<PAGE>
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 QUARTER ENDED JUNE 30, 2000
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
COMMISSION FILE NUMBER: 000-25077
SEACOAST FINANCIAL SERVICES CORPORATION
------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Massachusetts 04-1659040
------------------------ --------------------------------
(State of Incorporation) (IRS Employer Identification No.)
One Compass Place, New Bedford, Massachusetts 02740
--------------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
(508) 984-6000
-------------------------------
(Registrant's Telephone Number)
791 Purchase Street, New Bedford, Massachusetts 02740
-------------------------------------------------------------------------------
Former Name, Former Address and Former Fiscal Year if Changed Since Last Report
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
--- ---
At August 11, 2000, the Company had 25,155,361 shares of common stock
outstanding.
<PAGE>
SEACOAST FINANCIAL SERVICES CORPORATION
INDEX
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION Page No.
--------
<S> <C> <C> <C>
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets at June 30, 2000 1
and December 31, 1999
Consolidated Statements of Income for the three months and six months 2
ended June 30, 2000 and 1999
Consolidated Statements of Changes in Stockholders' Equity for the six months 3
ended June 30, 2000 and 1999
Consolidated Statements of Cash Flows for the six months ended 4
June 30, 2000 and 1999
Notes to Unaudited Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial 10
Condition and Results of Operations
Liquidity and Capital Resources 13
Item 3. Quantitative and Qualitative Disclosures About Market Risk 14
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 2. Changes in Securities and Use of Proceeds 15
Item 3. Defaults upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURES 17
EXHIBIT 27 - Financial Data Schedule
</TABLE>
<PAGE>
SEACOAST FINANCIAL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
---- ----
<S> <C> <C>
ASSETS:
Cash and due from banks ....................................................... $ 79,635 $ 60,245
Federal funds sold ............................................................ 106 106
----------- -----------
Total cash and cash equivalents ............................................. 79,741 60,351
Other short-term investments .................................................. 7 231
Investment securities -
Available-for-sale, at fair value ........................................... 222,992 245,583
Held-to-maturity, at amortized cost ......................................... 12,403 12,408
Restricted equity securities ................................................ 18,589 14,936
Loans held-for-sale ........................................................... 1,755 756
Loans, net (Note 2) ........................................................... 1,935,428 1,730,378
Accrued interest receivable ................................................... 11,354 9,426
Banking premises and equipment, net ........................................... 37,434 26,585
Other real estate owned, net .................................................. 229 552
Net deferred tax asset ........................................................ 13,428 12,527
Other assets .................................................................. 7,850 9,052
----------- -----------
Total assets .............................................................. $ 2,341,210 $ 2,122,785
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits (Note 3) ............................................................. $ 1,660,855 $ 1,515,622
Short-term borrowings ......................................................... 30,721 40,787
Federal Home Loan Bank advances ............................................... 352,626 271,900
Other borrowings .............................................................. 1,908 1,935
Mortgagors' escrow payments ................................................... 3,408 3,829
Accrued expenses and other liabilities ........................................ 15,172 14,691
----------- -----------
Total liabilities ......................................................... 2,064,690 1,848,764
----------- -----------
COMMITMENTS AND CONTINGENCIES
Stockholders' equity (Notes 6 and 7):
Preferred stock, par value $.01 per share; authorized 10,000,000 shares;
none issued .............................................................. -- --
Common stock, par value $.01 per share; authorized 100,000,000 shares;
26,758,136 shares issued ................................................. 268 268
Additional paid-in capital .................................................. 152,788 152,702
Treasury stock, at cost, 1,602,775 shares in 2000 and 898,500 shares in 1999 (15,951) (9,310)
Retained earnings ........................................................... 157,744 149,256
Accumulated other comprehensive income (loss) ............................... (2,794) (2,430)
Unearned compensation - ESOP and restricted stock ........................... (15,389) (16,326)
Shares held in employee trust ............................................... (146) (139)
----------- -----------
Total stockholders' equity ............................................. 276,520 274,021
----------- -----------
Total liabilities and stockholders' equity ............................. $ 2,341,210 $ 2,122,785
=========== ===========
</TABLE>
See accompanying notes to the unaudited consolidated financial statements.
1
<PAGE>
SEACOAST FINANCIAL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
----------------- -----------------
2000 1999 2000 1999
------- ------- ------- -------
<S> <C> <C> <C> <C>
INTEREST AND DIVIDEND INCOME:
Interest on loans ......................................... $35,877 $29,249 $69,090 $57,125
Interest and dividends on investment securities ........... 4,323 4,285 8,469 8,822
Interest on federal funds sold and short-term investments . 25 46 34 359
------- ------- ------- -------
Total interest and dividend income ...................... 40,225 33,580 77,593 66,306
------- ------- ------- -------
INTEREST EXPENSE:
Interest on deposits ...................................... 14,952 13,245 28,702 26,658
Interest on borrowed funds ................................ 5,446 2,237 10,103 3,676
------- ------- ------- -------
Total interest expense .................................. 20,398 15,482 38,805 30,334
------- ------- ------- -------
Net interest income ..................................... 19,827 18,098 38,788 35,972
PROVISION FOR LOAN LOSSES .................................... 1,200 350 2,250 575
------- ------- ------- -------
Net interest income after provision
for loan losses ....................................... 18,627 17,748 36,538 35,397
------- ------- ------- -------
NONINTEREST INCOME:
Deposit and other banking fees ............................ 1,393 1,262 2,621 2,450
Loan servicing fees, net .................................. 141 155 344 324
Card fee income, net ...................................... 300 198 480 288
Other loan fees ........................................... 198 110 423 233
Gain on sales of investment securities, net ............... -- 121 4 158
Gain on sales of loans, net ............................... 1 4 1 78
Other income .............................................. 268 277 607 458
------- ------- ------- -------
Total noninterest income ................................ 2,301 2,127 4,480 3,989
------- ------- ------- -------
NONINTEREST EXPENSE:
Salaries and employee benefits ............................ 6,461 5,521 13,156 10,820
Occupancy and equipment expenses .......................... 1,402 1,427 2,847 2,935
Data processing expenses .................................. 1,164 1,084 2,322 2,245
Marketing expenses ........................................ 694 590 1,239 1,117
Professional services expenses ............................ 538 468 916 702
Other operating expenses .................................. 1,323 1,962 2,808 3,837
------- ------- ------- -------
Total noninterest expense ............................... 11,582 11,052 23,288 21,656
------- ------- ------- -------
Income before provision for income taxes ................ 9,346 8,823 17,730 17,730
PROVISION FOR INCOME TAXES ................................... 3,347 3,018 6,303 6,308
------- ------- ------- -------
Net income .............................................. $ 5,999 $ 5,805 $11,427 $11,422
======= ======= ======= =======
Net income per share-diluted (Note 4) ................... $ 0.25 $ 0.23 $ 0.48 $ 0.45
======= ======= ======= =======
Weighted average number of outstanding shares (diluted).. 23,764 25,661 23,916 25,655
======= ======= ======= =======
</TABLE>
See accompanying notes to the unaudited consolidated financial statements.
