EXHIBIT 99.2
FEDERAL DEPOSIT INSURANCE CORPORATION
WASHINGTON, DC 20429
FORM F-4
QUARTERLY REPORT
UNDER SECTION 13 OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR
THE QUARTER ENDED MARCH 31, 1997
FDIC Insurance Certificate No. 17944
NORWALK SAVINGS SOCIETY
-----------------------
(Exact name of bank as specified in its charter)
48 WALL STREET, NORWALK, CT 06852
---------------------------------
(Address of principal executive offices)
CONNECTICUT
-----------
State or other jurisdiction of incorporation or organization)
06-0475300
----------
(I.R.S. Employer Identification Number)
(203) 838-4545
--------------
(Bank's telephone number, including area code)
Indicate by check mark whether the Bank (1) has filed all reports required to be
filed by Section 13 of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the Bank was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
day.
Yes X No___
---
Indicate the number of shares outstanding of each of the Bank's classes of
common stock, as of the latest practicable date:
2,442,129 shares of Common Stock, par value
$.01 per shares as may 12, 1997
TABLE OF CONTENTS
I CONSOLIDATED FINANCIAL STATEMENTS Page
A. Statement of Financial Condition 1
B. Statement of Operations 2
C. Statement of Shareholders' Equity 3
D. Statement of Cash Flows 4
E. Notes to Financial Statements 6
II. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 10
III. SIGNATURES 28
Exhibit A 29
NORWALK SAVINGS SOCIETY
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
March 31, December 31,
1997 1997
---------- ------------
(Unaudited)
(in thousands)
ASSETS
Cash and due from banks $ 10,435 $ 14,978
Interest bearing deposits in other banks 5,265 2,373
Federal funds sold 500 1,500
Securities
Trading, at fair value 1,463 3,292
Available for sale, at fair value 154,698 136,809
Loans receivable, net of allowance for credit losses of $7,344 as of
March 31, 1997 & 7,334 as of December 31, 1996, respectively) 424,246 410,766
Accrued interest receivable 5,532 4,034
Investment in Federal Home Loan Bank Stock, at cost 6,184 6,184
Other real estate owned, net 631 858
Bank premises and equipment, net 3,333 3,151
Deferred income tax asset, net 2,819 2,574
Goodwill 1,769 1,754
Other assets 492 1,315
---------- ----------
Total assets $617,367 $589,589
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Non interest bearing $ 24,343 $ 22,479
Savings, money market and NOW accounts 158,818 156,684
Time accounts 238,539 244,127
---------- ----------
Total deposits 421,700 423,290
Borrowed funds 144,377 114,043
Accrued expenses and other liabilities 1,558 2,903
---------- ----------
Total liabilities 567,635 540,236
SHAREHOLDERS' EQUITY
Preferred stock ($.01 par value, 500,000 shares
authorized, none outstanding) -- --
Common stock ($.01 par value, 7,000,000 shares
authorized, 2,442,129 issues; outstanding 2,403,638
as of March 31, and 2,397,312 as of December 31) 24 24
Additional paid-in capital 23,609 23,545
Retained earnings 27,261 26,339
Net unrealized (loss) on securities available for sale (799) (106)
---------- ----------
50,095 49,802
Less: unearned ESOP shares 363 449
---------- ----------
Total shareholders' equity 49,732 49,353
---------- ----------
Total liabilities and shareholders' equity $617,367 $589,589
========== ==========
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1
NORWALK SAVINGS SOCIETY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three months ended
($ in thousands, except shares and per share data) March 31,
-------------------------
1997 1996
INTEREST AND DIVIDEND INCOME
Loans, including fees $7,963 $6,860
Investment securities and other
Taxable interest 2,574 2,124
Dividends 308 91
--------- ---------
Total 10,845 9,075
--------- ---------
INTEREST EXPENSE
Deposits 4,215 3,785
Borrowed funds 1,970 1,191
--------- ---------
Total 6,185 4,976
--------- ---------
NET INTEREST INCOME 4,660 4,099
Provision for credit losses - 400
--------- ---------
NET INTEREST INCOME AFTER PROVISION
FOR CREDIT LOSSES 4,660 3,699
--------- ---------
NON-INTEREST INCOME
Customer service fees 201 170
Loan servicing fees 116 92
Trust department fees 141 130
Net gain on sale of securities 25 125
Credit card fees 284 -
Other 83 104
--------- ---------
Total non-interest income 860 621
--------- ---------
NON-INTEREST EXPENSE
Compensation and benefits 1,872 1,754
Occupancy, equipment & data processing 672 554
Regulatory assessments 15 4
OREO holding costs and expenses 84 128
Sale of OREO, (gains) losses, net (180) 138
Credit card expense 247 -
Goodwill amortization 81 -
Other 994 818
--------- ---------
Total non-interest expense 3,785 3,396
--------- ---------
EARNINGS BEFORE INCOME TAXES 1,735 924
Current tax provision 691 5
--------- ---------
NET EARNINGS $1,044 $ 919
========= =========
EARNINGS PER SHARE $ 0.43 $ 0.39
========= =========
Weighted average shares outstanding (excluding
shares committed to ESOP) 2,400,436 2,368,040
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2
NORWALK SAVINGS SOCIETY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
Unrealized
Additional Gains Unearned Total
Common Paid-in Retained (Losses) on ESOP Shareholders'
Shares Stock Capital Earnings Securities Shares Equity
------------ -------- ------------- ------------ ---------------- -------------------------
($ in thousands)
Balance - December 31, 1994 2,329,670 $24 $22,838 $16,225 ($603) ($971) $37,513
Net Earnings 4,778 4,778
ESOP shares committed for
release 26,556 168 266 434
Stock options exercised 8,494 127 127
Adjustment of unrealized
gains, net 743 743
--------- -------- ------------ ---------- ----------- --------- ---------
Balance - December 31, 1995 2,364,720 $24 $23,133 $21,003 $140 ($705) $43,595
--------- -------- ------------ ---------- ----------- --------- ---------
Net Earnings 5,702 5,702
Adjustment of unrealized
gains (losses), net (246) (246)
Stock options exercised 6,665 103 103
Shares distributed to Advisory
Board 230 5 5
Dividends paid (366) (366)
ESOP shares committed to be
released 25,697 304 256 560
---------- -------- ----------- ---------- ----------- --------- ---------
Balance - December 31, 1996 2,397,312 $24 $23,545 $26,339 ($106) ($449) $49,353
---------- -------- ----------- ---------- ----------- --------- ---------
Net Earnings 1,044 1,044
Adjustment of Unrealized
gains (losses), net (1,246) (1,246)
Tax effect of AFS 553 553
