SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 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: (860) 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 October
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 - September 30, 1995
and 1994 (unaudited) and December 31, 1994 3
Consolidated Statement of Income - nine months and
three months ended September 30, 1995 and 1994
(unaudited) 4
Consolidated Statement of Cash Flows - nine months
ended September 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 1 of 16 Pages
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<TABLE>
<CAPTION>
NEW ENGLAND COMMUNITY BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
September 30, 1995 September 30, 1994 December 31, 1994
=================================================================
<S> <C> <C> <C>
ASSETS:
Cash and due from banks $13,417,273 $10,809,520 $14,113,404
Federal funds sold 12,650,000 9,900,000 13,701,830
Investment securities
Securities held-to-maturity 6,033,116 11,382,770 11,742,402
Securities available-for-sale 41,793,592 34,432,060 36,065,007
FHLBB Stock 810,200 810,200
Mortgages held-for-sale 1,558,200
Loans Outstanding 136,334,487 121,951,162 132,624,255
Less: allowance for loan losses (2,369,025) (2,762,008) (2,564,514)
--------------- ------------------ ---------------
Net loans 133,965,462 119,189,154 130,059,741
Accrued interest receivable 1,414,983 1,372,066 1,502,341
Bank premises and equipment 5,879,468 5,545,302 5,677,349
Other real estate owned 427,453 580,222 572,751
Other assets 1,268,654 1,455,298 2,444,971
--------------- ------------------ ---------------
TOTAL ASSETS $219,218,401 $194,666,392 $216,689,996
=============== ================== ===============
LIABILITIES:
Deposits
Noninterest bearing $42,594,457 $36,254,538 $47,322,955
Interest bearing 154,597,453 144,077,705 149,549,022
--------------- ------------------ ---------------
Total deposits 197,191,910 180,332,243 196,871,977
Borrowed funds 691,114 800,000 799,998
Accrued interest payable 86,754 65,604 66,475
Other liabilities 945,107 514,015 478,425
--------------- ------------------ ---------------
Total liabilities 198,914,885 181,711,862 198,216,875
SHAREHOLDERS' EQUITY:
Common stock, $.10 par value, June 30,1994 authorized 3,000,000 shares,
outstanding 1,302,432 shares; December 31, 1994 authorized 10,000,000
shares,
outstanding 2,080,692 208,069 130,243 208,069
Surplus 12,114,828 6,622,080 12,114,828
Retained earnings 8,101,964 6,789,740 6,993,287
Net unrealized gain on securities available-for-sale (121,345) (587,533) (843,063)
--------------- ------------------ ---------------
Total shareholders' equity 20,303,516 12,954,530 18,473,121
--------------- ------------------ ---------------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $219,218,401 $194,666,392 $216,689,996
=============== ================== ===============
The accompanying notes are an integral part of these statements.
</TABLE>
Page 2 of 16 Pages
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<TABLE>
<CAPTION>
NEW ENGLAND COMMUNITY BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
Quarter ended Nine Months ended
September 30, September 30, September 30, September 30,
1995 1994 1995 1994
===========================================================================================================================
<S> <C> <C> <C> <C>
Interest and dividend income:
Loans, including fees $3,083,185 $2,416,835 $8,956,435 6,969,042
Investment securities:
Taxable interest 626,112 654,718 1,883,623 1,998,765
Interest exempt from federal income taxes 9,976 7,760 31,950 24,442
Dividends 59,600 981 138,466 42,506
Federal funds sold 69,154 66,382 273,089 175,639
--------------- --------------- -------------- --------------
Total interest and dividend income 3,848,027 3,146,676 11,283,563 9,210,394
Interest expense:
Deposits 1,396,894 961,360 3,854,075 2,972,767
Borrowed funds 10,947 5,396 27,652 14,326
---------------
Total interest expense 1,407,841 966,756 3,881,727 2,987,093
Net interest and dividend income 2,440,186 2,179,920 7,401,836 6,223,301
Provision for possible loan losses 120,000 87,000 400,000 402,000
--------------- ---------------- --------------- ----------------
Net interest and dividend income after provision
for possible loan losses 2,320,186 2,092,920 7,001,836 5,821,301
Noninterest income:
Service charges, fees and commissions 345,647 393,471 1,032,437 1,142,546
Investment securities gains 26,446 (23,882) 26,178 (1,114)
Gain on the sales of loans 87,289 (2,354) 135,119 36,665
Other 11,787 18,661 77,157 47,964
--------------- -------------- --------------- ---------------
Total noninterest income 471,169 385,896 1,270,891 1,226,061
Noninterest expenses:
Salaries and employee benefits 1,093,536 961,978 3,135,205 2,923,502