2
<PAGE>
SEACOAST FINANCIAL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNT)
<TABLE>
<CAPTION>
ACCUMULATED
ADDITIONAL OTHER
COMMON PAID-IN TREASURY RETAINED COMPREHENSIVE
STOCK CAPITAL STOCK EARNINGS INCOME (LOSS)
------ --------- -------- -------- -------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1998 ............................... $268 $ 152,936 $ -- $127,263 $ 2,337
Net income ............................................... -- -- -- 11,422 --
Other comprehensive income-Change in unrealized gain
(loss) on securities available for sale, net of taxes -- -- -- -- (2,948)
Comprehensive income ...........................
Amortization of unearned compensation .................... -- 3 -- -- --
---- --------- -------- -------- -------
Balance, June 30, 1999 ................................... $268 $ 152,939 $ -- $138,685 $ (611)
==== ========= ======== ======== =======
Balance, December 31, 1999 ............................... $268 $ 152,702 $ (9,310) $149,256 $(2,430)
Repurchase of common stock (Note 6) ...................... -- -- (6,641) -- --
Net income ............................................... -- -- -- 11,427 --
Other comprehensive income-Change in unrealized loss on
securities available for sale, net of taxes ....... -- -- -- -- (364)
Comprehensive income ......................
Cash dividends - $.12 per share .......................... -- -- -- (2,939) --
Amortization of unearned compensation .................... -- (14) -- -- --
Other .................................................... -- 100 -- -- --
---- --------- -------- -------- -------
Balance, June 30, 2000 ................................... $268 $ 152,788 $(15,951) $157,744 $(2,794)
==== ========= ======== ======== =======
<CAPTION>
SHARES HELD
UNEARNED IN EMPLOYEE
COMPENSATION TRUST TOTAL
------------ ------------ ---------
<S> <C> <C> <C>
Balance, December 31, 1998 ............................... $(11,153) $(139) $271,512
Net income ............................................... -- -- 11,422
Other comprehensive income-Change in unrealized gain
(loss) on securities available for sale, net of taxes -- -- (2,948)
--------
Comprehensive income ........................... 8,474
Amortization of unearned compensation .................... 280 -- 283
-------- ----- --------
Balance, June 30, 1999 ................................... $(10,873) $(139) $280,269
======== ===== ========
Balance, December 31, 1999 ............................... $(16,326) $(139) $274,021
Repurchase of common stock (Note 6) ...................... -- -- (6,641)
Net income ............................................... -- -- 11,427
Other comprehensive income-Change in unrealized loss on
securities available for sale, net of taxes ....... -- -- (364)
--------
Comprehensive income ...................... 11,063
Cash dividends - $.12 per share .......................... -- -- (2,939)
Amortization of unearned compensation .................... 937 -- 923
Other .................................................... -- (7) 93
-------- ------- --------
Balance, June 30, 2000 ................................... $(15,389) $ (146) $276,520
======== ======= ========
</TABLE>
See accompanying notes to the unaudited consolidated financial statements.
