SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
October 22, 1997 (October 22, 1997)
SIS Bancorp, Inc.
(Exact name of registrant as specified in charter)
Massachusetts 000-20809 04-3303264
(State or other jurisdiction (Commission file number) (IRS employer
of incorporation) identification no.)
1441 Main Street, Springfield, MA 01102
(Address of principal executive offices) (Zip code)
(413) 748-8000
Registrant's telephone number, including area code
<PAGE>
Item 5. Other Events
On October 22, 1997, SIS Bancorp, Inc. (the "Company") issued a press
release containing unaudited financial information and announcing a cash
dividend for the quarter ended September 30, 1997, and containing information
relating to its previously announced acquisition (the "Acquisition") of
Glastonbury Bank & Trust Company ("Glastonbury"). A copy of the press release is
filed as Exhibit 99.1 to this report and is incorporated herein by reference.
Cautionary Statements Relating to Certain Forward Looking Statements
The exhibit filed with this Current Report and incorporated herein by
reference contains a forward-looking statement concerning an anticipated charge
to be taken for expenses related to the Acquisition. The Company cautions
readers that certain factors, including without limitation certain operational
issues, may affect the actual timing and amount of the charge. For example, the
planned consolidation of various "back office" functions of the two companies
may be delayed as a result of difficulties in consolidating such functions. In
addition, if the Company is unable to retain certain key management personnel of
Glastonbury, the consolidation of such functions may be more time-consuming and
difficult and, therefore, more expensive.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements
Condensed Consolidated Balance Sheet F-1
Condensed Consolidated Statement of Operations F-2
Selected Financial Ratios and Data F-3
(c) Exhibits
99.1 Press Release of the Company, dated October 22, 1997
<PAGE>
<TABLE>
<CAPTION>
SIS BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
(Unaudited) (Unaudited)
September 30, December 31, September 30,
--------------------------------------------
1997 1996 1996
------------- ----------- ------------
<S> <C> <C> <C>
Assets
Cash and due from banks $ 34,464 $ 31,902 $ 34,709
Federal funds sold and short-term investments 6,692 10,045 17,545
Investment securities available for sale 502,868 449,323 386,050
Investment securities held to maturity 182,320 192,174 194,132
Residential real estate loans 237,623 242,410 244,067
Commercial real estate loans 121,355 118,442 121,803
Commercial loans 189,440 155,808 144,431
Home equity loans 133,049 104,206 91,554
Consumer loans 4,841 4,132 4,707
----------- ----------- -----------
Total loans 686,308 624,998 606,562
Unearned income and fees 2,141 1,196 977
Allowance for possible loan losses (18,393) (15,597) (15,488)
----------- ----------- -----------
Total loans, net 670,056 610,597 592,051
Accrued interest and dividends receivable 9,517 8,982 8,440
Investments in real estate and real estate partnerships 2,666 2,757 4,858
Foreclosed real estate, net 199 381 512
Bank premises, furniture and fixtures, net 28,244 27,106 25,660
Other assets 15,991 15,345 20,609
----------- ----------- -----------
Total assets $ 1,453,017 $ 1,348,612 $ 1,284,566
=========== =========== ===========
Liabilities and Stockholders' Equity
Deposits $ 1,021,613 $ 969,517 $ 954,132
Federal Home Loan Bank advances 134,297 68,471 48,189
Securities sold under agreements to repurchase 148,888 176,577 151,144
Loans payable 2,670 2,848 3,026
Mortgage escrow deposits 6,543 4,396 6,294
Accrued expenses and other liabilities 32,048 24,886 24,721
----------- ----------- -----------
Total liabilities 1,346,059 1,246,695 1,187,506
Stockholders' equity:
Preferred stock ($.01 par value; 5,000,000 shares
