SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
August 14, 1998
---------------
(Date of earliest event reported)
New England Community Bancorp, Inc.
-----------------------------------
(Exact name of registrant as specified in its charter)
Delaware
--------
(State or other jurisdiction of incorporation)
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
-----------------------------------------------------------------
(Address of principal executive offices)
(860) 610-3600
--------------
(Registrant's telephone number, including area code)
<PAGE>
Item 2. Acquisition or Disposition of Assets.
This Form 8-K/A amends the Current Report on Form 8-K of New England
Community Bancorp, Inc. ("NECB") dated August 26, 1998 (the "Original Form
8-K"), previously filed with the Securities and Exchange Commission (the
"Commission"). The Original Form 8-K was filed to report the completion of the
acquisition by NECB of Bank of South Windsor ("BSW"), a Connecticut charter bank
and trust company. This Form 8-K/A presents the financial statements and pro
forma financial information.
This Form 8-K/A also amends the Original Form 8-K by reflecting the
completion of the acquisition by NECB of Olde Port Bank & Trust ("OPBT"), a New
Hampshire state-charted bank and trust company. (An Item 5 disclosure on Current
Report on Form 8-K of NECB reporting the completion of this merger was
previously filed with the Commission on July 17, 1998.) The Item 7 (b) (Pro
Forma Financial Statements) of this Current Report reflects the mergers of both
BSW and OPBT (the "Mergers") with NECB.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Businesses Acquired.
Pursuant to the requirements of Rule 3-05 of Regulation S-X, the
following financial statements for BSW (initially filed by BSW with the FDIC on
Quarterly Report of BSW on Form 10-Q for the quarter ended June 30, 1998) are
included in this filing:
1. Balance Sheet as of June 30, 1998 (unaudited) and December
31, 1997.
2. Statements of Income for the six months ended June 30, 1998
and 1997 (unaudited).
3. Statements of Cash Flows for the six months ended June 30,
1998 and 1997 (unaudited).
4. Notes to Unaudited Financial Statements.
5. Audited Financial Statements as of and for the years ended
December 31, 1997, 1996 and 1995. (Audited Financial
Statements were previously filed in, and are incorporated by
reference to, NECB's Registration Statement on Form S-4,
File No. 333-57899).
(b) Pro Forma Financial Statements.
Pursuant to the requirements of Article 11 Regulation S-X, the
following pro forma financial statements for NECB, BSW and OPBT have been
included in this filing. Other pro forma financial statements required by the
above Article and not included in this filing were previously filed in, and are
hereby incorporated by reference to, NECB's Registration Statement on Form S-4,
File No. 333-57899.
1. Pro Forma Combined Condensed Consolidated Balance Sheet as
of June 30, 1998 (unaudited).
2. Notes to Pro Forma Balance Sheet.
3. Pro Forma Combined Condensed Consolidated Income Statement
for the six months ended June 30, 1998 (unaudited).
4 Notes to the Pro Forma Income Statements.
(c) Exhibits--None
<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 hereunto duly authorized.
NEW ENGLAND COMMUNITY BANCORP, INC.
Date: October 13, 1998 By: /s/ Anson C. Hall
--------------------------
Anson C. Hall
Vice President and Treasurer
(principal financial officer)
<PAGE>
Item 7(a)
Financial Statements of Business Acquired
<TABLE>
<CAPTION>
BANK OF SOUTH WINDSOR
BALANCE SHEETS
June 30, 1998 December 31,
(Amounts in thousands) (Unaudited) 1997
=================================================================================================================
ASSETS:
<S> <C> <C>
Cash and due from banks $ 6,477 $ 7,985
Federal funds sold 6,000 1,900
----------- -----------
Cash and cash equivalents 12,477 9,885
Securities held-to-maturity 500 1,000
Securities available-for-sale 43,394 41,907
Federal Home Loan Bank stock 1,295 1,295
Loans outstanding 95,571 99,947
Less: allowance for
possible loan losses (2,254) (2,156)
----------- -----------
Net loans 93,317 97,791
Accrued interest receivable 965 1,085
Premises and equipment 938 1,009
Other real estate owned 0 212
Other assets 1,321 939
----------- -----------
Total Assets $ 154,207 $ 155,123
=========== ===========
Liabilities:
Deposits:
Noninterest bearing $ 35,674 $ 29,989
Interest bearing 93,819 102,914
----------- -----------
Total deposits 129,493 132,903
Short-term borrowings 4,340 2,110
Long-term borrowings 8,500 8,500
Other liabilities 414 773
----------- -----------
Total Liabilities 142,747 144,286
Shareholders' Equity:
Common Stock 4,846 4,791
Additional paid-in capital 3,844 3,799