3
<PAGE>
SEACOAST FINANCIAL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ................................................. $ 11,427 $ 11,422
Adjustments to reconcile net income to net cash
provided by operating activities-
Depreciation ............................................... 1,211 1,227
Amortization and accretion, net ............................ 1,372 848
Provision for loan losses .................................. 2,250 575
Gain on sale of investment securities, net ................. (4) (158)
Other real estate owned income ............................. -- (58)
Provision (benefit) for deferred taxes ..................... (665) 12
Origination of loans held-for-sale ......................... (1,496) (4,652)
Proceeds from sales of loans originated for resale ......... 498 4,730
Gain on sales of loans, net ................................ (1) (78)
Net increase in accrued interest receivable ................ (1,928) (914)
Net (increase) decrease in other assets .................... 899 (1,792)
Net increase (decrease) in accrued expenses
and other liabilities .................................. 496 (2,373)
--------- ---------
Net cash provided by operating activities .............. 14,059 8,879
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Change in short-term investments, net ...................... 224 30,946
Purchase of securities classified as available-for-sale .... (26,065) (38,004)
Purchase of securities classified as held-to-maturity ...... (1,000) --
Purchase of restricted equity securities ................... (3,653) (320)
Proceeds from sales, calls, paydowns and maturities of
securities classified as available-for-sale ............. 47,997 66,549
Proceeds from paydowns, maturities and calls of securities
classified as held-to-maturity .......................... 1,000 1,000
Purchases of loans ......................................... (12,626) (5,486)
Net increase in loans ...................................... (194,718) (212,180)
Recoveries of loans previously charged off ................. 205 300
Proceeds from sales of other real estate owned ............. 162 158
Purchase of premises and equipment ......................... (12,060) (4,172)
--------- ---------
Net cash used in investing activities .................. (200,534) (161,209)
--------- ---------
</TABLE>
4
<PAGE>
SEACOAST FINANCIAL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
2000 1999
----- -----
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in NOW, money market deposit and
demand deposit accounts....................................... $ 24,655 $ 12,324
Increase in passbook and other savings accounts................. 4,128 10,867
Increase (decrease) in term certificates........................ 116,450 (6,590)
Advances from Federal Home Loan Bank............................ 260,000 75,000
Repayments of Federal Home Loan Bank advances................... (179,274) (4,933)
Increase (decrease) in short-term and other borrowings.......... (10,093) 25,583
Increase (decrease) in mortgagor's escrow payments.............. (421) 140
Repurchase of common stock..................................... (6,641) --
Cash dividends.................................................. (2,939) --
---------- ---------
Net cash provided by financing activities.................... 205,865 112,391
---------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS..................................................... 19,390 (40,029)
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR............................................... 60,351 101,419
----------- ----------
CASH AND CASH EQUIVALENTS,
END OF PERIOD................................................... $ 79,741 $ 61,390
========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Interest paid on deposits and borrowed funds................. $ 38,670 $ 30,001
Income taxes paid............................................ 6,492 9,228
SUPPLEMENTAL DISCLOSURE OF NONCASH
TRANSACTIONS:
Transfers from loans to other real estate owned.............. 61 514
Financed sales of other real estate owned.................... 222 871
</TABLE>
See accompanying notes to the unaudited consolidated financial statements.
5
<PAGE>
SEACOAST FINANCIAL SERVICES CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000 AND 1999
(1) BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The unaudited consolidated financial statements of Seacoast Financial
Services Corporation ("the Company") and its wholly-owned subsidiaries, Compass
Bank for Savings ("Compass" or "the Bank") and Lighthouse Securities
Corporation, presented herein should be read in conjunction with the
consolidated financial statements of the Company as of and for the year ended
December 31, 1999 included as part of its Form 10-K.
In the opinion of management, the accompanying unaudited financial
statements reflect all adjustments (consisting of normal recurring adjustments)
necessary for a fair presentation. Management is required to make estimates and
assumptions that affect amounts reported in the financial statements. Actual
results could differ significantly from those estimates.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company's significant accounting policies are described in Note 1 of
the Notes to Consolidated Financial Statements included in its Form 10-K for the
year ended December 31, 1999 filed with the Securities and Exchange Commission.
For interim reporting purposes, the Company follows the same significant
accounting policies.
(2) LOANS
The Bank's loan portfolio consisted of the following:
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
---------- ----------
(In thousands)
<S> <C> <C>
Real estate loans:
Residential (one-to-four family) $ 981,358 $ 896,479
Commercial ..................... 242,858 223,500
Home equity lines of credit .... 29,310 26,076
Construction ................... 86,622 71,735
---------- ----------
Total real estate loans ..... 1,340,148 1,217,790
---------- ----------
Commercial loans ........................... 84,002 66,360
---------- ----------
Consumer loans:
Indirect auto loans ............ 491,232 439,753
Less-Unearned discount ......... 11,024 17,370
---------- ----------
Indirect auto loans, net ..... 480,208 422,383
Other .......................... 49,573 40,673
---------- ----------
Total consumer loans, net .... 529,781 463,056
---------- ----------
Total loans .................. 1,953,931 1,747,206
Less-Allowance for loan losses ............ 18,503 16,828
---------- ----------
Total loans, net ............. $1,935,428 $1,730,378
========== ==========
</TABLE>
Non-accrual loans amounted $5,651,000 and $5,734,000 at June 30, 2000
and December 31, 1999, respectively.
6
<PAGE>
SEACOAST FINANCIAL SERVICES CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000 AND 1999
(3) DEPOSITS
A summary of deposit balances is as follows:
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
---------- ----------
(In thousands)
<S> <C> <C>
Demand deposit accounts................................................. $ 133,173 $ 101,218
NOW and money market deposit accounts ................................... 455,752 463,152
Passbook and other savings accounts ..................................... 218,445 214,317
---------- ----------
Total non-certificate accounts ....................................... 807,470 778,687
---------- ----------
Term certificates-
Term certificates of $100,000 and over ................................... 183,257 157,113
Term certificates less than $100,000 ..................................... 670,128 579,822
---------- ----------
Total term certificate accounts ....................................... 853,385 736,935
---------- ----------
Total deposits ........................................................ $1,660,855 $1,515,622
========== ==========
</TABLE>
(4) EARNINGS PER SHARE
Diluted earnings per share for the three months and six months ended June
30, 1999 and 2000 were computed based on the adjusted weighted average number of
shares outstanding during the periods. Unallocated ESOP shares and unvested
restricted stock awards are not considered outstanding for purposes of the
computation of earnings per share. There is only an insignificant difference in
the number of shares used in computing basic and diluted earnings per share and,
accordingly, such per share amounts do not differ.
(5) BUSINESS SEGMENT INFORMATION
The community banking business segment consists of commercial and retail
banking. This segment is managed as a single strategic unit which derives its
revenues from a wide range of banking services, including investing and
lending activities and acceptance of demand, savings and time deposits,
merchant credit card services as well as servicing loans for investors. There
is no major customer, as defined, and the Bank operates within a single
geographic area (southeastern Massachusetts).
Non-reportable operating segments of the Company's operations which do
not have similar characteristics to the community banking operations and do
not meet the quantitative thresholds requiring disclosure, are included in
the Other category in the disclosure of business segments below. These
non-reportable segments include the Parent Company.
