institutions located in the City of New
Britain and surrounding areas that also compete with the Bank. The Bank faces
significant additional competition for investors' funds from short-term money
market funds of securities firms and other financial institutions and from other
corporate and government securities yielding higher interest rates than those
paid by the Bank.
This increased competition has, and is expected to continue to have, an
effect on the Bank's cost of funds. However, the Bank has not experienced and
does not expect to experience any substantial adverse effect on the stability of
its deposit base as a result of increased competition. The Bank competes for
deposits by offering depositors a high degree of personal service, convenient
locations and hours, and other services. The Bank does not rely upon any
individual or entity for a material portion of its deposits, nor does it obtain
any deposits through deposit brokers. A substantial portion of the Bank's
customer and deposit base traditionally has been and continues to be the large
Polish community in New Britain.
The Bank's competition for real estate loans comes principally from
mortgage banking companies, other thrift institutions, commercial banks,
insurance companies and other institutional lenders. The Bank competes for loan
originations primarily through the interest rates and loan fees it charges and
the efficiency and quality of services it provides borrowers, real
11
estate brokers and builders. Factors that affect competition include, among
other things, the general availability of lendable funds and credit, general and
local economic conditions, current interest rate levels, and volatility in the
mortgage markets.
Competition is expected to increase as a result of legislation adopted in
recent years at the Federal and State of Connecticut levels which effectively
provide, subject to minimal limitations, for full interestate banking and
branching. As a result of this legislation and increasingly aggressive merger
activity in the Company's market area, competition from larger institutions with
resources much greater than the Company's, is expected to continue into the
future.
Certain legislative and regulatory proposals that could affect the Company
and the Bank and the banking business in general are pending, or may be
introduced, before the United States Congress, the Connecticut General Assembly,
and various governmental agencies. These proposals include measures that may
further alter the structure, regulation, powers, and competitive relationship of
financial institutions and that may subject the Company and the Bank to
increased regulation, disclosure, and reporting requirements. In addition, the
various banking regulatory agencies frequently propose rules and regulations to
implement and enforce existing legislation. It cannot be predicted whether or in
what form any legislation or regulations will be enacted or the extent to which
the business of the Company and the Bank will be affected thereby.
Employees
As of December 31, 1995, the Company and the Bank employed 132 employees,
113 of whom are full-time, including 31 officers. Management considers the
Bank's relations with its employees to be good. The Bank's employees are not
represented by any collective bargaining group.
REGULATION AND SUPERVISION
Connecticut Regulation
As a state-chartered capital stock savings bank, the Bank is subject to
applicable provisions of Connecticut law and the regulations adopted thereunder
by the Connecticut Banking Commissioner (the "Commissioner"). The Commissioner
administers Connecticut banking laws, which contain comprehensive provisions for
the regulation of savings banks. The Bank derives its lending and investment
powers from these laws, and is subject to periodic examination by and reporting
to the Commissioner.
Savings banks in Connecticut are empowered by statute to conduct a general
banking business and to exercise all incidental powers necessary thereto.
Subject to limitations expressed in the statutes, permissible activities include
taking savings and time deposits, including NOW checking accounts, paying
interest on such deposits and accounts, accepting demand deposits, making loans
on residential and other real estate, making consumer
12
and commercial loans, exercising trust powers, investing, with certain
limitations, in equity securities and debt obligations of banks and
corporations, and issuing credit cards. In addition, savings banks may engage in
certain other enumerated activities, including the establishment of an insurance
department to sell life insurance and annuities. Connecticut savings banks, in
general, have powers identical to those enjoyed by Connecticut commercial banks.
The Bank is prohibited by Connecticut banking law from paying dividends,
except from its net profits. Net profits are defined as the remainder of all
earnings from current operations. The total of all dividends declared by the
Bank in any calendar year may not, unless specifically approved by the
Commissioner, exceed the total of its net profits of that year combined with its
retained net profits of the preceding two years. These provisions limit the
amount of dividends payable to stockholders of the Company, since dividends
received from the Bank are the primary source of funds for the Company to pay
dividends. As of December 31, 1995, approximately $666,000 was available for
payment of dividends by the Bank to the Company.
Under Connecticut banking law, no person may acquire the beneficial
ownership of more than 10% or 25% or more of any class of voting securities of a
bank chartered by the State of Connecticut or having its principal office in
Connecticut or a bank holding company thereof unless the Commissioner approves
such acquisition.
Full statewide branching is available to all Connecticut depository
institutions. This legislation expands the branching opportunities of the Bank
to other towns while allowing virtually unrestricted branching expansion by
other institutions into New Britain. Legislation passed in 1990 requires the
Commissioner to consider significant additional criteria when reviewing branch
applications. While this legislation may result in increased administrative
review of bank branching applications, the Company does not anticipate at this
time that the criteria to be considered by the Commissioner will adversely
impact the Company's future branching activities or that any such review will
materially deter financial institutions which desire to open branches in New
Britain from doing so.
See "Competition" above for a discussion of Connecticut interstate banking
statutes.
13
FDIC Regulation
The Bank's deposit accounts are insured by the FDIC, up to a maximum of
$100,000 per insured depositor. The FDIC issues regulations, conducts periodic
examinations, requires the filing of reports and generally supervises the
operations of its insured banks. The approval of the FDIC is required prior to
any merger or consolidation or the establishment or relocation of an office
facility. This supervision and regulation is intended primarily for the
protection of depositors. Any insured bank which does not operate in accordance
with or conform to FDIC regulations, policies and directives may be sanctioned
for noncompliance. Under FDIC regulations, the Bank is a member of the Bank
Insurance Fund ("BIF") and is required to pay annual insurance premiums,
currently 0.00% of its deposits. Under the Federal Deposit Insurance Corporation
Improvement Act of 1991 (the "Improvement Act"), the FDIC has adopted
regulations establishing a risk-based assessment system for insurance premiums.