Retained Earnings 2,613 2,049
Net unrealized loss on securities
available-for-sale 157 198
----------- -----------
Total Shareholders' Equity 11,460 10,837
----------- -----------
Total Liabilities & Shareholders' Equity $ 154,207 $ 155,123
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
<TABLE>
<CAPTION>
BANK OF SOUTH WINDSOR
INCOME STATEMENTS
(Unaudited)
(thousands of dollars; except per share data)
Six months ended June 30, 1998 1997
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INTEREST INCOME:
Loans, including fees $4,548 $4,371
Investment Securities 1,360 1,087
Federal funds sold and other interest 77 55
------- -------
Total interest income 5,985 5,513
INTEREST EXPENSE:
Deposits 1,895 1,893
Borrowed funds 323 214
------- -------
Total interest expense 2,218 2,107
Net interest income 3,767 3,406
Provision for possible loan losses 180 210
------- -------
Net interest income after provision for possible loan losses 3,587 3,196
Noninterest income:
Service charges, fees and commissions 275 358
Investment securities losses, net 13 44
Gain on the sales of loans, net 0 0
Other 121 206
------- -------
Total noninterest income 409 608
NONINTEREST EXPENSE:
Salaries and employee benefits 1,573 1,475
Occupancy 319 328
Furniture and equipment 150 168
Outside services 429 454
Postage and supplies 143 125
Insurance and assessments 50 66
Losses (gains), writedowns, expenses - other real estate owned (142) 44
Acquisition expense 104 0
Other 346 307
------- -------
Total noninterest expense 2,972 2,967
Income before taxes 1,024 837
Income taxes 419 335
------- -------
Net Income $ 605 $ 502
======= =======
Net income per share--Basic $ 0.63 $ 0.53
Net income per share--Diluted 0.60 0.53
Weighted average shares outstanding of common stock--Basic 959 941
Weighted average shares outstanding of common stock--Diluted 1,004 941
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
BANK OF SOUTH WINDSOR
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
(thousands of dollars)
Six Months Ended June 30, 1998 1997
- ------------------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 605 $ 502
Adjustment for noncash charges (credits):
Provision for depreciation and amortization 146 149
Losses from sale or disposal and provisions to reduce the carrying value
of other real estate owned, net (124) (15)
Securities losses (gains), net (13) (44)
Accretion of discounts and amortization of premiums on bonds, net 486 8
Provision for possible loan losses 180 210
(Increase) decrease in accrued interest income and other assets, net (405) (163)
(Decrease) increase in accrued interest payable and other liabilities, net (472) 289
-------- --------
Net cash provided by operating activities 403 936
-------- --------
FINANCING ACTIVITIES:
Increase (decrease) in non-interest bearing accounts 5,685 2,111
Increase (decrease) in interest-bearing accounts (9,095) 11,560
Increase (decrease) in short-term borrowings 2,230 1,204
Increase (decrease) in long-term borrowings 0 5,250
Proceeds from issuance of common stock and/or warrants 100
Cash dividends paid (96) (56)
-------- --------
Net cash used for financing activities (1,176) 20,069
-------- --------
INVESTING ACTIVITIES:
Loans originated, net of principal collections 4,200 (2,942)
Purchases of securities available-for-sale (11,671) (21,235)
Proceeds from sales of securities available-for-sale 6,758 5,880
Proceeds from maturities of securities available-for-sale 3,282 1,205
Proceeds from maturities of securities held-to-maturity 500
Proceeds from sales of other real estate owned 337 1,141
Purchases of premises and equipment, net (41) (72)
-------- --------
Net cash provided by (used for) investing activities 3,365 (16,023)
-------- --------
Increase (decrease) in cash and cash equivalents 2,592 4,982
-------- --------
Cash and cash equivalents, beginning of period 9,885 8,593
-------- --------
Cash and cash equivalents, end of period $ 12,477 $ 13,575
======== ========
Schedule of noncash investing and financing activities:
Loans charged off, net of recoveries 82 206
Income tax paid 926 65
Interest paid 2,183 2,088
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
Bank of South Windsor
Notes to Financial Statements
June 30, 1998 (Unaudited)
Note 1--Basis of Presentation
BSW (the "Bank") is a state-chartered bank organized under the laws of
the State of Connecticut engaged in the commercial banking business. Based in
South Windsor, Connecticut the Bank operates two (2) branch banking offices
located in East Hartford and Vernon, Connecticut. Its primary source of revenue
is providing loans to customers, who are predominantly small- to mid-sized
businesses as well as individuals generally residing within the Bank's service
area.
