SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934 (Amendment No. )
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for use by the Commission only (as permitted by Rule
14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
NEW ENGLAND COMMUNITY BANCORP, INC.
................................................................................
(Name of Registrant as Specified in its Charter)
................................................................................
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
...............................................................
2) Aggregate number of securities to which transaction applies:
...............................................................
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on
which the filing fee is calculated and state how it was
determined):
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...............................................................
5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount previously paid:
...............................................................
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4) Date Filed:
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<PAGE>
[LOGO] New England
Community Bancorp
NEW ENGLAND COMMUNITY BANCORP, INC.
Old Windsor Mall
Windsor, Connecticut 06095
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 20, 1997
---------------------------
The Annual Meeting of the Shareholders of New England Community Bancorp,
Inc., a Delaware Corporation ("NECB"), will be held on May 20, 1997, at 10:00
a.m. at La Renaissance, 53 Prospect Hill Road (Route 5), East Windsor,
Connecticut, for the purposes of considering and voting upon:
1) The election of a Board of Directors, as described in the
accompanying Proxy Statement.
2) The ratification of the selection of Shatswell, MacLeod & Company,
P.C. as independent auditors for 1997.
3) Such other business as may properly come before the Annual Meeting.
The record date for determining shareholders entitled to notice of, and
to vote at, the Annual Meeting is the close of business on March 31, 1997.
By Order of the Board of Directors,
/s/ Angelina J. McGillivray
-----------------------------------
Angelina J. McGillivray
Secretary
Windsor, Connecticut
April 17, 1997
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, DATE, SIGN AND MAIL THE ENCLOSED
PROXY AS SOON AS POSSIBLE REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE MEETING.
IF YOU ATTEND THE MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU HAVE
PREVIOUSLY RETURNED YOUR PROXY.
<PAGE>
NEW ENGLAND COMMUNITY BANCORP, INC.
Old Windsor Mall
Windsor, Connecticut 06095
-------------------------
1997 ANNUAL MEETING OF SHAREHOLDERS
-------------------------
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors ("NECB Board")
of New England Community Bancorp, Inc. ("NECB" or the "Company"), in connection
with the Annual Meeting of Shareholders to be held on May 20, 1997. This proxy
statement and the enclosed proxy are first being mailed to shareholders on or
about April 17, 1997. The proxy will be voted at the Annual Meeting in
accordance with the instructions indicated on the proxy by the shareholder. If
no instructions are indicated, all shares represented by valid proxies received
pursuant to this solicitation (and not revoked before they are voted) will be
voted FOR Proposal Nos. 1 and 2.
The record date for the determining shareholders entitled to vote at the
Annual Meeting is the close of business on March 31, 1997. On this date, there
were outstanding and entitled to vote 3,667,166 shares of Common Stock, each of
which is entitled to one vote on each matter to be voted on at the Annual
Meeting. The presence (in person or by proxy) of a majority of the aggregate
number of shares of Common Stock outstanding and entitled to vote on the record
date is necessary to constitute a quorum at the Annual Meeting. Abstentions and
broker nonvotes will be counted as present at the Annual Meeting for purposes of
determining whether there is a quorum.
VOTING PROCEDURES
The affirmative vote of a majority of the shares of Common Stock
represented at the Annual Meeting and entitled to vote is required to elect
directors and to ratify the selection of auditors. In voting for the election of
directors, shareholders must either cast their votes in favor of or withhold
their votes. With respect to the ratification of the selection of independent
auditors, shareholders may vote for or against and abstentions may be specified.
Votes withheld and abstentions are not considered votes cast, and shall be
counted as neither for nor against a nominee or matter. Since a broker's
authority is not limited with respect to Proposal Nos. 1 and 2, NECB does not
expect to receive any broker nonvotes with respect to the Annual Meeting.
A shareholder of record may revoke a proxy by delivering written notice
of revocation to Anson C. Hall, Vice President, Chief Financial Officer and
Treasurer of NECB, at the address set forth above, by filing a duly executed
proxy bearing a later date, or by attending the Annual Meeting in person,
notifying the Secretary, and voting by ballot at the Annual Meeting. Any
shareholder of record attending the Annual Meeting may vote in person whether or
not a proxy has been previously given, but the mere presence of a shareholder at
the Annual Meeting (without notifying the Secretary) will not constitute
revocation of a previously given proxy. In addition, shareholders whose shares
of Common Stock are not registered in their own name will need additional
documentation from the recordholder of the shares to vote in person at the
Annual Meeting.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table lists all shareholders known by NECB to own
beneficially more than 5% of the 3,667,166 shares of Common Stock outstanding as
of March 20, 1997.