Occupancy 180,004 168,460 528,178 510,356
Furniture and equipment 185,792 198,839 501,904 505,185
Outside services 71,678 68,278 222,406 246,805
Postage and supplies 88,730 83,977 288,073 251,866
Insurance and assessments 16,225 150,780 311,521 488,823
Loan origination and collection 6,643 2,767 52,284 15,789
Writedowns, expenses - other real estate 68,407 92,634 147,085 135,063
Other 291,748 289,925 892,486 677,863
--------------- ---------------- ---------------- ---------------
Total noninterest expenses 2,002,763 2,017,638 6,079,142 5,755,252
NET INCOME BEFORE TAXES 788,592 461,178 2,193,585 1,292,110
Income taxes 274,896 175,291 772,779 496,387
--------------- --------------- -------------- ---------------
NET INCOME $513,696 $285,887 $1,420,806 $795,723
=============== =============== ============== ===============
Net Income per share $0.24 $0.22 $0.68 $0.61
Weighted Average shares of Common Stock 2,080,692 1,302,432 2,080,692 1,302,432
The accompanying notes are an integral part of these statements
</TABLE>
Page 3 of 16 Pages
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<TABLE>
<CAPTION>
NEW ENGLAND COMMUNITY BANCORP, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Nine Months ended September 30, 1995 1994
=========================================================================================================
<S> <C> <C>
Operating Activities
Net income $ 1,420,806 $ 795,723
Adjustment for noncash charges (credits):
Provision for depreciation and amortization 337,069 289,793
Losses from sale or disposal and provisions to reduce
the carrying value of other real estate owned, net 106,389 58,826
Losses(gains) on sales of investment securities, net (26,178) 1,114
Accretion of discounts and amortization of
premiums on bonds, net 181,815 226,281
Provision for possible loan losses 400,000 402,000
Decrease in accrued interest income and other assets, net 1,263,675 (832,043)
(Increase) decrease in loans acquired for sale (1,558,200) 3,511,931
Increase(decrease) in accrued interest and other liabilities, net 486,961 (326,223)
------------ ------------
Net cash provided by operating activities 2,612,337 4,127,402
Financing activities:
Net decrease in noninterest-bearing accounts (4,728,498) 3,772,453
Net increase (decrease) in interest-bearing accounts 5,048,431 (11,905,779)
Decrease in borrowed funds (108,884)
Cash dividends paid (208,094)
------------ ------------
Net cash used for financing activities 2,955 (8,133,326)
Investing activities:
Loans originated, net of principal collections (6,188,286) (12,535,079)
Proceeds from sales of loans 1,184,858 5,792,846
Purchases of securities available-for-sale (21,170,856) (9,980,980)
Purchases of securities held-to-maturity (2,770,591) (6,964,271)
Proceeds from sales of securities available-for-sale 1,564,925 11,737,000
Proceeds from maturities of securities available-for-sale 14,562,679 8,979,000
Proceeds from maturities of securities held-to-maturity 8,554,600 8,000,000
Proceeds from sales of other real estate owned 438,606 1,080,000
Purchases of premises and equipment, net (539,188) (656,263)
------------ ------------
Net cash provided by investing activities (4,363,253) 5,452,253
Increase in cash and cash equivilents (1,747,961) 1,446,329
cash and cash equivilents, beginning of period 27,815,234 19,263,191
------------ ------------
cash and cash equivilents, end of period $ 26,067,273 $ 20,709,520
============ ============
Schedule of noncash investing and financing activities
Loans charged off, net of recoveries 595,489 424,121
Real estate acquired through foreclosure 399,707 737,421
Income tax paid 590,100 355,548
Interest paid 3,861,448 2,987,671
The accompanying notes are an integral part of these statements.
</TABLE>
Page 4 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 5 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 September 30, 1995 were $219,218,000, an increase of $2,528,000
or 1.2% from $216,690,000 at December 31, 1994. Total deposits, the primary
funding source of the Company's assets, increased $320,000 or 0.2% while accrued
interest payable and other liabilities increased $467,000 from December 31, 1994
to September 30, 1995. Federal funds sold decreased by $1,052,000 to
$12,650,000. 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 nine months of 1995, total
loans increased $5,268,000 or 4.0% to $137,893,000 primarily because of the
Bank's ability to attract and retain qualified borrowers. Investment securities
were essentially unchanged, increasing by $19,000. Total equity capital was
$20,304,000 at September 30, 1995, an increase of $1,831,000 since the start of
the year. The change included a $722,000 reduction in net unrealized loss on
securities available-for-sale and $1,109,000 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.
