===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D. C. 20549
AMENDMENT NO. 1
FORM 10-Q/A
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1995 Commission File Number 0-14550
NEW ENGLAND COMMUNITY BANCORP, INC.
DELAWARE 06-1116165
OLD WINDSOR MALL,
P.O. BOX 130,
WINDSOR, CONNECTICUT, 06095
Telephone: (203) 688-5251
Indicate by check mark whether 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 twelve months, and (2) has been subject to such filing
requirements for the past 90 days. YES __X__ NO____.
The number of shares of common stock of the registrant outstanding as of July
31, 1995 was 2,080,692.
The total number of pages in this report is 16
===============================================================================
<PAGE>
NEW ENGLAND COMMUNITY BANCORP, INC.
INDEX
Part I. Financial Information Page No.
Item 1. Financial Statements
Consolidated Balance Sheet - June 30, 1995
and 1994 (unaudited) and December 31, 1994 3
Consolidated Statement of Income - six months and
three months ended June 30, 1995 and 1994
(unaudited) 4
Consolidated Statement of Cash Flows - six months
ended June 30, 1995 and 1994 (unaudited) 5
Note to Consolidated Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
Part II Other Information:
Item 1. Legal Proceedings 14
Item 2. Changes in Securities 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 15
Item 6. Exhibits - Reports on Form 8-K 15
Page 2 of 16 Pages
<PAGE>
NEW ENGLAND COMMUNITY BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, 1995 June 30, 1994 December 31, 1994
------------- ------------- -----------------
ASSETS:
<S> <C> <C> <C>
Cash and due from banks $11,452,843 $11,145,040 $14,113,404
Federal funds sold 4,975,000 6,950,000 13,701,830
Investment securities
Securities held-to-maturity 8,514,348 9,401,257 11,742,402
Securities available-for-sale 39,776,309 42,287,406 36,065,007
FHLBB Stock 810,200 810,200
Mortgages held-for-sale 511,100
Loans Outstanding 137,164,875 118,217,971 132,624,255
Less: allowance for loan losses (2,415,139) (2,749,180) (2,564,514)
------------ ------------ ------------
Net loans 134,749,736 115,468,791 130,059,741
Accrued interest receivable 1,609,912 1,296,535 1,502,341
Bank premises and equipment 5,817,461 5,530,488 5,677,349
Other real estate owned 341,202 648,953 572,751
Other assets 1,200,963 1,224,284 2,444,971
------------ ------------ ------------
TOTAL ASSETS $209,759,074 $193,952,754 $216,689,996
============ ============ ============
LIABILITIES:
Deposits
Noninterest bearing $36,230,804 $31,335,792 $47,322,955
Interest bearing 151,974,123 148,477,962 149,549,022
------------ ------------ ------------
Total deposits 188,204,927 179,813,754 196,871,977
Borrowed funds 799,949 783,765 799,998
Accrued interest payable 76,475 64,861 66,475
Other liabilities 787,451 435,678 478,425
------------ ------------ ------------
Total liabilities 189,868,802 181,098,058 198,216,875
SHAREHOLDERS' EQUITY:
Common stock, $.10 par value, June
30,1994 authorized 3,000,000 shares,
outstanding 1,302,432 shares December 31,
1994 and June 30, 1995 authorized 209,069 130,243 208,069
10,000,000 shares, outstanding 2,080,692
Surplus 12,114,828 6,622,080 12,114,828
Retained earnings 7,692,303 6,503,853 6,993,287
Net unrealized gain(loss) on securities
available-for-sale (124,928) (401,480) (843,063)
------------ ------------ ------------
Total shareholders' equity 19,890,272 12,854,696 18,473,121
------------ ------------ ------------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $209,759,074 $193,952,754 $216,689,996
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
Page 3 of 16 Pages
<PAGE>
NEW ENGLAND COMMUNITY BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Quarter ended Six Months ended
---------------------------- --------------------------
June 30, June 30, June 30, June 30,
1995 1994 1995 1994
---------- ---------- ---------- ---------
Interest and dividend income:
<S> <C> <C> <C> <C>