7
<PAGE>
SEACOAST FINANCIAL SERVICES CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000 AND 1999
(5) BUSINESS SEGMENT INFORMATION (CONTINUED)
Reportable segment specific information and reconciliation to
consolidated financial information as of June 30, 2000 and 1999 and for the six
month periods then ended are as follows (in thousands):
<TABLE>
<CAPTION>
Other
Adjustments
Community and
Banking Other Eliminations Consolidated
------- ----- ------------ ------------
<S> <C> <C> <C> <C>
June 30, 2000
Investment securities................. $ 251,075 $ 2,909 $ -- $ 253,984
Net loans............................. 1,935,428 10,569 (10,569) 1,935,428
Total assets.......................... 2,338,251 276,746 (273,787) 2,341,21
Total deposits........................ 1,660,855 -- -- 1,660,855
Total borrowings...................... 385,255 -- -- 385,255
Total liabilities..................... 2,064,464 226 -- 2,064,690
Net interest income................... 38,724 478 (414) 38,788
Provision for loan losses............. 2,250 -- -- 2,250
Total noninterest income.............. 4,480 -- -- 4,480
Total noninterest expense............. 22,755 533 -- 23,288
Net income............................ 11,462 11,427 (11,462) 11,427
June 30, 1999
Investment securities................. $ 279,783 $ 2,428 $ -- $ 282,211
Net loans............................. 1,605,645 11,080 (11,080) 1,605,645
Total assets.......................... 2,004,313 280,831 (278,335) 2,006,809
Total deposits........................ 1,513,816 -- -- 1,513,816
Total borrowings...................... 194,423 -- -- 194,423
Total liabilities..................... 1,725,968 572 -- 1,726,540
Net interest income................... 35,931 473 (432) 35,972
Provision for loan losses...,......... 575 -- -- 575
Total noninterest income.............. 3,989 -- -- 3,989
Total noninterest expense............. 21,302 354 -- 21,656
Net income............................ 11,331 11,422 (11,331) 11,422
</TABLE>
(6) STOCK REPURCHASE PROGRAMS
In July 1999, the Board of Directors authorized the Company to repurchase
up to 1,000,000 shares in the open market to meet the anticipated needs of stock
awards and stock options issued in connection with the 1999 Stock Incentive
Plan. In October 1999 and July 2000, the Board of Directors, with the approval
of the Commissioner of Banks, authorized the Company to repurchase up to an
additional 1,231,900 and 1,254,312 shares, respectively, in the open market. The
Board of Directors delegated to the discretion of senior management the
authority to determine the timing of the repurchase programs' commencement, the
timing of the subsequent repurchases and the prices at which repurchases will be
made.
As of August 11, 2000, the Company had repurchased 2,162,775 shares of its
common stock under these programs at a total cost of $22,580,228, all of which
had been repurchased as of June 30, 2000.
8
<PAGE>
SEACOAST FINANCIAL SERVICES CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000 AND 1999
(7) QUARTERLY CASH DIVIDEND
On July 20, 2000, the Board of Directors voted the payment of a quarterly
cash dividend of $.07 per share. The dividend is payable on August 18, 2000 to
stockholders of record on August 4, 2000.
(8) SUBSEQUENT EVENT - PENDING ACQUISITION
On July 20, 2000, the Company entered into a definitive agreement with Home
Port Bancorp, Inc. (Home Port) under which the Company would acquire all of the
outstanding stock of Home Port for cash of $37 per share resulting in a
transaction value of approximately $68.5 million, exclusive of one-time
transaction costs.
Home Port is the holding company for Nantucket Bank, a three branch savings
bank with total assets of approximately $328.5 million, located on Nantucket
Island, Massachusetts. The Company intends to keep Nantucket Bank as a separate
operating subsidiary retaining its name and charter. Accordingly, the only cost
savings initially expected from the transaction are from the elimination of Home
Port as the holding company for Nantucket Bank. Home Port has agreed to omit the
payment of dividends to shareholders for the remainder of 2000.
In connection with the execution of the definitive agreement, a reciprocal
break-up fee of $3.5 million was negotiated. In addition, the Company was
granted an option to purchase up to 19.9% of Home Port's outstanding common
stock under certain circumstances.
The transaction is subject to Home Port shareholder and regulatory approval
and is expected to close by the end of 2000. The transaction will be accounted
for under the purchase method of accounting.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This Form 10-Q contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Actual events could differ materially from
those anticipated in the forward-looking statements. Important factors that
might cause such a difference include, among other things, general economic
conditions, particularly the real estate market, in the Company's primary market
area, potential increases in the Company's non-performing assets (as well as
increases in the allowance for loan losses that might be necessary),
concentrations of loans in a particular geographic area or with certain large
borrowers, changes in government regulation and supervision, including increased
deposit insurance premiums or capital or reserve requirements, changes in
interest rates, and increased competition and bank consolidations in the
Company's market area.
COMPARISON OF FINANCIAL CONDITION AT JUNE 30, 2000 AND DECEMBER 31, 1999
Total assets increased by $218.4 million from $2,122.8 million at December
31, 1999 to $2,341.2 million at June 30, 2000. During the six months ended June
30, 2000, Compass increased its loan portfolio by $206.7 million, or 11.8%,
which was funded principally by deposit growth (primarily certificates of
deposit) of $145.3 million and, to a lesser extent, additional Federal Home Loan
Bank borrowings of $67.6 million.