Securities held-to-maturity
SEPTEMBER 30, 1995 DECEMBER 31, 1994
-----------------------------------------------------
Amortized Fair Amortized Fair
Cost Value Cost Value
----------- ----------- ----------- -----------
US Treasury and Agencies $ 4,979,000 $ 4,995,000 $10,886,000 $10,643,000
Municipal Obligations 1,054,000 1,109,000 856,000 885,000
----------- ----------- ----------- -----------
$ 6,033,000 $ 6,104,000 $11,742,000 $11,528,000
=========== =========== =========== ===========
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 $231,000 and $1,443,000 respectively for September 30,
1995, and December 31, 1994.
Page 6 of 16 Pages
<PAGE>
Securities available-for-sale
SEPTEMBER 30, 1995 DECEMBER 31, 1994
------------------------ -------------------------
Amortized Fair Amortized Fair
Cost Value Cost Value
----------- ----------- ----------- -----------
US Treasury and Agencies $23,981,000 $23,716,000 $22,977,000 $21,981,000
Mortgage Backed Securities 8,161,000 8,197,000 9,045,000 8,674,000
Foreign Government Debt 5,000 5,000
Corporate Bonds 1,532,000 1,517,000 3,361,000 3,275,000
Marketable Equity securities 9,021,000 9,035,000 2,120,000 2,130,000
----------- ----------- ----------- -----------
$42,695,000 $42,464,000 $37,508,000 $36,065,000
=========== =========== =========== ===========
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>
September 30 30 December 31,
1995 1994
------------------ -----------------
<S> <C> <C>
Nonaccrual loans $2,424,000 $2,975,000
Other real estate owned 427,000 $573,000
Reconstructed loans 123,000
------------------ -----------------
Total nonperforming assets $2,974,000 $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 1.7% 1.9%
Ratio of allowance for loan losses to nonperforming assets and loans
in excess of ninety days past due and accruing interest 80.0% 71.9%
Ratio of nonperforming assets and loans in excess of ninety days
past due and accruing interest to total shareholders' equity 14.6% 19.3%
</TABLE>
Total nonperforming assets decreased $574,000 to $2,974,000 at September 30,
1995 from $3,548,000 at December 31, 1994. During this period nonperforming
assets were increased by $1,447,000 loans newly classified as nonaccruing, and
decreased by $439,000 sales of foreclosed properties, $804,000 charged off and
write-downs, $433,000 loans returned to performing status and $345,000
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 7 of 16 Pages
<PAGE>
The Bank's allowance for possible loan losses was $2,369,000 at September 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:
Nine months ended September 30,
1995 1994
----------- -----------
Balance beginning of period $ 2,565,000 $ 2,784,000
Provisions charged to operations 400,000 315,000
Recoveries on loans previously charged-off 102,000 86,000
Loans charged-off (698,000) (436,000)
----------- -----------
Balance end of period $ 2,369,000 $ 2,749,000
=========== ===========
The provisions for possible loan losses charged to operations for the first nine
months of 1995 were $400,000, a decrease of $2,000 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 Company 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 Company at September 30, 1995, was $20,304,000
compared to $18,473,000 at December 31, 1994. The Company's Tier 1 leverage
capital ratio was 9.87% at September 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 14.07% respectively at September 30, 1995, as compared to
Page 8 of 16 Pages
<PAGE>
15.25% and 13.99% respectively at December 31, 1994. The Bank's Tier 1 leverage
capital ratio was 7.33% at September 30, 1995, as compared to 6.99% at December
31, 1994. The Bank's total risk-based capital ratio was 11.70% of which 10.45%
comprised Tier 1 capital at September 30, 1995, as compared to 11.26% and 9.94%,
respectively, at December 31, 1994. At September 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 the 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 SEPTEMBER 30, 1995
Net income for the three months ended September 30, 1995, was $514,000 or $0.24
per share as compared to $286,000 or $0.22 per share for the same period of
1994. The improved results occurred primarily from an increase of $260,000 in
net interest and dividend income. Noninterest income increased $85,000 while
noninterest expenses decreased $15,000.
