SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
JULY 11, 1996
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(Date of Earliest Event Reported)
NEW ENGLAND COMMUNITY BANCORP, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE
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(State or other jurisdiction of incorporation or organization)
0-14550 06-1116165
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(Commission File Number) (IRS Employer Identification No.)
POST OFFICE BOX 130, OLD WINDSOR MALL, WINDSOR, CONNECTICUT 06095
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(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (860) 688-5251
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<PAGE>
Form 8-K
New England Community Bancorp, Inc.
Commission File No. 0-14550
Item 2. Acquisition or Disposition of Assets
Pursuant to the terms of the Plan and Agreement of Reorganization, dated as of
December 19, 1995 (the "Reorganization Agreement") by and among New England
Community Bancorp, Inc. ("NECB"), New England Bank and Trust Company ("NEBT")
and Manchester State Bank ("MSB"), NECB acquired all of the outstanding shares
of MSB Common Stock. Pursuant to the Reorganization Agreement, MSB's operations
have been merged with and into NECB's wholly-owned subsidiary, New England Bank
& Trust Company.
The Reorganization became effective on Friday, July 12, 1996 at 12:01 a.m. (the
"Effective Time").
At the Effective Time, each share of MSB Common Stock issued and outstanding
immediately prior to the Effective Time was converted into the right to receive
5.493 shares of NECB's Common Stock and $35.20 in cash.
The total cash consideration paid by NECB for fractional shares was $5,316.44
which was available from NECB's operations. The total number of shares of NECB
Common stock issued in exchange for MSB Common Stock was 548,857.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
a. Financial Statements of Businesses Acquired.
Pursuant to the requirements of Article 3 of Regulation S-X, the
following financial statements for Manchester State Bank have been included in
this filing:
1. Balance Sheet as of March 31, 1996 (unaudited) and December
31, 1995.
2. Statements of Income for the three months ended March 31, 1996
and 1995 (unaudited).
3. Statement of Changes in Stockholders' Equity for the three
months ended March 31, 1996 and 1995 (unaudited).
4. Statements of Cash Flows for the three months ended March 31,
1996 and 1995 (unaudited).
5. Notes to Unaudited Financial Statements.
6. Audited Financial Statements as of and for the years ended
December 31, 1995, 1994 and 1993. (Audited Financial
Statements are incorporated by reference to NECB's
Registration Statement on Form S-4, File No. 33-1979).
b. Pro Forma Financial Statements.
1. Pro Forma Combined Condensed Consolidated Balance Sheet as of
March 31, 1996 (unaudited).
2. Notes to Pro Forma Balance Sheet.
3. Pro Forma Combined Condensed Consolidated Income Statements
for the three months ended March 31, 1996 and for the year
ended December 31, 1995 (unaudited).
4 Notes to the Pro Forma Income Statements.
<PAGE>
c. Exhibits.
Exhibit No. Description
2. Plan and Agreement of
Reorganization, dated as of
December 19, 1995.
(Incorporated by reference to
Appendix A to NECB's
Registration Statement on Form
S-4, File No. 33-1979).