The increase in loans occurred primarily in the residential mortgage,
indirect auto and commercial loan portfolios. From December 31, 1999 to June 30,
2000, residential mortgage loans increased by $84.9 million, or 9.5%, indirect
auto loans (net of unearned discounts) increased by $57.8 million, or 13.7% and
commercial loans (including commercial real estate loans) increased by $37.0
million, or 12.8%. The growth during the six months ended June 30, 2000 is
generally attributable to the favorable economic conditions which prevailed
during this period. The Bank has continued to retain all residential mortgage
loan originations in portfolio and has continued to emphasize the origination of
indirect auto loans through its network of automobile dealers which has been
expanded to include dealers in communities contiguous to the metropolitan Boston
area. The increase in commercial loans reflects the Bank's strategy to expand
this portion of its loan portfolio. Towards that end, the Bank has added four
commercial lenders since November 1999.
Total deposits at June 30, 2000 were $1,660.9 million, an increase of
$145.3 million, compared to $1,515.6 million at December 31, 1999. This increase
was largely due to an increase in certificates of deposit of $116.5 million
during the period. This increase was fueled by the introduction and promotion,
in February 2000, of a 7 month certificate at 6.30% and, to a lesser extent, the
promotion of 9 and 18 month certificates of deposit during the second quarter.
Core deposit account balances increased by 3.7% during the six months ended June
30, 2000. The change in core deposits during the period was generally
attributable to normal seasonal fluctuations and the promotion of a free
checking account product partially offset by the shift in funds to higher
yielding certificates of deposit. Management believes that the bank
consolidation and divestitures currently underway in the Bank's market area as a
result of the Fleet/BankBoston merger offers Compass an opportunity to increase
its deposits.
Total borrowed funds were $385.3 million at June 30, 2000 compared to
$314.6 million at December 31, 1999, an increase of $70.7 million, or 22.5 %.
During the six months ended June 30, 2000, Compass increased its net borrowings
from the Federal Home Loan Bank by $67.6 million in order to fund loan growth.
Management believes that it will continue to expand its Federal Home Loan Bank
borrowings during the remainder of 2000 to partially fund anticipated loan
growth and to finance its pending acquisition of Home Port Bancorp, Inc.
The increase in stockholders' equity of $2.5 million to $276.5 million at
June 30, 2000 resulted from the net income of $11.4 million for the six months
ended June 30, 2000 which was substantially offset by an increase in the
unrealized loss on securities available for sale, cash dividends and stock
repurchases. During 1999 and 2000, the Company announced three stock repurchase
programs, the most recent of which was approved in July 2000, aggregating
3,486,212 shares. As of August 11, 2000, 2,162,775 shares had been repurchased
leaving up to 1,323,437 shares for repurchase.
10
<PAGE>
COMPARISON OF OPERATING RESULTS FOR THE QUARTERS ENDED JUNE 30, 2000 AND 1999
Net income was $6.0 million, or $.25 per diluted share, for the quarter
ended June 30, 2000 compared to net income of $5.8 million, or $.23 per diluted
share, for the comparable period in 1999. The higher rate of increase in
earnings per share as compared to net income in 2000 reflects the impact of the
Company's stock repurchase program. The 2000 results, as compared to 1999,
include an increase of $1.7 million, or 9.6%, in net interest income, an
increase of $850,000 in the provision for loan losses, an increase of $174,000,
or 8.2%, in non-interest income and an increase of $530,000, or 4.8%, in
non-interest expense. The Company's effective tax rate increased to 35.8% in
2000 from 34.2% in the comparable 1999 period.
INTEREST INCOME. Interest income for the quarter ended June 30, 2000 was
$40.2 million, compared to $33.6 million for the quarter ended June 30, 1999, an
increase of $6.6 million, or 19.8%. The increase in interest income resulted
from growth in average interest-earning assets of $293.7 million, or 15.8%, and
an increase in the yield on interest-earning assets of 25 basis points in the
2000 period. The increase in the yield on interest-earning assets, as compared
to the same period in the prior year, is the first such increase since the
Company's initial stock offering in November 1998 and reflects the series of
rate increases initiated by the Federal Reserve Board beginning in June 1999.
The principal areas of growth in average balances were related to real estate
loans (up $196.9 million, or 17.9%) and indirect auto loans (up $107.7 million,
or 30.1%). Most of the real estate loan growth resulted from increased
origination and retention in portfolio of one-to-four family real estate loans.
The increase in indirect auto loans resulted from the positive economic
environment within Compass's local markets and the continued emphasis of this
area of lending as previously noted.
INTEREST EXPENSE. Interest expense for the quarter ended June 30, 2000 was
$20.4 million compared to $15.5 million for the quarter ended June 30, 1999, an
increase of $4.9 million or 31.8%. This increase resulted from a 39 basis point
increase in the cost of all funds from 4.02% in 1999 to 4.41% in 2000, and a
higher average balance of interest-bearing liabilities (up $310.1 million, or
20.1%). Average interest-bearing deposit balances increased $104.1 million, or
7.5%, during the quarter ended June 30, 2000 compared to the same period in
1999.
Interest expense on borrowed funds increased $3.2 million in the quarter
ended June 30, 2000 to $5.4 million due to a $206.0 million increase in the
average balance of such funds and a 29 basis point increase in the average rate
paid on borrowed funds to 6.01% in the 2000 period.
PROVISION FOR LOAN LOSSES. Compass provides for loan losses in order to
maintain the allowance for loan losses at a level that management estimates is
appropriate to absorb future chargeoffs of loans deemed uncollectible. In
determining the appropriate level of the allowance for loan losses, management
considers past and anticipated loss experience, evaluations of real estate
collateral, current and anticipated economic conditions, volume and type of
lending and the levels of nonperforming and other classified loans. The amount
of the allowance is based on estimates and ultimate losses may vary from such
estimates. Management assesses the allowance for loan losses on a quarterly
basis and provides for loan losses monthly in order to maintain the adequacy of
the allowance.
