SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2001
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from____________to
Commission File Number 0-23435
Medford Bancorp, Inc.
(Exact name of registrant as specified in its charter)
Massachusetts 04-3384928
- ------------- ----------
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)
29 High Street
Medford, Massachusetts 02155
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (781) 395-7700
------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes |X| No |_|
The number of shares outstanding of Medford Bancorp, Inc.'s common stock, $0.50
par value per share, as of September 30, 2001 was 7,797,476.
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS PAGE
Consolidated Balance Sheets 1
Consolidated Statements of Income 2-5
Consolidated Statements of Changes in Stockholders' Equity 6
Consolidated Statements of Cash Flows 7-8
Notes to Consolidated Financial Statements 9
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 10-26
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK 26
PART II OTHER INFORMATION
ITEM 1 - Legal Proceedings 26
ITEM 2 - Changes in Securities and Use of Proceeds 26
ITEM 3 - Defaults Upon Senior Securities 26
ITEM 4 - Submission of Matters to a Vote of Security Holders 26
ITEM 5 - Other Information 26
ITEM 6 - Exhibits and Reports on Form 8-K 26
SIGNATURES 27
PART I FINANCIAL INFORMATION
ITEM 1 Financial Statements
MEDFORD BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2001 2000
------------- ------------
(In thousands)
ASSETS
Cash and due from banks $ 17,989 $ 16,905
Interest-bearing deposits 64,960 5,353
----------- -----------
Cash and cash equivalents 82,949 22,258
----------- -----------
Securities available for sale, at fair value 541,102 528,690
Securities held to maturity , at amortized cost 58,853 42,854
Federal Home Loan Bank stock, at cost 11,920 11,420
Loans 683,658 675,697
Less allowance for loan losses (7,033) (6,950)
----------- -----------
Loans, net 676,625 668,747
----------- -----------
Banking premises and equipment, net 11,481 10,884
Accrued interest receivable 10,092 10,211
Goodwill and deposit-based intangibles 1,792 2,588
Other assets 6,631 12,038
----------- -----------
Total assets $ 1,401,445 $ 1,309,690
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $ 1,073,148 $ 975,857
Short-term borrowings 18,012 20,443
Long-term debt 191,325 203,400
Accrued taxes and expenses 2,494 2,278
Other liabilities 2,521 2,747
----------- -----------
Total liabilities 1,287,500 1,204,725
----------- -----------
Stockholders' equity:
Serial preferred stock, $.50 par value, 5,000,000 shares
authorized; none issued -- --
Common stock, 15,000,000 shares authorized; $.50 par value,
9,122,596 shares issued 4,561 4,561
Additional paid-in capital 21,929 22,705
Retained earnings 102,050 94,697
Accumulated other comprehensive income 8,954 424
Treasury stock, at cost (1,325,120 and 980,048 shares, respectively) (23,549) (17,422)
----------- -----------
Total stockholders' equity 113,945 104,965
----------- -----------
Total liabilities and stockholders' equity $ 1,401,445 $ 1,309,690
=========== ===========
See accompanying notes to consolidated financial statements.
1
MEDFORD BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
September 30,
------------------------
2001 2000
---------- ----------
(Dollars in thousands, except per share data)
Interest and dividend income:
Interest and fees on loans $ 12,463 $ 12,695
Interest on debt securities 9,199 8,862
Dividends on equity securities 211 258
Interest on short-term investments 394 79
---------- ----------
Total interest and dividend income 22,267 21,894
---------- ----------
Interest expense:
Interest on deposits 9,707 9,474
Interest on short-term borrowings 190 462
Interest on long-term debt 2,979 2,948
---------- ----------
Total interest expense 12,876 12,884
---------- ----------
Net interest income 9,391 9,010
Provision for loan losses 100 --
---------- ----------
Net interest income, after provision for loan losses 9,291 9,010
---------- ----------
Other income:
Customer service fees 577 507
Gain (loss) on sales of securities, net 1,626 (90)
Miscellaneous 199 224
---------- ----------
Total other income 2,402 641
---------- ----------
Operating expenses:
Salaries and employee benefits 3,088 2,785
Occupancy and equipment 738 636
Data processing 455 392
Professional fees 107 111
Amortization of intangibles 264 272
Advertising and marketing 155 203
Other general and administrative 651 598
---------- ----------
Total operating expenses 5,458 4,997
---------- ----------
Income before income taxes 6,235 4,654
Provision for income taxes 2,254 1,638
---------- ----------
Net income $ 3,981 $ 3,016
========== ==========
(continued)
2
MEDFORD BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME (Continued)
Three Months Ended
September 30,
----------------------------
2001 2000
----------- -----------
(Dollars in thousands, except per share data)
Earnings per share:
Basic $ 0.51 $ 0.37
Diluted $ 0.50 $ 0.36
Cash dividends declared per share $ 0.13 $ 0.12
Weighted averages shares outstanding:
Basic 7,802,556 8,048,154
Diluted 8,024,090 8,315,642
See accompanying notes to consolidated financial statements.
3
MEDFORD BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME (Continued)
Nine Months Ended
September 30,
--------------------------
2001 2000
----------- -----------
(Dollars in thousands, except per share data)
Interest and dividend income:
Interest and fees on loans $ 37,806 $ 37,049
Interest on debt securities 27,709 25,613
Dividends on equity securities 636 658
Interest on short-term investments 835 269
----------- -----------
Total interest and dividend income 66,986 63,589
----------- -----------
Interest expense:
Interest on deposits 28,949 26,782
Interest on short-term borrowings 829 1,844
Interest on long-term debt 9,377 7,891
----------- -----------
Total interest expense 39,155 36,517
----------- -----------
Net interest income 27,831 27,072
Provision for loan losses 100 75
----------- -----------
Net interest income, after provision for loan losses 27,731 26,997
----------- -----------
Other income:
Customer service fees 1,686 1,464
Gain (loss) on sales of securities, net 1,997 (164)
Pension plan curtailment gain -- 1,195
Miscellaneous 773 777
----------- -----------
Total other income 4,456 3,272
----------- -----------
Operating expenses:
Salaries and employee benefits 8,953 8,298
Occupancy and equipment 2,195 1,936
Data processing 1,325 1,139
Professional fees 335 331
Amortization of intangibles 796 822
Advertising and marketing 460 521
Other general and administrative 1,909 1,808
----------- -----------
Total operating expenses 15,973 14,855
----------- -----------
Income before income taxes 16,214 15,414
Provision for income taxes 5,821 5,561
----------- -----------
Net income $ 10,393 $ 9,853
=========== ===========
(continued)
4
MEDFORD BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME (Concluded)
Nine Months Ended
September 30,
------------------------
2001 2000
---------- ----------
(Dollars in thousands, except per share data)
Earnings per share:
Basic $ 1.33 $ 1.21
Diluted $ 1.29 $ 1.17
Cash dividends declared per share $ 0.39 $ 0.36
Weighted averages shares outstanding:
Basic 7,833,146 8,144,345
Diluted 8,036,792 8,427,433
See accompanying notes to consolidated financial statements.