99. Press release dated July 11, 1996.
<PAGE>
Item 7(a)
Financial Statements of Business Acquired
<PAGE>
MANCHESTER STATE BANK
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(thousands of dollars)
March 31, 1996 December, 31
(Unaudited) 1995
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<S> <C> <C>
ASSETS
Cash and due from banks $ 4,315 $ 3,854
Federal Funds Sold 13,510 14,275
Investment securities:
U.S. Government Securities 2,964 2,963
Other Securities 596 596
Loans 70,249 71,501
Less Allowance for Loan Losses 1,389 1,435
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Net Loans 68,860 70,066
Bank Premises & Equipment 1,051 1,088
Other Real Estate Owned 779 779
Due From MSB, Inc. 0 0
Other Assets 1,089 1,150
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TOTAL ASSETS $93,164 $94,771
====================================================================================================================================
LIABILITIES
Deposits
Noninterest bearing $ 16,010 $ 17,525
Interest bearing 69,192 69,609
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Total Deposits 85,202 87,134
Other Liabilities 1,274 1,103
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TOTAL LIABILITIES 86,476 88,237
STOCKHOLDERS' EQUITY
Common Stock 1,000 1,000
Surplus 850 850
Retained Earnings 4,838 4,684
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TOTAL SHAREHOLDERS' EQUITY 6,688 6,534
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TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $93,164 $94,771
====================================================================================================================================
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
MANCHESTER STATE BANK
CONSOLIDATED INCOME STATEMENTS
(Unaudited)
<TABLE>
<CAPTION>
(thousands of dollars; except per share data)
Quarter ended March 31, 1996 1995
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<S> <C> <C>
Interest Revenue
Loans, including fees $1,561 $1,563
Investment securities:
U.S. treasury securities 38 116
Other securities 12 0
Federal funds sold 158 71
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Total interest income 1,769 1,750
Interest Expense
Deposits 684 618
Borrowed Funds 0 0
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Total interest expense 684 618
Net Interest Income 1,085 1,132
Provision for loan losses 200 150
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Net interest income after provision for loan losses 885 982
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Noninterest income
Service charges, fees and commissions 62 64
Other charges, collections and fees 43 45
Other revenue 17 17
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Total noninterest revenue 123 126
Noninterest expense
Salaries and employee benefits 334 388
Occupancy 47 38
Furniture and equipment 63 63
Outside services 51 49
Losses, writedowns, expenses--other real estate owned 18 11
Insurance and assessments 6 66
Other operating expense 215 218
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Total noninterest expense 734 833
Income before taxes 274 275
Income taxes 120 121
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NET INCOME $154 $154
====================================================================================================================================
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
MANCHESTER STATE BANK
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Common Capital Retained Total Stockholders'
Three Months Ended March 31, 1996 Stock Surplus Earnings Equity
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<S> <C> <C> <C> <C>
Balances at December 31, 1995 $1,000 $850 $4,684 $6,534
Net Income -- -- 154 154
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Balance at March 31, 1996 $1,000 $850 $4,838 $6,688
Common Capital Retained Total Stockholders'
Three Months Ended March 31, 1995 Stock Surplus Earnings Equity
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Balances at December 31, 1994 $1,000 $850 $4,393 $6,243
Net Income -- -- 154 154
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Balance at March 31, 1995 $1,000 $850 $4,547 $6,397
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
MANCHESTER STATE BANK
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
(thousands of dollars)
Quarter ended March 31, 1996 1995
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<S> <C> <C>
Operating Activities:
Net Income $154 $154
Adjustments for noncash charges (credits):
Provision for depreciation and amortization 37 38
Excess (deficiency) of provision for credit losses charged to income over net credit losses (46) 161
Losses from sale or disposal and provisions to reduce the carrying value
of other real estate owned, net (13)
(Increase) decrease in accrued income receivable (2) (23)
(Increase) decrease in other assets 61 (19)
Increase (decrease) in other liabilities 172 164
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Net cash provided (used) by operating activities 376 462
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Investing Activities
Net decrease (increase) in federal funds sold 765 (3,150)
Proceeds from sales and maturities of investment securities 2,000 11,000
Purchase of investment securities (2,000) (8,000)
Net (increase) decrease in loans 1,252 1,189
Purchases of premises and equipment (3)
Proceeds from sale of other real estate owned
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Net cash provided (used by) investing activities 2,017 1,036
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Cash Flow From Financing Activities
Net increase (decrease) in demand, NOW and savings deposits (2,636) (4,191)
Net increase (decrease) in time deposits 704 3,084
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Net cash provided (used) by financing activities (1,932) (1,107)
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Net increase (decrease) in cash and cash equivalents 461 391
Cash and cash equivalents, beginning 3,854 3,765
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Cash and cash equivalents, ending 4,315 4,156
====================================================================================================================================
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
Manchester State Bank
Notes to Financial Statements
March 31, 1996
Note 1: Basis of Presentation
The interim unaudited financial statements have been prepared in accordance with
generally accepted accounting principals. Certain financial information, which
is normally included in the financial statements prepared in accordance with
generally accepted accounting principals, but which is not required for interim
reporting purposes, has been condensed or omitted. In preparing the interim
financial statements, Management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities as of the date of the
balance sheet and revenues and expenses for the period. Actual results could
differ significantly from those estimates.