Compass provided $1.2 million for loan losses in the quarter ended June 30,
2000 compared to $350,000 in the quarter ended June 30, 1999. The increase of
$850,000 in 2000 was primarily attributable to the growth in the loan portfolio
as all indicators of credit quality continue to be positive. The allowance for
loan losses was $18.5 million, or .95% of loans at June 30, 2000 compared with
$16.8 million, or .96% of loans, at December 31, 1999.
NON-INTEREST INCOME. Total non-interest income was $2.3 million for the
quarter ended June 30, 2000 compared to $2.1 million in the same period of 1999,
an increase of $174,000 or 8.2%. This increase was principally caused by
increases in loan fees, as well as ATM/Debit card usage which more than offset a
decrease of $121,000 in gain on sales of investment securities.
NON-INTEREST EXPENSE. Non-interest expense increased by $530,000, or 4.8%,
from $11.1 million for the quarter ended June 30, 1999 to $11.6 million for the
quarter ended June 30, 2000. Of this increase, $940,000 related to salaries and
employee benefits, which totaled $6.5 million for the quarter ended June 30,
2000, partially offset by a $410,000 aggregate decrease in all other categories
of non-interest expense.
11
<PAGE>
Of the increase of $940,000 in salaries and employee benefits for the
quarter ended June 30, 2000, approximately $525,000 related to increases in the
number of employees and annual wage adjustments, $318,500 was attributable to
the restricted stock awarded in July 1999, employment taxes increased $112,000
and the cost of a new sales incentive program for branch personnel amounted to
$115,000. These increases were partially offset by a net savings of $144,000
related to changes made in September 1999 to the Bank's employee retirement
plans.
The aggregate decrease in other categories of non-interest expense, which
amounted to $410,000 for the quarter ended June 30, 2000 was primarily caused by
certain non-recurring costs incurred in 1999 attributable to the merger with
Sandwich Bank.
INCOME TAXES. The effective tax rate for the quarter ended June 30, 2000
was 35.8% compared to 34.2% in the same period in 1999. This increase in overall
tax rate is primarily due to the non-deductible portion of the expense
associated with restricted stock awards in 2000.
COMPARISON OF OPERATING RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
Net income was $11.4 million, or $.48 per diluted share, for the six months
ended June 30, 2000 compared to net income of $11.4 million, or $.45 per diluted
share, for the comparable period in 1999. The increase in earnings per share
despite an unchanged level of net income reflects the impact of the Company's
stock repurchase program. The 2000 results, as compared to 1999, include an
increase of $2.8 million, or 7.8%, in net interest income, an increase of $1.7
million in the provision for loan losses, an increase of $491,000, or 12.3%, in
non-interest income and an increase of $1.6 million, or 7.5%, in non-interest
expense. The Company's effective tax rate was unchanged at 35.6% in both
periods.
INTEREST INCOME. Interest income for the six months ended June 30, 2000 was
$77.6 million, compared to $66.3 million for the six months ended June 30, 1999,
an increase of $11.3 million, or 17.0%. The increase in interest income resulted
from growth in average interest-earning assets of $279.3 million, or 15.3 %, and
an increase in the overall yield on interest-earning assets of 11 basis points
in the 2000 period. The principal areas of growth in average balances were
related to real estate loans (up $204.8 million, or 19.2%) and indirect auto
loans (up $105.3 million, or 30.6%). Most of the real estate loan growth
resulted from increased origination and retention in portfolio of one-to-four
family real estate loans. The increase in indirect auto loans resulted from the
positive economic environment within Compass's local markets and the continued
emphasis of this area of lending.
INTEREST EXPENSE. Interest expense for the six months ended June 30, 2000
was $38.8 million compared to $30.3 million for the six months ended June 30,
1999, an increase of $8.5 million or 28.1%. This increase resulted from a 29
basis point increase in the cost of all funds from 4.03% in 1999 to 4.32% in
2000, and a higher average balance of interest-bearing liabilities (up $290.1
million, or 19.2%). Average interest-bearing deposit balances increased $76.5
million, or 5.5%, during the six months ended June 30, 2000 compared to the same
period in 1999.
Interest expense on borrowed funds increased $6.4 million in the six months
ended June 30, 2000 to $10.1 million due to a $213.6 million increase in the
average balance of such funds, and a 19 basis point increase in the average rate
paid on borrowed funds to 5.91% in the 2000 period.
PROVISION FOR LOAN LOSSES. Compass provided $2.3 million for loan losses in
the six months ended June 30, 2000 compared to $575,000 in the comparable prior
year period. The increase of $1.7 million in 2000 was primarily attributable to
the growth in the loan portfolio as all indicators of credit quality continue to
be positive.
NON-INTEREST INCOME. Total non-interest income was $4.5 million for the six
months ended June 30, 2000 compared to $4.0 million in the same period of 1999,
an increase of $491,000 or 12.3%. This increase was principally caused by
increases in loan fees, ATM/Debit card usage and an insurance settlement which
more than offset a decrease of $154,000 in gain on sales of investment
securities. Also, non-interest income in the 1999 period was adversely impacted
by the waiver of the monthly fee on deposit accounts in the month of conversion
of former Sandwich Bank customers to Compass's computer system.
12
<PAGE>
NON-INTEREST EXPENSE. Non-interest expense increased by $1.6 million, or
7.5%, from $21.7 million for the six months ended June 30, 1999 to $23.3 million
for the six months ended June 30, 2000. Of this increase, $2.3 million related
to salaries and employee benefits, which totaled $13.2 million for the six
months ended June 30, 2000, partially offset by a $704,000 aggregate decrease in
all other categories of non-interest expense.
