SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_________________________
FORM 11-K
Annual Report
Pursuant to section 15(D) of the
securities exchange act of 1934
(Mark One):
(X) ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996].
For the fiscal year ended December 31, 1998
or
( ) TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED].
For the transition period from ______ to ______
Commission File Number 0-145550
A. Full title of the plan and address of the plan, if different from that
of the issuer named below: New England Community Bancorp, Inc. 401(k) Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office: New England Community Bancorp,
Inc., 176 Broad Street, P.O. Box 130, Windsor, CT 06095
<PAGE>
NEW ENGLAND COMMUNITY BANCORP, INC.
FINANCIAL STATEMENTS AND EXHIBITS
TABLE OF CONTENTS
PAGE
(A) FINANCIAL STATEMENTS
INDEPENDENT AUDITORS' REPORT ......................................3
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS.....................4
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
PARTICIPANT DIRECTED FOR THE YEAR ENDED DECEMBER 31, 1998 ......5
NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED
DECEMBER 31, 1998 ..............................................6
LINE ITEM 27A - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1998........................................11
LINE ITEM 27D - SCHEDULE OF REPORTABLE TRANSACTIONS FOR THE
YEAR ENDED DECEMBER 31, 1998...................................11
(B) EXHIBITS
EXHIBIT NO. 23 - CONSENT OF SHATSWELL, MACLEOD & COMPANY, P.C.
<PAGE>
SHATSWELL, MACLEOD & COMPANY, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
83 PINE STREET
WEST PEABODY, MASSACHUSETTS 01960-3635
TELEPHONE (978) 535-0206
FACSIMILE (978) 535-9908
TO THE BOARD OF TRUSTEES OF
NEW ENGLAND COMMUNITY BANCORP, INC.
401(K) PLAN
INDEPENDENT AUDITORS' REPORT
We are engaged to audit the statements of net assets available for benefits
of the New England Community Bancorp, Inc. 401(k) Plan as of December 31,
1998 and 1997, the statement of changes in net assets available for
benefits for the year ended December 31, 1998 and the supplemental
schedules as of December 31, 1998 and for the year then ended. These
financial statements and schedules are the responsibility of the Plan's
management.
As permitted by 29 CFR 2520.103-8 of the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement
Income Security Act of 1974, the plan administrator instructed us not to
perform, and we did not perform, any auditing procedures with respect to
the information summarized in Note 5, which was certified by the Principal
Mutual Life Insurance Company, the custodian of the Plan as of December 31,
1998, except for comparing such information with the related information
included in the financial statements and supplemental schedules. We have
been informed by the plan administrator that the custodian holds the Plan's
investment assets and executes investment transactions. The plan
administrator has obtained a certification from the custodian, as of
December 31, 1998 and 1997 and for the year ended December 31, 1998, that
the information provided to the plan administrator by the custodian is
complete and accurate.
Because of the significance of the information that we did not audit, as
discussed in the preceding paragraph, we are unable to express, and do not
express, an opinion on the accompanying financial statements and
supplemental schedules, as of December 31, 1998 and 1997 and the year ended
December 31, 1998, taken as a whole. The form and content of the
information included in the financial statements and supplemental
schedules, other than that derived from the information certified by the
custodian, have been audited by us in accordance with generally accepted
auditing standards and, in our opinion, are presented in compliance with
the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974.
SHATSWELL, MacLEOD & COMPANY, P.C.
West Peabody, Massachusetts
August 18, 1999
<PAGE>
NEW ENGLAND COMMUNITY BANCORP, INC.
401(K) PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
DECEMBER 31,
1998 1997
<S> <C> <C>
ASSETS:
Investment contract with the Principal Mutual Life
Insurance
Company at fair value:
Guaranteed Interest Accounts (Note 4) $ 303,431 $ 239,173
Pooled Separate accounts
Money Market Account 167,530 236,338
Government Securities Account 87,640 54,416
Bond & Mortgage Account 150,565 80,408
Bond Emphasis Balanced Account 150,225 64,944
Stock Emphasis Balanced Account 206,022 148,759
Stock Index 500 Account 556,842 322,237
U.S. Stock Account 353,562 256,472
Medium Company Value Account 231,666 149,228
Medium Company Blend Account 206,387 124,429
Small Company Blend Account 303,880 218,791
International Stock Account 205,010 126,959
Real Estate Account 41,637 7,054
Participant Loans 22,106 22,283
Other assets 175
--------- ---------
TOTAL ASSETS 2,986,678 2,051,491
--------- ---------
LIABILITIES:
Other Liabilities 5,487
--------- ---------
TOTAL LIABILITIES 5,487
--------- ---------
NET ASSETS AVAILABLE FOR BENEFITS $2,981,191 $2,051,491
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
NEW ENGLAND COMMUNITY BANCORP, INC.