Under this system, a depository institution's semi-annual assessment will fall
within a range of 0.00% to 0.27% of domestic deposits, based in part on the
probability that the deposit insurance fund will incur a loss with respect to
that institution. In setting assessments for a bank, the FDIC is required to
take into account the revenue needs of the insurance fund and to set the
assessments in a manner that will be sufficient to maintain the insurance fund's
required reserve ratio. Insured depository institutions are required to file
with the FDIC certified statements containing all information required by the
FDIC for the determination of the semi-annual assessment. Each institution has
been or will be notified of its risk classification based on its capital ratios.
The FDIC has the authority to assess penalties against an institution that fails
to make an accurate certified statement. These provisions of the Improvement Act
have not affected the Bank's assessment. Under this system, the Bank, as a well
capitalized institution, is required currently to pay annual insurance premiums
of 0.00% of its deposits.
The FDIC also requires FDIC-insured, state-chartered banks that are not
members of the Federal Reserve System to meet certain minimum capital
requirements. The FDIC amended its minimum requirements for capital as a
percentage of total assets to define capital in a manner consistent with the
risk-based capital categories described below and to require a minimum leverage
standard of 3 percent Tier 1 (or core) capital to total assets (as defined in
FDIC regulations) for the most highly rated banks that are not anticipating or
experiencing any significant growth. All other state banks that are not members
of the Federal Reserve System would be required to meet a minimum leverage ratio
that is at least 100 to 200 basis points above this minimum -- that is, an
absolute minimum leverage ratio of not less than 4 percent for those banks that
are not highly rated or that are anticipating or experiencing significant
growth. "Tier 1 capital" is generally defined as common stockholders' equity,
minority interests in consolidated subsidiaries and non-cumulative perpetual
preferred stock. Tier 1 capital generally excludes goodwill and other
intangibles and investments in subsidiaries that the FDIC determines should be
deducted from capital. As of December 31, 1994, the Bank's leverage ratio was
approximately 9.35%, exceeding the FDIC requirements.
The FDIC has also adopted supplementary capital regulations based on
international risk-based capital standards. The other United States bank
regulatory agencies have also adopted similar guidelines based on these
international standards. The guidelines, as adopted, supplement the minimum
leverage ratios described in the immediately preceding paragraph. The guidelines
set forth (i) a definition of "capital" for risk-based capital
14
purposes; (ii) a system for calculating risk-weighted assets by assigning assets
and certain off-balance sheet items to broad risk categories; and (iii) a
schedule, including transitional arrangements during a phase-in period, for
achieving a minimum supervisory ratio of capital to risk-weighted assets. In
general, the risk-weighting imposes "zero percent" risk-weighting for cash;
balances due from Federal Reserve banks; direct claims on (including
securities), and the portions of claims unconditionally guaranteed by, the
United States treasury and United States government agencies; and gold bullion;
"twenty percent" for cash items in the process of collection; all claims on, and
portions of claims guaranteed by, United States depository institutions, United
States government agencies and United States government-sponsored agencies;
general obligation claims on, and the portions of claims that are guaranteed by,
the full faith and credit of states or other political subdivisions of the
United States; and the portions of claims that are collateralized by securities
issued or guaranteed by the United States treasury, governmental agencies or
government-sponsored agencies; "fifty percent" for loans fully secured by first
liens on one to four family residential properties written in accordance with
prudent underwriting standards and certain privately issued mortgage-backed
securities; and "one hundred percent" risk-weighting for assets not included in
one of the other categories, including fixed assets, premises, other real estate
owned and equity investments. Basically, the higher percentage of riskier assets
an institution has, the more capital it must have to satisfy the risk-based
guidelines; the lower the risk, the lower the required capital. The guidelines
do not address other bank "risk" areas, such as interest rate, liquidity,
funding and market risks, the quality and level of earnings, investment or loan
portfolio concentrations, the quality of loans and investments, the
effectiveness of loan and investment policies and management's ability to
monitor and control financial and operating risks. The current minimum risk-
based ratio is 8%. The Bank's total risk-based ratio as of December 31, 1995 was
18.38%. The Bank does not believe that the implementation of the risk-based
guidelines has had or will have a material adverse effect on its prospective
business or require capital-raising efforts in the foreseeable future. In
January 1995, the risk-based capital standards were amended to require analysis
of the Bank's and Company's concentration of credit risks and certain risks from
non-traditional activities in assessing the institution's overall capital
adequacy. The Company and Bank believe that these amended regulations will not
materially affect the Company's and Bank's capital ratios or adequacy.
The Improvement Act increases the supervisory powers of the FDIC and the
other federal regulatory agencies with regard to undercapitalized depository
institutions, and changes the capital rules applicable to the Company and the
Bank. As of December 19, 1992, banking regulators adopted regulations which
define five capital categories of institutions: institutions that are well
capitalized, adequately capitalized, undercapitalized, significantly
undercapitalized and critically undercapitalized. The purpose of these
categories is to allow federal regulatory agencies to monitor undercapitalized
institutions more closely in order to take appropriate and prompt regulatory
action to minimize the potential for significant loss to the deposit insurance
fund. Institutions in the first two categories will operate with few
restrictions. Institutions in the other three categories may be required to
raise additional capital, curtail growth, limit interest rates paid, divest
subsidiaries and limit executive compensation. Regulators are also be empowered
to remove top management and call for new elections of directors. The
Improvement Act also allows for the appointment of a conservator or receiver of
an insured depository institution if the institution is
15
undercapitalized and either has no reasonable prospect of becoming adequately
capitalized, fails to become adequately capitalized as required, or fails to
submit or materially implement a capital plan. In addition, the Improvement Act
requires a holding company of a failing institution to guarantee that the
institution will comply with a capital restoration plan to the extent of 5% of
the institution's total assets or the amount needed to achieve the required
minimum capital levels. See pages 17 and 18 of the Company's 1995 Annual Report
to Shareholders under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Capital". The Bank is currently
categorized as a "well capitalized" institution under the Improvement Act.
