U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Quarterly period ended March 31, 1999
---------------------
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________to_______________
Commission file number 33-22224-B
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Beverly National Corporation
-----------------------------------------------------------
(Name of small business issuer as specified in its charter)
Massachusetts 04-2832201
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
240 Cabot Street Beverly, Massachusetts 01915
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code (978) 922-2100
----------------
Check whether the issuer (l) filed all reports required to be filed by Section
l3 or l5 (d) of the Securities Exchange Act during the past l2 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
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State the number of shares outstanding of each of the issuer's classes of
common equity, as of May 1, 1999. 1,564,674 shares
----------------
Transitional small business disclosure format Yes
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No X
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<PAGE>
BEVERLY NATIONAL CORPORATION
INDEX
PART I. FINANCIAL INFORMATION PAGE
Item 1.
Financial Statements (Unaudited)
Consolidated Balance Sheets at
March 31, 1999 and December 31, 1998 . . . . . . . . . . . . 3-4
Consolidated Statements of Income for the Three Months
Ended March 31, 1999 and 1998 . . . . . . . . . . . . . . . 5-6
Consolidated Statements of Cash Flow for the
Three Months Ended March 31, 1999 and 1998 . . . . . . . . . 7-8
Notes to Consolidated Financial Statements . . . . . . . . . 9
Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations. . . . . . . . 10
PART II. OTHER INFORMATION
Item 1.
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . 20
Item 2.
Changes in Securities and Use of Proceeds . . . . . . . . . 20
Item 3.
Defaults Upon Senior Securities . . . . . . . . . . . . . . 20
Item 4.
Submission of Matters to a Vote of Security Holders . . . . 20
Item 5.
Other Information. . . . . . . . . . . . . . . . . . . . . 20
Item 6.
Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . 20
Signatures. . . . . . . . . . . . . . . . . . . . . . . . . 19
<PAGE>
BEVERLY NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
MARCH 31, DECEMBER 31,
1999 1998
------------ ------------
ASSETS
Cash and due from banks $ 10,790,312 $ 10,971,822
Federal funds sold 12,500,000 14,500,000
Investments in avialable-for-sale
securities (at fair value) 33,365,585 31,879,320
Investments in held-to-maturity
securities 13,110,535 16,152,624
Federal Reserve Bank Stock, at cost 97,500 97,500
Loans:
Commercial 24,590,897 24,987,512
Real estate-construction and
land development 2,611,168 2,926,158
Real estate-residential 46,328,153 49,678,024
Real estate-commercial 49,684,602 44,223,264
Consumer 7,250,759 8,241,229
Municipal 2,262,108 2,669,963
Other 504,768 1,318,270
Allowence for possible loan losses (1,956,057) (1,934,541)
Deferred loan fees, net 146,053 136,759
Unearned income 0 0
------------ ------------
Net loans 131,692,451 132,246,638
Mortgages held for sale 3,167,855 1,576,925
Premises and equipment, net 4,757,498 4,561,232
Other real estate owned 0 0
Accrued interest receivable 1,519,718 1,224,462
Other assets 2,142,061 1,819,781
------------ ------------
$213,143,515 $215,030,304
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest bearing $ 36,159,033 $ 41,721,322
Interest bearing
Regular savings 42,614,781 40,608,619
NOW accounts 36,026,613 35,933,589
Money market accounts 19,549,883 17,884,214
Time deposits 57,763,669 57,401,670
------------ ------------
Total deposits 192,113,979 193,549,414
Notes payable 0 385,627
Employee Stock Ownership Plan loan 0 200,000
Other liabilities 1,814,415 1,955,650
------------ ------------
Total liabilities 193,928,394 196,090,691
------------ ------------
<PAGE>
Stockholders' equity:
Preferred stock, $2.50 par value per
share; 300,000 shares authorized;
issued and outstanding none.
Common Stock, $2.50 par value per
share; 2,500,000 shares authorized;
issued 1,610,798 as of March 31, 1999
and 1,609,698 as of December 31, 1998;
outstanding 1,564,674 shares as of
March 31, 1999 and 1,563,574 as of
December 31, 1998. 4,026,995 4,024,245
Paid in capital 2,479,607 2,470,673
Retained earnings 13,152,342 13,009,685
Treasury stock, at cost (46,124 shares
as of March 31, 1999 and December
31, 1998.) (427,467) (427,467)
Net unrealized holding gain (loss) on
available-for-sale securities (16,356) 62,477
Unearned compensation-Employee Stock
Ownership Plan 0 (200,000)
------------ ------------
Total stockholders' equity 19,215,121 18,939,613
------------ ------------
$213,143,515 $215,030,304
============ ============
The accompanying notes are an itegral part of these consolidated financial
statements.