Dividends paid (122) (122)
ESOP shares committed to be
released 6,326 64 86 150
---------- -------- ----------- ---------- ----------- --------- ---------
Balance - March 31, 1997 2,403,638 $24 $23,809 $27,261 ($799) ($363) $49,732
=========== ======== =========== ========== =========== ========= ========
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended:
March 31
------------------------------
1997 1996
------------- -----------
($ in thousands)
Cash Flows from Operating Activities
- ------------------------------------
Net Earnings $ 1,044 $ 918
----- ---
Adjustments to Reconcile net earnings to cash
provided (used) by operating activities
- ---------------------------------------------
Provision for Credit Losses - 400
Provision for Estimated OREO Losses - -
Deferred Income Tax 234 -
Provision for ESOP Benefit Cost 45 -
Depreciation and Amortization 149 130
Goodwill Amortization 81 -
Net Amortization (Accretion) of Discounts
and Premiums on Securities 149 68
Net (Gains) Losses on Sale of Loans & Investments 74 (125)
Net (Gains) Losses on Sales of OREO (180) 138
Net Decrease in Trading Securities 1,629 -
(Increase) in Accrued Interest Receivable (348) (456)
(Increase) Decrease in Other Assets 37 (158)
Increase (Decrease) in Accrued Expense and Other
Liabilities (897) 618
--- ---
Total Adjustments 1,175 615
----- ---
Net Cash Provided By (Applied to) Operating Activities 2,219 1,533
----- -----
Cash Flows from Investing Activities
- ------------------------------------
Proceeds from:
Sales of Loans, Investments & Mortgage Backed Securities 20,485 16,649
Maturities of Investments & Mortgage Backed Securities 4,923 7,982
Sales of Other Real Estate Owned 356 1,751
Purchases of Investment & Mortgage Backed Securities (44,693) (43,610)
Net Increase in Loans (13,709) (13,556)
Additions to OREO - -
Additions to Goodwill (95) -
Additions to Bank Premises & Equipment (417) (111)
--- ---
Net Cash Provided by (Applied to) Investing Activities (33,150) (30,895)
------ ------
Cash Flows from Financing Activities
- ------------------------------------
Net (Decrease) in Deposits (1,933) (5,212)
Repayments of ESOP borrowing (61) (61)
Cash Dividends (122) -
Securities Sold under Repurchase Agreements 13,500 22,450
Repayments of Repurchase Agreements (16,600) -
Advances from FHLB of Boston 62,487 (29,750)
Repayments of Advances from FHLB of Boston (28,993) (20,643)
------ ------
Net Cash Provided by (Applied to) Financing Activities 28,278 26,284
------ ------
Increase (Decrease) in Cash and Cash Equivalents (2,652) (3,077)
Cash and Cash Equivalents - Beginning 18,851 18,628
------ ------
Cash and Cash Equivalents - Ending $ 16,199 $ 15,551
------ ------
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4
NORWALK SAVINGS SOCIETY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three months ended:
March 31,
----------------------
1997 1996
---------- ----------
($ in thousands)
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash Paid During the Period For:
Interest $ 6,161 $ 3,785
========== ==========
Income Taxes $ 691 $ 5
========== ==========
Non-Cash Investing and Financing Activities:
Transfer from Loans to OREO $ 246 $ 4
========== ==========
Loans originated in connection with sale of OREO $ 298 -
========== ==========
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5
NORWALK SAVINGS SOCIETY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1997 (unaudited) and December 31, 1996
NOTE 1 - NATURE OF BUSINESS AND REGULATIONS
- -------------------------------------------
The Norwalk Savings Society (Bank) provides a full range of banking services to
its local area customers. The Bank is subject to competition from various other
financial institutions, and is also subject to the regulations of certain
federal and state agencies and undergoes periodic examination by those
regulatory authorities.
The following summarizes the Bank's capital ratios at March 31, 1997, and
December 31, 1996:
Actual
------------
March 31, Dec 31,
Required 1997 1996
-------- ---- ----
Tier 1 risk-based capital 4.0% 14.7% 15.7%
Total risk-based capital 8.0% 15.9% 17.0%
Tier 1 leverage capital 4.0%-5.0% 8.0% 7.9%
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
- ----------------------------------------
The condensed consolidated financial statements in this report have not been
audited, with the exception of the information derived from the Consolidated
Statement of Financial Condition as of December 31, 1996, which information
should be read in conjunction with the Bank's audited financial statements and
footnotes thereto included in the Bank's Annual Report to Shareholders for the
year ended December 31, 1996.
The consolidated financial statements include the accounts of the Bank and its
wholly owned subsidiary, NSS Realty Corporation. All significant intercompany
accounts and transactions have been eliminated in consolidation. In the opinion
of management, all adjustments necessary for a fair presentation of financial
position and results of operations for the interim periods presented have been
made, and all such adjustments are of a normal recurring nature.
In preparing the consolidated financial statements, management is required to
make estimates and assumptions that affect the report amounts of assets and
liabilities as of the date of the consolidated statement of financial condition
and income and expenses for the periods presented. Actual results could differ
significantly from those estimates.
Material estimates that are particularly susceptible to significant change in
the near-term related to the determination of the allowance for credit losses
and the valuation of other real estate owned ("OREO"). In addition, various
regulatory agencies, as an integral part of their examination process,
periodically review the
6
Bank's allowances for losses. Such agencies may require the Bank to recognize
additions to the allowances based on their judgment of information available to
them at the time of their examination.
Effective January 1, 1993, the Bank adopted SFAS 109, "Accounting for Income
Taxes", without applying its provisions to prior years. There was no impact
on the Bank's consolidated statement of operations for the year ended December
31, 1993 from the cumulative effect of the change in the method of accounting
for income taxes, due primarily to the Bank's net operating loss carryforward
position.