Name and Amount of
Address of Shares Beneficially Percentage
Beneficial Owners Owned of Class
- ---------------- -------------------- ----------
Wellington Management Co. ........... 344,300 9.4%
75 State Street, 19th Floor
Boston, MA 02119
Angelina J. McGillivray ............. 254,775 (1)(2) 6.7%
1 South Drive
Niantic, CT 06357
Bay Pond Partners, LP ............... 230,900 6.3%
75 State Street
Boston, MA 02119
John Hancock Advisers, Inc. ......... 185,000 5.0%
101 Huntington Avenue
Boston, MA 02119
- --------------
(1) Includes 85,167 shares owned by John A. Coccomo, Sr., for which Mrs.
McGillivray holds power of attorney to vote and which ownership has been
disclaimed by Mrs. McGillivray.
(2) Includes 42,012 shares owned by John A. Coccomo, Sr., Foundation for the
Blind, Inc., a charitable trust of which Mrs. McGillivray is a trustee
and for which ownership has been disclaimed by Mrs. McGillivray.
ELECTION OF DIRECTORS
A Board of ten (10) Directors is to be elected at this Annual Meeting to
hold office until the next Annual Meeting and the election and qualification of
their successors. The Governance Committee of the Board of Directors has
nominated the following persons (the "Nominees"), and it is intended that
proxies will be voted in favor of all these persons. If, for any reason, any of
the Nominees is not able or willing to serve as a Director when the election
occurs (a situation which is not presently contemplated), it is intended that
the proxy will be voted for the election of a substitute nominee in accordance
with the judgment of the proxy holder.
THE NECB BOARD RECOMMENDS A VOTE "FOR" ALL NOMINEES
FOR ELECTION AS DIRECTORS
<TABLE>
<CAPTION>
Nominees for Director
Director of
Name Age Positions and Principal Occupation (1) Committee Membership NECB Since
- ---------- ------- -------------------------------------- -------------------- ----------
<S> <C> <C> <C> <C>
Tadeus J. Buczkowski..... 70 Loss Control Director (retired), Executive 1986
Hartford Insurance Group
John C. Carmon........... 49 President, Carmon Funeral Executive 1985
Homes, Inc.
Gary J. DeNino........... 42 President, IMSCO, Inc. (IMSCO, Compensation and 1995
Inc., is a domestic market Governance
representative of international
products.)
Frank A. Falvo........... 54 Executive Vice President of NECB Executive 1995
since December, 1995 and
and President and CEO of The Equity
Bank ("EQBK") since its formation
2
<PAGE>
Director of
Name Age Positions and Principal Occupation (1) Committee Membership NECB Since
- ---------- ------- -------------------------------------- -------------------- ----------
Dominic J. Ferraina...... 64 Chairman of the Board of NECB Executive, 1986
and New England Bank & Trust Governance and
Company ("NEBT"), Practicing Compensation
Attorney
Charles D. Gersten....... 73 Partner, Gersten and Clifford Executive 1995
(law firm)
John R. Harvey........... 49 Partner, Harvey & Horowitz, P.C. Audit 1995
(certified public accountants)
David A. Lentini......... 50 President and CEO of NECB and Executive 1993
NEBT(2)
Angelina J. McGillivray.. 47 President, Coccomo Associates Executive, 1993
Realtors, Inc. Compensation,
Governance and Audit
Edward J. Szewczyk....... 67 President, Southwood Pharmacy, Inc. Governance and Audit 1986
</TABLE>
- -------------
(1) All directors have been engaged in their respective positions for more
than five years except Mr. Lentini.
(2) Mr. Lentini was appointed to serve as President and Chief Executive
Officer of NEBT and NECB in May 1993. Prior to joining the Company, Mr.
Lentini served as President and Chief Executive Officer of Connecticut
Bank of Commerce, Woodbridge, Connecticut, from September 1992 through
May 1993. Mr. Lentini was previously employed by Bank of South Windsor as
President and Chief Executive Officer from December 1987 until September
1992.
CERTAIN INFORMATION REGARDING THE BOARD OF DIRECTORS
AND ITS COMMITTEES
MEETINGS AND COMMITTEES
During 1996, NECB's Board met twelve times. Committees of the Board met
as follows: the Audit Committee met five times and the Executive, Compensation
and the Governance Committees each met once. In 1996, all NECB Board members
attended more than 75% of the meetings of the NECB Board and its committees on
which they serve.