5
MEDFORD BANCORP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Nine Months Ended September 30, 2001 and 2000
Common Stock Additional
------------------- Paid-In Retained
Shares Dollars Capital Earnings
--------- ------- ---------- --------
(In thousands)
Balance at December 31, 2000 9,122,596 $ 4,561 $ 22,705 $ 94,697
Comprehensive income:
Net income -- -- -- 10,393
Change in net unrealized gain (loss) on securities
available for sale, net of reclassification
adjustment and tax effects -- -- -- --
Total comprehensive income
Cash dividends declared ($.39 per share) -- -- -- (3,040)
Repurchase of treasury stock -- -- -- --
Issuance of common stock under stock
option plan -- -- (776) --
--------- ------- ---------- --------
Balance at September 30, 2001 9,122,596 $ 4,561 $ 21,929 $102,050
========= ======= ========== ========
Balance at December 31, 1999 9,122,596 $ 4,561 $ 24,839 $ 85,153
Comprehensive income:
Net income -- -- -- 9,853
Change in net unrealized gain (loss) on securities
available for sale, net of reclassification
adjustment and tax effects -- -- -- --
Total comprehensive income
Cash dividends declared ($.36 per share) -- -- -- (2,922)
Repurchase of treasury stock -- -- -- --
Issuance of common stock under stock
option plan -- -- (1,344) --
--------- ------- --------- --------
Balance at September 30, 2000 9,122,596 $ 4,561 $ 23,495 $ 92,084
========= ======= ========= ========
Accumulated
Treasury Stock Other
--------------------- Comprehensive
Shares Dollars Income (Loss) Total
---------- ------- -------------- ---------
(In thousands)
Balance at December 31, 2000 (980,048) $(17,422) $ 424 $ 104,965
---------
Comprehensive income:
Net income -- -- -- 10,393
Change in net unrealized gain (loss) on securities
available for sale, net of reclassification
adjustment and tax effects -- -- 8,530 8,530
---------
Total comprehensive income 18,923
---------
Cash dividends declared ($.39 per share) -- -- -- (3,040)
Repurchase of treasury stock (418,048) (7,420) -- (7,420)
Issuance of common stock under stock
option plan 72,976 1,293 -- 517
---------- -------- -------------- ---------
Balance at September 30, 2001 (1,325,120) $(23,549) $ 8,954 $ 113,945
========== ========= ============== =========
Balance at December 31, 1999 (739,344) $(14,278) $ (9,405) $ 90,870
---------
Comprehensive income:
Net income -- -- -- 9,853
Change in net unrealized gain (loss) on securities
available for sale, net of reclassification
adjustment and tax effects -- -- 4,015 4,015
---------
Total comprehensive income 13,868
---------
Cash dividends declared ($.36 per share) -- -- -- (2,922)
Repurchase of treasury stock (423,100) (6,428) -- (6,428)
Issuance of common stock under stock
option plan 106,616 1,937 -- 593
---------- -------- -------------- ---------
Balance at September 30, 2000 (1,055,828) $(18,769) $ (5,390) $ 95,981
========== ======== ============== =========
See accompanying notes to consolidated financial statements.
6
MEDFORD BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended
September 30,
-----------------------
2001 2000
--------- --------
(In thousands)
Cash flows from operating activities:
Net income $ 10,393 $ 9,853
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 100 75
Depreciation and amortization, net 1,578 1,813
(Gain) loss on sales of securities, net (1,997) 164
Increase (decrease) in accrued interest receivable and other assets 233 (1,985)
Decrease (increase) in accrued taxes and expenses and other liabilities 275 (921)
--------- ---------
Net cash provided by operating activities 10,582 8,999
--------- ---------
Cash flows from investing activities:
Activity in securities available for sale:
Maturities 52,023 59,974
Sales 101,865 15,849
Purchases (186,723) (102,846)
Principal amortization of mortgage-backed securities 36,114 22,639
Activity in securities held to maturity:
Maturities -- 4,997
Purchases (27,535) (35,522)
Principal amortization of mortgage-backed securities 11,140 646
Loans originated and purchased, net of amortization
and payoffs (7,784) (42,412)
Additions to banking premises and equipment, net (1,544) (287)
--------- ---------
Net cash used in investing activities (22,444) (76,962)
--------- ---------
(continued)
7
MEDFORD BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Concluded)
Nine Months Ended
September 30,
---------------------
2001 2000
-------- --------
(In thousands)
Cash flows from financing activities:
Net increase in deposits 97,291 51,946
Decrease in borrowings with maturities of
three months or less (2,431) (37,233)
Repayment of long-term debt (12,075) 63,464
Issuance of common stock 517 298
Payments to acquire treasury stock (7,420) (6,428)
Cash dividends paid (3,329) (3,466)
-------- --------
Net cash provided by financing activities 72,553 68,581
-------- --------
Net change in cash and cash equivalents 60,691 618
Cash and cash equivalents at beginning of period 22,258 20,910
-------- --------
Cash and cash equivalents at end of period $ 82,949 $ 21,528
======== ========
See accompanying notes to consolidated financial statements.