During the years 1993 and 1994, the Bank reflected a full valuation allowance
against its net deferred tax assets due to significant net operating loss
carryovers and uncertainty over the Bank's ability to generate sufficient and
consistent future taxable income to be able to support recognition of any
portion of its net deferred tax assets.
During the first calender quarter of the year ended December 31, 1995,
management reviewed its current projections for future profitability and
estimated that a portion of the Bank's net deferred income tax assets as of
December 31, 1994 could be recognized in the amount of $1.2 million. The amount
was recognized through a partial adjustment of the valuation allowance for the
portion of the net deferred income tax asset attributable to a net operating
loss carry-forward benefit which management was of the opinion was realizable
during the year ended December 31, 1995. At December 31, 1995, management again
reviewed its current projections of future profitability and determined that
$1.2 million of net deferred income tax asset was more likely than not
realizable in the future.
During the fourth quarter of 1996, management reviewed the Bank's estimated
profitability for the year ended December 31, 1996 and, on a projected basis,
for the year ending December 31, 1997. Based on this review, management
determined that it was more likely than not that the Bank's net deferred tax
assets, including available future net operating loss benefits of approximately
$1.1 million, as of December 31, 1996 were realizable, and therefore, reversed
the existing valuation allowance against net deferred tax assets. Realization of
the Bank's net deferred tax assets is dependent, however, on various factors and
is not assured.
Effective January 1, 1994, the Bank applied the provisions of SFAS 115,
"Accounting for Certain Investments in Debt and Equity Securities". Under this
pronouncement, investment securities are classified into one of three
categories: held to maturity, available-for-sale or trading. The classification
is based upon management's intended holding period and, in the case of held-to-
maturity, the ability to hold the securities to maturity, Investments classified
as held-to-maturity are carried at amortized cost. Investments classified as
available for sale are carried at fair value with unrealized gain or loss
reported as a separate component of retained earnings, net of applicable income
tax. Trading securities are carried at fair value with unrealized gains or
losses included in earnings.
The Financial Accounting Standards Board issued a "Special Report" in November
1995. "A Guide to Implementation of SFAS 115". This guide provided additional
guidance as to the criteria for the financial statement classifications
prescribed in SFAS 115. As a result of this additional guidance, the Bank could
reassess the appropriateness of the classification of all its securities held.
In December 1995, the Bank reclassified securities Held-to-Maturity with an
aggregate amortized cost approximately $37.0 million to the classification of
Available-for-Sale at a fair value approximating $36.6 million. During the year
ended December 31, 1996, the Bank transferred securities Available-for-sale with
a carrying basis of approximately $2.2 million to the classification of Trading
and securities Held-to-Maturity with an amortized cost of approximately $30.5
million to the classification of Available-for-sale at their fair value of
approximately $30.6
7
million. The transfer of securities Held-to-maturity to the classification of
Available-for-sale was the result of management's assessment that there was no
longer a positive intent to hold these securities to maturity based on
management's revised asset/liability management strategies. The gain or loss on
investments sold is computed by the specific identification method.
Effective January 1, 1995, the Bank implemented the provisions of SFAS Nos.
114/118, "Accounting by Creditors for Impairment of a Loan" (SFAS 114/118). The
basic provisions of these statements eliminate the financial statement
classification of in-substance foreclosed assets as OREO, resulting in the
classification of such assets and related specific allowance for credit losses
as Loans receivable. Additionally, these statements address the accounting for
loans considered impaired and the recognition of impairment. A loan is
considered impaired when, in management's judgment, current information and
events indicate it is probable that collection of all amounts due according to
the contractual terms of the loan agreement will not be met. The provisions of
these statements are prospective, with any adjustments resulting from initial
application reflected as an adjustment to the provision for credit losses.
Insubstance foreclosed assets prior to January 1, 1995 have been reclassified to
Loans receivable for comparability purposes. The effect on the accompanying
Consolidated Financial Statements of adopting SFAS 114/118 was not significant.
Effective January 1, 1996, the Bank has implemented the provisions of SFAS Nos.
121 and 122, which implementation had no significant effect on the Bank's
financial condition or results of operations at and for the three month periods
ended March 31, 1997 and 1996, or at and for the year ended December 31, 1996.
NOTE 3 - SUPPLEMENTAL DISCLOSURES
- ---------------------------------
Additional information and supporting disclosures as to investment securities,
loans, other real estate owned and related allowances for losses are included in
Management's Discussion and Analysis.
NOTE 4 - OTHER SIGNIFICANT MATTERS
- ----------------------------------
On February 23, 1994, the Board of Directors unanimously adopted and approved
the Bank's plan of Conversion (Conversion) to convert from a Connecticut-
chartered mutual to a Connecticut-chartered capital stock saving bank through
amendment of its mutual charter and the sale of common stock to the Bank's
depositors and others.
The Bank commenced its subscription offering on May 4, 1994, and concluded the
offering on June 9, 1994. A total of 2,426,740 shares were issued on June 15,
1994, the effective issuance date of the securities.
As part of the Conversion, the Board of Directors adopted a tax-qualified
employee stock ownership plan (ESOP). The ESOP Trustee borrowed the funds to
purchase Conversion stock in an amount equal to 5% of the total number of shares
issued in the Conversion. The Trustee for the ESOP acquired 121,337 shares in
connection with the stock conversion through the subscription offering. The
shares were purchased with a loan obtained from a third party, guaranteed by the
Bank, reflected as "Other Borrowings" on the Consolidated Statement of Financial
Condition.
8
In addition, the Board adopted stock option plans for the benefit of the
employees and directors of the Bank (Plans). The stock option plans became
effective as a result of the approval by the Bank's stockholders on April 25,
1995. The number of shares reserved for the plans was 169,872 for the Employee
Plan and 72,802 for the Director Plan as of March 31, 1996. At the April 1996
Annual Meeting shareholders approved an amendment of the 1994 Employee Stock
Option Plan to increase the number of shares of common stock subject to the Plan
by 100,000 from 169,872 to 269,872 shares. In addition, the shareholders
approved an amendment to the 1994 Director Stock Option Plan to (i) increase the
number of option shares granted to each director per year from 1,000 shares to
2,000 shares (effective immediately) following the 1996 Annual Meeting and (ii)
increase the total number of shares subject to the Plan by 50,000 from 72,802 to
122,802 shares.
