[LOGO]
Medford Bancorp, Inc.
1999 Annual Report
[GRAPHIC: Cover Photo]
[LOGO]
Medford Bancorp, Inc.
FINANCIAL HIGHLIGHTS
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(Dollars in Thousands) 1999 1998
Total Assets $ 1,224,912 $ 1,151,188
Investment Securities 535,858 512,648
Net Loans 626,751 580,665
Deposits 911,328 871,702
Total Borrowings 215,724 170,116
Net Income 12,651 12,252
Stockholders' Equity 90,870 102,267
Shares Outstanding 8,383,252 8,709,828
Per Common Share:
Basic Earnings $ 1.51 $ 1.38
Diluted Earnings 1.44 1.31
Book Value 10.84 11.74
Cash Dividends Declared 0.51 0.50
Financial Ratios:
Return on Average Assets 1.07% 1.09%
Return on Average Equity 13.52 11.99
Stockholders' Equity to Assets 7.42 8.88
Net Interest Rate Spread 2.63 2.72
Net Yield on Average Earning Assets 3.03 3.16
Employees (at year end), Full-Time Equivalent 254 252
Shareholders of Record 1,126 1,158
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Annual Meeting
The Annual Meeting of Shareholders will be held April 24, 2000 at 9 a.m. at
Anthony's of Malden, 105 Canal Street, Malden, Massachusetts.
Corporate Information
Medford Bancorp, Inc.
Medford Bank
29 High Street
Medford, MA 02155
781.395.7700
www.medfordbank.com
Accessing Information
Additional copies of this Annual Report and Form 10-K may be obtained without
charge by writing to the Company's Shareholder Relations Department. These
reports are also available to the public on request as required by the
Securities and Exchange Commission (SEC). These statements have not been
reviewed or confirmed for accuracy or relevance by the SEC.
Featured on the cover is a collection of coins dating back to 1869, the year
Medford Bank was established. Rare coin collection courtesy of Gerard A.J.
Stodolski, Inc. Twenty dollar gold coin, dated 1869, provided by Rare Coins of
New Hampshire, Inc.
During 1999, Medford Bancorp, Inc. celebrated 130 years of community banking.
Founded in 1869, Medford Bank continues to meet the financial needs of area
families and businesses. Today we look not only to provide a range of banking
services, but to create value for customers and shareholders alike.
[PHOTO]
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DEAR SHAREHOLDERS:
I am pleased to report that we continued to increase earnings per share during
1999. During the last two years, basic earnings per share grew at a compound
average growth rate of 10%, increasing from $1.25 in 1997 to $1.51 in 1999. Our
success was achieved through sound management of capital resources, firm control
of operating expenses and focused growth in the balance sheet.
Noteworthy for 1999, we increased dividends 10% from the prior year's level of
$.40 per share to $.44 per share and declared our seventh consecutive special
dividend in December 1999. We also successfully completed a 5% stock repurchase
program, acquiring 425,796 shares. We recently announced an additional stock
repurchase program of up to 5% of outstanding shares for year 2000. This
represents our third repurchase program in as many years.
We continue to explore opportunities to enhance the franchise. We were
disappointed that the divested branches from the FleetBoston transaction were
not allocated to community banks in this area. We submitted a bid on several of
these branches which, if successful, would have expanded our branch network.
With our Tewksbury office celebrating its first anniversary and contributing to
our balance sheet growth, we have filed an application to open a new branch
office on Massachusetts Avenue in Arlington. Construction is planned for later
this year and we anticipate opening the branch by early 2001. Our strategic plan
for profitable expansion remains in the forefront as customers look more toward
community banks to fill their financial needs. We plan to identify and evaluate
potential branch sites in the coming year.
As an independent community bank, we rely heavily on the branch network for our
delivery system. The heart of community banking is the branch office and the
connection to the customer. Our voice response system, Call Center, and web site
are growing in popularity and complement the branch delivery system well.