8
MEDFORD BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
Note 1. Basis of Presentation
The consolidated interim financial statements of Medford Bancorp, Inc. (the
"Company") and its wholly-owned subsidiary, Medford Savings Bank (the "Bank")
presented herein are intended to be read in conjunction with the consolidated
financial statements presented in the Company's annual report for the year ended
December 31, 2000.
The consolidated financial information for the three and nine months ended
September 30, 2001 is unaudited. In the opinion of management, however, the
consolidated financial information reflects all adjustments (consisting solely
of normal recurring accruals) necessary for a fair presentation in accordance
with accounting principles generally accepted in the United States of America.
Interim results are not necessarily indicative of results to be expected for the
entire year.
Note 2. Commitments
At September 30, 2001, the Company had outstanding commitments to originate new
residential and commercial real estate mortgage loans totaling approximately
$34.0 million, which are not reflected on the consolidated balance sheet.
Unadvanced funds on equity lines were $24.6 million, unadvanced construction
loan funds were $11.5 million, and unadvanced funds on commercial lines of
credit were $10.7 million at September 30, 2001.
Note 3. Earnings per Share
Basic earnings per share represents income available to common stockholders
divided by the weighted-average number of common shares outstanding during the
period. Diluted earnings per share reflects additional common shares that would
have been outstanding if dilutive potential common shares had been issued, as
well as any adjustment to income that would result from the assumed conversion.
Potential common shares that may be issued by the Company relate solely to
outstanding stock options, and are determined using the treasury stock method.
The assumed conversion of outstanding dilutive stock options would increase the
shares outstanding but would not require an adjustment to income as a result of
the conversion.
9
ITEM 2 Management's Discussion and Analysis of Financial Condition and
Results of Operation
GENERAL
The discussions set forth below and elsewhere herein contain certain statements
that may be considered forward-looking statements under the Private Securities
Litigation Reform Act of 1995. The Company may make written or oral
forward-looking statements in other documents we file with the SEC, in our
annual reports to stockholders, in press releases and other written materials,
and in oral statements made by our officers, directors or employees. You can
identify forward-looking statements by the use of the words "believe," "expect,"
"anticipate," "intend," "estimate," "assume," "will," "should," and other
expressions which predict or indicate future events or trends and which do not
relate to historical matters. You should not rely on forward-looking statements,
because they involve known and unknown risks, uncertainties and other factors,
some of which are beyond the control of the Company. These risks, uncertainties
and other factors may cause the actual results, performance or achievements of
the Company to be materially different from the anticipated future results,
performance or achievements expressed or implied by the forward-looking
statements.
Some of the factors that might cause these differences include the following:
changes in general, national or regional economic conditions; changes in loan
default and charge-off rates; reductions in deposit levels necessitating
increased borrowing to fund loans and investments; changes in interest rates;
changes in laws and regulations; changes in size and nature of the Company's
competition; and changes in the assumptions used in making such forward-looking
statements. You should carefully review all of these factors, and you should be
aware that there may be other factors that could cause these differences,
including, among others, the factors listed under "Risk Factors and Factors
Affecting Forward Looking Statements," as found in the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 2000. Readers should
carefully review the factors described under "Risk Factors and Factors Affecting
Forward Looking Statements" and should not place undue reliance on our
forward-looking statements.
These forward-looking statements were based on information, plans and estimates
at the date of this report, and we do not promise to update any forward-looking
statements to reflect changes in underlying assumptions or factors, new
information, future events or other changes.
Consolidated net income was $3,981,000, or basic earnings per share of $0.51
($0.50 diluted basis), for the three months ended September 30, 2001, compared
to $3,016,000, or basic earnings per share of $0.37 ($0.36 diluted basis), for
the comparable prior year period.
Net interest income was $9,391,000 for the quarter ended September 30, 2001, up
$381,000 or 4.2% from the comparable 2000 period, and represented a net interest
margin of 2.87%, which compared to 2.93% for the comparable 2000 period. Net
gain on sale of assets was $1.6 million for the 2001 third quarter compared to a
$90,000 loss for the same quarter in 2000.
Total operating expenses were $5,458,000 for the quarter ended September 30,
2001, up $461,000 or 9.2% from $4,997,000 during the comparable period in 2000.
There was a provision for loan losses of $100,000 recorded for the three-month
periods ended September 30, 2001 and zero for the same period in 2000.
For the third quarter of 2001, the annualized return on assets was 1.15% and the
annualized return on equity was 14.61%, compared to 0.94% and 13.04%,
respectively, for the comparable period in 2000.
10
Consolidated net income was $10,393,000, or basic earnings per share of $1.33
($1.29 diluted basis), for the nine months ended September 30, 2001, compared to
$9,853,000, or basic earnings per share of $1.21 ($1.17 diluted basis), for the
comparable prior year period. Basic and diluted earnings per share have
increased 9.9% and 10.3%, respectively, while consolidated net income increased
$540,000 or 5.5% for the nine months comparative period.
Net interest income was $27,831,000 for the nine months ended September 30,
2001, up $759,000 or 2.8% from the comparable 2000 period, and represented a net
interest margin of 2.87% compared to 2.96% for the nine months ended September
30, 2000. The net gain on sales of assets totaled $1,997,000 for the first nine
months of 2001 compared to a net loss of $164,000 for the same nine-month period
in 2000. During the nine months ended September 30, 2000, there was a $1.2
million pre-tax curtailment gain from the termination of the Company's defined
benefit pension plan recorded as miscellaneous other income.
Total operating expenses were $15,973,000 for the nine months ended September
30, 2001, up $1,118,000 or 7.5% from $14,855,000 during the comparable period in
2000. There was a $100,000 provision for loan losses recorded for the nine
months ended September 30, 2001 compared to $75,000 for the same prior year
period.
For the first nine months of 2001, the annualized return on assets was 1.04% and
the annualized return on equity was 13.20%, compared to 1.05% and 14.75%,
respectively, for the comparable period in 2000.