Net interest and dividend income increased $260,000 to $2,440,000 for the three
months ended September 30, 1995, as compared with $2,180,000 for the three
months ended September 30, 1994. This increase occurred as average earning
assets increased $12.1 million to $191.7 million in 1995 from $179.6.0 million
during the same three months of 1994. The net interest margin, tax-equivalent
basis, for the three months ended September 30, 1995 was 5.10% compared to 4.83%
for the same period a year ago. The average rate paid on interest bearing
liabilities in 1995 was 3.74% an increase of 1.05% from 2.69% paid in 1994. At
the same time the average rate earned on earning assets also rose 1.05% to 8.01%
in 1995.
Page 9 of 16 Pages
<PAGE>
Total noninterest income for the third quarter of 1995 was $471,000, an increase
of $85,000 from $386,000 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
the $90,000 increase in gains from such sales. The Bank generally sells
fixed-rate mortgage loans, while retaining the servicing, as part of its policy
to manage interest rate risk.
Noninterest expenses were $2,002,000 for the three months ending September 30,
1995, a decrease of $15,000 or 0.7% from the corresponding period in 1994.
Moderate increases were experienced for expenses such as personnel, occupancy,
outside services and postage-supplies. Among the expenses that decreased were
insurance costs and FDIC assessments.
RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 1995
Net income for the nine months of 1995 amounted to $1,420,000 or $0.68 per
share. This was an increase of $625,000 or 79% from $796,000 reported for the
first nine months of 1994. The increase resulted primarily from the $1,179,000
increase to net interest and dividend income. This increase was supplemented a
$45,000 increase in noninterest income, while noninterest expenses increased
$324,000.
Net interest and dividend income for the first nine months of 1995 totaled to
$7,402,000. This was an increase of $1,179,000 or 18.9% compared to the first
nine months of 1994. This improvement resulted from a $11 million increase in
average earning assets and a 57 basis point increase in the net interest margin.
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 nine months ended September 30, 1995 was 5.24%,
compared to 4.67% for the same period in 1994.
Page 10 of 16 Pages
<PAGE>
Average Balance Sheets, Net Interest Income and Interest Rates
The Table below presents the Company's average balance sheets (computed on a
daily basis), net interest income, and interest rates for the nine months ended
September 30, 1995 and September 30, 1994. Average loans outstanding include
nonaccruing loans. Interest income is presented on a tax-equivalent basis which
reflects a federal tax rate of 34% for all periods presented. (dollars in
thousands)
<TABLE>
<CAPTION>
Nine Months ended: September 30, 1995 September 30, 1994
Average Average Average Average
Balance Interest Rate Balance Interest Rate
---------- ---------- ---------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Federal Funds Sold $6,406 $273 5.70% $6,159 $175 3.80%
Investment Securities:
Held-to-maturity 9,140 469 6.86% 10,971 506 6.17%
Available-for-sale 37,854 1,650 5.83% 43,929 1,592 4.85%
Mortgages held for sale 726 33 6.08% 353 18 6.82%
Loans 136,263 8,923 8.76% 117,821 6,951 7.89%
--------- --------- ---------- ---------
Total interest earning
assets 190,389 11,348 7.97% 179,233 9,242 6.89%
Allowance for loan losses (2,382) (2,790)
Cash & due from Banks 9,112 9,271
Other assets 9,109 8,879
--------- ----------
Total Assets $206,228 $194,593
========= ==========
LIABILITIES
Regular savings deposits $48,252 $799 2.21% $57,073 $898 2.10%
NOW account deposits 20,618 190 1.23% 23,439 239 1.36%
Money market deposits 4,960 44 1.19% 4,762 45 1.26%
--------- --------- ---------- ---------
Total savings deposits 73,830 1,033 1.87% 85,274 1,182 1.85%
Time deposits 73,585 2,821 5.13% 64,099 1,791 3.74%
Borrowed funds 599 28 6.25% 380 14 4.93%
--------- --------- ---------- ---------
Total interest bearing
liabilities 148,014 3,882 3.51% 149,753 2,987 2.67%
Demand deposits 37,738 31,185
Other liabilities 939 715
--------- -----------
Total Liabilities 186,691 181,653
EQUITY 19,537 12,940
--------- ----------
Total Liabilities & Equity $206,228 $194,593
========= ==========
Net interest income
(tax equivalent Basis) $7,466 $6,255
Less Adjustment for
tax-exempt income (64) (32)
--------- ---------
Net interest income $7,402 $6,223
========= =========
Net interest spread 4.46% 4.23%
Net interest margin 5.24% 4.67%
</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 nine months ended September 30, 1995 when compared to the nine
months ended September 30, 1994 in net interest 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 been allocated to the changes
