SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 [NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996].
For the fiscal year ended December 31, 1998
------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED].
For the transition period from _______________ to ______________________
Commission File Number 0-22641
-------
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
Trenton Savings Bank, FSB 401(k) Profit Sharing Plan
B: Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
Peoples Bancorp, Inc.
134 Franklin Corner Road
Lawrenceville, New Jersey 08648
<PAGE>
TRENTON SAVINGS BANK
EMPLOYEE'S THRIFT/401(k) PLAN
Financial Statements and Schedules
December 31, 1998 and 1997
(With Independent Auditors' Report Thereon)
<PAGE>
TRENTON SAVINGS BANK
EMPLOYEE'S THRIFT/401(k) PLAN
Financial Statements and Schedules
December 31, 1998 and 1997
Index
Independent Auditors' Report
Statements of Net Assets Available for Benefits - December 31, 1998 and 1997
Statements of Changes in Net Assets Available for Benefits - Years ended
December 31, 1998 and 1997
Notes to Financial Statements - December 31, 1998 and 1997
Schedule
--------
Item 27(a) - Schedule of Assets Held for Investment Purposes - 1
December 31, 1998
Item 27(d) - Schedule of Reportable Transactions - Year ended 2
December 31, 1998
<PAGE>
[KPMG LETTERHEAD]
Independent Auditors' Report
The Compensation Committee of
the Board of Directors
Trenton Savings Bank:
We have audited the accompanying statements of net assets available for benefits
of the Trenton Savings Bank Employee's Thrift/401(k) Plan as of December 31,
1998 and 1997, and the related statements of changes in net assets available for
benefits for the years then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Trenton
Savings Bank Employee's Thrift/401(k) Plan as of December 31, 1998 and 1997, and
the changes in net assets available for benefits for the years then ended in
conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The 1998 supplemental schedules of assets
held for investment purposes and reportable transactions are presented for the
purpose of additional analysis and are not a required part of the 1998 basic
financial statements, but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The supplemental schedules
are the responsibility of the Plan's management. The fund information in the
statements of changes in net assets available for benefits is presented for
purposes of additional analysis rather than to present the changes in net assets
available for benefits of each fund. The supplemental schedules and fund
information have been subjected to the auditing procedures applied in the audits
of the basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
/s/ KPMG LLP
April 20, 1999
<PAGE>
TRENTON SAVINGS BANK
EMPLOYEE'S THRIFT/401(k) PLAN
Statements of Net Assets Available
for Benefits
December 31, 1998 and 1997
1998 1997
------ ------
Assets:
Investment funds at current value (note 5):
RSI Retirement Trust:
Core Equity Fund $ 627,216 $ 616,414
Emerging Growth Equity Fund 117,976 182,522
Value Equity Fund 63,246 113,748
International Equity Fund 24,746 19,305
Short-Term Investment Fund 103,319 310,433
Intermediate-Term Bond Fund 177,033 193,718
Actively Managed Bond Fund 181,069 226,520
Employer Stock Fund 2,930,697 1,909,986
----------- ----------
Total investment funds 4,225,302 3,572,646
Cash and cash equivalents 584 615
Loans receivable (note 6) 153,794 148,545
----------- ----------
Net assets available for benefits $ 4,379,680 $3,721,806
=========== ==========
See accompanying notes to financial statements.