The Executive Committee consists of seven members and has broad
responsibilities and reviews matters which may significantly affect NECB. Its
primary focus is strategic in nature and includes providing guidance for the
development and implementation of the Company's strategic plan. During 1996, the
Committee only met once because all matters otherwise reviewable by it were
reviewed by the entire Board.
The Audit Committee assists the Boards of Directors of NEBT and EQBK in
fulfilling their fiduciary responsibilities relating to corporate accounting and
reporting practices of NEBT and EQBK, respectively. Additionally, the Audit
Committee reviews the records and affairs of NECB to determine its financial
condition, reviews with management and the independent auditors NECB's internal
control systems, and monitors NECB's adherence in accounting and financial
reporting to generally accepted accounting principles.
The Compensation Committee, composed of three independent nonemployee
members of the NECB Board, determines issues related to compensation programs
and policies including compensation actions for the Chief Executive Officer and
reviews the compensation for all other executive officers (see Compensation
Committee Report on Executive Compensation).
The Governance Committee consists of four members. The Governance
Committee was formed to assist the Board with issues related to its membership
as well as issues related to the Articles of Incorporation and Bylaws of the
Corporation. Issues related to membership include, but are not limited to,
issues such as the size and membership of the Board of Directors and its
standing committees. The Committee, acting as the nominating committee, met on
March 14, 1997 and recommended the proposed slate of Nominees, as presented in
this proxy statement, to seek election at the 1997 Annual Meeting to serve as
directors of NECB.
3
<PAGE>
The Governance Committee will consider additional nominees during the
year as corporate needs dictate, and will advise the Board of Directors as to
its recommendations. The Governance Committee will consider recommendations by
shareholders for nomination as directors, provided such recommendations are
submitted in accordance with certain procedures set forth in NECB's Bylaws. A
shareholder's notice must be delivered to or mailed and received at the
principal executive offices of NECB not less than sixty (60) days nor more than
ninety (90) days prior to the meeting. However, if fewer than seventy (70) days
notice of the date of the meeting is given or made to shareholders, and the
meeting is held more than thirty (30) days before or after the corresponding
date of the Annual Meeting held in the preceding year, then notice of the
nomination by the shareholder to be timely must be received not later than the
close of business on the tenth day following the day on which such notice of the
date of the meeting was mailed to shareholders. Notice to shareholders' meeting
will be deemed to be given on the date of NECB's quarterly report, letter to
shareholders or other communications to shareholders disclosing the meeting
date, if the meeting is in fact held on that date or within thirty (30) days
thereafter. A shareholder's notice must set forth as to each person whom the
shareholder proposes to nominate for election or re-election as a director: (i)
the name, age, business address and, if known, residence address, (ii) the
principal occupation or employment, (iii) the number of shares of stock of NECB
that are beneficially owned, and (iv) any other information relating to such
person that is required to be disclosed in solicitation of proxies for election
of directors, or otherwise required, in each case, pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended. In addition, any
shareholder making the nomination must promptly provide any other information
reasonably requested by NECB.
COMPENSATION OF DIRECTORS
For their service on the NECB Board during 1996, directors (other than
executive officers of NECB who are Board members) received an annual retainer of
$1,500, plus $300 for each Board meeting attended and $150 for each committee
meeting attended. The Chairman of the Board and each Committee Chairman received
additional annual compensation of $3,500 and $500, respectively.
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table shows, as of March 20, 1997, the number of shares of
Common Stock and the percent of outstanding Common Stock beneficially owned by
(i) each of the current directors, (ii) each of the executive officers named in
the Summary Compensation Table, and (iii) all directors and executive officers
as a group.
<TABLE>
<CAPTION>
Amount and
Nature of
Beneficial Percent
Name Ownership (1) of Class (2)
- ----- ------------- ------------
<S> <C> <C>
Tadeus J. Buczkowski........................................... 17,788 (3) 0.5%
John C. Carmon................................................. 18,360 (3) 0.5%
Gary J. DeNino................................................. 25,587 0.7%
Frank A. Falvo................................................. 19,034 (3) 0.5%
Dominic J. Ferraina............................................ 15,000 (3) 0.4%
Donat A. Fournier.............................................. 20,656 (3) 0.6%
Charles D. Gersten............................................. 100,525 (3) 2.7%
Anson C. Hall.................................................. 12,486 (3) 0.3%
John R. Harvey................................................. 13,786 (3) 0.4%
David A. Lentini............................................... 33,600 (3) 0.9%
Angelina J. McGillivray........................................ 254,775 (4)(5) 6.7%
Edward J. Szewczyk............................................. 12,358 (3) 0.3%
All Directors and Executive Officers as a Group (12 persons)... 501,943 14.6%
- ----------
</TABLE>
(1) Amounts shown include 6,000, 16,000, 11,000 and 23,000 shares,
respectively, that may be acquired by Messrs. Falvo, Fournier, Hall and
Lentini.