After notice and hearing, FDIC insurance of deposits may be terminated by
the FDIC upon a finding by the FDIC that the insured institution has engaged in
unsafe or unsound practices or is in an unsafe or unsound condition to continue
operations, or has violated any applicable law, regulation, rule or order of, or
conditions imposed by, the FDIC. Neither the Company nor the Bank is aware of
any practice, condition or violation that might lead to termination of its
deposit insurance.
The Improvement Act also generally limits the activities and equity
investments of FDIC-insured, state-chartered banks to those that are permissible
for national banks. These restrictions became effective on December 19, 1992,
although the restrictions dealing with equity investments became effective upon
enactment of the Improvement Act on December 19, 1991. In October 1992, the FDIC
issued final regulations to implement the restrictions on equity investments and
indicated its intention to propose regulations addressing the activities
limitations at a later date. Under the regulations dealing with equity
investments, an insured state bank generally may not acquire or retain any
equity investment of a type, or in an amount, that is not permissible for a
national bank. In addition, an insured state bank (i) that is located in a state
which authorized as of September 30, 1991 investment in common or preferred
stock listed on a national securities exchange ("listed stock") or shares of a
registered investment company ("registered shares"), and (ii) which during the
period beginning September 30, 1990 through November 26, 1991 ("measurement
period") made or maintained investments in listed stocks and registered shares,
may retain whatever shares that were lawfully acquired or held prior to December
19, 1991 and continue to acquire listed stock and registered shares, provided
that the bank does not convert its charter to another form or undergo one of
four types of specified transactions which generally deal with changes in
control. In order to acquire or retain any listed stock or registered shares,
however, the bank must file a one-time notice with the FDIC which meets
specified requirements and which sets forth the bank's intention to acquire and
retain stocks or shares, and the FDIC must determine that acquiring or retaining
the listed stocks or registered shares will not pose a significant risk to the
deposit insurance fund of which the bank is a member. The Bank filed a notice of
intention to invest in listed stocks and registered shares with the FDIC on
December 11, 1992. On March 15, 1993, the FDIC granted its approval to the Bank
to continue to hold or acquire listed stocks and registered shares, subject to
the following conditions: (a) the maximum investment in listed stocks and
registered shares may not exceed 100% of the Bank's Tier 1 capital; (b) the Bank
must follow reasonable procedures limiting concentrations in listed stocks and
registered shares so as to provide for diversification of risk; and (c) the FDIC
may alter, suspend or withdraw its approval should any development warrant such
action. At December 31, 1995, the Bank held $.2 million of listed stocks and
registered shares.
16
The Community Reinvestment Act of 1977 ("CRA") was enacted to encourage
every financial institution to help meet the credit needs of its entire
community, including low and moderate-income neighborhoods, consistent with the
institution's safe and sound operation. Under CRA, state and federal regulators
are required, when examining financial institutions and when considering
applications for approval of certain merger, acquisition or other transactions,
to take into account the institution's record in helping to meet the credit
needs of its entire community, including low and moderate-income neighborhoods.
In reviewing an institution's CRA record for this purpose, state and federal
regulators will consider reports of regulatory examination, comments received
from interested members of the public or community groups, and the description
of the institution's CRA activities in its publicly available CRA statement,
supplemented, as necessary, by the institution. The Federal Reserve Board has
the power to disapprove proposed merger or acquisition transactions involving
banking organizations that are deemed by the Federal Reserve Board to have
unsatisfactory examination records of CRA compliance. Following its most recent
CRA examination as of August 24, 1995, the Bank received a "Satisfactory" rating
regarding its compliance with CRA.
Federal Reserve System Regulation
Federal Reserve Board regulations require the Bank to maintain reserves
against its transaction accounts and non-personal time deposits. These
regulations generally require that reserves of 3% be maintained against
transaction accounts (other than non-personal time deposits and Eurocurrency
liabilities) totaling $54.0 million or less (except that $4.2 million in the
transaction accounts is exempt from the reserve requirement) and a reserve of
10% be maintained against that portion of total transaction accounts in excess
of $54.0 million. Effective December 19, 1995, the Federal Reserve Board
adjusted these amounts so that reserves of 3% are required to be maintained
against transaction accounts totaling $52.0 million or less (except that $4.3
million is exempt) and a reserve of 10% is required to be maintained against
that portion of total transaction accounts in excess of $52.0 million. These
amounts and percentages are subject to further adjustment by the Federal Reserve
Board. The Bank also has authority to borrow from the Federal Reserve Bank of
Boston "discount window."
The Federal Reserve Board's capital adequacy guidelines for bank holding
companies are similar to the FDIC leverage ratio requirements described above.
This standard establishes a minimum level of Tier 1 capital to total assets of
3% for all bank holding companies with consolidated assets of $150 million or
more. Except with respect to the most highly-rated institutions, this standard
requires bank holding companies to maintain an additional cushion of 100 to 200
basis points depending upon the institution's financial condition and risk
profile. Additionally, the Federal Reserve Board has adopted risk-based capital
guidelines, similar to those adopted by the FDIC as described above, that are
applicable to all bank holding companies. Management believes that the Company
currently is, and expects to continue to be, in full compliance with applicable
capital requirements.
The Company is subject to regulation by the Federal Reserve Board as a
registered bank holding company. The Bank Holding Company Act of 1956, as
amended (the "BHCA"), under which the Company is registered, limits the types of
companies that the Company may acquire or organize and the activities in which
it or they may engage. In general, the Company and its subsidiaries are
prohibited from engaging in or acquiring direct control of any company engaged
17
in non-banking activities unless such activities are so closely related to
banking or managing or controlling banks or savings associations as to be a
proper incident thereto. Subject to various limitations, the Federal Reserve
Board has determined by regulation a number of activities that qualify without
the need for specific FRB approval. The Company believes that neither it nor the
Bank is engaged in any activities which would be prohibited under the BHCA.