At the time of Conversion, the Bank established a liquidation account in an
amount equal to its Retained Earnings as of that date. The liquidation account
will be maintained for a period of ten years from the date of the Conversion for
the benefit of eligible account holders who continue to maintain their accounts
in the Bank after Conversion. In the event of a complete liquidation (and only
in such an unlikely event), each eligible account holder would be entitled to
receive a liquidation equal to the current amount in their subaccount balance.
The Bank may not declare or pay dividends on its stock if such declaration and
payment would violate statutory or regulatory requirements.
In the event transactions resulting from the Conversion or from future events
unrelated to the Conversion occur, causing an "ownership change", as defined by
the Internal Revenue Code, the Bank's ability to realize all of the deferred tax
assets attributable to net operating loss carryforwards may be limited.
On April 24, 1997, the NSS Board of Directors declared a cash dividend of ten
cents ($.10) per share to common shareholders of record May 14, 1997 and payable
on May 29, 1997.
NOTE 5 - NEW BRANCH
- -------------------
THe Bank has recently announced plans to open a full service branch office at
1089 Post Road in Darien, Connecticut. The branch is scheduled to open towards
the end of May, 1997.
NOTE 6 - PROPOSED HOLDING COMPANY
- ---------------------------------
In January 1997 the Bank's Board of Directors authorized management to pursue
the formation of a holding company. Stockholders will be voting on this matter
at the Annual Meeting on May 20, 1997.
9
MANAGEMENT'S DISCUSSION AND ANALYSIS
OVERVIEW
--------
Norwalk Savings Society reported first quarter 1997 net earnings of $1.0 million
or $0.43 per share.
The Bank declared a quarterly dividend of ten cents ($.10) per share, payable to
shareholders of record as of the close of business on May 14, 1997.
The tier one leverage capital ratio was 8.0% as of March 31, 1997, continuing to
qualify the Bank as "well capitalized" according to standards established by the
Federal Deposit Insurance Corporation ("FDIC").
Asset quality continued on a steady course of improvement as of the end of the
first quarter. Non-performing assets, comprised of non-accrual and restructured
loans (collectively "non-performing loans"), and other real estate owned, were
$12.5 million or 2.0% of total assets.
RESULTS OF OPERATIONS
---------------------
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED
-----------------------------------------------------------
MARCH 31, 1997 AND 1996
-----------------------
OPERATIONS
- ----------
The net earnings for the three months ended March 31, 1997 were $1.0 million or
$0.43 per share compared to $919,000 or $0.39 per share for the comparable
period in 1996, a 13% increase in net earnings.
NET INTEREST INCOME
- -------------------
Net interest income, which is the primary source of income for the Bank, is the
difference between interest earned on loans and investments and the interest
paid on deposits and borrowings.
Net interest income was $4.7 million for the three months ended March 31, 1997
compared to $4.1 million for the same period last year. The increase in net
interest income of $0.6 million for the three months ended March 31, 1997
compared to the three months ended March 31, 1996 resulted from a $1.8 million
increase in interest income offset by a $1.2 million increase in interest
expense.
The improvement in interest income is primarily a result of the increased level
of earning assets, particularly in the loan portfolio. To a much lesser extent,
the benefit was also derived from higher interest rates. Average interest-
earning assets improved to $587.8 million for the three months ended March 31,
1997, compared to
10
$499.7 million for the same period in 1996. The continued growth of interest-
earning assets was attributable primarily to loan growth funded by deposit
growth and increased levels of Federal Home Loan Bank and other borrowings. In
addition to net loan growth was the increase in marketable equity securities.
Purchases of preferred stocks with a callable feature which converts the initial
fixed rate to an adjustable rate after a period of five to seven years on
average; and in addition, these securities carry a dividend equalization feature
which will adjust the dividend rate higher to equalize the effect of any
reduction in the dividend received deduction in the present tax law. The average
interest rate on earning assets for the three months ended March 31, 1997 was
7.38% compared to 7.26% for the same period a year ago.
Interest expense increased to $6.2 million for the three months ended March 31,
1997 from $5.0 million for the comparable period last year. The $1.2 million
increase was primarily a result of the higher balances of interest bearing
liabilities. The Bank's cost of funds increased 30 basis points to the first
quarter's level of 4.66% from 4.36% last year. The cost of funds associated with
deposits increased while the cost of funds associated with borrowings showed a
modest decline. The "market" for borrowings or wholesale funding is extremely
competitive and the reduced rate is reflective of that environment even though
maturities have been extended.
Overall, the Bank's net interest margin declined modestly to 3.17% for the three
months ended March 31, 1997 compared to 3.28% for the comparable period in 1996.
Table 1 summarizes the Bank's net interest income and net yield on average
interest-earning assets. Non-accruing loans for the purpose of this analysis are
included in average loans outstanding during the periods indicated. For the
purpose of this computation, daily average amounts were used to compute average
balances.