(2) For purposes of this calculation, the number of shares of Common Stock
used includes shares outstanding as of March 20, 1997 of 3,667,166 plus
any shares subject to options granted to that individual and exercisable
within sixty (60) days of March 20, 1997.
(3) Includes shares owned by, or as to which voting power is shared with,
spouse, children, or affiliates.
(4) Includes 85,167 shares owned by John A. Coccomo, Sr., for which Mrs.
McGillivray holds power of attorney to vote and which ownership has been
disclaimed by Mrs. McGillivray.
(5) Includes 42,012 shares owned by John A. Coccomo, Sr., Foundation for the
Blind, Inc., a charitable trust of which Mrs. McGillivray is a trustee
and for which ownership has been disclaimed by Mrs. McGillivray.
4
<PAGE>
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee is composed of three (3) independent
nonemployee members of the NECB Board who initiate all compensation actions for
the Chief Executive Officer ("CEO") and review and recommend the compensation
for all executive officers.
NECB's executive compensation programs are designed to be market
competitive in order to attract and retain highly qualified and experienced
executives who are motivated to enhance shareholder value. In 1996, the
Committee's compensation recommendations with respect to the CEO and other
executive officers as defined in the Summary Compensation Table (the "Named
Executives Officers") continued to be driven by NECB's strategy to place
emphasis on variable compensation. In order to link the Named Executive
Officers' pay closely with the interests of NECB's shareholders, this variable
compensation takes the form of performance-based awards and equity awards.
NECB's goal is to ensure that the total pay for each of the Named Executive
Officers reflects the executive's position, duties and level of responsibility
and which is comparable to the compensation paid to the executives in similar
positions at financial institutions of NECB's size (measured by total assets).
This group is not the same as the index used for the purposes of comparing total
shareholder return under the Stock Performance Graph below.
The amounts paid to each of the Named Executive Officers in the form of
base salary and short and long-term incentive awards are discretionary based
upon the Committee's assessment of certain quantitative and qualitative factors.
For 1996 compensation purposes, the Committee considered: (1) NECB's performance
in 1995, as measured by Return on Equity ("ROE"), Net Income and Return on
Assets ("ROA"), each of which increased significantly over the previous year;
(2) reduced problem loans; (3) the announced acquisition of EQBK; and (4) the
increased market value of the Company.
Long-term incentive awards, consisting of incentive and nonqualified
stock options, act as a retention tool and serve to link the executive officers'
opportunity for financial award with that of the shareholders, and ensure that
short-term performance is adequately balanced with the achievement of
longer-range objectives which are in the best interests of the shareholders.
Accordingly, the purpose is to stimulate key managerial employees, who are in a
position to materially contribute to the long-term success of NECB, by allowing
such individuals to acquire or increase their proprietary interest in NECB and
also to enable NECB to attract and retain such key employees. In January 1996,
the Committee awarded 140,000 such options to key employees.
CEO COMPENSATION
In 1996, NECB's most highly-compensated Named Executive Officer was David
A. Lentini, President and Chief Executive Officer. The Committee reviewed Mr.
Lentini's performance and determined that he met or exceeded all objectives in
1996. The Committee also discussed 1997 business objectives for Mr. Lentini. Mr.
Lentini's cash compensation for 1996 included a base salary of $175,000 and a
bonus of $30,800. The Committee exercised its judgment in determining the amount
of Mr. Lentini's award and took into account certain quantitative and
qualitative factors described above. Mr. Lentini was not present during the
Committee's discussion concerning his compensation. The Committee's decision was
unanimously accepted by the NECB Board.
This report is furnished by members of the Compensation Committee.