Under the BHCA, the Company is required to obtain the prior approval of the
Board of Governors of the Federal Reserve System to acquire, with certain
exceptions, more than 5% of the outstanding voting stock of any bank, to acquire
all or substantially all of the assets of a bank or to merge or consolidate with
another bank holding company.
Under the BHCA, the Company, the Bank and any other subsidiaries are
prohibited from engaging in certain tying arrangements in connection with any
extension of credit or provision of any property or services. The Bank is also
subject to certain restrictions imposed by the Federal Reserve Act on issuing
any extension of credit to the Company or any of its subsidiaries, or making any
investments in the stock or other securities thereof, and on the taking of such
stock or securities as collateral for loans to any borrower.
The Company is required under the BHCA to file an annual report of its
operations with the Federal Reserve Board, and it and the Bank and any other
subsidiaries are subject to examination by the Federal Reserve Board. In
addition, the Company, as a bank holding company, is required to register with,
submit reports to and be examined by the Commissioner under the Connecticut Bank
Holding Company and Bank Acquisition Act.
Effect of Government Policy
Banking is a business that has historically depended primarily on interest
rate differentials. In general, the difference between the interest rates
received by the Bank on loans to its customers and securities held in the Bank's
portfolio and the interest rate paid by the Bank on its deposits and its other
borrowings will comprise the major portion of the Bank's earnings. The value and
yields of its assets and the rates paid on its liabilities are sensitive to
changes in prevailing market rates of interest. Thus, the earnings and growth of
the Bank will be influenced by general economic conditions, the monetary and
fiscal policies of the federal government, and policies of regulatory agencies,
particularly the Federal Reserve Board, which implement national monetary
policy. The nature and impact of any future changes in monetary policies is
beyond the control of the Bank and cannot be predicted.
The FDIC is required to conduct annual FDIC examinations of all insured
depository institutions unless they are well or adequately capitalized, not less
than $250 million in assets, and have an "outstanding" composite condition (or
"good" if a bank has less than $100 million in assets); such institutions may be
examined every eighteen months. The Improvement Act also requires each insured
depository institution to submit a publicly available annual audit report to its
federal regulators. The report is required to be prepared in accordance with
generally accepted accounting principles and to contain any information that
federal regulators may require. The report must contain management's statement
of its responsibilities for preparing financial statements, establishing and
maintaining internal controls, complying with banking laws and regulations and
assessing the institution's results in these
18
areas during the past year. The institution's independent public accountants
must also attest to, and report separately on, management's statement. The
federal regulatory agencies are also required to adopt regulations requiring
each insured depository institution to have an independent audit made of its
financial statements. These audited financial statements will be included in the
institution's annual reports. The Company and the Bank have always had an annual
independent audit.
As discussed above, the Improvement Act allows the regulatory agencies to
take prompt regulatory action for institutions falling into one of the lower
three of five capital categories (see "FDIC Regulation") and restricts an
institution's ability to accept brokered deposits unless the institution is well
capitalized. Restrictions on loans to insiders are also strengthened under the
Improvement Act. Total aggregate loans to all insiders (including directors and
executive officers) and their related interests are generally restricted to the
amount of a bank's unimpaired capital and surplus. Unimpaired capital and
surplus is defined by regulation to mean the sum of (1) the bank's total equity
capital as reported on the bank's most recent consolidated report of condition,
(2) any subordinated notes and debentures approved as an addition to the bank's
capital structure by the appropriate federal banking agency, and (3) any
valuation reserves created by charges to the bank's income as reported on its
most recent consolidated report of condition. The Federal Reserve Board may, by
regulation, make the restrictions on aggregate loans to insiders more stringent.
In addition, certain restrictions on types and amounts of loans that can be made
to executive officers of financial institutions have been added to federal
regulations in addition to the existing restrictions in state law on loans to
executive officers. Loans to individual directors, executive officers, principal
shareholders and their related interests also may not exceed specified
percentages of the Bank's unimpaired capital and surplus (generally, 15% for
loans not "fully secured", and 10% additional for loans that are "fully
secured", with certain limited exceptions). Because the level of the Bank's
loans to insiders is significantly below the amount permitted under the
Improvement Act, the Company does not expect these regulations to adversely
impact the Company or the Bank.
The Improvement Act has also resulted in federal regulatory agencies to
adopt regulations setting forth safety and soundness standards relating to
internal controls, information systems and internal audit systems; loan
documentation; credit underwriting; interest rate exposure; asset growth; and
officers and employees compensation, fees and benefits. The Bank and the Company
do not expect these regulations will materially adversely affect them.
The regulations establish a standard for the ratio of classified assets to
total capital and loan loss allowances at no greater than 100%; and an
earnings/capital standard which provides that a bank's capital will be
sufficient if the bank's last four quarters of earnings history, projected over
the next four quarters, would leave the bank with capital meeting the applicable
minimum capital requirements. If the FDIC were to find that the Bank violated
either of the standards, the Bank would be required to submit a compliance plan,
which must be approved by the FDIC, describing the steps it would take to cure
the deficiency. However, the Company and the Bank currently comply with and
expect to continue to comply with these standards.
The present bank regulatory scheme has undergone and continues to undergo
significant change, both as it affects the banking industry itself and as it
affects competition between banks and non-banking financial
19
institutions. There have been significant regulatory changes in the bank merger
and acquisition area, in the products and services banks can offer, and in the
non-banking activities in which bank holding companies can engage. Banks are now
actively competing with other types of depository institutions and with non-bank
financial institutions, such as money market funds, brokerage firms, insurance
companies, and other financial services enterprises. It is not possible at this
time to assess what impact these changes in the regulatory scheme will
ultimately have on the Bank.
Item 2 - Properties
In addition to the main office of the Company and the Bank, located at 123
Broad Street, New Britain, Connecticut, the Bank has seven banking branches
located in New Britain, Southington, Newington, Rocky Hill, and Plainville,
Connecticut. The following table sets forth certain information regarding the
Bank's banking offices.
