<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
0-9517
Commission File Number
BANK OF NEW HAMPSHIRE CORPORATION
(Exact name of registrant as specified in its charter)
NEW HAMPSHIRE 02-0346918
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
300 Franklin Street
Manchester, New Hampshire 03105
(Address of principal executive office) (Zip Code)
(603) 624-6600
(Registrant's telephone number, including area code
Not applicable
(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 periods 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
Indicate the number of shares outstanding of the issuer's common stock as of
June 30, 1995:
Common Stock, $2.50 stated value, no par value, 4,064,156 shares.
<PAGE>
BANK OF NEW HAMPSHIRE CORPORATION
TABLE OF CONTENTS
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Bank of New Hampshire Corporation and Subsidiary:
Consolidated Balance Sheets 3
Consolidated Statements of Income 4
Consolidated Statements of Cash Flows 5
Note to Financial Statements 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 6
LIST OF TABLES
1995 Quarterly Average Balance Sheets and Rates 13
1994 Quarterly Average Balance Sheets and Rates 14
Quarterly Condensed Income Statements 15
Nonperforming Assets Quarterly Summary 16
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K. 17
SIGNATURES 17
<PAGE>
BANK OF NEW HAMPSHIRE CORPORATION
CONSOLIDATED BALANCE SHEETS (Unaudited)
June 30 December 31
1995 1994
(Dollars in thousands,
Assets except per share amounts)
Cash and due from banks $ 76,516 $ 66,037
Federal funds sold 60,000 28,000
Total cash and cash equivalents 136,516 94,037
Securities:
Held-to-maturity debt 286,103 286,577
Available-for-sale equity 3,654 3,614
Total securities 289,757 290,191
Loans:
Commercial 62,799 58,764
Real estate - commercial 126,504 133,183
Real estate - construction 4,803 3,544
Real estate - residential 256,143 261,062
Installment 59,801 85,926
Total loans 510,050 542,479
Less: Allowance for possible loan losses 12,550 13,191
Net loans 497,500 529,288
Premises and equipment 9,985 10,226
Other real estate owned 9,011 10,124
Other assets 17,283 19,590
Total Assets $960,052 $953,456
Liabilities and Shareholders' Equity
Deposits:
Non-interest bearing $167,121 $148,009
Interest bearing 669,509 677,847
Total deposits 836,630 825,856
Securities sold under agreements to repurchase 30,433 40,888
Other borrowed funds 3,070 3,072
Accrued expenses and other liabilities 9,848 8,466
Total liabilities 879,981 878,282
Shareholders' Equity:
Preferred stock - no par value
Authorized shares - 500,000; none issued
Common stock - stated value $2.50 per share
Authorized - 6,000,000 shares
Issued - 4,064,156 shares in 1995
and 4,064,103 shares in 1994 10,160 10,160
Surplus 27,289 27,288
Retained earnings 42,622 37,726
Total shareholders' equity 80,071 75,174
Total liabilities and shareholders' equity $960,052 $953,456
See note to financial statements.
<PAGE>
<TABLE>
<CAPTION>
BANK OF NEW HAMPSHIRE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Quarters Ended Six Months Ended
June 30 June 30
1995 1994 1995 1994
(In thousands, except per share amounts)
<S> <C> <C> <C> <C>
Interest income:
Loans, including fees $ 12,284 $ 11,065 $ 24,702 $ 22,153
Securities 4,245 2,950 8,129 5,372
Other 831 755 1,481 1,498
Total interest income 17,360 14,770 34,312 29,023
Interest expense:
Deposits 5,387 4,833 10,422 9,756
Funds borrowed 445 186 924 341
Total interest expense 5,832 5,019 11,346 10,097
Net interest income 11,528 9,751 22,966 18,926
Provision for possible loan losses 450 431 900 880
Net interest income after provision
for possible loan losses 11,078 9,320 22,066 18,046
Non-interest income:
Trust fees 1,089 994 2,075 1,993
Service charges on deposit accounts 815 820 1,608 1,603
Other 620 565 1,568 1,167
Total non-interest income 2,524 2,379 5,251 4,763
Non-interest expense:
Salaries 3,517 3,394 7,028 6,751
Employee benefits 1,171 978 2,638 2,095
Occupancy 811 759 1,625 1,621
Equipment 469 469 834 904
OREO expense (28) 366 207 841
FDIC insurance 466 552 931 1,103
Other 2,223 2,149 4,856 4,192
Total non-interest expense 8,629 8,667 18,119 17,507
Income before income taxes 4,973 3,032 9,198 5,302
Provision for income taxes 1,682 1,021 3,110 1,588
NET INCOME $ 3,291 $ 2,011 $ 6,088 $ 3,714
Average shares outstanding 4,064 4,067 4,064 4,067
Per share amounts:
Earnings $ .81 $ .49 $1.50 $ .91
Cash dividends declared $ .15 $ .10 $ .30 $ .18
</TABLE>
See note to financial statements.
<PAGE>
BANK OF NEW HAMPSHIRE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended June 30
1995 1994
(In thousands)
Cash Flows from Operating Activities:
Net income $ 6,088 $ 3,714
Reconciliation of net income to net
cash provided from operating activities:
Provision for possible loan losses 900 880
Depreciation, amortization and accretion 999 1,367
Net change in interest receivables and payables 2,905 (1,781)
Net gain on sales of loans (154) (53)
Gains on OREO, net (264) (33)
Provision for deferred taxes 410 118
Other, net 846 1,277
Net cash provided from operating activities 11,730 5,489
Cash Flows from Investing Activities:
Sales of available-for-sale equity securities 596
Maturities of held-to-maturity debt securities 84,131 81,120
Purchases of held-to-maturity debt securities (84,441) (110,942)
Proceeds from sales of loans 31,425 7,833
Proceeds from sales of OREO 2,411 2,478
Net cash (used for) from loans (1,527) 1,544
Purchases of premises and equipment (945) (343)
Net cash provided from (used for) investing
activities 31,650 (18,310)
Cash Flows used for Financing Activities:
Net cash (used for) provided from core deposits (10,662) 7,547
Net cash provided from (used for) certificates
of deposit 21,436 (17,609)
Net cash (used for) provided from short-term
borrowings (10,457) 4,664
Dividends paid (1,218) (732)
Net cash used for financing
activities (901) (6,130)
Net change in cash and cash equivalents 42,479 (18,951)
Cash and cash equivalents at January 1 94,037 165,999
Cash and cash equivalents at June 30 $136,516 $147,048
Income tax paid $ 2,925 $ 850
Interest paid $ 10,660 $ 10,828
See note to financial statements.
<PAGE>
BANK OF NEW HAMPSHIRE CORPORATION
NOTE TO FINANCIAL STATEMENTS
Note 1. The accompanying unaudited interim consolidated financial
statements of Bank of New Hampshire Corporation (the "Company")
have been prepared in accordance with generally accepted
accounting principles. The balance sheet at December 31, 1994 is
from the audited financial statements at that date but does not
include all of the information and footnotes required for complete
financial statements.
In the opinion of Management, all adjustments, consisting only of
normal recurring adjustments, necessary for a fair presentation of
the information contained herein have been made. Certain amounts
reported in prior periods have been reclassified for comparative
purposes. Results for the six-month period ended June 30, 1995
are not necessarily indicative of the results that may be expected
for the year ended December 31, 1995. The accounting policies
followed by the Company are set forth in Note A to the
consolidated financial statements in the 1994 Annual Report to
Shareholders (Form 10-K - Exhibit 13) and should be read in
conjunction with the information contained herein.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
For the Three and Six-Month Periods Ended June 30, 1995 and 1994
OVERVIEW
Net Income
For the six months ended June 30, 1995, the Company recorded net
income of $6.1 million, or $1.50 per share, versus net income of
$3.7 million, or $.91 per share, for the first half of 1994, a 65%
increase. For the second quarter of 1995, the Company recorded
net income of $3.3 million, or $.81 per share, compared to net
income of $2.0 million, or $.49 per share, for the second quarter
of 1994, a 65% increase. The principal reason for the increases
in net income in 1995 compared to 1994 were the increases in net
interest income of $1.8 million and $4.0 million for the three and
six-month periods, respectively.
FINANCIAL CONDITION
Loans
Total loans at June 30, 1995 were $510.1 million, a decrease of
$32.4 million from the 1994 year-end balance of $542.5 million.
This decrease was primarily due to the sale of $31.3 million in
student loans. A significant amount of the Company's commercial
real estate loans have been made to owner occupied businesses.
Even though these loans are collateralized by real estate, the
primary repayment source for each such loan is the cash flow
generated by the related business. The diversification of the
commercial real estate loan portfolio is such that a material
adverse impact on future operations of the Company is unlikely.
See "Nonperforming Assets," and "Net Interest Income." The
Company has no foreign loans or energy loans, and agricultural
loans totalled only $28,000 at June 30, 1995.
<PAGE>
Nonperforming Assets
The following Table provides information with respect to the
Company's nonaccrual, past due and restructured loans as well as
the components of nonperforming assets as of the dates indicated.