Total non-performing assets were $1,908,000 or 0.14% of total assets at
September 30, 2001, compared to $1,047,000 or 0.08%, respectively, at December
31, 2000. The allowance for loan losses at September 30, 2001 was $7,033,000,
representing 1.03% of total loans. At December 31, 2000, the allowance for loan
losses was $6,950,000, representing 1.03% of total loans. The Company had no
foreclosed real estate at September 30, 2001 or December 31, 2000.
The Company had total assets of $1.40 billion and capital of $113.9 million at
September 30, 2001, representing a capital to assets ratio of 8.13%, exceeding
all regulatory requirements. When compared to December 31, 2000, securities
increased $28.9 million or 5.0% to $611.9 million, total gross loans increased
$8.0 million or 1.18% to $683.7 million, deposits increased $97.3 million or
10.0% to $1.07 billion, and borrowings decreased $14.5 million or 6.48% to
$209.3 million.
A more detailed discussion and analysis of the Company's financial condition and
results of operations follows.
11
SECURITIES
The amortized cost and fair value of securities, excluding restricted equity
securities, at September 30, 2001 and December 31, 2000 with gross unrealized
gains and losses, follows:
Gross Gross
Amortized Unrealized Unrealized Fair
September 30, 2001 Cost Gains Losses Value
- ------------------------------------------------ --------- ---------- ---------- ---------
(In thousands)
Debt securities:
Corporate bonds $ 250,018 $ 8,882 $ -- $ 258,900
Federal agency obligations 38,505 504 -- 39,009
Mortgage-backed 237,227 5,147 -- 242,374
--------- -------- -------- ---------
Total debt securities 525,750 14,533 -- 540,283
Marketable equity securities 873 75 (129) 819
--------- -------- -------- ---------
Total securities available for sale $ 526,623 $ 14,608 $ (129) $ 541,102
========= ======== ======== =========
Debt securities:
Federal agency obligations $ 4,865 $ 366 $ -- $ 5,231
Mortgage-backed 53,988 1,651 (7) 55,632
--------- -------- -------- ---------
Total securities held to maturity $ 58,853 $ 2,017 $ (7) $ 60,863
========= ======== ======== =========
Gross Gross
Amortized Unrealized Unrealized Fair
December 31, 2000 Cost Gains Losses Value
- ------------------------------------------------ --------- ---------- ---------- ---------
(In thousands)
Debt securities:
Corporate bonds $ 310,165 $ 2,628 $ (478) $ 312,315
Federal agency obligations 3,000 -- (3) 2,997
Mortgage-backed 212,589 668 (1,850) 211,407
--------- -------- -------- ---------
Total debt securities 525,754 3,296 (2,331) 526,719
Marketable equity securities 2,285 81 (395) 1,971
--------- -------- -------- ---------
Total securities available for sale $ 528,039 $ 3,377 $ (2,726) $ 528,690
========= ======== ======== =========
Debt securities:
Federal agency obligations $ 4,809 $ 210 $ -- $ 5,019
Mortgage-backed 38,045 871 -- 38,916
--------- -------- -------- ---------
Total securities held to maturity $ 42,854 $ 1,081 $ -- $ 43,935
========= ======== ======== =========
12
The amortized cost and fair value of debt securities by contractual maturity at
September 30, 2001 are as follows:
Available for Sale Held to Maturity
------------------------ ----------------------
Amortized Fair Amortized Fair
Cost Value Cost Value
---------- ---------- --------- ---------
(In thousands)
Within 1 year $ 72,743 $ 73,840 $ -- $ --
After 1 year through 5 years 202,280 210,377 4,865 5,231
After 5 year through 10 years 13,500 13,692 -- --
---------- ---------- --------- ---------
288,523 297,909 4,865 5,231
Mortgage-backed securities 237,227 242,374 53,988 55,632
---------- ---------- --------- ---------
$ 525,750 $ 540,283 $ 58,853 $ 60,863
========== ========== ========= =========
Securities increased $28.9 million from $583.0 million at December 31, 2000 to
$611.9 million at September 30, 2001. At September 30, 2001, the securities
portfolio classified as "available for sale" reflected a $14.5 million
appreciation in market value as a result of the ongoing changes in market
interest rates as compared to $965,000 at December 31, 2000. In accordance with
the Company's asset-liability strategies, purchases of mortgage-backed
securities are primarily in fifteen year mortgages with weighted-average lives
of six years and other securities are generally short-term with maturities of
five years or less.
Sales of debt securities produced gains of $1,620,000 during the 2001 third
quarter and gains of $1,931,000 for the nine months ended September 30, 2001
compared to losses of $90,000 for the three months and $154,000 for the nine
months ended September 30, 2000. Sales of equities produced gains of $6,000 for
the three months and $66,000 during the nine months ended September 30, 2001
compared to losses of $10,000 for the nine months ended September 30, 2000.
There were no sales of equities recorded for the quarterly period ended
September 30, 2000.
13
LOANS
A summary of the Company's outstanding loan balances as of the dates indicated
follows:
September 30, December 31,
2001 2000
--------- -----------
(In thousands)
Mortgage loans on real estate:
Residential 1 - 4 family $ 493,557 $ 487,964
Commercial 127,297 124,201
Construction 18,072 19,913
Second mortgages 488 699
Equity lines of credit 23,806 21,609
--------- ---------
663,220 654,386
Other loans:
Commercial 16,441 17,219
Personal 2,739 2,925
--------- ---------
19,180 20,144
--------- ---------
Net deferred loan origination costs 1,258 1,167
--------- ---------
Total loans 683,658 675,697
Less allowance for loan losses (7,033) (6,950)
--------- ---------
Loans, net $ 676,625 $ 668,747
========= =========
Total gross loans outstanding at September 30, 2001 increased $8.0 million to
$683.7 million when compared to the December 31, 2000 level. Net residential
mortgage activity during the first nine months of 2001 caused an increase in
residential 1-4 family real estate mortgage loans of $5.6 million. Construction
real estate declined $1.8 million while commercial real estate increased $3.1
million from December 31, 2000 levels.
