the heart of
community banking
is the branch office
and the connection
to the customer
[Logo]
Medford Bancorp, Inc.
Annual Report
2000
build long-term
relationships
with customers
by meeting their financial needs
throughout life
financial highlights
- --------------------------------------------------------------------------------
(Dollars in Thousands) 2000 1999
Total Assets $ 1,309,690 $ 1,224,912
Investment Securities 582,964 534,713
Net Loans 668,747 626,751
Deposits 975,857 911,328
Total Borrowings 223,843 215,724
Net Income 13,769 12,651
Stockholders' Equity 104,965 90,870
Shares Outstanding 8,142,548 8,383,252
Per Common Share:
Basic Earnings $ 1.69 $ 1.51
Diluted Earnings 1.64 1.44
Book Value 12.89 10.84
Cash Dividends Declared 0.52 0.51
Financial Ratios:
Return on Average Assets 1.09% 1.07%
Return on Average Equity 15.06 13.52
Stockholders' Equity to Assets 8.01 7.42
Net Interest Rate Spread 2.49 2.63
Net Yield on Average Earning Assets 2.93 3.03
Employees (at year end), Full-Time Equivalent 256 254
Shareholders of Record 1,046 1,126
Annual Meeting
The Annual Meeting of Shareholders will be held April 30, 2001 at 10 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.
On the Cover: Branch Officer Kelly Hannify manages our new Somerville Office.
dear shareholders
Completing another year of continued strong financial performance, Medford
Bancorp, Inc. increased diluted earnings per share by 13.9% in 2000. We reported
diluted earnings per share of $1.64 in 2000, compared to diluted earnings per
share of $1.44 for the prior year. We achieved an annualized return on assets of
1.09% and an annualized return on equity of 15.06% for 2000.
Also notable, even as we completed our third stock repurchase program, increased
the regular dividend, and announced our eighth consecutive special dividend, our
capital grew to $105 million. This capital growth was achieved through earnings
retention and improvement in the valuation of the AFS investment portfolio
increasing book value per share by 19% to $12.89 at year-end.
Our branch network was focused on deposit generation throughout the year as we
gained $64.5 million in deposits in 2000. We were well positioned to capture new
business with the fallout from the merger of Fleet and BankBoston and Sovereign
Bank entering the marketplace. In particular, we experienced a significantly
higher growth rate in our suburban communities of Wilmington, North Reading and
Tewksbury. We continue to be dominant in Medford and Malden with ten locations
and a number one deposit market share of 48.26% and 41.05% respectively. Also,
our municipal banking department continued to grow with a portfolio of $40
million at year-end.
As part of our strategic plan, we actively pursue new branch opportunities that
will enhance our franchise. In January 2001, we opened our eighteenth branch
office in Somerville, Massachusetts. Somerville is an attractive market both in
proximity and demographics to our primary market area. We have served Somerville
indirectly for many years by providing deposit products, mortgages and
commercial loans to the area. The new branch office will allow us to penetrate
the consumer and commercial markets much more effectively and provide local
service to our existing customers.
As previously announced, a new full service branch, our nineteenth, opens at 430
Massachusetts Avenue in Arlington Center this June. It will be situated at the
entrance of the new Legacy Apartment complex and allow us to better serve
Arlington residents and area businesses.
Our branch network remains critical to our success as a leading community bank.
We will continue to look for new branch opportunities in locations that we
believe have high growth potential.
During 2000, we promoted a number of employees to officer level positions
rewarding them for their hard work. I congratulate William L. Marshall, III for
his promotion to executive vice president and also extend congratulations to
Laurence J. Packenham and Elizabeth J. Stodolski for their promotions to senior
vice president. Moreover, I would like to thank each employee for their efforts
and dedication throughout the year. Their collective contributions help make us
one of the leading community banks in Massachusetts.
In closing, I thank our Board of Directors for their dedication and guidance and
thank you, our shareholders, for your continued support and confidence.
Sincerely,
/s/ Arthur H. Meehan
Arthur H. Meehan
Chairman of the Board,
President and Chief Executive Officer
[The following tables were represented as bar charts in the printed material.]
return on equity
1998 11.99%
1999 13.52%
2000 15.06%
return on assets
1998 1.09%
1999 1.07%
2000 1.09%
regular cash dividends
1998 $0.40
1999 $0.44
2000 $0.48
diluted earnings per share
1996 $1.10
1997 $1.19
1998 $1.31
1999 $1.44
2000 $1.64
lasting value, the year in review
Retail Banking
Connecting with customers is at the heart of community banking. Although
alternative delivery channels are growing in popularity, the branch office
remains the single most valuable asset to us as a community bank.