June 30 December 31
1995 1994
(In thousands)
Nonaccrual loans (NL) $ 8,461 $10,927
Past due 90 days or more (accruing) 1,933 3,003
Restructured loans 1,251
Total nonperforming loans (NPL) 10,394 15,181
Other real estate owned (OREO) 9,011 10,124
Total nonperforming assets (NPA) $19,405 $25,305
At June 30, 1995, the nonaccrual loan balance of $8.5 million
included $7.6 million in real estate loans, $814,000 in commercial
loans, and $38,000 in installment loans. Loans 90 days past due
and still accruing interest were $1.9 million and included real
estate loans of $1.8 million, commercial loans of $69,000 and
installment debt of $101,000. Although restructured loans have
not been material, management encourages restructuring when it is
likely to benefit the Company and the borrower.
The OREO balance at June 30, 1995 of $9.0 million consists of $6.5
million of commercial properties, $1.5 million of residential
properties, and $1.0 million of sub-divided lots and undeveloped
land.
The following Table summarizes the real estate operations of
property held for sale for the three and six-month periods ended
June 30, 1995 and 1994.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1995 1994 1995 1994
(In thousands)
<S> <C> <C> <C> <C>
Balance, beginning of period $10,192 $ 9,878 $10,192 $ 8,607
Additions during the period 112 3,322 1,151 5,576
OREO losses (6) (184) (56) (226)
OREO sales (1,210) (1,463) (2,141) (2,319)
Other, net (34) (69) (92) (154)
9,054 11,484 9,054 11,484
Allowance for possible OREO losses (43) (172) (43) (172)
Balance, end of period $ 9,011 $11,312 $ 9,011 $11,312
</TABLE>
The following Table summarizes the components of OREO expense for the three
and six-month periods ended June 30, 1995 and 1994.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1995 1994 1995 1994
(In thousands)
<S> <C> <C> <C> <C>
Valuation adjustments:
OREO losses $ 6 $ 106 $ 6 $ 126
Net (gain) loss on OREO sales (266) (220) (270) (159)
(260) (114) (264) (33)
General carrying costs 232 481 471 874
OREO expense $ (28) $ 367 $ 207 $ 841
</TABLE>
General carrying costs include legal fees, real estate taxes, maintenance,
Appraisals, insurance and miscellaneous other costs. See "Non-Interest
Expense."
<PAGE>
Allowance for Possible Loan Losses (APLL)
The APLL is available for future loan losses. Management believes the APLL is
adequate as of June 30, 1995.
The following table presents the activity in the APLL for the three and six-
month periods ended June 30, 1995 and 1994, and the coverage percentages at
June 30, 1995 and 1994.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1995 1994 1995 1994
(Dollars in thousands)
<S> <C> <C> <C> <C>
Balance, beginning of period $12,750 $13,612 $13,191 $14,581
Provision for possible loan losses 450 431 900 880
Loan losses:
Commercial (119) (245) (151) (663)
Real estate - commercial (183) (306) (632) (448)
Real estate - construction (3) (3)
Real estate - residential (868) (872) (1,479) (1,897)
Installment (93) (97) (189) (209)
Total loan losses (1,266) (1,520) (2,454) (3,217)
Recoveries:
Commercial 115 304 243 464
Real estate - commercial 241 15 266 21
Real estate - construction 97 4 146 18
Real estate - residential 76 158 102 173
Installment 87 86 156 170
Total recoveries 616 567 913 846
Net loan losses (650) (953) (1,541) (2,371)
Balance, end of period $12,550 $13,090 $12,550 $13,090
June 30
1995 1994
APLL/NPA 65% 46%
APLL/NPL 121 76
APLL/NL 148 91
</TABLE>
At June 30, 1995, the recorded investment in loans that were
considered impaired under SFAS 114 was $4.6 million, all of which
were nonaccrual loans. Included in this amount is $3.5 million of
impaired loans for which the related allocation of the APLL is
$1.4 million. Impaired loans totalling $1.1 million do not have
an allocation of the APLL as a result of write-downs and other
factors. The average recorded investment in impaired loans during
the six months ended June 30, 1995 was $4.8 million. The Company
recognized no interest income on impaired loans or nonaccrual
loans in 1995.
Securities
Securities totalled $289.8 million at June 30, 1995 and $290.2
million at December 31, 1994. The portfolio consists principally
of U.S. Treasury instruments with an overall maturity of twelve
months. The estimated fair value of held-to-maturity debt
securities totalled $287.9 million and $283.0 million at June 30,
1995 and December 31, 1994, respectively. Federal funds sold
totalled $60.0 million at June 30, 1995, compared to $28.0 million
at year-end 1994 an increase of $32.0 million. The increase in
federal funds sold is principally due to the previously mentioned
sale of student loans.
Deposits
Deposits of $836.6 million at June 30, 1995 increased $10.7
million from $825.9 million at December 31, 1994. Interest
bearing deposit balances at June 30, 1995 totalled $669.5 million
<PAGE>
compared to $677.8 million at year-end 1994, a decrease of $8.3
million. The decrease occurred primarily in savings deposits
($24.2 million) and money market accounts ($6.2 million) and was
offset somewhat by increases in time deposits ($21.4 million).
Demand deposits increased by $19.1 million through June 30, 1995
compared to the 1994 year-end balance of $148.0 million. The
changes are principally attributable to normal seasonal
fluctuation and, to a lesser extent, customer movement of deposits
into other investment alternatives. The impact of the changes in
deposits during the first six months of 1995 was not material to
the overall liquidity position of the Company.
The following Table presents the various types of deposit balances
at June 30, 1995 and at December 31, 1994.
June 30 December 31
1995 1994
(In thousands)
Demand deposits $167,121 $148,009
NOW accounts 138,674 138,031
Savings deposits 264,409 288,646
Money market accounts 45,179 51,359
Time deposits of $100,000 or more 11,843 9,558
Other time deposits 209,404 190,253
Total deposits $836,630 $825,856
Capitalization
The following Table presents the regulatory capital ratios of the
Company.
Regulatory June 30 December 31
Minimum 1995 1994
Regulatory Capital Ratios:
Leverage ratio 3.00% 8.46% 7.68%
Tier 1 risk-based ratio 4.00 17.11 15.94
Total risk-based ratio 8.00 18.38 17.21
The following Table presents the regulatory capital ratios of the Bank.
Regulatory June 30 December 31
Minimum 1995 1994
Regulatory Capital Ratios:
Leverage ratio 3.00% 7.84% 7.06%
Tier 1 risk-based ratio 4.00 15.90 14.67
Total risk-based ratio 8.00 17.17 15.94
Dividend Policy
The declaration and subsequent payment of dividends on the
Company's common stock is considered quarterly by the Board of
Directors. The long-term capacity of the Company to pay dividends
is conditioned upon the receipt of upstreamed dividends from the
Bank.
<PAGE>
RESULTS OF OPERATIONS
Net Interest Income
This discussion of net interest income should be read in
conjunction with the Tables on pages 13 through 16. All interest
income, yields, rates and net interest margins which follow in
this discussion are stated on a fully taxable equivalent ("FTE")
basis using a tax rate of 34%.
Net interest income for the six months ended June 30, 1995,
totalled $23.0 million compared to $19.0 million for the six
months ended June 30, 1994. Net interest income changes are
caused by interest-rate movements, changes in the amounts and the
mix of earning assets and interest bearing liabilities, and
changes in the amounts of non-earning assets and non-interest
bearing liabilities. For the first six months of 1995, the $4.0
million increase in net interest income was primarily due to
higher rates earned on loans and securities. For the first six
months of 1995, the net interest margin equalled 5.41% compared to
4.37% for the six months ended June 30, 1994. Net interest margin
is calculated by dividing annualized net interest income by
average total earning assets.
Second quarter net interest income increased from $9.8 million in
1994 to $11.6 million in 1995. This increase of $1.8 is the
result of higher rates earned, in general, on interest earning
assets, primarily loans and securities. The net interest margin
was 5.41% and 4.48% for the 1995 and 1994 second quarters,
respectively.
The levels of net interest income and margin reported for the
three and six-month periods ended June 30, 1995 are not
necessarily indicative of future results. The Company has
benefited from interest rate increases on earning assets, such as
loans and securities, outpacing increases in deposit rates. The
Company will continue to be affected by competitive pricing
pressure on deposits, loans and other products.
Average interest earning assets totalled $858.3 million for the
first half of 1995, a decrease of $18.1 million compared to the
1994 comparable period. The decrease in average interest earning
assets consists primarily of a decrease of $36.1 million in
federal funds sold offset somewhat by an increase of $19.1 million
in securities. The yield on average interest earning assets for
the first half of 1995 equalled 8.08%, an increase of 138 basis
points from the comparable 1994 yield of 6.70%. The increase in
yield was offset somewhat by higher interest rates paid on
deposits and borrowings in the first half of 1995 compared to
1994. Rates paid on deposits and borrowings increased from 2.75%
in the first half of 1994 to 3.24% in the comparable 1995 period.
Average interest bearing liabilities totalled $706.4 million for
the first half of 1995, a decrease of $34.7 million from the
comparable 1994 total. The decrease in average interest bearing
liabilities resulted from decreases of $32.7 million in savings
deposits and $12.0 million in certificates of deposit offset
somewhat by an increase of $10.2 million in securities sold under
agreements to repurchase.
<PAGE>
Provision for Possible Loan Losses
The amount of the provision for possible loan losses is
recommended by Management and is then reviewed and approved
quarterly by the Board of Directors of the Company based on its
assessment of the size, composition and quality of the loan
portfolio and the adequacy of the APLL in relation to the risks
within the loan portfolio.