Loans, including fees $2,984,429 $2,335,180 $5,873,250 4,552,207
Investment securities:
Taxable interest 614,541 653,895 1,257,511 1,344,047
Interest exempt from federal income taxes 10,018 7,756 21,974 16,682
Dividends 49,198 19,160 78,866 41,525
Federal funds sold 92,329 57,572 203,935 109,257
--------- --------- --------- ---------
Total interest and dividend income 3,750,515 3,073,563 7,435,536 6,063,718
Interest expense:
Deposits 1,320,284 999,201 2,457,181 2,011,407
Borrowed funds 8,367 4,668 16,705 8,930
--------- --------- --------- ---------
Total interest expense 1,328,651 1,003,869 2,473,886 2,020,337
Net interest and dividend income 2,421,864 2,069,694 4,961,650 4,043,381
Provision for possible loan losses 150,000 140,000 280,000 315,000
--------- --------- --------- ---------
Net interest and dividend income after
provision for possible loan losses 2,271,864 1,929,694 4,681,650 3,728,381
Noninterest income:
Service charges, fees and commissions 359,648 387,540 686,790 749,075
Investment securities gains 2,335 5,730 (268) 22,768
Gain on the sales of loans 42,185 (2,805) 47,830 39,019
Other 49,388 12,688 65,370 29,303
--------- --------- --------- ---------
Total noninterest income 453,556 403,153 799,722 840,165
Noninterest expenses:
Salaries and employee benefits 1,019,087 992,874 2,041,669 1,961,524
Occupancy 187,737 173,430 348,174 341,896
Furniture and equipment 153,360 162,579 316,112 306,346
Outside services 75,174 89,949 150,728 178,527
Postage and supplies 102,722 83,659 199,343 167,889
Insurance and assessments 147,128 171,807 295,296 338,043
Loan origination and collection 18,426 14,848 45,641 13,022
Losses, writedowns and expense on 15,188 18,950 78,678 42,429
other real estate
Other 282,641 209,742 600,738 387,938
--------- --------- --------- ---------
Total noninterest expenses 2,001,463 1,917,838 4,076,379 3,737,614
NET INCOME (LOSS) BEFORE TAXES 723,957 415,009 1,404,993 830,932
Income taxes(benefit) 255,531 156,687 497,883 321,096
--------- --------- --------- ---------
NET INCOME $468,426 $258,322 $907,110 $509,836
========= ========= ========= =========
Net Income per share $0.23 $0.20 $0.44 $0.39
Weighted Average shares of Common Stock 2,080,692 1,302,432 2,080,692 1,302,432
</TABLE>
The accompanying notes are an integral part of these statements
Page 4 of 16 Pages
<PAGE>
NEW ENGLAND COMMUNITY BANCORP, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Six Months ended June 30, 1995 1994
- ------------------------- -------- --------
Operating Activities
Net income $907,110 $509,836
Adjustment for noncash charges (credits):
Provision for depreciation and 220,907 182,612
amortization
Losses from sale or disposal and
provisions to reduce the carrying value
of other real estate owned, net 55,793 682
Losses(gains) on sales of investment 268 (22,768)
securities, net
Accretion of discounts and amortization of
premiums on bonds, net 129,010 159,045
Provision for possible loan losses 280,000 315,000
Decrease in accrued interest income 616,711 (525,498)
and other assets, net
(Increase) decrease in loans acquired (511,100) 3,511,931
for sale
Increase(decrease) in accrued interest 319,026 (405,303)
----------- -----------
and other liabilities, net
Net cash provided by operating activities 2,017,725 3,725,537
Financing activities:
Net decrease in noninterest-bearing (11,092,151) (1,146,293)
accounts
Net increase (decrease) in interest-bearing 2,425,101 (7,505,522)
accounts
Decrease in borrowed funds (49) (16,235)
Cash dividends paid (208,094)
----------- -----------
Net cash used for financing activities (8,875,193) (8,668,050)
Investing activities:
Loans originated, net of principal (5,196,562) (2,681,515)
collections
Purchases of securities available-for-sale (13,385,021) (9,506,140)
Proceeds from salesof securities 3,046,312 6,349,965
available-for-sale
Proceeds from maturities of securities 7,765,000 6,322,687
available-for-sale
Purchases of securities held-to-maturity (246,950) (1,975,210)