NON-PERFORMING ASSETS
Total non-performing assets were $1.9 million and $1.0 million at September 30,
2001 and December 31, 2000, respectively. There were no foreclosed assets at
September 30, 2001 or December 31, 2000. As a percentage of total assets,
non-performing assets equaled 0.14% and 0.08% at September 30, 2001 and December
31, 2000, respectively. Fluctuations in total non-performing assets occur from
quarter to quarter but remain at historically low levels. It is the Company's
general policy to place loans on a non-accrual status when such loans become 90
days contractually delinquent or when the collectibility of principal or
interest payments becomes doubtful. When a loan is placed on non-accrual status,
its interest income accrual ceases and all income previously accrued but unpaid
is reversed.
In accordance with SFAS No. 114, a loan is considered impaired when, based on
current information and events, it is probable that the borrower will be unable
to meet principal or interest payments as agreed in the original loan contract.
The principal balance of impaired loans at September 30, 2001 was $1.9 million
all of which were included in the $1.9 million non-performing assets referenced
in the preceding paragraph.
14
ALLOWANCE FOR LOAN LOSSES
A summary of the activity in the allowance for loan losses follows:
Nine Months Ended
September 30,
-------------------
2001 2000
------- -------
(In thousands)
Balance at beginning of period $ 6,950 $ 6,779
Provision for loan losses 100 75
Recoveries 57 46
Loans charged-off (74) (58)
------- -------
Balance at end of period $ 7,033 $ 6,842
======= =======
The allowance for loan losses is established through a provision for loan losses
charged to earnings. Loan losses are charged against the allowance when
management believes the collectibility of the loan balance is unlikely.
Subsequent recoveries, if any, are credited to the allowance.
The allowance for loan losses is evaluated on a regular basis by management and
is based upon management's periodic review of the collectibility of the loans in
light of historical experience, known inherent risks in the nature and volume of
the loan portfolio, levels of non-performing loans, adverse situations that may
affect the borrowers' ability to repay, trends in delinquencies and charge-offs,
estimated value of any underlying collateral, and prevailing economic
conditions. This evaluation is inherently subjective, as it requires estimates
that are susceptible to significant revision, as more information becomes
available. Ultimate losses may vary from current estimates and future additions
to the allowance may be necessary.
The allowance consists of specific, general and unallocated loss components.
Specific allocations include the results of measuring impaired loans under SFAS
No. 114. General Risk allocations are determined by formula whereby the loan
portfolio is stratified by loan type and by risk rating category. Loss factors
are then applied to each category based on various considerations including
historical loss experience, delinquency trends, current economic conditions,
industry standards and regulatory guidelines. Any remaining unallocated portion
is reviewed for adequacy in relation to the overall loan portfolio and in
recognition of estimates inherent in the calculation methodology.
The allowance for loan losses of $7.0 million at September 30, 2001 represented
a reserve coverage of 1.03% of total loans. At December 31, 2000, the allowance
for loan losses was $7.0 million, representing 1.03% of total loans.
15
DEPOSITS
A summary of deposit balances, by type, is as follows:
September 30, December 31,
2001 2000
----------- ----------
(In thousands)
Demand $ 73,415 $ 63,122
NOW 61,875 65,106
Savings and money market accounts 493,159 388,655
Term certificates 444,699 458,974
----------- ----------
Total deposits $ 1,073,148 $ 975,857
=========== ==========
Total deposits increased $97.3 million from December 31, 2000 to $1.07 billion
at September 30, 2001. Demand deposits increased $10.3 million from year-end
levels. During the first nine months of 2001, savings and money market accounts
increased $104.5 million as retail depositors sought alternative banking
relationships in a consolidating market and a safe harbor from the equity
markets, and municipalities shifted from certificates of deposits to money
market accounts for increased liquidity. The shift in municipal deposits
contributed to the $14.3 million decrease in term certificates from $459.0
million at December 31, 2000 to $444.7 million at September 30, 2001.
BORROWED FUNDS
At September 30, 2001, the Company's long-term borrowings decreased by $12.1
million to $191.3 million from $203.4 million at December 31, 2000. Short-term
borrowings decreased by $2.4 million to $18.0 million from $20.4 million at
year-end. At September 30, 2001, borrowed funds totaled $209.3 million,
decreasing $14.5 million from the $223.8 million reported at December 31, 2000
as the Company experienced strong deposit growth.
16
STOCKHOLDERS' EQUITY
The Company's capital to assets ratio was 8.13% and 8.01% at September 30, 2001
and December 31, 2000, respectively.
The Company (on a consolidated basis) and the Bank are subject to various
regulatory capital requirements administered by the federal banking agencies.
Failure to meet minimum capital requirements can initiate certain mandatory and
possibly additional discretionary actions by regulators that, if undertaken,
could have a direct material effect on the Company's and the Bank's financial
statements. Under capital adequacy guidelines and the regulatory framework for
prompt corrective action, the Company and/or the Bank must meet specific capital
guidelines that involve quantitative measures of their assets, liabilities and
certain off-balance-sheet items as calculated under regulatory accounting
practices. Holding companies, such as the Company, are not subject to prompt
corrective action provisions. The capital amounts and classification are also
subject to qualitative judgments by the regulators about components, risk
weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Company and the Bank to maintain minimum amounts and ratios of total
and Tier 1 capital (as defined) to average assets (as defined). Management
believes as of September 30, 2001 that the Company and the Bank met all capital
adequacy requirements to continue to be categorized as well capitalized.
The Company's book value at September 30, 2001 was $14.61 per share, compared
with $12.89 per share at December 31, 2000.
17
RESULTS OF OPERATIONS
QUARTER ENDED SEPTEMBER 30, 2001 VS QUARTER ENDED SEPTEMBER 30, 2000
NET INTEREST INCOME
Interest and dividend income from loans and investments increased $373,000 or
1.7% to $22.3 million for the 2001 third quarter when compared to the same
quarter in 2000. For the 2001 third quarter, average earning assets totaled
$1.327 billion, an increase of $82.7 million or 6.6% over the comparable average
for 2000, with $65.0 million of that increase attributed to short and long-term
securities and $17.7 million attributed to loans. The annualized yields on
earning assets were 6.71% and 7.03% for the third quarters in 2001 and 2000,
respectively. The yield on investment securities was 6.27% for the third quarter
2001 as compared 6.33% for the third quarter 2000. Short and long-term
investments contributed $605,000 of additional interest and dividend income when
comparing the third quarter of 2001 to the third quarter of 2000, primarily as a
result of higher average balances. The increase in the average balance on loans
and a decrease in the yield, from 7.65% to 7.31%, caused interest income on
loans to decrease $232,000 from its 2000 third quarter level.