The provision for possible loan losses for the first half of 1995
and 1994 was $900,000 and $880,000, respectively. Net loan losses
for the first half of 1995 and 1994 were $1.5 million and $2.4
million, respectively. In connection with determining the
appropriate amount of the provision for possible loan losses for
any period, Management evaluates the current financial condition
of specific borrowers, the general economic climate, loan
portfolio composition, concentration of credits, loan loss
history, adequacy of collateral and the trends and amounts of
nonaccrual and past due loans. Management will continue to
utilize the aforementioned criteria to monitor and analyze loan
quality in future periods and will provide for possible loan
losses accordingly.
The provision for possible loan losses for the second quarter of
1995 was $450,000 compared to $431,000 during the second quarter
of 1994. Net loans charged off for the quarters ended June 30,
1995 and 1994 were $650,000 and $953,000, respectively.
Non-Interest Income
Non-interest income increased by $488,000 for the six months ended
June 30, 1995 compared with the same period last year. The
increase is primarily due to a $367,000 gain resulting from a fire
in one of the branch locations wherein the insurance proceeds
exceeded the book basis of the property destroyed. The increase
was also due to higher gains on sales of loans ($101,000) and
higher trust fees ($82,000).
Non-interest income increased $145,000 for the second quarter of
1995 over last year's total of $2.4 million. The increase was
primarily due to higher trust fees ($95,000) and higher
gains on sales of loans ($71,000).
Non-Interest Expense
Non-interest expense increased $612,000 to $18.1 million for the
six months ended June 30, 1995 compared to the 1994 first half.
This increase was primarily due to other miscellaneous non-
interest expense which totalled $4.9 million for the six months
ended June 30, 1995, an increase of $664,000 compared to the prior
year first half total. This increase consists of higher student
loan service bureau expenses ($80,000), marketing expenses
($93,000) and other miscellaneous expenses ($491,000). OREO
expense decreased by $634,000 for the 1995 first half compared to
the 1994 first half total of $841,000. The decrease was due to
lower general carrying costs ($403,000), lower write-downs to fair
value ($120,000) and higher gains on OREO sales ($111,000). FDIC
insurance expense totalled $931,000 for the six months ended June
30, 1995, a decrease of $172,000 from the comparable 1994 first
half due to lower deposit balances. Salaries and employee
benefits increased by $820,000 for the 1995 first half. This
increase was primarily due to increases in the cost of various
<PAGE>
employee benefit programs of $543,000 with the remainder resulting
from planned increases in salaries and wages.
Non-interest expense decreased $38,000 for the second quarter of
1995 compared with last year's total for the comparable period of
$8.7 million. Salaries and employees benefits increased
$316,0000, primarily due to an increase of $193,000 in the cost of
various employee benefit programs. Occupancy and equipment
expense increased by $52,000 compared to the prior year second
quarter. OREO expense decreased by $394,000 for the 1995 second
quarter compared to 1994. The decrease was due to lower general
carrying costs ($249,000), lower write-downs to fair value
($100,000) and higher gains on OREO sales ($46,000). FDIC
insurance expense decreased by $86,000 for the second quarter due
to lower deposit balances. Other non-interest expense increased
by $74,000 due primarily to higher other miscellaneous expenses.
Income Tax Expense
Income taxes for the first half of 1995 and 1994 totalled $3.1
million and $1.6 million, respectively, on 1995 pre-tax income of
$9.2 million and 1994 pre-tax income of $5.3 million. The
effective tax rate was 34% and 30% for the six months ended June
30, 1995 and 1994, respectively. The SFAS 109 valuation allowance
which totalled $198,000 at December 31, 1993, was reversed during
the 1994 first quarter resulting in a reduction in income tax
expense.
<PAGE>
<TABLE>
<CAPTION>
AVERAGE BALANCES AND RATES -
FULLY TAXABLE EQUIVALENT BASIS
QUARTERLY SUMMARY
(In thousands)
1995
2nd Quarter 1st Quarter
Avg Balance Rate Avg Balance Rate
<S> <C> <C> <C> <C>
ASSETS
Interest earning assets:
Loans (1) $511,435 9.66% $524,790 9.62%
Taxable securities 289,138 5.87 289,077 5.43
Non-taxable securities 842 8.57 908 8.93
Federal funds sold and securities
purchased under agreements to resell 55,335 6.02 45,037 5.85
Total interest earning assets 856,750 8.14 859,812 8.01
Non-interest earning assets:
Cash and due from banks 47,797 48,304
Premises and equipment, net 9,999 10,172
Other assets 26,846 28,568
Less allowance for possible loan losses (12,995) (13,318)
Total assets $928,397 $933,538
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest bearing liabilities:
Savings deposits $449,040 2.49 $464,528 2.52
Certificates of deposit of $100,000
or more 10,926 4.52 9,737 4.17
Other time deposits 200,546 4.95 191,736 4.34
Federal funds purhcased and securities
sold under agreements to repurchase 38,542 4.23 42,365 4.24
Other borrowed funds 2,484 6.30 2,876 5.08
Total interest bearing liabilities 701,538 3.33 711,242 3.14
Non-interest bearing liabilities:
Demand deposits 138,156 136,893
Other liabilities 10,318 9,512
Total liabilities 850,012 857,647
Shareholders' equity 78,385 75,891
Total liabilities and shareholders' equity $928,397 $933,538
Interest rate spread 4.81% 4.87%
Net interest margin 5.41% 5.41%
</TABLE>
(1) For the calculation of rates earned on loans, nonaccrual and restructured
loans are included in the average balance.
<PAGE>
<TABLE>
<CAPTION>
AVERAGE BALANCES AND RATES -
FULLY TAXABLE EQUIVALENT BASIS
QUARTERLY SUMMARY
(In thousands)
1994
4th Quarter 3rd Quarter 2nd Quarter 1st Quarter
Avg Balance Rate Avg Balance Rate Avg Balance Rate Avg Balance Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Interest earning assets:
Loans (1) $533,046 9.05% $520,221 8.80% $514,687 8.65% $523,703 8.60%
Taxable securities 287,717 4.80 289,680 4.45 281,454 4.16 255,100 3.81
Non-taxable securities 2,865 5.54 2,944 5.39 3,057 5.64 2,168 6.55
Federal funds sold and securities
purchased under agreements to resell 58,438 5.06 59,536 4.44 78,148 3.88 94,487 3.19
Total interest earning assets 882,066 7.39 872,381 7.04 877,346 6.77 875,458 6.62
Non-interest earning assets:
Cash and due from banks 50,905 52,694 56,095 55,377
Premises and equipment, net 10,347 10,770 11,041 11,201
Other assets 28,242 27,054 26,192 24,729
Less allowance for possible loan losses (13,509) (13,395) (13,750) (14,694)
Total assets $958,051 $949,504 $956,924 $952,071
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest bearing liabilities:
Savings deposits $486,783 2.42 $490,648 2.38 $493,573 2.23 $485,317 2.23
Certificates of deposit of $100,000
or more 9,430 3.83 9,467 3.65 10,262 3.64 11,517 3.70
Other time deposits 191,084 4.00 194,882 3.92 203,024 3.95 212,233 4.11
Federal funds purchased and securities
sold under agreements to repurchase 39,976 3.85 32,855 2.86 29,666 2.15 30,886 1.79
Other borrowed funds 2,573 5.40 2,643 4.65 2,879 3.76 2,785 2.77
Total interest bearing liabilities 729,846 2.94 730,495 2.84 739,404 2.72 742,738 2.77
Non-interest bearing liabilities:
Demand deposits 145,845 138,736 138,464 131,659
Other liabilities 8,485 8,281 8,656 8,801
Total liabilities 884,176 877,512 886,524 883,198
Shareholders' equity 73,875 71,992 70,400 68,873
Total liabilities and shareholders' equity $958,051 $949,504 $956,924 $952,071
Interest rate spread 4.45% 4.20% 4.05% 3.85%
Net interest margin 4.95% 4.67% 4.48% 4.27%
</TABLE>
(1) For the calculation of rates earned on loans, nonaccrual and restructured
loans are included in the average balance.
Note: Certain amounts in the 1994 Average Balances and Rates schedule have been
reclassified to present in-substance foreclosed assets on a consistent
basis under SFAS 114.
<PAGE>
<TABLE>
<CAPTION>
QUARTERLY INCOME SUMMARY -
FULLY TAXABLE EQUIVALENT BASIS
(In thousands, except per share data)
1995 1994
Second First Fourth Third Second First
Quarter Quarter Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C> <C> <C>
Interest income $17,394 $16,985 $16,420 $15,489 $14,817 $14,286
Interest expense 5,832 5,514 5,404 5,227 5,019 5,078
Net interest income 11,562 11,471 11,016 10,262 9,798 9,208
Less tax equivalent adjustment 34 33 39 41 47 33
Provision for possible loan
losses 450 450 385 252 431 449
Non-interest income 2,524 2,727 2,402 2,523 2,379 2,384
Non-interest expense 8,629 9,490 8,971 9,132 8,667 8,840
Income before income taxes 4,973 4,225 4,023 3,360 3,032 2,270
Provision for income taxes 1,682 1,428 1,356 1,130 1,021 567
Net income $ 3,291 $ 2,797 $ 2,667 $ 2,230 $ 2,011 $ 1,703
Earnings per share $ .81 $ .69 $ .66 $ .55 $ .49 $ .42
Dividends per share $ .15 $ .15 $ .125 $ .10 $ .10 $ .08
Return on average assets (1) 1.42% 1.22% 1.10% .93% .84% .73%
Return on average equity (1) 16.84% 14.95% 14.32% 12.29% 11.46% 10.03%
</TABLE>
(1) Annualized
Note: Certain amounts in the 1994 Quarterly Income Summary have been reclas-
sified to present in-substance foreclosed assets on a consistent basis
under SFAS 114.