Proceeds from maturities of securities 3,445,994 5,089,698
held-to-maturity
Proceeds from sales of other real estate owned 402,323 709,145
Purchases of premises and equipment, net (361,019) (534,268)
----------- -----------
Net cash provided by investing activities (4,529,923) 3,774,362
Increase in cash and cash equivalents (11,387,391) (1,168,151)
cash and cash equivalents, beginning of period 27,815,234 19,263,191
----------- -----------
cash and cash equivalents, end of period $16,427,843 $18,095,040
=========== ===========
Schedule of noncash investing and financing
activities
Loans charged off, net of recoveries 429,375 141,268
Real estate acquired through foreclosure 226,567 268,142
Income tax paid 10,765 164,500
Interest paid 2,477,514 2,021,658
The accompanying notes are an integral part of these statements.
Page 5 of 16 Pages
<PAGE>
NEW ENGLAND COMMUNITY BANCORP, INC.
NOTE TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Note 1- Basis of Presentation:
The accompanying condensed interim financial statements are unaudited and
include the accounts of New England Community Bancorp, Inc., ( the "Company")
and its subsidiary, New England Bank & Trust Company, (the "Bank"). These
financial statements reflect, in the opinion of Management of the Company, all
adjustments, consisting of only normal adjustments, necessary for a fair
presentation of the Company's financial position and the results of its
operations and its cash flows for the periods presented. These financial
statements should be read in conjunction with the financial statements and notes
thereto included in the Company's 1994 Annual Report on Form 10-K.
Page 6 of 16 Pages
<PAGE>
NEW ENGLAND COMMUNITY BANCORP, INC.
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Financial condition
Total Assets at June 30, 1995 were $209,759,000, a decrease of $6,931,000 or
3.2% from $216,690,000 at December 31, 1994. Total deposits, the primary funding
source of the Company's assets, declined $8,667,000 or 4.4% while all other
liabilities increased $319,000 from December 31, 1994 to June 30, 1995. Funds
for the outflow of deposits were provided by reducing Federal funds sold, by
$8,727,000 to $4,975,000. Federal funds, overnight loans to other banks,
represent excess reserves which are the Bank's most liquid assets and as such
are available to meet short term cash flow needs. During the first half of 1995,
total loans increased $4,541,000 or 3.4% to $137,165,000 primarily because of a
moderate increase in the demand for new funds. Investment securities were
essentially unchanged decreasing $483,000. Total equity capital was $19,890,000
at June 30, 1995, an increase of $1,417,000 since the start of the year. The
change included a $718,000 reduction in net unrealized loss on securities
held-for-sale and $699,000 increase in retained earnings.
Securities held-to-maturity are shown in the Company's balance sheets on an
amortized cost basis. Amortized cost is the original cost adjusted for the
effect of accumulated amortization of premiums and accretion of discounts.
<TABLE>
<CAPTION>
Securities held-to-maturity
June 30, 1995 December 31, 1994
------------------------------------------------------------
Amortized Fair Amortized Fair
Cost Value Cost Value
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
US Treasury and Agencies $7,960,000 $7,998,000 $10,886,000 $10,643,000
Municipal Obligations 554,000 603,000 856,000 885,000
---------- ---------- ----------- -----------
$8,514,000 $8,601,000 $11,742,000 $11,528,000
========== ========== =========== ===========
</TABLE>
Securities available-for-sale are shown in the Company's balance sheets at their
fair value. The unrealized gain or loss resulting from such valuation, reduced
by the effect of income taxes is reflected as a separately disclosed component
of shareholders' equity. The net unrealized losses on securities
available-for-sale were $216,000 and $1,443,000 respectively for June 30,1995,
and December 31, 1994.