authorized; no shares issued and outstanding) -- -- --
Common stock ($.01 par value; 25,000,000 shares authorized; shares
issued: 5,727,242 at September 30, 1997; 5,723,600 at December 31, 1996; and
5,722,600 at September 30, 1996; outstanding: 5,580,842 at September 30, 1997;
5,723,600 at December 31, 1996; and 5,722,600 at September 30, 1996) 57 57 57
Unearned compensation (3,036) (3,693) (4,282)
Additional paid-in capital 43,218 42,665 42,469
Retained earnings 67,901 60,993 58,483
Net unrealized gain on investment securities available for sale 2,678 1,895 333
Treasury stock, at cost (146,400 shares at September 30, 1997) (3,860) 0.00 0.00
----------- ----------- -----------
Total stockholders' equity 106,958 101,917 97,060
----------- ----------- -----------
Total liabilities and stockholders' equity $ 1,453,017 $ 1,348,612 $ 1,284,566
=========== =========== ===========
</TABLE>
F-1
<PAGE>
<TABLE>
<CAPTION>
SIS BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In Thousands Except Per Share Amounts)
(Unaudited) (Unaudited)
Three Months Ended Nine Months Ended
------------------------- -----------------------------
September 30, September 30, September 30, September 30,
1997 1996 1997 1996
----------- ------------ ------------- --------------
<S> <C> <C> <C> <C>
Interest and dividend income:
Loans $ 13,958 $ 12,472 $ 40,285 $ 35,946
Investment securities available for sale 8,019 5,934 24,105 15,230
Investment securities held to maturity 3,169 3,279 9,849 9,494
Federal funds sold and short-term investments 357 121 716 380
----------- ----------- ----------- -----------
Total interest and dividend income 25,503 21,806 74,955 61,050
----------- ----------- ----------- -----------
Interest expense:
Deposits 8,735 8,270 25,614 24,338
Borrowings 4,258 2,291 11,782 5,439
----------- ----------- ----------- -----------
Total interest expense 12,993 10,561 37,396 29,777
----------- ----------- ----------- -----------
Net interest and dividend income 12,510 11,245 37,559 31,273
Less: Provision for possible loan losses 402 750 1,203 2,200
----------- ----------- ----------- -----------
Net interest and dividend income after provision
for possible loan losses 12,108 10,495 36,356 29,073
Noninterest income:
Net gain on sale of loans 136 105 328 537
Net gain on sale of securities 10 62 21 64
Fees and other income 3,157 2,761 8,533 7,645
----------- ----------- ----------- -----------
Total noninterest income 3,303 2,928 8,882 8,246
----------- ----------- ----------- -----------
Noninterest expense:
Operating expenses:
Salaries and employee benefits 4,971 4,408 14,631 12,900
Occupancy expense of bank premises, net 982 810 2,885 2,387
Furniture and equipment expense 565 558 1,596 1,614
Other operating expenses 3,751 3,846 10,992 10,617
----------- ----------- ----------- -----------
Total operating expenses 10,269 9,622 30,104 27,518
----------- ----------- ----------- -----------
Foreclosed real estate expense 90 29 58 252
Net (income) expense of real estate operations (63) (8) 416 (170)
----------- ----------- ----------- -----------
Total noninterest expense 10,296 9,643 30,578 27,600
Income before income tax expense (benefit) 5,115 3,780 14,660 9,719
Income tax expense (benefit) 1,946 (6,421) 5,731 (5,931)
----------- ----------- ----------- -----------
Net income $ 3,169 $ 10,201 $ 8,929 $ 15,650
=========== =========== =========== ===========
Earnings per share:
Primary $ 0.57 $ 1.85 $ 1.60 $ 2.86
Fully diluted $ 0.57 $ 1.84 $ 1.58 $ 2.82
Weighted average shares outstanding:
Primary 5,521,785 5,511,554 5,584,339 5,475,422
Fully diluted 5,559,872 5,556,512 5,647,024 5,543,980
</TABLE>
F-2
<PAGE>
<TABLE>
<CAPTION>
SIS BANCORP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL RATIOS AND DATA
<CAPTION>
For the Three Months Ended
September 30,
1997 1996
----------- ----------
<S> <C> <C>
Financial Ratios:
Fully diluted earnings per share $0.57 $1.84