Of the increase of $2.3 million in salaries and employee benefits of the
six months ended June 30, 2000, approximately $1.1 million related to increases
in the number of employees and annual wage adjustments, $637,000 was
attributable to the restricted stock awarded in July 1999, employment taxes
increased $224,000, employee-related insurance costs increased $122,000 and the
cost of a new sales incentive program for branch personnel amounted to $115,000.
In addition, the amount accrued in connection with Compass's management
incentive plan increased $350,000 in 2000 principally due to reduced expense in
the first quarter of 1999 resulting from the utilization of amounts accrued but
not paid during the two month transition period ended December 31, 1998. These
increases were partially offset by a net savings of $150,000 related to changes
made in September 1999 to the Bank's employee retirement plans.
The aggregate decrease in other categories of non-interest expense, which
amounted to $704,000 for the six months ended June 30, 2000 was primarily caused
by certain non-recurring costs incurred in 1999 attributable to the merger with
Sandwich Bank.
INCOME TAXES. The effective tax rate for the six months ended June 30, 2000
was unchanged at 35.6% in both 2000 and 1999. While the overall tax rate was
favorably affected by the greater utilization of non-bank subsidiaries that are
taxed at lower rates for state tax purposes, the rate was adversely affected by
the non-deductible portion of expense associated with restricted stock awards in
2000.
LIQUIDITY AND CAPITAL RESOURCES
Compass's liquidity, represented by cash and cash equivalents and debt
securities is a product of its operating, investing, and financing activities.
The Bank's primary sources of funds are deposits, borrowings, principal and
interest payments on outstanding loans and mortgage-backed securities,
maturities of investment securities and funds provided from operations. While
scheduled payments from the amortization of loans and mortgage related
securities and maturing investment securities are relatively predictable sources
of funds, deposit flows and loan prepayments are greatly influenced by general
interest rates and, in the case of deposits, other instruments available to the
public such as mutual funds and annuities.
As a voluntary member of the Federal Home Loan Bank of Boston (FHLB),
Compass is entitled to borrow an amount up to the value of its qualified
collateral that has not been pledged to others. Qualified collateral generally
consists of residential first mortgage loans, U.S. Government and Agency
securities and funds on deposit at the FHLB. At June 30, 2000, Compass had
approximately $377 million in unused borrowing capacity that is contingent upon
the purchase of additional FHLB stock. Use of this borrowing capacity may also
be impacted by regulatory capital requirements.
Liquidity management is both a daily and long-term function of business
management. The measure of a bank's liquidity is its ability to meet its cash
commitments at all times with available cash or by conversion of other assets to
cash at a reasonable price. At June 30, 2000, the Company maintained cash and
due from banks, short-term investments and debt securities maturing within one
year of $98.8 million, or 4.2% of total assets.
At June 30, 2000, construction of the Bank's new corporate headquarters was
in-progress. At that date, the estimated remaining construction and related
costs to be incurred were approximately $8.4 million. Compass believes it has
adequate sources of liquidity to fund these costs.
At June 30, 2000, Compass had commitments to originate loans, unused
outstanding lines of credit, standby letters of credit and undisbursed proceeds
of loans totaling $186 million. Compass anticipated that it will have sufficient
funds available to meet its current loan commitments. Certificates of deposit
maturing within one year from June 30, 2000 amounted to $722.2 million. Compass
expects that a significant portion of maturing certificate accounts will be
retained at maturity, although the percentage retained may be below historical
levels due to increased price competition for these deposits.
13
<PAGE>
Compass's Tier 1 capital measured 14.22% of risk-weighted assets at June
30, 2000. Total capital, including the Tier 2 allowance for loan losses, was
15.40% of risk weighted assets. The leverage ratio was 10.18%. These ratios
placed Compass in the "well capitalized" category according to regulatory
standards.
The Company's Tier 1 capital measured 17.13% of risk-weighted assets at
June 30, 2000. Total capital, including the Tier 2 allowance for loan losses,
was 18.32% of risk-weighted assets. The leverage ratio was 12.23%. These ratios
placed the Company in excess of regulatory standards set forth by the Federal
Reserve Board.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The chief market risk factor affecting the financial condition and
operating results of the Company is interest rate risk. This risk is managed by
periodic evaluation of the interest risk inherent in certain balance sheet
accounts, determination of the level of risk considered appropriate given
Compass's capital and liquidity requirements, business strategy, performance
objectives and operating environment and maintenance of such risks within
guidelines approved by the Board of Directors. Through such management, Compass
seeks to reduce the vulnerability of its net earnings to changes in interest
rates. Compass's Asset/Liability Committee, comprised of senior management, is
responsible for managing interest rate risk and reviewing with the Board of
Directors on a quarterly basis its activities and strategies, the effect of
those strategies on Compass's and the Company's operating results, Compass's
interest rate risk position and the effect changes in interest rates would have
on Compass's net interest income. The extent of movement of interest rates is an
uncertainty that could have a negative impact on the earnings of the Company.
The principal strategies the Company and Compass generally use to manage
interest rate risk include (i) emphasizing the origination and retention of
adjustable-rate loans, origination of indirect auto loans which have relatively
short maturities and origination of loans with maturities at least partly
matched with those of the deposits and borrowings funding the loans, (ii)
investing in debt securities with relatively short maturities and (iii)
classifying a significant portion of its investment portfolio as available for
sale so as to provide sufficient flexibility in liquidity management.
The Company quantifies its interest rate risk exposure using a
sophisticated simulation model. Simulation analysis is used to measure the
exposure of net interest income and net income to changes in interest rates over
a specified time horizon. Simulation analysis involves projecting future income
and expense under various rate scenarios. Compass's internal guidelines on
interest rate risk specify that for every 100 basis points immediate shift in
interest rates, its estimated net interest income over the next 12 months should
decline by less than 5%.