401(k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
PARTICIPANT DIRECTED FOR THE YEAR ENDED DECEMBER 31, 1998
Bond Stock Stock
Guaranteed Money Government Bond & Emphasis Emphasis Index U.S.
Interest Market Securities Mortgage Balanced Balanced 500 Stock
Accounts Account Account Account Account Account Account Account
-------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS
Net investment earnings $ 13,762 $ 12,663 $ 5,023 $ 5,975 $ 10,484 $ 21,767 $109,212 $ 44,312
Contributions:
Employer 19,602 13,826 9,800 11,064 11,150 15,904 37,980 23,132
Participants 46,123 23,698 16,139 21,106 23,352 25,024 80,167 41,506
Rollovers 24,606 311 5,346 1,842 4,385 1,248 4,395 3,483
Transfer (Note 2) 69,313 70,035 5,836 171 14,123 25,759 51,862 51,723
------- ------- ------- ------- ------- ------- ------- -------
TOTAL ADDITIONS 173,406 120,533 42,144 40,158 63,494 89,702 283,616 164,156
------- ------- ------- ------- ------- ------- ------- -------
DEDUCTIONS FROM NET ASSETS
Benefits to participants 57,633 146,396 8,108 11,332 16,738 41,694 65,044 43,672
Refunds 133 169
Administrative 150 361 16 38 20 74 67 81
expenses/fees
------- ------- ------- ------- ------- ------- ------- -------
TOTAL DEDUCTIONS 57,783 146,757 8,124 11,503 16,758 41,768 65,111 43,922
------- ------- ------- ------- ------- ------- ------- -------
Net increase (decrease) prior
to transfers and 115,623 (26,224) 34,020 28,655 46,736 47,934 218,505 120,234
loans
Interfund transfers (52,222) (42,432) (796) 40,961 38,672 8,861 15,468 (17,542)
Net change in loans to 857 (152) 541 (127) 468 632 (5,602)
------- ------- ------- ------- ------- ------- ------- -------
participants
NET INCREASE (DECREASE) 64,258 (68,808) 33,224 70,157 85,281 57,263 234,605 97,090
Net assets available for
benefits:
Beginning of year 239,173 236,338 54,416 80,408 64,944 148,759 322,237 256,472
------- ------- ------- ------- ------- ------- ------- -------
End of year $ 303,431 $167,530 $ 87,640 $150,565 $150,225 $206,022 $556,842 $353,562
------- ------- ------- ------- ------- ------- ------- -------
</TABLE>
<TABLE>
<CAPTION>
NEW ENGLAND COMMUNITY BANCORP, INC.
401(k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
PARTICIPANT DIRECTED FOR THE YEAR ENDED DECEMBER 31, 1998
Medium Medium Small
Company Company Company International Real
Value Blend Blend Stock Estate Participant
Account Account Account Account Account Loans Other Total
------- ------- ------- ------- ------- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS
Net investment $ 5,468 $ 14,340 $(18,288) $ 15,734 $ 2,790 $ 1,834 $ $ 245,076
earnings
Contributions:
Employer 22,008 17,326 35,771 22,329 2,958 242,850
Participants 36,005 31,009 58,616 32,574 5,485 440,804
Rollovers 268 1,472 4,910 804 536 53,606
Transfer (Note 2) 30,717 26,049 46,449 23,426 5,631 1,033 422,127
------- ------- ------- ------- ------- ------- ------- ---------
TOTAL ADDITIONS 94,466 90,196 127,458 94,867 17,400 2,867 1,404,463
------- ------- ------- ------- ------- ------- ------- ---------
DEDUCTIONS FROM NET
ASSETS
Benefits to 16,290 7,405 27,049 22,371 1,639 2,624 467,995
participants
Refunds 5,487 5,789
Administrative 23 19 52 61 17 979
------- ------- ------- ------- ------- ------- ------- ---------
expenses/fees
TOTAL DEDUCTIONS 16,313 7,424 27,101 22,432 1,656 2,624 5,487 474,763
------- ------- ------- ------- ------- ------- ------- ---------
Net increase (decrease)
prior to 78,153 82,772 100,357 72,435 15,744 243 (5,487) 929,700
transfers and loans
Interfund transfers 4,285 (2,080) (15,930) 3,589 19,166
Net change in loans to 1,266 662 2,027 (327) (420) 175
------- ------- ------- ------- ------- ------- ------- ---------
participants
NET INCREASE (DECREASE) 82,438 81,958 85,089 78,051 34,583 (177) (5,312) 929,700
Net assets available
for benefits:
Beginning of year 149,228 $124,429 218,791 126,959 7,054 22,283 2,051,491
------- ------- ------- ------- ------- ------- ------- ---------
End of year $231,666 $206,387 $303,880 $205,010 $41,637 $22,106 $(5,312) $2,981,191
------- ------- ------- ------- ------- ------- ------- ---------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
NEW ENGLAND COMMUNITY BANCORP, INC.