Page 7 of 16 Pages
<PAGE>
<TABLE>
<CAPTION>
Securities available-for-sale
June 30, 1995 December 31, 1994
Amortized Fair Amortized Fair
Cost Value Cost Value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
US Treasury and Agencies $24,967,000 $24,700,000 $22,977,000 $21,981,000
Mortgage Backed Securities 8,440,000 8,285,000 9,045,000 8,674,000
Foreign Government Debt 5,000 5,000
Corporate Bonds 2,043,000 2,225,000 3,361,000 3,275,000
Marketable Equity securities 4,542,000 4,566,000 2,120,000 2,130,000
----------- ----------- ----------- -----------
$39,992,000 $39,776,000 $37,508,000 $36,065,000
=========== =========== =========== ===========
</TABLE>
The following table sets forth information pertaining to the Company's
nonperforming assets and the level of the allowance for possible loan losses
relative to those assets.
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
---------- ----------
<S> <C> <C>
Nonaccrual loans $2,589,000 $2,975,000
Other real estate owned 341,000 $573,000
Reconstructed loans 127,000
---------- ----------
Total nonperforming assets $3,057,000 $3,548,000
Loans past due in excess of ninety days and accruing interest 0 . 16,000
Ratio of nonperforming assets to total loans and OREO 2.2% 2.7%
Ratio of nonperforming assets and loans past due in excess of
ninety days and accruing interest to total loans and OREO 2.2% 2.7%
Ratio of allowance for loan losses to total loans 1.8% 1.9%
Ratio of allowance for loan losses to nonperforming assets and loans
in excess of ninety days past due and accruing interest 79.0% 71.9%
Ratio of nonperforming assets and loans in excess of ninety days
past due and accruing interest to total shareholders' equity 15.4% 19.3%
</TABLE>
Total nonperforming assets decreased $491,000 to $3,057,000 at June 30, 1995
from $3,548,000 at December 31, 1994. During this period nonperforming assets
were increased by $1,197,000 loans newly classified as nonaccruing, and
decreased by $402,000 sales of foreclosed properties, $562,000 charged off and
write-downs, $325,000 loans returned to performing status and $310,000
repayments. Nonperforming loans may be returned to performing status when they
have regained compliance with their original terms and the borrower demonstrates
an ongoing ability to continue performing as agreed.
Page 8 of 16 Pages
<PAGE>
The Bank's allowance for possible loan losses was $2,415,000 at June 30, 1995,
as compared to $2,565,000 at December 31, 1994. Activity in the allowance for
possible loan losses for the six months was as follows:
Six months ended June 30,
1995 1994
---------- ----------
Balance beginning of period $2,565,000 $2,784,000
Provisions charged to operations 280,000 315,000
Recoveries on loans previously charged-off 84,000 86,000
Loans charged-off (514,000) (436,000)
---------- ----------
Balance end of period $2,415,000 $2,749,000
========== ==========
The provisions for possible loan losses charged to operations for the first six
months of 1995 were $280,000, a decrease of $35,000 from the same period of
1994. Management's assessment of the adequacy of the allowance is based upon the
composition of the loan portfolio, past due experience, current economic
conditions and other factors deemed appropriate. Management analyzes the Bank's
loan portfolio as part of its risk management procedure to ascertain the
potential for loss from possible nonpayment by some of the Bank's borrowers as
well as the risk of loss inherent in the portfolio. Reserves are assigned to
specific loans and classes of loans and then aggregated to determine the total
level needed. The adequacy of the Allowance is also evaluated in light of
prevailing economic conditions and other factors.
Capital adequacy
Under currently applicable Federal Reserve Board regulations, the Registrant
must maintain a minimum risk based capital ratio of 8.0% of which 4.0% must be
Tier 1 capital and a minimum leverage capital ratio of between 4.0% and 5.0%. In
addition, under FDIC regulations, the Bank must meet these same minimum
risk-based and leverage capital ratios. These requirements are minimum ratios
and banks may be required to maintain higher ratios.