In 2000, we made improvements to our branch network. We constructed our new
Somerville Office to expand our primary market area, we upgraded and added ATM
equipment at some locations for greater customer convenience and we refurbished
several customer lobby areas for a more updated appearance.
The customer experience in the branch office is also a critical element to our
overall success as a community bank. We pay strict attention to the quality of
the interaction between the employee and the customer by hiring an independent
firm to monitor and rate our service quality. Our branch employees are well
trained and consistently receive top ratings. The bank also rates highly as a
whole when compared to other financial institutions.
For many consumers, time saving conveniences are a must. Banking is just a point
and a click away for customers connected to the internet. Medford Bank Online,
our new internet banking service, is easily accessed from our web site at:
www.medfordbank.com. Using Medford Bank Online, customers can view account
activity, make transfers between accounts or even pay bills. We also enhanced
our web site with added functionality, expanded content and interactive
elements. New features enable users to open accounts, apply for loans, obtain
current stock quotes, reorder checks and more.
InfoLine, our 24-hour automated banking service, now handles tens of thousands
of calls monthly. Our Call Center at 1-888-MEDFORD, provides convenience by
allowing customers to open or service accounts or apply for loans without having
to visit a branch. We are also seeing marked growth in our ATM and debit card
base due to our acquisition of new customers. Transaction volumes have also
increased with our participation in the SUM network.
Whether it is the high level of service or convenience that brings customers to
Medford Bank, we also offer a broad range of products to meet their needs. We
license most of our platform staff to sell Savings Bank Life Insurance (SBLI)
and have ranked number one in the state for the sale of SBLI annuities for ten
consecutive years. We consistently earn Bauer Financial's Five-Star rating and
Veribanc's Blue Ribbon status in recognition of financial strength and
performance. Overall, Medford Bank is recognized as a leading community bank.
[The following table was depicted as a pie chart in the printed material.]
Deposit Mix
as of December 31, 2000
(in thousands)
Term CDs $458,974 47.03%
Savings $323,298 33.13%
Demand & Official Checks $128,228 13.14%
Money Market $65,357 6.70%
create value
for customers
and shareholders alike
a financial partner
committed to helping
local businesses
succeed
Commercial Lending
In 2000, we restructured our commercial lending group. Commercial and
industrial, asset based and commercial real estate were aligned under the
direction of our Executive Vice President William Marshall, III. With a renewed
focus on developing commercial business, much of Mr. Marshall's work during the
year has been setting the foundation for future growth.
Our Commercial Lending Division is better positioned to serve companies in the
small to mid-size business market with annual sales up to $25 million. By
concentrating on the local market only, we are able to provide a high-service
alternative to the Boston-based banks.
In today's market, businesses need a fast, responsive financial resource to stay
competitive. We pride ourselves on our personalized service, experience and our
innovative approach to financing. Our range of lending solutions helps local
businesses expand or operate more efficiently. From lines of credit to the
purchase of fixed assets, a seasoned C&I lender works closely with the business
owner to structure a financing plan that meets their needs.
By having a dedicated asset based lending group, we offer a financing
alternative for companies in need of loans between $1 and $6 million. We are
able to design a flexible program that leverages the equity in a company's
balance sheet to solve cash flow problems. Companies that are in need of ongoing
working capital lines of credit, seasonal inventory support or financing for
acquisitions, benefit with an asset based lending solution.
We maintained our high credit quality standards and added $12 million to our
commercial real estate portfolio in 2000. At year-end, the commercial real
estate portfolio totaled $124 million, excluding construction mortgages. Our
commercial real estate lenders handle all types of properties including
apartment complexes, office buildings, retail and mixed-use property, warehouse
and industrial facilities, residential subdivisions and other new construction.
The potential to generate new business through our commercial lending division
remains strong. Our commercial lenders are dedicated to helping local businesses
succeed and are very responsive to the business owner or manager. This approach,
combined with resources of a $1.3 billion bank, enables us to serve the local
market very effectively.
[The following table was depicted as a pie chart in the printed material.]
Loan Mix
as of December 31, 2000
(in thousands)
Residential Mortgages $489,106 72.39%
Commercial Mortgages $124,201 18.38%
Second Mortgages & Equity Lines $22,311 3.30%
Construction Mortgages $19,913 2.95%
Commercial Loans $17,241 2.55%
Consumer Loans $2,925 0.43%
[MAP]
Tewksbury
North Reading
Wilmington
Burlington
Medford
Malden
Arlington
Belmont
Somerville
Waltham
Boston
Residential Lending
Our Residential Lending Division is a major asset generator for the bank with
$489 million in loans comprising 72% of the total loan portfolio. During 2000,
more than $90 million in new loans were originated, the majority of which were
for new purchases.