11
Table 1 Three Months Ended March 31, 1997
Compared to Three Months Ended March 31, 1996
($ thousands) 1997 1996
- ---------------------------------------------------------------------------------- -----------------------------------------------
Average Average Average Average
balance Interest rate balance Interest rate
- ---------------------------------------------------------------------------------- -----------------------------------------------
Interest-earning assets
Loans receivable $421,715 $ 7,963 7.55 % $ 363,232 $ 6,660 7.55 %
Investment securities 39,865 729 7.31 26,417 445 6.74
Mortgage backed securities 95,875 1,736 7.24 96,643 1,633 6.76
Short term investments 11,975 196 6.55 7,143 104 5.82
Marketable equity investments 18,407 221 4.80 6,242 33 2.11
---------- ------- ---------- -------
Total interest-earning assets 587,837 10,845 7.38 % 499,677 9,075 7.26 %
---------- ------- ----- ---------- ------- ----
Non-interest-earning assets
Cash and cash equivalents 9,288 12,590
Accrued income receivable 3,874 3,574
Premises and equipment 3,208 3,288
Other 9,017 2,699
Less: Allowance for credit losses (7,371) (4,347)
---------- ----------
Total non-interest-earning assets 18,018 17,804
---------- ----------
Total assets $605,853 $517,481
========== ==========
Interest-bearing liabilities
Deposits
Regular savings & NOW $ 57,487 $ 221 1.54 % $ 54,759 $ 212 1.55 %
Super savings & money market 93,808 729 3.11 112,812 821 2.91
Time 240,587 3,242 5.39 205,446 2,732 5.32
---------- ------- ---------- -------
Total deposits 391,882 4,192 4.28 373,017 3,765 4.04
Borrowings 135,918 1,970 5.60 80,826 1,191 5.89
Mortgage escrow deposits 3,282 23 2.80 3,024 20 2.65
---------- ------- ---------- -------
Total interest-bearing liabilities 531,082 6,185 4.66 % 456,867 4,978 4.36 %
---------- ------- ----- ---------- ------- ----
Non-interest-bearing liabilities
Non-interest-bearing deposits 21,562 16,616
Other liabilities 2,329 578
---------- ----------
Total non-interest-bearing liabilities 23,891 17,194
---------- ----------
Shareholder's equity 50,880 43,420
---------- ----------
Total liabilities & shareholders' equity $605,853 $517,481
========== ==========
Net interest-earning assets
and interest rate spread $ 56,755 2.72 % $ 42,810 2.90 %
========== ===== ========= ====
Net interest income & net yield on
average interest-earning assets $ 4,660 3.17 % $ 4,099 3.28 %
======= ===== ======= ====
RATE/VOLUME ANALYSIS
- --------------------
Table 2 presents the changes in interest and dividend income and the changes in
interest expense attributable to changes in interest rates or changes in volume
of interest-bearing assets and interest-bearing liabilities during the periods
indicated. Changes which are attributable to both rate and volume have been
allocated proportionately.
13
Table 2 Three Months Ended March 31, 1997
Compared to Three Months Ended
March 31, 1996
RATE VOLUME NET
(in thousands) CHANGE
INTEREST INCOME:
Loans receivable $75 $1,028 $1,103
Mortgage-backed securities 116 (13) 103
Short term investments 14 78 92
Investment securities 115 357 472
--- --- ---
Total 320 1,450 1,770
--- ----- -----
INTEREST EXPENSE:
Deposits
Savings & NOW 1 (10) (9)
Super savings & money market (53) 145 92
Time (37) (473) (510)
--- ---- ----
Total deposits (89) (338) (427)
Borrowings 18 (797) (779)
Mortgage escrow deposits (1) (2) (3)
-- -- --
TOTAL (72) (1,137) (1,209)
--- ------ ------
NET INTEREST INCOME $248 $313 $561
PROVISION FOR CREDIT LOSSES
- ---------------------------
There was no provision for credit losses for the three months ended March 31,
1997 compared to $400,000 for the comparable period in 1996. The balance in the
allowance for credit losses account as of March 31, 1997 was $7.3 million
providing 61.7% coverage of non-performing loans and 1.7% of total loans. In
comparison, the allowance for credit losses account balance at March 31, 1996
was $4.5 million, providing a coverage ratio of 33.7% of non-performing loans
and 1.2% of total loans. Although there was no provision for credit losses for
the three months ended March 31, 1997, it is management's opinion that the
allowance for credit losses is adequate based upon its review of the asset mix,
the level of delinquencies, reduced levels of chargeoff, significant levels of
recoveries, and the coverage of nonperforming loans.
NON-INTEREST INCOME
- -------------------
Non-Interest income consists of service charges and fees, fees derived from
servicing of loans, net realized gains on sale of securities, as well as fees
derived from the Bank's Trust Department, and, since the acquisition of
Fairfield First Bank and Trust in July 1996, credit card fees.
Non-Interest income for the three months ended March 31, 1997 was $860,000,
compared to $621,000 for the comparable period of 1996. Increases to the "core"
elements of non-interest income such as the fees from deposit accounts, Trust
Department relationships, and the servicing of loans were up a total of $66,000
or 16.8% in the current quarter, compared to a year ago as the Bank continues to
concentrate on the generation of fee income. Fees from credit card services,
which primarily derived from the merchant credit card business, are new since
July of 1996 and have continually increased since the Bank acquired the business
and introduced this new service to existing customers.
NON-INTEREST EXPENSE
- --------------------
Non-Interest expense is comprised of general and administrative expenses
incurred in managing the business of the Bank and costs associated with managing
and selling OREO properties.
15
The following table indicates the elements of non-interest expense including
OREO related expense which is directly related to the level of non-performing
assets.
NON-INTEREST EXPENSE Three months ended;
- -------------------- -------------------
March 31,
1997 1996
---- ----
(in thousands)
Compensation $1,351 $1,333
Employee benefits 521 421
Occupancy, Equipment & Data Processing 672 554
Regulatory assessments 15 4
Marketing 106 124
Goodwill amortization 81 --
Legal & professional 205 144
Office supplies 137 180
Insurance 30 67
Credit card expenses 247 --
Other 516 303
------ ------
Total operating expenses 3,881 3,130
------ ------
Net OREO holding costs & expenses 84 128
Sale of OREO, (gains) losses, net (180) 138
------ ------
Total OREO related expense (96) 266
------ ------
Total non-interest expenses $3,785 $3,396
------ ------
Non-interest expenses amounted to $3.8 million compared to $3.4 million for
the three months ended March 31, 1997 and 1996, respectively. The increase of
$389,000 or 11.5% is a result of the combination of increased expenses directly
associated with higher operating costs in the data processing and credit card
functions and partially offset by holding the line on "back office" expenses.
Non-interest expense for the three months ended March 31, 1997 including $81,000
from the amortization of goodwill associated with the acquisition of Fairfield
First Bank & Trust Company in July, 1996. Total OREO related costs declined
substantially as a result of the lower balance and number of properties in the
OREO portfolio. Holding costs and expenses were down 34% from the prior year and
gains of $180,000 compared to a loss of $138,000 on the disposition of OREO
property during the first three months of 1997 and 1996, respectively.