Total Shareholders' equity of the Registrant at June 30, 1995, was $19,890,000
compared to $18,473,000 at December 31, 1994. The Company's Tier 1 leverage
capital ratio was 9.71% at June 30, 1995, compared to 9.78% at December 31,
1994. The Company's total risk-based capital and Tier 1 risk based capital
ratios were 15.32% and 14.06% respectively at June 30, 1995, as compared to
15.25% and 13.99% respectively at December 31, 1994. The Bank's Tier 1 leverage
capital ratio was 7.12% at June 30, 1995, as compared to 6.99% at December 31,
Page 9 of 16 Pages
<PAGE>
1994. The Bank's total risk-based capital ratio was 11.63% of which 10.38%
comprised Tier 1 capital at June 30, 1995, as compared to 11.26% and 9.94%,
respectively, at December 31, 1994. At June 30, 1995, the capital ratios of the
Company and the Bank were in compliance with regulatory requirements.
Liquidity
It is management's objective to ensure a continuous ability to meet the Bank's
cash needs as they arise. Such needs may occur from time to time as a result of
seasonal declines in deposit levels, response to changes in interest rates paid
on deposits and interest rates charged for loans and fluctuations in the demand
for the Bank's various loan products. Accordingly, the Bank maintains liquidity
that provides the flexibility to meet its cash needs. The liquidity objective is
achieved through the maintenance of readily marketable assets as well as a
balanced flow of asset maturities and prudent pricing on loan and deposit
agreements. Management has alternative sources of liquidity including repurchase
agreements, which provide the Bank with flexibility in managing its liquidity
position. The maturities of investment securities and cash flows from the
repayments of outstanding loans are expected to provide the Bank with adequate
liquidity over the coming months.
Results of Operations - three months ended June 30, 1995
Net income for the three months ended June 30, 1995, was $468,000 or $0.23 per
share as compared to $258,000 or $0.20 per share for the same period of 1994.
The improved results occurred primarily from an increase of $352,000 in net
interest income. Noninterest income increased $50,000 while noninterest expenses
increased $83,000.
Net interest and dividend income increased $352,000 to $2,422,000 for the three
months ended June 30, 1995, as compared with $2,070,000 for the three months
ended June 30, 1994. This increase occurred as average earning assets increased
$12.3 million to $190.3 million in 1995 from $178.0 million during the same
three months of 1994. As the following tables help to show, the net interest
margin, on a tax equivalent basis, increased from 4.69% to 5.17%.
Page 10 of 16 Pages
<PAGE>
Average Balance Sheets, Net Interest Income and Interest Rates
The Table below presents the Registrant's average balance sheets(computed on a
daily basis), net interestincome, and interest rates for the Quarters ended June
30 and June 30, 1994. Average loansoutstanding include nonaccruing loans.