Gary J. DeNino
Dominic J. Ferraina
Angelina J. McGillivray
5
<PAGE>
STOCK PERFORMANCE GRAPH
The Stock Performance Graph compares the yearly percentage change in the
cumulative total shareholder return on the Company's Common Stock against both a
broad-market index (the Nasdaq National Market) and an industry index (SNL
Securities' Banks (New England) Index), for the five-year period from December
31, 1991 through December 31, 1996. The graph assumes that on December 31, 1991
$100 was invested in Common Stock of NECB and the indices and that all dividends
were reinvested.
<TABLE>
[The following table represents a graph in the printed piece.]
Total Return Performance
Period Ending
<CAPTION>
Index Value 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
- ----------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
New England Community Bancorp, Inc. 100.00 106.67 133.33 221.47 281.64 431.96
NASDAQ - Total US 100.00 116.38 133.59 130.59 184.67 227.16
SNL Banks (New England) Index 100.00 160.61 164.74 158.31 259.59 353.98
</TABLE>
6
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following table shows, for the years ended December 31, 1996, 1995
and 1994, the compensation of the Chief Executive Officer and the three other
most highly compensated executive officers of NECB who were serving as executive
officers at year-end 1996. The persons named in the table are referred to in
this proxy statement as the "Named Executive Officers."
<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term Compensation
Annual Compensation Awards
-------------------------------- -------
Options/ All Other
Name and Principal Position Year Salary ($) Bonus ($) SARs (#) Compensation ($)
- ------------------------- ---- --------- -------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C>
David A. Lentini...................... 1996 $175,000 $30,800 40,000 $19,345 (1)
President and Chief 1995 140,000 13,500 15,000 22,837
Executive Officer 1994 135,000 20,000 17,647
Frank A. Falvo........................ 1996 $150,000 $26,400 30,000 $4,167 (2)
Executive Vice President 1995(3) 125,000 12,325
Donat A. Fournier..................... 1996 $125,000 $26,400 30,000 $14,549 (4)
Vice President and Senior 1995 95,000 10,500 10,000 17,138
Loan Officer 1994 93,484 14,000 8,062
Anson C. Hall......................... 1996 $100,000 $17,600 30,000 $11,472 (5)
Vice President, Chief 1995 80,000 6,500 5,000
Financial Officer and 1994 75,000
Treasurer
</TABLE>
- -------
(1) During 1996, NECB contributed $9,000 and $2,288, respectively, into the
Company's former pension plan and the Company's 401(k) Plan. Additionally,
NECB paid life and disability insurance premiums in the amounts of $1,239
and $6,818, respectively, for the benefit of Mr. Lentini.
(2) During 1996, NECB contributed $4,167 pursuant to the Company's 401(k)
Plan.
(3) Amounts shown in the table for 1995 include amounts paid by EQBK to Mr.
Falvo prior to the acquisition of EQBK by NECB.
(4) During 1996, NECB contributed $9,000 and $1,635, respectively, into the
Company's former pension plan and the Company's 401(k) Plan. Additionally,
NECB paid disability insurance premiums in the amount of $3,914 for the
benefit of Mr. Fournier.
(5) During 1996, NECB contributed $5,279 and $1,308, respectively, into the
Company's former pension plan and the Company's 401(k) Plan. Additionally,
NECB paid disability insurance premiums in the amount of $4,885 for the
benefit of Mr. Hall.
Options/SAR Grants in Last Fiscal Year
The following table contains information concerning the grant of stock
options made during the year ended December 31, 1996 to the Named Executive
Officers.
<TABLE>
<CAPTION>
Individual Grants
Number of Percent of
Securities Total Options/
Underlying SARs Granted Exercise or Grant Date
Options/SARs to Employees Base Price Expiration Present Value
Name Granted (#)(1) in Fiscal Year (2) ($/sh) Date ($) (3)
- ----- ------------- ------------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
David A. Lentini 40,000 28.6% $10.25 1/31/2006 $127,200
Frank A. Falvo 30,000 21.4% $10.25 1/31/2006 $95,400
Donat A. Fournier 30,000 21.4% $10.25 1/31/2006 $95,400
Anson C. Hall 30,000 21.4% $10.25 1/31/2006 $95,400
- ----------
</TABLE>
(1) Under the 1996 Incentive and Nonqualified Compensatory Stock Option Plan
(the "1996 Plan"), the Committee may grant either Incentive Stock Options
or Non-Statutory Stock Options to key managerial employees to purchase
shares of Common Stock of the Company. The option price is fixed by the
Committee at the time of the grant and may not be less than 100 percent of
the fair market value of the stock, as determined by the Committee, in
good faith as of the grant date. Each option may be first exercised in
five equal annual installments commencing from the date set forth in the
Stock Option Agreement for such options; provided, however, that no option
be exercised beyond ten years after the date of the grant.