Medford Bank has consistently earned a Five-Star rating from Bauer Financial
Reports, Inc. and Blue Ribbon status from VERIBANC, Inc. in recognition of
financial strength and performance. We are proud that our reputation as a
leading community bank is enhanced with these ratings. Moreover, our product
offerings, such as our combined checking and savings account, ComboPlus, enabled
us to effectively gather deposits. ComboPlus deposits grew by $46 million during
1999. In addition, our municipal calling program generated $15 million in
deposits for the year.
Asset generation has been given renewed emphasis. Residential lending remains a
strength of the Company. The active sales efforts of the loan originators
generated $134.5 million in residential first mortgages during 1999. A portion
of this volume, $7.18 million, was committed to low cost,
affordable housing mortgages. By hiring William Marshall as Director of
Commercial Real Estate, along with an additional lender, the commercial real
estate lending team is focused on growth. Bill's energy and expertise in
developing new business is showing early signs of success. Our commercial
lending division is also actively developing new business, specializing in
serving small to mid-size companies, with commercial and industrial and
asset-based loans.
It is my honor to welcome Deborah A. Burke-Santoro who joined the Board of
Directors in May. Ms. Burke-Santoro is the Marketing and Communications Director
for the Office of the Mayor in Malden. She has been professionally dedicated to
the betterment of Malden and its residents for more than two decades. She brings
a fresh perspective to our Board. I also congratulate George A. Bargamian who
was promoted to executive vice president in 1999.
During 1999 many employees were actively involved in the preparation of our
successful Y2K transition while simultaneously handling normal operations. I
thank each and every employee for their dedication and hard work over the past
year. It is through their collective efforts that Medford Bank retains its rich
heritage and is a leading community bank today.
Sincerely,
/s/ Arthur H. Meehan
Arthur H. Meehan
Chairman of the Board,
President and Chief Executive Officer
[The following information was depicted as bar charts in the printed material.]
Basic Earnings Per Share
1997 ....... $1.25
1998 ....... $1.38
1999 ....... $1.51
Return on Equity
1997 ....... 11.81%
1998 ....... 11.99%
1999 ....... 13.52%
Return on Assets
1997 ....... 1.05%
1998 ....... 1.09%
1999 ....... 1.07%
Regular Cash Dividends
1997 ....... $0.36
1998 ....... $0.40
1999 ....... $0.44
2.
COMMERCIAL
LENDING
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We offer a range of commercial services and are well positioned to meet the
needs of the small and medium size businesses. We concentrate on businesses with
annual sales up to $10 million, as this market can often be under-served by the
Boston-based banks. Our strength in this market resides in providing high level
service to the business owner or manager. Our lenders have extensive knowledge
of the local market and try to be very responsive in addressing customer needs.
With Commercial Real Estate, Commercial and Industrial and Asset-based loans, we
support many businesses with lines of credit, construction loans, equipment
loans, funding for expansion, and more. We are also an approved SBA lender.
Through our lending activities, we are investing in the local economy and
helping our customers build their businesses and operate more effectively.
[PHOTO]
Keith Ohmart, President, and Helen Chen, majority owner, of the successful
cookware distribution business Joyce Chen, Inc., look to Medford Bank for their
commercial banking needs. Helen Chen is the daughter of the late Joyce Chen and
she and her husband work together selling several specialty cookware brands
through the company's two divisions. The company's China Village, Italian Villa,
Mexican Fiesta and Taco Bell Kitchen originals brand cookware and accessories
are sold directly to major retailers nationwide such as Target, Wal-Mart and
other discount retailers. Through the Joyce Chen products division, the company
markets its authentic, high-end Asian cookware at fine retailers such as Macy's.
In recent years, the Joyce Chen company has enjoyed tremendous growth and
success. Kim Foster, Vice President, Asset-based Lending, has been instrumental
in helping the company manage its cash flow through accounts receivable and
inventory financing. This is just one example of how Medford Bank is a financial
partner committed to helping local businesses succeed.