Interest income is presented on a tax-equivalent basis which reflectsa federal
tax rate of 34% for all periods presented. (dollars in thousands)
<TABLE>
<CAPTION>
Quarter ended: June 30, 1995 June 30, 1994
Average Average Average Average
Balance Interest Rate Balance Interest Rate
------ -------- ------- ------- -------- -------
ASSETS
<S> <C> <C> <C> <C> <C> <C>
Federal Funds Sold $6,345 $92 5.82% $6,515 $58 3.57%
Investment Securities:
Held-to-maturity 9,054 110 4.87% $12,327 162 5.27%
Available-for-sale 37,556 594 6.34% $42,007 532 5.08%
Loans 137,296 2,984 8.72% $117,145 2,335 7.99%
-------- ------ ------
Total interest earning assets 190,251 3,780 7.97% 177,994 3,087 6.96%
Allowance for loan losses (2,361) ($1,917)
Cash & due from Banks 9,127 $9,530
Other assets 8,792 $10,409
-------- --------
Total Assets $205,809 $196,016
======== ========
LIABILITIES
Regular savings deposits $48,174 $260 2.16% $54,624 297 2.18%
NOW account deposits 20,551 64 1.25% $24,442 80 1.31%
Money market deposits 5,184 16 1.24% $5,327 18 1.36%
-------- ------ ------
Total savings deposits 73,909 340 1.85% 84,393 395 1.88%
Time deposits 74,792 981 5.26% $65,047 604 3.72%
Borrowed funds 585 8 5.49% $527 5 3.80%
-------- ------ ------
Total interest bearing liabilities 149,286 1,329 3.57% 149,968 1,004 2.69%
Demand deposits 35,907 $31,900
Other liabilities 1,039 $1,341
Total Liabilities 186,232 183,209
Equity 19,577 $12,806
-------- --------
Total Liabilities & Equity $205,809 $196,016
======== ========
Net interest income
(tax equivalent Basis) $2,451 $2,083
Less Adjustment for
tax-exempt income (29) (13)
------ ------
Net interest income $2,422 $2,070
====== ======
Net interest spread 4.40% 4.27%
Net interest margin 5.17% 4.69%
</TABLE>
Page 11 of 16 Pages
<PAGE>
Rate Volume Analysis
The following table, which is presented on a tax-equivalent basis, reflects the
changes, for the quarter ended June 30, 1995 when compared to the quarter ended
June 30, 1994 in netinterest income arising from changes in interest rates and
from asset and liability volume, including mix. The change in interest
attributable to both rate and volume has beenallocated to the changes in the
rate and the volume on a prorated basis. (dollars in thousands)
Increase Change due to change in:
(Decrease) Rate Volume
---------- ----- ------
Interest income change
Federal Funds Sold $34 $36 ($2)
Investment Securities:
Held-to-maturity ($52) ($12) ($40)
Available-for-sale $62 $123 ($61)
Loans $649 $224 $425
---- --- ----
Total interest income change 693 370 323
---- --- ----
Interest expense change
Regular savings deposits ($37) ($2) ($35)
NOW account deposits ($16) ($4) ($12)
Money market deposits ($2) ($2) ($0)
---- --- ----
Total savings deposits (55) (7) (48)
Time deposits $377 $277 $100
Borrowed funds $3 $2 $1
---- --- ----
Total interest expense change 325 272 53
---- --- ----
Net interest income change $368 $99 $269
==== === ====
Total noninterest income for the second quarter of 1995 was $454,000, an
increase of $51,000 from $403,000 for the same period a year ago. The most
significant change to noninterest income occurred as decreasing interest rates
prompted many homebuyers to shift their preference to fixed rate mortgage
financing and away from less predictable variable rate loans. The increased
production of such loans which are generally sold by the Bank in the secondary
market resulted in $45,000 increase in gains from such sales. The Bank sells
fixed-rate mortgage loans as part of its policy to manage interest rate risk.
Noninterest expenses were $2,001,000 for the three months ending June 30, 1995,
an increase of $83,000 or 4.3% from the corresponding period in 1994. Moderate
increases were experienced for expenses such as personnel, occupancy and
postage-supplies. Among the expenses that decreased were insurance costs. FDIC
assessment and outside services.
Page 12 of 16 Pages
<PAGE>
Results of operation six months ended June 30, 1995
Net income for the first half of 1995 amounted to $907,000 or $0.44 per share.
This was an increase of $397,000 or 78% from $510,000 reported for the first
half of 1994. The increase resulted primarily from the $919,000 increase to net
interest income. This increase was partly offset by a decrease in noninterest
income of $40,000 and an increase of $338,000 in noninterest expenses.
Net interest income for the first half of 1995 amounted to $4,962,000. This was
an increase of $919,000 or 22.7% compared to the first half of 1994. This
improvement resulted from a $10 million increase in average earning assets and
an increase in the net interest margin of 0.77%. The increase in earning assets
included the use of $5 million proceeds received by the company from the common
stock offering completed in December 1994. The net interest margin for the six
months ended June 30, 1995 was 5.33%, compared to 4.56% for the same period in
1994.