Total interest expense for the three months ended September 30, 2001 was $12.9
million, reflecting an decrease of $8,000 or .06% over the same period in 2000.
At September 30, 2001, average interest-bearing liabilities were $1.19 billion,
an increase of $70.7 million or 6.3% over the comparable prior year period. This
period-to-period increase can be attributed to average deposit growth of $81.6
million and average borrowed funds declining $10.9 million. Overall, interest
expense on deposits increased $233,000 to $9.7 million as a result of the
increase in average deposits offset by a decline in rates paid from 4.17% to
3.92% for the quarters ended September 30, 2001 and 2000, respectively. Interest
expense on borrowed funds decreased $241,000 as the average balances and the
rates paid on borrowed funds decreased 15 basis points to 5.97% in the third
quarter of 2001 compared to the third quarter in 2000. The overall cost of
interest bearing liabilities decreased to 4.28% from 4.56% when comparing the
two quarters.
Net interest income increased 4.2% or $381,000 to $9.4 million when comparing
the third quarter in 2001 to the same quarter in 2000 even as the weighted
average rate spread decreased by 4 basis points to 2.43% while the net interest
margin decreased 6 basis points to 2.87%. The increase in net interest income is
primarily due to increased levels of earning assets while the basis point
declines in spread and margin reflect the changing mix of earning assets and
interest bearing liabilities. The yield on earning assets decreased 32 basis
points to 6.71% in the third quarter 2001 as compared to the same quarter in
2000, while the cost of interest-bearing liabilities decreased by 28 basis
points to 4.28%. This resulted in an interest rate spread and a net interest
margin of 2.43% and 2.87%, respectively, for the three months ended September
30, 2001.
18
MEDFORD BANCORP, INC.
INTEREST RATE SPREAD
Three Months Ended
September 30,
------------------
2001 2000
---- ----
Weighted average yield earned on:
Short-term investments 3.39% 6.27%
Securities 6.27 6.33
Loans 7.31 7.65
---- ----
All earning assets 6.71 7.03
---- ----
Weighted average rate paid on:
Deposits 3.92 4.17
Borrowed funds 5.97 6.12
---- ----
All interest-bearing liabilities 4.28 4.56
---- ----
Weighted average rate spread 2.43% 2.47%
==== ====
Net interest margin 2.87% 2.93%
==== ====
19
PROVISION FOR LOAN LOSSES
The provision for loan losses represents a charge against current earnings and
an addition to the allowance for loan losses. The provision is determined by
management on the basis of many factors, including the quality of specific
loans, risk characteristics of the loan portfolio generally, the level of non
performing loans, current economic conditions, trends in delinquency and
charge-offs, and value of the underlying collateral. Management considers the
allowance for loan losses to be adequate at September 30, 2001, although there
can be no assurance that the allowance is adequate or that additional provisions
to the allowance for loan losses will not be necessary.
The Company recorded a provision for loan losses of $100,000 and none for the
third quarter of 2001 and 2000, respectively. The Company recorded net loan
charge-offs of $15,000 for the three months ended September 30, 2001 compared to
net loan recoveries of $26,000 for the same period in 2000.
OTHER INCOME
Other income, including customer service fees and gains and losses on sales of
assets, equaled $2,402,000 for the third quarter of 2001 as compared to $641,000
in the third quarter of 2000, representing a increase of $1,761,000. When
comparing the third quarter of 2001 with the third quarter of 2000, the increase
in securities gains and customer service fees of $1,716,000 and $70,000,
respectively, principally account for the increase in other income. See related
discussions under "Securities" included in "Management's Discussion and
Analysis" in Item 2 of Part 1 of this report.
OPERATING EXPENSES
Operating expenses increased $461,000 or 9.2% to $5,458,000 for the three months
ended September 30, 2001 when compared to the same period in 2000. Salaries and
employee benefits increased $303,000, when comparing the third quarter of 2001
to the third quarter of 2000. Occupancy and equipment and data processing
expenses increased $102,000 and $63,000, respectively, when compared to the
third quarter of 2000 as a result of additional operating expenses associated
with the opening of branches in Somerville and Arlington Center and a remote ATM
also in Somerville. The Company's annualized expense ratio, which is the ratio
of non-interest expense to average assets, was 1.58% and 1.56% for the three
months ended September 30, 2000 and 2001, respectively.
PROVISION FOR INCOME TAXES
The Company's effective tax rate for three months ended September 30, 2001 was
36.2% as compared to 35.2% for the period ended September 30, 2000.
20
NINE MONTHS ENDED SEPTEMBER 30, 2001 VS NINE MONTHS ENDED SEPTEMBER 30, 2000
NET INTEREST INCOME
Interest and dividend income from loans and investments increased $3.4 million
or 5.3% to $67.0 million for the first nine months of 2001 when compared to
2000. During the first nine months of 2001, average earning assets totaled $1.3
billion, an increase of $72.7 million or 5.9% over the comparable average for
2000, with $49.1 million of that increase attributed to short and long-term
securities and $23.6 million attributed to loans. The annualized yields on
earning assets were 6.89% and 6.93% for the nine months ended September 30, 2001
and 2000, respectively. The yield on securities was 6.37% for the first nine
months of 2001, an increase of 18 basis points from 6.19% for the same period in
2000. Short and long-term investments contributed $2,640,000 of additional
interest and dividend income when comparing the first nine months of 2001 to the
first nine months of 2000, primarily as a result of higher average balances and
yield. The increase in the average balance of loans and decline in yield from
7.58% to 7.46% caused interest income on loans to increase only $757,000 from
its 2000 nine month level.