in the rate and volume on a prorated basis
Increase Change due to Change in:
(Decrease) Rate Volume
-------- ------- --------
INTEREST INCOME CHANGE
Federal Funds Sold $ 98 $ 88 $ 10
Investment Securities:
Held-to-maturity (37) 51 (88)
Available-for-sale 58 301 (243)
Mortgages held for sale 15 (4) 19
Loans 1,972 833 1,139
------- ------- -------
Total interest income change 2,106 1,269 837
------- ------- -------
INTEREST EXPENSE CHANGE
Regular savings deposits ($ 99) $ 42 ($ 141)
NOW account deposits (49) (22) (27)
Money market deposits (1) (3) 2
------- ------- -------
Total savings deposits (149) 17 (166)
Time deposits 1,030 701 329
Borrowed funds 14 5 9
------- ------- -------
Total interest expense change 895 723 172
------- ------- -------
Net interest income change $ 1,211 $ 546 $ 665
======= ======= =======
Noninterest income increased $45,000 or 3.6% in the nine months ended September
30, 1995 compared to the same period a year earlier. Income from service charges
decreased $110,000 This decrease resulted largely from decreased fee income
related to demand deposit accounts. Demand deposit account holders can reduce or
avoid the payment of fees by maintaining an account balance at or above that
required to waive such charges. The increase in 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. The decrease in fees was more than offset
in other revenue areas including a $98,000 increase in gains from loan sales and
a $27,000 increase in gains from sales of investment securities
Noninterest expenses increased $324,000 or 5.6% for the first nine months of
1995 compared to the same period in 1994. This increase included increased
salaries and benefits of $212,000 principally for merit increases. Postage and
supplies increased $36,000 in response to a 10% increase in postal rates and
higher prices for paper products. Outsides services, such as legal and
Page 12 of 16 Pages
<PAGE>
consulting, decreased $24,000. Insurance and FDIC assessments decreased
$177,000. Expenses related to loan origination and collection increased $36,000.
OREO related expenses, including market value adjustments for property already
held, increased $12,000. Occupancy costs increased $18,000 and equipment costs
decreased $25,000. All other expenses increased $215,000 including 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
$72,000 which was charged to miscellaneous expense in 1995.
Part II Other Information
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - None
Item 3. Default Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders
A Special Meeting of Shareholders of the Company was held on Monday,
September 11, 1995. Shareholders voted on and approved the following:
The proposal to approve the Plan and Agreement of Reorganization dated
March 14, 1995 and amended March 30, 1995 which provides for the acquisition of
all outstanding shares of The Equity Bank Common Stock by the Company and the
operation of Equity under its existing name and charter as a separate bank
subsidiary of the Company and the issuance of 1.85 shares of the Company's
Common Stock in exchange for each share of Equity Common Stock.
"FOR APPROVAL" "AGAINST APPROVAL" "ABSTAIN" "NO VOTE"
1,355,784 2,822 6,115 5,460
--------- ----- ----- -----
Item 5. Other Matters
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits - Exhibit 27, Financial Data Schedule
b. Reports on Form 8-K
(1) The Company filed a Current Report on Form 8-K, dated
September 12, 1995, regarding the results of the Company's
Special Meeting of Shareholders held on September 11, 1995
Page 13 of 16 Pages
<PAGE>
NEW ENGLAND COMMUNITY BANCORP, INC.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NEW ENGLAND COMMUNITY BANCORP, INC.
Date: November 8, 1995 By: S/S ANSON C. HALL
-----------------
(Anson C. Hall)
Treasurer (principal financial officer)
Page 14 of 16 Pages
<PAGE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 9
<CIK> 0000752324
<NAME> NEW ENGLAND COMMUNITY BANCORP, INC.
<MULTIPLIER> 1
<CURRENCY> US$
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-1-1995
<PERIOD-END> SEP-30-1995
<EXCHANGE-RATE> 1
<CASH> 13,417,273
<INT-BEARING-DEPOSITS> 154,597,453
<FED-FUNDS-SOLD> 12,650,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 42,695,000
<INVESTMENTS-CARRYING> 42,695,000
<INVESTMENTS-MARKET> 6,104,000
<LOANS> 136,334,487
<ALLOWANCE> 2,369,025
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0
0
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<INTEREST-DEPOSIT> 3,854,075
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<INTEREST-INCOME-NET> 7,401,836
<LOAN-LOSSES> 400,000
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<EXPENSE-OTHER> 6,079,142
<INCOME-PRETAX> 2,193,585
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<EPS-PRIMARY> 0.68
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