Owned Lease
or Expiration
Office Location Leased Date
- ------ -------- ------ ----
Main Office 123 Broad Street Owned Not applicable
New Britain, CT 06050
Farmington Avenue 553 Farmington Avenue Owned Not applicable
New Britain, CT 06050
Columbus Plaza 150 Columbus Boulevard Leased October 1999
New Britain, CT 06050
Lafayette Square 450 Main Street Leased July 2001
New Britain, CT 06050
Southington Office 405 Queen Street Leased August 2002
Southington, CT 06489
Newington Office 36 Fenn Road Leased January 2003
Newington, CT 06111
Rocky Hill Office 2270 Silas Deane Highway Owned Not applicable
Rocky Hill, CT 06067
Plainville Offic 275C New Britain Avenue Leased June 2004
Plainville, CT 06062
Total lease payments for all of the Bank's leased offices for 1995 amounted to
$442,892.
Item 3 - Legal Proceedings
There are no pending legal proceedings to which the Company or the Bank is
a party, other than ordinary routine litigation in the normal course of
business. No such proceeding is material to the Company or the Bank.
20
Item 4 - Submission of Matters to a Vote of Security Holders
During the fourth quarter of 1995, no matter was submitted to a vote of
shareholders of the Company.
Executive Officers of the Registrant
The following persons are the executive officers of the Company:
Richard S. Mansfield, age 55, has been the President and Chief Executive
Officer and a director of the Company since its incorporation in February 1989.
Mr. Mansfield has been President and Chief Executive Officer and a director of
the Bank since 1986 and was Executive Vice President and Vice President in
charge of mortgage lending at the Bank since 1980. Mr. Mansfield's 1986
employment agreement with the Bank provides for a term of three years with
automatic one year renewals each January 1st, unless either party gives written
notice of his or its intention not to extend the agreement.
John G. Medvec, age 49, has been the Executive Vice President and Treasurer
of the Company since its incorporation in February 1989. Mr. Medvec has been
Executive Vice President and Treasurer of the Bank since 1986 and has served in
various executive positions with the Bank since 1971. Mr. Medvec's 1986
employment agreement with the Bank provides for a term of three years with
automatic one year renewals each January 1st, unless either party gives written
notice of his or its intention not to extend the agreement.
There is no relationship by blood, marriage or adoption between any
executive officer or director of the Company and any other executive officer or
director of the Company.
PART II
Item 5 - Market for Registrant's Common Equity and Related Stockholder Matters
As of February 29, 1996, the Company had 1,924,363 shares of Common Stock
issued and outstanding and approximately 1,404 shareholders of record. The
Company's stock is traded over-the-counter and is quoted on The NASDAQ National
Market under the symbol "PBNB".
The market price information regarding the Company Common Stock and the
information relating to the payment of dividends required by Item 5 appears on
page 46 of the Company's 1995 Annual Report to Shareholders under the captions
"Common Stock Information" and "Dividend Policy", and is incorporated herein by
reference. Dividends are paid by the Company from its assets, which are mainly
provided by dividends from the Bank. However, certain restrictions exist
regarding the ability of the Bank to transfer funds to the Company in the form
of cash dividends, loans or advances and such restrictions may materially limit
the Company's ability to pay dividends to its shareholders.
In connection with the Bank's conversion from a mutual savings bank to a
capital stock savings bank, 2,444,324 shares of Common Stock were initially
offered to depositors of the Bank in a subscription offering, with the remaining
shares sold in a public offering. As part of the subscription
21
offering, the Bank established a liquidation account for a ten-year period for
the benefit of eligible depositors who maintain their accounts with the Bank
after the conversion. In the event of a complete liquidation (and only in such
an event), each eligible account holder will be entitled to receive a
liquidation distribution from the liquidation account before any liquidation
distribution may be made with respect to Bank Common Stock. The Bank may not
declare or pay a cash dividend on or repurchase any of its Common Stock if the
effect thereof would cause the capital accounts to be reduced below the amount
required for the liquidation account, which was approximately $913,000 as of
December 31, 1995.
Connecticut capital stock savings banks, such as the Bank, may not declare
cash dividends in excess of "net profits". "Net profits" are statutorily defined
as "the remainder of all earnings from current operations." In addition, the
total of all cash dividends declared in any calendar year may not, without the
specific approval of the Commissioner, exceed the total of its net profits of
that year combined with its retained net profits of the preceding two years.
The present intention of the Board of Directors of the Company is to
continue the practice of declaring and paying cash dividends on a quarterly
basis. However, the payment and size of any future Company dividend will depend
on the future earnings of the Company and the Bank.
Item 6 - Selected Financial Data
The information required by Item 6 appears on page 1 of the Company's 1995
Annual Report to Shareholders under the caption "Selected Financial Highlights",
and is incorporated by reference herein.
Item 7 - Management's Discussion and Analysis of Financial Condition and Results
of Operations
The information required by Item 7 appears on pages 9 through 24 of the
Company's 1995 Annual Report to Shareholders under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations", and
is incorporated by reference herein. See Note 18 "Recent Accounting
Pronouncements" on page 42 of the Company's 1995 Annual Report to Shareholders
and the caption notes to the Consolidated Financial Statements contained
therein.
Item 8 - Financial Statements and Supplementary Data
The information required by Item 8 is indexed in Item 14 of this Annual
Report on Form 10-K, and portions thereof appearing on pages 23 through 45 of
the Company's 1995 Annual Report to Shareholders are incorporated by reference
herein.
22
Item 9 - Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable.
PART III
Item 10 - Directors and Executive Officers of the Registrant
The information required by Item 10 relating to the identification of
directors and executive officers of the Company and their business experience
appears on pages 3 through 14 of the Company's definitive Proxy Statement dated
March 22, 1996 under the caption "Election of a Class of Directors (Proposal 1)
- - Information on Nominees and Directors", and in Part I of this Annual Report on
Form 10-K under the caption "Executive Officers of the Registrant", and is
incorporated by reference herein.