In utilizing a 300 basis point increase in rates in its simulation model,
the full impact of annual rate caps of 200 basis points common to most
adjustable rate mortgage loan products is considered. The rate shocks used
assume an instantaneous and parallel change in interest rates. Prepayment speeds
for loans are based on published median dealer forecasts for each interest rate
scenario.
As of June 30, 2000, the Company's estimated exposure as a percentage of
estimated net interest income for the next twelve and twenty-four month periods
is as follows:
<TABLE>
<CAPTION>
PERCENTAGE CHANGE IN ESTIMATED
NET INTEREST INCOME OVER:
------------------------------------------------
12 MONTHS 24 months
---------------------- ---------------------
<S> <C> <C>
300 basis point increase in rates ...................... (18.16%) (17.58%)
200 basis point decrease in rates ...................... 3.49% 0.25%
</TABLE>
14
<PAGE>
At June 30, 2000, the Company exceeded its internal guidelines for interest
rate risk as set forth above. This occurred as a result of increases in
short-term rates and the greater utilization of shorter term borrowings and
certificates of deposit to fund asset growth. Management believes that it is
advantageous to utilize shorter term funding sources in the current rate
environment and, along with its professional advisors, will continue to monitor
the trend in short-term and long-term interest rates and the related impact
which changes in rates may have on net interest income.
Based on the scenario above, net income would be adversely affected in both
the twelve and twenty-four month periods in the 300 basis point increase
scenario, while in the 200 basis point decrease scenario, net interest income is
virtually unaffected in the 24 month scenario and is positively affected in the
12 month horizon. For each one percentage point change in net interest income,
the effect on net income would be $544,000, assuming a 36% tax rate.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company and Compass are not involved in any pending legal proceedings
other than those involved in the ordinary course of business. Management
believes that the resolution of these matters will not materially affect their
business or the consolidated financial condition of the Company and Compass.
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
The Company held its annual meeting of stockholders on May 18, 2000 at which
time the five nominees for director, as set forth in the proxy materials for the
meeting, were elected with the following votes cast:
<TABLE>
<CAPTION>
For Withheld
--- --------
<S> <C> <C>
David P. Cameron 18,955,690 572,134
Howard C. Dyer, Jr. 18,958,146 569,678
Thornton P. Klaren, Jr. 18,966,055 561,769
Reale J. Lemieux 18,966,164 561,660
Joseph H. Silverstein 18,956,940 570,884
</TABLE>
ITEM 5. OTHER INFORMATION
Not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits:
3.1 Articles of Organization of Seacoast Financial Services Corporation+++
3.2 By-Laws of Seacoast Financial Services Corporation+++
15
<PAGE>
4 Specimen certificate for the common stock of Seacoast Financial
Services Corporation++
10.1* Form of Employment Agreement by and among Seacoast Financial Services
Corporation, Compass Bank for Savings and Kevin G. Champagne+
10.2* Form of Employment Agreement by and among Compass Bank for Savings,
Seacoast Financial Services Corporation and certain Officers of Compass
Bank for Savings+
10.3* Form of Change in Control Agreements by and among Seacoast Financial
Services Corporation, Compass Bank for Savings, Kevin G. Champagne and
certain other Officers of Compass Bank for Savings+
10.4* Form of Change in Control Agreement by and among Seacoast Financial
Services Corporation, Compass Bank for Savings and certain Officers of
Compass Bank for Savings+
10.5* Form of Executive Salary Continuation Agreements made and entered into
by and between Compass Bank for Savings and Kevin G. Champagne, Arthur
W. Short, John D. Kelleher and Francis S. Mascianica and forms of
amendments thereto+
10.6* Trust Agreement, made as of December 18, 1992, by and between Compass
Bank for Savings and Shawmut Bank, N.A.+
10.7* Compass Bank for Savings January 2000 Incentive Compensation Plan+++++
10.12* Compass Bank for Savings Executive Deferred Compensation Plan+
10.13* Rabbi Trust for Compass Bank for Savings Executive Deferred
Compensation Plan+
10.17* Sandwich Co-operative Bank 1992 Directors Deferred Compensation Plan+
10.20* Seacoast Financial Services Corporation 1999 Stock Incentive Plan++++
11 A statement regarding earnings per share is included in Item 1, Note 4,
of this report.
27 EDGAR Financial Data Schedule
b. Reports on Form 8-K: No reports were filed during the second quarter of
2000. The Company filed a Current Report on Form 8-K with the SEC on
August 3, 2000 in connection with the signing of a definitive agreement
to acquire Home Port Bancorp, Inc.
-----------------------------------------------------
* Management compensatory plan or arrangement.
+ Incorporated by reference to the Company's Registration Statement on
Form S-1 (333-52889), filed with the Securities and Exchange Commission
under the Company's prior name, "The 1855 Bancorp", on May 15, 1998.
++ Incorporated by reference to Amendment No. 1 to the Company's
Registration Statement on Form S-1 (333- 52889), filed with the
Securities and Exchange Commission under the Company's prior name, "The
1855 Bancorp", on August 14, 1998.
+++ Incorporated by reference to the Company's Registration Statement on
Form 8-A filed with the Securities and Exchange Commission on November
18, 1998.
++++ Incorporated by reference to the Company's Proxy Statement on Schedule
14A filed with the Securities and Exchange Commission on April 16,
1999.
+++++ Incorporated by reference to the Company's Annual Report on Form 10-K
filed with the Securities and Exchange Commission on March 28, 2000.
16
<PAGE>
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.
Seacoast Financial Services Corporation
---------------------------------------
(Registrant)
Date: August 11, 2000 By /s/ Kevin G. Champagne
---------------------------------
Kevin G. Champagne
President and Chief Executive Officer
Date: August 11, 2000 By /s/ Francis S. Mascianica, Jr.
---------------------------------
Francis S. Mascianica, Jr.
Treasurer, as Principal
Financial and Accounting Officer