<PAGE>
BEVERLY NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended March 31,
1999 1998
---------- ----------
INTEREST AND DIVIDEND INCOME:
Interest and fees on loans $2,908,702 $2,954,282
Interest and dividends on investment
securities
Taxable 675,905 574,029
Tax-exempt 8,717 5,764
Other interest 126,015 166,886
---------- ----------
Total interest and dividend income 3,719,339 3,700,961
---------- ----------
INTEREST EXPENSE:
Interest on deposits 1,317,222 1,295,043
Interest on short term borrowings 0 0
Interest on notes payable 12,604 8,696
---------- ----------
Total interest expense 1,329,826 1,303,739
---------- ----------
Net interest and dividend income 2,389,513 2,397,222
Provision for loan losses 0 0
---------- ----------
Net interest and dividend income after
provision for loan losses 2,389,513 2,397,222
---------- ----------
NONINTEREST INCOME:
Income from fiduciary activities 322,347 271,277
Service charges on deposit accounts 91,137 93,338
Other deposit fees 47,847 57,148
Other income 105,983 91,690
---------- ----------
Total noninterest income 567,314 513,453
---------- ----------
NONINTEREST EXPENSE:
Salaries and employee benefits 1,332,180 1,279,276
Occupancy expense 218,137 200,217
Equipment expense 108,494 109,300
Data processing fees 93,339 57,740
Stationery and supplies 57,164 38,545
Other expense 555,442 441,929
---------- ----------
Total noninterest expense 2,364,756 2,127,007
---------- ----------
Income before income taxes 592,071 783,668
<PAGE>
Income taxes 230,500 314,100
---------- ----------
Net Income $ 361,571 $ 469,568
========== ==========
Earnings per share:
Primary shares outstanding 1,473,243 1,500,144
========== ==========
Diluted shares outstanding 1,660,614 1,676,308
========== ==========
Net income per share-primary $ 0.25 $ 0.31
Net income per share-diluted $ 0.22 $ 0.28
Dividends per share $ 0.14 $ 0.18
Special dividend per share $ 0.00 $ 0.05
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
BEVERLY NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31, 1999 and 1998
(Unaudited)
1999 1998
----------- -----------
Cash flows from operating activities:
Interest received $ 3,440,770 $ 3,460,111
Service charges and other income 558,594 503,065
Interest paid (1,331,638) (1,339,499)
Cash paid to suppliers and employees (2,524,484) (1,805,916)
Income taxes paid (111,351) (112,137)
----------- -----------
Net cash provided by operating activities 31,891 705,624
----------- -----------
Cash flows from investing activities:
Proceeds from maturities of investment
securities held-to-maturity 3,042,000 3,042,938
Proceeds from maturities of investment
securities available-for-sale 6,387,721 8,137,008
Purchases of investment securities held-
to-maturity 0 1,999,531
Purchases of investment securities
available-for-sale (7,953,993) (11,902,636)
Net increase in loans 516,862 3,003,669
Proceeds from sale of mortgages (1,582,210) 161,929
Capital expenditures (313,016) (57,528)
Recoveries of previously charged off loans 21,902 48,295
(Increase) decrease in other assets (283,268) (20,739)
Increase (decrease) in other liabilities (406,734) (373,354)
----------- -----------
Net cash provided by (used in) investing
activites (570,736) 4,039,113
----------- -----------
Cash flows from financing activites:
Net increase (decrease)in demand deposits,
NOW, money market, and savings accounts (1,797,434) 4,143,418
Net increase (decrease) in time deposits 361,999 4,702,000
Issued capital stock 11,684 102,798
Dividends paid (218,914) (174,968)
----------- -----------
Net cash used in financing activities (1,642,665) 8,773,248
----------- -----------
Net increase (decrease) in cash and cash
equivalents (2,181,510) 13,517,985
Cash and cash equivalents beginning of year 25,471,822 18,687,570
----------- -----------
Cash and Cash equivalents at March 31: $23,290,312 $32,205,555
=========== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
BEVERLY NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31, 1999 and 1998
(Unaudited)
(Continued)
Reconciliation of net income to net cash provided by operating activities:
1999 1998
----------- -----------
Net income $ 361,571 $ 469,568
----------- -----------
Depreciation expense 116,750 108,814
Amortization expense of investment securities 6,276 1,274
Accretion income of investment securities (5,013) (51,409)
Change in prepaid interest 5,572 983
Provision for loan losses 0 0