2
<PAGE>
TRENTON SAVINGS BANK
EMPLOYEE'S THRIFT/401(k) PLAN
Statement of Changes in Net Assets
Available for Benefits (with Fund Information)
Years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998
Participant Directed
--------------------
Emerging Inter- Short-
Cash and Core Growth Value national Term
Cash Equity Equity Equity Equity Investment
Equivalents Fund Fund Fund Fund Fund
----------- ------ -------- ------ -------- ----------
Additions to net assets:
<S> <C> <C> <C> <C> <C> <C>
Employee contributions $ -- 49,708 16,741 10,353 3,537 10,271
Employer contributions -- 112,435 23,795 15,600 4,922 31,096
------ ------- ------- ------ ------ -------
Total contributions -- 162,143 40,536 25,953 8,459 41,367
------ ------- ------- ------ ------ -------
Investment income:
Dividends and interest -- -- -- -- -- --
Net investment gain -- 144,856 1,353 14,771 3,589 6,623
------ ------- ------- ------ ------ -------
Net investment income -- 144,856 1,353 14,771 3,589 6,623
------ ------- ------- ------ ------ -------
Interest on loans -- 3,165 1,487 329 106 834
Loan repayments -- 20,123 10,145 1,197 466 3,332
------ ------- ------- ------ ------ -------
Total additions -- 330,287 53,521 42,250 12,620 52,156
------ ------- ------- ------ ------ -------
Deductions from net assets:
Loans -- (25,281) (10,039) (3,287) (487) (5,172)
Distributions (31) (32,158) (3,889) (22,750) (845) (7,927)
------ ------- ------- ------ ------ -------
Total deductions (31) (57,439) (13,928) (26,037) (1,332) (13,099)
------ ------- ------- ------ ------ -------
Transfers among funds -- (262,046) (104,139) (66,715) (5,847) (246,171)
------ ------- ------- ------ ------ -------
Net increase (decrease) in
net assets available for
benefits (31) 10,802 (64,546) (50,502) 5,441 (207,114)
Net assets available for benefits
at beginning of year 615 616,414 182,522 113,748 19,305 310,433
------ ------- ------- ------ ------ -------
Net assets available for benefits
at end of year $ 584 627,216 117,976 63,246 24,746 103,319
====== ======= ======= ====== ====== =======
</TABLE>
<TABLE>
<CAPTION>
1998
Participant Directed
--------------------
Inter-
mediate- Actively
Term Managed
Bond Bond Employer Loans
Fund Fund Stock Fund Receivable Total
------- ------ ---------- ---------- ------
Additions to net assets:
<S> <C> <C> <C> <C> <C>
Employee contributions 13,613 7,114 83,127 -- 194,464
Employer contributions 16,961 16,879 58,348 -- 280,036
------ ------ ------- ------ -------
Total contributions 30,574 23,993 141,475 -- 474,500
------ ------ ------- ------ -------
Investment income:
Dividends and interest -- -- 24,450 -- 24,450
Net investment gain 10,988 14,265 135,024 -- 331,469
------ ------ ------- ------ -------
Net investment income 10,988 14,265 159,474 -- 355,919
------ ------ ------- ------ -------
Interest on loans 286 907 4,114 -- 11,228
Loan repayments 1,447 5,700 29,261 (71,671) --
------ ------ ------- -------- -------
Total additions 43,295 44,865 334,324 (71,671) 841,647
------ ------ ------- -------- -------
Deductions from net assets:
Loans (745) (6,575) (45,940) 97,526 --
Distributions (1,512) (9,114) (84,941) (20,606) (183,773)
------ ------ ------- ------ -------
Total deductions (2,257) (15,689) (130,881) 76,920 (183,773)
------ ------ ------- ------ -------
Transfers among funds (57,723) (74,627) 817,268 -- --
------ ------ ------- ------ -------
Net increase (decrease) in
net assets available for
benefits (16,685) (45,451) 1,020,711 5,249 657,874
Net assets available for benefits
at beginning of year 193,718 226,520 1,909,986 148,545 3,721,806
------ ------- --------- ------- ---------
Net assets available for benefits
at end of year $177,033 181,069 2,930,697 153,794 4,379,680
======== ======= ========= ======= =========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
TRENTON SAVINGS BANK
EMPLOYEE'S THRIFT/401(k) PLAN
Statement of Changes in Net Assets
Available for Benefits (with Fund Information)
Years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
1997
Participant Directed
--------------------
Emerging Inter- Short-
Cash and Core Growth Value national Term
Cash Equity Equity Equity Equity Investment
Equivalents Fund Fund Fund Fund Fund
----------- ------ -------- ------ -------- ----------
Additions to net assets:
<S> <C> <C> <C> <C> <C> <C>
Employee contribution $ -- 66,418 29,691 14,330 3,734 18,710
Employer contribution -- 58,684 25,154 12,488 3,093 15,839
------- ------- ------- ------- ------ -------
Total contributions -- 125,102 54,845 26,818 6,827 34,549
------- ------- ------- ------- ------ -------
Investment income:
Dividends and interest -- -- -- -- -- --
Net investment gain -- 112,213 13,444 21,873 47 10,004