The balance sheet as of June 30, 1998, the statements of operations for
the three and six month periods ended June 30, 1998 and 1997, and the statements
of shareholders' equity and cash flows for the six month periods ended June 30,
1998 and 1997 have been prepared by the Bank without audit. Certain amounts for
prior periods have been reclassified to conform with the current period
presentation.
In the opinion of management, the financial statements have been
prepared in conformity with generally accepted accounting principles for interim
financial statements and include all adjustments necessary to present fairly the
financial position of the Bank as of June 30, 1998, the results of operations
for the three and six month periods ended June 30, 1998 and 1997, and the
changes in shareholders' equity and results of cash flows for the six month
periods ended June 30, 1998 and 1997. Results of operations for the three and
six month periods ended June 30, 1998 are not necessarily indicative of results
for any other period.
The balance sheet as of December 31, 1997, which has been included for
comparative purposes, has been condensed from the audited statements for the
year then ended. Certain information and note disclosures normally included in
financial statements presented in accordance with generally accepted accounting
principles have been condensed or omitted. These financial statements should be
read in conjunction with the financial statements and notes thereto included in
the Bank's annual report on Form 10-K for the year ended December 31, 1997.
Note 2--Merger Agreement
On March 19, 1998, the Bank announced a definitive agreement with New
England Community Bancorp, Inc. ("NECB") to merge the Bank into and with New
England Bank & Trust Company, a wholly owned subsidiary of NECB. Under the
proposed merger, which is subject to various conditions, each share of the
Bank's common stock will convert into 1.3204 shares of NECB common stock,
subject to adjustment under certain circumstances. In connection with the merger
agreement, the Bank and NECB entered into a stock option agreement dated March
19, 1998 pursuant to which NECB will have an option to purchase 215,000 shares
of the Bank's common stock at $12.00 per share, which option is exercisable in
certain circumstances. On August 10, 1998, the Bank's shareholders approved the
merger. Pending the expected approval of the State of Connecticut Department of
Banking, management anticipates that the effective date of the transaction will
be August 14, 1998.
Note 3--Securities
<TABLE>
<CAPTION>
June 30, 1998 December 31, 1997
- -----------------------------------------------------------------------------------------------------
Amortized Amortized
Cost Fair Cost Fair
(Amounts in thousands) Basis Value Basis Value
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Debt securities issued by the U.S. Treasury
and other U.S. government agencies $11,692 $11,846 $17,954 $18,105
Debt securities issued by states and
political subdivisions of the states 7,101 7,093 3,766 3,774
Mortgage-backed securities 24,054 24,182 19,300 19,508
Other debt securities 300 273 552 520
------- ------- ------- -------
$43,147 $43,394 $41,572 $41,907
======= ======= ======= =======
</TABLE>
<PAGE>
Note 4--Loans
(Amounts in thousands)
June 30, December 31,
1998 1997
- --------------------------------------------------------------------------------
Commercial and financial $ 14,823 $ 15,523
Real estate:
Construction 4,035 3,112
Residential 40,774 42,894
Commercial 32,070 34,046
Consumer 3,869 4,372
----------- -----------
Gross loans outstanding $ 95,571 $ 99,947
=========== ===========
Note 5--Reserves for Loan and Other
Real Estate Owned Losses
Changes in the reserves were:
Six Months Ended
June 30,
------------------------
1998 1997
- ------------------------------------------------------------------------------
Reserve for loan losses:
Balance, beginning of year: $ 2,156 $ 1,973
Provision charged to expense 180 210
Loan charge-offs (176) (216)
Recoveries 94 10
----------- -----------
Balance, end of period $ 2,254 $ 1,977
=========== ===========
Reserve for other real estate owned losses:
Balance, beginning of year: $ 32 $ 50
Provision (reversed) charged to expense (32) 30
Write-downs (40)
----------- -----------
Balance, end of period $ 0 $ 40
=========== ===========
Note 6--Per Common Share Data
The Bank adopted Statement of Financial Accounting Standards No. 128,
"Earnings per Share" (SFAS 128), effective December 15, 1997. Upon adoption of
SFAS 128, all prior period earnings per share data were restated to conform with
the new statement. The Statement replaced the presentation of primary earnings
per share with the presentation of basic earnings per share. It also requires
the presentation of basic and diluted earnings per share in the statements of
operations. Basic earnings per common share were computed by dividing net income
by the weighted average number of shares of common stock outstanding during the
period (959,018 shares and 941,239 shares for the six month periods ended June
30, 1998 and 1997, respectively, and 959,740 and 941,239 for the three month
periods ended June 30, 1998 and 1997, respectively). Diluted earnings per common
share were computed by dividing net income by the weighted average number of
shares of common stock outstanding during the period, increased by the number of
shares issuable on the exercise of stock options, if dilutive, based upon the
treasury stock method. The effect of the stock options in 1998 was to increase
shares used in the diluted earnings per share calculation by 44,967 shares and
47,297 shares for the six and three month periods ended June 30, 1998,
respectively. The effect of the stock options outstanding in 1997 was
anti-dilutive and therefore not reflected in the computation of per common share
amounts.