Increase (decrease) in taxes payable 119,149 201,963
(Increase) decrease in interest receivable (295,255) (116,291)
Increase (decrease) in interest payable (7,384) (36,743)
Increase (decrease) in accrued expenses (231,893) 243,595
Net (gain) loss on sale of mortgages (8,720) (10,388)
Change in deferred loan fees 15,423 (74,424)
Change in prepaid expenses (44,585) (31,318)
----------- -----------
Total adjustments 329,680 236,056
----------- -----------
Net cash provided by operating activities $ 31,891 $ 705,624
=========== ===========
Non-cash investing activities:
Loans transferred to other real estate
owned $ 0 $ 0
=========== ===========
<PAGE>
BEVERLY NATIONAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(Unaudited)
1. BASIS OF PRESENTATION
The interim consolidated financial statements contained herein are
unaudited but, in the opinion of management, include all adjustments
which are necessary, to make the financial statements not misleading. All
such adjustments are of a normal recurring nature. The results of
operations for any interim period are not necessarily indicative of
results that may be expected for the year ended December 31, 1999.
2. EARNINGS PER SHARE
Earnings per share calculations are based on the weighted average number
of common shares outstanding during the period. The computation of
primary and diluted earnings per share have been adjusted retroactively
for all periods presented to reflect the 2 for 1 stock split on April 7,
1998.
3. LEVERAGED E.S.O.P.
The prepared financial statements include adjusting entries to properly
reflect the leveraged portion of the Employee Stock Ownership Plan.
4. RECLASSIFICATION
Certain amounts in the prior year have been reclassified to be consistent
with the current year's statement presentation.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Introduction
- ------------
The following discussion includes Beverly National Corporation (the
"Corporation") and its subsidiaries, Beverly National Bank (the "Bank"), and
Cabot Street Realty Trust (the "Realty Trust").
Summary
- -------
The Corporation's net income for the three months ended March 31, 1999, was
$361,571 as compared to $469,568 for the time period ended March 31, 1998.
This represents a decrease of $107,997 or 23.0%. Primary earnings per share
totaled $.25 for the three months ended March 31, 1999, as compared to earnings
per share of $.31 for the three months ended March 31, 1998. The reduction is
primarily attributable to the tightening of net interest margins and the
increase of non interest expense.
THREE MONTHS ENDED MARCH 31, 1999
AS COMPARED TO THREE MONTHS ENDED MARCH 31, 1998
Net Interest Income
- -------------------
Net interest and dividend income for the three months ended March 31, 1999,
totaled $2,389,513 as compared to $2,397,222 for the same time period in 1998.
This decrease was $7,709 or 0.3%. Total interest and dividend income equaled
$3,719,339 for the three months ended March 31, 1999 as compared to $3,700,961
for the same time period in 1998, an increase of $18,378 or 0.5%. Loan income
for the three months ended March 31, 1999, totaled $2,908,702 as compared to
$2,954,282 for the same time period in 1998. This decrease of $45,580 or 1.5%
represents the increased level of competition for loan production and
tightening of the interest margin. Interest and Dividends on Taxable Investment
Securities for the three months ended March 31, 1999 totaled $675,905 as
compared to $574,029 for the same period in 1998. This increase of $101,876
or 17.75% is attributable to a higher volume of investments. The taxable
investment portfolio increased $9,516,434 during the past twelve months. The
interest earned from federal funds sold decreased $40,871 or 24.5% for the
three months ended March 31, 1999 when compared to the same time period in
1998, due to decreased volume and rates.
Deposit interest expense equaled $1,317,222 for the three months ended March
31, 1999, as compared to $1,295,043 for the same period in 1998. This increase
of $22,179 or 1.7% reflects the current strategy of managing the cost of funds
of the Bank. The Bank generally pays competitive rates for its deposit base
in the local market.
Notes payable interest expense for the three months ended March 31, 1999
totaled $12,604 in comparison $8,696 for the corresponding time period in 1998.
This reflects the acceleration of loan fees relating to the paydown of the
CSRT bond in March 1999.