<PAGE>
<TABLE>
<CAPTION>
NONPERFORMING ASSETS
QUARTERLY SUMMARY
(In thousands)
1995 1994
Second First Fourth Third Second First
Quarter Quarter Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C> <C> <C>
Nonaccrual loans $ 8,461 $10,293 $10,927 $12,760 $14,367 $16,673
Loans 90 days or more past due 1,933 2,058 3,003 2,041 2,603 4,144
Restructured loans - - 1,251 1,259 281 602
Total nonperforming loans 10,394 12,351 15,181 16,060 17,251 21,419
Other real estate owned 9,011 10,149 10,124 10,676 11,312 9,650
Total nonperforming assets $19,405 $22,500 $25,305 $26,736 $28,563 $31,069
Nonperforming loans as a
percent of total loans 2.04% 2.41% 2.80% 3.04% 3.37% 4.17%
Nonperforming assets as a
percent of total loans 3.80% 4.38% 4.67% 5.07% 5.57% 6.05%
</TABLE>
Note: Certain amounts in the 1994 Nonperforming Assets Quarterly Summary have
been reclassified to present in-substance foreclosed assets on a
consistent basis under SFAS 114.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits required by Item 601 of Regulation S-K are listed on
the Exhibits Index on page 18 of this report and are filed
herewith.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter ended
June 30, 1995.
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.
BANK OF NEW HAMPSHIRE CORPORATION
Date: August 7, 1995 /s/ Davis P. Thurber
Davis P. Thurber, Chairman of the
Board and President
Date: August 7, 1995 /s/ Gregory D. Landroche
Gregory D. Landroche, Executive Vice
President, Chief Financial Officer and
Treasurer
<PAGE>
EXHIBITS INDEX
Filed as part of this Report on Form 10-Q
Part I
Exhibit No. Description Page No.
10 Agreement For Item Processing
Outsourcing Services 19-50
27 Financial Data Schedule 51
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 76516
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 60000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 3654
<INVESTMENTS-CARRYING> 286103
<INVESTMENTS-MARKET> 287899
<LOANS> 510050
<ALLOWANCE> 12550
<TOTAL-ASSETS> 960052
<DEPOSITS> 836630
<SHORT-TERM> 33503
<LIABILITIES-OTHER> 9848
<LONG-TERM> 0
<COMMON> 10160
0
0
<OTHER-SE> 69911
<TOTAL-LIABILITIES-AND-EQUITY> 960052
<INTEREST-LOAN> 24702
<INTEREST-INVEST> 8129
<INTEREST-OTHER> 1481
<INTEREST-TOTAL> 34312
<INTEREST-DEPOSIT> 10422
<INTEREST-EXPENSE> 11346
<INTEREST-INCOME-NET> 22966
<LOAN-LOSSES> 900
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 18119
<INCOME-PRETAX> 9198
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6088
<EPS-PRIMARY> 1.50
<EPS-DILUTED> 1.50
<YIELD-ACTUAL> 5.41
<LOANS-NON> 8461
<LOANS-PAST> 1933
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 6654
<ALLOWANCE-OPEN> 13191
<CHARGE-OFFS> 2454
<RECOVERIES> 913
<ALLOWANCE-CLOSE> 12550
<ALLOWANCE-DOMESTIC> 5995
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 6555
</TABLE>
<PAGE>
AGREEMENT
FOR
ITEM PROCESSING OUTSOURCING SERVICES
EFFECTIVE DATE: April 26, 1995
CONVERSION DATE: September 1, 1995
BETWEEN: BANK OF NEW HAMPSHIRE ("Client")
AND: FISERV Boston, Inc. ("FISERV")
31 West Street
Randolph, MA 02368
<PAGE>
AGREEMENT
FOR
IPS OUTSOURCING SERVICES
EFFECTIVE DATE: April 26, 1995 AGREEMENT NO.
Between: BANK OF NEW HAMPSHIRE ("Client")
And: FISERV, Boston, Inc. ("FISERV")
ARTICLE I - PURPOSE
1.1 Client has retained FISERV to transition Client's item
processing operations from an in-house IPS environment to an
outsourced environment whereby FISERV provides certain services
related to item processing for Client. FISERV shall service
Client's requirements for its item processing services and other
listed services as provided herein. Provisions are made for
employment of staff and acquisition of equipment as agreed by
FISERV and Client. The required transition planning and on-going
operating procedures were determined as listed in the attached
Schedules which were developed jointly and made part of this
Agreement.
ARTICLE II - SCHEDULES AND ATTACHMENTS
2.1 Schedules
The following schedules are hereby incorporated into and made a
part of this Agreement:
Schedule A - FISERV Transition Plan; which sets forth the
FISERV Transition Plan and responsibilities associated therewith.
This plan will be amended with a jointly developed, detailed plan
within four weeks of the Effective Date.
Schedule B - FISERV IPS Outsourcing Services and Fees;
which sets forth the FISERV services to be provided to Client and
the specific service fees associated therewith.
B.1- Unit Price Fee Schedule
B.2- Detailed Description of Service to be provided,
specification of FISERV and Client responsibilities and performance
criteria to be measured. A Schedule for each service is to be
developed jointly with Client and included with this Agreement.
Schedule C - IPS Outsourcing Reports; which sets forth a
list and description of all critical reports to be provided.
<PAGE>
Schedule D - Client Employees; which contains a list of
Client employees eligible for employment by FISERV.
Schedule E - Client hardware, software and equipment to
be acquired or leased by FISERV under this Agreement.
2.2 Amendment of Agreement and Schedules
From time to time during the term of this Agreement, FISERV and
Client may elect to amend the Agreement or a Schedule thereof,
which amendment shall be in writing and signed by both parties.
Amendments shall be sequentially numbered using the Agreement
Number as a prefix. Schedules shall likewise be sequentially
numbered (A.1, B.2,etc.). Superseded or amended Schedules shall
remain attached to this Agreement for reference purposes.
ARTICLE III - TRANSITION PLAN SERVICES AND FEES
3.1 Planning Phase
Commencing on the Effective Date, FISERV shall appoint a Manager to
conclude FISERV's analysis of Client's operational requirements and
recommend a final plan for the transition to IPS Outsourcing
Services. FISERV and Client shall adopt by mutual written
agreement, the detailed Transition Plan, which shall list the
responsibilities of FISERV and Client during the transition phase
and shall outline a preliminary time schedule for transition
activities. The finalized Transition Plan shall be incorporated
into this Agreement as an Addendum to Schedule A with a completion
date within four weeks from the Effective Date of the Agreement.
3.2 Transition Plan
Upon approval of the Transition Plan, FISERV and Client shall each
exercise their best efforts to meet their individual
responsibilities as set forth in the Plan. FISERV shall manage the
necessary personnel as provided in support of the plan herein, and
shall perform such other FISERV responsibilities as are listed in
Schedule A. Should either party fail to perform its
responsibilities in accordance with the schedule contained in the
Transition Plan, all subsequent dates for performance by the other
party shall be extended by the time elapsed until the applicable
responsibility has been successfully completed, to the extent such
performance was dependent on the prior performance of the other
party.
<PAGE>
3.3 Transition Costs
FISERV will manage and bear all costs of set-up and implementation
of the FISERV system and facilities requirements in the FISERV
Center. As implementation proceeds, FISERV will offer employment
and hire employees of Client to fill operations positions needed to
support the FISERV operation. Client will continue management of
the current operation and will bear associated expenses. FISERV
will bill Client for services as they commence production in
accordance with contract pricing Schedule B.1.
3.4 Personnel Transition
Personnel Policies
Client shall make available certain Client personnel listed on
Schedule D who shall be eligible for employment by FISERV. FISERV
shall abide by its personnel policies, procedures and evaluation
criteria, including but not limited to FISERV's equal employment
opportunity policies. FISERV shall provide Human Resources
support, at no charge, for the evaluation and transition of Client
staff to FISERV employment. A specific employee benefits package
will be prepared for acceptance by Client and offered to Client
personnel eligible for employment by FISERV. Client and FISERV
understand that FISERV is not required to offer employment to any
employees that are currently deemed to be under performing in the
current job classification.
ARTICLE IV - IPS OUTSOURCING SERVICES AND FEES
4.1 Item Processing Unit Prices
Schedule B.1 lists unit prices for each service to be provided to
Client under this agreement. As stated in Section 4.3, below,
additional item volume may be added by mutual agreement.
4.2 General Description Of Services
Schedule B.2 lists specific Services to be provided for Client.
The detailed procedures and operations schedule and dependencies
will be prepared jointly with Client for each service and will be
amended to this agreement within four weeks from the Effective
Date.
4.3 Client Acquisition of Additional Item Volume
This Agreement, at Client's option, will be applicable to future
item volume acquired by Client within the Boston Federal Reserve
district locations.