Note 7--Comprehensive Income
The Bank adopted Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income" (SFAS 130) effective January 1, 1998. This
Statement established standards for separately reporting comprehensive income
and its components (revenues, expenses, gains and losses) in a full set of
general-purpose financial statements. Components of comprehensive income
represent changes in equity resulting from transactions and other events and
circumstances from nonowner sources. This Statement is effective for fiscal
years beginning after December 15, 1997, and
<PAGE>
reclassification of financial statements for earlier periods provided for
comparative purposes is required. Comprehensive income for the periods ended
June 30, 1998 and 1997 is as follows:
June 30,
-----------------
1998 1997
- --------------------------------------------------------------------------------
Net income $ 605 $ 502
Other comprehensive income, net of tax
Unrealized gains (losses) on securities:
Change in unrealized holding gains (losses)
Arising during the period (28) 127
Less: reclassification adjustment for gains
Included in net income (13) (44)
----- -----
Comprehensive income $ 564 $ 585
===== =====
Item 7(b)
Unaudited Pro Forma Financial Information
The following unaudited Pro Forma Combined Balance Sheets as of June
30, 1998 combine the historical consolidated balance sheet of NECB, BSW and OPBT
giving effect to the Mergers and using the exchange ratio of 1.3539 for BSW and
8.6674 for OPBT, accounted for as a pooling of interests, as if the Mergers were
consummated as of such date, and the pro forma adjustments described in the
notes thereto.
The following unaudited Pro Forma Combined Income Statements for the
year to date period ending on June 30, 1998 combine the historical consolidated
statements of income of NECB, BSW and OPBT giving effect to the Mergers and the
above exchange ratios, accounted for as a pooling of interests, as if the
Mergers were consummated as of December 31, 1997, and the pro forma adjustments
described in the notes thereto.
The unaudited Pro Forma Financial Information is not necessarily
indicative of the financial condition or results of operations which would have
been achieved had the Mergers been consummated as of the beginning of the period
for which such data is presented and should not be construed as being
representative of future periods.
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA COMBINED BALANCE SHEETS (UNAUDITED)
As of June 30, 1998
NECB BSW OPBT Proforma Pro Forma
(000's omitted except per share data) (Historical) (Historical) Historical Adjustments Results
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash & due from banks $ 36,669 $ 6,477 $ 3,464 $ 46,610
Federal funds sold 6,600 6,000 362 12,962
Investments 128,414 45,189 12,496 $ (1,015) (a)
(344) (b) 184,740
Mortgages held-for-sale 8,622 8,622
Loans outstanding 400,356 95,571 31,799 527,726
Less allowance for loan losses (7,186) (2,254) (728) (10,168)
--------- --------- --------- --------- ---------
Net loans 393,170 93,317 31,071 517,558
Premises & equipment 11,167 938 1,175 13,280
OREO 1,624 114 1,738
Goodwill 5,042 5,042
Other assets 11,114 2,286 571 13,971
--------- --------- --------- --------- ---------
Total Assets $ 602,422 $ 154,207 $ 49,253 $ (1,359) $ 804,523
========= ========= ========= ========= =========
Deposits:
Noninterest-bearing $ 101,425 $ 35,674 $ 9,712 $ 146,811
Interest-bearing 401,586 93,819 31,735 527,140
--------- --------- --------- --------- ---------
Total Deposits 503,011 129,493 41,447 673,951
Short-term borrowings 18,617 4,340 1,049 24,006
Long-Term Debt 19,448 8,500 1,650 29,598
Other Liabilities 4,727 414 210 2,627 (c)
(138) (b) 7,630
--------- --------- --------- --------- ---------
Total Liabilities 545,803 142,747 44,356 2,847 735,395
Equity
Common stock 517 4,846 67 (4,729) (d) 701
Additional Paid-in-Capital 51,165 3,844 2,789 4,729 (d) 62,527
Retained earnings 3,966 2,613 1,994 (2,627) (c)
(1,015) (a) 4,931
Unrealized losses on securities
available for sale, net 971 157 47 (206) (b) 969
--------- --------- --------- --------- ---------
Total Equity 56,619 11,460 4,897 (4,206) 69,128
--------- --------- --------- --------- ---------
Total Liabilities & Equity $ 602,422 $ 154,207 $ 49,253 $ (1,359) $ 804,523
========= ========= ========= ========= =========
Shares outstanding 5,172 969 67 798 (e) 7,006
Book value/per share 10.95 11.82 72.59 9.87
See "Notes to Pro Forma Combined Balance Sheets (Unaudited)"
</TABLE>
<PAGE>
Notes to Pro Forma Combined Balance Sheets (Unaudited)
<TABLE>
<CAPTION>
(a) Retirement, at cost, of BSW Common Stock owned by NECB.