401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1998
1. DESCRIPTION OF PLAN AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The New England Community Bancorp, Inc. 401(k) Plan (Plan) is a
defined contribution plan that is available to all employees of New
England Community Bancorp, Inc. who have one year of entry service and
are age twenty-one or older. The plan is subject to the provisions of
the Employee Retirement Income Security Act of 1974 (ERISA). The plan
administrator is New England Community Bancorp, Inc. (Company).
METHOD OF ACCOUNTING - The financial statements of the Plan have been
prepared on the accrual basis of accounting.
PARTICIPANT ACCOUNT - Each participant's account is credited with the
participant's contribution, a proportionate allocation of any Company
contribution and plan earnings. Participants may contribute up to 15
percent of their earnings.
EMPLOYER CONTRIBUTIONS - 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%.
VESTING - Both employee and Company matches immediately vest in the
Plan. Additionally, funds which were not previously vested in the
Money Purchase Pension Plan vested with the transfer into the Plan.
PAYMENT OF BENEFITS - Upon termination of employment, the amounts
payable to a participant that are $3,500 or less will be distributed
in a lump sum payment. Benefits payable that exceed $3,500 can be
distributed in a lump sum or at the option of the participant can be
used to purchase an immediate or deferred annuity, remain in this plan
or be rolled over into another qualified plan.
INVESTMENTS - As described in Note 3, Principal Mutual Life Insurance
Company (Principal Mutual) provides numerous investment accounts and
owns all of the assets in the pooled investment accounts.
Participants are allowed to select their own investments from among
these investment choices and can change their investment elections
daily.
ADMINISTRATIVE EXPENSES - Transaction costs are paid out of the assets
of the Plan. Administrative expenses of the Plan are paid by the
Company.
INCOME TAX STATUS - The Plan obtained its latest determination letter
in May 1997, in which the Internal Revenue Service stated that the
Plan, as then designed, was in compliance with the applicable
requirements of the Internal Revenue Code. The plan administrator
believes that the Plan is currently designed and being operated in
compliance with the applicable requirements of the Internal Revenue
Code, and that the plan was qualified and the related trust was tax
exempt as of the date of the financial statements.
PARTICIPANT LOANS - Loans made to Plan members are made according to
specific loan provisions in the Plan. When a member takes a loan from
the assets of the plan, the loan is an asset of the Plan (held by the
trustee of the Plan). The trustee holds the executed note and pledge
of security. When loan payments are made, the amount "transfers" from
the member's loan account into the contract using the current
investment direction.
2. MERGER
On August 14, 1998 the Bank of South Windsor was acquired by New
England Bank & Trust Company, a subsidiary of New England Community
Bancorp, Inc. Effective as of the date of the acquisition the Bank of
South Windsor 401(k) Retirement Plan (BSW Plan) was merged into the
Plan. The Plan was amended to provide that the merger of these plans
occur on August 14, 1998 and that all benefits under the Plan be equal
to the benefits in the pre-merger BSW Plan. As of a result of this
merger, fifty BSW Plan participants transferred 401(k) accounts
totalling $422,127 as of October 20, 1998 into the Plan.
3. INVESTMENTS
GENERAL FUND ACCOUNT - Principal Mutual's Guaranteed Interest Accounts
provide a guaranteed interest rate for a specified period of time as
determined, or allowed, by the Plan. The rate credited is the rate in
effect on the day when each deposit is directed to the Account. To
simplify reporting to Plan members, all rates credited during the 12-
month "deposit year" are averaged into a single composite rate.
The Guaranteed Interest Accounts are a part of Principal Mutual
General Account. The underlying assets in the General Account are
invested mostly in private placement bonds, commercial mortgages, and
mortgage-backed securities.
To comply with SOP 94-4 the General Fund Account is reported at fair
value. The fair value of the account is the value paid any time funds
are withdrawn prior to their maturity and reflects the surrender
charge, if applicable according to the terms of the contract.