(footnotes continued on next page)
7
<PAGE>
(footnotes continued from previous page)
(2) The percentages in the table are based upon a total of 140,000 options
granted to NECB employees in 1996--all of which were granted under the
1996 Plan.
(3) The grant date present values shown in the table are determined using the
Black-Scholes option pricing model. The assumptions used in calculating
the Black-Scholes present value of approximately $3.18 per option for new
option grants were as follows: (a) a dividend yield of 2.1 percent; (b)
expected volatility of 25 percent; (c) a risk-free interest rate of 5.17
percent; and (d) expected lives of eight years. The Black-Scholes option
pricing model was developed for use in estimating the fair value of traded
options that have no vesting restrictions and are fully transferable. In
addition, option pricing models require the use of highly subjective
assumptions, including the expected stock price volatility. Because NECB's
employee options have characteristics significantly different from those
of traded options, and because changes in subjective assumptions can
materially affect the fair value estimates, the Black-Scholes model does
not necessarily provide a reliable single measure of the fair value of
NECB's employee options. The amount realized from an employee option
ultimately depends on the market of the Common Stock on the date of the
exercise.
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Option/SAR Values
Number of
Securities
Underlying Value of Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at FY-End (#) at FY-End ($) (2)
Shares Acquired Value Realized ------------------------- ------------------------
Name on Exercise (#) ($) (1) Exercisable Unexersisable Exercisable Unexercisable
----- ----------------- -------------- ----------- ------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
David A. Lentini 20,000 $140,000 23,000 32,000 $155,375 $164,000
Frank A. Falvo 6,000 24,000 $30,750 $123,000
Donat A. Fournier 14,000 $98,000 16,000 24,000 $107,00 $123,000
Anson C. Hall 11,000 24,000 $68,875 $123,000
</TABLE>
- -----------
(1) Value realized is the difference between the fair market value
of the Common Stock at the date of exercise and the exercise price of the
option exercised.
(2) Value is the difference between the fair market value of the Common Stock
at year end and the exercise price of the option.
PENSION PLAN
During 1996, the Company converted its defined contribution plan into a
401(k) Plan (the "Plan"). Employees over the age of 21 and with one year of
service are eligible to participate in the Plan. The Company matches employee
contributions to the Plan on the following basis: 100% of the first 3% of
employee contributions and 50% of the next 2%. Both employee and Company matches
immediately vest in the Plan. Additionally, funds which were previously not
vested in the defined contribution plan vested upon transfer into the Plan.
EMPLOYMENT AGREEMENTS
NECB entered into employment agreements with Messrs. Lentini, Fournier
and Hall in August 1994 and with Mr. Falvo in August 1996.
Mr. Lentini's employment agreement provides for his employment as
President and Chief Executive Officer until July 30, 1996. Beginning August 1,
1995, and annually thereafter, the agreement automatically extends for one
additional year unless canceled by either party. The agreement will terminate
two years from the date of the last extension. Under the agreement, Mr. Lentini
receives an annual base salary which is fixed by the Board each year. The
employment agreement also provides that the Board of Directors of NECB may pay
an incentive bonus to Mr. Lentini at its option, and the amount of such bonus is
discretionary and will be determined by the Board of Directors.
Mr. Falvo's employment agreement provides for his employment as Executive
Vice President until July 30, 1998. Beginning August 1, 1997, and annually
thereafter, the agreement automatically extends for one additional year unless
canceled by either party. The agreement will terminate two years from the date
of the last extension. Under the agreement, Mr. Falvo's annual salary is
$165,000. The employment agreement also provides that the Board of Directors of
NECB may pay an incentive bonus to Mr. Falvo at its option, and the amount of
such bonus is discretionary and will be determined by the Board of Directors.
8
<PAGE>
Mr. Fournier's employment agreement provides for his employment as Vice
President and Senior Loan Officer until July 30, 1996. Beginning August 1, 1995,
and annually thereafter, the agreement automatically extends for one additional
year unless canceled by either party. The agreement will terminate two years
from the date of the last extension. Under the agreement, Mr. Fournier receives
an annual base salary which is fixed by the Board each year. The employment
agreement also provides that the Board of Directors of NECB may pay an incentive
bonus to Mr. Fournier at its own option, and the amount of such bonus is
discretionary and will be determined by the Board of Directors.