Net interest margin (fully tax equivalent basis) 3.70% 3.94%
Fee income / total average assets 0.88% 0.91%
<CAPTION>
For the Nine Months Ended
September 30,
1997 1996
----------- ----------
<S> <C> <C>
Financial Ratios:
Fully diluted earnings per share $1.58 $2.82
Net interest margin (fully tax equivalent basis) 3.79% 3.86%
Fee income / total average assets 0.81% 0.88%
<CAPTION>
At At At
September 30, December 31, September 30,
1997 1996 1996
------------- -------------- --------------
<S> <C> <C> <C>
Asset Quality Ratios:
Nonperforming assets to total assets 0.33% 0.56% 0.59%
Allowance for possible loan losses to nonperforming loans 440.13% 223.61% 249.65%
Allowance for possible loan losses to total gross loans 2.68% 2.50% 2.55%
Capital Ratios:
Equity to assets ratio 7.36% 7.56% 7.56%
Tier 1 leverage capital ratio 7.13% 7.41% 7.31%
Tier 1 risk-based capital ratio 11.81% 12.79% 12.13%
Total risk-based capital ratio 13.07% 14.05% 13.39%
Book value per share (1) $ 18.94 $ 18.29 $ 17.51
Other Data:
Total residential loans serviced $ 985,656 $1,020,596 $1,039,876
Residential loans serviced for others 760,846 792,376 810,569
<CAPTION>
September December September
1997 1996 1996
------------- -------------- --------------
<S> <C> <C> <C>
Quarter to Date Average Balance Sheet (in thousands) :
Average loans $ 667,344 $ 609,106 $ 590,978
Average earning assets 1,359,163 1,228,252 1,146,978
Average assets 1,435,305 1,303,877 1,217,783
Average interest-bearing liabilities 1,182,883 1,078,452 1,013,753
Average equity 101,747 96,774 88,221
<FN>
1) Calculated on the basis of 5,647,024; 5,573,390; and 5,543,980 weighted
average shares outstanding on a fully diluted basis for the nine months
ended September 30, 1997, the year ended December 31, 1996, and the nine
months ended September 30, 1996, respectively.
</FN>
</TABLE>
F-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
SIS Bancorp, Inc. has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SIS BANCORP, INC.
Date: October 22, 1997 By: /s/F. William Marshall, Jr.
Name: F. William Marshall, Jr.
Title: President and Chief Executive Officer
Exhibit 99.1
P R E S S SIS Bancorp
R E L E A S E
FOR IMMEDIATE RELEASE
Date: October 22, 1997 Contact: Ting Chang, Vice President
Investor Relations
(413) 748-8271
SIS Bancorp Reports 35% Increase In Pre-Tax Earnings
Springfield, MA - October 22, 1997, 8:30 a.m. SIS Bancorp, Inc.,
(NASDAQ: SISB), the bank holding Company for Springfield Institution for Savings
("SIS Bank"), reported net income of $3.2 million or $0.57 per share (fully
diluted) for the quarter ended September 30, 1997, and $8.9 million or $1.58 per
share (fully diluted) for the nine months ended September 30, 1997.
For the same periods in 1996, the Company reported net income of $10.2
million and $15.7 million, respectively. Net income in 1996 was positively
influenced by certain non recurring tax benefits. Excluding the impact of these
tax items, pre-tax operating earnings for the quarter and nine months ended
September 30, 1997 increased 35% and 51% respectively over 1996.
In addition to reporting earnings, the Company announced the Board of
Directors' declaration of a quarterly cash dividend payment of $0.14 per share.
The cash dividend will be payable on November 21, 1997 to holders of record as
of the close of business on November 4, 1997.
"We are very pleased to report another quarter of increased core
operating earnings," said F. William Marshall, Jr., president and chief
executive officer of SIS Bancorp. "The results for the quarter reflect our
continued ability to differentiate ourselves in western Massachusetts as the
preferred provider of financial services. As we enter new markets through the
merger with Glastonbury Bank and Trust, we remain focused on activities which
generate growth in customers and build earnings momentum. Through these ends, we
believe SIS will build long term shareholder value."