In the opinion of Management, the accompanying interim unaudited financial
statements contain all adjustments (consisting of normal recurring adjustments)
necessary to present fairly the Bank's financial position as of March 31, 1996,
and the results of operations and its cash flows for the three months then
ended. The results of operations for the periods shown are not necessarily
indicative of the results expected for the year ending December 31, 1996. The
accompanying interim unaudited financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Bank's 1995 Annual Report.
Note 2: Earnings Per Share
Earnings per share have been computed based upon the weighted average number of
common shares outstanding during the period. The weighted average number of
common shares outstanding amounted to 100,000 shares for each of the quarters
ended March 31, 1996 and 1995.
Note 3 Accounting Pronouncements
On January 1, 1995 the Bank adopted Statement of Financial Accounting Standards
("SFAS") No. 114, "Accounting by Creditors for Impairment of a Loan," as amended
by SFAS No. 118, "Accounting for Creditors for Impairment of a Loan - Income
Recognition and Disclosures". The Bank now measures certain impaired loans based
on the present value of expected future cash flows discounted at the loan's
effect interest rate, or, as a practical expedient, at the loan's observable
market price or the fair value of the collateral if the loan is collateral
dependent. The adoption of these accounting pronouncements did not have a
material effect on the Bank's financial statements.
<PAGE>
Item 7(b)
Unaudited Pro Forma Financial Information
<PAGE>
New England Community Bancorp, Inc.
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma combined condensed consolidated
balance sheets give effect to the Reorganization (as described in Item 2) of
Manchester State Bank with New England Community Bancorp, Inc. assuming that the
Reorganization had been consummated on March 31 1996.
The unaudited pro forma combined condensed consolidated income
statements set forth the operations of New England Community Bancorp, Inc.
combined with Manchester State Bank for the year ended December 31, 1995 and for
the three months ended March 31, 1996, as if New England Community Bancorp, Inc.
had completed the Reorganization with Manchester State Bank on January 1, 1995.
The Reorganization of Manchester State Bank has been accounted for by
the purchase method of accounting. The adjustments arising from the application
of the purchase method of accounting are described in the respective notes to
the unaudited pro forma combined condensed consolidated financial statements.
The unaudited pro forma combined condensed consolidated financial
statements should be read in conjunction with the accompanying notes and the
consolidated financial statements and notes thereto of New England Community
Bancorp, Inc. and Manchester State Bank as of December 31, 1995.
The pro forma financial statements may not be indicative of the results
that actually would have occurred if the Reorganization had been effective on
the dates indicated or which may be obtained in the future.
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED BALANCE SHEET
(ooo's omitted except per share data)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
NECB MSB Proforma Pro Forma
March 31, 1996 (Historical) (Historical) Adjustments Results
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Cash & due from banks 15,738 4,315 20,053
Federal funds sold 8,300 13,510 21,810
Investments:
Securities held-to-maturity 6,595 3,560 10,155
Securities available-for-sale 68,205 68,205
FHLBB stock 1,475 1,475
Mortgages held-for-sale 1,381 1,381
Loans outstanding 219,236 70,249 20 (a) 289,505
Less allowance for loan losses (4,520) (1,389) (5,909)
- ------------------------------------------------------------------------------------------------------------------------------------
Net loans 214,716 68,860 20 283,596
Accrued interest receivable 2,444 2,444
Premises & equipment 7,290 1,051 866 (b) 9,207
OREO 720 779 1,499
Goodwill 3,499 (c) 3,499
Other assets 2,141 1,089 (500) (d) 2,730
- ------------------------------------------------------------------------------------------------------------------------------------
Total Assets 329,005 93,164 3,885 426,054
====================================================================================================================================
Deposits:
Noninterest-bearing 52,110 16,010 68,120
Interest-bearing 241,737 69,192 168 (e) 311,097
- ------------------------------------------------------------------------------------------------------------------------------------
Total Deposits 293,847 85,202 168 379,217
Borrowed Funds 1,151 1,151
Other Liabilities 3,098 1,274 3,525 (f) 7,897
- ------------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 298,096 86,476 3,693 388,265
Equity
Common stock 308 1,000 (945) (g) 363
Surplus 21,522 850 465 (h) 22,837
9,282 (i) 9,282
(247) (j) (247)
(3,525) (k) (3,525)
Retained earnings 9,230 4,838 (4,838) (l) 9,230
Unrealized losses on securities available for sale, net (151) (151)
- ------------------------------------------------------------------------------------------------------------------------------------
Total Equity 30,909 6,688 192 37,789
- ------------------------------------------------------------------------------------------------------------------------------------
Total Liabilities & Equity 329,005 93,164 3,885 426,054
====================================================================================================================================
Shares outstanding 3,084,309 100,000 548,857 (m) 3,533,166
Book value/per share 10.02 66.88 10.40
See "Notes to Unaudited Pro Forma Combined Condensed Consolidated Balance Sheet"
</TABLE>
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED BALANCE SHEET
(a) Represents an increase to reflect fair value of MSB's loans
acquired, with a corresponding increase in Surplus (see Note h).