POOLED SEPARATE ACCOUNTS - The value of each Separate Account
(Account) is determined at the close of each business day based on
fair value. The value of the Account is expressed in "units". The
"unit value" is the dollar value of one unit and is determined at the
close of each business day by dividing the value of the entire Account
by the total number of units in the Account.
Contributions to the Account increase the number of units.
Withdrawals from the Account decrease the number of units. The
increase or decrease in number of units is determined by dividing the
amount of the contribution or withdrawal by the unit value for the day
the transaction is made. The value of a participant's account on any
date is determined by multiplying the number of units held by the unit
value at the close of business day. Since these Accounts are separate
accounts (not part of the General Account), realized and unrealized
gains and losses from the assets in the Accounts are credited to or
charged against the Account without regard to other income, gains or
losses of Principal Mutual Life Insurance Company.
MONEY MARKET ACCOUNT. The Money Market Account is a pooled
investment account which invests in money market instruments.
GOVERNMENT SECURITIES ACCOUNT. The Government Securities Account
is a pooled investment account invested in obligations issued or
guaranteed by the U.S. Government or its agencies.
BOND & MORTGAGE ACCOUNT. The Bond & Mortgage Account is a pooled
investment account invested in loans to companies, most of which
are bonds and commercial mortgages with five to ten year
maturities.
BOND EMPHASIS BALANCED ACCOUNT. The Bond Emphasis Balanced Account
is a pooled investment account invested in other separate accounts
of Principal Mutual Life Insurance Company, weighted toward fixed
income accounts.
STOCK EMPHASIS BALANCED ACCOUNT. The Stock Emphasis Account is a
pooled investment account invested in other separate accounts of
Principal Mutual Life Insurance Company, weighted toward equity
accounts.
STOCK INDEX 500 ACCOUNT. The Stock Index 500 Account is a pooled
investment account invested primarily in common stocks of those
firms included in the Standard & Poor's 500 Stock Index.
U.S. STOCK ACCOUNT. The U.S. Stock Account is a pooled investment
account invested primarily in common stocks of U.S. securities.
MEDIUM COMPANY VALUE ACCOUNT. The Medium Company Value Account is
a pooled investment account invested in common stocks of medium
sized companies that are undervalued at the time of purchase and
whose earnings are expected to grow at above average rates.
MEDIUM COMPANY BLEND ACCOUNT. The Medium Company Blend Account is
a pooled investment account invested in common stocks of medium
sized companies including both growth and value stocks.
SMALL COMPANY BLEND ACCOUNT. The Small Company Blend Account is a
pooled investment account invested in common stocks of small
companies whose long term earnings are expected to grow at above
average rates
INTERNATIONAL STOCK ACCOUNT. The International Stock Account is a
pooled investment account invested primarily in common stocks of
corporations located outside the United States, mainly in Western
Europe and Asia. The account may also occasionally invest in
preferred stocks or convertible bonds of these corporations.
Account assets may also be invested in U.S. or non-U.S. securities
other than stocks or retained in cash.
REAL ESTATE ACCOUNT. The Real Estate Account is a pooled
investment account invested in developed, rent-producing properties
such as warehouses, office buildings and retail properties.
4. GUARANTEED INTEREST ACCOUNTS
The Guaranteed Interest Accounts are investments in Principal Mutual
Life Insurance Company under Annuity Contract 4-0129.5. The accounts
are reported at fair value as follows at December 31, 1998:
<TABLE>
<CAPTION>
Weighted
December 31 Contract Fair Average
Term Maturity Value Value Interest Rate
---- -------- ----- ----- --------------
<S> <C> <C> <C> <C>
2 Year 1998 $ 10,548 $ 10,548 5.24%
3 Year 1998 18,941 18,941 5.80
5 Year 1998 3,618 3,618 6.91
2 Year 1999 42,079 41,897 3.96
3 Year 1999 17,421 17,421 5.73
5 Year 1999 3,495 3,495 6.52
3 Year 2000 28,132 28,123 4.87
5 Year 2000 81,551 81,551 6.10
5 Year 2001 32,081 32,081 5.94
5 Year 2002 65,763 65,756 5.01
------- -------
$303,629 $303,431 5.38
======= =======
</TABLE>
5. INFORMATION CERTIFIED BY THE CUSTODIAN
The financial statements and supplemental schedules as of December 31,
1998 and the year then ended have been prepared using certain
unaudited information which was provided to the Company and was
certified as being complete and accurate by the custodian, Principal
Mutual Life Insurance Company.