Total interest expense for the nine months ended September 30, 2001 was $39.2
million, reflecting an increase of $2.6 million or 7.2% over the same period in
2000. At September 30, 2001, average interest-bearing liabilities were $1.165
billion, an increase of $61.7 million or 5.6% over the comparable prior year
period. This period-to-period increase can be attributed to average deposit
growth of $58.0 million and average borrowed funds increasing $3.7 million.
Overall, interest expense on deposits increased $2.2 million to $28.9 million
due to increases in both average deposits and rates paid. Interest expense on
borrowed funds increased $471,000 as the average balances increased and the
rates paid on borrowed funds increased 18 basis points to 6.11% in the first
nine months of 2001 compared to the first nine months of 2000. The overall cost
of interest bearing liabilities increased to 4.48% from 4.40% when comparing the
two periods.
Net interest income increased 2.8% or $759,000 to $27.7 million when comparing
the nine months in 2001 to the same period in 2000 even as the weighted average
rate spread decreased by 12 basis points to 2.41% while net interest margin
decreased 9 basis points to 2.87%. The increase in net interest income is
primarily due to increased levels of earning assets while the basis point
declines in spread and margin reflect the changing mix of earning assets and
interest bearing liabilities. The yield on earning assets decreased 4 basis
points to 6.89% in the first nine months of 2001 as compared to the first nine
months of 2000, while the cost of interest bearing liabilities increased by 8
basis points to 4.48%. This resulted in an interest rate spread and a net
interest margin of 2.41% and 2.87%, respectively, for the nine months ended
September 30, 2001.
21
MEDFORD BANCORP, INC.
INTEREST RATE SPREAD
Nine Months Ended
September 30,
-----------------
2001 2000
----- -----
Weighted average yield earned on:
Short-term investments 4.00% 5.95%
Securities 6.37 6.19
Loans 7.46 7.58
---- ----
All earning assets 6.89 6.93
---- ----
Weighted average rate paid on:
Deposits 4.10 4.03
Borrowed funds 6.11 5.93
---- ----
All interest-bearing liabilities 4.48 4.40
---- ----
Weighted average rate spread 2.41% 2.53%
==== ====
Net interest margin 2.87% 2.96%
==== ====
22
PROVISION FOR LOAN LOSSES
The provision for loan losses represents a charge against current earnings and
an addition to the allowance for loan losses. The provision is determined by
management on the basis of many factors, including the quality of specific
loans, risk characteristics of the loan portfolio generally, the level of non
performing loans, current economic conditions, trends in delinquency and
charge-offs, and value of the underlying collateral. Management considers the
allowance for loan losses to be adequate at September 30, 2001, although there
can be no assurance that the allowance is adequate or that additional provisions
to the allowance for loan losses will not be necessary.
The Company recorded a $100,000 provision for loan losses for the first nine
months of 2001 as compared to $75,000 for the same period in 2000. The Company
recorded net loan charge-offs of $17,000 for the first nine months of 2001
compared to net charge-offs of $12,000 for the nine months ended September 30,
2000.
OTHER INCOME
Other income, including customer service fees and gains and losses on sales of
assets equaled $4.5 million in the first nine months of 2001 as compared to $3.3
million in the first nine months of 2000, representing an increase of $1.2
million or 36.2%. When comparing the first nine months of 2001 and 2000, this
increase is primarily due to an increase in securities gains and losses of
$2,161,000 partially offset by a decrease in income due to the pre-tax gain of
$1.2 million from the Company's defined benefit pension plan recorded in the
first quarter of 2000. See related discussions under "Securities" included in
"Management's Discussion and Analysis" in Item 2 of Part 1 of this report.
OPERATING EXPENSES
Operating expenses increased $1,118,000 or 7.5% to $15,973,000 for the nine
months ended September 30, 2001 when compared to the same period in 2000.
Salaries and employee benefits increased $655,000, when comparing the first nine
months of 2001 to the first nine months of 2000. Occupancy and equipment and
data processing expenses increased $259,000 and $186,000, respectively, when
compared to the first half of 2000 as a result of additional operating expenses
associated with the opening of branches in Somerville and Arlington Center and a
remote ATM in Somerville. The Company's annualized expense ratio, which is the
ratio of non-interest expense to average assets, was 1.59% for the nine months
ended September 30, 2001, as compared to 1.58% for the prior year comparable
period.
PROVISION FOR INCOME TAXES
The Company's effective tax rate for the nine months ended September 30, 2001
was 35.9% as compared to 36.1% for the nine months ended September 30, 2000.
23
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal sources of funds are customer deposits, amortization and
payoff of existing loan principal and sales or maturities of various securities.
The Company is a voluntary member of the Federal Home Loan Bank of Boston
("FHLBB"), and as such may take advantage of the FHLBB's borrowing programs to
enhance liquidity and leverage its favorable capital position. The Company also
may draw on lines of credit at the FHLBB and a large commercial bank, and it may
pledge U.S. Government securities to borrow from certain investment firms and
the Mutual Savings Central Fund of Massachusetts. These various sources of
liquidity are used to fund withdrawals, new loans, and investments.
Management seeks to promote deposit growth while controlling the Company's cost
of funds. Sales oriented programs to attract new depositors and the
cross-selling of various products to its existing customer base are currently in
place. Management reviews, on an ongoing basis, possible new products, with
particular attention to products and services that will assist retention of the
Company's base of lower-costing deposits.
Maturities and sales of securities provide significant liquidity to the Company.
The Company's policy of purchasing shorter-term debt securities reduces market
risk in the bond portfolio while providing significant cash flow. For the nine
months ended September 30, 2001, cash flow from maturities and sales of
securities was $153.9 million compared to $55.3 million for the nine months
ended September 30, 2000. Principal payments received on mortgage-backed
securities during the nine months ended September 30, 2001 and 2000 totaled
$47.3 million and $14.2 million, respectively. During periods of high interest
rates, maturities in the bond portfolio could provide significant liquidity at a
lower cost than borrowings.