<PAGE>
Loan Loss Provision
- -------------------
No provisions to the allowance for possible loan losses were made during the
first calendar quarters of 1999 or 1998, respectively. At March 31, 1999, the
Corporation's allowance for possible loan losses was $1,956,057 representing
1.4% of gross loans as compared to $1,934,541 and a ratio of 1.5% of gross
loans at December 31, 1998.
The Corporation's non-accrual loans were $385,119 at March 31, 1999 as compared
to $297,375 at December 31, 1998.
The ratio of non-performing assets to total loans and mortgages held for sale
was 0.41% for March 31, 1999 as compared to 0.35% as of December 31, 1998. This
increase can be attributed to additional loans that were temporarily overdue 90
days or more and a higher non-accrual balance. The ratio of non-performing
assets to allowance for loan losses equaled 28.6% at March 31, 1999 as compared
to 24.3% at December 31, 1998.
A total of $386 loans were charged off by the Corporation during the quarter
ended March 31, 1999 as compared to $224,540 charged off during the
corresponding period in 1998. These charge-offs consisted primarily of loans
to small businesses and individuals. A total of $21,902 was recovered of
previously charged off notes by the Corporation during the quarter ended March
31, 1999, as compared to $48,295 recovered during the corresponding period in
1998.
Noninterest Income
- ------------------
Noninterest income totaled $567,314 for the three months ended March 31, 1999
as compared to $513,453 for three months ended March 31, 1998. This is an
increase of $53,861 or 10.5%. Income from fiduciary activities totaled
$322,347 for the three months ended March 31, 1999 as compared to $271,277
for the three months ended March 31, 1998. This $51,070 or 18.8% increase can
be primarily attributed to increased reoccurring trust business. Service
charges on deposit accounts totaled $91,137 for the three months ended March
31, 1999, as compared to $93,338 for the same time period in 1998. This
decrease is due to the promotion of deposit products that do not have a
service charge.
Other deposit fees decreased $9,301 or 16.3% for the three months ended March
31, 1999 as compared to the same time period in 1998. Other income for the
three month period ended March 31, 1999 totaled $105,983 as compared to $91,690
for the three month period ended March 31, 1998, an increase of $14,293 or
15.6%. This increase of income is the result of sale of the mortgages in the
secondary market.
<PAGE>
Noninterest Expense
- -------------------
Noninterest expense totaled $2,364,756 for the three months ended March 31,
1999, as compared to $2,127,007 for the same time period in 1998. This
increase totaled $237,749 or 11.2%. This increase is primarily attributed to
additional personnel. Salaries and benefits totaled $1,332,180 for the three
months ended March 31, 1999 and $1,279,276 for the same time period in 1998.
This $52,904 or 4.1% increase is due to increased staffing in lending.
Occupancy expense totaled $218,137 for the three months ended March 31, 1999
as compared to $200,217 for the same period in 1998 which is an increase of
$17,920 or 9.0%. This increase is due to higher expenses of repairs and
maintenance of facilities. The costs of equipment totaled $108,494 for the
three months ended March 31, 1999 as compared to $109,300 for the same period
in 1998. Data processing fees totaled $93,339 for the three months ended
March 31, 1999 as compared to $57,740 for the corresponding time in 1998. This
is an increase of $35,599 or 61.6%. The increase is attributed to expansion
into additional products and delivery systems. Other expenses totaled $555,442
for the three months ended March 31, 1999 as compared to $441,929 for the same
period in 1998. This reflects an increase of $113,513 or 25.7% which can be
attributed to an increase in postage, legal, and consulting services.
Income Taxes
- ------------
The income tax provision for the three months ended March 31, 1999 totaled
$230,500 in comparison to an income tax provision of $314,100 for the same time
period in 1998. This decrease reflects a decrease of taxable income reflecting
reduced pre-tax income in 1999.
Net Income
- ----------
Net income amounted to $361,571 for the three months ended March 31, 1999 as
compared to net income of $469,568 for the same period in 1998, which is a
decrease of $107,997 or 23.0%. The earnings decrease is due to a tighter net
interest margin and additional non interest expenses in 1999 as compared to
the same time period in 1998.
Capital Resources
- -----------------
As of March 31, 1999, the Corporation had total capital in the amount of
$19,215,121 as compared with $18,939,613 at December 31, 1998, which represents
an increase of $275,508 or 1.5%.