16
PROVISION FOR INCOME TAXES
- --------------------------
The current provision for income taxes during the three months ended March 31,
1997 represents estimated taxes owed based on taxable earnings subject to
taxation at a combined state and federal rate of approximately 40%. The
provision for income taxes for the three months ended March 31, 1996 represented
estimated minimum state income tax requirements as both federal and state tax
liabilities were offset by loss carryforwards.
As of December 31, 1996, the Bank recognized all of its available net operating
loss carryforwards.
17
FINANCIAL CONDITION
-------------------
GENERAL
- -------
Total assets were $617.4 million as of March 31, 1997 compared to $589.6 million
as of December 31, 1996, representing an increase of $27.8 million. Total
loans, net of allowance for loan losses, were $424.2 million, an increase of
$13.4 million from the $410.8 million as of December 31, 1996. Total deposits
were $421.7 million compared to $423.3 million, a decrease of $1.6 million from
December 31, 1996. Shareholders' equity as of March 31, 1997 was $49.7 million
compared to $49.4 million at December 31, 1996. The tier one leverage capital
ratio was 8.0% as of March 31, 1997 and 7.9% at December 31, 1996.
INVESTMENTS SECURITIES
- ----------------------
Total securities amounted to $156.2 million and $140.1 million as of March 31,
1997 and December 31, 1996, respectively. The $16.1 million increase represented
the net effect of sales of lower yielding securities, monthly amortization (pay-
downs) of the mortgage backed securities portfolio and purchases of $44.7
million of various investments, primarily callable preferred stocks that have
dividend received deduction protection.
The Bank continued with its investment philosophy of purchasing mortgage backed
securities as a supplement to the mortgage lending program.
In total, security gains for the first three months of 1997 were $25,000
compared to $125,000 for the comparable period in 1996.
The following table presents a summary of the investments and other securities
portfolios as of March 31, 1997 and December 31, 1996, fair values and
unrealized gains and losses as of those dates.
18
INVESTMENT & OTHER SECURITIES
MARCH 31,1997
-------------------------------------------------------
Amortized Unrealized Holding Fair
Cost Gains Losses Value
------------- --------- ---------- ----------
Available for sale
-------------------
U.S. Government & Federal
Agency Obligations $38,432 $25 $777 $37,680
Mortgage Backed Securities 85,505 313 710 86,108
Equity Securities 29,113 93 296 28,910
------ -- --- ------
Total Available for Sale $156,050 $431 $1,783 $154,698
Trading
-------
Equity Securities $1,492 $349 $378 $1,463
December 31, 1996
-------------------------------------------------
Amortized Unrealized Holding Fair
Cost Gains Losses Value
---------- ------------ --------- --------
Available for Sale
------------------
U.S. Government & Federal
Agency Obligations $ 42,436 $145 $461 $ 42,120
Mortgage Backed Securities 92,443 382 372 92,453
Equity Securities 2,110 138 12 2,236
------- --- --- -------
Total Available for Sale $136,989 $665 $845 $136,809
Trading
-------
Equity Securities $ 3,353 $ 48 $107 $ 3,292
19
LOANS
- -----
Total loans, before reductions for deferred credits, fees and the allowance for
credit losses amounted to $432.3 million, representing a $13.5 million or 3.2%
increase over the December 31, 1996 level of $418.8 million. Demand for new
residential mortgage loans continued at a good pace for the first three months
of the year. The Bank continues to focus on residential loans with emphasis on
adjustable rate products as its primary lending vehicle. As indicated by the
following table, more than 80% of NSS's loan portfolio is in first mortgage
residential loans, with 62.3% of the portfolio in adjustable rate first mortgage
loans.
There were no significant sales or securitizations during the first three months
of 1997.
20
Table 4
LOAN PORTFOLIO
$ thousands
March 31, 1997 December 31, 1996
-------------- -----------------
Real Estate Loans
- -----------------
1 to 4 family adjustable rate $269,221 62.3% $257,459 61.5%
1 to 4 family fixed rate 77,550 17.9% 77,160 18.4%
Multi-family 7,034 1.6% 7,450 1.8%
Commercial 48,502 11.2% 46,272 11.0%
Home equity lines of credit 7,270 1.7% 7,127 1.7%
Home improvement &
second mortgages 2,556 0.6% 2,568 0.6%
Land 823 0.2% 828 0.2%
Construction 1,553 0.4% 1,227 0.3%
----- ---- ----- ----
Total Real Estate Loans 414,509 95.9% 400,091 95.5%
------- ----- ------- -----
Commercial Loans 7,987 1.8% 8,425 2.0%
- ---------------- ----- ---- ----- ----
Consumer Loans
- --------------
Passbook 1,577 0.4% 1,510 0.4%
Automobile loans 2,485 0.6% 2,619 0.6%
Automobile leases 3,061 0.7% 3,149 0.8%
Credit cards 936 0.2% 991 0.2%
All other 1,743 0.4% 2,033 0.5%
----- ---- ----- ----
Total Consumer Loans 9,802 2.3% 10,302 2.5%
----- ---- ------ ----
Total Loans, gross 432,298 100% 418,818 100%
Deferred fees & credits (708) (718)
--- ---
431,590 418,100
Allowance for Credit Losses (7,344) (7,334)
------- -------
Total Loans, net $424,246 $410,766
-------- --------
21
NON-PERFORMING ASSETS/ASSET QUALITY
- -----------------------------------
The Bank's level of non-performing assets stood at $12.5 million or 2.0% of
assets as of March 31, 1997 compared to $11.3 million or 1.9% of assets as of
December 31, 1996. The $1.2 million increase in non-performing assets was
primarily attributable to 7 loans secured by one- to four-family residential
real estate slipping into the non accrual category. Management has reviewed the
present status of the loans and no relationship or trend is evident.
Sales of 3 OREO properties amounted to a reduction of $474,000 in the carrying
value of OREO during the first three months of 1997.
There were no troubled debt restructures included in non-performing loans as of
March 31, 1997 or December 31, 1996.
The allowance for credit losses amounted to $7.3 million at March 31, 1997,
representing coverage of 61.7% of non-performing loans compared to $7.3 million
as of December 31, 1996, representing coverage of 70.2% of non-performing loans.