[PHOTO]
Our team of commercial lenders from left to right:
Mary Ann Devlin, Vice President, Commercial Real Estate;
Laurence J. Packenham, Vice President, Commercial Real Estate;
William L. Marshall, Director, Commercial Real Estate;
Kim S. Foster, Vice President, Asset-based Lending;
Eric B. Loth, Senior Vice President, Lending Division;
Richard P. Lane, Vice President, Commercial Loan Officer;
Michael D. MacDonald, Vice President, Commercial Loan Officer.
3.
CUSTOMER
SERVICE
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With the customer as our top priority, we continually strive to provide the best
in service and product offerings. We look to build long-term relationships with
customers by meeting their financial needs throughout life. Starting with a
child's first bank account as a member of our Club For Kids to our range of
retirement services, we are there every step of the way. In addition, our
convenient banking options, such as our debit card, web site, automated
telephone banking system, and Call Center give customers choices and make
banking easier while saving time. And for those customers who prefer traditional
in-branch banking, we constantly look for ways to make improvements. With the
addition of new parking lots, our Main Office, Malden Center and South Medford
branch offices allow easier access. To help ensure that we provide a high level
of service to all customers, employees receive service quality training and we
have an outside firm monitor and rate service throughout the year. Our customer
service representatives and Call Center specialists advise customers about all
their options and help them select the best accounts and services for their
needs.
[GRPAHIC: ATM Card]
Medford Bank's MasterMoney(TM) and ATM Card, also known as a debit card, is a
convenient way for customers to make purchases with direct access to their
checking accounts. It's faster than writing a check. Our debit card enables
customers to take advantage of checking account conveniences around town or
around the world, wherever the Mastercard(R) symbol is displayed. With a 72%
activation rate, our card base continues to grow.
[PHOTO]
Tess Cunha, Call Center Officer
Our Customer Call Center routinely opens accounts, explains services and
provides other assistance for customers who prefer the convenience of a
telephone call instead of making a trip to a branch office. Call volumes into
our Call Center continue to increase as more people dial 1-888-medford for their
banking needs. Tess Cunha, a valued employee since 1987, has managed the Call
Center since it was introduced in 1997. She has been recognized for providing
excellent service and is responsible for training other Call Center specialists
to the same high standard.
4.
OFFICE
LOCATIONS
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[GRAPHIC: Office Locations Map]
Arlington
Route 60 & Mystic
Valley Parkway
781.393.6355
Belmont
4 Hill Road, Corner
of Brighton St.
781.393.6320
Burlington
258 Cambridge St.
781.272.5700
Malden
Malden Center
399 Main St.
781.393.6386
Broadway
44 Broadway
781.393.6334
Maplewood
28 Lebanon St.
781.393.6329
Oak Grove
876 Main St.
781.393.6326
West Side
443 Charles St.
781.393.6337
Medford
Main Office
29 High St.
781.395.7700
Loan Center
5 High St.
781.395.7700
Haines Square
257 Spring St.
781.393.6380
South Medford
448 Main St.
781.393.6340
Wellington
499 Riverside Ave.
781.393.6350
West Medford
501 High St.
781.393.6344
North Reading
80 Main St.
978.664.5581
Tewksbury
295 Main St.
978.851.0841
Waltham
695 Main St.
781.647.4848
Wilmington
240 Main St.
978.658.9134
[The following information was depicted as a pie chart in the printed material.]
Deposit Mix as of December 31, 1999
(in thousands)
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Term CDs 45.69%
$416,345
Demand &
Official Checks 12.29%
$112,013
Savings 34.49%
$314,353
Money Market 7.53%
$68,617
[The following information was depicted as a pie chart in the printed material.]