Amortization and payoffs of the loan portfolio also contribute significant
liquidity to the Company. Traditionally, the amortization and payoffs have been
reinvested into loans. When payoff rates exceed origination rates, excess
liquidity from loan payoffs is shifted into the investment portfolio.
The Company also uses borrowed funds as a source of liquidity. These borrowings
generally contribute toward funding over-all loan growth as well as purchases of
mortgage-backed securities. At September 30, 2001, the Company's outstanding
borrowings from the FHLBB were $206.3 million and $223.4 million at December 31,
2000. The Company also utilizes repurchase agreements as a source of funding
when management deems market conditions to be conducive to such activities.
Commitments to originate residential and commercial real estate mortgage loans
at September 30, 2001, excluding unadvanced construction funds of $11.5 million,
were $34.0 million. Management believes that adequate liquidity is available to
fund loan commitments utilizing deposits, loan amortization, maturities of
securities, or borrowings.
Purchases of securities during the nine months ended September 30, 2001 totaled
$214.3 million, consisting of debt instruments generally maturing in less than
five years. This compares with purchases of $96.1 million for the nine months
ended September 30, 2000.
Residential and commercial real estate mortgage loan originations for the nine
months ended September 30, 2001 totaled $ 105.2 million, compared with $ 113.9
million for the nine months ended September 30, 2000.
The Company's capital position (total stockholders' equity) was $113.9 million
or 8.13% of total assets at September 30, 2001 compared with $105.0 million or
8.01% of total assets at December 31, 2000. During the nine months ended
September 30, 2001, the Company purchased 418,048 shares of its common stock in
accordance with previously announced stock purchase programs. The Company's
capital position exceeds all regulatory requirements.
24
ASSET-LIABILITY MANAGEMENT
Through the Company's Asset-Liability Management Committee ("ALCO"), which is
comprised of certain senior and middle management personnel, the Company
monitors the level and general mix of interest rate-sensitive assets and
liabilities. The primary objective of the Company's ALCO program is to manage
the assets and liabilities of the Company to provide for optimum profitability
and capital at prudent levels of liquidity and interest rate, credit, and market
risk.
It is ALCO's general policy to closely match the maturity or rate sensitivity of
its assets and liabilities. In accordance with this policy, certain strategies
have been implemented to improve the match between interest rate sensitive
assets and liabilities. These strategies include, but are not limited to: daily
monitoring of the Company's changing cash requirements, with particular
concentration on investment in short term securities; originating adjustable and
fixed rate mortgage loans for the Company's own portfolio; managing the cost and
structure of deposits; and generally using matched borrowings to fund specific
purchases of loan packages and large loan originations. Occasionally, management
may choose to deviate from specific matching of maturities of assets and
liabilities, if an attractive opportunity to enhance yields becomes available.
The Company actively manages its liability portfolio in order to effectively
plan and manage growth and maturities of deposits. Management recognizes the
need for strict attention to all deposits. Accordingly, plans for growth of all
deposit types are reviewed regularly. Programs are in place which are designed
to build multiple relationships with customers and to enhance the Company's
ability to retain deposits at controlled rates of interest, and management has
adopted a policy of reviewing interest rates on an ongoing basis on all deposit
accounts in order to control deposit growth and interest costs.
In addition to attracting deposits, the Company has selectively borrowed funds
using advances from the FHLBB and, upon occasion, reverse repurchase agreements.
These funds have generally been used to fund loans typically having a matched
repricing date as well as purchases of mortgage-backed securities.
IMPACT OF INFLATION
The consolidated financial statements and related consolidated financial data
presented herein have been prepared in accordance with accounting principles
generally accepted in the United States of America, which require the
measurement of financial position and results of operations in terms of
historical dollars without considering changes in the relative purchasing power
of money over time due to inflation. The primary effect of inflation on the
operations of the Company is reflected in increased operating costs. Unlike most
industrial companies, virtually all assets of a financial institution are
monetary in nature. As a result, interest rates have a more significant effect
on a financial institution's performance than the effect of general levels of
inflation. Interest rates do not necessarily move in the same direction or in
the same magnitude as the prices of goods and services.
NEW ACCOUNTING PRONOUNCEMENTS
In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 141, Business Combinations, and
SFAS No. 142, Goodwill and Other Intangible Assets. These Statements change the
accounting for business combinations and goodwill and intangible assets. SFAS
No. 141 requires that the purchase method of accounting be used for all business
combinations initiated after June 30, 2001. Use of the pooling-of-interests
method is prohibited. SFAS No. 142, which is effective January 1, 2002, changes
the accounting for goodwill from an amortization method to an impairment-only
approach. In addition, this Statement requires that acquired intangible assets,
as defined, be amortized over their useful lives. Management is currently
evaluating the impact of adopting this Statement on consolidated financial
statements.
25
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
For a discussion of the Company's management of market risk exposure, see
"Asset-Liability Management" in Item 2 of Part I of this report and Item 7A of
Part II of the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2000 (the "2000 Annual Report").
For quantitative information about market risk, see Item 7A of Part II of the
Company's 2000 Annual Report.
There have been no material changes in the quantitative and qualitative
disclosures about market risk as of September 30, 2001 from those presented in
the Company's 2000 Annual Report.
PART II - OTHER INFORMATION
ITEM 1 - Legal Proceedings
There are no material legal proceedings to which the
Company is a party or to which any of its property is
subject, although the Company is a party to ordinary
routine litigation incidental to its business.
ITEM 2 - Changes in Securities and Use of Proceeds
Not applicable.
ITEM 3 - Defaults Upon Senior Securities
Not applicable.
ITEM 4 - Submission of Matters to a Vote of Security Holders
ITEM 5 - Other Information
None.
ITEM 6 - Exhibits and Reports on Form 8-K
(a) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the
three-month period ended September 30, 2001.
26
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MEDFORD BANCORP, INC.
Date: November 14, 2001
/s/ Arthur H. Meehan
--------------------------------------------------------------
Arthur H. Meehan
Chairman, President and Chief Executive Officer
Date: November 14, 2001
/s/ Phillip W. Wong
---------------------------------------------------------------
Phillip W. Wong
Executive Vice President, Treasurer and Chief Financial Officer
27