The Bank is required to maintain a Tier 1 capital at a level equal to or
greater than 4.0% of the Bank's adjusted total assets. As of March 31, 1999,
the Bank's Tier 1 capital amounted to 7.89% of total assets. In addition,
banks and holding companies must maintain minimum levels of risk-based capital
equal to risk weighted assets of 8.00%. At March 31, 1999, the Bank's ratio
of risk-based capital to risk weighted assets amounted to 13.72%, which
satisfies the applicable risk based capital requirements. As of December 31,
1998, the Bank's Tier 1 capital amounted to 7.83% of total assets and risk
based capital amounted to 12.56% of total risk based assets.
<PAGE>
The Corporation is required to maintain a Tier 1 capital at a level equal to
or greater than 4.0% of the Bank's adjusted total assets. As of March 31,
1999, the Corporation's Tier 1 capital amounted to 8.98% of total assets. In
addition, banks and holding companies must maintain minimum levels of risk-
based capital equal to risk weighted assets of 8.00%. At March 31, 1999, the
Corporation's ratio of risk-based capital to risk weighted assets amounted to
14.27%, which satisfies the applicable risk based capital requirements. As of
December 31, 1998, the Corporation's Tier 1 capital amounted to 8.86% of total
assets and risk based capital amounted to 14.03% of total risk based assets.
The capital ratios of the Corporation and the Bank exceed regulatory
requirements.
Liquidity
- ---------
The primary function of asset/liability management is to assure adequate
liquidity and maintain an appropriate balance between interest-sensitive
earning assets and interest-bearing liabilities. Liquidity management
involves the ability to meet the cash flow requirements of customers who may
be either depositors wanting to withdraw funds or borrowers needing assurance
that sufficient funds will be available to meet their credit needs. Interest
rate sensitivity management seeks to avoid fluctuating net interest margins
and to enhance consistent growth of net interest income through periods of
changing interest rates.
Certain marketable investment securities, particularly those of shorter
maturities, are the principal source of asset liquidity. The Corporation
maintains such securities in an available for sale account as a liquidity
resource. Securities maturing in one year or less amounted to approximately
$6,108,672 or 13.1% at March 31, 1999 of the investment securities portfolio,
and $8,150,954 at December 31, 1998, representing 16.9% of the investment
securities portfolio. Assets such as federal funds sold, mortgages held for
sale, as well as maturing loans are also sources of liquidity. The
Corporation's goal and general practice is to be interest rate sensitive
neutral, and maintain a net cumulative gap at one year or less than 10% of
Total Earning Assets, so that changes in interest rates should not dramatically
impact income as assets and liabilities mature and reprice concurrently.
Year 2000 Preparedness
- -----------------------
There is worldwide concern regarding the ability of computers to function when
the Year 2000 arrives. Historically, many computer programs used the last two
digits to refer to the year. This may cause errors in computer programs that
are date oriented and do not recognize the difference between a year that
begins with "20" instead of the current "19" or that ends in "00" instead of
"99".
A critical part of the Bank's service is provided through computer operations.
The Bank has implemented a comprehensive program to develop an operating
strategy to properly assess and address all Year 2000 issues. The Year 2000
operational team was formed during the second quarter, 1997. This operational
team assessed all critical systems and operational programs relating to Year
2000. All computer hardware has been tested and non-compliant computers have
been identified for remediation. All software have been categorized and are
currently being tested. It is expected that all systems will be verified and
remediated by the second quarter, 1999.
<PAGE>
The Bank's primary vendors have been identified and testing of the Bank's core
processing systems are substantially complete. The testing of these systems
will be completed by the end of the second quarter, 1999. Contingency plans
are in the process of being completed.
In addition, the Bank has taken a proactive stance in working with both loan
and deposit customers in preparing for Year 2000 because borrowers who do not
address the Year 2000 issue may not have the resources to service the debts of
their company if their operations, vendors, or customers are impacted by
Year 2000. Seminars have been presented for the largest borrowers and
depositors to help prepare them for Year 2000. The Trust Division has also
communicated with all their customers. Loan and deposit customers have been
provided with notice of the Year 2000 initiatives of the Bank.
The costs associated with upgrading the software and hardware to achieve Year
2000 compliance is estimated to be $115,000 for 1999.
Failure to resolve a material Year 2000 issue could result in the interruption
in normal business activities or operations such as servicing depositors,
processing transactions or servicing loans.