------- ------- ------- ------- ------ -------
Net investment income -- 112,213 13,444 21,873 47 10,004
------- ------- ------- ------- ------ -------
Interest on loans -- 2,675 1,452 296 35 1,089
Loan repayments -- 11,416 6,560 1,896 127 5,568
------- ------- ------- ------- ------ -------
Total additions -- 251,406 76,301 50,883 7,036 51,210
------- ------- ------- ------- ------ -------
Deductions from net assets:
Loans -- (26,001) (16,528) (1,589) -- (17,192)
Distributions (1,841) (31,793) (18,206) (5,443) (1,832) (21,405)
------- ------- ------- ------- ------ -------
Total deductions (1,841) (57,794) (34,734) (7,032) (1,832) (38,597)
------- ------- ------- ------- ------ -------
Transfers among funds -- 9,479 (7,569) 10,599 -- 179,851
------- ------- ------- ------- ------ -------
Net increase (decrease) in
net assets available for
benefits (1,841) 203,091 33,998 54,450 5,204 192,464
Net assets available for benefits
at beginning of year 2,456 413,323 148,524 59,298 14,101 117,969
-------- ------- ------- ------- ------ -------
Net assets available for benefits
at end of year $ 615 616,414 182,522 113,748 19,305 310,433
======== ======= ======= ======= ====== =======
</TABLE>
<TABLE>
<CAPTION>
1997
Participant Directed
--------------------
Inter-
mediate- Actively
Term Managed
Bond Bond Employer Loans
Fund Fund Stock Fund Receivable Total
-------- ------- ---------- ---------- -----
Additions to net assets:
<S> <C> <C> <C> <C> <C>
Employee contribution 21,448 21,144 47,762 -- 223,237
Employer contribution 17,082 16,205 45,724 -- 194,269
------- ------- --------- ------- ---------
Total contributions 38,530 37,349 93,486 -- 417,506
------- ------- --------- ------- ---------
Investment income:
Dividends and interest -- -- 14,931 -- 14,931
Net investment gain 12,163 22,105 1,250,047 -- 1,441,896
------- ------- --------- ------- ---------
Net investment income 12,163 22,105 1,264,978 -- 1,456,827
------- ------- --------- ------- ---------
Interest on loans 300 1,187 4,235 -- 11,269
Loan repayments 3,044 4,846 10,294 (43,751) --
------- ------- --------- ------- ---------
Total additions 54,037 65,487 1,372,993 (43,751) 1,885,602
------- ------- --------- ------- ---------
Deductions from net assets:
Loans (5,216) (6,488) (10,059) 83,073 --
Distributions (16,467) (15,022) (12,812) (10,606) (135,427)
------- ------- --------- -------- ---------
Total deductions (21,683) (21,510) (22,871) 72,467 (135,427)
------- ------- --------- -------- ---------
Transfers among funds (15,444) (41,589) (135,327) -- --
------- ------- --------- -------- ---------
Net increase (decrease) in
net assets available for
benefits 16,910 2,388 1,214,795 28,716 1,750,175
Net assets available for benefits
at beginning of year 176,808 224,132 695,191 119,829 1,971,631
------- ------- --------- ------- ---------
Net assets available for benefits
at end of year $193,718 226,520 1,909,986 148,545 3,721,806
======== ======= ========= ======== =========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
TRENTON SAVINGS BANK
EMPLOYEE'S THRIFT/401(k) PLAN
Notes to Financial Statements
December 31, 1998 and 1997
(1) Summary of Significant Accounting Policies
General
The accompanying financial statements of the Trenton Savings Bank
Employee's Thrift/401(k) Plan (the Plan) are prepared on the accrual
basis of accounting.
On October 1, 1996, Trenton Savings Bank and subsidiaries (the Bank)
acquired Burlington County Bank. Effective the date of merger, Burlington
County Bank's employees became eligible to participate in the Plan.
Effective August 1, 1996, employees of TSBusiness Finance Corporation (a
subsidiary of Trenton Savings Bank) became eligible to participate in the
Plan.
Effective January 1, 1997, in conjunction with the acquisition of
Manchester Trust Bank, the Manchester Plan was merged with the Plan and
Manchester Trust Bank's employees became eligible to participate in the
Plan.
Management of Trust Funds
All assets of the Plan other than the stock fund are managed by RSI
Retirement Trust (RSI). The Employer Stock fund is managed by Marine
Midland Bank.
Investments
Investment funds are stated at current value. The current value of
investments is based on current market quotations.
The assets of the Plan are primarily financial instruments which are
monetary in nature. As a result, interest rates have a more significant
impact on the Plan's performance than do the effects 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 as measured
by the consumer price index. Investments in funds are subject to risk
conditions of the individual fund objectives, the stock market, interest
rates, economic conditions and world affairs.