Loan Mix as of December 31, 1999
(in thousands)
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Residential Mortgages 73.68%
$466,740
Commercial Mortgages 17.69%
$112,050
Second Mortgages/
Equity Lines 3.18%
$20,175
Consumer Loans 0.46%
$2,912
Commercial Loans 2.86%
$18,149
Construction Mortgages 2.13%
$13,504
5.
RESIDENTIAL
LENDING
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A top mortgage provider, we originated $134.5 million in one to four family
mortgage loans in 1999. With a net gain of $44 million to the portfolio after
adjusting for amortizations, sales and prepayments, our residential loan
portfolio has grown to $466.7 million. Our experienced team of mortgage
originators was very active reaching out to home buyers. Our 1999 series of home
buying seminars, held in the spring and fall, helped many families with the
purchase of their first home and provided assistance for those ready to trade up
to their next home. The success of our pre-approval program contributes to our
overall success in closing loans. Pre-approval allows the home buyer to obtain a
mortgage commitment before finding a home and allows the option to lock in an
interest rate at application or closing, depending upon the mortgage selected.
Whether taking advantage of our pre-approval or affordable housing program, or
choosing one of our fixed or adjustable rate mortgage options, many families now
enjoy the rewards of home ownership through a Medford Bank mortgage.
[PHOTO]
Eagles Landing is an age 55 and older community with 176 residential units and a
club house in Tewksbury. Through our Commercial Real Estate division, Medford
Bank provided construction financing to the developers of this project in 1998.
The successful development also included the construction of Tewksbury Country
Club, a nine-hole golf course. In 1999, nearly all residential units were sold.
In addition, Medford Bank provided residential mortgage loans to many of the
owners.
[PHOTO]
Left to right: Anne Barry, John and Cheryl Trainor with their children.
John and Cheryl Trainor and children, John and Nicole, are longtime Medford Bank
customers. As owner of Accurate Paving, John Trainor has found Medford Bank's
commercial lending team extremely helpful in providing assistance and the
financing needed for his business. The family banking needs of the Trainors are
also expertly handled. Anne Barry, assistant vice president and mortgage
representative, meets with the Trainor family at their home. The Trainors are
contemplating home ownership and are learning how Medford Bank's pre-approval
program will be advantageous while house-hunting.
6.
Directors
Arthur H. Meehan*
Chairman of the Board, President and Chief Executive Officer Medford Bank
Edward D. Brickley
Manager of Corporate International
Accounting at Polaroid Corporation
Cambridge, MA (Retired)
David L. Burke
President and Treasurer, Boston Steel
& Manufacturing Co.
Malden, MA
Deborah A. Burke-Santoro
Marketing and Communications Director
Office of the Mayor
City of Malden
Paul J. Crowley*
President, CSC Consulting Group
Cambridge, MA (Retired)
Mary Lou Doherty
Assistant Principal, Medford School System (Retired)
Edward J. Gaffey*
President, Country Way Trust
Belmont, MA
Andrew D. Guthrie, Jr., M.D.