Through its credit rating system, the Bank has identified $8.7 million of
watchlist loans at March 31, 1997 compared to $8.5 million at December 31, 1996.
Details of the Bank's asset quality are shown in the analysis provided by the
table on the following page.
22
Table 5
ASSET QUALITY
AT DECEMBER 31,
--------- --------- -----------------------------------
March 31, March 31, 1996 1995 1994
1997 1996
Non-performing assets
- ---------------------
Non-accrual loans $11,910 $13,175 $10,441 $12,598 $9,489
Restructured loans - 138 - 472 487
------- ------- ------- ------- -------
Total non-performing loans 11,910 13,313 10,441 13,070 9,976
------- ------- ------- ------- -------
Foreclosed assets 631 2,382 858 4,267 11,622
Allowance for estimated OREO losses - - - - (802)
------- ------- ------- ------- -------
Total OREO 631 2,382 858 4,267 10,820
------- ------- ------- ------- -------
Total non-performing assets $12,541 $15,695 $11,299 $17,337 $20,795
======= ======= ======= ======= =======
Allowance for credit losses
- ---------------------------
Balance at beginning of period $7,334 $4,170 $4,170 $4,827 $2,532
Provision for credit losses - 400 4,415 1,005 3,790
Addition to the reserve through goodwill - - 1,000 - -
Charge-offs (346) (97) (2,488) (1,799) (1,589)
Recoveries 358 9 237 137 94
--- - --- --- --
Net Charge-offs 10 (88) (2,251) (1,662) (1,495)
-- --- ------ ------ ------
Balance at end of period $7,344 $4,482 $7,334 $4,170 $4,827
Allowance for estimated OREO losses
- -----------------------------------
Balance at beginning of period $0 $0 $0 $802 $194
Provision for estimated OREO losses - - $459 460 2,894
Charge-offs - - ($459) (1,262) (2,288)
----- ------ ------
Balance at end of period $0 $0 $0 $0 $802
Loans, receivable, net
End of period 424,246 373,944 410,766 355,796 284,885
Average 421,715 367,579 403,207 313,072 265,581
Assets, end of period 617,367 541,702 589,589 515,267 464,901
Ratios
Allowance for credit losses to total loans 1.73% 1.20% 1.79% 1.17% 1.69%
Net charge-offs to average loans - 0.02% 0.56% 0.53% 0.56%
Non-performing loans to total loans 2.81% 3.56% 2.54% 3.67% 3.50%
Non-performing assets to total assets 2.03% 2.90% 1.92% 3.36% 4.47%
Allowance for credit losses to
non-performing loans 61.66% 33.67% 70.24% 31.91% 46.39%
DEPOSITS
- --------
Total deposits at March 31, 1997 were $421.7 million compared to $423.3 million
as of December 31, 1996 representing a decrease of $1.6 million or less than
one-half of one percent. In terms of deposit mix, non-interest bearing accounts
as well as savings and money market deposit gains partially offset the decline
in time accounts. The Bank continues to focus on the total business deposit
relationship. The Bank's goal is to attract small business customers and capture
the majority of the business banking relationships through its commercial
lending function. The Bank continues to aggressively seek time deposits and all
other types of consumer deposits, but the best product to stimulate the Bank's
net interest margin is the non-interest bearing checking account. The Bank does
not solicit nor does it accept brokered deposits.
The following table presents a summary of deposits as of March 31, 1997 and
December 31, 1996.
24
Table 6
DEPOSITS
March 31, 1997 December 31, 1996
($ in thousands)
Demand deposits $ 24,434 5.8% $ 22,479 5.3%
Savings
Regular savings 27,544 6.5% 28,096 6.6%
Super savings 47,035 11.2% 45,404 10.7%
NOW 31,546 7.5% 30,262 7.2%
Money market 49,525 11.7% 47,957 11.3%
Escrow deposits 3,077 0.7% 4,965 1.2%
Certificates
Certificate accounts 197,710 46.9% 197,204 46.6%
Money market
certificates 40,829 9.7% 46,923 11.1%
-------- ----- -------- -----
Total Deposits $421,700 100.0% $423,290 100.0%
-------- ----- -------- -----
25
FEDERAL HOME LOAN BANK OF BOSTON, ADVANCES AND OTHER BORROWINGS
- ---------------------------------------------------------------
The Bank continues to utilize the FHLB as an alternative source of funds to the
traditional deposit account relationship. As of March 31, 1997, borrowings from
the FHLB amounted to $115.7 million at a weighted average rate of 5.75% and a
weighted average maturity of 1.3 years compared to $82.2 million at a weighted
average rate of 5.78% and a weighted average maturity of 1.3 years as of
December 31, 1996. In addition to borrowing from the FHLB, the Bank utilizes the
"REPO" market from time to time. There was $28.3 million outstanding in
securities sold under agreements to repurchase as of March 31, 1997 at a
weighted average rate of 5.93% and a weighted average maturity of 1.6 years. The
comparable data as of December 31, 1996 was $31.4 million at 5.73% for
approximately one year.
SHAREHOLDERS' EQUITY
- --------------------
The Bank's Shareholders' equity at March 31, 1997 was $49.7 million compared to
$49.4 million as of December 31, 1996. The Tier 1 leverage capital ratios were
8.0% and 7.9% at March 31, 1997 and December 31, 1996, respectively.
The following table indicates required and actual levels of regulatory capital
as of March 31, 1997 and December 31, 1996.
Required Actual
-------- ------
Mar. 31, Dec. 31,
1997 1996
------- -------
Tier 1 risk-based capital.................................. 4.0% 14.7% 15.7%
Total risk-based capital................................... 8.0% 15.9% 17.0%
Tier 1 leverage capital.................................... 4.0% - 5.0% 8.0% 7.9%
ASSET AND LIABILITY MANAGEMENT
- ------------------------------
In accordance with the Asset and Liability Management policy of Norwalk Savings
Society, senior management postures the Bank towards an acceptable level of
interest rate risk in turn producing a stable net interest income in ever
changing interest rate environments. On a continual basis, at its monthly asset
and liability committee meeting and more frequently, if necessary, the level of
interest-earning assets is monitored and measured in relation to
interest-bearing liabilities, utilizing the "gap" schedule (Exhibit A) in
conjunction with other supporting documents and systems providing relevant
information. Certain assumptions are made during this process, and the
applicable assumptions to the gap schedule are indicated at the bottom of the
page at Exhibit A. These assumptions may or may not be indicative of future
withdrawals of deposits or loan repayments.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Liquidity is the ability of the Bank to meet its cash flow requirements arising
from fluctuations in loans, securities, deposits, and other borrowings. At March
31, 1997, the Bank's primary liquidity consisting of cash,
26
cash equivalents and marketable securities (with maturities of one year or
less) was $44.7 million or 7.2% of total assets, compared to $30.6 million or
5.2% of total assets at December 31, 1996.