Mr. Hall's employment agreement provides for his employment as Vice
President, Chief Financial Officer and Treasurer until July 30, 1996. Beginning
August 1, 1995, and annually thereafter, the agreement automatically extends for
one additional year unless canceled by either party. The agreement will
terminate two years from the date of the last extension. Under the agreement,
Mr. Hall receives an annual base salary which is fixed by the Board each year.
The employment agreement also provides that the Board of Directors of NECB may
pay an incentive bonus to Mr. Hall at its option, and the amount of such bonus
is discretionary and will be determined by the Board of Directors.
OTHER INFORMATION RELATING TO DIRECTORS,
NOMINEES AND EXECUTIVE OFFICERS
Some of the directors and executive officers of NECB, NEBT and EQBK and
companies or organizations with which they are associated, have had, and may
have in the future, banking transactions with NEBT and EQBK in the ordinary
course of NEBT's and EQBK's business. All such loans are currently performing in
accordance with their terms. Total loans to directors and executive officers of
NECB, NEBT and EQBK and associates of such executive officers and directors
outstanding during the past three years were as follows:
December 31, Total Indebtedness Outstanding
- ----------- ------------------------------
1996...................... $4,704,000
1995...................... $6,971,000
1994...................... $3,337,000
Federal banking laws and regulations limit the aggregate amount of
indebtedness which banks may extend to bank insiders. Pursuant to such laws and
regulations, NEBT and EQBK may extend credit to executive officers, directors,
principal shareholders or any related interest of such persons, if the extension
of credit to such persons is in an amount that, when aggregated with the amount
of all outstanding extensions of credit to such individuals, does not exceed
NEBT and EQBK's unimpaired capital and unimpaired surplus. As of December 31,
1996, 1995 and 1994 the aggregate amounts of extensions of credit to insiders
were well below this limit.
NEBT and EQBK have had, and expect to have in the future, banking
transactions in the ordinary course of business with directors, executive
officers and their associates, on the same terms, including interest rates and
collateral on loans, as those prevailing at the same time for comparable
transactions with others and, on terms that do not involve more than the normal
risk of collectibility or present other unfavorable features.
During 1996, the Company retained Dominic J. Ferraina, Chairman of the
Boards of NECB and NEBT, to perform certain legal services.
Charles D. Gersten, a director of NECB and EQBK, is the lessor of the
property leased by EQBK at 1160 Silas Deane Highway, Wethersfield, Connecticut.
EQBK's lease, which commenced in 1989, provides that space in the building will
be leased for ten years with three five-year renewal options. Beginning in 1994,
until the end of the term of the lease, the rent is subject to an annual
increase equal to one-half of the prevailing cost of living rate adjustment.
Rent expense under this lease amounted to $224,576 during 1996. EQBK considers
the lease to have been written on terms comparable to the general market at the
time the lease was entered into and to have terms and conditions as would have
been negotiated with an outside party.
COMPLIANCE WITH 16(A) FILINGS
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires NECB's directors, executive officers, and persons who own more than 10%
of NECB's Common Stock, to file with the Securities and Exchange Commission (the
"SEC") reports of beneficial ownership and changes in beneficial ownership of
NECB Common Stock. Executive officers, directors and greater than 10%
shareholders are required by regulations of the SEC to furnish NECB with copies
of all Section 16(a) forms they file. In 1996, all required reports of
beneficial ownership were timely filed, based upon a review of the copies of
such reports furnished to NECB and representations that no other reports were
required to be filed.
9
<PAGE>
APPOINTMENT OF INDEPENDENT AUDITORS
Shatswell, MacLeod & Company, P.C. ("Shatswell, MacLeod & Company")
independent accountants, has been selected by the Board of Directors to serve as
independent accountants for NECB for the fiscal year ending December 31, 1997.
Although shareholders will vote upon the ratification of the selection of
Shatswell, MacLeod & Company, and the Audit Committee will review the selection
if it is not ratified, the Board of Directors will have the right to continue to
retain Shatswell, MacLeod & Company as independent accountants in any event if
it desires to do so.
A representative of Shatswell, MacLeod & Company will be present at the
Annual Meeting to respond to appropriate questions and may make a statement if
he or she desires to do so.
OTHER MATTERS
The Board of Directors does not know of any other matters which might
come before the Annual Meeting of Shareholders; however, if any other matters
should properly come before the meeting or any adjournment(s) thereof, it is the
intention of the persons named in the accompanying form of proxy to vote thereon
in accordance with their judgment.