(b) Represents an increase to reflect the fair value of certain land
and buildings (see Note h)
(c) Represents the acquisition of 100,000 shares of MSB Common Stock
exchanged for 549,000 shares of NECB at an assumed Market Value of
$12.00 per share, $3,520,000 in cash, plus $247,000 for fees and
expenses related to the transaction, for a total value of
$10,359,000.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
(in thousands)
Total purchase price $10,359
Less:
Tangible net assets of MSB at July 11, 1996 5,894
Purchase accounting adjustments:
Increase in loans 20
Increase in land and buildings 866
Increase in time deposits (168)
-------------
718
Valuation adjustment to deferred income taxes to reflect changes in
values of acquired assets 253
Tangible assets after purchase accounting adjustments 6,860
----------------
Excess of purchase price over value of tangible net assets acquired $3,499
================
(d) Represents a decrease in other assets to reflect the following:
(in thousands)
Prepaid expenses directly attributable to the transaction (see Note h) $247 (j)
Valuation adjustment to deferred income taxes to reflect changes in
values of acquired assets 253 (h)
--------------
Total $500
==============
(e) Represents increase to reflect the fair value of MSB's time deposits (see Note h)
(f) Represents liability for cash portion of exchange (see Note k).
(g) Elimination of MSB's Common Stock less $54 thousand to reflect the issuance of 549,300 NECB shares with a Par Value of
$.10 per share.
(h) Adjustments to Surplus reflecting fair value of assets and liabilities:
(in thousands)
Increase in loans $20 (a)
Increase in certain land and buildings 866 (b)
Increase in time deposits (168) (e)
Valuation adjustment to deferred income taxes to reflect changes in
values of acquired assets (253) (d)
======================
Total $465
======================
(i) Represents an decrease in Surplus as indicated:
(in thousands)
Decrease in MSB Common Stock $945 (g)
Elimination of Retained Earnings 4,838 (l)
Excess of Purchase Price Paid 3,499 (c)
----------------------
Total $9,282
======================
(j) Represents a decrease in Surplus related to prepaid expenses directly attributable to the transaction (see Note d)
<PAGE>
(k) Represents a decrease in Surplus to reflect payment of the cash portion ($3,520,000, plus $5,316 in cash in lieu for
fractional shares) of acquisition (see Note f).
(l) Represents the elimination of retained earnings.