Physician, President of Mistick Pediatrics Associates (Retired)
Robert A. Havern, III
Attorney, Arlington, MA
Member of State Legislature
of Commonwealth of Massachusetts
Eugene R. Murray*
Underwriting Manager of the
Boston Office of Cigna
Special Risk Facility (Retired)
Francis D. Pizzella*
Attorney and President of The
Savings Bank Life Insurance
Company of Massachusetts,
President of The Savings Bank
Employees Retirement Association (Retired)
Officers of Medford Bank
Arthur H. Meehan**
Chairman, President and Chief Executive Officer
Vincent Gargano
Senior Vice President, Strategic Planning
and Risk Management
Paula M. McNabb
Vice President, CRA/Compliance Officer
Administration
William F. Rivers
Senior Vice President
David L. Korp
Senior Vice President,
Operations Officer
Joan P. Cronholm
Vice President,
Loan Operations Officer
Jane M. Griffin
Vice President,
Director of Human Resources
Charles E. Samour
Assistant Vice President,
Security Officer
Lorraine Lucia
EFT Services Officer
Joanne Teixeira
Deposit Operations Officer
Alan Collopy
Systems Officer
Finance
Phillip W. Wong**
Executive Vice President,
Chief Financial Officer
Mary E. Auterio
Vice President,
Controller
Jane E. Cybulski
Vice President,
Investment/ALCO Officer
Martin J. Heneghan
Assistant Vice President,
Senior Audit Officer
Christine Panno-West
Assistant Vice President,
Assistant Controller
Lending
Eric B. Loth
Senior Vice President
Anthony R. Visco
Senior Vice President,
Residential Lending
William L. Marshall, III
Director of Commercial
Real Estate
Donald L. Cullen
Vice President,
Collections Officer
Mary Ann Devlin
Vice President, Commercial Real Estate
Kim S. Foster
Vice President, Commercial Loan Officer
Joanne M. Franco
Vice President, Senior Credit Officer
Richard P. Lane
Vice President, Commercial Loan Officer
Laurence J. Packenham
Vice President, Commercial Real Estate
Michael D. MacDonald
Vice President, Commercial Loan Officer
Anne M. Barry
Assistant VicePresident, Mortgage Representative
Harold L. Goldsmith
Assistant Vice President, Mortgage Representative
Deborah Sousa
Assistant Vice President, Mortgage and Loan
Origination Manager
Charles M. Byron
Mortgage Loan Officer
Retail
George A. Bargamian
Executive Vice President
Anna Beaudoin
Vice President,
Retail Systems Administrator
Kenneth E. Peterson
Vice President,
Branch Administrator
Elizabeth J. Stodolski
Vice President, Marketing Director
Theresa Barile
Assistant Vice President, Pension Officer
Kathleen M. Beasley
Assistant Vice President, Regional Manager
Cheryl A. Cannon
Assistant Vice President, Regional Manager
Linda A. Iacono
Assistant Vice President, Regional Manager
Dana Mann
Assistant Vice President, Municipal Officer
Rosanna Natola
Assistant Vice President, Retail Training/Support
Andree Brulhart
Branch Officer
Teresa Cunha
Branch Officer
Judith A. Gilligan
Branch Officer
Lea Hamel
Branch Officer
Kelly A. Hannify
Branch Officer
Kathleen Pasquale
Branch Officer
Barbara Purcell
Branch Officer
Christine Santapaola
Branch Officer
Stephanie M. Tiernan
Branch Officer
*Member of Executive Committee
**Officer of Medford Bancorp, Inc.
Celebrating
a 130 year history
1869-1999
People you know.
Experience you trust.
781-395-7700
www.medfordbank.com
Shareholder Information
The Company's common stock trades on the Nasdaq Stock Market under the symbol
MDBK. The stock is listed under various abbreviations in the Wall Street Journal
and other newspapers. There were 1,126 shareholders of record as of December 31,
1999.
Quarterly Stock Performance
The following tabulation shows the range of price quotations per share as
reported by Nasdaq for the periods indicated: (Adjusted for stock split).
1999 High Low
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First Quarter $ 18.81 $ 17.00
Second Quarter $ 18.44 $ 15.25
Third Quarter $ 19.25 $ 15.00
Fourth Quarter $ 17.63 $ 15.75
Dividend Reinvestment And Stock Purchase Plan
Stockholders may obtain a detailed brochure of the plan by writing to the
Company's Shareholder Relations Department.
Transfer Agent
Contact our stock transfer agent directly for assistance regarding: change of
address; transfer of stock certificates; replacement of lost, stolen, or
destroyed certificates or dividend checks; elimination of duplicate mailing.
Boston EquiServe
P.O. Box 8200
Boston, MA 02266-8200
800.426.5523
Legal Counsel
Goodwin, Procter & Hoar
Exchange Place
Boston, MA 02109
617.570.1000
Independent Certified
Public Accountant
Wolf & Company, P.C.
One International Place
Boston, MA 02110
617.439.9700