The Corporation plans to continue to work with third party service providers
to ascertain their Year 2000 compliance status and to coordinate testing
efforts. However, there can be no assurance that the computer systems of
others on which the Corporation relies will be Year 2000 ready on a timely
basis, or that a failure to resolve Year 2000 issues by another party, or
remediation or conversion that is incompatible with the Corporation's
computer systems, will not have a material adverse effect on the Corporation.
The Corporation has assessed its exposure to the risk of a liquidity crisis or
financial losses stemming from the withdrawal of significant deposits or other
sources of funds as the millennium date change approaches. The Corporation
has developed liquidity contingency plans to define and prioritize sources of
liquidity. Based on the Corporation's analysis and strong earnings records,
high liquidity and strong capital position, it is the opinion of management
that Y2K liquidity risk should not have a significant impact on the
Corporation.
The Corporation and the Bank are subject to examination and supervision by the
Board of Governors of the Federal Reserve System, and the Office of the
Comptroller of the Currency, respectively. These agencies are actively
examining the status of preparation of the institutions which they supervise
for compliance with applicable laws and prudent industry practices, including
those associated with preparation for the Year 2000. As regulated
institutions, the Corporation and the Bank could become subject to formal or
informal supervisory actions if their preparation for the Year 2000 failed to
satisfy regulatory requirements or prudent industry standards. As regulated
institutions, banks and bank holding companies face greater regulatory and
litigation risks for failure to adequately prepare for the Year 2000 than many
companies in other industries. However, such risks are not considered by
Management to be probable based upon the current level of preparation for the
Year 2000 and the Corporation's plans to fully prepare for the Year 2000.
<PAGE>
The Company has assessed the risks presented by its reliance upon computer
based products outside of information technology processing (such as HVAC,
elevators, telephone and security systems). The Company believes that the
risks associated with these areas are being adequately addressed in the
Company's Y2K preparations.
The Corporation is developing contingency plans for its mission critical
systems and will refine and test these plans in 1999. However, there can be
no assurance that the Corporation's remediation efforts and contingency plans
will be sufficient to avoid unforeseen business disruptions or other problems
resulting from the Year 2000 issues.
Forward Looking Statements
- --------------------------
Certain statements contained in this Annual Report, including those contained
in Management's Discussion and Analysis of Financial Condition and Results of
Operations and elsewhere, are forward looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995 and are thus prospective.
Such forward looking statements are subject to risks, uncertainties and other
factors which could cause actual results to differ materially from future
results expressed or implied by such statements. Such factors include, but are
not limited to changes in interest rates, regulation, competition and the local
and regional economy.
<PAGE>
SIGNATURES
In accordance with the requirement 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.
Beverly National Corporation
(Registrant)
Date: May 7, 1999 By:/s/ Lawrence M. Smith
------------ ------------------------
Lawrence M. Smith
President, Chief Executive Officer
Date: May 7, 1999 By:/s/ Peter E. Simonsen
------------ -------------------------
Peter E. Simonsen
Treasurer, Principal Financial
Officer
<PAGE>
PART II - Other Information
Item 1. Legal Proceedings None
Item 2. Changes in Securities and Use of Proceeds None
Item 3. Defaults Upon Senior Securities None
Item 4. Submission of Matters to a Vote of Security Holders
(a) On March 23, 1999 the Corporation had its Annual Meeting.
(b) The following Directors were elected to serve until the
year 2000:
Year For Withheld
---- --------- --------
Neiland J. Douglas 2002 1,428,716 134,958
Mark B. Glovsky, Esq. 2002 1,428,716 134,958
Lawrence M. Smith 2002 1,428,716 134,958
The following other Directors' terms continued after the
meeting:
Richard H. Booth
John N. Fisher
John L. Good III
Alice B. Griffin
Clark R. Smith
James D. Wiltshire
(c) At the Annual meeting shareholders considered and voted to
approve the "1998 Incentive Stock Option Plan" (the "Plan")
established for granting options to purchase shares of common
stock of the Corporation and designed to qualify as "incentive
stock options" within the meaning of section 422 of the
Internal Revenue Code of 1986, as amended. The following votes
were cast by Shareholders:
For Withheld Against
--------- -------- -------
1,332,059 164,918 66,697
Item 5. Other Information None
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
27. Financial Data Schedule
b. Reports on Form 8-K:
The Corporation filed a Form 8-K on January 26, 1999 to
report annual profits for the year ended December 31, 1998
and to declare a quarterly dividend of $.14 per share
payable on January 26, 1999 to all shareholders of record
on January 19, 1999.
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