The following is a summary of the information in the Plan's financial
statements and supplemental schedules that was prepared by the Plan's
custodian and furnished to the Plan administrator:
<TABLE>
<CAPTION>
Total assets at fair value as of December 31, 1998 $2,986,678
=========
Year Ended
December 31, 1998
-----------------
<S> <C>
Contributions received (cash basis) $ 737,260
Net investment earnings 245,076
Benefit payments to participants 467,995
</TABLE>
6. SUBSEQUENT EVENTS
On January 1, 1999 the Plan was restated to provide for the mergers of
the Community Savings Bank 401(k) Plan and the Olde Port Bank & Trust
401(k) Plan into the Plan. The Plan was amended to include Community
Savings Bank (renamed Community Bank) and Olde Port Bank & Trust as
participating employers effective January 1, 1999. Community Bank and
Olde Port Bank & Trust are wholly-owned subsidiaries of New England
Community Bancorp, Inc.
On June 30, 1999 Webster Financial Corporation announced that it has
reached a definitive agreement to acquire New England Community
Bancorp, Inc. The definitive agreement is subject to approval by
regulatory authorities and New England Community Bancorp, Inc.
shareholders, and may require approval by Webster Financial
Corporation shareholders.
<PAGE>
NEW ENGLAND COMMUNITY BANCORP, INC.
401(k) PLAN
EMPLOYEE IDENTIFICATION #06-1116165
PLAN #001
SUPPLEMENTAL SCHEDULES
LINE ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AS OF
DECEMBER 31, 1998
<TABLE>
<CAPTION>
IDENTITY OF ISSUE, BORROWER, LESSOR, OR SIMILAR PARTY COST FAIR VALUE
- ----------------------------------------------------- ---- ----------
<S> <C> <C>
Investment in Guaranteed Interest Accounts $303,629 $303,431
Investment in Money Market Account 162,314 167,530
Investment in Government Securities Account 78,816 87,640
Investment in Bond & Mortgage Account 141,299 150,565
Investment in Bond Emphasis Balanced Account 135,033 150,225
Investment in Stock Emphasis Balanced Account 166,377 206,022
Investment in Stock Index 500 Account 392,577 556,842
Investment in U.S. Stock Account 273,118 353,562
Investment in Medium Company Value Account 195,231 231,666
Investment in Medium Company Blend Account 173,556 206,387
Investment in Small Company Blend Account 289,700 303,880
Investment in International Stock Account 176,499 205,010
Investment in Real Estate Account 38,078 41,637
Investment in Participant Loans 22,106 22,106
</TABLE>
LINE ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS FOR THE YEAR ENDED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
TOTAL TOTAL NET
VALUE OF VALUE GAIN
DESCRIPTION OF ASSETS PURCHASES OF SALES ON SALES
--------- -------- --------
<S> <C> <C> <C>
Investment in Guaranteed Interest Accounts $179,087 $128,484 $
Investment in Money Market Account 564,443 645,915 22,459
Investment in Government Securities Account 37,826 9,625
Investment in Bond & Mortgage Account 101,146 36,964 3,161
Investment in Bond Emphasis Balanced Account 95,804 21,007 2,291
Investment in Stock Emphasis Balanced Account 82,228 46,731 9,273
Investment in Medium Company Blend Account 87,984 20,366 3,405
Investment in Medium Company Value Account 125,961 48,990 5,007
Investment in Stock Index 500 Account 261,864 136,471 32,591
Investment in U.S. Stock Account 140,952 88,177 21,581
Investment in International Stock Account 105,640 43,323 7,391
Investment in Small Company Blend Account 169,368 65,990 609
Investment in Real Estate Account 34,461 2,668
</TABLE>
<PAGE>
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act
of 1934, the New England Community Bancorp, Inc. 401(k) Plan has duly
caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
New England Community Bancorp, Inc.
401(k) Plan
/s/ Anson C. Hall
By: Anson C. Hall
Chief Financial Officer
Date: November 30, 1999
<PAGE>
EXHIBITS INDEX
Exhibit Number
Exhibit No. 23 Consent of Shatswell, MacLeod & Company, P.C.
Consent of Independent Auditors
We consent to the incorporation in the Annual Report on Form 11-K of our
report, dated Auguest 18, 1999, relating to the statements of net assets
available for benefits of the New England Community Bancorp, Inc. 401(k)
Plan as of December 31, 1998 and 1997, and the related statement of
changes in net assets available for benefits for the year ended
December 31, 1998, and all related schedules.
/s/ Shatswell, MacLeod & Company, P.C.
Shatswell, MacLeod & Company, P.C.
West Peabody, Massachusetts
November 29, 1999