With inventory relatively low in the real estate market, home prices reached an
all-time-high in many communities, frustrating many home shoppers. Medford Bank
was able to make home buying easier for most families. We dedicated a total of
$7.5 million to first time home buyer programs, giving the pride of home
ownership to a number of local families. Additionally, we helped other families
with our Pre-Approval Program. Our Pre-Approval Program gives home buyers
tremendous buying power and a stronger position when negotiating the purchase of
a new home. In a competitive market, Pre-Approval is an essential tool enabling
the home buyer to act fast. We also held a series of home buying seminars in
2000 for the general public. These informative sessions included expert advice
from real estate attorneys, home inspectors and other professionals.
Medford Bank is a leading lender in several communities. We hold the number two
market share position in both Medford and Malden, and rank fourth in our primary
market overall. Our entire lending area extends beyond our primary market,
throughout Eastern Massachusetts with each of our mortgage originators assigned
to key segments of this territory.
Much of the success we have experienced in residential mortgage lending is a
result of the high level of personal service that our originators provide. Our
lenders are available to meet with home buyers at the time and place most
convenient for them. This one-on-one interaction is just one of the ways we stay
in touch with the needs of our mortgage customers.
For consumers who prefer to search for a mortgage online, we have greatly
expanded the home mortgage section on our web site. In addition to current
rates, mortgage shoppers can review program options and details, calculate
mortgage payments, determine the maximum loan amount they qualify for or even
apply for their mortgage online.
By offering versatile mortgage programs, competitive interest rates,
personalized service and the convenience of online information and applications,
home buyers have many choices at Medford Bank. We are dedicated to making home
ownership possible.
Arlington
Route 60 & Mystic
Valley Parkway
781.393.6355
Arlington Center
430 Massachusetts Ave.
(opening June 2001)
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
Somerville
328 Broadway
617.666.4521
Tewksbury
295 Main St.
978.851.0841
Waltham
695 Main St.
781.647.4848
Wilmington
240 Main St.
978.658.9134
a rich heritage [Logo]
and a leading community
bank today
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
MedfordBank
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. Quercia
Vice President,
Director of Human Resources
Maria A. Leo
Assistant Vice President,
EFT Services Officer
Charles E. Samour
Assistant Vice President,
Security Officer
Joanne Teixeira
Assistant Vice President,
Deposit Operations 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
Vice President,
Senior Audit Officer
Christine Panno-West
Assistant Vice President,
Assistant Controller
Lending
William L. Marshall, III
Executive Vice President,
Commercial Lending
Eric B. Loth
Senior Vice President
Laurence J. Packenham
Senior Vice President,
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
Michael D. MacDonald
Vice President,
Commercial Loan Officer
Deborah Sousa
Vice President,
Residential Lending
Anne M. Barry
Assistant Vice President,
Mortgage Representative
Harold L. Goldsmith
Assistant Vice President,
Mortgage Representative
Charles M. Byron
Mortgage Loan Officer
Joanne M. Fitzpatrick
Mortgage Officer
Cathryn L. Kent
Credit Officer
Deborah M. Ofcharsky
Mortgage Officer
Retail
George A. Bargamian
Executive Vice President
Elizabeth J. Stodolski
Senior Vice President,
Marketing Director
Anthony R. Visco
Senior Vice President,
Branch Administrator
Theresa R. Barile
Vice President,
Pension Officer
Anna Beaudoin
Vice President,
Retail Systems Administrator
Kathleen M. Beasley
Assistant Vice President,
Regional Branch Officer
Cheryl A. Cannon
Assistant Vice President,
Retail Training and Support
Teresa Cunha
Assistant Vice President,
Call Center Officer
Judith A. Gilligan
Assistant Vice President,
Regional Branch Officer
Lea Hamel
Assistant Vice President,
Regional Branch Officer
Dana Mann
Assistant Vice President,
Municipal Officer
Christine Santapaola
Assistant Vice President,
Regional Branch Officer
Andree Brulhart
Branch Officer
Kelly A. Hannify
Branch Officer
Catherine Masiello
Branch Officer
Kathleen Pasquale
Branch Officer
Barbara Purcell
Branch Officer
Zoe RajBhandary
Marketing Officer
Stephanie M. Tiernan
Branch Officer
Deborah R. White
Branch Officer
[LOGO]
* Member of Executive Committee
** Officer of Medford Bancorp, Inc.
people you know.
experience you trust.
[LOGO] Medford Bancorp, Inc.
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 1,046 shareholders of record as of December 31,
2000.
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).
2000 High Low
- ------------------------------------------
First Quarter $ 16.50 $ 12.13
Second Quarter $ 15.63 $ 13.75
Third Quarter $ 16.13 $ 13.88
Fourth Quarter $ 15.63 $ 13.38
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 43011
Providence, RI 02940-3011
800.426.5523
Legal Counsel
Goodwin Procter LLP
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