<PAGE>
4.4 New Or Custom Services
For new services, not currently being provided to Client, a
separate schedule will be amended to Schedule B.2 which shall
contain a description of the service. Schedule B.1 will be amended
to include the unit price or other related pricing for the new
service. Should the Client request FISERV to develop a custom
feature or product, FISERV shall negotiate with Client as to the
hourly programming charge to be assessed to Client and the overall
cost to Client. If such feature or product is specifically
requested and funded by Client, and such feature or product is
unique to the FISERV location, Client shall have the option to
request exclusive use of such feature or product.
FIserv and Client agree that Client will develop a change in format
to their current statement format. If the programming changes
required to accommodate this new format are minor in nature, the
associated cost will be absorbed by FIserv. If, however, such
modifications are extensive in nature or require major software
changes, the associated cost will be borne by Client.
If FISERV is interested in selling this to other clients, Client
shall be reimbursed for a mutually agreeable amount up to the
original amount paid by Client.
ARTICLE V - GENERAL FISERV SERVICES
5.1 Audit Services
(a) FISERV shall engage a regionally or nationally recognized
certified public accounting firm ("CPA") to conduct an annual third
party review of the general controls associated with FISERV's IPS
Outsourcing Services. Client shall be informed by FISERV of the
audit firm to be employed and FISERV shall seek feedback from
Client in order to assess any concerns relative to previous
dealings Client has had with said firm. All such reviews shall
comply with the American Institute of Certified Public Accountants
SAS-44, or current audit standards, and the Federal Banking
Regulations applicable to FISERV and Client as such standards and
regulations are amended, updated or superseded by each respective
organization or regulator. Client and FISERV understand that the
independent auditor has the responsibility for application and
review of current generally accepted standards for data processing
and item processing services. The first audit to occur prior to
12/31/95.
(b) FIserv costs related to audit services as described above
are the sole responsibility of FIserv.
<PAGE>
(c) Client shall be allowed to have client internal auditors
access the FISERV operation and its records subject to reasonable
notice and a minimum of disruption to the operation.
5.2 Disaster Recovery Services
a) A Disaster shall mean any unplanned interruption of the item
processing operations or inaccessibility to the supporting FISERV's
data center which appears in FISERV's reasonable judgment to
require relocation of item and/or data processing to an alternative
site. The plan shall include an alternate "CPU" site to support
the IPS operation in the event of a "CPU" disaster. FISERV shall
notify Client as soon as possible after it deems a service outage
to be a Disaster. FISERV shall move the processing of Client's
items to an alternative processing center as expeditiously as
possible. FISERV, at its sole discretion, may elect to use an
existing or subsequent FISERV center as the contingency site as
appropriate. During a Disaster, optional or new on-request
services shall be provided by FISERV only to the extent that there
is adequate capacity at the alternate center and only after
stabilizing the provision of base item processing services. FIserv
in Reserve attached in addendum identifies levels of disaster.
b) FISERV shall develop back up communications plan work with
Client to establish a plan for alternative data communications at
FIserv site in the event of a Disaster. Client shall be
responsible for furnishing any additional communications equipment
and data lines required at Bank site under the adopted plan.
c) FISERV shall test its Disaster Recovery Services Plan by
conducting one annual test. Client agrees to participate in and
assist FISERV with such testing. Client will be provided with a
minimum of thirty (30) days notice of planned test. Notice will be
provided as stated in Article 13.2. Test results will be made
available to Client's regulators, internal and external auditors,
and (upon request) to Client's insurance underwriters.
d) Client understands and agrees that the FISERV Disaster
Recovery Plan is designed to minimize but not eliminate risks
associated with a Disaster affecting FISERV's item processing
center and services. FISERV does not warrant that service will be
uninterrupted or error free in the event of a Disaster. Client
maintains responsibility for adopting a disaster recovery plan
relating to disasters affecting Client's facilities and for
securing business interruption insurance or other insurance as
necessary to properly protect Client's revenues in the event of a
disaster.
<PAGE>
5.3 Consumable Supplies
FISERV shall provide consumable supplies (i.e., film, magnetic
media, ribbons and the like) as are necessary for the orderly and
professional provision of IPS Outsourcing Services. Client shall
reimburse FISERV only for the cost of any custom forms or specially
requested consumable materials used on behalf of Client. FISERV
shall provide an itemized monthly invoice listing any custom
supplies used and quantity of such supplies. FIserv will forward
to Bank second copy of film to Bank as back-up disaster copy.
ARTICLE VI - CLIENT RESPONSIBILITIES
6.1 Transportation and Reconcilement Activities
Client shall be responsible for transportation or delivery of all
items to FISERV for processing except as noted in 6.1 (a). Client
shall review all reports furnished by FISERV for accuracy and shall
work with FISERV to reconcile any out-of-balance conditions.
FISERV shall, in any event, be responsible for routine error
correction and similar contacts with the Federal Reserve,
Correspondent or similar third parties transmitting or receiving
items related to Client in the ordinary course of business.
6.1 (a) FISERV shall have responsibility for the cost associated
with pick-up and delivery to the Boston Federal Reserve site, to a
selected correspondent and one-half the cost associated with the
combined courier cost to First NH and New Hampshire Clearing House.
6.2 Telecommunications Equipment and Lines
FISERV shall be responsible for communications facilities to
transmit and receive Client files from the data processing center
utilized by Client. File transmissions to other Client locations
shall be recoverable as a direct pass through cost.
6.3 Report Delivery
Daily reports, selected media, fiche and all such other reports
prepared for the Client by FISERV shall be printed and made
available at the primary Client facility or transmitted to an
alternate Client location.
ARTICLE VII - BILLING AND PAYMENTS
7.1 INVOICING AND PAYMENTS PROCEDURE
FISERV will invoice client monthly for FISERV's IPS Outsourcing
Services in accordance with the fees listed in Schedules B.1 hereof
<PAGE>
and for any other amounts payable by Client under this Agreement.
Each such invoice will include base services provided by FISERV for
the current month, optional services provided by FISERV through the
end of the previous month, and any adjustments or credits
applicable to the prior month's charges. Client will pay all
undisputed charges from each invoice rendered within thirty (30)
days after receipt of FISERV's invoice.
7.2 Monthly Reviews
FISERV will submit each monthly invoice to Client and FISERV and
Client will utilize their best efforts to resolve any and all
disputed amounts contained in such invoice. To the extent that
FISERV and Client cannot resolve disputed amounts, Client shall
notify FISERV in writing that such amounts remain disputed, and
Client shall document, in writing, Client's basis for such
disputes. Upon resolution of the disputed amounts, acceptable to
FISERV and Client, FISERV shall adjust its next monthly invoice
after such resolution to incorporate such billing adjustments or
credits.
7.3 Late Charges
At its option, FISERV may assess Client a late charge for late
payments. The late charge for amounts that are more than thirty
(30) days past due will be equal to one and one-half percent (1
1/2%) per month. Such late charge shall be computed and assessed
only for each day such unpaid invoiced amounts are due and payable
until payment is received by FISERV. There will be no late charges
added to any late charge fee. There will be no late charges added
to disputed amounts.
7.4 Taxes
FISERV shall invoice client for and client shall pay any federal,
state or local sales, use, excise, or similar taxes attributed to
performance of FISERV's IPS Outsourcing Services. In no event
shall Client be responsible for taxes based upon the net income of
FISERV. There are no taxes incurred at this time. All such taxes
shall be itemized on FISERV's invoice. As of the Effective Date of
this Agreement, it is understood by both parties that state sales
taxes do not apply to this service. It is understood that FISERV
is responsible for any and all sales taxes that may be applicable
to the equipment acquired by FISERV from Client as stated in
Schedule E.
7.5 Annual Price Revisions
Beginning September 1, 1997, the monthly service fees listed on
Schedule B.1., or any amendment thereof, may be increased by an
amount not to exceed the percentage increase in the U. S.
<PAGE>
Department of Labor, Consumer Price Index for Urban Wage Earners
and Clerical Workers, All Cities (CPI-W), (1982 = 100%), for the
twelve month period preceding the anniversary date, or four (4)
percent, whichever is less. Bank will be notified ninety (90) days
prior to implementation of increase.
ARTICLE VIII - WARRANTIES
8.1 Service Quality
FISERV warrants that the IPS Outsourcing Services will be quality
services conforming to "generally accepted item and data processing
practices." Both FISERV and Client agree and understand that non
material mistakes will occur and such mistakes will not constitute
a basis for breach of the Agreement.
8.2 Error Correction
Any IPS Outsourcing Services performed by FISERV with proper
cooperation on the part of the Client which, after investigation by
FISERV, are acknowledged by FISERV to be less than quality services
conforming to generally accepted item and data processing
practices, shall be corrected to conform to original requirements,
by FISERV, without charge to Client, provided:
(i) Client supplies FISERV with a written request for such
investigation within three (3) business days after Client knows or
should have known that the IPS Outsourcing Services were of less
than professional quality; and
(ii) Where applicable, Client provides FISERV with any support
reasonably required to perform the corrections.
(iii) FIserv will supply Bank with information regarding
errors within (3) business days after FIserv knows or should have
known the IPS Outsourcing Services were of less than professional
quality.
8.3 Performance Standards
(a) FISERV warrants that the services provided hereunder
shall meet or exceed the Performance Standards listed on Schedule
B.2 hereof throughout the term of this Agreement. FISERV shall be
considered to be in default of this covenant if any material
performance measurement falls below the designated standard for any
three (3) occurrences in a month.