Under the terms of the Plan, the following eight investment funds are
currently maintained as follows:
Core Equity Fund - This fund offers potential long-term capital
appreciation, with income as a secondary goal. It invests in a
broadly diversified group of high-quality, medium to large
companies that appear attractively valued and exhibit substantial
earnings growth.
(Continued)
5
<PAGE>
TRENTON SAVINGS BANK
EMPLOYEE'S THRIFT/401(k) PLAN
Notes to Financial Statements
December 31, 1998 and 1997
Emerging Growth Equity Fund - This fund's assets are invested
primarily in stocks of smaller companies with higher-than-average
potential for earnings growth.
Value Equity Fund - This growth and income fund seeks capital
appreciation over the longer term. It invests in stocks of a
broadly diversified group of companies that are selling at low
market valuations based on price/earnings ratios and whose shares
offer prospects for significant earnings and dividend growth.
International Equity Fund - This fund seeks capital appreciation
by investing primarily in stocks of small, medium and large
capitalization companies headquartered in foreign countries to
take advantage of opportunities outside the U.S. capital markets.
Short-Term Investment Fund - This fund invests in high-quality
money market instruments with a maximum average maturity of one
year. It offers substantial liquidity and little risk of principal
loss.
Intermediate-Term Bond Fund - This fund invests in high-quality,
fixed income vehicles that mature within 10 years or have expected
average lives of 10 years or less. At least 65% of its assets are
invested in securities issued or backed by the United States
Government.
Actively Managed Bond Fund - The maturity structure of this fund
is expected to vary substantially, based on the perceived relative
attractiveness of different areas of the fixed income market. At
least 65% of its assets are invested in securities issued or
backed by the United States Government.
Employer Stock Fund - This fund enables participants to purchase
shares of the Bank's holding company, Peoples Bancorp, Inc. common
stock.
Use of Estimates
A number of estimates and assumptions have been made with respect to the
determination of the fair values of assets and related investment income
to prepare these financial statements in conformity with generally
accepted accounting principles. Actual results could differ from those
estimates.
(2) Description of Plan
The following brief description of the Plan is provided for general
information purposes only. Participants should refer to the plan
agreement for more complete information.
(Continued)
6
<PAGE>
TRENTON SAVINGS BANK
EMPLOYEE'S THRIFT/401(k) PLAN
Notes to Financial Statements
December 31, 1998 and 1997
The Plan is a defined contribution plan which covers all employees of the
Bank who are employed on a full-time basis, provided such employee has
attained the age of 21, has completed a period of service of one year, as
defined, and is classified as a salaried employee or as an hourly-paid
employee regularly scheduled to complete at least 870 hours of service in
a plan year, as defined, with the Bank. The Plan is subject to the
provisions of the Employee Retirement Income Security Act of 1974
(ERISA).
Members may direct contributions made by or for them to all or any
investment funds in 1% increments. A member is 100% vested at all times
for his salary deferred contributions. The employer's contributions and
related earnings or losses made to a member's account are vested 20%
after one year of service; 40% after two years of service; 60% after
three years of service; 80% after four years of service; and 100% after
five years of service.
The Bank has agreed to match the employees' contributions to the trust in
an amount equal to 90% of a certain percentage of each member's salary
deferred contributions as established by the Bank from time to time, up
to a maximum of 5.4%. Member contributions are limited to the lesser of
11% of the member's compensation, as defined, or such amount permissible
under the Internal Revenue Code (the Code). All contributions are paid to
the investment manager by the Bank.
After a member's separation from service with the Bank for any reason
(retirement, termination, etc.), the vested portion of his account shall
be distributed as a cash lump-sum payment. The benefit to which a
participant is entitled is the benefit that can be provided from the
participant's vested account. If the Plan were terminated, however, all
members of the Plan would automatically become 100% vested in their fund
balances.
Although the Bank has not expressed an intent to terminate the Plan, it
may do so at any time by action of its Board of Directors.
(3) Forfeitures
Forfeitures arising from the termination of members who were not fully
vested shall be used by the Bank to reduce its contributions.
(4) Federal Income Taxes
The Internal Revenue Service (IRS) issued its latest determination letter
on May 6, 1997 which stated that the Plan and its underlying trust
qualify under the applicable provisions of the Code and, therefore, are
exempt from Federal income taxes. In the opinion of the Plan's trustees,
the Plan and its underlying trust have operated within the terms of the
Plan and remain qualified under the applicable provisions of the Code.