The Bank's primary source of funds is deposits and other borrowings, primarily
from the FHLB. The Bank monitors its liquidity in accordance with policy
guidelines established by the Asset and Liability Management Policy and
regulatory standards, administered by the Asset and Liability Management
Committee of the Bank.
As of March 31, 1997, the Bank had approved loan commitments outstanding for
one- to four-family loans of $4.0 million. In addition, there was $8.2 million
available unused credit under the home equity line of credit facility and $0.9
million available unused credit under the overdraft protection credit line
facility. The unadvanced portion of residential construction loans amounted to
$1.8 million as of March 31, 1997. There was $1.9 million in approved loan
commitments in the Commercial Lending Department as of March 31, 1997, $1.6
million unused lines of credit, and $0.7 million in commercial letters of
credit. There was $1.1 million available unused credit in the credit card
program.
Management believes that the Bank's liquidity position is currently adequate to
meet normal operating needs. To meet unexpected demands, the Bank maintains a
line of credit with the FHLB. At March 31, 1997, this line of credit was $10.3
million of which no amount was outstanding.
Management also believes that the Bank's capital position is currently adequate
to meet anticipated growth and does not currently have plans to raise capital
from external sources in the near future.
MARKET PRICE OF COMMON STOCK
- ----------------------------
Norwalk Savings Society trades on the (NASDAQ) National Market under the symbol
"NSSY". The following table sets forth the high/low price range of "NSSY" common
stock as reported by NASDAQ and dividends declared for the periods indicated:
1997 1996
High Low Dividend High Low Dividend
-----------------------------------------------------------
First Quarter $26.25 $22.94 $.05 $22.00 $18.75 --
Second Quarter 22.25 17.94 $.05
Third Quarter 23.13 20.88 .05
Fourth Quarter 24.88 22.75 .05
27
NORWALK SAVINGS SOCIETY
-----------------------
(Registrant)
Date: May 14, 1997 By /s/ Robert T. Judson
---------------------------------
Robert T. Judson
President & CEO
Date: May 14, 1997 By /s/ Marcus I. Braverman
---------------------------------
Marcus I. Braverman
Senior Vice President
Treasurer & CFO
28
EXHIBIT A
---------
The following table presents the interest Rate Risk Exposure ("GAP") as of
March 31, 1997.
Repricing
Repricing after one Repricing
Total Percent within and within over
amount of total one year five years five years
- -------------------------------------------------------------------------------------------------------------------
Assets
Loans (1)
Fixed rate by maturity $105,706 17.12% $5,448 $16,662 $83,596
Floating rate by maturity 314,682 50.97% 176,853 117,419 20,410
Securities
Governments & agencies 37,680 6.10% 0 0 37,680
Mortgage-backed securities (1) 88,505 14.34% 23,641 2,674 62,190
Equity securities / FHLB stock 35,297 5.72% 8,312 26,985
Short term investments 5,765 0.93% 5.765
- -------------------------------------------------------------------------------------------------------------------
Total rate sensitive assets 587,635 95.18% $220,019 $136,755 $230,861
- -------------------------------------------------------------------------------------------------------------------
Cumulative rate sensitive assets $220,019 $356,774 $567,635
- -------------------------------------------------------------------------------------------------------------------
Other assets (2) 29,732 4.82%
- -------------------------------------------------------------------------------------------------------------------
Total assets 617,367 100.00%
- -------------------------------------------------------------------------------------------------------------------
Liabilities and shareholders' equity
Deposits
Savings 27,544 4.46% 27,544
Super savings 47,035 7.62% 47,035
NOW 31,546 5.11% 31,546
Money market 49,525 8.02% 49,525
Escrow 3,077 0.50% 3,077
Certificates 238,539 38.64% 184,351 54,188
- -------------------------------------------------------------------------------------------------------------------
Total deposits 397,266 64.35% 343,078 54,188
- -------------------------------------------------------------------------------------------------------------------
Borrowings 144,377 23.39% 88,246 54,703 1,428
- -------------------------------------------------------------------------------------------------------------------
Total rate sensitive liabilities 541,643 87.73% 431,324 108,891 1,428
- -------------------------------------------------------------------------------------------------------------------
Cumulative rate sensitive liabilities $431,324 $540,215 $541,643
- -------------------------------------------------------------------------------------------------------------------
Other liabilities 25,992 4.21%
Shareholders' equity 49,732 8.06%
- -------------------------------------------------------------------------------------------------------------------
Total liabilities & shareholders's equity 617,367 100.00%
- -------------------------------------------------------------------------------------------------------------------
Net position of assets (liabilities) (211,305) 27,864 229,433
- -------------------------------------------------------------------------------------------------------------------
Adjustments (3), (4) ($120,509) $64,373 $56,136
- -------------------------------------------------------------------------------------------------------------------
Adjusted Gap ($90,796) ($36,509) $173,288
- -------------------------------------------------------------------------------------------------------------------
Cumulative repricing difference (cummulative Gap) ($90,796) ($127,306) $45,992
- -------------------------------------------------------------------------------------------------------------------
Cumulative GAP to total assets -14.7% -20.62% 7.45%
- -------------------------------------------------------------------------------------------------------------------
Note:
(1) Included in the one year period are regularly scheduled monthly payments
to be received on Loans and Mortgage-backed securities.
(2) Not included above, as interest rate sensitive are $11.9 million in
non-accruing loans and $0.6 million in OREO property.
(3) 95% of savings and NOW accounts were reclassified to the over five year
period.
(4) Money market and super savings were divided 1/3, 2/3, respectively in
each of the first two periods.
29