(m) Represents the adjustment in the number of MSB shares exchanged for NECB shares:
Shares exchanged (100,000)
Remaining Shares exchanged (at 5.493 per share) 549,300
Fractional shares not exchanged (443)
--------------------------
Total Shares Exchanged 548,857
</TABLE>
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED INCOME STATEMENTS
<TABLE>
<CAPTION>
(ooo's omitted except per share data)
NECB MSB Proforma Pro Forma
Twelve months Ended December 31, 1995 (Historical) (Historical) Adjustments Results
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income $16,300 $7,356 ($3) (a) $23,653
Interest expense 5,736 2,734 (84) (b) 8,386
- ------------------------------------------------------------------------------------------------------------------------------------
Net interest income 10,564 4,622 81 15,267
Less: provision for loan losses 700 475 1,175
- ------------------------------------------------------------------------------------------------------------------------------------
Net Interest Income after provision for possible loan losses 9,864 4,147 81 14,092
Noninterest revenue
Service charges, fees and commissions 1,385 265 1,650
Investment securities gains, net 21 21
Gain on sales of loans, net 193 193
Other 93 134 227
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Total 1,692 399 2,091
Noninterest expense
Salaries and employee benefits 4,378 1,761 6,139
Occupancy 729 265 39 (c) 1,033
Furniture and equipment 686 267 953
Outside services 322 208 530
Postage and supplies 391 391
Insurance and assessments 363 159 522
Losses, writedowns and expenses on other real estate 225 125 350
Other 1,497 1,039 175 (d) 2,711
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Total 8,591 3,824 214 12,629
Net income before taxes 2,965 722 (133) 3,554
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Taxes 985 381 (17) (e) 1,424
Net Income $1,980 $341 ($116) $2,130
====================================================================================================================================
Net income per share $0.91 $3.41 $0.81
Weighted average shares of common shares 2,165,931 100,000 548,857 (f) 3,533,166
See "Notes to Unaudited Pro Forma Combined Condensed Consolidated Balance Sheet"
</TABLE>
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED INCOME STATEMENTS
(a) Represents amortization of $3 thousand related to the loan value
adjustment of $20 thousand, utilizing a weighted average expected
life of 8 years.
(b) Represents amortization of $84 thousand related to the discount on
acquired deposits of $168 thousand, utilizing a weighted average
contractual maturity of 2 years.
(c) Represents amortization of $39 thousand related to the adjustment
of $773 thousand for the fair value of the certain real estate
properties.
(d) Represents amortization of $175 thousand related to the excess of
purchase price over the value of identifiable tangible assets
acquired of $3,499,000, using a life of 15 years.
(e) Represents the adjustment in the number of MSB shares exchanged for
NECB shares:
<TABLE>
<CAPTION>
<S> <C>
Remaining Shares exchanged (at 5.493 per share) 549,300
Fractional shares not exchanged (443)
--------------------------
Total Shares Exchanged 548,857
</TABLE>
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED INCOME STATEMENTS
<TABLE>
<CAPTION>
(ooo's omitted except per share data)
NECB MSB Proforma Pro Forma
Three months Ended March 31, 1996 (Historical) (Historical) Adjustments Results
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income $6,641 $1,769 ($1) (a) $8,409
Interest expense 2,405 684 (21) (b) 3,068
- ------------------------------------------------------------------------------------------------------------------------------------
Net interest income 4,236 1,085 20 5,341
Less: provision for loan losses 532 200 732
Net Interest Income after provision for possible loan losses 3,704 885 20 4,609
Noninterest revenue
Service charges, fees and commissions 411 62 473
Investment securities gains, net (1) (1)
Gain on sales of loans, net 20 20
Other 10 61 71
- ------------------------------------------------------------------------------------------------------------------------------------
Total 440 123 0 563
Noninterest expense
Salaries and employee benefits 1,558 334 1,892
Occupancy 257 47 10 (c) 314
Furniture and equipment 187 63 250
Outside services 117 51 168
Postage and supplies 122 122
Insurance and assessments 36 6 42
Losses, writedowns and expenses on other real estate 47 18 65
Other 463 215 44 (d) 722
- ------------------------------------------------------------------------------------------------------------------------------------
Total 2,787 734 54 3,575
Net income before taxes 1,357 274 (34) 1,597
- ------------------------------------------------------------------------------------------------------------------------------------
Taxes 434 120 (4) 550
Net Income $923 $154 ($30) $1,047
====================================================================================================================================
Net income per share $0.30 $1.54 $0.30
Weighted average shares of common stock 3,084,309 100,000 548,857 (e) 3,533,166
See "Notes to Unaudited Pro Forma Combined Condensed Consolidated Income Statements"
</TABLE>
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED INCOME STATEMENTS
(a) Represents amortization of $1 thousand related to the loan value
adjustment of $20 thousand, utilizing a weighted average expected
life of 8 years.