Item 11 - Executive Compensation
The information required by Item 11 relating to the compensation paid and
benefits provided to directors and executive officers of the Company appears on
pages 8 through 14 of the Company's definitive Proxy Statement under the
captions "Election of a Class of Directors (Proposal 1) - Compensation of
Directors" and "Election of a Class of Directors (Proposal 1) - Compensation of
Executive Officers", and is incorporated by reference herein.
Item 12 - Security Ownership of Certain Beneficial Owners and Management
The information required by Item 12 relating to the ownership of the
Company's securities by certain beneficial owners and management appears on
pages 2 through 7 of the Company's definitive Proxy Statement under the captions
"Principal Stockholders", "Election of a Class of Directors (Proposal 1) -
Information on Nominees and Directors" and "Election of a Class of Directors
(Proposal 1) - Ownership of Shares by Directors and Officers", and is
incorporated by reference herein.
Item 13 - Certain Relationships and Related Transactions
The information required by Item 13 relating to transactions between the
Company and management, directors and certain beneficial owners of the Company's
securities appears on pages 13 through 15 of the Company's definitive Proxy
Statement under the caption "Transactions with Management and Others", and is
incorporated by reference herein.
23
PART IV
Item 14 - Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) The following documents, filed as part of this report, are included herein
or are incorporated by reference from the indicated pages of the Company's
1995 Annual Report to Shareholders:
1. Financial Statements:
Page(s) in
Annual Report
-------------
Report of Independent Auditors 23
Consolidated Balance Sheets 24
Consolidated Statements of Income 25
Consolidated Statements of Stockholders' Equity 26
Consolidated Statements of Cash Flows 27
Notes to Consolidated Financial Statements 28-45
2. Financial Statement Schedules:
All Schedules to the Consolidated Financial Statements required by
Article 9 of Regulation S-X are not required under the related
instructions or are inapplicable and therefore have been omitted.
24
3. Exhibits:
Exhibit No. Description
----------- -----------
3.1 Certificate of Incorporation of the Company
(incorporated by reference to Exhibit 3.1 to the
Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1991).
3.2 Bylaws of the Company (incorporated by reference to
Exhibit 3.2 to the Company's Registration Statement on
Form S-4 (No. 33-27219) filed on February 23, 1989).
4 Instruments Defining the Rights of Security Holders are
filed as Exhibits 3.1 and 3.2.
*10.1 Employment Agreement dated August 1, 1986 between the
Bank and Richard S. Mansfield (incorporated by
reference to Exhibit 10.1 of the Company's Registration
Statement on Form S-4 (No. 33-27219) filed on February
23, 1989).
*10.2 Employment Agreement dated August 1, 1986 between the
Bank and John G. Medvec (incorporated by reference to
Exhibit 10.2 of the Company's Registration Statement on
Form S-4 (No. 33-27219) filed on February 23, 1989).
*10.3 Employment Agreement dated August 1, 1986 between the
Bank and Florence Zaniewski (incorporated by reference
to Exhibit 10.3 of the Company's Registration Statement
on Form S-4 (No. 33-27219) filed on February 23, 1989).
*10.4 1986 Stock Option and Incentive Plan (incorporated by
reference to Exhibit 10.4 to the Company's Registration
Statement on Form S-4 (No. 33-27219) filed on February
23, 1989).
*10.5 1986 Stock Option Plan for Outside Directors
(incorporated by reference to Exhibit 10.5 to the
Company's Registration Statement on Form S-4 (No.
33-27219) filed on February 23, 1989).
*10.6 Pension Plan of The People's Savings Bank of New
Britain, as amended (incorporated by reference to
Exhibit 10.6 to the Company's Registration Statement on
Form S-4 (No. 33-27219) filed on February 23, 1989).
*10.7 Change of Control Agreement, dated as of September 17,
1991, between the Bank and Florence K. Gagnon
(incorporated by reference to Exhibit 10.7 to the
Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1991).
*10.8 Change of Control Agreement, dated as of September 18,
1991, between the Bank and Teresa Sasinski
(incorporated by reference to Exhibit 10.8 to the
Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1991).
*10.9 Change of Control Agreement, dated as of September 23,
1991, between the Bank and Edward E. Bohnwagner, III
(incorporated by reference to Exhibit 10.9 to the
Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1991).
*10.10 Directors' Voluntary Deferral Agreement, dated January
1, 1985, between the Bank and Walter D. Blogoslawski,
as amended January 1, 1987 (incorporated by reference
to
25
Exhibit 10.10 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1991).
*10.11 Directors' Voluntary Deferral Agreement, dated January
1, 1985, between the Bank and Matthew P. Duksa, as
amended January 1, 1987 and January 20, 1987
(incorporated by reference to Exhibit 10.11 to the
Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1991).
*10.12 Directors' Voluntary Deferral Agreement, dated January
1, 1985, between the Bank and Stanley P. Filewicz, as
amended January 20, 1987 and February 10, 1989
(incorporated by reference to Exhibit 10.12 to the
Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1991).
*10.13 Directors' Voluntary Deferral Agreement, dated January
1, 1985, between the Bank and Robert A. Gryboski, M.D.,
as amended January 1, 1987, January 20, 1987 and
February 10, 1989 (incorporated by reference to Exhibit
10.13 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1991).
*10.14 Directors' Voluntary Deferral Agreement, dated January
1, 1985, between the Bank and Edward Januszewski, as
amended January 1, 1987 and January 20, 1987
(incorporated by reference to Exhibit 10.14 to the
Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1991).
*10.15 Directors' Voluntary Deferral Agreement, dated January
1, 1985, between the Bank and Roland L. LeClerc, as
amended January 1, 1987, January 20, 1987 and February
10, 1989 (incorporated by reference to Exhibit 10.15 to
the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1991).
*10.16 Directors' Voluntary Deferral Agreement, dated January
1, 1985, between the Bank and Walter J. Liss, as
amended January 1, 1987 and February 10, 1989
(incorporated by reference to Exhibit 10.16 to the
Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1991).