(b) In the event of any default under this provision, Client
shall notify the FISERV authorized contact. FISERV shall assemble
a project team of FISERV technical personnel to investigate and
diagnose the reasons for such default and to implement corrective
actions designed to restore performance to the designated levels
All such project activity shall be conducted at FISERV's sole cost
and expense and shall be directed to correct all such performance
<PAGE>
failures as soon as reasonably possible but not longer than sixty
(60) days after Client's original notification of default.
(c) Upon expiration of the cure period as provided above or
at such earlier time as Client is notified that FISERV has restored
performance, Client and FISERV shall review performance
measurements on a monthly basis.
8.4 Disclaimer of Implied Warranties
THE FOREGOING WARRANTIES ARE IN LIEU OF AND FISERV DISCLAIMS ALL
OTHER WARRANTIES AND REPRESENTATIONS EXPRESS OR IMPLIED INCLUDING
BUT NOT LIMITED TO, THOSE CONCERNING MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE.
8.5 Data Delivery by Client
FISERV may accept as correct, without any further inquiry, all
data, documents and other records of Client delivered or made
available to FISERV hereunder and shall have no responsibility or
liability for any error, inadequacy or omission which results from
inaccurate or incomplete data, documents or other records of
Client.
ARTICLE IX - LIMITATION OF FISERV LIABILITY
9.1 Limitation of Monetary Damages
In any event, FIserv's liability, if any, arising out of or in any
way related to its performance of the services and processing
provided for under this Agreement shall be limited to an amount
which represents that actual direct damages or loss incurred by the
Client after the exercise by Client of due diligence to recover
such loss from responsible parties, if any. In the aggregate over
the term of this Agreement, such liability shall not exceed the
lesser of; (a) all costs of material, labor and other expenses for
re-runs and file reconstruction required to correct any error
caused by FIserv or; (b) $25,000.00 per occurrence with a maximum
of $250,000 per year on an aggregate basis, provided that such
Limitation of Liability shall not apply in event of FIserv's gross
negligence, malfeasance or fraud.
This shall constitute FISERV's sole liability and obligation in the
event of any claim arising out of its performance or nonperformance
of any provisions of this Agreement. Massachusetts statutes will
be used to determine the period of time during which Client may
assert a claim against FISERV after such claim either becomes known
or should have become known to Client.
<PAGE>
9.2 Third Parties and Exclusion of Damage
(a) This Agreement is for the exclusive benefit of the
parties and shall not create or evidence any right in any third
party. FISERV shall in no event be liable to Client or any third
party for indirect, incidental, special or consequential damages
arising out of the performance or nonperformance by FISERV of any
provision of the Agreement, whether an action for such damages is
brought in tort or in contract. Client shall indemnify and hold
FISERV harmless, and FISERV shall indemnify and hold Client
harmless, against any claims of Client and of any third party
arising through Client for any such damages and against any related
expenses arising therefrom, including but not limited to FISERV's
reasonable attorney's fees. The parties agree to indemnity without
being named in related lawsuit and to support any such lawsuit(s)
that may arise.
9.3 Force Majeure
In no event shall either party be liable for errors, delays or
nonperformance due to any events beyond its reasonable control,
including but not limited to, acts of God, changes in law or
regulation or other acts of governmental authority, weather
conditions or transportation. FIserv will use best reasonable
efforts to seek alternative sources of transportation, transmission
or other service delivery in the event of weather or transportation
problems or disruptions.
9.4 Indemnity
Each party shall indemnify and hold harmless the other party
against any claims made by such indemnifying party's employees for
personal injuries or otherwise, in connection with the performance
of this Agreement and against related legal fees or other expenses
arising therefrom.
ARTICLE X - TERM AND TERMINATION
10.1 Initial Term
The term of this Agreement shall be sixty (60) months beginning on
the Conversion Date as defined herein. This Agreement shall renew
for successive two(2) year periods unless either party gives
written notice to the other at lease ninety (90)days prior to the
expiration date of the current term.
10.2 Termination for Cause
If either party fails to comply in any material respect with any
provision of this Agreement and such failure is not cured within
ninety (90) calendar days (or such longer time as both parties may
<PAGE>
agree upon in writing) after its receipt of notice thereof from the
other party or if either party fails to make a payment due
hereunder within sixty (60) days after the date due, the aggrieved
party shall be entitled (in addition to such other rights, if any,
as it may have under this Agreement or otherwise) to terminate this
Agreement forthwith by giving notice of termination to the
defaulting party without application of liquidated damages. The
right of either party to terminate shall not be affected in any way
by its waiver of, or failure to take action with respect to, any
previous default. Under any termination, Client shall have the
right to request continuation of services by FISERV until alternate
source of service can be established, such period not to exceed one
(1) year.
10.3 Termination for Other Than Cause
Client may terminate this Agreement after 30 months by providing to
FISERV: (i) six (6) months written notice of intent to terminate
specifying the deconversion date, (ii) payment for any applicable
and reasonable deconversion costs and costs to transition Client's
item processing to a specified service location, and (iii)
liquidation costs associated with the acquisition of the item
processing services listed under B.1 at $40,000 times the number of
months remaining in the Agreement after deconversion, as liquidated
damages for early termination of the Agreement. The parties agree
that these damage provisions are reasonable in light of all present
and predictable circumstances.
ARTICLE XI - TERMINATION OR EXPIRATION PROCEDURES
11.1 Data Delivery
Concurrently with FISERV's discontinuation of service hereunder,
FISERV agrees to deliver to Client, upon written request, the
information relating to Client's operations contained in FISERV's
system and files. Client agrees to reimburse FISERV on a time and
materials basis for costs incurred by FISERV as the result of the
foregoing requirement. FISERV shall also provide, if requested,
reasonable assistance to Client in the orderly assumption by a
substitute contractor or by Client itself of Client's item
processing operation.
ARTICLE XII - CONFIDENTIAL INFORMATION AND DATA SECURITY
12.1 Client Owned Data
<PAGE>
Client shall remain the sole and exclusive owner of all data
relating to Client's business or customers regardless of whether
such data is maintained on magnetic tape, magnetic disk, punched
cards or any other storage or processing device comprising a part
of FISERV's Data Center Processing Resources. Client's data and
records shall, however, be subject to regulation and examination by
the appropriate regulatory agencies to the same extent as if such
information were on Client's premises. FISERV shall maintain
adequate backup procedures as necessary to reproduce Client's
records in the event of a disruption of service or recovery from a
disaster.
12.1 Confidential Information
"Confidential Information" shall mean information such as customer
lists, customer information, IPS Outsourcing Services pricing as
applied to Client, application software programs and documentation
licensed by third parties to Client or FISERV hereunder and the
proprietary use of those application software programs, FISERV or
Client documentation, and all other materials relating to either
Client or FISERV's business which are designated as confidential by
Client or FISERV and which are disclosed by Client or FISERV to the
other party in the conduct of business under this Agreement.
12.3 Standard of Care
FISERV and Client shall use their best efforts not to disclose and
shall instruct their employees to use the same care and discretion
with respect to the Confidential Information of the other party, or
of any third party utilized hereunder, that they use with respect
to their own confidential information including, but not limited
to, the utilization of security devices or procedures designed to
prevent unauthorized access to such materials. Each party shall
instruct its employees not to attempt to circumvent any such
security procedures and devices and all such confidential
information shall be distributed only to persons having a need to
know such information to perform their duties in conjunction with
this Agreement. Both FISERV and Client's written guidelines for
such care and discretion are available for review by the other
party.
ARTICLE XIII - MISCELLANEOUS
13.1 Executive of Agreement Amendments
This Agreement may be modified only by a written instrument
executed by the parties provided that FISERV and Client may, from
time to time, make reasonable modifications in the forms and
procedures used in the IPS Outsourcing Services hereunder.
<PAGE>
13.2 Notices
Any notice in connection with this Agreement shall be deemed duly
given if mailed by prepaid registered or certified mail, return
receipt requested, or electronic facsimile with confirmation of
transmission, to the addressee at the address first set forth
below:
If Client: If FISERV:
Bank of New Hampshire FISERV Boston, Inc
Senior Vice President Center Manager
Data Services Item Processing Services
300 Franklin St. 31 West Street
P.O. Box 600 Randolph, MA 02368
Manchester, NH 03105
13.3 Governing Laws
This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts as if made in
Massachusetts for performance entirely within the Commonwealth of
Massachusetts.
13.4 Regulatory Availability
All IPS Outsourcing Services performed for, and all records
maintained for, Client will be subject to regulation and
examination by State and Federal supervisory and regulatory
agencies.
FISERV will respond to supervisory agency verification requests
from those authorized State and Federal supervisory and regulatory
agencies after presentation of proper identifying credentials and
notification to Client. The files will be made available in
FISERV's Data Center for auditing purposes by these supervisory and
regulatory agencies, and by Client's external auditors at any time
during normal business hours.
13.5 Annual Financial Reports
FISERV shall provide Client with a copy of the most recent FISERV,
Inc. Annual Report annually upon issuance of such Report.
13.6 Compliance with Laws
The parties agree that, in connection with the performance of their
obligations hereunder, they will comply with all applicable
Federal, State and Local laws including the laws and regulations
regarding Equal Employment Opportunities.
<PAGE>
13.7 Insurance
FISERV carries Comprehensive General Liability insurance with
primary limits of one million dollars, Commercial Crime insurance
covering Employee Dishonesty in the amount of one million dollars,
all-risk replacement cost coverage on all equipment used at
FISERV's data center and Workers Compensation coverage on FISERV
employees in Massachusetts.