Noninterest income decreased $40,000 or 4.8% in the six months ended June 30,
1995 compared to the same period a year earlier. The primary reason for the
decrease was a $62,000 reduction in service charges. This decrease resulted
largely from decreased fee income related to demand deposit accounts. Demand
deposit account holders can reduce or avoid fees by maintaining an account
balance at or above that required to avoid such charges. The increase the size
of the average balance maintained in these accounts suggests that many of the
Bank's customers took this action to minimize their costs.
Noninterest expenses increased $338,000 or 9.0% for the first half of 1995
compared to the first half of 1994. This increase included increased salaries
and benefits of $81,000 principally for merit increases. Postage and supplies
increased $31,000 in response to a 10% increase in postal rates and higher
prices for paper products. Outsides services, such as legal and consulting,
decreased $28,000. Insurance and FDIC assessments decreased $43,000. Expenses
related to loan origination and collection increased $33,000. OREO related
expenses, including market value adjustments for property already held,
increased $36,000. All other expenses increased $213,000 including marketing
$52,000 and an income tax related provision for interest in the amount of
$72,000. An audit by the IRS for the years 1990 through 1993 resulted in a shift
in the timing of certain revenues and expenses. Amended federal and state
returns for the subject years were filed in 1995. No additional tax liability
was incurred as a result of the audit, however the revised tax returns resulted
in interest payments totaling $72,000 which was charged to miscellaneous expense
in 1995.
Page 13 of 16 Pages
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - None
Item 3. Default Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders of New England Community Bancorp, Inc.
(the "Company") was held on Tuesday, May 16, 1995. Shareholders voted on and
approved each of the following proposals:
1. To elect the following thirteen (13) individuals to the Board of
Directors of the Company:
Number of
Number of Shares
Shares Withholding
For Authority
--------- -----------
Tadeus J. Buczkowski 1,649,188 2,000
John C. Carmon 1,649,188 2,000
John A. Coccomo, Sr. 1,648,110 3,078
George A. Colli, Jr. 1,647,652 3,536
Lester R. Daddario 1,649,188 2,000
Dominic J. Ferraina 1,648,394 2,794
Russell A. Ferrigno 1,649,188 2,000
Hurlburt H. Frew 1,648,900 2,288
David A. Lentini 1,648,642 2,506
Angelina J. McGillivray 1,647,662 3,526
John J. Narkiewicz 1,648,052 3,136
Edward J. Szewczyk 1,649,072 2,116
Paul H. Wabrek 1,649,188 2,000
2. To ratify the resolution adopted by the Board of Directors appointing the
independent public accounting firm of Shatswell MacLeod & Company, P.C. as
independent auditors of the Company for the fiscal year ending December 31,
1995.
For Against Abstain
--- ------- -------
1,642,756 6,184 2,248
3. To approve the grant of options to purchase 15,000 shares of the Company's
stock to Mr. David A. Lentini, President and Chief Executive Officer of the
Company and New England Bank & Trust Company, ("NEBT") 10,000 shares of the
Company's stock to Mr. Donat A. Fournier, Executive Vice President and Chief
Lending Officer of NEBT, and 5,000 shares of the Company's stock to Mr.
Anson C. Hall, Treasurer of the Company and Chief Financial Officer of NEBT.
Such options may be exercised at a price of $7.75 per share after January
24, 1996 and prior to January 24, 1998.
For Against Abstain No Vote
--- ------- ------- -------
1,597,729 30,798 16,822 5,839
4. To approve a proposal to amend the Company's Restated Certificate of
Incorporation to increase the Company's common stock from 3,000,000 to
10,000,000 shares, par value $.10 per share.