*10.17 Directors' Voluntary Deferral Agreement, dated January
1, 1985, between the Bank and Henry R. Poplaski, as
amended January 1, 1987, January 20, 1987 and February
10, 1989 (incorporated by reference to Exhibit 10.17 to
the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1991).
*10.18 Directors' Voluntary Deferral Agreement, dated January
20, 1987, between the Bank and Anthony R. Puskarz, Jr.
(incorporated by reference to Exhibit 10.18 to the
Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1991)
*10.19 Directors' Voluntary Deferral Agreement, dated January
1, 1985, between the Bank and Eugene M. Rosol, as
amended January 1, 1987 and January 20, 1987
(incorporated by reference to Exhibit 10.19 to the
Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1991).
*10.20 Directors' Voluntary Deferral Agreement, dated January
1, 1985, between the Bank and Chester S. Sledzik, as
amended January 1, 1987, January 20, 1987 and February
10, 1989 (incorporated by reference to Exhibit 10.20 to
the
26
Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1991).
*10.21 Directors' Voluntary Deferral Agreement, dated January
1, 1985, between the Bank and Robert A. Story, as
amended January 1, 1987, January 20, 1987 and February
10, 1989 (incorporated by reference to Exhibit 10.21 to
the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1991).
*10.22 Directors' Voluntary Deferral Agreement, dated January
1, 1985, between the Bank and Joseph A. Welna, as
amended January 1, 1987, January 20, 1987 and February
10, 1989 (incorporated by reference to Exhibit 10.22 to
the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1991).
*10.23 People's Savings Financial Corp. Dividend Reinvestment
Plan and Stock Purchase Plan (incorporated by reference
to Exhibit 10.23 to the Company's Annual Report on Form
10-K for this fiscal year ended December 31, 1992).
*10.24 People's Savings Financial Corp. Savings and Investment
Plan (incorporated by reference to Exhibit 10.24 to the
Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1993).
*10.25 Change of Control Agreement, dated as of January 17,
1995, between the Bank and Daniel Hurley (incorporated
by reference to Exhibit 10.25 to the Company's Annual
Report on Form 10-K for the fiscal year ended December
31, 1994).
*10.26 Change of Control Agreement, dated as of January 17,
1995, between the Bank and Earl Young (incorporated by
reference to Exhibit 10.26 to the Company's Annual
Report on Form 10-K for the fiscal year ended December
31, 1994).
*10.27 The People's Savings Financial Corp. 1995 Stock Option
and Incentive Plan for Outside Directors (incorporated
by reference to Exhibit A to the Company's Proxy
Statement for the 1995 Annual meeting of Stockholders).
*10.28 The People's Savings Financial Corp. 1995 Stock Option
and Incentive Plan (for Employees) (incorporated by
reference to Exhibit B to the Company's Proxy Statement
for the 1995 Annual meeting of Stockholders).
11 Statement Concerning Computation of Per Share Earnings
13 1995 Annual Report to Shareholders
21 Subsidiaries of the Registrant
24 Consent of Independent Accountants
25 Power of Attorney
- ------
* Management contracts or compensatory plans, contracts or arrangements.
27
(b) Reports on Form 8-K. No report on Form 8-K was filed during the fourth
quarter of 1995.
(c) The exhibits required by Item 601 of Regulation S-K are filed as a separate
part of this report.
28
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
By /s/ RICHARD S. MANSFIELD
-------------------------------------
Richard S. Mansfield
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ RICHARD S. MANSFIELD President and Chief March 19, 1996
- -------------------------- Executive Officer
Richard S. Mansfield (Principal Executive
Officer)
/s/ JOHN G. MEDVEC Executive Vice March 19, 1996
- -------------------------- President and
John G. Medvec Treasurer (Principal
Financial Officer
and Principal
Accounting Officer)
* Director March 19, 1996
- --------------------------
Joseph A. Welna
* Director March 19, 1996
- --------------------------
Robert A. Gryboski
* Director March 19, 1996
- --------------------------
Walter J. Liss
* Director March 19, 1996
- --------------------------
Robert A. Story
* Director March 19, 1996
- --------------------------
Walter D. Blogoslawski
* Director March 19, 1996
- --------------------------
Stanley P. Filewicz
29
* Director March 19, 1996
- --------------------------
Roland L. LeClerc
* Director March 19, 1996
- --------------------------
Chester S. Sledzik
* Director March 19, 1996
- --------------------------
Henry Poplaski
* Director March 19, 1996
- --------------------------
A. Richard Puskarz, Jr.
By /c/ JOHN G. MEDVEC
- --------------------------
John G. Medvec
Attorney-in-Fact
30
EXHIBIT INDEX
Exhibit Page
Number Description Number
------ ----------- ------
3.1 Certificate of Incorporation of the Company
(incorporated by reference to Exhibit 3.1 to the
Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1991).
3.2 Bylaws of the Company (incorporated by reference
to Exhibit 3.2 to the Company's Registration
Statement on Form S-4 (No. 33-27219) filed on
February 23, 1989).
4 Instruments Defining the Rights of Security
Holders are filed as Exhibits 3.1 and 3.2.
*10.1 Employment Agreement dated August 1, 1986 between
the Bank and Richard S. Mansfield (incorporated by
reference to Exhibit 10.1 of the Company's
Registration Statement on Form S-4 (No. 33-27219)
filed on February 23, 1989).
*10.2 Employment Agreement dated August 1, 1986 between
the Bank and John G. Medvec (incorporated by
reference to Exhibit 10.2 of the Company's
Registration Statement on Form S-4 (No. 33-27219)
filed on February 23, 1989).
*10.3 Employment Agreement dated August 1, 1986 between
the Bank and Florence Zaniewski (incorporated by
reference to Exhibit 10.3 of the Company's
Registration Statement on Form S-4 (No. 33-27219)
filed on February 23, 1989).