(b) Elimination of valuation allowance of BSW Common Stock (difference between
cost basis and market value at June 30, 1998) with offsetting entries to:
<S> <C> <C> <C> <C>
Other liabilities (deferred tax liability)............................ $ 138
Unrealized gain on securities available for sale...................... 206
-------
$ 344
=======
(c) Estimated expenses related to offering of NECB Common Stock and
restructuring expenses--net of related tax benefit.
(d) Difference in par value of BSW and OPBT common stock and NECB common stock
issued:
Elimination of par value of BSW Common Stock.......................... $ (4,846)
Elimination of par value of OPBT Common Stock......................... (67)
Increase to reflect par value of NECB issued.......................... 186
---------
Total............................................................... $ 4,727
(e) Pro forma number of common shares outstanding:
BSW common stock outstanding at June 30, 1998 969,289
Less: BSW shares owned by NECB 47,264
-------
Net shares to be exchanged 922,025
BSW Exchange ratio 1.3539
NECB common stock issued in the Reorganization 1,248,330
Less: BSW Shares outstanding 969,289
---------
Net Change in NECB common stock outstanding 279,041
-------
OPBT common stock outstanding at June 30, 1998 67,465
OPBT Exchange ratio 8.6674
NECB common stock exchanged in the Reorganization 584,746
OPBT options converted to NECB common stock 1,240
---------
Total NECB common stock issued in Reorganization 585,986
Less: OPBT shares outstanding 67,465
---------
Net change in NECB common stock outstanding 518,521
-------
797,562
=======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA COMBINED INCOME STATEMENTS (UNAUDITED)
Six Months Ended June 30 1998
NECB BSW OPBT Pro Forma
(000's omitted except per share data) (Historical) (Historical) (Historical) Results
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income $ 22,163 $ 5,985 $ 1,973 $ 30,121
Interest expense 8,446 2,218 856 11,520
--------- --------- --------- ---------
Net interest income 13,717 3,767 1,117 18,601
Provision for loan losses 562 180 63 805
Noninterest revenue
Service charges, fees and commissions 1,541 275 86 1,902
Investment securities gains, net 1,403 13 1 1,417
Gain on sales of loans, net 1,367 1,367
Other 99 121 77 297
--------- --------- --------- ---------
Total 4,410 409 164 4,983
Noninterest expense
Salaries and employee benefits 5,860 1,573 374 7,807
Occupancy 1,042 319 50 1,411
Furniture and equipment 772 150 65 987
Outside services 541 429 28 998
Postage and supplies 445 143 24 612
Insurance and assessments 166 50 11 227
Losses (gains), writedowns and expenses on other real estate 27 (142) 1 (114)
Goodwill amortization 195 195
Other 2,051 450 319 2,820
--------- --------- --------- ---------
Total 11,099 2,972 872 14,943
Income before taxes 6,466 1,024 346 7,836
--------- --------- --------- ---------
Taxes 2,622 419 170 3,211
Net Income $ 3,844 $ 605 $ 176 $ 4,625
========= ========= ========= =========
Net income per share--Basic 0.74 0.63 2.61 0.66
Net income per share--Diluted 0.73 0.60 2.61 0.66
Weighted average shares of common shares--Basic 5,167 959 67 7,050 (a)
Weighted average shares of common shares--Diluted 5,301 1,004 67 7,245 (b)
See "Notes to Unaudited Pro Forma Combined Consolidated Income Statements"
</TABLE>
<PAGE>
NOTES TO PRO FORMA COMBINED INCOME STATEMENTS (UNAUDITED)
(a) Certain historical data of BSW and OPBT have been reclassified on a pro
forma basis to conform to NECB's classifications.
(b) The pro forma adjustment to shares outstanding is based upon historical
shares outstanding of NECB plus historical shares outstanding of BSW and
OPBT multiplied by the conversion ratio of 1.3539 and 8.6674 for BSW and
OPBT, respectively, less the historical shares of BSW and OPBT outstanding.