13.8 Independent Contractor
FISERV and Client understand and agree that FISERV is performing
all services under this Agreement as an independent contractor.
Nothing in this Agreement shall be construed as creating a
partnership, joint venture, or other agency relationship between
FISERV and Client.
13.9 Severability
If any part or parts of this Agreement are held to be invalid, the
remaining parts of the Agreement shall continue to be valid and
enforceable.
13.10 Assignability
This Agreement shall inure to the benefit of and shall be binding
upon the respective successors and assigns of the parties hereto,
but it may not be assigned in whole or in part by either party
without the prior written consent of the other, except that FISERV
may freely assign this Agreement to any company that is directly or
indirectly (i) in control of FISERV, or (ii) under the control of
FISERV. In the event FISERV assigns this Agreement to any company
that is not directly or indirectly (i) in control of FISERV, or
(ii) under the control of FISERV, without the Client's consent, and
as a direct result of such assignment, the Client expresses in
writing within ninety (90) days of FISERV's assignment its desire
to terminate this Agreement prior to the end of the Initial Term,
FISERV agrees that the Client may terminate this Agreement, without
payment of liquidated damages, within one (1) year from such
aforementioned notice and such termination shall be Client's sole
and exclusive remedy. Client may assign this agreement to any
subsidiary of Client having responsibility for the Client bank's
item processing business.
13.11 Arbitration
(A) Except with regard to disputes arising from the disclosure of
Confidential Information of either party, or from a
misappropriation or infringement of FISERV's proprietary rights in
its systems and software, all disputes or controversies arising out
of or relating to this agreement, or the breach thereof, shall be
<PAGE>
settled by arbitration to be held in the City of Boston, MA in
accordance with the Commercial Rules of the American Arbitration
Association. Judgment upon the award rendered by the Arbitrator(s)
may be entered in any court having jurisdiction over the parties.
(B) The prevailing party in any action brought to enforce any
provision of this Agreement, whether or not such action is brought
under this Section XIII, shall, in addition to any other remedy
available at law or in equity, be entitled to reimbursement of its
reasonable attorneys fees.
ARTICLE XIV - RELATIONSHIP MANAGEMENT
14.1 Meetings
FISERV and Client agree to meet regularly to discuss business and
relationship strategies affecting both.
FISERV and Client further agree to hold regularly scheduled
meetings to summarize current relations, performance results and
work efforts, as well as the planned activities. These meetings
shall follow a predefined agenda focusing on performance of IPS
Outsourcing Services, application projects, and major systems
installations.
ARTICLE XV - CONTRACT DATES
Contract shall be considered executed as of the Effective Date
being the date the contract is approved and signed by FISERV and
Client.
Contract shall have a term of sixty (60) months from the
Conversion Date which is the date FISERV, having completed the
Transition Plan for the first Client workload, begins production
operation for any client items.
ARTICLE XVI - EXCLUSIVE TERMS
CLIENT AND FISERV ACKNOWLEDGE HAVING READ AND UNDERSTOOD THIS
AGREEMENT AND AGREE THAT THIS AGREEMENT, TOGETHER WITH THE
SCHEDULES, REPRESENTS THE COMPLETE AND EXCLUSIVE UNDERSTANDING OF
THE PARTIES AND SUPERSEDES ANY PRIOR UNDERSTANDING WITH RESPECT TO
THE SUBJECT MATTER CONTAINED HEREIN.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their duly authorized officers listed below:
<PAGE>
THE BANK OF NEW HAMPSHIRE: FISERV BOSTON, INC.:
By By
Name Name
Title Title
<PAGE>
Schedule A
FISERV TRANSITION PLAN
IPS OUTSOURCING SERVICES
The proposed Transition Plan tasks are outlined below. FISERV and
Client will work to develop a detailed Transition Plan using this
outline. The detailed Plan will specify FISERV and Client
responsibilities, target dates for major activities and resource
requirements. The implementation will be divided into several
major project tasks which will be undertaken concurrently.
A. Facilities Preparation
Prepare final configuration, order and install equipment and
provide integration test of necessary hardware, system
software and communications systems in support of the FISERV
IPS implementation.
B. Requirements Planning
Validate FISERV's understanding and thorough documentation of
each of the Client functions to be outsourced; add updated
Schedules to this Agreement.
C. Prepare detailed Project Plan incorporating tasks outlined and
establish target dates and resource allocations.
D. Prepare FISERV Human Resource staffing and transition plans in
support of the above Project Plan. Evaluate staff needs and
Client staff provided in Schedule D to establish a staffing
plan and human resource support process. Provide additional
FISERV or outside staff as necessary to support the full
Transition Plan.
E. Conduct mock conversion test and prepare detailed plan for
production cut-over to the FISERV IPS operation for each
operation function being outsourced. Conduct complete systems
validation test and Client Acceptance Test.
F. Conduct formal post-conversion joint audit to access accuracy,
performance measurements and standards and potential
improvements in the FISERV operation.
<PAGE>
Schedule B.1
FISERV ITEM PROCESSING PRICING SCHEDULE
Prepared for
BANK OF NEW HAMPSHIRE
Inclearing $ .035/per item
Proof of Deposit $ .045/per item
Fine Sorting $ .005/per item
Qualify Returns $ .20/per item
Stuffers (over one) $ .01/per stuffer
Microfiche $ 6.00/per day
Research/Retrieval $ .25/per item
$ 20.00/per hour
No Check Statements $ .04/per statement
Laser Print Statements $ .04/per statement
A 15% discount will be applied to the above mentioned prices.
NOTES:
Client retains costs for letterhead and envelopes for statements,
transportation costs to and from the bank and telecommunications.
Postage is a prepaid expense. Postage will be equal to or less
than present postage and pre-sort costs.
<PAGE>
Schedule B.2
BANK OF NEW HAMPSHIRE
DETAIL SCHEDULE OF SERVICES
FIserv shall provide the following services in an accurate and timely manner.
INCLEARING SERVICES PLANNED COMPLETION
Items received from sources named Prior to 8:30 AM of the day
(Refer to 6.1) Federal Reserve Bank, FIserv receives the items
New Hampshire Clearing House and from such sources (the "Day
Direct Presentments. of Receipt".)
FIserv will separate and return to To be forwarded on next
Bank of NH all incoming dishonored available courier trip.
items. (return deposit items)
FIserv will verify receipt and balance all work from all normal sources.
FIserv will open all bundles, removing packages of incoming returns and
associated cash letters. Verify that all incoming returns have been located in
a manner consistent with normal packaging from sources. Package all incoming
returns and cash letters for delivery to Bank of New Hampshire courier or the
next available trip.
FIserv performs a "data capture" pass Prior to 6:00 PM of the
on each item, consisting of microfilming Day of Receipt. If Bank
each item, placing a trace on each item chooses new processors
and storing certain basic information as a new mutually agreed upon
to each item. time frame to be determined.
FIserv will encode batch tickets based on cash letters arriving with items.
Totals from cash letters will be accumulated establishing total inclearing
charge for day. Notification of total charge will be communicated to Bank of
New Hampshire as soon as available.
Batches will be processed on reader/sorter in blocks separated by source.
Standard balancing procedures will be followed. Adjustments will be filed in
accordance with rules by source as necessary to balance inclearing to totals
received. FIserv will repair and capture rejected items. Copies of
adjustments and copy of film will be forwarded to Bank of New Hampshire.
All incleared items will be held in original input sequence, with rejects added
on the end, for the cycle sort/exception outsort process on third shift.
Account numbers will be presented as input with translation.
Items that have no account number will be separated and packaged for delivery
to Bank of New Hampshire on the next courier delivery. Daily Recon items
will be sorted by account number and serial number and returned to Bank on next
courier delivery for Bank to distribute.
<PAGE>
Transmission of preliminary debit Prior to 11:15 AM of Day of
totals for notified funding accounts Receipt assuming timely delivery
or fax Report with Account Totals. of Inclearing to FIserv.
By 11:15 AM FIserv will execute a preliminary extraction program to extract
only items drawn on notified funding accounts. A file will be formatted and
sequenced based on specifications from Bank of New Hampshire and immediately
transmitted to Bank. This program will be run whether balancing of Bank
of New Hampshire inclearing is complete or not. FIserv will produce and fax
a report by Account number and Account total with aggregate total. Upon
written request from Bank FIserv will add accounts to listing within a
2 business days.
Transmission of data captured to Bank Prior to 6:00 PM of the Day
of Receipt. If Bank chooses new
processors a new mutually agree
upon time frame to be determined.
When inclearing and POD are posted, a file will be created detailing exception
items. This file will be immediately transmitted from Bank of New Hampshire.
Receipt from Bank of an exception Prior to 3:00 AM of the first
file, detailing results of posting. business day after Day of Receipt.
Prior to 3:00 AM, Bank of New Hampshire will initiate transmission of an
exception outsort file to FIserv. This file will contain all information that
is currently delivered to Bank of New Hampshire item processing. The format
and content may be modified from time to time in accordance with changing
needs for specific item handling for Bank of New Hampshire.
The file will indicate each "Exception Item" with an associated exception code
and cycle designation. The exception code may indicate either a
specific exception related to this item, or may indicate that the item
must be handled separately from those which would fall in the same cycle
based on sort pattern criteria. This file will be used to separate items
by exception/cycle, and to separate paid exception items by cycle.