(b) Represents amortization of $21 thousand related to the discount on
acquired deposits of $168 thousand, utilizing a weighted average
contractual maturity of 2 years.
(c) Represents amortization of $10 thousand related to the adjustment
of $773 thousand for the fair value of the certain real estate
properties.
(d) Represents amortization of $44 thousand related to the excess of
purchase price over the value of identifiable tangible assets
acquired of $3,499,000, using a life of 15 years.
(e) Represents the adjustment in the number of MSB shares exchanged for
NECB shares:
<TABLE>
<CAPTION>
<S> <C>
Remaining Shares exchanged (at 5.493 per share) 549,300
Fractional shares not exchanged (443)
--------------------------
Total Shares Exchanged 548,857
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereto duly authorized.
Dated: July 26, 1996 NEW ENGLAND COMMUNITY BANCORP, INC.
--
By:/s/ Anson C. Hall
___________________________________________
Anson C. Hall, Principal Accounting Officer
NEW ENGLAND COMMUNITY BANCORP, INC.
P.O. Box 130
Windsor, Connecticut 06095
For Immediate Release
CONTACT: David A. Lentini
President and Chief Executive Officer
(860) 683-4601
NEW ENGLAND COMMUNITY BANCORP, INC. COMPLETES MERGER WITH
MANCHESTER STATE BANK; SECOND MERGER IN NINE MONTHS
WINDSOR, CT, July 11, 1996--New England Community Bancorp, Inc. (NASDAQ: NECB),
the parent of New England Bank (Windsor, Connecticut) and The Equity Bank
(Wethersfield, Connecticut), today announced the completion of its merger with
Manchester State Bank (Manchester, Connecticut). This merger is the second
transaction completed by New England Community Bancorp in the past nine months
and increases the Company's total assets to $425 million. Effective July 12,
1996, Manchester State Bank's three offices will open as branches of New England
Bank.
Under the terms of the agreement, shareholders of Manchester State Bank will
receive 5.493 shares of New England Community Bancorp Common Stock and $35.20 in
cash in exchange for each share of Manchester State Bank Common Stock owned.
Based upon the closing stock price of New England Community Bancorp on July 10,
1996, this represents a total per share consideration to Manchester State Bank
shareholders of $101.80.
"The merger of Manchester State Bank represents a logical and exciting extension
of our distribution network," commented David A. Lentini, President and Chief
Executive Officer of New England Community Bancorp, Inc. "Manchester is served
by the same media markets as New England Bank, and the operational overlap will
lead to significant cost savings. In addition, Manchester and the surrounding
communities represent compelling opportunities for a commercial bank with the
resources brought by the New England Community Bancorp family."
New England Community Bancorp anticipates significant cost savings following the
merger. Through attrition, limited staff reductions and operational
improvements, a total savings of more than 30% of annual noninterest expenses of
Manchester State Bank is anticipated. In addition to converting Manchester State
Bank's data processing to New England Bank's internal system, many other
expenses of running a separate institution will be eliminated. Further, enhanced
revenue opportunities are anticipated through cross selling of New England Bank
products to existing Manchester State Bank customers.
The Company will account for the merger using purchase accounting. The purchase
method accounts for a business combination as the acquisition of one enterprise
by another. The acquiring corporation records at its cost the acquired assets
less liabilities assumed. A difference between the cost of an acquired
enterprise and the sum of the fair values of tangible and identifiable
intangible assets less liabilities assumed is recorded as goodwill. In addition,
the reported income of an acquiring corporation is included in the operations of
the acquired enterprise after the acquisition, based on the cost to the
acquiring corporation. Based upon the closing price of New England Community
Bancorp at July 10, 1996 ($12 1/8), the transaction is valued at $10.1 million.
- --------------------------------------------------------------------------------
SUPPLEMENTAL DATA AS OF MARCH 31, 1996
- --------------------------------------------------------------------------------
(in thousands, except ratios)
------------------------ ------------------------
NECB MSB
------------------------ ------------------------
Total Assets $329,005 $93,164
Total Loans $219,236 $70,249
Total Deposits $293,847 $85,202
Total Capital $30,909 $6,688
Shares Outstanding 3,084 100
Tangible Equity/Assets 9.27% 7.17%
***end***