SHAREHOLDER PROPOSALS FOR THE 1998 MEETING
Under NECB's Bylaws, for business proposed by a shareholder (other than
director nomination) to be a proper subject for action at an Annual Meeting of
Shareholders, in addition to any requirement of law, the shareholder must timely
request (by Certified Mail--Return Receipt Requested) that the proposal be
included in the Company's proxy statement for the meeting, and such request must
satisfy all of the provisions of Rule 14a-8 under the Securities Exchange Act of
1934, as amended. NECB received no such request from any shareholder with
respect to the 1996 Annual Meeting.
In order to be included in NECB's proxy statement and form of proxy for
the 1998 Annual Meeting of Shareholders and in order to be a proper subject for
action at that meeting, proposals of shareholders intended to be presented to
that meeting must be received at NECB's principal executive offices by December
19, 1997. Shareholder proposals should be directed to the NECB Corporate
Secretary, 176 Broad Street, Windsor, Connecticut 06095.
GENERAL
The cost of solicitation of proxies, including the cost of reimbursing
brokerage houses and other custodians, nominees or fiduciaries for forwarding
proxies and proxy statements to their principals, will be borne by NECB. NECB
files with the Securities and Exchange Commission Annual Reports on Form 10-K. A
copy of the report for 1996 will be furnished, without exhibits and without
charge, to any shareholder sending a written request to Anson C. Hall, Vice
President, Chief Financial Officer and Treasurer, New England Community Bancorp,
Inc., P.O. Box 130, Windsor, CT, 06095.
Submitted by order of the Board of Directors,
/s/ Angelina J. McGillivray
---------------------------------------------
Angelina J. McGillivray
Secretary
Windsor, Connecticut
April 17, 1997
10
<PAGE>
REVOCABLE PROXY
NEW ENGLAND COMMUNITY BANCORP, INC.
/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
THE PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF NEW ENGLAND COMMUNITY BANCORP, INC.
The undersigned holder(s) of the Common Stock of New England Community
Bancorp, Inc. ("NECB" or the "Company") do hereby nominate, constitute and
appoint Tadeus J. Buczkowski and Gary J. DeNino, jointly and severally, proxies
with full power of substitution, for us and in our name, place and stead to vote
all the Common Stock of NECB, standing in our name on its books on March 31,
1997 at the Annual Meeting of its shareholders to be held at the La Renaissance,
53 Prospect Hill Road (Route 5), East Windsor, Connecticut, on May 20, 1997 at
10:00 a.m. or at any adjournment thereof with all the powers the undersigned
would possess if personally present, as specified hereon.
With For All
(1) SET DIRECTORSHIPS AT TEN (10) For hold Except
AND ELECT THE FOLLOWING TEN (10) / / / / / /
PERSONS TO SERVE AS DIRECTORS OF NECB:
Tadeus J. Buczkowski, John C. Carmon, Gary J. DeNino, Frank A. Falvo, Dominic J.
Ferraina, Charles D. Gersten, John R. Harvey, David A. Lentini, Angelina J.
McGillivray and Edward J. Szewczyk.
INSTRUCTION: To withhold authority to vote for any individual nominee, mark "For
All Except" and write that nominee's name in the space provided below.
- --------------------------------------------------------------------------------
(2) APPOINTMENT OF AUDITORS: Proposal 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 New England
Community Bancorp, Inc. for the fiscal year ending December 31, 1997.
For Against Abstain
/ / / / / /
If any other matters are properly brought before the meeting, the persons named
in the proxy or their substitutes are authorized to vote in accordance with
their best judgment.
---------------------------------
Please be sure to sign and date Date
this Proxy in the box below
- --------------------------------------------------------------------
- ----Shareholder sign above-------Co-holder (if any) sign above------
Detach above card, sign, date and mail in postage paid envelope provided.
NEW ENGLAND COMMUNITY BANCORP, INC.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS (1) AND (2).
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN ACCORDANCE WITH THE
SPECIFICATION INDICATED. IF NO SPECIFICATION IS INDICATED, THIS PROXY WILL BE
VOTED "FOR" PROPOSALS (1) AND (2).
THIS PROXY MAY BE REVOKED AT ANY TIME PRIOR TO THE MEETING BY WRITTEN NOTICE TO
THE COMPANY OR MAY BE WITHDRAWN AND YOU MAY VOTE IN PERSON SHOULD YOU ATTEND THE
ANNUAL MEETING.
All joint owners must sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title. If more than one trustee, all must
sign.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
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