Exception types identified are:
Stop pay
Stop pay suspect
Insufficient funds
Uncollected funds
Posting rejects
Account closed
Invalid account number
Account lockout
Non bulk file account
Special cycle
Special signature verification
Month end cycle, regular
Month end cycle, serial sort
Large volume accounts
Image Statement Accounts
<PAGE>
All exception pockets are checked to verify that all required items have been
found. Items in the reject pocket are reviewed to put in proper pocket.
Preparation for delivery to Bank of NH Between 3:00-7:00 AM of the
of all signature verification, returns, first business day after Day
stops and unposted items, special of Receipt.
accounts.
The above items are packaged and prepared for delivery to Bank of New Hampshire
with the next courier run. A special bag will be used for those items going
both directions to prevent their being intermingled with other items.
Bank of New Hampshire will review signatures, returns, stops and perform
required functions on unposted items. All items will be returned to FIserv
with POD items that day (special bag used). FIserv will bulk file the paid
items and forward return items to Federal Reserve Bank of Boston.
Daily Batch Edit Report to Bank of NH Between 3:00-7:00 AM of the
on paper and item microfilm. first business day after Day
(FIserv is also capable of transmitting of Receipt.
to optical disc.)
Daily Batch Edit Report for Bank of New Hampshire will be produced along with
all others. It will be packaged along with duplicate microfilm (optional) of
prior night's POD and prior day's inclearing. They will be delivered on next
courier run.
Daily Batch Edit Report to Bank of NH Between 9:00-11:00 AM of the
on fiche. second business day after Day
Receipt.
Receipt of non-electronic Pay/Return Prior to 1:30 PM of the first
decision data. business day after Day of
Receipt.
Prior to 4:30 P.M. return paid
items to FIserv for bulk file. Forward Return Items to FIserv,
for FIserv to forward to the
Federal Reserve and Clearing House.
Bank of New Hampshire will use information from its account processing system
and from reviewing physical items to make pay/return decisions. Bank of New
Hampshire will return items to Federal Reserve Bank of Boston through
FIserv in specially marked package. FIserv will return items through separate
return cash letter for clearing house banks.
<PAGE>
Exception items not returned will be cycle sorted based on the cycle code
contained in the daily file received from Bank of New Hampshire.
Items bulk filed or account number To be held for statement
filed. insertion. To be received by
FIserv no later than 4:30 PM.
PROOF OF TRANSIT SERVICES PLANNED COMPLETION
Bank of New Hampshire is responsible for courier pickup at branches and delivery
to FIserv. Pickups must be on a schedule that is agreeable to both parties.
It will be Bank of New Hampshire's responsibility to continue to maintain
cut-off and pickup times that are consistent with its required deposit schedules
and the work required to prepare the items for deposit. Specific percentages
and times must be established.
Proof on items received and Between 12:00-8:00 PM of the
reconciliation to Bank of NH. Day of Receipt.
Saturday work will arrive on
Monday morning with Clearing
House courier run.
Proof on items received and On Day of Receipt.
reconcile to First NH Cash Letter.
FIserv to forward ECP file to
First NH with items to follow.
Using standards from Bank of New Hampshire, FIserv will balance deposits.
Detail and summary information will be prepared for daily delivery to
Bank of New Hampshire
Processing of items received from Between 4:00 PM Day of
Bank of NH, including electronic Receipt and 4:00 AM of
capture of data, microfilming and next morning.
correction of machine readable
items, endorse and sort by end-point,
preparation for delivery, including
deposit report. Preparation of
daily report, by endpoint, of
summary of items processed. Hold
On-Us items for inclusion with
inclearing items in cycle sort and
exception item processing. General
Ledger ticket sorting and other
transaction documents as necessary.
Encoded batches will be grouped into Blocks for sorter processing. FIserv will
process blocks on the sorter, distributing items as required. Blocks will be
balanced to proof totals.
<PAGE>
Transmission of captured On-Us and POD Prior to 11:30 PM on Day
data to Bank of NH processor. of Receipt. If Bank chooses
new processors a new mutually
agreed upon time frame to be
determined.
FIserv will prepare and transmit a file, or files as required of all On-Us and
foreign transactions processed through POD. Formats to be used will be those
currently used between Bank of New Hampshire's in house system. In the future,
modifications to the format and content may be made to suit needs of Bank
of New Hampshire or FIserv.
Deliver to end-points. See chart immediately below.
LOCATION TYPE OF CASH TIME
LETTERS
Federal Reserve Bank 1) Return items 12:01 AM on the first
Boston 2) Food Stamps business day after the
Day of Delivery
New Hampshire Clearing Transit Checks 7:00 AM on the first
House Exchange drawn on Clearing business day after the
House members. Day of Delivery.
Return Items
Transmission of 11:00 PM on the day
transit checks drawn of receipt.
on First NH BANK.
Followed by delivery 12:01 A.M. on the day
to First NH. following receipt.
Correspondent Bank All other transit 11:30 PM on the Day of
or FRB checks Receipt or by the
1) NE Items deadline.
2) All OD
Items in pockets designated for delivery to endpoints will be batched and
included with detail cash letters and packaged for delivery. Delivery will be
by designated courier and time. FIserv will support changes in
presentment upon reasonable Bank request.
GENERAL LEDGER TICKET PROCESSING
FIserv will sort General Ledger Between 3:00 AM-7:00 AM
tickets into account number of the first day after
order. Day of Receipt.
<PAGE>
FIserv will match General Ledger Between 3:00 AM-7:00 AM
tickets against a file to separate of the first day after
items by department (optional). Day of Receipt.
All unposted items will be
returned to Bank for next day
manual processing.
Summaries of all deposits will be made and forwarded to Bank of New Hampshire.
Copies of master lists, film and fiche will be packaged for delivery to Bank of
New Hampshire by next available courier.
STATEMENT PROCESSING PLANNED COMPLETION
Statement Print file to be received
. on mag tape . on first available courier
. or transmission . by 5:00 AM
by FIserv. On the first business day
following statement
cut-off.
Statements will be printed by FIserv on one-up paper. Statements will be
printed in account number order but separated into several "streams":
Those that are not to be mailed
Non-Bulk-File statements
Regular Bulk File statements
No Check statements
Foreign mail
Image statements
Special Accounts
Do NOT Mail Accounts
All bulk file items are fine sorted
by cycle and filmed
Statements folded and combined with Prior to 11:59 A.M. of the
appropriate checks and advertising business day following
material and inserted into envelope day of receipt of state-
and postmarked for delivery to Post ments with the exception
Office. of end-of-month. Based
on even distribution of
statements throughout
the month other than
end-of-month.
End-of-Month Statements Prior to 11:59 P.M. of the
second business day
following day of receipt of statements.
<PAGE>
Exception statements will be reviewed Prior to 11:59 P. M. of
to correct errors. Unresolved the third business day
statements will be forwarded to following day of receipt
Bank of NH for their review and of statements.
correction.
SPECIAL HANDLING
Item research if to be done by FIserv. Within three business
days of request for
individual items. Time
schedule quoted for
extensive research.
Photos of on-site
transaction documents
within one business day.
<PAGE>
Schedule C
IPS OUTSOURCING REPORTS
CRITICAL REPORTS TO BE PROVIDED
IPS OUTSOURCING SERVICES
REPORT NUMBER DESCRIPTION FREQUENCY
BNH001 IPS Master Report Daily
BNH002 IPS Detail Report Daily
BNH003 Inclearing Transaction Report Daily
BNH004 POD Application Report Daily
Other selected standard IPS Reports.
<PAGE>
Schedule D
CLIENT EMPLOYEES
<PAGE>
Schedule E
CLIENT HARDWARE
<PAGE>
Schedule G
NEEDED OPERATIONS POSITIONS
Schedule H
BACKUP DISASTER
<PAGE>
Schedule I
QUALITY ASSURANCE
QUALITY ASSURANCE
FIserv will provide a monthly "ITEM PROCESSING QUALITY REPORT" to Client by the
tenth of each month. The report will detail FIserv's performance relative
to services performed.
A. PROOF OF DEPOSIT
Checks will be received from Client branches via a courier service as provided
by and directed by Client. FIserv will encode, perform data capture including
microfilming and endorsement, balance checks to totals provided by branches,
provide adjustment documentation to Client, prepare cash letters for each
end-point and deliver work to end-points by such deadlines as documented
or other agreed upon deadlines as may be provided from time to time. Reports
will be provided to Client reflecting the amount of the cash letters
forwarded to end-points. FIserv will fax copies of the clearing house
settlement report each evening at completion of processing. Encoding
performance to be monitored by FIserv and Client. Encoding errors
not to exceed .001%.
B. STATEMENT INSERTION/MAILING
FIserv will match statements with checks and marketing inserts, inserting and
sealing for mailing.
Client will maintain a detailed log of customer calls relating to improper
mailing, missing or extra pages or checks or other problems related to
statement handling. This log will be made available to FIserv on
a monthly basis, and summarized in the "ITEM PROCESSING QUALITY REPORT".
FIserv will strive to achieve an error rate not to exceed .002%.
C. RESEARCH/RETRIEVAL
FIserv will respond to all single requests for copies or information within
three (3) business days. Photos of on-site transaction documents within one
business day. Volume request, such as subpoenas and audits,
will be processed expeditiously to meet the requirements of the subpoena or
audit.