*10.4 1986 Stock Option and Incentive Plan (incorporated
by reference to Exhibit 10.4 to the Company's
Registration Statement on Form S-4 (No. 33-27219)
filed on February 23, 1989).
*10.5 1986 Stock Option Plan for Outside Directors
(incorporated by reference to Exhibit 10.5 to the
Company's Registration Statement on Form S-4 (No.
33-27219) filed on February 23, 1989).
*10.6 Pension Plan of The People's Savings Bank of New
Britain, as amended (incorporated by reference to
Exhibit 10.6 to the Company's Registration
Statement on Form S-4 (No. 33-27219) filed on
February 23, 1989).
*10.7 Change of Control Agreement, dated as of September
17, 1991, between the Bank and Florence K. Gagnon
(incorporated by reference to Exhibit 10.7 to the
Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1991).
*10.8 Change of Control Agreement, dated as of September
18, 1991, between the Bank and Teresa Sasinski
(incorporated by reference to Exhibit 10.8 to the
Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1991).
*10.9 Change of Control Agreement, dated as of September
23, 1991, between the Bank and Edward E.
Bohnwagner, III (incorporated by reference to
Exhibit 10.9 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31,
1991).
*10.10 Directors' Voluntary Deferral Agreement, dated
January 1, 1985, between the Bank and Walter D.
Blogoslawski, as amended January 1, 1987
(incorporated by reference to Exhibit 10.10 to the
Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1991).
*10.11 Directors' Voluntary Deferral Agreement, dated
January 1, 1985, between the Bank and Matthew P.
Duksa, as amended January 1, 1987 and January 20,
1987 (incorporated by reference to Exhibit 10.11
to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1991).
*10.12 Directors' Voluntary Deferral Agreement, dated
January 1, 1985, between the Bank and Stanley P.
Filewicz, as amended January 20, 1987 and February
10, 1989 (incorporated by reference to Exhibit
10.12 to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1991).
*10.13 Directors' Voluntary Deferral Agreement, dated
January 1, 1985, between the Bank and Robert A.
Gryboski, M.D., as amended January 1, 1987,
January 20, 1987 and February 10, 1989
(incorporated by reference to Exhibit 10.13 to the
Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1991).
*10.14 Directors' Voluntary Deferral Agreement, dated
January 1, 1985, between the Bank and Edward
Januszewski, as amended January 1, 1987 and
January 20, 1987 (incorporated by reference to
Exhibit 10.14 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31,
1991).
*10.15 Directors' Voluntary Deferral Agreement, dated
January 1, 1985, between the Bank and Roland L.
LeClerc, as amended January 1, 1987, January 20,
1987 and February 10, 1989 (incorporated by
reference to Exhibit 10.15 to the Company's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1991).
*10.16 Directors' Voluntary Deferral Agreement, dated
January 1, 1985, between the Bank and Walter J.
Liss, as amended January 1, 1987 and February 10,
1989 (incorporated by reference to Exhibit 10.16
to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1991).
*10.17 Directors' Voluntary Deferral Agreement, dated
January 1, 1985, between the Bank and Henry R.
Poplaski, as amended January 1, 1987, January 20,
1987 and February 10, 1989 (incorporated by
reference to Exhibit 10.17 to the Company's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1991).
*10.18 Directors' Voluntary Deferral Agreement, dated
January 20, 1987, between the Bank and Anthony R.
Puskarz, Jr. (incorporated by reference to Exhibit
10.18 to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1991).
*10.19 Directors' Voluntary Deferral Agreement, dated
January 1, 1985, between the Bank and Eugene M.
Rosol, as amended January 1, 1987 and January 20,
1987 (incorporated by reference to Exhibit 10.19
to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1991).
2
*10.20 Directors' Voluntary Deferral Agreement, dated
January 1, 1985, between the Bank and Chester S.
Sledzik, as amended January 1, 1987, January 20,
1987 and February 10, 1989 (incorporated by
reference to Exhibit 10.20 to the Company's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1991).
*10.21 Directors' Voluntary Deferral Agreement, dated
January 1, 1985, between the Bank and Robert A.
Story, as amended January 1, 1987, January 20,
1987 and February 10, 1989 (incorporated by
reference to Exhibit 10.21 to the Company's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1991).
*10.22 Directors' Voluntary Deferral Agreement, dated
January 1, 1985, between the Bank and Joseph A.
Welna, as amended January 1, 1987, January 20,
1987 and February 10, 1989 (incorporated by
reference to Exhibit 10.22 to the Company's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1991).
*10.23 People's Savings Financial Corp. Dividend
Reinvestment Plan and Stock Purchase Plan
(incorporated by reference to Exhibit 10.23 to the
Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1992).
*10.24 People's Savings Financial Corp. Savings and
Investment Plan (incorporated by reference to
Exhibit 10.24 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31,
1993).
*10.25 Change of Control Agreement, dated as of January
17, 1995, between the Bank and Daniel Hurley
(incorporated by reference to Exhibit 10.25 to the
Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994).
*10.26 Change of Control Agreement, dated as of January
17, 1995, between the Bank and Earl Young
(incorporated by reference to Exhibit 10.26 to the
Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994).
*10.27 The People's Savings Financial Corp. 1995 Stock
Option and Incentive Plan for Outside Directors.
Incentive Plan for Outside Directors (incorporated
by reference to Exhibit A to the Company's Proxy
Statement for the 1995 Annual meeting of
Stockholders).
*10.28 The People's Savings Financial Corp. 1995 Stock
Option and Incentive Plan for Outside Directors.
Incentive Plan (for Employees), (incorporated by
reference to Exhibit B to the Company's Proxy
Statement for the 1995 Annual meeting of
Stockholders).
11 Statement Concerning Computation of Per Share
Earnings
13 1995 Annual Report to Shareholders
21 Subsidiaries of the Registrant
24 Consent of Independent Auditors
25 Power of Attorney
- ------
* Management contracts or compensatory plans, contracts or arrangements.
3