For Against Abstain
--- ------- -------
1,611,512 27,995 11,681
Page 14 of 16 Pages
<PAGE>
Item 5. Other Matters
The Company filed a Registration Statement on Form S-4 (File No. 33-93640)
with the Securities and Exchange Commission dated June 20, 1995 which
Registration Statement was amended by Amendment Number One on July 31, 1995
and Amendment Number Two on August 7, 1995. The SEC declared the Registration
Statement effective on August 9, 1995. The securities of the Company being
registered pursuant to the Form S-4 relate to the proposed acquisition of The
Equity Bank ("Equity"), a Connecticut chartered commercial bank pursuant to a
Plan and Agreement of Reorganization, dated as of March 14, 1995, and amended
March 30, 1995, by and among the Company, Equity and NEBT (the
"Reorganization Agreement").
Pursuant to the Reorganization Agreement, Equity will operate under its
existing name and charter as a separate bank subsidiary of the Company, and
the shareholders of Equity will receive 1.85 shares of the Company's common
stock in exchange for each share of Equity common stock which they own. The
Reorganization is subject to regulatory approval and is subject to the
approval by each institution's shareholders.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits - Exhibit 27, Financial Data Schedule
b. Reports on Form 8-K
(1.) On April 6, 1995, the Company filed a report Form 8-K, dated March
30, 1995 regarding the amendment to the Plan and Agreement of
Reorganization.
(2.) On May 19, 1995, the Company filed a report on Form 8-K, dated May
16, 1995 which set forth the results of the Company's Annual Meeting of
Shareholders held on May 16, 1995.
Page 15 of 16 Pages
<PAGE>
NEW ENGLAND COMMUNITY BANCORP, INC.
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.
NEW ENGLAND COMMUNITY BANCORP, INC.
Date: September 26, 1995 By: /s/ Anson C. Hall
(Anson C. Hall)
Treasurer (principal financial officer)
Page 16 of 16 Pages
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements as of June 30, 1995 and is qualified in its entirety by
reference to such financial statements
</LEGEND>
<CIK> 0000752324
<NAME>New England Community Bancorp, Inc.
<MULTIPLIER> 1
<CURRENCY> US$
<S> <C>
<PERIOD-TYPE> 6-Mos
<FISCAL-YEAR-END> Dec-31-1994
<PERIOD-START> Jan-1-1995
<PERIOD-END> Jun-30-1995
<EXCHANGE-RATE> 1
<CASH> 11,452,843
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 4,975,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 41,097,609
<INVESTMENTS-CARRYING> 8,514,348
<INVESTMENTS-MARKET> 8,601,000
<LOANS> 137,164,875
<ALLOWANCE> 2,415,139
<TOTAL-ASSETS> 209,759,074
<DEPOSITS> 188,204,927
<SHORT-TERM> 799,949
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<LONG-TERM> 0
<COMMON> 208,069
0
0
<OTHER-SE> 19,682,203
<TOTAL-LIABILITIES-AND-EQUITY> 209,759,074
<INTEREST-LOAN> 5,873,250
<INTEREST-INVEST> 1,358,351
<INTEREST-OTHER> 203,935
<INTEREST-TOTAL> 7,435,536
<INTEREST-DEPOSIT> 2,457,181
<INTEREST-EXPENSE> 2,473,886
<INTEREST-INCOME-NET> 4,961,650
<LOAN-LOSSES> 280,000
<SECURITIES-GAINS> (268)
<EXPENSE-OTHER> 4,076,379
<INCOME-PRETAX> 1,404,993
<INCOME-PRE-EXTRAORDINARY> 1,404,993
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 907,110
<EPS-PRIMARY> 0.44
<EPS-DILUTED> 0.44
<YIELD-ACTUAL> 7.97
<LOANS-NON> 2,589,000
<LOANS-PAST> 0
<LOANS-TROUBLED> 127,000
<LOANS-PROBLEM> 5,342,500
<ALLOWANCE-OPEN> 2,565,000
<CHARGE-OFFS> 514,000
<RECOVERIES> 84,000
<ALLOWANCE-CLOSE> 2,415,000
<ALLOWANCE-DOMESTIC> 1,062,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,353,000
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