Total assets at September 30, 1997 equaled $1.5 billion, representing a
$104.4 million increase from December 31, 1996. Expansion in the Company's loan
portfolio has contributed to the growth in total assets since year end 1996. At
September 30, 1997, total gross loans were
<PAGE>
$686.3 million, a 10% increase over year end 1996. The increase in total gross
loans is primarily due to the Company's on-going strategic emphasis on
increasing its home equity and commercial lending.
At September 30, 1997, total deposits were $1.0 billion, representing
an increase of $52.1 million or 5% from December 31, 1996. Deposit growth during
the first nine months of 1997 resulted principally from the Company's efforts to
expand its delivery systems and its on-going promotion of the convenience and
value of its products and services.
The Bank's total stockholders' equity at September 30, 1997 totaled
$107.0 million or 7.36% of total assets as compared to $101.9 million or 7.56%
of total assets at December 31, 1996. At September 30, 1997, the Bank's Tier 1
Leverage capital ratio was 7.13%; both the Company and the Bank qualify as
"well-capitalized" under applicable regulatory standards.
During the quarter, asset quality improved. Total nonperforming assets
at September 30, 1997 declined further to $4.9 million or 0.33% of total assets
and represented a $2.7 million reduction from year end 1996. The allowance for
possible loan losses totaled $18.4 million resulting in a reserve coverage ratio
of 440% of nonperforming loans, 379% of nonperforming assets, and 2.68% of total
gross loans outstanding.
For the quarter and nine months ended September 30, 1997, net interest
income was $12.5 million and $37.6 million, respectively. For comparable periods
in 1996, the Company reported net interest income of $11.2 million and $31.3
million. Higher levels of earning assets in 1997 resulted in the increase in net
interest income.
For the quarter and nine months ended September 30, 1997, provision for
possible loan losses totaled $0.4 million and $1.2 million, respectively,
compared to $0.8 million and $2.2 million for the same periods in 1996.
Noninterest income for the quarter and nine months ended September 30,
1997 was $3.3 million and $8.9 million, respectively, as compared to $2.9
million and $8.2 million over the same periods in 1996.
Total noninterest expense for the quarter and nine months ended
September 30, 1997 was $10.3 million and $30.6 million, respectively, as
compared to $9.6 million and $27.6 million for the same periods in 1996. The
increase in total operating expenses for the first nine months of 1997 reflects
costs related to the expansion of the Company's delivery systems, including new
branch locations, an expanded ATM network, and the introduction of new direct
marketing programs.
For the first nine months of 1997, the Company recorded a net expense
of real estate operations of $0.4 million as compared to net income of $0.2
million for the same period in 1996. The increased expense was attributable to
charges, recognized during the first quarter of 1997, in connection with the
Company's continuing divestment of its real estate subsidiary.
Commenting on the status of the acquisition of Glastonbury Bank and
Trust ("GBT"), Marshall indicated that the transaction is on schedule to close
by year end. Marshall further
2
<PAGE>
noted that the Company would be taking certain steps to accelerate the systems
conversions and full "back office" integration of GBT with SIS. As a result, the
combined companies anticipate taking a pre-tax charge of approximately $4.0
million in merger related expenses during the fourth quarter of 1997. Full
integration is expected to be completed before the end of the first quarter of
1998. The Company's objective is to realize, as soon as possible, the potential
synergies and future earnings related to this merger.
SIS Bancorp, Inc. is a Massachusetts bank holding company for SIS Bank,
its sole subsidiary. Established in 1827, SIS Bank serves its customers through
25 retail branches located throughout Hampden and Hampshire Counties. The Bank
services $1.0 billion in residential mortgages of which $761 million is for
others.
All inquiries may be forwarded to Ms. Ting Chang, vice president
investor relations and corporate planning, at (413) 748-8271.
This news release contains a forward looking statement regarding the
approximate pre-tax charge for merger related expenses, which SIS anticipates
incurring in connection with the acquisition of GBT. SIS cautions readers that
this forward looking statement involves certain risks and uncertainties as
further detailed in SIS' current report on Form 8-K dated October 22, 1997,
which has been filed with the Securities and Exchange Commission.
3