(Continued)
7
<PAGE>
TRENTON SAVINGS BANK
EMPLOYEE'S THRIFT/401(k) PLAN
Notes to Financial Statements
December 31, 1998 and 1997
(5) Investments
The following is a summary of individual investments that represent 5% or
more of net assets available for benefits at December 31, 1998 and 1997:
1998 1997
--------------- ---------------
RSI Retirement Trust:
Core Equity Fund $ 627,216 $ 616,414
Emerging Growth Equity Fund 117,976 182,522
Short-Term Investment Fund 103,319 310,433
Intermediate-Term Bond Fund 177,033 193,718
Actively Managed Bond Fund 181,069 226,520
Employer Stock Fund $ 2,930,697 $ 1,909,986
=============== ===============
(6) Loans Receivable
Participants may borrow from their fund accounts at a minimum of $1,000
up to a maximum equal to the lesser of $50,000, reduced by the highest
outstanding loan balance during the preceding twelve months or 50% of the
net value of their account balance. The loans are secured by the balance
in the participant's account and bear interest at a rate commensurate
with local prevailing rates. Principal and interest is paid ratably
through bi-weekly payroll deductions.
(7) Management Fees
Costs of management services rendered on behalf of the Plan were paid by
the Bank for the years ended December 31, 1998 and 1997.
(8) Plan of Merger
The Bancorp signed a definite agreement and plan of merger on September
7, 1998 providing for the merger with and into Sovereign Bancorp, Inc.
Under terms of the merger agreement, each share of the Bancorp will be
exchanged for .80 shares of Sovereign Bancorp, Inc. common stock. The
merger is expected to be completed in the second quarter of 1999 and is
pending shareholder and regulatory approval.
8
<PAGE>
Schedule 1
----------
TRENTON SAVINGS BANK
EMPLOYEE'S THRIFT/401(k) PLAN
Item 27(a) - Schedule of Assets Held for Investment Purposes
December 31, 1998
Current
Cost value
------------- ---------
Description
RSI Retirement Trust:
Core Equity Fund $ 215,350 $ 627,216
Emerging Growth Equity Fund 93,288 117,976
Value Equity Fund 54,598 63,246
International Equity Fund 20,133 24,746
Short-Term Investment Fund 103,135 103,319
Intermediate-Term Bond Fund 174,554 177,033
Actively Managed Bond Fund 174,643 181,069
Employer Stock Fund 1,705,774 2,930,697
Cash and cash equivalents 584 584
Loans receivable 148,545 153,794
------------- ----------
$ 2,690,604 $4,379,680
============= ==========
<PAGE>
Schedule 2
----------
TRENTON SAVINGS BANK
EMPLOYEE'S THRIFT/401(k) PLAN
Item 27(d) - Schedule of Reportable Transactions
Year ended December 31, 1998
Sales Purchases
----- ---------
Net
Number Gain Purchase
of Units Cost Proceeds (Loss) Price
-------- --------- -------- ------ ---------
Core Equity Fund Various $ 357,343 357,343 - 223,476
Employer Stock Fund Various 825,054 811,122 (13,932) 996,704
Marine Midland Bank
Short-Term
Investment Fund Various 707,430 707,430 - 706,453
RSI Short -Term
Investment Fund Various 378,987 378,987 - 165,250
======= ======= ====== =======
<PAGE>
The Board of Directors
Peoples Bancorp, Inc.:
We consent to incorporation by reference in the registration statement on Form
11-K of Peoples Bancorp, Inc. of our report dated January 25, 1999, relating to
the consolidated statements of condition of Peoples Bancorp, Inc. and
subsidiaries as of December 31, 1998 and 1997, and the related consolidated
statements of income, stockholder's equity, and cash flows for each of the years
in the three-year period ended December 31, 1998, which report appears in the
December 31, 1998 annual report on Form 10-K of Peoples Bancorp, Inc.
/s/ KPMG LLP
Short Hills, New Jersey
June 29, 1999
<PAGE>
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of
1934, the trustees (or other persons who administer the employee benefit plan)
have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
TRENTON SAVINGS BANK, FSB 401(K)
PROFIT SHARING PLAN
Date: June 21, 1999 By: /s/ Patricia F. Pikus
-----------------------------------------
Name: Patricia F. Pikus
Title: Assistant Vice President
HSBC BankUSA as Trustee
